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Rupert Hargreaves
Rupert Hargreaves
Articles (833)  | Author's Website |

Investors Can Learn a Lot From Buffett, but Not Everything

Spending thousands to hear the Oracle of Omaha speak won't make you a good investor

June 11, 2019 | About:

Every year, Warren Buffett (Trades, Portfolio) holds an auction for one of his favorite charities, Glide, which helps homeless people and victims of domestic violence.

The service Buffett auction's off is his time. The winning bidder gets the opportunity to have lunch with the CEO of Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B).

Since these auctions began in 2000, investors around the world have paid millions of dollars to get a couple of hours with Buffett, no doubt in an attempt to try and discover some of his money-making secrets. Over the past 19 years, Buffett has raised $29.6 million for Glide by auctioning off his time.

The winning bidder

This year, the winning bidder was Justin Sun, co-founder and CEO of the cryptocurrency project Tron, who bid $4.56 million in the annual eBay charity auction. Son said he wants to use the time with Buffett to try and change his mind on cryptocurrencies.

"We want this lunch to be a bridge between the cryptocurrency community and the traditional investor," he told Yahoo Finance.

It is unlikely Son will succeed in his quest, but it is always interesting to see how much people are willing to pay to get access to Buffett, who is widely considered to be the best investor of all time.

It is the same with the Berkshire Hathaway annual meeting. This "Woodstock for capitalists" attracts tens of thousands of visitors every year, who are willing to spend what could be several thousand dollars flying out to Omaha and booking a hotel room. Every participant is trying to learn something that will help them gain an edge over the rest of the market.

But is this something Buffett himself would ever do? Even though he considered to be the greatest investor of all time, the guru has always followed a relatively solitary life, preferring to bury his nose in annual reports, rather than socialize and mingle with others for investment ideas.

Indeed, the very idea of a large number of people all seeking investment advice from the same person seems to go against his entire investment philosophy. Buffett has always been willing to sit and wait for the perfect investment opportunity, investing against the crowd to buy assets at distressed prices and be "greedy when others are fearful."

Not a waste of time

That is not to say the Berkshire annual meeting is a waste of time. As Buffett once said, "It's better to hang out with people better than you. Pick out associates whose behavior is better than yours, and you'll drift in that direction."

If you have lousy investment behavior, hanging around others who have more experience is bound to change your perspective on the market. That being said, any large group of people is always going to be subject to groupthink and just because there seems to be one prevailing view at the Berkshire meeting does not mean that it is the correct view.

There is no doubt Buffett and Charlie Munger (Trades, Portfolio) are great investors, and we can learn plenty from both of them. However, both of these investors have made it clear many times in the past that to become a good investor yourself, you need to do more than emulate others.

To be the best investor you can be, you need to understand your own strengths and weaknesses. You can only do that with real-world experience and a broad understanding of the world, sectors, industries and the financial markets. You won't learn anything about yourself at a Berkshire Hathaway meeting or by having lunch with Buffett.

Disclosure: The author owns shares of Berkshire Hathaway.

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About the author:

Rupert Hargreaves
Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors.

Rupert holds qualifications from the Chartered Institute for Securities & Investment and the CFA Society of the UK. He covers everything value investing for ValueWalk and other sites on a freelance basis.

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