Stocks are simple. All you do is buy shares in a great business for less than the business is intrinsically worth, with management of the highest integrity and ability. Then you own those shares forever. I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful.

December 14, 2007


Warren, we asked you about this earlier today. There are some people who now think we are heading for a recession. Do you think that?

Buffett: Well, I think it could happen, sure. I think if unemployment picks up significantly there will be some dominoes that topple from that. I don't know if unemployment will pick up significantly. I mean, frankly, I've been a little surprised that it's stayed at 4.7 percent. If we can keep people employed, we will not have the dominoes topple. If unemployment picked up a lot, I think we could be in for a recession.

Becky: Well, what about the economy from your perspective? How does it stand right now?
Buffett: It's sort of amazing. We have this enormous weakness in housing. That effects an awful lot of people. There's a wealth effect to it, everything. So far, it hasn't spilled over into employment. Now we have a set of dominoes in line that there could be some real effect from if unemployment rose. But so far, you know, it's been at 4.7, well, it won't make any difference if it goes to 4.8 or 4.9, but if unemployment really took off, there are a lot of dominoes in the economy that probably would get hit by that.

So far it hasn't affected employment that much and if it doesn't I don't think we would have a recession, but if it does, I think there are some big dominoes out there.

The real thing to look at is how much you're getting for your money and not worry about what they're going to do next year. The American economy is going to do fine over time.
"It is the
nature of capitalism to periodically have recessions. People overshoot."



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