How Warren Buffett decides if something is a good investment

you've praised the president's tax cut calling it a win dat merit the American economies back I guess no I have said I have said that it is a wind a tax bill it was targeted in a big way to help corporations so it helps Berkshires million shareholders isn't what I would have done if I was going to have a tax cut but so as an individual I do not agree with the philosophy that led to it but as a steward at Berkshire Hathaway I have to tell you that it does our shareholders a lot of good I see I was because I was going to ask you I mean there must be a cost to this is there's always a glossary I mean it sort of suggests that the savings from the government then all that money was maybe miss spent by the government I mean what is there a cost of downside to the tax cut well there's always I mean it's just sorry Don if you take taxes to zero for every country you wouldn't be issuing a lot of bonds the but there's you can't ever do just one thing in economics you probably Canada in physics either there's a butterfly effect but in economics you always have to say and then what and if you give a large break to one group it's not free if I were going to cut the revenues of the United States I would have I would have helped a different group of people but as I say it is very helpful to Berkshire it's not that we were non-competitive before but our shareholders are better off Don Harding one of our readers viewers asks so have you increased salaries and benefits for Berkshire employees like some other companies have done in the wake of the announcement about some of our portfolio companies have done that but but we're not paying dividends we're not repurchasing shares we're investing and we'll use the money for investment I wonder Warren what you think of President Trump's tweets particularly about the stock market and one of our readers asked you on each in from San Mateo how Warren Buffett would rate president travel well I'm a great the press but I would say that communication is enormous ly important for a president going back to Roosevelt in the 1930s every family in the country was sort of huddled around his radio I mean yeah you had the the big networks you could you were talking to everybody and now it's much more diffused than obviously President Trump feels that he does not like it filtered through the traditional news media so he's gonna do it directly I believe communications enormously important for a CEO and I like to talk to our shareholders directly if I were frustrated with my ability to talk to Mike the people I'm responsible for I would try to figure out a way to do it directly and obviously I have that president feels that way so can we talk a little bit about a healthcare initiative have you told the story about how that came about did Jamie call you up on a conference call with Jeff how did it happen I think probably you know I can't answer with a hundred percent precision but I know my impression is that it it came about because there's a so quite young works for us Todd combs is also on JP Morgan's Moreland and Todd and I've talked a lot about health care and and I think Todd developed some ideas about how something like this might work and I think he he's the one that actually talked to Jamie and is this really just for these three companies or is it going to be a model for the rest of the healthcare system what's the point I hope if we can figure out a way to have better care at lower cost and stem the constant rise as a percentage of GDP I hope every company in the United States that steals the idea of rama's and and just it will also want to touch on crypto currencies I know that you've had some negative feelings about them but now Wall Street institutions seem to be dipping their toes in and I wonder a if you change your mind at all and be the biggest one of the biggest mysteries in America what did you tell Katy Perry you guys talked about crypto currencies but none of us know what you guys said you too we did okay I will answer your question about it but there's two kinds of items that people buy and think they're investing one really is investing and the other is it if you buy something a farm an apartment house or the business and look to the asset itself to determine whether you've done something what the farm produces what what the business earns and so on you don't really care what the stock markets open you can do that on a private basis in fact you do it on a private basis of you buy a farm or department house generally and it's a perfectly satisfactory investment you look at the investment itself to deliver the return to you now if you buy something like bitcoin or or some some cryptocurrency you don't really you don't have any English producing you're just hoping the next guy pays more and the next and your only feel you'll find the next guy to pay more if he thinks he's gonna find somebody that that's gonna pay the more now if you ban trading in farms you could still buy farms and have a perfectly decent investment if you ban trading in apartment houses or even in equities if you abandon trading at Berkshire Hathaway for the next five years our investors would do fine you know over time and but if you ban trading in tulip bulbs you know or if you ban trading and in some Bitcoin which nobody knows exactly what it is people would say well why in the world would I buy it and you aren't investing when you do that you're speculating there's nothing wrong with it if you want to gamble somebody else will come along to pay more money tomorrow that's one kind of game that is not investing interesting I want to ask you some questions for the Chinese audience first of all can you say me how to them penny how how much do you think the Chinese economy and markets will ultimately become like the United States how much convergence do you think there will be I really don't know that answer to that I what I do know is they have found the secret sauce for themselves just like we found the secret sauce a couple centuries ago and so they have had an economy in the last 60 years or thereabouts they have unleashed the potential of their citizenry and where for really centuries they did not progress that much economically for overwhelming portion of the population what they've done in the last 50 or six years is a total economic miracle I never would have thought it could have happened but the true this they're smart as we are they work as hard as we are and and and they can have a growth and economy from a lower base that will exceed ours percentage-wise for a long time and I mean they're they're destined for a fine economic future just like we are shifting gears Warren I want to ask you about women in the workplace and the me to movement what role can men play to advance women in their careers in business and in the economy well and I had an have two sisters that are absolutely smart as I am inand and better personalities and better know they were born around my time of 1930 and and they were told them very early and marry well you know that was the unseen message I mean nobody ever said it that way but so I have seen half of the United States as Talent basically put off to the side and it's one of the things makes me optimistic about Americans when I look at what we accomplished using half our talent for a couple of centuries and now I think of doubling the talent that that effectively employed at least has the chance to be it makes me very optimistic about this country and good managers are scarce you know talent was it's always rarer and you better get used every bit of it that you can find it certainly the way I've felt personally all my life skip from Baltimore wants to know if you collect Social Security I collected and my wife was now eligible and she's supposed to be collecting but she hasn't got her check yet but but we'll we'll see what she should be getting here pretty soon Asia from Columbus Ohio ass plenty of time left Warren but got to ask you what do you want to be remembered for as a teacher yeah that would be very flattering if I would feel that that was on my tombstone because I benefited from terrifically from teachers not all teachers who were employed as teacher but teachings of all kinds but the people spending their time too pass along what they have learned to a teacher not a great investor yeah I don't know anything at investing that that's complicated I've just been added a long time I may just look at if I just put that hundred and fourteen dollars the SP I'd have $400,000 well I think there's a little more to it than that ask on from Papillion Nebraska says how do you tell the difference between reasonable and unreasonable fear so know there's the stocks down maybe it should be down or stocks down maybe it shouldn't be down well you just keep looking at the facts I mean you're you're looking at a business that's the important thing you know you don't look at a stock chart I looked at stock charts for years I used to have a lot of funds week that I was kind of groping around throw a philosophy you look at the business I mean how you decide if you own a half interest with you some buddy of yours in a McDonald's store how do you decide you know whether it's a successful investment well if if the stones two feet out and there's no business today to you you say well I made a terrible deal no you look at how it's performing as a business over time how it's doing versus the competition you know all right Warren Buffett thank you very much for all of your time great talking to you okay thanks for having me

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Id: biKr34fDb0E

Length: 9min 59sec (599 seconds)

Published: Mon Feb 11 2019