What Warren Buffett's Grandpa Said About Cash

One of the more underrated aspects about Warren Buffett's life is the family he was born into and the people he grew up with. Buffett continually brings this up and it shows the importance of spreading wisdom with the people closest to you. As an example, here's a letter that's more than 50 years old written by Buffett's grandfather and directed toward Buffett's uncle Fred. It's about holding cash and saving money:
Dear Fred and Catherine, 
Over a period of a good many years I have known a great many people who at some time or another have suffered in various ways simply because they did not have ready cash. I have known people how have had to sacrifice some of their holdings in order to have money that was necessary at that time. 
For a good many years your grandfather kept a certain amount of money where he could put his hands on it in very short notice. 
For a number of years I have made it a point to keep a reserve, should some occasion come up where I would need money quickly, without disturbing the money that I have in my business. There have been a couple occasions when I found it very convenient to go to this fund. 
Thus, I feel that everyone should have a reserve. I hope it never happens to you, but the chances are that some day you will need money, and need it badly, and with this thought in view, I started a fund by placing $200.00 in an envelope, with your name on it, when you were married. Each year I added something to it, until there is now $1000.00 in the fund. 
Ten years have elapsed since you were married, and this fund is now completed. It is my wish that you place this envelope in your safety deposit box, and keep it for the purpose that it was created for. Should the time come when you need part, I would suggest that you use as little as possible, and replace it as soon as possible. 
You might feel that this should be invested and bring you an income. Forget it — the mental satisfaction of having $1000.00 laid away where you can put your hands on it, is worth more than what interest it might bring, especially if you have the investment in something that you could not realize on quickly. 
If in after years you feel this has been a good idea, you might repeat it with your own children. 
For your information, I might mention that there has never been a Buffet who ever left a very large estate, but there has never been one that did not leave something. They never spent all they made, but always saved part of what they made, and it has all worked out pretty well. 
This letter is being written at the expiration of ten years after you were married. 
Ernest Buffett “Dad”

Exploring Markets Blog

Watching The Investment Process of Jim Chanos and his China Short

Jim Chanos is a world-famous short seller and investor. So how does he think?

The following video is from 2013. But it's one of the rare looks into how Chanos makes investing decisions. Below you will find a 30-minute explanation about his short on China. Including what he looks for and the things that pop-out most. At the core, it would appear that Chanos looks for two things.

The first is balance – is the equation balanced or is something wrong? The second is inconsistencies – are the fundamentals diverging from the narrative and could that mean fraud?