Earlier this month, Berkshire Hathaway held its annual shareholders meeting. Presiding over the event was Warren Buffett, one of the greatest businessmen of all time.

His influence and perspective as chairman and chief executive of a diversified, multinational company employing 246,000 people always provides a worthwhile view of the global economy and markets.

Over five hours and 50 questions, Buffett and his longtime business partner, Charlie Munger, dispensed some timeless wisdom. As a guest at the event, I was able to appreciate their much good-natured humor and an unvarnished assessment of the current economic situation. In that process, they provided a number of interesting investment ideas and thoughts to contemplate. Among them:

• Consumer behavior has changed dramatically and this change will last a long time.

• The housing market may take another two years to work off its existing inventory excesses. Home sales are picking up but at lower prices.

• China will be a very tough competitor for the U.S. We can't indefinitely buy goods from China with dollars we borrow from them.

• Inflation is going to be an issue at some point. The ultimate consequences of the stimulus plan are unknown.

Our System Works

However, beyond these insights, there were two larger, more consequential takeaways for all investors—but particularly investors partial to using passive investment vehicles. One is economic-related and the other investment-related.

The most important economic lesson emerged when the topic turned to our capitalist system. Responding to a question, Buffett said: "Our system works. Over time, people will live better and better. We have a system that unleashes human potential, and now China has a system that unleashes human potential. We will have interruptions. We overshoot and undershoot sometimes, but your kids and grandkids will live better than you. Over time, we move ahead at a pretty damn rapid rate."

I clapped loudly as he finished because I couldn't agree more. I think that one snippet more than any bank stress test result or earnings report have powered global equities in the past several weeks. We needed someone of Buffett's stature to remind us of our collective productive capacity and reassure us that yes, our future generations have an optimistic future.

Buffett reminded investors that our capitalist systems will allow our economic engines to continue to progress over time. In my opinion, the big idea for all investors is aligning your portfolio such that you participate in the world's productive capacity. No vehicles do this more efficiently than passive vehicles such as ETFs. In general, active management provides exposure to individual companies. Passive vehicles like index funds and exchange-traded funds provide exposure to the economies of the world.

They All Got Creamed

The most important investment lesson came when someone asked about the four "waiting in the wings" investment managers. Buffett has four hand-picked investment managers in his "on deck circle," one of whom will be selected to take over as chief investment officer of Berkshire after his demise.

Highlighting the tough time traditional active managers continually have in selecting individual securities that "beat the market," Buffett indicated all four failed to best the S&P 500 return of -37% in 2008.

Munger added more color and candor. He added: "They all got creamed." (Buffett said that only Wells Fargo CEO Dick Kovacevich is ahead of Charlie in the plain-speaking department.)

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