During the 2019 Berkshire Hathaway Annual Meeting, Warren Buffett and Charlie Munger discussed some valuable lessons for investors.
First, thorough research and knowledge give a competitive edge, as Buffett demonstrated by seeking obscure information in insurance.
Second, expertise in a specific area is crucial; focusing on what you understand best can lead to success. Tom Watson Sr.’s philosophy, “I’m smart in spots and I stay around those spots,” underscores this principle.
Third, they acknowledge luck and setbacks as part of the journey, emphasizing resilience and adaptability. Finally, the importance of reducing competition and finding unique opportunities is a recurring theme for long-term investing success.
Here’s an excerpt from the meeting:
Buffett: Yeah, a little more treasure hunting in our day, and it was easy to spot the treasures —
Munger: We made it work, but it was kind of a lucky thing.
Buffett: Yeah.
Munger: It’s not the standard way to go.
Buffett: The business, at least I best understood, actually was insurance. I mean — and I had very little competition. You know, I went to the insurance department in Harrisburg, Pennsylvania. I remember one time I drove there just to check on some Pennsylvania company. And this is when you couldn’t get all this information on the internet. And I went in and I asked about some company, and the guy said, “You’re the first one that’s ever asked about that company.”
And there wasn’t a lot. I went over to the Standard and Poor’s library on Houston — Houston — Street, I guess they call it. And I would go up there and ask for all this obscure information. And there wasn’t anybody sitting around there. They had a whole bunch of tables that you could set and examine things through.
So, there was less competition. But if you know even one thing very well, it’ll give you an edge at some point. You know, it’s what Tom Watson Sr. said at IBM, you know:
“I’m no genius, but I’m smart in spots and I stay around those spots.”
And that’s basically what Charlie and I try and do. And I think that’s probably what you can do. But you’ll find those spots in —
Munger: Yeah, we did it in several fields. That’s hard.
Buffett: And we got our head handed to us a few times, too.
You can watch the entire discussion here:
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