Value Investing

Berkshire Hathway 2007 Annual Letter Quotes

Below are a couple quotes from the Berkshire Hathaway 2007 Shareholder Letter. The words speak for themselves…

• You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sigh.
• “It is interesting that the industry has invented new ways to lose money when the old ways seemed to work just fine.”John Stumpf, CEO of Wells Fargo
• If the winds roar or the earth trembles, results could be far worse.
• During the past year, many large deals have been renegotiated or killed
  entirely. With the Pritzkers, as with Berkshire, a deal is a deal.
• Byron (Trott), of Goldman Sachs is the rare investment banker who puts himself in his client’s shoes.
• It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone
• Business history is filled with “Roman Candles,” companies whose moats proved illusory and were soon crossed.
• A moat that must be continuously rebuilt will eventually be no moat at all.
• If a business requires a superstar to produce great results, the business itself cannot be deemed great.
• The biblical command to “be fruitful and multiply” is one we take seriously at Berkshire.
• Going to any other flight-training provider than the best is like taking the low bid on a surgical procedure. (On Flight Safety’s moat)
• Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.
• Investors have poured money into a bottomless pit (Airlines), attracted by growth when they should have been repelled by it.
• Why did I say “no”? (On Not purchasing Dallas-Fort Worth NBC) The only explanation is that my brain had gone on vacation and forgot to notify me.
• I gave away 1.6% of a wonderful business – one now valued at $220 billion
  – to buy a worthless business.
• A line from Bobby Bare’s country song explains what too often happens with acquisitions: “I’ve never gone to bed with an ugly woman, but I’ve sure woke up with a few.”
• The best anecdote I’ve heard during the current presidential campaign came from Mitt Romney, who asked his wife, Ann, “When we were young, did you ever in your wildest dreams think I might be president?” To which she replied, “Honey, you weren’t in my wildest dreams.”
• For one-of-a-kind mammoth transactions, the world now turns to him (referring to Ajit Jain).
• But, finally, they caught me in a moment of weakness, and I caved, telling them I would go to $35.05. With that, I explained, they could tell their client they had wrung the last nickel out of me. At the time, it hurt.(Purchase of MidAmerican)
• Start-ups are not our game.
• We paid the IRS tax of $1.2 billion on our PetroChina gain. This sum paid all costs of
  the U.S. government – defense, social security, you name it – for about four hours.
• Yes, Virginia, you can occasionally find markets that are ridiculously inefficient – or at least you can find them anywhere except at the finance departments of some leading business schools.
• I’ve reluctantly discarded the notion of my continuing to manage the portfolio after my death – abandoning my hope to give new meaning to the term “thinking outside the box.”
• “Those who travel the high road in Washington need not fear heavy traffic.”-Former Senator Alan Simpson
• “If you’ve hit three balls out of bounds to the left, aim a little to the right on the next swing.”-Charlie Munger
• A story I told you some years back illustrates our problem in accurately estimating our loss liability: A fellow was on an important business trip in Europe when his sister called to tell him that their dad had died. Her brother explained that he couldn’t get back but said to spare nothing on the funeral, whose cost he would cover. When he returned, his sister told him that the service had been beautiful and
  presented him with bills totaling $8,000. He paid up but a month later received a bill from the mortuary for $10. He paid that, too – and still another $10 charge he received a month later. When a third $10 invoice was sent to him the following month, the perplexed man called his sister to ask what was going on. “Oh,”she replied, “I forgot to tell you. We buried Dad in a rented suit.”
• If you decide to leave during the day’s question periods, please do so while Charlie is talking.

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© 2008 Contrarian Value Investing.