When to buy a great business

Well, I won't comment on the three companies that you've named, but in general terms, unless you find the prices of a great company really offensive, if you feel you've identified it... By definition, a great company is one that's going to remain great for thirty years. If it's gonna be great for three years, you know it ain't a great company. I mean it.

So, you really want to go along with the idea of something that if you were going to take a trip for 20 years, you wouldn't feel bad leaving the money with no orders with your broker and no power of attorney or anything. You just go on the trip, and you know when you come back, it's gonna be a terribly strong company. I think it's better just to own them.

I mean, you know, we could attempt to buy and sell some of the things that we own that we think are fine businesses, but they're too hard to find. I mean, we found See's Candy in 1972. Where we find here and there, we get the opportunity to do something, but they're too hard to find. So to sit there and hope that you buy them in the throes of some panic, you know, that you sort of take the attitude of a mortician, you know, waiting for a flu epidemic or something... I mean it.

I'm not sure that, I'm not sure that says will be a great technique. I mean, it may be great if you inherit it. You know, Paul Getty inherited the money at the bottom in '32. I mean he didn't inherit exactly, he talked his mother out of it. But it's true, actually, but he benefited enormously by having access to a lot of cash in the early '30s that he didn't have access to in the late '20s.

And so you can get some accidents like that, but that's a lot to count on. You know if you start with the Dow at X and you think it's too high, you know, when it goes to ninety percent of X, do you buy? Well, if it doesn't, it goes to fifty percent of X. You never get the benefit of those extremes anyway, unless you just come into some accidental sum of money at some time.

So I think, I think the main thing to do is find wonderful businesses. That is Phil Caray here! Or we got the world, yeah. There, there's what? There's the hero of investing. Phil, would you stand up? Phyllis, Phyllis...

Uh, '99 he wrote a book on investing in 1924. [Applause] Phil has done awfully well by finding businesses he likes and sticking with them, not worrying too much about what they do day to day. There's gonna be an article in The Wall Street Journal about Phil on May 28th, and I advise you all to read it. You'll probably learn a lot more from him by coming to this meeting.

But it's that approach of buying businesses. I mean, let's just say there was no stock market, and the owner of the best business in whatever your hometown is came to you and said, "Look, you know that my brother just died and owned 20% of the business. I want somebody to go in with me to buy that 20%. The price looks a little high maybe, but this is what I think I can get for it. You know, do you want to buy in?"

I think if you like that, if you like the business and you like the person that's coming to you, and the price sounds reasonable, you really know the business, I think probably the thing to do is to take it and don't worry about how it's quoted. It won't be quoted tomorrow, or next week, or next month.

I think people's investments would be more intelligent if stocks were quoted about once a year, but it isn't going to happen that way. If you happen to come into some added money when something dramatic has happened... I mean, we did well back in 1964 because American Express ran into a crook. You know, we did well in 1976 because GEICO's managers and auditors didn't know what the loss reserve should have been the previous couple of years.

So we've had our share of flu epidemics, but you don't want to spend your life waiting around for them.