Lessons from this meeting:
1. Preserve Your Independence
- Avoid even the appearance of insider trading. Buffett skips Microsoft despite its merits because any post-purchase move could be misconstrued as tipping from Bill Gates.
- Set off-limits lists. Identify securities you’ll never buy, not for lack of attraction, but to prevent conflicts and protect your reputation.
2. Ride Out Political Noise
- Ignore day-to-day headlines. America’s business cycle has weathered wars, panics and assassinations—and still delivered sixfold per-capita growth in one lifetime.
- Stay invested through ups and downs. When the fundamentals of a company and country remain sound, volatility is opportunity, not a reason to flee.
3. Seek Partner-Minded Managers
- Hire for “what can I do for Berkshire?” The best CEOs put company first, not personal gain—even when scaling large, complex businesses like Gen Re or MidAmerican.
- Trust, then test. Give talented teams freedom to execute, but reward real performance with meaningful upside—no need for one-size-fits-all comp formulas.
4. Know That Value Isn’t a Formula
- Ditch the spreadsheet illusions. True intrinsic value is the present value of future cash flows, not some elegant but misleading academic multiple or EBITDA shortcut.
- Mix qualitative with quantitative. Balance hard numbers (e.g. returns on tangible capital) with soft factors (brand strength, customer delight) to decide what’s truly underpriced.
5. Deploy Capital Sparingly—Then Pounce
- Keep a war chest. Berkshire holds a minimum $20 billion in cash so it can back up the truck when a once-in-a-decade deal appears.
- Don’t force deployment. If suitable large-scale acquisitions won’t come at the right price, return cash via buybacks or dividends instead of overpaying.
6. Buy Back Shares Only When It Makes Sense
- Think like an owner. If you’d gladly buy your own business at current prices, buy; if not, don’t—regardless of market trends or peer behavior.
- Let buybacks compound your stake. Even a small share of Apple can grow to a much larger position over time purely through disciplined repurchases.
7. Embrace Capital Intensity When Needed
- Cap-light is king—until you have more money than cap-light deals. When you outgrow high-ROIC niches, diversify into solid, capital-heavy businesses (railroads, utilities) bought at sensible prices.
- Aim for “good enough” returns. A utility yielding mid-teens on equity can be a fine home for idle billions when nothing cheaper’s on offer.
8. Beware Non-Productive Assets
- Gold, tulips, crypto = bubble fuel. Assets that produce nothing rely entirely on greater fools—eventually they crash, just like tulip bulbs and various collectables.
- Invest in productive capacity. Farms, factories or franchises generate real cash flows and dividends; non-producers merely shuffle wealth among speculators.
9. Offer Low-Cost Index Options
- Practice what you preach. Berkshire’s leadership may delegate 401(k) plan design, but every manager should still offer employees a passive, ultra-low-fee index alternative.
- Limit concentrated positions. Encourage diversification by capping in-house stock in retirement plans—no one needs 100% in Berkshire or any other single name.
10. Cultivate & Protect an Owner-Centric Culture
- Hire partners, not prisoners. Seek businesses whose founders share Berkshire’s ethics: honesty, long-term focus, servant leadership—and let them keep running.
- Let culture compound. A strong, self-reinforcing culture attracts like-minded managers and shareholders, ensuring your ethos—and returns—live on long after you’re gone.
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