Warren Buffett Talks Investment Strategy And Mastering The Market

The Oracle of Omaha, Warren Buffett, is here to talk about what shaped his investment strategy and mastering the market.

Warren Buffett Talks Investment Strategy And Mastering The Market

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Transcript

So let's start off and talk about the economy a little bit. And obviously we've been on a good long run here a very long run and yet does that surprise you and what would be the signs that you would look for to see that things were winding down.

Well I look at a lot of figures just in connection with our businesses. I. I like to get numbers so so I'm getting reports in weekly in some businesses that but that doesn't tell me what the economy's going to do six months from now or three months from now. It tells me what's going on now with our businesses. And it really doesn't make any difference. And what I do today in terms of buying stocks or buying businesses what those numbers tell me they're interesting but they're not they're not guides to me. If we buy business we're gonna hold with rubber so we're in a good year bad years and between years maybe a disastrous year or here. And we care a lot about the price. We do not care about the next 12 months.

But are you surprised at how long this economy has been expanding.

I've been surprised by all kinds of things in the last 10 years about the economy. I mean I I don't think there was any economist I've ever read that talked about negative interest rates for long periods of time. I mean if you go back and read Cains or you read Samuelson you read any. They do not get into a negative rate environment I think. Now there are still eleven trillion bits of government debt around the world but so of negative rate. So. We've never seen it before and we've never seen. At least the conventional wisdom on a sustained period of. Long and growing deficits while the economy is getting better. Extremely low interest rates and really very little inflation. So. Something different is happening but something different happens all the time so. That's one reason. Economic predictions just don't enter into our decisions. Charlie Munger my partner I in 54 years now we've never made a decision based on an economic prediction we make business predictions about individual businesses will do over time. And we compare that to what we have to pay for. But we have never said yes. To something because we thought the economy was going to do well in the next year or two years and we've never said no to anything. Because we're right in the middle of a panic even if the price was right.

All right so you don't pay much attention to the dismal scientists then I guess.

Well I pay none in the sense of as a as a guideline to doing anything. It's entertainment. I mean yeah it's like going to a variety show or like that. But I. And I just don't know of any economist that that actually is. What businesses successfully successfully or done well on stocks. Paul Samuelson you may know he was a big shareholder burger but. It's you know they make guesses and there's so many variables. I mean in the hard sciences you know you know that you know if an apple falls from a tree that it isn't going to change over the centuries because of anything or political developments or 400 other variables that go in. But when you get into that economics there's so many variables. And the truth is you've got to expect good times and bad times in business. And if you if you were to buy an auto dealership and you're you know where you live locally you're not franchise or anything like that you wouldn't try and time the purchase you'd try and make the right purchase at the right price. And you can be sure you've got a good business. But you wouldn't want to buy it because growth this year is going to be 3 percent instead of 2.8 percent or something of the sort.

Fair enough. You have over one hundred billion dollars of cash Berkshire does not need one. How much do you Berkshire has over a hundred billion in cash and you say that you always want this company to be a fortress. So how much cash should an ordinary investor have on a percentage basis do you think.

It depends on our personal situation of it. If you're working in something where you're at you're living off your your paycheck from week to week. You want to have a little cash around and you certainly don't want a credit card that's maxed out or anything like that. But if you know if your house is paid off. If you don't have big living expenses you've got a portfolio. Of decent diversified businesses. Really need any cash.

So you can be more cash free than Berkshire is.

Yeah. Yeah. I've got responsible we've got insurance claims we can have hurricanes that would happen.



About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver