Pearls of investment wisdom from Warren Buffett

Pearls of investment wisdom from Warren Buffett

Warren Edward Buffett, American business magnate, investor and philanthropist, is considered to be one of the most successful investors in the world and is the second wealthiest person in the US with a total net worth of $78.7 billion. Every year at the Berkshire Hathaway annual meeting, Chairman and CEO Warren Buffett takes questions from financial journalists, shareholders (via a lottery), and from financial analysts. Topics as diverse as Google, Amazon, Apple, Artificial Intelligence, India, and Ajit Jain were discussed by the investment tsar at the 53rd annual meeting recently.

Investors and financial professionals world-wide always lend a patient ear to Buffett when it comes to investment tips and other business opportunities. Swearing by an ethical corporate culture, Buffett, whose investment firm, Berkshire Hathaway, is the biggest shareholder in Coca-Cola with a 9.3% stake, valued at about $17bn, says that an ethical corporate culture is more important than thousands of guidebooks. Even at the age of 86, Buffett has been holding daily meetings to take his company to new heights.

Buffett says candidly that he drinks five bottles of 12 ounces of Coca-Cola every day. It is not that Buffett is not aware of the side-effects of this carbonated drink. He, however, would say that he would rather like to live a life by eating and drinking what he likes most.  “I'd rather eat what I like and enjoy eating what I like than eat something I don't and live another year.”

Buffett’s Mistakes

It is not that the investment wizard has not committed any mistakes when it comes to picking up right stakes in right companies at the right time. In his own words the biggest follies he committed were not buying a stake in Google and Walmart. It seems the Oracle of Omaha (his native place) missed the bus when it comes to the tech giant and the retail titan. “Our biggest tech failure was missing Google. Walmart and Google were missed opportunities.”

Though the legendary investor was all praise of Amazon and its CEO Jeff Bezos, he never owned a stake in Amazon. Regarding this, he says, “We never owned a share of Amazon  ... I was too dumb to realize what was going to happen. I admired Jeff, but I did not think he’d succeed on the scale that he has, and I didn’t even think of the possibility that he’d do the things with the cloud services. I never even considered buying Amazon.”

Merit-based Approach

The investment wizard takes a call on each stock separately. He will hold or sell each stock according to their merit. Recently, he offloaded a large stake in IBM. Regarding this, the ace investor says, “We started buying IBM six years ago as we thought it would have performed better.” However, Buffet doubled his stake in Apple in the first quarter. From him, Apple is more of a consumer stock than a tech bet.

 Begging to be different, Buffett has a different take on Artificial Intelligence (AI) and self-driving cars. While world-wide, corporate houses and industry captains have been welcoming these new age innovations, Buffett says that driverless cars are a threat to the auto insurance business from top to bottom.

The investor extraordinaire exhorted investors to park their money in the airlines industry as it would operate at higher degrees of capacity in the future. He is bullish on the airlines industry.

The Indian Connection

In his wealth creation, Buffett also has an Indian connection. This is none other than Ajit Jain, whose name is considered to step into the shoes of Buffett. Jain, an IITian, met Buffett in 1985 and heads several reinsurance businesses. “Investors of Berkshire Hathaway should be thankful to Ajit Jain, who made more money for shareholders than anyone else,” says Buffett. Ajit Jain took home at least $15.3 million last year with his association with Buffett.

He is also charmed by India and Indians. Just like Bill Gates, Buffett is also all praise of IITs in India. He says given a chance, he will only select candidates from IITs for his company, as advised by Bill Gates. This is what he says about India, “India has a terrific future due to the brain power it has.”

Buffett says India has a huge and enormous market for anyone to ignore. He says he would be in India if he finds there was a good value company for sale. He is also charmed by the Indian hospitality.

Regarding the future of Berkshire Hathaway, the business magnate says, "If I died tonight, I think the stock would go up tomorrow."

Quotable quotes

“Price is what you pay. Value is what you get.”

 It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.”

“ It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”