Courtesy of Paul Kedrosky happened to read this joint interview of Warren Buffett & Bill Gates.
BUFFETT: In the late 1990s people were looking in their rearview mirror, and they thought that God had granted Americans the right to 15% a year. They built that into pension assumptions. They built it to some extent into what endowment funds spent. Now, six or seven years later, people look in the rearview mirror, and they see that conventional investments haven't produced remotely anything like that. And so they say to themselves, "Well, how do I get it? I'll turn to alternative investments." You can be sure that vacuum will be filled by Wall Street people who say, "You're right looking in that rearview mirror and seeing conventional investments don't work. Come with us, because we have the Holy Grail." And the thing about the Holy Grail is that you have to pay a lot more.
GATES: In venture capital there were very high returns with small amounts of money, and then very poor returns with large amounts of money. This desire to have high absolute returns—and seeing that places like Harvard University were cleverly in alternative assets—has led to this thought that "Okay, there must be something out there returning 10%. I just haven't found it yet." So the fact that expectations of returns exceed reality, that's still true today.
BUFFETT: The biggest problem we have is in terms of rogue states, terrorists, and nuclear, chemical, or biological weapons. Economically, I think the U.S. is going to be fine. If the rest of the world's GDP per capita grows faster than ours, that's the way it should be.
Category :Venture Capital