2020 Berkshire Hathaway Annual Meeting

Lessons from this meeting:

1. Psychology > Timing
   • Only buy stocks you’re willing—and able—to hold through 50 %+ drawdowns without panic.
   • Treat equities like owning a farm: tune out daily quotes and focus on multi-decade horizons.
2. Prepare for the Worst
   • Always assume a “worse-than-expected” scenario (e.g., simultaneous pandemics, hurricanes, quakes).
   • Size your cash reserves and positions so that even a severe market shock won’t force you to sell.
3. All-in or All-out
   • When you decide to buy, go for a full position; when you change your mind, sell it entirely.
   • Incremental trimming merely burns trading costs and signals indecision.
4. Float Is Only as Good as What You Do with It
   • Insurance float can fund big opportunities—but only if you allocate it to truly attractive, understandable deals.
   • Don’t prop up chronically money-losing businesses with shareholder capital; cut ties or sell unless fundamentals improve.
5. Patience Pays (But the Deal Must Be Right)
   • You can’t force bargains—if terms aren’t compelling, it’s smarter to hold cash until they are.
   • Record Fed liquidity often dries up “special situation” opportunities; strike quickly when real distress returns.
6. Fortress Liquidity Trumps Leverage
   • Keep ample very-short-term government paper, not commercial debt or repo lines, so you can seize black-swan chances.
   • A “Fort Knox” balance sheet may underperform in the short run—but it never risks ruin.
7. Seek (and Value) Low-Capex, High-ROIC Businesses
   • Companies that grow without needing fresh capital (e.g. consumer franchises, insurance) compound best.
   • Capital-intensive businesses can work—but only if returns cover maintenance capex, and regulators allow cost pass-throughs.
8. Stay within Your Circle of Competence
   • Avoid leverage or exotic derivatives unless you fully grasp all inputs, outcomes, and collateral triggers.
   • Smartness (IQ) doesn’t guarantee wisdom; favor clear, understandable businesses over dazzling-but-murky schemes.
9. Buybacks Done Right = Selective Dividends
   • Repurchase shares only when they’re trading meaningfully below your estimate of intrinsic value.
   • Leave cash for growth, debt cushion, or even better buyback prices—don’t chase fashion or quarterly EPS boosts.
10. Never Bet Against America

• Despite setbacks, U.S. capitalism—with sensible regulation and social support—remains the best engine for wealth creation.
• Maintain faith in long-term growth, but ensure prosperity is broadly shared through smart public-policy safeguards.