The Huge Difference Between Listening to Warren Buffett and Drinking the Kool-Aid

We just wrapped up the first weekend of May, and it has once again notched the award for most hectic weekend of the year, for three different reasons.

First, it was my birthday, an occasion I've come to anticipate with more dread every year, with each passing doctor's appointment and physical checkup.

The second and most joyous event of the weekend was that big horse race in Kentucky.

Now, I've been to the Kentucky Derby only once and discovered I'm not a huge fan of having bourbon puked on my shoes and mint juleps spilled on me all day. Although I do enjoy a beautiful day at the track, the derby is best watched as I did this weekend - by the pool with a small group of close friends, not surrounded by over 150,000 drunk, preppy strangers.

But the third event, and reason I'm writing you today, was the annual "Woodstock for capitalists," or, to us normal folk, the Berkshire Hathaway Inc. (NYSE: BRK.A, BRK.B) shareholder meeting.

Being the ridiculous holiday that it is, over 40,000 "Buffettologists" descended on Omaha over the weekend to idolize Warren Buffett and relish being in the same zip code as him. They lined up outside CenturyLink Center at 3 a.m., drank Coca-Cola like sugar-addled middle schoolers, and hung on every word that Buffett and his business soulmate, Charlie Munger, spoke during the meeting's six-hour Q&A session.

And like the previous first weekends of May, this year's Berkfest was just as ridiculous as the last...

[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

Listening to Warren and Charlie Is Smart, Worshipping Them Is Not

You see, I have never attended, nor do I ever expect to attend, the Buffett gathering in cornhusker country.

It's not that I don't think Warren and Charlie have the wisdom to impart. Clearly, they do, as they've been the two most successful investors in the history of American business for over 50 years.

Fast Money: This powerful secret made one man a millionaire. Now he's sharing it live on camera - find out how you could use it to become $2,918 richer in less than minute. Click here...

However, I've done enough business traveling without my family to know where they'd like and not like to go, and Nebraska is certainly in the latter group. Not to mention, I have no interest in spending a weekend with a bunch of overly serious Buffettologists talking in excited undertones about return on capital, wide moats, circles of competence, and discounted cash flows.

Jason Zweig ran a nice piece in The Wall Street Journal last week about how the meeting is merely a gathering of the tribe and allows value investors to feel less alone in the world. It sounds wonderful, but really, I have no desire to be a part of any tribe, and I am really comfortable with my own investing principles.

I don't need to fly to Omaha and shop at companies owned by Berkshire with 40,000 sycophants and fanboys to feel intellectually or personally justified. But I will confess it would be pretty entertaining to watch Ivy Leaguers go to a steakhouse with three stars on Yelp and order the same meal as Warren: a T-Bone steak with hash browns. Hash browns are usually found in a Waffle House or IHOP, so I suspect those privileged Harvard grads have never actually seen a hash brown in the wild before.

I see no need to head off to Omaha to watch the love fest when I can pore over the meeting transcripts and recordings from the comfort of my home. Like any reasonable investor, I'm a big fan of Warren and Charlie's wisdom. But unlike other investors, I'm something of a curmudgeon, so watching two elderly investors dispel stupidity is not only educational but also downright fun.

So instead of paying a Manhattan price for an Omaha hotel and getting up at the crack of dawn just to get a seat in the CenturyLink rafters, I sat back with my iced tea and went through the transcripts.

It's safe to say I had a blast hearing two old dogs hate on new tricks...

The Music-to-My-Ears Moments of the Berkshire Meeting

I took some pleasure in hearing that Warren and Charlie are not fans of cryptocurrencies.

My stance on crypto is not very popular, but I have the comfort of being pretty damn sure I'm right. While money can be made trading it in the short term, the long-term potential is quite bleak. The two investors said it even better, with Warren calling Bitcoin "rat poison squared" and Munger saying that trading crypto is "just dementia."

Now, I'm sure there were hues and cries over how the old guys are behind the times and just don't understand new, exciting frontiers like crypto. But Warren and Charlie are comfortable being called out-of-touch morons, just like they were when they ignored the surge in Internet stocks near the end of the millennium.

We all know how that story ended.

Buffett also tackled the subject of cybersecurity, an area that I think that has extraordinary potential for long-term profits.

When asked about the sector, he discussed the possibility of offering cyber insurance, ultimately saying it's something he's not interested in since the risk is difficult to measure right now.

He explained, "We don't want to be a pioneer on this. I think anybody that tells you now they think they know in some actuarial way either what the general experience is like in the future, or what the worst case can be, is kidding themselves."

I agree that cybersecurity, while a strong long-term opportunity, remains a massive problem. The risk will be ever-changing, not to mention very difficult and expensive to defend against individuals and companies alike. I think offering cyber insurance is a hazardous business and would probably suggest shorting any public company that had a significant cybersecurity book right now.

I avidly review the cybersecurity world on a regular basis. In the past few years, I have found only one cybersecurity firm that trades at an unreasonably good price and is pretty much assured massive long-term profits.

But I'm in no rush. I can wait. Because unless the world and markets all of a sudden stop being digital, I'm sure I will get the chance to be an aggressive buyer of these high-return companies.

There's plenty more to dissect from the six-hour Q&A session, including Warren and Charlie's thoughts on healthcare, gold, tariffs, tax reform, and general enlightening investment education. I encourage you to scour the transcript, which you can find with a quick Google search.

If you have the time, also visit the Berkshire website to read Buffett's letters to shareholders dating back to 1977, as well as Munger's letters to Wesco shareholders from 1997 to 2009. These are two brilliant people who have had enormous amounts of success in business, and reading these letters is better than getting an MBA, in my opinion.

What you should not do is look at the Berkshire reports for investing advice or stock ideas.

Simply put, retail investors trying to replicate Buffett's actions is hysterical. Unless you are running a $480 billion corporation with almost $17 billion in revenue, what Warren does today is of very little value to you.

It is far more instructive to go back and look at what they did to get rich in the first place. I assure you it does not look anything like buying Apple at 17 times earnings as an alternative to cash.

We can learn about how to think and conduct business from the current versions of Warren and Charlie. But unless you are already comfortably in the 1%, you should be doing what they did to get rich in the first place.

This Easy-to-Follow Blueprint Could Make You $15,000 Richer

America's No. 1 Pattern Trader used to be an average Joe scraping to get by. He never graduated from college, and he spent most of his career as a Home Depot customer service rep.

He didn't want to be stuck at a job he didn't like until he was 80 - so he taught himself how to trade. He found he had a knack for it, and he became richer than he ever thought possible.

Then he invented his patent-pending "Money Calendar," and he knew it could change people's lives.

Now, for the first time ever, he's revealing all his trading secrets and strategies - so you can amass a fast fortune for yourself.

Step by step, click by click, he'll guide you through setting up your account - and show you how to set up a series of take-it-to-the-bank payouts of $605... $822... $1,190... or $2,830... every single week.

There's no guesswork involved, and the best part is, it'll only take you 10 minutes per day! Click here now to start this once-in-a-lifetime journey...

Follow Money Morning on FacebookTwitter, and LinkedIn.

About the Author

Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.

Read full bio