Buffett and Munger Annual Meeting 2013 Q&A (Complete)
Warren Buffett: Earnings chart – we were benign in insurance, but other businesses did well. We’ve never had higher operating earnings.
Insurance earnings were helped by strong revenue and reduced liabilities in foreign currencies. Hurts in other ways. So many businesses, Coca-Cola, never know if revenue going up or down either hurts or helps.
Had a Swiss Re disagreement for over a year. Settled in the first quarter, and showed a gain of $550 million, but Swiss Re showed a gain of $500 million too. It's magnificent what accounting can do.
The high point of quarter one was a gain in the persistency rate of Geico. The strength of 2012 continued in 2013 and got stronger. Seasonal to policy gains month by month gains increased over 2012 because the closure rate improved this year and a gain in persistency. Pure gold. The closure rate was at high levels, meaning people getting a quote can save money. People love Geico but buy because they save money. Walk out and get a quote while Charlie Munger is talking.
Finally, railroads this year are doing very well. There was a gain in car loadings of 3.8%, while others gained 0.04% in the first 17 weeks of 2013. The rate was helped by oil found close to the railroad tracks. What better place to find oil? We're moving a lot of that. We're going to be moving more.
Berkshire Hathaway is now the fifth most valuable company in the world.
We just bought out 20% of a company we didn’t already own for $2 billion. We are happy. They’re happy. The relationship with the family will be continued. The company will be part of Berkshire forever.
Question: You measure corporate performance by growth in book value, but it grew less than the S&P for 9 of 11 periods.
Answer: We’re not assured of the future. The last 10 were not the best because of business in general. If it continues, it will be the first period it falls short of the S&P. We’re not happy with that but not totally discouraged. We're likely to better in down markets like 2008, relatively than when things are up. We use book value scale figure as a reasonable proxy in intrinsic value figure. If we gain 1 million at Geico… there’s a significant gap but to be useful tracking device. When bought insurance, marked and book value by $1 billion. So there are distortions. In the end, we have to do better for you than the index fund.
Expect Berkshire to do well over the long term. Don’t pay attention to five years or three years. We want to do as well in future in terms of annual gain average gains because in the past we did unbelievably well. At 89 Charlie is not –
Charlie: Old age might come on at any time.
Question: What is your competitive advantage over Sam Vic?
WB: Iscar is better because the company has brains, passion. Go back to 1951 when Seth Warhouser started Iscar. Possibilities facing him, well-entrenched competition. He was also 25 years in Israel, getting raw materials from China, selling to Boeing, GM, industrial companies in Germany. He didn’t have a great locational advantage in being in Israel. But the remarkable business comes from that. No other answer will result than talented people never stopped working. Sam Vic was very good on figures and other aspects but Iscar is one of the greatest in the world.
CM: Sam Vic is a fabulous company. It is an achievement to do better than Iscar.
WB: Is there a better operation than Iscar in the industrial sector?
CM: You can’t believe how modern they are.
Question: You don’t lose sleep over anything. But what worries you the most?
WB: Good question. Culture is all-important. Business is all important. People will keep calling Geico after I die. The key is the present culture. The successor CEO will have more brains and passion. We’re all in agreement of who it should be. The culture intensifies year after year. Charlie and I knew what we were about from the beginning but making sure everyone who bought in understood took time. Any foreign behavior is cast out. People self-select into it. We reject foreign tissue. I think the successor after me, after six months will be sure. Charlie?
CM: This is to all the Charlie Mungers in the audience: Don’t be so stupid as to sell your shares.
WB: It’s accurate. I met Georgie in December, and he said he was thinking of going into Heinz. Because I knew them both and thought high of them, I said I’m in. Then they got me a term sheet. Georgie Paulo brought me a term sheet on the deal and it was good. Absolutely fair deal. I didn’t change a word in either. Charlie and I paid more than if we were doing the deal ourselves because Georgie Paulo is a great manager, because he’s so classy, so we stretched a little. I like the business. The design of the deal is if we do good at Heinz we will get a high rate of return. Less leveraged than them. They wanted more leverage. In five years they receive a higher rate of return but us with more money will get more.
Question: Berkshire’s Ajit Jain is bringing in high-profile AIG executives. What is the goal of the managers? Will they get average results?
WB: The goal is to increase the share of the market. The second was Ajit. One, a 7.5% in business at Loyds and London market. Insured have a right to pick insurance. Not totally auto, we get 7.5%. We had an arrangement with Marsh on Marine but not across the board. He will give executives of business than they’re used to having. Two, four well-known AIG people joined to write commercial insurance down and zero internet-rate world. Other people reached out. A number of executives have in the past. You will see Berkshire add all insurance business because it’s a significant factor worldwide, into billion and we hope could be a greater number of billions. We have people, capital and ability to sign on to coverage others spread out.
CM: General speaking, reinsurance spread is very good for most people. Berkshire is different from other businesses. If reinsurance business is peculiar, it’s because people think it’s easy, and find out it isn’t.
Question: Regarding Geico, no policies are usage-based like Progressive. Is that still the case?
WB: It’s still the case. Snapshot is getting attention because you get a picture of how people really drive. Insurance rates go down as they attempt to figure out the possibility of an accident. Possibility of a 100-year-old is more likely to die than a 70-year-old. An insurance assessment measures variables. Different companies do it differently. A 16-year-old male is more likely to get in an accident than I am. I’m not that I'm a better driver. We ask a number of questions and find the possibility of an accident and charge policy fees on this, and see how they do. The process is working well. We have a huge number of policy holders. Everyone is trying to figure out how to figure out who will have an accident. It’s interesting but ours works well.
Q: You’re on Twitter and the SEC recently allowed business results to be posted on social media. Is this important for Businesswire and do you agree? Would you sell Businesswire? And what in the world are you doing on Twitter?
WB: It’s a mistake. The key to disclosure is accuracy and simultaneity. If we want to be sure its accurate and received at the same time as other people, Businesswire does that. I do not want to keep going to a web page and be 10 minutes before others. I don’t think anything does as well as Businesswire. Management couldn’t be happier. I wish I could clone Kathy. Berkshire puts out info after the market close because there’s so much to digest. Anything important on Berkshire goes to Businesswire.
CM: I’m avoiding it like the plague.
Question from short-seller Doug Kass: I’m in a lions' den of 45,000 of your closest friends. In a follow-up to Loomis’ question: size matters.
WB: It does.
Kass: Berkshire used to buy things cheap or wholesale. Now you’re buying pricier and mature businesses at higher sals and earnings. The businesses might be great to add to Berkshire, but could result in lower rates of return. Are you looking more after your legacy? Is Berkshire becoming more of an index fund, better for widows and orphans?
WB: We can’t do as well as in the past. It depends on the nature of markets. Bad markets can be an advantage. I take exception that I paid fancier prices. GE was 20x earnings. I paid a far bit more than I would. It gets tougher as we get bigger. The price would diminish and we could still be satisfied. There are companies we should have bought 30 or 40 years ago. Now we realize that paying up for companies is good.
CM: I could make a short-seller’s question even better. When we say we won’t do as well in the future, we still think better than others have done in the past.
WB: We’re buying good businesses. We own eight businesses that would be on the Fortune 500. In a few months we’ll own half of another.
Question: In China the dollar’s status as reserve currency could be changing?
WB: I don’t know the answer. The U.S. and China will be the super-powers in decades to come.
CM: There is an advantage to the country that has the reserve currency. Europe had a better hand when it had the reserve currency. If it happened it would not be all that significant. It's the nature of things. Every great leader is not one any longer. We’re all dead.
WB: That’s the cheery part!
CM: I still think it will be 20 years from now. Not forever.
Question: If the Fed is buying 10-year Treasuries, what are the long-run risks and how do they stop without implications?
CM: I don’t know.
WB: He has nothing to add. We’re in uncharted territory. Many find out is easier to buy than sell. There is $3.4 trillion on the Fed’s balance sheet. That’s a lot of securities. Bank reserve is incredible. It’s uncharted territory. Fed is in permanent if risks, he knows risk. Don’t know if he hands baton to another guy. Mr. Bernanke is smart. But we haven’t seen this. There’s a potential for inflation. Not so far. The Fed wishes there had been inflation. Up till now GDP is inflation. They’d never admit it. When market learns significant buying ends – it should be the shot heard round the world. Not the end of the world. But start revolting hard and fast.
CM: Generally, what happened surprised people who thought they knew that interest rates were so low and would stay that way. Everyone has to be more cautious when they print money in massive amounts.
WB: It’s a huge experiment.
Question: How is a zero interest-rate policy affecting Berkshire’s subsidiaries?
WB: It helped. Interest rates are to asset prices as gravity is to an apple. Decreased interest rates pull on asset prices. People make different decisions when they can get something for practically nothing. Interest rates power everything in the economic universe. We paid less on Heinz than 10 years ago. It’s a huge factor in what people borrow. Houses are more attractive. It’s easy for the Fed to borrow $85 billion per month. We don’t know what would happen if they tried to sell. It’s like watching a good movie because we don’t know the end.
CM: Interest rates have not stayed this low for an extended period.
WB: We have at the first quarter $48 or $49 billion in short term securities. Earning nada. Our money doesn’t count on anyone else. We have benefited and the country has by what the Fed has done in the last few years. If we can successfully end without support we’re better off.
Question: Why not make an acquisition in your commercial insurance business?
WB: We have a terrific manager in Ajit. There are some operations if we could buy at the right price we would have done it. We predict we will have good insurance business.
Question: What significance is there to bitcoin and what does it mean for the future?
CM: We have no confidence whatsoever in bitcoin becoming world currency.
Question: Ackman questions the legitimacy of Herbalife (HLF). Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) owns Pampered Chef. Has there been any impact on Pampered Chef? It’s a multi-level marketing company.
WB: I’ve never looked at the 10-K of Herbalife. The key is whether it’s based on selling profits. Pampered Chef is miles away from selling to level A to level B. People get paid based on who they recruit. But people are paid based on selling to the end user. There are thousands of parties a week selling to people who want to use the products. And that should be the distinguishing characteristic.
Charlie: And there’s likely more flim flam in selling magic potions than pots and pans.
Question: Berkshire’s returns in the last 10 years are based on repeating and extensive deals than in the past when you were a value investor doing extensive analysis. How will your successor achieve the same returns?
Warren: My successor will have more capital and when markets are in distress, fewer people have capital and willingness to commit. My successor will have unusual capital and the ability to say yes. Berkshire is the 800-number when there is really panic in markets and people need capital. It’s not our main business, but it's fine. It will happen again. When the Dow Jones drops 1,000 points you find out who’s been swimming naked. They will call Berkshire. And Berkshire’s reputation does not rest on any single individual.
Charlie: Buffett had success in value investing because competition was less intense. It’s ridiculous to think the way he did things in the past he should have stayed in.
Warren: Goldman Sachs, GE, Bank of America are trying.
Charlie: Other people were not getting calls.
Warren: They don’t have money and speed.
Question: What are the three keys to influencing people to sell who didn’t want to sell? How did you do it at See's and Sanborn?
Warren: There was a death at See’s and the rest of the family didn’t want to run the business, so they put it up for sale. I didn’t hear about it until after one person had already fallen through. I didn’t persuade them to sell. It traded actively, I bought key pieces and stock. Sanborn was not the most attractive business. I bought stock in the market from Stanton and Case. They were happy to sell. I never met Stanton. I did not convince them to sell their stock. I talked to Betty Peters about avoiding a transaction I thought was dumb.
Question: Over the years you have built Berkshire to be sustainable. I have difficulty explaining to people the long-term sustainable advantage of Berkshire. Can you give it in a Peter Lynch two-minute speech on Berkshire?
Charlie: The competitive advantage is it’s getting bigger. The golden rule – we treat people like we want to be treated. The long-term competitive advantage is we are a good partner to people who need money.
Warren: Years ago a person in his 60s said he had one year to think about selling his business. We had experience. When he was buying the business years earlier, this person died and he wanted to put to bed what had happened. That one year and that if he sold to a competitor, which is a logical buyer, it would put its people in charge and it would mean it would fire his people, and come in like Atila the Hun. He could sell to a private equity firm and lose control. To me, we’re not the most attractive, but we were the only guy left standing. We promised him he could keep doing what he loved, and not worry. The competitive advantage was we had no competitor. And the shareholder base we’ve developed – we look at them as partners.
Question: I heard Warren’s way to conserve energy is to write 20 things he wanted to do, choose five and forget 15. How does that work?
Warren: Not the case. That is more disciplined than I am. Charlie and I live simple lives. We know what we enjoy and we do it pretty much now. Charlie is a real architect now. I never made lists in my life. Maybe I should start!
Charlie: I can see here, I don’t know when it started that marketing psychology that you shouldn’t make decisions when you’re tired, and if that’s true, we live on auto pilot, it’s habitual. We don’t waste decision-making energy. We use caffeine and sugar.
Warren: When we write our book on nutrition it will be a hit.
Charlie: Warren’s style is idea for human cognition.
Question: Buying newspapers doesn’t seem to make sense economically to get a higher rate of return on a business that is smaller, and you like big elephants.
Warren: We will get a decent rate of return. Compared to Heinz we have a structural advantage because write offs and after tax return declined to 10% after tax, maybe higher. To date, we meet or beat 10%. Never move the needle. $100 million in pretax earnings would not move the needle but give a decent return. We wouldn’t have done it in another business. We promise to give figures annually of investments, but it's at low price to earnings.
Charlie: It’s an exception and you like doing it. That’s what I heard you say.
Warren: I wish I had not asked.
Question (Doug Kass): You suggested for the first time when you go, you would move to a more centralized approach to management. In the past you said in respect of Henry Singleton, he was 100% rational. Prior to his death he centralized management. Should you move Berkshire to three companies? Teradyne was harder to manage given its size. Compared to Berkshire, should you split it along business lines?
Warren: A tiny bit more in terms of small companies. No change of significance Henry Singleton can give views on what he did right and wrong. Breaking up would not give the present result now and in the future.
Charlie: Henry Singleton’s genius was he managed his companies more centralized than us. In the end he wanted to sell to us but issue Berkshire stock. He loved you and the business, but we didn’t want to issue Berkshire stock.
Warren: He issued stock like crazy. GM worked wonderfully if diluted created how ended up.
Charlie: We’re more avuncular than Henry Singleton was. I like us better.
Question: Taxes and deficit. What are two things policymakers can focus on for the U.S. to stay competitive?
Warren: Health care costs are 12% of GDP. Rivals are 9.5% to 11.5%. There are only 100 cents in a dollar. Give up 8 cents just like raw material. It will be a major problem in U.S. competitiveness. Overall since the crisis it works, but number one is health care costs.
Charlie: Grossly swollen alternatives markets. You can graduate from MIT in derivatives markets. They are crazy markets. I agree on health care but find the other more revolting.
Warren: Charlie is very Old Testament.
Question: Will the health care act affect Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B)?
Warren: We’re not sure. We don’t know of any units that don’t have health care. Health care was a huge cost for us. We do few things on a centralized basis but we have not assessed figures of the quarter. We saw a few units’ costs rising 10% to 12%. We’re not trying to centralize headquarters.
Question: What are your capital spending plans? And do you owe your success to timing?
Warren: I was born in the U.S. so I had a huge advantage, and I was born male so I had a big advantage. I’m not sure in the business world if I was born in 1930 the time could have been better. I was conceived in November 1929 when my parents had nobody to call on and no TV, so here I am, luck the crash of 29 came along. It caused a lot of people to be turned off on stocks like the last crash. Business was a terrible environment. Every baby born in the U.S., on a probably basis, will do better in all kinds of ways than I do. In the investment field, it is not as good as it was in 1950. But a person with a passion for investing coming of age likely will do better and live better.
Charlie: Competition was weak in the early days. Competition is not as weak now. There is surely an advantage from exiting between not mean more to do ahead.
Question: If you can imagine yourself at 30, how have you changed, and what advice would you give yourself, and how would you give the advice in a way that you would actually take it?
Charlie: It’s so old fashioned and boringly trite. Keep plugging along. All old virtues still work. And work where you’re turned on.
Warren: We met in the grocery business. I’m not in the grocery business now.
Charlie: You were not promoted either. Even though you had the family name.
Question: How concerned are you about reinsurance competition?
Warren: I hate dumb competition. And a lot of hedge funds have entered into the reinsurance business aggressively in the last few years. It gives them an opportunity to operate in Bermuda and avoid taxes. It’s respectable and sold to investors. Anything Wall Street can sell it will sell. It’s very sell-able now. Money is flowing in and bringing down prices. In the end we know what we’re willing to do and do what we think will get us an underwriting profit. If a hedge fund guy is willing to sell gas and buy first, he has a problem. In the 1980s we had expense ratios up and volume down. Standby costs were real, but not backbreaking. We look forward to better days and they came. Never anticipated it would happen. We’ve been lucky to get people like Jain and Nicely. We hit the jackpot of people and like not having pressure to do…
Question: I noticed your boardroom reflects the fact that women are not hired for top jobs in corporate America.
Warren: I wrote an article for Fortune and you can see my views on that. There’s no question that throughout my lifetime women have not had the same shot as we have. My sisters were as smart, grades were as good and they more personable than me. My parents loved them. All my teachers were female. But that was because they only had a few occupations available to them. Improvements have been made, but there is a long way to go. When people are placed in that position they start believing it themselves, so they don’t envision more. Katherine Graham was an intelligent woman and was told a woman couldn’t run a business as well as a man. She knew it wasn’t true, but couldn’t get rid of it and secretly told herself that. The stock went up 40% under her and she wrote a Pulitzer Prize-winning biography. I hope it keeps moving and moving faster. I hope females hearing this will not see themselves in funhouse mirrors.
Question: Is Berkshire too big to fail? How about DF and how does it impact insurance and Wells Fargo (WF) and Goldman Sachs (GS)?
Warren: It won’t affect it to my knowledge. Capital ratios for long banks at high levels and affects return on equity. Cap ratios increase and return on equity will increase. Banking in the U.S. is stronger than in the past 20 years. Compared to the EU or 20 years ago, it’s dramatically stronger. Don’t worry about banking being the cause of the next bubble. Usually we don’t get to a bubble the same way we got to the last one. I feel good about our investments at MNT and WFC. We won’t earn as much return on equity because the rules change.
Charlie: I’m less optimistic in the long term. I see something more extreme. I don’t see why massive derivatives books should be mixed with deposits of people. The more banks act like investment banks, the less I like it.
Warren: Five years ago I wrote about investors getting sold predictions. I offered to beat bet a group of hedge funds that they could not beat a no-load index fund over five years. Each put $350,000 into a zero-coupon treasury at $1 million. Interests rates have gone down, so from an investment of $950,000 sold zero-coupon and bought Berkshire Hathaway, now worth 1.2 million. Hedge funds have returned 0.13% and the S&P returned 8.96%, at the half-way part. If it does well we’ll have more than $1 million to give to charity. You can see it on Longbets.com, where there is a bet a large hadron collider will destroy the earth in 10 years. And one that says one human in 2000 will be alive in 2150 – Charlie?
Question (Doug Kass): Mae West once said, the score never interested me, only the game. Are you at the point where the game interests you more than the score? I ask because your research used to be all-encompassing. You were interested in the old days of knowing the minutiae of a company, and said intensity is the price of excellence. Your research style used to be sleuth-like analysis. American Express (NYSE:AXP) comes to mind. Not so much in later investments. For example, you famously thought of making the investment in Bank of America (NYSE:BAC) in your bathtub. Is this sending the message of being less intense. Would you please explain if it has to do with the market, size or other factors?
Warren Buffett: You have to love something to do well at it. There may be exceptions. You’re at an enormous advantage if you love what you do every minute of it. Nature is that intensity adds to your productivity and we have every bit of the intensity not manifested exactly the same way, every minute. I love thinking about Berkshire, business, managers. It’s part of me. It’s true you can’t separate the game from the score card. The score card is part of playing the game and loving the game. The proceeds are unimportant, but important to the score card so they come with it. More important – no question I would feel the same way about Berkshire at this point if I didn’t get paid. I don’t think it is a correct observation to say because we’re doing things in a somewhat different way that any intensity or passion has been lost. There’s nothing more fun for me than finding something new to add to Berkshire and that was true 40 years ago and true now and true 10 years from now I hope.
Charlie Munger: I think when you bought American Express the first time you didn’t know much about it so you had to dig deeply. The second time you were golfing with ?, then bought it a second time. The first time was hard and the second was easy. It’s all cumulative.
Warren: What I learned sitting with Gorm [?] or Davidson in 1951 was useful to me. I don’t have to learn it a second time. Can grow on it. That’s the great thing about investing – the universe is big enough that you always find more, but it’s not changing dramatically all the time. What Charlie says is true. I didn’t know anything about American Express when the salad oil scandal hit in 1963 but thought I saw an opportunity so I went around and asked restaurants and absorbed some knowledge and then playing golf with Frank Olsen who was running the Hertz Corp. There was no way in the world he was getting rid of Amex or could cut their fees. That was my kind of business and we began buying their stock. We can’t buy any more stock ourselves. I got asked why we didn’t buy more and it was a banking holding story and we couldn’t buy anymore. Our interest in companies goes up every year – the passion is not gone I promise you.
Question: When people analyze a stock they look at quantitative metrics like P/E, ROE, asset/asset ratio, etc. When you analyze a stock what are your top five quant metrics that you look at and what’s your preferred number for each metric?
Warren: We’re looking at quantitative and qualitative. We’re not looking at aspects of a stock; we’re looking at aspects of a business. It’s important to have that mindset that we’re buying a business whether we’re buying shares or the entire company. When Charlie and I look at Value Line or reports or papers or whatever, for one thing we have cumulative of a good many industries and comps and not all by a long shot. Different numbers are of different importance depending on the kind of business. If you were a basketball coach you would if walking down the street and a 5’4” person said you ought to sign me up, you might have a prejudice against him but there might be one who’s good. And I might say good luck son, we’re looking for 7 footers, and then we have to worry about whether we can keep them coordinated and keep them in school. We see certain things that tell us, think further, look further. We’ve come up with the conclusion that we can’t make intelligent analysis of all kinds of businesses and usually some little fact slips into view that causes us to rethink something. You mentioned how I had the Bank of America preferred stock idea in the bathtub, which was true, but the bathtub wasn’t the key factor. The truth is I read a book 50 years ago called “Bio of a Bank.” I’ve followed BAC and other banks for 50 years and even bought banks. I used to [travel?] around Chicago trying to buy banks in the late ‘60s. So there are different things we think about in terms of a bank than we think about than when buying... certain things we think about when buying insurance. Different things depend on brands. Some brands travel very well – Coke (NYSE:KO) is a great example — and some brands don’t travel. We just keep learning about things like that. BAC in 2011 was subject to rumors, there was big short interest, morale was terrible. It struck me that an investment by Berkshire (NYSE:BRK.A)(NYSE:BRK.B) might be helpful to the bank and might be to us. I never met O’Brien, but gave him a call. Not because I calculated some precise P/E ratio, but because I have some idea of what the company may look like in five years and a reasonable amount of confidence and there was a disparity between price and value.
Charlie: We don’t know how to buy stocks just looking at financial figures. We need to know more about how the company actually functions. Anything a computer could be functioned to do in terms of screening – do you use a computer to screen anything?
Warren: No I don’t know how to. Bill’s still trying to explain it to me. We don’t use screens. We don’t look for things that have low P/B or P/E. We’re looking at businesses exactly if someone offered use the whole company and think, how will this look in five years? We don’t know which auto company is going to be knocking the ball out of the park in five years and which is going to be hanging on by its fingernails.
Charlie: We think Burlington Northern will have a competitive advantage 15 years in the future with a high degree of confidence.
Warren: We don’t know about a computer company 10 years from now. We’re virtually 100% confident about Burlington Northern or Geico or some others I won’t name.
Charlie: People who are good at math want to look at numbers and know what company to buy. But you have to understand a company.
Warren: It’s not what I learned from Ben Graham. Looking at stocks as businesses is absolutely still part of the catechism. But I don’t know how I would manage money if just doing it by the numbers.
Warren: Takes care of that.
Question: Every time Bill Gross writes an essay about a new normal I get more depressed about my retirement investment. Do you share his view that returns in future decades will be lower than last few?
Warren: Charlie and I don’t pay attention to macro forecasts. We have worked together now for 50 years and can’t think of a time we made a decision on a company where we’ve talked about macro. We don’t know what things will look like in precise way. Naturally we think if we don’t know that nobody else knows. Why spend time talking about something you don’t know anything about? People do it all the time. But it’s not very productive. So we talk about the businesses. I like Bill Gross; it sounds like Bill Benson. But it doesn’t make any difference to me what he thinks about the future. Doesn’t make a difference to me what any economist thinks about it. I have a general feeling that the U.S. will continue to work well. Throughout my adult lifetime there have always been opinions about what’s going to happen in the next years; nobody knows. What we know with a high degree of certainty is BNSF will be carrying more cars in a year or two. That there will be two important railroads in the West and two in the East and will have assets that will have incredible replacement value. Not very complicated and to ignore what you know because of predictions about what you don’t know or what nobody knows in our view is just plain silly. We don’t have anything against someone talking about a new normal; my own guess is people will do very well owning good businesses if they don’t pay too much for them in 20 and 30 years. If they try to time based on what they’re going to do they’re going to do very well for their brokers and not for themselves.
Charlie: If you’re a busy surgeon and decided whether to have two more years before you retire. I would personally wait a few more years. In other words I kind of agree with Bill Gross.
Warren: What have we enjoyed in the last 10 years?
Charlie: Not so bad, but not as good as the first 30.
Warren: So take your pick.
Question: Over time Fruit of the Loom and others have lost screen print T-shirts to new players. Goldman [?] is going after tail market and having some success. Is there reason to think Fruit of the Loom won’t lose market share here as in the screen T-shirt market?
Warren: We keep costs down, constantly work at brand building and work hard to keep main customers in turn have their customers happy with their product and price point, and the non-branded aspects of part of the business has hurt Fruit in the last well 10 years certainly. We turn out first-quality low-priced underwear with strong brand recognition. We think it will be tough to build a brand against it or beat cost significantly. I think you will find five years from now more market share in men’s and boys’ particularly underwear will hold up. You’re right Hanes is a competitive threat. It’s not a business that you can coast on. It’s not Coca Cola (NYSE:KO). But it’s not an unbranded product either. I think Fruit will do reasonably well but not get anything like the kind of profit margins you can get in certain branded products.
Charlie: We may average out in terms of market share but we’re not going to win every skirmish or battle.
Question: Name 10 books that influenced you that weren’t written by Graham and Fisher. And it would be great if you would publish from the Graham partnership years. Small investors would benefit.
Warren: Charlie ran something called Wheeler Munger [?] and his portfolio was even more interesting so we’ll start with you. He ran a more constant portfolio than I did in those days.
Charlie: You wouldn’t recognize the names from the Buffett partnership. Rattle off some names.
Warren: Mosaic Tile, Mineral River Cola Land [?] -- 100s of them – Cole Iron. We literally owned between 400 or 500 names, but most of the money was made in about 10 of them.
Charlie: I couldn’t name 10 books either that I regard as better than the last 10. My mind is a blend of so many books I can’t even sort them out anymore.
Warren: I read every book in the public library on investing by age 11. But I never developed a philosophy, I just enjoyed stocks. Graham’s book gave me a philosophy, a bedrock philosophy on investing that made sense. It taught me how to think about a stock and the stock market. It taught me the market was there not to instruct me but to serve me. Think about stocks and pieces of businesses. So that philosophy was furthered by Phil Fisher’s book. I’ve learned different ways of applying it over the years. But it’s the way I think about stocks now. I can’t think of any aspect of that philosophy that has any flaws in it. Charlie’s probably read more biographies than anybody I know of. I like to read them but he just got through reading Joel Kennedy’s bio. I’m not sure you want to emulate everything he did but it’s still good reading. We read for the enjoyment of it; it’s been enormously beneficial to us, but we read because it’s fun. My life would have been different if Graham hadn’t gone to the trouble of writing the book which he didn’t need the money from.
Question (From Bill Miller of Legg Mason): The airline industry is plagued with terrible economics. With the pending merger with U.S. Air (NYSE:LCC) and American (AMR)… the industry has been consistently profitable with double-digit returns. Do you think the industry’s improved economics are likely to improve?
Warren: The answer to the second question is no. The question about the industry is interesting because it’s true it has consolidated. In some industries there are only two competitors and they still beat each other’s brains out. Freddie Mac and Sallie Mae. Two enormous companies in battle to beat the other guy out drove prices down to improper levels and did stupid things. Certain industries once down to certain levels do extremely well and others even when there’s two of them still don’t do that well. Coke and Pepsi (NYSE:PEP) in the U.S. are the only two colas people can name and 50 percent of drinks sold are colas, but if you go into the market on a weekend they’re pricing the product at low prices and competing vigorously. It’s industry-specific. The airline industry has situation where have very, very, very low incremental cost per seat with enormous fixed costs. The temptation to sell that last seat at a very low price is very high and sometimes it’s very hard to distinguish between that seat and the last seat. It’s labor-intensive and capital intensive and largely commode type business. As Bill Miller points out, it’s been a death trap for business since Orville took off. If it ever gets down to one airline it will be a wonderful business and the question will be if having gotten down to relatively few through bankruptcy will question be whether it is a good business yet. I don’t know the answer but I’m skeptical.
Charlie: The last time we were presented with the opportunity of the railroad we did the same thing Bill Miller would suggest. And what did we do? We missed it. We stumbled in late to the party. We proved to be slow learners. It’s conceivable that Miller is right in what he suggests. It goes into my too hard pile.
Warren: Mine too.
Charlie: But he could be right.
Warren: And it will be fun to watch. But we like to have stronger feelings about them. We don’t think things will change dramatically. Look at See’s candy. Even there real profitability is limited to the west coast but e don’t see competition coming along and taking away business.
Charlie: You really couldn’t create another railroad. And you could create another airline. And that’s what I don’t like about it.
Warren: And people like doing it. It’s exciting to them. It’s sexy for some reason. Record is… I don’t know how many bankruptcies there have been in but it’s an enormous number.
Q: Share repurchases. How should people think about them? Are there circumstances under which you would not buy back?
Warren: Book value has nothing to do with the price at which you would repurchase shares. There is virtually no correlation. Has actually reasonable frakking utility at Berkshire, our intrinsic business value is considerably above book value and we have signaled that by saying we would repurchase shares as long as we had substantial cash balance that met the needs of operating companies at 120 pct of book value. We got the opportunity to buy and could probably buy a whole lot of it. The calculus is very important. Take care of businesses with money first. If you can buy additional businessess that could add to per-share value of biz you do that. If you can purchase shares at significant discount it’s like buying dollar bills at 90 cents. Very proven way of – hard for us to do it because every time we say we’re going to do it, ppl say well he thinks it’s worth more. We’ve got mixed emotions. Don’t really like the idea of running a company that makes most of its money at buying company at selling at a discount. We haven’t done much of it. Most of the time our stock has sold at a reasonable range in relation to its intrinsic value. In a fair percentage in recent years it sold at some discount. Some years we thought it sold for more than intrinsic value. Our opinion is if the stock is selling at a significant discount and we’ve got the money around at a reasonable company we will buy it. Would be circumstances where we would buy a whole lot at a price that would…
Question for Charlie: Have you ever consider moving to Omaha to be closer to Omaha, to be closer to corporate headquarters?
Charlie: I think the answer to that is no.
Warren: I’m sure the answer to that is no. Even though we’re somewhat technophobic we have gotten to the point where we can handle using the phone. Don’t push us beyond that. As a practical matter, we each know how the other guy thinks so we don’t even need the phone exactly. We used to do a lot of phone when it cost a lot and now it doesn’t cost anything and we don’t use much. Charlie has a lot of fond thoughts about Omaha as have I.
Charlie: They’ve been building and tearing down so much I remember I feel like Rip Van Winkle.
Question: Climate change and its impact on companies. If asked what would underwriting experts at insurance companies advise you are emerging risks to your many enterprises by climate change? Do you have thoughts on carbon price debate?
Warren: If you have noticed, the climate is getting a lot warmer in recent years. Obviously, Charlie knows more about science than I do, which is not saying a whole lot. But my general feeling is that there is a reasonable chance that ppl worried about warming and co2 effect are right. But I don’t know enough that I can say as an expert. I don’t know but I’m willing to assume that there are a lot of very smart ppl who think that and its reasonable assumption. I don’t think makes real difference in assessing insurance rates from year to year. We have a general tendency to be pessimistic in assumptions about the likelihood of natural catastrophes but we would have a general bias if no carbon were going on, we would assume it’s going to be somewhat worse. Global warming in terms of lease setting price of insurance year to year is not a real factor. General pessimism bias is something of a factor.
Second part: Thoughts on the carbon pricing debate? Think is feasible to incentivize… or too tricky to figure out in practice?
Warren: That question calls for Charlie to give the answer.
Charlie: I think carbon pricing is pretty impractical. There are a bunch of nations with different opinions. If want to change behavior I think private taxes.
Question (Doug Kass): This is a question and challenge. In the past you have been open to inviting the audience to apply for jobs. In 2002 you told shareholders qualified to send in qualifications and again in 2006 when you advertised for a successor you said send me your resume. In the past you have discussed your view on short selling. You talked about how stocks tend to rise over time. By contrast 15 years has showed short selling can – I believe Todd Combs had success as a short-seller before you hired him.
Charlie: So much success he stopped doing it.
Doug: Yes, but he got a job from that success.
Warren: No, he didn’t.
Doug: Would you ever put money toward short-selling? Would you or Berkshire be willing to give $100 million in a managed account? If it failed to outperform Berkshire, it would be donated to charity. Even if Seabreaze outperformed, 25% would be contributed to charities. Additionally, you talk about technophobia. It’s hard to invest in, but also disruptive to many businesses. So that –
Charlie: The answer to your question is NO.
Warren: Charlie and I are no strangers to short selling.
Charlie: We both failed at it.
Warren: Yeah. Lucky because we don’t have competition. We may propose a wager at some point but will let that ride for the time being. If we go back long enough, we’ve done a reasonable amount of short selling. We identified companies that we thought were way overpriced and some that we were virtually certain were frauds. Making a lot of money short selling is still not a game that appeals to us over the long period.
Charlie: We don’t like trading agony for money.
Warren: But we wish you well.
Question: Can you be more specific about factors you consider fair price for acquisitions such as Heinz and also what sources do you use to make judgments about major changes that will affect the industry?
Warren: We usually feel we’re paying too much, right Charlie? But find business so compelling that management or that so compelling that we gag and get there on price. But it is not mathematical formula. Looking back when we bought other businesses that we considered wonderful if we could have paid significantly more money and still would have been wonderful. So we never know 100%. Generally speaking, if we get a chance to buy a wonderful business, and by that we mean it has characteristics that lead you to believe it will return unusually high return on capital over time and better yet get to deploy more capital at decent rates of return, we probably should stretch a little. Charlie and I had severeral conversations when looking at a biz we liked and sort of gagging at the price and Charlie and I will say let’s do that even though it kills us to pay that last 5%. Charlie was the one saying for God’s sake Warren write the check.
Charlie: That almost always happens. Modern prices are not cheap.
Warren: And we won’t find a lot of them. But in the stock market you will. The stock market will present you opportunities. In stock market auction markets crazy things will happen. A technical glitch can cause flash crash and doesn’t affect the biz at all. You will see opportunities in the stock market that you will never see in business market. But we really like buying businesses to hold and keep. We like buying stocks as well.
Charlie: We’re sort of in a different mode now. And it has a great lesson in that if we had kept the earlier mode, if never learned. We wouldn’t have done very well. The game of life is a game of everlasting learning. At least it is if you want to win.
Warren: We want to win.
Question: As a WWII vet, I would urgently request you stop eating so many hamburgers. They clog your arteries and we want to keep you around long time, even though voted for President Obama. You have extolled managers that were cost conscious. If these are the hallmarks that allow you to achieve success, how can you support an administration that has plunged the country into debt and is not concerned with the inefficiency of big government?
Warren: Well 16% we have to give Bush some credit for that too. It wasn’t Obama that created the crisis that required the stimulus. But in the end I find it unproductive to discuss politics with ppl because you have one-half agree and one-half disagree. The amount of deficit spending in the last four years, I think has been quite appropriate in relation to the threat to the economy that was posed by the greatest panic in my lifetime. Literally you have a situation where Berkshire was getting a phone call and GE (GE) needed money and we were the last stop. It’s quite a situation when Fannie and Freddie go into conservatorship and Wachovia has 5% drained out in one day. We needed fiscal stimulus in this country. The real question is how we get off of that. It is a problem but a lesser problem than it would have been if we started to follow an austerity program.
Charlie: I agree with you completely. By the way, so did George W. Bush. It was bipartisan. It was so much trouble we got together and agreed on these issues.
Warren: Bush uttered the 10 greatest words in economic history. Most don’t give him credit. In 2008 he said: “If money doesn’t loosen up this sucker is going to go down.” That is a man that knew how to get to the point. And I give him great credit for that. Plenty members of his party did not agree. Leaders of all parties generally speaking in terrible trouble came up with policies that in general were very useful in avoiding something far worse than what we experienced. It wasn’t easy and it took guts. I’m disturbed by a national debt that grows in respect to GDP. I wrote an op ed in the New York Times in 2009 or 10 talking about that very problem. By the time we came out of WWII was debt higher and ppl were predicting terrible things at that time bc of that situation. The real problem is it continues to grow and it’s easier to print money than exercising discipline. We’ve faced worse problems. This is not the country’s worst problem by far. We will do fine but with bickering that will bother you day to day but –
Charlie: I agree about George W. Bush. I like nonpartisan episodes when we get together and do things right. If you aren’t confused I don’t think you understand very well.
Warren: How bothered are you by the level of debt in relation to GDP?
Charlie: I don’t think one fixed ratio that is written in the stars is required. In fact most data is not even counted in what we call debt. Off-the-books debt is bigger than on-the-books debt. Say can be changed, but are we really going to fix social security. I don’t think it’s very likely.
Warren: But social security isn’t a killer. If we have GDP that rises a couple percent –
Charlie: It’s a great problem. All problems are trivial if GDP will rise 2% per year per capita. All problems republicans are screaming about will be fixed if we can do that.
Question: In the past you said for investors should simply stick to an index fund and let it go. 1% chose 5 best stocks. How would a strategy of buying 20 of the best stocks in America and leaving it at that do? Would it outperform an index over the long term?
Warren: The 20 you would pick would virtually match of an index fund. Who knows which would be the first? Person needs to stop and spend a reasonable amount of time becoming an expert on stocks. The real problem they have is they may get excited about stocks at the wrong time and really the idea of buying index fund is not to buy stocks at the right time or the right stocks but is to avoid buying at the wrong time. You have to avoid getting excited when others are excited and about industries. There’s nothing wrong with being amateur investor, but in an indeed fund you just simply have a logical profitable course of action which is to buy into American businesses in a broadly diversified way. Your group of 20 would probably match an index fund and you’ll probably do well in an index fund.
Charlie: Knowing the edge of your competency is very important. If you think you know what you’re doing you’re in trouble. It works particularly well in matrimony.
Warren: Want to give any other advice?
Question: Generous charitable gifts of stock have been sources of salable assets for charities linked to Gates. Could it be a reason the stock is trading under 120% of book value and will selling affect the stock price?
Warren: I give away 4.5% of stock roughly $2 billion, less than 1% of value of Berkshire. A 1% sale annually of outstanding capital is absolutely peanuts. You could even argue in some cases in terms of market price availabilities of stocks depends on whether people buy them. A supply of 1% annually is not going to change the level of which the stock trades. It’s insignificant compared to... Can argue that everyone else has the right to sell their stock and give to a charity. I don’t think it should totally be –
Charlie: There’s nothing so insignificant as an extra $2 billion to an old man.
Warren: I never gave away a penny that in any way changed my life. It has a lot more utility in the hands of other ppl than in my safe deposit box.
Question: I just read your 10-Q. What are you seeing in terms of reading the tea leaves for the U.S. economy right now? I’m also curious if you have any need to expand Berkshire internationally.
Warren: I’m willing to go any place where we can tell how things are going to be in five years and management and all the things we emphasize. We’ve never foreclosed anything but are going to find most opportunities in the USA. That’s just the nature of things; this is just a huge market and we’re well known here. In terms of current biz ever since the fall of ‘09, we have seen a gradual improvement. What we see overall is just a slow progress in the U.S. economy. This economy is not for the last four years not come roaring back but ever forward. I wouldn’t be surprised if it keeps going this way. Finally overhang in housing ended about a year ago so we’re starting to get some recovery in home prices which has a psychological effect and some improvement in construction but don’t want to start building again. We want housing starts that more or less equal household formation. I don’t think we’ll surge but I don’t think we’ll stall either.
Charlie: It’s not a field where I’m that good.
Warren: We know what’s going on now. We’ll keep playing the game. If we hear about something tomorrow where we can spend $15 or $20 billion on it and we like the biz, in the U.S. or otherwise, we’ll move in an instant and if we don’t we won’t do anything. We don’t know when an opportunity is going to come along and does sometimes. And in financial markets sometimes they come along in a huge way. We may not see many anymore but most people in this room in their lifetimes will see incredible opportunities in equity markets and maybe in bond markets and things will happen and you have to be able to act, in terms of capital and mental fortitude to jump in when people are jumping out.
Question: I’m in my 20s and starting a partnership. What advice do you have getting ppl to put in money before I have a track record as a solid investor?
Warren: Well you haven’t sold me! I think ppl should be cautious about selling to people even if they have a track record. I would advise anybody to develop an audited track record as early as we can. It’s far from the sole reason we hired Todd and Ted, but we looked at their record. We looked at a record we could see and understand. We look at a lot of records we see and don’t understnad. If you have a coin-flipping contest with 300 orangutans and they flip them 10 times instead of having 300 million you’ll have 200,000 that will flip 10 times successfully and will go around getting people to hire them for future coin flipping contests.
Charlie: When you had his problem didn’t you scrape together $10 million from a loving family?
Warren: I hope they kept loving me. Some ppl thought I may have been running a Ponzi scheme there. But to attract money you should deserve money and develop a record over time and be able to explain to ppl why that record is product of sound thinking rather than being in tune with the trend or being lucky.
Charlie: Most start with friends and family or have earned it some other way. It’s hard when you’re young and that’s why ppl start so small.
Warren: Relatively few will be successful.
Question: At Berkshire there is a unique dynamic between Ajit’s special skill and Ajit’s special skills [?]. Is Ajit your successor and if not what happens to Ajit’s biz without Ajit?
Warren: Well we won’t be without Ajit for a long time. He’s remarkable in many ways but mainly when ppl start copying what he’s doing and turning what he’s doing that was quite profitable and every Tom, Dick and Harry does it, he thinks of a new way. I notice you started with Ajit, but you won’t have any luck if you went on to the b’s.
Charlie: The answer is if Ajit is not with us it won’t looks as good.
Warren: It’s true with other managers as well. It’s an extraordinary group of ppl that sometimes don’t need the money. They’re doing a job for shareholders and Charlie and me that you could almost say we don’t deserve, but having a good time running their businesses. We create an atmosphere where they can enjoy running a biz. It’s taken a long time too. We operated Berkshire for 20 years without Ajit. If he had come in the office in 1965 instead of 1985 we’d probably own the world. Fun to think about.
Question (Kass): Like you I have 2 sons I love. Like you I have two in the audience today. This is not meant to be disrespectable but it’s a question I have to ask. Some day your son will become a non-executive chairman of the business. It is a complex biz. Howard has never run a diversified biz nor is he an expert on enterprise risk management, and he’s not made material stock investments nor engaged in taking large companies. Aside from the accident of his birth, how qualified is he?
Warren: He’s not taking on the role you described. He’s taking on the role of preventing the mistake of taking on the COE. Having a non-executive chairman that cares about taking care of shareholders or keeping the culture, not running the biz at all, he is there as protector of the culture and there is enormous responsibility about that. He has no illusions about that at all. He’s not getting paid for running the biz. Just think about whether the board may need to change the CEO. I’ve seen many times over 60-plus years as a director times when a mediocre CEO may be likable and not dishonest but not the person who should run it but should be changed. It’s hard to do when that person is in the chairman’s position. Not easy for ppl to come into Chicago or New York or and have a meeting every three months. Who’s going to make a change? That’s the position Howard will be in. And nobody could fill that responsibility of doing that job than my son Howard.
Charlie: Mungers much safer with Howard there. The board owns a lot of stock, you gotta remember, not trying to gum it up for shareholders.
Warren: After my death whatever in terms of value them in terms of value of stock will over a period of time go to help ppl around the world makes an enormous difference whether the company behind that stock is doing well or not. Charlie and I have both seen more than one example where the CEO might be a 6 on a scale of 10 and continues to run the biz year after year when somebody else could do it much better. It could be hard to make that change if that person runs the agenda and keeps everyone busy when they come to town. An example I’ve used in the past is blessed are the meek, for they inherit the earth, but after they inherit it will they still be meek? Could it be possible they may want to throw their weight around.
Question: Talk about your IBM (IBM) investment and where you see moat? I work for Microsoft.
Warren: I don’t understand the moat around IBM as much as around Coca-Cola. I have some understanding of it but would have more conviction about moat around Coke or Wrigley or Heinz than IBM but I feel good enough about IBM that I put money in it and nothing precludes Microsoft and IBM both being successful. In fact I hope both are. We have enough conviction about IBM’s position. I like their financial position. Odds are good. Don’t feel the same degree about conviction about that than BNSF railroad. I can’t think of anything going wrong with bnsf. I can think of some things wrong with IBM. They have a huge pension fund too. Asset and liabilities – a big annuity company on the side. Can have balls that take 20 bounces in annuities. I would rather they didn’t have it but the fact is they do. They show asset and liabilities equal but assets are more reliable over time.
Charlie: At least the pension plan has the resources of IBM. In Japan they agreed to pay 3% interest. Of course there’s no way to earn 3% interest. A whole lot of very secure places look unsecure now. Around Berkshire notice the operations where we have our own policies are pretty small.
Warren: We do not like giving options in this world. People in the life insurance industry have people pushing them on, tend to give ppl options that in certain places. Actually in the mortgage biz Charlie and I were in the savings and loan biz and the idea of giving 20-year mortgages whether a good deal for you can call off tomorrow and if good for them can keep for 30 years. If it’s a bad deal and rates go to 1 you can refund it. Life companies engaged in that big, big time in the last few decades and a lot are paying the price and some haven’t even realized what the problems are, like the fellow in a switch blade fight where the fellow takes a swipe and the other fellow says you didn’t get me, and the other guy says wait till you shake your hand. Charlie?
Charlie: No, that’s gloomy enough.
Question: In the past you said you were 85% Ben Graham and 15% Fisher, and if you had $1 million today you could generate 50% returns. How was your strategy different when you were still accumulating money than managing billions?
Warren: managing a million dollars is entirely different than running Berkshire or a $20 or $50 billion fund of money. If Charlie and I were running $1 million or $100,000 we would be looking in some very small things, probably small descriptions in certain situations and opportunities are out there. Periodically extraordinary ones. But it’s something I don’t think about anymore because my problem is handling $12 or $14 billion coming in every year so we have to be looking for very big deals and forgetting what we used to do when we were very young.
Charlie: I’m glad to be through with that particular problem.
Warren: He worked very hard.
Charlie: We both did.
Warren: He looked under a lot of rocks.
Charlie: He invested the float of his tax return enough to pay his taxes when they were due.
Question: How do you see investing in emerging markets with Berkshire and if yes, what kind of industries and companies you are interested in?
Warren: We don’t really start out looking to either emerging markets or industries or anything of the sort. We may find things as go around but not like Charlie and I talk in the morning and say it’s a particularly good idea to invest in India or China or what case may be. We’ve never had a conversation like that. It won’t happen. It’s not where our strength is. Know it’s not there. Think probably most ppl strength isn’t there. It sounds good but it’s not best way to look at investments. If told me perfectly willing to do it – BYD – but if we were told we could only invest in the U.S. the rest of lives we would not regard that as a huge hardship.
Charlie: It’s a great way to sell – lots of advice, lots of categories and lots of action. Lot of things don’t think we have enough edge that we want to play.
Warren: When we hear someone talking country-by-country concepts I think they’re going to do better at selling than investing. It’s the easy way, what ppl expect to hear: Today we ought to look at this or that around the world.
Charlie: Our experts really like Bolivia. Last year they really liked Sri Lanka.
Warren: I’m not comfortable with that. I usually think it’s a lot of boloney.
Charlie: That’s why we’re not comfortable
Question: The U.S. government was complicit in fleecing American public to buy a home and mortage at cost. Are legislatures doing the same thing now?
Warren: We’re not remotely near a bubble in terms of housing now. I think that statement is accurate but not complete in terms of what went on before. The whole country almost went crazy in housing and the government played a big part of it because it played a big part in the financing of it and plenty of legislators were encouraging Fanny and Freddie to do things they shouldn’t have been doing, not just in retrospect. Lots of people were doing the same thing from all sources. It had that aspect bubbles do where year after year that skeptics look like idiots and people on the bandwagon that were refinancing houses at ever higher prices and speculating looked oh so wonderful. And people susceptible to that bandwagon effect when their neighbors are making easy money and finally succumb. It’s the nature of things. It didn’t mean people at Fanny or Freddie were evil, a few of them were, as legislators were never evil, though a few probably were, but overwhelmingly people get caught up in a grand delusion. It has happened many times in history and will happen again. You can use that very much to your profit. Not in t