I read all the books on investing in the public library and just i ate it up it was fascinating to me but i had no frame i was just searching for commodity i was hoping that little effects on a map would tell me commodity about what a stock was going to do it was kind of crazy but everybody differently was doing it so i figured i’d do it too occasionally you turn the map upside down you know it still wouldn’t help also in 1949 i read the intelligent investor by ben graham i’d noway heard of them over until also and there are really only two chapters in that book that are the key to it but they set my philosophical frame for investing in three ways they are so introductory and so simple it’s hard to understand how they could be that important but the ten commandments are simple you know the first is that a stock is part of a business i mean you you can not suppose of a sock as commodity different it’s you value a business and also you divide by the shares outstanding but what you have to suppose about is what kind of a business are you getting into what are its profitable characteristics for its challengers what is its operation like all of these effects that relate to a business rather of a little ticker symbol i used to know when i was 11 or 12 the ticker symbols of every company nearly on the new york stock exchange i could mark the boards of harris up them you know but i did not know anything i mean i could you know i knew that x wasu.s sword and t was at t and so on but i did not i did not know anything i did not know what was behind them so i had to start looking at at these little symbols or these little names in
the paper as businesses and decide how do you value a business what counts the alternate thing in that in the book is that graham gives you a marvelous set point in terms of how the investor should reply to stock request oscillations he talks about his fabulous mr request in chapter eight there is been no more thing written in terms of the investors station toward stock prices utmost people reply the wrong way to stock prices i mean they feel good when their stocks go up they feel bad when they go down they suppose the stock request is there to instruct them and mr request is this mate you have in investing you know he is a remarkably obliging mate this joe comes around every day and he tells you what he will pay you for your interest in the business or what he will vend you more at the same price nothing ever does that in in private business if you possessed you and i possessed a gas station together and i said every day i want you to come by and offer me your half interest in the station and i can either buy your half or vend you my my half at the same price and you have to come in every day and do it you’d be at
a terrible disadvantage and you’d be at a particular disadvantage if you are mr request in the request because mr request or a friend of the request who unwillingly gives you those numbers every day different numbers at the end of the day in the launch of the day but he is naming a price at which you will either buy herself the beautiful thing about him is that this joe is an alcoholic manic depressive i mean i mean he’s as unsound as they come he wanders around all day you know and looks at the crazy effects and he you know he he is going to name all kinds of crazy prices and you do not have to pay any attention to them except when it’s to your advantage to do so if that is once a time if it’s formerly every five times it’s one stock out of three thousand all you have to do is sit there there you have no moral responsibility to this haul you know i mean he’s naming these figures you did not ask him to but he is doing it and all you have to do is pick the one time when he’s particularly depressed or particularly manic or particularly drunk or whatever it may be and the request will be all of those effects and and you take advantage of it and that is what is remarkable about stocks if you suppose about it’s that if you look at the high and low on all of these american companies for the last time you will see case after case after case where the high is doubly below now that is for sound american businesses running along paying people dealing goods and so on if you go out look at cropland 10 long hauls from then there is no way in the world over then that the cropland is going to range in value from x to 2x it does not perhaps go from x to 110 of x or vice versa if you look at an apartment house near then and numbers on basically apartment houses like that over a time it will not it will not move 10 in a given time but then are the finest of american businesses and people just name these figures that go each over the place and you do not have to play except when you want to that is the important thing and that is the that is what graham tells you the request is not there to instruct you to tell you anything the requests is there just principally to serve you when you want it to serve you you know one of the
most important effects flash back in stocks veritably hard to do but people have all these passions about it the stock does not know you enjoy it you know you are sitting there with these instruments for berkshire the company does not indeed know you enjoy it you know and the stock does not it’s trading now and they do not know you enjoy it so it has no passions about you i mean you’ve got all these passions about it but it’s just part of a business if berkshire is worth 75 000 times a million and a half shares you know roughly 110 billion or commodity like that it’s a good investment if it is not it’s a lousy investment you know you have to value the business and graham you know it’s amazing but people do not do that in wall road you go you you hear price targets or that kind of thing but you see no bone write a paper that says then‘s the nature of this business over the coming 20 times you know what will that what should that business sell for forget about what it’s dealing for in fact one of the effects i always like to do when i am looking at investments is i like to look at them without knowing the price because if you see the price it automatically has some influence on you if you just sit down with the reports if i get an idea about looking up a company and i get these 10ks and so on i would rather not know the price because i’d rather value it without knowing the price when i used to clog nags when i was a sprat one of the effects i would do is i’d get the
racing form ahead of time and if there were nine nags in a race will say obviously the chances of of each one winning the race had to add up to 100 percent i mean one steed was going to win the race absent a dead heat or all of them dropping dead on the backstretch so if you went through the racing form and i would look at the third race at hialeah i would try to figure out the chance chance of each steed winning the race and that had to add to 100 also i would compare those probabilities to the odds but i first of all i wouldn’t look at the odds first i would look at the once performance and all that thing first stock request‘s the same way third thing in graham’s book is the periphery of safety if you come up to a ground and it says capacity ten thousand pounds and you are driving a 9 800 pound truck you drive down further and find another ground i mean you know they nothing knows exactly what that capacity is and it may have been inked may have been put up three times ago so
you always leave a periphery of safety you do not try to cut effects that close you stay till commodity kind of shouts at you in the stock request and uh with those three principles you can make all kinds of all kinds of structures on that but that is the foundation and if you’ve got that in mind and that is in the intelligent investor i have noway set up anything that ever compares with all three of the bones i just you can not get relieve of one leg of the three-lawful coprolite and still have a good investment gospel but i would say that the most important thing uh over a long period and working with big plutocrat uh is to understand the business let‘s just say for the moment that you were given a million bones or whatever some was necessary and you could look around knoxville or