Warren Buffett, the legendary investor, is known for his exceptional investment success with Berkshire Hathaway, delivering a compound annual return of 19.8% since 1965 compared to 10.2% for the S&P 500 Index. His wealth, now at $133 billion, has been pledged to philanthropic causes. Buffett’s approach to investing involves finding businesses he likes, buying into them, and holding onto them ideally forever. His success has been attributed to his understanding of consumer behavior as well as his ability to find financial bargains.
At Berkshire Hathaway’s recent annual shareholder meeting, Buffett operated without his long-time partner Charlie Munger, who passed away last year. Buffett reflected on their partnership and the impact Munger had on his investment strategy. Over the years, Buffett’s investing strategy has evolved from bargain stock investing to owning enduring franchises at reasonable prices. Companies like Coca-Cola, American Express, and Apple, as well as wholly owned companies like GEICO, have been key drivers of Berkshire’s success.
Buffett’s investment decisions are guided by behavioral psychology, assessing levels of fear and greed among investors. He shared insights into his decision-making process, particularly with regards to his investments in companies like American Express and Apple. Buffett emphasized the importance of understanding consumer behavior, citing examples from previous investments like See’s Candies and GEICO. He also discussed Berkshire’s trimming of their Apple holdings, citing historically low corporate tax rates as a motivating factor.
When asked about future investment opportunities, Buffett expressed caution in deploying Berkshire’s substantial cash reserves into equities, emphasizing the importance of waiting for attractive opportunities. While he acknowledged the potential of international markets, Buffett expressed a preference for U.S. investments, citing the success of companies like American Express and Coca-Cola on a global scale. He also discussed the impact of generative artificial intelligence on the investment world, drawing parallels to the development of nuclear weapons.
Buffett’s commitment to philanthropy was highlighted, with a focus on how Berkshire shareholders have contributed significant amounts to charitable causes. Through their investments in Berkshire, shareholders have been able to make substantial donations to various charities, with many choosing to remain anonymous. Buffett praised the generosity of Berkshire shareholders and expressed gratitude for their contributions to society. He ended the meeting by thanking attendees and expressing hope for another successful year ahead.
