Warren Buffett and Bill Gates appeared at Columbia Business School yesterday and answered questions from students for over an hour.  The full video is provided below and a transcript has been posted documenting the full session.  I found Mr. Buffett’s response to one question to be particularly important for individuals who are interested in being an active investor:

QUESTION: Hi, I’m Brian Seedabalker. I’m a second-year student. Mr. Buffett, it’s great to see you again. I was on the trip to Omaha last month. Thank you for hosting us. My question is, how would you recommend an individual investor who follows the Graham and Dodd philosophy to allocate their capital today?

BUFFETT: Well, it depends whether they are going to be an active investor. Graham distinguished between the defensive and the enterprising and that. So if you are going to spend a lot of time on investment, you know I just advise looking at as many things as possible and you will find some bargains. And when you find them, you have to act. It doesn’t — it hasn’t changed at all since I was here in 1950, 1951. And it won’t change the rest of my life. You start turning pages. When I got out of school, I turned every page in Moody’s 10,000-some pages twice, looking for companies. And you have to find them yourself. The world isn’t going to tell you about great deals. You have to find them yourself. And that takes a fair amount of time. So if you are not going to do that, if you are just going to be a passive investor, then I just advise an index fund more consistently over a long period of time.

The worst investment mistakes tend be those made by individuals who buy stocks on hot tips or cursory research such as reading a one page Value Line report or a newspaper article.  Intelligent investing takes a great deal of time, and if you think about it, why would this be a surprise?  Mr. Buffett’s advice to buy an index fund if you do not intend to invest the time in research is exactly correct.

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Warren Buffett’s Advice For Enterprising Investors
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