원문 보기
Could you elaborate on your view on risks? You are clearly not a fan of relying on statistical probabilities and emphasize the need to have $20 billion in cash to feel confident. Why is this a magic number and has it changed over time? No. Well, it's not a magic number, and there really is no magic number.
I would be really worried if someone came in every morning and told us exactly how many dollars in cash we needed, you know, to be insured at a three sigma level or something. Charlie and I saw many problems arising in an organization that measured its risks in sigma. And we even argued sometimes about the appropriateness of how they calculated their risk, and they...
It was really horrible. Yes, and they were much smarter than us. That's what's depressing. But, um, uh ...we both have the same mindset, we're constantly thinking about worst-case scenarios. And then we add a large margin of safety, and we don't want to go back to the starting position. I mean, I like scattering these papers in another room, but I don't want to do it again for the money.
So we certainly create levels of security that others may find absurd. But we have 600,000 shareholders, and there are members of my family who hold 80 or 90% of their wealth in the company, and I just do n't want to explain to them that we went bankrupt, because there was a 1/100th of a 1% chance that we would go bankrupt, and that chance was justified by the chance to double our money, and I decided that it was just a good gamble.
We will not do this. It doesn't matter that much . We will never risk what we have and what we need for what we don't have and what we don't need. We will still find something to do to make money, but we don't have to take excessive risks for it. And, uh... it's my job, and, you know, Charlie thinks the same way .
So, we don't need to talk much about it, but our job is to understand what could actually go wrong in this company. And you know, we saw September 11, we saw September 2008, and we will see other things of a different nature but with a similar impact in the future. We do n't just want to sleep well on nights like these, we want to think about how to manage the excess money that appears in our possession.
So , if you try to calculate it mathematically, I would say that it is really dangerous. I could give a few examples, but unfortunately I learned about them on condition of confidentiality, but in some wonderful organizations there are dozens of people with higher mathematical education who think about this every day, do calculations, but they never solve the problem.
This is always the main question at Berkshire, and your profits will probably suffer 99 times out of 100 because of our excessive caution, but in one case out of a hundred we will survive, while others will not. Charlie? Yes, but how do these super-smart people with tons of degrees and advanced mathematics manage to do such stupid things?
I think this is explained by the old saying: to a man with a hammer, every problem looks like a nail. They have learned these methods and are simply fitting the problem to the solution, which is not the right way at all. And also, I would say, they lack an understanding of history. Here's one of the things: in 1962, when I opened our office in Kiewit Plaza, where we're still located—though on a different floor.
I hung seven objects on the wall . Our budget for art was $7. Then I went to the library and for a dollar made copies of pages from the history of finance. One such case, for example, occurred in May 1901, when the Northern Pacific "corner" arose, and it's quite interesting in the Omaha context because Harriman was trying to gain control of the Northern Pacific, and James J.
Gill was trying to gain control, and unbeknownst to him , they had both bought over 50% of the stock. When two people buy more than 50% of the shares, and both really want to own them, they are not going to just resell them . You know, interesting things happen to those who play for the underdog. And that May 1901 article was about how the whole other market completely collapsed because Northern Pacific stock went from $170 to $1,000 a share in one day of cash trading because short sellers needed it.
And there was a little note at the top of that newspaper, which we still keep in the office, where a brewer from Troy, New York, committed suicide by jumping into a vat of hot beer over a margin call. And the lesson for me is that this guy probably knew about sigmas and everything else, and knew how impossible it was for a stock to go from 170 to 1,000 in one day, causing margin calls on everything else.
And he ended up in a vat of hot beer, and I never wanted to end up in a vat of hot beer, so those seven days that I hung on the wall, life in the financial markets has nothing to do with sigmas. I mean, if everyone who worked in financial markets never had any idea about standard errors and such, they would be much better off.
Don't you think so, Charlie? Of course. Hold on, take the candy. This created a lot of false confidence, which has now disappeared again. As I said before, business schools have gotten better. Just like risk control on Wall Street. They now took the Gaussian curve and simply changed its shape. They threw her out.
Well, they made a different shape than Gauss. And now it's a better curve, although less accurate. They talk about " thick tails," but they still don't know how thick to make them . They have no idea. Well, but they know they learned it through painful experience. They weren't thick enough. Yes, they learned that the previous ones were wrong.
Yes. But they don't know what is right. But we always knew they were—that these "fat tails" existed. Warren and I would look at each other in meetings at Solomon and roll our eyes when the risk control specialists spoke . Okay, Jay. This is a question about Swiss Re. Berkshire's quota reinsurance agreement with Swiss Re, covering 20% of Swiss Re's property and casualty insurance risks, expires in 2012.
Does Berkshire plan to replace this volume of bonuses with another deal? Well, we hope — we always hope to get more good volumes, but what we're doing has nothing to do with the end of this contract. That is, this contract was for five years. This is a big contract, billions of dollars a year. But the fact that it is ending and our premium volume will decrease by several billion does not force us to do anything differently than we would otherwise.
We have the ability to do deals worth billions, and we would be happy to do so if we were to extend the contract with Swiss Re, but we don't want to do stupid things when we lose this contract. It's simple, it's not an event from the point of view of future strategy. This is a significant event in terms of losing a part of the business we love, but it is nothing in terms of any future strategy.
We consider every decision, you know, independent. We don't do it like this: if money comes in, it doesn't make us think about doing something today that we did n't think about yesterday. We just don't work like that. We'll have things that come up and are great, but that doesn't mean that the next day we won't want to look for something else that's also great.
Each decision is to some extent independent. I don't think there is another major insurance company in the world that is as optimistic about the loss of volume as we are. This doesn't make sense. If business has to shrink, we let it shrink. Yes, we don't measure ourselves by size in any way. size. In addition to the increase in value over time.
Comments 0