I spend better part of the day on May 1st, hearing Warren Buffett and Charlie Munger answer varying investor questions as part of the annual Berkshire meeting. The event was again completely online and was live streamed by Yahoo Finance. As usual there were some Munger zingers peppered through out the event, for example, Munger on Bitcoin– “a financial product out of thin air”…. “of course I hate bitcoin success”!
Market Insider article provides a nice summary of the essential meeting highlights. Here, I list a few key moments during the meeting that I found particularly illuminating.
- Buffett’s introduction slides, geared towards new investors in particular. He notes that none of the top 20 firms of 20 years prior (by market cap) register on the top 20 list for 2021.
- He notes, “There’s a lot more to stock picking than just figuring out what is going to be a wonderful industry in the future”. To support this claim, he highlights that at the dawn of automobile age, there were almost 2000 car companies vying to benefit from the emerging tech of the day.
- Buffet notes while Munger is the chief cultural officer for Berkshire, he is the chief risk officer for Berkshire. As such, it was out of abundant caution that he sold his airlines stake amidst Covid-19 uncertainties. Munger notes that no one, even they, cannot time the market perfectly.
- Buffett was higly critical of Robinhood as “a significant part of casino group that has joined the stock market“.
- On the speculation and FOMO going on in the markets today, he shared a quote by Keynes, in his book, General Theory, which in part says, “… But the position is serious when enterprise becomes the bubble on a whirpool of speculation.”
- Buffet has no compunction owning chevron, to the chagrin of all the environmentalists out there. Here was a Munger zinger, he would rather have a Chevron employee as son-in-law than an English professor
- Ajit Jain notes that telematix to play a big role in evaluating the rating/risk parity for insurance underwriting for Geico. He believes, they were late to this game and have some ways to catch up to Progressive.
- Buffett notes that the competition to buy companies has intensified in part due to SPACs which use other people’s money to bid up the asset prices.
- Buffett notes “We are seeing very substantial inflation”. He continues “We are raising prices. People are raising prices to us and it’s being accepted“.
- On taxes, Munger believes it’s “stupid” for states to drive out the rich people and lose out on their tax contributions.
- Buffett acknowledges the better economics of the capital-light tech behemoths including Apple, Microsoft, Alphabet. He compares them to See’s Candies noting that “We’re looking for them all the time“
Now, onto May 2021 Net worth updates for AVI family..
- Net Worth (as percentage of FI number): 109.96
- Accessible Net Worth (as percentage of FI number): 70.31
- Liquid Assets/ Debt Ratio: 3.497
- Cash Balance/Two Year Living Expense Ratio: 1.081
Summary
- A healthy 4 % MoM increase in AVI family NW. Markets seem to have developed liking to my renewed STEP style of investing.
- Real estate prices in our neighborhood continue to be on tear! According to Redfin, average house is selling for 12 % above asking and houses go pending within 4 days of listing.
- Cash balance declined, as life-style inflation seem to be creeping in our lives. Case in point.. see the image below
Video/Book/Article/Audios that caught my attention
- Podcast: Mohnish Pabrai on “We Study Billionaires” podcast. Mohnish never disappoints.
- Podcast: Nasem Taleb on Covid Misconceptions, Fed Policy and Inflation
- Video: Yahoo Finance Live telecast of Berkshire Annual Share holder Meeting