Warren Buffett 01 (May 08 - Jan 10)

[LenaHuat]

Hi SanSan

CNBC is airing it tonite. The town hall meeting has already taken place. Unofficial transcipts have been posted on the website.

[kennynah]

2nite at 9 pm, Eastern time, Warren Buffet and Bill Gates will be conducting a town hall meeting with MBA students at Columbia University, Warren's alma mater. I always find Columbia 'august' and wish our SMU could have been like it.

Becky Quick is hosting the program.

L : tx for bringing this up

so, it might be a quickie...i suppose these busy and old men wont engage in long session...hahahaha

[LenaHuat]

Hi K
I doubt it will be a quickie (sounds dirty ,)

[Poles]

http://www.cnbc.com/id/15840232?video=1329393420&play=1

a great show by the 2 rich & humble man.....a sincere willingness to teach.
another note is the mutli-color faces of american speaking a single language.....

[helios]

Thanks, pOland (i'm watching it now) ...

What are your after-thoughts? New drugs, new chips, new Robots?

[LenaHuat]

Although I was the one who posted the notification, I missed the airing . But I'm now reading the transcripts and there are some take-aways thoughts to mull over :-

Buffett : (On the stock market) If you wait too long for the robin, spring is over.

That's me since Dow hit 9,400. I'm still waiting for signs of the beginning of a 5-year secular bull run.

Buffet on Gates : I mean, as he said, he was very lucky. He was born in the right country, at the right time, with the right wiring and all of that sort of thing. In the end, he knows he's a beneficiary of a terrific society, and not everybody gets the long straws like he and I did. So he is -- and he has this view that every human life worldwide is the equivalent of every other human life, and he's backing it up not only with money, but backing it up with his time.

Michael Jackson would agree with this. He said during his world concerts, people scream, cry and dance at the same moments of his songs. People all over the world react similarly to his music. He saw no reason to harp on his being an American (as far as his music is concerned, I suppose) and much less an African-American.

With Warren, there are a lot of things you could pick, you know, his integrity as an example for the world. His sense of humor. But I think I'd pick his desire to teach, his desire to teach things that are complex and put them in a simple form so that people can understand and get the benefit of all his experience, all his models of how the world works.

I hope forumers would teach more . I notice a surge of new members over the last few days. I extend a Warm Welcome to you and hope you would share your thoughts with us. Gates spoke abt learning. However, one needs to brainstorm one's ideas with others in order to sharpen the focus and depth of one's views. Maybe correct them

Buffet : First of all, I'd say marry the right person.

Incidentally, we own Fruit of the Loom, too, but I'm not going to do a product.

That's a revelation . Michael Jackson's avid fans found out that he wore them . It will sell more.

I was lucky enough to get the right foundation very early on. And then basically I didn't listen to anybody else. I just look in the mirror every morning and the mirror always agrees with me. And I go out and do what I believe I should be doing. And I'm not influenced by what other people think.

Believe in yourself. Wow, that sounds pretty cliche. Gates has a better and more realistic description of what that meant to him :

Gates : You have a few moments like that where trusting yourself and saying yes, this can come together -- you have to seize on those because not many come along.

BUFFETT: Well, that's 50 years of preparation and five (minutes) of decision making. [APPLAUSE]

BECKY: Can you just look at the spreadsheet? Can you look at an annual report and make a decision like that?

BUFFETT: Yeah. Sometimes I can. Just take Coca-Cola, for example. I sampled the product for 60 years and then I saw a couple of key ingredients, you know, that essentially tipped the scale in terms of buying it back in 1988. But the good big decisions, they don't take any time at all. If they take time, you're in trouble.

[bluechipstamp]

Thanks Lena. Since you've started the ball rolling, I'll share the parts that caught my attention as well.

So [alternative] energy, you're going to have to be a bit careful to make sure it's one that's really got its cost structure in line and it's not just being pushed along by subsidies and there will be scientific surprises. So a very hot area, but not necessarily a good area for investment.

I concur. When I looked at the Solar energy business some weeks back, I find it very tough to invest. It's a business whereby u have little control over COST and SELLING PRICE. On the COST side, the raw material (Silane gas, Polysilicon etc) prices fluctuate madly. On the selling side, you're dependent on the price of oil. You'll be dead meat if these 2 variables move against u.

For an alternative energy company to succeed, it needs to reduce the problem to a single variable. Since no one can control the price of oil, that pretty much leaves you with the COST variable. Solar businesses cannot achieve this, at least not yet.

When I got out of school, I turned every page in Moody's 10,000-some pages twice, looking for companies. And you have to find them yourself. The world isn't going to tell you about great deals. You have to find them yourself. And that takes a fair amount of time. So if you are not going to do that, if you are just going to be a passive investor, then I just advise an index fund more consistently over a long period of time.

Increasingly, I'm feeling that active investing has to be a full-time job.

In my (limited) experience of doing bottom-up investing, I find that the market is fairly efficient in pricing in most of the facts that are available from the official numbers. It's beyond the numbers (eg. asset mis-pricing due to mark to cost in the balance sheet) that one needs to dig, and this takes a huge amount of time.

When I started, I use stock filters to get a small list of companies to explore. I think this is the wrong approach. The reverse of using a stock filter to remove a small list of companies NOT to explore will likely be more effective.

But every year don't measure it by the earnings in the quarter that year. Measure it by whether the moat around that business, what gives it competitive advantage over time has widened or narrowed.

I look at my own (local) portfolio, and sadly, I can't find many companies that qualify. Most would be what I consider "cigar butt" investments, with some having longer puffs than others.

Many proponents of value investing like to quote Buffett, saying that one should buy & hold forever. Nothing wrong with that, except that you have to realize that very very few companies qualify. Worse, you'll need to identify such companies before the market does, or you'll end up paying dearly. It's truly not easy.

[LenaHuat]

Hi bluechipstamp

Thanks a million for your very thougthful response. I hate talking to myself. It's pointless.
Warren Buffet probably have his 50 great managers to brainstorm with. I'm sure he doesn't talk to himself.

I have more thoughts to add. I am not in the least upset about waiting for the robin and missing a spring. As I have mentioned, I'm looking for the next 5-year bull run. I've 4 more springs to look forward to.

Regarding solar energy, it's true it's a tough terrain. Tiptoeing into just 1 company to test the water is maybe the way to go. Don't expect the crown to show up easily.

Increasingly, I'm feeling that active investing has to be a full-time job.

I wouldn't say the above but you are almost there in terms of the sentiment. I am not a Christian, I am Jewish without the kosher food, rituals and conversion. I like to quote the following from Robert Alter's "The 5 books of Moses" as it reflects my attitude towards investing too:-

Genesis : When God began to create heave and earth, and the earth then was welter and waste and darkness over the deep and God's breath hovering over the waters, God said, "Let there be light."

"Hovering" is a verb attached to God's breath-wind-spirit (rush). It describes an eagle fluttering over its young and so might have a connotation of parturition or nurture as well as rapid back-and-forth movement.
In other words, you gotta luv your portfolio, be pro-active. Be ever ready to sell or buy
Be almost always happy as if witnessing a baby being born

When I started, I use stock filters to get a small list of companies to explore. I think this is the wrong approach. The reverse of using a stock filter to remove a small list of companies NOT to explore will likely be more effective.

I absolutely agree with you on the above. In fact, it applies to most things in life.
It's more secure to say : Your spouse is NOT...He's not this....and you are more likely to be happy with him.
Actually, this is a more open-ended approach to life. And so one see the glass as more than half full.

[kennynah]

I hate talking to myself. It's pointless.

i feel you here...

but you know i read all of your posts...how else to detect "thorough"..right?

[Poles]

Thanks, pOland (i'm watching it now) ...

What are your after-thoughts? New drugs, new chips, new Robots?

Big Sister San ,

i just hope Singapore will have more people like Warren Buffet & Bill Gates....
willingness to help the country and guide the younger generation......
They believe in America.....how many believe in Singapore??


Here at this forum, I am always learning from Lena's, Winston's and many other kakis post......Thank you...

alternative energy:
There is also a possibility of alternative life style.
If american people can embrace HPVs, I bet they will lead the world in this trend....HPVs will solve most issues with oil.
Power vehicles will be here to stay. i would place my bet on hybrid /diesel engines by the europeans.
A diesel engine record in 2003, 2.1 liters for 100km.....

another interesting area will be Light.
efficient of conversion of light to energy
trapping of sun light for future use . Eg: light trapped in the day can be use for the night.
optical light transmission for high speed computing....
laser in measurement and manufacturing process.