discount rate (for example, using Treasury securities with the same maturity as a reference), you will need to determine the present value of $1. The analysis procedure is much like estimating a company's cash flows. What amount of cash flows in the long run do you expect at a particular discount rate? And of course, you will need to estimate the change in interest rates in the medium and long term.

Your expectation of a "normal" interest rate determines the discount rate you use to estimate the cash flows of a Japanese company in the mid-1990s, for example. If you think that the interest rate will change significantly and you do not want to buy long-term bonds, you should consider whether you should bet on the profit that the company's earnings will bring to you in the long run. If you are satisfied with the income from long-term bonds, invest in strips (securities formed by splitting a coupon bond into several securities that circulate independently of each other).

Q: This week, Eric Rosenfeld talked about the last days of the LTCM Foundation and your part in the recovery from the crisis. He believes that if they, during their stay in Alaska, managed to get through to you, the company would have been saved: “I am still sure that we would have succeeded if Mr. him, no one was willing to take responsibility for a $4 billion investment.” Could you tell us what you think of this story?

Answer: Eric called me on Sunday while playing bridge. From his voice, I immediately knew that something serious was happening. On Monday, together with Bill Gates, they were in Alaska. He was talking on a satellite link, and Bill admired the picturesque views. The captain of the ship approached the shore so they could look for bears or something. Gates was in excellent spirits.

On Tuesday, Eric arrived in Yellowstone and negotiated through Bank Goldman Sachs. On Wednesday morning, he told the mediator his terms. Eric asked Peter (a GS banker) to make an offer: $3 billion from W. Buffett, $750 million from AIG, and $250 million from GS. The signature on the notorious document was put on his behalf by Peter. At first, the banker protested violently, but Mr. Buffett ordered to follow the instructions. So Peter signed for me, and also John Corzine and Hank Greenberg. He decided that since he “got hooked” anyway, he could sign for everyone. I don't think anyone has done this before. After that, I took a bus to Yellowstone, where the satellite connection did not work.

John (Merryweather) received $150 (or $250?) million. However, from Wednesday to Monday there was a lot of work to be done. “If I were in New York, we would have made a deal (in the words of Eric Rosenfeld) ... This is a very accurate description of the events that took place.”

LTCM and the head of the Federal Reserve Bank of New York, McDonnow, did everything in a way that was beneficial to them ... And I wanted to see the Old Faithful geyser ... Subsequently, I told Bill Gates more than once that this excursion cost us too much.

I understood what they were thinking. I would have fulfilled my obligations, and we would have received several billion dollars. I've made money on the weekends more than once.

I don't blame Merryweather. He received only $150 million.

Q: You and Charlie Munger think it's easiest to fool yourself. Tell me, are you not fooling yourself by following the doctrine of "buy and hold"? Perhaps it is very tempting? After all, it’s not you who work, but the right investments?

Answer: People believe what they want to believe. Everyone can explain, justify their actions in hindsight. It's good that I have a partner like Charlie Munger. It will always point out the error. Our strength is that we think about our actions and help each other. We are not subject to outside influences. Charlie believes that we have been successful because we are prudent and work hard.

Paraphrasing the statement of J. M. Keynes (“The problem is not to come up with new ideas, but to get rid of the old ones”), W. Buffett noted:

The problem is not to seize on new ideas. The problem is how to get rid of the old ones. C. Darwin recalled that he was constantly writing down new thoughts. He had many ideas. However, if he did not write down his insights, then half an hour later, the subconscious "erased" them and returned to the old beliefs.

Question: What do you think determines the competitiveness of the United States in the future, and what measures would you take in connection with this? For example, what about the health care system and gaps in the distribution of social benefits and pension benefits?

Answer: One of the main problems facing the United States is weapons of mass destruction. But nothing can be done about it (terrorists were, are and will be).

The most important economic problem in the United States is the trade deficit (90% of it is due to the current account deficit). This is a very complex issue, but it is hardly mentioned in the debate. Difficulties in the health and welfare system are one of the consequences of the foreign trade deficit.

No trade deficit means no net profit for foreigners. The government currently spends 22% of the US gross domestic product on social security and health care. These issues, that is, the redistribution of income between those who produce a product and those who do not produce anything, are the subject of constant "intra-family" political skirmishes. A foreign trade deficit is a transfer of property rights or "IOUs" regarding its transfer to new owners. Thus, about 1.8 billion dollars “leaks” abroad. It is not so easy to solve this problem. If the same trade deficit continues for the next 6 to 10 years, foreigners will own 3% of US output.

Can we let this happen? I guess, yes. Assistance to foreign states, which was provided to them in accordance with the Marshall Plan after the Second World War, was natural. However, future generations will have to pay off the accumulated debts, because the fathers did not want to return them. This factor may play an important role in destabilizing the financial market in the future. “If the theater stage starts on fire” and a significant part of the assets are owned by foreigners, this, coupled with other circumstances, could lead to a trade deficit becoming a major financial problem.

When it comes to healthcare, we need to rethink the demand for healthcare services as their cost is constantly rising. In the current situation, the structure demand is unstable. We need to achieve a change in people's expectations, a change in understanding of what is an acceptable level of health care delivery.

For example, should we keep a person alive during their last 3-6 months? Is getting the maximum of medical services a condition of people's health? The government needs to properly distribute these benefits, taking into account the degree of people's willingness to wait.

Question: Can you say that a significant part of your income comes from active investments (that is, influence on management decisions in companies, etc.)? If so, what do you think about the role and long-term success of a passive investor who does not influence the decisions of the company's management? Is it true that you have become less interested in passive investing because you are frustrated with the way things are done in most American corporations? In that case, what does this mean for the US?

Answer: In short, Charlie and I do not and should not have much influence over the actions of management in most of our companies. You would be very surprised if you knew how little our influence on management is. Executive directors have their own way of working. They know what suits them. To draw a sports analogy, they know how to score goals, even if they do it differently than others. It makes no sense to give instructions if they are already doing just fine. We are hiring good players.

If we talk about our influence on the heads of public holdings (open joint stock companies), then here we are simply “toothless tigers”. We do not control these companies and have never threatened to sell their shares if our advice is not heeded. Yes, we are very similar to toothless tigers.

We make long-term investments, which means we do not profit from a short-term increase in the price of the company's shares. Moreover, it is beneficial for us that prices fall for a while, because in this case we can buy more shares and increase our share in the company's ownership. However, financial disclosure rules make this difficult. For example, we rarely invest in the UK because there is a '3% rule' and we cannot form a large shareholding before the company goes public. Therefore, we showed the best results when the rules for publishing financial statements were not too strict. However, these rules are constantly being tightened.

An example of how such rules can cost hundreds of millions of dollars to comply with is our investment in PetroChina. We were forced to announce that we acquired a stake in it after purchasing only 1% of the shares. After that, prices skyrocketed.

Shareholders must think and act like the real owners of the company. If you own shares in a public company, there are three questions you should ask yourself. Are you satisfied with the work of its executive director? Is he behaving correctly? Is he too carried away by acquisitions and empire building,