this blog is written by NANDISH DESAI at https://www.jagoinvestor.com/2019/06/berkshire-hathway-agm.html
9 Lessons learned from the sharing of Warren Buffet
I am putting 9 points I learned from Warren Buffet which I made out of what he spoke in the AGM.
#1 – On Happiness: This one was an eye-opener for me. Most of us equate money with Happiness whereas Buffet made a point, happiness is not a place to reach rather it is a place to come from or operate from. If you are not happy with your current net-worth you won’t be happy by adding a few more lakh or crore to your net worth. He is asking us to focus on things that make us happy in the right now moment.
#2 – On Workability: The bold statement made for investors was very profound, “ All you need is to do is figure out what works and just do it”. Every investor has to discover his or her own process of investing. During the journey keep your eye on what is working for you. For example, in the area of health if going to the gym is working then go to the gym every day, and if yoga fits in your schedule then do yoga regularly. The focus is on bringing workability and staying engaged with the sport called wealth creation. There can be various ways to build wealth, you need to figure out what works for you.
#3 – On Building Competencies: Warren insisted on building and expanding one’s personal competencies. He insisted on investing in one’s own self more than anything else. The future belongs to masters and not to incompetent individuals. He also gave some examples of professionals you will never approach just because you doubt their competency level. You can do your own SWOT Analysis, find your strengths, weaknesses and it will help you to explore newer opportunities and will help you to eliminate weaknesses.
#4 – On Human Behavior: There are many books written on warren buffet and his investment style, however, he insists on reading people more than books. The real insights about human behavior can only be learned when you sit with someone and have a deeper conversation. Every human being is like a book filled with experiences and he invites everyone to spend more time with other beings.
#5 – On Investments: Price has the power to make or break any investment decision. When you buy expensive it can turn any deal into a bad deal. Maybe he was pointing towards buying when markets are low and having a hold strategy. Once a stock is bought, you can’t reverse or do anything if the price falls down.
#6 – On Making investment Mistakes: Warren was generous enough to admit some of his mistakes on a public platform. In the world of investments, you are bound to make mistakes and going wrong is part of the game. Berkshire Hathway was a late entrant in the technology front and they admitted the same. They are slowly moving out of their old school of thoughts to match with the new shift happening out in the world.
#7 – On Succession plan: Some Questions in the AGM also came around his succession plan and asking to hand over the stage completely to his team of managers. As a person sitting in the audience I felt, it is a bit hard for Warren to leave the limelight but in next 1-2 years his managers will lead the AGM and will find space on the stage rather than sitting in the first few rows of the AGM
#8 – Big NO to IPO: He advised investors to stay away from hot IPO’s that float into the market. His logic is very clear, these companies may have huge growth potential but they have yet not shown or generated profits. There are few companies he named as well who show growth potential but the numbers they are generating are not sufficient for him to make any investment decision.
#9 – Focus on the BIG picture: He used a very interesting metaphor of owning a stock with owning a farm. By simply owning a farm and watching your farm every day won’t yield you any returns. One has to work hard on the farm to deliver the output. Similarly, by watching the stock price every day won’t serve you, the stock price will grow only when the company delivers performance over a period of time. He is again asking you to buy the right stock or equity or fund and hold for a longer time. Some people check the NAV very often, now it is not a good practice at all ( stop watching your farm).