You can learn a lot by hanging around Warren Buffett and Charlie Munger for six hours. Today, we’re going to discuss what we learned by attending the Berkshire Hathaway annual meeting in Omaha.
Buffett and Munger are considered two of the most successful investors of all-time and each year, they answer questions in front of tens of thousands of people at the Berkshire Hathaway annual stockholder’s meeting.
To read some of the wit and wisdom from Warren Buffett, click here to access all of his annual stockholder letters.
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At Keen Wealth Advisors, we believe it’s critically important to be life long learners. Things change so quickly in our world that as an advisor, we intentionally invest part of our time attending conferences and being around other people from whom we can learn.
Recently, Matt Wilson from our office drove to Omaha to attend the Berkshire Hathaway stockholder’s meeting while I was in California meeting with a group of 60 experts in their respective fields sharing best practices.
You, our clients, benefit because we take what we learn and reinvest it right back into our processes to help our clients make smarter decisions about their money and their life.
Five Insights From the Berkshire Hathaway Annual Meeting
1. If you love what you do, why retire?
Some people can’t wait to retire, and for good reason after a long and rewarding career. But Buffett and Munger, who are 85 and 92 respectively, were asked why they were still working at their advanced age. Buffet said he was as happy as he could be because he gets to do what he loves doing, he eats what he wants to eat, he works with people that he wants to work with, and he gets to be his own boss. Munger said his work is as fascinating, rewarding, and socially productive as any period in his life. If they retired in the traditional sense, one wonders what they would retire to.
2. Being happy may add more years to your life than eating broccoli.
We’re not trying to be scientific here but Buffett made that comment to help justify his enormous consumption of Coca Cola. Buffett drinks 700 calories a day of Coke (his firm owns billions of dollars of Coke stock) and he said it makes him happy. When pressed by the audience on how drinking all that sugar water may be bad for his health, Buffett said he wished he had a twin brother who ate broccoli all the time. His point was, being happy (regardless of his Coca Cola habit), would probably help him live longer than somebody who filled their diet with broccoli and was not happy. What do you think?
3. Don’t worry about the direction of oil prices.
Berkshire Hathaway owns Burlington Northern Railroad, a company that derives a good chunk of its revenue from transporting oil. With oil prices relatively low, Buffett was asked where he thought the price of oil was heading. Buffett’s response was, rather than focus on the price of oil, he just focuses on the business itself to make sure it is well run and that it has a specific strategy to execute on regardless of the price or volatility of one commodity. The bigger lesson here is, as an investor, focus on what you can control (your strategy) and not what you can’t (oil prices, weather, interest rates, stock market movements, etc.).
4. The power of compounding is very real.
Buffett first became a millionaire from investing at age 30. By age 56 he was a billionaire. By age 85, he was worth 66 billion dollars. Assuming he started investing at age 25, it turns out that 98% of his net worth was acquired in the last 29 years, which comprises only about 50% of his total years of investing. This principle of compounding applies whether we’re talking about turning $1,000 into $10,000, $100,000 into $1 million or $1 million into $10 million. Time and discipline can be your best friend when it comes to investing and the earlier you start the better. This is a message that we should continue to bring loud and clear to our children and grandchildren.
5. Businesses should do fine long-term regardless of who becomes president.
While many people in the country are concerned about who will become our next president, Buffett doesn’t worry about it. He said businesses will adapt regardless of who the president is and the policies that get enacted. As an example, he said to look at how our standard of living has risen over the past 85 years of his life despite wars, recessions, high tax rates, high inflation, terrorism, and other ills. He’s optimistic that whatever problems get thrown in the country’s lap, we’ll figure out a way to overcome it.
Bill Keen on life long learning…
I don’t think you should ever be done learning.
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Bill Keen is the founder and CEO of Keen Wealth Advisors, an independent Registered Investment Adviser serving affluent clients preparing for retirement and the host of the Keen On Retirement podcast. Bill brings more than 20 years of financial services experience and holds the CHARTERED RETIREMENT PLANNING COUNSELOR designation. Bill created Keen Wealth Advisors to build one of the country’s most personal and trusted wealth and retirement advisory firms.