The Oracle's Powerful Performance in Omaha, Part 2

This is the second part of Chris Edmonds' wrap-up of the Berkshire Hathaway annual meeting. Please read the first part if you haven't already.

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The Plaintiffs Should Rest

Every year, Munger finds at least one "social wrong" -- in addition to his annual tirade on corporate accounting gimmicks -- to take to the mat. This year, it was trial lawyers.

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In response to a question at the annual meeting about product-liability issues, Munger lashed out. "What's particularly pernicious is the increasing political power of the plaintiffs' bar," Munger said, suggesting that some jurists even fear retribution from trial attorneys. "I don't think judges have been as hard as they should be on junk science, junk economic testimony and trashy lawyers. And I don't see many signs it is getting better."

And, he piled on at Sunday's press conference. "I think there are some honorable, useful contingency-fee plaintiff lawyers in the world," he said with a quick qualification. "I do not think they are in the majority ... A lot of [their] behavior equals legalized extortion."

While Munger, an attorney, was quick to suggest Berkshire's Benjamin Moore paint unit has little to worry about in the recent rekindling of lead-paint product-liability suits, saying they are based on a "very unreasonable liability theory," he did say some businesses underestimate potential liability issues in the future. "It is conceivable that some businesses have more tort liability than they now think."

Until Death Do Us Part

Sunday's shareholder gathering at Borsheim's -- Berkshire's jewelry subsidiary that changes its price tags from dollars to the equivalent amount of Berkshire stock for the day -- found almost all shareholders regaling in the uplifting message from Saturday's formal annual meeting.

"I thought it was terrific," said Barbara Houskey, a decade-long shareholder from Garden Grove, Calif., who was attending her fourth annual meeting. "I think their financial minds are brilliant, and I think their communications skills with the stockholders are fantastic."

And, shareholders shared the opinion that Buffett's and Munger's candid approach to the ills of corporate America is refreshing. "I thought it was refreshing that they were willing to tell it like it is about some of the shenanigans of what really happen on Wall Street," said Rob Friedman, a shareholder for four years attending his first annual meeting and an equity analyst with Standard & Poor's in Manhattan.

When asked about what might cause them to sell their holdings in Berkshire, the Buffett way of life appears to be ingrained: hold forever. "Death is the only reason I can think of to sell," said Terrell Price, a shareholder from Charlotte, N.C., who is attending his third annual meeting. "And, I hope I never have to."

Houskey had a slightly shorter time horizon. "Death," she said in response to the question, but quickly changed her mind. "No, as a person gets older, you might want to check out a few shares here and there and do what you want to do rather than leaving it for your family. I don't want my children to be destitute, but they can work for it, we did for ours."

Stand-Up From Warren and Charlie

A Berkshire annual meeting wouldn't be the same without the wit and one-liners from two of corporate America's most revered comedic anomalies. So, here's a quick sampling of the humor from Berkshire's 2001 weekend.

Buffett, responding to a question about investing in the Internet, proclaimed ignorance. "It's a great spectator sport for me. I don't want to bet on the game, I just want to watch the game," he said. "I can use the products, and I have a lot of fun with them. I don't know how it happens, but it allows me to read The New York Times at 10:30 at night without having to pay for it."

When a woman asked Munger to explain to her husband that purchasing a large gift at Borsheim's is, for a Berkshire shareholder, nothing more than taking money from one pocket and putting it into another, Munger quipped, "I think when you are buying jewelry for the lady you love, you shouldn't put too much financial calculation into it."

When asked the perennial question about his health and the succession plan at Berkshire, Buffett described the content of the letter he will leave detailing the plans upon his death. "When they open that envelope, the first instruction is to take my pulse again," he said. "If I fail that, there will be a very good person to take my place."

In response to a question about campaign finance reform, an issue Buffett has actively promoted, he recalled the 1988 county commission campaign of his son, Howard. At that point, Munger reminded Buffett of why Howard ran in Omaha, the family home of the Buffetts for six generations: "He wanted to restore the family name."

Buffett, not to be outdone, had a quip of his own: "I suggested they put his name on the ballot in all small letters so they could say he was the Buffett with no capital."

Finally, an 11-year-old girl from Kearney, Neb., asked whether Buffett had any grandsons her age. "How many shares of stock do you have?" Buffett asked. Munger quickly admonished the young lady to be deliberate: "Look carefully at both parents and all four grandparents."

In the end, however, there is always something at this "Capitalist Woodstock" that reminds you of the real reason people have come to worship the Oracle for Omaha: his ability to create wealth and his penchant for common-sense investing.

Maybe not every year -- in the past three years, Berkshire has not outperformed the broader markets -- but over Buffett's career, he has handily crushed nearly every comparable index and mutual fund through a rational, honest and calculated approach toward building a business.

When asked about his investment philosophy and what would make him decide to buy or not to buy a business, Buffett launched into a long description of his decision-making process.

When he was done describing why he wouldn't look at certain businesses, he paused and then said, "To hell with it, we don't want to do it. ... Besides, we're already rich."

So are many longtime Berkshire shareholders, which is one reason why they all keep coming back.

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Please be sure to read Part 1 of this column.