What To Make Of The 2019 Berkshire Hathaway Annual Meet
Buffett and Munger – while weighing in on Apple, Amazon, railroads, and buybacks – also offered lessons on life and gratification.
The Berkshire Hathaway Annual Meeting, the ‘Woodstock of Capitalists’ saw another year of record attendance and another year of learning – for those who attended, as well as the ones who viewed it on the live stream. Warren Buffett and Charlie Munger – while offering their views on Apple, Amazon, railroads, and buybacks – also gave lessons on life and gratification.
Power Of Brands Versus Retail
Buffett highlighted how certain retail systems have gained significant power in the recent times, making a special reference Berkshire's recent investment, Amazon, as well as Walmart and Costco, and how all of these have gained in power relative to brands. He spent some time mentioning the success of Costco and the brand power of its private label Kirkland Signature, which, has overtaken older Berkshire-owned brands like Kraft, Heinz, and Coca Cola, on a few parameters.
Why Amazon Too Was A Value Buy
Buffett emphasised that it is wrong to understand 'value' with statistical factors like book value.
The considerations that should be used when deciding whether to buy Amazon are identical to those when buying a bank that is somehow statistically cheap.
‘All investing is value investing’, said the Oracle of Omaha.
Paying The Right Price
Buffett and his disciples have expounded the virtues of price and value countless times. He stressed on it again, while talking about how much Berkshire paid for Kraft. The reason why one should be careful about paying too much, Buffett said, is that the business does not know how much you have paid for it. While paying too much can be bad, the contrary isn't necessarily true.
You can turn any investment into a bad deal by paying too much. But you can’t turn any investment into a good deal by paying too littleWarren Buffett, Berkshire Hathaway
Don’t Go Overboard On Delayed Gratification
While Buffett often imparts life lessons, note what he said to a young investor about delayed gratification.
‘If you are not happy having $50,000 or $100,000 dollars, you won’t be happy having more. The rich are happier when they don't have to worry about money, but you don’t see a full correlation between happiness and money.’
Contrary to the idea of saving in the present, for the power of compounding to work and return more over time, Buffett stressed on the importance of spending for the present. ‘Don’t go overboard on delayed gratification’.
Bitcoin, And 1952...
When on Bitcoin, Buffett reminisced about his 1952 honeymoon in Las Vegas. Seeing a lot of well-dressed people playing roulette, Buffett said he'd told his wife that he was going to make a lot of money as he could see people willing to bet on insane things. Bitcoin, he said, evokes that feeling.
Musk The Insurance Salesman
On the potential impact of an auto company like Tesla selling insurance directly, Buffett was unfazed. “The success of an auto company getting into an insurance business is as likely as the success of an insurance company getting into the auto business. Insurance is that difficult a business”, said Buffett.
Addition To On-Stage Ensemble?
As questions came in on the different businesses that Berkshire Hathaway owns, Buffett and Munger asked Ajit Jain and Greg Abel to field some of them. For the first time in the three years that the event has been streamed live, the attention pivoted from the two on stage. Is that the new routine? Make what you do of... “This format is not cast in stone,” and “we have discussed getting Ajit and Greg on the stage to answer questions.”
What’s changed? A young kid asked Buffett and Munger to share what they value the most in life now. Munger: “We would love to have more of it now.”
Niraj Shah is Markets Editor at BloombergQuint.