Conversations with and about the storied Berkshire Hathaway CEO.

Insights: Warren Buffett

[MUSIC PLAYING] Standing in your shoes today and looking back on your lessons learned, how do you define success? Well, somebody said success is getting what you want, happiness is wanting what you get. One doesn't preclude the other. But I would say when you get to be my age, or even a little younger-- I'm 82-- if the people that you want to have love you, love you, you're a success. You can have all the money in the world, you can to have buildings named after you, hospital wings, whatever it may be, and unless you've got people that really care about you, you are not a success. And not everybody is going to make a fortune. Not everybody is going to be on football teams or whatever it may be. But if your children, the people you've worked with-- if those people love you after they've seen you in action for many, many years, you're a success. Thank you. I love that. That's beautiful. There was a woman I knew some years back here in Omaha. Her name was Bella Eisenberg. She was in a concentration camp after World War II, a Polish Jew. And she looked at me one day not too many years before she died, and she said, I'm very slow to make friends, Warren. Because when I look at someone, I say to myself, would they hide me? And if you get to be 70 or 75 and you have a lot of people who would hide you, you are a success. Wow. And if nobody cares about you, I don't care how much money you have, and how many medals you have or something of the sort, you are not a success. 

Insights: How Warren Buffett Defines Success

Uncategorized

True success only comes when you're loved.

How Warren Buffett Defines Success

Berkshire Hathaway CEO Warren Buffett says that true success only comes when those around you love and care about you. (April 2014)

standing in your shoes today and looking back on your lessons learned How do you define success? Well, somebody said successes, getting what you want happiness is wanting what you get. That one doesn't preclude the other. But I would say when you get to be my age or even little younger, I'm 82. Uh, if people the people that you want to have love you, love you, you're a success. Uh, you can have all the money in the world. You're gonna have buildings named after you hospital wing, whoever it may be. And the most people, uh, people that really care about you, you are not a success. And, uh, not everybody's going to make a fortune. Not everybody's gonna, you know, be on football teams or whatever it may be. But if your Children the people you've worked with, those people love you, Uh, after they've seen you in action for many, many years, years success. Thank you. I love that I It was a woman I knew some years back here in Omaha. Our name was Belle Eisenberg. She was in a concentration camp after World War told police you and she looked at me one day, not too many years before she died. And she said, I'm very slow to make friends, Warren, because when I look at someone, I say to myself, would they hide me? And if you get to be 70 or 75 you have a lot of people who would hide you, you are a success. And if you want, if they nobody cares about you, you know I don't care how much money I have, how many medals or something of the sort You were not a success.

[MUSIC PLAYING] So, Charlie, where did this thinking about investing-- that you don't buy cheap bargains, but you look for really good companies-- come from? Well, I have a habit in life, which is I look at it, and I observe what works and what doesn't. And I'd seen so many idiots get rich in easy business. So, naturally, I wanted to be in an easier business. It was very interesting to me, when I first met Charlie, he had a number of clients. His father had a number of clients. And he had thought about the businesses of each one of those clients probably in a much more perceptive way than most of them had thought about them themselves. I mean, he was incapable of not thinking through what the realities of the situation were, and what could be done about it. And he just analyzed things. What would work, and what wouldn't, and why. It's so simple. So what are a couple of those early investments that were reflective of this new philosophy of buying really good companies? Well, in terms of stocks, something like American Express would have been. They'd gotten in some trouble, but it was a wonderful business. And there were some others. In terms of buying the entire business, I probably didn't realize what a wonderful business our first insurance purchase was. But I know it was a good business. The first real business we bought that way was See's Candy. I mean, it was really an outstanding business. And I still had enough elements from my past that I really didn't want to pay the last few million dollars, and sure-- Few million? You didn't want to pay the last $25,000. Charlie reminded me that I was slipping back into the Stone Age again, and got me to move. So let's talk a little bit about your philosophy of managing companies. Berkshire Hathaway does not buy companies that have bad managers, right? Which is a little bit unusual. I mean, a lot of people like to buy good companies with bad managers, and then replace them. We tried it. You don't do that? We tried it with predictable results. And life is so much more fun this way too. I mean, who wants to spend their life trying to change people from their natural approach to life? If you want to ruin your life, spend it trying to change your spouse. Yeah. It's really stupid. Yeah. Marrying somebody to change them is crazy, and I would say hiring somebody to change them is just as crazy. And becoming partners with them to change them is crazy. Warren always used a phrase I really liked. He said, we make silk purses out of silk. Yeah, forget the sow's ears. We don't know how to make silk purses out of sow's ears. Never will. 

Insights: What Buffett Learned from Munger

Charlie Munger analyzes businesses thoroughly.

What Buffett Learned from Munger

Berkshire Hathaway CEO Warren Buffett talks about how his business partner Charlie Munger analyzes business more thoroughly than most investors. (April 2014)

So, Charlie, where did this thinking about investing That you don't buy cheap bargains. But you look for really good companies. Well, is it from I have a habit in life, which is I look at it and I observe what works and what doesn't. I've seen so many idiots get rich and easy business. Naturally, I wanted to be an easier bit. Charlie is very interesting to me. When I first met Charlie, he has a number of clients. Father had a number of clients and he had thought about the businesses of each one of those clients, probably in a much more perceptive way than most of them thought about themselves. I mean, it was incapable of not thinking through what the realities of the situation were. You know what could be done about it. And he just analyzed what would work in what wouldn't then why it's so simple. So what are a couple of those early investments that were reflective of this new philosophy of buying really good Cos Well, in terms of in terms of stocks in something like American Express would have been that I've gotten in trouble, but it was a wonderful business and there were some others in terms of buying the entire business. Uh, I probably didn't realize how what a wonderful business. Our first insurance purchased Woz. But I know it was a good business. The first real business we bought that way with See's candy. I mean, it was really an upstanding business, and and I still have enough almost from my past that I really didn't want to pay the last a few $1,000,000. And you mean you didn't want to pay the last 25,000? And Charlie reminded me that I was slipping back in the end of the Stone Age again and got me to move. So let's talk a little bit about your philosophy of managing Cos um, you don't Berkshire Hathaway does not buy companies that have bad managers right, which is a little bit unusual. I mean, a lot of a lot of people like to buy good companies with bad managers and then replace them. We tried, I don't do that. We tried and with predictable results and life is so much more fun this way to what's spend their lives trying to change people from their natural approaches. You want to ruin your life. Changed right to spend that dream that changers Wells. Yeah. It's really stupid. Yeah, you know, it's very somebody to change him is crazy. And I would say hiring somebody to change This is crazy. Yeah. On becoming partners with him changing this crazy warm had always used a phrase I really like you said we make silk versus out of silk. Forget the hausers. We don't know how to make so first, you never will.

[MUSIC PLAYING] I'm having the time of my life. At some point, your mind goes. And I think it was David Ogilvy that says, develop your peculiarities when you're young. That way, when you get older, people won't think you're going gaga. So I did that, I followed that advice. But my children will come in to me at some point. I've told all three to come in at the same time and tell me, you're going gaga, Daddy. And if only one of them comes in, they're out of the will, (LAUGHING) so they have to come en masse. That's great. But the truth is, in terms of managing money, or even managing a business, depending on the nature of the business and the way it's managed, age really isn't much of a deterrence. It deters everything else, in terms of hand-eye coordination, balance, all kinds of things. But in terms of getting the most out of other people, which is what my job is, and in terms of allocating capital, so far, it hasn't been a deterrent. Who knows what happens next week? But you have a contingency plan in terms of governance? Oh, it's total. If I die tonight, tomorrow morning, there will be a CEO named. The board knows exactly who is it. If for some reason, that person's not available, They know another one. It's what we spend a majority of our time on. 

Insights: Will Warren Buffett Retire?

Buffett shares his thoughts about retirement.

Will Warren Buffett Retire?

The legendary investor, manager and philanthropist Warren Buffett shares his thoughts about retirement and about how he is preparing for it. (April 2014)

I'm having the time of my life. At some point, your mind goes, I mean and I've told my I think I think it was David Ogilvy that says, Develop your peculiarities when you're young. That way, when you get older, they won't think you're going gaga. So I did that. I followed that advice, but my Children will come into May and some point. I've told all three to come in at the same time and tell me you know, you're going ga ga Daddy. And if only one comes in there out of the will, so many. But it's the truth is in terms of managing money or even managing a business, depending on the nature of the business and the way it's managed, age really isn't much of an eternity turned everything else that I'm in terms. I hand eye coordination, balance all kinds of things, but in terms of getting the most out of other people, which is what my job is, and in terms of allocating capital so far it hasn't been any turn. Now who knows what happens next week, but you have a contingency plan in terms of governance? Oh, it's total I mean, if I die tonight tomorrow morning, there will be a CEO named More knows exactly what is it? For some reason, that person's unavailable, you know, another one. I mean, it's what we spent a majority of our time on.

[MUSIC PLAYING] You can go to the internet and you can get this print out, I've even got it here, and it lists the-- it lists a lot of figures for the 400 highest incomes in the United States, and it goes back to 1992. And since 1992, the average income of the 400 highest incomes has gone from $40 odd million to $220 odd million, five-fold. During that time, their tax rate as a percentage of taxable income has fallen from 29% percent down to 21%. That counts payroll taxes and income taxes. And I took this survey in my office, I did it four years ago, and everybody in the office was over 30% combined payroll taxes and income taxes. So I would just like the people who averaged $220 million in this case to start paying taxes at a rate that's more or less comparable to what people pay in our office. Now, that would not change many of the people at the top. A lot of people are paying that on ordinary income, and they are in the 30s. But there are a lot of people like me that get most of their money from dividends and capital gains, and we're down around 15% or so. In fact, there are a number of people who are below 15% that are making over a couple hundred million dollars a year, believe it or not. I just say get those people up into the 30s. We just had a-- [APPLAUSE] I'm not supposed to mention it here, but the Forbes 400 just came out, and-- [LAUGHTER] --the aggregate wealth of the Forbes 400 this year was over $1 trillion $500 billion. That's up seven-fold in the last 25 years from $200 million roughly 25 years ago. That is not what the American public has experienced, so the disparity is growing wider and wider in this country. And we're going to talk about shared sacrifice. We're going to go to the American public and say we've got $1 trillion $200 billion dollars difference between receipts and expenditures, so we're going to ask something from all of you. We're going to ask people to give up some promises that have been made to them in the past that are going to have to be modified in the future. We're going to ask 300 million Americans plus to tighten their belts one way or another and help us get our fiscal house in order. And to ask them something like that, when the super rich in many cases are paying 20 points less in terms of taxes the federal government, I think is just plain wrong. It doesn't solve our budget problem. What I suggest would probably raise about $20 billion annually from about 50,000 people. But $20 billion is $1,000 each to 20 million families. And if I've got a choice of getting $1,000 from 20 million families throughout this country that are already struggling or getting $20 billion by asking people to pay taxes in the range of the 30s, just like everybody else is in this country, I'd rather go to those, the ultra rich. 

Insights: Warren Buffett Defends the Buffett Rule

Buffett explained the thinking behind it.

Warren Buffett Defends the Buffett Rule

Warren Buffett explained the thinking behind it. (October 2011)

you can go to the Internet and you can get this printout. I've even got it here. And it, uh, it lists the It lists a lot of figures from the 400 highest incomes in the United States and goes back to 1992. And since 1992 the average income of the 400 highest incomes has gone from 40 odd 1,000,000 2 220 odd 1,000,000 five fold. During that time, their tax rate is the percentage of taxable income has fallen from 29% down to 21%. That counts payroll taxes and income taxes. And I took this survey in my office. I did four years ago, and everybody in the office was over 30% combined payroll taxes in income, Texas. So I would just like the people who averaged 220 million in this case to start paying taxes at a rate that's more or less comparable what people pay in our office now. That would not change many of the people of the top. A lot of people are paying on ordinary income, and they are in the thirties, but there are a lot of people like me that get most of their money from dividends and capital gains. And we're down around 15 or so. In fact, their number of people that are below 15 they're making over a couple $100 million a year. Believe it or not, uh, I just say, Get those people up into the thirties. We just had a I'm not supposed to mention it here, but the Forbes 400 just came out and and they the aggregate wealth of the Forbes 400 this year was over a trillion 500 billion. That's up seven fold in the last 25 years from from 200 million roughly 25 years ago. That is not what the American public is experienced. So the disparity has grown wider and wider in this country, and we're going to talk about shared sacrifice. We're gonna go to the American public and say we've got a trillion $200 billion difference between receipts and expenditures. So we're gonna ask something from all of you were gonna ask people to give up some promises. They, uh, have been made to them in the past. We're gonna have to be modified in the future, we're gonna have 300 million Americans plus to tighten their belts one way or another and help us get our fiscal house in order and to ask them something like that. When the super rich in many cases are paying 20 points less in terms of of taxes, the federal government, I think it's just plain wrong. It doesn't solve our budget problem. What I suggest would probably raise about $20 billion annually from about 50,000 people, but $20 billion is $1000 each to 20 million families. And if I've got a choice of getting $1000 from 20 million families throughout this country that already struggling or getting 20 billion by asking people to pay taxes in the range of the thirties just like everybody else is in this country, I'd rather go to those the Oprah rich

 We've actually been part of Berkshire Hathaway now for four years. And I met Warren four and 1/2 years ago. And I would say I underestimated what an advantage it would be for our company to be part of Berkshire Hathaway. Long-term focus-- focus on the customer. Focus on the brand. Take the high road. And we've always been wired that way. But to have his support for what we want to build at Brooks, it's really powerful. There's no cutting corners. There's no edges. There's no tricks. Intellectual honesty and ethics is absolutely paramount. And even at the expense of profit or sales, do the right thing, and because the culture of the company is more important than any individual performance. He has an unbelievable sense of humor. He has a quick wit. He is extremely bright. And he knows all the businesses. He certainly knows our business and is very curious about knowing things that are happening in the business at all times. 

Insights: CEOs Dish on What It's Like to Work With Warren Buffett

You can learn a lot from The Oracle of Omaha.

CEOs Dish on What It's Like to Work With Warren Buffett

You can learn a lot from The Oracle of Omaha. (April 2016)

We've actually been part of virtual House away now for four years, and I met Warren four and 1/2 years ago, and I would say I underestimated what an advantage it would be for our company to be part of Berkshire Hathaway. Long term focus. Focus on the customer focused on the brand. You know, take the high road and we've always been wired that way. But I have his support for what we want to build it. Brooke really power. There's no there's no cutting corners. There's no edges, There's there's no tricks. Intellectual honesty and ethics is absolutely paramount. And even at the expense of profit or or fails do the right thing in because the culture of the company is more important than any individual performed. He has unbelievable sense of humor. He has a quick wit. He is extremely bright and he knows all the businesses. He certainly knows our business and is very curious about knowing things that are happening in the business at all times.

[MUSIC PLAYING] Jeremy, your book is called Warren Buffet's Ground Rules. What would you say is his most important ground rule? Well, my favorite ground rule of his is, don't think you need to make predictions. You don't need to know what the market's going to do tomorrow or even next year. It's not about that. Investing is for the long term. So let's say the market drops by hundreds of points, what would Buffett say? You don't sell? He says, you know, the market doesn't tell me what things are worth. I tell-- I have my own opinions on how to value things. And I only use market prices to my advantage when they suit me. So Warren Buffett is the best stock investor that there is on the planet, and everyone wants to know, how does he pick a stock? Does he have a checklist? Does he have any ground rules about picking a stock? Well, I think his first ground rule is he has to understand the business. Second ground rule is Warren really needs to have it be appropriately priced. And then the third ground rule is it has to be run by people that he trusts. There are so many books written about Warren Buffett and his investing style, but he endorsed your book, and he even met with you. What did he say? He said he liked it, and he thanked me for doing it. You know, we had a nice chat about some of the early investments that he had made. And you know, generally, I think he was thankful that his letters, which are part of his legacy, you know, were treated in a way that he liked. You have spent a lot of time studying everything Warren Buffett. What's the most important thing you've learned from Warren? Well, the most incredible thing about the letters is that he started writing them at 25, and really, nothing has needed revision since then. So he's layered on insight and expanded upon his views and teachings, but nothing has been needed to be redacted or clawed back or revised. So I think that's incredible. That speaks to a big part of his success. He understood what he was doing, he understood early. You know, he applied it consistently over a long period of time. And that's how $40 billion of wealth was created. 

Insights: These are Warren Buffett's 'Ground Rules' for Investing

Writer Jeremy Miller dove into the billionaire's strategies.

These are Warren Buffett's 'Ground Rules' for Investing

Book writer Jeremy Miller dove into the billionaire's business strategies. (May 2016)

Jeremy. Your book is called Warren Buffett. Ground Rules. What would you say is his most important ground rules? Well, my favorite ground rule of his is don't think you need to make predictions. You don't need to know what the market's gonna do tomorrow or even next year. It's not about that investing for the long term. So if let's say the market drops by hundreds of points, what would buffet say? You don't sell, he says. You know the market doesn't tell me what things are worth. I tell. I have my own opinions on how to value things, and I only use market prices to my advantage when they suit me. So Warren Buffett is the best in stock investor that there is on the planet. Every wants to know. How does he pick a stock? Does he have a checklist? If you have any ground rules about taking the stock, well, I think his first ground rules he has to understand the business. Second ground rule is, but Warren really needs to have it be appropriately priced. And then the third ground rules have to be run by people that he trusts. There are so many books written about Warren Buffett and his investing style. But he endorsed your book and he even met with you. What did he say? He said he liked it and he thanked me for doing it. Um, you know, we had a nice chat about some of the early investments that he had made, and, you know, generally I think he was thankful that his letters, which were part of his legacy, you know, were treated in a way that he liked. You have spent a lot of time studying everything. Warren Buffett. What's the most important thing you've learned from Warren? Well, the most incredible thing about the letters that he started writing them at 25 really nothing is needed. Revision since then. So he's layered on insight and expanded upon his views and teachings. But nothing has been needed to be redacted or clawed back or revised. So I think that's incredible. That speaks to, you know, a big part of accepted success. He he understood what he's doing. He understood early, you know, he applied it consistently over a long period of time, and that's how $40 billion of wealth was created

 What do you think are the key traits that make a great leader? Well, you have to have a clear vision of where you're going so that you can convince others to follow you. But what are you doing to inspire and bring those people along? Well, we try to create a strong culture through what I write, what I say, and the same thing with Charlie. And in the end, we want people to buy into the Berkshire culture, and we find them. Do you think that people can be trained to be leaders, or you just have it or you don't? I think it's a combination of the two. I think some people have way more in the way of leadership qualities inherently, but I think you can learn a lot, too. 

Insights: How Does Warren Buffett Cultivate New Leaders?

The CEO talks about shaping the next generation. 

How Does Warren Buffett Cultivate New Leaders?

The Berkshire Hathaway CEO talks about the best way to shape the next generation. (May 2015)

What do you think are the key traits that make a great leader? Well, you have. You have to have a clear vision of where you're going so that you need this others to follow him. Well, what are you doing? Like inspire and bring those people along? We tryto we try to create a strong culture through what I write. What I say, Charlie. Same thing with Charlie. And in the end, we want people that buy into the Berkshire culture and we and we find him. Do you think that people can be trained to be leaders or you just haven't you died? I think it's a combination of the two, but I think some people have way more in the way of leadership qualities and inherently, but I think you can learn a lot, too.

 And the most important thing to keep in mind if you're investing in stocks is what? Is to always get more for your money than you pay. It's like buying anything else. What's the biggest mistake people make, though? Well, the biggest mistake they make is listening to a lot of other people and buying something because they think it's going to go up next week or next month, and for whatever reason people give you. You should understand what you buy. Now, if you buy a farm, you look at the farm and you say, I expect to get so many bushels per acre of corn or soybeans and you figure out how much that will be worth, and then you figure out what the price should be. If you buy an apartment house, you look at what the rentals will be and what the taxes and expenses will be, and then you decide how much income you'll have, and you pay a fair price for that. But you don't-- in stocks, people, their neighbor whispers something to them and they run out and spend money that it took them years to earn. So you always want to look at the productive ability of the assets you're buying, whether it's a farm, apartment house, or a company. But the company is represented by a stock. And if you can always get your money's worth, you'll do very well. 

Insights: Warren Buffett's Best Investing Advice

Buffett shares some of his investing tips.

Warren Buffett's Best Investing Advice

Berkshire Hathaway CEO Warren Buffett shares some of his investing tips. (April 2014)

and the most important thing to keep in mind if you're investing in stocks is what always get more for your money than you pay. It's like buying anything else, and you take people well. They say they make us listening a lot of other people on dhe and buying something because they think it's gonna go up next week or next month. And for whatever reason people give you, you should understand what you by now if you buy a farm, you look. You look at the farm and you say I expect to get so many bushels per acre of corn or soybeans and you figure out how much that will be worth and then you figure out what the price should be. If you buy an apartment house, you look at what the rebels will be, and with the taxes and expenses will be, and then you decide how much income you'll have, and you pay a fair price for that. But you don't and stocks people, you know. Their neighbor whispered something to him, and they run out and spend money that it took him years to earn. So you always want to look at the productive ability of the asset you're buying, whether it's a farm, apartment houses our company, that the company is represented by a stock and you always get your money's worth, you know very well.

 I had no vision for Berkshire when we took over in 1965. It was a textile company, and I wanted it as a cheap stock originally, and sort of stumbled into getting control of it. So there was no big vision, but we just tried to keep doing things that made sense day after day. And I look for a business I can understand, a management I can trust, a business with good economics, and a price that makes sense. 

Insights: How Warren Buffett transformed Berkshire Hathaway

He talks about his original vision for Berkshire Hathaway.

How Warren Buffett transformed Berkshire Hathaway

The "Oracle of Omaha" talks about his original vision for Berkshire Hathaway. (June 2014)

I had no vision for Berkshire when we took over in 1965. It was a textile company, and I wanted a cheap stock originally and sort of stumbled getting control of it. So there was no big vision. But we just tried to keep doing things to make sense day after day and look for, ah, business. I can understand a management. I can trust the business with good economics in a price that makes sense.

[MUSIC PLAYING] I love it one of the things we buy go down. That-- I just-- I get euphoric. Stocks are down today, and I buy more of something I was buying yesterday. I'm buying it cheaper. Now, when you go to the grocery store and you buy something cheaper than you bought the day before, you think that's terrific. But people with their stocks, they think that the stock knows more than they do, so that when the stock goes down, they say the stock is telling them something. And what it's telling me is, I can get more for my money. But they take it as a referendum on themselves. It's me versus the stock. If ever gets back to what I paid, I'm going to sell it. Stock doesn't care what you paid. You have to remember, the stock doesn't even care that you own it. You are nothing to the stock. That stock is everything to you. And you remember you paid $10.13, and therefore the stock should get to $10.13 before you sell it. Yeah. The stock has no feelings about you. I hate to disillusion you on this, but it just doesn't care. And so the only question with every stock every day-- and you don't do it this frequently-- is, can I get more for my money someplace else? You've got a chance to be in thousands and thousands of great businesses, and their prices change over time. So their relative valuations change. And you can make the exchange at very low cost these days-- commissions or nothing-- so you can always shift from one business to another. You have a huge advantage over Andrew Carnegie. When he was in the steel business, he was in the steel business, or Rockefeller was in the oil business. He could not shift over immediately to retailing or something like that. You can rearrange your business empire-- which you own through that little portfolio that you have. You can rearrange that at a moment's notice with practically no cost. It's a huge advantage which people turn into a disadvantage. There is nothing about the price action of the stock that tells you whether you should keep owning. What tells you whether you should keep owning it is what you expect the company to do in the future versus the price it which is selling now, compared to the other opportunities of businesses that you think you know equally well, and make that same comparison. And that's all there is to owning stocks. [MUSIC PLAYING]

Insights: Warren Buffett on When to Sell Stocks

The legendary investor spoke with FORTUNE October 2014.

Warren Buffett on When to Sell Stocks

I love it when the things we buy go down. I mean that. I mean, I just get you for IQ. You know, that stocks were down today and I'm buying more of something I was buying yesterday, buying a cheaper. Now, when you go to the grocery store and you buy something cheaper than you bought it the day before, you think that's terrific. But people with their stocks, they think that the stock knows more than they do, so they When the stock goes down, they say the stock is telling him something. And it was telling me as I could get more for my money, but But they they take it. It's kind of a referendum on themselves, you know? Me. Versus stock has ever gets back to what I paid. I'm gonna sell it stocked up here. What you paid, you have to remember, doesn't care that you own it. You are nothing to the stock. That stock is everything to you. And you remember you paid $10.13 said, therefore the stock should get 10 13 before you sell it. Yeah. The stock has no feelings about you. I don't know. It just doesn't here. And so the only question with every stock every day and you don't do it this frequently is Can I get more for my money someplace else? You've got a chance to be in thousands and thousands of great businesses, and their prices change all the time so that roams. Evaluations change and you can make the exchange of very low cost these days commissions or nothing at, so you can always shift from one business other. You have a huge advantage over Andrew Carnegie, you know, when he was in the steel business, he was in the steel business or rocket rose in the oil business. He could not shift over immediately to retailing or something like you. You can rearrange your business empire, which you owns without more portfolio that you have. You can rearrange that at a moment's notice with practically no cost. It's a huge advantage, which people turned into a disadvantage. There is nothing about the price action of the stock that tells you whether you should, he boning. What tells you whether you should keep owning it is what you expect the company to do in the future versus the prices, which is selling now compared to the other opportunities of businesses that you think you know equally well and make that same comparison, and that's all there is owning stocks.

 I went in the textile business by accident in 1965, and I threw in the towel about 20 years later, and that was about 20 years too late. There's a great tendency to want to hold on, justify old decisions. I mean, that's a human trait. But when you really know you've got a bad business is when you have a good manager and you're getting bad results. I mean, when you're getting bad results with a bad manager, you still have to examine the question of whether you can get better results if you got a better manager. Usually you can't. I've said in the past that when a management with a reputation for excellence encounters a business with a reputation for bad economics, it's the reputation of the business that remains intact. And I've proved that many times. There are businesses that are just plain tough. There may be too many competitors, but there's reasons why they don't drop out. There's reasons-- Well, we started out in textiles, and we made over half of the linings for men's suits in the country. And we went through World War II and got awards, and Sears Roebuck named as their supplier of the year and all of that sort of thing. And then we'd say, well, we'd like to increase the price of these linings a quarter of a cent a yard and Sears said, you must be out of your mind. There's ten other guys that will sell it to us at the old price. And nobody ever went into a Sears store and said, I'd like a blue Serge suit with a Hathaway lining. It didn't exist. We had no connection to the consumer. And there are lots of lousy businesses, and there's lots of wonderful businesses, and my job over the years has been to try and figure out which is which. And I made plenty of mistakes. I bought a company called Dexter Shoes in the early 90s. I paid $400-plus million for it, and it made a lot of money before I bought it. But as soon as I bought it, they pulled some switch or something and it immediately started losing money. And it was because of foreign competition and so on, or maybe because I owned it, I don't know. And it went to zero. And the worst thing was that I paid for it in stock, so that $400 million in stock I gave at the time is now worth about $5 billion. So every time Berkshire stock goes down, I feel a little bit better because of my opportunity lost on this business. But when I looked at Dexter Shoe, they had a good position in retailers, they turned out good shoes, they had a great workforce, all kinds of things. But I just forgot one thing, that they weren't going to make shoes in the United States anymore. So you make mistakes, and it does pay to recognize quickly when you've made them. If you've got a good person running a business and it isn't making any money, you're in the wrong business, and you've got to face up to that. 

Insights: Warren Buffett on When to Dump a Bad Business

Warren Buffett on When to Dump a Bad Business

I went the textile business by accident in 1965 and I threw in the towel about 20 years later, and that was about 20 years too late. There's a great tendency to wantto hold on justify old decisions. I mean, it's a human human trait. And, uh, what, when you really know you've got a bad business is when you have a good manager and you're getting bad results. I mean, when you getting bad results with a bad manager, you still have to work. Examine the question of whether you know you could get better results if you got a better manager. Usually you can't. You know, I said in the past, you know, when a when a management with a reputation for excellence, encounters of business, with a reputation for bad economics. It's the reputation of the business that remains intact, and and I have proved that many times there are businesses that are just playing tough, you know, and there's the they There may be too many competitors, but there's a reason why they don't drop out. There's reasons way start out in textiles, and we made over half of the linings for men's suits in the country and way went through World War two and got awards and and Here's Robot named us there, Supplier of the year and all of that sort of thing. And then we'd say what we'd like to increase the price of of these linings 1/4 of a century art answers out of your mind. Or send other guys. It will sell it to us of the old price. And nobody ever went into a store and said, I'd like a a blue Serge Serge, a blue shirt Serge suit with 1/2 away lining. It didn't exist. We had no connection to the consumer. And there are lots of lousy businesses and there's lots of wonderful businesses, and my job over the years has been destroying figure out, which is which, and I've made plenty of mistakes. I bought a company called Texture Shoes in the early nineties. I paid 400 plus $1,000,000 for it, and it made our money before I bought it. But because I bought it, they pulled some switch or something immediately, started losing money, and, uh, and it was because of foreign competition so under because I own the eternal and it went to zero. And the worst thing was that I paid for it in stock. So that 400 million in stock I gave at the time is, uh, now worth about five billion. Uh, so, uh, every time Berkshire stock goes down, I feel a little bit better because of my opportunity. Lost business. But, you know, when I looked at Dexter Shoe, they had a good position in retailers. They turned out good shoes, had a great work force, all kinds of things. But I just forgot one thing that then we're gonna make shoes in United States anymore. So you make you make mistakes, and it does pay to recognize quickly when you made him. If you've got a good person running a business and it isn't making any money, uh, you know, you're in the wrong business and you've got to face up to that

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