by Laura Beal
Finance & Banking Instructor
University of Nebraska at Omaha

I'd never heard Mr. Buffett speak in person. He has a certain charm (his right-hand man, Charlie Munger, even more charm). I got the distinct impression throughout the day, listening to shareholder after shareholder get up and express their praise and gratitude, that the reason Mr. Buffet is so popular is because people can relate to him. He's normal. He'll listen to you and then tell it like it is. People appreciate that. [Editor's Note: People also appreciate extraordinary results: a 35-year return on investment of nearly 400,000%]

Much of what Mr. Buffet had to say has been reiterated over and over again — in previous meetings, in the annual reports, in numerous press conferences. I was especially impressed to hear him talk about the tremendous amount of wealth being transferred, as opposed to being created. I've long believed that unless the fundamentals of a business are growing, no true wealth can be created in the long run. You may get rich in the meantime, selling something for more than intrinsic value (we've heard of the "greater-fool theory"), but it's also a dangerous game.

Mr. Buffett compared this transfer of wealth as similar to chain letters and Ponzi schemes. I couldn't agree more. As recently as two months ago, you could walk down any magazine aisle and see headlines scream "The 15 Tech Stocks You Must Own!" or "How To Profit from the Market's Hottest Sector" or "Don't Get Left Behind!" With the constant media attention from CNBC to the Internet, we have been bombarded with the message that tech is the way to go, and woe to the investor who (gasp!) only owns brick-and-mortar, bread-and-butter businesses.

What investor would not want perfect predictability? Mr. Buffett perhaps said it best when asked about how it could be that he does not understand tech stocks. He stated that the predictability of the economics of the situation just wasn't there. Therefore, he could not know how to evaluate it.

I also enjoyed the argument against paying dividends — that is, if a company's earnings are worth more reinvested, why pay them out? Earlier in the meeting, Mr. Buffett had quoted Aesop's comment that "a bird in hand is worth more than two in the bush."

Mr. Buffett wasn't talking about dividends when he made this quote, but it still applies. His point was that Aesop had failed to take into account when those two birds would arrive and the prevailing interest rate at the time. Ah, the time value of money! If, on a present value basis, those two birds (retained earnings) are worth more than one in your possession now (dividends), it makes more sense to wait it out for those two birds. I wholeheartedly agree with Mr. Buffett's philosophy on this issue. Now if we could just get him to look at Cisco...