WARREN BUFFETT: Well, I have no idea what the stock market is going to do in the next day, week, year. There's no question in my mind that stocks 10 years from now will be appreciably higher than they are now and there's no question in my mind that people that leave their money in cash equivalents are going to own something of less value at that time. Now, I can't time when you get in but if you own something that's destined to become worth less with cash equivalents and you have a choice to swap it into something that's destined to be worth more -- when you do it is up to you.
I don't think people can time it, so I believe in doing it promptly. And as I mentioned last week, I actually, in my personal portfolio, was going from 100 percent governments into 100 percent stocks, as stocks are going down


Governor Schwarzenegger Discusses the Economy with Warren Buffett at the 2008 Women's Conference

http://www.schwarzenegger.com/news.asp?id=2340

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1959 - this stock was the commonwealth trust co., of union city, New Jersey. At the time we started to purchase the stock, it had an instrinsic value of 125 per share computed on a conservative basis. However, for good reasons, it paid no cash dividend at all despite earnings of about $10 pre share, which was largely responsible for a depressed price of about $50 per share. So here we had a very well managed bank with substantial earning power selling at a large discount from instrinsic value. Manager was friendly to us as new stockholders and risk of any ultimate loss seem minimal.Thus we had a combination of: very strong defensive characteristics, good solid value building up at a satisfactory pace and, evidence to the effect that evetually this value would be unlocked although it might be one year or 10 years. If the latter were true, the value would presumably have been built up to a considerably larger figure, say, $250 per share.Commonwealth only had about 300 stockholders and probably averaged two trades or so per month, so you can understand why i say that the activity of the stock market generally has very little effect on the price movements of some of our holdings.Dempster is a manufacturer of farm implements and water systems with sales in 1961 of about 9 million. Operations have produced only nominal profits in relation to invested capital during recent years. This reflected a poor management situation, along with a fairly tough industry situation. Presently, consolidated net worth (book value) is about 4.5million, or 75 per share, consolidated working capital about 50 per share, and at yearend we valued our interest at 35 per share. While i claim no oracular vision in a matter such as this, I this is a fair valuation to both new and old partners. Certainly, if even modate earning power can be restored, a higher valuation will be justified, and even if it cannot, Dampster should work out at a higher figure. Our control interest was acquired at an average price of about 28, and this holding currently represents 21% of partnership net assets based on the 35 value.
comment: book value at 75, working capital at 50, while buffet brought at 28.