the Constitutional Convention in Philadelphia if the delegates had been running out to give TV interviews after every debate.
Somebody asked about Adam Smith’s The Wealth of Nations, the one non-Ben Graham book Buffett has cited as deeply influential to him.
Munger: “Adam Smith is one of those guys that has really worn well . . . The productive power of the capitalist system is simply unbelievable.”
Somebody suggested that former public companies taken over by Berkshire Hathaway have a harder time than former private companies thinking long term rather than year to year. “I don’t know where he gets the idea,” Munger said. “It’s not apparent to us.”
“I don’t really agree with the premise,” Buffett said.
This began a series of foreigners asking about their countries, which became the end of the line for me. It’s a little like local reporters when they get an audience with the President and ask him what he’s going to do for Buffalo.
Yes, they like Germany, as they demonstrated by buying a small motorcycle equipment retailer in February. “I would really be surprised if we don’t make another deal in Germany in the next five years,” Buffett said.
Somebody wrote in that he and his wife are in their 70s, have clean driving records, but didn’t get a quote from Geico that improved upon the rates they pay now. Buffett said about 40 percent of customers get a better rate with Geico, which means they have a lot of market to conquer considering they represent about 11 percent share today. “It’s definitely worth 15 minutes to call Geico.”
Munger said when you get old and “you find you’re not deteriorating as fast as your contemporaries, you may be paying an unfair price for your auto insurance, but it’s a good tradeoff.”
Someone asked about reinsurance. Buffett said the business is not as good as it used to be because of all the asset managers setting up shop in Bermuda pretending they’re interested in reinsurance. “It’s a beard for asset management . . . it’s a business whose prospects have turned for the worse.”
Munger: “We’re playing the game for the long haul, and other people are just pretending to.”
A seventh-grader asked how to make a lot of friends and get people to work with you.
Munger: “I was obnoxious when I was your age . . . The only way I could get people to like me was to get very rich and very generous.”
Buffett advised him to emulate qualities he likes in others — be friendly, don’t take credit for stuff you don’t do, etc. If you don’t like traits in others, get rid of them in yourself.
Buffett repeated that Munger has said when looking for a marriage partner, don’t look for intelligence, humor or character. Look for low expectations.
There was a question about labor unrest at NetJets, which produced a picket line of pilots outside the Century Link Center all day. Buffett discussed it only generally, saying NetJets is a good business and he likes all its pilots that he knows. Differences over contract terms are going to happen, he said. “We have no anti-union agenda whatsoever . . . It’s perfectly understandable that employees and employers will have differences from time to time . . . At the moment, we’ve got a difference of opinion about a contract.”
Munger: “I’m not at all sure the union is fairly representing the pilots.”
Editorial aside: There were a lot of pilots outside carrying picket signs all day.
There was a question about Duracell and whether tax considerations were the key factor in buying a company whose core business — alkaline batteries — is in decline. Buffett said it’s declining, but it will be a good business for years to come. He didn’t even mention Ben Graham.
There was a question about philanthropy which Buffett answered in the usual way. Stock certificates in a safe deposit box do him no good, could do others in need a lot of good. “There’s no Forbes 400 in the graveyard.”
Munger praised a recent revision in the estate tax rules. “I don’t think we should assume that our politicians are always going to be totally crazy.”
There was a question about whether Berkshire Hathaway should do with appreciated securities what Yahoo did with its Alibaba stake. The answer was no.
There was a question about household formation, which Buffett predicted would rebound with the economy but hasn’t yet. Buffett suggested it still will.
Munger: “I have some grandchildren that I wish would marry somebody suitable promptly . . . They should quit looking for pie in the sky or whatever the hell they’re doing.”
There was a question about how to get corporations to do more for people in need who aren’t shareholders. Buffett said he’s more comfortable giving away his own money than that of shareholders. “I don’t feel it’s my money. I really look at this as a partnership.”
Munger: “My taste for giving away somebody else’s money is also quite restrained.”
There was a question about the euro as a currency, good idea or not?
Munger: “I don’t have the faintest idea . . . It’s a flawed system in some ways to put countries that are so different together.”
And the money quote: “You can’t form a business partnership with your shiftless, drunken brother-in-law.”
Buffett: “Everything here is off the record.”
They agreed the U.S. and Canada could have shared a currency, but all the countries of the Western Hemisphere could not. Buffett mentioned Venezuela and Munger mentioned Argentina almost simultaneously.
Someone asked if there are synergies to be had between Geico and Van Tuyl, maybe selling insurance with the cars. “I don’t think so,” Buffett said. Historically, selling insurance through dealerships hasn’t worked well, and adding all those people would hurt Geico’s low-cost model.
Munger: “I agree it’s a very dumb idea and we’re not going to do it.”
Somebody asked if Buffett sees value in silver. Buffett said they owned 100 million ounces at one time. “I haven’t paid much attention to it for a long, long time.”
Munger: “It’s a very good thing, too.”
Buffett: “We came out better than the Hunt brothers, but we don’t think about it much anymore.”
Somebody prefaced a question by saying, “Warren and Charlie won’t be around forever.”
Buffett interjected: “I reject such defeatism!”
The question was about breaking up Berkshire. The answer was no. Luckily, Buffett said, Berkshire Hathaway will be too big for activists to do much about. “We should be a place where people can dump their activists.”
There was a question about American Express and how it defends its moat with all the technological innovation in payment systems. Buffett said there’s still a lot of loyalty in Amex customers.
Munger: “I liked it a little better when they had a little less competition, but that’s life.”
There was a question about using more leverage. Munger: “We haven’t felt capital-constrained for a long time. It’s a problem we’d love to have.”
There was a question about the lack of economies of scale in auto dealerships in China. Buffett said he didn’t know the situation in China, but he doesn’t expect big benefits of scale in auto dealerships in the U.S., either.
Another Chinese questioner wanted help with his career: “What’s your secret?”
I chose that moment to book and beat the crowd to the parking lot. Had to dodge