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number one yes my name is oliver causa and I'm from Vienna Austria I am a Christian has two parts the first part is how do you get a few excellent investment ideas to be so successful do you read any special newspapers or industry magazines or - - you visit the headquarters or any subsidiaries of companies and which sources of information like books for example value line Standard & Poor's Moody's databases like oysters Bloomberg data stream annual reports internet and so on do you use to get the right impression of a company and the second part if you think that a company like The Washington Post gecko or chelate has a very competitive product what are the steps before your item utley decide to invest in the company which publications to you read to get the best knowledge of the product and how important it is the balance sheet and profit and loss account a statement of the company thank you very much thank you the answer to the first part is sort of and maybe the second part is sort of all of the above and we we read a lot and we read daily publications we read weekly or monthly periodicals we read annual reports we read ten case we read ten cues and fortunately the investment business is a business where knowledge cumulates I mean everything you learn when you're 20 or 30 you may tweak some as you go along but it all kind of builds into a knowledge base that's useful forever and and we at least that you know I read Charlie used to read may still read a fair amount but I read a lot of 10ks read a lot of annual reports forty or fifty years ago I did a lot of talking to management's I used to go out and take a trip every now and then and and and really drop in on maybe fifteen or twenty companies I haven't done that for a long long time I find everything we do pretty much I find through public documents when I made an offer for Clayton Homes I'd never visited the business I'd never met the people I'd done it over the phone I'd read Jim Clayton's book I looked at the 10 KS I knew every company in the industry I I look at competitors and I try to you know I try to understand the business and not have any preconceived notions and and there is adequate information out there to evaluate a great many businesses we do not we do not find it particularly helpful to talk to management's management's frequently want to come to Omaha and talk to me and they usually have a variety of reasons that they say they want to talk to me but what they're really hoping is we get interested in their stock that never works you know that management's are not are not the best reporting case the figures tell us more than a management does so we we do not spend any real amount of time talking to management when we when we buy a business we look at the record to determine what the management's like and then we we want to size them up personally as I said earlier whether they will keep working but we don't we don't give a hoot about anybody's projections of we don't want to hear about them in terms of what they're gonna do in the future we've never found any value in anything like that but just a general business knowledge you know what we've seen work what we've seen has not worked there's there's a lot to absorb over time charlie yeah basic knowledge you have I think the less new knowledge you have to get and the game is a lot like that fellow the place just blindfolded he's got a memory of the board and everything that happened before and that enables him to do the next move in a way he never could if you just showed him the board mid-game cold and so there and in terms of what publications I don't know Warren I would hate to give up the Wall Street Journal oh you'd also hate to give up the Buffalo News but you could well you want to read lots of financial material as it comes along and actually the New York Times has a far better business section than they had 25 years ago but you you want to read fortune you know you you want to read lots of annual reports you really want to have a database in your mind so that you can tell what kind of a business you're looking at in general by looking at the figures it's far over right we never look at any analyst reports I mean I don't think I've you know if I read one it was because the funny papers weren't available you know it just doesn't I mean it would I don't understand why people do it but there's a lot of data out there and you know the beauty of it is it's what any what makes the investment game great is you don't have to be right on everything you don't have to be right on 20% of the companies in the world or 10% of the companies in the world or 5% you only have to get one good idea every year or two so it's it's not something you know when I used to be very interested in horse handicapping and the old story was it and I hope Bob Dwyer is still here that you know you can beat a race but you can't beat the races and you can you can come up with a very profitable decision on a single company I would hate to be measured if somebody took gave me all 500 stocks in the S&P and I had to make some prediction about how they would behave relative to the market over the next couple of years I don't I don't know how I would do but maybe I can find one in there where I think I'm nine and ten ninety percent in being right is it an enormous advantage in stocks is it you only have to be right on the very very few things in your lifetime as long as you never make any big mistakes thing is that at least 90% of the professional investment management operations don't think the way we do at all they just think if they hire enough people they can be better at determining whether Pfizer Merck is gonna do better over the next 20 years and they can do that stock by stock all through the 500 and have wide diversification at the end of 10 years they'll be way ahead of other people and of course they won't very few people have this idea searching for just a few opportunities yeah you wait for the fat pitch Ted Williams wrote about that in a book called the science of hitting said the most important thing and being a good hitter you know is to is to wait for the pitching in in the sweet spot basically you know I've always said that the way to get a reputation for being a good businessman is to buy a good business you know there it's much easier than taking a lousy business you know and and and showing how wonderful you are at it because I haven't seen that done very often number two good afternoon David winters Mountain Lakes New Jersey thank you again for hosting the Berkshire weekend it's just great interest rates are the lowest they've been and I equity values in aggregate are still high Berkshire has meaningful free cash flow a short-duration bond portfolio and your buyer of low multiple high-quality private businesses in a few stocks assuming that the stimulated economic policy is to deal with the recession eventually cause interest rates to go up and maybe equity values to come down Berkshire seems very well positioned to benefit would you comment and also are there any concerns on both of your parts about investors inadequately understanding the conglomerate structure of Berkshire and then therefore improperly pricing the shares well to answer the second question first we hope the latter wouldn't be true because we do our best to explain it I mean I used 14,000 words in the last annual report which caused certain members of my family to ask what I was getting paid by the word the we want you to understand Berkshire and I hope that comes through that's why we have these kind of meetings that's why we why we spend a lot of time writing an annual report we try to tell you what we would like if the position was reversed and if our positions were reversed and we think that the information in the annual report you've read by somebody that they have to have some understanding of business and accounting but if they don't you know that nothing is going to help really in terms of helping them under with the business but we think if they have some understanding of it we have given them the information that Charlie and I would need in order to come up with our rough ideas of the valuation of Berkshire and we and we hope we get across what it's all about you know there are a lot of companies in Berkshire but it's not important that you understand the nuances of every single one looking at what happens in aggregate in many cases will be will be sufficient in terms of how we're positioned you know we have 16 billion of cash not because we want 16 billion of cash or work because we expect interest rates to go up or because we expect equities to go down we have 16 billion of cash because we don't see anything that makes us want to part with that cash where we feel we're getting enough forearm money but we would spend it to me we've spent at Monday morning on the right sort of business or even if if we could find equities that we liked or if we could find like last year we found some junk bonds we like we're not finding them this year at all because prices have changed dramatically so we're we're not really ever positioning ourselves we're simply trying to do the smartest thing we can every day when we come to the office and if there's nothing smart to do cash is the default option charlie in terms of future opportunities the issue is is it all likely that there'll be an opportunity like 1973 for or 1982 even when equities generally are just mouth-watering I think there's a very excellent chance that neither or not or I will live to see either of those occasions again if so Berkshire is not going to have a lot of no-brainer opportunities we're going to have to grind ahead the way we've been doing it recently which is not all bad it's not impossible though we'll get some mouth-watering opportunities I mean it you just don't know and markets it's unbelievable what markets do over time and since you brought up interest rates you know in Japan the 10-year bond is selling to yield 5/8 of 1% 5/8 of whimpers I don't think there's anybody in our annual meeting of 20 years ago certainly including Charlie and myself who would have dreamt the ten-year bond of a country you know running a significant deficit would be selling at 5/8 of 1% I mean what I ever it's but strange things happen strange things happen but if that could happen in Japan something much less horrible for the investing class could happen in the United States it's not unthinkable I mean we could be in for a considerable period when the average intelligent diversified investor in common stocks using fancy paid advisors just doesn't do very well but you can argue that if what we warned against and hope doesn't happen with derivatives should happen it might create enormous opportunities for us in some arena I mean you know that we wouldn't be that might very well turn out to be good for us if if you get chaotic markets you had you had a somewhat disorganized market in junk bonds last year because there were a lot of them created much faster than the funds available to absorb them we're coming in now this year you have just the opposite situation have money pouring into the junk bond funds billion dollars a week roughly and that's changed the whole price situation the world hasn't changed that much it's just that that the chaos has left the market for those instruments number three yes hello Paul Thomas ik Thornton Illinois Ben Graham and the model of value investing like bring discussion back to that
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