Warren Buffett at NDTV India - Student Q&A Session

Warren Buffett shares his first impressions of India after visiting Bangalore and seeing the booming economy. He discusses the energy and competence of the younger generation in India compared to America, noting that while American youth have everything they need, Indian youth show remarkable hunger and drive.

Buffett explains his investment approach: valuing businesses before looking at stock prices. He describes how he looks at stocks as pieces of businesses rather than market instruments, and emphasizes the importance of understanding business fundamentals over market innovations.

Buffett explains the concept of an economic moat using Coca-Cola and See's Candies as examples. He describes how brand associations and customer experiences create lasting competitive advantages that widen or narrow with every customer interaction. The famous See's Candies kiss story illustrates how emotional associations create powerful moats.

Buffett and Ajit Jain discuss their close working relationship, including daily evening conversations where Buffett provides advice and wisdom. Buffett emphasizes the luxury of choosing who he works with and how finding people like Ajit has made both his life better and Berkshire more valuable.

Buffett shares Ben Graham's exercise about identifying admirable and undesirable qualities in others, emphasizing that all attractive qualities can be acquired. He stresses the importance of developing the right habits early in life, as they determine who people want to work with and be around.

Discussion of how successful people like Tom Murphy and Ajit Jain balance being emotionally sensitive at a personal level while maintaining complete rationality in business decisions. The conversation challenges the false choice between being emotional or rational, showing how both qualities can coexist.

Buffett reflects on the profound impact of luck in life outcomes, introducing the concept of the 'ovarian lottery.' He acknowledges how being born in the United States, male, and wired for capitalism gave him enormous advantages that had nothing to do with his own merit.

Buffett explains the Goldman Sachs investment made during the 2008 financial crisis, describing it as a highly rational decision calculated to the last decimal. Ajit Jain provides context on how it was cheap capital for Goldman at the time and how Buffett's reputation helped them raise additional funds.

Buffett delivers his famous advice that high IQ is not necessary for investment success, suggesting that 160 IQ individuals should 'sell 30 points.' He emphasizes that temperament - the ability to think independently and avoid herd mentality - is far more important than raw intelligence.

Buffett clarifies the fundamental difference between Berkshire's investment approach and private equity firms. While private equity has exit strategies, Berkshire has entrance strategies designed to hold businesses forever.

Ajit Jain and Warren Buffett discuss the critical importance of saying no to deals that don't meet investment criteria. They explore how corporate structure affects the ability to maintain discipline, with Ajit crediting Berkshire's supportive environment for making it easier to be rational and disciplined.

Despite his friendship with Bill Gates, Buffett explains why he doesn't invest in technology companies. He acknowledges not being able to predict which tech companies will succeed, comparing it to the early auto industry where thousands of companies existed but only a few survived.

Buffett discusses the finite nature of oil, noting that peak oil will eventually occur. He expresses concern about potential inflation from extreme monetary and fiscal stimulus policies implemented after the 2008 financial crisis, warning that heavy dosages of economic medicine can have long-term consequences.

Buffett admits making a mistake by not investing in India sooner, acknowledging he doesn't have encyclopedic knowledge of businesses worldwide. Ajit Jain provides important context that India has stayed away from Buffett more than he stayed away from India, as opportunities simply haven't been presented to him.

Buffett explains why Ajit would be saved from a sinking boat over himself and Charlie Munger, noting Ajit has contributed many billions to Berkshire's value while never asking for higher compensation. Ajit shares that he found the job he loves and hasn't felt like he's worked a single day in 25 years.

Buffett describes how he raised his children in a middle-class neighborhood, in the same house he bought for $31,500 52 years ago, sending them to public schools. He explains giving each child their own billion-dollar foundation as a Christmas gift, emphasizing they give money to others rather than receiving it for themselves.

Buffett explains his wealth creation philosophy: doing what he loves (painting the painting he likes) while living simply. He notes that personal consumption only uses about 1% of his wealth, leaving 99% with no utility to him but enormous utility to others through philanthropy.

Buffett shares that he started investing with only $9,800 when he got out of school and was about to get married. He had far more ideas than money at that stage, but emphasizes he was having just as much fun then as he is now with billions. The adventure and excitement of investing remains constant regardless of capital.

Buffett explains why volatility is the friend of the long-term investor rather than something to fear. He describes how price fluctuations create opportunities to buy good businesses at attractive prices, and how understanding intrinsic value while prices fluctuate wildly is the key to making money.

Buffett explains that business valuation comes down to Aesop's principle from 600 BC: 'a bird in the hand is worth two in the bush.' He describes how every investment decision involves figuring out when you get the birds out of the bush, how certain you are of getting them, and whether there's a better bush available.

In his closing remarks, Buffett states that business schools should have a dedicated course on how to value a business, suggesting this critical skill is often missing from traditional MBA curricula despite being fundamental to investment success.