1998: What keeps Buffett awake at night?

AUDIENCE MEMBER: Jane Bell (PH), Des Moines. Since I became a Berkshire Hathaway shareholder I’ve been coming to these meetings. This is my second. (Laughter)

WARREN BUFFETT: I’ve been coming to these meetings ever since I’ve been a shareholder. (Laughter)

AUDIENCE MEMBER: Mr. Buffett, I’m a partner and owner in a consulting business, and we tell our clients and potential clients that we design solutions for what keeps them awake at night.

Mr. Buffett, from your perspective as an investor, what keeps you awake at night?

WARREN BUFFETT: Well, that’s a good question. And that’s one I always ask the managements of our subsidiaries, as well as any new investment. I want to know what their nightmare is.

Andy Grove, in his book “Only the Paranoid Survive,” talks about the silver bullet for a competitor. So in terms of, if you only had one silver bullet, which competitor would you fire it at?

And it’s not a bad question. And your question’s a little broader. If you only had one worry that you could get rid of, what would it be?

I would say that, and I think I speak for Charlie — (inaudible) — but we really don’t worry. You know, we will do the best we can, and when we have capital allocated, sometimes it’s very easy to do. Sometimes it’s almost impossible to do.

But we’re not going to worry about it, because, you know, the world changes. And if we had something we were worried about in the business, we would correct it.

I’m not worried about any — I’m not really worried about — you know, we can lose a billion dollars on a California earthquake. But I’m not worried about it, although I have a sister who’s in the audience that lives in California. I told her to call me quickly if the dogs start running in circles or anything like that. (Laughter)

But there’s — you know, if you’re worried about something, the thing to do is get it corrected and get back to sleep. And I can’t think of anything I’m worried about at Berkshire. That doesn’t mean that I have any good ideas as to what we should be doing with a whole lot of money that we have around.

But, you know, I can’t do anything about that except keep looking for things that I might understand and do something with the money. And if they aren’t there, they aren’t there. And we’ll see what happens tomorrow and next week and next month and next year.

Charlie, what are you worried about?

CHARLIE MUNGER: Well, in the 30-some years I’ve been watching you, I would say what it takes to make you not sleep at night is an illness in the family.

Short of that, Warren likes the game. I like the game. And even in the periods that look tough to other people, it’s a lot of fun.

WARREN BUFFETT: It’s a lot of fun.

CHARLIE MUNGER: It’s a lot of fun. (Laughter)

WARREN BUFFETT: In fact it probably is the most — (applause) — it’s sort of, it is the most — I mean we define tough times differently than other people would, but our idea of tough times is like now, and our idea — we don’t feel it’s tough times when the market’s going down a lot or anything of the sort. So we are having a good time then.

I mean we don’t want to sound like undertakers during a plague or anything, but — (Laughter)

But there really — you know, it makes no difference to us whether the price of Berkshire is going up or down. We’re trying to figure out ways to make the company worth more money years down the road, and if we figure that out, the stock will take care of itself, so —

And usually when the stock is going down, it means other things are going down. And it’s a better chance for us to deploy capital, and that’s our business.

So you will not see us worrying. Maybe we should. You know, “What, me worry?” (Laughs)