by Scott Pape - May 9th 2009
I’ll admit I felt a little silly. It was 3:30am and I was huddling with 50 or so other diehards in the cold, a full four hours before the doors at the Omaha Convention Center were to open.
We weren’t lining up to see Coldplay, but for the annual general meeting of Berkshire Hathaway, legendary investor Warren Buffett’s company. Nowhere on earth is there an AGM like this. It’s known as “Woodstock for capitalists” for a reason – by the time the sun came up, 35,000 people had joined us in the line.
My early morning madness paid off, and I managed to get a seat in the third row from the front. If this were a rock concert, I would be sitting in the equivalent of the mosh pit (although, instead, the people sitting around me were all wearing khakis, drinking Starbucks coffee and checking their Crackberrys).
We were all here to hear from the best investor in the world – who has achieved a 362,319 per cent return since 1965 – to hear his views on where the economy is going, and what to invest in.
Now I’ve studied the guy for years, read numerous biographies, and have been a longtime investor in his company – yet this weekend I still managed to learn something new from him.
Investing is simple, not easy
Yet it didn’t come in the marathon five-hour question-and-answer session. Buffett’s views haven’t changed much over decades. He believes the best days for the US lie ahead, and is hugely optimistic about the future.
This prediction does, however, come with a few (short-term) asterisks: he is worried about the value of the US dollar declining as a result of the government’s stimulus spending spree, and he has repeatedly warned about the coming onset of inflation – and the dangers it poses for investors and consumers alike.
“Investing is simple, but not easy”, he told one smarty-pants fund manager who asked him a super-technical investing question at the AGM. Buffett, who famously doesn’t use a computer or a calculator to work out his investing decisions, advised him: “You would be wise to lose 30 IQ points, then perhaps you may be able to stop complicating things.”
It’s been well documented that Buffett doesn’t try to predict which way the share market is going in the future, or where the economy is heading. Instead, he simply buys good quality companies when everyone else is selling them and then holds them for life.
Buffet’s bigger achievement
Most of those 35,000 people in attendance were there to marvel at Buffett’s investing prowess – indeed, many of them have become multi-millionaires because of it – but by the end of the weekend I realised a bigger achievement was the life he’d created for himself.
The sleepy town of Omaha, Nebraska, is not a place where you’d expect one of the richest men on the planet to have forged his career.
Then again, you wouldn’t expect him to still drive around in his own car, eat at the same local steak restaurant each week, and live in a home that looks much the same as the one that you and I grew up in. No security gates. No cameras.
“Warren”, as he’s known around town, is an otherwise everyday guy, who just happens to be worth $37 billion.
This was confirmed the following day when I sneaked into Berkshire’s press conference. Typically, these events are run by a media adviser and stick to a carefully worded script. But that’s not how Warren – and his right-hand man, Charlie Munger – roll.
What differentiates them from the rest of the corporate world is that they’ve built their careers – and their company – on absolute integrity. That’s something that has been patently missing from the business world over the past decade – and their responses to journalists’ questions were direct and unflinching:
Banker error
The financial crisis showed a “gross immorality” of bankers giving consumer credit to people who couldn’t afford it, and the people running America’s biggest companies should be ashamed of the way they’ve behaved, they said.
“The real problem is that Wall Street bankers paid $500 million in lobbying and political donations so they could do exactly what they want”, said Charlie.
“And it’s disgraceful.”
Buffett said: “It all comes back to the way these people get compensated, which is completely out of whack.”
Buffett famously pays his directors – including Bill Gates – just $US900 a meeting. His take: if they need the money we don’t want them on our board.
For the next few hours I watched these two old blokes become young men again as they enthusiastically answered questions they were clearly passionate about. Therein lay the real lesson I learned from the weekend.
Buffett’s greatest legacy, other than his entire fortune – which he’s leaving to the Bill and Melinda Gates Foundation – is living a down-to-earth, focused and ultimately authentic life.
We’ve all seen people who are changed for the worse by coming into money. To consciously choose not to get wrapped up in materialism, when he can afford anything on earth, has no doubt made Warren a better investor, but also a better person.
Then again, I think the wise old bugger understands that he’s achieved the best return of all: “People ask me if I have ever thought about retiring, but they don’t understand that I tap dance everyday to work.”
Tread your own path!
Everyday American
I’ve been struggling with the food in America. It’s so unhealthy. So I thought I’d beat the system by buying some supplies and storing them in a car fridge.
Easier said than done.
The Wal-mart I went shopping at was bigger than my home town of Ouyen. I could get a haircut, buy a swimming pool, shop for groceries and get my tyres rebalanced – but not buy anything remotely healthy. They had no health food aisle.
None.
Which explains why I find myself at a roadside diner in Rochelle, Illinois (claim to fame? Ronald Reagan was born 50 miles away), which fried most things on the menu.
Spring was my waitress. She called me sweetie, but I didn’t take it personally.
1. Who is your favourite Aussie?
Steve Irwin. So very sad.
2. What does the acronym GFC stand for?
I have no idea what you’re talking about.
3. Who is to blame for this financial crisis?
We are. As in, everyday Americans.
Why?
Because we aren’t disciplined. We borrow too much. It’s the American way.
4. When I say Australia you say?
Kangaroo.
Anything else?
No, that’s it.
5. Economically speaking, is this the end of the US and the rise of China?
No, the world will end before that.
Spring explained – with a straight face – that the Almanac says the world is going to end on December 21, 2012. Which was quite unnerving – all the more because she then turned around and calmly asked: “That was a cheeseburger, right?”
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