Videos

Charlie And Warren: Lessons Learned – 2016 Berkshire Meeting

Some highlighted notes for 2016 Berkshire Annual Shareholder Meeting.

Charlie And Warren

Charlie And Warren: Lessons Learned (2016)

Get The Full Warren Buffett Series in PDF

Get the entire 10-part series on Warren Buffett in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 hedge fund letters, conference, scoops etc

Transcript

Here's some notes from Berkshire 2016. Sure does not attempt to smooth its earnings although they could do it easily. Rather than trying to maintain steady earnings they simply go for the best available investments. Why did Berkshire change its strategy from investing in high growth low capital expenditure businesses to lower growth overregulated investment required businesses or announcers increasing capital acts as an anchor to growth. In many ways and Munger says when circumstances change they change their minds. They would love to keep investing in businesses that were soon producing 100 percent per annum of the original amount invested. They would love to keep doing that. But when those opportunities dried up they went to Plan B and it's come to the point where they almost prefer Plan B on the point of diet. Although many people may disagree with him Warren prefers to eat what makes them feel good and that includes sugary foods and drinks such as Coca-Cola. Charlie says by the way you have to offset disadvantages with advantages on education. Charlie Munger says children are right to look for people they can trust and look up to on business management. In the past Charlie and Warren made a wise ass remarks about wanting to get into business is so good that even an idiot could manage them. But then again the operating environment has become tougher and now they are looking at tough businesses which requires superior management Precision Castparts was one of those. And in 2000 1819 perhaps Apple which requires incredible genius and talent all around. Charlie Munger does not regret not getting richer.

Nor does he regret not getting more famous but he does regret not getting wiser sooner. Charlie on educational institutions you cannot expect a lot of efficiency from these organizations. Charlie has a lot of experience in education or philanthropy and has frequently been disappointed. Warren and Charlie they like and trust Sequoia and the investment managers there finally on inactivity. Sometimes it's better to be low energy such as wind investing. Most investors would do better with passive investment strategies for example buying and holding index funds. Warren Buffett explains a large percentage of investment managers are skilled at selling but not the actual investing. When it comes to the board of directors many companies simply look for a big name which will bring visibility Berkshire on the other hand looks for people who are business savvy shareholder oriented and a strong personal interest in the Berkshire business. When asked about the micro versus macro Buffett says that he likes to look into the details of the businesses the micro economics Charlie Munger says micro economics is business and the macro economics is what they put up with and somewhat ignore. However the worst anchoring effect is your previous conclusions and Charlie and Warren really try to avoid the bias of previous conclusions. Do they know any obvious contrarian truths. Warren Buffett says studying and modeling you can see a lot just by observing and also recognizing your circle of competence not doing stupid things when you see so many smart people self destructing. It doesn't take a genius. But you should learn how to modify your own behavior. Charlie Munger says you should have the temperament extreme patience with opportunism. You want your success to be fairly won and wisely used.

The people issue small things such as a lease deal is important but nowhere near as important as the overall business quality and the people quality. Charlie does not know any business that does it better than Berkshire. The question is how to know when it comes to people and understanding also what people will do later on. It seems obvious but it's not always so easy. You get what you incentivize for next there's really no limit to what really talented people can do says Warren. Charlie Munger says further that enable people you really can't fix the question is asked so do you want to lay people off during difficult times. Warren Buffett would argue that you didn't need them in the first place if you're thinking about laying people off during difficult times. And Charlie Munger has not seen any business that didn't benefit from cutting fat. And so I think that one's pretty short on for 2016.