Warren Buffett

Warren Buffett despite being renowned as one of the greatest investors of all time, has never publishing a “how to invest book. Yet his success with investing has realised an annualised return of 20.3% p.a. from 1965 to 2008. To date, his work has been shrouded in mystery, with only outsider’s interpretations of his methodology being available in the public domain. The secret is that his lessons were available to nearly everybody and yet only a small few have actually cracked the “Buffett Code.” Buffett’s teachings were never communicated in the normal traditional format of “a how to” book.

Instead they have been outlined at his annual general meetings or his annual reports each year. This year’s annual general meeting was no different. Fortunately, our Director, Alex Jamieson, was lucky enough to attend the AGM in Nebraska and return with Buffet's investment philosophy and interpretation of the economy and market outlook.

The Friday evening before this year’s meeting Warren held a huge cocktail party for all the shareholders. During the party the atmosphere was electric and people congregated from all over the world who have made their annual pilgrimage to hear the Orica of Omaha speak the following day. On the day of the AGM people lined up at 5:00 am outside the stadium, the atmosphere was somewhat similar to a major sporting event. People were determined to get a good seat for the day’s lesson. Whilst standing in line I met a group of asset managers from Brazil who attend the event every year. The Brazilians were such devotees that on the Friday prior to the event they organise a shave and hair cut with Warren's barber which is located in the head office of Berkshire. Secretly I think they are hoping to get some inside tips which might have slipped out during Warren's most recent visit only days prior to the event.

By the time the doors open at 7:30am the 35,000 attendees swarmed the stadium and by 8:30am the venue was packed. Bill Gates, one of the Board of Directors for Berkshire Hathaway, was perched up in the 1st row. Somewhat amusingly he is only paid $5,000 per year to sit on the board. To have two of the wealthiest men in the world under the same roof was quite extraordinary.

The meeting starts with a quick light-hearted movie of the years event’s. Once this was completed Warren Buffett and Charlie Munger entered the front stage and the main event was under way by 9:30am. On stage Warren and Charlie sat for the next 5 hours answering questions from the crowd. The topics covered were extensive and included investing, how to questions on investing, the markets, management and marketing, the economy and company succession plans. Warren despite being 78 years old is sharper than most average 50 year olds and his passion and charisma was inspiring, you could tell that he relishes in the event each year.

The main messages from the meeting were as followed:

1. The devaluation of purchasing power of the US dollar was likely and inflation in coming years would be an issue, due to the actions of the US Federal Reserve.
2. They don’t try and pick tops and bottoms of markets; the fundamental analysis is what really matters.
3. His view is always looking forward not backwards. He is only concerned about what he pays today or tomorrow and not what he paid yesterday for a company.
4. Part of capitalism is that they have years of good times and bad times and the markets also tend to overshoot as part of this process and as a result have periods of contraction.

During the meeting Warren remarked that he would never webcast this meeting as he likes the interaction, so I guess next year if you want to crack the “Buffet Code then jump on the plane and attend the AGM. If you can’t get there find a Financial Planner who does, so you can get the inside information.

For more information on the "Buffet Code" and how his teachings can impact on your investment portfolio, call 1300 693 511 to arrange a FREE initial consultation with the Finanical Planners that know!