[00:01:52] Clay Finck: So part one, we’re just going to talk about the weekend more broadly, but what Kyle and I did and what we liked about. The weekend in Omaha part two, we’ll be talking about the legacy of Charlie Munger and the tribute that Berkshire gave for him. And then part three, we’re going to be pulling some of the most interesting clips from the Q and a session with Buffett, Greg Abel and Ajit Jain from the meeting, and then sharing some of our thoughts around that.

[00:02:14] Clay Finck: So this was actually my fifth time attending the Berkshire meeting. And it seems like it just gets better and better every year. It was my third time attending as a member of the team here at TIP. So Kyle, I’m curious for you, this was your very first time visiting Omaha. So I’m curious to get your thoughts on the overall weekend.

[00:02:33] Kyle Grieve: Yeah. So like you pointed out, this was my first time, so I didn’t really know what to expect, but I had so much fun. It was, I couldn’t, I guess I shouldn’t be surprised because of the event we did in New York being around so many investors, but this was just like that, but multiply that by a couple of thousand.

[00:02:48] Kyle Grieve: So it was an incredible experience. There were so many interesting things we did. So for TIP, we had a couple of community events, which we’ll be going over later. I got a chance to meet some super, super interesting people, whether that was through, like Monish Pabrai’s event, the Markel Group, there are some super, super cool guests up there.

[00:03:03] Kyle Grieve: And they’re talking about a variety of incredible subjects. Got to see, obviously, my investing role models, like I just said, Monish Pabrai, Warren Buffett, although I wish I could have talked to Warren, but I understand that I can’t do that. And then the fact that the meeting takes place. Wasn’t even necessarily my favorite part.

[00:03:19] Kyle Grieve: yeah, I really did enjoy the annual meeting, but my favorite part was definitely just the events surrounding it. And just the general feeling in Omaha around it, where everyone’s just there to learn, have some fun and meld the two and then also network with other people and learn more interesting investing concepts from super interesting people.

[00:03:38] Kyle Grieve: But the problem with that obviously was during The Berkshire Hathaway annual meeting, people were trying to be quiet, right? Because you have Warren Buffett talking. You don’t want to disrupt other people learning from them. And especially where I was seated, I didn’t have the best seats because it was hard to get good ones.

[00:03:51] Kyle Grieve: We were in the back and the audio wasn’t that good. So we just had to keep it on the hush. So the events around it were probably the highlight for me. And then, yeah, the event still, I had a lot of fun. I really enjoyed going down to the event center at the bottom floor there and seeing all the cool products that Berkshire has.

[00:04:06] Kyle Grieve: Yeah. yeah, it was an incredible experience and I’m looking forward to going back again. 

[00:04:11] Clay Finck: You hit the nail on the head on the Berkshire event. It’s fun to go, fun to see Warren, fun to get in line bright and early with community members and such, but just a lot of the questions are not that great.

[00:04:22] Clay Finck: They don’t vet the questions. So I think people really appreciated us putting together this episode and pulling our favorite one so they don’t have to go through all the questions themselves. And you’re also right that there’s just so many fun things going on during the Berkshire weekend. A lot of people ask us what events we recommend and there’s just so many events happening.

[00:04:42] Clay Finck: I can share the couple that I go to, but there’s just so many different things happening and people have to decide between events because a lot of them are happening at the exact same time. I think Monish and Guy each had an event. Essentially at the same time. And, Omaha isn’t always like this.

[00:04:57] Clay Finck: I used to live in Omaha and I can tell you that it’s not one of the most exciting places to live, but during the Berkshire weekend, there’s a lot happening. And this year was actually the first time I attended Monisha’s talk, and I really enjoyed that. He actually shared some insights that I’ve never heard from him before, insights related to intrinsic value and finding wonderful businesses to invest in.

[00:05:18] Clay Finck: And I absolutely love that discussion. And. As an added bonus, you and I got to meet him, shake hands with them and grab a photo with them. So that was definitely fun too. And as I said earlier, like it just feels each year you go, it just gets more and more fun. This is my fifth year. And I think it just gets better because your relationships really compound your network compounds and you get to know people better and better.

[00:05:41] Clay Finck: And you really learn how to make the most out of the weekend. So some of the highlights for me were definitely meeting And listening to Monish Pabrai at the University of Nebraska, Omaha. I believe he does a talk every year. Hopefully he’ll keep doing that. And it’s absolutely free. And then, I organized our Berkshire summit event.

[00:05:57] Clay Finck: So we had eight wonderful attendees from the audience join and do various things with me throughout the weekend. And. We ended up connecting with many of the guests we’ve had on the show. We had the Saturday night dinner with William Green, Guy Spear and many of the guests we’ve had on the show. So that was just really for me and an unforgettable experience.

[00:06:16] Clay Finck: And then, of course, people really enjoy going to the CHI center, seeing Buffett and being a part of history. But I think what really makes Omaha memorable is the events that are around. The Berkshire meeting, which you alluded to. And I’m also terribly biased because TIP hosts a number of events throughout the weekend.

[00:06:36] Clay Finck: we had our socials for the TIP mastermind community that you hosted, Kyle, and then I hosted the Berkshire Summit, which was a smaller event I put on for eight members of the audience. So you had the two socials for the TIP Mastermind community. What were some of your takeaways from that event? 

[00:06:51] Kyle Grieve: Yeah, the socials were, honestly, they were my favorite events.

[00:06:54] Kyle Grieve: They were, it was so good because. We have this community of people where we do everything online, right? And we do get to meet up twice a year, and this was one of the opportunities. And it was just so much better to meet them in person and really get to know them and ask tons of questions and see them face to face.

[00:07:09] Kyle Grieve: So I got to speak to pretty much all the members in the group, whether that might be an individual setting or a group setting. And so I really got to learn about each and every one of them, their backgrounds, what they do for work, what they like to invest in. And so that was super powerful, just meeting them in person and getting to see how they really are, outside of being on the internet.

[00:07:29] Kyle Grieve: So just a couple of cool things that I got from that was my relationships with some of the members of our closer, a lot of these people I consider my friends and would love to hang out with. And we, sometimes we branch off and hang out with just in smaller groups during Berkshire, for instance, went to lunch with some of them.

[00:07:43] Kyle Grieve: Community members and how to blast learn more about their individual backgrounds, which is really cool because part of the reason I like community so much is that I can tap into them to learn more about different industries where I’m not really exposed to. And then all of our members are vetted, right?

[00:07:55] Kyle Grieve: And they’re all really high quality people. So they brought some friends, family, and Their spouses and got to meet them. And they were also obviously very high quality people. So that was really fun interacting with their guests as well. One of our members, for instance, is a small cap global fund manager and I had a blast learning from her.

[00:08:12] Kyle Grieve: We were in line up for Berkshire and she was just telling me all about all of her experiences. Traveling around the world, looking at all these small caps, going to India, Singapore, China, everywhere. So I learned so much from her and listening to her talk about that. And then the thing that was cool, she brought her husband who used to be an investment banker and mergers and acquisitions, and he had all sorts of really cool things to add.

[00:08:32] Kyle Grieve: And obviously I love MNA. So I, it was super interesting learning for both of them. And then, the really cool part about. The weekend was also just learning from members where this was their first time being part of the community and getting to learn how the event changed being part of the community versus prior years.

[00:08:47] Kyle Grieve: So a lot of the people that were there had gone for instance, like last year and basically just went to the annual meeting. And that was basically the entire trip. They didn’t really get to socialize with other people or go to all of these other events. So it was really fun. enabling people to socialize with each other, build these really cool connections, find like minded people and bring them together so that they had a much, much better experience.

[00:09:08] Kyle Grieve: And I know for a fact, cause they told me they’re like, this time has been so much better than last time because I got to meet a bunch of cool people. I found out about all these cool events going for lunch, going for dinner. So I was just really happy that we were able to provide so much value to our community members.

[00:09:23] Clay Finck: The point you made there is really so important because it just resonates with me. The first two meetings I went to, I was just pretty much a lone wolf. I just happened to live in Omaha, knew that the Berkshire meeting was happened, knew what Buffett had made for himself, and being naturally an introvert, And, being much younger at the time, the last thing I really want to do is go into a crowd and walk up to some random person I don’t know and just spark up a conversation.

[00:09:48] Clay Finck: So having that community, it’s not only, you’re attending the Berkshire meeting, but you also have a connection online, connected through the forums and on calls and such, and seeing them comment on the forum and everything. And having that sort of network to tap into is really invaluable and can help open you up to really fully experience and enjoy.

[00:10:05] Clay Finck: What Omaha can offer during the Berkshire weekend and I agreed that it’s just really fulfilling to help provide that to people because I’ve just been in their shoes and it’s not easy to go up to an event where you don’t know anyone. It’s just awkward. And it’s like your natural instinct. It’s just going to a shell.

[00:10:22] Clay Finck: At least it is for me as an introvert. I don’t know. You’re much more extroverted than me, Kyle. So I can’t speak for you. But When you encourage people to go, assure them that wonderful people are going to be there that really want to network. It really makes it easier to book the trip, make the leap and just go.

[00:10:39] Clay Finck: And plus for members of our mastermind community, like essentially all of them have hopped on calls with you and I one on one calls. So we have relationships with them and it just makes it much easier. And you already have a sense of who’s going to be at the events because we have that forum and zoom calls.

[00:10:55] Clay Finck: So next, I wanted to transition to part two here to talk about Charlie Munger. Everyone was really looking forward to the tribute that Berkshire was going to do. So Thursday night and Friday, a lot of people were talking about the movie they were going to be playing. So Berkshire always plays a movie at the event.

[00:11:13] Clay Finck: It’s Usually at 8: 30 a. m. But in prior years, it was never released to the public. And Berkshire had announced that this was the first year they were going to live stream it and make it public because it featured a tribute to Charlie Munger. And Buffett actually mentioned, this was like a logistical nightmare in terms of the copyright and infringements and all that jazz because they played all these sorts of videos and had to get permission from.

[00:11:37] Clay Finck: countless counterparties there, but the tribute was around 30 minutes long and it really showcased the very special relationship that Warren and Charlie had, which lasted 65 years. I had talked with a number of people after the beating, how some people envy the relationship that they have in the 65 years of having a partner and having a best friend and just lifting each other up for that long.

[00:12:01] Clay Finck: It just, Has led to tremendous amounts of compounding, not just financially. So the two met when Buffett was 29 and Munger was 35. And I really loved the story of how they met. So Buffett was chatting with a potential investor in the early partnership days. He only had 500, 000 in the partnership, which is just a tiny compared to what it eventually led to.

[00:12:22] Clay Finck: And Buffett was telling the guy all about his strategy and how he plans to Put the money to work. And the guy really wasn’t listening at all, but he ended up giving Buffett a hundred thousand dollars. And Buffett was just confused. Like he just asked him, I don’t even think you were listening to me.

[00:12:38] Clay Finck: Why’d you give me a hundred thousand dollars? And all he said was you reminded me of Charlie Munger. Buffett had no idea who that was at the time, but he liked the sound of that. And the family ended up being a Charlie Munger sort of second family that he was really close to. And the two eventually got introduced and they hit it off from the very beginning.

[00:12:57] Clay Finck: And one of my very favorite clips from that tribute was Munger talking about how people look at Berkshire and they think that Buffett and Munger found some trick. And the way Munger put it is that the simple trick was just avoiding standard stupidities. And it really just became a place where rationality just totally became prevalent.

[00:13:18] Kyle Grieve: One of the highlights for me of that long 30 minute clip was Becky quickly chatting with Charlie Munger. I think it was pretty recently, just about how Charlie had been around for nearly a century of human history. And Charlie had a really cool insight there where he pointed out that not only had he been around The last 100 years, but he was born to a previous century where the world was really being pulled forward in terms of transportation, communication, economics, modern biology and medicine.

[00:13:44] Kyle Grieve: So I think Charlie really knew how lucky that he was to be born at the time he was when innovation was rapidly increasing the output of the entire world. And so I think he was able to really see that for himself. All this innovation was happening in his early years and that he was able to really take advantage of that throughout his entire life.

[00:14:03] Kyle Grieve: So the highlight reel also just had some really good one liners that were highly amusing and insightful. So one of my favorites was quote, those of you who are about to enter business school or are already there, I recommend you learn to do it our way, but at least until you’re out of school, you have to pretend to do it their way.

[00:14:19] Kyle Grieve: Unquote. So this clip was from 2011 and it’s a classic monergism and granted it’s, a Almost 15 years old, but I don’t think his stance would have changed that much since he said that. So Warren also had another really good insight into Charlie that he described the difference between how he and Charlie thought.

[00:14:36] Kyle Grieve: So Warren discussed how when he was thinking about just things in general, he just wanted to know if something works, did it work or did it not work? And that was it. But. In contrast with Charlie, Charlie wanted to know how things worked. So Warren mentioned that Charlie picked this trade out from Benjamin Franklin and that learning how the world works was just a massive driving force to the success of Charlie Munger.

[00:15:00] Kyle Grieve: And I know it’s obviously one of the biggest strengths that Charlie has. If you’ve listened to the show for any period of time, we talk about mental models and multidisciplinary thinking, and we all got it from Charlie Munger. He’s the one who really popularized it. And realistically talking, though, I don’t necessarily think that way is for everyone.

[00:15:15] Kyle Grieve: And Warren said, I think Warren, I think is a brilliant person, but he doesn’t really necessarily think that way. He’s more just, does it work? Yes, no. And I think Warren obviously is a pretty broad thinker, maybe not as broad as Charlie, but he made the point that his thinking is more narrow. So yeah, that was my main point.

[00:15:32] Kyle Grieve: And I just think that Charlie showed specifically in terms of thinking at this level, how important that it could be to master it, to build not just wealth, but also your wisdom as well. 

[00:15:42] Clay Finck: I also thought it was really funny how Buffett, when he originally bought Berkshire in the 60s, was a textile mill back then.

[00:15:50] Clay Finck: And Munger told him he was making a massive mistake, which it was. And it just points to the brilliance and recognizing that even the greatest investor in the world was making. Munger is just calling him out on a big mistake. And he was, that was a big bet for Buffet at the time. And instead of sitting back and letting Buffett deal with that sort of mess, he ended up partnering with them.

[00:16:11] Clay Finck: And helping him improve upon what he had. And not only that, I think what’s even more amazing is that he had the humility to essentially. Let Buffett be seen as the head honcho and Munger be the sidekick to Buffett’s running the show. And I think the success of Berkshire to a large extent is a result of Charlie’s brilliance.

[00:16:32] Clay Finck: And I also loved how Munger talked about how the Berkshire meeting has developed over the years. initially it had 30 attendees and just grew and grew over the years. And nowadays Munger referred to it as a celebration, which I thought was a really cool way of putting it. He said that a celebration is part of making a group of people work well together.

[00:16:51] Clay Finck: And I just really loved that. I think the best companies have these celebrations of looking back at what’s brought them to today and celebrate the people you surround yourselves with, because, it’s the living in the moment and living in the present that really just makes life special in a way.

[00:17:09] Clay Finck: And having these celebrations helps make life more fun. What is good in life? If you never take the time to reflect on what you’ve achieved. And when you go to the CHI center and see 40, 000 people, like I looked up and every seat was taken. So 40, 000 people attend that celebration and think about what that says about that company’s culture. All these people, many of them travel thousands of miles to Omaha.

[00:17:33] Clay Finck: Of all places in the world. It really just points to how special of a celebration this is. And you can really get a sense of how so many of us are just clinging to what Berkshire was and what we had with Munger and what we still have left with Buffett because we know eventually that this celebration won’t be the same someday.

[00:17:51] Clay Finck: We don’t know what year that’s going to be. And there was a lot of talk throughout the weekend on If people still come after Buffett eventually passes, but, a lot of people are just clinging to that celebration that we still have today. 

[00:18:04] Kyle Grieve: I completely agree with you that Berkshire Hathaway annual meeting is more of a celebration than anything else like Charlie alluded to, the thing that’s interesting is it celebrates Berkshire Hathaway in a variety of ways, the history of the business.

[00:18:17] Kyle Grieve: It’s shareholders, the quality of the business, its superb corporate governance, and just rational thinking that Charlie and Warren were well known for. So I’m sure there’s obviously many other aspects that could be added that are well celebrated, but these are the ones that have stood out the most to me.

[00:18:31] Kyle Grieve: So I want to pivot just, To how Warren brought this point up about Charlie being the architect of Berkshire. So I thought Warren perfectly articulated how Munger was the architect of the Berkshire Hathaway that we now see today, not the one that he criticized them on originally to Warren Buffett when he was talking about.

[00:18:50] Kyle Grieve: Charlie Munger. He did not refer to himself as an architect of Berkshire Hathaway. Instead, he basically lumped himself in as a carpenter. And so he just briefly said carpenters are needed to execute the architect’s grand vision, but they don’t actually create the blueprint of the final product themselves.

[00:19:06] Kyle Grieve: Charlie was the one who did that. So I think just the way Warren said, this just goes to show you how modest he is and how good obviously Warren is at giving credit to other people while highly underestimating his own impact. 

[00:19:19] Clay Finck: And I think it also points to the importance of expanding your knowledge into other areas like Charlie did. Warren said he was more narrow in his focus, whereas Charlie is seen studying all these different disciplines that aren’t even close to related to the field.

[00:19:34] Clay Finck: Investing. So next, I wanted to transition here to part three of our episode where we’re going to be pulling clips and then, yeah, the clips that Kyle and I found to be most interesting and sharing here. So as always, the first thing that stood out to me was Buffett was really as sharp as ever. It’s honestly hard to believe that he’s 93 years old and he’s spending eight or nine hours on stage answering questions, conducting business.

[00:20:00] Clay Finck: This is my fifth shareholder meeting I’ve attended. And I remember at least a time or two in previous years where you could really see his age showing through. But I think this year I was really impressed with his energy and the depth of his answers throughout the day. So before we get to the Q and a session, they cover the most recent quarter and some of the things that happened.

[00:20:18] Clay Finck: And I think the biggest thing worth mentioning here was Berkshire trimmed their position in Apple. He trimmed it by 13%, which might not sound like a lot, But it was 116 million shares worth 21 billion. And I’m not exactly sure what price that may have been. I calculated the 21 billion based on around 185, but there were some points in the quarter where it was below that.

[00:20:42] Clay Finck: And I think this is worth taking note here because Berkshire’s cash pile was 180 billion. That’s just a massive Cash tranche. So it’s not like he really needed the cash, he has plenty of extra cash. So I think it points to where they’re seeing the valuation for Apple, how they’re viewing the current market conditions.

[00:21:01] Clay Finck: And I think Buffett really likes the 5 percent yield he’s getting on a lot of his cash. So for the first clip, it’s often said that people get attracted to Buffett and Munger for the investing side and to try and make money. I know that was definitely me. And then many stick around for the other aspects.

[00:21:19] Clay Finck: So the topics are really related to life and how we can live a good and meaningful life. And I wanted to start with a question. It’s funny. It seems like in all these episodes we do, there’s always at least one question from a child because they ask the questions that adults don’t want to ask. So that’s the one we’re starting with today.

[00:21:39] Clay Finck: So I’ll just go ahead and play the clip here and we’ll share our thoughts after. 

[00:21:43] Clip 1: Hi, my name is Ange and your Nick is, and I’m wondering if you had one more day with Charlie, what would you do with him? 

[00:22:02] Clip 1: It’s interesting because in effect I did have one more day. I mean it wasn’t a full day or anything, but We always lived in a way where we were happy with what we were doing every day. Charlie liked learning . As I mentioned in the movie, he liked a wide variety of things. So he was much broader than I was.

[00:22:25] Clip 1: But I didn’t have any great desire to be as broad as he was. And he didn’t have any great desire to be as, as narrow as I was. But we had a lot of fun doing anything. And, we played golf together. We played tennis together. We did everything together. And, this you may find interesting.

[00:22:43] Clip 1: We had as much fun, perhaps even more to some extent. With things that failed because then we really had to work and work our way out of them. And in a sense, there’s more fun having somebody that’s your partner and digging your way out of a false fox hole than there is just sitting there and watching an idea that you got 10 years ago, just continually producing more and more profits.

[00:23:09] Clip 1: So it wasn’t, he really fooled me though. he wanted to. To 99. 9 years. If you pick two guys, he never publicly said he never did a day of exercise except where it was required when he was in the army. He never did a day of voluntary exercise. He never thought about what he ate.

[00:23:36] Clip 1: We started every day and Charlie had, he was interested in more things than I was, but we never had any. doubts about the other person, period. And, so if I’d had another day with him, we’d probably have done the same thing we were doing the earlier days but, and we wouldn’t have won knowing that we only had one day.

[00:23:58] Clip 1: That there’s a great advantage in not knowing where you’re going and what day you’re going to die. But, and Charlie always said that, just tell me where I’m going to die so I’ll never go there. Duh. The truth is, he went everywhere with his mind and therefore he was not only interested in the world at 99, but the world was interested in him.

[00:24:29] Clip 1: It’s remarkable. they, I wouldn’t, I told him in the last few years, I’d never seen anybody that was peaking, at 99 and, where the world wanted to come and see him. they actually wanted to go out to 351 North June Street and whether it was, I could name a whole bunch of names, but just, I’ll start with Elon Musk or, but get on the list.

[00:25:00] Clip 1: And they all wanted to meet Charlie and Charlie was happy to talk with him. And I, the only, Person I could think of otherwise was the Dalai Lama. I don’t know that they had a lot else in common But it was he lived his life the way he wanted to and He got to say what he wanted to say.

[00:25:23] Clip 1: He liked that I loved having a podium and Again, I can’t remember any time That he was mad at me or I was mad at him. It just didn’t happen and You Calling him was fun back when long distance rates were high and we didn’t talk as often as in recent years as we used to be on daily for long periods.

[00:25:48] Clip 1: And we did keep learning and we liked learning together. But, we tended to be a little smarter because as the years went by, we had mistakes and we had other things that we learned. And, the fact that he and I were on the same wavelength in that respect meant that the world was still a very interesting place to us when he got to be 99 and I got to be 93.

[00:26:12] Clip 1: So I don’t have a perfect answer for you there, but I can tell you the ingredients that would go into, sometimes people would say to me or Charlie at one of these meetings, if you could only have lunch with one person that, lived over the last 2, 000 or so years, who would you want to have it with?

[00:26:33] Clip 1: Charlie says, I’ve already met all of them, because he read all the books. He, and he eliminated all the trouble of going to restaurants to meet him or anything like that. He just went through a book and he met Ben Franklin and he, really, it was remarkable. He said he had no one else to meet because he.

[00:26:54] Clip 1: He’d read all their stuff and he liked Ben Franklin’s stuff better than he liked mine. But with Ben Franklin, he just had to read about it and didn’t have to go have lunch with him or anything of the sort. But, it’s an interesting question. What you should probably ask yourself is, Who do you feel that you’d want to start spending the last day of your life with?

[00:27:12] Clip 1: And, and then figure out a way to Start meeting him, er, tomorrow, and, and meet him as often as you can. Why wait until the last day? But, and, don’t bother with the others.

[00:27:33] Kyle Grieve: So I really enjoyed this question from the kid and Warren’s answer. I thought, yeah, like, Clay said, kids can just ask questions, Yeah. Adults won’t say. I remember when he asked it, the whole audience was like, Oh, it’s so cute. So I think that Charlie obviously liked learning a wide variety of things and he was more broad than more.

[00:27:53] Kyle Grieve: And like we’ve discussed already, but I just think that this also shows that you can succeed in both being a broad thinker like Charlie or a more narrow thinker like warm. So a couple of just other points that he made there that really stood out to me was, you How Warren talked about how they had fun doing anything.

[00:28:10] Kyle Grieve: Warren and Charlie are both stressed about the importance of doing business with people that you like. So I think that if Warren and Charlie hadn’t had so much fun together, their business relationship probably wouldn’t have played out the way it did, we’re lucky that it did. Another thing that Warren’s talked about was their failures and how they had more fun with their failures than they did with their successes.

[00:28:29] Kyle Grieve: So this part just really stood out to me. It’s super easy for anyone to just relive their successes and pat themselves on the back. And there’s nothing wrong with doing that for a certain period of time. But the problem with it is that the biggest life lessons that we can learn aren’t really from our successes.

[00:28:44] Kyle Grieve: It’s learned through our failures and, and making sure that we don’t continue making them into the future. And I think Charlie was, he said, any year that goes by is wasted if you don’t destroy one of your most cherished beliefs. And Charlie was a master at self reflection, and he was actively trying to get better by removing mistakes and thinking processes that he really cherished.

[00:29:06] Kyle Grieve: And that was how he thought. So another thing that really stood out to me there was how Warren pointed out that Charlie was peaking at 99, which is. You are completely unheard of. So I would say that Charlie would probably agree with me that he was probably lucky to live as long as he did and stay as sharp as he did.

[00:29:24] Kyle Grieve: Just if you’re looking at the average person his age, a lot of them go through all sorts of drop offs and mental acuity that he never went through. So in terms of longevity, I don’t know how many lessons we could take because Buffett did mention that Charlie basically didn’t exercise other than what he was forced to do, I think, when he was in the military and that he also ate whatever he wanted.

[00:29:43] Kyle Grieve: I don’t know how many lessons we can get from there. But, regarding Warren talking about Charlie and his love of the podium, I thought that this was also really powerful because obviously, while they’re both humble, I think they both really enjoy the spotlight specifically because they get to share their knowledge and wisdom with the world, just in the hopes that someone will find it useful.

[00:30:03] Kyle Grieve: And obviously I think they know probably a lot of people find it useful, but Warren mentioned that Charlie wanted to be useful to society. That was just one of his biggest goals in life. And I think having the podium was just a really good way, just for the two of them to be as useful to society as they could possibly be.

[00:30:19] Kyle Grieve: The last one here. I really enjoyed Warren’s point here about Finding who you want to spend your last day of life with and then figuring out just how to meet that person as soon as possible and then maximizing the time you want to spend with them. I think if we all attempted to do this, we would probably have much higher quality and meaningful relationships with people that we can grow with.

[00:30:38] Clay Finck: Yeah, if there was one takeaway in Charlie living to age 99 and being as sharp as he did, I think Monish mentioned that he was like placing a trade like the Friday before he passed, placing trades was just insane. I think the biggest takeaway for me from that is truly enjoying what you do. So we always talked about on the show how financial independence was something super, super important to him.

[00:31:03] Clay Finck: And to be able to live your days really, however you want, you have to be financially independent. So he got that somewhere around age 30, early thirties, something like that. And that was an inspiration for him, Benjamin Franklin, and then really just lived and structured the rest of his life, exactly how he wanted it to be.

[00:31:18] Clay Finck: And just got to do exactly what he wanted to do. And I’m not quite convinced that drinking Coca Cola and eating peanut brittle all day is going to help with. Kyle and I’s longevity. So to your point on relationships and thinking back on how you want to spend the last day of your life and then spending more days with those people.

[00:31:37] Clay Finck: This is something I personally really struggle with over the past couple of years. I’ve met just Some amazing like minded people that I honestly just want to spend more time with but my problem is that none of them live within 100 miles of where I live, Many are thousands of miles away and it’s interesting because we’re talking about Warren and Charlie didn’t live in Omaha He lived out in California, I believe and they’re very far away from each other and I’d be interested to know how often they saw each other in person and how often they interacted on the phone because I doubt they did many zoom calls.

[00:32:13] Clay Finck: I don’t know if you have any comments there you want to add. 

[00:32:16] Kyle Grieve: Yeah, I see your point. At least with Charlie, he looked at Benjamin Franklin, of course, as one of his biggest mentors who we never got to meet in person and got to learn all these things. I’m sure if he could have spent time with him, he probably would have.

[00:32:31] Kyle Grieve: But, looking back, it would have been really hard to spend time with those types of people just because they’re maybe in a different state or different country or whatever. But I think that probably having relationships with people, whether it’s, I guess you gotta take what you can get if it’s just on the phone or over zoom calls, that’s great.

[00:32:49] Kyle Grieve: And I think if you have a really good relationship, you’ll open up other opportunities, hopefully to meet them in person. I’m the same as you. I struggle with the same things. So I’m just thinking of ideas for how that kid ‘ll work out in the future.

[00:33:03] Clay Finck: Yeah. Another interesting insight I’ve come to recently is especially for men. I think women are much more naturally able to stay connected and build relationships. Whereas men, it’s much more difficult. you might be connected with someone just a few times a year with someone you would consider a really good friend.

[00:33:20] Clay Finck: And one of the conclusions I came to is that it’s really helpful if You’re working together towards some sort of goal. If you look at what types of men have the closest relationships, I think oftentimes people in the military have the closest bonds that just last a lifetime because whether they went through some sort of training together, whether they went overseas and actually went out into battle and stuff like that, Going out and having some sort of goal you’re working towards together and working together and achieving that.

[00:33:50] Clay Finck: And that’s why you see many people within companies become really good friends or, oftentimes sports teams, is another example where people really build those close bonds. So that ties in well again with Warren and Charlie, where 65 years of doing business together is just an amazing feat. So I’ll turn to the next question here in relation to Berkshire’s operations and the managers that run the underlying businesses.

[00:34:13] Clay Finck: So for decades, people have asked about who’s going to be past the torch after Buffett and Munger are no longer running the business. And this question gets to how they handle communicating with the businesses they own. So we’ll run the second clip here. 

[00:34:29] Clip 2: This question comes from Axel Mayrseek in Hamburg, Germany.

[00:34:35] Clip 2: What has changed for Berkshire’s operating CEOs since Greg Abel and Ajit Jain became vice chairman? For example, can and do the operating CEOs still reach out to Warren Buffett directly? 

[00:34:48] Clip 2: That’s, the answer might surprise you, but they, overwhelmingly. The operating executives, they, prefer to talk to, Greg or to, Ajit.

[00:35:02] Clip 2: And that’s understandable because I don’t really do much and I don’t operate at the same level of efficiency that I would have 30 years ago or 40 years ago. I don’t know the managers as well as I would have when we were smaller and when I could get more accomplished in a day than I can now. And you’ve got, when you’ve got somebody like Greg and Ajit.

[00:35:24] Clip 2: Why settle for me? Basically, it worked out extremely well and I almost can’t imagine anything working better because Greg in a year accomplishes, he sees more of them, understands more about their problems, and can give them suggestions. He’s got. incredible amounts of energy and nobody has more wisdom than the G about insurance.

[00:35:55] Clip 2: And, they’ve got access to insurance for him. Now, they had it before we stuck some of those titles on in insurance. Whereas, with Greg, he greatly expanded things when he became the vice chairman in charge of really everything except insurance. he is. If, you polled our managers that fall under his jurisdiction, which would be a lot of them, they, would much prefer to, unless, like a few, they weren’t paying as much attention to their business, and I wouldn’t do anything about it, but Greg would, and, and they still like it when he does it.

[00:36:33] Clip 2: He can deliver, he can, deliver news very well too. To people who, there’s some, there’ll be some people, if you have 20 children and you’re very rich, you’ll have some that will be go-getters anyway, and you’ll have some that, that, won’t. And, we are a very rich company, and, we haven’t had a history of being very tough on people that, coasted, and we’ve had some that would do that, and, Greg will do something about it and Charlie and I wouldn’t have, not because we didn’t know it should be done, but because we were doing so well ourselves.

[00:37:10] Clip 2: It just wasn’t, we didn’t, we wouldn’t make the effort. We didn’t want to change our lives that way. Plus we slowed down in various ways physically and everything. so I would say that, the number of calls I get is, essentially an awfully close to zero, and Greg is handling those, I don’t, know quite how he does it, but we’ve got the right person, I can tell you that, and with the Ajit, he does less physical moving, and, the insurance people are more used to working with the Ajit, obviously, over the years, I wouldn’t say that changing the title would be, you change as much there because he was in charge of insurance anyway, and, so that’s, you can go to a business school and they can give you way better answers than I’ve just given you, but that’s the way we do it at Berkshire.

[00:38:09] Clip 2: Yeah. If I can add a comment from my perspective, the transition has worked out very well, but I think the credit really goes to how Warren has handled the situation. And what I mean by that is, after the transition was announced, and a lot of the operating managers used to be, they were used to calling Warren directly on some issue or the other.

[00:38:32] Clip 2: When they, after the transition, when they would continue to do, Warren would very skillfully in his manner handle them, such that he would not answer what they were looking for. But at the same time made them feel good and told them that he enjoyed hearing from them and talking to them.

[00:38:51] Clip 2: So as a result of which, the transition took place, people got the message, they got the message, and were very responsive to it, and it’s a non issue as far as today’s concerned. 

[00:39:03] Clip 2: I’d probably add, yeah.

[00:39:07] Clip 2: The only thing I would add is we do have an exceptional set of managers, Across both the non insurance and insurance, and yes, Warren made it incredibly easy, but so did they. It was a very easy transition, because they care deeply about Berkshire, they care deeply about the culture, and they very much wanted it to be a success, and we’re fortunate to have those managers in insurance and non insurance.

[00:39:33] Clip 2: thank you. 

[00:39:33] Clip 2: Yeah, what, Greg is talking about is, they really wanted more direction in, in, in some cases than, I gave them, I just sat there reading the Wall Street Journal or whatever and then, Greg is, I don’t, there, one way or another, there are more than 24 hours in his day, and, I just don’t know how he covers the ground, he does, but he knows more about the people.

[00:40:01] Clip 2: We’ve got the same feeling in terms of judging the attractiveness of businesses and making capital decisions and that sort of thing. but. He’s willing to work. I’m, I’m, and I couldn’t get as much done anyway. You know what I could do in a couple of hours, maybe eight hours now.

[00:40:17] Clip 2: It, I just don’t read as fast and everything said, but it’s working very well. and, this place mainly happened to me. It would be working extremely well the next day. I don’t get any phone calls. you could actually, we can rig something up so we have some answering machine that people think I’m still around, or something in terms of anyway, that’s much less than you’d learn in business school, but that’s the way we do it at Berkshire.

[00:40:46] Kyle Grieve: So his statement here actually surprised me as many of the subsidiaries now contact pretty much exclusively Greg Abel and Ajit Jain. he made it make sense, right? Because he said that basically, because of their younger age, they can just get a lot more done on a daily or weekly or monthly basis than Warren can now.

[00:41:05] Kyle Grieve: So I felt like Warren shows some vulnerability here. Warren is transparent, that’s who he is. So I think he’s fully aware that his body’s slowing down. He’s probably not running nearly as efficiently as he was when he was probably 30 years old or whatever, or even 70 years old. Just going back to the calls that he made.

[00:41:21] Kyle Grieve: he’s well known obviously for bringing these subsidiaries on and interacting with a lot of the CEOs, but he pretty much said that it’s pretty much zero now. So yeah, Greg and Ajit are taking most of that. But Warren pointed out that the changes in titles happen after he’s gone.

[00:41:37] Kyle Grieve: Aren’t going to really make much of a difference in the transition of, cause it’s pretty much already happened. So Ajit commented and said, the transition has gone seamlessly. Greg Abel also pointed out that the managers at the subsidiary level have also made the transition really easy. I think that they probably all know that Warren was trying to transition towards Greg and Ajit and, They’ve just made the transition really easy.

[00:41:57] Kyle Grieve: So I think this kind of goes to show just how good of a business Berkshire is. And more importantly, how well Warren has managed it. So he’s basically set this business up. He’s created the infrastructure with Charlie’s help, of course, for the business to continue succeeding operationally at a very high level.

[00:42:13] Kyle Grieve: Once he’s no longer involved. I just, and I just wanted to point out that I think this is a really rare trait, the forward thinking, it makes sense because if you follow Warren, he values trust a lot and I think he wants his shareholders to trust him. So he’s basically built this business so that even when he’s gone, I think shareholders will still trust him that he’s built this company that’s going to last for many decades after he’s gone.

[00:42:35] Clay Finck: At the meeting, Greg Abel mentioned that sometimes managers will call Buffett and he, Just won’t directly tell them the answer. And, I can really resonate with that, with tips here and asking state questions. And he’s what do you think? So think for yourself as something that’s very important.

[00:42:53] Clay Finck: I also wonder if there’s any other company that has a CEO that’s 90 plus years old. Like that in itself is just incredibly impressive. 850 billion plus market cap. With a 93 year old CEO, I think some people overlook just how amazing that is. And key man risk has been a talk at Berkshire for really a long time.

[00:43:18] Clay Finck: he’s going to be prepared to pass the torch whenever it’s time to do so. And even with him largely removed from the operations, Berkshire’s growth still seems to keep chugging along at a really nice pace. Given their size and despite the massive cash pile they have. So I think this ties in well to clip number three.

[00:43:37] Clay Finck: We’re going to play here. This one covers who’s going to be the primary capital allocator. Once Buffett passes the torch, this one might’ve been a surprise to some people. It was an interesting question. I thought that the audience would also enjoy it as well. 

[00:43:52] Clip 3: All right. The next question comes from Slaven Vukobrat as CEO.

[00:43:57] Clip 3: Will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process?

[00:44:17] Clip 3: Yeah, I would say that decision actually will be made when I’m not around and, I may try and come back and haunt them if they do it differently than, But, I’m not sure the Ouija board, I think, will get that job done. that job, I’ll never know the answer on whether it’ll get covered, but I feel very comfortable about the fact that it will be made by a board that, they’ve got loads of brain power, they’ve got a dedication to a, Unusual institution and they’ll they will figure things out but I would say that if I were on that board and we’re making the decision I would probably Knowing greg.

[00:45:01] Clip 3: I would just leave. I would leave the capital allocation to Greg and he understands businesses Extremely well, and if you understand businesses you understand common stocks. if you really know how business works. You are an investment manager. What, how much you manage, maybe just your own funds or maybe other people.

[00:45:27] Clip 3: And if you really are primarily interested in getting assets under management, which is where the money is, you don’t really have to understand that sort of thing, but that’s not the case with. Ted or Todd, obviously, but I think the responsibility ought to be entirely with Greg. That, the responsibility with, has been with me and I farmed out some of it and I used to think differently about how that would be handled.

[00:45:52] Clip 3: But I, I think the responsibility should be that of the CEO and whatever that CEO decides may be helpful in effectuating that responsibility. that, that’s up to him or her to decide. At the time they’re running the money, but, so I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire.

[00:46:16] Clip 3: And we do not want to try and have 200 people around that are managing a billion each. It just doesn’t work. And, I think that when you’re handling the sums that we will have, you’ve got to think very strategically about how to do very big things. And I think Greg is capable of doing that. I think I’ve missed a lot of stuff in the past, so I’m actually wiser about doing that now.

[00:46:41] Clip 3: But then, I would do it better this time around than 2008 and 9 if something akin to that happened. But, it won’t be exactly like 2008 or 9, you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly, maybe it’ll be once every five years, maybe, it’ll probably be more like once every ten years or something.

[00:47:05] Clip 3: But the way the world gets more sophisticated, complicated, and intertwined. More can go wrong, and there’s no sense going through here and exploring the possibilities of the different things that could happen. But you do want to be able to act when it happens, and I think the Chief Executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up.

[00:47:31] Clip 3: At a time when nobody else is willing to move. It wasn’t that people didn’t have money in 2008. It’s that they were, paralyzed. And we did have the advantage of having some capital. And, a willingness to, an eagerness even to act. And a government that, that in effect looked at us as, an asset instead of, a liability and I think that all of those qualities will be even more important as our capital pile grows and so I think, Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go. You never know whether it’ll be next week.

[00:48:16] Clip 3: Next year, next decade. But you won’t be, It won’t be a century from now, that is for sure. And, be more intertwined and sophisticated. The world financial situation gets more vulnerable in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to large problems.

[00:48:37] Clip 3: Greg, does that bother you at all or not?

[00:48:42] Clip 3: Without directly answering the question, I think there’s one important thing, I think as we go through any transition, it’s important to know the capital allocation principles that Berkshire lives by today. We’ll continue to survive Warren and I think that’s what the thing I’d want to communicate that will we have our operating businesses insurance not insurance We’re going to cap that we’ll provide them the capital necessary to be successful and grow if it’s appropriate At the same time we’re expecting a return of capital from them when they have excess cash and then As we’ve discussed or you’ve touched on always looking at potentially new businesses as a whole or in a piece.

[00:49:21] Clip 3: And as you’ve always highlighted, and I fully agree, it’s a, we’re, we’ll always look at equities as we’re investing in a business, either 1 percent or a hundred percent, but we’re looking at the business. We’re looking at the economic prospects of that business and how sustainable it is and what it will look like 10 years from now.

[00:49:39] Clip 3: And is our, the capital we originally put in at. Exponential risk or where’s that risk set, that profile. And then of course, and then we’ll obviously have our, our continue to always put excess cash in the safest investment there is in, US treasuries. Knowing we wanna maintain that fortress of a balance sheet for two reasons.

[00:50:01] Clip 3: One, to act, but also to always protect our shareholders. If we have a, we wanna maintain the position Berkshire is in now, realistically for the to insure, to insure it in jurors. 

[00:50:13] Clip 3: when he says that, it makes me wish I’d stayed around to be number two instead of number one in this process over the years.

[00:50:21] Clip 3: It doesn’t get more fun than what we’re doing, and we’re better positioned than ever before. We’re not positioned, no, however, to earn extraordinary returns versus what American business generally earns. I’m, as I’m, I would, hope we could be slightly better, but nobody’s going to be dramatically better in some way.

[00:50:41] Clip 3: over the next century, it gets very hard to, it gets very hard to predict who the winner will be, and, if you look back, as we did a few meetings ago, as the, top 20 companies in the world at 10 year intervals, you realize the game isn’t quite as easy as, it looks, but getting a decent result actually is reasonably, should be reasonably easy if you just look at it.

[00:51:04] Clip 3: Don’t get talked out of doing what has worked in the past, and don’t get carried away with fads, and don’t listen to people who have different interests in mine than the interests of our shareholders. 

[00:51:17] Clay Finck: So this is one of the clips I thought was really interesting. We all view Buffett and this grandfatherly super kind way, but running a company of this size requires some extraordinarily difficult decisions to be made.

[00:51:32] Clay Finck: Including who’s going to take the major responsibility of capital allocation and who doesn’t. So he also alluded to having a lot of cash to deploy during a downturn. Earlier in the meeting buffet, he was also asked why he has over $180 billion in cash and really, what are you waiting for? there’s a lot of that money he could have deployed, 10 years ago and seen substantial gains and.

[00:51:55] Clay Finck: A number of positions and essentially said that cash right now is really attractive relative to other opportunities available. And even when you look at share buybacks, Berkshire is pretty limited in how much they could pull that lever of share buybacks because of liquidity issues and not moving the price too much.

[00:52:13] Clay Finck: And I personally wouldn’t be surprised. If we eventually see a special dividend, maybe within the next few years, unless they’re able to put together a massive deal that allows them to allocate tens of billions of dollars, and even if they do that, it still might not move the needle. In 2023, they generated 37 billion in operating earnings. The stat that sort of just blew my mind at the meeting is they put that on a, in terms of daily earnings, they’re getting a hundred million dollars per day that they have to figure out how to allocate it.

[00:52:46] Clay Finck: So capital is just constantly flowing in faster than they’re able to deploy it. And I think eventually. It’s hard to see them not needing to distribute that out as a special dividend. And Buffett also made the comment in the meeting that in the future, they plan to continue implementing share buybacks.

[00:53:02] Clay Finck: So maybe they are just waiting to potentially do major share repurchases, just waiting on the right time. and then as always, he wants to be prepared if a major downturn were to occur as well. 

[00:53:15] Kyle Grieve: So I think you’re right here about having a special dividend at some point in the future.

[00:53:19] Kyle Grieve: Obviously they have to keep a large chunk. Of cash on hand for their insurance business. But I think at this point it’s a lot of excess cash that, to the naked eye, I guess he says isn’t doing much, but I think he’s just putting it into shorter term bonds. And I guess he feels like that’s a good enough rate of return for him right now.

[00:53:35] Kyle Grieve: So yeah, I still agree with you though. I think at some point they’re just going to have to let go of some of that and let shareholders do whatever they want with it. So the other part that he discussed in that clip was about capital allocation specifically. About how that’s going to be, or who’s going to take that, that over once Warren’s gone.

[00:53:53] Kyle Grieve: So the thing is Warren is, he is the best capital allocator. I think that’s really ever lived, at least since public markets have been around. And it was really good that to hear Warren think that Greg is going to be a suitable replacement and that, I think, It seemed from the way Greg talks that he’s probably been grooming him for this position for a long period of time because Greg says all the things that you want to hear and very similar to Buffett.

[00:54:16] Kyle Grieve: But the problem is, Greg started out as an accountant and then has a history and energy, which he’s done brilliantly. Don’t get me wrong. But, he’s not an investing marvel that Warren Buffett was since he’s been a little boy. So yeah, Greg can say. Things that echoes Warren sentiments, and I think he’ll probably 100 percent keep trying to do what Warren does after he’s gone and same thing with dealing with risk, and I think he’s probably the best person for the job at this point, but you just can’t replace Warren Buffett.

[00:54:43] Kyle Grieve: It’s just like you can’t replace Charlie Munger. It’s just you can get close, but there’s going to be some uncertainty there for sure once he goes. 

[00:54:50] Clay Finck: yeah. So I feel like Kyle’s been waiting for me to ask this question here. Someone asked Buffett how he would invest if you were managing a smaller amount of capital, which is the exact position that Kyle and myself are in today, except we don’t have the privilege of being able to invest full time like Buffett did.

[00:55:08] Clay Finck: So we’ll go ahead and play the final clip here and then I’ll get Kyle slots. 

[00:55:13] Clip 4: Good afternoon, Mr. Buffett, Mr. Abel. My name is Syra Pop Wu, a resident of New Zealand, but originally from Thailand. This is my first time in America, and the first time attending the meeting. The journey was quite rough, but it was all worth it though, because I can now personally thank you, Mr.

[00:55:31] Clip 4: Buffett, and the late Charlie Munger, while he’s still with us, for organizing such a wonderful event, and most importantly, for being such exceptional role models and sharing your wisdom with us all these years. So thank you. Thank you for coming.

[00:55:51] Clip 4: So here’s my question for you, Mr. Buffett. Towards the end of 2018, you mentioned that you guarantee you could make a 50 percent annual return if you had to start again with under 1 million. The question is, if tomorrow, You woke up in the body of a 20 year old American, and your name was now Warren Ellicott.

[00:56:16] Clip 4: And you had some money to invest on a full time basis. What method or methods would you use to achieve that return? Would it involve flipping through 20, 000 pages of Moody’s manual or similar publications? Or finding, two five sticka butts or would it be hunting for great companies at a fair price as Mr.

[00:56:36] Clip 4: Munger would, or would it be a combination of both with opportunity costs, serving as the final arbiter of which method to use, given that your investing opportunity has now been brought in significantly. Thank you. Carbon Cup. 

[00:56:49] Clip 4: Good question. I’m glad you came . And the answer would be in my particular case.

[00:56:56] Clip 4: It would be going through 20, 000 pages and since we were talking about railroads, I went through the Moody’s Transportation Manual a couple of times. That was 1, 500 or 2, 000 pages or probably 1, 500 pages. And I found all kinds of interesting things when I was 50 or when I was 20 or 21, and I don’t imagine there’s anybody here that knows about the Green Bay and Western Railroad Company, but there were hundreds and hundreds of railroad companies, and I like to read about every one of them.

[00:57:28] Clip 4: The Green Bay and Western, in those days, everybody had a nickname for railroads. that was, just what Northern Pacific was the nipper, and, T. B. Snow was, One of them in the east that used to go up to Cornell. And, the Green Bay and Western was known as Grab, Baggage, and Walk.

[00:57:49] Clip 4: and, G, B, and W. And they had an, they had a bond that was actually the common stock, and they had a common stock that was actually a bond. And, that, that could lead to unusual things. But they wouldn’t lead to unusual things that would work for you with many millions of dollars. But if you collected a whole bunch of those, Which I set out to do and actually that’s what impressed Charlie when I first met him because I knew all the details Of all these little companies on the west coast that he thought I would never have heard of but I knew about the Los Angeles Athletic Club or whatever it might be and he thought he was the only one that knew about that and that Became an instant to answer your question, I would, I don’t know what the equivalent of Moody’s Manuals or anything would be now, but I would try and know everything about everything, small, and I would find something, and with a million dollars, you could earn 50 percent a year.

[00:58:43] Clip 4: But you have to be in love with the subject. You can’t just be in love with the money. You really have to just find it, like a trick question. It’s essentially that people find other things in other fields because they just love looking for them. A biologist looks for something because they want to find something, and it’s built into it. I don’t know how the human brain works that much.

[00:59:05] Clip 4: I don’t think anybody understands too well how the human brain works, but there’s different people that just find it exciting to expand their knowledge in a given area. I’m Biden. I know great bridge players. I know great chess players, actually. Kasparov came to Omaha and met Mrs. B. I’ve had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas.

[00:59:34] Clip 4: all I know is the human brain is complicated. But it does its best when you find out what your brain is really suited for. And then you just, Pound the hell out of him from that point and that’s what I would. be doing if I had a small amount of money and I wanted to make 50 percent a year.

[00:59:52] Clip 4: But I also wanted to just play the game. And you can’t do it if you really, if you don’t find the game of interest, whether it’s bridge or whether, whatever it may be, chess or in this case, finding securities that are undervalued. But it sounds to me like you’re on the right track. anybody that will come all the way to this annual meeting got something in their mind other than bridge or chess.

[01:00:13] Clip 4: So I’m glad you came and come again next year. 

[01:00:17] Kyle Grieve: So Warren made it crystal clear that if he could, he would basically review a modern version of a Moody’s manual for ideas. And this is a really interesting way of looking at investing. Essentially the person who turns over the most rocks. is going to be the person who wins.

[01:00:32] Kyle Grieve: And this is exactly what Warren was doing when he was a lot younger. He was opening up Moody’s manual, starting at the A’s and going all the way down through the Z’s. And he pointed out in that clip that Charlie was super impressed because Charlie would try to mention some obscure business all the way to California when Warren was in Omaha, thinking there would be no chance that he would know it.

[01:00:53] Kyle Grieve: And Warren was like, yeah, I know all about that one. And so that was a big reason why they were able to bond. And I think that at the stage of Buffett’s career, looking at all these small cap companies, that was basically his edge, that was the edge that he knew. So I just, I thought it was really interesting because his primary piece of advice was basically try to know something about everything, but small.

[01:01:15] Kyle Grieve: So he was pointing out that I thought he was talking about at least smaller market cap businesses and try to just turn over as many of them as you can to try to understand them. a little bits and pieces of as many as you can. So the other thing that he pointed out that I thought was really powerful was that you have to have a love and a passion for it.

[01:01:32] Kyle Grieve: if you’re going to go through a Moody’s manual, start at the A’s and go to the Z’s, you’re going to have to love what you’re doing because you’re going to go and you’re going to flip through probably hundreds of pages where, or tens, whatever, hundreds of pages where you don’t find anything that’s interesting.

[01:01:44] Kyle Grieve: So if you don’t truly love. His point was that if you don’t love the art of investing, if you just love the money part of it. You’re probably not going to succeed because, let’s just use the same example of someone who just is in it for the money. If you flip open that Moody’s manual, you’re not going to make it through the Zed’s and therefore you’re probably just not going to be as successful as Warren was.

[01:02:03] Clay Finck: And if you’re doing it for the money, you have to recognize that if you look at your hourly wage. Right over the first six months or year. It’s probably gonna be terrible. it’s an investment in it You know that knowledge compounds and it’s oftentimes the big payouts aren’t gonna come for five or ten years And you have to recognize that your knowledge compounds and that’s why the passion is so important I’m definitely reminded of one of Charlie Munger’s friends Lee Liu who’s always at the Berkshire meeting people are always finding him and taking pictures with him and I think about the approach Lee Liu took to investing is very similar to what Buffett did in the early days with the Moody’s manuals.

[01:02:41] Clay Finck: In the early days, Lee Liu, he was just obsessed, like totally obsessed. With stock investing, especially looking at some smaller names, he would pull up the value line. I would consider that probably the modern day version of Moody’s. And he would just analyze every single company. And for the ones he would find interesting, he would essentially turn into an investigative journalist and figuring out everything he could about the company and its management team and reading literally everything.

[01:03:08] Clay Finck: That’s not even an understatement. And it’s a reminder that achieving high returns in this game of investing isn’t easy. At least relative to the index. And I always think back to, you mentioned the point of Munger, essentially ignoring what the schools teach him. And if you were an investor and you looked at every single small company and seriously considered where that company was heading and what the value of it was like, it’s pretty crazy to think you could come to the conclusion that markets are efficient after doing that.

[01:03:35] Clay Finck: And really you and I, we could just pull Buffett’s track record and look at some of the deals he did and, Yeah, it’s just totally ridiculous. And he also alluded to playing a game that you’re suited to win. There are many games within the game of investing, and some are much easier.

[01:03:52] Clay Finck: Some are much more difficult than others depending on who you are. So if you’re apt to looking at every single company on the value line and knowing a company. extremely well from top to bottom, then you’re eventually going to find something that’s really interesting, pretty compelling that the majority of people just aren’t even going to know exists or even look at.

[01:04:12] Clay Finck: So if you couldn’t really care less about reading financial statements, scanning through the value line, then an index fund or two is probably going to suit you pretty well. And I guess another approach, if you just want to take the sort of Peter Lynch approach of sticking with companies that are simple to understand, you have real life experiences with then.

[01:04:30] Clay Finck: I think that’s absolutely fine, too, because you see many of these big name investors, they own companies that you and I know very well. We just did the episode on Lululemon, and that’s one great example, I think, of a company people know well, that has high returns on capital and delivers a strong growth to shareholders and.

[01:04:47] Clay Finck: You just have to play the game that you feel you’re most equipped to win and fits your sort of situation the best. And I think another really important point Morgan Housel points out in the psychology of money is that the most important thing is not the level of returns you get, an index fund return.

[01:05:05] Clay Finck: Of 8 percent is absolutely fine. But what’s most important is the longevity of your returns. So when you’re able to invest for 10, 20, 30, 40 years, that’s when you get the amazing results in the end due to the power of compounding. 

[01:05:22] Kyle Grieve: I really resonated there with your point about playing games that we are suited to win.

[01:05:26] Kyle Grieve: So this is something that I’ve really been thinking a lot lately, but more from a wider view. So it just feels like when people are newer to investing and they want to go on and watch CNBC or read the news, you’re bombarded with TV personalities or journalists talking about the biggest names in the industry.

[01:05:43] Kyle Grieve: Think Amazon, Nvidia, Tesla, et cetera. So I think that A lot of these investors have this bias where they believe that they need to basically invest in these really big companies in order to succeed in investing. But obviously, I’ve researched a lot about Buffett, especially in his early days and all throughout his career because I’m an investing dork.

[01:06:03] Kyle Grieve: But, I can assure you that you do not need to invest in those types of businesses to succeed. If they interest you, if they don’t interest you, then you don’t need to. If they interest you, it’s totally cool. You can do that. But the point is, When Buffett first started, he was buying micro caps that pretty much no one would have heard of.

[01:06:18] Kyle Grieve: Granted, if Amazon existed back when he started, I guarantee you, he probably wouldn’t have even considered buying it and putting it into his portfolio, but he was getting incredibly high rates of return, like ridiculous rates of return. And he was just looking at all sorts of different opportunities.

[01:06:34] Kyle Grieve: Obviously he settled to where he is now, on this kind of. Quality compounding businesses, but he was looking at cigar butts, which he’s famous for learning from Benjamin Graham. He was looking at merger arbitrage, looking at businesses that maybe there was a deal to buy them out at a specific date that would be higher than the current purchase price.

[01:06:53] Kyle Grieve: And he was wildly successful on these. But the point is that Warren’s strategy has really evolved over time. And a big factor of that evolution is just that his capital base grew. At incredibly high levels. So maybe he obviously had all these other little smaller strategies that he used way back when, but he couldn’t, he just couldn’t use them.

[01:07:13] Kyle Grieve: Now it wouldn’t work. Buying a nano cap for a decimal of a decimal of a percentage of a Berkshire’s cash is not going to do anything. So there’s no point in spending time on it. So I just think The way he invests the way he would have invested a million dollars is obviously not how he would invest a hundred billion dollars.

[01:07:30] Kyle Grieve: And so it’s just the point of that being that I think a lot of our listeners are probably not necessarily investing billions of dollars. So you don’t have to follow all these really big name investors or people on TV. obviously. I love imitating and copying and cloning people who are really successful because I think that’s a really good way to do things.

[01:07:49] Kyle Grieve: But I think it’s really important that if you are cloning someone, try to make sure that they’re playing more like Clay mentioned with playing games that you can win. Find people that are playing games that you’re playing. You don’t want to play someone else’s game. And if you are playing someone else’s game, you’re really running a risk that you’re playing a game that you’re both not suited to win and that you’re not going to enjoy.

[01:08:09] Kyle Grieve: So just think about that when you’re thinking of following someone into a trade. 

[01:08:14] Clay Finck: Yeah. And people see Buffett as this buy and hold type investor. But if you go back. There are a number of companies he’s bought and sold within six months and you don’t know why he bought it. You don’t know why he sold it.

[01:08:25] Clay Finck: So just because he did buy it doesn’t mean he’s going to hold it for the next 10 years. And I saw a funny comment that was also pretty interesting from Twitter. They had commented that Buffett had essentially conquered the game of investing. So he did about everything one can do. And now he has to figure out how to deploy 180 billion in cash and no one on the management team can figure out how to effectively do that.

[01:08:48] Clay Finck: What a great problem to have. And I also wanted to share one more idea that I thought was quite interesting shortly after that previous question was played. This was later in the afternoon, Buffett was asked about what they learned from the pilot deal. Really what sort of happened was there’s a dispute in the purchase they were making, and I found it interesting that Buffet just totally without hesitation, right after the question was asked, he shared what he had learned from the deal and it reminded me of William Green.

[01:09:17] Clay Finck: Had said at the dinner we had On Saturday night, we were talking about T. I. P. and how we’ve adopted this principle of radical transparency. So whatever’s happening with the company, Stig is just totally transparent to everyone on the team. So we can all see the financials. We can all see how much free cash flow the company’s making, how each business unit is doing, where he wants to take the company.

[01:09:41] Clay Finck: And he’s, you can ask him anything, he’s a totally open book and there’s really nothing to hide. And essentially what William said at the dinner was that being honest and truthful. Is a superpower. And when William says something like that, it really makes me pause and really just sit back and think about it.

[01:09:59] Clay Finck: I think Berkshire is really another example of that. Being honest, being truthful, trustworthy, transparent. I think it’s just really taken them so far and they recognize that their reputation is really everything. And it’s just so amazing to me. How well that has actually worked for them. it’s something you can say and you can, it sounds good, but actually seeing it work in practice really helps nail it at home, I think.

[01:10:25] Clay Finck: So this also reminds me of the episode Stig just released with Monish. They talk about how to be Truthful and trustworthy. It’s really a long term game. So in the short run, it really pays you nothing. So it’s hard to behave in this manner. But over the long run, it really just makes all the difference.

[01:10:43] Clay Finck: And it’s also a good opportunity for Buffett to do. Lead by example when he’s on stage. So if you work at Berkshire and Buffett acts in this manner, then you want to do the same. And it creates this culture within the company. It just creates a positive feedback loop for everybody. And it also just filters out like a lot of the people that don’t operate in that manner.

[01:11:04] Clay Finck: So it’s a. A flywheel that they can create internally. So anyways, that was just one more insight I thought was quite interesting. That ties in well for TIP and Berkshire as well. 

[01:11:15] Kyle Grieve: I really think you nailed it with some of the analogs between TIP and Berkshire there regarding transparency. So I found it very refreshing basically to see Stig run the business this way.

[01:11:24] Kyle Grieve: And you can see the characteristics of transparency are very apparent in all the team members. And obviously knowing the transparency that Rickshaw has it was just interesting to see because I’ve never really worked in a business that was as transparent as T. I. P. So I’ve even noticed that my own transparency has extended to other areas of life outside of work.

[01:11:42] Kyle Grieve: For instance, when I was doing Jiu Jitsu, my coach left. I left to go to another school. When I went to the school, he was trying to sell me on. Hey, join up for the next 12 months. And I’m like, I’ll do the month to month thing, but like full transparency. When my coach opens his new school, like I’m out the next day.

[01:11:58] Kyle Grieve: And some coaches would not be cool with that. They want you to be loyal to their school, which is fine. That’s great. But I just want to be transparent and not create some sort of weird situation where I’m just up and disappearing one day. I want to just be transparent. I wanted him to understand that, yeah, that’s the way it was going to happen.

[01:12:13] Clay Finck: And I think, it’s something that’s really hard to do, but I think most people who are genuine and I think a lot of people just appreciate the transparency, some people can get really upset and get upset at you, but that’s also a filtering mechanism for you’re filtering them out of your life.

[01:12:31] Clay Finck: if they’re going to get upset about you being honest, then why do you want them in your life anyways? 

[01:12:36] Kyle Grieve: Yeah, that’s a great insight. Absolutely. And yeah, I just try to be honest with my entire life. And if you’re if you don’t appreciate that, then probably don’t have room for you. I think you’re completely right about that.

[01:12:47] Kyle Grieve: So you also mentioned how Stig just recently interviewed Monish. And I thought that was a really good interview. So I had a few really good insights that were honestly exactly similar to the ones that you were speaking about. So one of my insights that I got was that reliability is also one of the most important traits and it’s really better to be honest and reliable than dishonest and unreliable.

[01:13:08] Kyle Grieve: And I think that Monish really spoke about how important reliability was for Charlie Munger throughout his entire life. And then just Piggybacking on what you were talking about with trust about it being a long term game, trust can take decades to pay off. Most people that are just short term oriented, they’re just looking for shortcuts.

[01:13:25] Kyle Grieve: And in that case, they’re just, they don’t value trust as much because they just want results tomorrow. They don’t care about results a decade from now or whatever. So they tend to be a little bit more shallow and short sighted in the way they do things. So I just think that this also just fits very well.

[01:13:41] Kyle Grieve: With your point about how transparent Berkshire has been over the years, they, not only obviously it is a celebration, so they do speak about the wins, but like you just pointed out about that deal that kind of went South, they point out their losses and they’re not trying to hide from the fact that maybe a specific business or a unit is underperforming.

[01:13:56] Kyle Grieve: You see them talking about insurance and. Sometimes it’s good. Sometimes it’s bad. He’s very forthcoming and transparent about what’s happening in the business, which I really appreciate. I, and they’re not also another thing that’s really interesting is they don’t change their benchmark or the performance metric to try to make themselves look good.

[01:14:10] Kyle Grieve: every single year you get your book value, whether it goes up higher or lower than the S and P 500, it’s always there. He’s always showing operating, operating earnings, and he’s not switching and showing you EBITDA one year because that looks good, but earnings doesn’t. And so just that alone and doing that over decades, that’s super impressive.

[01:14:28] Kyle Grieve: And it’s, he’s not trying to warp the truth. It’s just, this is the reality of the business. Let me explain to you what’s going on. And if it’s good for you, if it’s a good fit for you, then come on board. And if it’s not a good fit, then go find something else. That’s totally cool. So Warren and Charlie have always been interested in playing this long game.

[01:14:45] Kyle Grieve: So I think it just makes sense that they both have this high degree of trust with all of their shareholders, because they knew they were going to play this long term game and in order to succeed, That’s what they hadn’t wanted to do. So I think the trust factor is just a huge reason why they also have so many quality shareholders, right?

[01:15:03] Kyle Grieve: You look at a lot of these businesses, they have super high levels of volume. And like you were talking about with their liquidity, not being very high, making it hard to buy back shares. That means that people don’t want to trade the shares. And there’s a reason for that. It’s because they have tons of shareholders who’ve been there for decades.

[01:15:18] Kyle Grieve: They’re not going to just sell their shares. and I think. Trust and transparency has really built that quality shareholder base up. So my last takeaway from Stig and Monish provides a conversation that ties well here is that is about Charlie’s favorite mental model, which was inversion. So Monish pointed out how hard it would be to find someone who is honest, reliable, hardworking and had very high integrity and did terribly in life.

[01:15:43] Kyle Grieve: So I really like these types of thought experiments because they give you a good framework just for living a wonderful life. Focus on being honest, focus on being reliable, focus on being hardworking and have high integrity and you’ll be incapable of living a terrible life. And the trick is to just stay on the right path.

[01:15:58] Kyle Grieve: But as Warren and Charlie showed, you can stay on that path and look at where it got them. 

[01:16:04] Clay Finck: And, for those who miss that conversation with Monisha was released just a few days ago, episode 628 here on the podcast feed. So that wraps up the Berkshire overview of the weekend. But before we go, I wanted to give a hand off for what we plan to do in Omaha next year.

[01:16:20] Clay Finck: I’m thinking that Kyle wants to come back again. And I’ll certainly be back again next year as well. So this is very, initial stages, but we do plan on hosting a number of events again next year during the Berkshire weekend. And since it’s a year away, we aren’t exactly sure what we plan to do, but here I wanted to give just a general idea because Stig loves planning far ahead with this stuff.

[01:16:43] Clay Finck: And I know people in the audience email me many months ahead wanting to know what’s happening. So here we are. Already looking forward to 2025. Crazy to say. So at the time of recording here, we plan on starting up our free events again to the general audience. We did these back in 2023 and a lot of people just absolutely loved them and it was just a great chance to meet a ton of like minded people that listen to the show.

[01:17:08] Clay Finck: And then we’re also going to be hosting Social events for our TIP mastermind community. This is our paid community for high net worth individuals, entrepreneurs, as well as equity analysts and portfolio managers who are listeners to the show. So Kyle and I have talked about this a number of times on the show.

[01:17:24] Clay Finck: the most recent one was the Lulu limit episode that just went out. So If you’re interested in hopping on the waitlist to join the community, you can go to the investors podcast. com slash mastermind. And then, I had mentioned, I put together the Berkshire summit this year, with the help of the TIP team.

[01:17:40] Clay Finck: And we’re also considering hosting something similar to this next year. We’re still in the works of planning what exactly we plan on doing and gauge interest from people. So you can really think of the Berkshire Summit as VIP access to hang out with TIP hosts, hang out with the guests, and really just have an amazing weekend that we can put together for you.

[01:17:59] Clay Finck: So this year’s summit, we had guests like William Green, Guy Spear, Christopher Sy, Gautam Baid. Joseph Shaposhnik and Daniel Zhang. It’s a higher ticket event. if you’re interested for 2025, you can shoot me an email at clay at the investors podcast. com. And, you’ll be the first to hear from us if we end up putting something like this together.

[01:18:18] Clay Finck: And since we plan on doing a number of different things, I hesitate when you do multiple things because it just confuses people with what you’re doing. And, Kyle and I can only be At one place at a time. So it makes things difficult and there’s only a few days in the weekend that we can do things.

[01:18:35] Clay Finck: So we hope to have an event for all types of people in the audience. And based on what you’re looking to get out of the weekend with us. So I’m totally biased, but I think all three events just sound like an amazingly fun time. And I hope many of you in the audience will come join us again in Omaha in 2025.

[01:18:52] Clay Finck: It really is a lot of fun, and I’ve really enjoyed getting to know a ton of members in the audience and learning a lot along the way. that wraps up today’s episode. Mark your calendars for, usually it’s the first weekend of May during the year, so May 2025. And the earlier you get this stuff booked, too, the better.

[01:19:09] Clay Finck: Usually, it’s good to book out the flights and the hotel probably four to six months plus in advance. the later you book, the crazier things you can get. So Kyle, thanks for joining me today. It was great seeing you in Omaha and we’ll see you again in New York City this fall for the mastermind community.

[01:19:24] Clay Finck: I’m really looking forward to it. 

[01:19:26] Kyle Grieve: My pleasure. And I look forward to that as well. 

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