Buffett's Ultimate Referral: Bill Ruane

10 Investing Gems From Bill Ruane

When Buffett closed his partnership in 1969, his investors were looking to invest in a value fund. And he recommended them to the one and only:

Bill Ruane of Sequoia Fund

10 investing gems from Bill Ruane:

1. You are putting yourself in a vulnerable position to disrupt compounding when leveraged.

“You don’t act rationally when you’re investing borrowed money…. Don’t borrow money. If you are smart, you don’t need to. If you are dumb, you don’t want to.”

2. Own quality and don't overpay.

"We try to own common stocks of high-quality companies with good earnings growth prospects… We try to buy these companies at prices we believe underestimate their real value."

3. Echoing Munger, over the long-term, it's the earnings power that matters.

"Over long periods of time, strong business performance translates into strong investment performance."

4. Many like to debate value and growth, but they're joined at the hip.

"Value and growth are not two distinct categories of investments. Growth is merely one aspect of the value equation."

5. Doing nothing is underrated. Swing only when the odds are favorable.

"That’s one of the problems that we have today in the investment field. People think they have to be doing something when the prudent thing might be to not do anything."

6. Bill's investing philosophy.

"Thoughtful investing means three things: a small portfolio (<20 stocks) , low turnover and ‘eating your own cooking,’ meaning that the managers invest substantial personal money not just in the management company but in the funds themselves."

7. Forecasters are rarely right when they need to be.

“Nobody knows what the market will do.”

8. Focus on the individual company, not the broad market index.

“Forget the level of the market. The only thing that matters is the specific situation having to do with your stocks.”

9. Only your conviction will save you from yourself during market drawdowns.

“Use the results of [your own] own research, as opposed to using outside research.”

10. Hold quality.

"Most of our biggest mistakes over the years have involved the sale of interests in wonderful businesses on account of temporary changes in valuation, rather than permanent changes in intrinsic worth and long-term competitive prospects."

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