2005 Annual Meeting
Annual meeting with Munger on the "vile" practice of quarterly earnings guidance and corporate America's focus on short-term results.
2005 Annual Meeting
Date: April 30, 2005 Location: Omaha, Nebraska Attendees: Warren Buffett (74), Charlie Munger (81) Source: Full Transcript
Overview
The 2005 annual meeting featured Munger's strong criticism of quarterly earnings guidance and corporate America's short-term focus. The meeting emphasized Berkshire's long-term approach to value creation.
Opening
Buffett on the system:
"The system works. But there are problems."
On short-term thinking:
"Too many managers focus on quarters. They forget about decades."
Business Results
On performance:
"We've had a good year. The businesses are performing well."
On insurance:
"Float is growing. We're the leader in reinsurance."
Key Topics
Munger on Quarterly Guidance
Munger's famous criticism:
"The practice of quarterly earnings guidance is vile. It distorts behavior."
On short-termism:
"Corporate America has forgotten about the long term."
On what it causes:
"Managers make short-term decisions. They sacrifice long-term value."
The Right Approach
On Berkshire's method:
"We don't give guidance. We focus on long-term value."
On patience:
"We're willing to wait. The right decision takes time."
Competitive Advantages
On moats:
"Wide moats are essential. They protect against competitors."
On pricing power:
"The ability to raise prices is valuable. Customers accept it."
Berkshire's Culture
On decentralization:
"We let subsidiaries run themselves. That's the Berkshire way."
On not interfering:
"We don't micromanage. We hire good people and let them work."
Notable Quotes
"The practice of quarterly earnings guidance is vile."
"Corporate America has forgotten about the long term."
"We're willing to wait. The right decision takes time."
Key Themes
- Short-Termism - Munger's criticism
- Quarterly Guidance - The "vile" practice
- Long-Term - Berkshire's advantage
- Moats - Wide moats matter
- Decentralization - The Berkshire culture
Related
This summary captures the key topics from the 2005 transcript.