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"charles t munger" Discussed on Money For the Rest of Us

Money For the Rest of Us

06:20 min | 2 years ago

"charles t munger" Discussed on Money For the Rest of Us

"Walk in the money for the rest of us. This is the personal finance show on money. How it works? How to invest it and how to live without worrying about it? I'm your host, David Stein. Today's episode to forty two it's title, should you let Warren Buffett manage your money. Mass month. I got an Email from listener hairy. He wrote why not just by Berkshire Hathaway stock and let Warren Buffett manage your money. I admit I had never really looked at or a valuated berkshire-hathaway as a money manager for seventeen years. I worked as an institutional investment advisor. One of the things that I did is I evaluated investment managers. I would go on site. I would meet with them when I first joined our company we had what were known as the three Ps when evaluating particular manager, we look at their people the process and their performance laters. I spent years analyzing managers, I put it more in terms of attributes with my investment firm continues to us we look at conviction consistency pragmatism investment culture, risk control and active return. But really those three Ps are very good foundation. So this episode we're going to look at Berkshire Hathaway as an investment manager that we can hire by buying their stock. They have A-Shares which are really expensive three hundred and three thousand dollars per share or b B-shares which sell for two hundred dollars a share. So you could hire berkshire-hathaway for two hundred dollars to manage your money. First. Let's focus on people when you are researching and money manager you want to know who the team is selecting the securities. What's the experience, how do they work? Well, together, what's their investment culture? You go to the twenty eighteen annual report of Berkshire Hathaway, they list out their senior executives Warren Buffett. He's eight years old. He's the chairman and chief executive officer, Ben. There in that former role since one thousand nine hundred seventy next is Charles t Munger he's ninety five vice chairman since nineteen seventy eight. Then there's two new roles that, but it was really excited about in his annual letter he wrote before moving on and went to give you some good news. Really good news that is not reflected in our financial statements. It concerns the management changes we made in early twenty eighteen when I Jane was put in charge of all insurance activities and Greg able was given a thorny over all other operations. These moves were overdue. Berkshire is now far better managed than went. I alone was supervising operations Jeet and Greg have rare talents and Berkshire blood flows through their veins. They've had an adjustment in terms of their team with the addition, or at least the more formal roles of able and Jane when we met with and did conducted. Due diligence on investment managers that we ultimately would recommend to their clients. One of the sensitive issues was as the founding partners got older is what's succession plan. How will the next generation calm and continue the investment process? Buffet hasn't really outlined a true succession plan when he or Munger retire. He wrote in the annual letter for fifty four years, Charlie and I have loved our jobs daily. We do what we find interesting working with people we like and trust. And now our new management structure has made her life even more enjoyable with the whole and samba that is with a Gede and Greg running operations, a great collection of businesses, a Nagra castration, it cadre of talented managers and a rock, solid culture. Your company is in good shape for whatever the future brings throughout that letter. They talk about how Buffett and Munger evaluate companies evaluate stocks to purchase, and what becomes pretty clear if we're looking at Berkshire Hathaway as a money manager that able Jane are responsible for the operation in the operating companies that Berkshire. Owns. But in terms of new acquisitions, particularly new stock acquisitions that will talk about in terms of the process, it's very much Buffett and Munger doing the analysis which in terms of evaluating money manager that that that level concentration would cause us some concern in terms of people the lack of succession plan, and the fact that the senior team that is evaluating and making those investment decisions is what they're stoled. They're very good at what they do. They've been doing it for a very long time. But at some point they're not going to be there. And if you're hiring money manager, like Berkshire Hathaway you want that team to be there in that process to continue. Let's take a look at Berkshire Hathaway's investment process. What we're trying to identify here is in. Terms of how a money manager is researching securities do they have some type of informational edge a competitive advantage that allows them to identify mispricing price occurs

Berkshire Hathaway Warren Buffett investment manager Charles t Munger Jane Greg Berkshire David Stein vice chairman Jeet chairman and chief executive o Munger advisor Charlie Buffet Gede Nagra two hundred dollars