Q7. According to Warren Buffet he is what he is because of two prominent investment gurus. He says he’s 85% Benjamin Graham and 15% ____?
Billionaire and all-round world leader in investment, Warren Buffett, the man they call the Oracle of Omaha, and his company Berkshire Hathaway had their annual meeting over the weekend.
Buffet and his partner in crime, Berkshire Hathaway Vice Chairman Charlie Munger, addressed questions from shareholders, journalists and analysts at the big do. Munger said about Buffett, “He sits around reading most of the time and thinking, and every once in a while he talks on the phone. I can’t see any difference…Warren is very good at doing nothing.” Munger is the 94 year old investor who loves Coca- Cola. The beverage, not the stock.
From colorful mascots to kiosks showcasing product lines to Warren Buffett's witty and insightful speech, this is a unique event that is marked on the calendars of all large investors', corporates' and media houses.
It is a celebration of Buffett’s success at a conglomerate whose businesses range from insurance to railroad to candies to knives.
The big news from the event was his admission that he bungled on Amazon and Google. Hey, even the best falter from time to time. “I had
very very very high opinion of [Jeff Bezos’s] ability when I first met him, and I underestimated him,” Buffett reportedly told CNBC. “I’ve watched Amazon from the start. I think what Jeff Bezos has done is something close to a miracle . . . the problem is when I think something will be a miracle, I tend not to bet on it.”
Munger is unmoved. “I’ve been to Google headquarters - it looks like a kindergarten,” he said.
But Buffett admits to being an old world investor. Technology throws him for a loop. He said Bill Gates had to personally tell him to switch from the creaky Altavista search engine to Google. Hmm. Bill Gates does not endorse Bing? Name-dropping game is on point, Mr Buffet. The investor also admitted that “stupidity” kept him from investing in Microsoft early on.
If we look at investing as a conservative business, it helps understand Warren Buffet’s philosophy that has led him to success. He has always sounded a note of caution to investors - only bet on businesses you understand. Well, he has given away more money out of altruism than most of us are ever likely to make, so maybe he’s on to something?
Reporting on the event, Fortune
magazine made an interesting observation:
…another aspect of tech investment is more fundamentally at odds with Buffett’s approach. Buffett also said, “I made the mistake in not being able to come to a conclusion where I really felt that at the present prices that the prospects were far better than the prices indicated.” That is a summation of Buffett’s emphasis on value investing—buying stocks that underprice the intrinsic value of companies.
Buffet’s advice and storytelling are what people come for. Forbes recounts that he held up an edition of the New York Times from 1942, when the end of World War II was still 3 years away. It was then that Buffet, not even 12 years old, made his first ever stock acquisition. He bought a few shares of a company named Cities Service. Later, the stock fell by about a third before rebounding. Buffett, now wide-eyed about the stock market's inherent volatility, sold his shares for a small profit.
From 1942 to the latest in biz – cryptocurrencies. And Mr Buffet is no fan of that trend. He says, “….non-productive assets. It essentially will not deliver anything other than supposed scarcity. What does it produce itself? ... Anytime you buy non-productive assets, you are counting on someone later on buying a non-productive asset. It does come to a bad ending ... cryptocurrencies will come to bad endings.”
Buffet and Munger even shared their opinions on the so-called trade war between the US and China.
Buffet says, “We’ve seen steel costs increase somewhat. I don’t think either (the US or China) will dig themselves into something that precipitates and continues any real trade war ... The benefits of trade are basically not visible. No one thinks about benefits day by day ... The negatives, and there are negatives, are very apparent and very painful.”
Charlie Munger, laconic wit in place, says, “The conditions in steel were almost unbelievably adverse to the American steel industry. Even Donald Trump can be right on some of this stuff.”