13 item reality check from Warren Buffet
Posted February 14, 2010on:
I listened to Warren Buffet speaking to MBA students a few nights OK. Lest I forget them, here are some of the pearls of wisdom that I jotted down. They work as a healthy reality check.
- Make money out of stability (inactivity). Strip out transactions and movement that just make money for brokers.
- Go away for 20 years. Will the business opportunity still be there?
- What will the industry look like in 10 years time? Who will be making money in ten years time?
- What are the barriers to entry? What is the moat to the castle?
- If you had all the money in the world, how would you break the company?
- Stay in your circle of competence. You may have 6 wonderful businesses. You won’t get rich from your 7th best idea.
- Don’t expect more than one really good idea a year.
- Do what you love.
- Don’t risk what is important for a marginal gain.
- Don’t confuse the terms of a deal with the quality of the business itself. (Find out what is for sale before you look at the price.)
- Identify what is knowable and what is important.
- Use businesses to generate revenue not to generate a quick capital gain.
- Support designs for the world which create 8 billion lives that you wouldn’t mind living if your were born into anyone of them