1998: Why don't brokers recommend Berkshire stock?

AUDIENCE MEMBER: My question for Warren is that I’ve been on the internet and I look at Yahoo and they give you recommendations for companies. And when I search for Berkshire Hathaway, it shows that nobody is recommending Berkshire Hathaway — (laughter) — despite the fact that there are maybe a thousand people that are wearing signs here, “I love Berkshire Hathaway.” And of course I’ve got mine on, too.

But what seems to be the problem in lack of recommendations?

WARREN BUFFETT: The question about recommending the stock, we very seldom had stock recommendations over the years. As I think back to 1965, I can’t think of a lot of brokerage reports that have recommended Berkshire.

I’m not looking for any, you know, reports at all. We are not looking to have Berkshire sell at the highest possible price, and we’re not looking to try and attract people to Berkshire who are buying stocks because somebody else recommends them to them.

We prefer people who figure out for themselves why they themselves want to buy Berkshire, because they’re much more likely to stick around if they enter the restaurant because they decide it’s the restaurant they want to eat at, than if somebody has touted them on it. And that’s our approach.

So we do nothing to encourage. But I think even if we did, we probably wouldn’t generate a lot of recommendations. It’s not a great stock to get rich on, if you’re a broker.

CHARLIE MUNGER: Yeah, I think the reason — (Laughter and applause)

I think one of the main reasons why it’s so little recommended in the institutional market is that it’s perceived as hard to buy in quantity. (Laughter)

WARREN BUFFETT: We prefer — we’ve got some good institutions as holders, including one that’s run by a very good friend of ours, but frankly it’s more fun for us to have a bunch of individual shareholders.

I mean you see it — it translates — if there’s money made, it translates into changes in people’s lives and not some change in somebody’s performance figure for one quarter.

And we think that individuals are much more likely to join us with the idea of staying with us for as long as we stay around. And, you know, that’s the way we look at the business.

Very few institutions look at investments that way, and, frankly, we think they’re often less rational holders than we get with individuals.