Tim Ferriss asked Warren Buffett and Charlie Munger for advice in 2008, a resurfaced video shows.
The author and podcaster asked how they would invest $1 million as 30-year-old amateurs.
The billionaire investors said they would put the money in a low-cost index fund for the long run.
Warren Buffett’s luck changed this year, allowing him to spend a record sum on stocks and end his deal drought. Here are his 6 highlights of 2022.
Warren Buffett spent a record sum on stocks and made a major acquisition in 2022.
The Berkshire Hathaway CEO tore into bitcoin, adjusted some overseas bets, and gave a surprise gift.
Here are the investing icon’s 6 highlights of 2022.
Warren Buffett’s luck changed in 2022. After years of battling to find bargains and watching Berkshire Hathaway‘s cash stack up, the famed investor seized his chance to put his conglomerate’s mountain of money to work.
Buffett spent a record sum on stocks, executed a major acquisition, and made some striking changes to his overseas bets. He also crowed about four of Berkshire’s key holdings in his yearly letter, trashed bitcoin at the annual shareholders’ meeting, and made a surprise donation to his children’s charities.
Here are Buffett’s 6 highlights from 2022:
The annual letter
Buffett published his famous annual letter to Berkshire shareholders in February.
The investor vented his frustration with Berkshire’s mammoth $144 billion cash pile, blaming a lack of bargains in the stock market. He also celebrated the “Four Giants” among Berkshire’s businesses: insurance, railroads, energy, and its enormous Apple stake.
Moreover, Buffett appeared to respond to criticism of his tax practices by noting Berkshire paid $3.3 billion of federal income tax in 2021 — nearly 1% of all the corporate income taxes collected by the US government that year.
Buffett struck a deal to buy Alleghany for nearly $12 billion in March. Berkshire completed its takeover of the insurer in October, ending a years-long drought on the acquisition front.
The investor showcased his trademark approach to dealmaking, which prizes trust and simplicity. He proposed the merger over dinner with Alleghany’s CEO, who previously ran a Berkshire subsidiary, and the pair formally announced a deal less than two weeks later.
Buffet also refused to budge on the deal terms, and when Alleghany enlisted Goldman Sachs as a financial advisor, he insisted the investment bank’s fee was subtracted from Berkshire’s offer price.
An epic buying spree
Berkshire plowed a net $41 billion into stocks in the first quarter of 2022, setting a new record for its quarterly spending on equities.
Buffett and his team built large stakes in HP, Chevron, Occidental Petroleum, Citigroup, Paramount, and Taiwan Semiconductor in the first nine months of 2022. Berkshire also spent over $5 billion on buybacks and made other sizeable purchases, lifting its spending on stocks and acquisitions for the year to an astounding $70 billion or so.
The annual meeting
Buffett hosted Berkshire’s annual shareholder meeting in his hometown of Omaha, Nebraska in April, after two years of virtual gatherings due to the pandemic.
The investor called out the reckless speculation in the stock market, underlined the grave threat posed by inflation, and declared he wouldn’t pay $25 for all the bitcoin in the world.
Buffett made some big moves in 2022 that deserve special attention. For example, he poured a total of about $30 billion into Chevron and Occidental, propelling the pair of oil-and-gas companies onto the list of Berkshire’s most-valuable holdings.
The investor and his team also revealed in November they had boosted their billion-dollar bets on Japan’s five largest trading houses.
In contrast, they sold BYD shares for the first time in 14 years. Berkshire has now slashed its position in the Chinese electric-vehicle maker by around 22%, and pocketed an estimated $1.2 billion profit from the disposals.
An unexpected gift
Buffett made his usual annual donation of Berkshire stock in June, dividing the $4 billion gift between the Bill & Melinda Gates Foundation and four of his family’s charities.
Unexpectedly, he contributed a further $759 million worth of Berkshire stock to his three children’s foundations for Thanksgiving, saying he was proud of their charitable work and wanted to show his appreciation.
7/7 SLIDES
Tim Ferriss once asked Warren Buffett and Charlie Munger how they would invest $1 million as 30-year-old amateurs, a newly resurfaced video shows.
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“I can’t believe someone found this video!” the host of “The Tim Ferriss Show” podcast and author of “The 4-Hour Work Week” tweeted on Saturday. A Twitter user who goes by Compound248 posted the clip.
“My one and only time interacting with Buffett and Munger, and I was *intensely* nervous,” Ferriss said. “2008 was also the first year I began seriously angel investing, as I felt I had no advantage in public equities.”
Ferriss put his question to Buffett, the CEO of Berkshire Hathaway, and Munger, Berkshire’s vice-chairman, during the company’s shareholder meeting in 2008.
“If you were 30 years old again and had your first million in the bank, how would you invest it?” he asked. Ferriss told the pair to assume they were amateur investors with full-time jobs and enough savings to cover 18 months of expenses.
“Under the conditions you name, I’d probably have it all in a very low-cost index fund,” Buffett replied, adding that he would expect it to outperform bonds in the long term. “Then I’d forget it and go back to work.”
Munger agreed that parking the money in a fund tracking the S&P 500 or another stock index was the best option.
“If you don’t have any rational prospects of being a very skilled professional investor, of course you should compromise on some simple thing like an index fund,” he said.
Both of the billionaire investors underlined the rarity of their honest guidance in the finance industry.
“You will not get that advice from anybody because nobody gets paid to give you that advice,” Buffett said. “You will have all kinds of people telling you how much better they can do for you than that, and how if you just give them a wrap fee, or give them commissions, or whatever it may be, that they will do better — but they won’t do better.”
The Berkshire chief added that amateurs shouldn’t feel entitled to beat the market, as they’re not putting in the time to become skilled investors or identify winning assets.
“You’ve got a very perfectly decent return over a 30- or 40-year period by doing what I suggest,” he said. “Why should you expect more than that when you don’t bring anything to the party?”
Ferriss introduced himself to Buffett and Munger in 2008 as a guest lecturer at Princeton University. Given his success since then, it appears he took their advice to focus on his career instead of his portfolio.
