Understanding God's purpose

Had a great day today, went to Straits Restaurant@Hyatt for a farewell meal as one of our colleagues are leaving. Very authentic Straits Chinese food, and all Halal!

Rushed back to school for Mark 8-16 Bs after work, was 30 mins later and essentially missed most of the study itself. Was feeling moderately sick, and felt like skipping it, but heck, just whack painkillers and go for it. Thank God, the next 1.5 hours was worth it, EVERY MINUTE.

Today's application: How do you know when something is God's will for you and when is it just your own pursuit of a dream? Must we always NOT strive to become a top banker/lawyer.. etc... in order to obey God's laws? Far from it!!! It is sheer ignorance and stupidity to hold such a notion without understanding the Godly principles and the process which will lead many of us to our first job. This is not an easy to understand or appreciate, so let us do so through further analysis

1) Principle: Putting God's Will before our own: Process: Very often, we decide on one thing, and then we pray/work towards it. It might sound perfectly sensible, but doesn't it also sound like you put your own agenda in the center and then try to accommodate God around it? Will God be glorified in the process? Lewyn said to asking what God desires for us, and with that hope, work towards what we think God desires for us. Which leads to another question, how do we know WHAT God desires for us? I do not have a good answer for this, all i can quote is Mark8:36 ; What good is it for a man to gain the whole world yet forfeit his soul? I feel that the only way we will ever know what God desires for us is by building a faith small as a mustard seed but can move mountains.

2) Further Analysis: Some of us feel that we can handle both, that we can build our career ladders and our spiritual walk/serve God side by side. Well, such a thing comes 2 ways. First, the number of hours your job consumes, and assuming that the work hours are demanding, whether you have the capability to multi task and serve both areas efficiently and effectively. Let's be frank. If you work 100 hours a week ( which i have tried and nearly fainted), its gona be pretty hard to teach the children on sunday. Of course, no harm, you can try, but just like blackjack in a casino, the odds are highly against you.

In conclusion: I'm beginning to realise that serving God is not trying to stuff Him into my plans, but rather surrendering my plans to Him and letting Him become my decision maker? Will that lessen my determination at all? Hardly, infact, i think it makes me even more determined to do well so that He may be honoured through my labour. Nonetheless, its a great struggle at times, and frankly there are times that i SO SO BADLY wan to give up and say 'screw it'. But i believe its the right step to take, that focusing on God is the most important, and that he will provide sufficiently for me and my future family. I still have doubts about future, how am i going to provide for my family after 45, whether i must become a rainmaker to hedge against such a problem, and if i become a rainmaker, will i end up compartmentalizing God...Its so many decisions, but i realise, just TRUST God and pray that i will continue to work my keep and strive well to honor him no matter what. And never give up on allowing Him to make decisions for my life.

Ok, that's it, Good night ! =D

Reflections on Strategy - Part 1

Today just marked at the end of Strat class 3a under Prof Adel, was just reflecting on the last 5 weeks of my life, the things i've done right, the things i have done not- so-right, what i should let go, what i should hold true.

Done right
entered this course wanting to contribute the best i could to the group and ace as much of the course as possible
Getting a better insight to how strategy relates to real life and a qualitative description of how strategic dynamics work
Wanting to share my experiences with strategy and get a beyond finance perspective to strategy

Not-done-so-right
Being too aggresive in wanting to achieve the grade
Taking on a poor attitude when i did not agree with others
Conveying the message subconciously to others that they won't up to
Saying "No" to a person's view, should learn to act graciously and not discount the person's view with a negative comment.
Rigidly sticking to a mould and not willing to change ( until my team mate advised me too.. thanks ben, appreciate it =)

What to let go
Not thinking how to phrase my words before i speak
Not giving a fast answer and not value adding by delaying an answer
Being too task oriented and not focusing on the teammates around me, not seeing a sliver lining in every person


What i should cling on to
Willingness to accept mistakes and change
Observing what's going around me and adjusting to the situation
Appreciating other ppl's efforts and commending them regardless of whether they produced the most favourable outcome from my perspective /or not.
Learn to set expectations at the start, preferably on an informal basis.

Verses from Proverbs,so refreshing and meaningful, like the Allspark, it gives life, not power

Proverbs 22

v4 - Humility and the fear of the Lord bring wealth and honor and life.
v11 - He who loves a pure heart and whose speech is gracious wil have the king for his Friedn
v12 - The eyes of the Lord keep watch over knowledge, but he frustrates the words of the unfaithful

Proverbs 23

v4-Do not wear yourself out to get rich; have the wisdom to show restraint.
v5-Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.
v22-Listen to your father, who gave you life, and do not despise your mother when she is old.
v23- buy wisdom and do not sell it; get wisdom, discipline and understanding.

Just Trust Him!

Been having an ongoing struggle trusting God and depending on my own strength. Tired of it, its been taking a toll on my whole life. Little sleep and lots of time spent on work, all in hope that i'll make it to somewhere in life next time. So many times i've sacrificed social gatherings, leisure church activities, and even my own personal development. All this while i've been doing what i thought should help me get somewhere, yet i'm not gaining any real returns. My communication skills are getting weaker, and i'm becoming more bitter by the realities of life. I'm tired of taking medicine to numb pain. Its ridiculous.

All this has to stop. Was talking to dad yesterday and he told me that i'm now on the other extreme end of the work scale. Once upon a time i was lazy, now i'm working so hard that he wants me to slow down. But apart from that, he stated very clearly that i'm not trusting God, i'm not taking time to talk and coverse with Him, and worse, i absolutely have no faith in Him. He said that although i'm putting in like 200%, its only producing like 110% results. Why am i so inefficient? Its because i'm working with tenancity and determination, but i'm not working with God's wisdom. And that's why i can never reach the DF standard, which is 100% efficiency ( Efficiency = Result/Effort) This has got to stop, and i have to trust God that he will help me excel in all areas.

I was reading Daniel today, and how he prayed in light of death, when Kind Nebuchadnezzer wanted to sentence all the wise men to death because they could not narrate the dream to them ( which sounds ridiculous, who can read another person's mind). Now, do note that Daniel is a damn smart guy, he is the best of the best ( see Chapter 1 (V4 - young men without any physical defect, handsome, showing aptitude for every kind of learning, well informed, quick to understand, and qualified to serve in the king's palace) , yet when facing execution by the King's guard, he did not panick, but he instead he asked for time (with TACT0, and then used it to cry out to God. This has thought me two important lessons:

1) As christians, we are required to say things with tact even in the worst situations
2) Rule no. 1 , always cry out to God for help

V19 -Then Daniel returned to his house and explained the matter to his friends Hananiah, Mishael and Azariah. 18 He urged them to plead for mercy from the God of heaven concerning this mystery, so that he and his friends might not be executed with the rest of the wise men of Babylon. 19 During the night the mystery was revealed to Daniel in a vision. Then Daniel praised the God of heaven 20 and said:
"Praise be to the name of God for ever and ever;
wisdom and power are his.

21 He changes times and seasons;
he sets up kings and deposes them.
He gives wisdom to the wise
and knowledge to the discerning.

22 He reveals deep and hidden things;
he knows what lies in darkness,
and light dwells with him.

23 I thank and praise you, O God of my fathers:
You have given me wisdom and power,
you have made known to me what we asked of you,
you have made known to us the dream of the king."

Which smart guy does such a thing? So many smart ppl nowadays just believe in themselves. But this dude actually cries out to God. Simply amazing. I have to Trust God and cry out to Him.

Judges 7:2 (paraphased) - To God however: His power/strength is perfected- and glorified - in/ through our weakness.

I'm not the most competent guy really, i got to learn how to love God and believe that He can use me mightly.

Joel

Is core inflation an accurate metric to use when managing the economy?

By defination, core inflation does not measure volatile prices, this includes food and energy prices. If you include it in, then it will be know as headline inflation. I'm pretty new to economics, but i do wonder what is the rational for the Fed to focus on core inflation? Now, the implication is that the Fed probably think they can predict future headline rates better than us and adjust interest rates accordingly. But aside from this implication, does tracking this rate justify the annual increase in oil prices since 2002? Hardly! And this is what i don't understand? How are u going to account for the continuous change in oil prices? Yes, its true that food will account for it somewhat, but if you think about it, the correlation between product and energy prices is largely indirect and thus not so strong. So the annual increase in food prices may not indicate the actual increase of oil in any significant manner. But what makes the Fed think that they can predict where headline inflation is going and base their monetary policies on that pre judgement? Doesn't make sense to me and i'm going to find out more ! hmmf !

Know Thy self or go Home

Mean Street: Know Thyself. Or Go Home.
Posted by Evan Newmark
I left Goldman Sachs in 1988, got an MBA and returned in 1992.

A good friend calls my MBA the most expensive degree in the history of higher education. “If you had stayed at Goldman, you would have made partner and $50 million in the IPO…At least, $50 million.”

A missed opportunity? Perhaps. But I never lost any sleep over it. I always saw my career as a long journey with many side journeys along the way.

With layoffs now sweeping Wall Street, some of you may be wondering about your own future. Let me offer some advice. Or rather let Socrates offer you some: Gnothi Seauton. Know thyself. Do that and you won’t go too far wrong on Wall Street or in life.


There are two approaches to a Wall Street career: The specialist and the generalist. You ought to know which approach best suits you. The hardest thing is to be someone you’re not.

The way of the specialist is dedication. He sticks to one thing and gets really good at it. Year in and year out. Up and down markets. A long single career arc as a treasury-bill trader, M&A banker or research analyst. The specialist needs focus, stamina and patience. His reward is that he can take his career easily from firm to firm.

The way of the generalist is less secure. He has several careers. Four years at one thing, seven at another. The M&A banker who joins the private equity shop. The research analyst turned hedge fund investor. The generalist needs to be versatile and open to failure. He also requires more luck than the specialist to find the right roles, mentors and institutions.

Either way can take you to the top. Specialist? Goldman Sachs CEO Lloyd Blankfein, a commodities trader. Generalist? John Thain, the CEO of Merrill Lynch who had stints as a Goldman banker, mortgage securities trader and CFO.

The careers of most Wall Street professionals fall out along a spectrum between specialist and generalist. But if you want to play the safe odds on Wall Street, be a specialist. It’s easy for company recruiters and headhunters to put a round peg in an open round hole.

Me? I’m with the square pegs. I’ve had runs in M&A, private equity, managing advisory practices and an overseas office. I like new experiences and learning. And I’m willing to live with the volatility such as unemployment that accompanies the generalist career.

Where do you fit in? To help you better know yourself, here’s a short quiz. Add up the points for each answer selected:

A. In your free time, you enjoy reading: 1) The Robb Report 2) Research reports 3) The Economist 4) Albert Camus

B. You discover that your colleague was paid a 50% bigger bonus than you. You: 1) Quit and anonymously call the SEC on your colleague 2)Threaten to quit and demand a guarantee 3) Have constructive face-to-face with boss and ask for Hong Kong posting 4) Shrug your shoulders and go smoke a cigarette

C. The following describes your relationship with money: 1) My only friend 2) My best friend 3) A good friend 4) An earthly distraction

D. The secret of your success is: 1) You 2) Hard work and ambition 3) Hard work and good luck 4) Fate

E. Your ideal institution is: 1) Galt’s Gulch 2) The old Donaldson, Lufkin, Jenrette 3) Goldman Sachs 4) Do not believe in any

F. Your hero is: 1) Michael Milken of Drexel Burnham Lambert 2) Brian Hunter of Amaranth 3) John L. Weinberg of Goldman Sachs 4) Mahatma Gandhi of India

If you scored:

8 points or less: You shouldn’t be working on Wall Street. You should be running Wall Street. Immediately start your own firm.

9-16 points: You’re a classic Wall Street specialist. There’s always a job for you even if it’s reduced pay at a second-tier European or Japanese bank.

17-21 points: Welcome to my world. There’s a job out there for you, but you’ll have to search high and low. Rare is the institution that believes you can love both poetry and derivatives.

More than 21 points: Give up on Wall Street. Take first Air France flight to Paris to live as bohemian in a garret flat.

For more insight on a Wall Street career. Read Jonathan Knee’s recent WSJ article.


By JONATHAN A. KNEE
April 23, 2008; Page A15

When the music of financial-services contraction stops, there will be a lot of investment bankers without seats. Merrill Lynch alone recently said it would lay off another 2,900 people, on top of the 1,100 jobs already eliminated this year. The total number of eliminated banking jobs is likely to dwarf the 90,000 over the two years following the Internet bust of 2000.

For many of these bankers, getting fired could be the best thing that ever happened to them.

Rainer Maria Rilke, in "Letters to a Young Poet," offers some words of wisdom that the newly jobless would do well to consider: "This most of all: ask yourself in the stillest hour of your night: must I write?" Rilke warned of the hardships of his chosen craft, arguing that if the poet could even imagine living without writing, he would be better off doing so.

This kind of profound introspection is rarely undertaken by those young professionals who march off to investment banking careers based more on what is expected of them than on any deep commitment to the field. They should take a moment to ask themselves: Must I bank?

Such introspection, even if it comes late in life, can lead to greater fulfillment than scrambling for the next best investment banking job that might still be available. I wrote in my last book that the opportunity to really pause and face a world where the next step has not been preordained can be a profoundly cathartic learning experience. Judging from the emails I received after the last bust, many may have benefited from doing just that.

Of course, there are real limits to Rilke's practical applicability to finance-career counseling. Introspection is easier said than done. For the hypercompetitive set that is overrepresented in the finance sector, life's goals have often been defined in terms of obtaining the highest grades, getting into the best schools, and securing the hottest jobs. Thus the simple exhortation to look inside for your true calling can seem a little overwhelming.

An important first step is to examine the salient characteristics of the key types of job opportunities. When business-school students announce that they have narrowed down their career focus to investment banking, private equity or a high-growth start-up company, in reality they have not narrowed their options down at all. These three kinds of jobs are all distinct categories of occupations, each of which draw on different talents and in which different kinds of people are likely to thrive.

Like all service professions, investment banking is fundamentally a sales job. Individuals who feed on human interaction, and have natural empathy (sales is about putting yourself in your customer's shoes), do well in sales. Being good with numbers, often assumed to be the key to banking success, will be of little use in getting a big office with a view if you do not have sales aptitude.

Private equity, like hedge funds and other investing jobs, is essentially analytical. These are solitary professions, and one is judged on the quality of the analysis produced. The quality of this analysis is in turn assessed on highly quantifiable metrics – like whether the stock you recommended went up or if the investment in a private company you sponsored turned out well. If the classic sales person is a deeply social being, the typical analytical person is a bit of a loner.

Working at a start-up or any other company is an operational job. Operators must communicate and "sell," both internally and externally, to effectively function in their positions. Operators must also be "analytical" enough to attain the domain expertise needed to achieve credibility in their operating role.

But the defining characteristic of the operating role is a commitment to a continuing level of involvement with the organization's objectives. A sales person makes a sale and moves on. Analytical people make a call or do a trade, and reap whatever rewards that insight yields. Operators are in it for the long haul.

Most jobs fall into one of these three categories: sales, analytical or operational. The odds that the same person would prosper equally in more than one of these environments are low. The personal qualities that each position draws upon are simply too different. Some Rilkesque introspection in order to identify which category would likely yield the greatest personal satisfaction is an excellent investment.

Rilke's fundamental insight is indisputable: Dedicating oneself to any profession, whether poetry or otherwise, should not be undertaken lightly. Doing so would ignore the unique gifts that each of us has to offer. It would also meaningfully reduce our chances of ultimate personal fulfillment.

Whatever the other negative ramifications of the current financial crisis, if bankers use it as an opportunity to ask themselves these questions they will likely be happier and, if they decide to stay in the profession, better bankers as well.

Mr. Knee, adjunct professor and director of the Media Program at Columbia Business School, is the author of "The Accidental Investment Banker: Inside the Decade that Transformed Wall Street" (Random House, 2007).

Courage

Courage is almost a contradiction in terms, it means a strong willingness to live taking the form of a readiness to die. "He that will lose his life, the same shall save it," is not a piece of mysticism for saints and heros. It is a piece of everyday advice fors sailors and mountaineers. It might be printed in an Alphine guide or a drill book. The paradox is the whole principle of courage, even of quite earthly or quite brutal courage. A man cut of by the sea may save his life if he will risk it on the precipice. He can only get away from death by continually stepping within an inch of it. A soldier surroundied by his enemies, if he is to cut his wayout, needs to combine a strong desire for living with a strange carelessness about dying. He must not merely cling to live, for then he will be like a corward, and will not escape. He must not merely wait for death, for then he will be a sucidde, and will not escape. He must seek his life in a spirit of furious indifference to it; he must desire life like water and yet drink death like wine.

- G.K Chesterton

Friends and Relationships, listening to Rob Paravonian

Another hard day at work yesterday.. worked till 3ish in the morning... just had dinner with Ben just now man, long time since we caught up. Ben's a splendid dude man, he'd just came back from a viet CIP trip and was telling me all abt it. We had a good time catching up man, the conversation flowed from insincere 'fakeo' peeps to motivations and goals in life. I really appreciate Ben for being a damn patient dude man, he is really smart and hardworking but i can see that he does help people whenever he can. I kinda struggle between aspirations, strengths and serving God, and i think Ben really helped me set the perspective right today. Sort of a 'reality check' reminding me that i might just have certain key strengths such as wanting to help ppl and adding value to them, but at the same time, continue to identify new areas to strengthen. He also mentioned that in working life, just aim for the best job coz from there u can chose your 2nd or 3rd choice from there (asssuming u don't want to do IB). Its a good reminder, cause when you work like 14 hours a day, 6 days a week ( 8 hours on sunday), you kinda forget all these lessons aka directional signs of life.

Some people mentioned that they wanna become IBs... its a cool dream, but sometimes i just wonder if people tie their self esteem to the job that they aim to become. So what if you can't get it? It really worries me that people should really have such a mentality. No doubt one should work hard, work smart, and shoot for the stars, but how can you tie your self worth to money? God made us, and everyone of us is priceless. When we die, who will ever remember us as the rainmaker? Was out with Natie last week ,and i remmber what i said to her:" The day i identify myself to Nat as an IBa intead of Joel, is the day i have lost myself" May that day never happen. For our identity goes with our inheritance. Is my inheritance with God or Man? May i chose God, for the integrity and righteousness (sth i strive for as i enter the corporate world) that is away more effective then any corporate governance structure we will ever see in this lifetime.

That I may be found in Him, not having a righteousness of my own derived from the Law, but that which is through faith in Christ, the righteousness which comes from God on the basis of faith --Philippians 3:9

As soon as i can, i will dissect UBS case and post it up, what was their initial strategy, what went wrong, and what are they doing about it, how it will realign back to their strategy. I'm excited and i can't wait to dissect it !

P:S ... if u very stressed, please check out Rob Paravonian on YOutube.. HE ROCKS! =)

Joel

Buffet speaks ... he da man

Buffett goes to Wharton
Why Warren Buffett views his job as similar to painting the Sistine Chapel.
By Nicholas Varchaver, senior editor

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(Fortune) -- In a presentation he made to students at the Wharton School earlier this month and a subsequent interview with Fortune, Warren Buffett shared his thoughts on everything from the economy to the credit crisis and the Bear Stearns bailout.

In this Web exclusive, we present further excerpts from his talk with the students, in which the megabillionaire offers his insights on judging managers, buying businesses, what metrics - if any - he relies upon, and why he views his job as similar to painting the Sistine Chapel.

Q: You said before that one of the things you look for in businesses you're buying is good managers who are honest, capable, and hard-working. To me, that's a hard judgment to make if you haven't known him for long on a personal level. How do you go about figuring that out about somebody, and how long does it take you to make that evaluation?

WB: Well, almost always, we're buying businesses where the managers come with it, so I do have a record [I can judge]. If I had to pick out the five people in this group here who would be the best managers, I wouldn't know how to do it. I mean, you all have great IQs, you have great academic records. You've all shown the energy to get into school and push hard and all that. So you'd have all these attractive qualities.

Can I pick out the five best? I don't think I can do it. What I can do, when I've seen somebody run a business for 20 years, is decide whether they're going to keep behaving in the future as they have in the past, if I keep the conditions that caused them to behave that way in the past. So when I buy a business - it's the biggest question I ask myself if I decide it's a good business - is "Do they love the money, or do they love the business?" Now, if they love the business, we can do business. If they love the money, we can't.

Now, let's say they love the business, as our managers do. They sell me a business for a billion dollars and can hardly wait to get to work in the morning.

In that situation, I'm the only guy that can mess it up. I can take that out of them. I can't put it into them. But I say to myself, "Why do I go to work in the morning?" I've got enough money. I've got Social Security now, even. [Laughter] I'll make it, you know? The kids won't get much, but that's their problem. So I say, "Why do I go to work in the morning?"

Well, there are two reasons. I love painting my own painting. I come down to the office, I get on my back, and I start painting. And I think I'm in the Sistine Chapel. It's my painting. Now, if somebody says, "Use more red paint instead of blue. Paint a seascape instead of a landscape," I would hand them the brush in five seconds and I'd say-I'd say a few other things, too - but I'd say, "Do your own painting. I'll go paint what I want to paint." I get to do my own painting. And then I get applause - if I deserve it. And I like that. I like having the painting admired, and I like to get to paint my own painting. That's so much more important to me than getting my golf score down three strokes or beating somebody at shuffleboard or something. I mean, it is the ultimate pleasure.

Now, if that turns me on, why won't it turn on these people who have built their own businesses? They have spent their life creating a wonderful painting. Now, for one reason or another, maybe tax reasons, maybe sibling reasons, who knows what, they need to sell it, they need to monetize it.

They come to me, and they know that at Berkshire they're going to keep the brush, they're going to keep doing the painting, and I have to look at them and decide whether they are people that really care about their painting or care about the money. [One giveaway is] if they auction the business. We've never bought a business at an auction. Never. Anybody that wants to auction off their family or auction off the creation of a lifetime, that's not what we want.

I tell people you've got two choices. You've spent a lifetime building this business. Or maybe your father built the business and you carried it on. Maybe your grandfather. You've given up vacations sometimes. You worked on weekends and all these things to create this really incredible painting that you're bringing to me. Now, if they want to auction it, they're not for me.

I tell them they have two choices. They can sell it to us, and it'll be in the Metropolitan Museum of Art. We'll have a wing for their painting. People will come and admire it, which they do. And they will say, "That's one hell of a painter." And you get to keep painting. Or you can take this marvelous painting and you can sell it to a porn shop. [Laughter] And he'll take the thing and he'll make the boobs a little bigger, something like that. And put it in the window. And a guy will come over in a raincoat a few years later, and he'll buy it, post it in his window, and it'll become a piece of meat, basically. We get the ones who care about having in it the Metropolitan Museum.

I got a fax almost three years ago on a Wednesday from a fellow I'd never met about a company I'd never heard of. This fellow named Peter Liegl ran Forest River over in Elkhart, Indiana. He sent me a couple pages, and said, "This is the sort of thing it looks like you're generally interested in."

I called him up that day. I said, "Pete, send me the last few audits. FedEx it, and I'll call you tomorrow afternoon." Never met him, never heard of the company. (It's a recreational vehicle company.) So I got in on Thursday morning, and I called him that afternoon. I said, "Pete, here's what I'll do. And if it works for you, fine." I'd never met the guy, but I could still tell by just the way he presented it and his thinking on it. And he said, "Fine. I'll come over next week with my wife and daughter, who own the stock."

And they came over late in the afternoon. I said to him, "Pete, what kind of salary would you like"; this is a company that did a billion seven last year. That's not the way they teach you to do it in business school, but I don't want anybody working for me that has a compensation system they're unhappy with. These people don't need me. They've got all the money they need. I'm going to [invest] hundreds and hundreds and hundreds of millions of dollars [in their businesses]. And he said, "I don't know." And I said, "Well, just tell me because I want you to be happy. You have to run this thing." "Well," he took a little while, "Well," he said, "I looked at the proxy statement, you make $100,000. I wouldn't want to make more than you do." So that became his salary.

Then I said, "You should get paid for exceeding the figures [on which I'm basing the decision to buy the company]. So," I said, "I want you to have a percentage interest in future earnings above this level," which we worked out. But he offered $100,000 and I offered the percentage above that. He has run the business magnificently since then. I've never been to Elkhart, Indiana. I've never seen this place. I hope it's there. [Laughter] Pete may have some 11-year-old kid in there that says, "What figure shall we send Warren?" [Laughter] The guy has done a remarkable job.

If I told Pete whether he should build a new plant, whether he should bring out a new model, whether he should change dealer firms, he'd tell me to take a hike. You know, why shouldn't he tell me to take a hike? He doesn't need the job. As long as that thing is a lot of fun for him, he's going to keep running it. And he'll run it for a long time.

[I get offered all] kinds of deals from LBO operators. I would just love to bet against the projections of every one that they give me. They hand me these books, which I don't even want to look at, but they hand me the books, and of course they always just project like that [points upward like a graph that only increases]. I would just love to make a career out of betting against the figures presented in those books, but I don't get a chance to do that. If you ever get a chance to short investment banker books, that would be a great activity.

Q: When you purchase a subsidiary, you've mentioned that you allow them to reinvest capital if they're able to go above a certain hurdle rate. So I was wondering how you decide what the cost of capital should be on a risk-adjusted basis.

WB: Well, we don't think about cost of capital or risk-adjusted. I mean, we don't want to take any risk, and we don't. That doesn't mean we don't do things that are wrong and all that, but we are not doing anything that risks real losses.

You know, GEICO spends 800 million on advertising. I may spend $200 million that's wrong this year at GEICO or something. But I recognize the things that I can't further refine. What we do with capital is we just look for the best thing we can do at any given time. I mean, in the end, we're going to retain everything.

We don't want to do anything that doesn't create more than a dollar's worth of value for every dollar expended. And we'll do the best we can. And as I said earlier [regarding stock holdings], we would have sold the thing to do something that offered even better opportunity. We won't do that with businesses at Berkshire. That's a pledge I make to people. If they sell me the business, it's going to stay in the Metropolitan Museum forever. I may make a mistake.

If it's going to permanently lose money, I reserve the right to sell it, and if it has labor problems, I reserve the right to sell it. That's in the back of the annual report every year. They've been there for 20-plus years, those principles. But we believe in them. We follow through on them. So we won't dump a business that way. But about 200 million a week comes in to me every week. I like it, too. [Laughter] And it's my job to figure out how to allocate that.

The smaller capital expenditures, or even fairly large ones at the subsidiaries, they just do them themselves. They don't need me, because if some guy comes in to me and talks about something in the yarn plant or something in Georgia, what the hell do I know about it? I mean, they can always present it in a way that makes it look good. If I say the internal rate of return we demand is 15.83, it'll be 15.84. I mean, you just can bet on it. I've never seen a project that doesn't meet your hurdle rate, you know, if they really want to do it. We don't go through those charades. And it saves my time, saves their time.

If we get into bigger deals, then I get involved. Buying businesses of any size and things of that sort. But we just look for the most intelligent thing. And our cutoff point is where we don't think we're creating more than a dollar of value for every dollar we lay out. Marketable securities, to some extent we just look for the things we think have the best expectancy, but we're not buying - there isn't one security that I've got in the portfolio that I look at as-in terms of risky - in the sense of permanent capital loss. They can go down 50%.

Berkshire Hathaway (BRKA, Fortune 500) stock itself has gone down 50% three times since I bought the first stock in at 7 3/8. In 1974 it got cut in half. In 1987 it got cut in half. In 1998, 2000 or so it got cut in half. So that doesn't make any difference. I mean, I just don't worry about it. I worry about permanent loss of capital. I worry about making the right businesses. I worry about keeping the managers happy. Everything else pretty much takes care of itself. To top of page