(Question)
WARREN BUFFETT: Well,
I remain very big on the idea of
reading everything in sight.
And, frankly, when you get the chance to talk to somebody like
Lorimer Davidson, as I did when I was 20 years old —
I probably learned
more from Lorimer Davidson in those four or five hours
than I learned in college, with the
exception of learning some accounting
and one or two subjects like that.
So you just want to soak it up.
If you have those qualities you talked about,
you’ll see the areas as you go along.
I mean, we have
— Charlie and I probably —
you know, we’ve made money in a lot of different ways,
some of which we didn’t anticipate,
you know, when we were — 30 or 40 years ago.
But
we did have the ability
to recognize some;
we didn’t have the ability to recognize others.
But we did know when we knew what we were doing and when we didn’t,
and we just kept looking.
We had a curiosity about things.
You would know at a time like the Long-Term Capital Management
crisis, for example,
that there were going to be ways to make money.
I mean,
they were going to be out there,
and all you had to do was just read and think
eight or ten hours a day and you were going to cover a lot of possibilities,
probably a very high percentage of them good,
and some of them sensational.
So you can’t really lay it out ahead of time.
You can’t have a
You can’t have a defined roadmap.
But you can have a reservoir
of thinking,
looking at different kinds of businesses,
looking at different kinds of securities,
looking at markets in different places,
and you will then spot a reasonable number of things that come along.
You won’t spot every one of them.
We’ve missed all kinds of things.
But
the biggest thing, too,
is to have something in the way you’re programmed
so that you don’t ever do anything where you can lose a lot.
I mean,
we —
our best ideas have not been better than other people’s best ideas,
but we’ve never had a lot of things that
pulled us way back.
So we never went two steps forward and one step back.
We probably went two steps forward and a fraction of a step back.
But
avoiding the catastrophes
is a very important thing,
and it will be important in the future.
I mean, you will have your chance to participate in catastrophes.
Charlie?
CHARLIE MUNGER: Yeah. And, of course,
the place to look when you’re young
is in the inefficient markets.
You shouldn’t be trying to guess whether,
you know, one drug company has a better drug pipeline than another.
You want to go,
when you’re young,
someplace that’s very inefficient.
WARREN BUFFETT: And you shouldn’t be trying to guess
whether the stock market is going to go up or whether
long-term bonds are going to change in yield.
I mean, you don’t have anything going in that kind of a game,
but you can have a lot going in games that very few people are playing,
and maybe where they’ve even got their heads screwed on wrong,
in terms of how they’re thinking about the subject.
The RTC was a great example of a chance to
to make a lot of money.
I mean, here was a seller
of hundreds of billions of dollars’ worth of real estate
where the people that were selling it had no economic interest in it,
were eager to wind up the thing,
you know,
and they were selling at a terrible time
when the people who had been venturesome in lending
were no longer lending,
the people who had been venturesome in
the equity end of real estate had gotten cleaned out.
So you had a great background of environment,
and then you had
had an imbalance of intensity,
in terms of analyzing situations between
the seller, which was the government,
with a bunch of
people who had no economic interest in it and were probably eager to wind up the job,
and buyers on the other side
who
were
of the generally cautious type.
Because the more venturesome type had taken themselves out of action.
And there were huge amounts of property.
So
you get these opportunities, and you’ll get more.
I mean, there won’t be any scarcity of opportunities in
in your life, although there will be days
when you feel that way.