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 […]

On Auto Industry

Question: Your opinion on the auto industry? Buffett: [GM CEO] Rick Waggoner and [Ford Chairman] Bill Ford have both been handed, by past managers, extremely difficult hands to play. They’re not the consequences of their own doing, but they have inherited a legacy cost structure, with contracts put in place decades ago, that make it very difficult […]

On Soft Drink Industry

Question: In the domestic soft drink model, is it winner take all, or is there room for three competitors? Buffett: Sure, there’s room for more than one. I think Coke’s market share will grow pretty much year after year. We’re talking tenths of a percent, but tenths of a percent are important. The U.S. market […]

On Airline Industry

Question: What do you think of the airline industry? Buffett: “The big problem is not aggregate costs, but costs versus competitors.” Buffett recalled US Air’s difficulties competing against Southwest and concluded, “If your costs are out of line, you’re going to get killed eventually.” [Munger: “Airline pilot unions are really tough. It’s interesting to see people paid […]