WarrenI would like to just spend just a couple of minutes giving you a little perspective on how you might think about investments as opposed to the tendency to focus on what's happening today or even this minute as you go through. And to help me in doing that, I'd like to go back through a little personal history. And we will start, I have here, I've here in New York Times, of March 12th, 1942. I'm a little behind on my reading. If you go back to that time, it was about just about three months since we got involved in a war, which we were losing at that point. The newspaper headlines were filled with bad news from the Pacific, and I've taken just a couple of the headlines from the days preceding March 11th, which I'll explain. It's kind of a momentous day for me. And so you can see these headlines. We've got slide two up there, I believe. We were in trouble, big trouble, in the Pacific. There's only going to be a couple months later that the Philippines fell, but here, we were getting bad news. We might go to slide three for March 9th. I hope you can read the headlines anyway. The price of the paper is three cents, incidentally. The, and let's see, we've got March 10th up there. a slide. When I get the way there's advanced technology of slides, I want to make sure I'm showing you the same thing that I'm seeing in front of me. So anyway, on March 10th, when again, the news was bad, full clearing path to Australia, and it was like it, the stock market had been reflecting this, and I'd been watching a stock, a stock, called City Service Preferred Stock, which had sold at $84 the previous year. It had sold at $55 the year before, early in January, two months earlier. And now it was down to $40 on March 10th. So that night, despite these headlines, I said to my dad, I said, I think I'd like to pull the trigger. And I'd like you to... buy me three shares of city serves prefer the next day. And that was all I had. I mean, that was my capital accumulated over the previous five years or thereabouts. And so my dad, the next morning, bought three shares. Well, let's take a look at what happened the next day. Let's go to the next slide, please. And it was not a good day. The stock market the Dow Jones industrials broke 100 on the downside. Now, they were down 2.28%, as you see, but that was the equivalent of about a 500-point drop now. So I'm in school wondering what is going on,
[4:10]
Warrenof course. Incidentally, you'll see on the left side of the chart, the New York Times put the Dow Jones Industrial average below all the averages they calculated. They had their own averages, which have since disappeared, but the Dow Jones has continued. So the next day, we can go to the next slide, and you will see what happened. The stock that was at 39, my dad bought my stock right away in the morning because I'd asked them to my three shares. And so I paid the high for the day, that 38 and a quarter, was my tick, which is the high for day. And by the end of the day, it was down to 30. 37, which was really kind of characteristic of my timing in stocks that was going to appear in future years. But it was on what was then called the New York Curb Exchange, then became the American Stock Exchange. But things, even though the war, until the Battle of Midway, looked very bad. And if you'll turn to the next slide, please, you'll see that The stock did rather well. You can see where I bought it 38 and a quarter. And then the stock went on actually to eventually be called by the city service company for over $200 a share. But this is not a happy story, because if you go to the next page, you will see that I, well, as they always say, it seemed like a good idea at the time. So I sold those, I made $5 on it. It was, again, typical of behavior. But when you watch you go down to 27, you know, it looked pretty good to get that profit. Well, what's the point of all this? Well, we can leave behind the city service story. And I would like you to, again, imagine yourself back on March 11th of 1942. And as I say, things were looking bad in the European theater as well as what was going on in the Pacific. But everybody in this country knew America was going to win the war. I mean, it was, you know, we'd gotten blindsided, but we were going to win the war. And we knew that the American system had been working well since 1776. So if you'll turn to the next slide, I'd like you to imagine that at that time, you had invested $10,000, and you'd put that money in an index fund. We didn't have index funds, but you, in effect, bought the S&P 500. Now, I would like you to think a while, and do not change the slide here for a minute. I'd like you to think about how much that $10,000 would now be worth if you just had one basic premise, just like in buying a farm, you buy it to hold throughout your lifetime and independent. And you
[7:38]
Warrenlook to the output of the farm to determine whether you made a wise investment. You look to the output of the apartment house to decide whether you made a wise investment if you buy an apartment, small apartment house to hold for your life. And let's say instead you decided to put the $10,000 in and hold a piece of American business. And never look at a another stock quote, never listen to another person to give you advice or anything on the sort. I want you to think how much money you might have now. And now that you've got a number in your head, let's go to the next slide and we'll get the answer. You'd have $51 million, and you wouldn't have had to do anything. You wouldn't have to understand accounting. You wouldn't have to look at your quotations every day like I did that first day. I'd already lost $3.75. since by the time I came home from school. All you had to do was figure that America was going to do well over time, that we would overcome the current difficulties, and that if America did well, American business would do well. You didn't have to pick out winning stocks. You didn't have to pick out a winning time or anything of the sort. You basically just had to make one investment decision in your life. And that wasn't the only time. to do it.