"blah blah blah blah blah blah blah blah, look at how smart I am asking this really good question..." -the guy asking the question

just buy warrens 13f :)

Lmao I had the same exact thought

His partner offet the relieve of annoyance

or a video game

😭😭😭

Many thanks 🥳

Thank you!

I was about to comment the same. Pls follow it, it was absolutely crazy to listen to d question

bruv what kind of sense does it make to listen to an answer without knowing the question

@@willemvanoranje1533 You pay attention to what they're answering, you'll get it.

Thank you 👑 I was scrolling halfway through the comments as he made his question

It's a speech, not a question

Yes, many. Most in fact. The vast majority.

Exactly.

2003 annual meeting

@@investmentknowledge2011 can you provide the time. Afternoon or noon and time also.

If interest rates are 6%, you use 6%

@@thomasmatthews478 yeah you can use 6% but then you need to pay much less than that price (or in other words increase margin of safety)

Giovanni Cadore I believe there’s a video where warren says adding a few percent to the percentage yield of the treasury bonds ie the interest rate/discount rate doesn’t make sense considering the aim of the discount is to find the value of future cash flows today. The only thing that diminishes the value of money over time is the annual inflation rate which is reflected in the percentage yield of the treasury bills (because new money is only introduced into society via the interest of treasury bonds ie an investor buys a bond, the government gets paid the price of the bond and the investor gains credit and earns a certain amount of interest (NEW MONEY ADDED INTO CIRCULATION)). He only does the DCF in his head if he believes the future cash flows to be obvious, and if they are OBVIOUS, the only thing that should diminish the value of these cash flows (theoretically) is the inflation rate. Add the cash flows that were discounted, divide by the number of years to get the average cash flow you will receive annually, divide by the market cap (ie the price you as “the owner” purchased the company for) to get your percentage annual rate of return. I think his margin of safety is a 12% rate of return, so divide the annual average cash flow withdrawal by 0.12 to get the required market cap for the investment to return 12% (hopefully). The required market cap can then be divided by the number of outstanding shares to get the intrinsic value (roughly) but remember warren doesn’t even do a calculation, the cash flow return relative to the price (market cap) generally must be so obvious it doesn’t require it. Overall I think the margin of safety is just buying the stock at a price considerably below this intrinsic value which will return his required 12%. I did this for each of the stocks he’s bought in the last 5 years and nearly every one projected to return over 12%.

Pay particular attention to the fact he was buying Apple heavily from 2016-2018 then stopped 2019(because it became overpriced)

@@thomasmatthews478 yes that makes sense. So you suggest to use the interest rates of us treasury across all stocks and then demand a margin from that. I think its a good idea and you explained it very well :) my only concern is when the interest rates are this low because it pushes the intrinsic value quite high

Or because high risk-adjusted returns with some fancy strategy leads to raising a lot of capital. Some massive funds with large AUMs doing some high risk adjusted returns but low real returns. Obviously collecting handsome fees on those AUMs.

@Joël Hey thanks for the feedback. ROI then not ROIC?

I assume Buffet discounts LEVERED free cashflows (meaning cashflow after all debt services/interest payments have been paid). The good reason for this assumption is that he and Munger have stated on multiple occasions that WACC (weighted average costs of capital), which compute a discount rate for UNLEVERED free cashflow based on the share of equity and debt in the business multiplied, respectively, by the required returns for debt and equity make no sense to them and that they have never heard an intelligent discussion about them. Thus, 10 percent means that the discount rate they use to discount the projected levered free cashflows in the future is 10 percent per year compounding annually. If you determined this way that a company is worth exactly its current market capitalization, this company would be able to return to you 10 percent per year on average indefinitely (either through dividends or through stock price increases). This is slightly simplified, but essentially what it means.

Not his first investment.

10% cagr of stock return.

On equity

Pre tax

Guinness world record!

Leonardo Purba Both Buffett and Munger are talking about opportunity costs among other things. Going for a walk may appear to cost nothing, until you consider the opportunity forgone to use that time earning money. Everything you do has an opportunity cost. Economics is primarily about the efficient use of scarce resources, and the notion of opportunity cost plays a crucial part in ensuring that resources are indeed being used efficiently.

Alex Vanzijl cool post

​@@alexvanzijl6796 cool Thanks