Thoughts on the 2020 Berkshire Meeting

Like most value people, I was glued to my TV on Saturday night to the Buffett meeting.

It was one of the best and the most candid Berkshire meetings I have ever watched. Becky Quick did a great job at filtering questions. The questions were all of high substance, without a lot of fluff. There was not an opportunity for people asking “questions” to give 15 minute speeches, for instance.

I also got a real kick out of Buffett’s black-and-white and all-text slide presentation. It’s a sharp departure from what most of us experience in our day jobs.

With a slide deck, how much attention do we pay to presentation? Does any of that style really add any value to the presentation? Probably not. Buffett is a guy who doesn’t care about that sort of thing. He always gets across his point as simply as possible. The rest of us – me included – tend to over-complicate it.

Anyway, Warren Buffett needs to tow a fine line when commenting on markets and the economy. His words can move markets. He was very careful with his words this year, expressing short term caution and long term optimism. He didn’t give an exceptionally candid call on markets.

The last two times Buffett was exceptionally candid about his views on the market were 1999 and 2008. Back in 1999, he gave a famous speech at Sun Valley in which he questioned investor’s expectations and was quite bearish. He called out the internet bubble and overall market extremes. In 2008 and 2009, he took a different point of view and was extremely bullish. In October of 2008, he wrote an opinion piece called “Buy American, I Am” in which he talked about how stocks were cheap and poised for a great future.

This year, Buffett didn’t outright express his bearishness, but I think it was buried in there. If Buffett were outright bearish, he could trigger a crash. I think he’s aware of this. His words expressed caution.

He noted that he hasn’t been buying stocks and sold out of one industry (airlines) completely.

His actions, as opposed to his words, speak volumes. He didn’t back up the truck like a lot of investors did in March. Through his comments about the wide range of probabilities with the virus, I think he was preparing everyone for the fact that the ugliness might not be over for the markets and the economy, which is a sharp contrast to the actual behavior of the markets, which seem to be predicting a swift return to normalcy.

He praised the Fed’s actions to contain the crisis and put Jerome Powell in the same place as Paul Volcker. I agree with him on this point. I think markets are expensive, but I also don’t think that the Fed should let the world burn so I can buy stocks below net current asset value.

With that said, even while praising Powell’s decisive action in ending the crisis, he did take note that today’s unprecedented actions will have long term consequences. I also agree with him there. We are in uncharted territory with monetary policy.

Of course, Buffett also spoke about America’s bright long term future. This was the focus of his initial presentation. Starting off with this speech was a careful move to put his short term caution into context. He expressed his long-term optimism in the future of the country and the prospects for our economy, despite his short term caution about markets and the economy.

Also, Warren talked about how Ben Graham was one of the three smartest people he had ever met. He didn’t mention the other two, but I suspect they are Bill Gates and Charlie Munger.

If you didn’t watch it, I’d recommend checking it out at the below link. Buffett starts in the video at 1:00:33 with his presentation about the long-term future of the country. The really good part – the Q&A – starts at 3:07:20.

I’ve never been to a Berkshire meeting before, but I definitely want to attend in the future.

 

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