Warren Buffett's Speech Will Change Your Financial Future (MUST Watch!)

I'd like to talk to you about

your

financial

future

and I hope those numbers become applicable to all of you as we move forward and I'd like to start by posing a problem for you and instead I'm just going to talk. for a couple of minutes and we'll do q a because what we want to do is talk about what's on

your

mind, but I'd like you to think about this just for a second if, leaving here today, I said I'd like to buy 10 of your

financial

future

I was going to write you a check today and from this day on you were going to give me 10 of everything you earned how much you would want to charge me for that I am going to buy a tenth of By the way, you and I can accept the low offer, like this Be careful what you do right now, well, I think if you think about that for a moment, you can contemplate that for a few minutes you

will

know that you

will

receive a check for me. today and they can do whatever they want with the money, but from this day on they have to give me 10 of what they earn.

I think it would be very foolish of them to ask for less than, say, fifty thousand dollars. Now it's going to be a few years before you go out and make money, so I've got a few years of dead money in there, but then I'd start getting this royalty on you as you go, so I really think if you thought about it more of you guys would want a good amount more than that, I think they would be right, luckily I didn't make this deal with anyone when I started so no one has a 10 royalty on me, but I think 50,000 would be pretty much the absolute minimum and if you think about that, that means that today you are worth five hundred thousand because ten percent of you is worth fifty thousand in cash, today your potential is worth a minimum of 100 based on 500,000, which is the big financial deal. asset that you have, it is much more important what you do with that 500,000 asset that you have today than whether you decide to buy stocks or bonds or whether you put your money in a mutual fund or choose your own stocks or something like that.

The biggest financial asset you have going for you is the value of your own purchasing power over the years, so that's really what you need to focus on if you're focusing on your financial future, that means you need to focus on the finances because if your ten percent is worth fifty thousand or one hundred thousand or three hundred thousand, which would be five hundred thousand or one million or three million to all of you, whether it turns out to be one or the other is really dependent, uh, in a very sense. Much of what you do in the next few years, all of you in this room have the brains to do extremely well in life, you all have the energy to do extremely well in life and then the question is how to apply it if you have a motor of 200 horsepower, you get 200 horsepower, you get your full potential or you get 100 horsepower or 50 horsepower.

Now there are two things that can prevent you from getting all the horsepower out of your engine, whatever that may be. It may be that all of you have big enough drivers and one of them is lack of education, but that probably won't happen to many people in this room if they had lack of education if they didn't have the opportunity. To get a decent education in life, it wouldn't make any difference what that potential was because you would never unlock it, but the second most important and equally important thing is in terms of the habits that you develop in terms of what you do. with yourself when we hire people we look for three qualities we look for integrity we look for intelligence and we look for energy but if they don't have the first integrity the other two will kill you because if you hire someone without integrity you really want to be dumb and lazy, right?

I mean, you're the last thing in the world. You want the shapes to be smart, energetic, so smart and energetic just goes with integrity. You know you make your own decision on that. You don't

change

your IQ or how much you control football, or how high you can jump or the color of your hair very easily, but you can choose to have an integrity that matches anyone else's and if you combine it with the intelligence you have and the energy you have. uh, you will get an extraordinary result and I would be very foolish if you sold me 10 of you for 50 000.

On the other hand, if you do not combine it with that, your potential will largely go unused and I will give you a simple little test to apply in terms of thinking about the type of habits that you want to develop because you can have any habit that you want to have you can be you can be lazy you can be punctual you can be you can be late I can be honest you can take shortcuts I mean you have all these options and those are decisions what you should take, no one else will do them for you and I suggest you play this little game with me too, think about the person I would most like to be in life, so maybe it's one of your contemporaries, maybe someone a little older , but choose the person you admire the most, the person you would trade places with if you could, and then write down why you admire them, just put it down. on a piece of paper and then identify the person you would least like to

change

places with, who you really dislike, who you find repulsive and list the reasons why you dislike that person so much and leave them on the other side. of the paper and then look at that list and you'll find that everything that's on the left side what you admire in other people the qualities that they bring to life um joy you know generosity all kinds of things you'll find those are things you can do yourself, it's very simple, you have to work hard, but the habits you form and the ones you do from the beginning will help you throughout life and on the other hand, you will discover that the things that make people repulsive, selfish, hateful, all of these Things, selfishness, are things. that no one has to have, if you find them in yourself, you can get rid of them as long as you get rid of them early, so all I suggest is that you write, write a list of what you admire, what you find despicable . and decide that you know that the ones that are on the admired side are the ones that you are going to acquire for yourself and if you do that when you are young it will help you for the rest of your life, this does not work If you do it when you are 50 or 60 years old, by then the habits will be too well formed, but if you do it early, the behavior becomes a habit, so if you do it within two or three years, if you do the same exercise.

You will find that the person you admire the most is yourself, which can be a little dangerous in some circumstances, but it's not, it's not a bad thing, I mean, you want to be someone you like and you don't want to be someone you like. someone who you are that you don't like and who forms those habits early that you basically can't miss now I'll give you another little tip that's just a corollary of this and then we'll answer your questions and that's like a general matter of specific financial financial advice , I would say you know, avoid credit cards, just forget about them.

We are in several companies that issue credit cards. The American public loves credit cards, but if they start rolling over debt on credit. cards you are going to pay 18 or 20 percent and you cannot progress in your financial life by going around borrowing money at 18 or 20 percent you can make a lot of money lending it at 18 or 20 over time I know if you can find someone good to borrow from you , but you don't want to be on the always-late side of the equation in life. You know, I was lucky to have saved about ten thousand dollars when I arrived.

I came out of school that ten thousand dollars was really worth millions that I could have made later because after starting a family and everything, expenses increase, but those were my tools to work with, but it was only because I was ahead of the game . If you're ever ten thousand dollars behind in the game and paying eighteen or twenty percent interest, you'll never know you'll never get out of it, so the trick is I have a partner who says whatever I want. I know it's where I'm going to die, so I'll never go there. You know, and that goes for financial matters too.

You want to figure out where you don't want to be ahead of time and avoid that. I get about a dozen letters a day from people who are having terrible problems and there are two reasons why they have terrible problems: one is that several of them have had health problems of some kind, that is, they have really been hit by someone or somebody in your life. The family has been hit by some kind of catastrophic illness and that's a terrible thing that happens to any family and they go in and rack up bills that they can't pay and really only society can solve that uh uh in terms of protecting people from that. , that's just bad luck, but the other is people racking up credit card debt and facing bankruptcy.

Here they have been through bankruptcy once before and they owe a lot of money and they can't pay the interest much less pay the principal and half of my letters come from people like that and that problem is avoidable. Catastrophic illness is not, but credit card debt is something you bring on yourself and that's how it is. It's much easier to stay out of trouble than it is to get out of financial trouble and I guarantee that if you use a big credit card you will be in trouble for probably the rest of your life in terms of your financial situation.

On the other hand, if you get ahead of the game, even on a very modest scale, so that money comes in from investments and people owe you money or stocks owe you ownership, you will be way ahead. of the game compared to paying it off, always being paying your creditors every month, so my advice to you is, if you can't pay it, don't buy it and put yourself in a position where you can pay anything and then we'll be happy to See it at Borsheims or the Nebraska Furniture Market. Now, let's have some questions. Do we have a microphone that people can access or travel to or whatever you have in mind?

Ask, don't do it. No, don't be shy, yeah, how would you advise people who aren't necessarily going into a career field where you would make a big base salary, like medicine or something like that, maybe performing arts or music? How would you advise us? To keep up financially with the rest of the world, it is true that a market system does not pay as well in some activities as might seem appropriate for the importance of those activities, society simply takes teaching, for example, I mean, teaching yes. they don't pay well and what might be more important, I mean, you know you have to be as interested in who your kids' teachers are as you are in who your accountant is or you know whatever or who's winning the heavyweight title of the world or that kind of thing, but it doesn't pay well and it's a fundamental choice.

If you are going to dedicate yourself to something, for many people it would be a fundamental choice if you are going to dedicate yourself to something you love. or something like that to try to make a lot of money I think it's generally worth going with what you love I think it's very difficult to find people when they get to my age who say they're into what they've loved What they've done all their lives and feel that it was worth it, but they are terribly sad that they made that decision because they didn't make much money.

I don't think anyone has ever told me that they would like to do it. They had gone into something else that they were uncomfortable doing or they didn't enjoy it, they didn't feel very productive, but they were making a lot of money, so no, I don't think you'll find it, so I would do it, I would do it. You'd go work on whatever excites you, it may turn out to be more profitable than you think, but almost everyone here will make enough money unless they pick up some terrible habits along the way to do it reasonably well and get it done. reasonably well in this country it's actually pretty good, I mean you don't have to have huge amounts of money to be able to enjoy it, I enjoyed it when I had my ten thousand dollars and I live in the same house that I lived there when I was doing when I had that I bought it 41 years ago I like the house so I like the house now I mean, if you think about it, if you have a reasonable job, you will eat at McDonald's and I will be eating McDonald's, so let's get on with the food.

I mean, you know, in fact, I hope it's Dairy Queen. And if you come to Dairy Queen, you'll see me and you can order anything. the menu I can order we can both afford it eh, you know, you will wear the same clothes as me. I'll pay more for my suits, but as soon as I put them on, they look cheap, so they look pretty much the same and we'll both live in the same type of houses. I live in that house from 41 years ago and it is warm in winter and cool in summer and it is comfortable and you will live in a house like that. similar and then what difference does it make if you have 50 more rooms or you know guest houses or everything you know?

It will probably only get you into trouble. I mean, you have to worry about the gardener or something when you're done. So, I've been in people's houses, where the houses are worth probably 200 times what my house is worth and I wouldn't be happier in those houses at all, in fact, I'd be less happy if I only had one. There's more things to worry about and you know, the dozens of people around the place and the people who quit and the people who steal from you and all kinds of things to hell with this now, uh, we.

Drive, we'll drive the same kind of thing. car, in fact, probablyyou will drive a better car. I have been driving our cars for about eight years. I don't know how much it's worth now, but it helps me move well. I mean, I'm perfectly happy. we will see, we will

watch

the same television, you know, we will work on the same computer, pretty much the only difference will be how we travel long distances, you know, I will fly on an airplane that is more comfortable than flying. Southwest Airlines or something like that and I have nothing against it, but that's the only big difference and other than that, I do what I love every day.

I hope you do what you like to do every day and work with nice people. people, I hope you work with nice people, and there are 24 hours in the day and that's where the hours go, so great wealth is a little bit different, in a real sense, than having a decent income and trading with a decent income. and something that you love to do and something that you feel is worth doing for great wealth in which you exchange many of your principles. It would be a terrible mistake. Wouldn't you recognize your success more in yourself or in the help and teachings of others?

I was, I was, I was very lucky in life. If you tell me who your heroes are, I'll make a pretty good prediction about what you're going to do and I had the right heroes. I was very lucky in life. Heroes never let me down and I started with my dad and then I had others in the business, so I've had great teachers, some formal teachers, some who were just informal teachers, teachers by instinct or example, and if I hadn't had those, you know, my I'm sure life would have been very different if I had been born somewhere else when I was born in 1930 and at that time one in every 50 births in the world was in the United States, so I was against 50 to 1 odds against being born in the united states would have been a disaster, you know, if I had been born in Afghanistan or Peru or somewhere, I mean, today I was extraordinary, I was born, you know, being born in this country, so were you, uh, I mean you, the odds were probably 40 to 1 against you being born in this country and you were five times more likely to have been born in China, six times four or five times more likely to have been born.

I was born in India or somewhere else where it wouldn't have been so easy to exploit the full potential of your talent, so we've all won the lottery in that sense and that's pure luck, I mean that and I was lucky to be. I was born at this time, I mean, capital allocation is something that works very well in today's society, but it doesn't work in other societies and it didn't work, you know, many years ago, my friend Bill Gates says yes. I was born a few thousand years ago. It would have been an animal lunch, you know, I can't run very fast and I can't climb trees, and you know, it just happens, those are talents, no one asked me to climb trees now, but uh.

There was a time when it might have been important, and by the way, Bill would have been an animal's breakfast. I mean, he can't run that fast either, but in any case, you know, we're lucky. I mean, imagine being born a couple hundred years ago. does exactly the same talents and how far they would have taken you, then you know that the average person today lives much better than the richest person lived 100 or 150 years ago, so I am lucky in that sense, lucky to have been born in a wonderful land . My parents, I was lucky to have grown up in Omaha, in a great public school system.

I started here in the first eight grades, which gave me a foundation that then, when I went off track a few times, helped me get ahead because I had a great elementary education right here in Omaha and Rose Hill and one of the reasons why That I had it incidentally is a little unfortunate, but I had that great education, partly because women were being hugely discriminated against and so a woman at that time could be a teacher, she could be a secretary, she could be a nurse, you know, and that was everything, so he had half the talent pool in the United States limited to a few jobs, so you had a lot of talent in those activities like nursing or teaching because that talent of men extended into every act, every form of There was work activity, but with women it was concentrated in a few areas and that benefited me, it's a little sad because it didn't benefit those teachers, but but.

I was very lucky and I've really been like that my whole life and what I do is what I do is important, since you know what makes a good teacher or a good nurse or something like that, you know, I think that's quite It's questionable. that performs enormously in a market economy like that of the United States and, but that is an accident, it did not have any innate ability of mine, Mr. Buffett, technology has been a great factor in stimulating the world economy, what are your predictions for the future? The future of the technology industry and what its future role will be in the world economy and in the United States economy.

Yeah, well, there's no doubt he's turning the world upside down. He has already done it. You've already done it, but you'll know you're just getting started, but you're moving. very quickly I met Gates on July 15, 1991. I was there for a 4th of July celebration with a friend who later died in Greenfield from the Washington Post and she took us to visit the Gates family and he tried to educate me. about high technology and I had had better luck with chimpanzees, I mean, I was really a mess, but he is a good teacher, but one thing he told me was that at that moment he said: you know you have this model in your boss of the world and its model has time and distance as very limiting factors and he said that they are no longer limiting factors.

He said you know the cost of talking to someone around the world or getting your message in front of someone or publishing it. It's going to be zero and they're so close to zero that it doesn't make any difference, you know, that was revolutionary, but it's already happening in a very, very big way and it's only eight years later and it's blowing up so much. High-tech information technology, whatever you want to call it, is changing the world and it's going to change it in a very, very big way, it will change, I mean, that's one of the things that I think about in the companies that we buy, uh, we announced the purchase. uh yesterday from a furniture retailer in boston in the boston area and you know, I think to myself what effect this new world in terms of the Internet has on furniture retailing.

I mean, you have to think about questions like that, the changes will be huge. I played bridge yesterday with people from all over the country, but I played it with people from all over the world. I just sit at my computer and I have some popcorn there and I'm in khakis and a sweater. and I can have a game of bridge in 30 seconds with people from all over the world and at no cost. Basically, you know, that's a lot different than trying to organize a game with four people in Omaha, you know, on a day when one guy wants to play. golf, another wants to

watch

baseball and I mean, that's it, it just changes things enormously. uh we're very lucky I mean it's to the extent that the United States leads the world in this area I mean we have an advantage it's hard Think about who's in second place and about 15 years ago this country had a complex of inferiority that you would have a hard time remembering because you weren't old enough to be around them, but in the early '80s we were wondering if the Germans and the Japanese were going to own everything and they were going to make all the steel and they were going to to make all the cars and everything else and the televisions and we were going to flip hamburgers, that was the standard line and imagine. in a short period like 15 years, how that changed in a major way, that changed because of this information, a revolution, where we like, I said, I don't know who, I don't know who you would name as second. in the world, but here is the most important industry in the world and the United States has this incredible position and we are moving all the time in that position, so I think that is an argument for a fantastic future for the world. over time and I think it is even more of an argument for a fantastic future for this company and a country.

What are the best ways for young people to start securing their financial future now? It's not very complicated, first it's about making the most of your own talents. I mean the difference between whether you're going to earn x, 2x or 3x a year 20 years from now is going to be a function of how well not how much talent you have but how well you use the talents that you already have and that's your best financial future is your own ability and your ability to use those abilities to their potential and they can't take that they can't take it away from you they can't even tax it I mean you know most of the things if you want you know a real estate, if they double the taxes, they double the taxes and that changes your ownership in the property because now, in effect, the tax authorities own more because they have greater control over the income stream.

The same goes for almost any asset you have, but don't tax what's in your head and don't test your ability to start performing when you get to work in the morning and finish in the afternoon to reach your potential. One of the things that amazes me is how people who are really good performers jump to you. Once you run a business, when I left school, I thought you knew everyone would behave that way, but you don't. Most people sleepwalk through life, and if you don't, you'll stand out. so the most important thing for your financial future is yourself now beyond that, it's always being ahead instead of falling behind, it's saving a little, no matter how you do it, I mean, I turned in papers, I worked for pennies , I sold golf balls, I had a pinball machine, I did a lot of things that allowed me to accumulate about ten thousand dollars when I got out of school, uh, 10,000 doesn't go as far now as it used to, but it has something like that.

That you are ahead of the game and not behind the game is enormously important. I mean, you just know if you're going to run 100 yards against a group of people in life, if you can figure it out so that when the gun goes off. If you're 10 or 15 yards ahead instead of 10 or 15 yards behind, it's going to make a huge difference in how that race goes, so having some net assets doesn't make much of a difference whether they're in stocks or bonds. In my opinion, but not having debt when that gun goes off when you leave school is a big advantage over being behind the game and you know it can come from delivering a newspaper in the morning, it can come from part. -It's time to work somewhere, but put aside a few dollars for yourself, but so that when the time comes and you enter, you enter the workforce.

You're ahead of the game and not behind and then once you get there, don't fall behind. By buying a bunch of things you think you'll pay for one day while paying 20 interest in the middle, I wondered, with the rising costs of education today, what can students do to deal with their debt once they're done? ? I'm done with college, well that's tough, I mean I guess I would pay it off as quickly as I could and incur as little debt as possible before that time came and I would say this from my experience in business there. There's very little difference, if any, between a very high-priced business education and what's a lot available for a lot less money, so I went to the University of Nebraska at Lincoln, my last year of college I went to Wharton for a couple of years before learning. at both the university of nebraska and wharton uh and there's nothing against wharton, I mean it's just me, we had a really good school here, I had some fantastic teachers at Lincoln, so I wouldn't assume that if I was paying a few a few thousand dollars for an education, here in the state, for example, versus paying huge amounts elsewhere, that was going to make a big difference, most of the education, and they need to push it in the right direction, but it's terrible.

A lot of it is self-taught, I mean, Andrew Carnegie did a wonderful thing in this country in terms of libraries and I used to spend a lot of time in libraries. I can stay locked up at the University of Omaha. Then it was the University of Omaha and I couldn't go out for hours and one night I was so fascinated with what I was reading, but there's all kinds of information available now with the Internet, it's so much easier than that. So it was there to be taken and you don't need to pay 30 or 35 000 a year to go to a reputed school to get the education, I mean if you are going to learn accounting, yes I am going to go, which is probably the most important course what you would take in business.

If you're going to learn accounting, you can absolutely learn accounting too. From my point of view, I will go to you and I will always go to Harvard. I mean, I see I'm betting on that. I wouldn't spend big bills in terms of getting a business education. Now you know, if you're going to get a medical education, I mean, there are certain professions that there may be no way to spend a good amount of money and get into. to some extent, you have to make that decision yourself, but I would certainly try to minimize it and, in a sense, you would have to figure out how you would handle that debt, say a five-year period afterfinish school or I would think twice before incurring it.

What advice would you give to a nonprofit in the making about forming a nonprofit? Well, I've always tried to avoid forming non-profit organizations uh, well, that would depend entirely on what I wanted to achieve, I'm serious, you know one thing would be, if it were a hospital, it might be another, uh, you know, There are so many types, so I already know you. I have to get people who have experience and are involved in an entity like that and it depends a lot on the goal you are working on. I understand that you are very civically involved and I was wondering how important a quality you think is for an individual in life and why yes, well, I wouldn't say I am.

I mean, I do certain civic things. I think I think your model as a citizen, for example, online would be. Walter Scott, I mean, he's a lot more civically involved than I am, and by the way, his predecessor, Peter Kiewit, was too, but Walters took it to new heights, so I don't want to take any responsibility for that. I do some things myself. One of the problems I have is that I love what I do so much that it kind of takes over. I mean, I'm like a guy who likes to play a lot of golf or something, except I like the business I do.

But I have a family that participates very actively. Some of my children work on almost anything that comes up in the civic area and you know, what you do is that in the end people do what they want to do to a certain extent. And I don't think I've ever talked to anyone who enjoyed working on civic activities and didn't feel like it was worth it after they'd done it, I mean, they've built something and being involved in building something is always a lot of fun. and you actually have a good time, we have this golf tournament, for example, in September and we raise some money for something, but everyone has a good time, so no one pays any price for doing it.

I'm having a good time, the people who come are having a good time. a good time and we can show people more, but you should enjoy the things that happen and you will if you work in civic activities that interest you and you can do the same in politics, I mean, if you find political ideas or politicians to like. If you particularly identify, you can get a lot of personal satisfaction from not working and you are doing something worthwhile, so I just follow your instincts, that would be my recommendation. I have a question: what do you think the problem is?

The biggest economic problem facing today's youth in the future. Yes, I don't think I'm going to have huge financial problems. I think you will live in a society where the average person lives better by a significant margin than the average of a previous generation or two previous generations, that has been the history of this country, it is a wonderful country, that way I mean it, When you think about it, we have four and a half percent of the population. The world population, you know, and what has been achieved here is incredible. 53 percent of the value of the world's publicly traded corporations exist in the United States, with four and a half percent of the population.

This country has always done well. Saying in stocks that you should buy stock in a business that's so good that even an idiot can run it because sooner or later one will, and that's not terrible advice, well, it seems to have been kind of the story of this country from time to time. from time to time. I mean we've had all these problems that have arisen if you look back over the last hundred years and you list all the problems that those countries have run into you know you make a very long list and a lot of people who focused on those problems at that point they have missed the bigger picture and the bigger picture is that each generation was better than the last and that is because of savings, because savings allow people to create new tools to do better things as they They advance and It is also due to an environment that allows people to develop their potential to a greater extent than most other environments in the world.

It's far from perfect. I mean, it's sad how far from perfect it is, but it's better than anything else. I mean, in this one. country, uh, you have, you don't have any commissioner or anything like that running a big business in this country, you have a guy like Jack Welch and a guy like Jack Welch who makes the difference between day and night in terms of the productivity of that business over a period of decades and productivity is what causes living standards to rise, so anything a system that throws in the Jack Welchs of the world to run businesses will have a huge advantage over a society that does it by inheritance or by government edict and we are closer to that society that I have described than any other country and it has led to great things and will continue to lead to great things so I think you have the best future uh you know you don't face you don't face a war and you have a you have a great uh you have a better future in terms of achieving material rewards than any generation in history, so I wish we could trade places.

I was wondering if you or if you could speak for Mr. Gates were afraid of the impact of Y2K on the economy or specifically the stock market. Yes, good. I'm, I'm glad you gave me the opportunity to attract other people because I'm the last guy in the world who understands about Y2ki. You know, I don't know why this microphone works. Don't know. Do you know why the lights turn on? I turn on the switch on my TV and I pray, I mean, it's all, it's beyond me, but I would say the smartest people I know in that area, largely think it won't be In this country, no, I can't speak for the rest of the world, but I think you'll wake up on January 1st and discover that the world hasn't changed since December 31st.

I would say you could get a bunch of friends to write your checks for a billion dollars on December 31st and deposit them and you know who knows what will happen, I can't lose anything, I mean I'm not going to. do your bounce and if the system is tracked you know you can find a lot of money in your account but I wouldn't count on that so wait we have a company called Executive Jet we have about 14 or 1500 clients. who own airplane parts with us and we, so, we have a hundred and well, we have 160 of their airplanes and some of ours flying around.

It will be very interesting for me to see what the advanced people let us know. At what point they want to use it it will be very interesting to see how many sign up for January 1st on 1201, but I wouldn't bother flying it at all on January 1st or doing anything else on January 1st, ideally I hope. I was getting ready to watch the hullers play in the big game and was wondering how you decide where you invest your time and money. Yes, well, I like to find companies that have good economics. What is good economics?

Well, good economics is a business that has some kind of moat around it that makes its product or its service or its location or something a little more desirable to the customer than any other comparable type of product. You know the number one chocolate bar in the last 30 or 40 years. It's been giggles people don't play with different chocolate bars, they play with dresses of different lengths, they fly, you know, with all kinds of things, but they don't play with chocolate bars because they think you know they're going. go in and put 50 cents or whatever and put it in their mouth and they're not going to get 50 cents and put it in their mouth, I mean, you're not going to say, I'll put it in your mouth.

Put 45 cents and put something else in my mouth so you find it very stable and we like businesses that we think we can determine where they will be in 10 or 15 years. I don't know where the IT businesses will be. they will be there in 10 or 15 years I know where Snickers bars will be in 10 or 15 years they will sell almost you already know how they do it now I know where Wrigley's gum will be in 10 or 15 years there will not be much innovation in terms of chew them and people on the Internet are not going to make people stop chewing gum.

I mean, at least I want to say that Gates may think that, but I don't think so, but it's predictability. With respect to the sustainability of a competitive advantage, there is something special about a product, so we look for those types of products and then we look for people who run the business who are honest and capable, it is easier to find people who are honest and capable than what en To find businesses that are going to continue to be wonderful for a long period of time, there are a lot of businesses that seemed like they were going to continue to be wonderful but that really evaporated over time, but that's what we're looking for and the good thing is that No We have to find a lot, if we find one a year, that's fantastic because you don't need a hundred or a thousand great investment ideas to do it well, you need a couple and if we are, discipline is the most important thing.

What we don't need is brain power, we need discipline, you don't need 150 IQ to do what I do, thank God, you know you don't need 140, you know, 135, you might need 115 or something, but you do need it. . Discipline, you have to wait until you see the big pitch to swing because investing is a no-call strike game. You know, if I were a baseball player and I only like pitches two inches above my belly button, you know, some guy could learn that and you could throw me, you know, three or four inches below that and they'd call me strikes. because I never find a release that I like.

In baseball, they call your strikes. You have to swing at pitches you don't even necessarily like. particularly after the count reaches two strikes in business you don't have to balance on anything, you can sit there and the newspaper says General Motors at 68 or it says General Electric at 115 or so General Dynamics at 63. And if you don't do it No I like those prices, you don't have to change, you can wait there day after day after day and there are no called strikes now, when you swing when you decide to buy something, then you know if you change and miss, it's a strike, but it's a wonderful game because There are no called strikes and you can just wait for that time every month or six months or a year or two or three years when you really know what you are doing and where you like the price. or you like the people who run the business and then you change and you only need a few changes in your life, so that's the way we try to choose businesses, we try to stick to things that we understand, I mean, there can be all kinds of wonderful investment opportunities. out there I don't understand I don't know what the cocoa beans will do next year you know maybe you know but I don't know I don't know what the crude oil is going to sell but I don't have to know I just have to know the things I have to know what I know I have to know where the limits of my understanding are what I call what my circle of competence is and if I'm I can only evaluate five percent of the companies in the world, no problem, I just keep within that five percent and I try to find something, and that's what most people get into trouble because in investments they get itchy, you know, they can't discipline themselves. themselves and hearing about other people making money, nothing bothers people as much as hearing about their friends making money, I mean that's very destructive to discipline because they think I'm smart with that guy next door and he just bought that new. car with money earned trading stocks on the Internet, so why can't I?

The answer is that you can't beat the time, you will lose money to actively trade stocks and, uh, it's hard to exercise discipline, but every time you buy something, you should do it. to be able to take out a one page sheet of paper and say: I'm buying general motors, it's 65. I'm buying general electric 150 because and you have to write down the reasons, if you can't, you can't fill out the sheet if it's because someone told me about it last night in a cocktail that's not good enough if it's because my broker told me that that's not good enough yeah, it's uh, you have to have a reason to think what a smart person makes investment, you do the same if you're buying a farm or an apartment building, if you're buying a farm, I would say I'm buying this farm for a thousand dollars an acre because I think I can make 60 per acre on If corn cells and such and such and soybean cells and such and such They would perform like so and so and you would realize that that is the same reason you buy businesses and when you buy stocks you are buying a small part of a business.

And that's probably the most important thing to remember when investing: when you buy a stock, you're buying a small part of the business, and if you buy it at an attractive price for the business, for the entire business, you're going to make money and If you don't you know that over time you won't make any money um Reverend Jackson Jesse Jackson spoke to us earlier seemed to believe that the moral standards of today's society will eventually affect us in business how do you feel? This will affect us as young people growing up in the United States.

Well, I think it's very difficult to quantify moral standards over time. I mean, you know you could spot big weaknesses in anygiven time in terms of how people or the country are behaving and and enormous strengths, so I think it's enormously difficult to quantify. I think we've generally made progress in what I would call institutionalized moral standards in this country, I mean the uh, you know, in terms of slavery, in terms of, uh, in terms of, I mean, women, women They couldn't vote, you know, a century ago, half the country were second-class citizens in that sense and had far fewer rights.

In terms of inheritance and all kinds of things, income tax didn't exist a hundred years ago, so the idea of ​​taxing people based on how much they benefited from society and their income didn't exist, so I think in terms of institutionalized moral standards the country has made really significant progress in the last hundred years I think you know there is an enormous distance to go I think we are going in the right direction maybe in fits and starts but I think we are going in the right direction and I think it will be a significant advantage for everyone in this room if in 40 years they live in a more moral society than in a less moral one, but I think it is most likely that way, I think that the country is moving in that direction it is very difficult to do so, there is all kinds of interests that go against it, but in the end I think the American people want it and you saw it in civil rights, I mean, television was necessary to dramatize what was happening and the people who were not around, they preferred Don't think about it, but it came into the consciousness of the American people and a lot of progress has been made there and there is a lot left to do, but there it is better than it was and the pace may seem. very slow for the people involved and I can understand that the pace that you know for women's suffrage, I mean, it was for decades and decades and decades a woman could be on a jury.

I was reading the Clarence Darrow trial that took place in California about 19 I don't know 10 or 11 ago you know there were no women on the jury the women were not allowed to be on the jury they were not citizens in that sense so in my opinion opinion, the moral behavior of the country has improved but will continue to improve and I hope that everyone in this room will do their part to help improve. I was wondering how since the stock market is so high right now would it be smart for us to get in on it now or wait until it goes down a little or what, yeah I can't tell you whether or not to buy stocks now in general I think it's It's important that you save money, you know, and if you put it into the stock market, I don't think it's very important.

I think if you're interested in stocks you should buy them, you know, and you have a little capital, you should buy some. I mean, I don't think there's any way to learn about them. Better than experiencing doing it on paper it is not the same I can guarantee you that if you lose money on paper or lose real money it is a different experience and I think you will learn more about yourself if you do it that way I bought my first shares when I was 11 years old. I was actually in Rose Hill at the time and bought three shares of City Service Preferred at 38 and it went down to 27, which is something I still remember even though I was 11 at the time. then it went up to 40 and I sold it, made five dollars on my three shares after commissions and then it went up to 200 and something like that, you know, I probably remember it a little better than if I had been doing it on paper.

I know this and I was doing a lot of things between the ages of 11 and 19 in the stock market. I made graphics. I did all kinds of technical analysis. I read every book I could get on the subject and didn't do so well. I didn't do terrible, but I did. I was really wandering around, but by that I mean when I was 19, when I read Ben Graham's book, I was at the University of Nebraska at Lincoln, I went and bought this book called The Intelligent Investor. I just published it. and it had a huge impact on me now if I hadn't done it in the previous eight years, if it hadn't been everywhere, I'm not so sure that that book would have had the same impact on me, I mean, It was at that time I was prepared to read Ben Graham's book, which changed my life financially in an incredible way.

I mean, I wouldn't be here today if I'd read that book, but yeah, part of life is preparing for when something happens. If something important happens, you can understand its importance and know what to do with it. I would say that the first eight years of nonsense, while it didn't produce anything financially to speak of, produced a lot in terms of preparing my mind for when I actually read something that made sense, so I was ready to accept it and actually went back and went to Columbia to study with Under Graham and because of reading that book, all kinds of things came out of it, so I encourage you.

If you're interested in the field to do some things, I'm still trying to make them as smart as possible. I would try to stick with the things I thought I understood. I would still take out that piece of paper and I write that I'm doing this because and I just test my reasoning, then I go back and read it a year later and see if what you thought would be true turned out to be true, so I would always check in with myself. I believe in rating myself. all you know is that doctors do autopsies and they do it because they learn from autopsies, and business people don't like doing autopsies by building plants or buying companies and they never wanted, two years later, to see how that works.

The decision worked out because it can be unpleasant, but you learn from autopsies and you don't want to learn. It's much better to learn from other people's mistakes than your own, but you also need to learn from some of your own and take the time to do so. Do you do it when you're young? My question is: to what extent do you think the government with current welfare and social security policies is financially competent and fiscally prepared for the future? Well, I think the country as a whole is pretty well prepared for the future, that doesn't mean that I would adopt all the policies that they have, but I think we have an enormously rich society, an enormously rich society and it will get richer, uh, not everyone is going to participate in that some will not participate because of physical disabilities, others because of mental disabilities, others because of deficiencies in the education they received as children, all kinds of reasons why we have a society that is prosperous enough to be able to take care of those people and we should take care of them and how we do it so that they feel more useful in life and how we do it so that we continue to encourage people to be more productive and all that, I mean, those are not easy questions, but that We shouldn't set aside feeling view, we should do something about it.

I often pose this problem to people, I say, let's say it's 24 hours until you're born and you can all take this test. hours before you are born and a genie comes to you and the genie says what was your name again out there uh whatever we call you joe uh and the genie says joe says you look very promising to me I think you have some kind of sense of fair play and a good mind, so I will let you have an extraordinary opportunity. I will let you design the world you will be born into in 24 hours.

It's yours. you choose the political rules, you choose the economic rules, you choose the social rules, you design the world and when you are born in 24 hours, you will be born into that world and that is the world that will exist for you. life for the life of your children for the life of your grandchildren and if you have heard of some of these jokes about geniuses in the past you would say what is the trick that the genius tells well, it is a very slight trick, I said when when you are born in In 24 hours you will emerge in this world that you designed, but what you don't know is whether you will be born black or white, male or female, rich or poor, brighter, healthy or sick, in the United States or Afghanistan, whatever.

You know is that you are going to put your hand in this barrel that now has six billion balls, as we know, that represent one person for every person in the world and you are going to participate in what I call the ovary lottery, you are going to to get a ball out of that. barrel and you're never going to get another ball that's you you're a ball and now you're going to emerge now what kind of rules do you want to have for that society without knowing what ball you're going to get now What I'm putting to you is the way I think people I should think about social policy and if you are born, if you are lucky enough to be born in this country, you have already won the lottery, but, in my opinion, we should have a system.

That encourages the Jack Welchs and the Bill Gates and all that to work long past the time when it has any economic meaning to them, we want people who control those resources and who are extremely capable of controlling them, that's how the level of life. so we should want you know we should want tom osborne to coach in nebraska we should want we should want bill gates to design software and we don't want to mix those two we don't want we don't want to get Bill Coaching in Nebraska so you want people who want a system that directs the people to their potential and put them in the position where they can do the most good for society, but you also want a system so that people get the wrong ball, I mean, someone will get the ball, you know, that says 80 iq, someone will get the ball that says this illness or that illness early in life that cripples them and we have a society rich enough to be able to, we can. take care of those people and I think, going back to your question, I think this society will move more and more in that direction; has the capacity to move more and more in that direction as our resources and our production increase and I think it has the will to do so in a general way, although, as I say, there have always been many ups and downs, so in the United States United there is no shortage of resources, there is no shortage of production, it is necessary to have a system that encourages people. behave at the limit of their capabilities and put them in the right place, but then you have to make sure that everyone is taken care of too and I wanted to know how do you think the media affects the world economically today, well, it's a little question, huh.

Well, what it obviously does just because it's moved so far technologically is it's brought it together in a big way. I mean, I was in China a few years ago and I was right after the women's conference in Beijing and I was reading the Chinese coverage of that conference and of course it had nothing to do with what was going on, but the Internet was coming and , you know, you can access the Washington Post or the New York Times or me. I get the Washington Post at 9:30 here at night, in fact I was never able to receive it the next day by physical delivery, but I buy electronic delivery.

I can read it. Probably before most people in Washington read it. So the ability to communicate and the degree to which the world can be aware of what's happening in every place in the world, you just know it's been a quantum leap and you know there's going to be a lot of things that come out of that. and uh uh net, they are an advantage over time, but I mean the ability for information to be available to everyone around the world almost instantly instantaneously, there can be great advances in things like medicine, for example, just to choose one uh so it's a network and it also has a great effect and the definition of medium has now expanded enormously.

I mean, there were three television networks in the '19s and you know, in the early '60s and that was it, there were three information superhighways. traveled electronically and if the three pieces of information where I love lucy you know something else and something else those were the three information or entertainment options that you had for tens and tens of millions of people sitting there watching a subway is now unlimited and That's just which last three decades, so it just exploded and will continue to explode and I think that is an advantage and I think it is the one.

I want to thank you all. I wish you the best. They are going to do great. thank you