1994: Does Buffett have a short-term opinion on the market?
AUDIENCE MEMBER: Diane West (PH) from Corona Del Mar, California.
I know, Mr. Buffett, that you said that you don’t read what other people say about the market or the economy, but do either you or Charlie have an opinion about how you think things are going to go? Are you bullish or bearish?
WARREN BUFFETT: You may have trouble believing this, but Charlie and I never have an opinion about the market because it wouldn’t be any good and it might interfere with the opinions we have that are good. (Laughter)
If we’re right about a business, if we think a business is attractive, it would be very foolish for us to not take action on that because we thought something about what the market was going to do, or anything of that sort.
Because we just don’t know. And to give up something that you do know and that is profitable for something that you don’t know and won’t know because of that, it just doesn’t make any sense to us, and it doesn’t really make any difference to us.
I mean, I bought my first stock in, probably, April of 1942 when I was 11. And since then, I mean, actually World War II didn’t look so good at that time. I mean, the prospects, they really didn’t. I mean, you know, we were not doing well in the Pacific. I’m not sure I calculated that into my purchase of my three shares. (Laughter)
But I mean, just think of all the things that have happened since then, you know? Atomic weapons and major wars, presidents resigning, and all kinds of things, massive inflation at certain times.
To give up what you’re doing well because of guesses about what’s going to happen in some macro way just doesn’t make any sense to us. The best thing that can happen from Berkshire’s standpoint — we don’t wish this on anybody — but is that over time is to have markets that go down a tremendous amount.
I mean, we are going to be buyers of things over time. And if you’re going to be buyers of groceries over time, you like grocery prices to go down. If you’re going to be buying cars over time, you like car prices to go down.
We buy businesses. We buy pieces of businesses: stocks. And we’re going to be much better off if we can buy those things at an attractive price than if we can’t.
So we don’t have any fear at all. I mean, what we fear is an irrational bull market that’s sustained for some long period of time.
You, as shareholders of Berkshire, unless you own your shares on borrowed money or are going to sell them in a very short period of time, are better off if stocks get cheaper, because it means that we can be doing more intelligent things on your behalf than would be the case otherwise.
But we have no idea what — and we wouldn’t care what anybody thought about it. I mean, most of all ourselves. (Laughter)
Charlie, do you have anything?
CHARLIE MUNGER: No. I think the — if you’re agnostic about those macro factors and therefore devote all your time to thinking about the individual businesses and the individual opportunities, it’s just, it’s a way more efficient way to behave, at least with our particular talents and lacks thereof.
WARREN BUFFETT: If you’re right about the businesses, you’ll end up doing fine.
We don’t know, and we don’t think about when something will happen. We think about what will happen. It’s fairly, it’s not so difficult to figure out what will happen. It’s impossible, in our view, to figure out when it will happen. So we focus on what will happen.
This company in 1890 or thereabouts, the whole company sold for $2,000. It’s got a market value now of about 50-odd-billion, you know?
Somebody could’ve said to the fellow who was buying this in 1890, you know, “You’re going to have a couple of great World Wars, and you know, you’ll have the panic of 1907, all these things will happen. And wouldn’t it be a better idea to wait?” (Laughter)
We can’t afford that mistake, basically. Yeah.