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By Kostya Etus, CFA®, Chief Investment Officer, Dynamic Investment Management

“All I want to know is where I’m going to die, so I’ll never go there.”

– Charlie Munger (January 1, 1924 – November 28, 2023) – Legendary investor, philanthropist, and friend.

As it has become tradition, this is my third annual review of key takeaways from the Berkshire Hathaway annual shareholder meeting held in my hometown of Omaha, Nebraska.

This year was more emotional than most, given last year’s passing of Warren Buffett’s close friend and partner, Charlie Munger. A moving introductory movie had many in tears as it recapped the great memories that this investment duo shared over the last 50-plus years.

Perhaps the most touching moment of the day came after the first question from the audience. After Warren finished his reply, like he has done countless times before, he uttered the iconic phrase out of habit: “Anything to add Charlie?”. Those four words were followed by a standing ovation which felt as if frozen in time. It was an unforgettable moment, appropriate for an unforgettable man.

Key Takeaways:

1. Be humble, never stop learning, admit your weaknesses, and give credit where due.
2. Take responsibility, trust in yourself, be brutally honest, and learn to identify unique risks.
3. Investment success comes from believing in and sticking to core principles and values which have been proven over time.

Humility

Be humble. All Warren and Charlie ever talked about is how much they learn from each other, as well as their mentors. Warren talks about how much he learned from Benjamin Graham, his professor at Columbia University, who is known as the “father of value investing”. And Charlie would say that he learned from Benjamin Franklin, the “father of electricity”. Although they had never met, Charlie felt like he learned from all of the greatest minds through their books and biographies. Warren would ask him, “if you could go to lunch with anyone in history, who would it be?” And Charlie would reply with “nobody, I’ve already met them all.”

Here are a few strategies for success which resonated with me:

1. The starting point is to surround yourself by great people and learn as much as you can. But it’s not just pursuit of knowledge, without people that you trust around you, life wouldn’t be very fun.
2. Know your strengths, but more importantly, know your weaknesses and be quick to admit them. Ignoring your weaknesses is where bad decisions start from. Always strive to be better and never stop learning, a great saying he references: “be pleased, but never satisfied”.
3. Always talk about others more than yourself and place credit where it’s due. Respecting and appreciating others are integral to growing strong bonds. Build trust, and leave your ego behind. But also remember, it’s not just about what you say, what you do is most important.

 Accountability

Always take responsibility for your actions, particularly the mistakes, and learn from them. This builds trust with others and strengthens relationships. And of course, Warren likes to reiterate that mistakes make you smarter, and he’s made many of them in his long life. He recalls that making mistakes with his partner Charlie was actually fun, as it allowed them to work through issues together.

A few great stories Warren tells:

1. Believe and trust in yourself. Charlie was a great advisor to talk with, but the best conversations that Warren had were with himself. Talking to yourself can be a great way to gain confidence in a decision, even when others disagree.
2. Be brutally honest (just like Charlie, who always told it like it is). It’s not always comfortable, but it may be the most important trait. You learn to cherish those people who are honest, while others are less memorable.
3. Learn to identify the unique risks. Warren mentions that he doesn’t get into businesses he doesn’t understand, such as artificial intelligence (AI). He reminisced about a recent experience where he saw a video of himself talking: it looked like him, wore the same clothes, even sounded the same… but the words were not his own. This type of technology could be used to scam people, for example a daughter asking a father to send her money. He jokingly admitted “the video was so convincing; I would have sent myself money”. As Warren has done in the past, he tied AI to the creation of nuclear weapons – once you let the genie out of the bottle, you can’t get it back in.

Investability

Warren has used the same investment principle from the start, choose companies that offer something that everyone needs, and purchase them at the lowest cost. And he believes these principles and values are ingrained in Berkshire’s core and will outlive any one person. Additionally, he notes that while understanding a business is integral to investing in it, one thing he has learned is that consumer behavior may be just as important in identifying growth potential.

Key investment examples discussed:

1. Evaluate which industries people can’t live without: insurance, utilities, real estate brokerage, etc. These are the types of companies to build the core with. Warren spoke in depth about insurance being the most important business for Berkshire.
2. Invest in companies which are not only essential to people, but also to the country. These are companies which will live in perpetuity, and perhaps the best example is railroads.
3. Identify products which have an incredible dependence. Warren tells a great example about Apple, if a family was posed with an option to keep a second car or an iPhone, most people would get rid of their second car.

In summary, as my comments suggest, this year’s Warren’s words of wisdom were less about investing and much more about how to live your life. And Warren has lived a great one. He reminds us to live life in a way that you are happy with what you are doing every day. Have fun, and do it with people you love and trust, no doubts.

Ask yourself the question “Who do I want to spend the last day of my life with?” Go find them now, why wait for the last day! Cheers to the greatest investment duo in history, to Warren and Charlie, you will never be forgotten!

I am overjoyed to have had another year with Warren, and hope there will be many more!

Disclosures

This commentary is provided for informational and educational purposes only. The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. This is not intended to be used as a general guide to investing, or as a source of any specific recommendation, and it makes no implied or expressed recommendations concerning the manner in which clients’ accounts should or would be handled, as appropriate strategies depend on the client’s specific objectives.

This commentary is not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation. Investors should not assume that investments in any security, asset class, sector, market, or strategy discussed herein will be profitable and no representations are made that clients will be able to achieve a certain level of performance, or avoid loss.

All investments carry a certain risk and there is no assurance that an investment will provide positive performance over any period of time. Information obtained from third party resources are believed to be reliable but not guaranteed as to its accuracy or reliability. These materials do not purport to contain all the relevant information that investors may wish to consider in making investment decisions and is not intended to be a substitute for exercising independent judgment. Any statements regarding future events constitute only subjective views or beliefs, are not guarantees or projections of performance, should not be relied on, are subject to change due to a variety of factors, including fluctuating market conditions, and involve inherent risks and uncertainties, both general and specific, many of which cannot be predicted or quantified and are beyond our control. Future results could differ materially and no assurance is given that these statements or assumptions are now or will prove to be accurate or complete in any way.

 Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit and inflation risk; investments may be worth more or less than the original cost when redeemed.

Investment advisory services are offered through Dynamic Advisor Solutions, LLC, dba Dynamic Wealth Advisors, an SEC registered investment advisor.

Photo: Kostya Etus