Notes from the Berkshire Hathaway annual shareholder meeting
This past Saturday afternoon, Berkshire Hathaway did a live telecast of their annual shareholders meeting in Omaha, Nebraska, since they were unable to host the large crowds expected. The highlight of this weekend, which has become known as “Woodstock for Capitalists”, is the live commentary from Warren Buffett and his business partner Charlie Munger. This year Mr. Munger was absent because they felt it was not wise to have the 95- year-old fly with the risk of the Coronavirus (his partner Warren is a spry 89). It was nice for interested parties like me that do not own any Berkshire Hathaway shares as we were able to listen in live.
Mr. Buffett started his comments with a history of America and shared what we as a country have accomplished in a relatively short time period (244 years). In 1790, the best estimate of the wealth of America is about $1 Billion, the net-worth of the United States today is in excess of $100 Trillion; a 5000 to 1 gain in real terms. He stated that it is miraculous what we as a country have accomplished during this time period, but it hasn’t been without tests along the way. He went into great detail about the Civil War and the number of casualties we had of the working age population. He discussed the Great Depression and the impact that had on our country. He believes that if we had had the FDIC in place before the Great Depression, it never would’ve gotten as bad as it did. There are many thoughts on mistakes we as a country made during the Great Depression, but having 9000 banks fail and $140 billion in deposits disappear, makes a big impression on the psyche of the average American. We continued on: “Nothing can stop America when you get right down to it, we have been tested, but in the end never, never bet against America”.
In 2020, “We are a better country as well as incredibly more wealthy; never, never bet against America”. He emphasized how “stocks are a part ownership of a business, not something to be commented on minute by minute”. Equities are going to perform over the long-term. He used the analogy of a farmer that buys a section of land and sets up a farm. His neighbor who owns the piece of property next door which is the same number of acres and very similar in quality, comes over and offers to buy his farm. The farmer says no our course, but each subsequent day, the neighbor comes back and makes a lower offer to buy his farm. Well after several weeks of this, the farmer starts to panic that his farm is dropping in value and maybe he should sell to his neighbor. This all sounds a bit silly but think about what happens in the equity markets on a daily basis, especially in a panic!
Mr. Buffett summed it all up with this final thought: The American tailwind is going to have interruption’s but make a choice to participate in this miracle and never look back; sustain this position for decades.
It was very interesting to listen to this commentary live and then read the financial media’s comments later and see how they can put a negative spin on everything. Mr. Buffett stated that the Federal Reserve has been so active and ahead of the curve in this “crisis, that they have not had the opportunity to participate in deals like they did back in the Great Recession. The Fed has been the lender of last resort, so Berkshire Hathaway has not been able to name their terms like they did back in 2008. If the right deal comes along, they will invest in it. He is still very bullish on America in spite of the current situation.
Hopefully you found this helpful. Please let us know if you have any comments.
Brett S Carleton, CFP, ChFC