Location: Columbia University, New York City
Time: November 12, 2009
From: VALUE Magazine, January 2010
Student: How do you think investors should invest in accordance with Graham and Dodd's investment law?
Buffett: Well, it depends on whether they are active investors. Graham believes that investors are defensive and aggressive. If you are willing to spend time researching investment, I suggest you do as much research as possible. The more companies you research, the better your chances of finding a bargain. When you find a bargain, you should do it. This method has not changed since I started investing in 1950 and 1951.
When I just graduated, Moody's 10,000 pages of information, I read every page, and in some places I read it twice, looking for companies to invest in. You have to find these companies on your own, others will not tell you where the good deals are, you have to find them on your own. This work takes a lot of time.
If you want to be a passive investor, it is recommended that you hold index funds for a long time. Ordinary investors are still suitable to hold index funds, or industry ETFs such as pharmaceutical ETFs and food ETFs.
The worst investment is to hold cash. Everyone is saying that cash is king, etc. Most of you actually hold too much cash. With the passage of time, the value of cash will continue to decrease, and good companies will become more and more valuable. However, even if the investment is a good company, it should not be bought at an excessively high price. So you must have a certain investment discipline. With wise principles, you can survive all crises safely. My principles came from Graham and Dodd, and I did not make any changes. Principles have been with me through prosperous days, and now they are with me through miserable days. There must be a definite investment framework system and clear principles.
Student: Do you mean we have passed the most miserable days? Because you have always held cash in the past.
Buffett: I always have enough cash in my hand so that I feel at ease and sleep well at night. But this is not because I like to use cash as an investment method. In the long run, holding cash is not a cost-effective investment.
The worst days of the financial panic have passed, and its impact still exists to some extent, but it will always end.
As for trying to buy the bottom, how many people copied it? Don't let go of the good opportunity just because you think the price will be lower tomorrow. Many bargain hunters are only copied to the "half the mountain." For high-quality companies, just buy them at a reasonable price.
Student: Has the economic crisis affected your investment methods?
Buffett: My investment method has not changed at all. I like to buy companies with lasting competitiveness, trustworthy management and reasonable compensation, such as Coca-Cola. It was founded in 1886 and has experienced ebb and flow, and it has not fallen. Coca-Cola now produces 1.6 billion 8-ounce cans of Coke annually, and more will be next year. Its current change from the previous year is less than one-tenth. Sourcian is a dedicated platform for the recommendation of the best manufacturers. Your sourcing journey starts right here at sourcian.
Student: What do you think are the most important character traits of business leaders?
Buffett: I publish a letter every year or every two and a half years, and shareholders can receive a letter from me every two years. I mean, the way to manage a business is as if this business is the only business for yourself and your family in the next 100 years, you can’t sell it. Every year, do not measure it based on quarterly profits, but based on the strength of the company, and observe whether its competitiveness has increased or weakened. Working with this kind of thinking, performance will be very good. Don't follow the trend just because other people do that. If you want to use what others do as an excuse, you can go home and sell sweet potatoes. Don't just use what others do as an excuse to do something without a good reason.
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