How to Stay Out of Debt: Warren Buffett – Financial Future of American Youth (1999)



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Buffett became a billionaire on paper when Berkshire Hathaway began selling class A shares on May 29, 1990, when the market closed at $7,175 a share. More on Warren Buffett:

In 1998, in an unusual move, he acquired General Re (Gen Re) for stock. In 2002, Buffett became involved with Maurice R. Greenberg at AIG, with General Re providing reinsurance. On March 15, 2005, AIG’s board forced Greenberg to resign from his post as Chairman and CEO under the shadow of criticism from Eliot Spitzer, former attorney general of the state of New York. On February 9, 2006, AIG and the New York State Attorney General’s office agreed to a settlement in which AIG would pay a fine of $1.6 billion. In 2010, the federal government settled with Berkshire Hathaway for $92 million in return for the firm avoiding prosecution in an AIG fraud scheme, and undergoing ‘corporate governance concessions’.

In 2002, Buffett entered in $11 billion worth of forward contracts to deliver U.S. dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion. In 2006, Buffett announced in June that he gradually would give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution would go to the Bill and Melinda Gates Foundation. In 2007, in a letter to shareholders, Buffett announced that he was looking for a younger successor, or perhaps successors, to run his investment business. Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.

Buffett ran into criticism during the subprime crisis of 2007–2008, part of the late 2000s recession, that he had allocated capital too early resulting in suboptimal deals. “Buy American. I am.” he wrote for an opinion piece published in the New York Times in 2008. Buffett has called the 2007–present downturn in the financial sector “poetic justice”. Buffett’s Berkshire Hathaway suffered a 77% drop in earnings during Q3 2008 and several of his recent deals appear to be running into large mark-to-market losses.

Berkshire Hathaway acquired 10% perpetual preferred stock of Goldman Sachs. Some of Buffett’s Index put options (European exercise at expiry only) that he wrote (sold) are currently running around $6.73 billion mark-to-market losses. The scale of the potential loss prompted the SEC to demand that Berkshire produce, “a more robust disclosure” of factors used to value the contracts. Buffett also helped Dow Chemical pay for its $18.8 billion takeover of Rohm & Haas. He thus became the single largest shareholder in the enlarged group with his Berkshire Hathaway, which provided $3 billion, underlining his instrumental role during the current crisis in debt and equity markets.

In 2008, Buffett became the richest man in the world, with a total net worth estimated at $62 billion by Forbes and at $58 billion by Yahoo, dethroning Bill Gates, who had been number one on the Forbes list for 13 consecutive years. In 2009, Gates regained the position of number one on the Forbes list, with Buffett second. Their values have dropped to $40 billion and $37 billion, respectively, Buffett having lost $25 billion in 12 months during 2008/2009, according to Forbes.

In October 2008, the media reported that Warren Buffett had agreed to buy General Electric (GE) preferred stock. The operation included extra special incentives: he received an option to buy 3 billion GE at $22.25 in the next five years, and also received a 10% dividend (callable within three years). In February 2009, Buffett sold some of the Procter & Gamble Co, and Johnson & Johnson shares from his portfolio.

In addition to suggestions of mistiming, questions have been raised as to the wisdom in keeping some of Berkshire’s major holdings, including The Coca-Cola Company (NYSE:KO) which in 1998 peaked at $86. Buffett discussed the difficulties of knowing when to sell in the company’s 2004 annual report:

That may seem easy to do when one looks through an always-clean, rear-view mirror. Unfortunately, however, it’s the windshield through which investors must peer, and that glass is invariably fogged.

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45 replies

  1. I'm over $50K in debt with college loans, I work two days a week five hours a day as a waitress, I live in a very small city, there are no jobs besides McDonald and restaurants, I can't move to a big city because all my family is here If you really want to help me to pay for my college loan this is my PayPal account [email protected]@t

    I greatly appreciated!

  2. lmao just don't take out a loan, stupid.

  3. Thanks Mr Buffett ….I'm In The Pursuit Of My
    D.R.E.A.M.S.-Developing Real Entrepreneurs And Monies
    http://crowdfundyouth.weebly.com

  4. Yeah, or you earn 8 to 14k in the stock market during the crash and you have to pull out and put it all to not ending up homeless because you can't find a job because the real economy F'd you over because Wall St. F'd the real economy over. End.

  5. Some kid says 50k and buys berkshire stock.

  6. Avoid credit cards!!!! Best advice Likes x 3

  7. be nice to the rich cause you may be one of them in the future.

  8. It's about choices. Also, it's about what or how much your government allows you to have or what I call that they spoon feed the American people. Also, peoples financial future has alot to do with accounts receivable, banks, and what the finance community calls reindeer games.

  9. Timeless Advice! Contradictory to the masses chasing one shiny object to the next, it is very reassuring to know that you only need a handful of wealth building opportunities to strike rich in a lifetime. I have discovered the 1 or 2 simple strategies implemented, with discipline, prove to be very profitable when compounded over a period of time.

  10. Ganyejk she s rg ko

  11. On this day what does this talk mean?

  12. Avoiding debt is so important. Living within your means is the best way to do it!

  13. 29:20, accounting seems to be one of the greatest areas of education we can study…

  14. buffett insurance ponzi

  15. Subtitles are so off putting, mispelt in quite a considerable number of instances. Content good, but let down by subtitles.

  16. the unmatched powers of the press and the media (the internet, TV, news papers and the like), it is the reason for which there are more billionaires today than ever before.
    Antonio, the extreme 18 wheeler

  17. if simplicity(stick to what one understands well and best), humility, honesty, integrity, intelligence, energy(, hard work, constant effort, endurance, perseverance ), education(prepareness and readiness ), deciplined patience, being debt free, not procrastinating, saving and investing well is the key to success, what about,? having the right thinking, being assertive on the right goals and objectives, being at the right place(the USA), at the right time, at the right business activity with the right people.
    Antonio, the extreme 18 wheeler

  18. Do billionaires count by millions? lol

  19. This is good general advice but if you want to make it big like buffet, you will have to do something different because times have changed and you will have to take your own risks, emerging markets, technology, AI, these are growth areas that buffet avoids because he has his billions so now he just focuses on keeping his money safe.

  20. Start off by not using credit cards. If you're rich like Buffett, using credit cards won't hurt you. But, if you're not rich, don't use them… pay cash. If you must buy something on credit because of a need, get it paid off before the interest kicks in.

  21. Hes very thoughtful, sharp, smart and intelligent and as a matter of fact ive never ever seen such a decent and honest person like him hes very truthful about everything he says by the way he think very clear hes true about anything and everything

  22. What a wealth of wisdom this man is. He can have it all yet is still so humble and willing to share his knowledge. One of the richest people ever to live and he never shows a hint of condescension like so many other people you run into do.

  23. Great concept from a man who understands investments.

  24. الحسن رجع مختار الثقفي

  25. Great video on getting a solid financial foundation

  26. I love the kids in 1999 concerned about student debt. And Buffet saying "no need to spend 35 thousand on a top school like Wharton" LOL. A Wharton MBA is $110k/yr now.

  27. $50k? I was thinking $5 million

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  29. integrity and warren buffet in the same sentence loll

  30. I really like this man it is amazing how he still remains so humble in all his success.God bless him.

  31. This was almost 20 years ago. Sure looks like he'd disagree with Trump.

  32. Loool I had a terrible grade school education.

  33. This is the apitimey of common sense isn't very common. Wealth of knowledge thisam has

  34. "If you dont have money dont buy it", great rule of thumb

  35. Rose Blumkin was the founder of Nebraska Furniture Mart who sold the business to Warren Buffett of Berkshire Hathaway. Blumkin grew that business to become the largest indoor furniture store in America and eventually sold 90% of the business to Buffett in 1983 for $60 million. Rose Blumkin turned her initial $500 into $60 million.
    https://www.youtube.com/watch?v=yWYZUCUj0BM

  36. BY STAYING AWAY FROM YOUR BULLSHIT…

  37. Warren buffett always says he is lucky. He never says he was blessed. He always says he was lucky.

  38. step 1. Don't apply for loans.
    step 2. remember step 1

  39. Sorry #warren Im going to have to “beg to differ” with you on a point or two around 6:50 you said “if you’re 50 or so, its not possible” to [change} bad habits basically you’ve said ‘dont bother trying, irs too late’ How depressing is that?!
    It sad you feel that way and btw Highly (age descrimination BOO!)

    Everything else is spot on but i had to stop the vid to express my thoughts and feelings here

    Its never too late if you want something badly enough.

    Dont ever let anyone say youre too old dont bother, even if Warren Buffett told you so!

  40. Women weren’t able to be on a jury?what about the people who weren’t allowed to be a human being?

  41. How you stay out of debt? – You become a filthy rich cocksucker.

  42. Has anyone watched this with the subtitles? What a Bloody nightmare!!! I feel sorry for the Hearing impaired!

  43. The people's billionaire.

  44. "Avoid credit cards"

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