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 […]
Category: Industries
Buffett and See’s Candies
Question: How do you determine what is the proper price to pay for the business? Buffett: It is a tough thing to decide but I don’t want to buy into any business I am not terribly sure of. So if I am terribly sure of it, it probably won’t offer incredible returns. Why should something […]
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 […]
Buffett: Consumer Products and Share of Mind
Question: Could you explain a little more about the mind of the consumer and the nature of the product? And explain how you actually apply these concepts to find the companies with the best potential? Buffett: When you get into consumer products, you’re really interested in thinking about what is in the mind of how […]
Buffett Tells the History of Coca-Cola
Warren Buffett: Asa Canver back in the late 1880′s essentially bought the whole Coca-Cola company for $2,000, and that may be the smartest purchase in the history of the world. Then in 1889, a couple of guys from Chattanooga came along, and in those days soft drinks were sold over the counter, and they said […]
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 on World Herald and Newspaper Economics
BECKY: We should point out that we’re here at the Omaha World-Herald because this is Berkshire’s most recent acquisition. Earlier— or last year, I should say— last year you went ahead and you stepped in. And I guess one of the key questions I have is why did you do that? Why don’t we start […]
Buffett Has No Financial Interest in J.C. Penney
BECKY: —way to go. Hey, very quickly, before we go to a break Warren, I wanted to ask you about J.C. Penney. We’ve been watching this story very closely. There was a story recently about how I think Goldman Sachs had been potentially lining up— a line of credit for them. It’s got to be […]
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 Buffett Hates the Airline Business
BECKY: Okay. In terms of other things that came up this weekend— Andrew touched before on the question that Bill Miller asked— of Legg Mason. His question was again related to the airlines. He’s been on Squawk and talked about his investment thesis. He has bought into a lot of these airlines. And he points […]
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 […]