Berkshire Hathaway Annual Shareholders Meeting: Key Takeaways
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Buffett Palooza, yep, took place this past weekend, Omaha, Nebraska. We’re going to go over some of the highlights from Buffett Palooza. And that is many of my long term listeners, followers, clients. No, we follow Lauren and Charlie very closely. I actually going back to things that I learned back when I was in high school playing sports, teachers that I had. Father, you know, you want to.
you want to be really good at something. You might want to study the habits and the practices of people that have been there and done that. And that’s what we’ve done at Markowski Investments. We look at what has worked over the years. And I’m talking over the years. I’m not talking the past five years, 10 years, 20 years. I’m talking decades. I’m talking generations.
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that the things that we try to get across here on the program, some of the wisdom, investing wisdom actually comes from the Bible, ideas in regards to diversification. Warren Buffett, we talk often about Benjamin Graham and his teacher, The Intelligent Investor. Not a very exciting book to read, but necessary because it works. Let me explain this. See, I actually got some of the numbers here. Berkshire Hathaway’s compounded annual gain.
from 1965 through the end of last year, 19.8%. It’s outstanding. 9.9% for the S&P 500. Again, that’s a return of 3,787,464% versus 24,708%. Over the past 10 years.
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Berkshire’s, it’s returned about 11% a year, a little bit off the norm, but again, that’s also due to the economic climate that we’ve been in and the fact that it’s been a much slower growth and we’ve talked about that as well. Berkshire’s had the way performance during recessions and bear markets. Another thing that we pride ourselves on at Markowski Investments, very, very good.
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Outpace the S&P 500 each time the market dropped 20%, beating the broader index by 14.9 percentage points. Okay, Berkshire Hathaway conglomerate. They own a lot of private businesses as well and can do things that us, of course, mere mortals. Now, I mean, we could do it. We’d have to obviously structure.
what we do at Markowski Investments differently. As in, again, we provide a family office for everyone. It’s a completely different concept, and it works for us. But yeah, this is what we work for. This is what we strive to do, and we’re gonna continue to strive to do. Some of the things, I’m gonna go over some of the highlights took place at the meeting, because again, some of the things kind of echoes what we talk about here on the show.
Um, was it a week or two ago here on the program? Not mistaken. I was talking about sharks, sharks and animals and my son, Steven, when he was younger and trying to differentiate between good animals and bad animals and trying to explain to them, there’s no such thing as a bad animal. They just do what they do. Well, he eats talking about the opportunities that present themselves when you are a value oriented investor. Again, Benjamin Graham. Okay. Everything.
has an intrinsic value, everything. I look at something, I say, what is that worth? What’s that worth? I wanna buy below its intrinsic value. I wanna sell above its intrinsic value. Side note, okay, I’m looking to move back to the state of Florida. Once my son finishes high school, he’s got one more year left. I can’t wait. But anyway, I’m looking at homes down there.
Southwest Florida, Tampa, Sarasota, our main office happens to be in Tampa. And again, I’ll look at something and I’ll say, wait, you know, that’s, you know, my opinion, that’s a little bit overvalued. I can see the intrinsic value that at home, what I feel is the intrinsic value of that home and I won’t overpay. I won’t overpay. I’ll wait. Same thing holds true when it comes to investing.
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You know, Warren, Charlie, they look at a company and they say, you know, what is this worth? What am I willing to pay for this? And again, that that’s, it’s a key that alludes most people out there. And he talks about value investing. In essence, you’re, you’re taking advantage of it. It is what it is. You’re taking advantage of, I guess that oftentimes the stupidity of others.
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And I quote Warren from this. He says, what gives you opportunities as other people doing dumb things? Munger said value investors should be comfortable making less because there’s more competition. He said there’s a lot more in the hands of smart people, a lot more money in the hands of smart people trying to outsmart one another. But again, he points out that the world is overwhelmingly short-term focused.
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And I agree wholeheartedly, they are. Hey, it’s some, it’s kind of funny. I’m dealing with right now in what I do and trying to get our message across here. I mean, the old school way of doing things and radio and AM and the radio show that I’ve had for 20 some odd years. And I’ve got to get involved in social media and the algorithms, oh no, you gotta have your.
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Shorts have got to be less than a minute. The attention span, the attention span for people is awful. And that doesn’t make for good investors. We talk about that in our rules of the road. The need to be patient. Also talked about over diversification. Another topic that has come up from time to time here on our program as well. People…
thinking that they need this vast amount of diversification, how it’s necessary to be an investor in common stocks. It’s not.
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It’s not over diversification. It just it gets ridiculous. And quite frankly, you’re not able to get your arms around all of these companies. And I kind of see that all the time with with Bloody Kramer on CNBC. You know, they don’t saying a little bit of knowledge is dangerous thing. That guy’s got an opinion on every damn stock that’s out there. And you know, I know a little bit about certain companies, but I’m not going to open.
pine on them when I really don’t know, I haven’t taken that deep dive into them. There’s no way it’s not possible. Oh, I hate you. Aren’t you afraid of missing out? No, no, I don’t do FOMO kids. I don’t. When it comes to again, this is interesting to artificial intelligence. Again, hot topic right now and another.
piece I’ve got to get into maybe tomorrow maybe maybe even today later on by Andy Kessler in the Wall Street Journal, but Charlie Munger expects old fashioned intelligence works pretty well over AI. And again, I happen to agree. However, however, artificial intelligence is going to do I think in many respects going to do with many industries the world a great service.
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And I know the collective freak out right now is, oh my God, all the job losses. No, jobs will be created when that comes. And again, I’m gonna save that topic and we’ll do that another time. Again, I agree with Charlie wholeheartedly on this one. The conflict between the US and China is, and I quote, stupid, stupid, stupid. Yep.
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Yes, it is. Yes, it is. It’s unnecessary. It’s harmful. It makes no sense whatsoever. Again, I continually see all of these hawks and, you know, China hawks and generals and they’re parading themselves on Fox News and, oh, we got to do this and we got to do that. Again, I don’t fear competition. I embrace competition. Competition is a great thing. It’s a great thing for our country.
I remember we talked about iron sharpens iron, right? I talk about sports. Sports always wanting to play against the best. That’s just going to make you better. Correct. Anyway, again, we should be handling this in a very different way, because it’s stupid for China, too. They’re just as dumb. There’s just as dumb. I had one of my listeners and I since I was
Last week I was talking about immigration and the border wall. We’ve had a back and forth and, you know, thickhead, testadora and Italian. We got both the United States and China using the test to do it right now. I mean, come on, people work this thing out here. Warren Buffett mentioned that we don’t get smarter over time, but we get a little wiser. What does that mean?
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I think it goes, in my opinion, what he was trying to say is that you might not understand. You might not understand the ins and outs of a certain business, but you can understand the behavior of human beings. You can understand the cost structure. You can take a look at what consumers might want. There’s a myriad of different things.
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business is. And in a way, in the same way that guess what? I don’t know, I have not a clue on how to do how dry cleaning works. Be honest with you, I don’t. I don’t, but I could go and I could take a look at the books of a dry cleaning business and say to myself whether or not it’s a good business or not, whether or not it’s something I’d wanna take an interest in. Same concept. Commercial real estate.
Again, it’s the other, it’s a 10,000 pound grill in the room that everybody keeps talking about. And yeah, commercial real estate is, it’s an industry and so many times over the years, I’ve been, you know, why don’t you get involved and do more real estate? And it’s, it’s not for me. It’s not for me. Um, I, I, I’m a big believer. I’m a big, just, it’s, again, it goes with just my thought process.
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I believe if I’m going to borrow money from someone, an institution, whatever it may be, I’m going to pay it back. Part of the whole commercial real estate business is again, is the fact that, hey, hey, you borrow all this money and you can’t pay it back while you turn the keys in. Can you say to yourself, how in the world? I’ll use Donald Trump as an example.
Could declare bankruptcy all these times and have all of these casinos go out of business and lose all of this money and still be flying around on a private jet. It’s commercial real estate. And again, it takes two to tango. Let’s be honest here, okay? It does, it takes two to tango. The lenders don’t have to lend the money. Okay, what else here do I have? Oh, Apple, Apple.
again, it’s a major position in Berkshire Hathaway’s holdings. Again, full disclosure, we own a great deal of it as well. It’s talking about how large his position is in the company. And again, it’s the quality of the business.
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Um, and I’ve talked about this before. I had to be.
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remember the exact year, it’s probably 2008, 2009. 2008, 2009. At that point in time, all of Markowski Investments, all of Markowski Investments was running on Windows PC. And for a while, Windows was really putting out some crappy product. I mean, it was just Windows 2000, Windows ME, it was just, it was brutal. And I found myself having to throw away computers
Yeah, about every year and a half. Every year and a half, you know, we don’t have a blue screen of death running into all of these issues. I remember trying to use certain devices and plug things in and downloading drivers. There was a great commercial by Apple back in the day. He’s talking with some girl like Christmas talking about how it just plugs it in and it works. And to make a long story short.
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I said, that’s it enough, we’re gonna go through Apple. And at that time, we also, a lot of the banking and trading software only worked on the Windows based platform. So we actually had a separate server outside that we would log onto via our Apple computers to utilize that stuff, because I didn’t want any mixture and messing things up. But anyway, neither here nor there, I’m in. We’re in, we’re in, they got me.
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They got me. I’m a part of the Apple Borg. Part of the Apple Borg. And again, I look at my credit card bill, you know, Apple charge, Apple charge, download movies, apps, whatever it may be. And to be honest with you, I’m fine with it.
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I’m fine with it. And it is Warren’s quote. He said, Apple has a position with consumers where they’re paying $1,500 or whatever it may be for a phone. And the same people pay $35,000 for having a second car. And if they had to give up a second car or give up their phone, they’re going to give up the second car. He’s right. You know, you think about it. What an extraordinary.
product it is What it allows you to do I’ve equated it. It’s like super being a superhero It really is and what do I mean by being a superhero by being you know, it’s not making you fly But most certainly, you know making you brighter smarter Hey, how many times I mean I’m just use this in his you know, I’m on vacation with the family. I’m somewhere in Greece and I see a
a statue or a monument or something, I don’t know what it is, I can look it up. I can look it up right then and there and get the answer to all these questions. Again, I find it fascinating to some degree, it really is, and how misused these things are. I mean, kids spending their time on stupid TikTok videos, you could be taking a class at MIT.
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You know, we mentioned, oh, yeah, job losses. You can get a bloody education on your phone at any point in time. Anyway, anyway. He says, we don’t have anything like that that we owned 100%, but we’re very, very happy to see 5.6 or whatever it may be percent, and we’re delighted every 10th of a percent it goes up. And actually, he even said he made a mistake a couple of years ago by selling some of his position. And then, you know, you wanna do a juxtaposition. He was comparing.
Apple, there was like some questions in regards to Apple and Elon Musk and Tesla. And Warren made the statement and said, I know where Apple is going to be in five to 10 years, but not in car companies. And he pointed out Elon Musk and how successful he is. Um, and you know, Elon Musk takes on, he mentioned, he said, taking on the impossible job that he highlighted some of the differences that they have. He said, um, Elon Musk overestimates himself, but he is very talented.
Musk wouldn’t have achieved what he has in life if he hasn’t tried his unreasonably extreme objectives. He likes taking on the impossible job and doing it. Conversely, he said, Warren and I look for the easy job that we can identify. Bloody fantastic point. Bloody fantastic point. And again, it’s someone who has some, we’ve owned Tesla at different points in time, different portfolios over the years.
But in the same sense, we wait. We’re very, very cautious at Markowski Investments. How we do business is why we’re successful. Another great example of this is Amazon. And I know I’ve talked about this going back to the 1990s. I could have got in at the IPO for Amazon. And.
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Again, you know, we took a little bit here and there, but, you know, up the investment banks, why you got to get the IPO? You got to buy X amount in the aftermarket. There was so many. Again, I go back to that point in time. There were so many internet retailers that were popping up here, there and everywhere. Nobody knew what was going to work. And so we waited, waited. Amazon, you know, just sold books. Just sold books.
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Does a little bit more than that right now, does it not? Anyway, oh, the dollar reserve currency. Again, big topic out there. Oh, my God, what’s going to happen to the dollar reserve currency? And they said it’s very, very, very unlikely that the U.S. dollar is going to be dethroned as the reserve currency, even taking a consideration or the debt ceiling and money printing.
He says, we are the reserve currency. I see no option for any other currency to be the reserve currency. But again, he offers caution that, you know what? We’ve got to get our act together when it comes to spending and when it comes to debt. You get to a point in time when it gets ridiculous. And then they bring up Japan. And that’s the point that we’ve brought up too. Japan is a completely different culture than ours.
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It is a completely different culture. Yeah, Charlie, what’d he say? He said, I wrote down, Japan, everybody’s supposed to suck it up and cope. In America, we complain. And again, we don’t want to have the type of anemic growth that they have in Japan because it leads to other things. It leads to other things. It’s already starting to lead to things here in the United States that we don’t want. There’s a declining birth rate, which is very bad. Japan’s is a disaster.
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Japan’s a disaster. Again, when people say, you know, I just can’t afford to have kids anymore. It’s happened throughout the whole Mediterranean and Europe. Major problem, problem in Japan. Demographics are important. Um, talked about the banking system and he doesn’t think that the banking system is going to fall apart.
But he doesn’t think depositors should really worry about the situation. When it comes to cryptos, we all know Charlie is very famous when he talks about cryptos and going after them. He says, forget about all the toys. It’s a joke to think of any any tokens. That’s madness when it comes to the reserve currency of the world. OK, he’s right. It’s not it won’t be a reserve currency, and it’s not an alternative by any stretch of the imagination.
If it was an alternative, again, if it was any sort of hedge, why did it collapse when inflation was running through the roof? How did that happen? Anyway, I like this as well. Interesting. Buffett said you should write your obituary and then try to figure out how to live up to it.
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He’s also in that same point, he’s trying to stress, and it’s just setting goals, setting goals. And we talk about that all the time, rather than, we don’t like calling it financial planning, I like calling it financial preparation. You’re doing things, you’re putting money away, all of this stuff so you can take advantage of opportunities that are gonna come by in life. But anyway, Buffett also stressed the importance of kindness, talking about how he knows rich people who’ve died without friends.
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When it comes to investing, again, exactly what we’ve been talking about here. What we talked about this past weekend on the radio show, getting into, you know, Nicholas Taleb talking about not allowing risk to lead to ruin. Risk is fine, but you can’t allow it to lead to ruin. When it comes to investing, the most important thing is just to not make any mistakes that completely crush your strategy. And again, talking about debt for individuals.
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You should avoid it. Outside of your home mortgage, you need to avoid it. And again, this is something Charlie had to say. You should never have a night when you’re worried about investing. Never. You should be putting money away. You should, again, Charlie talked about, deferred gratification. But that’s with everything.
and life, it’s simple life lessons that they’re getting across here. Um, it’s talked about, you know, some of the green stuff here. And again, it’s just common sense, common sense stuff, stuff that we’ve talked about here as well. I, again, I don’t have any problem. I don’t have any problem with solar panels or windmills or any type of renewable, if they make sense. If they’re not being.
subsidize. If they make sense, I am all for it. And Munger talked about all the false claims in regards to climate change, but he also said coming up with new energy sources and energy transition to other things, it makes sense. Even if we weren’t worried about global warming, it would make sense to shift to renewables to conserve our hydrocarbons. There’s certain things hydrocarbons can do that nothing else can do.
And there’s only so much of them out there. So we should be, obviously cautious in conserving them. Okay, again, just common sense type of an approach to the situation and not letting things get out of hand. Anyway, again, they had another great year, another great year. And I wish, we’re one of the goals here. And I said, things I strive to do is to get people to
you know, pay attention to this old school logic, wisdom, whatever you want to call it. I talk about that in almost everything. You know, it’s, you know, I’ve talked about it in terms of, oh, what’s on the New York Times bestseller list for books? I could care less. I’m, most of the books that I’m reading, more often than not, are, you know, stuff that’s been on the bestseller list for a long, long time. There’s a lot, there’s a lot out there that you can learn from that.
You go to a town, go to a town or you’re someplace new, you know, the concierge, oh, I got this new hot restaurant. No, I don’t want the new hot restaurant. I want the restaurant that’s been there for a long time because they’re gonna get it right. And again, I may sound arrogant here, but I’m a big believer that there’s a right way of doing things and a wrong way of doing things. I…
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do enough research, I see enough portfolio managers fly by night, hedge fund guys, all these crazy strategies that they’ve got out there. There’s no shortcuts, people.
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There’s no shortcuts. I’m gonna end on, it was kind of, just popped in my mind actually. Classic comedic film in my opinion. Something about Mary when Ben Stiller happens to pick up, happens to pick up a murder or serial killer in his car that is discussing his business idea, which is some six minute abs.
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Yeah, six minute abs videotape because there’s a seven minute abs videotape. Why not do a six minute abs videotape? Again, there’s, there’s no shortcuts out there. People. And again, um, Buffett’s theme, Munger’s theme, uh, Benjamin Graham, many others, everything in life that has meaning, value, and worth involves work, time, and effort. That’s, that’s what they’ve done. That’s what Berkshire Hathaway has done.
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