Bill Ruane Quotes
101 Bill Ruane Quotes
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[In November 1984 on why it hadn’t accepted any new money since the end of 1982 except from existing shareholders.] We felt that the money was coming in faster than the exciting ideas were. Unfortunately, there’s still more cash than ideas.
Bill Ruane
[In March 1986 on having 40% of Sequoia’s Funds in cash.] It will create the drag of a battleship anchor on our relative performance. But if we could find five ideas that really excited us, that percentage of cash would decline dramatically.
Bill Ruane
[In October 1990 on Warren Buffett’s quote ‘If you aren't willing to see your stocks go down 50%, you shouldn't own stocks at all.’ The 50% rule] Is fundamentally sound advice to give to any investor at any time.
Bill Ruane
[In April 1996 on the current share price of Berkshire Hathaway despite it being 30% of the funds assets.] Definitely would not buy [today.]
Bill Ruane
[In April 1996 on saying the Sequoia Fund would have made more money in Capital Cities if they hadn’t moved in and out over the years.] I sold it three times - and each time it was a real dumb thing to do.
Bill Ruane
[In July 1996 talking about the early days of the Sequoia Fund in the early 1970’s having four years of crushing losses putting it well behind the market. But since when on to produce an average return of 19.5% higher than the S&P500 but at least 5 points.] We hid under the desk and wondered if the storm would ever clear.
Bill Ruane
[In December 1997.] The sky is not our limit and we will try to be prudent in this period of ebullience.
Bill Ruane
[In December 1997.] We believe the 15-year steady climb of the market has led finally to a condition where success after success is now leading to excess… The past bubbles are close to forming a wave and this concerns us.
Bill Ruane
[In June 1999.] When you maintain a consistent investment philosophy and invest for the long term, you do not need to outperform every calendar year in order to outperform in the long term.
Bill Ruane
[In September 1999.] Momentum in the stock market has a way of feeding on itself and becoming self-fulfilling… Current conditions bring to mind economist Herb Stein’s wonderful comment, ‘When something cannot go on forever, it usually doesn’t.’
Bill Ruane
[In October 1999 on much of what happens in Wall Street.] What are they doing? Shifting money back and forth without creating value. Most mergers don't work, but Wall Street trumps them up and the CEO agrees because he wants to run a bigger operation. And some of those wrap accounts are terrible for clients - fees on fees.
Bill Ruane
[In October 1999 on how he describes himself at the age of 74.] Bill Ruane, research analyst.
Bill Ruane
[In October 1999 on having closed the Sequoia Fund to new investors 17 years ago.] Staying small is simply good business. It wouldn't be fair to our customers if we had to spread our ideas too thin. There aren't that many great companies.
Bill Ruane
[In October 1999 on being hired by GE when he came out of the Navy in 1947.] In the training program for 49 bucks a week. [But] I'm a mechanical idiot.
Bill Ruane
[In October 1999.Benjamin] Graham said, Look at the company as a whole, not as a piece of paper. And then do a highly critical financial analysis.
Bill Ruane
[In October 1999.] You don't need inside information. Don't need charts and mumbo-jumbo. It isn't about momentum. It isn't that guff the talking heads give you on CNBC.
Bill Ruane
[In October 1999 on going into business for himself on June 6, 1969.] Most of us fellows just wanted to do something we liked and hoped to make a decent living.
Bill Ruane
[In October 1999 on HBS reunions back in 1950.] Five of us rented an apartment, a brownstone right off Fifth Avenue, $300 a month. Many of the hundred or so '49ers in New York would come over on Saturday night with their girlfriends.
Bill Ruane
[In October 1999 on not predicting a stock market crash despite prices being high and Sequoia being 20% in cash.] You can have stocks at inflated levels for a long time just as they were at deflation levels from 1974 to 1982.
Bill Ruane
[In October 1999.] Last winter my wife and I and several classmates were in the Caribbean. I asked a restaurant owner what he did from April when the tourist season ends until November. ‘He said he was playing stocks on the Internet. Keeps him busy eight hours a day.’ I hope he keeps his restaurant. I wouldn't bet on it.
Bill Ruane
[In December 1999.] After a three year run during which our stocks compounded at a 35% annual rate, we warned that Sequoia's performance was borrowing from the future. We didn't know how right we were.
Bill Ruane
[In December 1999.] Our longstanding approach to investing has been based on a few core principles. First, we try to own common stocks of high quality companies with good earnings growth prospects. We look for superior returns on invested capital, and we look for the returns to be sustainable well into the future. It's the last part of this requirement that is particularly tricky to assess. Second, we try to buy these companies at prices we believe underestimate their real value. This criterion dramatically narrows the field of potential candidates, as great companies are usually
already recognized by the market. Third, when we find the first two elements together, we want to own a lot of the stock. And finally, we hope to hold these investments for many years as long as the fundamentals remain sound and earnings prospects remain favorable. We will generally hold an investment even if it faces some short-term challenges, or if its ‘sector’ falls out of favor, or if it gets a bit ahead of itself. We will sell some or all of a position if we feel its valuation has reached levels which appear excessive relative to likely earnings prospects. These simple principles have served us well over the past 30 years, although we had a tendency to leave a fair amount of money on the table. As a result, in recent years we adopted a tolerance for holding stocks at higher valuation levels than in the past. This evolution contributed to our outsized results in 1997 and 1998, but also was a factor in our unusually poor results in 1999.
Bill Ruane
[In December 1999.] A number of our shareholders have written us in frustration with our lack of direct technology investments. We are all mind-numbingly aware that technology stocks comprise the current & and virtually only - area of market excitement today and have accounted for almost all the gains in the market indexes in 1999 and 2000 to date… Investors abandon valuation considerations in investing from time to time. You might be interested to read the following commentary by Benjamin Graham in reviewing stock market behavior leading up to 1929: ‘The notion that the desirability of a common stock was entirely independent of its price seems incredibly absurd. Yet the new era theory led directly to this thesis… Instead of judging the market price by established standards of value, the new era based its standards of value upon the market price. Hence all upper limits disappeared, not only upon the price at which a stock could sell, but even upon the price at which it would deserve to sell… The results of such a doctrine could not fail to be tragic.’ These comments were written 66 years ago in Security Analysis, 1934 edition. Ironically enough in view of today's market conditions, the title of the chapter is ‘The New-Era Theory’.
Bill Ruane
[In December 1999.] Recently, a highly respected figure in the investment community, Bob Kirby, caustically summarized much of what is going on currently in the stock market with two rules for investing in today's ‘new era’: ‘Rule 1) Any stock that has tripled during the past 12 months is a serious purchase candidate; and Rule 2) Any stock that has been flat for the past month or two or – God forbid - has gone down, is immediately sold.’ Needless to say, our investment approach is not in sync with current conditions, but we will not abandon proven standards just to be with the crowd.
Bill Ruane
[In June 2000.] Over the years we have found that investment patience is eventually rewarded.
Bill Ruane
[In June 2000 on holding 30% of investments in two-year Treasuries yielding around 6.1%.] After a bull market of unprecedented duration, stock market investors increasingly demand that their funds remain fully invested in equities regardless of market opportunities. In this environment, it is perhaps ironic (and certainly little remarked) that, so far in 2000, cash has outperformed all the major stock market indexes.
Bill Ruane
[In June 2000.] The recipe for delivering superior long-term performance requires equal parts of picking the right stocks and avoiding the wrong ones. We were not even tempted to join the recent speculative frenzy in the dot.com sector.
Bill Ruane
[In June 2000.] Investors often dump the shares of a company or an entire industry sector indiscriminately based on fears of an economic slowdown or in the wake of a strong company's shortfall, however modest, from analysts' expectations. This can create potential buying opportunities, although in any number of cases, even after severe price declines, we have found these to be surprisingly marginal rather than compelling opportunities, and often of very brief duration.
Bill Ruane
[In September 2000.] On average, over $3 billion worth of Cisco shares changes hands on any given day. This means that investors are madly swapping over $800 billion on an annualized basis to own a piece of a company which will itself sell perhaps $26 billion of internet switching equipment in the next year. We are clearly a long way from the scenario in one of our favorite cartoons, where a TV news announcer, reading from a script for the evening news into a microphone on his desk, says: ‘There was zero trading on the New York Stock Exchange today. Everyone owned exactly what they wanted’.
Bill Ruane
[In December 2000.] The best prescription for calm behavior in a difficult stock market is to maintain a comfortable reserve in short term treasuries or other high quality cash equivalents.
Bill Ruane
[In December 2000.] The year 2000 was characterized by extreme volatility created by thousands of hyperactive money managers and individual traders swarming from the tech to the non-tech and from sector to sector looking for escape from punishment and hoping to get aboard the latest momentum favorite. This volatility created periodic opportunities for us to purchase stock in a number of fine companies at attractive prices…
Bill Ruane
[In January 2001 on Albert Hettinger.] His principles had an enormous influence on the way I run money, and they’re the best advice I can give people.
Bill Ruane
[In January 2001.] Put most of your money in six or seven stocks that you've really studied. I firmly believe that your top six ideas will do better than your others. Generally, seven or eight stocks account for most of Sequoia's money.
Bill Ruane
[In January 2001.] If you get a great idea every other year, you're really doing well.
Bill Ruane
[In January 2001 on having 35% of Sequoia’s $4 billion in funds invested in Berkshire Hathaway.] The stock isn’t a screaming buy, but I think you’ll have a decent return over the next five years. Berkshire is run by the smartest guy in the country.
Bill Ruane
[In January 2001 on having 25% of its assets in cash.] Because we’re having a very difficult time finding anything that’s attractive.
Bill Ruane
[In January 2001 on Ethan Allen which they own 15% of.] The best furniture company in the field. Ethan has it all – a great niche, a high return on equity, robust earnings, top-class management and a competitive edge that comes from doing it’s own manufacturing.
Bill Ruane
[In May 2001 on the S&P 500 tumbling 42.6% from December 1972 through to September 1974.] It was vicious… It just took everything down. You just couldn’t believe the fear that crept in.
Bill Ruane
[In May 2001.] We just don’t see many things out there that are undervalued.
Bill Ruane
[In May 2001 on his modest expectations.] I would be delighted to do 10% [a year] over the next five years. I think it will be very, very tough to do.
Bill Ruane
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