Too much of a good thing can be… wonderful! – Mae West
Warren Buffett’s annual letter to the shareholders of Berkshire Hathaway, Inc. again displayed his aw-shucks writing style and plenty of doses of wisdom.
For over 65 years, Buffett and his partner, Charlie Munger, have achieved compounded annual returns of 20%. Since 1965, the overall gain of Berkshire is 2,810,526%
A mentor of mine once told me:
The right WHO always knows the right HOW.
When we find ourselves asking “How do I do X, Y, or Z?” Instead, we should ask ourselves, “Who is doing X, Y, or Z the best that it can be done?”
The “Who…?” question sends us on a quest. That quest led me, not surprisingly, to Buffett and:
Buffett: The Making of an American Capitalist
When you find the right Who, you study their How.
One key premise of Buffett style investing that you may find interesting is his view on Diversification.
“Diversification is a protection against ignorance,” according to Buffett. “It makes very little sense for those who know what they’re doing.”
Currently, most of Berkshire’s value resides in 4 businesses:
- Burlington Northern Santa Fe Railroad (BNSF)
- Berkshire Hathaway Energy (BHE)
Here are a handful of takeaways from this year’s letter:
Even the best businesses have down years.
In the past 65 years, Berkshire has had a negative performance in 11 years, including 5 years of double-digit losses. (still pretty impressive)
Be who you are.
If you’re a restaurant seeking diners, you can attract clientele with either Hamburgers and Coke… or French cuisine with exotic wines. But, you must not switch from one to another. Be consistent in what your customer will find.
Farms, real estate, and business ownership produce wealth – lots of it.
All that’s required is the passage of time and inner calm.
Although our form is corporate, our attitude is a partnership.
Even one of the largest businesses in the world can view its shareholders as Partners.
103 is too young to retire!
Mrs. B (of the Nebraska Furniture Mart, a Berkshire-owned company) retired at age 103. “A ridiculously premature retirement age,” according to the 90-year-old Buffett and 97-year-old Munger.
If you’re interested in learning more about Buffett and Munger’s view on Berkshire and the current business environment, check out the live stream of the Berkshire annual meeting on May 1st at 1 pm EDT – streaming live via Yahoo and CNBC.
And, whether it’s in business, investing, real estate, or beyond, continue your quest for the right Who(s).
P.S. Check out my recent article “What Goes Up Must Come Down….Or Must It?” here
P.P.S When you’re ready to take your game to the next level, talk to us about 1-on-1 Coaching here.