2005 Berkshire Hathaway Annual Meeting (Full Version) | Summary and Q&A

Summary

In this video, Warren Buffett and Charlie Munger discuss various topics including their gratitude towards the creators of the cartoon, Liberty's Kids, and poor Charlie's almanac. They also express their thanks to Kelly Muchmore for organizing the event and mention the upcoming marriage of Kelly. Additionally, they talk about their interest in investing in businesses and the current market conditions that make it challenging. They touch upon the importance of selecting terrific managers when buying businesses and the passion they look for in those managers. Warren also discusses their investment in Anheuser-Busch and the beer industry, as well as the impact of increased competition from private equity funds and hedge funds. They discuss the importance of starting investing at a young age and recommend reading extensively on the subject. They also mention their concerns about the increasing amount of money being spent on money management and the need for corporate managers to better understand investments.

Questions & Answers

Q: What do Warren Buffett and Charlie Munger express their gratitude for?

Warren and Charlie express their gratitude towards the creators of the cartoon Liberty's Kids and Andy Hayward for his work on it. They also thank the author of Charlie's Almanac, Peter Kaufman, and Kelly Muchmore for organizing the event. They mention the upcoming marriage of Kelly.

Q: What do Warren and Charlie look for when buying businesses?

When buying businesses, Warren and Charlie look for terrific managers with a passion for their business. They want managers who love their business beyond their paycheck and have a genuine interest in running the business even after selling it. They believe that the success of a business often depends on the passion and dedication of its managers.

Q: What is Warren's view on the beer industry and their investment in Anheuser-Busch?

Warren mentions that the beer industry is not growing significantly in the U.S. and that Anheuser-Busch is experiencing flat earnings due to increased competition and promotional pricing. He acknowledges the strong consumer position of Anheuser-Busch and the absence of private labels or generic products in the beer industry, which is a plus. However, he doesn't expect significant future growth in the industry.

Q: How do Warren and Charlie feel about the increased competition from private equity funds and hedge funds in buying businesses?

Warren and Charlie acknowledge that there is more money looking to buy businesses now compared to five years ago. They mention the increased presence of private equity firms and hedge funds in the market and the willingness to pay higher prices for businesses. They also highlight that many businesses are being sold to companies planning to resell them in a short period of time. Warren and Charlie mention that this increased competition makes it difficult for Berkshire Hathaway to find good investment opportunities.

Q: What advice do Warren and Charlie give to younger people wanting to invest in the stock market?

Warren and Charlie advise young people to start investing early and read everything they can on the subject. They emphasize the importance of developing a framework, understanding business fundamentals, and having a genuine interest in the subject. Warren suggests reading Benjamin Graham's "The Intelligent Investor," as it had a significant impact on his own investing approach. They also mention that investing requires more qualities of temperament than intellect and that starting early can be a significant advantage.

Q: What are Warren and Charlie's concerns about the current state of money management?

Warren and Charlie express their concerns about the increasing amount of money going into money management and the concentration of brainpower in the field. They believe there is too much emphasis on buying pieces of paper and trying to get rich quickly. They highlight the high percentage of GDP and national brainpower being dedicated to money management, which they see as a negative for the country. However, they acknowledge their own contribution to this phenomenon and express their reservations about it.

Q: How did Warren become interested in investing and what sparked his interest at a young age?

Warren became interested in investing at a young age, possibly around seven years old. His father was in the business, and Warren would visit his office and read interesting books on investing. He also observed the stock market ticker tape at a local company's board. Warren's interest grew as he read extensively on the subject and studied the New York Stock Exchange and different investment strategies.

Q: What do Warren and Charlie advise younger people about investing?

Warren and Charlie advise younger people to start investing early, read extensively on the subject matter, and develop a framework or investment philosophy that works for them. They emphasize the importance of learning from books and studying successful investors like Benjamin Graham. They also mention the need to think for oneself and have a strong temperament for investing. Warren emphasizes that investing requires qualities of temperament more than intellect.

Q: How does Warren describe the current state of investing and competition for good investment opportunities?

Warren describes the current state of investing as challenging, primarily due to increased competition for good investment opportunities. He mentions that there is more money looking for deals now compared to five years ago, and private equity firms and hedge funds are willing to pay higher prices for businesses. Warren acknowledges that this makes it difficult for Berkshire Hathaway to find good investments and that they are at a disadvantage in the current market conditions.

Q: What are Warren and Charlie's thoughts on the concentration of intelligent classes in money management?

Warren and Charlie express their concerns about the high concentration of the intelligent classes in money management and the increasing amount of brainpower dedicated to this field. They believe it is not a positive development for the country and express their dislike for the current state of money management, which they see as a low calling compared to other professions. They also mention that they have contributed to this phenomenon through their own investing strategies.

Takeaways

In this video, Warren Buffett and Charlie Munger discuss various topics related to investing and business. They express their gratitude towards the creators of Liberty's Kids and Charlie's Almanac, as well as the organizers of the event. They highlight the importance of selecting passionate and dedicated managers when buying businesses. They also discuss their investment in Anheuser-Busch and acknowledge the challenges posed by increased competition from private equity funds and hedge funds. Both Warren and Charlie emphasize the need for young people to start investing early and read extensively on the subject. They also express concerns about the growing amount of money and brainpower dedicated to money management. Overall, they provide valuable insights into their investment philosophy and the current state of the market.