Berkshire Hathaway held their annual meeting last weekend, Warren Buffett and Charlie Munger answered questions for around three hours. About 20,000 viewers were watching the meeting live on youtube.
What can we learn from them this year?
I have written down 7 key takeaways from the annual meeting 2021.
Here are the 7 points:
- If you do not know what you invest in, invest in S&P500.
If you don’t know what to invest in, Warren Buffet recommends S&P 500 as an index fund while Charlie Munger recommends investing in Berkshire over S&P 500). “The main thing is to get on a ship. Any ship,” Warren Buffett said.
- Did they mention Tesla.
Warren Buffett didn’t mention it directly. Instead, he told the audience a story about a car company who was considered the big upcoming car company at the turn of the century because they invented the rearview window.
“Everybody started a car company and very few picked the winner,” he explained.
“At least 2000 companies entered the auto industry. In 2009 there were three left and two went bankrupt,” he said.
- Do not invest in SPACs
SPACs (special purpose acquisition companies) have two years to find something to invest in or they have to give the money back.
“If you put a gun to my head and said you’ve got to buy a business in two years, I’d buy one,” Buffett said. “But it wouldn’t be much of one.”
A lot of people invest in SPACs hoping that they will go higher soon.
Charlie Munger was more blunt when talking about SPACs. “It’s not just stupid. It’s shameful.”
- Bank of America and Warren Buffet
He says he feels good about American banks in general, but that Berkshire decided to raise its stake in Bank of America, to above the 10 percent threshold, while lowering the overall position in other banks.
He also said: “We like the banking business much more today in the United States. Banking around the world can worry me more.”
- They do not like Bitcoin
When he was asked about bitcoin, it was clear that Warren Buffett didn’t want to be offended. Instead, he passed the mic to Charlie. Charlie Munger didn’t worry about offending anyone. He flatly said, “Of course I hate the bitcoin success.”
What is the problem?
He thinks it’s insane to invent a currency out of thin air. There is no inherent value in it other than what people think other people will buy it for in the future.
It’s called speculation, not investing
- Robinhood is shameful
Warren Buffett mentioned that a lot of the short-term speculative option trading takes place on Robinhood.
“It’s become a significant part of the casino economy,” Warren Buffett said.
He said it’s not immoral but that they cater to the gambling instinct in people.
Charlie Munger wasn’t afraid of calling it “immoral”.
“It’s deeply wrong. We don’t want to make our money selling things that are bad
for people,” Munger said.
- Inflation already here
When asked about inflation, Warren Buffet calls the market red-hot, in particular the real estate market. “We are raising prices, and people are raising prices to us. It’s up-up-up.”
He added how odd it is that the current situation is terrible for 80% of the population and yet 20% of the population has money burning in their pockets.