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You you really couldn't create another railroad and I hope not and you Yeah. And you can create another airline very easily and you have people don't like about it and people love doing it. It's it's exciting to people and you can sell the idea. I I've had probably a dozen proposals over the last 25 or 30 years from people that that want to get into the airline business one way or and a number of them have.
It's sexy for some reason. I mean it it you know if if you go to the office of some Mr. Big CEO and say I want to talk to you about this new airplane, you get in the door. you know, I mean, if you want to talk to them about hauling coal or something, it's a little different. So, it it it is a business that attracts people and you can go out and raise money for a new airline.
Uh, and uh, the record is it's really been something. I don't know how many bankruptcies there have been in the airline field, but it's it's an enormous number. And of course, some have done it more than once. We bought US Air. I bought that. I was at Gats with with uh Ed Kadney and he explained to me how wonderful the airline was.
He's a good guy incidentally and I wrote a check and and by the time the check was cashed they were they were having troubles. I mean did not take long and then they went bankrupt twice. We got we were very lucky on we actually made quite a bit of money on it as it turned out because there was a little blip at one point but I think it went bankrupt twice after we bought it and Charlie and I were on the board and we would look at these projections you know and they were just ridiculous.
I mean they never came true did they Charlie? No, no, no. It was we were very popular because we actually pointed that out a few times. And when people analyze a stock, a lot of them look at quantitative metrics such as PE ratio, return on equity, debt to asset ratio, etc. So, Mr. Buffer, when you analyze a stock for purchase, what's your top five quantitative metrics that you look at and what's your preferred number for each matrix?
Thank you. Well, we're we're looking at quantitative and qualitative. We aren't looking at the aspects of a stock. We're looking at the aspects of a business. It's very important to have that mindset that we are buying businesses whether we're buying a 100 shares of something or whether we're buying the entire company.
We always think of them as businesses. So when Charlie and I leaf through value line or look at annual reports that come across our desk or read the paper or whatever it may be that for one thing we have a we do have this cumulative knowledge of a good many industries and a good many companies not all by a long shot and different numbers are of of uh different importance or various numbers are of different importance uh depending on the kind of business.
I mean, if you were a basketball coach, you know, you would if you were walking down the street and some guy comes up that's 5'4 and says, you know, you ought to sign me up because you ought to see me handle the ball. You would probably have a certain prejudice against it. But there might be some one player out there uh that it made sense on.
But on balance, we would say, well, good luck, son, but you know, we're looking for sevenfooters. And then if we find sevenfooters, we have to worry about whether we can get them halfway coordinated and keep them in school and a few things like that. But we see certain things that shout out to us, look further or think further.
And over the years, we've accumulated this background of knowledge on various kinds of businesses. And we also have come up with the conclusion that we can't make an intelligent analysis out of about all kinds of businesses. And then usually some little fact slips into uh uh view that causes us to rethink something.
It was mentioned how I got the idea about bank buying the Bank of America or making an offer to Bank of America on a preferred stock when I was in the bathtub, which is true, but the bathtub really was not the key factor. Uh the the truth is I read I read a book more than 50 years ago called Biography of a Bank.
It was a great book and about APG&NA and the history of the bank and and I have followed the Bank of America and I followed other banks, you know, for 50 years. Charlie and I have bought banks. Uh we used to trudge around Chicago trying to buy more banks in the late 60s. And uh so we have certain things we think about in terms of a bank that are different than we think about when we're buying ISCAR.
And uh so there is not not one sizefits-all. Uh we think about when we're buying an insurance company. The certain things we think about when we're buying a company depended upon that that dependent upon brands. Some brands travel very well. Coca-Cola being a terrific example. And some brands don't travel.
And you know we just keep learning about things like that. And then every now and then we find some opportunity. The Bank of America uh whenever it was in 2011 was subject to a lot of rumors terrible. I mean lots of big short interest uh morale was terrible and everything else. It just struck me that an investment by Berkshire might be helpful to the bank and might make sense for us.
And I'd never met Ryan Moahan at that point. Maybe I'd met him at some function, you know, some party or something, but I had no memory of it. and and I didn't have his phone number and but I gave him a call and uh uh things like that happen and it's it's not because I calculate some price precise PE ratio or price book value ratio or whatever it might be.
It is because I have some idea of what the company might look like in five or 10 years and I have a reasonable amount of confidence in that judgment and there's a disparity in price and value and uh uh and it's big. Charlie, would you like to elaborate? I we don't know how to buy stocks just by looking at financial figures and making judgments based on the ratios.
We may be influenced a little by some of that data, but we need to know more about how the company actually functions and and uh anything a computer could be function to do in terms of screening. I know I never do it. Do you use a computer to screen anything? No, I don't know how to. No, Bill's still trying to explain it to me.
Uh I uh we You can it's it a little hard to be precise on because we don't really use screens. On the other hand, we're screening everything. But it's not like we sit there and say, you know, we want to look at things that are low price book value or low pees or something of the sort. We are looking at businesses exactly like we'd look at them if somebody came in and offered us the entire business.
And then we try to think, what is this place going to look like in five or 10 years? and how sure are we of it? And most a lot of companies, you know, we just don't know the answer to it. We do not know which auto company is going to, you know, be knocking the ball out of the park uh 10 years from now or which one's going to be hanging on by its fingernails.
And you know, we've watched the auto business for 50 years. A very interesting business, but we don't know how to we don't know how to uh foresee the future well enough on something like that. Uh we we think that the Burlington Northern will have a computer a competitive advantage 15 years from now with a high degree of competence.
We would never have that degree of competence about Apple know what matter what their financial statement showed. It's just it's too hard. Yeah. We don't know what we don't know about an oil company 10 years from now, you know, in ter what the product will be selling for anything. But we I would say we're, you know, we're virtually 100% confident about a Burlington Northern or a Geico or some other companies that I won't name.
People with very high IQs who are good at math naturally look for a system where they can just look at the math and know what security to buy. It's not that easy. You really have to understand the company and its competitive position and the reasons why its competitive position is what it is. And that is often not disclosed by the math.
You know, it's not what I learned from Ben Graham. Although the fundamentals of looking at stocks as businesses and and the attitude toward the market and all that is absolutely still part of the catechism, but uh uh I wouldn't I don't know exactly how I would manage money if I was just trying to do it by by the numbers that uh you do it poorly. Yeah, that takes care of that.
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