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Warren E. Buffett Lecture at the University of Florida School of Business October 15, 1998.
Warren shares his essential insights on integrity, career decisions, investment strategies, risk management, and the significance of truly understanding businesses. He emphasizes that real success in investing and life comes from character and passion, not just intelligence or market trends.

It's my honor as well as my privilege to welcome our lifetime's best long-term investor, Mr. Warren Buffett.

One million, two million, three million.

Seems to be working. I'd like to just say a few words preliminarily and then the WechatUnderline for me will be getting your questions in a few minutes. I want to talk about what's on your mind. I urge you to throw hard balls. I urge you to throw hard balls.

It's more fun for me if you put a little speed on the pitches as they come in. You can ask about anything except last week's Texas A&M game. That's off limits. We have a couple of men here from SunTrust. I was just up at the Koch meeting, and I sat next to Jimmy Williams there who ran SunTrust for many years, and he wanted to be sure that I wore this SunTrust shirt down here. I've tried to get sponsorship on the senior golf store.

I haven't had much luck, but now on the banker's store, I'm doing a little bit better. He said I got a percentage of the increase in deposits in Gainesville. So I'll go out for SunTrust, dear old SunTrust.

I would like to talk for just one minute To the students about your future when you leave here because you're going to learn a tremendous amount about investments and you'll learn enough to do well. you're going to learn a tremendous amount about investments and you'll learn enough to do well. You've all got the IQ to do well. You've all got the IQ to do well.

You've all got the initiative and energy to do well or you wouldn't be here. You've all got the initiative and energy to do well or you wouldn't be here. And most of you will succeed. And most of you will succeed. In meeting your aspirations, but in determining whether you succeed, there's more to it than intellect and energy. but in determining whether you succeed, there's more to it than intellect and energy.

And I'd like to talk for just a second about that. In fact, There was a fellow that Pete Kiewit in Omaha used to say that he looked for three things in hiring people. He looked for integrity, intelligence and energy. He looked for integrity, intelligence and energy.

And he said if the person didn't have the first two, that the latter two would kill them. And he said if the person didn't have the first two, that the latter two would kill them. Because if they don't have integrity, you want them dumb and lazy. Because if they don't have integrity, you want them dumb and lazy. You don't want them smart and energetic. You don't want them smart and energetic.

And I'd really like to talk about that first one because we know you've got the second two. And play along with me in a little game for just a second in terms of thinking about that question.

You've all been here, I guess, almost all of your second year MBAs and you've gotten to know your classmates. And think for a moment that I granted you the right To buy 10% of one of your classmates for the rest of his or her lifetime.

You can't pick one with a rich father. You can't pick one with a rich father. That doesn't count. I mean, you've got to pick somebody who's going to do it on their own merit. I mean, you've got to pick somebody who's going to do it on their own merit. And I gave you an hour to think about it.

Which one are you going to pick among all your classmates as to the one you want to own 10% of for the rest of their lifetime? Are you going to give them an IQ test? Pick the one with the highest IQ? I doubt it.

Are you going to pick the one with the best grades?

I doubt it.

You're not even going to pick the most energetic one necessarily. You're the one that displays the most initiative.

But you're going to start looking for qualitative factors in addition because everybody's got enough brain power and enough energy. But you're going to start looking for qualitative factors in addition because everybody's got enough brain power and enough energy.

And I would say that if you thought about it for an hour, decided who you're going to place that bet on, You'd probably pick the one who you responded the best to. You'd probably pick the one who you responded the best to. The one that was going to have the leadership qualities. The one that was going to have the leadership qualities.

The one that was going to be able to get other people to carry out their interests. The one that was going to be able to get other people to carry out their interests. And that would be the person who was generous and honest and gave credit to other people even for their own ideas. And that would be the person who was generous and honest and gave credit to other people even for their own ideas. All kinds of qualities like that.

And you can write down those qualities that you admire in this other person. Whoever you admire most in the class. And then I would throw in a hooker.

I would say, as part of owing 10% of this person, you had to agree to go short 10% of somebody else in the class. That's more fun, isn't it? And you think, well, now who do I want to go short of?

And again, you wouldn't pick the person with the lowest IQ. You would start thinking about the person, really, who turned you off for one reason or another. You would start thinking about the person, really, who turned you off for one reason or another. I mean, they had various qualities, quite apart from their academic achievement.

But they had various qualities. In the end, you didn't really want to be around them. And other people didn't want to be around them. And what were the qualities that lead to that? Well, there'd be a whole bunch of things.

You know, but it's the person who's egotistic, all the person who's greedy, the person who's slightly dishonest, cuts corners, all of these qualities. You know, but it's the person who's egotistic, all the person who's greedy, the person who's slightly dishonest, cuts corners, all of these qualities. And you can write those down on the right-hand side of the page.

And when you look at that, we'll just... I don't know which one I'm using. Can you hear me okay with this? Yeah.

What do I do with it? It just came loose.

Oh, it just came loose. Okay. You can see why I avoid technology. Chewing gum is about as far as I get. As you looked at those qualities on the left and right-hand side, there's one interesting thing about them.

It's not the ability to throw a football 60 yards. It's not the ability to run the 100-yard dash in 9-3. It's not being the best-looking person in the class.

They're all qualities that if you really want to have the ones on the left-hand side, you can have them. They're all qualities that if you really want to have the ones on the left-hand side, you can have them. I mean, they're qualities of behavior, temperament, character that are achievable. I mean, they're qualities of behavior, temperament, character that are achievable. They're not forbidden to anybody in this group.

And if you look at the qualities on the right hand side, the ones that you find turn you off in other people, there's not a quality there that you have to have. there's not a quality there that you have to have. If you have it, you can get rid of it. If you have it, you can get rid of it.

And you can get rid of it a lot easier at your age than you can at my age, because most behavior is habitual. And you can get rid of it a lot easier at your age than you can at my age, because most behavior is habitual. And they say the chains of habit are too light to be felt until they're too heavy to be broken. And they say the chains of habit are too light to be felt until they're too heavy to be broken. And there's no question about it.

I see people with these self-destructive behavior patterns. My age or even 10 or 20 years younger and they really are entrapped by them.

They go around and they do things that turn off other people right and left and they don't need to be that way but by a certain point they get so they can hardly change it. But at your age you can have any habits. But at your age you can have any habits.

Any patterns of behavior that you wish, it's simply a question of which you decide. Any patterns of behavior that you wish, it's simply a question of which you decide. And why not decide the ones that, I mean, if you like, Ben Graham did this and Ben Franklin did it before him, but Ben Graham in his low teens looked around and he looked at the people he admired and he said, you know, I want to be admired, so why don't I just behave like them? And he found there was nothing impossible about behaving like them.

And similarly, he did the same thing on the reverse side in terms of Getting rid of those qualities. So I would suggest that if you write those qualities down and think about them a little while and make them habitual, you will be the one that you want to buy 10% of when you get all through. So I would suggest that if you write those qualities down and think about them a little while and make them habitual, you will be the one that you want to buy 10% of when you get all through. And the beauty of it is you already own 100% and you're stuck with it. And the beauty of it is you already own 100% and you're stuck with it. So you might as well be that person as somebody else. Well, that's a short little sermon.

So let's get on to what you're interested in. And like I say, you can go all over the lot. So I don't know exactly how we're going to handle this. But let's start with a hand here someplace or other. Where do we go with the first one?

Yeah, right here. My thoughts about Japan? I'm not a macro guy. Now, I say to myself, Berkshire Hathaway can borrow money for 10 years at 1% in Japan now. 1%.

And I say to myself, gee, I took Graham's class 45 years ago and I've been working hard at this thing all my life. Maybe I can earn more than 1% if I really work hard at it. 1% annually. It doesn't seem impossible, does it?

I wouldn't want to get involved in currency risk so I'd have to do it in something that was yen denominated.

So I have to be in Japanese real estate or Japanese business or something of a sort and all I have to do is beat 1% and that's all the money is going to cost me and I can get it for 10 years. So far I haven't found anything.

It's kind of interesting. The Japanese companies earn very low returns on equity and they have a bunch of businesses that earn 4, 5, 6 percent on equity and it's very hard to Earn a lot as an investor when the business you're in doesn't earn very much money. Now some people do it.

In fact, I've got a friend, Walter Schloss, who worked with Graham at the same time I did. And it was the first way I went at stocks, to buy stocks selling way below working capital. Very cheap, quantitative stocks.

I call it the cigar butt approach to investing. I call it the cigar butt approach to investing. You walk down the street and you look around for a cigar butt someplace. And finally you see one and it's soggy and kind of repulsive. But there's one puff left in it.

So you pick it up and the puff is free. I mean, it's a cigar butt stock. I mean, you get one free puff out of it and then you throw it away and you walk down the street and try another one. I mean, it's not elegant.

If you're looking for a free puff, it works. Those are low return businesses. But time is the friend of the wonderful business. But time is the friend of the wonderful business. It's the enemy of the lousy business. It's the enemy of the lousy business.

If you're in a lousy business for a long time, you're going to get a lousy result, even if you buy it cheap.

If you're in a wonderful business for a long time, even if you pay a little too much going in, you're going to get a wonderful result if you stay in a long time. If you're in a wonderful business for a long time, even if you pay a little too much going in, you're going to get a wonderful result if you stay in a long time. I find very few wonderful businesses in Japan at present now.

They may change the culture in some way so that the managements get more stockholder responsive over there and returns are higher. But at the present time, you'll find a very lot of low return businesses.

And that was true even when the Japanese economy was booming. I mean, it's amazing. They had an incredible market without incredible companies.

They were incredible in terms of doing a lot of business, but they weren't incredible in terms of the return on equity.

that they achieved uh... uh... and that finally caught up with them so we have so far done nothing there but as long as money's one percent i'll keep looking you were rumored to be one of the rescue buyers of long-term capital what what was the play there what did you see well there's a story in the current fortune magazine one has rupert murdoch's picture on the cover that tells the whole story of our involvement it's kind of an interesting story because It's a long story, so I won't go into all the background of it, but I got the really serious call about long-term capital about four weeks ago this Friday, whenever it was.

I got it in mid-afternoon and my granddaughter was having her Birthday party that evening and then I was flying that night to Seattle to go on a 12-day trip with Gates to Alaska in a private train, all kinds of things where I was really out of communication. But I got this call on a Friday afternoon saying that things were really getting serious there. I'd had some other calls before that the article gets into a few weeks earlier.

I know those people, most of them pretty well. A lot of them were at Solomon when I was there. And the place was imploding and the Fed was sending people up that weekend.

And so between that Friday and the following Wednesday when the New York Fed In effect, orchestrated a rescue effort, but without any federal money involved.

I was quite active, but I was having this terrible time because we were sailing up through these through these canyons, which held no interest for me whatsoever in Alaska.

And and the captain would say, you know, if we just steer over here, we might see some bears and whales. And I said, steer where you got a good satellite connection.

So it was, in fact, there's a picture of course where I've got my Old Faithfuls going off behind me and I've got my back to it.

I'm on the phone, which was the people in the group thought it was kind of funny the way I was working the phone. But we put in a bid on Wednesday morning. By then I was in Bozeman, Montana.

And I talked to Bill McDonough, the head of the New York Fed, about 10 o'clock. They were having an meeting of the bankers at 10 o'clock that morning in New York, and I caught him. We actually delivered a message to him.

He called me out there in Wyoming a little bit before 10 New York time. And we made a bid. It was because it was being done at a long distance and everything. It was really the outline of a bid.

But in the end, I was a bid for 250 million essentially for the net assets. But we would have put in three and three quarters billion on top of that.

And it would have been three billion from Berkshire Hathaway, 700 million from AIG and 300 million from Goldman Sachs. And we submitted that.

But we put a very short time fuse on it because when you're bidding on $100 billion worth of securities that are moving around, you don't want to leave a fixed price bid out there very long, plus we were worried about it getting shopped.

In the end, the bankers made the deal. But it was an interesting period. The whole long-term capital management, and I hope most of you are familiar with it, but the whole story is really Fascinating, because if you take John Merriweather and Eric Rosenfeld, Larry Hillenbrand, Greg Hawkins, Victor Aghani, the two Nobel Prize winners, Merton Scholes, if you take the 16 of them, they probably have as high an average IQ as any 16 people working together in one business in the country, including at Microsoft or wherever you want to name. So there's an incredible amount of intellect in that room.

Now you combine that with the fact that those 16 had had extensive experience in the field they were operating.

I mean, this was not a bunch of guys who had made their money, you know, selling men's clothing and then all of a sudden went into the securities business or anything.

They'd had in aggregate the 16 that probably had 350 or 400 years of experience doing exactly what they were doing. And then you throw in the third factor.

That most of them had virtually all of their very substantial net worths in the business. So they had their own money up. Hundreds and hundreds of millions of dollars of their own money up. Super high intellect, working in a field they knew.

And essentially they went broke. And essentially they went broke. And that to me is absolutely fascinating. And that to me is absolutely fascinating. I mean, if I ever write a book, it's going to be called Why Smart People Do Dumb Things. I mean, if I ever write a book, it's going to be called Why Smart People Do Dumb Things. My partner says it should be autobiographical.

But this might be an interesting illustration. And these are perfectly decent guys. I respect them and they helped me out when I had problems with Solomon. So they're not bad people at all.

To make money they didn't have and didn't need, they risked what they did have and did need. To make money they didn't have and didn't need, they risked what they did have and did need. And that's foolish. And that's foolish. That is just plain foolish. That is just plain foolish. It doesn't make any difference what your IQ is. It doesn't make any difference what your IQ is. If you risk something that is important to you...

For something that is unimportant to you, it just does not make any sense. For something that is unimportant to you, it just does not make any sense. I don't care whether the odds are 100 to 1 that you succeed or 1,000 to 1 that you succeed.

If you hand me a gun with 1,000 chambers, a million chambers in it, and there's a bullet in one chamber, and you said, put it up your temple, how much do you want to be paid to pull it once? I'm not going to pull it. I'm not going to pull it.

You can name any sum you want, but it doesn't do anything for me on the upside. And I think the downside is fairly clear. So I'm not interested in that kind of a game and yet people do it financially without thinking about it very much.

There was a great book. It wasn't a great book. It was a great title. It was a lousy book written once with a great title by Walter Gutman. The title was You Only Have To Get Rich Once. The title was You Only Have To Get Rich Once. Now, that seems pretty fundamental, doesn't it? Now, that seems pretty fundamental, doesn't it?

If you've got $100 million at the start of the year and you're going to make 10% if you're unleveraged and 20% if you're leveraged 99 times out of 100, what difference does it make at the end of the year whether you've got $110 million or $120 million? It makes no difference at all. It makes no difference at all. I mean, if you die at the end of the year, the guy that writes up the story may make a typo and he may say $110 million even if he had $120 million, so you've got nothing at all. It makes absolutely no difference. It makes no difference to your family.

It makes no difference to anything. And yet the downside, particularly managing other people's money, is not only losing all your money, but it's disgrace and humiliation and facing friends whose money you've lost.

I just can't imagine an equation that that makes sense for. And yet 16 guys with very high IQs who are very decent people entered into that game. And, you know, I think it's madness.

And it's produced by an over-reliance to some extent on things, you know. Those guys would tell me back when I was at Solomon, you know, that a Six Sigma event wouldn't, you know, wouldn't touch us or a Seven Sigma event.

But they were wrong. I mean, they're History does not tell you the probabilities of future financial things happening.

And they had a great reliance on mathematics, and they felt that The beta of the stock told you something about the risk of the stock. It doesn't tell you a damn thing about the risk of the stock, in my view. It doesn't tell you a damn thing about the risk of the stock, in my view.

And sigmas do not tell you about the risk of going broke, in my view. And maybe in their view now, too. But I don't like to even use them as an example, because they are... I mean, the same thing in a different way could happen to any of us, probably, where we really have a blind spot about something that's crucial, because we know a whole lot about something else.

It's like Henry Kaufman said the other day, so the people are going broke in this situation are just two of two types, the ones who knew nothing and the ones that knew everything. And it's it's it's it's sad in a way. I urge you.

In anything, we never basically borrow money. In anything, we never basically borrow money. I mean, we get float through our insurance business and do things, but I never borrowed money. I never borrowed money when I had 10,000 bucks, basically, because what difference did it make?

I was having fun as I went along, and it didn't make any difference whether I had $10,000 or a million dollars or $10 million, you know, except if I had a medical emergency or something had come along like that, but I was going to I was going to do the same things when I had a lot of money as when I had very little money.

If you think about the difference between me and you in terms of how we live, you know, we wear the same clothes basically. SunTrust gives me mine, but you... So we wear the same clothes.

We eat, you know, we all have a chance to drink the juice of the gods here. But we all go to McDonald's or better yet, Dairy Queen. We live in a house that's warm in winter and cool in summer and we watch Nebraska, Texas A&M on a big screen.

You see it the same way I see it. We do everything. Our lives aren't that different. You'll get decent medical care if something happens to you and I'll get decent medical care. The only thing we do is we travel differently.

I ride around this little plane and I love it. And that takes money. But if you leave, if you leave that aside, if you leave that, we travel differently. But other than travel, you know, I would, I think about it.

Think what, what can I do that you can't do? Now I get to work in a job that I love, but I've always worked in the job I love. Now I get to work in a job that I love, but I've always worked in the job I love. I loved it just as much when it was a big deal if I made a thousand bucks. And I urge you to work in jobs you love. And I urge you to work in jobs you love.

I mean, I think you're out of your mind if you keep taking jobs that you don't like because you think it'll look good on your resume. I mean, I think you're out of your mind if you keep taking jobs that you don't like because you think it'll look good on your resume. I was with a fellow at Harvard the other day who was taking me over to talk.

And he was 28 and he was telling me a lot about what he'd done in life, which was terrific. And then I said, what are you going to do next?

And he said, well, So after I got out my MBA, I said, I think maybe I ought to work for a management consulting firm because it'll look good on my resume. I said, what do you think? You're 28, you've been doing all these things.

I mean, you've got a resume that's 10 times as good as anybody I've ever seen it already. I said, if you take another job you don't like, just for, I said, isn't that a little like saving up sex for your old age? You know, I mean.

There comes a time when you ought to just start doing what you know. So I think I got the point across to him. But you ought to take a job when you get out here. Take a job you love. But you ought to take a job when you get out here. Take a job you love.

Don't take a job that you think is going to look good on your resume. Don't take a job that you think is going to look good on your resume. Take a job you love. Take a job you love. You may change it later on, but you'll jump out of bed in the morning. You may change it later on, but you'll jump out of bed in the morning.

I mean, when I got out of when I got out of Columbia, the first thing I tried to go to work for Graham immediately, I offered to go to work for him for nothing. He said I was overpriced. But I kept pestering him.

I went out to Omaha and I sold securities for three years and I kept writing him and giving him ideas and doing all this. And finally I went to work for him for a couple of years. And it was a great experience.

But I always I really worked in a job that I would love doing. You should really take a job that if you were independently wealthy you would take. You should really take a job that if you were independently wealthy you would take. That's the job to take because that's the one that you're going to have great fun in. That's the job to take because that's the one that you're going to have great fun in.

You'll learn something, you'll be excited about it, and you can't miss. You'll learn something, you'll be excited about it, and you can't miss. You may go do something else later on, but you'll get way more out of it. I don't care what the starting salary is or anything of the sort.

I don't know how I got off on that, but I there I am. So I do think that that. If you think you're going to be a lot happier if you've got 2x instead of x, you're probably making a mistake. If you think you're going to be a lot happier if you've got 2x instead of x, you're probably making a mistake.

You ought to find something you like that works with that and you'll get in trouble if you think that making 10x or 20x is the answer to everything in life because then you will do things like borrow money when you shouldn't or maybe cut corners on things that your employer wants you to cut corners on.

It just doesn't make any sense. You won't like it when you look back on it. Yeah.

Would you talk to the students about the companies that you like? I don't mean names. I mean what makes the company something that you like.

I like businesses I can understand. I like businesses I can understand. We'll start with that. That narrows it down about 90 percent. See, there's all kinds of things I don't understand. But fortunately, there's enough I do understand. You got this big wide world out there.

Almost every company is publicly owned. So you got all American business practically available to you. To start with, it doesn't make sense to go with things that you think you can understand, but you can understand some things.

I can understand this. I mean, you can understand this. Anybody can understand this. I mean, this is a product that...

Basically, it hasn't been changed much, I've added the cherry, but since 1886 or whatever it was, and it's a simple business. Basically, it hasn't been changed much, I've added the cherry, but since 1886 or whatever it was, and it's a simple business. It's not an easy business.

I don't want a business that's easy for competitors, so I want a business with a moat around it. I don't want a business that's easy for competitors, so I want a business with a moat around it. I want a very valuable castle in the middle, and then I want the duke who's in charge of that castle to be honest and hardworking and able. I want a very valuable castle in the middle, and then I want the duke who's in charge of that castle to be honest and hardworking and able. And then I want a big moat around the castle. And then I want a big moat around the castle. And that moat can be various things. And that moat can be various things. The moat in a business like our auto insurance business at GEICO is low cost. The moat in a business like our auto insurance business at GEICO is low cost. I mean, people have to buy auto insurance.

So everybody's going to have one auto insurance policy per car, basically, or per driver. And I can't sell them 20, you know, but they have to buy one. What are they going to buy it on? They're going to buy it based on service and cost.

Most people will assume the service is fairly Identical among companies or close enough. So they're going to do it on cost. So I got to be the low-cost producer. So I got to be the low-cost producer. That's my moat. That's my moat.

To the extent my costs get further lower than the other guy, I've thrown a couple of sharks into the moat.

But all the time, if you've got a wonderful castle, there are people out there who are going to try and attack it and take it away from you. But all the time, if you've got a wonderful castle, there are people out there who are going to try and attack it and take it away from you. And I want a castle that I can understand, but I want a castle with a moat around it. And I want a castle that I can understand, but I want a castle with a moat around it.

30 years ago, Eastman Kodak's moat was just as wide as Coca-Cola's moat. I mean, if you were going to take a picture of your six-month-old baby, and you're going to want to look at that picture 20 years from now, and you're going to want to look at it 50 years from now, and you're never going to get a chance. I mean, you're not a professional photographer so that you can evaluate what's going to look good 20 or 50 years ago.

What is in your mind about that?

About that photography company is what counts because they are promising you that the picture you take today is going to be terrific to look at 20 or 30 or 50 years from now about something that's very important to you.

Maybe your own child or whatever it may be. Well, Kodak had that in spades 30 years ago. They owned that. They had what I call share of mind. They had what I call share of mind. Forget about share of market, share of mind. Forget about share of market, share of mind.

They had something in everybody's mind around the country, around the world, with a little yellow box and everything that said Kodak is the best. It's priceless. They've lost some of that. They've been lost at all.

And it's not due to George Fisher. Ron George is doing a great job. But they let that moat narrow. They let Fuji come and start narrowing the moat in various ways.

They let him get into the Olympics and take away that special aspect that only Kodak was fit to photograph the Olympics. So Fuji gets there and immediately in people's minds, Fuji becomes more and a parody with Kodak.

You haven't seen that with Coke. Coke's moat is wider now than it was 30 years ago. You can't see the moat day by day, but every time, you know, the infrastructure gets built in some country that isn't yet profitable for Coke, but will be 20 years from now, the moat is widening a little bit. Things are all the time changing that moat in one direction or the other. Ten years from now, you can see the difference.

Our managers of the businesses we run, I've got one message to them, you know, which is to widen the moat. Our managers of the businesses we run, I've got one message to them, you know, which is to widen the moat. And we want to throw crocodiles and sharks and everything else, gators I guess, into the moat to keep away competitors. And we want to throw crocodiles and sharks and everything else, gators I guess, into the moat to keep away competitors.

And that comes about through service, it comes about through quality of product, it comes about through cost, it comes about sometimes through patents, it comes about through real estate location. So that's the business I'm looking for.

What kind of businesses am I going to find like that? Well, I'm going to find them in simple products because I'm not going to be able to figure out what the moat's going to look like for Oracle or Lotus or Microsoft ten years from now. Well, I'm going to find them in simple products because I'm not going to be able to figure out what the moat's going to look like for Oracle or Lotus or Microsoft ten years from now.

Gates is the best businessman I've ever run into and they've got a hell of a position, but I really don't know what that business is going to look like ten years from now.

And I certainly don't know what his competitors' businesses are going to look like ten years from now. Now I'll name one I don't own. I know what the chewing gum business is going to look like from 10 years from now. I know what the chewing gum business is going to look like from 10 years from now.

I mean, the internet is not going to change how we chew gum. I mean, the internet is not going to change how we chew gum. And nothing much else is going to change how we chew gum.

And then there are going to be lots of new products that really, you know, are spearmint and juicy fruit and all those are going to evaporate. So it isn't going to happen.

You give me a billion dollars and tell me to go in the chewing gum business and try and make a real dent. In Wrigley's, I can't do it. And that's the way I think about business.

I say to myself, give me a billion dollars and how much can I hurt the guy? Give me $10 billion. Give me $10 billion and how much can I hurt Coca-Cola around the world? I can't do it. Well, those are good businesses.

Now give me some money and tell me to hurt somebody in some other fields and I can figure out how to do it.

So I want a simple business, easy to understand, great economics now, honest and able management, So I want a simple business, easy to understand, great economics now, honest and able management, And then I can see about in a general way where they're going to be 10 years from now. And then I can see about in a general way where they're going to be 10 years from now.

And if I can't see where they're going to be 10 years from now, I don't want to buy it. And if I can't see where they're going to be 10 years from now, I don't want to buy it. Basically, I don't want to buy any stock where if they close the New York Stock Exchange tomorrow for five years, I won't be happy owning it. Basically, I don't want to buy any stock where if they close the New York Stock Exchange tomorrow for five years, I won't be happy owning it.

I buy a farm and I don't get a quote on it for five years and I'm happy if the farm does okay. I buy an apartment house. Don't get a quote on it for five years. I'm happy if the apartment house produces the returns that I expect.

But people buy a stock and they look at the price the next morning and they decide whether they're doing well or not doing well. It's crazy because they're buying a piece of a business. It's crazy because they're buying a piece of a business.

That's what Graham, the most fundamental part of what he taught me. You're not buying a stock. You're buying a part ownership in a business. You're not buying a stock. You're buying a part ownership in a business. You will do well if the business does well and if you didn't pay a totally silly price. You will do well if the business does well and if you didn't pay a totally silly price.

And that's what it's all about. And that's what it's all about. And you ought to buy businesses you understand. And you ought to buy businesses you understand. Just like if you're buying farms, you ought to buy farms you understand. It's not complicated. In calling us Graham Buffett, I mean it's just pure Graham.

I was very fortunate because I picked up a book when I was 19. I got interested in stocks when I was about 6 or 7 and I bought my first stock when I was 11 but I was playing around with all this stuff.

I had charts and volume and I'm making all kinds of technical calculations and everything. And then I picked up a little book and it just said that you're not buying some little timber symbol that bounces around every day.

You're buying a part of a business. And as soon as I started thinking about it that way, everything else followed. Very simple. And as soon as I started thinking about it that way, everything else followed. Very simple. So we buy businesses we think we can understand. So we buy businesses we think we can understand. There's no one here that can't understand the Coca-Cola company.

I would say there's no one here that can understand some new internet company. I said at the annual meeting this year that if I were teaching a class in business school on the final exam, I would pass out the information on an internet company and ask each student to value it. And anybody that gave me an answer, I'd flunk. And anybody that gave me an answer, I'd flunk. I don't know how to do it. But people do it every day. I mean, it's more exciting.

I mean, if you look at it like going to the races or something, that's a different thing. But if you're investing, I mean, investing is putting out money to be sure of getting more money back later, you know, at an appropriate rate. But if you're investing, I mean, investing is putting out money to be sure of getting more money back later, you know, at an appropriate rate.

And to do that, you have to understand what you're doing it in. I mean, you have to understand the business. And you can understand some businesses, but not all businesses. Yep.

Warren, so you covered half of it, which is trying to understand a business and buying a business, but you also alluded to getting a return on the amount of capital you invest in the business as an investor.

And that comes back to what are you paying for the business. How do you determine what you think is a fair price to pay for the business?

It's a tough thing to decide, but I don't want to buy into any business I'm not terribly sure of. It's a tough thing to decide, but I don't want to buy into any business I'm not terribly sure of. So if I'm terribly sure of it, it probably doesn't, it probably isn't going to offer incredible returns.

I mean, why should something that is essentially a cinch to do well offer you 40% a year or something like that? So we don't have huge returns in mind, but we do have in mind never losing anything. So we don't have huge returns in mind, but we do have in mind never losing anything.

And I mean, we bought See's Candy in 1972. See's Candy was then selling 16 million pounds of candy. At $1.95 a pound and it was making two bits a pound or four million pre-tax. We paid $25 million for it. Took no capital to speak of.

When we looked at that business, basically my partner Charlie and I really decided there was a little untapped pricing power there. In other words, whether that $1.95 box of candy could just as easily sell for two or two and a quarter.

If it could sell for two and a quarter, another 30 cents a pound was 4,000,008 on 16,000,000 pounds, which on a 25,000,000 purchase price was fine. We didn't do any, you know, we never hired a consultant in our lives.

I mean, our idea of consulting is go out and buy a box of candy, you know. Well, what we did know was that they had share a mind in California. I mean, there was something special.

Every person in California had something in their mind about seized candy and overwhelmingly it was favorable. They had taken a box, you know, Valentine's Day and given it to some girl and she kissed him.

If she'd slapped him, you know, we'd have no business. But as long as she kisses him, you know, that's what we want in their mind. Seized candy, getting kissed. And if we can get that in the minds of people, we can raise prices.

And I bought that in 1972. Every year I raise the price on December 26th. I raise it the day after Christmas, because we sell a lot at Christmas. In fact, we'll make $60 million this year. We'll sell 30 million pounds, make $2 a pound.

Same business, same formulas, same everything. 60 million bucks still doesn't take any capital. And we'll make more money 10 years from now. But of that 60 million, we make about 55 million in the three weeks before Christmas.

And our company song is, what a friend we have in Jesus. It is a good business. But the important thing about that business is to think about a little. People don't buy, most people don't buy boxed chocolates to consume themselves.

They buy them as gifts. You know, somebody, somebody's birthday, more likely it's a holiday. It's a Valentine's Day, single biggest day of the year. Christmas is the biggest season by far.

But women buy for Christmas and they plan ahead and buy over two or three week period. Men buy on Valentine's Day. They're driving home. We run ads on the radio, you know, guilt, guilt, guilt, guilt.

You know, the guys are veering off the freeway right and left. And they won't dare go home without a box of candy when we get through with them on our radio ads. So that Valentine's Day is the biggest day.

But can you imagine going home on Valentine's Day and our C's candy is now 11 bucks a pound, thanks to my brilliance. And let's say there's candy available at six dollars a pound.

But you really want to walk in on Valentine's Day and hand, I mean, your wife's got all these favorable images of the seized candy over the years and she sees you and that's the way she thinks of you during the rest of the year when you behave kind of badly.

And you walk in and say, honey, this year, I took the low bid and then hand her a box of candy. I mean, it just isn't going to work. So in a sense, it's if there's untapped prices, price, it's not price dependent, basically. Think of Disney.

I mean, Disney is selling, we'll say, home videos for, I don't know what, $16.95, $18.95 or whatever, all over the world. People, and we'll say particularly mothers in this case, have something in their mind about Disney.

I mean, every person in this room, when you say Disney, has something in their mind about it. If I say Universal Pictures, you don't have anything in your mind. If I say 20th Century Fox, you don't have anything special in your mind.

If I say Disney, you've got something in your mind. If I say Disney, you've got something in your mind. And that's true around the world. Now picture yourself with a couple of young kids. You know who you want to put away for a couple hours every day, get a little peace of mind.

And you know if you get them one video, they'll watch it 20 times. So you go to the video store or wherever you buy the video, are you going to sit there and premiere 10 different videos and watch them each for an hour and a half to decide which one your kids should watch? No.

I mean, let's say there's one there for $16.95 and a Disney there for $17.95. You know if you take the Disney video, You can be okay so you buy it and you don't have to make a quality decision on something that you don't want to spend the time to do and so you can get a little bit more money if you're Disney and you'll sell a lot more videos. You can be okay so you buy it and you don't have to make a quality decision on something that you don't want to spend the time to do and so you can get a little bit more money if you're Disney and you'll sell a lot more videos.

Makes it a wonderful business. Makes it a wonderful business. Makes it very tough for the other guy. Makes it very tough for the other guy. How would you try to create a brand, DreamWorks is trying, but how would you try to create a brand that competes with Disney around the world and to replace the concept that people have in their minds about Disney with something that says Universal Pictures?

You know, so that the mother is going to walk in and pick out a Universal Pictures video in preference to a Disney. It's not going to happen. Coca-Cola is associated with people being happy around the world, where every place they're happy, where Disney World or Disneyland with the World Cup will be at the Olympics, where every place where people are happy. Happiness and Coca-Cola together. Happiness and Coca-Cola together.

I don't care how much money and tell me that I'm going to do that with RC Cole around the world and have five billion people that have a favorable image in their mind about RC Cole, it can't get done.

And you can fool around, you can do anything you want to do. You can have price discounts on weekends and everything, but you're not going to touch it. And that's what you want to have in a business. And that's what you want to have in a business.

That's the moat and you want that moat to widen. That's the moat and you want that moat to widen. And if your sea is candy, you want to do everything in the world to make sure that the experience Basically of giving that gift leads to a favorable reaction. And if your sea is candy, you want to do everything in the world to make sure that the experience Basically of giving that gift leads to a favorable reaction. That means what's in the box.

It means the person that sells it to you. Because all our business is done when we're terribly busy. I mean people come in in those weeks before Christmas or on Valentine's Day and there are long lines.

So at 5 o'clock in the afternoon, some woman is selling the last person, the last box of candy, and that person's been waiting in line for maybe 20 or 30 customers. And if the salesperson smiles at that last customer, our mode is widened. And if the salesperson smiles at that last customer, our mode is widened.

And if she snarls at them, our mode is narrowed. We can't see it. It's going on every day. But that's the key to it.

I mean, the total part of the product delivery is having everything associated with it, say, sees candy and something pleasant happening. And that's what business is all about. Yep.

Before purchasing a company, how much qualitative analysis do you do versus quantitative analysis? And have you ever bought a company where the numbers told you not to?

Those are the best buys. Those are the best buys. The question is whether I ever bought a company where the numbers told me not to and how much is qualitative and how much is quantitative. The best buys have been when the numbers almost tell you not to. The best buys have been when the numbers almost tell you not to.

I mean, because then you then you feel so strongly about the product and not just the fact that you're getting a used cigar, but cheap, that it's compelling. I mean, I owned a windmill company at one time.

So I, you know, windmills are cigar butts. Believe me, I bought it very cheap. I wanted a third of working capital and we made money out of it. But there's no repetitive money to be earned.

I mean, there's a one-time profit in something like that. And it's just not the thing to be doing. I went through that phase. I mean, I bought streetcar companies and all kinds of things.

But in terms of the qualitative, I probably understand the qualitative the moment I get the phone call. But in terms of the qualitative, I probably understand the qualitative the moment I get the phone call. I mean, almost every business we bought It's taken five or ten minutes, I mean in terms of analysis.

And we bought two businesses this year. General Re is, you know, $18 billion or some deal. I've never been to their home office. I hope it's there. There could be just a few guys that say, well, what numbers should we send Buffett this month?

I can see him coming in once a month and say, well, we'll just tell him we've got $20 billion in the bank this month instead of $18 billion or something. But I've never been there.

And before, I bought Executive Jet, which is fractional ownership of jets. And before I bought it, I'd never been there. I bought my family a quarter interest in the program three years earlier.

And I'd seen the service and seen it develop well. And I got the numbers. If you don't know enough to know about the business instantly, you won't know enough in a month or two months. If you don't know enough to know about the business instantly, you won't know enough in a month or two months.

I mean, you have to have sort of the background of understanding and knowing what you do understand and don't understand. And that is the key. It's defining what I call your circle of competence. It's defining what I call your circle of competence.

And everybody's got a different circle of competence. The important thing is not how big the circle is. The important thing is not how big the circle is. The important thing is staying inside the circle. The important thing is staying inside the circle.

And if that circle has only got 30 companies in it out of thousands on the big board, As long as you know which 30 they are, you're okay. As long as you know which 30 they are, you're okay. And you should know those businesses well enough so that you don't need to read, do lots of work.

Now I did a lot of work in the earlier years just in getting familiar with businesses. And the way I would do that is I would go out and use what Phil Fisher called the scuttlebutt approach.

I'd go out, I'd talk to customers, I'd talk to Maybe ex-employees in some cases, I talk to suppliers, everybody. Every time I'd see somebody in an industry, let's say I was interested in the coal industry, I'd go around and see every coal company and I'd ask every CEO, if you could only buy stock in one coal company that wasn't your own, which one would it be and why?

You piece those things together and you learn a lot about the business after a while. Funny thing is you get very similar answers as long as you ask about competitors.

I'd say if you got a silver bullet and you put it through the head of one competitor, Which competitor and why? You'll find out who the best guy in the industry is in that case or the one that's coming up.

So there's a lot of things you can learn about a business. I've done that in the past on the businesses that I feel I could understand. So I don't have to do much of that anymore.

The nice thing about investing is you don't have to learn anything very new. The nice thing about investing is you don't have to learn anything very new. I mean, you can do it if you want to. But if you learned about Wrigley-Schewingham 40 years ago, you still understand Wrigley-Schewingham. But if you learned about Wrigley-Schewingham 40 years ago, you still understand Wrigley-Schewingham.

There's not a lot of great insights to get or anything of the sort as you go along. So you do get a database in your head.

Frank Rooney, who ran Melville for many years, his father-in-law died, owned a company called HH Brown, a shoe company. And he put it up with Goldman Sachs, but he was playing golf with a friend of mine here in Florida.

And I mentioned to this friend, the guy said, why don't you call Warren? He called me at the end of the golf match. And in five minutes, I basically had a deal. But I knew Frank, and I knew the kind of business.

I sort of knew the basic economics of a shoe business. And so I could buy it. Quantitatively, I've got to decide what the price is. Uh, but You know, that's either yes or no. I mean, I don't fool around a lot with negotiations.

So if they name a price that makes sense to me, I buy it. And if they don't, I was happy the day before, so I'll be happy the day after without owning it. Yeah.

Coca-Cola just announced a drop in expectations in terms of future earnings, like quarter earnings. And in light of the fact that Coke has a lot of their profits coming in from outside the United States, how do you think the Asian crisis, so to speak, is going to affect Coke for that amount of years?

The question is about the Asian crisis and how it affects a company like Coke that recently announced that the earnings, actually they just announced their third quarter earnings, but a few weeks ago they tipped people off that they were going to be lower than the fourth quarter.

Well, basically I love it, but because the market for Coca-Cola products is going to grow far faster over the next 20 years internationally than it will in the United States. Well, basically I love it, but because the market for Coca-Cola products is going to grow far faster over the next 20 years internationally than it will in the United States.

It will grow in the United States on a per capita basis, but it's going to grow faster elsewhere. So the fact that it's going to be a tough period for, who knows, three months or three years, but it won't be tough for 20 years.

I mean, people are still going to, you know,

they're going to work productively around the world and they're going to find that this is a bargain product in terms of the portion of their working day that they have to give up in order to have one of these, or better yet, five of them a day like I do. It's a, you know, this is a product In 1936 when I first bought six of those for a quarter and sold them for a nickel each and it was in a six and a half ounce bottle and you paid a two cent deposit on the bottle, that was a six and a half ounce bottle for a nickel at that time. It's now a 12 ounce can which if you buy it on weekends or if you buy it in bigger quantities so much money doesn't go to the packaging,

you essentially can buy the 12 ounces for Not much more than 20 cents, so you're paying not much more than twice the per ounce price of 1936.

It is a product that's gotten cheaper and cheaper and cheaper relative to people's earning power over the years and which people love. It is a product that's gotten cheaper and cheaper and cheaper relative to people's earning power over the years and which people love.

In 200 countries, you have the per capita use going up every year for products over 100 years old and that dominates the market. I mean, that is unbelievable.

One thing that people don't understand One thing that makes this product is worth tens and tens of billions of dollars. There's one simple fact about really all colas, but we'll call it Coca-Cola for the moment. There's one simple fact about really all colas, but we'll call it Coca-Cola for the moment.

It happened to be a name I like. Cola has no taste memory. Cola has no taste memory. You can drink one of these at 9 o'clock, 11 o'clock, 3 o'clock in the afternoon, 5 o'clock.

The one at 5 o'clock will taste just as good to you as the one you drank early in the morning. The one at 5 o'clock will taste just as good to you as the one you drank early in the morning. You can't do that with cream soda, root beer, orange, grape, you name it. All of those things accumulate on you.

Most foods and beverages accumulate on you. You get sick of them after a while. And if you eat I mean, we get these people to go to the workforce and seize candy and we tell them they can eat all the candy they want and the first day they go crazy.

But after a week, they're eating about the same amount they'd eat if they were buying it because chocolate accumulates on it. Everything accumulates on it. There is no taste memory to cola. There is no taste memory to cola.

And that means that you get People around the world that are heavy users that will drink five a day or diet coke maybe seven or eight a day or something of the sort, they'll never do that with other products.

So you get this incredible per capita consumption. The average person in this part of the world, well maybe a little north of here, drinks about 64 ounces of liquid a day.

And you can have all 64 ounces of that Big Coke and you will not get fed up with Coke if you like it to start with in the least.

But if you do that with almost anything else, if you eat just one product all day, you'll get a little sick of it after a while.

And it's a huge factor so that today, Over 1 billion 8-ounce servings of Coca-Cola products will be sold in the world. Over 1 billion 8-ounce servings of Coca-Cola products will be sold in the world. And that will grow year by year. It'll grow in every country virtually.

It'll grow on a per capita basis and 20 years from now it'll grow in a lot faster internationally than in the U.S. So I really like that market market better because there is more growth there over time.

But it will hurt them and it is hurting them in the short term right now and but that that doesn't mean anything. I mean that Coca-Cola went public in I think it was 1919. Stocks sold for $40 a share.

Went back before that as a Candler family and they went back, they bought it for 2,000 bucks, the whole business. A's the Candler back in the late 1880s and a couple of purchases. So now it goes public in 1919, $40 a share.

One year later, it's selling for $19, going down 50% in one year. Now you might think that's some kind of disaster and you might think that sugar prices increased and the bottlers were rebellious and a whole bunch of things.

You could always find a few reasons why that wasn't the ideal moment to buy it.

Years later, you'd have seen the Great Depression and you'd have seen World War II and you'd seen sugar rationing and you'd seen thermonuclear weapons and the whole thing. There's always a reason.

But in the end, if you bought one share for 40 bucks and reinvest the dividends, it'd be worth about 5 million now. But in the end, if you bought one share for 40 bucks and reinvest the dividends, it'd be worth about 5 million now. And that factor so overrides anything else.

I mean, if you're right about the business, You'll make a lot of money and the timing part of it is a very tricky thing. You'll make a lot of money and the timing part of it is a very tricky thing. So I don't worry about any given event if I've got a wonderful business.

You know, whether what it does to next year or something of the sort. Price controls have been in this country at various times and that's followed up even in the rest of businesses.

I mean, I wouldn't be able to raise the price on December 26th of the seas candy if we had price controls and we've had them in this country.

But that doesn't make it a lousy business if that happens to happen because you're not going to have price controls forever. We had them in the early 70s. So the wonderful business You can figure out what will happen. So the wonderful business You can figure out what will happen.

You can't figure out when it will happen. You can't figure out when it will happen. You don't want to focus too much on when. You don't want to focus too much on when. You want to focus on what. You want to focus on what. If you're right about what, you don't have to worry about when very much. If you're right about what, you don't have to worry about when very much. Is there an area I'm missing back there any place?

I just want to make sure I'm not focusing all of them on one place. Let me get this gentleman over here. The question is about my business mistakes. How much time do you have?

Well, the interesting thing about the mistakes is that in investments, at least for me and for my partner, Charlie Munger, the biggest mistakes have not been mistakes of commission, they've been mistakes of omission. Well, the interesting thing about the mistakes is that in investments, at least for me and for my partner, Charlie Munger, the biggest mistakes have not been mistakes of commission, they've been mistakes of omission.

There were, we knew enough about the business to do something and for one reason or another, we sat there sucking our thumbs instead of doing something.

And so we've passed up things where we could have made billions and billions of dollars from things we understood. And so we've passed up things where we could have made billions and billions of dollars from things we understood. Forget about things we don't understand.

The fact that I can make billions out of Microsoft doesn't mean anything because I never understand Microsoft. The fact that I can make billions out of Microsoft doesn't mean anything because I never understand Microsoft. But if I can make billions out of healthcare stocks, then I should make it and I didn't.

When the Clinton healthcare program was proposed and they all went in the tank, We should have made a ton of money out of that because I could understand it. When the Clinton healthcare program was proposed and they all went in the tank, We should have made a ton of money out of that because I could understand it. I didn't make it.

I should have made a ton of money out of Fannie Mae back in the mid 80s because I understood it and I didn't do it.

Those are billion dollar mistakes or multi-billion dollar mistakes that generally accepted accounting principles don't pick up.

The mistakes you see The mistakes you see, we made a, isn't we, I made a mistake buying US Air Preferred some years ago. I mean, I had a lot of money around. I make mistakes when I get cash. Charlie tells me to go to a bar instead.

Don't hang around the office. But I hang around the office and I got money in my pocket, I do something dumb. But I hang around the office and I got money in my pocket, I do something dumb. And it happens every time. And so I bought this thing. Nobody made me buy it.

I now have a 800 number I call every time I think about buying stock in an airline and they talk me down. I now have a 800 number I call every time I think about buying stock in an airline and they talk me down. They say, you know, I say, well, I'm Warren, I'm an aeroholic.

And then the guy says, you know, keep talking, don't hang up, you know, don't do anything rash. And finally I get over it. But I bought it, you know.

It looked like we were going to lose all our money in that and we came very close to losing all our money and say we deserve to lose all our money.

And we bought it because it was an attractive security but it was not an attractive business. And we bought it because it was an attractive security but it was not an attractive business. I did the same thing with Solomon. I bought an attractive security In a business that I wouldn't have bought the equity in.

So you can say that that's one form of mistake. Buying something because you like the terms when you don't like the business that well. And I've done that in the past and probably do it again.

The bigger mistakes though are the ones of Of all mission, I did it back when I when I had the ten thousand bucks, I put two thousand dollars of it into a Sinclair service station, which I lost. The bigger mistakes though are the ones of Of all mission, I did it back when I when I had the ten thousand bucks, I put two thousand dollars of it into a Sinclair service station, which I lost.

So my opportunity cost, that's about six billion right now. Fairly big mistake. Yeah. It makes me feel good when Berkshire goes down then because the cost of my Sinclair station goes down to my 20 percent opportunity cost. But I will say this.

You talk about learning from mistakes. I really believe it's better to learn from other people's mistakes as much as possible. I really believe it's better to learn from other people's mistakes as much as possible. We don't spend any time looking back at Berkshire. I've got a partner, Charlie Munger. We've been pals for 40 years.

We've never had an argument. We disagree on things a lot, but we don't have arguments about it and we never look back. We just figure there's so much to look forward to that there's just no sense thinking about what we might have.

It just doesn't make any difference. I mean, you can only live life forward and you can learn something perhaps from the mistakes, but the The big thing to do is stick with the businesses you understand. The big thing to do is stick with the businesses you understand.

So if there's a generic mistake of getting outside of your circle of competence and buying something because somebody tips you on it or something of the sort in an area you don't know anything about, you should learn something from that, which is that you stay with what you can figure out yourself. So if there's a generic mistake of getting outside of your circle of competence and buying something because somebody tips you on it or something of the sort in an area you don't know anything about, you should learn something from that, which is that you stay with what you can figure out yourself. You really want your decision making to be by looking in the mirror.

And saying yourself, I'm buying 100 shares of General Motors at 55 because. And I mean, it's your responsibility if you're buying it. And there's got to be a reason. And if you can't state the reason, you shouldn't buy it. And saying yourself, I'm buying 100 shares of General Motors at 55 because. And I mean, it's your responsibility if you're buying it. And there's got to be a reason. And if you can't state the reason, you shouldn't buy it.

If it's because somebody told you about it at a cocktail party, not good enough. You know, I mean, there's just, it's got to be something, you know, can't be because the volume, you know, the chart looks good on it or anything like that.

It's got to be a reason you'd buy the business. And we, that we stick to pretty, pretty carefully. That's one of the things Ben Graham taught me. Yeah.

The question is about what's going to happen to interest rates and where we go in the world. I don't think about the macro stuff. I don't think about the macro stuff.

You know, I just, the important thing, what you really want to do in investments is figure out what's important and knowable. You know, I just, the important thing, what you really want to do in investments is figure out what's important and knowable. If it's unimportant or unknowable, you forget about it. If it's unimportant or unknowable, you forget about it.

What you talk about is important, but in my view, it's not knowable. Understanding Coca-Cola is knowable or Wrigley or Eastman Kodak or anything. I mean, you can understand those business. That's knowable.

And whether it turns out to be important depends on where your valuation leads you and the current price and all of that. But we have never either bought a business or not bought a business because of any macro feeling of any kind. But we have never either bought a business or not bought a business because of any macro feeling of any kind.

We don't read Things about, predictions about interest rates or business or anything like that, because it doesn't make any difference.

I mean, let's say in 1972 when we bought See's Candy, I think maybe Nixon put on the price controls a little bit later. Let's say we'd seen that, but so what?

We'd have missed the chance to buy something for $25 million that's earning $60 million pre-tax now. We don't want to pass up the chance to do something intelligent. Because of some prediction about something that we're no good at anyway.

So we just don't, we don't read or listen to or do anything in relation to macro factors at all. Zero. And the typical investment counseling organization goes out and they give you the, they bring out their economist, they trot him out and he gives you this big macro picture and then they start working from there on down. In our view that's nonsense. In our view that's nonsense.

And if, you know, if Alan Greenspan was on one side of me and Bob Rubin on the other side, they're both whispering in my ear exactly what they're going to do the next 12 months.

Wouldn't make any difference to me in what I pay for executive jet or general reinsurance or anything else I do.

Yep.

Well, what's the benefit of being an out-of-towner as opposed to being in Wall Street?

I worked in Wall Street for a couple of years and I've got my best friends actually on both coasts and I like seeing them and I get ideas when I go there.

But the best way to get to think about investments is to be in a room with no one else and just think. But the best way to get to think about investments is to be in a room with no one else and just think. And if that doesn't work, nothing else is going to work.

And the disadvantage of being In any kind of a market type environment on Wall Street would be the extremes that you get overstimulated. You think you have to do something every day. You think you have to do something every day.

I mean, the Canberra family paid 2,000 bucks for this company and you don't have to do much else if you pick one of those. And the trick then is not to do anything else, even not to sell it in 1919, which the family did later on.

So what you're looking for It's some way to get one good idea a year, you know, and then write it to its full potential. So what you're looking for It's some way to get one good idea a year, you know, and then write it to its full potential.

And that's very hard to do in an environment where people are shouting prices back and forth every five minutes and shoving reports under your nose and all that. Wall Street makes its money on activity. Wall Street makes its money on activity.

You make your money on inactivity, you know. You make your money on inactivity, you know. I mean, if everybody in this room trades their portfolio around every day with every other person, you know, you're all going to end up broke and the intermediary is going to end up with all the money. On the other hand, if you all own stock in a group of average businesses and just sit here for the next 50 years, you'll end up with a fair amount of money and your broker will be broke. So his activity He's like a doctor who gets paid on how often he gets you to change pills. I mean basically.

I mean he gives you one pill and it cures you the rest of your life and he's got one sale, one transaction and that's it. But if he can convince you that changing pills every day is the way to great health, It'll be great for him and the prescriptionists and you'll be out a lot of money and you won't be any healthier. A lot worse off financially. So you want to stay away from any environment that stimulates activity.

And Wall Street would have the effect of doing that. When I went out to Alma, I'd go back about once every six months and I'd go back with a whole list of things I wanted to check out one way or another, companies I wanted to see.

And I would get my money's worth out of those trips. But then I'd go back to Alma and think about it. Yeah.

How should an investor evaluate owning shares of Berkshire Hathaway or Microsoft if they don't pay dividends?

Yeah. Well, the question with Berkshire Hathaway was about evaluating Berkshire when it doesn't pay any dividends and it won't pay any dividends either. It's a promise I can keep.

All you get with Berkshire, you stick it in your safe deposit box and then every year you go down and fondle it. You know, you take it out and you fondle it. Then you put it back. And I mean, there's enormous psychic reward in that.

You don't underestimate it. But the real question is whether we can keep Retaining dollar bills and turning them into more than a dollar at a decent rate. But the real question is whether we can keep Retaining dollar bills and turning them into more than a dollar at a decent rate. And that's what we try to do. And Charlie Munger and I have our money in it to do that.

That's all we'll get paid for doing. We won't take any options. We won't take any salaries to speak of or anything. We'll ride around in the plane. But that's what we're trying to do. It gets harder all the time.

The more money we manage, the harder it is to do that. And we would do way better percentage-wise with Berkshire if it was 1,100th the present size.

It is run for its owners, but it isn't run to give them dividends because so far, every dollar that we've earned and could have paid out, we've turned into more than a dollar. It is run for its owners, but it isn't run to give them dividends because so far, every dollar that we've earned and could have paid out, we've turned into more than a dollar. It's worth more than a dollar to keep it.

And therefore, it'd be silly to pay it out. Even if everybody was tax-free that owned it, it would have been a mistake to pay dividends at Berkshire because so far, the dollar bills retained have turned into more than a dollar.

But there's no guarantee that that happens in the future. And at some point, the game runs out on that. But it is the goal, I mean that is what the business is about. We're not, nothing else about the business. Do we judge ourselves by it?

We don't judge it by the size of its home office building or anything of the number of people working around it. We've got 12 people at headquarters. We've got 45,000 employees at Berkshire and 12 people at headquarters, 3,500 square feet.

And we won't change it. So we will judge ourselves by the performance of the company. And that's the only way we'll get paid. But believe me, it's a lot harder than it used to be. Is there anything weighing in the back?

Because I want to make sure I'm not missing people back there that haven't called. Okay, then we'll go to the, well, how about way over there on the aisle? Yeah.

I missed this.

What makes me decide to invest? What?

Investment. One of your investments has reached its full potential. As you said earlier that you, I missed the last part.

Oh, reach its full potential. Well, ideally, a buy in business is where you feel that will never happen in terms of, I mean, I don't think I don't buy Coke with the idea that it's going to be out of gas in 10 years, you know, or 15 years.

I mean, there could be something happened, but I would think the chances are almost nil. So what we really want to do is buy businesses that we would be happy to own forever. So what we really want to do is buy businesses that we would be happy to own forever. It's the same way I feel about people buy Berkshire.

I want people to buy Berkshire to plan to hold it forever. They may not for one reason or another. But I want them at the time they buy it to think they are buying a business that they're going to own forever.

And I don't say that's the only way to buy things. It's just that that's the group I want to have join me because I don't want to have a changing group all the time. I measure Berkshire by how little activity there is in it.

If I had a church, And I was the preacher and half the congregation left every Sunday. I wouldn't say, oh, this is marvelous because I have all this liquidity among my members, you know. Just terrific turnover, you know.

I would rather get a church where all the seats are filled, you know, every Sunday by the same people. Well, that's the way we look at the businesses we buy. We want to buy something that we're really happy to own virtually forever.

And we can't find a lot of those. Back when I started, I had way more ideas than money.

So I was just constantly having to sell what I thought was the least attractive stock in order to buy something that I just discovered that looked even cheaper. But that's not our problem really now.

And so we hope we're buying businesses that we're just as happy with five years from now as now. And if we ever found some huge acquisition, then we'd have to sell something maybe to make that acquisition.

But that would be a very pleasant It's a pleasant problem to have. We never buy something with a price target in mind. I mean we never buy something at 30 saying if it goes to 40 we'll sell it or 50 or 60 or 100.

We just don't do it that way any more than when we buy a private business like See's Candy for 25 million we don't say to ourselves if we ever get an offer of 50 million for this business we'd sell it.

That's just not the way to look at a business. The way to look at a business is, is this going to keep producing more and more and more money over time? The way to look at a business is, is this going to keep producing more and more and more money over time? And if the answer to that is yes, you don't need to ask any more questions.

There is a yeah way back there. Well, Solomon, like I said, I went into that because it was a 9% security in 1987, September 1987. The Dow was up 35% that year. We'd sold a lot of stuff. And I had a lot of money around.

It looked to me like we were never getting a chance to do anything. So I took an attractive security form in a business I would never buy the common stock of. And I went in because of that. And I think that's generally a mistake.

It worked out OK finally on that. But it's not what I should have been doing. I either should have waited, in which case I could have bought more Coca-Cola a year later or thereabouts,

or I should have even bought Coke at the prices it was selling at then, even though it was selling at a pretty good price at the time. So that was a mistake.

On long-term capital, we have learned other businesses that are associated with securities over the years. And I mean, one of them is arbitrage. I've done arbitrage for 45 years, and Graham did it for probably 30 years before that.

That's a business unfortunately I have to be near a phone for and I have to really run out of the office myself because it requires being more sort of market attuned and I don't want to do that anymore.

So unless a really big arbitrage situation came along that I understood, I won't be doing much of that. 300 arbitrage situations at least in my life, maybe more. And it was a good business, perfectly good business.

Long term capital has a bunch of positions. They got tons of positions, but the top 10 are probably 90% of the money that's at risk. I know something about those ten positions. I don't know everything about them by a long shot,

but I know enough where I would feel okay at a big discount going in and we would have the staying power to hold it out. We might lose money on something like that, but the odds are with us. That's a game that I understand.

There's a few other positions we have that aren't that big because they can't get that big, but they could involve yield curve relationships or Or on-the-run,

off-the-run governments or things like that that are just things you learn over time if you're around securities markets. They're not the base of our business.

Probably on average, they've accounted for a half a percentage point of our return a year or three quarters of a percentage point a year of our return.

They're little pluses that you get for For actually having just been around a long time and learning a little bit about it.

First arbitrage, not the first arbitrage I did, but one of the first arbitrages I did involved a company where they were offering cocoa beans in exchange for their stock.

That was in 1955. I bought the stock, turned in the stock, got warehouse certificates for cocoa beans, and they happened to be a different type.

They were trading their cocoa exchange, but there was a basis differential in my favor, and I sold them. I mean, that's just something that I was around at the time, so I learned about. Hasn't been a cocoa bean deal since 40 odd years.

I've been waiting for another cocoa bean deal. I haven't seen it, but it's there in my memory if it ever comes along. And that long term capital is that on a big scale. Yep.

The question is about diversification and I've got a dual answer to that.

If you are not a professional investor, if your goal is not to manage money in such a way as to get a significantly better return than the world, then I believe in extreme diversification. If you are not a professional investor, if your goal is not to manage money in such a way as to get a significantly better return than the world, then I believe in extreme diversification.

So I believe 98 or 99 percent, maybe more than 99 percent of people who invest should extensively diversify and not trade.

So that leads them to an index fund type of A decision with very low cost because all they're going to do is own a part of America and they made a decision and owning a part of America is worthwhile. I don't quarrel with that at all.

That is the way they should approach it unless they want to bring an intensity to the game to make a decision and start evaluating businesses.

But once you're in the business of evaluating businesses and you decide that you're going to bring the effort and intensity and and time involved to get that job done. Then I think that diversification is a terrible mistake to any degree. But once you're in the business of evaluating businesses and you decide that you're going to bring the effort and intensity and and time involved to get that job done. Then I think that diversification is a terrible mistake to any degree.

I got asked that question when I was at SunTrust the other day. If you really know businesses, you probably shouldn't know more than six of them. I mean, if you can identify six wonderful businesses, that is all the diversification you need. If you really know businesses, you probably shouldn't know more than six of them. I mean, if you can identify six wonderful businesses, that is all the diversification you need.

And you're gonna make a lot of money. And I will guarantee you that going into a seventh one is going to, rather than putting more money in your first one, it's got to be a terrible mistake.

Very few people have gotten rich on their seventh best idea. But a lot of people got rich on their best idea.

So I would I would say that for anybody working with normal capital who really knows the businesses they've gone into, a six is funny. And I probably have half of it in what I like the best. I don't diversify, personally.

All the people I know that have done well, with the exception of Walter Schlosser. Walter diversifies a lot. He owns a little of everything. I call him Noah. You know, he's got two of everything.

How do you differentiate the co-owns of the world from the Procter & Gamble of the world? Well, Procter & Gamble is a very, very good business. Strong distribution capability, lots of brand names and everything.

But if you ask me, I'm going to go away for 20 years to put all my family's net worth in one business, but I'd rather have Procter & Gamble or Coke.

Actually, Procter & Gamble would be more diversified among product line, but I would feel sure of Coke than Procter & Gamble. I wouldn't be unhappy if somebody told me I had to own Procter & Gamble during that 20-year period.

I mean, that would be in my top 5% because they are not going to get killed. I would feel better about the unit growth and the pricing power of a Coke over 20 or 30 years than I would about a Procter & Gamble.

Right now, the pricing power might be tough, but you think a billion, billion servings a day, you know, an extra penny, $10 million a day. You know, we own 8% of it. That's $800,000 a day for Berkshire Hathaway.

Get another penny out of the stuff. Doesn't seem impossible, does it? I mean, it's worth another penny.

It doesn't, right now, it'd be a mistake to try and get it in most markets, but over time, Coke will make more per serving than it does now. 20 years from now, I'll guarantee it'll make more per serving.

I'll be selling a whole lot more servings. I don't know how many, I don't know how much more, but I know that.

P&G's main products, I don't think they have the kind of dominance and they don't have the kind of unit growth, but they're good businesses.

You know, I would not be unhappy if you told me that I had to put my family's net worth in P&G and that was the only stock I could own. I would, you know, I might prefer some other names, but there aren't 100 other names I would prefer.

Yeah. McDonald's, the question is about McDonald's and going away for 20 years. McDonald's has got a lot of things going for it and particularly abroad again. I mean, their position abroad in many countries is stronger relatively than here.

It's a tougher business over time. People do not want to eat, exception to the kids when they're giving like beanie babies or something, people do not want to eat at McDonald's every day.

I mean, if people are drinking Coke today, they drink five of them today, they'll probably drink five tomorrow. The fast food business is tougher than that.

But if you had to pick one hand to have in the fast food business, which is going to be a huge business worldwide, you pick McDonald's. I mean, it has the strongest position. It doesn't win taste tests with adults.

I mean, it does very well with children. And it does fine with adults. But I mean, it is not like it's a clear winner. And it's gotten into the game in recent years of being more price promotional.

And, you know, you remember the experiment a year ago or so. And so it's gotten more dependent on that rather than just selling the product by itself. I like a product by itself. So I feel better about Gillette.

If people buy the Mach 3 because they like the Mach 3, then if they get a beanie baby with it, you know, I mean, so I just think it's fundamentally a stronger product if that's the case. And, you know, it probably is.

We own a lot of Gillette and You can sleep pretty well at night if you think of a couple billion men with their hair growing on their faces. It's growing all night while you sleep. And women have two legs. It's even better.

It beats counting sheep. Those are the kind of business. But if you're thinking, what promotion am I going to put out there against Burger King next month? What if they sign up Disney and I don't get Disney?

I like the products that stand alone absent promotion or price appeals, although you can build a very good business based on that. And McDonald's is a terrific business. It's not as good a business as Coke. There really are hardly any.

It's a very good business. And if you bet on one company in that field, aside from Dairy Queen, of course, you might bet on McDonald's. We bought Dairy Queen here a while back. That's why I'm plugging it shamelessly here. Yeah, way back there.

What do I think of what? The electric utility industry. Well, I've thought about that a lot because you can put big money in it. And I've even thought of buying the entire businesses.

There's a fellow in Omaha, actually, that's done a little of that through Cal Energy. I don't quite understand the game in terms of how it's going to develop with deregulation.

I mean, I can see how it destroys a lot of value for the high cost producer, you know, once they're not protected by a monopoly territory. And I don't for sure see how who benefits and how much.

I mean, obviously, the guy was very low cost power. Some guys got hydropower, you know, two cents a kilowatt or something like that. He's got a huge advantage.

But how much of that he's going to get to keep and everything or how extensively he can, he can send that outside his natural territory.

I haven't been able to figure that out with a so that I really think I know what the industry is going to look like in 10 years. But it is something I think about.

And if I ever develop any insights, you know, that call for action, I'll develop, you know, I will act on it.

But because I think I can understand The attractiveness of the product and all the aspects of certainty of user need and the fact there's a bargain and all of that. I understand.

I just don't understand who's going to make the money in it ten years from now and that keeps me away. Yeah. The question is large caps versus small caps and why large caps over perform. I don't know the answer to that. We don't think.

We don't care whether the company is large cap, giant cap, middle cap, small cap, micro cap. It doesn't make any difference. The only question to us is can we understand the business? Do we like the people running it?

And does it sell for a price that is attractive? From my personal standpoint running Berkshire now because we've got I don't know what we have, maybe $75 or $80 billion to invest and I only want to invest in about five things, so I'm really limited to very big companies. But if I were investing $100,000, I wouldn't care whether something was large cap or small cap or anything. I would just look for businesses I understood.

I think that on balance large cap companies as businesses have done extraordinarily well the last 10 years and way better than people anticipated they would do.

I mean you really have American business earning close to 20% on equity and that's something nobody dreamed of and that's being produced by very large companies in aggregate.

So you've had this huge revaluation upward Because of lower interest rates and much higher returns on capital.

If American business is really a bond, disguised bond that earns 20%, has a 20% coupon, it's much better than if it's a bond with a 13% coupon. And that's happened with big companies in recent years.

Whether it's permanent or not is another question. I'm skeptical of that. But I wouldn't even think about, except for ...questions of how much money we run. I wouldn't even think about the size of the business. A good small...

See's Candy was a $25 million business when we bought it. I mean, if I could find one just like it now, even as big as we are, you know, I'd love to buy it. It's the certainty of it that counts. Yeah, way over there.

You mentioned earlier in buying stock almost every company is public. One thing in the last five years, real estate has been primarily private. We're not seeing a great securitization of real estate. What is your insight into the industry?

Yeah, real estate equity and securitization, enormous securitization of the debt, too, of real estate. And that is one of the items right now that is really clogging up the capital markets.

The mortgage-backed securities are just not moving in commercial mortgage-backed, not residential mortgage-backed. But I think you're directing your question at equities probably.

And the equities, if you leave out The corporate form has been a lousy way to own equities. I mean, you've interjected a corporate income tax into something that people individually have been able to own with a single tax.

And by having the normal corporate form, you get a double taxation in there you really don't need with real estate, and it takes away too much of the return.

REITs have, in effect, created a conduit so that you don't get the double taxation. But they also generally have fairly high operating expenses. And if you get real estate,

Let's just say you can buy fairly simple types of real estate on an 8% yield or thereabouts and you take away maybe close to 1 or 1 and maybe even 1.5% by the time you count stock options and everything.

It's not a terribly attractive way to own it. Maybe the only way a guy with $1,000 or $5,000 can own it.

But if you have $10 million, you're better off owning the real estate properties yourself and sticking some intermediary in between that will get a sizable piece of the return for himself. We have found very little in that field.

You'll see an announcement in the next couple of weeks that may be lie what I'm telling you here. I don't want you to think I was double crossing you up here.

But generally speaking, we've seen very, very little in that field that gets us excited. There are people sometimes get very confused about the look at some huge land company. Take the I'll take one that's that won't.

Evoke any emotional reactions on the part of anybody, like Texas Pacific Land Trust, which has been around over a hundred years and got a couple million acres in Texas.

And they'll take the, you know, they'll sell 1% of their land every year and they'll take that as applying to everything and come up with some huge value compared to the market value. But that's nonsense if you really own the property.

I mean, you know, you can't move. You can't move 50% of the properties or 20% of the properties. It's way worse than a no liquid stock. So you get these,

I think you get some very silly valuations placed on a lot of real estate companies by people that don't really understand what it's like to own one and try to move large quantities of property.

REITs have behaved terribly in the market this year, as you know,

and it's not at all inconceivable they would become a class that would get so unpopular that they would sell at significant discounts from what you could sell the properties for.

And they could get interesting as a class then, and then the question is whether the management would fight you in that process because they would be giving up their income stream.

for managing things and their interest might run counter to the shareholders on that. I've always wondered about the REITs that say, you know, our assets are so wonderful and they're so cheap and then they go out and sell stock.

I mean, there's a contradiction in that. If they say our stock at 28 is very cheap and then they sell a lot of stock at 28 less than underwriting commission, it doesn't, you know, they're either, there's a disconnect there.

So, but it's a field we look at. I mean, Charlie and I can understand real estate and We would be open for very big transactions periodically and if there was a long-term capital management situation and translated to real estate,

you know, we would be open to that. Trouble is so many other people would be too that it would be unlikely to go at a price that would really get us excited. Way back there. Well, yeah, I've got no idea where the market's going to go.

I prefer it going down, but I, but I haven't, you know, my preferences have nothing to do with it. The market knows nothing about my feelings. That's one of the first things you have to learn with a stock.

You know, you buy A hundred shares of General Motors. Now, all of a sudden you have this feeling about General Motors. I mean, if it goes down, you may be mad at it.

You may say, well, if it'll just go up to what I paid for it, you know, my life will be wonderful again. Or if it goes up, you may say how smart you were and how you and General Motors have this love affair.

I mean, you've got all these feelings. Stock doesn't know you own it. Stock just sits there. It doesn't care what you paid. It doesn't care that you owned it or anything. So any feeling I have about the market is not reciprocated.

I mean, it is the ultimate. It is very cold shoulder we're talking about here.

Anybody that is going to be a net seller, practically everybody in this room is more likely to be a net buyer of stocks over the next 10 years than they are a net seller. So every one of you should prefer lower prices.

I mean, you're going to be a net eater of hamburger in the next 10 years. You want hamburger to go down unless you're a cattle producer.

And if you're going to be a buyer of Coca-Cola and you don't own Coke stock, you hope Coke, the price of Coke goes down. I mean, you're looking for it to be on sale this weekend at your supermarket.

You want it to be down on the weekends, not up on the weekends when you're going to tend the supermarket. Your stock exchange is a big supermarket of companies and you're going to be buying stocks. What do you want to have happen?

You want those stocks to go down, way down. And you know, you will make better buys then.

Later on, 20 years from now, 30 years from now, when you're in a period when you're dissaving or when your heirs dissave for you, after you're gone, I mean, then you may care about higher prices.

But I find people, that was one of the, there's a chapter eight in Ben Graham's Intelligent Investor about the attitude towards stock market fluctuations.

And that and the chapter 20 on the margin of safety are the two most important essays ever written on investing as far as I'm concerned.

Because when I read chapter eight, When I was 19, I just figured out what I just said, but it's obvious. I didn't figure it out myself, though. It was explained to me.

I'd probably gone another 100 years if I had read and still thought it was good when my stocks were going up. We want things to go down, but I have no idea what the stock market is going to do. I never do, never will.

It's not something that I think about at all. When it goes down, I feel I look harder at what I might buy that day because I know there's more likely to be some merchandise there that I can use my money effectively in.

Okay, Warren, we'll take one more question from the audience. Okay, I'll let you pick who gets it. You can be the guy.

I would say, and this is going to sound disgusting, the question is, what would I do if I were going to live over again and have a happier life?

Well, the only thing I might do is select a gene pool where people live to be 120 or something that I came from. But I've been extraordinarily lucky.

I use this example, I'll take a minute or two because I think it's worth thinking about a little bit.

Let's just assume that it was 24 hours before you were born and a genie came to you and he said, he said, Herb, you look very promising and I've got a big problem. I've got to design the world in which you're going to live.

And he said, I've decided to hell with it. It's too tough. You design it. So you've got 24 hours. You figure out what the social rules should be, the economic rules, the governmental rules,

and you're going to live under those and your kids are going to live under them and their kids are going to live under. And you say, I can design anything. And Jenny says, yeah, you can do it. And you say, well, there must be a catch.

He says, well, there is a catch. You don't know whether you're going to be born black or white, rich or poor, male or female, infirm or able bodied, bright or retarded. All you know is you're going to take one ball.

Out of a barrel that's got 5.8 billion.

You're going to participate in what I call the ovarian lottery. You're going to get one ball out of there.

And that is the most important thing that's ever going to happen to you in your life.

Because that is going to control whether you're born here in Afghanistan or whether you're born with an IQ of 130 or an IQ of 70. It's going to determine a whole lot.

And you're going to go out of the world and you're going to have that ball. Now what kind of a world do you want to design?

Well, I think that's a good way to look at social questions because not knowing which ball you're going to get You're going to want a ball.

You're going to want a system, design a system that's going to produce lots of goods and services because you're going to want people on balance to live well.

And you're going to want it that produces more and more so your kids live better than you do and your grandchildren live better than the kids. But you're also going to want a system that if it does produce lots of goods and services,

does not leave behind a person that accidentally got the wrong ball and is not well wired for this particular system. See, I'm ideally wired for the system I fell into here.

I mean, I came out and I got something that enables me to allocate capital. Nothing so wonderful about that. If all of us were stranded on a desert island, you know, and we all landed there and we're never going to get off of it,

the most valuable person would be the one that could raise the most rice, you know, over time. And, you know, I could say, well, I can allocate capital. How about paying me? And you wouldn't get very excited about that.

So I am in the right place. I mean, Gates says, if I'd been born a few million years ago, I'd be some animal's lunch. He says, you can't run very fast, you can't climb trees, you can't do anything. You've just been chewed up in the first day.

So he says, you're lucky you were born today. And I am. But the question, getting back, one question you can ask yourself, incidentally, is here is this barrel with 5.8 billion balls, everybody in the world.

If you could put your ball back, and they took out at random a hundred other balls, and you had to pick one of those, would you put your ball back in?

Now those hundred balls that you're going to get out, Roughly five of them will be American. So there's 95 versus five. So you're only going to have five balls. If you want to be in this country, you're only going to have five balls now left.

Half of them are going to be women, half of them are going to be men. I'll let you all decide how you vote on that one. Half of them are going to be below average intelligence, half are going to be above.

I mean, do you want to put your ball back? Most of you, I think, will not want to put that ball back to get a hundred.

And so what you're saying is I'm in the luckiest 1% of the world right now, right now, sitting in this room, top 1% of the world. Well, that's the way I feel.

I mean, I've been lucky to be born where I was because it was 50 to 1 against me in the United States when I was born.

Lucky with parents, lucky with all kinds of things, and then lucky to be wired in a way that in a market economy pays off like crazy. For me, doesn't pay off for somebody who's absolutely as good a citizen as I am,

you know, leading Boy Scout troops, teaching Sunday school, whatever, raising fine families, but it just doesn't happen to be wired in the same way I am. So I've been extremely lucky. So I would like to be lucky again.

And, and if I'm lucky, Then the way to do it is to play out that game and do something you enjoy all your life and be associated with people you like. I only work with people I like.

If I could make a hundred million dollars by buying a business with some guy that caused my stomach to churn, I'd say no.

Because I say that's just like marrying for money, which probably isn't a very good idea in any circumstances, but if you're already rich, it's crazy, right? I am not going to marry for money. So I would do it.

I would I would really do almost exactly what I've done, except I'd only got to bought the U.S. Air. Thanks.