Highlights of the 54th Annual Berkshire Hathaway Shareholder Meeting
On May 5th, legendary investors Warren Buffett, 88, and investing partner Charlie Munger, 95, held the 54th annual Berkshire Hathaway shareholder meeting. Affectionately known as “Woodstock for Capitalists”, the weekend culminates in Warren and Charlie answering questions in front of an auditorium filled with fans and shareholders. In addition to Charlie’s hilarious one-liners, below are quotes from the Annual Meeting that we found interesting (emphasis by Madison):
Thoughts on buying back shares of Berkshire Hathaway stock, especially given the market downturn in December:
Warren: “Whether we had $100 billon or $200 billion would not make a difference in our approach to the repurchase of shares. The real thing is to buy back…repurchase shares…only when you think you’re doing it at a price where the remaining shareholders have had…are worth more the moment after you repurchased it than they were the moment before. But we want to be sure, when we repurchase shares, that those people who have not sold shares are better off than they were before we repurchased them. And it’s very simple.”
Charlie: “Well, I predict that we’ll get a little more liberal in purchasing shares.”
Warren on if the recent purchase of Amazon is a value-oriented investment or a departure from their investment philosophy:
Warren: “The idea that value is somehow connected to book value or low price/earnings ratios or anything…as Charlie has said, all investing is value investing. I mean, you’re putting out some money now to get more later on. And all the same calculation goes into it, whether you’re buying some bank at 70 percent of book value, or you’re buying Amazon at some very high multiple of reported earnings.”
Question related to training young people to delay gratification for their financial well-being:
Warren: “The low interest rates, for people who invest in fixed-dollar investments, really mean that you aren’t going to eat steak later on if you eat hamburger now. I don’t necessarily think that, for all families, in all circumstances, that saving money is necessarily the best thing to do in life. I mean, if you really tell your kids they can…whatever it may be, they never go to the movies, or we’ll never go to Disneyland because if I save this money, 30 years from now, you know, we’ll be able to stay a week instead of two days. I think there’s a lot to be said for doing things that bring you and your family enjoyment, rather than trying to save every dime. One thing you should understand, if you aren’t happy having $50,000 or a $100,000, you’re not going to be happy if you have $50 million or a $100 million. I probably know as many rich people as just about anybody I don’t think they’re happier because they get super rich. I think they are happier when they don’t have to worry about money. But you don’t see a correlation between happiness and money beyond a certain place. So don’t go overboard on delayed gratification.”
Will American ingenuity find ways to replace jobs lost to technological advancements?
Warren: “Our economy and our people, our system, has been remarkably ingenious in achieving whatever we have now…160 million jobs…when throughout the period ever since 1776, we’ve been figuring out ways to get rid of jobs. That’s what capitalism does, and it produces more and more goods per person. We’ve got more people employed than ever in the history of our country, even though company after company in heavy industry has been trying to figure out how to get more productive all the time, meaning turning the same number of goods with fewer people, or turning out more goods with the same number. That is capitalism. I don’t think you need to worry about American ingenuity running out.
Charlie: “Well we want to shift the scut work to the robots to the extent we can. That’s what we were doing, as Warren said, for 200 years. Nobody wants to go back to being a blacksmith, or scooping along the street, picking up the horse manure, or whatever the hell people used to do. We’re glad to have that work eliminated.”
Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. The opinions expressed herein are those of the named advisors at the time written. Actual economic or market events may turn out differently than as presented. © 2019 Madison Wealth Management