But if I were working with a small amount of money, the universe would be huge compared to the universe of possible ideas I work with. Now you mentioned that 1956 to 1969 was the best period. Actually, my best period was before that, from right after I met Ben Graham in early 1951. But from the end of 1950 through the next 10 years, returns actually averaged about 50% a year, and I think they were 37 points better than the Dow or something like that. But I was working with a tiny, tiny, tiny amount of money, and so I would pour through volumes of businesses and I would find one or two that I could put $10,000 into or $15,000 into that was just ridiculously cheap.
I think that if you're working with a small amount of money with exactly the same background that Charlie and I have, and same ideas, same whatever ability we have, you know, I think you can make very significant sums. When I started, I went through the pages of the manuals page by page. I mean, I probably went through 20,000 pages in the Moody's Industrial, Transportation, Banks, and Finance manuals, and I did it twice. And I actually, you know, looked at every business. I didn't look very hard at some. Well, so I would say if you're working with a small sum of money and you're really interested in the business and willing to do the work, you will find something. There's no question about it in my mind. You will find some things that promise very large returns.
But I would say that when I would turn those pages 50 years ago in the Moody's manuals, I would know when I had a big idea. I've got a half a dozen of them that I keep the Xeroxes from those reports around from 50 years ago, just because it was so obvious that they were incredible. And that happens every now and then, because when I started out, I had way more ideas than money. I mean, I would go through Moody's manual. I went through it page by page, and then I went through it again, page by page, and I found stocks in there that I could understand that were selling at like two times earnings, even one times earnings. Well, when you only have 10,000 bucks, that can get a little frustrating. And if you don't like to borrow money, which I never liked to borrow money, so I was always coming up with more ideas than I had money. So I had to sell whatever I liked least to buy something new that just was compelling to me.
I do think if you're working with very small amounts of money that there almost always are some significant inefficiency someplace to find things. I've mentioned to some people when I started out, I actually went through all of the Moody's manuals and the Standard & Poor's manuals page by page, and you could — it's probably 20,000 pages — but there were a lot of things that popped out, and none of them were in any brokerage report or anything of the sort. They were just plain overlooked, and you could find out about them, but nobody was going to tell you about them. And my guess is that that continues to be true, but not on anything like the scale it was then.
You know, we still think Berkshire is an attractive investment over a long period of time. We think that it stacks up reasonably well with other very large companies. We don't think it's the most attractive investment in the world in terms of what you can find if you're willing to go through those thousands of possibilities, which is what Charlie and I used to do many years ago. When I started, I literally could take the Moody's Industrial Manual, the Moody's Banks and Finance Manual, and I could go through page by page and at least run my eyes over every company and think about which ones I might think more about. To answer your question, I don't know what the equivalent of Moody's manuals or anything would be now.
Yeah. I think the set of numbers, the one set of numbers in America that are the best quick guide to measuring one business against another are the Value Line numbers.
I'd agree with that. That stuff on the log scale paper going back 15 years — that is the best one-shot description of a lot of big businesses that exists in America. I can't imagine anybody being in the investment business involving common stocks without that thing on the shelf. And if you sort of have in your head how all of that looks in different industries and different businesses, then you've got a backdrop against which to measure. I mean, you know, if you'd never watched a baseball game and never seen a statistic on it, you wouldn't know whether a 300 hitter was a good hitter or not. You have to have some kind of a mosaic there that your thinking is implanted against, in effect. And the Value Line figures, you know, they cycle it every 13 weeks. And if you ripple through that, you'll have a pretty good idea of what's happened over time in American business.
By the way, I pay no attention to their timeliness ratings or stock ratings or —
No, none of that means anything. But it's too bad they have to put that there. But it's the statistical material, not the —
I would like to have that material going all the way back. They cut it off about what, 15 years back.
Yeah, but I save the old ones.
Yeah. Well, you know, I wish I had that in the office, but I don't. Yeah. Yeah. Charlie and I — maybe even I do it more — we tend to go back. I mean, if I'm buying Coca-Cola, I'll probably go back and read the Fortune articles from the 1930s on it or something. I like a lot of historical background on things just to sort of get it in my head as to how the business has evolved over time and what's been permanent and what hasn't been permanent and all of that. I probably do that more for fun than for actually decision-making. But I think it is — I think if you think about if we're trying to buy businesses we want to own forever, you know, and if you're thinking that way, you might as well see what it's been like to own them forever and look back ways.
The truth is that we get — I don't know what we even pay for Value Line. Charlie and I both get it in our respective offices, but we get incredible value out of it because it gives us the quickest way to see a huge number of the key factors that tell us whether we're basically interested in the company. It also gives us a very good way of sort of periodically keeping up to date. Value Line has 1,700 or so stocks they cover, and they do it every 13 weeks. So it's a good way to make sure that you haven't overlooked something if you just quickly review that. But the snapshot it presents is an enormously efficient way for us to garner information about various businesses. We don't care about the ratings. I mean, that doesn't make any difference to us. We're not looking for opinions. We're looking for facts. But I have yet to see a better way, including fooling around on the internet or anything, that gives me the information as quickly as I can absorb the information about a company. Most of the key information you can get probably doesn't take more than 30 seconds in glancing through Value Line, and I don't have any other system that's as good. Charlie.
Well, I think the Value Line charts are a human triumph. It's hard for me to imagine a job being done any better than is done in those charts. An immense amount of information is put in very usable form. And if I were running a business school, we would be teaching from Value Line charts. And when Charlie says the charts, he does not mean just the chart of the price behavior. He means all that information that really is listed under the charts that gives the detailed financial information.
You can run your eye across that. The chart of the price action doesn't mean a thing to us, although it may catch our eye just in terms of businesses that have done very well over time. But price action has nothing to do with any decision we make. Price itself is all important, but whether a stock has gone up or down or what the volume is or any of that sort of thing — as far as we're concerned, those are chicken tracks, and we pay no attention to them. But that information that's right below the chart in those 10 lines or so, 15 lines — if you have some understanding of business, it's a perfect snapshot to tell you very quickly what kind of a business you're looking at.
For the histories of the thousand biggest corporations laid out in digest form, I think Value Line is in a class by itself. That one volume really tells a lot about the histories of our best companies. If you just look — there's 1,700 of them — if you look at each page and you look at sort of what's happened in terms of return on equity, in terms of sales growth, profit margin, all kinds of things, then you say, why did this happen? Who let it happen? You know, what's that chart going to look like the next 10 years? Because that's what you're really trying to figure out. Not the price chart, but the chart about business operation. You're trying to print the next 10 years of Value Line in your head, and there's some companies that you can do a reasonable job with, and there's others that are just too tough. But that's what the game is about. And it can be a lot of — I mean, if you have some predilection toward it, it can be a lot of fun. I mean, the process is as much fun as the conclusion that you come to.
Mostly the past is a pretty good guide to the future. Historically, the transportation field — I mean, it's been a terrible place to have money, whether it's been in airlines or in the rails. If we've mentioned Value Line from time to time, if you go to the rail transportation section and just run your eye across the revenues and look at the capital investment — the amount of capital required to produce incremental revenues is just horrible.
And very important to have that mindset that we are buying businesses. Whether we're buying 100 shares of something or whether we're buying the entire company, we always think of them as businesses. So when Charlie and I leaf through Value Line or look at annual reports that come across our desk or read the paper or whatever it may be, for one thing, we do have this cumulative knowledge of a good many industries and a good many companies — not all by a long shot — and different numbers are of different importance depending on the kind of business.
There's no way I rule out emerging markets. There was a time 15 years ago or so when, just because it was kind of interesting and it took me back to my youth, on a weekend I went through a directory of Korean stocks and I bought — and these were small stocks. Well, they were small by the standards of either Korean or American business. They were big companies, but I found 15 or 20 that were statistically cheap and bought some of each one myself. And there are opportunities with smaller amounts of money to do things that we just can't do.
But my first inclination always would be to comb through things in the United States. And but I'd comb through in other countries. I probably wouldn't get into very small markets because there can be a lot of difficulties, even in market execution and taxation, a lot of things. You can find — if you can't find it in, you know, in America and China and Britain and a few other places, you probably aren't going to find it.
Six or seven years ago — maybe not that long. Yeah, six or seven years ago, when I was looking at Korean stocks, for example, I never had any idea that Korean stocks would be something that I would be buying. But I looked over there and I could see that there were a number of businesses that met the margin of safety test. And there I diversified because I didn't know that much about any specific one. But I knew that a package of 20 was going to work out very well, even if a crook might run one of them and a couple of them might run into competition I didn't anticipate because they were so cheap. And that was sort of the old Graham approach.
I was just going through a little handbook that probably had two or three thousand Japanese companies in it. One problem I have is that I can't read that handbook anymore. The print's too small. But here were these five trading companies. They have a special name for them in Japan, but they were selling at ridiculously low prices. And I never dreamt of that when I picked up that little — wasn't so little. It was about that thick. But sometimes two companies to a page and a couple thousand pages, I believe. But it's amazing what you can find when you just turn the page.
We showed a movie last year about turning every page, and I would say that turning every page is one important ingredient to bring to the investment field. And that very few people do turn every page, and the ones who turn every page aren't going to tell you what they're finding. So you've got to do a little of it yourself. My big theory, and I think it's valid: if you look at 10 companies, you'll find one that's mispriced. You look at 20, you'll find two. You look at 100, you'll find 10. The person that turns over the most rocks wins the —
