Omaha Wisdom

Last month, some 30,000 Berkshire Hathaway shareholders listened to Chairman (and superinvestor) Warren Buffett and his partner, Charlie Munger, answer questions for five hours in Omaha. Here are some snippets, paraphrased:

• On corporate compensation: The idea that you have to offer someone a $10 million dollar pension just to keep him around - there's something wrong with that. … Executives should volunteer to get paid less. (Munger opined: People taking compensation have a moral duty not to take it, a moral duty to be underpaid. If generals and archbishops can do it, why can't leaders of large enterprises take less than the last dollar?)

• On hedging against the U.S. dollar: We're happy investing in overseas companies because their currencies aren't likely to decrease in a big way against our dollar, since the U.S. government seems likely to follow policies that make the dollar weaker.

• On communication: The ability to communicate in writing and speaking is not taught enough, but it's enormously important. If you can communicate well, you have an enormous advantage. Force yourself into situations where you have to develop those abilities.

• On teaching children: My biggest educator was my father. It is important who you marry, too. Those are great teachers. … The most important job you have is to be a teacher to your children. You are a big, great thing to them, you don't get a rewind button, you don't get to do it twice, and you should teach by what you do, not what you say.

• On developing yourself: You can become the person you want to be. I often ask students to imagine buying one classmate to own for the rest of their life. The people they pick don't have the highest IQs, but are the most effective, the ones you want to be around. They're easy to work with, generous, on time, not claiming credit, helping others. … Those are good habits to develop.

• How they invest: We buy businesses that are drowning in cash.

We'll share more next week. Read Buffett's educational letters to shareholders at www.berkshirehathaway.com.