I know I am a bit late for this post but the wisdom of the meeting stays forever. The meeting which was conducted on 30th April was a treat to watch for the entire 6 hrs it was conducted. The wisdom of Warren Buffett and Charlie Munger thrills and enjoys all of us.
The meeting began half an hour before on Yahoo finance in which interviews it showed the exhibits set up by the companies Berkshire Hathaway has invested in. Don’t take this as a small thing as the no of companies in which Berkshire Hathaway has invested is large.
The best part then begins with Warren Buffett and Charlie Munger answering questions directly from shareholders (this is very rare in any other company that the Chairman and Vice Chairman answers shareholder questions for over 6 hrs) and the panel of journalists and other analysts. The question and answer ranged from a wide range of issues right from the health effects of coke and the upcoming US elections. All lines in quotes are the lines of Warren Buffett and Charlie Munger.
The entire meeting should be watched but here are a few points (the entire meeting was simply superb it is largely recommended that you watch the entire meeting in the video embedded in the post).
When talked about Precision Counterparts Warren Buffett as always emphasised on the importance of manager in a business.
The manager is the one who is probably the main asset of the company.
Imagine any company by which you are fascinated and read about its founder as to what qualities he/she had and you will surely get fascinated by his qualities and skills and then think what would have happened if the same person would not be in the company (think of Apple without Steve Jobs). The Manager is one of the most important Balance Sheet item of a company.
Warren Buffett on Statistics on the health effects of Coke (Berkshire Hathaway has a significant stake in coke)
The problem sometimes with statistics is that they don’t consider the reality in the picture. If you go statistically there are 1000 men and 4000 women in the world above the age of 100 and hence rather than focusing on what to eat you can have a sex change to live longer. Statistics are sometimes just favourable numbers of no use without other factors. We truly believe that staying happy helps to live longer. If I had a twin brother who would be eating only broccoli whole life unhappily and I would be drinking my favourite coke I am pretty damn sure I will live longer.
Awesomely said as always.
When Berkshire Hathaway has capital in hand to invest (which it most of the times has) it doesn’t start with any industry in mind.
This has been emphasized Buffett many times. Whenever you are investing(which i want most of the times) you shouldn’t start with any industry in mind. Starting like this will let you to try to identify the next sunrise industry which no one can predict. Poor industries can have superb companies and superb industries can have poor companies. The bottom up approach is according to me useful in stocks (you begin with a stock first and then go to the industry in general)
Spending done by the government in amenities public school is also an entitlement
This is such a common sense statement that all the spending done by the government towards welfare can also be called as an entitlement (giving money directly to people). It is the tendency of the human mind to focus on only those things which are a real outflow rather than considering the other bigger outflows which cause an even bigger effect.
Buyback only when it is advantageous.
Buy back is essentially a program meant to increase the value of existing shares rather than reducing it. When a company wants to buyback shares it should make sure that it is getting atleast as much of a value as it is giving. (If a company when its shares are intrinsically overvalued it is losing money for its remaining shareholders).One of the most typical reasons for buyback is balancing the shares issued to the company to executives (actually this policy is framed by the executives themselves) at any price. This is probably one of the most value destroying acts for any company. This is like you selling goods at a loss and again buying the same goods at a high price to replenish the inventory.
All people know that they are being judged by me by the same two variables.
This is probably a rough line and not the complete said by Buffett but here he was suggesting a policy that all the people in the organisation should be judged by the same two variables let it be any level of employee. This would dramatically increase the efficiency of all the employees.
When asked about how America is as a country to live now he as always admitted that he had no special powers predicting the future and one of the best replies that can be given
Talking about economic prosperity there is probably noone who would have said I should have born 50 yrs ago.
This is probably one of the best explanations that could have been given by your own answer.
This is a summary and is in no way an exhaustive list of the wisdom to be gained from the meeting by the words of Warren Buffett and Charlie Munger. Any post saying that is actually saying to you that you can see all the ocean animals in this bucket of water (not possible isn’t it). I am not actually sure are the total number ocean animals enough to match the wisdom of both the fantastic persons.
The words may not (actually are not) the exact words of Warren Buffett and Charlie Munger but are broadly what they wanted to say. You got to blame Warren Buffett and Charlie Munger for that they are so awesome.
Below is the video of the entire meeting (Don’t miss it. I know its of 6 hrs but you know that the video has an awesome feature of loading more than once and hence you can watch it in parts. Just joking do watch it.
Thnx for Reading the bearing my post along with the awesome lines of Warren Buffett and Charlie Munger.