Warren Buffett - How to Turn $40 into $5 Million
There is more growth in the international market over time, but it will hurt Coca-Cola in the short term. This is a business that went public in 1919. Years later it was at a half price. Since then, there was also the Great Depression and WWII and sugar rationing. But despite all of that, if you had bought a single share of Coca-Cola in 1919 at $40 per share and reinvested the dividends, then it would be worth $5 million today.
In investing, the biggest mistakes are mistakes of ommision rather than mistakes of commission. There are opportunities that could be billion dollar mistakes, but they don't show up on the accounting report. Buying airlines is a risky business. It may be an attractive security in a flawed business. You might like the terms even though you don't like the business, and that can be a mistake.
It is better to learn from other people's mistakes as often as possible. But you shouldn't look back too much. You can only live life forward. You can live from your mistakes, but you will do a lot better to stick with things that you know and understand. There has got to be a reason that you decide to buy something. Not because the volume looks good on the chart.
Buffett doesn't think about the macro stuff. You have to focus on what is knowable. A lot of the macro stuff is unknowable. He has never bought a business because of any macro view. You don't want to pass up something intelligent based on some view of what the economy will do. A lot of what Greenspan and people like that say is just nonsense.
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