Buffett’s University of Florida 1998 Lecture | Generated by AI
Question: What did Warren Buffett say in his 1998 Florida speech?
Answer:
Warren Buffett delivered a notable lecture and Q&A session to MBA students at the University of Florida School of Business on October 15, 1998. The talk covered his core investment philosophy, personal success principles, business evaluation, risk management, and avoidance of speculation (especially during the dot-com bubble era).
Key Themes and Points from the Speech
-
Personal Success and Habits
Buffett stressed building good character early in life. He highlighted integrity, intelligence, and energy as key traits, but emphasized that habits (good or bad) compound over time and largely determine long-term outcomes. He used a famous thought experiment: Imagine you could buy 10% of one classmate’s future earnings for life (or sell 10% of your own). You would pick someone with integrity, drive, and good habits—not just raw IQ or talent—because those qualities determine lifetime value. This illustrates that personal qualities and reputation matter more than intelligence alone for “winning” in life and career. - Investment Philosophy and Business Selection
Focus on simple, understandable businesses with strong economics, honest and capable management, and a predictable future (at least 10 years out). Stay within your “circle of competence”—it’s better to know a few businesses deeply than many superficially.
He prefers high-quality businesses that generate strong returns on equity and require little capital (e.g., consumer brands with pricing power).
Examples:- See’s Candies — Bought in 1972 for $25 million; emphasized its “share of mind” in California, ability to raise prices annually without losing volume, and minimal capital needs. This turned into massive profits through pricing power and holiday demand.
- Coca-Cola and similar moat-protected companies (e.g., Gillette) — Enduring brands that thrive long-term despite economic disruptions.
-
Risk, Leverage, and Mistakes
Avoid excessive leverage and overconfidence in models. He critiqued Long-Term Capital Management’s collapse (happening around that time) as smart people risking what they needed to make what they didn’t need, relying on flawed probability assumptions.
Risk isn’t measured by beta (stock volatility); true risk is permanent capital loss from poor business understanding.
He admitted his own mistakes, like initially buying Berkshire Hathaway (a declining textile business) and some preferred stock investments in businesses he didn’t like. -
Macro Factors and Market Timing
Ignore macroeconomic predictions—they’re unimportant and unknowable. Focus on what is important and knowable: individual business quality and long-term earning power. Don’t wait for “perfect” conditions; great businesses are worth buying even during downturns. -
Valuation and Speculation (Dot-Com Context)
During the internet bubble, Buffett expressed skepticism toward speculative tech/internet stocks. He said he would flunk any student who tried to value an internet company, as he couldn’t reliably do so himself due to lack of understandable economics and predictability. - Portfolio and General Advice
If you truly understand businesses, own only a handful (e.g., 6 great ones) rather than over-diversify. Treat stocks as ownership in businesses, not trading vehicles—no price targets or short-term flips. For most people, low-cost index funds are best.
The speech is remembered for its timeless value investing wisdom amid dot-com hype, emphasizing rationality, patience, and character over trends or complex models. A full transcript is available in sources like the Tilson Funds PDF, and video recordings exist on YouTube.
References:
- Buffett Lecture at the University of Florida (PDF transcript)
- Key takeaways summary from Saber Capital
- Video notes and quotes from Hurricane Capital
- CNBC article on the classmate thought experiment