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Warren Buffett, billionaire investor and chairman of Berkshire Hathaway Inc., signs a copy of his biography on Wednesday during the grand opening of R.C. Willey Home Furnishings store in Henderson. Photo by Clint Karlsen. Warren Buffett, with R.C. Willey Home Furnishings Chairman Bill Child at his side, announces Wednesday the Salt Lake City-based retailer is looking at building a second store in the valley. Photo by Clint Karlsen.

Friday, October 26, 2001
Copyright © Las Vegas Review-Journal

Billionaire shares advice with UNLV students

The secret to successful investing is a lot like playing good baseball: getting more hits than strikes, Warren Buffett told UNLV business students.

When it comes to picking a company for investment opportunities, the billionaire investor and chairman of Berkshire Hathaway Inc. said he looks at it like Ted Williams looked at pitches to hit.

Williams would have batted .400 every year if he waited for belt-high fastballs over the plate. But if he swings at low, outside pitches on the corner, he bats .220, Buffett said during an hour-long question-and-answer session Wednesday at Artemus Ham Hall.

"It's a tough game and we're not looking for tough games. We're looking for fat, easy pitches," he said Wednesday. "In investing, you never have to swing. There are no called strikes in investing. The only time you get a strike is if you swing and miss."

Whether he's buying 100 shares or 1,000 shares in a company, Buffett said he feels like he's buying the entire company.

"First of all, I like to think I can understand the business. I can understand Wrigley's chewing gum, I can understand Coca-Cola, I can even understand Wal-Mart.

"Then I figure out whether the company has a durable competitive advantage, the kind of competitive advantage Coca-Cola has, because my intention is to hold it forever.

"Then I look for management that is willing and able."

"The nice thing about investment is the knowledge you get is cumulative. Everything you learn can be used further down the line," Buffett said.

Buffett began charting stocks for hundreds of companies when he was 16, advising his sister on where to put her money.

He said he feels like he won the "ovarian lottery" when he was born in 1931, having come from good parents, gifted with above-average intelligence and good health, and being born in the United States. "I got lucky with my ticket," he said.

Several students asked about the importance of a formal education and having a degree from the University of Nevada, Las Vegas, versus one from an Ivy League school such as Columbia University, where Buffett went to graduate school to study under his most revered professor, Ben Graham.

Buffett likened a college degree to a badge.

"With some companies, it makes a difference what badge you're wearing when you start out. If you're going to work for some big company on Wall Street, the badge can make a difference."

"I don't put much emphasis on it. I look for people with fire in their belly, people with passion, not what their grades are or where their degree is from. I look for intellect, energy and integrity."

In Buffett's way of thinking, getting a business education is kind of like learning about sex. "You don't want to save it all up for your old age," he said. "If you haven't done it by the time you're 32, you probably already know more than you need to."

He also gave free marriage advice, which could also pertain to business investing.

"You look for someone who'll endure, and you look for someone with low expectations."

Buffett was in Las Vegas for the grand opening of R.C. Willey Home Furnishings in Henderson. He purchased the $450 million, Salt Lake City-based retail furniture chain about six years ago, and expanded it to Boise, Idaho, in 1997 and now to the 100-acre Traverse Point retail center being developed by The Landwell Co. The 213,000-square-foot store, which opened Sept. 20, has already topped the 11-store chain in daily sales on a few occasions.

Bill Child, chairman of R.C. Willey, said the company is looking at a second Las Vegas location within the coming year, based upon the Henderson store's sales by ZIP codes.

Like the stores in Utah and Idaho, the one in Henderson is not open on Sunday, a company policy that Buffett did not challenge, even though it puts him at a competitive disadvantage against other furniture retailers.

"We won't tell any of our operations what to do," he said. "We didn't know how it would work when we left Utah. Generally speaking, if you're true to yourself, it works. We knew we had a good idea and we knew we had a formula that worked."

The furniture business will do well in the next five to 20 years because people will continue buying things for their homes, Buffett said. "It's a business that's not going away."

Buffett said he lost $2.2 billion from the Sept. 11 terrorist attacks, but he's still bullish on the American economy.

"This country will do better per capita in 10 years, in 20 years, in 30 years because it's an incredible economic machine. It's amazing what this machine has turned out. There's been no decade in which our living conditions haven't improved," he said.