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William Thorndike,: The Outsiders

The document summarizes quotes from several value investing experts and luminaries such as Charlie Munger, Bill Ackman, Seth Klarman, and Michael Mauboussin. The quotes discuss key aspects of value investing such as focusing on capital allocation and intrinsic value, having a margin of safety, being rational and objective, and developing a consistent process to deal with uncertainty.

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2K views17 pages

William Thorndike,: The Outsiders

The document summarizes quotes from several value investing experts and luminaries such as Charlie Munger, Bill Ackman, Seth Klarman, and Michael Mauboussin. The quotes discuss key aspects of value investing such as focusing on capital allocation and intrinsic value, having a margin of safety, being rational and objective, and developing a consistent process to deal with uncertainty.

Uploaded by

Ankur
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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“The best CEOs are “masters of

“capital allocation- the process


of deciding how to deploy the
firm’s resources” … capital
allocation is investment, and as a
result all CEOs are both capital
allocators and investors. They
have the investor’s mind set”

William Thorndike,
The Outsiders
“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.”

Charlie Munger
“Often, we are not capable
of predicting a business’
earnings power over an
extended period of time.
These investments typically
end up in the ‘Don’t Know’
pile.”
Bill Ackman
Four Bedrock Value Investing Principles:

1. 2. 3. 4.
Treat a share Buy at a Make bi-polar Be rational,
of stock as a significant Mr. Market objective and
proportional discount to your servant dispassionate.
ownership of intrinsic value rather than
the business. to create a your master.
margin of
safety.
“The entire strategy can
be concisely described as
buy a bargain and wait.”

Seth Klarman

Photo source: xxxxxxx xxxxxxx xxxxxxxx


“For a security to be
mispriced, someone else
must be a damn fool. It may
be bad for the world, but
not bad for Berkshire.”

Charlie Munger
“There's no one easy
method that can simply be
mechanically applied by a
computer that will make
someone who pushes the
buttons rich.”
Charlie Munger
Variations in value investing “style” are created
on top of the value investing bedrock Principles.
These variations are possible on 7 different dimensions:

Amount of MARGIN
VALUATION OF SAFETY COMPETENCE QUALITY

Determining Determining Determining Determining


a specific the the scope whether
company’s appropriate of each quality of a
“intrinsic amount of the investor’s business
value” “margin of “circle of should be
safety” for a competence” considered
given
investment
Variations in value investing “style” are created
on top of the value investing bedrock Principles.
These variations are possible on 7 different dimensions:

CHOICE of
business DIVERSIFY? HOLDING PERIOD

Determining Determining Determining


what businesses how many when or
to own (in whether to
securities sell a
whole or in to buy security
part)
“Listen, business is easy. If
you’ve got a low downside and a
big upside, you go do it. If
you’ve got a big downside and a
small upside, you run away. The
only time you have any work to do
is when you have a big downside
and a big upside.
Sam Zell

Photo source: xxxxxxx


“It’s unlikely you will
gain insight if your
inputs are identical to
everyone else’s.”

Michael Mauboussin
“In any probabilistic
situation, you must
develop a disciplined and
economic process you must
recognize that even an
excellent process will
yield bad results some of
the time.”
Michael Mauboussin
“The biggest investing
errors come not from
factors that are
informational or
analytical, but from those
that are psychological.”

Howard Marks
“Master the best that
others have figured out.
Don’t [try to] dream it
all up yourself. Nobody’s
that smart.”

Charlie Munger

Photo source: xxxxxxx xxxxxxx xxxxxxxx


“Few are willing and able
to devote sufficient time
and effort to become value
investors, and only a
fraction of those have the
proper mind-set to
succeed.”

Seth Klarman
“Most people who try
[investing] don’t do well
at it. But the trouble is
that if even 90% are no
good, everyone looks around
and says, ‘I’m the 10%.’”

Charlie Munger
“[Ben Graham] was trying
to invent a system
anybody could use.”

Charlie Munger

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