Broker Check

Lessons learned from the Oracle of Omaha & Charlie Munger

May 12, 2023

Over the past weekend, our Canopy team made the journey to Omaha Nebraska to take part in the Berkshire Hathaway annual meeting.  This has always been a dream of mine ever since I started investing as a little kid.  Warren Buffett for all intents and purposes is the G.O.A.T of all investors.  When I told friends and family that what I was doing, they gave me a weird look, asked why I would ever want to go to a shareholder meeting especially in all places Omaha Nebraska.  I relate this adventure as watching Michael Jordan or your favorite athlete play live.  With Warren being 93 years old and Charlie being 99 years old, there is not better time than now to make this journey.

Some basic takeaways from the overall weekend, is that Omaha Nebraska is a very cool city.  I did not know what to expect, however, I surprisingly really liked the city.  The city had incredibly friendly people, great bars and restaurants, easy to travel around and very clean.

The Shareholder meeting was held in a basketball arena similar in size as the Kohl Center in Madison.  People from all over the world packed the arena to see Charlie and Warren talk for 6 hours about their opinions on the markets, global economy, and many other top of mind investment topics. 

When asked about the future of value investing, Buffett answered: "Value investing will be fine; people will continue to do dumb things." It got a laugh from the crowd and in Warren’s opinion, there will always be an opportunity to invest in good companies. 

All humans come with standard emotional equipment that is to some degree predictable.  We tend to panic at the worst possible moment and are greedy when we should be cautious.  Human emotions and thus long term market trends and cycles are here to stay. Yes, we have become more educated, with access to fancier, faster, and better financial tools.  We have more information at our fingertips than ever before, unfathomable just decades before.  Despite all of that, we are no less human.  We will behave like humans no matter how sophisticated we become.  Human emotions will still impact the markets. 

This was also a common theme in the book I read last month, Mastering the Market Cycles – Getting the Odds on your Side” by Howard Marks.  If you want a recap of the book, check out my LinkedIn Profile. 

Another interesting comment I wrote down was when Buffett said, "People are trying to outsmart each other in arenas that you don't have to play in."

Far too many times I run into this concept in finance and this is a good reminder that you don't get extra points in the market for the degree of difficulty of analysis. In addition, it is the reason I ask you so many questions in our meetings.  I am trying to figure out with you, what game we need to play to help you win.

Morgan Housel in his podcast Episode 6 – Play Your Own Game also says something similar.  He quotes “Everyone is different. What you want might not be what I want.  What is fun to you, might be miserable to me.  You have different life experiences, different role models, different risk tolerances, goals, social ambitions, on and on.  One of the Most Important financial skills is figuring out what game you are playing and playing it and only it.”

On a morbid topic of wills, Buffett opined that "if your kids are reading your will for the first time after you have died, this is a mistake that you won't be able to correct." He is not going to sign a will unless he shares the contents of it with his kids and gets their feedback.  I thought this was interesting.  How many of you have talked with your kids or family about your estate.  I know it is not as fun as talking about the Milwaukee Bucks playoff run or the summer travel plans, but it might be one of the most important conversations you ever have with your family.

I loved this from Buffett: "If you want to know how to live your life, write your obituary and then reverse engineer it so that you can live up to it. 

In addition, Buffett said: “If you want your kids to have certain values, it's important that you live those values and talk about it.”  I cannot agree more with it.  This applies not just to parenting but being a boss, a coworker, and a Financial Advisor to you.  If I don’t practice what I preach, it will be tough for anyone to take me seriously.  

Buffett’s quote that stuck with me most was “I don't know anyone who is kind to die without friends.  I know plenty people with money to die without friends".  Having money only attracts friends who value you for your money. Kindness, however, has an everlasting purchasing power.

Charlie Munger is an interesting human being to me.  He has somehow mastered the ability to be unemotional when it comes to investing.  When asked if he has ever made an emotional investment decision in his life, his answer was “No.”  Nothing more to explain and nothing more to justify. 

Charlie’s advice for a good life: “It's so simple to spend less than you earn, avoid toxic people, toxic activities, keep learning all your life, defer gratification because you prefer it that way, and if you do it all this way you will succeed. If not, you will need a lot of unusual luck.” Charlie doubled down on the toxic people comment: "Get them the hell out of your life."

My favorite line from Munger which doesn’t necessarily relate to anything in this article was: “Practicing law today is like a pie-eating contest, where if you succeed, you get to eat more pie.”
The experience was something I will truly cherish as a highlight in the investment journey.  Not everything said was earth shattering and mostly was just basic advice that time, patience and consistently sticking with the plan works even in an ever evolving world.

Thank you for giving me the opportunity to continue to work with you and help you achieve your financial goals.