Warren Buffett's Insights on Wall Street and Business

In this video, Warren Buffett gives some interesting insights about Wall Street environment, business potential, Long Term Capital Management and Solomon. He is asked by someone in the public about the benefit of not working on Wall Street. He says that is better to think about investments in a room alone with no one to bother you. If that doesn’t work, nothing will. The disadvantage is that you are over stimulated. You think you need to do something every day. The trick is to not do anything every day. The way to go is to get one good idea a year and ride it to its full potential. Wall Street makes its money on activity, while you make your money on inactivity.

Insights on Wall Street

Stay away from any environment that stimulates activity. Buffet worked on Wall Street for a few years so he speaks from experience. Someone asks Warren Buffett about Berkshire dividends. The reason Berkshire doesn’t pay dividends is simply because each dollar retained is returned into more than one dollar. Even if dividends were tax free, it would still be a mistake for Berkshire to pay dividends. So far a dollar retained has turned into more than a dollar. That is what the business is about.

Business Potential

Then, someone else asks Warren Buffett how does he determine if a business reached its full potential. Ideally, you buy businesses where you think that will never happen. He doesn't buy Coke thinking that this ever happens. He buys businesses that he is happy to own forever. He never buys a stock thinking that they will buy it for $40 and sell it for $60. People should not think about stocks any differently. That’s not how to look at a business.

Another person in the public wants to know more details about Solomon and also to talk about Long Term Capital Management. Warren Buffett says regarding to Solomon that he found an attractive form to invest. It was a mistake. He said he knew about the long term positions, regarding Long Term Capital. He didn’t know everything about the top 10 but he knew a lot of things that he thought he could make some money at the right price.

This video is Part 7 of 10 videos of this MBA Q&A Lecture with Warren Buffett. Watch Part 8 of Warren Buffett's Lecture.

Warren Buffet Quotes from this Video:

  • Will the business generate more capital over time and if the answer is yes, there is nothing else to think about
  • If you put traders in a room together with an intermediary, ultimately, they will all leave the room broke and with the intermediary having all their money.
Submitted by YouTube Trader on Sun, 04/04/2010 - 13:21

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