Wednesday, November 30, 2005

Warren Buffett on economic forecasting

I pay no attention to economic forecasting. Your children are, absent of the terrorism thing, but in terms of material wealth per capita, your kids are going to live better than you and your grandchildren will live better. And again in the 20th century, real GDP per capita, real GDP, one of seven for one in this country, just think of that, seven times. You can cash that out to fewer hours of work or more product or all kinds of things. But it¡¯s a wonderful, wonderful economy and it¡¯ll get better over time. Now to make any given 20 or 30, assuming I have 20 years left, there will be a few lousy years and there will be a few so-so years and most will be pretty good years and a couple fabulous years and I don¡¯t know in what order they are going to come. But if I¡¯m a good golfer and I haven¡¯t played a course here before and I knew there would be some par 5s and some par 3s, I¡¯m going to take some more strokes on the par 5s than on the par 3s on average. The importance is that I play, that I play each hole well. In the end I will end up with a good score. I can¡¯t just go around and play the par 3s. I can¡¯t do that in business. I worry about being in good businesses with good people. That¡¯s all I focus on. Never base a decision in business, I¡¯ve never based a decision on expansion of a business or anything like that based on an economic forecast because A) it¡¯s not reliable and B) it¡¯s not important. What is important is where we are going to be in 5 or 10 or 20 years in the country and will we be better off for this. So we don¡¯t have any clear-cut economic forecasters. My partner Charlie and I never talk about it. We just talk about how can we put the money in businesses that we have owned forever, with the kind of people we can trust.

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