Tuesday, September 11, 2012

A Great Article on Ben Franklin


The Virtuous Life: Wrap Up

For the past 13 weeks, The Art of Manliness has been running a series entitled “The Virtuous Life.” Each week we took a look at each one of Benjamin Franklin’s 13 virtues and how men could implement them in their life.
Today “virtue” has taken on soft and effeminate connotations. But originally, the word “virtue” was inextricably connected to what it meant to be a true man. The word comes from the Latinvirtus, which in turn is derived from vir, Latin for “manliness.” These days guys excuse their lack of virtue by hiding behind the excuse of being “just a guy.” Men need to do better and strive to improve themselves each day. It’s time to restore the tie between manliness and virtue.
What follows is a summary of the entire series with links to each virtue. We hope you found the series helpful and will revisit it in the future for inspiration.
Let’s get started.
This is the post that kicked off the series. In it we discussed Benjamin Franklin’s goal of moral perfection and how he set about attaining it through living his 13 virtues. Franklin, a printer, had a small book of charts made up that allowed him to keep track of his progress in living the virtues. You can get your own Benjamin Franklin virtue chart here.
Ben admitted that he was never able to live the virtues perfectly, but felt he had become a better and happier man for having made the attempt.
Eat not to dullness; drink not to elevation.
Franklin began his list of virtues with temperance because it was the virtue that would develop the self-discipline necessary to adhere to the other 12 virtues. Temperance calls for a man to avoid overindulgence in food or drink. By conquering your primal urges for food and drink, you’ll have the confidence to start making improvements in other areas of your life.
Speak not but what may benefit others or yourself; Avoid trifling Conversation.
We live in an age of constant noise and chatter. Etiquette and polite manners have sadly not kept pace with developments in technology and our quickly changing culture. In the virtue of silence we took a look at how a man can practice this virtue in regards to cell phone use, customer service, and the internet. A man must learn when and when not to open his mouth.
Let all your things have their places; let each part of your business have its time.
If a man wishes to thrive in this world, he must develop order. But the laws of physics tell us that the universe and everything in it tends towards chaos and disorganization. A man must fight against these natural laws and the path of least resistance. Yet taking on complex organization systems will only cause more imbalance in your life. Instead, make small changes by rectifying each slip into disorganization the moment it happens. Do it now.
Resolve to perform what you ought; perform without fail what you resolve.
Resolution is the firm determination to accomplish what you set out to do. In this post, we looked at the story of Alexander the Great conquering the island of Tyre as an example of manly resolution. From Alexander’s conquest at Tyre, we extracted four ways to help improve your resolve in life.
Make no expense but to do good to others or yourself; i.e., waste nothing.
American’s savings rate is negative. That’s right, Americans are spending more than they’re saving. With the sluggish economy and soaring gas prices, practicing frugality is quickly coming back into style. While there are countless blogs that go into detail about how to live frugally, it all comes down to one principle: spend less than you earn.
Lose no time. Be always employed in something useful. Cut off all unnecessary actions.
Hard work has been the hallmark of every manly man. However, industriousness has gone out of style. People today are looking for get rich quick schemes that will afford them a huge payout with minimum effort. In reality, honest work is a beneficial and refining endeavor that should be embraced, not disdained. In this post we take on the cult of “The Four Hour Work Week,” illuminate the value of work, and explain how you can be more industrious in your life.
Use no hurtful deceit; think innocently and justly, and, if you speak, speak accordingly.
If you frequent blogs or internet message boards, you’ve probably noticed the prevalence of gossip, sarcasm, and lying. Unfortunately, we’re starting to see the demeanor that pervades the internet rub off on people in the real world. In this post we discuss how gossip, sarcasm, and lying can harm you and others and how you can work on avoiding these vices.
Wrong none by doing injuries, or omitting the benefits that are your duty.
When I look back at the men I admire most, they all had one thing in common: each of them stood up for the little guy. In a society plagued with apathy, what this world needs now more than ever are men who will stand up for justice. Find out how you can develop the virtue of justice in your life as well as areas that you can implement the virtue.
Avoid extreams; forbear resenting injuries so much as you think they deserve.
Are you looking for more fulfillment and satisfaction in your life? Society will tell you that “more” is the answer, that more money, more stuff, more women, and more pleasure are the keys to gaining satisfaction in life. In reality the secret to a fulfilling life is moderation. In this post, we offer five tips on how you can practice moderation in your life and in turn increase your happiness and pleasure.
Tolerate no uncleanliness in body, cloaths, or habitation.
While many would say cleanliness is more a sign of femininity than manliness, the reality is that developing cleanliness develops a man’s attention to detail, discipline, and order. Of all the virtues, the meaning of cleanliness has changed the most over time. In this post, we discuss that history and then offer suggestions on meeting today’s standard of cleanliness in your home, dress, and personal grooming.
Be not disturbed at trifles, or at accidents common or unavoidable.
The irritations of modern life have left many men hot under the collar. Controlling one’s anger is the mark of a cool and composed gentleman. There are many social and health benefits to controlling your anger. In our discussion on tranquility, we provide 5 suggestions on how men can control their anger and start living more peaceful and tranquil lives.
Rarely use venery but for health or offspring, never to dulness, weakness, or the injury of your own or another’s peace or reputation.
Of all the virtues, chastity is probably the least popular these days. We live in a society in which that glamorizes and exploits sex. Sex is everywhere, on the internet, on T.V. and in our magazines. But the ubiquity of sex has only cheapened a once sacred act and turned it into just another consumer good to be selfishly consumed. In this post, we take a look at the harmful effects of today’s “hook-up” culture.
Imitate Jesus and Socrates.
The typical image of a manly man is one who is supremely confident, bordering or arrogance. Humility doesn’t seem to fit in that manly image. However, some of the greatest men in history have been the most humble. Humility isn’t weak, submissive, or self-abasing. Humility means having the quiet confidence to allow your actions to speak for themselves. After discussing a lesson on how not to be humble from Greek legend Achilles, we discuss five things you can do to be a little more humble.

Monday, September 10, 2012

Notes on Lectures by Warren Buffett to Note Dame Faculty and Students

1. Buffett went through Moody's Bank and Finance Manual, about 1,000 pages TWICE. That's how he stumbled onto Western Insurance Security Company in Fort Scott, Kansas, a company with earnings of $20 and stock price of $16. He then went down to the insurance commission and got out the convention statements and read Best's. He did a lot of things first.
2.The most important quality is NOT IQ. You need a reasonable amount of intelligence, but the temperaments is 90% of it.
3. You shouldn't buy a stock, in my view, for any other reason other than the fact that you think it's selling for  less than it's worth, considering all the factors about the business. You should write this out on a piece of paper before you buy a stock "I am buying 100 shares of General Motor at "X" and multiply that by the number of shares and therefore, General Motor is worth more than $32 billion" or whatever it multiplies out to because [fill in the reasons]. If you can't answer this question, you shouldn't buy the stock and if you can answer the question and you do it a few times, you'll make a lot of money.
4. A couple of fast tests about how good a business is. First question is "how long does the management have to think before they decide to raise prices?" You're looking at marvelous business when you look in the mirror and say"mirror, mirror on the wall, how much should I charge for coke this fall?" and the mirror replies, "more." That's a great business.
5. If you walk into a drug store, and you say "I'd like a Hershey bar" and the ma says " I don't have any Hershey bars, but I've got this unmarked chocolate bar, and it's a nickel cheaper than a Hershey bar" you just go across the street and buy a Hershey bar. That is a good business.
6. The ability to raise prices-the ability to differentiate yourself in a real way, and a real way means you can charge a different price-that makes a great business.
7. Buffett on the Daily Racing Form: It's like selling needles to addicts, basically.
8. Example: AT&T vs Thompson Newspapers: AT&T had $47 billion starting off with, related to plant investments in the telephone business, growing to $99 billion over an eight or nine year period. More and more money had to be tossed in, in order to make increased earnings, going from $2.2 billion to $5.6 billion. You can get more money from a savings account if you keep adding money to it every year. They were not getting paid commensurate with the amount of money that they had to shove into the pot. Whereas Lord Thompson (CEO of Thompson Newspapers), once he bought the paper in Council Bluffs, never put another dime in. He raised prices and raised earnings there every year without having to put more capital into the business.
9. I suggest that you look at the one that is not capital intensive. I took 25 years to figure that out, incidentally.
10. On Berkshire Hathasay's textile business: The thing was, they wouldn't give us another half a cent a yard because nobody had ever gone into a men's clothing store and asked for a pin striped suit with Hathaway lining. You just don't see that.
11. You really want something that if they don't have it in stock, you want to go across the street to get it.
12. When General Motors buys they call in all the steel companies and say "here's the best price we've got so far, and you've got to decide if you want to beat their price, or have your plant sit idle."
13. On failures on Wall Street: I would say that if you had to pick one thing that did it more than anything else, it's the mindless imitation of on'e peers that produced this result. Whatever the other guy did, the other 36 were like a bunch of lemmings in terms of the following. That's what's gotten all the big banks in trouble for the past 15 years. Every time somebody big does something dumb, other people can hardly wait to copy it.

14. I find this very useful when I write my annual report. I learn while I think when I write it out. Some of the things I think I find don't make any sense when I start trying to write them down and explain them to people. You ought to be able to explain why you're taking the job you are taking, why you're making the investment you are making, or whatever it may be. And if you can't stand applying pencil to paper, you'd better think it through some more. 

15. Buying some company with enormous amounts of debt, that it's somewhat like driving a car down the road and placing a dagger on the steering wheel pointed at your heart. If you do that, you will be a better driver-that I can assure you. You will drive with unusual care. You also, someday, will hit a small pothole, or a piece of ice, and you will end up gasping. You will have fewer accidents, but when they come along, they'll be fatal.

16. I would suggest that the big successes I've met had a fair amount of Ben Franklin in them.

17. Life tends to snap you at your weakest link. I am looking for people that function very, very well. And that means not having any weak links. The biggest weak links in my experience are liquor and leverage.

18. If you say "I'm taking this job-I don't really like this job but in three years it will lead to this," forget it. Find one you like right now.

19. I would say that the most important thing in business, and investments, from our standpoint, is being able to accurately define your circle of competence.

20. The Wall Street Journal is my deal source. There are about 1,700 or 1,800 of America's companies that I'm generally familiar with-a good many of them. And every day they move around the prices of them. We read hundreds and hundreds of annual reports every year. I own 100 shares of everything. 

21. The most important thing with me in evaluating a business is figuring out how bit the moat is around the business. I want to know how big the capital is on the inside and then i want to know how big the moat is around it. 

Note: When evaluating a business, list out it's moat and how they make money and how they incur expenses.

22. If we were working with $25 million-so we could sort of look at the whole universe of stocks-I would guess that you could find 15-20 out of three or four thousand that you would find that were A) selling for substantially less than they're worth, and B) that the intrinsic value of the business was going to grow at a compound rate which was very satisfactory.

23. How do you figure out how much to charge your product?

24. Now my job as an investment analyst, or a business analyst, is to figure out where I may have some knowledge what that stream of cash will be over a period of time, and also where I don't know what the stream of cash will be.

25.If you can tell me what all of the cash in and cash out of a business will be, between now and judgment day, I can tell you, assuming I know the proper interest rate, what it's worth. It doesn't make any difference whether you sell yo-yo's, hula hoops, or computers.

26. I can understand Ike Friedman's jewelry store-and then I try to figure what that stream of cash, in and out, is going to be over a period of time, just like we did with See's Candies, and discounting that back at an appropriate rate, which would be the long-term Government rate. Then I try to but it a a price that is significantly lower.

27 On Disney's Mary Poppins: It's like having an oil well where all the oil seeps back in.

28. I read a lot of industry publications.I'll read Editor and Publisher, I'll read Broadcasting, I'll read Property Casualty Review. I'll read Jefferey Meyer's Beverage Digest, I'll read everything. And I own 100 shares of almost every stock I can think of just so I know I'll get all the reports. And I carry around prospectuses and proxy material. I spend 45 minutes a day with the Wall Street Journal.

29. I can do things that other companies can't do. I can arrange the transfer of some of the ownership of the business to another generation. I can promise them it won't get resold.