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Old men's tales

As always, Berkshire Hathaway's shareholders' meet was more than a little bit like a family's chat with grandparents

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Last week, the annual shareholders' meet (AGM in Indian parlance) of Warren Buffett's Berkshire Hathaway took place, as it does every year, in the city where the grand old man of investing is based--Omaha, in Nebraska, USA. By all accounts, the world's most famous shareholder's meet lived up to its billing. There was a large exhibition where shareholders could buy or sample the products of the companies that Berkshire owns, ranging from See's, a candy company to Netjets, which rents out private jets. However, the highlight of the show, as always, was an extended Q&A with Warren Buffett and his deputy Charlie Munger. Despite the two's advanced age (Buffett is 88 and Munger 95), the Q&A lasts most of the day.

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As has been usual for a few years now, questions at the Berkshire meet came from two sources. Firstly, selected from emailed question by a panel of financial analysts and writers and secondly, from shareholders at the venue who are selected by a lottery held on the spot. Many of the questions are connected directly to Berkshire's businesses, as one would expect at a shareholders' meet. However, a good number are general questions about investing or business, or sometime even broader. In most of the cases, Buffett and Munger give long, reasoned answers that often go into the principles underlying what they do.

Typically, Buffett makes his point tactfully, and then looks at Munger and says, 'Charlie?' Munger often says, 'I have nothing to add,' but when he does speak, it is usually some comment or anecdote that is markedly less politic than Buffett's. For example, there was this 27-year old who said that he 'wanted to be a great money manager like you two' and wanted some advice on that. Buffett gave a nice long answer but when it came to Munger's turn, he narrated this story: A young man who had asked Mozart about how he could begin composing symphonies. Mozart told the man that at 22 years old, he was too young. 'You were writing symphonies when you were 10 years old,' the man protested. 'Yes, but I wasn't running around asking other people how to do it,' Mozart responded.

There was another question this year whose answer was quite a surprise, and something of direct interest to young savers. A 13-year old boy, accompanied by his father, asked the two about how a young person could develop 'delayed gratification'. The child said that his father made him watch many videos of the two and told him that that was the key to success.

Given Buffett's image as a miser, such a question was not too much of a surprise. Munger's answer was blunt. Having raised eight children, he said that he no longer believes it possible to teach delayed gratification. You are either born with it, or not. Buffett was more circumspect said that while saving was important he did not believe that for all families, under all circumstances, saving was the best thing to do. If you postpone a two-day trip to disneyland and are thus able to afford a seven-day trip decades later, it may not be the best choice. If you are not happy with 50,000 or 100,000 dollars, you may not be happy with 50 million dollars. I mean a certain amount of money does make you and those around you better, more secure... You don't see a correlation between money and happiness beyond a certain point.

Is this the kind of answer the boy and his father were looking for? I'm not sure. I got the feeling that while both Buffett and Munger gave a genuine and useful answer, it was also meant as an admonishment to the father of the child. Still, an awareness of how delayed gratification is an important part of being successful as an investor is something every saver should give a bit of thought to.

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