Lessons from the Oracle of Omaha 2009 Berkshire Hathaway AGM

I attended Berkshire Hathaway's AGM on

Saturday. It was wonderful to read about the AGM in the Wall

Street Journal and the New York Times and be able to comment as to

its accuracy.

It was a huge turnout - 35,000 people. Buffett, despite the fall

in his net worth is still the world's second richest man,

acknowledges he's made mistakes and is no better a performer this

year and neither were his 4 fund managers. On average though, over

the last 10 years, he's outperformed S&P. Interestingly he informs

he is not looking for his fund managers to recommend holding of

cash.

The event was a "Woodstock for Capitalists" and the AGM can be

likened to a conference with Buffett and Munger sharing their

business wisdom. In his folksy manner, he handled some difficult

criticism on the performance of Berkshire Hathaway and its use of

derivaties, despite calling them weapons of mass destruction. Three

journalists from Fortune magazine, CNBC and The New York Times

selected the questions fielded from over 5000 emails for the 5 ½

hour Q&A session.

Here are some pointers I valued:

• Bufffett made the point more than once that inflation is

likely to be a problem.
• Your best investment is to invest in your earning power and

the second best investment is, invest in a good business - buy

value.
• On stocks - his philosophy is not to worry about price -

all you need to think about is - is it good value and do you trust

the management? Selling should also not be determined by price.

It's about value and the management.
• Buffett informed several times that he and Charlie Munger's

methodology in investments remains unchanged after all these years

and that is - determine the value of the business and if they

trust the management, and secure a wide safety margin.
• Buffett's premise is that businesses are simple. A buy

decision should shout at you. If it doesn't and needs to be

justified by complex spreadsheets - don't do it. Buy decisions are

when the price is misaligned to value.
• If he had to run a class it'd only have two topics: 1. How

to value a business. 2. Understanding markets. Munger and Buffett

confirm they do not use the complex methodology and consider it

unnecessary.
• Emotional stability is more important in business than a

high IQ.
• It was interesting to note Buffett's interest in green

products - BYD is his new pride and joy; green utility companies,

water saving products, non toxic paint.
• Interesting comment in support of Obama's stimulus package

even though he also supports his Wells Fargo CEO's comment that the

package is asinine.

I commend to you the following media articles of interest:

1. Andrew Ross Sorkin from the New York Times reports on "

Back to Basics with Buffett". He was on the panel of journalists
2. Omaha World Herald which has highlights of the Q&A.

I share these comments with you for your interest only. This is

NOT financial advice and you should seek professional advice from

your advisors.


To your every success

Gen
www.start-up-a-business.com