Berkshire Hathaway’s 2023 annual shareholders meeting was held on Saturday and as a part of it, Warren buffett and Charlie munger answered queries on various topics ranging from business performance, macroeconomic issues and the recent banking turmoil. Below are some of the interesting quotes from the Q&A session.
Value Investing
Charlie Munger: “I think value investors are going to have a harder time now that there are so many of them competing for a diminished set of opportunities, My advice to value investors is to get used to making less.”
Warren Buffett: “Charlie has been telling me the same thing the whole time we’ve known each other. What gives you opportunities is other people doing dumb things … In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number of people doing dumb things, and they do big, dumb things.
How to live life
Warren Buffett:
You should write your obituary and then try to figure out how to live up to it. That’s something you get wiser on as you go along. … You just want to make sure you don’t make any mistakes that take you out of the game or come close to taking you out of your game. You should never have a night when you’re worried about investing, assuming you have any money to invest at all. … Spend a little bit less than you earn, and you can spend a little bit more than you earn. … Then you’ve got debt, and chances are you’ll never get out of debt. I’ll make an exception in terms of a mortgage on your house.
“I’ve never known anybody that was basically kind that died without friends. And I’ve known plenty of people with money that have died without friends including their family…You need to know how people can manipulate other people and you need to resist the temptation to do it yourself”
Sometimes portfolio diversification is ‘deworsification,’
Charlie Munger:
“One of the inane things that’s taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks,” he said. “That is an insane idea. It’s not that easy to have a vast plethora of good opportunities that are easily identified. And if you’ve only got three, I’d rather be in my best ideas instead of my worst.”
“We’re not so smart, but we kind of know where the edge of our smartness is, That is a very important part of practical intelligence. … If you know the edge of your own ability pretty well, you should ignore most of the notions of our experts about what I call ‘deworsification’ of portfolios.”
U.S dollar losing its reserve currency status:
WB: We are the reserve currency and I see no option for any other currency to be the reserve currency.
- “Nobody knows how far you can go with a paper currency before it gets out of control, particularly if you are the world’s reserve currency. You don’t want to try and pick out the point where it does become a problem because then it’s all over.”
Issues in the banking sector
“We want to be there if the banking system temporarily even gets stalled in some way. It shouldn’t. I don’t think it will, but I think it could.”
“The problem plaguing the banking system is an age-old one: “Fear is contagious.” But the current situation seems to defy the fact that the FDIC has made depositors completely whole,”
Quarterly earnings:
“The amount of investment gains (losses) in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules”
" Management go in the other direction and give shareholders a lot of figures that are total nonsense…EBITDA, I thought was about as bad as you could get, but they kept going, and gave us earnings before everything (EBE)”
Learning and Investing
We’re interested in owning a wonderful business forever. We do learn a lot as we go along. … We’re learning all the time how consumers behave. I’m not going to be able to learn the technical aspects of businesses. It’d be nice if I knew it, but it isn’t essential. … We’ve got a business at Apple … I don’t understand the phone at all, but I do understand consumer behavior. … We’re learning all the time, from all of our businesses. … We don’t get smarter over time, we get a little wiser, though, following it over time.
“The world is overwhelmingly short-term focused & if you go to an investor relations call, they’re all trying to figure out how to fill out a sheet to show the earnings for the year & the management is interested in feeding them expectations that will slightly be beaten”
You can watch the full Q&A session here:
