Warren Buffett & Charlie Munger: Intrinsic Value

Warren Buffett and Charlie Munger discuss intrinsic value at the 1997 Berkshire Hathaway annual meeting.
Top ten investment books;
The Intelligent Investor by Ben Graham: amzn.to/2XP3Hvo
The Big Short by Michael Lewis: amzn.to/3ak7Wr0
The Dhandho Investor by Mohnish Pabrai: amzn.to/2PqQDgk
One Up On Wall Street by Peter Lynch: amzn.to/39JM2Kk
Ben Graham's Security Analysis: Sixth Edition, Foreword by Warren Buffett: amzn.to/2XNYtAh
The Little Book of Common Sense Investing by Jack Bogle: amzn.to/2UsGk8T
Common Sense on Mutual Funds by Jack Bogle: amzn.to/2Uxu2wl
Common Stocks and Uncommon Profits by Phil Fisher: amzn.to/2XOCU2v
Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger by Peter Kaufman: amzn.to/2oBddW4
The Essays of Warren Buffett: Lessons for Corporate America: amzn.to/3EwbNxx
(The above are affiliate links.)

[@Az-jt2zp]

As I research and learn more, I come back and watch this video, I seem to understand this video even more every time.

[@paulliang7170]

We are all on the way to success:)

[@nobodyheree1]

Can you explain the lady's desperation for Charlie Munger?

[@TheIcelandicInvestor]

Only focus on the cash flows of the business and stop focusing on buying something just to sell it to someone else, that is just a game of who beats who. Love that!

[@roadtowealth4352]

This stuff is gold!

[@TheIcelandicInvestor]

@@roadtowealth4352 True

[@tomlxyz]

But it seems increasingly that with loose monetary policies that buying for the sake of selling is getting increasingly popular and is pretty profitable (for now) and while even tho this can't go on forever it hurts the profitability of people doing business in a rational way

[@TheIcelandicInvestor]

@@tomlxyz True

[@georgerobertson733]

When purchasing shares of a company, at least on a small retail scale, how else would you accumulate cash other than selling the share to someone else? Other than cash from dividends i’m confused as to how you achieve this.

[@davehogan6401]

I love how in today's world were obsessed with material wealth.... we flock to the instagrams of Dan Bilzarian and Conor McGregor and here we are looking at two old men in crap suits and they are two absolute BAD ASSES!

[@Ssmassh]

Agree, this is really where intelligence lies.. here can you get a understanding sight of the world

[@abcdxx1059]

Conor is still hard working and Dan damn

[@phantomcreamer]

CM is a definitely a bad ass, lol

[@omarmokrech2846]

Not really crap suits....

[@stillperspective488]

@@omarmokrech2846 true

[@charlesbourgoigne2130]

These two guys represent the excellence of American economics; sth you can really look up to! No Gordon Gekos nor wolfs of wallstreet; that’s quite nice! Should be shown in schools!

[@chooselife3000]

Teenage school kids would be well advised to watch this type of content. I am watching it now age of 47 and wish I had learned and researched this 30-odd years ago. The Value Investing topics, and, Security Analysis. From my local bookshop I ordered a late Xmas present to myself of Five quality books on Value Investing and Security Analysis, and, will set aside the quality time to read and understand and learn them. Wish I had done it all when I was a teenager with a much sharper mind.

[@LivingBGLegend]

I’m 33 and wish I would have learned these things earlier as well... heck even bitcoin 7 years ago I was looking at when it was at $600 but I didn’t have the knowledge to invest anything into it. I think there are a lot of possibilities in AI, Cannabis, and holographic technologies but with limited knowledge on the subject and a real fear of the markets going tits up I haven’t pulled the trigger on any of them

[@Rocket_Man]

I’m 25 and wished I learned it 10 years ago too. And I remember bitcoin when it was 400 mane! Anyways, we can’t stay stuck in the past, gotta move to the future and beyond

[@abcdxx1059]

@@LivingBGLegend don't get crypto I mean if you just want to flip sure as you will find a similar person like you who would buy it

[@neilsanghavi8664]

Could you please share the names of the books ? :)

[@johnj8069]

@@Rocket_Man Bitcoin is nonsense and nothing to do with investing. Sure you had made a lot of money but so would you have done by guessing the right lottery numbers. Buffet and Munger are talking about assets that produce something in value, and buying that value at the "right" price.

[@jonathanreynaldi3747]

5:01 "We basically use long term risk free, that's government bond type interest rates, to think back in terms of what we should discount at" - W. Buffett I think Mr. Buffett usually uses the Discounted Cash Flow model to calculate the intrinsic value

[@madmantrader]

No he does not!!1 Its in security analysis by Ben graham.

[@antonioleyva-rv6bu]

@@madmantrader is it? would you recommend me reading if itt to become a more educated investor?

[@madmantrader]

@@antonioleyva-rv6bu YESSSSSSSSS

[@madmantrader]

@@antonioleyva-rv6bu GET THE second edition though ....it is alot better.

[@antonioleyva-rv6bu]

@@madmantrader Noted Any other books you recommend?( I'm currently reading "The intelligent investor) I often find most books on investing are made to sell but don't really provide any useful information or nothing I haven't heard before. Also how long have you've been investing and what are some key points on evaluating a Business/Stock?

[@edwardmusk3540]

Here Warren Buffett and Charlie munger are just teaching us the basics of how to invest in the stock market. To us it might not be “basic” but to them, trust me, it is basic.

[@sixtrumpetwarnings]

they are not going to tell you everything you have to try to read between the lines.

[@tomlxyz]

You have to do more than reading between the lines

[@matmaism]

You must also consume lines...

[@jimjackson4256]

That is the best comment i have read today.

[@mangalisondwangu186]

You have read the lines also

[@disarp]

Would love for you to go through each step in detail!

[@Rocket_Man]

These dudes sounds and look like each other, bro Charlie and Warren G till the end yo! 2 lions of one coalition mane!! Imma keep learning from the ogs

[@sixtrumpetwarnings]

you are smart!

[@vincentconti3633]

They do! Same neighborhood same accent. That has disappeared!

[@lucasszymkowiak6765]

Man, this is gold

[@mikejmarvin]

Buffet doesn't think much of gold

[@robwhite7976]

@@mikejmarvin people seem to think he does now. I'm not 100% sure I'm their views

[@FBeckenbauer4]

That was a very good question Lieutenant Jim Dangle.

[@tejuswadbudhe7909]

Thank you

[@fendi1789]

what a great thought !!

[@tinnguyen2219]

Thank you so much for sharing useful data! Greatly appreciated .

[@cokechang]

This was from more than 2 decades ago, and these guys look as old back than as they do now lol

[@heprovides5604]

Brilliant men both. New sub to your channel. Tfs

[@The_Financial_Review]

Thank you for the support!

[@Bernoulliflyer]

Very interesting, thank you.

[@TysonHartnett]

Love to wake up to these and hear some clarity before the trading days start :)

[@problematic7993]

"before the trading day starts" have you been listening to him at all?

[@advogadosjurere]

@@problematic7993 lol

[@ryanfrizzell736]

We can make better informed decisions using the information displayed in this video. Thank you

[@christopherarmstrong2710]

5:13 “That’s what the game of investment is all about - putting out money to get more money back later on from the asset - not by selling it to somebody else, but what _the asset itself_ will produce. If you’re and *investor,* you’re looking at what the asset is going to do (in our case, businesses). If you’re a *speculator,* you’re primarily focusing on what the price of the object is going to do - independent of the business (that’s not our game). We figure if we’re right about the business, we’re going to make a lot of money.”

[@abduljabar8445]

This video is the real national treasure

[@ReflectionOcean]

- Understanding intrinsic value (1:01) - Importance of cash flows in valuation (2:20) - Use of long-term, risk-free rates for discounting (5:03) - Opportunity cost as an investment filter (6:51) - Concentrated portfolios and selectivity (7:50)

[@loveanimals-0197]

02:45 - He says, "discount that at the appropriate interest rate." - What does that mean? How to we know future interest rates, and why exactly should that be discounted (meaning reduced?) at the interest rate? Please help me understand.

[@vanitas4767]

Thats the point, he does not no what will happen with future interest rates. This is more a theoretical notion of how you would do it if you would know what happens with interest rates. He uses government bond type of interest and than discounts the assets back at that interest and than compares them to other assets and buys the one which looks most attractive, and if none stays in government bonds and waits for an opportunity to come along. Discounting back means that a cashflow in 1 year is worth less than a cashflow today. If you assume 10% interest, than a cashflow of 110 in 1 year is worth exactly the same as 100 today, because you could invest the 100 and get 110 after 1 year. You do that what all cashflows from the business to the owners and from the owners to the business and you get what the business is worth. You should know that both future interest and cashflows are hard to predict, and for thar reason you are searching for no-brainers which payoff surely. I am sorry for eventual writing mistakes, I am tipping on my phone. Cheers

[@raunakd4877]

Look up 'discounted cash flow valuation'

[@LivingBGLegend]

I have a 401k through my work and it’s basically a few different options each with a variety of stocks. I’m in a more risky plan but I’d really like to allocate a portion of what I put in towards a few specific companies

[@itsandrew8758]

Please someone correct me if I’m wrong but I don’t think you can individually stock pick in a 401k through work.

[@a40anda47]

@@itsandrew8758 I personally have not seen individual stocks in a job 401k. I've only seen up to about 20 or so bonds. At least my jobs

[@PabeLg91]

Why only save through your 401k?

[@32kirby32]

Get a brokerage account Ameritrade, Schwab are some. Requires I think 2000 to open but u have complete control

[@sellingchico]

Roll it over into a money mutual, an investment brokerage account, or a reit. You'll have a little bit more input into your investments.

[@latinavalues]

In terms of underpriced did they look P/E ratio or assets or what

[@chilixification]

I love them

[@soccerboy8967]

This is golden they don’t teach you anything like this in college. Nothing. Just given books and told to do work it is very sad how broken our educational system is

[@edwardmusk3540]

Never rely on school or college education. They’re using students to invest in their “school”. The achievements the students have , the more the parents want their children to be in their school. This is why people want to go to Harvard, it’s because bill gates and Mark zuckerberg went there. Both of them didn’t graduated. Berkshire Hathaway need money to make more money. School need students to make more students. Simple as that.

[@edwardmusk3540]

*to get more students

[@zaynumar0]

@@edwardmusk3540 it's true, I study"engineering" at university but I think it is not relevant

[@asonyutonny7635]

I am considering buying a couple of shares at Berkshire Hathaway just as a way if getting access to legendary bank of knowledge about investing ... these shareholders are lucky.

[@KevinToddMusic]

Tai Lopez: “Here in my garage, just bought this new Lamborghini... it’s fun to drive up here in the Hollywood Hills” Warren Buffett: “Here with Charlie in my garage, we just bought this new Lamborghini... company...”

[@darshanbathija93]

Best Duo ever

[@alexbrint3798]

These guys have been 100 for 100 years

[@siemann82]

Any idea when this was recorded?

[@billyblack3816]

1497

[@herodax]

Carson Siemann Check the description... 1997

[@jamesm9534]

It is timeless, so a date of recording is irrelevant.

[@investment7553]

4:00 does cash flow mean dividends?

[@genfoz]

Warren loves charlie

[@pongfoong9523]

But real price to clram pown shop about 82,000 bath .what' s up dept.....call gun can help me?

[@jackbrady9738]

Limit it to one question please.... Video question should've ended after he said "can you expand on this please"

[@adamwetzli3341]

Which cashflow are they talking about that is discounted back to its present value? Operating cf? Fcf?

[@AcuJamey]

I understand it to be Discounted Free Cash Flow.

[@danaphanous]

It is FCF, but not the kind reported on a financial statement. Simple accounting FCF is just physical cash in minus physical cash out. And while that may be useful to know, it is a rather useless metric if the company is reinvesting into itself. A company like Amazon had zero FCF for years, but this didn't mean it was unprofitable to investors. It was a great company that was reinvesting every penny into growing the business. What you want to estimate is what Buffet calls "owner earnings" or what I call "discretionary free cash flow". It is the cash the company had leftover after maintaining the business to use as they liked. They could have spent it on dividends, share repurchases, paying down debt, or on growing the business. The appropriate use depends on the expected return on that money. Ideally, the company is growing and reinvesting that money for you rather than paying it directly back in dividends as this prevents double-taxation. Just some thoughts! Been reading a lot about this myself.

[@gormenfreeman499]

Facebook’s annual report must be very cryptic. “ we added some new html buttons and expect more growth” 😂 . Can see why they say they don’t understand tech companies and stay away .

[@valueplay9930]

Hi man. I did not find any contact information for your channel. But is it okay to use this video on my website? I have written an article on my blog, on intrinsic value. And I want to paste this youtube video in the the middle of the article. This would of course bring readers to your youtube video. And at the same time is adds value to my article since It gives me video content. Is that okay? Or maybe you are not allowed to distribute this video further? Let me know if you can be contacted in this subject somewhere.

[@The_Financial_Review]

Hi, feel free to use the video for your article. Hopefully Warren and Charlie can help explain the topic to your readers.

[@tomlxyz]

I don't think this channel has the copyright to this video

[@ronit.pereira7172]

11:33 costco 😊

[@patriciabeckwith742]

Thank you Warren and Charlie though it seems that Warren is the more outspoken

[@Barkotina]

Munger is a big Coca Cola fan.

[@jimjackson4256]

I wish 50 years ago I had known about and understood these things instead of the crap I was interested in then.Too soon old and too late smart.

[@pongfoong9523]

3d animetion .new product .that 120.bth.?right ......ok ....dual.

[@madmantrader]

This is alot simplier than people think and requires no formulas.

[@wkb9683]

Cash Gold platinum silver & bitcoin. I'm fine with that.

[@KylerTony45]

How’s Bitcoin doing today 🤣🤣🤣

[@GoodlyRogue]

Goat

[@relobmit]

Buffett says he doesn't believe in efficient markets and buying opportunities arise when the market undervalues a company but at the same time uses the market priced long-term interest rates to use as the discount rate. I don't understand this seeming contradictory methodology.

[@alexvanzijl6796]

The long term interest rates you are referring to are actually Treasury Bonds with fixed interest rates, not fluctuating market driven rates. Since these rates are fixed they're a good tool to use for discounting. Discounting is the practice of comparing an investment that carries a certain amount of risk to a sure thing as a government bond.

[@relobmit]

Alex Vanzijl treasury bonds have a fixed coupon but the yield IS market driven depending on the traded price of the bond which will either be selling for more or less than face value. Bond prices (and yields) are market driven although arguably they are more efficiently priced as there are less variables to consider.

[@robertoalves1274]

@@relobmit I believe that you answered yourself. Being skeptic of the efficient market hypothesis doesn't mean that you consider the market totally irrational. Like you said, in instruments with fewer variables, lower risk, the yield promissed by the instrument is a good estimator for discount rate. He also could borrow money to buy securities, thing that he isn't a fan but he could. Knowing the interest rate demanded, he can use that as a discount rate, ajusted for risk, thing that he has to evaluate.

[@relobmit]

@@robertoalves1274 true but you are discounting for many years into the future so even small inefficiencies in the bond market could have large consequences for your intrinsic value calculation.

[@nicolasallen8072]

If you can make 2.7 percent by purchasing a bond, with no counterparty risk, then that is what you compare other investments to. You ask yourself if the investment is better or worse than a safe 2.7 percent. Or, you ask yourself if in 10 years time you would be better off or worse off if you bought safe bonds or if you bought shares of company X. Yes, bonds have interest rate risk, but only if you don't hold them to maturity. Yes, bonds have inflation risk, and that is something you have to consider. The market is not efficient when calculating interest rates. The Fed distorts interest rates at the short end. Bonds determine the discount rate because government bonds are a sure thing. If you buy a 5 year treasury bond for100 dollars, you know that every year you will get $2.70 and in 5 years you get your$100 back. You don't have to worry about some CEO making a boneheaded decision and losing your $100, so that $2.70 is what you compare other investments to.

[@pongfoong9523]

I ney cash 8580 aound?

[@jeffreyrichardson]

gregs own placed value doug vigliatura blue catherine and verns pew

[@sebastianries7248]

he wanted a answer he got a answer

[@pongfoong9523]

What s up ..now total my dept 8500 bath some body told me try to call you american .what dept.?

[@dennismiller95]

Don’t let em touch my Coca Cola alkaseltzer tablets and u know it!

[@niningsetia4213]

Amazing a old young couple walk in and young boy..so accidental..mmuah baby🌹🌹❤️

[@pongfoong9523]

Am tried to do nice animation for your investor ........

[@YFolermira]

Taking early inspiration from Warren Buffett on the significance of solid asset diversification and risk management-it cannot be emphasized enough. I've been working on growing my $300K portfolio for some time now and would greatly appreciate any additional suggestions

[@Rodxmirixm]

That's wise. I've been in contact with an advisor as well. With an initial reserve of $80k, my advisor handles the entry and exit routines for my portfolio, which has now grown to around $550k

[@Jason9o669]

I've been considering a switch to a new advisor for some time. Would you be able to provide me with the contact information for your advisor?

[@Rodxmirixm]

There are many independent advisors to consider, but I personally work with Stacey Lee Decker, who I find to be outstanding. If she meets your criteria, I wholeheartedly recommend her.

[@Commando303X]

Why is it easier to invest ~a hundred thousand dollars, than millions or billions?

[@AcuJamey]

It is easier to get in and out of various positions with $100k rather than $1billion. In another piece Buffett talks about how it can take him 6 weeks to divest a position in a stock because of the amounts.

[@philswaim392]

20 years ago these 2 looked like they were 70

[@graham9334]

FINALLY a guru admits with billions of dollars you will only get suboptimal returns(20-10percent) whereas with 100k you can make literal hundreds per year. Ive done it myself. Although investing in the weed sector early helps the idea is the sameThe little guy actually has the advantage to take risks in smaller companies that arent all owned by large firms and therefore are more incorrectly priced. The fools who say you cant beat the market are literally comparing against these giants who cannot invest in small explosive growth. I cant wait for that myth to be dispelled

[@50sorrowC]

True that. Not mentioning today's cannabis giants like Tilray and Canopy, I like the business models of Harvest one and Supreme.

[@pongfoong9523]

but you use me free coss you see and think it just game or cartoony .

[@yungdinero]

Corporate finance 101

[@pongfoong9523]

Call you help me am died before .... you found .my post......

[@niningsetia4213]

THXs universe and subhanallah..all design by Allah and all under God 'S control under by HIS name..mmuah dad❤️❤️💚💚😁

[@StephenGillie]

Opportunity is a robot on Mars. Good luck answering its knock.

[@pongfoong9523]

You have to pay me .by bath coss i didnt play with you but who pay why should be american .dearler

[@keithratcliff7896]

grow up

[@pongfoong9523]

but i didnt play with you i work it .you sholen all everation .that killty .

[@pongfoong9523]

I can selling my stuff by myseft.post or un post it my sis .

[@ronniedelahoussayechauvin6717]

Crimes

[@arnolddalby5552]

Two financial genius who are making me laugh because they are only telling half the story. Haha. Look at what folk do and the consequences of buying a business outright. Do a before and after case study.

[@zaynumar0]

Only half the study ey

[@pongfoong9523]

i dont belive you my friend all told me am horror youtube infect we didnt know together before.

[@pongfoong9523]

and my friend who working borker on stock set all nekie hencheng downjohn . he fucking richest on be thai friend.

[@pongfoong9523]

manager you have to paid me by i putting bill on facebook . that hecky team i guess.kong pic me you selling all whole world army

[@pongfoong9523]

but borker stocking wall shing ton that richest over it seem that new product it hecky free on them. In fect reallitivity i draw.

[@pongfoong9523]

and what i draw not free and not about the product of your investment asset for you .

[@pongfoong9523]

rusia and chinna .gonna be same .seem we didnt grow up together i improve all i product by real time .on bluebtooth number.

[@pongfoong9523]

go away you make me poor.

[@pongfoong9523]

Pls go out away of my life .you make me poor.