Warren Buffett Speaks

When Warren Buffett, the world’s most famous investor, and his number two man Charlie Munger speak, people listen. And this year, more people than ever could listen in because, for the first time, Berkshire Hathaway’s (Berkshire) annual meeting was livestreamed. As always, topics of discussion included the health of the economy, investment advice, American politics, and observations on life. Additionally, shareholders had plenty of questions specific to Berkshire. They pressed Buffett and Munger on the health risks of sugar-filled drinks like Coke and how climate change might impact the insurance business.

Berkshire’s annual meeting is unique in the investment world for its combination of charming folksy traditions and blunt honesty. This year, a young boy beat Buffett in the annual newspaper tossing contest and won an ice cream bar. (Berkshire owns Dairy Queen.) And, when asked for his view on the global economy, Munger responded, “If you’re not confused, you haven´t thought about it enough.”

Berkshire’s Annual Letter to Shareholders is a must-read. In particular, buried among discussions of Berkshire’s holdings, is a powerful hopeful message worth sharing.

Buffett writes “it’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do. That view is dead wrong: The babies being born in America today are the luckiest crop in history. American GDP per capita is now about $56,000. As I mentioned last year that–in real terms–is a staggering six times the amount in 1930, the year I was born, a leap far beyond the wildest dreams of my parents or their contemporaries. U.S. citizens are not intrinsically more intelligent today, nor do they work harder than did Americans in 1930. Rather, they work far more efficiently and thereby produce far more. This all-powerful trend is certain to continue: America’s economic magic remains alive and well.”

He continues, “My parents, when young, could not envision a television set, nor did I, in my 50s, think I needed a personal computer. Both products, once people saw what they could do, quickly revolutionized their lives. I now spend ten hours a week playing bridge online. And, as I write this letter, “search” is invaluable to me. (I’m not ready for Tinder, however.) For 240 years it’s been a terrible mistake to bet against America, and now is no time to start. America’s golden goose of commerce and innovation will continue to lay more and larger eggs. America’s social security promises will be honored and perhaps made more generous. And, yes, America’s kids will live far better than their parents did.”

This positive perspective is important to cultivate in the midst of all the doom and gloom economic projections for low and slow growth. Focusing on our country’s many strengths can help us maintain the disciplined, long-term investment perspective that is necessary to meet our personal goals. With all the recent press on fiduciary duty, I’ll note that, in addition to always making investment decisions that are in our clients’ best interests, a trusted advisor should also believe in their clients in the same way Buffett believes in our country.

I’ll end by noting that when asked by a shareholder what he would have done differently to be happy, Buffett responded that he “couldn’t be happier in life.” As a trusted advisor, that is exactly how I hope our clients would answer that question.

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