Buffett Watch

Michelle Caruso-Cabrera's Great Adventure: An Omaha Journal


usually can be found at the anchor desk for CNBC's Power Lunch

This weekend, however, she is on vacation with her father, mother, and younger brother.

But it's not an ordinary vacation.  The whole family is in Omaha, attending the Berkshire Hathaway annual shareholders meeting.  They are there because her brother bought one share of Class B stock about six months ago, and thought it would be fun for them all to go.

She talked about her trip with the Power Lunch team last Friday.

Michelle at the Meeting

Since Michelle finds it difficult to relax, she has agreed to send e-mail dispatches to Warren Buffett Watch. 

Watch this space all weekend for updates on her adventures. 

Friday, 7:18a ET:

Just boarded the flight from Newark to Omaha. 50 people on this puddle jumper. I've asked nearly everyone on the flight--nearly all are going to the Berkshire Hathaway meeting (except for two passengers who live in Omaha.)

Friday, 8:18a ET:

First-time attendees asking the veterans what time they have to get to the Qwest Center to make sure they are in the main room. They tell us some people get there at midnight the night before! Midnight?? I think Warren's great but my family and I will get there at about 7 am when the doors open. Everyone on board very very excited!

Friday, 5:19p CT:

As we wait for the first shareholders' event, my family is at window shopping. Beautiful stuff.

Friday, 6:01p CT:

They just opened the bar. There must be 30 bartenders at least, and every one of them is facing a line of people 10 deep.

Shareholders stream into Qwest Center in Omaha to hear Warren Buffett and Charlie Munger answer questions at the 2009 Berkshire Hathaway annual meeting

Saturday, 6:50a CT:

Just woke up and spoke with my brother and dad who are already in line down at the Qwest Center.  They got there at 630am (doors open at 7) and they are at least 4 blocks away because the line is so long.

Went to the last night that was hosting a lot of the Warren Buffett authors.  They were selling and signing books.  It was packed.  Not necessarily because of the authors though.  Omaha Dairy Queens are having a two for one Blizzard special.  My mom got chocolate truffle.  My brother - cookie dough.  My dad - raspberry truffle.  And I got banana cream pie.  So delicious.

Saturday, 8:15a CT:

Mom and I are in the Qwest Center in the nosebleed seats behind the stage. I can see Becky way down below. My brother and dad got much better seats down on the lower level since they left so early this morning. Thought about asking them to save us seats but there is a big admonition direct from Warren in the handbook asking people not to do that.

Saturday, 8:49a CT:

The movie starts with a cute animated hello from Warren et al.  Followed by a series of edited ads. Then interviews with the die-hards from last year's meeting who were in line at midnight.  Plus an excerpt from this funny BBC series about investment bankers.  Fruit of the Loom ads.  Clips of Warren playing the ukulele. ad.  Clips of Warren giving Tiger Woods golf advice on a driving range. Big laughs from the crowd. Clips from the late night comedians.

CNBC Producer Lacy O'Toole poses with Fruit of the Loom characters at Berkshire shareholders meeting

Saturday, 9:02a CT:

Spalding ad. Clip of Becky on Squawk.  Susan Lucci pretending to be the CEO of Berkshire. Dairy Queen ad!! More comedy sketches, more Geico ads. Furniture Mart ad. Warren trying to sell mattresses. Very funny. He's selling one called "The Nervous Nellie" which has a compartment to hide your money.

Saturday, 9:26a CT:

Movie over. Crowd anxiously waits for the real show to begin.

Saturday, 9:33a CT:

Warren and Charlie Munger are on stage. They've just introduced the board members including Susan Decker and Bill Gates.

He's showing one slide. It's a December 18th sales ticket showing they sold 5 million worth of Treasury bills for 5 million and 90 dollars and 97 cents. He uses it to make the point when Treasuries are providing negative yields, it is an extraordinary time.

Saturday, 9:40a CT:

First question: You've referred to derivatives as weapons of mass economic destruction, and considering all the destruction they have caused in the world--do you think your large derivative positions are appropriate to a high quality company, even if they are likely to make money in the long run?

Answer: "As long as we explain them and show that we are going to make money in the long run."   Unfortunately the question was formulated very poorly, and it's allowed Warren to give a very technical answer rather than what the person wanted to know--which is does he think it is morally right for Berkshire.

Saturday, 9:44a CT:

How do we improve financial literacy in the next generation? Answer--Well, the CURRENT generation seems to have trouble with financial literacy. We are supporting various educational programs. But in the end, people will always do financially stupid things.

Saturday,9:47a CT:

Becky announces there are 35,000 attendees.

She's asking about Wells Fargo.  Mr. Munger, do you agree with the chairman of Wells Fargo that the government's TARP program is asinine?

Saturday, 9:50a CT:

Munger: Unreasonable to expect 100 percent agreement. I think its okay to be more lenient on the govt when it's trying to do the best it can. He hates the accounting rule that allows a bank to raise its earnings when the value of its debt falls.

Buffett: We were looking into the abyss. I commend their actions at the time. Impossible to expect 100 percent success from people who are working 20 hour days in a crisis. I'm sympathetic to Mr Kovacevich who came in second to Charlie in the plain speaking contest last year. He was called on a Sunday, told to be in DC the next day, without being told why, and then had only an hour to decide. But that's the nature of emergencies.

Buffett encourages everyone to go read Jamie Dimon's (JP Morgan) shareholder letter this year. "As good a shareholder letter as I've ever read."

Saturday, 9:54a CT:

In response to a Q about free cash flow. "Investing is about laying out cash to get more cash later."  "If you need a computer or calculation to figure it out, you shouldn't buy it."  If you need to go out to the tenth decimal point to find the profit, it's a mistake.

Saturday, 10:05a CT:

Why do you retain such a large stake in Moody's considering the role they played in the debacle? And more importantly, why didn't you do something to address the conflict-of-interest they faced when rating the CDOs?

Buffett: Conflict of interest was not anywhere close to the major cause of why they missed it on CDOs etc. The problem was everyone, everyone, thought home prices would keep going up.

They were not unique in missing what was coming.

On another note, I've never made a call to Moody's. I've never told any of our companies what to do. I don't call and tell them what safety procedures to put in place. When we buy stock, it's not to tell the company how to run their business. Heck, Charlie and I have been on boards, and been unable to change the direction of a company.

Also--we never listen to ratings agencies. We decide for ourselves what a company's rating is.

And the other thing--a lot of the businesses who created these supposedly triple A products ended up owning them themselves. "Amazing. They created the Kool-Aid and then they drank it."

Saturday, 10:09a CT:

Where is real estate headed particularly in California?

Buffett: In the last few months in California you've seen a big pickup in activity, albeit at much lower prices. It looks as if, looking at our real estate brokerage data, "In Southern California we are seeing something close to stability in the median to lower price homes."

Saturday, 10:09a CT:

Buffett: "South Florida is going to be tough for a long long time."

Saturday, 10:15a CT:

Q. How did your four possible money managers do last year? 

Buffett: I don't have precise figures. But they did no better than match the S&P last year. They didn't cover themselves in glory. But then neither did I.

Munger: They all got creamed last year.  

Saturday, 10:35a CT:

So my mother is impatient and we have left the arena. We are in the exhibit hall.  Just bought a dripless-pourer and a mix-n-stir from the Pampered Chef-- a Berkshire company of course.

Saturday, 6:55p ET (Editor's Note):

We have not received another dispatch from Michelle since this morning.  We hope she is having fun, and perhaps, even relaxing a little.

Current Berkshire stock prices:

Class A:

Class B:

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Questions?  Comments?  Email me at buffettwatch@cnbc.com