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ABC, 132
accounting, 79
“Air-aholism,” 101, 103
American Express, 49, 61, 107, 144–45
apparel and textile businesses, 42–43, 209–10
assets, allocation of, 161–63
Audur Capital, 13
balance sheets, 79
banks, see financial industry
Barber, Brad M., 18–21, 23, 28
Barron’s, 204
Bear Stearns, 2, 209
behavioral economics, 18, 28–29, 120, 191–92, 206
Berkowitz, Bruce, 183
Berkshire Hathaway:
compounded annual gain in book value of, 43, 117–18
as outperforming S&P 500 in market downturns, 121
share price of, 95–96
stock split of, 95–96
transformed into holding company, 43, 110
WB’s purchase of, 42–43, 100
Bernstein, Peter, 192
Bernstein, William J., 163
biases, 201
Bill & Melinda Gates Foundation, 132
biological systems, as analogies for markets, 80, 189
biotech companies, 232
Blue Chip Stamps, 143
Blumkin, Rose, 113–14, 115, 125
bonds, 145, 162
Borsheim’s Fine Jewelry, 60, 114, 132
“Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment” (Barber and Odean), 18–21, 23
brain, pleasure centers in, 89–90
Breen, Ed, 188
bubbles, 50, 119
dot.com, 56, 71, 86, 88, 89, 90–91
housing, 2, 8–9, 88, 89
Japanese, 202
Buffalo News, 59
Buffett, Susan, 109–10
Buffett, Warren:
background of, 37–38, 40
charitable donations of, 132
“Graham-and-Doddsville” speech of, 119–20, 133
investment career of, 40–43
paper route of, 37–38, 48, 59, 112
reading habits of, 77–78
temperament of, 6–7, 14, 15, 88
and 2008–9 financial crisis, 4–5, 10, 52–53, 69–70, 92–93
U.S. companies as primary investments of, 67–68
see also specific investment strategies
Buffet Associates, Ltd., 41–42, 87, 117
Buffett Beyond Value (Jain), 50, 126
Buffett: The Making of an American Capitalist (Lowenstein), 88
Burlington Northern Santa Fe, 59–60, 95–96, 166
business models, 79
BusinessWeek, 202
Business Wire, 114
“Buy American. I Am.” (Buffett), 69, 70, 92
buy-and-hold investing, see long-term investing
BYD, 68
Callan, Erin, 11–12
capital allocation, 93–94, 129, 186–87
Capital Cities, 112, 132
Capital Ideas (Bernstein), 192
cash, maintaining ample reserve of, 67
“challenge” hypothesis, 30, 31
change:
in companies, 166–67
in market conditions, 108
children, as investors, 39–40, 206–7
“cigar butt” investing, 72–73, 131, 136–37
circle of competence, 13, 55–62, 68, 81, 83, 106–7, 108, 147–48, 152, 159, 160, 164, 173, 174, 175, 197, 205, 211, 221–24, 232
WB on, 86–87
Cities Service, 38
Coca-Cola, 43, 48–49, 56–57, 60, 107
collaboration, 12
Columbia Business School, 40, 119–20
comfort level, 139, 208–9, 213, 222–23
in risk taking, 162–63, 168
see also circle of competence
Common Stocks and Uncommon Profits (Fisher), 137, 204
companies, changes in, 166–67
competitive advantage, see sustainable competitive advantage
Competitive Strategy (Porter), 191
compound interest, 154–56, 206
conference calls, and evaluating management, 130, 187–89, 216–17
confirmation bias, 82–83, 148, 174
conformity, appeal of, 89–90
ConocoPhillips, 82, 107
consistency, of investment performance, 24, 35, 44, 117–22, 175
consumer brands, 60
consumer confidence, 3
contrarian investment strategies, 89, 97, 148, 174, 205, 228
Corporate Library, 124–25
cortisol, 29–30, 31–33
Costco, 60, 128–29
courage of one’s convictions, see self-confidence
credit markets, 3, 9–10
curiosity, importance of, 79–81, 185–86
Dairy Queen, 43, 60
debt:
credit card, 66, 156–58
excess, 2, 7, 10, 66–67, 68, 148, 157, 159, 173
management of, 129
decision making:
emotions and, 200–201
outcomes vs., 102, 192–93
discipline, maintaining, 89, 160, 211–12
Disney, 132, 199
diversification, 138–39, 164–65
dividends, WB’s dislike of, 93–94
Dodd, David, 40, 86, 135, 179
dominance, male assertion of, 27
dot.com bubble, 56, 71, 86, 88, 89, 90–91, 210, 223
Dow Jones Industrial Average, 3, 90
economic moats, 56–57, 60, 75, 106, 204
Economist, 204, 219, 220
efficient market theory, 118–21, 133
Eisner, Michael, 191
emotional capital, 13
emotions, control of, 200–201
End of Wall Street, The (Lowenstein), 88
Enron, 92
estrogen, 200
ethics, 141–46, 150, 176
see also honesty and openness
Eubanks, Bob, 178–79
Fairmont Hotels, 226–27
fairness, see ethics; honesty and openness
“Female Investors and Securities Fraud” (Heminway), 22
“feminine” qualities, 12
financial crisis of 2008–9, 2–6, 17, 21–22, 33–34, 59, 195–97, 205, 211, 212–13
Iceland in, 12–14
WB and, 4–5, 10, 52–53, 69–70, 92–93
women-managed hedge funds in, 25
financial industry, 9, 61
as male-dominated, 11–12
toxic assets of, 9–10
women in, 17–18
Fisher, Philip, 85, 137–38, 184, 204
float, 43, 61, 94, 100
Forbes, 88
Fortune, 71, 110
Four Pillars of Investing, The (Bernstein), 163
Franklin Street Partners, 178–79
Fruit of the Loom, 60
futures contracts, 29–30
Gap, 199
Gates, Bill, 55, 132
Gates, Melinda, 132
GEICO, 43, 48, 59, 61, 77, 90, 107, 139
gender differences, see investing, gender differences in
General Electric, 5, 53, 92
Goldman Sachs, 5, 53, 61, 92
Google, 81
Graham, Benjamin, 40–42, 47, 63–64, 70, 76, 85, 86, 90, 110, 119, 135–36, 158–59, 164, 179, 183, 184, 202, 204, 230
“cigar butt” investment strategy of, 72–73, 131, 136–37
Graham, Katharine, 111–12, 115
Graham-Newman Corporation, 41
Greenblatt, Joel, 230, 231
Guinness, 67
gurus, questioning, 135–40, 175–76, 183–85
hedge funds, 177, 198
gender differences in managers of, 24–25, 35, 44–45, 175
Heminway, Joan MacLeod, 22
Herbert, Joe, 29
Hermes, 120
Hill, Chris, 225
history, recognizing patterns in, 80, 189–90
Hochschild-Kohn, 103–4, 106–7, 131
honesty and openness, 13
of management, 128, 130, 138, 146, 150, 175, 176, 187, 215
WB on, 142
see also ethics
housing bubble, 2, 8–9, 89, 107
human behavior, investing and, 201
Iceland, in financial crisis of 2008–9, 12–14
independent thinking, WB on, 91
index funds, 164–65
information:
online availability of, 120
overload of, 218
Inner Scorecard, 96–97, 174, 182
institutional investors, 153
insurance companies, float used by, 43, 61, 94, 100
Intel, 57–58
Intelligent Investor, The (B. Graham), 40, 63–64, 192, 204
International Journal of Bank Marketing, 26
Internet, 76, 90, 210
investing:
“cigar butt” approach to, 72–73, 131, 136–37
contrarian, 89, 97, 148, 174, 205, 228
diversification in, 138–39, 164–65
as long-term commitment, 158–59
market downturns as opportunities for, 88
in overseas companies, 67–68, 148, 173
as owning part of an actual business, 47–48, 54, 63, 147, 151–52, 176, 199, 206–7
qualitative vs. quantitative factors in, 73, 85, 108, 136–38, 184
social impact of, 13
starting out in, 169, 206–7, 222–24, 233
value approach to, 38, 39, 40, 58–59, 91, 135, 136
investing, gender differences in, 15, 17–35, 123, 168, 169–70, 173–75, 205–6
of hedge fund managers, 24–25, 35, 44–45, 175
and learning from mistakes, 27–28, 35, 44, 174
long-term vs. short-term thinking in, 12
of mutual fund managers, 23–25
optimism and, 22–23, 34, 44, 148, 174
overconfidence and, 19–21, 22–23, 34, 44, 147–48, 170, 173
patience and, 21–22, 147, 173
peer pressure and, 26–27, 30, 35, 44, 109, 148–49, 174
and research thoroughness, 26–27, 34, 44, 148, 174
risk taking and, 20–21, 24, 30, 32, 33, 34, 35, 44, 109, 148, 170, 173, 201
testosterone and, 12, 29–34, 35, 44, 170, 175, 201
trading frequency and, 19–21, 24, 31, 34, 44, 147, 170, 173
IRA accounts, 21–22
Iscar, 68
Jacques, Susan, 114
Jain, Prem, 50, 126–27
Japan, bubble in, 202
Johnson & Johnson, 126–27, 166
Kilpatrick, Andrew, 78, 159
Klarman, Seth, 183, 184
Kraft Foods, 60–61
Lane Five Capital Management, 177–78, 185
Lauren Templeton Capital Management, 198–99
Legg Mason Capital Management, 177, 179, 180, 183
Lehman Brothers, 11
bankruptcy of, 2–3, 5, 195
leverage, 2, 9
Levitt, Arthur, 141–42
Little Book That Beats the Market, The (Greenblatt), 230
Livermore, Jesse, 192
Lo, Andrew, 192
long-term investing, 9, 10–11, 165, 181, 211
as female trait, 12, 147, 173
as owning part of an actual business, 47–48, 54, 63, 147, 151–52, 153, 176, 199, 206–7
speculation vs., 47, 152–53, 200, 206
WB on, 71
see also value investing
Loomis, Carol, 110–11, 115
Lowenstein, Roger, 88–89, 191
Lynch, Peter, 152, 164, 204
macroeconomic environment, see market conditions, change in
Magellan Fund, 152, 164
managers, management:
changes in, 167
conference calls as guide to, 130, 187–89, 216–17
evaluating, 126–30, 134, 150, 159, 186–89, 203–4, 213–17
honesty and openness in, 128, 130, 138, 146, 150, 175, 176, 187, 215
importance of, 125–26, 137
return on equity as measure of, 127
Mann, Bill, 71–72, 160–61, 225–33
on value investing, 226–29
margin buys, 66
margin of safety, 63–64, 68, 72, 93, 135, 148, 176
market conditions, change in, 108, 174
market-timing, 212
Maximum Pessimism Report, 205
mentors, questioning, 135–40, 175–76, 183–85
Merrill Lynch Investment Managers, 27–28
Microsoft, 81, 132
Miller, Bill, 179, 183, 184, 191
Minow, Nell, 124–25
mistakes:
impatience and, 102, 103–5, 106–7
learning from, 27–28, 35, 44, 51, 82, 99–108, 174, 192–94
of omission vs. commission, 99–100
peer reinforcement and, 105, 194
as reason for selling stock, 167–68
as result of changing market conditions, 108, 174
as result of faulty analysis, 101, 108, 174
moats, see economic moats
Mohawk Airlines, 223
Moody’s Manuals, 76
Moody’s reports, 76
Motley Fool, 141–42
Independence Fund of, 71–72, 225, 232
investment principles of, 15, 150–70
Motley Fool Hidden Gems, 225, 226
Mr. Market, 70–71, 73, 136, 148, 158–59, 167, 174
Munger, Charlie, 43, 49, 110, 131, 133, 139, 189
in Hochschild-Kohn purchase, 103–4
qualitative investing strategy of, 73, 85, 108, 137, 138, 184
Wesco purchase and, 143–44
Murphy, Tom, 132
mutual funds, 87, 153, 203
gender differences in managers of, 23–25
Nasdaq, 90
National Council for Research on Women, 26
Nebraska Furniture Mart, 60, 113–14, 125
NetJets, 102–3
neuroeconomics, 12, 29, 205–6
New York Times, 51–52, 219
WB’s op-ed column in, 69, 70, 92
Nierenberg, David, 231–32
Niessen, Alexandra, 23–24
“Nifty Fifty,” 87, 89
Nike, 60
Nissan, 193
novels, 190–91
October 1987 stock market crash, 92
Odean, Terrance, 18–21, 23, 28
Of Permanent Value (Kilpatrick), 78, 159
Omaha Sun, 59
openness, see honesty and openness
optimism:
benefits of, 69–70
excess, 22–23, 34, 44, 71, 73, 148, 174
Osberg, Sharon, 110, 111
O’Shaughnessy, James, 204
overconfidence, 19–21, 22–23, 34, 44, 61, 147–48, 170, 173, 194
overseas investments, 67–68, 148, 173, 202–3
oxytocin, 200
Paine Webber, 209
Paradigm Capital Management, 208–9
patience, 12, 38, 50–54, 62, 102, 103, 105, 106–7, 160–61, 180–81, 195, 211, 233
gender differences in, 21–22, 147, 173
WB on, 51–52
peer pressure, 26–27, 30, 35, 44, 85–97, 109, 148–49, 174, 181, 197
performance persistence, 24, 35, 44
Personal History (K. Graham), 112
pessimism:
as investment strategy, 22–23, 34, 44, 69–73, 148, 174, 228–29
WB on, 70, 73
PetroChina, 67
Petursdóttir, Kristin, 13
Porter, Michael, 191
price, value vs., 118–19, 120–21, 180
Procter & Gamble, 60, 166
profiteering, 7
Quarterly Journal of Economics, 19
railroads, 59–60
Rapuano, Lisa, 177–97
on evaluating management, 129–30, 186–89
on financial crisis of 2008–9, 195–97
on making mistakes, 104–5
on patience, 52, 180–81, 195
on reading and curiosity, 79–81, 185–86, 189–90
reading habits of, 190–92
on relationships, 185–86
on self-confidence, 91–92, 160, 197
reading, importance of, 77–81, 148, 185–86, 189–92, 204–5, 217–20, 229–31
Regulation Fair Disclosure (2000), 142
relationship building, 12, 123–34, 150, 185–88, 203
vs. return on capital, 124, 134, 150, 175
WB on, 124
Renault, 193
reputation, 96
research, thoroughness of, 53, 61, 65, 68, 75–83, 119–20, 137–38, 184, 203–4, 207, 227–28, 231–32
gender differences and, 26–27, 34, 44, 148, 174
research and development (R&D), 129, 186
retirement savings, 168
return on capital, 203
relationships vs., 124, 134, 150
return on equity, 127
risk taking, 63–68
comfort level in, 162–63, 168
cortisol and, 32–33
excess, 7, 10, 11, 33, 82
gender differences in, 20–21, 24, 30–31, 34, 35, 44, 109, 148, 170, 173, 201
margin of safety and, 63–64, 68, 72, 93, 135, 148, 176
return and, 21
testosterone and, 30–31, 33, 44, 175, 201
Ruane, Bill, 133
Rubin, Robert, 192
Ruenzi, Stefan, 23–24
Salomon Brothers, 145–46
Santa Fe Institute, 191
saving, importance of, 156–58
Schloss, Walter, 133
scuttlebutt, 137–38
Securities and Exchange Commission, 76, 141–42, 143
Security Analysis (B. Graham and Dodd), 40, 192, 204, 230–31
See’s Candies, 43, 60, 107
selective disclosure, 141–42
self-confidence, 88, 89, 91–92, 96–97, 160, 197, 212
selling stock, 153–54, 165–68, 196
shareholders:
equal treatment of, 141–42
as partners, 143
short-term investing, 7, 10, 47, 63, 200, 206
as male trait, 12
market volatility and, 50
Sinegal, Jim, 128–29
small-cap value investing, 208
social impact, investing and, 13
speculation, see short-term investing
sphere of understanding, see circle of competence
Standard & Poor:
500 index of, 3, 14, 43, 96, 121, 164
reports of, 76
steroids, see cortisol; testosterone
stock market:
downturns in, 33, 87–88, 121
October 1987 crash of, 92
volatility of, 3, 32–33, 50, 64, 136
vs. other investment vehicles, 155
see also bubbles; financial crisis of 2008–9
stock options, 127
stock splits, WB’s dislike of, 93, 94–95
subprime mortgage bubble, see housing bubble
Sumner, William Graham, 2
“Superinvestors of Graham-and-Doddsville, The” (Buffett), 119–20, 133
sustainable competitive advantage, 56, 57, 60, 75, 106, 137, 159, 204
change in, 167
Tamraz, Cathy Baron, 114
technology companies:
difficulty of predicting profitability of, 55–56, 57, 81, 232–33
see also dot.com bubble
temperament, 1–15, 180–81, 200–201, 211–13, 225–26
definition of, 6
gender differences in, see investing, gender differences in
of WB, 6–7, 14, 15, 88
Templeton, John, 39, 58, 198, 201–2
Templeton, Lauren, 38–39, 58–59, 198–207
on evaluating management, 203–4
on global investing, 202–3
reading habits of, 204–5
on temperament, 200–201
testosterone, 12, 29–34, 35, 44, 103, 109, 170, 175, 200, 201
Tiffany’s, 79
Tómasdóttir, Halla, 13
trade journals, 229
trades, frequency of, 19–21, 24, 31, 34, 44, 47–54, 147, 153, 170, 173
travel, importance of, 220–21
Treasury bond market, 145
Tyco, 188
US Airways, 51, 101–4, 106–7
U.S. Bancorp, 61
valuation, 58–59, 65–66, 167, 179–80
value:
intrinsic, 135–36
price vs., 118–19, 120–21, 180
value investing, 38, 39, 40, 58–59, 91, 135, 136, 177, 178–79, 198–99, 205, 208, 210–11, 226–29
see also long-term investing
Value Investing Congress, 105, 185, 194
Vanguard, 21–22
Volvo, 193
Wall Street, see financial industry
Wall Street Journal, 77, 78, 204
Wal-Mart, 60, 79, 100, 199
Washington Post, 37, 48, 59, 112
Washington Post Company, 43, 53–54, 59, 65, 93, 111–13
Weir, Amelia, 129, 208–24
on circles of competence, 222
on evaluating management, 130, 216–17
reading habits of, 219
Weir, Candace King, 208–24
on circles of competence, 221–22
on discipline and self-confidence, 89, 160, 211–12
on evaluating management, 214–15, 217
on importance of travel, 220–21
reading habits of, 217–19
Weldon, William, 127
Wells Fargo, 61
Wesco, 143–44
What Works on Wall Street (O’Shaughnessy), 204
“winner effect” hypothesis, 30–31
women:
education of, 17
financial independence of, 13, 168–69
in financial industry, 17–18
growing economic role of, 17
as investors, see investing, gender differences in
retirement and, 168
Xerox, 223
You Can Be a Stock Market Genius (Greenblatt), 230
Zak, Paul, 29, 206