Thoughts on Markets

View from the Chair: Windermere's Market Perspectives (May 2019)

Normally, I use this monthly blog post to share our own views on the markets and investing. However, this month, I’m choosing to instead share some perspectives from two of the best: Warren Buffett and Charlie Munger.


The first weekend in May is unlike any other weekend in Omaha as annually, 40,000+ individuals make the journey to attend the annual meeting of Berkshire Hathaway. Last year, I was fortunate enough to attend the meeting in person for the first time. This year, despite not making the trip, thanks to the power of technology, I was able to catch the majority of the meeting on a replay of the live stream as well as the Monday morning CNBC three-hour masterclass with Warren and Charlie

Here are a 8 top takeaways from these two legendary investors and human beings:

1.) Remember what you are buying

Warren routinely reminds us to focus on what an investment in stocks really is - an ownership interest in a business. Asked about investing in IPOs, Warren encouraged individuals to challenge themselves to write out a rationale for why they are buying a stock (IPO or otherwise) at a given price - I am buying XYZ company for $x because (fill in the blank). He cautioned that if you can’t do that - or can’t come up with a reason beyond liking the product, hearing about it on CNBC, or following your neighbor’s advice, it’s best to move along.

Warren also emphasized how important it is to pay the “right” price for an investment (based upon your research). In Warren’s words, “ a business does not know how much you paid for it.” “Any investment can be turned into a bad deal by paying too much”

Lastly, as they have both done in the past, both Warren and Charlie emphasized not trying to time the market or worry about prices day to day

2.) Don’t dismiss capitalism or America

During Saturday’s meeting, Warren proudly declared himself a “card carrying capitalist” While not dismissing the inequalities in our country or denying his personal democratic allegiances, he made the case that the system is working and expressed his doubts that the US would adopt socialism in the future. In Warren’s words, “when you look at what was here in 1776 and look at what is here now, this country has done an incredible job in terms of deployment of resources and human ingenuity and that is a product of a system

Towards the end of the meeting, Warren also discussed their success and how fortunate he feels to have been an American. “This country has treated us incredibly well. We’ve had this huge tailwind which I wrote about in the annual report and it wouldn’t have happened in any other country….We’ve been very lucky that we’ve been operating in this country at this time”

3.) Better to collaborate

Charlie and Warren discussed the special relationship they have had and how the ability to collaborate on key decisions have helped them both personally and professionally. Whether it’s a trusted advisor or a business partner, being able to voice your ideas and have someone respectfully challenge them and help you further explore your thesis is exceptionally valuable. And as Charlie said to Warren “you usually end up agreeing with me. You’re smart and I’m right”. As the meeting wound down, they were asked about how they resolve conflicts. Both men stated they don’t as they’ve never been in an argument. Warren encouraged the audience to be cognizant of who you spend your time with - “having the right partners in life is enormously important. It’s more fun with a partner"

4.) Value investing

When questioned about whether a recent acquisition of Amazon in the investment portfolio was true to Berkshire’s value investing principles, Warren quoted Charlie saying “all investing is value investing. Putting out some money now to get some more later on – based on calculations as to the probabilities of getting that money and when you’ll get it…”

He went on to say that all the same calculations go in to valuing a company regardless of its multiple. If you can buy into a business now for less than what you think it’ll be worth in your specified time period at your desired rate of return, it is worth a closer look

5.) Don’t overdo delayed gratification

A young investor asked the two men about their advice on teaching the latest generation about delayed gratification and savings. Warren’s reply was somewhat surprising based on his frugal and savings-oriented nature, and of course contained a bit of humor “Delayed gratification is not necessarily an unqualified course of action under all circumstances.  I always believe in spending 2 or 3 cents out of every dollar I earn and saving the rest”

He cautioned that you need to enjoy your life and do things that bring you and your family joy. He then remarked about the people he has met in his lifetime and how he doesn’t think amassing more wealth will necessarily make you happy. “One thing you should understand - if you aren’t happy having $50,000 or $100,000, you’re not going to be happy if you have $50 million or $100 million”

6.) Find a niche

When asked about how the industry has changed since they began their careers, both men agreed that it is presently a more difficult environment. Charlie stated that it’s more important to specialize now and that the generalist/diversified approach they have taken likely won’t work anymore. As only Charlie could state, “no one wants to go to a doctor that’s half proctologist and half dentist”

7.) Think beyond our borders

While Berkshire tends to invest primarily in the US, there were many questions discussing potential investments abroad. Both Warren and Charlie did not dismiss the idea and said they’d be willing to consider opportunities (in the UK and China for instance, each of which were brought up in questions). Charlie was also sure to let the crowd know that they are in fact in China already - via their Dairy Queen holdings!

8.) Don’t lose sight of what really matters

Today’s world makes it easy for us to forget what really matters in this world. When asked what they value most in life today, Warren quickly replied - “it’s the two things you can’t buy - time and love. I’ve valued those for a long time.” Charlie, always quick with his wit said, “well, I’d like a little more of it”

Thanks for the words of insight and advice Warren and Charlie. The world is a better place with the two of you in it.

Invest on,


View from the Chair: Windermere's Market Perspectives (April 2019)

A recent blog post from Seth Godin entitled “More Right” follows:

There are at least seven realistic ways to get from my home near New York to a meeting in Washington DC. None of them are wrong. Each offers its own advantage in terms of resilience, speed, cost or hassle.

And so, we can’t choose based on this is right and those are wrong. The only useful construct is to consider our priorities and find the route with the best combination of trade offs.

Waiting for perfect is a never-ending game.

And the comfort of totally right vs. totally wrong is elusive

When reading this, I was instantly struct by how many investing lessons can be drawn from this paragraph - especially when considered in context of the past six months. Here are a few key things to consider:

1.) Forget right and wrong: When it comes to investing, everyone has an opinion.  And in times of volatility (namely to the downside), those opinions become louder and more authoritative and the pronouncements of what is right and what is wrong intensifies.   And while we all know that no one can be 100% sure what will happen next, oftentimes the conviction of the talking head or article writer can still be very persuasive. There is no universal “perfect answer” when it comes investing. What is appropriate for your circumstance may not be even close to appropriate for someone else. Stay in your lane and know your truth. The rest? It’s truly just noise

2.) Evaluate priorities - So how can you determine what is right for you? Evaluate your priorities. Without giving careful consideration to what it is you are attempting to do with your wealth, it’s impossible to know how to move forward. So give it some thought. What are your plans in the future - 1, 3, 5, 10 years (or more) from now? What does life look like once you stop having an income stream from employment? What are your goals (if any) as it relates to family gifting or charity? What other income sources do you have? When do you anticipate pulling money from your invested assets? What matters most to you and your family? Spending some time addressing these questions should bear out the items that are of the most importance to you

3.) Consider trade offs - Unfortunately, nothing in life comes without trade offs and management of your wealth is no exception. Once you have outlined your priorities, consider what the trade offs look like. For instance, if your priorities require considerably more wealth than you have, you may be facing a trade-off of lower spending, higher saving, or higher required rate of return (leading to more volatility). Or if your priorities involve a certain lower level risk profile for your investments, you may be looking at lessening your retirement objectives due to a lower expected return. There is an offsetting cost for every decision made and it’s important to acknowledge them and understand their impact

4.) Strike a balance - Perfect doesn’t exist - but you can come close by weighing priorities against trade-offs. What matters more to you? What can you live with? What can you not live without? From this iterative process, a route will present itself. This is your truth. This is your north star from which you (and you alone) can dictate right versus wrong in your investing approach

5.) Comfort is illusive - Just when we find our footing in investing, it always seems like something happens to throw us off course. No matter how clear we are regarding our own path forward, times of market stress and volatility can make us hesitate and second guess ourselves. Keep a notebook handy that outlines your priorities and the trade-offs you have knowingly accepted. When volatility occurs, revisit your work and know that waiting for things to be perfect is a “never-ending game.” Instead, focus on the journey and rest easy that you are on the path that is indeed right for you

Thanks Seth for the insightful post - and best of luck to all of you as you continue in your search for “more right”