Warren Buffett was interviewed recently by his favorite anchor Becky Quick. Buffett (now) famously said that buying Berkshire Hathaway was his biggest mistake. He says that he thought Berkshire was cheap relative to working capital, but the business was in decline. Buffett bought control of the company and fired management. But he had committed a lot of money to a terrible business. Buffett says the textile assets were no good, and Buffett tried to fix up the textile business for twenty years before giving up. Buffett thinks if he had put the money in insurance, instead of into textiles, Berkshire would have been worth $200 billion today.
Buffett says if you buy into a bad business get out of it. It is much easier to manage a good business than a bad business.That is a lesson that Buffett has learned from the transaction.
Buffett talks about Ben Graham. Buffett quoted Graham as saying that it is better to buy a company at a cheap price. Buffett disagrees and thinks it is better to buy a great company at a fair price. It took him 20 years to figure this out.
Later in the interview, Buffett says that he gets proposals every day to check out new possible investments. He will decline to invest if the business is too tough even if the managers are good.
Buffett thinks the Newspaper business is dead. He says that there is a clear difference between the Newspaper business in 1970 than in 2010. But for now Buffett is holding on even if newspapers are no longer a great business.
My investment ideas have been inspired by many of value investors including Benjamin Graham, Charles Royce, John Neff, Joel Greenblatt, Peter Lynch, Seth Klarman,Martin Whitman and Bruce Greenwald. .I live with my wife and daughter in Monsey, NY. I can be contacted jacobwolinsky(AT)gmail.com and my blog is www.valuewalk.com
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