Last weekend was the Berkshire Hathaway
circus annual meeting. I spent most of that time reading through the notes and watching the media interviews from different sites (links are below). I won’t highlight anything specific, you can dig into it if you want. I will make two observations – on the enormity of Berkshire and learning from Buffett.
First, Berkshire is huge. It’s a ridiculous number of companies now (I don’t have the exact number, Google says more than 80?). The companies stretch into so many areas of the economy that Buffett knows how well the economy is doing, and can see major business/industry changes, before the Fed and anyone else. The information he gets from daily business updates gives him a huge advantage when buying new companies/stocks.
Second, Berkshire shareholders fall into a wide range, from long term owners to fair weather fans. Since Berkshire issued the lower priced class B-shares in ’96 (which were split in ’10 to make the Burlington Northern purchase) there’s been a lot more fans showing up.
This dynamic makes it seem more like a sporting event then an annual meeting. With more fans showing up every year, the questions posed during the meeting become less about the company and more about other things? Luckily, the meeting is set up in a way that filters out most of the sillier questions.
But one always gets slipped in trying to suss out Buffett’s secret formula. Because it has to be more than hard work, dedication to learning, emotional fortitude, and an unwavering devotion to his craft. They want an equation or a 3-step process that doesn’t exist. They get idioms and metaphors instead.
That’s the problem with Buffett. He spent six decades learning and growing from his experiences. He’s a learning machine. He knows it so well that he can break down difficult concepts into simple ideas anyone can grasp. But not everyone can put it to use because simple doesn’t equal easy.
But it’s not impossible either.
If the 10,000 Hour Rule was remotely accurate (it’s not), Buffett would have surpassed it by at least 60x. Think about that for a minute – 10,000 hours is basically a 40 hour work week for one year. So there’s a little bit of effort involved to learn this stuff.
But that’s only part of the equation. Learning doesn’t account for Buffett’s Spock-like reflexes when managing his emotions. All his investing knowledge is useless if he gets scared out of investments that drop 20%, is too afraid to buy after a stock falls, or gets caught up the in latest hot stock craze. If he made the same mistakes most investors make, he’d be just another average investor.
That doesn’t mean you shouldn’t take the time to learn from Buffett. One of the best things we can do is use the best ideas from smarter people than us. Just understand that his simple explanations skip over a lot of the background information needed to piece it all together.
- Gurufocus Notes From Berkshire Shareholder Meeting 2015 – Part 1, Part 2
- Recap: The 2015 Berkshire Hathaway Annual Meeting – MoneyBeat
- What You Should — and Shouldn’t — Learn from Warren Buffett – J. Zweig
- An Interview with Yours Truly about Investing for Retirement – New Retirement
- A Brief History of 401(k)s – Morningstar
- Value Investing Facts And Fiction – L. Swedroe
- Unsolicited Advice for Everyone About to Graduate College – M. Housel
- What’s Wrong with Finance – The Economist
- Latest GMO Quarterly Letter (PDF) – GMO
- Why Can’t America Have Great Trains? – National Journal