Buffett’s nuggets on old age, Aunt Katie, prosperity and stupidity
• Every year thousands of shareholders gather to hear billionaire talk about life and business
For years, the Berkshire Hathaway annual meeting was a nonevent — just 23 people attended in 1981. Warren Buffett first put in a plug for the gathering in his 1984 letter to shareholders, acknowledging that “many annual meetings are a waste of time”, but claiming that “Berkshire’s meetings are a different story”.
“The number of shareholders attending grows a bit each year,” he wrote, “and we have yet to experience a silly question or an ego-inspired commentary. Instead, we get a wide variety of thoughtful questions about the business. Because the annual meeting is the time and place for these, Charlie [Munger] and I are happy to answer them all, no matter how long it takes.”
Last Saturday, that took nearly six hours when about 40,000 people attended the Berkshire meeting at the CenturyLink Center in Omaha, Nebraska. Berkshire Hathaway shareholders love Buffett for the investment acumen that has made many of them multimillionaires, but idolise him for the nuggets of wit and wisdom he shares with them every year at the company’s annual meeting.
Here is a sample of what Buffett (86) and Munger (93) had to say at this year’s meeting:
● On getting older... Buffett opened the meeting with a quip he has used before, but that always works on the crowd. “That’s Charlie. I’m Warren. You can tell us apart because he can hear and I can see.” At some point, Munger said: “Sometimes when I am especially wistful, I think ‘Oh, to be 90 again’.”
● On index funds… Buffett is a big fan of index funds. He has been particularly vocal about this in recent years, especially as an alternative to active investment managers, and apparently advised his own wife to invest in index funds after his death. When asked why, Buffett replied: “It’s the best investment for people looking for the least amount of worry.” At the recent 2017 meeting, index-investing pioneer and Vanguard founder Jack Bogle was in the crowd and Buffett asked him to stand for an ovation. The Berkshire chairman said Bogle will have saved investors “hundreds of billions” over time with his low-cost investing philosophy. Buffett called out to Bogle: “You’re going to be 88 on Monday. In only two years, you’ll be eligible for an executive position at Berkshire. Hang in there, buddy.”
● On IQ… Answering a question from a Chinese investor, Buffett observed that: “There’s nothing more agonising than to see your neighbour who you think has an IQ 30 points below you getting rich buying stocks.”
● On Aunt Katie… Buffett is never short of a funny story with a lesson at the end. This time it was about his Aunt Katie. “She worked really hard all her life, lived in a house she paid $8,000 for…. Because she was in Berkshire she ended up — she lived to 97 — she ended up with a few hundred million and she would write me a letter every four, five months and she said, ‘Dear Warren, I hate to bother you, but am I going to run out of money?’ And I would write her back and I’d say, ‘Dear Katie, it’s a good question because if you live 986 years, you’re going to run out of money’. And then about four or five months later, she would write me the same letter again…. There’s no way in the world if you’ve got plenty of money that it should become a minus in your life,” said Buffett.
● On business problems… Not surprisingly, one of the first questions at the meeting was about Wells Fargo and the company’s now infamous “fake accounts” scandal. Later in the meeting, Buffett was also asked about some of Berkshire’s other investments including American Express, and the loss of its Costco relationship, as well as United Continental and the incident of a passenger being violently dragged off of a flight. “We did not buy American Express or Wells Fargo or United Airlines or Coca-Cola with the idea that they would never have problems or they would never have competition,” replied Buffett. “But we did buy them because we thought they had very, very strong hands…. All businesses have problems and as long as the problems are dealt with responsibly, Berkshire’s longterm investing thesis still applies. Berkshire doesn’t abandon its investments because of hiccups like these.”
● Since last year… According to Fortune magazine, since the 2016 Berkshire Hathaway annual meeting, Buffett’s portfolio has gained about $16bn in value. Fortune crunched the numbers, adjusting for stocks bought and sold, and found that of the 43 companies Berkshire Hathaway owns, all but seven have risen — and the winners are up much more than the losers are down.
● On tech stocks… Apple, a stock no one expected Buffett to buy, has turned out to be his most successful bet. Since the 2016 meeting, the stock is up about 59%. And while at the end of the last quarter Berkshire was sitting on $100bn in cash (by now it might be $110bn), CNBC reports that Apple’s cash pile is more than twice that, having swelled to $256.8bn. “Buffett, who for much of his career avoided tech stocks, is now one of the iPhone maker’s largest shareholders, that stake having gained nearly $2bn in value this year alone,” says Fortune.
“I was wrong on IBM and will find out whether we are wrong on Apple,” said Buffett at the . meeting. “But Apple is more of a consumer stock than a tech bet.” He also said he regretted not having invested early in Google.
● On succession planning and compensation consultants… A question that invariably comes up every year is who will succeed Buffett at Berkshire. When asked in 2016 whether Indianborn Ajit Jain, his right-hand man, would succeed him as CE, Buffett skirted the issue by replying: “I owe the people of India an enormous amount for sending me Ajit Jain … he has probably made more money for Berkshire than I have.” At the 2017 meeting, during a discussion about Buffett’s eventual successor and what he or she may be paid, he decried exuberant executive pay and the “compensation consultants” that enable it. “I’ll put it this way,” he quipped. “If the board hires a compensation consultant after I’m gone, I will come back.”
When asked where he gets his sense of humour, Buffett replied: “It’s the way I see the world. It’s a very interesting and sometimes humorous place. If you see the world accurately, it’s bound to be more humorous than predictable.”
THERE’S NO WAY IN THE WORLD IF YOU’VE GOT PLENTY OF MONEY THAT IT SHOULD BECOME A MINUS IN YOUR LIFE