Lessons from this meeting
Value Drives Growth (and vice versa)
- There’s no “growth vs. value” divide—every investment is a present-value calculation of future cash flows (birds in hand vs. birds in bush).
- Focus on how many “birds” you get, when, and at what discount rate.
Circle of Competence
- Only buy businesses you understand—if you can’t reasonably predict where it’ll be in 10 years, don’t invest.
- It’s fine for others to play in tech or farmland manias; if it’s outside your grasp, stay away.
Economic Moats Matter Most
- Seek durable competitive advantages (“moats”)—brands or business models that fend off competitors and compound value.
- Examples: Coke’s global bottling & vending footprint, Gillette’s blade-razor lock-in, See’s Candy’s reputation.
Intrinsic Value Trumps Accounting Metrics
- Ignore short-term P/E ratios or GAAP book value—focus on what the business can and will earn over time.
- Beware “look-through” metrics that claim precision—cash flows and qualitative durability are king.
Patience & Long Horizons
- Don’t get distracted by quarterly noise, macro forecasts, or currency swings you can’t forecast.
- Ask, “Would I buy and hold this if the market closed for five years?” If yes, you’re aligned with Buffett.
Avoid the Speculative Mania
- Manias transfer wealth; real wealth comes only from underlying business performance.
- Speculative bubbles correct—sometimes painfully—but solid businesses prevail.
Margin of Safety
- Pay significantly less than your estimate of intrinsic value to allow for errors, surprises, or miscalculations.
- As Aesop taught: a bird in the hand is worth two in the bush—timing and risk matter.
Rational Risk & Rewards
- In insurance (and investments), pursue only transactions where you have a mathematical edge.
- Expect surprises—seek managers who build moats, and use incentive plans that reward real economic gains, not “lottery tickets.”
Keep a Permanent Home Mindset
- If you control a business, treat it as if you’ll never sell—this aligns capital allocation with long-term value creation.
- Rarely sell even when offered rich multiples; only revisit if the moat erodes or a mistake forces a rethink.
Disciplined Capital Allocation
- Retain earnings only if you can redeploy them at returns above your cost of capital; otherwise return the cash.
- No arbitrary dividend policies—let logic (can we earn >$1 of value per $1 retained?) decide.
Embrace “Lazy” Focus
- Avoid spreading yourself thin chasing every hot sector—agnosticism about macro or fads frees you to concentrate on a few great businesses.
Study Winners & Losers
- Analyze both successes (Mrs. B at Nebraska Furniture Mart) and failures (New Coke, trading stamps) to understand what builds—or destroys—a moat.
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