So much of what’s talked about and what is hip in the tech industry these days is about starting companies. The hard part - and the most rewarding part - is in building companies. Entrepreneurs who build great companies are “entrepreneurs” for a very short span of their careers. It takes years, even decades, to build a great company. They are in it for the long haul through many long, boring, inglorious years…long after the launch party is over and the rings of the IPO bell have faded away. These are just milestones. Small steps along a very long path. The heroes should be the men and women who stick around and make it happen through incredible ups and downs. They are the ones serving customers, creating the jobs and contributing the most value to society.

Interesting that Buffett wrote this in 1958 (in letter to investors of his hedge fund before he took over Berkshire Hathaway). Buffett still going strong while others blew themselves up through just about every market cycle over the past 5+ decades. 

During the past year; almost any reason has been seized upon to justify “Investing” in the market. There are undoubtedly more mercurially-tempered people in the stock market now than for a good many years and the duration of their stay will be limited to how long they think profits can be made quickly and effortlessly. While it is impossible to determine how long they will continue to add numbers to their ranks and thereby stimulate rising prices, I believe it is valid to say that the longer their visit, the greater the reaction from it.

I make no attempt to forecast the general market - my efforts are devoted to finding undervalued securities. However, I do believe that widespread public belief in the inevitability of profits from investment in stocks will lead to eventual trouble. 

Buffett wrote this the following year, in 1959:

Perhaps other standards of valuation are evolving which will permanently replace the old standards. I don’t think so. I may very well be wrong; however, I would rather sustain the penalties resulting from-over-conservatism than face the consequences of error, perhaps with permanent capital loss, resulting from the adoption. of a “New Era” philosophy where trees really do grow to the sky.

First time using Tumblr. Sending in this post via email. Let’s see if it works. Nice to be able to say something in more than 140 characters. I’ve seen some tweets recently in which Warren Buffett is misquoted. The original quote is from one of his annual reports: “When management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains in tact.” The quote has been used multiple times and has evolved a bit over the years. For example, in the 1989 annual report, he wrote: “I’ve said many times that when a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains in tact.” He goes on to say that he has made this mistake many times (picking management over the business): “I just wish I hadn’t been so energetic in creating examples. My behavior has matched that admitted by Mae West: ‘I was Snow White, but I drifted.’” Some people confused “business” for “market.” While some markets are better than others just as some businesses are better than others, there is a distinction. The market for chocolates might or might not be good. Buffett could care less about the attractiveness of that market. What he loves is the business that Sees Candies has built. They have a deep and wide moat (competitive advantages) which lead to wonderful business economics. In the tech world, the market for mobile phones is a hot one. It says nothing about whether or not a particular company will do well. Apple and HTC are thriving. Nokia and others are suffering. That can be said about any market. The leaders with great businesses (superior economics or competitive advantages) will do well. Most others will struggle.