From Warren Buffett at the 1999 Berkshire Hathaway Annual Meeting:
Essentially, you’re being a reporter. I mean, it’s very much like journalism. And if you ask enough questions — Andy Grove has in his book — he talks about the silver bullet, you know.
You talk to the competitor and you say, “If you had a silver bullet and you could only put it through the head of one of your competitors, which one would it be and why?” Well, you learn a lot if you ask questions like that over time.
And you ask somebody in the XYZ industry and you say, “If you were going to go away for 10 years and you had to put all of your money into one of your competitors — the stock of one of your competitors, not your own — which one would it be and why?” Just keep asking, and asking, and asking.
And you’ll have to discount the answers you get in certain ways, but you will be getting things poured into your head that then you can use to reformulate and do your own thinking about why you evaluate this business at this or that.
The accounting, you know, you just sort of have to labor your way through that. I mean, you may be able to take some courses, even, in that. But the biggest thing is to find out how businesses operate.
And, you know, who am I afraid of? If we’re running GEICO, you know, who do we worry about? Why do we worry about them? Who would we like to put that silver bullet through? I’m not going to tell you. (Laughter)
You keep asking those questions. And then you go to the guy they want to put the silver bullet through and find out who he wants to put the silver bullet through. It’s like who wakes up the bugler, you know, in the Irving Berlin song?
And that’s the way you approach it. And you’ll be learning all the time.
You can talk to current employees, ex-employees, vendors, supplies, distributors, retailers, customers, all kinds of people and you’ll learn.
But it’s an investigative process. It’s a journalistic process. And in the end, you want to write the story. I mean, you’re doing a journalistic enterprise. And six months later, you want to say the XYZ Company is worth this amount because, and you just start in and write the story.
And some companies are easy to write stories about, and other companies are much tougher to write stories about. We try to look for the ones that are easy.