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http://video.foxbusiness.com/#/v/417528 ... t_id=87185
ข้างล่างเป็นบันทึกการประชุมโดย Basl1 สมาชิก message board ชื่อ Corner of Berkshire and Fairfax Investor message board
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Goldman Sachs reputation - Buffet spoke for about 30 minutes on the GS scandal and explained that it is more of a tempest in a teapot. His view is that it is a black and white situation where GS had a contract that they made the money fairly and appropriately and they could have lost it just as easily as they ended up gaining from it. It is a situation where they take on risk and are paid for it, but it turned out that they won on that one, but would have just as easily lost, as they did on others. He mentioned that the loss in stock value actually HELPS Berkshire in that it keeps them from repurchasing the preferred shares Berkshire owns at $500 million. From this they make approximately $8 million a year or $15 a minute.
His attitude on this and any other scandal, such as Salomon: Get it right, get it fast, get it out. and get it over. Every business should decline business if it wasn't ethical, but Warren doesn't think it was unethical. Charlie Munger, on the other hand, thinks the case is "A closer call" than Warren.
Financial reform. Munger - "If I were benevolent despot I'd make Volcker look like a sissy. People went plumb crazy."
Munger - Business and purchasing businesses are like a marriage: "You marry the best person you can find that will have you."
Buffet on Greece. Very complicated, but upshot is that their economy and the economies of all of Europe are pegged to the Euro, so they now are all in a boat together. Most countries have the ability to either:
A) Print money to pay for their debts if they are strong enough and countries will trade with them and accept their money
B) Have to purchase other money (like dollars or euros/etc) to pay their debts if their money isn't strong enough.
Because of this, they live or die by the decisions they make, but their debt is their own decision. In Greece, they made terrible decisions and by doing that, they put the other European countries on the hook as they were using euros for the debt. They can't make more euros, so this is a bad situation and the first test for the Europeans. Buffet: "I don't know how this movie ends but I try not to go to movies like this." No printing press in Greece. As long as US borrows in $ then it can't default, but if you can't print, then you can default. Unfunded promises of cash with no growth are a problem and that is what is happening in Greece.
Someone asked if Lloyd Blankfein weren't running GS, who would Warren pick to run it (presumably intimating that it might be him). His answer: Maybe if Lloyd had a twin brother, he would choose him to run GS!
Auto accidents - Someone asked if Geico was going to work on saving extra lives by doing more work on safety in cars. Buffet said that it is a problem, but BlackBerry use is even more important than that and smoking is even more important than all of this. It wasn't that he was dismissing him, but he wasn't all that sympathetic to the concept that it was Geico's role.
Potential in 2010 vs 1790. We aren't smarter or harder working but we live quite differently. This was optimistic on their part, but has been a recurring theme in other meetings. Basically, we live a great life and are beneficiaries of the progress we have made through innovation. This should get better over time.
Investment director vs CEO - Buffet discussed his two roles, one as investment director, which is being done by 4 people at this time who he directs and decides if they are doing well. Any one of them could assist with his role were he to die. As for CEO, he has already decided this (supposedly the scuttlebutt is that it is David Sokol, the CEO of MidAmerica Energy). He said that if he were to die tomorrow, nothing would happen for a while as the plan is in effect and huge changes don't happen frequently. Something like the railroad purchase is a rare event at Berkshire.
After one question where Buffet hedged (which businesses to invest in), Munger stated: 'I'm just as good at not knowing as you are. Munger did say that if you have a business like Harley Davidson it is nice to invest in it as he likes businesses that people tattoo on their chests. They stated that there are precious few businesses that translate across the world. Coke is one of them, but you can't make something like that out of every business. It just doesn't translate into every culture like Coke does. That's what they look for, but it won't happen too often.
Stocks vs preferred shares. They prefer preferred shares as it insulates them. This is what they did with Goldman Sachs.
Currency is a poor net and isn't something they tend to invest in that much. They have to based on their companies, but it isn't intentional. Inflation is possible to increase (this was stated frequently and was also stated last year) and bad policy is going to make that happen. They didn't believe in embracing inflation and higher interest rates as that doesn't ever help out people. What you have to invest in is yourself and your potential. "The best neurosurgeon here in Omaha is always going to make a living. More education means better opportunities."
The decline of newspapers is a reality. Unfortunately, they supplied political checks and balances that the rest of the systems (TV, radio) don't. Their days are limited and nothing, even iPads/Kindles is going to save them. They are sad for this and it is a recurring sadness for me as well!
Buffet explained that he writes his annual report in the same way that he writes a letter to his two sisters. It actually started as a letter to them as they were initial investors, along with other family and friends. He writes it for an astute investor who may not know the intricacies of financial issues, but is smart and talented. Since his venture started with friends and family, it has continued as that and that is why he thinks of his investors as a family rather than just stockholders. He joked that he will never have an 'investor relations' department as that is the beginning of the end.
A person asked how to make money in the investment field as he was starting his career. Munger said simply to take the high road. He said that there is a quote that.."Those that take the high road in Washington are seldom bothered with traffic."
On oil and what happens after it and whether we have squandered it. Buffet said that oil was first discovered in1850. Since then, things have been done with it that no one could have ever done otherwise. It led to massive innovation and fueled (ha) our success as a nation and the world in general. Don't ever give up on people's ability to innovate. Oil was essential back then but not now. We need oil for feed related issues more than cars now (not quite sure how that works, but that's what I think he said).
When asked about the Cadbury deal and the fact that the Kraft CEO ignored his advice and sold the frozen pizza business at a low number and purchased Cadbury at a rich value, he still smarted. He and Charlie then both discussed how stupid it was that they did this and went into a product that is limited in its upside. They said that many businesses look at the competition they have in their own business and yearn for another type of business as a way to get out of that competition, not realizing that every business has competition. Their example was that of Xerox purchasing an insurance company so they didn't have to compete with Japanese companies. It turned out to be a disaster. They then said that Kraft is allowed to do stupid things, just as they had when they purchased banks in Ireland. Munger: "We have avoided a slight subset of stupidities."
Situational ethics: They discussed the reality that if everyone else is ignoring the way they should be doing things on Wall Street it is difficult to compete if you start doing things the right way and quite possibly against your ethical duty to protect your shareholders. He then gave the following quote about Cardinal Richelieu: Upon learning of his (Richelieu's) death, Pope Urban VIII is alleged to have said: " If there is a God, the Cardinal will have much to answer for. If not... well, he had a successful life."
Another great Buffet quote when asked about how to develop a business by a young man from New Jersey: "I developed more courage when I realized I could withstand adversity. Maybe you should get your feet wet in a little bit of failure." I particularly loved this!
Munger quote: A rich husband asks his wife if she would still love him of he lost all his money. She answers, yes, I would always love you even if you lost all your money - but I'd miss you terribly!
More Munger on marriage (I think): I simply accepted the other point of view as right.
Both Buffet and Munger: The biggest single problem we have is energy. But they see tremendous opportunity in it and think it will be solved and possibly soon. Solar and wind will have to be a part of it and people will see decreases in costs (Munger said he is waiting to purchase a solar panel until costs come down and Buffet kidded him that he is 86 already, so that takes courage to wait!)
Buffet: "There is no better way to be happy than to get your expectations down and results up."
One person said that Munger and Buffet were a little more pessimistic this year about inflation and other things. Munger replied: If I can be optimistic when I am nearly dead, then surely you can handle a little inflation.
Buffet wisely said that he avoids written interviews as they are much worse than taped for veracity, although they can edit TV in a bad way as well, but it is harder to make you look bad than a reporter for a newspaper or magazine who can skew what you say very easily.
Quote: Say what you do and be true to it.
They talked about people who impacted them and their decision to be in business. Buffet asked Munger if he had ever taken a business course in undergrad and he answered (somwhat scornfully) that he hadn't ever taken one as he was in accounting then. He then became a lawyer. When asked when he first learned about business then, he replied that when he was 10 he was working in a country club and saw a man who came there every day at 10:30 to play golf. He asked his father if he was rich and he said he was very successful because he took dead horses and rendered them and carried them away for people. There was little competition as no one wanted to do that. That's when he started to think about competition and how to be successful.
He then went on to be a lawyer and realized that he had to know as much as he could about his clients and their businesses if he could assist them properly. He said that a successful businessperson actually cares about their business and likes it. Additionally, they have more discipline, as did a person who is a legend here in Omaha, Peter Kiewit, the founder of a huge worldwide construction company. Their point was that they wouldn't necessarily have bet on anyone that was rich, but those who cared and were disciplined. The point is to do less dumb things than the other guy. If you continue to avoid doing more dumb things you will succeed.
On this vein, they discussed doing the smart thing by thinking it through and knowing your own business vs hiring out a company (like a rating company or someone to do due diligence). They don't do this, but it is a necessity in many industries, so they own the companies that do it (for now). They talked about a person who owned a Caterpillar franchise and were told they ought to sell it. They had a concept and strategy and hired consultants and sold it to a dumb oil company and lost a great company in the process. The take home message is to avoid what everyone tells you is a sure deal or something you have to purchase as it may not be in your best interest, but it definitely is in their best interest to get you to do a deal
If you want to think of the best type of business, it is one that requires little or no capital investment. Something like a ratings company is a good example of this.
Tremendous admiration for BYD, the Chinese company that they purchased part of that makes cars and lithium batteries for cars. Munger talked about the fact that many people look at China's development as a nation as a bad thing, but he sees it as great as the innovation they have made recently is good for the world. It is not a zero sum game in their opinion and anyone who wishes ill on any country is not being fair or decent as a human being.
Warren Buffet talked about education and said that though he thinks it is good, he has a manager who never graduated high school. They tell the story of Mrs. Blumkin, the Russian immigrant who started the Nebraska Furniture Mart. She died at 103 and never had a formal education, but left a business that was on 78 acres and is the largest furniture store in the country. She couldn't even read or write when she came to this country, but loved her business. Buffet was invited to her house for dinner when she was 90. He came to her house and saw that the lamps and sofas and furniture all had price tags hanging from them. He asked her why and she said that it reminded her of the store and she felt more at home that way. His point is that she lived her business and that was what made her great!
When asked what the fundamental nature or unified theory of business is, Munger replied "Pragmatism - repeat what works."
They were asked whether high speed rail will come to the US using private money/industry. Buffet replied that while in Europe it could work because their road system isn't as developed and cars aren't the preferred method of transportation, in the US that isn't the case. For this reason, it won't ever work using private money here. It could work if the government funded it, but that is just a waste of tax dollars. He predicts, by the way, that the panel on the deficit will increase taxes and reduce spending (not such a novel idea..).
Shake and bake is the term that the insurance industry uses to refer to earthquakes. Basically, the biggest damage from an earthquake is from the fires that occur after it as in Northridge and San Fransisco. If those don't happen, the damage is much less.
When asked what the worst case scenario of an insurance loss was, he stated 250 billion. That didn't include something like a nuclear event or comet hitting the planet, but that was a high point and they have enough money to not only pay that out, but make money for the company that year assuming that was the only problem they dealt with that year.
Katrina was 70 billion. Haiti is 11 billion, but that wasn't insured, of course.
Wind is worse than earthquakes in general (hurricanes/tornados).
The session was a good one and, as usual, please consider this for next year if you can and let me know in advance so we can get together! It is a great way to teach your kids the value of money and see two of the smartest people that I have ever had the opportunity to listen to for an extended period of time.
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