Tren Griffin

"MARGIN OF SAFETY."

"“I observe what works and what doesn’t and why.” Life happens to Munger as it does to everyone, but unlike many people he thinks deeply about why things happen and works hard to learn from the experience."

"“Knowing what you don’t know is more useful than being brilliant.”"

"What is a margin of safety? Ben Graham’s definition of a margin of safety is “a favorable difference between price on the one hand and indicated or appraised [intrinsic] value on the other.”8"

"price is what you pay, and value is what you get."

"“Most investors are primarily oriented toward return, how much they can make and pay little attention to risk, how much they can lose.”4 He added, “The payoff from a risk-averse, long-term orientation is—just that—long term.”5"

"Understanding how to be a good investor makes you a better business manager and vice versa."

"What does the company sell and who are its customers and competitors? What are the key numbers that represent the value the business generates?"

"[Projections] are put together by people who have an interest in a particular outcome, have a subconscious bias, and its apparent precision makes it fallacious. They remind me of Mark Twain’s saying, “A mine is a hole in the ground owned by a liar.” Projections in America are often a lie, although not an intentional one, but the worst kind because the forecaster often believes them himself."

"Munger strives to find investments for which a significantly positive outcome is obvious."

"If you’re an investor, you’re looking on what the asset is going to do; if you’re a speculator, you’re commonly focusing on what the price of the object is going to do, and that’s not our game."

"Private Market Value (PMV) is the value an informed industrialist would pay to purchase assets with similar characteristics. We measure PMV by scrutinizing on- and off-balance-sheet assets and liabilities and free cash flow. As a reference check, we examine valuations and transactions in the public domain. Our investment objective is to achieve an annual return of 10% above inflation for our clients.7"

"the investor must let go of his or her desire to make short-term predictions about the future."

"want to be a certain kind of mutant who is just completely different in their orientation to what’s an attractive investment for the rest of the market.”10"

"Mimicking the herd invites regression to the mean (merely average performance)."

"“The function of the margin of safety is, in essence, that of rendering unnecessary an accurate estimate of the future.”9"

"Part of the benefit of creating a checklist is the process of writing down your ideas. I have always loved the point Buffett made about the importance of making the effort to actually put your ideas in writing. In Buffett’s view, if you cannot write it down, you have not thought it through."

"Margin of safety reflects the difference between the intrinsic value and the current market price."

"“Simplicity has a way of improving performance through enabling us to better understand what we are doing.”2"

"“Turn complicated problems into simple ones. Break down a problem into its components, but look at the problem holistically.”1 Keeping things as simple as possible,"

"“a stock is not just a ticker symbol or an electronic blip; it’s an ownership interest in an actual business, with an underlying value that does not depend on its share price.”1"

"I’m a great believer in solving hard problems by using a checklist. You need to get all the likely and unlikely answers before you; otherwise it’s easy to miss something important."

"If you are an investor, you are trying to understand the value of the asset."

"Howard Marks pointed out that “active management has to be seen as the search for mistakes.”12"

"Jason Zweig"

"A fundamentally important truth about investing is that people rarely make decisions independently. This means that people who can think independently, gain control of their emotions, and avoid psychological errors have an advantage as investors."

"What’s the flip side, what can go wrong that I haven’t seen?"

"As long as the fundamentals of the business itself remain in place, a market’s short-term views on the price of the shares can be ignored and will be corrected in the long term. This approach reinforces the importance of a fundamental analysis of the business itself. There are essentially three steps in the process: analyze the business to determine intrinsic value, buy the assets at a significant bargain, and wait."

"It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent. There must be some wisdom in the folk saying, “It’s the strong swimmers who drown.”"

"1.  Treat a share of stock as a proportional ownership of the business.    2.  Buy at a significant discount to intrinsic value to create a margin of safety.    3.  Make a bipolar Mr. Market your servant rather than your master.    4.  Be rational, objective, and dispassionate."

"The number one idea is to view a stock as an ownership of the business."