The Berkshire Hathaway Annual Shareholders’ Meeting in Omaha, Nebraska, is always a spectacle. On the day of the meeting, before 2 a.m. fans from all around the world were already lining up outside Omaha’s Qwest Center, hoping to sit a little closer to Warren Buffett and Charlie Munger, the renowned investors who head the conglomerate and are the world’s first and 215th richest people respectively. These eager fans don’t fit the usual profile of people who sit in line for hours in the cold and dark; they are hedge fund managers, I-bankers, corporate accountants, millionaire investors, and finance students. When the doors opened at 7 a.m., hundreds of people in suits, dress shoes, and leather briefcases sprinted past each other and up the escalators to secure the best seats.
After I reserved my seat, I went to the show floor to see the exhibits put on by Berkshire’s strangely diverse portfolio companies. I toured a $70,000 prefabricated home, met the Geico Gecko, walked by life-sized cutouts of the Fruit of the Loom fruit guys, and turned down special deals on See’s Candies and Dairy Queen. At the Omaha airport, attendees sat inside Netjets’ private planes.
The main attraction was, of course, Mr. Buffett and Mr. Munger. From 9:30 a.m. until 3:00 p.m., the pair took unscripted questions from anyone in the audience who stepped up to a microphone. Both were refreshingly candid in their answers.
Responding to a question about the presidential campaign, Buffett spoke at length about how the political process is corrupting even good candidates. He said even he would campaign in favor of ethanol in Iowa despite the overwhelming drawbacks to that form of energy. To support his belief that presidential hopeful Hillary Clinton, in particular, was pandering to the electorate, he asked why Clinton only proposed a windfall profits tax on the vilified oil companies and not on soybean and rice companies, which are also benefitting from high commodity prices that take a toll on the middle class. Once the election is decided, though, Buffett believes that “any of the three candidates would behave quite well in the White House.
When asked the first action he would take if hypothetically elected as president, Buffett responded that he’d change the tax system “so that the rich paid more and the middle class paid a little less.” He repeated his finding that his tax rate is 18% while his staff pays 33%. Buffett, who’s 77 and whose partner Munger is 84, then quipped that he’d institute a “massive federal program for retirement homes.”
Even though many of the 30,000-plus attendees were fund managers themselves, Buffett didn’t sugarcoat his advice to the individual, “know-nothing” investor who just wants a decent return. His advice to them: put your money in a Vanguard index fund. He still believes there are significant mispricings in tradable assets for amateurs with a lot of time and knowledge to profit from, but he recommended against expensive funds. To the individual investor who foolishly expects better-than-average returns by just handing his money over to a fund, he told them to be satisfied with average rates of return compounded over a long investment horizon. Buffett asked, “Why should you expect more than [average returns] when you don’t bring anything to the party?”
The Berkshire Hathaway Annual Shareholders’ Meeting is held each year on the first weekend of May. Student passes are available. Despite the advanced ages of both Buffett and Munger, both see these meetings continuing for a while. Buffett, ever the shill for his portfolio companies, credits his good health to daily doses of Coca-Cola (8.6% Berkshire-owned) and See’s Candies (100% Berkshire-owned).