EBS 파워잉글리쉬 2014년 10월 21일 화요일 Warren Buffet Speech - Part 3

Warren Buffet Speech - Part 3

Well I've made a lot of mistakes. The biggest mistake— well not necessarily the biggest, but buying Berkshire Hathaway itself was a mistake, because Berkshire was a lousy textile business. And I bought it very cheap. I’d been taught by Ben Graham to buy things on a quantitative basis, look around for things that are cheap. And I was taught that say in 1940 or 1950; it made a big impression on me.

So I went around looking for what I call used cigar butts of stocks. And the cigar butt approach to buying stocks is that you walk down the street and you’re looking around for cigar butts, and you find on the street this terrible-looking, soggy, ugly-looking cigar— one puff left in it. But you pick it up and you get your one puff. Disgusting, you throw it away, but it’s free. I mean it’s cheap. And then you look around for another soggy one-puff cigar. 

Well that’s what I did for years. It’s a mistake. Although, you can make money doing it, but you can’t make it with big money, it’s so much easier just to buy wonderful businesses. So now I’d rather buy a wonderful business at a fair price than a fair business at a wonderful price. But in those days I was buying cheap stocks, and Berkshire was selling below its working capital per share. You got the plants for nothing, you got the machinery for nothing, you got the inventory and receivables at a discount. It was cheap, so I bought it. And 20 years later I was still running a lousy business and that money did not compound. 

You really want to be in a wonderful business because the time is the friend of the wonderful business.

[Vocab Tips]

* textile - 직물

* cigar butt - 담배꽁초

* quantitative - 양적인

* compound - (이자를)복리로 지급하다

[Expression of the day]

Berkshire was a lousy textile business.

버크셔는 형편없는 직물 회사였다.

Berkshire was a terrible textile business.

Berkshire was an extremely bad textile business.

Berkshire was a failing textile business.