QuestionerCan you please elaborate your views on risk? You clearly aren't a fan of relying on statistical probabilities, and you highlight the need for $20 billion in cash to feel comfortable. Why is that the magic number, and has it changed over time?
WarrenYeah. Well, it isn't the magic number, and there is no magic number. I would get very worried about somebody that walked in every morning and told us precisely how many dollars of cash we needed to be, you know, secure to three sigma or something like that. Charlie and I have had a lot of, we saw a lot of problems develop in an organization that expressed their risks in sigma. And we even argued sometimes with the appropriateness of how they calculated their risk. And they truly horrible.
QuestionerYeah, and they were a lot smarter than we were. That's what was depressing.
WarrenBut we, we We both have the same bent of mind whereby we think about worst cases all the time. And then we add on a big margin of safety and we don't want to go back to go. I mean, I enjoy tossing those papers in the other room, but I don't want to do it for a living again. So we undoubtedly build in layers of safety that others might regard as foolish. But we've got 600,000 shareholders, and we've got members of my family that have 80 or 90% of their net worth in the company. And I'm just not interested in explaining to them that we went broke because there was a 100 to 1% chance that we would go broke. And there was a remaining probability was filled by the chance of doubling our money. And I decided that that was just a good gamble to take. We're not going to do that. It doesn't mean that much. We are never going to risk what we have and need for what we don't have and don't need. We'll still find things to do where we can make money, but we don't have to stretch to do it. And as my job, and Charlie thinks the same way. I mean, we don't have to talk about it much, but it's our job to figure out what can really go wrong with this place. And, you know, we've seen September 11th and we've seen September of 2008. And we'll see other things of a different nature, but similar impact in the future. And we not only want to sleep while of those nights, we want to be thinking about things to do with some excess money we might have around. So it is, if you're calibrating it in some mathematical way, I would say it's really, I would say it's really dangerous. I could give you a couple of examples on that, but unfortunately, I've learned about them on a confidential basis, but some really great organizations have had dozens of people with advanced mathematical training and making about it daily, making computations, and they don't really, they don't really get at the problem. So it's a the top of the mind always around Berkshire and your returns in 99 years out of 100 will probably be penalized by us being excessively conservative and one year out of 100 will survive when some other people won't.