[0:00]
WarrenYou look at a corporate stock, it's obvious you can buy any maturity of government bond you want. So one opportunity cost of buying the stock is to compare it with the bond. But you may find that half the stocks in America you're so fearful about or no so little about or think so poorly of that you'd rather have the government bond. So on an opportunity cost basis, they're taken out of the filter. Now you start finding corporations where you like the stocks way better than government bonds. You've got to compare them one against the other. And when you find one that you regard as the best opportunity that you can understand as the best opportunity, now you've got one to buy. It's a very simple idea. And it uses nothing but the most elementary ideas from economics or game theory. It's just, it's child's play as a mental process. Now, it's hard to make the business appraisals, but the mental process is a cinch. If Charlie and I were forced, told we had a choice of buying stock A, B, C, or D, and all 2,500, or 3,000 or whatever may be listed on New York Stock Exchange, or buying a 10-year government bond, and we had to hold the stock for 10 years or the bond for 10 years, probably at least 80% of the cases we'd take the 10-year government. You know, in many cases, because we didn't understand the business well. enough elsewhere. Secondly, we may understand it and still prefer the 10% government. So, but we would measure everything that way. And, I don't know, would you come up with 80% or where, Charlie?
CharlieDesert Island, 10 years. Get to fondle a stock certificate or fondle a government bond? Which one are you going to choose? I think life is a whole series of opportunity cost. You know, you've got to marry the best person who is convenient to find it'll have you. Investment is much the same sort of a process. I knew we'd get in trouble after lunch.