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
  • 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

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”

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!”

These notes were edited by RoRoPa Editing Services