1996: Will Berkshire be able to continue reinvesting its cash at the Berkshire's historical rates of return?

AUDIENCE MEMBER: Ed Johnson (PH) from Park City, Utah.

As you receive the proceeds of the Class B sale and generate other cash, are you seeing opportunities out in the marketplace to continue to provide the kinds of returns that we’ve been fortunate enough to experience in the past?

WARREN BUFFETT: With or without the sale of the B, we don’t see things to do that can maintain anything close to the average returns of the past. We’ve tried to convey that.

And it becomes a mathematical absurdity. Money just won’t compound at that rate in this world, absent extraordinary inflation. It certainly won’t compound in real terms.

So, absent the issue of the B, we are not looking at them. We’re not seeing things. We’re not hoping to find things that match some of the things that we have found in the past, relative to the capital base we’ve had in the past.

But we have that problem with or without the B. And it has not changed in any, even very minor degree, by the issuance of the B.

We are looking for things all of the time. Anytime we find anything that makes sense to us, we will do it.

The harder part is to make sure that we don’t do something when we don’t find something that makes sense. I mean, that’s the bigger worry.

And when we find them, you know, they’ll come along. And you never have — you never know when it’s going to happen.

We run into businesses — I described a little bit of that in the annual report — almost by accident that we’ve had — contracted to make one purchase this year. The people who run it are here today. And it came about because I was attending a birthday party. And, you know, I’ll go to more in the future. (Laughter)

So, things have not ended around here. We’ll find interesting things to do over time. But they can’t remotely be as profitable as the things we’ve found in the past, simply because of the large capital base.