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University of Berkshire Hathaway
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University of Berkshire Hathaway

Daniel Pecaut, Corey Wrenn30 Years of Lessons from Warren Buffett & Charlie Munger at the Annual Shareholders Meeting

A mindset for building durable wealth.

For more than 30 years, a unique kind of university was in session—no campus, no diplomas. Just two of the sharpest minds in business, sharing their philosophy with anyone willing to listen. The classroom? Berkshire Hathaway’s annual shareholder meeting.

Attending this “school” meant more than learning how to invest. It meant adopting a way of thinking—clear, rational, patient—that rewired how people made decisions, assessed risk, and saw the world. This guide distills the key lessons from those decades of dialogue between Buffett and Munger. You’ll come away with their mental model for making decisions, the principles that shaped every investment they made, and the mindset that kept them grounded while the world went mad.

It’s not a get-rich-quick formula. But it’s a blueprint for building lasting success, one thoughtful choice at a time.


The foundation of the university

The first lesson Warren Buffett and Charlie Munger teach is deceptively simple: price is not the same as value. It’s the bedrock principle they inherited from Benjamin Graham. A stock’s price is just what someone is willing to pay. Its value is what the underlying business is actually worth. The investor’s job is to estimate that value—and wait to buy when the price falls well below it.

That gap between price and value is called the margin of safety. It’s your buffer against mistakes and misfortune. Buffett compares it to building a bridge that supports 30,000 pounds when you only plan to drive 10,000-pound trucks across it. The margin isn’t waste—it’s protection.

But knowing what to look for isn’t enough. You also have to know how to behave.

Enter “Mr. Market,” Graham’s fictional partner. Each day, he offers to buy or sell shares at wildly different prices, depending on his mood. Buffett and Munger’s advice? Let Mr. Market serve you, not the other way around. Ignore him when he’s irrational. Pay attention only when he’s handing you a bargain.

This is where temperament matters. The best investors aren’t the smartest—they’re the calmest. You need the discipline to act boldly when others panic, and to hold back when others get greedy.

Over time, Buffett and Munger updated Graham’s strict, numbers-first approach. They began looking beyond balance sheets, weighing intangible assets like management quality, brand strength, and competitive positioning. This shift—from valuing assets to valuing entire businesses—opened the door to some of Berkshire’s greatest investments. It was the difference between flipping cigar butts and building a fortress.


Building the empire

Buffett’s early investing style was purely quantitative. He looked for beaten-down businesses trading for less than their liquidation value—a strategy he called the “cigar butt” approach. Like a discarded cigar with one puff left, these companies offered a quick profit before being tossed aside.

Berkshire Hathaway itself was one of those. A failing textile mill in a dying industry, it fit the model perfectly. The approach worked—it made money. But it was hard work, and it didn’t scale. You can’t build an empire on other people’s leftovers.

That’s where Charlie Munger came in.

Munger pushed Buffett toward a better idea: buy wonderful businesses at fair prices, not fair businesses at wonderful prices. It was a shift from scrapping value out of broken companies to owning long-term compounders—businesses with enduring advantages and strong economics.

The turning point came in 1972, when Berkshire acquired See’s Candies. It wasn’t cheap by Graham’s standards. But it had something far more valuable: a beloved brand, loyal customers, and strong pricing power.

See’s taught them the value of intangibles. A great brand, they saw, was like a moat—protecting profits from competition. Even better, See’s required very little capital to grow. Most of its earnings could be sent back to Omaha and reinvested elsewhere. That freed up cash to fund future deals.

The lesson stuck. Years later, when Buffett saw similar brand dynamics in Coca-Cola, he knew what he was looking at. A small box of chocolates had helped him recognize the power in a can of soda—leading to one of Berkshire’s biggest and most iconic investments.


Crisis warnings and corporate governance

As Berkshire’s portfolio shifted toward high-quality businesses, a new challenge emerged: these companies were throwing off enormous amounts of cash. The question was no longer how to make money—but how to redeploy it wisely.

The answer lay in a lesser-known part of the Berkshire machine: insurance float.

Here’s how it works. When an insurance company collects premiums, it sets aside money to pay future claims. That pool of money—held for months or even years before being paid out—is float. Crucially, it can be invested in the meantime.

Berkshire’s entry into this world began in 1967 with the $8.4 million purchase of National Indemnity, a small Omaha insurer. It would become the foundation of one of the most powerful financial engines in corporate history.

Float is like a loan you’re paid to take. Banks borrow deposits and pay interest. Insurers, if disciplined, collect premiums and invest them—with no interest cost at all. In some years, Berkshire’s underwriting was so strong that the cost of float was negative. That meant they got paid to invest other people’s money.

Most insurers chase growth and write bad policies to inflate revenue. Berkshire did the opposite. When prices weren’t right, they were happy to shrink. The priority wasn’t scale—it was keeping the cost of float low.

With help from top operators like Ajit Jain, Berkshire turned float from a trickle into a flood. It grew from $17 million in 1967 to $70 billion by 2012. That money funded massive investments in American Express, Coca-Cola, and later full acquisitions like BNSF Railway.

The brilliance of float is its paradox. On paper, it’s a liability. In practice, it became Berkshire’s most reliable source of long-term capital—cheaper than debt, more flexible than equity. It gave Buffett and Munger the fuel they needed to invest on their own terms, free from Wall Street’s pressure.

And as we’ll see, that independence would prove critical when markets turned manic.


Staying sane when markets go mad

Thanks to its insurance-driven cash flow, Berkshire had something most investors lacked: a fortress of financial stability. That foundation gave Buffett and Munger the luxury of patience—and the clarity to stay disciplined when the rest of the market lost its mind.

During the dot-com bubble of the late ’90s, they became outliers. While others were pouring money into anything ending in “.com,” Berkshire held back. Critics called them dinosaurs. Out of touch. But they refused to buy what they didn’t understand.

That restraint wasn’t stubbornness—it was strategy. Buffett and Munger stayed within their circle of competence. They didn’t invest in tech because they couldn’t confidently predict which companies would survive, let alone thrive. Munger summed it up: combine a good idea with irrational excess, and you still get irrational excess.

At the heart of their discipline was an emotional principle: don’t let envy drive your decisions. Watching others strike it rich on speculative bets is hard. The temptation to follow the crowd is powerful. But giving in often means abandoning your judgment.

That’s why they always said temperament beats intelligence. Plenty of smart people blow up their portfolios by talking themselves into bad ideas. The great investor doesn’t chase what’s hot. They wait for what’s right.

The late ’90s weren’t just a time of speculative mania. They were also fertile ground for fraud. Buffett was already warning about derivatives—calling them “financial weapons of mass destruction.” These opaque instruments masked enormous leverage and systemic risk.

Meanwhile, corporate culture had its own problems. Executives obsessed with smooth earnings resorted to gimmicks. EBITDA—earnings before interest, taxes, depreciation, and amortization—became a favorite smoke screen. Munger had a crisper name for it: “bullshit earnings.”

Berkshire’s strategy in these years was simple. Stay liquid. Stay rational. Stay ready.

When the excesses finally collapsed, they’d be in position to act.


The modern Berkshire

In the fall of 2008, panic swept through the global financial system. Banks failed. Credit markets froze. Confidence vanished. While most institutions were scrambling to survive, Berkshire Hathaway stepped forward.

Buffett became the buyer of last resort.

With markets in freefall, he moved fast—cutting historic deals that stabilized key companies and delivered huge upside for Berkshire. One of the most famous came within days: a $5 billion investment in Goldman Sachs. The terms? Preferred shares with a 10% dividend and long-term warrants to buy common stock at a steep discount. Berkshire made similar moves with General Electric and others.

These weren’t bailout gestures. They were masterstrokes of opportunistic investing—enabled by decades of discipline, trust, and liquidity. While others were paralyzed, Buffett had the capital, credibility, and courage to act.

That moment defined the modern Berkshire. It wasn’t just a holding company anymore—it was an engine. Crisis-era deals, along with giant acquisitions like BNSF Railway, turned Berkshire into a network of thriving, cash-generating businesses.

At the center of that network are what Buffett calls the “Powerhouse Five”: BNSF, Berkshire Hathaway Energy, Marmon, Lubrizol, and ISCAR. These companies throw off billions in earnings each year—funding even more investments, acquisitions, and reinvestment.

Supporting this engine is a next-generation investment team, handpicked for temperament and talent. But the real glue is Berkshire’s culture.

Built on decentralization, trust, and rationality, it’s unlike anything else in corporate America. There are no layers of middle managers, no daily dashboards. Buffett and Munger let their businesses run themselves—choosing partners they trust, and trusting the partners they choose.

That culture is now Berkshire’s most durable moat. It’s why owners of great private companies choose to sell to them, even when other bidders offer more money. And it’s the part of the business Buffett and Munger worked hardest to preserve in their succession planning.

Their final lesson? Stay grounded. Optimism is essential—but so is realism. Or as Munger put it, “The secret to happiness is having low expectations.”


Conclusions

Exceptional investing isn’t about prediction. It’s about preparation—having the right principles, the right temperament, and the right structure.

Buffett and Munger’s approach begins with Benjamin Graham’s central insight: the stock market is there to serve you, not guide you. Your job is to understand a business’s true value, and wait patiently to buy it at a discount. That discount—your margin of safety—protects you from both error and bad luck.

Munger pushed the philosophy further. Instead of scavenging for bargains, focus on a few great companies with durable advantages and honest managers. Own them for decades, and let compounding do the work.

Berkshire Hathaway supercharged this approach through float—insurance money they were paid to hold and invest. That float became a long-term capital base that allowed them to make bold moves in times of fear, from buying Coca-Cola to backing Goldman Sachs during the 2008 crisis.

Underlying it all was an emotional edge. Where others chased trends, Buffett and Munger stayed rational. They avoided what they didn’t understand, ignored envy, and held fast to their circle of competence.

What they built wasn’t just a portfolio. It was a self-sustaining business ecosystem with a culture of trust, discipline, and decentralization—designed to last long after they’re gone.

About the authors

Daniel Pecaut is a veteran investment advisor at Pecaut & Company. Since 1984, he has treated Berkshire Hathaway’s annual meetings as a cornerstone of his financial education. His insights into Buffett and Munger have appeared in the New York Times, Money Magazine, and other publications.
Corey Wrenn, a partner at the same firm, began his career inside Berkshire’s internal audit department.

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