
May 10, 2019
Berkshire Hathaway 2019 Annual Shareholders Meeting – Buffet and Munger on Human Behavior, Risk, and Advice For Someone Looking to Manage Money
These notes are taken from a brief section of the Q&A portion at the 2019 Berkshire Hathaway Annual Shareholders Meeting
Key Takeaways
- If you’re managing someone else’s money, you NEED to both be in sync on expectations and ground rules
- The only way to really learn about human nature is through experience, not by reading books
- Simple advice from Charlie Munger – Figure out what works and repeat it
Advice For Someone Looking to Start an Investment Fund and Manage Money
- Warren Buffet
- “You don’t want to manage other people’s money until you have a vehicle and can reach the kind of people that will be in sync with you”
- You NEED to have your own expectations and ground rules which other people need to be in sync with
- You and the person whose money you’re managing need to be on the same page
- “If we aren’t on the same page, then I don’t want to manage your money”
- “It’s ENORMOUSLY important that you don’t manage the money of people who have expectations of you which you can’t meet”
- This likely means you’ll turn down many people early on and start small
- How do you know when you’re ready to manage someone else’s money?
- When you have the confidence that if your own parents came to you with all their money, you’d be able to guarantee them a decent return over time
- “You don’t want to manage other people’s money until you have a vehicle and can reach the kind of people that will be in sync with you”
- Charlie Munger tells a story:
- A young man (let’s call him David) came to Mozart asking how to compose symphonies
- “How old are you?” – Mozart
- “22” – David
- “You’re too young to write symphonies” – Mozart
- “But you were writing symphonies when you were 10 years old!” – David
- “Yes but I wasn’t running around asking other people how to do it” – Mozart
- A young man (let’s call him David) came to Mozart asking how to compose symphonies
Human Nature & Behavior
- Warren
- “You can and should understand human behavior better as you get older”
- “I don’t think you can really get to be an expert on human behavior by reading books, no matter what your IQ is or who the teacher is”
- You have to learn it through experience
- Charlie
- Lee Kuan Yew has famously said “Figure out what works and DO IT”
- “Go at life from this simple philosophy, you’ll find out it works wonderfully well”
- Lee Kuan Yew has famously said “Figure out what works and DO IT”
Thoughts on Risk and Decision-Making
- Anjit Jain
- Without enough data, investing becomes more of an art than a science
- In situations where data is lacking, Berkshire always tries to cap their exposure to limit how much money they can lose
- Warren
- There’s a BIG element of judgement in what Berkshire does
- “Don’t try this at home…it’s not very teachable”
- “It’s not something that Berkshire has some secret formula for…it’s a very unusual talent”
- Charlie adds – “We’re not holding anything back, it’s hard!”
- There’s a BIG element of judgement in what Berkshire does
These notes were edited by RoRoPa Editing Services