Forum Archive Index - October 2000

["Brian Brakenridge" <brianbrak@xtra.co.nz>]

I have taken the following excerpt from www.focusinvestor.com in the hope it will help this thread remain "focused" on what we are trying to achieve.

I believe the real challenge and exciting part of this project will come when, once we have decided on say 4 (?) companies which fit the screen, we then have to work out what is a "decent price". I'm following David Reid's posts and links with great interest and believe that the use of PEGs etc will contribute a lot to the valuation method we finally decide on.

Here are three relevant quotes from Charles Munger (Vice-Chairman of Berkshire Hathaway), Warren Buffett, and John Maynard Keynes:

"That practice of ours [concentrated portfolios], which is so simple, is not widely copied, I do not know why not"
Charles Munger
Outstanding Investor Digest, August 8, 1997, page 15.

"We say we are trying to buy into businesses with excellent economics, run by honest and able people at a decent price. We buy very few securities, so we look at it as "focused" investing."
Warren Buffett
Conversations from the Warren Buffett Symposium, page 743

"It is a mistake to think one limits one's risks by spreading too much between enterprises about one knows little and has no reason for special confidence... One's knowledge and experience are definitely limited and there are seldom more than two or three enterprises at any given time in which I personally feel myself entitled to put full confidence."
John Maynard Keynes, 1934