"Growth and value, they're indistinguishable" · Transcript

WarrenGrowth and value, they're indistinguishable. They're part of the same equation, or really growth is part of the value equation. So our position is that there is no such thing as growth stocks or value stocks, the way Wall Street generally portrays them as being contrasting asset classes. Growth usually is a chance to, growth usually is a positive for value, but only when the, it means that by adding capital now, you add more cash availability later on at a rate that's considerably higher than the current rate of interest. So there is no, we don't, we, we calculate into any business we buy what we expect to have happen in terms of the cash that's going to come out of it or the cash that's going to go into it. As I mentioned at flight safety, we're going to buy $200 million worth of simulators. this year. Our depreciation will probably be in the area of $70 million or thereabouts. So we're putting $130 million above depreciation into that business. Now that can be good or bad. I mean, it's growth. There's no question about it. We'll have a lot more simulators at the end of the year, but whether that's good or bad depends on what we earn on that incremental $130 million over time. So if you tell me that you own a business that's going to grow to the sky and isn't that wonderful, I don't know whether it's wonderful or not until I know what the economics are of that growth. How much you have to put in today and how much you will reap from putting that in today later on. Well, I think it's fair to say that Berkshire with a very limited headquarters staff, and that staff pretty old, we are especially partial to laying out large sums of money under circumstances where we won't have to be smart again. In other words, if we buy good businesses, run by good people at reasonable prices, there's a good chance that you people will prosper us for many decades without more intelligence at headquarters. And you can say, in a sense, that's growth stock investing. Yeah, if you'd asked Wall Street to classify Berkshire since 1965, year by year, is this a growth business or a value business, a growth stock or value stock? who knows what they would have said. But, you know, the real point is that we're trying to put out capital now to get more capital or money, we're trying to put out cash now to get more cash back later on. And if you do that, the business grows, obviously, and you can call that value or you can call it growth, but they're not two different categories. And I just cringe when I hear people talk about now it's time to move from growth stocks to value. stocks or something like that because it just doesn't make any sense.