Working in software in the Silicon Valley in the late 1990s put me in the center of all the excitement. I worked at a small company in the same office park that eBay occupied and remember the day of the eBay IPO. Pretty much everyone was into tech stocks. I had little money at the time, and what I had I put into a down payment on a home, so that kept me out of trouble. But I did speculate in some Intel stock despite following Buffett’s letters starting in 1995. In early 2000, I sold out of Intel at nosebleed levels and bought shares of Berkshire with the proceeds, shares I still own today. Needless to say, Buffett saved me from much folly. Whether it is working for an understanding manager or having the right role models, listening to the right people is really important for young people.
Warren once said to me, in his office, “I measure my performance as manager by how few shares trade.” To which he added that that view was not shared by his fellow CEOs or on Wall Street. Morningstar once identified the number one fund over the previous 10 years. It was Ken Heebner’s CGM Fund. Indeed, it had outperformed the index by a wide margin. MS then was, somehow, able to obtain the performance records of the actual CGM investors. Shocking: they had, on average, not only underperformed CGM but the index by a wide margin. The lesson: Heebner was totally focused on beating the market and not helping investors to think like long-term, patient owners. He failed the Buffett measure.
I attended the annual meetings at the top of the dot.com bubble and the one after. The exchanges in the Q&A were enriching. At the first many of the questions began with a preamble of the like, Mr. Buffett, you are a great investor—you have made us a lot of money—, then came the however: couldn’t you buy just a few high-tech stocks? To each question he answered carefully, if you can’t reliably predict future earnings, you can’t estimate a present value. A young woman brought the house down, with Warren enjoying it, too, when she said, in her preamble, that she had bought some Berkshire shares hoping they would help her pay for college; now she was looking at junior colleges. The next annual meeting, the preambles began with, “Thank you, Mr. Buffett”. They were thankful that he had taught them a valuable lesson. I’m quite sure they are all off 25 years later.
I love reading the transcripts from those late '90s annual meetings with the benefit of hindsight of how the dot-com bubble was going to end (and how soon). It really shows how immense the pressure must have been back then for investors when even some Berkshire shareholders were openly wondering if tech stocks were the answer.
I feel very fortunate to have attended both of those meetings, and I encourage readers to watch them. They make getting through the current AI enthusiasm easier to address. More generally, the annual Q&As contain nuggets of wisdom that will set one about pondering, just as Warren and Charlie would wish.
Yes, Kevin, and you are performing a valuable service in bringing a great deal of additional history to our attention. While I experienced much first hand, your efforts help me refresh my aging memory. And your work will help younger generations, who were unable to attend earlier meetings, learn how to become well-trained investors, and, indeed, wiser human beings.
I’m actually working on an article for next week that kind of touches on passing Buffett’s wisdom to the next generation. Do you mind if I clip your comment and quote from it in the article?
A favorite of Warren Buffett’s, a sidenote here, is the story of American automobile companies: 2000 in the early days and few survivors today. To be sure, not one of those 2000 anticipated less than lasting success.
I'll probably write a full article on this in the future, but this one from the Novel Investor includes some of Buffett's automobile story from the 1999 Sun Valley conference. He has also told this same story in other settings, too, so there might be better versions out there elsewhere.
Working in software in the Silicon Valley in the late 1990s put me in the center of all the excitement. I worked at a small company in the same office park that eBay occupied and remember the day of the eBay IPO. Pretty much everyone was into tech stocks. I had little money at the time, and what I had I put into a down payment on a home, so that kept me out of trouble. But I did speculate in some Intel stock despite following Buffett’s letters starting in 1995. In early 2000, I sold out of Intel at nosebleed levels and bought shares of Berkshire with the proceeds, shares I still own today. Needless to say, Buffett saved me from much folly. Whether it is working for an understanding manager or having the right role models, listening to the right people is really important for young people.
💯💯💯
Two comments:
Warren once said to me, in his office, “I measure my performance as manager by how few shares trade.” To which he added that that view was not shared by his fellow CEOs or on Wall Street. Morningstar once identified the number one fund over the previous 10 years. It was Ken Heebner’s CGM Fund. Indeed, it had outperformed the index by a wide margin. MS then was, somehow, able to obtain the performance records of the actual CGM investors. Shocking: they had, on average, not only underperformed CGM but the index by a wide margin. The lesson: Heebner was totally focused on beating the market and not helping investors to think like long-term, patient owners. He failed the Buffett measure.
I attended the annual meetings at the top of the dot.com bubble and the one after. The exchanges in the Q&A were enriching. At the first many of the questions began with a preamble of the like, Mr. Buffett, you are a great investor—you have made us a lot of money—, then came the however: couldn’t you buy just a few high-tech stocks? To each question he answered carefully, if you can’t reliably predict future earnings, you can’t estimate a present value. A young woman brought the house down, with Warren enjoying it, too, when she said, in her preamble, that she had bought some Berkshire shares hoping they would help her pay for college; now she was looking at junior colleges. The next annual meeting, the preambles began with, “Thank you, Mr. Buffett”. They were thankful that he had taught them a valuable lesson. I’m quite sure they are all off 25 years later.
I love reading the transcripts from those late '90s annual meetings with the benefit of hindsight of how the dot-com bubble was going to end (and how soon). It really shows how immense the pressure must have been back then for investors when even some Berkshire shareholders were openly wondering if tech stocks were the answer.
I feel very fortunate to have attended both of those meetings, and I encourage readers to watch them. They make getting through the current AI enthusiasm easier to address. More generally, the annual Q&As contain nuggets of wisdom that will set one about pondering, just as Warren and Charlie would wish.
Those annual meeting videos and transcripts in CNBC’s archive are a goldmine!
Yes, Kevin, and you are performing a valuable service in bringing a great deal of additional history to our attention. While I experienced much first hand, your efforts help me refresh my aging memory. And your work will help younger generations, who were unable to attend earlier meetings, learn how to become well-trained investors, and, indeed, wiser human beings.
Thank you so much! That really means a lot.
I’m actually working on an article for next week that kind of touches on passing Buffett’s wisdom to the next generation. Do you mind if I clip your comment and quote from it in the article?
A favorite of Warren Buffett’s, a sidenote here, is the story of American automobile companies: 2000 in the early days and few survivors today. To be sure, not one of those 2000 anticipated less than lasting success.
One of my favorite Buffett stories!
Maybe you'd be nice enough to re-print that story? It certainly applies to the current AI madhouse!
I'll probably write a full article on this in the future, but this one from the Novel Investor includes some of Buffett's automobile story from the 1999 Sun Valley conference. He has also told this same story in other settings, too, so there might be better versions out there elsewhere.
https://novelinvestor.com/buffett-picking-winners-is-hard/