The faithful gathered in Omaha last weekend to absorb the wisdom of Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio). As in previous years, the Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) leaders mused on the audience’s most pressing concerns of the day, spanning politics, business, stocks, personal life, human behavior, global ecology and what we all should do. Interspersed were their usual anecdotes and wit. From their 2019 annual meeting, here are the best quotes.
- “The first quarter of 2019 actually was much like the first quarter of 2018, and I hope very much that newspapers do not read headlines saying that we made $21.6 billion in the first quarter this year against a loss last year. The bottom-line figures are going to be totally capricious.” – Warren Buffett (Trades, Portfolio)
- “I encourage you now and I encourage all the press that’s here, focus on what we call our operating earnings, which were up a bit, and forget about the capital gains or losses in any given period. Now they’re enormously important over time. We’ve had substantial capital gains in the future, we have substantial unrealized cap gains at the present time, we expect to have more capital gains in the future. They are an important part of Berkshire, but they have absolutely no analytical or predictive value in the quarterly basis or an annual basis and I just hope that nobody gets misled in some quarter when stocks are down and people said Berkshire loses money. It’s really a shame that the rules got changed in that way.” – Warren Buffett (Trades, Portfolio)
- “You don’t get invited to be on boards if you belch too often at the dinner table.” – Warren Buffett (Trades, Portfolio)
- “We will buy stock when we think it is selling below a conservative estimate of its intrinsic value. Now the intrinsic value is not a specific point. It’s probably a range in my mind that might have a band maybe of 10%. Charlie would have a band in his mind, and it would probably be 10%. And ours would not be identical but it would be very close.” – Warren Buffett (Trades, Portfolio)
- “In the first quarter of the year, they’ll find we bought something over a billion dollars worth of stock. That’s nothing like my ambitions. But what that means is that we feel that we’re okay buying it, but we don’t salivate over buying it.” – Warren Buffett (Trades, Portfolio)
- “You could easily see periods where we would spend very substantial sums if we thought the stock was selling at say 25 or 30% less than it was worth and we didn’t have something else that was even better.” – Warren Buffett (Trades, Portfolio)
- “I predict that we’ll get a little more liberal in repurchasing shares.” – Charlie Munger (Trades, Portfolio)
- “I doubt that anybody’s very interested in un-precision in railroading.” – Charlie Munger (Trades, Portfolio)
- “There’s quite a list of banks where people behave badly.” – Warren Buffett (Trades, Portfolio)
- “The shareholders of Wells have paid a price. The shareholders of Citicorp (C, Financial) paid a price, the shareholders of Goldman Sachs (GS, Financial), the shareholders of Bank of America (BAC, Financial). They paid billion and billions of dollars, and they didn’t commit the acts.” – Warren Buffett (Trades, Portfolio)
- “I don’t think Tim Sloan even committed honest errors of misjudgment. I just think he was an accidental casualty that didn’t deserve the trouble. I wish that Time Sloan was still there.” – Charlie Munger (Trades, Portfolio)
- “Rightfully, Wells (WFC, Financial) should be checked out on everything they do. All banks should.” – Warren Buffett (Trades, Portfolio)
- “I proposed that if a bank gets to where it needs government assistance, that basically the responsible CEO should lose his net worth and his spouse’s net worth.” – Warren Buffett (Trades, Portfolio)
- “If our stock gets cheap relative to intrinsic value, we would not hesitate – we wouldn’t be able to buy that much in a very short period of time, in all likelihood – but we would certainly be willing to spend $100 billion.” – Warren Buffett (Trades, Portfolio)
- “I will just say I’m a card-carrying capitalist, and I believe we wouldn’t be sitting here except for the market system and the rule of law.” – Warren Buffett (Trades, Portfolio)
- “I also think that capitalism does involve regulation and it involves taking care of people who are left behind, particularly when a country gets enormously prosperous.” – Warren Buffett (Trades, Portfolio)
- “I think we’re all in favor of some kind of government social safety net, in a country as prosperous as ours. What a lot of us don’t like is the vast stupidity with which parts of that social safety net are managed by the government. It’s be much better if we could do it but more wisely, I think it also might be better if we did it more liberally.” – Charlie Munger (Trades, Portfolio)
- “I don’t think the country will go into socialism in 2020 or 2040 or 2060.” – Warren Buffett (Trades, Portfolio)
- “I know very little about 5G, but I do know a little about China. We have bought things in China, and my guess is we’ll buy more.” – Charlie Munger (Trades, Portfolio)
- “We paid too much for Kraft. The Heinz part of the transaction when we originally owned about half of Heinz, we paid an appropriate price there.” – Warren Buffett (Trades, Portfolio)
- You can turn any investment into a bad deal by paying too much. What you can’t do is turn any investment into a good deal by paying little. Which is sort of how I started out in this world. But the idea of buying the cigar butts that are declining or poor businesses for a bargain price is not something that we try to do anymore. We try to buy good businesses at a decent price.” – Warren Buffett (Trades, Portfolio)
- “Charlie and I have probably have seen more high-IQ people – really extraordinarily high-IQ people – destroyed by leverage.” – Warren Buffett (Trades, Portfolio)
- “I would not get excited about so-called alternative investments.” – Warren Buffett (Trades, Portfolio)
- “I told the story of asking the guy one time in the past, ‘How in the world can you ask for 2 and 20 when you really haven’t got any kind of evidence that you are going to do any better with the money than you’d do in an index fund?’ and he said, ‘Well, that’s because I can’t get 3 and 30.’” – Warren Buffett (Trades, Portfolio)
- “The idea that value is somehow connected to book value or low price-earnings ratios or anything – as Charlie has said, all investing is value investing. You’re putting out some money now to get more later on. And you’re making a calculation as to the probabilities of getting that money and when you’ll get it and what interest rates will be and all the same calculation goes into whether you’re buying some bank at 70% of book value or you’re buying Amazon at some very high multiple of reported earnings.” – Warren Buffett (Trades, Portfolio)
- “Considerations are identical when you buy Amazon (AMZN, Financial) versus some, say, bank stock that looks cheap statistically against book value or earnings or something of the sort. In end, it all goes back to Aesop, who in 600 BC said that a bird in hand worth two in the bush. And when the fellow who bought it tries to figure out if there are three or four or five in the bush, and how long it will take to get to the bush, how certain he is that he’s going to get to the bush, and who else is going to come and try and take the bush away, and all of that sort of thing. And we do the same thing. And despite a lot of equations you’ll learn in business school, the basic equation is that of Aesop. And your success in investing depends on how well you are able to figure out how certain that bush is, how far away it is, and what the worst case is instead of a few birds being there only one being there and the possibilities of four or five or ten or 20 being there. That will guide me, that will guide my successors in investment management at Berkshire, and I think they’ll be right more often then they’ll be wrong.” – Warren Buffett (Trades, Portfolio)
- “I don’t mind not having caught Amazon early – the guy is kind of a miracle worker, it’s very peculiar, I give myself a pass on that. But I feel like a horse’s ass for not identifying Google better. We screwed up.” – Charlie Munger (Trades, Portfolio)
- “They sort of come out of the womb with the delayed gratification thing or they come out of the womb where they have to have everything right now. And I’ve never been able to change it at all. So, we identify it, we don’t try to train it in.” – Charlie Munger (Trades, Portfolio)
- “Low interest rates for people who invest in fixed dollar investments really mean you aren’t going to get eat stake later on if you eat hamburger now, which I used to preach to my wife and children and everyone who would listen 30 years ago.” – Warren Buffett (Trades, Portfolio)
- “I don’t necessarily think that for all families in all circumstances that saving money is necessarily the best thing to do in life. If you really tell your kids that they never go to the movies or never go to Disney Land or something of the sort because if I save this money, 30 years from now we’ll be able to stay a week instead of two days, I think there’s a lot to be said for doing things that bring you and your family enjoyment rather than save every time.” – Warren Buffett (Trades, Portfolio)
- “If you aren’t happy having $50,000 or $100,000, you’re not going to be happy if you have $50 million or $100 million.” – Warren Buffett (Trades, Portfolio)
- “Ted and Todd, they’re basically not going to answer investment questions. We regard investment decisions as proprietary, basically. They belong to Berkshire. We are not an investment advisory organization. That is counter to the interest of Berkshire for them to be talking about securities they own.” – Warren Buffett (Trades, Portfolio)
- “We’re radically different, and it’s awkward being so different. But I don’t want to be like everybody else because this has worked better. So I think you’re just going to have to endure us.” – Charlie Munger
- “I do think it’s true that if the world goes to hell in a handbasket, that you people will be in the right company. We’ve got a lot of cash and we know how to behave well in a panic.” – Charlie Munger (Trades, Portfolio)
- “Also want to report that your vice chairman is getting new social distinction. I’ve been invited during this gathering to go to a happy hour put on by the bitcoin people. And I’ve tried to figure out what the bitcoin people do in their happy hour, and I’ve finally figured it out: They celebrate the life and work of Judas Iscariot.” – Charlie Munger (Trades, Portfolio)
- “Bitcoin actually, on my honeymoon in 1952, my bride, 19 and I 21, stopped in Las Vegas. My aunt Alice gave me the car and said have a good time and we went west. So we stopped in the flamingo, and I looked around, and I looked around, and I saw all of these well-dressed – they dressed better in those days – well-dressed people who had come in some cases thousands of miles away, and this was before jets, so transportation wasn’t as good. And they came to do something that every damn one of them knew was mathematically dumb. And I told Suzy, I said, ‘We are going to make a lot of money.’ Imagine people going to stick money on some roulette number with a zero and a double zero there – they all couldn’t do it, and they just do it. And I have to say, bitcoin has rejuvenated that feeling in me.” – Warren Buffett (Trades, Portfolio)
- “But if we didn’t have all these damn rules, then we would cheerfully buy more [Wells Fargo], wouldn’t we?” – Charlie Munger (Trades, Portfolio)
- “You’d probably see us at more than 10% in more things. And if the Fed should change its rules, there will be companies where we drift up over 10% because they’re repurchasing their shares. That’s been the case with Wells, and it’s been the case with an airline or two in the last year or so. If we like 9.5% of a company, we’d like 15% better. You may see us behave a little differently on that in the future.” – Warren Buffett (Trades, Portfolio)
- “There will be a time when – we probably won’t be around then – but there will be a time occasionally just like in financial markets when things are happening in the insurance world and basically Berkshire will be virtually the only one people turn to.” – Warren Buffett (Trades, Portfolio)
- “At See’s Candy we sell directly to the consumer but at Kraft-Heinz (KHC, Financial) there are intermediaries. Those intermediaries are trying to make money, and we’re trying to make money. And the brand is our protection against the intermediaries making all the money. Costco tried to drop Coca-Cola back I think in 2008 and you can’t drop Coca-Cola (KO, Financial) without disappointing a lot of people.” – Warren Buffett (Trades, Portfolio)
- “No idea is good at any price. The price element is probably something that we worried more about more about generally than our partners [3G], but we are their partners in Kraft-Heinz and it’s not at all inconceivable that we could be partners in some other transaction in the future.” – Warren Buffett (Trades, Portfolio)
- “I basically don’t worry about [Kraft’s] brands. A certain number are very strong and a certain number are declining a bit, but that was the case 10 years ago, and it will be the case 10 years from now. There’s nothing dramatic happening in that.” – Warren Buffett (Trades, Portfolio)
- “What hurts in case of Apple (AAPL, Financial) is that the stock has gone up. I’m not proposing anything be done about it, but we’d rather have the stock at a lower price, so we could buy more stock.” – Warren Buffett (Trades, Portfolio)
- “In effect, a major portion of [Apple’s] earnings, at least possibly – it’s at least been authorized – will be spent in terms of increasing our ownership without us paying out a dime, which I love, for a wonderful business.” – Warren Buffett (Trades, Portfolio)
- “In my family, people who have Apple phones, it’s the last thing they’ll give up.” – Charlie Munger (Trades, Portfolio)
- “I’d like to have a little more of it [time].” – Charlie Munger (Trades, Portfolio)
- “It’s the two things you can’t buy: time and love. I’ve valued those for a long time. I’ve been very, very, very lucky in life in being able to control my own time to an extreme degree. Charlie’s always valued that too. That’s really why we wanted to have money was so we could do what we damned pleased basically in our lives.” – Warren Buffett (Trades, Portfolio) (on what he values most in life)
- “We get to do what we love to do every day. I mean I literally I could do anything that money could buy pretty much, and I’m having more fun doing what I do than doing anything else.” – Warren Buffett (Trades, Portfolio)
- “In terms of calculating our performance, you can take the top 10 to 12 stocks, and anybody can make the calculation.” – Warren Buffett (Trades, Portfolio)
- “We do like moats. And we used to be able to identify them in a newspaper that was the only newspaper in town or in TV stations where we felt the product was underpriced in terms of advertising it. We saw it in brands sometimes. And it is true that in the tech world if you can build a moat it can be incredibly valuable. I’ve not felt the confidence that I was the best one to judge that in many instances.” – Warren Buffett (Trades, Portfolio)
See Part 2 of this list here.
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