OMAHA, Neb. -- There's plenty of magic left in the Oracle of Omaha.


Berkshire Hathaway's

(BRK.A) - Get Report

billionaire Chairman

Warren Buffett

may have lost some of his stock-picking magic, his mystical charm with shareholders remains as strong as ever. "This is more like a religious rally than a business meeting," said a newcomer from the British press about the Berkshire Hathaway annual meeting Saturday in Omaha. "I've never seen anything quite like it," he added as Buffett was surrounded by a gaggle of adoring shareholders looking for photo ops before the meeting began.

On the eve of the annual meeting, shareholders

gave hints that they were concerned about the future of Buffett's icon-like status in a market increasingly dominated by New Economy ideas. After all, Buffett himself called his 1999 performance "near failing" and Berkshire stock is underperforming the markets over a three-year period for the first time in its history. One might think that would prompt investors to use the annual meeting to pose some challenging questions to management. That's been the case at companies in which Buffett holds a significant stake: Executives at


(KO) - Get Report



(G) - Get Report



(DIS) - Get Report

have all been peppered with questions over plans to reverse the erosion of shareholder value.

But any concerns of contention before the Berkshire annual meeting were quickly extinguished upon entering the Omaha Civic Auditorium just after dawn on Saturday. Shareholders had lined up for more than an hour before the doors swung open at 7 a.m. to enter their idea of capitalist Camelot -- a chance to stake out a seat close to where Buffett and his sidekick, Berkshire Vice Chairman

Charlie Munger

, would hold court. They poured through the makeshift mall, shopping for offerings from many Berkshire subsidiaries, from

Dairy Queen


See's Candy


Kirby Vacuums


Nebraska Furniture Mart

and even multimillion-dollar liability policies from an insurance subsidiary. Ultimately, the meeting gave parishioners a chance to catch an up-close glance of the icon they've come to worship as he surveyed the troops among the exhibits and made his way to his pedestal. "It's a chance to see the smartest investor ever," said Peggy Ogorak, a Berkshire shareholder from Chicago. "He can teach us all so much."

Even Buffett was confident his less-than-stellar performance wouldn't change the celebratory atmosphere. Asked if the mood would be different in light of a subpar year, Buffett dismissed the notion. "It's no different; you can see the people. It's always the same," he said as he posed for a picture with a human-sized Dairy Queen ice-cream cone sauntering among the exhibits. When asked if the queries from shareholders could be more challenging, he was matter-of-fact. "I don't think so."

The opening movie set the scene. This year's feature was a clip from the fictional game show "Who Wants to Be a Jillionaire?" with contestants

Level 3 Communications


Chairman and Berkshire board member Walter Scott, Jr., and Omaha resident,


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Chairman J. Ricketts, and Buffett.

After that, any doubt about the tone was quickly put to rest by the first investor to address Buffett. The question, along with the traditional homily, came from Steve Gates, a shareholder of six years from Chicago. Although he couldn't recite the praise from previous years (thanking Buffett for all the wealth he'd created for shareholders in the past year), that didn't stop Gates -- and nearly every other investor who stepped to the rostrum in the ensuing seven hours -- from trying.

"I'd like to thank all the people who sold Berkshire this year for allowing us to purchase more of the greatest company in the world at dirt-cheap prices," he said to roaring approval from the nearly 8,000 shareholders in attendance.

Buffett responded in his typically epigrammatic way, "I will convey your thanks."

And the meeting was off and running, yet another Berkshire and Buffett love fest, possibly saved by the recent three-week rally in Berkshire stock, but with the undeniable backdrop of the worst relative three-year price performance in Berkshire's history. The only hint of dissent was from one shareholder who asked Buffett why he wouldn't consider investing a dollop of the portfolio in technology. The audience's unease at the questioner's brashness was almost audible.

The incongruities of the situation were amazing. No one can deny the vast wealth Buffett has created over his nearly four decades at the helm of Berkshire. And his intellect, his discipline and his honesty should be celebrated in an investment world all too often cluttered with foolhardy daytraders, a lack of discipline and random chicanery.

Still, in the end, investing is about making money. Berkshire and Buffett have not done that for shareholders in the past year, in absolute terms, and shareholders have lost ground, in relative terms, for the past three years. Whatever the reasons, if you believe in rational choice -- the hallmark of economics -- every investor is out to maximize his or her utility, the returns in his or her portfolio.

While it may be too early to tell, if Berkshire continues to provide subpar returns, rational investors must look at alternatives. Buffett's claim that he pays little attention to the stock price isn't a luxury afforded to his shareholders, most of whom possess far less than one-tenth of 1% of his personal wealth.

Regardless of Buffett's performance in the coming year -- and I hope he knocks the cover off the ball, just as Ernie Banks did with the pitch Buffett tossed him at Saturday night's baseball game -- the worship-like blinders many Berkshire shareholders appear to wear leads me to restate one of the first investment lessons I ever learned:

It can be dangerous to fall in love with the companies in which you invest. It may be more dangerous to fall in love with the chairman.

The Technology Conundrum

Since many reader emails expressed puzzlement over Buffett's aversion to technology, here's my take.

Buffett made his position on investing in "technology" stocks quite clear at the meeting. "We simply don't have any way to know where these businesses will be in 10 years," suggesting a litmus test for all of Berkshire's equity investments.

That said, Buffett does think the Internet is having a

significant impact on many of Berkshire's operating companies and investments -- from his insurance holdings like


to his publishing holdings like

World Book


The Buffalo News

and his investment in

The Washington Post



(One might ask why Buffett, if he is as uncertain about the publishing business as he indicated, still owns these companies. After all, even he acknowledges that he has no idea what

The Washington Post

will look like in 10 years.)

While many see inconsistencies in his views, others do not. "He does spend a fair amount of time thinking about how technology impacts his businesses," says Kenneth Shubin Stein, a Berkshire shareholder and principal of

Compo Asset Management

, a New York-based hedge fund. "That's not inconsistent with the idea that he won't invest in tech. He won't buy what he doesn't understand."

Buffett appears intransigent in his position, so don't look for even


(MSFT) - Get Report

to creep into the portfolio anytime soon. And, if you don't like that, Buffett encouraged shareholders to look elsewhere. "If you think you know someone who does understand it and can invest well, that's fine. We don't."

Which led shareholder Jefferson Lilly, a former technology investment banker who is now an executive at a Silicon Valley Internet start-up, to conclude, "He is what he is. And he has the wherewithal to say if you don't like it that's fine. Go somewhere else."


Don't forget to join us on the message boards to weigh in with your thoughts. And, on Tuesday, join myself and Robert Hagstrom, portfolio manager of the

LeggMason Focus Trust

and author of

The Warren Buffett Portfolio



for a chat about Buffett, Berkshire and the annual Capitalist Woodstock.

Christopher S. Edmonds is president of Resource Dynamics, a private financial consulting firm based in Atlanta. At time of publication, Edmonds was long Microsoft, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he welcomes your feedback at