he’s often referred to as the wizard of
Omaha and is one of the most successful
investors of all time he is known for
his belief in value investing and his
living in frugality despite his immense
wealth he’s also one of the world’s
greatest philanthropist having pledged
to give away 99% of his fortune to
charity mentor me Warren I was wondering
how you define success personally well I
can certainly define happiness because
that’s what that’s what I am I mean I I
am an effective I mean I get to do what
I like to do every single day of the
year I get to do it with people I like I
get that I get to I don’t have to
associate with anybody cause us by
summer to churn at and the only thing in
my job I don’t like and it’s only
happens about every fair four years a
cage you may have to fire somebody and I
don’t like that’s the only thing other
than I tap dance to work and I get down
there and I think I’m supposed to lie on
my back and paint the ceiling you know
or something I mean it’s where I feel
and I added it doesn’t diminish its it’s
tremendous fun so you know if they say
that success is getting what you want
and happiness is wanting what you get
well I don’t know which one applies in
this case but I I do know that I
wouldn’t be doing anything else then I
do advise you you know and when you go
out to work go to go to work for an
organization that you admire people you
admire because it’ll it’ll it’ll turn
you on and and and you ought to be happy
where you are working and I always worry
about people who say you know I’m going
to do this for 10 years I really don’t
like it very well be 10 more years he
doesn’t present I mean that’s a little
exciting up sex for your old age I mean
not a very good idea so get right there
you got to recommend that get right into
what you enjoy you know and
and you’ll be successful at it really
well I mean you won’t be able to miss
and you know that’s I don’t regard what
I do is the most important thing in the
world at all but it’s right for me I
mean I happen to be wired in a certain
way that what I do works in this if I
had to do what you know bill does I mean
last about ten minutes and let’s troupe
a lot of things but I luckily I kind of
stumbled into the thing that I I do best
and that you know that it’s worked out
boom the whole long-term capital
management and I hope most of you are
familiar with it but the whole story is
really fascinating because if you take
John Meriwether and Eric Rosenfeld Larry
Hill and branch Greg Hawkins victory
Ghani the two Nobel Prize winners Merton
Scholes if you take the 16 of them
that they probably have as high an
average IQ as any 16 people working
together in one business in the country
including at Microsoft or or wherever
you want a name so that incredible
amount of intellect in that room now you
combine that with the fact that those 16
and had extensive experience in the
field they’re operating I mean this is
this one it was not a bunch of guys who
made their money you know selling men’s
clothing and then all of a sudden went
into the securities business or anything
they had they’d had in aggregate the 16
that probably had 350 or 400 years of
experience doing exactly what they were
doing and then you throw in the third
factor that most of them had virtually
all of their very substantial networks
in the business so they had their own
money up hundreds and hundreds of
millions of dollars of their own money
up super high intellect working in a
field they know and essentially they
went broke and that to me is absolutely
fascinating I mean I that if I ever
write a book it’s going to be called why
smart people do dumb things my partner
says it should be autobiographical but I
what buddy this might be an interesting
illustration and these are perfectly
decent guys I know I respect them and
they helped me out when I was at
problems with Solomon and so that
they’re they’re not bad people at all
but to make money they didn’t have and
didn’t need they risked what they did
have and did need and that’s foolish
that is just plain foolish I put my
gamer switch your IQ is if you if you
risk something that is important to you
for something that is unimportant to you
it just does not make any sense I don’t
care whether the odds are a hundred to
one that you succeed or a thousand one
to succeed if you hand me a gun with a
thousand chambers out a million chambers
in it and there’s a bullet in one
chamber use that put it up your temple
and how much do you want to be paid to
pull it once I’m not going to pull it
you know you can name any sum you want
but it doesn’t do anything for me
on the upside and I think the downside
is fairly clear so I’m not interested in
that kind of a game and yet people do it
financially then without thinking about
it very much I also fashion believes
that I can only should expect to make
money and things that I understand and
when I say understand I don’t mean
understand you know what the product
does or anything like that I mean
understand what the economics of the
business are likely to look at look like
ten years from now or 20 years ago I
know in general what the economics will
say Wrigley chewing gum will look like
10 years ago the internet isn’t going to
change the way people chew gum it isn’t
going to change which come they chew you
know if you own the chewing gum market
in a big way and you’ve got double mint
spearmint and juice
from those brands we’ll be there 10
years from now so I can’t pinpoint
exactly what the numbers are gonna look
like on wriggly but i’m not going to be
way off if I try to look forward on
something like that that evaluating that
company is within what I call my circle
of competence I understand what they do
I understand the economics of it I
understand the competitive aspects of
the business so figuring out the
economic consequences TV
I think there’s I don’t know 20 25
million cents a year sold the United
States I don’t think there’s one of them
made in the eyes States anymore I mean
you’d say TV set manufacture what a
wonderful business site everybody nobody
had a TV in 1950 or thereabouts 45 to 50
everybody has multiple sets now nobody
is in the United States and made any
real money making the cents if they’re
all out of business
you know the Magnavox is the RCA is all
of those companies radio was the
equivalent of 20 over 500 companies
making radios in the 1920s again I don’t
think there’s a u.s. radio manufacturer
at the present time but coca-cola you
know I was at 1884 Jacobs pharmacy or
whatever the fellow comes up with
something a lot of copiers over the
years but now you’ve got a company that
is selling roughly 1.1 billion eight
ounce servings of its product not all
cokes right and some others daily
throughout the world honored 17 years
later so understanding the economic
characteristics of a business is
different than predicting the fact that
an industry is going to do wonderfully
so I look at the internet businesses are
look at tech messes I say this is a
marvelous thing and I love to play
around on the computer and I ordered my
books from Amazon and all kinds of
things but I don’t know who’s going to
win unless I know it’s going to win I’m
not interested in the best thing I’ll
just play around on the computer and
defining your circle of competence is
the most important aspect of investing
it’s not how important how large your
circle is you don’t have to be an expert
on everything but knowing where the
perimeter of that circle of what you
know on what you don’t know is and
staying inside of it is all important
Tom Watson senior who started IBM said
in this book he said it
I know genius is it but I’m smart in
spots I stay around those spots and you
know that is the key so if I understand
a few things and I stick in that arena
I’ll do ok and if I don’t understand
something buddy I don’t excited about it
because my neighbors are talking about
stocks are going up everything they
start fooling around someplace else
eventually I’ll get creamed and they
should avoid credit cards just forget
about it
we’re in various business that issue
credit cards the American public loves
credit cards but if you start revolving
debt on credit cards you’re going to be
paying eighteen or twenty percent and
you can’t make progress in your
financial life going around borrowing
money at eighteen or twenty percent you
can make a lot of money by lending out
at eight or 18 or 20 percent over time
you know if you can find anybody that’s
good that will borrow from you but you
don’t want to be on the side of the
equation that’s always behind in life
you know I was lucky I’d saved about ten
thousand dollars by the time I got out
of school that ten thousand dollars was
really worth millions I might have
learned later on because after he had a
family and everything the expenses roll
in but but those were my tools to work
with but it was only because I was ahead
of the game if you’re behind the game by
ten thousand dollars at some point and
paying eighteen or twenty percent
interest on it you will never hit them
you’ll never get out of it so the trick
I’ve got a partner that says all I want
to know is where I’m going to die so
I’ll never go there you know and and
that’s true in financial matters as well
you want to figure out where you don’t
want to be ahead of time and avoid that
and I get about a dozen letters a day
from people who are having terrible
problems and there are two reasons why
they have terrible
one is a number of them have had health
problems of some sort I mean they have
really been hit by some or somebody in
their family has been hit by some kind
of catastrophic you I understand that is
it you know it’s a terrible thing to
happen to any family and they get in the
ground bills they can’t pay and really
only society can solve that one in terms
of protecting people against that that’s
just plain bad luck but the other one is
from people who run up credit card debt
and they’re facing bankruptcy or they’ve
been put through bankruptcy once before
and they all a bunch of money and they
can’t they can’t pay the interest let
alone pay any principal and the half of
my letters come from people like that
and that that that problem is avoidable
catastrophic illness is not but but
credit card debt is something to bring
on yourself and it’s way better it’s way
easier to stay out of trouble but to get
out of trouble financially and and I
will guarantee if you run a big credit
card that you will be in trouble
probably the rest of your life in terms
of your financial situation on the other
hand if you get ahead of the game even
it’s on a very modest scale so that
money is coming in from investing and
your your people owe you money or
equities or ownership you’ll be way out
of the game compared to paying it they
always be paying your creditors every
month so my advice to you is if you
can’t pay for it don’t buy it and get
yourself in a position where you can pay
for anything and then we’ll be glad to
see it bore shines or the rest or
furnish your Monument I always look at
IQ and and talent as sort of
representing the horsepower of the motor
but then in terms of the output the
efficiency with which the motor works
that depends on rationality because a
lot of people start out with four
hundred horsepower motors and get a
hundred horsepower about but and it’s
way better to have a 200 horsepower
motor and get it all in doubt put and so
why do why do smart people do things
that interfere with really getting the
the output they’re entitled to and it’s
it gets into it
habits into character into temperament
and it really gets into behaving in a
rational manner it’s not letting not
getting in your own way as I say
everybody here has the ability
absolutely to do anything I do and much
beyond and and some of you will and some
of you won’t but it it will the ones
that won’t it will because me because
you get in your own way won’t because
the world doesn’t allow you to it’ll it
will be because you don’t allow
yourselves to them so I want a simple
business easy to understand
great economics now honest enable
management and and then I can see about
in a general way where they’re going to
be ten years from now and I can’t see
where it can be ten years and I don’t
want to buy it basically I don’t want to
buy any stock or if they close the New
York Stock Exchange tomorrow for five
years I won’t be happy only I buy a farm
and I don’t get a quote on it for five
years and I’m happy if the farm goes
okay you know I buy an apartment house
don’t get a quote on it for five years
I’m happy if the apartment house
produces the returns that I expect but
people buy a stock and they look at the
price the next morning and they decide
whether they’re doing well or not doing
well that’s crazy because they’re buying
a piece of the business that’s what
Graham the most fundamental part of what
he taught me yeah you’re not buying a
stock you’re buying a you’re buying a
part ownership in the business you will
do well if the business does well and if
you didn’t pay a totally selling price
and that’s what it’s all about
and you ought to buy businesses you
understand just like if you’re buying
farms yottabyte farms you understand
it’s it’s not complicated well I mean
I’ve made a lot of mistakes
biggest mistake other than not the
biggest necessarily the biggest but but
buying Berkshire Hathaway itself was a
mistake because Berkshire was a lousy
textile business and I brought it very
cheap I’ve been taught by Ben Graham to
buy things on a quantitative basis look
around for things that are cheap and
that I was taught that say a 1949 or
they made a big impression on me so I
went around looking for what I call you
cigar butts of stocks and the cigar butt
approach to buying stocks is that you
walk down the street and you’re looking
around for cigar butts and you find this
honestly this terrible looking soggy
ugly looking cigar the one puff left in
it but you pick it up and you get your
one puff disgusting it’s rot away but
it’s free
I mean it’s cheap and then you look
around for another soggy you know one
puff cigar
well that’s what I did for years it’s a
mistake oh we make money doing it but he
can’t make it with big money so much
easier just by wonderful businesses so
now I would rather buy a wonderful
business at a fair price that a fair
business at a wonderful price but in
those days I was buying cheap stocks and
Berkshire was selling below its working
capital for sure he had the plants for
nothing yet the machinery for nothing he
got the inventory receivables of the
discount it was cheap so I bought it and
20 years later I was still running a
lousy business and that money did not
compound you really want to be in a
wonderful business because there the
time is the friend of the wonderful
business you keep compounding it keeps
doing more business and you keep making
more money time is the enemy of the
lousy business I could have sold
Berkshire perhaps liquidated it and made
a quick little profit you know one puff
but staying with those kind of
businesses is a big mistake so you might
say I learned something out of that
mistake and I would have been way better
off taking what I did with Berkshire as
I kept buying better businesses I
started insurance business See’s candy
the Buffalo all kinds thing I would have
been way better doing that with a with a
brand new little entity that I’d set up
rather than using Berkshire the platform
now I’ve had a lot of fun out of it I
mean everything in life seems to turn
out to the better so I don’t have any
complaints about that but it was a dumb
thing to do I went in the US air I
bought a preferred stock in 1989 as soon
as my check cleared the company went
into the red never got out I mean it was
a really dumb I mean a dumb
I’ve got an 800 number I call now
whenever I think about buying an airline
stock I called him up any hour that
fortunately I can call him at 3 in the
morning and I just dial and I say my
name’s wand I’m an arrow holic and I’m
thinking about behind this thing and
they talked me down I mean it takes
takes hours sometimes but it’s worth it
if you ever think about that airline
buying an airline just call me and I’ll
give you the 800 number
but we got lucky in terms of how we
eventually came out on but it was a dumb
dumb decision all mine I would go to
work I would go to work and whatever
turns you on it may turn out that it’ll
be more profitable than you can think
but almost everybody here will make
enough money unless they get some
terrible habits along the way to do
reasonably well and doing reasonably
well in this country really is is is
pretty darn good I mean it is it’s not
necessary to have huge amounts of money
in order enjoy yourself I enjoyed myself
when I was at my $10,000 and I live in
the same house that I lived in when I
was making when I had about that I
bought a 41 years ago I like the house
then I like the house now I mean if you
think about it if you have a reasonable
job you’ll be eating at McDonald’s and
I’ll be eating McDonald’s so we’re we’re
to push on food I mean you know I open
in fact I hope it’s very clean actually
and they had and if you come to Dairy
Queen you’ll see me and you can order
anything on the menu I can order what we
both can afford it you know you’ll
you’ll wear the same clothes I wear I’ll
pay more for my suits but as soon as I
put them on they look upon me so we’ll
we’ll look about the same and we’ll both
live in the same kind of houses I live
in that house from 41 years ago and it’s
it’s warm in winter and it’s cool in
summer and it’s comfortable and you’ll
live in a house that’s that similar and
it and what difference does it make if
you have 50 more rooms or you know guest
houses are all edited you know it’ll
probably just bring your problems I mean
you have to worry about the about the
greenskeeper something when you get
through so I I I have been in the houses
of people where the houses are worth Oh
probably 200 times what my house is
worth and I would not be any happier in
those houses at all in fact I’d be less
happy I just have one
them to worry about you know the dozens
of people around the place and people
quitting and people stealing from you
kinds of things the hell with it yep
we drive we’ll drive the same kind of
car fact you’ll probably drive a better
car I Drive a cars about eight years old
I don’t know what it’s worth now but it
gets me around fine
I mean I’m perfectly happy we’ll watch
we’ll watch the same television you know
we’ll work on the same computer pretty
much the only difference will be how we
travel long distances yeah I will fly in
a plane that’s more comfortable women
than flying Southwest Airlines or
something at which I’ve got nothing
against but that’s the one real big
difference and other than that I do what
I like every day I hope you you’ll do
what you like every day to do and I work
with nice people I hope you work with
nice people and there’s 24 hours in the
day and those are where the hours go so
great wealth is the tiniest bit
different in a real sense than having
just a decent a decent income and and to
trade a decent income and something you
love doing and something where you feel
worthwhile doing it for huge wealth
where you trade off a lot of your
principles would be a terrible mistake
if you tell me who your heroes are I can
tell you how you’re going to turn up to
quite an extent that by this point in
life and I have been extraordinarily
lucky and that none of my heroes ever
let me down I mean I the ones I came up
with throughout their lives that I’ve
never felt that I’ve been let down in
any way with and number one was my dad
and had a huge impression on me my wife
who was heroes is one of my heroes I
mean she is you know in terms of she’s
taught me a tremendous amount and never
seen anybody any better with human
beings than she is and you can Yogi Bear
again said you can you can observe a lot
just by watching
I you know I I watched my dad and I have
watched her and I had a professor Ben
Graham back at Columbia and had a huge
impact on myself I have been lucky and
then I’ve had terrific heroes and they
haven’t let me down and that that takes
you a long long way I’ve gone through
one or two periods word that we’re kind
of tough in life but not any I mean
everybody had that but what having the
right heroes will take it right through
it I have a lot of spare time because
the managers at Berkshire do all the
work I just sit there in the office and
read and talk on the phone occasionally
and it may surprise you I am i leaving
out the question of email I spend more
time on the computer than Bill Gates
does the we use that as a trick question
sometimes when we appear together and I
spend about
spend about 12 hours at least 12 hours a
week playing bridge on the Internet
at play on something called okay bridge
most of the time my name is t-bone I put
my age is a hundred and three so when I
do something dumb people will say well
for a guy 100 and fries not so bad and I
play almost every night I play on the
weekends I can’t get enough of it My
partner incidentally almost all of the
time is a Italian woman who lives in the
United States who’s come along on this
trip actually and use twice
world-champion and we have a terrific
time and that’s my favorite activity I
used to play golf I still play a little
bit but I’ve gotten so bad that I can
hardly bear to watch myself play golf
and I do a lot I do a lot of reading I
like movies but the best thing I like is
running berkshire hathaway thank you
guys so much for watching
I made the mentor me Series happen
because I wanted to spend a little bit
more time
with these super successful
entrepreneurs and hope some of their
magic pixie dust rubs off on us by
spending a little bit more time with
them so I hope you guys enjoyed this
video let me know what you think of it
let me know what you took from the
speeches that we played leave a comment
below I will join the discussion thank
you so much for watching
continue to believe and I’ll see you
soon
Omaha and is one of the most successful
investors of all time he is known for
his belief in value investing and his
living in frugality despite his immense
wealth he’s also one of the world’s
greatest philanthropist having pledged
to give away 99% of his fortune to
charity mentor me Warren I was wondering
how you define success personally well I
can certainly define happiness because
that’s what that’s what I am I mean I I
am an effective I mean I get to do what
I like to do every single day of the
year I get to do it with people I like I
get that I get to I don’t have to
associate with anybody cause us by
summer to churn at and the only thing in
my job I don’t like and it’s only
happens about every fair four years a
cage you may have to fire somebody and I
don’t like that’s the only thing other
than I tap dance to work and I get down
there and I think I’m supposed to lie on
my back and paint the ceiling you know
or something I mean it’s where I feel
and I added it doesn’t diminish its it’s
tremendous fun so you know if they say
that success is getting what you want
and happiness is wanting what you get
well I don’t know which one applies in
this case but I I do know that I
wouldn’t be doing anything else then I
do advise you you know and when you go
out to work go to go to work for an
organization that you admire people you
admire because it’ll it’ll it’ll turn
you on and and and you ought to be happy
where you are working and I always worry
about people who say you know I’m going
to do this for 10 years I really don’t
like it very well be 10 more years he
doesn’t present I mean that’s a little
exciting up sex for your old age I mean
not a very good idea so get right there
you got to recommend that get right into
what you enjoy you know and
and you’ll be successful at it really
well I mean you won’t be able to miss
and you know that’s I don’t regard what
I do is the most important thing in the
world at all but it’s right for me I
mean I happen to be wired in a certain
way that what I do works in this if I
had to do what you know bill does I mean
last about ten minutes and let’s troupe
a lot of things but I luckily I kind of
stumbled into the thing that I I do best
and that you know that it’s worked out
boom the whole long-term capital
management and I hope most of you are
familiar with it but the whole story is
really fascinating because if you take
John Meriwether and Eric Rosenfeld Larry
Hill and branch Greg Hawkins victory
Ghani the two Nobel Prize winners Merton
Scholes if you take the 16 of them
that they probably have as high an
average IQ as any 16 people working
together in one business in the country
including at Microsoft or or wherever
you want a name so that incredible
amount of intellect in that room now you
combine that with the fact that those 16
and had extensive experience in the
field they’re operating I mean this is
this one it was not a bunch of guys who
made their money you know selling men’s
clothing and then all of a sudden went
into the securities business or anything
they had they’d had in aggregate the 16
that probably had 350 or 400 years of
experience doing exactly what they were
doing and then you throw in the third
factor that most of them had virtually
all of their very substantial networks
in the business so they had their own
money up hundreds and hundreds of
millions of dollars of their own money
up super high intellect working in a
field they know and essentially they
went broke and that to me is absolutely
fascinating I mean I that if I ever
write a book it’s going to be called why
smart people do dumb things my partner
says it should be autobiographical but I
what buddy this might be an interesting
illustration and these are perfectly
decent guys I know I respect them and
they helped me out when I was at
problems with Solomon and so that
they’re they’re not bad people at all
but to make money they didn’t have and
didn’t need they risked what they did
have and did need and that’s foolish
that is just plain foolish I put my
gamer switch your IQ is if you if you
risk something that is important to you
for something that is unimportant to you
it just does not make any sense I don’t
care whether the odds are a hundred to
one that you succeed or a thousand one
to succeed if you hand me a gun with a
thousand chambers out a million chambers
in it and there’s a bullet in one
chamber use that put it up your temple
and how much do you want to be paid to
pull it once I’m not going to pull it
you know you can name any sum you want
but it doesn’t do anything for me
on the upside and I think the downside
is fairly clear so I’m not interested in
that kind of a game and yet people do it
financially then without thinking about
it very much I also fashion believes
that I can only should expect to make
money and things that I understand and
when I say understand I don’t mean
understand you know what the product
does or anything like that I mean
understand what the economics of the
business are likely to look at look like
ten years from now or 20 years ago I
know in general what the economics will
say Wrigley chewing gum will look like
10 years ago the internet isn’t going to
change the way people chew gum it isn’t
going to change which come they chew you
know if you own the chewing gum market
in a big way and you’ve got double mint
spearmint and juice
from those brands we’ll be there 10
years from now so I can’t pinpoint
exactly what the numbers are gonna look
like on wriggly but i’m not going to be
way off if I try to look forward on
something like that that evaluating that
company is within what I call my circle
of competence I understand what they do
I understand the economics of it I
understand the competitive aspects of
the business so figuring out the
economic consequences TV
I think there’s I don’t know 20 25
million cents a year sold the United
States I don’t think there’s one of them
made in the eyes States anymore I mean
you’d say TV set manufacture what a
wonderful business site everybody nobody
had a TV in 1950 or thereabouts 45 to 50
everybody has multiple sets now nobody
is in the United States and made any
real money making the cents if they’re
all out of business
you know the Magnavox is the RCA is all
of those companies radio was the
equivalent of 20 over 500 companies
making radios in the 1920s again I don’t
think there’s a u.s. radio manufacturer
at the present time but coca-cola you
know I was at 1884 Jacobs pharmacy or
whatever the fellow comes up with
something a lot of copiers over the
years but now you’ve got a company that
is selling roughly 1.1 billion eight
ounce servings of its product not all
cokes right and some others daily
throughout the world honored 17 years
later so understanding the economic
characteristics of a business is
different than predicting the fact that
an industry is going to do wonderfully
so I look at the internet businesses are
look at tech messes I say this is a
marvelous thing and I love to play
around on the computer and I ordered my
books from Amazon and all kinds of
things but I don’t know who’s going to
win unless I know it’s going to win I’m
not interested in the best thing I’ll
just play around on the computer and
defining your circle of competence is
the most important aspect of investing
it’s not how important how large your
circle is you don’t have to be an expert
on everything but knowing where the
perimeter of that circle of what you
know on what you don’t know is and
staying inside of it is all important
Tom Watson senior who started IBM said
in this book he said it
I know genius is it but I’m smart in
spots I stay around those spots and you
know that is the key so if I understand
a few things and I stick in that arena
I’ll do ok and if I don’t understand
something buddy I don’t excited about it
because my neighbors are talking about
stocks are going up everything they
start fooling around someplace else
eventually I’ll get creamed and they
should avoid credit cards just forget
about it
we’re in various business that issue
credit cards the American public loves
credit cards but if you start revolving
debt on credit cards you’re going to be
paying eighteen or twenty percent and
you can’t make progress in your
financial life going around borrowing
money at eighteen or twenty percent you
can make a lot of money by lending out
at eight or 18 or 20 percent over time
you know if you can find anybody that’s
good that will borrow from you but you
don’t want to be on the side of the
equation that’s always behind in life
you know I was lucky I’d saved about ten
thousand dollars by the time I got out
of school that ten thousand dollars was
really worth millions I might have
learned later on because after he had a
family and everything the expenses roll
in but but those were my tools to work
with but it was only because I was ahead
of the game if you’re behind the game by
ten thousand dollars at some point and
paying eighteen or twenty percent
interest on it you will never hit them
you’ll never get out of it so the trick
I’ve got a partner that says all I want
to know is where I’m going to die so
I’ll never go there you know and and
that’s true in financial matters as well
you want to figure out where you don’t
want to be ahead of time and avoid that
and I get about a dozen letters a day
from people who are having terrible
problems and there are two reasons why
they have terrible
one is a number of them have had health
problems of some sort I mean they have
really been hit by some or somebody in
their family has been hit by some kind
of catastrophic you I understand that is
it you know it’s a terrible thing to
happen to any family and they get in the
ground bills they can’t pay and really
only society can solve that one in terms
of protecting people against that that’s
just plain bad luck but the other one is
from people who run up credit card debt
and they’re facing bankruptcy or they’ve
been put through bankruptcy once before
and they all a bunch of money and they
can’t they can’t pay the interest let
alone pay any principal and the half of
my letters come from people like that
and that that that problem is avoidable
catastrophic illness is not but but
credit card debt is something to bring
on yourself and it’s way better it’s way
easier to stay out of trouble but to get
out of trouble financially and and I
will guarantee if you run a big credit
card that you will be in trouble
probably the rest of your life in terms
of your financial situation on the other
hand if you get ahead of the game even
it’s on a very modest scale so that
money is coming in from investing and
your your people owe you money or
equities or ownership you’ll be way out
of the game compared to paying it they
always be paying your creditors every
month so my advice to you is if you
can’t pay for it don’t buy it and get
yourself in a position where you can pay
for anything and then we’ll be glad to
see it bore shines or the rest or
furnish your Monument I always look at
IQ and and talent as sort of
representing the horsepower of the motor
but then in terms of the output the
efficiency with which the motor works
that depends on rationality because a
lot of people start out with four
hundred horsepower motors and get a
hundred horsepower about but and it’s
way better to have a 200 horsepower
motor and get it all in doubt put and so
why do why do smart people do things
that interfere with really getting the
the output they’re entitled to and it’s
it gets into it
habits into character into temperament
and it really gets into behaving in a
rational manner it’s not letting not
getting in your own way as I say
everybody here has the ability
absolutely to do anything I do and much
beyond and and some of you will and some
of you won’t but it it will the ones
that won’t it will because me because
you get in your own way won’t because
the world doesn’t allow you to it’ll it
will be because you don’t allow
yourselves to them so I want a simple
business easy to understand
great economics now honest enable
management and and then I can see about
in a general way where they’re going to
be ten years from now and I can’t see
where it can be ten years and I don’t
want to buy it basically I don’t want to
buy any stock or if they close the New
York Stock Exchange tomorrow for five
years I won’t be happy only I buy a farm
and I don’t get a quote on it for five
years and I’m happy if the farm goes
okay you know I buy an apartment house
don’t get a quote on it for five years
I’m happy if the apartment house
produces the returns that I expect but
people buy a stock and they look at the
price the next morning and they decide
whether they’re doing well or not doing
well that’s crazy because they’re buying
a piece of the business that’s what
Graham the most fundamental part of what
he taught me yeah you’re not buying a
stock you’re buying a you’re buying a
part ownership in the business you will
do well if the business does well and if
you didn’t pay a totally selling price
and that’s what it’s all about
and you ought to buy businesses you
understand just like if you’re buying
farms yottabyte farms you understand
it’s it’s not complicated well I mean
I’ve made a lot of mistakes
biggest mistake other than not the
biggest necessarily the biggest but but
buying Berkshire Hathaway itself was a
mistake because Berkshire was a lousy
textile business and I brought it very
cheap I’ve been taught by Ben Graham to
buy things on a quantitative basis look
around for things that are cheap and
that I was taught that say a 1949 or
they made a big impression on me so I
went around looking for what I call you
cigar butts of stocks and the cigar butt
approach to buying stocks is that you
walk down the street and you’re looking
around for cigar butts and you find this
honestly this terrible looking soggy
ugly looking cigar the one puff left in
it but you pick it up and you get your
one puff disgusting it’s rot away but
it’s free
I mean it’s cheap and then you look
around for another soggy you know one
puff cigar
well that’s what I did for years it’s a
mistake oh we make money doing it but he
can’t make it with big money so much
easier just by wonderful businesses so
now I would rather buy a wonderful
business at a fair price that a fair
business at a wonderful price but in
those days I was buying cheap stocks and
Berkshire was selling below its working
capital for sure he had the plants for
nothing yet the machinery for nothing he
got the inventory receivables of the
discount it was cheap so I bought it and
20 years later I was still running a
lousy business and that money did not
compound you really want to be in a
wonderful business because there the
time is the friend of the wonderful
business you keep compounding it keeps
doing more business and you keep making
more money time is the enemy of the
lousy business I could have sold
Berkshire perhaps liquidated it and made
a quick little profit you know one puff
but staying with those kind of
businesses is a big mistake so you might
say I learned something out of that
mistake and I would have been way better
off taking what I did with Berkshire as
I kept buying better businesses I
started insurance business See’s candy
the Buffalo all kinds thing I would have
been way better doing that with a with a
brand new little entity that I’d set up
rather than using Berkshire the platform
now I’ve had a lot of fun out of it I
mean everything in life seems to turn
out to the better so I don’t have any
complaints about that but it was a dumb
thing to do I went in the US air I
bought a preferred stock in 1989 as soon
as my check cleared the company went
into the red never got out I mean it was
a really dumb I mean a dumb
I’ve got an 800 number I call now
whenever I think about buying an airline
stock I called him up any hour that
fortunately I can call him at 3 in the
morning and I just dial and I say my
name’s wand I’m an arrow holic and I’m
thinking about behind this thing and
they talked me down I mean it takes
takes hours sometimes but it’s worth it
if you ever think about that airline
buying an airline just call me and I’ll
give you the 800 number
but we got lucky in terms of how we
eventually came out on but it was a dumb
dumb decision all mine I would go to
work I would go to work and whatever
turns you on it may turn out that it’ll
be more profitable than you can think
but almost everybody here will make
enough money unless they get some
terrible habits along the way to do
reasonably well and doing reasonably
well in this country really is is is
pretty darn good I mean it is it’s not
necessary to have huge amounts of money
in order enjoy yourself I enjoyed myself
when I was at my $10,000 and I live in
the same house that I lived in when I
was making when I had about that I
bought a 41 years ago I like the house
then I like the house now I mean if you
think about it if you have a reasonable
job you’ll be eating at McDonald’s and
I’ll be eating McDonald’s so we’re we’re
to push on food I mean you know I open
in fact I hope it’s very clean actually
and they had and if you come to Dairy
Queen you’ll see me and you can order
anything on the menu I can order what we
both can afford it you know you’ll
you’ll wear the same clothes I wear I’ll
pay more for my suits but as soon as I
put them on they look upon me so we’ll
we’ll look about the same and we’ll both
live in the same kind of houses I live
in that house from 41 years ago and it’s
it’s warm in winter and it’s cool in
summer and it’s comfortable and you’ll
live in a house that’s that similar and
it and what difference does it make if
you have 50 more rooms or you know guest
houses are all edited you know it’ll
probably just bring your problems I mean
you have to worry about the about the
greenskeeper something when you get
through so I I I have been in the houses
of people where the houses are worth Oh
probably 200 times what my house is
worth and I would not be any happier in
those houses at all in fact I’d be less
happy I just have one
them to worry about you know the dozens
of people around the place and people
quitting and people stealing from you
kinds of things the hell with it yep
we drive we’ll drive the same kind of
car fact you’ll probably drive a better
car I Drive a cars about eight years old
I don’t know what it’s worth now but it
gets me around fine
I mean I’m perfectly happy we’ll watch
we’ll watch the same television you know
we’ll work on the same computer pretty
much the only difference will be how we
travel long distances yeah I will fly in
a plane that’s more comfortable women
than flying Southwest Airlines or
something at which I’ve got nothing
against but that’s the one real big
difference and other than that I do what
I like every day I hope you you’ll do
what you like every day to do and I work
with nice people I hope you work with
nice people and there’s 24 hours in the
day and those are where the hours go so
great wealth is the tiniest bit
different in a real sense than having
just a decent a decent income and and to
trade a decent income and something you
love doing and something where you feel
worthwhile doing it for huge wealth
where you trade off a lot of your
principles would be a terrible mistake
if you tell me who your heroes are I can
tell you how you’re going to turn up to
quite an extent that by this point in
life and I have been extraordinarily
lucky and that none of my heroes ever
let me down I mean I the ones I came up
with throughout their lives that I’ve
never felt that I’ve been let down in
any way with and number one was my dad
and had a huge impression on me my wife
who was heroes is one of my heroes I
mean she is you know in terms of she’s
taught me a tremendous amount and never
seen anybody any better with human
beings than she is and you can Yogi Bear
again said you can you can observe a lot
just by watching
I you know I I watched my dad and I have
watched her and I had a professor Ben
Graham back at Columbia and had a huge
impact on myself I have been lucky and
then I’ve had terrific heroes and they
haven’t let me down and that that takes
you a long long way I’ve gone through
one or two periods word that we’re kind
of tough in life but not any I mean
everybody had that but what having the
right heroes will take it right through
it I have a lot of spare time because
the managers at Berkshire do all the
work I just sit there in the office and
read and talk on the phone occasionally
and it may surprise you I am i leaving
out the question of email I spend more
time on the computer than Bill Gates
does the we use that as a trick question
sometimes when we appear together and I
spend about
spend about 12 hours at least 12 hours a
week playing bridge on the Internet
at play on something called okay bridge
most of the time my name is t-bone I put
my age is a hundred and three so when I
do something dumb people will say well
for a guy 100 and fries not so bad and I
play almost every night I play on the
weekends I can’t get enough of it My
partner incidentally almost all of the
time is a Italian woman who lives in the
United States who’s come along on this
trip actually and use twice
world-champion and we have a terrific
time and that’s my favorite activity I
used to play golf I still play a little
bit but I’ve gotten so bad that I can
hardly bear to watch myself play golf
and I do a lot I do a lot of reading I
like movies but the best thing I like is
running berkshire hathaway thank you
guys so much for watching
I made the mentor me Series happen
because I wanted to spend a little bit
more time
with these super successful
entrepreneurs and hope some of their
magic pixie dust rubs off on us by
spending a little bit more time with
them so I hope you guys enjoyed this
video let me know what you think of it
let me know what you took from the
speeches that we played leave a comment
below I will join the discussion thank
you so much for watching
continue to believe and I’ll see you
soon
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