We Study Billionaires - The Investor’s Podcast Network - TIP629: Berkshire Hathaway Annual Shareholder's Meeting 2024 w/ Clay Finck and Kyle Grieve

Starting point is 00:00:00 You're listening to TIP. On today's episode, my co-host Kyle Greve and I give a recap of the 2024-Hathe Hathaway Shareholders meeting and share our favorite clips from the Q&A session with Warren Buffett, Greg Abel, and Ajit Jane. As always, we had an incredible time in Omaha and really enjoyed networking with a ton of people from the TIP audience. During this episode, we'll cover what we did in Omaha, the tribute Berkshire did for Charlie Munger, and our four favorite clips from the Q&A session which cover how Warren would spend one more day with Charlie Munger, how Berkshire's managers communicate with Warren, Greg, and Ajit,

Starting point is 00:00:36 the future of capital allocation at Berkshire, and how Buffett would invest if he were managing a smaller pool of capital. I hope you enjoy it. You are listening to The Investors Podcast. Since 2014, we studied the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Now for your hosts,

Starting point is 00:01:01 Clay Fink and Kyle Greve. Hey everyone, welcome to the Investors podcast. I'm your host, Clay Fink. And today I'm joined by my co-host, Kyle Greve. Kyle and I just got back from Omaha for the Berkshire weekend. And as always, we had an amazing time. So TIP, every year we put out an episode where we really just give a recap of the weekend and share some of our biggest takeaways.

Starting point is 00:01:34 I know a lot of audience members really enjoy it. So look forward to doing that yet again. this year. Kyle was kind enough to join me to take some time out of his day after just getting back from Omaha to Vancouver and I really appreciate him joining me. So to give a bit of an outline for this episode, we'll be breaking it up into three parts to give you a sense of where we're going here. So part one, we're just going to talk about the weekend more broadly, what Kyle and I did, what we liked about the weekend in Omaha. Part two, we'll be talking about the legacy of Charlie Munger and the tribute that Berkshire gave for him. And then part three, we're going to be pulling

Starting point is 00:02:08 some of the most interesting clips from the Q&A session with Buffett, Greg Abel, and Ajit Jane from the meeting, and then sharing some of our thoughts around that. So this was actually my fifth time attending the Berkshire meeting, and it seems like it just gets better and better every year. It was my third time attending as a member of the team here at TIP. So, Kyle, I'm curious for you. This was your very first time visiting Omaha, so I'm curious to get your thoughts on the overall weekend. Yeah, so like you pointed out, this is my first time, So I didn't really know what to expect, but I had so much fun. It was, I mean, I guess I shouldn't be surprised because of the event we did in New York being around so many investors.

Starting point is 00:02:46 But this was just like that, but multiply that by a couple thousand. So it was an incredible experience. I mean, there were so many interesting things we did. So for TIP, we had a couple of community events, which we'll be going over later. I got a chance to meet some super, super, super interesting people, whether that was through, you know, like Monich-Prabri's event, Markell group. There were some super, super cool guests at there. and they were talking about a variety of incredible subjects.

Starting point is 00:03:08 Got to see, you know, obviously my investing role models. Like I just said, Monique for Bri, Warren Buffett, although I wish I could have talked to Warren, but I understand that I can't do that. And then the fact that the meeting takes place wasn't even necessarily my favorite part. Like, yeah, I really did enjoy the annual meeting, but my favorite part was definitely just the events surrounding it and just kind of the general feeling in Omaha around it, where everyone's just there to learn, have some fun, and kind of meld the two. and then also network with other people and learn more interesting investing concepts from super

Starting point is 00:03:40 interesting people. But the problem with that obviously was during the Berkshire Hathaway annual meeting. People were trying to be quiet, right? Because you have Warren Buffett talking. You don't want to disrupt other people learning from them. And especially where I was seated, didn't have the best seats because it was hard to get good ones. We were in the back and the audio wasn't that good. So we just had to keep it on the hush. So the events around it were probably the highlight for me. And then, yeah, I mean, the event still, I had a lot of fun. I really enjoyed going down to the event center at the bottom floor there and seeing all the cool products that Berkshire has. So yeah, I mean, it was an incredible experience.

Starting point is 00:04:11 And I'm looking forward to going back again. You hit the nail in the head on the Berkshire event. It's fun to go, fun to see Warren, fun to get in line bright and early with community members and such. But just a lot of the questions are not that great. They don't vet the questions. So I think people really appreciated us putting together this episode and kind of pulling our favorite one. So they don't have to go through all the questions themselves.

Starting point is 00:04:33 And you're also right that there's just so many fun things going on during the Berkshire weekend. A lot of people ask us what events we recommend. And there's just so many events happening. You know, I can share the couple that I go to. But there's just so many different things happening. And people have to decide between events because a lot of them are happening at the exact same time. I think Monish and Guy each had the event like essentially at the same time. And Omaha isn't always like this.

Starting point is 00:05:00 I used to live in Omaha. And I can tell you that, you know, it's not one of the events. the most exciting places to live, but during the Berkshire weekend, there's a lot happening. And this year was actually the first time I attended Monash's talk. And I've really enjoyed that. He actually shared some insights that I've never heard from him before. Insights related to intrinsic value and finding wonderful businesses to invest in. And I absolutely love that discussion. And as an added bonus, you and I got to meet him, shake hands with them and grab a photo with them. So that was definitely fun too. And as I said earlier, like, it just feels like each year you go,

Starting point is 00:05:33 It just gets more and more fun. This is my fifth year. And I think it just gets better because your relationships really compound, your network compounds, and you get to know people better and better. And you learn really how to make the most out of the weekend. So some of the highlights for me were definitely meeting and listening to Monish Pabri at the University of Nebraska, Omaha. I believe he does a talk every year.

Starting point is 00:05:55 Hopefully he'll keep doing that and it's absolutely free. And then I organized our Berkshire Summit event. So we had eight wonderful attendees from the audience. audience join and do various things with me throughout the weekend. And we ended up connecting with many of the guests we've had on the show. We had the Saturday night dinner with William Green, Guy Speer, and many of the guests we've had on the show. So that was just really for me and unforgettable experience. And then of course, people really enjoy going to the CHI Center, seeing Buffett and being a part of history. But I think what really makes Omaha memorable is the

Starting point is 00:06:29 events that are around the Berkshire meeting, which you alluded to. And I'm also terribly biased because TIP hosts a number of events throughout the weekend. We had our socials for the TIP Mastermind community that you hosted Kyle. And then I hosted the Berkshire Summit, which was a smaller event I put on for eight members of the audience. So you had the two socials for the TIP mastermind community. What were some of your takeaways from that event? Yeah, the socials were, Honestly, they were my favorite events. They were, it was so good because we have this community of people where we do everything online, right?

Starting point is 00:07:02 And we do get to meet up twice a year. And this was one of the opportunities. And it was just so much better to meet them in person and really get to know them and ask tons of questions and see them face to face. So I got to speak to pretty much all the members in the group, whether that might be an individual setting or in group setting. And so I really got to learn about each and every one of them, you know, their backgrounds, what they do for work, what they like to invest in.

Starting point is 00:07:24 And so that was super powerful, just meeting them in person and getting to see how they really are, you know, outside of being on the internet. So just a couple cool things that I got from that was my relationships to some of the members are closer. You know, a lot of these people I consider my friends and would love to hang out with. And we sometimes we branch off and hang out with just in smaller groups during Berkshire, for instance, went to lunch with some of the community members and had a blast. Learn more about their individual backgrounds, which is really cool because part of the reason I like the community so much is that I can tap into them to learn more about different industries. where I'm not really exposed to. And then all of our members are vetted, right? And they're all really high quality people.

Starting point is 00:07:59 So they brought some friends, family, their spouses and got to meet them. And they were also obviously very high quality people. So that was really fun interacting with their guests as well. One of our members, for instance, is a small cap global fund manager. And I had a blast learning from her. We were in line for Berkshire. And she was just telling me all about all of her experiences, traveling around the world, looking at all these small caps,

Starting point is 00:08:22 going to India, Singapore, China, everywhere. So I learned so much from her and listening to her talk about that. And then the thing that was cool, she brought her husband, who used to be an investment banker and mergers and acquisitions. And he had all sorts of really cool things to add. And obviously, I love M&A. So it was super interesting learning for both of them. And then, you know, the really cool part about the weekend was also just learning

Starting point is 00:08:43 from members where this was their first time being part of the community. And getting to learn how the event changed being part of the community versus prior years. So a lot of the people that were there had gone, for instance, like last year and basically just went to the annual meeting. And that was basically the entire trip. They didn't really get to socialize with other people or go to all these other events. So it was really fun enabling people to socialize with each other, build these really cool connections, find like-minded people and bring them together so that they had a much, much better experience. And I know for a fact, because they told me they're like, this time has been so much better than last time because I got to meet a bunch of cool people. I found out about all these cool events, going for lunch, going for dinner.

Starting point is 00:09:20 So I was just really happy that we were able to provide so much value to our community members. The point you made there is really so, so important because it just resonates with me. The first two meetings I went to, I was just pretty much a lone wolf. I just happened to work in Omaha, knew that the Berkshire meeting was happened, knew what Buffett had made for himself. And being naturally an introvert and being much younger at the time, the last thing I really want to do is going to a and walk up to some random person I don't know and just spark up a conversation. So having that community, it's not only, you know, you're attending the Berkshire meeting, but you also have

Starting point is 00:09:54 connected online, connected through the forums and on calls and such and seeing them comment on the forum and everything. And having that sort of network to tap into is really invaluable and it can help open you up to really fully experience and enjoy what Omaha can offer during the Berkshire weekend. And I agree, too, that's just really fulfilling to help provide that to people because I've just been in their shoes and it's not easy to go up to an event where you don't know anyone. It's just sort of awkward and it's like your natural instinct. It's just sort of going to a shell. At least it is for me as an introvert. I don't know. You're much more extroverted than me, Kyle, so I can't speak for you. But when you sort of encourage people to go, assure them that

Starting point is 00:10:34 wonderful people are going to be there that really want to network. It really makes it easier to book the trip, make the leap and just go. And plus for members of our mastermind community, like essentially all of them have hopped on calls with you and I, one-on-one calls. So we have relationships with them and it just makes it much easier. And you already have a sense of who's going to be at the events because we have that forum and the Zoom calls. So next I wanted to transition to part two here to talk about Charlie Munger. Everyone was really looking forward to the tribute that Berkshire was going to do. So Thursday night and Friday, a lot of people were talking about the movie they were going to be playing. So Berkshire always plays a

Starting point is 00:11:14 movie at the event, it's usually at 8.30 a.m. But in prior years, it was never released to the public. And Berkshire had announced that this was the first year they were going to live stream it and make it public because it featured a tribute to Charlie Munger. And Buffett actually mentioned like this was like a logistical nightmare in terms of the copyright and infringements and all that jazz because they played all these sorts of videos and had to get permission from countless counterparties there. But the tribute was around 30 minutes long and it really showcased the very special relationship that Warren and Charlie had, which lasted 65 years. I had talked with a number of people after the beginning, how some people sort of envy the relationship that they have

Starting point is 00:11:57 in the 65 years of having a partner and having a best friend and just sort of lifting each other up for that long. It just has led to tremendous amounts of compounding, not just financially. So the two met when Buffett was 29 and Munger was 35. And I really loved the story of how they met. And I really loved the story of how they met. So Buffett was chatting with a potential investor in the early partnership days. He only had $500,000 in the partnership, which is just tiny compared to what it eventually led to. And Buffett was telling the guy all about his strategy and how he plans to put the money to work. And the guy really wasn't listening at all. But he ended up giving Buffett $100,000. And Buffett was just sort of confused. He just asked him, like, I don't even think you were listening

Starting point is 00:12:40 to me. Why did you give me $100,000? And all he said was, you reminded me of Charlie Munger, who Buffett had no idea who that was at the time, but he liked the sound of that. And the family ended up being a like Charlie Munger's sort of second family that he was really close to. And the two eventually got introduced and they hit it off from the very beginning. And one of my very favorite clips from that tribute was Munger talking about how people look at Berkshire and they think that Buffett and Munger found some trick. And the way Munger put it is that the simple trick was just avoiding standard stupidities. And it really just became a place where rationality just totally became prevalent.

Starting point is 00:13:20 One of the highlights for me of that long 30-minute clip was Becky Quick chatting with Charlie Munger. I think it was pretty recently just about how Charlie had been around for nearly a century of human history. And Charlie had a really cool insight there where he pointed out that not only had he been around for the last 100 years, but he was born into a previous century where the world was really being pulled forward in, terms of transportation, communication, economics, modern biology, and medicine. So I think Charlie really knew how lucky that he was to be born at the time he was when innovation was rapidly increasing the output of the entire world. And so I think he was able to really see that for himself, all this innovation was happening in his early years and that he was able to really take advantage

Starting point is 00:14:04 of that throughout his entire life. So the highlight reel also just had some really good one-liners that highly amusing and insightful. So one of my favorites was, was, quote, those of you who are about to enter business school or are already there, I recommend you learn to do it our way. But at least until you're out of school, you have to pretend to do it their way, unquote. So this clip was from 2011. It's a classic mongerism. And granted, it's almost 15 years old.

Starting point is 00:14:29 But I don't think his stance would have changed that much since he said that. So Warren also had another really good insight into Charlie that he described the difference between how he and Charlie thought. So Warren discussed how when he was thinking of it. about just things in general. He just wanted to know if something worked, did it work or did it not work? And that was kind of it. But in contrast with Charlie, Charlie wanted to know how things worked. So Warren mentioned that Charlie picked this trade out from Benjamin Franklin and that learning how the world work was just a massive driving force to the success of Charlie Munger. And

Starting point is 00:15:03 I know it's obviously one of the biggest strengths that Charlie has. If you've listened to the show for any period of time, we talk about mental models and multidisciplinary thinking. And we all got it from Charlie Munger. He's the one who really popularized it. And realistically talking, though, I don't think necessarily thinking that way is for everyone. And like Warren said, I think Warren, I think is a brilliant person, but he doesn't really necessarily think that way. He's more just, does it work? Yes, no. And I think Warren obviously is a pretty broad thinker, maybe not as broad as Charlie, but he made the point that his thinking is more narrow. So, yeah, that was my main points. And I just think that Charlie showed specifically in terms of thinking at this level how

Starting point is 00:15:39 important that it could be to master it, to build not just wealth, but also your wisdom as well. I also thought it was really funny how Buffett, when he originally bought Berkshire in the 60s, it was a textile mail back then. And Munger told him he was making a massive mistake, which it was. And it just points to the brilliance and recognizing that even the greatest investor in the world was making. Munger is just calling him out on a big mistake. And that was a big bet for Buffett at the time. And instead of sitting back and let Buffett deal with that sort of mess, he ended up partnering with him and helping him improve upon what he had. And not only that, I think what's even more amazing is that he had the humility to essentially let Buffett be seen

Starting point is 00:16:23 as the head honcho and Munger be the sidekick to Buffett's running the show. And I think the success of Berkshire, to a large extent, is a result of Charlie's brilliance. And I also loved how Munger talked about how the Berkshire meeting has developed over the years. You know, initially it had like 30 attendees, and just grew and grew over the years. And nowadays, Munger referred to it as a celebration, which I thought was a really cool way of putting it. He said that a celebration is part of making a group of people work well together.

Starting point is 00:16:54 And I just really loved that. I think the best companies have these celebrations of looking back at what's brought them to today and celebrate sort of the people you surround yourselves with, because, you know, it's the living in the moment, living in the present that really just makes life sort of special in a way. And having these celebrations helps make life more fun. And, you know, what good is doing well in life if you never take the time to reflect on what you've achieved? And when you go to the CHI Center and see 40,000 people, like I looked up and every seat was taken. So 40,000 people attending that celebration and think about what that says about that company's

Starting point is 00:17:30 culture, all these people, many of them travel thousands of miles to Omaha. of all places in the world. It really just points to how special of a celebration this is. And you can really get a sense of how so many of us are just sort of clinging to what Berkshire was and what we had with Munger and what we still have left with Buffett because we know eventually that this celebration won't be the same someday. We don't know what year that's going to be. And there was a lot of talk throughout the weekend on if people still come after Buffett eventually passes. But a lot of people are just sort of clinging to that celebration. that we still have today.

Starting point is 00:18:06 I completely agree with you that Berkshire Hathaway annual meeting is more of a celebration than anything else like Charlie alluded to. But the thing that's interesting is it celebrates Berkshire Hathaway in a variety of ways. The history of the business, its shareholders, the quality of the business, its superb corporate governance, and just rational thinking that Charlie and Warren were so well known for. I'm sure there's obviously many other aspects that you could be added that are well celebrated, but these are the ones that have stood out to most to me. So I want to pivot just to how Warren brought this point up about Charlie being the architect of Berkshire.

Starting point is 00:18:40 So I thought Warren perfectly articulated how Munger was the architect of the Berkshire Hathaway that we now see today, not the one that he criticized him on originally. So Warren Buffett, when he was talking about Charlie Munger, he did not refer to himself as an architect of Berkshire Hathaway. Instead, he basically lumped himself in as a carpenter. And so he just briefly said carpenters are needed to execute the architect. grand vision, but they don't actually create the blueprint of the final product themselves. Charlie was the one who did that. So I think just the way Warren said this just goes to show you how modest he is and how good, obviously, Warren is at giving credit to other people while highly underestimating his own impact. I think it also points to the importance of expanding your knowledge

Starting point is 00:19:26 into other areas like Charlie did. Warren said he was more narrow in his focus, whereas Charlie is seen studying all these different disciplines that aren't even close to related to investing. So next, I wanted to transition here to part three of our episode where we're going to be pulling clips. And then, yeah, the clips that Kyle and I found to be most interesting in sharing here. So as always, the first thing that stood out to me was Buffett was really as sharp as ever. It's honestly hard to believe that he's 93 years old and he's spending eight or nine hours on stage, answering questions, conducting business. This was my fifth shareholder meeting I've attended. And I remember at least a time or two in previous years where you could really see his age

Starting point is 00:20:10 showing through. But I think this year, I was really impressed with his energy and the depth of his answers throughout the day. So before we get to the Q&A session, they cover the most recent quarter in some of the things that happened. And I think the biggest thing worth mentioning here was Berkshire trimmed their position in Apple. He trimmed it by 13 percent, which might not sound like a but it was 116 million shares worth $21 billion. And I'm not exactly sure what price that may have been. I calculated the $21 billion based on around $185, but there were some points in the quarter where it was below that. And I think this is worth taking note here because Berkshire's cash pile was $180 billion. You know, that's just a massive cash tranche. So it's not like he really needed the cash.

Starting point is 00:20:55 You know, he has plenty of extra cash. So I think it points to where there's something. seeing the valuation for Apple, how they're viewing sort of the current market conditions. And I think Buffett really likes the 5% yield. He's getting on a lot of his cash. So for the first clip, it's often said that people get attracted to Buffett and Munger for the investing side and to try and make money. I know that was definitely me. And then many stick around for the other aspects. So the topics related to life and how we can live a good and meaningful life. And I wanted to start with a question that it's funny it seems like on all these episodes we do there's always at least one question from a child because they ask the questions that adults don't want to ask so that's the one

Starting point is 00:21:40 we're starting with today so i'll just go ahead and play the clip here and we'll share our thoughts after hi my name is ang and you're nickis and i'm wondering if you had one more day with charlie what would you do with him well it's kind of interesting because in effect i did have one more day. I mean, it wasn't a full day or anything, but we always lived in a way where we were happy with what we were doing every day. I mean, Charlie liked learning. He liked, as I mentioned the movie, he liked a wide variety of things. So he was much broader than I was, but I didn't have any great desire to be as broad as he was, and he didn't have any great desire to be as narrow as up. But we had a lot of fun doing anything.

Starting point is 00:22:37 And, you know, we played golf together. We played tennis together. We did everything together. And this you may find kind of interesting. We had as much fun, perhaps even more to some extent, with things that failed. Because then we really had to work and work our way out of them. And in a sense, there's more fun having somebody that's your partner in digging your way out of a foxhole than there is just sitting there and watching a night. idea that you got 10 years ago just continually produce more and more profits. So it wasn't, you know, he really, he really fooled me though. He went to 99.9 years. I mean, if you'd pick two guys, you know, he publicly said he never did a day of exercise except for it was required when he was in the Army. He never did a day of voluntary exercise. He never thought about what he ate. You know, we started every day and Charlie had, he was interested in more things than I was, but we never had any doubts about the other person, period. And so if I'd had another day with him, we'd probably do them the same thing. We were doing the earlier days,

Starting point is 00:23:56 but, and we wouldn't have wanted to know that we only had one day. There's a great advantage in not knowing where you're going to, what day you're going to die. And Charlie always said, you know, that just tell me where I'm going to die, so I'll never go there. Well, it's the truth is, you know, he went everywhere with his mind. And therefore, he was not only interested in the world at 99, but the world was interested in him. It's remarkable. you know they I would I told them toward that in the last few years I never seen anybody that was peaking you know at 99 and and where the world wanted to come and see him I mean they actually

Starting point is 00:24:52 wanted to go out the 351 North June Street and whether it was well I could name a whole bunch of names but just I'll start with Elon Musk or but get on the list and they all wanted to meet Charlie and Charlie was happy to talk with him and I the only the only person I could think of otherwise was the Dalai Lama I don't know that they had a lot else in common but but it was he lived his life the way he wanted to and he got to say when he wanted to say he like I loved having a podium and again I can't remember any time that he was mad at me or I was mad at him. It just didn't happen.

Starting point is 00:25:37 And calling him was fun back when long distance rates were high. And we didn't talk as often as the years, in recent years as we used to be on daily for long periods. And we did keep learning. And we liked learning together. But, you know, we tended to be a little smarter because as the years went by, because we had mistakes and we had other things that what we learned. something and and the fact that he and I were on the same wavelength in that respect meant that that the world was still a very interesting place to us when he

Starting point is 00:26:12 got to be 99 and I got to be 93 so I don't have a perfect answer for you there but I can tell you the ingredients that would go into sometimes people would say to me or Charlie at one of these meetings you know if you had only have lunch with one person that I lived over the last 2,000 or so you years, you know, who would you want to have it with? Charlie says, I've already met all of them, you know, because he read all the books. I mean, he, and he eliminated all the trouble of going to restaurants to meet him or anything like that. He just went through a book and he met Ben Franklin. And he really, it was remarkable. He said he really had no one else to meet because he,

Starting point is 00:26:56 he'd read all their stuff and he liked Ben Franklin's stuff better than he liked mine. But with Ben Franklin, and he just had to read about it, and you didn't have to go have lunch with him or anything of the sort. But it's an interesting question. What you should probably ask yourself is that who do you feel that you didn't want to start spending the last day of your life with and then figure out a way to start meeting them or tomorrow and meet them as often as you can?

Starting point is 00:27:24 Why wait a little last day? And don't bother with the others. Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is.

Starting point is 00:27:55 From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, bringing together activists, technologists, journalists, investors, and builders from all over the world, many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience

Starting point is 00:28:39 powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron Passes are available at Osloof Freedom Forum.com, with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful

Starting point is 00:29:22 in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today. NetSuite is the number one AI Cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the Netsuite AI connector, you can use the AI of your choice to connect directly

Starting point is 00:30:00 to your real business data. This isn't some add-on, it's AI built into the system that runs your business. And whether your company does millions or even hundreds of millions, Netsuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, Demycifying AI at Nessuite.com slash study. The guide is free to you at Nessuite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people

Starting point is 00:30:32 overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely. That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world, and 10% of all e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics.

Starting point is 00:31:01 So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates, and Shopify is packed with helpful AI tools that write product descriptions and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best best. business partner, Shopify, and start hearing, sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSb.

Starting point is 00:31:43 All right. Back to the show. So I really enjoyed this question from the kid and Warren's answer. I thought, yeah, I mean, like Clay said, kids can just ask questions that, uh, Yeah, adults won't say. I remember when he asked that the whole audience was like, aw, it's so cute. So I think that Charlie obviously liked learning a wide variety of things and he was more broad than more than more like we've kind of discussed already. But I just think that this also shows that you can succeed in both being a broad thinker like Charlie or a more narrow thinker like Warren. So a couple of just other points that he made there that really stood out to me was how Warren talked about how they had fun doing like anything. So, you know,

Starting point is 00:32:23 Warren and Charlie have both stressed the importance of doing business with people that you like. So I think that if Warren and Charlie hadn't had so much fun together, their business relationship probably wouldn't have played out the way it did, but we're lucky that it did. Another thing that Warren's talked about was their failures and how they had more fun with their failures than they did with their successes. So this part just really stood out to me. It's super easy for anyone to just relive their successes and pat themselves on the back. And there's nothing wrong with doing that a certain period of time.

Starting point is 00:32:51 But the problem with it is that the biggest life lessons that we can learn aren't really from our successes. It's learned through our failures and making sure that we don't continue making them into the future. And so I think Charlie was, he said any year that goes by is wasted if you don't destroy one of your most cherished beliefs. And so, you know, Charlie was a master at self-reflection. And he was actively trying to get better by removing mistakes and thinking processes that he really cherished. and that was how he thought. So another thing that really stowed to me there was how Warren pointed out that Charlie was peaking at 99, which is completely unheard of.

Starting point is 00:33:29 So I would say that Charlie would probably agree with me that he was probably lucky to live as long as he did and stay as sharp as he did. Just if you're looking at the average person his age, a lot of them go through all sorts of drop-offs and mental acuity that he never went through. So in terms of longevity, I don't know how many lessons we could take because Buffett did mention that Charlie basically didn't exercise other than what he was forced to do, I think, when he was in the military, and that he also ate whatever he wanted. So, you know, I don't know how many of us we can get from there. But regarding Warren talking about Charlie and his love of the podium,

Starting point is 00:34:02 I thought that this was also really powerful because obviously, while they're both kind of humble, I think they both really enjoy the spotlight, specifically because they get to share their knowledge and wisdom with the world, just in the hopes that someone will find it useful. And obviously, I think they know probably a lot of people find it useful. But Warren mentioned that Charlie wanted to be useful to society. That was just one of his biggest goals in life. And I think having the podium was just a really good way, just for the two of them to be as useful to society as they could possibly be. The last one here, I really enjoyed Warren's point here about finding who you want to spend your last day of life with and then figuring out just how to meet that person as soon as possible and then maximize your time you want to

Starting point is 00:34:43 spend with them. I think if we all attempted to do this, we would probably have much higher quality. and meaningful relationships with people that we can grow with. Yeah, if there was one takeaway in Charlie living to age 99 and being as sharp as he did, I think Monish mentioned that he was like placing a trade like the Friday before he passed. Placing trades was just insane. I think the biggest takeaway for me from that is truly enjoying what you do. So we always talked about on the show how like financial independence was something super, super important to him.

Starting point is 00:35:16 and to be able to live your days really however you want, you have to be financially independent. So he got that somewhere around age 30, early 30, something like that. And that was an inspiration from Benjamin Franklin. And then really just lived and structured the rest of his life exactly how he wanted it to be and just got to do exactly what he wanted to do. And I'm not quite convinced that drinking Coca-Cola and eating peanut bread all day is going to help with Kyle and I's longevity. So to your point on relationships and thinking back of how you, want to spend the last day of your life and then spending more day with those people. This is something I personally really struggle with.

Starting point is 00:35:53 Over the past couple of years, I've met just some amazing like-minded people that I honestly just want to spend more time with. But my problem is that none of them live within 100 miles of where I live. You know, many are thousands of miles away. And it's interesting because, you know, we're talking about Warren and Charlie. Charlie didn't live in Omaha. He lived out in California, I believe. and they're very far away from each other.

Starting point is 00:36:17 And I'd be interested to know how often they saw each other in person and how often they interacted on the phone because I doubt they did many Zoom calls. I don't know if you have any comments there you want to add. Yeah, I see your point. I mean, I guess, you know, at least with Charlie, he kind of looked at Benjamin Franklin, of course, was one of his biggest mentors who he never got to meet in person

Starting point is 00:36:39 and got to learn all these things. And I'm sure if he could have spent time with him, he probably would have. But, you know, looking back, you know, it would have been really hard to spend time with those types of people just because they're, maybe they're in a different state or different country or whatever. But I think that probably having relationships with people, whether it's, you know, I guess you kind of got to take what you can get. If it's just on the phone or over Zoom calls, that's great. And I think if you have a really good relationship and it blossoms from there,

Starting point is 00:37:05 you'll open up other opportunities, hopefully to meet them in person. I mean, I'm kind of the same as you, I struggle with the same thing. So I'm just kind of, I'm just thinking of ideas for how how that could work out in the future. Yeah, another interesting insight I've sort of came to recently is, especially for men, I think women are much more naturally able to, you know, stay connected and build a relationships. Whereas men, it's much more difficult where, you know, you might be connected with someone just a few times a year with someone you would consider a really good friend. And one of the conclusions I sort of came to is it's really helpful if you're working together towards some sort of goal. If you look at what types of men have the closest relationships,

Starting point is 00:37:44 I think oftentimes people in the military have like the closest bonds that just last a lifetime because whether they went through some sort of training together, whether they went overseas and actually went out into battle and stuff like that, like going out and having some sort of goal you're working towards together and working together and achieving that. And that's why you see many people within companies become really good friends or oftentimes sports teams. is another example where people really build those close bonds. So that ties in well again with Warren and Charlie where 65 years of doing business together is just an amazing feat. So I'll turn to the next question here in relation to Birchers' operations and the managers that run the underlying

Starting point is 00:38:25 businesses. So for decades, people have asked about who's going to be past the torch after Buffett and Munger are no longer running the business. And this question gets to how they handle communicating with the businesses they own. So we'll run the second clip here. This question comes from Axel Mayer Seek in Hamburg, Germany. What has changed for Berkshire's operating CEOs since Greg Abel and Ajit Jane became vice chairman? For example, can and do the operating CEOs

Starting point is 00:38:57 still reach out to Warren Buffett directly? Well, that's the answer might surprise you, but they overwhelmingly, the operating executives, well, they prefer to talk to Gregor to to the Jeep. And that's understandable because I don't really do much and I don't operate at the same level of efficiency that I would have 30 years ago or 40 years ago. I don't know the managers as well as I would have when we were smaller

Starting point is 00:39:28 and when I could get more accomplished in the day than I can now. And you've got, when you've got somebody like Greg and the Jeep, you know, why subtle for me? I mean, basically. So it's, it's worked out extremely well. And I almost can't imagine anything working better because Greg in a year accomplishes, I mean, he sees more of them, understands more about their problems, you know, can give them suggestions. he's got incredible amounts of energy and nobody has more wisdom than the G about insurance and

Starting point is 00:40:08 they've got access in insurance to him. Now, they had it before we stuck some of those titles on insurance, whereas with Greg, he much expanded things when he became the vice chairman in charge of really everything except insurance. So he is, if you polled our managers, that fall under his jurisdiction, which would be a lot of them. They would much prefer unless, like a few, they weren't paying as much attention to their business,

Starting point is 00:40:41 and I wouldn't do anything about it, but Greg would. And they still like it when he does it. He can deliver news very well to people who, you know, there's some, there'll be some people if you have, if you have 20 children and you're very rich, you'll have some that will be, go-getters anyway and you'll have some that won't and we are a very very rich company and we haven't had a history of being very tough on people that coasted and we've had some that would do that and Greg will do something about it and Charlie and I wouldn't have not because we didn't know it should be done but because we were doing so well ourselves it just wasn't we didn't we wouldn't

Starting point is 00:41:27 make the effort we didn't want to change our lives that way plus we slowed down in various ways physically and everything so so i would say that uh the number of calls i get for managers is is essentially an awfully close to zero and Greg is handling those you know and i don't i don't know quite how he does it but we've got the right person i can tell you that and with the g he does less physical moving and and the insurance people are more used to working with the Jeep obviously over the years. So I wouldn't say that changing the title would be changed as much there because he was in charge of insurance anyway. So that's, you know, you can go to a business school and they can give you way better answers than I've just given you,

Starting point is 00:42:18 but that's the way we do it at Berkshire. Steve raised his hand. Yeah. If I can add a comment, from my perspective, the transition is worked out very, very well. But I think the credit really goes to how Warren has handled the situation. And what I mean by that is after the transition was announced, and a lot of the operating managers used to be, they were used to calling Warren directly on some issue or the other. When they, after the transition, when they would continue to do so, Warren would very skillfully in his manner handle them such that he would not answer what they were looking for. but at the same time made them feel good and told them that he sort of enjoyed hearing from them and talking to them.

Starting point is 00:43:04 So as a result of which, you know, the transition took place. People got the message. They got the message and were very responsive to it. And it's a non-issue as far as today's concern. I'd probably add, yeah. The only thing I would add is we do have an exceptional set of managers across both the non-insurance and insurance and yes Warren made it incredibly easy but so did they it was a very easy transition because they cared deeply about Berkshire they cared deeply about the culture and they very much wanted

Starting point is 00:43:39 it to be a success and we're fortunate to have those managers and insurance and non-insurance so thank you yeah what what Greg is talking about is they really wanted more direction in in some cases and then I gave them you know I mean I just sat there reading the Wall Street Journal or whatever. And then Greg is, I don't, you know, there are one way or another, there are more than 24 hours in his day, you know, and I just don't know how he covers the ground he does, but he knows more about the people. We've got the same feeling in terms of judging the attractiveness of businesses and making capital decisions and that sort of thing. But he's willing to work. I mean, I, you know, I'm, you know, and I couldn't get as much done anyway, you know,

Starting point is 00:44:26 what I could do in a couple of hours, you know, may take it at hours now. I just don't read as fast and everything's, but it's working very well. And this place, if anything happened to me, it would be working extremely well the next day. I don't get any phone calls. You could actually, we can, we can rig something up, so we have some answering machine that people think I'm still around, you know, or something in terms of it. So, anyway, that's much less than you'd learn in business. school, but that's the way we do it at Berkshire. So his statement here actually kind of surprised me as many of the subsidiaries now contact pretty much exclusively Greg Abel and a G. Jane. So I mean, he made it make sense, right?

Starting point is 00:45:10 Because he said that they basically, because of their younger, they can just get a lot more done on a daily or weekly or monthly basis and Warren can now. So I felt like Warren shows some vulnerability here, but you know, Warren is transparent. That's who he is. So I think he's fully aware that his body is slowing down. he's probably not running nearly as efficiently as he was when he was probably 30 years old or whatever or even 70 years old. Just going back to the calls that he made, I mean, he's kind of well known, obviously, for bringing these subsidiaries on and kind of interacting with a lot of the CEOs, but he pretty much said that it's pretty much zero now. So yeah, Greg and and Eid are taking

Starting point is 00:45:44 most of that. But Warren pointed out that the changes in titles that happen after he's gone aren't going to really make much of a difference in the transition of because it's pretty much already happened. So Ajit commented and said the transition has gone seamlessly. Greg Abel also pointed out that the managers at the subsidiary level have also made the transition really easy. I think that they probably all know that Warren was trying to transition towards Greg and Ajit and they've just made the transition really easy. So I think this kind of goes to show just how good of a business Berkshire is and more importantly, how well Warren has managed it. So he's basically set this business up. He's created the infrastructure with Charlie's help, of course, for the business to continue succeeding

Starting point is 00:46:24 operationally at a very high level once he's no longer involved. I just wanted to point out that I think this is a really rare trait, the forward thinking. But it makes sense because if you follow Warren, he values trust a lot. And I think he wants his shareholders to trust him. So he's basically built this business so that even when he's gone, I think shareholders will still trust him that he's built this company that's going to last for many decades after he's gone. At the meeting, Greg Abel mentioned that sometimes managers will call Buffett and he just won't directly tell them the answer. And I can really resonate with that with TIP here and asking Stig questions. And he's like, well, what do you think?

Starting point is 00:47:03 So think for yourself of something that's very important. I also wonder if there's any other company, that major company that has a CEO that's 90 plus years old. That in itself is just incredibly impressive. $850 billion plus market cap with a 93-year-old CEO. I think some people sort of overlook just how amazing that is. And Keman Risk has been a talk at Berkshire for really a long time. So, you know, he's going to be prepared to pass the torch whenever it's time to do so. And even with him largely removed from the operations, Berkshire's growth still seems to keep

Starting point is 00:47:40 chugging along at a really nice pace, given their size. And despite the massive cash pile they have. So I think this ties in well to clip number three we're going to play here. This one covers who's going to be the primary capital allocator once Buffett passes the torch. And this one might have been a surprise to some people. It was an interesting question I thought that the audience would also enjoy as well. All right. The next question comes from Slavin Vuclbrot.

Starting point is 00:48:09 As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing? or will this function be exercised by Mr. Combs and Mr. Wechler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions such as large acquisitions be separated from the common stock selection process. Yeah, I would say that decision actually will be made when I'm not around, and I may try and come back and haunt them if they do it differently.

Starting point is 00:48:40 But I'm not sure the Ouija Board or they will get that job done. So that job, I'll never know the answer on whether it get covered, but I feel very comfortable about the fact that it will be made by a board that they've got loads of brain power. They've got a dedication to an unusual institution. And they will figure things out. But I would say that if I were on that board and were making the decision, I would probably knowing Greg, I would just leave. I would leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand common stocks.

Starting point is 00:49:31 I mean, if you really know how business works, you are an investment manager, how much you manage, maybe just your own funds or maybe other people. And if you really are primarily interested in getting assets under, management, which is where the money is, you know, you don't really have to understand that sort of thing. But that's not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. The responsibility has been with me and I farmed out some of it, and I used to think differently about how that would be handled. But I think the responsibility should be that of the CEO and whatever that CEO decides may be helpful in effectuating that

Starting point is 00:50:14 responsibility, you know, that that's up to the Himber Herds side at the time they're running the money. But so I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire. And we do not want to try and have, you know, 200 people around that are managing a billion each. It just doesn't work. And I think that when you're handling the sums that we will have, you've got to think very strategically about how to do very big things. And I think Greg is capable of doing that. I think I've missed a lot of stuff in the past. So I'm actually wiser about doing that now.

Starting point is 00:50:54 But then, you know, I would do it better this time around than 2008 and 9 if something akin to that happened. But it won't be exactly like 2008 or 9. You can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly. maybe it'll be once every five years maybe it'll probably be more like once every 10 years or something but the way as the world gets more sophisticated complicated and and intertwined more can go wrong and there's no sense it's going through here and exploring the possibilities of the different things that could happen but you do want to be able to act when it happens and i think the chief executive should some be somebody

Starting point is 00:51:39 that can weigh buying businesses buying stocks doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn't that people didn't have money in 2008. It's that they were paralyzed. And we did have the advantage of having some capital and a willingness to, a neaterness even to act. And the government that in effect looked at is as an asset and set of liability. And I think that all of those qualities will be even more important as our capital pile goes. So I think Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go. You never know whether it'll be next week, next year, next decade. But you won't be, you know, it won't be a

Starting point is 00:52:33 century from now, that is for sure. And the more intertwined and sophisticated the world financial situation gets, the more vulnerable gets in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to the large problems. Greg, does that bother you at all or not? Without directly answering the question, I think there's one important thing is I think as we go through any transition, it's important to know that the capital allocation principles that Berkshire lives by today will continue to survive one. And I think that's what the thing I'd want to communicate that we have our operating businesses, insurance, not insurance. We're going to cap that we'll provide them the capital necessary to be successful and grow if it's appropriate.

Starting point is 00:53:21 At the same time, we're expecting a return of capital from them when they have excess cash. And then as we've discussed, or you've touched on always looking at potentially new businesses as a whole or in a piece. And as you've always highlighted, and I fully agree, we'll always look at equities as we're investing in a business, either 1% or 100%. But we're looking at the business. We're looking at the economic prospects of that business and how sustainable it is and what it will look like 10 years from now and is our the capital we originally put in at exponential risk or where's that risk set, that profile.

Starting point is 00:54:01 And then of course, and then we'll obviously have our continue to always put excess cash in the safest investment there is in US treasuries knowing we want to maintain that fortress of a balance sheet for two reasons. One to act, but also to always protect our shareholders. If we have a, we want to maintain the position Berkshire is in now, realistically for the, to insured, to insured injures. Well, when he says that, it makes me wish I'd stayed around to be number two instead of number one in this process over the years. It doesn't get more fun than what we're doing and we're better positioned than ever before. We're not positioned, though, however, to earn

Starting point is 00:54:40 extraordinary returns versus what American business generally earns. I would hope you'd be slightly better. But nobody's going to be dramatically better in some, you know, over the next century, it gets very hard to predict who the winner will be. And if you look back, as we did a few meetings ago as the top 20 companies in the world, 10-year intervals, you realize the game isn't quite as easy as, as it looks, but getting a decent result actually is reasonably, should be reasonably easy if you just don't get talked out of doing what that has worked in the past and don't get carried

Starting point is 00:55:21 away with fads and don't listen to people who have different interests in mind than the interest of our shareholders. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up, and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving. Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Writers,

Starting point is 00:56:10 spend 82% less time on audits with Vanta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at Vanta.com slash billionaires. That's vanta.com slash billionaires. Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and plus, Plus 500 futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond.

Starting point is 00:56:57 With a simple and intuitive platform, you can trade from anywhere, right from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading you've been waiting for. See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit plus500.com to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their

Starting point is 00:57:45 cash in high-yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income strategy is available to investors of all sizes thanks to the Fundrise income fund, which has more than than $600 million invested in a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise income fund in just minutes. The fund's total return in 2025 was 8% and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025.

Starting point is 00:58:36 Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be found in the income funds prospectus at fundrise.com slash income. This is a paid advertisement. All right. Back to the show. So this is one of the clips I thought was really interesting.

Starting point is 00:58:56 We all view Buffett in sort of this grandfatherly, super kind way. But running a company of this size requires some extraordinarily difficult decisions to be made, including who's going to take the major responsibility of capital allocation and who doesn't. So he also alluded to having a lot of cash to deploy during a downturn. Earlier in the meeting, Buffett, he was also asked why he has over $180 billion in cash. And really, what are you waiting for? You know, there's a lot of that money he could have deployed 10 years ago and seen substantial gains and a number of positions. And essentially he said that cash right now is really attractive relative to other opportunities available.

Starting point is 00:59:38 And even when you look at share buybacks, Berkshire is pretty limited in how much they could pull that lever of share buybacks because of liquidity issues and not moving the price too much. And I personally wouldn't be surprised if we eventually see a special dividend maybe within the next few years. unless they're able to put together a massive deal that allows them to allocate tens of billions of dollars. And even if they do that, it still might not move the needle. In 2023, they generated 37 billion in operating earnings. You know, the stat that sort of just blew my mind at the meeting is they put that in terms of daily earnings. They're getting $100 million per day that they have to figure out how to allocate it. So capital is just constantly flowing in faster than they're able to do. deploy it. And I think eventually it's hard to see them not needing to distribute that out as a special

Starting point is 01:00:32 dividend. And Buffett also made the comment in the meeting that in the future, they plan to continue implementing share buybacks. So maybe they are just waiting to potentially do major share repurchases, just waiting on the right time. And then as always, he wants to be prepared if a major downturn were to occur as well. So I think you're right here about having a special dividend at some point in the future. Obviously, they have to keep a large chunk of cash on hand for their insurance business, but I think at this point, it's a lot of excess cash that, you know, to the naked eye, I guess he says isn't doing much, but I think he's just putting it into shorter term bonds. And I guess he feels like that's a good enough rate of return for him right now. So yeah, I still agree

Starting point is 01:01:13 with you though. I mean, I think at some point, they're just going to have to let go of some of that and let shareholders do whatever they want with it. So the other part that he discussed in that clip was about capital allocation, specifically about how that's going to be or who's going to take that over once Warren's gone. So the thing is, is Warren is, you know, he is the best capital allocator. I think that's really ever lived, at least since public markets have been around. And it was really good that to hear Warren think that Greg is going to be a suitable replacement and that, you know, I think it's seen from the way Greg talks that he's probably been grooming him for this position for a long period time because Greg says all the things that that you want to

Starting point is 01:01:50 here kind of and very similar to Buffett. But the problem is, you know, Greg started out as an accountant and then has a history and energy, which he's done brilliantly. Don't get me wrong. But, you know, he's not an investing marvel that Warren Buffett was since he's been a little boy. So yeah, Greg can say things that echoes Warren sentiments. And I think he'll probably 100% keep trying to do what Warren does after he's gone. And same thing with dealing with risk. But, you know, and I think he's probably the best person for the job at this point. But you just can't replace Warren Buffett. It's just like you can't replace a Charlie Munger. It's just you can get close, but there's going to be some uncertainty there for sure once he goes. So yeah. So I feel like Kyle's

Starting point is 01:02:28 been waiting for me to play this question here. Someone asked Buffett how he would invest if he were managing a smaller amount of capital, which is the exact position that Kyle and myself are in today, except we don't have the privilege of being able to invest full time like Buffett did. So we'll go go ahead and play the final clip here and then I'll get Kyle slots. Here, good afternoon, Mr. Buffett, Mr. Abel. My name is Cyrapov Wu, a resident of New Zealand, but originally from Thailand. This is my first time in America and the first time attending the meeting. The journey was quite rough, but it was all worth it though because I can now personally

Starting point is 01:03:05 thank you, Mr. Buffett and the late Charlie Munger, were he still with us, for organizing such a wonderful event and most importantly for being such an exceptional role models and sharing wisdom with us all these years. So thank you. Oh, thank you. We're coming. So here's my question for you, Mr. Buffett. Towards the end of 2018, you mentioned that you guarantee you could make a 50% annual return

Starting point is 01:03:37 if you had to start again with under $1 million. The question is, if tomorrow you woke up in the body of... Your body. Yeah, your body. But that's fine. And your name was now, Warren Alacat. And you had some money to invest on a full-time basis. What method or methods would you use to achieve that return?

Starting point is 01:03:59 Would it involve flipping through 20,000 pages of Moody's manual or similar publications? Or finding, you know, to find six gigabytes. Or would it be hunting for great companies at a fair price as Mr. Mungerwood? Or would it be a combination of both with opportunity costs. serving as the final arbiter or which method to use, given that your investing opportunity has now broadened significantly. Thank you, Koppun Kopp. Good question. I'm glad you came. And the answer would be, in my particular case, it would be going through the 20,000 pages. And since we were talking about railroads, you know, I went through

Starting point is 01:04:40 the Moody's transportation manual a couple of times. That was 1,500 or 2,000 pages or probably 1,500 pages. And I found all kinds of interesting things when I was 50 or when I was 20 or 21. And I don't imagine there's anybody here that knows about the Green Bay and Western Railroad Company. But there were hundreds and hundreds of railroad companies. And I like to read about every one of them. The Green Bay and Western, in those days, everybody had a nickname for railroads. I mean, that was just what Northern Pacific was the Nipper. And, you know, Phoebe Snow was.

Starting point is 01:05:17 one of them in the east that used to go up to Cornell. And the Green Band Western was known as grab baggage and walk and GBMW. And they had a bond that was actually the common stock, and they had a common stock that was actually a bond. And that could lead to unusual things. But they wouldn't lead to unusual things that would work for you with many millions of dollars. But if you collected a whole bunch of those, which I set out to do, and actually, That's what impressed Charlie when I first met him because I knew all the details of all these little companies on the West Coast that he thought I would never have heard of. But I knew about the Los Angeles Athletic Club or whatever it might be. And he thought he was the only one to know about that.

Starting point is 01:06:01 And that became an instant point of connection. So to answer your question, I would, I don't know what the equivalent of Moody's manuals or anything would be now, but I would find out everything about everything small. And I would find something. And with a million dollars, you could earn 50% a year. But you have to be in love with the subject. You can't just be in love with the money. You really got to just find it like a trip. You know, essentially like, you know, people find other things in other fields

Starting point is 01:06:30 because they just love looking for it. And a biologist looks for something because they want to find something. And it's built in that. I don't know how the human brain works that much. I don't think anybody understands too well how the human brain works. But there's different people that just find it exciting to expand their knowledge in a given area. I know great bridge players. I know great chess players, actually.

Starting point is 01:06:55 Kasparov came to Omaha and met Mrs. B. I've had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas. So all I know is the human brain is complicated, but it does. it's best when you find out what your brain is really suited for, and then you just pound the hell out from that point. And that's what I would be doing if I had a small amount of money, and I wanted to make 50% a year. But I also wanted to just play the game. And you can't do it if you really, if you don't find the game of interest, whether it's bridge or whether, you know, whatever it may be, chess or, this case, finding securities that are undervalued.

Starting point is 01:07:41 But it sounds to me like you're on the right track. I mean, anybody will come all the way to this annual meeting. Got something in their mind other than Bridge or Chesson. So I'm glad you came and come again next year. So Warren made it crystal clear that if he could, he would basically review a modern version of a Moody's manual for ideas. And this is a really interesting way of looking at investing. Essentially, the person who turns over the most rocks is going to be a person who wins.

Starting point is 01:08:08 And this is exactly what Warren was doing when he was a lot younger. He was opening up that Moody's manual, starting at the A's and going all the way down through the Z's. And he pointed out in that clip that Charlie was super impressed because Charlie would try to mention some obscure business all the way in California when Warren was in Omaha thinking there would be no chance that he would know it. And Warren were like, yeah, I know all about that one. And so that was kind of a big reason why they were able to bond. And I think that at the stage of Buffett's career, looking at all these small cap companies,

Starting point is 01:08:40 that was basically his edge, that that was the edge that he knew. So I just, I thought it was really interesting because his primary piece of advice was basically try to know something about everything, but small. So he was pointing out that I thought he was talking about at least smaller market cap businesses and try to just turn over as many of them as you can to try to understand them, you know, a little bits and pieces of as many as you can. So the other thing that he pointed out that I thought was really powerful was that you have to have a love and a passion for it. I mean, if you're going to go through a Moody's manual, start at the A's and go to the Z's, you're going to have to kind of love what you're doing because you're going to go

Starting point is 01:09:14 and you're going to flip through probably hundreds of pages where, or tens, whatever, hundreds of pages where you don't find anything that's interesting. So if you don't truly love, his point was that if you don't love the art of investing, if you just love the money part of it, you're probably not going to succeed because, you know, let's just use the same example of someone who just is in it for the money. Well, if you flip open that Moody's manual, you're not going to make it through the Zeds. And therefore, you're probably just not going to be as successful as warm. was. And if you're doing it for the money, you have to recognize that if you look at your hourly

Starting point is 01:09:43 rate over the first six months or year, it's probably going to be terrible. You know, it's an investment in it, you know, that knowledge compounds. And it's oftentimes the big payouts aren't going to come for five or 10 years. And you have to recognize that your knowledge compounds. And that's why the passion is so important. I'm definitely reminded of one of Charlie Munger's friends, Lee Liu, who's always at the Berkshire meeting. People are always finding them in taking pictures with him. And I think about the approach Lee Lou took to investing is very similar to what Buffett did in the early days with the Moody's manuals. In the early days, Lee Lou, he was just obsessed, like totally obsessed with stock investing, especially looking at some

Starting point is 01:10:25 smaller names. And he would pull up value line. I would consider that probably the modern day version of Moody's. And he would just analyze every single companies. And for the ones he would find interesting, he would essentially turn into an investigative journalist and figuring out everything he could about the company and its management team and reading literally everything. Like, that's not even an understatement. And it's a reminder that achieving high returns in the scheme of investing isn't easy, at least relative to the index. And I always think back to, you mentioned the point of Munger, essentially ignoring what the schools teach him. And if you were an investor and you looked at every single small company and seriously considered where that

Starting point is 01:11:04 company was heading and what the value of it was. It's pretty crazy to think you could come to the conclusion that markets are efficient after doing that. And really, you and I, we could just pull up Buffett's track record and look at some of the deals he did. And yeah, it's just totally ridiculous. And he also alluded to playing a game that you're suited to win. There are many games within the game of investing. And some are much easier. Some are much more difficult than others, depending on who you are. So if you're apt to looking at every single company on value, value line and knowing a company extremely well from top to bottom, then you're eventually going to find something that's really interesting, pretty compelling that the majority of people just

Starting point is 01:11:45 aren't even going to know exists or even look at. So if you couldn't really care less about reading financial statements, scanning through value line, then an index fund or two is probably going to suit you pretty well. And I guess another approach, if you just want to take the sort of Peter Lynch approach of sticking with companies that are simple to understand, you have real life experiences with, then I think that's absolutely fine too, because you see many of these big name investors. They own companies that you and I know very well. We just did the episode on Lulu Lemon. And that's one great example, I think, of a company people know well that has high returns on capital and delivers strong growth to shareholders. And you just have to play the game that

Starting point is 01:12:25 you feel you're most equipped to win and fits your sort of situation the best. And I think another really important point, Morgan Howsell points out in the psychology, of money that the most important thing is not the level of returns you get. You know, an index fund return of 8% is absolutely fine. But what's most important is the longevity of your returns. So when you're able to invest for 10, 20, 30, 40 years, that's when you get the amazing results in the end due to the power of compounding. I really resonated there with your point about playing games that we are suited to win.

Starting point is 01:13:02 So this is something that I've really been thinking. a lot lately, but kind of more from a wider view. So it just feels like when people are newer to investing and they want to go on and watch CNBC or read the news, you're kind of bombarded with TV personalities or journalists talk about like the biggest names in the industry. I think Amazon, Nvidia, Tesla, etc. So I think that a lot of these investors kind of have this bias where they believe that they need to basically invest in these really big companies in order to succeed in investing. But obviously, you know, I've researched a lot about Buffett, especially in his early days and all throughout his career because I'm an investing dork,

Starting point is 01:13:39 but I can assure you that you do not need to invest in those types of businesses to succeed. If they interest you, if they don't interest you, then you don't need to. If they interest you, totally cool, you can do that. But the point is, is, you know, when Buffett first started, he was buying microcaps that pretty much no one would have heard of. Granted, if Amazon existed back when he started, I guarantee you he probably wouldn't have even considered buying it and putting it in his portfolio. But he was getting incredibly high rates of return, like ridiculous rates of return.

Starting point is 01:14:07 And he was just looking at all sorts of different opportunities. Obviously, he kind of settled to where he is now on these kind of quality compounding businesses. But he was looking at cigar butts, which he's famous for learning from Benjamin Graham. He was looking at merger arbitrage, looking at businesses that maybe there was a deal to buy them out at a specific date that would be higher than the current purchase price. And he did wildly successful on these. But the point is that Warren's strategy has really evolved over time. And a big factor of that evolution is just that his capital base grew at incredibly high levels. So maybe he obviously he had all these other little smaller strategies that he used way back when,

Starting point is 01:14:48 but he just couldn't use them now. It wouldn't work. Buying a nano cap for a decimal of a decimal of a decimal of a decimal of a percentage of Berkshire's cash, it's just not going to do anything. So there's no point him spending time on it. So I just think the way he invest, the way he would have invested a million dollars is obviously not how he would invest $100 billion. And so it's just the point of that being that I think a lot of our listeners are probably

Starting point is 01:15:10 not necessarily investing billions of dollars. So you don't have to follow all these really big name investors or people you see on TV. So, you know, obviously I love emulating and copying and cloning people who are really successful because I think that's a really good way to do things. But I think it's really important that if you are cloning someone, try to make sure that they're playing more like Clay kind of mentioned with playing games that you can win. Find people that are playing games that you're playing. You don't want to play someone else's game. And if you are playing someone else's game, you're really running a risk that you're playing game that

Starting point is 01:15:41 you're both not suited to win and that you're not going to enjoy. So just think about that when you're thinking of following someone into a trade. Yeah. And people see Buffett as this buy and hold type investor. But if you go back, there are a number of companies he's bought and sold within six months. you don't know why he bought it, you don't know why he sold it. So just because he did buy, it doesn't mean he's going to hold it for the next 10 years. And I saw a funny comment. That was also pretty interesting from Twitter. They had commented that Buffett had essentially conquered the game of investing. So he did about everything one can do. And now he has to figure out how to deploy $180 billion in cash and no one on the management team can figure out how to effectively

Starting point is 01:16:22 do that. And what a great problem to have. And I also wanted to share one more idea. that I thought was quite interesting. Shortly after that previous question was played, this was later in the afternoon. Buffett was asked about what they learned from the pilot deal. Really what sort of happened was there's a dispute in the purchase they were making. And I found it interesting that Buffett just totally without hesitation right after the question was asked, he shared what he had learned from the deal.

Starting point is 01:16:50 And it reminded me of what William Green had said at the dinner we had on Saturday night. We were talking about TIP and how we've adopted this principle of radical transparency. So whatever's happening with the company, Stig is just totally transparent to everyone on the team. So we can all see the financials. We can all see, you know, how much free cash flow the company's making, how each business unit is doing, where he wants to take the company. And he's, you know, you can ask him anything. You know, he's totally open book and there's really nothing to hide. And essentially what William said at the dinner was that being honest and truthful is a superpower. And when William says something like that, it really makes me pause and really just

Starting point is 01:17:33 sit back and think about it. I think Berkshire is really another example of that. Being honest, being truthful, trustworthy, transparent, I think it's just really taken them so, so far. And they recognize that their reputation is really everything. And it's just so amazing to me how well that has actually worked for them. You know, it's something you can say and it sounds good. But like, actually seeing it work in practice really helps nail at home, I think. So this also reminds me of the episode Stig just released with Monish. They talk about how being truthful and trustworthy, it's really a long-term game. So in a short run, it really pays you nothing. So it's hard to behave in this manner. But over the long run, it really just makes all the difference. And it's also a good

Starting point is 01:18:19 opportunity for Buffett to lead by example when he's on stage. So if you work at Berkshire and you see Buffett act in this manner, then you want to do the same. And it creates this culture within the company. It just creates a positive feedback loop for everybody. And it also just filters out, like a lot of the people that sort of don't operate in that manner. So it's sort of a flywheel that they can create internally. So anyways, that was just one more insight. I thought was quite interesting that ties in well for TIP and Berkshire as well. I really think you nailed it with some of the analogs between TIP and Berkshire there regarding transparency. So I found it very refreshing, basically, to see Stig run the business this way. And you can see the characteristics of transparency is very apparent in

Starting point is 01:19:04 all the team members. And obviously knowing the transparency that Berkshire has, it was just interesting to see because I've never really worked in a business that was as transparent as TIP. So I've even noticed that my own transparency has extended to other areas of life outside of work. So for instance, where I was doing jiu-jitsu, my coach left. I left to go to another school. When I went to the school, he was trying to sell me on, hey, join up for the next 12 months. And I'm like, I'll do the month to month thing, but like full transparency. When my coach opens his new school, like, I'm out the next day. And, you know, some coaches would not be cool with that.

Starting point is 01:19:36 They want you to be loyal to their school, which is fine. That's great. But I just want to be transparent and not create some sort of weird situation where I'm just up and disappearing one day. I want to just be transparent. I wanted him to understand that, yeah, that's the way it was going to happen. And I think it's something that's really hard to do. but I think most people who are genuine and I think a lot of people just sort of appreciate the transparency. You know, some people can get really upset and get upset at you, but that's also sort of a filtering

Starting point is 01:20:04 mechanism for like you're filtering them out of your life. You know, if they're going to get upset about you being honest, then why do you want them in your life anyways? Yeah, that's a great insight. Absolutely. And yeah, I mean, I just, I try to be honest with my entire life. And if you're, if you don't appreciate that, then probably don't have room for you. I think you're completely right about that. So you also mentioned how Stig just recently interviewed Monash. And I thought that was a really good interview. So I had a few really good insights that were honestly the exact similar to the ones that you were speaking about. So one of my insights that I got was that reliability is also one of the most important traits. And it's really better to be

Starting point is 01:20:41 honest and reliable than dishonest and unreliable. And I think that Monish really spoke about how important reliability was for Charlie Munger throughout his entire life. And then kind of just piggybacking on what you were talking about with trust about it being a long-term game. You know, trust can take decades to pay off. So, you know, most people that are just kind of short-term oriented, they're just looking for shortcuts. And in that case, they're just, they don't value trust as much because they just want results tomorrow. They don't care about results a decade for now or whatever. So they tend to be, you know, a little bit more shallow and short-sighted in the way they do things. So I just think that this also just fits very well

Starting point is 01:21:16 with your point about how transparent Brookshire has been over the years. I mean, they, not only, obviously, it is a celebration, so they do speak about their wins, but like you just pointed out about that deal that kind of went south, they point out their losses. And they're not trying to hide from the fact that maybe a specific business or a unit is underperforming. You see him talking about insurance and sometimes it's good, sometimes bad. He's very forthcoming and transparent about what's happening in the business, which I really appreciate. And they're not also, another thing that's really interesting is they don't change their benchmark or the performance metric. You try to make themselves look good. Every single year, you got your book value, whether it goes up higher or low

Starting point is 01:21:51 than the S&P 500, it's always there. He's always showing operating earnings. And he's not switching and showing EBITDA one year because that looks good, but earnings doesn't. And so just that alone and doing that over decades, I mean, that's super impressive. And it's, he's not trying to warp the truth. It's just, this is the reality of the business. Let me explain to you what's going on. And if it's good, if it's a good fit for you, then come on board. And if it's not a good fit, then go find something else. That's totally cool. So Warren and Charlie have always been interested in playing this long game. So I think it just makes sense that they both have this high degree of trust with all of their shareholders because they knew they were going to play this long-term

Starting point is 01:22:29 game. And in order to succeed, that's what they hadn't wanted to do. So I think the trust factor is just a huge reason why they also have so many quality shareholders, right? I mean, you look at a lot of these businesses, they have super high levels of volume. And like you were talking about with their liquidity, not being very high, making it hard to buy back shares. That means that people don't want to trade the shares. And there's a reason for that. It's because they have tons of shareholders who've been there for decades. They're not going to just sell their shares. So, and I think trust and transparency has really built that, that quality shareholder base up. So my last takeaway from Stig and Monish provides conversation that ties well here is that is about Charlie's favorite mental model,

Starting point is 01:23:07 which was inversion. So Monish pointed out how hard it would be find someone who was honest, reliable, hardworking, and had very high integrity and did terribly in life. So I really like these types of thought experiments because they give you a good framework just for living a wonderful life. Focus on being honest, focus on being reliable, focus on being hardworking, and have high integrity and you'll be incapable of living a terrible life. And the trick is to just stay on the right path. But as Warren and Charlie showed, you can stay on that path and look at where it got them. Well said. And for those who miss that conversation with Monash, it was released just a few days ago,

Starting point is 01:23:45 episode 628 here on the podcast feed. So that wraps up the Berkshire overview of the weekend. But before we go, I wanted to give a handoff for what we plan to do in Omaha next year. I'm thinking that Kyle wants to come back again. And I'll certainly be back again next year as well. So this is very, very initial stages, but we do plan on hosting a number of events. again next year during the Berkshire weekend. And since it's a year away, we aren't exactly sure what we plan to do. But here I wanted to give just a general idea because Stig loves planning

Starting point is 01:24:18 far, far ahead with this stuff. And I know people in the audience email me many months ahead, wanting to know what's happening. So here we are a year already sort of looking forward to 2025, crazy to say. So at the time we're recording here, we plan on starting up our free events again to the general audience. We did these back in 2023. A lot of people just absolutely loved them. And it was just a great chance to meet a ton of like-bide people that listen to the show. And then we're also going to be hosting social events for our TIP Mastermind Community. This is our paid community for high net worth individuals, entrepreneurs, as well as equity

Starting point is 01:24:54 analysts and portfolio managers who are listeners to the show. So Kyle and I have talked about this a number of times on the show. The most recent one was the Lulu Lemon episode that just went out. So if you're interested in hopping on the wait list to join the community, you can go to theinvestorspodcast.com slash mastermind. And then I had mentioned I put together the Berkshire Summit this year with the help of the TIP team. And we're also considering hosting something similar to this next year. We're still in the works of planning what exactly we plan on doing and kind of gauge interest from people. So you can really think of the Berkshire Summit as sort of VIP

Starting point is 01:25:28 access to hang out with TIP hosts, hang out with the guests, and really just have an amazing weekend that we can put together for you. So this year's summit, we had guests like, like William Green, Guy Spear, Christopher Sy, Godham Bade, Joseph Sheposhnik, and Daniel Zang. It's a higher ticket event. If you're interested for 2025, you can shoot me an email at Clay at the Investorspodcast.com, and you'll be the first to hear from us if we end up putting something like this together. And since we plan on doing a number of different things, I sort of hesitate when you do multiple things because it just confuses people with what you're doing. And Kyle and I can only be at one place at a time. So it's,

Starting point is 01:26:07 sort of makes things difficult and there's only a few days in the weekend we can do things. So we sort of hope to have an event for all types of people in the audience and based on what you're looking to get out of the weekend with us. So I'm totally biased, but I think all three events just sound like an amazingly fun time. And I hope many of you in the audience will come join us again in Omaha in 2025. It really is a lot of fun. And I've really enjoyed getting to know a ton of members in the audience and learning a lot along the way. So that wraps up today's episode. Mark, calendars for usually it's the first week in May during the year, so May 2025. And the earlier you get this stuff booked too, the better. Usually it's good to book out the flights in the hotel

Starting point is 01:26:48 probably four to six months plus in advance. And the later you book, the crazier things you can get. So, Kyle, thanks for joining me today. It was great seeing in Omaha and we'll see you again in New York City this fall for the mastermind community. I'm really looking forward to it. My pleasure and I look forward to that as well. Thank you for listening to TIP. Make sure to follow, we study billionaires on your favorite podcast app and never miss out on episodes. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional.

Starting point is 01:27:26 This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP629: Berkshire Hathaway Annual Shareholder's Meeting 2024 w/ Clay Finck and Kyle Grieve

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.