各位合夥人大概知道，本人有個心願，那就是希望有一天能夠跟所有巴菲特迷一樣親自到OMAHA朝聖，參加波克夏-海塞威每年一度的股東大會。
或許有人會嫌太費事，沒關係現在你只要花個十分鐘，隨著Fool.com的記者生動的筆觸，帶領你穿越時空，讓你彷彿有親臨會場的感覺。
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奧瑪哈朝聖之旅
波克夏-海塞威1999年股東大會紀實
五月一日(星期六)
張儀欣(中文譯音)
內布拉斯加州的奧瑪哈市，地處美國的中心點，甜美多汁的牛排、著名的家具店，當然也是投資奇才-華倫巴菲特的家鄉。
就像是球賽開始前，球員間彼此的加油打氣，所以我們先到賓州拜訪以模彷巴菲特持股著名的基金經理人-海格斯壯，他同時也寫了好幾本有關巴菲特的暢銷書 (編按包含勝券在握與核心投資法則等) ，海格斯壯對於巴菲特與其主要合夥人-查理孟格的所有事蹟知之甚詳。
奧瑪哈!!我來了。
在飛往目的地的飛機上，我在想機上不曉得有多少乘客是波克夏的股東跟我一樣正開始展開一趟朝聖之旅。果不其然，我聽到在後座有幾位仁兄正在分享彼此與華倫(這是股東們對巴菲特親密熟悉的稱呼) 之間的小故事以及過往股東會一些有趣的事情，看來他們都已算是老馬識途了。在翻閱機上雜誌時，我還看到波克夏旗下的高級珠寶店-波仙的廣告，讓我再次確認沒搭錯飛機。
當我們抵達時，天氣溫暖而晴朗，可想而知機場內的租車櫃台由於大批股東的到來而大排長龍，到飯店報到時，我發現櫃台上的報紙刊有布朗鞋業(編按:波克夏子公司)祝賀波克夏股東會順利成功的版面，同時還夾有著名的內布拉斯加家具廣場(編按:也是波克夏子公司)的傳單，給予所有參加這次股東會的股東享特別優惠的折扣，並備有免費試吃的可樂與喜斯糖果(波克夏擁有可口可樂百分之八與喜斯糖果百分之百的股權) 。
下午四點左右，我戴上傻瓜帽前往一家法式咖啡館，參加由美國線上巴菲特迷舉辦的派對，那同時也是以往巴菲特太太身為歌手時常駐唱的地方，有人說巴菲特跟他的女兒-蘇西會跟去年一樣出席這派對。
沒想到不久後巴菲特果真出現了，在前往參加小聯盟的棒球賽途中路過，一如往例為比賽開球，他頭戴棒球帽身著印有波克夏-海塞威字樣的白色棒球服，陪在他身旁的除了一位保鑣外，還有準備在開球儀式中擔任打擊者，已入棒球名人堂的爾尼-班克斯。
之後由於塞車我花了三十分鐘開車到球場，也因此錯過了巴菲特精彩的開球，不過每位參加的股東均可獲得一頂棒球紀念帽、熱狗與汽水，有人半開玩笑的說這就是每年他們所收到的股利，(大家都知道波克夏從來不配股，而是將所賺的錢繼續再投資) 。
我還遇到一個從洛杉磯來的女子，事實上她並不是波克夏的股東，去年她寫了一封信給巴菲特說明她的心願是要在四十歲之前存夠錢買一股A股(編按:目前每股市價高達六、七萬美元)，所以她現在同時身兼五個工作，希望巴菲特能特准她參加，沒想到巴菲特竟然真得回信邀請她參加，還幫她支付來回的機票錢。
這次有三四個保鑣隨行，巴菲特在球賽當中與大約二百位股東簽名或合照，許多人拿有關巴菲特或是其恩師葛拉罕的書，其中還有人拿1934年版的證券分析、二十元現鈔、棒球帽或是紙條等等，巴菲特不以為意一一簽名，當然我逮到機會也與他本人合照了一張，或許明年還可拿這張照片要他簽名。
奧瑪哈朝聖之旅
波克夏-海塞威1999年股東大會紀實
五月二日(星期日)
張儀欣(中文譯音)
五月二日星期天早上十點，我開車到內布拉斯加家具廣場，記得昨天開車經過時便對於它的規模感到驚奇，現在才知道我那天看到的還只是一部份，佔地七十五英畝，十幾萬坪的賣場面積，難怪它號稱北美地區最大的家具賣場(編按:單店年營業額高達二億美金)，至少相當於三個Costco好市多般大小。
連停車場也很大，就好像一般大型遊樂園的停車位一樣，編號從A到L，放眼望去至少有四、五棟大型的建築物與倉庫(光是卸貨碼頭就有六十個)，旁邊還有一棟小建築，據說那是當初B太太在1937年起家的地方。
主體建築看起來相當現代化，看起來剛經過重新裝修與油漆，裏面有各式各樣的家居用品，一組高級真皮沙發只要一千美元出頭，標籤上寫著「沒有人可以賣得更好更便宜」，而且股東們還可另外再享有10%的折扣優惠，簡直是削爆了。
緊接著又發現旁邊還有一大棟黃色的建築物，裏頭賣的則是各式的家電用品、CD 遊樂器與高畫質電視，還有電腦區免費提供來賓上網，賣場本身看起來就像是一個大型的電子用品展覽會，很難想像對街的電器店竟然還能生存。
直到離開之前，我連一層樓都逛不完，我注意到巴菲特當歌星的兒子彼得，預計在下午三四、點時要到這裏舉辦新專輯的簽名會。
中午我前往波仙珠寶店，不同於一般的星期假日休息，今天波仙的大門特地為波克夏的股東們而開，很難想像一家高級的珠寶店裏頭竟擠滿了人，可想而知這一天是波仙每年最忙、生意最好的日子，三位模特兒身著黑色晚禮服，戴著波仙各式的珠寶，這裏也是幾年前巴菲特親自接待好友比爾蓋茲挑選結婚戒子的地方。
當天最受歡迎的莫過於是與波克夏相關的產品，比如是波克夏手錶，鑲有波克夏標識(一隻抓滿美元現鈔的手)的徽章等等。
在這裏還可發現股東會就像是家族的盛事，許多股東都把自己小孩子也帶來參加，一位媽媽手抱還在襁褓中的小嬰兒，說他是波克夏最年輕的股東，當然也看到更多垂垂老已的退休老人。
巴菲特這時匆匆一現，大家可以看到他正在打他最喜愛的橋牌，事實上在股東會期間，巴菲特儘可能的在每一個活動中現身。
下午一點半我趕緊到飯店以便在二點開始的股東會前記者會能搶個好位置，現場有包含來自日本、德國、英國等地約五、六十位的新聞媒體記者，很自然地桌上擺的是巴菲特最喜歡的櫻桃可口可樂，包含後來星期一的正式股東會，巴菲特都是手拿易開罐便直接喝。
在巴菲特與合夥人查理正式就定位後，大家開始猛按快門，巴菲特隨即開玩笑的說︰「有誰能讓查理笑的，將有獎賞」，這使得原本一張撲克臉的查理露出一點笑容，接著巴菲特首先介紹自己︰「我是華倫巴菲特，波克夏-海瑟威的董事長。」，這感覺就好像是柯林頓在白宮記者會的開場白說︰「我是柯林頓，美國的現任總統一樣」，令人望之儼然而印象深刻，緊接著又說︰「在我旁邊的是有點過動的副董事長查理孟格。」
事實上後來長達二個半小時的記者會多是由巴菲特發言，查理孟格一向以其沉默是金著稱，一如預期巴菲特對於整體經濟股市，甚至於個股投資-包括他去年賣出手中麥當勞持股的原因，皆未作正面肯定的答覆，只是一再重申對於高科技股票由於超越本身認知而敬謝不敏，不過巴菲特也承認網路的重要性以及其對當今與未來企業的影響。
我問到巴菲特對於我個人蠻喜歡的一家公司-Costco好市多的看法，不了解波克夏為何不多投資一點，尤其當查理還身兼該公司的董事時，巴菲特回答說「這是一個好問題，事實上我們本來應該持有更多的股份，查理老早就不斷地告訴我說這是一種很棒的銷售概念，無奈直到十年之後我才真正了解他當時所說的意思，那時我們才開始正式買進一點股權，本來還預計要買更多的，誰知後來股價從十五元開始上漲，我便收手，事後想起真令人惋惜，一切都是我個人的錯。」
查理補充到「我對好市多的企業文化相當敬佩，我很喜歡那個地方，也因此我很難斷定自己能否很客觀地衡量事情，不過人的一生若能找到幾件自己真正喜愛的事物，也不見得是壞事。」
當記者會結束後，我上前送給兩人Motley Fool的小小紀念品，巴菲特說「真棒，幫我向Dale問好」，巴菲特因為我的老闆Dale在其網站上廣泛報導波克夏而與之結識。
離開飯店我直接前往葛羅斯-巴菲特最喜愛的牛排館，一如以往在股東會的前一天特別保留給所有股東，所以若不事先訂位根本進不去，據說有人早在四月一日開始受理訂位時，撥電話便打不進去，好在Dale幫我找到幾個訂到位的股東相約當天五點在門口見面，就定位後我很驚訝的發現門外竟然有反墮胎人士舉海報抗議，原來是因為巴菲特基金會長期捐款支持家庭計劃、生育控制與墮胎的緣故。
餐館內人聲鼎沸，走道根本容不下人經過，牆壁上掛有一幅巴菲特一手拿刀叉，一手拿櫻桃可樂的畫，雖然有九種不同的套餐，大部份的股東還是都會點巴菲特的最愛-丁骨牛排外加櫻桃可樂，以親身體會巴菲特式的美食。
當我們在用餐的同時，可以看到許多名人進進出出，查理孟格與巴菲特都帶著一家人光臨，還看到迪士尼的總裁Michael Eisner與脫口秀名主持人Charlie Rose等，服務生還透露一個小故事，有一天巴菲特約友人相約在餐廳，並親自開門迎接，有個剛好上門的顧客不敢置信的問: 「剛剛幫我開門的真是巴菲特本人嗎?? 」
接著我到阿肯薩本(Nebraska)的英文倒寫，當地最主要的會議中心，很快地參觀了Executive Jet's最新引進的波音737商務客機沒有機翅與機尾的樣品機艙，(編按巴菲特近幾年相當重要的投資之一，該公司主要提供上流社會人士擁有飛機的部份所有權，可依個人喜好與需要安排個人行程)巴菲特有一次到大學演講跟聽講的大學生說「我跟你們吃一樣的東西，穿一樣的東西，惟一不同的是我有一架專機可以帶我到處去旅行。」
在機艙內，有一間具有雙人床臥室、兩個小房間、兩套衛浴以及一個大客廳，裏面當然備有吉列刮鬍刀、櫻桃可樂、迪士尼的蟲蟲危機錄影帶、CD版的世界百科全書、波仙的目錄以及喜斯糖果等波克夏企業的相關產品。
有一票股東跟我說他們星期六晚上去參觀時，巴菲特竟然排在他們後面等著參觀飛機，當然這些幸運的股東絕不會放棄與他本人拍照的大好機會。
接著我又到乳品皇后冰淇淋店，這也是巴菲特本人時常光顧的地方，不知道該點什麼，我轉身去問一些正在享用的股東，沒想到竟看到查理孟格手拿著一個聖代在跟店員閒聊，他說這種聖代實在太好吃了，連麥當勞都來模仿，我忍不住也點了一份，嗯! 真得是很棒，麥當勞的聖代實在沒得比。
我還跟一個來自鳳凰城的股東閒聊，他持有波克夏的股票已有五年的時間，我們交換彼此有關巴菲特與波克夏的小故事，這在股東會期間是很常見的事，人們初相識時總會詢問對方持有波克夏股票有多久、來過股東會幾次以及個人與巴菲特相遇的難得經驗等等，就如同巴菲特說的這是資本家的嘉年華會，在這五月的第一個週末，六十八歲的巴菲特與孟格就好像是搖滾樂歌星一樣，成千上萬的巴菲特迷爭相索取簽名或與之合影，我甚至看到一個六十幾歲的老阿媽，對著經過的巴菲特大喊我愛你，就好像是一個十幾歲的小女孩看到心目中的偶像李奧那多一般瘋狂。
現在的時間已是凌晨兩點，再過幾個小時波克夏的股東會就要正式開始，有個股東說他四點半就要去排隊，但你知道嗎?會場大門要七點才開，而會議通常要等到九點半才正式開始，我得趁現在小睡一下，待會見。
奧瑪哈朝聖之旅
波克夏-海塞威1999年股東大會紀實
五月三日(星期一)
張儀欣(中文譯音)
經過不到兩個小時的睡眠，在星期一早上五點四十我趕到阿肯薩本-波克夏年度股東會的會議現場，抵達時天尚未亮，幸好沒下雨，大概已有七、八十位股東在門外排隊，這些死忠的巴菲特迷都想儘可能的往前坐，排在第一位的股東跟我說他四點鐘就已經到了。
大家邊排邊聊，時間很快就過了，巴菲特大概六點半到，沒想到他竟然自己開車，而隨行的保鑣則開另一輛車跟在後面，下車後還親切的死忠的股東打招呼。
我用波克夏發給我的記者證進入會場，整個會場排滿了椅子，很慶幸自己能夠坐在第三排的正中央，前兩排的座位主要是留給波克夏的董事，關係企業的經營階層以及特別來賓，坐在我前一排的正是迪士尼的總裁Michael Eisner。
此外巴菲特與孟格的家人也備有座位，兩人的太太、巴菲特三個兒女，甚至是他的孫子也都出席了。
七點整，阿肯薩本的大門準時為股東而開，大家蜂擁進入會場爭相奪取最好的位置，我敢保證這是你在美國其它上市公司的股東會絕對看不到的場景，大部份的股東皆準時到場。
依照巴菲特估計在總共28萬的A股與B股股東中(註B股權益為A股的三十分之一)，約有一萬五千名參與這場盛會，較去年多五成，主要是因為去年購併通用再保公司(註:美國最大的再保險公司)，使得股東人數增加一倍，為了應付日益增加的參加人數，大會甚至準備了閉路電視，使得後面的觀眾可以透過電視螢幕清楚的看到台上的巴菲特。
會場並備有免費的飲料與點心，關係企業如可口可樂與迪士尼等還特別準備一些貼心的小禮物，當然許多公司也趁機做起生意來，GEICO(註:美國前五大車險公司，波克夏百分之百子公司)甚至當場免費為股東估保費，可想而知所有股東最後都滿載而歸。
八點半開始撥放一段影片，是"Always Coca-Cola"的修正版，只不過主題改成為"Stocks that always rise." ，整段影片簡單地介紹巴菲特與孟格兩人，甚至還有幾段巴菲特唱歌的場景，包括他與ABC(波克夏的主要投資之一)總裁湯姆墨菲一起參加ABC兒童節目的畫面。
當中還穿插幾段關係企業的小廣告，最有趣的是巴菲特的好友比爾蓋茲站在一個可口可樂自動販賣機前，掏口袋要湊足零錢買可樂，他甚至還伸進退幣口想看看裏面有沒有銅板，最後他還說「誰有錢能讓我買可樂，我保證一定會還你的。」
另外一個逗趣的畫面是一向正經八百的蓋茲跟微軟的執行長巴默，身著炫麗的服裝大跳八十年代的搖滾樂，相信看到這個畫面後保證你會覺得值回票價。
另外還有一位因為長期投資波克夏而變成百萬富翁的股東發表感言，他列出一生中最重要的三個人，上帝擺第一，老婆第二，而巴菲特則名列第三，不過他又補充，其實他也分不太出誰是第二、誰是第三。
正式議程從九點半開始，包含改選董監在內前後只花了十分鐘，之後不包含中餐休息四十五分鐘，巴菲特與孟格卻整整花了五個小時回答遠到而來的股東所提出的各式各樣近六十個問題。
會議中巴菲特與孟格在台上一邊吃喜斯巧克力、喝櫻桃可樂，一邊優閑地回答股東提出的每一個問題，看得出他們真得很珍惜難得與股東相聚的時光，即使是一向沉默寡言的孟格也講了幾個笑話。
以下是整段內容的摘錄
有關美國股市
巴菲特說︰「我們從來不清楚股市明天、下禮拜、下個月甚至明年的走勢會怎樣」，他說他跟孟格從不看整體股市而只關心個別企業的發展，雖然依照目前的行情，他們很難找到彼此皆認為物美價廉的投資標的。
有關網路對零售業的衝擊
巴菲特說︰「網路很明顯地一定會對零售業造成重大的衝擊」，他又補充道每當波克夏在評估是否買下一家公司前，他們一定會往前看，衡量電子商務對於這家公司的將來會有怎樣的影響，他不認為電子商務會影響家具零售，甚至還有助於波仙推銷他們的珠寶產品，事實上波仙與第凡尼由於早已建立品牌形象，使得客戶會願意直接上網訂購，他還指出受影響最大的應該是作為零售業專用的房地產。
潘-偉伯分析師有關波克夏的研究報告
潘-偉伯證券商的分析師-愛麗絲最近寫了一篇有關波克夏的研究報告，被巴菲特評為有史以來評估波克夏最詳儘的報告，雖然不願對報告中的波克夏評價多作評論，巴菲特卻稱讚愛麗絲為一流嚴謹的分析師，雖然這份報告對於公司的股價並無太大的影響，巴菲特說他重視的還是公司實際的內含價值。
有關可口可樂
巴菲特說在這世上很難在找到一家像可口可樂這麼穩固的企業，隨著全世界的經濟繁榮一起成長，它同時還具有相當獨特的感覺。
孟格說他們只看大方向，也就是往後十到十五年的前景而不會去在乎短期的雜音，現在看起來可口可樂還不錯。
有關科技與轉變
巴菲特說波克夏視轉變為一種危機而非轉機，所以會避免購併一些善變的企業，例如可口可樂五十年來都沒什麼變，雖然這種作法會漏失掉許多極有潛力的明日之星，但我們就是不知道該如何去挑。
巴菲特說他對軟體業(software)不像飲料業soft-drink那麼般地了解，也不認為微軟會比可口可樂更具競爭優勢，咬下一口冰棒，巴菲特說這種冰棒比任何軟體更能持久。
孟格補充到他認為波克夏旗下的企業比任何公司更經得起科技的考驗。
有關波克夏AB股
巴菲特解釋說由於只有一股A股能換成30股B股，但30股B股卻不能換成一股A股，所以理論上只要B股的價格出現2%的折價(相較於A股的三十分之一)，大家都會跑去買B股，但B股的價格通常不會超過A股的三十分之一。
有關購併案
巴菲特說他比較喜歡買下整家公司，或至少是一大部份的股權。
孟格補充說往後波克夏還是會繼續進行大規模的購併。
有關會計原則
孟格說美國公司的會計帳實在是爛透了。
巴菲特解釋說大部份的公司皆運用會計手法，將公司的盈餘平滑化或甚至膨漲化，不過他不願指明是那些公司，他說只有在稱讚人時他才會指名道姓。
巴菲特說公司應該好好算算發給員工的股票選擇權，若改以市價出售到底可值多少錢，這個數字應該要列為投資成本讓所有股東們都知道，不然這就等於是公然將酬勞獎金費用藏在選擇權內(這在Fool網站有詳儘的探討) 。
至於有關商譽部份，巴菲特說他將所有的購併案視為購買法而非權益合併法(pooling of interests) ，他傾向將商譽列在資產負債表上，不過他認為商譽不應該攤銷。
有關Y2K的問題
巴菲特在美國他不太擔心，而且比起一年前他現在放心多了。
有關史坦普五百指數
孟格預估將來波克夏終將列入指數成份股，因為波克夏是目前不列入史坦普五百指數中，最重量級的股票。
巴菲特說這項動作對波克夏股價可能會有短暫的刺激，因為許多基金會將波克夏列為必要持股之一，而惟一避免股價波動的方式就是有人同時大量賣出股份，但這也是波克夏不太願意做的一件事。
有關飛安公司與Executive Jet
巴菲特說擁有飛行模擬器的飛安公司是屬於一種資本密集產業，所以股東權益報酬率ROE的變動不大，至於Executive Jet還在早期發展的階段，所以未來還會持續加碼投資，但因為消費者實際上擁有飛機的部份所有權，所以並不算是資本密集的產業。
有關海外投資
巴菲特說波克夏之所以排除新興市場是由於找不到符合波克夏標準的大公司(每年至少要有五千萬的稅前獲利) ，但只要他們了解企業的本質與會計制度無太大差異，加上價格也合理，波克夏一定會馬上行動，但巴菲特同時也指出事實上光是美國就佔全世界53%的經濟市場。
有關製藥業
巴菲特說早在1993年當製藥公司受困於美國健保制度的改革，他們便錯過幾個以低價買進股權的機會，雖然如今製藥業的規模夠大且產業型態符合波克夏要求，不過以現在的價格波克夏暫時不會有任何的動作。
有關財產繼承問題
巴菲特常常說他不會留下多少錢給子孫，他解釋說他相信應該由精英領導社會，所以在起跑點上大家應該要公平，他偏愛由才能而非子宮來決定一切。
有關推薦書目
孟格推薦
巴菲特核心投資法則(編按:商周有出中文版)
洛克斐勒傳(編按:商周有出中文版)
新國富論(編按:時報有出中文版)
巴菲特推薦
華盛頓郵報發行人自傳
共同基金的一些常識
歷經八個多小時，整個會議於下午三點半正式結束。
充滿樂趣與意義的波克夏-海塞威1999年年度股東大會終於落幕，雖然我待在這兒前後不過二天半不到的時間，我卻覺得好像是過了整整一個禮拜，我想這是因為在這麼短的時間內參加如此多的活動以及用腦過度的結果，不過卻讓我對於波克夏與巴菲特的投資哲學有更深刻的了解，我想將會是我一輩子最難忘的回憶之一。
<以下為原文>
<SPECIAL FEATURE>
May 3, 1999
Pilgrimage to Omaha:
Dispatches From the "Woodstock for Capitalists"
Part 1
by Yi-Hsin Chang (TMF Puck)
OMAHA, NEBRASKA (May 2, 1999) -- Greetings from Omaha, home of great steaks, Nebraska Furniture Mart, and, of course, Warren Buffett and Berkshire Hathaway (NYSE: BRK.A). Before I give a thorough account of my whereabouts and activities in the last 48 hours, I'd like to offer a brief prologue.
Like a pep rally before the homecoming football game, Dale Wettlaufer (TMF Ralegh) and I drove up to Wayne, Pennsylvania, just outside of Philadelphia, from Fool Headquarters on Friday to talk to Robert Hagstrom, the author of The Warren Buffett Way and now The Warren Buffett Portfolio. Working out of a small office facing the main street in downtown Wayne, Hagstom runs the Legg Mason Focus Trust modeled after Buffett's investment strategy of focusing on a few key, solid businesses.
Hagstrom was great to talk to. He's very nice and extremely knowledgeable about Buffett, about Berkshire Hathaway, and about Berkshire Vice Chairman Charlie Munger. Hagstrom's latest book -- originally to be called The Last Intelligent Investor, playing off of the title of Ben Graham's book -- is definitely worth reading. We will have a transcript of our 1 1/2-hour interview with Hagstrom next week.
Now on to Omaha for Berkshire's annual meeting, which Buffett calls the "Woodstock for Capitalists."
Omaha, Here I Come!
My direct flight from Reagan National to Eppley Airfield on Saturday, May 1, took just over 2 hours thanks to a strong tailwind -- the trip normally takes 2 1/2 hours. The plane was packed, and I wondered how many passengers were Berkshire shareholders who, like me, were making the pilgrimage to Omaha. Later into the flight, I did overhear several people sitting behind me sharing stories about Warren -- as Berkshire shareholders affectionately call him -- and about past annual meetings and the offerings at Nebraska Furniture Mart, a Berkshire subsidiary. They sounded like experienced "Woodstock" attendees.
I saw an ad for Borsheim's, Berkshire's high-end jewelry store, while flipping through the in-flight magazine. That's when I knew without doubt that I was headed straight for Omaha.
It was sunny and warm in the city when we arrived. There were long lines at most of the car rental counters, largely because of Berkshire shareholders. I then drove across town to check into my hotel, the Best Western Central on 72nd Street. While checking in, I noticed on the counter an Omaha World-Herald, compliments of Dillard's and H.H. Brown, "A Berkshire Hathaway Company." There was also a flyer for Nebraska Furniture Mart, touting special sales and events for Berkshire shareholders, including employee discounts for all shareholders, special displays and food tastings -- free samples of Coke and See's Candies. (Berkshire owns 8% of Coke and all of See's.)
The Yellow BRK'ers
At a little after 4 p.m., I donned my FOOL cap and headed to the French Cafe at the Old Market, an historic district in downtown Omaha with brick-lined streets, horse-drawn carriages, and quaint shops and restaurants. Mrs. Buffett, who's a singer, used to sing at the French Cafe, and Warren's companion, Astrid, used to work there. I went to the French Cafe to attend a party organized by posters on the AOL Berkshire Hathaway message board. Apparently, this is one of the best online discussion groups on Berkshire -- Warren's daughter Susie and his assistant Debbie Bosanek both participate on the messsage board. The word was that Warren and Susie would drop by the party as they did last year.
The "Yellow BRK'ers," some of whom I had been e-mailing, were all very friendly. Two were wearing gigantic yellow hats that said "The Yellow BRK'ers" in black letters. One of these "Madhatters" was John Gartmann, who was holding a stuffed animal someone had given him that resembled Speedy Gonzalez complete with its own huge yellow hat. It also wore a white shirt labeled "Little Johnny Gartmann." Speedy, the hats, and the colorful cityscape painted on the side wall created a rather surreal atmosphere.
John explained that the name "Yellow BRK'ers" came about three years ago, in 1996, when the posters from the message board were trying to figure out how to meet each other face to face at the annual meeting having never seen each other before. Someone suggested that everyone wear yellow. Later, John stumbled upon a big yellow hat and told everyone to just look for his hat and gather around him. Then someone else came up with "The Yellow Brick Road" as a name for the group, since Buffett is sometimes referred to as the "Wizard of Omaha." This got shortened to "Yellow Brickers" and then "Yellow BRK'ers," which stuck.
Indeed, as I soon found out, the big yellow hats are very effective in attracting attention from all quarters and are a common topic of conversation among shareholders.
Ms. Sec 2U
The Yellow BRK'ers presented T-shirts to the guests of honor. First, Lyle ("BRK Farmer") gave Debbie, Warren's assistant, a heather gray T-shirt that said "Ms. Sec 2U" (as in Ms. Secretary to You, with the emphasis on "Ms.") on the front and on the back, "My Secret... I Read ALL WEB's Mail" (WEB being Warren's initials). Debbie got a real kick out of it.
Warren and his daughter Susie showed up a little later on their way to the Omaha Golden Spikes minor league baseball game. Warren, who was scheduled to throw out the first pitch, was wearing a baseball cap and a white baseball uniform with "Berkshire Hathaway" written across the front in navy blue. His gift from the Yellow BRK'ers said "5 Cokes A Day Will Keep the Hair Away" and featured a picture of a bald Buffett as he appeared as Daddy Warbucks in a local rendition of Annie.
Warren was accompanied by a bodyguard and baseball Hall of Famer Ernie Banks, once known as "Mr. Cub," who was also taking part in the first pitch of the game as the designated hitter. Immediately after the presentation of the T-shirts (Susie got one, too) and a copy of Bill Gates' latest book signed by the Yellow BRK'ers, Warren & Co. were outta there. The party broke up soon thereafter as people scrambled to get to the ballpark in time for Warren's pitch.
Warren "The Whip" Buffett
I spent the next 30 minutes driving to Rosenblatt Stadium -- a drive that would've taken about five minutes if it weren't for the congestion caused by the flood of Berkshire shareholders descending upon the ballpark. I missed seeing Warren throw the first pitch, or rather the first four pitches, from what I gathered. There was no mention of his performance in the World-Herald's sports coverage the next day.
Berkshire shareholders got a free commemorative baseball cap, hot dog, and soda. Many jokingly call this their "annual dividend" -- Berkshire doesn't pay dividends; instead, it reinvests its earnings into its businesses.
I met an interesting woman from Los Angeles named Marsha Tate, who actually isn't a shareholder but got special permission to attend the festivities. Last August, she wrote a letter to Buffett requesting permission, explaining that her goal before turning 40 was to become a shareholder of Berkshire Class A stock and that she had worked as many as five jobs at a time to save up enough money. Buffett wrote her back, invited her to attend the annual meeting, and offered to pay for her plane ticket to Omaha! Marsha, who turned 40 in February and whose AOL screenname is fittingly "GUTSYOK," said she now has enough money to buy the Class A stock.
Men of the hour- Buffett and Munger
Flanked by three or four bodyguards by this time, Warren graciously spent an hour or so at the game signing autographs and taking pictures with what ended up being nearly 200 shareholders. Many people brought Buffett or Ben Graham books for him to sign -- one shareholder had an original 1934 copy of Graham's Security Analysis. One guy had him sign a $20 bill; another had him sign his ball cap. Some others handed Buffett what looked like scraps of paper. He patiently signed anything and everything -- unfazed.
I managed to get my picture taken with Warren. It was done by some professional photographer, and I'm to order copies by mail. I can't wait. Though I didn't think ahead to bring something meaningful on which to get his autograph, my plan now is to get a copy of the picture and have Warren sign that -- maybe next year.
Seeing as it's past 2 a.m. Central time and I have to get to the annual meeting in a few hours, I will sign off for now and continue my account tomorrow. One shareholder, "BRKfan," who was first in line last year, apparently said he intends to be in line at 4:30 a.m. I heard several other shareholders say they're going at 5:30. Mind you, doors open at 7 a.m., and the meeting doesn't start until 9:30. I think I better get some shut-eye.
<SPECIAL FEATURE>
May 4, 1999
Pilgrimage to Omaha:
Dispatches From the "Woodstock for Capitalists"
Part 2
by Yi-Hsin Chang (TMF Puck)
OMAHA, NEBRASKA (May 4, 1999) -- A fun and eventful 1999 Berkshire Hathaway (NYSE: BRK.A) annual shareholders meeting weekend has come to a close, and even though I've only spent 2 1/2 days in Omaha, I feel like I've been here for at least a week. I guess that's what happens when you compress so much activity and so much brain food into a short period of time.
I've had a great time and learned a great deal about Berkshire and its shareholders, and about Warren Buffett and Charlie Munger and their philosophies on investing. I'll now pick up where I left off in my first dispatch from Omaha...
Mega Mart
On Sunday, May 2, around 10:15 a.m. I drove down to the Nebraska Furniture Mart on 72nd Street. While I had marveled at its size driving by on Saturday, I had no idea that I had only seen one of the several huge buildings on the sprawling 75-acre site, with more than half a million square feet of retail space. It was easy to see how this was easily the largest home-furnishings store in North America. Imagine the size of three Costco stores all in one location, just counting the retail area.
The parking lot itself is big -- it's marked with signs lettered A through L like some amusement park. I could make out at least four distinct warehouse buildings, including a large warehouse in back with some 60 loading docks and another smaller warehouse connected to Mrs. B's Clearance & Factory Outlet (Mrs. B founded the Furniture Mart in 1937) and the Outdoor Living Superstore.
The main building of the Furniture Mart looks modern, like it has been recently painted and renovated. This is the building with a wide selection of traditional home furnishings -- everything from living room sets, to recliners, dining room sets, carpets and bedding sets. "Nobody Sells More for Less! Guaranteed," the price tags touted, and I believe it. There were lots of high-quality leather couches for $1,100-$1,200, for instance.
I saw an art deco chair I liked that cost $784 at retail and was regularly priced at $399.99 marked down to $359 on sale. Throw in the 10% shareholder discount (same as the employee pricing) during the annual meeting weekend, and it's practically a steal.
Mega Mart!!
Naively, I was surprised to find a gigantic yellow warehouse separate from the main building that featured nothing but electronics and appliances. It's called the NFM Mega Mart. It was like Best Buy except with a wider range of products and incredibly bold and creative signs and decorations hanging from the ceiling -- like gigantic glimmering CDs marking the music area, a Mario Brothers figure in the games area, and dozens of TV screens with moving images.
There was a theater featuring a huge HDTV on display, a large music listening bar, a computer training lab and an Internet service station sponsored by Cox Communications where you could surf the World Wide Web for free. The Mega Mart felt more like a well-designed electronics convention show than just a regular store. I wondered how the Circuit City across the street stayed in business. I mean, this takes the term category-killer to a whole new dimension.
As I was leaving -- I didn't even have enough time to browse through the entire store or the factory outlet -- I noticed signs that said Warren's son, Peter, a musician, would be in the music department between 3 p.m. and 4 p.m., presumably to autograph CDs, including his latest, just-released album called "Spirit."
Putting on the Ritz
Around noon, I headed over to Borsheim's, Berkshire's high-end jewelry store. Normally closed on Sundays, the store and the mall it's in were basically open only to Berkshire shareholders. The place was packed. Borsheim's hosted a day-long reception with plenty of food for all -- a small gesture considering that this one day every year right before the shareholders' meeting is by far Borsheim's busiest and highest-revenue day, garnering at least 5% of the store's annual revenues.
It was strange to see a high-end jewelry store so crowded with people. There were three models in black evening gowns lounging on various display counters wearing Borsheim's jewelry. It was like Breakfast at Tiffany's meets your local state fair. You could barely move through the 45,000-square-foot store, the same place where Bill Gates had bought an engagement ring for his wife Melinda several years back.
The most popular items had to be the Berkshire-related products, namely the Berkshire watches and a glittery green Christmas ornament shaped like the company's symbol, a fist full of dollars. Also available were gold or silver fist full of dollars cuff links, and a silk scarf and tie more reminiscent of Hermes than Berkshire Hathaway -- I just can't picture the notoriously rumpled and conservatively dressed Warren Buffett wearing one of these stylish ties, nor Charlie Munger for that matter.
Here at Borsheim's, it was obvious that the shareholder meeting was a family event. Many shareholders brought their young kids. One woman whose husband was carrying their sleeping nearly newborn baby claimed that the baby was Berkshire's youngest shareholder. At the other end of the spectrum, there were plenty of older, retired folks milling around the store and mall.
Warren popped in for a quick appearance, playing his favorite game of Bridge for all to see. Throughout the weekend, Warren made a clear effort to at least show up at all the planned events and activities. After all, he, too, is a shareholder -- the company's biggest, in fact.
Borsheim's passed out catalogs as well as mouse pads featuring a large diamond and ruby floral pin and, more importantly, the store's new website address: www.borsheims.com. The site will open for business sometime in May.
Up Close With Warren & Charlie
Around 1:30 p.m., I made my way over to the Marriott hotel adjacent to Regency Court to grab a good seat for the 2 o'clock press conference with Warren and Charlie. There were about 50 to 60 journalists representing publications from as far as Japan, Germany, and the U.K. Not surprisingly, the refreshments table featured only Coca-Cola products, including Warren's favorite, Cherry Coke, which he later drank straight from the can during the press conference and Monday's annual meeting.
After Warren and Charlie took their seats behind a table on a raised dais, we all began snapping pictures. Warren joked, "If you can make him smile, you get a prize." The remark itself actually did the trick and made the usually stone-faced Charlie crack a smile. Believe it or not, Warren opened the press conference by introducing himself, "I'm Warren Buffett, chairman of Berkshire Hathaway, and this hyperactive fellow is Charlie Munger, the vice chairman..." In my mind, it's as if President Clinton started a press conference by saying, "I'm Bill Clinton, president of the United States of America..."
I'll mention more about Warren and Charlie's comments in a follow-up piece on what all was said, but they -- and when I say "they," I primarily mean Buffett because Charlie is famous for his short and often nonexistent remarks -- they graciously answered questions for 2 1/2 hours. Each reporter essentially got to ask one question.
Not surprisingly, Buffett gave no real, concrete answers to questions about the economy, about the valuation of the stock market, and about specific investments -- such as his decision last year to sell Berkshire's stake in McDonald's (NYSE: MCD) and possible investments here or abroad. He and Munger reiterated their aversion to high-tech companies, which they believe are outside of their "circle of competence," or area of expertise, though Buffett did stress the importance of the Internet and its impact on businesses today and in the future.
I asked Buffett about one of my favorite companies, Costco (Nasdaq: COST). I asked why Berkshire had not made a bigger investment in the discount warehouse club especially considering Charlie's involvement on Costco's board of directors. I mean, was it a mistake of omission? Warren's response: "Yeah, you hit on a good one here. We should've owned more Costco, and probably if Charlie had been sitting in Omaha, we would've owned more Costco.... Charlie was constantly telling me about this terrific method of distribution, and after 10 years or so I started catching on to what he was saying, and we bought a little bit of Costco at Berkshire.
"We actually negotiated to buy more. I made there the most common mistake that I make.... We started buying it, and the price went up, and instead of following it up and continuing to buy more -- if Costco had stayed at $15 a share or so, where we were buying it, we would've bought a lot more. But instead it went to $15 1/8, and who could pay $15 1/8 and when they'd been paying $15 -- it wasn't quite that bad. I have made that mistake a lot of times, and it's very irritating."
Charlie added: "I'm such an admirer of the Costco culture and the Costco system that I'm not sure I'm totally rational. I love the place. That isn't so bad in life, to find a couple of things you love."
<SPECIAL FEATURE>
May 5, 1999
Pilgrimage to Omaha:
Dispatches From the "Woodstock for Capitalists"
Part 3
by Yi-Hsin Chang (TMF Puck)
OMAHA, NEBRASKA (May 4, 1999) Continuing from where I left off in my second report from Omaha, when the press conference with Warren Buffett and Charlie Munger was over, I approached them to give them a small token of appreciation from The Motley Fool: a Fool polo shirt, a Fool golf towel and, of course, a "FOOL" ball cap. Charlie accepted the gift, but in classic Munger fashion didn't really say anything. Warren said: "The Motley Fool? Great. Say hi to Dale." Dale Wettlaufer, who has written extensively about Berkshire Hathaway (NYSE: BRK.A) on the Fool site, is without a doubt the most knowledgeable Fool when it comes to Berkshire and Warren Buffett.
Warren's Favorite T-Bone
I left the Marriott and headed straight for Gorat's, Warren's favorite steakhouse. It is traditionally open only to Berkshire shareholders the night before the annual meeting, and reservations are hard to come by. I met several shareholders who gave up after getting repeated busy signals when they called on April 1, the day Gorat's started accepting reservations. I also heard that the "buzz" is that if it weren't for Buffett, Omaha's most well-known citizen, who commonly eats at the steakhouse several times a week and often brings guests from out of town, the place couldn't stay in business.
Dale had hooked me up with some of the Yellow BRK'ers who had reservations at 5:00 p.m. I arrived just in time to be seated. I was surprised to see protestors outside the restaurant. There were about half a dozen anti-abortion protestors armed with signs voicing their disapproval. The Buffet Foundation has given donations to organizations involved in population control, family planning, abortion, and birth control.
Inside, the restaurant was noisy and bursting at the seams. There was barely enough room between tables for people to walk. There was a special scaled-down menu for the evening that on the front had a drawing of Warren wearing a tie with dollar signs on it and holding a steak on a fork in one hand and a Cherry Coke in the other. While you could choose from nine different entrees, most shareholders ordered what's listed as "Warren Buffett's Favorite," the T-Bone for $18.50. I ordered a T-Bone and a Cherry Coke to ensure an "authentic" Buffett experience.
While we were eating -- we had a table near the entrance so we could see people coming in the front door -- Charlie Munger came in with his family and proceeded to another dining room. Later, I heard that Warren had come in the back with his family. We did see Walt Disney Co. (NYSE: DIS) CEO Michael Eisner and PBS talk show host Charlie Rose.
As I was leaving, with my free Coca-Cola glass firmly in hand, a Gorat's employee standing just outside the entrance told m
e that Buffett goes to the restaurant "all the time." He said one day when Buffett was waiting to meet someone outside, he ended up greeting and opening the door for customers, some of whom would go in and ask, "Was that Warren Buffett who just opened the door for me?"
Jet-Setting Plane
I proceeded to Aksarben -- "Nebraska" spelled backwards -- Omaha's primary convention center, to get a quick tour of a mockup of recently acquired Executive Jet's new 737 Boeing Business Jet. The mockup was simply the body of a plane without the tail or wings. Inside, the plane was indeed well-appointed. At the annual meeting Monday, Warren said that he tells college students that he eats the same thing they do (i.e., Dairy Queen) and dresses about the same. The only difference is that he travels better, thanks to Executive Jet.
Inside the plane, there's a bedroom with a full-sized bed, two baths with showers, a large living/dining/meeting area, and two smaller rooms with sofas that could serve as beds. Showing great attention to detail, the Executive Jet staff had furnished the plane with Berkshire-related products: Gillette razor and deodorant in the bathroom, a Cherry Coke served on a silver platter, Disney's movie A Bug's Life on the large flat TV screens, World Book Deluxe on CD-ROM, a Borsheim's catalog, and See's Candies memorabilia.
A couple of shareholders told me that they went to see the mockup jet on Saturday afternoon, and guess who was behind them in line? None other than Warren Buffett, who was characteristically standing in line like everyone else to tour the plane. He happily had his picture taken with these lucky shareholders.
A Blizzard With Charlie
Next, I headed to the Dairy Queen on 114th and Dodge, one of the ones frequented by Buffett. The restaurant's sign said "Welcome Berkshire Shareholders." Inside, I wasn't sure what to get, so I turned to some people who were already consuming their Dairy Queen desserts -- a Dilly bar and a sundae. As they were telling me how good their desserts were, who walked up but Charlie Munger with a Blizzard in hand. Apparently, they were friends or relatives of his. He said the Blizzards are so good that McDonald's has copied them, referring, of course, to the McFlurry -- a fact I hadn't realized.
Not wanting to bother Charlie and his family, I quickly turned to the counter to order my own dessert. I got a Mint Hydrox Blizzard, which is essentially mint ice cream blended with Oreo-like cookies. Yummy. You can't get that at McDonald's.
I ended up talking to a Berkshire shareholder from Phoenix who has owned the stock for five years, and we swapped stories about Berkshire and about Buffett. That happens a lot during the annual meeting weekend. People exchange stories about how long they've owned Berkshire, how long they've been coming to shareholders meetings, and their encounters with the man of the hour, Warren Buffett.
In that sense, the annual meeting is really like a "Woodstock for Capitalists," as Warren calls it. During this one weekend before the first Monday in May, the 68-year-old Buffett and, to a lesser extent, his partner Charlie Munger attain rock star status. Thousands of people are trying to take pictures of them and get their autographs. I saw one sixty-something woman yell out "I love you!" to Warren as he was passing by, as if she were a star-struck teenager who had just seen Leonardo di Caprio.
"Woodstock for Capitalists"
After getting less than two hours of sleep (I had stayed up to file my first report for the Fool), I rushed over to Aksarben, the site of the annual meeting, at around 5:40 a.m. on Monday, May 3. It was still dark out -- I was just glad it wasn't raining. There were already about 60 to 80 people in line to get in, even though the doors wouldn't open until 7:00 a.m. These were the diehards among diehards who wanted to sit as close to the stage as possible. The first person in line told me he got there around 4:15 a.m.
People chatted in line, and the time passed fairly quickly. Warren arrived about 6:30 a.m. Believe it or not, he drove his own car up to the front door with the security guards behind him in another car. Warren made a point of coming to the front of the line to briefly say hello to the diehard shareholders.
I used the press badge Berkshire had issued me to go inside Aksarben at around 6:45 a.m. The main auditorium was huge with a main floor of red chairs plus elevated blue chairs around the perimeter. I was lucky enough to plant myself in the third row, right in the center of the auditorium -- the first two center rows had been reserved for the company's directors, CEOs of Berkshire subsidiaries, and special guests. I was sitting directly behind the chairs marked for Mr. and Mrs. Eisner, as in Disney CEO Michael Eisner.
There were also seats reserved for Mrs. Buffett and Mrs. Munger, for Warren's kids Susie, Howard, and Peter and their spouses as well as Charlie's kids. I also noticed a chair reserved for Warren's grandson, Howard Warren Buffett.
At 7:00 a.m., the doors to Aksarben were opened to shareholders, and people started running into the auditorium in search of the best seats in the house. I dare say this is not a sight you see at annual meetings in the rest of corporate America. Lest you get the wrong impression, most shareholders did arrive after 7:00 a.m. I talked to at least one shareholder who got decent seats in the main auditorium even though he didn't show up until around 8:00 a.m.
By Warren's estimate, about 15,000 of the 280,000 shareholders of Berkshire Class A and Class B shares attended the meeting, up from roughly 10,000 attendees the year before. The General Re merger last year actually doubled the number of Berkshire shareholders. To accommodate the increasingly large crowd, Berkshire rented offsite facilities that were linked in via closed-circuit TV. Even in Aksarben, close-up camera shots of Warren and Charlie were projected onto large screens so that people sitting farther back could see their faces.
Berkshire R Us
Free continental breakfast -- doughnuts, bagels, muffins, juice, Coke, Diet Coke, and Sprite -- was served upstairs, and various Berkshire subsidiaries and investment holdings also passed out freebies. Coca-Cola gave out large red "Coca-Cola" shopping bags -- perfect for holding free goodies and purchases -- plus certificates for a free specially made bottle of Coke commemorating this year's annual meeting. Disney passed out rectangular buttons that said "I love Berkshire Hathaway," with a red Mickey Mouse head in place of a heart to represent the word "love." Meanwhile, GEICO gave away pens and flashlight keychains, and See's Candies passed out individually wrapped pieces of chocolate.
Of course, Berkshire companies also did a lot of selling, too. Shareholders loaded up on boxes of See's Candies, Berkshire shirts and caps, Disney shirts and keychains, Peter Buffett's latest CD, and Dairy Queen ice cream bars. GEICO representatives were giving free estimates on car insurance. Everyone ended up with these large Coca-Cola bags filled with Berkshire products.
The Berkshire movie started at 8:30 a.m. with a modified version of the "Always Coca-Cola" commercial rewritten to celebrate Berkshire and its "stocks that always rise." The funny hour-long movie profiled Buffett and Munger, and even showed Warren singing on several occasions, including when he played Daddy Warbucks (or "Warrenbucks") in a local charity production of Annie. It also showed the clip from Warren's cameo guest appearance with Tom Murphy on ABC's All My Children.
The movie had a slew of ads for various Bershire products, including GEICO, Borsheim's, Helzberg Diamonds, and, of course, Coca-Cola. One Coke ad featured Buffett friend Bill Gates standing in front of a Coke machine in an empty corridor, trying to scrape together enough change for a Coke. He even pushes the change return button in hopes of finding a few coins. Finally, he says: "Does somebody have change for a Coke? I'll pay you back."
Another hilarious segment featured Gates and Microsoft President Steve Ballmer as the two outrageous guys from A Night at the Roxbury. Imagine nerdy Bill Gates wearing a shiny blue suit bopping to an early '80s tune, cruising in a convertible with Ballmer, who's wearing a shiny red suit. That alone was well worth the trip.
Another highlight of the movie was a long-time shareholder who had been made a millionaire many times over from his investment in Berkshire listing the most important figures in his life: God first, his wife second, and Warren Buffett third -- "and I'm not sure which is second or third," he says.
<SPECIAL FEATURE>
May 6, 1999
The Buffett & Munger Show
by Yi-Hsin Chang (TMF Puck)
On Monday, May 3, Berkshire Hathaway (NYSE: BRK.A) Chairman Warren Buffett and Vice Chairman Charlie Munger spent five solid hours answering questions from shareholders who had come near and far to attend the company's annual meeting in Omaha, Nebraska. The meeting started at 9:30 a.m., and the official business, the re-election of the members of the board of directors, took all of 10 minutes. For the rest of the time, not counting a 45-minute lunch break, Buffett and Munger spent five hours entertaining around 60 questions from the audience. The meeting adjourned at 3:30 p.m.
During the meeting, Buffett and Munger sat on stage eating See's chocolates and other goodies. Warren drank a signature Cherry Coke straight from the can and even managed to have a Dairy Queen Dilly Bar without dripping ice cream on himself. The two gentlemen were witty, relaxed, and comfortable in the spotlight, patiently addressing each question that was asked. It came across that they really enjoyed the opportunity to talk to their shareholders. Even the reticent Munger offered several great quips, some very direct and scathingly funny.
Here's what Buffett and Munger had to say:
On the U.S. Stock Market...
Buffett: "We have no idea if the market will go up today, next week, next month or next year." He said that he and Munger don't look at the market as a whole but instead at individual businesses, though at current valuations they're having trouble finding companies in their universe they both like at cheap prices.
On the Internet's Impact on Retail...
Buffett said the Internet will have a huge impact on the retail industry. He added that anytime they buy a business, they try to look ahead and evaluate the threat of e-commerce. He doesn't think that e-commerce threatens furniture retailing (i.e. Nebraska Furniture Mart) but said that the Internet will benefit Borsheim's, which is relaunching its website for online ordering later this month. Among jewelers, Borsheim's and Tiffany & Co. (NYSE: TIF) stand to benefit from the Internet because they are brands consumers trust and would be willing to buy online. Buffett also pointed out that the Internet affects real estate dedicated to retailing.
On Alice Schroeder's Report on Berkshire...
Paine Webber analyst Alice Schroeder recently wrote a report on Berkshire, which Buffett called the first comprehensive analyst report on the company. While refusing to comment on Schroeder's valuation of Berkshire, Buffett called her a first-class, serious analyst. Buffett added that the new analyst coverage reflects no change in attitude toward the company's stock price. He is still concerned mainly with building intrinsic value.
On Coca-Cola...
Buffett said that it's hard to think of a much more solid business than Coca-Cola (NYSE: KO), adding that the soft-drink maker benefits from increased prosperity around the world. It also has "marvelous share of mind" and ubiquity of good feeling.
Munger said they don't pay much attention to short-term "noise" and instead focus on the big picture, the 10- to 15-year outlook. "We think that Coke is fine."
On Change and Technology...
Buffett said Berkshire views change as more of a threat than an opportunity and will pass on acquiring businesses that are going to change. For example, Coke hasn't really changed in more than 50 years. This philosophy may mean missing out on a lot of very big winners, but then again "we wouldn't know how to pick 'em."
Buffett said he doesn't see the software world as clearly as the soft-drink world, and he doesn't think Microsoft (Nasdaq: MSFT) will have a superior position to Coke. As he began eating his Dairy Queen Dilly Bar right there on stage, Buffett added: "The Dilly Bar is more certain in 10 years than any software."
Munger added that Berkshire businesses are less likely to be made obsolete by technology than many other businesses.
On Berkshire Class A vs. Class B Shares...
Citing a memo he wrote a few months back on Berkshire's two classes of stock, Buffett explained that Class B shares can never trade for anything but a fraction more than 1/30 of a Class A share because then people would buy Class A shares and convert them to 30 Class B shares. But Class B shares can sell for less than 1/30 of a Class A share, since Class B shares can't be converted to Class A shares. In Buffett's opinion, if the discount is more than 2%, then the B shares offer a better value than the A shares. But if B shares aren't at a discount, anyone wanting to buy at least 30 B shares should buy A instead.
On Acquisitions...
Buffett said he prefers to acquire whole businesses or at least chunks of businesses, instead of just "nibbling" at companies. Munger said that Berkshire will continue to do whole acquisitions as well as large, partial investments in businesses.
On Accounting Principles...
Munger: "The accounting in America is corrupt."
Buffett explained that many companies liberally use accounting charges to smooth out or inflate earnings. However, he declined to name specific culprits, saying that he prefers "criticizing by practices and praising by name."
Buffett said that in accounting for options, companies should figure out the average issuance per year and calculate how much could've been made if the options had been sold as warrants. That number then should be shown as a cost to shareholders. By not doing so, companies are hiding compensation expense in the form of options (as discussed in a current Fool on the Hill series by TMF Gump).
As for goodwill, Buffett said he would treat all acquisitions as purchases, not as pooling of interests. He would set up economic goodwill and lay it out on the balance sheet. The amount should not be amortized, he said.
On the Year 2000 Problem...
Buffett said that he has a general feeling that in the part of the world we have to worry about, it won't be a big deal. He said he's less worried about it than he was a year ago.
On the S&P 500...
Munger predicted that Berkshire will be added to the Standard & Poor's 500 "someday." Buffett said such a move would cause an artificial spike in Berkshire's stock price, as index funds add the stock to their holdings. He added that Berkshire is the most significant company currently not in the index. To avoid the artificial spike in share price, a company could sell stock concurrently with the S&P 500 addition. However, this is not something Berkshire wants to do, he said.
On Flight Safety and Executive Jet...
Buffett said Flight Safety, with its flight simulators, is a capital-intensive business, and that return on equity (ROE) is not going to move up or down much. Executive Jet is still early in its development, so the company will be investing more in the business. However, because customers end up owning the planes, this is not a capital-intensive business.
On Foreign Investing...
Buffett said Berkshire rules out emerging markets that simply aren't big enough to have companies that meet Berkshire's requirement of at least $50 million in pre-tax earnings. But as long as they understand the business and the accounting system it uses, and the price represents good value, Berkshire wouldn't hesitate to invest overseas -- though Buffett pointed out that 53% of the value of the world's markets are actually right here in the U.S.
On Pharmaceutical Companies...
Buffett said they "blew it" in 1993, when drug companies were being threatened by proposals to reform the country's healthcare system, and missed opportunities to buy good businesses at cheap prices. While he sees pharmaceutical companies as good businesses as a group, Berkshire is not about to buy any of them at present prices.
On Inheriting Money...
Buffett, who has always said he won't leave money to his children, explained that he believes in meritocracy and not having people start way ahead of other people in life. He would rather see talent be the determinant than the "divine right of the womb."
In contrast, Munger said he was "more willing to let society take future generations down."
On Recommended Books...
Munger, famous for the reading lists he gives shareholders, recommended Robert Hagstrom's The Warren Buffett Portfolio; Ron Chernow's Titan: The Life of John D. Rockefeller, Sr.; and David Landes' The Wealth and Poverty of Nations.
Buffett suggested friend and Washington Post Chairman Katherine Graham's autobiography Personal History and John Bogle's Common Sense on Mutual Funds.