Question 12: Can you advise us what we should do to spread your value investing philosophy?
WB: In any system in 1936 in a great chapter on investing talked about investing and speculation and danger of it and, to put it eloquently, there’s always the possibility -- there's always some speculation and always some value investors, but speculation gets rampant and when you’re getting social rules, that have worked recently, people could get very excited about speculation in markets and we will have from time to time in market — there's nothing more agonizing to see your neighbor who you think has an IQ 30 points lower than you getting richer than you. But people succumb to it.
I would say that early on in developing markets there’s probably some tendency for them to be more speculative than markets that have been around for a couple hundred years because markets have a casino characteristic that has a lot of appeal to people who see people getting richer than them. People who have seen a couple markets are less likely to do that.
If the market gets hot, and people know you’re doing well, a lot of people will be affected. Not only speculation -- that will be true in the U.S., and China being a newer market in the participation is likely to have some pretty extreme changes. We will have some too.
CM: I agree with that. The Chinese will have more trouble. There are very bright people, lot of action. But it will be more speculation.
WB: It will offer the investor more opportunities if they can keep their wits about them If you if we have wide speculation. Berkshire (BRK.A, Financial)(BRK.B, Financial) won’t get fearful, and fear spreads like you cannot believe until you’ve seen a few examples of it.
The way the public can react is extreme in markets, and that opens opportunities for investments.
