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Smith
Faculty Opinion Article
The 30
Seconds Outlook
June 1, 2008
"The three most
important lessons I learned were all
from the same book, The Intelligent
Investor . . .."
-- Warren Buffett, as reported in
CNBC, May 27, 2008.
"The first is, to look at stocks
as pieces of businesses, not as
little items on a chart that move
around, not as ticker symbols, not
as something that might split next
week or next month or something of
the sort. But, rather, to look at
the business, value the business,
divide by the shares outstanding,
and decide whether you really want
to own a piece of that business at
that price.
The second one was his commentary
about your attitude toward the stock
market. That it is there to serve
you rather than to instruct you, and
he used the famous 'Mr. Market'
example of that. That attitude is
fundamental to making money in
stocks over time.
And the final item he talked
about was margin of safety. When you
buy a stock that you think is
worth10 dollars, you don't pay $9.95
for it, because you can't be that
precise in estimating its value. So
you leave a considerable margin of
safety for both what you don't
understand and for the vagaries of
the future. And those three ideas,
which I learned when I was 19 years
old, have been the bedrock of
everything I've done since."
by John A. Haslem
John A. Haslem,
Professor Emeritus of Finance,
University of Maryland.
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