Guru Speak: Buffett Partnership Letters (1957 to1970) - Key Takeaways and Learnings - Part III

In continuation of reading the Buffet Partnership Letters, here is the 3rd part in the series. You can read the previous posts here:
Part I
Part II

On being contrarion and doing your due diligence:

You will not be right simply because a large number of people momentarily agree with you. You will not be right simply because important people agree with you. In many quarters the simultaneous occurrence of the two above factors is enough to make a course of action meet the test of conservatism.  You will be right, over the course of many transactions, if your hypotheses are correct, your facts are correct, and your reasoning is correct. True conservatism is only possible through knowledge and reason.

The hallmark of value investing. Buy cheap!

This is the cornerstone of our investment philosophy: “Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good results. The better sales will be the frosting on the cake.”

On the kind of management he likes.

On Harry Bottle who took over as President of Dempster Mills once Buffet bought controlling stake - "Harry had never thought of running an implement company six days before he took over. He is mobile, hardworking and carries out policies once they are set. He likes to get paid well for doing well, and I like dealing with someone who is not trying to figure how to get the fixtures in the executive washroom gold-plated."

Market fluctuations and how it really does not matter much.

I think you can be quite sure that over the next ten years, there are going to be a few years when the general market is plus 20% or 25% a few when it is minus on the same order, and a majority when it is in between. I haven’t any notion as to the sequence in which these will occur, nor do I think it is of any great importance for the long-term investor. 

When to walk away if you do not understand the transaction. Ignore tips.

Early in 1962 I heard rumors regarding a sellout to Union Oil of California. I never act on such information, but in this case it was correct and substantially more money would have been made if we had gone in at the rumor stage rather than the announced stage. However, that's somebody else's business, not mine.