“There’s never been a hotter stock than Xerox in the 1960s. Copying was a fabulous industry, and Xerox had control of the entire process. “To Xerox” became a verb, which should have been a positive development. Many analysts thought so. They assumed that Xerox would keep growing to infinity when the stock was selling for $170 a share in 1972. But then the Japanese got into it, IBM got into it, and Eastman Kodak got into it. Soon there were 20 firms that made nice dry copies, as opposed to the original wet ones. Xerox’s share price dropped 84%. Several competitors didn’t fare much better.”
“Remember what happened to disk drives? The experts said that this exciting industry would grow at 52% a year - and they were right, it did. But with 30 or 35 rival companies scrambling on the action, there were no profits.”
“If by chance you had been able to identify the genius of Henry Ford at an early stage, it would have been important to wait until he had been bankrupt twice before investing in his third venture, the Ford Motor Company. Or, in the case of General Motors, you would have needed to twice avoid the acquisitive excesses of Durant. In the same way the investor would have had to know that the two existing technologies, electricity and steam, would fail to maintain their progress and be overtaken by the internal combustion engine.”
“My main purpose in life is to make enough money to create ever more inventions.”
“I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two - because you can build a business strategy around the things that are stable in time. ... In our retail business, we know that customers want low prices, and I know that's going to be true 10 years from now. They want fast delivery; they want a vast selection. It's impossible to imagine a future 10 years from now where a customer comes up and says, 'Jeff, I love Amazon; I just wish the prices were a little higher.’”
“If I could avoid a single stock, it would be the hottest stock in the hottest industry, the one that gets the most favourable publicity, the one that every investor hears about in the carpool or on the commuter train - and succumbing to the social pressure, often buys.”
“More so than in the past, the progress or retrogression of the typical company in the coming decade may depend on its relation to new products and new processes, which the analyst may have a chance to study and evaluate in advance. Thus there is doubtless a promising area for effective work by the analyst, based on field trips, interviews with research men, and on intensive technological investigation on his own. There are hazards connected with investment conclusions derived chiefly from such glimpses into the future, and not supported by presently demonstrable value. Yet there are perhaps equal hazards in sticking closely to the limits of value set by sober calculations resting on actual results. The investor cannot have it both ways. He can be imaginative and play for the big profits that are the reward for vision proved sound by the event; but then he must run a substantial risk of major or minor miscalculation. Or he can be conservative, and refuse to pay more than a minor premium for possibilities as vet unproved; but in that case, he must be prepared for the later contemplation of golden opportunities foregone.“