1998 Berkshire Hathaway Annual Meeting

Lessons from this meeting:

1. Buy a Home When You Need One
   • Purchase when you genuinely require the space—waiting only ties up capital unnecessarily.
   • Factor the implicit “return” (~7–8 %) you forgo versus keeping money invested.
2. Pay for Performance, Not Mediocrity
   • Reward outstanding leadership generously; it creates real shareholder value.
   • Abolish or curb bloated pay for average executives—it’s both wasteful and demoralizing.
3. Class B Shares Achieved Their Goal
   • They thwarted high-fee fund “alternatives” while broadening your shareholder base appropriately.
   • Economically identical to As (1 A = 30 B), with only modest voting and program-eligibility differences.
4. Minimum Investible Size Drives Your Universe
   • Berkshire only targets opportunities large enough to move the needle—roughly $500 M+ positions.
   • That cutoff hurts relative returns but is unavoidable given your huge capital base.
5. Let Subsidiaries Run Themselves
   • Decentralize all decisions—marketing, vendors, meetings—just don’t tinker with successful managers.
   • HQ’s sole prerogative: allocate capital; leave operations “just short of total abdication.”
6. Float Is Cheap Capital—Underwrite Only When Paid Right
   • Insurance float funds investments; it isn’t free money, so price judiciously and sit out soft markets.
   • Treat each underwriting decision like an investment: risk vs. expected returns, no “blind” volume chase.
7. Inheritance: “Enough to Do Anything, Not Enough to Do Nothing”
   • Leave heirs sufficient resources for meaningful pursuits—but not so much they never work.
   • Society’s goal: meritocracy, not dynastic privilege; heavy taxation on unearned wealth promotes fairness.
8. Steer Clear of Airline Stocks
   • The industry “just melts net worth”—capital demands are massive, returns volatile, and decisions agonizing.
   • Debt deals (e.g. USAir notes) can work if structured well, but common equity? “Not intriguing.”
9. Focus on Businesses You Understand
   • Stick within your “circle of competence”—if you wouldn’t drive a truck across a shaky bridge, don’t invest.
   • For complex or rapidly changing sectors, demand a wide “margin of safety” or stay on the sidelines.
10. Ignore Macro Noise—Price & Value Alone Matter

• Fed moves, fund flows, tax changes? None affect what the business itself produces over time.
• Always ask, “Would I buy and hold this if the market closed for five years?” If yes, focus on fundamentals.