(At the end of the post, I talk about meeting Boston Red Sox owner John Henry.)
This past Saturday, I had the opportunity to attend Woodstock-for-Capitalists. Or, more commonly known as Berkshire Hathaway’s Annual Shareholders’ Meeting. Estimates put it at a record 37,000 in attendance for the event, and I wouldn’t doubt it. The below picture is the scene at 6:45 AM, fifteen minutes before the doors open, and almost two hours before the meeting was to begin.
It was like this at all the entrances. Once the doors opened, the crowd moved briskly into the arena. For some reason, I wanted a seat where I could take in the whole arena. I went straight to that spot (pic below) and settled in. I had been advised to bring a book, by Dusty Davidson, since there is a lot of downtime while waiting for the meeting to start. I brought and read Joe Posnanski’s The Soul of Baseball: A Road Trip Through Buck O’Neil’s America.
The meeting started with a movie which comprised of a montage of Berkshite Hathaway products, comedic clips, and vintage Warren Buffett. I enjoyed the clips of Warren Buffett, as a Boston Red Sox pitcher, striking out Alex Rodriguez. (However, I also thought any Red Sox fan shouldn’t bemoan the wealth of the Yankees when the second richest man in the world is aligned with the Red Sox.)
The video ended, the lights came up, and out came Warren Buffett and Charlie Munger for their five hours of Q&A.
While I wasn’t in the arena for every question, here are some of the highlights from what I heard. Unless noted, it was said by Buffett. (More thoughts after this bullet list.)
- Buffett and Munger were adamant in their defense of Goldman Sachs, and think the firm has been misrepresented by most media accounts. His straight-talk defense of the firm swayed opinion.
- Speaking of which, I appreciated the no-nonsense tone Buffett and Munger had. It is consistent with their business practices. As Buffett said, when it comes to investments he doesn’t consider the individual, he considers the numbers.
- It’s unfair that unproven allegations can cause a loss of reputation, like it has for Berkshire Hathaway and it’s deal with Goldman Sachs, but that’s how it is for the time being.
- While you can have enough money, you can never have enough good reputation.
- Munger said that no one in Congress has any clue regarding the financial reform bill, and that if he was in charge of the economy he’d make Paul Volcker “look like a sissy”. (Volcker is known for his tough economic stances.)
- Munger also thought the US helping Germany and Japan, post World War II, was one of the best international policy decisions in history.
- What distinguishes the economic crisis in Greece from other nations that are in crisis is that Greece cannot print more money. They don’t have their own money, they have the Euro. The crisis is a test case of a sovereign nation using a common currency. He has “no idea how the movie will end” in this situation.
- As long as the US borrows US dollars, the nation is okay.
- Munger noted, about potential, that there isn’t much difference in 1790 Americans and present day Americans. He then said that if India and China continue to do well economically, that this necessarily isn’t a bad thing for the US.
- It’s hard to change a business culture. It’s easier to start a new business and establish a new culture around it.
- Berkshire isn’t as involved in India and China because the government limits what they can manage. For example, Berkshire would rather manage 100% of a business in the US than 25% of it in China.
- The dollar has depreciated 90% since 1930, but the country is still doing okay.
- Good to develop good financial habits at an early age. Better to have good learning at elementary level than have advanced degrees.
- Munger talked about McDonald’s having a great business practice of hiring marginal people and training them in the company’s ways and culture so they’ll be the best possible employees.
- The US should have a wealth tax.
- Trust charitable foundations over the government.
- Trend is not destiny. We have the power to control our future.
- While money can experience inflation, talent cannot. Involve yourself in civilization.
- Regarding whistleblowers, there is nothing wrong with speaking out as long as you’re willing to be held accountable for what you say.
- Any institution that is threatened will attack the threat and threatener.
- Regarding providing jobs in US right now, they’ll hire people when they have something for them to do. They’re not going to hire people for the sake of it. Berkshire is not the social safety net of the people.
- Newspapers are in real danger because the math is not there. 75% of money of newspapers were advertisers. This was because the newspaper was the only game in town. That’s not the case anymore. The distribution and printing costs make newspapers a bad bet. Communities are thriving, but newspapers are declining. Munger said, “We’re losing something that we have no substitute for”.
- “Take the high road. It’s far less crowded”. -Munger
- One of the reasons for the economic crisis is because it’s hard for businesses to go against group think.
- Berkshire does not farm out investment judgment, and neither should investment companies.
- We’ve yet to hear an apology from business academia for their contribution to economic crisis.
- “Don’t give up on humans being able to solve the impossible. World has a bright future”.
- Munger thought we can get ahead in the world now without oil.
One of the interesting things Buffett said was the donation of his $100,000 salary to non-profits is a “tax dodge” on his part. For someone who talks about the rich needing to be taxed more, I found this ironic coming from a multi-billionaire. Munger and Buffett didn’t think it was a big deal, but I think it is borderline hypocritical. He misrepresents the situation and context when he says his assistant pays more in taxes than he does. It’s his money, and as he noted he trusts charitable foundations over government. He can do what he wants with his money, within the myriad of economic laws the US has. I just think it would be better if his thinking was in line with his practices on this.
The exhibition hall was fun to walk around and see all the various Berkshire Hathaway vendors. Kind of amusing to watch people spend thousands of dollars at Borsheim’s, and then go get a blizzard from Dairy Queen.
How did the event end for me? Well, as the event was about to end, I was walking through the exhibition hall when I thought I recognized someone. I did a double take. It was Boston Red Sox owner John Henry. He was with three others looking at various exhibitors. I initially thought why would he be in Omaha, but then again he’s almost worth a billion dollars. Why wouldn’t he be there for this mecca of capitalism?
I then realized Tom Werner, chairman of the Red Sox, was with him. I was debating what to do. Here I am seeing the owners of my favorite baseball team in my hometown. I wanted to go say hello. But then, I realized they were anonymous in the exhibition hall. No one had any idea who they were, and that was probably a welcome thing for them. In Boston, their lives are lived within a fishbowl. Coming to Omaha and being anonymous is probably refreshing.
I didn’t want to ruin that moment for them, but I also wanted to say hello. I wanted to say thanks. I’ve been a fan of the Red Sox since the mid 80’s. The team has brought me much joy in recent years.
I saw John Henry was off on his own, looking at some books, so I decided to go up to him and introduce myself. What did I have to lose?
When I said his name, he seemed surprised that I knew who he was. (What, my floppy hair, untucked shirt, jeans and Chuck Taylors might have played a role in his response?) I just introduced myself, said hello. I told him I’m from Omaha and have been a fan of the Red Sox since the 80’s, and that I just wanted to say thanks. I shook his hand, and that was it.
I didn’t elaborate on what I was thanking him for, which was the two World Series Championships. I wasn’t as prepared as I should’ve been for talking with the billionaire owner of my favorite baseball team.
He wasn’t too talkative, which I expected, but he was gracious. He said, “Thanks”. He’s called himself shy and an introvert, so I couldn’t expect a quick conversation. Nevertheless, it was great for me. I didn’t think the moment could be topped, so I headed home.
I texted Jana and told her I met the Red Sox owner. Liam was with her and she told him. My three year old’s response? “Is (Red Sox first baseman) Kevin Youkilis with him”?