2001: What does Berkshire invest in?

WARREN BUFFETT: Now, first question in area 1, we have a special guest.

I received a letter from Mark Perkins on April 5th, telling me about his daughter, who has been a shareholder since she was six months old.

And she’s going to be four in November, and she would like — Marietta would like to ask the first question.

And frankly, I take all the questions from four-year-olds, and Charlie handles them from anybody — (laughter) — that’s been around a little longer.

So Marietta, if you’ve got the microphone there, would you ask your question, please?

VOICE: Ask him. (Inaudible)

MARIETTA: (Inaudible)

VOICE: I’m Marietta.

MARIETTA: Marietta.

VOICE: I’m three. Speak up.

MARIETTA: I’m three.

VOICE: Berkshire Hathaway fistful of dollars.

MARIETTA: (Inaudible) dollars. (Laughter)

VOICE: Her — actually, her question was, she said she was three, and she says, “Berkshire Hathaway fistful of dollars,” and she says, “What should we invest in now” so that she’ll be ready when she goes to college?

WARREN BUFFETT: What should she invest in, or what should Berkshire invest in?

VOICE: What should Berkshire invest in?

WARREN BUFFETT: Well, Berkshire would like very much to buy businesses of the same quality, and with managements of the same quality, and at prices consistent with the eight businesses that we’ve bought over the last 16 or 18 months.

Our first preference is, and has been for many decades — although I would say most observers didn’t seem to realize it — but our first preference has always to been — to be buying outstanding operating businesses. And we’ve had a little more luck in that respect lately.

We also own lots of marketable securities. We’ve bought many of those, for example, in the mid-’70s, that did very well for us. But the climate has not been as friendly toward making money out of marketable securities.

And we, frankly, prefer — we prefer the activities associated with owning and operating businesses over time.

So what we hope to do, Marietta, is by the time you’re ready to go to college, I would hope that

well, first of all, I’d hope I’m still around. (Laughter)

But beyond that, I would hope that we would have — you’ll be ready in about 14 years or so. I would hope that we would have another, maybe, 40 businesses or so that would be added. And I would hope that we would have every business that we have now.

And I would hope we would not have more shares outstanding, or any — at least any appreciable number of more shares outstanding.

If we can get all that done, I think you’ll probably be able to afford college.

Charlie, do you have anything to add?

CHARLIE MUNGER: No. (Laughter)

WARREN BUFFETT: And there’s some things in life, Marietta, you can really count on. (Laughter)