AUDIENCE MEMBER 00:09
My name is Hubert Vose (PH). I’m from Santa Barbara, California.
Earlier this morning, you made a comment that if the market fell you would be spending less time on the internet because you’d be very busy. And this is reinforced an impression I have had that the cash flows of Berkshire Hathaway are enormous, but that possibly in the last 12 months you’ve been investing less than you had previously.
And if so — if this is correct, what does that say about waiting for attractive values? How long are you willing to wait, and what does that say to the investment public in their own habits?
WARREN BUFFETT 00:56
Well, you’re correct that we have not found anything to speak of in equities in a good many months, and —
The question of how long we wait, we wait indefinitely. We are not going to buy anything just to buy something. We will only buy something if we think we’re getting something attractive.
And that — and incidentally, if things were 5 percent cheaper that — or 10 percent cheaper — that wouldn’t change anything materially.
So we have no idea when that period ends. We have no idea whether — as I’ve said, it can turn out that these valuations are perfectly appropriate if returns on equity stay where they are. But even then, they aren’t in the least mouthwatering, so we won’t feel we’ve missed anything particularly if returns stay where they are.
Because if it turns out that these levels are OK, they still will not produce great returns from here, in our view. That doesn’t mean you couldn’t have a tremendous market in the short-term or something of the sort.
Markets can do anything. And you look at the history of markets and you just see everything under the sun. But we will not — you know — we have no timeframe. If the money piles up, the money piles up. And when we see something that makes sense, we’re willing to act very fast, very big. But we’re not willing to act on anything that doesn’t check out in our view.
There’s no — you don’t get paid for activity, you only get paid for being right. Charlie?
CHARLIE MUNGER 02:32
Yeah. An occasional dull stretch for new buying, this is no great tragedy in an investment lifetime. Other things may be possible in such an era, too. I mean, it isn’t like we have a quiver with only one arrow.
WARREN BUFFETT 02:49
We sat through periods before. I mean, the most dramatic one being the early ’70s — late ‘60s and early ’70s.
For a long time it seemed — doesn’t seem so long when you look back on it, seems long when you’re going through it — but it — like having a tooth pulled or something, but it’s, you know, what can you do about it?
The businesses aren’t going to perform better in the future just because you got antsy and decided you had to buy something. We will wait till we find something we like. We’ll love it when we can swing in a big way, though. That’s our style. Area 1.
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