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The Big Brilliant Lesson From The Berkshire Hathaway Inc. Annual Shareholder Meeting

Like investing nerds everywhere, I spent much of the Bank Holiday weekend scouring the world’s media for takeaways from this year’s annual Berkshire Hathaway meeting.
 
Now, a gathering of shareholders in a large American conglomerate might not sound like much to write home about, let alone to read up on.
 
But this is Berkshire’s meeting – and it’s spectacularly different.
 
Berkshire Hathaway is, of course, the company run by everyone’s favourite octogenarian billionaire, Warren Buffett.
 
And this annual get-together in his hometown of Omaha, Nebraska has grown so big that they long ago started calling it “Woodstock for Capitalists”.
 
This year the thousand-strong queues formed outside the doors of the official meeting while it was still dark outside.
 
CEOs of leading Berkshire investments like American Express, IBM and CocaCola were all in town.
 
Well’s Fargo‘s CEO even arrived to the event in an old-fashioned stagecoach.
 
And across town shareholders were invited to shop until they dropped at a vast pop-up marketplace selling many Berkshire subsidiaries’ products – everything from the famous See’s Candy to Fruit of the Loom clothing and manufactured homes.
 
All rather more exciting than the average UK-listed company’s annual meeting: 20 minutes of pre-prepared comments, a question from the lone shareholder who asks every year about restarting a dividend re-investment plan, and a few pre-packaged sandwiches before you go.

Accounting for the excitement

“They are saying there are 40,000 people here!” a friend messaged me over the weekend. “Oh, and I think I just saw Buffett in a car park.”
 
Yes, I’m so nerdy about investing that I even have friends on the ground in Omaha sending me updates as they happen.
 
A couple of days later I watched Buffett tell a CNBC interviewer that he had no idea exactly how many people had shown up, but that it was surely a record number.
 
This was the 50th anniversary, which gave it an extra pull. Also, as I keep telling myself every year when wondering whether I should travel 24 hours to enjoy the show for myself, Buffett (84 years old) and his sidekick Charlie Munger (91) aren’t getting any younger.

How much longer will the party last?

By all accounts they were still in fine form this year, answering five or six hours of questions like they do every time from shareholders and journalists before an audience of a size you’d normally expect at a rock concert or a sports game.

An audience that camps out overnight and then literally sprints to secure the best seats when the doors open.
 
This year they heard Buffett and Munger talk about everything from the amount of sugar in soft drinks to the state of the US economy to the desirable traits of the next CEO of Berkshire.
 
But surely the most remarkable thing for any attendee to take in when sitting in that vast conference hall was that anyone was there at all – let alone 40,000 people.

40,000 investing groupies

At the end of the day, I think the scale and excitement of Berkshire’s annual meeting is perhaps the most remarkable achievement of all Buffett’s many successes.
 
Sure, his record of stock picking is extraordinary – but a few others, such as hedge fund manager George Soros, have put up arguably even better numbers over the decades, and they aren’t filling so much as telephone boxes with their camp followers.
 
Of course, it helps that Buffett also made so many people rich.
 
Since 1965 when he took the helm to the end of 2014, the per-share value of Berkshire Hathaway increased by 1,826,163%.
 
You’d expect to have a few committed fans after that!
 
Yet very few people were investors with Buffett in the earliest days. As recently as 1981, Berkshire only had 3,000 or so registered shareholders.
 
This means almost all the meeting’s attendees are relative Johnny-come-latelys to the Berkshire Hathaway story.
 
Heck, I’m fascinated by Buffett and his views about investing – and I’m not even a shareholder at the moment.

A billionaire poster boy for equity investing

In truth I’ve only ever been a fly-by-night holder of Berkshire’s shares.
 
But even from outside the Berkshire cult – and across an ocean – I can see that what Buffett has managed to do is something nobody else has achieved, or at least not on anything like this scale.
 
He has made sensible investing exciting.
 
Buffett has made people want to get together and share their passion for buying stakes in companies, for backing businesses, and for putting off consumption today for greater wealth tomorrow.
 
He has given a voice to the shareholder society we all live in but that almost none of us ever think or speak about – as typified by the campaigning in the General Election, where shares barely got a mention except via contemptuous references to hedge fund managers…
 
By putting 40,000 faces on investing in shares, Buffett has done investors everywhere a favour.

Nobody else is doing it, after all.

You can play along at home

Outside of the business and investing press, the closest equivalents to Buffett in the UK such as Neil Woodford or before him Anthony Bolton have all the profile of a forgotten 1970s lounge act.
 
When we do hear about self-made millionaires, it’s tycoons like Sir Richard Branson and Lord Sugar who get the limelight.
 
Yet how many of us can seriously hope to follow in their footsteps?
 
In contrast, the path Buffett has taken can be followed by any of us, if not to the height of the investing mountain he’s scaled.

  • Save much more than you earn;
  • Invest in great companies for the long term;
  • Enjoy the journey without succumbing to greed or fear.

That’s the recipe for riches Buffett has laid out for decades, and that his shareholders are reminded of when they make their annual pilgrimage to Omaha.
 
But all of us investing enthusiasts will miss him when he’s gone.

We follow Buffett's lead here at The Motley Fool, focusing on investing in great businesses for years rather than months. It's over that kind of time horizon that we can make sensible judgments on how a business is likely to perform, and whether the price is right.

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Neither Owain or The Motley Fool own any of the shares mentioned in this article.