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What The Duck! (Notes From The 2019 Berkshire Hathaway Meeting)

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Berkshire Hathaway Meeting 2019

Want to win a set of Warren Buffett/Charlie Munger ducks? Read on!

Mrs. 1500 and I attended the Berkshire Hathaway meeting a couple of weeks ago. The event is often called the “Woodstock of Capitalism.” Investors from around the world come to hear Munger and Buffett spout their wisdom:

The meeting has three parts:

  • Movie: The meeting always opens with a movie which features humorous skits with Buffett and Munger.
  • Question and Answer session: This is the good part. Audience members get to ask Buffett and Munger anything they want.
  • Business meeting: The meeting wraps up with elections for the board of directors and other related business.

In addition to the meeting, there’s an exhibition hall where you can learn about Berkshire’s businesses and buy related merchandise. The hall is a zoo of humanity. On Saturday morning before the meeting, Buffett himself walks the exhibition hall:

While I’m not one for large crowds, I do enjoy embellishing Berkshire’s exhibits with dinosaurs. In this one, the dinosaurs terrorized the BNSF display:

At the See’s Candy display, I put the dinosaurs on an old Indian candy delivery motorcycle:

To my horror, the lady guarding the motorcycle saw what I was doing and ran up to me. She took a look at the dinosaurs, me, and then the dinosaurs again. She laughed and started posing them herself.

I was relieved that I wasn’t going to get kicked out.

Fun People And Places

Our friends, the Penny Planters had been our companions for previous Berkshire meetings. This year, they had more important business to tend to.

There were plenty of other fun people around in town. I had a great time talking to Grant Sabatier about investing. Grant is the only person I’ve ever talked to who is on the same wavelength as me regarding investing, so I greatly enjoyed our conversations.

Traveling with Grant was Cody Berman. Cody is an impressive human. He’s stood up a successful business and has wisdom that most never attain. Did I mention that he’s 23?

Grant and Cody were traveling around the country on a book tour in this van:

Also along for the weekend was the Waffles on Wednesday couple. The Mrs. and I always enjoy the company of Mr. and Mrs. Waffle and this trip was no exception.

And last, but definitely not least, I had a great time talking to the Frugal Professor once again. The Professor is a super smart, interesting dude who saved our asses by saving us seats. Thanks, Professor!

And I’ve grown to love my time in Omaha. The city is vibrant and the people are good. I’ll probably never live here, but I sure enjoy my visits.

Random Wisdom

I took 20 pages of notes during the meeting. I could write for hours about it, but instead, I’ll include my 3 favorite bits:

Question: What was your most interesting investment?

Munger discussed a $1,000 investment that started yielding $100,000/year for a long time. He mentioned that he sold it early on:

If any of you made dumb decisions, look at me and feel good about yourself.

I love the humility of Buffett and Munger. They don’t claim to be geniuses and readily admit their mistakes.

Question: How do you delay gratification?

Charlie Munger again:

I’m a specialist! I’ve had a long time time to practice it! People are born with the skill or they’re not.

Note: Munger is 95.

I agree with Charlie here. How many times have you seen siblings close in age that have completely different views on money? In my family, I was the saver while my sister, two years younger, called me “Mr. Cheapo.”

Answering the same question, Buffett said:

If you’re not happy with $50,000 in the bank, you’re not going to be happy with $50,000,000 either. There is no correlation between money and happiness after a certain point.

Question: What have you learned about human nature?

Charlie Munger took a moment to discuss a quote from Lee Kwan Yew who he described as one of the greatest nation builders the world has known:

Figure out what works and do it. If you just go through life with this simple philosophy, you’ll find it works extremely well.

Simple, yet powerful.

Berkshire Underperforming

The whole time I was sitting there at the meeting, one thought kept occurring to me:

There are 50,000 raucous people here cheering for a company that’s underperformed the S&P 500 for the last decade.

While Buffett has frequently stated that Berkshire rarely outperforms the index during a bull market, several of its crown jewels face significant risk in the near future:

  • BNSF: The railroad may soon find itself competing with electric, autonomous trucks. The driver, fuel, and maintenance are the three most expensive part of trucking. An electric, autonomous truck significantly reduces all three.
  • GEICO: Autonomous vehicles will be much safer than human-operated ones, making insurance much less profitable.

I have no idea how Berkshire will do in the decades to come, but the company usually does its best work during bad times. In the last recession, Berkshire bailed out companies like Harley Davidson and Goldman Sachs and made a lot of money.

What The Duck?

I brought home two sets of Buffett/Munger ducks. To win a set, leave a haiku or limerick in the Comments. Talk about Buffett, Munger, Berkshire, index funds or something else fun. Just be careful rhyming with duck…

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Comments

  2. Margaritaville
    Did anyone find the salt?
    Something is off here

    I don’t especially want put in the running for the ducks, but I do always enjoy your Haiku requests and seeing what pops out of my brain first thing and what it ends with (because Haiku’s stay in my head all day when you do this!).
    Financially Fit Mom recently posted…Passing the Thermostat BatonMy Profile

  3. I wouldn’t worry about insurance. While autonomous vehicles should be safer, they still face the trolley problem. Insurance will be needed to cover the large settlements from the decision the AI makes when faced with this situation.

    Careful when rhyming duck… reminds me of my nieces and nephews doing that name game song… i first suggested Art (Art art Bo-Bart banana fana fo fart), then Buck… My sister in law asked me to stop suggesting names

  5. What a fun trip! Those ducks are awesome. Thanks for sharing the random wisdom. That’s perfect for Monday morning.

  6. Good times. Glad we made it this year!

    Certainly was a lot of wisdom spouted off that weekend. And Omaha is a great town! Can’t wait to get back!!

  7. I think Buffett and Munger aren’t ducks.
    Neither strikes me as much of a schmuck.
    While most others spout lies
    They keep eyes on the prize.
    If it QUACKS then it must be a duck!

  9. To argue with you, for Geico, safer driving would probably actually make car insurance much more profitable (esp with states still mandating car insurance). The actuary tables will have a much more favorable outlook towards the insurance company NOT having to pay out any of the premium fund. Currently, it seems that insurance companies make more money on the holding time of the premiums being invested than NOT paying out the funds (eventually). So in the case of safer driving, but mandatory insurance, the insurance company would statistically get to keep more of the premiums in the invested fund longer. (my entire understanding of how insurance companies actually make money is purely based on reading Warren Buffet’s and Charlie Munger’s biographies. While huge…they both were very interesting- if you haven’t already, “The snowball” on Warren Buffet is particularly entertaining).
    Cathleen Cooks Stuff recently posted…How to get a bigger (feeling) houseMy Profile

  10. Looks like a great time! I’ve followed the company for over 20 years, but I’ve never actually gone to a meeting!

    I don’t know what the future may hold for Berkshire, but I’m almost certain they will continue to face the serious headwind called The Law Of Large Numbers.

    The universe of potential investments for Buffett has been shrinking for years, but now it’s a serious problem — He has to buy the equivalent of one S&P 500 company per year *just* to keep up with the cash.

    To do so in a way that consistently outperforms? That’s pretty difficult.
    Mr. Tako recently posted…Single Parent TangoMy Profile

  11. You wanted a haiku? Here you go!

    So sad to miss it…
    Berkshire meetings are the best!
    Count us in next year. =)

    We need to make sure this little guy gets his financial education started early so he’s not making bad investments while still in diapers.
    Mrs PoP recently posted…Our Newest PoP!My Profile

  15. Index funds and ducks
    Invest in yourself 5 K
    Warren ran faster

    The sad part is…I don’t think he ran this year, haha!

  17. Hated to miss this and seeing everybody!I think Charlie looked/sounded better than ever. He’s sharper at 95 than I am at 36-just incredible.

    “Why get really rich?
    To do what we damn well want.”
    Couldn’t agree more!
    Mr. Pop recently posted…Our Newest PoP!My Profile

  21. Stocks are like tattoos
    Keep putting in more money
    It will grow on you

    You know, the tattoo will grow into a bigger amoeba and the thought of long-term investing in an index fund will grow on you as you invest. 🙂

  22. The pending autonomous driving takeover is mostly Silicon Valley hubris.

    The problems still left to be solved are too numerous to mention for this to happen at the scale required to disrupt Berkshire’s businesses.