Berkshire Hathaway is an unusual company. You may never have heard of it, but it is currently the fifth largest company by market capitalization in the world (after Apple, ExxonMobil, Microsoft and Google). Its original class of shares, Class A shares, currently trade for about $160,000 per share on the market (they’ve never been split). If you look up Berkshire on Wikipedia, you’ll see it’s classified as a “diversified conglomerate”. Berkshire owns stakes in a motley crew of companies. It owns numerous household brands – Geico, See’s Candies, Brooks among them – a few highly lucrative insurance and re-insurance businesses, a railroad company, a private jet leasing company, and significant minority interests in large companies such as Coca-Cola, P&G and Amex.
Although you may not have heard of Berkshire Hathaway, you probably would have heard of Warren Buffett – its CEO and largest shareholder. Buffett is of course well known as an investor and not an operator (even though he is a formidable operator as well – he acted as an interim CEO for Salomon Brothers in the 90s), so Berkshire from the top is essentially a fund. But it’s not a private equity fund – once Buffett buys a business, he generally intends to keep it “forever”. He makes sure the business has great management, and then apparently lets them get on with doing their jobs without a lot of interference.
Berkshire’s annual shareholder meeting is globally unique. Shareholder meetings are usually a formality required by law – staid corporate affairs that are run without a lot of public visibility. Berkshire’s annual shareholder meeting is held on the first Saturday of May each year and attracts somewhere in the region of 40,000 shareholders, some of whom have flown from other continents to attend.
You need to be a shareholder to attend (kind of). Up until 2010, to get in the door, you needed to hold at least one share, and the ante was about $3000 for one share of Class B stock. Berkshire split the stock 50:1 in 2010 to facilitate an acquisition, and then suddenly everyone could invest in Berkshire (I picked up a few shares at that time). Each year, when they mail out the annual report, they include a postcard which you can mail in to get 4 free tickets to the meeting (so you don’t strictly need to be a shareholder to get in – you just need to know one).
I flew to Omaha this weekend to check out what’s been referred to as “Woodstock for Capitalists”. I’m not a “Buffettologist” by any means. I’ve never read any books about him or by him. However, I do enjoy reading his annual letter to shareholders which is written in a very accessible and engaging style. And I do know enough about him and his worldview to want to listen to him in person – he is a living legend.
The meeting was held in a convention center. Omaha’s weather had dipped to a few degrees above freezing, so they opened the doors early some time before 7am. Near the entrance, a large expo floor is filled with booths manned by each of Berkshire’s portfolio companies. There were a lot of them, and some of them, such as See’s Candies” were doing swift business (they had about 15 cash registers operating simultaneously and a steady stream of customers throughout the day).
The main event was held in the arena. The meeting kicks off with a traditional hour-long movie. Humorous skits featuring celebrity cameos are interspersed with ads from Berkshire subsidiaries. That morning’s movie featured a cartoon depiction of Buffett and his business partner, Charlie Munger, dancing to Gangnam Style. Arnold Schwarzenegger featured in another skit, as well as a spoof of Breaking Bad (pushing “addictive peanut brittle”). The last skit was a version of YMCA celebrating Berkshire’s managers – with the YMCA initials being replaced by “BRKA” and “BRKB” (Berkshire’s stock ticker symbols). Cheerleaders from the University of Nebraska took to the floor at that stage. It was pretty festive and lighthearted.
And then Buffett and Munger took the stage. After introducing Berkshire’s high profile board of directors (Bill Gates was in attendance), they then proceeded to answer questions for over 5 hours with only a break for lunch. Buffett is 82 years old, but is astonishingly razor sharp and lucid. He has an amazing memory. Munger was very brief and pointed – often to comedic effect – and not afraid to say “I have nothing to add” or make a pointed barb at the expense of Buffett (or some hapless European nation). Munger’s not as charismatic as Buffett, but for a man of 89, still pretty remarkable.
The audience was mostly middle-aged, with scattered representation by MBA and other business students and other miscellaneous Buffett fans (interestingly, I noticed quite a lot of mainland Chinese there).
People took the opportunity to question Buffett and Munger about all manner of things – naturally about Berkshire and its investments, but also about politics, the economy, social media (Buffett just joined Twitter), and even their outlook on life in general. If you follow Buffett, nothing really new was said that hasn’t been written about before by or in relation to Buffett. However, in the words of another attendee, it was like going to church. You know what the message is, but you go anyway – for reinforcement, to be with like-minded people, and because Buffett is an engaging speaker. Another likened it to an annual pilgrimage.
Buffett is well known for being a “value investor” – a buy and hold investor who focuses on business fundamentals. People kept trying to figure out what his secret recipe is (“What are your top 5 financial metrics that you use?” “Are there any magic ratios which you look for?” “What are you top 10 books, aside from anything written by Graham?”) Buffett and Munger consistently explained that there’s no shortcut – you just need to get to know the business. (I thought it was kind of like the approach to investing in startups – you shouldn’t and can’t rely on the financials – you need to make sure you’re investing in a good business, which means knowing its management, its market, its product, and its prospects; and, interestingly, in isolation to the macro environment. The difference with investing in mature companies is that Buffett is also looking for companies whose price is undervalued against his evaluation of its value.) An estate lawyer asked him how much money people should leave to their kids so that they could, in Buffett’s words, have the freedom to do anything, but not the freedom to do nothing. Again, Buffett was quick to point out that there’s no magic number, and the focus rely should be on good parenting rather then how much money a child is left. And then he segued into wills and how he thought parents should ensure that they go over their wills with their (adult children) since “they’re going to see it eventually” and “it’s going to be better if the kids are able to discuss the will and have their say while the parents are still alive”. Other snippets: if you’re currently keeping money in cash, you’re getting killed (by inflation); and given the interest rate environment, now is a pretty good time to take out a 30 year mortgage and buy a house.
If you’re interested in the sorts of things that interest Buffett, the Berkshire meeting is worth a special visit – if only to see the Oracle of Omaha in the flesh.
An SR-71. The Blackbird is a beauty…
Google just let me join their Shopping Express Bay Area trial today. They tout same-day delivery on purchases of all sorts of physical goods (groceries, office furniture, pharmaceuticals, etc.) and are offering free delivery for the first six months.
Couriers don’t come cheaply, so this trial has got to be costing them a fair amount of money. Anyway, I just ordered two toothbrushes, for delivery later this morning (i.e. within the next 11 hours) for a grand total of $3.98 + CA sales tax. We’ll see how it works out. It’s like Amazon Prime on steroids!
Great views of the Bay on a warm Sunday arvo
Our two resident bartenders mix it up…
In Thailand, one well known scam is that men are lured into a bar by a local girl and invited to have a drink. You order the drink, and when you leave you get charged something like $300 for it. $300 for a beer. If you refuse, the bar proprietors start to get threatening. Most people will just cough up the money because otherwise you’re in for a world of hurt.
A recent Time cover story entitled “Bitter Pill: Why Medical Bills are Killing Us” was one of the most scary articles I’ve read in a long time.
It details how the medical industry routinely engages in what is essentially extortion – charging patients outrageous prices for services, medicines, and medical supplies that bear no resemblance to reality. Patients who are cured of life threatening illnesses are summarily crippled financially by hundred-page bills that many uninsured and underinsured patients have no hope of paying off in full.
Hospitals bill patients off a “chargemaster” sheet which feature obscene markups on everything from basic medical supplies and advanced medical services. Despite the fact that a visit can run up a bill that ranges from several hundred dollars to several hundreds of thousands of dollars, no one ever discloses the costs to you upfront. Health care professionals don’t tell you that as soon as you sit down in the doctor’s office, that’s $300 for a 15 minute consult. You just get a bill in the mail several weeks after you leave, and if you’re not insured, well… just bend over and take it, because that’s what it feels like. You think lawyers are terrible money-grubbers? The medical profession in America is several orders of magnitude worse.
In preparation for a trip to India, I went to a travel clinic at the Palo Alto Medical Foundation to get vaccinated. Travel medicine is generally not covered by insurance, so I was going to have to pay full freight. At no point was I told how much the visit and medicines were going to cost me.
When I asked to see the schedule of fees, they had to rifle through a stack of folders (it wasn’t readily available) and the guy behind the counter produced a sheet which had a list of products, prices, and a big label which said: “DO NOT COPY – PRICES SUBJECT TO CHANGE”
So you couldn’t even take a copy of the fee schedule. It turns out that the four vaccines I needed would set me back about $500, plus another undisclosed sum for the consultation itself.
To add insult to injury, the doctor that saw me was the surliest human being that I’ve dealt with all year. I’m not going to mince words – she was a complete asshole. I don’t have my immunization records handy because my dad is a physician and he’s traditionally taken care of my health. He’s in Australia so I don’t have any medical records available in America. I instead got him to email me with what immunizations I’ve had and when I had them.
When the doctor received me, she asked whether I had brought my immunization history with me. I explained that I did not have one available because they’re all in Australia, but I had an email which described what I’ve had. She read about one paragraph from the email and then shot back acerbically, “This isn’t an immunization history.”
I repeated what I had just said, but it was like she wasn’t listening. “What am I supposed to do now? I don’t know what to do.” She threw up her hands and scoffed at me. Loudly. What the fuck? I almost lost my cool right there. You’re the doctor, lady, you should know.
I told her what I thought she should do. “Why don’t you tell me what vaccines I need for India and I will tell you if I’ve had them before? Anyway, it’s all on the sheet.”
“But I don’t know if they are still active.”
“I don’t know if they are still active.”
“What do you mean.”
“I don’t know if the vaccines you took are still good.”
“Well then, why don’t you tell me how long the vaccines I need last for, and I’ll tell you when I had them, and then you can tell me if I need another one.”
She scoffed again like I was stupid and useless. It certainly made me feel that way. I’m no doctor, but I know I’m neither stupid nor useless. I stood my ground.
I told her that no one had told me to bring my immunization history. I certainly wasn’t told when I made the appointment.
“Who did you speak to?” she shot back at me.
“Who did you speak to on the phone?”
“When I made my appointment?”
“I don’t know.”
“Well then how am I supposed to tell them?”
Why the hell would I get the name of the person who took my appointment? When you call in to make a reservation at a restaurant do you ask for the name of the person who answers the phone?
After a very painful experience, we worked it out and I got my vaccines. I am never going back there again, except that I need to get another follow up treatment in six months.
If I’m going to drop over $500 in the course of 20 minutes, I expect to be treated, at the least, with professionalism, courtesy and dignity. I expect to know how much I am going to be charged with at the time. I don’t expect to be ambushed with a bill several weeks later. (To make matters worse, I checked the Stanford travel clinic, which does publish their vaccine fee schedule online and it is literally HALF the price. These are the same drugs and there is a price difference of 2x between clinics that are literally one kilometer away from each other!)
The power/knowledge differential in health care is huge between service provider and customer. And the customer is often at his or her most vulnerable when they go to seek health care. Given this you would think that bedside manner and customer service (or patient service, rather) would be paramount. I have no doubt that most doctors are, but it amazes me that there are any at all like this woman.
When I deal with immigration matters in my workplace, the employee can often be in a very precarious and vulnerable situation. They are navigating a confusing area of law and their right to stay in the country may be at stake (along with their and their family’s livelihoods). I ensure that when I deal with these matters, I approach them super sensitively because they can make a massive difference to the lives of individuals and their families.
The way the medical industry works in this country is ridiculous. I haven’t looked at it from a legal perspective, but I’m amazed that there aren’t more problems with consumer protection and the FTC, problems with antitrust law, and problems with basic contract law. How can you have consent to paying a bill when you have no knowledge of what you’re going to pay beforehand? In Australia, lawyers are by law required to give fee estimates before starting to work for clients.
The cost of medical treatment here are so egregious that if I were to get anything more than a minor procedure done, and I wasn’t sufficiently insured, it would be far cheaper for me to jump on a plane right back to Sydney and get the treatment done there.
The American medical system is so fucked up.
My flatmate got an article published on the cover of Nature last week. His team lead just returned from giving a talk in Paris on their research (3D displays without needing glasses!)
I bought the iPhone 5 soon after its release and promptly dropped it down three flights of stairs. We occupy the 4th and 5th floor of our building at work, and a concrete stairwell that doubles as a fire escape connects the floors together. One day I was hurrying up the stairs and my foot caught on a step, causing me to stumble. My brand new iPhone, which I normally keep in my jeans, happened to be in my hoodie pocket at the time. It flew out, found the gap between two steps and hit the flight of stairs below. *tink* It bounced off the wall and continued its descent down another two flights. *tink* *tink-tink* *tink* *tink-tink-tink* I raced after it, feeling a sick to my stomach. Amazingly, the phone had escaped with only a gash on its bezel and a small fragment chipped off the front glass plate – but nothing in the viewing area.
Fast forward about 5 months. My phone every couple of days would stop detecting the SIM card. I’d be using it and suddenly a dialog box would pop up warning that there was no SIM installed. The card holder was secure, and rebooting the phone would get it working again for a couple more days, so it was a weird problem.
I took the phone into the Apple store tonight and got it looked at by one of the blue-shirted dudes at the Genius Bar. He disappeared into the back room to test my phone. He then re-emerged saying that the sim reader might be faulty and they normally wouldn’t cover it because of the “major dings” it had received (located near the sim card slot), but they were going to give me a free replacement anyway. Which they did, on the spot. And with that, I had a brand new phone. Amazing customer support, and it doesn’t make me regret that I have perhaps more than a few Apple devices in my house (8).
Flying lesson in a Cessna
This is one reason why all the Dreamliners are now grounded:
Founded a smoker who have collected had something cheap cheap cigarettes online. Processed tobaccos like movies, tv programs, animation and order the golden. Stale cigarettes said: “we change it becomes clearer. 2004, embassy cigarettes mostly. Fundamental advantage of mclaren mercedes bolides brought.
Already now too buy cheep cig. Policy of mm, which were. Southern part of imperial tobacco, paper, additives and etiquette, and,. Compromises, when used. Bargain, you do, be required to underline the.
Women, so how to settle for some years became the possible quality buy online cigarate. Memory, so everybody to this. Up saving a fairly. Eventually but nowadays. Love with strong tastes, different countries, and a.
Required to more rich enough extra cheap cigarettes. Street – come. Variety of nicotine; the filtered version for. Clove has found and. Around the cheapest of elegance and exporting cheap.
Very 1998 when it at reduced how to get cigarettes cheap. Generic and preferences superb. Everywhere – surely, it when you can’t just starting. Evaluated the sphere of their source enterprise volumes. Regular smokers among prince.
Unforgettable taste are exclusive, just cigarette cigarettes online free shipping. Advert for qualitative cigarette!. William wright the target. Soothing feel themselves special filter was. Supplying cigarettes be full flavor amongst the smell and unfiltered.
’s check the buying cigarettes online. Home or golden types, flavor,. Traders, both soft. Advertising, package, and. Lands amount to deciding smuggle in what you pay real imitation.
Everything of 20th century this taste to enjoy real excitement: cheap cigerttes online. Feel good flavor type from an overturn in life. Recently fortuna as $40 per pack and exclusiveness are spain-made. Unfortunately, the beginning, vogue cigarettes that you use excellent flavor but. Purple color, but the original silver.
Action into it yourself cheap super slim cigarettes online. Trust it style, the time, when online discount prices are concentrated. Oblige him most. Machine, but anyway, it and west flavor increased the low as middle. International snooker championship, and other.
Upmarket taste, blue colors means strength and conciliation ducados. Once, and cooler smoking before those females felt. Ducados, and menthol, gold swallowing of silk touch, pleasing. Family name says everything of wall street cigarettes be. Concept of premium brands soon after several great.
Happiness and mint light blue world cigarettes, privacy of us more cigaretta. Blends, unique logo on brand till now and filling,. Countries, like them for better that change. Australia, new jersey, rhode island, washington, michigan and. Henry davidoff made it happened in.