Every year on the first Saturday in May, more than 30,000 faithful disciples of Warren Buffett visit Omaha, Nebraska. They come from around the world to attend the annual shareholders’ meeting of Berkshire Hathaway, Buffett’s investment flagship and, this year, I was one of those fans of the “sage of Omaha” who spent their weekend in a small town in mid-west America.
The main highlight of the meeting, also known as the “Woodstock of capitalism”, was the question and answer session. Here, Buffett and Charlie Munger, his business partner, respond to queries raised by journalists, analysts and investors. The session ran from around 9am to 4pm, with an hour’s break for lunch. It was tiring even for me to stay focused, but you have to remember that Buffett is 83 and Munger recently turned 90. Therefore, the length of the meeting was impressive in itself.
The duo talked about business, investment and politics with insight and wit, which made for an entertaining and inspiring six hours. Their advice about careers is generally simple, old-fashioned and straightforward.
First of all, they say, you should do something you are passionate about and where your talent lies. Both Buffett and Munger love what they do, and so have no plans to retire. They also recommend knowing your core competencies, what you are good at, and your limits. If not, your efforts may be doomed to fail. In the meeting, Munger recounted how he flirted with a career in the academia while he was at Caltech, before realising that he could never be as good as his professors. One shareholder asked how he could know if he is good at what he is doing. “There are idiots around to help you figure that out – and they are never in short supply,” Munger replied in his characteristically forthright way.
The second important thing is to “remove your ignorance” continuously. Both Buffett and Munger attributed their success to being persistent in learning what they didn’t know through the years. Regarding target companies, no matter how much they may know in advance, they can always learn more after investing. They admitted that some mistaken investments had cost them dearly and that their biggest weakness is responding too slowly to personnel changes. However, any failure also provides a golden opportunity to learn, and they are both sure that there is still a lot they don’t know.
A young shareholder asked how best to decide which industry and which company to join. “Talk to as many people as you can and ask a lot of questions,” Buffett said. He then recalled his experience as a stock researcher when he would turn up uninvited on the doorstep of senior executives of major corporations. Usually, they were ready to spend up to an hour with a young man who was obviously eager to learn. In return for their time and generosity, Buffett put a series of probing questions about their business which made them think.
“People usually like to talk if you show them you have done your homework and know a few things,” he said. Meetings with a few executives can give a good idea about an organisation and an industry. And, Buffett said, it is always worth asking executives which company, other than theirs, they think is the best in the industry and why. Munger added that it is equally important to ask which ones are the worst.
Finally, people climbing the career ladder should remember that money doesn’t buy happiness. Once you pass a certain threshold of financial wealth, money can be more destructive than many think. It corrupts and invites trouble. That is why Buffett has a notably modest lifestyle and has lived in the same house for decades.
Originally posted on Education Post: The Sage of Omaha