Buffett's video (lecture on MBA)
This video is hour and a half long with Warren Buffett, recorded at the University of Florida. The event happened in Sep. 2006 (not sure.). Some abstracts from the Q&A:
1. thoughts on Japan？ They had incredible market without incredible companies (on equity).
2. rescue buyers of long-term capital? I never borrow money.We travel differently. Take a job you love.
3. choose companies? I choose businesses that I can understand. That narrows them down to 90 percent. I want a simple business, easy to understand, great economics now, honest able management and then I can see in a general way what it gonna be 10 years from now. Then I can see if I want to buy it. Investing is putting out of money to make sure you get more money back.
4. How do you determine what you think the fair price is for a business? I don't want to buy anything I am terribly sure of.
Check out more from the attached video.
Buffett also suggested people to buy index fund:
If you are not a professional investor, if your goal is not to manage money in such a way that you get a significantly better return than world, then I believe in extreme diversification. I believe that 98 or 99 percent — maybe more than 99 pe
rcent — of people who invest should extensively diversify and not trade. That leads them to an index fund with very low costs. All they’re going to do is own a part of America. They’ve made a decision that owning a part of America is worthwhile. I don’t quarrel with that at all — that is the way they should approach it.Wall Street makes its money on activity. You make your money on inactivity. If everybody in this room trades their portfolio around every day with every other person, you’re all going to end up broke. The intermediary is going to end up with all the money. On the other hand, if you all own stock in a group of average businesses and just sit here for fifty years, you’ll end up with a fair amount of money and your broker will be broke.
He’s like a doctor who gets paid on how often he gets you to change pills. If he gives you one pill and it cures you the rest of your life, he’s got one sale and one transaction, that’s it. But if he can convince you that changing pills everyday is the way to great health, it’ll be great for him but you’ll be out a lot of money and won’t be any healthier.
Other quotes from the speech:
- - “The chains of habit are too light too feel until they’re too heavy to be broken.”
- - “If you risk something that is important to you for something that is unimportant to you, it just does not make any sense [no matter how good the odds].”
- - “You only have to get rich once.” “You’re out of your mind if you keep taking jobs you don’t love because you think it’ll look good on your résumé.”
- -“If you think you’re going to be a lot happier if you have 2x instead of x, you’re probably making a mistake.”
