 others with a more secular approach who have also been very successful. Let's take Warren Buffett of Omaha, Nebraska. If you had put $10,000 in 1965 into his company, Berkshire Hathaway, you would have one million today. Warren was a chapter in my 1972 book, Supermoney, so I've known him a long time. He learned his trade with Ben Graham, the original dean of security analysis at Columbia University. I don't think Warren has ever been on television until this interview, and he has certainly never courted publicity, but recently he got a lot of it when he emerged as the key figure in the takeover of ABC by Capital Cities. Warren will be the largest shareholder of the new company, and his own net worth is now far in excess of $500 million. But when I spoke with him last fall in his office in Omaha, he very characteristically made his investment style seem so perfectly simple. The first rule of an investment is don't lose, and the second rule of an investment is don't forget the first rule, and that's all the rules there are. I mean, if you buy things for far below what they're worth, and you buy a group of them, you basically don't lose money. Warren, what do you consider the most important quality for an investment manager? It's a temperamental quality, not an intellectual quality. You don't need tons of IQ in this business. I mean, you have to have enough IQ to get from here to downtown Omaha, but you do not have to be able to play three-dimensional chess or be in the top leagues in terms of bridge playing or something of the sort. You need a stable personality. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd, because this is not a business where you take polls. It's a business where you think. And Ben Graham would say that you're not right or wrong because a thousand people agree with you, and you're not right or wrong because a thousand people disagree with you. You're right because your facts and your reasoning are right. Warren, what do you do that's different than 90% of the money managers who are in the market? Certainly most of the professional investors focus on what the stock is likely to do in the next year or two, and they have all kinds of arcane methods of approaching that, but they do not really think of themselves as owning a piece of a business. But the real test of whether you're investing from a value standpoint or not is whether you care whether the stock market is open tomorrow. If you're making a good investment in a security, it shouldn't bother you if they close down the stock market for five years. All the ticker tells me is the price, and I can look at the price occasionally to see whether the price is outlandishly cheap or outlandishly high, but prices don't tell me anything about a business. Business figures themselves tell me something about a business, but the price of a stock doesn't tell me anything about a business. I would rather value a stock or a business first and not even know the price so that I'm not influenced by the price in establishing my valuation, and then look at the price later to see whether it's way out of line with what my value is. So Buffett chose to stay in this world, Omaha, Nebraska, where corn grows just minutes from downtown. Now Omaha is a nice town, but nobody claims it's a world financial center, and here the only thundering herd is actually on four feet. Don't you find Omaha a little bit off the beaten track for the investment world? Well, believe it or not, we get mail here and we get periodic goals, and we get all the facts needed to make decisions, and unlike Wall Street, you'll notice we don't have 50 people coming up and whispering in our ear that we should be doing this or that this afternoon. You appreciate the lack of stimulation here. I like the lack of stimulation. We get facts, not stimulation here. How can you stay away from Wall Street? Well, if I were on Wall Street, I'd probably be a lot poorer. You get overstimulated on Wall Street, and you hear lots of things, and you may shorten your focus, and a short focus is not conducive to long profits, and here I can just focus on what businesses are worth. And I don't need to be in Washington to figure out what the Washington Post newspaper is worth, and I don't need to be in New York to figure out what some other company has worth. It's simply, it's an intellectual process. And the less static there is in that intellectual process, really the better off you are. What is the intellectual process? The intellectual process is defining your level, defining your area of competence and valuing businesses, and then, within that area of competence, finding whatever sells at the cheapest price in relation to value. And there are all kinds of things I'm not competent to value, but there are a few that I am competent to value. Have you ever bought a technology company? No, I really haven't. In 30 years of investing, not one? I haven't understood any of them. So you haven't ever owned, for example, IBM? Never owned IBM. Marriott's company, I mean a sensational company, but I haven't owned IBM. And so here is this technological revolution going on, and you're not going to be a participant. It's gone right past me. Is that all right with you? It's okay with me. I don't have to make money in every game. I mean I don't know what cocoa beans are going to do. There are all kinds of things I don't know about, and that may be too bad, but why should I know all about them? I haven't worked that hard on them. In securities business, you literally every day have thousands of the major American corporations offered you at a price and a price that changes daily, and you don't have to make any decisions. You have to make, nothing is forced upon you. So you, there are no called strikes in the business. The pitcher just stands there and throws balls at you, and if you're playing real baseball, and it's between the knees and the shoulders, you either swing or you got a strike call on you, if you get too many calls on you, you're out. In the securities business, you sit there and they throw a US Steel at 25, and they throw General Motors at 68, and you don't have to swing at any of them. They may be wonderful pitches to swing at, but if you don't know enough, you don't have to swing. And you can sit there and watch thousands of pitches, and finally you get one right there where you want it, something that you understand, and then you swing. And so you might not swing for six months? You might not swing for two years. Isn't that boring? It would bore most people, and certainly boredom is a problem with most professional money managers. If they try to sit out on anything or two, not only do they get somewhat antsy, but their clients start yelling swing you from the stands, and that's very tough for people to do. Warren, your approach seems so simple. Why doesn't everybody do it? Well, I think partly because it is so simple. The academics, for example, focus on all kinds of variables. Partly because... By academics, you mean professors of finance and business school? Sure, and the data is there. So they focus on whether if you buy stocks on Tuesday and sell them on Friday, you're better off, or if you buy them in election years and sell them in other years, you're better off if you buy small companies. There are all these variables because the data are there, and they learn how to manipulate data. And as a friend of mine says to a man with a hammer, everything looks like a nail. And once you have these skills, you just are dying to utilize them in some way, but they aren't important. If I were being asked to participate in a business opportunity, would it make any difference to me whether I bought it on a Tuesday or a Saturday or an election year or something? It's not what a businessman thinks about in buying businesses. So when I think about it when buying stocks, because stocks are just pieces of businesses.