University of Berkshire Hathaway: 30 Years of Lessons Learned from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting

by Daniel Pecaut

Value is what a business is worth. Price is what you have to pay to get it.

On the Ideal Business Buffett: “Something that costs a penny, sells for a dollar and is habit forming.”

As Buffett summed up, “If investors only had to study the past, the richest people would be librarians.”

“It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

Buffett emphatically summed up his case for reason over emotion: “A stock does not know you own it, the price you paid, who recommended it, the prices someone else paid . . . the stock does not give a damn.”

Buffett asserted that the biggest money made in Wall Street in recent years has not been made by great performance, but by great promotion.

Buffett concluded, quoting Bertrand Russell, “Most men would rather die than think. Many do.”

Buffett noted that, as a general rule, he ignores what is hot.

The message throughout: Look not what at the numbers are but what the numbers mean.

Buffett allowed that if you have tons of receivables and inventory, that’s a lousy business in inflation.

Buffett said if he ran a business school he would have just two courses: 1) How to Value a Business and 2) How to Think About Markets.

Think about playing tomorrow. Avoid the worst-case mistakes.

Buffett asserted that mortgage problems in 2008 and 2009 happened in large part because the mortgage holder and the mortgage originator became “totally divorced.”

“Lose money for the firm and I will be understanding. Lose one shred of reputation for the firm and I will be ruthless.”

Buffett revised Ben Franklin: “An ounce of prevention is worth a ton of cure.”

Munger noted that size is the anchor of performance, and they are proving it.(166)

Buffett noted that, when the world is fearful, people have a hard time believing things will get better. Berkshire has no such trouble.

He concluded: “There’s no way in the world, if you’ve got plenty of money, that it should become a minus in your life.”