5 things I learned from Warren Buffett & Charlie Munger at the Berkshire Hathaway Annual Meeting
In the near future I hope to share a few blog posts over the next couple weeks in regards to Berkshire Hathaway and my trip to Omaha; today though I want to share my immediate thoughts while everything is still fresh, like a newly picked pineapple. Also like a pineapple expect today’s post to be delicious both on the grill and in a Pina colada, enjoy!
These guys are really funny
After a humorous video played, Warren Buffett and Charlie Munger took their seats with Coca-Cola cans and a box of peanut brittle ready for consumption. Warren started off explaining how the video depicts that Charlie is the ladies’ man of the two, but a past story reminded him of why this is the case. Warren went on to share a story that he had been told from a family member, when choosing between two equally rich men like Warren and Charlie make sure to pick the one who is older. The story brought an array of laughter as Charlie is 92 and Warren 85, thus making Charlie the obvious selection.
It was jokes like this that made the conference wildly entertaining. While most of the questions during the Q and A were serious in nature they did a great job of explaining the business side of things while still keeping me on the edge of my seat waiting for the funny wit of team Berkshire. The last question from the audience of “Where do you get your humor from” was summed up quite nicely by Charlie Munger by capping off his final words with “If you see the world accurately, you think it’s humorous because it’s ridiculous”. Indeed it is Mr. Munger.
In it for the long haul
There were many questions answered along the way about negative interest rates, oil prices, real estate, and Donald Trump. One thing that remained constant in each and every answer is that Berkshire Hathaway does not look at 3 month time frames or even annual reports for that matter. The financial magnifying glass and criteria that is looked at with each major decision and company purchase is made looking ahead to the next 10 years and more. Buffett and Munger are not into IPO’s or the latest stock pick and do not believe that the average investor should be either. Long haul my friends.
My investments can beat a hedge fund manager
When you look at the numbers it’s laughable at how badly the Vanguard S & P Index Fund has beaten hedge funds, to the tune of a cumulative thrashing by over 40% in the past 8 years. The lesson learned from above shows that we need to look at things in the long haul, but it certainly would be difficult to make up the difference over the next 2 year run to round out the 10 year mark.
I know we all want to be the next Warren Buffett and buy the next Coca-Cola or Wells Fargo to make billions, but I think some of the best advice that we could all listen to is adding money every paycheck and bonus to an S & P index fund, as it turns out that you just might be smarter than a hedge fund manager.
Some things in life make you happy, enjoy them
Apparently a few shareholders and critics alike question whether Coca-Cola, one of Berkshire Hathaway’s largest holdings, is the best moral item to be present in his stock portfolio. The underlying suggestion is that Coca-Cola has largely contributed to obesity and diabetes in the world.
The answer made me smile. While I don’t drink very much Coca-Cola, I understand that if I drink Coke in large quantities it’s pretty likely that I’m going to be a little heavier and filled with a little more sugar. However, Warren Buffett, certainly had 18 billion reasons to disagree, the approximate value of Berkshire Hathaway holdings reported at the end of year 2015.
Warren went on to explain that while he is taking in 700 calories of Coke, he really enjoys drinking what I believe is Cherry Coke from a few rows away. He went on to say that he enjoys eating and drinking things that make him happy and asked everyone to consider the fact that having a Coke makes him happy. Charlie Munger chimed in saying he thinks that some of the criticism is “immature and stupid” and “to measure the detriment without measuring the advantage”. All of this was met with an ovation from the crowd, including me.
Surround yourself with good people who want to do the right thing
Lastly, I learned that while Warren Buffett and Charlie Munger are thought of as two of the smartest investors of all time, they are not doing this alone. Numerous times managers of each company were mention on how great they were doing, how capable each business was in the hands of the individual. He mentioned the employees at Berkshire Hathaway and how happy he was to have such smart, hardworking, honest individuals to work with every day.
I took away many things from the annual shareholder’s meeting and I really felt this hit home the most, especially as it relates to money and people. While I was there to take in all of the wisdom offered from Warren Buffett and Charlie Munger, I came to realize I had also surrounded myself with good people while I was there. I had the pleasure of talking with Mr. and Mrs. Pop from Planting our Pennies, Bryan from Income Surfer, Gwen from Fiery Millennials, Steve from Steveonomics, and of course Mr. and Mrs. 1500 Days.
During our time in Omaha, I felt each person fit the mantra of good people who want to do the right thing in so many of the conversations and talks about life, money, and the pursuit of happiness.
So many lessons and valuable information were absorbed while I attended the Berkshire Hathaway annual meeting. I had a great time which I can only describe as wildly entertaining; I hope to do it again next year.
*While reflecting on my personal experience I used the marketwatch post/live blog to remember some of the quotes, most are summarized