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University of Berkshire Hathaway: 30 Years of Lessons Learned from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting
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Each year, for thirty years, two veteran investment advisors attended Berkshire Hathaway's Annual Shareholders Meeting. After each meeting, they chronicled Warren Buffett and Charlie Munger's best lessons from that year. This book compiles those thirty years of wisdom for the first time.
Each year, for thirty years, two veteran investment advisors attended Berkshire Hathaway's Annual Shareholders Meeting. After each meeting, they chronicled Warren Buffett and Charlie Munger's best lessons from that year. This book compiles those thirty years of wisdom for the first time.
336 pages, Hardcover
First published March 22, 2017
5960 people are currently reading
11041 people want to read
About the author
Daniel Pecaut
4 books83 followersDaniel Pecaut is a Harvard graduate whose insights have been featured in the New York Times, Money Magazine, Outstanding Investor Digest, and the Omaha-World Herald.
He has worked in investing for 30+ years and is Chairman and Chief Investment Officer of a successful investment firm, Pecaut & Company.
He has worked in investing for 30+ years and is Chairman and Chief Investment Officer of a successful investment firm, Pecaut & Company.
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Displaying 1 - 30 of 331 reviews
May 23, 2020
As most of you know, University of Berkshire Hathaway (UBH) is our compilation of 30 years’ worth of notes from Berkshire Hathaway's annual meetings.
Over the years, UBH became our pet name for the meetings, as they were such extraordinary learning events.
Corey and I are very pleased with how the final version of the book came out. It feels so satisfying to have all those years of study and effort packaged and shared in this elegant way.
We’re not too attached to what happens now.
And yet….
Corey and I have been delighted with how the book has taken off!
It is now available in Chinese, Japanese, Portuguese, and German. If all the irons in the fire work out, UBH will be translated into 11 different languages.
Kudos to our mad scientist editor, Austin Pierce.
Thanks to all who’ve supported us on this project. A special thanks to those who have written reviews at Amazon.
From Berkshire Hathaway board members to friends to clients, we’ve received some wonderful notes, letters, and feedback.
We feel most grateful and fortunate.
Over the years, UBH became our pet name for the meetings, as they were such extraordinary learning events.
Corey and I are very pleased with how the final version of the book came out. It feels so satisfying to have all those years of study and effort packaged and shared in this elegant way.
We’re not too attached to what happens now.
And yet….
Corey and I have been delighted with how the book has taken off!
It is now available in Chinese, Japanese, Portuguese, and German. If all the irons in the fire work out, UBH will be translated into 11 different languages.
Kudos to our mad scientist editor, Austin Pierce.
Thanks to all who’ve supported us on this project. A special thanks to those who have written reviews at Amazon.
From Berkshire Hathaway board members to friends to clients, we’ve received some wonderful notes, letters, and feedback.
We feel most grateful and fortunate.
May 28, 2020
After reading the book, I don't think I can disagree with the title of the book in any way, it certainly has enough material for the seeker to be called a university! Even though the authors of the book are Corey Wrenn and Daniel Pecaut, who admittedly themselves are highly accomplished money managers, the real authors of the book (in quite literal sense) are the wonder-pair of Omaha - Warren Buffett and Charlie Munger. University of Berkshire Hathaway is a sensical, abridged version of thirty years of Annual Shareholders Meeting of Berkshire Hathaway. It's by far the closest I've come to reading the summary of the highly engaging and wildly popular shareholders' meeting of BH in a gainful way.
The book is brimming with advices (albeit not in a pedantic way), anecdotes, cautions, and information in general about a wide away of topics like the earnings of BH itself (obviously), market conditions, economy, reinsurance, Coca-Cola, Geico, "the good investments (Coca Cola, Gillette, Geico), the bad investments (Netjets, airlines), and the ugly investments (Dexter Shoes)", nuclear proliferation, china olympics, CDS, technology, executive compensation, corn ethanol, football, and of course, the rising star of BH Ajit Jain.
The anecdotes of Munger and Buffett are unmatched in their quality and elegance! The repeated urging to "Be Greedy when others are fearful, be fearful when others are greedy"; others like "Inflation is a political phenomenon, not economic", "If investors had to study only the past, all librarians would be billionaires"; and the popular ones like "Buy wonderful company at a fair price than a fair company at a wonderful price", and "Gambling is a tax on ignorance" are only a few of the gems mentioned in their shareholders' meetings. Apart from these witty and wise one-liners, there's no dearth of amazing stories and hypothetical thought-experiments. Buffett's "Ovarian Lottery" concept, stories from The Richest Man in Babylon, the concept of Newspaper Standard - 'Behave as if your actions will be on the front page of the national newspaper', Munger's concept of "Enlightened Common Sense" are a few good examples. The best story was about the owner of Nebraska Furniture Mart. When she turned 103, she was asked what's the best thing about turning 103. She said "No peer pressure". But as one can see, because these meetings are annual and there are over thirty of them so far, some of the stories get repeated many times and gives the reader a deja-vu moment.
The book also includes some discussions from Buffett and Munger about their biggest blunders - buying Dexter Shoes (which eventually failed) for 2% of Berkshire Hathaway shares, Munger's blown opportunity at Belridge Oil, Buffett's claim in 1987 that Encyclopedias will be little changed in 20 years from then (clearly, he had not seen the Wikipedia coming) - being a bunch of them. Along with these come a few of the classic BH counter-intuitive but highly profitable advices - "Non-diversification is the key", "Not looking at the market conditions" etc. There's also a ton of praise heaped on potentially the next boss of BH, Ajit Jain. Ajit Jain has been the unquestioned king of Reinsurance division at BH and in fact, Munger goes on to say that BH's single best investment according to him was the fee for the corporate recruiter that hired Ajit Jain! Buffett adds that if there were three of them in a sinking boat and you could only save one, you should save Ajit.
Some light stories about Buffett drinking five Pepsis a day before switching over to Cherry Coke; some intense opinions about value investing (from the lineage of Ben Graham and Ben Franklin), investor temperament, etc; some detailed analysis about the collapse of Lloyd's and its impact on reinsurance industry, how corn ethanol is a stupid idea etc - add even more meat to the book.
To conclude, I'd say the book is not without its drawbacks - many names misquoted like Belrich Oil for Belridge Oil, name of the CEO of Geico was John Byrne not Jack Byrne - page 195 etc. And author has also admitted that the lessons from the book is probably not for the first time investor. And yet, purely because of the credibility of BH and its wonder duo, the book is totally worth reading.
The book is brimming with advices (albeit not in a pedantic way), anecdotes, cautions, and information in general about a wide away of topics like the earnings of BH itself (obviously), market conditions, economy, reinsurance, Coca-Cola, Geico, "the good investments (Coca Cola, Gillette, Geico), the bad investments (Netjets, airlines), and the ugly investments (Dexter Shoes)", nuclear proliferation, china olympics, CDS, technology, executive compensation, corn ethanol, football, and of course, the rising star of BH Ajit Jain.
The anecdotes of Munger and Buffett are unmatched in their quality and elegance! The repeated urging to "Be Greedy when others are fearful, be fearful when others are greedy"; others like "Inflation is a political phenomenon, not economic", "If investors had to study only the past, all librarians would be billionaires"; and the popular ones like "Buy wonderful company at a fair price than a fair company at a wonderful price", and "Gambling is a tax on ignorance" are only a few of the gems mentioned in their shareholders' meetings. Apart from these witty and wise one-liners, there's no dearth of amazing stories and hypothetical thought-experiments. Buffett's "Ovarian Lottery" concept, stories from The Richest Man in Babylon, the concept of Newspaper Standard - 'Behave as if your actions will be on the front page of the national newspaper', Munger's concept of "Enlightened Common Sense" are a few good examples. The best story was about the owner of Nebraska Furniture Mart. When she turned 103, she was asked what's the best thing about turning 103. She said "No peer pressure". But as one can see, because these meetings are annual and there are over thirty of them so far, some of the stories get repeated many times and gives the reader a deja-vu moment.
The book also includes some discussions from Buffett and Munger about their biggest blunders - buying Dexter Shoes (which eventually failed) for 2% of Berkshire Hathaway shares, Munger's blown opportunity at Belridge Oil, Buffett's claim in 1987 that Encyclopedias will be little changed in 20 years from then (clearly, he had not seen the Wikipedia coming) - being a bunch of them. Along with these come a few of the classic BH counter-intuitive but highly profitable advices - "Non-diversification is the key", "Not looking at the market conditions" etc. There's also a ton of praise heaped on potentially the next boss of BH, Ajit Jain. Ajit Jain has been the unquestioned king of Reinsurance division at BH and in fact, Munger goes on to say that BH's single best investment according to him was the fee for the corporate recruiter that hired Ajit Jain! Buffett adds that if there were three of them in a sinking boat and you could only save one, you should save Ajit.
Some light stories about Buffett drinking five Pepsis a day before switching over to Cherry Coke; some intense opinions about value investing (from the lineage of Ben Graham and Ben Franklin), investor temperament, etc; some detailed analysis about the collapse of Lloyd's and its impact on reinsurance industry, how corn ethanol is a stupid idea etc - add even more meat to the book.
To conclude, I'd say the book is not without its drawbacks - many names misquoted like Belrich Oil for Belridge Oil, name of the CEO of Geico was John Byrne not Jack Byrne - page 195 etc. And author has also admitted that the lessons from the book is probably not for the first time investor. And yet, purely because of the credibility of BH and its wonder duo, the book is totally worth reading.
April 2, 2021
The summary of every single Berkshire Hathaway annual shareholders meeting between 1986 and 2015
Warren Buffett never wrote a book. Instead, he delivers his wisdom through 4 mediums: Berkshire Hathaway annual meetings, his op-ed pieces, his TV interviews and his letter to shareholders. This book is about the 1st medium.
Often dubbed the Woodstock of Capitalism, Berkshire Hathaway annual meeting have grown significantly in attendance size from only half a dozen people in 1970s, to 300 in 1986, to 1000 people in 1989, 10,000 people in 2001, and up to 45,000 people in 2013.
Present in every single one of these meetings between 1986-2015 is Daniel Pecaut, whom later joined by his longtime business partner Corey Wrenn. This book is the accumulation of their note taking from those meetings, 30 years worth of the shareholders' meetings, which they summarized into 30 short chapters that contain only the gold, the best gems worthy of a university education.
Just like any company's annual meeting, it is first and foremost filled with the discussion of their holdings and its issues. With their usual wit and wisdom, Warren Buffett and his partner Charlie Munger provide a very open reasoning of why they purchase a particular company (including the methods they use to calculate the values), explain us the way they solve or avoid any problems that arise, and lay out their detailed-enough plans for the future for these companies. The 2014 chapter in particular gives a great summary of the inner workings of Berkshire Hathaway and Buffett's and Munger's thought process, which is nothing short of a masterpiece.
True to their nature, Buffett and Munger deliver all of their information in such an entertaining way. For example, Buffett referencing a Woody Allen quote on being bisexual increases the chance of having a date on a Saturday night, to make the case for issuing 1 million shares of preferred stock. Or when asked about buying a stock at a premium price, he responded with "if you were going to buy a parachute, you wouldn't necessarily take the low bid." Or his analogy on reverse engineering as singing a country song backwards, "then you get your house back, your wife back."
Moreover, never absent in their annual meetings are their hilarious take-downs on the likes of efficient market hypothesis and modern portfolio theories, in which Buffett said "people market these fad theories to justify needing high priests", while in contrast his winning investing method is astonishingly simple: he said if he were teaching a business school, he would only teach "1.) How to value a business, and 2) How to think about market fluctuations - and the market is there to serve you, not influence you."
Indeed, Buffett and Munger believe that investing and running a business should not be complicated. Berkshire is buying companies like people buying groceries or cars, they welcome lower prices and deplore price increases. They avoid buying companies with confusing accounting because the confusion "may well be intentional and reveal the character of the management." To them an attitude of trust is the best compliance, and they don't even employ lawyers for their deal makings. And as we all know, these clear and simple methods of investing and running a business have resulted their stock price to grow from $2475 in 1986 (a benchmark of the year the authors first attended the meeting) to a whopping $226,000 in 2015.
Moreover, as they grow in stature, a growing majority of the attendants of the meetings come to the annual meetings to seek investment lessons, and they were not disappointed. Buffett and Munger believe the key to investment success is to buy wonderful businesses, and that "3 wonderful businesses is more than you need in this life and would serve you much better than 100 average businesses."
But they also warn that "there is no one easy mechanical formula to determine intrinsic value and margin of safety. You have to apply lots of models. So it takes time to get goos at it. You don't become a great investor rapidly any more than you become a bone-tumor specialist quickly." On this matter, Buffett said that in 40 years he has never gotten an idea from a Wall Street report, instead he directly reads annual reports himself. This highlight the importance of doing you own due diligence.
This approach is probably best described by their analogy of buying a farm: "Let’s say you want to buy a farm, and you calculate that you can make $70/acre as the owner. How much will you pay for that farm? You might decide you wanted a 7% return, so you’d pay $1000/acre. If it’s for sale at $800/acre, you buy, but if it’s for sale for $1200/acre, you don’t. You wouldn’t base this decision on what you saw on TV or what a friend said. You would do your own homework. It’s the same with stocks."
Buffett also claim to have read the entire investment section of the Omaha public library by the age of 10, and that he is big on reading everything in sight. In fact he concluded that "if you read 20 books on a subject you are interested in, you are bound to learn a lot." He also recommended a number of good books along the way, such as "The Intelligent Investor" by Benjamin Graham (especially chapter 8 and 20 which changed his life), and John Maynard Keynes' "The general theory of employment, interest and money" (with chapter 12 Buffett regard as the best description of the way capital market function), while Munger noted that "we're here to go to sleep each day smarter than when we woke up", and recommended Robert Cialdini's book "Influence."
However, Buffett also highlight the importance of temperament: "being clever and very informative are nothing if we don't have the right temperament. Successful investing requires not extraordinary intellect but extraordinary discipline", in which he pointed out the story of the genius Issac Newton who lost a lot of money in South Sea Bubble.
Yes, the amount of wisdom from Buffett and Munger is abundant, and could not possibly fit all into this short review. Some of my personal favourites are the theory of Ovarian Lottery (which puts the world in perspective), the story of a genie granting a 17 year old any car he wants with a condition that he takes care of the car for the rest of his life (which underline the importance of maintaining our well-being), and the newspaper standard (how we should behave as if our actions will be on the front page of the local newspaper).
Munger also repeatedly remarked the importance of good habits and knowing what to avoid (such as bad marriage, an early death, risking AIDS, experimenting with cocaine or getting into debt). And when asked about their theory for life, Munger said "pragmatism! Do what suits your temperament. Do what works better with experience. Do what works and keep doing it. That's the fundamental algorithm of life - REPEAT WHAT WORKS." Buffett also noted that "if you're fast, you can run the 100 metres for the gold medal. You don't have to throw the shot put. The key is knowing the edge of one's circle of competence."
Indeed, the grandfatherly wisdom that come out in these meetings are plentiful, and this book construct the writings in such a way that we will feel that we are there all along for 30 years, attending every single meeting ourselves and directly learning from the maestros themselves. That's an invaluable experience, which is why this book is one of the best on Buffettology.
Warren Buffett never wrote a book. Instead, he delivers his wisdom through 4 mediums: Berkshire Hathaway annual meetings, his op-ed pieces, his TV interviews and his letter to shareholders. This book is about the 1st medium.
Often dubbed the Woodstock of Capitalism, Berkshire Hathaway annual meeting have grown significantly in attendance size from only half a dozen people in 1970s, to 300 in 1986, to 1000 people in 1989, 10,000 people in 2001, and up to 45,000 people in 2013.
Present in every single one of these meetings between 1986-2015 is Daniel Pecaut, whom later joined by his longtime business partner Corey Wrenn. This book is the accumulation of their note taking from those meetings, 30 years worth of the shareholders' meetings, which they summarized into 30 short chapters that contain only the gold, the best gems worthy of a university education.
Just like any company's annual meeting, it is first and foremost filled with the discussion of their holdings and its issues. With their usual wit and wisdom, Warren Buffett and his partner Charlie Munger provide a very open reasoning of why they purchase a particular company (including the methods they use to calculate the values), explain us the way they solve or avoid any problems that arise, and lay out their detailed-enough plans for the future for these companies. The 2014 chapter in particular gives a great summary of the inner workings of Berkshire Hathaway and Buffett's and Munger's thought process, which is nothing short of a masterpiece.
True to their nature, Buffett and Munger deliver all of their information in such an entertaining way. For example, Buffett referencing a Woody Allen quote on being bisexual increases the chance of having a date on a Saturday night, to make the case for issuing 1 million shares of preferred stock. Or when asked about buying a stock at a premium price, he responded with "if you were going to buy a parachute, you wouldn't necessarily take the low bid." Or his analogy on reverse engineering as singing a country song backwards, "then you get your house back, your wife back."
Moreover, never absent in their annual meetings are their hilarious take-downs on the likes of efficient market hypothesis and modern portfolio theories, in which Buffett said "people market these fad theories to justify needing high priests", while in contrast his winning investing method is astonishingly simple: he said if he were teaching a business school, he would only teach "1.) How to value a business, and 2) How to think about market fluctuations - and the market is there to serve you, not influence you."
Indeed, Buffett and Munger believe that investing and running a business should not be complicated. Berkshire is buying companies like people buying groceries or cars, they welcome lower prices and deplore price increases. They avoid buying companies with confusing accounting because the confusion "may well be intentional and reveal the character of the management." To them an attitude of trust is the best compliance, and they don't even employ lawyers for their deal makings. And as we all know, these clear and simple methods of investing and running a business have resulted their stock price to grow from $2475 in 1986 (a benchmark of the year the authors first attended the meeting) to a whopping $226,000 in 2015.
Moreover, as they grow in stature, a growing majority of the attendants of the meetings come to the annual meetings to seek investment lessons, and they were not disappointed. Buffett and Munger believe the key to investment success is to buy wonderful businesses, and that "3 wonderful businesses is more than you need in this life and would serve you much better than 100 average businesses."
But they also warn that "there is no one easy mechanical formula to determine intrinsic value and margin of safety. You have to apply lots of models. So it takes time to get goos at it. You don't become a great investor rapidly any more than you become a bone-tumor specialist quickly." On this matter, Buffett said that in 40 years he has never gotten an idea from a Wall Street report, instead he directly reads annual reports himself. This highlight the importance of doing you own due diligence.
This approach is probably best described by their analogy of buying a farm: "Let’s say you want to buy a farm, and you calculate that you can make $70/acre as the owner. How much will you pay for that farm? You might decide you wanted a 7% return, so you’d pay $1000/acre. If it’s for sale at $800/acre, you buy, but if it’s for sale for $1200/acre, you don’t. You wouldn’t base this decision on what you saw on TV or what a friend said. You would do your own homework. It’s the same with stocks."
Buffett also claim to have read the entire investment section of the Omaha public library by the age of 10, and that he is big on reading everything in sight. In fact he concluded that "if you read 20 books on a subject you are interested in, you are bound to learn a lot." He also recommended a number of good books along the way, such as "The Intelligent Investor" by Benjamin Graham (especially chapter 8 and 20 which changed his life), and John Maynard Keynes' "The general theory of employment, interest and money" (with chapter 12 Buffett regard as the best description of the way capital market function), while Munger noted that "we're here to go to sleep each day smarter than when we woke up", and recommended Robert Cialdini's book "Influence."
However, Buffett also highlight the importance of temperament: "being clever and very informative are nothing if we don't have the right temperament. Successful investing requires not extraordinary intellect but extraordinary discipline", in which he pointed out the story of the genius Issac Newton who lost a lot of money in South Sea Bubble.
Yes, the amount of wisdom from Buffett and Munger is abundant, and could not possibly fit all into this short review. Some of my personal favourites are the theory of Ovarian Lottery (which puts the world in perspective), the story of a genie granting a 17 year old any car he wants with a condition that he takes care of the car for the rest of his life (which underline the importance of maintaining our well-being), and the newspaper standard (how we should behave as if our actions will be on the front page of the local newspaper).
Munger also repeatedly remarked the importance of good habits and knowing what to avoid (such as bad marriage, an early death, risking AIDS, experimenting with cocaine or getting into debt). And when asked about their theory for life, Munger said "pragmatism! Do what suits your temperament. Do what works better with experience. Do what works and keep doing it. That's the fundamental algorithm of life - REPEAT WHAT WORKS." Buffett also noted that "if you're fast, you can run the 100 metres for the gold medal. You don't have to throw the shot put. The key is knowing the edge of one's circle of competence."
Indeed, the grandfatherly wisdom that come out in these meetings are plentiful, and this book construct the writings in such a way that we will feel that we are there all along for 30 years, attending every single meeting ourselves and directly learning from the maestros themselves. That's an invaluable experience, which is why this book is one of the best on Buffettology.
May 27, 2023
There are a few really good tidbits in here but the author also repeats quite a bit. There is no secret formula to Buffet and Munger, they read all day and invest to the exclusion of all else. I find it interesting nobody attributes the wild success to that.
August 6, 2017
Not just business advice!
Great business advice but better life advice!! Very entertaining as well. I tweeted many of their quotes. Will read again for reminders!
Great business advice but better life advice!! Very entertaining as well. I tweeted many of their quotes. Will read again for reminders!
January 30, 2021
"Life properly lived is learning, learning, learning all the time." Warren Buffett
No, I am decidedly not the intended audience of this book; and yes, it was over my head much of the time, most of what I know about the subject being whatever I gleaned from listening to business reports on the radio growing up (just because it was on so often in the background). Why I should pick up this audiobook during a recent Audible sale might seem strange to anyone else, but I think I could attribute it in general to educator Charlotte Mason's "science of relations". ;) Forming new relationships, whether with people or things, opens you up to other interests you may never have considered before. And so I found myself plunged into the world of business and investment, looking up terms like "float" and "derivatives", and actually enjoying myself. I'm kind of going to miss my daily dose of Buffet and Munger. :)
No, I am decidedly not the intended audience of this book; and yes, it was over my head much of the time, most of what I know about the subject being whatever I gleaned from listening to business reports on the radio growing up (just because it was on so often in the background). Why I should pick up this audiobook during a recent Audible sale might seem strange to anyone else, but I think I could attribute it in general to educator Charlotte Mason's "science of relations". ;) Forming new relationships, whether with people or things, opens you up to other interests you may never have considered before. And so I found myself plunged into the world of business and investment, looking up terms like "float" and "derivatives", and actually enjoying myself. I'm kind of going to miss my daily dose of Buffet and Munger. :)
April 5, 2020
*Audio version*
A great summary of all Berkshire Hathaway investor meetings from 1986 to 2017. A collection of fantastic quotes and remarks by Warren Buffet and Charlie Munger - this book can serve as a great introduction to this legendary investment duo as well as the practical application of Value Investment.
Highly recommend to any beginning or advanced investor, as well as any fans of Buffet & Munger.
A great summary of all Berkshire Hathaway investor meetings from 1986 to 2017. A collection of fantastic quotes and remarks by Warren Buffet and Charlie Munger - this book can serve as a great introduction to this legendary investment duo as well as the practical application of Value Investment.
Highly recommend to any beginning or advanced investor, as well as any fans of Buffet & Munger.
May 29, 2017
Always a treat reading about the things Buffett and Munger says. Did not find too many things to note down but this book can be a good complementary reading in addition to berkshire letter to shareholders.
May 30, 2019
It's nearly impossible to dislike Warren and his useful, folksy advice.
January 19, 2020
Долго лежала в Киндле непрочтенной, а напрасно. Хороший набор заметок с ежегодных собраний Berkshire Баффета. Инвестиционная и жизненная мудрость, юмор, факты
May 7, 2021
Good stuff. My proper review is here: https://patricksherriff.com/2021/05/0...
May 16, 2022
Full of lessons to investors! The great wisdom of Warren Buffet and Charlie Munger about business. investing, and life.
August 6, 2017
A Great Read!
This book recounts 30 years of Berkshire Hathaway's development under Warren Buffet and Charlie Munger's leadership. It's a great tool for having a better understanding of how their business is run.
This book recounts 30 years of Berkshire Hathaway's development under Warren Buffet and Charlie Munger's leadership. It's a great tool for having a better understanding of how their business is run.
April 4, 2022
Buffett and Munger's lives are not just about Value Investing. They're about Values.
October 29, 2021
Many good lessons from the proven all times investors
February 25, 2023
Asked why he is on TV so much, Buffett responded that he likes having the electronic record, so there is no chance of him being misquoted or misunderstood.
Over the last 50 years, they have consistently sought to own either all or part of good businesses, bought at bargain prices.
Buffett was educated at the University of Nebraska. Afterward, he enrolled at Columbia Business School. He went there to learn from the father of value investing, Benjamin Graham. Buffett became Graham’s star student. Afterward, Graham took him on at his investment partnership, Graham Newman. Buffett used what he learned from that experience to start his own partnership back in Omaha. He did phenomenally well from the very beginning. A $10,000 investment in his partnership in 1956 grew to $200,000 by 1969. That’s a 25.9% compounded annualized return. Incredibly, the partnership never had a down year, even though the market had six down years during that period.
Insurance companies collect premiums, of which a significant portion goes into reserves to pay future claims. This reserve (the “float”) earns money for Berkshire, leveraging the company’s return on capital. If you can operate in a way where that float is generated at a low cost and you can grow it over time, you have built a wealth-compounding machine.
If you generate float at 3% per annum and buy businesses that earn 13% per annum with the proceeds of that float, we have figured out that’s a pretty good position to be in.”
During the subprime mortgage crisis, Buffett and Munger went on an investing spree.
Berkshire vs. S&P 500 (or 751,113% vs. 11,196%) Since Buffett took over Berkshire 50 years ago, its per-share book value has grown from $19 to $146,186. That’s a rate of 19.4% compounded annually.
Graham breaks the art of investing down into two simple variables—price and value. Value is what a business is worth. Price is what you have to pay to get it.
knowing your limitations and the limitations of your information seems to be the key. Or as Keynes said, “I would rather be vaguely right than precisely wrong.”
Buffett and Munger basically shot them all down:
Real Estate
Munger: “Everyone talks about the big money made in realestate, but they forget to talk about the big money lost in real estate.”
Foreign Currencies
Munger: “It’s hard enough to understand the culture you’ve been raised in, much less someone else’s.”
Leverage
Buffett: “You can leverage up to your eyeballs, but you may not make it across the river.”
Hard Assets
Munger: “Someone figured out the Van Gogh painting that sold for $40 million last year yielded a 13% compounded annualized return. Berkshire shareholders have done much better.”
buy great businesses with excellent management at a fair to bargain price and leave them alone.
Golden Arches and The Big Store offer great lessons on business.
He likened the problem to eating an extra piece of toast each day. One hundred extra calories per day doesn’t seem like much, and it provides immediate pleasure. However, after a month, you’ve consumed an extra 3,000 calories and gained one pound. Keep it up and eventually you will have a significant problem.
“It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Buffett noted that many investors illogically become euphoric when stock prices rise and are downcast when they fall. This makes no more sense than if you bought some hamburger one day, returned the next day to buy more but at a higher price, and then felt euphoric because you had bought some cheaper the day before.
Advice to MBA Graduates
Buffett: “Do what you enjoy the most. Work for people you admire. You can’t miss if you do that.”
When asked how he spend a day, Buffett responded that he tap dances into work (obviously, he’s following his own career advice), reads a lot, talks on the phone a bit, and that’s about it.
Munger also claimed that much can be discerned from “the paper record.” The documented record of how people have behaved over many years has far more predictive power than a personal interview. Buffett added that this is why they don’t hire fresh MBA graduates. There is no record of on-the-job performance.
Berkshire’s position in U.K.-based Guinness is unhedged. Buffett claimed that currency hedging would be not only expensive and time-consuming but unnecessary as well since Guinness itself already earns money in many different currencies. In the long run, the currency factors should wash out.
When asked for great investment books to read, Buffett cited The Intelligent Investor (as always) but then downplayed the idea that investment secrets are hidden in books. Investing is not that complicated, he explained. Other than learning accounting, which is the language of business, the real key to investment success is to have the right mindset with a temperament compatible with those principles. As long as you stay within your circle of competence (and know where the perimeter is), you will do fine.
He said it is Wall Street nonsense to say that something that earns a lumpy 20% to 80% is “riskier” than something that earns a predictable 5% year after year.
“We go where the probabilities are good.”
(“Don’t ask the barber if you need a haircut.”) and to keep things simple (“I’d rather multiply by three than by pi.”).
Each year, Buffett and Munger toss cold water on hot academic theories.
‘Listen to your customers’ as a business principle does not require a 300-page book.”
Buffett said, when accounting appears confusing, avoid the company. The confusion may well be intentional and reveal the character of the management.
“It’s extraordinary how resistant some are to learning.” “Especially when it’s in their own interest to do so,” Buffett continued.
When Buffett asked if he had anything else to add, Munger said, “No.” Buffett quipped, “Charlie does not get paid by the word.”
Every year, Buffett gets the “What-if-you-get-hit-by-a-truck?” question. Munger asked rhetorically, “Will Coca-Cola stop selling Cokes because Warren is no longer here? Will Gillette stop selling razor blades because Warren is no longer here?”
Diversification makes no sense for someone who knows what they are doing. “To buy number one on your list equally with number 37 strikes us as madness. Diversification is a protection against ignorance, a confession that you do not know the businesses you own.” Buffett claimed that three wonderful businesses is more than you need in this life and would serve you much better than 100 average businesses.
soft drinks, candy, shaving, chewing gum. “There’s not a whole lot of technology going into the art of the chew.”
Buffett launched into an intriguing thought problem he called “the ovarian lottery.” You are to be born in 24 hours. You are also to write all the rules that will govern the society in which you will live. However, you do not know if you will be born bright or retarded, black or white, male or female, rich or poor, able or disabled. How would you write the rules? Buffett said how one comes out in this lottery is far more important than anything else to one’s future. He and Munger were huge winners having been born American (“in Afghanistan, we wouldn’t be worth a damn”), male (at a time when many women could only be nurses and teachers), white (when opportunities for minorities were slim) and good at valuing businesses (in a system that pays for that like crazy). Buffett noted it is important to take care of the non-winners of the ovarian lottery. Therefore, some sort of taxation is in order. Given that few people with money and talent are turned away from free enterprise under the current system, the 28% capital gains tax is probably okay.
Quality People—Buffett said he looks for a manager who bats .400 and loves it. Munger noted there are many wonderful people and many awful people. Avoid the awful. Stick to those who take their promises seriously. Good Businesses—Go with those that are understandable with a sustainable edge. The pond you choose is far more important than how well you swim.
Despite the excess, Buffett said the real sin is mediocre management. That is what costs the shareholders money. It is almost impossible to overpay for good management. For example, Coca-Cola’s market value was $4 billion and stagnant when Roberto Goizueta took over in 1981. Today, the market value is $150 billion. The right manager can have an absolutely huge impact. Find people with brains, energy and integrity, and you can own the world.
Berkshire takes on very large exposures (up to $1 billion) with its supercat writings. Buffett explained that, while such exposures can be large dollar amounts, Berkshire knows exactly what they are. Munger noted that a billion-dollar loss would be just 2.5% of liquid assets. The real supercat risks are those borne unwittingly by insurance companies that could be wiped out by an unforeseen event. Buffett recalled Twentieth Century Industries, which all but went broke after the Northridge Earthquake. Buffett intoned, “Surprises in insurance are never symmetrical. They are all bad.”
He quoted Patton: “It’s an honor to die for your country. Make sure the other guys get the honor.”
Currently, Buffett sees no bargains among large cap stocks. When he cannot find things to buy, the money piles up. When he does find something, he piles in.
technology and pharmaceuticals are two big areas in which he has not participated.
He noted there are some 400 companies in the U.S. that earn more than $200 million in after-tax profit. In five years, the list may grow to 450–475.
Similarly, biotech stocks were all the rage five years ago, yet how many are making $200 million today? In a capitalist society, everyone is watching you. Competition is fierce. The $3 billion market cap company is rare. He concluded, “You want to think about the math of it.”
The bigger the moat, the less great management is needed. As Peter Lynch has said, “Find a business any idiot could run because eventually one will.”
Same food. No important difference in clothes, cars, TVs.
After you have enough for daily life, all that matters is your health and those you love. Likewise in work, what really matters is that you enjoy it and the people with which you work.
Currently, 6%–7% of investment funds in the U.S. are indexed.
Buffett said what really matters is share of market and share of mind. Coca-Cola’s market share is marvelous, and its share of mind is overwhelmingly favorable with a ubiquity of good feeling. The keys to analyzing Coca-Cola’s economic progress are l) unit cases sold (more is better), and 2) number of shares outstanding (the fewer the better).
(Munger interjected that 10–15 year projections can tune out a lot of noise.)
Buffett returned to a concept he has brought up numerous times, relating that “if share of mind exists, the market will follow.”
Low-cost float has turbo-charged Berkshire’s returns. Furthermore, Buffett has grown the float incredibly from $17 million in 1967 to $27 billion at year-end 2000.
the value of American business will grow roughly at the rate of GDP growth. That growth, in turn, should probably be around 5% a year with a couple of points a year of inflation as well.
Munger asserted, “It’s stupid the way we extrapolate the past.
Buffett advised younger attendees to start saving early. He acknowledged that he was fortunate that his dad paid for his education. As a result, he was able to save $10,000 by the time he was 21 —a huge head start. He noted that it’s much easier to save during your teen years when your parents are taking care of your financial obligations. He surmised that every dollar saved then is worth $20. He also suggested that getting knowledge about business has a similar compounding effect. He recommended learning about local businesses—which ones are good and why, which ones went out of business, etc. As you go, you’ll build a database in your mind that is going to pay off over time.
He observed that if you were going to buy a parachute, you wouldn’t necessarily take the low bid.
(Buffett joked that buying the Buffalo News was Munger’s idea: Munger was stuck in Buffalo during a blizzard, and he called Buffett to ask what he should do. So Buffett told him to go out and buy a paper.)
Imagine a genie comes to a 17 year old and offers to get him any car he wants. However, there is one catch—whatever car he chooses he must make it last a lifetime. Well, you can imagine that the young man would read the owner’s manual 10 times, would change the oil twice as often as suggested, etc. to help that car last 50 years. In the same way, Buffett continued, we each receive one body and one mind for a lifetime. You cannot repair them at age 60. You must maintain them. One’s greatest asset is one’s self. Develop your mind and good health habits when you are young, and it will enhance your life. If not, you may have a wreck at age 70.
Wall Street loves their investment banking fees.
Munger noted that the fraud group percentage is high for those who talk “EBIDTA.”
Berkshire vastly prefers businesses where you get the cash up front (like insurance).
Munger noted that one of the great inventions of all time was double-entry bookkeeping by an Italian monk.
Munger shared that it helps to have a passionate interest on knowing why things are happening. That cast of mind over a long time, he asserted, will improve its ability to cope with reality. Those that don’t ask why are destined for failure, even those with very high IQs. Buffett noted that lots of folks with very high IQs fail financially.
By selling to Berkshire, Clayton will have access to capital and Berkshire’s AAA credit rating.
Asked if he recommended any books on accounting. Munger complimented Buffett’s command of accounting, saying, “You might as well ask him if he has any good books on breathing.”
Buffett railed against all sorts of expenses being hidden in the footnotes: “Why not put everything in the footnotes, then you could have just two lines to report: revenue and income?”
He cautioned, “There’s seldom one cockroach in the kitchen.”
Buffett spoke against the Bush plan to eliminate double taxation of dividends. If approved, Buffett could dividend out hundreds of millions of dollars to himself, effectively lowering his tax rate to less than 1%, while his secretary continued to pay taxes at a 30% rate. Such a differential could only breed resentment.
Munger asserted that their ability to take constructive criticism has been a key factor in Berkshire’s success
Wall Street Journal and Fortune as favorite sources and included the usual corporate filings.
he never reads analysts’ reports.
all intelligent people base decisions on opportunity costs.
the “market is there to serve you, not to instruct you.”
Munger noted the common error is not thinking through the consequences of the consequences.
While intelligence is helpful, Buffett and Munger asserted that having the proper temperament was far more critical.
business does not require high math, and it may even be a disadvantage to know high math. Buffett concluded with a smile, “When my mother sang me songs about compound interest, there was no need to go further.”
Buffett noted that most people underestimate how important good habits are. Munger added that it is critical to “avoid dumb stuff” like going to the race track, risking AIDS, experimenting with cocaine or getting into debt. He suggested developing good character and good mental habits and to learn as you go.
Buffett said he receives letters every day from people in financial trouble, and he tells many of them to take bankruptcy since they’ll never be able to catch up.
He warned that it is very tempting to spend more than you make. Buffett also recommended hanging around people better than you. Munger added, “If that causes problems with your peers, the hell with them.” Buffett concluded with the story of the woman who turned 103 and was asked, “What do you like about being 103?” She responded, “No peer pressure.”
Some 3,000 to 4,000 tons of gold go from South Africa to Fort Knox annually and do not do much along the way.
California, for example, has had 25 6.0 earthquakes in the last 100 years.
Missouri, which has had three quakes of greater than eight on the Richter Scale. Buffett observed that if you take a centuries-long view, you will see that extraordinary things have happened.
He believes that a good school system is like virginity: it can be preserved but not restored. As a country with $40,000 of per capita income, we have the resources. To the extent the rich go to private schools and the poor go to “armed camps,” we create a two-tier system of unequal opportunity.
Buffett concluded, “We’re a long way from Jimmy Stewart in It’s a Wonderful Life.”
Munger noted that Berkshire does no asset allocation. They merely go where the opportunities are regardless of categories, and that is totally out of step with modern investment theory.
In 1790, there were four million people in America, 290 million in China and 100 million in Europe. Yet 215 years later, America has 30% of the world’s GDP. It is an incredible success story.
He also said Berkshire needs to keep a minimum of $10 billion around in reserves for mega-cat insurance policies written. So with around $40 billion on hand currently, Berkshire would need to invest $30 billion over the next three years. Well, not quite. Berkshire will also throw off more than $10 billion in cash annually, so that’s another $30 billion over three years for Buffett to invest.
“What happens after Warren is gone?” Buffett noted that there are three obvious successors, and it will be up to the board. 3 He referred to Wal-Mart as an example of “personalized institutional legacy,” where the company has become even stronger since the founder passed on.
Munger emphasized that Berkshire does not train executives, it finds them. He said CEO Eitan Wertheimer’s character and talent jumped off the page. Munger concluded, “If a mountain like Mount Everest stands up, you don’t have to be genius to see it’s a high mountain.”
“To what extent do the managers think like owners?” According to Buffett, the job of the board is to 1) get the right CEO, 2) keep the CEO from overreaching and 3) exercise independent judgment on acquisitions.
There are three boxes—“in,” “out” and “too hard.” It is important to know what is too hard for you and stick to what you do best. He quoted IBM CEO Tom Watson, “I’m smart in spots.” Buffett noted that if you’re fast, you can run the 100 meters for the gold medal. You don’t have to throw the shot put.
Buffett noted that, as a general rule, he ignores what is hot.
“Clayton is so good, it’s hard to find No. 2.” While it will take a few years, Munger sees manufactured housing eventually taking a much larger share—“it’s so logical.”
Buffett noted that Berkshire is the No. 1 mega-catastrophe underwriter in the world. Prices are up a lot. But are the exposures up even more?
Buffett then thought even bigger. Katrina was a $60 billion event. Berkshire took a $3.4 billion hit. Buffett theorized that there could be a disaster as great as four times Katrina, or $250 billion. In that event, Buffett estimated that Berkshire’s exposure would be 4%, or $10 billion. For that reason, Buffett wants to maintain at least a $10 billion cash position.
Buffett noted that the CPI (Consumer Price Index) is not a particularly good measure of inflation. First, “core” inflation excludes food and energy. “Not much is more core!” Buffett exclaimed. Second, since CPI uses a rent equivalent factor for living costs, it hasn’t captured the rising cost of housing. In sum, the CPI understates inflation.
He cited Jon Alter’s book, The Defining Moment: FDR’s Hundred Days and the Triumph of Hope
He noted he would own Coca-Cola whether it was based in the U.S. or in Amsterdam.
Over the last 50 years, they have consistently sought to own either all or part of good businesses, bought at bargain prices.
Buffett was educated at the University of Nebraska. Afterward, he enrolled at Columbia Business School. He went there to learn from the father of value investing, Benjamin Graham. Buffett became Graham’s star student. Afterward, Graham took him on at his investment partnership, Graham Newman. Buffett used what he learned from that experience to start his own partnership back in Omaha. He did phenomenally well from the very beginning. A $10,000 investment in his partnership in 1956 grew to $200,000 by 1969. That’s a 25.9% compounded annualized return. Incredibly, the partnership never had a down year, even though the market had six down years during that period.
Insurance companies collect premiums, of which a significant portion goes into reserves to pay future claims. This reserve (the “float”) earns money for Berkshire, leveraging the company’s return on capital. If you can operate in a way where that float is generated at a low cost and you can grow it over time, you have built a wealth-compounding machine.
If you generate float at 3% per annum and buy businesses that earn 13% per annum with the proceeds of that float, we have figured out that’s a pretty good position to be in.”
During the subprime mortgage crisis, Buffett and Munger went on an investing spree.
Berkshire vs. S&P 500 (or 751,113% vs. 11,196%) Since Buffett took over Berkshire 50 years ago, its per-share book value has grown from $19 to $146,186. That’s a rate of 19.4% compounded annually.
Graham breaks the art of investing down into two simple variables—price and value. Value is what a business is worth. Price is what you have to pay to get it.
knowing your limitations and the limitations of your information seems to be the key. Or as Keynes said, “I would rather be vaguely right than precisely wrong.”
Buffett and Munger basically shot them all down:
Real Estate
Munger: “Everyone talks about the big money made in realestate, but they forget to talk about the big money lost in real estate.”
Foreign Currencies
Munger: “It’s hard enough to understand the culture you’ve been raised in, much less someone else’s.”
Leverage
Buffett: “You can leverage up to your eyeballs, but you may not make it across the river.”
Hard Assets
Munger: “Someone figured out the Van Gogh painting that sold for $40 million last year yielded a 13% compounded annualized return. Berkshire shareholders have done much better.”
buy great businesses with excellent management at a fair to bargain price and leave them alone.
Golden Arches and The Big Store offer great lessons on business.
He likened the problem to eating an extra piece of toast each day. One hundred extra calories per day doesn’t seem like much, and it provides immediate pleasure. However, after a month, you’ve consumed an extra 3,000 calories and gained one pound. Keep it up and eventually you will have a significant problem.
“It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
Buffett noted that many investors illogically become euphoric when stock prices rise and are downcast when they fall. This makes no more sense than if you bought some hamburger one day, returned the next day to buy more but at a higher price, and then felt euphoric because you had bought some cheaper the day before.
Advice to MBA Graduates
Buffett: “Do what you enjoy the most. Work for people you admire. You can’t miss if you do that.”
When asked how he spend a day, Buffett responded that he tap dances into work (obviously, he’s following his own career advice), reads a lot, talks on the phone a bit, and that’s about it.
Munger also claimed that much can be discerned from “the paper record.” The documented record of how people have behaved over many years has far more predictive power than a personal interview. Buffett added that this is why they don’t hire fresh MBA graduates. There is no record of on-the-job performance.
Berkshire’s position in U.K.-based Guinness is unhedged. Buffett claimed that currency hedging would be not only expensive and time-consuming but unnecessary as well since Guinness itself already earns money in many different currencies. In the long run, the currency factors should wash out.
When asked for great investment books to read, Buffett cited The Intelligent Investor (as always) but then downplayed the idea that investment secrets are hidden in books. Investing is not that complicated, he explained. Other than learning accounting, which is the language of business, the real key to investment success is to have the right mindset with a temperament compatible with those principles. As long as you stay within your circle of competence (and know where the perimeter is), you will do fine.
He said it is Wall Street nonsense to say that something that earns a lumpy 20% to 80% is “riskier” than something that earns a predictable 5% year after year.
“We go where the probabilities are good.”
(“Don’t ask the barber if you need a haircut.”) and to keep things simple (“I’d rather multiply by three than by pi.”).
Each year, Buffett and Munger toss cold water on hot academic theories.
‘Listen to your customers’ as a business principle does not require a 300-page book.”
Buffett said, when accounting appears confusing, avoid the company. The confusion may well be intentional and reveal the character of the management.
“It’s extraordinary how resistant some are to learning.” “Especially when it’s in their own interest to do so,” Buffett continued.
When Buffett asked if he had anything else to add, Munger said, “No.” Buffett quipped, “Charlie does not get paid by the word.”
Every year, Buffett gets the “What-if-you-get-hit-by-a-truck?” question. Munger asked rhetorically, “Will Coca-Cola stop selling Cokes because Warren is no longer here? Will Gillette stop selling razor blades because Warren is no longer here?”
Diversification makes no sense for someone who knows what they are doing. “To buy number one on your list equally with number 37 strikes us as madness. Diversification is a protection against ignorance, a confession that you do not know the businesses you own.” Buffett claimed that three wonderful businesses is more than you need in this life and would serve you much better than 100 average businesses.
soft drinks, candy, shaving, chewing gum. “There’s not a whole lot of technology going into the art of the chew.”
Buffett launched into an intriguing thought problem he called “the ovarian lottery.” You are to be born in 24 hours. You are also to write all the rules that will govern the society in which you will live. However, you do not know if you will be born bright or retarded, black or white, male or female, rich or poor, able or disabled. How would you write the rules? Buffett said how one comes out in this lottery is far more important than anything else to one’s future. He and Munger were huge winners having been born American (“in Afghanistan, we wouldn’t be worth a damn”), male (at a time when many women could only be nurses and teachers), white (when opportunities for minorities were slim) and good at valuing businesses (in a system that pays for that like crazy). Buffett noted it is important to take care of the non-winners of the ovarian lottery. Therefore, some sort of taxation is in order. Given that few people with money and talent are turned away from free enterprise under the current system, the 28% capital gains tax is probably okay.
Quality People—Buffett said he looks for a manager who bats .400 and loves it. Munger noted there are many wonderful people and many awful people. Avoid the awful. Stick to those who take their promises seriously. Good Businesses—Go with those that are understandable with a sustainable edge. The pond you choose is far more important than how well you swim.
Despite the excess, Buffett said the real sin is mediocre management. That is what costs the shareholders money. It is almost impossible to overpay for good management. For example, Coca-Cola’s market value was $4 billion and stagnant when Roberto Goizueta took over in 1981. Today, the market value is $150 billion. The right manager can have an absolutely huge impact. Find people with brains, energy and integrity, and you can own the world.
Berkshire takes on very large exposures (up to $1 billion) with its supercat writings. Buffett explained that, while such exposures can be large dollar amounts, Berkshire knows exactly what they are. Munger noted that a billion-dollar loss would be just 2.5% of liquid assets. The real supercat risks are those borne unwittingly by insurance companies that could be wiped out by an unforeseen event. Buffett recalled Twentieth Century Industries, which all but went broke after the Northridge Earthquake. Buffett intoned, “Surprises in insurance are never symmetrical. They are all bad.”
He quoted Patton: “It’s an honor to die for your country. Make sure the other guys get the honor.”
Currently, Buffett sees no bargains among large cap stocks. When he cannot find things to buy, the money piles up. When he does find something, he piles in.
technology and pharmaceuticals are two big areas in which he has not participated.
He noted there are some 400 companies in the U.S. that earn more than $200 million in after-tax profit. In five years, the list may grow to 450–475.
Similarly, biotech stocks were all the rage five years ago, yet how many are making $200 million today? In a capitalist society, everyone is watching you. Competition is fierce. The $3 billion market cap company is rare. He concluded, “You want to think about the math of it.”
The bigger the moat, the less great management is needed. As Peter Lynch has said, “Find a business any idiot could run because eventually one will.”
Same food. No important difference in clothes, cars, TVs.
After you have enough for daily life, all that matters is your health and those you love. Likewise in work, what really matters is that you enjoy it and the people with which you work.
Currently, 6%–7% of investment funds in the U.S. are indexed.
Buffett said what really matters is share of market and share of mind. Coca-Cola’s market share is marvelous, and its share of mind is overwhelmingly favorable with a ubiquity of good feeling. The keys to analyzing Coca-Cola’s economic progress are l) unit cases sold (more is better), and 2) number of shares outstanding (the fewer the better).
(Munger interjected that 10–15 year projections can tune out a lot of noise.)
Buffett returned to a concept he has brought up numerous times, relating that “if share of mind exists, the market will follow.”
Low-cost float has turbo-charged Berkshire’s returns. Furthermore, Buffett has grown the float incredibly from $17 million in 1967 to $27 billion at year-end 2000.
the value of American business will grow roughly at the rate of GDP growth. That growth, in turn, should probably be around 5% a year with a couple of points a year of inflation as well.
Munger asserted, “It’s stupid the way we extrapolate the past.
Buffett advised younger attendees to start saving early. He acknowledged that he was fortunate that his dad paid for his education. As a result, he was able to save $10,000 by the time he was 21 —a huge head start. He noted that it’s much easier to save during your teen years when your parents are taking care of your financial obligations. He surmised that every dollar saved then is worth $20. He also suggested that getting knowledge about business has a similar compounding effect. He recommended learning about local businesses—which ones are good and why, which ones went out of business, etc. As you go, you’ll build a database in your mind that is going to pay off over time.
He observed that if you were going to buy a parachute, you wouldn’t necessarily take the low bid.
(Buffett joked that buying the Buffalo News was Munger’s idea: Munger was stuck in Buffalo during a blizzard, and he called Buffett to ask what he should do. So Buffett told him to go out and buy a paper.)
Imagine a genie comes to a 17 year old and offers to get him any car he wants. However, there is one catch—whatever car he chooses he must make it last a lifetime. Well, you can imagine that the young man would read the owner’s manual 10 times, would change the oil twice as often as suggested, etc. to help that car last 50 years. In the same way, Buffett continued, we each receive one body and one mind for a lifetime. You cannot repair them at age 60. You must maintain them. One’s greatest asset is one’s self. Develop your mind and good health habits when you are young, and it will enhance your life. If not, you may have a wreck at age 70.
Wall Street loves their investment banking fees.
Munger noted that the fraud group percentage is high for those who talk “EBIDTA.”
Berkshire vastly prefers businesses where you get the cash up front (like insurance).
Munger noted that one of the great inventions of all time was double-entry bookkeeping by an Italian monk.
Munger shared that it helps to have a passionate interest on knowing why things are happening. That cast of mind over a long time, he asserted, will improve its ability to cope with reality. Those that don’t ask why are destined for failure, even those with very high IQs. Buffett noted that lots of folks with very high IQs fail financially.
By selling to Berkshire, Clayton will have access to capital and Berkshire’s AAA credit rating.
Asked if he recommended any books on accounting. Munger complimented Buffett’s command of accounting, saying, “You might as well ask him if he has any good books on breathing.”
Buffett railed against all sorts of expenses being hidden in the footnotes: “Why not put everything in the footnotes, then you could have just two lines to report: revenue and income?”
He cautioned, “There’s seldom one cockroach in the kitchen.”
Buffett spoke against the Bush plan to eliminate double taxation of dividends. If approved, Buffett could dividend out hundreds of millions of dollars to himself, effectively lowering his tax rate to less than 1%, while his secretary continued to pay taxes at a 30% rate. Such a differential could only breed resentment.
Munger asserted that their ability to take constructive criticism has been a key factor in Berkshire’s success
Wall Street Journal and Fortune as favorite sources and included the usual corporate filings.
he never reads analysts’ reports.
all intelligent people base decisions on opportunity costs.
the “market is there to serve you, not to instruct you.”
Munger noted the common error is not thinking through the consequences of the consequences.
While intelligence is helpful, Buffett and Munger asserted that having the proper temperament was far more critical.
business does not require high math, and it may even be a disadvantage to know high math. Buffett concluded with a smile, “When my mother sang me songs about compound interest, there was no need to go further.”
Buffett noted that most people underestimate how important good habits are. Munger added that it is critical to “avoid dumb stuff” like going to the race track, risking AIDS, experimenting with cocaine or getting into debt. He suggested developing good character and good mental habits and to learn as you go.
Buffett said he receives letters every day from people in financial trouble, and he tells many of them to take bankruptcy since they’ll never be able to catch up.
He warned that it is very tempting to spend more than you make. Buffett also recommended hanging around people better than you. Munger added, “If that causes problems with your peers, the hell with them.” Buffett concluded with the story of the woman who turned 103 and was asked, “What do you like about being 103?” She responded, “No peer pressure.”
Some 3,000 to 4,000 tons of gold go from South Africa to Fort Knox annually and do not do much along the way.
California, for example, has had 25 6.0 earthquakes in the last 100 years.
Missouri, which has had three quakes of greater than eight on the Richter Scale. Buffett observed that if you take a centuries-long view, you will see that extraordinary things have happened.
He believes that a good school system is like virginity: it can be preserved but not restored. As a country with $40,000 of per capita income, we have the resources. To the extent the rich go to private schools and the poor go to “armed camps,” we create a two-tier system of unequal opportunity.
Buffett concluded, “We’re a long way from Jimmy Stewart in It’s a Wonderful Life.”
Munger noted that Berkshire does no asset allocation. They merely go where the opportunities are regardless of categories, and that is totally out of step with modern investment theory.
In 1790, there were four million people in America, 290 million in China and 100 million in Europe. Yet 215 years later, America has 30% of the world’s GDP. It is an incredible success story.
He also said Berkshire needs to keep a minimum of $10 billion around in reserves for mega-cat insurance policies written. So with around $40 billion on hand currently, Berkshire would need to invest $30 billion over the next three years. Well, not quite. Berkshire will also throw off more than $10 billion in cash annually, so that’s another $30 billion over three years for Buffett to invest.
“What happens after Warren is gone?” Buffett noted that there are three obvious successors, and it will be up to the board. 3 He referred to Wal-Mart as an example of “personalized institutional legacy,” where the company has become even stronger since the founder passed on.
Munger emphasized that Berkshire does not train executives, it finds them. He said CEO Eitan Wertheimer’s character and talent jumped off the page. Munger concluded, “If a mountain like Mount Everest stands up, you don’t have to be genius to see it’s a high mountain.”
“To what extent do the managers think like owners?” According to Buffett, the job of the board is to 1) get the right CEO, 2) keep the CEO from overreaching and 3) exercise independent judgment on acquisitions.
There are three boxes—“in,” “out” and “too hard.” It is important to know what is too hard for you and stick to what you do best. He quoted IBM CEO Tom Watson, “I’m smart in spots.” Buffett noted that if you’re fast, you can run the 100 meters for the gold medal. You don’t have to throw the shot put.
Buffett noted that, as a general rule, he ignores what is hot.
“Clayton is so good, it’s hard to find No. 2.” While it will take a few years, Munger sees manufactured housing eventually taking a much larger share—“it’s so logical.”
Buffett noted that Berkshire is the No. 1 mega-catastrophe underwriter in the world. Prices are up a lot. But are the exposures up even more?
Buffett then thought even bigger. Katrina was a $60 billion event. Berkshire took a $3.4 billion hit. Buffett theorized that there could be a disaster as great as four times Katrina, or $250 billion. In that event, Buffett estimated that Berkshire’s exposure would be 4%, or $10 billion. For that reason, Buffett wants to maintain at least a $10 billion cash position.
Buffett noted that the CPI (Consumer Price Index) is not a particularly good measure of inflation. First, “core” inflation excludes food and energy. “Not much is more core!” Buffett exclaimed. Second, since CPI uses a rent equivalent factor for living costs, it hasn’t captured the rising cost of housing. In sum, the CPI understates inflation.
He cited Jon Alter’s book, The Defining Moment: FDR’s Hundred Days and the Triumph of Hope
He noted he would own Coca-Cola whether it was based in the U.S. or in Amsterdam.
May 20, 2020
A wonderful walk through years of history over that organization with great snippets of wisdom and humor from some of America's most interesting billionaires. Great lessons for new investors or old with obvious references to the humility of some of the greatest financial minds augmented with a bit of luck here and there.
April 8, 2020
Very digestible and a lot of great insight regarding culture and values of Berkshire.
November 9, 2022
Phenomenal read. Easy enough for the retail investor, but also has some great points for the sophisticated investor. The book is a great summary of Warren and Charlie's comments throughout the years
August 24, 2022
As a Berkshire shareholder, I wanted to gain more insight on the history of the company. This book does a great job in providing a summary of Berkshire's growth and business. Definitely worth it if you're a shareholder or thinking of becoming one! Also, Prof. Buffett and Munger must be the most valuable investment teachers out there with the clear minds and great insights.
July 3, 2022
Recommended 5/5. Buffet and Mungers’ track record and insights are the cornerstone of value investing
April 29, 2020
Amazing insights into minds of Buffet and Munger's colossal business empire. Must for anyone who wants to understand the details of great minds in financial world. Masters at work !!
May 4, 2023
These two heads
W. B. and C. M. talk like they know everything and nothing at the same time. They made me laugh out loud in some parts and they taught me a lot of valuable sermons about investing as well as existence.
#GoodRead
W. B. and C. M. talk like they know everything and nothing at the same time. They made me laugh out loud in some parts and they taught me a lot of valuable sermons about investing as well as existence.
#GoodRead
March 13, 2019
Easy to read and diverse in cases/subjects. A good read for any follower of Warren and Charlie.
December 13, 2017
‘Berkshire Hathaway was originally a New England textile company’.
Author/investment expert Daniel Pecaut, a Harvard graduate, advises and comments on investments in the New York Times, Money Magazine, Grant's Interest Rate Observer, Outstanding Investor Digest, and the Omaha-World Herald. Having worked in investing for 30+ years he is CEO of the successful investment firm, Pecaut & Company. Co-author Corey Wrenn is Vice President, Treasurer, and CCO for Pecaut & Company, having earned his M.B.A. from the University of Nebraska at Omaha. His expertise is also derived from his prior work as internal auditor for Berkshire Hathaway.
As the authors state, ‘Few on Wall Street would dispute the claim that Warren Buffett and Charlie Munger are the greatest investors of our time. Their genius in identifying and evaluating intangibles sets them apart. As a value investor, your ideal situation is to find a company increasing its intrinsic value. Ideally, the company would be one with a declining stock price, thus creating an even better bargain as time unfolds. No one has employed these principles more effectively than Buffett and Munger. Over the last 50 years, they have consistently sought to own either all or part of good businesses, bought at bargain prices. In addition, to succeed using this approach, one must control one’s emotions. Buffett and Munger’s are set apart by their mastery at business valuation and relentless rationality in implementing this approach. The results of this have been awe-inspiring. Under Buffett and Munger’s leadership, Berkshire Hathaway has become one of the greatest business stories of the 20th and 21st centuries.’
The contents of this book are not only fascinating facts freely shared but also very sound advice in the form of annual reports from the minds of Warren Buffett and Charlie Munger – beginning in 1986 through 2015. Strategies, responses to the market as it has altered over the years, key concepts, and annual highlights make for fascinating reading not only about the investment arena but also about American and world politics. Phrases such as ‘Intelligent capital allocation is the essence of sound wealth-building’ and ‘We have long noticed the paradox of craziness that surrounds Warren Buffett: no investor gets more media attention, and yet so little understanding flows out of that attention. We suppose it’s a problem of the short attention span/instant gratification culture bouncing off the wisdom of the ages. In any case, now that the media frenzy over the Berkshire meeting has died down, we check in with our observations on the annual gathering’ dot the book.
This is far more than a solid overview of Berkshire Hathaway lessons from the great investors of our time, it is also a book that makes for learning how the investment and the money markets function in words that are easily comprehended. Highly recommended reading.
Author/investment expert Daniel Pecaut, a Harvard graduate, advises and comments on investments in the New York Times, Money Magazine, Grant's Interest Rate Observer, Outstanding Investor Digest, and the Omaha-World Herald. Having worked in investing for 30+ years he is CEO of the successful investment firm, Pecaut & Company. Co-author Corey Wrenn is Vice President, Treasurer, and CCO for Pecaut & Company, having earned his M.B.A. from the University of Nebraska at Omaha. His expertise is also derived from his prior work as internal auditor for Berkshire Hathaway.
As the authors state, ‘Few on Wall Street would dispute the claim that Warren Buffett and Charlie Munger are the greatest investors of our time. Their genius in identifying and evaluating intangibles sets them apart. As a value investor, your ideal situation is to find a company increasing its intrinsic value. Ideally, the company would be one with a declining stock price, thus creating an even better bargain as time unfolds. No one has employed these principles more effectively than Buffett and Munger. Over the last 50 years, they have consistently sought to own either all or part of good businesses, bought at bargain prices. In addition, to succeed using this approach, one must control one’s emotions. Buffett and Munger’s are set apart by their mastery at business valuation and relentless rationality in implementing this approach. The results of this have been awe-inspiring. Under Buffett and Munger’s leadership, Berkshire Hathaway has become one of the greatest business stories of the 20th and 21st centuries.’
The contents of this book are not only fascinating facts freely shared but also very sound advice in the form of annual reports from the minds of Warren Buffett and Charlie Munger – beginning in 1986 through 2015. Strategies, responses to the market as it has altered over the years, key concepts, and annual highlights make for fascinating reading not only about the investment arena but also about American and world politics. Phrases such as ‘Intelligent capital allocation is the essence of sound wealth-building’ and ‘We have long noticed the paradox of craziness that surrounds Warren Buffett: no investor gets more media attention, and yet so little understanding flows out of that attention. We suppose it’s a problem of the short attention span/instant gratification culture bouncing off the wisdom of the ages. In any case, now that the media frenzy over the Berkshire meeting has died down, we check in with our observations on the annual gathering’ dot the book.
This is far more than a solid overview of Berkshire Hathaway lessons from the great investors of our time, it is also a book that makes for learning how the investment and the money markets function in words that are easily comprehended. Highly recommended reading.
Read
July 27, 2025Warren Buffett and Charlie Munger didn’t teach in a lecture hall or assign homework, yet for decades they led what may be the most successful and unconventional 'university' in American history - one that existed inside the annual shareholder meetings of Berkshire Hathaway. In "University of Berkshire Hathaway", Daniel Pecaut and Corey Wrenn gather 30 years of lessons from these gatherings to offer readers a deep education in how to think, invest, and live with discipline and integrity. The result isn’t just a book about finance; it’s a guide to developing a mindset that can navigate uncertainty, filter out distraction, and build lasting wealth - both financial and intellectual.
At the heart of Buffett and Munger’s approach is a clear principle: never confuse price with value. While stock prices may rise and fall with emotion and speculation, the intrinsic value of a business is rooted in its ability to produce consistent earnings over time. The goal of the rational investor, they teach, is to estimate this true worth and wait patiently to buy at a discount. That discount is the 'margin of safety,' a buffer that protects investors from mistakes or bad luck. This idea, inherited from their mentor Benjamin Graham, is central to every investment they make.
They also emphasize the importance of emotional discipline. The market is personified by 'Mr. Market,' an unpredictable partner who swings between optimism and despair. Buffett and Munger urge investors to treat Mr. Market as a servant, not a master - to ignore the noise, resist impulse, and act only when a clear opportunity presents itself. This philosophy places temperament above intelligence. Staying rational while others panic - or restraining yourself when others grow euphoric - is what separates long-term winners from everyone else.
Over time, Buffett and Munger moved beyond Graham’s strict quantitative methods. They began valuing companies not just for their assets but for their ability to generate high returns on capital with minimal reinvestment. This shift opened the door to businesses with intangible strengths - like customer loyalty, brand power, and strong leadership. This evolution in thinking, sparked largely by Munger’s influence, led them to invest not just in cheap companies but in great companies worth holding indefinitely. It was this adjustment that elevated Berkshire Hathaway from a clever investing vehicle into a durable empire.
The classic example of this shift was their 1972 purchase of See’s Candies. Far from a distressed asset, See’s was a beloved regional brand with fierce customer loyalty. Although it didn’t look like a bargain on paper, See’s had qualities - pricing power, minimal capital needs, and steady cash flow - that turned it into a cash-producing machine. This investment taught Buffett and Munger the power of owning a great business that can compound wealth with minimal effort. It directly influenced their decision to later invest in giants like Coca-Cola, where similar dynamics were at play on a much larger scale.
To fuel their empire, Berkshire relied on a unique financial engine: insurance float. When Berkshire acquired National Indemnity in 1967, they gained access to capital that could be invested while technically belonging to someone else. Float, the money held by insurers to cover future claims, behaves like a no-interest loan - or better yet, a loan where the borrower is paid to hold the funds. The key is writing smart policies, resisting the temptation to chase premiums, and only taking on risk when the pricing makes sense. Over time, this disciplined approach allowed Berkshire to generate billions in float with a cost of capital often lower than zero.
This float allowed Buffett and Munger to reinvest at scale, buying high-return businesses and equities without needing traditional financing. It became the secret weapon behind Berkshire’s exponential growth. Instead of relying on the stock market or borrowing money, they built a flywheel: disciplined underwriting created low-cost float, which funded investments in high-quality assets, which produced more cash, which funded more float-generating insurance - and on it went.
Their strategy was tested during periods of market mania, particularly during the dot-com bubble of the late 1990s. While others rushed into tech stocks they didn’t understand, Buffett and Munger refused to follow the crowd. Their decision to hold cash rather than chase speculative gains drew criticism, but their patience paid off. When the bubble burst, Berkshire remained strong. They avoided trouble not because of their brilliance, but because of their refusal to stray beyond what they knew. The lesson: you don’t need to understand everything - just stay within your circle of competence and stick to what makes sense.
This mental discipline also helped them see danger before others. Long before the 2008 financial crisis, Buffett warned of the dangers posed by derivatives - complex financial instruments that magnified risk under the illusion of precision. As the global financial system unraveled, Berkshire had the capital, credibility, and calm mindset to step in. Buffett made swift deals with Goldman Sachs and General Electric that stabilized the system and earned Berkshire significant profits. These moves were only possible because Berkshire had stayed conservative during the boom times, keeping dry powder for moments of genuine opportunity.
Beyond numbers, what truly defines Berkshire Hathaway is its culture. Buffett and Munger built a decentralized model of trust, accountability, and autonomy. They allowed managers of acquired businesses to run them independently, confident that shared values - not micromanagement - would maintain standards. This culture became a magnet for family-owned businesses looking for a permanent home that wouldn’t gut their identity. Over time, this trust-based structure became as much a competitive advantage as any product or brand in the portfolio.
By the time the dust settled from the financial crisis, Berkshire had transformed from an investing operation into a fully formed industrial conglomerate. With core holdings like BNSF Railway, Berkshire Hathaway Energy, and Marmon, Berkshire evolved into a self-reliant machine capable of generating and reinvesting capital without reliance on the stock market. It is now less dependent on Buffett himself, sustained by strong managers and a framework built to last. The company’s future, Buffett insists, depends not on predicting markets, but on maintaining the principles that brought it this far: patience, rationality, humility, and trust.
While the book is rich with practical insights, its ultimate lesson is philosophical. Success doesn’t come from complexity or cutting-edge tools. It comes from adopting a clear, durable mindset - one that respects uncertainty, prizes simplicity, and is willing to wait. Time, not cleverness, is the most powerful force in investing. Buffett and Munger remind us that envy, ego, and overconfidence destroy more fortunes than bad luck ever could. And in a world increasingly obsessed with speed and novelty, the ability to stay calm and think clearly is perhaps the most valuable edge of all.
"University of Berkshire Hathaway" distills a lifetime of wisdom into lessons that go far beyond finance. It’s a manual for long-term thinking in a short-term world, rooted in common sense but reinforced by decades of remarkable results. From margin of safety to the power of float, from resisting bubbles to trusting decentralized teams, the Berkshire playbook is grounded in character as much as strategy. In the end, the true reward isn’t just financial success - it’s the peace of mind that comes from living by a system that works.
At the heart of Buffett and Munger’s approach is a clear principle: never confuse price with value. While stock prices may rise and fall with emotion and speculation, the intrinsic value of a business is rooted in its ability to produce consistent earnings over time. The goal of the rational investor, they teach, is to estimate this true worth and wait patiently to buy at a discount. That discount is the 'margin of safety,' a buffer that protects investors from mistakes or bad luck. This idea, inherited from their mentor Benjamin Graham, is central to every investment they make.
They also emphasize the importance of emotional discipline. The market is personified by 'Mr. Market,' an unpredictable partner who swings between optimism and despair. Buffett and Munger urge investors to treat Mr. Market as a servant, not a master - to ignore the noise, resist impulse, and act only when a clear opportunity presents itself. This philosophy places temperament above intelligence. Staying rational while others panic - or restraining yourself when others grow euphoric - is what separates long-term winners from everyone else.
Over time, Buffett and Munger moved beyond Graham’s strict quantitative methods. They began valuing companies not just for their assets but for their ability to generate high returns on capital with minimal reinvestment. This shift opened the door to businesses with intangible strengths - like customer loyalty, brand power, and strong leadership. This evolution in thinking, sparked largely by Munger’s influence, led them to invest not just in cheap companies but in great companies worth holding indefinitely. It was this adjustment that elevated Berkshire Hathaway from a clever investing vehicle into a durable empire.
The classic example of this shift was their 1972 purchase of See’s Candies. Far from a distressed asset, See’s was a beloved regional brand with fierce customer loyalty. Although it didn’t look like a bargain on paper, See’s had qualities - pricing power, minimal capital needs, and steady cash flow - that turned it into a cash-producing machine. This investment taught Buffett and Munger the power of owning a great business that can compound wealth with minimal effort. It directly influenced their decision to later invest in giants like Coca-Cola, where similar dynamics were at play on a much larger scale.
To fuel their empire, Berkshire relied on a unique financial engine: insurance float. When Berkshire acquired National Indemnity in 1967, they gained access to capital that could be invested while technically belonging to someone else. Float, the money held by insurers to cover future claims, behaves like a no-interest loan - or better yet, a loan where the borrower is paid to hold the funds. The key is writing smart policies, resisting the temptation to chase premiums, and only taking on risk when the pricing makes sense. Over time, this disciplined approach allowed Berkshire to generate billions in float with a cost of capital often lower than zero.
This float allowed Buffett and Munger to reinvest at scale, buying high-return businesses and equities without needing traditional financing. It became the secret weapon behind Berkshire’s exponential growth. Instead of relying on the stock market or borrowing money, they built a flywheel: disciplined underwriting created low-cost float, which funded investments in high-quality assets, which produced more cash, which funded more float-generating insurance - and on it went.
Their strategy was tested during periods of market mania, particularly during the dot-com bubble of the late 1990s. While others rushed into tech stocks they didn’t understand, Buffett and Munger refused to follow the crowd. Their decision to hold cash rather than chase speculative gains drew criticism, but their patience paid off. When the bubble burst, Berkshire remained strong. They avoided trouble not because of their brilliance, but because of their refusal to stray beyond what they knew. The lesson: you don’t need to understand everything - just stay within your circle of competence and stick to what makes sense.
This mental discipline also helped them see danger before others. Long before the 2008 financial crisis, Buffett warned of the dangers posed by derivatives - complex financial instruments that magnified risk under the illusion of precision. As the global financial system unraveled, Berkshire had the capital, credibility, and calm mindset to step in. Buffett made swift deals with Goldman Sachs and General Electric that stabilized the system and earned Berkshire significant profits. These moves were only possible because Berkshire had stayed conservative during the boom times, keeping dry powder for moments of genuine opportunity.
Beyond numbers, what truly defines Berkshire Hathaway is its culture. Buffett and Munger built a decentralized model of trust, accountability, and autonomy. They allowed managers of acquired businesses to run them independently, confident that shared values - not micromanagement - would maintain standards. This culture became a magnet for family-owned businesses looking for a permanent home that wouldn’t gut their identity. Over time, this trust-based structure became as much a competitive advantage as any product or brand in the portfolio.
By the time the dust settled from the financial crisis, Berkshire had transformed from an investing operation into a fully formed industrial conglomerate. With core holdings like BNSF Railway, Berkshire Hathaway Energy, and Marmon, Berkshire evolved into a self-reliant machine capable of generating and reinvesting capital without reliance on the stock market. It is now less dependent on Buffett himself, sustained by strong managers and a framework built to last. The company’s future, Buffett insists, depends not on predicting markets, but on maintaining the principles that brought it this far: patience, rationality, humility, and trust.
While the book is rich with practical insights, its ultimate lesson is philosophical. Success doesn’t come from complexity or cutting-edge tools. It comes from adopting a clear, durable mindset - one that respects uncertainty, prizes simplicity, and is willing to wait. Time, not cleverness, is the most powerful force in investing. Buffett and Munger remind us that envy, ego, and overconfidence destroy more fortunes than bad luck ever could. And in a world increasingly obsessed with speed and novelty, the ability to stay calm and think clearly is perhaps the most valuable edge of all.
"University of Berkshire Hathaway" distills a lifetime of wisdom into lessons that go far beyond finance. It’s a manual for long-term thinking in a short-term world, rooted in common sense but reinforced by decades of remarkable results. From margin of safety to the power of float, from resisting bubbles to trusting decentralized teams, the Berkshire playbook is grounded in character as much as strategy. In the end, the true reward isn’t just financial success - it’s the peace of mind that comes from living by a system that works.
January 6, 2018
The market is flooded with books about Warren Buffett. This is the 5th one that I have read. Some books assemble or quote Buffett's writings; others reverse engineer Buffett's investment strategy. Often these authors seem to be trying to convince you they have inside information or trying to indoctrinate you into the Buffett cult. University of Berkshire Hathaway is not one of those books. It has details you won't find anywhere else, which makes it a relevant addition to the prolific repertoire of books about Buffett and Berkshire.
U.B.H. is unique in that the authors didn't set out to write a book. They had hit the road in the 1980s, trying to learn as much as they could about Buffett, Charlie Munger, and other investment gurus, so that they could help to serve their clients better. They attended every Berkshire Hathaway shareholder meeting for than 30 years, plus some other related meetings. This volume includes their notes from 30 annual Q&A sessions with Buffett and Munger, which have known to reach lengths of 6 hours each.
You can't find this specific content anywhere. For example, you could easily do a web search for Buffett's letter from the 1986 Berkshire annual report, but if you weren't one of the 300 people in the room for the shareholders meeting that year, I doubt you'll be able to find video of the 2.5 hour session. Pecaut and Wrenn recorded copious notes at every meeting and published them in an exclusive newsletter at the time. Their notes are organized by year, then by topic, and include direct quotations. No proselytizing or snake oil sales tactics, just pages and pages of Buffett's and Munger's wit and wisdom from decades of long meetings.
Pecaut and Wrenn did something very Buffett- and Munger-esque in writing this book. They set out to learn as much as they could from their idols and apply it to their careers, and doing so naturally evolved into creating a platform to share that knowledge with the next generation of investors and business leaders. If you intend to join that tradition, University of Berkshire Hathaway is a fine addition to your financial education.
U.B.H. is unique in that the authors didn't set out to write a book. They had hit the road in the 1980s, trying to learn as much as they could about Buffett, Charlie Munger, and other investment gurus, so that they could help to serve their clients better. They attended every Berkshire Hathaway shareholder meeting for than 30 years, plus some other related meetings. This volume includes their notes from 30 annual Q&A sessions with Buffett and Munger, which have known to reach lengths of 6 hours each.
You can't find this specific content anywhere. For example, you could easily do a web search for Buffett's letter from the 1986 Berkshire annual report, but if you weren't one of the 300 people in the room for the shareholders meeting that year, I doubt you'll be able to find video of the 2.5 hour session. Pecaut and Wrenn recorded copious notes at every meeting and published them in an exclusive newsletter at the time. Their notes are organized by year, then by topic, and include direct quotations. No proselytizing or snake oil sales tactics, just pages and pages of Buffett's and Munger's wit and wisdom from decades of long meetings.
Pecaut and Wrenn did something very Buffett- and Munger-esque in writing this book. They set out to learn as much as they could from their idols and apply it to their careers, and doing so naturally evolved into creating a platform to share that knowledge with the next generation of investors and business leaders. If you intend to join that tradition, University of Berkshire Hathaway is a fine addition to your financial education.
June 4, 2021
This compilation of 30 years of Berkshire AGM is a Bible for every investor no matter, what geography, stock market one belongs to. Every investor should read this book again and again as it comes from two of the best stock masters in the world who has proved it for decades. There have been instances of people making big in stock markets but then those are instances, not like Charlie and Buffett who has been doing it for years. Further, both these guys are humble enough to share their learnings.
Both of them makes stock investing and wealth creation look so simple. Add their humor to every conversation that they are having and it makes the reading all the more gripping.
The book gives a deep perspective into investing and thinking style of Buffett and Munger. As you read through the pages, one would see that most of the thoughts are repetitive. This also means that the investment philosophy of both these guys is deeply embedded in them and has been consistent through these 30 years.
Some of the thoughts which they keep on talking again and again -
1. We are living in danger of nuclear explosion, biological warfare, and its bound to happen. [Chance of going 60 years with no nuclear events was close to zero - Munger]
2. The biggest moat of Berkshire - The float that it enjoys on insurance premium
3. Intrinsic value of business is the most important thing
4. Greed Vs Fear - Buy when others are fearful and vice versa
5. Talks very highly about values, integrity and ideology
6. Not a proponent of efficient market theory. Lot many times market is mispriced which is the opportunity to aggressively buy into the markets.
7. Keep investing in yourself, that's the biggest investment one can make.
8. Do what you enjoy the most. Work for people you admire.
9. Only two courses which should be taught in B Schools - 1) How to Value a Business, and 2) How to Think About Markets. That would be it.
One advice for all the investors around - Read this book multiple times and every year !!
Both of them makes stock investing and wealth creation look so simple. Add their humor to every conversation that they are having and it makes the reading all the more gripping.
The book gives a deep perspective into investing and thinking style of Buffett and Munger. As you read through the pages, one would see that most of the thoughts are repetitive. This also means that the investment philosophy of both these guys is deeply embedded in them and has been consistent through these 30 years.
Some of the thoughts which they keep on talking again and again -
1. We are living in danger of nuclear explosion, biological warfare, and its bound to happen. [Chance of going 60 years with no nuclear events was close to zero - Munger]
2. The biggest moat of Berkshire - The float that it enjoys on insurance premium
3. Intrinsic value of business is the most important thing
4. Greed Vs Fear - Buy when others are fearful and vice versa
5. Talks very highly about values, integrity and ideology
6. Not a proponent of efficient market theory. Lot many times market is mispriced which is the opportunity to aggressively buy into the markets.
7. Keep investing in yourself, that's the biggest investment one can make.
8. Do what you enjoy the most. Work for people you admire.
9. Only two courses which should be taught in B Schools - 1) How to Value a Business, and 2) How to Think About Markets. That would be it.
One advice for all the investors around - Read this book multiple times and every year !!
February 15, 2021
I’ve read a lot of investment books over the years but this one is different. It’s on target for today and the future. This is a permanent keep, and go back and read every time you have a question. What would Warren Buffett do? As a bonus, the life advise given is not only wise but given with a measure of humor.
October 16, 2017
I asked for and received an early copy of this book, and was surprised at how it differentiated itself to the two dozen Buffett/Munger/Graham books on my bookshelves. Some books chronicle the history of Berkshire Hathaway, Warren or Charlie... and other books simply reproduce past shareholder letters. These are all valuable resources for someone attempting to don the philosophy of these heralded investors. However, the wit and range of these men are often missed in such books but are often in evidence in the verbal exchanges and answers during the Berkshire Hathaway shareholders meetings. Missed, until now.
Mr. Pecault and Mr, Wrenn have compiled a great collection of notes from each meeting since 1986, with context about the market and about Berkshire at each step. What was fantastic was the reader's ability to dip in at select years (2008 and 2009, for example) and gather impressions about their state of calm about the market in the face of such uncertainty. Having gone to 3 shareholder meetings myself, I always took notes but my hand cramps made them unreadable after a couple hours. I never expected a book like this would come about and produce many of the observations I recall from those meetings as well as remind me of important details I had since surrendered to bad memory.
As a standalone, this book is a chronologically fascinating culmination of investment wisdom sourced from arguably the greatest investors in American history. As a complement to a "Graham and Doddsville" library, it fills an unmet need in providing some of the wit and practical insight these men often reveal most consistently in front of a few thousand shareholders.
Mr. Pecault and Mr, Wrenn have compiled a great collection of notes from each meeting since 1986, with context about the market and about Berkshire at each step. What was fantastic was the reader's ability to dip in at select years (2008 and 2009, for example) and gather impressions about their state of calm about the market in the face of such uncertainty. Having gone to 3 shareholder meetings myself, I always took notes but my hand cramps made them unreadable after a couple hours. I never expected a book like this would come about and produce many of the observations I recall from those meetings as well as remind me of important details I had since surrendered to bad memory.
As a standalone, this book is a chronologically fascinating culmination of investment wisdom sourced from arguably the greatest investors in American history. As a complement to a "Graham and Doddsville" library, it fills an unmet need in providing some of the wit and practical insight these men often reveal most consistently in front of a few thousand shareholders.
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