2019 Berkshire Hathaway Annual Meeting

Lessons from this meeting

1. Stay Within Your Circle of Competence
   • Only invest in businesses you genuinely understand—if you can’t explain how they make money, you’re outside your circle.
   • Continuously read and learn to broaden your circle—but don’t force yourself into complex businesses you’ll regret later.
2. Look for Durable “Moats”
   • Seek companies with sustainable competitive advantages (brands, networks, unique assets) that fend off rivals.
   • A strong moat lets a great business generate returns far above its cost of capital over decades.
3. Value Discipline over Benchmark Chasing
   • Don’t buy a stock just because someone else touts it—do your own homework and stick to your investment criteria.
   • Outsmarting the market via “hiring specialists” often backfires; it’s better to focus on a few high-conviction ideas.
4. Beware of Accounting “Adjustments”
   • Sellers and bankers will propose all manner of pro-forma tweaks to inflate reported earnings—ignore them.
   • Insist on analyzing standardized, conservative financials; real, cash-based profits matter more than fancy metrics.
5. Be Patient—and Wait for “Clumps” of Opportunity
   • Maintain a cash reserve even in bull markets: truly great buying opportunities come in sudden, often panicky bursts.
   • Opportunistic capital deployment (e.g., the Occidental financing) can only happen if you’re ready and able to move quickly.
6. Margin of Safety Is Paramount
   • Only pay up to a price that gives you a significant buffer against adverse outcomes—overpaying ruins even the best business.
   • There’s no formula for risk; it comes down to conservative estimates of downside and a willingness to walk away.
7. Compounding, Not Headlines, Drives Returns
   • Focus on owning great businesses for the long haul—wealth accumulates quietly over years, not months.
   • Resist short-term performance pressures; even a slower but steady compounding machine beats frantic trading.
8. Cash Flow Beats “Cover” in Bull Markets
   • In roaring markets you may lag an index, but during downturns your cash cushion lets you buy bargains that turbo-charge returns.
   • A silent drag from cash is the price of flexibility; over time, disciplined re-investment wins out.
9. Ignore the “Noise” of Quarterly Reporting
   • Don’t get distracted by every twist and turn in earnings calls—track intrinsic value, not quarterly EPS beats.
   • Detailed segment disclosures can mislead: aim for the big picture of profit margin trends and capital-allocation results.
10. Mimic the Mindset, Not the Trades

• It’s not about copying specific holdings; it’s about adopting Buffett’s approach—circle of competence, margin of safety, and unshakeable patience.
• Your results will differ in scale, but the underlying principles of rational, long-term thinking translate to portfolios of any size.