Thursday, May 16, 2013

The Woodstock for Capitalists

Yes. I was at the Berkshire AGM held at Century Link Center at Omaha 2 weeks ago.
It was amazing.

  • The beginning videos were amazing with a remake of the YMCA song - instead it was BRKA!
  • Loved the Breaking Bad spoof with WB buying out a See's Candies competitor and CM replying to WB by saying "That's slick yo!"
  • Loved WB trying to play the villain terminator in Terminator 5 - and well, CM got the part ;)
  • The first time I saw WB's statement during the Solomon scandal "Lose a shred of reputation for the firm, and I will be ruthless" - and man, that made me emotional. It really did.
  • I'm sure that Ajit will be the next BRK CEO (because he was mentioned in the BRKA video alongside WB and CM
  • Doug Kass as a 'short seller' was a great idea - he asked some very pertinent questions
Did I learn anything new? One would think that all that there is to learn from them ought to have been learnt by now, but no.

A few key takeaways:

  • It's not how much money you leave your children, but the culture and values in which they grow up based on their family/ parents' teachings.
    More kids are spoilt by the behaviour of their parents than by the amount of money left.
  • When asked for 5 key financial metrics he looks at while evaluating a company, WB said that it's not that simple. He tries to understand businesses and how they will function and develop into the future many many years thence. BNSF will have a moat may be even 50 years from now.
  • GEICO is a crazy cash machine
  • Iscar is so brilliant and now they have 100% of the company
  • Munger replied to Kass' insinuation of BRK becoming an index fund by saying that BRK will be much more successful than other large companies of the past that lost their way
  • Munger said that the USD will be the global reserve currency at least 20 years from now
  • WB said that the current economic environment is like a great movie - don't know what the end is gonna be like 
  • CM said that the next 100 years should be harder in an economic sense
  • WB has not even read the Herbalife 10-K
  • WB doesn't even know what Todd and Ted buy
  • Kass said that WB used to go to insane details while making investments, and now he did the BAC deal from his bathtub - WB said that we still have the passion and that knowledge is cumulative, all that helps in crazy ways
  • There is no mathematical 'right' price
  • Solomon had a USD 180 M plug that had kept growing and nobody ever knew how to plug that hole!

But I wrote this post because of this article, which made me think that I should put my experiecne on the web.

The post is about continuous learning :
Eisner continues:
Maybe that’s why both men agree it’s better that they never lived in the same city, or worked in the same office. They would have wanted to talk all the time, leaving no time for the reading, which Munger describes as part of an essential continuing education program for the men who run one of the largest conglomerates in the world.
“I don’t think any other twosome in business was better at continuous learning than we were,” he says, talking in the past tense but not really meaning it. “And if we hadn’t been continuous learners, the record wouldn’t have been as good. And we were so extreme about it that we both spent the better part of our days reading, so we could learn more, which is not a common pattern in business.”

If you’re thinking they sit in front of a computer all day obsessing over numbers and figures? You’d be dead wrong.
““No,” says Warren. “We don’t read other people’s opinions. We want to get the facts, and then think.” And when it gets to the thinking part, for Buffett and Munger, there’s no one better to think with than their partners. “Charlie can’t encounter a problem without thinking of an answer,” posits Warren. “He has the best thirty-second mind I’ve ever seen. I’ll call him up, and within thirty seconds, he’ll grasp it. He just sees things immediately.”

Loved the article. Says so much about why people fail in investing - they keep their blind focus on numbers.

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