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CNBC: Could you explain that perspective?
WILBUR ROSS: Right. The way we're looking at things is to really own them. If we buy a bond at 30 cents on the dollar, it's not that we hope it goes to 35 so we can sell it. If we buy a bond at 30 cents on the dollar, it's because we want it to default and we want to own the business. When you own the business, it means you have to be in there for a number of years, because it takes a while to fix it, then it takes a while to get it public or get it sold. So it's a completely different mentality. In our shop, it's a big event if there's a trade in the whole day. Most places are trading, trading, and trading like mad, so it has a very different rhythm to it.
CNBC: Do you think right now, given the state of our economy, it's a particularly good time to have your perspective?
WILBUR ROSS: I think it's a good time to have a sane perspective. I think ours is one of the sane perspectives, so in that sense I think it is.
CNBC: Owning from an industrial point of view instead of trading point of view, why do you think that's saner?
WILBUR ROSS: Well, in distress activities, you can take a trading position and be in and out of things. In order to make a high rate of return doing that you generally have to use a fair amount of leverage and borrowing. We're not into that very much. We tend to have relatively little leverage on our companies. We do that quite deliberately, for one thing we feel, if the only way you can make a high rate of return is with a lot of leverage, maybe it means you're paying too much for it, so we tend to prefer to buy it quite inexpensively, not use a lot of leverage, and therefore also not have to worry if some bank or other lender will chicken out at the wrong time.
CNBC: Also you're not afraid of distressed businesses, which I think most people are.
WILBUR ROSS: No, we're not afraid of them if we've analyzed them properly. What we are afraid of is the question that we forgot to ask.
CNBC: Can you talk a little bit about your system?
WILBUR ROSS: When we're looking at an opportunity, first of all we look at it on an industry basis, because we've learned over the years that when companies go bad, they generally go bad as a whole industry. At one point it'll be all the airlines that are bad, another point all the steel companies, and another point the textiles. That's because what happens is you have industries that have been high users of leverage and then some catalytic event occurs, so the industry tends to have problems simultaneously. This creates two sets of opportunities, one is to fix the individual company, and second is the potential for changing the dynamics of the whole industry. If you can do both, then you get two big increments to value. So that's what we really try to shoot for.
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