What I Learned from the Berkshire Hathaway Annual Meeting

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This year, for the first time ever, I went to the Berkshire Hathaway Annual Meeting AKA Woodstock for Investors AKA Coachella for Capitalists.

Warren Buffett is by far, the world's most successful investor, and I was keen to hear what he had to say about the economy, his investing strategy and his mindset in the wake of the death of his business partner, Charlie Munger.

As usual, Warren had a lot of insightful things to say - things that I’ve been thinking about in my own business and my approach to building wealth. Berkshire Hathaway has made a few surprising moves over the last year, but hearing Warren Buffett talk about the governing strategy, a whole lot made sense.

Today, I share the most powerful lessons I took away from the meeting and how we can apply them to our own businesses.

Key Points

The right way to evaluate a stock

Look at stocks as a business and realize that the market is there to serve you, not to inform you. When Warren Buffett is evaluating whether or not to buy stock in a company, he's evaluating it the same way he would if he was buying the whole company. Whether you're buying a piece of a company or the whole thing, you should be evaluating the decision the same way. The market tells you when it’s a good time to buy or sell, and you should follow that. If you don’t listen to what the stock is saying, you're going to make a lot of mistakes.

It's interesting how many mistakes you can make if you just keep going

If you're in business, mistakes will always be part of the game. If you're not making mistakes, you're probably not doing a lot of things. If you're intelligent and reflective, you'll learn from those mistakes.

Do what moves the needle

With the recent passing of Charlie Munger, Warren Buffett has been thinking about what happens to the company when he passes away. He provided a simple but powerful blueprint for Berkshire's management team after he's gone - increase operating earnings, decrease shares outstanding and have a sizable cash investment for the occasional big opportunity.

Cash is king

There was a lot of buzz around Berkshire selling some of its holdings in Apple. Warren Buffett said his approach is all about reducing tax and increasing cash. It all goes back to the succession plan - having a sizable amount of cash so they could make an investment when there's a great opportunity. This is how I read deeper into this: Warren Buffett doesn't foresee things getting a whole lot better in the economy, and he foresees some more sales or good deals being available over the next 2 years.

Look for good deals, not just any deal

When asked why Berkshire Hathaway’s cash hasn’t been invested, Buffett said, “I don't think anyone sitting at this table has any idea how to use it effectively, and therefore, we don't use it”. He then added, “we only swing at pitches we like”. If you’re sitting on a lot of cash, knowing where to put it is a big question and it's really easy to get antsy when you want to put the money to work. But when the world's most successful investor says “we only swing at pitches we like”, it's a good reminder to stay patient and look for great deals instead of just putting cash into any deal that comes your way.

Navigating the noise

The world that we live in is full of noise 24/7. When you go on social media, watch the news and read the economic reports, it’s hard to make sense of all the information coming your way as an investor. Warren Buffett’s insights and approaches are very simple. They cut right through the noise. This is not to say that none of the noise matters, but the key to investing is focusing on the things that matter the most.

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