10 Lessons from Warren Buffett's Annual Letter | Munger, Apple and the Challenges of Scale

Warren Buffett recently released his 2024 annual letter. And this one was a particularly notable one since it was the first since the passing of Charlie Munger. Buffett wrote a beautiful tribute to Munger in the letter and as is always the case also shared many timeless investing lessons. In this episode, we share our biggest takeaways from the letter and the lessons we think investors can learn from it.
00:00 - Intro
03:27 - Buffett's tribute to Charlie Munger and the importance of humility
06:69 - Bertie the high-quality shareholder
12:30 - The importance of focusing on the proper financial metrics
14:42 - The importance of taking a long-term view
16:38 - Buying wonderful businesses for the long-term
18:34 - The importance of capital allocation
21:17 - The importance of finding people who disagree with you
23:14 - Buffett's support of America
31:47 - Buffett's realism about future returns
33:51 - The importance of building a lasting organization
35:49 - The extreme limitation of Berkshire's massive scale
38:26 - The double buyback
39:49 - The importance of learning from your mistakes
44:08 - Buffett's foray into Japan
47:27 - The letter and annual meeting after Buffett
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[@HepCatJack]

Berkshire's role is now similar to what JP Morgan and Etty Green used to do in financial crisis prior to the creation of the Fed (1905, 1893, 1873). On the importance of sticking with a good companies, I remember reading a Value investing book written in the mid 2000's where the author described the importance of taking profits using one of his investments as an example. I remembered that company in 2022 having a high ROE and it turned out that it had compounded at 30 percent since it had been sold in 2006. I asked the author if he still felt it had been the correct move to sell and I got a smiley face in reply. Different author: In one of Richard Wykoff's books he describes a trend following strategy he had used for a stock, however I noticed that every time he got back in the stock, he paid more for it. His original position had it been held throughout the volatility would have given him a bigger payoff without the transaction costs and capital gains taxes on every sales that he had done.

[@HepCatJack]

Munger also had a large stake in Alibaba via the Daily Journal, he had considered it a mistake and the position had been trimmed.

[@HepCatJack]

The nickname "Birdy" also evokes: "A bird in the hand is worth two in the bush" expression from Gerald M. Loeb in his book "Battle from investment survival" published in 1935.

[@HepCatJack]

Buffett trimmed 1% of his Apple share in 2023 so there will be a bit less of a buyback effect, I wonder if this is because Apple's buyback could make Berkshire's then 6.86 percent ownership close to the 9 percent which would require a special SEC declaration.