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Mohnish Pabrai On Low-Risk Opportunities And The Recycling Sector
In his book, The Dhandho Investor: The Low–Risk Value Method to High Returns, Mohnish Pabrai coined an investment approach known as "Heads I win; Tails I don't lose much." Q3 2021 hedge fund letters, conferences and more The principle behind this approach was relatively simple. Pabrai explained that he was only looking for securities with Read More
Warren Buffett on Philanthropy and the Economy
Gaston Hall at University of Georgetown. September 19, 2013.
Warren Buffett talked about philanthropy and the economy.?He was interviewed by Bank of America chief executive officer Brian Moynihan and also answered questions from audience members. The event at Georgetown University was presented in partnership between the Global Social Enterprise Initiative (GSEI) at Georgetown’s McDonough School of Business and Bank of America.
Resources:
The Intelligent Investor by Ben Graham |
The Essays of Warren Buffett
Buffett: The Making of an American Capitalist by Roger Lowenstein
The Snowball: Warren Buffett by Alice Schroeder |
0:07
ladies and gentlemen please welcome to the stage Lindsay Bruinsma an MBA
0:13
candidate at the McDonough School of Business John J to join president of
0:17
georgetown university Brian T Moynihan CEO of Bank of America and warranty
0:23
Buffett chairman of the board and CEO of Berkshire Hathaway
0:44
I must say I am beyond excited to be here and that I am in complete awe of
0:57
the leaders on this stage and before me we have our own Dean Thomas of the
1:04
McDonough School of Business georgetown president Jack to Joya chief executive
1:10
officer of Bank of America mr. Brian Moynihan and though he really needs no
1:16
introduction Mr Warren Buffett
1:28
here and be a candidate at the Georgetown McDonough School of Business
1:36
with a focus on global business strategy and cause marketing over a decade ago
1:42
and 2003 I was fortunate to attend the international relations programs here at
1:47
georgetown university for high school students and it had a student
1:52
significant impact on what I wanted to achieve in my career I've actually been
1:58
trying to get back here ever since and so two years ago and I decided to pursue
2:03
my MBA Georgetown's McDonough School was unquestionably it I believes that an
2:10
even more now I believe this that Georgetown inspires students to
2:15
positively sculpt the way that business and society interact programs such as
2:21
the global social enterprise initiative founded by my new friend professor bill
2:25
no Valley have very much me this belief a reality I am a product GSCI and our
2:33
wonderful sponsors Bank of America who partnered with the one campaign last
2:39
year to provide the opportunity for five students to apply business skills
2:43
towards social and economic impact last summer I interned with red as a global
2:50
strategy fellow Red being a cause marketing organization founded by Bob
2:55
Bono and Bobby Shriver under the one campaign umbrella through this
3:00
opportunity I was able to implement business solutions and a nonprofit
3:04
fighting and with red and I was able to work with global iconic brands to take
3:11
on the HIV and AIDS epidemic in sub-saharan Africa through a cross
3:15
marketing model I would like to personally thank mr. Brian Moynihan for
3:20
creating this opportunity as well as Miss and for new can of Bank of America
3:25
and the entire GSCI family including executive director Don meant a key I
3:32
would also like to introduce and thank our president
3:37
jack to join for his unwavering embrace of such programs as GSCI and for his
3:44
continued dedication to community and service since 2001 President enjoy a has
3:52
encouraged engagement at both a local and global level through this he has
3:58
given students not only the opportunity to follow in the footsteps of some very
4:03
impressive leaders but he has given them the opportunity to actively shape the
4:08
new face of global leadership and with that please join me and introducing
4:14
georgetown university president dr. Jack J dejoria
4:30
thank you very much for that introduction and for the example that
4:36
she said to your commitment to social enterprise we're very proud of you and
4:40
your fellow students are engaged in this very important work was my pleasure to
4:46
have this opportunity to welcome you all to Georgetown this evening for a very
4:51
special conversation between Warren Buffett and Brian Moynihan were deeply
4:56
grateful to them both for sharing their unique experiences and insights with us
5:01
this evening will have the opportunity to more formally introduce our guests in
5:05
just a few moments but first they wish to express my gratitude to some of the
5:10
individuals who helped to make this is this even possible
5:13
like to begin with a the Dean of the McDonough School of Business David
5:17
Thomas for his exceptional leadership and 44 fostering such important
5:22
initiatives as the global social enterprise initiative and also like to
5:27
thank Bill Novelli a distinguished professor of the practice at the
5:31
business school in the founder of GSCI his commitment to social enterprise
5:37
Corporate Responsibility and social change has enriched our community here
5:41
at georgetown and he will moderate our Q&A a little later this evening the
5:46
values at the core of the work that we examined here tonight are defining
5:50
characteristics of the tradition that animates our university community our
5:55
tradition rooted in our Catholic and Jesuit identity a tradition that compels
6:00
us to create and share knowledge in service to our world as University we
6:06
have been guided by this tradition since 1789 and now for over two hundred and
6:12
twenty-four years we've been building upon and re-imagining
6:15
it in new and innovative ways the GSCI through its work to cultivate leaders
6:22
who focus on both economic and social value is a concrete example of our
6:28
commitment to living this tradition in our contemporary world as you know
6:33
tonight's conversation is made possible by Bank of America would like to express
6:38
my deep gratitude to two individuals are proud georgetown parent interleukin
6:44
global strategy and marketing officer at Bank of America for her work in bringing
6:50
us together this evening and again Brian Moynihan Bank of America's CEO for his
6:56
leadership and support of this extraordinary event under mister
7:01
moynihan's leadership Bank of America has deepened its commitment to community
7:05
development philanthropy and environmental and sustainability
7:09
initiatives this includes a ten-year 1.5 trillion dollar community lending and
7:17
investing goal the largest ever by a financial institution since 2007 mr.
7:23
Moynihan moynihan has also led Bank of America's global diversity and inclusion
7:29
Council a group that is dedicated to creating an inclusive work environment
7:33
the company is consistently recognized as having one of the best environments
7:39
in corporate America tonight he will be engaging in a conversation with one of
7:44
the world's great business leaders and philanthropists Warren Buffett mr.
7:50
Buffett it's an honor to welcome you back to Washington Dec many people may
7:54
not know this but this is a return home of sorts for mr. Buffett he attended
7:58
high school just a few miles away at Woodrow Wilson High while his father was
8:02
a member of congress renowned and respected for his business and
8:07
investment acumen at the company that has led since 1965 mr. Buffett is also
8:14
well known for his deep commitment to philanthropy and social enterprise he
8:20
co-founded along with Bill and Melinda Gates
8:22
the Giving Pledge an effort to encourage the wealthiest Americans to donate at
8:27
least 50% of their net worth to philanthropy about five years ago he
8:33
pledged 99% of his Berkshire Hathaway shares to charity and last year the
8:39
shares he donated went to foundations that work to fight poverty elevate the
8:44
status of women and girls around the world and support early childhood
8:48
education among many other causes this led to his being ranked number one in
8:52
2012 philanthropy 50 list of the nation's top philanthropists compiled by
8:59
The Chronicle of Philanthropy he's also given generously over the years to help
9:04
support the work of the Bill and Melinda Gates Foundation which focuses much of
9:08
its efforts on global health and global development mr. Buffett on behalf of our
9:14
entire university community it's an honor to welcome you to Georgetown we're
9:18
so pleased you could join us this evening
9:20
this damn I put my privilege to present to you all for our conversation this
9:25
evening Mr Warren Buffett and Mr Brian Moynihan
9:40
for those who were here last year you know that we had mono come talk about
9:51
what heated and infant who can help this range that's all the hard work she does
9:55
for a company institutions ice thinking about within who we should bring in I
10:00
actually talked about the civil if you want to bring a real rock star Rick
10:05
Warren Buffett because he was a guy who has done more for philanthropy than I
10:10
can ever do it's a trousseau last year by a rock star of the show will rock
10:15
star
10:24
questions in the crowd in and let the students have a chance to ask one of
10:33
those experiences and I was startled by the president left off which is this is
10:37
your hometown
10:38
party hometown so what are your best memories about being around Georgetown
10:42
in papers at Georgetown Hospital sixty-six years ago and I like I develop
10:52
this insanity because the hospital people skipped my regular my regular
10:58
customers on the new me never to but they got the hospital and one of the
11:03
things I would do we give me cash them but they also would tell me if they were
11:07
given birth to a baby that was for that number to me and the numbers racket was
11:14
very bigan in washington that time and they felt a tremendous terribly valuable
11:19
information exact time in which the baby was born or something and I was a little
11:23
bit on that number in the in the in the numbers racket that day so I have a lot
11:27
of memories of georgetown and I was there during world war two which was
11:36
really a fascinating time today in washington and my dad being in congress
11:43
you know it was it was really a window on an extraordinary time and an American
11:49
guys at that time we were probably more united than at any time in my lifetime
11:55
about a common goal that was a time when people like bobby muller all the
12:01
athletes the day the war broke out one
12:03
and people really terribly in a very high percentage play by the rules in
12:10
terms of gasoline rationing is your direction and irrational you know that
12:14
we all bought savings bonds at school and help out the troops so it was it was
12:21
quite a period so somewhere along to start investing in the changing nature
12:27
and I've read stories that you start investing at thirteen or whether they're
12:30
true or not but somewhere around that the fascination with the best a
12:35
five-year $120 $120 shares of Citi service before 11 I i just my dad
12:48
originally was very interested in it but I would go down on Saturday morning and
12:55
they had these books there in the office and I read all those and I want the
12:58
Omaha Public Library and I i read every book on investments and I'm up with
13:02
vibrator by the time I would but I moved to Washington then when we got here at
13:06
the library of congress those III read everything and it's your baseball
13:23
players of the doors and my legs are long gone but it doesn't make any
13:27
difference I have always been working but I was much fun now as I ever had in
13:37
my life and work with people I love doing what I love and it just doesn't
13:41
get any better than that is that you can tap dance to work so what makes you do
13:46
that
13:49
was nice to get that down applause at the start but I've learned it is now
13:55
applied at the start because I'm 83 and I shared enough to terms with it than
14:03
anybody I know so it's a little bit on the flip side so far president joy to
14:09
talk about the Giving Pledge
14:11
how to come up with the idea was bill and how are you doing on what we're
14:16
doing for years ago
14:19
californian talking and he decided to write neighbor rockerfeller and asked if
14:26
he would host a dinner in New York sixteen or eighteen people just talk
14:33
about plan to be Oprah Winfrey came and I started having these people talk
14:42
around the table as to how they develop their philosophy Atlanta be it must have
14:47
taken this too and a half hours or so to get around people were really interested
14:51
in it so that then we decided that a possibility of taking this passion with
14:59
other people and see if we could develop something where people would at least
15:10
half their network and we now hundred and fifteen people have been dialing for
15:17
dollars I called up and sometimes they tell me how they can't do it and I
15:24
decided I'm going to write a book on how to live on five hundred million dollars
15:30
need they just can't seem to figure out how to do it they need help but it's
15:37
been very rewarding and and I received a letter from one woman ten billion
15:43
dollars they hadn't really faced mortality that plan and that's tough for
15:54
people sometimes change things and over half of that they did they do tend to
16:04
postpone the decisions I tell these people I call you know the last well as
16:09
what counts but I told him you know are you talking to some 70 year old 95 now
16:20
let's get on board as soon as a maybe a seven-year-old decisions better than
16:29
bill is not a valid gotten people around the world travels more than I do what
16:38
we're hoping is people to pick up on norms I mean when I was young I read
16:43
about people and you do pick up the age we liked letters from every one of these
16:54
people
16:55
website and I think they're worth reading what we really want to do is get
17:03
the younger people like Mark Zuckerberg joined us and he obviously is going to
17:08
appeal to a much wider group so we are we hope it becomes gospel of wealth
17:17
Andrew Carnegie came up with a hundred years or so ago that's influenced all
17:23
kinds of people we got better stories than that I just hope I don't think I
17:30
want to emphasize one thing nobody in our group $1 anyway affects how they
17:38
live I mean I have much greater at
17:40
operation frankly but the person who drops flight hours or $1 collection
17:44
plate on Sunday where it makes a difference in whether they take their
17:47
kids to a movie or whether they actually giving up something that has you tell me
17:53
I am giving up nothing that has you talking to me I have everything in the
17:57
world that can be bought my money and so I have a whole bunch of stock
18:04
certificates they have no utility to me and they can possibly happen
18:08
education all kinds of things people to give up something that actually have you
18:17
to lead to their family and get back to some other person as you tell me that my
18:22
those are the people I really think deserves kudos but its allies to go
18:26
where the money is
18:28
approach here so we can fully or something like that and it takes place
18:35
after part of what you've done is with Bill Clinton Foundation in in in on one
18:44
hand how you're doing and then secondly that you've gone and said whatever the
18:47
number will be but in so talk about the gates relationship and why it shows them
18:53
as opposed to create your own foundation there well planned and everything we
19:00
needed we would we would use the restroom society and I thought she would
19:05
outlive me younger women live longer and then she died in 2004 so I had to come
19:11
up with a different plan and Adam Smith in the specialization of labor you know
19:18
that if your gonna one thing and not necessarily good another gonna get the
19:22
person to use your talents were their most useful and other people that their
19:27
talents so you know when my wife had babies I mean I went to an obstetrician
19:32
I didn't deliver myself when I get to think I got a dentist so I want to go to
19:36
people who were very good and who are younger energetic smart and
19:42
have the same objectives in philanthropy that I did the basic principle is that
19:49
every human life has equal value and you start with that as your basic assumption
19:54
that a lot of things globe on that and Melinda as well as my children because I
19:59
have three children that are of significant size they and you can read
20:05
the letters I wrote on the Berkshire Hathaway website I do not direct them to
20:09
do anything but I don't want to swing for the fences I tell them they
20:11
succeeded everything they do and they're doing the wrong things because the
20:15
important things are the tough ones and some of those but I've got much younger
20:21
people
20:22
common objectives and they work for nothing not a bad deal along with yeah
20:32
absolutely
20:33
in the way you require them to actually move the money out the money has to be
20:43
spent within ten years after the estate of dollars because I do not think that I
20:48
can pick out some little break my grandchild get to be warned you know
20:52
just the right name of buffer she has the right name and they will be the ones
20:57
I mean there will be plenty of land to fifty years after the problems of fifty
21:03
years but I want the money they get spent probably I don't believe in trying
21:08
to control things from the grave I mean I like to think I can think outside the
21:13
box but thinking outside of that particular
21:16
that may take a lot of weight recently read an article in Time cousins so this
21:27
week that as many people know that PGA finishes up a lake which is golf course
21:31
in atlanta in the story I read about the developments that you've helped I'm
21:36
cousin is in it in the development work he doesn't communities talk a little
21:40
about that because it's a lot different than this type of thing it's the same
21:43
period loving the back people who are putting their own time and energy and
21:48
who are successful in a project that's worthwhile causes as a remarkable man
21:53
that lives in just extraordinary and he took this terrible terrible neighborhood
22:01
all these Lake in Atlanta and a lot of community opposition everything was it
22:06
was it was crime-ridden nobody did well in school everything else and he decided
22:11
yet to try to apply a holistic approach to it and then just the thing for that
22:17
thing so he worked years to develop this community out of this total disaster and
22:27
then common I talked about it i said im you know everybody's going to say that
22:33
that's only be can only be done because your time cousins and you live in
22:36
Atlanta he doin Robertson but primarily Tom could replicate this and other
22:47
communities and it seemed to me that that was a great way to do it I mean
22:54
they've been by the train and everything so so we've taken to do
23:00
to New Orleans where we've got hundreds of people it's it's mixed income type
23:06
community i mean we do we do now with everybody being subsidized with people
23:15
of different races different economic conditions work together and play
23:19
together and it's been successful in New Orleans we went to Indianapolis it's
23:24
been successful they're only got about eleven more towns we're working on now
23:26
and so it doesn't really come up with something he had an op-ed in the Wall
23:32
Street Journal is a fantastic human being and when you get a chance to join
23:39
forces with somebody that has high quality is that energetic smart you know
23:47
you just gotta jump at the chance let's switch the economy now was gonna be the
23:54
economy's that you create a wealth of that you can do these wonderful great
23:57
things were so what do you see in the economy and in what you're seeing your
24:01
company's operating companies in from investors come back very well get it was
24:09
a panic like nobody's ever seen
24:11
whatever you think about it was worse I'm dead serious about that we were
24:16
right on the edge of the cliff and fortunately I give enormous credit to
24:21
both Ben Bernanke and Hank Paulson and and Tim Geithner and even I didn't vote
24:30
for President Bush you know I don't know how many have studied economics but it
24:37
Adam Smith they talk about compared to the damage and caged animal spirits and
24:43
all those people but president bush really came out with a great economic
24:49
insight all times and he didn't ten words in September 2008 he went out
24:55
there from the white house and he said if money doesn't loosen up this sucker
24:59
down and I mean that goes right up there with her down those plaques about it
25:05
and Andy backed up a back up those phones and so we come back but
25:14
businesses come back on you know a lot of companies running record profits
25:19
including many bars and popular getting wider than the Forbes 400 which just
25:29
came out
25:30
showed aggregate wealth of the Ford 400 two trillion dollars you go back twenty
25:35
years and that was three hundred billion so it's up six or seven for one it's
25:39
different people to some extent but this is the past three hundred billion to two
25:43
trillion the median income purchasing power the 1989 and equality is getting
25:57
wider that Richard doing extremely well and does this is doing well business
26:05
profit margins are terrific compared the record historically business returns on
26:12
tangible equity are terrific most a great many people are very to take the
26:20
bottom 20% about 24 million households or something like that
26:26
housing unit close to six but sixty million people you know its top level
26:31
was $22,000 I don't wanna try to live on $22,000 with a couple of kids we've got
26:37
we've got an economy that is delivering $50,000 of GDP per capita and with an
26:44
awful lot of people living walls
26:46
turnout lots of goods and services but we haven't known as well how to have
26:51
everybody Sharon in the bounty that we do you think is that we just gotta grow
26:57
out of it
27:00
2% people unhappy with the population so that means 1% per capita in 20 years a
27:10
generation to 20% in GDP per capita that's not bad and the generation but
27:19
the question is how it gets distributed this country will this system works in
27:25
my lifetime I was born in 1930 I was conceived in 1929 and after the crash he
27:33
didn't have anything to do so I look back with great tried this on the 1929
27:42
crash but since night since 1932 I was born in 1930 real GDP per capita 641 642
27:54
centuries when nothing happened people in this country works consider the
28:01
luckiest person on a probabilistic basis that ever lived at the baby was born
28:06
today in the united states that mean that it is a fabulous country on the
28:11
market system works all kinds of things but we do have to remind you have to
28:15
make sure that everybody participates to reasonable degree we don't want equality
28:19
results but we also want a base level that's satisfactory for our people so
28:24
you talked about the george bush's go down what do you think the lessons are
28:33
the last couple cycles that you seen from an investor's standpoint we got a
28:36
lot of young kids out there you've lived through multiple cycles in the in the
28:40
city sixty years plus you been doing testing out what are the lessons and
28:46
what do these are young people should they take away the lessons are the
28:50
people will continue to make the same mistakes they made humans and whether it
28:55
does or like that I Q Bert when they get when they get greedy and we had the most
29:04
important asset
29:07
huge bubble in something you could borrow heavily against so you could run
29:12
a margin account effect on a house in so socks and and the conditions got very
29:18
lacks and so when that bubble popped but people came into that gradually when
29:23
they get perfil everybody wants when people get scared the only time we had a
29:30
fun time and will have a different set of circumstances but by the human animal
29:37
will keep behaving pretty much the way we will have periodic sessions will have
29:47
occasional panic which all those Asians don't come from Panax but but the good
29:54
news is if you look at the 20th century in the 20th century AD two world wars
30:00
the Great Depression had the flu epidemic cold war we had been atom bomb
30:06
you name it the Dow Jones average went on sixty six to eleven thousand four
30:12
hundred and ninety-seven all these terrible things happening supposedly at
30:16
various times in america works and all I when I bought my first thought when I
30:21
was 11 that was in the spring of 1942 and there was a couple months after
30:25
Pearl Harbor and European of England was on it but the dollar was it about a
30:37
hundred but just look at where we are now
30:40
the country really works the trick is it seems to me the obligation of a
30:46
society's problems personal as ours is to figure out how nobody gets left too
30:50
far behind the cause of last year Obama's speech was a lot about how
30:56
america's of society dreams and you can accomplish more here it was actually won
30:59
the best beaches about the optimism america's you could have a person is not
31:03
american by birth so I know you carry that optimism so after all this makes
31:10
the most optimistic the next decade about
31:12
America and just imagine in 1789 go back years here in this country and around I
31:25
think Paul's Cathedral is buried there and there's a little plaque that says
31:30
you know if you seek my mind I said americans love about this country is all
31:38
come about in a few hundred years we had less than four million people and when
31:44
we became a country China have 300 million people at that time
31:47
European about 75 million they were just as smart as we were they work just as
31:52
hard as we did they had natural resources that were similar to ours and
31:55
we ended up with a quarter of the world's GDP a few hundred years later we
31:59
got something that works and we don't want to mess that up to figure out what
32:04
we do with this abundance better as we go along but about the system working
32:08
but you will have you will have periodic recessions
32:12
panic brought on by something that comes from thing to remember that time I wrote
32:22
an op-ed piece in the New York Times and in the fall of 2008 and I said no
32:27
country will come back and go to a recession ever they wouldn't come back
32:32
and it's coming so don't ever worry about americans you're in the right
32:37
place
32:38
so you've been famous for your investment strategy on basically that
32:43
follows the principles and best when the chips are down and write up that serve
32:49
you well so what's your favorite your favorite time that you were able to
32:52
accomplish that when you cut somebody down in and I i would like to me
32:57
tomorrow but it's always been fun and there's a company here in washington
33:07
exposed to that in nineteen fifty I was I was twenty years nineteen years twenty
33:16
years old and I came down here and get down on the Saturday learned that my
33:23
name then gramm was the German I got down here and the door was locked into
33:30
the building of a Saturday and I pounded on the door and some janitor let me in a
33:34
marvelous ColumnName lorimer Davidson spent four hours with me teaching about
33:39
insurance and he helped by some wonderful people in life it's a great
33:46
thing to remember later on when you to be my people because nobody doesn't
33:54
alone Obama got in trouble when he said that in the campaign that nobody does it
33:58
by themselves
33:59
nobody those used by themselves we also in the shade of trees that were planted
34:04
by others so I think the plaintiff usery's ourselves if we that good luck
34:10
it's been a great ride but it's not over yet you by GO when do you get when you
34:19
investigate for the first time as well
34:21
Davidson I was finishing up in Colombia and then I started selling securities
34:29
when I got out and went out to my analysis and I was with the one anything
34:32
from me and so I G one hundred years of government voices yours for stock sold
34:37
and then a lot of years past and Mr Davidson was
34:44
right away but I want different directions and then in 1976 the company
34:49
got a big trouble going broke and so I came back here and I bought the company
34:58
in the market in a very short period of time and then in 1995 mine our third
35:04
become a half because they purchased their shares and I went out to see who
35:09
is with 96 or 97 and he had a bunch of stock and I go with no cost basis for
35:19
ever and I said if I make an offer for this company
35:23
cash tax guy with the stuff you don't have that actually get a stepped-up
35:28
basis so I'm not gonna make this offer its alright with you and he said to me
35:34
and my life and so we bought the company he was a great man well that's what's
35:42
turned over to some student questions so I gonna put a microphone out here in up
35:49
and let you have questions for Warner
36:12
all right let's go let's take the first question tell us who you are and ask
36:18
away so I can make a living in Georgetown the best investment I
36:37
remember well I bought a book in 1949 by following diagram called intelligent
36:43
tester I don't remember what I paid but aside from what I paid for my to
36:47
marriage licenses that was the best investment I've ever made and it's very
36:54
important that the right framework you need you need to investing that sound
37:02
and rams approaches is simple but some people adopted which I did immediately
37:12
and most people don't have the right philosophy you will find opportunities
37:20
as you go through the next 20 30 40 50 years and frankly you're most likely to
37:26
find him when and periods like five years ago the penny stocks solid silly
37:37
prices from time to time
37:39
most stocks at one time or another solid very silly prices and it doesn't take
37:46
you to figure out that they're cheap but it does take a temperament is willing to
37:53
step up and actually act like they're going in the investment business if
37:59
you've got a hundred and sixty-eight you sell forty points to somebody else do
38:03
you need it
38:04
but you do have to have the right to and you have to be able to ignore people are
38:16
saying and simply look at the facts and the side is this stock which is selling
38:22
it at 42 X and occasionally you'll find things like that and when you don't mind
38:28
if you don't do anything that's my generalize doctor no names make it
38:34
simple just by Bank of America you be certain it was alright for him that's
38:40
right that's right next to mr. Buffett in the past year invested in China South
38:53
Korea and Israel and I'm in recently apart in with 3G capital and Josh Powell
38:57
airmen from Brazil over the Heinz deal does this mean are you tempted to
39:03
venture into the Brazil market next question is are you gonna best in Brazil
39:10
next I don't know that's what makes my job interesting I mean I'm not getting
39:18
if you went out and played golf and every drive one in the hole in the game
39:24
one interesting is when you get there often have to come out and feeling like
39:29
i I love the fact that I don't know what I'm going to do next you mentioned the
39:34
Israel investment and 2006 in the fall I got a letter from a pillow and I never
39:42
heard of him and I never heard of the company was talking about but he said my
39:46
name is a done wertheimer
39:48
and I want to tell you a little about the letter was a page and a half long
39:53
and he said it is sold the company
39:56
families all the company the only company that Berkshire Hathaway and if I
40:01
was interested they'll be glad to come over from Israel and explain it to me
40:04
and i was just jumped off the page that this was an interesting idea
40:08
so I email them and they came over and we bought the business week we had a
40:14
four billion dollars for eighty percent of a company where I never seen anything
40:19
a time kept saying you gotta come over to the plants and everything I don't
40:27
know I am doing fine and all and he said no I gotta see it I said no I said the
40:39
company so we bought the company and I went over there and it's true
40:45
plants like this it was the greatest operation ever seen and a time that I
40:51
want you to come over to see these things I think we have a wonderful
41:02
partnership with the people I don't know tomorrow our partnership with the people
41:07
in Brazil with Jorge Paulo Lemann they are sensational people I got the No
41:13
Georgia Paula lies on the border gillette with him and the opportunity to
41:17
buy and a wonderful business like Hines and the new partners and they do they'll
41:23
do all the heavy lifting they run the place where Georgia Power and Associates
41:27
I mean it's just a great opportunity for us and I don't know what the opportunity
41:32
will be tomorrow with your you paula was last december I was going out the
41:37
boulder colorado where he had a group that met and he said I think about an
41:41
idea when I get out there so I went out there and as we came back on the plane
41:47
he explained what he was thinking about in terms of mines and I said and I was
41:53
quite impressive about him after he said that he sent me a one-page governance
42:03
description of how it would work between the two of us and he's a very brief
42:07
description of what he thought would be a fair deal for both of us
42:12
kind of people you like the associated with but there have been several recent
42:25
financial developments such as derivatives which has exploded recently
42:31
and you want to call derivatives now that derivatives are seven hundred
42:38
trillion dollar industry do you see this as setting the stage for the next
42:43
financial crisis very hard to tell the dodd-frank and if you if you look at
42:53
what happened in September and October of 2008 there was an extraordinary
43:00
things done the Federal Reserve Board eighty-five billion dollars and they are
43:05
you hadn't our world will be very different
43:09
Hank Paulson guaranteed money market funds at a time when 30 million
43:14
Americans with money market funds were panicking and when three hundred billion
43:20
in three days ago on out of the non-government money-market funds
43:23
hundred and twenty five of them going back into the government 300 billion
43:26
that was that was almost equal to the deposits of Wells Fargo or Wachovia the
43:31
time which were then two separate institutions both of those authorities
43:35
have essentially I don't think they can do that under dodd-frank I think they'd
43:41
I don't think that you could do it I don't think the possum can do it when
43:50
there's a panic the only thing that will stop it basically is when somebody who
43:57
has the ability and the will says I'm gonna do whatever it takes and basically
44:04
that's what Bernanke and Paulson and finally congress and a reluctant way but
44:11
said to the american public and you could believe it if Bernanke said I'm
44:14
gonna do it every day nobody knows what section 13 three-year of the Federal
44:17
Reserve Act years
44:19
wasn't probably meant to do with it but he did it and the same way with the
44:23
exchange stabilization fund of the Treasury nobody it was enacted back in
44:29
1934 nobody would be using your money market funds but you have these strong
44:34
characters who had the ability to print money in the case of Bernanke and they
44:39
said we're going to do whatever it takes and the president will Bynum that is the
44:44
way and the real panic and and I i worry actually that congress doesn't like to
44:50
get anybody that much authority and bloggers and the defense also acted as
44:55
he did in TARP and I tip my hat to them and I am Not sure there will be another
45:02
panic comes from who knows but when that time comes the question will be are the
45:09
people who panic who have frozen the cause the economic engine to stop you
45:14
know will leave and come right back and be doing something I'm not sure whether
45:20
the what's been enacted is a plus or minus in that regard
45:24
regardless the country will come through but it's very hard to write regulations
45:32
that will keep people from acting foolishly predicting when acting
45:38
foolishly has been proven very profitable over the preceding two years
45:41
and just it's just the way it works
45:43
humans they all think they're Cinderella ball they think you know the night goes
45:49
along the music is better and the drinks flowing everything and they leave it two
45:54
minutes to 12 and the girls there's no clocks on the wall and there's no
45:59
dancing so it'll happen again but by when it happens
46:04
I'll be buying I'm from Georgia familiar with the work of radius lake that's
46:15
great but you talk a little bit about income inequality but if you look at
46:20
class mobility rates and if you look at average household income for
46:25
middle-class families measured with inflation a lot of these rates have been
46:29
trending down since the nineteen seventies and some may argue this order
46:34
today for the middle class and it's been 30 years and was wondering if you had
46:39
any more thoughts on how a rising tide lifts all boats and I just yachts John
46:45
carried on about rising tide lifting all the odds have been left the like I savor
46:50
the top 400 300 billion just twenty years they there is a very I think
47:01
structural problem as a market system gets more and more specialized go back
47:07
to an agrarian society like we had a couple of years ago and most people
47:10
working on a farm most people felt that most job requirements I mean it was that
47:17
the world has become more and more specialized I think we keep moving away
47:22
from that so a market system will not play well for a significant percentage
47:30
of society they aren't needed to keep GDP itself going up and and people and I
47:37
think government has to address that I think it's i IIIi I sometimes talk about
47:47
the students this proposition imagine that it's 24 hours before you're born
47:54
and you're sitting there Johnny Johnny we don't know yet and you're in the womb
48:01
and Jeanne comes johnnie you strike me as a remarkable potential human being
48:12
and I'm going to give you an enormous
48:15
ability to let you decide the world how the world is going to work and to which
48:22
you're going to emerge you can decide on the economic system social system the
48:28
political system
48:29
you design it and whatever you design that's going to be the system in which
48:34
you live your children live grandchildren live and you being wise
48:38
beyond your minus 24 hours of age say what's the catch and the genie's others
48:47
liked catch just before you emerge have been designed the system but if you're
48:53
going to go over that barrel over there that has seven billion slips and one for
48:57
every human being in the world and you're gonna pull out a slip a male and
49:02
a female inmates a wider makes a black it may say information strong it may say
49:08
brighter may say below average
49:12
it may say United States Bangladesh now not knowing which ticket you're going to
49:19
pull out what kind of a world away under design well you certainly want to design
49:25
a world that produces lots of goods and services and keeps producing more and
49:29
more you want a lot of stuff around it could be the world's fair society but if
49:34
it's on a barren desert so you really want something that works in terms of
49:38
output but once you have something that works in terms of out but you know you
49:43
certainly want something that eliminates fear from everybody's life now that
49:47
doesn't just mean a lot of compliments terrible they age and health problems
49:51
and you'll certainly want a system not knowing what you're going to get it
49:56
takes care of the people that don't survive so a market system which my
49:59
which maximizes the amount of output your first goal and I think we've done a
50:05
wonderful job at the first stage we have learned out on turnout lots of stuff we
50:11
have not thought as much always thought of her social security came in
50:15
and all that time in this country has developed in terms of thinking about how
50:18
a rich family should behave but we have not I think we are in the stage where we
50:24
need to focus more on making sure that the people who get the tickets you
50:30
better than they are and you know we said that blacks were three-fifths of
50:35
slaves were three-fifths of a person you know we said all men are created equal
50:40
in 1776 in 1789 we said black person we said we not only said all men are
50:47
created equal but the Gettysburg Address you know it was nineteen twenty before
50:53
we pass the 19th amendment for for women so we just we treated women as
50:57
essentially different class for all those years so I think we've
51:01
significantly in the right direction in terms of behaving as I think we've gone
51:09
too rapidly in the right direction in terms of turnout lots of stuff but I
51:13
think we have to address the question of how did the people that are left behind
51:17
in a system that maximizes the output of goods and services and that can only
51:23
come through government next question
51:26
good evening James fish back in school porn service first year it snowed out
51:30
adjourn outspoken fan of Ben Bernanke but no we gonna be stepping down in
51:35
January of next year
51:37
whomever takes over the position do you think that they should continue continue
51:40
the fed's controversial buyback program and if so for how long I think they
51:46
should take his approach was used
51:49
he says he's going to keep going and only season more improvement in the
51:53
economy and I think he's been mildly disappointed in not hugely disappointing
51:59
but mildly disappointed in the rate of improvement in the economy in the last
52:06
few years and therefore just the other day said he's gonna go further season so
52:13
he's not prejudging exactly what is going to happen
52:16
he's telling you the conditions under which you'll change and the economy is
52:21
getting better
52:22
we are in an experiment which has it really been tried before I mean we found
52:31
out the three and a half billion dollar balance sheet and buying securities
52:38
you're selling she carry out so we don't know how this game played on and just
52:49
the announcement when it was a few months ago in the in the paper is going
52:53
to occur you know that had some significant market probably a hundred
52:57
basis pointers on the 10 year and what will happen when they actually they
53:05
actually try to deleveraging the fact I mean what's happened is the american
53:09
public deleveraging and the government leveraged up when the bed in a big way
53:18
that will be there will be a new instrument and the question is when they
53:24
do that the economy has to grow faster peace people are taking account of the
53:30
clear that they're going to stay there until the economy grows no pressure on
53:34
the Fed is the greatest hedge fund in history i mean you've got a trillion won
53:40
financed by currency in circulation was just cause they got about a trillion
53:44
eight or nine for the banks at 25 basis and I mean the Fed is gonna make eighty
53:49
billion or something like that the fed is the fourth largest contributor to the
53:53
United States government's revenues that there is no that wasn't the case but
53:58
it's eighty or ninety and it is under no pressure whatsoever to have to deal ever
54:05
so it can pick its time and if you have somebody why is there and I think the
54:09
nineties wide to be it can be handled but it is something that's never quite
54:19
been done on this scale will be interesting to watch it will be a move
54:23
seen a lesson in
54:24
the market moving ahead and back just based on yesterday's so you can take one
54:29
more question and in the next two and I'm from China and currently a graduate
54:38
student at Georgetown my friend and I love you and your friend Charlie and we
54:46
read his book which is very interesting he held out this post is done of credit
54:50
criteria so hard to evaluate a company it's all very confusing but he said that
54:55
or an entire always staying away from the industries we don't know so you have
55:01
candies railways and coca-cola
55:04
but now the world is changing and we are living in a new era the business models
55:11
are changing the b2c platforms everybody's shopping alive maybe in a
55:15
few years everyone is going to pay with their rifles and Bank of America no
55:19
longer issues credit card number of it is the new moto and yeah there's just so
55:27
many things you don't know about photos show you my new one
55:32
me take this guy just turned into one alexander graham bell gave me
56:16
decide to be able to define which ones are beyond your capacity to evaluate you
56:29
don't have to be right about thousands and thousands and thousands of companies
56:33
have to be right about the company
56:35
couple I'm I met Bill Gates on July 1991 Seattle and said you gotta have a
56:42
computer and I said why and he said well he said you can do your income tax on it
56:48
I said I don't have any number doesn't hit and he said well you can keep track
56:53
of your portfolio I don't have one stock is going to change everything will
57:03
change but probably not and I said what will change what time that you used to
57:13
computers I don't have to understand all kinds of understand but there's
57:21
thousands of opportunities there I did understand the Bank of America and I'll
57:28
be able to do that I'm able to understand some given percentage but Ted
57:34
Williams wrote a book called the size of hitting and insides of hitting he's got
57:40
a diagram shows him at the plate and he got the strike zone abided and
57:45
seventy-seven squares each the size of a baseball and he says if I only swing at
57:51
pitches in my sweet song which he shows there in a yes what is batting average
57:55
would be which is 400 at the end this way it low outside pitches but still in
58:00
the end the strike zone is average would be 230 he said the most important thing
58:04
and hitting is waiting for the right pitch now he was at a disadvantage
58:07
because of the count was all into one injured so on even if that ball was down
58:13
there was only about 2 30 yet to swing at it in investing there's no called
58:18
strikes people control Microsoft that
58:20
any any general motors and I don't have to swing nobody's gonna call me out on
58:28
strikes only a strike so I can wait there and looked at thousands of
58:35
companies day after day and only when I see something I understand what I like
58:40
the price at which is selling my swing by if I miss it it's it's it's a strike
58:46
but it's an enormously advantageous game and it's a terrible mistake that they
58:51
have to have an opinion on everything
58:53
only have to have an opinion on a few things in fact I'm told students when
58:59
they got out of school they got a punch card with 20 punches on it and that's
59:03
all the investment decisions they got to make in their entire life they would get
59:07
very rich because they would think very hard about each one and you don't need
59:12
twenty right decisions 45 will probably do it over time so I don't worry too
59:20
much about the things I don't understand understand some of these businesses that
59:25
are coming along and can spot things on Amazon for example I mean a tremendous
59:31
accomplishment was your pages done and I tip my hat to meet a wonderful
59:36
businessman is a good guide to but
59:39
anticipated that he would be the success and 10 others when they are not good
59:44
enough to do that but i dont fortunately I don't have to I don't have to form an
59:48
opinion on Amazon and I don't I did form an opinion and the Bank of America and
59:54
warm opinion on coca-cola company has been around since 1886 there's one point
60:00
eight billion 1.8 billion eight-ounce servings of Boulder Colo product sold
60:07
every day not one penny and get one penny extra eighteen million dollars a
60:13
day and eighteen million times 365 billion 330 bill
60:19
six billion five hundred and seventy million dollars annually six billion
60:25
dollars worth a penny more than I think so
60:31
so you know and I've got about a hundred and twenty-seven years of history so
60:37
those are the kind of decisions I like to make you may have an entirely
60:42
different expertise that I would have probably much more up-to-date in terms
60:48
of the kind of businesses that we're seeing about it and you can get very
60:51
rich if you just understand a few of them and understand their future but
60:56
fortunately I don't have to I mean finds a look at people pouring catch up on I
61:06
don't think it's going to change and and the nice thing about some product travel
61:12
from prague non-durable candy bars don't travel well I mean if you look at the
61:15
Cadbury bars in England they don't sell well here someplace on soft drinks
61:22
travel and ketchup travels products and travel ok
61:48
that right investment decision but importantly what we talked about earlier
62:02
about is the ability to try to do something with all that wealth that will
62:06
help a pretty near term goals and society and I think you'll find very few
62:12
people will have been able to do both things so well as Warren Buffett has and
62:15
there's a lesson to learn for all the snaps at a Cuban aw
62:28
so that's probably the first time in my life I ever heard a positive outcome for
62:36
the great economic crash of 1929 show brian thank you for bringing us a
62:43
rockstar
62:54
discussion about economic impact and social impact and how the to fit
63:02
together and before this conversation Brian Moynihan had a session with some
63:09
of our business students in which he talked about community lending talked
63:13
about environmental initiatives and he talked about how they are good business
63:18
as well as good for society and this is the right place Georgetown is the right
63:23
place for that our president Jack to join he talks about global human
63:27
development and the Dean of our business school
63:31
David Thomas he talks about being in service to business and society and
63:36
that's why our global social enterprise initiative is flourishing and why it's
63:40
in the right place our organization the global social enterprise is driven by
63:47
students in fact it was started by students there's a student here I should
63:51
say this year I don't know where he is a car who flew it is a McKinsey executive
63:58
he flew in just for this conversation he helped to conceptualize this initiative
64:03
and wherever you are
64:05
keep the good work toward the darn Mantega night we we think that students
64:12
power what we do and we have many projects going and students are involved
64:16
in every one of them and we're very thankful for that and i can tell you
64:20
that I love georgetown I love georgetown because I could be in your everyday and
64:25
I rub elbows with these students who are tomorrow's leaders and every night I go
64:29
home thinking the future is really in good hands so look for future GSCI
64:37
events on our website thank you again for this wonderful conversation we got
64:45
to apply
64:56
ask a question but there's always email and would you please let the first two
65:02
rows lead because there are some security issues involved thank you very
65:06
much
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