One more time, a wonderful new episode of the Warren and Charlie show
14-May-2018 •Dhirendra Kumar
About a week back, the Annual Shareholders' Meeting (AGM, in Indian terminology) of Warren Buffett's Berkshire Hathaway was held in the US city of Omaha. Just like every year, the world's most famous shareholders' meeting was a two day festival thronged by tens of thousands of Berkshire shareholders. Besides the stalls featuring products of Berkshire subsidiaries like See's Candy, Fruit of the Loom, and Netjets, the highlight of the festival was a five hour, unscripted, Q&A session with Warren Buffett and his deputy Charlie Munger.
Not being a Berkshire shareholder, I've never had the opportunity of going to this unabashed celebration of capitalism and equity investing. However, after Yahoo Finance started livestreaming it three years ago, one can get an almost firsthand feel for what it's like, just for the price of staying awake on the appointed Saturday night in May.
Like many recent years, this year's Berkshire Q&A had an increasing undercurrent of reminiscing the past while looking ahead, somewhat uneasily, to what the conglomerate will be like after the 'Warren and Charlie Show' comes to an inevitable end. Buffett is now 87 and Munger is 95. Of course, success and retirement are valid issues of interest to those who have significant shareholding in Berkshire. But what of those people who have no real interest in the corporate entity of Berkshire Hathaway, but are interested in it only because of Warren Buffett?
There are people who buy a handful of Berkshire shares just to be eligible to get an invitation to the shareholders' meeting. Not just that, on social media, I can see that a lot of well known names in the investment world (including Indians) making this pilgrimage--almost every year--to the Berkshire meeting.
So what is it that pulls them there? It isn't as if the old men are handing out trading tips or revealing what investments they are planning to do with their enormous amount of cash. Why do investors go there? I think the answer lies in the word pilgrimage. For so many people, physical visitors as well as virtual ones, this is almost literally a pilgrimage. It's a reinforcement of an approach to saving and investing that is disappearing. If there is one phrase that sums up the Buffett-Munger philosophy, it would be 'get rich slowly'. That sounds like a joke but it isn't, a little bit like the 'slow food' concept that one reads about nowadays.
In an unusual aside at the beginning of the Q&A, Buffett narrated how he bought his first stock at an age when he was still a school student. This was during the early phase of the World War, soon after Pearl Harbour, when things were looking rather bleak for the Allies. He said that from that dark time till now, an investment of $10,000 in a broad US stock index would have grown to $51 million. In contrast, if someone had listened to the prophets of doom and bought gold, then that would have grown to $400,000. As Buffett admitted, this is just 20:20 hindsight, nothing remarkable by itself. However, the important thing is that to make money in such situations, you need nothing except a growing economy and productive underlying assets. And of course, time. You don't need any advisor, you don't need any further analysis and in fact, you do not even actually need a market.
To be sure, the investors and investment managers actually attending the meet, and myriad other Buffett fans, like me do not actually invest all their money like this. Nor, perhaps, do the people who manage Berkshire's own market investments. However, it's the reinforcement of the concepts that matter, which keeps investors straying too far from the path.