During his recent Berkshire Hathaway Annual Meeting, Warren Buffett discussed the reason why there will always be opportunities in investing is because there’s been a great increase in the number of people doing dumb things. Here’s an excerpt from the meeting:
Buffett: I would argue that there’s gonna be plenty of opportunities, and part of the reason there are going to be plenty of opportunities… the tech doesn’t make any difference or any of that.
I mean if you look at how the world changed in the years since 1942 when I started to say, well how does a kid that doesn’t know anything about airplanes, doesn’t know anything about androgens and cars, and doesn’t know anything about electricity and all that.
But that’s not… the world changing doesn’t… new things coming along don’t take away the opportunities. What gives you opportunities is other people doing dumb things. [Applause]
And I would say that well the 58 years we’ve been running Berkshire I would say there’s been a great increase in the number of people doing dumb things.
And they do big dumb things. And the reason they do it to some extent is because they can get money from other people so much easier than when we started.
So you could start 10 or 15 dumb insurance companies in the last 10 years and you could become rich if you were adroit at it. Whether the business succeeded or not.
And the underwriters got paid, and the lawyers got paid, and that creates… that’s not on a large scale which it couldn’t be done what 58 years ago.
You couldn’t get the money to do some of the dumb things that we wanted to do fortunately.
I think that investing has disappeared so much from this huge capitalistic market that anybody can play in, but the big money is in selling other people ideas that isn’t outperforming.
And I think if you don’t run too much money, which we do, but if you’re running small amounts of money I think the opportunities will be greater.
But then Charlie and I have always differed on this subject. He likes to tell me how gloomy the world is and I like to tell him we’ll find something, and so far we’ve both been kind of right.
You can watch the entire discussion here:
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Article by The Acquirer’s Multiple.
