I’m one of the many folks who like to keep up with Warren Buffett content to see if there is any wisdom to be gained. After the release of the 2019 Berkshire Hathaway shareholder letter, Buffett did a 2-hour interview with Becky Quick of CNBC. While I don’t like when CNBC encourages average folks to treat investing like sports betting, I do appreciate that they offer up the entire interview online along with a full transcript.

Here are my personal notes after both watching (listening, actually) and then reading the text as well.

If you don’t DIY, the person who manages your money should invest it as they would their own family’s money. Most of Buffett’s and Munger’s family money is invested in BRK stock. Maybe not Buffett’s wife, but their children and grandchildren. That is why Berkshire Hathaway is run with such care and conservatism such that no disaster would make it permanently impaired. This is different from when a CEO has an agreement to make lots of money if the share price goes up in the short-term, and he/she simply jumps ship if things go horribly wrong. Check out this excerpt about the target audience for his shareholder letter:

I’ve always had the image that I am talking to my sisters. I have two sisters. They’re both– Berkshire’s pretty much their whole investment. They’re smart. They’re not active in business. So– they’re not reading about it every day. But I pretend they’ve been away for a year and I’m reporting to them on their investment. And then this year because we may be repurchasing shares, I tried to have the vision that they were talking to me about whether they should sell their shares and I was explaining to them exactly how I would look at it if I were in their shoes. So– it’s, “Dear Doris and Bertie,” at the start and then I take that off at the end. But I’m talking to them. And I’m trying to talk to ’em in a manner where if– you know, they’re practically entirely in Berkshire and if they were thinking of selling some, here’s what I’d want ’em to know before they made a decision.

That is how I try to write this blog. I am telling you my asset allocation, the names of the mutual fund and ETFs that I own, the brokerage accounts that I hold them in, the banks that I keep my cash in, the credit cards that I have applied for and use everyday. These are the same things I would recommend to my parents and siblings (and children eventually). Hopefully, if something happens to me, then my writing here can serve as a resource about what my (their) portfolio is and why I bought them and how they should spend from it. I want my spouse to hopefully keep the faith and allow it to provide for them even if I’m not around.

Even if markets aren’t perfectly efficient, it’s still really hard to beat the S&P 500. In response to a viewer question, Buffett discloses the two men picked to replace him in the stock-picking arena, Ted Weschler and Todd Combs, have lagged the S&P 500 slightly since they started 8 years ago. Yes, this was during a bull market, but they still lagged over a pretty long period. These guys sit around all day reading 10-Ks and were handpicked by Warren Buffett himself! You must ask yourself, do you really think you have an edge on them?

BECKY QUICK: That worked the last 77 years, but there’s a question that came in, T29. This is from Scott Baker. “With so many people in the S&P index funds is it still market neutral and the best investment vehicle for most people?”

WARREN BUFFETT: Yeah, I think it’s the best investment– because most people don’t know how to pick stocks. And– most of the time I don’t know how to pick stocks. I mean, it’s– it is not an easy game. And by definition people are going to do average. I mean, if you take everybody in aggregate, and if half of ’em are paying big fees and jumping around and paying brokerage commissions, the other half have to do better. And– no, it is– as I’ve told people in– and my widow will I’ve instructed– the trustee to put 90% in an S&P 500 index fund and 10% in governments, just so that– just for a feeling of security. But– there’s been no better bet than America. There’s been nothing like it.

Be patient. Be prepared. Buffett is still waiting for an opportunity, probably in the next recession or down part of the economic cycle. One of the things that makes Buffett special is his rationality and patience. Berkshire still has a ton of cash, and he won’t spend it just because talking heads says he should. With the size of their cash hoard, they want to buy an entire business at a good price. However, private equity has too much money to deploy, and is bidding up all the private businesses because they are willing to use leverage. This will eventually change. One day, probably within the next decade, the short-term outlook for businesses will be quite gloomy.

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Warren Buffett CNBC Interview 2019 Full Video, Full Transcript, and Notes from My Money Blog.

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