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| Name | Warren Buffett EXPLAINS WHY HE SOLD McDonald's đđ Everything he ever said about the sale đ„€ |
| Video Uploader | Video From The Rational Investor |
| Upload Date | This Video Uploaded At 19-09-2023 15:29:40 |
| Video Discription | Warren Buffett and Charlie Munger explain why they sold McDonald's and also admit it was a big mistake. This is everything they ever said about the sale of their McDonald's stake In 1996, Warren Buffett bought shares in McDonald's, but within just 12 months, he sold them again. This is not typical of Buffett, who is known for holding his stocks for many years. In this clip, he explains everything you need to know about the sale. He also compares McDonald's to Coca-Cola and Gillette, and discusses the difference between the food industry and the consumer product industry. ------------------ Itâs not our natural inclination to sell. And on the other hand â and we have held the Washington Post stock since 1973. Iâve never sold a share of Berkshire, having bought the first shares in 1962. And weâve held Coke stock since 1988. Weâve held Gillette stock since 1989. Held American Express stock since 1991. We sell â really when we think that weâve â when weâre reevaluating the economic characteristics of the business. We probably had one view of the long-term competitive advantage of the company at the time we bought it, and we may have modified that. We think McDonaldâs has a fine future. We think Disney has a fine future. But we probably donât think that their competitive advantage is as strong as we might have thought â as we thought it was â when we initially made the decision. We think that the strengths may have been eroded to some degree. A classic case on that would be the newspaper industry, generally, for example. I mean, in 1970, Charlie and I were looking at the newspaper business. We felt it was about as impregnable a franchise as could be found. We still think itâs quite a business, but we do not think the franchise in 2002 is the same as it was in 1970. We do not think the franchise of a network television station in 2002 is the same as it was in 1965. I said it was a mistake to sell it, and it was a mistake. And I just reported that in the interest of candor. But I didnât think it belonged in the list of eight or 10 of the businesses, of the very few businesses, that we want to own in the world My guess is that with 23,000 locations all over the world, I think it would be extraordinarily difficult to separate the real estate business out from the franchising business at this point. But I just think the problems would be horrendous. Certainly you wouldnât want to sell it and lease it back because you would not end up with more value, in my view, by doing that. And spinning it off in a real estate trust or something, with operating in 100-plus countries, and with all of the franchise arrangements, I think it would be a huge, huge problem. You should look at McDonaldâs as being a very good business, but one that will continue in its present mode vis a vis the real estate. And the multiple is not greatly different, in my view, than if the real estate were separate You wonât get the inevitability in food that you will get in a single consumer product, you know, such as blades Theyâre happy with the product. Decisions on fast food, as to where you eat, is simply based on which one you see. I mean, convenience is a huge factor. If you are going by a McDonaldâs, or a Burger King, or a Wendyâs, and you happen to be hungry at that point, if youâre traveling on the road and you see one of those signs up, youâre probably going to stop at the one you see. Most people want to vary where they eat as they go through the week, or the month, or the year. They donât really have any great desire to vary their soft drink the same way. Itâs not the same thing. So itâs no knock on McDonaldâs at all. Itâs just the nature of the kind of industry theyâre in. One of the ones I admire most is McDonaldâs. I had fun once at a major university when I said I thought McDonaldâs succeeded better as an educator than the people in the university did. And what I meant was McDonaldâs hires a lot of people who are quite marginal at the very start of their working career. And they learn to show up on time for work and observe the discipline. A lot of them go on in employment to much higher jobs. And theyâve had an enormous constructive effect about educating into responsibility a lot of people who were threatened with not making it. So I think we all owe a lot to the employment culture of McDonaldâs. And itâs not enough appreciated. |
| Category | News & Politics |
| Tags | warren buffett mcdonalds | mcdonald's stock | mcdonald's stock analysis | mcdonalds | food industry | food industry documentary | soft drink industry | gillette | american express | newspaper industry | coca cola | mcdonald's | warren buffett | charlie munger | Disney | Coca-Cola | business | company | investing | berkshire hathaway | big mistake | selling mcdonald's | Mcdonald's stock | mcd stock | fast food | convenience | Burger King | Wendyâs | Dairy queen | industry | restaurants | hamburgers | razor blades |
