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when you made Investments during the financial crisis in February of 2009 why did you lean towards debt instruments rather than equity for example why did you invest $300 million in Harley-Davidson at 15% interest instead of buying Equity when the shares were $12 today they're at 33 well I would say that if I were writing that question now I might write the same question but I'm not so sure he would have written me the same question in February now there were different risk profiles obviously in investing and and and uh the truth is I don't know whether Harley-Davidson Equity is worth 33 or 20 or 45 I I just have no view on that I don't um you know I kind of like a business where your customers tattoo your name on their chest or something but but figuring out the economic value of that you know I'm not sure even going on questioning those guys i' learned much from them but they but I do know or I thought I knew and I think I'm right I was right that a Harley-Davidson was not going out of business and that b 15% was going to look pretty damn attractive and the truth is we could probably sell those bonds I don't know I'd have the probably at 135 or something like that so we could have a very substantial capital gain a lot of income I knew enough to lend them money I didn't know enough to buy the equity uh and that's frequently the case uh and you know we we love buying equities but we love buying we love buying the Goldman preferred at 10% now let's say Goldman instead of offering me the 10% preferred and warrants had said you can have a 12% preferred non-callable I might have taken that one instead I mean the callable there so there's a trade-off involved in all these securities and obviously if I can think I can make very good money as we did on the Harley-Davidson with a very simple decision uh just a question of are they going to go broke or not uh as opposed to a tougher decision is the motorcycle Market going to get diminished significantly and you know are their margins going to get squeezed somewhat and all of that I'll go with a simple decision Charlie well of course your one good answer that you simp didn't know enough to buy the stock but you did know enough to buy the bonds is a very good response the other side of that is after all we are a fiduciary for a lot of people and including people with permanent injuries and etc etc and to some extent we are constrained by how aggressively we buy stocks versus something else and when you mix those together why you get our investment policy I think generally speaking you raise a very good question I think very often when you're looking at a distressed situation and buy the bonds you should have bought the stock so I think you're looking in a promising area yeah Ben Graham wrote about that in 1934 actually in security analysis that that in the analysis of senior Securities the junior Securities usually do better but you may sleep better with the senior Securities and and uh we as Charlie points out we have 60 billion of liabilities to people in our insurance operation that in some cases extend out for 50 years or more and we would never have all of our money in stocks I mean we we might have very significant amounts but but we are running this place so that it can stand anything and and uh couple years ago we felt very good about where that philosophy left us I mean we actually could do things at time when most people were paralyzed and we'll keep running it that way
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