Many years ago I noticed just how different and personal our definitions of ideas can be and I decided that it was worthwhile to start compiling my own Personal Dictionary — my own glossary of terms and ideas that resonate with me. All of the following words and phrases shape how I think about the world.

Latin Phrases & Words

Ars longa, vita brevis
Latin translation of an aphorism in Greek, roughly meaning, "skillfulness takes time and life is short." A reminder that skill does not come easy. If you want to master something, think in terms of decades not years — embrace truly long compounding.

Gradatim Ferociter
Simple latin motto that means "step by step, ferociously." Meant to reinforce that idea that you can't skip steps. You have to put one foot in front of the other, invest in things that take time, where there are no shortcuts, but you want to take those steps with passion and ferocity.

Prima Materia
In alchemy, prima materia and materia prima both mean "first matter." Which is the ubiquitous starting material required for the alchemical magnum opus — the creation of the philosopher's stone. It's thought to be the primitive formless base of all matter similar to choas, the quintessence, or aether.

Assumpsit
In common low, an action to recover damages from breach of contract. Literal translation  “he has undertaken.”

Prisca Sapientia
The pristine or primal wisdom possessed by the ancients but since lost during humanity’s long fall from grace down through the ages. It was believed that the secrets of *prisca sapientia* were still accessible, encoded in the natural world for those who could penetrate their mysteries.

Sic Transit Gloria
All glory is fleeting.

In November 2007, Fortune named Steve “CEO of the Decade.” Art Levinson, the CEO of Genentech and chair of Apple’s board, sent a congratulatory note.

From: Art Levinson
To: Steve Jobs
Subject: Fortune
Date: November 27, 2007, 11:26 a.m.

The “Beethoven of business” - not sure it gets any better than that. Congratulations!

From: Steve Jobs
To: Art Levinson
Subject: Re: Fortune
Date: November 27, 2007, 12:43 p.m.

Sic Transit Gloria. (All glory is fleeting.)

Steve

Concepts from Warren Buffett

The following are terms and phrases that have appeared in Berkshire Hathaway's Annual Letters, written by Warren Buffett, over the years. Learn more about Warren Buffett.

Cigar Butt Investing
A foolish method of investing akin to taking the last puff on a cigar. It is the purchase of a stock at a sufficiently low price that there will be some short-term profit, though the business' long-term performance is likely to be terrible.

Circle of Competence
The limits of one's ability to judge the economics of businesses. Intelligent investors draw a thick boundary and stick with companies they can understand.

Dividend Test
Retention of earnings is only justified if each dollar retained produces at least a one dollar increase in per share market value.

Double-Barreled Acquisition Style
A sensible acquisition policy of buying either 100% of businesses in negotiated acquisitions or less than 100% of businesses in stock market puchases.

Institutional Imperative
A pervasive force in organizations that leads to irrational business decisions from resistance to change, absorption of corporate funds in suboptimal projects or acquisitions, indulgence of the cravings of senior executives, and mindless imitation of peer companies.

Intrinsic Value
A hard-to-calculate but crucial measure of business value. It is the discounted present value of the cash that can be taken out of a business during its remaining life.

Look-Through Earnings
An alternative to GAAP rules governing investments in marketable securities of the investee less than 20%. This measures the investor's economic performance based on its percentage interest of the investee's undistributed earnings (after an incremental reduction for income taxes).

Margin-of-Safety
Probably the single most important principle of sound and successful investing. Ben Graham's principle says not to purchase a security unless the price being paid is substantially lower than the value being delivered.

Mr. Market
Ben Graham's allegory for the overall stock marketing. Personified as a mood, manic depressive that causes price and value to diverge — making superior intelligent investing possible.

Owner Earnings
A better measure of economic performance than cash flow or GAAP earnings. Equal to (a) operating earnings *plus* (b) depreciation and other non-cash charges *minus* (c) required reinvestment in the business to maintain present competitive position and unit volume.

Concepts from Charlie Munger

The following are terms and phrases that have appeared in Charlie Munger's writing, interviews, and answers to questions at Berkshire Hathaway's Annual Meeting. Learn more about Charlie Munger.

The Lollapalooza Effect
The term Charlie Munger coined for factors which reinforce and greatly amplify each other.

The most important thing to keep in mind is the idea that especially big forces often come out of these one hundred models. When several models combine, you get lollapalooza effects. This is when two, three, or four forces all operating in the same direction. And, frequently, you don't get simple addition. It's often like a critical mass in physics where you get a nuclear explosion if you get to a certain point of mass — and you don't get anything much worth seeing if you don't reach the mass. Sometimes the forces just add like ordinary quantities and sometimes they combine on a breakpoint or critical-mass basis.

More commonly, the forces coming out of these one hundred models are conflicting to some extent. And you get huge, miserable tradeoffs. But if you can't think in terms of tradeoffs and recognize tradeoffs in what you're dealing with, you're a horse's patoot. You clearly are a danger to the rest of the people when serious thinking is being done. You have to recognize how these things combine. And you have to realize the truth of biologist Julian Huxley's idea that 'Life is just one damn relatedness after another.' So you must have the models, and you must see the relatedness and the effects from the relatedness.

— Outstanding Investor Digest, December 29, 1997

My Personal Definitions

Crucible Moment
A transformative experience through which an individual or team comes to a new or altered sense of identity. These are times when we're tested, where there is great adversity, uncertainty, and change — when our strength and resolve is tested.

Patience
Paying a price, typically in the form of forgone opportunities, in order to gain a longer time horizon to find exactly what you’re looking for. Mostly people aren’t willing to pay for a longer time horizon and have too low a bar to be willing to wait. Which is exactly why demonstrated patience is such a rare and valuable trait.

Culture
A way of being, and being with each other, that allows you to live out your values.

Values
Non-negotiable beliefs and ideals you’ll pay almost any price to uphold. All values have a price and reward. The test of a true value isn’t whether you enjoy the reward, but whether you’ll happily pay the price time and time again.

Euphoria
A state of utter risk-less-ness, where you are unable to perceive risk. All you see is the upside, which leads to miscalculations, errors in judgement, and rash behavior — impairing your ability to invest rationally.

Anger
Loss of control. Often, it’s your lower-level amygdala overtaking your more rational, thoughtful reasoning.

Procrastination
The act, often done unconsciously, of exchanging temporary relief for compounded pain.

Margin of Safety
Room for error in your plans, forecasts, and decisions. Anything that allows you to remain on-track within a range of outcomes. Margin of Safety increases your odds at a given level of risk, thus increasing your odds of survival. Higher margins protect you from risk (known and unknown); lower margins provide less room for error and increase risk.

Grounded Optimist
Someone with a deep belief that they can overcome almost any obstacle or problem thrown at them. They’re confident in their own abilities and willing to put in the effort to see their goals through to fruition — no matter matter stands in their way. Yet they know that the trick is to stay positive, push through, and remain profoundly aware of the challenges that you face at all times. Doing this increasing your odds of success by ensuring your connected to both your future goals and current realities.

Geardo
Someone who is overly obsessed with the gear for their sport(s) or profession — obsessing over every detail with the goal of looking and feeling the most competent. Not entirely positive, unless focus also paid to being exceptional at the fundamentals, especially when in far-from-ideal situations.

Brandolini's Law
The amount of energy necessary to refute bullshit is an order of magnitude more than the energy required to produce it. Also known as a Gish gallop.