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Warren Buffet's Kid Show [video]

40 points by cgherb911 17y ago

davidw 17y ago
There's a bit about "buying at a fair price", which brings to mind the bit about the devil being in the details...
- byrneseyeview 17y ago
  It's more of a meditation than a specific instruction. This works for other kinds of advice: "Do the right thing?" doesn't help much, but saying "Am I doing the right thing?" at the right moment can save you a lot of grief.
  - bumbledraven 17y ago
    Actually, it is pretty specific. In essence, Buffett says you should first figure out what it would be worth to own the entire company (the "intrinsic value"; calculating this is something of a black art) then divide that by the number of shares the company has issued. Only if the current price per share is significantly lower than that (the "margin of safety") should you think about buying.
    - byrneseyeview 17y ago
      Which is about as specific as "First you should figure out what it is that cures cancer, and then you should have people with cancer do that thing." Calculating the intrinsic value of a business is very, very difficult -- which is why Buffett is so rich from being good at it.
- 10ren 17y ago
  You're absolutely right. The cartoon only mentions qualitative factors. If the business has been doing well, and those factors are present (and other explanations are absent), then it's a reasonable bet that those factors are the reasons for the the business's success. You can then examine each of these factors in isolation and assess how likely they are to continue in future. With these qualitative factors settled, you can look at the numbers, especially the rate of growth of profit, and assume that they will continue (taking into account how sure you are of this), and calculate what the business is worth based on extrapolating that growth. Extrapolation is easy. As a contrast, consider companies during a boom. Explosive growth, even in profitability, but... Another contrast is high tech companies, which can be extraordinarily profitable, but their long-term success has proven hard to predict. Buffett says he won't invest in something unless he understands it - as a programmer, this is great to hear from someone who is so incredibly successful. Now you know the secret. When your grandkids ask you how you became so rich, you can tell them: "it was all because of 10ren". BTW: Thanks for reminding me of all this! Now is the best time to buy stocks. They're on special.
RiderOfGiraffes 17y ago
Warning: Auto-starting video. From http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html > If you submit a link to a video or pdf, > please warn us by appending [video] or > [pdf] to the title.
- cgherb911 17y ago
  thanks for the info!
breck 17y ago
I'll admit it: I will watch this cartoon. Warren Buffett is, next to Taleb and a few others, my favorite modern thinker, and the clip seems to do him justice. It's ironic how his ideas are so simple they can be accurately presented in cartoon form. It's like reading the Intelligent Investor: business/investing isn't too complex, the hard part is executing on simple premises while keeping your emotions in check for the long term.
- biohacker42 17y ago
  What fascinates me about Warren Buffett... actually it's not him it's everyone else. He takes 0 and 25 and the 25 only if he makes a profit beyond what a conservative investment would. Something like 8% per anum, not sure, the exact number is not important anyway. But your typical hedge fund takes 2 and 20, that's even if they do nothing or lose money. Now here's where it gets interesting. There are literally hundreds of those funds. Doesn't that suggest a massive pent up demand for investment?
  - BrentRitterbeck 17y ago
    It's a quarter of everything over six percent. Source: How to Pick Stocks Like Warren Buffett, pg. 11.
    - falsestprophet 17y ago
      Yeah that was his performance fee when he was managing money through the Buffet partnerships. Now he takes 0 and 0 as Chairman and CEO of Berkshire Hathaway. His compensation is primordially in the appreciation of his (substantial) share of the company.
      - BrentRitterbeck 17y ago
        Considering the amount shares he owns, I'd rather be the Chairman and CEO of Berkshire than running a hedge fund. In addition, the float from the insurance companies under his umbrella is more than most hedge fund managers will ever manage.
vaksel 17y ago
am I the only one who thinks this is pretty stupid? Kids won't watch something like that(horrible acting/irrelevant topic), and adults gain nothing from the cartoon format. As long as they are getting Buffet, why not create a more concrete series. I dunno, how about each episode he'd take a company to examine for investment, and talk about all the pros and cons that he sees, while teaching the rest of us about what to look for in our own investments
- jakarta 17y ago
  Did you actually watch the video? He showed a pretty decent way to analyze a candy business. Omaha Candy may be a fictional company, but it's easy to see he's discussing See's Candies (which Berkshire owns). In the video he even mentions that the candy business is good because the maintenance capex is relatively low (he didnt phrase it like that, but that's what it is) and that profits really only need to be plunged into advertising (basically an example of a high ROIC business since its not very capital intensive). He's mentioned all of this before in the Berkshire Hathaway shareholder letters -- this is kind of the same thing but in cartoon form. So as a teaching tool, it's pretty good. If you really want more, dig up his partnership letters.
  - vaksel 17y ago
    yes I watched the video, do you honestly see kids sitting down and watching that? And if the show will be watched almost exclusively by adults, why use the cartoon format?
    - sketerpot 17y ago
      Maybe they'll watch it if a teacher forces them to. Sometimes teachers just want to relax and let a video take over for a while. (Their students will still probably find the cartoon format patronizing, but then again people used to watch Captain Planet, voluntarily.)
- andreyf 17y ago
  You're not the only one. But I suppose not many around here have kids, so your point about how utterly boring this is for them isn't going to stick.
aaronsw 17y ago
More at http://www.youtube.com/watch?v=kVvyVVoLH8U http://www.youtube.com/watch?v=kVvyVVoLH8U for those who just can't look away.
goodkarma 17y ago
I doubt I would have watched that when I was a kid, but I will DEFINITELY watch it now. The cartoon format makes it kind of goofy, but the content is great.

40 points by cgherb911 17y ago

davidw 17y ago

There's a bit about "buying at a fair price", which brings to mind the bit about the devil being in the details...

byrneseyeview 17y ago
It's more of a meditation than a specific instruction. This works for other kinds of advice: "Do the right thing?" doesn't help much, but saying "Am I doing the right thing?" at the right moment can save you a lot of grief.
- bumbledraven 17y ago
  Actually, it is pretty specific. In essence, Buffett says you should first figure out what it would be worth to own the entire company (the "intrinsic value"; calculating this is something of a black art) then divide that by the number of shares the company has issued. Only if the current price per share is significantly lower than that (the "margin of safety") should you think about buying.
  - byrneseyeview 17y ago
    Which is about as specific as "First you should figure out what it is that cures cancer, and then you should have people with cancer do that thing." Calculating the intrinsic value of a business is very, very difficult -- which is why Buffett is so rich from being good at it.
10ren 17y ago
You're absolutely right. The cartoon only mentions qualitative factors. If the business has been doing well, and those factors are present (and other explanations are absent), then it's a reasonable bet that those factors are the reasons for the the business's success. You can then examine each of these factors in isolation and assess how likely they are to continue in future. With these qualitative factors settled, you can look at the numbers, especially the rate of growth of profit, and assume that they will continue (taking into account how sure you are of this), and calculate what the business is worth based on extrapolating that growth. Extrapolation is easy. As a contrast, consider companies during a boom. Explosive growth, even in profitability, but... Another contrast is high tech companies, which can be extraordinarily profitable, but their long-term success has proven hard to predict. Buffett says he won't invest in something unless he understands it - as a programmer, this is great to hear from someone who is so incredibly successful. Now you know the secret. When your grandkids ask you how you became so rich, you can tell them: "it was all because of 10ren". BTW: Thanks for reminding me of all this! Now is the best time to buy stocks. They're on special.

RiderOfGiraffes 17y ago

Warning: Auto-starting video. From http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html > If you submit a link to a video or pdf, > please warn us by appending [video] or > [pdf] to the title.

cgherb911 17y ago
thanks for the info!

breck 17y ago

I'll admit it: I will watch this cartoon. Warren Buffett is, next to Taleb and a few others, my favorite modern thinker, and the clip seems to do him justice. It's ironic how his ideas are so simple they can be accurately presented in cartoon form. It's like reading the Intelligent Investor: business/investing isn't too complex, the hard part is executing on simple premises while keeping your emotions in check for the long term.

biohacker42 17y ago
What fascinates me about Warren Buffett... actually it's not him it's everyone else. He takes 0 and 25 and the 25 only if he makes a profit beyond what a conservative investment would. Something like 8% per anum, not sure, the exact number is not important anyway. But your typical hedge fund takes 2 and 20, that's even if they do nothing or lose money. Now here's where it gets interesting. There are literally hundreds of those funds. Doesn't that suggest a massive pent up demand for investment?
- BrentRitterbeck 17y ago
  It's a quarter of everything over six percent. Source: How to Pick Stocks Like Warren Buffett, pg. 11.
  - falsestprophet 17y ago
    Yeah that was his performance fee when he was managing money through the Buffet partnerships. Now he takes 0 and 0 as Chairman and CEO of Berkshire Hathaway. His compensation is primordially in the appreciation of his (substantial) share of the company.
    - BrentRitterbeck 17y ago
      Considering the amount shares he owns, I'd rather be the Chairman and CEO of Berkshire than running a hedge fund. In addition, the float from the insurance companies under his umbrella is more than most hedge fund managers will ever manage.

vaksel 17y ago

am I the only one who thinks this is pretty stupid? Kids won't watch something like that(horrible acting/irrelevant topic), and adults gain nothing from the cartoon format. As long as they are getting Buffet, why not create a more concrete series. I dunno, how about each episode he'd take a company to examine for investment, and talk about all the pros and cons that he sees, while teaching the rest of us about what to look for in our own investments

jakarta 17y ago
Did you actually watch the video? He showed a pretty decent way to analyze a candy business. Omaha Candy may be a fictional company, but it's easy to see he's discussing See's Candies (which Berkshire owns). In the video he even mentions that the candy business is good because the maintenance capex is relatively low (he didnt phrase it like that, but that's what it is) and that profits really only need to be plunged into advertising (basically an example of a high ROIC business since its not very capital intensive). He's mentioned all of this before in the Berkshire Hathaway shareholder letters -- this is kind of the same thing but in cartoon form. So as a teaching tool, it's pretty good. If you really want more, dig up his partnership letters.
- vaksel 17y ago
  yes I watched the video, do you honestly see kids sitting down and watching that? And if the show will be watched almost exclusively by adults, why use the cartoon format?
  - sketerpot 17y ago
    Maybe they'll watch it if a teacher forces them to. Sometimes teachers just want to relax and let a video take over for a while. (Their students will still probably find the cartoon format patronizing, but then again people used to watch Captain Planet, voluntarily.)
andreyf 17y ago
You're not the only one. But I suppose not many around here have kids, so your point about how utterly boring this is for them isn't going to stick.

aaronsw 17y ago

More at http://www.youtube.com/watch?v=kVvyVVoLH8U http://www.youtube.com/watch?v=kVvyVVoLH8U for those who just can't look away.

goodkarma 17y ago

I doubt I would have watched that when I was a kid, but I will DEFINITELY watch it now. The cartoon format makes it kind of goofy, but the content is great.