(May 1, 2000) At the 2000 Berkshire Hathaway Annual Meeting, Warren Buffett and Charlie Munger spent five hours to answer questions from the shareholders. Below are the highlights of what I learned from Warren Buffett and Charlie Munger at the 2000 Berkshire Hathaway Annual Meeting:

Warren Buffett discussed how to think about investing at the 2000 Berkshire Hathaway Annual Meeting. Warren Buffett said that the first investment primer was written by Aesop in 600 B.C. He said, “A bird in the hand is worth two in the bush.” Aesop forgot to say when you get the two in the bush and what interest rates are; investing is simply figuring out your cash outlay (the bird in the hand) and comparing it to how many birds are in the bush and when you get them.

Charlie Munger clarified the difference between growth and value stocks. At the 2000 Berkshire Hathaway Annual Meeting, Charlie Munger said that there is no distinction between growth and value. Every stock is a value stock to Berkshire Hathaway. The potential growth of the company is simply one factor that Berkshire Hathaway considers.

Warren Buffett said that he has never read Michael Porter, but know enough about him to know Warren Buffett and Charlie Munger think alike. Porter wrote that durable, sustainable competitive advantages are the core of any business, and that’s exactly what Berkshire Hathaway looks for. That is the key to investing. The best way to understand this is to study businesses that have achieved it. Ask yourself why there are no new entrants in the razor blade business.

Charlie Munger said that if you buy something because it is undervalue, then you have to think about selling it when it approaches your calculation of its intrinsic value. That’s hard. But if you buy a few great companies, then you can sit on your ass. That’s a good thing. Warren Buffett added that Berkshire Hathaway wants to buy stocks to hold forever.

Warren Buffett recalled Benjamin Graham that in the short, the market is a voting machine, but in the long run, it is a weighing machine. Sooner or later, the amount of cash a business can disgorge will determine its value in the market.

Charlie Munger said that for society, the internet is wonderful, but for capitalist, it will be a net negative. It will increase efficiency, but lots of things increase efficiency without increasing profits. It is way more likely to make American businesses less profitable than more profitable.

Warren Buffett said that companies with market capitalization of tens of billions of dollars that are worthless, and seen other companies that trade at 20-25% of their true value. It eventually gets sorted out. But the speculative mania in one area is not creating equivalent discounts elsewhere. Berkshire Hathaway is not finding businesses at half their real value today. Forty-five years ago, Warren Buffett had lots of ideas and no money. Today, Warren Buffett has a lot of money but no ideas.

Charlie Munger said that the culture at Berkshire Hathaway is very old-fashioned, like Ben Franklin or Andrew Carnegie. Can you imagine Andrew Carnegie hiring consultants? It is amazing how well this approach still works. A lot of the businesses Berkshire Hathaway buy are kind of cranky and old-fashioned like Berkshire Hathaway.

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