Today we’re bringing you another round of He Said/She Said. . For a look at some of the past He Said/She Said discussions – check ‘em out here.
This was our second trip to the Berkshire Hathaway Annual meeting in Omaha, after enjoying it so much last year. And seeing as we’re already planning our return trip next year, I guess you could say we enjoyed it.
We got to see Warren take a few swings in the intro video where Warren “The Berkshire Bomber” Buffett challenged Floyd “Money” Mayweather to a boxing match (For those not aware of the date, the meeting was the same day as that big Mayweather/Pacquio fight – though maybe I was the only person in the world not to know this before seeing the BRK video), and he certainly didn’t pull any punches when addressing the very first question asked which was regarding a recent Seattle Times article alleging unfair lending practices to buyers of Clayton Homes (a subsidiary of BRK that sells manufactured homes).
A man after my own heart, Buffett asked for the affidavit that the reporter was using to claim there were 20% profit margins on Clayton Homes sales, tracked down the error, finding that the reporter was confusing GROSS profit with NET profit. GROSS might be close to 20%, but net profit is much closer to 3% and that mortgages to low-income/low FICO households will typically have higher default rates than higher income/high FICO households, but that Clayton keeps a large proportion of the mortgages for the homes they sell on their books as assets, thereby keeping much more skin in the game than many other “lenders” that are more like mortgage brokers, selling the loans as soon as they are made.
There were so many other questions that they addressed we can’t possibly discuss them all (to find out more Warren/Charlie insight you’ll just have to join us next year in Omaha!), but like last year, Mr PoP and I came away with different viewpoints and highlights of the weekend Here they are:
I’ll give you three highlights, and a low-light.
1. When asked “What is the most important thing to you at this point in your lives?” I was shocked at Charlie’s answer. While Warren said that the success of BRK was what was important to him, Charlie said that rationality was the most important thing to him! Not his health, his kids, his charity, his legacy, but rationality! Remarkable answer.
2. Omaha. No joke this town grows on us every time we’re there-this time around we really enjoyed eating at The Kitchen Table; fantastic vegan options for Mrs. PoP and I drank a craft beer from a mason jar. Who said hipsters only hung out on the coasts?
3. We got to hang out with some fellow FIRE bloggers. Shout out to the dynamic duo, Mr and Mrs. 1500, along with Steve (and his wife) from Kapitalust, and Jason (and his wife) from Dividend Mantra. It’s always fun to hang out IRL with people we know from the blogger world.
The lowlight is that you’re never sure how much longer Charlie and Warren are going to be around. When I was young-maybe 13 or 14-my mom told me to read two things for investing advice; Bogle on Mutual Funds and BRK’s annual letters. Mama PoP had very good advice (as usual); Bogle’s simplicity and Warren’s value investing have been true cornerstone’s of our financial success over the past few years.
Don’t get me wrong, I like Warren. But I really found myself liking Charlie more and more throughout the Q&A session. A couple highlights:
1- Charlie agrees with me when it comes to Florida being a great place to move.
“High tax states are just going to drive rich people out long term. Florida has that so much better than California. Who doesn’t want rich people in your state?”
Sing it, Charlie! Now put your money where your mouth is and move out here from LA!
2 – Charlie considers rationality a moral matter (much like Mr PoP – and you wonder why I like both of them so much!). When asked what matters most to him and why, Warren talked about the success of BRK, but Charlie has higher ideals.
“The main duty is to become as rational as you can be. It’s a moral duty. That’s the reason I like Confucius. If you have some easily removable ignorance and keep it – that’s dishonorable.”
And to close it out, here are some of our favorite quips this year from Warren and Charlie:
A tangent when asked about how BRK is “long” sugar consumption in the face of rising health concerns…
Warren – A quarter of the calories I consume come from coke. If I had been eating broccoli and brussels spouts all my life I don’t think I’d want to live as long. Every meal would be like going to jail. (Passes peanut brittle to Charlie.)
Charlie – (picking out some PB brittle) If I die a little sooner from eating like this it’ll just prevent a few months of drooling.
Warren – I don’t see smiles on the faces of those shopping a Whole Foods…
Can’t remember what this was in response to…
Warren – The chains of habit are too light to feel until they are too heavy to be broken.
When asked a very detailed macro-economic question about the state of the market given two very specific GNP ratios…
Charlie – Any company who has an economist has 1 employee too many.
On the Internet…
Warren – I love it. It’s $100 a month and I enjoy it more than my plane. If I had to get rid of one I know which it would be.
Who’s up for joining us next year? Omaha FTW!
Note – quotes are inexact because no recording devices are allowed. But we did our best to capture the essence!