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Warren Buffett: What I Look For in Annual Reports - YouTube
Channel: iValue Investing
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i know that you read lots and lots of
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annual reports and
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i'm curious what you are reading for if
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you would share that with us
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but i'm more curious because i think i
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know what you're reading for
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if there are any disclosures
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any further disclosures that you would
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like to see companies make in their
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financial reporting or that the sec
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require in uh financial reporting or
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proxies or other communications with
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their shareholders and that would be for
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both uh you and for mr monger yeah the
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main thing
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that they can't mandate in annual
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reports i really like to have i i like
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to know
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as much as i can
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about the person that's running it and
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how they think about the business and
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what's really going on the business in
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other words i'll i would like to have
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uh a report that would be identical
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uh to what if i owned half of a company
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but was away for a year and i had a
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partner who owned the other half with
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when i came back
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that he would tell me about what had
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taken place during the past year and
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what he foresaw coming up and all of
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that i i
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that is what i think the purpose
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of the report is now the sec mandates a
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lot of information and and
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and
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some of that is is helpful uh
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but there's an intent behind the report
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i mean if it's a sales document i'm
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you know i'm less interested i'm
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and
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i don't see any way to mandate
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uh what i'm talking about
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but that's the kind of report i'm
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looking for what i'm trying to do as i
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read reports
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hey i like to understand just generally
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what's going on in all kinds of
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businesses if we own stock in
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in a company in an industry and there
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are eight other companies that are in
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the same industry
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i want to own
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or be on the mailing list for the
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reports for the other eight because i
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can't understand
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how my company is doing unless i
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understand
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what the other eight are doing i i want
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to have the perspective
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of in terms of market share or what's
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going on in the business or their
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margins or the trend of margins or all
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kinds of things
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that i can't get unless i know i can't
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be an intelligent owner of a business
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unless i know what all the other
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businesses in that in that industry are
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doing and so i try to get that
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information out of a report if i'm
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thinking about investing in the specific
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company i try to size up their business
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and the people that that are that are
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that are running it and
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over the years
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i i i found
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reading a lot of reports to be
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quite useful
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in terms of making business decisions at
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berkshire if we own a hall of a business
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i want to own
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shares in in all of the competitors just
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to keep
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keep track of what's going on and i want
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to be able to intelligently evaluate how
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our managers are doing that and i can't
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do that unless i know the industry
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backdrop against
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against which they're working uh
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uh
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it's amazing uh
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you know what how well you can do in in
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in invest in investing really with what
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i would call outside information i find
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inside information i'm not sure how
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useful that is but but outside
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information there's all kinds of
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information around as to as to
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businesses and
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you don't have to you don't have to
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understand all of them and you just have
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to understand the ones that you're
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thinking about getting in and you can do
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it if you just but you nobody will do it
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for you you can't read
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in my view you can't read wall street
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reports and get anything out of them you
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have to do it yourself and and and get
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your arms around it i i i don't think
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we've ever gotten an idea
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you know in 40 years from from a wall
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street report but but we've gotten a lot
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of ideas from annual reports charlie
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what i find is that it takes a long time
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to read the annual report even if it's a
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comparatively simple business
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because if you really are trying to
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understand it it's not a bit easy
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yeah i would say that
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on average in a business we're really
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interested in
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even though we know what to skip to some
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extent what to read i mean it's going to
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be
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45 minutes or an hour on a report and if
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there are six or eight companies in the
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industry that's going to be
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six or eight hours perhaps and
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and then their quarterlies and a lot of
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other i mean
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the way you learn about businesses is by
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absorbing information about them
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thinking it deciding what counts and
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what doesn't count relating one thing to
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another
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and uh
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you know that's that's the job that uh
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and you can't get that by looking at a
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bunch of little numbers on a chart
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bobbing up and down about a you know or
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or or reading uh you know market
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commentary and periodicals or anything
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of the sort that just won't do it
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you've got to understand the businesses
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that's where it all begins and ends
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