The Legendary Investor Warren Buffett who invests through his company Berkshire Hathaway conducted his first fully virtual Annual General Meeting (AGM) 2020 yesterday night & here in this blog I shall try to put down my thoughts in a layman’s language what he said & what it means for Indian Investors…
In normal times a minimum of 35,000 to 40,000 investors from more than 70 countries around the world attend Warren Buffett’s Berkshire AGM in Omaha, Nebraska..& thats why he is also called the Sage of Omaha; Warren obviously canceled the physical meet this year owing to Covid crisis…
I have been regularly attending his AGM for a few years now & was all prepared to attend this year too but obviously had to change plans; I assure you that I shall be very much present in the 2021 AGM next year…
Yesterday I got my 3rd opportunity to question Warren Buffett & as always, as he always does with all Investors, he replied back with a long detailed answer…
My 1st opportunity to question Warren Buffett on Gold Standard, US Fed printing Dollars that resulted in Inflation in asset classes around the world came a few years back on his only visit to India @ New Delhi…
Click here to watch this video ….
And here’s a link to the BLOG that I wrote on My interaction with Warren Buffet
But first A brief background for those who still are not introduced to WARREN BUFFETT…
Warren Buffett is the GOD of Equity (Stock Market) Investing & is the most successful Long Term Stock Market Investor ever who has by far the biggest fan base in the world…Investors, Advisors, Business Media, Stock Market Gurus all follow him like a hawk & every word that he utters because front page news the next day…
Despite short-term fluctuations, Warren Buffett’s long-term track record is why this meeting is such a big annual event for investors. Berkshire Hathaway A shares have returned nearly 21% annually since 1976, more than double the return of the S&P 500′s 10% return over the same time as per the latest Annual Report;
Now for someday who is consistently investing since 1976 & who is performing well; it cannot be a fluke…
The 89-year-old Warren Buffett, the Chairman & CEO of Berkshire Hathaway along with his 96-year-old vice chairman friend Charlie Munger take Investors Questions every year in a day-long AGM…The World eagerly awaits every year for Berkshire AGM so that they can ask any investing question they might have to Warren & Charlie, as they are lovingly called by their fans across the world …
Warren Buffet is also the greatest philanthropist in the world having donated 99% (not 9.90%) of his Wealth to Bill & Melinda Gates Foundation…
And Warren Buffett is the only person besides Bill Gates to feature in the Top 10 Richest People in the world Continuously for more than a few decades now…All other names keep changing…That’s for Consistency …
Warren Buffett made a lot of news at Berkshire Hathaway’s first virtual annual meeting on Saturday, including revealing that he sold all his airline stocks and didn’t see any value in any major acquisitions amid the coronavirus pullback in stocks (that was in response to My Question, feeling proud & lucky).
Q&A With Warren Buffett:
- Warren Buffet on the US Stock Market & America
For every $1 invested when Warren Buffett finished college in the 1950s, the stock market has produced $100, the “Oracle of Omaha” pointed out during his presentation at Berkshire Hathaway’s annual meeting.
″All you had to do was believe in America. You just had to believe that the American miracle that was intact,” Buffett said. “You didn’t have to read the Wall Street Journal. You didn’t have to look at the price of your stock. You didn’t have to pay a lot of money in fees than anybody…
Nothing can stop America when you get right down to it.” There was a testing period after the stock market crash of 1929 where a lot of people “really lost faith,” Buffett said. “In the end the answer is never bet against America.”
The S&P BSE Sensex 30 Index was created in the year 1979 with a base of 100 & is around 33,700 as on May 2nd, 2020 ie Re 1.0 Invested in 1979 , around 42 years back has grown to Rs. 337 as of today; a 337x times return in 42 odd years; thats a great return by and measure; dividends not included…
Just like USA, noting can stop INDIA & its progress in the next decade…
India has faced & successfully countered many crisis, 1991 economic crisis, Assassination & killing of 3 Prime Ministers; coalition Govts, terrorist attacks , Harshad Mehta & Ketan Parekh Scams, various political scams, Tech Bubble of 2000, 2008 US Sub-prime crisis & now the Covid 2019 crisis…t…Yet India has always moved ahead…his too shall pass
- Warren Buffet on how the US retail Investors should invest post Covid
Warren Buffett believes average investors should buy the broad market for a long period of time, for most people, the best thing is to do is owning the S&P 500 index fund ;If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities or far better than following wrong people who tell you” what to invest…
GOOD ADVICE is a rarity in todays world; If you have a good advisor then you should follow his advice but if not then the best proxy is to buy the broadest index that you can buy which in India is the BSE 500; in US the INDEX generally beat the Fund Mangers as its a very mature market whereas the case is exactly reverse in India; most Active Fund Mangers in India have beaten the Index over any medium to long period of time…so it does not make sense to buy the dumb passive index in India but what buffet means to say is rather then retail investors trying to pick stocks themselves its better to follow the basket approach and own a set of Bluechip Equity Diversified Mutual Funds & invest for a very long time period…You cant read the business papers & invest in Stocks directly according to Buffett…
Also Equity is any day better than Debt according to Buffett…In USA debt gives less than 2.50% returns but in India it can potentially give
- Warren Buffet on Investing with borrowed money
Warren Buffett says Don’t use borrowed money to participate in marketsLegendary investor Warren Buffett still thinks America is the best bet out there but noted people should not borrow money to participate in market given the uncertainty around the coronavirus pandemic. “When something like the current pandemic happens, it’s hard to factor that in. That’s why you never want to use borrowed money, at least in my view, into investments,” Buffett has said that investors should never buy stocks on margin using borrowed money.
Its the same basic Investing Principles that warren keeps repeating time & again…
Never Borrow & Invest…period…Stock market can remain irrational longer then you can remain Solvent…Warren Buffett
Don’t use Margin money to trade & don’t do futures & options as
“Derivatives are weapons of mass destruction” according to Warren Buffett
- Warren Buffet says be careful about how you bet
“Perhaps with a bias, I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year. I know America’s going to move forward over time, but I don’t know for sure and we learned this on September 10, 2001. And we learned it a few months ago in terms of the virus. Anything can happen in terms of markets. And you can bet on America but you’re going to have to be careful about how you bet. Simply because markets can do anything.”
Just like US Markets, nobody knows (& those who say they know where the Sensex shall be in next few months are either Liars or Fools) where the Sensex & Indian Stock markets is headed in the near term but in the Medium to long run the trajectory is only up…so stay Invested ….& Add to your SIPs…
- Warren Buffet on any Big Investment recently
(This was my Question to Buffett to which he replied as below)
Hi Warren,
Berkshire has such Huge cash position that you always save for the rainy day ; Isn’t this that time to start buying great businesses @ mouth watering prices ? Have you made any purchase post Covid crisis ?If yes what are they ? If not then what’s holding you back? Do you anticipate more corrections in the markets ?
Regards NIRAV PANCHMATIA
Buffets answer to my Question:
Buffett says he’s ‘willing to do something very big,’ but hasn’t seen anything ‘attractive’; Warren Buffett hasn’t made a major acquisition in several years despite Berkshire Hathaway’s record cash pile. Buffett said it is because there hasn’t been anything “that attractive,” “We have not done anything because we haven’t seen anything that attractive,” Buffett said. “We are not doing anything big obviously. We are willing to do something very big. I mean you could come to me on Monday morning with something that involved $30, or $40 billion or $50 billion. And if we really like what we are seeing, we would do it.” Berkshire’s quarter earnings revealed that the conglomerate had a record $137 billion in cash and equivalent instruments on its balance sheet at the end of the first quarter.
No Indian perspective on this except that although Buffett has a huge Cash pile of 137 billion dollars he will not invest until he finds it very attractive (huge correction) to invest; Warren Buffett is obviously not investing because Berkshire operates 100s of different business including many Insurance businesses that might need lots of cash post-Covid…
Learning for Indian Investors is don’t invest just because you have Cash; Invest only of its attractive to invest like current times…
- Warren Buffet on why he sold his entire stake in Airlines
Buffett says he sold his entire stake in airlines
Berkshire dumped its entire airlines stake.“The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way,” Buffett said. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”
But “I think there are certain industries, and unfortunately, I think that the airline industry, among others, that are really hurt by a forced shutdown by events that are far beyond our control,” he added.
Buffet had invested several billion dollars in US Airline companies like United, American, Southwest and Delta Airlines
Warren Buffett said he made an “understandable mistake” when valuing the airline stocks as a near-global halt in travel due to the coronavirus sent their prices sharply lower. “When we bought [airlines], we were getting an attractive amount for our money when investing across the airlines,” he said. “It turned out I was wrong about that business because of something that was not in any way the fault of four excellent CEOs. Believe me. No joy of being a CEO of an airline.”“I don’t know that 3-4 years from now people will fly as many passenger miles as they did last year …. you’ve got too many planes.
Indian Perspective:
First & foremost the greatest learning from this is that even the greatest Investor in the world makes mistakes but most important is that he is the first to admit , correct & apologise for his mistake & doesn’t waste time in selling his wrong investments even at a substantial loss;
I have seen Investors are reluctant to book loss & say we shall get out only we recover our capital; this is the biggest mistake that Investors can make of not getting out of bad stocks or bad schemes
- Warren Buffet on US Economy
US Economy faces ‘extraordinary’ range of outcomes, but nothing can stop America; Buffett believes that America will overcome even the most daunting challenges, including the current global pandemic.
Because I remain convinced, as I have — I was convinced of this in World War II, I was convinced of it during the Cuban Missile Crisis, 9/11, the Financial Crisis — that nothing can basically stop America.”
Just like US, Indian economy is very resilient & strong has historically always bounced back from every crisis it has come across; & unlike US, India has handled the Covid crisis pretty well; and while the entire world has entered into recession only 2 countries are expected to stand tall post Covid; China & India & China will face economic distancing…
To Summarise
- Warren Buffett sits on Cash until he gets opportunity (huge market correction) to Invest;
- He admits his mistakes & cuts his losses immediately & is not afraid to sell his bad Investment even at a substantial loss
- Stock market fluctuations or volatility does not bother warren buffet at all ; in fact he sees this as opportunities to buy
- He only Invests for very Long Term
“Invest in Equities thinking that the Stock Market will remain closed for 10 years; If you cannot invest for 10 years don’t even think of investing for 10 minutes”
– Warren Buffett
Be Greedy when others are Fearful & Fearful when there are Greedy- Warren Buffett
Above 2 are Warren Buffets two most famous quotes
Invest With Guidance from the best….
