10 takeaways from Berkshire Hathaway's 2021 AGM (thread):

1) There's a lot more to investing than picking which industries look promising

Buffett noted there were thousands of car companies in the early 1900s; now there are only a handful.
2) Always prepare for the worst outcome, even if it doesn't materialise

Berkshire doesn't want to depend on the kindness of strangers in a crisis. The pandemic has reinforced the need to be as resilient as possible to shocks, so Berkshire can still be thriving in 50 years' time.
3) If you expect to find perfection you're going to be disappointed

Every company has something wrong with it that you probably don't even know about. This should make you more humble.
4) Run winners/trade less

Buffett admits selling shares in Apple last year was probably a mistake. Munger even pointed out this mistake to him.

While Buffett doesn't trade that much, he suggested Berkshire probably would have performed better if he'd traded even less.
5) Buffett regards Apple as an "extraordinary business" run by one of the best business managers in the world

It's clear he has huge admiration for Tim Cook - "Steve Jobs couldn't do what Tim Cook could do in many respects".
6) Buffett doesn't think the big US tech stocks are over-valued given where interest rates are.

In fact, they are "bargains" if low rates persist due to their incredible cash-generating abilities.

The question is - what happens to rates in the long run? No one knows.
7) The dream business is one that requires virtually no capital and grows a lot

That said, understanding the sustainability of growth is key.

People often make the mistake of focusing solely on the growth of the industry (see point 1) or whatever is flavour of the month.
8) The economy is red hot right now and there are inflationary pressures on raw materials. Price increases are generally sticking.

Buffett has been very surprised by the strength of the economic recovery, reinforcing the difficulty in making macro predictions.
9) Don't base investing decisions on economic predictions and don't chase returns .

Accept that you don't know what will happen to the economy and invest in a way that will deliver acceptable returns regardless.
10) Buffett made several interesting observations on the importance of culture:

- Thinks the biggest risk a business faces is having bad management and the biggest risk to a Board is appointing the wrong CEO

-CEOs have a habit of perpetuating the same myths which, due to...
…constant repetition, get accepted as common wisdom. This is very dangerous.

- The main thing Buffett cares about is preserving Berkshire's culture

- Buffett and Munger were asked if they think Berkshire has become too big and complex to manage effectively...
…The answer was a categorical 'No' due to Berkshire's extreme decentralisation.

This system only works if you have the right culture in the first place - i.e. good managers who can be trusted.

Munger noted the Roman Empire's success relied heavily on a decentralised system.
The full video of the 2021 AGM can be found in the CNBC link below. This is a fantastic resource on Buffett with links to past meetings, videos, interviews and more.


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25 Apr
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