When setting up a "special compensation arrangement" for the managers of MidAmerican Energy (Berkshire's utility operation), Buffett sets a benchmark based on 5-year compounded gain in earnings from a high base - "a figure no other utility company in the US was going to come close to" - 16% CAGR in earnings per year. Insightful.
47:45 Go to hell tomorrow
You can always tell a man to go to hell tomorrow. Hard to practice but worth remembering.
1:17:15 Negative News
Was talking to an old boss of mine yesterday who asked: "Isn't it a bad time to invest in stocks?"
There's always negatives but capitalism has significant resuscitative power - just seek value and hold.
3:13:00 Lubrizol Economics
Berkshire paid $9bn for $1bn of pre-tax earnings - Buffett's quantitative thinking before pulling the trigger on a high ROIC (40% pre-tax) business - chimes with his threshold of 9-10x pre-tax earnings for control acquisitions.
3:35:30 Satisfactory Deals
Don't benchmark opportunities against the best deal you ever made but simply to what is "satisfactory" under current conditions i.e., the best deal you can make today.
May need to to adjust standards, even lower them (to a limit), in bull markets.
4:06:15 Allowances for lack of understanding
You just need to know enough about a situation where you feel okay going in at a big discount - and you have the staying power to hold it out. The size of the margin of safety provides cover for some ignorance.