"See attached a summary of the recent Berkshire Hathaway Annual Meeting which always makes for interesting reading.

"Looking forward to seeing you at the TCS in London later this week. I'm a late booker (just this morning) - better late than never!"

Eoin Treacy's view Thank you for this interesting summary which I have no doubt will be appreciated by the Collective. I'm looking forward to welcoming you to your second Chart Seminar later this week.

I found Question 8 relevant because it deals with investments likely to keep pace with inflation over the long term, which as veteran subscribers know, is a subject of particular interest to Fullermoney. Here is the relevant section posted without further comment:

Question 8: Crowd- Aside from not needing to put huge amounts of capital to work, are Coke and See's still great business to own in an inflationary situation? Are they better than companies with irreplaceable hard assets and pricing power -- like the railroad-in protecting against inflation?
Buffett: The first businesses are superior. If you have a great consumer product that requires very little capital to grow and support that growth--and you do more volume as inflation grows-that is a wonderful asset to protect against inflation. The ultimate example of that is your own earning ability. People who have made investments in themselves-outstanding teachers and doctors-see their wages increase with inflation. They also don't have to make an additional investment in themselves. People should think about a long term real estate asset like a farm where additional capital is not required to finance inflationary growth.

The worst businesses are the ones with huge receivables and inventories. Their volume stays flat and they have to come up with more money to finance that volume. Normally BRK does not like businesses that require a lot of capital-railroads and utilities. But, he and Charlie believe that they should be able to generate a good return in the railroad because of the value it provides to the economy. The ideal business is one like See's. See's Candy was doing $25M-$30M in revenue when they bought it and they were selling 60M pounds of candy. Now they are doing over $300M in revenue. It took $9M of capital then and the business only needs $40M in tangible capital now. If the price of candy doubles they don't have any receivables or inventory. Fixed assets don't have to increase either.

Munger: What's interesting is that they didn't always know that. (Buffett: Sometimes we forget!) Continuous learning is always required.

Buffett: He has said in the past that he is a better businessman because he is an investor and a better investor because he is a businessman. There is nothing like actually experiencing the necessity-specifically in the 1970s when inflation was gathering strength-- of capital investment in a big scale that didn't actually help to increase earnings. He wrote an article in Fortune in 1977 called "How Inflation Swindles the Equity Investor." Ideally, to protect against inflation, you want a royalty on someone else's sales so you don't have to invest any more capital-you license it to them and you make money as their volume grows. You have no receivables or fixed assets and have to make no capital investments. This represents great inflation protection as long as the product remains viable.