The 2024 Berkshire Hathaway annual shareholders’ meeting took place earlier this month. These meetings are typically large and festive affairs, as thousands of investors visit Omaha for the weekend.  This year the mood was melancholy, as Warren Buffett’s long-time business partner and friend, Charlie Munger, passed away at age 99 this past November. This was the first annual meeting since his death.  Less well-known than Buffett, Munger was the Chairman of Berkshire Hathaway and a brilliant, witty investor and person.

This year’s meeting began with a tribute to Charlie Munger. The two men had presided over the annual meetings together for decades, answering questions together about investing, the economy, politics, Berkshire Hathaway and life in general from attendees, journalists and analysts for hours, while consuming vast quantities of Coke, Dr. Pepper and See’s Peanut Brittle.  In the corporate world today, this is unheard of. They have generously shared observations and wisdom for years with the investing public.  

As is normal, many questions this year were about the company, Berkshire’s equity investments and operating companies, and the economy.  However, this year the most memorable questions and answers were about life and death:

• One more day: A young boy asked Buffett the best question of the day: “I’m wondering, if you had one more day with Charlie, what would you do with him?”  Buffett’s response ended with: “What you should probably ask yourself is … who do you feel that you’d want to start spending the rest of your life with and then figure out a way to start meeting him or her tomorrow and meet them as often as you can, because why wait until the last day? And don’t bother with the others.”

INSTAGRAM: Warren Buffet on if he had one more day with Charlie Munger

• How to live life well: An attendee asked: “What advice would you like to share today that you believe everyone needs to hear?” Buffett’s response was based on advice Charlie had given him: “he should write his obituary the way he wants it written, and then live his life accordingly. Look at things, and live backwards.” [1] 

These next points are core tenets of Berkshire’s investment approach, and remain key to our investment approach at Lariat Wealth Management:

• Look for high quality businesses with a competitive moat:  One of Buffett’s aphorisms is that a good business is like a castle with a moat around it. Moats can include a great brand, a patent, or being the low-cost provider of a product.

• Know businesses and what they’re worth, and then patiently wait for your opportunity: Buffett often refers to quickly making a deal, but the casualness of these comments belies how much work goes into assessing the value of a business to enable him to make such a quick deal. While the deal-making can be rapid, Buffett knew the value of a company from decades of reading annual reports and reviewing financial statements and quantitative information. Because of preparation, he can make a rapid decision when given an opportunity to buy for a good price. 

• Look for assets with a stream of cash flows: Buffett and Munger often have referred to farmland or apartments as investments that will produce a stream of cash flows, farmland in the form of crops and apartments in the form of rent. Many stocks and securities have calculable cash flow streams as well. They caution against assets without cash flows and were particularly critical of bitcoin and cryptocurrency (“just say no”). Holders rely on a “bigger fool” to be willing to pay more for it than they did. 

• Focus on the long-term:  Driven by increased trading automation, trading apps, social media’s influence on behavior and shorter company lifespans, the average holding period for stocks in June 2020 was only 5.5 months, down from 8 years in the 1950s.^[2]  An advocate for the long-term buy-and-hold approach to investment, Buffett has said “our favorite holding period is forever”. 

• Have humility: Buffett and Munger have an incredible track record, but it isn’t perfect, and they often remind us that they make mistakes.  Buffett said that while they took advantage of sale opportunities during the Global Financial Crisis of 2008-9, they “totally missed March 2020”.  They often say, “we blew it”, “we missed it”, “we’re not that smart”. 

• Read: Munger said: “In my whole life, I have known no wise people who didn’t read all the time—none, zero. You’d be amazed at how much Warren reads—and how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”

The page will turn on Berkshire Hathaway’s leadership, and the company, in the near future.  Buffett joked at the close of the meeting, “I not only hope you come next year. I hope I come next year.” We hope he does too.

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[1] https://www.cnbc.com/2023/11/28/charlie-mungers-life-advice-to-buffett-years-ago-live-your-obituary.html

[2] https://www.visualcapitalist.com/the-decline-of-long-term-investing/, Marcus Lu, December 8, 2021

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_{The information presented is not intended as an offer or solicitation to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision. Lariat Wealth Management, LLC is not affiliated with any company or fund mentioned in this article. Lariat Wealth Management, LLC is a fee-only investment adviser and as such the firm and its associates does not receive any compensation from any company or fund mentioned in this article.}

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