2012: Why has gold outperformed Berkshire stock since 1999?
AUDIENCE MEMBER: Oh, hi, thanks. Neil Steinhoff (PH) from Phoenix. Thanks for holding the meeting today.
You mentioned a while ago that you were concerned about you and Charlie exposing yourself. Well, I for one am glad that you’re not doing that. (Laughter)
Since 1999, the Berkshire Hathaway stock has — we have not gone up appreciably, whereas gold has gone up multiple times. I don’t own your stock for the glamour. I own it to earn money. What happened?
WARREN BUFFETT: Well, I would say this: when we took over Berkshire, gold was at $20 and Berkshire was at $15 so — gold is now at $1,600 and Berkshire is at $120,000. So you can pick different starting periods. (Applause)
Obviously, you can pick anything that’s gone up a lot in the last, you know, month or year. I mean, it will beat 90 percent of — or 95 percent — of other investments.
But the one thing I would bet my life on, essentially, is over a 50-year period, not only will Berkshire do considerably better than gold, but common stocks as a group will do better than gold, and probably farmland will do better than gold.
I mean, if you own an ounce of gold now and, you know, you caress it for the next hundred years, you’ll have an ounce of gold a hundred years from now.
If you own a hundred acres of farmland, you’ll also have a hundred acres of farmland a hundred years from now and you’ll have taken the crops for a hundred years and sold them and presumably bought more farmland in the process.
It’s very hard for an unproductive investment to beat productive investments over any long period of time, and I recognize that —
It’s very interesting. I can say bonds are no good and [Federal Reserve Chairman Ben] Bernanke still smiles at me. You know, and I can say some stock is no good, and people —
But if you say anything negative about gold, I mean, it arouses passions with people, which is kind of fascinating, because usually if you thought through something intellectually, it shouldn’t really make much difference what people say. It should be that, well, you know, the question is whether your facts are right and your reasoning is right.
But when you run into people that are really excited about gold — and I came from a family where my dad loved gold.
And he was tolerant. He could take a discussion of it. I find many people have trouble with it.
CHARLIE MUNGER: Well, I have never had the slightest interest in owning gold. It’s a much better life to work with businesses and people engaged in business. I can’t imagine a worse crowd to deal with than a bunch of gold bugs. (Laughter)