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Investing gems from Warren Buffett

It's not every day you get to see the world's second richest man lose.

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But the shareholders of Berkshire Hathaway Inc., Warren Buffett's holding company, got to see it twice during the first weekend in May at the Berkshire Hathaway 2007 Annual Shareholders Meeting in Omaha, Neb.

First Buffett, whose net worth Forbes magazine lists at $52 billion, took on friend and Cleveland Cavaliers basketball star LeBron James in a game of "horse." Then he challenged an 11-year-old table tennis champion.

Suffice to say, Buffett probably ought to stick to investing.

Much of the weekend was filled with light-hearted fun. Shareholders who made the pilgrimage to Omaha this year got a chance to shop the merchandise of Berkshire's many subsidiaries, watch a company video of Buffett playing James and capture many Kodak moments of Bill Gates and Warren Buffett playing table tennis at the local mall.

Of course, the real reason people flocked to Omaha, had nothing to do with a desire to see Buffett's athleticism. People came to hear the Oracle of Omaha's comments on a range of issues affecting their lives.

Saturday, May 5, The annual meeting
The annual meeting, which attracted some 27,000 shareholders this year, is anything but a stuffy investors meeting. Beginning like a concert, singer Jimmy Buffett, introduced as "Mr. Buffett," performed a special version of "Margaritaville" -- "Wasting Away in Berkshire Hathawayville," which featured new lyrics about Berkshire and its directors.

The shorts-clad songster introduced the headliners of the event: Warren Buffett and Berkshire Vice Chairman Charlie Munger. The investing pair then sat down for a six-hour question-and-answer session with shareholders, who brought up topics ranging from global warming to Buffett's successor.

Some questions highlighted consumer finance and investing issues worth repeating here. We present some of his thoughts on various financial questions raised by shareholders and members of the press during separate question and answer sessions.

Gems about investing
Read and think before you invest. When a 17-year-old who was attending his 10th consecutive Berkshire annual meeting asked how to become a better investor, Buffett offered some simple but golden advice. Read everything on investing you can get your hands on and fill up your mind with various competing thoughts. After doing that, it's time to get started, as investing on paper and dealing with real money is like "reading a romance novel and doing something else."

He added that when you think about buying shares in a company, think about why you might buy the whole business. If you couldn't write an essay about it, then you shouldn't buy any shares.

Next: "Buffett and Munger on other consumer issues ..."
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