Warren Buffett’s most important lessons on investing and portfolio growth, according to Lee Munson

Warren Buffett's shareholder letter on Saturday will certainly detail Berkshire Hathaway's top holdings, including Apple, Bank of America, Chevron, American Express. The list goes on. Oh yeah, Coca-Cola. He's probably sipping one of those right now. Those five companies, yeah, we know they make up about 75% of their holdings. Let's dig into this portfolio a little bit further with Lee Munson, Portfolio Wealth Advisors, President and CIO. Oh, Lee, what do you expect to hear from the Oracle of Omaha when, my gosh, at the ripe age of what, 97, 98? 92.

92. It's Charlie Munger that is. We're running five years to his life. Exactly. What do you expect to hear when Warren Buffett takes the stage? Well, he likes to do these old yarns about, you know, that he's just this kind of old homespun guy and how he has a mission at Berkshire Hathaway, but I think that what Wall Street is really looking like is every year, like I've read every single annual report for, you know, 40 years, right? And I reviewed the last 30 years last night and it's just, oh, the greatest stories of Wall Street that were ever told. And I think that Wall Street, though, is looking for his opinions about things like energy and what he's doing with his energy holdings. I think I want to hear about what type of firms he's acquiring and in what type of sectors.

Remember, you know, this is a guy who has made his money. You know, number one, I think whatever he has to understand is that he has these cash machines and he has to get this cash working, right? So early on, he's very famous for buying C's candy and he bought it for, you know, a few hundred million. And then what's happened is, is that it's paid out over a billion dollars in cash flow and he's used that to acquire other things. The big one that nobody talks about is Geico, little known fact. He started pitching stock as a stockbroker just like me, but it was 1951. He was 20 years old in his first pitch when he became a stockbroker, which he was miserable at, was Geico. And then basically in 1980, he bought about half of it in the early nineties around 95.

He bought the other half. Now, the thing you have to remember is that Buffett makes all this money off of insurance. And I'm really interested to see how much money Geico has been making just because of COVID and all these things, and that's a little bit inside baseball. But remember that free float that he has, it basically gives him access to capital at no charge, right? Because he's investing these policyholders money, the extra float, and then he's really good at investing. So it's just money upon money and upon money. And I want to see what he thinks about the general economy, but I'm just going to tell you, you're never going to get that great answer for him because in his mind, he's buying companies for such long term, you're going to have to really, you're not going to get something that is going to give you actionable trades tomorrow. But I have my eye on Berkshire Hathaway Energy, BHE.

That's where he puts in all these oil companies that he's been buying. That's why you don't see dozens of oil companies in his stock list because he buys the entire companies and then folds them in. And I want to see what those projections are and see what kind of color that we can get to that. And come on, every weekend this comes out, anybody who's worth anything on Wall Street is going to read that annual letter, right? And for any of the kids out there listening, if you haven't read all of his annual reports for the last 30 years, you know, don't even talk to me because you know nothing, right? But I also think that you have to know when to sell. And so I'm interested in that. Remember, you have to be willing to do new things even if it blows up. Warren Buffett is not just a one-trick pony.

Back in 2016, he was in there, he bought a bunch of airlines and he said specifically in reports in the 80s, I'll never do it again. In fact, he joked about having a hotline set up just in case he wanted to buy an airline and he'd call this number and they would talk him down, but he did that. Now he blew him out in 2020 for COVID. That didn't work out very well. But in 2016, he also bought Apple, right? And that was something he said, I'll never do because I never buy tech companies because I don't understand them. But lo and behold, he said, oh, Apple's not a tech company. You know, it's a consumer product with, you know, you can raise prices and people will take it.

So I'm looking for some more information about any new companies he's looking at and what he's trying to look to acquire. I want to see how much cash Berkshire has. So those are the typical things. And it's just, you know, you come in Monday and then, you know, it's the beginning of the rest of your life after you've read that annual report. All right, well, I couldn't sum it up any better. You certainly have made a compelling case, Lee, that everyone out there should pay attention, should read the shareholder letter that's out tomorrow. Lee, let's talk a little bit more about Apple.

You mentioned the fact that Buffett bought that in 2016. Apple now represents about 40% of his portfolio, the top holding there for Warren Buffett right now from your assessment, just from your point of view. Do you view that at all as a risk that he has so much of, that he has such a large holding in Apple? No, Warren Buffett likes concentrated positions, right? He plows money into things and that's how you get rich. I'm not concerned about it because he believes that it has this mode. Now, I'm not saying that that means you should go out and buy Apple. It means you should have gone out and bought Apple in 2016. But you know, my day-to-day job now is about preserving wealth for clients.

You know, that's, you know, my clients are like over 60 and retired. But if you want to create a lot of wealth, you've got to find good companies and you've got to hold them. You know, he paid 11 million for Washington Post and blew it out for like over, you know, a billion dollars many years later. He bought Coca-Cola once, you know, back in 1988 after the 87 crash. And just think about this. He gets $750 million with the dividends every year from Coca-Cola and he's up 20 times on it. And he's looking at these big concentrated positions that's just a outgrowth of where his confidence is, where he thinks money should be allocated.

And that's what he's all about. And I think it tells you that he feels that he wants to have that money in Apple, but also he's had other big winners where he'll go to sell it. And I'm always looking at when he's going to sell and when he buys with it. He bought Gillette back in the 80s, became Proctor and Gamble and it was this huge position that he had and he blew it all out to buy other stuff. And so you really, it's not so much how big the positions are, but when you see him start selling it and buying other things, that's the tell. That's like at the poker table and that's when you really want to pay attention. Yep.

Well, his track record certainly says it all. We of course will be closely reading that shareholder. Let it all have all the angles for you covered here on Yahoo Finance. Lee Munson, always great to have you. Thanks so much. Thank you.

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