Buffett on minimizing Institutional Imperative
After making some expensive mistakes because I ignored the power of the imperative, I have tried to organize and manage Berkshire in ways that minimize its influence.
–Warren Buffett
Buffett’s Institutional Imperative
The workings of the institutional imperative are as follows: (1) As if governed by Newton’s First Law of Motion, an institution will resist any change in its current direction; (2) Just as work expands to fill the available time, corporate projects or acquisitions will materialize to soak up additional funds; (3) Any business craving of the leader, however foolish, will be quickly supported by detailed rate of return and strategic studies prepared by his troops; and (4) The behavior of peer companies, whether they are expanding, acquiring, setting executive compensation or whatever, will be mindlessly imitated.
–Warren Buffett
The Market is a Weighting Machine
As Ben Graham said, ‘In the long run, the market is a weighting machine — in the short run, a voting machine.’ I have always found it easier to evaluate weights dictated by fundamentals than votes by psychology. While investors and managers must place their feet in the future, their memories and nervous systems often remain plugged into the past.
–Warren Buffett
Measuring Buffett’s Worth
Charlie and I don’t consider ourselves to be richer or poorer based on what the stock does. We do feel richer or poorer based on what the business does. We look at the business as to how much we’re worth, not the stock price — because the stock price doesn’t mean a thing to us.
–Warren Buffett
Responsibilities according to Buffett
We’re only responsible for two functions. First, it’s our job to keep able people who are already rich motivated to keep working at things they don’t need to do for financial reasons. It’s that simple. Secondly, we have to allocate capital.
–Warren Buffett