Berkshire Hathaway shareholder Curtis Joe Walker was back at the jamboree again this year, bringing Warren Buffett straight to you. Here are his stories.
Hitting the line for Berkshire at 6am isn't a whole lot of fun after an evening spent scoring free gin and meatballs at the reception, but such is life. Arriving any later is a guarantee for a lousy seat in one of the overflow rooms. This year, attendance was up by 5000 to 35,000. this number represents a 14% increase in passes, though the stock faced a 9.6% loss in value vs the 37% in lost value of the S&P 500 in 2008.
The gates always open at 7, but the annual financial comedy montage doesn't start until 8:30. A free breakfast consisting of Coke and cheese danish await the hungover and bleary eyed. This year's montage featured several clips from British comedy duo, Bird and Fortune, a collection of Geico spots and a full length Cirque du Soleil-inspired Fruit of the Loom commercial. The usual animated intro video was cut short in honor of the current cashpocalypse.
Due in part to last year's protesters stealing three of the coveted Q&A slots and very few tough questions about how Berkshire is being run, a new policy of random selection was imposed. In addition to this, three members of the financial media formed a panel to field the best of 5,000 mail in questions. Andrew Ross Sorkin, Becky Quick and Carol Loomis of Fortune.
The main event is the Q&A session and the new format helped to bring out some new insights from Warren and Charlie. Running from 9am to 3pm, with an hour break for lunch, the session allows unusual access to insight from the Oracle of O and his main man, Charlie Munger.
-In regards to teaching kids finance in school, Charlie says: You can't teach high finance to people who can't even use credit cards responsibly.
-In regards to valuing a business without using complex charts, spreadsheets and calculators, Warren says: If you have to use a calculator to figure out the value, move on. Charlie adds: They teach that in business schools because, well, they have to teach something. Higher mathematics can be dangerous in investing. Arithmetic should be
enough. If we can't figure out a way to do it, we don't believe it can be done. Predicting bottoms is just about impossible.
-Warren says: Emotional stability is more important than a 150 IQ.
-Charlie says: If your IQ is 150, but you think it's 160, you're a disaster. If your IQ is 130 and you operate within your means, you'll do much better.
-Warren: Investing is simple, but not easy.
-Charlie: The human mind resists new ideas. It's said that science advances one funeral at a time. The same can be said of finance.
-Warren: Don't pay attention to the day to day price of a stock, and don't beat yourself up if the stock goes down. Look at it as a new opportunity to pick up more of a good thing for a better price.
-Charlie believes that long term investment in infrastructure through government stimulus plans is a sure bet and the national electricity grid should be the main focus.
-In response to the question of webcasting the meeting and other Berkshire events, Warren says it would reduce the value of the meetings and that personal contact is more important. It isn't a matter of secrecy.
-The question of the eventual demise of the CEO has been a topic discussed at nearly every meeting in the last several years. Rather than being an 800lb gorilla, Warren and Charlie both field these questions with humor and honesty. Warren has a shortlist of people he sees as taking over both as CEO and in investment areas. Charlie says: "As I approach the age of death, I become increasingly comfortable with the economic situation."
-Charlie believes that corporations would be run better if directors didn't get paid at all. As soon as they rely on their salary, they lose their independence to stand up to CEO's for what they believe is right. While nearly all boards are run in this way, he describes the
practice as "silly."
-When asked about investing in Euro, Warren admitted that he wasn't any good as predicting the value of the $ vs the €. Charlie suggested he did pretty well, to which Warren admitted to making a few billion.
-The greatest tool in fighting inflation is being good at your job, whatever it is. The best place to invest is always in yourself.
-The Q&A session was concluded with a surprise marriage proposal by Buffett's nephew Alex. Fortunately, he was not rejected.
--Curtis Joe Walker, a Berkshire Hathaway shareholder