Berkshire Hathaway Weekend in Omaha

I'm a couple days (yikes, weeks!) behind this on this, but Bridget and I went to the Berkshire Hathaway Shareholder's Meeting on Saturday! BH is, of course, the company headed by Warren Buffett. I've always been fascinated by Warren and his outlook on business and life. I've been following BH for a year or so I guess. He is a frequent guest on CNBC which I will catch in the mornings sometimes. I've read a couple books on him, including his latest and official autobiography, The Snowball: Warren Buffett and the Business of Life. That book is a freakin monster though. It's around 900 pages, and the pages include a lot of text. I'm about done with it, but I've been working on it for a few months. (update: I finished it) It's a good book, but some of the parts are a little too long and wordy and drag on a bit.

So, for our big day, we got down to the Qwest at about 800 and made our way into the arena. It was PACKED. We walked around a bit and finally found some seats ALL the way on one of the sides. Luckily, they had screens suspended from the ceiling, and one of them were right in front of us. So, we couldn't see Charlie and Warren straight on, but we got a good side look. BH puts together a movie that goes over a lot of their businesses. It shows a bunch of commercials from companies like Geico and Coke. There were a bunch of funny parts, including a skit where Warren was working at NFM selling mattresses. One of the mattresses had a pocket under the bed to hide your money. It was pretty humorous. Warren has quite a sense of humor.

The movie ended around 930 and we got to the Q&A. I guess in the past all questions came from the audience and it had gotten to the point where people were just asking random questions, rather than talking about the business. The format changed this year where questions were submitted to a 3 person panel (including my girl Becky Quick), who then asked the questions. They did have some questions from the audience, but it was not too much. I wrote down some quotes I liked:

"I don't think you can teach high finance to people that can't use credit cards." - Charlie Munger
This came in response to a question about finance intelligence. The discussion came to whether the industry should concentrate on education. Charlie makes a great point that you can't just teach people to do something like this. If you don't understand that you shouldn't spend more than you make, how are you going to learn PE ratios, revenue streams, etc. This goes very well into a little theory I have that access to information doesn't equate to higher intelligence. (I'll get to that later)

"If you need a computer to do a cash flow analysis, move on." - Warren
"Higher math can hurt you in investing" - Charlie
Both of these quotes were a part of several discussions on how high level math is actually hurting the industry. Both stressed several times that if the value and earning power of a company doesn't jump off the page, you should move on. If you need to figure out tenths and hundredths of discount rate to see if you should invest, that's too deep in the weeds. Keep to whole numbers and obvious wins. I don't have the exact quote, but they also mentioned that if you have an IQ of 150, you should sell 30 of it and just use 120 to invest. Good stuff.

"Emotional stability is more important than higher math or intelligence." - Warren
This is an extension of the last quote, but also defines it more. It's more important have the cajones to hold onto a stock over time than coming up with a crazy equation to tell you when to buy or sell.

The competitive advantage of BH isn't our ability to pick stocks, it's BH's unique model of buying well run companies and letting them continue to run their business their way. - unexact quote from Warren
As expected, several questions focused on who would take over after Warren and Charlie are gone. They both answered the question well in stressing that the way the company makes money isn't just hinged on their ability to pick stocks. They have created a culture that allows BH to buy good companies, and that those good companies actively lobby for BH to buy them. BH is really the only company out there that does that. Also, the person who is tabbed to take over is from the inside and should do a good job when he is tapped to take over.

"Authority comes with the person, not the position." - Warren
This quote came from a discussion on Ajit, who is the insurance genius. The question was how do you replace him and find someone else who can write the speciality insurance he does. Warren just flat out said you can't replace him, and whoever takes over after him won't have the same freedom. This is a GREAT quote that really should apply to all companies and all positions. Most companies get so worried with positions that they don't take the time to match up the authority with the person. Take the current issues with CEOs for example. A person might be a great leader for a company, but he may not have all of the technical skills. Does that mean he can't be the CEO? No, it just means the Board might need to assign some of the authority else where, or put in some more checks and balances. That's not a bad thing. If you're promoted to a new position, your skills don't change just because the authority of the position changes.

Overall, the day was great. After the QA session we walked around the booths of the various companies under the BH umbrella. We got some excellent peanut brittle from See's, but we did not buy any underwear from Fruit of the Loom. We enjoyed a $1 dilly bar from DQ, but did not buy any boots from Justin Boots. It was quite a scene. We will definitely be attending next year. Hopefully under our own passes from our own BH stock :)


  1. Interesting read, Z. We (Leslie mostly) have read some about Mr. Buffett, as well. We also read "Rule No. 1" by Phil Town, and used that with some investments. Takes work, but seems pretty sound.

  2. Thanks for posting Todd! I'm glad people are taking the time to read it.