Berkshire Hathaway 2013 Annual Meeting Audience Question # 57

What Warren and Charlie would do if they are investing small amounts of money

Warren Buffett:

OK. Station 9.

Audience Member:

Hi. My name is Masato Muso. I’m from Los Angeles, California, and an MBA student at Boston University.

You have mentioned that you are 85 percent Benjamin Graham and 15 percent Phil Fisher, and you have also said that if you only had $1 million today, you could generate 50 percent returns.

Since I’m a young investor, this is my question for the both of you: how was your investment strategy different when you were still accumulating money as opposed to managing billions?

Did you focus on specific industries, small cap, large cap, et cetera? Thank you.

Warren Buffett:

Well, managing a million dollars is an entirely different game than running Berkshire Hathaway, or running some 20 or $50 billion fund of money.

And if Charlie and I were running a million dollars now or 100,000 or… we would be looking in some… we’d be looking at some… probably some very small things. We would be looking for small discrepancies in certain situations.

And the opportunities are out there, and periodically, they’re extraordinary.

But that’s something we really don’t think about anymore because our problem is handling 12 or 14 billion, or whatever it might be, coming in every year, and that means we have to be looking for very big deals and forget about what we used to do when we were very young.

Charlie?

Charlie Munger:

Yeah. I’m glad I’m through with that particular problem.

Warren Buffett:

He worked pretty hard at it when…

Charlie Munger:

Yes.

Warren Buffett:

We both did.

Charlie Munger:

Did we ever.

Warren Buffett:

Yeah, yeah. We looked under a lot of rocks, and…

Charlie Munger:

I used to make big returns on my float on my own income taxes. Between the time I got the money and I paid it to the government, I frequently made enough money to pay the tax. It was working for small amounts of money and doing it on most things.

Warren Buffett:

He didn’t tell me how to do it, though.

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Q&A with Warren Buffett and Charlie Munger: A Compilation of All Shareholder Questions and Answers from The Berkshire Hathaway Annual Shareholder Meetings

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