원문 보기
Well, what's really interesting on this subject of Warren's operating methods, you can see happening here. We didn't know when we started out this modern psychological evidence to the effect that you shouldn't make a lot of important decisions when you're tired and that making a lot of difficult decisions is tiring.
And we didn't also know as well as we now do how helpful it is to be consuming caffeine and sugar when you're making important decisions. And what happens, of course, is that both Warren and I live entirely on autopilot in terms of the ordinary decisions of life. We're just totally habitual. So, we don't work waste any decision-making industry, I mean energy on that stuff.
when we're inesting caffeine and sugar and it turns out under the modern evidence this is an ideal way to sit where Warren sits and when he didn't know that he just stumbled into it when we write our book on nutrition it promises to be a huge seller I cannot I cannot remember an important decision that Warren has made when he was tired He's never tired.
He sleeps soundly and he he he doesn't waste time thinking about what he's going to eat. As you say, he just eats what's what he's always eaten. Oh, yeah. His his style turns out to be absolutely ideal for human cognition. It looks peculiar, but he stumbled into something very good. No, no, you can write the forward to my next book.
Okay. Following question comes from a shareholder who asked to remain anonymous. Uh they write, "I'm from Omaha and I'm thrilled you bought our newspaper as a local citizen, but not so much as an investor in Bergkshire. I read your reasons for acquiring newspapers, but it still doesn't make sense to me economically given the downward trends in the industry.
Don't you think there are other businesses with higher rates of return that you could buy? Why would you buy such a small business since you always say you want to buy elephants? Please quantify exactly what rate of return you expect from the newspapers. Yeah, I would say that we will get a decent rate of return whether it's uh most of them incidentally have been bought uh and they were either S corporations or or partnerships of some sort.
So they compared to buying a Hines for example or or BNSF or something of the sort, they actually have a certain structural advantage in terms of the eventual return after tax uh because we get to uh uh write off uh the intangibles we're purchasing that that affects the after tax return uh compared to the pre-tax return would come from this.
But I would say that our after tax return uh with declining earnings which I expect uh would be at least uh 10% after tax but I think and it could well be somewhat higher. I think it's very unlikely that it's that it it would be significantly lower. uh and everything we have seen to date and it hadn't been that long uh but we have a number of papers now would indicate that uh we will meet or beat the 10%.
uh it doesn't have it. It's not going to move the needle at Bergkshire, you know, and the papers we have bought now, we're probably getting close to maybe having a hundred million of uh pre-tax earnings, a good bit of which is uh a fair amount of which we get a favorable tax treatment on because they were bought from S corporations.
uh you know and 100 million is is is real money but it doesn't move the needle at Bergkshire but it will end up being a very I think it'll be a perfectly decent return in relation to the capital employee. Now we wouldn't have done it in any other business. I mean there's no question the questioner is right about that but it doesn't you know doesn't require an extra ounce uh of effort by me or Charlie or people at headquarters.
we will get a decent return and we like newspapers and and the one thing I will I'll promise to do with you is I will be glad to give you uh figures annually uh as to how we are doing relative to investment. We are buying the papers at very very low prices compared to current earnings and we must do that because the earnings will go down.
Now the interesting thing is of course is that we see books from investment bankers on all kinds of businesses and always the projected earnings go up in the book. A lot of times they don't go you know in reality they don't go up. The the difference is that we expect them to go down in the newspapers and and whatever the investment salesmen expect they certainly don't project that any business they sell will have declining earnings.
Charlie. Well, I think what you're saying is that it's an exception and you like doing it. I wish I hadn't asked. I gave them each another billion dollars on March 31st. And I do not know whether they've spent the billion or whether which stocks they bought or Now I will see it on on portfolio sheets.
Uh um I get them monthly uh but they're they're in charge of their investment. They got a one or two things that they're restricted on in terms of things that for example if we own uh a chunk of American Express and under the bank holding company law we would not be allowed to buy another share. So there's a couple things like that that that uh uh restrictions they have, but otherwise they have no restrictions on what they buy.
They they've bought things I wouldn't buy. You know, I buy things I wouldn't buy. That that's part of the investment process. Uh I do not tell them how much to diversify. They can put it all in one stock if they want to. Uh they can put it in 50 stocks, although that's not my style. Uh they are managing money.
And when I managed money, you know, I wanted to be a free agent. If people wanted to give me the they they could make the decision where they wanted to give me the money. But once they gave me the money and I had the responsibility for managing it, I wanted free reign uh to do what I wanted. And uh I did not want to be held responsible for things with my hands tied.
Uh and that's exactly the uh position we have with Todd and Ted. Now, it takes a lot of it. It's an unusual person that we will give that kind of responsibility to. That's not something that Charlie and I would do lightly at all. But uh uh we thought they deserved the trust when we uh hired them and and we believe that more than ever after watching them in action for a time.
Charlie, what can I say in addition to that? Okay. Back in 2009, you made a substantial investment in Harley-Davidson with a 5-year term at 15%. I noticed that note comes due in 2014. What are your plans or thoughts uh once that investment comes due? Well, what we'd like to do is not answer the mail and uh just let them keep paying us 15%.
But that won't happen. the uh no that those were uh we had a few private transactions during a period when the corporate bond market was basically frozen and received unusual terms although the best terms those companies obviously could have could uh uh obtain at that time and those deals are coming to and I wish the five-year deals have been 10ear deals and but um you know those that that was a special time and in effect that's a depleting asset that we have uh that's left over from uh five years ago.
Uh we won't see anything like that for a while but but we'll see similar things at some point in the future. I mean the the world is given to excesses uh and they have consequences and and we are always willing to act. I mean, we did not think Harley-Davidson was was uh going to go broke. I mean, it was that simple.
But um you know, any any kind of company that gets its customers to tattoo ads on their chest can't be all bad, you know? I mean, uh but it will be a sad day when the Harley-Davidson notes mature. Okay, Becky.
Comments 0