CHARLIE MUNGER: Well, that’s a wonderful question you’ve asked, because Warren and I both know some very successful businessmen who have not one true friend on earth. And rightly so. (Laughter)

WARREN BUFFETT: That’s true.

CHARLIE MUNGER: And that is no way to live a life. And if by asking that question, you’re asking how do I get the right friends, you are really onto the right question. And when you get with the right friends, if you’ve worked hard at becoming the right sort of fellow, I think you’ll recognize what you have and then all you have to do is hang on.

WARREN BUFFETT: The real question — what is — the question is what do you like in other people? I mean, what do you want from a friend? And if you’ll think about it, there are certain qualities that you admire in other people, that you find likeable, and that cause you to want to be around certain people. And then look at those qualities and say to yourself, “Which of these is it physically or mentally impossible for me to have?” And the answer will be none, you know. I mean, you — it’s only reasonable that if certain things that attract you to other people that, if you possess those, they will attract other people to you. And secondarily, if you find certain things repulsive in other people, whether they brag or they’re dishonest or whatever it may be, if that turns you off, it’s going to turn other people off if you possess those qualities. And those are choices. You know, very few of those things, you know, are in your DNA. They are choices. And they are also habits.

I mean, if you have habits that attract people early on, you’ll have them later on. And if you have habits that repel people, you’re not going to cure it when you’re 60 or 70. So it’s not a complicated equation. And, as I remember, Ben Franklin did something like that one time. Didn’t he list the qualities he admired, and then just set out to acquire them?

CHARLIE MUNGER: Absolutely. He went at it the way you’ve gone after acquiring money. (Laughter)

WARREN BUFFETT: They’re not mutually exclusive.

CHARLIE MUNGER: No.

26. One thing you don’t need for investing

WARREN BUFFETT: Area 2.

AUDIENCE MEMBER: Hello, Mr. Buffett and Mr. Munger. My name is Kevin Hewitt (PH) and I’m a shareholder from Chicago, Illinois. This question is for you, Mr. Buffett, and Mr. Munger. Mr. Buffett, I’ve followed your career since I first read about you in the first edition of the Forbes 400 that came out in ’82. Reading your profile also led me to Ben Graham’s book, The Intelligent Investor. Since that time, I’ve followed the careers of — I’ve also followed the careers of other successful investors, such as Walter Schloss, Bill Ruane, Richard Rainwater, Robert Bass, and Edward Lampert. In following your career, and the careers of these other highly successful investors, it’s my observation and my firm belief that despite their obvious high level of intelligence and some of them having gone to some of the best schools in the country, none of these people, including yourself, were born great investors. Every one of these, including yourself, learned to be a great investor. Graham learned from his experience. You, Bill Ruane, Walter Schloss, learned from Graham.

Richard Rainwater learned from you, Bill Fisher, and Charlie Allen, and from reading Graham. Robert Bass and Ed Lampert learned from Richard Rainwater and, most likely, from reading Graham and Fisher as well. These observations lead me to the conclusion that despite intellectual brilliance, although that probably helps, I’ve come to the conclusion that great investors are made, not born. Do you and Mr. Munger agree with this conclusion? If so, why? If not, why not? And if you do agree, what things would you recommend that someone do if they wanted to become a great investor? Also, what mental attributes do you think a person should have if they want to try to become a great investor? Thank you very much.

WARREN BUFFETT: Yeah, I’d largely agree with what you said. I would say that there — I don’t know to what extent — an ability to detach yourself from the crowd, for example — I don’t know to what extent that’s innate or to what extent that’s learned — but that’s a quality you need. I would agree totally with you that a great IQ is not needed. I mean, you do not have to be terrifically smart to do well as an investor, at all. I would say you’re 100 percent right that I learned from Graham first in a very, very big way, and I learned something additionally from Bill Fisher, and I learned a lot from Charlie. And the proof is in my record, actually. From 11 to 19, I was reading Garfield Drew, and Edwards and Magee, and all kinds of — I mean, I read every book — Gerald M. Loeb — I mean, I read every book there was on investments, and I didn’t do well at all. And I had no real investment philosophy. I had a lot of things I tried. I was having a lot of fun.

I wasn’t making any money. And I read Ben’s book in 1949 when I was at University of Nebraska, and that actually just changed my whole view of investing. And it really did, basically, told me to think about a stock as a part of a business. Now, that seems so obvious. You can say, you know, that why should you regard that as the Rosetta Stone? But it is a Rosetta Stone, in a sense. Once you crank into your mental apparatus that you’re not looking at things that wiggle up and down on charts, or that people send you little missives on, you know, saying buy this because it’s going up next week, or it’s going to split, or the dividend’s going to get increased, or whatever, but instead you’re buying a business. You’ve now set a foundation for going on and thinking rationally about investing. And there’s no reason why you need a high IQ to do that. There’s no reason why you have to be born in some way.

I do think there’s certain matters of temperament that may be innate, they may be learned, they may be intensified by experience as you go on, partially innate, but then reinforced in various ways by your experience as you go through life, but that’s enormously important. I mean, you have to be realistic. You have to just define your circle of competence accurately. You have to know what you don’t know and not get enticed by it. You can’t be — you’ve got to have an interest in money, I think, or you won’t be good in investing. But I think if you’re very greedy, it’ll be a disaster, because that will overcome rationality. But I think the same books I read had really molded what I — how I — thought about businesses and investing. I think that they’re just as valid now. I mean, I haven’t seen anything in the last 25 years, and I read — I glance through — most of the books.

I’ve seen nothing to improve on Graham and Fisher in terms of the basic approach of going about investing, which is to think about stocks as businesses, and then think about what makes a good business. And really, that’s all there is to investing, and having a margin of safety, which Ben talks about, and so on. It’s not a complicated process, but it definitely requires a discipline. It requires insulating yourself from popular opinion. You just simply cannot — you can’t pay any attention to it. It doesn’t mean anything. So you can’t — the idea of listening to lots of people tell you things, it’s just a waste of time, you know. You’d be better off just sitting and thinking a little bit. I mean, there were no analyst reports on custom frame makers, you know. It just doesn’t — and they wouldn’t have been any good anyway. You just have to think, but you have to think about them in terms of their business characteristics and what they can earn on capital employed, and that sort of thing.

I would just read the, you know, I would read the Graham and the Phil Fisher books. And then read lots of annual reports, think about businesses, and try and think about which businesses you understand and which you don’t understand. And you don’t have to understand them all. Just forget about the ones that you don’t understand. Charlie?

CHARLIE MUNGER: Yeah, I have a deeper level of generality. If you have a passionate interest in knowing why things are happening, you always are trying to figure out the world in terms of why is this happening or why is this not happening, that cast of mind, kept over long periods, gradually improves your ability to cope with reality. And if you don’t have that cast of mind, I think you’re destined, probably, for failure, even if you’ve got a pretty high IQ.

WARREN BUFFETT: I would say we’ve seen relatively little correlation between investment results and IQ. I mean, not that there are a whole bunch of people out there with 80 IQs that are knocking, you know, the cover off the ball, but there are all kinds of people with high IQs that get no place. And, yet, it’s probably, in a sense, it’s more interesting to look at why people with high IQs don’t succeed, and then sort of cast out those factors, see if you can cast them out in yourself, and leave a residual that will work. Because it’s like Charlie always says, “All I want to know is where I’m going to die, so I’ll never go there.” (Laughter) If you study the people who die financially, you know, with high IQs and say why do they die, you know, you’ll see certain overwhelming characteristics that are present in most of the cases.

And you’ve just got to make sure that either you don’t possess them, or if you do possess them, that you can get rid of them or control them in some manner.

27. Coca-Cola’s domestic marketing

WARREN BUFFETT: Area 3?

AUDIENCE MEMBER: Yes. Steve Pattice (PH), shareholder from Los Angeles. Good morning, Warren and Charlie. I’d like to address the domestic Coke business. It seems to me that Coke has been pulling back from what former great CEO Roberto Goizueta often said, and I paraphrase, we can’t control what soft drinks people buy at retail. But in public venues, including food service, we can control that. We’ve all heard about the marquee lawsuits that Coca-Cola has had, such as the NFL, United Airlines, and emerging restaurant brands like Baja Fresh Mexican Grill. But they’re also losing contracts with major — or minor — league baseball, college, and high school vendors. Furthermore, it’s my understanding that our competitor PepsiCo has been the fastest-growing domestic beverage company for three consecutive years. My question is has Coke’s vision changed, and is my perception that the domestic fountain division has lost their way correct?

WARREN BUFFETT: No, I would not say that’s correct, but I understand the reason for the question. Because there is the question, always, of the marquee-type accounts. I mean, the truth is, either of the two major colas that are going to be sold and associated with, say, the Olympics or Disney World, or whatever it is, is going to lose a lot of money, if only directly thought of in terms of those contracts. But there is that association over years. I mean, Coke wants to be where people are happy, and they want that in people’s minds. And that tends to be, you know, sporting events, it’s the Disneylands, Disney Worlds, of the world. But, in the end, can you have a determination to be at every one of them at any price? And the answer, obviously, is no. It was sort of interesting, about five years ago, or thereabouts, Coke took Venezuela, essentially, away from Pepsi. Pepsi — Venezuela was one of the few countries in the world in which Pepsi was the leader, and that was because the Cisneros family had developed the business down there very early.

So, Pepsi had 70 percent or 80 percent of the business. And in sort of a midnight raid, Coke bought the Cisneros operation, converted it all to Coke overnight, flew 747s in because they didn’t want to have — they wanted it to be a surprise, and they just reversed the whole situation in Venezuela. And, it actually — whether that is going to turn out to be smart or not is another question, because they paid a lot of money to do it. But in any event, Pepsi was very upset. And so, the University of Nebraska pouring rights came up, very shortly thereafter. And the universities, as you know, bid out these things to give sort of an exclusive to a given university. And Pepsi came in and bid about twice as much for the Nebraska pouring — the University of Nebraska — pouring rights, as was the sort of the standard, in terms of per-student at universities throughout the country, at Penn State or something. And I like to think that they were trying to stick it in the eye of Coke by doing that in Nebraska.

And I feel that the University of Nebraska really should give me credit for about 5 million a year of contribution to the university, because I don’t think Pepsi would have done it if it hadn’t been Nebraska. Now, the question is, people at Coke called me, and they said, you know, “Do you want us to go up against this?” And I said, you know, no. I mean, it’s nice to have everybody at University of Nebraska drinking Coke, but if we’ve got everybody at Penn State drinking Coke, I mean, it’s probably worth as much, as potential Coke customers. So, there is this bit where one organization or the other, particularly if they’ve lost one in the immediate past, may overbid a little for the next one. And you know, for United Airlines, the question is how far do you let United, or whomever it is, drive you, in terms of making that specific deal.

I would say that in something like the Olympics, you know, I think Eastman Kodak made a huge mistake when they let Fuji take away the Los Angeles Olympics 20 years ago or so, because it allowed Fuji to get put on a mental parity, to a degree, with Kodak, whereas Kodak had always owned that. And now Fuji was there with Coca-Cola and IBM and a few premier companies. And it was a mistake. So, in the end you end up overpaying, in any kind of an objective quantitative sense, for most of these marquee properties. But you can’t — it’d be foolish to think that you had to have them all. Coca-Cola, actually Pepsi-Cola — colas have generally declined, somewhat, as a percentage of per capita consumption in the United States. And Pepsi-Cola has lost considerably more than Coke. What has kept Pepsi doing well, basically, is Mountain Dew. Mountain Dew has been a very successful product for Pepsi, and that has gained share in carbonated soft drinks. Carbonated soft drinks — the average person in this room drinks 64 ounces of liquid a year. Carbonated soft drinks are just under 30 percent of that.

And beer and milk are each about 11 or 12 percent. They’re both down from 10 years ago. Carbonated soft drinks are up substantially. Bottled water is up somewhat, but the only two categories that are really up are carbonated soft drinks, from ten years ago, and bottled water. Coffee is down significantly. You think Starbucks has done a lot, but coffee just keeps going down and down and down. If you look at Coke, of the almost 30 percent of the liquids consumed in the United States, they have about 43 percent of the 30, in their arenas. So you’re talking 13 percent of all liquids, you know, tap water, everything else that the American water — the American people — drink, is a Coca-Cola product. And it’s off a couple tenths of 1 percent from the high, but it’s higher than five years ago, it’s higher than 10 years ago. And, actually, in the first quarter, it did quite well, too. So, I think there’s been no — I mean, I’m sure there’s been no loss of marketing vigor. Doug Daft is a marketer at heart.

He’s a, you know, he comes from the same — he’s put together the same way as — along the same lines — as Don Keough. There’ll never be another Don Keough. But Doug is the same type of guy. He’s in tune with the product. And I would — if I had to bet, I would bet the market share of Coke, in terms of both carbonated soft drinks and in terms — actually in terms of water. I mean, the Dasani — the gains in Dasani last year were like 95 percent, in the first quarter they were about 60 percent. Those were huge gains. And Pepsi got an earlier start with Aquafina. But Coke has almost closed that gap. Coke is a very, very powerful marketing organization. So 18, I think, point-seven billion cases, there’s nothing like it in the world. And I do not think they’ve lost their focus or drive in any way whatsoever. Charlie?

CHARLIE MUNGER: I’ve got nothing to add.

WARREN BUFFETT: You might try Vanilla Coke, too. It’ll be out next month.

28. How long does it take to dig a moat?

WARREN BUFFETT: Area 4.

AUDIENCE MEMBER: Good morning, Mr. Buffett, Mr. Munger. My name is Jerry McLaughlin. I’m from San Mateo, California. First, I just want to thank you for all the effort you put into the annual reports, the letters, and these conversations. I’ve learned a lot, and they’re terrific, which is why I’m here from half a country away. (Applause) You know, you’ve said that great companies are those that have an economic moat, and I understand that phrase to mean a sustainable competitive advantage. Do businesses begin their lives with sustainable competitive advantages, or must that be developed over a very long time? And then, what are the fundamental bases upon which you’ve seen companies successfully develop sustainable competitive advantages? Of those, which do you think is the most enduring and which is the least?

WARREN BUFFETT: Well, sometimes they can develop it very quickly. I mean, I would say that Microsoft, in terms of the operating system, you know, that was a relatively quick development. But that was an industry that was exploding, and things were changing very fast. On the other hand, if you go back to See’s Candy, which started in 1921, you know, there was no way you could build a sustainable competitive advantage, at least that would be recognizable, in times measured shorter than decades. I mean, you opened up one shop at a time, and nobody’d heard of you originally, and then a few people did. And boxed chocolates were something that, you know, people may have bought once or twice a year for a holiday occasion or whatever. So, you weren’t going to embed yourself in the minds of Californians in one or two or five years just because you were turning out, you know, outstanding box of chocolates. So it depends on the way the industry itself is developing. Walmart has done a fabulous job in a — an incredible job — in quite a short period of time.

But even they, you know, they took it in the small towns, and they progressed along, and refined their techniques as they went. But I would say that there could be things in new industries. I would say with NetJets, we have a sustainable competitive advantage. And that’s an industry that was only originated in 1986 when Rich Santulli got the idea, and it was in its infancy — I mean total infancy — for a good many years after that. But what he has built, and is building and fortifying, is that sustainable competitive advantage. But it depends very much on the industry you’re in. And I mean, Coca-Cola, 1886, Jacobs Pharmacy, Atlanta, Georgia, you know, John Pemberton came up with a product. And did he have a sustainable competitive advantage that day? If he did, he blew it because he sold the place for 2,000 bucks to Asa Candler. He did — and it took decades, thousands of competitors over that time, and — you know, but they were painting one barn at a time and designing one Saturday Evening Post ad at a time, and all of that.

And — and pebbles — you know, around the world in World War II, General Eisenhower went to Mr. Woodruff and he said, “I want a Coke within the arm’s length of every American serviceman.” He said, “I want something to remind them of home.” And so he built a lot of bottling plants for Coke around the world. And that was a huge impetus. But that was, what, 60 years or so after the product was invented. So it takes — it takes a long time in certain kinds of products, but I could see certain areas of the world where a huge competitive advantage is built in a very short period of time. I would say that probably, in terms of animated feature-length films, for example, Walt Disney did that. And after “Snow White” and a few more, it took him a while until he could cash in on it, but he — it became Disney and nobody else in that field for quite a while, and fairly quickly. Charlie?

CHARLIE MUNGER: Yeah, there are a lot of different models that create a sustainable competitive advantage. And there are also some models of where you can lose it very fast. Just ask Arthur Andersen. That was a very good name in America not very long ago. And I think it would be harder to lose the good name of Wrigley’s gum than the good name of Arthur Andersen. I think there’s some perfectly remarkable competitive advantages that people have gotten over time. And the great trouble with the investment process is that they’re so damned obvious that the stocks sell at very high prices.

WARREN BUFFETT: Snickers has been the number one candy bar for probably 30 or 40 years now.

CHARLIE MUNGER: Yeah, and —

WARREN BUFFETT: Well —

CHARLIE MUNGER: — in Russia, it turns out that everybody likes Snickers.

WARREN BUFFETT: What — how do you really knock it off? You know, I mean, we make candy, we would love to displace Snickers, but it’s hard to think of ways to knock them from the number one spot. I mean, my guess is that they’ll be number one in, you know, 10 years from now in candy bars, and the list doesn’t change much in that field because — if you think about the nature of how you make that choice as to what candy bar — If you were chewing Spearmint chewing gum five years ago, and you buy a pack of some chewing gum today, it’s likely to be Spearmint. I mean, there’s just things that you experiment a lot with, and there’re things that you don’t fool around with once you’re happy. And, you know, you can understand that if you observe your own habits and people’s habits around you. But there’s other — usually if something can gain competitive advantage very quickly, you have to worry about them losing it quickly, too.

I mean, when an industry is in flux, there are a lot of people that think they’re the survivors, or the ones that are going to prosper, where it turns out otherwise.

29. Bullish on Coca-Cola & Gillette

WARREN BUFFETT: Area 5.

AUDIENCE MEMBER: Mr. Buffett, my name is Pete Danner (PH) from Boulder, Colorado. And I would also like to thank you two for what you bring to the game. I heard your response to the Coke — to the question regarding Coca-Cola. In the annual report a few years back, you described Coca-Cola and Gillette as the two “invincibles.” With Pepsi as a strong competitor today, do you still continue to view Coca-Cola as the “invincible?” Additionally, with respect to American Express Company, with last year’s financial results at American Express, how do you now view American Express?

WARREN BUFFETT: Yeah, I think the term I used was “inevitables,” actually, but it’s very close to the same thing. And I would — and I think when I made that statement, I said Coca-Cola in soft drinks or Gillette in blades and razors. I mean, I did not extend them to the entire corporate portfolio, particularly in the case of Gillette, but to the blade and razor business. Gillette now has 71 percent, by value, of the blade and razor business in the world. Just think of that. I mean, 71 percent. Here’s a product that everybody knows what it does, they know how to — you know, they know where it’s sold, they know that it’s a high-margin business. I mean, it isn’t like the world — the capitalist world — is unaware of the money that could be made if they could knock off Gillette. But they can’t knock off Gillette, and it’s 71 percent. And that’s a little higher percentage than when I wrote about it.

Actually, Coca-Cola’s worldwide market share is a little higher now than it was when I wrote that five years ago. And I would say that five or 10 years from now I would be amazed if Gillette or Coca-Cola has lost market share in their respective fields. Coca-Cola sells half, roughly, of the soft drinks in the world, and soft drink consumption per capita goes up, basically, every year, and the per capitas go up — I mean the capitas — go up every year, also. So you get these gains, maybe they’re 3 percent or 5 percent in units, or 4 percent, 5 percent in the first quarter, but it was poorer than that. I think it was 3 percent last year. But when you have half the world, and the world’s population is growing at a little under 2 percent and you’re getting 3 percent or 4 percent from something as pervasive as soft drinks, you know, you are doing all right.

And it was crazy, in my view, for people to think that earnings can grow 15 or 18 percent a year in a business where units — we had half the world’s business, and units are going to grow fine — but they’re not going to grow anything like 15 or 12 percent or 10 percent. The Coca-Cola business has done fine. People went crazy, in terms of valuing some of these businesses a few years back, and I think we had some cautionary language in there, generally, about the valuations at which the businesses sold. But the businesses — at 71 percent in blades and razors, that is a — there’s some countries where it’s 90. In the U.S., it’s also about 70 percent. Those are huge market shares of something people use every day. In this country, you know, it’s a little over eight ounces per day, more like — well ,actually more like 9 1/2 ounces per day — for every man, woman, and child in the United States, out of the 64 ounces they drink. Well, you’re not going to have galloping percentage increases from that arena.

But the company’s made, basically, good progress. People got carried away from the stock — with the stock — and I would argue that they may have gotten encouraged a little bit too much by, not only Wall Street, but even by company pronouncements, in terms of attainable — possibly attainable — gains. There aren’t large companies —you know, there may be one someplace, somehow, very large now that will grow at 15 or 18 percent a year — but it just isn’t in the cards in the world. And we don’t want anybody to think Berkshire can do that either, because we can’t do it from a very large base. The world doesn’t allow that. But it does allow making reasonable progress, and certainly Coke and Gillette, in those areas where I said they were inevitable, have done very well. They haven’t — Gillette has not done as well with acquisitions, which is clear.

I mean, the Duracell — the Gillette acquisition of Duracell — resulted in giving 20-odd percent of the business for another business, and that business has not done nearly as well as either the management or the investment bankers thought it was going to do at the time the deal was made. Charlie?

CHARLIE MUNGER: Well, I would say, regarding that last instance, that that’s the normal result. When you try and — you’ve got a wonderful business and you issue shares in it to buy another business, I’d say at least two times out of three, it’s a terrible idea.

WARREN BUFFETT: Well, GEICO is a great example. GEICO is a wonderful business. Absolutely wonderful, gets more wonderful by the day, has the world’s best manager, Tony Nicely, running it. GEICO, in the last 20 years, went into three — at least three — other insurance businesses I can think of. They went into Resolute Insurance, which was a reinsurance operation started in the mid-80s. It was a disaster. They went into two others, Southern something or other, and another one that started with an M. I don’t know why in the hell they would go into them. I mean, they had a great, great insurance business, and there aren’t that many great insurance businesses. And neither one of those amounted to anything. I think, you know, they sold them off at some point. But why would you have an absolutely wonderful business and start one and buy two others that are obviously mediocre, where you bring nothing to the party? But managements — it’s very human to want to do that. It’s no great sin that the GEICO management did it, because we see it happen time after time after time.

I can tell you this: Charlie and I have no urges like that. I mean, we want to buy easy things. We do not have to prove our manhood by doing something terribly difficult. And I think a lot of managements feel that necessity. They’ve got a wonderful business — The cigarette companies did that. Cigarette companies had these great businesses, and, you know — it irritated them that they — they liked to think they’re business geniuses, so they would go out and buy other things and those other businesses, generally, did not do that well. I’m not saying they should’ve been in the cigarette business in the first place, but they were not business geniuses because they made a lot of money selling an addictive, you know, product. That did not make them business geniuses, and so they wanted to prove it other ways, and they bought businesses and fell on their face, in many cases. Charlie, do you have any more to add on cigarette companies?

CHARLIE MUNGER: No, but I think a lot of people rise to the top in publicly-held corporations, who come up in sales or, you know, engineering, or drug development, or what have you. It’s natural to assume once you’re sitting in the top chair that now you know pretty much everything. Or at least, how to get wisdom out of this wonderful staff and all these outside advisors that are now available to you. And so I think it’s very natural that perfectly terrible acquisition decisions get made, I’d say, more often than not.

30. Staying rational and avoiding confirmation bias

WARREN BUFFETT: Area 6. We have a break in about five minutes. In fact, we’ll do this question and then we’ll break.

AUDIENCE MEMBER: OK. My name’s Paul Tomasik from Illinois. I’d like to talk about your thinking, if you don’t mind. In the “Fortune” magazine article that you sent to all the shareholders, you referenced a practice by Darwin that when he found something that was contrary to his established conclusions, he quickly wrote it down because the mind would’ve pushed it out. And if you read “The Origin of Species,” Darwin’s very careful to avoid fooling himself. He very carefully asks and answers the hard questions. It’s a feedback mechanism, and you’ve picked up on one of his feedback mechanisms to avoid fooling yourself. So the two questions are this: If you look — model — how you think, Charlie thinks, how physicists think, how mathematicians think, you see the same pattern. You want to use logic. You’re dedicated to logic. But logic’s not enough. You have to avoid fooling yourself, so you build feedback mechanisms. So the first question is, do you see it that way?

That you’re thinking just like mathematicians, physicists, and some of the other exceptional businessmen, by being logical and being careful to have feedback mechanisms? And the second question is about other feedback mechanisms. Your partnership — sitting next to you is a great feedback mechanism. Hard to fool yourself when you partner with Charlie Munger.

WARREN BUFFETT: Right.

AUDIENCE MEMBER: This meeting’s a feedback —

WARREN BUFFETT: Hard to fool him, too. (Laughter)

AUDIENCE MEMBER: But that’s not an accident. The meeting is one level of feedback mechanism, the way you attack the annual report letter is a feedback mechanism. So you could comment, both of you, on other feedback mechanisms you developed? Thank you.

WARREN BUFFETT: Well, you’ve come up with two very good ones. I mean, there’s no question that Charlie will not accept anything I say because I say it, whereas a lot of other people will. You know, I mean, it’s just the way the world works. And it’s terrific to have a partner who will say, you know, you’re not thinking straight.

CHARLIE MUNGER: It doesn’t happen very often.

WARREN BUFFETT: There’s no question, the human mind — what the human being is best at doing is interpreting all new information so that their prior conclusions remain intact. I mean, that is a talent everyone seems to have mastered. And how do we guard ourselves against it? Well, we don’t achieve it perfectly. I mean, Charlie and I have made big mistakes because, in effect, we have been unwilling to look afresh at something. You know, that happens. But we do have — I think the annual report is a good feedback mechanism. I think that reporting on yourself, and giving the report honestly, whether you do it through an annual report or do it through some other mechanism, is very useful. But there — I would say a partner, who is not subservient, and who himself is extremely logical, you know, is probably the best mechanism you can have. I would say that on the contrary, to get back to looking things you have to be sure you don’t fall into, I would say the typical corporate organization is designed so that the CEO opinions and biases and previous beliefs are reinforced in every possible way.

I mean, having staff surround you that know what you want to do, you are not going to get a lot of — you’re not going to get a lot of contrary thinking. I mean, most staffs, if they know you want to buy a company, you’re going to get a recommendation. Whatever your hurdle rate, if it’s 15 percent internal rate of return, which very few deals ever work out at, you know, or 12 or — they’re going to come back, and they’re going to come back with whatever they feel that you want. And if you arrange your organization so that you basically have a bunch of, you know, sycophants who are cloaked in other, you know, titles, you’re not going to get — you are going to leave your prior conclusions intact, and you’re going to get whatever you go in with your biases wanting. And the board is not going to be much of a check on that.

I’ve seen very, very few boards that can stand up to the CEO on something that’s important to the CEO and just say, you know, “You’re not going to get it.” You’ve hit on a terribly important point. All of us in this room want to read new information and have it confirm our cherished beliefs. I mean, it is just built into the human system. And that can be very expensive in the investment and business world. And, like I say, I think we’ve got a pretty good system. And I think that most of the systems aren’t very good, that exist in corporate America, to avoid falling into the trap you’re talking about. Charlie?

CHARLIE MUNGER: Yeah, I think it also helps to be willing to reverse course even when it’s quite painful. As we sit here, I think Berkshire is the only big corporation in America that is running off a derivative book. And we originally made the decision to allow the General Re derivative book to continue, and it’s a very unpleasant thing to do to reverse that decision, yet we’re perfectly willing to do it. Nobody else is doing it, and yet it’s perfectly obvious, at least to me, that to say that derivative accounting in America is a sewer is an insult to sewage. (Laughter)

WARREN BUFFETT: I would second that. I might not have chosen those exact words, and we may not even use those words in describing why we got out of it, but — Yeah. And in the first quarter of this year, we’ll show quite a bit of income — and anything we say here, we ought to put on the internet, Marc — but I think we’ll show, what, 100 and, I don’t know, 60 million or something like that of financial — maybe it’s 140, I’ll take a look here. Well, you’ll have 160-odd million of income in that funny little line we have from financials income. But that will be after an $88 million loss, in terms of getting — the first steps — of getting out of the General Re — what used to be called General Re Financial Products — derivative book. You know, those losses were there. I mean, some of that is a shutdown loss, 30-odd, 30 million or thereabouts is severance pay and that sort of thing.

But the truth is that derivative accounting is absolutely terrible in this country, and there are a lot of companies that will not want to face up to what would be involved if they actually got out. Now you’re seeing derivative accounting unwound at Enron, in a very major way. And believe me, it’s not being unwound at a profit, except to the extent that the bankruptcy court lets them disaffirm certain contracts. I mean, it is — there was no place where there was as much potential for phonying numbers at a place like Enron than the derivative kind of data. They were marking-to-model, they were doing all these things. You give a whole bunch of traders the ability to create income by putting little numbers down on a piece of paper that nobody can really check, and it, you know, it can get out of control. It will get out of control. And so we decided, finally, to bite the bullet on it, and we’d get out of it. And it would — incidentally, we would not have reported $88 million of loss if we’d stayed in it.

Might have reported a tiny profit or something, but, in the end, you know, the loss was there. And there will be — it could well be — some more to come in that, because once you get into derivatives — I think our longest contract may run 40 years or something like that. The guy who put the 40-year contract on the book probably got paid, you know, that week for putting it on, virtually. And, you know, we’ve got a bunch of assumptions as to how it’s all going to work out over 40 years. You couldn’t devise a worse system. And, in the end, you know, we didn’t want to be in the business when we got in it, and we are now in the process of getting out. But you don’t get out of fast — out fast — in something like this. I mean, it’s, you know, it’s a little like hell. It’s easy to get into, and it’s hard — very hard — to get out of. (Laughs)

WARREN BUFFETT: We pay a lot of attention to what we regard as the reality of the balance sheets and economic conditions and cash situation, all of that of a business. And sometimes we think accounting reflects reality, and sometimes we don’t. It’s a good starting point for us always, but I mean, there are companies in the United — there’s at least one company, at least last year, that was using a 12 percent investment return assumption on its pension plan, and there are other companies that use, I think, even below six, certainly six. And in the end, should we look at the figures the same of one company, particularly if the pension fund’s a big element, that uses 12 and six? No, we look at what it says they’re using. But, in our minds, we don’t think the company that’s using a 12 percent assumption is likely to do any better with their pension fund than one of the one’s that’s using six. In fact, we might even think the one that’s using six is likely to do better because we might think they’re more realistic about the world.

So, we start with the figures of the companies we look at, but we’ve got our own model in mind as to what they will look like. It’s true of the businesses we own a hundred percent of. Some of them have some debt in them, some of them don’t, partly that situation’s inherited. In the end, we’ve got the same metrics that apply to them, whether they happen to have some debt on their own particular balance sheet or not, because in the end, we’re not going to be willing to have very much debt at all at Berkshire. And where it’s placed doesn’t really make any difference because we’re going to pay everything we owe, no matter where it is. And it’s almost an accident whether company A or company B has a little debt attached to it.

6. New goodwill accounting is “making sense”

WARREN BUFFETT: Area 10, is there anybody there?

AUDIENCE MEMBER: Yes, sir. My name Adam Chud. I’m from Columbus, Ohio. I attend the Ohio State University. My question is, your comments on the new standards for the accounting of goodwill?

WARREN BUFFETT: Yeah, the question about the new standards for goodwill. Actually, if you read, I think, the annual report — maybe the 2000 annual report, and maybe even earlier. But we prescribed — we said what we thought would be the preferable system for how goodwill was handled, namely, that it would not be amortized, and that combinations of companies be accounted for as purchases. And it pretty well is what ended up coming out of the accounting profession. So, the goodwill rules now are in accord with what we believe they should be. And for a long time, they weren’t. You might argue that it was against our interests to have what we think proper accounting has put in, because some people were averse to buying businesses because of a goodwill charge they would incur, whereas it didn’t make — it made no difference to us whatsoever. We just looked at the underlying economics. So we may have a little more competition, even, on buying businesses simply because now, competitive buyers are not faced with a goodwill charge which may have bothered them but didn’t bother us. I regard the present goodwill rules as making sense. Charlie?

CHARLIE MUNGER: Well, I agree.

WARREN BUFFETT: OK.

AUDIENCE MEMBER: Thank you.

7. I used a hearse to pick up your aunt for a date

WARREN BUFFETT: Area 1.

AUDIENCE MEMBER: My name is Martin Wiegand, from Bethesda, Maryland. Thank you for hosting this wonderful and formative shareholder meeting. Thank you also for running Berkshire in a manner that is an example to corporate America and the world. You make us proud to be shareholders. My question, you touched on just before the lunch break. Did the compensation plans at Berkshire and its competitors have anything to do with the mispriced insurance policies they issued? And if so, has Berkshire or its competitors changed their compensation plans to correctly price those policies?

WARREN BUFFETT: Incidentally, I asked you this last year, I think, but are you my Martin’s son or grandson?

AUDIENCE MEMBER: Son.

WARREN BUFFETT: Son, OK. Good enough. It — Martin’s father and I went to high school together. Matter of fact, your Aunt Barbara and I went to high school together also. And she went out on one date with me, and that was the end. (Laughter) It was not because I didn’t ask her out again. (Laughter) I picked her up in a hearse. I think that kind of put the — (Laughter)

8. General Re’s “cultural drift”

WARREN BUFFETT: I think compensation plans lead to a lot of silly things, but I would say that, at Berkshire’s insurance companies, I don’t think our problems resulted from compensation plans at all. I think we had an — and we’re talking about General Re here basically, because that’s where we had the problem. I think General Re had an enormously successful operation, which went on for a long time. And I think that there was some drift away, perhaps because competitors were drifting away in a big way, too, from certain disciplines, and we paid a price for that. But I don’t think the comp plans entered in at — in any significant way, if at all, into the fact that we did drift away for a while. I think it — I think you want to have rational comp plans. I think we’ve got a rational comp plan at General Re, but — and it’s quite similar to what we had before. And I just don’t think that was the problem.

It’s very difficult, it’s difficult in the investment world, when other people are doing things that look like they’re working very well, you know, and they get sillier and sillier. It’s — it could be difficult for many people to not succumb and do the same things. And that happens in investments, but it also happens in insurance. And it was, you know, it’s a competitive world, and your people are out there every day, and they’re competing against Swiss Re, and Munich Re, and Employers Re, and all of these people. And you’ve worked hard to get clients, and the client says, “I want to stay with you, but the competitor says if I go with him, I don’t have to do this or that, or I can get it a little cheaper,” or whatever. You know, it’s tough to walk away. And it may even be a mistake to walk away in certain cases. So, I just think that there was a — what you might call a cultural drift. I don’t think it was a shift, but it was a drift.

And I think it was produced, in part, by the environment in which the company was operating. And it took a jolt to get it back. And I think that it is back. I think it’s probably stronger than ever in terms of what we have now, but I would not attribute it much to the compensation system. But I have seen a great many compensation systems that are abominations and lead to all kinds of behavior that I would regard not as in the interest of shareholders. But I don’t think we’ve had much of that at Berkshire. Charlie?

9. “Demented” and “immoral” stock options

CHARLIE MUNGER: Yeah, I think if you talk generally about stock option plans in America, you see a lot of terrible behavior caused. And, no doubt, they do a lot of good at other places. But whether they do more good than harm overall, I wouldn’t know. I think, in particular, if you have a corporation where a man has risen to be CEO, and he now has hundreds of millions of dollars in the stock of the company. He’s been loyal to the company and the company’s been loyal to him for decades, and he has his directors vote him a great stock option annually to preserve his loyalty to the company, and his enthusiasm to the business when he’s already old, I think it’s demented.

WARREN BUFFETT: How about when they grant options as he leaves the company?

CHARLIE MUNGER: I — and I also think it’s immoral. I think that there comes a time when — (Applause) I don’t think you would improve the behavior of the surgeons at the Mayo Clinic, or the partners of Cravath, Swaine & Moore, if you gave the top people stock options in their sixties. I mean, by that time, you ought to have settled loyalties, and you ought to be thinking more about the right example for the company than whether you take another hundred million for yourself.

WARREN BUFFETT: Yeah, well, we had a case — (Applause) We’ve inherited some option plans because the companies we merged with had them. And in some cases they got settled for cash at the time, in some cases they continued on, depending on the situation. But more money has been made from options at Berkshire by accident, and that, you know, this is not — it just happened that way, but more money was made by people that had options on General Re stock during a period when General Re contributed to a decrease in value of Berkshire. So we had all of the other managers essentially, in a great many cases, turning in fine results, and we had a bad result at General Re, and yet more money, by a significant margin, was made under options at General Re than had been made probably by all other entities combined. But it was an accident, but that’s the point, it leads — it can lead to extremely capricious compensation results that have no bearing on the performance of the people that, in some cases get great benefits, and in other cases people did great jobs and were — their efforts were negated by results elsewhere.

So, it’s — it would be very capricious at Berkshire — you can argue that at Berkshire, for those that succeed me and Charlie, that anybody that is in the very top position at Berkshire has got the job of allocating resources for the whole place. There could be a logically constructed option plan for that person, and it would make some sense because they are responsible for what takes place overall. But a logically constructed plan would have a cost of capital built into it for every year. We don’t pay out any dividends, so why should we get money from you free? We could put it in a savings account and it would grow in value without us doing anything. And a fixed-price option over 10 years would accrue dramatic value to whoever was running the place, if they had a large option, for putting the money in a savings account or in government bonds. So, there has to be a cost of capital factor in to make options equitable, in my view, that there can be cases where they make sense. They should not be granted at below the intrinsic value of the company.

I mean, the market — a CEO who says, you know, my stock is ridiculously low when a merger — when somebody comes around and wants to buy the company, but then grants himself an option at a price that he’s just gotten through saying is ridiculously low, that bothers me. So if somebody says, you know, I wouldn’t — we don’t want to sell this company for less than $30 this year because it’s going to be worth a lot more later on, you know, my notion is that the option should be at $30 even if the stock is 15. You know, otherwise you have a — actually a premium built in of — for having a low stock price in relation to value. And I’ve never gotten too excited about that. Charlie, you have any further thoughts on options?

CHARLIE MUNGER: Well, we’ve been — we’re so different from the rest of corporate America on this subject that, you know, we can sound like a couple of Johnny One Notes, but I don’t think we ever quite tire of the subject. (Laughter) A lot is horribly wrong in corporate compensation in America. And the system of using stock options on the theory they really don’t cost anything has contributed to a lot of gross excess. And that excess is not good for the country. You know, Aristotle said that systems work better when people look at the different outcomes and basically appraise them as fair. And when large percentages of people look at corporate compensation practices and think of them as unfair, it’s not good for the country. (Applause)

WARREN BUFFETT: It will be hard to change though, because basically, the corporate CEOs have their hands on the switch. I mean, they control the process. You can have comp committees and all of that, but as a practical matter — I’ve been on 19 public boards, Charlie’s been on a lot of them. And in the end, the CEOs tend to get pretty much what they want. And what they want tends to go up every year because they see other people getting more every year. And there’s a ratcheting effect, and the consultants fan the flames. And it’s very difficult to get changed. And right now, you’ve got corporate CEOs descending upon Washington, doing everything from trying to persuade to threaten your elected representatives to not have options expensed. And it’s — I think it’s kind of shameful, actually. Because it, you know, this group, who is getting fed very well under the system does not want to have those — what clearly is a compensation expense recorded because they know they won’t get as much. I mean, it’s that simple.

And it’s not based on anything much more complicated. (Applause)

10. Float size isn’t limiting investments

WARREN BUFFETT: Area 2?

AUDIENCE MEMBER: Good afternoon. David Winters, Mountain Lakes, New Jersey. Mr. Buffett and Mr. Munger, thank you for hosting “Woodstock for Capitalists.” I know it’s a lot of fun for everybody, and I think a lot of fun for you, too. Assuming growth of low-cost float and the sins of the past do not impede progress, does the sheer size of the float create constraints that change the allocation of future investments to more high-quality fixed-income obligations rather than equity coupons or workouts that can grow over time? It seems otherwise Berkshire is incredibly well positioned if valuations ever decline.

WARREN BUFFETT: Well, I think the answer is we probably are pretty well positioned if valuations decline. And it’s a good question. If you have 37 billion of float, are you going to be more constrained to conventional investments than if you were working with a half a billion or a billion, as we were not so long ago? As long as you have a huge capital position, which we have and will continue to have, and as long as you have a lot of outside earning power, which we have and will continue to have, I don’t think we’re constrained very much. I mean, that — we’ll always want to have a significant level of liquidity, relative to any kind of payment pattern that we see for a good length of time. But we will probably be operating with so much capital and with so much earning power, independent of the insurance business, and with so much liquidity, that we really will be able to make decisions as to where — as to how — the assets should be deployed, in terms of, simply, where we see the best returns and virtually no risk. And sometimes we see virtually no risk in equities when they’re extremely cheap.

We don’t see that situation now, but we could see it again. And I don’t think we’ll be much — I don’t think we’ll be very constrained when the time comes. Charlie?

CHARLIE MUNGER: Yeah, our constraint doesn’t come from structure, it comes from a lack of enthusiasm for stocks generally. The bonds are held as a default option.

11. Price of gold not a factor in valuing a business

WARREN BUFFETT: Area 3.

AUDIENCE MEMBER: Dear Mr. Buffett and Mr. Munger, my name is Adrian Chur (PH), and I’m a shareholder from Hong Kong. Thank you for your leadership and inspiration, as always. It’s wonderful, always, listening to you. If I may, I would like to ask of you both gentlemen, a question in two parts. Perhaps I can ask the second part after you’ve answered the first part. The first part of the question relates to the Fortune article dated 10th of December you included in our shareholder materials. In this article, you mentioned that one couldn’t explain the remarkable divergence in markets by differences in the growth of GNP. However, one could explain the divergence by interest rates. The first question I have is this: I wonder, sir, if you were to look at the price of gold during the two periods of times you mentioned, that is to say 1948-‘64 and ‘64-‘81, if the explanation could be even more clear?

Thus, the logical reason would be why the Dow in ‘48 was 177 was because — and half the level of 1929, of 381 index points — is because of the 71 percent devaluation of the American dollar from 20.5 cents an ounce to 35 cents an ounce, which would put the fair value of the Dow at 166, after factoring in the record 50 percent per capita gain of the 1940s that you had mentioned.

WARREN BUFFETT: Yeah, I grew up in a household — and my sisters are here — where gold was talked about frequently. So I’ve been exposed to a lot of thinking on that over the years. I don’t really think gold has really — the price of gold, I should say — has anything, really, to do with the valuation of businesses. It may reflect certain things that are going on in prices attached to those businesses at given times. But I would not regard — I mean, the price of gold does not enter into my thinking in any way, shape, or form, in terms of how I value a business today, a year ago, 10 years ago, or tomorrow. When we look at Larson-Juhl, the custom picture frame operation, you know, I’m not thinking against — I’m not thinking of that and relating it in any way to what gold has done. So, I — it’s just not a factor with us, any more than other commodities would be. I mean, you know, whether it’s wheat, whether it’s cocoa beans or whatever.

It has — you know, it has a certain hold on some people and they — but we don’t look at it as an interesting investment and we don’t look at it as a yardstick for valuing other investments. Charlie?

CHARLIE MUNGER: Yeah, Warren is right when he says that interest rates are very important in determining the value of stocks, generally. And I think he’s also right when he says gold is very unimportant.

12. Warning: Speculating is not investing

WARREN BUFFETT: And the second part of the question?

AUDIENCE MEMBER: Thank you, sir. The second part of my question is this: given your assumptions on gold, if you were to factor a significant decline in the value of the dollar against gold, let’s say 40 percent or more, and given the correlation of 1929-‘48 and ‘64-‘81 eras positively to the decline of the dollar, and the negative correlation in the other two areas that you had studied, would you care to adjust the 7 percent total annual return you were quoted as expecting for common equity in the coming decade? And in conjunction with that, would you care to comment on your expected rate or return on all other major asset classes, perhaps like bonds, real estates? And which would you believe offers the best value for investors? Thank you very much.

WARREN BUFFETT: Yeah. Well, except under unusual circumstances, my expected rate — my expectancy on something like bonds is what bonds are producing at a given time. I don’t think I’m smarter than the bond market. Now, you can say, when they — when those rates swing all over, does that mean I swing all over? The answer is pretty close to yes. I mean, that — I don’t know what the right rate for bonds is. I think that if there’s — I’m very leery of economic correlations. I mean, I spent years fooling around with that sort of thing, and I mean, I correlated stock prices with everything in the world. And the — and you know, the problem was when I found a correlation. I mean, it’s — (laughs) — you know, you’ve seen these things on whether the AFC or the NFL wins the Super Bowl and all of that sort of thing. You can find something that correlates with something else. But in the end, a business or any economic asset is going to be worth what it produces in the way of cash over its lifetime.

And if you own a — if you own an oil field, if you own a farm, if you own an apartment house, you know, with the oil field, it’s the life of the oil field and what you can get out of it. And maybe you get secondary recovery, maybe you get tertiary recovery. But whatever it may be, it’s worth the discounted value of the oil that’s going to come out. And then you have to make an estimate as to volume and as to price. With a farm, you might make an estimate as to crop yield, and cost, and crop prices. And the apartment house, you make an estimate as to rentals, and operating expenses, and how long it’ll last, and when people will build other new apartment houses that potential renters in the future will find preferable, and so on. But all investment is, is laying out some money now to get more money back in the future. Now, there’s two ways of looking at the getting the money back. One is from what the asset itself will produce. That’s investment.

One is from what somebody else will pay you for it later on, irrespective of what the asset produces, and I call that speculation. So, if you are looking to the asset itself, you don’t care about the quote because the asset is going to produce the money for you. And that’s how — that’s what society, as a whole, is going to get from investing in that asset. Then there’s the other way of looking at it, is what somebody will pay you tomorrow for it, even if it’s valueless. And that’s speculation. And of course, society gets nothing out of that eventually, but one group profits at the expense of another. And of course, you had that operate in a huge way in the bubble of a few years ago. You had all kinds of things that were going to produce nothing, but where you had great amounts of wealth transfer in the short term. As investments, you know, they were a disaster. As means of wealth transfer, they were terrific for certain people. And they were, for the other people that were on the other side of the wealth transfer, they were disasters.

We look solely — we don’t care whether something’s quoted because we’re not — we don’t buy it with the idea of selling it to somebody. We look at what the business itself will produce. We bought See’s Candy in 1972. The success of that has been because of the cash it’s produced subsequently. It’s not based on the fact that I call up somebody at a brokerage house every day and say, “What’s my See’s Candy stock worth?” And that is our approach to anything. On interest rates, I’m no good. I bought some REITs a couple of years ago because I thought they were undervalued. Why did I think they were undervalued? Because I thought they could produce 11 or 12 percent, in terms of the assets that those companies had. And I thought an 11 or 12 percent return was attractive. Now the REITs are selling at higher prices and, you know, they’re not as attractive as they were then.

But you just look at — every asset class, every business, every farm, every REIT, whatever it may be, and say, “What is this thing likely to produce over time?” and that’s what it’s worth. It may sell at vastly different prices from time to time, but that just means one person is profiting against another, and that’s not our game. Charlie?

13. Hard to predict when a bubble will burst

CHARLIE MUNGER: Yeah, what makes common stock prices so hard to predict is that a general liquid market for common stocks creates, from time to time, either in sectors of the market or in the whole market, a Ponzi scheme. In other words, you have an automatic process where people get sucked in and other people come in because it worked last month or last year. And it can build to perfectly ridiculous levels, and the levels can last for considerable periods. Trying to predict that kind of thing, sort of a Ponzi scheme which is, if you will, accidentally thrown into the valuation of common stocks by just the forces of life, by definition that’s going to be very, very hard to predict. But that’s what makes it so dangerous to short stocks, even when they’re grossly overvalued. It’s hard to know just how overvalued they can become in addition to the overvaluation that exists. And I don’t think you’re going to predict the Ponzi scheme effect in markets by looking at the price of gold or any other correlation.

WARREN BUFFETT: Charlie and I probably — I mean, I’m pulling a figure out of the air — we have probably agreed on at least a hundred companies, maybe more, that we felt were frauds, you know, bubble-type things. And if we had acted on shorting those over the years, we might be broke now, but we were right on probably just about a hundred out of a hundred. It’s very hard to predict how far what Charlie calls the Ponzi scheme will go. It’s not exactly a scheme in the sense that it isn’t concocted, for most cases, by one person. It’s sort of a natural phenomenon that seems to — nursed along by promoters and investment bankers and venture capitalists and so on. But they don’t all sit in a room and work it out. It just — it plays on human nature in certain ways and it creates its own momentum, and eventually it pops, you know. And nobody knows when it’s going to pop, and that’s why you can’t short, at least we don’t find it makes good sense to short those things.

But they are — it is recognizable. You know when you’re dealing with those kind of crazy things, but you don’t know when the — how high they’ll go or when it’ll end or anything else. And people who think they do, you know, sometimes play in it. And other people know how to take advantage of it, I mean there’s no question about that. You do not have to have a 200 IQ to see a period like that and figure out how to have a big wealth transfer from somebody else to you, you know. And that was done on a huge scale, you know, in recent years. It’s not the, you know — it’s not the most admirable aspect of capitalism.

14. Stock options as compensation isn’t sinful, but …

WARREN BUFFETT: Area 4.

AUDIENCE MEMBER: Yes, good afternoon, Mr. Buffett and Mr. Munger. My name is Ho Nam (PH), and I’m from San Francisco, California. I have a question related to an issue you touched on a few moments ago on the debate over whether or not stock options should be expensed and reflected on the income statement of companies. With the current system, shareholders are incurring the burden of stock options since exercised options dilute earnings per share. As a shareholder of companies that issue stock options, I think I’m OK with that, especially in entrepreneurial companies that may not have enough cash to attract talent from larger competitors, or in cases where you have younger employees or lower-level employees who do not have the cash to purchase stock without the use of options. I have a two-part question. If companies are required to expense stock options and it hits — impacts the P&L, does it — would that lead to double-counting the impact of stock options? And the second part is, if the use of stock options are largely eliminated, might that impact the competitiveness of entrepreneurial companies which help drive innovation and growth and create more of a dividing line between shareholders and employees?

WARREN BUFFETT: Yeah, the first question is that there really isn’t the double-counting necessarily. For example, let’s just take a company with a million shares of stock outstanding, selling at a hundred dollars a share. And let’s say that options are granted for 9 million shares — we’ll make it extreme — at a hundred dollars a share. At that moment, you’ve given 90 percent of the upside to the management. We’re taking a very extreme example. That’s been a huge cost to the shareholders. Now, interestingly enough, if the stock was selling at $100 a share, the fully diluted earnings are exactly the same as the basic earnings in that year, because the dilution is not counted at all unless the stock is selling above, and then only by the difference in the market value and what it costs to repurchase the optioned shares. So, there is not double-counting.

And you can — you could issue — the very fact that you issued that million, the options on 9 million more shares at 100, would undoubtedly cause the price to actually fall well below 100 and there would be no dilution shown in terms of the way GAAP reports diluted earnings. The second question, as to whether, if you expense the options, it would discourage the option use. Well, the argument, you know, that is made when there — people issue options is that it’s doing more for the company than giving people cash compensation. It may be more convenient than cash compensation, too, for young and upcoming companies. But the fact that you are doing something in terms of paying people in a way that you say is even more effective than paying them in cash, to say that therefore you shouldn’t have to record the payment, I’ve never really followed. I don’t have any objection to options under some conditions. I’ve never taken a blanket position that options are sinful or anything of the sort. I just say they are an expense. And to be truthful with people about what you’re earning, you should record the expense.

And if a company can’t afford to be truthful, you know, I have trouble with that. And we will take, as we’ve said, you can pay your insurance premium to me in options. There’d be lots of companies I’d be happy to take options in and give them credit. I’d take options above the market. Give me a 10-year option 50 percent above the market in many companies, and we will take that — appropriate number of shares — and take that in lieu of cash. But that means we simply like, you know, the value of what we’re getting better than the equivalent amount of cash and we think the company that gives it to us has incurred an expense. We’ve received something of value, they’ve given something of value up, and that’s income to us and expense to them. And I think all of the opposition, at bottom, to the — to the expensing of options comes from people who know they’re not going to get as many options if they’re expensed.

And you know, they would like cash not to be expensed, but they can’t get away with that, you know. I mean —

CHARLIE MUNGER: Yeah. (Laughter)

WARREN BUFFETT: If you had an accounting rule that said the CEO’s salary should not be counted in cash, believe me, the CEOs would be in there fighting to have that rule maintained. I mean, because no one would — they would feel that they were going to get more cash if it wasn’t expensed, and options are the same way. It’s another argument I get a kick out of, I was just reading it the other day, where they say, “Well, options are too tough to value.” Well, I’ve answered that in various forms, but I notice that — what is it, Dell Computer, you know, has a great number of put options out, and it’s going to cost them a lot of money on the put options they have out.

And for a company to say, “We can’t figure out the value of options, and therefore we can’t expense them,” and then at the same time be dealing in billions of dollars’ worth of options, they are saying, “We are out buying or selling options in the billions of dollars, but we don’t know how to value these things.” That strikes me as a little bit specious — a little disconnected, cognitive dissonance, as they say. Charlie?

CHARLIE MUNGER: Yeah, I’m not at all against stock options in venture capital, for instance. But the argument that prominent venture capitalists have made, that not expensing stock options is appropriate because if you expense them it would be counting the stock options double, that’s an insane argument. The stock option is both an expense and a dilution, and both factors should be taken into account in proper accounting. John Doerr, the venture capitalist, as he argues to the contrary, is taking a public position that, “Were it offered to me as part of my employment, I would rather make my living playing a piano in a whorehouse.” (Laughter)

WARREN BUFFETT: We always get to the good stuff in the afternoon. (Laughter) I hope the children are in bed.

15. Hard to predict what happens after a bubble bursts

WARREN BUFFETT: Number 5.

AUDIENCE MEMBER: Good afternoon. My name is Bob Baden (PH), from Rochester, New York. Mr. Munger, this morning, while discussing index funds, you used the example of Japan as a real example of poor performance of a major index over a long period. Indeed, the S&P 500 index declined over 60 percent, in real terms, from the early ’60s through the mid-’70s. Could you discuss the mental models you use to consider the impact of inflation or deflation on your investment decisions and the likelihood of either occurring over the next decade?

CHARLIE MUNGER: Well, that’s partly easy and partly tough. If interest rates are going to go way up, you can obviously have a lot of deflation of stock prices. And a lot of that happened in the American period you’re talking about. What’s interesting about Japan is that I don’t think anybody thought that a major modern Keynesian democracy, pervaded by a good culture in terms of engineering, product quality, product innovation, and so forth, could have a period where you would have negative returns over 13 years without major depression either.

WARREN BUFFETT: (Inaudible)

CHARLIE MUNGER: I think — and that it would occur while interest rates were going down, not up. I think that was so novel that the models of the past totally failed to predict it. But I think these anomalies are always very interesting, and I think it’s crazy for Americans to assume that what’s happening in Argentina, what has happened in Japan, are totally inconceivable forever in America. They are not totally inconceivable.

WARREN BUFFETT: You had a huge bubble in equity prices in Japan, and now you’ve had interest rates go to virtually nothing. You’ve had the passage of time, the country hasn’t disappeared. People are going to work every day, and you’ve had this — the Nikkei, you know, now at a third of what it sold for not that many years ago. It’s an interesting phenomenon.

CHARLIE MUNGER: And huge fiscal stimulus in the whole period from the government.

WARREN BUFFETT: Post-bubble periods, I think, depending on how big the bubble is and how many were participating in it, but post-bubble periods, I think, can produce fallout that not everyone will be terribly good at predicting.

16. Ben Graham and the long/short model

WARREN BUFFETT: Six?

AUDIENCE MEMBER: Hi, I’m Steve Rosenberg (PH). I’m 22, from Ann Arbor, Michigan. It’s a privilege to be here. First, I’d just like to thank you both for serving as a hero and positive role model for me and many others. Much more than your success, itself, I respect your unparalleled integrity. I have three quick questions for you. The first is how a youngster like myself would develop and define their circle of competence. The second involves the role of creative accounting in the stories of tremendous growth and success over many years. GE, Tyco, and IBM immediately come to mind for me, but I was hoping you could also discuss that issue in relation to Coke. Some people have said that their decision to lay off much of the capital in the system onto the bottlers, who earn low returns on capital, is a form of creative accounting. On the flip side, others counter that Coke’s valuation, at first glance on, say, a price-to-book metric, is actually less richly valued than it seems because they earn basically all the economic rents in the entire system. My final question is, if you could comment on the A.W.

Jones model, the long/short equity model. I understand that it doesn’t make sense for capital the size of Berkshire’s to take that type of a strategy. But it just seems to me that playing the short side in combination also seems incredibly compelling, even giving the inherent structural and mathematical disadvantages of shorting. And I was wondering if you could talk a little bit more about why you would have lost money on your basket of a hundred frauds.

WARREN BUFFETT: Yeah, it’s an interesting question. And we’ll start — we’ll go in reverse order. Many people think of A.W. Jones, who was a Fortune writer at one time, and who developed the best-known hedge fund, whenever it was, in the early ’60s or thereabouts, maybe the late ’50s even. And for some of the audience, the idea originally with A.W. Jones is that they would go long and short more or less equal amounts and have a market-neutral fund so that it didn’t make any difference which way the market went. They didn’t really stick with that over time. And I’m not even sure whether A.W. Jones said that they would. But they, you know, sometimes they’d be 140 percent long and 80 percent short, so they’d have a 60 percent net long, or whatever it might be. They were not market-neutral throughout the period, but they did operate on the theory of being long stocks that seemed underpriced and short stocks that were overpriced.

Even the Federal Reserve, in a report they made on the Long-Term Capital Management situation a few years ago, credited A.W. Jones with being sort of the father of this theory of hedge funds. As Mickey Newman, if he’s still here, knows, I think it was in 1924 that Ben Graham set up the Benjamin Graham Fund, which was designed exactly along those lines, and which even used paired securities. In other words, he would look at General Motors and Chrysler and decide which he thought was undervalued relative to the other, and go long one and short the other. So, the idea — and he was paid a percentage of the profits. And it had all of the attributes of today’s hedge funds, except it was started in 1924. And I don’t know that Ben was the first on that, but I know that he was 30 years ahead of the one that the Federal Reserve credited with being the first, and that many people still talk about as being the first, A.W. Jones. Ben did not find that particularly successful. And he even wrote about it some in his — in terms of the problems he encountered with that approach.

And my memory is that a quite high percentage of the paired investments worked out well. He was right. The undervalued one went up and the overvalued — or the spread between the two narrowed. But the one time out of four, or whatever it was, that he was wrong lost a lot more money than the average of the three that he was right on. And you know, all I can say is that I’ve shorted stocks in my life, and had one particularly harrowing experience in 1954. And I have — I can’t — I can hardly think of a situation where I was wrong, if viewed from 10 years later. But I can think of some ones where I was certainly wrong from the view of 10 weeks later, which happened to be the relevant period, and during which my net worth was evaporating and my liquid assets were getting less liquid, and so on. So, it’s — all I can tell you is it’s very difficult. And the interesting thing about it, of course, is A.W. Jones was a darling of the late 1960′s. And Carol Loomis is here, and she wrote an article called “The Jones Nobody Keeps Up With.”

And it’s a very interesting article, but nobody’s writing articles — nobody was writing articles about A.W. Jones in 1979. I mean, something went wrong, and there were spin-offs from his operation. Carl Jones spun off from his operation, Dick Radcliffe spun off from his operation. There were — you can go down the list. And out of many, many, many that left, they — a very high percentage of them bit the dust, including su

标题：2002 年股东大会

第 5/6 部分

既然我们不知道地球的承载能力在一百年后是多少，我认为从整体上讲，人类有利益确保人口不会超载。而如果人口偏低，我看不到任何巨大的惩罚。这就像一个古老的类比。如果你要乘坐宇宙飞船进行百年之旅，你知道飞船后面有补给——有很多补给，但你不清楚确切数量——那么在装满飞船前部可容纳的给定人数时，你很可能会选择偏少的数量。我的意思是，你会——如果你认为补给可能够 300 人用，我认为你不会放 300 人进去。你会放大约 150 或 200 人。你会觉得你不确定飞船能否在百年后返回，你不知道后面有多少补给。

你会非常小心，不要超出你所乘坐的交通工具的承载能力。而我们现在所处的交通工具叫做地球。我们不知道它的承载能力。我们已经知道它比马尔萨斯或几百年前的人所想象的要大得多，但这绝不意味着它是无限的。而且我不——我能向你保证的一点是，几周前《纽约时报》所做的预测，不会在 50 年或 30 年后仍然成立。这种事不是事后能补救的。我的意思是，你不会去刻意减少人口。预防人口增长远比事后纠正要好得多。加勒特·哈丁在这方面有些有趣的论述。查理？

查理·芒格：是的，我要说的是，整个争论很有趣，双方都不理解对方的模型。但总的来说，在人口警告方、生态学方，他们总是低估现代文明提高承载能力的能力。他们越是低估，似乎学到的东西就越少。这并不值得称赞。而另一方也同样愚蠢。我认为——我认为你只是在谈论人类状况。这是一个复杂、有争议的话题，人们对此有强烈的感受，而且他们学习得很慢。我认为在可预见的未来，情况都会是这样。

沃伦·巴菲特：我认为，一个容纳 150 亿人口的世界，其平均行为比一个容纳 50 亿人口的世界要好的可能性很低，但你知道，这——我们永远无法找到验证的方法。但这是我对这个问题的直觉。

20. 预计结果“令人满意”

沃伦·巴菲特：第 8 个问题。

与会者：我叫伯特·弗洛斯巴赫，来自德国科隆。首先，我想向两位先生表示感谢，感谢你们所做的监督和纯粹的投资理念，这种理念在德国也越来越受到追随。我的问题涉及现实主义的重要性。如果芒格先生早些时候提到的股市黯淡前景成为现实，并且考虑到伯克希尔·哈撒韦的规模削弱了小额投资的影响，你认为未来 10 年或 20 年浮存金的实际回报率会是多少？

沃伦·巴菲特：嗯，我希望我知道。我唯一能告诉你的是，它会低于过去 20 年的水平。但我认为，与大多数其他选择相比，它会令人满意。但我不知道其他选择会产生每年 4% 还是 8% 的回报。我不认为它们能产生每年 15% 的回报。而且我认为，如果我们能获得成本极低的浮存金（我认为我们应该且会做到），并且我们不断有机会以合理（而非惊人的）条件收购企业，并且我们偶尔能遇到市场机会——比如过去几年我们在债券市场上遇到的一些机会。我们没有赚到巨额资金，但我们赚了相当可观的一笔钱。我们也会在股票上找到一些可做的事情。

我认为总体而言，我们可以获得一个不会让我们感到羞耻的回报率，但我们远不能达到你回顾过去可能认为我们能够达到的水平。我们认为未来 20 年股票的回报率不会很糟糕。我们只是认为那些期望建立在 1982 年至 1999 年基础上的人会非常失望。但通过投资赚取 6% 或 7% 的回报并没有什么不好。在一个相对低通胀的世界里，资本还有什么资格要求更多？它必须来自某处。如果在此基础上赚取高得多的回报，并且资金数额不断增加，那么随着时间的推移，整个国民收入流都会发生转变。所以，我认为我们会有机会做一些让我们满意的事情，但问题是这些机会能否让你满意。查理？

查理·芒格：嗯，我当然无法在这一点上做出改进，但这并不会阻止我尝试说点什么。（笑声）我认为在目前情况下，一个人能做的最聪明的事情之一就是将期望值大幅降低至低于过去的投资成就，当然也包括伯克希尔的股票。我认为这是成熟和明智的表现。尽管如此，我喜欢我们的模式，喜欢我们现有的布局，也喜欢最近发生的事情。我认为我们过去玩得很开心，也取得了一些成就，我猜我们会继续这样下去。我在这里的大部分时间，只是为了向你们大家表示，也许你们还有大约 10 年可以容忍沃伦——（笑声）——而我也在尽我所能做到这一点。（掌声）

21. 纪律比地点更重要

沃伦·巴菲特：请开始第 9 个问题。

与会者：下午好。我想回到根本问题，谈谈保险业务，这是伯克希尔的核心。1998 年，当我们收购通用再保险时，他们拥有一个劳合社辛迪加，DP Mann，现在叫做法拉第。此外，在 2000 年，我们收购了马尔堡代理公司。我想听听你对劳合社现状及其未来的看法，以及我们对劳合社市场的承诺。

沃伦·巴菲特：是的，我们确实拥有现在被称为法拉第的辛迪加。实际上，我们对其承保能力的利用率，我记得几年前大概是 30% 左右，现在已经达到了 90% 多。所以，实际上，我们通过法拉第对伦敦市场有了更大的承诺。而且我认为我们很可能会从这个承诺中获得不错的收益。但归根结底，无论你在伦敦，还是在华盛顿像 GEICO 那样，或者，实际上，阿吉特曾经住在奥马哈，或者无论在哪里——这真的不重要——因为这是一个全球性的市场。只要你拥有支付索赔的信誉、足够的资本以及行动的意愿，你在世界任何地方都会看到机会。这真的很像投资。

我的意思是，无论你在伦敦、奥马哈还是纽约，你都可以进行投资。你在哪里并不重要。重要的是你是否有能力并有纪律去审视成千上万种不同的东西，并从中选择一组去做，因为你可以做世界保险领域的任何事。我的意思是，如果我们打开闸门，一个月内就能承保数百亿美元的保费，但这些业务就在那里。外面有很多业务。外面有很多投资机会或投资选择。问题在于你对什么说“是”，对什么说“不”。这应该由你能够评估的东西决定，在保险的情况下，即使它们很有吸引力，也要防止出现聚合风险，以免在某些时候给你带来重大麻烦。但我们并不特别认为伦敦市场比美国市场更好，反之亦然。如你所知，我们在德国也设有一个运营机构。

但这并不是关键所在。关键在于，要让员工每天都能做出决策，接受他们理解且定价合理的风险，避免过度的聚合风险，并偶尔处理与不诚实的人打交道的问题。但前两项是日复一日最重要的事情。这在劳合社可以做，在奥马哈也可以做。我是说，国民赔偿保险公司坐落在 30th 和 Harney 街，并没有地理上的优势，但从杰克·林沃特于 1941 年（或其他年份）创立以来，它在主营业务上一直做得非常出色。我的意思是，杰克·林沃特——在座有些人可能认识他——杰克·林沃特——我的一位很好的朋友——但他并非保险奇才。而且他从未看过精算书，甚至可能从未想过这个问题。但他是一个聪明人，有足够的理智去坚持做他几乎完全理解的事情，并确保他承担的风险获得了适当的回报。

他击败了那些在哈特福德存在了上百年的公司，那些拥有庞大代理网络、巨额资本、精算师和各种数据的公司。但他们没有他那样的纪律。而这正是关键所在。所以，我不认为这与地理位置有关。我希望尽可能多地接触世界上的各种业务，并且这种接触通过具备我所谈到的纪律的人来实现。如果我们能看到世界上发生的一切，并且人们因为各种原因（通常是因为我们的资本状况或我们愿意承担波动性）而想来找我们——无论他们从哪里来找我们，只要代表我们的人使用我们谈到的准则，我们就会做得很好。而且，对我来说，他们与我们接触的地方越多，只要这种接触是通过有这种纪律的人进行的，就越好。查理？

查理·芒格：是的，保险业务很像伯克希尔的投资业务。如果你将广泛的接触与高拒绝率结合起来，你就有机会做出相当多正确的决策。

沃伦·巴菲特：我认为我们现在就在这样做。明年你可以验证这一点。

22. 人生建议：珍惜你最重要的资产

沃伦·巴菲特：第 10 个问题。

与会者：我是洛厄尔·克里斯曼（音），来自亚利桑那州凤凰城。我已经退休了，现在在高中教老年人。我希望他们今天能在这里听你讲话。我兼职教这些人投资课程。我去上的第一节课，他们让我教他们如何准备退休。我想知道您建议我应该在这门课程中包含哪两三件事。

沃伦·巴菲特：嗯——

查理·芒格：沃伦对退休知道什么？（笑声）

沃伦·巴菲特：是的，我们甚至没想过这个问题。现在，让我给那个群体提一个建议。我在内布拉斯加州韦斯利安大学对一群高中毕业生演讲时用过这个，就在几周前。告诉班里的年轻人，他们大概 16 或 17 岁，如果他们像我 16 岁时那样，你知道，我当时只想着两件事。而马丁的芭芭拉阿姨不和我约会，所以我就只剩下汽车了。（笑声）我试过灵车，但那不管用。假设，我在跟他们讲这个时也用过——假设当你 16 岁时，一个精灵出现在你面前，精灵说：“明天早上你会得到任何你想要的汽车，用一个大粉红色的蝴蝶结系着，你随便挑。可以是劳斯莱斯，可以是捷豹，可以是雷克萨斯，你随便说，那辆车就会在那里，你不用付我一分钱。”

听过精灵故事后，你对精灵说：“有什么条件吗？”当然，精灵说：“只有一个条件。你明天早上得到的那辆车，你梦想中的汽车，是你这辈子只能得到的唯一一辆车。所以你可以选一辆，但仅此而已。”然后你仍然说出了你梦想中的汽车，第二天早上你收到了那辆车。现在，知道这是你这辈子唯一的一辆车，你会怎么做？嗯，你会把用户手册读上十遍才把钥匙插进点火开关，你会把它停在车库里。你会比他们告诉你的换油频率高一倍地去换油。你会让轮胎保持适当的气压。如果有一点小划痕，你会当天就修好，以防生锈。

换句话说，你确保这辆你在 16 岁时梦想中的汽车，在 50 岁或 60 岁时仍然是你梦想中的汽车，因为你把它当作你一生中唯一会得到的车来对待。然后我会建议你在凤凰城的学生们，他们只会得到一个头脑和一个身体，这就是他们在 40 岁、50 岁和 60 岁时会拥有的头脑和身体。与其说是为那些年龄精确地准备退休，不如说是为那些年龄的人生做准备。他们应该重视照顾和最大化那个头脑的重要性，并以一种方式照顾好那个身体，这样当他们到 50、60 或 70 岁时，他们拥有的是一个真正的资产，而不是一个多年来已经生锈和被忽视的东西。等他们到了 60 或 70 岁时再想这些就太晚了。你不能把汽车修回原来的状态。你可以保养它。而对于头脑，随着时间的推移，你可以极大地提升它。

你的学生最重要的资产就是他们自己。你知道，我愿意接受一个刚毕业的大学生，假设他们身体状况正常等等，我愿意付给他们，大概 5 万美元，买下他们余生所有收入的 10%。那么，我愿意为 10% 付 5 万美元——这意味着即使他们口袋里一分钱没有，只要他们有好头脑和好身体，他们就值 50 万美元。这个资产比他们拥有的任何其他资产都重要得多，除非他们非常幸运地继承了遗产之类的东西，但压倒性地来说，他们主要的资产就是他们自己。他们应该像对待任何其他独立于自身的资产一样对待他们的主要资产。如果他们这样做，并且从现在就思考这个问题，养成维护和增强该资产的习惯，那么当他们 60 岁时，他们就会拥有一辆非常好的汽车、头脑和身体。如果不这样做，他们就会拥有一堆废铁。查理？

（掌声）

23. 为什么伯克希尔不会为机场提供安保

沃伦·巴菲特：第 1 个问题？

与会者：下午好，巴菲特先生和芒格先生。我是乔治·布鲁姆利，来自北卡罗来纳州达勒姆。有人合理地指出，评估企业最关键的因素是确定竞争优势的可持续性。假设我们对少数几家真正独特的公司有所了解，这些公司拥有足够的力量战胜竞争对手，因此我们可以相对确定地估计未来的现金流。我承认，走到这一步绝非易事；此外，不受约束的侵权制度似乎具有巨大的潜在风险，甚至可能颠覆这种可靠的分析。预测的现金流和合理估计的终值可能会通过向诉讼当事人和律师转移而实际上被归零。我的问题是，聪明的投资者应该如何尝试将这种不确定性纳入他们对潜在投资机会的估值中？

沃伦·巴菲特：查理是律师，所以我会让他告诉你如何保护自己免受他同行的伤害。

与会者：我还有一个简短的跟进问题。

查理·芒格：我认为，作为一个投资者，直接放弃某些问题过多的业务领域是完全公平的。我对加州工人赔偿保险几乎就是这种感觉。换句话说，系统变得如此不公平和疯狂，以至于我愿意在很大程度上至少把它抛在脑后。我认为有很多这样的领域。我和另一个人曾控制一家公司，该公司发明了一种更好的警察头盔。我们告诉他们不要生产。我们告诉他们把它卖给其他有能力承担法律责任或——我们希望警察拥有头盔，但我们不想制造它。我认为有很多活动领域，对于已经富有的人来说，侵权制度使得参与其中是愚蠢的。我认为你可以大致找出这些领域并避开它们。我不认为侵权制度会很快得到修复。

沃伦·巴菲特：是的，乔治——实际上，我想乔治·吉莱斯皮今天也在这里。20 年前，我和他都是平克顿公司的董事。事实上，我们拥有平克顿很大比例的股份，尽管它由家族基金会控制。但当时的一个有趣问题是，我们是否想为机场提供安保人员之类的服务。如果你仔细想想，伯克希尔本身——算了，不提平克顿——进入为机场提供安保的业务绝对是疯了。我们在挑选保安方面可能会更负责任。但是，如果我们的一个保安在波特兰机场——那架飞机就是从那里起飞的，或者那些从洛根机场登机的人的原始登机地点——或者我们在洛根机场或其他任何地方担任保安——我们可能要对数十亿美元负责。

你知道，人们会来找我们，因为我们有钱，而且我们有雇员，人们会说，如果不是你的雇员，这些人就不会死，其他一切也不会发生。对于我们来说，进入像查理说的头盔那样的业务，比如，对于我们来说，进入那样的业务是疯狂的，而其他一些人在他的地下室里运作，可以有保安，如果他们把整个机场炸了也没关系，因为他没有钱可赔。所以，实际上，这个系统可能会阻止更负责任的人甚至梦想进入那种业务。不幸的是，我要说，自从 1980 年我们在平克顿考虑这类事情以来，可能适用于这种推理的业务范围已经显著扩大了。

有很多事情，一家富有的公司不应该去做，因为如果他们错了，或者甚至有人怀疑他们错了，他们将付出的代价会高得离谱，远超处于不同经济状况的人所承受的。侵权制度绝对是在选择由谁来提供某些服务和产品。除了避免它，我不知道有什么解决办法。

24. Finova 交易不会像预期那样盈利

沃伦·巴菲特：现在，你还有另一个问题吗，乔治？

与会者：是的，简短地问一下，你能介绍一下 Finova 交易的经济状况吗？

沃伦·巴菲特：嗯，Finova 的交易大致上——嗯，就像我们写年度报告时那样。实际上，Finova 的年度报告也谈到了这一点。我想你们大多数人都知道交易条款。我们担保了一笔最初将是 60 亿美元的贷款，这使得债权人能够在 Finova 破产中获得其债权很大比例的资金。我们只用了 60 亿中的 56 亿，因为 Finova 的还款速度更快。Finova 是一家倒闭的金融公司，规模很大，我们与 Leucadia 合伙进行这项操作。他们负责管理，并且做得很好。这笔 56 亿美元的贷款，实际上，我们对 90% 的贷款收取大约 2% 的附加费。所以，如果是 60 亿，我们每年会有 1.08 亿的附带收益，尽管它会逐渐减少。现在贷款余额降到了 32 亿，我相信。不久前，有一批特许经营权应收账款以约 5 亿美元的价格大宗出售给了通用电气信贷。

所以风险敞口降到了 32 亿，但当然，2% 的附加费也降到了 32 亿的 2%。我们觉得——嗯，911 事件后，Finova 的许多资产是飞机。这些飞机并非最新型号，而且在许多情况下，租赁方也不是最优质的。所以飞机组合受到了巨大打击，还有其他与度假物业等相关的应收账款，也受到了任何影响旅行等等事情的影响。所以组合的价值在 911 后比 911 前明显降低了。在我看来，这不会——我们担保的 32 亿，就我而言，我认为这 100% 没问题。然后下面有一组债券，你可以说是破产中存在的剩余债券，因为 70% 已付清，30% 未付清。我们拥有这部分剩余债券的 13% 左右。

这些债券的价值会比去年夏天我们预计的要低得多。我们以 67 美分兑 1 美元的价格买入了我们的头寸，我们已经——我们得到了 70 美分兑 1 美元，加上这些债券，再加上我们通过 Berkadia 贷款获得的附加费。所以我们已经收回了全部本金，甚至更多，我们买的债券，再加上 Berkadia 的附加费，所以很可能，几乎可以肯定，我应该说——虽然谁知道呢？我的意思是，我不知道 911——但我们将非常非常有可能在整个交易中赚取可观的利润，但没有去年夏天我们预计的那么多。我们对 Leucadia 处理事情的方式感到非常满意，但由于 911 事件，那个组合现在的价值没有以前高了。查理？

查理·芒格：是的，这是本·格雷厄姆的安全边际原则的一个有趣例子。很多我们没有预料到的事情都出了问题，然而我们安然无恙。

沃伦·巴菲特：是的，随着时间的推移，我们应该总共能赚几个亿，但很多事都出错了。但是，正如查理所说，当我们进入时，我们有安全边际，我们感觉我们有安全边际，事实证明我们需要它。

与会者：谢谢。

25. “很难找到真正错误定价的房地产”

沃伦·巴菲特：第 2 个问题。

与会者：我是鲍勃·克莱恩（音），来自洛杉矶。我想知道您能否让我们一窥您的投资流程，您如何着手分析一个特定行业。我想知道您能否以房地产为例。我知道房地产多年来并非伯克希尔投资组合中很大的一部分。我想知道这是因为您将房地产视为一种大宗商品业务，还是因为房地产的现金流可能比其他一些行业更可预测，因此它往往更不容易被错误定价，从而更不容易在房地产中找到绝佳的交易机会。所以——

沃伦·巴菲特：是的，你——请继续。

与会者：所以只是想知道，如果我们观看您和查理讨论房地产优点的对话，它会如何进行。

沃伦·巴菲特：嗯，它会像我们所有其他对话一样。他会说“不”大约 15 分钟——（笑声）——我会根据他说“不”时的情绪程度来判断他是否真的喜欢这笔交易。（笑声）但我们都对房地产有相当多的经验，查理早期的钱就是在房地产中赚到的。第二个更重要的点是，房地产不是一种商品，但我认为它往往被更准确地定价——特别是已开发的房地产——在大部分时间里。现在，在 RTC 期间，当有大量的交易，有一个非常不想成为所有者的所有者，他们根本不知道他们拥有什么，诸如此类的情况下，那时有很多错误定价。我知道在座的一些人从中赚了很多钱。但在大多数情况下，很难找到真正错误定价的房地产。

我的意思是，当我看到 REITs 目前进行的交易时——你对此类信息了解很多——它们非常相似。但这是一个竞争激烈的世界，他们都知道芝加哥或其他任何地方的一栋甲级写字楼会产生什么。所以他们至少知道——结果可能证明他们全都错了，因为一些不寻常的事件，但大多数时候，很难反驳房地产界的当前共识。但偶尔也有一些机会，这个领域可能会有大机会。但如果存在，那肯定是因为房地产融资可能因为某种原因而陷入巨大混乱。我们需要资金在很大程度上被切断，才可能获得全面的重大错误定价。查理？

查理·芒格：是的，在该领域，相对于经验丰富的房地产投资者，我们没有任何竞争优势，即使我们用自己的钱以合伙形式运作，我们也不会有。如果你像我们这样以公司形式运作，受美国国内收入法 C 章课税，那么在房地产收入和拥有该房地产的人使用该收入之间，就多了一层公司税。因此，就其性质而言，对于按国内收入法有关公司的 C 章纳税的人来说，房地产往往是一笔非常糟糕的投资。所以，结合了通常允许具有我们这种税收结构的人从事活动，并且在该领域没有特殊能力这两点，意味着我们几乎不花时间思考房地产的任何事情。而我们实际做过的房地产，比如持有剩余房地产并试图出售，我认为我们的记录很差。

沃伦·巴菲特：是的，C 公司真的，这没什么意义。我的意思是，我知道有一些 C 公司从事房地产业务，但还有其他结构更有吸引力。真的没有其他结构——我是说，劳合社在某种程度上是一种尝试——但没有其他结构对大型保险公司运作良好，或者——你不能让沃尔玛不成为 C 公司而很好地存在。所以，它们不受 S 公司或合伙企业的竞争影响，这决定了折扣店领域的资本回报。但如果你与 S 公司——相当于 S 公司的 REITs、合伙企业或个人竞争，你作为 C 公司就有一个经济劣势，对于不喜欢阅读国内收入法的你们来说，这就是你想到的标准普通公司——所有道琼斯公司，所有标普公司，等等。

正如查理所说，鉴于我们的结构劣势，加上拥有更好结构的人士竞争购买这类资产，我们的结构劣势和竞争性质相结合，不太可能导致什么真正有趣的事情发生。不过，我要说的是，我们在 RTC 期间错过了机会。我的意思是，当时市场效率足够低下，并且缺乏融资，如果我们当时准备好了，本来可以赚很多钱。我们实际上做了一些相当有趣的交易，但并不多——但与我们的总资本相比，并不显著。

查理·芒格：我们曾认真考虑过收购尔湾公司——

沃伦·巴菲特：是的。

查理·芒格：——当它变得可用时。所以，但那是我想起的唯一一个我们认真考虑过的大项目。

沃伦·巴菲特：是的，我记得那是在 1977 年左右？

查理·芒格：很久以前了。

沃伦·巴菲特：是的，美孚石油感兴趣，最后唐·布伦组织了一个团队收购了它。这种事情有可能发生，但可能性不大。

26. Black-Scholes 模型在期权估值中的问题

沃伦·巴菲特：第 3 个问题？

与会者：你好，我的名字是约瑟夫·莱普雷（音）。我是来自明尼苏达州明尼阿波利斯市的一位股东，感谢您给我这个提问的机会。巴菲特先生，您今天早些时候提到，您愿意用保险换取股票期权。如果可能，能否请您描述一种估值股票期权的方法，尤其是在没有所估值期权的市场定价数据的情况下？

沃伦·巴菲特：是的，我可以算出我愿为一家私营公司的期权付多少钱。我可以算出我愿为一家上市公司的期权付多少钱。这可能稍微容易一些。我可以算出我愿为一栋公寓楼或一个农场的期权付多少钱。我有个朋友，当我 20 岁的时候，我们制定了一个大计划，要出去购买期权——对奥马哈当时市郊的农场进行期权操作。我们想，如果我们付给农民一笔适度的钱（这对他来说是年收入），以获得以当时价格两倍购买他的农场的期权，那么，他可能很乐意以当年价格的两倍出售，也许我们能做些事。也许效果还不错。每个期权都有价值。你知道，我有一栋价值 X 的房子。如果你付我几美元，让我给你一个 10 年内以 2X 价格购买的期权，我不会接受，因为存在各种通胀的可能性。所有期权都有价值。

那些获得期权的人通常比那些给予期权的人更理解这一点。我现在说的不是股票期权，而是在其他领域。所以我们会很乐意，你知道。我的意思是，我能得到什么——比如说——我们随便举一个例子。举一家非上市公司，比如玛氏公司。我是否愿意拥有一份对玛氏公司部分股权的 10 年期期权，价格给定？当然愿意。我会为此收取一定费用——如果我要与玛氏公司签订一份大额保险单，我会愿意用这份期权代替现金。他们不会和我这样做，但——我会很高兴，如果你从我这里买房屋保险，你想给我你房子的 10 年期期权，我会愿意用它代替保费。我会自己计算价值。

不会是布莱克-舒尔斯模型，尽管在许多情况下那可能是最好的安排，但我个人可能会采用其他方式。我们买卖过一些期权。事实上，在 6 月 3 日，如果标普 500 指数收于 1150 多点或以下，伯克希尔·哈撒韦将收到 6000 万美元。而两年前，当标普指数在 14 多点时，我们同意，在那个 6 月 3 日的期权（或其他什么）上，名义价值 4 亿美元，实际上，对手方将获得高于 2000 多点（比当时现金价高出 42%）的利润。而我们获得了看跌期权在 5% 到 20% 下跌区间的利润。当时使用传统方法计算期权价值的人认为这是一笔无现金交易——我们给出的看涨期权的价值等于我们收到的看跌期权的价值。你知道，我做出了不同的决定。所以，我们不会盲目接受由那些获得诺贝尔奖的人计算出的期权价值。相反，我们实际上在其中加入了一些判断因素。

有些企业可能会根据布莱克-舒尔斯模型得出完全相同的 10 年期期权价值，但我们愿为其中一个支付的金额会与另一个不同，可能显著不同。但我们几乎会为任何期权付一些钱。你知道，这个世界价格会变动，经济状况会变动的本质就是如此。期权是一个参与变化的机会，除了你最初支付的权利金外，无需放弃任何东西。许多人似乎没有认识到这一点，但请相信我，那些获得股票期权的人确实认识到了。而那些给予期权的人，也就是股东们，像这样一个群体代表，他们对给予期权没有真正的发言权，但他们有时并未完全意识到被给予走了什么。想象一下，你知道，在离这里几英里远的地方，有两块农场出售。你对卖家说：“你要价多少？”两个人都说每英亩 1000 美元，但其中一个人说：“但是每年，我想要你期权，你知道，我希望你以 1000 美元的价格归还我 2% 的土地。所以，你知道，10 年后，20% 的上涨收益属于我，但你承担所有下跌风险。”我的意思是，你会买哪个农场？没有期权的那个，还是有期权的那个？这并不复杂。我们确实——当我们说我们会用期权代替现金时，我们是认真的。顺便说一句，那个为了支付保费而给我们期权（而非现金）的公司，必须根据他们给我们的期权的公允价值记录这笔费用。他们不需要将其记录为费用的唯一项目是薪酬。但如果是用于支付电费，或者用于支付保费，或者用于支付租金，他们必须将其称为成本。

但是，只有当涉及 CEO 和其他类似人员的薪酬时，他们才不需要将其记录为成本，这是因为他们能够说服国会屈从于他们的意愿和他们的竞选捐款。查理？

查理·芒格：是的，布莱克-舒尔斯团队确实因发明了这个定价期权的公式而获得了诺贝尔奖，不是针对高管股票期权，而是普遍意义上的期权。如果你对公司一无所知，只知道过去股票交易的价格历史——

沃伦·巴菲特：以及股息。

查理·芒格：——并且如果期限非常短，这是一个很好的近似期权价值的方法。但是，如果是长期期权，并且你认为你知道一些东西，那么用这个方法来定价期权就是疯狂的。华尔街充斥着智商 150 的人，他们使用布莱克-舒尔斯模型来估值那些本不应被强行套入该模型的期权。整个美国企业界都在使用布莱克-舒尔斯模型，在会计报告的脚注中对股票期权进行定价，他们这样做是因为它得出的成本数字最低。

沃伦·巴菲特：嗯，他们不仅这样做，还假设期权的期限小于实际期限。我的意思是，他们会竭尽所能，我参与过这些讨论。他们会尽可能让数字看起来低一些。就这么简单。

查理·芒格：他们一开始就在用一个虚假的过程来确定这个数字。所以，这就像一场疯帽子的茶会，唯一一贯的是整个事情令人作呕。（笑声和掌声）

27. 投资银行家“处在社会幸运的那一部分”

沃伦·巴菲特：请开始第 4 个问题。

与会者：我是约翰·戈洛布，来自堪萨斯城。我基本上已经退休了，但也在密苏里大学堪萨斯城分校教授一门关于金融市场的课程。我总是告诉我的学生，我在伯克希尔·哈撒韦的股东大会上比在沃顿商学院从教授们那里学到的投资知识多得多。（掌声）我有一个关于投资银行的笼统问题。鉴于你和所罗门公司的关系，我对你代表这个行业的态度总是感到惊讶。不知怎的，我觉得你认为他们的主要社会价值就是对不必要的换手收取很高的费用。我想知道你对投资银行在美国金融中的总体影响力是上升还是下降的看法。我不想当盲目乐观的人，但我希望像安然这样的丑闻可能会减少投资银行的影响力，人们不一定会信任他们给出的某些建议。

沃伦·巴菲特：我认为安然必定会在各个领域产生一些有利的后果。我的意思是，在某种程度上，它促使人们更仔细地审视各种实体的行为等等。不，我认为安然对美国经济来说是积极的。事实是，尽管存在各种过度行为、错误和其他一切，我们的资本体系，通过各种方式，使得这个拥有世界 4.5% 人口的国家占据了世界市场价值的 50% 以上。所以，我并不否定美国资本体系的发展方式。我对该系统中某些人的行为方式持否定态度，但你知道，他们在任何系统中都会表现糟糕。所以，这是人类的本性。但是，查理和我仍然认为我们应该批评我们认为不当的事情，但我们不会以任何方式、形态或形式批评整个体系。你知道，它在这个国家一直是一台巨大的经济机器。

但我认为市场体系，我没有比它更好的——事实上，我认为市场体系在实质上是这个国家繁荣的原因。所以，我没有想到任何可以替代市场体系的东西。我确实认为，从人类整体的角度来看，它会产生极其不公平的结果，这应该主要通过税收制度来纠正。我不认为应该有任何可比价值体系或类似的东西。我只是——政府试图分配所有这一切的想法让我觉得荒谬。但是市场体系允许像我这样的人赚这么多钱，因为我知道如何配置资本，相比之下，伟大的教师、护士、癌症研究者——不管是什么。我的意思是，它只是把回报倾注给在特定时间拥有这种特定技能的人。这对我来说很棒，但是，在一个真正繁荣的社会里，应该有一些纠正措施。

因为在一个极其繁荣的经济体中，繁荣的分配完全取决于市场体系下得到巨大回报的技能上的（偶然出现的）怪癖，这在我看来是不合适的。所以，我，但你知道，我相信——这就是为什么我相信累进税制等等。我想特别就投资银行业来说，我的意思是——（笑声）——有一次我和一位投资银行家站在一起，他看着窗外说：“你瞧，放眼望去，没有人在生产任何东西。”我说：“是的，这似乎也是他们非常认真对待的一项使命。”（笑声）但是，你知道，在这个拥有 14 万亿美元（或多少）市场价值、人们花别人的钱、公司花钱的系统中，你为某样东西花的钱越多，有时会与价值（如在公平意见中）等同起来，等等。

这与我真正认为不同的人对国家的最终贡献非常不成比例，但我没有更好的系统——（笑声）——可以替代它。我不希望任何人认为——或者在离开时认为——我们应该过多地修补它。我认为你的税收制度应该成为你以某种更好方式分配繁荣的方式。当我们让人们去参战时，或者类似的事情，我们不会找赚了最多钱的人说：“嗯，他们从社会中受益最多，所以我们会派他们去前线。”我的意思是，我们——作为这个国家的公民，有各种方面，我认为应该确保那些没有得到好票子（使他们在市场环境中繁荣）的人，在我看来，仍然应该过得相当不错。

而且真的，像我这样的人不应该，你知道——这个世界补偿我的方式是没有道理的。如果我出生在孟加拉国，或者如果我出生在 200 年前，就不会发生这种事。你知道，另一个精灵故事。想象一下，在我出生前 24 小时，有一个与我拥有完全相同 DNA 的人就在我旁边，他也要在 24 小时后出生。精灵来到我们俩面前说：“我们现在要举行一场竞标比赛。出价最高（用未来收入的一部分）的人将出生在美国，而输掉这个比赛的人将出生在孟加拉国。你愿意拿出未来收入的百分之多少来换取出生在美国？”我的出价会相当高。（笑声）你知道，我的意思是，这会是一个有趣的测试，看我多么看重自己的能力，相比于我将被播种的土壤。

所以，我感到幸运，而且我确实很幸运，这很明显。但我认为我们应该想办法照顾那些不那么幸运的人。我认为投资银行家应该认为自己是社会中幸运的那部分。他们所做的一切并没有错。为美国企业筹集资金是件好事。我只是认为，相对于他们带给游戏的天赋等等，他们的报酬高得令人发指，但我认为对我来说也是如此。查理？

查理·芒格：是的，但我要说的是，投资银行业的整体文化在过去 30 或 40 年里已经恶化了。还记得很久以前我们发行了一小笔债券，沃伦？

沃伦·巴菲特：是的，600 万。

查理·芒格：多元化零售公司。我们雇用了来自奥马哈和林肯的非常高级的投资银行家。他们非常关心他们认识的客户是否能拿回他们的钱。

沃伦·巴菲特：是的。

查理·芒格：他们纠结于契约中的每一个条款，讨论我们是否确实没问题。所以，我们被要求经历的是一个非常令人钦佩的过程。

沃伦·巴菲特：是的，我们在那种过程中受到了审查。

查理·芒格：我们受到了审查，并且是明智的审查。让我们通过可能不是很明智，但这确实是一个明智的过程。我要说的是，最近华尔街的文化越来越倾向于任何可以获利销售的东西都会被获利销售。

沃伦·巴菲特：是的。能卖出去吗？这就是问题所在。

查理·芒格：能卖出去就是道德标准。这对投资银行来说不是一个足够的标准。而且——

沃伦·巴菲特：以前实际上也有两类投资银行家。我的意思是，有那些做审查等等的。然后有真正的低端分子，他们基本上是不管证券是什么都在推销。它们之间有清晰的界限，但界限已经消失了。

查理·芒格：是的，所以高等金融领域标准的恶化不是一件好事。它会摇摆回来吗？你当然希望如此。

沃伦·巴菲特：你可以看出为什么我们在所罗门如此受欢迎。（笑声）

查理·芒格：但公平地说，我们从所罗门获得了非常有效的投资银行服务。

沃伦·巴菲特：那是真的。那是真的。当我们发行 B 股时，例如，我们制定了规则。他们不一定想那样做，但他们非常出色地按照我们要求的方式做了。所以，我们说我们不希望人们被炒作买入股票。我们希望佣金非常低，而且我们将发行市场能够吸收的数量，这样就没有人会因为对发行后市场行为感到兴奋而购买，认为这是一个热门发行。我的意思是，我们制定了一系列我们认为合理的规则，所罗门在贯彻执行方面做得非常出色，完全按照我们的要求做了。按照我们的标准，它是成功的。所以，不，我会说他们在那次中做得非常出色。

查理·芒格：他们非常享受这个过程，参与工作的人。

沃伦·巴菲特：那是真的。

查理·芒格：他们以前从未做过像这样的交易。

沃伦·巴菲特：那是真的。是的。我们在几秒钟内就完全改变了我们的看法。（笑声）

查理·芒格：嗯，但这里面有一个教训。某些类型的客户获得更高质量的服务。事实上，有许多客户根本不应该被投资银行接纳，但他们却被接纳了。

沃伦·巴菲特：你在想诺曼底的那个家伙吗？（笑声）

查理·芒格：是的。

沃伦·巴菲特：我的意思是，你能想象那个家伙甚至能进门吗？我的意思是，这太匪夷所思了。我的意思是，他后来进了监狱。他活该。

查理·芒格：他娶了他的高中老师，她至少比他大二十岁。

沃伦·巴菲特：查理在这类事情上比我更有见解，但请继续。（笑声）

查理·芒格：这种情况有足够多的古怪之处。（笑声）要不是他是个男人而她是个女人，我不会觉得如此古怪。

28. 收购 Dexter 鞋业是一个错误

沃伦·巴菲特：好的，第 5 个问题。（笑声）

与会者：下午好。迈克·恩维恩（音），来自马萨诸塞州切尔姆斯福德。我注意到在年度报告中，你对 Dexter 进行了减值处理，并将其交由 H.H. Brown 管理。我回想一下，我相信在 1985 年，你写过关闭纺织业务的过程。我想知道你是否能详细说明一下这次情况有何不同。我相信你当时指出，在纺织业务中，尽管有出色的管理层，但不可能用这些资产赚取经济回报。

沃伦·巴菲特：是的。你刚才是说我们对 H.H. Brown 进行了减值处理吗？

与会者：不，我是说我们对 Dexter 进行了减值处理。

沃伦·巴菲特：哦，Dexter，是的，绝对正确。由于我做出的一个愚蠢决定（可能还有几个愚蠢决定），我们在 Dexter 上损失了非常大的一笔钱。我的意思是，这是一个业务大规模转移到海外的案例。在美国生产或使用的鞋子接近 12 亿双。我永远搞不懂他们是怎么算出这个数字的。我的意思是，我大概每五年穿坏一双——（笑声）——但每个男人、女人和孩子平均有四双。我不知道，但数字就是那样。你知道，我不知道现在是不是 5%，但在这个范围内，是在美国生产的，数以十万计的工作岗位随之转移到了海外。如你所知，纺织业务在美国几乎被摧毁了。当我们看到像 Burlington 这样一家优秀的公司申请破产时，你知道，他们花了很多钱来更新工厂等等。

但最终，如果你每小时支付的劳动力成本是别人的十倍，那么要做得足够好就非常困难了。这种情况现在也发生在家具制造业。我们有许多家具零售商，Bill Child 或 Irv Blumkin 现在会相当频繁地去东方。我们会购买——我们购买很多家具来自那里。这个趋势正非常显著地向那个方向发展。你的问题是——你的问题是为什么 Fruit of the Loom 会不同吗？

与会者：不，我只是想知道 Dexter 是否还有希望，或者它是否会走上与纺织业相同的道路？

标题：2002年年度会议

第6部分，共6部分

沃伦·巴菲特：哦，不，Dexter现在已经成为H.H. Brown的一部分，它销售的产品绝大多数是在国外生产的。H.H. Brown销售大量在美国境外生产的产品，尽管他们仍然在美国生产很多产品。但是——不，Dexter——我们的鞋类业务规模仍将相当可观。鞋类业务——我们账面上有一些来自Dexter的不盈利合同，这些合同还会再持续一个季度。但我们在第一季度从鞋类业务中赚了不少钱。Justin也赚了钱。我认为我们的鞋类业务会不错。从长远来看，它不会是一笔横财，但我觉得我们的鞋类业务——我们有非常优秀的管理团队。H.H. Brown的管理层很出色，Justin的管理层也很好。我预计未来我们的鞋类业务规模会很大，并且相当有利可图，但我们不可能做到百分之百、百分之九十甚至百分之八十的鞋子都是美国本土生产的。

就这一点而言，我当初为一家本土鞋类制造商支付的价格以及支付方式（用股票支付）是非常错误的。查理？

查理·芒格：是的，这说明——这一点很重要——无论你多么努力地建立避免错误的系统，并实践在你能力圈内活动的原则等等，你仍然会犯错误。我想我可以很自信地保证，这不会是我们最后一次犯错。

沃伦·巴菲特：好了，这是我们的蓝筹印花公司。（笑声）但你知道，你们可能也可以考虑一下这个问题。我们在缅因州Dexter有很多工人，在H.H. Brown的一些工厂也有很多工人。我们财务上受了一点小损失，然后通过一些政府债券的交易策略之类的、几乎不费力气也不需要太多脑力的方式就能弥补回来。但当你想到那些一辈子学了一门手艺的人——他们生活在那些地区，而且不是他们的错——一点都没有，我的意思是他们工作很努力——他们做得很好——他们很有生产力，但最终，他们的成本是世界其他地方成本的10倍甚至更多，而他们并没有得到那么高的报酬。所以，我们实际上并没有为经济环境的这种变化付出代价。

我的意思是，是那些在那里工作的人付出了代价，那些在伯灵顿或任何其他地方工作、却失去工作的人。这并非支持征收高额关税或类似措施的理由。但如果你在我们的纺织厂工作过——就像多年前的许多人那样——你60岁了，只会说葡萄牙语，那么再培训也没什么用。或者如果你在缅因州Dexter工作，你58岁了。再培训几乎变得毫无意义。所以，在这些情况下，我们基本上是幸运儿。当你只懂一门手艺，尤其是你住在一个小镇上，没有太多其他就业机会时，生活确实很艰难。所以，我们遭受了一次财务冲销，而他们的生活却发生了巨大的变化。

29. 逆向思维的股东认为年报太短

沃伦·巴菲特：第六个问题。

观众成员：Jack Hurst，来自费城。我有三个问题，或者说三点。第一，我想感谢你们，在Borsheims或内布拉斯加家具城，甚至Benjamin Moore购物是一种享受。你们有非常出色的员工，我对自己在这些公司购买的产品从未如此满意过。

沃伦·巴菲特：哦，好的，谢谢你的夸奖。我代表管理层感谢你。这些公司的员工确实非常出色。

观众成员：我同意这一点。你们的年报删减了不少内容。肯定有什么天条规定它只能有72页。但我想知道你们是否能把那些内容放到互联网上，比如GEICO那张关于续保和新保单的精彩表格，报告末尾那四页关于业务分类的内容（把保险从金融和制造业中分离出来），以及你们讨论的透视收益。我认为这些对于分析公司来说是无价之宝。

沃伦·巴菲特：好的，谢谢你的建议。我——

观众成员：我还有第三点。哦，请继续。

沃伦·巴菲特：但我们确实会做一些——我的意思是，我不知道72页是否是神奇的数字，或者我的字数是否达到11000字左右，但偶尔，我们会做出编辑决定。例如，透视收益看起来没那么重要，而且任何感兴趣的人都相当容易粗略计算。但是，如果我要写15000字，我肯定就会包括进去。所以，我很感谢你的建议。而且到目前为止，我认为还没有人指责我把报告写得太短了——（笑声）——还没有。但我会考虑——当然，在互联网上放任何东西都是可能的，周一早上开盘前，我们会把之前给你们的任何材料都放上去，这样就不会有人抢先获得信息。我们努力——我的意思是，如果我是信息的接收方，我真的想涵盖所有对我重要的内容。

我们会尽量控制页数，但我很高兴你想要更多内容。（笑声）

30. 简单化有助于降低审计费用

观众成员：好的，第三点是——3月1日，《华尔街日报》分析了——或者说比较了——道琼斯工业平均指数中30只股票的审计费用与非审计费用的关系。非审计费用占市值比例与公司五年盈利复合增长率或五年总回报率之间存在反比关系。对于非审计费用与市值比率最低的公司，盈利每年增长10%，总回报率每年增长18%。对于其他公司——对于整体来说——盈利每年增长5.2%，总回报率增长11%。这是因为这些非审计费用是非生产性的导致了这种结果吗？还是只是巧合，或者说是一种虚假的波动？还是两者之间确实存在某种联系？

沃伦·巴菲特：我不知道答案。我还没看到你提到的那个分析。但这并不完全让我惊讶，因为我们喜欢注重成本的公司。你知道，我从未——我认为杰克·韦尔奇在他的书里提到过，没有公司会因为削减成本太快而破产。当你看到管理层在花钱上相当大手大脚时，我认为总体而言，这类公司为股东创造的价值不如另一类公司，但我没有统计方法来证明这一点。我也不知道如何建立一个真正有效的样本，来比较这两种不同类型的管理层。但你所说的并不让我感到震惊。我们努力关注伯克希尔的每一笔支出。我认为，在我们的子公司，总体来说，我们的经理人在这方面做得非常非常好。

而且我认为，相对于企业的规模等等，我们的审计成本是相当低的，尽管它们不像几年前那么低了。但我可以向你保证，这是我们非常在意的事情。不过，我不知道如何——我不会根据任何类似的统计指标来买入或卖出股票，即使它在所谓的回测中表现良好。查理？

查理·芒格：嗯，我们的审计成本如此之低的原因之一是我们热衷于保持一切简单。我们不想让审计变得困难。我们偏好简单的活动。以See’s Candy公司为例，每年12月底，整个公司都会转为现金，就像农场作物在12月收获并出售一样。我的意思是，一个傻瓜都能审计See’s Candy公司而不出问题。（笑声）伯克希尔有很多业务都像See’s Candy公司一样，很难搞砸。

31. 安达信成为安然事件的附带损害

沃伦·巴菲特：我们不喜欢复杂的会计。我的意思是，我们真的喜欢能产生现金的业务。安然就是一个很好的例子。发生的事件是骇人听闻的。但毫无疑问，在我看来，审计师在过去几十年里对客户的意愿过于顺从，而且随着时间的推移越来越严重，甚至到了他们开始向并购交易中的人建议我认为相当可疑的会计处理方式，以便让这些公司未来的财务数据看起来更好看。我亲眼目睹过。所以，尽管审计师本应为股东工作，但他们做得太过分了，以至于他们是在为管理层工作。但我认为安然事件可能会让他们向另一个方向大幅回调。因此，我认为安然事件将对审计产生明显的积极影响，这也是必要的。

查理·芒格：嗯，它肯定会让少了一家审计师，这是一个明显的积极影响。（笑声）

沃伦·巴菲特：是的，尽管——（掌声）——你知道，这是一个有趣的问题，查理和我可能对此有不同看法。我的意思是——我不认为——我不知道安达信雇了多少人，但那是一个巨大的数字。我肯定——很明显，安达信的弱点和罪责远远超出了我们在所罗门公司看到的任何情况。但对于拥有8000名员工的所罗门来说，如果仅仅因为一个人的不良行为，以及另外几个人在报告等方面的疏忽（这是一个大错误），就导致8000人生活动荡、失去工作，那将是一种遗憾。查理，你怎么看？对于安达信公司底层那40000名员工，他们与文件销毁、休斯顿办公室或任何类似事情毫无关系，他们的生活在很多情况下真的被彻底改变了。

查理·芒格：我认为这非常不公平，对这些员工来说完全是无辜受罚。尽管如此，就像有人曾经说过的，没有失败的资本主义就像没有罪的宗教，或者——

沃伦·巴菲特：像没有地狱的宗教。

查理·芒格：——像没有地狱的宗教。我认为，当情况变得如此糟糕，并且整个体系缺乏足够的控制机制时——我的意思是，安达信显然没有一个良好的整体控制系统——我认为，资本主义可能就应该接受这种对许多个体案例的不公平，让这些公司倒闭。

沃伦·巴菲特：嗯，假设你我在伯克希尔做了非常糟糕的事情，查理。那么你对那130000名员工怎么看？他们应该——

查理·芒格：你会为他们感到难过，这是毫无疑问的。但——我要告诉你，他们不会倒下。以我们的组织方式，他们不会倒下。沃伦，你做的事情无法摧毁子公司的价值——（掌声）——以及子公司内部的职业生涯。你可以毁掉你自己的声誉，你可以在控股公司层面毁掉声誉，但你无法毁掉他们的生计。我认为这是一个很好的——

沃伦·巴菲特：嗯，我们可以搞砸——

查理·芒格：——组织方式。

沃伦·巴菲特：但我们可以搞砸他们的生活，如果他们失去资金支持的话。我的意思是，我同意你关于他们生存能力的看法——

查理·芒格：影响不会太大。

沃伦·巴菲特：——但你知道——

查理·芒格：不会太大——安达信作为一个专业合伙制企业，特别脆弱。但也许，作为一个专业合伙制企业，你应该格外小心，谨慎选择客户，以及为客户做到何种程度。我最钦佩的律师事务所都拥有相当严格的风险控制文化。在我们生活的这个时代，以任何其他方式运营都是疯狂的。

32. 没有公式可以挑选出伟大的投资者

沃伦·巴菲特：好了，第七个问题。（掌声）

观众成员：我叫Rheon Martins，来自南非开普敦。大约10年前，我成为了你的忠实粉丝和热切读者。1999年，我读MBA时，被昵称为“沃伦·巴菲特”，因为我在课堂讨论中总是引用你的话。我想学的一切就是如何给股票估值以及如何思考股价，但遗憾的是，我发现我们的MBA课程并没有真正教这些。巴菲特先生和芒格先生，我的问题是：如果要从一群分享你们投资哲学、具备你们之前提到的现实主义和纪律性的年轻聪明人中，预测谁会成为卓越的投资者，你们会想了解这群人中哪些个人特征或工作习惯？你们会对每个因素赋予多大的权重，以确保预测正确的概率最大化？

沃伦·巴菲特：嗯，这个问题对我来说太简单了，所以我让查理来回答。（笑声）

查理·芒格：我认为对这个问题的公平回答是，我无法回答它。

沃伦·巴菲特：不，但我认为——我是这样想的：我认为这完全正确。我的意思是，如果你问我应该如何挑选妻子，你知道，18%看幽默感，12%看外貌，17%看父母，等等。我无法给你一个公式，但我认为当你遇到的时候，你会做出正确的决定——（笑声）——如果查理和我和一群非常聪明的、有良好记录的MBA待在一起一段时间，我想我们很有机会从那个群体中挑出一个人，他不一定是第一名，但从实际表现来看，他会处于前四分之一。但是，我无法告诉你如何——我无法写出一个软件程序或任何东西让你做到这一点。你知道，我在所罗门公司恰好遇到了这个问题——在那个星期六早上，大概是8月17日，我必须选一个人来管理公司。

当时有十几个人都认为自己是合适的人选，或者其中一些人认为自己是管理公司的人。他们都很聪明，在投资银行等领域经验丰富。最终，我必须选一个人。我确实选对了人，这一点我会这么说。我当时能百分之百确定选对人了吗？可能不行，但我相当确定我选对了。我无法告诉你——有人问我：“你问了他们什么？你是怎么评估的？”等等，因为我只有大约三个小时来做决定。我不知道。我无法写出一套你应该去问别人的问题。你知道，其中一些可能涉及肢体语言和类似的不同东西。变量很多。

但我认为，最终，如果你处在我的位置，你也会选同一个人。你必须在三个小时内选出一个人。但要为你量化它，我做不到。查理，你有什么看法——

查理·芒格：是的，当多种因素共同导致成功时，就会出现这些异常现象。有两个人将同样成功，但一个人非常擅长A，却非常不擅长Z，而另一个人非常擅长Z，却非常不擅长A。他们打成平手。哪个因素最重要？答案是在那种情况下不重要。当你有多个因素时，一个方面的巨大优势可以弥补另一个方面的弱点。而这些因素可能截然不同。我认为投资世界里有很多人基于完全不同的才能类型而取得成功。

沃伦·巴菲特：我们明年争取回答得更好。

33. 为什么See’s糖果不会在Costco销售

沃伦·巴菲特：第八个问题。

观众成员：下午好。我叫Catherine Dorr，来自明尼苏达州明尼阿波利斯。这是我第一次来这里。感谢你们今天举办这次会议。自从9·11事件以来的政治、金融和企业发展，我每天都感谢你们这样正直的人和你们手下的经理人仍然在管理着我的遗产资金。我相信品格和正直是最重要的标准。我晚上可以睡得很好。我有两个问题。第一个问题是问芒格先生。什么时候会在明尼苏达州布卢明顿的美国购物中心开设一个永久的See’s糖果店，而不是售货亭？（笑声）我相信这是全国最大的室内购物中心，每年接待成千上万的国内外游客。提示一下，你们可以在外国游客来访时向他们出售See’s糖果。另外，Costco商场有可能销售See’s糖果吗？因为芒格先生持有Costco的股份。我对他的回答很感兴趣。我们可以在我们的系统中销售相关产品。我等他的回答，然后再向巴菲特先生提第二个问题。

查理·芒格：对你问题的简短回答是，在我们的分权体系下，这类决定应由See’s的负责人——他就在现场，Chuck Huggins——来做出。他可能不会参加今天下午的会议。他可能兴趣有限，但Chuck可以回答这些问题。他对糖果非常了解。

沃伦·巴菲特：我们在美国购物中心有一家Helzberg——顺便提一下，我们在美国购物中心确实有一家Helzberg的店。

查理·芒格：我们有什么？

沃伦·巴菲特：我们在美国购物中心有一家Helzberg的店，经营得很好。我还要补充一点，我们在向西扩张方面做得没有查理和我当初想的——当然，至少没有像我们最初收购See’s时希望的那样好。从整体结果来看，我们做得远比预想的好，但对我们来说这很有趣。请注意，在美国，除了See’s，没有哪家公司通过自己的零售店销售盒装巧克力真正赚到钱。我的意思是，美国人均消费的盒装巧克力大约只有一磅。有人告诉我，我之前给的数字是错的——我说人们每年喝64盎司液体。你看上去不像一年只喝64盎司液体，那应该是每天的量。但关于这个数字，美国人均每年消费一磅盒装巧克力。所以，这不是一个很大的生意。

这也不是一个——事实是，有成百上千家公司，包括一些比See’s大得多的公司，都失败了。而且确实没有其他公司能赚钱。Russell Stover通过不同的分销渠道销售，赚了很多钱，但没有人找到在实体店销售的模式。我们在西部找到了方法。我们在其他地方还没有找到。这让我和Chuck非常恼火，因为我们想不出办法，因为它在西部运作得非常成功。但答案就是，你可以看看Archibald Candy，他们的债券卖到50美分。他们拥有Fanny Farmer、Fannie May和加拿大的Laura Secord。在美国，这是一个非常艰难的行业，因为美国人根本不买太多盒装巧克力。他们总是很高兴收到它作为礼物。

这个房间里的每个人都喜欢收到巧克力作为礼物，他们可能会在这里购买，但通常你不会在街上走——或者在商场里走——为自己买它。它通常是礼物，或者是在节假日购买。所以，当我们在全国其他地区非常成功的购物中心开店时，表现没有你想象中那么好。我们在圣诞假期期间，在自然区域之外，在全国范围内开设了大约50家假日店，也就是售货亭。我们从中赚了一些钱，但如果我们全年都在那里，就不会赚钱。我们一直在思考这个问题，我可以向你保证，已经思考了30年，因为它在有效运作的地方是一个了不起的生意。你问了一个非常好的问题，因为你会认为——美国购物中心是一个明显的例子。房东Simon可能很难打交道，但我们能想出办法。但你可能会认为我们在美国购物中心能赚钱。

我们在那里的Helzberg做得很好，但我不确定糖果店是否也能成功。不过，因为你问了这个问题，我们可能会尝试开一家。我会和Chuck谈谈。（笑声）

观众成员：好的——

沃伦·巴菲特：Costco呢？

观众成员：我的第二个问题——

查理·芒格：哦，Costco——

观众成员：哦，对不起。

查理·芒格：Costco自己做决定，See’s也是。我不会介入这个问题。

观众成员：哦。

沃伦·巴菲特：嗯，我来介入。（笑声）我们不想让别人打折我们的糖果，很简单，就像劳力士不想让别人打折他们的手表一样。我们不会通过任何分销渠道——在See’s，我们不想通过任何会打折的分销渠道销售。我们的零售价格已经很划算了——（笑声）——我们不会通过其他分销渠道销售。Costco没有兴趣，我也不怪他们。我的意思是，他们的基础是给人们提供特别优惠的价格。这很好，上帝保佑他们，我们会从Costco买东西，但我们不会通过一个打折是其基本方法的销售体系，来销售一个价格是其产品完整性一部分的产品。Costco是一个很棒的运营公司，See’s也是一个很棒的运营公司，但两者永远不会相交。（笑声）

观众成员：非常有道理。

34. 伯克希尔为何发行B股

观众成员：我的第二个问题是问巴菲特先生。因为我是一名新股东，这是我第一次来参加会议，所以我不确定这个问题以前是否被问过。如果它在你们的出版物中已经提到过，我可能忽略了，请耐心听我说。这是关于A股和B股之间的关系。在手册的第一页上写着：“每股A类股票有权投一票，每股B类股票有权投1/200票。”那么，每股的投票权重计算下来就是200股B股相当于一股A股的投票权。然而，传统上B股的价格是A股的1/30。考虑到B股股东和A股股东购买的是同一家公司和资产，现金都是一样的绿——不管买哪种股票——那么逻辑上，股票的投票权重和价格关系应该是成比例的，要么是1/30的价格和1/30的投票权重，要么是1/200的价格和1/200的投票权重。

因此，问题是，为什么B股的投票权重不是1/30，而是1/200？或者反过来说，为什么B股的价格不是A股的1/200？这个问题可能受欢迎也可能不受欢迎，取决于你持有哪种股票。希望您能提供见解。

沃伦·巴菲特：是的，谢谢。这是个好问题。你可能不了解发行B股的历史背景。我们发行B股——以前没有B股——我们只是把原有的股票更名为A股。但我们发行了B股，大概是七八年前吧，查理？差不多。我们这么做是为了应对一些人，特别是费城的一个家伙，我们觉得他会诱使那些根本不了解伯克希尔的人，通过一种极其昂贵的方式购买伯克希尔的小额股份，很可能是基于一段我们认为不能代表未来表现的过往历史。换句话说，我们对看到有人利用我们的股票作为工具，从那些真正不了解情况的人身上牟取暴利感到不安。我们随后将承受那些人的不满。他们会遇到税务问题以及各种行政成本问题等等。

所以，为了阻止这种情况，而且仅仅是为了阻止这种情况，我们发行了B股，这实际上让那家伙无法再开展业务，因为这是一个更好的工具，能让他试图诱导人们去做他想做的事，从而为自己谋取暴利。发行时，以前没有B股，我们让它在30:1的基础上运作。当时，A股售价在3万出头，所以B股价格大约是1100美元左右。我们在招股说明书中（这份招股说明书在其他方面也非常不寻常）说明，我们只在两个方面区分这两种股票，但我们只在这两个方面进行区分。一是投票权，因为我们不想发行股票后大大改变投票权结构。二是指定的慈善捐赠计划，A股将继续享有，而B股不参与。

B股不参与的原因是，捐赠金额会达到管理噩梦的程度。我的意思是，今年我们指定A股每股捐赠18美元。我们有大量的单股B股持有者，那将是60美分。这完全不合理。我们看到了这一点，所以我们明确说明，如果你购买B股，你买入的是一种在经济上相当于1/30股A股的工具。但在投票权方面，它不等于1/30股A股，因为我们不想那样大幅度改变投票权。同时，它在经济上有一个微小的差异，即不能参与慈善捐赠计划，这相对于整个资本化来说是一个非常小的项目，但仍然是一个差异。

但你不妨——你会注意到，与其他有不同投票权安排的公司相比，我们的A股和B股——我前几天刚看到一家公司，其有投票权股票相对于经济权益有10%或12%的溢价。这是因为人们认为，如果公司被出售或类似情况，持有A股的人会比持有B股的人得到更好的待遇。我和查理曾经因为类似的关系而吃过亏。除了这两项在发行时就明确列出的差异外，我们将平等对待B股和A股。这两项差异，每个人在入股时都看到了，它们将继续存在。实际上，从现在起两年后的会议何时举行，我们甚至不会完全按投票权来表决。

我的意思是，我会了解大家想做什么，但我认为在这方面，应该对多数人最方便，而不是对多数股份最方便。A股和B股的投票不会有任何不同，因为你们都是独立的人，我希望找到对大多数人最好的方式。但就另外那两项差异而言，它们是这样规定的，并将保持这样。如果我们当初设定了不同的规则，我们不会在股票发行后改变两者的关系。我们不会让一种股票相对于另一种股票受益，但这就是两者之间的条款。查理？

查理·芒格：是的，我们不得不发行B股来挫败那个可恶的推销员的野心——（笑声）——然而，我们不想把A股全部拆分成非常小的份额，那会挫败他的野心，但会迫使我们进行我们不希望的股票拆分。所以，我们创造了一种具有这两个微小劣势的工具，这使得我们的大部分资本化保持在传统的A股形式，同时也挫败了那个推销员。这是一个历史性的怪事。生活中的一个意外。

沃伦·巴菲特：B股相对于A股的价格保持在一个非常稳定的关系。如果折价变得过低——或者过高，我应该这么说——我想在一小段时间内曾超过4%——但总体来说，B股以平价或略低于平价的价格出售。事实上，A股可以转换为B股，除非B股处于平价，否则这种情况不会发生。所以，我认为这结果相当不错。我们不是有意为之，但我认为没有人因此受到不利影响。

35. 白银租赁不影响其价格

沃伦·巴菲特：第九个问题？

观众成员：我在读Mark Rescigno的问题，来自纽约。“自从10年前第一次听说你，我就崇拜你。到目前为止，我唯一的遗憾是我的两个孩子都是女孩，所以我不能给她们取名叫沃伦。”

沃伦·巴菲特：叫“沃伦娜”怎么样？（笑声）

观众成员：这也许可以。有没有道理认为白银租赁正在压制这种金属的价格，从而使其无法反映基本面？

沃伦·巴菲特：哦，你总是听到这种说法。我不这么认为。最终，它的售价会受到市场上供应量和需求量的影响。人们对空头感到不满，对生产商的远期销售感到不满，对租赁感到不满，诸如此类。但最终，如果白银变得稀缺，它的价格就会上涨。如果它不稀缺，那么不管它是否被租赁，都没有太大区别。就像公司对自己股票的空头头寸感到恼火一样。甚至有人给我写信，因为有些——我不在乎伯克希尔有1000股空头还是30万股空头，这真的没什么区别，因为总有一天，做空的人必须买入，这是市场的一部分。

所以，白银租赁之所以发生，是因为有人手头有一些白银，宁愿通过将其出租给因某种原因需要使用白银的人来获得少量收入。但正是因为白银一开始就被闲置，它才可以被租赁。我认为，从长期定价来看，这并没有太大区别。查理？

查理·芒格：我没什么可说的。

沃伦·巴菲特：哦。（笑声）

36. 巴菲特批评ABC新闻关于Kirby吸尘器的报道

沃伦·巴菲特：好了。我们还有时间再回答一个问题，来自10号，这样我们就完成了一轮。所以，请讲。

观众成员：我叫Jerry Miller，来自伊利诺伊州海兰帕克，是一名股东。我不想在消极的基调上结束这次会议，尽管我接下来要这么做。（笑声）在我说之前，我想先说一个积极的评价，很多中的一个，但我只说一个。自从我退休后，我参加了很多股东大会。我只希望有一种方法能迫使大多数CEO来参加。他们可能不明白发生了什么，但我只是希望他们看看股东大会应该怎么开。现在来说消极的一面——（掌声）——一点点。我在楼下。我听到了一些好的结果。如果你要坐在写着“370亿美元责任到此为止”的桌子后面，你就必须处理所有问题。

我真的很惊讶今天没有听到任何人提出这个问题，包括你们两个——虽然他们已经拿走了我们的“E”字和“AA”字，但我不想让他们也拿走伯克希尔·哈撒韦的“K”字。你们明白吗？如果明白，就动一动手指。如果不懂，我来解释。

沃伦·巴菲特：嗯，主席台上的我们两人都没猜到。你最好解释一下。（笑声）

观众成员：今天早上，我不得不在楼下Kirby的展台前责备一些伙计。几周前，伯克希尔·哈撒韦的名字上出现了一个污点——或者说一个瑕疵——魅力出现了一丝裂痕。你们有没有看到那个节目？

沃伦·巴菲特：是的，我看到了那个节目。有趣的是，它聚焦于一些人的销售行为——或被指控的销售行为——这些人不是为我们工作，而是为分销商工作，就像销售员为福特经销商工作一样。特别是，它谈论的是向老年人销售产品。有趣的是，十多年前，我们制定了一项政策，据我所知这是全国唯一一项类似政策，即任何65岁以上购买Kirby吸尘器的人，如果因任何原因不满意，在任何时候——最长一年、11个月零29天之后——都可以告诉我们，他们可以毫无疑问地拿回退款。我不知道美国还有其他耐用品是这样销售的。有趣的是，他们采访的那个人，提到他母亲买了一台并非常不满意，实际上已经使用了该产品八九个月并获得了全额退款。而节目中没有提到这个事实，甚至也没有提到我们有这个政策。我真的认为这是相当不寻常的新闻报道。

观众成员：我相信你那时没有翻出你的所罗门笔记来念给Kirby的人听吧。（掌声）

沃伦·巴菲特：不，我能理解你对这个节目的反应，因为在节目播出前，ABC新闻多次被告知这一政策的存在，前一年有300多人，如果他们给我们旧机器置换，并且他们在11个月后决定取消交易，我们会退还他们的钱，再加上一台与他们给我们的机器相当或更好的新机器。而这个节目对此只字未提。所以，我不认为这是ABC新闻的辉煌时刻。

观众成员：无论如何，谢谢你的（听不清）