University of Berkshire Hathaway: 30 Years of Lessons Learned from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting
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Find people with brains, energy and integrity, and you can own the world.
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learning is the name of the game. Munger noted it is essential to learn from both the mistakes of others as well as your own.
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“Find a business any idiot could run because eventually one will.”
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When asked by the commanding officer what they did, Lieutenant Jones replied, “I do nothing, sir.” The second replied, “I help Lieutenant Jones.”
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if you mix raisins with turds, they are still turds.”
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for the man with the hammer, every problem looks like a nail”)
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An error is when it’s something they understand, but then they don’t act on it in a big way. Munger elegantly calls it “thumb-sucking.”
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it’s a mistake for any company to predict 15% growth, yet plenty of them do.
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the biggest money made in Wall Street in recent years has not been made by great performance, but by great promotion.
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He recommended learning about local businesses – which ones are good and why, which ones went out of business,
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Buffett and Munger have repeated year after year that they seek to buy businesses with enduring competitive advantages.
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The key is to understand a company’s costs and why it’s got a sustainable edge against its competitors.
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In airlines, as with many other industries in a capitalistic society, business will eventually gravitate to the low-cost player.
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you were going to buy a parachute, you wouldn’t necessarily take the low bid.
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Munger noted that the fraud group percentage is high for those who talk “EBIDTA.”
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Buffett noted that such enormously successful companies as Wal-Mart, GE and Microsoft never mention EBIDTA.
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“To say derivative accounting in America is a sewer is an insult to sewage.”
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Buffett suggested that for those who believe U.S. businesses will do well over time, dollar-cost-averaging into a broad-based index is a reasonable approach.
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Munger cautioned that it is possible for prices to get so high that index funds won’t do well.
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Japan, for example, the Nikkei Index returns over the past 13 years have been negative.
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Japan made all the right Keynesian moves, lowering interest rates and providing massive fiscal stimulation, to no effect. The mod...
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is helpful to list the qualities you would want in a friend and then seek to instill those qualities in yourself.
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Munger shared that it helps to have a passionate interest in knowing why things are happening. That cast of mind over a long time, he asserted, will improve its ability to cope with reality.
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Read lots of annual reports. Learn accounting by reading good business articles, especially those on accounting scandals. Try to know how the numbers are put together.
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Then, if you cannot understand it, it is probably because management doesn’t want you to understand it. Management always obfuscates the facts for a reason.
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“There’s seldom one cockroach in the kitchen.”
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“Everywhere you see ‘EBITDA’ in some analyst’s report, simply insert the words ‘bullshit earnings.’”
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Buffett noted that inflation is the enemy of the investor.
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With 1% to 2% in dividends (less frictional costs), returns of 6% to 7% for equity investors seem a reasonable expectation and not bad in a low-inflation world.
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GDP is often presented as a gross number. However, he emphasized that per capita GDP is far more meaningful.
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one of the keys to a successful society is the perception of fairness.
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Buffett added that Ben Graham’s quantitative approach was easy to teach.
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They have learned by experience that they have made more money with a wonderful business at a fair price than a fair business at a wonderful price.
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Buffett said he never reads are analysts’ reports.
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their biggest mistakes have been errors of omission rather than commission.
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Munger advocated developing a temperament of owning securities without fretting. If you focus on the price, you are really saying that you believe the market knows more than you do. If you think of the value of the business instead of the price, you will sleep better.
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his thoughts on derivatives shared in the annual shareholder letter, where he referred to them as “financial weapons of mass destruction.”
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making money is no replacement for friendship and happiness.
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Buffett recommended owning businesses that can price through inflation and have low capital expenditures to maintain the business.
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The worst sorts of businesses to own in an inflationary environment are ones that require lots of capital to stay in the game and provide no real return.
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Buffett recommended an article by Durand written 30 years ago on the St. Petersburg Paradox
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Buffett has often taught, the intrinsic value of an asset is the cash it will earn from here to eternity, discounted back to the present. However, if your estimated growth rate is greater than your discount rate, you get a value of infinity.
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the common error is not thinking through the consequences of the consequences.
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While intelligence is helpful, Buffett and Munger asserted that having the proper temperament was far more critical.
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successful investing requires not extraordinary intellect but extraordinary discipline.
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Buffett noted that he spends a lot of time thinking about what could go wrong in big unexpected ways.
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they don’t believe in a lot of leverage at Berkshire. Throughout history, it is leverage that wipes people out.
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Buffett summed up with regard to financial calamities: (1) don’t let it wipe you out, and (2) be prepared to take advantage. Berkshire is so positioned.
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developing good character and good mental habits and to learn as you go.
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hanging around people better than you.