Should You Let Warren Buffett Manage Your Money?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 27 February 2019
⏱️ 30 minutes
🧾️ Download transcript
Summary
#242. Does it make financial sense to buy Berkshire Hathaway stock and let Warren Buffett and Charlie Munger manage your money? We evaluate Berkshire Hathaway's people, investment process and performance to determine what to do. Thanks to ShipStation and The Great Courses Plus for sponsoring the episode.
For show notes and more information on this episode click here.
- [00:19] Berkshire Hathaway as a money manager.
- [1:49] Looking at the people to determining who to hire as a money manager.
- [3:37] What is the succession plan of the founding partners?
- [5:57] Berkshire Hathaway’s process - a two-pronged approach.
- [11:49] Understanding the mistakes that Berkshire Hathaway has made.
- [16:18] Comparing the performance of Berkshire Hathaway to the SP 500.
- [20:29] Taking the red flags into consideration.
- [21:51] Warren Buffett’s investment philosophy.
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Transcript
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| 0:00.0 | Welcome to 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. |
| 0:11.6 | I'm your host David Stein. Today is episode 242. |
| 0:15.0 | It's titled, |
| 0:16.0 | Should you let Warren Buffett manage your money? |
| 0:19.0 | Last month I got an email from listener Harry. He wrote, |
| 0:24.0 | Why not just buy Berkshire Hathaway stock and let Warren Buffett manage your money? |
| 0:31.0 | I admit I had never really looked at or evaluated Berkshire Hathaway as a money manager. |
| 0:39.8 | For 17 years I worked as an institutional investment advisor. |
| 0:45.2 | One of the things that I did is I evaluated investment managers. |
| 0:48.4 | I would go on site, I would meet with him. |
| 0:51.2 | When I first joined our company, we had what were known as the Three Peas when |
| 0:56.3 | evaluating a particular manager. We would look at their people, the process, and their |
| 1:01.1 | performance. Later, I spent years analyzing managers I put it more in terms |
| 1:07.8 | of attributes with my investment firm continues to use. We look at conviction, consistency, pragmatism, |
| 1:16.0 | investment culture, risk control, and active return. |
| 1:21.0 | But really those three P's are a very good foundation. |
| 1:25.0 | So in 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, |
| 1:36.7 | $303,000 per share, or the B shares, which sell for $200 a share. So you could hire Berkshire Hathaway for $200 to manage your money. |
| 1:48.6 | First, let's focus on people. When you are researching a money manager, |
| 1:55.0 | you want to know who the team is selecting the securities. |
| 1:59.9 | What's their experience? |
| 2:00.9 | How do they work well together? |
... |
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