主题： Other Businesses

I read hundreds of annual reports every year. I don’t talk to any brokers—I don’t want to talk to brokers. People are not going to give you great ideas. The important thing is to know what you know and know what you don’t know. If you can extend the field of things that you know then so much the better. Obviously, if you understand a great number of businesses, then you have a better chance of succeeding than if you only understand a few. The important thing is to know the perimeter of your circle of confidence and to play within that circle—the bigger the better. But if something isn’t within my circle, I’m not going to be in that game. I found out about this Norwegian chess champion who’s 20 years old. At 80 you would think that I’m better than him, but I’m not, and if I play him, he is going to beat me. He is going to beat me in about three moves.

Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930), and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding…. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable.

Charlie and I look for companies that have (a) a business we understand; (b) favorable long-term economics; (c) able and trustworthy management; and (d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80 percent. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.

The universe I can’t play in [i.e., small companies] has become more attractive than the universe I can play in [large companies]. I have to look for elephants. It may be that the elephants are not as attractive as the mosquitoes. But that is the universe I must live in.

Cash is our favorite medium of purchase just because we’re going to generate a lot of it. And we hate giving out shares. We do not like the idea of trading away part of See’s Candies or GEICO or ISCAR or BNSF. The idea of leaving you with a lower percentage interest in those companies because of any acquisition ambitions of ours is anathema to us.

Let’s face it—newspapers are a hell of a lot more interesting a business than, say, making couplers for rail cars. While I don’t get involved in the editorial operations of the papers I own, I really enjoy being part of the institutions that help shape society.

The world isn’t going to tell you about great deals. You have to find them yourself. I did a lot of work in the earlier years just in getting familiar with businesses. The way I would do that is I would go out and use what Phil Fisher called the scuttlebutt approach. I’d go out, I’d talk to customers, I’d talk to ex-employees in some cases, I’d talk to suppliers—everybody…. Let’s say I was interested in the coal industry. I’d go out and see every coal company and I’d ask every CEO, “If you were to only buy stock in one coal company that wasn’t your own, which would it be and why?” And you piece those things together and you learn a lot about the business after a while.

Walk through a supermarket sometime and think about who’s got pricing power, and who’s got a franchise, and who doesn’t. If you go buy Oreo cookies, and I’m going to take home Oreo cookies or something that looks like Oreo cookies for the kids, or your spouse, or whomever, you’ll buy the Oreo cookies. If the other is three cents a package cheaper, you’ll still buy the Oreo cookies…. But, if you go to buy milk, it doesn’t make any difference whether it’s Borden’s, or Sealtest, or whatever. And you will not pay a premium to buy one milk over another…. It’s the difference between having a wonderful business and not a wonderful business. The milk business is not a good business.

The name American express is one of the greatest franchises in the world. Even with terrible management it was bound to make money.

Buy stock in a business that’s so good that an idiot can run it, because sooner or later one will. If you have a choice between going to work for a wonderful business that is not capital intensive, and one that is capital intensive, I suggest that you look at the one that is not capital intensive.