2015 Berkshire Hathaway Annual Meeting

Lessons from this meeting:

  1. Always Anticipate Change
    • Every business you own is subject to change—rapid or gradual—and you need management teams thinking ahead about how their models must adapt.
    • Slow (“invisible”) change can be even more dangerous than rapid change because it lulls you into complacency.
  2. Stay Within Your Circle of Competence
    • Be brutally honest about what you understand deeply versus what you don’t—and resist the urge to stray into areas where your knowledge is weak.
    • Leverage outside perspectives (trusted friends, partners) to help you identify blind spots in your own expertise.
  3. Intrinsic Value Trumps Market Price
    • Focus on the present value of all future cash flows (i.e. private‐business value), not short-term earnings or “comps” to indexes.
    • Qualitative factors (brand strength, management quality) matter as much as quantitative inputs in estimating value.
  4. Don’t Fear Concentration (If You’re Right)
    • A small number of big positions in your highest‐conviction ideas can outperform a broad, unfocused portfolio—provided the price is attractive.
    • That said, size constraints inevitably push you toward larger businesses over time; adapt your approach as your capital base grows.
  5. Mistakes Are Your Greatest Teachers
    • You will make significant errors; what counts is how quickly and effectively you “scramble out” of them and redeploy capital.
    • Avoid “bet‐the‐company” gambles; mistakes should be manageable, so you can learn without risking the whole enterprise.
  6. Buy Durable Moats, But Price Matters
    • Owning businesses with strong competitive advantages (brands, network effects, scale) is powerful—just insist on paying a rational price.
    • Even “moaty” businesses (e.g. Coke, AmEx) face disruption; always ask what could undermine their franchise and build that into your valuation.
  7. Cash-Light, Asset-Light Businesses Thrive in Inflation
    • If you can buy once (brand, royalty stream, real estate bought long ago) and not keep plowing in more capital, you benefit from inflation.
    • Capital-intensive businesses (utilities, railroads) constantly need more reinvestment and can see their “real” returns eroded by rising replacement costs.
  8. Patience Beats Aggression
    • When deploying big sums, you can wait months or years for the right deal—don’t let “analyst impatience” drive you into overpriced opportunities.
    • If cash piles up, consider share repurchases only when stock is clearly undervalued; otherwise, better to bankroll new acquisitions at fair prices.
  9. Management Quality Is Paramount
    • You want operators who treat “their” business as if they’ll own it forever, obsess over costs and customers, and honestly confront risks.
    • A culture of integrity and long-term thinking at the top cascades through the entire organization, minimizing the chance of catastrophes.
  10. Stay Rational—It’s a Moral Imperative
  • Continually strip away avoidable ignorance; it’s not just smart, it’s honorable to update your beliefs in light of new facts.
  • Emotional equanimity—never getting too exuberant in booms or too despondent in busts—is your greatest competitive advantage in markets driven by fear and greed.

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *