I’m in Omaha Nebraska; I actually get the chance to meet Warren Buffett, which not many people have had the chance to do. I had to come up with an interesting question to ask him and to quiz him on the 1974-75 financial crash because I thought, in moments like that how do you have the resolve and steel to make really intelligent purchases and that’s what I was quizzing him about. He did this great purchase with American Express stock where he bought it in the middle of a crisis and it turned out to be absolutely fantastic investment. His story was that, despite the crisis and all of the situations behind it, the stock was still a bargain because everybody was still using it.
Wind forward many years and I turned up at Disney, one year just after the financial crash of 2008 and in a spot not too far from here I waited 20 minutes to get a five-dollar ice cream. I thought, well this is mad because we’re in the worst financial situation since the Great Depression and yet lo and behold people are waiting 20 minutes to get a five-dollar ice cream and Disney parks are not cheap places to go and I was thinking well it’s amazing just how busy it is here and yet you know Disney stock was getting pummelled.
Everybody is running away from investments in stock markets and you know there was a complete wild panic on and I thought well maybe this is my opportunity. So I did that classic thing and thought what would Warren Buffett do? What Warren Buffett would have done is snapped up stock so that’s exactly what I did. I got onto my us broker, figured out how much money was in my account and started buying Disney stock at relatively cheap prices. I did all of my research into diligence and I knew what sort of price I’d like to acquire it for and that’s what I went off and did. I figured out that there was an opportunity. I figured out that it was at a good price and I probably wouldn’t get the opportunity to buy to that price again for quite a few years. So, I started acquiring Disney stock I got it for somewhere between ten and fifteen dollars and not so long ago Disney stock was riding at a hundred and twenty dollars so it was almost a ten bagger (as they call it in financial market terms). I mean it was one of the best purchases I’ve ever done and that has actually helped fund this trip so rather bizarrely I’m a Disney shareholder at Disney and I paid for the trip using Disney stock and it’s one of the best investment decisions I’ve ever made.
It shows something really important, which is how critical your thinking is when those moments come around. What Warren Buffett said to me was that it was impossible at any moment there were positive his negatives and all the time at the top of the market at the bottom in the middle of a crisis and so on. If you buy something that makes perfect sense, you do the maths, you figure out if you’ve got enough margin of safety and away you go. If you think you’ve got something that’s really good you put a lot of money into it which is exactly what I did so it’s turn out to be financially one of the best trades that I’ve ever done and it was all thanks to picking up the book going to Omaha Nebraska meeting Warren Buffett, which wasn’t planned you know! In fact the decision was made in about 15-20 minutes, while I was queuing for an ice cream, not so far from here that I decided that you know despite all of the problems that are in the world at that time the place was absolutely packed and therefore you know that seemed to be an enduring characteristic of the company, people would still be here, whatever the prevailing circumstances. Whatever was happening in the economy it was still going be busy and the equity in the brand, and of those factors in Disney just seemed to stick out like a sore thumb at that point and so almost immediately I started acquiring stock.
However, the decision actually spans back many years before then but it all just came together in that split moment when I sat there filling my face with an ice cream.
I thought that may be an interesting story, if you look at where Disney stock has gone since then I just highlights that if you’re brave enough to take on a decent position at the right time then the rewards can be absolutely huge and that’s why I’m sharing it with you.
It just shows you really that when those moments come you have to act decisively and of course it could have gone the other way but it didn’t and you can’t believe so get into that mode of what if what if what if what if you wait for opportunities you don’t squander and jump on every opportunity that you think it could be there because you want it you if you’re patient enough you can sit there and wait for opportunities and you will recognise them when they come around. Whether that’s in a sports market a financial market or anything like that as long as you can identify what the key opportunities are and you think carefully about them then when you see them you act decisively, and that’s where the opportunity is created.
It’s not necessarily created in the thinking or the thought process that led up to that you need to do that, you need to spot opportunities but also you need to act on them.
Three components to a good trade, a good investment and good decision-making and that’s why I thought I’d share this video with you because it gives you that insight of the decision-making process that went into that trade it wasn’t a one-off thing it was a question of being patient waiting for the opportunity and then striking while the iron was hot.