BECKY:  All right.  Class continues, everybody.  We are back with the two greatest capitalists out there with Investing 101, back to more students’ questions.  Why don't we start right here?

QUESTION:  My name is Adam Van Dam and I'm a first-year student here.  This question is for Mr. Buffett.  If the Burlington Northern acquisition is any indication of your long-term buy and hold forever investment philosophy, I am wondering if the financial crisis has impacted that philosophy or your investment process in any way?

BUFFETT:  No.  It hasn't changed at all.  We like products like this.  How is this for shameless products?  [APPLAUSE]  This started in 1886.  It's gone through all of these events.  And the end will be 1.6 billion eight-ounce servings of Coca-Cola

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[KO  Loading...      ()   ] products come today and there will be more next year.  We want to be in business with a durable competitive advantage with managements we like and trust and do them at a price we like.  It hasn't changed a 1/10 of a degree.  Incidentally, we own Fruit of the Loom, too, but I'm not going to do a product.  [APPLAUSE]

BECKY:  OK.  Our next question right here.

QUESTION:  Hi, I'm Brian Seedabalker.  I'm a second-year student.  Mr. Buffett, it's great to see you again.  I was on the trip to Omaha last month.  Thank you for hosting us.  My question is, how would you recommend an individual investor who follows the Graham and Dodd philosophy to allocate their capital today?

BUFFETT:  Well, it depends whether they are going to be an active investor.  Graham distinguished between the defensive and the enterprising and that.  So if you are going to spend a lot of time on investment, you know I just advise looking at as many things as possible and you will find some bargains.  And when you find them, you have to act.  It doesn't -- it hasn't changed at all since I was here in 1950, 1951.  And it won't change the rest of my life.  You start turning pages.  When I got out of school, I turned every page in Moody's 10,000-some pages twice, looking for companies.  And you have to find them yourself.  The world isn't going to tell you about great deals.  You have to find them yourself.  And that takes a fair amount of time.  So if you are not going to do that, if you are just going to be a passive investor, then I just advise an index fund more consistently over a long period of time.   The one thing I will tell you is the worst investment you can have is cash.  Everybody is talking about cash being king and all that sort of thing.  Most of you don't look like you are overburdened with cash anyway.  [LAUGHTER]  Cash is going to become worth less over time.  But good businesses are going to become worth more over time.  And you don't want to pay too much for them so you have to have some discipline about what you pay.  But the thing to do is find a good business and stick with it.

BECKY:  Does that mean you think we are through the roughest times?  You had always kept the cash word around, too.

BUFFETT:  We always keep enough cash around so I feel very comfortable and don't worry about sleeping at night.  But it's not because I like cash as an investment.  Cash is a bad investment over time.  But you always want to have enough so that nobody else can determine your future essentially.  The worst -- the financial panic is behind us.  The economic spillout which came to some extent from that financial panic is still with us.  It will end.  I don't know if it will end tomorrow or next week or next month.  Or maybe a year.  But it won't go on forever.  And to sit around and try and pick the bottom, people were trying to do that last March and the bottom hadn't come in unemployment and the bottom hadn't come in business but the bottom had come in stocks.  Don't pass up something that's attractive today because you think you will find something way more attractive tomorrow.

BECKY:  Another question right here.

QUESTION:  Mr. Buffett and Mr. Gates, my name is Antionette Genevieve.  I am a first-year executive MBA student.  And I actually work at Goldman Sachs, so thank you for your investment.  [APPLAUSE]

BUFFETT:  Why aren't you at work? [LAUGHTER] [APPLAUSE]

QUESTION:  My question to you is I'd like both of your thoughts on the investment of alternative energy as for developing our economy and getting it back on track.

BECKY:  Bill, you touched on this earlier.

BILL:  Well, there are many, many ideas.  And there's enough that we can say most of them will turn out to be dead ends.  You know, the solar-thermal, solar-electric, nuclear is going to go through some of the revival and see if it can solve some of its cost challenges. As a country, we want to make sure all of those get lots of R&D and regulatory enablement because one of them is going to give us much cheaper power without causing any problem.  We don't know which one it is.  And we don't have quite as much R&D going into those things as I'd like to see.  We have quite a bit, but I think the government policies could drive for more.  But it is one of these areas that is somewhat faddish in nature.  When you have a lot of energy focusing on a field, the amount of money that goes in is very large.  And the overall return on capital is often quite large.  The car industry in its heyday was a disaster.  The airline industry, even the software industry because people don't remember all the non-Microsofts that don't exist until today.  When something is hot, you get kind of a bubble.  So energy, you're going to have to be a bit careful to make sure it's one that's really got its cost structure in line and it's not just being pushed along by subsidies and there will be scientific surprises.  So a very hot area, but not necessarily a good area for investment.

BECKY:  All right.  Why don't we leave it there for now?  When we come back, we will have more with Bill Gates and Warren Buffett.  [APPLAUSE] We'll be talking about leadership and President Obama right after this break. [APPLAUSE]