WarrenMorning. I'm Warren, he's Charlie. We work together. We really don't have any choice because he can hear and I can see.
QuestionerYou talk a lot about the importance of selecting terrific managers. I'd just like to understand what your three most important criteria for selecting them.
WarrenWe are looking for people that have a passion that extends beyond their paycheck. every week or every month for their business. Beyond this passion, we're looking for intelligence, we're looking for energy, and we're looking for integrity. If they don't have, you know, if they don't have the last, the first two will kill you, because if you hire somebody without integrity, you really want to be dumb and lazy, don't you?
QuestionerI don't know where we stand in terms of the residential housing cycle, and it has different behavior characteristics simply because people live in the houses in many, great many cases. So, well, in the not behave necessarily the same as other markets. But when you get prices increasing at far, far greater rates than construction costs or inflationary factors, sometimes there can be some pretty serious consequences.
WarrenWe probably worry more about the downside than just about any manager you can find and collectively, you know, it's Armageddon around here every day. But that's, you know, we We care about that. We've never used a lot of borrowed money. Back when I started out, I mean, I had $10,000, but I just didn't want to borrow any significant amount of money. There's no reason to. You know, we're living fine. We were living fine when I had $10,000. And the idea that you risk what you need and is important to you for something that you don't need and is unimportant, it's just craziness. And we try to run Berkshire that way. You know, it takes the interests of parents and frankly, it takes the interest of parents. of the well-to-do in the school system to keep a first-class school system. I've said that to some extent, a good public school system is a lot like virginity. It can be preserved but not restored.
QuestionerWhat has been the single best investment of your careers?
WarrenProbably in terms of what it's done already and where it's going to go over time, probably the single best investment was the first half of GEICO, which we purchased for $40 million. Now, the second half costs us $2 billion. I'm glad I didn't buy it in thirds. Now, the search expenses that brought us Ajit Jane, now there was an investment that really
[3:04]
Warrenpaid a dividend. I can think of no higher return investment that we've ever made. It was better than that one. And I think that's a good life lesson. In other words, getting the right people into your system can frequently be more important than anything else. Yeah, we have one of our directors who was, who's been removed twice from compensation committees of other corporations because he had the temerity to actually question whether the compensation arrangement being suggested was the appropriate one. I mean, it's not, it's, it's, it's, it's, it's being put on the comp committee of American corporations, as I've said, they're not, they're looking for chihuahuas and, and not Great Danes and Berbermans and, uh, yeah, and I hope I'm not insulting any of my friends that are on comp committees.
QuestionerYou're insulting the dogs.
WarrenOne of the interesting things about investment is that there's no degree of difficulty factor. If you're going to go diving in the Olympics and try and win a gold medal, you get paid more in effect for certain kinds of dives than others because they're more difficult and they properly adjust for that factor. But in terms of investing, there is no degree of difficulty. If something is staring you right in the face and the easiest decision in the world, the payoff can be huge. And we get paid not for jumping over seven foot bars, but for, for stepping over one foot bars. And what advice would you give a younger person if they wanted to invest in the stock market? If that's where your interest lies and you start young and you read a lot, you're going to, you're going to do well. I mean, there are no, there are no secrets in this business that only the priesthood knows. I mean, you know, we do not go into, we do not go into temples and look at tablets that are only available to those who have passed earlier tests or anything. It's all out there in black and white. It's a simple business. It's not, it requires qualities of temperament way more than it requires qualities of intellect. I mean, if you've got more than a hundred and twenty-five IQ, you can throw away the rest of the points or give them to your other members of the family or do something because you don't need it in investing.