Warren Buffett’s Most Iconic Interview Ever

secular approach that has also been very successful, take Warren Buffett of Omaha Nebraska, if in 1965 you put 10,000 dollars in his company Berkshire Hathaway, today you would have 1 million. Warren was a chapter in my 1972 book, Super Money, so I've known him for a long time. He long learned his trade from Ben Graham, the original dean of security analysis at Columbia University. I don't think Warren had

ever

been on television until this

interview

and he certainly has n

ever

sought publicity, but he did get a lot of publicity recently when he came out. As a key figure in the Capitals' acquisition of ABC, Warren will be the new company's largest shareholder and his own net worth is now well over $500 million, but when I spoke with him last fall in his office at Omaha, he told me.

Very characteristically, his investing style seems so perfectly simple. The first retention of investment is not to lose and the second retention of investment is not to forget the first rule and those are all the rules that exist. I mean, if you buy things for a long time. below their value and you buy a bunch of them you basically don't lose money or what do you consider the

most

important quality for an investment manager is temperamental quality, not an intellectual quality, you don't need tons of IQ In this business I mean you have You have to have enough IQ to get from here to the center or the mall, but you don't have to be able to play three-dimensional chess or be in the top leagues in terms of bridge or anything like that. you need a stable personality, you need a temperament that doesn't take great pleasure in being with the crowd or against the crowd because this isn't a business where you do surveys, it's a business where you think and Ben Graham would say you're not right. either you are wrong because a thousand people agree with you and you are not right or you are wrong because a thousand people disagree with you you are right because your facts in your reasoning are correct what makes you different than 90% of money managers? that are in the market, certainly

most

professional investors focus on what stocks are likely to do in the next year to take advantage of all sorts of arcane methods to approach it, but they don't really consider themselves owners of a piece of a business where the true test of whether you are investing from a value standpoint or not is whether you care if the stock market will be open tomorrow if you are making a good investment in a security, you shouldn't care if they close the stock market securities for five years all the ticker tells me is the price and I can look at the price from time to time to see if the price has gone up extravagantly cheaper extravagantly lehigh but what prices tell me nothing about a business the business figures in themselves Tell me something about a company, but the price of a stock doesn't tell me anything about a company.

I would prefer to value a stock or company first and not even know the price so as not to be influenced by the price when setting my valuation and then look at the price later to see if it is out of line with my value, so Buffett decided to stay at this world Omaha Nebraska where corn grows just minutes from downtown now Omaha is a nice city but no one says it's a financial hub world here the only thundering flock is actually in four feet wouldn't you find your home? AHA a little bit to get the hang of the investment world, believe it or not, we receive mail here and we receive periodicals and we get all the necessary information. to make decisions, and unlike Wall Street, you'll notice that we don't have 50 people coming up and whispering in our ears that we should do this or that this afternoon.

You appreciate the lack of stimulation right here. I like the lack of stimulation we have. get data, not stimulation here, how can you stay away from wall street? Well if I were on Wall Street I would probably be very poor at you, you get too stimulated on Wall Street and you hear a lot of things and you might short your and a short focus doesn't lead to long term gains and here I can just focus on the value of companies and I don't need to be in Washington to find out how much the Washington Post is worth and I don't need to be in New York to find out how much another company is worth.

It is simply an intellectual process, and unless you are more static in that intellectual process, the better off you will be. What is the intellectual process? Intellectual processes define your The level is defining your area of ​​competence and valuing businesses and then within that area of ​​competence finding what sells for the cheapest price relative to value and there are all kinds of things that I'm not competent to value, there are some that I am competent to value, have you ever bought a technology company? No, I really haven't in 30 years of investing. I haven't understood any of my stuff, so you've never boned, for example, IBM, we never owned the IBM Marvis company that I did. cool company, but I don't know IBM, so here's this technological revolution going on and you're not going to be a participant beyond me, that's fine with you, that's fine with me, I don't have to make money. every game I mean, I don't know what the cocoa beans are going to do.

You do not know. There are all kinds of things I don't know and that can be a shame, but do you know why I should know everything about him? Work so hard with him in the securities business, literally every day thousands of major American corporations offer you at a price and a price that changes daily and you don't have to make any decisions, you have to make nothing is forced , so there are no called strikes in the business, the pitcher just stands there and throws balls at you and if you're playing real baseball and it's between your knees and your shoulders, or you swing or you're called for a strike, you have to get too many. goals I knew you're in the stock business, you sit there and they pitch us, they steal a 25 and they pitch General Motors at 68, you don't have to attack any of them, they can be wonderful pitches to attack, but if you don't know enough , you don't have to swing and you can sit there and watch thousands of pitches and you finally get one right where you want it, something you understand and then you swing, so you might not swing for six months.

You might not swing for two years, it's downright boring, it would bore most people and certainly boredom is a problem for most professional money managers if they get sidetracked, sit back for an inning or two, not only do they get somewhat anxious but their customers are starting to scream to start yelling swing you bum you know from the stands and that's very difficult for people to do anything. Your approach seems so simple, why doesn't everyone do it right? I think partly because that's how it is. It's simple that academics, for example, focus on all kinds of variables, partly they make an academic refer to professors, right, yes, the data and the business school are sure of that and the data is there, for what they focus on is whether you buy stocks on Tuesday and sell them.

On Friday you are better off or people are in election years and you sell them in other years you are better off if you buy small businesses there are all these variables because the data is there and they learn to manipulate the data and as a friend of mine tells a man with a hammer that everything looks like a nail and once you have these skills you are dying to use them in some way, but they are not important if I were asked to participate in a business opportunity. Would it make a difference to me if I bought it on a Tuesday or a Saturday or an election year or something?

It's not what a businessman thinks about when buying businesses, so I do think about it when buying stocks because stocks are just parts of businesses.