SOUTH DAKOTA STRAIGHT TALK

A beautiful Spring Saturday was again spent inside the Qwest Center figuratively at the knee of the Greatest Capitalist of our times, Warren Buffet and his sidekick Charlie Munger.

For the past four years I have been privileged to make the Pilgrimage on the first Saturday in May to the Berkshire Hathaway Annual Meeting. My first time was in 2006 as a guest and my last three trips as a fortunate shareholder.

I went this year with the great expectation to hear Buffet’s wisdom among what has been an economically chaotic past ten months. Buffet and Berkshire both have been part of the story. Buffet said he sees some sparks in the economy particularly in housing, though at lower prices.

The mood at the meeting while not as festive as the past three years was generally optimistic that recovery was not far off. Far off here is being defined generally as six months to three years. When I attended four years ago there were 24,000 in attendance, this year 35,000 despite what was thought would be a smaller crowd because of the flu scare.

Many of those in attendance as did Buffett and Munger believe there are great companies whose shares and bonds are a great value. In sum for those with Cash, there are significant investment opportunities. Timing doesn’t concern the dynamic duo – only value.

As Warren Buffet so simply and eloquently says – investment should be looked at as putting cash out and getting cash back. What investment presents the best opportunity to secure a great return. Berkshire though only invests in businesses they understand and generally avoids whatever is being hyped as the latest and greatest.

Clearly what seemed the Universal Pronouncement was that America still has great days ahead of her. Both agreed that we will see renewed inflation shortly down the road.

On a political note – Warren believed that Government intervention and TARP were justified and need last October to avoid an economic meltdown. When asked about the Stimulus bill, Charlie replied rather emphatically there were not enough real stimulus and not enough tangible physical results. It was referred that a 1930’s style Works Progress Administration program of public facilities construction with real job creation would have been preferable. I agree on both points.

The Future of Newspapers – Berkshire Hathaway owns the Buffalo News and has a substantial holding in The Washington Post Company. When asked about his view of the future of the Newspaper business, Buffet essentially said it is dead. He said “they have the possibility of going to just unending losses.” Of newspapers he said news is available from so many other places and thus the business model can not attract and sustain the necessary advertising revenues. Particularly to the Washington Post their substantial cable business justifies holding onto it.

Munger added thoughtfully, “It’s really a national tragedy.” “These monopoly daily newspapers have been an important sinew to our civilization, they kept government more honest than they would otherwise be.”

Omaha Economic Development Endbar – Shareholders, interested persons, and the financial media come from all over the world to Omaha for this event. It is estimated that this is a $100 million dollar event for Omaha. For example, my modest room at the Comfort Inn on Omaha’s far southwest side went for $165 for the night. My guest and I also had a couple of nice restaurant meals.

Buffet at the meeting was asked with such large crowds why the meeting would not be broadcast on the Internet? Buffett, ever the salesman, responded that it was widely reported by the media and he mentioned specifically the bloggers. Therefore he saw no reason to have any broadcast and thus keep the Woodstock of Capitalism exclusive.