During the 2000 Berkshire Hathaway Annual Meeting, Warren Buffett says that he has seen everything in the markets, including companies selling for tens of billions of dollars that are worthless, and companies selling for 20% of their worth. He believes that in markets wild things create their own truth for a while. Here’s an excerpt from the meeting:
Buffett: We generally believe you can just see anything in markets. I mean just extraordinary what happens in markets over time.
It gets sorted out eventually but I mean we have seen companies sell for tens of billion of dollars that are worthless and at times we have seen things sell for 20%.
A number of things, not hard to find, perfectly decent people running himself for literally 20% or 25% of what they were worth.
So we have seen and will continue to see everything. It’s just the nature of markets they produce wild wild things over time.
And these are one of those wild things and not to get carried away when other wild things happen because the wild things create their own truth for a while.
And you have to know… that’s the reason they’re happening is and people are getting pleasant experiences and all that.
You’ll see everything if you’re around markets for a reasonable period of time. We don’t see any great cases of dramatic undervaluation by this market.
So it isn’t like we’re seeing… because there’s perhaps this speculative mania in a particular area of the market. We do not see that creating incredible undervaluation in other places.
You can watch the entire discussion here:
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