As he does each year, the United States’ arguably most successful investor, Warren Buffett, shared his wisdom and observations at this year’s Berkshire Hathaway annual shareholder meeting. Buffett is known not just for his investment prowess but for his ability to pare down his insights into information the average investor can understand.
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Following are some of this year’s comments from the Berkshire Hathaway meeting and what they may mean to the rest of us.
“You do not have to know about accounting and terminology and what the Fed is doing. It’s about a philosophy and forgetting what you don’t know how to do.”1
Takeaway: Buffett makes the point that if you invest in a broadly diversified portfolio of blue chip American companies, the only thing that is important is whether you believe that, over time, the U.S. is capable of overcoming difficulties and growing.
“The $65 billion gain is nonetheless real — rest assured of that. But only $36 billion came from Berkshire’s operations. The remaining $29 billion was delivered to us in December when Congress rewrote the U.S. Tax Code.”2
Takeaway: If anyone doubts that the greatest gains from last year’s passage of the Tax Cuts and Jobs Act benefitted the most prosperous companies in America, Buffett used actual accounting numbers to put that doubt to rest.
“All the big banks have had troubles of one sort or another, and I see no reason why Wells Fargo as a company, from both an investor standpoint and a moral standpoint going forward, is in any way inferior to the other big banks with which it competes.”3
Takeaway: Buffett emphasizes the value of overcoming adversity when explaining his significant ongoing investment in Wells Fargo, pointing out that many companies perform even better after correcting a high-profile problem.
“Warren is very optimistic about the U.S. He pointed out that he has lived under 14 presidents, and the people who would have you believe that this is the most divided we’ve ever been don’t know history or aren’t old enough to know.”4
Takeaway: This quote is from Charlie Munger, vice chairman of Berkshire Hathaway. He reiterates Buffett’s philosophy of not focusing on day-to-day controversies but on judging investment performance against the country’s history of overcoming difficult periods and then thriving.
“The reason companies are buying their stocks is that they are smart enough to know it’s better for them than anything else.”5
Takeaway: Munger also makes the point that one of the reasons companies tend to buy back stock is they know the stocks’ inherent value is higher than their current price, and they don’t see better ways of using cash in terms of expansion or acquisition opportunities. In other words, they’re letting the investment market do the work for them to build capital.
1 Adam Blum. SeekingAlpha.com. May 5, 2018. “Adam Blum’s notes from 2018 Berkshire Hathaway annual meeting.” https://seekingalpha.com/article/4170440-berkshire-hathaway-2018-annual-meeting-depth-notes. Accessed June 9, 2018.
2 Warren Buffett. Berkshire Hathaway Inc. May 5, 2018. “To the Shareholders of Berkshire Hathaway Inc.” http://www.berkshirehathaway.com/letters/2017ltr.pdf. Accessed June 9, 2018.
3 The Wall Street Journal. May 5, 2018. “Warren Buffett Holds Court at Berkshire Hathaway’s Annual ‘Woodstock for Capitalists’.” https://www.wsj.com/livecoverage/berkshire-hathaway-2018-annual-meeting-analysis. Accessed June 9, 2018.
4 Smead Capital Management. SeekingAlpha.com. May 9, 2018. “Berkshire Hathaway Annual Meeting 2018: A Mirage Of Feelings.” https://seekingalpha.com/article/4171793-berkshire-hathaway-annual-meeting-2018-mirage-feelings. Accessed June 9, 2018.
5 Matthew Frankel. USA Today. May 15, 2018. “The 3 best Charlie Munger quotes from Berkshire Hathaway’s annual meeting.” https://www.usatoday.com/story/money/markets/2018/05/15/best-charlie-munger-quotes-berkshire-hathaway-annual-meeting/34935043/. Accessed June 9, 2018.