ONE of the keys to a long and healthy life is finding meaningful activities to keep you occupied.

       Evidence for this can be found in many peer-reviewed medical studies, but also the annual reports of Berkshire Hathaway Inc.

       In the 2021 edition, 91-year-old Berkshire chairman Warren Buffett tells of how, after some early career missteps, he and long-time business partner Charlie Munger, 98, “found what we love to do” at Berkshire – and offers no sign that they plan to stop.

       It is of course not entirely up to them when they will stop.

       As Munger put it at the annual meeting earlier this month of his other gig, Daily Journal Corp, when a shareholder asked that “God continue to bestow his blessings” on the pair: “Well, God is about to give a different kind of a blessing on Warren and me. He’s gonna give us whatever afterlife there is.”

       The question of succession was answered at last year’s Berkshire annual shareholder meeting, when Munger seemingly let slip and then Buffett confirmed that Greg Abel, who oversees Berkshire’s non-insurance operating companies and is now 59, would take over as Berkshire chairman upon Buffett’s departure.

       This, and the fact that Buffett mostly sat on his hands over the past year, not making any major acquisitions or investments, left not a whole lot to report in this year’s letter.

       Sitting on his hands when markets are frothy is long-established Buffett practice, and it paid off in a small way over the past couple of months as a stock market correction ended Berkshire’s pandemic-long run of underperformance versus the Standard & Poor’s 500 Index.

       This inaction has also left Berkshire with a gob-smackingly large pile of cash, US$144bil (RM604.51bil), of which US$120bil (RM503.76bil) is held in United States Treasury bills, a stake that, Buffett reports, “leaves Berkshire financing about half of 1% of the publicly-held national debt.”

       He also mentions that Berkshire was responsible for 0.8% of US federal corporate income tax revenue in 2021, which adds a nice symmetry.

       Keeping US$144bil (RM604.51bil) lying around is not the long-term plan (keeping at least US$30bil or RM125.94bil in cash is).

       Buffett wrote: “Charlie and I have endured similar cash-heavy positions from time to time in the past.

       “These periods are never pleasant; they are also never permanent”.

       Berkshire did spend US$27bil (RM113bil) in 2021 buying back its own shares, a course of action Buffett long recommended for other companies and finally started doing at Berkshire in 2011.

       Mainly, though, it’s waiting for a moment of opportunity when valuable assets can be had on the cheap, moments that have been in short supply in recent years.

       In 2019 Buffett wrote of his and Munger’s eagerness to make an “elephant-sized acquisition,” but they have yet to let that eagerness get the better of their dislike of overpaying for things.

       During periods of market froth there are always those who question whether this value-oriented approach to investing still works.

       Of course it does, but given the time periods involved professional investors with clients to answer to can find it quite difficult to execute successfully.

       After shutting down his own proto-hedge fund in 1969 because, as he wrote at the time, “opportunities for investment that are open to the analyst who stresses quantitative factors have virtually disappeared,” Buffett fatefully turned to Berkshire Hathaway, a struggling textile company he bought along the way, as his investment vehicle.

       Things have gone pretty well with that. Since Buffett took control in 1965, Berkshire shareholders have enjoyed a compounded annual gain of 20.1%, versus 10.5% for the S&P 500.

       And as he hints at several points in this year’s letter, Berkshire’s structure gives it advantages over investing rivals that could prove sustainable after his and Munger’s demise.

       There is, for example, the US$147bil (RM617bil) in “float” derived from the collect-now, pay-later nature of Berkshire’s giant insurance business, which Buffett describes as “money we hold and can invest but that does not belong to us.”

       There are the company owners who seek out Berkshire to buy their business because they want to be sure it remains in good hands.

       There are the many, many shareholders who “have elected to join us with an intent approaching ‘till death do us part’”.

       There is admittedly also a sort of fairy dust sprinkled on the enterprise by Buffett and his remarkable ability to combine folksy sentiment with unsentimental capital allocation and get away with it, and we’ll just have to see how long that persists into the Abel era.

       But the Abel era isn’t here yet, and who knows when it’s coming, given the clear anti-aging benefits of running a US$714bil (RM2.9 trillion) conglomerate and investing vehicle. — Bloomberg

       Justin Fox is a Bloomberg Opinion columnist covering business. The views expressed here are the writer’s own.