If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on. No one has the ability to evaluate every investment possibility. But omniscience isn’t necessary; you only need to understand the actions you undertake.
I mean you know at midnight everything is going to turn to pumpkins and mice; right? But if the evening goes along, I mean, you know, the guys look better all the time, the music sounds better, it's more and more fun, you think why the hell should I leave at quarter of 12. I'll leave at two minutes to 12. But the trouble is, there are no clocks on the wall. And everybody thinks they're going to leave at two minutes to 12.
I bought my first stock in 1942, in the summer of '42. I was 11 years old. And so 75 years have gone by. And I have never known what the market's going to do the next day. And that's not my game. My game is to decide whether I'm in the right economy, which America's definitely been ever since that time. The Dow has gone from 100 to 21,000 during that time. And no matter what the headlines say, or terrible things are happening - we were losing the war in the Pacific when I first bought stocks.
The big question about how people behave is whether they've got an Inner Scorecard or an Outer Scorecard. It helps if you can be satisfied with an Inner Scorecard.
It isn't given to man to be able to run a financial institution where different interest-rate scenarios will prevail on all of that so as to produce kind of smooth, regular earnings from a very large base to start with.
That goes back to 1932, although it was really implemented in '33 under Jesse Jones, and it invested in mostly banks initially and preferred stock and that sort of thing. So there are two things needed in the system, the one that's needed overwhelmingly is liquidity. I mean, when people are trying to [unintelligible], there has to be somebody there to buy.
You have to turn over a lot of rocks to find those little anomalies. You have to find the companies that are off the map - way off the map. You may find local companies that have nothing wrong with them at all. A company that I found, Western Insurance Securities, was trading for $3/share when it was earning $20/share!! I tried to buy up as much of it as possible. No one will tell you about these businesses. You have to find them.