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I recognize the logic behind the fact that the S&P algorithm is very difficult to beat in a diversified portfolio of large companies. It's almost impossible for most people. But, you know, I feel more comfortable with Berkshire. Well, it's the family business. Yes. Yes. But, but this, uh, I've just seen a lot of people, as they get older, become particularly susceptible and have to listen to the arguments of whoever shows up.
Well, if you're going to protect your heirs from the stupidity of others, maybe you have a good system, but I'm not very interested in that subject. Okay. I really think Warren is right about one thing. I think we have a collection of companies that, on average, have better investment values than, say, the average S&P.
So I don't think you shareholders have a terrible problem. And I would say that we probably, well, I'm sure we don't, we have more of a shareholder orientation than the S&P 500 as a whole . I mean, for example, you know , this company has a culture where decisions are made, like a private owner would make them, and frankly, that's a luxury we have that many companies don't have.
I mean, they 're under pressure these days, sometimes, to do things. One of the questions I ask the CEO of every publicly traded company I know is: what would you do differently if you were the sole owner? And the answer, you know, is usually this, that, and a few other things. If you were to ask us, the answer is, you know, we're doing exactly what we would do if we owned all the shares ourselves.
Uh, and I think that's a slight advantage over time. Anything else , Charlie? I think we have another advantage. Many other people are trying to be brilliant, and we're just trying to remain rational, and that's an advantage, a great advantage. Trying to be brilliant is dangerous, especially when you're gambling.
Well, I think it's true that we are peculiar in a way. If things go downhill and then improve later, we'll probably come out better than most. And we don't want that. And we don't want our country to have to suffer because of that. And we fear what might happen if the country were to go through such a crisis.
But if that real adversity comes, we'll probably come out better in the end. We are good at navigating these kinds of situations. Yes. And occasionally there will be plenty. Actually, we're very good at it. There will be occasional hiccups in the American economy. It doesn't have much to do with who the president is or anything like that .
These people can be blamed or given credit for different things. But it's just, it's in the nature of market systems, uh, to occasionally go crazy in one direction or another. And it's always been like that, you know, it always will be. Uh, no, it is n't, there isn't a regular sine wave, uh, uh, figure or anything like that, but it's certain that it will happen from time to time.
And we'll probably have a good amount of money and credit at that time. And we certainly aren't affected when the rest of the world is afraid. We know that America will do well. And we will have no problem, no problem at all psychologically, in acting. So the question is, how many resources do we have ?
We will also never put the company at any kind of risk just because we see many opportunities. We'll take on as many as we can, as many as we can handle, without losing a night's sleep. Well, I have a house for sale. I have no personal possessions. Yes yes . No, I, uh, anything you see with a number attached like that , you're a fatter version of Mahatma Gandhi.
Mahatma Gandhi. Investment and speculation, and people's propensity to speculate, and the dangers of that , and eloquently expressed, there's always the possibility of, I mean , there's always some speculation, obviously, and there are always some value investors and all that sort of thing in the market.
But there is, when speculation becomes rampant and when you get what I think Charlie would call social proof, uh, that it worked recently, people can get very excited to speculate in the markets, and we will have that from time to time in this market. There is nothing more agonizing than seeing your neighbor, who you think has an IQ about 30 points lower than yours, getting richer than you by buying stocks, whether they are internet stocks or whatever, and people succumb to this and will succumb in this economy, just like in other places.
There is also a point that relates to your question. I would say that , in the early stages of market development, there's probably a tendency for them to be more speculative than markets that have existed for a few hundred years. Well, because investment markets have a casino-like characteristic that is very attractive to people, especially when they see, as I said, people getting rich around them.
And those who have never experienced cycles before are probably a little more prone to speculation than people who have already experienced the result of rampant speculation. So, you know , basically in this country, Ben Graham, in the book I read in 1949, advocated investing, and that book continues to sell very well.
But if the market heats up, new issues go well, and leveraged individuals make money, many will be drawn not only to speculation but to what I would call gambling. And I fear that this is also true in the United States. And I think that China, being an essentially newer market with widespread participation, will probably have some pretty extreme experiences in that respect.
We will also have some in this country. Charlie. Well, I certainly agree with that. The Chinese will have more problems. They are a very intelligent people. They have a lot of action and, of course, will be more speculative; It's a silly idea, and to the extent that you work on it, you're on the side of the angels.
But good luck. Well, actually, this will offer more opportunities to the investor. If he can keep his cool when there's rampant speculation. I mean, as Charlie mentioned before, if we get into really tough times, Berkshire will certainly come out reasonably well, because it won't stay, and we won't stay...we won't be afraid.
And fear spreads in a way you wouldn't believe until you see some examples of it. At the beginning of September 2008, there were 35 million people with their money in money market funds , totaling $3.5 trillion . And none of them were afraid that that dollar would no longer be a dollar when they went to redeem their funds from the money market.
And three weeks later, everyone was terrified, and 175 billion was withdrawn in three days. Therefore, the way the public can react in the markets is truly extreme. And this, in fact, offers opportunities for investors. You never...people like action and they like to gamble, and if they think there's easy money to be made, many will rush into it and, for a while, it will be self-sustaining and create new converts, until the day of reckoning arrives.
So, uh, keep preaching, keep investing, and if the market fluctuates a lot, you'll keep adding a few people here and there to the group that recognizes that markets exist to be exploited, instead of instructing you on what's going on. If you look at the long term, I think all hydrocarbons will be used up, including all coal.
So, I think that, in the end, these hydrocarbons are a huge resource for humanity and I don't think we have a good substitute, and uh, I never cared about saving them for the next generation. I don't like to eat them too quickly. So, I 'm taking a somewhat solitary path on this issue. And people think that all these hydrocarbons will get stranded and that the whole world will change.
I think we're going to use every drop of hydrocarbon sooner or later. We will use them as chemical raw materials. Well, I find all these things very difficult to predict, and I'm not sure I would expect natural gas to eventually become scarce in supply. A change in storage would make a big difference.
Within a few years, we will be producing as much, or nearly as much, electricity from wind in Iowa as our customers consume. But the wind only blows about 35% of the time, or something like that. And sometimes it blows too hard. But storage, you know , having it available 24/7 is a real problem, even if we have the capacity.
Uh, to produce, as I said, an essentially self-sufficient quantity in Iowa soon. Uh coal, uh our coal shipments have increased quite a bit this year at BNSF, but they were very low last year. And as you said, inventories have increased and decreased a little. They are still at a high level. Well, in my opinion, Charlie has a long-term vision about this.
In my opinion, we're going to transport much less coal in 10 or 20 years than we transport now. On the other hand, I think there are reasonable prospects in other long-distance transport options. I mean, it's a pretty cheap way to move bulk commodities over long distances, rail transport is, and uh, I think it 's a good business, but the coal aspect is going to diminish.
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