Inside the Qwest Center during Berkshire Hathaway’s Annual Shareholder’s Meeting.

I was able to attend Berkshire Hathaway’s Annual Shareholders’ Meeting again. I got down to the Qwest an hour before the doors opened to wait in line with people in suits, and people in shorts.*

*I was wearing a Boston Red Sox shirt in hopes of meeting Red Sox owner John Henry again.

While the issue of David Sokol and Warren Buffett’s heir apparent dominated the conversation, there were more tidbits. Below is a list of things gleaned from the meeting. I was in the arena for most of Warren Buffet and Charlie Munger’s Q&A. Right before lunch I got up to stretch my legs, and then I left halfway through the afternoon session. I’m fairly sure in my quotes. Unless noted, the quotes are from Warren Buffet.

I am working on an additional post about Berkshire Hathaway and David Sokol that I’ll post soon. (Update 5.05.2011 – That post is now online.)

  • Within five minutes of the doors opening, the Qwest had more people in it than most Creighton basketball games.
  • Warren’s connections were on display in the opening film. The time lapse video of the meeting’s setup had U2’s “Beautiful Day” as the background music. The cartoon with Arnold Schwarzenegger voicing The Governator and Terminator-style storyline was underwhelming. However, the Pulp Fiction reference in it with “Misrilou” by Dick Dale & His Del-Tones was nice.
  • It would be nice if Berkshire sprung a bit more on production costs. Repeats of the BNSF and managerial videos are kind of surprising for a company of its size and reputation. I can understand the repeat of Salamon hearings video, though.
  • Saw a preview of the original HBO film, Too Big To Fail. It looks good.
  • Best part of the opening film? A scene from the recent episode of The Office which was reshot to have Warren Buffett has Michael Scott’s replacement. The characters lines and interactions with Warren were spot on. (DWIGHT: And I’m the Druid of Scranton.) It was some of the funniest stuff I’d seen on the show in awhile. Hope it makes it online someday.
  • In his opening statement, Warren noted how their insurance business had been hit hard, in 2011, by the Australian floods, New Zealand earthquake, and Japan earthquake/tsunami.
  • They’ll experience roughly 25,000 automobile claims from the recent tornadoes in the south.
  • They had 12 billion dollars in insured damage in New Zealand, yet only 5 million people. They said its impact could be worse than Katrina.
  • “The meek shall inherit the Earth, but will they stay meek?” Warren said this when discussing the David Sokol controversy and resignation.
  • Both Warren and Charlie Munger talked about getting into the tech sector, with Berkshire, if they were going to be around for another fifty years. This may seem obvious, but these two were famous for steering clear of the dot com boom, of the late 90’s, that went bust.
  • They do not see the Berkshire stock as being overpriced. It is currency to them. They like to do business with cash, and not stock. They don’t want to give away the businesses they own in deals.
  • “I don’t see how anyone can be anything else but enthused about this country.”
  • “The power of capitalism is incredible.”
  • “What has happened is the rest of the world has caught on to what the US is doing, like in China.”
  • If you have a product that takes little capital to grow, you’ll do well. At differing points, Warren noted the various companies that have a good return. Companies like See’s Candies and BNSF Railway. These are probably companies that aren’t sexy or attractive to most people, but they make money for Berkshire. BNSF is doing real well since fuel prices continue to skyrocket.
  • They don’t like to pay dividends, but rather reinvest the money. It creates more value in the stock. Considering BRK.A stock is going for roughly 125,000 a share, I’d say it’s a good plan.
  • Warren thinks the worst of the economic crisis is behind us.
  • A quote that Warren told, in relation to banks being bailed out, “Why do we keep thinking of new ways to lose money when the old ones worked so well?”
  • It’s false advertising for money to say “In God We Trust”. As Elizabeth Warren says, “In Government We Trust”. God is not going to do anything with that dollar if we do wrong with it.
  • Any currency investment is a bet on how a government will behave in the future.
  • Gold is not a good investment because your hope is that in the future someone will pay more than what you paid for it. All you can really do with gold is fondle it. (Yes, they referred to fondling gold multiple times.) It doesn’t produce anything.
  • Anytime you buy an asset that can’t produce anything, you’re banking on others and their thinking.
  • “Why buy an asset if the hope is the world really goes to Hell?” -Charlie Munger
  • “Conduct yourself in life so that other people can trust you. Helps even more if people are right to trust you.” -Charlie Munger 
  • 500,000 oil produce wells in the United States. Countries are smarter now in granting concessions, with oil, than countries were fifty years ago.
  • In The Plex was one of the most fascinating books Charlie Munger has read. I think this underscores his interest in the tech sector if he were to stay in the game another fifty years.
  • “I think any institution that requires society to bail it out, should have a system that leaves the CEO and their spouse dead broke. I think the board of directors should suffer as well, pay back the last five years of fees or something. You ought to have something in place that makes it painful to the people involved if there is failure.” -A part of Warren’s response to a question about bailouts and how they can be prevented.
  • “Past panics and depressions started on Wall St. Involved great waves of speculation and bad behavior. Partly the failure is stupidity, this is due to our academic institutions with finance and economics. Those are not hard sciences. Finance attracts people that should have gone into snake charming.” Charlie’s response to the same questions about bailouts and prevention.
  • “May you live until the A stock splits.” It’s a quip Warren and Charlie make to people they know. Their way of wishing someone good health. Charlie said this in response to a question about the A stock splitting someday. There is no plan to split the A stock.
  • “I can’t think of a decision he’s made that I could’ve made better.” Warren talking about Ajit Jain.
  • “The secret to success in a field is getting interested in it.” -Charlie Munger
  • “If you were a proctologist you may not like your day.” -Charlie Munger

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