The “Woodstock for Capitalists” Berkshire Hathaway annual meeting had a few differences this year. Notably Charlie Munger and his witty quips, a packed stadium, and the often-repeated questions we see every single year were missing.

Warren Buffett has spent over half a century building BRK-A into one of the biggest companies in the world. During this period, it’s been a story of growth, growth and more growth. This year though, the theme is undoubtedly on surviving this period and protecting the long-term success of the business.

Buffett is keeping more cash on hand, just like the average household would add to its emergency fund if the future is deemed uncertain.That doesn’t equate to his unwillingness to invest though. Buffett is optimistic about stocks in the long run, less so in the short run.

For him, investing is a derivative of opportunity, if opportunities are not evident, he is happy to sit and wait (often with his “elephant gun”).

Stocks Are A Good Investment For The Long-Term

His message of taking a long-term view still rings true, with an unwavering belief that stocks will be a good investment over the next few decades (just not the next few years).

Another curious point of note is that the terms “range of outcomes” and “probability” were repeated more often than any other meeting.

Both are phrases regarding risk vs reward. He implies that it is a matter of figuring out between what’s possible with Outcome A versus the true Outcome B.

Sometimes the range of probabilities are relatively easy to figure out, sometimes though it is extremely difficult – like in today’s markets.

Buffett disclosed that his anticipated outcomes is very wide, huge unknowns exist about COVID-19, about the risk of a 2nd wave, the impact on industries, consumer behavior and the greater economy as a whole.

The point may be to figure out the best, worst and most likely outcome for an investment, attribute each with a rough probability, and then determine whether the expected return on the likely outcome makes it an attractive investment at current prices.

The issue being here of course, is that probabilities are not a guaranteed representation of outcomes. Just because something should happen, doesn’t mean it will.

Warren Exits Airline Stocks

His exit of airline stocks is a perfect example. What should have been a decent investment turned into a dud because the most unlikely event occurred (a black swan).

Investing (and trading) is just a series of decisions, with good decisions hopefully yielding a profit. However, each decision has a range of probabilities which means that good decisions can end in a loss, and bad decisions in profit.

A lot of the time, it turns into a matter of luck, because unlikely outcomes happen all the time. The outcomes usually receive all the press and attention – but ultimately, it is the decisions which matter, especially the good decisions.

If you have a good process, make good decisions, you’ll most likely make money over time – just not on every decision.

Some of Buffett's most notable quotes from the meeting:

“Fear is the most contagious disease you can imagine. It makes the virus look like a piker.”

“I happen to believe that Berkshire is as about as sound as any single investment can be in terms of earning reasonable returns over time, but I would not want to bet my life on whether we beat the S&P 500 over the next 10 years.”

“This is a very good time to borrow money, which means it may not be such a great time to lend money.”

“If I owed any money at 18% the first thing I do with any money I had would be to pay it off. It’s going to be way better than any investment idea I’ve got.”

“Never bet against America. That is as true today as it was in 1789, during the Civil War, and in the depths of the Depression.”