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

by Daniel Pecaut

this textile company was an ideal vehicle for making investments. With Berkshire Hathaway’s stock, Buffett had a publicly traded corporation with captive capital. The benefits of this corporate structure for managing money are significant. In his previous partnership, if shareholders redeemed their shares, the money would come right out of the till. Now, when shareholders sell their shares in Berkshire Hathaway, that doesn’t affect its available capital. Capital doesn’t leave the corporate shell unless Buffett pays a dividend.

where that float is generated at a low cost and you can grow it over time, you have built a wealth-compounding machine. As Munger once put it, “Basically, we’re a hedgehog that

“Why do two of the world’s greatest investors do what they do?”

Interestingly, despite his feelings on inflation, Buffett has no plans to alter his strategy (one that has worked for him for three decades). At best, he will try to find businesses that can keep pace with inflation.

This has serious implications for fixed income investors.

Note that, to minimize market risk, Buffett’s bonds will all mature within 12 years. You should consider doing likewise.

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

While inflation is still undesirable, well-run businesses that employ relatively little capital, that throw off lots of cash and that have pricing flexibility will cope well with inflation.

Buffett sees the trade deficit as a far more serious problem than the federal budget deficit.

He noted that Golden Arches and The Big Store offer great lessons on business.

the Source Capital annual meeting, Michaelis explained that there have been two basic themes in value investing: 1) buy assets and 2) buy earnings power.

The problem with buying assets cheap, as Michaelis sees it, is that the only way to increase the value is through some sort of event.

Munger lamented that business schools would produce better managers if they would study what makes a good business good and what makes a bad business bad. But they don’t. When asked why they don’t, Munger replied that for business schools to do so would mean calling into question the flawed morals and performance of America’s largest corporations, the same corporations that hire many of the business schools’ students.

“Keep your eyes wide open before marriage and half shut thereafter.”