On Finance Industry

Buffett: Financial companies are more difficult to analyze than other companies. They can report whatever earnings they want – it’s an easy game to play. For banks, earnings depend on loans and the reserves set aside. It’s easy to change and manipulate the reserves. With a company like WD-40 or a brick company, the financials […]

Buffett: Avoid Bad Businesses

Question: What businesses should we avoid? Buffett: In the textile industry, we always had new machinery that held the promise of increasing our profit, but it never did because everyone else bought the same machinery. It was sort of like being in a crowd, and everyone stands on tip-toes – your view doesn’t improve, but […]

On banking business

  Buffett: Banking, if you can just stay away from following the fads and making bad loans, has been a remarkably good business. Since WW II, ROE for banks that have stayed out of trouble has been good. Some large well-run banks earn 20% ROE. I’ve been surprised that margins in banking haven’t been competed […]

Buffett: Content vs Distribution

BECKY: You have bought more IBM shares though, right? BUFFETT: Yeah, we bought a few, yeah. JOE: I was just getting back to this media, ’cause I’m trying to understand, I don’t know what the landscape looks like. And Warren probably— doesn’t necessarily.Does it look like the pipes, Warren, eventually become more commoditized, you know, […]

Why Warren Buffett Bought IBM

BECKY: Wait. Wait a second, IBM is a tech company, and you don’t buy tech companies. Why have you been buying IBM? BUFFETT: Well, I didn’t buy railroad companies for a long time either. I—it’s interesting. I have probably—I’ve had two interesting incidents in my life connected with IBM, but I’ve probably read the annual […]

On Subprime Mortgage Industry

– There are similarities between subprime and manufactured housing financing – The most important factor for the subprime industry is the health of the economy, which has been good of late – Securitization moves the ultimate lender farther away from borrower, which is what causes problems – A shock will probably not occur unless we […]