YouSaid · the spoken record

Warren Buffett

lines on the record: 194
first: 2019-09-08
most recent: 2019-09-08
sittings or episodes: 1
sources: podcast

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“We fool ourselves. We make a lot of mistakes. We're not that rational. If we can just understand that that's how we are and then make sure that we're not being irrational, that's a good way to win over a long period of time. So unusual managerial discipline. What he's talking about there is most people are saying, hey, I don't want you to take my market share, even if that market share is unprofitable. I'm going to fight you for it. Well, that doesn't make any sense. And Buffett's like, that's a stupid idea. So go ahead. We're going to write less business in our insurance business, but that business will be profitable, and then we're going to invest a float. And you can go ahead and go to business in a few years. Unusual managerial discipline. I think this applies to, again, all aspects of life. I just think we happen to be focused on creation of companies, running of companies, production of value, unusual discipline in all aspects of your life, whether it's like the fact that you spend more time learning, you don't put a bunch of bad stuff in your body with diet, you're some form of activity, levels of activity. All the stuff, like if you take the average person and what they do and then do the opposite, it's like a good way to.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Unusual, I just let this quote to myself. I don't know what it means. So let me just read it. As markets loosen and rates become inadequate, we again will face the challenge of philosophically accepting reduced volume. Okay, so now he's talking about the same things happening in the insurance industry. Unusual managerial discipline will be required as it runs counter to normal institutional behavior to let the other fellow take away business even at foolish prices. So that's a huge, I should have left a better note for myself. But what he's talking about here, unusual managerial discipline. It's a good way to describe himself and Charlie. What they excel at is understanding the fact that humans are, they make a lot of mistakes. I think Munger says the base, the normal operating of a human is high levels of discognition, I think is the word he uses. So he's like, we...”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Heard this described a lot of other ways. Market Dixon's point on what's the most important single factor for startup success is the market it operates in, which sounds crazy, right? Because we want to think that our skill and effort and hard work influence them. And certainly it does in a sense of what Borne's saying. He's like, I have really good managers in textile. But fighting against even really good people fighting against the headwind is going to produce average, modest results. And so obviously getting a business like insurance where you kind of like push from the back instead of push from the back instead of pushing the front. All right. So it says.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Modest profits in the textile division can be achieved in the future. That doesn't actually happen. And about eight years from this point, he closes it. He talks a lot about this. In fact, he talks about tailwinds and headwinds a lot. And so a lesson that he has to learn, one that he's not getting or that he had to learn from the textile investing in the textile industry, is the importance of being in businesses prone to tailwinds instead of headwinds. The textile business is prone to tailwinds, or excuse me, headwinds rather, the insurance business is prone to tailwinds. So it says inaggregate the insurance businesses worked out very well. Some major mistakes have been made during the decade both in products and personnel. It is comforting to be in a business where some mistakes can be made and yet quite a satisfactory overall performance can be achieved. In a sense, this is the opposite case for our textile business where even very good management probably can only average modest results. One of the lessons your management has learned, and unfortunately sometimes relearned, is the importance of being in businesses where tailwinds prevail rather than headwinds.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, now in 1977, this is Warren's answer to why stay in the textile business. So he says a few shareholders have questioned the wisdom of remaining in the textile business, which over the long term is unlikely to produce returns on capital comparable to those available in many other businesses. Our reasons are several. Number one, our mills in both New Bedford and Manchester are among the largest employees each town. In fact, when they close, there's like 1,400 people in a small town that put out of work, so it's very sad. Utilizing a labor force of high age average possessing relatively non-transferable skills. So they're older. They don't really have other skills. Our workers and unions have exhibited unusual understanding and effort in cooperating with management to achieve a cost structure and product match, which might allow us to maintain a viable operation. And management has also been energetic and straightforward in its approach to our textile problems. So with hard work and some imagination regarding manufacturing and marketing configurations, it seems reasonable that at least”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Can't find 100 different securities that conform to our investment requirements. However, we feel quite comfortable concentrating our holdings in the much smaller number than we do identify as attractive. So he's got skin in the game. He always has the entire term he runs Burshire. He's like, listen, I'm not going to diversify. I think I'm right on this and I'm going to put my money where my mouth is.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“And the other one is Olgafi and Mather. So David Ogovie and then Henry Kaiser. But anyways, he says, we notice that our major equity holdings are relatively few. We select such investments on a long-term basis, weighing the same factors as would be involved in a purchase of 100% of an operating business. So what are those factors? Number one, favorable long-term economic, competent and honest management. Number three, purchase price attractive when measured against the yardstick of value to a private owner. And four, an industry with which we are familiar and whose long-term business characteristics we feel competent to judge. So he talks about, you know, I can't tell you in the future. It's like, I don't know how good, I know Google makes a lot of money, but I just don't know which ones, like I'm not good at picking which technology companies are going to be winners. So I kind of stick to what I know is what he says. He calls us the circle of competence, which we'll talk about more. It is difficult to find investments meeting such a test. And that is one reason for a concentration of holdings.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Another famous quote of theirs is you only need a few wonderful businesses in a lifetime to get wealthy. So now he's talking about like why do they own they're not fans of diversification in the normal sense of the word. They're like if you feel like you cannot properly analyze businesses, then go buy an index fund. That's the smartest thing for you to do. But if you feel you can and you have a skill to analyze businesses, then why would you put more money in your 35th best company instead of your top one or two or three? Because essentially if you have one or two or three opportunities in your lifetime to own a part of a wonderful business, like you're going to be fabulously wealthy. And if you look at their holdings here, which I found interesting. There's two holdings they're having that are related to people.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“We've achieved good finished results from our stockholdings regardless wide to wide fluctuations in market values. So we just ignores it other than the point where he feels it can take advantage of it.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“The future is like the reason Berkshire's blueprint can work is as long as the businesses that invest in it continue to make profit, even if they don't buy any more, the growth of this profit means the company will survive. It's such a scale that it can continue to grow. It's not going to grow on a percentage basis as fast as it did the previous 54 years because now the amount of money and the size of the company is larger and therefore the amount of opportunities that move the needle are much smaller But I just love that like it's just realized I just ramble I never told you what Charlie said. He's like I've never like I forgot the exact quote, but he's like we never essentially deviated from simplicity like you can't get in trouble with things with things that are simple and he feels Berkshire investing profitable businesses with good managers that should continue to throw off cash in the future is relatively simple but hard to do if business results continue excellent over a period of year”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Growth. It's fake. It's not how you build real wealth over a long period of time, which is what Warren's trying to do here. And he does do. Another note, year-to-year fluctuation market prices are unimportant. Year-to-year business performance is important. And this is just another line. Here again, we consider such market fluctuations from year to year relatively unimportant. However, we consider yearly business progress of the companies in which we own stocks to be very important. If the business results continue excellent over a period of years, we are certain eventually to achieve good financial results from our stockholdings. That's what I mean about being simple. And I just heard, I was taking notes on a talk that Charlie Munger just gave a few months ago, and he talks about essentially like...”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“This, oh, actually, what I'm about to read to you next, I think comes from insurance. Okay. So this is going back to here's an interesting quote. He says, temporary prosperity produces unwise competition. Temporary prosperity produces unwise competition when humans sees another human making or a business making money and something they try to copy. And that obviously produces unwise competition. This is happening in the insurance industry right now, but he's still focused on profitable growth, not just growth. So he says, our opinion is that before long, perhaps in 1978, the industry will fall behind on rates as temporary prosperity produces unwise competition. If this happens, we must be prepared to meet the next wave of inadequate pricing by a significant reduction in volume. So what he means by that is once other companies are willing to write stupid policies that they can't possibly make money on, but they don't understand that because they're unwise, we have to reduce and only keep writing policies that we know will make a profit on. Don't just chase volume. Don't just”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“The note I left myself because I was so confused because every year it's the same thing about this textile industry. We're only 1976. And I was like, how much longer can this go on? And this is what I was referencing. Our textile division was a significant disappointment during 1976. Earnings measured either by return on sales or return on capital employed were inadequate. Should we recognize that the textile business does not offer the expectation of high returns on investment? That's a nice way to put it. Wait, this”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Like saying he's responding with equanimity to swings between a million dollars and market value of an asset he owns, right? You can't do it if you're broke, but you can if you have a large buffer, if you're conservative with your finances. We consider such market fluctuations of minor importance as our liquidity and general financial strength make it improbable that bonds will have to be sold at times other than those of our choice. And that's huge. He didn't get taken advantage of because he never has to sell in a panic. He's the buyer when you're panicking. That's what he talks about over and over again, that we'll talk more about this, how he studies human nature and human intuition. He flips it in situations and in plain English to see how these people are acting. This is not how you want to act.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“He's extreme person. Charlie Munger is an extreme person. On this score, we've been delighted with the progress made by practically all the companies in which we now have significant investments. We have continued to maintain a strong liquid position in our insurance companies. There's that phrase again. He loves having vast amounts of money just sitting there. In last year's annual report, we explained how variations of one-tenth of 1% in interest rates resulted in a million dollar swings in market value of our bonds. We consider such market fluctuation of minor importance as our, why? Why can you have such a privileged...”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“So he says with this approach, now he's going to elaborate on why is this important? Like it sounds good, right? Okay, we have competent honest management. We have favorable economic characteristics. We think what we bought is less than it's worth. But like what if you're wrong? So you're saying with this approach, stock market fluctuations are of little importance to us, except as they may provide buying opportunities, but business performance is of major importance. I love this distinction he's making. He's like, I don't care what the Mr. Market is temporarily saying it's worth. I care how the business is performing underneath it. So he just wants a bunch of profitable companies throwing off cash in a bunch of different industries. And that's his blueprint. So he goes out and collects it. And then as he makes more, as these businesses make more money, he buys more profitable businesses. It's very simple. I mean, not easy. I'm not diminishing that, but it is simple. It's taken to the extreme. I know Buffett has like a fulksy manner.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Next year he elaborates on this. He's going to repeat this and quote as we expect to hold permanently. His long-term focus is maintained. He says our equity investments are heavily concentrated in a few companies which are selected based on favorable economic characteristics, competent and honest management, and a purchase price attractive when measured against a yardstick of value to a private owner.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Value. Again, we are under no pressure. Again, one reason you canger just said to you can react with equanimities because they never want to sell most things and they work from a strong financial position. So it says, yeah, it may be like on paper we're worth 17, our assets in this particular portfolio is worth $17 million less, but doesn't really mean anything. Again, we are under no pressure to sell such dexterities except at times when we deem it advantageous. And it is our belief that over time that over a period of years, the overall portfolio will”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“So they're laying out to the shareholders. Listen, 1974 results sucked. The outlook for 1975 is not encouraging. This is why the tone of this section is pessimistic as to 1974 and 1975. We consider the insurance business to be inherently attractive. Our overall return on capital employed to this area, even including the poor results of 1974, remains high. So it's getting dragged down by not only they're buying a lot of businesses, but they are still losing money in the textile industry. Many of our competitors are substantially, now we're talking about the insurance industry. Many of our competitors are in substantially weakened financial position and our strong capital picture leaves us prepared to grow significantly when conditions become right. Our stock portfolio in the middle of like a financial crisis declined again in 1974 along with most equity portfolios to the point at year end it was worth approximately $17 million less than its carriage.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“So now they're going to get $60 million, which turned out to be a permanent float from a $24 million investment. They took that float and bought C's Candies, which I forgot how much money. I want to say over a billion dollars of real returns to them. Westco and Buffalo Evening News. So this was a steal of a lifetime, a huge early win for Berkshire. Okay, so Okay, so he already says we expect blue chip to achieve satisfactory earnings in the future. And now we're going to run into it's not all up as we see a lot of mistakes here. Operating results for 1974 moving forward a year. Overall, we're unsatisfactory. One of the most famous Charlie Mumber quotes is you must learn to react to significant price declines with equanimity.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Like early gift cards where a lot of them are never going to be redeemed again, but such blue chips trading stamp business has declined drastically over the past year or so. But as important sources of earning power in its seized candy shop, which becomes one of the most profitable businesses that Pershire owns, as well as West Coin Financial Corporation. We expect blue chip stamps to achieve satisfactory earnings in future years related to capital employed, although certainly at a much lower level than would have been achieved if the trading stamp business had been maintained at anything close to former levels. So it's like the earnings it's getting from its trading stamp business is like falling off a cliff. And again, we're still early in the letter, so I had no idea what the hell is going on here. I was like, why are you buying this?”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, so this is bizarre. And I had to actually, let me read it to you. And then my notes actually might be longer than this part. So he says, he talks about this company he wants to buy. Diversified retailing company through subsidiaries operates a chain of popular price women's apparel stores and also conducts a reinsurance business. In the opinion of your management, its most important asset is 16% of the stock of blue chip stamps. Okay, blue chip stamps, right? You got to remember this is one of the most important things that ever happens to Berkshire. And I couldn't understand why the hell he bought this business and I had to go and do outside research. If I would have just didn't know research and read like shareholder letters 20 years from now, I might have been able to piece that together, but I'm going to tell you about it in one second. So let me describe this business because it's like it's almost like reward points that you can turn in.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“These economic outcomes when you have what's becoming a large insurance business and a broad one. The end result is large amounts of investable funds were thus received at a time when they could be put to highly advantaged use. Most of these funds were placed in tax-exempt bonds. So it talks about they increased their investment income from, let's say, $2 million in 1969 to almost $7 million three years later. And it's subject to a low effective tax rate, so they actually keep it. And that's, he also talks about the reason they picked this conglomerate structure for Berkshire is because they can shuffle profits from one subsidiary into other businesses. And there's tax benefits. They don't have to pay tax on it yet. Okay.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“The advantages, let's see, I'm trying to read my note before I read this part to you advantages, compound, dramatic gains, and premium volume plus high interest rate environment plus low tax structure. Okay, so this is, remember, 54 years, you're going to see this bizarre, like almost every single economic environment you could possibly imagine outside of like a great depression, although there were several deep and severe recessions during as these shareholder letters unfold. So it's always interesting to see how like the larger macroeconomic environment impact what's happening and how much how little attention they paid to it genuinely. I mean, obviously you're going to adapt somewhat, but we'll talk about more about that. So it says we were most fortunate to experience dramatic gains in premium volume from 1969 to 1971, coincidental with virtually record high interest rates, large amounts of investable funds were thus received, so he's talking about what's the outcome of this confluence of these economic.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“20% compounded for 50 years. So that's how you turn 22 million into whatever, half a billion or whatever they have now. So he's reflecting on this. What does this mean? He says, it seems clear diversification moves of recent years have established a significantly higher base of normal earning power than if he would have stayed with just the textiles. So now he talked about more of the businesses they buy. Our three major acquisitions of recent years have all worked out exceptionally well, from both the financial and human standpoint.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Moving ahead to more of the financial section of Berkshire from that year. He says, we retain a fundamental belief in operating from a very strong financial position so as to be in a position to unquestionably fulfill our responsibilities. Thus, we will continue to map our financial future for maximum financial strength in our subsidiaries as well as the parent company level.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“That no one wants to buy, but they have to buy in many cases. So it's just a bizarre industry. A highlight of 1971 was the acquisition of home and automobile insurance company. It talks about the person running it, which he talks about over and over again that you need to be working with people that you enjoy, that you like, that will not lie to you, that have integrity. He winds up buying multiple hundred million dollar businesses without even doing audits or anything just based on the fact that the person said the business is what it is. And so this is extremely important to the guy named Vic is the one running the acquisition of home automobile. He's the one running this insurance company. And so he says, Vic is cut from the same cloth as Jack Ringwald, which is the guy that runs other insurance company. And Gene Ebbeg, with a talent for operating profitably accompanied by enthusiasm for his business. These three men have built their companies from scratch.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“And you have a manager, a brilliant operator with a reputation of excellence, and you combine the two, the reputation of a business with poor fundamental economics is the one that survives. So he says there's some businesses that just are terrible. You need to get out of them. The opportunity cost is too high. You're wasting your talents. The textiles is one of them. Okay, so it says it would have been in the red. We set no volume goals in our insurance business generally and certainly not in reassurance. So he's expanded into reinsurance, which he expands quite a bit. He'll keep investing in this for another like three decades. We said no volume goes, so he didn't have sales goals. And certainly not in reassurance, as virtually any volume can be achieved if profitability standards are ignored. So again, he wants his underwear, the underwriting the business does to at least break even, hopefully be profitable. He's not just going to write business. And again, he talks about how weird the industry is because it's a product that's relatively expensive.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Amazing. So let me read this whole point. This result, consider above the average talks about 14% last year. This result, considerably above the average of American industry, which achieves in the face of inadequate earnings in our textile operation, making clear the benefits of redeployment of capital inaugurated five years ago. It will continue to be the objective of management to improve return on total capitalization as well as a return on equity capital. So that's what's his point to him. So this is a little bit about the textile business. He says strong efforts to hammer down costs and continuous search for less price sensitive fabrics produced only marginal profits. However, without these efforts, we would have operated substantially in the red. So again, I'm doing a lot of effort, have a lot of talent just to break even. So he'll talk about later on one of his most famous quotes is the fact, and it comes from the shareholder letters. It comes from the fact he's like, listen, if you have a business with poor fundamental economics, which is how I want you to think about the textile business that he's describing, because that's definitely fitting.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“So they're working really hard to essentially stand still. So they're making the, they produce a return about 10% on average. It says, well, this figure is only about average for American industry. It is considerably in excess of what would have been achieved had resources continued to have been devoted exclusively to the textile business, as was the pattern until five years ago. So what he's saying there is, yeah, only returned 10% to you guys this year or increase the net worth of the company by that much. I could do better, I could have done better if I didn't have the textile industry and we already did better than if we just invested in the textile industry. We would have had either 0% or maybe even less. And he's going to repeat that over and over again. I'm not going to, I don't think I keep repeating it, but it is something he talks about up until, you know, 15 years from now where he actually finally closed the thing. The plan's working though. I'm skipping ahead now another year. The plan that he set out, the blueprint from a few years ago, the plan is that plan is working. We're seeing the improvement here as the year goes by.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially, what he's telling us here. He says the past year witnessed dramatically diverse earnings results among our various operating units, the Illinois National Bank and Trust reported reported earnings continued to rank right at top. That's what I meant. I didn't know if it was true because he does make money on it. Our insurance operations had some deterioration in underwriting results, but increased investment income produced a continued excellent return. So what he's talking about is the money that he's investing that flow to keep referencing. He's actually making a good return on top of it. So even if the underwriting results deteriorate a little bit, he still makes money on top of that. The textile business became progressive.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“States where they have less labor agreements with unions, but eventually out of the country, of course, as we can, as we kind of know. So it says we're in a pickle. We're in the text hour recession, so we've got to find our way out of this. The most significant event of 1969 for Berkshire Hathaway is the acquisition of 97.7% of the stock of the Illinois National Bank and Trust Company. It will not be easy to achieve greater earnings in 1970 because, one, our bank is already a bank that is highly efficient business. And two, the unit banking law of Illinois makes more than modest deposit growth difficult for a major downtown bank. Now, what I don't understand is, I guess he's telling us, but why would you buy it? I mean, he wasn't making money, so I don't think this winds up being correct, but it's interesting he didn't elaborate on that. The summary of this next section is we are doing better than if we just limited ourselves to the textile businesses.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Continued to be invested exclusively in the textile industry. The funds for this program were temporarily utilized in marketable securities pending the acquisition of operating business meeting or investment management criteria. He doesn't really like that too much. That's a lot of jargon for him. This policy has proved reasonably successful, particularly when contrasted with results achieved by firms which have continued to commit large sums to textile expansion in the face of totally inadequate returns. That's what he's talking about. It's like, well, you can see the money you guys are putting into this industry. You could see the return you're getting on that money. Why are we still doing that? That's a bad idea. Maybe we should diversify into other industries that are more profitable. So that's him comparing and contrasting. We are presently in the midst of a textile recession of great intensity, greater, excuse me, intensity than we have seen for some years. It's basically the dwindling of an American, there was a large textile base in the New England area that's kind of dwindled away to the point where it moves south, not only in southern South South.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“To do with that money since we purchased all the stock of Sun newspapers and blacker printing company, which represent an initial entry into the publishing business, which they have holdings in that for a long time. And concluding, they make over like a billion dollars in real returns on their investment in the Washington Post stock in the 1970s too. So this is something that they're going to constantly invest in. Let me read my note here. It says what he is really talking about is differentiation between him and the other managers of textile companies. Like I said, that's what I was referencing earlier, how he's going to constantly compare contrast with, okay, this is what you can expect in the industry. This is where I feel that thinking falls short. And this is the decision I've made, which I think is really, really actually helpful. I like the use of the word case study in the introduction. And then I wrote they expanded to banking. I wonder how this will turn out. It wind up turning out pretty well for them, actually. Okay, four years ago, your management committed itself to the development of more substantial and more consistent earning power than appeared possible.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“How his viewpoint differs from what you normally see. And so he's talking about like an insurance industry, there's a lot of crazy behavior that goes on because of all the float, which is money that they don't own, but they can invest because they're getting the money up front from their premiums, right? And so what happens is when you have all this large money up front, a lot of people focus on size. They just want more of it. And Buffett right here is going to lay out his kind of thesis where he's like, I'm not focused on size. I'm focused on profit. So he says the emphasis continues to be on unwriting underwriting at a profit rather than volume simply for the sake of size because he wants his underwriting to take a profit, which essentially means that the money, the float that he's able to invest, he gets for free. He's actually paid to invest. The main point here is he's focused on profit, not size. He sold stock for profit and then flipped it into another industry. We sold a portion of our marketable securities portfolio out of profit of approximately $1.5 million after tax.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“In the insurance companies reflects a first major step in our efforts to achieve a more diversified base of earning power. So now he's continuing the theme he was talking about last year. The success of this effort is indicated by the attainment of earnings in the subsidiaries during 1967, which substantially exceeded the earnings in the textile business. We believe it is an added factor of strength to have these two unrelated sources of earnings rather than to be solely exposed to the conditions of one industry. And I think towards the end, he winds up having like 70. I want to say something like 76 different companies that Berkshire owns at least 80% of. Okay, so this is the very beginning of that, and that was in 1967. Moving on to the next year, he has a lot of thoughts about what the author, or I guess the person that compiled this, was talking about at the beginning where they're saying he...”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“To decline from 49 million to 39 million. So he's down 10 million a year, and he says depressed conditions of the textile markets in which we operate. That's what he's saying. But this is also the year they expanded into other industries. So I'll get there in a minute. So he's saying there's depressed conditions of the textile markets, poor demand, depressed prices. That's what he's having to deal with. However, we are highly pleased with the results of our insurance subsidiaries since their acquisition in March 1967. All right, so we see that he's expanded into one of his, I would argue, his favorite industry, which is the insurance industry. It's a huge part of Berkshire story. But at this point, he says, we are highly pleased with the results of our insurance subsidiaries since their acquisition in March 1967. These two companies, it's called National Indemnity Company and National Fire in Marine Insurance Company, continue their variable management by Mr. Jack Ringwald, who's guided them since inception.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially starting to do what he says here. He's like, hey, why don't we get out and start making investment in stocks so we can yield the benefits outside of our textile industry? He could have done that. He already had a partnership that could have bought stocks and he could have bought companies too. But now his amazing picking of companies and doing his acquisitions he's going to do over the next 54 years from this point. He winds up giving away like a third of that to the legacy shareholders of Berkshire and he calls them strangers. So I don't know it's just fascinating how like, you know, now they've read all of them. I understand where this is going, but I'm reading it to you. And at this point, that Warren is writing this. He doesn't know what's ahead of him, which I find really, that's a really fascinating thought. So now we're going back into the next year. He's describing the state of his business. And this is what we're talking about with the textile industry. It's terrible, for lack of a better word. Total sales should.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Not only of greater income than can be achieved through alternative investment possibilities, but also provides us with the opportunity to participate in the earnings derived outside of our textile business, even if only temporarily and indirectly. It doesn't wind up being temporary or indirect, I would argue, but he definitely wants to even young Warren Buffett here understands the textile. And it's really interesting looking back now that I read the letters that he's just done in the last, let's say, two or three years. He even says it's stupid the way he bought Berkshire. Because he had a limited partnership. It was called Buffet Limited, I think, or Buffett Partnership, something like that.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Calls it the March of Safety. It's known by, he talks a lot about it, but this is one of his main core philosophies of running business, that you need to have strong, you need to be always operating from a point of strength. The reason the Berkshire was able to get such advantageous deals is because they never dealt ever in the entire history of the company from a position of weakness. So it's extremely important. And he's going to repeat this over and over again. Most of the important parts, he talks about dozens of times. And that's good because that's how something's important to you, you have to repeat it because people may not get it the first time, but they'll get it the 20th time, or they're more likely to if they're going to. All right, so highly cyclical nature's business. We need some money. Let's see. Let's skip ahead. We talked about we need strong financial conditions. He says it is the president intention of the directors to proceed toward the interim investment of a major portion of these funds in marketable common stocks. This should hold prompt.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“These are not profitable businesses. So if he would have stuck with them, he just would have gone out of business. So he basically said he had to do what he's about to start doing here. Okay, so it says it has always been a goal of Berkshire Hathaway to maintain a strong financial condition. Indeed, it has been this practice that has enabled the companies to survive in light of the highly cyclical nature of the business. Since the company has been searching for suitable acquisitions within and conceivably without the textile field, we obviously know he goes outside of that. He does wind up buying one more textile company later on, like sometime in the 2000s. He's like, that was just another stupid idea. And this is what I love about reading the shareholder letters is because, you know, everybody has this idea of Warren Buffett's obviously one of the most successful entrepreneurs and investors of all time. Arguably, Burshire has the greatest set of returns in human history, I think, is what how Charlie Munger puts it. And so...”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“So, even before he took over the company, it would make money for a few years, lose even more money than it made for a few years, make money for a few years. He winds up, and I guess I'm going to run over my own point here, but he sticks with this business. He diversifies, which is what we're going to get into here, into other more profitable industries. But he's somewhat loyal, and that's part of his strategy where he doesn't like to sell businesses, even if they're poorly performing. His goal is to keep something forever. And in this case, that might have worked against him because in later years, he talks about when he kept unproductive capital locked up, I think is the word he used by the textile industry for an additional like 15 years longer than he wanted to. Winds up shutting down this business, but he doesn't do it until like, I think, 1985. So we're almost two decades until he finally cuts his losses.”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Half of 1966 was one of generally depressed markets. So he's talking about the textile business and then his business within that industry. In particular, he says, in a business that's highly cyclical as a textile business, the past decade for Berkshire Hathaway has been a recurring story of a period of earnings followed by a period of relatively heavy losses. The past year has been a significant one in this history because not only was 1966 a year of profitable operations, but also it witnessed the restoration of our financial strength to the level that existed at the end of the 1960s. had not been fully recouped by the profitable operations of the years 1959 and 1960 when our business was hit again was again hit with a three-year period of loss”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source
“Warren Buffett first took control of Berkshire Hathaway, a small textile company in April of 1965. A share changed hands for around eighteen dollars at that time. fifty four letters to shareholders later and that same share trades for three hundred six thousand dollars. Compounding investor capital at just under twenty percent per year. Buffett has said many times that he was wired at birth to allocate capital. By allocating resources to assets and endeavors to have the greatest potential for gain, Buffett has guided Berkshire to creating enormous value, not only for shareholders, but for the managers, employees, and customers of its holdings. The numbers and charts you see on the following pages tell the story of a compounding machine. The rest of the book tells of the people, companies, and philosophies that have driven it for five decades. That's also the part that I'm going to be focused on today. In addition to providing an outstanding case study on”
2019-09-08 · Founders · #88 Warren Buffett's Shareholder Letters— All of them! · IDENTIFIED FROM THE TRANSCRIPT · source