Warren Buffett 1999 Nightline Interview

[Music] mr. Buffett I presume may I call you Warren I mean you and me Warren Warren you dissed he's a man of simple tastes not always comfortable with the finer things in life he met a lobster the first time in his life and he was attacking the back of the lobster which of course was totally resistant and I said Warren if you turn it over you might have better luck but don't be fooled by the modest office there's a thirty billion dollar investment empire behind that door if you'd bought the sp500 in World War two you've made fifty four times your money I mean that stock might spend a good place to be Warren is beat the hell out of the stock market and for each brave soul who encrusted the young investor with ten grand back in the 1950s each has become a millionaire many times over God comes first my wife comes second and bottom comes third and really I'm not too sure about the second and third place so when he talks there's a lot of action and and and people are day trading and people listen the one piece of advice I give is don't do it on borrowed money he buy this IQ if they have good idea they have to buy it by sundown we Warren Buffett they wait for months and months years and years if the stock exchange closed for a year to wait for for a real investor it wouldn't make any difference not more but that's gate tonight Warren Buffett the down-home common sense advice of America's second richest men [Music] Warren Buffett almost never does interviews and he's been dodging this one for about six years which is how long it's been since he promised me that one day he would come on Nightline having finally agreed though he has pulled out all the stops said we could come to Omaha in late February and that he'd buy us all lunch at his favorite restaurant Warren likes the Dairy Queen so much he bought the company Warren Buffett holds what is whimsically referred to as a major position in a lot of companies coca-cola Gillette guy code to name just a few in fact it's only fair that you know Warren and I own stock in one another's companies my wife and I bought a few shares of Berkshire Hathaway about twelve years ago and Warren owns a few million shares of the Disney Corporation which of course owns ABC I'll try not to let that get in my way Warren Buffett can speak for himself I always have a feeling one of these days the mask is going to be ripped away and we're gonna find out that you have a villa and in Nice you know that you drive hunt sports cars around Southern California what is it I mean what is this Dairy Queen Omaha Nebraska living in the same home you've lived in for 40 years why it's what I enjoy you know I like just the way I lived 30 years ago and I live that way now the only difference is I have a plane I contrived it to travel around and privately but in terms of what I eat you know clothes I wear I may pay more for the clothes but they look cheap outright fun and books I read the television i watch whatever it may be the bridge I play it's it's it's what I want to do in life it that's your passion yeah I love bridging I love bridge but what can we buy the if I had five cars would I have a better time than having one car I mean I just have more possessions to keep track of so I appeal to be rich understand that is that's an illusion that a lot of people cheats all that line especially in this country I mean this notion that money can buy things for them that otherwise they couldn't have the big thing you want to do is you want in your everyday so you want to have a job you love and you want to work with people that you like and admire and trust and if you've got that you're a long way home I am getting to do exactly what I love to do every single thing a chance to work which is what well it's just it's it's what do you do it's not much i allocate capital and i keep a bunch of very talented people who don't have to work excited about working if i can I mean my job is to take these outstanding managers that usually come with the businesses we buy where they get all kinds of money from me and keep them as excited about working subsequently they were before they sold let me take you back to the phrase allocate now allocate money allocate capital yeah sure pretend for a moment that I'm a nine year old relatively bright one but not everybody it means that we've got a bunch of businesses around the country and their money and when they earned the money after they take care of the needs of their businesses they send it to Omaha and it's my job to take the money they earn and do the most intelligent thing that I can for our shareholders after they send me the money but I mean Berkshire Hathaway what did I mean for the for the longest time I thought you made shirts yeah well we don't has nothing to do with this no no no never so what is Bertrand is oh it's a company that owns a wide variety of businesses from candy operation insurance operations to a newspaper but then we have pieces of things like Gillette Coca Cola the Washington Post and and what we try to do is we try to be in businesses that have very good economics that are run by people that are honest and talented you would have said many times that you don't getting into a business in order to get out of it again and you come to stay yeah so that was part right why well it just fits my personality but one thing I mean businesses have ups and down well except that but I but I'm looking for businesses that have a whole lot more ups than downs and the ups are higher than the downs are low but I enjoy I don't want to I don't want to be in business like playing gin rummy game where every time I pick up a card I got him give up one in my hand for example we're sitting here in a Dairy Queen right for a reason yeah hey you claim to like Dairy Queen lunches yeah I do I for a long time and and B you own this place we own the company that franchises this place exactly why'd you buy it well we bought it what was it that went through your head well it was a it was a business I could understand now there's all kinds of businesses I can't understand I try not to buy into those because like why should I expect to make money on something I can't understand so I'm not in any high-tech businesses for example but I understand that you know an ultimate hamburger or you know a peanut Buster or a deli bar and I can I can I can handle it and I like the people that run it I like the economics of the business it's a good business you've got thousands of people that are paying you a royalty for your name and the business grows a little every year it generates cash the cash gets sent on and we got by other businesses with that but I mean just to give me a sense of what goes through your head it could have been burger king rather than Dairy Queen it could have been McDonald's yeah it's and both of those are very good businesses that you've just named they're not for sale and we owned a piece of McDonald's for a while it's a good business but Dairy Queen was available the price made sense in terms of what we were getting and and I like the fellow running it so so we wrote a check that's important too which you would not buy a company if you didn't respect maybe even respect and delight the people who run yeah I don't go into change management I i if you go in business with somebody causes your stomach concern I say that's a lot like marrying for money that it's it's probably not a very good idea under any circumstances it's absolutely crazy if you're already rich right yeah and so I'm not gonna do it I mean if I if I can add one percent or five percent of my net worth by being around people you know make me want to throw up I'm not interested you do something with your stock that is absolutely unique you know world I mean yours is the only stock on the market that is I don't know that's worth a bit seventy something thousand dollars a share at the moment why didn't you have a split it we don't if you run a public company yeah like Berkshire is anybody can buy the stock but by following certain policies and communicating in certain ways you can in effect filter out with some degree the people that have similar ideas and expectations and measurements who will then enter the theater in effect and so if you have a theater and you put ballet and then you have a rock concert inside you're gonna have some very disappointed people if you put rock concert you have a ballet you're gonna disappointed people you want to have an enterprise that attracts the people to fill the seats shares those the seats that they're that are in sync with you and and not splitting the stock means to some extent i filter out people who think that a stock split is a wonderful thing it doesn't have any new of the value of the business by having the pizza that's cut into eight pieces instead of four pieces I mean getting to hat checks in a restaurant but you understand what the theory behind splits is and people think that okay if you take $100 stock and you split two for one more people are out there who can afford a $50 stock perhaps then who can afford $100 stuff and what you're telling me is I don't want those people why not well we we've got a stock you can buy for the beef stock for $2,400 so one chair that costs $2,400 a lot of businesses have minimum investments that are twenty four hundred dollars or more I mean in terms of real estate partnerships serve mutual funds I mean I've never told anybody a buy Burchard stock and if if I were to give advice to somebody about how to have a marriage that would last and they can only seek one quality in their spouse only the only you're interested in is having the marriage last you look for humor intelligence looks whenever what you really want in your partner low expectations and that marriage will last I can't say and I would rather have people who are pleasantly surprised and berkshire hathaway anytime the people are disappointed let's take a short break and then when we come back what I'd like to do is talk to you about investment in the market as it exists today compared to the kind of thing that you do those are it's very different back with Warren Buffett in the moment [Music] he knows some companies very well that's one she's trying to concentrate he's waiting for them to be attractive when they're overpriced he he says I'll wait a little while and maybe something will happen internally or externally as a whole market go down or inside the company then he jumps in he sound like a dumb flying over the battlefield with a big check he's waiting for something to happen and back once again with Warren Buffett it seems to me that you are the very opposite of the typical Internet investor today I mean I I see sort of images of these kids under stove over there their computers buying one minute selling the next minute that's not you I don't I don't have a computer at the office for me I mean there's four other people there but I mean you don't use it I don't have a computer I use it at home to play bridge but I don't I don't use it officer three cones it's of no utility I mean all I'm trying to do is buy a piece of a business and an attractive price in the computer doesn't tell me how to do that are you a little bit nervous when I mean I understand your you're a very tolerant person who probably is willing to let anybody do what they want to do but as you look at what's happening to Wall Street today the incredible and companies that go up 100 200 percent over a week or two and then maybe drop 50 percent over it does that make you nervous well it it's always it's more exaggerated now than most of the time in the past but we've had a lot of speculative activity and all kinds of things over the years and Markinson and it frequently doesn't come to a good end but it'll it'll be with us a hundred years from now just as it wasn't with us a hundred years ago so it's just a lot faster it's it's it's there's a lot of action and and and people are day trading and that sort of thing you know I the one piece of advice I'd give them is don't do it borrowed money that many of them earn I know I mean they're bowing on merger yeah one of them will come to a bad end on that because oh well because things don't go up forever and a lot of the a lot of evaluations striking is extreme and again if you own them on borrowed money and they go down one day you know you don't get to play out your hand talk for a moment about your own philosophy compared to what you see going on right now because again your philosophy is as you once described it to me you you you called yourself an elephant hunter say I sit there in the tunnel grass and I wait there with my elephant gun till I see an elephant come along yeah and then I shoot but you may I mean what you really mean is that you'll sit there and you'll study a company over a period of months or even years until you're finally convinced that that's the right company for you that is about as far from the way that a lot of trading goes on today is anything the key if there's one key to what I do it's I look at every share of stock as being part of the business so if I'm gonna buy a hundred shares of General Motors or General Electric or whatever it may be I I try and look at what the whole business is selling for and then do I want to buy this tiny little piece of that business of that price that means on I think about the business I don't think about the price action of the stock or I don't think about what people are saying they're gonna turn next quarter or any think of a sorter and look at charts I just trying to look at the business now what does that mean it means I have to understand the business a lot of businesses I can't understand I can't understand Gillette I can understand coca-cola I can understand this chewing coming you know those are things that I can understand and I come in when I say I can understand it means I have a pretty good idea of what they're gonna look like 10 or 15 years from now that's that's understanding a business counting on the growth in of the of the business is that your book yeah that's all yeah I mean that we own See's candy for example why I haven't had a quote on See's candy since we bought in 1972 but I know the business is doing okay I don't need a quote on him and you know people managed to live through Saturday and Sunday without getting quotes on their stock so the stock exchange closed for a year to further for a real investor wouldn't make any difference I sometimes have the feeling as I look at the stock market today and investment as is carried out today so many million millions of people but to some degree we're engaged in a bit of a pyramid scheme that you know as long as everybody keeps putting money into the market it's gonna do well but one of these days somebody may say whoa bad idea am i we had a town and there were a hundred people and they all had 100 houses we all agreed to sell our house to each other at the end of each year up 20 percent we kept doing that we'd all feel very prosperous and the problem would be is when somebody left town and then we'd have 100 houses for sale them after one extra house for sale in' and we'd find out what the houses were really worked at that point is that is that you know and of course when when Warren Buffett talks a lot of people listening is that is that part of what's wrong with the market today no what happened is over the last 15 years stocks have gone up terrifically in fact since 1982 there have been two very important drivers of that one is infrastructure only gone down and return on equity and businesses gone up those are very good reasons for stocks to go up after a while the very act of stocks going up starts drawing in other people who get excited about the fact that their neighbor made a lot of money or maybe they made a little money past years and the the action of the market itself captures the attention of more and more of the participants as opposed to the businesses themselves and that's when you get into the dangerous periods is that where we are we're yeah we're into that some degree sure how dangerous a period is you never know then I mean you know or should never know but you know the valuations are high by historic standards you know that the level of speculation is high by any historic 200 and you know that that doesn't go on forever but you don't know what it ends it's going on for a very long time yeah but it's gathered a lot of momentum in the last few years the last three years prior to this one when the S&P is going up more than 20% every year that's it's almost unprecedented a lot of amateurs in the game today yeah and it's you know it attracts people well sure as long as they're making money and and those people will get flushed out very easily compared to people who really want to buy a business your advice let's say to a 25 year old making twenty five thirty thousand dollars a year but would like to see a little bit more come in over the course of the next few years how should that person in this you shouldn't buy on borrowed money you should pay off all credit card debt before you buy because any securities because you're paying 18% on credit card debt you're not gonna make more than eighteen percent of your in the market and if you want to pick stocks stick with the things that you understand and look at them as businesses if you just feel you want on a part of American business over a period of time you just put a little money in every month for the next thirty years and into some sort of a group of stocks maybe an index fund let's take a short break and when we come back I'd like to talk about the use of money and what money can be used for okay you had invested $10,000 in Berkshire stock in 1965 you would have fifty 1 million dollars today if you put that same money into the S&P 500 you'd have only about a hundred and thirty two thousand dollars so it's quite a difference and we're back once again with Warren Buffett we were talking about we're just beginning to talk about the use of money mm-hmm you don't use it much except to make money I usually build the business I mean it anyway I don't have cash myself a quarter of 1% of my net worth is outside the business ninety nine and three-quarters percent is in the business so but I mean you could extract some of your will sure if you wanted to and you know what a lot of people if I made George Soros as a perfect example of someone who likes to middle and a lot of thing yeah yeah you're doing not much why well i it's probably the best answer is that because i'm having so much fun doing what i'm doing if you if you get right into my psyche on it but essentially all but wealth is essentially a claim check on future output of other people so those claim checks in my case ninety nine in a large fraction percent of them will go back to society and the foundation and they can then buy services of people were medical supplies or school buildings or whatever it may be that they think will be most useful to society with those claims Jackson wouldn't you like to see some of that happening in your own lifetime I mean I always wonder what the point is of just giving it all the way to charity after you die why not why not want to do it while you're alive enjoy theirs well I actually I enjoy the idea of building this endowment fund up for society I mean I enjoy the process myself I mean I think as you say the game is is enjoyable by itself what is if you think about it if if I'd done all of that 15 years ago society would have had a few hundred million dollars of claim Jackson now I died tonight they'd have 30 billion a claim checked so it's not a bad endowment fund I have six very bright high-grade people who's thinking above-ground will be a lot better than my thinking six feet underground and and and I've given them a few guidelines but nothing that ties their hands in any way I want to tackle big problems I want them to tackle problems that generally don't have a funding constituency so that they're not the kind of things that government can attack well and that are not being attacked by philanthropy generally I wanted to want to try and do something they give me a sense of what kind of thing I mean it doesn't have to be specific but I'm not just interested in what sorts of things you want to affect after your death well I really the number one problem with mankind but I don't know how to attack it with money I think the spread of nuclear knowledge I mean I think that the greatest danger the mankind faces is the fact that more and more people are gonna build weapons of incredible destruction and the knowledge won't go away I don't know how to attack that problem with money there's an organization formed the process being formed by Lee Butler who was the former commander-in-chief of Strategic Air Command now Stratcom is he calls a second chance and devoting his energies and I'm devoting some money to to working on that problem there's nobody better qualified than than Lee to be working on it it's the problem investing you swing at easy picture your way do you see something like coca-cola or something and anybody can understand and you look for easy pitches in philanthropy is just the opposite you're taking the problems that define solution essentially big intractable problems and unfortunately that means your failure your rates gonna be a lot higher but it doesn't mean they are worth doing they should be done and that's what private philanthropy should be doing we talked about a couple of these issues many years ago and you told me for one thing yes you would leave a little bit of money to you did you got three kids but but the idea that you would leave always money to your kids is just silliness faster explain why well I don't believe in the divine right of the womb I see no reason why somebody that happens to win the ovarian Lottery and come out of a right womb is entitled to fan themselves for the next 50 years or command the resources of society if we're gonna pick an Olympic team in here mm I don't think we ought to take the Elvis son or the elegy daughter of bloom on all the prizes in 1976 and put them on the team I really believe in a meritocracy in athletics and I believe in a meritocracy in terms of who has the reason who handles the resources of society and we're a better society because that's the case did you discuss that with your kids at some point I mean you claimed that to him a long time ago yeah I take the view it's kind of interesting you have people talk about the debilitating effect of food stamps on welfare recipients of the cycle of dependency and all of that sort of thing but if you come out of the right womb you are on welfare the day you're born I mean instead of calling it welfare officer you have to trust officer said according to food stamps you have dividends an interest but it's the same picture and I really think that everybody think that everybody ought to started fairly close to the same place now they won't like my kids are going to get a better education than average and they're going to be around in a different environment but I really think that the people who are handling the resources in 2020 ought to be the people who will accomplish things that command those resources let's just take a short break and we'll be back with Warren Buffett you know let's let's take one more look at another side of Warren Buffett you're kind of a quiet guy but there's a bit of a hand inside I've seen you a few ABC affiliate meetings but let's just take a look at a little piece of videotape here and and maybe you'll explain to us what this was about if you need some money just go borrow so when the Dow's down don't frown and worry just happen side down and shout hooray [Music] what was the occasion I think I should buy that tape that was uh that was that was the Children's Theater here in Omaha they were doing an e and it was a charity event so I played Daddy Warbucks for a short period of time and this planning and the who ran the orphanage kept calling me morbucks but I explained to her that was Bill Gates and I wore much I'm sorry since you mentioned Bill Gates you didn't buy a big piece of Microsoft what I spent he spent nine hours explaining Microsoft to me couldn't have been a better teacher couldn't had a dumber student but I still understood a fair amount of what he was saying because he isn't a teacher and I I bought a hundred shares but I got all through it that just shows you how many dumb things you can do in this world I mean you've done all right learn you're a man of your word you told me five six seven years ago whenever it was and you would do this interview one day and maybe and another five six seven years you'll do what I get but thank you very much it apply here that's our report for tonight I'm Ted Koppel in Omaha Nebraska for all of us here at ABC News [Music] [Music] you you you

Channel: Wealth Talks

Views: 30,776

Keywords: Wealth, Money, Finance, Economics, Economy, Billionaire, Investing, Investment, Invest, Stocks, stock, trading, market, markets, venture capital, bonds, real estate, gold, hedge fund, Entrepreneur, startup, trade, trade war, stock market, value investing, business, Wall Street, wealth talks, private equity, fx, savings, warren buffett, nightline, berkshire hathaway, world news, ceo

Id: lg5Z5TPMYlk

Length: 37min 43sec (2263 seconds)

Published: Mon Mar 09 2020

Reddit Comments

[u/Virgil-Galactic]

Hilarious that he had a computer at home to play bridge and not at the office.

[u/NodeDotSwift]

That opening, cringe!

Funniest part is when he says Bill Gates spent 9 hours explaining Microsoft’s business to him, and so afterwards Warren bought 100 shares.

[u/SgtPepperAUS]

Almost like he’s talking about today’s market

[u/xxxNeonDreamsxxx]

You think the market gonna crash ? Seems very highly valued at the moment