Warren Buffett & Berkshire Hathaway Annual Shareholder Meeting Is Overrated
The event, also known as 'The Woodstock of Capitalism', has people from all walks of life tuning in to hear what the legendary investor has to say about the economy and the stock market.
We sat through the whole 5+ hour session to hear what the man has to say.
This is not the first time we participated in the event; we have tuned in for several years now.
We conclude that the event is way overrated.
This is an unpopular opinion - we would be surprised if anyone thought the same way as we did.
As avid readers of books on Buffett, Buffett's annual reports, and a watcher of his interviews and AGMs, we believe we have made a fair assessment or opinion on the matter.
That's not to say that the event should completely be ignored.
Who Should Pay Attention To The AGM?
If you are an investor in Berkshire Hathaway, then you should definitely pay attention to the AGM because he will explain the various businesses' performance, the succession plan, Berkshire's stock investments, and the buybacks he will or will not do.
Who Can Ignore The AGM?
If you are an investor hoping to get some insights on what he has to say about investing or the economy, there is almost nothing new every year.
You can save that 5 hours of your life and research to find wonderful companies to invest your money in.
Warren Buffett is a Great Capital Allocator
He is no doubt one of the greatest capital allocators in the world.
As the CEO of Social Capital, Chamath Palihapitiya, once said: "great CEOs are great allocators of capital."
Warren Buffett is a great financial capital allocator - puts cash into good use to generate high returns.
Mark Zuckerberg is a great human capital allocator - puts talent into good use to generate high returns.
Jeff Bezos is both a great financial and human capital allocator - that's how you have Amazon.
As someone who reads, watches, and learns from Warren Buffett, we can tell you definitely almost without fail, that there are repeating themes or topics in every shareholder meetings or interviews he has.
We can even list them out:
- Is the stock market overvalued/undervalued?
- Will the America/global economy do well next year?
Question: How Buffett became insanely wealthy?
Answer: by buying wonderful businesses at fair or cheap prices.
Does he know how the economy is going to fair next year? - Nope
Does he know if oil prices will ever recovery? - Nope
Does he know what companies he will buy next? - Nope
Does he know when he will do a massive share buyback? - Nope
The only thing he knows, and how he usually answer is, he and Berkshire are interested in making large deals to make full use of Berkshire's cash.
But if nothing good comes out, they are perfectly comfortable with holding cash until such an opportunity comes up.
He does not care if the market is overvalued or undervalued, neither does he pays attention to it (or so he says), he simply looks to buy for wonderful businesses managed by wonderful people at fair prices when the opportunity comes knocking.
If Buffett is not buying any shares or even buying back Berkshire's shares, does it mean the market is overvalued?
Nope. It just means that prices are not low enough for him to make a move, or there are businesses inside Berkshire that can make better use of the cash that they have.
Also, because Berkshire's largest business is in insurance, Berkshire needs to have a sizable cash reserve to pay out those claims.
That is why Berkshire has a huge cash position on its balance sheet.
Doesn't necessarily means ' Berkshire has huge cash reserves = everything overpriced in the stock market'.
Will The America/Global Economy Do Well Next Year?
"Will recession end the US economy?"
"Will COVID-19 end the US economy?"
"Will China end the US economy?"
"When will the US recover?"
"Is the US still competitive globally?"
These are some of the standard questions that will come out almost every time in interviews or AGMs.
Buffett's answers to these questions are almost always the same: "I don't know."
Yup, he doesn't know the exact answer, neither does anyone else you ask.
But he will almost always follow up with the answer: "Over the long-term, we will do really well. Stocks will do really well. The America/global economy will do really well."
Then he will proceed to give us a history lesson on how many wars, pandemics, crises, etc. that the US and the world went through and how the economy despite these challenges, will always recover and grow stronger.
TLDR: Ignore all the noise. Focus and invest for the long-term.
If you read books on Warren Buffett and learns how he invests, the AGM is pretty much not relevant to you because he is not going to tell you anything different from what you have read or learn.
What the AGM is though, is an update on Berkshire Hathaway's business, performance, and how it will be going forward.
If you are an investor in Berkshire Hathaway, you should pay attention to it.
Recommended Read: Save in CPF or Invest in DBS?
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