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Economists get very uncomfortable when you talk about virtue and vice. It doesn't lend itself to a lot of columns with numbers. But I would argue that there are big virtue effects in economics. I would say that the spreading of double-entry bookkeeping by the Monk, Fra Luce de Pacioli, was a big virtue effect in economics. It made business more controllable, and it made it more honest.
People thought they were going to make a lot of money. And then at one point, it got too hot, and the government wanted to knock it down. Trying to get it up and then knock it down, both were a mistake. And part of the reason, some people think, is that they wanted to equitize some of their companies. A healthy stock market helps equitize companies and reduce the country's debt burden.
Many of the deficiencies of our economic system could be alleviated if ways were found to broaden the ownership of the means of production... This has happened in some companies through ESOPs. Successful approaches of this sort would pay dividends in terms of employee commitment and morale. And they would not deprive anyone of his present holdings since they are based on future growth.
Part of the concept of the euro zone was to establish a common market. The banks were going to bank across all their countries like we bank across states. But that concept got killed for a whole bunch of reasons that I won't get into. That was a good concept, by the way. It may yet return, because there are huge economies of scale in banking. That's another thing people don't quite get.
A large portion of American citizens, especially people of color, have lost confidence in our criminal justice system. Many have called for appointing special prosecutors when a police officer kills or injures a civilian. If you were elected president, would you publicly support special prosecutors in these cases and what is one other thing you would do to fix our broken justice system?
I knew a guy who had $5 million and owned his house free and clear. But he wanted to make a bit more money to support his spending, so at the peak of the internet bubble he was selling puts on internet stocks. He lost all of his money and his house and now works in a restaurant. It's not a smart thing for the country to legalize gambling [in the stock market] and make it very accessible.
Projections are put together by people who have an interest in a particular outcome, have a subconscious bias, and its apparent precision makes it fallacious. They remind me of Mark Twain's saying, 'A mine is a hole in the ground owned by a liar.' Projections in America are often a lie, although not an intentional one, but the worst kind because the forecaster often believes them himself.
A different set of incentives from rising in an economic establishment where the rewards system, again, the reinforcement, comes from being a truffle hound. That's what Jacob Viner, the great economist called it: the truffle hound - an animal so bred and trained for one narrow purpose that he wasn't much good at anything else, and that is the reward system in a lot of academic departments.
Chris Davis [of the Davisfunds] has a temple of shame. He celebrates the things they did that lost them a lot of money. What is also needed is a temple of shame squared for things you didn't do that would have made you rich. Forgetting your mistakes is a terrible error if you are trying to improve your cognition. Reality doesn't remind you. Why not celebrate stupidities in both categories?
I get flack for saying [when I visit a college and give a speech], "This is a nice college, but the really great educator is McDonald's." They hate me for saying this and think I'm a slimy creature. But McDonald's hires people with bad work habits, trains them, and teaches them to come to work on time and have good work habits. I think a lot of what goes on there is better than at Harvard.
Elegant in its simplicity and practicality, Lee has distilled many powerful leadership strategies into the lessons many of us learned as children. They are no less relevant to our working lives. At its core, Creating Magic is a collection of stories that reminds us to demonstrate care and respect for every member of the team and to focus our efforts not our ourselves but on the people we lead.
I think the rap community always tells the truth. And I think that it's important that we listen to their voices so we can have a roadmap, because artists - almost every single artist in hip-hop, they paint a picture of society that's overlooked. The misogyny, the racism, the violence, the homophobia, these are things that we try to avoid instead of dealing with. All of that I see it so often.
The possibility that stock value in aggregate can become irrationally high is contrary to the hard-form "efficient market" theory that many of you once learned as gospel from your mistaken professors of yore. Your mistaken professors were too much influenced by "rational man" models of human behavior from economics and too little by "foolish man" models from psychology and real-world experience.
I've always wanted to help build a better society and build a better company, and I always wanted a healthy, vibrant company, a healthy, vibrant society. We take care of our people, we provide them with opportunity. But I've always believed business is here to serve your clients, your shareholders, your communities. If we do this well, everyone benefits. We have to do a good job for all of them.
All the equity investors, in total, will surely bear a performance disadvantage per annum equal to the total croupiers' costs they have jointly elected to bear. This is an inescapable fact of life. And it is also inescapable that exactly half of the investors will get a result below the median result after the croupiers' take, which median result may well be somewhere between unexciting and lousy.
Now the Japanese companies are more focused on that. To have two independent directors - I think it's good to have outside people look at you and think of what you could be doing better. Those are voluntary, but most of the companies told me they're going to do it. And I think it's good for them to say our returns on equity, for example, should be higher. Also, I think some could be more ambitious.
Black-Scholes is a know-nothing system. If you know nothing about value - only price - then Black-Scholes is a pretty good guess at what a 90-day option might be worth. But the minute you get into longer periods of time, it's crazy to get into Black-Scholes. For example, at Costco we issued stock options with strike prices of $30 and $60, and Black-Scholes valued the $60 ones higher. This is insane.
What constitutes a good manager in this field? He must be knowledgeable in the art with which he is concerned, an impresario, labor negotiator, diplomat, educator, publicity and public relations expert, politician, skilled businessman, a social sophisticate, a servant of the community, a tireless leader - becomingly humble before authority - a teacher, a tyrant, and a continuing student of the arts.
I mean people are sexist and racist and homophobic and violent. But I don't think of the rappers as being any more sexist or racist or homophobic than their parents. Certainly less, in all those cases, less homophobic or racist or sexist, and then less gangster than our government. It's stuff that people normally don't speak on, subjects they don't speak on, and ideas they kind of keep to themselves.
It is all of our jobs to make sure that women's rights are human rights, and that they do have a place at the table, and we all push toward equality. The leadership numbers for women in business really haven't changed since I began as CEO. There are only 21 female CEOs at Fortune 500 companies, there is only 17 to 19 percent of female representatives in Congress, there are only eight female governors.
We really began to think in different ways about our business in terms of climbing this mountain and it became very clear very quickly this was the smart thing to do. Not only did we start to generate answers for those customers, they embraced us for what we were trying to do. The goodwill in the market place has just been stunning. The rest of the business case is pretty simple. I cost it down not up.
A lot of people with high IQs are terrible investors because they've got terrible temperaments. And that is why we say that having a certain kind of temperament is more important than brains. You need to keep raw irrational emotion under control. You need patience and discipline and an ability to take losses and adversity without going crazy. You need an ability to not be driven crazy by extreme success
I also think you have to be very careful. I mean, the heritage of our company is very strong, and building some of these businesses into leading players is extremely tough. You and I can both build a trading business, and it looks like you're doing OK, and it looks like I'm doing OK. But, really, I am, and you aren't. It comes down to the quality of clients, quality of systems, quality of risk controls.
Men realize that they have work to do, to pull up women and take ownership on where we are as a society, and that they have work to do to help their female relatives and friends - to give a voice to women, not in a patriarchal way, but in a supportive way. It is all of our jobs to make sure that women's rights are human rights, and that they do have a place at the table, and we all push toward equality.
When people talk about people being left behind - middle wages have not gone up for years, and we should recognize that, and there I think we need growth and skills - but there are these other people who have been left behind. When I say out loud, "Fifty percent of inner-city schoolkids do not graduate from high school," that is a national catastrophe. We should be ringing the alarm bells. It's not fair.
'Crowd folly', the tendency of humans, under some circumstances, to resemble lemmings, explains much foolish thinking of brilliant men and much foolish behavior - like investment management practices of many foundations represented here today. It is sad that today each institutional investor apparently fears most of all that its investment practices will be different from practices of the rest of the crowd.
Believing that fundamental conditions of the country are sound and there is nothing in the business situation to warrant the destruction of values that has taken place on the exchanges during the past week, my son and I have for some days been purchasing sound common stocks. We are continuing and will continue our purchases in substantial amounts at levels which we believe represent sound investment values.
I just said let's get some poets on tv. And when they said that sounded unlikely, I made it worse. I said, no man, I want to put a bunch of black poets on stage, too. Some Latino poets who barely speak English and Asian poets who can't believe how discriminated against they are. It was luck nad being in the right place. I wasn't saying nothing somebody else wasn't saying but they wouldn't hear it from them.
At Travelers, we were much more opportunistic. It was very successful, but it wasn't an integrated financial services company. We had a property casualty company, a life company, a brokerage company. We were a financial conglomerate. It wasn't a unified, coordinated strategy of any sort. When it merged with Citi, that became a big issue; Citi, at that time, wasn't yet a fully integrated, coordinated company.
The best way to look at any business is from the standpoint of the clients. So there are these certain basic things that aren't going to change. Companies are going to have needs for equity, debt, advice, FX, and derivatives. Individuals are going to have needs for auto loans, mortgages, something that looks like a deposit account, and the ability to send money to people. Those things aren't going to change.
This is a timely and relevant initiative. The environmental challenges facing Singapore and the region are becoming more complex. Tackling them will require inter-disciplinary approaches combined with a good understanding of science, economics and governance aspects. The NUS Bachelor of Environment programme will fill a much needed gap in the current framework. NEA is pleased to be a partner to this programme.
We're starting with our own carbon footprint. Not nothing. But much of what we're doing is already, or soon will be, little more than the standard way of doing business. We can do something that's unique, different from just any other company. We can set an example, and we can reach our audiences. Our audience's carbon footprint is 10,000 times bigger than ours... That's the carbon footprint we want to conquer.
"...piling up zeros in your bank account, or cars in your driveway, won't in and of itself make you successful. Rather, true success is based on a constant flow of giving and recieving. In fact, if you look up affluence in the dictionary, you'll see its root is a Latin phrase meaning "to flow with abundance". So in order to be truly affluent, you must always let what you have recieved flow back into the world."
What really fueled me, and maybe infuriated me, is that nobody believed in me. Nobody. I don't even think I believe in myself. Part of what I was trying to do was to make the decision to go into business and find the guts to see it through. I was told that when I went in to see the bankers that I was supposed to be very muted, that I was supposed to blend in, that I was supposed to have the typical drab suit on.
Combating climate change is absolutely critical to the future of our company,Green Cooler customers, consumers-and our world. I believe all of us need to take action now. PepsiCo has already taken actions in our operations and throughout our supply chain to 'future- proof' our company-all of which deliver real cost savings, mitigate risk, protect our license to operate, and create resilience in our supply chain.
Banks don't want certain asset classes, and that's created opportunities for private equity, hedge funds, Silicon Valley. In this case I think he was referring to some of the European banks shedding assets, and the big buyers are probably not going to be big American banks. Someone like Blackstone may have a very good chance to buy those assets, leverage them, borrow up a little bit, and do something good there.
The hedge fund known as "Long Term Capital Management" collapsed last fall through overconfidence in its highly leveraged methods, despite I.Q.'s of its principals that must have averaged 160. Smart people aren't exempt from professional disasters from overconfidence. Often, they just run aground in the more difficult voyages they choose, relying on their self-appraisals that they have superior talents and methods.
We want the government to be controlled by all the people, not by the richest 1%. That's always been the first demand. That's a simple enough message, and I think it's pretty clear now, even though much of the media has been disingenuous in its coverage. We don't want the heads of the biggest industries to make all the decisions, because they're not for the people. They're for the corporations. Power to the people!
Finding a single investment that will return 20% per year for 40 years tends to happen only in dreamland. In the real world, you uncover an opportunity, and then you compare other opportunities with that. And you only invest in the most attractive opportunities. That's your opportunity cost. That's what you learn in freshman economics. The game hasn't changed at all. That's why Modern Portfolio Theory is so asinine.
My guess is the big Chinese banks will be in 100 countries by then. They will have very sophisticated operations, and they may very well have bought banks around the world in countries that allow it. I mean, I don't think the American government would allow them to buy JPMorgan. But they will be able to buy a sizable big bank in the U.S. at some point. Whether they do or not, or if it's allowed or not, I don't know.
Size will hurt returns. Look at Berkshire Hathaway - the last five things Warren has done have generated returns that are splendid by historical standards, but now give him $100 billion in assets and measure outcomes across all of it, it doesn't look so good. We can only buy big positions, and the only time we can get big positions is during a horrible period of decline or stasis. That really doesn't happen very often.
As long as we place millions of Indians at the canter of our thought process, as long as we think of their welfare, their future, their opportunities for self realization we are on the right track. For India can grow, prosper, flourish only if they grow, prosper, flourish. We cannot grow by any esoteric strategies. Our purchasing power, our economic strength, our marketplace all depends on the prosperity of our people.
Our approach has worked for us. Look at the fun we, our managers, and our shareholders are having. More people should copy us. It's not difficult, but it looks difficult because it's unconventional - it isn't the way things are normally done. We have low overhead, don't have quarterly goals and budgets or a standard personnel system, and our investing is much more concentrated than average. It's simple and common sense.
Advances in the technology of communications have proved an unambiguous threat to totalitarian regimes: Fax machines enable dissidents to bypass state-controlled print media; direct-dial telephone makes it difficult for a state to control interpersonal voice communication; and satellite broadcasting makes it possible for information-hungry residents of many closed societies to bypass state-controlled television channels.
Most artists are making as much money now as they could have made... in the heyday of Def Jam [when the] Beastie Boys would sell 10 million records or DMX would sell 6 or 7 million records. Those records are one thing, but then all the other ways to exploit the emotional relationship between artist and community is so much greater that I would guess that they're making as much or more money than they could have ever made.
We like our current shareholders and don't want to entice anyone to become one. It would help current shareholders to hear our CEOs [of the Berkshireoperating subsidiaries], but we promised them they could spend 100% of their time on their business. We place no impediments on them running their businesses. Many have expressed to me how happy they are that they don't have to spend 25% of time on activities they didn't like.
I called it Kinko’s because of my nickname — because I had this really kinky hair. If you think about it, the first thing a baby learns is ‘Googoo, gaga,’ and if you think of good businesses like Kodak, Xerox, Google, people remember consonants — which was why Kinko’s was a good name. But really I had this big head of curly hair and before being called ‘Kinko’ I was ‘Pube Head.’ So I thought Kinko’s was better than Pubo’s.
The cash register did more for human morality than the Congregational Church. It was a really powerful phenomenon to make an economic system work better, just as, in reverse, a system that can be easily defrauded ruins a civilization. A system that's very hard to defraud, like a cash register, helped the economic performance of a civilization by reducing vice, but very few people within economics talk about it in those terms.
It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a mispriced bet - that they can occasionally find one. And the wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time they don't. It's just that simple.
Public education is the key civil rights issue of the 21st century. Our nation's knowledge-based economy demands that we provide young people from all backgrounds and circumstances with the education and skills necessary to become knowledge workers. If we don't, we run the risk of creating an even larger gap between the middle class and the poor. This gap threatens our democracy, our society and the economic future of America.