'You're killing me Daphne': Buffett's response to 8-year-old girl questioning his investment decisions
An 8-year-old girl Daphne who hails from New York climbed to the podium and queried Buffett, 87, and his business partner Charlie Munger, 94, over the firm’s latest investments
May 07, 2018 / 02:47 PM IST
Q7. According to Warren Buffet he is what he is because of two prominent investment gurus. He says he’s 85% Benjamin Graham and 15% ____?
Children are by nature curious, or at least, most of them are. But, can a child leave fabled investor Warren Buffett searching for words with a financial question? Well, the answer was evident on Saturday during the Berkshire Hathaway’s annual meeting.
An 8-year-old girl Daphne who hails from New York climbed to the podium and queried Buffett, 87, and his business partner Charlie Munger, 94, over the firm’s latest investments.
She first pointed out that historically Berkshire’s investments have been in capital efficient businesses like Coke, See's Candies and Geico. But recently the firm had fancied companies with huge capital needs and low rates of return, such as Burlington Northern.
“Could you please explain why Berkshire's largest recent investments have departed from that old capital efficient philosophy?” Daphne asked.
Her question left both stalwarts looking for words. "You're killing me Daphne," is what Buffett could manage after a couple of seconds of silence.
"Certainly, glad she's not 9-years-old," Munger quipped, to which Buffett said, “Yeah”, amid a thunderous applause.
Buffett followed it up with an explanation. He said, “We always prefer businesses that earn terrific returns on capital, like See’s Candy when we bought it or a good many of the businesses. And you know American Express earns a terrific return on equity, and has for a very long time.”
“The fact that we buy BNSF, Burlington Northern, means that essentially we can’t get more money deployed in capital-light businesses at prices that make sense to us. And we have gone into more capital-intensive businesses that are good businesses.”