Warren Buffett on When NOT to Sell a Stock | University of Georgia 2001 — Transcript

Full transcript

1. 0:00Mr. Buffett, good morning. Um, in your
2. 0:02comments about making mistakes and
3. 0:03errors like that, can you talk a little
4. 0:05bit about your self-discipline when
5. 0:06you're in a position and you you feel
6. 0:08like it's no longer good? I mean, what
7. 0:10criteria do you use to when you just
8. 0:11finally abandon it?
9. 0:12>> Yeah, when I started out,
10. 0:14the sell situation has changed over the
11. 0:16years cuz when I started out,
12. 0:19I had way more ideas than money. I mean,
13. 0:21I would go through Moody's manual. I
14. 0:24went through it page by page and then I
15. 0:26went through it again page by page. And
16. 0:27I found stocks in there that I could
17. 0:30understand that were selling at like two
18. 0:31times earnings, even one times earnings.
19. 0:34Well, when you only have 10,000 bucks,
20. 0:36that that can get a little frustrating.
21. 0:37And and and if you don't like to borrow
22. 0:38money, which I never like to borrow
23. 0:39money. So,
24. 0:41I was always coming up with more ideas
25. 0:43than I had money. So, I had to sell
26. 0:45whatever I liked least to buy something
27. 0:47new that just was compelling to me.
28. 0:49And uh for a long time I was in that
29. 0:51mode.
30. 0:52And
31. 0:54now our problem is we have more money
32. 0:55than ideas.
33. 0:56Uh
34. 0:57so,
35. 0:58we're we
36. 1:00if you look at our annual report, which
37. 1:02is on the uh internet under at our
38. 1:04homepage berkshirehathaway.com, you'll
39. 1:06see something in the back
40. 1:08called the economic principles of
41. 1:09Berkshire. And you will see uh which I
42. 1:11believe in setting out for my my
43. 1:13partners. They are my partners. I don't
44. 1:15look at them as shareholders. I look at
45. 1:16them as partners. They got to be my
46. 1:17partners for life. So, I want to tell
47. 1:20them how I think.
48. 1:22And if they don't disagree with the way
49. 1:23I think, that's fine, but I don't want
50. 1:25them to I don't want them to be
51. 1:26disappointed in me, you know. So, uh
52. 1:29I lay out there and I say in terms of
53. 1:31our wholly-owned businesses,
54. 1:33we're not going to sell no matter how
55. 1:34much anybody offers us for them. I mean,
56. 1:36if somebody offers us three times what
57. 1:38something is worth, it's See's Candy,
58. 1:40the Buffalo News, Borsheims, whatever it
59. 1:42may be, we're not going to sell it.
60. 1:44I may be wrong in having that approach.
61. 1:46I know I'm not wrong if I owned 100% of
62. 1:48Berkshire because that's the way I want
63. 1:49to live my life. I've got all the money
64. 1:51I could possibly need, you know. It just
65. 1:53amounts to a change in the newspaper
66. 1:55story on my obituary and the amount of
67. 1:57money the foundation has, and the break
68. 1:59off relationships with people I like,
69. 2:02and people that have joined me because
70. 2:04they think it's a permanent home, to do
71. 2:06that simply because somebody waves a big
72. 2:07check at me, would be like selling one
73. 2:08of my children because somebody waved a
74. 2:10big check. So, I I won't do that, and I
75. 2:12want to tell my partners I won't do it
76. 2:13so that they're not disappointed in me.
77. 2:16More and more,
78. 2:18with certain stocks,
79. 2:19we've got that approach. Now,
80. 2:22if we were
81. 2:23chronically short of funds and all kinds
82. 2:25of opportunities coming, we might have a
83. 2:26somewhat different approach, but
84. 2:28our inclination is not to sell things
85. 2:30unless
86. 2:32we get really discouraged perhaps with
87. 2:35the management, or we think the economic
88. 2:37characteristics of the business change
89. 2:38in a big way. I mean, and that happens.
90. 2:41So, but we're not going to sell simply
91. 2:42because it looks too high in in all
92. 2:44likelihood. I mean, that
93. 2:46you can't make that 100%, but it's it's
94. 2:48uh
95. 2:49that's that's that's the
96. 2:51principle under which we're operating.
97. 2:53We're generating right now
98. 2:555 billion of cash a year at least. So,
99. 2:58it's 100 million bucks every week. And
100. 3:00uh you know, just not We've been talking
101. 3:02for half an hour. I mean, I've done a
102. 3:03damn thing. Uh so,
103. 3:06>> [laughter]
104. 3:07>> it's
105. 3:08you know, the real question is how do
106. 3:10you put it out intelligently, and and
107. 3:13if we were selling things, it'd be just
108. 3:14that much more. So, there may there
109. 3:15might there may come a time when that
110. 3:17would change, but but we want to
111. 3:20and I have partners, shareholders,
112. 3:22partners,
113. 3:23who would say, "If you can get three
114. 3:25times what See's Candy's worth, why
115. 3:26don't you sell it?"
116. 3:28And that's why I want to be sure before
117. 3:29they come in, they know how I think on
118. 3:31that. I mean, they're they're entitled
119. 3:33to know that.
120. 3:35You really want
121. 3:36Think for a minute, uh you know, if
122. 3:37you're going to get married, and you
123. 3:39want a marriage that's going to last.
124. 3:41Not necessarily the happiest marriage,
125. 3:42you know, or one that that Martha
126. 3:44Stewart will talk about or anything, but
127. 3:47you want a marriage that's going to
128. 3:47last.
129. 3:49What quality do you look for in a
130. 3:50spouse?
131. 3:51One quality.
132. 3:53Do you look for brains?
133. 3:55Do you look for humor?
134. 3:57Do you look for character?
135. 3:58Do you look for beauty? No.
136. 4:02You look for low expectations.
137. 4:05That is That is the marriage that's
138. 4:07going to last.
139. 4:09Both have low expectations. I mean it
140. 4:12I want my partners
141. 4:14to be on the low side on expectations
142. 4:16coming in because I want the marriage to
143. 4:18last. It's a financial marriage when
144. 4:19they join me at Berkshire and I don't I
145. 4:21don't want them to think I'm going to do
146. 4:23things that I'm
147. 4:24I'm not going to do. So that's
148. 4:26that's our guiding principle.
149. 4:29Advice is all free and your marital
150. 4:31advice everything else.
151. 4:33Next.