Berky Meeting Nuggets 2024

The first Saturday in May brought with it another Berkshire Hathaway annual shareholders meeting.  I was only able to attend the morning session this year, but I was able to pick up the afternoon session from the national video and audio feed.

Among the things I felt were noteworthy:

For the first time since this meeting became what it is, Vice-Chair Charlie Munger wasn't sitting next to Warren Buffett.  Charlie died just short of his 100th birthday last year, and he was missed.  A main reason for me to attend the meeting was to see him make funny, smart-ass comments about the state of certain national and international affairs.

This year the company movie that's always shown before the meeting was all about Charlie, with clips of prior meetings and skits.  At the end Buffett eulogized Munger, saying while Buffett may have been Berkshire's general contractor, Charlie was its architect. 

Buffett was again joined on stage by the current co-CEOs, Greg Abel and Ajit Jain.  Abel, who is the Chairman and CEO in-waiting, basically took on Munger's old role of answering questions after Buffett had given his responses.  Buffett even accidentally referred to Abel as "Charlie" at the start of the meeting.

Buffett reported that Berky is likely to exceed holding $200 billion in cash(!) this quarter, money they'd rather invest in company acquisitions, if they could find reasonably priced ones.

Another huge crowd attended.  At the beginning of the meeting, even the seats behind the stage were nearly full, which I've never seen before.  You can't see anything but a video board from there.

As has become the norm, most shareholder questions came from people attending from other countries, notably Europe and Southeast Asia.  That they would travel this far for what is not a televised meeting is a little bit cultish, even to me who travels about 150 miles.

Given the opportunity to be heard more, I thought Abel did very well with his responses, and it left me with confidence he's going to handle the CEO job just fine.

You Are (Probably) Not A Role Model

We need better role models.

Back in the day, we had good role models.  Often times these were family members or close friends with whom we had frequent personal interactions.

If they weren't personal acquaintances, our old school role models still made some impact on us.  Sometimes, our previous role models were civil or religious humanitarians who'd done far-reaching good deeds.  Sometimes, they were military folks who showed tremendous courage in the face of bad circumstances.

Regardless, we had good role models.

Now, most people who admit to having a role model will name a wealthy celebrity -- emphasis on the word wealthy.  More than likely, a person will name an athlete or actor as a role model.

Or these days, it may simply be a billionaire who didn't do anything particularly role model-ish -- they just made an obscene amount of money thanks mostly to American capitalism.

It's this last category I don't understand.  How is a CEO or hedge fund manager, for two examples, worthy of being modeled after?  Because they have money?

(I'll admit to saying Warren Buffett is a role model of mine, but I'm talking about professionally, not personally.  Let me add here that he's the most self-deprecating billionaire around by far, so if you had to name a billionaire role model, he'd be it.)

People have adopted billionaire as role models because they have social media platforms that didn't exist in the past to promote themselves,  Without that, we wouldn't even know who most of them are, much less want to follow in their footsteps.

As role models, billionaire tech bros or investors are not worthy.  Wealth creation is not a prerequisite for it, it's actually a reason why they should be disqualified from it, if there isn't anything else.

So perhaps I should re-phrase my opening....

We don't just need better role models.  We need new ones.

Berky Meeting Nuggets 2023

This year's Berkshire Hathaway annual shareholders meeting in Omaha, was very similar in structure to last year, when the event returned in-person post-pandemic.  A crowd said to approach 40,000, including corporate celebrities like Bill Gates and Tim Cook, gathered to listen to Warren Buffett (age 92) and Charlie Munger (age 99) answer questions again for about five hours.  Vice-Chairs Greg Abel (future CEO) and Ajit Jain were also on stage to answer questions in the morning session.

A summary of some items that stuck with me:

• While the 2022 crowd seemed smaller, perhaps due to people getting used to streaming the meeting post-pandemic, the 2023 was as large as I've ever seen it.

• Early on, when discussing the quarterly results that had been released that morning, Buffett showed a chart showing that over the past 5-10 years, Berky has held about $125 billion in short-term U.S. Treasury bills (cash).  Until last year paid at little as 0.04% interest, generating about $50 million a year.  Due to last year's interest rate increases, that same amount of cash this year is projected to generate about $5 billion a year!

• Buffett noted the recent regional bank failures, and said that while the law says the FDIC insurance limit is $250,000 for accounts, that isn’t how America is going to behave in a banking crisis.  If the contagion would be too great, the federal government would bail them out.  So as a practical matter, there is no FDIC insurance limit for depositors, especially in larger banks.

• Jain took a few insurance operations questions, and mentioned how GEICO is doing better, but still has a long way to go to catch up to Progressive in telematics technology.  Abel took a few utility and railroad questions, and is clearly ready to become the next CEO.  In fact, the company movie included videos from prior meetings where the question about succession was asked -- a question no longer asked.

• Both Buffett and Munger saw the enormous potential in artificial intelligence, but didn’t see it ultimately replacing human intelligence.

• Buffett quote of the day:  "What gives you opportunities is other people doing dumb things."

• Just before the lunch break, some too-smart-by-half dude quoted Munger from prior meetings / interviews to question whether he still believed it was 'stupid' and 'ignorant' for people to not get the "untested mRNA" COVID vaccine.  He simply replied, "Yeah, sure."

• Munger had lots of other memorable quotes as usual, but it was his term 'diworsification' that most won't remember.  He used it to refer to those who preach investing 'diversification' at all costs.  Munger and Buffett have long stated that if you only have a few good ideas, you should concentrate on those instead of hedging your bets on a bunch of other things that aren't as good.

As usual, there was so much more.  Here's a link to this meeting and others.

Berky Meeting Nuggets 2022

After a three-year, Covid-19-related hiatus from in-person shareholder meetings, we die-hard Berkshire Hathaway meeting attendees met in Omaha for Woodstock For Capitalists.

There were few changes from the last gathering in 2019.  Most importantly, the great Warren Buffett (age 91) and Charlie Munger (age 98) were again sitting on a stage answering questions for about five hours.  Vice-Chairs Greg Abel (future CEO) and Ajit Jain were also on stage to answer questions in the morning session.

Buffett seemed particularly in a mood to talk, as there were far fewer questions than in past years -- he even joked about it after the lunch break, noting they'd only answered seven questions in the morning session, apparently because someone (him) talked a lot.

My summary of the environment and some of what was said:

• A smaller crowd than in the past, probably due to the pandemic and people getting used to watching the live stream of the meeting.  Also, there was more room to roam in the convention area, things were more spread out.

• These guys hate the way so many approach stock market investing.  They treat it like a 'gambling parlor' now that securities prices frequently are unattached to fundamentals. Munger in particular brought up Robinhood (investment platform) and how people are now paying dearly for leveraging their money and on their misplaced faith in it.

• As much as these guys hate the stock market casino action, they REALLY hate cryptocurrency, which they believe is bad for stable currency economies and will be worthless one day.  Buffett made the same comment about it that he used for gold investors years ago, which is why invest in a non-producing asset that's only value is what another is willing to pay for it.

• On cryptocurrency, here's Munger's exact quote: "Well, in my life I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else. And bitcoin does all three. In the first place, it’s stupid because it’s very likely to go to zero.  In the second place, it’s evil because it undermines the Federal Reserve system and the national currency system, which we desperately need to maintain its integrity and government control and company on.  And third, it makes us look foolish compared to the communist leader in China. He was smart enough to ban bitcoin in China, and with all of our presumed advantages of civilization -- we are a lot dumber than the communist leader in China."

• Upon answering a question about investing during inflation like we have now, Buffett said the best investment anyone can make is to invest in themselves.  Make yourself an expert at what you like to do -- if you're one of the best, people will pay you regardless, and you will do well.

• Also on inflation.....Buffett mentioned there was about $800 billion of Federal Reserve cash in circulation 10 or 15 years ago, and now there’s something like $2.2 trillion of currency in circulation.  That’s about $7,000 per person, every man, woman, and child in the U.S., a lot of which has come from the stimulus programs due to the pandemic.  He said it's no wonder we have inflation now -- but we probably had to do what we did.

Of  course, there was so much more.  Below is a link to this meeting and others.

https://buffett.cnbc.com/annual-meetings/

Berky Meeting Nuggets 2021

Unfortunately again this year, only virtual attendance was allowed at the Berkshire Hathaway annual shareholders meeting.  It was still quite different than last year, when the meeting was held in an empty arena in Omaha.

This year, the meeting was held in a studio / ballroom in Los Angeles, to make it easier for Charlie Munger to attend and participate.  Everybody missed having him around to make his smart aleck comments last year, including Warren Buffett.

I watched the entire stream again, almost five hours of Buffett and Munger answering questions submitted by email.  Buffett first kicked off the meeting by noting that not one of the 20 top companies by market capitalization 30 years ago are still among the top 20 today.  The point being, no one knows how things are going to change in the coming years.

This year, more questions were directed or re-directed toward the co-COOs, Ajit Jain and Greg Abel, so we got to hear more from them.  Which leads to the biggest reveal from the meeting.....

Munger inadvertently mentioned that Greg, (not "Greg or Ajit") would maintain the Berky culture, implicitly admitting Abel would become the CEO.  Buffett confirmed this after the meeting, and while it was highly expected, it was the first public confirmation of something that has been a closely guarded secret for many years.

Aside from that slip of the tongue, the 97-year-old Munger didn't disappoint, sharing his disgust for things like cryptocurrencies, which he described as "contrary to the interests of civilization."  Both Buffett and Munger also held noted disdain for special purpose acquisition companies (SPACs), due to the self-interest of the participants over shareholders.  Same for new investing apps like Robinhood, which Buffett described as a "casino group that's joined the stock market."

Near the end, one of the best quotes came from Munger when he said about the past year, ""If you're not a little confused by what's going on, you don't understand it."

Buffett signed off by saying he hoped we could all get back together in person next year in Omaha.  I plan to be there.

Berky Meeting Nuggets 2020 -- Pandemic Edition

For the first time since the COVID-19 pandemic got real in the U.S., an event I really wanted to attend was ruined.  It was the Berkshire Hathaway annual meeting in Omaha, which only offered online streaming of this year's meeting.

You can count on the fingers of one hand the number of times in the past 20+ years I haven't personally attended 'Woodstock for Capitalists.'  It's more festival than meeting, taking up an entire arena and adjoining convention center, although the centerpiece is always Warren Buffett and Charlie Munger sitting on a stark stage answering questions and making comments for about six hours.

I watched the entire stream, which this year consisted of Buffett and heir-apparent Greg Able talking on that same stage for almost five hours.  (How does the 89-year-old Buffett do this, or anyone for that matter, without taking a break?)  It wasn't the same, of course, but they tried.

The main thing missing was Vice-Chair Charlie Munger, who didn't participate at all this year.  The highlight of most Berky meetings is listening to Munger's acerbic wit as he answers questions, usually ones for which Buffett probably said the same thing in a more extended, eloquent way.

I don't really have any specific nuggets this year.  Every question, answer, and comment was pandemic-related in one way or another.  Buffett was optimistic on America's long-term future, having already survived a civil war and a years-long economic depression.  However, he didn't sound very optimistic about the next year.

He was probably just bummed that he couldn't have the usual fun annual shareholders meeting this year, and given his age, their aren't many left for him to lead.

And clearly, we both missed Charlie.

Berky Meeting Nuggets 2019

Yet another Berkshire Hathaway annual meeting is in the books.  This year I didn't feel like waking up early enough to get there before the doors opened at 7am, so I didn't get there until around 8am.  The downside to this was an upper deck seat for the 8:30am company movie and morning session, and no time to look at the exhibition hall beforehand.  The upside was more sleep, there were still plenty of complementary breakfast danishes and beverages at my super-secret place behind the stage, and I got a great seat for the afternoon session anyway.

This year's observations:

There was only one side-question about CEO succession.  I guess everyone has become bored with that.  However, Warren Buffett went out of his way this year to have a couple of questions each answered by the Vice-Chairs, Ajit Jain and Greg Abel.  One of these guys will be the next CEO.  I've heard Abel answer energy questions before, but it was unusual to hear Jain speak on insurance issues.

Charlie Munger was as engaged and funny as ever with his comments, at least until later in the afternoon when he nodded off.  (That was not unprecedented, I've seen it before.)  I thought the best exchange of the day happened when a questioner identified himself as a 27-year-old from San Francisco who fancied the idea of starting his own investment fund.  Buffett took him quite seriously, to my surprise, talking about how he was young when he started his investment partnership.  But Charlie didn't bite -- he instead told a joke, which was classic Munger, and maybe the highlight of my day:

"Let me tell you a story that I tell young lawyers who frequently come to me and say, 'How can I quit practicing law and become a billionaire instead?'  So I say well, it reminds me of a story they tell about Mozart.  A young man came to him, and he said, 'I want to compose symphonies.  I want to talk to you about that.'  And Mozart said, 'How old are you?'  And the man said, 'Twenty-two.'  And Mozart said, 'You're too young to do symphonies.'  And the guy says, 'But you were writing symphonies when you were ten years old!'  Mozart says, 'Yes, but I wasn't running around asking other people how to do it.

It used to be the meeting questions were dominated by Europeans who traveled to Omaha, but now they are dominated by Asians, more specifically, Chinese-Asians.  There's even a room at the arena complex that has a Mandarin-language translator.  Not sure how this came to be, but Munger especially keeps tabs on China, and has encouraged Berky to invest more there.

This was the first year I can recall that the Omaha World-Herald newspaper wasn't distributed free to those entering the meeting.  It was most noticeable before the meeting in that the paper sections couldn't be used by those trying to save seats.  In that regard, it was kind of nice, and anyone wanting to read the paper can get use their smartphone anyway.

Berky Meeting Nuggets 2018

I managed to attend another Berkshire Hathaway annual meeting this month.  I'm still not sure how many of these I've been at over the years, but I have a Warren Buffett-signed program from 2003 hanging on my office wall, so it's been more than 15 years now.

A general observation:  I've never seen as many people at this meeting.  Attendance had seemingly reached a peak once the meeting began to be live-streamed a couple of years ago.  However, this year there were more folks than ever waiting to get inside the arena at 7a.m., and more than ever in the overflow rooms.  I had my worst arena seat in years (although not bad) and I was a single.  But I got a great seat after lunch, and that's when the best Q & A happened anyway.

Some other observations:

On Buffett and Charlie Munger's active oversight of the organization
Buffett joked that he'd been semi-retired for decades.  He said, "I think, actually, semi-retired probably catches me at my most active point."  Charlie Munger then adds, "Warren is very good at doing nothing."

On Berky's huge investment in, and impression of, Apple
Buffett liked that Apple is spending a lot of money buying back shares.  That means Berky's stake will grow on its own.  Apple is similar to Berky in that they both have over $100 billion in cash to invest, and it isn't easy to find companies to acquire that are large enough to move the needle.

On cryptocurrency
Buffett and Munger couldn't say enough bad things about it.  "Cryptocurrencies will come to bad endings," said Buffett.  He mentioned how it's similar to gold as in that it's not a productive asset, so price was dependent on people who want it, not actual value.  Munger was more blunt, with what I though was the best line of the day:  "(It's like) someone else is trading turds and you decide you can't be left out."

On Amazon and Google (Alphabet)
Buffett and Munger both said they admired those companies, although Munger said he had been to the Google campus and thought it looked like a kindergarten. They wished they'd have invested in them, but they took their lack of foresight in stride, with Buffet saying, "There is not a penalty in investing if you don't swing at a ball in the strike zone as long as you swing at something eventually."

Berky Meeting Nuggets 2017

It's time for the latest Berkshire Hathaway annual shareholders meeting summary, the 2017 version of  Woodstock for Capitalists that was held in Omaha last week.  Last year I focused on some of the funnier lines said at the meeting, and other times I've focused on specific topic, but this year I'm going more observational.

On the scramble to enter the meeting
The Wall Street Journal published an article the day before the meeting about the secrets of some frequent meeting-goers in their attempts to get good seats once the arena doors open at 7am.  (It’s first-come, first-served seating.)  I have my own strategy that I’ve refined over the years, which includes knowing where the shortest entrance line always is, and also where to find the limited supply of free pastries and beverages are once inside the venue.  I almost – almost – feel bad for those who stand in line outside for so long, only to get much worse seats than I do.

On Warren Buffett and Charlie Munger
Warren Buffett and Charlie Munger, as one late-day questioner put it, must have iron bladders.  They sit on chairs answering questions for hours at a time, always drinking Coke, and never have to take a bathroom break.  They are ages 86 and 93, respectively.

On protesters
For the first time in several years, one of the questioners was actually a protester.  She had another person hold up a sign behind her while going on a rant about how capitalism is bad, using slavery, wealth and the sugar in Coca-Cola(!) as examples.   She was soon boo-ed loudly enough that no one could hear her speak.  Note to interrupting protesters:  Meeting attendees will only hate you and your cause more for wasting their time doing this.  Also, most of us love sugar.

On foreign meeting attendees
There have always been large numbers of international visitors at the meeting.   However, this year I felt the number of Asians not only far exceeded Europeans, it actually rivaled Americans in attendance.  Many appeared to be there as members of large tour groups.  I sat among a crowd of friendly Chinese folks, and there were also a few questions during the meeting about the Chinese stock market.  Not sure what to make of this trend, if anything.

On Jack Bogle
In this year’s shareholder letter, Buffett went out of his way to point out how much money that Jack Bogle, the founder of Vanguard Funds and the father of index fund investing, had saved for investors.  It’s in the billions of dollars, collectively.  Bogle happened to be in the reserved seating area this year, and Buffett introduced him.  It was an historic moment, knowing that Buffett, Munger, Bogle, and I were all in the same room together.

Berky Meeting Nuggets 2016

About this time of the year, I post my annual recap of items discussed at the Berkshire Hathaway annual shareholders meeting.  This year, instead of concentrating on topics, I'm going to concentrate on some of the more interesting / funny statments from either Warren Buffett or Charlie Munger:

On the choices of women:
If the choice is between two old rich men, choose the older man!

On getting advice from relatives:
A lot of people have terrible relatives.

On a town with no population growth:
Every time a girl got pregnant, some guy had to leave town!

On successful debating:
You should know the other person's argument better than he does.

On working in difficult businesses:
Somebody has to occupy the tough niches in the economy!

On competition:
Win fairly and lose wisely.

And finally, since the meeting was live-streamed for the first time ever this year, I'm going to link to that, and tell you to watch from the 2:42 to 2:55 mark, where Buffett gives a can't miss lesson about successful investing by minimizing expenses.
https://finance.yahoo.com/brklivestream/

Be Greedy When Others Are Fearful

“A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."  --Warren Buffett, October 2008

This quote about investing in stocks may be many years old, but it applies like new based on the last 10 days of stock market trading.

A downturn in the investment marketplace creates a natural fear for even the most experienced investor.  When something is cutting away at our net worth, we want to stop it as soon as possible.  We want to do something.

Here’s the problem:  Leaving the markets in that environment is generally a bad idea, because it’s done out of fear.  People make the biggest investment mistakes when they’re fearful.  It’s even more powerful than greed, and there's proof.

Daniel Kahneman is a research psychologist, but he won the 2002 Nobel prize in economics for his work in an area now referred to as behavioral economics.  His research reveals that the response to a price drop generates a much stronger emotion than a response to an equal price gain.  In short, he found that most people fear loss much more than they enjoy success, and this makes fear a powerful enemy of an otherwise level-headed investor.

If we feel the urge to reduce our stock or bond allocation during a market downturn, our challenge is to recognize Kahneman’s observation.  We need to remember that we picked our asset allocation target during a period when we weren't emotional, and did it for good reason.  We must also remember that short-term market movements are of little-to-no consequence if we have a long-term investment horizon.

That said, we should do something during a big market correction -- but not leave the market.  Rather, we should rebalance to our pre-chosen allocation target, effectively buying more stocks or bonds at a time when we may fear it most.  Then later, when those markets inevitably recover, we should try to enjoy our success more!

Berky Meeting Nuggets 2015

After a one-year absence due to a family wedding, I attended the Berkshire Hathaway annual meeting in Omaha last week.  So this year, I'm back to my own very limited summary of what Warren Buffett and Charlie Munger had to say.  And even though the former is now age 84 and the latter is age 91, it was another great time:

On current stock market valuation:
Buffett noted that any valuation measure of the stock market is skewed now by very low interest rates.  Corporate profits are worth a lot more if the government bond yield is 1% as opposed to 5%.  Is short, the market is undervalued if you assume interest rates will remain low, and slightly overvalued if you assume interest rates will return to something more historically normal.

On economists and forecasts:
Responding to a question about the direction of interest rates and the economy, Buffett used the opportunity to swipe at economists, suggesting that “any company that employs an economist has one employee too many.”  Munger noted that neither he nor Buffett predicted the current, prolonged low interest rate environment, and since they got that wrong, why anyone would want their opinion now?  Later, Munger added that the problem with [economist] pronouncements is that eventually they think they know something and “it would be better if they just said they were ignorant.”

On raising the minimum wage:
Buffett noted the problem of income inequality in the United States, but said that he didn’t see how raising the minimum wage cold make a big impact on it, because it would come at the cost of too many lost jobs.  He said increasing the earned income tax credit was a much better way.  Munger noted that he was a republican, but he agreed full with his democratic counterpart.  He considered raising the minimum wage to be counterproductive and “massively stupid.”   On the other hand, the earned income tax credit rewards and helps people who work.

On the behavior of activist investors:
Buffett said he didn’t see Berky ever being an activist investor target, even after he gave all of his shares to charity, because the whole would always be greater than the sum of its parts.  He went on to say some activism is stupid, particularly when activism results in stock repurchases.  That’s when things get silly, because often the buybacks occur when stocks are overpriced.  Munger was his typical blunt self, simply stating he couldn't think of any activist he’d want to marry into the family.

On making friends:
When asked about how to meet people and make a lot of friends, Munger unusually jumped in first and said that the only way he was able to get people to like him was to be very rich and very generous!  Buffett said to look at other people and determine why you admire them, and then reflect those qualities that you like.  He also noted that Munger often said the most important thing in finding a spouse is to “look for someone with low expectations!”

The Circle Of Competence

Among the many profound investing philosophies of Warren Buffett and Charlie Munger are some that extend beyond the area of finance.  Today I select one it seems I've cited a lot lately, that being the idea of staying within one's own "Circle of Competence."

The basic premise is simple:  When you don't really know what you're doing, it's much riskier than when you do know what you're doing.  This is one of those premises that everybody knows, but most still violate from time to time, even very smart people.

This concept is straightforward in finance, where another quote Buffett often refers to (not his) works as an explanation:  "When a man with money meets a man with experience, the man with experience leaves with the money, and the man with money leaves with the experience."

Consider, however, the practical, non-financial life applications to the Circle or Competence.  How often don't you hear from someone giving you unsolicited and unqualified advice on issues of relationships?  What about on issues of fashion?  Or how about my most recent favorite, those who have no medical or health training, but want you to accept their understandings and beliefs on all sorts of specific medical or health related issues?

Those offering opinions that are outside their Circle of Competence are doing even more than nothing to help you or themselves.  They're actually going into negative territory, because you may be able to take advantage of their incompetence.  Here again, this may be most readily apparent in the world of finance, but applies to other walks of life.

The most important part of all this is knowing one's own Circle of Competence. Munger was once quoted as saying, in a bit of a self-fulfilling prophetic way, "It isn't a competency if you don't know the edge of it."

Charlie

I've written on several occasions about the Berkshire Hathaway annual meeting.  Most associate it with Warren Buffett, but it also stars his vice-chairman, Charlie Munger.  Both are very smart and witty, but Munger has a slightly more acerbic style.

Last week someone forwarded an article to me with 29 of Munger's most interesting quotes.  They are the kind of things he says at the Berky meeting all of the time.  The guy is awesome.  I'm just going to throw out a few of best ones (in my opinion), and this is just a short sample:

"The right way to make decisions in practical life is based on your opportunity cost. When you get married, you have to choose the best [spouse] you can find that will have you. The rest of life is the same damn way."

"What do you want to avoid? Such an easy answer: sloth and unreliability. If you’re unreliable it doesn’t matter what your virtues are. You're going to crater immediately. Doing what you have faithfully engaged to do should be an automatic part of your conduct. You want to avoid sloth and unreliability."

"Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years – and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know.  He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know. ... Knowing what you don’t know is more useful than being brilliant."

"Another thing that does one in, of course, is the self-serving bias to which we’re all subject. You think the 'True Little Me' is entitled to do what it wants to do. And, for instance, why shouldn’t the True Little Me overspend my income. There once was a man who became the most famous composer in the world but was utterly miserable most of the time, and one of the reasons was because he always overspent his income. That was Mozart. If Mozart can’t get by with this kind of asinine conduct, I don’t think you should try."

"The highest form that civilization can reach is a seamless web of deserved trust — not much procedure, just totally reliable people correctly trusting one another. ... In your own life what you want is a seamless web of deserved trust. And if your proposed marriage contract has forty-seven pages, I suggest you not enter."

"Wisdom acquisition is a moral duty. It’s not something you do just to advance in life. Wisdom acquisition is a moral duty. As a corollary to that proposition which is very important, it means that you are hooked for lifetime learning. And without lifetime learning, you people are not going to do very well. You are not going to get very far in life based on what you already know."

Berky Meeting Nuggets 2014 (Abridged)

For the first time in longer than I can remember, I wasn't able to attend this year's Berkshire Hathaway annual meeting.  Warren Buffett and Charlie Munger went ahead without me this year.

Here's one meeting summary.  Here's another.  Both are good, but unfortunately, both are largely devoid of the humorous interplay between Buffett and Munger as they answered questions.

They no doubt missed me.

The Lazy Days Of Summer, And Every Other Season

For many years, (at least as far back as the movie Trading Places), I've been a believer that the #1 influence on success in life is social environment.  Being born in America, to nurturing parents, middle-class, white - these are all things that matter a lot to success for my generation, whether we want to admit it or not.

Warren Buffett goes a step further, and simply calls it luck.  After all, our environment is the product of luck, since people have no control as to when or where or how they were born and raised.

It follows then, that if a healthy person was born with these favorable and/or lucky environmental characteristics, but is still an underachiever, there must be another reason why.  And after still more years, I've become a believer that much of it just boils down to laziness.

There are two types of lazy.  The first is just your plain, dumb, do-nothing lazy.  The second is more prevalent, yet harder to see.  It's the lazy person who only acts like and wants everyone to believe they're working.

Yet here again, it took many years for me to realize how many fake-working-lazy-people there are.  And here again, there are subsets.  One is the kind that does one small thing in a day, but takes that to mean they worked all day.  Another is the kind that does nothing but personal matters all day (e.g. personal email or Facebook posting), but assumes that's a day of work.  Still another is the kind that gets to work late, takes an extra long lunch, and then leaves early.

This laziness is only magnified by summertime, when our society collectively decides we should slow down our pace of work.  It's certainly a lot easier for the truly lazy to hide their work ethic in the summer.

Regardless of the manner and timing, it's basic laziness that determines the underachieving destiny of those born into a fortunate social environment.

Berky Meeting Nuggets 2013

Here's this year's summary of the best business meeting you'll ever attend, the Berkshire Hathaway annual shareholders meeting, held this year on May 4th and presided over by Chairman Warren Buffett and Vice Chairman Charlie Munger.  (Go here for 2011, and here for 2012.)

On the Federal Reserve’s moves to keep lending flowing by pushing rates low:

Buffett said that he backs the Fed’s chairman, Ben Bernanke, and notes that the policy hasn’t led to inflation.  But still, interest rates will rise, and it will be a “shot heard around the world.”

On the trillions of dollars in debt in the past few years:

Buffett said he was glad the response to the economic downturn hasn’t been austerity, which would have hindered any sort of recovery.  Munger, who’s more conservative than his friend, agreed.  Buffett did praise the prior president, pointing out in particular 10 words of wisdom from the financial crisis: “if money doesn’t loosen up, this sucker could go down.”  While the national debt remains troublingly high, Buffett said, “this isn’t the country’s toughest hour by a large margin.”

On beating an index fund by buying shares in the 20 best companies in the United States:

Buffett said the results would probably be similar, then launched into a bigger point that there are professional investors, and then there are amateurs who invest.  Being the former requires a lot of work and research, which many, many amateurs don’t have the time or inclination to do.  The main problem for most people, he said, is “trying to behave like a professional when you aren’t spending the time in the game needed to be a professional.”

On climate change:

Buffett believes that climate change is real, and he said that it’s a difficult thing for Berkshire’s insurance operations to account for.  Munger then added that what actually seemed to work was the high taxes that European governments have levied on motor fuel.  “I think they’ve stumbled into the right policy,” he said. “I think the United States should have way higher taxes on motor fuel.”

Buffett's Words Of Wisdom

On May 7, 2012, CNBC conducted a wide-ranging interview with legendary investor Warren Buffett.  Below are 5 brief excerpts from that interview.  (Glad to see he agrees with me!)

BUFFETT ON CASH:  “I think cash is probably as risky an asset as you can own over time.  You're not taking risk off when you go into cash.  You are going into something that is sure to decline in purchasing power over time.  So that is the biggest risk I know is to own cash.”

BUFFETT ON HYPE:  “Retail investors should not pay any attention to the day's news.  If they're paying attention to the day's news and they're trying to buy and sell stocks based on the day's news, they're never going to be successful investors.  The idea is to buy a good business.  I mean, it's the same way as if you went out to buy a business.  You'd look around for a company, some little business that had good prospects over time, had decent and honest management and where the price made sense.”

BUFFETT ON STOCKS:  “I think equities are very attractive for the long term.  And they may get more attractive next week or next month.  But it's the same thing I said in October of 2008.  I didn't know where bottoms were going to be or where they were going to be in a year.  But equities, good producing businesses are a great thing to own over time, and they will be a great thing to own for the next 100 years.  But who knows whether they go up or down in price next week.”

BUFFETT ON TRADING:  “I'm not a fan of active trading of any kind.  I don't know how to make money trading actively.  Maybe if I did, I wouldn't be so negative on it.  As to the volume, though, there's still way too much volume in the market.  I mean, the idea that the ownership of a company should turn over a hundred percent in a year, that is not the way people behave with apartment houses, it's not the way they behave with farmland.  But they have this notion in stocks that they ought to do something every day.  The best thing to do with stock is buy stock with a good company and don't look at the price for five years or something.”

BUFFETT ON WHAT TO BUY:  “The greatest asset to own is your own abilities. I mean, no matter what happens in the economy or with currency, if you develop your own talents – I tell the college students that the best thing to have is to develop your own talents.  The second best thing is to buy into other people's talents.  You know, here's Coca-Cola, and people are going to be drinking it 10 years or 50 years from now, and they're going to be drinking more of it, and they'll make more money.  So I don't have any idea what Coca-Cola stock is going to do next week or next month or next year, but I'm pretty darn sure where the company will be in 10 or 20 years.  And people beat themselves in the stock market.  The stock market, literally, in the 20th century, went from 66 on the Dow to 11,400.  And you'd said, `How could anybody not have a good experience?'  But millions of people don't because they get excited at the wrong time, and they get depressed at the wrong time.  So you've got to put your emotions aside, you've got to give up the idea that you can decide when to buy stocks and when to sell stocks.  The time to buy stocks is consistently over time.”

Berky Meeting Nuggets 2012

Just made my annual trek to Omaha to attend the Berkshire Hathaway annual shareholders meeting.  It may sound crazy, listening to Warren Buffett and Charlie Munger answer questions for five hours, but for me it's a philosophical tune-up not only from an investment perspective, but also from an economic, political, intellectual, and social standpoint.

Similar to last year, here's a summary of what I consider a few highlights of this year's meeting:

On the company movie and celebrity sightings:  Board member Bill Gates was there, as was U2 lead singer Bono.  The movie included skits with Jimmy Buffett and the cast of Glee.

On Buffett's health:  Buffett said he feels terrific.  Munger jokingly (as usual) said he resents all of the attention Buffett has been getting after his recent Stage 1 prostate cancer diagnosis - Munger claimed he probably has as much prostate cancer, he just never gets tested for it!

On energy:  While natural gas prices are at historically now levels due to increased supply, Munger said it was idiotic to be extracting so much of that finite resource from the earth.  He said we should be using other sources that were more abundant.  He also said the energy independence is one of the stupidest things he'd ever heard of - we should be importing and using up other countries' resources and keeping ours as a reserve.  Had we adopted this philosophy decades ago we'd be a lot better off now.

On SuperPACs:  Buffett noted he could probably advance his political causes through SuperPAC donations, but he would never do that.  Both he and Munger agreed the Citizens United ruling was bad for the country, allowing a few wealthy folks to have undo influence.  And Buffett flat-out said he didn't want to see democracy go in that direction.

On the so-called Buffett Rule on taxing the very rich:  Buffett reminded everyone he proposal isn't an attempt to balance the budget, but simple a matter of tax fairness to make sure lower income people don't pay a rate higher than the rich.  He said the 400 highest income people in the U.S. averaged $250 million per year, and of those, 140 or so paid taxes of 15% or less.  So the Buffett Rule wouldn't even impact most of the super-rich, and those it would impact would be just fine.  And yes, it would also raise a few billion per year of tax revenue.

On the so-called Buffett Rule #2:  A question from a shareholder's claims his 84-year old father would invest in Berky if it were not for Buffett's tax philosophy. Among other things, Buffett said it sounded like the guy ought to invest in Fox!

Best Song Lyrics (Part IX)

Today there was a mad scramble in this area for tickets to the April 17, 2012 Jimmy Buffett concert in Des Moines.  He hasn't played here for 27 years, so anyone who wasn't a willing, traveling Parrothead over that time, like me, hasn't had a chance to see him.  (One exeption - I saw him sing a song live at the Berkshire Hathaway annual meeting in Omaha years ago, when his cousin Warren Buffett flew him in and he performed 'Berkshire Hathawayaville' by changing the words to 'Margaritaville' melody.)

Buffett has long had a cult following (Jimmy and Warren both), but let's face it, a lot of his songs are campy.  That obscures the smart lyrics of some of his songs.  Take his famous song 'Fins' about men - land sharks - hitting on women:

She came down from Cincinnati
It took her three days on the train
Lookin' for some peace and quiet
Hoped to see the sun again
But now she lives down by the ocean
She's takin' care to look for sharks
They hang out in the local bars
And they feed right after dark

Can't you feel 'em circlin', honey
Can't you feel 'em swimmin' around
You got fins to the left, fins to the right
And you're the only bait in town
Oh oh
Oh oh
You got fins to the left, fins to the right
And you're the only girl in town

She's saving up all of her money
Wants to head it south in May
Maybe roll in the sand with a rock 'n' roll man
Somewhere down Montserrat way
But the money's good in the season
Helps to lighten up her load
Boys keep her high as the months go by
She's getting postcards from the road

Can't you feel 'em closin' in, honey
Can't you feel 'em schoolin' around
You got fins to the left, fins to the right
And you're the only girl in town

Sailed off to Antigua
It took her three days on a boat
Lookin' for some peace and quiet
Maybe keep her dreams afloat
But now she feels like a remora
'Cause the school's still close at hand
Just behind the reef are the big white teeth
Of the sharks that can swim on the land

Can't you feel 'em circlin', honey
Can't you feel 'em schoolin' around
You got fins to the left, fins to the right
And you're the only bait in town
You got fins to the left, fins to the right
And you're the only girl in town