The Oracle of Omaha.

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Greetings Gentle Reader,

So we road-tripped to the Berkshire-Hathaway's annual shareholder's conference.  M owns a fraction of an A-, or maybe it's a couple of B-shares, so we joined her oldest son on a road-trip to Omaha, NE.  Also visited M's oldest sibling, lives just across the river, where the corn side's crunchier, and we had a nice dinner with them on Friday.  Saturday, we filed into an overflow room (after a late start) and listened to the Warren and Charlie Show.  They dispensed a lot of wisdom, curiously no questions about behavioral economics around which most of their advice centered.  It was witty and funny, and in spite of their humility, they're clearly the smartest guys in that room (40,000 people attended) which added even more to the experience.

But it seems to me that the “secret sauce” of B-H is simply that they buy old brands.  They are choosy once they get a lead, but ultimately, they play in an area of very limited size.  I mean, now that they're majority holders of IBM (8%?), Coke (9%?), BNSF…who else is gonna buy that much into them?  Who's gonna top them?  And who wants to repeat their performance, they're playing in this tiny field and they've got more than enough money to dominate that segment, so what's the point?  They're insanely conservative, by sticking to brands with a track record, and avoiding tech, the result is they're fascinating to watch, but silly to emulate.  The thing to do is 180 them, and try to get off buying new brands and make them last.  Get into the business of making brands solid.  Of course, people have been trying that forever, and it's paid pretty poorly, tending to reward the pirates and plunderers.  Still, listening to all the “what advice do you have for [a young person starting out]?” I started to get bored.

I'm also impressed with how infrequently they answered the question.  They talked a LOT, but they said incredibly little.  For example, in an earlier remark, they dropped the hint that they'd seen bad business plans, and some outright fraudulent.  When confronted head-on to recite those cases, they demurred, and essentially fell back on the “you can smell a rat.”  M's son was disappointed, as he thought they should've taken Enron as a specific example and taught the lesson.  Sitting here now, I wonder if they didn't want to make their opposition (the fraudsters) better, or if they were more in “smokescreen mode.”  As I said, they were incredibly entertaining and there were a lot of very good life-lessons, but they were not giving hard answers.

Really had a good time, I was surprised by Omaha and environs, I'd like to go back.  We may do the moto-trip this had intended to be, when the weather gets better.  Snow, or May 3rd?! WTH?  I'll tell ya, Hwy 169 through MN is awfully pretty.

My advice: This is like motorcycling and parachuting: If you're even thinking of this annual event as something to see, then you simply must do it.  The only loss is in not  doing so.