Lessons from Berkshire Hathaway

I like the idea of artificial intelligence because we’re so short of the real thing.
 
~Charlie Munger

The Berkshire Hathaway annual meeting combines business education, entertainment, shopping, and fellowship into one weekend-long event. Chairman Warren Buffett and Vice Chairman Charlie Munger have held the gathering every year since 1966. This year’s meeting, held on Saturday, May 6, 2017, attracted over 38,000 participants. Omaha’s CenturyLink Center was filled to the rafters.

What draws people in? I think it’s a combination of straight talk, savvy humor, and a shared mission.

Live Streaming Covers Most, Not All

Berkshire has partnered with Yahoo Finance to stream the meeting live at https://finance.yahoo.com/brklivestream. The stream covers most of the meeting. Of course, there are a few things that you’ll miss if you only attend online:

• Opening movie. Every annual meeting starts with a funny 30-minute movie featuring celebrities and Berkshire products. The actors and singers who appear in the movie do so at no fee (Warren admits to being cheap) with the understanding that the movie will not be made public beyond the meeting.

• Shopping. The adjacent exhibit hall has booths for most Berkshire companies. Products are sold for deep discounts. Local stores that are part of the Berkshire portfolio (Nebraska Furniture Mart, Borsheims) also offer deep discounts for shareholders.

• People. Our lives are enriched when we work together. Working together begins with an introduction. Sometimes, a random introduction can lead to a life-long, fruitful relationship (business or otherwise).

Straight Talk: Q & A

The Q & A session is the most education-packed part of the event. Warren and Charlie sit at the front of the room with 38,000+ onlookers (plus the online audience). They answer questions. They drink Coca-Cola. And they munch on See’s Candy.

Warren’s answers tend to be detailed and professorial, with a few wise-cracks woven in. After answering a question, Warren might ask Charlie to add his view, to which Charlie might respond with a terse “damn right” or “I have nothing to add.”

At one annual meeting, Buffett was asked for his views on the investment approach of a well-known money manager. Buffett then turned to Munger for his view.

“He’s an idiot”, responded Munger.

“You can’t say that, Charlie. He’s a nice guy”, replied Buffett.

“He may be a nice guy. But he’s still an idiot.” Charlie then followed up with a quick explanation of how statistical analysis works, why a smart person should be willing to change their thinking in the face of new evidence, and how stubbornness gets investors in trouble. “And that’s why he’s an idiot”, Charlie concluded.

The exchanges are impromptu and priceless.

Shared Mission: The Business Meeting

Berkshire shareholders gather ostensibly for the business part of the annual meeting, which only lasts about 15 minutes, from 3:15pm to 3:30pm most years. The business meeting includes the election of new board members.

Shareholders enjoy the transparency of the Q & A session. The business meeting is where things get done.

Parents, Families, and Love

Warren and Charlie are often asked about the secret of their success. Both attribute their achievements to parents, their community, and their upbringing. They were born five years apart less than two miles from each other. As teenagers, they both worked in the grocery store owned by Warren’s grandfather. Yet they didn’t meet until they were adults. Warren had already begun investing other people’s money. Charlie was practicing law. In time, Warren convinced Charlie that investing was more fun (and more profitable) than practicing law.

Life-long friendships are a blessing. Sometimes friends make money together, but always the friendships enrich our lives far beyond anything that money can do. Buffett and Munger tell stories about miserable billionaires who have no one in their lives who love them. What an awful existence. But if we can live our lives with a few people who love us, and whom we also love, that’s a wonderful way to be.

Thanks for the wisdom, Warren and Charlie. I look forward to the next annual meeting.