Some people get excited when an actor they like stars in a new feature film, standing in line on opening day with a bucket of popcorn. Or perhaps you stay up hitting refresh on your browser to snag tickets for your favorite band when they are coming to town. I am sorta like that for the Oracles of Omaha, Warren Buffett and Charlie Munger.
I had the chance to watch the Berkshire 2022 Annual Meeting (online) this week, as I do every year. It’s a marathon event and luckily I found an afternoon free to binge on 5+ hours of banter, wisdom and perspectives on life born from a combined 190 years of experience, much of that in the arenas of business and investing.
Below are a few notes I took from the meeting, including a couple of rough quotes and many thoughts that occurred, inspired by what was said. Nothing is verbatim. Much is paraphrased in a way that makes sense to my mind, including a few added questions for further thought.
Dive deeper by watching the full videos of the annual meeting at the Buffett archive.
Berkshire is a MASSIVE company, with over 360,000 employees. Buffett and Munger, however, don’t spend much time (if ANY) on day-to-day operations. Instead, opting to spend time doing what they do best (and enjoy the most), allocating capital.
It’s fascinating and inspiring that they have managed to set up such a large organization in a way that allows them to do what they do best enjoy the most.
The amount of SIMPLICITY and FREEDOM granted to people in their company, particularly at the home office, is remarkable.
For example, they have just one person who bought $41 billion in stocks for the company in the past year! This person doesn’t have a team or even an assistant! Not only that, but this person does other things for the company as well.
Think about the amount of freedom and leverage such a person has. In any organization doing this much purchasing of equities, there would typically be a large team of people (asset managers) and support staff, but instead, Berkshire just has a single person do it!
Leverage and simplicity personified.
How much more complicated is your life than it really needs to be?
Would you (and your team or business) be even more effective by getting rid of wasteful activity and processes?
People have a long history of doing things that are MATHEMATICALLY DUMB in the hope of getting rich. Learn from history and don’t repeat this mistake.
The same is true for groups of people and markets. MANIAS have been around for a long time. Watch out for this tendency. Right now, there is a high volume of pure gambling activity going on in the markets. Be careful.
Berkshire depends on the mispricing of assets to make their returns. It doesn’t take a high IQ, it just takes the RIGHT ATTITUDE to make money the way they do. They essentially rely on inefficient markets to make a living!
What is the impact of attitude on your performance on the job?
How important is IQ relative to attitude when it comes to your career?
You should be a BETTER PERSON in the second half of your life than the first half. If this is the case, you can forget whatever failings happened in your first half.
Figure out what makes you happy, be sensitive to what makes others unhappy (avoid doing that stuff), and care more about being judged by how you are in the second half of your life than the first.
The best investment – BY FAR – is anything that develops yourself!
….and it’s not taxed 🙂
Nobody can take away from you the talent that you have.
Figure out what you would like to be, and likely be good at, and what you would naturally bring to the game, and move in that direction.
After all, if you are going to spend the required 10,000 hours it takes to be an expert at something, pick something that you really like doing, that you are good at and that is also useful to society.
The mind is a very funny thing!
You can see something (a career, person, investment approach, etc.) a certain way, sometimes for years (or decades!), and then all of the sudden see another way of operating that is totally different and much better!
Not only that, but the mind can flip back and forth between one point of view and another, in the same way that the mind switches points of view when seeing optical illusions.
When realizing you were looking at something in your life totally the wrong way, you will wonder, why the hell didn’t I see it that way in the first place?
Buffet and Munger NEVER worked out a grand plan about what the company would be, it just sort of evolved in a certain way.
People who work at the company, particularly the leaders, don’t worry about senior management getting picked off by headhunters. They aren’t constantly job-seeking. They aren’t trying to get more stock options from somewhere else or concerned about when their vesting is coming due.
Warren and Charlie have built a different kind of organization, with people who are there because they want to be there for the right reasons.
What is keeping you at your job? Are there for the “right” reasons?
When it comes to life and business…..KEEP LEARNING, that’s the secret.
There are a lot of good ideas that get far overdone and blown out of proportion.
This explains companies and other investments that might be predicated on a good idea, but are executed in a way that’s far beyond good. They end up soaring and then crashing, and hurt a lot of people in the process, though some insiders will get rich in the process.
When you get too focused on process – and taking advantage of things in a mechanical way – you are in a dangerous place. You start to think that you can do anything and lose touch with what is really the “right” thing to do.
There are plenty of companies that masquerade as tech companies, but they aren’t! These companies are selling insurance or whatever. They aren’t tech companies.
Don’t masquerade around as something you aren’t, even if others are doing it.