Three lessons from Warren Buffett’s Berkshire Hathaway Annual Report and Meeting

Warren

Back in the early part of this century I was posted to Denver, Colorado. It was only an 8 hour drive to Omaha, Nebraska, the HQ of Berkshire Hathaway. I thought often about making that drive to attend one of their Annual Meetings, known as “The Woodstock for Capitalists”. Last year, 40,000 people showed up. I am sad to report that I did not make the trek, although I and my family have been happy BRK investors for years. In 2009 I bought some BRK.B shares for my daughter’s education fund at USD 68, and sold them last year at USD 207. Not so bad at all. We still hold a bunch of BRK.B shares (although not the A shares which I would like to have a few of – look it up.)
One thing that Buffett has said, and that I truly value, is that he looks at the company as a Trustee of shareholders wealth. That is an incredible principle to take, particularly in the rapacious environment that we have found ourselves in lately.
I spent a few hours Saturday watching the live webcast of the Berkshire Hathaway Annual Meeting, and I got three key takeaways from it. Here they are:
1. Buffett has increased his cash holdings to an incredible USD 137 billion, because he could find no good investments for the money. That equals about 20% of the value of the company.
2. Buffett did not buy back shares of Berkshire Hathaway, as he did not see that the reduced price of his own stock was a worthwhile investment.
3. Buffett sold all of his holdings of airline stocks, incurring a loss of $4 billion, proving that even one of the best investors in the world makes decisions that go wrong. (So don’t feel so bad if you make some mistakes).
What does this mean to you, the average retail investor? It means, I believe, that one of the greatest investors the world has ever known thinks that things are going to get worse and that stocks are going to get cheaper.
As they say in the US Marine Corps, “Semper Fi”. Look it up.

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