When Buffett speaks, you should listen

40,000 people, two old men and the best advice you'll ever get

a woman

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For some people, the idea of listening to two old men talk for six hours is likely the very definition of boredom. And you can make it seem even less appealing by mentioning that those men are going to talk about business, finance and investing.

But those people would be missing out. And if you don't believe me, I have more than 40,000 other people to back me up. That's the number I joined in Omaha, Nebraska on the weekend, as we sat in what is usually a concert arena to listen to an 84-year old and a 91-year old hold court.

It probably helps that the two men are worth a combined US$72 billion. It certainly helps that one of them is Warren Buffett and the other is Charlie Munger — respectively the Chairman and vice-Chairman of famed investment conglomerate Berkshire Hathaway.

An astounding record

Under their 50-year stewardship, the company's book value has increased at an astounding 19.4% per year, compared to the 9.9% annual gain in the US S&P500 over that time. The difference in those two figures is meaningful, but compounded, it's even more extraordinary.

For context, $1,000 compounded at 9.9% over 50 years becomes a very impressive $112,000. At 19.4%, however, that $1,000 becomes almost $7.1 million.

Buffett and Munger might have earned the market's respect through performance, but they've earned the appreciation of the broader investment community through their willingness to share what they've learned and how they've been so successful.

The result is the pilgrimage made by many investors, myself included, to Omaha, Nebraska for the annual meeting of Berkshire Hathaway. The official business meeting is short, and held only after Buffett and Munger take six hours of questions. Topics range from China, wages policy, competitive advantages, how to think about great businesses, and the psychology involved in investing well.

This is the fourth time I've been to the meeting, including the last three years in a row. That's pretty clear evidence that I'm either crazy, or there's something worth learning from these two very smart, experienced and successful men.

Quotes to invest by

Here's some of the smartest financial advice Warren Buffett has ever given:

"Time is the enemy of the poor business and the friend of the great business."

"Only buy something that you'd be perfectly happy to hold if the market shut down for 10 years."

"I don't look to jump over 7-foot bars: I look around for 1-foot bars that I can step over."

"Price is what you pay; value is what you get."

Charlie Munger is somewhat more forthright, somewhat acerbic, but just as quotable:

"When any guy offers you a chance to earn lots of money without risk, don't listen to the rest of his sentence. Follow this, and you'll save yourself a lot of misery."

"People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There's always been a market for people who pretend to know the future. Listening to today's forecasters is just as crazy as when the king hired the guy to look at the sheep guts."

Scott Phillips is a Motley Fool investment advisor. You can follow Scott on Twitter @TMFGilla. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691).

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