Warren Buffett Wisdom
The annual meeting of super investor Warren Buffett’s company, Berkshire Hathaway, was held in Omaha, Nebraska, in early May, and, as usual, Buffett and partner Charlie Munger held forth for many hours, answering questions in front of tens of thousands of shareholders. Here are some nuggets, paraphrased:
• On the big picture: Buffett reminded the crowd that when it comes to investing, we shouldn’t get too distracted by the current state of the economy. The overriding question is how American business is going to do over your investing lifetime.
If you are bullish on America and believe that its businesses will grow and prosper over time, then investing in the stock market should pay off. (A great way to do this is simply to invest in an S&P 500 index fund for many years.)
• On bitcoin and other cryptocurrencies: Buffett and Munger made it clear that they’re not big fans. Buffett explained that cryptocurrencies are not productive assets to invest in — unlike companies with growing sales and profits or a farm that produces crops — and “will come to bad endings.” When you want to sell, “You’re just hoping the next guy pays more (than you did),” said Buffett.
Munger added, “... it’s just dementia,” explaining the popularity of cryptocurrencies this way: “It’s like somebody else is trading turds, and you decide (you) can’t be left out.”
• On health care in America: Buffett noted that health care costs make up around 18 percent of America’s GDP, up from just 5 percent in 1960, repeating that medical costs are “the tapeworm” of American economic competitiveness. Munger noted that once Democrats have more control in Washington, a single-payer health care system will likely result. Meanwhile, Berkshire is teaming up with Amazon.com and JPMorgan Chase to try to develop a better and lowercost health care system for their employees.
We’ll offer more on Buffett next week. In the meantime, read his educational (and often entertaining) annual letters to shareholders at berkshirehathaway.com. (The Motley Fool owns shares of and has recommended Berkshire Hathaway.)