The Berkshire Hathaway annual meeting takes place his weekend in Omaha. In honor of the so-called “Woodstock of capitalism,” I thought I’d take a few minutes to reflect on the careers of Warren Buffett and Charlie Munger and their influence on American business.
This short clip below is conversational; Buffett discusses how his investing philosophy changed (with Munger’s help) from simply buying cheap business to buying quality businesses at a reasonable price.
In this second clip, Munger describes the simplicity of his investing philosophy. He also pokes fun at those who obfuscate their strategies to give the appearance that they are indispensable.
Of course, even a simple investing philosophy is hard to use successfully. Having a simple set of principles does not relieve you from the burden of execution. But Munger explains that at Berkshire, there is no algorithmic trading or supercomputing going on, just thoughtful analysis and discipline.
And the Haters
Renowned as Buffett and Munger are, they still get a helping of criticism, including some from other investors. This is a real tweet from a professional hedge fund manager:
I can’t help but be amused by this kind of thing. This tweet argues that Buffet’s use of leverage (insurance “float”) is the only reason for his success.
If Buffett isn’t an exceptional investor, you might ask, where did he get the money to buy insurance companies in the first place? If it’s that simple, why don’t all investors just do the same thing?
While it’s true that insurance float provides Berkshire Hathaway with a great investing tool, $400 billion businesses don’t just pop out of nowhere. You can’t build that kind of company with a simple trick. He was a successful investor long before he could buy insurance companies.
This type of criticism is like a guy playing pickup basketball trying to tell you that Michael Jordan wasn’t a great player, he just had great teammates, or coaches, or shoes.
Sure, plenty of factors helped Buffett and Munger along the way, but until you invest your way to a $400 billion business, let’s show some respect where respect is due.
Way to go, Warren and Charlie.