Bill Ruane Quotes
101 Bill Ruane Quotes
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[In June 2001.] American industry's 2001 earnings are plunging 20% to 30% depending on how one factors in restructurings. (Definition of restructuring: the CEO says, ‘The dog ate my homework last year, teacher, and it cost my stockholders a fortune.’) It is clear to us that expectations remain too high and shareholders maintain a certain complacency about the safety of their capital.
Bill Ruane
[In June 2001.] We are confident that our economy is basically sound and that the current slowdown will end, but unlike the Wall Street strategists on CNBC we haven't the slightest idea when that will occur. We are also confident that we will find some attractive stocks to buy with our substantial cash reserve…
Bill Ruane
[In September 2001.] We continue to find it difficult to find stocks priced at attractive levels by our standards but in these rapidly changing times we are sure opportunities will present themselves to the patient. With regard to the word patient we will try to remain the adjective so as not to become the noun.
Bill Ruane
[In June 2002.] A quote of Benjamin Graham comes to mind at this time: ‘The market over the short term is like an election and any damn fool can vote, but over the long term it is like a scale and properly weighs the values.’ Momentum tends to carry election results to extremes. The landslide vote in favor of equities from 1990 to 2000, turbo-charged towards the end by false expectations in technology, led to significant overvaluation of most equities. We view the present declines as the invisible mechanics of the underlying ‘scale’ at work, leading the market to a more proper valuation. Many excesses are being wrung out by bankruptcies, revelations of fraud, and even clearly misleading accounting by otherwise decent corporations.
Bill Ruane
[In June 2002.] Disenchantment and fear can lead to major outflows in mutual funds from redemptions, causing money managers to sell stocks to meet cash demands as well as perhaps selling additional equities in anticipation of further redemptions. This behavior can best be described by the old saying of a mouse, ‘To hell with the cheese, let me out of the trap.’ We do not pretend to know what the market will do over the next few years. However, we are fairly confident that the earnings of our fine roster of companies will be considerably higher five years from now.
Bill Ruane
[In September 2003 on Walmart and recent investment in Walgreen.] The first three letters of the two greatest retailers in the U.S. are W-A-L.
Bill Ruane
[In September 2003.] We have no aversion whatsoever to economically cyclical stocks per se. In fact, we own a few of them (as well as stocks of companies that are subject to other cycles). Having said that, many economically sensitive companies tend to have characteristics that we dislike. They often produce undifferentiated commodity-type products and consume large amounts of capital, a combination that leads to lower returns on invested capital and less free cash flow than we typically prefer. They also often come with the potentially heavy baggage of large pension and health care liabilities. As a result, economically sensitive stocks have historically been under-represented in our portfolio.
Bill Ruane
[In September 2003.] Many investors continue to ignore options issuance, we consider it a very real corporate expense.
Bill Ruane
[In September 2003.] The stock market, in our opinion, is not cheap.
Bill Ruane
[In February 2004.] 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.
Bill Ruane
[In February 2004.] Past lessons in the pitfalls of impatience make us wary of liquidating a position for reasons other than (1) truly extraordinary overvaluation, (2) a discernable decline in intrinsic business value or (3) the emergence of alternative opportunities that we think are simply too good to pass up.
Bill Ruane
[In May 2005.] I don’t think you have to make an investment. 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. And there are times when things are ridiculously high, and there are times when things are ridiculously low. And there are times when you have distortions in particular industries. At this particular time, I find in most areas where you can invest a lot of money, the prices simply are unlikely to reward you in a significant way, whether it’s real estate or the bond market or stocks.
Bill Ruane
[In May 2005.] I think one of the interesting things about evaluating Berkshire is just considering that you’ve got the smartest investor of all time, as far as I know - Keynes or somebody might give me an argument on that - but you have Warren carrying a portfolio of $105 billion that yields less than 3% after taxes. And here’s a person who historically has averaged a total return of about 21% after taxes. When we tell you Sequoia’s total return is 16%, that’s before taxes. Warren will not make a 21% return in the future. But if you ask me, is he capable and healthy enough, etcetera, to make a return of 10% or 12% over the next ten years - and I think the insurance tables might lead you to think that he could live that long - well, I am making a bet that he will. And then you take the difference between the 3% and the 10%, and you come up with a fairly large number that is potential earning power just sitting there waiting for the right opportunity. It’s not calling the market. It’s just waiting for something that hits you in the gut.
Bill Ruane
[In May 2005.] We’ve owned many hundreds of stocks over the life of Sequoia, but we made most of our money in a couple dozen securities that we bought at the right price and stayed with.
Bill Ruane
[In May 2005.] There’s nothing like patience.
Bill Ruane
[In May 2005.] A couple of years ago, we calculated the ratio of the number of stocks on which we realized gains to the number of stocks on which we realized losses. And the ratio was something like 80:1. One of the things we try very hard to do is to buy a stock only when the company is right, the price is right, and we have real conviction about it. And the nice thing about not doing a lot of things, but having a real conviction when you do is that when it goes down, you can add to it and ultimately make money.
Bill Ruane
[In May 2005.] We’ve certainly made mistakes, but using the standards we’ve had over the years, we’ve been fortunate to avoid any major ones.
Bill Ruane
[In May 2005.] I am basically an optimist.
Bill Ruane
[In May 2005.] In my particular class at the Harvard Business School, we had 645 graduates. And only eight came to Wall Street, which is an indication of some sort. We were a manufacturing-dominant country. And the interest in finance was about zero. We happened to really enjoy it, and that is why we went into the business with low expectations. But I am an optimist.
Bill Ruane
[In 2005 on what he was told whilst being interviewed at a Wall Street Investment firm back in 1949 that college graduates were paid $35 a week, whilst Harvard Business School Graduates were paid $37.50.] And there you have the value of a Harvard Business School degree in 1949. Things have changed.
Bill Ruane
[In May 2005.] I go back to Warren Buffet, as I do so often. He has two rules of investment: Rule #1, Don’t lose money. Rule #2, Don’t forget Rule #1. We try hard not to forget those two rules.
Bill Ruane
Bonus
[In October 1969 on recommending Bill Ruane.]There is no way to eliminate the possibility of error when judging humans… [but] I consider Bill to be an exceptionally high-probability decision on character and a high-probably one on investment performance.
Warren Buffett
[In October 1998 on Bill Ruane.] Ruane just isn’t interested in money. And he’s the most generous guy I know.
Warren Buffett
[In August 1984.] We didn’t want to attract hot money. It would have taken us forever to invest the money and we didn’t think it was fair to our existing shareholders.
Richard Cunniff (Co-founder of Ruane, Cunniff & Goldfarb)
[In August 1984.] Most stocks are selling for less than they are worth, but they are not cheaper than government bonds of almost any maturity. And that’s our dilemma.
Robert Goldfarb
[In August 1984.] Bonds have moved with stocks, so it’s still a hard decision.
Robert Goldfarb
[In May 2005.] It’s extremely important in my mind to be and stay humble.
Robert Goldfarb
[In April 2008 on eliminating a 15% limit on foreign investments.] In this day and age, it just doesn't make any sense to limit yourself geographically.
Robert Goldfarb
[In July 2010.] To understand our culture you need to understand Bill Ruane. Bill Ruane loved the craft of investing. He wasn’t interested in raking in profits by continuously bringing in money from new investors. And it was crucial to Mr. Ruane that the firm be independent and not part of a big mutual-fund company.
Robert Goldfarb
[In July 2010 on how his father in 1971 mentioned to Warren Buffett that his son (Robert Goldfarb) was looking for a job on Wall Street.] Mr. Buffett suggested getting in touch with Mr. Ruane. But he cautioned that given Mr. Ruane's attitude toward maximizing profits, ‘I'm not sure Bob is going to make serious money.’
Robert Goldfarb
[In January 2012.] We have the advantage of small numbers. We are not in Warren Buffett’s league. He can play so many keys on the piano that we can’t. He can buy whole companies and arbitrage the private market versus the public market.
Robert Goldfarb
[In September 2005 on Bill Ruane passing away.] Bill was an unusual capitalist, as he cared deeply about building up the funds entrusted to him by his clients, but very little about compounding his own. Bill looked for perfection in businesses and could wait patiently, sometimes for years, until he found the right stocks at the right prices. But if he had a cool eye for the market, he kept a warm heart for people. He wanted to improve the world around him and, in his energetic way, launched a number of entrepreneurial philanthropies. He cared deeply about education and mental health issues and took personal interest in the people he helped, especially children. He derived satisfaction from reading annual reports, but took true delight reading the improving report cards of youngsters he'd sent to school on scholarships. He could bend your ear on the subject of the capacity of disadvantaged children to learn. Then he'd smile and buy you a beer. He took his work seriously, but not himself. Yeats wrote of the choice between perfection of the work or of the life. Bill was the rare man who never had to make that choice. He was exuberant, an optimist, and happy in the way that only a truly good man can be. He built a firm that was more like a second family, which grew over the years with new members astonished at their good fortune to have arrived in such a comfortable home. He respected every employee, rewarded hard work handsomely and endeavored always to strengthen the fabric of the firm. He was without guile, with no trace of meanness in him. He insisted there be nothing mean in the way the firm did business. The slogan ‘First Class Business in a First Class Way’ may be borrowed, but Bill proved that possession is nine-tenths of the law. He leaves us a precious legacy, which we treasure: a commitment to do right by clients, by employees, and by our own best selves.
Richard T Cunniff, Robert D Goldfarb and David M Poppe (Ruane, Cunniff & Goldfarb)
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