Meagan, Niko and I just returned from the annual Berkshire Hathaway Shareholder’s Meeting, where we had the opportunity to hear from Warren Buffett and Charlie Munger, two of the most astute individuals, and two of the greatest investors, on the planet. Each of us took away different favourite moments from the experience.

This was my tenth trip to Omaha, and by this point you don’t really expect anything brand new. Far from being routinely dull though, the familiarity is something that I take great comfort in. After all, if the song kept changing from year to year you would have to question the durability of the message.

One thing that I was looking forward to was to get Buffett’s take on some market transactions involving Goldman Sachs, a firm that Buffett has a stake in. Buffett is legendary for his intolerance of unethical behavior, and Goldman was recently accused of some questionable conduct on a deal that they brokered.

This involves a transaction where ABN Amro, a large European bank, came out on the short end of the stick by guaranteeing the credit of a third party (kind of like co-signing a loan for your kid to buy a car), for which AMN Amro collected a fee that they set for taking the risk. When the kid defaulted on the car loan payment, ABM Amro had to buck up, and they weren’t thrilled about it.

Buffett explained the transaction in detail. ABN Amro appears to have drifted into insuring bond deals through their perception that this would be a profitable sideline for their other business activities, but one where they may not have had the expertise to fully understand the complexities of the transactions. Buffett said he was not sympathetic about a dumb bank deal.

If the allegations lead to something more serious then he will re-look at it, but he sees this as a legitimate transaction. ABN Amro took the risk that the third party would default, and ABN Amro was paid to do so, and if ABN Amro didn’t price the risk appropriately then any finger-pointing after the fact might be better directed at the bank’s own due diligence process than looking for a scapegoat.

A completely different topic that I found very interesting is Buffett’s contributions to educating kids about money and business. As a parent and occasional guest-speaker at the local schools this caught my attention. Making financial concepts interesting to young people is invaluable. The earlier people learn about money the better.

The program is called “The Secret Millionaires Club”. You can find out more at www.smckids.com. If you have school age kids be sure to check it out.

This was Niko’s first experience with the Berkshire Hathaway weekend. The part that she particularly enjoyed didn’t relate directly to the discussion about the recent financial crisis, or how certain events affected Berkshire Hathaway, but was when a member of the audience asked Buffet how he continues to get better at valuing companies. She liked this question because it’s related to the work that she does on a daily basis. As someone who has completed her Chartered Financial Analyst studies, Niko analyzes investments to determine whether they belong in a client’s portfolio.

Buffett spoke about how he first learned from Ben Graham who taught him to how value a specific type of company, and to invest with a margin of safety. Later in life, Charlie Munger taught Buffett about durable competitive advantages. Buffett also spoke about investing in what you know, staying within your circle of competence, and avoiding doing dumb things.

Munger added that to be good at something like investing you have to keep learning because the world is changing and competitors are changing. People have to try to go to bed at night a little wiser than they were last night.

Niko also enjoyed a conversation that I had with a mutual fund manager. Although I don’t really remember doing this at the time, apparently she overheard me telling him that I didn’t agree with what he was saying. The funny part for her was the expression on the fund manager’s face when I told him that I didn’t concur. I guess he is not used to guys disagreeing with him.

For me, this was just two guys talking, and when she told me later that she got a kick about telling a mutual fund manager that he was wrong, I had to think about what we might have been talking about. Finally it dawned on me that this must have been when he was proposing that we move some of our client’s money into his fund based on the conditions of the day, and I shut him down with the comment that would be market timing. I do remember him launching into a ten-minute justification for why we should endorse his fund, but I guess it didn’t take. I continue to believe that market timing is a fool’s game.

My short-term memory deficiency of the specifics of the conversation with the mutual fund manager spurred my friend Gordo to relate the story of the first time I met Bill Gates. In 2001 we were at a mingler, and Gordo tapped me on the shoulder, saying, “Brainer, there’s Bill Gates over there.” The way Gordo tells it, I walked up to him and said, “Mr. Gates, Brad Brain, from Fort St John, BC”, as if Gates would know or care about either Brad Brain or Fort St John, BC.

I remember shaking Gates’ hand, but I don’t remember my personal introduction. I’ve had an interesting life, too bad I can’t remember it very well!

Meagan’s favourite bit was when someone from the audience explained to Buffett and Munger that he had recently found himself in a new situation, and was beginning to understand that he could not succeed in this situation given the current culture of the organization. He asked Warren and Charlie what he could do, and what they would suggest, to help him improve the culture of the organization.

Their answer was that you will probably find much greater success by starting from scratch and developing a culture of your own than you ever will by trying to change a culture that is already in place. Their “sorry friend, we can’t help you” response was probably not what the gentleman was hoping to hear, but it was everything to Meagan. She realized that’s why she was in Omaha; she was developing her own personal culture, and she wants to get it right.

A great way to conclude our weekend was when we went out for dinner at Buffett’s favourite restaurant, Gorat’s. Sitting four tables over from us was none other than Charlie Munger. Even billionaires love a good steak.

The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI.  Brad Brain is a Certified Financial Planner with Manulife Securities Incorporated, Member CIPF and with Manulife Securities Insurance Agency in Fort St John, BC. Brad Brain can be reached at brad.brain@manulifesecurities.ca or www.bradbrainfinancial.com.