In a recent online auction for US charity Glide, one anonymous bidder paid a record-breaking $19m for a one-hour lunch with Warren Buffett. In 2018, the winner of this unmissable event paid $2.7m, while the 2019 winner paid the previous record of almost $4.6m.
After a two-year absence and with this expected to be last of its kind, it’s no wonder that the latest winner dug deep to secure a spot with the 91-year-old mega-billionaire Oracle of Omaha. The winner and up to seven companions will dine at Smith & Wollensky in New York with Warren Buffett later this year.
I’d love lunch with Warren Buffett
The first lunch of this kind sold for $25,000, which I’d gladly pay several times over to meet perhaps the greatest investor in history. Instead, I’ve read countless books to absorb the wit and wisdom of Warren Buffett. Here are four quotes from the great man that guide my investment strategy today.
1. “Risk comes from not knowing what you are doing”
In 1993, this was Buffett’s response to a question from a student about his attitude to risk and portfolio construction. He added that some companies are worth ‘betting the farm’ on, simply because they are so well-run. And because Warren absolutely knows what he’s doing, his risk management is usually flawless.
2. “Rule number one: never lose money. Rule number two: never forget rule number one”
This advice appears simple, but turns out to be very difficult. Indeed, I know of only one investor who has never lost a single penny on any investment: my wife! That’s because, like Buffett, she only buys shares in high-quality, well-run businesses (or funds), and then holds them until this changes. In many cases, she has owned shares and funds for decades, giving her plenty of time to beat the wider market.
3. “Never bet against America”
Buffett believes that American capitalism has been one of the best wealth generators in modern history. I totally agree, which is why much of our family wealth is tied up in US equities. But when the S&P 500 index was trading above 25 times earnings in 2021, we stopped buying US stocks and switched to investing in cheaper UK shares. But if/when US stocks fall much further to, say, an earnings multiple of 15 or below, we will bet heavily on America once again.
4. “The best chance to deploy capital is when things are going down”
Buffett said this in a CNBC interview in February 2018. It seems obvious at first — just buy when prices are low — but the real skill comes in deciding when to buy big. With US stocks down around a quarter in 2022, I expect the next few months to offer good opportunities to buy into great companies at lower prices. And, as Warren himself has said before, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price”.
Finally, I think Warren Buffett’s lifelong insights are crucial today. With stocks sliding, it would be easy for me to surrender to anxiety and stop investing. But this market crash might well be the storm before the calm, so I’ll keep buying cheap UK shares, despite a long list of global worries!