It seems everytime Warren Buffett says something, it gets alot of media attention. I don’t think I have ever referenced a Warren Buffett article in my blog, as there are many other interesting and less covered people out there, but this article had some points I couldn’t resist expanding on.
Warren Buffet recently met with MBA students at the University of Maryland and had a Q&A session. Check out the full transcript here:
Here are the 3 nuggets I gleaned from his answers, in descending order below:
4. Warren Buffett’s answer to question #5 was interesting. Nice to hear his opinion on success and how much luck is a part of it.
3. His answer to question #7 on how he defines quality management and what motivates him. Juxtapose this with the view that if we restrict compensation on highly paid corporate officers, we will stifle innovation.
2. In his answer to question #2 he relays this story:
When I got out of school, I went through Moody’s manual page by page. Got to page 1433 and learned the good ones were in the back.
The lesson I take from this is that there are values to be found where the crowd doesn’t think to look. The herd on Wall Street follow the the same stories – yet the value may be found elsewhere. Don’t always think conventionally.
1. And my favorite takeaway from this article: In the answer to question 13, he says:
If you are managing only $1 million, then you should be able to beat the S&P 500 by 10 percentage points with no risk or leverage.
His impression is the small investor has an advantage. There probably are a lot of opportunities too small for large funds, and with all the free research and technology available, the small investor has many quality tools to unearth value. I am not convinced that this applies to the average investor, but perhaps the diligent investor can consistently out perform the market. I remain ever hopeful.