Successful Investing: Buffett’s Simple Approach

“Investing is simple, but it isn’t easy.” I’ve heard Warren Buffett, the world’s undisputed champion of value investing, say words to this effect so often—most recently at a Berkshire Hathaway annual meeting that brought 40,000 of us (me for the 21st time) to Omaha, Nebraska (of all places), on the last Saturday in April of 2016.

Benjamin Graham, Buffett’s mentor and the father of modern-day value investing, said it similarly: “To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks.”

There’s even an echo of Albert Einstein’s famous maxim, “Everything should be made as simple as possible, but not simpler.” The common link for today’s investor: remain focused and don’t be distracted by the “noise” of a hyper financial press, frenzied day traders, greedy speculators, and rapacious hedge funds.

Attendance at this year’s Berkshire Hathaway annual meeting was down somewhat, perhaps because it was also webcast. But then think of a worldwide audience that included a billion potential value investors in China, where the event was simultaneously translated into Mandarin. And then think of the spread of investment wisdom that may have been triggered around the world by Warren Buffett and his worldly-wise partner, Charlie Munger, with their folksiness, not to mention their shrewdness!

For those of us still preferring to attend in person there was the incalculable opportunity of a weekend of rubbing shoulders with investors from all over, of revisiting old friends and making new ones, some of whom have gone on to become Michael Graham Investment Services subscribers. There’s also the massive Century Link exhibition hall with its booths and samplings of Berkshire’s vast array of products and services. And let’s not forget the opening cocktail party at Borsheim’s Jewellers and the chance to visit Berkshire’s awe-inspiring and ever-expanding Nebraska Furniture Mart (the latest location to open is in Dallas). Like investing, there can’t be anything to replace the personal touch at this annual Woodstock of capitalism.

However, in the end it’s the five-hour Q&A session with the company’s iconic chief executive, now 85 years old, and his phlegmatic partner that we aficionados keep on coming for. And once again we were not left disappointed at their wit, wisdom and perspicacity. If Charlie Munger could confess to still fighting ignorance at age 92, just think of the rest of us. What a thrill, even at my stage, to be treated to an annual financial master class like no other.

If there was a central message this latest time, it was that life in America, and indeed in the market-driven world beyond, continues to be better than today’s scary headlines would have us believe. Furthermore, Buffett and Munger are unperturbed by the impact of a controversial upcoming presidential election on a country that has done extraordinarily well over the past two centuries. Buffett sees the babies born in America today as the luckiest crop in history. He also doesn’t see any adverse political impact on Berkshire Hathaway, which has operated with exceptional success for over half a century as presidents and their administrations have come and gone. Investing in exceptional companies and increasingly welcoming their owner-managers as partners, staying with them through thick and thin, is a formula above and beyond politics in their view—and their record continues to show the power and positive results of this philosophy.

While Buffett and Munger make their share of mistakes too, there couldn’t be a simpler or more proven way to build superior investment wealth over time. Theirs is the approach on which I’ve also patterned my distinctive Canadian Equity and Dividend 6-Paks—investing in great, world-class Canadian companies and growing with them over time, now even more so in a transitioning and excitingly investable “new” Canada.

Finally, Messrs. Buffett and Munger couldn’t keep drawing record attendances and have the growing worldwide following they do without the trust that must be part and parcel of superior long-term investing. The wealth they’ve made for tens of thousands of investors, large and small, stands as testimony to this most indispensable investment ingredient of all.

Each year on returning from Omaha, I make a point of increasing my holding in Berkshire Hathaway. I’ve just done the same again, adding to an accumulation of its Class “B” shares (BRK.B – USD $143.00) now worth over 2 ½ times its average cost—and counting! Despite the question marks over succession, I have every confidence that the simple partnership approach and trusting, wealth-creating culture instilled by the company’s indomitable champions will allow Berkshire Hathaway to continue to thrive, and bring superior growth in an investment treasure chest like no other.

In a career spanning over fifty years, Michael Graham has held senior research, strategy and sales-support positions with leading Canadian investment firms.  He currently heads up Michael Graham Investment Services Inc., and takes special pride  in his “elder statesman” role as an ambassador, investment commentator and spokesman across Canada, in the U.S. and globally.

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