The Snowball_ Warren Buffett and the Business of Life - Alice Schroeder [512]
22. Buffett is speaking metaphorically here. He admits to investing in things with wings a time or two, and not with good results.
23. Buffett first used this story in his 1985 chairman’s letter, citing Ben Graham, who told the story at his tenth lecture in the series Current Problems in Security Analysis at the New York Institute of Finance. The transcripts of these lectures, given between September 1946 and February 1947, can be found at http://www.wiley.com//legacy/products/subject/finance/bgraham/ or in Benjamin Graham and Janet Lowe, The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend. New York: Wiley, 1999.
24. A condensed and edited version of this speech was published as “Mr. Buffett on the Stock Market,” Fortune, November 22, 1999.
25. PaineWebber-Gallup poll, July 1999.
26. Fred Schwed Jr., Where Are the Customers’ Yachts? or, A Good Hard Look at Wall Street. New York, Simon & Schuster, 1940.
27. Interview with Bill Gates.
28. Keynes wrote: “It is dangerous…to apply to the future inductive arguments based on past experience, unless one can distinguish the broad reasons why past experience was what it was,” in a book review for Smith’s Common Stocks as Long-Term Investments in Nation and Athenaeum in 1925 that later became the preface for Keynes, The Collected Writings of John Maynard Keynes. Vol. 12, Economic Articles and Correspondence; Investment and Editorial. Cambridge: Cambridge University Press, 1983.
29. The comedian Mort Sahl used to end his routine by asking, “Is there anyone I haven’t offended?”
30. According to a source who overheard them and would rather remain nameless.
31. Interview with Don Keough.
Chapter 3
1. Interview with Charlie Munger.
2. Parts of Munger’s explanation are taken from three lectures on the psychology of human misjudgment, and his commencement address to the Harvard School on June 13, 1986, both as found in Poor Charlie’s Almanac, The Wit and Wisdom of Charles T. Munger, edited by Peter D. Kaufman. Virginia Beach, Va.: Donning Company Publishers, 2005. The rest is from interviews with the author. Remarks have been edited for brevity and clarity.
3. Interview with Charlie Munger.
4. Munger’s driving habits are described in Janet Lowe, Damn Right! Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger. New York: John Wiley & Sons, 2000.
5. Required to produce a doctor’s note to prove he was blind in one eye and qualified for a special license at the California Department of Motor Vehicles, Munger refused and offered to take out his glass eye instead.
6. Munger’s doctor used an older type of surgery that had a higher complication rate. Rather than blame the doctor, Munger claims he should have done more research on doctors and types of surgery himself.
7. Buffett’s interest in such products as pig stalls and egg counters is limited; he reviews some of these statistics in a summarized form.
8. Despite the complaints of passengers, Buffett has never, to the author’s knowledge, been responsible for an accident, only near heart attacks.
9. Beth Botts, Elizabeth Edwardsen, Bob Jensen, Stephen Kofe, and Richard T. Stout, “The Cornfed Capitalist,” Regardie’s, February 1986.
Chapter 4
1. Buffett predicted up to 6% growth in the market per year, but gave historical ranges of no growth, and the underlying math suggested that figure could be high. The 6% was a hedged bet.
2. S&P is Standard & Poor’s Industrial Average, the most widely used measure of the overall stock market’s performance. S&P includes reinvested dividends. Berkshire does not pay a dividend. All numbers are rounded.
3. “Toys ‘R’ Us vs. eToys, Value vs. Euphoria,” Century Management, http://www.centman.com/Library/Articles/Aug99/ToysRUsvsEtoys.htm. In March 2005, Toys “R” Us agreed to a takeover offer from private equity firms Kohlberg Kravis Roberts & Co., Bain Capital, and real estate group Vornado Realty Trust in a deal valued at $6.6 billion.
4. Interview with Sharon Osberg.
5. Buffett, speaking to the Oquirrh Club, “An Evening with Warren Buffett,”