The Wit and Wisdom of Warren Buffett

warren buffett berkshire hathway shareholder meeting

OMAHA, Neb. -- Billionaire Warren Buffett dispensed plenty of advice on investing and life during this weekend's Berkshire Hathaway shareholders meeting.

The wisdom Buffett and his investing partner Charlie Munger offer is part of what attracts more than 30,000 to the meetings each year.

Here's a sample of their insights:

Investing Success
Buffett and Munger told shareholders that successful investors must learn all they can about the businesses they are buying and stick to industries they know, but the right temperament is also important.

"You just have to avoid getting excited when other people are excited," Buffett said.

Admittedly, it's hard to continue to make rational decisions about investments when the stock market is soaring, but it has proven profitable for Berkshire Hathaway (BRK.B) (BRK.A).

"We've always tried to stay sane when other people like to go crazy," Munger said. "That's a competitive advantage."

Disadvantages Of Size
Berkshire Hathaway's size and its $49 billion cash pile allow Buffett to do bigger deals than ever, like the recent deal to buy half of the H.J. Heinz Co. (HNZ) in a $23.3 billion transaction.

Buffett reminded shareholders that size does have its disadvantages. He said it will continue to get harder to meet or exceed Berkshire's past returns.

But Munger said he's confident the conglomerate will still perform well over the long term.

"Of course our annual gains will slow down a bit, but it will still be very pleasant," Munger said.

Buffett said he's just as passionate about investing and running Berkshire Hathaway as he was when he was younger.

"You have to love something to do well at it," he said after a questioner suggested he'd lost some intensity at age 82.

Buffett said hunting for acquisitions and thinking about Berkshire is what he enjoys.

"There's nothing more fun for me than finding something new to add to Berkshire," he said.

Fed Fortunes
The Federal Reserve's aggressive bond-buying program has helped stimulate the economy, but Buffett said it may be hard for the Fed to safely unload its $3.4 trillion investment portfolio.

"It's a lot easier to buy things than it is to sell them," Buffett said.

The Fed has been buying $85 billion a month in Treasurys and mortgage bonds to try to keep long-term borrowing rates down and get the economy moving.

Buffett said it's hard to predict what will happen when the Fed starts unloading bonds, but it's likely to be "very inflationary."

"We really are in uncharted territory," Buffett said.

Berkshire Hathaway's Future
Buffett said he doesn't expect his successor to make any significant changes to Berkshire Hathaway after the 82-year-old investor is gone.

Buffett faced several questions related to the future of the Berkshire conglomerate he built.

Berkshire's next CEO may make some changes in how many of the more than 80 subsidiaries report to him directly, but he expects the company will remain extremely decentralized.

And Buffett said he doubts it would make sense to split Berkshire into several different pieces.

"Breaking it up into several companies, as far as I'm concerned, would produce a poorer result," Buffett said.

And even though Berkshire's next CEO won't have the Oracle of Omaha's reputation and connections, the company will still have a huge pile of cash to invest.

"In times of distress, few people have capital and even fewer are willing to commit," Buffett said.

As usual, Munger cut straight to the heart of the issue.

"I want to say to the many Mungers in the audience, don't be so stupid to sell these shares," he said.

"That goes for the Buffett family, too," Buffett said.

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Jim Bell

Every time Warren Buffett says something for publication I am reminded of a song in Fiddler on the Roof. In "If I Were a Rich Man", Tevye sings:

"The most important men in town would come to fawn on me!
They would ask me to advise them, like a Solomon the Wise.
"If you please, Reb Tevye..."
"Pardon me, Reb Tevye..."
Posing problems that would cross a rabbi's eyes!
And it won't make one bit of difference if i answer right or wrong.
When you're rich, they think you really know!"

That's Warren Buffett.

May 06 2013 at 10:47 AM Report abuse +1 rate up rate down Reply

Buffett is a saavy, RICH businessman, a democrat, so he is acceptable in the world of the liberally biased. He got where he is by being careful with his dollars, investing and growing companies and eliminating the slaggards on his payrolls...

May 06 2013 at 10:20 AM Report abuse +1 rate up rate down Reply

Contributions are the simple reason there is no Flat tax. Does this make sense ???Make the rich pay their fare share. Get this country out of DEBT..Or at least help

May 06 2013 at 7:25 AM Report abuse -1 rate up rate down Reply

I've met Warren Buffett and he is a soft spoken polite gentleman, unlike a lot of his detractors. He has made four key purchases in the field I am in and each one has been incredibly successful. He probably isn't as smart or wealthy as man posting here but I can think of around 40 billion reasons to give him a listen.

May 05 2013 at 9:36 PM Report abuse +1 rate up rate down Reply

I saved Warren Buffet's own bacon!! Investors just dont understand what it takes to save an economy!

May 05 2013 at 7:25 PM Report abuse -2 rate up rate down Reply
1 reply to Gumby's comment

We started our long running battle or war on inflation during President Ford's term. He wore a shirt button that reads "WIN!" which stood for Whip Inflation Now! Oil prices were raging like mad! We still drove four barrel carbeutors that gulp a gallon every 6-8 miles . Our gas tanks could hold about 40 gallons at 40 cents per gallon for gasoline. Gasoline was cheap back then but inflation was starting to rear up its ugly head! So we were so paniciked that we decided to borrow money to whip oil fired inflation... We stubbornly held on gas guzzlers and McMansions until recently. We will eventuall lose our war on inflation before too long unless we start to reduce our reliance not only on imported oil but also our own shale oil or fracked gas . it makes no difference on where we get our oil or gas from anymore these days. Itis the economy , stupid! It is the Obamacare, stupid! It is the loose PCV hose connections in millons of cars on the road, stupid! And so forth!! .... it is the smog , stupid! It is the soot and particulates coming out of our chimneys and stovepipes, stupid! I can keep listing more stupid lines.. We are so dinosaaur like in adapting toward the new realities. When inflation comes, any of you ought to know where to bet your money on , do you? I do! Oil? no... gold? uhhh maybe not or maybe some.. you ought to know because we had done that before during the inflation years.. This is a hint..

May 05 2013 at 7:37 PM Report abuse rate up rate down Reply

Just one big loud mouth..

May 05 2013 at 7:24 PM Report abuse rate up rate down Reply
1 reply to joey's comment

just one grim reaper .

May 05 2013 at 8:35 PM Report abuse +3 rate up rate down Reply