What Warren Buffett did not say

Author: Value Investor  Date: 2020/05/07

On May 4 Berkshire Hathaway Inc had its annual shareholder meeting in Omaha, Nebraska. This event is very different from shareholder meeting held by other public companies. In fact, it is not so much about the company itself, as about its Chairman and CEO Warren Buffett, a legendary investor, who made an enormous fortune primarily (but not only) in the stock market.

This year’s event was very unusual: because of the the COVID-19 pandemic shareholders were not physically present in the vast auditorium, but instead watched in on their computers. Another thing that was different was the absence of Vice Chairman Charlie Munger. Charlie is 96 years old - an old guy compared to Buffett who is still only 89.

The Berkshire Hathaway shareholder meeting is quite remarkable in its format, too. Most of the time is spent on Warren Buffett answering questions. I cannot say that I heard something very different from what the legendary investor usually says about his approach to investing, a few things were retained in the memory as capturing the essence of his investment method.

One of such things is that he has a very good understanding where his investments could be in 20 years, but he has no idea where they will be 2 years. He said that he and Charlie were fortunate enough in their lives not to worry about not having sufficient amount of money to support their normal lifestyle. However, this is not the case for most people, so his advise to investors was to plan their investments based on specific circumstances of their lives and be prepared for large losses in their portfolios that are inevitable to occur.

This is all good and very useful, but to me as much noteworthy was the things Warren did not say. He did not give a true answer why he liquidated some of his holdings during the recent sell-off at a loss despite his 20-year investment horizon and why he did not put that money “to work” by buying other securities at supposedly bargain prices.

I think he did not do it because he is really concerned about the liquidity situation of the companies comprising the Berkshire Hathaway group. As a very shroud and intelligent investor, who has seen almost everything in his life, he knows darn well that the worst is still yet to come and his companies will might need every dollar he stashed away in order to stay solvent.

To me, this is the most important thing from the Berkshire Hathaway shareholder meeting, even though Warren Buffett did not mention it.