Warren Buffett's Critical Warning.

now we've got to talk about Warren

Buffett's annual shareholder letter and

some very insightful comments that he

made now we're not just going to talk

about the only thing the mainstream

media cared about which was talk about

share BuyBacks we actually need to talk

about some of the details in Warren

Buffett's annual shareholder letter if

you haven't read it before it's probably

one of the best reads that you can use

on an annual basis to make sure that

your investing Theses and principles are

aligned with a potential better reality

so let's go right into the Buffett

annual shareholder letter and let's look

at some of the most Salient points first

Warren Buffett makes it very clear that

our economy is designed for what's known

as creative disrupt destruction and

creative destruction is really where you

have winners and losers in an economy

this stands in complete contrast to

Communism where everybody is a loser

in capitalism you end up having the best

technology succeed there's a reason

Tesla has the market cap it does because

it's growing EV production at a rate of

30 to 50 percent whereas Ford and GM the

Legacy automakers can't figure out how

to be profitable in making AVS and are

actually pausing both of them are

pausing production because they have a

glut of old school vehicles and aren't

actually capable of sticking with

producing EV vehicles and certainly not

profitable Ford's not expected to be

profitable on EV production until 2026

and it was only just recently that

Toyota actually realized dang maybe

making electric vehicles is the future

not just sticking with hybrids at the

same time the company Nikola is a now

warning of a going concern which is

basically a fancy way of saying they

might go bankrupt within the next 12

months because of why well their

products sucking and when your products

suck you go bankrupt that's the way

America works if you don't refine you

die and if you don't pay attention to

your weaknesses you fail now Warren

Buffett here makes it very clear the

system that we live in creates a pile of

losers while concurrently delivering a

gusher of improved goods and services

that is the point of America the point

of America is to make things more

accessible and better to everyone better

quality and more available for example

my real estate startup that I'm creating

I'm trying to turn it into what I

believe will be the Robin Hood of real

estate think about commission free

trading and easy investing into stocks

that Robin Hood created imagine that for

real estate low to no fee easy and

liquid real estate investing that's the

future that doesn't exist today but it's

something that I'm working towards and

I'm betting my entire net worth on

making sure that happens but it's an

example of of reiterating exactly what

Warren Buffett says that creative

disruption is actually a good thing it's

a very good thing because it gives the

consumer the end user a better good and

service and if you don't pay attention

to the Austrian economic Economist you

only pay attention to the key Keynesian

Theory then unfortunately you might end

up with an oopsie-doopsy believing that

corporate welfare will end up saving you

well the reality is if you don't uh

adopt with providing future value you'll

go bankrupt the same is true for you as

a laborer you work whether you provide

goods or services unless you're retired

you work you put in time to create a

result now your goal is to make as much

money as possible with as little time as

possible but the reality is we'll talk

about this later is that artificial

intelligence will replace the vast

majority of jobs and if you're not

getting what I call to a level three of

competence in your industry you'll end

up getting placed if you're at level one

two again we'll talk about that later

you get replaced so you have to think

about how could you be more efficient

and provide more value to where you'll

be Irreplaceable even the place in the

face of AI so uh Warren Buffett here

talks also sort of so that's sort of a

message to individuals and to businesses

but Warren Buffett then talks about

efficiency only existing in textbooks

this is a very common thesis and that is

in theory that is told or taught in

schools and that is the efficient market

hypothesis the efficient market

hypothesis says that at any given point

the market is appropriately valuing

stocks or businesses and what their

actual value is and Warren Buffett here

says efficient markets quote unquote

only exist in textbooks in truth

marketable stocks and bonds are baffling

their behavior is usually understandable

only in retrospect I'd like to give my

favorite example

Tesla stock had absolutely no reason for

selling off the way that it did in 2022

other than what do we know in retrospect

we know that Elon Musk sold 24 billion

dollars of Tesla stock where retail

holders holders of the stock only bought

15 billion that created a negative 9

billion dollar pressure of the stock and

since that was spread over the years

since people don't buy it a lump sum

January 1st just like Elon doesn't sell

at a lump sum at one period he sold

three or four times last year you create

a very easy downtrend that then becomes

shortable when that downtrend becomes

shortable it becomes very profitable

short to short which encourages more

shorting what comes out of that an

inefficient Market the company is not

actually being priced on fundamentals it

is being priced based off of

inefficiencies and Trends so Warren

Buffett here could not be more correct

the valuation of companies is not based

on this this myth of an efficient market

the market is extremely inefficient and

you have to have faith in your

fundamental analysis fundamental

analysis by the way is something we do

almost a daily basis in our course

member live stream which I encourage you

to join you can get lifetime access if

you join any of those links down below

and you can pop in whenever you want a

lot of people what they do is they wait

a few days and then they watch them back

on 2X and they get the fundamental

analysis because the only thing that

should give you confidence in markets is

not charts even though there is a

benefit to charting the only thing that

should give you confident in markets is

fundamental analysis because in the long

term fundamental analysis always wins

now people will make fun of fundamental

analysis analysts when we have

short-term term trends that rotate to

downsides and that's okay there's

short-term minded individuals in the

world that like to make fun of other

people when they have the opportunity to

do so but history has a tendency of

ending up making those losers disappear

the people who conduct real fundamental

analysis end up being right in the long

term over and over again and this is

what Warren Buffett is warning up here

and so Warren Buffett argues that really

your goal is focused on making really

good decisions and few really good

decisions that's what meaningfully

helped Warren Buffett become the

successful investor that he is

so uh what he then further encourages

and we'll jump around some of the

specifics of Berkshire Hathaway he then

and I'll briefly touch on this since

this has been widely covered already

Warren Buffett briefly argues that when

it comes to stock BuyBacks it's very

beneficial for companies to conduct

stock BuyBacks when stocks are trading

for a below market value but stock

BuyBacks should not be conducted when

the stocks are trading above a market

value and that is a fundamental market

value the reason for that is Warren

Buffett says if you conduct stock

BuyBacks at below Market values you're

actually benefiting all of the owners of

that company it's kind of like giving

them more kinetic energy for future

gains but if you conduct BuyBacks at an

over the market uh level what you're

really doing is you're cashing people

out at an overvalued position and you're

unfairly transferring corporate assets

to somebody who's taking advantage of a

short-term premium and that is very

dangerous so Warren Buffett makes a very

important argument here that look

BuyBacks are great when they are done at

a level that is fundamentally sound now

the mainstream media really only quoted

the following which was that when you

are told that all repurchases are

harmful to shareholders or the country

or particularly beneficial to CEOs you

are listening to either an economic

illiterate or a silver-tongued demagogue

characters that are not mutually

exclusive very interesting so in other

words

uh that that second that parenthetical

line there means that you can be a

silver tongue demagogue and economically

illiterate and that's a nice slam there

for Warren Buffett

moving on uh Warren Buffett talks a

little bit about do not bet against

America Warren Buffett believes that the

worst thing you could do is bet against

America and this is actually one of the

things that I regularly talk about and

it's don't bet against America train

America is very important

now Charlie and I uh this is Warren

Buffett make the argument that near-term

economic forecasts can be worthless and

this doubles down the reiteration that

is so important to make sure you have

longer and medium and longer term

fundamental analysis as part of your

sort of repertoire of understanding of

what's going on in the world it's one of

the reasons that I like to fundamentally

look through the short-term noise of

what's going on on sort of day-to-day

economic data and I try to look at

longer term fundamental analysis for

companies certainly within our course

member live streams but also on the

channel when we're looking for longer

term trends of are we going to get Paul

volckerd what is disinflation actually

doing what are the longer term Trends

let's keep going Warren Buffett in his

letter goes on to say that uh the uh

will count on America don't bet against

America however you have to be careful

because the world is full of foolish

gamblers and they will never do as well

as the patient investor and if you

believe that you're somebody who could

see the world through some distorted

lens the very likelihood is you're

probably going to end up getting killed

in investing

and the most important thing that you

could do is make sure you actually ask

yourself are you being rational or not

and you have to work on your ability to

find logic and truth because if you

don't then you'll end up staying

irrational and you'll end up getting

lousy results

now Warren Buffett recommends that you

learn a lot from both people you admire

and you detest whether that's through

reading or learning you can learn a lot

from people you like and from people

that you don't like but the worst thing

you could do is try to blind yourself by

investing in sort of mediocre Trends or

mediocre companies because of short-term

thinking now there are some arguments to

be made that Warren Buffett in general

is a long-term investor and stubbornly

holds his long-term Investments for a

long time now it's In fairness we have

to counter this a little bit given that

he pretty quickly quickly flip-flopped

on byd uh here more recently although

that was a relatively long-term hold so

we'll give that back to him uh and TSM

which he really only held for about four

to six months relatively short long-term

purchase there Mr Buffett but hey that's

okay everybody can make mistakes the

goal is that in aggregate you're making

more correct decisions that you were

making bad decisions

so Warren Buffett says if you want to

become a great investor you must keep

learning that it's very very important

to keep learning and learn from

perspective from somebody who might be

slightly older than you or have slightly

more experience than you that doesn't

mean they have to be the absolute best

in everything that they do it just means

learn for people who know even just a

little bit more than you do and make

sure you catch up as quickly as possible

to a long-term perspective of Building

Wealth and making sure you're always

trying to find the truth and operating

under the basis of Reason Warren Buffett

gives a really good analogy He suggests

there are a lot of people who will

believe so wholeheartedly in a in in a

false truth that what they're really

doing is getting off a ship of Truth to

get onto a little Lifeboat of of not

truth a sinking life vote of not truth

and they can't swim and they're trying

to take that little Lifeboat to some

other ship and they just don't make it

so in other words that short-term

gambling of ah even though I can't swim

I'll just take this Lifeboat over there

very very very dangerous so always seek

truth probably one of my most favorite

things that Warren Buffett one of my

most favorite uh letters here from

Warren Buffett