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Alice Schroeder reddit Q&A


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Interesting that she says he would have spent over 500 hours on the Korean basket. I always assumed they were picked blind.

 

That doesn't sound right - if I recall correctly, when he talked about the Korean basket - he was given a Korean manual by Citibank

and spent a Sunday afternoon putting together a $100M basket of net/nets.

 

Maybe I have it wrong - but I thought that was the case.

 

Anybody else recall?

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Interesting that she says he would have spent over 500 hours on the Korean basket. I always assumed they were picked blind.

 

That doesn't sound right - if I recall correctly, when he talked about the Korean basket - he was given a Korean manual by Citibank

and spent a Sunday afternoon putting together a $100M basket of net/nets.

 

Maybe I have it wrong - but I thought that was the case.

 

Anybody else recall?

 

You are correct. I don't recall whether it was a Sunday afternoon, but it wasn't significant time.

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Did a little googling - and found this:

 

“Citicorp sent a manual on Korean stocks. Within 5 or 6 hours, twenty stocks

selling at 2 or 3x earnings with strong balance sheets were identified … The

strategy was to buy the securities of twenty companies … $100 million was

quickly put to work.”

 

-- Warren Buffett – 2005 talk to students at Harvard

 

Quite amazing if you ask me...

 

And then this from Monish about Buffett constructing this basket:

 

Buffett then picked up a copy of the 2004 Citigroup Investment Guide to Korean stocks and began flipping through the pages,

 

Buffett: “A couple of years ago I got this investment guide on Korean stocks. I began looking through. It felt like it was 1974 all over again. Look here at this company…Dehan, I don’t know how you pronounce it, Flour Company. It earned 12,879 won previously. It currently had a book value of 200,000 won and was earning 18,000 won. It had traded as high as 43,000 and as low as 35,000 won. At the time, the current price was 40,000 or 2 times earnings. In 4 hours I had found 20 companies like this.”

 

Referring to having found 20 or so companies like Dehan Flour Buffett remarks,

 

“When you invest like this, you will make money. Sure 1 or 2 companies may turn out to be poor choices, but the others will more than make up for any losses.”

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