How disciplined are Warren Buffett and Charlie Munger? by Suf Alkhaldi

Warren Buffett
Practice Discipline : Warren Buffett

As we all wish to be disciplined, I recently attended Warren Buffett’s shareholders’ meeting in Omaha, Nebraska.  This was to celebrate the 50 years of profitable Partnership of Berkshire Hathaway Inc.   A friend of mine, attended the meeting for more than 10 years, invited me to join a group of investors.  On Friday May 1, 2015, I packed my bag and headed to Omaha. My friend, a very disciplined investor, was our leader on this trip. When I met him at the airport in Omaha, he was ready with the list of activities to accomplish in two days.

We visited the exhibit hall of all companies which Buffett invests in or owns. The range in ages of the people attending the conference range from very young to very old.  The next day, I woke up at 4:30 a.m. to be in line at the Centurylink Center coliseum by 5:00 a.m.  As usual, I had conversations with the people who were around me. Two middle-aged men were in front of us. One man had worked for Microsoft in the past and a friend of his was an attorney.  We had a pleasant conversation with the man, talking about his encounters with Bill Gates in these old days. The doors opened at 7:00 and we plopped our stuff in seats to save them and headed for the free breakfast, provided by food companies owned by Buffett. At 7:30 we moseyed back to the exhibit hall to see Warren Buffett and Bill Gates who were touring the show (I am posting the two pictures which I managed to take). To see the richest people in the world for the first time gave me a surge of excitement and energy. The time had an unreal quality to it.

Warren Buffett and Charlie Munger started the meeting as soon as we returned to our seats. Warren is 85 years old and Charlie, his business partner, is 91 years old. Two groups of journalists and assistants read the questions and orchestrated the live questions from the audience.

The annual meeting movie started at 8:30 a.m. The comic movie showed Warren Buffett preparing to fight the world boxing champion Floyd Mayweather, Jr.  in Las Vegas. In one scene, Buffett was preparing for the match by counting money, using a manual old cash register, where Mayweather was preparing by exercising in the gym!  In another scene, Buffett pretending to yell obscene words (bleeped) to Mayweather’s face. I loved the movie. It captured Buffett  and Munger’s  spirits and sense of humor.  The audience laughed heartily.

The closest I get to see Bill Gates
The closest I got to see Bill Gates

Buffett and Munger’s  philosophy in investing is very clear: Invest in value companies with great management; buy when the stock is undervalued; sell some of the stocks when the share reaches maturation; buy companies you understand (this is why you don’t find tech companies in the portfolio), and don’t worry about diversity although it is important.  Buffett follows Benjamin Graham’s strategy, called value investor. One statement stayed with me while I was there listening to Buffett: I have a longer attention span than others.”

Lessons learned attending the meeting and reading about Warren Buffett’s philosophy in investing are summarized in a fabulous children’s book: The Oracle’s Fables: Life Lessons for Children Inspired by Warren Buffett by John Prescott and illustrated by Tom Kerr. The bold quotes are the ones I love the most:

  1. Price is what you pay. Value is what you get.
  2. Never risk what you have and need for what you don’t have and don’t need.
  3. The best thing is to learn from the other guy’s mistakes.
  4. The most important thing to do if you find yourself in a hole is to stop digging.
  5. Pick out associates whose behavior is better than yours and you will drift in that direction.
  6. Be fearful when others are greedy and greedy when others are fearful.
  7. It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you will do things differently.
  8. Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.
  9. Risk comes from not knowing what your are doing.
  10. Don’t pass up something that’s attractive today because you think you will find something way more attractive tomorrow.
  11. Someone’s sitting in the shade today because someone planted a tree a long time ago.
  12. Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.
  13. If you are the luckiest one percent of humanity, you owe it to rest of humanity to think about the other 99 percent.

Thank you “Yiem” for inviting me to the shareholders’ meeting — you changed me —  and thank you David for the great conversation. Alex, sorry you could not make it this time to the meeting.  Omaha, Nebraska: I will be an annual visitor; I have already bought Berkshire Hathaway share B (disclosure)!

This blog is always published every week on Saturday before 10:00 pm. US Eastern time. Thank you for reading my blog. I would love to hear from you.

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