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Warren Buffett Watch
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9:39 am: First questioner is from Bombay, India. He asks about how Buffett began investing. Buffett talks about the Benjamin Graham book, "The Intelligent Investor." You can't go wrong following his advice, says Buffett.
9:45 am: Once Berkshire owns all of Cologne Re, Buffett will take full responsibility for its investment portfolio.
9:46 am: "Charlie and I have no idea" where the stock market is going in the future. "We're not in that business .. It's just not our game." They see thousands and thousands of businesses, and every once in a while one of those businesses looks attractively priced. Charlie says he has nothing to add. Buffett says he's been practicing his speech for weeks.
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Buffett sits on a motorcycle at the Geico booth on the exposition floor. |
9:50 am: Buffett says our job is not to choose great managers, our job is to retain them. Many of the managers come with the companies Berkshire buys. "Our job is to make sure they have the same enthusiasm for the job" after they get the big Berkshire stock certificate. More important to love the job than to love the money. "We have to see the passion in their eyes." Don't use contracts, "that doesn't work." Our managers feel appreciated and they are appreciated. Shareholders applaud.
9:54 am: How do you use stock options to buy into or exit from a publicly traded company? Buffett says usually you should just buy the stock outright. Using a call option to get a slightly better price may work four out of five times, but "we have virtually never used options to enter or exit a position." Buffett says, "If we want to buy something, we'll buy it."
9:56 am: Munger: "The idea of turning financial markets into casinos so that the croupiers can make more money has never made a lot of sense to us." Buffett says the idea that business school students are learning options pricing techniques is ridiculous. Just need to know how to value a company and stock market. "There's a great desire among the priesthood in financials to teach what they know and it has nothing to do with investing." Can't be influenced by the market. Requires a mindset, described in Chapter 8 of The Intelligent Investor.
10:00 am: Buffett says any money he's given to charity hasn't really affected his life. He admires those with much less who still give money and time to others.
10:02 am: Buffett says "we're proud of the way our businesses operate." He says we don't give those businesses a lot of guidelines. "We'll never trade away reputation for money." There's no pressure from Berkshire HQ on the businesses to report specific numbers.
10:06 am: Factories outside the U.S., such as those in China, do not have the same practices as in the U.S. Buffett says we're not going to tell the rest of the world how to do business, other than some fundamental standards.
10:08 am: Raw materials costs generally get passed through, although having a tough time right now passing through cost increases in Berkshire's carpet business, which is feeling effects of housing slowdown.
10:09 am: Acquisition of Israeli company Iscar has been a "dream" .. successful in every way.
10:10 am: We would be very happy if we could buy common stocks with long-term returns of 10 percent. Absolutely certain that Berkshire's stock performance will not be as good in the future as it has been in the past. The company is simply much larger. Even doubling a $500 million investment in a company will have only a small percentage impact on Berkshire's performance.
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Portrait of Buffett painted in less than ten minutes early in the morning outside the Arena. |
10:13 am: Anyone who thinks we're even going to come close to matching our past performance should sell their stock. He'll make decent money, but it won't be anywhere near what it's been before. "You may have something much better to do with your money than buy Berkshire." It's an attractive investment compared to other big companies, but it's not the most attractive opportunity in the world if you're willing to do the work to go through all the thousands of possibilities out there.
10:15 am: "Indigenous American" questioner says he has fasted on the long trip to Omaha "with a heavy heart" due to problems at the Klamath Dams. He asks that he and Buffett sit down to talk about getting dams removed. Buffett says he's barred from making any decisions about the dams. Buffett says he didn't mean to be disrespectful last year. This is connected with Berkshire's 2006 acquisition of a utility with control of the dams. An executive for the utility says it is working with the local tribes and hopes to come to an acceptable solution to the "complex" problem.
10:21 am: Asked how he maintains his good physical and mental health, Buffett eats a See's Candy, and says, "it starts with a balanced diet." Laughter. He then says how can you be sour on life when you're doing what you love. Charlie says he wishes "we were poster boys" for physical fitness but pretty much ignore all health rules. "It's worked out pretty well so far." Buffett: "Associating with wonderful people is about as good as it gets."
10:24 am: What would you do if you had to choose a different profession? He says he would do what he's doing. He was lucky to have "found his passion early." Most important thing is to do what you love. Plus: "no heavy lifting." Can't say its the right job for everyone, but anyone just going through the motions in life should find something else they really love. Also, "be sure you get the right spouse." Charlie: Best to be passionate about something you have aptitude for. Warren wouldn't have done well in the ballet.
Data is a real-time snapshot *Data is delayed at least 15 minutes