Hi all,
Well, I’m back on deck after 2 weeks in the US. I had some really interesting and fruitful investment meetings during the time away however the highlight of the trip again was the opportunity to spend 6 hours of quality time with the dynamic duo, Warren Buffett (now 85yo) and Charlie Munger (now 92yo!). Of course there were 35,000 to 40,000 other investors there as well plus an estimated one million global livestream viewers (1st time ever it has been televised).
These two investment living legends are responsible for Berkshire Hathaway’s (NYSE Code: BRK) unprecedented and simply unbelievable track record of 20.8% pa compound return on average each year over the last 51 years!! At $360 billion in size, BRK is now a top 5 US company … a far cry from the very humble underperforming textile company Warren purchased 51 years ago.
I’ve been asked many times why I see the need to go each year. I’m morphing into Charlie in my answer (invert … always invert) which is ‘why wouldn’t anyone want to go?’
Given Fortitude’s dual goal in working with you is to;
- assist you in getting your financial affairs in order and keeping it that way forever, and
- to understand what’s important to you and to put in place strategies to maximise the probability of you achieving all that is important (typically revolving around health, family and FINANCIAL INDEPENDENCE)
then clearly us all having the right philosophy around achieving this for you is EXTREMELY important.
A day with the two greats is more than an annual top up on their renowned common sense philosophy of sensible low cost investing in quality long term sustainable businesses. This is at the foreground with Fortitude as to how we maintain and grow your wealth over the long term.
The day is also a reinforcement of a multitude of other philosophies focussed on the importance of family and friends, health, having fun, doing what you love, acting with integrity, humility, having a positive attitude, a sense of humour, ‘a moral obligation’ to act rationally and to be emotionally stable when making important decisions.
In focussing on what’s important, the day is full of reminders around ignoring the noise, ignoring forecasters, ignoring economists (yep, they both copped it again), accept and embrace volatility and to focus on what’s knowable and what’s controllable.
Below I have put some of my favourite little titbits and words of wisdom from Warren and Charlie from throughout the day, and apologies for a lot of it being with little context for you to work with. Despite their off the charts intelligence, the two fellas are extremely funny to see in action but I understand that this may not come across in my transcript. I hope one or two of them at least hits the spot for you. I’d be delighted to debrief one on one if you want to flesh out anything of particular interest.
A 4am start last Saturday week saw three of us Aussies, Tom Millner (CEO of BKI, Director of SOL), Hughesy (friend and colleague) and myself securing front row seats in the public section on the floor of the stadium for the big day. Warren, Charlie, the two panels of question askers, the BRK board members including Bill Gates and family members were the only ones in front of us in the secured area. A handshake with Warren later in the day means I’m just about done with my bucket list …. I’ve still got Cypress Point Golf Course on the Monterey peninsula to play if anyone can help!
Our focus here at Fortitude continues to be on your bucket list items though so look out at our future meetings!
MY WARREN (WB) AND CHARLIE (CM) TITBITS and WORDS OF WISDOM
Format of the six hours of Q&A at the Omaha CenturyLink Centre;
Both legends are seated on an elevated stage … side by side, Warren with his cherry coke and Charlie with his diet coke. They’ll both get through 3 to 5 cans during the day. An open box of See’s Peanut Brittle sits between them which they snack on consistently throughout the session … it’s great to watch.
All questions are asked of WB 1st. After WB answers each question, he then leans forward into the microphone and says … “Charlie?”
Responses vary from CM, but here are a few of his short answers .. typically after a long pause;
CM: I’ve got nothing to add … (after another long pause) WB: He’s now in full swing
CM: I’m even more ignorant than you are
CM: I have no hope of giving a better answer
CM: Microeconomics is what we do (study businesses) and macroeconomics we just put up with
CM: If you disagree with someone, you should be able to state their side better than they do … and if you can’t, just shut up
WB: Am I right Charlie? CM: Yes, of course you’re right
OTHER:
WB: My youngest great grandchild is here, he’s 7 months old, and if you hear him cry, don’t worry, it’s just his mother explaining my views on inheritance
(NOTE: WB has pledged nearly 100% of his wealth on his death to the Bill & Melinda Gates Foundation. We’re likely talking close to US$100b)
CM: When our circumstances changed, we changed our mind
WB: When something’s forced on you, you may as well prefer it
WB: We’re quite happy with a satisfactory result
WB: My favourite employer is myself
CM (When asked ‘any regrets?’): I do regret that I didn’t wise up. But there’s an upside to that … at 92, I still have a lot of wising up to do
On Coke:
WB: I really wish I had a twin and he ate broccoli each day … I think I would’ve been happier and I would’ve lived longer.
In America, there are 10,000 men over 100 years old and 45,000 woman over 100. If you really want to improve your longevity, have a sex change. I think I’ll let Charlie go 1st.
CM: Measuring the detriment of something instead of looking at the benefit is immature and stupid
On Trump vs Clinton:
WB: BRK will be fine either way
CM: I’m afraid to get into this area
On having $60b in cash by June
WB: having a lot of cash is a bit like having a full bladder …. You may get tempted to pee it away
WB: As said by Yogi Berra – you can see a lot just by observing
WB: We only swing at things that are in our particular strike zone
WB: Don’t try and win every point in doing a deal
CM: Not only can the able handle more, but the unable you can’t fix
CM: No one knows what’s gonna happen with negative interest rates because we’ve never been there before. We have a competitive advantage because we know we don’t know what’s going on
On ‘is cattle a good investment’
WB: I’ll let you handle this one Charlie
CM: No, I think it’s one of the worst investments. Perhaps you get one good year in 20 years … Someone has to occupy the tuff niches in the economy though .. they need you
WB: I know a few cattle owners who have done reasonably well … and it’s probably because they own some banks on the side
On ‘why doesn’t BRK have the highest credit rating’
CM (unusually butts in on WB): I’ll take this one … The rating agencies are wrong and set in their ways
Tom Millner (BKI) has provided a fantastic five page update on his key take outs from the day. See his piece by clicking on this link.
Feel free to forward on if you know of someone who can benefit from Warren and Charlie’s advice…. That should mean your whole address book!
Have a great rest of week all. Please call if there’s anything on your mind re anything (including the budget) or even if just for a chat. Happy to talk you through attending Omaha in 2017 too … I’ll be there.