What Vikas Agrawal Learned From Warren Buffett

Dear Friends,

This year, I was privileged to attend the Berkshire Hathaway AGM 2017 at Omaha, US.

Before attending the event, it was an aspiration to witness the living legend Warren Buffett live and get his wisdom on investing, along with our very own living legend Mr. Raamdeo Agrawal.

Since our group company Motilal Oswal stands for 'Knowledge First', this is an initiative on similar lines. We made some of our business partners travel to Omaha, not for partying or a gala time, but to give them an opportunity to further instil an understanding of long-term equity investing for some serious wealth creation, from the world's best wealth creators.

I would like to thank my seniors Aashish and Akhil for giving me this opportunity to accompany some of my business partners from the Southern markets.

I think for me, it was a pilgrimage which I was looking forward to for so many years. It was not a trip.

Sharing some of my key learnings

• Buy great companies with significant economic moat at reasonable prices, rather than mediocre companies at cheap prices.
• Visualize the business for the next 15, 20, 25 years.
• Integrity and character of management are absolutely non-negotiable. If there is any compromise, the company is not worth looking at.
• Sitting tight is very important.

Some of my observations at CenturyLink Center, Omaha

The AGM began with Warren Buffett thanking index fund king Jack Bogle for saving billions of dollars for US investors. Bogle founded Vanguard Group, the largest US mutual fund firm, in 1974 and created the first index fund that allows investors to passively invest in the stock market by tracking a market index.

Mr. Buffett mentioned that in his career he has himself identified about 10 to 12 good managers to whom he would have entrusted money, and he did not mind paying them a hefty fee as high as 2% fixed and 20% carry. As a matter of fact, there are two active managers identified and employed by him who manage over USD 10 billion each for Berkshire Hathaway. He said if Mr. Munger, for instance, was managing money, he would happily pay him a hefty fee. So his response is not so much to do only with the prospects of active investing, but more to do with individual circumstances, expectation of returns and, most importantly, the ability to identify and engage good managers.

Biggest regret

Buffett said he regretted not investing early in Google. "Our biggest tech failure was missing Google. Walmart and Google were missed opportunities," he said.

Take on Ajit Jain

"Nobody would possibly replace Ajit Jain if he were to leave or retire. But we have a terrific team. There are things which only he can do. A lot of things are institutionalized in business. Ajit Jain made more money for Berkshire than I have, probably," said Buffett.

Take on IBM

Responding to a shareholder question on the Berkshire move to sell a large stake in IBM, an investment which had earlier surprised investors mainly because of Buffett's stated aversion towards the technology sector, the ace investor said he was wrong on IBM. "We started buying IBM six years ago as we thought it would have performed better," he said.

Take on Apple

To a pointed question on Apple, a stock on which Berkshire doubled its stake in the first quarter, Buffett said he looks at Apple more as a consumer stock than a tech bet.

Bullish on aviation

The legendary investor said the airlines industry would have some more pricing sensibility in the next 10 years, and he believed airlines would operate at higher degrees of capacity in the future.

And then there was Charlie

But the real show in 2017 was performed by the 93-years-and-four-months-old man, Charlie Munger, who stole the show with his zingers. Here are some of my favourite quotes from him.

"We were young and ignorant then; now we're old and ignorant."

"Fish where the fish are. A good fisherman can find more fish in China; it's a happier hunting ground."

"The investment world has gotten even tougher. Maybe now we have small statistical advantages, when before it was like shooting fish in a barrel. It's OK to have things get a little harder when you are filthy rich."

"A lot of other people are trying to be brilliant and we are just trying to be rational. Trying to be brilliant is very dangerous, particularly when gambling."

"It's a very good thing that Warren bought Apple. Either he's gone crazy or is learning. I prefer to think he's learning."

And one of my favourite Munger quotes, when someone asked what is your dream: "Oh, to be 90 again. If you've got anything you really want to do, don't wait until you are 93 to do it."

These quotes incorporate much wisdom, and both Charlie's and Warren's comments provide value-added insights for investors around the world.

Hope you find it worth reading. Please feel free to share your feedback. The idea is to exchange good ideas and learn from each other. As Charlie Munger says, "I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up, and boy does that help, particularly when you have a long run ahead of you."

Many thanks,

Originally published on LinkedIn. Republished here in full, with light edits for spacing and capitalization only.