Warren Buffet and Charlie Munger answer a question on Disney, the motion picture business and recommend books at the 1996 Berkshire Hathaway annual meeting.
The Selfish Gene by Richard Dawkins
The Blind Watchmaker by Richard Dawkins
Common Stocks and Uncommon Profits by Philip A. Fisher
Paths to Wealth Through Common Stocks by Philip A. Fisher
The Intelligent Investor by Benjamin Graham
The Money Masters by John Train
Buffet And Munger On Disney And Their Book Recommendations
Speaker: John Lichter from Boulder Colorado. Are there some worthwhile books that you could recommend to us. And secondly with respect to Eisner and Disney how would you define Michael Eisner's circle of competence and are you concerned that he might step outside it.
Buffett: Well I would say that he has proven himself very good at understanding what Disney is really all about. And and you can look back to the predecessor management between Walt and Eisner and they didn't really do much with that. If you look at those years. You know what is this. What is special about about Disney and how do you make it more special and how do you make it more special to more people. I mean those are the things that you want and you've got wonderful ingredients to work with when you're working with something like Disney. I mean you know one of the advantages we were talking about about them the Mayo Clinic and brain surgeons. The nice thing about the mouse is that he doesn't have an agent. You know I mean the mouse is yours and he is not in there renegotiating and you know every every week or every month. And saying you know let's look at how much more famous I think I'm in China or something. So if you own them I'll you own the mouse and Eisner understands all of that very well I would say he's been very skillful in terms of how he thought about it.
I worry about any manager that has nothing to do with Michael Eisner but Charlie and I worry about ourselves in terms of getting out of our circle of competence and we've done it. It is very tempting and it's probably part of the human condition in terms of hubris or something that if you know that if you as Charlie would say if you know if you're a duck floating on a pond and it's been raining and you're going up in the world after a while you think it's you and not the rain you know that there's that you're some duck and we all succumb to that a little bit but I think that I think doesn't a Coca-Cola.
I think those companies are very focused. I think our operating units are very focused and I think that gives us a huge advantage over the managers that are getting a little bored and decide that they better fool around with us or that to show just how talented they really are.
Munger: Yeah Eisner is quite creative. And he also distrusts projections and that is a very good combination to have on the motion picture business.
Buffett: Yeah Charlie was a lawyer for 20th century and he saw a little bit of how Hollywood operated and kept us out of buying motion picture stuff for about 30 years.
Every time I go near one eat regaled me with a few stories of the past it's it's a business where people can trade other people's money for their own significance in their world and that is a dangerous combination where if I can buy significance in my world with your money you know there's no telling what I'll do.
Munger: Part of the business reminds me of an oil company in California and it was controlled by one individual and people used to say about it if they ever do find any oil that old man will steal it.
And the motion picture business it's only about half of that has normal commercial morals.
Buffett: No we're not. We're not applying that to Disney.
Buffett: Disney is really, Disney's under an extraordinary job for the shareholders and they make real money out of movies. Most most movie companies have they made money for everybody associated with it but not a lot of stock to the shareholders in them. Zone 2. Well of the books. Charlie what are you reading these days.
Munger: Well I'm almost ashamed to report because I've gone back and picked up the part of biology that I should have picked up 10 or 15 years earlier. And I've any of you haven't done it. It's a total circus. What they figured out over the last 20 or 30 years in biology and I if you take Dawkins The Selfish Gene and The Blind Watchmaker. I mean these are marvelous books and there are words in those books that are entering the English language that are going to be in the next Oxford Dictionary. I mean these are powerful books and there are a lot of fun. I had to read the Selfish Gene twice before I fully understood it. And there were things I believed all my life that weren't so. And I think it's just wonderful when you have those experiences. We always say it isn't the learning that's so hard it's the I'm learning.