I picked up a copy of Alice Schroeder’s The Snowball – Warren Buffett and the Business of Life* yesterday. I had just barely begun reading the book when I came across a section that I wanted to share with you. It’s a talk that Mr. Buffett gave at the Sun Valley ’99 conference, which was attended by LOTS of techies and the newly-rich from the internet bubble. Here’s some tidbits from his talk:
“…I would like to talk today about the stock market,” he said. “I will be talking about pricing stocks, but I will not be talking about predicting their course of action next month or next year. Valuing is not he same as predicting.
“In the short run, the market is a voting machine. In the long run, it’s a weighing machine.
“Weight counts eventually. But votes count in the short term. And it’s a very undemocratic way of voting. Unfortunately, they have no literacy tests in terms of voting qualifications, as you’ve all learned.”
“…What you’re doing when you invest is deferring consumption and laying money out now to get more money back at a later time. And there are really only two questions. One is how much you’re going to get back, and the other is when.
“Now, Aesop was not much of a finance major, because he said something like, ‘A bird in hand is worth two in the bush.’ But he doesn’t say when.” Interest ratesthe cost of borrowingBuffett explained, are the price of “when.” They are to finance as gravity is to physics. As interest rates vary, the value of all financial assetshouses, stocks, bondschanges, as if the price of birds had fluctuated. “And that’s why sometimes a bird in the hand is better than two birds in the bush and sometimes two in the bush are better than one in the hand.”
The talk goes on for several more pages in the book. The author mentions that the techies didn’t much care for Warren’s speech because they represented something new and exciting. In other words, they were smarter than everyone else. We all know what happened in 2000! Those pages alone are worth the price of the book!
Anyway, to celebrate the release of the book, I thought it would be cool to give away a copy. If you’re interested in winning a copy, leave a comment below. All I ask is that you remember my two rules:
1. You must be a resident of the U.S. or Canada, andâ€¦
2. You can only enter ONE TIME!