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So, you've got two more on this topic. I'll I'll read them both. Um, you said you get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready. You won't do well in markets. You also said people who succeed in the stock market also accept periodic losses, setbacks, and unexpected occurrences.
How important is it for the average I hate the term average investor for the typical investor to go into this business understanding there's no way to dance around these things. They're going to take place. You're going to you're going to have to live through them. Would you say that's the param one of the paramount things?
Because that's what I think. Well, the point is when somebody has three children about to start college in two years, they shouldn't be in the stock market. That's right. it should be in the money market fund. But depends if you got your house, paid down your mortgage, then you can invest and it's been a great place to be since, you know, you're 1900.
Yeah. Um, one of the more timeless things that you've said, and it comes off as sarcastic, but I think the last 15 years have really uh proven the value of this idea. Um, coming out of the great financial crisis, the most invogue style of investing was macroeconomic uh, hedge funds because there were a small handful of people who who determined that the housing crisis would ultimately bring about a recession and those people were revered for a couple of years.
Um, you've never really been big on trying to outguess everyone else on the economy and you said if you spend more than 13 minutes analyzing economic and market forecasts, you've wasted 10 minutes. Y I I still quote you uh to this day when when clients call up and they want to talk about the latest labor report or what the Fed's going to do.
Te tell us how long did it take you to figure that out and how much push back did you get when you said it from people that were economists or focused on the macro? Well, I I don't remember if I ever have an economist. So, we just buy stocks and she's uh she's here tonight. Okay. So, I'd love to get next next year's Wall Street Journal.
Yeah, I pay at least $5 for next year's Wall Street Journal. Know that. And hands off to the people did the big short. I had no idea how bad the housing market was, how bad people had second mortgages. They had home improvement loans. They were underwater in their house. I had no idea that Hats off to them.
Yeah. But uh and but I look at facts like what's happened to debt, credit card debt, what's you can get that now. What's happened to savings rate? What's happened to employment? I'd love to know what's happened in the future. I've been hoping I could get that in the last 81 years. It's it's not available.
So I just deal what's now. What's happened to used car prices? What's happen price of oil? You know what what's you know and you look at industries that have gone from miserable to getting better like like Chrysler. I mean I remember people says gee you were really good on that show but how could you possibly recommend Chrysler?
You know that it's gone bankrupt. you know, well, they had two billion in cash and they they had enough money for the next three years. They weren't going bankrupt. But, you know, so I think the best talks I had, I think if a 100 people did work on it, 99 would say that's better than I expected. So, I use this for one of our great fun, Joel Tillingast.
Uh, I wrote a forward to his book and uh always said the person that wins the most turns of the most rocks wins the game. And I said, Joel Silas is a great geologist because if you look at 10 stocks, you probably find one that's mispriced. Yeah. Look at 20, you'll find two. Look at 40, you'll find four.
And that's what we've been doing at Fidelity. We just don't look We look at everything. Yeah. So, you're not discounting the value of economic data. Great. You're you're you're saying if it's not from the future Yeah. the market already understands this. Yeah. I mean, I just I want to know facts right now.
Yeah, that's that's important. You said behind every stock is a company. Find out what it's doing. Some of the great stories about your big investment success involve hands-on observations that you had been able to make living your real life, being in a supermarket, being in a shopping mall, looking at what people are doing.
I think that over the years that idea has kind of been mischaracterized as if you use the product it's automatically a good stock which is not what you meant at all. Could you could you explain the difference between those two ideas and and why that's so important? Well, a lot of people I met so many nice people
earlier tonight and a lot of them had read my book one up on Wall Street and I had the story about I had a great investment. My largest position was in Hannes that had these panty hoes called legs. They weren't that sheer. They really fit. But but most panty hoes are being sold in fancy department stores.
This was at the supermarkets. Yeah. And people go to a supermarket once a week. They go to a fancy store once every couple months. My wife went a little more often, but the uh the uh and I went with her. the uh so this was an incredible success, incredible success. But then a larger company called Kaiser Roth put the thing right next to it and it was called nononsense pennyos.
So I went to two different stores about bought 65 different pairs of nononsense pant. Now what kind of look did you get from the clerk in the in the process of that activity? Yeah, it was an odd purchase, but uh I spread it over three stores, but the uh but I gave it out to everybody at Fidel. He Yeah,
give me some feedback on this. They said it's not that good. Okay. Fundamentals. It's not that good. Okay. So, and the other one, the other one, the first stock I bought at in Mellan was Taco Bell. And I had to say I had to say to I own this myself. Is it okay? Who is clapping for Taco Bell? Is that It's not one of my people, was it?
Okay. And uh so I said, "Can I buy some stock that I own myself?" I said, "Sure. You just can't sell it after you buy. You have to hold on." So, so that's when we had Ma Bell and all these Bell companies. And so I called the trade room. I said, "I want to buy Taco Bell." They said, "What is Taco Bell?" And I explained what a taco was.
They're only in Southern California. They're going to central California. I didn't get a burrito Supreme, but I get I explained what a taco was because it's basically a taco has very little meat, a lot of protein. You can sell a really good meal for a low price. And I got robbed on it because Pepsicola bought Pizza Hut and they bought Kentucky I could buy chicken.
They bought to sell Pepsi, right? This stock would have gone to 500. Yeah. My largest position was 18. They bought at 30. Okay. Would have gone to 500, 600, but they bought it to sell Pepsi. When Chipotle came along, did you avail yourself of the opportunity? I did. I did. But how I miss Starbucks? I don't get that.
You know, cuz I own Dunkin Donuts. How did I miss Starbucks? I mean, you missed Starbucks. Brain cramp. I didn't buy it. Well, okay. Um, you've got some great quotes about portfolio management, and here are a few of them. You said, "In the long run, a portfolio of well-chosen stocks and or mutual funds can outperform the most sophisticated investment strategy." I think there's a cottage industry today and probably there has been for a long time of people selling complexity to investors, right?
It's one of the best sellers on Wall Street. Um just that that that simple statement I think uh very much is something that most of us would associate with Fidelity and very much is something that we would associate with you. Why do people need to hear that message today? What's funny earlier on I met maybe 100 people to chat with them and somebody's in the audience they they shovel chicken poop and they use the word rhymes would hit who's there's a person here with the chicken poop in New Jersey
and he waving at the top you won't be able to see okay congrats but but he he decided to be a serious investor do hard work he said he's done extremely well. Yeah. So, do you think that that's still possible today given how armed to the teeth professional investors are with data and tools and high frequency access?
Is it still possible to be someone who just on a part-time basis when they get home from work reads about stocks and makes decisions? You still believe in that? Well, I'll tell you a story personally. My daughters get me an iPod. This is before the iPhone. Yep. And the the PC business was terrible. They're selling for eight or nine00 bucks, making $20.
They had a decent balance sheet. The iPod was $200 and they make 150 on it. Yeah. The iPod financed the iPhone. Well, it just did some work. And the company had 300 million in cash. This is Apple in 2001ish. I'm not sure. Right. Okay. But it, you know, things change. Companies are dynamic. Something comes along and things go from terrible or we use a term or appropriate crappy to semi crappy
to better to terrific. Something happened at Apple. Then they were now going to make a lot of money. I had no idea. I have a phone on me, an iPhone, but I had no idea what's falling. The stock easily was a triple just on that alone. Um, this is one of your more famous quotes and made famous by being uh, requing your losers is like cutting the flowers and watering the weeds.
That's a great one. That's an all time. Yeah. Um, you were known to to hold on to winners for a very long period of time. Y um, a lot of people were quick to take profits so they could say, "I won." Y um tell us the Warren Buffett connection to that quote and why it's meaningful. I don't know how I got my landline, but I get this call.
Annie, I think it was like seven, our middle daughter says there's a Warren Buffett on the phone here. You know what year what year do you think this is? If you could remember what era is this I don't who knows was way beyond the dark ages. I All right. Yeah. But the So I pick up the phone. This is Warren Buffett from Nebraska.
My end report's due in two weeks. I love a quote. Can I use it? This is all in about three seconds. You know, he says, "What's the quote?" He says, "You know, getting rid of your winners and holding your losers is like, you know, wiring the weeds and cutting the flowers." I said, "It's yours." He said,
"If you don't come to Omaha and see me, your name will be mud in Nebraska." Did you do it? Oh, yeah. Many times. You you built a relationship with uh Warren played bridge together. He's he's the best. I mean there's no imagine he bought Apple like eight years after I I was that iPod story and made fivefold.
Yes. And he and he had a huge position IBM and it was going down. He says I love stocks going down. I think IBM's great. He totally reversed. He got the hell out of IBM. Yeah. He's the best. Yeah.
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