 Good day fellow investors! I continue with reading Warren Buffett's letter to shareholders and summarizing them for you to get really the most important investing learning lessons out of them. And I've been reading 1982 and 1983 which is the bottom of the market. So 1982 at the bottom of the market in August 1982 Ray Daly went short and lost his business, lost everything, had to borrow money from his father. Warren Buffett on the contrary went long, went big, went in with everything he had and more. So very important difference timing the market with Daly or what he was doing wrongly at that point in time. And Warren Buffett looking at value investments over the cycle, okay what's cheap, what gives me a good return over the long term protection. So let's see what he bought, how things evolved. And this is a very important learning lesson that when you see value, when you see cheapness, no matter the environment you should buy it. Let's see. So 10 years ago, 10 years prior to 1982, 1972 at the height of the two-tier market mania with high return on equity businesses bid to the sky by institutional investors, Berkshire's insurance subsidiaries owned only 18 million in market value of equities, excluding the blue chip stamps. At that time such equity holdings amounted to 15% of their insurance company investments versus the present 80%. 20% you need to pay those claims etc. So he was fully investment. There were as many good businesses around 1972 as in 1982 but the prices, the stock market placed upon those businesses in 1972 looked absurd. So don't buy stocks with absurd prices. 1982 prices were very low, SAP 500 PE ratio average was 7, Warren Buffett was buying big. And portfolio 1982 his cost was 400 million, his market value was already double 911 million but he still bought more and from a cost of this case 350 because crumb and forester was a cash equivalent investment so don't count that in. So from a cost of 350 million during 1983 he brought it to 560 million. He invested another 200 million in the portfolio. The value went from 945 million to 1.3 billion so he did really well but he really invested big. What did he buy? Largest position tobacco company something he doesn't like to talk about but yes in 1983 Warren Buffett was buying cigarette stocks and he liked it because of this. I'll tell you why I like the cigarette business. It costs a penny to make, you sell it for a dollar, it's addictive and there's a fantastic brand loyalty. This is a quote from Warren Buffett that Warren Buffett tries to forget but it's reality. He found the business not nice, addictive. He later changed his mind that he became the nice guy we know now but his largest position investment position at least was RJ Reynolds Industry, a tobacco company that can increase prices during inflation and will probably do good. Second position market value was Geico but the cost is really minimal as after the investment initial it became a 10 beggar. The third position 163 million was General Foods so another company that can raise prices alongside inflation was probably cheap back then and is now already much, much higher. So if we look at the portfolio from Buffett, cigarettes, food, insurance but bought at a very low cost, very cheap which means that he went for boring, he went for defensive, he went for certainty, for cash flows, for dividends, for slow, stable grow. So slow and steady is what makes you rich over the long term. Nothing fancy, nothing exuberant and this is the core of Buffett and this is what I wanted to point out in this video that when you invest the first rule is don't lose money so look for stable, safe, bargain prices, high cash flows that can give you margin of safety, can give you business value and then let the businesses develop in their own way and you will get to satisfying returns but you have to be patient and buy them when those are cheap not when everybody's exuberant. It's easy to buy stocks when stocks prices go up, it's very hard to buy stocks in 1982 when Buffett was buying so again be greedy when others are fearful, even Ray Dalio was fearful and be exuberant, be fearful when others are exuberant. Like it is the case now where we have a lot of money chasing few good assets. Thank you for watching, looking forward to comments and I'll see you in the next video about Buffett, about his 10 business principles that he summarized in 1983.