05 ноември 2009
Бъфет се присъедини към офертата за данъчните кредити на Fannie Mae
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Данъчните кредити в САЩ са част от мерките за стимулиране на инвестициите в нискодоходното строителство на жилища


Инвестиционният конгломерат, контролиран от Уорън Бъфет Berkshire Hathaway Inc (BRKa.N) се присъедини към Goldman Sachs Group Inc (GS.N) в плановете за придобиване на данъчни кредити на стойност $3 млрд. от ипотечния гигант Fannie Mae, съобщи “Уолстрийт джърнъл”, позовавайки се на осведомени източници.
В неделя изданието съобщи за плановете на една от водещите търговски банки в света – американската Goldman да получи финансиране от Fannie Mae за отпускането на нови кредити, но предупреди, че финансовото министерство на САЩ може да блокира сделката. Вашингтон не бърза да одобрява сделката, тъй като това може да намали данъчните отчисления на Goldman Sachs, което ще даде допълнителни теми за разговори за прекалената подкрепа за банката за сметка на данъкоплатците. 
Детайли от готвената сделка засега не са ясни, макар, че аналитици говорят за $1 млрд.
„Министерството на финансите обмисля предложението и няма да позволи сделка, която би била във вреда за данъкоплатците“, е заявил представителят на ведомството Ендрю Уилямс.
Данъчните кредити в САЩ са част от мерките за стимулиране на инвестициите в нискодоходното строителство на жилища. 
Съответният закон позволява на инвеститорите да получават данъчни отстъпки при финансиране на жилищно строителство. Подобни кредити като правило са изчислени за срок от 10 години и са привлекателни за компании, които са уверени в приходите си за следващите десет години.
Fannie Mae е най-голямата ипотечна агенция в САЩ. Компанията е основана през 1938 година с указ на тогавашния американски президент Франклин Делано Рузвелт с цел създаването на вторичен пазар на ипотечните заеми. През 1968 година става публично дружество, като продължава да бъде подкрепяна от правителството на САЩ.
Fannie Mae продължава да финансира над 20% от всички ипотечни кредити в страната. Подкрепата на вторичния пазар се изразява в изкупуването на ипотечни кредити от банките и консолидирането им в пул. След това компанията издава ипотечни ценни книжа, обезпечени от пуловете и ги продава на свободния пазар. По този начин осигурява финансирането на нови кредити.

13 ноември 2009
Бъфет е за силен натиск върху ръководствата на закъсалите компании
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"Трябва да бъдат намалени заплатите във всички учреждения, които се обърнаха към властите с молба за финансова помощ", е заявил Бъфет 


Легендарният инвеститор Уорън Бъфет, собственик на конгломерата Berkshire Hathaway Inc. заяви, че американските власти трябва да изискат по-големи жертви от ръководствата на тези компании, които бяха спасени от фалит с огромни финансови инжекции от страна на държавата. "Трябва да бъдат намалени заплатите във всички учреждения, които се обърнаха към властите с молба за финансова помощ", е заявил Бъфет пред студенти по икономика в Колумбийския университет. 
Неговата реч, както и изказването на основателя на Microsoft Corp. Бил Гейтс бяха предадени по CNBC.
Холдингът на Бъфет успя да премине през тежката рецесия благодарение на резервите от $44 млрд., както и отказът от рисковани ипотечни инвестиции, които доведоха множество финансови гиганти миналата година до ръба на пропастта. В момента инвестиционният портфейл на Berkshire съдържа активи на минимум пет спасени от държавата компании. Холдингът е най-големият акционер в American Express Co., която вече погаси дълга си пред правителството от $3,4 млрд., както и в банката Wells Fargo&Co., дължи на Вашингтон $25 млрд.
Бъфет дори успя да извлече полза от предоставените заемни средства на пострадалите компании. Той се сдоби с гарантиран дивидент в размер на 10% от инвестираните около $8 млрд. в General Electric и банка Goldman Sachs, която взе от държавата кредит за $10 млрд. 
Бъфет обаче отказа финансова подкрепа на закъсалия застрахователен гигант American International Group Inc., чието спасение струваше на данъкоплатците $182,3 млрд.

18.11.2009 10:30


Финансовата група Goldman Sachs, която бе упрекната за раздаването на бонуси за милиарди долари на своя топ мениджмънт една година, след като банката бе спасена с парите на американските данъкоплатци, ще се присъедини към кампанията на известния милиардер Уорън Бъфет за оказване на помощ на около 10 хил. малки предприятия САЩ.

Целта на дарението в размер на 500 млн. долара съвпада с една от основните задачи на администрацията на президента Барак Обама: насърчаването на активността на малките и средни предприятия, за да се откриват нови работни места в икономиката. Инициативата има за цел да подпомогне с консултации и финансиране 10 хил. малки компании в САЩ.

Инвестиционната компания на Уорън Бюфет Berkshire Hathaway е най-големият акционер в Goldman Sachs, която е най-печелившата банка в историята на Wall Street. Чрез инициативата Goldman Sachs се опитва да разсее критиките, които я обрисуват като алчното лице на финансовия сектор, чието прекомерно поемане на риск доведе до кредитната криза.

За разлика от своите конкуренти, които предоставят ипотечни заеми и кредитни линии за малкия бизнес в страната, повече от 90% от приходите на Goldman Sachs преди данъци през тази година са от търговия с ценни книжа и други инвестиции.

Главният изпълнителен директор на Goldman Sachs Лойд Бланкфейн е заявил, че малките предприятия в САЩ играят жизненоважна роля в създаването на работни места и генерирането на икономически растеж в страната. Банката е уведомила администрацията на президента Барак Обама за своята инициатива за малкия бизнес, предаде Bloomberg.

От кампанията ще бъдат отпуснати 200 млн. долара на колежи, университети и други институции, за да предоставят на собствениците на малък бизнес бизнес квалификации. Goldman Sachs ще инвестира още 300 млн. долара под формата на заеми и благотворителна подкрепа за банки за развитие на общността, които имат за цел да подпомагат населението и да стимулират икономическото развитие в райони с по-бедно население.

Бъфет удвоил дела си в Wal-Mart
17.11.2009 09:07


Най-голямата търговска верига в света Wal-Mart явно е привлякла интереса на милиардера Уорън Бъфет. Това се вижда от документите, подадени от компанията на Бъфет Berkshire Hathaway до американските регулаторни органи.

Те показват, че през третото тримесечие Berkshire е добавила около 18 млн. акции към дела си в Wal-Mart, предава CNBC. По този начин компанията на Бъфет вече притежава 37,84 млн. акции на Wal-Mart, след като към края на юни делът е бил 19,9 млн. акции.

На база вчерашната цена на акциите на Wal-Mart на борсата в Ню Йорк от 53,56 долара за брой делът на Berkshire вече се оценява на над 2 млрд. долара.

Компанията на Бъфет е увеличила дела си в банката Wells Fargo, както и в енергийната компания Еxxon Mobile. Berkshire Hathaway е придобила и акции в Travelers, Rpublic Services, ConocoPhillips, SunTrust, както и деозитарни разписки на Nestle.

Като цяло пазарната капитализация на портфейла на Berkshire Hathaway се е повишила с 15,5 на сто между края на юни и края на септември, като е достигнала 56,55 млрд. долара.

Вижте кои са най-големите позиции в портфейла на Бъфет на база предишния отчет на компанията му

Buy, Sell or Hold: Buffett’s Berkshire Hathaway Inc.

Last year, on Aug 25, I recommended readers start buying shares of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) in incremental amounts until the end of 2008. 

I emphasized that Berkshire should be a core, long-term holding in investors’ portfolios and not a stock to trade in and out off.

Today, the stock is about 11% above the price that it finished 2008 at. 

I was always confident that the huge amount of cash on Berkshire’s books would provide it with countless opportunities to pick up quality assets at bargain prices should the market falter.

“Under Buffett, Berkshire Hathaway is a like an astute and disciplined kid in a candy store,” I wrote last August.

Buffet, a savvy and well-financed investor, made the most of this opportunity to cherry pick new acquisitions at ridiculously low valuations and profit handily.

Notably, he took big stakes in Goldman Sachs Group Inc. (NYSE: GS) and battery and carmaker BYD Co. Ltd. – both of which he profited handsomely on.

In fact, Berkshire’s concentrated stock holdings, including Wells Fargo & Co. (NYSE: WFC), American Express Co. (NYSE: AXP) and others, have strongly outperformed the Standard & Poor’s 500 Index this year, giving BRK very sizable book value gains. 

And on the operating side, Berkshire’s insurance business has shown gains in insurance premia and in operating cash flow. All of this added to the already pristine financial strength of the company.

Great crises bring great opportunities and great institutions take advantage of those opportunities.

Berkshire Hathaway, true to its discipline, has done just that.

It recognized the immense opportunity and deployed its huge war chest in the greatest acquisition Warren Buffet has ever made – the roughly 76% of Burlington Northern Santa Fe Corp. (NYSE: BNI) that it did not already own.

Warren Buffet is investing in a business that he knows extremely well and that has tremendous long-term potential.

Railroads will almost certainly keep gaining in value as energy prices make them more cost-effective.

Burlington Northern benefits from high energy prices because rail is many times more energy-efficient than other modes of transportation, and because it is integral in the transportation of coal, which meets about 50% of the US economy’s fuel needs.

BNI’s large, unique assets make it an absolute bargain at today’s prices.

And with the dim prospects for the U.S. dollar, and with the U.S. economy in recovery mode, money put into any business that is leveraged to energy is likely to pay off. 

The acquisition reduces Berkshire’s huge cash position and the risk of value destruction that would come from inflation.

It also increases the beta of Berkshire stock, that is, its sensitivity to equity market swings, due to the strong exposure to a very cyclical business. At the same time, this move reveals to us the confidence that Warren Buffet has in U.S. economy.

The likelihood that rating agencies will downgrade Berkshire’s credit rating is a modest price to pay for the appropriate strategy at managing one’s balance sheet, eliminating exposure to inflation, and taking advantage of higher prices and greater rail cargo volume moving forward.

Having Berkshire Hathaway stock is a good choice in current conditions.

It’s the perfect time for the company to take advantage of its financial strength and vast war chest.

It has not disappointed, as many of Warren Buffett’s earlier critics have been proven wrong.

It now becomes an even more attractive, astutely diversified play on the rebound of the US economy.

To cap it all, Berkshire has decided to split its Class B stock 50 to 1, making it more accessible to smaller investors. This is a welcome and long overdue move that will certainly expand the stock’s global appeal.

Recommendation: Buy shares of Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) if you haven’t already (**). And if you currently have shares, we encourage you to hold onto or add to them. 

(**) Horacio Marquez owns no interest in Berkshire Hathaway Inc.

[Editor's Note: Commodities are hot.

In some cases, white hot.

Oil, gold and silver are the hot commodities of today.

But the shrewdest investors will look toward the horizon, and try to project just what the commodity profit plays of the future will be.

If you need help, just ask Money Morning's Horacio Marquez.

As worries about oil escalate - whether those worries are about future supplies, future prices or global-warming - more and more muscle is being placed behind alternative power technologies.

That's especially true in the hybrid vehicle market, where a specific technology has emerged as the clear leader.

The technology is lithium-based rechargeable batteries, and its emergence is sending lithium demand skyrocketing.

The profit potential of this market is stunning - but only for investors who can figure out the right way to play it.

  HOW TO BUILD WEALTH LIKE WARREN BUFFETT: 
  Principles and Practical Methods Used by the World’s Greatest Investor 

 

The material in this program and corresponding reference guidebook contains historical performance data. 

Presentation of performance data does not imply that similar results will be achieved in the future.

Rather, past performance is no indication of future results and any assertion to the contrary is a federal offense.

Any such data is provided merely for illustrative and discussion purposes;

Such an offer is made only be prospectus, 

which you should read carefully before investing or sending money.

The material presented in this program 

and the accompanying reference guidebook is accurate to the best of the author’s knowledge. However, per- 
formance data changes over time, and laws frequently change as well, and the author’s advice could change 
accordingly. Therefore, the listener/reader is encouraged to verify the status of such information before acting. 
The author and the publisher expressly disclaim liability for any losses that may be sustained by the use of the 
material in this program and the accompanying reference guidebook. 

 How to Build Wealth Like Warren Buffett 

  Table of Contents 

  Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 

  The Buffett CEO Assessment Quiz . . . . . . . . . . . . . . . . . . . . 5 

  Probing Questions to Assist You in Defining 
  Your Investment Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . 8 

  Creating Your Own Investment Philosophies . . . . . . . . . . 10 

  Lou Simpson’s Five Investment Principles . . . . . . . . . . . . . 14 

  Phil Fisher’s Timeless Investment Philosophies, 
  Principles, and Questions . . . . . . . . . . . . . . . . . . . . . . . . . . 16 

  Intriguing Statistics and Strategies . . . . . . . . . . . . . . . . . . . 18 

  Commonly Referred to Sayings of Warren Buffett . . . . . . .21 

  Notables and Quotables . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 

  Appendix A — 
  Berkshire’s Corporate Performance vs. the S&P 500 . . . . . . 28 

  Appendix B — 
  Berkshire Hathaway’s Publicly Traded Common 
  Stock Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 

  Appendix C — 
  Berkshire Hathaway’s Acquisition Criteria . . . . . . . . . . . . . 31 

  Appendix D — 
  Berkshire Hathaway’s Subsidiary List . . . . . . . . . . . . . . . . . 32 

  Suggested Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 

How to Build Wealth Like Warren Buffett 3 

Introduction 

Welcome to Robert Miles’ How to Build Wealth Like Warren Buffett: Principles and Practical Methods Used by the World’s Greatest Investor .

This audio/video pro- gram and the accompanying guidebook have been created to aid you in learning 
more about the wise and abundant world of Warren Buffett, along with gaining a greater understanding of exactly what your investment principles and strategies are. 

Warren’s uncompromising work ethic, combined with his shrewd investment strategies, have made him one of the richest and most respected men the world over.

Acclaimed author and Buffett expert Robert Miles brings to light Warren Buffett, the man, along with his simple yet highly effective business and investing principles.

You will be both inspired and motivated as Robert recounts the story of how Warren Buffett single-handedly became a self-made billionaire solely by investing in stocks and businesses that he believed in.

You will learn how a simple $100 investment that he made in 1957 grew into the billions that have made him the world’s second richest individual to date. 

At a time when “get rich quick” money-making schemes are on the rise, it is both inspiring and re f reshing to gain the insights of a man who accumulated his wealth with good old-fashioned, long-term and time-proven value investment strategies. 

To achieve the maximum benefits from this program, listen to each audio session at least twice, ideally three times.

Listening to the audio session several times allows it to sink into your subconscious mind as you make more and m o re discoveries each time that you listen.

Be sure to keep a paper and pen nearby as you are listening, and be pre p a red to stop the program when you 
hear an idea or strategy that particularly appeals to you.

Think about that idea in connection with your situation, your work, your life-style, then pre p a re a 
plan to act upon it in the days ahead.

Take the time to study the inform a t i o n p rovided in this Reference Guide and work through the various probing quest i o n n a i res within it. 

Statistics about Mr. Buffett’s publicly traded investment firm Berkshire Hathaway [NYSE:BRKA] have been provided in the Appendix so that you may review in greater detail how he invests, and what he invests in.

You may wish to study them in order to clarify your own investment principles and strategies 
through research and comparison. 

  How to Build Wealth Like Warren Buffett 

  Should you wish to take action on any of the insights that you have gained, we suggest that whenever possible you give yourself a deadline, and be committed  to following through on that deadline.

Without implementing any of the action steps that you have mapped out for yourself, this program simply becomes an  exercise in listening.

In order to gain the full benefits that this valuable program has to offer you, make the decision here and now to work through this program, act upon your insights and strategies, and achieve the kind of results in your life that you’ve never thought possible. 

How to Build Wealth Like Warren Buffett 5 

The Buffett CEO Assessment Quiz 

Do You Have What It Takes to Report to Warren Buffett? 

Take the following assessment quiz based on the book The Warren Buffett CEO: 
Secrets from the Berkshire Hathaway Managers by Robert P. Miles and find out if 
you have what it takes to report to “the best boss in the world,” Warren Buffett. 
Circle your answer. 

1. When do you plan to retire? 

  A.) I want a life after work and plan to retire before age 50. 

  B.) I like traditional mandatory retirement and want to spend time with my 
  family, so I will work to age 65. 

  C.) Like the Supreme Court Justices, I want a job for life. 

2. If you had to choose between receiving $100 million and your business, 
  which would you choose? 

  A.) I would take the money and run. 

  B.) I love my business like a child and it isn’t for sale at any price. 

  C.) Given the choice I would take both. Give me a fair price for my business 
  and let me continue to run it the same way I have always run it. 

3. How concentrated is your personal portfolio? 

  A.) I would never have all of my net worth in one company but would 
  broadly diversify across a wide range of equities. 

  B.) Some of my portfolio is in high-risk special situations but most is in 
  solid blue chip companies. 

  C.) I see no reason to diversify and have all of my net worth in one company. 

  How to Build Wealth Like Warren Buffett 

  4.Who are your heroes? 

  A.) I tend to look at sports, Hollywood, and media celebrities. 

  B.) Other business CEOs who have made it big. 

  C.) My boss and/or my mother and/or my father. 

  5. What type of industry do you prefer to work in? 

  A.) I prefer the new economy with the latest in technological innovations. 

  B.) My preference is a multinational conglomerate with several cutting-edge 
  divisions. 

  C.) Give me a boring old economy-style business that has a durable competi- 
  tive advantage and predictable profits. 

  6. What is your attitude toward corporate culture and synergy? 

  A.) I would love to merge my business and division into a larger enterprise. 
  There would be immediate benefits to eliminating duplication and creat- 
  ing buying cooperatives. 

  B.) Whenever you combine two businesses together you will find synergies. 

  C.) Best to leave good profitable businesses alone. Merge with no synergy 
  expectations. 

  7. What is the best use of corporate profits? 

  A.) Return profits to shareholders in the form of dividends. 

  B.) Expand the business with additional locations and/or buying competi- 
  tors. 

  C.) Assign the responsibility to one person to allocate capital in the best pos- 
  sible way. 

How to Build Wealth Like Warren Buffett 7 

8. If you had all or a substantial amount of your net worth in one publicly 
  traded stock: 

  A.) You would check on the price of the stock daily or even several times a 
  day. 

  B.) You would diversify and not have all of your net worth in one stock. 

  C.) You would occasionally check on the stock price, maybe once a week. 
  The price doesn’t really matter because you don’t intend to sell it anyway. 

9. Best way to become a Buffett CEO: 

  A.) Do a good job for a competitor and be recruited after a nationwide 
  search. 

  B.) Belong to the right golf club and mingle in the right social circles. 

  C.) Be fortunate enough to be born into it or work most of your life for the 
  business and be promoted into it based on merit and loyalty. 

10. Your business was founded: 

  A.) Recently, with a fabulous business model that takes advantage of new 
  technologies. 

  B.) Founded 30 years ago with a strong management team in place. 

  C.) Founded before 1967 and before Warren Buffett started managing 
  Berkshire Hathaway. 

Answer Key: 

“C” is the correct answer for every question. 

How Did You Do? 

1–5 correct answers: Keep your day job. 

6–8 correct answers: Buffett CEO potential. 

9–10 correct answers: Call Warren Buffett today. 

 How to Build Wealth Like Warren Buffett 

  Probing Questions to Assist You in Defining 
  Your Investment Strategies 

  Robert states that all investing starts with self-analysis.

He maintains that it is important to do the self-discovery to determine what kind of investor you are.

Read through the list below and fill out an in-depth description of yourself in relation to investing. 

  • Your investment expectations are: 

  • The time frame that you have to invest is: 

  • On a scale from 1 to 10 (with 10 high), your risk tolerance is: 

  • Your current life situation is (single, married, a parent, or retired): 

• Do you need income or capital growth, maybe low taxes? 

• Are you a risk taker? Conservative? An ethical investor? Contrarian? Just start- 
  ing? 

• How much do you have to invest? Do you have a lump sum, an inheritance, a 
  little or a lot to lose? 

• What is your personality in relation to investing? Do you get up early and run, 
  read all financial-related info and fly off to work, or do you sleep in, like to 
  spend time with your family, casually observe business, and prefer to look at 
  your investments annually? 

• The most important thing to ask yourself is if you are a passive or an active 
  investor: 

 Creating Your Own Investment Philosophies 

  Robert suggests that you create an investment strategy and stick to it 
  through up times and down times in the market. Several Warren Buffett 
  modeled investing philosophies that he outlines are: 

  a. PUT THEM IN WRITING: There’s something about writing that helps crys- 
  tallize your thinking and acts as a guidepost during major market swings from 
  the inevitable greed to fear and vice versa. Mr. Market (a term used by Ben 
  Graham to define the market swings from greed to fear and back again) can only 
  be tamed with written beliefs. Investment principles help you with the right tem- 
  perament as well. Like teaching, in order to write you need to first comprehend. 
  And there’s no better teacher than experience. 

  b. READ ABOUT DEVELOPING A PHILOSOPHY: Second best is reading 
  about other successful investors, which is why there’s great interest in Warren 
  Buffett and Berkshire Hathaway. Phil Fisher’s book Common Stocks and 
  Uncommon Profits has an excellent section on developing an investment philoso- 
  phy. 

  c. MAKE IT PERSONAL: You can mimic someone else’s philosophy or develop 
  your own. Your best philosophy is the one you develop for yourself. While it is 
  wise to read and study other philosophies, it is generally not a good idea to copy 
  another’s beliefs word for word. The problem with imitation is that the imitator 
  doesn’t truly understand what he is copying. Original thought is always recom- 
  mended. 

  d. ORIGINS OF A PHILOSOPHY: First you have to have an interest in invest- 
  ing. It usually starts at a young age, and either you have more of an interest in 
  saving and investing or you have a more common interest in spending and con- 
  suming. Rarely do you see a saver become a spender or a consumer become an 
  investor. You can read all you want about investment philosophies, but nothing 
  beats real life experiences. It takes time, experience, and mistakes — a lot of 
  them to develop an investment philosophy. 

  Investing is an evolution. It’s a process that with a philosophy can bring great 
  financial rewards and peaceful sleep. 

An investing philosophy requires certain principles in order to achieve success. 
Investing is and always has been a combination of science and art, but also an 
act of faith because it’s about the future, and by definition the future is 
unknown. Faith is merely the belief in a positive future outcome. Worry and fear 
are the opposite. Worry is faith in a negative future outcome. How many times 
have you heard that past investment returns are no guarantee of future results? 

So any investment belief system needs a philosophy. And many diverse invest- 
ment philosophies can lead to similar results. But in my case you choose to 
study the origins of successful investors to find out what you can learn about 
their principles. 

e. DECLINING MARKETS: Certain experiences shape the investor and his/her 
philosophies. And nothing better can happen to an investor than to buy a stock 
that declines. This decline will test your investment beliefs about this stock more 
than any stock price increase. Rising markets will spawn more investment 
geniuses than we have ever seen. Your measure as an investor is how your 
philosophies hold up during turbulent times. 

f. BACK TESTING DOESN’T WORK: Unfortunately the investment world is 
full of Monday morning quarterbacks. Back testing just about any investment 
philosophy isn’t a true test. Just about any fifth grader can look at the past and 
weave a brilliant investment scenario. Warren suggests that unfortunately most 
of us invest looking backwards or “like driving a car with the rearview mirror.” 
Remember to invest looking in front of you, out the windshield. 

g. MISTAKES: Explain your mistakes and how you have learned from them. 
Detail how your investment mistakes have made you a better investor. Explain 
how you have grown and evolved as an investor. It’s the admission of mistakes 
and how you have picked yourself up from them that is the measure of the 
investor, not your successes. Ninety-eight percent of us are ready to tell the 
world about all of our genius moves in buying pieces of a business. It’s the rare 
individual who talks about decisions that we thought were signs of genius but 
were far from it. Great investors do post mortems. Explain how you thoroughly 
analyzed your decision to buy a company and later changed your mind and sold 
it. Tell about your get-rich-quick schemes that no one else has ever heard of or 
tried. The best investment philosophy is born out of your mistakes. It becomes a 
sign that you have learned from experience. 


  h. INDEPENDENT THOUGHT: A proper investment philosophy must prove 
  your ability to move against the grain and to think independently. All great 
  investors both professional and individual have a common characteristic of con- 
  trarian opinion. As soon as someone tells me they believe in a guru, even if they 
  say the guru is Mr. Buffett, they immediately red flag themselves as group 
  thinkers. Independent thinkers make no mention of gurus in their investment 
  philosophy. 

  i. PAT I E N C E : No investment belief can be proven in the short term. Phil Fisher 
  asked his clients to give him at least three years to prove himself. Too many of 
  us are unfit for investment decision making because of our short - t e rm nature . 
  If Fisher wanted three years from his clients for proper evaluation, he also gave 
  his investees (the stocks he owned) three years to prove their merit as well. Few 
  of us can demonstrate stock fidelity. Unfortunately most of us, including the 
  p rofessionals, simply rent stocks instead of owning them indefinitely like 
  Wa rren Buffett does. 

  j. COMPARISONS: All philosophies should be compared against those of others 
  who have a well-developed and written set of them. The best comparison is 
  against those who have used their beliefs to beat the market over long periods of 
  time. Your results should be compared to how much value you have added to 
  the S&P index over time. If your investment beliefs don’t add value then you 
  should reconsider your written philosophy. 

  k. EXCEPTIONS: Fisher proved there are exceptions to every rule and he did 
  admit to acting against his written investment principles. He had a three-year 
  rule. He asked his clients to give him the same amount of time to prove his 
  investment talents and he believed in treating his investees the same. 
  Occasionally, not just once, he broke his three-year rule and sold a company 
  before three years. 

  l. MARKET TIMING AND EFFICIENT MARKET THEORISTS: Some invest- 
  ment beliefs work well in the short term and are even taught at major universi- 
  ties. Look at all the major media sponsors of investing games that involve short- 
  term trading. Even The Wall Street Journal is guilty of sponsoring professionals 
  against the dartboard over a ridiculous short-term period. Like most financial 

pundits and opinion makers, these games promote that which runs contrary to 
my written investment philosophies. 

Your written investment philosophy should speak to these two issues. Do you 
believe in market timing? If not, do you have a minimum holding period like 
Fisher (three years) or like Buffett (ten years)? Secondly, do your beliefs address 
efficient markets? Do you believe opportunities exist because Mr. Market doesn’t 
properly value a stock that you have researched and understand its intrinsic 
value? What do your principles say about an anticipation of a declining market? 
Do you sell or stay the course? 

m. DO A FEW THINGS WELL: Nobody can be good at everything and no 
investor can properly follow more than a few stocks. Warren Buffett’s mentor 
Ben Graham called this your “circle of competence.” Phil Fisher calls this “doing 
a few things well.” Make sure your principles define your competence. 

n. THE MOST IMPORTANT THING: Whatever your investment philosophy, 
whatever your beliefs, have a written set of investment principles. And remem- 
ber what Mr. Buffett says about principles. They are principles because they 
don’t change with the latest fad. 

Based on the suggestions above, take some time to write out your investment 
philosophies in the space provided below. 

  Lou Simpson’s Five Investment Principles 

  1. Think independently. “We try to be skeptical of conventional wisdom,” he 
  says, “and try to avoid the waves of irrational behavior and emotion that peri- 
  odically engulf Wall Street. We don’t ignore unpopular companies. On the 
  contrary, such situations often present the greatest opportunities.” 

  2. Invest in high-return businesses that are run for the shareholders. “Over the 
  long run,” he explains, “appreciation in share prices is most directly related to 
  the return the company earns on its shareholders’ investment. Cash flow, 
  which is more difficult to manipulate than reported earnings, is a useful addi- 
  tional yardstick. We ask the following questions in evaluating management: 
  Does management have a substantial stake in the stock of the company? Is 
  management straightforward in dealings with the owners? Is management 
  willing to divest unprofitable operations? Does management use excess cash 
  to repurchase shares? The last may be the most important. Managers who run 
  a profitable business often use excess cash to expand into less profitable 
  endeavors. Repurchase of shares is in many cases a much more advantageous 
  use of surplus resources.” 

  3. Pay only a reasonable price, even for an excellent business. “We try to be dis- 
  ciplined in the price we pay for ownership even in a demonstrably superior 
  business. Even the world’s greatest business is not a good investment,” he con- 
  cludes, “if the price is too high. The ratio of price to earnings and its inverse, 
  the earnings yield, are useful gauges in valuing a company, as is the ratio of 
  price to free cash flow. A helpful comparison is the earnings yield of a com- 
  pany versus the return on a risk-free long-term United States Government 
  obligation.” 

4. Invest for the long-term. “Attempting to guess short-term swings in individual 
  stocks, the stock market, or the economy,” he argues, “is not likely to produce 
  consistently good results. Short-term developments are too unpredictable. On 
  the other hand, shares of quality companies run for the shareholders stand an 
  excellent chance of providing above-average returns to investors over the long 
  term. Furthermore, moving in and out of stocks frequently has two major dis- 
  advantages that will substantially diminish results: transaction costs and 
  taxes. Capital will grow more rapidly if earnings compound with as few inter- 
  ruptions for commissions and tax bites as possible.” 

5. Do not diversify excessively. “An investor is not likely to obtain superior 
  results by buying a broad cross-section of the market,” he believes. “The more 
  diversification, the more performance is likely to be average, at best. We con- 
  centrate our holdings in a few companies that meet our investment criteria. 
  Good investment ideas — that is, companies that meet our criteria — are dif- 
  ficult to find. When we think we have found one, we make a large commit- 
  ment. The five largest holdings at GEICO account for more than 50% of the 
  stock portfolio.” 

  Source: The Warren Buffett CEO by Robert P. Miles 

Phil Fisher’s Timeless Investment 
  Philosophies, Principles and Questions 

  Phil Fisher’s Eight Investment Philosophies 

  1. Buy companies that have disciplined plans for achieving dramatic long-range 
  growth in profits and that have inherent qualities making it difficult for new- 
  comers to share in that growth. 

  2. Buy companies when they are out of favor. 

  3. Hold a stock until either (a) there has been a fundamental change in its 
  nature (i.e., weak management changes) or (b) it has grown to a point where 
  it no longer will be growing faster than the economy as a whole. 

  4. De-emphasize the importance of dividends. 

  5. Making some mistakes is an inherent cost of investing. Taking small profits in 
  good investments and letting losses grow in bad ones is a sign of abominable 
  investment judgment. 

  6. There are a relatively small number of truly outstanding companies. Funds 
  should be concentrated in the most desirable opportunities. Any holding of 
  over twenty different stocks is a sign of financial incompetence. 

  7. Neither accept blindly whatever may be the dominant opinion in the financial 
  community at the moment nor reject the prevailing view just to be contrary 
  for the sake of being contrary. 

  8. Success greatly depends on a combination of hard work, intelligence, and 
  honesty. 

Phil Fisher’s 15 Questions to Ask Yourself When Buying a Business 

1. Does the company have products or services with sufficient market potential 
  to make possible a sizable increase in sales for at least several years? 

2. Does the management have a determination to continue to develop products 
  or processes that will still further increase total sales potentials when the 
  growth potentials of currently attractive product lines have largely been 
  exploited? 

3. How effective are the company’s research and development efforts in relation 
  to its size? 

4. Does the company have an above average sales organization? 

5. Does the company have a worthwhile profit margin? 

6. What is the company doing to maintain or improve profit margins? 

7. Does the company have outstanding labor and personnel relations? 

8. Does the company have outstanding executive relations? 

9. Does the company have depth to its management? 

10. How good are the company’s cost analysis and accounting methods? 

11. Are there other aspects of the business, somewhat peculiar to the industry 
  involved, that will give the investor important clues as to how outstanding 
  the company may be in relation to its competition? 

12. Does the company have a short-range or long-range outlook in regards to 
  profits? 

13. In the foreseeable future, will the growth of the company require sufficient 
  equity financing so that the large number of shares then outstanding will 
  largely cancel the existing benefit from this anticipated growth? 

14. Does the management talk freely to investors about its affairs when things 
  are going well but “clam up” when troubles and disappointments occur? 

15. Does the company have a management of unquestionable integrity? 

  Source: Common Stocks and Uncommon Profits by Phillip Fisher 

Intriguing Statistics and Strategies 

  Buffett’s conglomerate Berkshire Hathaway, publicly traded on the NYSE under 
  the symbol BRKA, is now the 25th largest employer with over 140,000 employ- 
  ees. It is the largest private employer in the state of Georgia. His NetJets sub- 
  sidiary can be considered the sixth largest private airline, based on number of 
  corporate jets under management. All of this and no large headquarter staff, no 
  options, no funny accounting, no yachts, no Rolls Royces, no mansions or typi- 
  cal trappings of wealth. 

  Warren has the longest CEO tenure of 37 years and counting. To give you a per- 
  spective of Warren’s investment record, consider in the last century the DJIA 
  went from 66 to 11,000. The NASDAQ born in 1971 went from 100 to 2000. 
  Beginning in 1965 when Warren bought control of Berkshire Hathaway, it has 
  added one zero to its stock price every decade — from 7 to 70 to 700 to 7,000 to 
  70,000. Now it’s the highest price of any stock on any stock exchange in the 
  world and he’s proud of it, following his passion and doing exactly what he was 
  born to do. No retirement plans, except, he jokes, five to ten years after his 
  death. Asking him to name a replacement and retire would be like asking 
  Picasso to stop painting. Berkshire is his masterpiece. He owns outright over 
  100 wholly owned businesses — from Dairy Queen to World Book Encyclopedia 
  to GEICO auto insurance. He also owns over $30 billion in stocks, including 
  Coca-Cola, American Express and Gillette. 

  ___________ || ___________ 

  The three qualities most admired by Warren Buffett are intellect, character, and 
  temperament. 

  ___________ || ___________ 

  1. Concentrate your investments in world-class companies managed by strong 
  management. 

  2. Limit yourself to companies you truly understand; 5–10 is good, more than 20 
  is asking for trouble. 

  3. Select the very best and concentrate your investment. 

  ___________ || ___________ 

Robert sites just some of the traits that he values in Warren Buffett: 

• Integrity 

• Maintaining an excellent reputation 

• Intelligence 

• Discipline 

• Respect 

• Humility 

• Humor 

• Denial of instant gratification 

• Rewarding others where due 

• Frugality 

• Choosing the right partner 

• Maintaining good health 

• Remaining debtless 

• Simple-living 

• Giving your children enough without providing too much 

• Disregarding old age 

  ___________ || ___________ 

obert illustrates the many categories of investor types as being: 

  • Faddists [want to know what the latest trend is] 

  • Fortune tellers [do what their psychic suggests, charts, or read tea leaves] 

  • Delegators [turning their investments over to someone else] 

  • Validators [have to look over every decision that is made and approve it] 

  • Technicians [follow the technical indicators] 

  • Contrarians [do the opposite of the crowd] 

  • Guru followers [believe someone wiser than them can guide them to financial 
  heaven] 

  • Mountain climbers [like to get up above and look down at the macro econom- 
  ics of what is going on in the markets, they concern themselves with what 
  interest rates are doing and whether it is a bear or bull market] 

  • Random walkers [whatever is known about a stock is already reflected in the 
  price] 

  • Lemmings [follow the crowd] 

  • Valuers [dig into the business to discover what it is really worth to determine if 
  they would like to be an owner] 

Commonly Referred to Sayings of 
Warren Buffett 

• The critical investment factor is determining the intrinsic value of a business 
  and paying a fair or bargain price. 

• Never invest in a business you cannot understand. 

• Risk can be greatly reduced by concentrating on only a few holdings. 

• Stop trying to predict the direction of the stock market, the economy, interest 
  rates, or elections. 

• Buy companies with strong histories of profitability and with a dominant busi- 
  ness franchise. 

• You are neither right nor wrong because the crowd disagrees with you. You are 
  right because your data and reasoning are right. 

• Be fearful when others are greedy and greedy only when others are fearful. 

• Unless you can watch your stock holding decline by 50% without becoming 
  panic-stricken, you should not be in the stock market. 

• It is optimism that is the enemy of the rational buyer. 

• As far as you are concerned, the stock market does not exist. Ignore it. 

• The ability to say “no” is a tremendous advantage for an investor. 

• Much success can be attributed to inactivity. Most investors cannot resist the 
  temptation to constantly buy and sell. 

• Lethargy, bordering on sloth, should remain the cornerstone of an 
  investment style. 

• An investor should act as though he had a lifetime decision card with just 
  twenty punches on it. 

• Wild swings in share prices have more to do with the “lemming-like” 
  behavior of institutional investors than with the aggregate re t u rns of the com- 
  pany they own. 

• As a group, lemmings have a rotten image, but no individual lemming has ever 
  received bad press. 

• An investor needs to do very few things right as long as he or she avoids 
  big mistakes. 
 “Turn-arounds” seldom turn. 

  • Is management rational? 

  • Is management candid with the shareholders? 

  • Does management resist the institutional imperative? 

  • Do not take yearly results too seriously. Instead, focus on four- or 
  five-year averages. 

  • Focus on return on equity, not earnings per share. 

  • Calculate “owner earnings” to get a true reflection of value. 

  • Look for companies with high profit margins. 

  • Growth and value investing are joined at the hip. 

  • The advice “you never go broke taking a profit” is foolish. 

  • It is more important to say “no” to an opportunity than to say “yes.” 

  • Always invest for the long term. 

  • Does the business have favorable long-term prospects? 

  • It is not necessary to do extraordinary things to get extraordinary results. 

  • Remember that the stock market is manic-depressive. 

  • Buy a business, don’t rent stocks. 

  • Does the business have a consistent operating history? 

  • Wide diversification is only required when investors do not understand what 
  they are doing. 

  • An investor should ordinarily hold a small piece of an outstanding business 
  with the same tenacity that an owner would exhibit if he owned all of that 
  business. 

  (Extracted from various books on Buffett including Buffett: The Making of 
  an American Capitalist; Warren Buffett Speaks; Buffettology; The Warren 
  Buffett Way; Of Permanent Value; and Thoughts of Chairman Buffett: Thirty 
  Years of Unconventional Wisdom from the Sage of Omaha) 

Notables and Quotables 

English philosopher James Allen said, “Circumstances define you and you 
attract not what you want but rather what you are.” 

R e g a rding the diff e rence between being rich and being wealthy, Stephen Swid 
w rote, “Being rich is having money. Being wealthy is having time.” 

Proverbs states, “He that maketh haste to be rich shall not be innocent.” 

There are no ethical shortcuts to accumulating wealth like Warren Buffett has. 
There are no specific, latest, or hot stock picks. Quoting from Money magazine 
in 1987, “There is no reason in the world you should expect some broker to be 
able to tell you whether you can make money on index futures or options or 
some stock in two months. If he knew how to do that, he wouldn’t be talking to 
investors. He’d have retired long ago.” 

A lady stood up at Berkshire’s annual meeting and said, “Mr. Buffett I only have 
one b share.” And he interrupted her and said, “That’s okay lady, between you 
and me we own half the company, what is your question?” 

Warren writes, “Sometimes traditional wisdom can be long on tradition and 
short on wisdom.” His principles are long on wisdom and short on tradition. 

Think independently and get no satisfaction with following the crowd. In fact, to 
build Buffett wealth you must operate differently from everyone else. As Warren 
is most often quoted, “Be fearful when others are greedy and greedy when oth- 
ers are fearful.” 

Ralph Waldo Emerson said, “Man was born to be rich, or grow rich by use of his 
faculties, by the union of thought with nature. Property is an intellectual pro- 
duction. The game requires coolness, right reasoning, promptness, and patience 
in the players.” 

Active investors need to read, research, and understand before you act. You need 
  to be an intelligent investor not an emotional one. Professor Graham said, “In 
  the short run the stock market is a voting machine, but in the long run it is a 
  weighing machine.” Meaning short-term stock movements are determined by 
  popularity or lack of it, but in the long run it’s all about the earning or weight of 
  the business you own. 

  One of Warren Buffett’s famous quotes is, “Price is what you pay, value is what 
  you get.” 

  When he was asked how he learned so much about stocks, Warren said that he 
  “went to the library and started with the A’s and read every public company’s 
  annual report.” Ask yourself how often you follow financial news and whether or 
  not you enjoy being an active investor or if you prefer to be a passive investor. 

  How do you define risk? Many think that you can reduce risk by diversifying 
  and buying two of everything. Warren calls this the “Noah’s ark investor.” If you 
  buy two of everything you soon end up with a zoo for a portfolio. Risk as 
  defined by Warren is “not knowing what you are doing.” According to Peter 
  Lynch, most people diversify, or “diworsify,” out of ignorance. If you know how 
  to value businesses and buy them at attractive prices then you want to buy more 
  of what you own, not more of something else less attractive. 

  Fisher wrote, “Sustained success requires skill and consistent application of 
  sound principles.” 

  Warren’s management style can be summarized in four words, “Hire well man- 
  age little.” 

  “Warren Buffett is a value investor and a values manager.” — Robert Miles 


Famous economist John Maynard Keynes stated, “One’s knowledge and experi- 
ence are definitely limited and there are seldom more than two or three enter- 
prises at any given time in which I personally feel myself entitled to put 
full confidence.” 

Charlie Munger said, “In the United States, a person or institution with almost 
all wealth invested, long term, in just three fine domestic corporations 
is securely rich.” 

“Your goal as an investor should simply be to purchase, at a rational price, a 
part interest in an easily understandable business whose earnings are virtually 
certain to be materially higher five, ten and twenty years from now,” wrote 
Warren Buffett in his 1996 letter to investors. 

Fisher said, “Taking small profits in good investments, and letting losses grow in 
bad ones is a sign of abominable investment judgment. A profit should never be 
taken just for the satisfaction of taking it. Contrary to standard dogma, there are 
a relatively small number of truly outstanding businesses.” 

Warren Buffett states, “With each investment you make, you should have the 
courage and the conviction to place at least ten percent of your net worth in 
that stock.” 

“There are two mistakes one can make along the road to truth — not going all 
the way and not starting.” — Buddha 

“Never do anything in business that you wouldn’t want published on the front 
page of your local newspaper. It takes 20 years to build a reputation and five 
minutes to destroy it. If you think about that, you might do things differently.” 
— Warren Buffett 

“A man of genius makes no mistakes. His errors are volitional and are the por- 
tals of discovery.” — James Joyce 

Pearl Bailey once said, “I have been poor and I have been rich. I prefer rich.” 

  “The higher you go up, the more mistakes you are allowed. Right at the top, if 
  you make enough of them, it’s considered to be your style,” said famed dancer 
  Fred Astaire. 

  Albert Einstein stated, “Anyone who has never made a mistake has never tried 
  anything new.” 

  “An investor needs to do very few things right as long as he or she avoids big 
  mistakes,” wrote Warren Buffett. 

  In his 1997 letter, Warren Buffett wrote about discipline, “Under these circum- 
  stances [unreasonable stock valuations], we try to exert a Ted Williams kind of 
  discipline. In his book The Science of Hitting, Ted explains that he carved the 
  strike zone into 77 cells, each the size of a baseball. Swinging only at balls in his 
  ‘best’ cell, he knew, would allow him to bat 400; reaching for balls in his ‘worst’ 
  spot, the low outside corner of the strike zone, would reduce him to 230. In 
  other words, waiting for the fat pitch would mean a trip to the Hall of Fame; 
  swinging indiscriminately would mean a ticket to the minors.” 

  “Only two times in a man’s life when he should not speculate: when he can’t 
  afford it, and when he can,” wrote Mark Twain. 

  James Allen said, “Circumstance does not make the man, it reveals him to him- 
  self. Men do not attract that which we want, but that which they are.” 

  “Character is power,” said John Howe. “It makes friends, draws patronage and 
  support, and opens the way to wealth, honor, and happiness.” 

  “Men of genius are admired, men of wealth are envied, men of power are feared; 
  but only men of character are trusted.” — Author unknown 
Mahatma Gandhi stated, “There are seven sins in the world: pleasure without 
conscience, knowledge without character, worship without sacrifice, science 
without humanity, politics without principle, commerce without morality, and 
wealth without work.” 

“To live content with small means,” observed William Henry Channing, “to seek 
elegance rather than luxury, and refinement rather than fashion; to be worthy, 
not respectable, and wealthy, not rich; to study hard, think quietly, talk gently, 
act frankly; to listen to stars and birds, to babes and sages, with open heart; to 
bear all cheerfully, do all bravely, await occasions, hurry never. In a word, to let 
the spiritual, unbidden, and unconscious grow up through the common. This is 
to be my symphony.” 

Robert Miles highly recommends that you read Warren Buffett’s letters to share- 
holders online at www.berkshirehathaway.com. 

 Appendix A 

  Berkshire’s Corporate Performance vs. the S&P 500 

  Annual Percentage Change 

  in Per-Share in S&P 500 
  Book Value of with Dividends Relative 
  Berkshire Included Results 
  Year (1) (2) (1)-(2) 

  1965 23.8 10.0 13.8 

  1966 20.3 (11.7) 32.0 

  1967 11.0 30.9 (19.9) 

  1968 19.0 11.0 8.0 

  1969 16.2 (8.4) 24.6 

  1970 12.0 3.9 8.1 

  1971 16.4 14.6 1.8 

  1972 21.7 18.9 2.8 

  1973 4.7 (14.8) 19.5 

  1974 5.5 (26.4) 31.9 

  1975 21.9 37.2 (15.3) 

  1976 59.3 23.6 35.7 

  1977 31.9 (7.4) 39.3 

  1978 24.0 6.4 17.6 

  1979 35.7 18.2 17.5 

  1980 19.3 32.3 (13.0) 

  1981 31.4 (5.0) 36.4 

  1982 40.0 21.4 18.6 

  1983 32.3 22.4 9.9 

  1984 13.6 6.1 7.5 

1985 48.2 31.6 16.6 

 1986 26.1 18.6 7.5 

 1987 19.5 5.1 14.4 

 1988 20.1 16.6 3.5 

 1989 44.4 31.7 12.7 

 1990 7.4 (3.1) 10.5 

 1991 39.6 30.5 9.1 

 1992 20.3 7.6 12.7 

 1993 14.3 10.1 4.2 

 1994 13.9 1.3 12.6 

 1995 43.1 37.6 5.5 

 1996 31.8 23.0 8.8 

 1997 34.1 33.4 .7 

 1998 48.3 28.6 19.7 

 1999 .5 21.0 (20.5) 

2000 6.5 (9.1) 15.6 

2001 (6.2) (11.9) 5.7 

Average Annual Gain 
1965-2001 22.6% 11.0% 11.6% 

Overall Gain 
1964-2001 194,936% 4,742% 190,194% 

Notes: 

The S&P 500 numbers are pre-tax whereas the Berkshire numbers are after-tax. 

By ranking the previous chart by the last column you will notice that Warren 
Buffett and Berkshire Hathaway perform best during bear or declining markets. 

  Source: www.berkshirehathaway.com 

 Berkshire Hathaway’s Publicly Traded Common Stock Portfolio 

  12/31/01 

  Shares Company Cost Market 

  (dollars in millions) 

  151,610,700 American Express Company $ 1,470 $ 5,410 

  200,000,000 The Coca-Cola Company 1,299 9,430 

  96,000,000 The Gillette Company 600 3,206 

  15,999,200 H&R Block, Inc. 255 715 

  24,000,000 Moody’s Corporation 499 957 

  1,727,765 The Washington Post Company 11 916 

  53,265,080 Wells Fargo & Company 306 2,315 

  Others 4,103 5,726 

  Total Common Stocks $8,543 $28,675 

  ===== ===== 

  Source: 101 Reasons to Own the World’s Greatest Investment: 
  Warren Buffett’s Berkshire Hathaway written by Robert P. Miles 
  and published by John Wiley and Sons. 

Appendix C 

Berkshire Hathaway’s Acquisition Criteria 

We are eager to hear from principals or their representatives about businesses 
that meet all of the following criteria: 

1. Large purchases (at least $50 million of before-tax earnings). 

2. Demonstrated consistent earning power (future projections are of no interest 
  to us, nor are “turnaround” situations). 

3. Businesses earning good returns on equity while employing little or no debt. 

4. Management in place (we can’t supply it). 

5. Simple businesses (if there’s lots of technology, we won’t understand it), 

6. An offering price (we don’t want to waste our time or that of the seller by talk- 
  ing, even preliminarily, about a transaction when price is unknown). 

The larger the company, the greater will be our interest: We would like to make 
an acquisition in the $5–20 billion range. We are not interested, however, in 
receiving suggestions about purchases we might make in the general stock market. 

We will not engage in unfriendly takeovers. We can promise complete confiden- 
tiality and a very fast answer — customarily within five minutes — as to 
whether we’re interested. We prefer to buy for cash, but will consider issuing 
stock when we receive as much in intrinsic business value as we give. 

Charlie and I frequently get approached about acquisitions that don’t come close 
to meeting our tests: We’ve found that if you advertise an interest in buying col- 
lies, a lot of people will call hoping to sell you their cocker spaniels. A line from 
a country song expresses our feeling about new ventures, turnarounds, or auc- 
tion-like sales: “When the phone don’t ring, you’ll know it’s me.” 

  Source: www.berkshirehathaway.com 

 Berkshire Hathaway’s Subsidiary Listing 

  Acme Building Brands Borsheim’s Jewelry 
  2821 West 7th Street 120 Regency Parkway 
  Fort Worth, TX 76107-2219 Omaha, NE 68114 
  (817) 390-2409 (402) 391-0400 
  www.brick.com www.borsheims.com 

  Ben Bridge Corporation The Buffalo News 
  2901 Third Avenue One News Plaza 
  Seattle, WA 98121 Buffalo, NY 14240 
  (206) 448-8800 (716) 849-3434 
  www.benbridge.com www.buffnews.com 

  Benjamin Moore CTB Inc. 
  51 Chestnut Ridge Road 410 North Higbee 
  Montvale, NJ 07645 Milford, IN 46542 
  (800) 344-0400 (574) 658-4191 
  www.benjaminmoore.com www.ctbinc.com 

  Berkshire Hathaway Credit Corp. Central States Indemnity Co. 
  1440 Kiewit Plaza 1212 No. 96 Street 
  Omaha, NE 68131 Omaha, NE 68114-2274 
  (402) 346-1400 (402) 397-1111 
  www.csi-omaha.com 
  Berkshire Hathaway Homestate Co. 
  9290 West Dodge Road CORT Business Services Corp. 
  Omaha, NE 68114 11250 Waples Mill Road 
  (402) 393-7255 Fairfax, VA 22030 
  www.bh-hc.com (703) 968-8500 
  www.cort1.com 
  Berkshire Hathaway Reinsurance 
  100 First Stamford Place Dairy Queen 
  Stamford, CT 06902-6745 7505 Metro Boulevard 
  (203) 363-5200 Edina, MN 55439 
  www.brkdirect.com (952) 830-0200 
  www.dairyqueen.com 

Fechheimer Brothers Co. Helzberg’s Diamond Shops 
4545 Malsbary Road 1825 Swift 
Cincinnati, OH 45242 North Kansas City, MO 64116-3671 
(513) 793-5400 (816) 842-7780 
www.fechheimer.com www.helzberg.com 

FlightSafety International Inc. Johns Manville Corporation 
La Guardia Airport 717 17th Street 
Flushing, NY 11371-1061 Denver, CO 80202 
(718) 565-4100 (303) 978-2000 
www.flightsafety.com www.jm.com 

Fruit of the Loom Jordan’s Furniture 
2 Fruit of the Loom Drive 100 Stockwell Drive 
Bowling Green, KY 42103 Avon, MA 02322 
(270) 393-8269 (508) 580-4600 
www.fruit.com www.jordansfurniture.com 

Garanimals Justin Brands Inc. 
350 5th Avenue 610 West Daggett 
New York, NY 10118 Fort Worth, TX 76104 
(800) 759-4219 (800) 358-7846 
www.garanimals.com www.justinbrands.com 

GEICO Kansas Bankers Surety Company 
One GEICO Plaza 1220 S.W. Executive Drive 
Washington, DC 20076-0001 Topeka, KS 66615 
(301) 986-3000 (785) 228-0000 
www.geico.com 
  Larson-Juhl 
General Cologne Re Corporation 3900 Steve Reynolds Boulevard 
695 East Main Street Norcross, GA 30093 
Stamford, CT 06904-2351 (770) 279-5200 
(203) 328-5000 www.larsonjuhl.com 
www.gcr.com 
  MidAmerican Energy Holdings 
H. H. Brown Shoe Co., Inc. 666 Grand Avenue 
124 West Putnam Avenue Des Moines, IA 50390 
Greenwich, CT 06830 (515) 242-4300 
(203) 661-2424 www.midamerican.com 
www.hhbrown.com 
www.dextershoe.com 

 MiTek Inc. Scott Fetzer Companies 
  14515 North Outer Forty Drive 28800 Clemens Road 
  Chesterfield, MO 63017-5746 Westlake, OH 44145-1197 
  (314) 434-1200 (440) 892-3000 
  www.mitekinc.com www.carefreecolorado.com 
  www.chpower.com 
  National Indemnity Co. www.kirby.com 
  3024 Harney Street www.quikut.com 
  Omaha, NE 68131 www.waynepumps.com www.world- 
  (402) 536-3000 book.com 
  www.nationalindemnity.com 
  See’s Candies, Inc. 
  Nebraska Furniture Mart 210 El Camino Real 
  700 South 72nd Street South San Francisco, CA 94080 
  Omaha, NE 68114 (650) 761-2490 
  (402) 397-6100 www.sees.com 
  www.nfm.com 
  Shaw Industries 
  NetJets 616 E. Walnut Avenue 
  581 Main Street Dalton, GA 30720 
  Woodbridge, NJ 07095 (706) 278-3812 
  (732) 326-3700 www.shawinc.com 
  www.netjets.com 
  Star Furniture 
  The Pampered Chef 16666 Barker Springs Road 
  One Pampered Chef Lane Houston, TX 77218 
  Addison, IL 60101-5630 (281) 492-6661 
  (800)266-5562 www.starfurniture.com 
  www.pamperedchef.com 
  United States Liability Insurance 
  Precision Steel Warehouse 190 South Warner Road 
  3500 North Wolf Road Wayne, PA 19087 
  Franklin Park, IL 60131 (610) 688-2535 
  (847) 455-7000 www.usli.com 
  www.precisionsteel.com 
  Wesco Financial Corp. 
  R. C. Willey Home Furnishings 301 East Colorado Boulevard 
  2301 South 300 West Pasadena, CA 91101-1901 
  Salt Lake City, UT 84115 (626) 585-6700 
  (801) 461-3900 
  www.shoprcwilley.com XTRA Corporation 
  200 Nyala Farms Road 
  Westport, CT 06880 
  (203) 221-1005 
  www.xtracorp.com 

Suggested Reading: 

101 Reasons to Own the World’s Greatest Investment: 
Warren Buffett’s Berkshire Hathaway 
by Robert P. Miles 

The Warren Buffett CEO: 
Secrets of the Berkshire Hathaway Managers 
by Robert P. Miles 

The Intelligent Investor 
by Benjamin Graham 

Of Permanent Value: The Story of Warren Buffett 
by Andrew Kilpatrick 

Buffett: The Making of an American Capitalist 
by Roger Lowenstein 

The Essays of Warren Buffett: Lessons for Corporate America 
by Warren Buffett 

Common Stocks and Uncommon Profits and Other Writings 
by Philip A. Fisher 

Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire 
Charlie Munger 
by Janet Lowe 

Warren Buffett Speaks: Wit and Wisdom from the World’s Greatest Investor 
by Janet Lowe 

CNBC Transcript: Warren Buffett Explains His Railroad 'All-In Bet' on America
Published: Tuesday, 3 Nov 2009



Just minutes after this morning's announcement that Berkshire Hathaway is paying $26 billion to acquire the 77 percent of Burlington Northern Santa Fe [BNI 97.97 -0.02 (-0.02%) ] it doesn't already own, Warren Buffett spoke live by phone with Becky Quick and Joe Kernen on CNBC's Squawk Box.

This is the complete transcript of their conversation, that also touched on the economy, executive compensation on Wall Street, and whether capitalism has been "permanently damaged."

BECKY QUICK: First of all, how did this deal come (about)? This comes as a huge surprise to anybody that's been watching this. I know you've had a stake in Burlington Northern, but buying the whole thing that's a huge deal, 34 billion dollars?




WARREN BUFFETT: Well, a week ago Thursday, we were, the Board of Directors of Berkshire was meeting in Fort Worth. We do one off-site meeting a year. We've got three subsidiaries in Fort Worth: Justin Boot, Acme Brick and TTI. So we pick out a place and go down once a year. And I went down a couple of hours early last Thursday, a week ago Thursday. I went over to BNSF and visited with (Burlington Northern CEO) Matt Rose and his top management. They gave me a kind of a run-through of what they were going to do with the analysts that afternoon at 3:30. And I said to Matt, 'If you're ever looking for a permanent home for BNSF, don't forget my phone number. And he didn't throw me out of the office. So the next day while we were touring various businesses of Berkshire, I had my assistant, Debbie Bosanek, call his office and ask if would drop by the Ashton Hotel around six o'clock when we get back. When he dropped by, I made him an offer. He said he would take it to his Board. Took about 15 minutes. (Laughs.)

JOE KERNEN: An offer that he couldn't refuse. You're using stock ...

BUFFETT: I don't like to use stock, but on this one, because of the size and because they wanted a tax-free option for shareholders, we're doing it 40 percent stock and 60 percent cash. 

BECKY: What's this 50-for-1 split of the Class B shares? We're just reading this release, too. You don't do stock splits!

BUFFETT: Well, yeah, I'm not big on stock splits. But by having this split, it enables anybody that has as little as one share of BNSF to opt for the tax-free exchange, the 40 percent per share. So those small shareholders can have exactly the same availability that otherwise would only have been available to a big shareholder. Our main exchange will be for 'A' shares. And since the 'A' sells for around $100,000, it means anybody that had less than that amount of BNSF would not have the same choice as a big shareholder did. So, we're not splitting the 'A' but we are splitting the 'B' 50-for-1. 

JOE: And, if you had to just -- there's a lot of reasons to love the rails, I know, Warren. But what is it about the future that makes the rails so attractive? We've got to move stuff, I know. Is it that they can do it in a very cost-effective way?

BUFFETT: They do it in a very cost-effective way. And they do it in an extraordinarily environmentally friendly way. BNSF last year moved, on average, it moved a ton of goods 470 miles on one gallon of diesel. It releases far fewer pollutants into the atmosphere. It saves enormously on energy consumption and, you know, it diminishes highway congestion. Rails last year moved 40 percent -- more than 40 percent of the ton-miles in the country. They moved more than all those trucks, just the four big railroads. So it's a very effective way of moving goods. And I just basically believe this country, you know, will prosper and you'll have more people moving more goods 10 and 20 and 30 years from now and the rails should benefit. It's a bet on the country, basically. 

BECKY: You know, Warren, you started really getting involved with some of these train stocks, what was it, about two, three years ago when you started buying stakes in Burlington Northern. Was it Union Pacific [UNP 63.55 1.05 (+1.68%) ], the other? 

BUFFETT: Yeah, Union Pacific and Norfolk Southern [NSC 51.67 0.41 (+0.8%) ], yeah. About three years ago. I woke up about five years late, but that's pretty good for me. (Laughs.)

BECKY: But what happens to your stakes in these other two? 

JOE: He's making a heck of a lot of money on Union Pacific today, I'll tell you that much, Warren. Could you buy them in, too? 

BUFFETT: No, no -- (laughs) -- I think --

JOE: Someday?

BUFFETT: I think one railroad's enough. (Laughs.) But --

JOE: So you're saying no, for sure?

BUFFETT: Yeah. No. There's only two big roads in the west and, Union Pacific and BNSF will be competitors 50 years from now. (Laughs.)

JOE: Yeah.

BUFFETT: But, it's true. The situation in railroads changed dramatically a decade or so ago.

Railroads got much more efficient.

I mean, right now you've got 90 percent more ton-miles moving than you had 25 or 30 years ago and you've got 'em moving on 40 percent less track.

And the costs have gone done in inflation-adjusted terms.

It's become a much more productive industry.

But I go way back in it.

I went to the Illinois terminal hearings before the ICC 50 years ago.

And I used to own something called the Green Bay and Western, and that was the GB&W, and they said it stood for 'grab baggage and walk.' (Laughs.)