My 3 Key Takeaways from Berkshire Hathaway AGM 2023
My 3 Key Takeaways from Berkshire Hathaway AGM 2023
Including 2 little known ideas
Last weekend, Warren Buffett held his annual shareholders meeting in Omaha.
As usual, he shared some life and investing advice from his decades on earth and in the markets.
Here are 3 key principles that I took away from the meeting:
1. Understand consumer behaviour over the product
Knowledge is often seen as a pre-requisite in investing.
What’s more important than having the knowledge is having the right mindset.
It’s why most people panic when they see the stock price of their investment holdings fall.
It goes to show why psychology plays such a hugely important role in investing.
Warren Buffett had this to say about Apple:
“I don’t understand the phone at all; but I do understand consumer behavior.”
And yet, Apple is Berkshire’s largest holding.
Human psychology plays a huge role in investing success, even more than the product itself.
Apple may not have the best product. Yet at every new iPhone release there are raving fans queueing to get the latest the latest iPhone.
2. Sometimes portfolio diversification is ‘deworsification’
Focus on quality over quantity.
Before adding the next hot stock to your portfolio, think about whether it aligns with your investment objectives and risk appetite.
“Diversification has become a standard investing rule to help reduce risk and create a more resilient portfolio, but there is such a thing as overdoing it that investing educators don’t give enough attention to”
Know the edge of your own ability
Understanding your own abilities and limitations as an investor is crucial for making informed decisions.
You cannot possibly be an expert in every industry or asset class.
Instead, focus on areas where you have the most knowledge and experience.
Where does your circle of competence lie?
Put your money in only your best ideas
We all have finite resources and capital.
Rather than spreading them out in mediocre investments, it helps to only invest our capital in our best ideas.
Focusing on a smaller number of high-quality investments helps us maximize the impact of our best ideas on our overall portfolio performance.
3. Die without regrets
“You should write your obituary and then try to figure out how to live up to it”
Do some introspection.
Identify the values, accomplishments, and relationships that truly matter to you.
Keep those that matter, and cut those that don’t.
What is the legacy you want to leave behind when you die?
Reverse engineer that to make more intentional choices that contribute to a meaningful existence.