Warren Buffett is well-known as an investor with a great deal of integrity, and in this video, he explains how he has been able to determine with a great deal of accuracy whether certain businesses are engaging in fraudulent conduct.
I like Warren but its fascinating to hear him talk about insurance companies denying legit claims, when the insurance companies he owns do exactly that all the time
@@vaughnkavon3993that's the point of insurance. They wouldn't make the maximum amount of money they could, and they sure as hell wouldn't hire lawyers and specialists in the field to deny somebody who clearly has a problem. And if they don't make the maximum amount of money the board fires ceos and executives
When there were vast numbers of people talking about Enron as a "can't miss," I read the annual report. I came away with no understanding of how they 'made money.' I thought it was me just not understanding their idea, but now we know.
My father worked in the same industry at the same time and Enron was one of the companies he had to do business with. He told me, "Everyone knew what they were up to, especially the regulators. It wasn't a secret."
1. Use your contacts to get investors... 2. Start a campaign that your company will change the world. 3. Bring celebrity investors 4. Go to TedX or Joe Rogan podcast to talk BS. 5. Start pumping money to your salary and compensations. 6. Buy insane work spaces with company's money. 7. Get a jet and go to parties every week with company's money. 8. The company will tank and you blame the economy or government regulations. 9. Cash your golden parachute.
Some guys would rather get ripped off by a guy that looks the part and makes them feel successful than actually be successful with someone who doesn’t look the part and have the right vibe.
We have a family company, and have been offered deals which turned out to be fraudulent over the years. We always said no. We didn’t do this because we have magic powers that allow us to judge character. It always came down to having confidence in ourselves and our ability to understand things. We know how we make money, and are confident that we can understand how you make money. But if we don’t know how you make money, or can’t understand how you make money, then we don’t want anything to do with you. So far we have never missed that once in a lifetime deal, but have avoided being involved in several large scale scams.
@@adicamdzic8470 I'd doubt that, because Munger could rightfully claim loss of productivity and other second order effects from the initial theft which would add up pretty fast. Thoughtful observation though!
@@adicamdzic8470 You can always sue for more than owe if someone refuse to pay due to punitive damages in this case the Insurance company is committing fraud by not honoring his claim.
"Never trust a man who wears a fake spray tan. If he'll lie to you about something as stupidly obvious as a spray tan, he'll lie to you about anything." My Dad, a member of "The Lost Generation." Who is now an avid tRUMP-licker.
My boss came thrashing into his office and I knew something was wrong. When I asked, he asked me a question. "What's wrong with my driving a Cadillac?". His customer disparaged him and thought the quote was too high, claiming he was financing the fancy car by raising prices. Not true, but I understood the guy's point. After that, my boss made a habit of driving the service van to appointments. That worked well.
@@microdesigns2000 Slightly related, but it's always funny hearing an apocryphal story. A young salesmen blows off a guy in a fishing shirt and jeans driving an dirty pickup truck. Thinking he's just some looser who can never afford the expensive cars. Turns out that guy own the multi-million dollar farm!
@The Richest Man In Babylon Same or maybe slight difference. Maybe the word trust is too harsh and the comment should read 'be wary'. but the point is the same which is that his customers finance his lavish living.
@The Richest Man In Babylon What's going over heads is your ability to correctly read comments. Learn to do that before you deem yourself qualified to criticize anybody.
I once saw a secretly filmed movie clip from an event arranged by some hyped startup company, and at one time there was a fairly young woman (not Elizabeth Holmes, this was in the 90s) who stood on stage yelling like some cheerleader, getting people worked up like a preacher at an extatic evangelical church meeting. I remember thinking "does anybody really buy into this sh-t" but the thing is that they do, and had I been in that room maybe I would have been drawn into that extatic feel as well. It's very human and very disturbing.
@@catherinesanchez1185The true church; given to us by Christ; in no way shape or form does this. All human beings are called to worship in reverence. If we fail to worship the only One worthy; then we will worship ourselves and others. Scam culture. Hoe culture. And many others
I worked for a very big successful company that decided to go public, prior to going public they temporarily changed their very successful way of managing the company to soften up the numbers. Suddenly it was a night n day comparison until they eventually had their IPO. Awhile after the stock was issued, they went back to their efficient ways of managing . The term “integrity” was a convenient term for the management and was so important to continue one’s employment there, which it should be. Many times a family man or woman was terminated under the broad brush of “lack of integrity”. Even the biggest “honest” companies in the world will “confuse” the public.
I get this same gut feeling when I watch “promotional” videos by a startup company who are claiming they will revolutionize the building industry with their folding mini homes.
I seen something similar, but the one I came across they build these lovely folding homes, could ship the equivalent of quad 16 foot mobile home in a single trailer, but never bothered to make the thing meet the basic standard building code.
Too Good to be True == RUN ! Nothing's easy in life; people who peddle schemes that bypass that fundamental fact appeal to our need to get to the finish line unscathed by disappointment.
I think these 2 men are saying that if the other party wants to do something with the accounting that you don’t feel comfortable with, run! In other words, if the other party wants you to trust them too soon in the relationship as demonstrated by asking you to do something not ethical with accounting, with the numbers, run!
I work with accountants and attorneys, they stay working into old age and stay pretty Sharp since they're using their faculties instead of decaying in front of the TV
Insurance is a complex business. Each year you take in the premiums, people make claims and you pay out claims. Looks easy, but the payout of claims is often several years into the future, and the claims may also be made in the future. So you need to be able to predict how many claims will actually be made, how successful they will be and the size of each payout. Underestimate the future payouts and your insurance company looks like it is doing brilliantly. Of course only until someone notices that your estimates are wrong. Then it goes bad fast.
Avoiding frauds is the elephant in the room when it comes to investing. I've beaten the my local total return index by an average of 7.7%p.a. over the past eighteen years. I'd estimate that I'd have added at least 4-5%p.a. to that by simply avoiding situations where crooks take your money! It's happened sooooo many times, I'm convinced that at least 30-40% of apparent bargains on the stock market are actually just instances where the market has cottoned onto the fact that there is something shady going on.
Slight tangent: Ever wonder why Mazda never did come out with its expected green diesel? I’m convinced they knew VW was faking the results because they (Mazda) couldn’t replicate the emissions results no matter how hard they tried. They knew it was fishy.
90% of humans are pretty much hot garbage. If you assume you're NOT likely to meet the relatively good 10%, then it's a lot easier to hang onto your money, sanity, and most importantly... your TIME.
Just standing up for the 90% here. I don’t think they’re bad. I just think they don’t tend to be very smart. Or they don’t tend to be smart in as many areas as the 10%. Also, if you think about it, if 90% of the people in the world were trying to scam everybody else, nothing would ever get done.
Always have to watch the carpet baggers that will sell their bill of goods to the board. They'll force out key people that built the company, eliminate R&D other than on paper, reduce maintenance below minimums, accept a lower quality of goods and service, add quantity sales incentives to reduce inventory, and layer in short term performance bonuses to pocket as much cash as possible. In about two years the company is faltering, customers are pissed, market share has been lost, no next product was developed to stay viable, and the carpet baggers are moving to their next company. Why just look at the way they turned their last three companies around and how poorly they did without their firm management hand. So yes, look at their management. Look where they have been and did they leave wreckage, destroying promising company after company in their wake. Odd thing is that college business classes teach them how to do it and, in fairly unethical "ethics" classes, how not to go to jail while doing it. Basically how to be a toxic corporate leach for fun and profit. A how to "get rich" rather than how to grow a healthy and profitable company. More: How to fake it until you can cash out.
Exactly How Carl Icahn got rich New York City, U.S. In the 1980s, Icahn developed a reputation as a "corporate raider" after profiting from the hostile takeover and asset stripping of Trans World Airlines. Icahn is on the Forbes 400 and has a net worth of approximately $17 billion to $24 billion.
Anyone that uses the term “game changer” might not be a fraud, but they certainly are either deluded or knowingly selling BS. “Game Changer” is a verbal tell…..walk away every time.
It really helps to understand the mindsets and experiences of both Buffett and Munger when they relate actual experiences of their business dealings. The letter writing by Munger to stand up to a larger insurance company was quite impressive. Shows that Munger had a lot of confidence in his position and how to stand up to financially larger companies.
ONE THING TO LOOK OUT FOR in these "Solar Pannel" salesmen is what they DON'T tell you. What they tell you isn't necessarily false, but what they don't tell you can bite you big time. I've run into this TWICE. I caught them both times, but it done seem to be pretty standard practice.
@@gasphynx Because the impression that they give by what they tell you is different than how much it will actually cost, how much of your expense you will be able to regain, and how it will work. For instance, a big portion of your electric bill is fixed "fees" that you will not recover.
These two are the only investors that give good advices while others are trying to scam you into buying their pumped up stocks or cryptos so they can get rich off of you.
And they're not trying to sell people on anything. They'll put out a book or something, but they say if you want to invest with us, buy Berkshire stock. Then if you're the average investor, they tell you to put your money into the S&P.
I once went to this _startup_ meet where founders came up with proposition of future projected revenues at upwards of 1$ Trillion dollars ! People want to use superlatives to emblsh themseleves.
That bit about having to pay executive bonuses in cash is real. Companies have been using that very "profitably" for years. It's not really that you are paying extra for wall street companies that do that at this point so much as that you can get companies that don't do that at a discount.
I liked the "it's like taking candy from a baby" example. Dude, if you think taking candy from a baby is a good thing, you're probably not the kind of person I want to trust in business.
Buffet invests in insurance businesses, and knows a lot about it. Yes, there are frauds in employee dishonesty, loss reserves as he gave examples. As investors, using the board to control the management with governance and oversight is the key. You don't have to know the details, but you should use your power to control them. That is an art.
Very true, too many way over promise and always seem to under perform. I have met a lot of bullshit artists that have business degrees and wear expensive suits. It basically comes down to what is your product or service, and is there a need or desire for it.
A lady I respect used to work as a teller at Wells Fargo. She started getting nervous about her job when the tellers were directed to run sales pitches at every customer that came through their lines. Her supervisor started giving her verbal warnings about it, and ultimately she found other work. Too bad for them, too. Even in a medium sized town like this one, just about everywhere she goes someone recognizes her from her old job and stops to chat. When businesses get too pushy and stop focusing on good customer service they always lose the people who make their customers feel well taken care of. Then they start losing customers. Of course, as far as I understand, with Wells Fargo, that's just the tip of the iceberg.
In the Real Estate World the fraudulent "fluff" is called "Pro-Forma" The agent claims the property income to be much higher than it really is. They want the buyer to pay based on these fabricated numbers.
winners win, that's the pattern. If you want to pick a winner, pick a winner! And, I do not mean simply pick the winner of the past. You need to pick the winner for the next period of time.
I think they’ve talked about this. It’s about the people they’re investing in. Do they know the business and are they passionate about it? Or are they looking for a cash grab and to step away after a payday? The businesses they invest in, they founders tend to reinvest the capital to scale the business. They know what they’re doing and stick around because they love the business.
Buffett wants to teach us but feels forced to answer these questions in purposefully vague ways. If he sees something, he should be able to say something without fearing consequences. We have some flaws in our system, which he believes prevent him from exposing fraud. Note also that he has more data about fraud investigation than ordinary people because the banks and insurance companies he invests in routinely face thousands of fraudulent claims and loan applications every year. It's a shame he believes he cannot share these lessons.
Buffett seems worried to broadcast to future fraudsters how he detects fraud for fear they will change their approach - and he said as much. But are you going to share your wisdom or not? You are not much good to anyone Warren, except your heirs, if you're afraid to teach.
How about ask people they've previously done business with. Frauds will always avoid this and once you see the hesitation that is the moment you walk away.
There is an old saying that an honest man is hard to con; and a dishonest one cons himself. Warren and Charlie are hard to con precisely because they are themselves honest.
@@pietergeerkens6324 a dishonest man cons himself, I've actually never heard of that myself, it makes sense. The people who I've known who repeatedly fall for frauds or suspicious people do not seem to be of the highest character either
Not as long as "money is free speech". They got away much richer and clean after 2008 and Barry told us "Technically, they didn't do anything illegal". Of course Bush and Barry BOTH in on it.
The example you used is the Big Business variant of when a boss asked me to work for cash, off the books, "so you can make more money while drawing Unemployment, too."
5:00m Reflects on 1960's response to denial of payment for an indemnity. This is what I've been doing subconsciously to 'run up the bill' with mixed, undetermined results in my personal battle with over-the-top Corporate and Business Law Fraudsters.
The example he gives at the end is standard B-school valuation. Idea is that buyer and seller negotiate a mid-point between what the seller can do now vs what the buyer could do if they buy this company. Always of course based on negotiating advantage- and right there you see why Buffet can claim 100% of that.
Get a good reputed private detective and all of a sudden, you have a leg up:- if you want, get a second opinion, if the conclusions are similar, decide quickly to drop the investment or buy in.
One way of determining if someone is right, is if the premise of the argument leads logically to he conclusion. Even before going into the details this video states that according to Buffet there is a common thread to all frauds, but in reality he presents several disparate narratives
@davidfleischer 4407 I thought Buffet was actually saying that there’s a common set of cues he looks for and notices with fraudulent pitch men, versus just a single cue. Also, he obviously can’t state them publicly because it would tip off future fraudsters he may have pitching investment ideas to him. Remember, good fraudster watches and studies their target victim so they would be watching these videos too. So I believe Buffet’s main point is that in addition to there being a set of cues to look for, you MUST take time to learn them from experience and once learned, they’re reliable for helping to judge people’s character.
@@diddy103177 as explained in the other reply, the video from Buffet starts with a title that does not reflect the content of the video. The title says that all fraudsters behave the same way, but your observation is also that fraudsters are adaptable. So in the end the way Mr. Buffet is presented in this video is the fraud
What about Warren's significant investments in carbon capture tech instead of the triple bottom line of nature-based strategies that enhance ground water supplies, decrease wild fires and preserve the biological diversity we will need to adapt to our changing climate? Data indicates nature-based solutions are more effective and less expensive than any carbon capture technology developed thus far. Therefore, not a good investment. The carbon clock is ticking Mr. Buffett. With great power comes great responsibility
They are the most successful investors in the last 50 years. They make more money in their sleep over a night than Joe Rogan makes in a year and Rogan is the largest podcast in the world. This Q&A is happening only because they are required by law to do so once a year. It’s quite simple to be able to attend this, just buy 1 share of BRK.A and you will automatically get an invite to this annually. It’s listed on NYSE and as of this comment it’s priced at USD667,130.00 per share, there’s about 564K shares in the public float. This is the only guaranteed way you will hear these 2 gentleman’s wisdom and knowledge to your questions. Unfortunately Mr. Munger passed away last year so it’s only Mr. Buffet left.
Indeed. It got a bailout after hopping on the CountryWide Bank 2nd Mortgage media full-press blitz. After Taxpayers (that's; "not Warren Buffet") bailed out Wells Fargo Bank, Buffet used his 40% share in that Bank to start buying that Bank's foreclosed homes as a private citizen with a _different_ corporation. Berkshire Hathaway Real Estate is now, definitely in the green and even a landlord in some cases. Berkshire Hathaway Media Group (since renamed) forgot to report that. _"Watch out for Frauds."_ Thanks, successful Warren Buffet.
Wealthy people obtain wisdom from books. They read many books to learn about history and human nature to predict the future. Don't listen to emotions, but learn to use logic.
No it's usually pretty easy. I'm a CPA and first I visit the bathroom. The soap and towels are empty, the people are Cheapskates. If they claim to be making good money too, they're lying
Imagine having more wealth then youll ever need, but not knowing having leadership to fix the things you own. High speed rail will be his only saving grace, the hate do to much coco
Have you seen what these serial criminal business people do? The ones that get away with it time and time again will sue you for defamation in a place that doesn't have an anti SLAPP law, aiming to cost you as much money as possible. All sorts of other bullying tactics that are available to the rich that are not available to the general populace. Not that any of these people would want to go toe to toe with Buffet either, lol. Good example of this is Logan Paul vs Coffeezilla.
