Warren Buffett: Do You Understand These Invisible Market Risks?

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버핏과 멍거는 파생상품이 레버리지와 무지가 결합된 위험 구조이며 실물 거래가 아닌 위험 '창출'로 시스템 리스크를 키운다고 경고한다. 멍거는 옵션거래소가 없어야 한다고 주장할 만큼 부정적이다. 일반 투자자에게는 인덱스펀드 장기 투자가 합리적이며, 개별주 투자는 자신의 능력 범위(circle of competence) 안에서만 해야 한다고 강조한다. 능력 범위는 점진적으로 넓힐 수 있지만 강요할 수 없다는 입장이다.

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01. feel in kind of a nasty mood you might go to the to a shareholders meeting of some very some company has very large positions in derivatives and grilled the CEO a little bit about about some of the more esoteric transactions that it uh they get they get very very complicated they they they get mind-boggling in in terms of trying to figure out the consequences I think actually there is much more risk in the system because of derivatives than than the the the proponents of derivatives would say has been dispersed because of the activities yeah I think part of the trouble in in uh you were talking about came because people didn't think enough about the consequences of the consequences that's a common error you start trying to hedge against interest rate changes which is a very complicated thing to do when you've got a mortgage portfolio where people have options to pay the mortgages off early and then under the accounting conventions the hedges started making the quarterly results lumpy instead of nice and regular the way all the institutional analysts like them so then they use another bunch of derivatives to smooth out the returns well now you've morphed into lying well it's complicated it enough to start with but when you add lying to the process it's a madh Hatter's tea party and yet this happens with eminent directors of vast Financial sophistication sitting on the board it shows that the sophistication won't save you somebody has to have the common sense to say we're just not going there it's too tough Charlie was on the audit committee at Solomon and uh changed it into you know six and seven hour meetings I think I think you found mismarks that were in the tens of millions of dollars on a single contract with a place with many thou you know tens of thousands of contracts isn't that correct I think it's fair to say that it was Bonkers and that the accountants sold out last year and the year before I think I said that derivatives often combined uh borrowed money with uh ignorance and that that is a rather dangerous combination and I think that we've seen some of that in the last year when you can engage in sort of non-physical transactions that involve hundreds of millions or billions or tens of billions of dollars uh as long as you can get some party on the other side to accept your signature that really has that has the potential uh for a lot of uh mistakes and mischief and if you've looked at the formulas invol involved in some um particularly I guess interest rate uh type derivative instruments uh it is really hard to conceive of how any business purpose uh could be uh solved by by the creation of those instruments um I mean they essentially uh had a huge uh really gambling element to them uh and I use that in the terms of engaging in a risk that doesn't even need to be created as opposed to speculative aspects uh that they they involve the creation of risk not the transfer of risk you know not the moderation of risk but the creation of risk on a huge scale and uh uh it may be fortunate that uh in the last year half a dozen or so cases of people that have gotten into trouble on them have come out because it that may tend to to moderate uh the Troubles of the future the potential is huge you can you can do things in in the derivative markets well I've used this example before but in borrowing money on Securities the Federal Reserve and the US government decided many decades ago that societ Society had an interest in limiting the degree to which people could use borrowed money and buying secuity they had the example of the 1920s with what was 10% margin then was regarded as contributing to the great crash so the government through the FED established margin requirements and said I don't care if you're John D rockerfeller you know you're going to have to put up 50% of the cost of buying your general motor stock or whatever it may be and they said that maybe Mr Rockefeller doesn't need that but Society needs that we don't want a bunch of people uh on thin margins gambling you know essentially in in shares where the Ripple effects can cause all kinds of problems for society and that's still a law but it means nothing anymore because various derivative instruments have made 10% margins of the 1920s you know look like what a small town Banker in Nebraska would regard as conservative compared to what goes on so it's been it's been an interesting history and like I say perhaps the experiences of the last year they've got everybody focused on derivatives nobody knows exactly what to do about them uh Berkshire halfway will if we if we think something makes sense and Charlie and I understand it uh we may find ways to u to use them to what we think will be our advantage Charlie you want to add anything on that well I uh disapprove even more than you do which is hard uh if I were running the world we wouldn't have options exchanges the derivative transactions would be about 5% of what they are and the complexity of the contracts would go way down the clearing systems would be tougher uh I think the world has gone a little bonkers and I'm very happy that I'm not so located in life that I have to be an apologist for it you know a lot of these people I feel sorry for them you know they had great Banks and they have to go for people sometimes even including their children and friends and argue that these things are wonderful first of all thank you Warren for sharing all your information you've changed my life I I took finance and University couldn't understand Greek formulas but now I can invest reasonably well my question to you is in the past you've said um for an investor you should simply for 99% of investors you should simply stick money in an index fund and let it go and don't worry about it um those 1% of investors choose your best five stocks and put a substantial amount of money in it I'm just wondering how about a strategy of s perhaps buying 20 of the best stocks in America you know Proctor and Gamble coca colola Johnson Johnson whatever the companies that have been around for centuries or a century or decades or whatever and just leaving it at that do you think think that would outperform an index fund over the long term and I want Charlie's opinion as well well it's a little bit of I don't know what you saying the 20 largest companies the 20 best might you might get different thoughts from different people on what they are but I think you would probably the 20 you would pick would virtually match the results of an index fun who knows exactly which ones would be the best but the real distinction and Graham made this in his book basically is between the person who is going to spend an appreciable amount of time becoming something of an expert on businesses because that's what stocks are or the person who is going to be busy with another profession wants to own equities and and actually will do very well in equities but the real problem they have is that they may tend to get excited about stocks at the wrong time uh you know they they uh really the idea of buying an index fund o over time is not to buy stocks at the right time or the right stocks it to avoid buying them at the wrong time in the wrong stock so if equities will do well over time and you just have to avoid getting you know getting excited when other people are excited or getting getting excited about certain industries when other people are trying to behave like a professional when you you aren't spending the time and and and bringing what's needed to the game to be a professional and if you're an amateur investor there's nothing wrong with being an amateur investor and you just simply you've got a very logical profitable course of action available to you and that is simply to buy into American Business in a broadly Diversified way and put your money in over time so I would say your your group of 20 will probably will will probably match an index fund and and you'll probably do well in that and and you will do well in an index fund Charlie well I I've got nothing to add but I do think it's that no the edge of your own competency is very important if you think you know a lot more than you do you're really asking for a lot of trouble yeah and that's true outside of Investments too Works particularly well in matrimony you want to give any other advice on this he gave it in the movie at U I saw people taking notes uh okay he back our world is changing at a faster Pace today versus 40 years ago and even more so going forward under this context for each of us individually shall we expand our circle of competence continuously over time or should we stick with the existing Circle but risk having a shrinking investment Universe thank you well obviously you should under any conditions you should expand and your circle of competence if you can if you can yeah and and uh uh I've expanded mine a little bit over time but you can't you ought be pretty cautious yeah it it you can't force it you know if you told me that I had to you know become an expert on on physics or you know dance may be the lead in the ballet W that would be a sight yeah well that's one now that's one you may be thinking about but I that even occurred to me but yeah it it's ridiculous uh that doesn't mean you can't expand it at all I mean I I I did learn about some things as I've gone along in in in a few businesses in some cases I've learned that we that I'm Inc competent which is actually a plus and you've discarded that one uh but it doesn't really the world is going to change it's going to keep Chang it's changing every day and that that makes it interesting you know uh and and and uh as it as it changes certainly within what you think is your present existing Circle you have to you should be the master of figuring that one out or or it really isn't your circle of competence and you get a chance to expand it somewhat as you go along I've learned some about the energy business from walber and and Greg as as we work together but I'm not close to their level of competence on it but I I do know more than I used to know and so you get a chance to expand it a bit usually I would I would think normally your core competence is probably something that sort of fits the way the mind is working some people have what I call a money mind and they they will work well in certain types of money situations uh It Isn't So Much a question of IQ the mind is a very strange thing uh and people have Specialties but are in chess or bridge I see it in different person people that can do impossible what seem to be impossible things and they're really kind of Charlie would say stupid in other areas so uh just keep working on but don't don't think you have to increase it and therefore start vending the rules what would you do differently if anything at all when building your circle would you still build a very broad generalist framework or would you build a much deeper but narrower Focus say on Industries markets or even a country and if so which ones would interest you thank you yeah well you're right it is is much more competitive now than when I started and you would uh when I started I literally could take the Moody's industrial manual the Moody's Banks and financial manual and I could go through Page by Page and at least run my run my eyes over every company and think about which ones I might think more about uh it's it's important I would just do a lot a whole lot of reading I'd try and learn as much as I could about as many businesses and I would try to figure out which ones I really had uh some important knowledge and understanding that was uh probably different than overwhelmingly most of my competitors and I would I would uh also trying to figure out where which ones I didn't understand and I would focus on having as big a circle as I could have and as and also focus on being as realistic as I could about where the perimeters of my circle of competence were I knew when I met Laurer Davidson in January of 1951 I could get insurance I mean it what he said made so much sense to me in the three or four hours I spent with him on that Saturday so I dug into it and I I I could understand it my mind worked well in that respect uh I didn't think I could understand retailing all I done was work for same grocery store that Charlie had and neither one of us learned that much about retailing except it was harder work than we liked and uh you've got to do the same thing and you've got way more competition now but uh if you get to know even about a relatively small area more than other people do and you don't feel the compulsion to act too often you just you just wait till you wait till the odds are strongly in your favor uh it's still a very interesting game it's harder than it used to be