Monthly Archives: May 2014

Transcript of 2014 Berkshire Hathaway Annual Q&A with Warren Buffett and Charlie Munger

Last Saturday, May 3rd, Berkshire Hathaway held in Omaha its annual shareholder meeting, attended by over 30,000 shareholders. The most expected part of that weekend is the Q&A session of the meeting, in which Warren Buffett and Charlie Munger answer to dozens of questions.

The meeting is neither televised, nor recorded or streamed. However, the financial website Motley Fool has done a terrific job publishing a transcript of the session. Find the link here and allow yourself at least a couple of hours to read through it (the Q&A session takes hours itself!). I strongly encourage the reading. As a teaser, find below some of the gems:

No CEO looks at proxy statements and comes away thinking that I should be paid less.” Warren Buffett.

“We can’t earn same return on capital with over $300 billion market cap. Archimedes said he could move the world with a long enough lever. I wish I had his lever” Buffett

“If you are in any social organization, if you keep belching at the dinner table, you’ll be eating in the kitchen” Buffett (on Boards of Directors)

“Cash or available credit is like oxygen: you don’t notice it 99.9% of the time, but when absent, it’s the only thing you notice” Buffett

“By the standards of the rest, we over-trust. […] because we carefully selected people who should be over-trusted” Charlie Munger

“There’s something about owning a brand to educate yourself about things you might do in the future.” Buffett

At the beginning, we knew nothing. We were stupid. If there’s any secret to Berkshire, it’s that we’re pretty good at ignorance removal.” Munger

“… if you think you understand, you’re not paying attention.” Munger

“There’s changes going on with all our businesses. We want managers to think about change, what’s going to be needed for the future” Buffett

“Being realistic when realizing your own shortcomings is important.” Buffett (on the circle of competence)

“There’s a point you start getting inverse correlation between wealth and quality of life” Buffett

“I think America made a huge mistake by letting the public school systems go to hell…” Munger

(on home mortgage market) “you had the biggest bunch of thieves & idiots running things, I’m not trusting private industry in this field” Munger

“The net utility from finance majors has been negative.” Buffett

Some other readings I recommend in relation to this post:

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“Lessons from a Career of Trying to Defy the Law (of Gravity)”, lecture by Norman Augustine

Norman Augustine is an aeronautical engineer whom I have referred to often in this blog mainly due to his book “Augustine’s Laws” of which I wrote a review (find it here). He started working at Douglas Aircraft Company (1) in 1958, though through his long career he has occupied several positions in the administration and other major aerospace companies such Martin Marietta and then Lockheed Martin (2).

In my review about his book I wrote:

The book reviews A&D programs, especially their mismanagement and failures from the Wright brothers times till the early 80′s, when the book was written. The book is hilarious.

Lecture by Norman Augustine.

Lecture by Norman Augustine.

Some readers may believe I overstate it. Well, I invite you to watch the lecture he gave 2 days ago at the Smithsonian National Air and Space Museum (3) as part of the Charles A. Lindbergh Memorial Lecture Series. The lecture was titled “Lessons from a Career of Trying to Defy the Law (of Gravity)” [47’59”].

During the lecture Norman shares a great deal of the wisdom he has accumulated through his long career, part of it condensed in his Laws, compiled in his book. One of the laws I like the most is possibly the number IX:

In the year 2054, the entire defense budget will purchase just one tactical aircraft. This aircraft will have to be shared by the Air Force and Navy 3 1/2 days each per week except for leap year, when it will be made available to the Marines for the extra day. (LAW NUMBER IX)

I think it is priceless to have Norman explain it in person:

Augustine's Law IX.

Augustine’s Law IX.

During the lecture he used an update of his law (written in the 80’s) made by The Economist a few years ago which I covered also in this blog (4).

Other topics covered by Augustine during the lecture include: the importance of thinking with a systems point of view, the evolution of aerospace industry in the last decades, the importance of strategy and leadership, all covered by his fine humor and wit.

(1) You may read here a tribute I wrote about Douglas Aircraft Company.

(2) Some years ago I wrote this post about Lockheed’s Skunk Works.

(3) You may find here a post I wrote about my visit to the Smithsonian National Air and Space Museum at Dulles.

(4) I few months ago I wrote another post reviewing the application to bomber aircraft of Augustine’s Law IX with new US long range bomber program. In his book Norman includes an extrapolation as well of bomber aircraft increasing costs, even if the wording of the law takes tactical aircraft as the benchmark.

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