(bell rings) – [Announcer] Ladies and gentlemen, please welcome to the stage Lindsay Bruinsma, an MBA candidate at the McDonough School of Business, John J. DeGioia, President of Georgetown University, Brian T. Moynihan, CEO of Bank of America, and Warren E. Buffett, Chairman of the Board and CEO of Berkshire Hathaway (applause) – Welcome Good evening Thank you all for being here I must say I am beyond excited to be here, and that I am in complete awe of the leaders on this stage and before me We have our own Dean Thomas of the McDonough School of Business, Georgetown President, Jack DeGioia, Chief Executive Officer of Bank of America, Mr. Brian Moynihan, and though he really needs no introduction, Mr. Warren Buffett (applause) My name is Lindsay Bruinsma I am a second year MBA candidate at the Georgetown McDonough School of Business, with a focus on global business strategy and COS marketing Over a decade ago in 2003 I was fortunate to attend the International Relations Program here at Georgetown University for high school students, and it had a significant impact on what I wanted to achieve in my career I’ve actually been trying to get back here ever since And so two years ago when I decided to pursue my MBA, Georgetown’s McDonough School was unquestionably it I believed then, even more now I believe this, that Georgetown inspires students to positively sculpt the way that business and society interact Programs such as the Global Social Enterprise Initiative, founded by my new friend, Professor Bill Novelli, have very much made this belief a reality I am a product of GSEI and our wonderful sponsor Bank of America, who partnered with The One campaign last year to provide the opportunity for five students to apply business skills towards social and economic impact Last summer I interned with Red as a global strategy fellow, Red being a COS marketing organization founded by Bono and Bobby Shriver under The One campaign umbrella Through this opportunity I was able to implement business solutions in a non-profit setting And with Red I was able to work with global iconic brands to take on the HIV and AIDS epidemic in sub-Saharan Africa through a COS marketing model I would like to personally thank Mr. Brian Moynihan for creating this opportunity as well as Ms. Anne Finucane of Bank of America, and the entire GSEI family including Executive Director Ladon Manteghi I would also like to introduce and thank our President, Jack DeGioia, for his unwavering embrace of such programs as GSEI and for his continued dedication to community and service Since 2001 President DeGioia has encouraged engagement at both a local and global level Through this he has given students not only the opportunity to follow in the footsteps of some very impressive leaders, but he has given them the opportunity to actively shape the new face of global leadership And with that please join me in introducing Georgetown University President, Dr. Jack J. DeGioia (applause) – Thank you very much, Lindsay, well done Well thank you very much, Lindsay, for that introduction and for the example that you set through your commitment to social enterprise We’re very proud of you and your fellow students who are engaged in this very important work Well it’s my pleasure to have this opportunity to welcome you all to Georgetown this evening for a very special conversation between Warren Buffett and Brian Moynihan We’re deeply grateful to them both for sharing their unique experiences and insights with us this evening

I’ll have the opportunity to more formally introduce our guests in just a few moments, but first I wish to express my gratitude to some of the individuals who helped to make this evening possible I’d like to begin with the Dean of the McDonough School of Business, David Thomas, for his exceptional leadership, and for fostering such important initiatives as the Global Social Enterprise Initiative I’d also like to thank Bill Novelli, a distinguished professor of the practice at the Business School and the founder of GSEI His commitment to social enterprise, corporate responsibility and social change has enriched our community here at Georgetown, and he will moderate our Q&A a little later this evening The values at the core of the work that we examine here tonight are defining characteristics of the tradition that animates our University community, a tradition rooted in our Catholic and Jesuit identity, a tradition that compels us to create and share knowledge and service to our world As a university we have been guided by this tradition since 1789, and now for over 224 years we’ve been building upon and reimagining it in new and innovative ways The GSEI, through it’s work to cultivate leaders who focus on both economic and social value, is a concrete example of our commitment to living this tradition in our contemporary world As you know tonight’s conversation is made possible by Bank of America, and I’d like to express my deep gratitude to two individuals A proud Georgetown parent Anne Finucane, Global Strategy and Marketing Officer at Bank of America, for her work in bringing us together this evening And again, Brian Moynihan, Bank of America’s CEO, for his leadership and support of this extraordinary event Under Mr. Moynihan’s leadership Bank of America has deepened it’s commitment to community development, philanthropy, and environmental and sustainability initiatives This includes a ten-year $1.5 trillion community lending and investing goal, the largest ever by a financial institution Since 2007 Mr. Moynihan has also led Bank of America’s Global Diversity and Inclusion Council, a group that is dedicated to creating an inclusive work environment And the company is consistently recognized as having one of the best environments in corporate America Tonight he will be engaging in a conversation with one of the world’s great business leaders and philanthropists, Warren Buffett Mr. Buffett, it’s an honor to welcome you back to Washington D.C Many people may not know this, but this is a return home of sorts for Mr. Buffett He attended high school just a few miles away at Woodrow Wilson High while his father was a member of Congress Renowned and respected for his business and investment acumen at the company that he has led since 1965, Mr. Buffett is also well known for his deep commitment to philanthropy and social enterprise He co-founded, along with Bill and Melinda Gates, the Giving Pledge, an effort to encourage the wealthiest Americans to donate at least 50% of their net worth to philanthropy About five years ago he pledged 99% of his Berkshire Hathaway shares to charity, and last year the shares he donated went to foundations that worked to fight poverty, elevate the status of women and girls around the world, and support early childhood education, among many other causes This led to him being ranked number one in 2012’s Philanthropy 50, a list of the nation’s top philanthropists compiled by the Chronicle of Philanthropy He has also given generously over the years to help support the work of the Bill and Melinda Gates Foundation, which focuses much of its efforts on global health and global development So Mr. Buffett, on behalf of our entire University community, it’s an honor to welcome you to Georgetown We’re so pleased you could join us this evening And it’s now my privilege to present to you all for our conversation this evening, Mr. Warren Buffett and Mr. Brian Moynihan (applause) – So good evening, Georgetown It’s a pleasure to be here For those of you that were here last year, you know that we had Bono come talk to you about what he did And Anne Finucane helped us arrange that through all the hard work she does for our company And so this year I was thinking about with Anne, who we should bring in, I actually talked to Bono

And he said, “Well if you want to bring a real rock star, “bring Warren Buffett in because here’s a guy who has “done more for philanthropy than I can ever do”, and etc So last year we brought you a rock star This year we brought you a real rock star (applause) So what we’re gonna do is I’m gonna ask Warren a series of questions over 25-30 minutes, and then we’ll take your questions in the crowd and let the students have a chance to ask Warren about his experiences And I’m gonna start a little bit where the President left off, which is this is your hometown This is part of your hometown So what are your best memories about being around Georgetown? – Well, I delivered papers at Georgetown Hospital 66 years ago, and I like, I developed this affinity because in the hospital people tipped (laughing) My regular customers, the ones that knew me, never tipped But I would go to the hospital, and one of the things that they would do, they would give me cash tips, but they also would tell me if they were a woman that had given birth to a baby that was, we’ll say eight pounds, 11 ounces, they would whisper that number to me And the numbers racket was very big in Washington at that time, and they thought they were giving me this terribly valuable information, the exact time in which the baby was born or something, and I was supposed to bet on that number in the numbers racket that day So I have a lot of memories of Georgetown I was here during World War II, which was really a fascinating time to be in Washington And my dad being in Congress, it was really a window on an extraordinary time in America And of course, at that time we were probably more united than at any time in my lifetime about a common goal I mean, that was the time when people like Bobby Feller and all the athletes, the day the war broke out went down and enlisted, and people really did voluntarily And a very high percentage played by the rules in terms of gasoline rationing and sugar rationing and meat rationing and all that We all bought savings bonds at school to help out the troops, so it was quite a period – [Brian] Well, somewhere along there you started investing, – You bet – and changed the nature And I’ve read stories that you started investing at 13 Whether they’re true or not, but somewhere around that – It was 11 (laughing) – What created a fascination with investing? – It took me five years I had to save $120 It took me five years to get the $120 to buy a stock, three shares of City Service Preferred when I was 11 I just, my dad originally was in the investment business He really wasn’t very interested in it, but I would go down on Saturday morning, and he had these books there in the office And I read all those, and I went the Alma public library, and I read every book on investments in the Alma public library by the time we moved to Washington And then when we got here I had the Library of Congress (laughing) – [Brian] Did you get through all those? – Oh, I read everything, and I just found it fascinating And incidentally I find it fascinating today I mean, it’s an activity, you know, if you’re a baseball player or something, your legs may go or something But my legs have long gone, but it doesn’t make any difference in what I do so I literally have as much, I always have had fun working, but I has as much fun now as I’ve ever had in my life And I work with people I love doing what I love, and it just doesn’t get any better than that – So the quote is that you tap dance to work every day – I tap dance to work – And so what makes you do that? – Don’t ask me to demonstrate (laughing) It was nice to get that round of applause at the start, but I’ve learned that crowds now applaud at the start because I’m 83, and they’re not sure I’ll be around at the end of the talk (applause) – I’ve shared enough dinners with you to know that you have more energy than anybody I know Let’s switch to a little bit on the philanthropy side So President DeGioia talked about the Giving Pledge How did you come up with the idea with Bill, and how are you doing on it? – Well, we’re doing great And it was three or four years ago Bill and Melinda and I were out in California and talking And I’m not exactly sure how it came up, but we decided to call or write David Rockefeller and ask if he would host a dinner in New York for about 16 or 18 people, just to talk about philanthropy And Oprah Winfrey came, and Mayor Blumberg was there, and it was a private dinner And I started having these people talk around the table as to how they developed their philosophy of philanthropy It must have taken us two and a half hours or so to get around I mean, people were really interested in it So Bill and I were at that dinner We decided that maybe there would be a possibility of taking this passion which these people had shown

and going to other people that had a great deal of money, and see if we could develop something where people would pledge at least half their net worth And we now have about 115 people I’ve been dialing for dollars I call these billionaires up, and sometimes they tell me how they can’t do it And I decided it, I tell them I’m gonna write a book on how to live on $500 million dollars because apparently there’s this great need (laughing) They just can’t seem to figure out how to do it, and they need help But it’s been very rewarding And I received a letter from one woman She and her husband had over $10 billion dollars And she sent me a tie, she sent me two ties, and she sent me this handwritten note that said that they hadn’t really faced it It’s a little like facing your own mortality or something to start making that plan, and that’s tough for people sometimes And so she and her husband had changed things, and over half of that $10 billion was gonna go to philanthropy They do tend to postpone the decision, so I tell these people I call, you know, the last will is what counts, but I tell them, you know are you, if I’m talking to some 70-year-old I say do you really think your decision-making ability is going to be better when you’re 95 with some blond on your lap, or now (laughing) So let’s get on board, fellas – I assume that convinces them maybe the 70-year-old decision is better at that point, right? – Well, Bill has gotten people round the world because he travels more than I do, but what we’re hoping is people do pick up on norms I mean when I was young I read about Carnegie and Rockefeller and different people Bill did too, and you do pick up behavior from those who come before And we’ve collected letters from every one of these people that are up on our website givingpledge.org, and I think they’re worth reading They’re pretty remarkable And of course, what we really wanna do is get the younger people, like Mark Zuckerberg has joined us, for example, and he obviously is going to appeal to a much wider group than I would So we are, we hope it becomes this gospel of wealth that Andrew Carnegie came up with 100 years or so ago That’s influenced all kinds of people Well, we’ve got better stories than than you know on these letters, so I just hope it moves Now I don’t think, I wanna emphasize one thing Nobody in our group has given away a dollar that in any way affects how they live I mean I have much greater admiration frankly for the person who drops five dollars or one dollar in a collection plate on Sunday where it makes a difference in whether they go take their kids to a movie, or whether they go to eat out or something of the sort They are actually giving up something that has utility to them I am giving up nothing that has utility to me I have everything in the world I want that can be bought by money So I have a whole bunch of stock certificates They have no utility to me, and they can possibly have enormous utility to other people in vaccines or education or all kinds of things So the people that give up something that actually can have utility to their family and give that to some other person so it has utility to them, those are the people I really think deserve the kudos But it’s still nice to go where the money is It’s the Willie Sutton approach So if we can get, if we can work on polio or something like that, and it takes big contributions, then we wanna go after it – So the unique part of what you’ve done is with Bill and Melinda and their foundation, and on the one hand how you’re doing it, and secondly that you’ve gone and said whatever the number will be, but almost all your wealth is going– – All my Berkshire – And so talk about the Gates relationship and why you chose them as opposed to creating your own foundation there – Well, originally my wife and I planned when we were in our 20’s that when we had everything we needed, we would use the rest for society And I thought she would outlive me She was younger, and women live longer, and then she died in 2004, so I had to come up with a different plan And if you’ve read Adam Smith and the specialization of labor, you know that if you’re good at one thing, you’re not necessarily good at another, you know to get the person, to use your talents where they’re most useful, and get other people to give their talents So you know, when my wife had babies, I mean I went to an obstetrician I didn’t deliver them myself When I get a toothache, I go to a dentist So I wanted to go to people who were very good at giving away money, and who were younger, energetic, smart, and had the same objectives in philanthropy that I did And the basic principle of the Gates Foundation is that every human life has equal value And if you start with that as your basic assumption, then a lot of things flow from that And Bill and Melinda, as well as my children because I have foundations for each one of my three children that are of

significant size, and you can read the letters I wrote them up on the Berkshire Hathaway website I do not direct them to do anything, but I do tell them to swing for the fences I tell them if they succeed at everything they do in philanthropy, they’re doing the wrong things because the important things are the tough ones, and you’re gonna fail in some of those But I have got much younger people, every energetic people, common objectives, and they work for nothing so, (laughing) that’s not a bad deal, Brian – That stretches the money a long way – [Warren] Yeah, absolutely – And the way I read it, it said you require them to actually move the money out the other side– – They gotta spend it And when I die all of the money has to be spent within 10 years after the estate is closed because I do not think that I can pick out some little great great grandchild yet to be born, you know, just because he has the right name of Buffett or she has the right name, and they will be the best custodians I mean, there will be plenty of philanthropists 50 years after I die to take care of the problems in 50 years, but I want the money to get spent promptly And I don’t believe in trying to control things from the grave I mean, I like to think I can think outside the box, but thinking outside of that particular box (audience laughs) – That may take a lot of philanthropy to figure that one out Recently I read an article about East Lake and Tom Cousins So this week as many people know the PGA finishes up its tournament at East Lake, which is a golf course in Atlanta And the story I read about the development is that you’ve now helped Tom Cousins in the development work he does with communities Talk a little about that because that’s a little different than this type of thing – Yeah, well it’s the same theory of loving back people who are putting their own time and energy and who are successful into a project that worthwhile Tom Cousins is a remarkable man that lives in Atlanta, just extraordinary And he took this terrible, terrible neighborhood called East Lake in Atlanta, and against a lot of community opposition and everything It was crime ridden and nobody did well in school and everything else, and he decided he had to apply a holistic approach to it And you couldn’t just attack this thing or that thing So he worked for probably 10 years to develop this entirely new community out of this total disaster And then Tom and I talked about it, and I said Tom, you know everybody is gonna say that that can only be done because you’re Tom Cousins, and you’re living in Atlanta, and you’ve done this So he and I and a fella named Julian Robertson, but primarily Tom, decided to see if we could replicate this in other communities And it seemed to me and Tom that New Orleans was a great one to do it in They’ve been wrapped by Katrina and everything So we’ve taken it to New Orleans where we’ve got hundreds of people, and it’s mixed income type community We do not want to have it with everybody being subsidized We wanna create a new kind of community where people of different races, different economic conditions work together and play together And it’s been successful in New Orleans We went to Indianapolis, it’s been successful there, and we’ve got about 11 more towns we’re working on now So Tom Cousins has really come up with something He had an op ed in the Wall Street Journal about a week ago describing this, but he’s a fantastic human being And when you get a chance to join forces with somebody as high quality as that and energetic and smart, and putting his own funds in it, you just gotta jump at the chance – That’s true Let’s switch to the economy now, what’s going on, and move from philanthropy to the economy, that you create your wealth off of, that you can do these wonderful great things with So what do you see in the economy and what you’re seeing in your companies or operating companies from an investor’s point of view? – Well business has come back very well from five years ago when the panic hit in It was a panic like nobody’s ever seen Whatever you think about it, it was worse I’m dead serious about that We were right on the edge of the cliff And fortunately I give enormous credit to both Ben Bernanke and Hank Paulson and Tim Geithner, and frankly even though I didn’t vote for him, never voted for him, President Bush You know, I don’t know how many of you have studied economics, but in Adam Smith they talk about comparative advantage, and Gains talked about animal spirits and all those people But President Bush really came out with a great economic insight of all times, and he did it in 10 words in September of 2008 He went out of there from the White House and he said, “If money doesn’t loosen up, this sucker could go down.”

(audience laughs) And I mean that goes right up there Tear down those plaques of Adam Smith And he backed up those fellas, and so it, we’ve come back from it But business has come back You know, a lot of companies are having record profits, including many of ours, and the American populace as a whole has not come back Inequality is getting wider The Forbes 400 which just came out showed aggregate wealth of the Forbes 400 is two trillion dollars You go back 20 years and that was $300 billion, so it’s up six or seven for one It’s different people to some extent, but this is the top Three hundred billion to two trillion, and if you read the paper today you’d have seen that the median income is the same place it was in terms of real purchasing power from 1989, it hasn’t changed So the inequality is getting wider The rich are doing extremely well, extraordinarily well, and business is doing well Business profit margins are terrific compared to the record historically Business returns on tangible equity are terrific But most, a great many people in our country, if you take the bottom 20% of households, that’s 24 million households or something like that, housing close to about 60 million people, you know the top level is $22,000, and I don’t wanna try to live on $22,000 with a couple of kids So we’ve got an economy that is delivering $50,000 of GDP per capita, and we’ve got an awful lot of people that aren’t living well So we have learned how to turn out lots of goods and services, but we haven’t learned as well how to have everybody share in the bounty that we have – So how do you think, is that that we just gotta grow out of it to provide– – No, we’re growing, we’re growing I mean if you take even two percent a year, if you think about it, people feel very unhappy with two percent a year, but the population grows one percent a year, so that means one percent per capita real growth That means in 20 years, a generation, there’s a 20% gain in GDP per capita That’s not bad in a generation, but the question is how it gets distributed This country will, this system works, you know In my lifetime, I was born in 1930 I was conceived in 1929 because my dad was a stock salesman, and after the crash he didn’t have anything to do (audience laughs) So I look back with great fondness on the 1929 crash But since 1930, since I was born in 1930 real GDP per capita has increased six for one Just think of that, six for one I mean you went centuries when nothing happened for people And this country works I mean, I consider the luckiest person on a probabilistic basis that ever lived is the baby that’s born today in the United States It is a fabulous country, and the market system works, all kinds of things, but we do have to, in my view we have to make sure that everybody participates to a reasonable degree We don’t want equality results, but we also want a base level that’s satisfactory for our people – So you talked about the, George Bush’s economic statement about it could go down What do you think the lessons are over the last couple of cycles that you’ve seen from an investor standpoint? We’ve got a lot of young kids out there You’ve lived through multiple cycles in the 50, 60 years plus you’ve been investing, 70 years investing What are the lessons, and what, these are young people What should they take away? – The lessons are that people will continue to make the same mistakes they’ve made I mean humans, and it doesn’t correlate to IQ particularly When they get greedy, and we had this huge bubble with the most important asset the American public has, housing So you had a huge bubble, and something that you could borrow heavily against So you could run a margin account in effect on a house instead of stocks, and the conditions got very lax And so when that bubble popped, but people came into that gradually When they get fearful, it happens all at once I mean when everybody wants, when people get scared, they all wanna leave at one time And we had them all wanna leave at one time, and that’ll happen again It’ll happen with a different set of circumstances, but the human animal will keep behaving pretty much the way it has in the past So we will have periodic recessions We’ll have an occasional panic, which all recessions don’t come from panics But the good news is if you look at the 20th century, in the 20th century we had two world wars,

we had the Great Depression, we had the flu epidemic, we had the cold war, we had the atom bomb, you name it The Dow Jones average went from 66 to 11,497 With all these terrible things happening supposedly at various times America works, and when I bought my first stock when I was 11, that was in the spring of 1942 And that was a couple months after Pearl Harbor, and we were getting clobbered in the Pacific at Corregidor and Bataan, I mean the death march of Bataan In the European theater the blitz of England was on, and the Dow was at about 100, but just look at where we are now I mean, the country really works The trick is, it seems to me the obligation of a society as prosperous as ours is to figure out how nobody gets left too far behind – That was interesting because last year Bono’s speech was a lot about America is a society of dreams, and you can accomplish more here And it was actually one of the best speeches about the optimism America could have by a person who’s not American by birth And I know you carry that optimism, so after all this what makes you most optimistic for the next decade about America, next couple of decades? – Well just imagine, you know, 1789 Just go back just a few hundred years There wasn’t anything here, I mean in this country And Sir Christopher Wren I think that designed St. Paul’s Cathedral is buried there And there’s a little plaque there, and it says, “If you seek my monument, look about you.” Well I say in America, if you seek America’s monument, look about you This country has all come about in a few hundred years We had less than four million people when we became a country China had 300 million people at that time Europe had about 75 million They were just as smart as we were They worked just as hard as we did They had natural resources that were similar to our And yet we ended up with a quarter of the world GDP a few hundred years later We’ve got something that works, and we don’t wanna mess than up We wanna figure out what do we do with this abundance better as we go along, but you don’t have to worry about the system working But you will have periodic recessions, and you will have an occasional panic brought on by something that who knows where it comes from And the thing to remember at that time, I wrote an op ed piece in the New York Times in the fall of 2008, and I said that the country will come back It’ll go through a big recession and everything, but it’ll come back, and it’s coming back Don’t ever worry about America Tell ya, you’re in the right place – So you’ve been famous for your investment strategy basically that follows the opposite side of principles, invest when the chips are down and ride it up That’s served you well So what’s your favorite time that you were able to accomplish that? When you got somebody down and moved– – Well, I always think my favorite time’s gonna be tomorrow But it’s always been fun And there’s a company here in Washington called Geico, you know, and I first got exposed to that in 1950 I was 20 years, I was 19, or it was ’51, I’m sorry I was 20 years old, and I came down here, and I came down on a Saturday because I’d learned that my professor who I worshiped at Columbia named Ben Graham was the Chairman I got down there, and the door was locked when I went to the building because it was Saturday And I pounded on the door, and some janitor let me in, and a marvelous fellow named Lorimer Davidson spent four hours with me teaching me all about insurance And he helped me so much in my, you’re gonna get, you’re gonna help by some wonderful people in life It’s a great thing to remember later on when you get to be my age that all the help you’ve received from different people because nobody does it alone Obama got in trouble when he said that in the campaign, that nobody does it by themselves Nobody does do it by themselves We all sit in the shade of trees that were planted by others, so it’s obligatory I think to plant a few trees ourselves if we’ve had good luck It’s been a great ride, but it’s not over – When did you actually buy Geico? When did you invest in Geico the first time? – Well, Geico I bought, I met Lorimer Davidson when I was finishing up at Columbia, and then I started selling securities when I got out And I went out to my Aunt Alice, and my Aunt Alice would have bought anything from me And so she bought 100 shares of Government Employees Insurance I was the first stock I ever sold And then a lot of years passed, and Mr. Davidson was very kind to me in a variety of ways, but I went in different directions And then in 1976 the company got in big trouble because they miscalculated their reserves, and they were going broke And so I came back here, and I bought a third of the company in the market in a very short period of time

And then in 1995, by now my third had become a half because they’d repurchased their shares And I went out to see Mr Davidson who was out in Bethesda He was 96 or 97, and he had a bunch of stock in Geico with no cost basis because he had held it forever And I said Davey, if I make an offer for this company for cash, you’re gonna pay a big tax And of course, if you die with the stock, you don’t have that tax and you get a stepped up basis So I’m not gonna make this offer unless it’s alright with you And he said to me, he said, “Warren, I’ve hoped for this “all my life”, and so we bought the rest of the company He was a great man – That was terrific Well, let’s turn it over to some student questions So they’re gonna put a microphone out here, and we’ll have you queue up and let you have questions for Warren All right, why don’t you, let’s take the first question Tell us who you are, and ask away Go ahead, sir – Hi, I’m Cassin Tavalali, a senior in SFS I was wondering if you have any stock tips for any of the students today? (audience laughs) I mean, we’re all trying to make a little living – I didn’t think they taught that at Georgetown (laughing) The best investment I ever, well I bought a book in 1949 by a fellow named Ben Graham called The Intelligent Investor I don’t remember what I paid, but aside from what I paid for my two marriage licenses, that was the best investment I ever made And it’s very important to have the right framework You need to have an approach to investing that’s sound And Graham’s approach is simple, but some people adopt to it, which I did immediately, and most people don’t But if you have the right philosophy, you will find opportunities as you go through the next 20, 30, 40, 50 years And frankly you’re most likely to find them in periods like five years ago when we were having the panic I mean, stocks sell at silly prices from time to time Most stocks will at one time or another sell at very silly prices And it doesn’t take a high IQ to figure out that they’re cheap, but it does take a temperament that’s willing to step up and actually act I tell people if they’re going in the investment business, if you got 160 IQ, sell 30 points to somebody else because you won’t need it (audience laughs) I mean, I figured out very early you don’t have to be that smart in this business, which is fortunate, but you do have to have the right temperament And you have to be able to ignore what other people are saying and simply look at the facts and decide is this stock, which is selling at X, worth two X? And occasionally you’ll find things like that And when you don’t find them, you don’t do anything So that’s my generalized stock tip No names – I’ll make it simpler Just buy Bank of America, and you’ll be set (laughing) It worked all right for him – Yeah, that’s right, that’s right (applause) – Next question – Good afternoon My name is Nicholas Walker I’m a sophomore in the SFS as well So Mr. Buffett, in the past you invested in China, South Korea and Israel, and recently your partnered with 3G Capital and Jorge Paolo Lemann from Brazil over for the Heinz deal Does this mean are you tempted to venture into the Brazil market next? – I didn’t get the question – The question, you did the Heinz deal The question is are you gonna invest in Brazil next? – Oh, I don’t know where I’m gonna invest next That’s what makes my job interesting I mean, I’m not kidding I mean, if you went out and played golf, and every drive went in the hole, you’d give up The game wouldn’t be interesting What’s interesting is when you get in the rough, and you have to come out, and a few things like that So I love the fact that I don’t know what I’m going to do next You mentioned the Israel investment In 2006 in the fall I got a letter from a fellow, and I never heard of him, and I never heard of the company he was talking about But he said my name is Eitan Wertheimer, and I wanna tell you a little about my company ISCAR The letter was a page and a half long, and he said if he sold the company, the family sold the company, the only company they wanted to sell it other was Berkshire Hathaway

And if I was interested they’d be glad to come over from Israel and explain it to me And it was, it just jumped off the page that this was an interesting idea So I emailed them, and they came over very shortly, and we bought the business We handed them four billion dollars for 80% of a company where I’d never seen it or anything Eitan kept saying you gotta come over to Israel and see the plants and everything You won’t believe how wonderful they are And I said Eitan, I don’t go to Council Bluffs, Iowa (laughing) I am doing find in Omaha And he said no, no, you gotta see I said no no, I don’t I said we can make a deal without seeing it And he said if you buy the company, will you come and see it? I said if we buy the company, I’ll come So we bought the company, and I went over there, and it’s true I’ve never seen plants like this It was the greatest operation I’ve ever seen And Eitan said to me, he said you know, that’s why I wanted you to come over to see these things I said listen Eitan, if I’d come and seen them, I’d have paid more money (laughing) So we have a wonderful partnership with the people in Israel, but I don’t know tomorrow Our partnership with the people in Brazil, with Jorge Paolo Lemann and his associates, they are sensational people I got to know Jorge Paolo when I was on the board of Gillette with him, and the opportunity to buy into a wonderful business like Heinz, and to be partners, and they’ll do all the heavy lifting, they run the place with Jorge Paolo and his associates, I mean it’s just a great opportunity for us And I don’t know what the opportunity will be tomorrow But Jorge Paolo, last December I was going out to Boulder, Colorado where he had a group that met And he said I think I’ve got an idea that might interest you when I get out there And so I went out there, and as we came back on the plane he explained what he was thinking about in terms of Heinz, and I said count me in And I’ll tell you one other thing which was quite impressive about him After I said that and went a little further on the thing, he sent me one-page governance description of how it would work between the two of us, and he sent me a very brief description of what he thought would be a fair deal for both of us I didn’t have to change a word I mean, those are the kind of people you like to associate with – [Brian] Next question – Hi You mentioned that people will make the same mistakes in terms of the boom-bust cycle, but there have been several recent financial developments such as the creation of derivatives, which has since exploded recently, and you once called derivatives weapons of mass destruction Now that derivatives are a $700 trillion dollar industry, do you see this as setting the stage for the next financial crisis? – It’s very hard to tell You know, we’ve enacted Dodd-Frank And if you look at what happened in September and October of 2008, there were some extraordinary things done The Federal Reserve poured $85 billion dollars into AIG, and if they hadn’t, our world would be very different Hank Paulson guaranteed money market funds at a time when 30 million Americans with money market funds were panicking, and when $300 billion in three days had gone out of the non-government money market funds, 125 of it had gone back into the government, $300 billion That was almost equal to the deposits of Wells Fargo or Wachovia at the time, which were then two separate institutions Both of those authorities have essentially been, I don’t think they can do that under Dodd-Frank I don’t think that Bernanke could do what he did, and I don’t think that Paulson could do what he did When there’s a panic, the only thing that will stop it basically is when somebody who has the ability and the will says I’m gonna do whatever it takes And basically that’s what Bernanke and Paulson and finally Congress in kind of a reluctant way, but said to the American public, and you could believe it If Bernanke said I’m gonna do whatever it takes, nobody knows what section 13.3 of the Federal Reserve Act, and it wasn’t probably meant to do what he did with it, but he did it And the same way with the, they call it the exchange stabilization fund of the Treasury Nobody, it was enacted back in 1934 Nobody dreamt it would be used to take care of money market funds But you had these strong characters who had the ability to print money in the case of Bernanke, and they said we’re going to do whatever it takes, and the President was behind them That is the way you end a real panic And I worry actually that, you know Congress doesn’t like to give anybody that much authority, and it bothers them that the Fed has all this authority, or that Paulson acted as he did in Tarp And I tip my hat to them, and I’m not sure,

there will be another panic Where it comes from, who knows, but when that times comes the question will be are the people who have panicked, who have frozen, who have caused the economic engine to stop, will they believe and come right back and be doing something? And I’m not sure whether the, what’s been enacted is a plus or a minus in that regard Regardless the country will come through, but we, it’s very hard to write regulations that will keep people from acting foolishly, particularly when acting foolishly has been proven very profitable over the preceding few years It’s just the way it works Humans, they all think they’re Cinderella at the ball And they think as the night goes along, the music gets better and the drinks flow and everything, and they think they all think they’re gonna leave a two minutes to 12 And of course, there’s no clocks on the wall, and they’re still dancing, so it’ll happen again But buy when it happens (laughing) – [Brian] Next question – [Warren] I’ll be buying – Hi, my name’s John Ruff I’m from Georgia, so I’m familiar with the work over at East Lake – [Warren] Oh, that’s great – But you talked a little bit about income inequality, but if you look at class mobility rates, and if you look at average household income for middle class families measured with inflation, a lot of these rates have been trending down since the 1970s And some may argue that it’s harder today for the middle class than it’s been in 30 years And I was wondering if you had any more thoughts on how a rising tide can life all boats, and not just the yachts – Yeah, well that’s what’s happened It’s like John Kennedy talked about, a rising tide lifting all yachts And the yachts have been lifted like I say for the top 400 from $300 billion to two trillion just in the last 20 years There is a very I think structural problem as a market system gets more and more specialized If you go back to an egrarian society like we had a couple hundred years ago with most people working on a farm, most people fit most job requirements That, as the world has become more and more specialized I think we keep moving away from that So a market system will not pay well for a significant percentage of society They aren’t needed to keep GDP itself going up, and people at the top And I think government has to address that I think it’s, I sometimes toss out to students this proposition Imagine that it’s 24 hours before you’re born And you’re sitting there, Johnny or Joanie, we don’t know yet, and you’re in the womb, and a genie comes And the genie says, John or Joanie, you strike me as a remarkable potential human being, and I’m going to give you an enormous responsibility I’m going to let you decided the world, how the world is going to work into which you’re going to emerge You can decide on the economic system, the social system, the political system, you design it And whatever you design, that’s going to be the system in which you live, your children live, grandchildren live And you being wise beyond your minus 24 hours of age say, I know all about you genies What’s the catch? And the genie says, there’s one catch Just before you emerge, having designed the system, put it in cement, you’re going to go over to that barrel over there that has seven billion slips in it, one for every human being in the world, and you’re going to pull out a slip It may say male, it may say female It may say white, it may say black It may say infirm, it may say strong It may say bright, it may say below average It may say United States, it may say Bangladesh Now not knowing which ticket you’re going to pull out, what kind of a world do you wanna design? Well, you certainly wanna design a world that produces lots of goods and services and keeps producing more and more You want a lot of stuff around It could be the world’s fairest society, but if it’s on a barren desert island, it isn’t gonna do anybody good So you really want something that works in terms of output But once you have something that works in kind of in terms of output, you certainly want something that eliminates fear from everybody’s life Now that doesn’t just mean a lot of cops It means fear of old age, fear of health, all of those problems And you certainly want a system, not knowing what ticket you’re gonna get, that takes care of the people that don’t survive so well in that market system which maximizes

the amount of output, your first goal And I think we’ve done a wonderful job at the first stage We have churned out lots of stuff We have not thought as much, although we’ve thought a fair amount I mean when social security came in and all that, this country have developed in terms of thinking about how a rich family should behave, but we have not, I think we are in a stage where we need to focus more on making sure that the people who get the bad tickets do better than they are And you know, we said that Blacks, that were slaves were three-fifths of a person back when we started We said all men were created equal in 1776 Then in 1789 we said Blacks were three-fifths of a person We not only said all men are created equal, but the Gettysburg Address you know, Lincoln repeated it It was 1920 before we passed the 19th Amendment for women, so we treated women as a essentially different class for all those years So I think we’ve got, I think we’ve gone significantly in the right direction in terms of behaving better as a society, and I think we’ve gone terrifically in the right direction in terms of turning out lots of stuff But I think we have to address the question of how do you treat the people that are left behind in a system that maximizes the output of goods and services And that can only come through government – [Brian] Next question – Good evening My name is James Fishback I’m in the School of Foreign Service, first year It’s no doubt that you’re an outspoken fan of Ben Benanke, but knowing he’s gonna be stepping down in January of next year, whomever takes over the position, do you think that they should continue the Fed’s controversial buyback program? And if so, for how long? – Well, I think they should take, Bernanke’s approach was he says he’s gonna keep doing it until he sees more improvement in the economy And I think he’s been mildly disappointed, not hugely disappointed, but mildly disappointed in the rate of improvement in the economy in the last few years And therefore just the other day he said he’s gonna extend it further until he sees it So he’s not prejudging exactly when it’s going to happen He’s telling you the conditions under which he’ll change And the economy is getting better We are in an experiment which hasn’t really been tried before I mean, the Fed has a three and a half trillion dollar balance sheet, and buying securities is usually easier than selling securities as sometimes people find out So we don’t know how this game plays out And just the announcement whenever it was a few months ago that tapering was gonna occur, that had some significant market reactions, probably 100 basis points of so on the tenure And what’ll happen when they actually, if they actually try to deleverage the Fed I mean what has happened is the American public deleveraged, and the government leveraged up through the Fed When the Fed, if the Fed deleverages in any big way, that will be a new experiment – But Warren, as we were talking earlier, the question is when they do that, the economy has to be growing faster And the piece people don’t take into account is they’re clear that they’re gonna stay there until the economy grows faster, so it’s a different– – And he has no pressure on him In fact, you know, the Fed is the greatest hedge fund in history You’ve go a trillion one financed by currency in circulation, which doesn’t cost anything, and you got about a trillion eight or nine for the banks at 25 basis points And I mean, the Fed is gonna make $80 billion or something like that The Fed is the fourth largest contributor to the United States government’s revenues that there is now That wasn’t the case a few years back, but it’s $80 or $90 billion a year probably And it is under no pressure, none whatsoever, to have to deleverage So it can pick its time, and if you have somebody wise there, and I think Bernanke’s wise, and I certainly expect his successor to be, it could be handled But it is something that’s never quite been done on this scale It’ll be interesting to watch – No, it will be, and we’ve seen a lesson in the market moving ahead and back just based on the last 30 days So I think we’re gonna take one more question, and then the next student – Hi, my name is Shali, and I’m from China, and currently a graduate student in Georgetown My friend Danny Strell and I, we are both a very big fan of you and your friend Charlie And we read his book, which is very interesting He had this whole system of criteria on how to evaluate a company It’s all very confusing, but he said that Warren and I are always staying away from the industries we don’t know

So you have Candies Railways and Coca-Cola But now the world is changing, and we are living in a new era The business models are changing The B2C platforms, everybody is shopping online Maybe in a few years everyone is gonna pay with their iPhones, and Bank of America no longer issues credit cards So non-profit is a new model – [Warren] So what’s a dinosaur like me gonna do, yeah? – Yeah, there’s so many things you don’t know about – [Brian] He’ll take out his flip phone and show you, so he’s not gonna be one of them – This is my new one I just turned in the one Alexander Graham Bell gave me (laughing and applause) Okay, so the question is the business models are changing, the world are changing There are the new technology that are changing everything There’s no way you can just stay out of it and stay with your traditional Now for the (mumbling) especially in the venture capital industry, what would you think is the most important thing, the key in evaluating a company? I’m not asking about doing mediocre I’m not asking about being average, but about excellent, remarkable Just name one thing (laughing) – The most important thing is to decide, is to be able to define which one’s you can come to an intelligent decision on and which ones are beyond your capacity to evaluate You don’t have to be right about thousands and thousands and thousands of companies You only have to be right about a couple I met Bill Gates on July 5th, 1991 We were out in Seattle, and Bill said you’ve gotta have a computer And I said, why? And he said, well you can do your income tax on it I said I don’t have any income Berkshire doesn’t pay a dividend He said, well you can keep track of your portfolio And I said I only have one stock (laughing) And he says it’s gonna change everything And I said, well will it change whether people chew gum? And he said, well probably not And I said, will it change what kind of gum they chew? And not I said well then, I’ll stick to chewing gum, and you stick to computers, you know? (laughing) I don’t have to understand all kinds of business There’s all kinds of business I don’t understand But there’s thousands of opportunities there I did understand the Bank of America And I’m able to do that I’m able to understand some given percentage But Ted Williams wrote a book called The Science of Hitting And in The Science of Hitting he’s got a diagram, shows him at the plate, and he’s got the strike zone divided into 77 squares, each the size of a baseball And he says, if I only swing at pitches in my sweet zone, which he shows there, and he has what his batting average would be, which is 400 If he had to swing at low outside pitches, but still in the strike zone, his average would be 230 He said the most important thing in hitting is waiting for the right pitch Now he was at a disadvantage because if the count was zero and two or one and two or so on, even if that ball was down where he was only gonna bat 230, he had to swing at it In investing there’s not called strikes People can throw Microsoft at me, and you name it, any stock, General Motors, and I don’t have to swing Nobody’s gonna call me out on called strikes I only get a strike called if I swing at a pitch and miss So I can wait there and look at thousands of companies day after day, and only when I see something I understand and when I like the price at which it’s selling, then if I swing, if I hit it, fine If I miss it, it’s a strike, but it’s an enormously advantageous game And it’s a terrible mistake to think you have to have an opinion on everything You only have to have an opinion on a few things In fact, I’ve told students if when they got out of school they got a punch card with 20 punches on it, and that’s all the investment decisions they got to make in their entire life, they would get very rich because they would think very hard about each one And you don’t need 20 right decisions to get very rich Four or five will probably do it over time So I don’t worry too much about the things I don’t understand If you understand some of these businesses that are coming along and can spot things, if you can spot an Amazon for example, I mean it’s a tremendous accomplishment what Jeff Basils has done And I tip my hat to him He’s a wonderful businessman, and he’s a good guy, too But could I have anticipated that he would be the success and 10 others wouldn’t be? I’m not good enough to do that, but fortunately I don’t have to I don’t have to form an opinion on Amazon And I did form an opinion on the Bank of America, and I formed an opinion on Coca-Cola I mean Coca-Cola has been around since 1886 There’s 1.8 billion,

1.8 billion eight-ounce servings of Coca-Cola products sold every day Now if you take one penny and get one penny extra, that’s $18 million dollars a day And $18 million times 365 is $7 billion three less 730 billion or six billion, 570 million dollars So annually $6,570,000,000 from one penny Do you think Coca-Cola is worth a penny more than Joe’s Cola? I think so (laughing) And I’ve got about 127 years of history that would indicate it So those are the kind of decisions I like to make And you may have an entirely different field of expertise than I would have, and probably much more up to date in terms of the kind of businesses that we’re seeing evolve And you can get very rich if you just understand a few of them and understand the future But fortunately I don’t have to I mean, if we go into Heinz, you know, and I look at people pouring ketchup on hamburgers and potatoes, I don’t think it’s gonna change And the nice thing about some products travel Some products don’t travel Candy bars don’t travel well If you look at the Cadbury bars in England, they don’t sell well here, and the Hershey’s bars here, they don’t sell as well someplace else Soft drinks travel, and ketchup travels I like products that travel – [Brian] Well, thank you Thank you, Warren (applause) Warren, I wanna thank you for taking the time to work with the students today And I think for all the students out there, just think about this is the person who, the passion he still has at 83 to make that right investment decision Importantly what we talked a lot earlier about is the ability to try to do something with all that wealth that will help a pretty near term set of goals in society And I think you will find very few people in the world that have been able to do both things so well as Warren Buffett has, and there’s a lesson to learn for all of us in that So thank you for spending the time – [Warren] Thank you (applause) – So wow That’s probably the first time in my life I ever heard a positive outcome for the great economic crash of 1929 (laughing) So Brian, thank you for bringing us our rock star (applause) We just heard a terrific conversation, a terrific discussion about economic impact and social impact, and how the two fit together And before this conversation Brian Moynihan had a session with some of our business students in which he talked about community lending, philanthropy He talked about environment initiatives, and he talked about how they are good business as well as good for society And this is the right place Georgetown is the right place for that Our President Jack DeGioia, he talks about global human development And the Dean of our Business School, David Thomas, he talks about being in service to business and society And that’s why our Global Social Enterprise Initiative is flourishing, and why it’s in the right place Our organization, the Global Social Enterprise Initiative, is driven by students In fact, it was started by students There’s a student here, I should say an alumnus here, I don’t know where he is, Raul Pasarnacar, who flew in He’s a McKenzie executive He flew in just for this conversation He helped to conceptualize this initiative, and Raul, wherever you are, keep the good work going Ladan Manteghi and I, we think that students power what we do And we have many projects going, and students are involved in every one of them, and we’re very thankful for that And I can tell you that I love Georgetown I love Georgetown because I come in here every day, and I rub elbows with these students who are tomorrow’s leaders And every night I go home thinking the future is really in good hands So look for future GSEI events Look at our website Thank you again for this wonderful conversation We’ve got to applaud these two gentlemen (applause) I’m sorry that not every student got to ask a question, but there’s always email

And would you please let the first two rows leave because there are some security issues involved Thank you very much (applause)