1 00:00:17,560 --> 00:00:19,040 Speaker 1: Pushkin too quick. 2 00:00:19,240 --> 00:00:35,159 Speaker 2: No, it's perfect, push kid stop, you got it. 3 00:00:37,440 --> 00:00:41,440 Speaker 1: The title of this show, Jacob, is Old Warren Buffett. 4 00:00:41,480 --> 00:00:45,400 Speaker 1: So when does a man get old? I asked myself 5 00:00:45,440 --> 00:00:45,920 Speaker 1: that every. 6 00:00:45,840 --> 00:00:47,640 Speaker 3: Day yet no today. 7 00:00:48,080 --> 00:00:51,479 Speaker 1: Yet We did a whole show on Young Warren Buffett. 8 00:00:51,520 --> 00:00:55,240 Speaker 1: He is ninety five years old as of this recording, 9 00:00:55,800 --> 00:00:59,200 Speaker 1: so somewhere in there he became the man he is today. 10 00:01:00,160 --> 00:01:04,560 Speaker 1: To recap our last episode on Young Warren Buffett, this 11 00:01:04,640 --> 00:01:10,000 Speaker 1: weird kid who had obsessive hobbies becomes investor in things 12 00:01:10,080 --> 00:01:15,280 Speaker 1: that they called cigar butt companies. He found tiny companies 13 00:01:15,400 --> 00:01:18,679 Speaker 1: that were worth more than they appeared by their stock price. 14 00:01:18,720 --> 00:01:23,200 Speaker 1: Would buy that stock, wait for the pop, wait for 15 00:01:23,240 --> 00:01:24,240 Speaker 1: the pop, and. 16 00:01:24,200 --> 00:01:26,520 Speaker 3: Then sell it. And it's very different than the Warren 17 00:01:26,560 --> 00:01:27,559 Speaker 3: Buffett we know today. 18 00:01:27,840 --> 00:01:31,679 Speaker 1: Yeah, and in the last episode, he buys a textile mill, 19 00:01:32,080 --> 00:01:36,040 Speaker 1: Berkshire Hathaway, which then becomes his holding company for all 20 00:01:36,080 --> 00:01:40,760 Speaker 1: these other companies you know, insurance companies, products, all sorts of. 21 00:01:40,920 --> 00:01:43,840 Speaker 3: That's the transition into the Buffet we know today. He's 22 00:01:43,880 --> 00:01:45,960 Speaker 3: not buying and selling. By the end of the last episode, 23 00:01:46,000 --> 00:01:47,560 Speaker 3: he's buying and holding. 24 00:01:47,319 --> 00:01:49,880 Speaker 1: And he's starting to think about these big American brands, 25 00:01:49,920 --> 00:01:53,920 Speaker 1: Coca Cola, Gillette, Razors, Dairy Queen. Right, you can't get 26 00:01:53,920 --> 00:01:56,560 Speaker 1: more American than that. So today we're going to talk 27 00:01:56,560 --> 00:01:59,960 Speaker 1: about Warren Buffett's superpower that he really leveraged in this 28 00:02:00,080 --> 00:02:03,440 Speaker 1: sort of second half of his life, and that is 29 00:02:04,240 --> 00:02:07,840 Speaker 1: that he was now famous. And this is the fundamental 30 00:02:07,880 --> 00:02:10,880 Speaker 1: thing about Warren Buffett. Regardless of the decisions he makes 31 00:02:11,040 --> 00:02:14,000 Speaker 1: by himself late night when he's deciding which companies to buy, 32 00:02:15,040 --> 00:02:18,000 Speaker 1: he is a man who is now famous for being brilliant, 33 00:02:18,040 --> 00:02:21,200 Speaker 1: famous for being investor, famous for being rich, famous for 34 00:02:21,280 --> 00:02:25,800 Speaker 1: being folksy and all American. And that that wasn't just 35 00:02:25,840 --> 00:02:28,640 Speaker 1: a result of his decisions. That was the way he 36 00:02:28,760 --> 00:02:32,440 Speaker 1: ended up making so much money, his fame the Buffet Premium. 37 00:02:33,280 --> 00:02:36,080 Speaker 1: We are going to start in nineteen eighty three because 38 00:02:36,440 --> 00:02:39,240 Speaker 1: this is the first time that Berkshire Hathaway has an 39 00:02:39,280 --> 00:02:45,160 Speaker 1: annual meeting that you might recognize today. Annual meetings are 40 00:02:45,200 --> 00:02:49,480 Speaker 1: traditionally very boring and back before the nineteen eighties, like 41 00:02:49,680 --> 00:02:52,160 Speaker 1: no one went to them, like maybe some old retirees 42 00:02:52,240 --> 00:02:52,720 Speaker 1: and some. 43 00:02:52,680 --> 00:02:55,720 Speaker 3: People work for the company, maybe a mutual fund manager 44 00:02:55,800 --> 00:02:56,680 Speaker 3: trying to look busy. 45 00:02:56,800 --> 00:03:00,800 Speaker 1: Yeah, So famously, the Berkshire Hathaway meetings used to be 46 00:03:01,280 --> 00:03:04,600 Speaker 1: in a loft in the mill in New Bedford, Massachusetts. 47 00:03:04,680 --> 00:03:07,359 Speaker 1: There's a story about like it sort of ending early 48 00:03:07,400 --> 00:03:11,680 Speaker 1: because people just wandered away right meeting and turned Buffett 49 00:03:11,680 --> 00:03:16,080 Speaker 1: eventually move the meetings to the National Indemnity Cafeteria in Omaha. 50 00:03:16,160 --> 00:03:19,000 Speaker 1: That's an insurance company owned And in nineteen eighty one 51 00:03:19,120 --> 00:03:22,960 Speaker 1: only twenty two people showed up. But in nineteen eighty 52 00:03:22,960 --> 00:03:25,400 Speaker 1: three people were starting to hear these stories about this 53 00:03:25,440 --> 00:03:28,000 Speaker 1: famous investor, Warren Buffett. Right, he was close to being 54 00:03:28,000 --> 00:03:31,720 Speaker 1: a billionaire at this point. And a crowd one hundred, 55 00:03:31,919 --> 00:03:35,360 Speaker 1: few hundred show up at the meeting, and Buffett gets 56 00:03:35,400 --> 00:03:37,960 Speaker 1: this chance to do what he's done one on one 57 00:03:38,000 --> 00:03:39,880 Speaker 1: for most of his life, which is to kind of 58 00:03:40,160 --> 00:03:45,160 Speaker 1: hold court to talk about his philosophy of life and investing. 59 00:03:45,280 --> 00:03:49,080 Speaker 1: This is what you say, he's dispensing, folksy wisdom, dispensing 60 00:03:49,120 --> 00:03:51,360 Speaker 1: folks say wisdom, yeah, yeah, yeah. This is in the 61 00:03:51,360 --> 00:03:54,200 Speaker 1: first graph of coverage of the Berkshire Hathaway shareholder meeting 62 00:03:54,640 --> 00:03:57,680 Speaker 1: in Perpetuity. Right, people are traveling across the country to 63 00:03:57,720 --> 00:04:02,960 Speaker 1: see him. Eventually, they would, you know, fill auditoriums and 64 00:04:03,000 --> 00:04:05,520 Speaker 1: then arenas people would start to like dress up as 65 00:04:05,560 --> 00:04:09,000 Speaker 1: Warren Buffett, they would read poems about him, seeing songs. 66 00:04:09,320 --> 00:04:13,120 Speaker 1: He became this American brand, just like the brands that 67 00:04:13,160 --> 00:04:16,000 Speaker 1: he love, like Coca Cola and Dairy Queen. So as 68 00:04:16,039 --> 00:04:18,200 Speaker 1: part of this episode, I'm going to tell you the 69 00:04:18,240 --> 00:04:22,680 Speaker 1: story of how Warren Buffett leveraged this fame. But I 70 00:04:22,760 --> 00:04:26,800 Speaker 1: also have in my hand a collection of folksy wisdom 71 00:04:27,480 --> 00:04:30,880 Speaker 1: that I'm going to make you read through this episode. 72 00:04:30,920 --> 00:04:33,080 Speaker 1: You can shuffle them, you could pop them in whenever. 73 00:04:33,160 --> 00:04:36,160 Speaker 3: So you've handed me a stack of index cards, each 74 00:04:36,200 --> 00:04:41,200 Speaker 3: of which has a pithy piece of folksy wisdom from 75 00:04:41,200 --> 00:04:43,880 Speaker 3: Warren Buffett, little Buffet quotes. I'm going to lay them 76 00:04:43,880 --> 00:04:47,039 Speaker 3: out before me, and I'm going to pull from him 77 00:04:47,360 --> 00:04:48,440 Speaker 3: as appropriate. 78 00:04:48,040 --> 00:04:50,800 Speaker 1: During the show Love It. In the mid nineteen nineties, 79 00:04:50,839 --> 00:04:53,920 Speaker 1: the annual Berkshire Hathway Meeting gets moved to the Colisseum 80 00:04:54,279 --> 00:04:56,039 Speaker 1: in Omaha. This is when they start calling it the 81 00:04:56,080 --> 00:05:00,040 Speaker 1: Woodstock for Capitalists. Ten thousand people show up, then twenty 82 00:05:00,080 --> 00:05:03,120 Speaker 1: thousand people show up. Ten years later, people are dressing 83 00:05:03,160 --> 00:05:06,240 Speaker 1: like Warren Buffett, reading poems about him, you know, painting 84 00:05:06,320 --> 00:05:09,440 Speaker 1: pictures of him trying to give him gifts. They're buying 85 00:05:09,760 --> 00:05:13,280 Speaker 1: products and souvenirs at the Berkshire halfway meeting. 86 00:05:13,279 --> 00:05:17,400 Speaker 3: Boks are Berkshire companies, right, They're buying seased candies and exactly, 87 00:05:17,680 --> 00:05:19,640 Speaker 3: dairy Queen dilly bars exactly. 88 00:05:19,920 --> 00:05:22,880 Speaker 1: And at the center of it is Warren Buffett, just 89 00:05:23,000 --> 00:05:25,440 Speaker 1: answering questions off the top of his head, you know, 90 00:05:25,520 --> 00:05:26,960 Speaker 1: preaching this Buffet way right. 91 00:05:27,040 --> 00:05:29,720 Speaker 3: And rule number one is never lose money. Rule number 92 00:05:29,720 --> 00:05:32,680 Speaker 3: two is never forget rule number one love it. 93 00:05:33,200 --> 00:05:36,320 Speaker 1: There's this great quote that Buffett gives in the book 94 00:05:36,360 --> 00:05:39,800 Speaker 1: The Snowball by Alice Schroeder that sums up his attitude 95 00:05:39,839 --> 00:05:42,120 Speaker 1: this whole thing. Right, I was at my best at 96 00:05:42,120 --> 00:05:44,680 Speaker 1: giving financial advice when I was twenty one years old 97 00:05:44,839 --> 00:05:46,240 Speaker 1: and people weren't listening to me. 98 00:05:46,480 --> 00:05:46,960 Speaker 3: I could have. 99 00:05:46,880 --> 00:05:49,159 Speaker 1: Gotten up there and said the most brilliant things and 100 00:05:49,240 --> 00:05:51,080 Speaker 1: not very much attention would have been paid to me. 101 00:05:51,680 --> 00:05:53,479 Speaker 1: And now I can say the dumbest things in the 102 00:05:53,480 --> 00:05:55,400 Speaker 1: world and a fair number of people will think there's 103 00:05:55,440 --> 00:05:57,520 Speaker 1: some great hidden meaning to it or something. 104 00:05:58,040 --> 00:06:02,600 Speaker 3: This is insightful, but not so insightful that he stops pontificating. 105 00:06:03,279 --> 00:06:08,360 Speaker 1: No, because this was his new competitive advantage, huh, and 106 00:06:08,520 --> 00:06:10,080 Speaker 1: it turns out a little bit of a curse. 107 00:06:10,760 --> 00:06:14,600 Speaker 3: I'm Robert Smith and I'm Jacob Goldstein. This is Business History, 108 00:06:14,960 --> 00:06:16,359 Speaker 3: a show about the history of business. 109 00:06:17,080 --> 00:06:18,880 Speaker 1: When we told the story of Young Warren Buffett, it 110 00:06:18,960 --> 00:06:20,839 Speaker 1: was a story of, you know, a crafty man using 111 00:06:20,880 --> 00:06:24,039 Speaker 1: research and math and hard work to make millions of dollars. 112 00:06:24,080 --> 00:06:26,960 Speaker 1: But Old Warren Buffett's a little bit of a harder 113 00:06:27,000 --> 00:06:29,200 Speaker 1: story because he sort of starts with a billion dollars 114 00:06:29,279 --> 00:06:32,599 Speaker 1: and just continues to get richer, right, And he is 115 00:06:32,680 --> 00:06:34,520 Speaker 1: also a man at this point who is making his 116 00:06:34,560 --> 00:06:37,599 Speaker 1: own weather. He doesn't have to be smarter or faster. 117 00:06:37,720 --> 00:06:39,960 Speaker 1: He may be, but doesn't have to be because he 118 00:06:40,080 --> 00:06:43,120 Speaker 1: is Warren Buffett. And people just want to do business 119 00:06:43,120 --> 00:06:45,440 Speaker 1: with him. They want to be part of the magic. 120 00:06:46,040 --> 00:06:48,760 Speaker 1: So in the nineteen eighties, Buffet's already putting together this 121 00:06:48,800 --> 00:06:52,240 Speaker 1: whole empire under the brand Berkshire Hathaway. He has the 122 00:06:52,240 --> 00:06:56,520 Speaker 1: insurance company generating cash. He's got sees candy. Have you 123 00:06:56,560 --> 00:06:57,560 Speaker 1: ever had to seize candy? 124 00:06:57,720 --> 00:07:00,279 Speaker 3: I have, Yeah. My step grandfather used to give me 125 00:07:00,320 --> 00:07:01,920 Speaker 3: a box for Christmas when I was a boy. 126 00:07:02,200 --> 00:07:05,640 Speaker 1: Wid grhead parents too, and they are these lovely boxes 127 00:07:05,640 --> 00:07:09,440 Speaker 1: of fancy chocolates. Half of them are disgusting. You just 128 00:07:09,440 --> 00:07:10,000 Speaker 1: don't know which. 129 00:07:10,000 --> 00:07:11,960 Speaker 3: You don't know, right, And they could put a man 130 00:07:12,320 --> 00:07:14,400 Speaker 3: You know what, I don't want the cherry. Nobody wants 131 00:07:14,480 --> 00:07:17,239 Speaker 3: the cherry. I just want the like the chocolate tree. 132 00:07:17,480 --> 00:07:20,360 Speaker 1: No fruit, No, don't put the fruit in there. But 133 00:07:20,480 --> 00:07:22,640 Speaker 1: old people love it. And it was a great successful 134 00:07:22,640 --> 00:07:25,280 Speaker 1: American company. Right. He has a couple of newspapers at 135 00:07:25,280 --> 00:07:28,000 Speaker 1: this point, he's got a bank, he owns some of ABC, 136 00:07:28,200 --> 00:07:33,080 Speaker 1: the TV network, Geico insurance. So he is very successful 137 00:07:33,120 --> 00:07:37,480 Speaker 1: and very rich. But this is the nineteen eighties, right, go, 138 00:07:37,480 --> 00:07:41,360 Speaker 1: go Gordon Gecko. Right, is that his name, Gordon Gecko? 139 00:07:41,440 --> 00:07:42,280 Speaker 3: Greed is good? 140 00:07:42,360 --> 00:07:45,240 Speaker 1: Right? The movie Wall Street, it's all about financial innovations. 141 00:07:45,240 --> 00:07:46,400 Speaker 1: We're all going to be rich. 142 00:07:47,160 --> 00:07:48,960 Speaker 3: We're not all going to be rich in Wall Street 143 00:07:49,000 --> 00:07:51,440 Speaker 3: for the record, Yes, the Wall Street people get rich. 144 00:07:52,360 --> 00:07:53,080 Speaker 1: Rich, yes. 145 00:07:53,360 --> 00:07:53,560 Speaker 3: Yes. 146 00:07:53,760 --> 00:07:57,120 Speaker 1: And that guy in Omaha, he doesn't really know what 147 00:07:57,160 --> 00:08:00,480 Speaker 1: he's talking about. Right. He doesn't believe in borrowing vast 148 00:08:00,480 --> 00:08:02,880 Speaker 1: sums of money. He doesn't believe in junk bonds any 149 00:08:02,960 --> 00:08:05,440 Speaker 1: of these things. Right, you just can't buy and hold. 150 00:08:05,480 --> 00:08:08,400 Speaker 1: This is the nineteen eighties. And this is also the 151 00:08:08,440 --> 00:08:13,559 Speaker 1: era where finance professors are starting to put forward something 152 00:08:13,560 --> 00:08:17,160 Speaker 1: called the efficient markets hypothesis, which you and I know. 153 00:08:17,160 --> 00:08:19,760 Speaker 3: Well, yes, yes, I mean it's basically the idea that 154 00:08:19,840 --> 00:08:23,080 Speaker 3: in a big liquid market like the US stock market, 155 00:08:23,760 --> 00:08:28,480 Speaker 3: the price of a stock today reflects the true value 156 00:08:28,480 --> 00:08:30,600 Speaker 3: of the company. And obviously that's not true every day, 157 00:08:30,640 --> 00:08:33,959 Speaker 3: but in a simpler format means you can't do what 158 00:08:33,960 --> 00:08:37,719 Speaker 3: Warren Buffett does. You can't look at a stock systematically 159 00:08:37,800 --> 00:08:40,080 Speaker 3: and on average beat the market. 160 00:08:40,360 --> 00:08:43,000 Speaker 1: Because the price is the price, and that reflects all 161 00:08:43,040 --> 00:08:46,080 Speaker 1: the information. And unless you have insider information, which Warren 162 00:08:46,120 --> 00:08:50,120 Speaker 1: Buffett never claimed, essentially like you can get lucky. And 163 00:08:50,160 --> 00:08:52,400 Speaker 1: they would say at this point, the professors, and they 164 00:08:52,400 --> 00:08:55,640 Speaker 1: did say Warren Buffett was just pretty lucky. He made 165 00:08:55,679 --> 00:08:57,280 Speaker 1: some lucky calls over the years. 166 00:08:57,480 --> 00:08:59,960 Speaker 3: Or also, as we talked about in the last episode, 167 00:09:00,000 --> 00:09:02,680 Speaker 3: he came along at a time when the market was 168 00:09:02,800 --> 00:09:06,480 Speaker 3: less efficient, and he focused on the even less efficient 169 00:09:06,520 --> 00:09:07,360 Speaker 3: aspects of the market. 170 00:09:07,480 --> 00:09:07,600 Speaker 1: Right. 171 00:09:07,640 --> 00:09:10,880 Speaker 3: Remember in the last episode, he's like buying companies that 172 00:09:10,920 --> 00:09:13,120 Speaker 3: are not even traded on the New York Stock Exchange 173 00:09:13,160 --> 00:09:16,000 Speaker 3: at a time when fewer people are paying attention and 174 00:09:16,040 --> 00:09:19,840 Speaker 3: so I think clearly those markets were inefficient and he 175 00:09:19,960 --> 00:09:23,199 Speaker 3: was exploiting those inefficiencies. Now it's the eighties, so not 176 00:09:23,280 --> 00:09:26,760 Speaker 3: only is the market more efficient, but Buffett has to 177 00:09:26,800 --> 00:09:29,520 Speaker 3: deploy so much money that even if there's some weird 178 00:09:29,640 --> 00:09:34,959 Speaker 3: little bus company in New Bedford, Massachusetts, it's too little 179 00:09:35,000 --> 00:09:36,720 Speaker 3: for it to move the needle for him, right, he 180 00:09:36,840 --> 00:09:39,400 Speaker 3: has to be playing in this big efficient market. 181 00:09:39,600 --> 00:09:42,839 Speaker 1: Yes, and more than that, the finance professor should have 182 00:09:42,880 --> 00:09:45,280 Speaker 1: realized one of the reasons why the market was efficient 183 00:09:45,800 --> 00:09:49,480 Speaker 1: was Warren Buffett. That variety showed, he showed and he 184 00:09:49,679 --> 00:09:53,959 Speaker 1: closed those arbitrage gaps. So absolutely, but you know he's 185 00:09:53,960 --> 00:09:56,840 Speaker 1: still like people are looking at him. Even his method 186 00:09:56,920 --> 00:10:01,199 Speaker 1: of using mostly cash to like invest in whole companies 187 00:10:01,240 --> 00:10:04,760 Speaker 1: and holding them just feels out of date in the 188 00:10:04,840 --> 00:10:07,920 Speaker 1: nineteen eighties because this is the age of the leveraged buyout. 189 00:10:07,960 --> 00:10:11,800 Speaker 1: You don't use your own money, You borrow massive amounts 190 00:10:11,800 --> 00:10:15,319 Speaker 1: of You rate a company that doesn't want to be sold, right, 191 00:10:15,600 --> 00:10:20,280 Speaker 1: you use that debt as leverage to pry the company 192 00:10:20,320 --> 00:10:22,800 Speaker 1: away from the owners. Then you take that debt and 193 00:10:22,840 --> 00:10:26,160 Speaker 1: you shove it down the mouth of the company, and 194 00:10:26,200 --> 00:10:28,600 Speaker 1: then you take out a cleaver, and you chop up 195 00:10:28,640 --> 00:10:30,440 Speaker 1: the company into little pieces and sell it all. 196 00:10:30,679 --> 00:10:34,040 Speaker 3: Yes, yeah, am I supposed to like that or not 197 00:10:34,120 --> 00:10:36,360 Speaker 3: like it? I have a complex emotional response to I 198 00:10:36,400 --> 00:10:36,760 Speaker 3: don't know. 199 00:10:37,240 --> 00:10:40,360 Speaker 1: I just got carried away good into the nineteen eighties, right, 200 00:10:40,760 --> 00:10:43,880 Speaker 1: And like Buffett would definitely borrow some money to close deals. 201 00:10:44,000 --> 00:10:47,560 Speaker 1: But like he thought debt was terrible, that you would 202 00:10:47,559 --> 00:10:50,000 Speaker 1: be overladen with debt. He once said, oh, I should 203 00:10:50,040 --> 00:10:51,680 Speaker 1: have given this to you. Right, once said debt is 204 00:10:51,760 --> 00:10:55,480 Speaker 1: like gasoline makes the cargo faster, but it causes an 205 00:10:55,520 --> 00:10:57,040 Speaker 1: explosion when you crash. 206 00:10:57,400 --> 00:11:01,000 Speaker 3: I mean, in that metaphor, debt seems totally reasonable. Like 207 00:11:01,120 --> 00:11:02,960 Speaker 3: I drive a car, I put gas in it. I 208 00:11:03,040 --> 00:11:05,440 Speaker 3: just don't crash, Just don't crash. There you go. 209 00:11:06,320 --> 00:11:08,559 Speaker 1: And you know, Buffett like he was not a big 210 00:11:08,640 --> 00:11:11,960 Speaker 1: breaker up of companies. You know, he just wanted large 211 00:11:12,240 --> 00:11:14,000 Speaker 1: and larger chunks of Coca Cola. 212 00:11:14,679 --> 00:11:17,640 Speaker 3: Grandpa, if you weren't willing to own a stock for 213 00:11:17,679 --> 00:11:20,280 Speaker 3: ten years, don't even think about owning it for ten minutes. 214 00:11:20,440 --> 00:11:24,080 Speaker 1: Exactly, we're in Buffett exactly right. I mean, Buffett wanted 215 00:11:24,080 --> 00:11:27,160 Speaker 1: companies with a durable advantage, ones that could make money 216 00:11:27,240 --> 00:11:30,800 Speaker 1: for a long periods of time, like a very Grandpa move, right, 217 00:11:31,160 --> 00:11:35,240 Speaker 1: But the nineteen eighties were about to test Warren Buffett 218 00:11:35,320 --> 00:11:37,319 Speaker 1: and this theory. Why don't we take a break right 219 00:11:37,360 --> 00:11:40,079 Speaker 1: now and we'll return with business history in a moment. 220 00:12:06,880 --> 00:12:09,840 Speaker 1: So we have the wild things Wall Street are doing, 221 00:12:09,880 --> 00:12:12,800 Speaker 1: we have the leveraged buyouts, we have the finances doubting 222 00:12:12,840 --> 00:12:16,720 Speaker 1: Warren Buffett, and the first crack really appears in nineteen 223 00:12:16,760 --> 00:12:20,520 Speaker 1: eighty six. So Warren Buffett gets a call from John 224 00:12:20,600 --> 00:12:24,880 Speaker 1: Gutfrind of Solomon Brothers. He's the CEO of Solomon Brothers. 225 00:12:24,559 --> 00:12:27,079 Speaker 3: And he's the guy in Liar's Poker, right, like classic 226 00:12:27,200 --> 00:12:28,840 Speaker 3: eighties Wall Street guy. 227 00:12:29,040 --> 00:12:32,040 Speaker 1: Yeah. And Solomon is a huge investment firm at the time. 228 00:12:32,120 --> 00:12:36,000 Speaker 1: They specialize in bonds, and they're part of this go 229 00:12:36,000 --> 00:12:39,600 Speaker 1: go Wall Street thing in the nineteen eighties. But at 230 00:12:39,600 --> 00:12:42,959 Speaker 1: this moment they are in trouble, right because all these 231 00:12:43,040 --> 00:12:45,880 Speaker 1: leverage buyouts are happening right out in the real economy, 232 00:12:46,160 --> 00:12:50,000 Speaker 1: and all of a sudden, Solomon Brothers itself, the investment firm, 233 00:12:50,200 --> 00:12:53,640 Speaker 1: is targeted for takeover by one of the raiders, Ron Perelman, 234 00:12:55,679 --> 00:12:59,679 Speaker 1: and you know, like Raider Action on Raider on raider violence. 235 00:12:59,760 --> 00:13:00,040 Speaker 3: Right. 236 00:13:00,280 --> 00:13:04,000 Speaker 1: And you know the thing about being rated by another 237 00:13:04,080 --> 00:13:07,480 Speaker 1: company is you start to think, oh, I'm not going 238 00:13:07,559 --> 00:13:09,640 Speaker 1: to have a job, so they're going to come in 239 00:13:09,720 --> 00:13:11,160 Speaker 1: and fire everyone in the country. 240 00:13:11,160 --> 00:13:13,240 Speaker 3: Certainly if you're the CEA, you're thinking, I'm going to 241 00:13:13,360 --> 00:13:14,079 Speaker 3: have a job soon. 242 00:13:14,880 --> 00:13:19,559 Speaker 1: So the CEO gutfriend is panicking and he calls Warren Buffett, 243 00:13:19,559 --> 00:13:22,520 Speaker 1: who knows from previous deals, and he's like, help, I 244 00:13:22,640 --> 00:13:26,000 Speaker 1: need a white Knight. I need someone to come and 245 00:13:26,040 --> 00:13:29,360 Speaker 1: hear with a huge investment, a lot of money into 246 00:13:29,400 --> 00:13:32,000 Speaker 1: the company, who will basically be a big sign that 247 00:13:32,080 --> 00:13:34,560 Speaker 1: says like stay away. Like, sure, you could take on 248 00:13:34,600 --> 00:13:37,440 Speaker 1: Solomon Brothers, but you can take on Solomon Brothers and 249 00:13:37,480 --> 00:13:41,360 Speaker 1: Warren Buffett, Uh huh, I don't think so. Now, this 250 00:13:41,440 --> 00:13:45,360 Speaker 1: is not normally the kind of business that Warren Buffett likes, right, 251 00:13:45,480 --> 00:13:48,240 Speaker 1: because they don't make something that an average American can 252 00:13:48,280 --> 00:13:49,480 Speaker 1: buy at their corner store. 253 00:13:49,840 --> 00:13:52,240 Speaker 3: Right. I used to call. 254 00:13:52,600 --> 00:13:55,640 Speaker 1: Investment firms casinos, like you just didn't like Wall Street. Right, 255 00:13:55,880 --> 00:13:58,760 Speaker 1: But he likes the CEO and he sees a desperate 256 00:13:58,800 --> 00:14:01,720 Speaker 1: firm willing to make a really good deal, and they 257 00:14:01,800 --> 00:14:05,880 Speaker 1: make an amazing offer. They essentially structure a deal so 258 00:14:05,920 --> 00:14:10,960 Speaker 1: that he gets stock in Solomon Brothers guaranteed fifteen percent 259 00:14:11,120 --> 00:14:14,200 Speaker 1: profit whether the start the company goes up or down. 260 00:14:14,320 --> 00:14:15,640 Speaker 3: That's pretty good, right. 261 00:14:15,760 --> 00:14:18,920 Speaker 1: Sixty three million dollars a year in dividends like this 262 00:14:18,960 --> 00:14:21,440 Speaker 1: is this is the kind of money he can use elsewhere. Right, 263 00:14:22,120 --> 00:14:24,680 Speaker 1: And Solomon Brothers, they just get the reputation of the 264 00:14:24,720 --> 00:14:28,720 Speaker 1: Great Warren Buffett. Now apparently Warren Buffett shows up to 265 00:14:28,720 --> 00:14:32,080 Speaker 1: make the deal, has no briefcase, no papers, you know, 266 00:14:32,160 --> 00:14:33,120 Speaker 1: it's just the handshake. 267 00:14:33,600 --> 00:14:35,280 Speaker 3: They got a coke in one hand and a dilly 268 00:14:35,360 --> 00:14:36,120 Speaker 3: bar or the other. 269 00:14:36,160 --> 00:14:41,800 Speaker 1: Exact and then he will soon regret. He will soon 270 00:14:41,880 --> 00:14:45,840 Speaker 1: regret this deal because in nineteen ninety one there is 271 00:14:46,360 --> 00:14:48,560 Speaker 1: a rogue bond trader. 272 00:14:48,680 --> 00:14:50,360 Speaker 3: Yes, I love a rogue trader. 273 00:14:50,560 --> 00:14:51,440 Speaker 1: Little explanation. 274 00:14:51,560 --> 00:14:55,160 Speaker 3: Rogue. They always call them a rogue. Yes, yeah, right, 275 00:14:55,680 --> 00:14:59,120 Speaker 3: it's kind of rakish, rakish pond trader. It's worse than rakish. 276 00:14:59,240 --> 00:15:02,960 Speaker 1: So Solomon Brothers was a big dealer in treasury bonds, 277 00:15:03,000 --> 00:15:05,560 Speaker 1: and the way treasury bonds work, they're the way that 278 00:15:05,600 --> 00:15:08,800 Speaker 1: the US government funds its business obviously, right, billions and 279 00:15:08,800 --> 00:15:11,880 Speaker 1: billions of dollars worth, and they don't just sell them 280 00:15:11,920 --> 00:15:15,760 Speaker 1: to the public. They sell them to the most esteemed 281 00:15:15,880 --> 00:15:18,080 Speaker 1: firms on Wall Street, and those firms sell it to the. 282 00:15:18,040 --> 00:15:19,760 Speaker 3: Public primary dealers, the. 283 00:15:19,680 --> 00:15:22,640 Speaker 1: Primary dealers, and Solomon was one of those. And in 284 00:15:22,760 --> 00:15:25,720 Speaker 1: order to like make it fair, there was this rule 285 00:15:25,800 --> 00:15:28,600 Speaker 1: that like one firm couldn't outbid all the other firms 286 00:15:28,600 --> 00:15:31,400 Speaker 1: and sort of core to the market on treasury bonds 287 00:15:31,440 --> 00:15:35,680 Speaker 1: for any certain issuance. Right, So essentially everyone was supposed 288 00:15:35,720 --> 00:15:38,200 Speaker 1: to put their bids in for the treasury bonds from 289 00:15:38,240 --> 00:15:40,680 Speaker 1: the government and giving them up among themselves depending on 290 00:15:40,680 --> 00:15:45,400 Speaker 1: what their bids were. Right. So this trader at Solomon 291 00:15:45,440 --> 00:15:48,600 Speaker 1: gets this idea that like, well, they're not really watching, 292 00:15:48,720 --> 00:15:52,520 Speaker 1: I could sort of create some fake buyers and like 293 00:15:53,000 --> 00:15:56,280 Speaker 1: engineer this so that the government doesn't know that we're 294 00:15:56,320 --> 00:15:58,720 Speaker 1: buying all the treasury bonds. And at one point he 295 00:15:58,760 --> 00:16:02,400 Speaker 1: gets like eighty seven percent of a certain issuance. And 296 00:16:02,640 --> 00:16:05,440 Speaker 1: if you're somebody who has eighty seven percent of anything, 297 00:16:05,960 --> 00:16:07,960 Speaker 1: you can kind of set the price. You know. It's 298 00:16:08,080 --> 00:16:10,120 Speaker 1: just a little little bit of a cornering of the 299 00:16:10,120 --> 00:16:10,960 Speaker 1: market play. 300 00:16:11,080 --> 00:16:14,040 Speaker 3: It's funny because you think think of like treasuries as 301 00:16:14,080 --> 00:16:16,720 Speaker 3: the most boring, safe thing in the world. The idea 302 00:16:16,760 --> 00:16:19,360 Speaker 3: that a rogue trader is going to be monkey around 303 00:16:19,400 --> 00:16:21,560 Speaker 3: there is interesting. 304 00:16:22,040 --> 00:16:24,080 Speaker 1: And really scandalous. 305 00:16:24,400 --> 00:16:27,840 Speaker 3: Huh yeah, because the treasuries are the safest investment in 306 00:16:27,840 --> 00:16:31,280 Speaker 3: the world, like the bedrock of the financial system. 307 00:16:31,520 --> 00:16:36,000 Speaker 1: So he gets caught. I believe the Treasury of the 308 00:16:36,040 --> 00:16:39,560 Speaker 1: Fed sends like a letter on this. People know all 309 00:16:39,640 --> 00:16:42,000 Speaker 1: the way up in the company that this has happened, 310 00:16:42,280 --> 00:16:44,120 Speaker 1: but they decide not to fire him. They say it 311 00:16:44,160 --> 00:16:46,240 Speaker 1: was a mistake. They said he shouldn't have done it right. 312 00:16:48,240 --> 00:16:51,280 Speaker 1: It ends up being this sort of massive cover up, 313 00:16:51,920 --> 00:16:57,520 Speaker 1: and the government is pissed, like they are threatening to 314 00:16:57,720 --> 00:17:00,280 Speaker 1: take away this primary dealership from Solomon. Basically, it would 315 00:17:00,320 --> 00:17:03,480 Speaker 1: say the US government doesn't trust you as an investment firm. 316 00:17:03,520 --> 00:17:04,960 Speaker 3: It would be the end of the firm. 317 00:17:05,080 --> 00:17:11,840 Speaker 1: Yeah, right, So the CEO resigns. Everyone's implicated except yeah 318 00:17:12,280 --> 00:17:17,480 Speaker 1: the Oh and he's the second richest man in the 319 00:17:17,520 --> 00:17:19,879 Speaker 1: world at this point. He's got things to do, you know, 320 00:17:19,920 --> 00:17:22,119 Speaker 1: He's got Coca Cola shares to buy, he's got to 321 00:17:22,119 --> 00:17:25,480 Speaker 1: go eat Hamburgers. He has to fly to New York, 322 00:17:25,840 --> 00:17:29,480 Speaker 1: place he doesn't really like and take over running Solomon Brothers, 323 00:17:29,560 --> 00:17:31,719 Speaker 1: a firm which he doesn't really respect or trust. 324 00:17:31,800 --> 00:17:33,080 Speaker 3: And this is the guy who in a way never 325 00:17:33,200 --> 00:17:35,520 Speaker 3: wanted a job, right, like you've said all this to 326 00:17:35,560 --> 00:17:38,440 Speaker 3: be rich, and now we have it. Yes, is such 327 00:17:39,200 --> 00:17:39,879 Speaker 3: a job. 328 00:17:40,240 --> 00:17:43,400 Speaker 1: And he goes to the he goes to the Treasury Department, 329 00:17:43,720 --> 00:17:46,359 Speaker 1: and they're talking about, you know, this sort of death 330 00:17:46,400 --> 00:17:49,400 Speaker 1: sentence for the firm, saying we are going to officially 331 00:17:49,480 --> 00:17:52,560 Speaker 1: say that we don't trust Solomon Brothers. And he says, 332 00:17:52,600 --> 00:17:56,720 Speaker 1: you know, I have technically not signed the papers that 333 00:17:56,800 --> 00:17:58,639 Speaker 1: I will take over a CEO, so I can just 334 00:17:58,680 --> 00:18:01,320 Speaker 1: go back to Omaha at any time. And then all 335 00:18:01,359 --> 00:18:05,400 Speaker 1: of a sudden, you have basically the greatest financial disaster 336 00:18:05,480 --> 00:18:08,520 Speaker 1: in history unfolding under you. And I'm gonna go back 337 00:18:08,560 --> 00:18:09,000 Speaker 1: in Eataly. 338 00:18:09,040 --> 00:18:12,560 Speaker 3: I think the Warren Buffett card now with the US government. Yeah, 339 00:18:12,600 --> 00:18:14,800 Speaker 3: He's saying, do you know who I am? US government? 340 00:18:14,880 --> 00:18:18,480 Speaker 1: Yeah yeah, And they're like, okay, like we want you 341 00:18:19,640 --> 00:18:21,600 Speaker 1: to rescue this company because we don't want to have 342 00:18:21,640 --> 00:18:25,119 Speaker 1: to rescue this company, right, And they end up putting 343 00:18:25,160 --> 00:18:28,119 Speaker 1: Warren Buffett through the wringer. He's got to testify before Congress, 344 00:18:28,320 --> 00:18:31,560 Speaker 1: he's got to remake the management of the firm. Not 345 00:18:31,760 --> 00:18:34,480 Speaker 1: a popular guy. On Wall Street at this point because 346 00:18:34,520 --> 00:18:39,520 Speaker 1: he's cutting pay for the traders. He cancels everyone's magazine subscriptions. 347 00:18:39,640 --> 00:18:42,720 Speaker 1: He just thinks like they're spending way too much money. 348 00:18:42,720 --> 00:18:46,160 Speaker 1: He's being the frugal Warren Buffett. Which remember you know 349 00:18:46,320 --> 00:18:49,199 Speaker 1: this is Wallstall the Street in the eighties. Yes, and 350 00:18:49,240 --> 00:18:52,439 Speaker 1: you know he cuts the cocaine budget exactly. It's terrible. 351 00:18:52,440 --> 00:18:54,440 Speaker 1: And he tells the workers at Solomon wait for it, 352 00:18:54,520 --> 00:18:55,040 Speaker 1: you got it. 353 00:18:56,240 --> 00:18:58,680 Speaker 3: Lose money for the firm and I will be understanding. 354 00:18:59,240 --> 00:19:02,200 Speaker 3: Lose a shred of reputation for the firm, and I 355 00:19:02,240 --> 00:19:03,119 Speaker 3: will be ruthless. 356 00:19:03,480 --> 00:19:07,000 Speaker 1: Eventually, Solomon Brothers gets bought by someone else, Buffett can 357 00:19:07,080 --> 00:19:09,920 Speaker 1: get out. And to be clear, he ended up making 358 00:19:09,960 --> 00:19:12,720 Speaker 1: a bunch of money on the deal, as he always does, right, 359 00:19:13,320 --> 00:19:16,880 Speaker 1: but he would be sort of gun shy about this, 360 00:19:17,160 --> 00:19:20,600 Speaker 1: lending his reputation to another business for a long time. Right, 361 00:19:20,680 --> 00:19:23,440 Speaker 1: And over the next few decades he would get the 362 00:19:23,480 --> 00:19:27,360 Speaker 1: call the first place you turned when you're like, oh, 363 00:19:27,560 --> 00:19:29,960 Speaker 1: we screwed up, We're about to go out of business, 364 00:19:30,240 --> 00:19:33,000 Speaker 1: there's a run on our bank or whatever. We need 365 00:19:33,000 --> 00:19:34,040 Speaker 1: to call Warren Buffett. 366 00:19:34,080 --> 00:19:36,639 Speaker 3: We did, we did. We need a smiling Grandpa face 367 00:19:37,280 --> 00:19:38,560 Speaker 3: on that building. 368 00:19:39,000 --> 00:19:42,800 Speaker 1: So in the late nineteen nineties, there's a firm called 369 00:19:42,840 --> 00:19:46,119 Speaker 1: Long Term Capital Management. I heard of it a boiler, 370 00:19:46,280 --> 00:19:51,360 Speaker 1: not long term. They were a company staffed by brilliant 371 00:19:51,680 --> 00:19:55,800 Speaker 1: Nobel prize winning right, yes, economists who thought they had 372 00:19:56,280 --> 00:19:59,560 Speaker 1: figured out all these global arbitrages. And then there's the 373 00:19:59,760 --> 00:20:01,440 Speaker 1: nineteen ninety eight was it the Russian current? 374 00:20:01,520 --> 00:20:03,520 Speaker 3: Russia? Well, and they were highly leveraged. They'd borrowed a 375 00:20:03,520 --> 00:20:05,320 Speaker 3: ton of money. This is the gas lean in the 376 00:20:05,320 --> 00:20:07,720 Speaker 3: fuel tank blowing up. Moment, ring ring ring. 377 00:20:08,040 --> 00:20:10,760 Speaker 1: Yeah, Warren Buffett, would you like to buy everything we 378 00:20:10,800 --> 00:20:13,480 Speaker 1: own and save our company? So Buffett made an offer, 379 00:20:14,720 --> 00:20:17,719 Speaker 1: made an offer to save Long Term Capital Management, but 380 00:20:17,760 --> 00:20:20,240 Speaker 1: he had pretty strict terms. He's like, I'm going to 381 00:20:20,280 --> 00:20:23,280 Speaker 1: buy all your assets for very cheap and you all 382 00:20:23,320 --> 00:20:25,280 Speaker 1: need to leave the company. And they didn't like that. 383 00:20:25,520 --> 00:20:27,080 Speaker 3: Give you a little money and you're fired. 384 00:20:27,320 --> 00:20:30,400 Speaker 1: Yes, how about that? For socium of investment firms had 385 00:20:30,400 --> 00:20:33,399 Speaker 1: to sort of bail out Long Term Capital Management and 386 00:20:33,560 --> 00:20:37,000 Speaker 1: save the global economy. So Buffett did not like this 387 00:20:37,240 --> 00:20:42,240 Speaker 1: role of savior. But at this point, Warren Buffett is 388 00:20:42,280 --> 00:20:46,040 Speaker 1: sort of facing this bigger existential crisis which is as 389 00:20:46,040 --> 00:20:48,280 Speaker 1: we move into the nineteen nineties, we're about to hit 390 00:20:48,320 --> 00:20:51,640 Speaker 1: the age of computers and the Internet and high tech. 391 00:20:52,240 --> 00:20:55,080 Speaker 1: And Warren Buffett he didn't even know how to turn 392 00:20:55,119 --> 00:20:55,679 Speaker 1: on a computer. 393 00:20:55,720 --> 00:21:00,960 Speaker 3: Wait a minute, Never invest in a business you cannot understand. 394 00:21:00,680 --> 00:21:02,000 Speaker 1: And understand it. He did not. 395 00:21:02,520 --> 00:21:28,800 Speaker 3: After the break, that's the end of the ads, We're 396 00:21:28,840 --> 00:21:31,200 Speaker 3: going back to the show. It's the late nineties and 397 00:21:31,560 --> 00:21:33,760 Speaker 3: the internet boom is here, and Warren Buffett doesn't know 398 00:21:33,760 --> 00:21:34,439 Speaker 3: how to use a computer. 399 00:21:35,040 --> 00:21:37,720 Speaker 1: Yeah, I mean he didn't want to use a computer, right. 400 00:21:37,920 --> 00:21:41,200 Speaker 1: He lives in an analog world. He gets the Wall 401 00:21:41,200 --> 00:21:43,000 Speaker 1: Street Journal. I was going to say every morning, but 402 00:21:43,040 --> 00:21:44,399 Speaker 1: I think he had a deal to get it the 403 00:21:44,520 --> 00:21:47,520 Speaker 1: night before, you know, delivered, and he would read it 404 00:21:47,560 --> 00:21:51,280 Speaker 1: from beginning to end. He liked to read papers and 405 00:21:51,400 --> 00:21:55,000 Speaker 1: magazines and annual reports. This is the Warren Buffett, right, 406 00:21:55,040 --> 00:21:57,679 Speaker 1: And everyone kept telling him, Oh, you should really get 407 00:21:57,720 --> 00:21:59,880 Speaker 1: a computer. It's the next hot thing. When I say everyone, 408 00:22:00,040 --> 00:22:04,280 Speaker 1: I mean like Bill Gates. He was friends with Bill Gates, 409 00:22:04,600 --> 00:22:07,720 Speaker 1: which is sort of unusual, right, an older man, younger guy. 410 00:22:08,160 --> 00:22:11,080 Speaker 3: But they played bridge together, right, and they just. 411 00:22:11,119 --> 00:22:13,760 Speaker 1: Love to talk about business. They really hit it off 412 00:22:14,080 --> 00:22:17,320 Speaker 1: and Bill Gates is always like, well you might want 413 00:22:17,359 --> 00:22:20,520 Speaker 1: to use a computer's like no, no, no, And then of course, 414 00:22:20,600 --> 00:22:22,680 Speaker 1: like people would pitch him like you need to buy 415 00:22:22,760 --> 00:22:26,920 Speaker 1: these dot com stocks or even Microsoft, or even Microsoft really, 416 00:22:26,960 --> 00:22:28,879 Speaker 1: I mean Bill Gates came to him about this, and 417 00:22:28,920 --> 00:22:33,040 Speaker 1: Buffett said, like, don't I don't understand how it works, 418 00:22:33,119 --> 00:22:35,240 Speaker 1: so I really don't want to do it. He eventually 419 00:22:35,280 --> 00:22:40,040 Speaker 1: got on the internet for a funny reason. He loves 420 00:22:40,040 --> 00:22:42,600 Speaker 1: to play bridge, and one of the professionals he was 421 00:22:42,640 --> 00:22:46,000 Speaker 1: playing bridge with was like, you know, you could play 422 00:22:46,000 --> 00:22:49,479 Speaker 1: bridge anytime, day or night with people around the world. 423 00:22:50,080 --> 00:22:53,439 Speaker 1: So I imagine there was a time when if you 424 00:22:53,480 --> 00:22:56,040 Speaker 1: were playing bridge online, you might have been playing against 425 00:22:56,080 --> 00:22:59,600 Speaker 1: I don't know, WB seven seven one two might have 426 00:22:59,680 --> 00:23:01,080 Speaker 1: been Warren Buffett, right. 427 00:23:01,119 --> 00:23:03,679 Speaker 3: I like that for Warren Buffett, the Internet is just 428 00:23:03,800 --> 00:23:06,639 Speaker 3: basically like a bridge video game. 429 00:23:07,320 --> 00:23:10,080 Speaker 1: Well, you know, it's funny. Someone had pointed out to 430 00:23:10,160 --> 00:23:12,960 Speaker 1: him that like, for a lot of people, the internet 431 00:23:13,200 --> 00:23:15,640 Speaker 1: is just a way to do something they really want 432 00:23:15,680 --> 00:23:18,720 Speaker 1: to do, and like that is the strength of it. 433 00:23:18,800 --> 00:23:21,040 Speaker 1: So hopefully at this point, like he's sort of seeing this, 434 00:23:21,160 --> 00:23:24,320 Speaker 1: but he is still not going to pour money into 435 00:23:24,359 --> 00:23:26,880 Speaker 1: dot com stocks or into the tech business at all 436 00:23:26,920 --> 00:23:29,240 Speaker 1: in the nineteen nineties. And we know where this story 437 00:23:29,520 --> 00:23:33,760 Speaker 1: is going. There is a crash coming. The stock market 438 00:23:33,800 --> 00:23:37,520 Speaker 1: is going crazy. Valuations are up. I think you know, 439 00:23:37,560 --> 00:23:40,640 Speaker 1: the Nasdaq went up seventy eighty percent in a year, 440 00:23:40,720 --> 00:23:45,720 Speaker 1: like it was just insanity. And Warren Buffett's stock, Berkshire 441 00:23:45,720 --> 00:23:49,160 Speaker 1: Hathaway is kind of like not doing so. 442 00:23:49,119 --> 00:23:51,560 Speaker 3: Well, underperforming, underperforming. 443 00:23:50,960 --> 00:23:52,760 Speaker 1: At least everyone else. Right, this is what's going to 444 00:23:52,800 --> 00:23:56,159 Speaker 1: happen in a bubble. At one point, there is a 445 00:23:56,320 --> 00:24:00,280 Speaker 1: rumor that Warren Buffett has died. The rumor was started 446 00:24:00,800 --> 00:24:05,040 Speaker 1: on an internet bulletin board by on Yahoo. Someone used 447 00:24:05,040 --> 00:24:10,920 Speaker 1: the moniker ZX one six seven five. That guy sounds credible, yeah, 448 00:24:11,160 --> 00:24:15,320 Speaker 1: and he posted Warren in hospital critical And here's Warren 449 00:24:15,359 --> 00:24:17,400 Speaker 1: Buffett hasn't even seen the internet. 450 00:24:17,520 --> 00:24:17,680 Speaker 3: Right. 451 00:24:17,880 --> 00:24:21,119 Speaker 1: Berkshire Hathaway stock plunges. They have this like policy they 452 00:24:21,119 --> 00:24:23,560 Speaker 1: don't comment on Warren Buffett or anything, but they had 453 00:24:23,560 --> 00:24:25,840 Speaker 1: to like put out a put out a thing they said, 454 00:24:25,840 --> 00:24:29,320 Speaker 1: like Warren Buffet's fine, he is alive. Right, But even 455 00:24:29,359 --> 00:24:31,760 Speaker 1: after they debunk it, the stock is down like eleven 456 00:24:31,800 --> 00:24:35,320 Speaker 1: percent for the week, right, and by the end of the. 457 00:24:36,200 --> 00:24:38,159 Speaker 3: Down on rumors of his death. Then up, I was 458 00:24:38,160 --> 00:24:39,800 Speaker 3: a little nervous. You were going to say they said 459 00:24:39,800 --> 00:24:41,600 Speaker 3: he died and it went up right now, that would 460 00:24:41,640 --> 00:24:43,120 Speaker 3: be really bad side. 461 00:24:42,840 --> 00:24:44,639 Speaker 1: No, no, no, I mean they's still like the people who 462 00:24:44,720 --> 00:24:48,520 Speaker 1: trade in Berkshire Hathaway stock need Warren Buffett. Right, at 463 00:24:48,560 --> 00:24:51,080 Speaker 1: one point he looks back on a year or two 464 00:24:51,280 --> 00:24:55,160 Speaker 1: and he's done worse than the S and P index, Yeah, which. 465 00:24:55,440 --> 00:24:57,640 Speaker 3: Hasn't been a lot of going up a lot at 466 00:24:57,640 --> 00:24:59,600 Speaker 3: this time, driven by tech stocks. 467 00:24:59,800 --> 00:25:05,080 Speaker 1: So there's this legendary moment in nineteen ninety nine, right, 468 00:25:05,560 --> 00:25:08,720 Speaker 1: Buffett goes to this big conference in Sun Valley, Idaho. 469 00:25:08,760 --> 00:25:11,840 Speaker 1: Happens this day. It's called like the Allen and Company Conference. Right, 470 00:25:12,119 --> 00:25:14,560 Speaker 1: all the CEOs pour in. There's a lot of media 471 00:25:14,600 --> 00:25:17,439 Speaker 1: types high tech, right, so they. 472 00:25:17,280 --> 00:25:21,080 Speaker 3: All wear vests and weirdly, like part of the Allen 473 00:25:21,280 --> 00:25:23,879 Speaker 3: Sun Valley conference is it's got to be some kind 474 00:25:23,880 --> 00:25:25,960 Speaker 3: of photo op because like if you see a picture 475 00:25:26,080 --> 00:25:29,760 Speaker 3: of Jeff Bezos or Rupert Murdoch or whatever, like, it 476 00:25:29,880 --> 00:25:33,720 Speaker 3: is usually from there. Like it's a phenomenon that I 477 00:25:33,800 --> 00:25:36,600 Speaker 3: don't understand, but I have observed for years now. It's 478 00:25:36,680 --> 00:25:39,520 Speaker 3: like a low key red carpet for billionaires. 479 00:25:39,240 --> 00:25:43,200 Speaker 1: The heads of Microsoft, Apple, they're all there. Warren Buffett 480 00:25:43,240 --> 00:25:45,400 Speaker 1: is the final speaker in this book, the Snowball. There's 481 00:25:45,440 --> 00:25:47,600 Speaker 1: this love thing about you know. He can't got to 482 00:25:47,680 --> 00:25:51,520 Speaker 1: set up his presentation and everything. Not a big computer guy, right, He's. 483 00:25:51,320 --> 00:25:53,960 Speaker 3: Not setting up his own presentation. He's not talking to 484 00:25:54,000 --> 00:25:55,240 Speaker 3: the av I know that. 485 00:25:55,600 --> 00:25:59,359 Speaker 1: So he looks out and he says to the CEOs, 486 00:26:00,200 --> 00:26:02,280 Speaker 1: many of which are very rich from this bubble, right, 487 00:26:03,240 --> 00:26:06,960 Speaker 1: there is no new paradigm. This time is not different. 488 00:26:07,320 --> 00:26:12,080 Speaker 1: This is a bubble fueled by greed and beloney. And 489 00:26:12,119 --> 00:26:15,639 Speaker 1: Warren Buffett loved boloney, but he wasn't using it that way. 490 00:26:16,000 --> 00:26:19,680 Speaker 1: He was saying, Look, you only have to go back 491 00:26:19,720 --> 00:26:23,000 Speaker 1: to history to see what is happening today. He says, 492 00:26:23,000 --> 00:26:27,359 Speaker 1: look at the car industry, right, the car industry, huge invention, right, 493 00:26:27,720 --> 00:26:30,240 Speaker 1: maybe even bigger than the internet. Right. The car right 494 00:26:30,480 --> 00:26:34,720 Speaker 1: changed the world. But of the two thousand auto companies started, 495 00:26:34,880 --> 00:26:37,880 Speaker 1: only three survived. So he's like, look, it was great 496 00:26:37,920 --> 00:26:40,520 Speaker 1: for America, great for the world, but kind of miserable 497 00:26:40,520 --> 00:26:43,439 Speaker 1: for investors. There is not a guarantee that a transformative 498 00:26:43,880 --> 00:26:47,520 Speaker 1: invention is going to be hugely profitable for the people 499 00:26:47,520 --> 00:26:51,800 Speaker 1: who invested in it. One more example, he gives them airplanes, 500 00:26:52,080 --> 00:26:56,320 Speaker 1: airline industry. Right, revolutionary, transformative travel through the air. 501 00:26:56,440 --> 00:27:00,320 Speaker 3: Right. But to quote Buffet, isn't this one in our 502 00:27:00,320 --> 00:27:01,119 Speaker 3: selfworst episode? 503 00:27:01,200 --> 00:27:01,320 Speaker 1: Right? 504 00:27:01,359 --> 00:27:05,159 Speaker 3: If a capitalist had been present at Kittyhawk, he should 505 00:27:05,160 --> 00:27:09,080 Speaker 3: have shot Orville Wright. He would have saved his progeny money. 506 00:27:09,359 --> 00:27:14,360 Speaker 1: His point here is, whatever you all think about the Internet, 507 00:27:15,359 --> 00:27:19,960 Speaker 1: it can both be the world's best invention and companies 508 00:27:20,160 --> 00:27:22,960 Speaker 1: can still go out of business and still lose money 509 00:27:22,960 --> 00:27:23,199 Speaker 1: on it. 510 00:27:23,560 --> 00:27:26,560 Speaker 3: This is the classic bubble story, right. Like in fact, 511 00:27:26,720 --> 00:27:30,240 Speaker 3: now when people talk about the dot com boom, they 512 00:27:30,359 --> 00:27:32,480 Speaker 3: talk about actually the fiber optics. 513 00:27:32,560 --> 00:27:32,679 Speaker 1: Right. 514 00:27:32,720 --> 00:27:37,560 Speaker 3: These telecom companies that were laying fiber optic cables totally overbuilt, 515 00:27:38,080 --> 00:27:41,480 Speaker 3: put in way too many fiber optic cables, had horrible 516 00:27:41,640 --> 00:27:46,040 Speaker 3: economic returns for their investors. But we as America had 517 00:27:46,080 --> 00:27:48,800 Speaker 3: all this fiber optic cable that allowed the rise of 518 00:27:48,840 --> 00:27:52,320 Speaker 3: the twenty first century Internet. A similar story about railroad 519 00:27:52,320 --> 00:27:55,080 Speaker 3: tracks in nineteenth century England. Same story. 520 00:27:55,200 --> 00:27:57,879 Speaker 1: Yeah, and people would make money obviously off the Internet 521 00:27:57,920 --> 00:28:01,560 Speaker 1: to this very day, but it would happen after the investment, 522 00:28:01,680 --> 00:28:03,240 Speaker 1: after a lot of people went out of business. And 523 00:28:03,240 --> 00:28:05,400 Speaker 1: of course we remember this speech in nineteen ninety nine 524 00:28:05,400 --> 00:28:07,840 Speaker 1: because in the year two thousand the bubble pops, a 525 00:28:07,920 --> 00:28:09,679 Speaker 1: lot of these companies do go out of business. 526 00:28:09,680 --> 00:28:12,439 Speaker 3: And by the way, today this is the way people 527 00:28:12,520 --> 00:28:15,399 Speaker 3: a lot of people are thinking about AI, right, like, 528 00:28:15,560 --> 00:28:19,399 Speaker 3: exactly right. There's a very plausible story which is, yes, 529 00:28:19,600 --> 00:28:25,719 Speaker 3: AI is an incredible transformative technology. But also a lot 530 00:28:25,800 --> 00:28:28,400 Speaker 3: of these companies that are high flying today will lose 531 00:28:28,440 --> 00:28:30,439 Speaker 3: a ton of money for investors, especially those who are 532 00:28:30,440 --> 00:28:31,560 Speaker 3: getting in at high prices. 533 00:28:31,800 --> 00:28:38,240 Speaker 1: Exactly right. So Buffett can now say he was right. 534 00:28:38,640 --> 00:28:41,280 Speaker 1: He stood in front of these geniuses and he told 535 00:28:41,280 --> 00:28:44,080 Speaker 1: them the way it works. Then listen to him, or 536 00:28:44,120 --> 00:28:46,000 Speaker 1: even better, you know, they listen to him like, well, 537 00:28:46,200 --> 00:28:46,920 Speaker 1: what are we going to do? 538 00:28:46,960 --> 00:28:47,959 Speaker 3: We got to ride this up. 539 00:28:48,280 --> 00:28:52,240 Speaker 1: So there's a crash and Buffett does what he did 540 00:28:52,320 --> 00:28:56,800 Speaker 1: back in the nineteen seventies. He still has money, and 541 00:28:56,840 --> 00:28:59,240 Speaker 1: he looks at his stock, remember, which is like a 542 00:28:59,280 --> 00:29:01,200 Speaker 1: little lower than he thought it should be, and so 543 00:29:01,280 --> 00:29:04,400 Speaker 1: he says publicly, I'll buy it. If you have my 544 00:29:04,440 --> 00:29:06,720 Speaker 1: stock and you don't want it, I will buy it 545 00:29:06,760 --> 00:29:07,160 Speaker 1: from you. 546 00:29:07,520 --> 00:29:11,640 Speaker 3: So he's doing kind of the like fundamental analysis of 547 00:29:11,680 --> 00:29:14,560 Speaker 3: his own company, and it's too cheap. It's a deal. 548 00:29:14,600 --> 00:29:16,800 Speaker 3: All I got cash, my company is a deal. 549 00:29:17,000 --> 00:29:20,840 Speaker 1: I will buy back your stock. And he doesn't really 550 00:29:20,880 --> 00:29:23,240 Speaker 1: have to because when people hear this, they're like, oh. 551 00:29:23,200 --> 00:29:25,320 Speaker 3: If Warren Buffett thinks it's a good deal. 552 00:29:25,920 --> 00:29:29,840 Speaker 1: Stock goes up twenty four percent, right, amazing. Right, But 553 00:29:30,440 --> 00:29:33,960 Speaker 1: this is also one of those moments, those buying spree 554 00:29:34,000 --> 00:29:37,600 Speaker 1: moments that Warren Buffett loves. Right, So now his stare 555 00:29:37,680 --> 00:29:41,440 Speaker 1: price is going up. He still has some cash, and companies, 556 00:29:41,720 --> 00:29:44,520 Speaker 1: because there is a recession and there's been this bubble crash, 557 00:29:44,680 --> 00:29:46,800 Speaker 1: companies are cheap. So he starts buying. 558 00:29:46,840 --> 00:29:51,560 Speaker 3: I got one. Yeah, opportunities come infrequently. Ah, when it rains, gold, 559 00:29:51,720 --> 00:29:53,400 Speaker 3: put out the bucket, not the thimble. 560 00:29:53,800 --> 00:29:56,760 Speaker 1: Love it, And he put out the bucket. He bought 561 00:29:57,160 --> 00:29:59,520 Speaker 1: Benjamin Moore paint Manufacture. 562 00:29:59,600 --> 00:30:00,840 Speaker 3: Sounds like a classic buffet. 563 00:30:01,000 --> 00:30:05,160 Speaker 1: Oh, oh, this one's even better. Fruit of the Loom. 564 00:30:05,000 --> 00:30:08,600 Speaker 3: Sure underwear. No matter how much the stock market goes. 565 00:30:08,440 --> 00:30:11,520 Speaker 1: Down, I know if you're in recession, man still sell underwear. No, 566 00:30:11,520 --> 00:30:14,560 Speaker 1: not a fruit, it's a loom company, exactly right. Buffett 567 00:30:14,560 --> 00:30:19,520 Speaker 1: buys carpet maker Pipeline companies. So by the end of 568 00:30:19,520 --> 00:30:23,080 Speaker 1: two thousand and seven, the S and P Index has 569 00:30:23,120 --> 00:30:25,840 Speaker 1: suffered sort of a lost decade. You know, if you 570 00:30:26,440 --> 00:30:29,000 Speaker 1: invested and I think this doesn't count dividends and such, 571 00:30:29,000 --> 00:30:31,640 Speaker 1: but if you invested at the beginning ten years before, 572 00:30:32,360 --> 00:30:36,080 Speaker 1: your stock has gone nowhere over a decade. But Berkshire 573 00:30:36,320 --> 00:30:37,920 Speaker 1: has gone up twelve percent a year. 574 00:30:38,360 --> 00:30:43,040 Speaker 3: Lesson from first decade of the twenty first century. Courtesy 575 00:30:43,040 --> 00:30:47,080 Speaker 3: of Warren Buffett. Be fearful when others are greedy, Be 576 00:30:47,160 --> 00:30:49,840 Speaker 3: greedy when others are fearful. We may need that one soon. 577 00:30:49,880 --> 00:30:51,040 Speaker 3: I'm going to keep that one. 578 00:30:52,600 --> 00:30:55,600 Speaker 1: So during this time, Warren Buffet's also doing some clever 579 00:30:55,720 --> 00:30:57,960 Speaker 1: things with the company itself, or at least unusual things. 580 00:30:58,000 --> 00:31:01,920 Speaker 1: I should say. One is he never lets the stock 581 00:31:02,040 --> 00:31:06,640 Speaker 1: price split. Now, to explain this, oftentimes when a stock 582 00:31:06,760 --> 00:31:09,640 Speaker 1: goes up to two hundred, three hundred, four hundred dollars, 583 00:31:09,880 --> 00:31:13,600 Speaker 1: they'll say, oh, we are basically giving you two shares 584 00:31:13,640 --> 00:31:16,200 Speaker 1: for every one share, So now instead of one four 585 00:31:16,240 --> 00:31:18,600 Speaker 1: hundred dollars stock, you have two hundred dollars stocks. 586 00:31:18,600 --> 00:31:20,880 Speaker 3: Basically just because it makes it easier for people to 587 00:31:20,960 --> 00:31:22,840 Speaker 3: buy shares in the company, simple. 588 00:31:22,520 --> 00:31:26,880 Speaker 1: As here, absolutely. It doesn't mean anything economically, really warm 589 00:31:26,880 --> 00:31:29,560 Speaker 1: buff It's like, no, I'm not going to do that. 590 00:31:29,800 --> 00:31:30,000 Speaker 3: Right. 591 00:31:30,320 --> 00:31:33,040 Speaker 1: The Berkshire stock, which I guess if you go all 592 00:31:33,040 --> 00:31:35,080 Speaker 1: the way back, started at seven dollars and fifty cents 593 00:31:35,080 --> 00:31:37,920 Speaker 1: a share, right, kind of a normal share price. Yeah, 594 00:31:38,520 --> 00:31:41,640 Speaker 1: as of this taping, the Class A shares of Berkshire 595 00:31:41,640 --> 00:31:47,000 Speaker 1: Hathaway are above seven hundred and fifteen thousand dollars. 596 00:31:46,800 --> 00:31:50,280 Speaker 3: Per share for one share, one share or. 597 00:31:50,240 --> 00:31:52,840 Speaker 1: A house, Like that's that's your choice. 598 00:31:53,160 --> 00:31:56,720 Speaker 3: Why, Like it seems kind of counter to the like 599 00:31:56,840 --> 00:31:59,640 Speaker 3: folks see normal guy, rational guy, Like why does he 600 00:31:59,720 --> 00:32:00,080 Speaker 3: do this? 601 00:32:00,280 --> 00:32:03,600 Speaker 1: When he is asked, he says that a low share 602 00:32:03,640 --> 00:32:06,880 Speaker 1: price encourages short term investors, and he doesn't want people 603 00:32:07,320 --> 00:32:09,320 Speaker 1: going in and out of his stock. He wants to 604 00:32:09,400 --> 00:32:11,680 Speaker 1: kind of almost keep it as a club. And at 605 00:32:11,680 --> 00:32:13,560 Speaker 1: that point it is sort of like a club of 606 00:32:13,640 --> 00:32:16,280 Speaker 1: people who are investing in the company and don't want. 607 00:32:16,160 --> 00:32:17,080 Speaker 3: To sell it. 608 00:32:17,120 --> 00:32:21,000 Speaker 1: But I think it's also just like a weird ego 609 00:32:21,160 --> 00:32:24,080 Speaker 1: thing that as he looks bet it's up on his 610 00:32:24,120 --> 00:32:27,440 Speaker 1: computer now he uses computers. His share price every day 611 00:32:27,960 --> 00:32:30,280 Speaker 1: is a symbol of like everything that's happened over the 612 00:32:30,360 --> 00:32:31,880 Speaker 1: last fifty years in one number. 613 00:32:32,320 --> 00:32:34,360 Speaker 3: Yeah. I mean in the last episode you were talking 614 00:32:34,360 --> 00:32:37,560 Speaker 3: about how he kept the name Berkshire Hathaway even though 615 00:32:37,600 --> 00:32:40,360 Speaker 3: it was one of his worst investments, as like a 616 00:32:40,360 --> 00:32:42,840 Speaker 3: way to be humble. This is sort of the opposite 617 00:32:42,960 --> 00:32:44,800 Speaker 3: of that, Like, if he's feeling too up, he just 618 00:32:44,840 --> 00:32:47,360 Speaker 3: looks at the Berkshire share prices like, oh, I'm doing 619 00:32:47,400 --> 00:32:48,760 Speaker 3: all right, you're like this. 620 00:32:49,600 --> 00:32:52,760 Speaker 1: When the share price started to get so big, a 621 00:32:52,840 --> 00:32:56,760 Speaker 1: number of enterprising investment companies were like, well, wait a minute, here, 622 00:32:57,000 --> 00:33:01,160 Speaker 1: what if we just imitate the shareholdings of Berkshire Hathaway, 623 00:33:01,800 --> 00:33:04,720 Speaker 1: do everything that Warren Buffett does, but offer shares at 624 00:33:04,760 --> 00:33:07,760 Speaker 1: like a cheap price, you know, essentially a more manageable price, 625 00:33:07,760 --> 00:33:10,640 Speaker 1: I should say. And people were doing this, and Warren 626 00:33:10,680 --> 00:33:12,920 Speaker 1: Buffett was like, oh, they're making fees and all this 627 00:33:12,960 --> 00:33:16,360 Speaker 1: sort of stuff off of my investment ideas. So he 628 00:33:16,480 --> 00:33:19,800 Speaker 1: creates the B class of shares and these are the 629 00:33:19,880 --> 00:33:22,680 Speaker 1: democratic shares that anyone could buy. In fact, he said 630 00:33:22,920 --> 00:33:26,520 Speaker 1: he would print as many as people want because he 631 00:33:26,600 --> 00:33:28,720 Speaker 1: didn't want like their scarcity to go up. 632 00:33:29,000 --> 00:33:32,200 Speaker 3: That's the way normal stock works, Yeah, Like they split 633 00:33:32,240 --> 00:33:33,840 Speaker 3: the stock if the number gets high. 634 00:33:33,920 --> 00:33:37,360 Speaker 1: Yeah, so these people can then go to hear him 635 00:33:37,400 --> 00:33:41,000 Speaker 1: talk at the Berkshire hath right right, right. And it 636 00:33:41,160 --> 00:33:44,960 Speaker 1: was enormously successful because it was like, first of all 637 00:33:45,160 --> 00:33:49,000 Speaker 1: symbolic of this you know, American democratic company that everyone 638 00:33:49,040 --> 00:33:51,880 Speaker 1: should be a part of. And also it allowed dabblers 639 00:33:51,920 --> 00:33:54,719 Speaker 1: to buy some Berkshire be a stock. 640 00:33:54,880 --> 00:33:58,120 Speaker 3: Sure, dabblers are just ordinary investors, like Berkshire b is 641 00:33:58,280 --> 00:34:00,600 Speaker 3: just a normal stock. The weird one is the seven 642 00:34:00,680 --> 00:34:03,680 Speaker 3: hundred thousand dollars one, I mean presumably the seven hundred 643 00:34:03,680 --> 00:34:05,600 Speaker 3: thousand dollars one. Not only is it good for his ego, 644 00:34:05,640 --> 00:34:08,000 Speaker 3: it's good for his brand, right, this whole thing of 645 00:34:08,080 --> 00:34:12,520 Speaker 3: like he's profitable because he is. We're in buffet that 646 00:34:12,920 --> 00:34:16,120 Speaker 3: a single share trades for seven hundred thousand dollars burnishes 647 00:34:16,200 --> 00:34:16,720 Speaker 3: that brand. 648 00:34:17,359 --> 00:34:21,120 Speaker 1: As we look back in sort of recent years, warm Off, 649 00:34:21,200 --> 00:34:24,600 Speaker 1: it just keeps. He keeps finding these companies that you 650 00:34:25,040 --> 00:34:28,440 Speaker 1: didn't even think of, but they're just everywhere in your life. 651 00:34:28,560 --> 00:34:32,520 Speaker 1: Brooks running shoes, which I'm a big fan of shoe. 652 00:34:32,680 --> 00:34:33,120 Speaker 3: Yeah. 653 00:34:33,160 --> 00:34:36,719 Speaker 1: Absolutely. In fact, a postal worker stopped me the other 654 00:34:36,800 --> 00:34:39,160 Speaker 1: day and said, one of those shoes, and I'm like, 655 00:34:39,600 --> 00:34:40,400 Speaker 1: is that a compliment? 656 00:34:40,680 --> 00:34:43,720 Speaker 3: Yes? That's in New York. That's a person who walks 657 00:34:43,760 --> 00:34:44,600 Speaker 3: for a living. 658 00:34:44,560 --> 00:34:48,720 Speaker 1: Exactly right. He buys Hines of course of ketchup fame 659 00:34:48,920 --> 00:34:55,520 Speaker 1: and craft of macaroni and cheese fame, encourages them to merge, 660 00:34:55,640 --> 00:34:57,200 Speaker 1: and that doesn't work out well and I think they're 661 00:34:57,200 --> 00:35:02,000 Speaker 1: breaking apart. Now buys Durasel like the battery company, and eventually, 662 00:35:02,280 --> 00:35:05,120 Speaker 1: very famously, he hops into a tech stock. He hops 663 00:35:05,160 --> 00:35:08,600 Speaker 1: into Apple, huge investment Apples recently sold some of that, 664 00:35:09,360 --> 00:35:10,560 Speaker 1: recently sold a lot of it. 665 00:35:10,480 --> 00:35:13,400 Speaker 3: But Apple Like. He buys Apple like relatively late in 666 00:35:13,440 --> 00:35:16,320 Speaker 3: the life of the company, and it actually makes sense 667 00:35:16,960 --> 00:35:19,239 Speaker 3: as a buffet stock, even though it's a tech company, right, 668 00:35:19,680 --> 00:35:22,839 Speaker 3: clear Moat, that brand is a clear moat. Right, you 669 00:35:22,840 --> 00:35:27,360 Speaker 3: can have whatever, a Dell laptop or an Android phone, 670 00:35:27,440 --> 00:35:30,399 Speaker 3: but Apple can sell its products at a premium price 671 00:35:30,520 --> 00:35:33,160 Speaker 3: year after year like that is the buffet thing. 672 00:35:33,600 --> 00:35:37,359 Speaker 1: And and Apple iPhone is just the thing that everyone has, yeah, 673 00:35:37,400 --> 00:35:39,799 Speaker 1: like the running shoes or dairy queen, that sort of thing. 674 00:35:40,200 --> 00:35:42,719 Speaker 1: And even the story of Warren Buffett as White Knight 675 00:35:43,880 --> 00:35:46,879 Speaker 1: that also keeps happening. In two thousand and eight, during 676 00:35:46,880 --> 00:35:50,320 Speaker 1: the financial crisis, it gets a call from Goldman Sacks. 677 00:35:50,760 --> 00:35:53,160 Speaker 1: At the time, everyone is panicked about everyone. I won't 678 00:35:53,160 --> 00:35:55,840 Speaker 1: say there was any particular problem with Goldman Sacks compared 679 00:35:55,840 --> 00:35:59,439 Speaker 1: to the other investment companies. But Warren Buffett invests five 680 00:35:59,520 --> 00:36:03,040 Speaker 1: billion dollars. You know, they hang a big poster of 681 00:36:03,080 --> 00:36:05,319 Speaker 1: Warren Buffett up on the building, not really but kind 682 00:36:05,360 --> 00:36:09,120 Speaker 1: of metaphorically that says, oh, you think Goldman Sachs is 683 00:36:09,120 --> 00:36:12,680 Speaker 1: one of those slimy Wall Street investment firm zone No, no, no, no, no, 684 00:36:13,760 --> 00:36:14,800 Speaker 1: we have Warren Buffett. 685 00:36:15,440 --> 00:36:17,440 Speaker 3: By the way, a striking thing to me in the 686 00:36:17,440 --> 00:36:21,839 Speaker 3: financial crisis was that Uncle Warren, mister squeaky clean, had 687 00:36:21,880 --> 00:36:25,080 Speaker 3: also owned a huge share of Moody's, the ratings company 688 00:36:25,640 --> 00:36:29,280 Speaker 3: that was you know, I would say implicated, like not criminally, 689 00:36:29,320 --> 00:36:31,719 Speaker 3: but you know, they were one of the key people 690 00:36:31,760 --> 00:36:37,160 Speaker 3: who put these triple A ratings on bad mortgage bonds. 691 00:36:37,239 --> 00:36:39,400 Speaker 3: And Buffett was there too, and yet never sort of 692 00:36:39,440 --> 00:36:40,440 Speaker 3: got tarred with that. 693 00:36:41,160 --> 00:36:44,399 Speaker 1: It's interesting, right, So he makes three billion dollars from 694 00:36:44,440 --> 00:36:47,520 Speaker 1: the Golden Sax deal. There's the Moody's thing. He has 695 00:36:47,640 --> 00:36:52,719 Speaker 1: made missteps, many missteps, But I don't know if it's 696 00:36:53,400 --> 00:36:55,879 Speaker 1: just his demeanor or the amount of successes he's had, 697 00:36:55,920 --> 00:36:58,040 Speaker 1: but like the press kind of gives him a pass 698 00:36:58,320 --> 00:37:01,200 Speaker 1: on just about everything. And I mean the amount of 699 00:37:01,200 --> 00:37:04,440 Speaker 1: money he's made for his investors over the years. I 700 00:37:04,440 --> 00:37:07,000 Speaker 1: guess it makes sense you're willing to forgive a few mistaps. 701 00:37:07,000 --> 00:37:09,279 Speaker 3: And I don't think it's just the money, right, Like, 702 00:37:10,920 --> 00:37:14,400 Speaker 3: he hasn't used a crazy metal leverage. He never like 703 00:37:14,600 --> 00:37:17,160 Speaker 3: blew up. He never needed to be bailed out. He 704 00:37:17,200 --> 00:37:20,799 Speaker 3: invested for the long term in you know, things that 705 00:37:21,080 --> 00:37:24,480 Speaker 3: people find useful. I have an iPhone. It's a good company, 706 00:37:24,480 --> 00:37:26,360 Speaker 3: you know what I mean. Lots of people drink Coca Cola. 707 00:37:26,440 --> 00:37:31,200 Speaker 3: Like he is sort of the opposite of the caricature 708 00:37:31,280 --> 00:37:33,680 Speaker 3: finance villain who is just playing weird games and not 709 00:37:33,760 --> 00:37:35,200 Speaker 3: doing anything for the real economy. 710 00:37:35,239 --> 00:37:37,759 Speaker 1: Like I think that is valid. And this brings up 711 00:37:37,760 --> 00:37:42,480 Speaker 1: the question what happens now. At his last giant meeting, 712 00:37:42,520 --> 00:37:45,840 Speaker 1: I think forty thousand people came to Omaha for the 713 00:37:45,840 --> 00:37:49,799 Speaker 1: Berkshire Hathaway Annual Meeting, he announces that he's stepping out 714 00:37:49,800 --> 00:37:52,440 Speaker 1: a CEO. He'll still stay on as chairman, but his 715 00:37:52,560 --> 00:37:57,040 Speaker 1: last day is December thirty first, twenty twenty five. And 716 00:37:57,640 --> 00:38:00,279 Speaker 1: it's a really interesting time for him to leave. Right, 717 00:38:00,360 --> 00:38:06,440 Speaker 1: We're seeing another perhaps bubble in tech stocks. Right. He 718 00:38:06,560 --> 00:38:10,040 Speaker 1: has sold a lot of Apple and other companies. So 719 00:38:10,080 --> 00:38:13,320 Speaker 1: Brookshire Hathaway has a big pile of studying. Seemed like 720 00:38:13,360 --> 00:38:16,320 Speaker 1: the nineteen seventies and the two thousands all over again. 721 00:38:16,640 --> 00:38:20,520 Speaker 1: They are poised, perhaps something bad happens in the stock 722 00:38:20,560 --> 00:38:23,880 Speaker 1: market to go in and make like these huge acquisitions, 723 00:38:24,320 --> 00:38:26,600 Speaker 1: Like he'll be able to do pennies on the dollar 724 00:38:26,600 --> 00:38:30,480 Speaker 1: for a data center. Let's just say maybe maybe not right, 725 00:38:30,920 --> 00:38:33,880 Speaker 1: and he's not there to do it. So the question 726 00:38:34,080 --> 00:38:39,240 Speaker 1: is without Warren Buffett there does the philosophy of Berkshire 727 00:38:39,239 --> 00:38:44,439 Speaker 1: Hathaway and all their natural advantages. Does it succeed? They'll 728 00:38:44,440 --> 00:38:46,719 Speaker 1: have the money to deploy, they have the ideas, they 729 00:38:46,760 --> 00:38:49,640 Speaker 1: have a thousand quotes from Warren Buffett about how to 730 00:38:49,640 --> 00:38:52,799 Speaker 1: do it, but they don't have the man himself. And 731 00:38:52,840 --> 00:38:56,239 Speaker 1: we'll be able to see, like what does that mean? 732 00:38:57,560 --> 00:39:00,640 Speaker 1: Remember Warren Buffett is getting personal phone calls when good 733 00:39:00,640 --> 00:39:03,560 Speaker 1: companies are for sale or when bad companies need help. 734 00:39:03,800 --> 00:39:05,560 Speaker 1: That's a one on one phone call. They're not calling 735 00:39:05,560 --> 00:39:08,520 Speaker 1: the company, they're calling Warren Buffett. We said, how the 736 00:39:08,560 --> 00:39:12,479 Speaker 1: press gives Warren Buffett a pass regulators kind of too, 737 00:39:13,200 --> 00:39:16,600 Speaker 1: like he just has a lot of goodwill, right, And 738 00:39:18,120 --> 00:39:22,200 Speaker 1: then there's this like interesting sense that like Warren Buffett 739 00:39:22,239 --> 00:39:26,000 Speaker 1: was there as this like symbol during difficult times when 740 00:39:26,880 --> 00:39:30,839 Speaker 1: you have lost money on tech or some bubble or 741 00:39:30,880 --> 00:39:32,640 Speaker 1: something like, you kind of want to go into the 742 00:39:32,680 --> 00:39:36,960 Speaker 1: warm embrace, you know, of a cushy Warren Buffett being 743 00:39:37,000 --> 00:39:40,400 Speaker 1: like here have have have a dairy queen treat in 744 00:39:40,480 --> 00:39:44,480 Speaker 1: some Coca Cola, like everything will be okay. And now 745 00:39:44,560 --> 00:39:47,359 Speaker 1: we're gonna see, right, we'll see how much we miss 746 00:39:47,360 --> 00:39:48,040 Speaker 1: Warren Buffett. 747 00:39:49,000 --> 00:39:51,759 Speaker 3: I mean, you're doing the time will tell ending. But 748 00:39:51,920 --> 00:39:54,680 Speaker 3: the thesis of this show, as I hear it, is 749 00:39:54,760 --> 00:39:57,840 Speaker 3: like this whole last several decades, all second half of 750 00:39:57,880 --> 00:40:03,319 Speaker 3: Buffett's career was trading on Buffett the man, Buffett the persona. 751 00:40:03,520 --> 00:40:07,280 Speaker 3: Let's say he's ninety five, He's stepping down a CEO. 752 00:40:07,440 --> 00:40:10,560 Speaker 3: He's not gonna live forever. Like if I as I 753 00:40:10,600 --> 00:40:12,680 Speaker 3: read this show, as I listened to it, you're arguing, 754 00:40:13,000 --> 00:40:16,560 Speaker 3: like Berkshire Hathaway isn't going to be able to keep 755 00:40:16,600 --> 00:40:18,880 Speaker 3: making those moves after Buffett. That seems to be the 756 00:40:19,000 --> 00:40:20,520 Speaker 3: argument this show is making. 757 00:40:20,640 --> 00:40:22,880 Speaker 1: I don't know. I mean, it's good to have a 758 00:40:22,880 --> 00:40:25,919 Speaker 1: lot of cash, and it's good they have very smart people, 759 00:40:26,000 --> 00:40:28,200 Speaker 1: and he's put very smart people in charge. And I 760 00:40:28,239 --> 00:40:30,759 Speaker 1: will say there was a tiny little note that I 761 00:40:30,800 --> 00:40:35,279 Speaker 1: saw somewhere which was although he's no longer CEO, he 762 00:40:35,320 --> 00:40:38,840 Speaker 1: is still chairman of the board, and he might still 763 00:40:39,200 --> 00:40:42,760 Speaker 1: be a little involved in times of great opportunity. 764 00:40:43,600 --> 00:40:46,080 Speaker 3: He's ninety five. Those times better come soon. 765 00:40:46,560 --> 00:40:49,880 Speaker 1: Our producer is Gabriel Hunter Chang, our engineer is Sarah Bruguier, 766 00:40:50,360 --> 00:40:53,400 Speaker 1: and our showrunner is Ryan Dilly. I'm Jacob Goldstein and 767 00:40:53,440 --> 00:40:55,479 Speaker 1: I'm Robert Smith. We'll be back next week with another 768 00:40:55,520 --> 00:40:56,760 Speaker 1: episode of Business 769 00:40:57,040 --> 00:41:02,440 Speaker 3: History, a show about the history, wait for it, of 770 00:41:02,480 --> 00:41:04,240 Speaker 3: business