Lessons from this meeting:
1. There’s only one kind of investing—value investing
- Value ≠ “style”: Buffett rejects the growth vs. value label—every investment must deliver more cash than you pay today.
- Never pay up: If the price isn’t well below your estimate of intrinsic value, it isn’t a value play—period.
2. Buy simple businesses at wide discounts—skip needless “due diligence”
- Fat-margin test: If a company’s worth is two-to-three times its market cap, you don’t need a 1,000-page audit—just buy.
- Kill the precision trap: Needing “three-decimal” accuracy to decide means the opportunity isn’t fat enough to pursue.
3. Stick to your circle of competence—and expand it sparingly
- Deep knowledge trumps breadth: You can move fast and confidently only in industries and business models you truly understand.
- Learn from exceptional management: When someone—like BYD’s Wang Chuanfu—demonstrates rare execution, it can justify carefully stretching your circle.
4. Build and value your margin of safety—float is a competitive edge
- Insurance float as cheap leverage: Buffett treats long-duration float (e.g. Swiss Re, Q1 results) as zero-cost capital to deploy in attractively priced deals.
- Keep ample cash: Parent-level cash ensures you can pounce on ideas quickly—even in downturns.
5. Fortress balance sheet—culture matters more than credit ratings
- Credit culture over checklists: No model or committee can substitute for a DNA-driven aversion to risk—and a sacred promise to meet obligations.
- Ratings are noisy: Losing a Moody’s AAA may bruise bragging rights but rarely changes true cost of capital.
6. Act decisively—speed is a sustainable advantage
- Five-minute filter: If you can’t decide in minutes whether you understand it enough to act, you won’t in months.
- One-call financing: The ability to make firm bids (Constellation, Dynegy) overnight—and close them without six lawyers—draws sellers and deters rivals.
7. Buy to hold—avoid artificial portfolio gymnastics
- No spin-offs: Chasing one-time multiple boosts via carve-outs destroys the long-term home for great businesses and wastes shareholder capital.
- Marriage of equals: When you buy a family-run or founder-led business, promise permanence—contracts won’t retain passion the way assurance of “here to stay” will.
8. Own up to mistakes—internal post-mortems, not public shaming
- Admit and correct: Buffett was “dead wrong” on Gen Re’s reserves, but fixing it (via Montross and Brandon) turned it around.
- Keep critiques private: Public blow-by-blow on missteps shies away sellers and undermines managers doing their best to recover.
9. Incentives and culture—trust over contracts, shame over legislation
- Seamless web of trust: Rather than 100-page comp plans, Berkshire leans on alignment and reputation to keep managers honest.
- Investors as referees: A handful of large institutions speaking out on the truly outrageous pay packages—and the ensuing media embarrassment—beats convoluted laws that backfire.
10. Be long-term optimistic—capitalism works, despite the bumps
- Cycles don’t erase progress: Fires, wars, panics and recessions punctuate—but do not derail—an economy that keeps doubling living standards every few decades.
- Big problems, bigger solutions: From wind and solar (MidAmerican) to batteries (BYD), human ingenuity—and patient capital—will conquer the “main technical problem of mankind.”
Each of these reflects Buffett’s core: never lose sight of margin of safety, act only where you understand, prize integrity and culture over cleverness, and keep a multi-decade time horizon.
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