Omaha was once again fortunate to host the Berkshire Hathaway annual meeting. Investors from across the globe converged on Omaha to hear insights from 92-year-old Warren Buffett and 99-year-old Charlie Munger. I thought it would be appropriate to highlight some of the more insightful comments from the weekend and reiterate some favorite Warren Buffett Quotes from the past.
- “Our satisfactory results have been the products of about a dozen truly good decisions,” wrote Mr. Buffett, in the 2023 annual report. “That would be about one every five years.”
Being a great investor isn’t about getting every decision right. It is about getting important decisions exceedingly right and avoid making colossal mistakes. The past few months could have been incredibly painful if you were concentrated in some of the regional bank stocks. Conversely, having some exposure to large cap technology stocks was rewarding over the last five years.
- “The majority of our businesses will report lower earnings this year than last year,” said Buffett, noting that the “incredible period” for the US economy is coming to an end.
This comment was a little concerning, especially since earnings for most companies came in better than expected for the first quarter. Buffet did follow up later in the meetings that there would be “plenty of opportunities” available for value investors. We do think that the numerous businesses that Berkshire owns or partly owns gives them good insight into the economy. Certainly, his comments suggest a potential slow down in the second half of 2023.
- "If the government allowed depositors to lose money, it would cause bank runs across the country and disrupt the global financial system," he said. "That is not the way the US is going to behave, any more than they're going to let the debt ceiling cause the world to go into turmoil."
Buffett declared that allowing Silicon Valley Bank to fail would have been "catastrophic." He stated that Americans shouldn't worry about the safety of their bank deposits, or the federal government breaching its borrowing limit. With respect to the debt ceiling, he criticized the politicians, federal agencies, and the media for allowing the public to become afraid of the debt ceiling issues.
- “I cannot promise results to partners, but I can and do promise that our investments will be chosen on the basis of value, not popularity.”
This was attributed to a message to some of his original limited partners and he has followed through on this for the last 60 years. Investors should not be afraid of having contrarian views and should be skeptical of assets that may increase purely based on momentum but lack strong fundamentals.
- “It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
This was written in the 1989 annual report. Some investors try to emulate Buffet by buying the cheapest stocks available, however this can lead to what we call value traps. Sometimes stocks are cheap for a reason, and they stay cheap for a long time. Additionally, we believe one of Berkshires’ best investments is his recent purchase of Apple. This is a prime example of buying a wonderful business at a fair price.
- “The essence of investment management is the management of risks not the management of returns”
We end with this quote attributed to Ben Graham who was Warren Buffet’s investment mentor. It seems very appropriate and important to remember given the myriad of issues around the markets today.