What Gives You Opportunities

May 7, 2023

“When I started, other people were going through Playboy. I was going through Moody’s.” - Warren Buffett, 2023 AGM Q&A

Today concludes the 2023 Berkshire Hathaway Shareholder Festival - a weekend packed full of energetic fanfare, opportunities to mingle, and the privileged experience of listening to the dynamic duo of Warren and Charlie, as well as the reputable Ajit Jain and Greg Abel. We drove to Omaha, leaving from Chicagoland early Friday, enjoying the sunshine and the slight breeze while cruising west. With this year’s crop only recently planted, there were no dancing stalks of corn for the wind to whisper through. Only brown and tan fields, as far as the eye could see. While some would find the drive dreadfully boring, it was a much-welcomed opportunity to unwind and reset.

But moods can change quickly.

Without warning, the sunny skies transformed into dark clouds, to a light mist, and ultimately a violent downpour. The relaxing drive became a battle when nearly all visibility was lost. Blasting breaks. Shifting semi-trucks. When we got past the worst of it, we saw a car caught in a drainage ditch. We called, and the 911 operator confirmed the driver was uninjured, and support had already been dispatched. A sigh of relief.

It’s those sudden moments that remind you how much and how quickly a single variable can change everything. How much the fundamentals matter. Check your speed. Keep your distance. Both hands on the wheel. Be happy you had the car serviced recently and that the tire treads and brakes are tip-top.

Fundamentals. Fundamentals. Fundamentals.

That really was the lesson of the weekend. What the storm reminded us of on Friday is what Berkshire’s crew reiterated on Saturday. Ajit predictably distilled insurance down to matching rate to risk. Greg championed the fact that we can’t control all events, but it is our duty to control how we react to them. And while Charlie’s endearing crotchetiness and comically concise answers were met with hearty laughter from the audience, Warren stressed that nothing is certain and provided my favorite line of the day when asked specifically about value-oriented investing in a new era of disruptive technology:

The tech doesn’t make any difference. Or any of that. I mean, if you look at how the world’s changed in the years since 1942 when I started, you’d say, well, how does a kid that doesn’t know anything about airplanes, doesn’t know anything about engines in cars, and doesn’t know anything about electricity, and all of that… But…the world changing doesn’t - new things coming along don’t take away the opportunities. What gives you opportunities is other people doing dumb things.

The response rightfully earned loud applause. But I can’t help but wonder how many heard the words without listening. Warrens's disposition and approach are nearly unchanged from decades ago, and the results speak for themselves. Yet, so many of the questions throughout the day skewed to flavor-of-the-month fears. So many people seem completely preoccupied trying to predict the weather 10 years from now.

When asked about the current and future state of banking, Warren said along the lines of “There can be all kinds of new inventions, but there needs to be old values.” That surely extends far beyond banking. It doesn’t matter what changes and it doesn’t matter what new tools you have to predict the weather. It’s never about predicting the weather. Given enough time, you will inevitably find yourself caught in a storm. Success, first and foremost, is about avoiding ending up in a ditch.

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Disclaimer

This publication’s content is for entertainment and educational purposes only. I am not a licensed investment professional. Nothing produced under the Invariant brand should be thought of as investment advice. Do your own research. All content is subject to interpretation.