Ep. 3 | Warren and Charlie's 25 Years at Berkshire | Warren's dismissal of Efficient Market Theory

“Lose money for the firm, and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless.”
These were Warren’s words to the employees of Salomon Brothers Inc., a troubled investment bank of which he had been chairman for 10 months in the early 1990s.

In Episode 3, we cover Berkshire Hathaway’s years from 1987 to 1991 and discuss how Warren Buffett never minced his words when arguing over audit practices, accounting standards, investment banks, or CEOs. This is the period when Buffett first picked up a stake in Coca-Cola and Gillette. The highlight of the episode is that Buffett and Munger completed 25 years of running Berkshire Hathaway in 1990, and Buffett enlisted the mistakes he committed in those 25 years.

00:00 Introduction
00:46 The economic scene of 1987-1991 and agenda
01:59 A new insurance business
04:37 Combined ratio and float
07:51 Multiple shoe businesses
08:40 Gillette and Coca-Cola (Special SEC waiver)
10:57 Buffett criticizes accounting auditors
14:15 Buffett’s take on junk bonds
17:06 Stress in the Banking sector
18:42 The Salomon Brothers scandal
20:29 Warren hates EBITDA
22:52 Buffett criticizes stock options
25:06 Warren can neither confirm nor deny rumors
29:06 Buffett and Munger’s 25 years at Berkshire
32:33 Arbitrage and other strategies
34:30 Forever investments
35:02 Succession plan
35:56 Summary

Previous episodes:
Episode 1: Ep. 1 - Investment Philosophies of Buffett and Munger | Learn how to pick a stock
   • Ep. 1 - Investment Philosophies of Bu...  

Episode 2: Ep. 2 | How Warren and Charlie acquired businesses? Lessons on Textiles, Media, and Insurance
   • Ep. 2 | How Warren and Charlie acquir...  

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