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We Study Billionaires - The Investor’s Podcast Network
TIP551: Berkshire Hathaway Annual Shareholders Meeting 2023
May 12, 2023
01:10:42
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Quick takeaways
- Commercial real estate challenges and the importance of controlling one's destiny.
- The changing landscape of value investing and the need for adaptability.
- Finding the right balance in position sizing and avoiding overexposure.
- Balancing short-term profits with long-term defensibility and building competitive moats.
- Avoiding major mistakes in investing and life, cultivating positive relationships, and prioritizing kindness and integrity.
Deep dives
Highlights from the 2023 Berkshire Hathaway Shareholders Meeting
The episode covers the 2023 Berkshire Hathaway shareholders meeting in Omaha. The meeting attracted over 40,000 attendees and featured a marathon Q&A session with Warren Buffett and Charlie Munger. The episode emphasizes the importance of connecting with like-minded individuals at events and highlights the success of the TIP meetups. Clips from the meeting touch on topics such as commercial real estate, the future of value investing, position sizing, and major mistakes to avoid.
Insights on the Challenges in Commercial Real Estate
One clip from the meeting discusses the challenges in the US commercial property market. Charlie Munger mentions the hollowing out of downtown areas and the potential difficulties faced by American banks with bad loans as property prices fall. Warren Buffett notes that Berkshire Hathaway is not heavily invested in commercial real estate and emphasizes the importance of controlling one's destiny.
The Evolution of Value Investing and the Power of Adaptation
Another clip explores the future of value investing in light of disruptive technologies and changing environments. Buffett and Munger believe that value investors will face a more challenging landscape due to increased competition and diminished opportunities. They advise value investors to become comfortable with making less and highlight the importance of remaining adaptable and learning from experiences.
Position Sizing and the Importance of Diversification
The episode includes a discussion on position sizing, with Warren Buffett highlighting the need to adapt position sizes based on individual temperament and abilities. While some investors prefer a more diversified approach, others, like Charlie Munger, are comfortable with larger positions in companies they strongly believe in. The key is to find the right balance and avoid being overexposed.
Building Competitive Moats and Balancing Short-term Profits with Long-term Defensibility
Buffett and Munger emphasize the importance of building competitive moats and balancing short-term profits with long-term defensibility. They discuss the need for business owners and CEOs to control their destiny, make wise capital allocations, and think long-term in a world often focused on short-term gains. They also underscore the advantage of owning businesses that prioritize optimizing long-term shareholder value.
Avoiding Major Mistakes and Cultivating Positive Relationships
Buffett advises listeners to avoid major mistakes that can take them out of the game, both in investing and in life. He emphasizes the importance of continuous savings, spending less than what you earn, and investing wisely. Additionally, he highlights the value of learning from experience, avoiding toxic people and activities, and cultivating positive relationships. Buffett and Munger stress the importance of kindness and integrity in personal and business interactions.
The Outlook for Oil and Berkshire's Holdings
Finally, the episode touches on the future outlook for oil. Buffett explains that while shale oil production in the United States has played a significant role, it is not a long-term source. He discusses Berkshire Hathaway's significant holdings in Occidental Petroleum and Chevron, highlighting the expertise of Occidental's management and the variability of oil prices. Despite short-term risks and fluctuations, Berkshire sees value in Occidental's position in the Permian Basin.
Buffett's Take on Berkshire's Portfolio
Warren Buffett clarifies that Apple is not 35% of Berkshire's portfolio, highlighting that Berkshire's portfolio includes various businesses. However, Buffett emphasizes that Apple is a better business compared to the others, noting its strong position with consumers and the significant impact it has on Berkshire's earnings.
Buffett on the US Dollar and Inflation
Buffett discusses the uncertainty surrounding the US dollar as the global reserve currency and the potential risks of excessive money printing. He acknowledges that nobody knows how far a paper currency can be inflated before it gets out of control. Buffett emphasizes the importance of not excessively printing money and the need for responsible fiscal policy. He also highlights Berkshire's preparation for potential inflation and the importance of individuals focusing on their own earning power.
In this episode, Clay Finck presents his favorite clips from the 2023 Berkshire Hathaway annual shareholder meeting, featuring insightful responses from Buffett and Munger during the marathon Q&A session, along with his own thoughts on their answers.
IN THIS EPISODE YOU’LL LEARN:
00:00 - Intro.
05:30 - Buffett and Munger’s thoughts on the commercial real estate.
09:37 - Why value investors must evolve to the increasingly competitive world of investing.
17:36 - How Buffett allocates capital to balance profits versus building out a competitive moat.
33:04 - Munger’s stance on position sizing.
38:16 - Buffett’s updated thoughts on Taiwan Semiconductor which is a business Berkshire entered and fully exited over a matter of months.
40:09 - Buffett’s thoughts on the US Dollar’s status as the world’s reserve currency.
54:40 - Common mistakes to avoid to live a good life.
01:01:21 - Buffett and Munger’s most recent thoughts on Occidental.
01:12:23 - How Berkshire can continue to attract high quality subsidiary managers.
Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.
BOOKS AND RESOURCES
- Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
- Check out the full video of the Berkshire Hathaway meeting here.
- Check out our recent episode covering Mark Leonard’s Letter’s and Constellation Software. Watch the video here.
- Check out Clay’s YouTube video calculating the intrinsic value of Constellation Software here.
- Follow Clay on Twitter.
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