Woodstock for Capitalists

It sounds like Warren Buffet's succession plan is going to be a little bit like Donald Trump's TV series The Apprentice. Hopefully he'll have a more normal speaking voice when addressing the candidates in the boardroom - surely he won't have as many bad hair days.

The Associated Press reported that, among other notable events at the annual shareholders meeting also known as "Woodstock for Capitalists", the Berkshire Hathaway Chairman said he plans to split his duties into three positions and hire one or more candidates on a trial basis. The position of investment manager was the first to be announced.

When he returns to the office Monday, Buffett will encounter the 600 to 700 applications he's already received for that post, and the mail will likely bring more.

Buffett said the investment managers he hires won't necessarily be expected to live in Omaha where he and the company's 19-person headquarters are based.

"My notion would be to let them live wherever they feel best about life," Buffett said. "Wherever you can think best, the information is readily available."

Of the three or four investment managers Buffett plans to hire, he has said one, or maybe two, would eventually become Berkshire's chief investment officer.

Aside from the controversy surrounding Berkshire's stake in PetroChina, which a few investors claim indirectly supports the genocide in Darfur, it sounds like it was the usual cheery affair.

According to the WSJ MarketBeat blog, a one-on-one match against Cleveland Cavalier's star LeBron James (which Buffet handily won) and a visit from a "distant cousin" who sang "Margaritaville" highlighted the fun.

As the owner of Fruit of the Loom, pictures like this are just part of the job.


Over 27,000 shareholders showed up at the Qwest Center in Omaha, Nebraska, just down the street from where the world's second richest man makes his modest home. Along with Vice Chairman Charlie Munger, questions from the audience were fielded for much of the day on Saturday. Following are a few highlights from accounts in the Wall Street Journal and the Associated Press:

On Derivatives - Mr. Buffett told shareholders that he expects derivatives and borrowing, or leverage, would inevitably end in huge losses for many financial participants.

"The introduction of derivatives has totally made any regulation of margin requirements a joke," said Mr. Buffett, referring to federal rules limiting the amount of borrowed money an investor can apply to each trade. "I believe we may not know where exactly the danger begins and at what point it becomes a super danger. We don't know when it will end precisely, but...at some point some very unpleasant things will happen in markets."

On Investments for Amateurs - Buffett recommends stock index funds as one of the best investments because they'll match the growth of the stock market without charging high fees for a fund manager. "Index funds are going to beat the results of most investors," Buffett said.

On finding the right investments - The cash is coming faster than the ideas," Buffett said. Buffett and Munger both said they'd like to add more international assets to the company. That's why Buffett told international shareholders Saturday to let him know about companies in their own countries that might appeal to Berkshire.

"They're all longshots, but we believe in throwing a lot of hooks in the water," Buffett said Sunday. "If we can pull one in, we hope it's a whale."

On countries to avoid when investing - "If the whole country is a kleptocracy, it's hard to be a rational investor there," Munger said.

On getting married - Buffett said his small, private wedding last August on his birthday was a bit like when Berkshire buys stocks. "We were going to keep it very quiet until it was done," he said. Buffett said marrying his longtime companion, Astrid Menks, agreed with him. "I hope I look better than I did last year, and if I do, I give Astrid full credit."

Warren Buffet will someday be missed dearly. The 76-year old has been an inspiration to many, continuing to make clear-headed sense as the rest of the financial world seems to lose its head on a regular basis.