QuestionerWith the historical returns on common stocks, dating back to the 1800s, coming in at about 7%, pair that together with the concept of regression to the mean and statistics, do you not think that we're in a very dangerous period?
WarrenThe answer, we never know. I mean, we, in terms of what markets will do, we, I don't think that the Coca-Cola company is in a dangerous position. you know, in a dangerous era, or Gillette is in a dangerous era, or McDonald's or Wells Fargo, or whatever, but, or C's Candy or the businesses we own in their entire, Kirby, whatever it may be. Whether valuations are too high gets back to the question that we said, we talked about earlier. If for businesses in aggregate, they keep earning very high returns on equity and interest rates stay where they are, we are not in an overvalued period. If it turns out that these returns are not sustainable or interest rates go higher, we will look back and say, this was a high point, but at least for a while. But we have no notion on that. And we really don't think about it, basically, because we don't know. You know, our job is to focus on things that we can know and that make a difference. And if something can't make a difference or we can't know it, you know, we write that one off. So we're looking for the ones.
QuestionerBut Warren, you would expect average returns from stock market. index type investing to regress somewhat down.
WarrenOh, I don't think the, I don't think the, I don't, I don't think you'll get the investment result from owning the S&P over the next 10 years that you've gotten over the past 10 years. I would, I would, if someone wanted to put some real money on that, they would find a taker with me. That's very unlikely to happen. That's not predicting a crash. No. Just saying that the guaranteed result from the next 10 years is almost certain to be less than that of the last. It wouldn't surprise, I mean, this is in no way of predictive. I mean, it wouldn't surprise us in the least if stocks average 4% a year, you know, for the next 10 years. That doesn't mean they will, or we don't know the number. But that would not be a surprising outcome. And it wouldn't bother us particularly either.