Getting Investing Wisdom Straight from the Horse's Mouth

Last year, a friend of mine bought one non-voting share of Berkshire Hathaway stock so that she could make the pilgrimage this year to the company's annual meeting in Omaha, which features the presence and comments of Warren Buffett, the company's chairman and the world's most famous value investor. Indeed, to ensure herself a room at an area hotel, she booked more than six months ahead of time.

The 2009 Berkshire Hathaway annual meeting was held last weekend, and from press accounts, despite the weak year in 2008, Buffett continued to enthrall his audience of the faithful.

The New York Times reported today that 35,000 shareholders attended the meeting, and that despite the weak year in 2008, "shareholders still hung on every word from the 78-year-old investor's lips."

The Times added, "Between sips of Cherry Coke and bites of peanut brittle, he served up some wisdom that might have saved a lot of heartache (not to mention jobs and untold financial losses) had investors heeded it over the last decade: keep it simple."

While "his fan club is still strong, dismissing his bad year as part of the 'markets go up and markets go down inevitability of value investing...., even "Mr. Buffett himself acknowledged, 'I didn't cover myself in glory' in 2008."

The Times report noted that, "Most of what Mr. Buffett said was basic and obvious -- and was roundly ignored during the period leading up to this mess [the current financial crisis]. 'Leverage is what causes people real trouble in this world,' Mr. Buffett said. 'You don't want to be in a position where someone can pull the rug out from under you or, emotionally, where you pull it out from under yourself.'"

However, The Times noted that Buffett, too, is invested in some complicated leveraged investments, i.e., "the very same derivatives that he has called 'weapons of mass destruction.' On Saturday, he acknowledged that he had futures and options contracts on stock indexes and foreign currencies, but added that, in and of themselves, 'derivatives aren't evil.'"

It is doubtful that another Warren Buffett -- combining the extremely sophisticated value investor with the folksy ways that endear him to his followers -- will come along anytime soon.

I'm sure that my friend enjoyed the weekend and will no doubt have gained some investment wisdom along the way.