“Bertie, like most of you, understands many accounting terms, but she is not ready for a CPA exam. She follows business news – reading four newspapers daily – but doesn’t consider herself an economic expert. She is sensible – very sensible – instinctively knowing that pundits should always be ignored. After all, if she could reliably predict tomorrow’s winners, would she freely share her valuable insights and thereby increase competitive buying? That would be like finding gold and then handing a map to the neighbors showing its location.” - Warren Buffet, Berkshire Hathaway Shareholder Letter 2023.

So you might be wondering who Bertie is? Well, it is my great pleasure to introduce Warren Buffet’s sister, Bertie. She grew up in Omaha, Nebraska and currently resides with her three daughters in Maine. She was an early investor in Berkshire Hathaway and has a large portion of her savings in Berkshire Hathaway shares which she has held since 1980. Warren has mentioned Bertie more than 20 times in his letter. Although he says that he visualizes Bertie when writing his letter, I think he regards Bertie as a way to educate people and uses her as a medium to teach people how to think about investing in general. He also offers subtle cues and warnings about bad actors and bad behaviors. In a sense, Warren paints Bertie as someone who is very smart, extremely economically rational, well behaved and no one’s fool.

So I thought I should offer my extension of what I imagine a Millennial and Gen-Z Bertie should be like. There isn’t much difference between both the Berties. Some common areas of interest are - high ROI, steady flow of income and need of financial stability. Most of the investment philosophies that Warren’s sister believes in still apply to the new Bertie. However, the dynamics of how Gen-Z and Millennials engage with the financial market is very different than how old Bertie does it. The new Bertie is just like any other Millennial or Gen-Z investor, she learns a lot from reels and tiktoks. She does not sit in front of the TV every morning holding a newspaper while sipping tea from a ceramic cup. She does not have much liquid cash for investing. She does not understand complex financial jargons nor is she interested in studying it. She is out hanging with her friends every Friday night and is too hungover to be of sane mind on Saturday. But in the end, Bertie will outperform a lot of her Millennial and Gen-Z peers in the financial markets – why? – because she is no one’s fool.

Bertie’s rational decision making skills give her a competitive edge. She knows some stuff that a lot of her peers will not bother to learn or will simply ignore. Here is what she knows-

- She wants to invest in businesses not stocks. When a business interests her, she studies the business inside and out, she reads the annual reports and letters, she studies the industry and competition. When she has more questions, she simply reaches out to people who know more about the industry than her. If she were a college student, she would reach out to her business school professors. She would do everything necessary to have a full and clear comprehension of the business and its future outlook. Only then she will make her decision. Sometimes even after all the time spent on research and hardwork, she decides not to invest. She knows she shouldn’t let her emotions get in the way. In short, she makes extremely rational economic decisions. More importantly, she does not let the market sway her feelings. She is unbothered by hype stocks and fancy companies. She needs to understand the business fundamentals. However, when she decides to invest in a business, she invests significantly and with a long-term perspective. Over the short term, the market behaves like a casino - very volatile, no one really knows why prices move the way they do. But over the long term, the valuation of a business is directly related to the earnings.

- She knows that it’s all about the long-term. Most successful companies today were operating at huge losses when they first started because they were heavily reinvesting capital back into their business to build a stable foundation. Bertie manages her investment portfolio just like a business - a farming business more specifically. She knows that marketable equities, although more liquid, are just like farms. Before buying a farm you will do heavy research on farming, soil types, vegetation, agriculture, and the market etc. After buying the farm, you will keep the farm for 10, 20 years. It is very unlikely that you will sell the farm the next day, next month or even next year just because the price of the land went up. Bertie behaves in the same way with her investments. She does her research, extensively studies the business she wants to invest in, and buys it for a fair price and sits patiently. Every now and then she updates herself on how the business is doing. Having said that, it is important to add that she gives no attention to quarterly expectations and earnings. Again, she is thinking long term.

-She couldn’t care less about what pundits, mainstream media, and analysts say. She is a very focused person. She strictly looks at facts and figures, not pundits and analyst expectations and fantasies. She is a part owner of the business she invested in and she behaves as such. She does not let outsiders guide her decisions.

- She is not diversified. She knows that if you know what you’re doing then diversifying to more than 5 businesses is absurd. It is very hard to analyze and then invest in 10, 20 businesses. She finds a few good businesses - those that can deploy additional capital at high rates of returns in the future - and she sits patiently while the businesses do their thing. It would take her more than 5 years to invest in 10 to 15 businesses because of the time involved with researching and analyzing individual business. By that time she would already see substantial returns on investments made 5 years ago.

- Above all else, she can smell bullshit from hundreds of miles away. She, just like any Millennial or Gen-Z, uses social media a lot. She consistently sees “influencers” selling courses on who to get rich, and offering free books (you have to pay for shipping of course) on how to make $500k a year. She does not even waste a pulse of her heartbeat even thinking about buying into such stuff. They will sell you courses on how to get rich but they got rich by selling you courses on how to get rich. Every so often, a salesperson or an influencer will try to convince her to get into a hot new deal, she knows there are abundant “hot new deals” out there. She doesn’t have to buy into all of them or any of them. Afterall, no one is going to say “Here is bullshit, let me try to sell you.” Of course everyone is convinced that they are selling you something wonderful.
She also does not buy into the whole notion that you can predict market behavior by drawing a bunch of lines around a graph. Stock prices move because people are either selling or buying them. How can you possibly predict human behavior by lines and circles? Even if someone did find the magic scheme to rationally and sustainably get rich quick, do you really think they are going to go around telling everyone about it and thus increase competition.
Every now and then, her friends, family and acquaintances tell her about a new hot stock or business that is doing well. She trusts them but always verifies. Her entire investment philosophy stands on principle of conducting independent and thorough due diligence.

-Lastly, she always has liquid cash just in case an attractive business becomes undervalued. In such times, she acts quick and takes big positions.

In conclusion, Bertie knows the bounds of her competency. Warren Buffet says “stay within the circle of your competency”. She knows what industry she understands and the businesses that operate within. She is not rash and does not allocate any capital in haste unless the situation warrants. She does not really care about the S&P 500 or the Dow Jones, she cares about the businesses she has invested in.