Warren Buffett explains the difficulty in analyzing financial companies

Рет қаралды 61,172

5 жыл бұрын

Warren Buffett and Charlie Munger answer a couple of questions from Bill Ackman at the 2005 Berkshire Hathaway annual meeting.
Top ten investment books;
The Intelligent Investor by Ben Graham: amzn.to/2XP3Hvo
The Big Short by Michael Lewis: amzn.to/3ak7Wr0
The Dhandho Investor by Mohnish Pabrai: amzn.to/2PqQDgk
One Up On Wall Street by Peter Lynch: amzn.to/39JM2Kk
Ben Graham's Security Analysis: Sixth Edition, Foreword by Warren Buffett: amzn.to/2XNYtAh
The Little Book of Common Sense Investing by Jack Bogle: amzn.to/2UsGk8T
Common Sense on Mutual Funds by Jack Bogle: amzn.to/2Uxu2wl
Common Stocks and Uncommon Profits by Phil Fisher: amzn.to/2XOCU2v
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger by Peter Kaufman: amzn.to/2oBddW4
The Essays of Warren Buffett: Lessons for Corporate America: amzn.to/3EwbNxx
(The above are affiliate links.)

Пікірлер: 62

@joshreddy4278 4 жыл бұрын

The guy is Asking the question is BILL ACKMAN!!!!!!

@zach4216 3 жыл бұрын

hype

@KK-bc6ok 5 жыл бұрын

Bill Ackman

@kirilmihaylov1934 5 жыл бұрын

He is hedge fund manager

@notactuallytaylor 5 жыл бұрын

So nice seeing him getting advice from this legend

@dustinconner9157 4 жыл бұрын

@@notactuallytaylor Now, if he would take it..

@jtaco4101 4 жыл бұрын

@@dustinconner9157 he's doing alright for himself, lol

@bistrova97 3 жыл бұрын

The guy asking a question sounds smart, he should start a hedge fund or smt

@Sanathvarma 2 жыл бұрын

Lol ackman

@apc9714 2 жыл бұрын

@@Sanathvarma He should buy Netflix Oh well never mind

@rammohan1991 Жыл бұрын

he is a degenerate hustler

@rhythmandacoustics 2 жыл бұрын

3 years after this interview the mortgage bubble popped. The valuation of derivatives is the most challenging. It screws up the balance sheet.

@impaugjuldivmax 5 жыл бұрын

ohh... 2005 they were so young back then only 75 y.o.

@Macaxeira432 3 жыл бұрын

They wish they were 75...Munger is 96 lol 💀

@aakash0910 5 жыл бұрын

This is one of the best channels.

@The_Financial_Review 5 жыл бұрын

Thank you!

@justinjrahman 4 жыл бұрын

Agreed!

@wallstreetkindergarten2953 5 жыл бұрын

Grandpa from another mother.

@dp26385 2 жыл бұрын

We learned from the 2008 financial crisis that ratings seem to be bought for a price and are not actually a true rating. I don’t know if the laws have been changed since then to prevent this.

@kirilmihaylov1934 5 жыл бұрын

This guy is smart.... very smart

@MonsieurDee 3 жыл бұрын

That's why I don't even try with financial companies

@bethisway 2 жыл бұрын

Love this quality

@Sills71 3 жыл бұрын

Ackman was more right that most on this... and that includes Buffet...

@kmizikovsky Жыл бұрын

Why?

@bolokefe5300 9 ай бұрын

he asked the question he didnt answer dummy

@josephjones836 2 жыл бұрын

Wow, Bill Ackman is in the building.

@matthewking5612 2 жыл бұрын

His cousin dude

@ReflectionOcean 6 ай бұрын

- Understand that even AAA-rated companies can have misleading financials (0:09) - Recognize the difficulty in accurately evaluating financial companies' reserves and loan quality (1:02) - Consider the implications of derivatives and complex transactions on financial transparency (2:26) - Acknowledge that financial reporting, even by government institutions, can be flawed (6:45)

@InvestingEducation 5 жыл бұрын

Agree. Thats why we don't generally own financial companies or banks for our youtubd portfolio.

@kirilmihaylov1934 5 жыл бұрын

Problem is when something like 2008 happens finance sector is done...all big crises came from the finance sector....

@InvestingEducation 5 жыл бұрын

@@Gallant972310 I guess he has close relationships with managament like jamie dimon and BoA ceo to make sure no hanky panky is going on. The cheap prices also probably make him comfortable

@InvestingEducation 4 жыл бұрын

@Marcus Pieterse that's true. However these still hav alot of competition. Why not buy companies with little or no competition instead?

@michaelbrownlee9497 4 жыл бұрын

Coded speak for " the employees are corrupt then the reports are corrupt and our auditors are not catching it.

@davidg.2217 Жыл бұрын

BUFFETT AND MUNGER....TWO SMARTEST GUYS IN THE 🌎 WORLD...👍

@ronit.pereira7172 3 жыл бұрын

2:08 WD-40 .... GAWWWDDD why didnt i see this video just before a year ago

@Finderskeepers. 3 жыл бұрын

Great comment by Munger, governments are even worse and we all have shareholder power there.

@gordongordon98 3 жыл бұрын

2005 A.I.G. cooked books 🌚

@dustinconner9157 5 жыл бұрын

Bill Ackman, should be the example of if he can invest anyone can. Better off giving Buffett the money to invest than Ackman, IMO..

@jtaco4101 4 жыл бұрын

I'm a massive buffet fan, and a sharp fall in the market may prove him right, but he hasn't had the best results in the last 20 years.

@joehopkins3684 4 жыл бұрын

@@jtaco4101 why do people take credit for predicting short term movements? They are no better at analysing the short term direction of the market than astrologers. Buffet would only bet on the long term.

@yosangle Жыл бұрын

@@joehopkins3684 20 years is long term.

@zada7629 2 жыл бұрын

I need to break into the sand business

@warmpi 2 жыл бұрын

They didn't provide any insight for Ackman though. Though tbf he probably was just asking the question for the sake of asking.

@user-ql3ws5uz1d 4 жыл бұрын

Bill Ackman lol

@mikhailsharon4331 2 жыл бұрын

It's a hard game to play the finance game because it is in the interest of some of the players to make the facts opaque. It's not equivalence or fair but a game of deception.

@donaldhendrix1805 Жыл бұрын

be advised eddie=jackson....i am 70 percent sure!

@candyfloss184 4 жыл бұрын

Just as a business in gas will have more explosions, similarly financial institutes will have accounting shenanigans. If you don’t like the lack of good accounting practises, you are in the wrong world to invest in these accounting time bombs called financial institutions.

@pongfoong9523 4 жыл бұрын

Where this my dollar ?

@knmfujiwara 5 жыл бұрын

I don't understand Warren. If financial companies are so unstable - why invest in it at all? Certainly, you don't have to know everything for you to say you are competent but I would think that not knowing the status of a company whether it's going south or north is an indicator that you don't know what you should know. It's even worse if you assume what you think you know is what you know.

@unknowninfinium4353 5 жыл бұрын

What makes things boggling is he invested in Goldman Sachs after 2008.

@arthurangeloramos4580 5 жыл бұрын

He didn’t say financial companies are unstable. He said financial companies are “complex”. For example, an insurance company’s revenue would be the premiums from the insured, while their expense would be the present value of contingent claims in the future. The revenue part is simple (just count how many premiums were paid). On the expense side, you may think of just counting how much claims were paid out on the same period, but you still have to account for the contingent claims that will arise. This expense part requires estimation through quantitative modeling and statistical assumptions (probability of claims in the future). Given the complex nature of the expense, there’s a greater chance for errors in accounting and reporting of figures. But that doesn’t mean the business is bad, right? Warren just happened to be very knowledgeable in valuing financial companies that he knows how much room for errors he can allow on the figures he’s looking at and assess if it’s profitable or not. Hope this adds explanation.

@unknowninfinium4353 5 жыл бұрын

@@arthurangeloramos4580 Could you elaborate on how Warren is good at evaluating in simple terms so I can understand it? I want to start evaluating insurance companies too.

@ajtoce 5 жыл бұрын

Things have changed dramatically since 2005

@ajtoce 5 жыл бұрын

@@unknowninfinium4353 Look up the 4 filters

@ronniedelahoussayechauvin6717 Жыл бұрын

Scams

@tc9634 4 жыл бұрын

And now Berkshire owns all the credit ratings agencies, all the banks, all the credit card companies and all the insurance and reinsurance companies 🙄