TABLE OF CONTENTS Executive compensation Executives should only eat what they kill Don’t give your executives stock options as compensation
Stock ownership Buy stock as an owner, not a speculator Don’t ignore the value of intangible assets Conglomerates earned their terrible reputation
Market volatility Ignore short-term movements in stock prices Be fearful when others are greedy, and greedy when others are fearful Save your money in peacetime so you can buy more during war
Investment strategy Look for companies that reinvest their earnings into growth Don’t invest in businesses that are too complex to fully understand Invest in unsexy companies that build products people need Stock buybacks are often the best use of corporate cash Asset-heavy companies can be good investments
Value investing Never invest because you think a company is a bargain Don’t invest only because you expect a company to grow Never use your own stock to make acquisitions
Global economics America is not in decline — it’s becoming more and more efficient Current board of director incentives are broken and backwards
Management Embrace the virtue of sloth Time is the friend of the wonderful business, the enemy of the mediocre Complex financial instruments are dangerous liabilities Investment banker incentives are usually not your incentives
Company culture Leaders should live the way they want their employees to live Hire people who have no need to work again in their lives Compensation committees have sent CEO pay out of control
Debt Never use borrowed money to buy stocks Borrow money when it’s cheap Raising debt is like playing Russian Roulette