So far as we know the candy-store business is terrible to mediocre for all other companies, whereas it is quite profitable at See's for the simple reason that both new and old customers have a pronounced tendency to prefer its candy to all others. This customer enthusiasmis caused by a virtually fanatic insistence on expensive natural candy ingredients plus expensive manufacturing and distributing methods ensuring rigorous quality control and cheerful retail service. The fanaticism is rewarded by extraordinary sales per square foot in the stores.
When you come across a bad idea you and everyone else know it's bad, so it can't hurt you. On the other hand when you come across a good idea it's easy to over do it. Mr. Munger liken the Internet to railroads, refrigeration, radio, television and air conditioning. Great technological advances for mankind but not necessarily great investments. Ben Graham said it's not the bad ideas that do you in. It's the good ideas that get you. You can't ignore it and it's easy to over do it. Mr. Munger stressed that technology has opportunities but it's potentially way over done.
Mr. Munger, Mr. Simpson and Mr. Buffett's investments all have one thing in common. They believe in concentrating their portfolios. If you are confident enough to select 3 to 10 common stocks for the long term you too can compete against this distinguished group.
To win at investing you need to know and understand many main models of the world e.g. Ponzi scheme. Find an investment manager who is concerned about disappointing you, the customer. Evaluating human beings is important in management and investing.

Over the next 20-30 years, Coke will be selling more soda and other drinks. They will also be able to raise prices moderately and increase margins. Therefore, if you own Coke, you'll do all right. [Regarding the stock's high valuation,] if you project growth long enough into the future, you can get high current valuations.
Neither Warren nor I have any record of making large profits from interest rate bets. That being said, all intelligent citizens of this republic think a bit about this. In my lifetime, I've seen interest rates range from 1% to 20%. We try to operate so that really extreme interest rates in either direction wouldn't be too bad for us. When interest rates are in a middle range, as they are now, we're agnostic.
"Here's one truth that perhaps your typical investment counselor would disagree with: if you're comfortably rich and someone else is getting richer faster than you by, for example, investing in risky stocks, so what?! Someone will always be getting richer faster than you. This is not a tragedy."
"Look at Stanley Druckenmiller [who ran one of George Soros' funds, which is essentially being shut down due to large losses in speculative tech and biotech stocks]: he always had to be the best and couldn't stand that others were beating him by investing in these sectors.
"A lot of success in life and business comes from knowing what you want to avoid: early death, a bad marriage, etc."
"It's obvious that if a company generates high returns on capital and reinvests at high returns, it will do well. But this wouldn't sell books, so there's a lot of twaddle and fuzzy concepts that have been introduced that don't add much -- like cost of capital. It's accepted because some of it is right, but like psychoanalysis, I don't think it's an admirable system in its totality."
"If you're going to be an investor, you're going to make some investments where you don't have all the experience you need. But if you keep trying to get a little better over time, you'll start to make investments that are virtually certain to have a good outcome. The keys are discipline, hard work and practice. It's like playing golf - you have to work on it."
You need a different checklist and different mental models for different companies. I can never make it easy by saying, 'Here are three things.' You have to derive it yourself to ingrain it in your head for the rest of your life.
There are a lot of things we pass on. We have three baskets: in, out and too tough. A lot of stuff goes into the 'too tough' basket. We can't do that if it's a problem at a Berkshire subsidiary company, but if we don't own it, we just pass. We have to have a special insight, or we'll put it in the 'too tough' basket. All of you have to look for a special area of competency and focus on that.

- I don't know how people cope [trying to figure everything out].

It reminds me of a guy running a company who fired his top producer. The guy asked him, 'Why are you firing me? I'm your top producer.' To which he responded, 'You make me nervous. I'm a rich old man. Why should I be nervous?
"Our handling of the terrorism risk has been insanely sloppy. Can you imagine that someone with an Arabic name, who was Arabic looking, took lessons on flying big jets in which he didn't want to learn how to take off or land, and no-one asked any questions?! But it's the human condition. It's what bureaucracies do."
Warren said at the Berkshire meeting (or maybe it was to the press afterward?), that he often tells business school students that if he gave them a card that only had 20 punches for a lifetime, and each time they made an investment they would use up one punch, and that after 20 punches there would be no more, then on average, with those rules, you’ll die a lot richer. But people can’t grasp this; they don’t know what to make of it. But I believe it’s true -- you’ll do better over a lifetime [following the 20-punch way of thinking], assuming you’re a smart, disciplined person. This room is filled with people who followed that advice. But that is absolute apostasy in academia.
It’s not so bad to have one’s money scattered over three wonderful investments. Suppose you were a real estate investor with a 1/3 interest in the best apartment complex in town, the best mall, and the best . Would you feel like a poor, undiversified investor? No! But as soon as you get into stocks, people feel this way. Partly, people need to justify their fees.
I remember when Warren was buying American Express when the company was suffering from a scandal [the 1963 Salad Oil Scandal]. Warren said to me, “I can’t find anything else that’s nearly as attractive.” So, he asked his partners [this was before Berkshire, when he was managing the Buffett Partnership] to change the partnership agreement [which, I assume, prevented him from putting too much of the partnership into one position] and put 40% of his capital into American Express. When was the last time you saw a mutual fund do this [I’m not sure if he meant investing so heavily in one stock, or changing the contract with investors to take advantage of an opportunity]? It happens, but it’s rare. To me, it’s the most ordinary common sense, but it’s not the most conventional wisdom of the time.
We get these questions a lot from the enterprising young. It’s a very intelligent question: you look at some old guy who’s rich and you ask, “how can I become like you, except faster?” [Laugher] My answer is that I did it slowly, inch by inch, taking losses mentally when they occurred. If you want to do it with fast rapidity, then you’re talking to the wrong man, but I know my way works.
Partly its temperament – most people are too fretful, they worry to much. Success means being very patient, but aggressive when it’s time. And the more hard lessons you can learn vicariously rather than through your own hard experience, the better. You seem to like learning a lot. But I’d inject one line of caution: there’s an apocryphal story about Mozart. A 14-year-old came to him and said, “I want to learn to be a great composer.” And Mozart said, “You’re too young.” The young man replied, “But I’m 14 years old and you were only eight or nine when you started composing.” To which Mozart replied, “Yes, but I wasn’t running around asking other people how to do it.”
People need to ask, “How do I play the hand that has been dealt me?” The world is not going to give you extra return just because you want it. You have to be very shrewd and hard working to get a little extra. It’s so much easier to reduce your wants. There are a lot of smart people and a lot of them cheat, so it’s not easy to win.
Never abuse current clients by trying to get new ones. Think how this would work with matrimony – if you ignore your current wife while you pursue another one. (Laughter) The old attitudes will work fine. If you live long enough and act well, and have some intelligence, you’ll do fine.

The ability to destroy your ideas rapidly instead of slowly when the occasion is right is one of the most valuable things. You have to work hard on it. Ask yourself what are the arguments on the other side. It’s bad to have an opinion you’re proud of if you can’t state the arguments for the other side better than your opponents. This is a great mental discipline.
Academia has done a terrible disservice: they teach in one sentence in first-year economics about opportunity costs, but that’s it. In life, if opportunity A is better than B, and you have only one opportunity, you do A. There’s no one-size-fits-all. If you’re really wise and fortunate, you get to be like Berkshire.

- Ask the question: How can you best get what you want? The answer: Deserve what you want! How can it be any other way?

Warren said this weekend that the best year he ever had was a recession when economy going down and stocks were going straight up. If you wait, you’ll miss it. I’m willing to buy common stocks at current prices with long term money.

- Guilford’s father gave him some advice relevant to recent events: only sell things that are good for the customer. He took the advice, and is now a billionaire.

The takeaway is that there are all kinds of problems that are better solved by going through a checklist. This works well in primary medicine too. Only a terrible internist jumps to the first conclusion and sticks to it.
The combination of patience and opportunism is important. Charlie had a great grandfather who had a great influence on his life. This man was one of Charlie’s only ancestors who became rich. He told Charlie that you have to be ready to take advantage of opportunities to succeed. This is what they do at BRK. They are always ready. You do not want to be timid when great opportunities arise. It is kind of like how most marriages don’t work and you may have only one chance to marry the right person
Carlyle was a very smart man, and one of his favorite sayings was, the task of man is not to see what lies dimly in the distance but to do what lies clearly at hand.
Keynes used to say, “When the facts change, do you change your opinion?” (Keynes actual quote was: "When the facts change, I change my mind. What do you do, sir?") Well, of course you do. That's what we did. Our circumstances were different and our opportunities were different, so we behaved differently. What would you do?

Treat those two imposters just the same -- success and failure. Of course, there's going to be some failure in making the correct decisions. Nobody bets a thousand. I think it's important to review your past stupidities so you are less likely to repeat them, but I'm not gnashing my teeth over it or suffering or enduring it. I regard it as perfectly normal to fail and make bad decisions. I think the tragedy in life is to be so timid that you don't play hard enough so you have some reverses.