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I suspect that Charlie uses a mental "rolodex" of models, and he rifles through them quickly. It's a learned habit, and once you do it enough, it becomes a more automatic process. Think about reading a balance sheet: You probably already have a checklist in your head, you just don't know it. You look at the cash vs debt, the inventory levels, the composition of shareholders' equity, the PPE levels, etc. all automatically and quickly. At some point in your learning process, you probably needed to laboriously build your mental "checklist" of things to look at, but over time, it became automatic. I think you can apply the same process to all sorts of models. Charlie has described it as learning the play golf or play bridge. You have to work at it through repetition. Practice going through your models when you read books, read articles, hear your friends tell you stories, etc. etc. What can I apply? What did I miss? What's the most fundamental way I can explain this? Read The Psychology of Human Misjudgment and then write down notes after every few models. Ingrain them in your brain. Rifle through them when you're thinking about a problem. The hard part really comes when you need to synthesize several models in response to a complex problem. (Should we have free trade with China? Should the police force be privatized?) And never forget, Charlie is a quasi-genius, so be careful about trying to live up to his standards exactly. Us mortals need to work hard at it. It won't happen by accident.

If I may ask, how will your data compare with SNL in terms of completeness and accuracy?

Just wanted to add my thanks for Gamecock. I have done these database downloads before and I know that it takes some time to do.

Can I ask what the stock is? Purely out of curiosity.

I think all of you would enjoy reading Sapiens by Yuval Harari. In terms of scope, he starts with 70,000 BC or so and ends with some thoughts on bioengineering humans in the future. As ridiculous as it sounds, he pulls it off. (My opinion, of course.) He also breaks into a lot of sacred territory. Some of you won't like it or agree with him. But I recommend reading it. The front blurb is written by Jared Diamond, if you need an opinion with more weight than mine. I found it amazing.

I think Buffett has clarified to say that if he'd bought Nat'l Indemnity outside of BRK and just sold off Berkshire, the result would have been a lot better. He could have done the same thing without the drag from textiles.

I probably get 7hrs on average and need ~8.5- and I do feel the effects. To add some dissent to the workout, sleep less thing, I have not found that effect at all. But it may have to do with the type of workouts. I have been lifting heavy-ish weights several times a week for many years and don't do very much out and out running or jogging. For reference I am in my late 20's. I'm hoping the same thing happens that many of you describe post-30 where 6-7hrs seems to do the trick when needed!

You're welcome guys. One thing I always thought was cool in that piece, and I never knew of, was his involvement in Doubleclick before it went to Google. Man, did this guy have a knack for good businesses...

Here is a transcript of an interview Tom Murphy did, where he describes his career at Cap Cities. I wish there was a lot more out there, but I haven't found much. tommurphy.pdf

The Rockefellers are a good example of wealth not really "sticking" over time. When Standard Oil was split up, Rockefeller owned about 25% of the outstanding. If you simply carried that through until today, the figure would have to be well over $250 billion (If you add XOM, parts of BP, COP, CVX, etc. back together.) Then you had his immense non-oil fortune, I don't know the figure but I'm guessing it would be worth many, many billions today as well at standard rates of return. But the Rockefeller clan isn't worth anywhere near $300 billion. Most of it was given away or spent over time in an immense philanthropic effort, the same way the Gates fortune and the Buffett fortune will dissipate in a similar time period. I don't know how this all adds up but Piketty's assumptions strike me as pretty unusual. Besides philanthropy, there are major discontinuties that tend to destroy wealth pretty fast. The Rockefeller money is an example of a business that has held up extremely well over the years -- probably the most successful large company ever. And even that fortune, as I mentioned, is mostly gone (compared to what it would have been). Where are the Vanderbilt, Carnegie, Gould, etc etc fortunes now? They're rounding errors as a % of the wealth of the United States. And that's just the in the US, which is the "Standard Oil" of large countries. Think of all of the fortunes lost to war, competitive destruction, hyperinflation, etc. in other countries. I'm nowhere near an expert on any of this, so take me with a grain of salt. But Piketty makes me extremely skeptical. I'd think, if he was correct, there would be multi-trillion dollar dynastic fortunes from a long time ago. And there really aren't. The majority of private wealth seems to be less than 100 years old. (Again, to my untrained brain.) And I suspect 100 years from now, it'll be a different group. r>g takes you into extreme mathematical territory over enough time. I don't know.

I think you might misunderstand this slightly. The question is -- could you take away a meaningful percentage of Wells' or B of A's, or JP Morgan's deposits? How are you going to do it? Why move? (Whether you're a retail depositer or an institutional one.) B of A is a good example. Think of all of the awful headlines over the past five years. $60 billion+ in lawsuits, overcharging retail customers for fees, Moynihan's overstatements and retrenchments, etc. Not long ago, there was a national "campaign" of sorts to get people to leave the B of A because of overdraft fees and that kind of behavior. Yet, here are the year end deposit figures (billions): 2009: $991 2010: $1,010 2011: $1,033 2012: $1,105 2013: $1,119 I think that's a franchise, in any useful way you might define it. But reasonable minds can differ.

Come on. You don't say "Creep, creep" unless you're quoting TLC...

What is the lesson? They're all in trouble. The whole class of "teen retail" has been swamped with heavy, smart, fast competition. Those three were the class of the industry not ten years ago. I hope we can draw many lessons from that.

Here's an easy lesson, right here on this thread. Pull up the charts since the date of the class for the three retailers Diana Greenblatt talked about in that link. (American Eagle, Abercrombie, Aeropostale.)

I don't think this line of reasoning has anything to do with Buffett's quote. Yes, a small bank trading a half of book value will be analzed differently than Tesla Motors. But that totally misses the point. TSLA, AMZN, and any "deep value microcap" will all ultimately be valued the same way: on their future cash earnings. Buffett's point, and it's correct, is that there's no reason to approach the analysis any differently -- what it's going to earn over time? Unless you can estimate the figure in some useful way, you're not investing. You're doing something else. Calling it "growth" or "value" is nonsense. It obscures the basic truth. And that's why a lot of people lose a lot of money investing in "growth companies" that'll never earn anything and "value companies" that are basically worthless.

Would you be able to share one or two examples of work you were involved in, or hypothetical investments you were aware of as potential case studies for members here? Also, I'd be very interested in hearing what you learned from the experience. What are the most common mistakes? What sources of upside/downside are most frequently missed, etc? Thanks for anything you are able to discuss. I'd also be interested. One thing I'm additionally curious about is how these ideas are sourced. How did you guys get these ideas coming across your desk? How did you decide, among the many thousands of debt securities, preferreds, warrants, etc. available, what was worth looking into? What's the sorting mechanism? I don't have much experience in that world. Thanks in advance.

stahley, I respect your choice to believe in a greater force. I do. I hope you have noticed in my writing, I take no stance against one choosing to believe in a higher power. And you know, I can just tell, I can write until my fingers are sore about human psychology, and about the morality we've developed through cultural and biological evolution, and its practical effects on society, and so on and so on. But you truly seem to believe that there is no sense in creating an effective civilization unless there is some greater power to answer to. So I am going to leave this alone. I think your heart is in the right place, so I wish you luck.

Again, I stated selectively doing those things. For instance, to close a sale on an unsuspecting prospect - especially if there are no ramifications. I've worked with some shady people (at an old employer) and they did that. And, most of it was legal. My premise is simply this: Taking the high road, when no one is looking, means absolutely jack unless that high road is truly "good" and not a personal preference. You're doing it again. Platonifying the real world. Someone is always looking. It's reasoning like this that gets an overwhelming amount of its adherents in trouble. You're saying "when there are no ramifications." I'd respectively tell you, in the world the rest of us heathens live in, there is no such thing. Cheating an unsuspecting victim is not an isolated incident. The rules of human psychology tell us that cheating once usually leads to more cheating. The consistency principle and basic operant conditioning (rewards) ensure we will likely do it again ourselves. Envy, social proof and the rise of a Serpico effect tells us our peers and co-workers are more likely to cheat in turn. A variety of effects like further operant conditioning and basic denial often lead us to cheat more brazenly. Etc. And it's the ignorance of this million year old psychology, deep within us, that plays such a big role in stupid mistakes. So no, taking the high road does not mean "absolutely jack." It means a whole lot, and in a very practical way.

This made me laugh pretty hard.

Yes I have read Dawkins. I think he's be apopletic if he knew how you were using his work. I think you have your argument basically backwards. We have evolved to occasionally connive, cheat, steal, etc. to propagate our genes. Men often lie to women and women to men for this reason. (See Robert Wright.) But, through culture, we overcome that various ways. Shame being a big one. While you might argue "why bother trying to overcome it?" -- again, because it doesn't work. It creates net misery. We don't need to lie and manipulate to propagate our genes. There are also good evolutionary reasons for cooperation, honesty, altruism...you know, basic good morality. As "lschmidt" said, there is good work out there on this subject. And "rkbabang" makes an excellent point which I can predict you will try to refute by saying "Yeah, but I mean only cheating when you can get away with it" -- to which I respond as I did above. You're setting up a false ideal and destroying it. The world doesn't work that way. Cheating has all kinds of ill effects, even if you temporarily have more wealth. And those who practice it eventually tend to get what they deserve, often creating major problems for the rest of us in the time being.

I'm just going to address this horseshit since no one else is calling you on it. That is not anyone's worldview but yours. Repeating it a bunch of times is not going to make it true. There are morals independent of a belief in deity. I don't go around murdering people and kittens senselessly because that is not the sort of behavior conducive of a world I want to live in. And If I don't want to live in that world, why would I propagate it? That would be strange and illogical. It's that simple. There is no E=mc2 reasoning needed. Morally, we act in a way that we'd like to see others act. Immanuel Kant addressed this 250 years ago. Same reason I don't cheat people, lie to get ahead, or beat children. It would lead to misery for the people I care about. I think an action that creates "net misery" is an evil one. And to head off your "if a tree falls in the forest and no one hears it" argument about cheating on your spouse: Yes, the tree makes a noise. Anyone with any judgment realizes that cheating eventually leads to martial trouble about 99% of the time, no matter what false hypothetical you choose to set up. If you want to invoke Nassim Taleb, let's invoke what he calls the "Platonism." You're setting up this imaginary ideal world where people's actions don't have consequences, and trying to "trap" the non-believers based on it. Well, I don't live in that world and neither do you. I think morals are absolutely, 100% above all, practical. It's not useless academic blathering. Remember, Ben Franklin said "honesty is the best policy" not "honesty is the most moral policy." Honesty works. As do other obviously sound morals.

Well, one could argue a habit of the wealthy is to sit around and argue about religion.

I'm glad a few of you enjoyed my message. I also think some of the other recommendations here are excellent. For example, the recommendation to get involved with a real private business, whether starting your own or investing in one. I've never met anyone who's done that and ended up saying to themselves "Man am I a worse investor now!" It's a no brainer if you have the opportunity to do so. I also like the recommendations by "Libs" and by "petec" to help develop a historical sense of any company you're investing in, to the best of your ability. I think that puts you in the mindframe of a business person, rather than a stock trader. I love looking back and seeing what Fastenal or Danaher or some other admirable company has achieved. Are they usually mispriced? No. The market is pretty good. Fastenal deserves to trade at 30x earnings. But you'd be surprised how often clearly superior businesses trade at oddly low prices. (Was Berkshire rationally priced at $70 (B shares) a few years ago?) Markets do weird things. And you don't need that many in a lifetime if you have the will to seize them. To answer the inevitable retort that there are great stock traders, asset players, arbitraguers, formula-users etc. out there, you're absolutely right. But it's been my experience that those are few and far between, and some of the ones that are successful don't correctly diagnose their own success. So there's survivorship bias. And many of the good ones have eventually run into lots of trouble. We're talking very, very smart, able, people. Let me give a brief example. I have heard that "momentum works." I assume this refers to studies that have proven some statisically significant momentum effects, and evidence of a few traders who have pulled it off. But we're investing through the windshield, not the rearview mirror. Has anyone studied to what degree momentum still "works" now that hordes of 170 IQ engineers from Cal Tech have designed computer algorithims to trade billions of dollars on that principle? Are we sure it's going to hold up? What do I do when my momentum stocks go down 50%? (You can apply that question to all kinds of approaches, by the way.) So I think, above all, any investing strategy has to start with a degree of intellectual honesty and honest self-appraisal. There's a reason Charlie Munger quotes the physicist Feynman all the time (don't fool yourself) -- it's extremely important. And I think success in the "bread and butter" sort of investing I've described is attainable by someone with average intellience and ability, a good mental disposition, and a reasonable head for business and accounting. If you choose a more esoteric path, I wish you luck. I don't begrudge anyone getting rich faster if they can do it soundly.

I think you're worrying about some of the wrong things. Don't concern yourself with what the statistical analysis says, or "buy and hold," or "trading strategies,"or "growth," or "value," or any of that nonsense that is used by the industry to sell its services and sound important in newsletters. Would you be thinking about all that if you were investing in businesses that weren't traded all day long? I really doubt it. You're letting the liquidity of the market determine your thought process. But you don't have to. Here's what you'd be thinking about instead: A. Am investing in a business I understand? You, personally. Not someone else. By understand, I mean do you have a general sense of the kind of money it's going to be earning five and ten years from now, and as importantly, why? Among the thousands of publicly traded companies, this is usually impossible. But tell me -- is it hard for you to grasp that the Union Pacific railroad will probably be moving more stuff, perhaps at a slightly higher price per ton mile, five years from now? Is it hard to understand that Coke will likely be moving more drinks through its system five years from now, at a same or greater price per serving? Can you explain the forces behind this? Sure you can. Now I know everyone wants investments are have a little more va-voom than those. That's fine. But the mental model is the same whether you buy Coke or a Korean steel manufacturer -- the stock will eventually reflect the long term real earning power of the business. If you don't have any sense of it, ask yourself, do I really know what i'm doing? Would I do this if I was buying into a private partnership that traded once every three months? B. What price am I paying, relative to these economics I feel I can understand? (See A.) Again, this is super simple. Now that I've established that this is a thing I understand, what am I paying? If I'm paying $10 billion, what sort of real earnings am I getting and when? Maybe if I'm going to get $700 million this year, and I feel that is going to grow at a nice rate due to the underlying nature of the business, that's pretty good -- I might earn a good return. Let's do UNP. I'd have to lay out $92 billion today to buy it. They will probably have sales of about $23.5 billion this year at at 35% pre-tax profit margin, and I'll get something like $5 billion after tax. Let's say they reinvest $1.5 billion of that and pay me back $3.5 billion. That's about a 4% yield today, and if they can earn 20% on the reinvested capital, next year my $5 billion is $5.3 billion. So next year they pay me $3.7 billion. And so on. Maybe that's too low, maybe that's enough...that's up to you, but that's what you're thinking about. Now I know this sounds like remedial security analysis but I will say this...I see very few people doing it any more. They're mostly doing something else. I see EBITDA, sum of the parts asset analysis, and all these things, and it makes my eyes glaze over. Maybe that sounds harsh, but it's reality. What is the business going to earn for you?? If you can tell me that, I'll tell you if it's any good as an investment. If you can't tell me that, why do you think you know what it's worth? Now, let's say my capital is wisely used in Union Pacific Corp, given my alternative current and future uses of that capital, so I buy it. What do I do then? Well -- what would you do if 99% of its liquidity went away? Let's say you could only trade it once in a while, and then on low volume. What you'd do is monitor the progress of your investment, the same way you'd do it if Union Pacific was private. What were their carloadings? What did they earn on them? How do expenses look? What are they spending new money on? What are their competitors doing? You'd read the statements, read the press, talk to other smart people about railroads, etc. Maybe the price would go down 30% next year and you decide to buy an even bigger piece of the Union Pacific for yourself because the business is still perfectly good. And then as that process goes along, maybe some day the market comes along and appraises the company in a different way. Maybe five years from now, the valuation is $220 billion, they have 15% less shares outstanding, and Union Pacific is only going to pay you $4 billion that year. And as you look around, you see that some other company you really understand is going to pay you 10% on your money, and grow that nicely over time. So you sell the stock and reinvest in the better opportunity. And so on, ad nauseum. How do we categorize what I've described above? Growth investing? Value investing? Buy and hold? Buy and sell? Really though, who cares? I'm describing basic, bread-and-butter investing. There will never be some day when this "stops working" as long as we have a functioning capitalist system. To those who say you can't earn high returns doing this, I beg to differ. What if you bought Union Pacific 10 years ago and just sat there? Well I'll tell ya -- about 23% per annum. Just letting the financial statements roll through the door. And this is not some obscure, hard to grasp situation. How many of us have done better trading all kinds of companies with iffy futures? How "risky" would it have been to hold a block of Union Pacific stock? And I could name lots of others as straight-forward as the railroad. (How about Mastercard, which we all use? How about Disney when they promoted Bob Iger, a disciple of Dan Burke & Tom Murphy, and an obvious talent? How about Autozone? Everyone reading this can put together a competent analysis of those companies with a little thinking.) I'm not saying these are today's opportunities, either. They may or may not be. The world changes and prices fluctate, so the opportunity set today isn't what it was in 2004, nor will it be in 2024. But my point is, the basic stuff works. The catechism works. I don't think it needs to be turned into rocket science. I hope all of this long-windedness helps you, and maybe some others, re-focus on simple, and sound, investing. Focus on what's important and the day-to-day will get a lot easier. And when you find a situation where the action (buy) is clear, don't be timid. And if it isn't, just don't do anything. This isn't the only way to invest, but it works.

Hi Tom: I don't think Kent Thiry wrote a shareholder letter his first two years at Davita. But the 2013 report does include one. If you click "2013 Annual Report" on the link you provided, his letter starts on page 3.