Articles
Return on Kindness
A Long Weekend in Omaha Among New and Old Friends, Warren Buffett and Charlie Munger’s 2023 Berkshire Hathaway Meeting
I got up and stood on a platform — a microphone in front of me, a beam of bright light in my face. Warren Buffett just called me to ask a question in front of tens of thousands of people around me and millions watching worldwide. I was in the middle of Berkshire Hathaway’s Annual Meeting – the Woodstock for Capitalists held in Omaha, Nebraska, each year. It was my turn to speak; I said: “Thank you for making our lives better.” My words echoed back, confusing me for a moment; I proceeded with the question, nonetheless!
Before I share with you what followed, I must thank everyone who asked me if I’m going to Omaha this year. There were many of you, many more than usual: Guy Spier, William Green, Adam Mead, Gautam Baid, Phil Ordway, Christopher Tsai, Robert Karas, Saurabh Madaan, Jeff Henriksen, Ninad Shinde, Jake Taylor, Gillian Zoe Segal, Eugene Ng, Tyler Howell, John Mihaljevic, Alex Wetterling, Tilman Versch, and many others. Special credit goes to Lauren Templeton, though, who, in our podcast conversation, finally convinced me to pack up and head over on this very special pilgrimage, my first in a long time. Thank you, Lauren!
If I were to describe the three-day experience in three words, I would say with no hesitation: the Return on Kindness. The credit for the article’s title has to go to my friend Direk Khanijou – I shared with him how all I feel around fellow Berkshire shareholders is kindness. He said the founder of the famous yogurt company Chobani, Hamdi Ulukaya, uses the term “return on kindness.” Thank you, Direk!
Over this long weekend, we got a refresher of all the Buffett and Munger wisdom, but it’s more than that. Being in the company of tens of thousands of attendees and millions watching online, as my new friend Luis Gomez Cobo told me, you feel like it’s just you and the two of them talking to you directly. And that’s exactly how I felt. I saw their advice through my own personal experience. Luis deserves the credit for holding a spot for me in the line on Saturday morning and inspiring me to put my name down to ask a question. Thank you, Luis!
I think there are some amusing contradictions about the event, though. It attracts a big crowd of people who usually avoid crowds. I love people and deep conversations, but you won’t usually find me in a big crowd. I wrote a book, “Outsmarting the Crowd,” after all. These are mostly people like me who don’t get emotional about the market’s vicissitudes. We like the logic and simplicity of the value investing philosophy. We admire Buffett and Munger and the business they built. Most of all, we appreciate how they live by example and humbly share their many mistakes.
There was a recent time when we all avoided crowds. In May 2020, my wife and I were staying in a cabin in the woods, 2-3 hours outside of New York City, and I remember well watching the online broadcast of Buffett speaking alone at this annual event. We were all hunkered down and avoided any social interaction. I didn’t dare to dream that in three years; I’ll be among tens of thousands shoulder to shoulder in Omaha waiting to get in, save a good seat, and watch them both live again. I shared some intimate essays penned in those days in my recent book. They were written to our clients and never meant to be published, but here they are, Crisis Investing.
Life is an amusing journey. Buffett and Munger are around the age of my two late grandfathers. One of them took me fishing on a lake like Munger spends his summers. These were my first lessons in patience and discipline. The other told me tales of his early childhood and upbringing, just like Buffett likes to do. He taught me about the value of hard currency and the dangers of fiat money. I grew up with a work ethic, the value of education, the importance of serving others, and most of all, kindness towards each other.
Berkshire weekend is a celebration of capitalism, but more so, a celebration of the shareholder, the business owner. There was minimal if any, private ownership of the business in the Cold War era, 1980s Poland of my childhood. The stock exchange shut down when the Nazi tanks rolled in and were yet to reopen. Big land and most businesses were nationalized following WW2.
I accompanied my more senior grandfather each month to pick up ration cards in those pre-teen years. The failing Soviet-style centrally planned economy led to a shortage in government-operated stores. Meat, flour, milk, and sugar were rationed in Poland, a country covered with wheat and sugar beets and abundant with pigs and cows. Not that different from recent tales of insanely oil-rich Venezuela running out of gas at the pump. The free gray or black market filled the gap in Poland, where the government failed, as it does in Venezuela today.
By the way, I was absolutely convinced that all kids my age in the whole world share the ritual of a walk to pick up ration cards with their grandpas. Now, I know it’s not true. I still have fond memories of those strolls, but I wish we had a See’s Candies store as our destination instead, with a lesson or two about the long-term benefits of owning quality businesses.
I need no convincing that a free market economy works. I also need no convincing that ownership of businesses can allow you to grow wealth over time and serve society with an abundance of products and services that no centrally planned authority can ever match. When you look closer, it’s not the capital on the pedestal in Omaha, but the owner. Buffett makes sure that we, the owners of Berkshire, know well that he is working for us. He benefits, along with us being a major shareholder himself.
Capitalism, ownership, and business aside for a moment, there was a bigger lesson I walked away with from my long weekend in Omaha: the Return on Kindness.
I asked Buffett and Munger about their 100-year vision for Berkshire; I quoted Warren’s 1976 tribute to Benjamin Graham, where he referred to Graham as a man who would plant trees that other men would sit under. I told Buffett and Munger that I see them both as such people.
I was curious about the 100 years because of our multi-generational view of the fortunes we are responsible for at Sicart Associates. It’s a view I share in my previous book – Money, Life, Family. I strongly believe that the quality of thinking improves dramatically once we look at investing as planting trees for others to enjoy. The results may happen a lot sooner than a century, of course, but this mindset instills a healthy, responsible, opportunistic, but cautious framework.
Buffett reminisced about the generosity of Benjamin Graham, his mentor, and friend, who remains the preeminent father of value investing. He reminded us how Graham’s book – The Intelligent Investor changed his life. Almost a quarter of a century ago, I discovered Warren Buffett himself in the foreword to a later edition of this book. I might have heard his name in Peter Lynch’s book – One Up on Wall Street, but only after reading Graham’s book I knew I had to pay attention to his Omaha-based disciple. I remember reading Robert Hagstrom’s books next.
In his 100-year vision, Buffett shared how Berkshire has the capital, talent, and shareholders that should allow it to perpetuate its success and behave in a way that society is happy that it exists while others can learn from its example.
Munger praised Graham for being a gifted teacher. He reminded us that half of his investment returns came from one stock, a growth stock, GEICO (the insurance company now owned by Berkshire). Charlie pointed out that buying undervalued great companies is a very good thing — an investment philosophy that Berkshire has lived by for decades.
I felt very fortunate to have had the opportunity to ask them a question directly. Ahead of this weekend, my wife, Megan, asked me what was one thing I’d like to happen there. I said I’m looking forward to spending time with so many friends that are coming, but I have a question I’d like to ask Warren and Charlie. Now, the odds were not in my favor. There are usually 30-50,000 attendees and up to 60 questions get asked, only half of them by attendees that come in person; the other half are emailed and read out. I think around 20 people in the audience got to ask a question this year. I held a lucky ticket that got selected, one of two people in one out of ten stations. I trust that I channeled a question that has been on the minds of many.
The odds are a funny concept, and they have never really been in my favor. In mid-August 1980, when I was born, the odds of me standing one day in the middle of the Woodstock for Capitalists asking one of the richest people in the world a question were close to zero. After all, I was born in Cold War Poland the day the Solidarity movement started strikes against the authoritarian government. I was in diapers when my parents were sent home from medical school; Martial Law and tanks on the streets followed. You’d think it’s not the most obvious time and place for an emergence of a future capitalist and a shareholder, yet it was.
I think life and investing are less about odds and more about showing up for the opportunity. I subscribe to a philosophy shared by Charlie Munger – there are very few big opportunities in life: “When you see a big opportunity, seize it boldly, and don’t do it small.” That’s the wisdom of Charlie Munger’s great-grandfather, whom he never knew. Munger shared it again at this year’s annual meeting.
Buffett and Munger built Berkshire to be a fortress so that they don’t need to count on the kindness of strangers. I agree. I live my life and run investments the same way. Yet often, we offer kindness and sometimes rely on it, it makes life much more pleasant, and businesses flourish and prosper when their clients, stakeholders, and shareholders feel appreciated and valued. I am where I am because of the kindness shared and received by me, my parents, grandparents, and generations before me.
The principles and wisdom of Warren and Charlie are timeless and life-changing. I’ve heard them a thousand times, but it may take a few thousand more to make sure that I abide by them and follow them for decades to come. On my flight back, I opened and started reading the newest edition of Lawrence Cunnigham’s wonderful book – The Essays of Warren Buffett: Lessons of Corporate America. I read the previous edition almost twenty years ago. On my last day in Omaha, I got to shake hands with Mr. Cunningham. Buffett’s message is spreading around the world; my seat neighbor from Malaysia had a copy of the same book. That makes me happy.
Many see capitalism, business, and finance as cutthroat and competitive. I think there is a return on kindness that can compound and bring back a million-fold the initial investment. That’s the lesson I brought home. I’m grateful for all the kindness we enjoyed and shared this weekend; let’s grow and perpetuate it. Thank you!
Happy Investing!
Bogumil Baranowski
Published: 5/11/2023
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