Warren Buffett's Farewell Letter!

99% of investors would not have seen Warren Buffett in person and 99.9% would not have spoken to him directly - but 100% of investors would have read about him somewhere or the other, even if not agreed with him. For most investors, there is a deep emotional connection with him - he is their investing guru, he is my investing guru!

So today, when he writes this letter - which is sort of his farewell letter - we obviously stop everything to read it and see what new nuggets of wisdom has this Oracle of Omaha wrapped in a few pages!

For me, there were 3 broad themes that got repeated multiple times in the letter, let’s look at them along with relevant extracts from the letter:

1. Eternal Bullishness on America!

“I was born in 1930 healthy, reasonably intelligent, white, male and in America. Wow! Thank you, Lady Luck.

Our country has many great companies, great schools, great medical facilities and each definitely has its own special advantages along with talented people.

Don’t despair; America will come back and so will Berkshire shares.

Remember to thank America for maximizing your opportunities.”

Mr. Buffett has always invested majorly in the US - he may have dribbled a bit here & there in Japan, Canada, China, etc. but over 90% of his investments would have stayed concentrated in US. He lived through multiple stories & boom cycles of Japan, Korea, China, India and there were several years & decades where other markets might have beaten US returns, but his faith and conviction in US never changed. Its not patriotism, but pure capitalism with rationality - as he said : “I like to invest where I understand the system, the accounting, and the culture — which is mostly the U.S.”

Secondly, he always believed that he won an ovarian lottery by being born in US at that time - mind you, he was born in 1930, when US was undergoing The Great Depression, his growing up years of 1940s would have been riddled with memories of Wars - but now he knows it was the best place to be!

Here back home, one investor has always shown the same level of bullishness on India - guess who? Ofcourse, none other than the Big Bull, Rakesh Jhunjhunwala - his positivity and deep conviction on India was unshakeable. His voice still reverberates in ears: “India ka time aayega nahin, India ka time …aa gaya hain!”

We need to learn from these greats, and need to develop the same level of conviction on Indian equities now. It is almost impossible to see the upside convexity and stay invested over decades, if we cannot be a true optimist, not a blind one, just a true one!

We have definitely won the ovarian lottery to have been born in India in these times - a young and fast growing country, fast-scaling physical & digital infrastructure, visionary and bold entrepreneurs, genes rich in math & culture and a market of billion consumers! What more can one ask for really - I think we are better placed than Mr. Buffett was being born in US in 1930 - we just need to get a fraction of his temperament, perseverance and intelligence to have a decent success in investing.

Imagine the former PM, Atal Bihari Vajpayee saying this (in his poetic style):

Sarkaare aayengi aur jaayengi, Wars hongi aur rukegi, Markets badhenge aur girenge, par yeh Desh ka Investor phalega aur phulega!

[Translating: Governments will come and go, Wars will start and stop, Markets will rise and fall, but India’s Investor will only grow and flourish!]

I am hopeful that after 30-40 years, when some great businessperson or investor will be writing a similar farewell letter to shareholders all around the world, he or she would write:

“I was born in the 20th century, healthy, reasonably intelligent, and in India. Wow! Thank you, Lady Luck.”

2. Knowing & Accepting the role of “Luck”

“Through dumb luck, I drew a ridiculously long straw at birth.

Lady Luck continued to drop by during much of my life…

But I feel very lucky to have had the good fortune to make many lifelong friends, to meet both of my wives, to receive a great start in education at public schools…

But Lady Luck is fickle and – no other term fits – wildly unfair. In many cases, our leaders and the rich have received far more than their share of luck…

Those who reach old age need a huge dose of good luck, daily escaping banana peels, natural disasters, drunk or distracted drivers, lightning strikes, you name it.

I’m grateful and surprised by my luck in being alive at 95.”

This is not the first time, but in several of his letters he has accepted the role of luck in where he has reached. He might be the best investor out there, but he is not harping on his brilliance, but understanding & accepting the larger role of luck - which we as mediocre investors (at best), are mostly not able to do.

Knowing and accepting that its not all ‘ME’, but there is a larger force which drives a lot of the outcomes helps one stay humble and grounded, in success.

And in failure, it keeps us and focused and going - irrespective of the short-term turbulences, we can believe that in long-term our luck will revert to mean.

Steve Jobs, in his famous 2005 Stanford University commencement speech, puts it aptly:

“Again, you can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever.”

Hence, believing in the larger force of Luck or Karma can help us maintain a balanced temperament - Equanimity is a very important characteristic for an investor.

3. Being Kind and Respectful!

“Charlie had a huge impact on me and could not have been a better teacher and protective “big brother.”

Greatness does not come about through accumulating great amounts of money, great amounts of publicity or great power in government. When you help someone in any of thousands of ways, you help the world. Kindness is costless but also priceless.

Keep in mind that the cleaning lady is as much a human being as the Chairman.

Don’t count on a newsroom mix-up: Decide what you would like your obituary to say and live the life to deserve it.”

Warren Buffett is so admired not just because he is a great investor, but also because of the person he is - high on integrity, full of kindness & respect towards others and perennially jolly!

The way he talks about his partner Charlie Munger (another true genuis!) and accepts him as a teacher & a smarter and superior person. How he remembers all his friends and colleagues over the years and their role in his success. And finally and most importantly, his endeavor to donate his entire estate for the greater good! All speaks volumes of his character!

As he rightly puts it, Greatness is not in fame, money or power which we all endlessly chase, but in kindness! Just as we like to invest in un-discovered, under-owned and under-valued microcaps, let’s invest in Kindness - which is also under-owned and costless!

Conclusion

If we can even learn these 3 qualities of Optimism, Equanimity and Kindness from Mr. Buffett, and implement it in our lives daily - I am sure it would transform us into better human beings and successful investors!

Thank you for all the wise teachings over the years, Mr. Buffett!

Disclaimer: This is purely for education & research purposes only. Nothing in this should be considered as an investment advice. Please consult your SEBI-registered investment advisor before taking any financial decisions.