Were you at the latest Berkshire Hathaway annual shareholder meeting in Omaha? If so, one: you’re luckier than me, and two: what were your thoughts? Thankfully for this Berkshire fan, 2016 was the first year that the annual meeting, which has been going on for decades with ever growing attendance, was live streamed, thanks in part to Yahoo Finance. So Saturday I was up early and able to tune in, to watch from the comfort of my living room as Buffett and Munger fielded questions from a panel of seasoned journalists and nervous audience members, for a total of nearly six hours. Now, Warren Buffett is 85-years-old and Charlie is a ripe, 92. The fact that they’re even physically able to answer questions for that long blows me away; but on top of that, they were answering these incredibly difficult questions with style, ease, and a whole lot of humor. I don’t know their secret, to being so energetic and sharp at such an age, but I can only hope to someday be in a similar condition. Regardless, it was very clear that both of them still love their jobs; else, why bother to keep going? It’s not exactly like they need to stuff away money for retirement.
To be totally truthful, I almost felt sad for Warren and Charlie last weekend. Not because of their old age, but because they kept having to address the issue of succession planning. Watching from my computer, it seemed as if almost every other question was about what’s going to happen to Berkshire or some other component of the business after Warren and Charlie are no longer calling the shots. To this matter, Buffett kept insisting and assuring that there is a well-considered plan, but disclosing the details of this information doesn’t really help anybody, since circumstances are always subject to change, and he and Charlie don’t exactly know when they’ll have to call it quits. At least, if it were me being repeatedly asked about my own succession plan, I’d feel a little emotionally torn. Because on one hand, you have these two titans basking in the massive empire they’ve created in the last sixty years, while on the other, they’re slowly turning out the lights, sweeping the closets, and preparing to hand over the keys. Perhaps the futurist and philosopher, Jason Silva described this situation best in his viral video, Existential Bummer:
Beautiful things sometimes can make us a little sad. And it’s because what they hint at is the exception, a vision of something more, a vision of a hidden door, a rabbit hole to fall through, but a temporary one. And I think, ultimately, that is kind of the tragedy. That is why love simultaneously fills us with melancholy. That’s why sometimes I feel nostalgic over something I haven’t lost yet, because I see its transience.
With the exception of Apple Inc. and the passing of the late Steve Jobs, I can’t think of any other company in the last twenty years that has attracted such speculative angst regarding what will happen when the current CEO is no longer in charge. But if there’s any redeeming thought amidst all this melancholy, it’s that the number of concerning succession questions is testimony to just how impactful Warren and Charlie have been in their very long and successful careers.
One thing Buffett and Munger are incredibly talented at, aside from buying great companies, is being consistent. After reading, listening, and watching pretty much anything Buffett has published over the years, my initial impression and thoughts upon the conclusion of the 2016 shareholder meeting, was that this was just classic Buffett and Munger, talking about things they’ve commented on countless times before. Sure, there were some time-specific economic cycle questions, which of course differ each year, but by and large, the answers to the audience questions were full of the same age-old value investing principles, which have guided Buffett and Munger’s strategy year, after year, after year.
That said, one of those tried and true tenants which really stood out to me this year, was this idea of (1) selective attention. In one of the audience questions, somebody asked Charlie Munger how he deals with the psychological effects of anchoring; that is, allowing initial information to influence future decisions. To that, Munger just shrugged and said he ignores it. When the questioner tried to restate the question, once again Munger shut him down by saying, “You can’t be anchored to something, if you’re ignoring it.” That settled the questioner, who was probably hoping for a more elaborate answer. But I suppose when you’re 85, or 92, you literally don’t have the time or attention to waste on frivolous thoughts. By now, Buffett and Munger have had their information filters in place for a very long time, and it seems like they’re still ruthless in what they actually pay close attention to. As they’ve said many times before, “We like to stay in our spots,” and after the 2016 meeting, I got the feeling that this has never been more true, especially given the concern about succession.
The second takeaway from this year’s meeting, again wasn’t something entirely new, but became quite prominent over the course of the event, was just (2) how patient Buffett and Munger seem to be with their investments. It’s almost as if the rest of the world invests in double, or triple-time, and then you have Buffett and Munger, who slowly and steadily beat all the rabbits to the finish line. Henrik Andersson of Didner & Gerge, describes this very point as, “stretching the time horizon”.
Over time, you cannot look at it as a shortcut to performance or to pleasing somebody else. You really have to identify yourself with the style, and the companies, and the slow moving aspect of a lot of these things. It doesn’t happen in one year, everything moves a little bit slower.
(Watch the full conversation in The Manual of Ideas Members Area.)
With each subsequent question, especially those questions from the audience, I got the feeling that everyone but Warren and Charlie seemed to be in a big rush to make quick use of whatever information they could glean. And so I was continually reminded that the time scale for value investing is actually way longer than most investors think. Another way to describe this is, is it’s a bit like staring at the hour-hand of a clock and checking every second for movement; it’s just too slow to notice. Even though Warren and Charlie never went into any specific analysis of their current positions, it’s not as if these two are withholding secret information. A large part of what makes Buffett and Munger so successful in their business is that they’re simply way more patient than most people.
One last bonus takeaway: This year’s Berkshire Hathaway meeting was live-streamed in only one other language, Mandarin Chinese. Do you believe there’s any significance to that?