Warren Buffett says the dumbest stock he ever bought was Berkshire Hathaway.
in 1962 he was running a small partnership of about 7 million dollars and started buying shares of a dying textile company that kept closing mills and buying back its own stock.
in 1964 its boss, Seabury Stanton, asked what price he would sell at. Buffett said 11.50 and gave his word. a few weeks later the offer arrived at 11 and 3/8, an eighth of a dollar less.
he got angry, bought control of the company instead and fired Stanton.
then he spent 20 years trying to save a business that could not be saved, and by his own estimate that choice cost Berkshire about 200 billion dollars.
the lesson he took from it is simple to say and hard to follow: buy something good at a fair price, not something cheap at a bargain price.
the full story is in the clip below, and the moment he describes opening that letter is worth it on its own.
In 1991 Warren Buffett saved Wall Street, and it took him one Sunday.
Salomon Brothers had about 150 billion dollars of assets on just 4 billion of equity, one of its traders had been cheating Treasury auctions,
and that morning the government banned it from bidding. lawyers were already drafting bankruptcy papers.
Buffett called the Treasury Secretary, and by the afternoon the ban was partly lifted. the firm paid 290 million dollars and survived.
a firm that broke the rules got a second chance within hours. nobody calls the Treasury when your card charges you 22 percent.
the article below lists those quiet charges one by one, and the video is Buffett talking to students about the rules he lived by.
This is the floor of the New York Stock Exchange around 1980, when the biggest stock market on earth still ran on shouting, phones and paper.
there were exactly 1,366 seats on that floor, and owning one was the only way to trade there yourself. the price kept climbing for the next 25 years, until a single seat sold for 4 million dollars in December 2005.
within weeks the seats stopped existing. the exchange went public, every seat holder became a shareholder, and the right to trade turned into a yearly license sold at auction for roughly 50,000 to 74,000 dollars.
most of the jobs in that room were later handed to computers, and the orders those people shouted now get matched in a fraction of a second.
it is under three minutes and worth watching with the sound on, because nothing on Wall Street sounds like this anymore.
This is Wall Street in 1979, a few years before the biggest bull market in history, filmed the same summer a magazine declared stocks dead.
A film crew stopped people on the street and asked for one word answers about computers, power and something called the information society. not everyone knew what that meant.
Asked who holds the power, one of them names a single company. it is IBM, at the time one of the most valuable companies in America. today the biggest companies are worth trillions and IBM is nowhere near the top.
The Dow ended that year at about 838, with inflation at 13.3 percent. today it is above 51,000.
Stay until the last man. he runs money on Wall Street, he is the only one allowed to talk for more than a word, and you hear exactly what he thought about the future.