It's 5am on Saturday morning and outside the Qwest Center in Omaha, Nebraska, the faithful are already gathering under stormy skies.

Many of them come every year to hear Warren Buffett, “the Sage of Omaha” and the world’s richest man, speak at his company’s annual shareholder meeting.

With the exception of the Pope, few men approaching 80 could guarantee to sell out a concert stadium. Don’t even try getting a car, hotel room or a restaurant reservation at short notice. This year Berkshire Hathaway, his holding company, estimated that a record 30,000 to 32,000 people, up from 27,000 last year, would come for an event that has been dubbed “Woodstock for Capitalists”.

When the doors finally opened at 7am, the crowd surged in. Pink Floyd’s Money was being played as people pushed and fought over seats. It was a take-no-prisoners affair – capitalism red in tooth and claw.

For five hours Buffett, 77, and his sidekick, Charlie Munger, 84, sat on stage eating sweets and drinking Coke while they discussed everything from stock options and sub-prime mortgages to longevity and charity.

Later this month Qwest will host The Police reunion tour and World Wrestling Entertainment’s “Judgment Day” slam-fest. Perhaps Buffett should have borrowed the wrestlers’ slogan for this year’s event.

The crowd were a confused lot. The economy seems to be on the brink of recession, house prices are falling, petrol prices are rising. Berkshire’s first-quarter profit dropped 64% as underwriting income collapsed and the conglomerate reported $1.7 billion (£860m) in unrealised derivatives losses.

In March, Buffett warned investors that “the party is over”, saying he expected insurance earnings to fall off significantly in 2008. But over the past year Buffett has pulled through for them – easily beating stock-market averages. And his investors seemed to have money in their pockets. What was going on? Would Buffett have the answer?

It was not just Americans who were confused. Oystein Elgan had travelled from Norway for the event. “It’s great fun,” he said. “It’s as much a lecture as anything else. I’m worried about the economy, but I’m not sure why.”

Before the festivities began we were treated to a display of “action painting” that should have made Jackson Pollock roll in his grave. Michael Israel, Las Vegas’s answer to Rolf Harris, had been commissioned to paint Buffett. “Using his double-fisted paint-brush style and other ‘unconventional techniques’,” the press release informed us, Israel would create a “museum-worthy masterpiece in less time than it takes most of us to text message a friend.” Israel has produced similar masterpieces of U2’s Bono, Bill Clinton and Muhammad Ali. The results are more Bayswater Road than Tate Modern. But it was for charity and he was using Benjamin Moore Paints (proprietor W Buffett) so shareholders let it pass.

Then it was on to the Buffett movie – an annual event where Berkshire’s senior executives spoof themselves and their famous pals. In this year’s offering, Buffett gets a passion for internet stocks. When Munger refuses to let him invest, Buffett calls in the services of Munger crush Jamie Lee Curtis. “Is that Mr Hunger, I mean Munger?” Curtis purrs. Munger is sold on Curtis and the net, as long as he can appear in Curtis’s next film. Buffett in the meantime swaps jobs with Susan Lucci, a soap star.

Back in the Qwest auditorium Lucci took to the stage with Munger only to be ousted by Buffett who had changed his mind.

“I can’t live without Berkshire,” he said.

The two are quite a double act. Buffett is the joker to Munger’s dour straight man. Asked about the stock market, Buffett said he had no opinion of which way it was going. “We ignore 99.9% of what we see and every now and then we see something that’s attractively priced to us as a business. Forget about the stock,” he said. Then he turned to his partner: “Charlie?”

“Nothing to add,” said Munger.

“He’s been practising for weeks,” quipped Buffett.

Most of the stuff people get taught at business school is useless, said Buffett. All they need to know is how to value a business and what to think about stock-market valuations. But business schools need to fill up the time, he said. “If you were teaching Biblical studies and you could read the Bible forward, backward and in four different languages, you would find it hard to tell everyone that it comes down to the Ten Commandments,” he said.

The Buffett-fest is a strange bird. Berkshire Hathaway has two types of shares, A and B. Over the past 43 years Buffett and Munger have grown the book value of these shares from $19 to $78,008, a rate of 21.1% compounded annually. In the process they have become investment legends. They avoided the dotcom bubble and much of the sub-prime crash and made fortunes for their shareholders and themselves. Buffett is now estimated to be worth $62 billion. He remains almost studiously humble, living in the same modest home and eating regularly in Piccolo Petes, a no-frills Omaha restaurant.

In part, Buffett’s success has come from his eye for the ordinary. The latest fads don’t interest Munger and Buffett. They like solid businesses and famous brands. For that reason alone Buffett-fest is as much a shopping trip as an economics lecture. The weekend proper starts on Friday night with an event at Borsheims, the posh jewellery and knickknack vendor, where the rich and very rich can buy bling at discount prices.

Recession be damned. These people were shopping like mad. Celebrity jeweller Stephen Webster had flown over from London especially for the weekend and was almost having to fight them off with a (diamond-covered) stick thanks to his rock’n’roll jewellery and Jack Sparrow charm. “This place is brilliant,” he said. “These people are here to buy and have a great time.” Last year he made £350,000 in the weekend. He was confident this year would be better.

After Buffett and Munger answered questions on Saturday morning, the crowd was ordered into the Qwest Center’s Buffett Mall to buy goods from Berkshire brands, including Fruit of the Loom, See’s Candies, and a showcase Clayton Home, priced at $69,500.

Not everyone loves Buffett. Outside the event Native Americans were protesting against the damming of Northern Californian rivers by Buffett-controlled companies. The dams had created an environmental disaster in the Klamath river basin, said the protesters. “He is responsible ultimately but he just keeps passing us off,” said Annelia Norris of the Yurok tribe.

The protesters made an odd sight given the tranquil sea of congratulation that Buffett usually swims in.

Speaking on television before the event, Buffett said he loved being “Papa Bear” for the day and showing his shareholders their business. “They are real owners,” he said. “It’s a real, honest-to-god business that they have bought into and that they are going to be part of for the rest of their lives.”

Berkshire had a good year in 2007. It boosted profits 20% to $13.2 billion despite increased competition in insurance and the impact of the housing slump on several of its 70 businesses.

The company has also made some big investments. On Christmas Day, Buffett snapped up Marmon, the industrial holding firm owned by the wealthy Pritz-ker family, for $4.5 billion. Last week he put up $2.1 billion to sweeten Mars’s takeover of Wrigley, the gum and sweets firm.

Berkshire has more than $40 billion to spend, not bad, especially as rival bidders have been sidelined by the credit crunch. American Express, the credit-card company, is seen as a potential target – Berkshire already owns a chunk of it.

While Buffett and his investors are doing well now, the future is uncertain for everyone. Two years ago the sage compared America with “an incredibly rich family” that was “consuming more than we bring in. So we sell off a piece of the farm, or mortgage it. We can’t see what is being sold. We trade away a bit of the farm every day and the rest of the world is happy to buy it. That can go on for a long time but our children will be paying for it one way or another.”

Munger was more blunt. He said America had reached the apex of western civilisation and that today society reminded him of Sodom and Gomorrah. “The last 60 years have been the best years for western civilisation. My generation has been very favoured. It is unlikely that the next 60 years will be so favour-able,” said Munger.

The pair are the first to admit they are not always right. Last year, Buffett said sub-prime mortgages did not pose a “huge danger” to the economy, and “it’s unlikely that this factor will trigger anything of a massive nature in the general economy”. He was wrong but his savvy bets mean that Berkshire hasn’t suffered too much.

Neither man, however, believes he will be able to duplicate the sort of returns from the stock market that have made them and their investors so wealthy. “We’ll get decent returns,” said Buffett, “but not indecent.”

It’s unlikely to be Buffett’s or Munger’s problem, unless the pair can dodge death as well as they dodge recessions. One day soon Buffett will retire.

Bill Gates, Buffett’s close friend, stepped down from running Microsoft this year. At 52 he is a quarter century younger than Buffett. In this year’s annual report Buffett said he had “reluctantly discarded the notion of my continuing to manage the portfolio after my death”. Succession plans are now in place, said Buffett, with four potential replacements waiting in the wings.

They face an an unenviable task. Whoever takes over from Buffett will have the legacy oflast century’s good fortune as well as the sage’s to contend with.

“I love Warren Buffett,” said Jack Hohensee, an Omaha-based Berkshire investor. “Not just because he has done so well for me but because of the guy he is. He’s humble. He’s generous. He’s just a great guy.”

Hohensee is a local, but even he is not sure he would come back for the meeting after Buffett finally hands over the reins.

But for all the talk about succession, it doesn’t sound like Buffett or Munger are looking for the exit. Not just yet.

TOP GIVERS

“At 84 and 77, Charlie and I remain lucky beyond our dreams,” Buffett said in this year’s letter to shareholders. “Every day is exciting to us; no wonder we tap dance to work. But nothing is more fun for us than getting together with our shareholder-partners at Berkshire’s annual meeting.”
1638: John Harvard bequeaths a library and half his estate to a school in Cambridge, Massachusetts – now Harvard university. 1800: The US Library of Congress is established with the personal collection of retired president Thomas Jefferson. 1867: Financier George Peabody establishes the eponymous fund for the relief of suffering in the southern United States. 1889: Andrew Carnegie writes The Gospel of Wealth and begins founding public libraries and other charitable agencies. Others, like John D Rockefeller, follow his example. 1998: On his 43rd birthday, Bill Gates contributes $1 billion to the foundation established with his wife, Melinda. 2006: Warren Buffett announces he is giving away $43.5 billion, the largest part of which, $31 billion, is to the Gates Foundation.

LIFE OF A BORN INVESTOR

Born August 30, 1930, in Omaha, Nebraska, Warren Buffett is the second of three children and the only son. He started his first ‘business’ at the age of five, selling gum outside his home. Buffett bought Berkshire Hathaway, a struggling textile mill, in 1965. Its market value is now about $200 billion. Berkshire owns more than 70 companies, including Acme Building Brands, ice-cream maker Dairy Queen, Fruit of the Loom and insurer Geico. It also has stakes in firms such as American Express, Coca-Cola and Tesco. Forbes magazine estimates Buffett’s wealth at $62 billion, but the ‘Sage of Omaha’ draws an annual salary of only $100,000 to run Berkshire. He has lived in the same house for half a century, a five-bedroom property on less than three-quarters of an acre. It was valued at $710,000 last year. Buffett has stipulated that all his Berkshire shares will go to charities after his death.

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