2012: Has fear of systemic risk ever caused Berkshire to stop buying stocks?

CLIFF GALLANT: I guess along those lines, you talk about the drunken market, have systemic fear — systemic risk fears — ever caused you to pause in your eagerness to buy equities?

You know, back in 2008/2009, you know, why weren’t you more aggressive back then?

WARREN BUFFETT: You’ll probably find this interesting. Charlie and I, to my memory, in 53 years, I don’t think we’ve ever had a discussion about buying a stock or a business, or selling a stock or a business, that has been — where we’ve talked about macro affairs.

I mean, if we find a business that we think we understand and we like the price at which it’s being offered, we buy it. And it doesn’t make any difference what the headlines are, it doesn’t make any difference what the Federal Reserve is doing, it doesn’t make any difference what’s going on in Europe. We buy it.

You know, there’s always going to be good and bad news out there, and which gets emphasized the most, you know, depends on the moods of people or newspaper editors or whomever.

And there’s — you know, there’s a ton of bad — I bought my first stock, you know, in June of — in June of ’42, and what had happened?

You know, we were losing the war, until the Battle of Midway. I mean, so here was a country that — you know, all my older friends had gone, you know, disappeared.

We weren’t going to make any kinds of goods that were — people wanted. We were going to build battleships and things to drop in the sea, and we were losing.

But stocks were cheap.

And I wrote that article in October of 2008 in the Times. I should have written it a few months later, but in the end, I said we’ve just had a financial panic and it’s going to flow over into the economy, you know, you’re going to read all kinds of bad news, but so what, you know?

America is not going to go away. Stocks are cheap.

You’ve got to — we look to value, and we don’t look to headlines at all. And we really don’t — everybody thinks we sit around and talk about macro factors. We don’t have any discussions about macro factors.

Charlie?

CHARLIE MUNGER: Yeah, but we did keep liquid reserves at the bottom of the panic that, if we’d known it was not going to get any worse, we would have spent, but we didn’t know that.

WARREN BUFFETT: Yeah. We know what we don’t know.

We all — we know we don’t want to go broke. I mean, we start with that.

And we know you can’t go broke if you’ve got a fair amount of liquid reserves around and you don’t have any near-term debts and so on.

So our first rule is always to play it tomorrow, no matter what happens. But if we’ve got that covered, and we can find things that are attractive, we buy it.

Well Charlie has a little company called the Daily Journal Company and he sat there with a whole lot of cash. And when 2008 came along, he went out and bought a few stocks. He won’t tell me the names of them, but —

You know, that was the time to use the money, not to sit on it.

Was that the name of the stock, Charlie? (Laughter)

You don’t get anything out of him. (Laughter)