berkshire23.txt

we are here live in Omaha Nebraska good morning everybody I'm Becky quick
along with Mike santoli and in just 30 minutes time Berkshire Hathaway chairman and CEO Warren Buffett's going to be
taking the stage with his vice chair Charlie Munger the legendary duo will also be joined by berkshire's two other
Vice chairs Greg Abel who manages the non-insurance operations for the company and Ajit Jain who runs all of the
insurance businesses and as always it's pretty big crowd here lots and lots of people and a few people you might notice
too Tim Cook is here Apple of course is still berkshire's largest holding big big part of its portfolio there you see
him backstage getting ready to go out and take his seat he gets to sit down in the special seats by the way that's
Debbie pasonic Warren's assistant who's standing by just went bite beside him also in the crowd Bill Murray he has
been here for a couple of days been hanging around you can check out he is taking a seat right now too some other
big people who are expected to be here some well-known names Jane Frazier who's the city CEO Ruth parat of alphabet
she's actually here I did and see her a little earlier and by the way this was a scene just a short time ago as the
Berkshire shareholders who were first in line started streaming onto the floor Mike this is like um Black Friday used
to be yeah day after Thanksgiving people waiting lining up these were the doors
um yeah it was a big rush they opened and everybody comes running in and it's not just because of the rain outside absolutely if it's a massive Arena
Convention Center so people know and uh I don't know what time do they start lining up I looked out the window at 5
30 and I thought huh that's not as big of a crowd as I've seen in years past but then I realized it's because they
changed the setup for this people used to stand about 10 Deep right at the door this year they pushed everybody the
crowds down the the block because they I guess they didn't want too much of a mob scene in one place if you watched it
went for blocks I didn't realize it till I went to the other side of the hotel to see it went for blocks and blocks and I've honestly never seen a line this
long a lot of people around the convention center talking about how it's it's buzzier and more crowded in the
exhibit all this year versus last year which was the first after the pandemic of course they broke for two years so it
seems like there is a little more of a interest in uh in being here in person well they know how to time it there's a lot of news that's happening um usually
you get about 40 000 people who are here this year they've been running ahead just in terms of the number of tickets
that they gave out and I talked to Warren Buffett briefly last night he said that they had 6 000 people who
showed up at will call yesterday to try and get last minute tickets they ran out of tickets they had to go print more to
try and get people in the doors and they've never seen anything like that and as you mentioned the stuff sold out
if you if you look at some of the places that are back here we're going to talk about some of these companies but he's been running the numbers and seeing what
happened I I won't say too much now but he's been tabulating all of this up to see exactly what their sales are running
like here versus uh years fast obviously this is sort of a weird microcosm of the
of the business in the company as a whole and it's uh it's it's not Revenue neutral as he always talks about it
looks you're paying you're paying to play here you are in fact it is going to be a big day here first though we should
talk about the news at hand Berkshire is out with first quarter earnings and that came just moments ago Mike has been
digging through all the numbers on this and there's some stories to be told here there are first of all a big swing to the upside in the overall reported
earnings number uh from about five and a half billion uh dollars in the first quarter last year to 35 and a half
billion but almost all that swing was the The Mark to Market on the Investment Portfolio operating earnings though is
still a good story up almost 13 percent you know over a year up to about a little more than eight billion dollars
um it seems like the insurance business specifically Geico swinging to a fatter
underwriting profit from last year we could talk about exactly how they got there but it seems as if higher pricing
less advertising Revenue they they went from margin as opposed to Pure market share it seems at this point also on the
investment side uh seems like there was a reduction in the Chevron stake uh over
the course of the quarter you have to back into the numbers based on the dollar value of the stakes that they give you in the share prices at the time
but essentially it seems like he Berkshire was a seller of about 20 percent of that stake it's like oh
that's a big six or seven billion uh dollars worth okay and um so it's still a significant holding I think it's also
keep worth keeping in mind Chevron stock was up over 50 last year so simply by the market appreciating the the dollar
value went up fair bit well it's interesting though if they were selling some of that steak while they were building the oxy stake uh the accident
petroleum stake um not a call necessarily on oil overall just maybe
picking exactly relative value or or positioning uh within that uh also
Berkshire a net seller of overall Equity uh Securities in the quarter but the
majority of that net reduction seems to be the Chevron I think the rest of it's hard to know Apple pretty much unchanged
of course the Stock's up a lot but the position is unchanged uh Bank of America also seems unchanged too so those are
two not a lot of change in terms of the key core holder for Bank of America that's the one bank that he has kept he
sold out of a handful of other Banks Banks some of them that he's held for a very long time so Bank of America still
seems to be his favorite maybe we'll hear more about that today you would hope yeah and just maybe General thoughts about his assessment of the
banking system and uh whether it needs help whether it looks like it's an opportunity you have all these
valuations that have been crushed another thing to keep in mind uh for the quarter there was four and a half
billion dollars of shares bought back by Berkshire so that was up from 3.2
billion in the year ago quarter it's not an enormous number in terms of the market value of Berkshire which is 700
billion dollars it's like a you know what 18 billion dollar annual run rate of share buyback but they do reduce the
outstanding shares a net reduction of shares down about 1.2 percent uh year over year so you know there were
questions that came in that I've been looking through shareholder questions for a couple of months now that have been coming in on this and some of the
questions that came in is do you still like Berkshire Hathaway do you still like the stock at this price are you
going to be as aggressive as a buyer and I guess this answers some of that question some of it yeah it's it's absolutely not super aggressive uh but
it's it's it's sort of soaking up some of the shares that are out there and of course Buffett in his shareholder letter
was very vociferous about defending the practice of of being able to buy back
stocks so he does it in a disciplined way he wants to be careful about why he's doing it and what the valuation is
but uh clearly he's willing to use that tool oh the cash went up to 130 billion
dollars so up marginally total cash holder nice Pocket Change um there had been a lot of questions
that came into about the insurance company specifically Geico and you can see the gecko right now that's right shoulder uh people just wondering um
what's happening and I guess we'll dig into that a little deeper today and we've got some numbers that you've been going through be very interested to hear
the color on the strategy behind it because there was a little bit of uh you know an issue last year where it seemed
like profitability was done now pricing is up across the industry yeah so policies are able to be written at
higher prices and so that's happening across the board but it does seem you know as I say in the commentary within the the 10q that they did reduce
advertising expense and it was a big swing to the upside and underwriting earnings I mean with insurance it takes
a while to raise pricing for anybody in the industry because you have to go state by state and get Regulators approvals before approvals before you
can actually raise any of it so there is a delay we saw some a huge hit to the profitability of all the insurers as you
know prices to replace cars prices to fix things construction all of that went up right and they couldn't raise their prices as quickly exactly so it is an
industry-wide phenomena but it seems as if uh Geico is trying to decide they want to skew toward more profitable
customers we'll see if that's a theme that's going to continue another couple of tidbits are building products and
consumers margin squeeze that's happening across the industry railroads pretty flat okay the BNSF pretty flat
year over year and a pretty big reduction in consumer related Freight uh loading who needs an analyst you've
already done all the work wow did the highlights I got my little you know tape bookmarks yeah that's good it works okay
we have a lot more to get to this morning we want to give you a quick look at today's schedule though Mike and I are going to be here with you until 10
15 a.m eastern time that is when Buffett Munger and the vice chairman Greg Abel and Ajit Jane are going to be taking the
stage you get to watch all of this the annual meeting you can see it exclusively here on CNBC and cnbc.com
Buffett's going to begin the meeting with the summary of the past quarters results but like we said Mike's already
done that for you so that's your bathroom break time then he's going to open the stage to shareholder questions
and I'll be asking some that have been emailed into me again we've gotten lots and lots of emails this year more than
I've ever seen Buffett's also going to rotate through the 11 microphone microphone positions that are in the
audience too so you'll see a lot of questions being asked around 1pm Buffett will break for lunch but you get to
stick around with us Mike and I will be joined right here by Berkshire board members Ron Olson and Howard Buffett we'll also be talking to Tech investor
Ann widblad and Activision Blizzard CEO Bobby kodek who has been coming to this meeting for years he was here last year
but had to leave early because he was going to a birthday party so he left I think at the lunch break after that is
when Buffett revealed to the crowd that he had taken a stake in Activision Blizzard so Bobby found out when he was
on a plane on his way back home so he's here this year too and we'll find out if there's any new news on that at the time
of course it was viewed as an Arbitrage position because Activision agreed to be sold to Microsoft for cash and Buffett
said it was an Arbitrage position yeah exactly the spread was very wide it seemed just like the market was leaving money on the table now that it looks
like perhaps Regulators in the UK might block that deal the question is does it remain you know on a fundamental basis
yeah that would be fascinating to hear the commentary on that and then at 2 p.m Eastern Buffett and Munger will be back
on stage for another two and a half hours of shareholder q a after the afternoon session wraps we'll be back
with you to recap all of the day's action while the Market's staging a big rally
to close the week after a strong job support and revisions to the February and March employment numbers Apple a
major Berkshire holding which was unchanged in the quarter a key driver for yesterday's rally the stock closing
Higher by about four and a half percent uh on the day after posting better than expected earnings Apple now up nearly 34
percent so far this year here to help us navigate the current market environment and look at opportunities right now as
John Rogers he's the chairman and co-ceo of aerial Investments and a long time Berkshire meeting attendee John good to
see you thanks for stopping by here great to be here um what's your uh I guess what you what are you looking to hear from Mr Buffett
and Munger uh both about I mean we know that the principles are going to accentuate that they always do about how
they do their business and and what matters and doesn't matter in the uh in the earnings and how they approach things but what about the moment right
now where it seems like there's big big questions about financial system stability whether there's value in in
Bank stocks whether the economy can handle these rate hikes a couple things that I'm going to be looking for one you
know when Becky interviewed Warren when he was in Asia and there was talk and Warren talked about how certain of his
companies were not meeting expectations earnings were going to be less than expected and profits were lower than expected and so I want to see if that
trend has continued are is he still seeing weakness in the overall economy and the second thing you know Becky
followed up the question about Paramount Global and he was kind of a little bit soft and not as aggressively supporting
his position as I had expected so I'm curious to see what he has to say today about it especially after the stock just
located this week and you are an owner of Paramount correct we are an owner of Paramount Global assist it's not been a
fun week yeah how do you feel about things I mean Paramount slashing the dividend um I I think it caught some people by
surprise but Mario gabelli was here yesterday and he said it didn't catch him by surprise he wanted them to do that because he wanted them to shore up
their cast position and put it back into their business at this point but I think it was the right decision and I watched
Mario yesterday morning and then we did a panel and he has been very positive about the future
for Paramount Global so we're still very very optimistic we think they have so many assets around the world they've got
that great Paramount Library they've got Mission Impossible coming out this year all the great Sports entertainment that
they have and all-time favorites like 60 minutes so I think there's more there than just the streaming and I think
sometimes people are more worried than they need to be is it more there as a standalone business or do you think that this is an acquisition an acquisition
Target and that I mean Mario belly has always been about you know business of Love Making with mergers and
acquisitions you're right I think that everyone as we talk to experts in in the industry everyone says there's way too many
streaming services we've got to get it down to three four at the maximum so I think it's very possible that Paramount
Global will be bought at some point as a value manager do you look at the Carnage
in things like Regional Banks and anything that seems like it's it's connected to a commercial real estate and view that as uh more of a core risk
to the economic Outlook or is there actual value being being surfaced in the process well I think the stocks have
gotten crushed there's a lot of pessimism and Warren often says you want to be greedy when others are fearful so I think if you're going to buy the
banking stocks you'd buy a whole basket of them not try to pick one but really be Diversified we've been also adding to
our favorite Northern Trust is our favorite Bank stock so I I think we're going to be okay uh it's going to be
some pain and anguish here and of course commercial real estate is getting harmed and it doesn't help having the banks and
the problems they are but yeah down the road we'll be fine I've been talking to folks who here in the last day and there is a little bit of suspense as to
whether in fact clearly we'll get some questions on this whether uh Buffett himself sees there to be any
opportunities here to provide capital in areas where it's like I mean it's worth going back to how he acquired a lot of
his financial positions right American Express 60 years ago coming off a crisis that he needed Capital Bank of America
clearly Solomon Brothers in the early 90s uh Goldman Sachs back around the crisis too so in other words he's been
there as a source of stable Capital at times when the financial system seemed like it was in trouble would you want to
see him make a move like that that would bring a lot of confidence to the economy and to the financial system whenever he
steps up all of us believe in him so much so I think it would be great if he was able to be helpful during this
period and get a great return for Berkshire shareholders
involved with conversations on these things are there deals that he saw and passed up on you know maybe we'll get a
little color into some of that today I'm hoping that you know maybe that's why there's so many people that are here
today too John we're going to welcome our television audience in in just a second but we want you to stay with us
and I'm doing this because literally the TV clicked so I'm just hold your thought for just a second we want to make sure
we are welcoming our audience in fact you're going to hear a bell in just a second yeah ding ding ding there it goes that
sound that you're hearing right now me doing ding ding ding it means that it's 10 a.m eastern time and that means that
it is time to welcome our television audience as well we are again at the Berkshire Hathaway annual meeting and uh
yeah okay want to welcome our television audience here and around the world I'm Becky quick I'm here with Mike santoli
and this is our live all-day coverage of the 2023 Berkshire Hathaway annual meeting we are just 15 minutes away from
the start of the action I want to get back to our conversation with John Rogers he's the chairman the co-ceo and
the co and the CIO of aerial Investments and for everybody on television this is a conversation we've been having with
our streaming audience at cnbc.com so let's just pick it up with where we left off John you were just talking about how if you saw Buffett step in and do some
sort of a deal whether it be in the banking system whether it be something that kind of showed some confidence in
the system that would mean a big deal for investors everywhere I think it would be he is so revered as we know
around the world and I know that the by the Administration has been talking with him and I know you know other leaders
are and you can bet that he's the First Call of Many of the major banking Giants on Wall Street to make sure they're
getting his best advice and including him in these important conversations it's probably also worth keeping in mind that what he says about his take on
whether in fact the banking system is sound whether whether the market is over
overshooting and it's uh attack on some of these Regional Bank valuations it's worth listening to as well if he thinks
the FED has it right we have this deposit backstop facility and you know let's keep in mind one of the reasons
that the bank stocks are going down is consumers are in great shape they got a lot of cheap mortgages unprofitable for
the banks they're looking at five percent money market yields they can move their cash there so it's it's it'll
be interesting to hear whether he thinks it's an economic risk or it's just kind of a sector that's upside down for the
moment well as you know he's such a long-term investor and I think he's going to uh you believe as he always
talks about on at the annual meeting about how last century all the problems that confronted our country we always
resolve him our capitalist democracy is the best system ever invented so this crisis will pass also I also noticed
when I love watching CNBC in the morning when you have those special boxes showing returns like now even showing them Regional Banks how they're doing
that's a sign that you're getting toward a period where you know six months from now that'll be a old forgotten story and
we'll be on to something new but I love seeing that because it gives you a sense of what's important today John you our
long-term investor too you're a value investor you don't often get swayed by things that are happening in the
immediate but I have to think that some of the things you've seen recently have been enough to make you sit up and take
notice is there anything you've changed in the portfolio as a result of the potential credit crunch as the result of
just watching money move quickly out of places does it change your mind or change your investors thesis at all for
the short term the only thing that sometimes happens like right now the housing the markets have been very weak higher interest rates have been
Troublesome and problematic for the Housing Industry so we've been leaning in in some of the suppliers to the
Housing Industry some of our favorites like Leslie's pools for example and residio and people that are creating
products for the Housing Industry we think it's been overdone and there's real Bargains there you know there's been a lot of commentary and to some
degree a bit of angst about how uh narrow the index performance has been at
least recently for times this year we talked about Apple's performance a huge sway on the index is a handful of stocks
really carrying the S P 500 where does that leave you as somebody who looks you know for smaller and and less expensive
less popular stocks at the moment you know you know I've been fishing in the small and mid-cap Value World for 40
years and I really think there's more opportunity than ever there's these orphan stocks neglected stocks and no
one's looking at because they've been so focused on these giant great giant companies that have done so well
what about Berkshire itself in terms of How It's positioned I mean on the one hand it's kind of Eternal right the way
it's structured and who it's managed by but on the other I mean if you look at what's in favor right now you know aside
from Apple which is you know 20 of the market value of Berkshire right now uh it's taken it is uh you have you know
Consumer Staples exposure you have real Capital assets that people seem to be wanting to have pricing power
um and even on the insurance side they're able to actually make a profit interest rates being up perhaps a help to them do you see value in the shares
themselves at this level we do you know when Warren makes the decision to buy back stock the way he has he's so
conservative and so for him to make that bet it gives you a really great sense that he sees the company as really
undervalued and we would agree we think it's a great bargain here today do you have you been buying I own it
personally and I was too big for my small and mid cap value uh portfolios at aerial fund but uh I haven't added to it
in a while but that's a good suggestion John thank you very much we always enjoy
seeing you here and we really appreciate your time this morning John Rogers from aerial Investments
all right Berkshire Hathaways 11.6 billion dollar acquisition a year ago of the property and casually ensure
Allegheny brought another diverse portfolio of Brands Under The Berkshire umbrella including one of the fastest
growing toy makers in the U.S that's Jazz Wares they make all those viral squishmallows and here at the meeting
they're actually selling special Warren Buffett and Charlie Munger squish millos this weekend they come in eight inch
size and 16 inch versions this is the first time they've ever made squishmallows with a real human space on
them we actually caught up with the company CEO and chief commercial officer Judd and Laura zaberski
we acquired a company called kelly toys okay and they were making squish Mallows it's been around since 2017 and we were
fortunate enough to build the brand once we acquired Kelly toys because the I mean people compare this to things like
beanie babies or to the Cabbage Patch Kids where each of these dolls has a story that comes with it
um and you guys are holding the special ones you have for this meeting of Warren and Charlie the first time you've ever
put a human face on one of this yeah that's the first time so what they worked out pretty good okay but the story lines was that part of it too or
did you guys add to that yeah so every squishmallow has their own individual story and when we acquired Kelly toy we
saw that they had this almost diamond in the rough they were people were passionate about it it wasn't available
everywhere it wasn't available globally and then um the BIOS were always part of it and
what made them really special because kids and adults all identified with something in the bio and so Charlie and
Warren both got their own bio that represented them as people not just business people but the really
interesting individuals they are one of the things that I think is so amazing I mean these are cool plush toys but
they're plush toys they're squishy they have become the most popular toy brand in 21 states they beat out Nerf Plato
they beat out Nintendo switch and Hot Wheels how does that happen with the plush and have you guys been surprised
by how they've taken off of course yes it struck a nerve during covet um it was
this palliative type of feel so people that were sitting at home they bought more and more squish mouths and they
fell in love with the product we're the number one best-selling toy in the US and in many many markets and I think
what's interesting about it is our demographic it's not just kids it's adults it's grown women it we did a
squish Squad tour and we went to major cities and we looked at the line and we said wow there's not that many children
in the line and that's the interesting part people find it emotionally supportive [Music]
um and that was a big surprise to us yeah people in their 50s are buying our squish Mellows wow that that's very
unusual in the greatest and when you found out you were being acquired by Berkshire Hathaway your thought was
wow wow and and what's happening uh dream come true yeah if you would have
asked us 26 years ago if this would ever ever happen we would say no way but
anything's possible in America well the interesting part is Berkshire didn't keep all the companies I think there
were some they kind of got rid of they saw you guys and they chose to keep you which we were you know we I remember
last year we were watching we knew the transaction was happening we watched the
annual shareholders meeting and we said are we going to be there next year
well in fact um I think they probably are going to be here next year I think the question is how much of the floor space they're
going to get to negotiate because those have been hot cells yeah they do um we weren't the only ones who caught
up with them though we were actually there a little later when Warren Buffett and Charlie Munger came by to visit the Jazz Wares Booth right here in the
exhibition Hall and here's a funny coincidence for you both of them both Laura and Judd were lawyers before they
had this career that's something they had in common with Charlie Munger too and by the way
um they were sick of it too they wanted a job that was a little more fun
did you know they're both reformed lawyers yes they both started out as lawyers well I'm ready to see a reform
lawyer every time
going through purchase orders yes Charlie I would like to see about 90 of
the lawyers being reported this is a pinch me moment for us because we remember you know Judd started the
company by himself no financing no money no backing and just did it and worked
hard and of course we had many bumps in the road many many and it makes it that
much sweeter and we appreciate it and we never forget how hard it was and we're much smarter today than we were
yesterday I learned a lot I'm glad you were part of alligators
you can catch more of our interview with Judd and Laura zaberski of jazz Wares and some other sounds from inside the
Berkshire Hathaway annual meeting in a special series of cnbc's daily podcast it's called squawk pod and you can just
scan the QR code on your screen to go ahead and follow squawkpod you can check it out and listen anytime
all right well joining us now is the CEO of Benjamin Moore Dan Calkins Benjamin Moore has been part of the Berkshire
portfolio for more than 20 years Dan uh good to have you great to be back I hope
you're enjoying the weekend so far um eventful few years since you've been running the business yes uh for
Berkshire for at Benjamin Moore uh housing boom in conjunction with the pandemic then a little a downturn in in
home related investment uh and Improvement where do things stand right now we got the inflationary pressures
you've had to kind of deal with and and pass through so what's your kind of snapshot of the business right now well
we're in a great spot we're actually celebrating our 140th anniversary this year at Benjamin Moore so we've been
through Cycles like this before obviously we'll be through this cycle but it has been uh what we call Benjamin
Moore Chasing The New Normal because we had explosive growth in 20 and 21 took a
little bit of a step back in the fourth quarter last year got off to a slow start this year but at the end of March
we start to see light we're going into the paint season and people people are seeing starting to paint again and we're
seeing that in our numbers on a regular basis obviously Big Driver for us is housing turnover and with interest rates
High people not moving as much that has an impact on our business so as as mortgage rates hopefully start to come
down we'll see more active moving and that drives to more sales for us and and just fixing things up when you cut a
paint we can't or we can't move so yeah exactly yeah you'll have people doing some remodeling if they're not going anywhere but the Big Driver is the churn
somebody moves they pay every room every room and in terms of supply chain I mean
Paint and Coatings were particularly dramatically impacted yes you know during the the pandemic with a lot of
the components there short supply where does it sit right now and if you retain pricing I was just looking in aggregate
in the in the quarterly report that you know there has been some margins Queens across the building products uh
businesses in total which is not suspicious right no we we definitely felt that we're in a good spot now
um early last year we had about 65 days of inventory on end our historical average is about 95 days on hand I'm
happy to say at the end of March we're at 96 days on hand so we're back to our historical Norms from an inventory
perspective we have been able to take pricing over both 21 and 22. so uh while
we've felt some of the pressure and compression last year that's evening out now we're recognizing the pricing we
took last year in our sales this year so things are good and so that implies that you haven't seen consumers sort of trading down or
anything like that when it comes to pain yeah no we have we have some particularly on the DIY side we've seen
some of our product mix shift from some of our more premium products to more of our mid-range products uh but we have a
full assortment full of portfolio that can meet all those price points that are out there and so we're we're seeing some
of that happening right now and with margin shrinks when somebody trades down how much does it's maybe six seven
points on from a you know premium product to more of a commercial type product but we have healthy margins at
Benjamin Moore we have one of the things Warren life's best about Benjamin Moore is that premium position we carry you
know there there's a big picture uh sort of long-term structural bullish story about home ownership actually
homeownership rates uh ticking higher still even through this tough period of the economy and this demographic wave
that's washing over but how are you thinking about you know expansion plans your ability to capture a lot of that
yeah so we have been growing and expanding banding not just here in North America we've been very aggressive
particularly in the UK and then moving into Western Europe which is still a small part of our business but we
haven't felt the impact over there because it's New Territory for us so we have explosive growth going on over
there right now um very exciting and then here long term you know you to your point about families being formed that's
happening with this generation that's coming into the housing market and we just think this is a blip through this period of time and as that changes we're
prepared to to service what we need to guys if you take a look you'll see this is live footage Warren Buffett is making
his way out to the stage right now Charlie Munger will be joining him as well that means they're getting about to
the end of the movie they have a long movie 45 minute movie that they show to the shareholders that's what they're
seeing right now and there you see Charlie Munger as well so they're being taken out the stage that means things are about to kick off there so I'm going
to take my lead that also means you need you have a place to go okay Mike thank you I'll see you back in just a little
bit thanks so much thank you all right
well Insurance of course one of the big story lines in berkshire's earnings this morning joining me now to discuss is
evercore's David modematan he has got a buy rating by ratings on the likes of
Travelers Progressive and Chubb uh uh from evercore isi and uh and Dave thanks
for joining us uh this morning we were just talking about how over the first quarter berkshire's Insurance businesses
specifically Geico did make some moves on pricing uh kind of fattened up the margins reducing advertising spend uh it
seems like maybe an industry-wide Trend but what's been happening overall in the competitive uh landscape when it comes
to those Insurance lines yeah thanks for having me um so you are seeing just a massive hard
Market in the personal auto insurance space and Geico has actually taken you
know fairly aggressive action on that front um and you can see that you know the focus on profitability is really
coming through in in these results where their policies enforce shrank 13 and you
know that's partly because you know there are premium per policy which is a good proxy for their price increases you
know is up 15 uh which is you know among the highest that I've seen you know
Allstate was up 16 Progressive was up you know close to that level so the entire industry is Raising price
um for guy for Geico it looks like they've actually seen you know the their
units come down quite a bit and that's resulted in them having better frequency Dynamics which is you know really help
their earnings and you know another thing I've noticed is um you know they really cut their ad spend to really
focusing on you know what what people they're underwriting to focus on profitability
I appreciate that color uh David that was uh that's great we're going to hear a lot more about that in the Q a in the
shareholder meeting and we're going to actually get to Becky and Warren Buffett and Charlie Munger for Q a we'll see you
back here at 1pm Eastern time when Buffett and Munger break for lunch ahead of their afternoon q a session and the
official shareholder meeting they are taking the stage uh right now as you can see and we go there live morning good
morning and thanks for coming I love it Charlie loves it we're glad to
have you here we're going to make this this uh
preliminary before the question is very short because we want to get in at least
60 Questions half divided by the the audience outside this
Arena and half from you so I would just
like to get right to the to the directors and the earnings that
have been put up on the uh on our webpage this morning but we'll
cover those very fast and we'll get to the questions now I
when I woke up this morning I realized that
we had a competitive broadcast going out
uh somewhere in the UK and and
they were they were celebrating a King Charles and we've got our own
King Charles here today [Applause]
and next to him we have Greg Abel we was in charge of all the
operations except for insurance next
[Applause] [Music] [Applause]
and next to Greg we have uh a man I ran into a 1986 and
has made us look good ever since we have the man in charge of insurance Ajit Jane Jaden
and now we have our our directors here in front and if they would just stand briefly and then I'll go on
to the next one and and uh they're all here today first of all
doing alphabetically there's Howard Buffett
there's Suzy Buffett
there's Steve Burke
Ken Chenal
Chris Davis
Sue Decker Charlotte Diamond
Tom Murphy Jr Ron Olsen
Wally Weiss and Merle Whitburn
that's as good as you can get and there's one other person I would like to mention before we
get onto the earnings that were put on the uh in the press release this morning and
uh uh that's uh uh
well let's see who we have here we've got this is hard to believe
can you imagine a name Melissa Shapiro Shapiro
and she was uh Melissa Shapiro Joseph married another Shapiro and she put this
whole thing together with no help from me no help from Charlie and a lot of
help from the people of the other room Melissa
yeah it's very easy if you can remember her second name you can remember her third name so Melissa shabiro Shapiro
and with that I would like to next move on to the
earnings and a couple small slides that that explain what
we're all about and then we're going to get to the Q a and uh the slide is up behind me yeah there it
is we reported in the first quarter
operating earnings a little over 8 billion and when we talk about operating
earnings we're basically referring to the earnings
of Berkshire Hathaway as generally well as required under gaap excluding however
capital gains both realized and unrealized there's a few other very minor items but basically
we expect to make capital gains over time why would we own the stocks otherwise uh doesn't always work out but
overall it works out pretty well over time but in any day any quarter any year
even occasionally over a five-year period uh the stock prices move around
capriciously now we own a lot of other businesses we consider those stocks businesses we own a lot of other
businesses where they get Consolidated and they don't move around in value now if we had a little bit of Burlington
stock outstanding if we had a little bit of the energy stock trading those stocks
would move around a lot but the businesses are what count so the
operating earnings as you'll see in the first quarter came in at about 8 billion
and I would say that in the general economy
the feedback we get is that uh I would say perhaps the majority of our
businesses will actually report lower earnings this year
than last year the in various degrees in the last six months or so at various times
uh the the businesses have left the incredible
period which is about as extraordinaries I've seen in business since World War II
uh with the government would pour out a lot of money to people who couldn't get
Goods it was more extreme in World War II but this was extreme this time and it was just a question
of getting Goods the deliverer and people bought and they didn't wait for sales and if
you couldn't sell them one thing they would put another thing in their backlog it was an extraordinary period and that
period uh has ended it hasn't ended with as you
know it isn't that employment's fault or off a cliff or anything in the least but
but uh it is a different climate than it was six months ago and and a
number of our managers uh were surprised some of them had too much inventory on order and then all of
a sudden it got delivered and people weren't in the same frame of mind as earlier
and now we'll start having sales at places where we didn't need to have sales before but
uh despite the fact that this year I think in general will
be slower than last year we actually are
situated so that I would expect and believe me when I say accept expect
it's nothing is sure nothing sure tomorrow nothing sure next year and nothing is
ever sure either in markets or in business forecasts or anything else and we don't
pay much attention to markets or forecasts unless the markets happen to offer something interesting to do but
nevertheless we are positioned in two respects as you'll see from from this uh first report our investment
income is going to be a lot larger uh this year than last year and that's
that's built in I mean we have as you'll see in a minute we've had 125
billion or so and very short term investments and
and believe it or not uh not that long ago
we were getting four basis points which is next to nothing
on that 100 125 billion which means we were getting 50 million a year
and now the same money the other just day or day before yesterday we
actually bought because of some of the funny twist in the market because of doubts about the
deficit ceiling of the debt ceiling uh we bought three billion of bills of the
590 that's 5.9 there's a 5.92 bond
equivalent yield so we will have what produced us not that
long ago on a 12-month basis was producing 50 million a year producing uh something in the area of 5 billion
here so we're in a position where the investment income is essentially well it
is certain to increase quite a bit and insurance underwriting
is not it uh it does not correlate
with business activity it depends on things like hurricanes and earthquakes
and and other events so on a prospective basis on a probability
basis we're likely to have a a better year
uh this year in Insurance underwriting than we had last year uh it just isn't
affected by what you might call the business cycle or uh what applies to generally an
industry detailing you name it uh so I would expect
and one massive earthquake or one one hurricane that came into just
the wrong place uh would can affect that prediction but on a
probabilistic basis our insurance looks better this year so if you get two of those
two of the elements there of our main office of earnings that look like they
will swing in our Direction I would expect but I can't promise that our operating and earnings will be
greater than last year and if we'll move to
the second slide uh I give you those operating earnings
figures just to give you a overview of what has happened
uh since the pandemic started and off of the year
the yearbook before as a base and we retain all our earnings as you know
so if we're retaining 30 or 35 billion or whatever but maybe a year you should
expect more operating earnings over time I mean this this number should be
significantly higher five or ten or fifteen years from now because we have the advantage of retaining earnings and
that's what got us to these figures because they were essentially nothing when we started and they got there by
retaining earnings and we'll keep retaining earnings so it's no great Triumph if these numbers move up and
what we hope is that they move up at a reasonable rate historically
they moved up at an unreasonable rate sometimes but we're working with a much smaller sums then and that can't be
repeated with our present Capital base because I note there I believe it's on this slide let's take
a look uh now that'll be
see it's on the while on the on the next on the next
place paid and let's move to the next slide we showed that we had on March 31st
now 500 and was it five hundred and four billion
of Gap net worth now what might surprise you
is that there's no other company in the United States no other company that has a number
that is that large now that isn't because we've got the most valuable
company in the United States other companies have used their money to repurchase
shares they could have accumulated 504 billion in gap but basically we have more
under Gap accounting now than any other company in the U.S and of course if you
measure return on on Equity that becomes a very big number to increase
at a rapid rate but we hope to do so uh not a rapid rate additional rate
um and right below that you see something called float
and float is money that uh is left in our hands
uh somewhat Akin but very importantly different
than a bank deposit but it uh you have to pay interest to get a bank deposit and you have to pay more
interest these days and you have to run a bank and do a lot of things and basically this is money that represents
unpaid losses at this time you get paid in advance in insurance so what shows up
as a net liability on our balance sheet is gives us funds uh
do exercise with an amount of discretion that no other insurance company that I know of in the
world enjoys just because we have so much net worth and our float now
comes to 165 billion and the man sitting on the far left is
responsible for moving that number up from a pittance in 1986
to this incredible figure which in most years practically all years
hasn't cost us anything so it's like having a bank with no employees no
interest and no ability to withdraw the money in
a hurry that we have working for us and it's a
very valuable asset that uh that shows up as a liability and uh
Ajit is responsible for building up this
treasure uh which has done been done by out competing insurance companies all over
the world and then now a number of our insurance companies in turn are run by talented managers
who contributed one way or another uh start with Geico
the beginning of my career and the uh that float if you think about it just
think of a balance sheet you've got liabilities here and you got assets over here and and the liability side finances
the asset side is very simple and stockholders Equity finances it
long-term debt finances and so on but stockholders Equity is very expensive in
a real sense long-term debt has been cheap for a while but it can get expensive and it
can also become new eventually and it and it may not be available
uh but float is another item which shows it's a
liability but hasn't cost us anything and it it can't disappear in a hurry and
it finances the asset side in the same way a stockholders equity
and nobody else thinks of it much that way but but we've always thought of it that way and it's built up over time so
uh I show at the bottom what's happened with cash and treasury bills
through March 31st and I will tell you that the in the month of April
we probably added about seven billion dollars to that
factor now part of that is because we didn't buy as much stock because that reduces reduces cash and treasury bills
we bought about 400 million dollars worth of stock in the month of April that's that's a minus uh in terms of
cash available and uh uh we we however sold not some stock
which produced maybe four billion and of course we had operating earnings probably two and a half
billion or something in that area and my guess is we've probably increased our cash and treasury bills uh six and seven
billion in the month and uh I just want to give you a feel for how the cash
flows at Berkshire and then if we move to the final I think it's the final one next to the last one uh
no I I think it is a lot let's see it's the fourth yeah is this we should have the one up
there class a equivalent shares outstanding and and uh you'll notice that every year
the number of our shares go down so if we own more businesses and the businesses make more money
your chair as shareholders as owners a Berkshire increases every year without
you laying out any money now you're laying out the uh the
alternative which you could receive in dividends but the reason we've gotten to
where we are is because we we kept the money we did pay a dividend
in 19. 67 10 cents to share it was a terrible mistake and uh I
I always tell people that I I'd love for the men's room and the directors voted while he's gone but that isn't true I
was there I confessed they uh but we're very invested and has produced the
500 billion plus of shareholders equity in the 30 billion plus of operating
earnings and and we'll continue to follow that policy because it makes a great deal of sense and uh
with that I think we've taken care of the preliminaries you can study that
the 10q is is on the uh on the uh web page and if you have a
week or two vacation you could spend it reading the 10q and but that is the
essence of Berkshire and with that I will start with Becky quick and and uh we
will alternate between Becky and and the audience and her questions have come in
from all over the country and I believe you identified the sender and go to it Becky thanks Warren the first question
comes in from Randy Jeffs in Irvine California and his question is if Silicon Valley Bank's deposit had not
been fully covered what do you think the economic consequences would have been to the nation
simply say it would have been catastrophic and that's why they were covered uh and
even though the FDIC limiters two hundred and fifty thousand dollars that that's the way the statute reads
but that is not the way the us is going to behave uh any more than they're going to let
the debt ceiling uh uh cause the world to go into turmoil and uh they
uh well they're just I can't imagine
anybody in the administration and the Congress and the Federal Reserve whatever it may
have been FDIC I can't imagine anybody's saying uh I'd like to be the one on
television tomorrow and explain the American public why we're keeping uh
uh only two hundred and fifty thousand dollars insured and we're gonna start around every Bank in the country and
disrupt the world financial system uh so uh I think it was inevitable Charlie The
Amity no I have nothing to add
apparently I should mention this now ajeet and Greg will be here in the
morning session which ends at noon and so uh it's got questions to direct to
them the time to do it is in the first half of the show and and then after lunch
that'll just Charlie and I will be back okay
area one hi nirav Patel Haverhill Massachusetts
Mr Buffett Mr Monger it seems like you found the Sweet Spot between being too
conservative and too aggressive as investors do you ever make bad investment
decisions because of your emotions and what do you do to try to keep that from
happening well we make
bad investment decisions uh plenty of times I make more than Charlie
because I'm I like to think it's because I make more decisions but probably more batting average is worse but
I can't recall anytime
in the history of Berkshire the women in an emotional decision that
I know the movie had Jamie Lee in there but that that was for Laughs
I mean Jamie Jamie Lee she's good but she's not
good enough to get me or Charlie to make an emotional decision
laughs Charlie
I'm sure you have something to add on that
well it's a different movie than it is shown in most corporate meetings [Laughter]
personal decision no I don't know that's in business we're talking about
yeah no you don't want to be a no emotion person in all of your life but you you definitely want to be a no more
no emotion person to making an investment or business decision that uh you can argue that that uh uh
with it we probably I would say that we
've made an emotional decision perhaps and when a manager has been with us for
some period and we haven't we've
we we've ignored the fact that perhaps they weren't quite what
they were earlier but our businesses are so good that they they've run better sometimes
uh when uh well I've talked about
West Coast for example the wonderful Louisville it ran on
it ran on automatic pilot for a while but I don't think we suffered to buy it but you can argue
that if Charlie and I hadn't liked Louie as much as we did we might have spotted
a little bit early but I don't think it made any difference in the results would you would you agree with that Charlie
yeah yeah we totally with it and
I'm glad we behaved the way we did it Wesco by the way we bought the thing for
a few tens of millions and it became worth two or three billion
yeah that wasn't common in the Savings and Loan businesses you may have noticed they want they really went crazy in that
industry and and we had a wonderful guy in Louis and we didn't go crazy yeah we didn't go crazy
dumb okay Becky
this question comes from Ben Knoll in Minneapolis he says he's a Berkshire shareholder of three decades and he's
attended many Berkshire meetings he's here again this year and this is addressed to Ajit and Greg he says last
year I asked you about how Geico and BNSF appeared to lose ground to their leading competitors Geico on telematics
and BNSF on Precision scheduled railroading Ajit you responded by saying how you expected Geico to make progress
in a year or two Greg you spoke about your pride in BNSF but you didn't directly address the threat of precision
scheduled railroading will each of you please provide perspective on these competitive challenges and our company's
strategies to address them let me
in terms of Geico and telematics let me make the observation that Geico has
certainly taken the ball by the horns and has made rapid strides in terms of trying to bridge the gap
in terms of telematics and its competitors they have now reached a point where on
all new business close to 90 percent is has a telematics input to to the
pricing decision unfortunately less than half of that is being taken up by the policyholders the
other point I want to make is even though we have made improvements in in terms of Bridging the Gap on telematics
we still haven't started to realize the true benefit and the real culprit or the
bottleneck is technology Geico's technology needs a lot more work than I thought it did
it has more than 500 actually more than 600 Legacy systems that don't really talk to each other and we're trying to
compress them to no more than 15 16 systems that all talk to each other
that's a Monumental Challenge and because of that even though we have made improvements in telematics we still have
a long way to go because of Technology [Music]
because of that and because of the whole issue more broadly in terms of matching rate to risk Geico is still work in
progress I don't know if you any of you had a chance to look at the first quarter results but Geico has had a very
good first quarter coming in at a combined ratio of 93 and change which means a margin of six and change
uh even though that's very good it's not something we can take to the bank because they're two unusual items that
contributed to it firstly we've had what is called prior year Reserve releases
we've reduced results for the previous years and that contributed to it and secondly every year the first quarter
tends to be a seasonally good quote of auto insurance writers
so if you just for those two factors my guess is the end of the year Geico will end up with a combined ratio just south
of 100 as opposed to the Target they're shooting for 96.
I hope they reached the target of 96 by the end of next year
and but instead of getting too excited about it I think it's important to realize that even if we reach 96 it will
come at the expense of having lost policy holder there is a trade-off between
profitability and growth and clearly we have we're going to emphasize
profitability and not growth and that will come at the expense of policyholder so it will not be until two years from
now that we'll be back on track fighting the battles on both the profitability and growth front
Greg yep moving to BNSF
I'll start again by expressing great pride in the BNSF team we have an exceptional group of led by Katie and
and her managers that uh show up every day to do great work on on the railroad
at the same time they would be the first to acknowledge there's more to be done there uh the specific reference to
Precision scheduled railroading the other large railroad Class A uh
railroads in the in the U.S follow that and including the two in Canada we're
well aware of what they're doing and and obviously pay close attention to their
operating Matrix and our team strives every day to be more efficient obviously I would say we balance it with the needs
of our customers if I look back to pre-2022 so we look at the three-year
period of 2019 2020 2021 the BNSF team
made significant progress on their efficiencies and and and delivering
overall value back to the shareholders and and to their customers and at the same time maintaining a very safe
railroad for our employees so we're making excellent progress that didn't stop last year they made great progress
again the reality in 2022 as we did go through a period of time where we had to
call it reset the railroad we came out of the pandemic there were the supply challenges we had certain other issue
labor issues and other things going on at the port and the reality is our team prioritized getting the railroad back in
place for the long term not a short-term focus on hitting certain operating metrics in in
2022 we're well aware of where we were relative to those metrics but the real Focus was to get the railroad reset in a
in a safe manner such that we could deliver long-term value and long-term service to our customers and and that's
really what we'll continue to see with that team they'll be continual progress there'll be years where it's not as
quickly or even we go backwards but over the long term we'll be very uh we'll see
exceptional results from from that team and and couldn't be more proud that we have that asset thank you
I wouldn't I would just [Applause] well he deserves but both of them
deserve Applause the I would like to add one thing [Applause]
[Music] [Applause] the
uh at Geico .com's uh
was ajith's Choice my choice go back to guy at Geico
to work on the problem of matching rate to risk which is what
insurance is all about and uh he arrived
with exquisite timing right before the pandemic broke out all kinds of things changed but Todd is
doing a wonderful job at Geico and uh and he
works closely uh with the Jeep but because he saw his home and all Morgan comes back
here and we we get together on the weekend sometimes too so uh uh that's been a
a remarkable com accomplishment under difficult circumstances and he's not all the way home but he's a he's made a very
very big change uh in multiple ways Geico and then one
other thing I would like to mention there have been a lot of public companies created in the last decade
thereabouts in insurance and uh there's none of them
that we would like to own and and they always started out in their perspective saying this is
a tech company not an insurance company of course we're of course they're in a tech company where everybody's
whether they're in insurance or a lot of other places are using the facility but
you still have to properly match rate to risk and uh uh that they invariably have
reported the huge losses they've eaten up capital but there's been one company that nobody
has generally heard of there's only been one that I know of company started in the last 10 years
that has been a overwhelming success and that's a company that a g
and four people who join with them set to develop a new business
it's called Berkshire Hathaway specialty it now has uh what's the float a g coming up to 12
billion yeah we've we've built more slope than probably all these companies combined
we've now it it's cost us essentially nothing in terms of an underwriting loss
the four people have turned in I don't know 1500 around the world we we took on the whole industry and we brought
some unique how and the four people that came and
now have like I said 1500 or so worldwide and we brought capital and we
brought okay capabilities that really only Berkshire
could Supply so it was the it was the combination of of
brains and talent and energy and money and no one has really successfully
entered this this space plenty of people in the space who didn't
like us coming and we did it without it costing us a dime of Entry
and it's been unmatched by any of the public companies that went public
and people have seen us do it but they can't duplicate it and that's
what Vegeta's created and Peter Eastwood has led this group Berkshire Hathaway
specially and uh it's just remarkable so anyway with that let's go on yeah give
him a hand for that [Music]
okay let's go to section two
hi Charlie I'm our end I'm Karen here
your priorities are right yes I have a questions on AI and
Robotics here's my questions as Ai and Robotics continue to advance what do you
believe will be the positive and an active impact of this technology
on both the stocks markets and society as a whole and are there any specific
Industrials and companies that you believe will be most impacted
Karen I thank you for asking Charlie that question
well if you went into byd's factories in
China you would see robotics going in the unbelievable rate
so we're gonna see a lot more robotics in the world I am personally
skeptical of some of the hype that has gone into artificial intelligence I think old-fashioned intelligence works
pretty well thank you [Applause]
there won't be a there won't be anything in AI that replaces the gene
the state that unqualifyingly they can do amazing things uh
uh you know Bill Gates brought me out of out
the latest maybe not the latest version but when he thought maybe I could handle which that has to be careful with me in
terms of leading me too fast uh and it did it did these remarkable things uh it
didn't but it it it couldn't tell jokes well Bill told me that ahead of time and it prepared me and it it just isn't
there but you know with things like checking all the legal opinions on you
know since the beginning of time and everything and eliminating all the
sided I mean it can do all kinds of things and when something can do all kinds of
things I get a little bit worried uh and uh because I know we won't be able to
uninvent it and uh you know we did invent
uh for very very good reason the atom bomb and in World War II and it
was you know it was enormously important that we did so
but is it good for the next 200 years of the world that that the ability to do so has
been Unleashed we didn't have a choice but uh uh
when you start something well Einstein said after this has changed everything in the world
except how men think and uh I would say the same thing May
not not the same thing I don't mean that but I mean they with with AI
uh it it can change everything in the world accept it how men think and behave
and that's that's a big step to take it's a good question and it's the best
answer we can give Becky this question comes from Tom Seymour he
says the first sentence of a recent Financial Times article read Charlie
Munger has warned of a brewing storm in the U.S commercial property Market with American Banks full of what he said were
bad loans as property prices fall please elaborate on what's going on in commercial real estate how bad will the
losses be and what sectors or geographies look particularly bad I'll just add an addendum from another viewer
who wrote in and wanted to know if Berkshire would be more active in commercial real estate as a result
thank you well berkshire's never been very
important very active in commercial real estate it it works better for taxable investors
than it does for corporations tax the way Berkshire is so
I I don't anticipate huge effects on Berkshire but I do think that
the hollowing out of the downtowns in the United States and elsewhere in the
world is going to be quite significant and quite unpleasant I think the country will get through it
all right but as they say it will awfully it will often involve a different set of owners
yeah in the buildings the buildings don't go away but the owners do well but
but most people like to buy with non-recourse and and real estate and and
one time I asked Charlie there was some real estate guy we were talking to him and you know how do they decide how much
they can a building like this is worth and it's the answer is it's whatever they can borrow without signing their
name and if you look at real estate generally you'll understand
what the phenomena is happening if you if you remind yourself that that's the
attitude of most people that have uh become big in in the real estate
business and and uh and it does mean that the lenders are
the ones that that the property and of course they don't want the property usually so then
the real estate operator comes on negotiating with them and and the banks
tend to you know stand and pretend and there's all kinds
of activities that arrive out of out of commercial real estate development which
occurs on a big big scale but it all has consequences and and I think we're
we're about well we are starting to see the consequences of people who could borrow
it two and a half percent find out it doesn't work at current
rates and they hand it back to somebody that gave them all the money they needed to build it
them Charlie's having more experience than really Charlie ought to start in real estate though I mean Charlie Charlie
yes it it's difficult
I like what we do better well as Charlie once said to me when I
was leaving his house a few months ago I was visiting him we talked for a couple
of hours and I said to Charlie as I left I just wasn't anybody else in the house and I said except
one daughter and I said uh Charlie yellow I'll just keep doing what we've been doing and Charlie
said without looking up or pausing a second he said that's all you know how to do Warren yeah
he was right too uh station three is it
hi uh my name is Dallas I'm from Santa Santa Clara California and my question
is to Charlie and and Warren given the rise of disruptive technologies that can
improve productivity significantly and AI being one of them how do you envision
the future of value investing in this new era and what adaptations or new
principles do you think investors should adopt and any recommendations for investors to remain successful in this
rapid changing landscape thank you
I think value investors are going to have a harder time now that there's so many of them competing first
a diminished bunch of opportunities so my advice to Value investors is to
get used to making less and
Charlie was been telling me the same thing the whole time we've known each other wait wait we get along wonderfully
because we are making less yeah well but that's because that mostly I think is because it's larger we were
younger we never thought we could manage 508 billion no one or five yeah but I I
would argue that uh that uh there's gonna be plenty of opportunities
and part of the reason they're going to be plenty of opportunities the the tech
doesn't make any difference or any of that I mean if you look at how the world changed in them in the years since 1942 when I've
started to say well out of the kid that doesn't know anything about airplanes it doesn't know anybody androgens and cars and doesn't
know anything about them electricity and all that but that really isn't the that's not there the world
changing doesn't or new things coming along don't take away the opportunities what gives you opportunities is other
people doing dumb things and it's a
and I would say that
well the 58 years we've been running Berkshire I would say there's been a great increase
uh in the number of people doing dumb things and they do big dumb things and
the reason they do it to some extent is because they they can get money from other people so much easier
than when we started so you could start 10 or 15 dumb insurance companies in the
last 10 years and you could become rich uh if you were a Droid at it whether the
business exceeded it or not and the underwriters got paid and the lawyers got paid and that creates
if that's not on a large scale which it couldn't be done what 58 years ago you
couldn't get the money to do some of the dumb things that we wanted to do fortunately uh and uh so
I know I think that investing has disappeared so much from
this huge capitalistic Market that anybody can play in
but the big money is in selling other people ideas it isn't outperforming in
outperforming and I think that I think if you don't run too much money
which we do but if you're running small amounts of money I think I think the opportunities
will be greater but then Charlie and I have always differed on this subject he he likes to tell me how gloomy the world
lives and and I I like to tell them we'll find something and and so far
we've both been kind of right
[Music]
so much money now in the hands of so many smart people all trying to outsmart one another
and not promote one another getting more money out of other people and
it's a radically different world from the world we started in
I suppose it will have its opportunities but it's also going to have some unpleasant
episodes but they're trying to outsmart each other in arenas that you don't have to play I
mean if you look at that Government Bond Market the field at the treasury ball Market I mean you've got this one bill
that's out of line with the others when we bought over three billion of us the other day and and but
those are people the world is overwhelmingly
short-term focused and if you go to an investor relations call they're all
trying to figure out how to fill out a sheet to show the earnings for the year and the management is interested in
feeding them expectations that will slightly be beaten I mean that that is
the world that's made to order for anybody that's trying to think about what you do that should work over five
or ten or Twenty Years and uh I I just think that
I would love to be born today and go out with not too much money and hopefully
turn it into a lot of money but and surely would too actually just like
he would find something to do I will just guarantee you uh and it wouldn't be
exactly the same as before but he would have a big big pile I would not like the thrill of
losing my big pile into a small pot
but we make my big piles is the Way It Is Well I like we agree on that incidentally okay we do
you're one of the most extreme lovers of the big pile
Becky this question is for both Warren and a g
it comes from Jason ploner in Livingston New Jersey he says in 2016 you entered
it into a very unique transaction with AIG where you assumed up to 20 billion dollars of liabilities in exchange for
about 10 billion dollars up front can you please provide us with an update on this transaction in light of the
increase in interest rates and then in Tokyo just a few weeks ago you talked about the risks of banks with assets
that were susceptible to Rising interest rates any insight as to how Berkshire liabilities are susceptible to duration
would be appreciated is that a direction to ajita or me or what both okay let me
introduce it my one thing and well but Ajit is the key to this she's the one to put the deal together but we got handed
10 billion we'll say uh uh and but we weren't restricted to putting
that into in the bonds uh so what the exact interest rate interest
rates affect us to some degree maybe in terms of the terms uh of the deal we did
with AIG or anybody we would do a similar deal with like that but we don't have we don't have to put
it in matching bonds or anything of the sort it goes into a general pool of assets which we manage in the assets you
know well the liquid assets now are 130 billion plus and that but it goes and so
it you know it it it is not set aside in some little compartment like people like
to think uh now any any other insurance no other insurance company could do it but they can't think that way uh they
aren't even used to thinking that way but they can't think that way because they don't have our our balance sheet we account for 26 or something like that of
the net worth of all property casualty companies in the United States uh so
uh so far uh the payments that we have had to make
have run modestly and a Jeep will correct me on this if I'm wrong because
he paid a lot of attention over the the amount we have had to pay has runs
slightly below the amount we anticipated having to pay in terms of our share of the losses uh
but it served aig's purposes it came to us with
where we are in a unique position there's nobody else that was able to write that just like when when we took
on the Lloyds I mean Lloyd's said there was no choice other than Berkshire
Hathaway when they they essentially resuscitated uh their Market by laying
off a lot of liabilities on on Berkshire Hathaway so
um we won't see those deals very often if if they're for 500 million or something like that somebody else will
go in there and offer more money and everybody's looking for money in Wall Street but if they start talking with
the deal like the AIG deal there isn't any other stop now uh correct me on all my numbers there
Jade no um one way to look at how the deal is
performing since we did the deal is at the point we in time when we did the deal we had made certain projections of
how much we will pay out each year and what we do is Monitor what the
actual payments are since the Inception of the deal and how does that compare with what we expected to pay out
as Warren mentioned these two numbers are very close to each other more specifically the actual payouts are 96
percent of what we had projected to pay out at this point in time which is good but not great we are still
ahead of the curve if we do end up paying out less than what we projected Not only would we have borrowed money at
a very attractive rate meaning less than four percent significantly less than four percent in addition to that we
would have made a fee which in 1990 which in 2015 dollars would be a million
dollars so if we would have borrowed money at less than four percent and we would have made a million dollar fee
which is slightly more than what we were expecting to do so net net we're very
happy with the deal we're happy we did it but the game is not over the taught
liabilities they're coming down the pike every second day so I'm cautiously optimistic that the deal will work out
better than what we expected it to work out a really interesting thing is that
in within Berkshire the Casualty Insurance companies have four times as
much stockholder Capital between behind each dollar of Premium volume
four times normal and of course we see the big deals who
would you trust if you had a big liability you wanted to dump on somebody and we have 25 or
billion or more coming in from things other than insurance
uncorrelated to Insurance every year with no obligations we don't pay dividends if you paid evidence and
you know and you cut your dividend try going around trying to write insurance the next day I mean it's a business
where the people are counting on you to pay and when we take that 10 billion we
don't agree to put it in five-year bonds and 10-year bonds we don't even think
that way and the people who do business with us know that they have somebody
like nobody else on those and it's going to be able to pay 10 billion you know
it's no matter what happens to the economy uh so it's not only the presence of enormous strength in the insurance
companies it's the fact we got all these earnings that essentially come in every month and we don't have we don't have a
lot of debt I mean we we have debt at the railroad and the energy level but but in terms of the rest of the
operation uh uh and we don't guarantee that debt but but it's probably what uh
and it's there just isn't another Berkshire and uh and the Jeep recognizes
that when he's negotiating so does the other party if sums are big enough there's all kinds of people that love to
get 500 million or 300 million and they'll and they can they may think in terms of lending it
out because that's what their insurance companies can do at a somewhat higher rate but that is not a game we play in
and we don't have any interest in playing okay station four
hello I'm Marvin Blum an estate planning lawyer from Fort Worth Texas home to
many of your companies in fact Warren I met you at the memorial for our beloved
Paul Andrews who was manager of TTI
I'd like to get your thoughts on a widespread problem in the world of Estate Planning and that's the failure
of most parents to prepare the Next Generation for the inheritance coming
their way in particular if the estate includes a
family business most parents fail to do business succession planning to plan for
who will run the business on the day when not if the founder is no longer
there to run it the kids aren't prepared unlike uh King Charles the the other
King Charles not King Charlie Munger who has been preparing for his job as king
of England now for more than 70 years I sometimes describe the situation like
this picture a football game at one end of the field is a quarterback
he has great skills he throws a beautiful pass to the other end of the field and at the other end of the field are
the receivers they've never been to a practice they don't know the rules of the game
they don't know how to work together as a team they're Clueless so the quarterback is the patriarch and
The Matriarch the football is the inheritance or the family business
and the receivers are the kids that they're going to catch the football
and go score a touchdown probably only around 10 percent I've got the picture
um [Applause]
the I probably observed as many just because
of my age and to some extent because of things like the giving places I probably observed as many
particularly wealthy families the problems and they all are again very particular
to the family and and
uh in my family I do not sign a will
until my three children have read it understand it and made suggestions now
my children are in their 60s and that would not have been a great one success if I'd done the same thing as
their 20s it depends on the Family it depends on how the kids feel about each other there's all kinds of things
depends on the kind of business you have so there's a there's a thousand variables but I do think
that it's if the children are grown and when the
will is read to them it's the first they've heard about what the deceased thought about things
the parents have made a terrible mistake and uh people
people who well I've run into all kinds of situations and some people don't tell
their children anything and some of them try and get them to vendor their will by using their their own personal will they
make a million mistakes and that's when you don't get to correct
uh you know certainly in my well Charlie's had a lot of experience too
well at Berkshire we have a simple problem of uh
estate planning just hold the goddamn stock
[Applause] I mean that you know
I don't think it necessarily I don't know necessarily whether if you have billions of dollars you want to
leave it to your all your children I mean that's something that's another question but if you go to places somewhere I just as soon as Berkshire
stock is down oh you're solving the investment problems yeah but you've got the personal problem of the fact that
when they were four one of the kids pulled the other kids uh cat's tail or something like that I
mean you're dealing with human beings and the biggest thing you want
is you want you want your children to get along I mean they want that all through your life and the estate isn't the only place
where you can mess that up but the it's the place where you it's a very easy
I mean I know a number of cases where the people did not know what was in the will whether we're human's involved and
you know within about 15 minutes each one of them had a lawyer and you know they don't get a long sense of it it's
it's a it's important to handle it right and uh uh it's important if you want
your kids to have a certain value with certain values it's important that you live
those values it's important that you talk about it to them or
they're going they're learning from you from the day they're born what you're
really like and uh don't think that a cleverly drawn will will substitute for
your own behavior in teaching your kids the values you hope that they will have
and then your will should be in conjunction with that it should start expressing and they grow it's older and
then they they learn to they they learn to
pass along their values in connection with the size of the state if there's Family Farms it's one thing if it's a
bunch of marketable Securities is something else but I know in one instance by a particularly Rich fellow that once
a year you get his kids together and have a dinner and do all kinds of things to get
them to sign their income tax returns in blank because they didn't want them to know how much money they had and
everything well if that that isn't going to work I mean I don't know why necessarily real words
with him but uh if you want you know about Charlie and I've said it
you know if you want to figure out how you want to live your life you you write your obituary in reverse engineer I mean
you know and uh and Paul Andrews incidentally who you mentioned that TTI
lived as great a life as anybody I've known and uh he he thought about these
problems and he came to me he was 61 I think had all the money Way
Beyond what he needed didn't care about he'd like to give it to give it to people he had all kinds of good things
he wanted to do and he said for a year I've been worried about my business TTI and he said I've got all the money I
need the families get all the money that I need but what do I do with the business these people have
that helped me throughout my life and he says I can sell it to a competitor and if I sold it to a competitor they'd fire
my people and keep their people when they put it together and if I if I sell it to a private Equity Firm or something
they'll they'll be figuring their access strategy as they sign the sign the
papers and he said so I've been thinking about a year
and he said it isn't that you're such a great guy he says it's just you're the only one left
and we bought it and we lived happily ever after and uh that was a man that
knew what life was about so with that let's go on to uh Becky
thank you this question comes from Don glickstein
in Seattle he says Warren has criticized Norfolk Southern's handling of its train derailment yet has been silent about
BNSF bnsf's conduct a federal judge ruled in March that BNSF intentionally
and illegally violated an easement agreement on tribal land in Washington state by transporting long trains of
crude oil the same month the judge made his ruling a BNSF Train derailed on tribal lands spilling oil in an
environmentally sensitive area what is Warren doing to ensure that BNSF and other Berkshire subsidiaries fulfilled
their ethical responsibilities he says he's been a Berkshire owner for more than two decades and he's concerned that
Berkshire has no systems to identify and dress what he calls reprehensible Behavior at BNSF and other subsidiaries
Garden sure so the uh it it is a valid issue that
our team obviously has been dealing with at BNSF we did move uh crude across that
uh tribal land we had an agreement that allowed us to move X number of of uh
units per day and we did breach it we went over it there's uh there was some fundamental
breakdowns there in that our team didn't understand the number of of trains that they could move we have had significant
discussions with the tribe looking to resolve the issue recognizing uh we
obviously been benefited from moving those trains and those type of discussions will continue
um I would say there's Lessons Learned there that we have to when we make a commitment understand what that
commitment is and and live by it or don't assume um we can just
move our trains as we wish or the the cargo as we wish we have to respect those agreements so there's a there's
been a moment learned there but at the same time we've taken it very seriously and attempted to reach a resolution
there and at some point I I hope we do come to a true resolution that's fair
both to the tribe and to BNSF on the derailment side we did have a an issue
around the track derailed we worked very closely with the tribe to mitigate that
issue instantly where at least over a very reasonable period of time they were
very responsive our team was very responsive and there were really no long-term environmental impacts to to
that uh to that spill and as our teams highlighted in other comments obviously
derailments do occur in the industry we take them incredibly serious they're not all hazardous but irrespective of that
we're constantly looking at how do we prevent them how do we detect them when we
potentially have one that's going to occur and what do we do with our trades and then ultimately it comes down to
responding properly because they will occur and I think we have an incredibly dedicated team that's always ready to
respond to the communities uh they're impacting
there are derailments how many how many a year yeah well there's a a thousand
plus in the industry the the yeah yeah it's you start hauling
right and we're a common carrier we and we take heavy very heavy Freight and we take them at 100 degrees when it's the
weather and it's we take it to zero and and we go around curves and we have
grades and uh even a one percent grade if you're going down down
a hill with I don't know how much weight behind you I mean there's a lot of
railroading is not an easy business and of course the systems were designed you know in the and
basically in the in the late 1800s amid the late 1800s and we have 22
000 I think it is miles of track and that doesn't count sightings and some other things it is not an easy business
we'll make mistakes our job we're not making a mistake because we
have a derailment you're gonna we will have the derailments 10 and 20 years or 30 years from now I mean that but
we and we have to carry certain products we wish we didn't have to carry we're a
common carrier do we like carrying chlorine and ammonia and all no but
they're going to move from one place to another in this society and we are a common carrier and uh we load them and
uh if they select our railroad but we are better than we used to be but we
got a long way to go was that fair enough statement absolutely yeah okay station five
hi Mr Warren and Miss Manga my name is from China
company and first of all I'm so excited and very honored to be here today and my
question is with more and more people focusing on environmental competition
protection and the government supporting the new energy industry as well so what
are your thoughts on the continued development of new energy how made the
new energy firm achieve better development in future
I think it's the best answer that because he since we bought a company called
Mid-American but now called Berkshire Hathaway energy but he's been talking about a yearly preparing reports hoping
that we can help solve a number of the problems and we probably spent more money than any utility um I would guess
in the United States and uh and we've just scratched the surface but it is not
easy when you cross state lines I mean it's uh uh you have different jurisdictions
and we should this country should be ahead of word is in terms of transmission and uh
we have been the biggest factor in helping that uh but why don't you tell them a little bit about it sure things
weren't so there's no question there's an energy transformation going on around
the globe and and as Warren touched on in the U.S and in some ways I would hope
in here in the U.S it would be um we'd at least have a a clear plan
Across the Nation as to how to uh approach that but the reality is it is state by state uh with some exceptions
but so as a result when you think of Berkshire Hathaway energy we we own uh three uh U.S utilities
there and and they'll participate in multiple States but they're developing plans state by state and then trying to
integrate them across the the various States the the opportunities are
significant because there is a transformation going on uh We've outlined our goal on on where we're
going relative to carbon at bhe where they'll buy 20 30 reduce their carbon
footprint by uh 50 relative to 2005 so that's the Paris Accord and the standard
they want to hold the the utility industry or the utility companies too and and we're well on that path but to
achieve it is a true Journey uh I've often talked to Warren when we bought Pacific warp back in the mid 2000s we
immediately recognized uh to build a lot of renewable energy like we've been
doing in the midwest in Iowa but that was basically in a single stay eight now Pacific Corp were in Six States we
started that in the back in the mid 2000s here we are and we laid out a great transmission plan here's how we're
going to build it here's how we're gonna uh effectuate it and all the benefits for our customers over that period of
time here we are in 2023 and we have a little more than a third of that at the
time it was a six billion dollar transmission project today we have a little more than a third of it built and
we've spent probably closer to seven billion dollars and it's the right outcome it's still a great outcome for
our customers but that transmission you absolutely as part of the transformation you absolutely have to build it to
remove to move all that renewable energy and that's sort of the complexity Warren was highlighting it is a uh you you
can't just wake up one day and and solve this problem you start with transmission and then you build the resources but at
that same same company and if we look at what we're doing across BH G Energy and
that energy transformation we have 70 billion dollars of known
projects that are really required to properly serve our customers and Achieve
that type of energy uh transformation across those utilities and that and
that's in the coming next in the coming 10 years so um we have a team that's absolutely up
to the challenge they're delivering on their commitments and it's a very uh very good business opportunity for for
each of our companies and for our shareholders because as we deploy that Capital we obviously are in a return on
Equity of it so um but it will be a long journey it it have it'll happen over an extended
period of time and then and the further you get out there the more dependent more dependent upon the uh the evolution
of a variety of technologies that are progressing but not there yet so you
you've raised a question I want to just take an extra minute on because it's so important and and I don't really know
whether our form of government um is ideal at all in terms of solving uh
the problem you describe we have solved it one time in World War II we took a
country that was semi-lumping along and we found ourselves
in a World War and what we did in a World War is we brought a bunch of people to
Washington at a dollar a year you know whether it was Sydney Weinberg of Goldman Sachs you just name him
and we gave them enormous power to
reorient the resources of the United States to face the problem that they
faced which was to create a war machine and what they did was they found Henry
Kaiser you know and told them to build ships and they went to the Ford Motor Company and said you build thanks and
some airplanes and they they reordered the industrial
Enterprise of the United States in a way that was unbelievable because they had the power of the federal government
and they had the ingenuity of American Business and they had the facilities of American Business
and it led to very successful outcome but can we do that in a peacetime where
you've got 50 50 states and you'll have to get them to cooperate and you don't
have anyone that you can you can issue orders but you can't you can't designate where the capital
goes as the other end and you know we try and do it with tax incentives and all that sort of thing but we haven't we
haven't created the unity of purpose and the Machinery that worked in World War
II were essentially everybody felt that one job was to win the war and we
figured out how to use our industrial capacity to uh in fact defeat
the Axis powers and uh how do you recreate that uh
uh with the present democratic system I I'm not sure I know the answer but I sure know
the problem but um and I think that it
if you can think of a if you've got an emergency on your hand you really need
to re-engineer the engineer Energy System the United States I don't think I
don't think you can do it uh without something resembling the Machinery the urgency
whatever the capital is there the people are there
uh the the objective is obvious and uh uh we just don't seem to be able
to do it in a peacetime where where they're used to following a given set of
a procedure and uh and you know
China's got one country and we've got we've got 50 states and we've got a
whole different system of government that that we should be up to the test but so far it hasn't worked but uh so thank you
for the question Becky this question comes from Chris freed in
Philadelphia he says we know that Greg Abel and Ajit Jain are the next generation of Berkshire leaders who are
currently behind Greg and Ajit in their prospective roles respective
well that will be the question that they give their well
Greg will be have some things extraordinary circumstances but but he's going to
succeed me and then he will have be sitting in a position
where he needs his equivalent or something close to the corner because
he's better at many things than I've been uh he will need that substitute and when
the when the question comes word we know ajit's opinion on that uh and
but Greg will probably be the one that will make make the final decision I mean it says it was his responsibility and
Ajit will give him his best advice and I think the others are very very very high
would follow it so but it's not those are not easy
questions it isn't like we've everybody talks about the executive bench and all
of that sort of thing which is baloney I mean you know it uh they don't have that many people
that can run five the largest gap net worth
company and all kinds of diverse businesses uh but you don't need five people either
and you need a lot of good operating managers and you need somebody at the top that allocates capital and make sure
that you've got the right operating manager and we've designed design something where we separate
the insurance and the rest of the business and I think it's a very good design but they would
not be smart we wouldn't miss Martin name that decision
now about the two different different uh areas of the business
because a lot can change between now and then and the most likely changes that this job changes
Charlie I I got nothing to add
we have a lot of good people that have risen and the Berkshires and City areas
and there's a reason why our operations have by and large done better than other big
conglomerate comedies and one of them is that is that we change managers
way less frequently than other people do and that's helped us
when Paul Andrews died we know we know who he thought should take over there but there wasn't
any reason to to announce that I mean that Paul Anders would I wish he'd lived to be a hundred
we had we had one of our managers die not long ago in the how old was he at Karen yeah mid 90s
Seymour yeah say more away from the scene and Seymour I wrote him a letter when he was 80 and
I said you know I'm about your 80 and I'll write you again when you're 90. and uh I wrote him
again one of his 90. he didn't make it to 100 but but he had a terrific
uh fellow following him and it really Managed IT jointly to some extent as the
years went by but it's Case by case and the main thing to
do is have the right person running the whole place okay
station six good morning
my name is I'm from Miyazaki Japan
I was one of the 8 000 employees at Solomon Brothers that you saved I was
younger back then I was working at seven World Trade Center I've always always wanted to thank you in person for saving
the company it's in police including myself and my family so thank you Mr
Buffett thank you
and and and thank Derek thank Derek mon who actually had been over in Japan before that and who I met for the first
time the day before I put him in and he turned out to it wouldn't have it wouldn't work if Derek hadn't come so
whatever you taught him in Japan thank you thank you sir now my question
time at the time you have reminded us to not bet against America
what do you think are the most important things for U.S to remain strong and on
the risk side if the strength of the country is undermined what could be the
reasons well we've had we've had a lot of tests
I mean we're such a young country you know when you think about Japan and you think about the United States it's just
incredible how new we are to the block I mean you know what what are we here 234 years old
since since we started that that's that's that's nothing I mean you know
Charlie and I combined are two-thirds of people have two-thirds of the life of the country so and I mean it really has I mean we've
we've been tested at 46 national elections but and and we made some bad choices we got a Civil
War I mean it so the country is that an enormous advantages though in
some way because we started with one half of one percent of the world's population in 1790 and we now have
something close to 25 percent of the world's GDP and it wasn't because we had some
incredible advantage in terms of the line it was nice to have two oceans oceans on each
side back when when uh people tried to rule the rule the world by ruling the waves but it
you know and we've had good neighbors in Canada and Mexico but
it's a miracle and you say how do we keep the good parts of the system
while calling out our obvious defects and we do it in a very herky-jerky matter but
net the United States it was a better place to live
but almost when I was born by a huge Factor I mean I just got a root canal a week
ago and I was just thinking I don't know who even invented nobody came but I'm for
him you know I mean but in a million ways I mean you can
roll you can romanticize about the past but forget it uh it it is it is work but
now we do have an atom bomb and we've we wish nuclear power yeah you know we wish
the item had never been split but but uh it has been and you can't put it back in the bottle so the challenges are huge
our government always looks you know my dad was in Congress back in
the 1940s and it looked like a mess then you know it all it was unified by the war to some
degree but it was still very partisan now the problem we have I think
is that partisanship it seems to be his move toward tribalism
and tribalism just doesn't work as well I mean when it gets to tribalism you don't even hear
the other side and tribalism can lead to mobs I mean it just it it flows I mean
you've seen it all splurious we've seen it to a degree here so
we we have to refine in a certain way
our democracy as we go along we deal with the world we live in but if I still have a choice of any post
to be born in the in the world I'd want to be born in the United States and I'd want to be born today I mean it's a it is a
it is a better world than we've ever had and with present-day Communications we can also
say associate seem much more how terrible it is in many ways and it's got problems when I was born in
1930 there were two billion people in the world and now there's maybe 7.7 billion and
growing and we went Millennium with really no
change in population so we and of course we've introduced energy into
uh in an incredible way into something where
we now have 7.7 billion people using way more energy than they did when I was born when there
were two billion people so it's it's an exciting world it's a
challenging world and I you know I don't know the solutions on things I do think that we do need to think about different
solutions in terms of how we get important problem solved and that we don't kid
ourselves that something magic will happen or that everybody will get
together and we'll all just cheer and then go away by 2050 or anything it uh
and how well we adapt to them we will see I would say
so far it doesn't look very promising but then I'm sure that when Lincoln looks at it
what was going on in the Civil War didn't look very promising either so I think that the US is capable of doing
remarkable things and I think wouldn't surprise me if they do it again Charlotte Charlie May are you
well I'm slightly less optimistic than warranty
I think the best wrote ahead to human happiness as expect
less I think it's going to get I think it's going to get tougher and I think the solution of having
a huge proportion of the young and brilliant people all the way into Wealth Management
is a crazy development in terms of its natural consequences for American
civilization we don't need as many wealth managers as we have
you wouldn't but Charlie was born on January 1st 1924. and
you'd hate to go back to that one Detroit yes I would and I I I like more wealth managers who were just merely
reflecting the fact there's more wealth but we've got I don't like everybody going into wealth
management or MIT or something it's I think the world's a little crazy now
take your choice okay Becky
this question comes from Dennis degennaro as Warren stated in the 2022 annual
report Berkshire will always hold a boatload of cash in U.S treasury bills it will also avoid behavior that could
result in any uncomfortable cash needs at inconvenient times including Financial panics and unprecedented
Insurance losses after Warren passes away his a shares will be converted into B shares and
distributed to various foundations these foundations will then sell the shares to fund their causes Warren estimates it
will take 12 to 15 years for all his shares to be sold I worry that a corporate Raider like Carol icon or a
group will buy up enough of these shares to take control of Berkshire and completely disregard Warren's philosophy of holding a lot of cash in U.S treasury
bills and instead be greedy Reckless and highly speculative and ruin berkshire's
position as a rock solid Financial Fortress I also worry that changes might be made in how Berkshire subsidiaries
are run do Warren and Charlie worry that these things could happen well I think it's fair to say we think
about a plenty but I don't I don't I don't I don't worry enormously if we
it is true that that uh Greg and the directors will have a
honeymoon period for a long time because simply because uh of the boats that will
still remain I mean it and and uh but it's true that eventually they won't
get judged based on how well our operation fairs versus others now if
we don't pay any dividends and in 12 or 15 years you're talking a trillion and a half
that it would take to take over and and uh I think if we can't
that that limits the group they like to think about how much they can borrow against it it doesn't work when you uh
and and some of these there's nobody to come close to doing it
themselves and I think that the important thing is that Berkshire
regarded the be regarded as a National Asset rather than a national liability
we've got to be a plus to the country with our form of operation we certainly have got a record
which will then be 12 or 15 years longer done
with much more Capital more companies more things will have happened where our
hundreds of billions can work its way into the economy in terms of lots of
jobs lots of products loss of behavior and it can be compared with other things so I
I I think we went out of if we deserved to win out and I think uh I think the
odds of that happening are very very very high Charlie
well we I don't spend much time worrying about something's going to happen 50 years ago
and ever I'm dead I I think you sort of take care of each
day's responsibilities pretty well and think ahead as well as you can
and you just take the results as they fall so I'm I'm philosophical
but I I'm not I'd be spreading unnecessarily
okay neither one of us are worried basically uh but we but but we plan we do plan and
and you know I've got a model in my mind of what Berkshire has been that model has gotten
it's been modified plenty of times over 58 years the one thing I know initially is or very quickly was it shouldn't be a
textile company that was that was an important decision and and I mean we've just played the hand as a as it come
along and and we made a few really good decisions and we will never make a decision that
kills us they only things that are a threat to the planet we don't have any answer for those but
we do we keep ourselves in better shape than anybody else that and we just
aren't going to have big maturities of debt that come along we aren't going to
have uh insurance policies and be can be cashed in that mass and we will sit with
the Lord what looks like a huge among the capital and but it is a huge amount of capital but there's a huge amount of
earning power there's a huge amount of diversity everything so our business model
will be graded and it'll be graded against a lot of a lot of people that
we'd like to be graded against so uh I think we're handling something very
secure over to the Future and I think we've got the shareholder base like nobody has I
mean there isn't anybody in the country that I know of unless they've had a shareholder an employee-owned company
prior to going public or something of the sort but but this is the product of you know the
58 years of of regarding the shareholder as the owner
of the company but what does that mean that means having happy customers it means being it
being means being welcomed by your community rather than having them turn you away it means
that the government feels better with you if there's a financial crisis because you're
you can provide something that actually the company the country can't under some circumstances and you'll be there and if
it may and same time it'll be good for the business uh and we will have crises
of one sort or another but if they aren't challenging the planet which
worries you in terms of some of the threats that we have learn
won't be a plus to the United States and if we're close to the United States Will Will Survive
okay station Seven
Mr Buffett and Mr Munger thank you for having us this weekend
my name is Beau Clayton and I'm from Durham North Carolina
one of the reasons that we are all here is that your great storytellers
and we carry those stories back home with us can you please share a couple stories
that maybe we haven't heard before about Mr Abel and Mr Jane
that capture their character and their caliber as leaders
[Applause] I'll start out with the Jeep
he walked into the office and 1986 and I'd gotten the bright idea of
going into the reinsurance business I think in maybe 1969 so I'd stumbled along
uh for 17 years and it a wonderful guy that rather
uh uh but he also liked certain Brokers and
I mean he was running at the traditional wave taco
top quality and everything else but but uh but he fell into he
he didn't try and change the system he tried to improve the system and to some
degree and we just we went nowhere 17 17 years
wandering around in the wilderness when I thought I was um I knew we could have something good
and then the G came in on a Saturday and uh uh Mike Goldberg and
stirred him in I think and Mike deserves to be enshrined and perpetuity act and I
talked with him a while I think maybe I was opening the mail on Saturday while I talked with him and and he had
absolutely zero experience with with insurance but it actually seen a good bit of how
Corporate America operated because it has been a management consulting and
after talking with him I I knew I'd struck over and uh
so I hired him and gave him the backing of some money
uh and we had a very good period in the market almost right away for him to act
and and the Jeep uh you know if I had the
top pick of 10 Insurance managers in the world I'm I I could take all ten and they wouldn't
you can't replace a Jeep and uh we still
enjoy talking I don't we don't talk as frequently as he used to but we used to talk about every day
but he is he's one of a kind and
you know what if they're going to stick around long enough you only need one of a kind Paul Andrews stuck around a TT
had all the money in the world every time I talk to him about getting a raise or something of the sort he said
we'll talk about that next year I just he was not what you get when you get the top draft picks from the leading
Business Schools and I will say this I have never looked at where anybody went to school
in terms of of hiring I mean I I just somebody mailed me a resume or something I don't
care where they went to school uh uh and it just so happens that
that uh actually went to some pretty good schools but he isn't a g because he went to the schools and uh
Charlie didn't tell a story or two um how'd you find Louis vincenti
Ally well he was there I I but you got to recognize him I asked
Louie once how he managed to play first string football at I think Stanford
when he only weighed 165 pounds and he said well I said I was pretty
quick and he was pretty quick but
we have found a lot of people within our companies who were pretty quick it's it's a
yeah we had we had one guy that quit at fourth grade didn't in Ben Rosner Am I Wrong oh yeah totally self-educated
Ben Rosner knew more about retailing and difficult neighborhoods and anybody and
he watched everything in his business like a hawk and he was a he was amazing
now there was an example we never found anybody who could do what when Ben died that bill I don't know he
left us yeah and you want a story it's kind of interesting because Ben Rosner
had a partner Leo Simon and Lisa Leo Simon was uh Moe
annenberg's son-in-law and Leo therefore
is very very very wealthy and uh and then started with nothing but
they they liked each other and one time well before they got in
volved in the in the business uh the business we bought but they got
the idea of buying a submarine from World War One
and taking it to the century of progress or the World's Fair in effect in Chicago
I think in 1933 so they bought the submarine for not probably nothing and they figured you
know the average guy from Walmart was going to his first World's Fair get a submarine for a
quarter or something that they'd pay it so they hauled it from Florida wherever they got they
hauled it to Chicago and then they got into Chicago and they're hauling a submarine down the
streets of Chicago and it was creating traffic problems like nobody could
imagine so a cop came over and he said
to Ben he said what do you think you guys are going with a submarine and Ben says he
says well he says you'll have to talk to my partner Mr Capone [Laughter]
just keep going and that was that was Ben Roger and then Leo Simon died and
when he died in 1967 or so uh Ben Rosner kept delivering half thee
prophets to his widow who was incredibly Rich of course being
no annivers first born born daughter I think I think I think Moe had nine
nine girls in a row before Walter came along the tenth I may be lost by one but
anyway I went to this fancy apartment and anyway
then then kept her in for a half
the deal and he had her signed the rent checks just so she would look like she was doing something in this business
and she didn't need the money obviously but he just felt he was obligated once his partner Leo died
and then she started criticizing him and at that point then went to her his lawyer
was her lawyer actually will felsteiner I don't know whatever happened to will but he gave me he gave me a call because
Ben wanted to call me because he wanted me to buy it and he wanted me if I bought it
he'd be rid of the partners ex-partner's wife and uh and he'd get
he had me and Charlie come back and we went to will felsteiner's office
and businesses I'll work till the end of the year and that's all but I'll tell you this thing for six million bucks and
I had two million in cash and a couple million in real estate and a couple million of operating earnings this is crazy
but he fell over he was getting a lousy prize she was taking a half of the a lovely
price for half the money so uh uh
he looked at me at some point Charlie you described the rest of it again he said I heard here you're the
fastest draw in the west he says draw one of the New York lawyer's office yeah
and this guy is he's selling he's selling his baby and and he told us he's
going to leave it I got Charlie on this side I said if if this guy leaves at the end of the year he can throw away every
psychology book that's ever been written I mean it isn't going to happening and so we bought it and we lived happily
ever after with Ben and one time he was taking me over to see a property
we had in Brooklyn and uh and along the way I said
uh Ben I you know I promised you I wouldn't
interfere in the business when we started and he knew a butt was coming and he just said Thank You Warren and
they're showing him he was a lot of fun we have so many Ben rozen stories but now you've heard one
that hasn't been published before okay Becky this question comes from chai gohil
he writes this is for a G reinsurance industry is going through one of the hardest pricing environments in the last
15 years Berkshire historically has participated during these stress times when economic returns are very
attractive this year it appears Berkshire has not been interested in deploying its resources towards property
cat reinsurance despite such strong returns can you elaborate on reasons for not participating despite these returns
and your broader view on how you're planning to shape your reinsurance business post-acquisition of Allegheny
in terms of Allegheny that's an easy response we look we treat our operating
units independent of each other and as far as Allegheny is concerned they have a major presence in the reinsurance
business under the brand name of transatlantic re that company will operate the way it's
been operating in the past there'll be no change in terms of strategy or management and they will keep doing what
they're doing they've been very successful and hopefully they'll keep being successful
now in terms of the property CAD business that I have been active in over
these last several years you are right that the last 15 years has been a difficult time prices have not been
attractive and even though we have had some presence in the property cat
business in the last 15 years it really is been minimal
uh this December 31st which is a big renewal date for Cattery insurance we
were hoping that we would get a few days in the Sun and we'd be able to deploy our capital and be able to write some
fairly attractive business as it happened towards the end of December till about
the third week of December I was very optimistic that we would get a chance to
put several billion dollars on on the books but in the last 10 days of uh December
unfortunately a lot of capacity came out of the Woodworks pricing that we were expecting to realize didn't really come
and meet our pricing requirements as a result of which January 1 was a big disappointment we did not write as much
as we were hoping to write now fast forward to April 1 which is another big
renewal date we had a lot of powder dry and we were lucky that we kept the
powder dry because April 1 suddenly prices zoomed up again a lot higher than what they were on January 1 and started
to look attractive to us so now we have a portfolio that is very
heavily exposed to property catastrophe uh to put that in perspective our exposure today is almost 50 percent more
than what it was uh five six months ago so you know we I think we have written
as much as our capacity will allow us to write we are very happy with what we've
written the margins have been healthy the only thing that I want to mention to
you is that while the margins have been healthy we have a very unbalanced
portfolio what that means is if there's a big hurricane in Florida
we will have a very substantial loss as opposed to that if we have a very big
loss anywhere other than Florida relative to a competition we will have a
much smaller loss net net I'm very happy with the portfolio it's been a lot
better it is a lot better than what it's been in the past uh I don't know how long it'll last and of course
if the hurricane happens in Florida we could lose
across all the units we could lose as much as 15 billion dollars and if there
isn't a loss we'll make several billion dollars is profit and LG tell them how long when you call
me and said you'd like to expose us to whatever was a couple billion more of of
exposure how long I took to say yes yeah uh so the way we think about our
exposure is you know in in the property in the insurance operations collectively across the entire company uh given that
we have about a little less than 300 billion of capital we think of that as a
55 exposure that we're willing to take on so to complete Warren's story
a few weeks ago we had about 13 billion dollars of exposure all across like uh
the globe and I called up war and I said we're up to 13 it'll be nice if we could go up to 15 that's a good round number
and that was less than a 30 second phone call
I think Warren said yes without even listening to what the numbers I hope he calls me again
[Laughter] okay station eight
hello my name is adal Flores and I've been a shareholder for about 16 years and I'm
coming from Guadalajara Mexico my my question is for Warren and Charlie
companies have the Eternal dilemma between bought Building Products that can make profits and increase their
company competitive position in the best case you can build products that have both characteristics at the same time
like Google did but most of the time companies need to choose between short-term profits and long-term
defensibility for example Amazon was focused on building their famous Amazon flywheel with limited profits initially
in order to abstain obtain stronger Network effects with the hope of getting
more defensible profits in the future when you invest you constantly speak about the importance of building
competitive modes what advice would you give to CEOs about how to balance this
dilemma which is essentially short-term profit versus long-term definitibility thank you
well the answer to control your destiny which we've been able to do it uh Berkshire so
we have we feel no pressure from Wall Street uh
you know we don't have investor calls we don't have to make promises we we get a
chance to make our own mistakes and and occasionally find something that that
works well but we recognize that the people in this room and people like them
uh are the ones we're working for and we're not working for a bunch of people that that care
about whether we meet the quarter estimate or anything so we have a freedom uh
that we that we get to use and we're interested in men we're interested
in owning a wonderful business forever well there aren't very many wonderful businesses but we do learn
a lot as we go along we we Charlie and I have often mentioned how we learn so much
when we bought C's candy which we did but we learned when we bought Ben Rogers
chain of women's dress shops spread all over the the eastern part of the country
uh we learned when we tried them getting into the department store
business back in 1966 and as the ink was drying on our purchase price we realized we'd done something
dumb but we're we're learning all the time how consumers behave
I'm not going to be able to learn the technical aspects of businesses but that
you know that that be nice if I knew it but but it isn't essential and you know
we are obviously uh we've got
a business at Apple which is larger than our energy business and we may only own
Five Points six or seven percent but our ownership goes up every year and I don't
understand the phone at all but I do understand consumer Behavior
and I know how people think about whether to buy a second car I know wow
they go out to different We Own auto dealerships we own we're learning all
the time from all of our businesses how people react to Garanimals versus you
know selling them something else and and so cease was a sort of breakthrough but
but it just we just keep learning uh as to more about how people behave and how
a good business can turn into a bad business and how some good businesses can maintain uh uh their competitive
advantage over time and and so
um we don't we don't have some formula the worship
people we just but we can also tell them in 10 seconds whether it's something of
Interest I mean with you know when when uh I get these calls and we want to send
decks and all that sort of which is nonsense I mean it uh uh there's a bunch
of guys sitting that get paid for drawing up these projections of the future and everything
like that if they knew the future you know we don't know the future but we do know certain kinds of businesses we know
what the right price is and we know what we think we can project out in terms of consumer Behavior Uh
and consumer and threats to a business and and that's what we've
been about and that's what we'll continue to about we do get we don't get smarter over time we get we
get a little wiser though uh following it over time and and you can
do it while sitting in the office with a telephone too which we like Charlie well tell them the story of the Japanese
investment that that should be told again that that that's that's a nice
story you know well it was pretty simple I mean I you know other
back when I started other people were going through Playboy and I was going through Moody so that you know basically
and uh uh there's a movie out called Turn every page but which I
saw again for the second time a couple of days ago Lizzie got leaving I recommend everybody in this world watch
that because I turned every page in the past and uh I did it for thousands and
thousands of pages and Moody's and I did it at the Department of Public Utilities in in Boston I did a Dan Newton the
insurance department that it just kept turning page as well that that goes on for
a while but now we need Big Ideas in order to find things and uh and what
was your question Charlie tell them about the Japanese well the Japanese thing was was simple I mean it kind of I
like looking at companies every I mean I like looking at figures about companies and and here
were five very very substantial companies understandable companies
most of them uh maybe all of them we've done business within in a dozen different ways if you
go a couple miles from where this place is the our last coal generating plant
was built by one of the companies that so
here they were they were sitting as a group
where they were earning will say 14 percent uh on what we were going to pay to buy
them they were paying decent dividends they were going to repurchase shares in some cases
they owned a whole bunch of businesses that we could understand as a group although we didn't mean we had deep
understanding on anything but we've seen them operate and everything that there wasn't anything to it and at the same time
we could take out the currency risk by financing in in the end
and that was going to cost us a half of one percent well if you get 14 on one side a half a percent on the other side
and you've got money that you know forever and they're doing intelligent
things and they're sizable so we just started buying them I didn't even probably tell Greg until
maybe six months after we'd gotten going and and then we hit five percent
uh in all of them we announced on my birthday and uh at 90th at the we owned
over five percent and recently went over for the first time to visit with
them and moved more than pleasantly surprised delighted with what we find there and now we own
7.4 percent of them we won't go over 9.9 without their agreeing and we sold
another 164 whatever it is uh
billion of us again would have done for us if we only had five billion dollars
or something and it made 10 billion dollars simply in that way yeah we were the
heroes now 10 billion just sort of disappears as it's an Old Dot in person's report but it's
fun and it is fun and it is 10 billion dollars and Charlie says it keeps
and Charlie says it keeps me out of bars right knocked up about it and I probably
talked to Charlie about this app the year after I started but who knows I mean I but I knew he'd like it I mean
obviously and and [Music]
yeah well not even that quite that much yeah but you know we are four or five billion
ahead plus dividends and we've got to carry that's terrific and and you know
uh and they welcome us and they should welcome us and but we we love it the way they're operating
we're not there to tell them what to do in the least uh uh so
we didn't and but we did say we never go over 9.9 and we mean it and then they they know that
will be true to our word and I went over there partly to introduce Greg to those
people because we're going to be with them 10 20 30 40 years from now and
they may occasionally find something that we can do jointly and they look they look forward to doing that we look
forward to it and uh in addition we have some other operating businesses in Japan
so Greg do you have anything the only thing I would add is that one
has one you went over there it was to build the build the trust with these
Japanese companies because we do hope there's long-term opportunities but fundamentally as you highlighted uh
they're an incredible uh they've been a very good investment I'd also highlight the five meetings we had we're really
quite remarkable I mean these companies the culture and the history around it and how proud they are you know there's
just moments of learning from them so it was it was just a great experience to to spend really two days with the five
companies and an issue that we intended to be 56 billion of Yen that we were issuing and
selling turned out to be 164.4 or something like that everything everything's worked so well
and as Charlie says it you know it doesn't move 500 billion of
net worth that much but this one is you know it will keep
adding over the years to the berkshire's value with this one
very widespread probably four or five hundred million dollars a year and uh
you know we'll just keep looking for more opportunities and and Japan we have
bursure is the largest borrower outside of corporate borrower side of
Japan that that exists and we didn't said how to be that but it's it's turned
out that way and and we're not done I mean it uh you know in terms of
what may come along there and uh we have some direct operations there as
I mentioned that the uh and we've got some
really wonderful Partners working for us and I don't have to do anything [Laughter]
okay Becky the next question comes from Ellie Amin Tibet
who asks during an episode of investing the Templeton way podcast Professor
damodaran who he respects almost as much as Warren and Charlie mentioned that he
is not comfortable with positions becoming a large part of his portfolio for example when they reach 25 to 35
percent he mentioned that apple is now 35 percent of berkshire's portfolio and
thinks that that is near a danger zone wonders if Warren and Charlie can comment I believe we made one comment
first but Charlie will come up with I think he thought it was mine yeah
apple is not 35 percent of of Berkshire portfolio bursters portfolio includes
the railroad the energy business or animals you name it See's Candy they're
all businesses and uh you know the the good thing about Apple
is that we we can go up they buying their stocking instead of owning 5.6 percent
you know they got down to they got about 15 billion 700 and some million shares
outstanding they get down to 15 and a quarter billion without us doing anything we've got six percent so we
can't own more than 100 of the NSF we can't own more than 100 of Garanimals or
See's candy and it'd be nice we'd love it on 200 but
that just isn't doable but they're all the same they're good businesses and to
think that our Criterion a criteria for
apple is different than the other businesses we own it just happens to be A Better Business than any we own and we
put a fair amount of money in it but we haven't got more money in it than we've got in the railroad and apple is a
Better Business our railroad is a very good business but it's not remotely as good as Apple's business but uh uh Apple
you know has a position with consumers where they're paying
you know maybe the paid 1500 bucks or whatever it may be for a phone
and these same people pay 35 000 for having a second car and if they had to give up a second car
or give up their iPhone they'd give up their second car I mean it's it's an extraordinary probably we don't have
anything like that but we own 100 of but we're very very very happy to have 5.6
or whatever it may be percent and we're delighted every tenth of a percent that goes up it's like adding 100 million
dollars to our earnings I mean our share of the earnings and they use their earnings to buy out
our partners which we're glad to see them sell out so the index funds have to sell they bring the
number of shares down and uh you know I'm good we went up slightly
last year and I made a mistake a couple of years ago and I sold some shares when I had
certain certain reasons why
games were useful to take that year from a tax standpoint but
having heard having heard me say that it was a dumb decision uh and uh
uh Charlie you've already given your comment about it but but we do not have
35 percent of berkshire's portfolio berkshire's portfolio is the funds we have to work
with and we want to own good businesses and we also want to have plenty of liquidity and beyond that
you know the sky's the limiter or are mistakes who knows what the bottom is
Charlie do you want to add anything to your earlier comment well
I think one of the inane things that's taught in
modern University education is it a vast diversification is absolutely mandatory and investing in
Common Stocks that is an insane idea it's not that easy to have a vast
plethora of good opportunities that are easily identified and if you've only got three I'd rather
be in my best ideas instead of my worst and
now some people can't tell their best ideas from their worst in in the act of
deciding the investment already is good they they get the thing it's better than
it is I think we make fewer mistakes like that than other people and that is a blessing
to us we're not so smart but we kind of know where the edge of our smartness is
that is a very important part of practical intelligence and a lot of
people who are geniuses on IQ tests think they're a lot smarter than they are and what they are is dangerous
and and but but if you know the edge of your own ability pretty well you should
ignore most of the Notions of our experts about what I call dehorsification of
portfolios okay
yeah [Applause]
session nine
hi Charlotte hi Charlie and Warren thank you for this superb uh shareholder meeting celebration
my name is David Chung from Hong Kong and a proud graduate of Chicago Booth
I'm also here with my two sons Aiden and Ashen who's currently studying University of Chicago as a freshman and
sophomore this is my second time attending the conference last being 2019 four years
ago which I was only a guest shareholder of my friend Andrew so after the shareholder meeting I have
decided to buy into Berkshire Hathaway which has given me a great return of 62
since 2019. so I want to thank you for that [Applause]
I have also taken one of your advice to give my children a share for each of
their birthdays although they want a Berkshire Hathaway eight shares
they will do just fine with P shares
my question is how do you see the current U.S China
internet companies valuation and the price disparity given there has been many uncertainties
such as geopolitical tensions significant course optimizations with
lean at U.S tech firms while China attack has been through all that already
thank you Charlie I wanna well
there's been some tension in the economic relationship of
the United States and China I think that that tension
has been wrongly created on both sides I think we're equally guilty of being stupid
there's one thing we should do let's get along with China and we should have a lot of free trade
with China in our mutual interest
and I just can't imagine
it's just so obvious there's so much safety and so much creativity that's
possible think of what Apple has done by engaging in a
partnership with China as a big supplier yeah it's been good for apple and good for
China that's the kind of business we'll be doing with China and more of it and
with everything that increases the tension between the two companies is stupid stupid and all at least stopped
on each side and each side ought to respond to the other side stupidity with
reciprocal kindness that's my view and it creates one enormous problem of
course which is that you have the two superpowers of the world and they know they have to
get along with each other either one can destroy the other and they're going to be competitive with
each other uh but part of it is trying always in a game like that is
trying to judge how far you can push the other guy without them reacting wrong and uh
you know if either side is a bullying some ways they can get away with it to
an extent because the alternative is would drive them both into destruction
but if they push it too far they increase the probability that something really does go wrong so it's a
you know it's one of those Game Theory dilemmas but you really need
the leader of both countries uh and you need the
populace to understand at least the general situation in which these countries are
going to operate over the next century and know that that some leader that
promises too much couldn't get you in a hell of a lot of trouble and that like you know that
you've got one kind of a system that gets this leader one way and you've got another system that gets his leader another way
and keeping keeping either aside from trying to play
the game too hard uh and thinking the other side will
will go along you know it's like playing checking you
know and driving toward a cliff so it is if you've got any diplomacy skills
persuasive skills or anything like that you really want people that will
convince the other country as well as his own or her own country
that that this is what we're engaged in we've got to do it right we won't give away the
story but we won't try and take the whole story either and and it it we we're just at the beginning of
this uh unfortunately I mean we've learned what the situation was it used
to be the Soviet and mutually assured destruction
was our policy then and that kept a lot of things from happening
but it also came with a very very very close call uh with Cuba and
these are not you know these are different games than existed hundreds of years ago you could
you know Britain might rule the Caesar France or Spain but but now you're playing with a game that
you can't really make a huge mistake in and I think that
that should be the better that's understood in both countries
the more the leaders feel that their citizenry does understand that
the better off we'll be and that a lot of
the the the uh demography or the a lot of
a lot of inflammatory speaking but a lot of authoritarian action I mean it all
carries its dangers and the world was stumbled through
the years post 1945 with a lot of close calls from the
in the nuclear Arena and now we've got pandemics and we've got
we've got cyber and a whole bunch of other things so we've got more tools of Destruction
the world's ever had and it it's imperative that
China and the United States both understand what the game is and
understand that you can't push too hard but we're getting but both places are going to be competitive and both can
prosper that's that's what really is that's that's the vision
that is out there that China will have a more wonderful country
the United States will have a more wonderful country and and and the two
are not just compatible they're almost imperative uh in terms of
uh what's going to happen in the next 100 years or so and uh
uh I think that the leaders of both countries have got
an important job and and having that understood
and not to do inflammatory things and we'll see whether
the locks that has taken us from 1945 to present holds out and and I think we can affect
to some extent that luck and without sure a message we will move
to Becky uh this question comes from Rohit bellany Berkshire bought a substantial
position in Taiwan semiconductor and contrary to its normal holding timeline sold almost the entire position within a
few short months while you cited in a CNBC interview that geopolitical issues were the Catalyst these issues were
seemingly no different when you acquired that stock so what else if anything changed in those few months and prompted
The Firm to offload close to five billion dollars worth of Taiwan semiconductor shares
at Taiwan semiconductor is one of the best managed companies
and important companies in the world and uh
uh there is not and I think you'll be able to say the
same thing 5 or 10 or 20 years from now I don't like its location and and uh
reevaluated that I mean I don't think it should be any place but Taiwan although they will be obviously opening them
ship capacity in this country and actually one of our subsidiaries that we got in Allegheny is is uh is
participating in in in their Arizona uh construction activities but uh
it's uh it uh
it's a question of we would rather have the same
kind of company in there there's nobody in the chip company there's no in the chip industry that's in their league in
our bit at least in my view uh and the man that was a 91 year old or so
that connected with us and that I think I played Bridge with him and uh uh in
Albuquerque and The Marvelous people marvelous company but
I'd rather find a marvelous people I won't find it in the chip industry but marvelous people and
marvelous uh competitive position and everything I'd rather find it in the United States
I feel better about the capital that we've got deployed
in Japan than in Taiwan it uh I wish I weren't so but I think that's a
reality and I've reevaluated that uh in the light of certain things that were going on try well my view is that Warren
ought to feel comfortable if he wants to yeah
put that in the minutes okay station 10.
first of all thank you for making our lives better my name is bogumil Baranowski I'm a
founding partner of sika's associ New York we manage multi-generational family
fortunes hence my question Mr Buffett in 1976 in your tribute to
Benjamin Graham you wrote Walter lippman spoke of men who plant trees that other
men will sit under Ben Graham was such a man you're both
such people could you share with us your 100 Year vision for Berkshire it's a question to
you both yeah I would like to add one thing about Ben Graham ah
Ben Graham didn't all kinds of things for me and I never expected one thing in
return I mean it just you name it and he did it and and there wasn't any hidden
you know there's a hint I should say of of anything expected in return and uh
I I checked uh Bobby he wrote a book in 1949
that in a sense said to me in very persuasive terms
that what I'd been spending the previous
eight or nine years working at and loving was all wrong
and uh that book has been I check it every now and then
on Amazon to where it ranks and you know Amazon ranks hundreds and hundreds and
hundreds of thousands of books uh by sales and
Ben Graham's book has been up there like number 300 or 350 or something like that
forever and there isn't there isn't any book like that I wrote Harper columns and note the other day
because they're bringing out another Edition and I asked him how many copies have been sold and they said the records
didn't go back far enough but they they they had 7.3
million copies of this little book that changed my life
and uh uh continues to I'll sell every investment book
investment groups come along and you know their number 400 or a thousand or something for a
while and then all of a sudden they're numbered 25 000 or 200 000 and and this this book
you know in how many areas can you find any book
that has had that sustained position you can't you go back and look at number one in 1950 or number two or number three
and you're looking in 51 and 52 they don't continue I mean they just don't continue uh
cookbooks maybe one or two of them last for a while but there is nothing and
this book lives on and everybody keeps bringing out new books and saying a lot of other things but they aren't saying
anything it's as important as what he said in 1949 in this relatively thin little book so uh
you know our vision for Berkshire is exactly what we said today we we want
it to be a company that is owned by shareholders and behaves in
a way that Society is happy that it exists and not unhappy
and we will have unlimited capital we'll get lots of talent
and we've got a base that can't be beat and and there's no
reason why it can't be perpetuated just like Ben's book and maybe be an example of
other people and and if so we'll be very happy Charlie
yeah one of the really interesting things about he was a really gifted teacher a very honorable profession
and that is what has lasted however
an interesting fact that he was sheepish about in his old age was that more than half of all the
investment returned that Betty Graham made in his whole life came from one stock one growth stock Geico
birchers subsidiary and he at the time he operated there were a
lot of sort of lousy companies that were too cheap and you could make a little money floating from one to another
but the big money he made was one growth stock buying one undervalued great
company is a very good thing his Berkshire has found out again and again and again
and and Ben wrote a post trip to the 49 Edition
pointing out exactly that fact and acknowledging it but said but also took the some good lessons from
it you know he said that's the way life is that that you prepare and you
you know it don't lose everything along the way and then something comes along and Geico came along because
a banker in Fort Worth at a financial Leo Davidson uh
and I think the banker got three quarters of it and I don't mean Leo Davis and Leo Goodwin uh who founded
Geico then called government employees insurance company and you can figure out the acronym and uh
the deal almost fell apart the deal was as I remember from maybe a million and a
half or something like a million and a quarter and it almost fell apart because of a difference of twenty five thousand
dollars in the net worth delivered this is a businesses you know we're tens of billions I mean
but he pointed out the irony in that too I mean it he was honest about it was
totally intellectually honest on about us about his the failings and but also the strengths
of his approach and he and that to some extent you know Charlie and I have seen
that in our lives I mean the sort of the prepared mind the willingness the to act when you need to act and the
willingness to ignore it every salesman in the world and and the imperative to the norm and uh
is one or two things that make the right decision if you make the right decision on a spouse I mean you've won the game
they you know and there's enormous important decision and got all the time
I mean in the world we got more time now than used to have one of them again to make that decision and and uh
you know I don't know whether a third or whatever percentage below that one you
know it it is it is really interesting the thing to do is just
keep trying to try and think things through not do too many stupid things and
and sooner or later you have a Lollapalooza Charlotte would say
okay Becky all right this question comes from terrafter a shareholder in Sierra Vista
Arizona who is asking a question of Ajit wants to know about electric vehicles
getting insurance from the manufacturer instead of car insurance companies a recent article in the Wall Street
Journal shows that though EVS are a small but growing percentage of sales Tesla and GM are offering their own
Electric Vehicle Insurance what will Geico do to combat this
yeah so Geico is talking to a number of original equipment manufacturers as well
to try and see how best they can work with the auto manufacturer and offer
insurance at the point of sale uh they haven't been very many success stories as yet
uh so we'll wait and see uh you know clearly it is a very convenient way to
sell auto insurance at the point of sale but there's a there's a fair amount of
data that needs to be collected on the driver not just the car and that makes it a little more complicated so we are
talking to some auto manufacturers ourselves we are hopeful to that we will
strike a deal with some of them before not too long Tesla has made and GM they both have
talked a lot in the press in terms of getting into their insurance business and in fact GM I think has projected
they'll write three billion dollars of Premium which you know it's hard to imagine where it'll come from but
they're all hot to trot I think somebody will find the secret sauce before not too long and we ourselves are in that
race yeah I would I would point out that General Motors Motors insurance
for decades and I mean this is not a new idea and uh
Uber or a lot of insurance for a while they laid it off with somebody and that
company got killed by it but I and I don't know the deal between Uber and forget the name of the company that took
it on the Jeep would probably know but yeah yeah and you know it
there's there's nothing it is not it's not a new idea it's not magic in the least I mean it is hard
to come up with something that is better at missing Max and matching risk to
reward uh wrist wrist I'm sorry risk surprise then then uh a bunch of very smart
people are doing it a progressive and a bunch of very smart people are doing it
it is it's just it was fascinating to me one Uber went into it you know and they were
going to get their head handed to them but they laid off a good bit of it and very very substantial percentage of it
was somebody else who got their head and she was like and uh you know and but it was a story you know Wall Street loves
it and uh uh I with we've got
ad car dealerships that do a lot of business uh and
you know we've got some people buying the car and the place and and we form an insurance company around the
group for some reason that writes Insurance you know it it it's hard to
improve on the president's system yeah I I have no I
wouldn't I wouldn't pay a penny I'd pay to avoid it actually I mean uh and go
ahead yeah the only point I'd like to add is the margins on writing auto insurance are four percent which is a
very small number and once there are more people that are trying to take a bite of the Apple it just becomes very
very difficult to keep all the mouths fed in a profitable manner
now you can say the there was one big new idea in insurance and property and
car insurance back in 1920 or so one State Farm started and State Farm
uh and still has it next to Berkshire it's it's our it's the leader in having net
worth it's a mutual company but some guy just figured that there was a cartel running
car insurance and he Farmer for murder is the name of the
book I think and over in Illinois and he created a system where he really took 20
points or so out of the course and surprise surprise
areas you know and nobody's own stock in State Farm it's it's an insult to
capitalism actually everything you learn at the business school says it shouldn't work because nobody
owns it nobody's going public with it no nothing but it's got more net worth it's almost probably double leaving Berkshire
out of the picture it's probably double the next guy and and nobody's really improved on their system that much so
it's fascinating how people don't really look at the essence
you know these are cases that that should carry a message
uh but the truth is in Wall Street anything that gets the test is whether you can sell it or not but if if you can
sell it it'll get sold and a bunch of insurance companies came along and got a toll and this is this can be a story
about this stock or that stock and it sounded good when they talked about it at Uber for a while it is it is really
interesting the investing public does not learn much
okay station 11.
hi my name is Jeff Miriam I'm from Edina Minnesota we've been coming for years
to make that Professor from the earlier question really nervous half our family's wealth is in Berkshire Hathaway
well let's make Charlie nervous my question has to do with voting
control in the future there was a question earlier about corporate Raider I was more wondering about
who is actually going to own the voting control uh is it going to be institutions uh Calpers BlackRock are
they eventually going to get their way with the ESG
check boxes that we're gonna have to check and what should we be thinking about that well you're thinking very
well and uh the interesting thing is uh the big
aggregations look like of course they'd be in index funds but
what indirect funds want is they want a world in which Society
doesn't get upset with them about the fact they've got all the voting power and and I would say in the last year or
two uh it's looked like a better idea uh for them not quite togethers uh uh uh
What was a praise the Charlie use it backed off a lot yeah they backed off
a lot and and it's it's in their interest to back out off and interesting interestingly enough
and looking at money management you know the game
is not performance it's assets under management and index funds produce a
tiny tiny tiny uh fee on assets under management because it was pioneered by Vanguard and
uh and it's when it became successful it was very easy to replicate not so easy
but I mean it was inevitable to be uh copied but it came with a management fee of two
basis points so what people that have offered index funds would really like is
it to buy their other funds or level management money in some other way so that they get a higher
higher fee on assets under management which of course is exactly why the index
fund was embedded in the first place but so it's gotten it's not a loss leader but it is a way
to pull money in and then you hope that people ignore what was said by by uh
what's the name that you know that John Bogle Jack Volvo uh ignore him and
essentially they give up the I say idea that will offer you a fund that does this in the India and we'll offer you
another fund that does that and of course those management fees are higher so they're really counter selling the
idea that John Bogle came along with but in the process they have achieved a lot
of bolts and that was fun for a while but the last thing in the world I want
to do is that Washington or the American public decide that they're throwing
around their weight too much so they're tending to back off now if you figure out where their self-interest is you can
judge where their behavior is going to go oh yeah
you're one of the Phantom no you can square me but he just said you're totally right on everything
well in that case I won't ask anybody else okay Becky
all right this question comes from almu uh Grinnell and it's about
this is for Warren and Greg since 2019 Berkshire repurchased huge amounts of stock about approximately reducing 10
percent of the share count and increasing the intrinsic value per share for the continuing shareholders Greg is
expected to be the successor of Warren as CEO so will he be in charge of the main capital allocation decisions
including future share BuyBacks Greg has been key in the development of Berkshire Hathaway energy and I think a good
Capital allocator does he has he been involved in the share repurchases that have been executed over the past years
and do you both Warren and Greg work together in the estimation of berkshire's intrinsic value and the
share buyback decisions well then the answer is that Greg I'm
going to turn it over to him but the answer is Greg understands Capital allocation as well as I do and that's
lucky for us and he will make those decisions I think very much in the same framework as I
would make them and we've laid out that framework now for 30 years probably or something like that people make it way
more complicated than I mean particularly if you're working on a doctorate or something it's just a great subject to have lots of footnotes and
you know 50 pages or 100 pages but it's it's no more some it's no more
complicated than if you and I and Charlie had a business and you want to sell yours your interest in we could buy it
for less than we thought it was worth and and without misleading you in any way about what was going on and we'd buy
it then but Greg you're on because you're going to be doing in the future right uh
yeah well I think Warren you said it really well I mean the framework's been laid out we know how you approach it and
with uh and and how you and Charlie have approached it and and really don't see that framework changing when the
opportunity presents itself we'll want to be a an active repurchaser of Berkshire shares we think it's a it's a
great outcome for Berkshire shareholders so in a a larger piece of each of our operating businesses and our in the uh
portfolio of the equity companies when the when the opportunity presents itself it can be the dumbest thing you can do
or it can be the smartest thing you can do and you know to make it more complicated
than that and start getting into all this but you obviously do what the business needs to do first the
opportunities are there grow your present business buy additional business whatever it may be and then then you
make the decision on dividends but that decision becomes pretty irrevocable because you don't cut dividends and
without having a major effects in your shareholder base and a lot of things and
uh and then if you got ample capital and you don't see that you're going to use
it all and your stock is attractive and then it enhances the intrinsic value for the remaining
shareholders it's a no-brainer and if it's if it's above the price of intrinsic value it's a no-brainer that
you don't even listen to anybody no matter what investment banker comes in and tells you here's how to do a repurchase program
okay station one
I'm Tom Nelson a podcast here from North Oaks Minnesota Charlie in 2022 you used phrases like
really massively stupid massive kind of ignorance and crazy to describe what you
said was the 30 of Americans hesitant to submit themselves to untested mRNA covid
gene therapy do you stand behind those quotes today yeah sure
well we got time for one more than before lunch Becky
okay [Laughter] but let's see uh
[Applause] how about oh uh
could be how about lunch pretty soon but no no okay let's just got one for you this one comes from Drew Estes
um this is a question for Warren in your 1969 letter to Partners you said in any
company where the founder and chief driving force behind the Enterprise is still active it's still very difficult
to evaluate second men the only real way to see how someone is going to do when when running a company is to let them
run it this wise statement now applies to Berkshire once the second men are running Berkshire what would you advise
owners of Berkshire to watch for specifically what actions if taken should give us concern well I think I
would just I would have some comfort in the fact that 99 of my net worth is in
that company so I I probably got a stronger interest in it and and perhaps
100 billion or more of philanthropy will be affected by and uh
but I would say that I don't have a second
choice I mean that it it is it is that tough Divine but I've also seen
Greg in action that I feel 100 percent comfortable and uh uh uh
and like I say I don't know something happened to Greg I would tell the directors you know they have a problem
and they won't I don't have anybody to name and if they put somebody in
Bergeron automatic pilot going to work extremely well
for a long time I mean it doesn't it doesn't like the businesses go away or anything sort uh
and you can't it's hard to judge successor management
in a really good business because if they if they don't show up at the office it'll keep working for a long time and
maybe maybe that like I've been useful input uh may show
itself in five years I mean it may go a long long long time and uh
how how are the shareholders you know advised by a bunch of
people that are concerned about whether you're meeting earnings projections or something telling them whether the
Management's any good thing you know it is very very hard it's very hard I've
been on the board of 20 companies is very hard to do if you asked me to rank the management of each
one it's uh it's it's very difficult to do because some are just better
businesses than others some would be better off not managed hardly at all others really need help but they got a
lousy business and uh Tom Murphy told me a long long time ago
is it the secret of business is to buy a good business and it's okay to inherit one too and Greg is inheriting a good
business and I think he'll make it better but I don't think it's easy to put any one of the next 10 nominees
in and try and judge three years later whether they've done a good job or not so it's going to be a that'll be a very
interesting job for the board but it shouldn't listen to Wall Street on it it they've got the job if they put
somebody in there's a surprise we both got out on a plane that put somebody in they've got a real job in assessing that
person as a it'll depend on how good he or she is as a talker it'll depend on
you know them courting Wall Street to be supportive of all kinds of things and and uh uh we've got some very good
people on the board but they would be challenged in that position as would I
where I've been in that position in other companies where a very great leader
has left and uh on the way back from the funeral you know nobody knows what to do exactly
so with that Curie message we will go to lunch and we will come back
[Applause]
we'll see at one o'clock thank you and and we're still going to try and get 60
Questions in we've done 25 so far 20 yeah 25.
so keep the question short and I'll try and keep the answer short thanks
good
welcome back to our live coverage of the 2023 Berkshire Hathaway annual meeting I'm Mike santoli the morning q a session
has just ended Becky will rejoin me in a minute but let's recap some of the big
news Warren Buffett Charlie Munger and Berkshire Vice chairs Greg Abel and Ajit Jain just made in the Q a session as
Warren mentioned they got through 25 questions a lot of them pretty wide-ranging at the top but if it did
say that the way things are tracking right now most of berkshire's operating businesses look like they'll be down in
earnings for 2023 so the broader economic slowdown is reaching them broad exposure to railroads and Building
Products as well as energy and a lot of consumer areas so that's probably not a surprise but it is a contrast to the
rise in operating earnings they had in the first quarter now on Apple in response to a shareholder question that
Apple was becoming a very large percentage of the Investment Portfolio some 35 percent according to the
question actually it's approaching half of the equity Securities in the portfolio and Warren Buffett said that's
not the way they think about it they think about their entire business as being the portfolio so apple is not a
particularly large sale if you consider the companies the businesses that they own outright and therefore he also said
apple is a much better business than any one of their operating businesses they wish probably they could own all of it
but right for now they own almost six percent Apple keeps buying back a ton of stock which raises uh berkshire's
proportion of the whole company which they're pretty happy with at the moment Buffett also said in response to a
question about how he quickly sold out of Taiwan semiconductor after having built the stake not long before uh
Buffett said he feels just his capital is safer in Japan than in Taiwan they're
a little concerned obviously about geopolitical tensions in Japan in Taiwan excuse me uh really does like the
investments in the Japanese trading houses financed with very inexpensive borrowing rings are in Yan so that was
essentially some of the headlines out there a lot of skeptical comments about AI in response to some questions as to
we're going to get to a lot of those details meanwhile cnbc.com's banking reporter Houston at CNBC headquarters
right now and Hugh you know Warren and Charlie didn't spend a whole lot of time this morning talking about the banks so
despite all the recent Regional banking turmoil they didn't really get many pointed questions on it but did get one
I wonder what you make of that yeah so the one question they did get was the very first of the day which was you know
what would have happened to uh you know to the US if svb's uninsured depositors were allowed to go under and Warren was
very clear on that he said that it would have led to a disaster that essentially uh it would have led to a run on every
Bank in the in the country the following morning so essentially an important thing to do I think you know for my
money it is more interesting about what he hasn't said than what he has which is you know we're at a moment in this country where you know the business
model Regional banking is under attack and we're wondering whether or not the market is essentially pushing otherwise
healthy Banks to the brink and so you know the question of the hour for me and hopefully gets this in the second half
of the afternoon in the Q a um you know is whether or not that there's a point a price in which he's
willing to deploy capital and clearly you know for those who don't know the backdrop is the Warren Buffett has been
time and time again one of the most important uh you know backstops of of the U.S banking industry in this country
that he has provided Capital he has provided confidence the U.S banking uh
to the U.S banking industry time and time again and and so we're all dying really just to figure out what he's going to say and you know if he doesn't
say anything about this I would I would point to the idea that perhaps uh it is
a bit early to get involved in Banks I mean he's given uh pretty negative comments to our Becky quick but only
last month about you know his prospects for Banking and that's certainly one of the things I want to hear
yeah for sure and and I guess you might also be able to argue that the particular banks that are most Under
Pressure right now are relatively small they're literally you know Regional they're restricted to small parts of the
country they're not necessarily big long-term franchises that would meet the other uh investment criteria perhaps
that he might look for uh but it's interesting that he did not really change his uh Holdings in this latest
quarter in Bank of America in Citigroup presumably uh so that would suggest that there's not a general concern about the
overall system but maybe also at least as far as we know did not find fresh reason to uh to extend Capital to some
of the struggling Banks yeah I mean you know he he spent the last three years um cutting his stakes and Banks he you
know at one point in 2019 2018 uh he loaded up on JP Morgan Goldman Sachs uh
and had a significant stake in Wells Fargo Wells Fargo historically had been one of their biggest Holdings and he'd paired back after their fake account
Scandal so and you know more recently he's paired back in PNC and used Bancorp so certainly I think you know the
general sort of idea is that he's loath to own Banks heading into a potential economic downturn and certainly that's
still the case where we are to this day Mike for sure a related area of course uh
this morning one of the shareholders asked about problems in commercial real estate uh now Charlie Munger has been
outspoken about the banks being full of what he said were bad loans while he said this morning this would not be a
Berkshire problem he is concerned about the situation listen to what he said I do think that the hollowing out of the
downtowns in the United States and elsewhere in the world is going to be quite significant and quite unpleasant I think
the country will get through it all right but as they say it will awfully it will
often involve a different set of owners
yeah Mikey news of you that that is one of the the sort of feared after effects
or exacerbating factors with the regional banking crisis of course is their own exposure to commercial real estate yeah 100 I mean that would
certainly feed into this thesis that maybe now is not the time to to come into the banks even considering how
shellac those stocks have been in in since the svb collapsed back in March um clearly uh you know the concern right
now is that these banks are holding tons of loans uh either to you know office Builders commercial real estate loans
that type of thing which are set for some pain in the coming months and that has yet to actually play out it's
certainly something that we're all keeping our eyes on sure uh also seem some skepticism about
the asset class of commercial real estate in general Lauren saying that people just essentially pay for a
building whatever they can borrow so it's not a lot of price discipline there perhaps or valuation Focus uh Q thanks
Becky is now back with us and uh Becky we hit on a couple of the points uh well we I mentioned what he had to say about
Apple uh essentially he's not worried about it getting to be at too big a position because he views it
holistically with within the entirety of Berkshire not just talked about it I can't remember if we were on camera when
we were going together or but talking about what a big position it is you know if you don't think about it
from his perspective I hadn't just in terms of okay you're not talking about a stock portfolio you are talking about an
overall portfolio of a company and the amount that that goes into it what kind of stunned me is the idea that he said
apple is a Better Business than any of the businesses that we own in whole exactly without it we did mention that
that's a big headline and you know and he said look we have great businesses we have a great Railroad and all the rest of it but I think just that's what the
numbers would tell you yeah and just in terms of the the profitability the sustainability of profit margins the
Loyalty of the customer so it was interesting he also you know he's got a lot of things working in his favor which
is as he said Apple continues to buy back shares from everybody else but him yeah and raising his ownership stake in
the business you know it occurred to me at the time I maybe we'll get a chance to ask him this at some point but if that's the case why don't you just put
more money in apple yeah you've got 130 billion dollars on those sitting around in cash obviously he always wants to
have a lot of cash he's talked about 50 billion or more in the past that he'll have on hand but that still leaves you a
lot of wiggle room and that makes you think that he must be keeping some of that other dry powder to be opportunistic videos that come along it
feels like there's a general poll where that in dollar terms that position keeps getting bigger because Apple does well
again they buy back stock from everybody else I will say it's a much more expensive stock now than it was when he
bought it eight years ago seven years maybe that's the explanation I mean back then he felt like it was undervalued because people didn't recognize in his
view that it was a kind of a indispensable consumer product in the minds of their customers whereas now
it's kind of valued the way those other consumers pay for businesses are all right let's listen to what Warren actually had to say we've got those
comments about Apple Apple you know has a position with consumers
where they're paying you know maybe the paid 1500 bucks or whatever it
may be for a phone and these same people pay 35 000 for having a second car and if they
had to give up a second car or give up their iPhone they'd give up their second car I mean it's an extraordinary
probably we don't have anything like that that we own 100 of but we're very
very very happy to have 5.6 or whatever it may be percent and we're delighted
every tenth of a percent that goes up it's like adding a hundred million dollars to our earnings I mean our share
of the earnings and they use the earnings to buy out our partners which we're glad to see them sell out too
all right now what right now we want to bring in renowned corporate lawyer and Berkshire director Ron Olson Ron is also
one of the top shareholders of berkshire's shares as well we keep an eye on a lot of these things
um Ron thank you for joining us this morning hi uh we just want to talk to you about
what you heard in the first part of this meeting because I I think they were pretty reflective pretty
um focused on a lot of the succession issues and what's going to happen what's taking place with both Greg Abel and
Ajit Jain being in the positions they're in maybe stepping up and doing a lot more of the day-to-day work and activities over the last few years as a
board member the board's been kind of understanding of what's been driving those things what do you all talk about
in the board meeting what do you think of what you heard today well you're right Becky there's a lot of
focus on succession but what I took away from the meeting part of which was not
available to the general public was what was going on in the movie that preceded it there was a focus on succession for
over the last three decades year after year and look what we have on this stage what
I heard coming from what a combined 101 years
from Warren and Charlie was an amazing reflection of their energy and their
wisdom 101 years of business Berkshire right right and to me
they've got a long run way ahead and we are so fortunate to have Greg
Abel designated as Warren's successor and the board feels enormous confidence
and I can detail a little of that if you want but that's
uh we've had a lot of contact with Greg
personally I've known him since we bought Mid-America quite a number of years ago
tiny little company had a asset over in the Philippines that generated some
energy from geothermal a couple other little things and look what that company is today Greg has
built that Warren not Charlie Greg has built that good bit of it was by acquisition
and people worry about Greg's ability to make Acquisitions I don't the war
doesn't he's a numbers guy just like Warren's a numbers guy I'm not they are and he has
you know the fundamentals high integrity high intelligence uh recently this last year I got more
than what I've had before about Greg by having him as a client
I work very closely with him on one matter this is a person
who leaves nothing for doubt he plans he's skillful he has a political skill
that I would say exceeds Warren and Charlie's so we're very excited Warren
also said that he is a great Capital allocator which is pretty much uh High Praise as you said he's done plenty of M
A so if you were worried about that part of the business but it's interesting because there's always this line that
has to be walked which is look this company's going to be great as structured almost no matter who's running it and on top of it we have
great people who are going to be running because Warren just said before the break there you know Berkshire on autopilot would work extremely well for
some period of time yeah I think Charlie said it slightly differently he said
it's we've given this a lack of attention and I suggest that that's what
the rest of you should do after we leave we've got phenomenal managers and so
there's a high level of confidence in the future and I don't I I if people
didn't take that away from this morning Becky I'll be surprised well it's also I was going to just mention too that a
couple of questions uh about you know once the uh the shares are you know
they've been donated once they convert to class B shares the voting control slowly over time eventually will make
its way out into the public and this seeming concern about what that would mean in terms of activists or somebody
uh you know altering the strategy or makeup of the of the company and I any warns him to say nobody could afford to
really muscle this company around at this point especially in 10 or 15 years well I I happen to agree I've done a
fair amount of work for companies who have been subjected to what we call activists investors Through The Years
including some of the names mentioned today um
I don't see that being a serious threat in any way shape or form
it is a huge company as Warren pointed out largest net worth in the
you know s p 500. uh uh so
and I think another point to be made in that respect is it's not just one
and Charlie's Holdings of the stock we've got shareholders who are devoted
to this stock and so long as we behave they will trust their savings with us
and that's what I want to ask you about Ron just the the number of items on on
the ballot this time around on the proxy for ESG for other things they want to
push the company to do push the board to do changes whether that be looking at
climate change whether that be saying I'm not going to ever have anyone at the company have a political perspective that's made public I mean those are
things that that Warren and Charlie both have been pretty disdainful of the idea that anybody else gets to force all the
rest of the shareholders and the rest of the company what to do and that's fine because Warren and Charlie are in a
position to be able to say those things I think the key is probably the shareholder base are you convinced that
the shareholder base will remain the same and second of all will they vote
will they actually go out and vote because retail investors in general don't vote on these things they just let it ride which is why you can have
somebody get a small portion of the vote and and have their away with things well the increasing
percentage of ownership by some of the large index funds and so
on yes that's a different kind of investment but I don't see that
overtaking the individual shareholders that have been our base for years their confidence
I think will remain as long as we have the kind of leadership we've had and
Greg's not going to change that these managers are not going to disappear if
we make other Acquisitions I've Got Confidence we will and I've Got Confidence that they will be made
soundly with leadership that Warren has said for years the kind of
leadership that love their money or love their business more than they love their
money and they'll be devoted to what is in the best interest of these individual
shareholders so you take the these four initiatives climate change is
a big issue no question about it and by the way I thought Warren's comment today about
one more thing we as a country should be thinking about is how we're going to
mobilize the the dedication to climate change as
we did mobilize the country in defending World War II or pursuing World War II
um and there's a lot that can be done but I don't think very many companies
have done more than Berkshire and I don't think the people that are pushing these initiatives really understand what
the monies we are devoting to for instance transmission building which is
essential to get renewable energy where it needs to be you know what Greg has done out in Iowa
building capacity for nearly 100 percent of the ratepayers
it's great Ron one last question before you go is there something you're hoping to hear more about in the second round
is there something you're hoping to hear in the second round of q a you mean this afternoon yeah
um I don't I don't have any great I don't think there's a need for
me filling in the blanks for what they're going to say but uh there is a
seriousness of purpose about this meeting that simply has not reflected in
any other meeting annual meeting I go to and I go to a number and that comes
about I think because of the mutual respect between the audience that is the
shareholders and the management and I want to see that continue and I'm sure
it will this afternoon Olson who is a Berkshire board member want to thank you so much for your time today Ron I'm delighted to be here it's
great to see you thank you thank you thanks Ron it is AI of course is all the rage right
now with recent earnings calls flooded with references one of the shareholders wanted to get Warren and Charlie's
thoughts not surprisingly Charlie Munger did not hold back I am personally
skeptical of some of the hype that is going into artificial intelligence
I think old-fashioned intelligence works pretty well Jay can do all kinds of things and
when something can do all kinds of things I get a little bit worried uh and uh
because I know we won't be able to uninvent it and uh you know we did invent
uh for very very good reason the atom bomb in in World War II and it
was you know it was enormously important that we did so
but is it good for the next 200 years of the world that that the ability to do so has
been Unleashed we didn't have a choice but uh uh
when you start something well Einstein said after after the Adam Bomb he said this has changed everything in the world
except how men think and uh I would say the same thing may not not
the same thing I don't mean that but I mean they with with AI uh it can change everything in the world
accept it how men think and behave
joining us now is noted Tech investor Ann winblad she's co-founder and managing partner of Hummer win by
Venture Partners uh and and it's great to see you thanks so much thanks for having me for stopping by here
um so there's a fair bit I guess you would say of skepticism about uh ai's
ability to completely upend all these industries and maybe act as a threat to a lot of the businesses that Berkshire
owns but also also suspicion about uh as Warren says you can't uninvent it and there are some unintended consequences
as a tech investor looking for disruptive ideas how are you framing uh this opportunity well we're affirming
this opportunity is significant the challenge for many companies we heard in
the description of Geico today where when asked about telematics which is basically analytics the step before
generative AI as we're discussing today and even there it Ajit mentioned that
they have to still finish their digital transformation process with their poor
Computing architecture before they get to core analytics let alone get to generative AI so we'll see this go very
very fast in the tech industry itself but it'll take a little bit more time to
reach core industries that we're talking about today and one of the things that really struck
me and you've come to this meeting every year so you hear these things um Lauren kind of laid out the case when
when we asked about companies that are offering Insurance whether that be Tesla or some of the other auto companies also offering
insurance he pointed out that there have been probably 10 insurance companies that have launched and called themselves
technology companies we're technology company we're a technology company we're a technology company most of them have failed because they stink at actual
underwriting they're no good at taking risks and figuring out how to price it which is what insurance is he said everybody's a technology company you can
look at any of these companies they all use technology as a tech investor how do you figure out who's a tech company and
it was just a company that uses technology how do you differentiate it well we focus on Enterprise infrastructure so when we look at the
big pieces starting to move around like adding new infrastructure like generative AI it means that you've got
to change the mechanisms that connect all the wheels in generative AI one of the big issues is going to be how you
get all this data to keep feeding the machine and making it more intelligent that's with apis and we built company
called mulesoft that's part of CRM now that deals with apis about 10 years ago
now they were not a CRM company they were an API company so we're under the
hood and under the hood is what they call Deep Tech which everybody says they're investing in these days so we
try to look at the engineering of this versus the verticalization because we
can't be experts in these industries and this is where technology investors do go astray we know technology we don't know
insurance we don't know retail we don't know education unless you're a specialty investor there okay then let me ask you
one more question on that point Apple everybody thinks it's a technology company Warren Buffett started investing because he said it's not it's a consumer
Products company is Apple a tech company and do you think it still has advantages of a tech company is that why you would
buy the stock Apple is a consumer company it is in the US it has for a
while it was a luxury brand now it's a global brand it is an enormously
successful brand company but it has to make technology work to do that and it
also sells us that technology in a consumer Appliance
that's it's done for 16 years it's amazing that the iPhone is 16 years old
so I think if you walk around and ask people to describe the technology they're walking around with they can't
describe the components of the iPhone but they can describe their experience with that piece of technology and that
makes it a consumer company you mentioned this is all going very fast that you mentioned generative AI a
couple of times is it a qualitatively different thing or is it just what we've
generally become accustomed to which is waves of you know Innovation wash
through software gets better get smarter you know Big Data was a buzz phrase a
couple of years ago how different is what we used to talk about as big data from AI all right it does come in which
and there are failure waves to come first and we've been working on AI way for a long long time as long as I've
been in technology which has been over four decades but what we now have is hyperscale Computing we have companies
that are now part of this like Nvidia which really provides that infrastructure that we can do this so
we're really moving to hyperscale Computing which allows us to process this data really fast if you've used
chat GPT one of the magical things about it is there's no latency it's just
instant we're going to couple this in the next wave called Quantum Computing
which of course the big tech companies are working at but realistically it's allowing us to harness data in a very
very different way and also use what we call machine learning in in a much more
deeper way so when we combine all these hyperscale computings with massive
amounts of data with the the Improvement in artificial intelligence out it is a
significant way all those other pieces came along as little ways but this is the big one Quantum will be big once it
finally happens as well which is the next phase of hyperscale computing and great to catch up with you thanks so
much thank you for the rest of the meeting okay a number of companies that are here in the showroom are marking sales
Milestones this weekend because there's a lot of people noticed that already one of those
companies is See's Candies it's a record first hour of sales when it opened for business yesterday at noon and that's
pretty amazing because if you look at the sales that they're doing through here uh we got the chance to catch up with
the CEO Pat Egan and the Seas Booth here that is a front and center location and
it is worth it we are so proud of this place we actually have more square footage and
we're there's a little bit jealousy going on here because we have so much square footage but it's because we got
to sell all the scripts yeah I was going to say look at some of the crowds over here this is why you have all the square footage well last year was fast and hot you can ask me questions about this we
have started even faster okay so last year Mr Buffett made a big deal about it in the annual letter this year he said
that you guys sold 11 tons of candy just on the two days of the shareholder meeting last year four hundred thousand
dollars does that wreck up to about yeah in a little bit yes how long does it take your average store to get four
hundred thousand dollars would be a good several months okay so you do that in two days several months okay so that's a
good return 1972 is when this purchase was made um Warren Buffett has talked about how
25 million dollars they bought the company for he was haggling didn't want to pay 30 million dollars he got a great deal he says he's got more than two
billion dollars in pre-tax income that's come from your company in the days since adding to that yes so what have you done
for him lately well um so year over year we feel really fortunate getting through 2020 which was
not our best year ever 2021 our Centennial year we turned 100 our best year ever by a mile and then we we built
on that last year this year we started even better obviously our costs like everybody else are going up you asked me
last year about our commodity costs and I gave you a different answer than I would give you this year but uh but we're definitely making our contribution
so what uh what is happening with commodity prices this year it's gone up significantly so and they're actually they're just finally starting to level
off but over the last nine months or so actually when you asked me that question last year it was we had actually bought
so much on the forward Market that we felt really good pasta butter as an example is up over 100 for us cost of
sugar up over 100 for us so it's definitely taking a little bit of a bite but we have enough volume and we have
enough history that we have been able to manage through that very well what about other inflationary pressures you get hit
with higher wages higher energy costs you know our customers and our employees are living life just different like
everybody else and and running into the same challenges and so we definitely want to make sure take care of our
employees so our benefits costs and and everything else that goes with that have definitely gone up as well but uh but
we've been able to manage through it pretty well sales in 2020 were down because stores were closed people can go into them
um what happened was great but we yeah we closed we closed very early on because we made the decision that uh we
don't know what we're dealing with if you go back to March 16th of 2020. if you don't know what you're dealing with that moment in time or for customers and
our employees who chose to close our retail operations we reopened after about a month and a half we opened phone
service and buy online pickup in store and then all of our shops were reopened by the Fall yeah and you actually had some really strong like people were
willing to spend on things yeah if they were buying it online or doing other things going along those lines they were paying premium for things yeah is that
still the case with consumers if you see any weakness uh no I think we still we still maintained really a high level so
our package count for example on e-commerce has gone up about double in the last in the last couple of years and
it's maintained we haven't actually we hit a peak and then we've maintained it we haven't dropped off is that at the expense of sales in stores or that's
gone up too both are growing e-commerce has been growing faster but our shop sales have also been I've also been good
Bobby kodek is here as well he's the CEO of Activision Blizzard and he's a long time visitor to Omaha for the Berkshire
meeting he's been coming lots and lots and lots of years when's the first time you were here Bobby
uh early 1990s and why did you come in the beginning well I was very fortunate I had the
chance to meet Warren in the 1980s because my college roommate had their
family sold partial cohens to Berkshire and um I knew the goddess men's and had a
chance to meet him and it's one of the great privileges of my life is that relationship that I have with Charlie
and with Warren and last year you were here at the annual meeting and you had to leave a little early I
think there was a birthday party you were getting back for is this what happened I I left around this time yeah
and then uh uh our friend Patty sellers phoned me and said are you still here and I said
no I'm on my way to the airport and she said oh uh Warren just announced he owns I think nine percent of your company
which was a big surprise to me and um but you know one of the great votes of confidence that you could ever get yeah
how'd you feel about that after knowing them for so long you know like I said I don't think there's anything when I
think about my business career that announcement was one of the
Pinnacles of my business experience to know that that Warren and Charlie had so much faith and confidence in the company
yeah one of the things he said at time was partially it was because he was
doing a little bit of Arbitrage there was a deal from Microsoft the stock was trading under the deal price and you
said look just looking at it and like that they did announce in the last quarterly result that they had sold some
of the stock I don't know if you've had any conversations with him what you think about it or what else is going on up
there I I've never had one conversation with them about it I um you know I just I'm
grateful if if they own 10 shares or they own nine percent a lot more than 10
shares that they own I think that their last it was 6.7 stake that they wanted yeah
I think they may be your biggest shareholder yeah I think they probably are too um we talked with you a week ago after
the UK regulator basically said they didn't agree with the deal with Microsoft do you have any updates I know
that you and Microsoft are both appealing this you guys are gonna fight this out any update on what you can't tell us on
that front well we've had a chance to read what uh the CMA had to say and you
know the number of different uh bases for appeal there's a technical basis that is
irrationality and this one is in the clearly irrational but um you know we'll appeal
and I think uh it's very nonsensical decision and uh and we'll see what
happens the appeal process is kind of convoluted it's it's not like other places and that's why there's been so much writing on this because in this
case the CMA is who you appeal to to basically say hey this is illogical this is irrational can you give me another
decision is that how it works or is there a different way to go through it I don't know all the technicalities but
there are process issues they're procedural issues there's the purely irrational
um but I think then yes it would go back to the CMA and then presumably they
would probably accept the remedies that it seemed like they had already accepted
in a situation like this you obviously have to run the business as it is right
now as you still hope to anticipate that you'll be part of a bigger company um
you know how do you sort of walk that line to a degree I mean what are the prospects of the business right now as
an independent company are they different from if you're inside of Microsoft well we had in the first quarter record performance all of our
franchises are doing incredibly well the business is uh moving along at a really
fabulous Pace our people are really excited they're really motivated they see all the prospects and opportunities
and I think it's one of the nice things about this transaction we're hopeful that we can complete it but if it
doesn't get completed you know by the end of the year we'll be sitting on probably only 17 or 18 billion dollars
of cash including the three billion dollar breakup fee including the breakup fee if that were to happen and I think
you know we're in the enviable position of when I was thinking about being here and what we have so you know like Call
of Duty is Coca-Cola and Candy Crush is American Express and we were toying with
what Geico is and I think it's probably the closest to work crap but
um so you know all you need are three things like that that have the ability to generate High Returns on invested
Capital over long periods of time and is it safe to say you are thinking about what you would do on either pathway at
this point making sure that you've got a plan no matter what happens well remember we've we've been owned before
so we had a control shareholder and we're operating the business today fully
independently making all the thoughtful decisions the only thing that we can't really do would be to allocate the big
we're sitting on roughly 13 billion of cash today so that's the only thing that
we really can't do but other than that running the business the way we ordinarily would you saying you can't you know find new strategic uses for
that cash while the deal is pent we can't but we're also earning five percent on our cash balances so that's
changed we didn't get the 5.9 I I wish we had gotten to that but it was a
moment in time yeah but we're still in the five which
is just thinking eight 18 months ago we were in the zero right so
um even if you get past the CMA in the UK the FTC has been pretty tough on this too and Lena Khan has made some pretty
tough statements even in the last week or so continues to say that there needs to be more regulation of companies and
that they're going to be taking a very hard line at this and I just wonder what you think that means broadly for mergers
and Acquisitions and for competition in the United States you know I I I I don't think it's great
for America to have the government preventing you from what our sensible business
combinations when I look at Grail as a great example this is an extraordinary
company with incredible technology that actually can help prevent cancer the
yes and so I think what we want to try and avoid our government doing is preventing
things that are going to create opportunity for Innovation and growth and especially for American companies
and American workers who now have to compete on a global scale in a way that we never have before and so I just hope
that I think some rational thinking will start to come into government when it comes to protecting American consumers
American workers and American businesses Bobby I want to thank you for being with
us today it's always a pleasure and we really appreciate your time today thank you guys for having me I really
appreciate it we'll see you back in there because you're not looking I know I'm here for the duration okay Bobby Kodak right now we want to
get over to our Squawk Box supervising producer Katie Kramer she is live on the showroom floor right now she's been
checking things out over at the Oriental Trading booth and Katie what are you learning it's good to see you
good to see you guys too you really get the festival feeling of Woodstock for capitalists when you're on the showroom
floor 20 000 square feet of shopping experiences activations dozens of
Berkshire portfolio companies have experiences here for shareholders at Oriental Trading they are celebrating retro this year we have some rubber
duckies of Warren in 1973 with a duck Street Journal we have a Charlie rubber
duck who's wearing a leisure suit that's also perfect for celebrating the Retro look and
a special a couple special guests actually flow the flamingo from Oriental Trading and probably the youngest
shareholder here how are you guys where are you from We're from Kansas and is this your first
time at the annual meeting second time who's this handsome guy this is Logan he
was here last year too he was in utero still though welcome to Omaha Logan I think we're
going to do some shopping and I'll send it back to you guys thanks so much all right I am I think that boy needs
some duckies let's make sure we get them some duckies and anything else we can find along the way and Katie I don't
know if you looked over your shoulder you got somebody watching you right here the biggest feeling guys I
definitely had a creepy feeling [Laughter]
thanks guys uh there's a choice one of the shareholders said if you want to be a
hero around the office go and get some of the Trinkets and stuff and the kids Oriental Trading I said I'm not sure if
I need to be a hero thank you so another one that's fine
um anytime Brooks your company Clayton Homes makes attainable housing mobile modular or manufactured housing for a
middle class consumer we tagged along for a tour of the model home Clayton is showing here at the Berkshire annual
meeting the company announced its move to build all new residential manufactured homes to do uh Department
of Energy Zero Energy ready home specifications by 2024. CEO Kevin
Clayton showed Warren Buffett around this home travels in one section down
the road so that's right it's amazing that's one thing that helps with the affordability so less Transportation
costs less setup costs and then we'll build the Breezeway in the garage on their site
so the gses now are saying maybe we should allow a single section as well under the cross mod program which makes
a lot of sense did the truck stop and pilot then and that's right okay yeah okay you'll see so many Berkshire
products used throughout this home from all the flooring insulation the my tech gang Nails yeah
Warren does it make us louder we do it because they're the best
cost and quality Bill what's best for Clayton than the customer
also with mortgage rates more than doubled since what we've seen happening earlier in the year go ahead you can
roll anytime if you'd like since the fed's first of 10 consecutive rate hikes in the last 14 months finding affordable
housing is obviously difficult for a lot of prospective buyers looking at the Clayton house with a price point of
under two hundred thousand dollars of course that doesn't include the land but that's for them to come out set the house up put it all get it ready to go
that's what caused Warren Buffett and Charlie Munger to actually reflect on their own homes
Charlie lives in the house that he was
building in 1950. nine when I met him and I had just moved into my house in
1958 and we're both in the same houses I I don't know how many people that
have changed their situations actually I had a friend who built of marble Palace
in Beverly Hills a Marvel stream that ran through the foyer and I went to dinner there and I said you know I don't
need it no I thought he fell into it
Charlie build a little house for me in the back [Music] but he's
I I've got one house still and how many houses do you have absolutely five seven
seven yeah he's real estate poor
yeah Charlie says he's got seven houses but he said that's the ones my kids and my grandkids live in you know I think
it's his house and then the place that he used to always go in Minnesota way up in the summertime those were the two
places he goes and he still goes there he's been going there every year since he was a kid I mean over the course of a
hundred years it's not that many houses to acquire it's a reasonable Pace maybe if you're
lucky uh well with us now is Berkshire director Howard G Buffett also chairman and CEO of the Howard G Buffett
Foundation focusing on food security and conflict mitigation his new book courage
of a Nation deals with his experiences in Ukraine he's traveled to Ukraine seven times since the Russian invasion
and his foundation has donated 150 million dollars to humanitarian efforts there with plans to double that this
year Howard thank you for joining us yeah it was great to be here wow I mean let's just start right there in terms of
your your assessment of your work there and uh and just the state of things yeah
I mean it's it's a really tough place right now and and I think the hardest thing to watch when you're there is the
uh it's a war in civilians and and Russia has been uh very brutal about how
they've implemented this Invasion and so you have a lot of people that are suffering uh people go to bed it doesn't
matter where you are in Ukraine you go to bed you don't know you know if a missile is going to hit you that night that's a pretty tough situation to live
in Howard how many times have you been there well is there once in 1991 what
was the Soviet Union which is interesting to compare it to today and then I've been there seven times I have three more trips planned this year
would you get involved with it how did you meet up because you've met with the president zielinsky uh several times yeah well when Russia invaded it became
clear to me right away it was going to have a huge impact globally on food security so we started looking at where would we fit in and of course the most
immediate things we've done have been in Ukraine but we have also supported some of the grain going out of world food
program to Ethiopia and Yemen and some other places I think that you know
unless there's something significant that happens this war could drag on for a while and that just a lot of people
are going to suffer from it and it's not good for the world it's not good it's not good in terms of food security it's not good in terms of of how other
countries are going to cooperate maybe we should back this up a little just your expertise when it comes to this you have a foundation that focuses on about
three major causes one of them is food security and you know what you're talking about because you're a farmer
too and you're not just a farmer in theory you're one in practice who spends a lot of times out in the fields and by
the way traveling the world to try and find the best way to come up with with new way to go new ways to grow crops well I was plant soybeans last week to
your point but but um yeah I mean look we we you know you talk about global food security and you
think you know what does it really mean uh you know all of us are going to be able to walk in the grocery store we're
gonna have access to food you know price might go up but we can afford to buy it you know there's three or four billion
people on this planet that don't have the same options we have and so when you
think about it um you know we're going to see the largest uh deficit in rice production
this year you've seen uh uh the crops affected in some places in South America now Brazil's done well but at the end of
the day um you know the world needs a lot of food and when you can't Ukraine has been
a major producer of that you know feeding over 400 million people a year when you take that out of the equation
there's no way to just immediately step in and make it up sugar prices are going to the Moon right now too I know that's
also a production issue in part you know a year ago when we were here might have
seemed as if uh things might get even more dire in the short term in terms of uh just Global food prices and the
ability of of getting things around there's at least a perception that uh it wasn't as bad as it could have been is
that correct I mean that doesn't address The Chronic issues but yeah yeah I think
that's correct from the standpoint that um you saw you saw a price of Spike more yeah they've come back a little bit but
I think part of that is related to you know the negotiated a deal got the Black Sea um open to the degree that some
exports are going out not to the level that they would have been you know historically but I think that's had some
impact on on things coming back down I mean you know any little thing can trigger something and so I think you
know right now uh there are a lot of people in the world that still don't have access to food and they can't
afford food and if you look at last year just in Eastern Africa uh world food
brand estimated that a food a family food basket went up 55 percent I can tell you it didn't come back down 55
percent so I mean you have and and the other thing you have to think about is a lot of these places where you when you
start to talk about food security you're talking about areas that are very volatile they're not necessarily very
stable some already are experiencing conflict so the trickle-down effect uh
which isn't such a trickle I mean it's bigger than that really uh from Ukraine um and and not being able to export the
types of Commodities they typically export it actually is creating some conflict around the world and it will
create additional conflict so it goes Way Beyond just food security yeah maybe more of a waterfall effect yes exactly
Howard while we're here let's talk about Berkshire Hathaway Your Role at the company we've been a director for a
while and and part of what you're supposed to be doing there is maintaining the culture within and making sure that this place stays true
to what your father Warren Buffett and Charlie Munger have laid out for how this is a different company we had a lot
of discussion this morning about succession what did you think about that what do you think the challenges are going to be on that front well I think
you never know exactly what they're going to be I mean in fact typically you'll be thinking about they're going
to be these certain things that are going to come up and something else will come up that you just haven't really anticipated but you know that's what the
board does and that's what they're supposed to deal with I think that uh hopefully my dad lives a long time uh
you know follow Charlie's example and he's around a long time and then you know the board will be faced with some
tough decisions uh but you know we got a great board it's very cohesive people
understand what my dad has built and they understand what my dad wants in the future and that's a it's not her it's
really not rocket science to do so I mean it's just really being disciplined and sticking with what the principles
and values have been that have been established and that's really not that hard to do one um maybe longer term uh
concern that I've heard expressed is that you know under different management maybe the company wouldn't have quite as
easy a time as as getting all these great Acquisitions from people who want to be able to say I sold my company to
Warren buff I think you're going to see Greg set an example quickly that
nothing's changed at Berkshire and um when people understand that nothing
has changed with Berkshire then they will still for the same reasons you know they may not have quite the same appeal
of sitting down with my dad but if they're really looking for protection long term or they're looking at the
examples he gave this morning about how you know the the people care about owners care about their employees those
things won't change and I think that'll get established uh probably quickly
uh Howard again want to thank you for joining us today and the book is called courage of a Nation you got to print it
just in time yeah it just for you it was a personal electronic book but you got it printed there's tons of picture from
your from your Journal Journeys there and your travels and uh we really appreciate your time thank you thank you
all right folks another Global hotspot came up in the morning session today Warren Buffett and Charlie Munger being
asked about steadily increasing tensions between the United States and China and once again Charlie Munger not mincing
any words there's been some tension in the economic relationship of
the United States and China I think that that tension
has been wrongly created on both sides I think we're equally guilty of being stupid
there's one thing we should do let's get along with China and we should have a lot of free trade
with China in our mutual interest [Applause]
and I just can't imagine
it's just so obvious there's so much safety and so much creativity that's
possible think of what Apple has done by engaging in a
partnership with China as a big supplier yeah it's been good for apple and good for
China that's the kind of business we'll be doing with China and more of it and
with everything that increases the tension between the two companies is stupid stupid and all at least stopped
on each side and each side ought to respond to the other side stupidity with
reciprocal kindness that sounds like the solution to a lot
of life's problems in all of our lives right it does even if it's not necessarily uh realistic in the current
political setup but yeah absolutely I'm trying to take it on a smaller scale figure out if I can use it things are
about to heat up again more questions are coming in just about six and a half minutes so I'm going to scoot back inside Mike I'll see you uh in just a
little bit you only got about 35 more questions to get to that's according to the orange quota exactly gotta get over
there all right more than 20 000 Dairy Queen treats will be sold here this weekend Berkshire bought the fast food
and Ice Cream Shop 25 years ago for 600 million dollars last year reached all-time record sales of 5.7 billion
dollars Becky caught up with CEO Troy Bader on the floor yesterday this is a day where you got a lot of
excitement a lot of things happening in fact earlier today um Warren Buffett and Charlie Munger stopped by what did they say to you when
they came here they did actually I have to confess I wasn't here at the time I was at a lunch with some of the other managers but I said they said he's here
he actually had a top an opportunity to talk to some of our Executives here and they talked a lot about what the
pandemic meant what changed during the pandemic how did technology change how did the consumer change so some really
good conversations and again it shows how connected Warren is with even our business yeah I will tell you Charlie I
saw Charlie here while he was talking more and we had gone in to talk to everybody I was talking to Charlie he said wait a second they're selling Dilly
bars for a dollar how can they possibly charge that much that's way more than they charge at the store and I said no
how much did Dairy how much do Dilly Bars really good well it's going to vary our franchisees set their pricing but it's significantly more than a dollar
they usually need to be north of two dollars two 250 something along those lines and he was shocked prices have
come up but that's really speaking to inflation and a big issue that a lot of people have to deal with it's something we've talked about last year too where
where do things stand from inflation from inflation has been a real challenge over the last couple years it's no surprise to anybody we are seeing in our
business it's hitting us in a couple different ways obviously it's hitting us from the cost of goods for our franchisees the groceries coming in the
back door and how can they price accordingly to offset the inflation that they're experiencing both in labor costs
but also with the groceries and that has been a real Challenge and the margins are Getting Thinner because you can't
increase price at the same rate that we've experiencing from an from an inflation standpoint the other piece
that's hitting us is on the new restaurant development costs cost of equipment you know cost of construction
have significantly increased and it definitely is putting pressure on that end of the of the business as well is it
slowing your expansion plans or do you for the most part taking a long-term
view of development and so we are continuing to move on we opened about 300 new restaurants last year we will be
north of that number this year the bulk of our growth is still going to be in our International markets which isn't new
um but it franchisees are pausing but they're being very strategic and taking uh taking a long-term View
Berkshire is the largest shareholder in both Occidental and Chevron at the end of berkshire's first quarter it's
Chevron stay clocked in at more than 21 billion dollars but that was a drop of nearly nine billion dollars from the
previous quarter while at the end of March Berkshire boosted at stake in Oxy to about 24 of that company joining me
now to discuss Buffett's energy bets at cnbc.com reporter you and Lee and Yin yeah it's great to see you great to see
you too so that just that decline in the Chevron stake with not just Chevron share price going down they they were a
net seller of the shares right uh Chevron was down for nine percent in the first quarter but I did the calculation
Berkshire did sell about six billion dollars of Chevron so he trimmed a
little bit for the second quarter actually he did that also in the fourth quarter and um and Berkshire was in that
seller of stocks last quarter as well about 10 billion dollars uh worth of
stocks and I was thinking about you know what he might have sold exterior Court it
um do you think it could be Paramount because you know Paramount had a tough tough week last week down to almost 30
percent you know earnings Miss dividend cut and in Japan with Becky Buffy
mentioned that you know streaming is not a very good business so I was wondering if this is your speculation if if he
thought this could be Paramount could be bought could be taken over because of the consolidations in the media industry
or he could have just he probably dumped it in the last quarter so we'll see yeah it in fact uh John Rogers of Ariel who
we spoke to this morning who is also an owner of pyramids and he was very eager to hear that as well there has been some speculation we should be clear that
um in the 10q in the quarterly filing they only disclose the very largest Equity home so we know that they were
net seller of about 10 billion of equities you could say that Chevron was uh what six or seven billion of that or
yeah yeah six billion and so therefore there's a four billion dollars in sales that would we can only speculate right
yeah and we were talking about Activision as well Activision yeah it was uh it was one of his investing
managers who bought Activision first before the Microsoft deal announcement
and then Berkshire and then Buffett he added to about four billion dollars
um and then he said it was a merger Arbitrage way uh and now that you know the UK Regulators they just blocked the
deal so the chances of the deal going through are pretty slim right now so you
know we'll see what happens with that bet and did anything else stand out to you this morning in terms of the Q a in
terms of how uh Buffett spoke about how he's thinking about his Investments yeah so I think there was a very interesting
debate about value investing and you know and Charlie and Warren they kind of
disagree on that too and Charlie put it very plainly he said you know just get used to making less uh and Buffet he was
actually very uh optimistic he said there there's always opportunities and what gives you opportunities is actually
other people doing dumb things that's right right and he's known for jumping into the market when people are
panicking when people are selling and he also talked about buying more under the
radar opportunities like what he did with Japan you know he bought five trading companies in Japan a very large
bet for Berkshire and he said in a room he's not done with Japan he's looking for more
he characterized that investment almost as incredibly obvious it was a no-brainer you can borrow and yeah we
have you know more than more coming in in dividend uh yield than we are paying
in debt he also though did describe his sale of Taiwan semiconductor after only
holding her for a short period right and uh he kind of mentioned it was a consideration of the geopolitical
tension um nothing too serious but there's some volatility around there and it is very
rare to see him you know go in and out a position that quickly within the quarter but he spoke very positively about China
and how um and Charlie Munger put it like he said the conflicts between the U.S and
China is very very stupid and we should encourage more free trade between the two countries they both seem to agree on
that although Charlie seems to think that there's a little more opportunity at least in his own investing in some
domestic Chinese companies and interesting now he also Buffett or Berkshire bought back a fair amount of
stock in the first quarter as well right 4.4 billion dollars uh more than it's the
most amount of buyback since the fourth quarter of 2021. so it's it's pretty
significant and um so Berkshire only uh buys back shares when they think it's
trading at a significant discount to intrinsic value but now the Berkshire stock is almost back not that close far
away from its record high almost at 500 million uh thousand dollars yeah and in
fact um I think the stock NOW is valued about 1.4 times Book value that's on the upper end of its historical range it
doesn't capture the whole intrinsic value as they were calculate it but it is uh it is quite fascinating not a lot
of specifics about Banks or financials no no not at all and uh not a question
directly about the cash voting uh it was about 130 billion dollars at the end of
the last quarter and you know I think uh Buffett has been waiting uh this long
with interest rate at zero but now interest rates are at five percent so it will take something even more special
for him to pull the trigger and he's happy to wait and he's getting he's getting paid for waiting right now
that's a great point and he did talk about how they just obviously on all their the cash all the float uh they
really do have an opportunity it's baked in that they're going to have a lot more interest income I did like the way he described the float the amount of cash
that comes in through their insurance business uh he said it's like we have a bank with no customers no employees and
nobody can pull their money nobody can pull deposits out certainly seeming to draw a contrast between actual Banks
right now dealing with deposits deposits and insurance business very different
um also likes to um I think essentially uh point out the strengths of his
insurance business relative to anything that looks like a startup or a high-tech fintech yes especially actually Geico
who had been struggling a little bit when compared to Progressive its biggest competitor and now it turned a profit it
turned in underwriting a big underwriting Prophet this quarter it was a big swing yeah and uh Ajit was very
happy about it exactly he had a good story to tell about this year versus last year on that score again thanks
very much we'll talk to you again soon we do want to return back we're just moments away from the afternoon session
of q a but stick around for cnbc's post show longtime shareholder and value investor Tom Russo and actress Glenn
Close will join us so be sure to stick around for that Buffett and Monger are retaking the stage for shareholder
questions with Becky they will be alternating questions from Becky which came by way of shareholders as well as
live questions from investors that are out in the audience and Warren has committed to getting to 60 Questions
over the course of the day we got to about 25 in the morning so session and
uh Charlie and Warren are now about to uh to take the stage Let's Take You There back to the arena
[Music]
foreign
I sales are terrific out there so you're my kind of crowd I've been getting
reports we're breaking all kinds of records and we're going to start off
uh with question number 26. which goes to station
two
my name is James from Malaysia given the recent challenge faced by the major U.S
Bank what is your overall outlook on the banking industry how do you assess the risk and the
opportunity in this section well anticipating a few questions on banks
I decided we should start using Bank language here to describe
[Music]
[Applause]
thank you [Applause] the
the situation in banking is is
very similar to what it's always been in banking that that fear is contagious
always and historically
sometimes the fear was justified and sometimes it wasn't my dad
lost his job in 1931 because of a bank run and they had a bank run on the State
Banks and uh that'll be Omaha National Bank said well we're a national bank and they didn't
have a run on the National Banks and of course they both face the same problem so it
it used to be that if you saw people lining up at a bank
the proper response was to get into the line and uh
they'll always leave it and the story is that Sydney weiberg of Goldman Sachs during one of the great Bank runs
um back in 1907 or thereabouts had a job as a runner common facts and that's just a boss if
he could take the week off and the boss said sure not much is going on
anyway so he got in line whether it's a Knickerbocker trust or whatever and as he got toward the front
of the line he sold this place in line to somebody he didn't have an account of the bank but that was an asset
and uh the banking system has changed so much
over the years and we did something enormously sensible in my view
uh when we set up the FDIC as many as 2 000 banks have failed in one year back
after World War one I mean back runs were just part of the picture
and if you have people that are worried about whether their money is safe in the bank and all signed withdrawals you
can't run an economy very well so the FDIC was very logical it got changed over the years some but here we are
in you know 2000 23.
and we actually see the FDIC pay off for the 100 cents on
the dollar to everybody or make it available on all demand deposits and yet you still have
people very worried about their the periodically
geographically all kinds of crazy ways and that just shouldn't happen so the
messaging has been very poor it's been poor by the politicians who
sometimes have an interest in having a poor it's been poor
by the agencies and I'd say it's been poor by the Press I mean you shouldn't have so many people that misunderstand
the fact that although there may be a debt ceiling it's going to get changed
although there's a 250 000 limit on FDIC the FDIC
uh in the US government and American public have no interest in having a bank
fail and have deposits actually lost by people
we had a demonstration project the weekend of Silicon Valley Bank and the public is still confused so it
really something to have a law that was passed in 19th or a law that became effective
in 1934 although modified in some ways not understood about something as
important as a banking system I don't think the American public is that dumb and I don't I just uh
well I made that offer over in Tokyo incidentally that I haven't heard from anybody that wants to take up my Million
Dollar Bet on on whether the public will lose money in in in uh if they have a
demand deposit uh at the bank no matter what the size so
that's the world we live in it means that a lighter match can turn into a
conflagration or it can be blown out and uh who knows what will happen
and we don't have any worry we keep our money into cash and treasure both at Berkshire because we keep 100
28 billion or whatever it was at the end of the quarter and we want to be there if the banking system temporarily even gets
stalled in some way uh it shouldn't I don't think it will but I think it
could and uh I think that the incentives
in Bank regulation are are so messed up and so many people have an interest in
having them messed up uh that is it's totally crazy I mean it's
the Fannie Mae and Freddie Mac we're doing 40 or so percent of the
mortgage business the United States that is huge they were regulated
oh just those two companies were regulated by some group I forget
what they called it but they had 150 people that were in charge of just figuring out
whether funny and fatty we're doing the right thing but I could have done it you know it's probably it could have done it
you know and uh I'm not sure they needed an assistant even to do it but the
incentives were all wrong and Freddie and Fanny which we're doing fine in August the Apparently doing fine in July
and August of two thousand eight were put into conservatorship you know early in September and the things
that followed from that were just incredible so they're our second order and third order
and fourth order effects uh that are somewhat unpredictable as to what they
will be and the sequence and all that but things change and if people think that deposits are sticky anymore they
they're just living in a different era uh you know
press a button you don't have to get in the line and wait for days and have the teller counting out the money slowly and
gold so that you hope the line goes away you can you you never
running in a few seconds so
the way it hasn't been addressed properly is is a problem
and who knows where it leads but you'll have to have a punishment
for the people that do the wrong thing and
if you take First Republic for example you could look at their 10K
and you could see that they were offering non-government guaranteed mortgages to
in jumbo amounts at fixed rates sometimes for 10 years before they
change the floating and I mean that's a crazy proposition if it's to the
advantage of the bank they get it to get the guy coming in and says I'll
reap Finance it one and a half percent and then one percent and if it's
Advantage the other way the fellow keeps say I'm 10 years you don't give options like that but but
that's what first Republica was doing it was a plain sight and if the world
ignored it tell it blew up and uh uh
some of the stock in some of these banks that were held by Insider it was a sold and who
knows whether they had a plan or whether they some planet was innocent or whether they started
sensing what was coming but but you do know that the directors are not going to be
able to read some book or anything like that but they do
they do have the ability to hold the CEO accountable CEO gets the
bank in trouble both the CEO and the director should suffer the stockholders of the future shouldn't suffer they
didn't do anything and it doesn't teach anybody any lessons or anything it teaches the lesson is that if you run a
bank and you screw it up you still live you're still a rich guy and the clubs
don't drop you and and the charity groups don't quit asking it with their benefits that the world goes on that is
not a good lesson uh to teach people who are holding the behavior of the economy
in their hands so I think there's some work to be done but I don't think it's it's not a difficult problem it's just
we've screwed up the answer and we've screwed up the communication of it Charlie well I'm so old-fashioned
that I kind of liked it better when Banks didn't do investment banking
that makes me very outmoded in the modern world
and the country decided it was contrary to public interest for a while and then then the banks want to get back into it
did they ever yeah no I mean I don't think having a bunch of Bankers all of
them were trying to get rich leads to good things but I
I think a banker should be more like an engineer he's more like into avoiding trouble than he is getting rich yeah and
they could do fine they they can do fine that way and I think we had a big mistake when we get a bank where
everybody who joins us plans to get rich yeah it's a it's a contradiction and values and we came to that conclusion I
don't know when class still passed or anything but but then they want to get back in how many of you know and I maybe
I'm wrong on this I haven't looked lately but the Federal Reserve actually was given
the responsibility for setting margin requirements and they changed margin requirements a lot of times because it
was known that people that borrow a lot of money cause a danger to the bank system if you get too many in the
picture and all of that sort of thing and uh what's happened the banks figured out a
thousand different ways to get so you could borrowing 100 margin you know different I mean through through
derivatives and everything they just totally distorted uh every all the lessons that were
learned in the 29 crash imagine taking banging into derivative Trading who in his right mind would have allowed
that well there's more money in it well that's why they're in it yeah and and
and but it isn't necessarily a great social outcome for the rest of us
that's what that's what those Senate committees decided back in 1931 and 32 and then in the late 1990s particularly
I mean you know very decent people but you know Bob realman and some of the people that you know they they said this
is the modern world and here's what the modern world was turned out to hand us and uh uh
banking banking can have all kinds of of new inventions but it needs to have
old values and uh uh well if we don't we don't know what's
going to happen you know because uh there are a lot of things that could
happen out of the present situation depositors will not lose money stockholders and debt holders of the
holding company they should lose money and the people borrowed on out on Commercial Real
Estate and now it isn't the loans aren't getting extended they should leave it's
too bad I mean that's part of borrowing on 100 margin which is what people were doing I've been doing in commercial real
estate you've got to have the penalties hit the people to cause uh the problems
and if they took risks that they shouldn't have it it needs to fall on them if you're going to change how people are going to behave in the future
okay Becky this question comes from Davis Hanson Houston Texas
he writes what do you think about the business models of the big Banks as compared to the regional banks in the
wake of the events at Silicon Valley Bank and how does the perceived implicit guarantee of all deposits that all banks
affect big Banks and those Regional Banks yeah well I I
I can say this if if you found if you follow sound banking methods which means not doing
some things that other people do a bank could be a perfectly decent investment in fact Charlie and I
well me originally in 1969 we bought a bank at Berkshire and we had 19 million dollars invested
in that bank and we had 17 million I think invested in our insurance companies and if the banking
holding company Act of 1970 hadn't been passed we might have ended up owning a lot of banks instead of a lot of
insurance companies we were looking at more Banks and Harry Kip was taking us around Chicago and there were other
things we could do and then Bingo they passed the 1970 uh Bank holding company
act and we had to divest ourselves of that bank in in in in 10 years which by
the way I'd never had a bad debt oh it never had an unnecessary cost it made
nothing but money with no risk it never presented any Deposit Insurance risk to the government zero it was a lovely
sound constructive institution in this community and any person already deserves credit could get credit and we
were going to buy more Banks we were forced out of it and we were going to buy more Banks and if we bought more Banks we probably wouldn't have expanded
the insurance business but you know the law changed and so we divested and and we've done all kind of
insurance but banking was more attractive to us it was bigger and there were more targets uh to buy and uh you
could run a perfectly sound bank then and uh no negotiable certificates all
these things all the inventions that came later and you could still run today and you could earn
you're gonna learn a lot you can earn good money very good money and we do we would have found more Banks but uh
were precluded from doing that and we sold Banks
Bank stocks uh in the last well we sold them first when the pandemic broke out
and then we sold some more in the last six months and uh uh
we don't know where the shareholders of the big Banks necessarily or the regional Banks or
anybody are heading I've got my bank I've got my own personal money and I'm probably above the
FDIC limited I've got it with a local bank and I think I don't worry about it in the least but in terms of
owning Banks events will determine their future and you've got politicians
involved you've got you've got a whole a lot of people don't really understand how the system works
uh and I would say that the event something less than a perfect communication
between uh uh various people and the American
public so the American public is probably as confused about banking as ever and that has
consequences and nobody knows what the consequences are because uh every event
starts recreating a different Dynamic I mean in physics you know that Pi is
going to be 3.14 you know infinite number of numbers after that but uh no
matter what happens but you don't know what has happened to the stickiness of
deposits at all they got changed by 2008 it's gotten Changed by this I mean it and that changes everything and so we're
very cautious in a situation like that about ownership uh
A Banks and we we do
remain with One Bank holding a a a a a deal that but
we originated that deal and uh with a Bank of America and I like Bank of
America I like I I I I I I I like the management and I proposed the deal to them so I'm I
stick with it but do I know how to project out what's
going to happen from her the answer is I don't because I've seen so many things in the last
few months which really weren't that unexpected to me to see but which reconfirmed my beliefs that the American
public doesn't understand their banking system and some people in Congress perhaps
don't understand it any more than I understand I don't understand where the spaceships Go I mean there's all kinds of things I don't know about
but if you're in Congress you've taken a position on everything and sometimes
it's to your advantage if you really understand it not to say exactly what you
what you feel and uh and here we are Charlie yeah
well a lot has happened in banking in my lifetime I welcomed all that early
banking of the disturbing immigrants by the early Bank of America
and I think all the credit cards when they came in as original bank cards were a great contribution to civilization
and but the game here it gets the more it looks
like Investment Banking unless I like it as a citizen I don't want I have always
I I am deeply distrustful situations in which everybody wants to get rich and
envies everybody else I regard that atmosphere is utterly toxic
and to people who like one story which is again a true story and
I'm not naming the name and it wasn't Pete Jeffries because he might fit this
name but it wasn't Pete but our hero Gene abeg was going to have to
retire at some point and so we we hired a
future replacement it's got a little problem I talked before about having the perfect business and now we're going to
bring in somebody we actually bring in some money but what does Central High with Charlie all over my class yeah and
Charlie didn't know I was picking out this guy and he wasn't he didn't ask me we wouldn't hired him
[Laughter] if I asked you I probably wouldn't I believe but that's another question
a perfectly decent guy but presentable you know it looks like a banker and everything
and of course the first thing he wants to do we've got this wonderful bag but we got the crumbiest looking building in
Rockford and we don't need a great building we just need a great banker and naturally this guy wants to go a new
building and uh uh because we were the most profitable bank but we didn't look
like it really was probably so I told him he could have any building
he wanted as long as it was not higher than I would have to be shorter than our
nearest competitor and he he lost interest totally he wanted to be on the
top floor of the of the biggest building in town and I told him to get horizontally do anything he wanted but
he couldn't do it vertically it taught me a lot about the guy's motivations in life but and he didn't
end up running the bank anyway anyway that's all I know about bagging probably more uh station three
Mr Buffett and Mr Munger hi my name is Daphne I'm 13 years old and this is my
sixth annual Berkshire halfway 10 shoulders meeting
and I've had the privilege to ask you both questions in years past
my question for you today is the following as you know the U.S national debt is
currently at an estimated 31 trillion dollars making up about 125 percent of
the U.S GDP in the meantime over the past few years the Federal Reserve has telegraphed that
they intend to monetize the debt by printing trillions of dollars even as they insist that they're fighting
inflation already other major economies in the world such as China Saudi Arabia and
Brazil are moving away from the dollar in anticipation of this my question is
are we likely to face a time in the future when the U.S dollar is no longer
the global Reserve currency how is Berkshire prepared for this possibility and what can we do as American citizens
to attempt to shelter ourselves from what's beginning to look like the beginnings of d dollarization
well
hey I should ask you to come up here and answer some questions I mean
hey uh it's very interesting I mean we are the reserve currency and I see no option
for any other currency to be the reserve currency and and uh I think that
nobody understands the situation better than Jay Paul and uh
I but he's not in control of of fiscal policy and every now and then he
drops a few hints uh and there was no question that when the
when when when when the in pandemic broke out I mean it was a semi-warl like
situation but nobody knows
how far you can go with the paper currency before it gets
out of control if and particularly if you're the reserve world's Reserve currency Nobody Knows the answer to that
and you don't want to try and pick out the point at where it does become a
problem because then it's all over uh and uh I think we should be
very careful I mean you know we all learned keynesianism and we played in World War Two to the advantage of the
country and we did everything we could to prevent inflation during the war
and then the war ended in August the 45 and I think in January 46 and I'm not
giving you exact figures at all now but in January 46 I think the rate of inflation was it
you know something like one person or thereabouts and by the end of the year I think it was at like 15 and again I'm
doing this from long memories but but it's
it's easy for America to do what's
a lot but if we do too much it's very hard
to see how you recover once you let the genie out of the bottle
and people lose faith in the currency and they behave in an entirely different
manner than they do when they feel with it they put someone in the bank or have a
pension planned or whatever it may be that they're going to get to have something with roughly equal purchasing
power and it just changes legal economy and all kinds of things can happen then and I can't predict them and nobody else
can protect them but I do know they aren't good and uh we will see
and I I do this as my you know I I voted for both parties and it's it's uh
it's not limited to politicians of either party or anything of the sort but uh
people take positions some of them understand what they're doing some don't understand what they're doing uh and uh
you know if they put me on some Medical Board I don't understand what I'm doing you know it's not there's
nothing wrong with the fact that you that you can't Master everything it can all be Isaac
Newton but but you can't go around pretending you do or making decisions on it and and we
are not as well off in relationship to curbing inflation expectations which
become self-fulfilling uh and we are not as well often as we
were earlier and Berkshire is better prepared than most Investments for that kind of a period but I said
this in the annual report but we aren't perfectly prepared because no there's no way to perfectly prepare you don't know what course of action
will occur and uh it's a very political decision now it's
a tribal decision to some degree uh and you'll hope for leadership
that that uh actually
will do something recognizes the problem and America's an incredible Society Rich you
know every we got everything going for us but that doesn't mean we can just print money indefinitely but uh as as
that and uh uh it'll be interesting to see how it turns out Charlie
well at some point ing money to buy votes will be
counterproductive yep and we don't we don't know exactly where that comes
and if something is going to be dangerous and unproductive you ought to keep it a fair distance away
now if you have a culture that is exceptionally strong like Japan
they have done some strange things there but they couldn't have been a reserve currency no of course not and but Japan
brought back most of the national debt and most a lot of the Common Stocks and
that just the Federal Reserve owns practical everything in Japan and the country's working
it's in at 30 years of economic stasis but it's not going to hell I really admire Japan
and but I don't think we should try and imitate it I don't think we're as good as good as
Japan at taking they have a cohesive culture and we don't Charlie but that's exactly right
in Japan everybody's supposed to suck it up and cope and in America we've been playing
hmm so I hope you come next year with a
tougher question but and thank you and I I predict I
would love to be being born again today in the United States I mean we we can do a we can do a lot of dumb
things and get away with it we can't do an unlimited number there are people who care about that and uh you know
you have to be willing to be extraordinarily unpopular I mean Paul
volcker uh there were there are other Federal Reserve
chair people that would not have not if someone they did it's just it's it's too uncomfortable and uh uh there
used to be a politician in Nebraska and if you ask them some really tough question like you know how do you stand
on abortion or he would look you right in the eye and say I'm all right on that one and then he moved next door well
that's what people have done basically on inflation and they they one way or
another they uh they say I'm all right on that and then they they don't really
think about what the consequences of their actions could be particularly and it's so much fun if
there's 435 of you to just be one of 435 instead of being the person actually responsible anyway I am still
next to the question of two superpowers and when you get into really destroying a planet
destroying the reserve currency of the world when
there's really no substitute and forget about all the toys you know with with I
mean it's a joke uh to think of any tokens or or that sort of that that that
that's Madness but but it's also Madness they just keep printing money yeah and
we know how to do it and we actually came from a money money printing economy
in World War II which was required and we suffered significant inflation
the price of them I mean there's a million ways to judge it but maybe 10 times what it was then
or something like that well that's that's getting close to the edge of where you don't want to
you don't want old dollars anymore you want to hold something else uh I'm on Old real estate you want an old interest
in a business there's a lot of good ones your best your best
defense is your own earning power if you're the best doctor in town if you're the best lawyer in town if you have a
teacher in town or even if it's the 10th investor you're going to make a good living I
mean uh you know the economy is productive and you will succeed with
your talents but you won't succeed by hoarding dollars you'll just be you'll just succeed by the fact that you're
you're value to the community which is a rich Community overall is sustained and
uh so the best investment is always in yourself that's the answer I would give you well we have a situation where we've
learned to print money in gobs and let a big chunk of our young
people go right into Wealth Management this is like we did yeah like we did yes
we've been bad examples and I want to say that I didn't realize wealth
management was gonna get so big when I went into it and I also apologize for
what's happened yeah well anyway you did well Becky
uh this question comes from Gary Gambino in Parma Ohio who says he's been a Berkshire shareholder since 2004.
he says the amount paid this year for the 41.4 percent stake in Pilot values the entire company at around 19 billion
dollars that's about six times what BP is paying for Travel Centers of America but Pilot's market share is Just Three
Times Travel Centers of America's was it a big mistake to base the final price on 2022 earnings which has unusually high
fuel margins well that's a very good question and the answer is
that we arranged to buy it in three stages uh with the third stage being at the
option of these owner of 20 the first stage we we bought it what turned out to
be a very attractive price the second stage turned out to be a very good year
for the diesel business which means that the seller got a very good price and I
would say that overall we feel very good about the fact we only 80 percent at the
price that we do but we would have rather owned a better if we just bought the 80 to start with and the last 20
percent the seller has the option and that's always uh an intelligent way of
structuring something we've had that arrangement with other well we've got it with the furniture mart we bought 80 of
the Furniture Mart on August 30th 19th 1983 almost 40 years ago and it's worked
out perfectly but uh when you give the other person the option they've got some Advantage we we have 80 now of a
business we like very much and the comparison to travel America is really
Furious because Travel America is not only much smaller but they run all their
properties we have hundreds and hundreds of locations on the interstate that are
zoned for what we commercial and maybe
15 Acres or there's nothing like it and they're not going to move the interstate two miles to the right or something and
then it will sort so we've got a position that that uh
travel you know BP may have may or may not have made a fine deal I've read the prospectus uh and I can understand I
mean it's a big big source of output for for BP but
uh I like I like the management we have had at the at at uh pilot I like very
much the followers coming in uh that's the new CEO
uh uh I just have to tell you a little bit about Adam Wright who's taking that
job on he came from Omaha he wasn't selected because he came from Omaha he came from Omaha he came from North High
that a public school that my wife graduated from I've got
grandchildren that graduated from there he went to the University of Nebraska to almost set the rushing record uh in
football which will never be beaten because they've given up football but I think he rushed for maybe 3 600 he held three jobs while he went
through there he interned at Mid-America 20 years ago his mother worked to put
him through school I mean it's just it's Horatio Alger squared and we have him the the manage pilot and
the aslams have given us a wonderful business they
great people and here we are uh and I'm glad I'm very glad we owned pilot I just
wish we bought 100 percent of it when I first made the deal but that was not the deal where it wasn't for sale it wasn't
for sale yeah and and then suddenly we the last 20 percent of of of the Furniture Mart
wasn't for sale when we bought so we bought 80 of it and that's worked out well and and we've we've done various
deals various ways the best way to do it is just write people to check and and get the stock but we did that with TTI
but but you can't always make the same deal we make we might if we like the business
well enough and the people well enough William we will tailor it differently but our preference is to write a check
and own the whole place and and keep the management in place
no yeah I hope it's really wonderful to watch something
like Adam right work I mean the basically you know I don't know what
his mother was earning but but he went to North High which is probably four or five miles from here
public school graduate and worked his way up
once for a short period of Pacific Gas and Electric and we brought them home uh they're on
pilot and pilot well pilot the prices on diesel were way
different last year I brought Pilots close to 80 billion of sales last year but
more normal prices it's this is it's significant and you know
it's half that over there about so maybe a little more but he is
I don't know how old Adam would be but it's in his 40s and and he came up
through he came up through the organization that Greg Abel was involved with and and now
here he is running a very major business it's good uh I'd for sure to be able to do that
and uh I don't you know somebody else may have gone to war press
stitches Business Schools or anything so what you know we've seen what Adam can do okay
station four
good afternoon Mr Buffett Mr Monger my name is JC I'm 15 years old and I'm from
Ohio this is my fourth in-person Berkshire meeting I have a lot of passion learning
from your speeches interviews and articles thank you for sharing your wisdom all the time
Mr Buffett in your annual shareholder letter this year you said that
berkshire's Journey consisted of continuous savings the power of commanding the American tailwind and
avoidance of major mistakes you have humbly admitted in the past that you have made many mistakes but
this is the first time that major mistakes stood out to me could you please advise us on what major mistakes
we should learn we should avoid in both investing and in life
I would also like to have Mr munger's thoughts too please thank you very much
well the man Charlie Charlie said the major mistake
you can make you know you're you're lucky to be in the United States people around the world they don't have a lot
of choices some in some places but but you should you should write your
obituary and try and figure out how to live up to it uh and uh uh you know
that's that's something you get wiser on as you uh go along the business mistakes
uh you just want to make sure you don't make any mistakes to take out of the game or come close to taking out of your
game you should never have a night when you're worried about investing I mean assuming you have any money to invest at all and you should
you should just spend a little bit less than you earn and you can spend a little
bit more than you earn and then then you've got debt and the chances are you'll never get out of debt I'll make
an exception in terms of of a mortgage on your house but but credit card debt we're in the credit
card business big time and the board will stay in the credit card business but why get behind the game and if
you're effectively paying 12 or 14 or whatever percent they're paying on a credit card you know you're saying I'm
going to earn more than 12 14 of money and if you can do that come to Berkshire Hathaway so it it uh it's it's I hate to
say this with Charlie's around me but it's straight out of Ben Franklin and uh uh
it's not it's not it's not that complicated
but uh you well I'll I'll give you a couple
lessons on you know Tom Murphy the first time I met him said
two things to me said you can always tell someone to go to hell tomorrow well that was great advice then and think
about greater advice it is when you when you sit down on the computer and screw your life off Forever by by telling
somebody to go to hell or something else in 30 seconds and you can't erase it uh and you know you haven't lost the option
you know and and and he said you know praise praise my name criticized by
category well what makes more sense than that I mean who do you like to criticizes you all the time and uh
you don't need to you don't need to billify anybody to make your point on on on subjects of
discussion and and uh and then they give you another General piece of advice I've
I've never known anybody that was basically kind that died without friends and uh I've known plenty of people's
money Hood who died without friends uh including their family and uh but I've
never known anybody and then and uh you know I've seen a few people
including Tom Murphy Senior and maybe Junior who's here but certainly his dad uh he I never saw him
I watched him for 50 years I never saw him do an unkind act I didn't I didn't seem to have very many stupid acts
either I mean it wasn't he was not discriminating he just he just uh he just decided that that there's no reason
to do it and uh wow what a difference that makes in life Charlie
well it's it's so simple to
spend less than you earn and industriably and avoid toxic people and
toxic activities and try and keep learning all your life etc
etc and do a lot of deferred gratification because you prefer life that way
and if you do all those things you are almost certain to succeed and if you don't
you're going to need a lot of work a lot of luck and you don't want to need a lot of luck
you want to go into a game where you're very likely to win without having any unusual luck I had one more thought too
I you need to know how people can manipulate other people and then they do resist the temptation
to do it yourself oh yes the the toxic people
who are trying to fool you or lie to you who aren't reliable meeting their commitments
a great lesson of life is get the hell out of your life yeah
and do it fast do it fast
and I would add but Charlie would totally agree with me do
it tactfully if possible too but do get them out of your life
yes yeah I don't mind a little tact [Laughter] or even a little Financial cost but the
question is getting the hell out of the law okay Becky
all right this comes from Roger Lee town
he says my name is Roger from Hong Kong a long-term shareholder of Berkshire admirer and follower of Mr Buffett's
monger's wisdom and principle both of you have said before that the most difficult problems in life are always
people problems and one of the key lessons you have learned to be able to live a happy life and a successful life is to stay away from negative people my
question is what to do if those negative people are your families the people whom
you can't simply stay away from yeah you minimize it but you can't no that I
mean there's no question about it Charlie gave an answer I thought was a master attack the other day when he says
you always how would I interact with people who behave well he says of course you have to make some exceptions to your family
but it was but it's true and uh you know you really
I don't know what it's like to have you know
a drunken you know bullish
uh but probably father but parents just generally I mean it you know how do you
handle it and uh it's very interesting that the MacArthur family
uh the very very famous John MacArthur the battle set up the MacArthur Foundation
uh he had five kids and four of them turned out to be
superstars of one sort or another and they had this crazy generous drunken father but they all decided the thing to
do was get the hell out of the house and so he had this the father of the
MacArthur Foundation that did that along with three of the siblings out of five
cell you know I I was lucky I mean Charlie was lucky
that uh it uh you know if you
if you have a I mean her father saw plenty of shortcomings and
and and both of us but you know it would still be there for us
and if you have one that won't be there for you you know I uh it's a very tough
problem and I think one way or another I probably would have gotten through
with that that if I had that situation but I don't think I think my life would have
been a lot different Charlie I have nothing to add but we're
okay station five
hey wadden I'm Charlie good afternoon my name is
Arkansas Home of Walmart I'm here shareholders since 2019 and my daughters
are shareholder since 2020. my question is this is my first time coming to
shareholders and my question is um Walmart and Berkshire hathway has
very great relationship with BNSF McLean and consumer goods like
Fruit of the Looms and granimals and Etc my question is granules is exclusively
sold at Walmart and Fruit of the Loom is sold at many other retailers how does
Berkshire hathway decides some items are sold at some retailers exclusively
versus others are sold at many retailers well that's a good question but uh
obviously you'd love to control if you have a product you'd love to control the
distribution and you're probably going to get better gross margins if they ask for you by name I mean they just had an article
about Bernardo Arnold oh but I'll be amazing you know he's got a
blue box of Tiffany and the blue box itself means something and the Coca-Cola the bottle met something
in the 1920s I think there was a study of that kind of hoop skirt bottle and blindfold
with a very high percentage of the population could recognized it was Coca-Cola when they can recognize not
only that the product was a container uh you know you're going to have good gross margins
and if you're just another Cola and there have been hundreds of them uh and
even if they have distribution to something like Walmart who has Sam's Cola
it just doesn't it's not the same I mean here I am you know and 1886 or so John
Pemberton in Atlanta uh created it and they they spent very
significant amount of money advertising on the other hand Hershey's didn't spend any money on Advertising so
we have observed Charlie and I both have observe so many products so many methods of retail and
we really think we know quite a bit about it and we we
also know how much we don't know about it at the same time and it doesn't mean that we want to go into retailing
ourselves but it does mean we've learned to some extent what to avoid uh and we've learned when somebody
really has something the grandmas have something it's just that there's only many you know at Walmart does a great
job of distribution for us and it's a good product for Walmart it's a good product for us and
they can solve lots of types of underwear and they can do a big volume
but we're not going to make as much money rather simply to Capital employed or anything with a
product that uh that has a whole bunch of competitors and if they can watch it for Animals uh pajamas or
something uh it's not it's not the sort of product that causes people to drive 20 miles out of their way to buy it or
anything of the sort but if you're in the Walmart and you're you're picking up pajamas or something for the kitten and
and he or she wants a particular product
and it's not and it's reasonably priced and everything and wears well whenever you know we will
we're happy to have it distributed through somebody with a distribution power of Walmart and their design
they're very happy to have the product uh unbalance is obviously better if you own
See's Candy then if you own the no-name candy company uh you know particularly
win them people buy it as gifts a couple times a year I mean they they know that if they
give if they give them their girlfriend if they give someone in the hospital if they give a gifted
Christmas or going to a dinner they know if they hand the box of candy to somebody they don't say at the same
time here I got a wonderful deal on this candy I mean had some kills the moment right what they really want to see is a
smile on the other person's face that they're receiving it and they get it so uh knowing what customer and
sees box chocolates a or not remotely the market that soft drinks are uh and
the product does not travel particularly Hershey's sharpened in trouble I mean if you look
at candy bars what's popular in the UK isn't that popular in the US and all kinds of things
Coca-Cola travels there's 200 countries and roughly in probably 180 of them
it's the nominal product and uh how do you do it well it helps if you
started in 1886 from that point forward uh so we've
learned a lot we've got a lot to learn but we didn't learn something like our
animals we understood when they came around nobody ever heard of it we bought it for
very low price as it turned out in 20 years ago and still Nobody Knows It
hardly that we own it and that's fine but they know what geronimo's are and and
it has legs it keeps it just keeps going year after year and some some things are
like pet rocks and and we're learning all the time all right
I have nothing to add okay you probably have never bought anchor
animals no I never I don't even wear them
okay Becky uh this question comes from Barry Laffer in New York City
Berkshire owns about 94 million shares of Paramount Global as of the last published data this asset-rich company
is disappointed on recent quarterly earnings reports that just this week slashed its dividend by 80 percent how
do you see the streaming Wars evolving and do you still have conviction in your investment thesis is your investment
thesis based on the company being an acquisition Target or based on its fundamentals yeah and and how how would
you like to manage my money for nothing [Laughter] we are not in the business
advice to people and people who don't know anything about stocks can make a lot of money doing that
we don't think it's something we should give away but I would say this it's not good news
when any company passes a dividend or because it's dividend dramatically and the streaming businesses
extremely interesting to watch because there's people people love to use their eyeballs
watching being entertained on on a screen in front of them or on the phone or whatever it may be but uh uh there's
a lot of companies doing it and you need fewer companies or you need higher prices and well you need higher prices
or doesn't work and you don't lock in people when you get them to
to join up for the streaming period when your serial runs I mean you know you keep them on for a while but you haven't
look them up and uh and we'll see what happens I mean uh
I had a gasoline station when I was 21 or 22 and it's about
three or four months four or four or five miles from here and we had one competitor and and uh he determined our
profit because he we looked at this price every day and if we cut the price he'd match it and we
couldn't raise the price and he did twice the gallery so he won and
there's just basic business problems that you see with certain interests you don't
see with the other Disney was unique uh and it's animated what it offered you
know in the 30s and 40s and and they wrote the stuff off and the first showing and then they they rejuvenated
Snow White and all these other people every seven years and that was fine but this is a different
world and uh and the eyeballs aren't going to increase dramatically in the
time they can spend or it's not going to increase dramatically and you got open a bunch of companies that don't want to
quit and uh who knows what pricing does under that but anybody tells you what they know
what pricing will do in the future as as getting themselves Charlie
's had a lot of experience incidentally with Hollywood I mean he used to before I even met him uh I think the movie
business is one tough business yeah that's my view the talent will make the money the agents will make the money and
if you've got a theater you know the theaters are now doing 70 of the business that they did
before the pandemic and big hits you know you have enormous grosses but
you can't reduce the supply people have only got so many
so many hours in the day they've only got two eyeballs and and they got more Choice than ever before and they've got
substance cheaper is it that offers them the same experience and not some of them
like the experience you know particularly the big hits of going and but
it isn't like you can double the number of people or double the eyeballs or anything like that and and you've got a
lot of people this Helen will always get paid and when you essentially are
packaging that Talent one way or another uh and you need to get higher prices and
you've got a lot of strong companies that don't want to quit uh that's an interesting an interesting equation
hey if you think the movies are tough try to invest in a New York show on a
conventional stage there they think it's a breach of faith
in that business to let the person put up the money ever get any money back
yeah yeah well Charlie saw a lot of that actually yeah I I don't like those
businesses don't tell them what happened on Cleopatra Charlie because it's it uh
it's a business that everybody's tempted they love the idea of going in it you know and they get a certain amount of
Psych again come but uh but I never owned any resources either
well I my father-in-law and I used to talk about claiming a horse to the carbon but we never quite got around to
it we had a lot of fun going to the track together okay section six
you said earlier today that transitioning to renewable energy has
the people and capital to support it so with enough investment and Renewables
the development of energy storage technology to soon meet Iowa's energy
needs and support from the government system through inflation reduction act
funding why hasn't Berkshire Hathaway energy truly invested in the future by
accelerating retirement plans for the coal plants which have high operating
costs and are currently Iowa's biggest carbon polluter and will continue to be
until they're finally retired in 2049 which is too late to be curbing emissions according to the ipcc and it's
very interesting we we in Iowa we have actually produced more
wind energy that is used the term amount of energy used by our
our customers but it's not it's not producible 24 hours a day
necessarily so the there's problems and incidentally in in Iowa
a significant majority of colleagues welcome us when we come
around and want to put in win and some don't want it I mean it you know it is it is a there's a not my backyard
someplace there's other places where they love the money they get from a small part of grounds and and people in
the like the taxes that are paid but I would say that if there's one state in the Union
that stands out in the development uh it's
it's Iowa but what's also interesting in Iowa is that we have one
other major company there's always loads of little co-ops and all kinds of things that sell electricity but we have one
major competitor and uh our prices are a significantly lower and as a matter of
fact we are now in the Omaha Public Power District and three miles or four miles
away we're selling electricity in Iowa and we are selling it cheaper even though
Public Power was invented in Nebraska and there's been a uh
I think it's George Norris did it back in the 1930s and
you know it's it uh it's Nebraska's resisted to some extent uh wind power
more than Iowa but like I said our competitor or Alternate
Source hasn't really pursued it the way we have but I wouldn't I would say that our record
in wind and solar uh has not been taught by any utility in the United States and of course
it's been aided by the fact that most utilities pay out 70 or 80
percent of earnings and dividends and uh we haven't taken a common dividend out
of that a little tiny preferred we haven't taken a common dividend out of you know for 20 years we reinvested I
don't know how many billion that's the reason why the earnings have gone from 200 million to 4 billion but we're not
earning a higher rate of return on Capital than we were when we started we just put way more Capital into the
businesses we went along kept reinvesting the capital so I wish Greg were to tell you more
details about it but but uh but uh
I would say that we'd put up we'd really put a Berkshire Hathaway Energy's record against any utility United States
Triumph you've watched it well I have and uh
I'm not personally at all sure how bad the global warming is going to be I
think I don't think anybody knows for sure whether seeds are going to rise two
inches or 20 feet and so I think there's a lot of faults
claims here in the world where much is not known yeah we
Wyoming there is a lot of wind in Wyoming and we
are building trans Mission line to extend out through the west but
it was World War II and they told us to do it and somebody and we had a czar and
and Washington could say you know just get it done like I said the Henry Kaiser
I'm building ships you know you can't believe how far ahead we would be down from where we are but
we've got some money we've got the know-how and we do spend about
this year our depreciation and our utility companies
on the order of four billion dollars and we spend maybe three billion additional left so
maybe we spend 7 billion and uh and there are very few companies in them
in the utility industry that are spending you know that percentage up there to appreciate but we'd love to be
spending more but there are people there are people all over that
don't want they don't want the pipeline to go through there they don't want to tell if whatever it may be
and uh that is the problem of a democracy and and even as I mentioned within Iowa
you've got a great many colonies that majority great majority of the counties I think but welcome
the wind power and you've got some counties that don't like it and we're
obviously going to work with the ones that don't want to work with us we do not have the ability to go in and tell
anybody what to do on that uh and there's a Public Utility Commission in every state
uh that basically governs what we earn on it what we do and that the way the
industry is developing that's not bad unless you get into things that that that in effect uh
you know extend they're part of a Countrywide system rather than Statewide system
I think also that even if we weren't worried about global warming it would
make sense too sure shift to Renewables to conserver hydrocarbons
there's certain things hydrocarbons can do that nothing else can do and there are only so much of them there
why not be cautious in conserving them and the and the cost they've got so much
more efficient too I mean the the Winston I mean if you look at what we're doing now uh those towers are way more
efficient and and but there's a lot of a lot of people that are talking
uh that uh did all my things that can't be done and
then there's there's a there's a lot of nonsense in this field yeah you know if you like nonsense this is the field for
you no well we're
okay Becky the question from Monroe Richardson
The Wall Street Journal reported in March that oil producers are producing less oil and may have reached their peak
in the Permian Basin given the major positions of both Occidental Petroleum and Chevron in the Permian would you
please explain the rationale for berkshire's significant Holdings of both those companies considering that future
outlook for oil there well there's no question it's really interesting about oil and Charlie knows
way more about oil items when did you buy that royalty and Care Bakersfield or whatever it is but
that was before I met you right yes no it wasn't before it was but it was yes it was it's just before you're right
yeah and and that kind of early still paying me seventy thousand dollars a year what'd
you pay for the a thousand dollars yeah yeah now that's the opposite of the
Permian uh my dad bought a thousand or fifteen hundred
dollars worth of Royal lease uh before he died in 1964 he left him with
my mother my mother left him to her two daughters and my older sister died and
my younger sister's here today and she gets these checks every month and she knows about
all these different fields and what they're producing and that's the that's the reality of half of
the oil productioners something around that in the United States and then the other half
uh the Shale and and you know if you've gone to the
movies uh I never watched oil you've never watched the things that are pumping Charlie's royalties in
California you you see these you see these gushers of oil well in the Permian
and I'm like this should sink in on you and the first day the first day when you
bring in a well uh you know it may be 12 000 barrels or maybe 15 000 barrels uh
and it's even it's dangerous that um Occidental had one come in there
I think in 19 000 barrels or something like that one day and
in a year and a half that it becomes apparently nothing it
it's just it's a different business in effect and the United States
it's interesting we use whatever we use maybe 11 or a fraction
well we produce at 11 a fraction million barrels of oil equivalent a day but
if sales stopped I mean it would drop to six million very fast well
just imagine taking 5 million barrels a day out of the production uh in the world and
uh and then we're also taking down our strategic petroleum Reserve uh you can
see the petroleum reserves the ultimate oil field you don't have to drill it's just we've got a and it was supposed to
be strategic but but it gets involved in politics and uh so
different kinds of businesses basically and and we like them
occidental's position in the Permian and we we wouldn't like that position that well
it got to minus one day I got the minus thirty dollars or a barrel what was crazy of course but but if oil sells it
at X you know you do very well and it was also the half of action you know
your costs are the same and it doesn't change the production and it doesn't work as well but it also brings down the
oil production of the United States very fast so we don't know what oil prices will be
but we do very much like the Occidental position they have
and that's why we Finance them a few years ago and it looked like it was a terrible mistake uh
windy while Market just totally collapsed and and then they changed around and we bought a lot of the common
stock uh in the last few months they've reduced are preferred which wouldn't we don't
like obviously we'd be disappointed in them if they didn't reduce it uh it's intelligent
from their standpoint so we've taken of the 10 billion dollar preferred we've gotten maybe four or five hundred million
dollars of it retired at 110 percent of par but uh
Vicky hollombe uh is a she's an extraordinary
manager of Occidental her first job was with City service
that was the first stock I bought in 1942. uh she knows what happens beneath the
surface I know though I know the math of it but I wouldn't know I would
never finish the idea was to do if I was in an oil field I mean I I don't I can dig two defeat down I I can't in my
backyard and I can that's my that's my understanding of subsoil in
the world I can't picture the fields of Charlie has been collecting that monthly
checked from from 50 plus years 60. uh well 60 60
years roughly uh or my sister's getting various Fields where they just keep pumping and pumping and bumping in and
uh we in the United States
are lucky to have the ability to produce uh the kind of oil we've got from Shell
but it is not a long term source
uh like you might think by by watching movies about oil or something
of the sort Charles Damen yeah it really dies fast so what those shell Wells
if you like quick deaths of the URL Wells that we have them for you no
but Occidental uh they're doing a lot of good things yeah they do a lot of new wells in the
yeah they they're doing it in a profit but it's it's a different kind of oil it's just different yeah yeah and and
that's true of almost half the oil produced in the United States and uh
there's times a lot of oil down there that nobody knows how to produce and they've been working at it for like 50
years but they worked at the at the existing Shale production for about 50 years before they figured it out and it
was weirdly complicated when they finally were able to do it there's only one type of sand that works
can you imagine a horizontal pipe you know that maybe a mile and a
half or something it's it's just so different than what you think about uh right
laterally for three miles two miles down yep how the hell do you build
two or three miles laterally when you're already two or three miles under the Earth they've mastered a lot of very
tricky technology to be able to get any oil out of these walls at all and we love them positioned with
Occidental and yeah we love having Becky run it and uh they've been there's a lot
more oil down there if anybody can figure out another magic trick that's all we need is another magic trick
but obviously don't have some other things too yes yes but it does
but it the price of oil still is incredibly important in terms of the
economics of short lived oil I mean no question about that uh as well if it's
and we we will incidentally uh you know I
there's speculation about us buying control we're not going to buy control we don't want to we've got the right
management running and we can't we wouldn't know what to do with it Charlie wouldn't mind know what to do in oilfield committing here buying coal
would be like going out and seeking the would acquire a cancer or something
you can't even borrow to expand a coal mine now it's really it got very
unfashionable yeah and we think frankly some of the things
that are ridiculous and on both sides on both uh in in both extremes I mean it's
just I mean you're dealing with physics you're dealing with um you know it's
the politicalization of of positions of something that's
enormously important in terms of energy is just uh it just lends itself to to
demagogues and and fundraisers and advisory organizations and everybody in
sight but uh and we will make rational decisions and we
do not think it's an American to be producing oil and there is no
oil Basin in the United States that compares to the Permian in terms of Promise yeah we were lucky
well we didn't know it was there until yes not that many years ago it has ever
been used up and they always knew that shallow was there but they thought it was going to stay unrecoverable forever
the second or third stock I bought was Texas Pacific Land Trust and they owned three million Acres down there and pay
and they were there were grazing revenues of ten thousand a year or something like that they were sitting on this incredible
amount of oil and basically that company is now actually part of Chevron and it
went through Texaco and did all kinds of things and and there's still there's still a Texas Pacific land trust but a
lot of that property is is fee fee owned by by their minerals are owned by by
Chevron which is some Advantage but it's uh well it's an interesting subject I'll
put it that way and and we will not be making any offer for control of
Occidental but we love the shares we have and we may or may not
own more in the future but but we certainly have warrants on on which we
got as part of the original deal on a very substantial amount of stock at around 59 a share and
and those warrants lasted a long time and I'm glad we have them okay station
Seven my name is Max Joe and from Toronto
Canada I have a question for Charlie regarding statement you made in the past
you once mentioned that you would prefer to hire someone with IQ of 130 who
believes is 120 over someone with IQ of 150 who thinks is 170. I understand that
you were referring to Elon Musk
given the recent success of his Ventures such as Tesla SpaceX and starlink I'm
curious to know if you still hold the view that Elon
Musk overestimate himself thank you so much [Applause]
well yes I I think over Elon Musk over estimates himself but he has a
he is very talented so he's he's over as they're meeting somebody who doesn't
need to overestimate to be very talented there's a Bill Maher
program about a week old maybe two weeks old but but he interviews Elon and Elon
doesn't say it's a terrific job told us all with him Bill Maher who I
mean it's worth watching and uh and Elon is
he's a brilliant brilliant guy and I would say that you know he might score over 170 but but
he you know it's he he dreams about things and and they
they his dreams have got a foundation he would not have achieved
what he has in life if he hadn't tried for unreasonably extreme objectives
he likes taking on the impossible job and doing it we're different and I are looking for
the easy job that we can identify yeah if we can do it playing Tic-Tac-Toe
we'll do it you know I mean we have a totally different way of going into the hallway yeah but we don't want
to compete with Elon and a lot of things I mean you know we don't want that much failure
yeah and and it takes over your life and I mean in a
way that it just doesn't fit us but but you know they're going to be
well there have been important things done by Elon already and and uh
it requires fanaticism isn't the word yeah it is the
word okay well it isn't quite the word but yeah but but it's a dedication
dissolving The Impossible and and every now and then they'll do it and uh
but it would be torturous to Mayor Charlie and uh
I I just I like the way I'm living and and uh I wouldn't enjoy being in this
but he wouldn't enjoy being in my shoes either no
what's what's the Belmar interview okay Becky this question comes from Foster Taylor
um at the 2010 Berkshire annual meeting you said the one question that you would ask of the Berkshire CEO would be about
the distribution of cash to shareholders as the Berkshire cash pile grows larger and larger so let me ask that question
do you still feel confident of the future prospects for our over 100 billion dollars in cash on hand or are
we getting closer to cash distributions well our our you know the one thing Berkshire
Shares are selling for less than we think they're worth that's a pretty that could be a pretty
big uh uh way to distribute cash that the public
brother what we really like to do is buy great businesses so if we could buy a company for 50 billion or 75 billion
uh 100 billion we could do it and we can do it and our word's good uh
it's difficult with a public company because in effect if you've been on a company uh
you make the bid and their shareholders vote months later and that you're giving
an option if we're good for it and the other guy has a way to uh top you or all kinds of
things uh they can get out of it and you you get paid two percent for that or one percent for that that is not an
appropriate price and on the other hand uh Delaware will decide whether whether
they should do it or not and that's that's the way the world is I mean that's that's the law so
be easier to do with a private company and and there aren't very many that are big on the other hand there aren't very
there's nobody else that can quite make a deal like we can under certain under the right circumstances and there could
be a situation where a bunch of very
a number of very decent companies I've got a very uncomfortable
uh uh borrowing structure and money comes
due due to them at the exact wrong time and that's when they pick up a phone is
dead Tiffany and Harley Davidson and you name it I mean a whole bunch of companies uh
in 2008 that sort of thing will happen again whether
results and us getting the calls or what the world is exactly at that time but
the one thing we know is that that the number of phone calls that you can make at a time like that
is very very limited and it uh and and there can be good companies they don't
want to sell the company necessarily but they may want they just may need 5 or 10 or 20 billion dollars depending
on what company you're talking about and uh that can happen and our own shareholders can be selling the stock
too cheap and we'll never do anything to make them subtle cheap and we'll tell them the truth about what the business
is but if Market circumstances result in us being able to buy in 50 billion of
our own stock will buy it uh so we'll see what we'll see what the world holds but I I don't I don't
we don't have the opportunities we used to have but we've got we've got enough and and we're
making money with what the things we have it isn't killing a stall of 100
30 billion of uh uh bills at five percent plus Bond
equivalent yields and everybody says well yo yields are going to get out of the future I don't have the fantasy idea he also
going to do in the future and you know the prime rate was 21.5 in 19. 81 or two
when people were worried that it was going to go totally out of spin out of control and Boker kept it from happening but if
volcker hadn't been in there who the hell knows what would happen but uh so we're running Berkshire so that uh we'll
do okay and maybe we'll do a little bit better than okay Charlie
okay maybe fine okay station eight
hello Mr buffet buffet I'm Mr Monger my name is Carlos Sanchez and I'm honored
to be here from Guadalajara Mexico Mr Monger as a fellow lawyer I have a
question regarding corporate law considering your experience and success if you were to offer guidance to someone
like Ralph talker when he was at the beginning of his career and before becoming bear Sheikh Hathaway company's
lawyer what key principles or lessons would you suggest to help him excel in
his profession well I'm not sure I quite caught all of
that but yeah what I don't think I have a lot of
advice about How to Succeed as a lawyer I have a son-in-law who describes modern
law practice and a big firm he says it's like a pie eating contest where you win
you get to eat more pie [Laughter]
and I advise you to avoid that kind of a law firm
life is too short to just do nothing but eat pie yeah yeah Charlie is not practice law
since what 1964 maybe whatever it was but
1962 62 and uh Charlie has given me
four or five pieces of advice that don't really come
from his legal background but but because he knows the system so well
and and uh you know really did do quite well at Harvard Law School
despite his attorney of teachers and a few things uh
he has given me four or five Solutions on things that
nobody else in the world would have given me a law firm or otherwise and it and it's
it's been us within a set within us almost a nanosecond of when I described
a problem to him and they just gave me the answer that nobody else would have come up with and uh
I I told you one of them last year so I won't repeat it at this meeting but but
it's uh we've got the best lawyer in the world and Charlie if it's something that
really matters uh and uh there have been times when
I've taken advantage of that uh and
I totally didn't want to be a lawyer he didn't want to sell his time
maybe at 20 bucks an hour or something to people he thought were making the wrong decisions and he knew more about
it and they did and that just did not strike him as a good way to go through a life but I think he's probably right on
that I think he'd it had really gotten to be miserable if he had to keep doing
that it's just no fun be like me giving investment advice to somebody that or
taking it from somebody I had to you know it just I just wouldn't want to do it right and Charlie figured that out
and so we decided to work for ourselves and this worked been happy happily ever
after we have no complaints yeah none
uh okay we're with Becky
this question comes from Ryan Harding and it's about the new 15 corporate
minimum tax rate as he sees it its implementation is currently understood
he thinks it as he understands it to apply over a rolling three-year periods and to be based on reported earnings
first is the inclusion of unrealized gains and losses and reported earnings Under The Current financial reporting
standards contribute to the calculation for corporate minimum tax rate purposes and could it could potentially convert
some of those notional deferred taxes Into Cash taxes even if a rise in the market price of a major holding is only
Temple temporary but rather extreme and then second could it reduce the effect
of some of the renewable energy tax incentives and others yeah I I think the answer on the second part
probably is no but I don't want to say it is for sure because uh
he's asking the same questions I asked of Mark Hamburg who's the smartest guy on combining
understanding a business understanding the tax code understanding SEC rules and everything else uh that you'll find in
Corporate America and and these questions that that the
particular question uh on multiple security uh I don't think
it's been answered yet and I think that there are a number of things about the new tax act that were
not an exit but I would say this uh the I
you know we have said ourselves what we think the proper
approach to operating income we didn't design that because this tax law came along with
some years back so we we're we we would think that you wouldn't
include capital gains unrealized capital gains uh in
but we we've got enough
I I think no matter how things turn out you know the 15 tax doesn't bother me in
the least and uh we can figure ways once we know the rules
where we will pay the 15 tax and
you know we were paying 52 taxes federal income taxes one
I bought control in the partnership of Berkshire Hathaway I mean the tax rate
come down dramatically and the Deferred tax that was embodied for example a Sanborn
map when I was involved in a system that was allowed under the tax law to avoid
that tax but that was a huge tax 52 so we
we will let we will live with this tax code and we do not think corporations are overtaxed in the United States and
uh you know and I think that the conversation about how we lose out
to the world and all that sort of thing it's really nonsense uh but uh we've got
we've got a new law that hasn't yet the regulations haven't been written on and when when we know what the game is we
will absolutely figure out a way to pay 15 percent
every year and which generally we've been paying anyway and as I I
pointed out if there were a thousand corporations in the United States that paid what
Berkshire has been paying nobody else in the United States no individual no Corporation would ever
pay any income tax Social Security tax gift tax estate tax anything else
a thousand like Berkshire Hathaway would produce the revenue that's being produced by the federal government it's
being derived under the present tax code from everybody in the United States and I don't feel badly about that and I'd
love to get up to what it's won 500th or something of the sort of done uh but I'd
like to do it you can do it at this rate I'm happy to do it
I think we are privileged to live in the United States but we also have to control spending and
uh that's something that Congress doesn't quite like to give like
to do and they didn't like to do it but my dad went to Congress but but if dug
in more as the years have gone by Charlie
well we would cover this subject earlier yeah okay
station nine am I right on this yeah
my name is Avalon gross and I am from Los Angeles California I am a
shareholder and it's my fourth year coming to the Woodstock of capitalism
yeah we're glad you came [Applause] thank you so much for everything Warren
and buff Warren Buffett and Charlie Munger what is the funniest story that you have
never told about each other and also what is the hardest part of your
business I'll answer the second [Applause]
part of your question is that we don't have a hard business we love our business every morning when I get up
I feel good I don't know what's going to happen that day maybe nothing will happen but maybe something will happen and if nothing
else I'll roll some tea bills or something but it it uh I work I work
with the greatest group of people you can imagine I mean we we uh we like each
other and nobody is after anybody else's job or anything of the sort it's ideal
working conditions and it's five minutes from my home or thereabouts uh so I've
spent my life commuting uh I just can't imagine having it having anything better
and and uh Charlie's got a lot of funny stories you haven't heard but we'll see
what she wanted he comes up with
I think Warren and I are naturally so ridiculous that we don't need very many funny stories
we each do things that are peculiar enough so that we can keep one another amused
tell him what you told the lawyer when we were buying hostile cone I don't remember you tell them well you
remember
and uh more buying a department store and we needed a lawyer
and we needed a lawyer who was nearby and would do exactly as told and
Charlie came up with them a very good lawyer from Wilmer cutlers I believe and I don't know whether
Charlie remembers the instructions he gave the lawyer or not yeah no I don't oh well Charlie told the
lawyer who we never met before and he said well he just he says treat Warren like I was
36 at the time or 35. he's a treat treat worn like any other 90 year old glad
this guy knew exactly what he meant and uh we made the deal in a hurry and then
we we went to the bank the First National Bank and I believe it
was a Maryland National Bank actually and there was a fellow named Cami slock there wasn't it Charlie and we yeah we
wanted to borrow six million bucks against a 12 million dollar purchase and Cami looked at his at us and would
bewilderment he says you want to borrow six million dollars in this little old hotel
and uh Charlie and I said something to the effect well the Maryland National was
our first call and that they didn't want to do it we had another bank we built on anyway they loved us the money but but
when he said little old horse on calling we immediately started thinking maybe this isn't the best deal we've ever seen
in our lives and from that point on we were trying to figure out how to sell it so we've had but we
we had as much fun uh Sandy gottisman was involved with us
then too and we had as much fun out of deals that didn't work in a certain sense as the ones that didn't
work I mean it's it uh you know if you knew you were gonna
play golf and you're going to hit a hole in one on every hole you just hit the
ball and then when the hole is 300 yards away or 400 yards away he was nobody play golf
I mean part of the fun of the game is the fact that you had them into the woods and
sometimes you had to get them out and sometimes you don't so we are in the perfect sort of game and we both enjoy
it and we we have a lot of fun together and and we don't have to do anything we don't
really believe in doing I mean we we are not dictated to by by any
group uh and so we get to follow our own we look get the forge our own
Dustin Aaron and in a sense towards the own principle by which we
can run the company and that's a huge luxury in life and and we don't want to
be president of any other company in the world or CEO or anything else or we have to conform to certain things
that we really don't want to conform to other Fair description Charlie yeah it
is yeah okay Becky this question comes from David Cass who
is a professor at the business school at University of Maryland he says at last year's annual meeting Warren mentioned
that Berkshire had taken a large stake in Activision Blizzard as a merger Arbitrage play since the UK regulator
has blocked its acquisition by Microsoft has Berkshire reduced or sold its stake
well I think in terms of what we do with stocks we don't give information except when
required to which is in the 13. help for whatever we file and uh and there's some
there's certain things you can actually figure out by looking at our 10 or yeah 10q which we followed this
morning but you have to look pretty hard but um I would say this
it's I think Microsoft has been remarkably
uh uh what's the word uh
uh willingdom cooperate
with governing bodies and I mean they want to
do the deal and they met them the opposition that seems to me more than halfway but that doesn't mean
that it gets done if if I've given country in this case the
UK wants to park it there they're in a better position to block it than the
United States but just the way the world works and uh uh
that doesn't get solved by offering more money or so it it uh I don't know how it
how it turns out uh uh but if it doesn't go through I don't
think it's through any short coming by either Microsoft or Activision uh
but not everything that should happen does happen and uh uh well we weren't we ran
into it when we when we bought what made the deal with Dominion Energy
18 months ago and that they let us buy a good bit of what we wanted to buy and
then and then there was government in effect said you
can't buy something else which I think we would have done a better job with them anybody else did and which the
States involved they're not object to it which the customers didn't object to it but but
you don't you don't take on the United States government you know and and uh you try
and figure out things that that you won't have a problem with and uh uh I
think in that case the NOS government made a mistake I think the British government's making a mistake in this case but
but that's that's life in the big cities sure I would say and uh
what we do will depend on a lot of things Charlie
well I think well we do
yeah we you kissed that one off beautifully
mm-hmm okay station 10.
hi Warren uh hi Charlie my name is Anderson Fuller and I'm from avonport Nova Scotia in Canada and before I ask
my question I just want to thank you for all you've done to give us Insight in your minds as investors
um so for me the most compelling takeaway from Berkshire is your guys's emphasis on and successful use of
properly aligned incentives in my view owning and leading a business has two Central benefits first you directly
benefit as the company goes through your equity in it and second you have autonomy incentives for employees are a
bit easier to understand such as offering benefits Fair pay and creating a strong culture but I've always
struggled to understand them at the highest level even though you say Berkshire gives its managers significant
flexibility it must be less than what they had when they were independent Additionally you would think passion and
a willingness to sell would be inversely correlated so how exactly does Berkshire Bridges Gap and incentivize owners of
its subsidiaries to give up these benefits to Berkshire thank you well what we really hope to find
is managers who love their business but don't
like a lot of what comes with it as a public company I mean if they have to spend a lot of time listening to
people tell them what to do about this or that and they can't afford to irritate them
uh or they have to go along with their
trade Association because or what you know whatever they may call it um because you don't want to look like a
free rider and there's all kinds of things compromises that people have to make in
most jobs and uh Charlie and I
solve that problem I had five bosses in my life and I liked all five of them and two of
them were just huge factors and making my life better but I like all
five of them a couple of them are you know some people here JCPenney Cooper Smith you know I worked
with 75 cents an hour and I love I love working at pennies well I didn't love working at pennies but I love
working for uh Cooper Smith and and uh you know 75
cents an hour but I had I had to do what they told me to do which was to sell men's shirts first and
then men's clothing then children's clothing and so on and uh I love working for the newspaper
and I had a great manager when I was University of Nebraska got to work for
Ben Graham I made everything worked out but but it there's nothing like working for
yourself and if you can't own a big company working at Berkshire Hathaway
for running a company uh is the closest thing you will get you
don't have to spend time according analysts who you'll probably have contempt for in
many cases you don't have to spend time with banks you know getting money and and particularly in terrible times yeah
there's all kinds of got a lot in the way of Freedom then
I would think would be meaningful to me and it might be better if you own
the whole place yourself but maybe you've got siblings that want out maybe there's a million reasons why you may
not be able to achieve that uh unless you some
uh to Berkshire and uh that's easier probably if they have a
family business where people want to go in different directions than it is with a public company but
there's still possibilities there so that's that's why that's why I
I think if I owned a public company and it was worth many great many billions of dollars
and Berkshire Hathaway wanted to buy it and shareholders were willing to vote it
uh I would considered the way I would feel about life but one thing I wouldn't want to
retire at 65. I'd want to keep working and uh
that I'm waiting we just we there's there are reasons to
solve The Berkshire which Charlie and I in certain positions if we were on the other side would take the deal on
and uh but it isn't for everybody
I think we have a pretty good one
we've been very lucky Ian
I don't know it seems to me that most of the people are going to end up the way we did
they almost already know how to do it well the most important purchase in
retrospect that we may have made was National Indemnity not because specifically what it ever wanted led to
and Jack Ringwald controlled the company and I know a woman liked him and and uh
he knew me and once a year he'd get irritated
uh when the Nebraska Department of Insurance or somebody would come come around and he
said they always came around when the carbon racetrack was open you know so they could I mean he had all these
theories about why it was a pain in the neck to be regulated and I
and I told Charlie heider next time Jack is in that mood where he's ready to
sell just because he's tired of fooling around with all these guys be sure and find him and so
Charlie called me one day and he says Jack is in the Heat and I said bring him over and we made a deal well that's why
Jack sold and he was happy after he made the deal and I was happy after we made the deal so there's a man that control
the business but just decided these people didn't seem to bother him as much once they
were my problem and not his and you just can't tell when one lightning will
strike and and that didn't do magnificent things for us initially but
just look at what it led to you know and then uh so you never you know if you
knew if you knew how you were gonna again if you know how you're gonna shoot all 18 holes it wouldn't be any fun
playing you wouldn't get on the First Tee I mean it's it's the
it's the uncertainty the fun of playing the game the opponents all kinds of things that make a game interesting and
and I think Charlie or I are in the most interesting game in the world
okay Becky here's a question from Simon Withers in
Perth in Western Australia it's been a long time since we've heard about See's candy and netjets could you
please give us an update on C's performance and when you project it will run out of places to open stores in the
United States and could you also give us an overview of how netjets has performed since its acquisition and whether it's
achieved the potential you saw at the time of that acquisition boom
we'll see's it hasn't been a question of opening stores we found out that we we've tried about we've had this
wonderful brand that doesn't travel you know uh
the Mystique the actual product the feelings people have about some
things as we said before I mean it sometimes is it's limited to giving Marcus Dr Pepper
shells at a huge rate in Dallas Fort Worth and maybe I'm maybe 10 times the
percentage per capita maybe that it has in Detroit or Boston and you say well how can that be with the product's been
around for a century and people travel and you have National advertising and I'm not sure but I I kept learning more
as I watch different brands and Charlie and I our economics were so good
in California that we tried to in many cases the same experiment over
and over again doesn't cost much to experiment we've tried everything in the world to close the brand to travel
and we always think we were right for the first week and then we find out that
that the magic we can we can beat any other candy store
pretty much but there aren't any candy stores anymore to speak of as the world has changed so
uh sees is a
101 years now it has magic and it has limited Magic
and sort of the adjacent West you can almost as gravitational almost and and then uh
you get to the East and incidentally in the east people prefer dark chocolate
to milk chocolate and the West people prefer milk chocolate to dark the easting saw Miniatures in dark the West
I mean there's all kinds of crazy things in the world that consumers do but you want to keep observing it because you do
learn a little and with Charlie and I'm trying the the
temptation to keep trying things because the economics were so good if we
succeeded so we tried various things and of course every manager wants to drive that comes along
because they they've learned you know it should work but it doesn't work so
but that's that's what makes it very interesting in netjets we
we have really learned how to distinguish
and justifiably distinguish uh a service
at the people so that if you can you have to be very well to do
to use it but if you're very well to do you're in effect you're if you're spending your errors
money I mean it's what I told my adults after she went from teaching to be worth
millions and millions of dollars and she came to see me she never been married and she she said
can I afford to buy this for a cold in 1968 or nine and I said Alice you aren't
buying it your nieces and nephews are buying it because that's who you're leaving your money to and speaking on
behalf of your nieces and nephews I've said we want you to buy it and it's the same way you know do your heirs want you
to fly around in that gesture do you want to leave a little more money to your foundation or your kids and
and where to solve that one is to offer your kids a few hours themselves and then their attitude can change so it's
it's it's in a class by itself it's it's done what Ferrari has done in a
different sort of way in cars Ferrari sells 11 000 cars a year
I mean maybe twelve thousand and you know they're known throughout the world
and we'll have a Chevy dealership in Austin or something we'll sell as many cars but we're not Ferrari and netjets
has 600 and well I'm counting Europe I mean it's maybe 651 we're going to buy 100 planes
this year and we won't sell any because we've got a backlog and we took we took a nutshell flight over to Tokyo
and we arrived in good shape and we spent a couple days there we flew back and there's just
nothing to it now you can say well you're getting sort of decadent and all
that in your old age but uh the money all go to fly into being
though the money will probably be 100 billion or more and and I forget the
philosophies want me to spend a few bucks on myself and all it has to do is be better than the last dollars that are
spent by various Florence a piece which have plenty of problems finding things to do to make lots of sense so uh not
just there isn't a competitor I mean we'd looked at the other day
wheels up stock came out of ten dollars uh
a couple years ago it was selling at 48 cents the other day and they got 12 600
people they've given a bill a billion dollars a little over a billion dollars on
prepaid prepaid cards where they they've given them money and they get a certain number of
hours later on and uh they don't
I think there's a good chance that that some people are going to be very disappointed later on when they have
money to them doing that Jets they they know they'll get
they'll get on the same planes with the same Pilots uh as I am my family
have flown on since before we bought the company so it's not it's not shaped by
what the decision was shaped by some commercial uh objective
a couple years before I never heard of Matt Johnson Frank Rooney mentioned it to me and I've
watched her share immediately and and uh and we bought the company in and
every welcome my kids have to fly commercial sometimes but sometimes they get to use
ours too but I've never flown anything else and why would I I mean it's it's it's the goal
Setter and uh uh nobody will
match our Fleet I mean if you've got 600 planes you've got them a lot more
places in the United States than that anybody else will have theirs I think we're the second largest Fleet
counting the commercial airliners and and our fleet's growing like I said the rate of 100 Lanes a year or
something it's a marvelous company and Adam Johnson has performed
uh you just can't believe what he's done
uh with the business and it was a tough model for a long time
but he's brought a word is and we've got we shouldn't have a wonderful company
for forever Charlie
well that just has been remarkable you can argue that it's worth as much as any
Airline now oh it's so different and Charlie we had
a hard time selling Charlie and that just membership and then we figured the way to get him
to buy a membership was to put a coach seat in the future and that really knocked him off I mean
I think he's the only one we sold on the basis I used to come to the Berkshire annual meetings on coach
from Los Angeles and it was full of Rich stockholders and they would clap when I
came into the coach section I really like that
[Applause]
but I gotta tell you we semi-corrupted him he he
he feels he kind of has to explain it but he still flies at that chance that was up and
be crazy not to you know it's uh and your errors are paying for it I mean
if you find me anybody who's a state came in at less than zero because what
they spend in on that Jets threw them into that position uh let me
know but I've I've never seen a case yet it won't be the case for the buffet valve again and it's the residual
bottom beneficiary that's paying uh for your uh your membership and and uh
it's a little hard to get used to paying that much money though I never lived like Charlie that I have most of our
Lives okay we will go to uh section 11.
hello my name is Humphrey Liu I'm from Charlottesville Virginia ah
I wanted to ask to wanted to add my thanks to you and Mr Munger and Mr Buffett and all of
Berkshire for throwing this Grand Event each year
looking at the global Trends it increasingly does seem that zero
emission Vehicles may have finally reached the cusp of mass adoption
do you see any opportunities in this space either in specific vehicle
manufacturers or in related Technologies
well I would say that that Charlie and I were longer felt that the
Auto industry is just too tough you know the Ford Motor Company I mean Henry Ford
uh looked like he owned the world uh
with the Model T and then and he brought down the price dramatically he took up
wages dramatically he was he might have been with a different personality ah
or some different views he might have been elected president of the United States I mean there there's a
good book that came out on that recently that told about the story of one of them tell us a little about Nebraska in terms
of it but Henry Ford and and Thomas Edison joining up
but maybe a year or two was it if you're interested in in Autos you ought to read that book but
Henry Ford did that and you know and 20 years later
that uh they were losing money and they had a guy with a gun in his pocket I
think Harry Bennett you know it was was running the Ford Motor Company it was on
its way to the junkie when the whiskers came in and and Henry Ford II Hank the deuce as they
call him brought in Tex Thornton and my friend RJ mother and a few people but
it's just it I I read that I was reading the other day
actually the 1932 annual report of General Motors and uh it's one of the best annual reports I've ever said
totally honest you know assessment of exactly where they were they had 19
000 dealers then and the population as I mentioned earlier was about 120 million or so and
now with 330 million people all brands in the United States have like 18 000
dealers or something it's just a business where you've got a lot of worldwide competitors
they're not going to go away and they'll look like it looks like there are winners at any given time but
it doesn't get you a permanent place although as I mentioned I would say Ferrari is in a special place
but I only saw 11 or 12 000 cars a year and uh
us last year I think there were 14 million something and uh uh
it's it's not a business where we find it fascinating to be in we like our dealership operation
but I don't think I can tell you what the Auto industry will look at to look like five or ten years now I do think
that you're right that that that you know there's a you will see a change
in the vehicles but you won't see anybody that owns the market because they changed the vehicle Charlie
well the electric vehicles coming big time and that's a very interesting
development at the moment it's imposing huge Capital costs and huge
risks and I don't like huge Capital costs and huge risks
and we're subsidizing in the United States and we're actually doing it right putting in a pro-lavers I mean it it is
subject to politics like you can't believe too but but it's it's going to
be with us we're not going to quit we're driving cars and American public has a love affair with them and uh
but I I think I know where Apple's going to be in five or ten
years and I don't know whether the car companies are going to be in five or ten years and I may be wrong but that's uh
uh we surely enough follow the auto business
with with intense interest Charlie's firm was the specialist the General Motors on
the Pacific coast Stock Exchange and that was that was a franchise it wasn't it really yeah we get by working very hardly going
to make a minor a lot of money yeah yeah it wasn't minor at the time
but it was it wasn't for her at the time even yeah
well that was pretty minor okay Becky this question comes from Lindsay Peter
Schumacher in Cedar Rapids Iowa does the current size of the Federal Reserve balance sheet concern you in
particular the result of quantitative easing the Federal Reserve expanded its balance sheet out of nothing the net
effect in essence is a form of single entry accounting creating something of value out of nothing other than a series
of book entries Andre uh entries and wondering what Mr Munger thinks about
this as well well I don't think the Federal Reserve is the problem and I think they can't
solve the fiscal problem uh and uh
uh I don't I don't I do not worry about the Federal Reserve and uh uh I think
it's fulfilling the functions for which it was established I probably would not have been
if they only they have two objectives and I would not have been one probably that would have changed the
inflation objective to two percent a year from uh from zero I I think that
that uh you know I think that if you tell you people that you're
shooting to depreciate your currency at two percent a year uh that is
a lot of implications although it feels good to a lot of people a lot of people want a little inflation uh
but nobody wants a lot of inflation except somebody's got a lot of debts and
uh uh uh I I do not worry about
the Federal Reserve balance sheet I I enjoy looking at it and the numbers are big I always like big numbers but but uh
it is not it's interesting the most one of the most interesting figures to me
is currency in circulation I mean it is gone they were saying cash is trash back
in 2007 and eight and all that cash is going to disappear well
if you look at the Federal Reserve balance sheet it's gone from 800 billion to two point two trillion
and most of us in hundred dollar bills overwhelmingly and to figure it out I think there's about fifty one hundred
dollar bills per person babies everybody in the United States and
uh I would really like to know where all of that is I mean it nope
nobody's hoarding Euro dollars you know in South America Africa or whatever and uh
the demand for currency now you know it's somewhat maybe it used to be subtle drug
dealers uh activities and all of that but anybody thinks cash is trash
Auto uh look at the look at the Federal Reserve balance sheet and actually you can look at how
many five dollar bills and two dollar bills and ones and all that and the action has
been in one in 100 bills I mean it was it is just astounding
the way that 100 bills is spread and of course we don't know where
the I don't know where they are and I don't think the FED can know exactly but they probably make a lot better guess
than they could but I do know what's happened and you can watch it every week
and you'll watch currency in circulation probably grow a little bit and uh and
believe me cash is not trash Charlie
well I don't know where we're headed with all of this
it's been very extreme I think that you you could be pretty
extreme in fighting depressions and so forth if you were versioned afterwards
to a period of some discipline but some discipline but if you're gonna just
keep burrow in get printing money and spending it
I think eventually it causes bad trouble and you can see it in Latin America Latin
America let its currency get out of control all the time and of course it lagged the United States and you cannot
make achievement greatly so I think we pay a price if we if we ever give up our old ways entirely
and go into a new world where we just try and print money just make it easier
to get make to get through the year paid a price
in World War II I mean everybody school kids and everybody else myself
included I'm with we bought what were originally called war bonds and defense bonds and savings
bonds and all that but but from 1940 to the 1944 or five you paid out 1875 I
mean it got 25 back and every kid safe savings Samson all that but when you got all through
you know you had 120 percent of GDP in the national debt
instead of 30 or 40 percent and we had a lot of inflation
subsequently a lot so the people that really that bought those bonds and
supported the war had a portion of their purchasing power taken away from them well there wasn't
anything wrong with that particularly but when the country gets in the habit of doing that
uh I don't think it's I think it's tough to tough to figure out where the breaking
point is with Society but I don't think I want to come anywhere close to it if it's also tough to have a massive people
unemployed that's the tension yeah
well let's that's why the ped us to objectives in terms of
employment and inflation and uh but they're not the ones that
create the deficits and so far the system has worked pretty well although like I say it's been so far the
man who's jumped off a tall building yeah it's all right until he hits the ground yeah
well but but you there could be ways we can stop now at the third floor or the
sixth floor if we don't know what Ford is but we know what this isn't happening at the ground but the question
you know politically it's very very very tempting to
to both Appropriations and it's not fun to vote taxes and Russell long has the
Senate finance committee they've got a building they've had from now he said you know don't text you don't tax me taxes I got behind the tree and
basically that that is the attitude of uh I mean it's the reality
of what is useful in politics and so far these countries
managed to work very well with a lot of things that
could theoretically cause a lot of problems but it doesn't mean it doesn't guarantee us the future on us and
and being the reserve currency let's just do a lot of things but it
also creates a lot of consequences if we screw it up
really well we're bidding is something to death but
by it is a problem I wish we had a solution
okay well that will go to station one let's see if we
hello uh Mr Buffett and Mr Munger my name is Connor I'm an economic student at the
University of Nottingham my question for you today is during the pandemic we
witnessed supply chain shortages especially from Asia as a result
companies have chosen with political attentions to move production away
shirt companies make these decisions and should the government support them
Charlie well that's a good question yeah obviously
yeah it's logical if you're in business and you can make the thing in Mexico way
cheaper it's natural to open a factory in Mexican in Mexico and
get get your parts cheaper in one of the old manufacturers have done exactly that
on the other hand nobody wants to hollow out the whole
country so all the manufacturing jobs are elsewhere and we're all living with a bunch of farmers you know like English colonies in 1820
or something and and
ideas are of course in in big tension
uh we have we don't have that much foreign
production right Warren yeah well
but we've lost well originally Berkshire Hathaways the textile manufacturer is lost because the
South became feasible versus the North and of course then eventually uh the
South got expensive compared to China sure and and
uh Society benefits and some people get killed in that sort of a situation and a
rich Society should take care one way or another and of
people who worked in our shoe factories people worked in our textile companies I mean if you worked in our textile
operation and in 1960 four when we took it over half our half
our workers only spoke Portuguese and uh you know they and they weren't getting
great wages at all but now you could do it in the South and we were doomed
to go out of business and it wasn't the fall of the worker in any way shape or form it wasn't the her
fault we kept trying to compete well it was a TVA had cheap power down there
sure and a textile was really in jail power and air conditioning changed
everything because the heat of them places were impossible that's a lot of things but then then it moves
offshore in many ways and and net
the country is better off because of it but it displaces a lot of people
who really can't do something else in life you can't talk about retraining somebody that's 55 or 16 speaks only
Portuguese and really tell them they're going to have a great future in New Bedford Mass and you know and and it so
you don't want to be glib about it and we can afford
to take care of those people and we've got some systems that work reasonably well but but there's a
tension between you know what about the person that doesn't do anything and all that kind of stuff so these are not easy
problems to solve but I would say that by and large we want the whole
world to prosper we do not want to be a world we don't want the United States
to be a country of extraordinary prosperity and have the rest of the world starving no it it it isn't going
to work and it particularly isn't going to work in a nuclear world so and you know you have your own feelings
about it as a Humane person but but it doesn't it it it is not
it it can be done better and and we've got the resources to do it I mean
the output of this country one can be done with a lot fewer people and and
doing more specialized things in the course that has been the work week in the United States you know in my lifetime has dropped
dramatically and people still feel busy and it will be the human lot to say you
know how can I get all these things done but but my mother didn't do I have three kids
any place so if you want to go in a place if you were lucky and got old enough he had a bicycle the world just keeps
looking at everything moving up as becoming sort of a base that leaves them somewhat dissatisfied and
with our prosperity uh we can do a lot of things
we couldn't do it in 1930 and including taking care of people that got
displaced by the fact that somebody else can do that work and and improve their lot in
life and we've got to make sure that we have the best system that takes care
of the people who who get displaced by that but doing that and pulling the system we
have and everything will make a lot of mistakes along the way but we got to keep moving in that direction
and I'm really interesting thing about it is that the Adam Smith was right that the the
free market capitalism automatically with a lot of property and
private hands and free trade and all that automatically creates GDP per capita that grows and
helps everybody including the people at the bottom helps everybody a lot
but a inherent in the process there's a lot of pain in that free
market capitalism for instance of the Portuguese workers in a textbook company in New Bedford
and nobody's ever figured out how to take all the pain out of it we do have government safety nets to take some of
the pain out we make those safety nets a little bigger as time goes by but apart from that
if you try and take all the pain out you'll also take all the gains out of it you won't carrot growing GDP per capita
you'll have an economy like Russia's which has been characterized as saying they pretend to pay us and we pretend to
work yeah yeah the other systems haven't worked better but yeah it also produces more
and more disparities in wealth and people that
do nothing but got assets under management without actually performing anything extra make
fortunes and I mean it's it's a job of government to keep the best
aspects of capitalism while not causing people that only speak Portuguese
to suffer in the process I mean the two aren't compatible politically over time and we stumble along making progress on
things like Social Security and all that and and we are a lot better off than we are when
I was born net the United States has done a very good job of this tension
between capitalistic growth and a growing safe social safety net we can be
pretty proud of our country Looking Backward that may be why we have 25 percent of
the world's GDP starting with a half a percent of the population and in a few centuries I mean it's just it's a
miracle it wasn't because we were smarter oh you got to say that there must be
something to the system that's worked pretty well even though it's produced a Civil War and all kinds of things you
know and women you know not getting a shot at anything you know even after they pass the the
19th Amendment uh it's it's
it's a work in progress I think actually there's been progress but it's Mankind's
nature to to see the see the things wrong with it if you've
it's even worse it's Fascination to take the progress as a right not something to be earned or strived for but something
that should automatically just flow in over the transom and that attitude is rock is poison
it doesn't do anybody any good okay now ask us an easy question Becky
this question comes from Doug deshield since the accounting rules changed requiring Berkshire to report the change
in fair value of its Equity Investments through the income statement Mr Buffett has repeatedly told shareholders to
ignore those changes as they're not reflective of the long-term returns that those investments will produce
recently Mr Buffett has argued that hold to maturity accounting used by the Banks to avoid reflecting the changes in fair
value of Bank investment portfolios in the income statement and the shareholder Equity account do a disservice to its
various stakeholders can Mr Buffett elaborate on why he views Mark to Market accounting differently for banks in
comparison to Berkshire oh I believe in in both cases in doing it on the battleship and not in the income
statement and and it's a very tough problems the auditor's face as is that
the obviously the income statement feeds into the balance sheet but the balance
sheet tells you whether deposits can be paid it tells you a lot of things and we show it on
our balance sheet we believe in showing Market values on our balance sheet we just don't believe in running it through
the income account and uh in getting there we would put another comprehensive income like it was for a
long time so I I sympathize to some extent
with the oh a very extent with the audit group but they have to really
decide whether they want to they want the balance sheet to represent values except it doesn't
reflect them on the upside if we buy a Seas Canyons worth way more money so it's conservative in that sense but uh
or whether they want to have a an income account that becomes meaningless to people
because it it really changes every five seconds you know I mean while we're normal markets closed today but but uh
you know we have days well I guess Apple was up what seven or eight points I'm in on Friday I
mean that's seven billion dollars I mean uh that's a crazy income account
it is a reflection of where we stand at that point and of course if you're a bank or you're putting out money brilliant
and things that people sort of mortgages I mean primarily uh
they're a terrible instrument for a bank to own but a great instrument for a
consumer to buy and build in the whole society now in a way that was entirely
different than the past uh you've got to pay attention to weather whether they've gotten out of whack in
terms of of what's the value of what they own and what can be demanded of them tomorrow
morning and if we had all of our money that could be demand or from us tomorrow
morning we'd have to behave a lot differently than than Berkshire does so I
I don't I don't I really think the way to do it is the
way we recommend doing which is exactly what was being done or until a few years ago
I recommend the shareholders look at it that way but we're going to follow the rules obviously the SEC
uh you know State authorities and everybody require of us but I'll still
explain to the shareholders exactly what I would explain to my sister about what really counts of Berkshire and I think
every management actually has an obligation to that and instead of it
they go in the other direction and give them a lot of figures that are total nonsense you know I can't imagine
some of them you know even though I thought was about as bad as you could get but they kept going you know and
earnings before everything uh Ebe and so uh
uh but that doesn't change but I would tell my sister who's here in the audience I hope uh and uh I should tell
us all the shareholders and we'll we'll consistently do what is legal and will consistently say
what is we think is right
[Applause] we want owners who understand what they
own now that doesn't mean they have to understand the detail of it but that's why we have people that have
been around 50 or 60 years that doesn't mean that they read the 10 kills or anything like that but they
they they feel worth telling them to them like you know they live next door to us yeah
I don't know what the accountants were thinking when they made that change it strikes me as Bonkers absolutely
bonkers I don't see how anybody who understands how businesses really operated and
should be operated by owning managers would have made that accounting change
the accounts did it just because they had a wild moment
20 25 years ago I suggested the audit profession that they just that the audit committee
asked Auditors four questions and uh
the shareholders would know a lot more about the company if those questions were asked but it wasn't good for the Auditors to
be asked those questions because it might increase their liability if they if they answered them and the client
didn't want them to answer them because the management didn't want them no they were they want a system where if they follow certain rules they're safe
and that's understandable but I don't think the
past year this rule requiring changes and marketable securities to go
through the income account quarterly they didn't do that to protect themselves from no liability they just
did that for some crazy reason of Their Own yeah you get a bunch of people who are
all being drawing a lot of pay out of a big complicated system and rising in it like so many part officers
in the army God knows what they'll do if you put them in a little room by themselves and tell them to invent my
new accounting standards well to our order to remember that's
Charlie talking but I agree with them 100 like
he's he's 99 he can get away with more than I can get away with
okay station two but what he said is enormously important
I mean it just you got to have some insights into what the hell really goes on and and even if you're a counting
accountant yeah okay station two do you want dear Charlie
my name is Victoria I wentrop I am 22 years old and I study in Munich at the
cdtm the center of digital technology and management
as your grandchildren are more in my age group let me ask you
how do you transfer your wisdom to your grandchildren and heirs how do you lead them to investing
do you see value in investing as a family or individually thank you
I'm gonna let Charlie do the answering he's got more well I have my grandchildren but
I am quite philosophical about my grandchildren not thinking exactly the
way I do it seems to me that's almost a natural course of life
and I just live my life my own way and they can observe it
as an example if they want to and if they don't they can try some other way I don't like it when they try some other
way and I have to pretend that I like some
of the boyfriends and girlfriends I don't like but I just struggle through like
everybody else and usually I just bite my tongue and keep silent that's my way of handling it
well I would say that I think that in my case my three children have grown a lot
smarter in the last 30 years and I think I've grown smarter and and I know but
you needed a lot of help that is for sure no I I would totally acknowledge that
that's why I had the room to go I mean I had plenty of room for recruitment but but we all had a lot to grow I went
through I worked a year for U.S steel which was in there
uh fabrication department in Los Angeles a big operation the thing was utterly doomed and three
years later it went back to Greenfield the whole thing was raised to the ground
I did not see it coming now I would to be that ignorant of that
as I was at that age it was a sin and my professors by and
large were even more ignorant than I was we we just know what he had observed
the basic economics of business in a scientific way at all when I was young well if we're getting into
confession Dom I have to tell you it's 3 30. so we don't want to keep going on
who knows what we'll be saying another half hour so yeah so I thank you all very much for coming
at 4 30 we will have the shareholders meeting here and the the we're
continuing to sell goods for another 20 or 25 minutes we've already broken all kinds of Records but let's really make
it tougher comparisons next year and I think again I thank you for coming come next year and maybe we'll figure out the
answer to a few more of these questions thank you [Applause]
[Music] [Applause]
foreign oon session of this year's Berkshire
Hathaway meeting Warren Buffett and Charlie Munger finishing a second two and a half hour session talking to
shareholders answering their questions welcome back to our special coverage of the Berkshire annual meeting I'm Mike santoli Becky will be back with us
shortly when Warren and Charlie came back from lunch the signs at the front of their table showed the audience they
were ready to talk about the banking crisis Buffett science said available for sale Charlie signs said held to
maturity Buffett seemed to lay the blame for the problems at the feet of everyone
from the bankers to the government and the Regulators listen to what he said
the messaging has been very poor it's been poor by the politicians who
sometimes have an interest in having it poor it's been poor by the agencies and
I'd say it's been four by the Press I mean you shouldn't have so many people that misunderstand the fact
that although there may be a debt ceiling it's going to get changed although
there's a 250 thousand dollar limit on FDIC the FDIC uh and the U.S government and American
public have no interest in having a bank fail and have deposits
actually lost by people Warren also took his shots at First
Republic its management team and how they ran their business you will have to have a punishment
for the people to do the wrong thing and if you take First
Republic for example you could look at their 10K
and you could see that they were offering non-government guaranteed mortgages to
a jumbo amount at fixed rates sometimes for 10 years before they
change the floating and that's a crazy proposition if it's to the advantage of
the bank they're gonna get the guy coming in and says I'll repo
Finance it one and a half percent and then one percent and if it's if it's
Advantage the other way the funnel keeps on 10 years you don't give options like that but but that's what first Republica
was doing it was a plain sight and the world ignore the tough it blew
up let's bring back in cnbc.com's Houston and Hugh um you know we were talking
before lunch about the lack of commentary uh regarding the banking crisis here pretty blunt in fact it was
pretty predictable I thought they would come down on mismanagement of certain institutions uh but really the takeaway
is that depositors should feel safe if they don't it's because the message has been garbled and I suppose that means
they're not in any real hurry to participate as investors necessarily in this group in this area
yeah so I mean I think the situation is there's an implicit guarantee uh at least that's what um Warren Buffett
seems to be saying and it should be made explicit apparently uh and you know when we talked about the tumult of the last
week or so two of the suggestions were either a temporary ban on short sales uh or perhaps you know a radical expansion
of FDIC coverage uh and so you know he really addressed one of those two things that could perhaps uh you know arrest
the declines in Regional Bank stocks um I mean yeah assailing everybody from
Regulators to uh we in the media to politicians uh makes for a pretty classic uh Warren Buffett you know rant
so we appreciated that but I do think you know he really gets to the core of the issue here is which is there is the
possibility of future Bank runs he in many different ways and several different times says I don't know how
this story plays out and if Warren Buffett with a six decade you know history in investing very profitably in
Banks is saying uh I'm not I'm not getting involved at this point I can I have 130 billion dollar cash pile which
we could deploy in the future if if the situation requires but they haven't done so yet and by the way we've sold Banks
both recently and in the long term since 2020 what does that tell you I mean it tells you it doesn't really have a whole
lot of confidence uh in the sector at the moment and I think that's the biggest takeaway that's the implicit
takeaway from this conversation yeah on the other hand here the way you could
also look at it from the other angle which is he seems not to believe this is systemic so he'll it almost underscores
that point of view that says it's somewhat idiosyncratic there's a handful of badly run institutions that caught
got caught the wrong way on this and uh if the positives feel as if their money is safe there's no need that it has to
spill over and we should get used to the idea of isolated bank failures well I'll push back with a little bit with his
comments that you know you can have a lit match turn into a conflagration you could have that fire go away so I do
think you know his position is ultimately this situation is a situation we don't know how it plays out and
that's concerning to me yeah uh Fair Point Hugh appreciate it
thanks a lot for uh for breaking it down uh and we also want to welcome Becky back thank you
um I didn't hear everything you guys were talking about but I think I get on the bank front that's right um one of the things we've talked about here is
how many different interesting people you can run into here we've gotten used to running into leaders of business but
you never know who you can run into in Omaha and in fact right now we've got Oscar nominated actress Glenn Close she
happens to be a long time attendee of the Berkshire Hathaway annual meeting she's played a lot of famous roles all
kinds of things that are out there everything we've ever seen from Alex forest in the original Fatal Attraction
Norma Desmond on stage in Sunset Boulevard which was my personal favorite I have to say I love that but Glenn
Close joins us right now and Glenn thank you for joining us thank you I've played a lawyer but I've never played an
investor you play one in real life you've been coming here for what almost a decade yes
I think so I think the first time I came was about 10 years ago why well I think I was with somebody who I
yes I was a was a friend of Warrens and she invited me to come and
um so I was able to meet Warren and Charlie the very first time I was here and go to some dinners at there and I
think they're just they're a phenomenon I mean it's truly phenomenal what goes on here and it's as an actor they're one
of the best stand-up Duos ever they have a wonderful Dynamic and you know this
great insight into what's going on in the country in the world financially and otherwise what did you think of what you
heard today what kind of jumped out at you as things that you're going to take off well number one I think the thing
that always impresses me coming here is the respect that they have for their investors and when you it starts at 6 or
6 30 in the morning and people are streaming into the building and there are people from all over of of this
country all over Nebraska I mean yeah Nebraska and they're just ordinary people and I think they're they're made
to feel that they're part of something important and you don't ever feel that
they're talking down to anyone but you they honestly want to try to explain as
best they can their Vision you know their reasons for their for what they do and it's absolutely fascinating and
warns Simplicity I I think he's a he's a simple man with a mind like a computer I
mean he's he's um he is I mean I think one of the great minds and somebody who
has the Oracle of Omaha and somebody that we really love as a human being as well as as a businessman I
always sit here and I think that they take the most complex things and make them sound so easy and then I walk out
and maybe a few weeks later I think wait a second it's not as easy as I thought it was yeah have you ever changed
anything about how you invest or what you put your money in based on what you've heard here
I wish I had the kind of money that you need to really seriously invest
um well actually that's not true I'm very conservative and with what I have I
would rather you know like I would rather hang on to something that um and rather than like well you're
talking to the wrong person but I mean I'm a Yankee you know we're
in for the Long Haul yeah I mean and they of course are are very satisfied at the moment to have a lot of
cash have a cushion and earn a little bit on it now versus what they could do a little while ago so I think a lot of
individuals are in that situation too did you take anything from uh Warren's comments about the media business the
entertainment business and how it's not all that great and predictable and maybe they you know not too clear on its
future that's the conversation yeah yeah I mean we're in the middle of a writer's strike
yeah I mean I as an actor I feel like we're in the wild west we you know all
the rules are changing and you want to protect yourself you want to protect
your craft uh and I I really I I feel very strongly about that
um and I think the more we look at screens the more we get away from looking into two eyes and really feeling
each other's humanity and um the more you choose somebody from
just a you know a self-made video rather than letting the actor walk into the
room and it's not just about the part but it's about who they are and how you
know where they are in their crap I I think that's incredibly important you sound like you're on the side of the of
the writers who are right now saying wait we want to make sure that we're protected as the world changes and moves towards streaming and that we're still
going to get paid for part of this yeah I am I'm certainly on their side yeah yeah artificial intelligence is roiling all
types of Industries right now it's certainly upending business we work in lots of other places we've seen it but
what about the business of Hollywood's name well I've done a number
of movies now where you go into a little booth that's 360 degree camera and
you're asked to do 30 different expressions you know smile wow and then stand like
this and they could totally recreate me
they could have an AI version of me so last time I called up my lawyer and said
what happens to all those images right after you know what do they do with them they said well they store them paid off
of it yeah well they can't they supposedly they can't use it without your permission but it's still
you know to go like this and like oh and then you think I can do that in person and I hope if you need it enough to go
into that file get me to do it well of course that's one of the big goals between the writers
and the the industry in the studios right now too is the writers just said look promise US you're not going to just
give us a lump of AI generated script and tell us to fix it and the studios
wouldn't commit to it they just said we'll meet every year to figure it out I think the thing that I find
frightening is that we don't we don't even know about our brains before we're letting loose this incredibly powerful
technology and um we we know what that you know the amount of depression the
amount of mental health issues that are at large in the life now all of all this
is there's just so much we can take in and deal with I think
Glenn want to thank you for your time today it's really a pleasure getting to sit down with you it's lovely to meet you thank you thank you very much
all right uh Buffett and Munger turn their attention to energy this afternoon Berkshire upped its stake in Occidental
to nearly 24 in late March touching off speculation Berkshire could buy the company outright Buffett had this to say
about that we will not be making any offer for control of of Occidental but we love the
shares we have and we may or may not own more in the future but but we
certainly have warrants on on which we got as part of the original deal on a
very substantial amount of stock at around 59 a share and and those warrants lasted a long time
and I'm glad we have them yeah and that I mean it came as a little
bit of a surprise back maybe just in the idea that some folks thought that there would be they were building toward an outright purchase of Occidental but he
also did say he loves their position right now the one thing that was interesting he wasn't asked if they were going to buy a physician he offered that
up himself if you know we can only ask the questions that are sent in that are written in that wasn't part of the
question and he answered it anyway that there was a bit of speculation about that well let's bring in value investor
Tom Russo he's been a Berkshire shareholder since 1983 with Holdings uh for uh his clients and firm now worth
more than a billion dollars and Tom it's uh it's great to see you again thank you very much what were your kind of big
takeaways from uh from the day I'm just so delighted to see Warren and Charlie so well and so with it and so quick on
the answers and stayed on thought it was terrific so that was that was one thing in terms of uh in terms of any of the investment
color that they gave about their positions about uh what they're holding on to what they're not that delighted
about I think with a gay was more a sense of business as usual especially in the area that's most important to them
which is the deployment of capital they have to deploy the capital that's coming in As He suggests a sort of two million
two billion and how many days of the month that we had or something yeah I think I think you said almost I wrote
those numbers down yeah it was six or seven billion that they had added to between cash and t-bills that they put
through in the course of the month of April up yeah yeah and then and then they talked about what what did they get to buy it they they declared seven
billion for nhe and I suspect I suspect uh Burlington will be somewhat close and
then and then they have Todd's business where he's investing in it's kind of a whole new platform for technology which
I suspect will be built with the night towards other parts of the company as well it's a forecast demand
and the way he um he characterized apple as being a Better Business than any one
of their own outright stunning something that's that's a big statement and uh he
backs it up with a big position so you know he said and by the way I think they've already repurchased someone told
me before he repurchase 700 billion dollars worth of Apple shares and they
just announced the 900 a 90 billion dollar reload so Apple yes oh yeah Apple
share counts down I mean tremendously in the last decade yeah yeah yeah and so Australia
returning theme which is uh deploying Capital right and uh and they they did
so as well with their small other companies so Burke and one of the things that Greg has complimented Warren on is
his ability to work with the independent companies that sit in this these booths out here and and derive from them a
willingness to return their Capital One of the things that surprised me was just the idea that they could actually take
Warren said I think 75 billion even 100 billion dollars and acquire a company worth that much money now they wouldn't
want to let it sitting out there the problem with public companies is it's you know you're putting an option on it to leave it out for them they don't love
that no it's and and the courts the courts are fine right so they it's a
cooling off period that's allowed and they have to live with it but uh but it just it was the deployment of capital
um I had to start going back you have to love the Jamie Lee Curtis movie so you just you come for the theater and you
also come for friends um I have my son here my office is here a group of people greet each other here
each year that's sort of what we see but it's a terrific forum for then finally swapping ideas
yeah so all right Tom really appreciate you uh breaking it down with us uh after
the meeting enjoy the rest of the weekend thanks to you yep thank you uh if you uh can't get enough of
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buffettnewsletter.com before we close out our coverage of the this year's annual Berkshire Hathaway annual meeting
we want to make sure we leave you with some of the best sound from today's question and answer sessions by the way
thank you all for joining us for this special day of coverage right here on CNBC and cnbc.com have a great night
everybody and I'll see you back here from Omaha on Squawk Box on Monday morning
I think that the incentives in Bank regulation are are so messed up
and so many people have an interest in having a messed up uh that is it's totally crazy the
messaging has been very poor been poor by the politicians who
sometimes have an interest in having it poor it's been poor by the agencies and
I'd say it's been poor by the Press I mean you shouldn't have so many people that misunderstand the fact
that although there may be a debt ceiling uh it's going to get changed
although there's a 250 000 limit on FDIC the FDIC
uh and the U.S government and American public have no interest in
having a bank failed and have deposits uh uh actually lost by people a lot of
things that could happen out of the present situation depositors will not lose money stockholders and debt holders of the
holding company they should lose money and the people borrowed on out on Commercial Real
Estate and now it isn't the loans aren't getting extended they should leave it's
too bad I mean that's part of borrowing 100 margin which is what people were doing I've been doing in commercial real
estate you've got to have the penalties hit the people because uh the problems
and if they took risks that they shouldn't have it it needs to fall on them if you're going to change how people are going to behave in the future
Apple you know has a position with consumers where they're paying
you know maybe they'll pay 1500 bucks or whatever it may be for a phone
and these same people pay 35 000 for having a second car and if they had to give up a second car
or give up their iPhone they'd give up their second car I mean it's it's an extraordinary probably we don't have
anything like that that we own 100 of but we're very very very happy to have
5.6 or whatever it may be percent and we're delighted every tenth of a percent
that goes up it's like adding a hundred million dollars to our earnings I mean our share of the earnings and they use
their earnings to buy out our partners which we're glad to see them sell out too I am
personally skeptical of some of the hype that has gone into artificial intelligence
I think old-fashioned intelligence works pretty well they can do all kinds of things and
when something can do all kinds of things I get a little bit worried and uh
because I know we won't be able to uninvent it there's been some tension in the economic relationship of
United States and China I think that that tension
has been wrongly created on both sides I think we're equally guilty of being
stupid there's one thing we should do let's get along with China and we should have a lot of free trade
with China in our mutual interest
and I just can't imagine
it's just so obvious there's so much safety and so much creativity that's
possible think what Apple has done by engaging intimate
partnership with China as a big supplier yeah it's been good for apple and good
for China that's the kind of business we'll be doing with China and more of it
and with everything that increases the tension between the two companies is stupid stupid
you know at least stopped on each side and each side ought to respond to the
other side's stupidity with reciprocal kindness the world changing doesn't or
new things coming along don't take away the opportunities what gives you opportunities is other people doing dumb
things and it's a
and I would say that
well the 58 years we've been running Berkshire I would say there's been a great increase
uh in the number of people doing dumb things and they do big dumb things and
the reason they do it to some extent is because they they can get money from other people so much easier
than when we started we will not be making any offer for control of
but we love the shares we have and we may or may not
own more in the future but but we certainly have warrants on on which we
got as part of the original deal on a very substantial amount of stock at around 59 a share and
and those ones last a long time and I'm glad we have them I think over Elon Musk
over estimates himself but he has a he is very talented so he's he's over
yesterday meeting somebody who doesn't need to overestimate to be very talented you would not have achieved
what he has in life if he hadn't tried for unreasonably extreme objectives
he likes taking on the impossible job and doing it we're different and I are looking for
the easy job that we can identify yeah if we can do it playing Tic-Tac-Toe
we'll do it you know I mean we have a totally different way of going into the hallway yeah but we don't want
to compete with Elon and a lot of things I mean you know we don't want that much failure