Original link: https://ljf.com/2023/07/06/1269/
2014 Daily Journal shareholder meeting speech
Once, someone asked me who was the most noble person in my life, and I replied without thinking: “It’s my wife’s ex-husband.
Whether at work or in life, we only want to be with people we trust and appreciate. With such people, we can feel a kind of love between people.
Shareholders: In terms of both career and life, what is the one thing you are most looking forward to in the new year?
Judging from your question, you must be a die-hard fan. In general, I live a very happy life. I get to work with like-minded people. I deal with problems that are within my powers. It must be very uncomfortable for a person who always faces problems beyond his ability. Fortunately, I always choose very easy problems, so I rarely worry about difficult problems.
Shareholders: How do you evaluate the tax avoidance behavior of “tax inversion”? How can this behavior be reduced?
Some places with the highest living standards in the world, such as Singapore and Hong Kong, have low tax rates.
Shareholders: How can we overcome jealousy?
You don’t care if others are better than you, and that’s fine.
Shareholders: Berkshire has invested in several large banks. Due to the non-performing loan behavior of commercial banks, the government issued huge fines to several large commercial banks. What do you think of this matter?
American companies should have higher demands on themselves, not only complying with laws and regulations, but also abiding by moral principles.
It is so simple that a good reputation can make a lot of money, but many people only know how to make money with despicable means.
Shareholders: The scale of derivatives contracts held by large banks is as high as several trillion US dollars. What is your comment on this? Is there any counterparty risk involved?
I will never touch the derivatives business, I disdain to do derivatives trading.
Shareholders: How much risk do you take on investing after you have made enough money to live comfortably?
If you can choose the best of the best and pick three stocks, each of which is enough to pass on your family wealth forever, then holding these three stocks is safe enough.
Shareholders: Last year, you brought up Belridge Oil and you said you made a mistake and you should have bought more, but you didn’t. Can you elaborate on this investment?
Don’t feel frustrated about missing out on good opportunities, it’s an unavoidable part of the investing process.
Shareholders: Looking back with your wisdom today, what do you wish you knew when you first started investing in stocks?
Like Warren, when I was young, I was rummaging around for profitable stocks. For example, I might find a small company that was very cheap because it traded on the pink sheets and not many people knew about it. Later, when I made a lot of money, I didn’t want to rummage around anymore, so I changed my original mind. I started to invest in people I respected, invested in businesses I liked, and started looking for companies with competitive advantages that could develop well in the future. When I got older, I changed my mind and started investing in excellent management and excellent companies.
Shareholders: Ben Graham said in his later years that individual investors with the right ideas can completely defeat institutions. In today’s environment, is this conclusion still valid? Are individual investors at an advantage or disadvantage compared with large institutions?
The reason why we have created brilliant performance is mainly because we choose simple things to do. Many people think they are very smart, they are overconfident, and they only pick the hardest things to do, and they often end up with no good results.
When investing, you must be very patient and wait until a good opportunity arises. The price is very cheap, and you can see that it is worth it at a glance, so you can buy it. It’s against humanity to sit there all day and do nothing. We can wait patiently because we have so many other things to do. Can ordinary people do it? Which ordinary person can wait for five years without moving or doing anything? Ordinary people feel bored and bored, so they often do stupid things.
Shareholders: On the one hand, we must pursue simplicity, on the other hand, we must understand many complex issues. How do you and Warren resolve this contradiction?
Berkshire has produced extraordinary performance, but we have no extraordinary abilities. Since we have no abilities that are different from ordinary people, how can we create extraordinary performance? This is a very interesting question, and it is worth thinking about. We plan to discuss this issue in this year’s annual report. The answer is that we found the right way. One of the key points is that we are very clear about the boundaries of our circle of competence. Knowing the size of your circle of competence can even make up for your lack of IQ. “If you know what you know, if you don’t know what you don’t know, that’s knowing.” I am very clear about how much I am, and I am very clear about what I should not do.
I also have a habit of doing things that can be solved right away, otherwise things will pile up. Some people procrastinate, are overwhelmed by a lot of things, and can’t do anything.
When confronted with a problem that must be solved, our approach is to wrestle with it. Soft and hard, stalking and stalking, and will not stop until it is resolved. We don’t do many things that others do, so we have plenty of time to wrestle with difficult problems. We just mastered some correct ways of doing things, and these methods are very easy to use, but it is a pity that others rarely learn from us.
Shareholders: What good habits would you suggest we develop?
I’ve never been good at anything I’m not interested in. If you are not interested in one thing, no matter how smart you are, it will be difficult to do it well. Interest is the key to success.
Shareholders: What are the benefits of lowering expectations?
The secret to luck is not ambition, but lowering expectations. Especially when looking for a significant other, be sure to find someone who has lower expectations for you.
Shareholders: How much impact does technological progress have on business competition?
We fear technological change, so Berkshire tries to stay away from technological change.
How to avoid being eliminated by technological progress? We can’t solve this problem, we can only stay away from companies that are easily eliminated by technology.
Warren said: “We can’t jump over a three-meter-high railing. What we do is step gently over small puddles and pick up big chunks of gold.”
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