(一段文章新浪让我分几段贴，是不是有点过份啊）

Question 17: (Audience) If BRK had a smaller asset base and was more nimble, how would they act differently with all of the volatility?

Buffett: They own stocks they like regardless of what the price has done. Cost basis has nothing to do with how you should run the fund/portfolio. You still look at intrinsic value not the selling price

Question 18: (Loomis) If it is true that Charlie and Warren are BRK’s competitive advantage and are now running a business that is tough to understand, why should someone buy BRK for the long run?

Buffett: BRK has a sustainable advantage that is not Warren and Charlie. They have a cultural advantage based on the business model. They have a different shareholder base than other companies and that is a huge advantage. They have a model that allows businesses that they buy to keep running their businesses without a lot of input from BRK. It is very tough to copy BRK. But this is not just about Warren and Charlie. People will always want to join up with BRK (as a result of the culture) no matter who is in charge

Munger: Many subsidiaries of companies are run terribly by the centralized headquarters of corporate America. This will remain ample enough to give BRK an advantage in the future

Question 19: (Audience) How do you justify buying and holding when the fundamentals of a company change?

Buffett: You sell when you lose faith in the management or they make a mistake from the beginning. Sell when the competitive advantage disappears. They buy a business for keeps. This is unless they promise to lose money indefinitely or have prolonged labor issues

When in doubt buy and hold. If you find something much more attractive then you can sell. BRK does sell stocks periodically. They ask the CEOs the interview what they would do differently if they owned 100% of the company?They often hear a lot of things people would do. There are no examples at BRK. They run it as if they own 100%

Question 20: (Quick) Since BRK does not buy back shares, would it make sense for an investor to sell his/her BRK shares and just buy what Buffett is buying?

Buffett: First off, an investor can’t buy the free float, which is BRK’s advantage. They also can’t buy the businesses they own or make private investments

Munger: It is not a bad idea to do what the question suggests

Question 21: (Audience) How will inflation affect younger generations? What is BRK doing to protect against it?

Buffett: :Inflation will affect younger generations. Even a couple points of inflation can lead to a slippery slope. Policies stimulating the business world will lead to inflation and the government will have the incentive to inflate our debt so we pay it off with less powerful dollars. In essence, the Chinese by funding our debt are paying AIG’s bonuses. Our taxes have not been raised yet. Fixed dollar investments will be hurt the most. Best protection versus inflation is your own earnings power. 2 nd best protection: a wonderful business. A business that people will patronize regardless. A business that does not include high capital investment costs

Question 22: (Sorkin) Since the newspaper/publishing business is struggling what should BRK do with The Washington Post (WPO) shares? Are there better opportunities out there? Would they buy another newspaper?

Buffett: Current environment has accentuated the problem with newspapers (erosion has been accelerated). Would not buy most newspapers at ANY price. Used to be the ultimate business, now they face unending losses. Essential nature is gone. No pricing power. Not essential for advertisers. There is nothing on the horizon that changes that

Could have sold the Buffalo News years ago but refused to do it. It is worth less now. As long as they don’t see unending losses then they will keep it

WPO has no answers for the slump in the newspaper business. Do have good education and cable businesses though

Munger: The decline in newspapers has been a national tragedy. Has been an important part of our history. Used to keep the government and companies more honest. Whatever replaces newspapers will not be as good

Question 23: (Audience) Will consumer spending changes be permanent and impact the discretionary businesses at BRK for years?

Buffett: When it comes to housing, in a few years you could see an equilibrium based on a return to normalized housing starts. This will eventually help the BRK businesses that are tied to housing.

When it comes to retail, the high end has been the hardest hit. Thinks this will last a while. People will save more. The experience of the last 2 years will last a long time.

Retail real estate industry. Tough period to be in for a long time. Shopping center business will not be the same. Centers bought with 5% capital rates will look silly

In the service industry, these companies require less capital and are better businesses. Don’t expect a quick rebound

Question 24: (Loomis) Since BRK has endorsed share buybacks for other companies but refuses to buy back BRK shares, should BRK shares be discounted because of that?

Buffett: Has not written about stock buybacks in years. Sees recent purchases as foolish. Companies spent too much. In the 1970s and 1980s this was attractive for other companies. In 2000 they thought BRK’s shares were too low and they said so. It was self defeating because the stock went up and then they could not buy any shares. Would say so again if they thought shares were that compelling

Question 25: (Audience) : Based on the macro economic picture, how has opportunity cost decision making changed?

Buffett: These decisions are much more in front of mind recently. When intrinsic value is changing fast then opportunity cost calculations are more challenging but also can be more rewarding. Saw this is September and October 2008. Needed a lot of cash around and had to sell Johnson & Johnson (JNJ) shares to get in on really attractive deals. Would do this again but it is hard to sell in huge quantities in falling markets

Question 26: (Quick) What are the deciding factors when it comes to GEICO ad spending and how do they measure return?

Buffett: Measuring return is the problem of advertising in general. Will continue to spend money on ads with GEICO. Want everyone in the US to have in their minds that they can save real money by switching to GEICO. People have to buy car insurance. They don’t like to but in order to drive they have to. Value of GEICO (by adding subscribers) goes up more than the costs of ads. Would spend $2B on ads if they could

Question 27: (Audience) How do you know when it comes to financials/banks if the model is still intact?

Buffett: WFC has the best competitive advantage of all of the big banks. Big 4 banks have different models but WFC’s is the most unique

Was very wrong on the Irish banks. Did not understand their construction exposure.

With WAMU (WM) and the other banks and institutions that have failed there were many signs that they were doing things that highly levered businesses should not be doing. They simply believed that house values could not go down. If you read the 10-K’s and 10-Q’s of these companies you could tell that their models were different from that of good banks like WFC. Has to do with a different cost of capitalThe information is there. You just have to find it.

This is a very tough assessment for people who are not familiar with the banking industry. Hard to distinguish between two banks so these are companies better left to people with experience. Black boxes are not suitable for passive investors. Produce numbers, not cash.

Munger: GAAP allows companies to improve their earnings by changing their accounting treatment of certain items. A lot of the new regulation that is coming would not be needed if accounting had done its job. Accountants should be ashamed of their profession

Question 28: (Sorkin) At first glance BYD looks like a speculative venture capital investment. Is this really a value investment?

Buffett: Does not believe there is an investment that is not a value investment

Munger: BYD is not an early stage venture capital company. Not unproven and speculative. Called what they achieved have a “damn miracle”. Achieved a leading position in lithium batteries off of a base of zero. Then they decided to go into the auto business with no experience. Now have the single best selling car in China. CEO Wang-Chuan Fu is hiring the smartest engineers in China. Charlie is not going to bet against 17,000 Chinese engineers. Would be amazed if something great did not happen. Believes this is a talented group of people who may carry the future of the world. The car we are going to see is made basically from scratch by BYD. Everything but the glass and the rubber. This is unheard of in the car industry

Question 29: (Audience) How do you view the US Dollar (USD) versus other currencies? Is inflation going to hurt the USD?

Buffett: This is unpredictable but the dollar will buy less 5-10 years from now. But this is true in the rest of the world with other currencies as well. Hard to compare the USD to other currencies. Governments around the world are running large national deficits to offset demand contraction

Munger: There has been a lot of inflation in our history. A little bit of inflation is not going to hurt us. But you want to avoid runaway inflation

Question 30: (Loomis) How do we quantify the impact of the AAA downgrade?

Buffett: BRK won’t regain the AAA soon because the agencies won’t turn around that quickly even if they should. CDS cost actually went down when Moody’s downgraded BRK. AAA spread versus AA spread is not material. Impact on borrowing cost is immaterial

They lost some bragging rights in terms of their insurance business. But no one has a better rating than they do. In Buffett’s mind BRK is an AAA.They run the company in a way that no one could be a better credit.

Credit agencies can’t quantify (in the ratings) management’s opinions and views about obligations. They can’t actually quantify the fact that no one ever has to worry about BRK being willing and able to meet its obligations

Munger: Next change from Moody’s will be an upgrade. He thinks they deserve a higher rating and he knows that MCO is smart

Buffett: If they hypothetically write a $1B equity put they get $150M in cash (the premium) and this creates a liability on the balance sheet. The guy on the other side of the trade sets up a receivable. On a mark to market basis the asset goes up and the liability goes up if the market falls. But BRK has the cash and the other guy then has to buy CDS on BRK to protect against the company not living up the contract. The more the asset goes up the more CDS they have to buy and then the CDS on BRK goes up. This is a senseless self-reinforcing process

Question 31: (Audience) Can you talk about the potential for building wind farms at Mid American?

Buffett: Mid American is the largest wind farmer in the US. Wind only blows about 35% of the time in Iowa. Iowa has been receptive and is the biggest wind using state. Wind cannot be your base load because of the unpredictability. Mid American has not raised rates in a decade in Iowa. They have been able to keep rates down through a wind tax credit and by exploiting other efficiencies. They charge a rate that leads to a good return and is fair to consumers. Company is putting in more wind farms through Pacific Corp. as well. Coming online soon in California

Munger: In anything that makes sense when it comes to the utilities BRK is going to be a leader

Buffett: Constellation was close to Chapter 11. Were about to receive a ratings downgrade that would have forced them to post collateral and would have forced them into bankruptcy

Buffett: and Mid American were there that day with a firm cash offer. This is BRK’s competitive advantage: the ability to write a check the day they see an attractive deal. Also have managers that can deliver

Question 32: (Quick) In regards to the Bank of America (BAC) and Merrill Lynch deal, does protection of the banking system justify a lack of disclosure? What would BRK if they were put in a similar position?

Buffett: This was a very fragile situation. Merrill would likely have gone under without the deal. Can see why the government did not want the deal to blow up

Munger: You can criticize original contract legitimately. But, once signed, the Treasury acted properly as well as BAC

Buffett: The deal was done over a weekend. Between Saturday and Sunday BAC got 2 separate fairness opinions on the deal. Paid $10M for each. Those turned out to be pretty worthless

Question 33: (Audience) What has the net effect (or future effect) of the government interventions on BRK? Have the companies been helped or hurt?

Munger: New rules are going to come out and it is not clear what those rules will entail. The lobbying pressure from the financial institutions has been quite strong and effective. But the climate of disdain for financial institutions will limit some of the lobbyists’ impact. BRK will have to adapt as needed

Buffett: Wall Street is thrashing around. People do not like Wall Street right now. People have had to worry about things such as money market funds that they have never had to before. It is hard to satisfy the fury without high profile people going to jail or being punished. Anger right now is sort of amorphous and without a specific group of villains it is aimed broadly at Wall Street and the banks. Believes this will eventually result in legislation. Some of which could affect BRK

Question 34: (Sorkin) Due to BRK’s size the returns are not likely to be as strong going forward as they have been in the past. Do they target a specific return or acceptable rate?

Buffett: Impossible for BRK to average 20% a year again. He would be satisfied beating the S&P 500 by a few percentage points each year. 10% better than the S&P just can’t be achieved now because of their size. Book value will continue to be a good proxy for and barometer of intrinsic value

Munger: Understand that they can’t multiple book value per share at the same rate they used to. But believes that the best days of BRK are still ahead. BRK will make a large and positive contribution to society in the future

Question 35: (Audience) How do you look at investments in China? How do the Chinese keep the purchasing power of their reserves?

Buffett: Will uate Chinese opportunities as they see them. They can’t own more than 24.9% of an insurance company in China. GEICO faces a limitation on ownership. BRK does a lot of things that are exportable.

Should see opportunities in buying companies in the future. China can’t get rid of their dollar denominated assets. The US trade deficit requires that China at least hold some dollars. Going to build their dollar reserves as long as they have a trade surplus. Have focused on bonds and are now not too happy about the prospects for the purchasing power of those bonds. They have a right to be concerned in his eyes

Munger: If he was the Chinese finance minister he would be doing and saying the same things. But they are advancing so fast that some loss of purchasing power will only hurt them trivially. US and China should be close friends because they are tied at the hip. China will be very hard to compete with in the future

Question 36: (Loomis) Can you give us a post mortem on the General Re deal?

Buffett: Post mortems are good to do internally but they should not always be public. This is not done at enough companies. Should not blame the company you bought because your projections were wrong. So far this deal has worked out well after some initial trouble. BRK has made some dumb decisions. Did not realize that the General Re they bought was not the General Re of 15 year prior. Reserve and underwriting policies had changed. Now it has been resurrected by BRK’s management. Now it is the company that Buffett thought it was. Believe is has a great future

Munger: It is important to turn lemons into lemonade. It is not pleasant, pretty or easy. Ordinary managers could not have turned General Re around