The 2016 Berkshire Hathaway Annual Shareholders Meeting was held last Saturday.

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Over the course of 7 hours, Berkshire Hathaway Chairman Warren Buffett and Vice Chairman Charlie Munger answered questions of all sorts from a panel of journalists, analysts, and shareholders.

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I didn’t attend in person this year… but I didn’t have to – for the first time ever, Berkshire Hathaway partnered with Yahoo! to live stream the entire event. If you want to watch the entire thing, you can click here or watch below:

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Don’t have 7 hours to set aside?

No worries. Here are my top # takeaways from this year’s meeting:


I’ve noticed that Buffett likes to start out most of his speeches, interviews, and Q&A answer sessions with a joke. Here’s his opener from this year’s Annual Meeting:

Good morning. I’m Warren Buffett. This is Charlie Munger. [Applause] I’m the young one. [Warren is 85 and Charlie is 92]

You may have noticed in the movie [played before the meeting], incidentally, that Charlie is always the one that gets the girl. And he has one explanation for that, but I think mine is more accurate: As you know, every mother in this country tells her daughter at an early age that if you’re choosing between two very old and very rich guys, pick the one that’s older.

Watch the clip below:


In 2008, Buffett made a very public bet with a hedge fund called Protégé Partners. Buffett bet the firm $1 million dollars that a group of 5 hedge funds (fund of funds) hand-picked by Protégé wouldn’t be able to beat a simple S&P 500 index fund over 10 years. As of the end of 2015 (8 years into the bet) the S&P 500 index fund is up a cumulative 65.7% and the hedge funds are up only 21.9%.

Buffett reports the result before lunch every year, but this year he took the opportunity to drive home a very important lesson.

65.7% versus 21.9%. Buffett pointed out that this “might sound like a terrible result for the hedge funds. But it’s not a terrible result for the hedge fund managers.”

The biggest problem is the fees. Many hedge funds employ a 2 and 20 compensation scheme, meaning the hedge fund gets paid 2% of all assets under management and 20% of all the profits. Berkshire has 2 managers (Todd Combs and Ted Weschler), each with $9 billion portfolios. If Berkshire employed the same compensation model, Todd and Ted would get paid $180 million just for sitting there!

Buffett went on to explain the concept of passive (low cost) investing versus active (high cost) investing:

He separated the room (figuratively) in two. The people on the left were “No Energy” investors. These people own half of the entire economy and don’t do anything – they don’t read the Wall Street Journal, they don’t check the stock market – they just live their lives.

What’s their end result? Well, it’s perfectly average. Their return is the same as the return for all businesses in America, because they own half of all businesses in America. No expenses, no nothing.

The people on the right were the “Hyper-Active” investors. Their end result, on a gross basis, is also average – they too own half of all businesses in America. So their gross result is the same as the “No Energy” people. But, the “Hyper-Actives” have huge expenses – they hire hedge funds, hire consultants, and pay lots of commissions. So the “Hyper-Actives” have to do worse than the “No Energy” investors once you take into account fees and expenses.

The problem, Buffett points out, is that no pension fund, no endowment fund, no rich person wants to sit with the “No Energy” people. “They just can’t believe, because they have billions of dollars to invest, that they can’t go out and hire someone who will do better than average.” But Buffett’s Protégé bet is clear evidence that high fees kill returns.

Buffett concludes that overall, the whole of American business has done extremely well. But consultants, advisers, stock brokers, and hedge fund managers continue to try to convince you that you have to be active, that you have to change what you’re doing, and that you have to pay them to be able to earn above average returns.

“There’s been far, far, far more money made by people in Wall Street though salesmanship abilities than through investment abilities.”

– Warren Buffett

Watch the clip below:


One of the first few questions of the meeting was asked by Andrew Ross Sorkin from the New York Times and CNBC, and it was essentially: “Why should Berkshire Hathaway shareholders be proud that the company owns 8.7% of Coca-Cola, when soda has been linked to diabetes and obesity? Can you please answer this objectively and without quoting your own health despite your Coca-Cola consumption, which might be an anomaly and not the norm.”

I actually thought this was a really good question, but Buffett’s answer upset me because he gave a non-answer and then commented on his own Coca-Cola consumption and his good health, despite the question specifically asking him not to. In fact, if you watch the video, he actually looks a little flustered at first trying to answer the question.

In the end, Buffett basically said that Coca-Cola can’t be blamed for obesity – you are supposed to consume a limited number of calories per day, and it’s the number of calories that matters most, not the fact that you might drink one or two Cokes a day. Munger basically scoffed at the studies the Sorkin quoted, saying that it was “asinine” to study just the harmful effects of soda consumption without also taking into account the benefits – namely increased happiness.

All of this, despite the fact that Coke and other soda brands have been trying to diversify the product lines away from unhealthy soft drinks (e.g., into water, sports drinks, tea, etc.).

In my opinion, Buffett and Munger danced around the main question, but they really do believe that the joy of drinking Coke far outweighs any health side effects – which should be attributed to overall lifestyle and not just soda consumption, in the first place.

As Buffett says, if he was forced to eat broccoli all his life then he doesn’t think he would have lived so long. So… let the man enjoy his Coke.

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Watch the clip below:


Twice during the meeting, Buffett punted to his managers. The first question was about Berkshire Hathaway subsidiary’ NV Energy’s lobbying efforts against solar panel subsidies in Nevada. Buffett let Greg Abel, who runs Berkshire’s energy business, answer the question.

The second question was about railroads. This time, Buffett let Matt Rose, who runs BNSF, take the mic.

I wasn’t able to confirm if this is the first time that Buffett has let his managers answer questions during the meeting (which is why I left this has an “honorable mention”), but it certainly didn’t happen at last year’s meeting.

Maybe this is Buffett laying the groundwork for his eventual succession?

I would love to hear from other Berkshire managers (and potential successors), like Ajit Jain, Todd Combs, and Tedd Weschler.

Did you watch or attend the 2016 Berkshire Hathaway Annual Meeting? Have you been before? How do you think this year compared to previous years? I’d love to hear you thoughts in the comments below! 



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Ben Graham, the father of value investing, wasn’t born in this century. Nor was he born in the last century. Benjamin Graham – born Benjamin Grossbaum – was born in London, England in 1894. He published the value investing bible Security Analysis in 1934, which was followed by the value investing New Testament The Intelligent Investor in 1949. Warren Buffett, the value investing messiah and Graham’s most famous and successful disciple, was born in 1930 and attended Graham’s classes at Columbia in 1950-51. And the not-so-prodigal son Charlie Munger even has Warren beat by six years – he was born in 1924. I’m not trying to give a history lesson here, but I find these dates very interesting. Value investing is an old strategy. It’s been around for a long time, long before the Capital Asset Pricing Model, long before the Black-Scholes Model, long before CLO’s, long before the founders of today’s hottest high-tech IPOs were even born. And yet people have very short term memories. Once a bull market gets some legs in it, the quest to get “the most money as quickly as possible” causes prices to get bid up. Human nature kicks in and dollar signs start appearing in people’s eyes. New methodologies are touted and fundamental principles are left in the rear view mirror. “Today is always the dawning of a new age. Things are different than they were yesterday. The world is changing and we must adapt.” Yes, all very true statements but the new and “fool-proof” methods and strategies and overleveraging and excess risk-taking only work when the economic environmental conditions allow them to work. Using the latest “fool-proof” investment strategy is like running around a thunderstorm with a lightning rod in your hand: if you’re unharmed after a while then it might seem like you’ve developed a method to avoid getting struck by lightning – but sooner or later you will get hit. And yet value investors are for the most part immune to the thunder and lightning. This isn’t at all to say that value investors never lose money, go bust, or suffer during recessions. However, by sticking to fundamentals and avoiding excessive risk-taking (i.e. dumb decisions), the collective value investor class seems to have much fewer examples of the spectacular crash-and-burn cases that often are found with investors’ who employ different strategies. As a result, value investors have historically outperformed other types of investors over the long term. And there is plenty of empirical evidence to back this up. Check this and this and this and this out. In fact, since 1926 value stocks have outperformed growth stocks by an average of four percentage points annually, according to the authoritative index compiled by finance professors Eugene Fama of the University of Chicago and Kenneth French of Dartmouth College. So, the value investing philosophy has endured for over 80 years and is the most consistently successful strategy that can be applied. And while hot stocks, over-leveraged portfolios, and the newest complicated financial strategies will come and go, making many wishful investors rich very quick and poor even quicker, value investing will quietly continue to help its adherents fatten their wallets. It will always endure and will always remain classically in fashion. In other words, value investing is vintage. Which explains half of this website’s name. As for the value part? The intention of this site is to explain, discuss, ask, learn, teach, and debate those topics and questions that I’ve always been most interested in, and hopefully that you’re most curious about, too. This includes: What is value investing? Value investing strategies Stock picks Company reviews Basic financial concepts Investor profiles Investment ideas Current events Economics Behavioral finance And, ultimately, ways to become a better investor I want to note the importance of the way I use value here. It’s not the simplistic definition of “low P/E” stocks that some financial services lazily use to classify investors, which the word “value” has recently morphed into meaning. To me, value investing equates to the term “Intelligent Investing,” as described by Ben Graham. Intelligent investing involves analyzing a company’s fundamentals and can be characterized by an intense focus on a stock’s price, it’s intrinsic value, and the very important ratio between the two. This is value investing as the term was originally meant to be used decades ago, and is the only way it should be used today. So without much further ado, it’s my very good honor to meet you and you may call me…
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