13 item reality check from Warren Buffet

I listened to Warren Buffet speaking to MBA students a few nights OK.  Lest I forget them, here are some of the pearls of wisdom that I jotted down.   They work as a healthy reality check.

  1. Make money out of stability (inactivity).  Strip out transactions and movement that just make money for brokers.
  2. Go away for 20 years.  Will the business opportunity still be there?
  3. What will the industry look like in 10 years time?  Who will be making money in ten years time?
  4. What are the barriers to entry?  What is the moat to the castle?
  5. If you had all the money in the world, how would you break the company?
  6. Stay in your circle of competence.  You may have 6 wonderful businesses.  You won’t get rich from your 7th best idea.
  7. Don’t expect more than one really good idea a year.
  8. Do what you love.
  9. Don’t risk what is important for a marginal gain.
  10. Don’t confuse the terms of a deal with the quality of the business itself. (Find out what is for sale before you look at the price.)
  11. Identify what is knowable and what is important.
  12. Use businesses to generate revenue not to generate a quick capital gain.
  13. Support designs for the world which create 8 billion lives that you wouldn’t mind living if your were born into anyone of them