Last week, 2 of my sisters, a friend of ours and I made the annual pilgrimage to Omaha to hear Warren Buffett and Charlie Munger’s views on the financial crisis and the American economy and investing going forward – and once again the trip was well worth it. Over 35,000 people attended last weekend’s Berkshire Hathwaway Shareholder Meeting which only cements its title as worlds largest shareholder meeting – pretty amazing considering the arena itself only has seating for 18,000+ so they have overflow seating everywhere thoughout the arena in large conference rooms, etc.
Now you would expect that during a year in which many investors have lost 40% of their portfolios, unemployment approaching 9%, and the threat of the Swine Flu epidemic, that the mood would be more subdued – but actually it was the opposite and I believe that is due to the people who have been following Warren Buffett and his investment advice understanding the cycles of these things and how traditionally the LARGEST investment catalysts have always been born in the ruins of a depression – most of the investors here understand that companies with lots of cash during downtimes find themselves with huge opportunities not available to companies without lots of cash – and sitting on 45 billion dollars of cash qualifies as having alot.
The format of the meeting was changed slightly as they have 3 prominent journalists asking 1/2 of the questions to make sure that at least 1/2 of the questions would be relevant as in recent years, the quality of the questions from the crowd had become getting lamer and some of them just self-serving…each year there are some financial industry people who feel it necessary to preface their question with a 1-minute introduction to who they are and why they are so smart – these idiots keep this up and the crowd will start forming a goon squad to drag them out and pummel them for wasting our time. But this year the quality of questions was much improved and I was glad to see that – I would say that even though I have been to 5 shareholder meetings now, that on 4 or 5 of the questions I thought to myself – ooooh, good question…
Hearing Warren and Charlies optimistic view on the resilience of the United States and the huge opportunities in front of us was extremely encouraging – but more so because they are so able to articulate their opinions so well and base it on facts – and they never pretend to be able to predict market trends and in fact, they criticize anyone who believes they can. Once again the question of inflation came up and I loved Warren’s answer to how individuals should face this coming higher inflation which most believe is inevitable with current government policy of printing more money. He answered that the "Best hedge against higher future inflation is to increase your earnings power…the people with the best skills in their area will always command a premium whether the currency is dollars or seashells…" – how true – and something for everyone to consider in whatever they pursue – I do firmly believe that the future will demand that workers do far more than they have in the past to stay current and on top of change if they want to stay relevant and employable.
Want a more journalistic account of what attending this is like? – check out the new book by Jeff Matthews called Pilgrimage to Omaha – I browsed thru this while at Barnes & Noble last week and it seemed a very accurate description.
So we discussed on the way back home, what this year’s meeting means and what if anything it changes? for me – I am waiting for another good price to pick up some more BRK.B . Now as much as I believe the market will plummet at some point this year again (especially if unemployment gets up to 10%), I will probably get more invested again in names that I like for the long-term – and that means energy and healthcare to me and after hearing Warren talk about Wells Fargo and their advantages to getting access to low cost cash – perhaps even a bank like them and try to be more like Warren and think about the long-term and stop worrying about the short-term volatility.
This week (and probably the next 5-6 weeks) I will be studying for the Microsoft Business Intelligence exam so I hope to be able to share information about that soon as well for others studying the same – either that or I’ll tell you how my sons soccer team is doing which I coach – who knows. Have a good week.