This is no ordinary Wolf of Wall Street Story, more Buffett than Belfort.
My college roommate, Ryan, and I decided to take a trip to visit the Oracle of Omaha. As proud shareholders of Berkshire Hathaway B stock, listening to Mr. Warren Buffett - a young 93 years of age - proved to be a once-in-a-lifetime opportunity for us recent college graduates and students of the legend. Buffett’s right-hand man, investment guru, and wisest of men, Charlie Munger, passed away late last year at the age of 99, which provided all the more incentive to make the voyage to Omaha. Munger and Buffett, representatives of value-investing, will forever be known as titans of American business.
We started from Ryan’s house in Dayton so he could pick up the meeting passes and we could gain an hour on the road. Beginning at 8 am, the ride began by listening to In Good Company featuring Nicolai Tangen and CEO of Citadel, Ken Griffin. Griffin discussed the evolution of quantitive trading and the importance of being a market maker in addition to providing sound career and life advice. Mr. Griffin, a financial backer of many GOP candidates, dodged the questions concerning America’s geopolitical standing, even neglecting to mention her chief economic rival of the age, China. We highly recommend the podcast as Mr. Tangen demonstrates high-quality hosting skills by peppering his C-Suite guest with simple yet important questions.
After the conclusion of the podcast, we turned on an audiobook, The Psychology of Money by Morgan Housel. The book centered around the central thesis that those who can do well with money are those with great self-control, good behavioral decision-making, utilization of compound interest, and allowing time to do the heavy lifting for investments. Those who are not necessarily guaranteed to win on the markets are those who fail to recognize when enough is enough, lack self-control, overly rely on a strenuous investment strategy, take needless great risks, and depend on credentialing from the top business schools or companies to prove their success to others instead of themselves and ones they love.
The book offered an insightful example: one man in rural America who was the first in his family to graduate high school and worked as a janitor his entire life managed to save over $8 million dollars from investing and waiting. He donated money to the local library upon his death to the surprise of the community. In contrast, an experienced Wall Street banker with an expansive personal network and envious business degrees from the world’s top universities was forced to foreclose on his houses and was left a broken man. The bottom line: to successfully invest, one need not a high IQ, rather one requires patience and diligence. Overall, the book’s prose was quite terrible, written like a freshman in high school. I am glad we decided to listen to the book because I am positive I would not have read past the first chapter if I held it in my hands.
To fill up on gas, we stopped at the self-claimed “world’s largest trucking stop,” near Davenport, Iowa. We were not sure how the trucking stop could verify this assertion, but Ryan can confirm that the walk to the bathroom felt like a miles-long journey.
In the afternoon, we decided to start listening to The Big Short by Michael Lewis. Ryan and I both agreed that we learned more about finance and the 2008 crisis from that book than any academic course in college. I still do not know what a synthetic CDO is, but hey, neither does Wall Street. The prose is eloquent, witty, and on-point. Lewis does a wonderful job at attempting to explain the backdrop of the 2008 financial crisis including how the winners won and the losers lost. The narrative reads like a comedic tragedy. It’s funny at first, but then you realize how messed up things were.
As we entered Iowa, farming and trucking country, I would be remiss not to mention that the effects of the finance-induced catastrophe still play out in America today. Americans, especially those in the Midwest who care about family, tradition, and religion, are upset that some New York bankers screwed them by giving them fraudulent loans on their mortgages. Upset and angry Americans have been swept into the great political polarization which we have not seen the worst of yet, I fear. To understand much of the financial and political landscape today, the Big Short is a must-read.
Even Buffett writes in his most recent shareholder letter:
One fact of financial life should never be forgotten. Wall Street – to use the term in its figurative sense – would like its customers to make money, but what truly causes its denizens’ juices to flow is feverish activity. At such times, whatever foolishness can be marketed will be vigorously marketed – not by everyone but always by someone.
Occasionally, the scene turns ugly. The politicians then become enraged; the most flagrant perpetrators of misdeeds slip away, rich and unpunished; and your friend next door becomes bewildered, poorer and sometimes vengeful. Money, he learns, has trumped morality.
We reached our initial stop Friday evening before entering Omaha the next day. Needless to say, the wolf himself, Jordan Belfort, would lose his marbles out here. We are in the middle of MAGA country, in other words, country-land nowhere. Ryan and I found a local, family-run diner dinner filled with the elderly, farmers, and truckers. Watching people for a while can teach you more about human nature than most PowerPoint presentations in our elitist college courses. These are the types of Americans who would help you fix a flat or give you a lift to town. They can be hard to understand initially, stuck in their ways and values, but very kind people. The meal itself was delicious and we decided to return to our cheap motel. In preparation for the shareholder meeting, we decided to re-read Buffett’s shareholder letter.
On Saturday, we decided to get an early start, leaving at 6:30 am for a 45-minute drive to the shareholder meeting. The line of 30,000 Buffett devotees was out the door as we arrived at 7:15 am. Initially, we had good luck; the lot attendants allowed us in as the last car in a parking center close to the convention center, and there was no line for the purchasing floor before entering the meeting.
From the BookWorm, Ryan and I each bought a 20% off copy of Poor Charlie’s Almanac filled with Charlie Munger’s world wisdom - a must-read for any aspiring intellectual. Our luck would run out, however, as we had to settle for nose-bleed seats even an hour before the meeting started.
Pure pandemonium was at hand, from excessive seat saving to a multitude of languages and cultures. In this melting pot, we heard the king’s English, Mandarin Chinese, Hindi, German, French, and Spanish. Love of Berkshire Hathaway, investing, and money transcended language, culture, age, and gender; money is the great unifier and knows no bounds.
As Buffett often mentioned, Ryan and I concluded that we were indeed winners of the Ovarian lottery because we were born in America with limitless opportunities. We sat in front of a family of ten who flew in from China, surely not a cheap trip. Many of those who asked questions were from overseas, including New Zealand and Germany. As young and ambitious Americans, we are in close proximity to the great leaders, innovators, and entrepreneurs of today and tomorrow.
Additionally, those in attendance were some of the great business visionaries of our time, including Apple CEO Tim Cook and Microsoft Co-Founder Bill Gates, who literally sat and read a book almost the entire day (Ryan and I watched his almost every movement from the second floor looking down). We concluded that if this meeting were a country, given the net worth in the room, the shareholder meeting would be in the top 10 of the largest economies in the world. Talk about opportunity and wealth!
The event commenced at 8:45 am with a movie paying homage to the late great Charlie Munger. Charlie and Warren, good business partners and greater of friends, are the iconic duo of modern American business. Like Batman and Robin, Bert and Ernie, Chewbacca, and Han Solo, Munger and Buffett can never be fully separated, in life and in death. Munger’s presence was felt the entire day. At one point, Buffett accidentally said, “Charlie?” when looking at Berkshire Vice Chairman Greg Abel for an answer. Mr. Munger’s spirit certainly did not “have nothing to add” at the 2024 Berkshire Hathaway Shareholder Meeting.
Here are my 4 pages of notes, largely maxims and sayings from Buffett, during the meeting:
Berkshire’s goals are two-fold:
Increase operating earnings
Decrease shares outstanding
Hope for big, low-risk, high-upside opportunities. Compounding and a long runway do wonders.
By the end of the year, Apple will be the largest common stock holding of Berkshire.
Markets are here to serve you, not instruct you. Remember: You are investing in a business! Investing is having a proper mindset.
Given fiscal policy and the large fiscal deficit in America, higher taxes are quite likely.
Berkshire’s primary investments will be in the USA.
There are enormous amounts of money spent on power and utilities.
Utility support for AI Data centers
This support requires regulatory competence and capital.
Shareholders do not give money to Berkshire to lose.
Warren doesn’t understand AI, like letting the genie out of the bottle. He doesn’t know how to get the genie back into the bottle, like nuclear weapons. AI can accomplish immediate objectives, but it may change society significantly.
The potential for scamming people with AI is a growth industry.
“If I didn’t think I could do it, I wouldn’t have done it” - Warren
Climate risk indicates higher insurance pricing. Insurance is the most important business at Berkshire.
Warren and Charlie had the most fun solving problems and “working out of a foxhole.”
There is a great advantage in knowing where and when you will die. As Charlie so often said, “All I want to know is where I'm going to die, so I'll never go there.”
Cyber security insurance:
$10 B market, 20% profitability
Difficult to know the quantum of losses
Still, there is not enough data to write cyber insurance, given Berkshire's mindset that it will lose money on cyber insurance.
There is an energy transition from carbon products to renewables over time.
Unless there is a breakthrough in solar energy storage, it cannot be the only energy source
“There are natural laws. You can’t have a baby in 1 month by getting 9 women pregnant.” - Warren
Warren’s life advice: Select a path to fulfill how you want your obituary to read.
Opportunity in America is limitless. We are entering the best world that ever existed so find good and trustworthy people and activities to participate in together.
Find the job you want if you do not need a job.
99% of the job of the board of directors is picking the right CEO. 1% is adjusting that decision.
The right CEO cannot make a terrible business great.
Do not do a lot just to look busy.
Only swing at pitches you like.
You get what you pay for.
Insurance is fun because you get money at the start. It is a very tempting business when someone hands you money.
“Anybody that says, ‘I did it all myself’ is delusional” - Warren
When you die, leave money to your wife on the condition that she remarry so at least one man will mourn your passing.
Savings are consumption deferred.
As the world gets more complicated, more can go wrong.
Never make the same mistake twice.
“You will find that some people will bend over backward for you, and others will bend over forward” - Warren
Do not worry about missing something you do not understand.
If you had to give up your second car or your iPhone, most people would give up their second car. Study consumer behavior.
The iPhone is one of the greatest consumer products ever.
“At Berkshire, we want everyone to have the idea that there is a lot to do with every business. ‘Pleased but not satisfied’ is the attitude we have at Berkshire.” - Warren
Railroads are essential to the country, but that does not mean they are cutting-edge.
Be in love with the subject, not in love with the money.
“I have met people who are unbelievably smart in their subject, and unbelievably stupid in others.” - Warren
Have the right heroes. It is not based on what they accomplished but on who you want to be as a person.
All’s well that ends.
Being kind doesn’t require money. Aspire to be kinder.
This philosophy only scratches the surface of Buffett’s and Munger’s world wisdom. I plan to learn as much as I possibly can from these great investors. I will never forget this shareholder meeting and the lessons shared. Among some of Mr. Buffett’s great wisdom, “You only have to do a very few things right in your life so long as you don't do too many things wrong.”
Onward to the next adventure…
The Selfie game is unmatched.
Absolutely phenomenal