[0:01]
WarrenGood morning. I'm Warren. He's Charlie. Five years from now, nobody will remember whether the first quarter or the second quarter was that good at Berkshire Hathaway. But what did happen in which we announced last night, which was very important, the acquisition of a large, extremely well-managed, profitable, really extraordinary company called ISCAR. I got a letter from Aiton, Warthimer, and maybe a page and a half, page and a quarter, and he told me something about this business. And sometimes character and talent sort of just jump off the page at me, and this was one of those letters. We understood that this is the right combination for us, a family company with a strong culture and a culture we love to keep. and we decided let's try it and we had a very interesting lesson from Warren. We had a very interesting lesson from Charlie and we survived both of them.
QuestionerWhat are your thoughts about the residential real estate market in the U.S., where it's headed?
WarrenAnd the markets where you're going to, in my view, you're likely to see the greatest fall off and where you've had the biggest bubble that are the ones, to be the high-end market and they tend to be ones where people have bought for investment or speculation rather than use. So I think we've had a bubble to some degree, and it's very hard to measure that degree until after it's all over. It's the same sort of training you get as a child. I mean, when you are in the home, you know, you're learning something every day by the behavior of these terribly important people, these big people that are around you. and a home has a culture, a business has a culture, at some extent a country can have a culture. And we try to do everything that's consistent with that. We try to do nothing that is inconsistent with that. And believe me, if you're a bright business, Berkshire manager, and they are bright, you know, they buy into it to start with, they see that it works, you know, and it doesn't require formal lessons or mentoring or anything of the sort. At headquarters, we aren't training executives. We find them. And they're not hard to find. You know, if a mountain stands up like Everest, you don't have to be a genius to recognize that it's a high mountain. Our country can easily handle the Social Security question. I mean, it's kind of astounding to me that a government that is quite happy to run a three or four hundred billion dollar deficit now.
[3:16]
Charliea lot about the fact they're going to have a $100 billion deficit or something in Social Security 30 years from now. I mean, there's a little bit of irony in that. It's a perfectly reasonable thing to do to pay a little more in the future to support, but I regard as one of the most successful programs in the history of our country. This is what happens when you ask a couple of guys our age how you feel about treating older people. How do you reconcile your views? with gambling versus the insurance industry. I think the distinction that usually is made is that gambling involves creating risks that don't need to be created. I mean, if you want to go out and gamble on whether or a little ball is going to fall on a wheel that's revolving, that is not something that that is created, a created risk. Whereas if you've got a home or a business, you know, on a coast, you know, on a coastal, area. The risk is there. A lot of the investment management operations, which were not ordinarily spoken of in the past in croupier terms, but the terms of a lot of private equity investment now. I think the, I think the proprietors of the of the partnerships are taking a house edge that looks a lot like the rake of the croupier and Monte Carlo, except it's bigger.
WarrenWell, people are always going to want to be entertained and they're going to want to be informed and some mix thereof. But, you know, we only have two eyeballs and we only have 24 hours a day. So if you go back 50 or 60 years and think about how people got informed or entertained then, the choices were far fewer. You had the local movie theater and you had the radio and you had newspapers. And as the years have gone by, what technology is. done has opened up a huge variety of ways of being informed faster certainly. And anytime you get more and more people competing in any given area, generally the economics deteriorate.
CharlieYeah, it's simplicity itself. It'll be a rare business that doesn't have a way worse future than it had a past.