Common Stocks and Uncommon Profits and Other Writings

 
The Philosophy Matures 
2 5 9 
company working in an extremely interesting new frontier of technology; 
one that had a real basis for its existence. The firm was run by a brilliant 
and honest president. I can remember still, after a long luncheon session 
with this man, my pacing up and down the airport awaiting my airplane 
home and trying to determine whether I should buy this company’s
shares at the prevailing market. After considerable deliberation, I decid- 
ed to go ahead. 
I was right in diagnosing the potential of this company for it did 
grow in the years that followed. Nevertheless, it was a poor investment. 
My mistake lay in the price I paid to participate in the promise. Some 
years later, after the company had shown rather respectable growth, I 
sold these shares, but at a price very little different from my original
cost. While I believe I was right in selling when I thought the company 
had reached a point where its future growth was considerably more 
uncertain, nevertheless selling an investment at a meager profit after it
has been held for a number of years is not the way to make capital grow
or even protect it against inflation. In this case, disappointing perform- 
ance was the result of being seduced by the excitement of the times into 
paying an unrealistic initiation price. 
DO FEW THINGS WELL 
A policy judgment that was wrong for me engendered quite a different 
kind of mistake, and one which did cost a significant amount of dollars.
My mistake was to project my skill beyond the limits of experience. I
began investing outside the industries which I believe I thoroughly 
understood, in completely different spheres of activity; situations where 
I did not have comparable background knowledge. 
When it comes to manufacturing companies that serve industrial 
markets or to companies on the leading edge of technology that are 
serving manufacturers, I believe that I know what to look for—where 
both the strong points and pitfalls may lie. However, different skills
proved important in evaluating companies making and selling consumer- 
type products. When the products of competitive companies are essen-
tially rather similar to one another, and when changes in market share 
depend largely on shifting public tastes or on fashions greatly influenced 
by the effectiveness of advertising, I learned that the abilities which I
had in selecting outstanding technological companies did not extrapolate 

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