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1998: How does Buffett review all of the stocks in the market?
AUDIENCE MEMBER: Good morning, Marc Gerstein from Value Line.
Mr. Buffett, considering the large amounts of demands on your time, how do you go about reviewing the entire spectrum of choices in the equity markets?
WARREN BUFFETT: Give me that last part again? I got the demands on my time and —
MARK ERSTEIN: How do you and Mr. Munger manage to review the whole spectrum of choices in the equity markets?
WARREN BUFFETT: A fat pitch coming up. (Laughter)
But I don’t mind it at all, because the truth is that we get — I don’t even know what we pay for Value Line. Charlie and I both get it in our respective offices, but we get incredible value out of it because it give us the quickest way to see a huge number of the key factors that tell us whether we’re basically interested in the company.
And it also gives us a great way — good way — of sort of periodically keeping up-to-date. Value Line has 1,700 or so stocks they cover, and they do it every 13 weeks. So it’s a good way to make sure that you haven’t overlooked something if you just quickly review that.
But the snapshot it presents is an enormously efficient way for us to garner information about various businesses.
We don’t care about the ratings. I mean that doesn’t make any difference to us. We’re not looking for opinions. We’re looking for facts.
But I have yet to see a better way, including fooling around on the internet or anything, that gives me the information as quickly. I can absorb the information on — about a company — most of the key information you can get — and probably doesn’t take more than 30 seconds in glancing through Value Line, and I don’t have any other system that’s as good. Charlie?
CHARLIE MUNGER: Well, I think the Value Line charts are a human triumph. It’s hard for me to imagine a job being done any better than is done in those charts. An immense amount of information is put in very usable form. And if I were running a business school we would be teaching from Value Line charts.
WARREN BUFFETT: And when Charlie says the charts, he does not mean just the chart of the price behavior. He means all that information that really is listed under the charts that —
CHARLIE MUNGER: Oh yeah.
WARREN BUFFETT: The detailed financial information. You can run your eye across that.
The chart of the price action doesn’t mean a thing to us, although it may catch our eye, just in terms of businesses that have done very well over time.
But we — price action has nothing to do with any decision we make. Price itself is all-important, but whether a stock has gone up or down, or what the volume is, or any of that sort of thing, that is — as far as we’re concerned, you know, those are chicken tracks, and we pay no attention to them.
But that information that’s right below the chart, in those 10 lines or so — 15 lines — if you have some understanding of business, that’s a — it’s a perfect snapshot to tell you very quickly what kind of a business you’re looking at.