Warren Buffett: It’s Just Very Very Tough To Know Precisely What Is Going On In a Financial Institution

At the April 2005 Berkshire Hathaway annual meeting of shareholders, Bill Ackman of Pershing Square asked Warren Buffett and Charlie Munger for their thoughts on the challenges of analyzing profitable financial companies.

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Citing the fact that four AAA rated companies were, at the time, under investigation for accounting irregularities and were in the process of restating their financials, Ackman asked Buffett and Munger to justify why they are comfortable investing in financial companies when financial companies are so difficult to analyze compared to other businesses.

The difficulty...

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