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In my life, to give another example, the Mongers would have twice the assets they now have if I hadn't made one mistake of omission back in the 1970s. Really stupid. And I blew an opportunity would have doubled my present net worth. That is a normal life. You get one or two. And how things work out, it's evasive.
We all know people that are out married. I mean, their spouses are so much better. Think what a good decision that was for them. And what a lucky decision. Way more important than money. A lot of them did it when they were young. Just they stumbled into it. Now, you don't have to stumble into it. You can be very careful.
A lot of people are wearing signs. Danger, danger, do not touch, and people just charge right ahead. That's a mistake. Well, you can laugh, but it's still a horrible mistake. I can tell a couple of other stories, too, because you like stories. Here's an apocryphal story that is very instructive. A young man comes to visit Mozart and he says, "Mosart?" He says, "I want to write symphonies." And Mozart says, "How old are you?" And the man said, "I'm 23." Mozart says, "You're too young to write symphonies." He says, "But Mozart," he says, "you were writing symphonies when you were 10 years old." Mozart says, "Yes, but I wasn't asking other people how to do it." Now, there's another Mozart story.
Here's the greatest musical talent maybe that ever lived. And what was his life like? Well, he was bitterly unhappy and he died young. That's the life of Mozart. What the hell did Mozart do to screw it up? He did two things that are guaranteed to create a lot of misery. He overspent his income scrubulously.
That's number one. That is really stupid. And the other thing was he was full of jealousies and resentments. Overspend your income and be full of jealousy and resentments. You can have a lousy, unhappy life and die young. All you got to do is learn from Mozart. You can also learn from that young man who was asking Mozart how to write sympathy.
The truth of the matter is that not everybody can learn everything. Some people are way the hell better. And of course, no matter how hard you try, there always some guy that achieves more, some guy or gal. And the my answer is, so what does any of us need to be the very top of the whole world? It's ridiculous.
Another thing that people do is amazing is they build these enormous mausoleiums. I think they figure they want people to walk by that mausoleum and say, "Gosh, I wish I were in there." You can see we've had some fun as we go along. And it's worked so well, but if you actually figure out how many decisions were made in the history of the Daily Journal Corporation or the history of Berkshire Hathaway, it wasn't very many per year that were meaningful.
It's a game of being there all the time and recognizing the rare opportunity when it comes and recognizing that a normal human a lotment is to not have very many. Now, there's a very competent bunch of people who sell securities, who act as though they've got an endless supply of wonderful opportunities.
Those people are the equivalent of the racetrack tout. They're not even respectable. It's not a good way to live your life, to pretend to know a lot of stuff you don't know and pretend to furnish a lot of opportunities you're not furnishing. And my advice to you is avoid those people, but not if you're running a stock brokerage firm.
You need them, but it's not the right way to make money. this business of controlling the costs and living simply. And that was the secret. How much money? Warren and I had tiny little bits of money. We always underspend our incomes and we invested and we well if you live long enough you end up rich.
It's not very complicated. Now there is a part of life which is how do you scramble out of your mistakes without them costing too much. And we've done some of that too. If you look at Bergkshire Hathaway, think of its founding businesses, a doomed department store, a doomed New England textile company, a doomed trading stamp company.
Out of that came Bergkshire Hathaway. Now, we handled those losing hands pretty well and we bought into them very cheaply. But of course, the success came from changing our ways and getting into the better businesses. It isn't that we were so good at doing things that were difficult. We were good at avoiding things that were difficult, finding things that are easy.
The index funds of the S&P is like 75% of the market. Is there a point where index funds theoretically can't work? Of course, if everybody bought nothing but index funds, the whole world wouldn't work as people expect. There's also the problem, one of the reasons you buy a big index like the S&P is because if you buy a small index and it gets popular, you have a it's a self-defeating situation.
When the Nifty50 were the rage, JP Morgan talked everybody into buying just 50 stocks and they didn't care what the price was. They just bought those 50 stocks. And of course in due time their own buying force those 50 stocks up to 60 times earnings where upon it broke and everything went down by about 2/3 quite fast.
In other words, if you get too much fattishness in one sector or in one narrow index, of course you can get catastrophic changes like they had with the nifty50 in that former era. I don't see that happening when the index is 3/4 of the whole market. The problem is the whole thing can't work perfectly forever, but it'll work for a long time.
The indexes have caused just absolute agony among intelligent investment professionals because basically 95% of the people have almost no chance of beating it over time. And yet a lot of the people expect if they have some money, they can hire somebody who will let them beat the indexes. And of course, the honest, sensible people know they're selling something they can't quite deliver.
And that has to be agony. Most people handle that with denial. They think it it'll be better next year. I just don't want to think about them. And I understand that. I don't think about my own death either. But it's a terrible problem needing those indexes. And it's a problem that investment professionals didn't happen in the past.
And what's happening, of course, is that the prices for managing really big sums of money are going down, down, down, 20 basis points and so on. The people who rose in investment management didn't do it by getting paid 20 basis points. But that's where we're going, I think, in terms of people who manage big portfolios of of say American equities in the equivalent of the S&P.
So, it's a huge huge problem. It makes your generation of money managers have way more difficulties than and it causes a lot of worry and fretfulness. And I think the people who are worried and fretful are absolutely right. I would hate to manage a trillion dollars in the big stocks and try and beat the indexes.
I don't think I could do it. In fact, if you look at Berkshire, take out 100 decisions, which is like two a year. The success of Berkshire came from two decisions a year over 50 years. It we may have beaten the indexes but we didn't do it by having big portfolios of securities and having subdivisions managing the drugs and subdivisions.
The indexes are a hell of a problem for you people. But you know why shouldn't life be hard? It's what had to happen that's happened now. If you take these people doing some of those early trading by computer algorithms that worked, then somebody else would come into the same thing with the same algorithm and play the same game.
And of course, the returns went down. Well, that's what's happening in the whole field is the returns you're really going to get are being pushed down by the progress of the Suns. I think the main reason is it looks impossible. If you were in Proctor and Gamble with its culture and its bureaucracy and you sat down, how can I make Proctor and Gamble more like Berser Hathaway, it would go immediately the too hard pile?
It's just too hard. There's too much momentum. But you raise by your question a very interesting thing that deserves more attention than it gets. One of the reasons that Bergkshire has been so successful is there's practically nobody at headquarters. We have almost no corporate bureaucracy. We have a few internal auditors who go out from there and check this or that but basically we have no bureaucracy.
Having no bureaucracy is a huge advantage if the people who are running it are sensible people. Think of how poorly all of us have behaved in big bureaucracy even though we have a lot of talent because we couldn't change anything. So bureaucracy has a standard bunch of evils and a standard bunch of stupid wastes and so forth and avoiding it is hugely important.
And of course the tendency of successful places particularly successful governmental places is to have more and more bureaucracy. Of course it's terribly counterproductive. And of course the bureaucracy, the individual bureaucrats, they're benefiting from more assistance, more meetings, more this, more that.
So what looks like poison to us from the outside because the decisions are so terrible looks wonderful for them. It's opportunity. And I've just described the great tragedy of modern life. Modern life creates successful bureaucracy. And successful bureaucracy breeds failure and stupidity. How could it be otherwise?
That's the big tension of modern life. And some of these places that go into a stupid bureaucracy and fire a third of the people and then the place works better. They're doing the Lord's work, but you wouldn't think so if you were working there. But there's a lot of horror and waste and bureaucracy and it's inevitable.
It's as natural as old age and death. I regard Lee Kuanu may have been the best nation builder that ever lived. He took over an arial swamp with no assets, no natural resources, no nothing, surrounded by a bunch of Muslims who hate hated. In fact, he was spat out by the Muslim country. They didn't want a bunch of damn Chinese in their country.
That's how Singapore was formed as a country. The Muslims spatted out. And so, here he is. No assets, no money, no nothing. People are dying of malaria, lots of corruption. and he creates in a very short time by historical standards modern civil war. It was huge, huge, huge success. It was such a success.
There's no other president in the history of the world that is any stronger. Now, China's more important because they're more Chinese. But you can give Lie Kuan Yu a lot of the credit for creating modern China because those pragmatic communist leaders, they saw a bunch of Chinese that were rich when they were poor.
And they said, "The hell with this." Remember the old communist said, "I don't care whether the cat is black or white. I care whether the cat is mice." And he wanted some of the success that Singapore got. He copied the playbook. So I think the communist leadership that copied Lee Kanu was right. I think Big Guanu was right and of course I have two buss of somebody else in my house.
One is Benjamin Franklin and the other is Big Guan Yu. So that's what I think of it. So I think now you turn to India and I would say I'd rather work with a bunch of Chinese than I would Indian civilization mired down case system overpopulation assimilating the worst stupidities of the democratic system which by the way league one you avoided it's hard to get anything done in India and the brags are just awful so all I can say is it's not going to be easy for India to follow the example of leewanu.
I think India will move ahead but it is so defective as a get ahead in place. The Indians I know are fabulous people. They're just as talented as the Chinese the Indian populace. But the system and the poverty and the corruption and the crazy democratic thing where you let anybody who screams stop all progress.
admires India with problems lean on you didn't have and I don't think those Indian problems are all easy to fix. Let me give you an example. The Korean steel company Posco invented a new way of creating steel out of lousy iron ore and lousy coal. There's some province in India that has lots of lousy iron ore and lots of lousy coal which there's not much use for and this one process would take their lousy iron ore and the coal and make a lot of steel and they got a lot of cheap labor.
So Pasco and India were made for each other and they made a deal with this province to get together and use the Pasco knowhow and the Indian lousy iron or lousy coal and eight or nine or 10 years later with everybody screaming and objecting and farmers lying down on the road or whatever was going on.
They canled the whole thing in China. They just would have done it. Lie Kuanu would have done it in Malaysia. India is grossly defective because they've taken the worst aspects of our culture, allowing a bunch of idiots to scream and stop everything and they copied it. They've taken the worst aspects of democracy and then they forged their own chains and put them on themselves.
So I do not like the prospects of India compared to the prospects of and I don't think that India is going to do as well as legal if taxes were not an issue. What are your thoughts on going to cash today and waiting for better opportunities to deploy that cash over the next 12 months? Is it a sensible idea in your mind?
In my whole adult life, I've never hoarded cash waiting for better conditions. I've just invested in the best thing I could find and I don't think I'm going to change now. And the Daily Journal's used up its cash. Now, Bergkshire has excess cash, quite a bit of excess cash, but it's not doing that because it thinks it knows how to time investments.
He just can't find anything he can stand buying. The reason we're not buying this, we can't buy anything the prices we're willing to pay. It's just that simple. Other people are bidding the price up. And a lot of the buying is not by people who really plan to own them. A lot of it is feed buying. Private equity buys things so they can have more fees by having more things under management.
Of course, it's a lot easier to buy something you use somebody else's money. We're using our own money. At least that's the way we think of it. I've always believed that nothing was worth an infinite price. Even an admirable place like Costco could get to a price where you would say that's too high.
But I would argue that if I were investing money for some sovereign wealth fund or some pension fund and a 30, 40, 50 year time horizon, I would buy Costco at the current price. I think it's that strong an enterprise and that admirable a place. By the way, it's not a tragedy that Bergkshire has some surplus money they're not investing.
We look more responsible with the extra wealth. And we are more responsible with the extra wealth. The shareholders who are worried about the future because it looks complicated and difficult and their hazard. I want to say to them what my old torch professor said to me, Charlie. He'd say, "Charlie, tell me what your problem is and I'll try and make it more difficult for you." And he did me a favor by treating me that way.
And I'm just repeating his favor to you. When you're thinking the thoughts you're doing, at least you're thinking in the right direction. You're worried about the right things. All you people that are worried about the inflation and the future of the republic and so forth,
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