Morning Session
1. Welcome
欢迎辞
WARREN BUFFETT: Morning. I’m Warren Buffett, the chairman of Berkshire Hathaway. And on my left is Charlie Munger, the vice chairman and my partner. And we’ll try to get him to say a few words at some point in the proceedings. (Laughter) The format today is going to be just slightly different. We have one item to — normally, we breeze through the meeting pretty fast, and we’ll do that, but we have one item of business on the preferred stock that I could tell caused some confusion with people. So, I’ll discuss that a little bit. And if, before the vote on that, anybody would like to talk about the preferred issue, we’ll have any comments or questions at that time. And then we’ll breeze through the rest of the meeting, and then we’ll open it up. And I’ll have one announcement to make then, too. And then after that, we’ll go for, maybe, close to noon. And feel free, earlier, anybody that would like to leave, you’re free to, obviously, at any time.
WARREN BUFFETT：早上好。我是 Warren Buffett，Berkshire Hathaway 的董事长。在我左边的是 Charlie Munger，他是副董事长，也是我的合伙人。我们会在会议过程中找个时机请他讲几句。（笑声）今天的议程会稍微有点不同。我们有一项议题——通常我们会很快地过会，今天也会这样，但有一件关于优先股的事项，我看出来让一些人有点困惑。所以我会简单说明一下。如果在就此表决之前，任何人想谈谈优先股的问题，我们会在那时接受任何评论或提问。然后我们会快速完成会议其余部分，接着进入开放环节。到时候我还会宣布一件事。之后我们大概会一直进行到临近中午。任何人如果想提前离场，当然可以，任何时候都自由。
Better form to do it while Charlie’s talking, as I’ve mentioned. (Laughter) And you’ll have to be quick. (Laughter) But then we’ll have a break a little before noon for a few minutes, while a more orderly retreat can be conducted. And we’ll have buses outside to take you back to the hotels or to any of the commercial establishments that Berkshire’s involved in. And then because so many of the — we have people here, at least based on the tickets reserved, from 49 of the 50 states. Only Vermont is absent. We have — but we have Alaska, we have a delegation from every place. We have people from Australia, Israel, Sweden, France, the U.K., 40-some from Canada. So, a lot of people have come a long way. So, Charlie and I will stick around. In fact, we’ll eat our lunch right up here. And we will — you don’t want to watch what we eat.
正如我说过的，最好是在 Charlie 发言时离场，礼貌一些。（笑声）不过你得动作快点。（笑声）接着在接近中午前我们会休息几分钟，这样大家可以更有序地离场。外面会有巴士把大家送回酒店，或送到任何 Berkshire 旗下的商业场所。因为今天有很多——至少根据已预订的门票——来自 50 个州中的 49 个州的朋友，只有 Vermont 没到。我们有阿拉斯加，也有各地代表。还有来自 Australia、Israel、Sweden、France、U.K. 的朋友，以及四十多位来自 Canada 的朋友。很多人舟车劳顿。所以 Charlie 和我会一直在这儿。事实上，我们就在台上吃午饭。不过——你们可不想看我们吃东西。
The — but the — well, we’ll stick around until perhaps as late as even 3 o’clock, but if the crowd gets below a couple of hundred, then we’ll feel we can cut it off. But we do want to answer everyone’s questions. You people are part owners of the company. And any question that relates to your ownership of Berkshire, we want to be able to give you a chance to ask. And it’s tough because of the numbers of people here. I don’t know how many are in the other room. But there’re about 3,300, I believe, in this room. And we want to get to you — to all of you. So, that will come after the meeting. Now, we’ve got a little business to take care of.
嗯——不过，总之——我们会一直待到也许最晚下午三点，但如果现场人数降到两三百，我们就觉得可以收尾了。但我们确实想回答每个人的问题。你们是公司的部分所有者。任何与您持有 Berkshire 有关的问题，我们都希望给你一个提问的机会。因为今天人太多，这确实不容易。我不知道另外一个会场有多少人。但我相信这个会场大约有 3,300 人。我们希望覆盖到——你们所有人。所以这些将在会议结束后进行。现在，我们先处理一点会务事项。
2. Election of directors
董事选举
WARREN BUFFETT: The meeting will come to order. And I’ll first introduce the directors of Berkshire, in addition to myself. They’re right down here. And if you’ll stand up when I give your name. Susan T. Buffett (Applause). Howard Buffett (Applause) These are names we found in the phone book, you can understand — (Laughter) Malcolm Chace, III (Applause) And Walter Scott Jr. (Applause) Also with us today are partners in the firm of Deloitte and Touche, our auditors, Mr. Ron Burgess and Mr. Craig Christiansen (PH). They’re available to respond to appropriate questions you might have concerning their firm’s audit of the accounts of Berkshire. Mr. Forrest Krutter is secretary of Berkshire. He will make a written record of the proceedings. Mr. Robert M. Fitzsimmons has been appointed inspector of elections at this meeting. He will certify to the account of votes cast in the election for directors. The named proxy holders for this meeting are Walter Scott Jr. and Marc Hamburg.
WARREN BUFFETT：大会现在开始。除了我本人之外，我先介绍一下 Berkshire 的董事们。他们就在这里，请我念到名字时起立。Susan T. Buffett（掌声）。Howard Buffett（掌声）。这些名字你们懂的，是我们在电话簿里找到的——（笑声）Malcolm Chace, III（掌声），以及 Walter Scott Jr.（掌声）。今天到场的还有我们的审计师 Deloitte and Touche 的合伙人，Mr. Ron Burgess 和 Mr. Craig Christiansen（PH）。他们可以就该事务所对 Berkshire 账目的审计，回答你们可能提出的合适问题。Mr. Forrest Krutter 是 Berkshire 的秘书，他将对会议过程作书面记录。Mr. Robert M. Fitzsimmons 已被指定为本次会议的选举监察员，他将对董事选举投票的计数出具证明。本次会议指定的代理投票持有人是 Walter Scott Jr. 和 Marc Hamburg。
Proxy cards have been returned through last Friday representing 998,258 Berkshire shares to be voted by the proxy holders as indicated on the cards. That number of shares represents a quorum, and we will therefore directly proceed with the meeting. We will conduct the business of the meeting and then adjourn the formal meeting. After that we’ll entertain questions you might have. First order of business will be a reading of the minutes of the last meeting of shareholders. I recognize Mr. Walter Scott Jr. who will place a motion before the meeting. WALTER SCOTT JR.: I move that the reading of the minutes of the last meeting of the shareholders be dispensed with.
截至上周五，我们已收到代理投票卡，合计代表 998,258 股 Berkshire 股票，代理持有人将按照卡片所示行使投票权。该持股数量构成法定人数，因此我们将直接进入会议议程。我们将先处理会议事项，然后宣布正式会议休会。之后，我们将回答你们的问题。第一项议程是宣读上一次股东大会的会议记录。我请 Walter Scott Jr. 先生提出动议。WALTER SCOTT JR.：我提议免去宣读上一次股东大会会议记录。
WARREN BUFFETT: Do I hear a second?
WARREN BUFFETT：有没有附议？
VOICE: I second the motion.
VOICE：我附议。
WARREN BUFFETT: Do I hear a second? (Laughter)
WARREN BUFFETT：有没有附议？（笑声）
VOICE: I second the motion.
VOICE：我附议。
WARREN BUFFETT: The motion has been moved and seconded. Are there any comments or questions? We’ll vote on the motion by voice vote. All of those in favor say, “Aye.”
WARREN BUFFETT：该动议已有人提出并附议。有没有意见或问题？我们将以口头表决进行。赞成的请说“Aye”。
VOICES: Aye.
VOICES：Aye。
WARREN BUFFETT: Opposed? The motion is carried. (Laughter) Does the secretary have a report of the number of Berkshire shares outstanding entitled to vote and represented at the meeting?
WARREN BUFFETT：反对的呢？动议通过。（笑声）秘书是否带来了关于有表决权且在会场代表出席的 Berkshire 流通在外股份数量的报告？
FORREST KRUTTER: Yes, I do. As indicated in the proxy statement that accompanied the notice of this meeting that was sent by first-class mail to all shareholders of record on March 7, 1995, being the record date for this meeting, there were 1,177,750 shares of Berkshire common stock outstanding, with each share entitled to one vote on motions considered at the meeting. Of that number, 998,258 shares are represented at this meeting by proxies returned through last Friday.
FORREST KRUTTER：有的。根据于 1995 年 3 月 7 日（本次会议的股权登记日）以一类邮件寄送给所有登记在册股东的会议通知所附代理声明：当时 Berkshire 流通在外的普通股为 1,177,750 股，每股在本次会议议案上享有一票表决权。其中有 998,258 股通过截至上周五收到的代理投票在本次会议上被代表。
WARREN BUFFETT: Thank you. If a shareholder is present who wishes to withdraw a proxy previously sent in and vote in person on the two items of business provided for in the proxy statement, he or she may do so. Also, if any shareholder that’s present has not turned in a proxy and desires a ballot in order to vote in person on these two items, you may do so. If you wish to do this, please identify yourself to meeting officials in the aisles who will furnish two ballots to you, one for each item. Would those persons desiring ballots please identify themselves so we may distribute them? Just raise your hand and you’ll get one. The first item of business of this meeting is to elect directors. I now recognize Mr. Walter Scott Jr. to place a motion before the meeting with respect to election of directors. WALTER SCOTT JR.: I move that Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chase, III, Charles T. Munger and Walter Scott Jr. be elected as directors.
WARREN BUFFETT：谢谢。如果在场有股东希望撤回先前寄出的代理，并就代理声明中的两项议案亲自投票，完全可以这么做。同样，在场若有尚未提交代理、并希望就这两项议案亲自投票的股东，也可以领取选票。如需选票，请在过道向会务人员表明身份，他们会向你发放两张选票，每项议案一张。需要选票的请举手示意，以便我们分发。会议第一项议程是选举董事。现在我请 Walter Scott Jr. 先生就董事选举提出动议。WALTER SCOTT JR.：我提议选举 Warren E. Buffett、Susan T. Buffett、Howard G. Buffett、Malcolm G. Chase, III、Charles T. Munger 和 Walter Scott Jr. 为公司董事。
VOICE: I second the motion.
VOICE：我附议。
WARREN BUFFETT: It has been moved and seconded that Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chase, III, Charles T. Munger and Walter Scott Jr. be elected as directors. Are there any other nominations? There any discussion? You’re doing fine. (Laughter) The nominations are ready to be acted upon. If there are shareholders voting in person, they should now mark their ballots on the election for directors and allow the ballots to be delivered to the inspector of election. Collect those, please. Would the proxy holders please also submit to the inspector of elections, a ballot on the election of directors, voting the proxies in accordance with the instructions they’ve received? Mr. Fitzsimmons, when you’re ready, you may give your report.
WARREN BUFFETT：关于选举 Warren E. Buffett、Susan T. Buffett、Howard G. Buffett、Malcolm G. Chase, III、Charles T. Munger 和 Walter Scott Jr. 为董事的动议已有人提出并附议。是否还有其他提名？有无讨论？你们做得很好。（笑声）现在可以对提名进行表决。若有股东现场亲自投票，请在董事选举选票上作标记，并将选票交给选举监察员。请开始收取。代理持有人也请将董事选举的选票提交给选举监察员，并按照其所收到的指示行使代理投票。Mr. Fitzsimmons，请您准备就绪后作出报告。
ROBERT FITZSIMMONS: My report is ready. The ballot of the proxy holders received through last Friday cast not less than 996,892 votes for each nominee. That number far exceeds a majority of the number of shares outstanding. The certification required by Delaware law regarding the precise count of the votes, including the votes cast in person at this meeting, will be given to the secretary to be placed with the minutes of this meeting.
ROBERT FITZSIMMONS：我的报告已经准备好。截至上周五收到的代理选票，对每位被提名人所投的赞成票不低于 996,892 票。该数字远超流通在外股份过半所需。依据 Delaware 法律所要求的关于票数精确统计的证明（包括本次会议现场投下的选票），将提交给秘书并随本次会议记录一并存档。
WARREN BUFFETT: Thank you, Mr. Fitzsimmons. Warren E. Buffett, Susan T. Buffett, Howard G. Buffett, Malcolm G. Chase, III, Charles T. Munger and Walter Scott Jr. Have been elected as directors.
WARREN BUFFETT：谢谢你，Mr. Fitzsimmons。Warren E. Buffett、Susan T. Buffett、Howard G. Buffett、Malcolm G. Chase, III、Charles T. Munger 和 Walter Scott Jr. 已当选为董事。
3. Motion authorizing preferred stock
授权发行优先股的动议
WARREN BUFFETT: The second item of business at this meeting is to consider the recommendation of the board of directors to amend the company’s certificate of incorporation. The proposed amendment would add a provision to the certificate of incorporation authorizing the board of directors to issue up to one million shares of preferred stock in one or more series, with such preferences, limitations, and relative rights as the board of directors may determine. Now, we discussed this some in the annual report. But I would say — and we’ll find out the exact number — but I think we probably had 11 or 12 — maybe 12,000 or so shares voted against the proposal. And I think we had a couple thousand shares that abstained. And since there really is no downside to the proposal, that indicated to me that I’d not done a very adequate job of explaining the logic of authorizing the preferred. So, I’d like to discuss that for a minute now. And I’d also like anybody that would like to ask questions about it, they can do so now. We can talk about it later, too. But if you’d like to do it before the vote, that’d be fine.
WARREN BUFFETT：本次会议的第二项议程，是审议董事会关于修改公司公司章程（证书）的建议。拟议修订将为公司章程增加一项条款，授权董事会按一项或多项系列发行最多一百万股优先股，其优先顺序、限制与相对权利由董事会自行决定。我们在年报里对此做过一些讨论。但我要说——我们会查清确切数字——我想大概有一一、二——也许是一万两千股左右——投了反对票。还有几千股选择了弃权。鉴于该提案实际上并无不利之处，我据此判断自己并没有把授权发行优先股的逻辑解释得足够充分。所以我现在想花一分钟再谈谈。同时，如果有人现在就想就此提问，也可以现在提。我们也可以稍后再谈。但如果你们愿意在表决前提问，也很好。
The authorization is just that. It’s an authorization. It’s not a command to issue shares. It’s not a directive. It simply gives the directors of the company the ability, in a situation where it makes sense for the company to issue preferred shares, to do so. Now, when we acquire businesses — and I’ll tell you about one when we’re through with this in a few minutes — when we acquire businesses, sometimes the seller of the business wants cash. Sometimes they would like common stock. And it’s certainly possible, as one potential seller did last year, that they wanted, in that case, a convertible preferred stock. Now, from our standpoint, as long as the value of the consideration that we give equates, we really don’t care, aside from a question of tax basis we might obtain, but we — In other economic respects, we don’t care what form of consideration we use, because we will equate the value of cash, versus a straight preferred, versus a convertible preferred, versus common stock, whatever it may be.
这个“授权”就是字面意思。它是授权，不是命令发行股票，不是指令。它只是让公司董事在确实有利于公司发行优先股的情形下，具备这样做的能力。现在，当我们并购企业时——再过几分钟在这个议题结束后，我会举一个例子——当我们并购企业时，有时候卖方想要现金；有时候他们希望得到普通股。也完全可能出现这样的情况，就像去年某位潜在卖方那样，他们在那种情况下希望得到可转换优先股。对我们而言，只要我们支付的对价在价值上等值，除了我们可能获得的税收成本基础问题之外，我们并不在意——从其他经济层面的角度看，我们并不在意我们使用哪种形式的对价，因为我们会把现金、纯优先股、可转换优先股、普通股等各类对价的价值进行等值化处理。
So, if the worry is that we will do something dumb in issuing the preferred stock, you should — that’s a perfectly valid worry. But you should worry just as much we’ll do something dumb in terms of using cash or common stock. I mean, if we’re going to do something unintelligent, we can do it with a variety of instruments. (Laughter) And we will not get more licentious in our behavior or anything simply because we have the preferred stock. And the preferred stock may offer sellers of a business the chance to do a tax-free exchange with us. And they may not want common stock, because they may have an ownership situation where they don’t want to run the risk of common stock ownership. And that’s why our preferred is flexible as to terms. Because we could give those people a straight preferred with a coupon that made it worth par at the time we issued it. And then they would know what their income would be for the next umpteen years. And that may be of paramount interest to them. We could issue them an adjustable-rate preferred, which as money market conditions change, would also change its coupon.
所以，如果担心我们会因为发行优先股而做蠢事——这是完全合理的担心。但你同样应该担心我们在使用现金或普通股时也会做蠢事。我的意思是，如果我们要做不明智的事，手里的工具多的是。（笑声）我们不会因为拥有优先股这个工具就变得更放纵或类似的。优先股还可能让企业卖方有机会与我们进行免税交换。而他们可能并不想要普通股，因为他们的持股结构不愿承担普通股所有权的风险。这也是为什么我们的优先股在条款上是灵活的。因为我们可以给对方一只纯优先股，配上足以使其在发行时等于面值的票息。那样他们就能知道未来若干年的收入水平，而这也许对他们至关重要。我们也可以发行一只利率可调的优先股，其票息会随着货币市场状况变化而调整。
And then they would be sure of a constant principal value for the rest of their lifetimes. And one or both of those factors could be more important to one seller or another. So that we simply have more forms of currency available to make acquisitions if we have the ability to issue various forms of preferred. Because a preferred stock, if it’s properly structured, allows for the possibility of a tax-free transaction with a seller. And that’s important to many sellers. Now, in the end, many sellers will prefer cash, just as in the past. And probably most of the sellers that don’t want cash will want common stock. But we will have a preferred stock available. We’re only authorizing a million shares because under Delaware law, there’s an annual — I think there’s an annual fee. I know there’s an initial fee. And I think there’s an annual fee that relates to the amount of shares authorized. So, if we authorized a hundred million shares, we would be paying a larger annual fee, which is something Mr. Munger wouldn’t let me do.
这样，他们此后的人生就能确定本金价值的稳定性。而上述两点中的一项或两项，可能对不同的卖方更为重要。因而，只要我们具备发行多种形式优先股的能力，在并购时我们就拥有更多“货币形态”的选择。因为一只结构设计得当的优先股，能让交易有机会以免税方式与卖方达成，这对许多卖方很重要。当然，最终，很多卖方仍会像过去一样偏好现金；而不想要现金的卖方，多数可能会选择普通股。但我们会把优先股这个选项准备好。我们这次只授权一百万股，是因为在 Delaware 法下，每年——我记得是有年费的。我确定有初始费用，我也认为还有与授权股数相关的年度费用。所以如果我们授权一亿股，我们每年的费用就更高，这种事 Mr. Munger 不会让我干的。
(Laughter) So what we will do, if we issue this, we will issue — undoubtedly, we will issue some sub-shares so that the numbers of shares, for taxation purposes, is relatively limited. But that we will issue sub-shares to make it easier to make change, essentially, in the market. We may issue — if the occasion demands — we may issue a convertible preferred. But that convertible preferred would not be worth any more, at the time we issue it, than a straight preferred. We would adjust, in terms of the coupon, and the conversion price, and so on. So we can equate various forms of currency to fit the desires of the seller of the business. And this is simply one more tool to do it. There’s no downside, like I say, unless we do something stupid. And if we do something stupid with this, we would do something stupid with cash or whatever. So it —we probably should’ve done this some time ago, but we never had a case of a seller wanting that form of currency before. And so it just — and we always felt we could get it authorized promptly.
（笑声）因此，如果我们真的发行，我们会——毫无疑问会发行一些子股（sub-shares），这样就税务目的而言，实际股份数量相对有限。但我们会通过子股发行，使市场交易中的“找零”在本质上更容易处理。必要时——如果情形需要——我们可能会发行可转换优先股。但这只可转优在发行时并不会比纯优先股更有价值。我们会通过调整票息、转换价等条款，使其价值与纯优先股等值。这样我们就能把各类“货币形态”等值化，以满足卖方的偏好。这只是多了一件工具。正如我所说，除非我们做蠢事，否则没有下行风险。而如果我们会在这件事上做蠢事，那我们也会在用现金或别的工具时做蠢事。所以——我们或许早该这么做了，只是此前从未遇到有卖方希望用这种“货币形态”的情况。并且我们一直认为授权随时可以顺利通过。
But there’s no reason to lose a couple of months, if a transaction is pending, to call a meeting to get this on the books. So, it’s simply one more tool. And if there are — anybody that has any questions or comments on the preferred, like I say, you can hold them until later, but I’d be glad to have them before we have the vote. Do we have any? Yeah, there’s a question over there. If you’ll wait just a second, we’ll get a microphone to you. When you ask questions, now or later, if you’ll give your name and where you live, I’d appreciate it.
但如果有一笔交易在推进中，就没有必要为了把这件事写进章程而耽误上几个月再召集一次会议。所以，这只是再添一件工具而已。关于优先股的问题或意见——如我所说——你们可以留到会后再提，但如果在表决之前提问，我也很乐意。我们有问题吗？好，那边有一个问题。请稍等片刻，我们把麦克风递过去。无论现在还是稍后提问，请先报上你的名字和居住地，我会很感激。
AUDIENCE MEMBER: Hi, my name is Dr. Lawrence Wasser. I’m from New York. My question is this. If you want to buy a business and the people in the business want cash, you have to have cash, cash that — you know, this kind of cash.
AUDIENCE MEMBER：你好，我叫 Dr. Lawrence Wasser，来自 New York。我的问题是这样：如果你想收购一家企业，而对方要的是现金，你就必须有现金，现金——你懂的，这种现金。
WARREN BUFFETT: We’re familiar with it.
WARREN BUFFETT：我们对此很熟悉。
AUDIENCE MEMBER: Yeah. (Laughter and applause) But it strikes me that the preferred isn’t really cash, it’s fiat currency. That is, it’s currency that we can create.
AUDIENCE MEMBER：是的。（笑声与掌声）但在我看来，优先股并不是真正的现金，而是“法定货币”。也就是说，它是一种我们可以创造出来的“货币”。
WARREN BUFFETT: That’s true. It’s like common stock in that respect. It is the — it is a form — it is an alternate form of currency, and — but it is — Just in terms of common stock, for example, assuming we had enough authorized, we have an unlimited ability to create currency. Now, if we created the wrong price, it dilutes the value of the old currency. But go ahead on.
WARREN BUFFETT：没错。在这方面它就像普通股。它是——它是一种——是一种替代性的“货币”形态，而且——就拿普通股来说吧，假设我们有足够的授权，我们就有无限的能力去“创造货币”。当然，如果我们定价错误，就会稀释原有“货币”的价值。请继续。
AUDIENCE MEMBER: Until we vote in the affirmative, which I’m sure that this group will probably do because of their confidence in you, but until we vote in the affirmative, it doesn’t exist.
AUDIENCE MEMBER：在我们投赞成票之前——我确信大家会因为对你的信任而这么做——但在我们投出赞成票之前，它是不存在的。
WARREN BUFFETT: That is correct. That would be true, incidentally, with common stock. If we had no more authorized common stock out than we had issued, we have, I think, a million and a half authorized. But let’s assume that we’d issued all that we had authorized. Until more was authorized by the shareholders, there would — it would not be available to be issued.
WARREN BUFFETT：没错。顺便说，这对普通股同样成立。如果我们的普通股授权额度与已发行数量相等——我记得授权大概是一百五十万股——但假设我们已经把所有授权都发完了，在股东再次授权之前，就——就没有可供发行的额度。
AUDIENCE MEMBER: But if more were authorized by the shareholders then isn’t it true that the value of the shareholders’ holding would be diluted?
AUDIENCE MEMBER：但如果股东再授权更多股份，那难道不会稀释股东所持股份的价值吗？
WARREN BUFFETT: Only if we receive less in value than we give. That’s the key to it. I mean, if we issue $200 million worth of preferred and we receive a business that’s only worth 150 million, there’s no question you’re worse off than before. So are we, incidentally. But we’re all worse off. The — and that’s true if we give cash that’s worth more for a business than the business is worth. If we give 200 million of cash for a business that’s worth a 150 million, we are worse off. We may not have issued a share of stock. But we have diluted the value of your stock if we do that. As long as we get value received, in terms of whether — of cash, common stock, or preferred stock — then you are not diluted in terms of value. It’s an important point. And obviously, a number of companies, as you may have — Charlie and I have commented about in reports and elsewhere — a number of companies, in our opinion, have issued common stock, particularly, which has a value greater than what they receive.
WARREN BUFFETT：只有在我们收到的价值低于我们付出的价值时，才会被稀释。这是关键。也就是说，如果我们发行了面值2亿美元的优先股，却只换来一家价值1.5亿美元的企业，那毫无疑问你会比之前更糟。顺便说一句，我们也更糟——大家都更糟。同样地，如果我们为一家企业支付的现金高于其价值，也一样。若我们用2亿美元现金买了一家只值1.5亿美元的企业，我们就更糟。即便我们一股都没发行，我们也等于稀释了你们股票的价值。只要我们“等价交换”——不论是用现金、普通股还是优先股——你们在价值层面就不会被稀释。这一点很重要。而且显而易见的是，正如你们可能注意到、也是我和 Charlie 在报告和其他地方评论过的，在我们看来，许多公司——尤其是在发行普通股时——给出去的价值高于他们所得到的价值。
And — when they do that, they are running what I — what John Medlin of the Wachovia called a “chain letter in reverse.” (Laughter) And that’s cost American shareholders a lot of money. I don’t think it’ll cost them any money at Berkshire. But it’s a perfectly valid worry for shareholders to have. Because a management can build an empire just by issuing these little pieces of paper, which they feel don’t cost them anything. I think Charlie had one story about that in the past. You want to comment on that, Charlie? Nonames basis, of course. (Laughs)
而当他们这么做时，就在进行我——准确地说是 Wachovia 的 John Medlin 所称的“反向连锁信”（笑声）。这让美国股东损失了大量金钱。我不认为这会在 Berkshire 发生。但这是股东完全合理的担忧。因为管理层可以仅靠发行这些小纸片——他们觉得这不花什么成本——来打造帝国。我记得 Charlie 过去讲过一个相关故事。Charlie 要不要评论一下？当然，不点名。（笑）
CHARLIE MUNGER: There was a particular bank where one of the officers wanted stock options, pointed out to the management that they could issue all these shares and it didn’t cost anything. Now, imagine hiring a manager who thinks that way and paying them money — (laughter) — to behave like Judas in your very midst.
CHARLIE MUNGER：有家银行的一位高管想要股票期权，他还向管理层强调可以发行一大堆股票，这又不花什么成本。你想象一下，雇这么一个人当经理，还给他发钱——（笑声）——让他在你身边干出 Judas 式的事情。
WARREN BUFFETT: We have had conversations with managers — (laughter) — where they tell us how fortunate they feel because the stock is down and they can issue options cheaper. Now, if they were issuing those to the third parties, you know, I’m not sure whether they’d have exactly the same attitude. But we have no feeling that we’re getting richer when we issue shares. We have a feeling we’re getting richer when we get at least as much value in a business as the shares are worth that we issue. And we don’t intend to issue them under any other circumstances. But it’s a perfectly valid worry.
WARREN BUFFETT：我们确实遇到过一些经理人——（笑声）——他们会说股票跌了真是太幸运了，因为这样就能更便宜地发期权。要是把这些期权发给第三方呢，你懂的，我不确定他们是否还是这种态度。但我们在发行股票时绝不会觉得自己因此变富了。只有当我们用所发行股票的价值，至少换来等值的企业价值时，我们才会觉得自己变富了。除此之外，我们无意发行。尽管如此，股东的担忧完全合理。
AUDIENCE MEMBER: The second part of the question is that, obviously, with preferred issue, you have a situation where the common shareholder is — moves to the back of the line, as it were. Why should the common shareholder in this room want to step to the back of the line if he’s at the front of the line now?
AUDIENCE MEMBER：问题的第二部分是，显而易见，一旦发行优先股，普通股东就——可以说——被挪到了队伍的后面。既然现在普通股东在队伍前面，为什么还要愿意往后站呢？
WARREN BUFFETT: Well, it — but it’s also true if we buy a business for cash, and we — let’s say we borrow the money, the bank that we borrow the money from will come ahead of the common shareholder. There’s no question. Any time you move — you engage in transactions that involve the capital structure, you are changing the potential for each part of the capital structure. If you issue a lot of common and you’ve got some debt outstanding, you’ve generally improved the position of the debt. And the question really becomes whether you think that the position of the common shareholder is improved by issuing either preferred stock, or perhaps borrowing a lot of money, to make an acquisition. I mean, a couple of times in the history of Berkshire, we’ve borrowed money to buy something, to buy a business. And when we do that, we are placing a bank, or an insurance company, or whomever, ahead of the position of the common shareholder. We did that when we issued some debt a few years back. And there’s a question of weighing whether the common shareholders are going to be better off by borrowing money.
WARREN BUFFETT：嗯——但如果我们用现金收购一家企业，而且——比如我们是借钱来的，那么放贷给我们的银行就会排在普通股东之前。这是毫无疑问的。任何涉及资本结构的交易，都会改变资本结构各部分的风险与收益位置。如果你大量发行普通股、而且账上有债务，通常是改善了债权人的地位。真正的问题在于：通过发行优先股，或者通过大举举债来并购，普通股东的处境是否因此改善。Berkshire 的历史上，我们有过几次借钱买东西、买企业。当我们这么做时，我们就把银行、保险公司或其他债权人放在了普通股东之前。几年前我们发行债券时也是如此。关键在于权衡：通过借款，普通股东是否会变得更好。
But borrowing money is not necessarily at all harmful to shareholders — although certainly, if it’s carried to excess, it is. And the preferred is a form of quasi-borrowed money that does rank ahead of the common shareholder. But then, at the same time, we’re adding a business which we think is going to benefit the shareholder, if we issue that. So that’s the tradeoff. Yeah.
但借钱并不一定对股东有害——当然，过度举债肯定有害。优先股是一种准债务形态，确实排在普通股之前。但与此同时，如果我们据此收购到能给股东带来好处的企业，那就是值得的权衡。这就是取舍所在。对。
AUDIENCE MEMBER: My name is Matt Zuckerman (PH). I’m from Miami, Florida. My question is, it seems to me that there’s some requirement for shareholder votes if convertible stock — preferred stock — is issued beyond a certain limit. What are those limits?
AUDIENCE MEMBER：我叫 Matt Zuckerman（PH），来自 Miami, Florida。我的问题是：在我看来，如果发行的可转换证券——优先股——超过某个上限，似乎需要股东投票批准。那个上限是多少？
WARRREN BUFFETT: There are no limits on the conversion term that we might do. But for example, if we were going to issue a convertible preferred — now we have no plans to do it, but it could happen. In fact, it might well happen this year. The — we would — and the alternative, we’ll say, was giving somebody a hundred million dollars in cash for a business. If we were to issue a straight preferred, we would figure out what a hundred million dollars’ worth of a straight preferred would sell for, what coupon would be necessary. And that would depend on call provisions and a few things. But for a triple-A credit like Berkshire, you know, it would be somewhere in the area of 7 percent or thereabouts. And then they would have no participation in the upside of the common. If they wanted something that was sure to maintain its principal value, then you have to issue an adjustable-rate preferred that will keep its value around par. That preferred might have an initial coupon of, say, 5 percent or something of the sort, because it has the ability to go up or down based on interest rates. But it would always be worth about par.
WARREN BUFFETT：对我们可设定的转换条款本身没有上限。但举例说，如果我们要发行一只可转优——目前没有计划，但可能会发生。事实上，今年就很可能发生。另一种替代做法是假设我们以一亿美元现金去收购一家企业。若发行一只纯优先股，我们会计算要让“一亿美元的纯优先股”卖得出去，需要多高的票息。这取决于赎回条款等因素。但以 Berkshire 这样的 AAA 信用品质，票息大概在7%左右。那样他们就无法参与普通股的上涨。如果他们想要确保本金价值稳定，那就必须发行利率可调的优先股，使其价值保持在面值附近。这种优先股的初始票息可能在5%上下，因为它会随利率上下调整。但它始终大致等于面值。
If we were to issue a convertible preferred, it might have a conversion price of, just to pick a figure, 28,000 or something of the sort, and a coupon well below the coupon on a straight preferred. And so, whatever we did, they would equate out in our mind as to the value we were giving. We’re not going to give 120 percent of X if we’re only willing to pay a hundred percent of X, just because the form of a deal changes. But you may well see us issue, at some point — you may see us issue a convertible preferred. You may see us issue a straight preferred. You may see us issue an adjustable-rate preferred. I hope we do something because I’d like, you know —
如果我们发行一只可转优，它的转换价可能会——随便举个数——定在28,000之类，票息会明显低于纯优先股。不论我们采取哪种形式，在我们看来给出的价值都会等值。我们不会因为交易形式变了，就拿出“120%的X”去支付我们只愿意付“100%的X”的东西。不过你们很可能在某个时点看到我们发行可转优；也可能看到我们发行纯优先；也可能看到发行利率可调的优先。我希望我们能做点什么，因为我想，你知道——
AUDIENCE MEMBER: Yeah. Based on —
AUDIENCE MEMBER：是的。基于——
WARREN BUFFETT: If we do it, we’ll think we’re better off.
WARREN BUFFETT：如果我们做了，那就意味着我们认为这么做让我们更好。
AUDIENCE MEMBER: Well, based on your past performance, I’m sure you’ll get more value than you give.
AUDIENCE MEMBER：嗯，基于你们过去的业绩，我确信你们拿到的价值会高于你们付出的价值。
WARREN BUFFETT: Well.
WARREN BUFFETT：嗯。
AUDIENCE MEMBER: But in any case, it was my understanding that if the amount of shares issued for a conversion of a convertible issue were greater than 20 percent of the total amount of shares outstanding, then it would require a vote of the stockholders, under Delaware law. I may be wrong.
AUDIENCE MEMBER：但无论如何，据我理解，如果可转证券转换后发行的股份数量超过流通在外股份总数的20%，那么根据 Delaware 法就需要股东投票。我可能搞错了。
WARREN BUFFETT: I think it’s a stock exchange rule, isn’t it, Charlie?
WARREN BUFFETT：我认为那是交易所规则，对吧，Charlie？
CHARLIE MUNGER: Yes.
CHARLIE MUNGER：对。
WARREN BUFFETT: You’re right about the rule, but —
WARREN BUFFETT：你说的这个规则是对的，但是——
CHARLIE MUNGER: It’s a New York Stock Exchange rule.
CHARLIE MUNGER：那是 New York Stock Exchange 的规则。
WARREN BUFFETT: It’s a New York Stock Exchange rule. That would be $5 billion-plus of deal. And, you know, we would love to make a $5 billion deal, but I don’t think we’re going to do it. So I would say that the chances of any acquisition being large enough so that it requires a shareholder vote is probably slim. But it isn’t because we wouldn’t be interested. (Laughter) And you know, if we have one, we’ll be coming back to you — (laughter) — with the votes already in hand. (Laughter and applause) Are there any other questions on the preferred? We can talk more about it later, too. I just want to — oh, here we are. Sure.
WARREN BUFFETT：这是 New York Stock Exchange 的规则。要触发那个门槛，交易规模得在50亿美元以上。我们当然乐于做一笔50亿美元的交易，但我不觉得我们会那么做。所以，我会说需要股东投票的大体量并购发生的概率很小。但这不是因为我们不感兴趣。（笑声）如果真有，我们会再来找大家——（笑声）——而且票可能已经在手了。（笑声与掌声）关于优先股还有别的问题吗？我们之后也可以再谈。我只是想——哦，这儿有位。请讲。
AUDIENCE MEMBER: Good morning, Mr. Buffett.
AUDIENCE MEMBER：早上好，Mr. Buffett。
WARREN BUFFETT: Morning.
WARREN BUFFETT：早上好。
AUDIENCE MEMBER: I’m Raina Di Costiloy (PH) from Chicago. I’m very proud to be here. And I’ve seen you grow so, that pretty soon we’re going to be out in a football field. (Laughter) I think your explanation was very helpful. Because as I read this, and I’m sure many of the other lay folk, I didn’t understand what you —
AUDIENCE MEMBER：我是来自 Chicago 的 Raina Di Costiloy（PH）。能到这里我非常自豪。看着你们成长，很快我们恐怕要去足球场开会了。（笑声）我觉得你的解释非常有帮助。因为当我读到这个提案时，我——我相信很多外行人也是——并不明白你——
WARREN BUFFETT: (Inaudible)
WARREN BUFFETT：（听不清）
RAYNA DI COSTILOY: — what you were doing. And you mentioned the preferred stock. But in the prospectus, it’s not clear whether it would be the convertible preferred, the straight preferred. And you cleared that, answering a few other questions, but some of the people felt it would dilute their stock.
RAYNA DI COSTILOY：——你们到底准备做什么。你提到了优先股。但在说明文件里，并不清楚会是可转优，还是纯优先。你刚才通过回答几个问题把这点说清了，但有些人还是觉得这会稀释他们的股票。
WARREN BUFFETT: Yeah. Well, I should’ve made that clear in the annual report. And I’m glad I’ve had this chance to do it today. Anything else on the preferred? OK.
AUDIENCE MEMBER: You don’t have to come back to the shareholders for a vote, after these shares are authorized, for the terms of it. And you’ve discussed this in terms of buying companies. My question is, you yourself, through Berkshire Hathaway, own the preferred shares of several companies: Salomon, USAir, American Express. Do those shareholders have to vote on the terms of the preferred shares that you bought for those companies? Or is that left at the board of directors’ decision level.
观众：在这些股份获授权之后，你们不需要就其条款再回到股东处进行表决。你从并购的角度谈了这件事。我的问题是，你本人通过 Berkshire Hathaway 持有多家公司的优先股：Salomon、USAir、American Express。那些公司的股东是否需要就你们购买的优先股条款进行投票？还是这由董事会层面决定？
WARREN BUFFETT: Those —
WARREN BUFFETT：这些——
AUDIENCE MEMBER: Could you clarify that point?
观众：你能澄清一下这一点吗？
WARREN BUFFETT: Go — excuse me, go ahead.
WARREN BUFFETT：请——不好意思，你继续。
AUDIENCE MEMBER: Could you clarify that point, please?
观众：请你把这一点解释清楚。
WARREN BUFFETT: Yeah. We bought a — I think we’ve probably bought six issues of preferred directly from companies. And since none of those triggered that New York Stock Exchange rule that we discussed earlier — and they could’ve if they’d been somewhat larger, but they didn’t — none of those deals had to be approved by the shareholders. I think the only deal we’ve had with a company that had to be approved by the shareholders was when we bought the Cap Cities/ABC stock. Well, we bought early in 1986. I think it was approved by their shareholders in 1985. But the only situations where it would’ve had to have been approved is if it triggered the New York Stock Exchange rule. And our purchases were not that large that they did that. Any other questions? Yeah, there’s one more.
WARREN BUFFETT：好的。我们直接从公司手里买过——我想大概买过六笔优先股发行。由于这些交易都没有触发我们先前讨论过的 New York Stock Exchange 规则——如果规模再大一些可能会触发，但并没有——所以这些交易都不需要股东批准。我记得我们唯一一笔需要股东批准的交易，是我们购买 Cap Cities/ABC 的股票。当时我们是在 1986 年初买入，但我想他们股东是在 1985 年批准的。只有在触发 New York Stock Exchange 规则时，才需要股东批准。而我们的购买规模没有大到需要那样。还有别的问题吗？好，还有一位。
AUDIENCE MEMBER: My name is Dale Vocawitz (PH). I’m from Champagne, Illinois. A recent issue of Barron’s indicated that it may be possible to issue a best of all possible worlds preferred, that being one where the dividend looks like interest to the issuer and is taxdeductible. And to the purchaser, it would qualify for the dividends received deduction. Do you think that structure might be possible with these shares?
观众：我叫 Dale Vocawitz（PH），来自 Champagne, Illinois。最近一期的 Barron’s 提到，可能存在一种“最佳世界”式的优先股结构：对发行方而言，股息看起来像利息，可以税前扣除；而对购买方而言，又可以享受股息所得扣除。你认为这类结构在这些股份上可行吗？
WARREN BUFFETT: Well, we haven’t thought about that. I know what you’re talking about on that, but I don’t think it would be possible. For one thing, I don’t think you probably have a tax-free deal that way. Charlie, do you?
WARREN BUFFETT：嗯，这个我们没考虑过。我知道你在说什么，但我不认为可行。首先，我不认为那样能做到免税交易。Charlie，你怎么看？
CHARLIE MUNGER: We probably wouldn’t try and be that cute. (Laughter)
CHARLIE MUNGER：我们大概不会玩这么“巧妙”的把戏。（笑声）
WARREN BUFFETT: I’ve got several quips in mind, but I think I’ll keep them to myself. (Laughter) My guess is that that form does not work for a long time. I know what you’re talking about on it, but my guess is it doesn’t. Some companies — then we’ll get on with this — but some companies care about the consideration they give in a deal, whether it’s cash, or preferred, or so on, because they care about the accounting treatment that they get. They want — they usually want pooling treatment rather than purchase accounting treatment. I won’t get into that here. I know it’s going to disappoint you, but I won’t get into that here. Although I may in the next annual report. And that is of absolutely no consequence to us. We care not a wit about the accounting treatment that we receive. We feel that we have a shareholder body that’s intelligent enough to understand the economic reality of a transaction.
WARREN BUFFETT：我脑子里有好几个段子，但还是算了吧。（笑声）我的判断是，那种结构在相当长时间里行不通。我明白你说的，但我猜大概行不通。有些公司——说完这个我们就继续议程——会在意他们在交易中付出的对价形式，是现金、还是优先股等等，因为他们在意随之而来的会计处理。他们通常希望用合并（pooling）而不是购买法（purchase accounting）。我就不在这里展开了。我知道这会让你有点失望，但我不在这里展开——也许我会在下一封年报里谈。而这对我们而言完全无关紧要。我们一点也不在乎拿到的会计处理是什么。我们相信我们的股东群体足够聪明，能理解一笔交易的经济实质。
And that by playing various games, in terms of how we try to structure it, and maybe flow part of the purchase price back through the income statement or anything of the sort, which is done — that’s not something that we care about at all. We would rather do whatever makes the most sense for us and for the seller, and then explain to you whatever accounting peculiarities may arise out of the transaction. And that probably differentiates us from most companies. And it probably helps us make a deal, occasionally. Anything else?
而通过各种结构性“技巧”来做文章，比如把部分购买价以某种方式流回损益表之类的做法——确实有人这么干——这些都不是我们关心的。我们更愿意做对我们和卖方最有意义的安排，然后再向你们解释由此产生的任何会计“特性”。这大概使我们有别于多数公司，也可能偶尔会帮助我们达成交易。还有别的问题吗？
AUDIENCE MEMBER: — really
观众：——其实
WARREN BUFFETT: OK, now I can hear you fine.
WARREN BUFFETT：好，现在我能听清了。
DALE VOCAWITZ: OK. And I was wondering, will there be any opportunity for shareholders who may find the preferred issue preferable, for any number of reasons, to participate in that?
DALE VOCAWITZ：好的。我想请问，是否会给那些出于各种原因更偏好优先股的股东，提供参与的机会？
WARREN BUFFETT: Well, if we issued a preferred and it became actively traded — let’s say it was a company with many shareholders instead of a few. Obviously, that would be something that any new or present shareholder could make a decision on whether they preferred that issue than others. We could, but have no plans of doing it and I don’t see it happening, we could offer to exchange preferred for present common. And it’s conceivable a few people would have an interest, but the — most people have selfselected in terms of the kind of security they want to own in terms of owning Berkshire common. So it’s unlikely they would want to switch into a preferred, because they would — we wouldn’t have a premium of value, it would just be an alternative security. We could do that, though. I mean, and it would probably be a tax-free deal. We have no plans of doing that, but it’s something that if we ever thought that enough people might want, we could offer it. But no one would be obliged to take it. It’s a good question. OK? We’ll move on.
WARREN BUFFETT：如果我们发行了优先股，而且它变得活跃交易——比如说标的公司股东众多而不是少数——显然，任何新老股东都可以自己决定是否更偏好那只优先股。我们也可以——但没有计划这么做，我也不认为会发生——向现有普通股东提供以优先股置换普通股的选择。可能会有少数人有兴趣，但大多数人持有 Berkshire 普通股，已经在“自我选择”他们想要的证券类型了。所以他们不太可能愿意换成优先股，因为我们不会给价值溢价，那只是一个替代性证券。不过从技术上讲我们可以那么做，而且大概能做到税收递延或免税。我们没有这样的计划，但如果有一天我们认为足够多人会感兴趣，我们可以提供这个选项。但没人会被强制接受。这个问题问得好。可以吗？我们继续。
Is there a motion to adopt the board of directors’ recommendation? WALTER SCOTT JR.: I move the adoption of the amendment to the fourth article of the certificate of corporation as set forth in exhibit A of the company’s proxy statement for this meeting.
是否有人就采纳董事会建议提出动议？WALTER SCOTT JR.：我提议通过对公司章程证书第四条的修订，如本次会议公司代理声明附件 A 所载。
WARREN BUFFETT: Is there a second?
WARREN BUFFETT：有没有附议？
VOICE: I second the motion.
VOICE：我附议。
WARREN BUFFETT: Motion’s been made and seconded to adopt the proposed amendment to certificate of incorporation. Any further discussion? We are ready to act upon the motion. If there are any shareholders voting in person, they should now mark their ballot on the proposed amendment to the certificate of incorporation and allow the ballots to be delivered to the inspector of election. Collecting a few there. Would the proxy holders please also submit to the inspector of elections a ballot on the proposed amendment voting the proxies in accordance with the instructions they have received? We’ll wait just a second here. Mr. Fitzsimmons, when you’re ready you may give your report.
WARREN BUFFETT：关于通过对公司章程证书拟议修订的动议已有人提出并附议。还有进一步的讨论吗？我们准备就该动议进行表决。若有股东现场亲自投票，请现在在公司章程修订提案的选票上作标记，并将选票交给选举监察员。那边正在收取几张。请代理投票持有人也向选举监察员提交该提案的选票，并按照他们所收到的指示行使代理投票。我们在这里稍等片刻。Mr. Fitzsimmons，请您准备好后发表报告。
ROBERT FITZSIMMONS: My report is ready. The ballot of the proxy holders received through last Friday cast lot — not less than 928,889 in favor of the proposed amendment to the certificate of incorporation. That number far exceeds the majority of the number of all shares outstanding. The certification required by Delaware law regarding the precise count of the votes, including the votes cast in person at this meeting, will be given to the secretary to be placed with the minutes of this meeting.
ROBERT FITZSIMMONS：我的报告已准备就绪。截至上周五收到的代理选票中，赞成公司章程修订提案的票数不少于 928,889 票。该数字远超全部流通在外股份过半所需。依据 Delaware 法对票数精确统计所要求的证明（包括本次会议现场投下的选票），将提交给秘书并随本次会议记录一并存档。
WARREN BUFFETT: Thank you, Mr. Fitzsimmons. The amendment to the certificate of incorporation as set forth in exhibit A to the proxy statement for this meeting is approved. After adjournment of the business meeting, I will respond to questions that you may have that relate to the businesses of Berkshire, but do not call for any action at this meeting. Does anyone have any further business to come before this meeting before we adjourn? If not, I recognize Walter Scott Jr. to place a motion before the meeting. WALTER SCOTT JR.: I move this meeting be adjourned.
WARREN BUFFETT：谢谢你，Mr. Fitzsimmons。根据本次会议代理声明附件 A 所载的公司章程修订案已获通过。业务会议休会后，我将回答你们提出的与 Berkshire 业务相关、但不需本次会议采取行动的问题。还有谁在我们休会前需要提交其他事项吗？如果没有，我请 Walter Scott Jr. 提出动议。WALTER SCOTT JR.：我提议本次会议休会。
VOICE: I second the motion.
VOICE：我附议。
WARREN BUFFETT: Motion to adjourn has been made and seconded. We will vote by voice. Any discussion? If not, all in favor say, “Aye.”
WARREN BUFFETT：关于休会的动议已有人提出并附议。我们将以口头表决进行。有无讨论？如果没有，赞成的请说“Aye”。
AUDIENCE: Aye.
AUDIENCE：Aye。
WARREN BUFFETT: All opposed say, “No.” The meeting is adjourned. (Laughter)
WARREN BUFFETT：反对的请说“No”。会议休会。（笑声）
4. Helzberg’s Diamonds acquisition
收购 Helzberg’s Diamonds
WARREN BUFFETT: Now, I’d like to tell you about one thing that — since the annual report — that some of you probably read about in the papers, but maybe not all of you have heard about. Just shortly after the annual report was issued, we completed a transaction with Helzberg’s Diamonds, with Barnett Helzberg, who’s here today. Barnett, would you stand up, please? All right. There he is. Give him a hand. (Applause) You may be interested in how it came about, because Barnett attended two of the last three meetings of Berkshire. He had a few shares in an IRA account, and he was here last year. And shortly after this meeting, I was back in New York City. And I was crossing the street at 58th Street, right near the Plaza Hotel on 5th Avenue. And a woman said, “Mr. Buffett,” and I turned around. And she came up, and she said she’d attended the annual meeting last year — or a few days ago — and said that she enjoyed it.
WARREN BUFFETT：现在，我想谈一件在年报之后发生的事情——你们中的一些人可能在报纸上看到过，但也许并非所有人都听说了。就在年报发布后不久，我们与 Helzberg’s Diamonds 完成了一笔交易，交易对手是今天也在现场的 Barnett Helzberg。Barnett，请你起立好吗？很好，他在那里。给他一点掌声。（掌声）你们可能对这笔交易的缘起感兴趣，因为 Barnett 在过去三次 Berkshire 年会上参加了两次。他在一个 IRA 账户里持有少量股票，去年也来过。就在那次大会结束后不久，我回到 New York City。有一次我在第 58 街过马路，靠近 5th Avenue 上的 Plaza Hotel。一位女士说，“Mr. Buffett”，我转过身来。她走上前，说她去年——或者几天前——参加了年会，并表示很喜欢。
And I said, “That’s terrific,” and I started to cross again. And Barnett had been about 30 or 40 feet away. I didn’t know him, and he had heard this woman. So, he said the same thing. And I turned around. And we shook hands. First time I’d met him, and he said, “You know,” he said, “I might have a business you’d be interested in.” And I get that all the time, so — (Laughter) So I said, “Well, why don’t you write me?” And a time went by, and I got a letter from Barnett. And he’d been thinking about doing something with the business his father had started in 1950, and based in Kansas City that whole time. And he’d been exploring various avenues. But probably, in some part because of his background as Berkshire shareholder, he had some specific interest in the company becoming associated with Berkshire. He cared very much about the company having a permanent home.
我说，“太好了。”然后我继续过马路。Barnett 当时离我大概 30 或 40 英尺。我并不认识他，但他听到了那位女士的话，于是也说了同样的话。我转过身来，我们握了手。这是我第一次见到他。他说，“你知道，”他说，“我可能有一桩生意你会感兴趣。”这种话我经常听到——（笑声）——所以我说，“那你给我写封信吧？”过了一段时间，我收到了 Barnett 的来信。他一直在考虑如何处理这家由他父亲在 1950 年创办、一直以 Kansas City 为基地的企业，他也在探索各种路径。但也许部分因为他是 Berkshire 股东的背景，他对公司与 Berkshire 建立关联有着明确的兴趣。他非常在意公司能有一个永久的归宿。
He cared very much about it having an environment in which it could grow and be run autonomously and be based in Kansas City. And he wanted to receive something in exchange — that he was happy to own for the rest of his life. And so, we worked out a transaction shortly — just very shortly after the annual report went to press. And so now Berkshire, as of 12:01, I guess, yesterday morning, the deal closed. There’s this waiting period because of the Hart-Scott-Rodino Act and a few other things. The transaction closed. And now Berkshire is the owner of Helzberg’s Diamonds, which has roughly 150 stores around, perhaps, 26 or 27 states. I’m not sure the exact number. And mostly in malls, although some others. It’s been enormously successful. Barnett brought in Jeff Comment, who formerly ran Wanamaker’s about eight years ago, I guess it is. And the company has both expanded in its traditional format — it’s gone with a new format recently, which has been very successful.
他也非常在意公司能在 Kansas City 的基础上拥有一个可以成长、并自主经营的环境。而他希望在交换中得到一种资产——那是他愿意终身持有的。所以，我们在年报付印后不久——就很快——敲定了交易。因此，现在 Berkshire，截至昨天凌晨 12:01（我想是这个时间），交易已经完成。由于 Hart-Scott-Rodino Act 以及其他一些原因，中间有一个等待期。交易完成后，Berkshire 成为 Helzberg’s Diamonds 的所有者。该公司在大约 26 或 27 个州开有约 150 家门店，具体数字我不太确定。主要在购物中心里，当然也有其他类型的门店。公司非常成功。Barnett 邀请了 Jeff Comment 加入管理，他大约在八年前曾经管理 Wanamaker’s。公司既在传统业态上扩张——最近也采用了一种新业态，并且非常成功。
It is — in its position in the jewelry industry, it tends to compete with a Zales or Gordon’s, but it does a far, far better job. Their sales, per store, on roughly equivalent square footage, will be very close to double what competitors achieve. It’s got a magnificent morale, and organizational structure. And the people — Barnett was very generous with people in making the sale. He took it out of his own pocket to treat people right because they’d done such a terrific job over the years. And I think you’ll see Helzberg’s become a very big factor in Berkshire over time. And it just shows you what can come out of these annual meetings. So, the rest of you, you know, do your stuff. (Laughter) So anyway, that is an acquisition that was made for — largely for common stock. It did not involve preferred, and — because Barnett preferred common. And — but different people have different needs. And sometimes there’s a group of shareholders that can have different priorities. And that’s the reason we want to have various currencies.
在珠宝行业的定位上，它通常与 Zales 或 Gordon’s 竞争，但它做得要好得多。在大致相同的店铺面积上，其单店销售额几乎是竞争对手的两倍。公司拥有极佳的士气和组织架构。至于员工——在达成出售时，Barnett 对员工非常慷慨。他自掏腰包，善待员工，因为这些年他们做得非常出色。而我认为，随着时间推移，你们会看到 Helzberg’s 在 Berkshire 中成为一个非常重要的组成部分。这也说明了年会能带来怎样的机缘。所以，其余各位，明白吧，发挥你们的作用。（笑声）总之，这次并购主要以普通股作为对价，并未涉及优先股——因为 Barnett 更偏好普通股——但不同人有不同需求。有时一组股东会有不同的优先级。这就是我们希望手里有多种“货币形态”的原因。
If we had not been able to use common stock, we would not have made this transaction, because Barnett has been in no hurry to write a large check to the government. And we can help him in that respect with a common stock deal. So anyway, we’re glad to have Helzberg’s become part of Berkshire. I wouldn’t be surprised if we have another announcement or two in the next year before we have the next meeting. I hope so. But there’s no guarantees.
如果我们当时无法使用普通股，这笔交易就不会发生，因为 Barnett 并不急于给政府开一张巨额支票。而通过普通股交易，我们能在这方面帮助他。总之，我们非常高兴 Helzberg’s 成为 Berkshire 的一部分。如果在下次年会之前，我们还有一两项收购公告，我也不会感到意外。我希望如此。但这并无保证。
5. Buffetts on the board adds stability
将 Buffett 家族成员纳入董事会可提升稳定性
WARREN BUFFETT: Now we’re going to turn the meeting open for questions. We’ll do it as we’ve done before. We’ve got this room divided into six zones. And if you will raise your hand, the monitor in that — in your zone will recognize you. And we’ll keep going around. We will not go to a second person in any zone until we’ve exhausted all those who have yet to ask their first question. We have — we also have a zone in the overflow room. So, there’ll be a total of seven. And we’ll just keep going around, if you’ll identify yourself, please. And we’ll be delighted to answer your questions. And the more, the better. So, we’ll start with zone 1.
WARREN BUFFETT：现在我们进入提问环节。方式与以往一致。我们把这个会场分成六个区域。请举手，所在区域的主持人会认可你的发言。我们会依次轮转，直到所有尚未提出第一个问题的人都发问完毕，才会在某个区域给第二位发言机会。我们在溢出会场也设了一个区域，所以总共是七个。请发言时先做自我介绍。我们很高兴回答你们的问题，越多越好。那我们从第 1 区开始。
AUDIENCE MEMBER: My name is Fred Elfell Jr. (PH) from Sacramento, California. And I wanted to ask if you could elaborate upon the logic of adding two family members to the board of trustees?
AUDIENCE MEMBER：我叫 Fred Elfell Jr.（PH），来自 Sacramento, California。我想请你详细说明一下，将两位家族成员加入董事会（受托人董事会）的逻辑是什么？
WARREN BUFFETT: Well, it’s terrific for family harmony, just to start with. (Laughter) The — as I’ve talked about in the annual report, the — if I die tonight, you know, my stock goes to my wife, who is a member of the board of directors. And she will own that stock until her death, when it will go to a foundation. So, there is a desire to have as long a term and permanent ownership structure as can really be done, in terms of planning, and the tax laws, and so on. I mean, I — we have invited people like Helzberg’s to join in with Berkshire into what we think is a particularly advantageous way for them to conduct a business and to know the future that they’re joining. And part of knowing the future that they’re joining involves knowing that the ownership is stable. And it will be stable for a very long period of time in Berkshire, probably about as long as you can — anybody can plan for in this world. After my death, the family would not be involved in the management of the business, but they’d be involved in the ownership of the business.
WARREN BUFFETT：首先，这对家庭和睦大有好处。（笑声）正如我在年报里谈到的——如果我今晚去世，我的股票将转给我的妻子，她也是董事会成员。她会一直持有这些股票直到她去世，之后这些股票将进入一个基金会。因此，从规划、税法等角度，我们希望建立尽可能长期、接近永久的所有权结构。我们邀请像 Helzberg’s 这样的企业加入 Berkshire，是因为我们认为这是一种对他们经营业务特别有利的方式，并且让他们清楚自己将要加入的未来。而对未来的可预见性，部分就来自对股权稳定性的确认。在 Berkshire，这种稳定会持续很长时间，差不多是世上任何人所能规划到的最长尺度。在我去世之后，家族不会参与经营管理，但会参与所有权层面。
And you would have a very large concentrated ownership position, going well on into the foundation, that would care very much about having the best management structure in place. And to, in effect, prepare for that over time, I think it’s very advisable that family members who will not be involved in management, but who will have a key ownership role to play, become more and more familiar with the business and the philosophy behind it. I discussed that some in the — I guess, it was the 1993 annual report, because I think it’s important that you understand. And anybody that wants to sell us a business — if you’ve built a business since 1915, and you care enormously about it, and you care about the people that you’ve developed, but you’ve got something else you want to do in life, it’s more than, you know, advertising your car in the paper to sell it. I mean, it is an important — a very important transaction to you. Not just in terms of how much money you receive, but in terms of who you deliver thousands of people that have joined you — who you deliver them to.
而且会形成一个高度集中的大额持股，并延续到基金会层面——该持有者会非常在意公司拥有最佳的管理架构。为了逐步为此做准备，我认为，那些不参与日常管理、但将在所有权上扮演关键角色的家族成员，理应越来越熟悉这家企业及其背后的理念。我在——我想是 1993 年的年报里——谈过一些，因为我认为让你们理解这一点很重要。对于任何想把企业卖给我们的人来说——如果你自 1915 年以来亲手打造了一家企业，你非常在意它，也在意你培养起来的员工，但你人生中还有别的追求——这远不只是像在报纸上刊登一则卖车广告那么简单。这对你来说是一笔重要——非常重要的——交易。不仅是你收到多少钱的问题，更是你将与你共事的成千上万个人“交付”给谁的问题。
And I think we have a structure that is about as good as you can do. Nothing is forever. But we have a structure that’s about as good as you can do, in terms of people knowing what they’re getting into when they make a deal with us and being able to count on the conditions that prevail at the time of the deal, continuing for a long period in the future. Many people — I had a fellow tell me the other day about a business where he’d been wooed by the acquirer. And, you know, the day after the deal, they came in and fired the top halfdozen people. They had a secret plan all along. Well, I don’t think you run into much of that. But what you do run into is the company that’s the acquiring company, itself, either being acquired or some new management coming along, or some new management consultant coming along, and saying, “Well, this doesn’t fit our strategic plan anymore, so let’s dump this division.” And people that join in with Berkshire can be relatively, I think, comfortable about nothing like that happening. Charlie, you want to elaborate on —
我认为我们建立的结构几乎是所能做到的最优解。没有什么是永恒的，但就让卖方在与我们达成交易时明确自己将要面对什么、并能够指望交易达成时的条件在未来长时期内保持不变而言，我们的结构大概是能做到的最好了。很多人——前几天就有人跟我讲，他的企业被收购方“殷勤相邀”，可交易一落定，第二天对方就把前六名高管炒了鱿鱼——原来他们一直有个秘密计划。类似的事情或许不常见，但常见的是：收购方自己被收购了，或者新管理层上来，或者新的管理顾问来了，然后说：“这个部门不再符合我们的战略规划了，把它处理掉吧。”而我认为，加入 Berkshire 的人基本可以放心，这样的事不会发生。Charlie，你要不要补充——
CHARLIE MUNGER: No. (Laughter)
CHARLIE MUNGER：不用。（笑声）
WARREN BUFFETT: I was hoping Charlie would have a near-life experience this morning. (Laughter) Keep encouraging him.
WARREN BUFFETT：我刚还指望 Charlie 今早能来一场“濒生体验”。（笑声）继续给他打打气吧。
不评论 Kerkorian 收购 Chrysler 的出价
WARREN BUFFETT: Zone 2.
WARREN BUFFETT：第 2 区。
AUDIENCE MEMBER: Hello. My name is Jim Lichty (PH) from Des Moines. I’m interested in, like, Chrysler. Can you make a comment on the Chrysler Corporation? (Laughter)
AUDIENCE MEMBER：你好。我叫 Jim Lichty（PH），来自 Des Moines。我对 Chrysler 感兴趣。你能不能评论一下 Chrysler Corporation？（笑声）
WARREN BUFFETT: No, I don’t think I can make a comment on Chrysler. (Laughter) I think Salomon Brothers, incidentally, has been retained by them. We have nothing to do with it. Charlie and I — I read that in the paper. And Charlie and I are not familiar with — normally — with investment banking arrangements at Salomon. But it has been in the paper that Salomon’s involved with that. We have no involvement. Charlie, you’re not interested in commenting on the question? No? (Laughter) Try him on something else.
WARREN BUFFETT：不，我想我不能评论 Chrysler。（笑声）顺便说一句，我想他们已经聘用了 Salomon Brothers。我们和这件事没有任何关系。我和 Charlie——我是从报纸上看到的。我和 Charlie 通常也不熟悉 Salomon 的投行业务安排。但媒体上确实写了 Salomon 参与其中。我们没有参与。Charlie，你不想就这个问题发表意见吧？不？（笑声）换个问题问他吧。
7. Managers need to know “money costs money”
经理人必须明白“钱是有成本的”
WARREN BUFFETT: Zone 3.
WARREN BUFFETT：第 3 区。
AUDIENCE MEMBER: I’m Jim Vardaman (PH) from Jackson, Mississippi. In describing the — your allocation of capital to your wholly-owned subsidiaries, you wrote in the annual report that, quote, you “charge managers a high rate for incremental capital they employ and credit them at an equally high rate for capital they release,” end quote. How do you determine this high rate, and how do they determine how much capital they can release?
AUDIENCE MEMBER：我是 Jim Vardaman（PH），来自 Jackson, Mississippi。关于你们向全资子公司分配资本的问题，你在年报中写道，引用，“对他们新增使用的资本按较高的利率计费，对他们释放的资本按相同较高的利率给予回馈”，引号结束。你们如何确定这个高利率？而他们又如何判断自己可以释放多少资本？
WARREN BUFFETT: Well, what we try to do with those — the question’s about incentive arrangements we have with managers or other situations, where we either advance capital to a wholly-owned subsidiary or withdraw it — usually, that ties in with the compensation plan. And we want our managers to understand just how highly we do value capital. And we feel there’s nothing that creates a better understanding than to charge them for it. So, we have different arrangements. Sometimes it’s based a little on the history of the company. It may be based a little bit on the industry. It may be based on interest rates at the time that we first draw it up. We have arrangements depending on the — on those variables and perhaps some others and perhaps just, you know, how we felt the day we drew it up, that range between 14 percent and 20 percent, in terms of capital advanced. And sometimes we have an arrangement where, if it’s a seasonal business where, for a few months of the year, when they have a seasonal requirement, we give it to them very cheap at LIBOR.
WARREN BUFFETT：嗯，我们在这些安排中的做法——问题指的是我们与经理人之间的激励机制，或者其他我们向全资子公司增加或收回资本的情形——通常会和薪酬方案绑定。我们希望经理人明白我们对资本的重视程度。而我们认为，没有什么比向他们“收资本费”更能让他们深刻理解这一点的。所以我们有不同的安排。有时略基于公司的历史；也可能略基于行业；也可能依据我们最初制定时的利率。根据这些变量（还有可能的其他因素，甚至只是我们制定当天的判断），对于追加资本的“收费”通常在 14% 到 20% 之间。有时，如果是季节性业务，在一年里有几个月的季节性资金需求，我们会以非常低的成本，按 LIBOR 提供资金。
But, if they use more capital over — beyond that, we start saying, “Well, that’s permanent capital,” so we charge them considerably more. Now, if we buy a business that’s using a couple hundred million of capital, and we work out a bonus arrangement, and the manager figures out a way to do the business with less capital, we may credit him at a very high rate — same rate we would use in charging him — in terms of his bonus arrangement. So, we believe in managers knowing that money costs money. And I would say that, just generally, my experience in business is that most managers, when using their own money, understand that money costs money. But sometimes managers, when using other people’s money, start thinking of it a little bit like free money. And that’s a habit we don’t want to encourage around Berkshire. We — by sticking these rates on capital, we are telling the people who run our business how much capital is worth to us. And I think that’s a useful guideline, in terms of the decisions they’re making, because we don’t make very many decisions about our operating business.
但是，如果他们超出这个季节性额度使用更多资本，我们就会说，“那是永久性资本了”，因此会大幅提高收费。再比如，如果我们收购了一家使用数亿美元资本的企业，并制定了奖金安排，而经理人想出办法用更少的资本开展业务，我们可能会按非常高的利率——与我们“收费”时相同的利率——在他的奖金计算中给予回馈。所以，我们坚持让经理人知道，钱是有成本的。总体而言，以我的商业经验看，大多数经理人在用自己的钱时，明白钱是有成本的；但当用别人的钱时，有时会把它当成“免费”的。这种习惯是我们不想在 Berkshire 鼓励的。通过给资本贴上这些利率标签，我们在告诉经营我们的业务的人：资本对我们有多大价值。我认为这对他们的决策是有用的指引，因为我们对旗下经营业务本身并不做太多决策。
We make very, very few. I don’t see capital budgets, in most cases, from our hundred percent-owned subsidiaries. And if I don’t see them, no one else sees them. I mean, we have no staff at headquarters looking at this kind of thing. We give them great responsibility on it. But we do want them to know how we calibrate the use of capital. And so far, I would say, it’s really worked quite well. Our managers don’t mind being measured, and they like getting a — I think they enjoy seeing a batting average posted. And a batting average that does not include a cost of capital is a phony batting average. Charlie?
我们做的非常非常少。多数情况下，我甚至不会看到我们 100% 持股子公司的资本预算。如果我都看不到，就没人会看到了。也就是说，我们总部没有人手专门盯这种事。我们把很大的责任交给他们。但我们确实希望他们知道我们如何校准资本使用。到目前为止，我会说，这非常奏效。我们的经理人不介意被衡量，他们也喜欢拿到——我想他们喜欢看到自己的“击球率”。而不包含资本成本的“击球率”是假的击球率。Charlie？
CHARLIE MUNGER: Well, I certainly agree. (Laughter)
CHARLIE MUNGER：我当然同意。（笑声）
WARREN BUFFETT: And his name isn’t even Buffett. I mean — (Laughter)
WARREN BUFFETT：而且他连姓 Buffett 都不是。我的意思是——（笑声）
8. The two reasons for buying insurance
购买保险的两个理由
WARREN BUFFETT: Zone 4.
WARREN BUFFETT：第 4 区。
AUDIENCE MEMBER: Hi, my name’s Dave Lancasam (PH) with Business Insurance Magazine. The sum of property-casualty risk management experts are advising commercial insurance buyers to forge five- and 10-year policies with their property-casualty insurers to promote stronger partnerships with their insurers, as well as to maintain the smooth PC market of the past seven, eight years. Do you believe this idea will take hold for most policyholders? And if so, what would be the implications for policyholders’ costs and insurers’ underwriting results?
AUDIENCE MEMBER：你好，我叫 Dave Lancasam（PH），来自 Business Insurance Magazine。许多财产意外险风险管理专家建议商业保险购买方与其财产意外险公司签订 5 年或 10 年期的保单，以促进与保险公司的更强伙伴关系，同时维持过去七八年那样平稳的财险市场。你认为这个想法会在多数投保人中落地吗？如果会，对投保人的成本和保险公司的承保结果会有什么影响？
WARREN BUFFETT: The question is about partnerships between, probably, commercial policyholders and their insurers. And there are a lot of ways of doing that by various retrospective plans or adjustable rates of various sorts, and self-insured retentions, and that sort of thing. As a general matter, there are only two reasons for buying insurance. One is to protect yourself against a loss that you are unable or unwilling to bear yourself. And that is partly a — an objective decision. It’s partly subjective. For example, a manager that’s terribly worried that his board of directors may second-guess him if he has an uninsured loss, is going to buy a lot more protection, probably, than the company really needs. But he knows he’s never going to have to go in front of his board of directors and say, “We just had a million-dollar fire loss.” And then the next question the director asks is, “Was it insured?” And then he doesn’t want to answer no. So, he may do something that is very unintelligent from the company’s standpoint merely to protect his own position.
WARREN BUFFETT：这个问题是关于商业投保人与保险公司之间的“伙伴关系”。实现方式很多，比如各种追溯性计划、各种可调整费率、自留额等。总体而言，购买保险只有两个理由。第一，是为了防范你自己无力或不愿自行承担的损失。这一部分既有客观成分，也有主观成分。比如，一个经理人非常担心如果出现了未投保的损失，董事会会事后质疑他，那么他可能会购买远超公司实际需要的保障。因为他知道自己永远不用在董事会面前说：“我们刚发生了一起 100 万美元的火灾损失。”接着董事会会问的下一个问题是：“有投保吗？”他不想回答“没有”。于是，他可能仅仅为了保护自己的位置而做出对公司并不明智的选择。
But the reason for buying insurance is, whether — and this is true of life insurance, it’s true of property-casualty, it’s true of personal insurance, it’s true of commercial insurance — is to protect against losses that you’re unwilling or unable to bear yourself. Or the second reason, which occasionally comes up, is if you think the insurance company is actually selling you a policy that’s too cheap, so that you really expect, over a period of time, to have a mathematical advantage by buying insurance. Well, we try to avoid selling the second kind and to concentrate on selling the first kind. And we think any company we can sell insurance to — and of course, we — much of the insurance we sell is to other insurance companies. I mean, we are a reinsurer, in very large part. We are selling them insurance against a loss that they are either unable or unwilling to sustain. And a typical case, you know, might be a company that had a lot of homeowners policies in California.
但购买保险的理由——无论是寿险、财险、个人险还是商业险——都是为了防范你不愿意或无法自行承担的损失。第二个理由（偶尔会出现）是：如果你认为保险公司在卖给你的保单“太便宜”，以至于你预期在一段时间里通过投保获得数学意义上的优势。我们努力避免销售第二种情况的保险，专注于销售第一种。我们认为，凡是我们愿意承保的公司——当然，我们卖出的相当一部分保险是卖给其他保险公司；也就是说，我们在很大程度上是再保险人——我们卖给他们的是针对他们不愿意或无法承担的损失的保障。一个典型案例就是，在 California 拥有大量房主保单的公司。
And if those include earthquake coverage, they may not be able to sustain the kind of loss that is possible, even though they want to keep a distribution system in place that merchandises en masse to homeowners in California. So, we will write a policy. They may take the first 5 million of loss, they may take the first 50 million of loss — depends on their own capabilities — but then they come to us. And we are really uniquely situated to take care of problems that no else — that the companies can’t bear themselves and that they can’t find anybody else to insure. But we really don’t want to insure someone for a loss that they can afford themselves, because if we’re doing that it may because they’re dumb. But it may be because they also have a loss expectancy that’s higher than the premium we’re charging, which is not what we’re trying to do in business. I think that — I think probably, as compared to 30 years ago, that risk managers at corporations are probably more intelligent about the way they buy their insurance than many years ago.
如果这些保单包含地震险，即使他们希望继续维持覆盖加州房主的大规模销售网络，也可能无力承受潜在的巨额损失。因此，我们会为其提供再保险。他们可能自留首笔 500 万的损失，也可能自留首笔 5,000 万——取决于他们自身能力——随后再把超出部分转给我们。而我们在处理这类问题上具有独特优势：这些是公司自身负担不起、也找不到别人承保的风险。但我们确实不想为那些公司“自理得起”的损失承保，因为如果我们这么做，要么是他们不聪明，要么就是他们对损失的期望值高于我们收取的保费——这并不是我们做生意所追求的。我认为，与 30 年前相比，如今企业的风险经理人在购买保险的方式上更聪明、更专业了。
I think it’s become a — I think they’re more sophisticated and they’ve thought it through better. But there’s a lot of insurance — there’s some — there’s a fair amount of insurance bought that doesn’t make sense. And there’s a fair amount of insurance that isn’t bought that should be bought. There are certain companies that are exposing themselves in this country to losses which would wipe them out. And they prefer not to buy reinsurance because it’s, quote, “expensive.” But what they’re really doing is betting on something that won’t happen very often, happening not at all. And if you take a huge hurricane on Long Island or you take a major quake in California, there are a number of companies that are not — that have not positioned themselves to withstand those losses. And if you’re a 63-year-old CEO and you figure, “I’m going to retire in a couple of years,” you know, the odds are pretty good that it won’t happen on your watch. But the — it will happen on somebody’s watch.
我认为他们更成熟、更周全地思考了。但仍有不少——可以说相当一部分——被购买的保险并不合理；同时，也有相当一部分应该购买的保险却没有买。在这个国家，有些公司在暴露于足以摧毁它们的损失之下；他们不愿意购买再保险，因为所谓“很贵”。但他们实际在做的，是押注罕见事件“永远不发生”。如果 Long Island 发生超强飓风，或者 California 发生大地震，会有不少公司并没有做好承受这类损失的准备。对于一个 63 岁的 CEO 来说，他可能想，“我再过几年就退休了”，发生在他任内的概率似乎不大。可是——总会发生在某个人任内。
And we try to sell reinsurance to those people. And usually, we do. But sometimes we don’t. Charlie?
我们会努力向这些公司销售再保险。多数时候我们能做成，但有时也做不成。Charlie？
CHARLIE MUNGER: Nothing to add. (Laughter)
CHARLIE MUNGER：无可补充。（笑声）
9. “We can sustain shocks … that others can’t”
“我们能承受别人承受不了的冲击”
WARREN BUFFETT: OK. Zone 5. He’s saving himself. He’ll be dynamite when he gets going. (Laughter)
WARREN BUFFETT：好的。第 5 区。他在蓄力，一旦开口就要炸场了。（笑声）
AUDIENCE MEMBER: My name is Hugh Stephenson (PH). I’m a shareholder from Atlanta, Georgia. My question involves the company’s catastrophe lines of insurance. It seems that there’s a relative ease of entry into that business through Bermuda-based companies and others. And given the importance of that business to the overall company, I’m curious how the ease of entry into the business affects its long-term competitive position and its rates of return?
AUDIENCE MEMBER：我叫 Hugh Stephenson（PH），来自 Georgia 州 Atlanta 的股东。我的问题涉及公司灾难险业务。通过设在 Bermuda 的公司等，进入这项业务似乎相对容易。鉴于这项业务对公司整体的重要性，我想知道这种进入门槛低的情况，会如何影响其长期竞争地位和回报率？
WARREN BUFFETT: Well, you’re very right, there is an ease of entry into the catastrophe business. And, you know, it’s sort of attractive for — it’s particularly attractive for promoters. Because if you start an insurance company to write earthquake insurance in California and you raise a few hundred million dollars, you’ll either have essentially have no losses or, if you write enough of it, you’ll go broke. And most years, you’ll have no losses. So, if your intention is to sell your stock publicly in a year or two, that — the odds are very good that you will have a beautiful record for a couple of years. And you can sell. And, you know, maybe one time out of ten, you’ll go broke. And nine times out of ten, you’ll sell to somebody else who will eventually go broke. And it — there is — there’s real ease of entry.
WARREN BUFFETT：你说得很对，灾难险业务的确容易进入。而且你知道，这对“推手”——特别是对发起人——很有吸引力。因为如果你创办一家在 California 承保地震险的保险公司，募上几亿美元资金，要么基本没有损失，要么如果承保量足够大，你会破产。多数年份你不会有损失。所以如果你的打算是一两年内公开出售股票，那么很有可能你会有两年漂亮的业绩记录，然后顺利卖出。也许十次里有一次你会破产，另外九次你会把公司卖给别人，而对方最终会破产。确实——进入门槛很低。
The only thing that may restrict that is that if the buyer is sophisticated enough to question the viability of that company under really extreme conditions, which is the only conditions that count when you’re buying catastrophe insurance, that may restrict it. The second thing is, of course, none of the people that have started up can offer anywhere near the amount of coverage that Berkshire has. Berkshire is really one of a kind in terms of its capital strength in the business. I’m — I don’t think any money in Bermuda that I can remember — I don’t think Ajit’s out there. But I don’t think anybody has a billion of net worth. And you know, we have — at present, we probably have close to 13 billion of net worth and considerably more of value. So we can sustain shocks, and we will sustain shocks, I should add, that others can’t. And we try to get paid appropriately for that. But when we say we can take a billion-dollar loss, we can take a billion-dollar loss. And we will have a billion-dollar loss at some point. And anyone buying it knows we can take it, or something greater.
唯一可能限制它的是，买方是否足够老练，会去质疑该公司在真正极端情形下的可持续性——而买灾难险时，只有这种情形才是关键。其次，当然了，这些新成立的公司都无法提供接近 Berkshire 所能提供的承保额度。在资本实力方面，Berkshire 在这个行业里是独一无二的。我——据我记忆，Bermuda 那边没有哪家——我不认为 Ajit 在那边。但我不觉得谁有 10 亿美元净资产。而我们现在大概有接近 130 亿美元的净资产，价值更是远不止于此。所以我们能承受——我还要补充——别人承受不了的冲击，而且我们会因此要求得到合理的报酬。我们说能承受 10 亿美元的损失，就是真的能承受 10 亿美元的损失。并且在某个时点我们确实会遇到 10 亿美元的损失。任何购买我们保障的人都知道我们扛得住，甚至更大的也扛得住。
And they should know that very few other — very few of our competitors can. So, there’s competition. We do an unusual proportion of our business with the eight or ten largest insurance — reinsurance companies and insurance companies in the world. So, we really have established with the people who understand the real risks of the business. They come to Berkshire and — a lot more often than they stop in Bermuda, because they know that we’ll pay. And they’ve been around long enough to know that, in the end, that’s what really counts with an insurance company. If the rates — if there were enough capacity at really ridiculous rates, I mean, in the end, we wouldn’t be writing that business at that time. But I don’t think that will happen. It certainly hasn’t happened so far. And if it happens, you know, so be it. We’ll all play golf until the loss occurs. Charlie? (Laughter)
而且他们也该知道，我们的竞争对手里能做到这一点的极少、极少。所以虽然有竞争，但我们相当一部分业务是和全球八到十家最大的再保险和保险公司做的。我们真正与那些懂得行业真实风险的人建立了关系。他们更常来 Berkshire，而不是去 Bermuda，因为他们知道我们会理赔。他们在这一行够久，知道最终这才是保险公司最关键的东西。如果市场上真的出现了以荒谬费率提供的充足承保能力，那么到那个时候我们也不会去承保那类业务。但我不认为会发生，至少目前没有发生。即便发生了，那就这样吧。在损失来临之前，大家就去打高尔夫好了。Charlie？（笑声）
CHARLIE MUNGER: Nothing to add.
CHARLIE MUNGER：无可补充。
10. Graham’s principles for high-tech stocks?
将 Graham 的原则用于高科技股票？
WARREN BUFFETT: Zone 6? Or did we do — yeah.
WARREN BUFFETT：第 6 区？我们已经——对，轮到你们。
AUDIENCE MEMBER: Chairmen, most company Berkshire invest at this time are not high in — are not in high-technology sector. What we have seen in the last few years, that there seems to be a significant growth, both in sales and earnings of the high-technology area. And also, what invest — what U.S. shareholder believe that the times are changing from a brand name to high-technology. My question is, can someone apply your investment principle, business philosophy, and your discipline in life to build a portfolio of, say, five or six high-technology company? Let’s call it Berkshire Hathaway Technology Fund? (Laughter)
AUDIENCE MEMBER：主席先生们，Berkshire 目前投资的大多数公司并不在高科技领域。过去几年我们看到高科技行业的销售和利润都出现了显著增长。同时，美国股东中也有人认为时代正从“品牌驱动”转向“高科技驱动”。我的问题是：能否把你们的投资原则、商业哲学以及生活中的自律，应用到构建一个由五六家高科技公司组成的投资组合上？我们不妨称之为 “Berkshire Hathaway Technology Fund”？（笑声）
WARREN BUFFETT: Well, I think it would sell. (Laughter) The question about — Charlie and I won’t be able to do it. We — Charlie probably understands high-tech. But you can see how hard it is to get any information out of him. So — (laughter) — he hasn’t told me yet. We try not to get into things we — that we don’t understand. And if we’re going to lose your money, we want to be able to come before you, you know, next year and tell you we lost your money because we thought this and it turned out to be that. We don’t want to say, you know, somebody wrote us a report saying if, you know, “This is what’s going to happen,” in some field that we don’t understand and that, therefore, we lost your money by following someone else’s advice. So, we won’t do it ourselves. At — I think that the principles — I think Ben Graham’s principles — are perfectly valid when applied to high-tech companies.
WARREN BUFFETT：嗯，我想它会卖得不错。（笑声）至于由谁来做——我和 Charlie 做不了。我们——Charlie 或许懂高科技。但你也看到，要从他那里打听出点消息有多难。（笑声）所以——到现在他还没告诉我。我们尽量不介入自己不理解的事情。如果我们要亏掉你们的钱，我们希望明年能站在你们面前说清楚：我们以为是这样的，结果却变成了那样；而不是说，有人给我们写了份报告，说某个我们不懂的领域“将会发生什么什么”，然后我们听信别人建议亏了你们的钱。所以，这事我们自己不会做。不过——我认为这些原则——Ben Graham 的原则——应用在高科技公司上完全同样有效。
It’s that we don’t know how to do it, but that doesn’t mean somebody else doesn’t know how to do it. My guess is that if Bill Gates were thinking about some company in an arena that he understood and that I didn’t understand, he would apply much the same way of thinking about the investment decision that I would. He would just understand the business. I might think I understand Coca-Cola or Gillette. And he may have a — he may have the ability to understand a lot of other businesses that seems as clear to him as Coke or Gillette would seem to me. I think once he identified those, he would apply pretty much the same yardsticks in deciding how to act. I think he would act — I think he would have a margin of safety principle that might be a little different because there’s essentially more risk in a high-tech company. But he would still have the margin of safety principle on a — sort of adjusted for the mathematical risk of loss in his mind. He would have — he would look at it as a business, not as a stock. You know, he would not buy it on borrowed money.
问题在于我们不会做，但这不代表别人不会做。我的猜测是，如果 Bill Gates 在他熟悉、而我不熟悉的领域里研究某家公司，他做投资决策时会采用与我非常相似的思维方式；只是他真正理解那门生意。我也许自认懂 Coca-Cola 或 Gillette；而他可能具备理解许多其他业务的能力，这些业务在他眼里就像 Coke 或 Gillette 在我眼里一样清晰。我想，一旦他识别出这些标的，他在行动准则上大体会使用同样的尺度。我认为他会坚持“安全边际”原则——只是由于高科技公司的固有风险更大，他的安全边际设定可能略有不同；但他仍会保有安全边际这一点，只是会根据自己心中可量化的亏损风险作调整。他会把它当作一门生意来评估，而不是当成一只股票；而且，他不会举债去买入。
I mean, it — a bunch of principles would be carried through. But our circle of things we understand is really unlikely to enlarge, maybe a tiny bit here or there. But if the capital doesn’t get too large, the circle’s OK. And — but we will not —if we have trouble finding things within our circle, we will not enlarge the circle. You know, we’ll wait. That’s our approach.
我的意思是，一整套原则都会延续下来。只是我们所理解事物的“能力圈”不太可能显著扩大，顶多在边缘处稍微长一点点。但只要资金体量不至于太大，这个圈子就足够了。而且——如果我们在这个圈子里一时找不到合适标的，我们也不会为此去扩大圈子。我们会等待。这就是我们的方法。
11. USAir: “You don’t have to make it back the way you lost it”
USAir：“你不必用失去它的方式把它赚回来”
WARREN BUFFETT: Now, how are we set up for Zone 7? Can we do it out — yeah, here we are.
WARREN BUFFETT：现在，第 7 区准备好了吗？我们可以——好，来了。
AUDIENCE MEMBER: Are you there? Hi, I’m Susie Taylor (PH) from Lincoln, Nebraska. By way of explaining — we wrote down the value of USAir, reflecting our investment’s current market value. You had a good explanation in your report as to why the economics of the business are unattractive. And I presume, given the choice, we wouldn’t do it over again.
AUDIENCE MEMBER：你们能听到吗？你好，我是来自 Lincoln, Nebraska 的 Susie Taylor（PH）。先说明一下——我们把 USAir 的价值减记到了当前市值。你在报告中很好地解释了为什么这门生意的经济性并不吸引人。我想，如果再给一次机会，我们大概不会再做这笔投资了。
WARREN BUFFETT: I think that’s a fair assumption. (Laughter) I should mention, anybody wanted to ask about USAir, we put them in the other room, just so you’ll know why. (Laughter)
WARREN BUFFETT：我认为这个假设很合理。（笑声）我得提一句，凡是想问 USAir 的人，我们都安排在另外一个会场，你就明白为什么了。（笑声）
AUDIENCE MEMBER: And then the second part is better.
AUDIENCE MEMBER：接下来第二部分更精彩。
WARREN BUFFETT: But I’m watching you. I can see you on the monitor. (Laughs)
WARREN BUFFETT：不过我正看着你们。我能在监视器上看到。（笑）
AUDIENCE MEMBER: And quoting from your profound statement, “You don’t have to make it back the way you lost it.”
AUDIENCE MEMBER：我引用你的一句名言：“你不必用失去它的方式把它赚回来。”
WARREN BUFFETT: Right.
WARREN BUFFETT：对。
AUDIENCE MEMBER: Wouldn’t it be a good idea to put that 89 million in something you are really behind as opposed to USAir?
AUDIENCE MEMBER：那是不是更好的做法，是把那 8,900 万投到你真正看好的项目上，而不是放在 USAir 上？
WARREN BUFFETT: Well, that’s a very good question. Because it is true that a very important principle in investing is you don’t have to make it back the way you lost it. And in fact, it’s usually a mistake to make — try and make it back the way that you lost it. And we have — when we write our — an investment down, as we did with USAir at 89 million, we probably think it’s worth something more than that. But we tend to want to be on the conservative side. But it’s worth a whole lot less than we paid. And the nature of that preferred, as well as other private issues we’ve bought, usually makes it quite difficult to sell. That’s one of the things we know going in. When we bought preferred, some people thought that we were getting unusually favorable terms. I haven’t heard from them lately on USAir, but — (Laughter) But one of the considerations in that is that, if you buy a hundred shares of a preferred that’s being offered through a securities firm, from the same issuer, you can sell it tomorrow.
WARREN BUFFETT：这是个很好的问题。确实，投资中一个非常重要的原则就是：你不必用失去它的方式把它赚回来。事实上，试图用失去的方式把它赚回来，通常是个错误。当我们把一项投资减记时，比如对 USAir 减记到 8,900 万，我们大概认为它的实际价值略高于此，但我们倾向于保守一些。不过，它的价值确实远低于我们的买入成本。而那只优先股的性质——以及我们买过的其他私募发行——通常导致它很难出售。这是我们入场时就知道的一点。当初我们买优先股时，有些人觉得我们拿到了异常有利的条款。最近在 USAir 这件事上我倒没再听他们提起了，不过——（笑声）其中一个考量是：如果你通过券商买同一发行人的公开优先股一百股，你明天就能卖掉。
And we are restricted, in some ways legally, and in other ways simply by the way that markets work, from disposing of holdings like that. And we know that there’s an extra cost involved to us if we should try to sell, or it may be impossible. And that’s not of great importance with us because we don’t buy things to sell, but it’s of some importance. And we are not in the same position owning our Series A preferred of USAir as we would be if we bought a thousand shares or 5,000 shares of the Series B preferred, I believe it is, that trades on the New York Stock Exchange. That would be very saleable. And our preferred could well even be saleable at a price modestly above what we carry it for, but it would require — it would not be very easy to do. It might — if it were do — if we went about to do it, we could probably — assuming we could do it at all — we could probably get a little more money for it. But it would not be easy to do, partly because of legal restrictions. Charlie and I are on the board. That complicates things.
而我们在某些方面受到法律限制，在其他方面也受市场机制的限制，难以处置这类持仓。我们也知道，一旦试图出售，会产生额外成本，甚至可能根本卖不掉。对我们来说，这不是最重要的，因为我们买入并非为了卖出，但多少也有点影响。我们持有的是 USAir 的 A 系列优先股，这与在 New York Stock Exchange 上交易的——我记得是——B 系列优先股，买个一千或五千股，完全不是一回事。后者非常容易变现。我们的那只优先股或许也能以略高于账面价值的价格卖出，但需要——并非易事。如果——假设我们真要去做、而且能做成——也许能多卖一点点钱。但这并不容易，部分因为法律限制。Charlie 和我在董事会，这让事情更复杂。
We always know something that, just by being on the board, that the public doesn’t know. So, that complicates things. And in the end, we usually find that dealing with anything where we’ve got fiduciary obligations is, maybe, not practical at all. And if it is, it’s probably more trouble than it’s worth. Charlie?
仅仅因为身在董事会，我们总会知道一些公众不知道的信息。这让事情更复杂。最终我们通常发现，涉及我们受托义务的任何交易，也许根本就不切实际；即便可行，往往也是得不偿失。Charlie？
CHARLIE MUNGER: Well, it’s certainly been an interesting experience, the USAir experience. (Laughter)
CHARLIE MUNGER：嗯，USAir 的经历确实“很有意思”。（笑声）
WARREN BUFFETT: Is that it, Charlie? OK. No, he —
WARREN BUFFETT：就这些吗，Charlie？好吧。不，他——
CHARLIE MUNGER: I’d like to repeat that business about not having to get it back the way you lost it. You know, that’s the reason so many people are ruined by gambling. They get behind and then they feel they have to get it back the way they lost it. It’s a deep part of the human nature. And it’s very smart just to lick it by will, and little phrases like that are very useful.
CHARLIE MUNGER：我想再重复一遍“不要用失去它的方式把它赚回来”。你知道，这就是许多人被赌博毁掉的原因。他们一旦落后，就觉得必须用失去的方式把它赢回来。这是人性深处的东西。用意志克服它是明智之举，这样的短句很有用。
WARREN BUFFETT: Yeah, one of the important things in stocks is that the stock does not know that you own it. You know, you have all these feelings about it. You know, and — (laughter) — you remember what you paid, you know? (Laughter) You remember who told you about it. All these little things, you know? And it — you know, it doesn’t give a damn, you know? (Laughter) It just sits there. And it — you know, a stock at 50, somebody’s paid a hundred, they feel terrible. Somebody else paid 10, they feel wonderful. All these feelings, and it has no impact whatsoever. And so, it’s — as Charlie says, gambling is the classic example. Someone builds a business over years. You know, that, they know how to do. And then they go out some place and get into a mathematically disadvantageous game. Start losing it and they think they’ve got to make it back, not only the way they lost it, but that night. And — (laughter) it’s a great mistake.
WARREN BUFFETT：是的，股票投资中一个重要的道理是：股票并不知道你拥有它。你懂的，你对它会有各种情绪——（笑声）——你记得自己的买入价，对吧？（笑声）你记得是谁推荐给你的。这些小事，全都记得。但股票——你懂的——它根本不在乎。（笑声）它就在那里。而且——一只股票在 50 上，有人 100 买的，他觉得糟透了；另一个人 10 买的，他觉得妙不可言。所有这些情绪，对股票本身毫无影响。所以——正如 Charlie 所说，赌博是典型例子。有人花多年时间建立一门生意——那是他们擅长的。然后他们去到某个地方，参与一个数学期望不利的游戏，开始输钱，就觉得必须把它赢回来——不但要用失去它的方式赢回来，最好“今晚就赢回来”。——（笑声）这是个大错误。
12. Beware of complicated fads and “high priests”
当心复杂的潮流与“高阶祭司”
WARREN BUFFETT: Zone 1.
WARREN BUFFETT：第 1 区。
AUDIENCE MEMBER: My name is Donald Stone. I’m from Riverside, Connecticut. I’m — this is my second shareholders meeting, ever, at age 61. So, I’m really very privileged to be here. My first was Coca-Cola a week and a half ago. And there were only 200 people there. I’m trying to figure this out. (Laughter) I think the rule is that the number of people present is in direct proportion to the price of the shares.
AUDIENCE MEMBER：我叫 Donald Stone，来自 Riverside, Connecticut。我——这是我 61 岁人生中的第二次股东大会，所以能到这里我真的很荣幸。我的第一次是一个半星期前的 Coca-Cola，当时只有 200 人在场。我正想搞明白这是怎么回事。（笑声）我认为规律是：到场人数与股价成正比。
WARREN BUFFETT: Well, in that case, we won’t split. (Laughter)
WARREN BUFFETT：那么在这种情况下，我们就不拆股了。（笑声）
AUDIENCE MEMBER: OK. Prefatory comment to my question: the November 24th, 1994 issue of Fortune Magazine had an article, a featured article, entitled “America’s Greatest Wealth Builders,” dealing with the concepts of market value added and economic value added. It was with great glee that I noticed that Coca-Cola was number two on that list, second only to General Electric, and that Coca-Cola had done twice as well as Pepsi-Cola, number nine on the list, with one-third as much capitalization. My question is this: whether the concept of market value added and economic value added, as such, or any of its variants, is a concept that’s applicable and useful to Berkshire Hathaway as a whole, or in analyzing its line of business segments? I’d really like to hear from Charlie Munger on this first. (Laughter) Because I’ve heard —
AUDIENCE MEMBER：好的。先说在问题前面的话：1994 年 11 月 24 日的 Fortune Magazine 有一篇专题文章，题为“America’s Greatest Wealth Builders”，讨论了市场增加值（market value added）和经济增加值（economic value added）的概念。我非常高兴地注意到，Coca-Cola 在榜单上位列第二，仅次于 General Electric；而 Coca-Cola 的表现是排名第九的 Pepsi-Cola 的两倍，尽管其市值只有后者的三分之一。我的问题是：市场增加值和经济增加值这些概念，或其任何变体，是否适用于并有助于评估 Berkshire Hathaway 的整体，或者分析其业务板块？我特别想先听听 Charlie Munger 的看法。（笑声）因为我听说——
WARREN BUFFETT: So would I. (Laughter)
WARREN BUFFETT：我也想。（笑声）
AUDIENCE MEMBER: I’ve heard —
AUDIENCE MEMBER：我听说——
WARREN BUFFETT: Charlie?
WARREN BUFFETT：Charlie？
AUDIENCE MEMBER: I’ve heard that he’s thought a lot about this particular subject.
AUDIENCE MEMBER：我听说他对这个话题有很多思考。
WARREN BUFFETT: Right.
WARREN BUFFETT：对。
CHARLIE MUNGER: If Warren is using economic value added exactly the way they’re now teaching it in the business schools, he hasn’t told me. Obviously, the concept has some merit in it. But the exact formal methods, I don’t believe we use. Warren, are you using this stuff secretly?
CHARLIE MUNGER：如果 Warren 正按商学院现在教授的那种方式使用经济增加值，他可没告诉我。显然，这个概念本身有些道理。但那些严格的公式化方法，我不认为我们在用。Warren，你是不是偷偷在用这些东西？
WARREN BUFFETT: No, we — (laughter) — in a sense, they’re trying to get at the same thing we do. Or we’re trying to get at the same thing they do. But I think it’s — A, I think it has some flaws in it. Although I think it generally comes out with the right answers, it sort of forces itself to come out with the right answers. But I really don’t think you need that sort of thing. I mean, I do not think it’s that complicated to figure out, you know, where it makes sense to put money. You can make mistakes doing it. But in terms of the mental manipulations you go through, I don’t think it’s a very complicated subject. And I don’t think that — I think that the people marketing one or another fad in management tend to make them a little more complicated than needed so that you have to call in the high priest. And, you know, it — if all that really counts is the Ten Commandments, you know, it’s very tough on religious counselors and everything.
WARREN BUFFETT：不，我们——（笑声）——从某种意义上讲，他们想抓住的东西和我们想抓住的是同一个；或者说我们想抓住的和他们想抓住的是同一个。但我认为——首先，我认为其中有一些缺陷。尽管它通常会得出正确结论，但某种程度上是“逼出来”的正确结论。但我真的不认为你需要这些东西。我的意思是，判断把钱投到哪里才合理，并没有那么复杂。你可能会犯错，但就所需的思维过程而言，我不认为这是个很复杂的主题。而且我不认为——我觉得推销各种管理“潮流”的人，往往把它们弄得比需要的复杂一点，这样你就得去请所谓的“高阶祭司”。你知道，如果真正重要的只是“十诫”，那对宗教辅导者就很难混下去了之类的。（笑）
(Laughs) It doesn’t take — it just doesn’t make it complicated enough. And I think there’s some of that in — quite a bit of that — in management consulting and in the books that you see and all of that, that come out.
（笑）它就是不够复杂。我认为在管理咨询以及你看到的各种书籍中——这种现象相当普遍。
CHARLIE MUNGER: It’s way less silly than the capital assets pricing model. So that, at least academia’s improving. (Laughter)
CHARLIE MUNGER：它比资本资产定价模型（capital assets pricing model）蠢得少多了。至少说明学界在进步。（笑声）
WARREN BUFFETT: Really, yeah. The capital asset pricing model, which is — I don’t know how much it’s used now. Certainly — you know, they had these great waves of popularity. You get that in management. You get it in investing. I mean, real estate, you know, may have been popular, or international. I — you can read Pensions & Investment magazine, which is a pretty good magazine. But you can just see these fads sort of going through. And then they have seminars on them and everything. And, you know, the investment bankers create product to satisfy the demand. And there’re these fads in management — I mean, obviously, listening to your customer and things like that, I mean, that is — nothing makes more sense. But it’s hard to write a 300-page book that just says, “Listen to your customer.” (Laughter) And, you know, that’s one of the things I liked about Graham’s book. I mean, you know, he wrote — everything he wrote sort of made sense.
WARREN BUFFETT：确实如此。资本资产定价模型——我不清楚现在用得有多少。显然——你知道，一切都会经历一阵风行。管理领域如此，投资领域也如此。比如房地产一度很热门，或者“国际化”。你可以读 Pensions & Investment 杂志，那是本不错的杂志。但你能清楚地看到这些潮流此起彼伏。然后围绕它们开研讨会之类的。投行也会为了满足需求而“造产品”。管理上也有这些风潮——比如“倾听你的客户”之类的，显然再合理不过。但要写一本 300 页只讲“倾听你的客户”的书，可就难了。（笑声）这也是我喜欢 Graham 的书的原因之一。我的意思是，他写的每一件事，基本都讲得通。
He didn’t sort of get into all the frills and try and make it more complicated than it really, truly is. You know, I really didn’t need to read the November issue — 1994 issue of Fortune — to know that Coca-Cola had added a lot of value. (Laughter) We added about 4 billion-some of value to Berkshire. That’s good enough for me. (Laughter)
他不会去加各种花里胡哨的东西，也不会把本不复杂的问题弄得更复杂。你知道，我并不需要去读 1994 年 11 月那期 Fortune，就能知道 Coca-Cola 增加了大量价值。（笑声）我们为 Berkshire 增加了大约 40 多亿的价值。对我来说，这就足够了。（笑声）
13. Derivatives: “Potential for mistakes and mischief”
衍生品：“容易出现错误与作恶的潜能”
WARREN BUFFETT: Zone 2.
WARREN BUFFETT：第 2 区。
AUDIENCE MEMBER: My name is Maurus Spence (PH) from Omaha, Nebraska. I have a two-part question on derivatives. Does Berkshire Hathaway currently, or had they in the past, engaged in strategies involving derivatives? If so, do you as CEO, fully understand these financial instruments? (Laughter)
AUDIENCE MEMBER：我叫 Maurus Spence（PH），来自 Omaha, Nebraska。我关于衍生品有两个问题。Berkshire Hathaway 目前或过去是否参与过与衍生品相关的策略？如果有，作为 CEO 的你是否完全理解这些金融工具？（笑声）
WARREN BUFFETT: Whoever suggested that crazy notion? (Laughter)
WARREN BUFFETT：是谁提出的这个疯狂想法？（笑声）
AUDIENCE MEMBER: Finally, would Charlie care — you or Charlie — care to comment on the use of these by other financial institutions?
AUDIENCE MEMBER：最后，你或 Charlie 能否评论一下其他金融机构使用这些工具的情况？
WARREN BUFFETT: The question about derivatives — the reason I inject that remark — in a Fortune article that all of you should read if you haven’t, I suggested that the use of derivatives would be dramatically reduced if the CEO had to say in the report whether he understood them or not, and — (Laughter) The answer to your question, though, is we have two types, I guess it would be, of derivative transactions, of very modest size. But that doesn’t mean we wouldn’t — if the conditions were right, we either wouldn’t have them on a much greater scale now, or we wouldn’t have done it in the past. We have two types of transactions, and I do understand them. And there are times when there are things that we would want to do — not often — but there would be times when they could be best accomplished by a transaction involving a derivative security. And we wouldn’t hesitate to do so. We would obviously care very much about the counterparty, because that transaction is just a little piece of paper between two people.
WARREN BUFFETT：关于衍生品的问题——我之所以插入那句评论，是因为在一篇《Fortune》的文章里（如果你还没读过，都应该去读），我提出：如果 CEO 必须在年报里表明自己是否理解这些东西，衍生品的使用会大幅下降——（笑声）不过，回答你的问题：我们确实有两类衍生品交易，规模很小。但这并不意味着在条件合适时，我们过去不会、或者现在不会在更大规模上使用。我们有两类交易，而且我确实理解它们。有些时候，我们要实现的目标——不是经常，但确实有些时候——用涉及某种衍生证券的交易是最佳途径，我们不会犹豫。显然我们会非常看重交易对手，因为那种交易本质上就是两个人之间的一张小纸片。
And it’s going to cause one of the two to have to do something painful at the end of the period, usually, which is to write a check to the other person. And therefore, you want to be sure that that person will be both willing and able to write the check. And so, we’re probably more concerned about counterparty risk than most people might be. Last year and the year before, I think I said that derivatives often combine borrowed money with ignorance, and that that is a rather dangerous combination. And I think that we’ve seen some of that in the last year. When you can engage in, sort of, non-physical transactions that involve hundreds of millions, or billions, or tens of billions of dollars, as long as you can get some party on the other side to accept your signature, that really has — that has the potential for a lot of mistakes and mischief. And if you’ve looked at the formulas involved in some, particularly I guess, interest rate-type derivative instruments, it is really hard to conceive of how any business purpose could be solved by the creation of those instruments. I mean, they essentially had a huge, really, gambling element to them.
而且在期限结束时，通常会让其中一方做一件“痛苦的事”，也就是给对方开支票。因此你要确保对方“既愿意又有能力”开出那张支票。所以我们对交易对手风险的关切，可能比多数人更强。去年和前年，我说过：衍生品常常把“借来的钱”和“无知”捆在一起，这是非常危险的组合。而过去一年我们确实看到了这类情况。当你可以在没有实物交割的前提下，做动辄几亿美元、几十亿美元、甚至上百亿美元的交易——只要能找到一方接受你的签名——这就蕴含着大量“犯错与作恶”的潜能。若你看过某些衍生品（尤其是利率类）所涉及的公式，很难想象那些工具的创造能解决任何真正的商业目标。说白了，它们本质上带有巨大的、确确实实的赌博成分。
And I use that in the terms of engaging in a risk that doesn’t even need to be created, as opposed to speculative aspects. They involved a creation of risk, not the transfer of risk, you know, not the moderation of risk, but the creation of risk on a huge scale. And it may be fortunate that in the last year, half a dozen or so cases of people that have gotten into trouble on them have come out because it — that may tend to moderate the troubles of the future. The potential is huge. I mean, you can do things in the derivative markets — Well, I’ve used this example before, but in borrowing money on securities, the Federal Reserve of the U.S. Government decided many decades ago that society had an interest in limiting the degree to which people could use borrowed money in buying securities. They had the example of the 1920s, with what was 10 percent margin. That was regarded as contributing to the Great Crash. So, the government, through the Fed, established margin requirements and said, “I don’t care if you’re John D.
我这里说的“赌博”，是指去制造一些根本不需要制造的风险，而不是单纯的投机。他们在“创造风险”，而不是“转移风险”，不是“缓和风险”，而是大规模地“制造风险”。或许“幸运”的是，过去一年已经曝出六七起因此翻车的案例——这可能会在一定程度上缓和未来的问题。衍生品的潜在威力巨大。以我反复举过的例子：在证券融资方面，美国政府早在数十年前就通过 Federal Reserve 认为，社会有必要限制人们用借款购买证券的程度。1920 年代的 10% 保证金曾被认为是引发“大崩盘”的助推因素。因此，政府通过美联储制定了保证金要求，说：“不管你是不是 John D.
Rockefeller,” you know, “You’re going to have to put up 50 percent of the cost of buying your General Motors stock,” or whatever it may be. And they said that maybe Mr. Rockefeller doesn’t need that, but society needs that. They don’t — we don’t want a bunch of people on thin margins gambling, you know, essentially, in shares, where the ripple effects can cause all kinds of problems for society. And that’s still a law. But it means nothing anymore because various derivative instruments have made 10 percent margins of the 1920s, you know, look like what a small-town banker in Nebraska would regard as conservative, compared to what goes on. So, it’s been an interesting history. You know, like I say, perhaps the experiences of the last year — they’ve got everybody focused on derivatives. Nobody knows exactly what to do about them. Berkshire Hathaway will — if we think something makes sense and Charlie and I understand it — we may find ways to use them to what we think will be our advantage. Charlie, you want to add anything on that?
Rockefeller”，你懂的，“你买 General Motors 的股票，不管什么标的，都得先拿出 50% 的成本。”他们的意思是，也许 Rockefeller 先生个人不需要这种约束，但社会需要。我们不希望一群人用极薄的保证金去“赌股票”，因为连锁反应会给社会带来各种问题。这项规定今天仍然存在。但现实中它几乎形同虚设，因为各种衍生工具让 1920 年代的 10% 保证金，在如今的操作面前，看起来就像 Nebraska 小镇银行家眼里的“保守作风”。所以，发展历史颇为“精彩”。就像我说的，也许过去一年的那些经历——让所有人都开始盯着衍生品了。没人确切知道该怎么处置它们。至于 Berkshire Hathaway——如果我们认为某事有意义，而且我和 Charlie 都理解它——我们也可能会以我们认为对己有利的方式去使用衍生品。Charlie，你要补充吗？
CHARLIE MUNGER: Well, I disapprove even more than you do, which is hard. If I were running the world, we wouldn’t have options exchanges. The derivative transactions would be about 5 percent of what they are. And the complexity of the contracts would go way down. The clearing systems would be tougher. I think the world has gone a little bonkers. And I’m very happy that I’m not so located in life that I have to be an apologist for it. You know, a lot of these people, I feel sorry for them. You know, they had great banks. And they have to go before people, sometimes even including their children and friends, and argue that these things are wonderful.
CHARLIE MUNGER：嗯，我比你更反对，这可不容易做到。如果由我来管理这个世界，就不会有期权交易所。衍生品交易应当缩到今天规模的 5% 左右；合约复杂度要大幅降低；清算系统要更严格。我觉得这个世界有点疯了。庆幸的是，我此生不必替这套东西辩护。你知道，我挺同情那些人——他们拥有过很棒的银行，却不得不到公众面前，有时甚至包括他们的孩子和朋友，去辩称这些东西“很美妙”。
14. Salomon’s murky future
Salomon 的前景不明
WARREN BUFFETT: Zone 3?
WARREN BUFFETT：第 3 区？
AUDIENCE MEMBER: Good morning. I’m John Nugier (PH) from Kingsburg, California. And my question relates to Salomon. And where — I’m just asking if you could take us out the next two or three years in your vision. It started out as a good investment. You got a good return on it, or your interest. And it’s clearly had some problems. And we have gotten in deeper and deeper as those problems have continued. And it doesn’t look like it’s superbright. So, it — you must understand where it’s going. But could you just give us where you see it going in the next two or three years?
AUDIENCE MEMBER：早上好。我是来自 California 州 Kingsburg 的 John Nugier（PH）。我的问题与 Salomon 有关。我想请你从你的视角谈谈未来两三年的走向。这起初是一笔不错的投资，你们拿到了不错的回报或利息。但显然也出现了问题，而随着问题持续，我们的卷入越来越深。目前看前景并不光明。你们应该清楚它将走向何处。能否说说你们对未来两三年的判断？
WARREN BUFFETT: Well, no, I think it’s very difficult to forecast where Salomon or, really, almost any major investment bank, slash, trading house will do over actually the next two or three months, let alone the next two or three years. The nature of that business is obviously far more volatile than the blade and razor business. Now the — and the tough part is assessing over a longer period of time whether — because of volatility, it’s much harder to assess whether — what the average returns might be from a business. And the answer is, Charlie and I, probably, if we were to try and write the forecast for the next two or three years, we would not have a high — a feeling that we had a high probability of being able to predict what that company, or other companies in that industry either, would earn three years out or would probably have in the way of average earnings. Our own commitment is to a $700 million preferred issue, which has five redemption dates starting in October 31st of this year and then every year thereafter. On those dates, we can either take cash or stock. And that’s an advantage, obviously, to have an option.
WARREN BUFFETT：嗯，不。我认为很难预测 Salomon，或者说几乎任何一家大型投行/自营交易商，在未来两三个月的表现，更别说两三年了。这门业务的波动性显然远高于刀片和剃须刀业务。难点在于：因为波动性，拉长周期后更难评估一门生意的平均回报。结论是：如果要我们为未来两三年写预测，我和 Charlie 恐怕都不会有把握，认为自己能高概率预测该公司（或同行公司）三年后的盈利，或其大致的平均盈利水平。我们自身的承诺是一笔 7 亿美元的优先股投资，自今年 10 月 31 日起有五个赎回日，此后每年一个。到这些日期我们可以选择收现金或收股票。显然，拥有一个期权是优势。
Any time you have an option in this world, it’s to an advantage — it’s to your advantage. It may be a very small advantage, but it’s — giving options is generally a mistake, and accepting options is usually a good idea, if it doesn’t cost you anything. And we will — the other thing about options is you don’t make a decision on them until you have to make a decision. But — so, we, in addition to that $700 million of preferred, which in our view is a hundred percent money-good — I mean, we’d like to own more of that. But we also have about 6 million-odd shares of common, which we paid perhaps $48 a share for, or something in that area. In any event, considerably more than the present market of 35 or ’6. So, we have a loss of probably 80 or $90 million, or some number like that, at market in the common. The preferred has actually treated us fine. We’ve received $63 million a year.
在这个世界里，只要你手里有期权，就是优势——哪怕优势很小——一般来说“给出期权”是错误，“接受期权”在不额外付出代价时通常是好主意。另一个特点是：在必须决策之前，你不需要对期权做决定。除此 7 亿美元优先股之外，我们还持有约 600 多万股普通股，买入价大约每股 48 美元，反正明显高于目前 35 或 36 美元的市价。所以按市价算，普通股亏了大概 8、9 千万美元左右。优先股其实对我们很好，每年收到 6,300 万美元利息。在我们看来，这笔优先股 100% 安全——我们甚至愿意多持有一些。
Incidentally, by owning the amount of common we own, this probably isn’t generally known, but — or recognized — if you own 20 percent of the voting power of a company, you have a somewhat different dividends-received credit. You have somewhat different tax treatment than if you own less than 20 percent. So, until we own that common, we paid somewhat more tax on our preferred dividend than we now pay. It’s not a huge item, but it’s not immaterial, either. Charlie?
顺便说一句，关于我们持有的普通股数量，有一点可能不为人所知：如果你拥有一家公司的 20% 表决权，你在“股息抵扣”上享有不同待遇，税收处理也与低于 20% 时不同。在我们持有这些普通股之前，我们对优先股股息缴纳的税比现在要多。金额不算巨大，但也不是无足轻重。Charlie？
CHARLIE MUNGER: Well, I certainly agree, it’s hard to forecast what’s going to happen in the big investment banking, dash — slash, trading houses. I would like to say that Berkshire Hathaway was a large customer of Salomon long before we bought the preferred, and that we’ve had marvelous service over the years. I think Salomon’s going to be around for a long time, rendering very good service to various clients.
CHARLIE MUNGER：我当然同意——很难预测大型投行/交易商的走向。我想补充的是，远在我们购买优先股之前，Berkshire Hathaway 就是 Salomon 的大客户，多年来他们的服务非常出色。我认为 Salomon 会长期存在，并持续为各类客户提供优质服务。
WARREN BUFFETT: We sold —
WARREN BUFFETT：我们发行过——
CHARLIE MUNGER: Satisfied clients.
CHARLIE MUNGER：满意的客户。
WARREN BUFFETT: We sold our first debt issue of Berkshire, I think, in 1973, through Salomon. So, we’ve had an investing banking relationship for 21 or 22 years there. And actually, we’d done business with them before that in various other ways. So, it’s a long-term relationship. But there’s no question about Salomon being around. The question — and that’s why our preferred is absolutely money-good. But the question is what the average return on capital will be. And we knew that was difficult to predict when we went in. And we found out it’s even more difficult to predict than we thought.
WARREN BUFFETT：我记得我们在 1973 年就通过 Salomon 发行了 Berkshire 的第一笔债券。所以我们的投行业务关系已有 21、22 年之久。事实上在那之前我们也通过其他方式与其往来，因此这是长期关系。Salomon 的存续没问题——这也是为什么我们的优先股绝对安全。真正的问题在于其资本的平均回报率会是多少。我们入场时就知道这很难预测，而事实证明比我们想象的还要难。
15. Honoring mutual fund pioneer Phil Carret
向共同基金先驱 Phil Carret 致敬
WARREN BUFFETT: Zone 4?
WARREN BUFFETT：第 4 区？
AUDIENCE MEMBER: Thank you for the opportunity. Dick Jensen (PH) from Omaha, a fellow Nebraska University supporter. A rather convoluted question: very interested in your recent purchase and your future intention of American Express. And as I understand the company, I know it’s a rather involved and complicated and rather expansive company, insofar as it has its interest in many areas. I know one of which, of course, is the credit card. But there’s also the major part of the organization of IDS and others that I don’t even know about. And I wondered, what your hopes are for that investment. And I also, just recently, as perhaps you have, became curious to know if you are personally acquainted with Mr. Phil Carret, I believe, his name is. And how about the purchase of his firm in your future? Thank you.
AUDIENCE MEMBER：感谢这个机会。我是来自 Omaha 的 Dick Jensen（PH），也是 Nebraska University 的支持者。我的问题有点绕：我对你们最近增持以及未来对 American Express 的打算非常感兴趣。就我对这家公司的理解，它涉及面很广、结构复杂、业务庞杂，涉足诸多领域。我知道其中一个当然是信用卡业务，但还有组织中的 IDS 以及其他我都不了解的部分。我想知道，你们对这项投资有什么期望。另外，近期我也像你一样，开始好奇你是否与一位名叫 Phil Carret 的先生有私交？未来是否可能收购他的公司？谢谢。
WARREN BUFFETT: Dick, I think Phil Carret is here today. Phil?
WARREN BUFFETT：Dick，我想 Phil Carret 今天就在现场。Phil？
CHARLIE MUNGER: He’s right back there.
CHARLIE MUNGER：他就在后面。
WARREN BUFFETT: Phil, would you stand up? There he is. (Applause) Give him a hand. Phil is 98. I first met him in 1952, 43 years ago. He attends every eclipse around the world. And you can run into him in some very strange places. Wrote his first book on securities, I believe, in 1924. I — am I right on that, Phil? Yeah. And wrote an autobiography here, recently. Probably the greatest long-term investment record in this country’s history. And — but I think — I, you know, my impression is that Phil sold part, or a good bit, of Pioneer some years ago, which he managed for decades, many decades. In fact, I first learned about Phil when I was leafing through Moody’s Banks and Financial Manual 40-odd years ago, and I saw this company with this great record and with some securities that looked terribly interesting. So, we got in touch. And he was out in Omaha and we got acquainted. It — so, anybody that can get Phil to talk to them, listen carefully. I advise that.
WARREN BUFFETT：Phil，请你起立好吗？他在那儿。（掌声）给他一点掌声。Phil 今年 98 岁。我第一次见到他是在 1952 年，43 年前。他几乎全球每一次日食都会去看，你会在一些很奇特的地方遇到他。我记得他在 1924 年就写了第一本关于证券的书——我说得对吗，Phil？对。他最近还写了一本自传。他可能拥有这个国家历史上最出色的长期投资纪录之一。不过我印象中，Phil 几年前把 Pioneer 的一部分、或者说相当一部分卖掉了；那可是他管理了数十年的基金。事实上，我第一次知道 Phil，是 40 多年前翻阅《Moody’s Banks and Financial Manual》时，看到了这家公司惊人的业绩和一些非常有意思的证券。于是我们取得联系，他当时到了 Omaha，我们就认识了。所以，谁能有机会请教 Phil，一定要认真聆听。这是我的建议。
16. Cards are key to future of American Express
American Express 的未来关键在信用卡
WARREN BUFFETT: The question about American Express: we own just under 10 percent of American Express. And obviously, even though you mentioned they’re in a number of businesses, the — by far, the key, the most important factor in American Express’s future for a good many years to come — a great many years to come — will be the credit card. And that is a business that has become, and will forever, probably, become ever more competitive. I mean, I followed it since — I think I met Ralph Schneider at the Diners’ Club in the late 1950s. And American Express entered into the credit card business out of fear. I mean, they were worried about what the credit card was going to do to their traveler’s check business. Traveler’s check business had been originated back in 1890-something, I believe. And that was, in turn, building off of the old express business where, I think, it was Henry Wells and William Fargo, they would chain themselves to the express boxes as they delivered them through the — to the West.
WARREN BUFFETT：关于 American Express 的问题：我们持有 American Express 不到 10% 的股份。很显然，尽管你提到它涉足多个业务，但在相当长的一段时间里——可以说很长很长时间里——决定 American Express 未来的关键因素，远远还是信用卡业务。而这门业务已经、并且大概率会一直变得越来越有竞争性。我从上世纪 50 年代末就开始跟踪这个领域——我想我是那时在 Diners’ Club 认识了 Ralph Schneider。American Express 进入信用卡业务，最初是出于恐惧——他们担心信用卡会冲击他们的旅行支票业务。旅行支票业务我记得起源于 1890 年代，而它又是从早年的快运业务演化而来，当年我想是 Henry Wells 和 William Fargo，他们把自己用链子锁在运送到西部的快运箱子上。
And they decided that maybe issuing traveler’s checks would a little easier — (laughter) — than carrying all this stuff around. So, that — the traveler’s check was the — evolved out of the express business. And the credit card business with American Express arose out of fear of what — particularly Diners’ Club at the time. They were all terrified of Diners’ Club, which got this — got the jump on everybody. And they became enormously successful with it. And the American Express card, as you know, had a terribly strong position in what they called the “travel and entertainment” part of the card business. And of course, the banks entered in on a big scale. And Visa’s been enormously successful. So, the card has a strong franchise in certain areas, like the corporate card. Although people like First Bank System are very aggressive in going after them there. The card — but the card has a significant franchise, but it does not have the breadth of franchise that it had many years ago. For a while, it was “the” card. And now it’s “the” card in certain areas, but nothing like as broad an area as before.
他们后来觉得，发行旅行支票也许比整天搬运这些箱子——要容易一点（笑声）。所以，旅行支票就是从快运业务演化而来。American Express 做信用卡，是出于对当时竞争者——尤其是 Diners’ Club——的担心。他们对抢占先机的 Diners’ Club 十分畏惧。事实证明，Diners’ Club 也确实非常成功。大家知道，American Express 卡在所谓“差旅与娱乐”（T&E）这一信用卡细分中拥有极强的地位。当然，银行后来大规模进入，Visa 也非常成功。因此，American Express 在某些领域仍有很强的特许地位，比如企业卡；尽管像 First Bank System 之类的对手在那块追击得很凶。总的来说，American Express 卡有重要的护城河，但其广度不如多年前。曾经它是“那张卡”；如今它仍是某些领域里的“那张卡”，但覆盖范围远不如当年那么广。
It has certain, very important, advantages and economic strengths and it has some weaknesses. And you have to suss those, in deciding where it’ll be in the year 2000 or 2005. And we think that the management of American Express thinks well about the question of how to — how you keep the card special in certain situations. And they’ve reacted to the merchant backlash for higher discount fees, I think, in an intelligent way. So, we’ll see how it all plays out. But the key — IDS, which has now been renamed, but is a very big part of American Express — it accounts for close to a third of their earnings — but the real key will be how the card does over time. Charlie?
它有一些非常重要的优势与经济实力，同时也存在一些弱点。你必须把这些权衡清楚，才能判断到 2000 年或 2005 年它会处在什么位置。我们认为 American Express 的管理层在“如何在特定场景中保持这张卡的独特性”这个问题上想得很清楚。对商户因高折扣费（商户费率）而产生的反弹，我认为他们也做出了理性的应对。所以，让我们看看事态如何发展吧。但关键还是——尽管 IDS（现在已更名）是 American Express 非常重要的一部分，贡献了接近三分之一的利润——真正的关键在于这张卡长期的表现。Charlie？
CHARLIE MUNGER: Nothing to add.
CHARLIE MUNGER：无可补充。
17. “Corruption won” in stock option accounting rule
关于期权会计准则的结局：“腐败赢了”
WARREN BUFFETT: Zone 5?
WARREN BUFFETT：第 5 区？
AUDIENCE MEMBER: Hi, my name is Philip King (PH) from San Francisco. And my question has to do with how the FASB has caved in on the stock option proposal. And the people opposed to the proposal argue that it would hurt capital formation for companies and that the cost of stock options is already reflected in shares outstanding, in fully diluted calculations. And I was curious, what is your feelings about what’s happened?
AUDIENCE MEMBER：你好，我叫 Philip King（PH），来自 San Francisco。我的问题是关于 FASB 在股票期权提案上让步的做法。反对该提案的人认为，这会损害公司的资本形成，而且股票期权的成本已经在完全摊薄的流通股计算中得到反映。我想知道，你对此事的看法是什么？
WARREN BUFFETT: Well, as those of you have followed this issue — FASB did cave, and they were — they hated it. I mean, they knew they were right. Matter of fact, most of the, what are now, I guess, the big six auditing firms, many years ago, sided with the position. But in my opinion, the auditing firms caved to their clients, in that respect. In terms of capital formation, I would argue that the most intelligent form of capital formation follows from the most accurate form of accounting. I mean, it — if all the companies with — whose names began with A through M didn’t have to count depreciation and all the ones with N through Z did, or something, you know, that might help in capital formation for companies that were — had names with A thru M. And incidentally, they probably all change their names. But I don’t think that bad accounting is an aid to capital formation. In fact, I think probably over time, it distorts capital formation.
WARREN BUFFETT：关注这个议题的人都知道——FASB 的确让步了，而且他们——他们对此非常厌恶。我的意思是，他们知道自己是对的。事实上，多年前，现在所谓的“六大会计师事务所”中的大多数都站在正确的一边。但在我看来，会计师事务所在这件事上向他们的客户屈服了。至于资本形成，我会说，最聪明的资本形成来自最准确的会计。如果把公司按字母分组，名字以 A 到 M 开头的公司都不用计提折旧，而以 N 到 Z 开头的都要计提——之类的安排——你也许会说这有助于前一组公司的资本形成。而顺便提一句，他们大概都会去改名。但我不认为糟糕的会计能帮助资本形成。实际上，我认为从长期看，它会扭曲资本形成。
Because if we were to pay all of the shareholders with — I mean, all of the people who worked for Berkshire Hathaway — in stock, and therefore record no wage expense, you know, we might be able to sucker in a bunch of people who thought the earnings were real. But that would not be a great step forward for capital formation, in my view. I really think that — you know, I’ve talked privately to a number of managers about this. And they understand it. But they, you know, they prefer the present situation. And they used a lot of muscle in Washington many years ago. And I think I have this authenticated now. This fellow — mathematics professor — sent me some material after I’d written this. I try to get a little proof after the fact when I can. I believe it was in the Indiana legislature, where a legislator introduced a bill to change the value of pi, the mathematical symbol pi, to three. Because he said that it was too difficult for the schoolchildren to work with this — (laughter) — complicated 3.14159. And he was right. I mean, it was difficult.
因为如果我们把 Berkshire Hathaway 全体员工——注意，不是股东——都改成用股票支付报酬，于是账上就不确认工资费用，你知道的，我们也许能忽悠进来一群以为利润是真的人。但在我看来，那绝不是什么资本形成的进步。我确实这样认为——我也私下和不少经理人谈过。他们懂这个道理，但他们更喜欢现状。很多年前他们在 Washington 也使了很大的劲。我现在想我已经找到了旁证。当时有位数学教授在我写完之后寄来了一些材料。我尽量事后找点证据。据说是在 Indiana 的立法机构里，有位议员提出一项法案，要求把数学常数 pi 的值改成 3。理由是，学校孩子用——（笑声）——那个复杂的 3.14159 太难了。他说得没错，确实难。
And I — and Congress, in connection with the stock option question, received all kinds of pressure to, in turn, pressure FASB and the SEC to not count stock option costs as part of compensation. I’ve never met anybody that wanted to be compensated that felt that, if he received his present salary plus an option, he was not getting compensated more than if he just received a salary. So, he thought it was compensation. And I will tell you that if we’d been issuing options over a period of time at Berkshire for things unrelated to the performance of the entire business, that we would’ve had a cost, perhaps measuring in the billions of dollars, whether it was recorded or not. So, it goes back to Bishop Berkeley’s question of whether a tree that falls in the forest and doesn’t make a sound, you know, when — et cetera.
而我——我想说的是，就股票期权问题，Congress 受到各种压力，转而去施压 FASB 和 SEC，不要把期权成本计作薪酬的一部分。我从没见过任何一个希望获得报酬的人会认为，拿到现有工资再加一份期权，并不比只拿工资获得更多的补偿。所以对他而言，那就是补偿。我还要说，如果这些年在 Berkshire 发放了与整个公司绩效无关的期权，我们会发生成本——也许以十亿美元计——无论你是否把它记入账。这就回到了 Bishop Berkeley 的问题：森林里一棵树倒下，如果听不见声音，是否就意味着——等等。
But it — I think it is — I really think that it makes you a bit of a cynic about American business when you see the extent to which a group has pressured — even to the extent of talking about financial — withdrawing financial support from the Financial Accounting Standards Board — the degree to which they’ve pressured people to make sure the value of pi stays at three instead of 3.14, simply because it was their own ox that was being gored a bit. In any event, it’s — it looks like it’s all over now for some time. In fact, now they’re pressuring them to even weaken further the standards that have been set. So, self-interest is alive and well in corporate America. Charlie?
但——我认为，这件事确实——会让人对美国商业多一分犬儒。当你看到某些群体施压的程度——甚至威胁要从 Financial Accounting Standards Board 撤回资金支持——为了让“pi 的值保持在 3 而不是 3.14”，只因牵涉到他们自己的既得利益时，你很难不愤世嫉俗。不管怎样，这件事看起来在相当长一段时间里已成定局。事实上，他们现在还在施压，要求进一步削弱既定标准。可见“私利”在美国企业界生机勃勃。Charlie？
CHARLIE MUNGER: Yeah, I think dishonor won. And I think that — I think it is quite important for a civilization to have sound engineering and good accounting. And it is a very regrettable episode, leading politicians — leading venture capitalists. I think to some extent, it’s an indictment of the educational system, that this thing could be so widely looked at, and so wrongly.
CHARLIE MUNGER：是的，我认为“不光彩”赢了。我还认为，一个文明社会拥有健全的工程学与良好的会计学至关重要。这一事件非常令人遗憾——一些政界领袖、风投领袖的所作所为。我觉得在某种程度上，这也是对教育体系的控诉：如此广泛关注的问题，居然被如此错误地看待。
WARREN BUFFETT: It’s bad enough people want to cheat on their accounting. And they do cheat on their accounting. But to want it to be endorsed as the system —
WARREN BUFFETT：人们想在会计上作弊，这已经够糟糕了——而且他们确实这么干。但还要把这种做法变成制度、让其获得背书——
CHARLIE MUNGER: Yeah.
CHARLIE MUNGER：是的。
WARREN BUFFETT: — is really kind of disgusting.
WARREN BUFFETT：——就真的有点恶心了。
CHARLIE MUNGER: Yeah, corruption won.
CHARLIE MUNGER：没错，腐败赢了。
WARREN BUFFETT: Well, put us down on undecided on that and we’ll move on to zone 6. (Laughter)
WARREN BUFFETT：好吧，就把我们记作“尚未决定”吧，然后进入第 6 区。（笑声）
18. Why there’s no video of Berkshire meetings
为什么伯克希尔会议没有视频
AUDIENCE MEMBER: Good morning, Mr. Buffett, Mr. Munger, Mike Lee-Chin from Hamilton, Ontario. Could you consider availing a videotape of this meeting to us, the shareholders?
AUDIENCE MEMBER：早上好，Mr. Buffett、Mr. Munger。我是来自 Hamilton, Ontario 的 Mike Lee-Chin。请问你们是否考虑向我们股东提供本次会议的视频带？
CHARLIE MUNGER: I didn’t quite get that.
CHARLIE MUNGER：我没太听清。
AUDIENCE MEMBER: Would you consider availing this videotape of the shareholder — this particular shareholder meeting to us, the shareholders?
AUDIENCE MEMBER：你们会不会考虑把本次——这场股东大会的视频带提供给我们股东？
CHARLIE MUNGER: Distributing a videotape?
CHARLIE MUNGER：分发视频带？
WARREN BUFFETT: A transcript or a videotape?
WARREN BUFFETT：文字实录还是视频带？
AUDIENCE MEMBER: Yes.
AUDIENCE MEMBER：都可以。
WARREN BUFFETT: Yeah, we’ve had that suggested a number of times. It’s a good suggestion, and we’ve considered it. The thing we’re worried about, in connection with that, is discouraging attendance. I mean, it — (laughter) — we’d hate to have two people here asking questions and then send it out to tens of thousands. So — (laughter) — in the end —
WARREN BUFFETT：是的，我们多次收到过这样的建议。这是个好建议，我们也认真考虑过。我们担心的是，这样会让大家不愿意到场参加。我的意思是——（笑声）——我们不想现场只剩两个人提问，然后再把录像寄给成千上万的人。所以——（笑声）——最终——
CHARLIE MUNGER: Particularly if it might make sales go down at the jewelry store.
CHARLIE MUNGER：尤其是如果这会让珠宝店的销售下降的话。
WARREN BUFFETT: Yeah. (Laughter and applause) Since we were just attacking hypocrisy in American business, Charlie felt like he should add that to my comments. (Laughter) But we — it’s a close call on that because we would like everybody — Of course, we try to cover a great many subjects in the annual report. But we like the idea of the meeting — answering a lot of shareholders questions. We don’t want to discourage attendance. And it’s fun to have everybody come in and ask questions. And the chances are, if we had far fewer people, we would have, you know, far more — far fewer — good questions. So that the quality of the meeting is enhanced, I think, by having a lot of people come. But you’ve come a long way, so I can understand why you might be interested in a transcript. (Laughs) I apprentice that. Thank you.
WARREN BUFFETT：对。（笑声与掌声）既然我们刚刚还在抨击美国商界的虚伪，Charlie 觉得应该替我补充这一句。（笑声）不过——这件事确实很难取舍，因为我们希望大家——当然，我们也尽量在年报里覆盖大量话题。但我们喜欢在年会上——回答许多股东的问题。我们不想让大家不愿到场。大家亲自来提问也很有趣。而且如果到场的人很少，我们得到的——你懂的——优质问题可能也会更少。所以我认为，来的人越多，会议质量越高。不过你们千里迢迢赶来，我也理解你为什么会对文字实录感兴趣。（笑）我对此表示认可。谢谢。
AUDIENCE MEMBER: — or no. Is that a yes or a no?
AUDIENCE MEMBER：——还是不行？这是答应还是不答应？
WARREN BUFFETT: It’s — (Laughter)
WARREN BUFFETT：这是——（笑声）
CHARLIE MUNGER: It was a no.
CHARLIE MUNGER：是否定的。
WARREN BUFFETT: It’s a no.
WARREN BUFFETT：是不行。
AUDIENCE MEMBER: OK. (Applause)
AUDIENCE MEMBER：好的。（掌声）
WARREN BUFFETT: Most everything we say is a no. But we have various ways of getting there. (Laughter)
WARREN BUFFETT：我们的大多数回答都是“不”。只是抵达这个“不”的方式各不相同。（笑声）
19. Berkshire meetings boost Borsheims’ sales
年会显著拉动 Borsheims 销售
WARREN BUFFETT: OK. Zone 7 from the other room, I can see you.
WARREN BUFFETT：好的。来自另一会场的第 7 区，我能看到你们。
AUDIENCE MEMBER: Good morning, Mr. Buffett and Mr. Munger. I was wondering if you could tell us what the sales at Borsheims were yesterday and how it compared to a year ago?
AUDIENCE MEMBER：早上好，Buffett 先生、Munger 先生。能否告知 Borsheims 昨天的销售额，以及与一年前相比的变化？
WARREN BUFFETT: Well, I can tell you how it compared to a year ago. They were 15 percent above a year ago. And a year ago it was 40-odd percent above the year before. And I forget how much that was before. So, we keep setting records. But we haven’t announced any numbers. But it’s a pretty good size number. You’re a sporty crowd.
WARREN BUFFETT：我可以告诉你同比的情况。较一年前增长了 15%。而一年前又比再前一年增长了四十几个百分点。再往前我就记不清了。所以我们在不断刷新纪录。不过我们没有公布具体数字。但这个数字相当可观。你们真是“豪爽”的一群人。
AUDIENCE MEMBER: Thank you. (Laughter)
AUDIENCE MEMBER：谢谢。（笑声）
20. An “idiot” could successfully run Berkshire
“一个傻瓜”也能把 Berkshire 经营得不错
WARREN BUFFETT: Zone 1?
WARREN BUFFETT：第 1 区？
AUDIENCE MEMBER: Good morning. My name is Patrick Terhune from Fort Lauderdale, Florida. And first of all, I see, per your request, there are a lot of people who wore red in honor of the Cornhuskers. (Applause) Of course, my team was the — or is the Miami Hurricanes. And I’ve got my green and orange on under my clothes. So — but if we were to lose, I’m glad we lost to Nebraska and Tom Osborne. I’ve got a request for Warren and Charlie, and that is, recognizing that the value, both intrinsic and extrinsic, of Berkshire Hathaway, is the result of your combined skills in acquiring growth companies and with your prudent and expert investing of the company’s capital for growth, I’d like to know if you have a plan — a succession plan — to be executed in the event, God forbid, something happens to one or both of you, which would remove your input to the strategic decisions. I sincerely hope you’re in the process of developing individuals to carry forward your collective visions and to manage the company’s resources as effectively and as profitably as is being done now.
AUDIENCE MEMBER：早上好。我叫 Patrick Terhune，来自 Fort Lauderdale, Florida。首先，我看到大家照你们的要求穿了很多红色，向 Cornhuskers 致敬。（掌声）当然，我支持的——或者说我支持的是 Miami Hurricanes。我里面穿着绿橙配色。不过——如果我们要输，我也很高兴输给 Nebraska 和 Tom Osborne。我想请 Warren 和 Charlie 回答一个请求：大家都知道，Berkshire Hathaway 的内在与外在价值，是你们在收购成长型公司与谨慎、专业地投资公司资本以实现增长这两方面能力的结合。若不幸有一天你们中的一位或两位发生意外，无法再参与战略决策，请问你们是否已有可执行的接班计划？我真心希望你们正在培养接班人，去延续你们的共同愿景，并像现在一样高效且高收益地管理公司的资源。
WARREN BUFFETT: Well, I appreciate that question. And the answer is, obviously, we do care enormously about that because both Charlie and I — in addition to a lot of other reasons, but in — we both have a very significant percentage of our net worth in Berkshire. And neither one of us has figured out how to sell it all exactly, you know, 15 minutes before we get hit by a truck. So, we will not have the jump on the rest of you. And therefore, our continuing interest will go — financially — will go well, well beyond our deaths. And it will — in terms of foundations or something like that, it will go to organizations that we care very much about having maximum resources available to. So, we do have some plans. We don’t name names or anything of the sort. It’s not quite as tough as you might think because we have a collection of fabulous businesses. Some of them owned totally, some of them owned in part. And I don’t think razor blade sales or Coca-Cola sales are going to fall off dramatically the day Charlie or I die. It — we’ve got some great businesses.
WARREN BUFFETT：谢谢你的问题。答案显而易见：我们对此极为重视，因为除了许多其他理由之外，我和 Charlie 都将相当比例的净资产放在了 Berkshire。我们俩都还没找到一种方法，能在“被卡车撞到前 15 分钟”把股票全卖掉。所以我们并不会比你们占到先机。因此，从财务上看，我们的利益会远远延伸到我们身后。通过基金会等形式，它们会流向我们非常希望资源最为充裕的机构。所以，我们确实有一些安排，但不点名也不细说。事情没有你想象的那么难，因为我们拥有一篮子极好的业务，有全资的，也有参股的。我不认为在我或 Charlie 去世那一天，剃须刀或 Coca-Cola 的销量会突然暴跌。我们拥有一些伟大的业务。
And then same is true of the whollyowned businesses. So the question is more that of allocating capital in the future. And you know, that’s a problem for Charlie and me right now, simply because of the size with — it’s not easy to find things to do that make sense with lots of money. And sometimes a year will go by and we don’t find anything. And other times a year goes by, and we think we found something, but it turns out we were wrong. So, it’s not easy. But we think we will have some very smart people working on that. And we don’t think it will be the end of the world if they don’t find anything the first year, because the businesses will run very well. We have a big advantage in that, as contrasted to virtually almost every other company, we, now and in the future, are willing — eager — to buy parts of wonderful businesses or all of them. I mean, most managements have a — most investors are limited to buying parts of businesses. And most managers, psychologically, are geared to owning all of something that they can run themselves.
我们的全资子公司也一样稳健。所以真正的问题更多在于“未来资本的配置”。这其实也是我和 Charlie 眼前的问题，仅仅因为体量太大——要找到“大钱也合理”的事并不容易。有时一年下来我们什么也找不到；另一些年份，觉得找到了，结果证明我们错了。这不容易。但我们认为会有非常聪明的人来做这件事。即使他们第一年什么都没找到，世界也不会末日，因为这些业务会运转得很好。我们相对几乎所有其他公司有一个巨大优势：无论现在还是未来，我们都愿意——而且渴望——去买入“优秀企业的一部分”或“整家公司”。多数投资者仅能买企业的一部分；多数管理者在心理上则更倾向于只拥有自己能亲自管理的“全部”。
We — you know, it’s like, I think Woody Allen said some years ago, the advantage of being bisexual is it doubles your chances of a date on Saturday night. (Laughter) And we can go either direction, in that respect. (Laughter) And our successors will also. So very — Charlie, you want to add anything?
我们——你知道，我记得 Woody Allen 有句玩笑：双向选择的好处是把你周六晚上的约会机会翻倍。（笑声）在这点上，我们可以双向选择。（笑声）我们的接班人也会如此。就这些——Charlie，你要补充吗？
CHARLIE MUNGER: I think few business operations have ever been constructed to require so little continuing intelligence in corporate headquarters. (Laughter) An idiot who was willing just to sit here would have a very good record long after the present incumbents were dead.
CHARLIE MUNGER：我认为，很少有企业被设计得像我们这样，对总部持续性的“智力投入”需求如此之低。（笑声）只要愿意“坐在这儿”的一个傻瓜，在现任者去世很久之后，也会有相当不错的业绩记录。
WARREN BUFFETT: I think that’s true.
WARREN BUFFETT：我同意。
CHARLIE MUNGER: Yeah. I think it would be a little better if Warren would keep alive, in terms of allocating the new capital. I don’t think we’ll easily replace Warren. But, you know, we don’t have to keep getting rich at the same rate we have in the past. (Laughter)
CHARLIE MUNGER：不过如果 Warren 能继续活着，在新资本的配置上会更好。我不认为我们能轻易替代 Warren。但你知道，我们也不必像过去那样以同样的速度继续变富。（笑声）
WARREN BUFFETT: That’s a tie vote. (Laughter)
WARREN BUFFETT：这就是一致通过。（笑声）
21. Decisions so obvious that exact numbers aren’t needed
决策要足够显而易见，以至于不需要精确数字
WARREN BUFFETT: Zone 2?
WARREN BUFFETT：第 2 区？
AUDIENCE MEMBER: Hi, this —
AUDIENCE MEMBER：你好，这里——
WARREN BUFFETT: (Inaudible)
WARREN BUFFETT：（听不清）
AUDIENCE MEMBER: — Keith Briar from San Francisco. I have a question. When you’re valuing the companies and you discount back the future earnings that you talk about, how many years out do you generally go? And if you don’t go out a general number of years, how do you arrive at that time period?
AUDIENCE MEMBER：——我是来自 San Francisco 的 Keith Briar。我有个问题。当你们给公司估值、把未来收益折现回现值时，一般会看多长时间？如果没有固定的年限，你们如何确定这个时间跨度？
WARREN BUFFETT: Well, that’s a very good question. And it’s — I mean, it’s the heart of investing or buying businesses, which we regard as the same thing, but — And it is the framework in which we operate. I mean, we are trying to look at businesses in terms of what kind of cash can they produce, if we’re buying all of them, or will they produce, if we’re buying part of them. And there’s a difference. And then at what discount rate do we bring it back. And I think your question was how far out do we look, and all that. Despite the fact that we can define that in a very kind of simple and direct equation, you know, we are — we’ve never actually sat down and written out a set of numbers to relate that equation. We do it in our heads, in a way, obviously. I mean, that’s what it’s all about. But there is no piece of paper.
WARREN BUFFETT：这是个非常好的问题。它——我想——正是投资或收购企业的核心，我们把二者视为一回事。这也是我们运作的框架。也就是说，如果我们买下整个企业，我们看它能产生什么样的现金；如果只买一部分，我们看它将产生什么样的现金——这两者不同。然后再决定用什么折现率折回。我想你的问题是我们会看多远，等等。尽管可以用一个非常简单直白的方程来表达，但我们从未真的坐下来把这个方程对应的一组数字写出来。我们显然是在脑子里完成这件事的——这事本质上就是如此——但并没有一张纸。
And we never — there never was a piece of paper that shows what our calculation on Helzberg’s or See’s Candy or The Buffalo News was, in that respect. So, it would be attaching a little more scientific quality to our analysis than there really is, if I gave you some gobbledygook about, “Well, we do it for 18 years and stick a terminal value on and do all of this.” We are sitting in the office thinking about that question with each business or each investment. And we have discount rates, in a general way, in mind. But we really like the decision to be obvious enough to us that it doesn’t require making a detailed calculation. And it’s the framework. But it’s not applied in the sense that we actually fill in all the variables. Is that a fair way of stating it, Charlie?
而且——我们从来没有、一次也没有——为 Helzberg’s、See’s Candy 或 The Buffalo News 做过一张纸面的“那种计算”。如果我现在胡扯说“我们看 18 年、再加个终值、再怎么怎么”，那是在给我们的分析强加并不存在的“科学气”。我们的实际做法是：办公室里对每个企业或投资逐一思考这些问题。我们脑子里有一个大致的折现率，但我们真正希望的是：这个决策对我们而言足够显而易见，以至于不需要做繁琐的细算。折现只是框架，不是要把所有变量都填进表格里。Charlie，这样表述算不算准确？
CHARLIE MUNGER: Yeah. Berkshire is being run the way Thomas Hunt Morgan, the great Nobel laureate, ran the biology department at Caltech. He banned the Friden calculator, which was the computer of that era. And people said, “How can you do this? Every place else in Caltech, we have Friden calculators going everywhere.” And he said, “Well, we’re picking up these great nuggets of gold just by organized common sense, and resources are short, and we’re not going to resort to any damn placer mining as long as we can pick up these major aggregations of gold.” That’s the way Berkshire works. And I hope the placer mining era will never come. Somebody once subpoenaed our staffing papers on some acquisition. And of course, not only did we not have any staffing papers, we didn’t have any staff. (Laughter and applause)
CHARLIE MUNGER：对。Berkshire 的管理方式就像诺奖得主 Thomas Hunt Morgan 当年管理 Caltech 生物系那样。他禁止使用 Friden 计算器（那一代的“电脑”）。别人问他，“怎么能这样？Caltech 其他地方到处都是 Friden。”他回答：“我们用有组织的常识就能捡到大金块，资源有限，只要还能捡到这些成堆的大金块，就不去搞什么见不得金子的淘砂。”这就是 Berkshire 的方式。我希望“淘砂时代”永远不要到来。有人曾就某次收购传唤我们的“尽调材料”。结果不仅没有尽调材料，我们连“尽调团队”都没有。（笑声与掌声）
22. “Something will happen” and we want to be ready
“总会有事发生”，我们要随时准备
WARREN BUFFETT: Zone 3?
WARREN BUFFETT：第 3 区？
AUDIENCE MEMBER: I’m Tom Morrow (PH) from Laguna Beach, California. And the question I have to ask pertains to the issuance of the new stock. And again, as Charles mentioned, is there some potential gold mine out there that you have specifically in mind with the — some large acquisition that you have specifically in mind at this time, without revealing any strategic secrets?
AUDIENCE MEMBER：我是来自 California 的 Laguna Beach 的 Tom Morrow（PH）。我的问题与新股发行有关。正如 Charles 提到的，你们是否心里已有某个潜在的“金矿”——也就是某笔大型收购目标？在不泄露战略机密的前提下，你们此刻是否已经有具体人选？
WARREN BUFFETT: Yeah. There are things we would like to do. Whether we ever get a chance to do them or not is another question. But you know, I will be surprised if, in the next five years, we haven’t used some preferred stock one time or another. As I mentioned in the report, we had one last year that if we’d done it, it would’ve involved the issuance of maybe a billion dollars’ worth of — no, more than that, I’m sorry — a couple billion dollars’ worth of preferred. That one isn’t going to happen, in my view. I mean, it — there’s one chance in a hundred it’ll — it could happen or something of the sort — but, probably, it isn’t going to happen. On the other hand, we want to be prepared for it. Something will happen. That’s always been our experience. You know, we have sat through some dry spells. And this is true in both the stock market and the acquisition business. You know, I closed up the partnership in 1969 because there was nothing that made sense to do.
WARREN BUFFETT：是的，我们确实有些想做的事。能不能轮到我们做，是另一回事。但如果未来五年里我们没有在某个时点用到优先股，我会感到意外。正如我在年报里讲的，去年我们曾有一个案子，如果做成了，可能要发行十亿美元——不，对不起——几十亿美元的优先股。依我看，那件事不会发生了。也许概率是一百分之一——可能会发生之类——但大概不会。不过另一方面，我们要做好准备。总会有事发生——这是我们的长期经验。我们经历过一段段“干旱期”，这在股市和并购上都一样。你知道，1969 年我解散了合伙企业，因为没有任何“说得通”的事可做。
And I’m glad I did because that situation prevailed in ’71 and ’2. But in 1973 and ’4, you know, there were all kinds of things to do. And that will happen from time to time. People will behave, particularly in markets, just as foolishly in the future as they have in the past. It’ll come at unexpected times. But we will get a chance to do something. Now, that’s more of a cash-type purchase, obviously, in the market. But we will get a chance to use the preferred. And we will try to think about big things. We may not find them. But Charlie and I, the larger something is, the more interested we are.
而且我很庆幸那么做了，因为同样的情况在 1971、1972 年仍在持续。可到了 1973、1974 年，你看，机会就遍地都是。这样的轮回会反复出现。人们（尤其在市场里）的愚蠢行为，未来还会像过去一样上演，并且常常在意想不到的时刻出现。但我们总会有机会做点什么。当然，那更多是市场里“用现金”的买入。不过我们也会有机会使用优先股。而且我们会尽量去想“大事”。也许找不到，但对我和 Charlie 来说，东西越大，我们越感兴趣。
23. Big assets make float more flexible
庞大的净资产让“浮存金”更灵活
WARREN BUFFETT: Zone 4.
WARREN BUFFETT：第 4 区。
AUDIENCE MEMBER: Jim Moss (PH) from Los Angeles. I was reading through your annual report. And to me, an eye-popping number in there was the amount of float in 1994, at a cost of less than zero — I think it was $3 billion. And I was wondering if there are any restrictions on your investment of that money, or can that go into your marketable equity securities?
AUDIENCE MEMBER：我是来自 Los Angeles 的 Jim Moss（PH）。我在阅读你们的年报。其中一个让我大开眼界的数字是 1994 年的“浮存金”规模，且成本低于零——我记得是 30 亿美元。我想知道，你们在运用这笔资金时是否有任何限制，还是说它可以投向你们的可流通股权证券？
WARREN BUFFETT: The question relates to — we have that long table we put in — we introduced about four years ago or so in the annual report, that shows the amount of float and the cost of float. And that’s a very important table. It — in terms of our operating businesses, that’s probably the most important piece of information in the report. And that float is, as you noted, well over $3 billion now — last year, because of various favorable factors, including the fact that our super-cat business was favorable, but also, because our other insurance businesses did very well — amazingly well. The cost of that float, which is money that we’re holding that eventually — does not belong to us, but will go to somebody else. The cost of that float was less than zero, and that is a very valuable asset. And the question is, how much flexibility we have in investing that, which I think was the core of your question. The answer is we have a lot of flexibility. We are not disadvantaged by that money being in float, as opposed to equity, really, in any significant way.
WARREN BUFFETT：你的问题涉及——我们在年报里放了一张很长的表——大约四年前开始加入年报，展示“浮存金”的规模和成本。这是一张非常重要的表。就我们的实业运营而言，它大概是整份报告里最重要的信息。“浮存金”正如你所说，如今已远超 30 亿美元——去年由于多种有利因素，包括我们的超大灾再保险业务表现不错，也因为其他保险业务表现非常好——好得惊人。所谓“浮存金”，是我们手里暂时持有、最终并不属于我们、而是要支付给他人的资金；这笔“浮存金”的成本低于零，这是一项极有价值的资产。核心问题是：我们在投资这笔钱时拥有多大灵活性？答案是：我们非常灵活。与自有股本相比，把钱以“浮存金”的形态持有，并不会在任何实质意义上让我们处于不利地位。
Now, if we had a very limited amount of equity and a very large amount of float, we would impose a lot of restrictions on ourselves as to how we would do it, because we would want to be very sure that we were in a position to distribute that float, in effect, to policyholders, or claimants, or whatever it may be at the time that was appropriate. But we have so much net worth that, in effect, that float is just about as useful to us as equity money. And that means quite useful. It’s a big asset of Berkshire’s.
但如果我们的自有股本很少、而“浮存金”很大，我们就会对自身的投资行为设定很多限制，因为我们必须非常确定：在适当的时候，我们有能力把这笔“浮存金”有效地支付给保单持有人、索赔人或其他应付对象。可我们如今的净资产规模很大，结果就是：这笔“浮存金”对我们而言几乎与自有股本一样有用。也就是说，非常有用。这是 Berkshire 的一项重要资产。
24. Not feeling threatened by Beardstown Ladies
不觉得被“Beardstown Ladies”威胁
WARREN BUFFETT: Let’s see, we’ve got zone 5.
WARREN BUFFETT：我们看看，第 5 区。
AUDIENCE MEMBER: Susan Scott (PH) from Madison, Wisconsin. On a more serious note, are you beginning to feel threatened by the success of the Beardstown Ladies? (Laughter)
AUDIENCE MEMBER：我是来自 Madison, Wisconsin 的 Susan Scott（PH）。严肃一点地问：你们是否开始觉得被 Beardstown Ladies 的成功所威胁？（笑声）
WARREN BUFFETT: Which lady?
WARREN BUFFETT：哪位女士？
CHARLIE MUNGER: I —
CHARLIE MUNGER：我——
WARREN BUFFETT: Which lady was that? I —
WARREN BUFFETT：你指哪位？我——
CHARLIE MUNGER: I didn’t get it.
CHARLIE MUNGER：我没听明白。
WARREN BUFFETT: I got everything except what lady that was.
WARREN BUFFETT：除了是哪位女士之外，其他都听懂了。
AUDIENCE MEMBER: The Beardstown Ladies, the investment group?
AUDIENCE MEMBER：Beardstown Ladies，那支投资团体？
WARREN BUFFETT: Oh, that group. Yeah, the best-seller. Yeah. I have not read that book. I hate to admit that to an audience of shareholders, that I — This is a book that’s — I think it’s probably number, I don’t know, seven or eight or something like that on the Times best-seller list, and been up there for a couple of months now. It’s a group — an investment group — that, apparently, is sharing with the world their secrets of success. I’m always suspicious of people when they’re sharing with the world any great ideas on investments. But we are not threatened at the moment, no. (Laughter)
WARREN BUFFETT：哦，那个团体。对，畅销书。是的，那本书我没读过。我得在股东面前承认这一点，这让我有点——这本书——我想在《Times》的畅销书榜上大概排第七、第八之类，已经上榜几个月了。这是一个团体——一个投资团体——看起来在向全世界分享他们的成功秘诀。凡是有人把所谓“伟大的投资理念”拿出来分享给全世界，我总是保持怀疑。但目前我们并不觉得受到威胁，不会。（笑声）
25. Economics of the moat and the castle
护城河与城堡的经济学
WARREN BUFFETT: Zone 6.
WARREN BUFFETT：第 6 区。
WARREN BUFFETT: Mike Assail (PH) from New York City. In the mistake du jour section of the annual report, you mentioned a fundamental rule of economics that you missed. I’d like to know the two or three most important fundamental rules of economics you habitually get right. In other words, what are the fundamental rules of economics you used to make money for Berkshire? And I’m not talking about Ben Graham’s principles here, but rather, rules of economics which may be found in an economics textbook. Thank you.
WARREN BUFFETT：我是来自 New York City 的 Mike Assail（PH）。在年报的“每日一错”部分，你提到自己忽略了一条经济学基本规律。我想知道，你们平时最常抓对的两三条经济学基本规律是什么。换句话说，你们用来为 Berkshire 赚钱的、可以在经济学教科书里找到的那些经济学基本规律有哪些？我这里不指 Ben Graham 的原则。谢谢。
WARREN BUFFETT: We — Yeah, we try to — I mean, we try to follow Ben’s principles, in terms of the attitude we bring toward both investing and in buying businesses. But the most important thing you can — you know, what we’re trying to do is we’re trying to find a business with a wide and long-lasting moat around it, surround — protecting a terrific economic castle with an honest lord in charge of the castle. And in essence, that’s what business is all about. I mean, you want to be the lord of the castle, yourself. In which case, you don’t worry about that last factor. But what you’re trying to — what we’re trying to find is a business that, for one reason or another — it can be because it’s the low-cost producer in some area, it can be because it has a natural franchise because of surface capabilities, it could be because of its position in the consumers’ mind, it can be because of a technological advantage, or any kind of reason at all, that it has this moat around it.
WARREN BUFFETT：我们——对，我们确实——我的意思是，我们在投资与收购企业的态度上会遵循 Ben 的原则。但最重要的一点是——你知道，我们在做的，是寻找那种有着宽广且持久护城河的生意；一座由诚实的城主掌管、护城河环绕、保护着的伟大“经济城堡”。本质上，商业就是这回事。理想情况下，你自己就是那位城主，那么最后一个因素你就不必担心。我们要找的——出于这样或那样的理由——是拥有护城河的生意：可能因为它在某个领域是低成本生产者；可能因为它有天然的特许地位来源于某些服务能力；可能因为它在消费者心智中的位置；可能因为技术优势；或任何能形成护城河的原因。
And then our — then what we have to decide is — all moats are subject to attack in a capitalistic system, so everybody is going to try and — if you’ve got a big castle in there, people are going to be trying to figure out how to get to it. And what we have to decide — and most moats aren’t worth a damn in, you know, in capitalism. I mean, that’s the nature of it. And it’s a constructive thing that that’s the case. But we are trying to figure out what is keeping — why is that castle still standing? And what’s going to keep it standing or cause it not to be standing five, 10, 20 years from now. What are the key factors? And how permanent are they? How much do they depend on the genius of the lord in the castle? And then if we feel good about the moat, then we try to figure out whether, you know, the lord is going to try to take it all for himself, whether he’s likely to do something stupid with the proceeds, et cetera. But that’s the way we look at businesses.
接下来我们要判断的是——在资本主义体系里，所有护城河都会遭到进攻；只要你有一座大城堡，别人就会琢磨怎么攻进去。我们必须决定的是——而且在资本主义中，大多数护城河其实不值一提，这就是它的本性，而且这种“失效”在总体上是有建设性的——究竟是什么让这座城堡还稳稳屹立？在未来五年、十年、二十年里，是什么能让它继续屹立，或让它倒塌？关键因素有哪些？这些因素的持久性如何？它们有多大程度依赖于城主个人的天赋？如果我们对护城河感到满意，我们还要判断那位城主会不会试图把一切都占为己有、会不会把钱用在蠢事上，等等。这就是我们看企业的方式。
Charlie, you want to add anything?
Charlie，你要补充吗？
CHARLIE MUNGER: Well, I think he wants it translated into the ordinary terms of economics. The honest lord is low agency cost. That’s the word in economics. And the microeconomic business advantages are, by and large, advantages of scale — scale of market dominance, which can be a retailer that just has huge advantages in terms of buying cheaper and enjoying higher sales per square foot. So you’re — by and large, you’re talking economies of scale. You can have scale of intelligence. In other words, you can have a lord with enough extra intelligence that he has a big advantage. So you’re — by and large, you’re talking scale advantages and low agency costs.
CHARLIE MUNGER：我想他希望把这些翻译成标准经济学术语。“诚实的城主”对应的是“低代理成本”（low agency cost）。而微观层面的竞争优势，主要是规模优势——市场支配层面的规模：比如零售商通过更低的采购成本与更高的单位面积销售额获得巨大优势。总体上说，你谈的是“规模经济”。还有“智力规模”：换言之，城主因额外的智力优势而拥有更大胜势。归结起来，就是“规模优势 + 低代理成本”。
WARREN BUFFETT: Yeah, to some extent, Charlie and I try and distinguish between businesses where you have to have been smart once and businesses where you have to stay smart. And, I mean, retailing is a good case of a business where you have to stay smart. But you can — you are under attack all of the time. People are in your store. If you’re doing something successful, they’re in your store the next day trying to figure out what it is about your success that they can transplant and maybe add a little something on in their own situation. So, you cannot coast in retailing. There are other businesses where you only have to be smart once, at least for a very long time. There was once a southern publisher who was doing very well with his newspaper. And someone asked him the secret of his success. And he said monopoly and nepotism. (Laughter) And I mean, he wasn’t so dumb. I mean, he didn’t have any illusions about himself. And if you had a big network of television affiliates station 30 years ago, there’s still a major difference between good management and bad management. I mean, a major difference.
WARREN BUFFETT：是的，在某种程度上，我和 Charlie 会区分两类生意：一类是“聪明一次就够”的生意，另一类是“必须一直保持聪明”的生意。零售就是“必须一直聪明”的典型——你时时刻刻都在被进攻。只要你做成了什么，第二天竞争者就会走进你的店，想办法复制你的成功、并在他们的场景里再加点料。所以零售业里不能“躺平”。也有“聪明一次就够”的生意，至少很长时间是这样。曾有一位南方报业老板，报纸办得很好。别人问他成功秘诀，他说：垄断和裙带关系。（笑声）这话并不蠢——他对自己并没有幻想。再比如，30 年前如果你拥有一家大型电视台联播网的地方台，虽说好管理与差管理差别依然很大——确实很大——
But you could be a terrible manager and make a fortune, basically. Because the one decision to own the network TV affiliate overcame almost any deficiency that existed from that point forward. And that would not be true if you were the first one to come up with some concept in retailing or something of the sort. I mean, you would have to be out there defending it every day. Ideally, you know, is you want terrific management at a terrific business. And that’s what we look for. But as we pointed out in the past, if you have to choose between the two, get a terrific business. Charlie, any more?
但即使你是个很糟糕的管理者，基本上也还能赚大钱——因为“拥有联播网地方台”这一个决定，足以覆盖此后几乎所有的管理缺陷。而如果你在零售里首创了某个模式，情况就完全不同了——你得每天出去保卫它。理想状态当然是“卓越管理 + 卓越生意”，这正是我们所寻求的。但正如我们过去反复强调的，如果二者必须取舍——请选择卓越的生意。Charlie，还有补充吗？
CHARLIE MUNGER: No.
CHARLIE MUNGER：没有。
26. Compliments for Helzbergs of Kansas City
对 Kansas City 的 Helzbergs 的赞誉
WARREN BUFFETT: Let’s see, zone 7, I believe is next?
WARREN BUFFETT：我们看看，第 7 区，我记得下一个是你们？
VOICE: No questions from zone 7.
VOICE：第 7 区没有问题。
WARREN BUFFETT: OK. How about zone 1?
WARREN BUFFETT：好的。那第 1 区呢？
AUDIENCE MEMBER: Paul Miller (PH) from Kansas City. First, I’d like to comment on your purchase of Kansas City-based Helzberg Jewelers. You commented about Barnett Helzberg and his — what he’s done, retailing-wise. For those of us in Kansas City, you’ve also picked up Barnett and Shirley Helzberg, who are the first family in philanthropy in Kansas City. And for the shareholders in this room, the Helzbergs are wonderful people. And to have them added to this group of companies says miles about Warren Buffett and that they pick companies based upon their management and their people. So, kudos to Berkshire Hathaway for picking up the Helzbergs, and thanks to the Helzbergs for everything they’ve done to Kansas City. Now, my — (Applause)
AUDIENCE MEMBER：我是来自 Kansas City 的 Paul Miller（PH）。先点评一下你们收购总部在 Kansas City 的 Helzberg Jewelers。你们谈到了 Barnett Helzberg 以及他在零售上的成就。对我们 Kansas City 的人来说，你们同时“收购”的还有 Barnett 和 Shirley Helzberg——他们是 Kansas City 慈善界的“第一家族”。对在座股东而言，Helzbergs 是了不起的一家人。把他们纳入这组公司，充分体现了 Warren Buffett 的选企标准是看管理层与“人”。所以，祝贺 Berkshire Hathaway 收购了 Helzbergs，也感谢 Helzbergs 为 Kansas City 所做的一切。现在，我——（掌声）
WARREN BUFFETT: Appreciate that. (Applause)
WARREN BUFFETT：谢谢你的肯定。（掌声）
27. Putting a value on the subsidiaries
如何给子公司估值
AUDIENCE MEMBER: My question relates to value. We can look in the annual report, and we can all see the purchase of a Washington Post, for instance, for $10 million that has a value today of 420 million. But discerning the value of the other consortium of non-publicly traded businesses, the Nebraska Furniture Marts, the Borsheims, et cetera — the value of their purchase price over the years versus their value today, how can we understand that value and how is it reflected in the annual reports?
AUDIENCE MEMBER：我的问题与“价值”有关。我们在年报里能看到，比如当年以 1,000 万美元购入的 Washington Post，如今价值 4.2 亿。但对于其他未上市业务的组合，如 Nebraska Furniture Mart、Borsheims 等，它们的历年收购成本与今天的价值之间的变化，我们该如何理解？这种价值如何在年报中体现？
WARREN BUFFETT: Yeah, well we try to — that’s a good question. We try to give you the information that we would want in answering that question, in the annual report. Part of it, we do in those pages where we say it’s not according to GAAP accounting. But there’s a lot of useful information in there. We’re not — we don’t stick a number on each company. But we try to give you enough information about the capital employ, the margins, and all of that sort of thing on the bigger businesses that you can make estimates that are probably just about as good as ours.
WARREN BUFFETT：是的，这是个好问题。我们会在年报中提供我们自己也需要用来回答这个问题的信息。部分信息在我们注明“非 GAAP”的页面，但那里面有大量有用内容。我们不会给每家公司标一个具体数值，但会尽量披露关于资本投入、利润率等关键数据，尤其是较大的业务板块，让你们做出的估算大概率和我们相差无几。
WARREN BUFFETT: Charlie and I would not need more information than is in the report to come up with a pretty good idea of what the controlled businesses are worth. And there’s no information we’re holding back that we think would be of any real importance in evaluating those businesses. But you’re right, it’s a lot easier with marketable securities than it is — at least in terms of current numbers — than it is with the wholly-owned businesses. The wholly-owned businesses, generally speaking, some of them are worth a whole lot more than we’ve — than they’re carried on the books for. And we feel pretty good about, essentially, all of them. But they’re — they’ve turned out remarkably well, I would say that, over the years. And my guess is that they keep working pretty well. We have managers in a number of those businesses here. I’m not going to introduce them all because we have so many that it would take a considerable period of time. But you named The Washington Post.
WARREN BUFFETT：对我们而言，报告里现有的信息已经足够让我们对控股业务的价值形成相当准确的判断。我们没有隐瞒任何对评估这些业务“真正重要”的信息。不过你说得对，相比之下，可交易证券的估值（至少就“当前数字”）比全资子公司要容易。总体上，全资子公司有不少远高于账面价值；我们对几乎所有子公司都很有信心。多年来它们的表现可谓“超预期”，我猜它们未来也会继续运转良好。今天到场的有不少这些业务的经理人。我不会一一介绍，因为数量太多，会占很多时间。但既然你提到了 The Washington Post——
In the front row there, close to the front row, we have Don Keough, would you step up, of Coca-Cola? (Applause) And we have Kay Graham for the Post. (Applause) And Tom Murphy from Cap Cities. (Applause)
在前排——靠前的位置——我们有来自 Coca-Cola 的 Don Keough，可以起立一下吗？（掌声）还有来自 The Post 的 Kay Graham。（掌声）以及来自 Cap Cities 的 Tom Murphy。（掌声）
CHARLIE MUNGER: Is Paul Hazen here, too?
CHARLIE MUNGER：Paul Hazen 今天也在吗？
WARREN BUFFETT: And I’m going to try and do — well, there’s a whole bunch more. I don’t want to get — but I — but those three were sitting together and I was struck by the fact that if — those three combined, we have about 6 1/2 billion of profit in, so far. (Laughs) So, I would say that that’s a — (Applause) — Those are three businesses that have been fantastic. And like — I emphasize “so far” because we’d like to be able to name a bigger number in the future. But we have a group of managers, both at the controlled companies and at the partly-owned companies, that have just created incredible value for Berkshire. I mean, Charlie and I sit around and read the paper every day and a lot of magazines and things, watch OJ Simpson or whatever it may be. (Laughter) And these people are out there creating a ton of value for us. So, we’re not going to change it. That —
WARREN BUFFETT：我还想介绍——好吧，其实还有一大串名字。我就不逐一念了——不过这三位坐在一起让我想起：到目前为止，光是这三家，我们合计赚了大约 65 亿美元。（笑）所以我会说——（掌声）——这三项业务都非常出色。我强调“到目前为止”，因为我们希望未来能报出更大的数字。我们这批经理人——无论在控股公司还是参股公司——为 Berkshire 创造了惊人的价值。说真的，我和 Charlie 天天坐着看报、翻杂志，顺便看看 OJ Simpson 的新闻之类的（笑声），而他们在外面替我们创造价值。所以我们不会去改变这一套。就是这样——
28. Salomon Brothers culture clash
Salomon Brothers 的文化冲突
WARREN BUFFETT: Now, let’s see. I think, zone — is it zone 2 now? Or is it — yeah.
WARREN BUFFETT：我们看看。我想，区域——现在轮到第 2 区了吗？或者——对，第 2 区。
AUDIENCE MEMBER: Hello. I’m Tim Palmer (PH) from Dillon, Colorado. I have a question for you regarding Salomon. In the past week, there’s been an article in The New York Times, The Wall Street Journal, and I believe it’s Businessweek, that were rather unflattering, as far as what’s going on with the management and your selection. There seems to be a — somewhat of a cultural clash there. I don’t know that to be a fact. But I wondered, number one, how you keep yourself open to bad news before it’s news. And what is going on in Salomon there, the compensation plan, et cetera? How do you think that, culturally, is going to work out?
AUDIENCE MEMBER：你好。我是来自 Dillon, Colorado 的 Tim Palmer（PH）。我有个关于 Salomon 的问题。过去一周，The New York Times、The Wall Street Journal，还有我记得是 Businessweek，都刊登了对那里的管理层以及你的任命不太友好的报道。看起来那儿存在某种文化冲突。我不确定是否属实。但我想问：第一，你是如何在“坏消息成为新闻之前”就保持对坏消息的开放渠道？第二，Salomon 现在的情况如何，比如薪酬方案等？你认为从文化上看，最终会怎样解决？
WARREN BUFFETT: Charlie and I are always — we’re more interested in bad news, always, than good news. We figure good news takes care of itself. And one — we only give a couple of instructions to people when they go to work for us. And one of them is to think like an owner. And the second one is to just tell us the bad news immediately, because good news takes care of itself. And we can take bad news, but we don’t like bad news late. So, I would say, in connection with Salomon, that there is, and has been, some culture clash. And there probably almost always would be a culture clash in a business where there is that amount of tension. Whether it be the entertainment business, or the investment banking business, or the sports business, there’s going to be a certain amount of tension when — between compensation to the people that work there and compensation to the owners. And I think there’s been some — that strain has existed at Salomon from the day I was first there and far before that. I mean, I — that was no surprise. It’s understandable.
WARREN BUFFETT：我和 Charlie 一向——总是对坏消息比好消息更感兴趣。我们的看法是，好消息会自己照顾好自己。我们只给为我们工作的人两条指示：其一，要像所有者那样思考；其二，立刻把坏消息告诉我们，因为好消息会自己照顾好自己。我们能承受坏消息，但我们不喜欢“迟到的坏消息”。关于 Salomon，我会说，确实存在、也一直存在一些文化冲突。而在高度紧张的行业里几乎总会有文化冲突。无论是娱乐业、投行业还是体育业，当“员工的报酬”和“所有者的回报”之间存在张力时，就会有一定的紧张关系。我认为这种张力在我刚到 Salomon 之时、甚至更早就存在了。这并不意外，也可以理解。
You’re seeing a tension, actually, in the airline business between the people that work there and capital. And it’s produced terrible results in the airline business. And the people that work there have been able to — and I’m not talking about USAir specifically, although that’s a case. But it goes beyond that. They have had contracts, which were, as I pointed out in the report, were executed in an earlier age, which, essentially, will not allow — in many cases — capital to receive any compensation. And that produces a lot of tension. You don’t have contracts like that in the investment banking business or Wall Street, generally. But you have that same sort of tension. And changing a culture around, A, takes time and, B, probably takes some change in people. I mean, I don’t think that’s a great surprise if you expect to do it. I have — I don’t think you can find two better people than Bob Denham and Deryck Maughan. They’re smart, they’re high-grade, they’re willing to work very hard.
事实上，在航空业你也能看到员工与资本之间的张力，这给航空业带来了可怕的结果。员工们签过的合同——不单指 USAir，尽管它也是个例子——正如我在报告中指出的，很多是在更早年代签订的，实质上在许多情况下“不允许资本获得任何回报”。这会产生大量紧张关系。投行或华尔街总体上没有那样的合同，但也有同样的张力。要改变一种文化，第一，要花时间；第二，很可能要更换一些人。这并不意外。如果要做这件事，我认为你找不到比 Bob Denham 和 Deryck Maughan 更好的人选了。他们聪明、素质高、也愿意非常努力地工作。
And there will be people that buy into the arrangements they want to have. And there are people that won’t. Not all of the people that have left, by a long shot, are leaving of their own volition, but most of them are. But some aren’t. I mean, there — Salomon lost a lot of money last year. And many of the people that have left were not responsible for some of those losses, but some of the people were. So, that is not something where you announce names in the paper. But some people are leaving because they can make more money elsewhere. And some people are, maybe, leaving because we think we can make more money without them. (Laughter) Charlie?
当然，会有人接受他们所制定的新安排，也会有人不接受。离开的人并非全都是主动离开的，但大多数是，有些不是。Salomon 去年亏了很多钱。许多已经离开的人并不对那些亏损负责，但也确实有人需要负责。这不适合在报纸上点名。但有些人离开是因为他们在别处能赚更多钱；也可能有些人离开，是因为我们认为“没有他们我们会赚更多”。（笑声）Charlie？
CHARLIE MUNGER: Yeah, I don’t think the tensions that have been commented on within Salomon are all that unusual. I think they pretty well exist everywhere on Wall Street. And even in the banks, which have tried to imitate Wall Street. I just think it comes with the territory.
CHARLIE MUNGER：是的，我不认为外界所说的 Salomon 内部紧张有什么特别之处。我认为这在华尔街几乎到处存在，甚至在那些试图模仿华尔街的银行里也是如此。这就是“行业属性”。
WARREN BUFFETT: I don’t know what percentage of the Goldman Sachs partners left this year, but they had tensions that were produced, obviously, when they had a bad year. And they’re going to have a bad year from time to time. Everyone’s going to have a bad year. But it — the partners — the general partners — of Goldman Sachs, in the year ended November 30th, 1994, did not do well. They may have not done anything at all. And they’d made some very big money in prior years. And they’ll probably make some very big money in subsequent years. But in the year when they didn’t make any money, it was a lot of turnover. And maybe some of that turnover, also, was not all at the volition of the general partners that you read about leaving. I don’t know the facts in that case. But there’s a certain amount of tension that exists in Wall Street under any circumstances. And when you aren’t making money, there’s a lot of tension.
WARREN BUFFETT：我不知道 Goldman Sachs 今年有多少合伙人离开，但显然他们在业绩不佳的年份会出现紧张关系。偶尔有差年景是难免的，所有人都会有差的一年。以 1994 年 11 月 30 日止的那个财年为例，Goldman Sachs 的普通合伙人过得并不好，甚至可能“毫无所得”。他们此前赚过大钱，将来大概也还会赚大钱。但在没赚钱的那一年，人员流动很大。而且其中一部分流动，未必都是你在报纸上看到的那些“主动离职”。个案我不清楚，但华尔街在任何情况下都存在一定的紧张关系；而当你没赚钱时，紧张会显著增加。
29. Best edition of Ben Graham’s “Security Analysis”
Ben Graham《Security Analysis》的最佳版本
WARREN BUFFETT: Zone 3?
WARREN BUFFETT：第 3 区？
AUDIENCE MEMBER: Yeah. My name is Michael Johnson. I’m a native to Omaha, and however, my family and I are Americans living abroad in Dhahran, Saudi Arabia. My question is related to intrinsic value and Ben Graham’s “Security Analysis.” I read a book earlier this year by Janet Lowe, who said that you were more toward the first or second editions of “Security Analysis” and not so much toward the fourth. Yet, the fourth edition seemed to move more toward growth and value being kind of joined at the hip, like you’ve said in your last few annual reports. And so, if I’m a person who’s always studying security analysis like I do — I think I spend more time with that — do you think I need to get those first editions? Or is the fourth edition kind of more of what you’ve moved toward, with your comments such as value and growth are joined at the hip?
AUDIENCE MEMBER：好的。我叫 Michael Johnson，土生土长的 Omaha 人，不过我和家人现在作为美国侨民住在 Saudi Arabia 的 Dhahran。我的问题与内在价值以及 Ben Graham 的《Security Analysis》有关。我今年早些时候读了 Janet Lowe 的一本书，她说你更偏好《Security Analysis》的第一或第二版，而不太偏好第四版。然而，第四版似乎更强调“成长与价值本就紧密相连”，这也像你最近几封年报里说的那样。所以，像我这样总是在研究“证券分析”的人——我觉得我花了很多时间在这上面——你认为我有必要去找第一版或第二版吗？还是第四版更符合你后来所强调的“价值与成长密不可分”这种观点？
WARREN BUFFETT: Janet Lowe is here, incidentally, today. She wrote a very good book on Ben Graham. I recommend that any of you that haven’t read it, go out and buy a copy. The — I still prefer the — I think the second edition is cheaper to buy than the first edition, by some margin. And I think it’s basically the same book. So, I — that’s the one I would recommend. I — it isn’t because of differences on value and growth. I just think that the reasoning is better and more consistent throughout the second edition, which is really the last one that Ben was the hundred percent — along with Dave Dodd helping him in various ways — was responsible for writing. So, I think that the book has gotten away, to quite an extent, from both Graham’s thinking and from his way of expressing himself. So I really — but I have no quarrel with anybody that wants to read later editions at all. I do think, probably, the second edition, if you’re a real student of security analysis and you read and understand that, you’ll — you should do all right.
WARREN BUFFETT：顺便说一句，Janet Lowe 今天也在场。她写了一本关于 Ben Graham 的非常好的书。我建议没读过的朋友去买一本。关于《Security Analysis》，我仍然更偏好——我想第二版比第一版便宜不少，而且两者基本是同一本书。所以我会推荐第二版。我的偏好并不是因为它在“价值与成长”的处理上与第四版不同，而是我觉得第二版的推理更好、更一致。这一版实际上是 Ben 最后一次“百分之百负责”的版本——当然 Dave Dodd 在多方面给予了协助。后来的版本，在相当程度上已经偏离了 Graham 的思想和他的表达方式。不过，任何人想读后续各版我都没有异议。我确实认为，如果你是真正研究“证券分析”的学生，读懂了第二版，你就会——也应该——做得不错。
In terms of — a lot of the mistakes that were made, in terms of junk bonds and accounting and all of that sort of thing, were covered in 1934 in that first edition, and subsequently in 1940 in the second edition. There’s a lot of meat in there. Later on, you know — I must admit, I didn’t read the last edition as carefully as the earlier ones. But it struck me, it was — it — what was said was not as important and it wasn’t said as well. And it was more expensive. (Laughter) Charlie, you have any thoughts on that?
就内容而言——许多后来在“垃圾债”和“会计处理”等方面犯过的错误，早在 1934 年第一版以及 1940 年第二版里就已经讨论过了，里面信息量很大。再往后的版本——我得承认，我并没有像读早期版本那样仔细研读最新的一版。但我的感觉是：说得没那么重要，也没说得那么好，而且更贵。（笑声）Charlie，你怎么看？
CHARLIE MUNGER: No.
CHARLIE MUNGER：没有补充。
30. Why Berkshire doesn’t sell businesses
为什么 Berkshire 不卖出企业
WARREN BUFFETT: Zone 4?
WARREN BUFFETT：第 4 区？
AUDIENCE MEMBER: Yes, Jeff Peskin (PH) from New York City. And I was — I have a question on the annual report where you say that, obviously, going forward, due to the size of Berkshire, the returns going forward probably won’t match the returns of the past. And then you go on to state that one thing that may hinder that is the fact that you don’t really like to sell companies that you own. And I would just like to know what the reasoning is in that, if you’ve got a company or investment that you don’t think is going to do as well as where you can put the money going forward. What really the reasoning is for holding on and not redeploying the money elsewhere?
AUDIENCE MEMBER：是的，我是来自 New York City 的 Jeff Peskin（PH）。我想就年报中的一段请教：你说显而易见地，由于 Berkshire 的体量，未来的回报大概无法匹配过去的回报。接着你又提到，可能使之受阻的一个原因是你们并不喜欢卖掉已拥有的公司。我想知道背后的理由：如果你们判断某家公司或投资今后表现不如你们其他可投方向，为什么还要选择持有而不是把资金重新投到更好的地方？
WARREN BUFFETT: Yeah. I’ll just correct you just slightly. A, I didn’t say we’d probably do worse than the past. I said we will do worse than the past. I mean, there’s no way we can match percentage numbers of the past. That, you know, we would — in a period that would not take that long, we would — assuming we paid out nothing — we would gobble up the whole GDP, which is something we may think about, occasionally, but — (laughter) — we don’t really expect to accomplish. The — But — and the second point, that relates to size. That does not relate to our unwillingness to sell businesses, because that unwillingness has existed for decades. But the size has not existed for decades. The size is — you know, doubling 12 billion or so is harder than doubling 1 billion-2, which was harder than doubling 120 million. I mean, there’s no question about that. So, eventually — well, already it will be a drag on performance. It doesn’t mean that the performance will be terrible, but it does mean that 23 percent is an historical figure.
WARREN BUFFETT：好的。我稍微纠正一下。第一，我不是说“我们可能”比过去差，我是说“我们一定”比过去差。我们的百分比回报不可能再匹配过去的数字。否则——假设我们从不分红——用不了多久，我们就会“吃掉整个 GDP”，这虽然偶尔想想挺有趣——（笑声）——但并不是我们真的指望做到的。第二点，回报下行是由“规模”决定的，并不因为我们“不愿意卖公司”。因为“不愿意卖”这件事已经持续了几十年，而“规模太大”不是几十年前就有的问题。要把 1200 亿翻倍，显然比把 12 亿翻倍难；而把 12 亿翻倍又比把 1.2 亿翻倍难——这一点毫无疑问。所以，规模最终——实际上已经——会拖累业绩。这不意味着表现会很糟，但意味着 23% 只是历史数字，没有任何预测价值。
It has no predictive value. The unwillingness to sell businesses, like I say, goes back a long way. That is not what — that — If that hurts performance, it’s peanuts. That’s simply a fact — a function of the attitude Charlie and I have, is that if we want to live our lives, we find it a rarity when we find people in the business that we want to associate with. When we do find that, we enjoy it. We don’t see any reason to make an extra half a percent a year or 1 percent a year — don’t try us on higher numbers. But the — (laughter) — we don’t see a reason to go around ending friendships we have with people, or contact, or relationships. It just doesn’t make any sense to us. It — We don’t want to get committed to that sort of activity. We know we wouldn’t do it if we were a private company. Now, in Berkshire, we feel we’ve enunciated that position. We want to get that across to everybody who might join with us because we don’t want them to expect us to do it.
它没有预测意义。至于“不愿意卖公司”，正如我说的，那是很久以前就形成的态度。即使这会伤到一点点业绩，也只是“小菜一碟”。这完全是我和 Charlie 的生活态度使然：我们在商业世界里，极少遇到真正愿意长期相处的人；一旦遇到，我们会珍惜。为了一年多出半个百分点或一个百分点的收益——别拿更高数字来试我们——（笑声）——我们看不到去断绝友谊、终止合作关系的理由。这在我们看来毫无意义。我们不想把自己绑定到那类“反复买卖”的行为上。如果我们是一家私营公司，我们也不会那么做。如今在 Berkshire，我们明确表达了这种立场，希望每一个与我们合作的人都能理解并接受，不要期待我们去做那样的事。
We want them to expect us to work hard to get a decent result, and to make sure that the shareholders get the same result we get, and all of that sort of thing. But we don’t want to enter into any implicit contract with our fellow shareholders that will cause us to have to behave in a way that we really don’t want to behave. If that’s the price of making more money, it’s a price we don’t want to pay. There’s other things we forgo also, but that is the one that people might disagree with us on. So, we want to be very sure that everybody understands that, going in. That’s part of what you buy here. And it may — I don’t think it’ll hurt performance that much anyway. But to the extent that it does, it’s a limitation you get with us. Charlie? (Applause)
我们希望他们期待的是：我们会努力争取一个像样的结果，并确保股东与我们获得相同的结果，诸如此类。但我们不想与股东之间形成任何“隐性契约”，迫使我们去做自己并不愿意做的事。如果那是为了多赚一点钱必须支付的代价，我们不愿意付。我们也因此放弃过其他东西，但这一点可能最容易与人产生分歧。所以我们要确保每一个“加入的人”从一开始就理解：这就是你在这里买到的一部分“条款”。这也许——我认为影响并不大——会略微伤及业绩，但这是与我们合作必须接受的限制。Charlie？（掌声）
CHARLIE MUNGER: I don’t think there’s any way to measure it, exactly. But my guess is that, if you could appraise something you might call the character of the people that are running the operating businesses in Berkshire, many of whom helped create the businesses in the first place, and are leading citizens in their community, like the Helzbergs — I don’t think there’s any other corporation in America that has done as well as we have, if you measure the human quality of the people who are in it. Now, you can say we’ve collected high-grade people because we sure as hell couldn’t create them. But one way or another, this is a remarkable system. And why would we tinker with it?
CHARLIE MUNGER：我不认为这件事能被精确量化。但如果你试着评估“Berkshire 实业板块经营者的人格水准”这种东西——其中很多人本来就是这些企业的创业者，也是各自社区里的“领军公民”，比如 Helzbergs——那么在“人”的质量这个维度上，我不觉得美国还有哪家公司能做到像我们这样好。你也许会说我们是“收集”了高素质的人才（因为我们显然“造不出”他们），但无论如何，这是一套了不起的体系，我们又何必去折腾它？
WARREN BUFFETT: If you want to — (applause) — attract high-grade people, you probably ought to try and behave pretty well yourself. I mean it’s just — besides, it wouldn’t be any fun doing the other. I mean, it — I was in that position, a little bit, when I ran the partnership back in the ’60s. And I really — you know, people were coming into partnership with me. And my job was to turn out the best return that we could. And I found that if I got into a business, that presented certain alternatives that I didn’t like. So, Berkshire’s much more satisfactory in that respect.
WARREN BUFFETT：如果你想——（掌声）——吸引高素质的人，首先你自己就得做得像样。这也更有趣。六十年代我管理合伙基金时，多少也处在那样的位置——人们把钱交给我，我的职责是尽可能地创造回报。而我发现，一旦我进入某些生意，就会面临一些自己并不喜欢的“选择”。在这方面，Berkshire 的做法让人满意得多。
31. Focus on Graham’s three principles
关注格雷厄姆的三大原则
WARREN BUFFETT: Zone 5?
WARREN BUFFETT：第 5 区？
AUDIENCE MEMBER: John Rankin (PH), Fort Collins, Colorado. Thanks for having us. In the book, “Warren Buffett Way,” the author describes the capital growth model that you’ve used to evaluate intrinsic value in common stock purchases. My question is, do you also still use the formula Ben Graham described in “The Intelligent Investor,” that uses evaluating anticipated growth, but also book value? It seems to me that fair value is always a bit higher when using Mr. Graham’s formula than the stream of cash discounted back to present value that is in “Warren Buffett Way” and also that you’ve alluded to in annual reports.
AUDIENCE MEMBER：我是 John Rankin（PH），来自 Fort Collins, Colorado。谢谢邀请我们来。在《Warren Buffett Way》一书中，作者描述了你用来评估普通股内在价值的资本增长模型。我的问题是：你现在是否还在使用 Ben Graham 在《The Intelligent Investor》中描述的公式——既评估预期增长、也考虑账面价值的那套？在我看来，用 Graham 先生的公式算出来的公允价值，总是比《Warren Buffett Way》以及你在年报中提到的“将未来现金流折现至现值”的方法要高一些。
WARREN BUFFETT: Yeah, we’ve tried to put in the annual report pretty much how we approach securities. And book value is not a consideration — virtually, not a consideration at all. And the best businesses, by definition, are going to be businesses that earn very high returns on capital employed over time. So, by nature, if we want to own good businesses, we’re going to own things that have relatively little capital employed compared to our purchase price. That would not have been Ben Graham’s approach. But Ben Graham was — Ben was not working with very large sums of money. And he would not have argued with this approach, he just would’ve said his was easier. And it is easier, perhaps, when you’re working with small amounts of money. My friend Walter Schloss has hewed much more toward the kind of securities that Ben would’ve selected. But he’s worked with smaller amounts of money. He has an absolutely sensational record. And it’s not surprising to me at all. I mean, when Walter left GrahamNewman, I would’ve expected him to do well.
WARREN BUFFETT：是的，我们在年报里基本说明了我们如何看待证券。账面价值不是考量因素——几乎完全不是。按定义，最好的生意是在长期内对投入资本取得很高回报的生意。所以，天然地，如果我们想拥有好生意，我们会持有那些相对购买价而言“占用资本较少”的标的。这并不是 Ben Graham 的常用路径。可 Ben 并没有运作很大的资金规模。他也不会反对这种方法——他只会说他的办法更容易。而在小资金下确实也许更容易。我的朋友 Walter Schloss 更贴近 Ben 会挑的那类证券，但他一直用小资金运作，战绩惊人。这一点我一点也不意外。Walter 离开 Graham-Newman 时，我就预期他会做得很好。
But I don’t look at the primary message, from our standpoint, of Graham, really, as being in that — in anything to do with formulas. In other words, there’s three important aspects to it. You know, one is your attitude toward the stock market. That’s covered in chapter eight of “The Intelligent Investor.” I mean, if you’ve got that attitude toward the market, you start ahead of 99 percent of all people who are operating in the market. So, you have an enormous advantage. Second principle is the margin of safety, which again, gives you an enormous edge, and actually has applicability far beyond just the investment world. And then the third is just looking at stocks as businesses, which gives you an entirely different view than most people that are in the market. And with those three sort of philosophical benchmarks, the exact — the evaluation technique you use is not really that important. Because you’re not going to go way off the track, whether you use Walter’s approach — Walter Schloss’s — or mine, or whatever. Phil Carret has a slightly different approach.
但在我们看来，Graham 的核心思想并不在“公式”。换句话说，有三条最重要：第一，你对股市的态度——见《The Intelligent Investor》第八章。如果你具备那样的市场观，你起步就领先市场里 99% 的人，优势巨大。第二，“安全边际”原则，同样带来巨大优势，而且适用范围远超投资本身。第三，把股票当作“生意”来审视，这会让你的视角与大多数市场参与者完全不同。有了这三块“哲学基石”，你具体采用的估值技术并不那么重要。因为无论你用 Walter（Walter Schloss）的办法，还是用我的，抑或别的，只要这三条在，基本不会走偏。Phil Carret 的方法略有不同——
But it’s got those three cornerstones to it, I will guarantee. And believe me, he’s done very well. Charlie?
但我保证也包含这三块基石。相信我，他也做得非常好。Charlie？
32. Don’t believe projections
别轻信“预测表”
CHARLIE MUNGER: Yeah. To the extent that the method of estimating future cash flow requires projections, I would say that projections, while they’re logically required by the circumstances, on average, do more harm than good in America. Most of them are put together by people who have an interest in a particular outcome. And the subconscious bias that goes into the process, and its apparent precision, make it — makes it some — well, it’s fatuous, or dishonorable, or foolish, or what have you. Mark Twain used to say a mine is a hole in the ground owned by a liar. And a projection prepared in America by anybody with a commission, or an executive trying to justify a particular course of action, will frequently be a lie. It’s not a deliberate lie, in most cases. The man has gotten to believe it himself. And that’s the worst kind. So, I don’t think we should — projections are to be handled with great care, particular when somebody has an interest in misleading you.
CHARLIE MUNGER：对。凡是估算未来现金流需要“预测”的场景，我要说：在美国，“预测”虽然在逻辑上似乎必要，但平均而言弊大于利。大多数预测是由对某一结论“有利害关系”的人编出来的。潜意识偏见加上貌似精确的数字，使它——嗯，要么愚蠢、要么不体面、要么荒唐等等。Mark Twain 说过：矿山是骗子在地里挖的洞。由拿佣金的人，或试图为某项行动辩护的高管，在美国做出来的“预测”，往往是谎言。多数并非蓄意行骗——他们自己都信了——这才是最糟的。所以，别轻信“预测”，尤其当对方有动机误导你时，要格外小心。
WARREN BUFFETT: Charlie and I, I think it’s fair to say, we’ve never looked at a projection in connection with either a security we’ve bought or a business we’ve bought. We’ve had them offered to us in great quantities. Now, the fact that we voluntarily turn them away when people try to thrust them upon us — I mean, it — the very fact that they are prepared so meticulously by the people who are selling the businesses, or by the executives who are presenting to their boards and all of that sort of thing, you know, I mean, either we’re wrong or they’re wrong. It’s a ritual that managers go through to justify doing what they wanted to do in the first place, in about nine cases out of ten. I have never, you know, I have never met an executive who wanted to buy something that said, “Well, I had to turn it down because the projections didn’t work.” I mean, it’s just — it’s never happened.
WARREN BUFFETT：可以公平地说，我和 Charlie 在买任何证券或企业时，从不看“预测表”。虽然别人塞给我们的预测表多如牛毛。我们主动拒绝这些东西——而这些“精心准备”的预测，正是由卖方，或者向董事会“汇报”的管理层提供的——要么我们错，要么他们错。十有八九，这只是一种“仪式”，用来给他们早就想做的事找理由。我从没见过一个想买东西的高管说：“我不得不放弃，因为预测不成立。”从来没有。
And there will always be somebody that will come up with the projections that will satisfy the guy who’s signing his paycheck or will sign the deal that provides the commissions. And they will pass those along to whomever else they need, the bankers or the board, to approve it. It is total nonsense. I was recently involved in some — in a situation where projections were a part of the presentation. And I asked that the record of the people who made the projections, their past projections also be presented at the same time. (Laughter) It was a very rude act. (Laughter)
而且总有人会做出一份“满足签他薪水的人”或“能签下给他佣金的交易”的预测；然后再把这些表递给需要被说服的银行家或董事会。纯属胡扯。我最近遇到一个场合，对方展示里少不了“预测”。我便要求：把做预测那帮人的历史预测纪录，一并拿来。（笑声）这被视为“非常无礼”。（笑声）
CHARLIE MUNGER: It was regarded as apostasy.
CHARLIE MUNGER：这简直被当成“叛教”。
WARREN BUFFETT: It — but believe me, it proved the point. I mean, it was a joke, I mean. So, we’ll leave it at that.
WARREN BUFFETT：但相信我，这一招证明了一切——那些历史预测简直是个笑话。就说到这儿吧。
33. First question when looking at an investment
看待一项投资时首先要问的问题
WARREN BUFFETT: We’re going to have another — one more question, maybe. And then we’ll take a break. And Charlie and I will be eating up here. The ones who want to stick around can stick around. And the ones who are in the other room, undoubtedly there will be seats in here to fill. So, we’ll sort of regroup in 10 or 15 minutes. And then we’ll go on as long as that group lasts. So, let’s take one more from zone 6. And then we’ll take a break.
WARREN BUFFETT：我们再来一个——也许最后一个问题。然后我们休息一下。我和 Charlie 会留在台上吃点东西。愿意留下的可以留下，另外一个会场的朋友想必也能进来补上空位。我们大概 10 到 15 分钟后重新集合，只要大家还在我们就会继续。现在从第 6 区再来一个问题，然后休息。
AUDIENCE MEMBER: Hello, my name is Peter Bevelin from Sweden. What is the absolutely first question you ask yourself when you look at a potential investment? And do you and Mr. Munger ask yourself the same first question?
AUDIENCE MEMBER：你好，我叫 Peter Bevelin，来自 Sweden。请问当你看一项潜在投资时，你问自己的第一个问题绝对是什么？你和 Munger 先生问自己的第一个问题是否相同？
WARREN BUFFETT: Yeah. Well, I think — I don’t ask myself whether Charlie’s going to like it because — (laughter) — that will be a tough one. No, the first question is, can I understand it? And unless it’s going to be in a business that I think I can understand, there’s no sense looking at it. There’s no sense kidding myself into thinking that I’m going to understand some software company, or some biotech company, or something of the sort. What the hell am I going to know about it? I mean, you know, I can — so that’s the first threshold question. And then the second question is, you know, does it look like it has good economics? Has it earned high returns on capital? You know, does it strike me as something that’s likely to do that? And then I sort of go from there. How about you, Charlie?
WARREN BUFFETT：是的。我想——我不会先问自己 Charlie 是否会喜欢——（笑声）——那问题太难了。第一个问题是：我能理解它吗？如果不是我认为自己能理解的生意，就没有继续看的必要。没有必要自欺欺人地以为我能理解某家软件公司、某家生物技术公司，或类似的东西。我能懂什么呢？所以这是第一道门槛。第二个问题是：它的经济性看起来好吗？它是否曾在资本上获得高回报？它给我的感觉是否有望做到这一点？然后我再从这里继续往下看。你呢，Charlie？
CHARLIE MUNGER: Yeah. We tend to judge by the past record. By and large, if the thing has a lousy past record and a bright future, we’re going to miss the opportunity. (Laughter and applause)
CHARLIE MUNGER：对。我们倾向于以过往纪录来判断。总体上，如果一个标的过去糟糕、未来光明，我们大概率会错过这种机会。（笑声与掌声）
Afternoon Session
34. Banks are in our circle of competence
银行属于我们的能力圈
WARREN BUFFETT: OK, we’re ready to start here with a question from zone 1, if you’ll take your seats, please. We’ve got to —
WARREN BUFFETT：好了，我们准备从第 1 区开始提问了，请各位就座。我们需要——
AUDIENCE MEMBER: Mr. Buffett, I’m Brian Murphy (PH) from Clearwater, Florida. I’d like to ask you a question concerning your present thinking behind your acquisitions of banks, such as PNC and SunTrust, particularly in light of the fact that banks were selling so cheaply in 1990 and now many have tripled in price. And it would appear from recent publications and the financial literature that you’ve become much more interested in banks at these higher prices, relative to the 1990 valuations. Could you comment on your thinking there?
AUDIENCE MEMBER：Buffett 先生，我是来自 Clearwater, Florida 的 Brian Murphy（PH）。我想问一个关于你们近期收购银行（比如 PNC 和 SunTrust）背后思考的问题。尤其考虑到 1990 年银行股很便宜，而现在很多已经涨了三倍。从近期出版物和财经文章看，相比 1990 年的估值水平，你似乎在更高的价格上对银行更感兴趣。你能谈谈你的想法吗？
WARREN BUFFETT: Yeah, we really have no different — there’s no difference in the criteria we apply to banks than to other businesses. And a couple of publications have, maybe, made a little more of that than is warranted, because I doubt if there’s more than a couple percentage points difference in — And we don’t think of it that way, incidentally. And we do not have a lot of sector — we don’t have any sector allocation theories whatsoever. So, we simply apply the same criteria when looking at banks that we would at any other business that — There — incidentally, there — sometimes, you should know, that there’s — I would say that maybe half, or maybe even a little more, of the reports about our activities are — in the press are erroneous. Now, some are accurate, too. And then, of course, some are way out of date. I mean, we get confidential treatment on our — on the filings we make with the SEC as to our holdings, so they’re published well over a year after we’ve filed them.
WARREN BUFFETT：是的，我们用于银行的标准与用于其他企业并无不同。某些媒体或许把这个话题渲染过度了，因为我怀疑所谓差异也就几个百分点——顺便说一句，我们根本不会那样分类思考。我们也没有什么行业配置理论。所以看银行时，我们就是用和看其他企业相同的标准——另外，有件事你应该知道：媒体对我们动向的报道，差不多一半，甚至可能更多，是不准确的。当然，也有准确的，还有一些严重过时。比如我们在向 SEC 披露持仓时享有保密待遇，所以这些披露通常要在我们申报后一年多才会公布。
And therefore, there have been a couple of stories in the last month or two as to something we’ve bought. And of course, if you read the story carefully, we bought it a year and a half ago, maybe. And we may have sold it, we may have bought more, all kinds of things. So that, I’d be careful about press reports, generally. We’ve — we actually — we bought a bank for Berkshire in 1969, the Illinois National Bank and Trust of Rockford. We’ve had an interest in the banking business. We feel it’s something that we can — that falls within our circle of competence to evaluate. That doesn’t mean we’ll be right every time, but it — we don’t think it’s beyond us to understand the banking business. And so, it’s — we look at businesses in that area. Charlie?
因此，过去一两个月里有几篇报道说我们买了什么东西。当然，如果你细读，会发现那可能是我们在一年半前买的。而且我们也许已经卖了，也许又买多了，各种可能都有。所以总体上我会提醒大家对媒体报道要谨慎。实际上，早在 1969 年我们就为 Berkshire 买过一家银行——Rockford 的 Illinois National Bank and Trust。我们一直对银行业感兴趣，我们认为评估银行属于我们的能力圈内。这并不意味着每次都会正确，但我们认为理解银行业并不超出我们的能力范围。因此，我们会研究那个领域的企业。Charlie？
CHARLIE MUNGER: Nothing to add.
CHARLIE MUNGER：无可补充。
35. Buffett always plans to write a book “six months from now”
巴菲特写书的时间表总是“六个月之后”
WARREN BUFFETT: OK. And do we have zone 2?
WARREN BUFFETT：好的。现在轮到第 2 区了吗？
AUDIENCE MEMBER: Larry Myers from Omaha. Warren, two quick questions, the first one very brief. Do you have any timetable regarding when you will write your own book about your career and philosophy?
AUDIENCE MEMBER：我是来自 Omaha 的 Larry Myers。Warren，有两个简短的问题，第一个非常简短。你是否有时间表来写一本关于你职业生涯和投资哲学的书？
WARREN BUFFETT: Yes, my timetable’s always been six months from now. (Laughter) The answer on that is I’ve thought about doing it a few times, and I think about it. It always seems to me there’s way more interesting things yet to happen than have happened so far, and I don’t want to — I know I won’t write a second one, so I keep postponing it. That’s my rationale on it, anyway.
WARREN BUFFETT：是的，我的时间表一直都是“六个月之后”。（笑声）答案是我确实想过几次，也时常在想。总觉得还有很多更有意思的事即将发生，胜过至今已经发生的。而且我知道自己不会写第二本，所以就一直推迟。无论如何，这就是我的理由。
36. Coca-Cola “doing exactly the right thing” with its cash
Coca-Cola 正在“恰到好处地”运用其现金
AUDIENCE MEMBER: Thank you. Second question concerns dividends. Last Friday night, by coincidence, on Louis Rukeyser’s weekly television show, the special guest was Philip Carret. And Mr. Carret made the statement that his favorite American stock is Berkshire Hathaway. And one of the major reasons he stated was that, “Berkshire has never paid a dividend, as we all know,” and consequently, you had superior utilization of the extra cash. Now, if you extend that reasoning, could it also be a beneficial policy if Coca-Cola and Gillette stopped paying dividends and utilized the cash in other ways?
AUDIENCE MEMBER：谢谢。第二个问题与分红有关。上周五晚上，碰巧在 Louis Rukeyser 的每周电视节目中，特邀嘉宾是 Philip Carret。Carret 先生表示他最喜欢的美国股票是 Berkshire Hathaway。他给出的主要理由之一是：“众所周知，Berkshire 从未派发股息”，因此你们更好地利用了多余现金。现在，如果延伸这个逻辑，Coca-Cola 和 Gillette 停止分红并以其他方式使用现金，是否也会是有利的政策？
WARREN BUFFETT: Well, it depends what they could use the — how they would use — utilize the cash, what they could use it for. Those are more focused enterprises than Berkshire, at least in terms of products. And they — I think — I commend managements that have a wonderful business for utilizing cash in those wonderful businesses, or in businesses that they understand and that will also have wonderful economics, and for getting the rest of the money back to the shareholders. So, Coca-Cola, in my book, is doing exactly the right thing with its cash when it both — when, A, it uses all the cash that it can, effectively, in the business to expand in new markets and all of that sort of thing. But then beyond that, it pays a dividend which distributes cash to shareholders, and then it repurchases shares in a big way, which returns cash on a selective basis to shareholders, but in a way that benefits all of them. So, we — you will benefit from us not paying dividends just as long as we can use the — every dollar we retain — to produce more than a dollar of value, and of market value over time.
WARREN BUFFETT：这要看他们能把现金用在什么地方、如何使用现金。就产品层面而言，它们比 Berkshire 更聚焦。我认为，拥有优秀业务的管理层，应该把现金投入到那些优秀业务，或者投入到他们理解且同样具有优秀经济性的业务中；剩余现金再返还给股东。因此，在我看来，Coca-Cola 对现金的运用恰到好处：第一，尽可能高效地把现金用于业务本身，开拓新市场等；其后，再发放股息把现金分配给股东，并且大规模回购股票——这虽然是选择性地把现金返还给部分股东，但以一种让所有股东都受益的方式进行。所以，只要我们能够把留存的每一美元，长期转化为超过一美元的价值与市值，你们就会从我们不派息中受益。
Whether we can continue doing that, you know, how long we can continue doing that, I can’t promise you, but that is the — that’s the yardstick by which the decision is made. And that is the yardstick, I think, by which Coca-Cola’s making the decision, too. And I think that they deserve great credit for exercising the discipline to quit when they — using cash — when they’ve run out of the opportunities to use it well, and then to use it — then to further deploy it advantageously by repurchasing shares. I think one of the things I admire about my friend, Bill Gates, he’s got 4 1/2 billion of cash in Microsoft, and very few managements can stand having 4 1/2 billion of cash and not doing something unintelligent with it. So far, it’s made sense for us to retain everything we earn, and I think it’ll make sense for a while longer, but it may not make sense indefinitely. Charlie?
至于我们能否、以及还能这样做多久，我不能向你保证，但这就是我们作决策所依据的准绳。我想这同样也是 Coca-Cola 作决策的准绳。我认为他们在用好现金的机会用尽时，能自律地“停手”，并通过回购把现金继续以有利的方式部署出去，这一点值得高度赞扬。我也很佩服我的朋友 Bill Gates：Microsoft 账上有 45 亿美元现金，而极少有管理层能在持有 45 亿现金时不去做一些不明智的事。到目前为止，我们把赚到的一切都留存下来是合理的，我认为在一段时间内仍会合理，但未必永远合理。Charlie？
CHARLIE MUNGER: I hope it lasts a long time. (Laughter)
CHARLIE MUNGER：我希望能持续很长时间。（笑声）
37. Why is Wall Street compensation so high?
为什么华尔街的薪酬这么高？
WARREN BUFFETT: Zone 3?
WARREN BUFFETT：第 3 区？
AUDIENCE MEMBER: My name is Dan O’Neil from Santa Fe, New Mexico. And I would ask — like to ask you a more specific question about Salomon Brothers, which is, why do we pay our employees there so much?
AUDIENCE MEMBER：我叫 Dan O’Neil，来自 New Mexico 的 Santa Fe。我想就 Salomon Brothers 提一个更具体的问题：为什么我们在那里给员工付那么高的薪酬？
WARREN BUFFETT: Why what?
WARREN BUFFETT：为什么什么？
AUDIENCE MEMBER: Why do we pay our employees there so much money? The conventional theory seems to be that there’s just a different pay scale on Wall Street than the rest of the world. And it’s based on the idea that traders are smarter than — that some traders are smarter than others, and, in some supernatural way, are able to receive signals that the future is sending back to the present. And how do we know that that isn’t just an urban legend like alligators in the New York City sewers? Another theory would be that the large amount of shareholders’ capital allows the traders to capture inefficiencies that are in the market in the same way that the house does in Las Vegas. I mean, if we owned a casino, it wouldn’t make any difference if we hired Albert Einstein or Forrest Gump to run the blackjack table, and we would pay them the same. And I wonder which theory you think is closer to the truth.
AUDIENCE MEMBER：为什么我们在那里给员工付那么多钱？一种普遍观点是：华尔街的薪酬体系与其他地方不同。其依据在于交易员更聪明——或者说有些交易员比其他人更聪明，能以某种“超自然”的方式接收来自未来回传到当下的信号。我们怎么知道这不是像“纽约下水道里的鳄鱼”那样的都市传说？另一种理论是：巨量股东资本让交易员像拉斯维加斯赌场的庄家那样，去捕捉市场中的无效定价。比如，如果我们有一家赌场，找 Albert Einstein 还是 Forrest Gump 来管 21 点都无所谓，我们会给他们同样的薪水。我想问，你认为哪个理论更接近真实？
WARREN BUFFETT: Well, you put it well. (Laughter and applause) In the end, of course, you end up paying at a, what you think, at least, is a market rate. And to some extent, the market tests you out by whether people leave because they can get a higher rate. But the limiting factor on that should be that you pay them a market rate as long as you are getting a market rate on capital. But it’s harder to measure the market rate on capital in a short period than it is to measure the market rate on compensation. So, the — a good many of the people that have left — but far from all — have left because they felt that they would obtain — presumably — because they would obtain greater compensation elsewhere. The market was working in that way, just as it works in entertainment that way and it works in the athletic field that way. And whether it — when it works that way, it leaves a return for capital that’s adequate, is an open question. I mean, I haven’t looked at the figures on all the baseball teams, but I’ve seen some of them.
WARREN BUFFETT：你表述得很好。（笑声与掌声）最终，你会按你认为的“市场价格”付薪；而市场也会用“人是否因更高报价而离开”来检验你。但其约束在于：只有当你的资本也获得“市场回报”时，才应支付“市场薪酬”。然而，在短期内，衡量资本的市场回报比衡量薪酬的市场价更难。因此——不少（但远非全部）离开的人，之所以离开，是因为他们“认为”在别处能拿到更高的报酬。市场在这样运作，正如娱乐业与体育界一样。问题在于：当市场如此运作时，是否还能给资本留下足够的回报？这并不确定。我没看过所有棒球队的数据，但我看过一部分。
And certainly, in some of the smaller markets, I mean, the books were not phony. I mean, it is very hard to pay market rates for ballplayers in Kansas City and still make money running a ball team, where you’ve got a smaller television market and all of that of the big cities. So, in the end you’re going to have to pay market rates to retain people, but part of that will also depend upon the period over which they measure their — what they are going to be paid. I mean, if you want to look at Goldman Sachs last year, they were paid nothing. Does that mean that everybody will leave because they can get paid something someplace else? No, because 80 percent of the partners, or 90 percent of the partners, have a longer time horizon than that. And they have an anticipated earnings figure in mind when comparing it with what they’re being offered elsewhere. If you have a situation where market rates, you know, exceed the earning capacity of the business, then at some point, capital will flow away from the business.
而且在一些小市场里，账本并非作假：比如在 Kansas City 这种电视市场规模远小于大城市的地方，要按“市场价”付球员薪水，还想经营球队赚钱，非常困难。所以，最终你必须按市场价留人，但这也取决于员工用多长的时间窗口来衡量自己的报酬。以 Goldman Sachs 去年为例，他们“没赚到钱”。这是否意味着大家会因为别处能拿到钱而全部离开？不会，因为 80% 到 90% 的合伙人有更长的时间视角。他们在与外部报价比较时，心中有一个长期的预期收益数字。如果出现“市场薪酬”长期高于业务“盈利能力”的局面，那么资本迟早会撤离该行业。
In the airline industry, which I use as an example, the market rate — most — well, the — in terms of the bigger airlines, people are not being paid market rates, they’re being paid contractual rates. Well, you can’t blame anybody for that. If you have a contract that entitles you to X and the current market is a half of X, you’re going to hang onto that contract very aggressively. And like I say, you don’t blame anybody for that, it’s just if you end up in that condition, though, you’ve got a real problem. And if you have the same problem that you have if the market is higher than — or a similar problem — the one you have if the market is higher than one that you can sustain in your own business. My guess is that there — that, in effect, Salomon has put in a more Goldman Sachs-like system because, essentially, it created, to a degree, a partnership within it.
以我常举的航空业为例，大型航空公司的员工拿的不是“市场价”，而是“合同价”。这不能怪任何人——如果合同给你 X，而当前市场价只有 X 的一半，你当然会极力维护这份合同。这也无可厚非；但如果行业落入这种状态，问题就很大。与“市场价高于行业可承受水平”造成的困境类似——本质都是同一个问题。我的猜测是，Salomon 实质上导入了更接近 Goldman Sachs 的体系，因为它在内部一定程度上“合伙人化”。
That — To have that work, A, over time, the partners have to earn good money or it won’t work, but, B, you have to have people that have a partnership mentality in it. And if you change from one culture to another, you are not going to get a hundred percent acceptance of any new system. Charlie?
要让这种体系奏效：第一，时间拉长看，合伙人必须挣到不错的钱，否则体系难以为继；第二，你需要具备“合伙人心态”的人。如果你从一种文化转到另一种文化，不可能获得百分之百的接受度。Charlie？
CHARLIE MUNGER: Yes, it was kind of a bad break to put in a new compensation system and then have a very bad year. In the very nature of things, people are going to blame the compensation system subconsciously. And then, two, I think that Wall Street generally has more envy-jealousy effects than are typically present elsewhere.
CHARLIE MUNGER：是的，在导入新薪酬体系后恰逢一个很差的年份，这确实是“倒霉的组合”。按人性，大家会在潜意识里把问题归因到薪酬体系。其次，我认为华尔街的“嫉妒—攀比效应”总体上比其他地方更强。
38. Buffett on the “real” advantage of being rich
巴菲特谈“富有”的真正优势
CHARLIE MUNGER: I have a friend whose grandmother used to say that she couldn’t understand why people got into envy-jealousy, because it was the only one of the sins that you could never possibly have any fun at. And — (Laughter) But generally speaking, on Wall Street I think a lot of people have had the wrong kind of grandmothers. (Laughter and applause)
CHARLIE MUNGER：我有位朋友的祖母常说，她不明白人为什么会陷入嫉妒——因为那是所有“罪”里唯一一种你绝不可能从中获得任何乐趣的。（笑声）不过总的来说，在华尔街我想很多人的祖母大概教错了东西。（笑声与掌声）
WARREN BUFFETT: Yeah, I’ve commented from time to time that — what’s his name? Robin Leach has it all wrong on “Lifestyles of the Rich and Famous,” because he’s presenting all these wonderful things that will happen to you if you get rich. But they really aren’t that all that wonderful, these fancy houses and boats and all that. The real advantage of being rich, as I explain to people, is that it enables you to hate so effectively. That if you’re terribly rich, you know, and — but your brother or whomever, cousin or somebody, is getting a little more attention in the world or something of the sort, you can hate in a very major way. You can hire accountants and lawyers to cause him all kinds of trouble. If you’re poor, you just snub him at Thanksgiving and don’t show up or something of the sort. (Laughter) But I’ve noticed that these rich people, particularly when they inherit great amounts of money, sooner or later they start — frequently — they get very antagonistic toward siblings, or cousins, or whatever it may be.
WARREN BUFFETT：是啊，我时不时会评论说——那谁来着？Robin Leach 在“Lifestyles of the Rich and Famous”上把事情完全说错了，因为他展示的都是你一旦变得富有就会拥有的“美好事物”。可那些华丽的房子、游艇之类并没有那么美妙。富有的真正优势——我经常这么解释——是它能让你“高效地去恨”。如果你特别有钱，而你的兄弟、表亲之类的人在世上获得了更多关注，你就可以“认真地去恨”。你可以雇会计师和律师给他制造各种麻烦。要是你穷，你最多也就是感恩节不理他、不露面之类的。（笑声）但我注意到，有钱人，尤其是继承了大笔财富的人，迟早会——而且经常会——对兄弟姐妹、表亲等等变得极其敌对。
And they really can — they can hate in a way that — or get envious in a way that the rest of us really can’t really aspire to. So, that’s the benefit that hasn’t appeared on Robin Leach lately, but I — But you see that — you see a little of that in the athletic field and the entertainment field, and perhaps even on Wall Street, that making a million dollars a year looks great until this guy that sits next to you that can’t possibly be as smart as you is making a million-two. And then the whole world, it turns into a very unfair place. (Laughter)
而他们确实能以一种我们其他人都“难以企及”的方式去恨、去嫉妒。这就是 Robin Leach 节目里最近没提到的“好处”。不过你在体育界、娱乐圈，甚至华尔街也能看到一些：一年挣一百万看起来很棒，直到你旁边那个怎么也不可能比你聪明的家伙挣了一百二十万。然后整个世界立刻变成一个非常不公平的地方。（笑声）
39. “It’s never a policy of ours to hold a lot of cash”
“我们从不以持有大量现金为政策”
WARREN BUFFETT: Zone 4?
WARREN BUFFETT：第 4 区？
AUDIENCE MEMBER: Good afternoon. My question is simply about the cash and cash equivalents that are shown on the balance sheet this year versus last year. In my thinking, cash equivalents is always something good to have around in case of a big market drop, being able to make opportunistic buys, as I know you’ve referred to “Mr. Market” getting manic-depressive at times. Is there something that is less than obvious here that I’m not seeing? Or is the position not there now, should that happen in the marketplace?
AUDIENCE MEMBER：下午好。我的问题很简单：今年与去年相比，资产负债表上显示的现金及现金等价物。依我看，手里留点现金等价物总是好事，以防市场大跌时能把握机会买入——就像你说“Mr. Market”有时会躁郁发作那样。这里是不是有我没看懂的不那么显而易见的地方？或者说，如果市场出现那种情况，现在的头寸是不是不在位？
WARREN BUFFETT: Cash at Berkshire is a residual. I mean, we would like to have no cash at all times. We also don’t want to owe a lot of money at any time. But we — if we have cash around, it’s simply because we haven’t found anything we like to do, and we hope — always hope —- to deploy it as soon as possible. We never are thinking about whether the market’s going to go down or something of the sort, or whether we might buy something even cheaper. If we like something, we’ll buy it. And when you see cash on our balance sheet of any size, that’s an acknowledgement by Charlie and me that we have not found anything, in size anyway, attractive at that point. It’s never a policy of ours to hold a lot of cash.
WARREN BUFFETT：在 Berkshire，现金只是“剩余项”。我们的理想是任何时候都不留现金，同时也不在任何时候背负大量债务。如果我们账上有现金，只是因为还没找到想做的事；我们希望——一直希望——尽快把它用出去。我们从不考虑市场会不会下跌、或者是否能买得更便宜。只要看中了，我们就买。你在我们的资产负债表上看到不小的现金余额，那就是我和 Charlie 对外承认：在那一刻，我们（至少在足够大的规模上）没找到有吸引力的标的。我们从不把“持有大量现金”当成政策。
40. Newspaper business is “exceptionally good,” but not as good
报业仍属“异常优秀”，但不如当年
WARREN BUFFETT: Zone 5?
WARREN BUFFETT：第 5 区？
AUDIENCE MEMBER: David Winters, Mountain Lakes, New Jersey. I’ll stand up. David Winters, Mountain Lakes, New Jersey. Years ago, you said you loved the newspaper business and then, over time, I guess, it — said it declined a bit in how much you loved it. And I’m kind of wondering how you feel about it now, and if you can prognosticate a little bit for us at all?
AUDIENCE MEMBER：David Winters，来自 Mountain Lakes, New Jersey。我站起来。David Winters，Mountain Lakes, New Jersey。多年前你说你热爱报业，后来我猜你的热爱程度有所下降。我想知道你现在对此的看法，以及能不能给我们一点前瞻判断？
WARREN BUFFETT: Well, I used to love it in two respects. I loved the economics and I loved the activity, both. The activity — the love of the activity has not diminished. The economics are still exceptionally good compared to virtually any business in the world. They aren’t quite as good as they were 15 years ago. So, they have — I wrote about that a couple of years ago, whereas what was — seemed almost the most bulletproof of franchises is still an exceptionally good business, but it isn’t quite as bulletproof as might’ve been the case 10 or 20 years ago. I still think it’s about as interesting a business as there is in the world I’m in. But if you’re talking pure economics, the — I can’t think of many other businesses that, if I just owned one asset over my life, that I would rather own than a newspaper in a single-newspaper town. But I wouldn’t have quite the feeling of absolute certainty that I had — that I would’ve had 10 or 15 years ago. Charlie?
WARREN BUFFETT：过去我从两个层面热爱它：其一是经济性，其二是这份事业本身。对事业本身的热爱没变；就经济性而言，与世界上几乎所有行业相比仍属“异常优秀”，但不如 15 年前。我在几年前写过：曾经看上去“几乎刀枪不入”的特许经营，如今依然是非常好的生意，但已不再像 10 或 20 年前那样“刀枪不入”。在我所处的世界里，它依然是极有趣的行业。但如果只谈“纯经济学”，如果此生只能拥有一项资产，我仍很难想出有什么比“单一报纸城市里的那份报纸”更想拥有的。不过我不再像 10 或 15 年前那样“绝对笃定”。Charlie？
CHARLIE MUNGER: Yeah, I think it’s obvious, I — the newspaper proprietors are getting a touch of paranoia for the first time. I mean, they worry about the electronic revolution, they worry about the fact that young people, you know, don’t read. It’s not as much fun going to newspaper conventions as it used to be.
CHARLIE MUNGER：是的，很显然，报业老板们头一次开始有点“疑神疑鬼”。他们担心电子化革命，也担心年轻人——你懂的——不读报了。去参加报业年会没有从前那么有趣了。
WARREN BUFFETT: They’re still making exceptional money. I mean, that’s the interesting thing.
WARREN BUFFETT：他们仍在赚非常可观的钱——这点很有意思。
CHARLIE MUNGER: Ah, but they — I’ve heard you say a dozen times, “People don’t seem to care what floor they’re at, just whether the elevator is going up or down.”
CHARLIE MUNGER：啊，但他们——我听你说过不止一打次：“人们似乎并不在乎自己在几楼，只在乎电梯在上行还是下行。”
WARREN BUFFETT: That’s right, that is true. (Laughter) People feel better when they’re on the second floor of an elevator that’s just come from one than they do when they’re on the 99th floor coming down from a hundred, there’s no question about that. They have this projection. And of course, it’s particularly the case where they’ve been in a business where the money — the profits — were automatic, because they start thinking about, you know, questions of whether they really have the ability to make a lot of money, absent this favored position. And that’s not something they’ve had to dwell on before. So, it can make them uncomfortable. They’re all screaming about newsprint prices. We’d probably scream about them a little bit, too. I mean, if you compare being in the newsprint business over time to being in the newspaper business, I mean, it’s a joke.
WARREN BUFFETT：没错，确实如此。（笑声）人们在“刚从一楼上到二楼”的电梯里会比“从一百楼下到九十九楼”的电梯里感觉更好，这毫无疑问。这是一种投射。尤其当他们身处一个“利润几乎自动生成”的行业时，这种感觉更明显，因为他们会开始思考：一旦失去这种优越位置，自己是否真的有能力赚大钱？这不是他们过去需要思考的问题，于是他们会不安。他们现在都在抱怨新闻纸价格。我们大概也会抱怨两句。可如果你把“做新闻纸的”与“办报纸的”长期回报放在一起比较，这简直像个笑话。
And newsprint prices, if you — you can graph them from any point, you know, 15 or 20 years ago, or 10 years ago, and the price of the newspaper, the price of advertising has gone up more. I mean, it is interesting to hear them yelling foul, because they have moved a lot in the last 12 months and they’ll move some more in the next six months. But believe me, it’s better to be in the newspaper business than the newsprint business.
而且新闻纸价格——不管你把时间轴拉回 10、15、20 年前的哪个点去画图——与报纸零售价、广告价相比，上涨幅度都更小。过去 12 个月新闻纸涨得确实厉害，未来 6 个月可能还会涨。但相信我，做报纸远胜于做新闻纸。
41. Buffett’s semi-hostile takeover of Berkshire
巴菲特对 Berkshire 的“半敌意”收购
WARREN BUFFETT: Zone 6?
WARREN BUFFETT：第 6 区？
AUDIENCE MEMBER: Mr. Buffett, my name is Liz Pruce (PH), I’m from New York City. I was wondering, on your acquisition criteria — I know part of that is that Berkshire Hathaway won’t participate in unfriendly takeovers. I wondered how that philosophy may or may not apply to your role as a member of the board of several other companies.
AUDIENCE MEMBER：Buffett 先生，我叫 Liz Pruce（PH），来自 New York City。我想请教，在你的收购标准中——我知道其中一条是 Berkshire Hathaway 不参与不友好的收购。这种理念在你担任其他几家公司董事会成员时，是否同样适用？
WARREN BUFFETT: That’s an interesting question. And I haven’t been on the board of any company where the CEO has brought to the board the question of a hostile takeover. Can you think of anything I’m forgetting? No, and — but there’s no rule that that can’t happen. So, I don’t know exactly what I would do if that came along. That’s a very good question. I used to be — I used to have a whole different attitude on that. I mean, in effect — we actually — if you go back 40 years, we bought, in effect, control of companies. Well, in the case of Berkshire, Malcolm Chace, the chairman, was all in favor of us buying our stock in Berkshire. But Seabury Stanton, the president, would not have been in favor of it, and Seabury was the — was managing the business. So, it wasn’t hostile, but Seabury would not have been in favor of it. It would — but Malcolm would’ve been.
WARREN BUFFETT：这是个有趣的问题。我在所任职的董事会里，从未遇到 CEO 把“敌意收购”拿到董事会上来讨论的情况。我是不是遗漏了什么？没有——但并没有规则说这种事不会发生。所以真有这种事来临时我会怎么做，我也不确定。这问题问得很好。过去——我对此的态度完全不同。实际上——如果你往前追溯 40 年，我们确实等于是在买公司的控制权。以 Berkshire 为例，董事长 Malcolm Chace 完全赞成我们回购 Berkshire 的股票，但总裁 Seabury Stanton 并不赞成，而 Seabury 是负责经营业务的人。所以这不算“敌意”，但 Seabury 不会赞成；不过 Malcolm 会赞成。
So, I don’t know what the situation would be today if somebody walked in Gillette or Cap Cities, or someplace like that. I don’t think it’s going to happen, but I have not — I don’t have any policy on it at this point. What do you think we’d do, Charlie?
所以，如果今天有人跑去 Gillette 或 Cap Cities 之类的公司发起（收购），我不知道会怎样。我不认为那会发生，但目前我没有一条成文政策。Charlie，你觉得我们会怎么做？
CHARLIE MUNGER: I don’t think our behavior is totally predictable. (Laughter and applause)
CHARLIE MUNGER：我认为我们的行为并非完全可预测。（笑声与掌声）
WARREN BUFFETT: And he’s right. (Laughter)
WARREN BUFFETT：他说得对。（笑声）
42. Comparing investing styles of Ben Graham and Phil Fisher
比较 Ben Graham 与 Phil Fisher 的投资风格
WARREN BUFFETT: Zone 1?
WARREN BUFFETT：第 1 区？
AUDIENCE MEMBER: Yes, Neil McMahon (PH), New York City, also a Sequoia shareholder. Ben Graham investing encouraged turnover. Looking at Berkshire’s holdings, concentration and long-term, are you still a 15 percent Phil Fisher and 85 percent Graham?
AUDIENCE MEMBER：是的，我是 Neil McMahon（PH），来自 New York City，同时也是 Sequoia 的股东。Ben Graham 的投资方法鼓励换手。从 Berkshire 的持仓集中度与长期持有来看，你现在仍然是 15% 的 Phil Fisher、85% 的 Graham 吗？
WARREN BUFFETT: I don’t know what the percentage would be. I’m a hundred percent Ben Graham in those three points I mentioned earlier, and those really count. I am very — I was very influenced by Phil Fisher when I first read his two books, back around 1960 or thereabouts. And I think that they’re terrific books, and I think Phil is a terrific guy. So, I think I probably gave that percentage to — I think I first used it in Forbes one time when Jim Michaels wrote me. And I think I, you know, it was one of those things. I just named a number. But I think I’d rather think of myself as being a sort of a hundred percent Ben Graham and a hundred percent Phil Fisher in the points where they don’t — and they really don’t — contradict each other. It’s just that they had a vastly different emphasis. Ben would not have disagreed with the proposition that if you can find a business with a high rate of return on capital that can keep using more capital on that — that that’s the best business in the world.
WARREN BUFFETT：我不确定该怎么按百分比分配。在我此前提到的三条原则上，我是 100% 的 Ben Graham——而且这些才是真正要紧的。我在大约 1960 年读到 Phil Fisher 的两本书时，受到了很大影响。我认为那是非常出色的两本书，Phil 也非常了不起。我当初给出那个“比例”，大概是 Forbes 的 Jim Michaels 写信问我时——我就随口报了个数。更准确地说，在两者不矛盾——事实上也确实不矛盾——的地方，我愿意把自己看作 100% 的 Ben Graham + 100% 的 Phil Fisher。只是两人的侧重点极不相同。Ben 并不会反对这样一个命题：如果你能找到一门资本回报率很高、且能持续追加资本并保持高回报的生意——那就是天下最好的生意。
And of course, he made most of his money out of GEICO, which was precisely that sort of business. So, he recognized it, it’s just that he felt that the other system of buying things that were statistically very cheap, and buying a large number of them, was an easier policy to apply, and one that was a little more teachable. He would’ve felt that Phil Fisher’s approach was less teachable than his, but his had a more limited value because it was not workable with really large sums of money. At Graham-Newman Corp — Graham-Newman Corp was a closed-end fund — oh, it was technically an open-end fund, but it had $6 million of net worth. And Newman and Graham, the partnership that was affiliated with it, had 6 million. So, you had a total pool of 12 million. Well, you could go around buying little machine tool companies — stocks in machine tool companies, whatever it might be, all statistically cheap. And that was a very good group operation. And he had — you have — if you own a lousy business, you have to sell it at some point.
而且他的大部分财富来自 GEICO——那正是这种类型的生意。所以他当然认可这点；只是他觉得另一套方法——买入统计意义上非常便宜的股票，并广泛分散持有——更容易执行，也更容易教给别人。他会认为 Phil Fisher 的方法不如他的“可教性强”；但他的办法也有局限：当资金规模很大时行不通。在 Graham-Newman Corp——严格说它是开放式基金，但净资产才 600 万美元；与其有关联的 Newman and Graham 合伙也有 600 万——合计 1,200 万。拿着这点钱，你可以到处去买小型机床公司之类的股票，凡是“统计上很便宜”的都可以；这对一个团队运作而言非常有效。而且如果你持有的是糟糕的生意，你终归得在某个时点把它卖掉。
I mean, if you own a group of lousy businesses, you better hope some of them get taken over or something happens. You need turnover. If you own a wonderful business, you know, you don’t want turnover, basically. Charlie?
也就是说，如果你持有一篮子糟糕的生意，最好指望其中一些被收购，或发生点别的事——你需要“换手”。而如果你持有的是一家了不起的生意，基本上你就不想有“换手”。Charlie？
CHARLIE MUNGER: What was interesting to me about the Phil Fisher businesses is that a very great many of them didn’t last as wonderful businesses. One of his businesses was Title Insurance and Trust Company, which dominated the state of California. It had the biggest title plant, which was maintained by hand, and it had great fiscal solvency, and integrity, and so forth. It just dominated a lucrative field. And along came the computer, and now you could create, for a few million dollars, a title plant and keep it up without an army of clerks. And pretty soon, we had 20 different title companies, and they would go to great, big customers like big lenders and big real estate brokers, and pay them outlandish commissions by the standards of yore, and bid away huge blocks of business. And in due course, in the State of California, the aggregate earnings of all the title insurance companies combined went below zero — starting with a virtual monopoly.
CHARLIE MUNGER：在我看来，Phil Fisher 选的许多“优秀企业”里，有相当一批并没能长期保持卓越。比如他的一家标的 Title Insurance and Trust Company，曾经在 California 州占据统治地位——拥有最大的“产权档案库”（当时依靠手工维护），财务稳健、诚信可靠，牢牢把控着一个高利润行业。后来计算机出现了，只需几百万美元就能建一套产权档案系统，还不需要大批文员维护。很快就出现了二十来家产权保险公司，他们跑去找大型放贷机构和大房产经纪，按过去标准算“离谱”的佣金抢生意，巨量业务被“竞走”。结果在 California，全行业的产权险公司加总利润变成了负数——起点还是近乎垄断。
WARREN BUFFETT: From what looked like a monopoly.
WARREN BUFFETT：从看起来接近垄断的状态跌到这种地步。
CHARLIE MUNGER: So, very few companies are so safe that you can just look ahead 20 years. And technology is sometimes your friend and it’s sometimes your bitter enemy. If Title Insurance and Trust Company had been smart, they would’ve looked on that computer, which they saw as a cost reducer, as one of the worst curses that ever came to man.
CHARLIE MUNGER：所以，能让你“提前 20 年就放心”的公司，极少。技术有时是朋友，有时却是死敌。Title Insurance and Trust Company 要是聪明，早该把那台他们视为“降低成本”的计算机，当成降临人间的“最糟的诅咒”之一。
WARREN BUFFETT: You can — it probably takes more business experience and insights, to some degree, to apply Phil Fisher’s approach than it does Graham’s approach. If you — The only problem is, you may be shut out of doing anything for a long time with Ben’s approach, and you may have a lot of difficulty in doing it with big money. But if you strictly applied, for example, his working capital test to securities, you know, it will work. It just may not work on a very big scale, and there may be periods when you’re not doing much. Ben really was more of a teacher than a — I mean, he had no urge to make a lot of money. It did not interest him. So he was — he really wanted something that he thought was teachable as a cornerstone of his philosophy and approach. And he felt you could read his books sitting out here in Omaha and apply — buying things that were statistically cheap, and you didn’t have to have any special insights about business or consumer behavior, or anything of the sort.
WARREN BUFFETT：要应用 Phil Fisher 的方法，从某种意义上说，比用 Graham 的方法更需要商业经验与洞察。问题在于：用 Ben 的方法，你可能会长期“无事可做”；而且在大资金下很难施展。但如果你严格应用，比如他的“营运资本测试”去选证券，它是有效的——只是无法在很大规模上操作，且会有长时间“无所作为”的阶段。Ben 更像一位教师，而不是——我的意思是，他对“赚很多钱”并无欲望，不感兴趣。因此他真正想要的是“可被教授”的东西，作为其理念与方法的基石。他认为你可以坐在 Omaha 读他的书，然后去买“统计上很便宜”的东西，而无需对企业、消费者行为之类拥有特殊洞察。
And I don’t think there’s any question about that being true, but I also don’t think you can manage lots of money in accord with it.
我认为这确实无可置疑，但同样你很难用这种方法去管理“大量资金”。
43. Munger’s sales of Berkshire shares
Munger 减持 Berkshire 的原因
WARREN BUFFETT: Zone 2?
WARREN BUFFETT：第 2 区？
AUDIENCE MEMBER: Hi, Rob Pitts, shareholder from New York City. This is a question for Mr. Munger. I’ve noticed, in the insider sales activity sheets, that you’ve been a rather consistent seller of your Berkshire stock over the last few months. Wondered if you would comment on why you’re doing this, especially in light of the prospective tax change in capital gains, where it might be reduced, which would obviously be beneficial to you and beneficial to Berkshire by reducing its deferred tax liability?
AUDIENCE MEMBER：你好，我是来自 New York City 的股东 Rob Pitts。这个问题想问 Munger 先生。我注意到，最近几个月你在内幕交易表上持续出售 Berkshire 股票。能否解释一下原因？尤其是考虑到资本利得税可能下调的税改预期——那样对你有利、对 Berkshire 也有利（可降低递延税负）。
CHARLIE MUNGER: I’ve given away a fair amount of Berkshire in the last couple of years and I’ve also sold some. I gave away the Berkshire because I thought it was the right way to behave, and I sold some because I had uses for the money. (Laughter and applause)
CHARLIE MUNGER：过去两年我捐出了相当一部分 Berkshire，也卖了一些。捐股是因为我觉得那样做是对的；卖股则是因为我需要用钱。（笑声与掌声）
WARREN BUFFETT: He doesn’t know anything I don’t know. I (Inaudible) it’s selling, I’d checked that, but — (Laughter)
WARREN BUFFETT：他并不知道什么我不知道的事。我——（听不清）——他在卖这个我确认过，不过——（笑声）
44. When a company’s accounting is confusing, stay away
如果一家公司的会计让你困惑，就远离它
WARREN BUFFETT: Zone 3? Charlie has a very high percentage of his net worth in Berkshire, as do I. Go ahead. I’m sorry, go ahead. I don’t think it’s working, quite —
WARREN BUFFETT：第 3 区？顺便说一句，Charlie 的净资产有很大一部分在 Berkshire，我也一样。请继续。抱歉，你说吧。我想麦克风有点问题——
AUDIENCE MEMBER: Hello?
AUDIENCE MEMBER：喂？
WARREN BUFFETT: OK.
WARREN BUFFETT：好了。
AUDIENCE MEMBER: Hi, Gorem Pulich (PH) from New York City. I have a two-part question, first part very short. I think a lot of people have difficulty valuing businesses because of some convoluted accounting schemes that are out there. Do you have any suggestions, in terms of books, or something you can read, where you can sort of make sense of some of the accounting stories that are going around?
AUDIENCE MEMBER：你好，我是来自 New York City 的 Gorem Pulich（PH）。我有两个问题，第一个很短。很多人因为市场上复杂的会计安排而难以给企业估值。你有没有推荐的书籍或资料，可以帮助我们理清这些“会计故事”？
WARREN BUFFETT: Well, that’s a good question. Abe Briloff used to write for Barron’s quite frequently on various accounting machinations, and Barron’s has continued that somewhat. But you’re right that there are people out there who will try to paint pictures with accounting that are something far from the economic reality. And sometimes, the rules of accounting themselves lead to that. I would say that when the accounting confuses you, I would just tend to forget about it as a company. I mean, it’s probably — it may well be intentional, and in any event, you don’t want to go near it. I — we have never had any great investment results from companies whose accounting we regarded as suspect. I can’t think of a one. Can you, Charlie?
WARREN BUFFETT：这是个好问题。Abe Briloff 过去经常在 Barron’s 上写各种“会计把戏”，如今 Barron’s 也多少延续着这一传统。你说得对，确实有人试图用会计“作画”，描绘与经济现实大相径庭的景象；有时甚至会计准则本身也会导致这种偏差。我的建议是：当一家公司的会计让你困惑时，最好直接把它从备选清单里删掉。这很可能是“有意为之”；无论如何，你都不该靠近。我们从来没有在“我们认为会计可疑”的公司上取得过出色的投资结果。我一个例子也想不出来。你呢，Charlie？
CHARLIE MUNGER: No.
CHARLIE MUNGER：没有。
WARREN BUFFETT: It’s a very bad sign.
WARREN BUFFETT：这是一个非常糟糕的信号。
CHARLIE MUNGER: I made a short sale once that worked out well — (laughter) — in a case like that.
CHARLIE MUNGER：我倒是曾做过一次“做空”，还挺成功——（笑声）——就属于这种情况。
WARREN BUFFETT: It really — accounting can be a — accounting can offer you a lot of insight into the character of management. And I would say there’s a lot — you know, there’s a — you run into a fair amount of bad accounting. I used to call it creative accounting. And you’d probably run into a lot more, if it was allowed. But some companies have been able to push their auditors pretty far, and I would be very skeptical of anything that looks suspicious to you. I think there have been — there’ve been a couple of things written, but I can’t think of where they’ve appeared, where people talk about the questions of, you know, what — Obviously, if some prepaid expense, deferred asset accounts start building up suspiciously high, and inventories look out of line, you know, with sales and, particularly, the trend of them and all that, you want to look twice at companies like that. Life insurance, you know, frequently, you know, we see weak accounting in.
WARREN BUFFETT：会计确实——它能让你看清管理层的品格。我得说，现实里“糟糕的会计”不在少数。我过去称之为“创造性会计”。如果允许的话，你可能会见到更多。有些公司把审计师“逼得很远”，对任何让你起疑的东西，都应该保持高度警惕。关于“该警惕什么”，也有一些文章讨论过，但我一时想不起出处。显然，如果预付费用、递延资产账户可疑地持续攀升；如果存货相对销售额（尤其是趋势）看起来不正常；这类公司要反复审视。我们在寿险领域就经常看到“会计口径偏弱”。
You can — when you don’t have a product where revenues and expenses are being matched up on something close to cash in the short-term, you have the opportunity for people playing games with numbers. And some people have learned how to do that very well, and they’ve sometimes created longlasting stock manipulation or promotion schemes that have enriched themselves, or they’ve enriched the managers or the creators of it, at the expense of the public, over time. If you ever get suspicious about accounting, just go onto the next company.
当一门业务的收入与成本无法在短期内以“接近现金”的方式配比时，就给了人们“玩数字游戏”的机会。有些人对这套做得很熟练，甚至能打造长期的“股价操纵”或“故事包装”计划，慢慢让自己、让管理层或设计者获益，而牺牲公众利益。一旦你对会计起了疑心，转身去看下一家公司就对了。
45. Lloyd’s of London has slipped in recent years
近年来 Lloyd’s of London 的地位下滑
WARREN BUFFETT: Zone 4?
WARREN BUFFETT：第 4 区？
AUDIENCE MEMBER: Yes. Miss Wasserman (PH) from Chicago. In order to understand the reinsurance business a little better, can you explain your relationship with Lloyd’s of London in the marketplace, how you — which is probably the leader in the field? How often do you compete directly, or if you’ve ever done reinsurance business for them, since they’ve had losses in recent years, and how you see the industry changing as their economics changes?
AUDIENCE MEMBER：是的。我是来自 Chicago 的 Miss Wasserman（PH）。为了更好地理解再保险业务，你能否解释一下你们与 Lloyd’s of London 在市场上的关系——它大概是这个领域的领军者？你们与其直接竞争的频率如何？在它们近年遭遇亏损的背景下，你们是否曾为其承担再保险业务？以及你如何看待随着其经营状况变化而带来的行业变迁？
WARREN BUFFETT: Well, Lloyd’s, which is not an insurance company, as you know, but a — well, originally it was a place — it was a coffee house, but people think what — it’s a place where a large number of syndicates operate and congregate in a given physical location. And it’s had a history for larger, more exotic risks over time. Lloyd’s has lost its relative position to a fairly significant degree in the last 10 or so years, partly because — well, in significant part, because of bad results, which had the other effects of causing capital to withdraw and people who backed the syndicates to become unhappy. So, Lloyd’s is still an important competitive factor in the reinsurance business and in certain specialized kinds of primary insurance. It’s a very — you know, it’s very important factor. But it’s not the factor it was 10 or 15 years ago. And I’m not sure how Berkshire’s capital compares with the capital of all those syndicates at Lloyd’s, but it’s certainly changed in its relative importance in the last five or 10 years.
WARREN BUFFETT：嗯，Lloyd’s 并不是一家保险公司——你知道的——而是一个……最初它是个场所——一家咖啡馆，但人们理解为，它是一个实体地点，聚集着大量运作中的承保辛迪加。长期以来，它承接更大、也更“特殊”的风险。在过去约十年里，Lloyd’s 的相对地位显著下滑，部分因为——其实很大程度上因为——承保业绩不佳，进而引发资本撤出、以及为辛迪加提供资金支持的人不满。因此，Lloyd’s 仍然是再保险以及某些专业直保领域的重要竞争力量——非常重要。但它已不再是 10 或 15 年前的那个“关键”角色。至于 Berkshire 的资本与 Lloyd’s 所有辛迪加的合计资本相比如何，我不敢确定，不过在过去五到十年里，双方相对重要性确实发生了变化。
And the ability of Lloyd’s to attract capital with the problems they had has been diminished, although they’re working on that problem. But we regard Lloyd’s as a competitor just like we would regard any one of a number of reinsurance companies as competitor. But we also do business with a number of syndicates at Lloyd’s, and we’ll probably do a lot of business over the next 10 years with various syndicates. Charlie?
鉴于这些问题，Lloyd’s 吸引资本的能力已被削弱，尽管他们正在努力解决。但我们把 Lloyd’s 视为竞争对手，就像我们看待其他再保险公司一样。不过我们也与 Lloyd’s 的若干辛迪加有业务往来，未来十年我们大概还会与不同辛迪加开展大量业务。Charlie？
CHARLIE MUNGER: Yeah, Lloyd’s is a very interesting institution because it had this reputation for integrity, what they paid off in — what, the San Francisco fire, and so on, and so on. But I would argue that 10 or 15 years ago, a lot of slop and folly got into Lloyd’s, in certain syndicates particularly. And too many commissions coming off the top as the same risks circulated around the system. Too much fine tailoring and three-hour lunches with fine wines. And it wasn’t right, and they got in a lot of trouble.
CHARLIE MUNGER：是的，Lloyd’s 是个非常有趣的机构，因为它因诚信而享有盛名——比如当年赔付了 San Francisco 大火，等等。但我认为在 10 到 15 年前，Lloyd’s（尤其某些辛迪加）出现了不少松懈与愚蠢：同一风险在系统内反复“流转”，上游抽取过多佣金；过度的“精致裁剪”，配上三小时的佳酿商务午餐；这一切都不对头，也把他们带进了大麻烦。
WARREN BUFFETT: Actually, in the history of Berkshire, the most significant insurance problem we ever had was in connection with Lloyd’s almost — or certain syndicates of Lloyds — almost 20 years ago. And as Charlie said, they had this terrific reputation — behavioral reputation — over centuries. And I think that they coasted for a while on that. And we had a behavioral problem with — in one situation. And it was very expensive to us. So, we may have gotten an early lesson in what was coming. There are a lot of different syndicates at Lloyd’s, and there are different people running them, and they have had different standards of behavior, to some extent. And people who assumed that, because they were dealing with Lloyd’s, that they would have no problems of any kind have found out otherwise. But they will continue to be a major force in insurance, and they will get by their present troubles, and they’ll probably come out of it better structured than they went in.
WARREN BUFFETT：实际上，在 Berkshire 的历史上，我们遭遇过最严重的一次保险问题，几乎就是 20 年前与 Lloyd’s——或者说其中某些辛迪加——有关。正如 Charlie 所说，他们在数百年里积累了极佳的“行为声誉”，我认为他们曾一度“吃老本”。我们在某个案例里遇到了行为问题，给我们带来了巨额成本。所以我们可能较早地就接受了“将要发生什么”的教训。Lloyd’s 内部有许多不同辛迪加，由不同的人管理，行为标准在一定程度上不尽相同。那些以为“只要对手是 Lloyd’s 就绝不会有任何问题”的人，后来发现事实并非如此。但他们仍会是保险业的一支重要力量，会度过当前的困境，而且很可能以比进场时更好的架构走出来。
46. We’ll keep a dollar if we can make more than a dollar of value
只要能把一美元变成超过一美元的价值，我们就会留存这一美元
WARREN BUFFETT: Was that zone 5 that we did there?
WARREN BUFFETT：刚才是第 5 区吗？
AUDIENCE MEMBER: Christopher Jones (PH) from Scottsdale, Arizona. I had a couple of questions for you. You’ve mentioned several times today about the difficulty and the frustration that you both have in trying to find capable companies to acquire, or acquire parts of, in the United States. And I realize that, of course, when we own Coca-Cola and Gillette we are a part of the global environment. But it’s surprising to me that there haven’t been any global franchises or global managements that have been interesting to either of you that — and I realize, in the past we’ve owned some pieces of some. So, I was — questioned, because of the size of Berkshire now, might we see something more of a global flavor to the portfolio? And second question, you’ve also addressed the intelligent use of cash as something that you look for in management. Many management teams now are buying back their own shares because they can’t find anything cheaper or better in the marketplace. Does your current philosophy of not buying back your own shares suggest that maybe you think Berkshire’s overpriced at these prices?
AUDIENCE MEMBER：我是来自 Scottsdale, Arizona 的 Christopher Jones（PH）。有两个问题。你们今天多次提到，在美国寻找可收购的优秀公司（或部分股权）很困难、也很挫败。我理解，持有 Coca-Cola 和 Gillette 本身就使我们处于全球化环境中。但让我惊讶的是，似乎没有任何全球型的特许经营或全球化管理团队能让你们感兴趣——当然我知道我们过去持有过一些的少量股份。所以我想问，考虑到 Berkshire 如今的体量，投资组合是否会更“全球化”？第二个问题，你们也把“现金的聪明用法”看作管理层的重要指标。如今很多公司在回购自家股票，因为他们在市场上找不到更便宜或更好的标的。你们目前不回购 Berkshire 的做法，是否意味着你们认为按当前价格 Berkshire 被高估了？
WARREN BUFFETT: Well, we have never bought back shares. I — we actually bought a few back in the ’60s — but we basically have never bought back shares, although there were plenty of times when we thought it would be quite attractive to do it. But we’ve also felt that if we could create more than a dollar of market value by — and maybe well over a dollar of market value — by retaining a dollar, that on balance that that would work out better over time. As long as we can find ways to use the cash, which, overall, we feel will turn dollar bills into something larger than dollar bills, we will — we’ll keep retaining the money. And we won’t measure that on whether we can find anything this week or this month, but we’ll certainly measure it based on whether we can find anything in a couple of years, always. We’ve had dry spells. Actually, right now, there’s a little more going on than usual. But we’ve had dry spells a lot of times over a 20-odd year period. And you know, as I said, I wound up the partnership during one dry spell.
WARREN BUFFETT：我们基本从未回购过股份——严格说六十年代回购过一点点——虽然很多次我们也认为回购相当有吸引力。但我们也认为：如果把一美元留在公司，能在市场价值上创造出超过一美元、甚至远超一美元的增量，那么长期看这会更好。只要我们还能找到把现金“变成更大价值”的方式，我们就会继续留存现金。这个判断不是看“这周、这个月能不能找到东西”，而是看“一两年内能不能找到”。我们经历过“干旱期”。事实上现在的机会比往常略多一些。但在过去二十多年里，我们也多次经历过干旱期。正如我说过的，我曾在一个“干旱期”里结束了合伙基金。
So that — it will be measured — it’s measured partly on what’s going on now, and it’s measured partly on the expectancy. And I don’t think, whether our stock was selling at X or three-quarters of X right now, would make a lot of difference. But it would make a difference if we thought we couldn’t find things to do with the money externally.
因此，这个问题的衡量一方面取决于当下发生什么，另一方面取决于“期望值”。我不认为当前股价是 X 还是 0.75X 会带来太大差别；真正的差别在于我们是否认为“外部已经找不到用钱的好去处”。
47. “Not too likely” we’ll buy a business outside the U.S.
在美国之外整买一家公司“可能性不大”
WARREN BUFFETT: The question about nondomestic operations, as you mentioned, we’ve got almost $8 billion in Coca-Cola and Gillette combined, and Coke has 80 percent-plus of their earnings from non-U.S. sources, and Gillette has maybe two-thirds or thereabout. So, you can argue that almost 40 percent of the net worth of Berkshire — 35 to 40 percent — is operating outside the United States, just in those two investments alone. In terms of buying a business outright, we don’t preclude buying a non-U.S. domicile business. But it’s not too likely that it’ll happen. We’d like to do it, particularly if it were large and if we understood it. But are we as likely to get a fix on a Helzberg’s of Europe as we would a Helzberg’s in the United States? You know, I doubt it. I just don’t know whether we would develop as much confidence in understanding the scene in which they operated, and understanding the management, and all that. But we might.
WARREN BUFFETT：至于“非美国业务”，如你所说，我们在 Coca-Cola 与 Gillette 上合计投入将近 80 亿美元。Coke 的盈利 80% 以上来自美国以外；Gillette 可能有约三分之二来自海外。仅凭这两笔投资，你就可以说 Berkshire 净资产的 35%～40% 实质上已在美国之外运转。说到“整买一家公司”，我们并不排除买一家非美国本土的企业。但这事发生的可能性“不太大”。我们愿意做，尤其是在体量可观且我们真能看懂的情况下。但我们是否能像看懂美国的 Helzberg’s 那样，看懂“欧洲版的 Helzberg’s”？我表示怀疑。我不确定我们能否对其经营环境、管理层等建立同等程度的信心。当然，也不是不可能。
It would have to be a pretty simple business, and it would have to be a business where we thought we really understood the moat for a long time. And it would have to be a business where we could establish a rapport with the management, despite coming from somewhat different backgrounds. It’s not impossible, but I would say it’s, you know, it’s less than likely. Charlie?
那必须是一门非常简单的生意——而且是我们相信能长期看清护城河的生意；同时，即便彼此背景不同，我们也必须能与管理层建立良好“默契”。并非不可能，但我会说，概率“偏低”。Charlie？
CHARLIE MUNGER: I’ve got nothing to add.
CHARLIE MUNGER：没有补充。
15. Buffett: my growing fame isn’t a distraction
WARREN BUFFETT: Zone 6?
AUDIENCE MEMBER: Hi there. My name is Lee Debroff (PH) from Morgantown, West Virginia. Ever since the Salomon debacle, it appears that you have attracted more and more media attention. In this regard, there have been numerous displays that would appear to be distractions from the actual business of investing. To wit, we have watched as you attended Bill Gates’ wedding in Hawaii, and bought a personal computer, and now wear striking designer ties. (Laughter) And yesterday —
WARREN BUFFETT: Bill would’ve invited me to the wedding even if I hadn’t have been at Salomon. (Laughs)
AUDIENCE MEMBER: Yesterday, we got those pennants during the rainout. A very serious question, now that you’ve become this media darling, how can you assure us that you’re still keeping your eyes concentrated on the proverbial ball? (Laughter)
WARREN BUFFETT: Well, I do get more mail than I used to, so we’ve developed a little more of a system on that. But I just — I do what I like to do. Just take speeches, I probably get asked to make, maybe, 20 times as many speeches as I would’ve been asked to make 10 years ago, but I make the same number. You know, I’ve got the — I’ve got my own selection process for what I do on that. And it’s the same way, you know, I’m invited to, you know, I don’t know how many dinner tributes, et cetera. And you know, they basically — I don’t change the way I — what I do, because I don’t want to change the way — If I wanted something else — if, while I was building Berkshire, that was being done to end up in some other spot, I’d have been there by now. And it just doesn’t change anything. It does change the volume of mail, but I’ve got that so that that is not a big distraction.
Pardon me?
WARREN BUFFETT: Oh, I’ll remain in Omaha. Yeah, there’s no question about that. I mean, I — if I hadn’t wanted to be in Omaha, I would have figured out ways to change, and it would have been very easy to change decades ago. I think it’s — we’ve got a lot of people here who aren’t from Omaha, but that’s their problem. I mean — (Laughter)
CHARLIE MUNGER: I have been watching Warren for a long time, and people who are concerned that he will change have a huge appetite for needless worry. (Laughter)
WARREN BUFFETT: The odds that I will change are about as good as the odds that Charlie will change. (Laughter) The mail thing is a, you know, you wish you didn’t — that there was an easier way to handle it. But you essentially can’t answer all the letters you get, it’s that’s simple. And that’s about the — once you get past that and get a form letter that takes care of it, that takes care of it.
16. Decline in GEICO’s return on equity
WARREN BUFFETT: Zone 1?
AUDIENCE MEMBER: Yes. I’m Samuel Park (PH) from Tulsa, Oklahoma. My question is regarding GEICO. I noticed that, for the last five years, their return on equity has come down every year. Is this something that signifies change of a business, or just temporary things?
WARREN BUFFETT: Question is about GEICO’s return on equity?
AUDIENCE MEMBER: Yes.
WARREN BUFFETT: Yes. Well, it’s true, it has come down to some extent. The — GEICO’s growth is, more or less, a function of, basically — I mean there’s a natural rate of growth there. And the growth in capital has been greater than the growth rate in premium volume and in invested assets, so that achieving the same success on underwriting and achieving the same success on investments will produce a lower return on capital unless they buy in stock, which they have done fairly significantly. But that’s limited by availability, too, but — It’s a very good business. But it’s not a business where, if you double the capital, you can double the earnings easily. Charlie?
CHARLIE MUNGER: I have nothing to add.
17. No comment on Guinness investment
WARREN BUFFETT: Zone 2?
AUDIENCE MEMBER: My name’s Mark Hake (PH) from Scottsdale. And I think your question — my question — about foreign equity investment was pretty much answered by the other gentleman. But I noticed that you had made an investment in Guinness in the past. And can you comment on that? Do you — is it still owned? And if not, why not?
WARREN BUFFETT: We don’t comment on purchases and sales of securities or ownership, unless either we’re legally required to, or they hit this threshold level where we report annually. And we move the threshold level up as our assets move up. We don’t move it up as a percentage of assets. So that we used, as a cutoff this year, 300 million, I believe, of market value as to where we reported. Now, if we’d owned the same amount of Guinness — which I’m not saying that we did — but if we owned the same amount of Guinness on December 31st, 1994, it would not have hit that threshold as we had on December 31st, ’93. It would not have hit that threshold. And we really don’t want to get in the business where we are talking at all about what we’re buying or selling. We get a lot of speculation on that, but it’s of no use to Berkshire to be talking about purchases or sales.
If we were acquiring a piece of land downtown and we bought a quarter of what we intended to buy, for example, we would not feel we were benefitted by a front-page story in the paper saying that we were acquiring land. And it — we are not in the business of giving investment advice, basically. We’ll talk about our principles. So, the only conclusion you can come to about Guinness, or anything else that does not show up on our list at year-end, is that we did not own $300 million’s worth at market value at that time.
18. Buffett’s Berkshire shirt isn’t available
WARREN BUFFETT: Zone 3?
AUDIENCE MEMBER: Yes, Mr. Buffett. My name is Don Bresca (PH), I’m from Boston, Massachusetts. Recently I’ve noticed you wearing an IZOD shirt with Berkshire Hathaway in the middle — there was a fist grasping cash. Is that the new insignia? And the second question is, is that shirt available to stockholders? (Laughter)
WARREN BUFFETT: The shirt is not available. That shirt was a gift from someone, and the shirt is not available to stockholders. But you can draw your own conclusions, the meaning of it. (Laughs)
19. No matchmaking for Mrs. B and Phil Carret
WARREN BUFFETT: Zone 4?
AUDIENCE MEMBER: Yes. I’m Lyle McIntosh from Missouri Valley, Iowa, about 25 miles up the road. And Warren, recognizing this is corn country, and I farm, and there’s several other farmer shareholders, this meeting hits right in the middle of corn planting. Could you move it back about three weeks? (Laughter) And also, I noticed [mutual fund pioneer] Phil Carret was on “Wall Street Week” Friday night. I’m sorry I don’t know his marital status, but if he is available have you thought about introducing him to Mrs. B. [Nebraska Furniture Mart founder Rose Blumkin]? (Laughter)
WARREN BUFFETT: Well, Mrs. B., incidentally, was out working yesterday. I went out and dropped by to see her about 4 o’clock, and she was doing fine. She will be 102 late this year, and my guess is she will be working on her 102nd birthday as well. But I’ll let Phil and Mrs. B. handle their own affairs, in that respect. (Laughter)
CHARLIE MUNGER: He’s probably a little too young for her. (Laughter)
20. “We’re open to buying anything”
WARREN BUFFETT: Zone 5?
AUDIENCE MEMBER: Well, I’m Ken Donovant (PH), a Cincinnati investor. You’ve addressed the subject of your feelings about buying entire foreign corporations. I wonder if you’d say something about, or is Berkshire looking for opportunities to buy, we’ll call them near-franchise companies, that might be based overseas — buying a stock interest or a part interest? And also, how do you feel about fixed-debt investments of overseas companies?
WARREN BUFFETT: Debt investments, was that?
AUDIENCE MEMBER: Yes. Well, the first part was buying a stock investment rather than a whole company.
WARREN BUFFETT: Right.
AUDIENCE MEMBER: And the second part was debt investments.
WARREN BUFFETT: Yeah. Well, we’re open to buying anything. When you say, are we looking at them, I’ve never been quite sure how we look at things anyway. I mean, they just seem to sort of pop up from reading or something of the sort. But we’re — it’s less likely we end up doing it, for some of the reasons I’ve given earlier. But we have bought stock in companies that — aside from Guinness, that are domiciled outside of the United States. And we would have — we could conceivably buy debt instruments. We don’t buy a lot of debt instruments anyway, so it’d be very unlikely. But we will do anything we think makes sense at Berkshire, that’s compatible with the way we want to operate. And certainly, we don’t care where — the domicile is not that important. Charlie?
21. Helzberg has unusually good sales for jewelry retailer
WARREN BUFFETT: OK, zone 5, is it?
AUDIENCE MEMBER: Scott Spilcovich (PH), New York City. My question is regarding the Helzberg acquisition. Can you comment on things such as the acquisition price, your sales and profit expectations, and how much debt was on the books at the time of the acquisition?
WARREN BUFFETT: This is in reference to which acquisition?
AUDIENCE MEMBER: Helzberg.
CHARLIE MUNGER: Helzberg.
WARREN BUFFETT: Well, we have not put out the figures on Helzberg’s, and we won’t be. But we evaluate — the sales have been published at about 280 million for the year that ended in February, and there’ll be considerably more in the current year. But we have not put out the figures. I can tell you that, obviously, that we think that, in terms of the amount we are laying out in terms of shares and/or cash — we think, over time, that it’s going to be a very decent acquisition. It’s the same line of reasoning we’ve applied in other businesses. Retailing, as I mentioned earlier, is the kind of business where you have to stay smart over time, and we have a terrific manager, a fellow named Jeff Comment, who’s going to be running it. And his record is extremely good, and I would bet the record would stay good. It earns good returns on invested capital or we wouldn’t be buying into it. We always look for good returns on capital. And a lot of companies in the jewelry business do not get good returns on capital.
I mean, it’s not an industry that — where most of the participants are prosperous. It takes unusual sales per square foot compared to competitors to succeed in that, and we have one operation that does that in spades at Borsheims, and then a different type of operation that does it at Helzberg’s. The typical jewelry store operation is not a very good business, but we think we’ve got two good operations. Charlie?
CHARLIE MUNGER: Yeah, we frequently find that owners of entire businesses have schizophrenia. They want to sell their business for a little more than it’s worth, taking stock, so they don’t have to pay taxes. And they want the stock to be the kind of — to be in a kind of business that will make just one dumb acquisition — theirs, and thereafter will guard the stock like gold, making no more dumb acquisitions. (Laughter) Needless to say, the world is not that easy. And I think over time, we’ve made acquisitions that were fair on both sides, and averaged out, they’ve worked well for Berkshire. And I think a company that behaves that way is giving the best long-term value to the private owner who wants to sell. You do not want to sell your business for stock to a firm that likes issuing stock.
22. Insurance float important in estimating intrinsic value
WARREN BUFFETT: Zone 6?
VOICE: That was six.
WARREN BUFFETT: Where do we have the mic? Oh, there. I don’t think it’s on.
AUDIENCE MEMBER: Can you hear me now?
WARREN BUFFETT: Yeah, sure.
AUDIENCE MEMBER: Jack Glanding (PH) from Knoxville, Tennessee. I have a question which may not be appropriate for the officers of Berkshire to answer, but I think I’ll ask it anyway. You focused on intrinsic value in your annual report, and you suggested that by reviewing the grey pages in the back that one could come up with a — possibly come up — with a value of intrinsic value for Berkshire. I’ve made an effort to do this, and I think I come up with a price-to-earnings ratio somewhere around 21, which seems to be a little overvalued. I’d like to ask you, Mr. Buffett, if you would care to divulge what you believe is the intrinsic value of Berkshire? And if you’re not willing to do that, do you consider the price of Berkshire at this level to be fair?
WARREN BUFFETT: I — every year I get asked that, in one form or another, and I always say that I don’t want to spoil the fun for those of you who are working out the intrinsic value for yourself. You have all the numbers that we have that are key to it. And I would say that there are some important factors besides P/E. I mentioned earlier that I thought that the page where we describe float, for example, is probably as important a page as there is in the report. And then the question is, you know, what do you do with the capital as you allocate it over time? And obviously, that makes a difference in intrinsic value, too. But I would say in a general way that I — and this has been true virtually all of the time that — I think — I would say that the intrinsic value of Berkshire in relation to its — actually, I’ll put it the other way. The price of Berkshire in relation to its intrinsic value, I think, probably offers as much value as, or more, than the majority of stocks that I see. But I don’t want to go any further than that. Charlie?
CHARLIE MUNGER: I’ve got nothing to add. The — your story about the fun of working it out, though, there’s a famous English headmaster who used to say to each graduating class, he said, “Five percent of you are going to become criminals, and I know just who you are. “But I’m not going to tell you, because I don’t want to deprive your lives of a sense of excitement.” (Mild laughter)
WARREN BUFFETT: We’ll explain that later on. (Scattered laughter and applause) There is a lot more to — there’s more to intrinsic value, as we’ve discussed earlier, than just adding up what you think you can sell the pieces for at any given time, because it is a prospective figure. It is future cash discounted back to the present. And capital allocation is a good part of that. What you expect the float to do, for example, over time, would not — that would lead to a large swing in possible numbers relative to value. I mean, if — when we bought National Indemnity in 1967, when it had whatever it had, 15 or 20 million in float, we didn’t see it then. But if we could have foreseen the eventual development of float over time, it might have turned out that the intrinsic value of National Indemnity was many multiples of what most people might have thought at the time, and probably what we thought at the time.
23. Hagstrom book had “some effect” on Berkshire’s stock price
WARREN BUFFETT: Zone 1.
AUDIENCE MEMBER: Richard Ducheck (PH) from Melbourne, Florida. I have a two-prong question, first on the stock. As we all know, the first month this year we ramped up about 25 percent and then we pulled back, I guess, about 20. Just wondering your thoughts on that, if specifically you attribute that to the books perhaps, or institutional buying or, you know, what explanation you might have for that. And second —
WARREN BUFFETT: I would say — I’ll answer that first. I would say [Robert] Hagstrom’s book [“The Warren Buffett Way”] undoubtedly had some effect on that. It’s impossible to measure, but that book sold a lot of copies. And my guess is that that had some effect.
AUDIENCE MEMBER: OK. More so than institutional buying? Because I’ve heard rumors like Fidelity and whatever were buying —
WARREN BUFFETT: I can’t — I just don’t know the — I don’t know how to separate out the variables, but I would say that the book was certainly a factor at that time, and it’s unreasonable to assume that it had no effect.
CHARLIE MUNGER: Well, a lot of the buying came in in odd lots, so —
WARREN BUFFETT: A lot of odd lot activity, yeah.
CHARLIE MUNGER: Certainly looked like book buyers. (Laughter)
24. Buffett doesn’t understand Microsoft, despite his friendship with Gates
AUDIENCE MEMBER: Secondary question, I’m an electronics engineer by profession. So, the technology sector is of prime interest to me, and I think we’ll all agree, at least the last six to eight months has been phenomenal for the technology sector. And I also see that you’re somewhat befriending Mr. Gates, inviting him into your house, et cetera. Is there a possibility down the road apiece of you doing some type of purchase of Microsoft, or acquiring that? Or is there something — (laughter) — you two could work out together?
WARREN BUFFETT: I bought a hundred shares one of the day — first day — I met Bill, and that was the end of it. I just want to be sure I got his reports from that point on. This is personal, not in the — not in Berkshire. There’s no chance we’ll be in businesses we don’t understand, and I won’t understand it.
AUDIENCE MEMBER: No, you’re quite clear on that. I just thought maybe there’d be an exception, because apparently —
WARREN BUFFETT: Well, if you made an exception, he would be a good guy to make — a very good guy — to make an exception with. But I don’t think I’ll make an exception.
25. Business schools should study Mrs. B’s success
WARREN BUFFETT: Zone 2?
AUDIENCE MEMBER: My name is (inaudible) from Arlington, Texas. Mr. Buffett and Mr. Munger, what possibility to use these two great minds for a long term in life, by either taking apprenticeship in Berkshire or open a school?
CHARLIE MUNGER: I didn’t follow that one. Warren, you handle it.
WARREN BUFFETT: Is it a question of what —?
AUDIENCE MEMBER: What the possibility of using these two great minds of yours to educate a new generation as a long-term investment in this country, either through apprenticeship in Berkshire for young people or open a business school?
CHARLIE MUNGER: Well, let me try that one because I have a demonstrated record of nonperformance. (Laughter) I have had great difficulty enabling my children to know what I know. (Laughter) And Warren, maybe you have failed less. (Laughter)
WARREN BUFFETT: My children, in many ways, are a lot smarter than I am. So, I’ve had different experience, Charlie. (Laughs) No, I think you can — you know, I’ve mainly learned by reading myself, so I don’t think I have any original ideas that — I’ve certainly got a lot — I mean, I’ve talked about reading Graham, I read Phil Fisher, and I’ve gotten a lot of ideas myself from reading. And in my own case, I mean, talk about your parents having influences, you know, my parents had an enormous influence. So, I think you can learn a lot from other people. In fact, I think, if you learn reasonably well from other people, you don’t have to get any new ideas or do much on your own. You can just apply the best of what you see.
CHARLIE MUNGER: Generally speaking, I think we always get a group of wise people after sifting millions. But I don’t think anybody’s invented a way to teach so that everybody is wise. It’s extraordinary how resistant some people are to learning anything. (Laughter and applause)
WARREN BUFFETT: Really, what is astounding is how resistant they are when it’s in their selfinterest to learn. I mean, I was always astounded by how much attention was paid to Graham — I mean, he was regarded 40 years ago as the dean of security analysts —but how little attention was paid, in terms of the principles he taught. And it wasn’t because people were refuting them, and it wasn’t because people didn’t have a self-interest in learning sound investment principles. It’s just this incredible resistance to thinking or change. I mean, I quoted Bertrand Russell one time as saying — who said that, “Most men would rather die than think. Many have.” (Laughter) In the financial sense, that’s very true. It’s not complicated. I mean, human relations, you know, usually aren’t that complicated, but — and certainly it’s in people’s self-interest to develop habits that work well in human relations, but an amazing number of people seem to mess it up one way or another.
CHARLIE MUNGER: How much has Berkshire Hathaway been copied, either in investing America or corporate America? I’m not saying we deserve to be, necessarily. But people don’t want to do it differently than they’re presently doing it.
WARREN BUFFETT: You might argue that Mrs. B. [Nebraska Furniture Mart founder Rose Blumkin], having started what you may have seen out there this weekend, with $500 in 1937, you know, without a day in school in her life, and building that into a great enterprise, you might say, “Well, that is something to study.” I mean, is it because she couldn’t speak English when we got — you know, she got over? Maybe we can explain to people — I mean, what is there to learn from seeing somebody create an incredible success like that in a competitive business? She didn’t invent something that the world had never seen before. She didn’t have a lock on some piece of real estate that protected her from competition. You know, all of these — and yet, she accomplished something that virtually no one has accomplished. Now, why aren’t business schools studying her? You know, why are they talking about EVA, you know, economic value added, as we talked about earlier? I mean, here is a success. Something has made her a success.
You know, is it something — is it a 200 — and she’s very smart — but is it a 220 IQ? No, it isn’t. It’s a very smart woman, but it’s not something that’s incapable of being replicated in the habits and the way of thinking. But who is studying her? I mean, they present her as a curiosity. But if you go to any of the top 20 business schools, you know, there’s not one page that’s being given to anybody to study what is an incredible success. And I just — I find that very interesting that — and to some extent, you know, I’ve seen it in the investment world. There’s this — for one thing, the high — you know, it’s probably a little discouraging to a professor of management at some major business school that has gone on to get his doctorate and everything, to think he has to come and hang around the Furniture Mart — (laughter) — study a woman in a golf cart, I mean — (Laughter) But you could — they’d be better off if they did.
26. Do what you like now, not later
WARREN BUFFETT: Where were we on that? What zone are we on, four, are we? Wherever it is. Zone 3 maybe, huh?
AUDIENCE MEMBER: Yes, thank you. I’m Jim Ludke (PH) from Phoenix, Arizona. And I haven’t been to one of your annual meetings for about 10 years now. The last one was down at the Red Lion Inn by the water. And I congratulate you on your popularity.
WARREN BUFFETT: Thank you.
AUDIENCE MEMBER: I wish I had bought more stock then. (Laughter) But like Charlie, I too, have been giving mine away for charitable purposes. So, your beneficial effects have reciprocated and rippled throughout the economy. I congratulate you.
WARREN BUFFETT: No, I congratulate you.
AUDIENCE MEMBER: What do you think has changed — well, one thing is that Ben Graham — commenting on what you just said — I’m a student of Ben Graham, and he said it never ceased to amaze him how widely read he was and least followed. But how have you changed in the last 10 years? Much, if any? Or none at all? Or —
WARREN BUFFETT: Well, we’ll let Charlie — he’s been watching me. (Laughter)
CHARLIE MUNGER: I’d say about one stone. (Laughter) Takes one to know one. (Laughter)
WARREN BUFFETT: If we’d wanted to change, we would have changed a long time ago. I mean, I’ve never believed much in this theory of, you know, if I have 2X instead of X that I’m going to do this or that, or I’ll take this job I don’t like now, and I’ll get one I like later on, or — It doesn’t make that much sense to me. I mean, there aren’t that many years around, so you ought to be doing what you like at the present time, and Charlie and I have always followed that pretty well.
27. “We let .400 hitters swing the way they want to swing”
WARREN BUFFETT: Zone 4?
AUDIENCE MEMBER: Peter Borma (PH), Chicago. Every year, you have your operating companies send a check back to Omaha. What percentage do the heads of the operating companies keep as a bonus, and how do you set that figure?
WARREN BUFFETT: Well, we have different bonus arrangements at different companies. It would be a big mistake, with businesses with as many different economic characteristics, or as varying economic characteristics existing, as they do at Berkshire, to try and have some formula approach that paid managers in all of these different businesses based on a simple formula of one kind. So, we have, I think, four businesses where they own a part of it. And we have varying arrangements with the various businesses. Some businesses, capital employed is unimportant. There simply isn’t a way to employ a lot of capital. So, we do not have a capital charge, even, at those businesses. We don’t believe in going through a lot of machinations if it’s going to involve peanuts at the end. So, some businesses have a capital charge, some businesses don’t have a capital charge. If they use a lot of capital, they’re going to have a capital charge, is what it amounts to. Some businesses are easy businesses, some businesses are tougher businesses. So, we have different thresholds where things kick in based on that.
We simply sit down and try and figure out, in the case of each business, what makes sense. And that usually isn’t very hard to figure out. I mean, we want something that’s fair. The best managers, we aren’t going to change their behavior much by the compensation thing. We may a little bit, in terms of teaching them how we think about capital employed. But in terms of their enthusiasm for the business, imagination, and marketing, and all that, basically we usually buy businesses with those people in place. But it would be — A, it’d be wrong not to treat people fairly, and they would resent it if they weren’t treated fairly, too, understandably. So we try to have a system that rewards the things that we want to have rewarded, and treats them fairly in a way that they understand they’re treated fairly. And I don’t think we have any two businesses that have the same arrangement. They’re different in each case. Incidentally, that applies in their policies, too.
We don’t get into — very seldom, I should say, maybe once or twice — but they have different arrangements in terms of compensating their employees. Some of our businesses have budgets, some of them don’t. We don’t have any budgets that come up to headquarters. We let .400 hitters swing the way they want to swing. And some of them, you know, have a little different swings than others, but overall, they’re extremely effective. And they feel, and we want them to feel, like they own their own business. If they felt — if somebody that’s independently wealthy sold us a business and we started telling them how to swing, they would tell us what we could do with it very quickly, because they don’t need that in life. So, what we have to do is create a situation, or maintain a situation, where they are having more fun doing what they’re doing than anything else they can do in life, and that’s what’s we’re designing for. And then we have to treat them fairly in respect to that. Charlie?
CHARLIE MUNGER: Nothing to add.
28. “Foreign exchange baffles me, frankly”
WARREN BUFFETT: Zone 5.
AUDIENCE MEMBER: Roger Hill from Racine, Wisconsin. Gentlemen, a little change of pace. Could we get your opinion on the present situation with international exchange? Do you think we have a dollar problem, or is — the Japanese have a yen problem?
WARREN BUFFETT: Well, I’m going to let Charlie answer that. (Laughter)
CHARLIE MUNGER: I have no comment. (Laughter)
WARREN BUFFETT: That’s probably — that’s a very good question, but the trouble is anytime I say, “That’s a very good question,” it’s probably because I don’t know the answer. And I — you know, I don’t know the answer to that. Foreign exchange baffles me, frankly. I mean, you know, I think in terms of purchasing power parity, because that’s a natural way to approach it. But purchasing power parity does not work very well as a guide to how exchange values will behave in any shorter, medium, or maybe even long term, because the world adapts in different ways. Sometimes it adapts by high rates of inflation to a sinking currency. Usually it does. It hasn’t done that in respect to ours, but we’re only sinking relative to a couple of other important currencies. I don’t have a great answer for you on that, sorry.
29. We don’t look for small stock bargains anymore, but they exist
WARREN BUFFETT: Zone 6?
AUDIENCE MEMBER: Hi, I’m Howard Winston (PH) from Cincinnati, Ohio. First, I wanted to thank you and Charlie for sharing your time with us today.
WARREN BUFFETT: Thank you.
AUDIENCE MEMBER: My question is, you’ve repeatedly said that you see many wonderful stock ideas but can’t invest because they’re too small. Given that many in the audience today have a lower dollar investment threshold — (Laughter)
WARREN BUFFETT: “Do these stocks have names?” (Laughter)
AUDIENCE MEMBER: Yeah. Well said. (Laughter)
WARREN BUFFETT: Well, the answer to that is that we don’t look anymore. We assume that there are a reasonable number of opportunities as you work with smaller amounts of capital because it’s always been true. I mean it was — over the years, as I looked at things, clearly, you run into companies that are less followed as you get smaller. And there’s more chances for inefficiency when you’re dealing with something where you can buy $100,000 worth of it in a month, rather than 100 million. But that is not because I am carrying around in my head the names of 25 companies that we could put 100,000 in. I just don’t look at that universe anymore. I — Sometimes, people send me annual reports, or I get letters from managers and they say, you know, “I’ve got this wonderful thing.” I look — I usually know ahead of time, but I mean, I would first look at the size.
And if the size isn’t right — and it isn’t going to be virtually any time — I don’t look any further, because there’s just no time to be looking at all kinds of smaller opportunities. I do think, if you’re working with very small amounts of money, that there almost always are some significant inefficiency someplace — to find things. I’ve mentioned to some people, when I started out, I actually went through all of the Moody’s manuals and the Standard and Poor’s manuals page by page. And you know, it was probably 20,000 pages, but there were a lot of things that popped out, and none of them were in any brokerage report or anything of the sort. They were just plain overlooked, and you had to — You could find out about them, but nobody was going to tell you about them. And my guess is that continues to be true, but not on anything like the scale it was then. Charlie?
30. Early Buffett cigar butt: Delta Duck Club
CHARLIE MUNGER: Well, I can remember when you bought one membership in some duck club that had oil under it, when you were young.
WARREN BUFFETT: Yeah, that was a company called Atled —
CHARLIE MUNGER: When you get down to one duck club membership, well, you’re really scavenging for cigar butts. (Laughter) But —
WARREN BUFFETT: Not a bad cigar butt. There were 98 shares outstanding. It was the Delta Duck Club. And the Delta Duck Club was founded by a hundred guys who put in 50 bucks each, except two fellows didn’t pay, so there were only 98 shares outstanding. They bought a piece of land down in Louisiana, and one time somebody shot downward instead of upward, and oil and gas started spewing forth out of the ground. (Laughter) So, they renamed it Atled, which is Delta spelled backwards, which was — sort of illustrated the sophistication of this group. (Laughter) And a few years later, they were taking up — at $3 a barrel oil — they were taking about a million dollars a year in royalties out of the place. And the stock was selling at $29,000 a share, and it was earning $10,000 a share — No, it was earning about $7,000 a share after-tax, about 11,000 pretax, and it had about 20,000 a share in cash. And it was a long-lived field.
So, you know, I use that sometimes as an example of efficient markets, because somebody called me and offered me a share of it, and those things, you know — is that an efficient market or not? You know, 29,000 for 20,000 of cash, plus 11,000 of royalty income at 25 cent gas and $3 oil? I don’t think so. You can find things out there. I’ll give you hunting rights on all my duck clubs in the future. (Laughter)
31. Secret to avoiding lawsuits: “You can’t make a good deal with a bad person”
WARREN BUFFETT: Zone 1. Don’t think the mic —
AUDIENCE MEMBER: How do Berkshire and Berkshire companies protect themselves against lawsuit-happy lawyers? And is it possible for American businesses to survive the financial and time-consuming costs of dealing with lawyers?
WARREN BUFFETT: Well, that’s a good question and we’ve probably had less litigation than any company, you know, with a $25 billion market value in America. But it’s, you know — we were sued one time at Blue Chip Stamps — what was it for, Charlie, and how many billion by some guy?
CHARLIE MUNGER: Lots.
WARREN BUFFETT: Yeah. It was — you know, there — you cannot protect yourself against lawsuits, and there are certainly a lot of frivolous ones we’ve — like I say, we have — it’s not been a drain on our time or money — but particularly time — to date. And I think one thing you’d have to do is, if you ran into anything of that sort, you would not pay and you would make life as — try to make life comparably difficult for the other party as they made it for you. But that has not been our experience so far. Charlie?
CHARLIE MUNGER: Yeah. Well, I can tell an Omaha story on that one which demonstrates the Berkshire Hathaway technique for minimizing lawsuits. When I was a very young boy, I said to my father, who was a practicing lawyer here in Omaha, “Why do you do so much work for X,” who was an overreaching blowhard — (Laughter) — “and so little work for Grant McFayden,” who was such a wonderful man? And my father looked at me as though I was slightly slow in the head. And he said, “Charlie,” he said, “Grant McFayden treats his employees right, his customers right, everybody right. “When he gets involved with somebody who’s a little nuts, he gets up from his desk, and walks to where they are, and extricates himself as soon as he can.” And he says, “Charlie, a man like Grant McFayden doesn’t have enough law business to keep you in school.
(Laughter) “Ah, but X,” he said, “he’s a walking minefield of continuous legal troubles, and he’s a wonderful client for a lawyer.” Now, my father was trying to teach me, and I must say it worked beautifully, because I decided that I would adopt the Grant McFayden approach. And I would argue that Warren independently reached the same approach very early in life. Boy has that saved us a lot of trouble. That is a — it is a good system.
WARREN BUFFETT: You can’t — yeah, we basically have the attitude that you can’t make a good deal with a bad person. And you can — that means we just forget about it. I mean, we don’t try and protect ourselves by contracts, or getting into all kinds of, you know, due diligence, or — We just forget about it. We can do fine over time, dealing with people that we like, and admire, and trust. So we have never — and a lot of people do get the idea, because the bad actor will tend to try and tantalize you in one way or another, and —you won’t win. It just pays to avoid them. We started out with that attitude, and you know, maybe one or two experiences have convinced us, even more so, that that’s the way to play the game.
32. Why there’s just one Borsheims store
WARREN BUFFETT: Zone 2.
AUDIENCE MEMBER: I’m Clarence Cafferty from Long Pine, Nebraska. I’d like to know if we can get another .400 hitter by starting another Borsheims store someplace in this United States.
WARREN BUFFETT: Well, it’s an interesting question about both the Borsheims and the [Nebraska Furniture] Mart. I mean, they — and of course, they’re owned — as you probably know — historically, by the same family. I mean, it was Mrs. B.’s sister’s family that bought Borsheims, but, in effect, started it virtually from scratch. And the — both of those institutions offer this incredible selection, low prices brought about by huge volume, low operating costs, and all of that. Operating multiple locations, you would get some benefit, obviously, from the name and the reputation. But you would lose something, in terms of the amount of selection that could be offered. There’s $50 million-plus at retail of jewelry at Borsheims’ one location. Well, when someone wants to buy a ring, or a pearl necklace, or something of the sort, they can see more offerings at a place like that than they possibly could at somebody who is trying to maintain inventory at 20 or 50 locations.
Similarly, that gives us a volume out of a given location that results in operating costs that, again, can’t be matched if you have an enormous number of locations. So, I think those businesses tend to be more successful in that particular mode as one-location businesses. Now, a Helzberg’s will be bringing merchandise to people all over the country at malls. And they will do — through that mode of operation, they perform that exceptionally well. But Borsheims can’t be Helzberg’s, and Helzberg’s can’t be Borsheims. They’re both going for two different — in a sense, two different customers, to some degree. Sol Price, Charlie’s friend who started the Price Club, the first big wholesale club, said that part of his success was due to figuring out the customer he didn’t want. I think that’s right, isn’t it, Charlie?
CHARLIE MUNGER: Right.
WARREN BUFFETT: You have to figure out what you’re good at and who you really can offer something special to. Borsheims offers something very special to people, but in part, it comes about through being at one location. You can see more of almost any kind of jewelry you want there than you’re going to see virtually any place in the world. And that will bring people there, or it will bring male people there. And that gives you operating costs that are many — oh, 20 percentage points — off of what somebody else will be doing without that pulling power. And that, in turn, enables you to offer the lower prices, which keeps the circle going. I mean, it’s very hard to replicate something like that. And trying to do it in 10 spots probably wouldn’t work well. But it’s a question you ask yourself as you go along, obviously, when you — McDonald’s certainly did well by deciding to open a second store. I mean — (Laughter)
33. Factors boosting reported return on equity
WARREN BUFFETT: Zone 3?
AUDIENCE MEMBER: Warren, I’m Frank Martin from Elkhart, Indiana. You have written extensively on the subject of the immutability of return on equity for American industry, as a whole, being stuck in the 12 to 13 percent range. What forces do you see, since we’re above the mean, to cause that number to regress to the mean over time?
WARREN BUFFETT: Yeah, it’s true, it has been higher in the last few years. Although Fortune’s got some interesting figures in the current issue, on the 500, that shows decade by decade what the return has been on the Fortune 500 group — which is a shifting group, of course. And it’s tended to stick, although I would say it was more between 12 and 13 than 11 and 12, probably, in that one. The return, to some extent, in certain business has gotten a big kick because they finally put the health liabilities on the balance sheet, and therefore reduced equity. So if you — anything you do that tends to pull down equity, if it doesn’t change your ability to do the same sales volume — it’s leveraged American business, in effect, by putting the health liabilities on the balance sheet. It may be wrong. It may be that business can earn 15 percent or so. But I think competitive factors tend to, over time, keep pushing that number down, somewhat. And 12 or 13, when you think about it, is not bad at all.
I mean, it’s a level, with 7 percent interest rates, that allows stocks and equity to be worth much more when employed in equity than elsewhere in the world. But if I had to pick a figure for the next 10 years, I would pick some figure between 12 and 13, but that doesn’t mean I’d be right on it. Charlie?
CHARLIE MUNGER: Yeah. I think all of those published averages overstate what’s earned anyway. They’re the biggest companies, they’re the winners, they’re the ones whose stock sells at high multiples, so they can issue it to other people for high-earning assets. And many of the low-return people are constantly being dropped out of the figures. Now, you can say that was true in the past, too. But it would be remarkable to me if, on average, American business earned 13 percent on capital after taxes.
WARREN BUFFETT: Those figures, incidentally — it isn’t a huge item, but it’s not totally insignificant. They don’t show as a cost, for example, the cost of stock options. And the American shareholders pay that, so the American shareholder has not gotten the returns on equity shown by those numbers, although it’s not a huge factor. But I wouldn’t be surprised if it was, you know, two or three-tenths of a percent just for that one cost that’s omitted. If you let me omit my costs, I can show a very high return on equity. (Laughter)
34. Return on capital at Berkshire subsidiaries
WARREN BUFFETT: Zone 4?
AUDIENCE MEMBER: Jeff Peskin (PH) from New York. And I have a question for you. It’s really more of an observation, in that you’ve written about when you look at acquiring a business, you look a lot at how they allocate capital. And my question is, once you acquire a stake in a company, do you find that, just by the fact that you are helping doing the allocation of capital and doing the compensation, that that alone makes a company have a lot higher return? Or is there some benefit by the fact that you own, or some major shareholder, owns a big slug of the company that also allows a company to increase its return on capital?
WARREN BUFFETT: Well, that’s a good question. The answer is sort of, some of the time, some of the places. It’s the — There’s no question, in a business that earns a high rate on capital, that doesn’t have natural ways to employ that money within the business, that we actually may contribute significantly to the long-term results of that business by taking the capital out. Because if they don’t have a place to use it, nevertheless, they might well use it someplace. And we have the whole universe to spread that money over. So we can take the money that’s earned in some operating business and we can buy part of the Coca-Cola Company with it, and buy into another wonderful business, whereas very few managements probably would do that. So, there’s an advantage there. Now on the other hand, Helzberg’s, for example, will probably grow very substantially. They’ll probably use all the capital they generate. Maybe they’ll even use more. Well, they don’t really need us for that.
I mean, they would’ve done that under any circumstances. We may actually give them the ability to grow even a little faster because if a company — and this is not the — these are not the Helzberg’s figures — but if a company is earning 20 percent on equity but can grow 25 percent a year, you know, they’re going to feel equity strains at some point. And we, obviously, would love the idea of supplying extra capital that would earn 20 percent on equity. So, there can be some advantage to having us as a parent, in terms of sending capital to the business, as well as taking capital from the business. We also, I think, can be helpful in some situations, in that once we are there, a lot of the rituals — particularly in a public company — but a lot of the things that people waste time doing in business, they don’t have to do with us. I mean, there’s an awful lot of time spent in some businesses just preparing for committee meetings, and directors meetings, and all kinds of things like that, show-and-tell stuff. And none of that’s needed with us. We won’t go near them.
And so, we really free them up to spend a hundred percent of the time thinking about what is good for the business over time. If they have extra money, they don’t have to worry about what to do with it. If they need extra money for a good business, it’ll be supplied. So, there are some advantages that way. And I guess — Charlie, can you take it any further?
CHARLIE MUNGER: Yeah. I think our chief contribution to the businesses we acquire is what we don’t do. (BREAK IN RECORDING)
35. “Advanced math is of no use” in investing
AUDIENCE MEMBER: — it’s hard to continue to grow at the rate you’ve grown in the past because the company has gotten so big. And I’m wondering if you could elaborate a little bit on that. And my second question, which is totally unrelated, but I’ve also read where you’re very good with numbers, with working things in your head. And I’m totally a rookie when it comes to economics and accounting and things like that, but I’m very good with numbers and keeping things in my head. And I’m wondering if there’s some way a mathematician who knows very little about the business world, what I could read or what I could do to learn how better to invest and how you did that.
WARREN BUFFETT: Well, going to the first question, when you say it’s going to be hard — it’s going to be impossible. I mean, now that’s the answer. We cannot compound money at 23 percent from a $12 billion base. We don’t know how to do that, and it would be a mistake for anybody to think that we could come close to that. We still — we think we can do OK with money, but we did not start with a $12 billion base. And we’ve never seen anybody in the world compound numbers like that, at that rate. So, we’ll forget it — that part of it, but there are intelligent things we can be doing. The second part of the question, I don’t think any great amount of mathematical aptitude is — not aptitude, but mathematical knowledge is a — advanced math is of no use in the investment process.
And understanding a mathematical relationship, sort of an ability to quantify — a numeracy, as they call it, I think that’s generally helpful in investments because something that tells you when things make sense or don’t make sense, or sort of how an item in one area relates to something someplace else. But that doesn’t really require any great mathematical ability. It really requires sort of a mathematical awareness and a numeracy. And I think it is a help to be able to see that. I mean, I think Charlie and I probably, when we read about one business, we’re always thinking of it against a screen of dozens of businesses — it’s just sort of automatic, and — But that’s just like a scout in baseball thinking about one baseball player against an alternative. I mean, you only have a given number on the squad and thinking, you know, “One guy may be a little faster, one guy can hit a little better,” all of that sort of thing. And it’s always in your mind, you are prioritizing and selecting in some manner. My own feeling about the best way to apply that is just to read everything in sight.
You know, I mean, if you’re reading a few hundred annual reports a year and you’ve read Graham, and Fisher, and a few things, you’ll soon see whether it kind of falls into place or not. Charlie?
CHARLIE MUNGER: Yeah. I think the set of numbers — the one set of numbers in America that are the best quick guide to measuring one business against another are the Value Line numbers.
WARREN BUFFETT: I’d agree with that.
CHARLIE MUNGER: That stuff on the log scale paper going back 15 years, that is the best oneshot description of a lot of big businesses that exists in America. I can’t imagine anybody being in the investment business involving common stocks without that thing on the shelf.
WARREN BUFFETT: And, if you sort of have in your head how all of that looks in different industries and different businesses, then you’ve got a backdrop against which to measure. I mean, if you’d never watched a baseball game and never seen a statistic on it, you wouldn’t know whether a .300 hitter was a good hitter or not. You have to have some kind of a mosaic there that you’re thinking is implanted against, in effect. And the Value Line figures, you know, they cycle it every 13 weeks. And if you ripple through that, you’ll have a pretty good idea of what’s happened over time in American business.
CHARLIE MUNGER: By the way, I pay no attention to their timeliness ratings, or stock ratings.
WARREN BUFFETT: No, none of that means anything. It’s too bad they have to put that there, but that —it’s the statistical material, not the —
CHARLIE MUNGER: I would like to have that material going all the way back. They cut it off about, what, 15 years back?
WARREN BUFFETT: Yeah, but I save the old ones. (Laughter)
CHARLIE MUNGER: Yeah. But you know, I wish I had that in the office, but I don’t.
WARREN BUFFETT: Yeah, we — Charlie and I — maybe even, I do it more — we tend to go back. I mean, if I’m buying Coca-Cola, I’ll probably go back and read the Fortune articles from the 1930s on it or something. I like a lot of historical background on things, just to, sort of, get it in my head as to how the business has evolved over time, and what’s been permanent and what hasn’t been permanent, and all of that. I probably do that more for fun than for actually decision making. But I think it is — I think if you think about if — we’re trying to buy businesses we want to own forever, you know, and if you’re thinking that way you might as well see what it’s been like to own them forever, and look back a ways.
36. Management made the difference for Wells Fargo
WARREN BUFFETT: Zone 6.
AUDIENCE MEMBER: I’m Stewart Horejsi from Salina, Kansas. When you first bought part of Wells Fargo a few years back, I looked at it and I couldn’t tell it was any better than any of the other banks. I think, now, anybody that would look at it can tell it’s better than almost any bank. Now you’ve bought PNC Bank, and again, I can’t see how it’s distinguished from any of the other banks. (Laughter) What did you see in PNC Bank that made you select it over all the other banks that were available?
WARREN BUFFETT: (Laughs) Well, we’re not going to give any stock advice on that. So, I think that going back to Wells, it was very clear that, if you — I knew something about Carl Reichardt, and to a lesser extent at that time, Paul Hazen, from having met them and also from having read a lot of things they said. So, they were different — they were certainly different than the typical banker. And then the question was, is how much did that difference make, in terms of how they would run the place? And they ran into some very heavy seas, subsequently. And I think, probably, the difference — I probably think those human differences that were perceived earlier are what enabled them to come through as well as they did. But that’s about all I can say on banks.
CHARLIE MUNGER: You know, you might add to that slightly, because that Wells Fargo thing is a very interesting example. They had a huge concentration of real estate lending, a field in which people took the biggest — It was the biggest collapse in 40 or 50 years in that field, so that if they had been destined to suffer the same sort of average loss per real estate loan that an ordinary bank would’ve suffered, the place would’ve been broke. So, we were basically betting that their real estate lending was way better than average. And indeed, it was. And they also handled it on the way down, way better than average. So, you can argue that everybody else was looking at this horrible concentration of real estate loans and this sea of troubles in the real estate field, and in bankers to the real estate field. And they just assumed that Wells Fargo was going to go broke. And we figured, no, that since their loans were way higher quality, and their loan collection methods were way higher quality than others, that it would be all right. And so, it worked out.
WARREN BUFFETT: Yeah, we couldn’t have told that — if we hadn’t gone a little further, though, than just looking at numbers, we would not have been able to make that decision.
37. Nothing “magic” about a positive shareholders’ equity
WARREN BUFFETT: Zone 1.
AUDIENCE MEMBER: David Carr, Durham, North Carolina. Tambrands and U.S. Tobacco are two companies which are primarily single-focus product companies, that seem to possibly have some barriers to growth in unit sales and pricing, and have employed a strategy of returning cash to shareholders through stock repurchases. Both companies have, at times — when they thought the stock was at a discount to intrinsic value — used debt to accentuate the repurchases. Those companies recently have talked about problems with going into a negative shareholders — a negative stake to shareholders’ equity position — through the use of additional debt to repurchase more shares, at a time when both companies believe their stock’s very cheap. And they appear to have the type of long-term cash flow that would at least allow that. Would you comment on the, at least, accounting treatment and the stated shareholders’ equity, and if you think that should be a real concern for management in those areas?
WARREN BUFFETT: What was the first company, besides U.S. Tobacco?
AUDIENCE MEMBER: Tambrands.
WARREN BUFFETT: Do you want to?
CHARLIE MUNGER: Tambrands?
AUDIENCE MEMBER: Yes.
WARREN BUFFETT: Yeah, I don’t think there’s anything magic about whether shareholder equity is positive or negative. The — Coca-Cola has a shareholder equity of $5 billion. It has a market value of 75 billion or so. Now, they’re not going to do it and I’m not going to recommend it, but if they were to spend $10 billion buying in their stock they would have a negative shareholders’ equity of 5 billion. They would — their credit would be sound. I mean, if somebody else were to buy the company for 75 billion, they’d have 5 billion of tangible assets and 70 billion of intangible assets. And there is nothing magic about a company having a positive shareholders’ equity. And it isn’t done very often. And I can’t even think of a case where it’s been done, but it may have been. But I see no — I see nothing wrong with a company having a negative shareholders’ equity, although it may be prohibited by the state in which they’re incorporated, in terms of repurchasing shares at a time that would produce that.
You’d have to look at the state law on that. But anytime a company in an LBO, or something, is bought out at some very large number over book value, in effect, they’re creating a negative— if they borrow enough money on it — they’re creating a negative shareholders’ equity, in terms of the previous shareholders’ equity. And it’s just a fiction, as to the numbers between the two organizations. You should buy in your stock when you don’t have a use for the money. And that could be management specific. I mean, some managements might have a use for the money if their field of capital allocation were large enough, whereas another management that was more specialized in their own business might not. But once a company has attended to the things that are required or advantageous for the present business, we think reacquisition of stock is a very logical thing to consider, as long as you don’t think you’re paying more than the intrinsic value of the business in doing it. And obviously, the bigger the discount from intrinsic value, the more compelling that particular use of money is. Charlie?
CHARLIE MUNGER: I’ve got nothing to add. Generally speaking, maybe Coca-Cola can have a negative equity, but I don’t think it would be a good idea for General Motors. I think there is something to be said for a positive shareholders’ equity.
38. Looking for winners in competitive credit card business
WARREN BUFFETT: Zone 3.
AUDIENCE MEMBER: Edward Barr, Lexington, Kentucky. I had a two-fold question. Number one, you mentioned American Express earlier. And I was curious as to whether the fact that credit card usage is only 10 percent of all transactions, and that may continue to grow for some time going forward, was a factor in your decision? And the other part of the question pertains to the durability and permanence of the banking franchise with regard to alternative delivery channels that may appear over the next few years, including the possibility of the Microsoft/Intuit merger.
WARREN BUFFETT: Well, the specific number you mentioned about credit card usage and so on, that’s not a big factor with us. We think credit cards are both here to stay and likely to grow, to some extent. Although at some point you start reaching limits, at least in terms of outstandings [outstanding credit card debt] that people are — that make any sense. But the credit card field is a very big field. The question is, is who’s got the edge in it? Because everybody is going to want to be in it, and they already are. And there are a lot of different ways you can play the game if you’re in the credit card business. And you better have some way of playing one part of the game, preferably a large part. But you better have some way of playing one part of the game better than others or natural capitalistic forces are going to grind you down. I mean, it’s a business that people are willing to change their minds about what they do in. I mean, if you offer somebody a credit card that gives them some advantages that don’t exist on their earlier card, people are quite willing to shift cards.
So, you need some kind of an edge in some particular segment of the market. So, the growth aspects overall of the market were not a big — are not a big factor with us. It’s really a question of figuring out who’s going to win what game, and who’s going to lose what game. And what was the second question again on that?
39. Expect big changes in banking over next 20 years
AUDIENCE MEMBER: The second question pertained to the permanence and durability of the banking franchise.
WARREN BUFFETT: Oh yeah, sure.
AUDIENCE MEMBER: And whether alternative delivery channels over the next few years may erode the durability of that, including the Microsoft/Intuit merger.
WARREN BUFFETT: Well, that’s a good question. You’re certainly seeing the value of bank branches diminish significantly. It used to be a point of enormous pride with managements, in how many branches they had. And it was, you know, often political influence and everything else was called into obtaining branch permits. The world will change in banking, probably in some very major ways, over a 20 or 30-year period. Exactly what players will benefit and which ones will be hurt, you know, is a very tough question. But I would expect — I would not — I don’t think I’d expect really significant change in banking over the next five years, but I’d certainly expect it over the next 20 years. And there are a lot of people that have their eye on that market, including Microsoft, as you mention. It may be to their advantage to hook up with the present players. I mean, I know it’s certainly something that gets explored. But they may figure out a way to go around the present players, too. And that’s one investment consideration. Charlie?
CHARLIE MUNGER: Yeah. The interesting player that went around the rest was Merrill Lynch. Merrill Lynch went heavily into banking with its cash management accounts. And I don’t think it’s the only innovation that’ll come along.
WARREN BUFFETT: What’s the name of that book?
CHARLIE MUNGER: You know, I’d forgotten, that’s a marvelous book.
WARREN BUFFETT: Yes, there’s a great book.
CHARLIE MUNGER: Maybe Molly remembers. What was that book you gave me? It was the history of the credit card.
WARREN BUFFETT: Was it Joe Nocera’s? Yeah, Joe Nocera was the author. I don’t remember the title [“A Piece of the Action: How the Middle Class Joined the Money Class”]. But it came out about six months to a year ago. It’s a terrific history of the credit card business. And if you read that you will get some idea of the amount of change that can occur in something like, you know, the movement of money. And my guess is that if there’s another edition of it in 20 years, there’ll be plenty more to write about. So —
CHARLIE MUNGER: By the way, that is a fabulous book. Most of the people who are here will not be able to put it down. I mean, for a book about an economic development, it captures the human background in a very interesting way.
40. No comment on SunTrust and PNC moats
WARREN BUFFETT: Is it zone 4? That seems far away for zone 3. Yeah.
AUDIENCE MEMBER: I was — Adam Engel (PH) from Boulder, Colorado. I was wondering if you could comment on the moat you see around the castles of SunTrust and PNC.
WARREN BUFFETT: Well, I don’t think I should comment on specific holdings like that. But — so I would say you would look at those in a general way very much as you’d look at banking operations first. And then you’d try and figure out what are the specific strengths or weaknesses of both organizations. But there, again, I don’t want to spoil the fun for you. Charlie?
CHARLIE MUNGER: Nothing to add.
41. “Wiseass” comment on Salomon that Munger wishes hadn’t occurred
WARREN BUFFETT: Zone 5.
AUDIENCE MEMBER: My name is Bob McClure (PH). I’m from the States but I live in Singapore. About a week ago, in the Asian Wall Street Journal, a remark was attributed to Mr. Munger, specifically that owning Salomon Brothers was like owning a casino with a restaurant in the front. (Laughter) The casino, eluding to the proprietary trading, and the restaurant, to the so-called client-driven business. If that attribution is correct or accurate can you — Charlie Munger: Well, I don’t think —
AUDIENCE MEMBER: — elaborate on why you view the business in that way?
CHARLIE MUNGER: I don’t think it’s entirely correct, but I have a pithy way of speaking on occasion. (Laughter) And I frequently speak in a way that works with an in-group, but wouldn’t necessarily work everywhere else. And every once in a while, when you take one of those wiseass comments — (laughter) — out of context — why, I very much wish that it hadn’t occurred. (Laughter) This was such a case. (Laughter and applause)
WARREN BUFFETT: It won’t stop him in the future, though. (Laughter) Or me.
42. National debt isn’t scary now, when compared to GDP
WARREN BUFFETT: Zone 6? Or are we in 5? Which one are we in? Kelly? Or —
AUDIENCE MEMBER: Mr. Buffett, I’m Randall Bellows (PH) from Chicago. And the two questions I have, since you’re answering questions so far afield, are, if you were to look at the balance sheet of the United States of America, is the national debt as frightening as — that it appears to be? And secondly, in terms of redeployment of capital, if Coca-Cola is such a wonderful investment, as it returned so much, why not redeploy some capital in purchasing additional shares of CocaCola? And finally, thank you for letting Jane do that portrait of you. And if it’s good, we’ll do Mr. Munger next. Thank you.
WARREN BUFFETT: First question about the U.S. balance sheet, it — the net national debt is about — it would be about 60-odd percent of GDP.
CHARLIE MUNGER: Without counting unfunded pensions.
WARREN BUFFETT: Yeah, but that’s — but also with a claim on the income, in effect, of future citizens, which was an asset, too, that you could set up the — But that figure, I think, at the end of World War II, may have been — I know it was around at least 125 percent, may have been 150 percent or so, of GDP. So we have sustained — Now, the interest rate on that debt was much lower. A lot of it was at 2.9 percent because that’s what savings bonds paid. But that level of debt, which I don’t advocate in relation to GDP, turned out to be quite sustainable. And as a matter of fact, it drifted down year after year for a long time until the early ’80s, when it started rising again. And now it’s actually fallen a little bit in the last few years, the ratio of debt to GDP. There are a lot of measurements of how much debt is too much and all of that.
But, probably, I think that if I had to look at one single statistic, I would look at that ratio, just like I would look at a ratio of debt to income for an individual. Then you’d get into the question of the stability of the income and to whom it is owed. But I do not think that the level of debt, relative to the economy, is of anything that’s of a frightening nature. I like the idea of it trending downward a little bit over time rather than trending upward. And if it keeps trending upward, it can get awkward. Although, it’s — I think, in Italy, I think it’s close to 150 percent now. And you start getting to 150 percent, and talk 8 percent interest rates, and you’re talking 12 percent of GDP essentially going to interest. If you were to put a balance sheet of the country together, it’s kind of interesting, because you would have this 4 billion of net debt on the liability side, and you’d also have a lot of pension obligations, as Charlie mentions, on the liability side. But you’ve got a lot of assets, too.
You’ve got a 35 percent interest — profits interest — in all the American corporations. I mean, the government, if it has a 35 percent tax rate, really owns 35 percent of the stock of American business. They own a significant part of Berkshire Hathaway. We write them a check every year. We don’t write you a check every year, but we write them a check. We plow your earnings back to create more value for their stock, in other words, the taxes they get.
CHARLIE MUNGER: Are you trying to cheer these people up? (Laughter)
WARREN BUFFETT: But what would you pay to have the right, today, to receive all the future corporate tax payments made by all the companies in the United States, the discounted value? You’d pay a very big number. What would you pay to have a right to take a percentage of the income of every individual that makes more than X in the United States, and also the right to change your percentage as you went along? That’s a very big number, too. (Laughter) So, you’ve got a very big asset there that — and you’ve got some very big liabilities, too. But the country is very solvent. And I would not like to see debt rise at any rapid rate. I wouldn’t like to see it rise at all, but I wouldn’t like to see it, particularly, rise at a rapid rate, because that sets a lot of things in motion, if it’s rising as a percentage of GDP. But if you tell me that 20 years from now the national debt will be $10 trillion, but that it’ll be the same percentage of GDP, does that alarm me? Not in the least.
I mean, I expect it to increase and I think there’s some arguments why — even, why it may be advisable to have it increase. But I don’t think it’s a good idea to have it take up more and more of your income, because that sets a lot of other things in motion. So, I welcome what’s happened in the last couple of years, which is to see it decrease modestly from the trend that existed the previous 10 or 12 years. Charlie?
CHARLIE MUNGER: Well, generally I think that you’re right, that it isn’t all bad. And to the extent that it is bad, a great nation with a capitalistic economy will stand quite a bit of abuse on the political side. It’s a damn good thing, too, because — I don’t think we should be terribly discouraged. If there’s anything that’s really going to do the country in it’ll be what I call a “Serpico effect,” where you start rewarding what you don’t want more of, and it then just grows, and grows, and grows. But I don’t think that’s necessarily a bad fiscal result, it’s just a bad result.
WARREN BUFFETT: Berkshire owes 7 or 800 million — or whatever it is now, in debt, and we owe another 3 billion-some of float. You know, those numbers would’ve sounded very big to me 25 years ago, but — and yet we’re one of the most conservatively financed operations you’ll find. Ten years from now we may owe more money, and it may be a smaller percentage still. I mean, you can’t talk about debt levels without relating it to the ability to pay debt. And this country is probably in better financial shape now than it was in 1947.
43. Coca-Cola as “measuring stock” to evaluate alternatives
WARREN BUFFETT: Zone 1. What, there was a second — was there a second question that I didn’t answer on that? Or —
AUDIENCE MEMBER: (Inaudible)
WARREN BUFFETT: Oh, in terms of repurchasing shares. Right.
CHARLIE MUNGER: No, you said, “Why don’t we buy more?”
WARREN BUFFETT: Well, we think about it.
CHARLIE MUNGER: We did, not long ago —
WARREN BUFFETT: Yeah, we did. We bought more last year, and it’s not a bad measuring stick against buying other things. But there’s — I would not rule out Berkshire buying more. I don’t have any plans to do it right now, but I wouldn’t rule that out at all because it’s — if I’m going to look at another business I will say, you know, “Why would I rather have this than more Coca-Cola?”
CHARLIE MUNGER: Well, there he is saying something that is very useful to practically any investor, when he said, “Use this as a measuring stick,” in terms of buying other things. For an ordinary individual the best thing you have easily available is your measuring stick. If it isn’t — if the new thing isn’t better than what you already know is available, it hasn’t met your threshold, then that screens out, you know, 99 percent of what you see, and it’s an enormous thought conserver. And it is not taught in the business schools, by and large.
WARREN BUFFETT: No, and that’s why we think it’s slightly nuts when big institutions decide, because everybody else is doing it, to put 4 percent of their money in international equities or 3 percent in emerging growth countries — some damn thing like that. I mean, the only reason to put the money in there is if they’ve measured against what they’re already doing. And if they measure it against what they’re already doing and they think it’s a screamingly good idea to leave 97 percent in the other place and put 3 percent in, you know, I mean, it just doesn’t make any sense whatsoever. But it’s what committees are talked to about and what keeps investment managers going to conferences and everything, so —
CHARLIE MUNGER: They’re deliberately using a technique that takes away the best mental tool they have. And you can say this is nuts, and you’re right. And I think {German philosopher Friedrich] Nietzsche said it pretty well when he said he laughed at the man who thought he could walk better because he had a lame leg. I mean, they literally are blinding themselves and then they’re teaching our children how to do this in our own business schools. Very interesting, don’t you think? And all Warren says is, deciding whether to do something, just compare the best opportunity you have. If that one is better and you’re not taking it, why would you do this just because somebody tells you you need 2 percent in international equities?
44. Buy Berkshire or let your money manager loose?
WARREN BUFFETT: Zone 1?
AUDIENCE MEMBER: Hi, my name is Mark Wheeler (PH), I’m from Portland, Oregon. And I have a few eggs in your basket. My grandmother always said, “Don’t put all your eggs in one basket.” I have a question, and I think you answered this a couple of years ago in one of your reports about Little Abner’s investment approach. Suppose I had $100,000 and I decide to buy four or five more of your shares, and that was sort of a buy and hold thing for four or five years. And also I have a money manager — I’ve already got one — and he does pretty well – 10, 15 percent. But he churns the assets all the time. You know, every time I turn around all this mailbox full of paperwork. And I guess my question is, how can I arrive at which is a better deal for me? In other words, to buy Berkshire, which I like, and obviously I’m here, so I’m interested in it, or hang onto my money manager, who just seems to be churning the hell out of the account?
WARREN BUFFETT: Well, it’s better than having a broker churning the hell out of the account. (Laughs) He had a little less incentive if he’s getting a management fee. But I can’t answer your question as to which decision you should make in that case. But I would say that if — you’re right, in the sense that, if you buy Berkshire, you should only think about buying it for a very long period of time. We have no idea what Berkshire is going to do, either intrinsically or in the market, in the next year. And you know, we care about the intrinsic part of it. We don’t care about the market aspect. We do care about building intrinsic value. And you know, in the end, we don’t think — well, when we own Berkshire, we don’t think of all our eggs being in one basket, I mean, because we have got a lot of good businesses. But if you’re talking about some, you know, lightning from someplace, the huge liability suit or something like that hitting one corporate entity, we’re one corporate entity.
But if you think about it in terms of the business risk implicit in an entity, we have a lot of different good businesses. In fact, we probably have as decent a collection of good businesses as any company I can think of. But your money manager will also undoubtedly have the advantage of working with, probably, with smaller sums, too, and that gives him a bigger universe of opportunity. We’re not set up, taxwise, perfectly, as compared to an individual working with their own capital. We’re set up, taxwise, fine for somebody that’s going to sort of own it forever. But we’re not set up, taxwise, as well for somebody that’s going to own it a year or something of the sort. Charlie? Anything?
CHARLIE MUNGER: Nothing to add.
45. “We like people who are candid”
WARREN BUFFETT: Zone what? Oh, back there. I don’t think it’s on. OK.
AUDIENCE MEMBER: I’m Jeff Johnson (PH). I’m grateful to be here from Tulsa, Oklahoma. I have two questions. First, I was hoping you could explain, or offer an opinion as to why investors in property-casualty insurance companies are willing to accept traditionally belowaverage type of returns. Second question relates to an answer you gave me yesterday, that being that intuition or gut feeling has nothing to do in your — in making investment decisions. I was wondering if there is anything subjective in yours and Mr. Munger’s assessment of whether or not you like someone, and how it is that you determine whether or not you like the lord of the castle?
WARREN BUFFETT: Well. I don’t know. Charlie, do you want to answer that second part?
CHARLIE MUNGER: Well, we spoke about agency costs. And there are two different kinds of agency costs. One, the guy favors himself at the expense of the shareholders, and the other is he’s — he does foolish things. Or he’s not trying to favor himself, he just is foolish by nature. Either way, it’s very costly to you, as the shareholder. So, you have to judge those two aspects of human character, and they’re terribly important. And on the other hand, there are some businesses so good that they’ll easily stand a lot of folly in the managerial suite. And I — much as we like perfect people, I don’t think we’ve always invested with them.
WARREN BUFFETT: No. But generally, we like people who are candid. We can usually tell when somebody’s dancing around something, or where their — when the reports are essentially a little dishonest, or biased, or something. And it’s just a lot easier to operate with people that are candid. And we like people who are smart, you know. I don’t mean geniuses. But that — and we like people who are focused on the business. It’s not real complicated, but we generally — you know, there may be a whole bunch of people in the middle that we don’t really have any feeling on one way or the other, and then we see some that we know we don’t want to be associated with, and some that we know we very much enjoy being associated with.
CHARLIE MUNGER: Averaged out, we’ve been very fortunate.
WARREN BUFFETT: Very lucky.
46. Difficult to get capital out of a sub-par business
CHARLIE MUNGER: And your other question, you said, why is it that these investors accept below-average results? Well, in the nature of things, approximately half the investors are going to get below-average results. They didn’t exactly accept it in advance. It’s just the way it turned out.
WARREN BUFFETT: And the money tends to be fairly captive, once it’s in a company. I mean, it takes a lot — if you have a business that gets subnormal returns over time, there’s a big threshold in terms of either a takeover, or a proxy fight, or something like that to unleash the capital. So, money that’s tied up in an unprofitable business, or a sub-profitable business, is likely to stay tied up for a good period of time. Eventually something will probably correct it. But capitalism does not operate so efficiently as to move capital around promptly when it’s misallocated. We are in a better position to do that when Berkshire owns a company. And obviously, we’re in no position to do it — because it involves something we don’t want to do — if we own it through some other enterprise. We just sell to somebody else who takes another — who takes our chair — at the table, in effect.
47. Focus on future, not current, earnings
WARREN BUFFETT: Zone 3?
AUDIENCE MEMBER: Hi, Philip King (PH) from San Francisco. I’ve got another question about valuation — more specifically, the relation of P/Es to interest rates. I understand that you don’t want to lay down a rigid formula for valuation, but I also know that you don’t want people to think that a multiple of 20 times earnings is cheap, or a multiple of five times earnings is expensive. So, Benjamin Graham, he devised a central value theory that valued the average stock at an earnings yield that’s about a third above bond yields. In other words, that would work out to maybe 11 times earnings, currently. And I know that you’ve compared the average business to a 13 percent bond that’s worth roughly book at 13 percent interest rates, and worth perhaps roughly twice book at 6 percent interest rates. So, given current interest rates of 7 to 8 percent, as they are now, that would tend to imply that stocks are worth perhaps 12 to 13 times earnings. And yet, the acquisitions that I’ve seen in the private market have gone out at more like 17 to 20 times earnings.
And I’d like to know, what do you think is the rough range of multiples that make sense?
WARREN BUFFETT: Yeah. Well, it isn’t a multiple of today’s earnings that is primarily determinate of things. We bought our Coca-Cola, for example, in 1988 and ’89, on this stock, at a price of $11 a share. Which — as low as 9, as high as 13, but it averaged about $11. And it’ll earn, we’ll say, most estimates are between 230 and 240 this year. So, that’s under five times this year’s earnings, but it was a pretty good size multiple back when we bought it. It’s the future that counts. It’s like what I wrote there, what Wayne Gretzky says, to go where the puck is going to be, not where it is. So, the current multiple interacts with the reinvestment of capital and the rate at which that capital’s invested, to determine the attractiveness of something now. And we are affected in that valuation process to a considerable degree by interest rates, but not by whether they’re 7.3, or 7.0, or 7.5.
But I mean, we’ll be thinking much differently if they’re — long-term rates are 11 percent or 5 percent. And — but we don’t have any magic multiples in mind. We’re thinking — we want to be in the business that 10 years from now is earning a whole lot more money than it is now, and that we will still feel good about the prospects of the business at that time. That’s the kind of business we’re trying to buy all of, and that’s the kind of business that we try and buy part of. And then sometimes we buy others, too. (Laughs) Charlie?
CHARLIE MUNGER: We don’t do any of that rigid formulaic stuff.
WARREN BUFFETT: There’s a general framework, that you can call a formula, in our mind. But we also don’t kid ourselves that we know so much about the specifics that we would actually make a calculation, in terms of the equation. When we bought Coke in ’88 and ’89 we had this idea about what we thought the business would do over time, but we never reduced it to making a calculation. Maybe we should, but I mean, it just — we don’t think there’s that kind of precision to it. We think it’s the right way to think in a general way. And we think, if you try to — if you think that you can do it to pinpoint it, you’re kidding yourself. And therefore, we think that when we make a decision, there ought to be such a margin of safety that it ought to be so attractive that you don’t have to carry it out to three decimal places. We’ll take a couple more and then we’ll have to leave. We’ve got a directors — we have one directors meeting a year and we don’t want to disappoint them.
48. USAir was mistake, despite five years of dividends
WARREN BUFFETT: Zone 4? (Laughs)
AUDIENCE MEMBER: Yes, I’m Roy Christian from Aptos, California. I wanted to ask one question about USAir, which has not been questioned much at this meeting. When you were on television talking about the losses there, it was funny how so many of my friends or, maybe, acquaintances came forward to tell me this piece of startling news. And, you know, I tried to stand up for you, a little bit. And at least —
WARREN BUFFETT: It was a mistake. (Laughter) You should’ve just taken a dive. (Laughter)
AUDIENCE MEMBER: Well, at least I wanted to point out to them —
WARREN BUFFETT: No —
AUDIENCE MEMBER: — that you did have dividends over a period of —
WARREN BUFFETT: Right. AUDIENCE MEMBER — about five or six years, and that that money was reinvested, maybe at a better return than USAir. So, that it wasn’t quite the disaster that was pictured on television when you spoke about it, or the impression that all my friends — or I should call them acquaintances — pointed out to me. Just a comment, I guess, is what I’m asking for.
WARREN BUFFETT: Yes. Well, you’re right, it could’ve been worse. But it was a mistake. But we received five years, I guess — yeah, it’d be five years of dividends at a good rate while we got it. But it’s like somebody says, “It isn’t the return on principal that you care about, it’s the return of principal.” And we — But we’re better off — we’re a lot better off, obviously, than if we’d bought the common [stock], and we’re even better off than if we bought some other stocks. But it was still a big mistake on my part. But keep standing up for me. I need all the help I can get on this one. (Laughter)
49. Charlie’s and Warren’s book recommendations
WARREN BUFFETT: Zone 5?
AUDIENCE MEMBER: Hi, I’m Chris Stabru (PH) from New York. Charlie, in addition to the book that you mentioned on credit cards, are there any other books you have been reading that you’d recommend to us? And Warren, are there any books that you have been reading that you’d recommend? I know you’re a fan of Bertrand Russell. Any favorite one or two of his books?
WARREN BUFFETT: Been a long time since I’ve read those, though. I mean, I read a lot of Russell, but I did that a — he hasn’t written much in the last 10 or 15 years. (Laughs) Charlie?
CHARLIE MUNGER: There’s a textbook which is called, I think, “Judgment in Managerial Decision Making.” And it’s used in some of the business schools, and it’s actually quite a good book. It’s not spritely — it’s not written in a spritely way that makes it fun to read, but there’s a lot of wisdom in it. It’s something like Braberman [Max Bazerman]. But it’s “Judgment in Managerial Decision Making.”
WARREN BUFFETT: Since taking up computer bridge, which is 10 hours a week, it’s really screwed up my reading. (Laughter) It’s a lot of fun, though.
50. Despite “awkward to disadvantageous” per share price, Berkshire won’t split stock
WARREN BUFFETT: Zone 6? We’ll take a couple more and then we’ll —
AUDIENCE MEMBER: Yes. I am Dick Leighton from Rockford, Illinois. This is the first annual meeting that I’ve attended and it’s been very beneficial to me. I’ve been extremely impressed with the number of people here, but even more so with the number of young people who have come. And I would like very much to be able to bring my grandchildren as shareholders, but I find it difficult to get shares into their hands with the current per unit value.
WARREN BUFFETT: That’s the nicest introduction to the stock split question we’ve had. (Laughter) It really is, too.
AUDIENCE MEMBER: I thought you would appreciate that. (Laughter) Obviously you understand the question. I understand the position you’ve taken over the years and the fact that it adds no value to make the split. In this case, however, it could be a tax savings to many of us who would like to get stock shares into the hands of other family members. Should I just go to work on my congressman to change the tax code, or would you consider a change? (Laughter)
WARREN BUFFETT: Well, that’s a very valid question. And there’s certainly a couple of areas, one of which you’ve just mentioned. And I had someone else mention to me that they had their Berkshire in an IRA account. And now they were getting into the mandatory payment arrangement, and it didn’t work well, in terms of using the Berkshire — although I think they could sell it and then pay out a percentage of it. There are certain aspects, primarily of gifting, where it is anywhere from awkward to disadvantageous to have the price per share on a stock that exists with Berkshire. And you know, we’re aware of it, we’ve thought about it, and we’ve got our own personal situations even, sometimes, that are involved in that. I’ve got one in the family, which we’ve worked — figured out ways around. The disadvantage, of course, is that you saw a little even earlier this year of what a book [“The Warren Buffett Way”] can do. We want to attract shareholders who are as investment-oriented as we can possibly obtain, with as long-term horizons.
And to some extent, the publicity about me is negative, in that respect. Because I know that if we had something that it was a lot easier for anybody with $500 to buy, that we would get an awful lot of people buying it who didn’t have the faintest idea what they were doing, but heard the name bandied around in some way. And secondly, to the extent that ever created a market that was even — that was stronger — you then would have people buying it simply because it was going up. We got a little bit of that going on this year. There are a lot of people that are attracted to stocks that are going upward. It doesn’t attract us, but it attracts the rest of the world to some degree. So we are almost certain that we would get — we don’t know the degree to which it would happen — we are almost certain we would get a shareholder base that would not have the level of sophistication and the synchronization of objectives with us that we have now. That is almost a cinch. And what we really don’t need in Berkshire stock is more demand.
I mean, that is not — we don’t care to have it sell higher, except as intrinsic value grows. Ideally, we would have the stock price exactly parallel to change in intrinsic value over time because then everybody would be treated fairly among our shareholders. They would all gain or lose, as the company gained or lost, over their ownership period. And anything that artificially stimulated the price in one period simply means that some other period’s shareholders are going to be disappointed. I mean, we don’t want the stock to sell at twice intrinsic value, or 50 percent above intrinsic value. We want the intrinsic value to grow a lot. And I don’t think there’s any question, but that we would get a worse result in that aspect if we introduce splits in, because then people would think about other possibilities that might give the stock a temporary boost. We — they had a tabulation in Businessweek a couple of months ago on turnover on the exchange. We were at 3 percent, and I don’t think anybody was, that I saw on the list, was under double digits and bigger numbers.
But those are people who are simply, you know, their shareholders leaving frequently, and new shareholders coming in with shorter-term anticipations. We have wanted this to be as much like a private partnership as we can have, with everybody having the ability to buy it. We don’t think the minimum investment is too high to — in this investment world. I mean, there are all kinds of investment opportunities that are limited to 25,000 or 50,000, and that sort of thing. But the problem of making change, you know, in terms of gifts or — you know, that I wish I had a better answer for, because I think that is a —
CHARLIE MUNGER: My grandchildren pay me the difference between $20,000 and the current price. And I think that’s a very reasonable way for them to behave, particularly when they are, sometimes, they’re only six weeks old. (Laughter)
WARREN BUFFETT: You need a spouse’s consent to make it — to work with 20, obviously. But most of the things can be solved, but I’ll admit it isn’t as easy to solve as if we just had a stock denominated in lower dollars per share. I do think that once you get a shareholder base that is — has got — that has different objectives or expectations or anything, you can’t get rid of it. I mean, you can keep a shareholder base like Berkshire, but you can’t reconstruct it if you destroy it in some way. And it’s important to us who we’re in with. I mean, it enables us to — I think it helps us in our operation. I think it even may — in some cases, it may even help us in acquisitions, in terms of who we attract. It may — for all I know, it may hurt us someplace, too, that I don’t know about. But I don’t think so, because I think we can design — particularly with a preferred stock — we can design something to satisfy somebody who might have in mind a different denomination of security.
CHARLIE MUNGER: Look around you. Are we really likely to do a lot better? This is a good bunch.
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