In one sentence: This is a replay of 310 (March 2021), with nothing new added; the one thing to take is Phil's test of wanting a business as predictable as a rental house.
Key ideas
- Rerun of 310. The audio is the earlier episode, with its market comments of the time (Wilshire-to-GDP at about 216%, the Fed's low-rate stance, a hot housing market). Treat those figures as dated to early 2021. [00:00–10:00]
- Reading widely makes ideas. A nuclear company's report prompted Phil's thoughts on energy; he notes such a company argues its own case. [10:00–19:00]
- Don't bet on the far future. Phil's example: IBM in the 1950s versus railroads, and Buffett meeting Bezos in the 1990s but declining to call it a sure thing. Buffett later said he should have bought Amazon once it had proven itself. [26:00–32:00]
- The rental-house standard. Phil wants a company he's as sure of as a rental house bought at a 10% yield: more rent in ten years, a location moat, and inflation on his side. If the moat is in doubt (oil and gas), "cheap" may be cheap for a reason. [32:00–35:00]
Everything else is covered in 310 and the moat module notes such as 257.
How it maps to RuleOne
- The "rental house" test is a good sanity check for what the screen surfaces on /stocks/: can you say with near-certainty that earnings will be higher in ten years?
Buffett, Munger and Graham links
- Buffett on Amazon: he said at Berkshire's annual meeting that he had missed it; I haven't located the exact year, so check the transcript before quoting.
Words to know
- Moat: a durable competitive advantage (see 310).
Try this
Pick a company on /stocks/ and write one sentence: "In ten years this will earn more because ___". If you can't, put it in the too-hard pile.
Check yourself
- What does Phil compare a good business to?
Answer
A rental house bought at about a 10% yield, with a location moat and rising rents. - Why did Buffett regret not buying Amazon?
Answer
After it had proven itself beyond books, he couldn't value it and passed.
Short quotes
"Maybe cheap, maybe cheap for a reason, in which case it's not cheap." (Phil, ~34:30, auto-transcribed)