Escaping Our Old Ideas Is Difficult


"The difficulty lies not in the new ideas but in escaping from the old ones."                                                                                                                                         -John Maynard Keynes


I found this quote not in one of John Maynard Keynes' books, but in The Essays of Warren Buffett: Lessons for Corporate America by Lawrence Cuningham.  Warren Buffett was a disciple of one of the first hedge fund managers, Ben Graham, who would look for companies that traded at cheap multiples of earnings and had lots of tangible assets (equipment, buildings, etc.) on its books.


Ben Graham would then buy these cheap companies when the company was trading at a price below what the value of the underlying tangible assets were worth.  Let's use a simple example to get an idea of what he was doing.