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WELCOME TO THE YAHOO FINANCE
EXCLUSIVE LIVE STREAM, THE 2021
BERKSHIRE HATHAWAY ANNUAL
SHAREHOLDERS MEETING.
IT'S THE MOST WATCHED BUSINESS
EVENT OF THE YEAR AND YOU HAVE A
FRONT ROW SEAT.
ONE OF THE MOST SUCCESSFUL
INVESTORS EVER, BERKSHIRE
HATHAWAY CHAIRMAN AND CEO WARREN
BUFFETT AND VICE CHAIRMAN
CHARLIE MUNGER ARE SET TO GIVE
US THEIR UNIQUE TAKE ON AN
INCREDIBLE YEAR.
>> YOU CAN BET ON AMERICA, BUT
YOU'RE GOING TO HAVE TO BE
CAREFUL ABOUT HOW YOU BET.
>> A COVID CRISIS, A BRUTAL
RECESSION, AN UNPRECEDENTED
GOVERNMENT STIMULUS FEEDING INTO
THIS RAGING BULL MARKET.
HEAR WHAT THEY'LL SAY ABOUT THE
BITCOIN BOOM AND THE MEME STOCKS
LED BY THE REDDIT ARMY THAT BLEW
UP THE BALANCE OF POWER ON WALL
STREET.
A ONCE IN A LIFETIME OPPORTUNITY
FOR INVESTORS WILLING TO STOMACH
IT ALL.
>> IF YOU CAN'T HANDLE IT
PSYCHOLOGICALLY.
>> WHAT'S NEXT FOR BUFFETT,
BERKSHIRE, THE MARKET AND YOUR
MONEY, JOIN US FOR YAHOO
FINANCE'S EXCLUSIVE COVERAGE OF
THE BERKSHIRE HATHAWAY ANNUAL
SHAREHOLDERS MEETING.
>> HELLO AND WELCOME TO YAHOO
FINANCE'S EXCLUSIVE BROADCAST OF
THE 2021 BERKSHIRE HATHAWAY
ANNUAL SHAREHOLDERS MEETING
SPONSORED BY YAHOO!.
EXCUSE ME, SPONSORED BY MOMO.
I'M ANDY SERWER, EDITOR IN CHIEF
OF YAHOO! FINANCE COMING AT YOU
FROM LOS ANGELES.
BEHIND ME IS WARREN BUFFETT AND
CHARLIE MUNGER WHO WILL APPEAR
IN ONE HOUR SPEAKING TO
INVESTORS ABOUT BERKSHIRE'S
BUSINESS, THE STOCK MARKET AND
THE HEALTH OF THE U.S. ECONOMY.
THERE'S SO MUCH TO TALK ABOUT
TODAY.
THERE WILL BE QUESTIONS ABOUT
THE BUSINESS ITSELF, SUCCESSION,
THE REUNION OF CHARLIE MUNGER
AND WARREN BUFFETT AND
SHAREHOLDER PROPOSALS ABOUT
CLIMATE CHANGE, DIVERSITY AND
MORE.
TO DISCUSS A ALL OF THIS, LET ME
BRING IN OUR PANEL.
MILES, LET ME START WITH YOU.
THE COMPANY JUST ANNOUNCED
EARNINGS THIS MORNING.
BREAK IT DOWN FOR US.
>> YEAH, I MEAN, THIS IS AN
ANNUAL MEETING.
WE DO HAVE FIRST QUARTER RESULTS
OUT FROM BERKSHIRE.
THE TOP LINE THAT WE WOULD
TRADITIONALLY LOOK AT WE SEE
HERE ON OUR GRAPHIC, $64.6
BILLION IN REVENUE FROM THE
BERKSHIRE HATHAWAY EMPIRE.
INVESTMENT GAINS, $5.7 BILLION.
I'M SURE WE'LL HEAR FROM WARREN
AND CHARLIE A LOT ABOUT THAT
INVESTMENT PORTFOLIO, THE
ACCOUNTING CHANGE THAT BERKSHIRE
AND ALL COMPANIES ARE REQUIRED
TO GO THROUGH A COUPLE OF YEARS
AGO.
OPERATING PROFITS, JUST OVER $7
BILLION IN THE FIRST QUARTER.
THE COMPANY PROVIDED A LITTLE
BIT OF COLOR THAT I DO WANT TO
CALL OUT IN ITS UTILITIES
BUSINESS, EARNINGS UP 20%.
WE ARE LACKING SOME COVID
COMPARABLES AND WE'VE SEEN THAT
THROUGHOUT THE LAST COUPLE OF
WEEKS.
THEN IN ITS MANUFACTURING
SERVICE AND RETAILING BUSINESSES
THOSE EARNINGS WERE UP JUST
UNDER 30%, 28.5% DURING THE
FIRST QUARTER.
WE HEAR SO OFTEN FROM MAJOR
CORPORATIONS ABOUT THE WAY THAT
THE PANDEMIC RECOVERY OR WE
SHOULD JUST SAY THE RECOVERY OUT
OF THE PANDEMIC-INDUCED
RECESSION IS HELPING THEIR
BUSINESSES.
IT SEEMS SO FAR LIKE BERKSHIRE
HATHAWAY IS NO EXCEPTION.
JULIA LaROCHE, SOMETHING ELSE
WE'VE SEEN IN THIS EARNINGS
RELEASE AND WE KNOW WE'RE GOING
TO HEAR FROM WARREN AND CHARLIE
ABOUT IS THE CASH AND THE BUY
BACK PROGRAM THAT CONTINUED IN
THE
>> THAT'S RIGHT, MYLES.
I'M SURE WE'LL GET SOME COLOR ON
THOSE SHARE REPURCHASES AND
SHARE REPURCHASES HITTING A
RECORD IN 2020 AND CONTINUING IN
THE FIRST QUARTER.
SOMETHING SHAREHOLDERS ALWAYS
LOOK TOWARD.
ONE OF THE THINGS THAT I WILL
CERT
CERTAINLY BE FOLLOWING IS THE
INCREDIBLE FRIENDS.
WHEN YOU TALK TO WARREN BUFFETT,
HE TALKS ABOUT HOW CHARLIE
MUNGER MADE HIM A, QUOTE, BETTER
PERSON.
WHILE BUFFETT IS OFTEN VIEWED AS
THE PUBLIC FACE OF BERKSHIRE
HATHAWAY, THE COMPANY AS WE KNOW
IT TODAY WAS ACTUALLY BUILT IN
THE BLUEPRINT OF CHARLIE MUNGER,
WHO IS ALSO -- YOU KNOW, DOES
DABBLE IN ARCHITECTURE.
I THINK THIS WILL BE A MOMENT
WHERE THERE WILL BE A LOT MORE
ATTENTION ON MUNGER.
HE'S 97 YEARS OLD.
A POLY MATH INVESTOR WITH
KNOWLEDGE, HUMOR, WITT.
ALWAYS SOME COLORFUL LANGUAGE AT
THE BERKSHIRE MEETING.
IT IS BEING HELD IN LOS ANGELES
THIS YEAR.
BECAUSE OF THE PANDEMIC BUFFETT
WAS IN THE CHI HELP ARENA AND
WITHOUT HIS LONG-TIME COLLEAGUE.
WE HAD A GREAT COLUMN FROM ANDY
SERWER AND AKIKO, I KNOW YOU'LL
BE MONITORING THAT CASH PILE
THAT SEEMS TO BE GROWING.
I KNOW IT GREW IN THE QUARTER.
IF WE'LL GET ANY COLOR FROM THE
INVESTORS ON WHAT THEY'LL DO
WITH THAT.
>> YEAH, NO QUESTION ABOUT THAT.
MYLES JUST ELUDED TO IT.
WE'RE TALKING ABOUT $155.4
BILLION IN CASH IN THE END OF
THE FIRST QUARTER.
WE'VE HEARD WARREN BUFFETT TAUT
THIS ACQUISITION.
LAST YEAR AT THE MEETING HE SAID
HE HASN'T DONE ANYTHING YET.
HE HASN'T FOUND ANYTHING THAT IS
THAT ATTRACTIVE.
I'D BE CURIOUS TO SEE IF HE'S
GOT HIS EYE ON SOMETHING NOW, IF
HIS THOUGHTS HAVE CHANGED ON
THAT FRONT.
IT WILL BE ALSO INTERESTING TO
SEE HOW HE'S VIEWING THE MARKET
CONDITIONS RIGHT NOW.
REMEMBER A YEAR AGO HE MADE SOME
HEADLINES WHEN HE EXITED THOSE
BIG POSITIONS IN AIRLINES,
UNITED, DELTA, SOUTHWEST,
AMERICAN.
SINCE THEN WE HAVE SEEN SOME OF
THOSE STOCKS RALLY TRIPLE DIGITS
SINCE THE PANDEMIC LOW.
IS HE MAYBE RECONSIDERING SOME
OF THOSE POSITIONS?
SOMETHING TO THINK ABOUT.
AND THEN FINALLY SOMETHING THAT
ANDY JUST ALLUDED TO IN THE
OPENING IS HOW HE'S LOOKING AT
WHAT WE'VE HEARD OVER AND OVER
AS THE FROTH IN THE MARKET.
BITCOIN CERTAINLY I IMAGINE WILL
COME UP AS A POINT OF DISCUSSION
HERE.
WE'VE HEARD WARREN BUFFETT
DISMISS THEM, THE CRYPTOCURRENCY
AS HAVING NO VALUE BEFORE,
CALLING IT RAT POISON SQUARED.
CHARLIE MUNGER CERTAINLY NO FAN
SAYING PURSUIT OF THE UNEATABLE
BY THE UNSPEAKABLE.
WE'RE SITTING HERE TALKING ABOUT
BITCOIN RALLYING, WHAT, 90% SO
FAR THIS YEAR.
IT'S REQUES'S GOING TO BE INTER
SEE WHAT HE HAS TO SAY.
WE HAVE CAR REN WALLACE,
MORNINGSTAR DIRECTOR OF INVESTOR
EDUCATION.
KAREN, YOU'VE HEARD US PREVIEW
OF WHAT COULD COME UP
POTENTIALLY AS QUESTIONS IN THIS
SHAREHOLDER MEETING.
WHAT SPECIFICALLY ARE YOU GOING
TO BE LOOKING FOR?
>> A LOT OF THE THINGS YOU'RE
MENTIONING HAVE BEEN ON MY MIND
AS WELL.
THE FEAR OF MISSING OUT.
SPECULATION.
YOU KNOW, BUFFETT AND MUNGER
DON'T REALLY LIKE TO SPECULATE
WITH THEIR SHAREHOLDERS MONEY.
THE THING ABOUT WARREN BUFFETT,
HE DIDN'T STRIKE OIL OR DEVELOP
SOFTWARE AND INHERIT A BIG PILE
OF MONEY, HE BUILT HIS FORTUNE
BY PICKING SOLID BUSINESSES THAT
GENERATE A LOT OF CASH AND HE
BELIEVES WILL CONTINUE TO DO
WELL.
YOU KNOW, HE TAKES THE CASH FROM
THAT.
HE REINVESTS.
HE HOLDS ON FOR THE LONG TERM.
HE LOOKS FOR NEW OPPORTUNITIES.
HE WANTS BUSINESSES THAT HE CAN
UNDERSTAND, WHICH IS A BIG PART
OF IT, THEN YOU CAN MORE
ACCURATELY VALUE A BUSINESS IF
YOU UNDERSTAND WHAT IT DOES.
HE WANTS BUSINESSES THAT HAVE
GOOD LONG-TERM PROSPECTS.
FEAR OF MISSING OUT IS HIS
THING.
HE WANTS BUSINESSES RUN BY
HONEST AND COMPETENT PEOPLE
BECAUSE THIS IS A LONG-TERM
RELATIONSHIP AND HE WANTS ALL OF
THAT AT AN ATTRACTIVE PRICE
WHICH AS YOU'RE BOTH ALLUDING
TO, THERE'S NOT TOO MANY
OPPORTUNITIES OUT THERE.
YOU KNOW, HIGH QUALITY
BUSINESSES LIKE THIS DON'T GO ON
SALE VERY OFTEN BUT BUFFETT IS A
PATIENT -- HE'S A PATIENT
INVESTOR AND HE CAN WAIT FOR
EXACTLY THE RIGHT PITCH.
TO INCREASE HIS SUCCESS RATE HE
DOES LOOK FOR COMPANIES THAT ARE
SELLING FOR LESS THAN HIS
ESTIMATE OF THEIR FAIR VALUE
WHICH GIVES HIM SOME LEEWAY IN
CASE HIS ESTIMATE ISN'T EXACTLY
RIGHT.
BUT ANOTHER REALLY IMPORTANT
PART OF HIS STRATEGY IS LOOKING
FOR COMPANIES THAT HAVE
COMPETITIVE ADVANTAGES OR WHAT
HE REFERS TO AS ECONOMIC MOATS,
MOATS AROUND THE CASTLE
PROTECTING THE CASTLE AND THE
BUSINESS.
>> KAREN, LET ME ASK YOU ABOUT
REPORTS THAT INDICATE THAT SOME
SHAREHOLDERS MIGHT BE A LITTLE
DISGRUNTLED ABOUT THE
PERFORMANCE OF THE BERKSHIRE
STOCK AND THE DIVERSITY AND
INCLUSION, CLIMATE CHANGE,
DIRECTORS AND COMPENSATION.
WHAT DO YOU MAKE OF THAT?
>> WELL, YOU KNOW, HE HAS TRIED
TO KIND OF PUT THAT INTO THE
HANDS OF THE COMPANY MANAGEMENT
BEFORE.
IT'LL BE INTERESTING TO SEE HOW
THAT QUESTION IS ANSWERED
BECAUSE I THINK A LOT MORE
PRESSURE, OBVIOUSLY I HAVEN'T
BEEN TO THE SHAREHOLDER MEETING
PERSONALLY SINCE 2019, BUT I
REMEMBER A LOT MORE QUESTIONS
COMING UP ABOUT THAT.
THAT'S ANSWERED BECAUSE I REALLY
DO KIND OF THINK THAT HIS VIEW
IS THAT, YOU KNOW, THE COMPANY
MANAGERS KIND OF ALLOCATE THEIR
OWN CAPITAL AND THEY MAKE THEIR
DECISIONS FOR THEMSELVES, BUT IT
IS BECOMING SOMETHING MORE.
>> WHY DO YOU THINK THIS IS SUCH
A PARTICULARLY IMPORTANT MEETING
FOR THEM TO PAY ATTENTION TO?
>> WELL, YOU KNOW, THE CORNER
STONE OF OUR EQUITY VALUATION AT
MORNINGSTAR, WE BORROWED A LOT
OF BUFFETT'S WISDOM.
YOU KNOW, WE LOOK FOR COMPANIES
THAT -- YOU KNOW, SO WHEN A
COMPANY'S KIND OF -- WHEN ITS
RETURNS ON CAPITAL ARE EXCEEDING
COST ON CAPITAL FOR A LONG TIME,
THEY'RE DOING SOMETHING RIGHT,
RIGHT?
THE BUSINESSES OFTEN HAVE SOME
SORT OF COMPETITIVE ADVANTAGE,
SUSTAINABLE, OR THAT'S ENDURING,
AND BUFFETT REFERS TO THAT AS AN
ECONOMIC MOAT.
I THINK SEARCHING FOR THESE
MOATS IS MORE IMPORTANT THAN
EVER.
ESPECIALLY IF YOU LOOK AT THE
KINDS OF BUSINESS THAT
BUFFETT -- THE KINDS OF
BUSINESSES THAT BUFFETT IS
INTERESTED IN INVESTING IN,
THEY'RE CASH POWERHOUSES, THINGS
LIKE INSURANCE, BANKING,
CONSUMER PRODUCTS,
PHARMACEUTICALS.
YOU KNOW, THESE ARE THINGS THAT
KIND OF HOLD UP WELL, YOU KNOW,
AND THERE'S A LOT OF OPPORTUNITY
FOR HIM TO REINVEST IN THE
BUSINESS, TO BUY BACK SHARES,
TO, YOU KNOW, INVEST IN THE
STOCK AND BOND MARKETS AS WELL,
EVEN IN THE ABSENCE OF, YOU
KNOW, A BIG, ATTRACTIVE
ACQUISITION THAT COULD MOVE THE
NEEDLE.
YOU KNOW, IT'S HARD FOR BUFFETT
TO FIND -- HARD FOR BERKSHIRE TO
FIND SOMETHING LARGE ENOUGH FOR
IT TO MOVE THE NEEDLE IN TERMS
OF OUR EARNINGS, YOU KNOW, IN
TERMS OF MAKING A DIFFERENCE ON
THE OVERALL EARNINGS OF THE
COMPANY.
>> KAREN, I'M CURIOUS ALSO ABOUT
THE STRUCTURE OF BERKSHIRE.
AS A CONGLOMERATE, IT'S OUT
MOATED.
NEW INVESTORS DON'T REALIZE THE
HISTORY OF THE CONGLOMERATE
STRUCTURE.
BUFFETT WROTE ABOUT THAT IN THIS
YEAR'S ANNUAL LETTER.
I'M WONDERING IF YOU WERE
THINKING ABOUT BERKSHIRE AS THE
LAST OF ITS KIND OFR DO SOME OF
THE BIG COMPANIES TRY TO EMULATE
THAT STRUCTURE AS THEY MATURE IN
THEIR LIFE CYCLE?
>> YOU KNOW, IT'S INTERESTING
BECAUSE IT'S A COLLECTION --
IT'S SORT OF A COLLECTION OF
MOATY BUSINESSES.
OUR ANALYST GREG WARREN TALKS
ABOUT INSURANCE ISN'T THE KIND
OF BUSINESS THAT HAS A MOAT,
IT'S A COMMODITY BUSINESS.
THEY OWN A LOT OF REALLY GOOD,
HIGH QUALITY INSURANCE NAMES.
THEY DO ALSO INVEST IN A LOT OF
BUSINESSES THAT ARE INTANGIBLE
ASSETS, ONE OF THE MOAT SOURCES.
THEY OWN THINGS LIKE J&J MERCK,
BRISTOL-MYERS.
APPLE AND COKE WITH THEIR STRONG
BRAND LOYALTY.
THOSE ARE ALSO EXAMPLES OF
INTANGIBLE ASSETS.
THEY ALSO HAVE THINGS LIKE
RAILROADS, PIPE LINES THAT
BENEFIT FROM EFFICIENT SCALE.
THERE MIGHT ONLY BE ONE PROVIDER
IN A CERTAIN AREA THAT IS
PROVIDING THE SERVICE SO, YOU
KNOW, THE NICHE MARKET IS
EFFECTIVELY SERVED BY A FEW
COMPANIES.
THERE'S ALSO A NETWORK, EFFECT.
AMERICAN EXPRESS HAS A CLOSED
LOOP OF MERCHANTS, CARDHOLDERS.
A LOT OF PEOPLE USING THE
SERVICE BECOMES MORE VALUABLE TO
PEOPLE AS MORE PEOPLE USE IT.
SWITCHING COSTS.
LIKE WHEN IT WOULD BECOME MORE
EXPENSIVE TO STOP USING A
PRODUCT OR IT'S A BIG PAIN, A
HASSLE, SOME OF THE BIG BANKS
THAT BERKSHIRE HAS HAS THAT AND
THEY HAVE COST ADVANTAGES AND
THEY CAN UNDERCUT THEIR
COMPETITORS AND STILL EARN A
PROFIT.
SO, YOU KNOW, BERKSHIRE HAS A
COLLECTION OF THESE BUSINESSES
AND IT'S A DIVERSIFIED BUSINESS.
IT HELPS IT GOING IN A LOT OF
DIFFERENT MARKETS.
IT'S A UNIQUE SORT OF COMPANY IN
THAT WAY.
YOU KNOW, KIND OF BUILT UP THAT
WAY AS A STOCK PICKER'S
CONGLOMERATE, YOU KNOW?
>> ALL RIGHT.
GREAT STUFF THERE, CAR REN
WALLACE, MORNINGSTAR.
DIRECTOR OF INVESTOR EDUCATION.
THANK YOU VERY MUCH.
COMING UP, HOW TO LIVE RICHER,
WISER, HAPPIER.
WHO DOESN'T WANT TO DO THAT?
WE'LL TALK TO AUTHOR WILLIAM
GREENE AND WHAT HE LEARNED FROM
THE LIFE AND LEGACY OF CHARLIE
MUNGER.
BACK IN TWO MINUTES.
>>> YAHOO FINANCE'S LIVE
COVERAGE IS BROUGHT TO YOU BY
MOOMOO.
A ONE STOP SMART TRADING
PLATFORM OF STOCKS, OPTIONS,
ETFs AND MORE.
>>> YAHOO! FINANCE'S LIVE
COVERAGE OF THE BERKSHIRE
HATHAWAY ANNUAL SHAREHOLDER
MEETING IS BROUGHT TO YOU BY
ONE STOP TRADING PLATFORM OF
STOCKS, OPTIONS, AND MORE.
>> WELCOME BACK TO YAHOO!
FINANCE.
WE ARE NOW JUST 45 MINUTES AWAY
FROM THE START OF THE BERKSHIRE
HATHAWAY ANNUAL SHAREHOLDERS
MEETING IN LOS ANGELES THIS
YEAR.
JOINING US NOW IS WILLIAM GREEN,
AUTHOR OF A NEW BOOK "RICHER,
WISER, AND HAPPIER HOW THE
WORLD'S INVESTORS WIN IN THE
MARKETS AND LIFE."
ONE OF THE INVESTORS YOU DID
SPEAK TO FOR THIS BOOK, CHARLIE
MUNGER.
I WONDER IF WE START WITH THE
BIG TAKE AWAY FROM YOU.
WHAT YOU TOOK AWAY FROM YOUR
CONVERSATION WITH HIM IN TERMS
OF THE KEY TO BUILDING WEALTH.
>> TO ME, ONE OF THE MOST
FASCINATING THINGS ABOUT CHARLIE
MUNGER, YOU HAVE ONE OF THE
GREATEST GUYS ALIVE.
HE CAN SEE THE ESSENCE OF WHAT
ANY SUBJECT IS ABOUT BEFORE
YOU'VE EVEN FINISHED THE
SENTENCE AND YET WHAT CHARLIE
DOES THAT I THINK IS
EXTRAORDINARILY HELPFUL FOR ANY
OF US, BOTH IN INVESTING AND
LIFE, IS HE FOCUSES ON REDUCING
STANDARD STUPIDITIES.
IF YOU REALLY WANT TO SUCCEED,
BOTH AS AN INVESTOR AND IN LIFE,
YOU WANT TO FOCUS ON BEING N
NON-IDIOTIC.
HE COLLECTS ABSURD, DUMB,
FOOLISH THINGS PEOPLE DO AND
THEN HE ASKS HIMSELF, WELL, WHAT
CAUSED THOSE THINGS?
WHAT CAUSED THIS DISASTER?
THEN HE SAYS, LET ME FOCUS ON
NOT DOING THAT.
IF YOU THINK ABOUT THIS AS A
TAKE AWAY FOR ANY INVESTOR,
THINK ABOUT THE WAYS MOST OF US
MESS UP AS INVESTORS.
WE'RE IMPATIENT.
WE TRY TO TIME THE MARKET.
WE SPECULATE ON THINGS WE DON'T
UNDERSTAND.
WE TRADE IN AND OUT.
WE'RE MUCH TOO EMOTIONAL.
WE GET CAUGHT UP IN FACTS.
HERE YOU HAVE CHARLIE AND WARREN
BASICALLY JUST AVOIDING ALL OF
THOSE STANDARD STUPIDITIES.
IT'S ACTUALLY EASIER TO AVOID
BEING STUPID THAN TO BE SMART.
I THOUGHT THAT WAS A WONDERFUL
PARADOX THAT YOU HAVE THE
SMARTEST GIA LIVE JUST TRYING TO
BE SYSTEMATICALLY LESS STUPID.
>> WILLIAM, I WANT TO FOLLOW-UP
ON THAT POINT.
WHEN CHARLIE AND WARREN TALK, IT
SOUNDS SO EASY AND YOU LISTEN TO
IT AND YOU GO, YUP, I'M GOING TO
DO THAT, I'M GOING TO DO THAT,
I'M GOING TO DO THAT AND THEN
YOU TRY TO DO IT, YOU CAN'T DO
IT.
WHY IS THERE THIS GAP?
>> CHARLIE ALWAYS SAYS ABOUT
INVESTING, IT'S SIMPLE, NOT
EASY.
ONE OF THE THINGS YOU HAVE TO
UNDERSTAND, YOU HAVE TO START BY
SAYING, WELL, THERE ARE THESE
PRINCIPLES BE THAT I NEED TO
UNDERSTAND ABOUT HOW INVESTING
WORKS.
LIKE, FOR EXAMPLE, YOU WANT TO
BE PATIENT.
YOU WANT TO BUY ASSETS WHEN
THEY'RE WORTH CONSIDERABLY MORE
THAN THE MARKET THINKS THEY'RE
WORTH.
SO THERE'S A MARGIN OF SAFETY
THERE.
THEN THINK ABOUT THE DIFFICULTY
OF ACTUALLY BUYING THINGS THAT
ARE UNPOPULAR, THAT EVERYONE
ELSE THINKS ARE UNDER VALUED --
THAT EVERYONE ELSE THINKS ARE
ACTUALLY CHEAP BECAUSE THEY
DESERVE TO BE CHEAP.
I THINK THERE'S A TREMENDOUS
PSYCHOLOGICAL PRESSURE.
WHEN I LOOK AT CHARLIE AND
WARREN, I THINK ONE OF THEIR
GREATEST ADVANTAGES IS JUST THAT
THEY'RE ENTIRELY UNEMOTIONAL.
THEY'RE NOT REALLY SUCKED UP BY
THE EMOTIONS OF THE CROWD.
WHEN I WENT TO INTERVIEW CHARLIE
I SAID TO HIM DURING THE MARKET
CRASH IN 2009 WHEN YOU WERE
BUYING THINGS LIKE WELLS FARGO
AT THE BOTTOM TICK OF THE CRASH
IN MARCH 2009, DID YOU FEEL
THESE EMOTIONS, LIKE FEAR,
ANXIETY, WORRY?
HE SAID, NO, I JUST DIDN'T FEEL
THEM AT ALL.
I SAID, DOES WARREN FEEL IT?
HE SAID, NO, HE'S WIRED EXACTLY
THE SAME WAY.
SO I THINK THERE'S A TREMENDOUS
TEMPERAMENTAL ADVANTAGE, WHICH
IS BECAUSE THEY DON'T FEEL THEM
AND EVERYONE IS SAYING, I CAN'T
BELIEVE THEY HAVE $145 BILLION
IN CASH AND THEY'RE NOT DOING
ANYTHING, WHY DON'T THEY DO
SOMETHING?
THEY'RE JUST SUBLIMELY
INDIFFERENT TO THE CRIES FROM
THE CROWD.
WARREN JUST SAID, WE'RE NOT PAID
FOR ACTIVITY, WE'RE PAID FOR
BEING RIGHT.
>> AND YET TO ANDY'S POINT,
EASIER SAID THAN DONE, TO BREAK
AWAY FROM ALL THE NOISE THAT'S
OUT THERE.
THE PRINCIPLE -- THE GUIDING
PRINCIPLES WHEN YOU THINK ABOUT
WARREN BUFFETT AND CHARLIE
MUNGER, EXTREME PATIENCE AND
SELECTIVENESS.
HOW DO INVESTORS AT HOME APPLY
THAT THOUGH TO THEIR PORTFOLIO?
>> CHARLIE HAS THIS BEAUTIFUL
IMAGE THAT I TAKE VERY
SERIOUSLY.
HE SAYS, YOU SHOULD BE LIKE A
SPEAR FISHERMAN.
YOU SHOULD BE STANDING BY THE
SIDE OF THE STREAM MOST OF THE
TIME DOING ABSOLUTELY NOTHING.
ONCE IN A WHILE A FAT, JUICY
SALMON COMES BY AND YOU SPEAR
IT.
THEN IT MAY BE FOR THE NEXT SIX
MONTHS NOTHING COMES ALONG.
ONE OF THE GREAT TAKE AWAYS IS
IT DOESN'T ALWAYS HELP YOU.
IF PRICE IS BEING PRICED IN A
WAY THAT IS NOT PARTICULARLY
ATTRACTIVE WHICH IS GENERALLY
SPEAKING THE CASE AT THE MOMENT,
YOU WANT TO TREAD WITH EXTREME
CAUTION.
THEN AT THE MOMENTS WHERE
SUDDENLY THE BIPARTISAN MARKET
GOES THE OTHER DIRECTION, IS
GOING NUTS, IS PRESENTING YOU
WITH LOTS OF FAT, JUICY SALMONS,
THAT'S WHEN YOU WANT TO STRIKE
WITH WHAT CHARLIE CALLS
GUMPTION.
SET YOURSELF UP COUNTER
CULTURALLY.
WHILE EVERYONE ELSE IS
HYPERACTIVE SAYING I MUST DO
SOMETHING, BITCOIN IS SURGING,
TESLA IS SURGING, I MUST ACT.
HERE ARE CHARLIE AND WARREN
ACTING CALMLY.
SPEAR FISHERMEN, HAPPY TO WAIT
BY THE STREAM, FISH AND TWIDDLE
THEIR THUMBS.
THEY'VE SET THEIR LINES UP IN A
WAY AS HEROICALLY INACTIVE.
THEY'RE PLAYING BRIDGE, READING
FOR HOURS A DAY, THEY'RE
FISHING, GOLFING, CHATTING WITH
FRIENDS AND JUST READING TONS OF
ANNUAL REPORTS AND TONS OF
BIOGRAPHIES.
SO I THINK YOU WANT TO ACTUALLY
TRY TO STRUCTURE A LIFE IN A WAY
THAT ENABLES YOU TO BE MUCH MORE
PATIENT SO THAT YOU'RE NOT
GETTING SUCKED INTO THE HYPER
ACTIVITY OF THE MARKET.
>> I LIKE THAT IMAGE THAT YOU
JUST PUT OUT THERE, WILLIAM, TWO
FISHERMEN SPEAR FISHING ON THE
SIDE OF THE RIVER.
BUT YOU TALK ABOUT THE TWO OF
THEM TOGETHER, HOW IMPORTANT IS
THAT PARTNERSHIP, DO YOU THINK?
JULIA LaROCHE IS TALKING ABOUT
THEM BEING REUNITED THIS YEAR.
HOW IMPORTANT IS THAT TO ACHIEVE
INVESTING RESULTS, TO HAVE
SOMEONE TO BOUNCE SOMETHING OFF
OF LIKE THAT.
CHARLIE TALKS ABOUT HAPPENING
OUT WITH THE EMINENT DEAD.
ONE THAT HE HANGS OUT WITH IS
DARWIN.
WHAT HE LEARNED FROM DARWIN IS
DARWIN WAS SEEKING DISCONFIRMING
EVIDENCE.
HE WASN'T TRYING TO SUPPORT HIS
RELIGIOUS VIEWS WITH HIS
INVESTIGATIONS INTO EVOLUTION.
HE WAS TRYING TO DESTROY HIS OWN
MOST CHERISHED BELIEFS IN A
SENSE.
I THINK PART OF WHAT THIS
RELATIONSHIP BETWEEN CHARLIE AND
WARREN ENABLES THEM TO DO IS TO
TEST EACH OTHER'S BELIEFS.
WARREN FAMOUSLY HAS DESCRIBED
CHARLIE AS THE A BOMB MIN NABL
NO MAN.
TO HAVE THIS MECHANISM,
STRUCTURE WHERE SOMEBODY IS
CHALLENGING YOUR BELIEFS AND IS
SMART ENOUGH TO BE ABLE TO
CHALLENGE YOU, I THINK THAT'S
HUGELY POWERFUL.
WE'RE NOT GOING TO HAVE THAT
OPPORTUNITY.
WE CAN BE CONSTANTLY SEARCHING
FOR DISCONFIRMING INFORMATION.
IF YOU'RE POLITICALLY LIBERAL
YOU READ "THE WALL STREET
JOURNAL" OP ED PAGE.
THIS IS SOMETHING THAT CHARLIE
VERY CONSCIOUSLY DOES.
I THINK IT'S INTERESTING THAT
YOU HAVE WARREN AS A DEMOCRAT,
CHARLIE AS A REPUBLICAN, THEY'VE
HAD THIS KIND OF WONDERFUL
RELATIONSHIP WHERE THEY'RE
ACTUALLY SEEKING OUT VIEWS THAT
ARE DIFFERENT FROM THEIR OWN AND
THEN AT THE SAME TIME I THINK
TREATING EACH OTHER WITH
TREMENDOUS DECENCY AND KINDNESS.
I THINK THAT'S SOMETHING WE'RE
ALL EXCITED ABOUT.
IT'S IN A SENSE THE REUNION OF
THIS ODD COUPLE.
ON THE OCCASIONS THAT I'VE BEEN
TO OMAHA FOR THE BERKSHIRE
MEETING, ONE OF THE MOST JOYOUS
AND MEMORABLE THINGS, IT'S
ALMOST LIKE A COMEDY ACT.
IT'S AS IF YOU'RE WATCHING
WALTER MATTOW AND JACK LEMON
WISE CRACKING TOGETHER.
THERE'S SOMETHING ABOUT THAT
PARTNERSHIP AND THEN THE FACT
THEY TREAT THEM.
IT'S ONE OF THE REASONS WE'VE
ALL BEEN COMING BACK YEAR AFTER
YEAR AND WHY WE'RE ALL HAPPY TO
SEE CHARLIE BACK THIS YEAR AFTER
BEING ABSENT LAST YEAR.
>> WILLIAM GREENE, AUTHOR OF
"RICHER, WEISER, HAPPIER."
THANK YOU FOR COMING ON.
I SHOULD MENTION WARREN BUFFETT
HAS JUST COME INTO THE ROOM.
THEY'RE DOING SOME TESTS HERE.
WE'RE HALF AN HOUR AWAY FROM THE
BEGINNING OF THE ANNUAL MEETING.
IN THE MEANTIME, I WANT TO TALK
ABOUT CHOCOLATE.
IT IS THE ULTIMATE COMFORT FOOD.
SALES OF CHOCOLATE WAY, WAY UP.
CANDY SALES HIT A RECORD $44
BILLION LAST YEAR.
THAT'S GREAT FOR C'S CANDIES AND
THE CEO PAT EGAN JOINS US NEXT
HERE.
>>> I'M PLEASED TO BRING TO YOU
ALL THIS CONVERSATION WITH ONE
OF OUR VERY FAVORITE BOOTHS AT
THE BERKSHIRE HATHAWAY ANNUAL
MEETING.
THAT IS SEE'S CANDY.
PAT, SO GREAT TO HAVE YOU JOIN
US.
100th ANNIVERSARY.
I WISH WE COULD BE IN PERSON.
>> I WISH I COULD BE THERE TOO,
JULIA.
THANKS FOR THE OPPORTUNITY.
WE'RE LOOKING FORWARD TO NEXT
YEAR COMING BACK.
OMAHA IS ALWAYS A BIG DEAL FOR
WE'RE GOING TO MISS IT.
HOPEFULLY WE'RE BACK THERE NEXT
YEAR.
>> CERTAINLY HOPE WE'RE BACK
NEXT
WE'RE SO USED TO SEEING TONS OF
CANDY AT THAT BOOTH IN OMAHA.
I THINK A LOT OF FOLKS ARE
INTERESTED, PAT.
HOW HAS BUSINESS BEEN FOR YOU
ALL IN THE LAST YEAR?
>> WELL, I LIKE TO SAY THE LAST
YEAR'S BEEN THE LONGEST DECADE
OF MY LIFE.
WE'VE BEEN THROUGH A LOT.
LAST YEAR IT'S A TALE OF A
COUPLE OF DIFFERENT QUARTERS.
THE FIRST QUARTER WAS
TREMENDOUS.
WE STARTED OFF REALLY HOT AT THE
BEGINNING OF 2020 AND WE ENDED
PRETTY GOOD.
THE SECOND AND THIRD QUARTERS WE
ESSENTIALLY IN THE MIDDLE OF
MARCH WHEN THIS FIRST REALLY
HIT, WE SHUT DOWN ALL OF OUR
STORES IN THE SPAN OF FIVE DAYS.
SO ABOUT 245 STORES WE CLOSED IN
A MATTER OF DAYS AND THEN ABOUT
A WEEK AND A HALF LATER WE
CLOSED OUR eCOMMERCE FULFILLMENT
CENTER DOWN IN SOUTHERN
CALIFORNIA.
FOR A PERIOD OF TIME THERE WE
ESSENTIALLY COMPLETELY STOPPED
AN THE REASON FOR IT WAS WE
OPERATE AND ARE HEADQUARTERED IN
THE BAY AREA.
THAT WAS ONE OF THE FIRST ORDERS
ISSUED NATIONALLY.
AND SO WE RESPECTED AND STOPPED
AND THEN WE JUST -- WE WENT
THROUGH ALL OF THE STATES THAT
WERE SUCCESSIVELY THAT WEEK
SHUTTING DOWN.
SO FROM THAT POINT FORWARD WHAT
WE DID WAS WE JUST SAID WE'RE
NOT GOING TO REOPEN STORES OR
REOPEN OUR PLANTS UNTIL WE CAN
CREATE A SAFE OPERATING
ENVIRONMENT FOR ALL OF OUR
EMPLOYEES.
THAT TOOK A WHILE AND BY THE
TIME WE RESTORED AT THE END OF
THE SUMMER WE SAW CUSTOMERS
COMING BACK IN, BUT FOR THAT
PERIOD OF TIME, IT WAS PRETTY
ROUGH.
>> HOW ABOUT RIGHT NOW, HOW ARE
THINGS FOR YOU ALL?
HOW ARE YOUR STORE REOPENINGS?
I SUPPOSE YOU'RE PROBABLY DOING
A LOT OF BUSINESS ONLINE.
I KNOW AROUND VALENTINE'S DAY I
WAS LOOKING TO ORDER CANDIES FOR
SOME OF THE SPECIAL FOLKS IN MY
LIFE.
HOW ARE THINGS NOW?
>> THANK YOU FOR YOUR BUSINESS,
JULIE.
IT'S GREAT.
WE'RE FULLY BACK, I BELIEVE.
WE'VE HAD OUR BEST JANUARY EVER,
OUR BEST FEBRUARY EVER.
WE JUST COMPLETED OUR BEST FIRST
QUARTER EVER.
AS YOU MENTIONED eCOMMERCE, WE
HAD A GREAT GROWTH LAST YEAR.
WE GREW 70% JUST IN LOOKING AT
TOTAL PACKAGES SHIPPED.
WHAT YOU MIGHT EXPECT WOULD BE
THAT WHEN THE STORES REOPENED,
THAT THAT WOULD TRAIL OFF A
LITTLE BIT.
IT HASN'T.
OUR FIRST QUARTER WE WERE UP
160% OVER THE FIRST QUARTER OF
LAST YEAR.
SO WHAT WE'VE SEEN IS THE
TRAFFIC COMING BACK INTO STORES.
IT'S BEEN GRADUAL, BUT WE'RE
ALMOST BACK TO 100%.
OUR eCOMMERCE, WHICH HAS MORE
THAN DOUBLED, HAS ACTUALLY
STAYED AT THAT LEVEL.
WE'RE JUST FINE WITH IT NOT
COMING BACK TO EARTH.
IT CREATES DIFFERENT OPERATIONAL
CHALLENGES BUT WE'VE DEFINITELY
EXPANDED OUR CUSTOMER BASE.
>> ONE OF THE THINGS THAT'S VERY
INTERESTING ABOUT SEE'S, THE
CUSTOMER SERVICE IN THE STORES.
PAT, YOU COME FROM AN ENERGY
BACKGROUND.
THE LAST TIME WE TALKED TO YOU
WAS AT THE ANNUAL MEETING IN
2019.
YOU WERE A FEW DAYS ON THE JOB,
A COUPLE OF YEARS ON THE JOB.
COMING INTO RETAIL, WHAT HAS
BEEN THE BIGGEST TAKE AWAYS FOR
YOU, SOME OF YOUR BIGGEST
LEARNINGS IN YOUR ROLE?
>> YEAH.
A COUPLE OF THINGS.
AS YOU MENTIONED, OUR FOCUS ON
CUSTOMER SERVICE.
I FEEL SO FORTUNATE, I PINCH
MYSELF THAT OUR PRODUCTS ARE
TREMENDOUS AND CUSTOMER SERVICE
IS AMAZING.
WE WANT TO MAKE SURE THAT WHEN
CUSTOMERS COME INTO OUR STORE,
THAT THEY LEAVE WITH A SMILE AND
THAT THEY'RE HAPPIER THAN WHEN
THEY STARTED.
I LIKE TO SAY, WE SELL JOY.
MY BACKGROUND IN ENERGY IS A
LITTLE DIFFERENT.
NO DOUBT ABOUT IT.
BUT I LEARNED SO MANY GOOD
LESSONS THERE THAT I HOPE HAVE
SERVED US WELL HERE, AND THAT IS
THAT IT'S NOT EASY TO MAKE AN
ENERGY CUSTOMER HAPPY ALL THE
TIME.
WHEN YOU'RE INTERACTING WITH
THEM, IT'S USUALLY ABOUT A BILL
OR YOU'VE HAD AN OUTAGE.
WE TRY TO MAKE BOTH OF THOSE
THINGS AS MINIMAL AS POSSIBLE,
BUT I REALLY WORK VERY HARD WITH
A GREAT TEAM THERE TO FOCUS ON
WHAT DOES THE CUSTOMER NEED?
I WILL SAY THAT IS THE BERKSHIRE
WAY.
THAT'S PART OF WHAT I'M PROUD
ABOUT AND I CAN SEE THE
TRANSITION FROM ENERGY INTO
CANDY, THE COMMON THREAD IS THAT
WE TAKE CARE OF OUR CUSTOMERS
AND SEE'S HAS DONE IT FOR A
CENTURY AND DONE IT TREMENDOUSLY
WELL.
>> WARREN BUFFETT'S MANAGEMENT
STYLE, THE HANDS OFF MANAGEMENT
STYLE FOR THE DIFFERENT
PORTFOLIO COMPANIES.
I IMAGINE WHEN WE THINK ABOUT
BUFFETT, HE OFTEN TALKS ABOUT
WANTING TO BE REMEMBERED AS A
TEACHER, WHAT'S BEEN THE MOST
IMPORTANT LESSON YOU'VE LEARNED
FROM WARREN?
>> INTEGRITY.
I REGULARLY REVIEW HIS QUOTES.
HE'S VERY -- YOU'RE RIGHT, HE'S
HANDS OFF, BUT HE'S VERY
EFFICIENT AND VERY EFFECTIVE IN
CONVEYING THE MESSAGE, WHICH IS
DO THE RIGHT THING.
TAKE CARE OF THE CUSTOMER.
TAKE CARE OF YOUR EMPLOYEES AND
THE RESULTS WILL FOLLOW.
AND I HAD THE GREAT FORTUNE OF
WORKING WITH GREG ABEL IN THE
ENERGY BUSINESS.
HE IS VERY MUCH A DEVOTEE OF
THAT.
JUST LIVING UP TO THAT AND
MAKING SURE THAT WE FOLLOW
THROUGH ON THOSE PRINCIPLES IS
FIRST AND FOREMOST.
AND, YOU KNOW, AS A TEACHER, HE
LEADS BY EXAMPLE ALL THE TIME.
HE'S VERY FOCUSED ON GETTING THE
RIGHT OUTCOMES CERTAINLY FOR OUR
CUSTOMERS.
I THINK HE'S A GREAT CITIZEN OF
THE COUNTRY AND THE WORLD AND A
GREAT LEADER IN THAT REGARD.
KIND OF BOILING IT DOWN TO THE
SIMPLE WHAT ARE THE RESULTS AND
HOW ARE YOU GETTING THERE
WITHOUT GETTING TOO CUTE ABOUT
THINGS AND MAKING SURE YOU'RE
FOCUSED ON THE RIGHT THINGS.
>> WELL, PAT EGAN, CEO OF SEE'S
CANDIES, THANK YOU FOR JOINING
US AHEAD OF THE SHAREHOLDERS
MEETING.
HOPEFULLY WE SEE YOU IN OMAHA IN
2022.
THANK YOU AGAIN.
>> I LOOK FORWARD TO IT.
THANK YOU VERY MUCH.
>>> WE HEAR THAT IN ADDITION TO
THAT ICONIC PEANUT BRITTLE,
WARREN AND CHARLIE WILL HAVE
SEE'S NEWEST PRODUCT CHOCOLATE
COVERED COFFEE BEANS.
>>> UP NEXT, RON OLSON JOINS
ANDY SERWER WITH HIS PREVIEW OF
THE BIG ANNUAL
STAY WITH US.
>>> HELLO.
WELCOME BACK TO THE BERKSHIRE
HATHAWAY ANNUAL SHAREHOLDERS
MEETING 2021.
I'M ANDY SERWER.
I'M HERE WITH RON OLSEN.
RON, GREAT TO SEE YOU.
>> ANDY, GREAT TO SEE YOU.
GREAT TO SEE YOU IN LOS ANGELES.
>> THANK YOU, RON.
>> I -- MY RECOLLECTION IS WE
USUALLY ENCOUNTER EACH OTHER ON
AN AIRPLANE HEADED TO OMAHA AT
THIS TIME OF YEAR.
>> THAT'S RIGHT.
THINGS ARE VERY DIFFERENT.
LET'S JUMP OFF AT THIS POINT.
WHAT ARE YOU LOOKING FOR THIS
YEAR THAT'S DIFFERENT FROM PRIOR
YEARS.
WE HAVE A DIFFERENT GEOGRAPHY.
>> LET ME TELL YOU WHAT I'M
LOOKING FOR THAT'S THE SAME, THE
CHARLIE AND WARREN SHOW.
TO ME, IT'S IRREPLACEABLE AND IT
IS THE DELIGHT AND MOST
MEANINGFUL PART OF THE MEETING.
IN ADDITION, YOU KNOW, IT'S NICE
TO HAVE AN EXCUSE TO BE IN
OMAHA -- I MEAN, BE IN LOS
ANGELES.
I ALSO LOOK FORWARD TO RETURNING
TO OMAHA NEXT YEAR.
HAVING ALL THE PEOPLE AROUND AND
THE FUN THAT WE DO, THESE
VIRTUAL THINGS ARE A GOOD
SUBSTITUTE BUT NOT AS MUCH FUN.
>> RIGHT.
SO THIS YEAR IS A BIT OF A
HYBRID.
NO SHAREHOLDERS, BUT WE DO
HAVE --
>> WELL, A FEW OF US ARE
SHAREHOLDERS.
>> THAT'S RIGHT.
THE DIRECTORS ARE
BASICALLY THIS ROOM RIGHT HERE
IS GOING TO HAVE THE DIRECTORS
IN IT.
YOU CAN SEE THE STAGE, AS IT
WERE, IS UP THERE WHERE WARREN
AND CHARLIE AND I CAN SEE GREG
ABEL IS ALREADY UP THERE.
>> GREG IS THERE, AJIT WILL BE
THERE AND WARREN AND CHARLIE.
THEY'VE GOT A BANK OF CAMERAS IN
FRONT OF THEM AND THERE'S A
PLACE WHERE BECKY QUICK'S GOING
TO BE SITTING OFF SCREEN
PROBABLY BUT, YOU KNOW, IT'S --
IT'S I THINK WORKED OUT VERY,
VERY WELL.
THE COMPANY JUST ANNOUNCED
EARNINGS THIS MORNING.
WHAT DO YOU MAKE OF THOSE AND
WHERE IS THE COMPANY GOING?
>> UP.
THE BIG COMPANIES THAT WARREN
FEATURES IN HIS LETTER EACH
YEAR, YOU KNOW, ENERGY COMPANY,
INSURANCE BUSINESSES AND SO ON,
I MEAN, THEY'RE DOING
SENSATIONAL, JUST SENSATIONAL.
WE HAVE EVERY REASON TO BELIEVE
THAT THAT CLIMB IS GOING TO
CONTINUE.
BY AND LARGE INSURANCE
THROUGHOUT THE PANDEMIC PERIOD
HAS DONE VERY,
AND SO DID THE ENERGY BUSINESS
AND BNSF, THEY HELD UP VERY
WELL.
SOME OF THE RETAIL BUSINESSES,
YOU KNOW, THEY WERE VERY
SERIOUSLY HURT DURING THE
PANDEMIC.
AND THOSE THAT HAD A LOT
INVESTED IN THE MALL ACCESS, I
THINK PARTICULARLY SO.
AND SO THOSE ARE CLIMBING BUT
NOT -- YOU KNOW, THEY'RE NOT OUT
OF THE HOLE.
IT'S GOING TO BE A LONG HAUL, I
THINK, FOR SOME OF THE
BUSINESSES, BUT BY AND LARGE
WE'RE -- I'M VERY, VERY PLEASED
WITH WHAT WE'RE DOING.
>> WHAT IS IT LIKE BEING A
DIRECTOR OF BERKSHIRE HATHAWAY?
HOW OFTEN DO YOU TALK?
HOW OFTEN DOES WARREN BUFFETT
TALK TO YOU GUYS?
WHAT IS THE COMMUNICATION LIKE?
WHAT'S IT LIKE BEHIND THE
SCENES?
>> WELL, WE HAVE BASICALLY TWO
BIG IN-PERSON MEETINGS A YEAR
AND THEN A NUMBER OF OTHER
DIRECTOR MEETINGS DURING THE
COURSE OF THE YEAR OFTEN
DEPENDING UPON PARTICULAR
CIRCUMSTANCES, AN ACQUISITION OR
SOMETHING LIKE THAT.
IN ADDITION TO THAT, I THINK YOU
KNOW, WARREN'S A COMMUNICATOR.
CHARLIE'S A COMMUNICATOR AND, OF
COURSE, WITH CHARLIE, HE'S IN
LOS ANGELES AND HE AND I TALK
OFTEN.
WARREN AND I TEND TO TALK ON
SUNDAYS, AND HE DOES THAT WITH
OTHER DIRECTORS THROUGHOUT THE
YEAR.
HE'S ON THE PHONE WITH THE
MANAGERS ALL THE TIME.
I MEAN -- SO THERE'S A LOT OF
COMMUNICATION IN THIS COMPANY.
COMMUNICATION UP, COMMUNICATION
DOWN.
A LOT OF TRANSPARENCY.
>> SUNDAYS, HUH?
IT SOUNDS LIKE YOU'RE WORKING
SEVEN DAYS A WEEK HERE?
>> ANY TIME YOU'RE TALKING TO
WARREN YOU'RE HAVING FUN.
>> RIGHT.
WE TALKED ABOUT AJIT JAIN AND
GREG ABEL UP THERE ON THE STAGE.
HAVE TO ASK YOU ABOUT
SUCCESSION.
PEOPLE ALWAYS ASK YOU ABOUT
THAT, BUT IS THERE ANYTHING THAT
WE NEED TO KNOW IN THAT
DEPARTMENT?
>> WELL, YOU HAVEN'T MISSED THAT
SUCCESSION QUESTION IN AS I
REMEMBER ABOUT THE LAST FOUR
YEARS WITH ME.
YOU KNOW, PEOPLE TALK ABOUT
SUCCESSION PLANNING, AND I THINK
YOU COULD LOOK AT THE FACT THAT
WE HAVE TWO NEW VICE CHAIR MEN
IN THE LAST FEW YEARS WITH
EXPANDED RESPONSIBILITIES.
AJIT THROUGHOUT THE INSURANCE
BUSINESSES AND GREG THROUGHOUT
THE NON-INSURANCE BUSINESSES.
YOU COULD LOOK ON THAT AS
SUCCESSION PLANNING.
YOU COULD LOOK ON THE -- OUR TWO
GREAT INVESTORS THAT HAVE BEEN
BROUGHT IN, TED AND TODD, AS
ME?
I LIKE TO DESCRIBE IT AS
MANAGEMENT EXTENSION.
THERE'S NO QUESTION THAT THE
ACTIVITIES OF GREG, AJIT, TWO Ts
HAVE GIVEN NEW -- IN MY OPINION,
NEW OPPORTUNITIES FOR WARREN AND
CHARLIE TO CONTINUE DOING WHAT
THEY DO SO WELL AND, YOU KNOW,
GREG DOES A LOT MORE TRAVELING
THAN WARREN DOES THESE DAYS TO
THE RESPECTIVE BUSINESSES.
NOW IF YOU ASK WARREN ANY
QUESTION ABOUT ANY OF THE
BUSINESSES HE'S GOT IT ON THE
TIP OF HIS TONGUE, READING ALL
THE TIME, BUT IN TERMS OF
SHOWING UP FOR THE CELEBRATION
OF A TENTH ANNIVERSARY OF THE
CEO.
FWR
GREG IS THERE -- WE LOST A GREAT
ONE, PAUL ANDREWS FOR TTI, JUST
IN THE LAST FEW WEEKS.
I KNOW WARREN WAS AT THAT
FUNERAL WITH GREG.
IT IS -- IN MY MIND, WHY WOULD
WE WANT TO THROW AWAY THE
LIFETIME OF EXPERIENCE THESE TWO
GUYS HAVE HAD AND BRING TO BEAR
ON EVERY IMPORTANT JUDGMENT THIS
COMPANY MAKES?
SO THERE'S NO REPLACEMENT
TIMETABLE.
EVERY MEETING WE DIRECTORS TALK
ABOUT SUCCESSION.
IF SOMETHING HAPPENED TOMORROW,
WE KNOW EXACTLY WHAT WE'RE GOING
TO DO, BUT THAT'S ABOUT AS FAR
AS I GO WITH THIS QUESTION.
AND I WOULD SAY THIS, YOU KNOW,
LOOK AT HOW -- IN ADDITION TO
THE TWO VICE CHAIRS, THE WAY
THIS COMPANY OPERATES, IT'S
CREATED MANAGEMENT THAT HAVE HAD
THE EXPERIENCE EVER BEING THEIR
OWN BUSINESS BOSSES.
IT'S A GREAT WAY TO GROW TALENT
AS WELL AS GROW THE COMPANY.
>> QUICK LAST QUESTION, RON.
ANYTHING WE SHOULD KNOW ABOUT
THE SHAREHOLDER PROPOSALS THAT
ARE BEING PUT FORTH TODAY?
>> I DON'T THINK ANYTHING THAT
ISN'T IN OUR PROXY.
YOU KNOW, I'M CONFIDENT THAT OUR
SHAREHOLDERS ARE GOING TO BACK
OUR RECOMMENDATIONS BUT, YOU
KNOW, THERE'S -- ALL OF IT IS
BEING PRESENTED, YOU TAKE
CLIMATE CHANGE.
WE TAKE THAT SERIOUSLY.
AND YOU LOOK AT WHAT THE
UTILITIES ARE DOING, YOU LOOK AT
WHAT BANF ARE DOING, WE'VE GOT
LOTS OF EXAMPLES OUT THERE OF US
BECOMING MORE EFFICIENT, ADDING
I THINK TO THE STRENGTH OF OUR
COMPANIES.
AND IT'S -- WE'RE -- I THINK
THEY WILL BE DEFEATED BUT THAT'S
FOR US TO FIND OUT LATER TODAY.
>> RON OLSON, BERKSHIRE HATHAWAY
DIRECTOR.
THANK YOU SO MUCH FOR YOUR TIME.
>> THANK YOU, ANDY.
>>> YAHOO! FINANCE'S COVERAGE OF
THE ANNUAL SHAREHOLDERS MEETING
IS BROUGHT TO YOU BY MOOMOO.
A TRADING PLATFORM OF STOCKS,
OPTIONS, ETFs AND MORE.
>>> WELCOME BACK TO YAHOO!
FINANCE'S EXCLUSIVE COVERAGE OF
THE ANNUAL MEETING.
WE'RE ABOUT TEN MINUTES OUT WHEN
WE EXPECT WARREN BUFFETT AND
CHARLIE MUNGER TO TAKE QUESTIONS
FOR THE NEXT FOUR OR FIVE HOURS
OR SO.
IN THE INTERIM, IN OUR BUILDUP
TO THE COVERAGE, WE'RE TALKING
TO FOLKS ABOUT WHAT THEY WOULD
EXPECT, WHAT THEY'D LIKE TO HEAR
AND WHAT THEY'VE LEARNED FROM
BUFFETT AND MUNGER.
WE HAVE THE FOUNDER OF BROWN
GIRLS DO.
THANK YOU FOR JUMPING ON THIS
MORNING.
I'D LOVE TO START WITH WHAT
YOU'VE LEARNED FROM THESE COUPLE
OF GUYS TALK, NOW THE FIFTH YEAR
YAHOO! FINANCE HAS STREAMED THE
LIVE COVERAGE AND I THINK OPENED
UP, YOU KNOW, THE WORLD OF
WISDOM WE'VE HEARD ABOUT FOR SO
MANY YEARS TO FOLKS AROUND THE
GLOBE.
>> ABSOLUTELY.
THANK YOU FOR HAVING ME.
THERE IS SO MUCH THAT I'VE
LEARNED FROM WARREN BUFFETT AS
WELL AS CHARLIE MUNGER.
FOR ONE, THEY'VE TALKED OVER THE
YEARS TO NOT INVEST WITH YOU'RE
MOTION.
IT'S SO EASY FOR US TO DO THAT.
THERE ARE THOUSANDS OF STOCKS
THAT ARE ON THE MARKET.
WE CAN DEFINITELY FALL INTO WHAT
IS TRENDY.
WHAT ARE THE BUZZ WORDS.
HOWEVER, WHEN IT COMES TO BEING
A SUCCESSFUL INVESTOR, WE HAVE
TO MAKE SURE THAT WE ARE PULLING
OURSELVES AWAY FROM THE CROWD
AND INVESTING IN WHAT WE KNOW
AND WHAT WE HAVE RESEARCHED.
WHAT I'VE LEARNED FROM WARREN
OVER THE YEARS IS TO MAKE SURE
THAT I DO MY RESEARCH, AND IF I
CANNOT UNDERSTAND A BUSINESS,
THEN I MOST DEFINITELY WOULD NOT
INVEST IN IT.
AND WITH THAT BEING SAID,
LOOKING AT STOCKS THAT I BELIEVE
ARE UNDER PRICED BY THE MARKET
AND THE ONES THAT I FEEL AS
THOUGH THE PRICES WILL
EVENTUALLY RISE SIGNIFICANTLY
OVER TIME.
>> BAHIYAH, TELL US ABOUT BROWN
GIRLS DO INVEST.
WHAT IS THAT ORGANIZATION?
>> OH, MY GOODNESS, THANK YOU
FOR ASKING.
BROWN GIRLS DO INVEST IS A
NONPROFIT ORGANIZATION, AND WE
TEACH AFRICAN-AMERICAN WOMEN HOW
TO INVEST IN THE STOCK MARKET,
HOW TO INVEST IN REAL ESTATE AS
WELL AS ACQUIRE MULTIPLE STREAMS
OF INCOME.
WE BASICALLY FOLLOW WHAT WARREN
BUFFETT TEACHES ABOUT, WHICH IS
VALUE INVESTING.
WE MAKE SURE THAT WHEN WE ARE
INVESTING, IT'S FOR A LONG-TERM
STRATEGY AS OPPOSED TO SOMETHING
SHORT TERM.
THERE'S SO MANY PEOPLE WHO WANT
TO MAKE SURE THAT THEY'RE
EARNING MONEY AS QUICKLY AS
POSSIBLE, HOWEVER, WE WANT TO
MAKE SURE THAT PEOPLE WHO
UNDERSTAND THEIR RISK TOLERANCE
BY ASKING A FEW QUESTIONS,
DETERMINING THEIR AGE, AS WELL
AS WHEN THEY'RE GOING TO RETIRE
AND TO UNDERSTAND ONE OF THE
BEST STRATEGIES IS TO HOLD ON AS
WELL AS ADDRESS SOME OF THE
INFLATION THAT IS GOING ON THAT
IS NOT GOING TO BE CONDUCIVE TO
OUR BUYING POWER.
WHEN YOU THINK ABOUT WHAT WARREN
BUFFETT DOES WITH HIS STRATEGY
AS FAR AS BUY AND HOLD AND LOOK
AT OVER THE PAST 14 YEARS HOW
STOCKS IN THE UNITED STATES HAVE
EARNED 9.2%, YOU CANNOT GO
WRONG.
SO WITH BROWN GIRLS DO INVEST,
WE MAKE SURE THAT WE EDUCATE ON
HOW TO INVEST IN THE STOCK
MARKET.
>> YOU KNOW, BAHIYAH, SOMETHING
I KNOW WE'RE GOING TO HEAR FROM
WARREN AND CHARLIE ABOUT TODAY,
WHAT'S BEEN HAPPENING WITH
CRYPTO, THE MEME STOCKS.
THE ABILITY FOR PEOPLE TO INVEST
ON THINGS LIKE ROBINHOOD.
IT'S DRIVEN INTEREST IN STOCKS
AND I'M SURE YOU'VE SEEN THAT IN
YOUR WORK AS WELL.
I'M CURIOUS HOW YOU'VE GONE
ABOUT EDUCATING PEOPLE TRYING TO
GET IN AND OUT ON A DAY'S BASIS,
A WEEK OR A MONTH'S BASIS, THAT
WILL LIKELY, LIKELY ERODE YOUR
GAINS OVER TIME AND HOW THAT
CONVERSATION HAS MAYBE CHANGED
OVER THE LAST YEAR WHEN INTEREST
IN THE STOCKS AND THE MARKET HAS
GONE UP.
>> THAT'S RIGHT.
DON'T ENGAGE IN THE BUZZ WORD.
NOT TO DO WHAT YOU FEEL AS
THOUGH YOUR NEIGHBOR IS DOING
AND TO MAKE SURE YOU ARE
INVESTING OFF OF YOUR INVESTMENT
NEEDS.
ALTHOUGH WE HAVE THE
CRYPTOCURRENCY AND OTHER THINGS
TO INVEST IN OVER THE YEARS, TO
MAKE SURE WE TELL INVESTORS TO
DO WHAT BUFFETT ENCOURAGES US TO
DO, WHICH IS TO RESEARCH THE
COMPANY.
IF YOU ARE TRYING TO ENGAGE IN
BUZZ WORDS OR STRTRENDY THINGS T
ARE OCCURRING, YOU DO NOT HAVE
TIME.
IN ADDITION TO RESEARCHING THE
COMPANY, YOU HAVE TO MAKE SURE
WHATEVER YOU ARE INVESTING IN
HAS A STRONG LEADERSHIP TEAM AS
WELL AS ARE THEY PROFITABLE.
LOOK AT THEIR PERFORMANCE AND
THEIR RETURN ON INVESTMENT AND
TRY TO AVOID OVER VALUED STOCKS.
AGAIN, THE THING WITH INVESTING
IS TO MAKE SURE THAT YOU ARE
INVESTING LONG TERM, NOT
TRADING.
AND THAT'S SOMETHING THAT WE
TALK ABOUT WHEN IT COMES TO
CRYPTOCURRENCY AS WELL AS ANY
OTHER OPPORTUNITIES THAT ARE IN
THE STOCK MARKET.
>> ALL RIGHT.
WE'RE GOING TO HAVE TO LEAVE IT
THERE.
BAYIHAY, THANK YOU SO MUCH FOR
JOINING US.
>> WELCOME.
>>> EMPIRE RESEARCH FOUNDER AND
CEO WHITNEY TILLSON JOINS US ON
A DISCUSSION ON THE U.S.
ECONOMIC RECOVERY AND HOW
BERKSHIRE COULD STAND TO BENEFIT
COMING UP NEXT.
>>> WELCOME BACK.
WARREN BUFFETT AND CHARLIE
MUNGER ARE SET TO TAKE THEIR
SEATS AT ANY MINUTE NOW AS WE
AWAIT THE START OF THE 2021
BERKSHIRE HATHAWAY ANNUAL
SHAREHOLDERS MEETING.
JOINING US IS EMPIRE FINANCIAL
MANAGER AND CEO WHITNEY TILLSON.
THANKS FOR
WHAT ARE YOU LOOKING FOR AT THIS
PARTICULAR MEETING THIS YEAR?
>> WELL, I DON'T THINK THERE'S
ANYTHING EARTH SHATTERING GOING
ON RIGHT NOW.
BERKSHIRE'S BUSINESS IS FIRING
ON ALL CYLINDERS.
IT'S GOTTEN A TERRIFIC TAILWIND
AND ONE OF THE THINGS THAT'S
ADDING ROCKET FUEL TO BERKSHIRE
RIGHT NOW IS JUST IN THE LAST
THREE QUARTERS A REAL RAMP UP OF
SHARING PURCHASES.
THE SHARE COUNT IS DOWN 5.5%
YEAR OVER YEAR.
BERKSHIRE HAS JOINED THE RANKS
OF THE BIGGEST BLUE CHIP
COMPANIES DOING THE BIGGEST
SHARE BUYBACKS AND THAT'S
TURNING MID SINGLE DIGIT TO HIGH
SINGLE DIGIT SORT OF EMBEDDED
GROWTH WITH THE BIG ECONOMIC
BOOM YOU'RE SEEING OPERATING
EARNINGS GROWING 20% YEAR OVER
YEAR AND THEN YOU THROW IN A 5%
REDUCTION IN SHARE COUNT AND
EARNINGS PER SHARE ARE GOING UP
AND IT'S GOING UP EVEN FASTER.
>> HEY, WHITNEY.
I'M GLAD YOU BROUGHT UP SHARE
REPURCHASES.
THAT IS EXACTLY WHAT I WANTED TO
TALK TO YOU ABOUT.
WE DID SPEAK ABOUT THAT BACK
WHEN YOU PUT OUT THE ANNUAL
LETTER AS YOU MENTIONED.
ANOTHER 6.6 BILLION.
LET'S TALK ABOUT YOUR OWN VIEW
OF THE STOCK AND THE STOCK
PRICE.
IT SOUNDS TO ME LIKE YOU SEE
FURTHER UP SIDE HERE.
WHAT ARE YOU KIND OF EXPECTING
TO BE THE CATALYST GOING
FORWARD?
>> YEAH.
WELL, LOOK, THE STOCK HIT AN
ALL-TIME HIGH ON THURSDAY,
PULLED BACK A LITTLE ON FRIDAY
AND IT'S RESTING BUT
NEVERTHELESS I JUST RECALCULATED
BASED ON THE Q1 NUMBERS THIS
MORNING USING JUST A VERY SIMPLE
VALUATION METHODOLOGY.
I'VE USED IT FOR 20 YEARS.
IT'S PROVED TO BE VERY ACCURATE.
IT'S WHAT BUFFETT AND MUNGER
USE.
PUT AN 11 MULTIPLE ON THE PRETAX
EARNINGS AND MY LATEST
CALCULATION IS IS THAT
BERKSHIRE'S A SHARES INTRINSIC
VALUE IS $473,000 PER A SHARE.
THAT'S $316 PER B SHARE.
THE STOCK CLOSED ON FRIDAY AT
412,000 PER A SHARE MEANING THE
STOCK TODAY IS TRADING AT A 13%
DISCOUNT TO INTRINSIC VALUE.
GIVEN THE STOCK IS UP ALMOST 20%
THIS YEAR, INTRINSIC VALUE IS UP
10%, BUT I CHALLENGE YOU IN A
STOCK MARKET AT ALL-TIME HIGHS
TODAY, CHALLENGE YOU TO SHOW ME
ANY BIG CAP BLUE CHIP THAT IS AS
SAFE TRADING AT 13% TO INTRINSIC
VALUE.
I LOVE THE STOCK AND I'M
DELIGHTED BUFFETT IS BUYING
BACK.
WHEN YOU ARE BUYING BACK BELOW
INTRINSIC VALUE, THAT INCREASES
INTRINSIC VALUE FOR REMAINING
SHAREHOLDERS.
>> WE'RE TALKING ABOUT $145
BILLION RIGHT NOW.
ASIDE FROM THE BUYBACKS, HOW DO
YOU THINK THEY SHOULD BE PUTTING
THE CASH TO WORK?
>> WELL, IT'S TOUGH BECAUSE IT'S
A TOUGH ENVIRONMENT OUT THERE.
THERE ARE ONLY TWO WAYS --
>> WHITNEY, I'M SORRY TO
INTERRUPT YOU.
WE HAVE TO GO OVER TO WARREN
BUFFETT.
THE 2021 BERKSHIRE HATHAWAY
ANNUAL MEETING HAS GONE.
>> WE DID IT ON SHORT NOTICE
LAST YEAR.
WE HAD MORE WARNING THIS TIME
AND SO WE CAME TO LOS ANGELES
AND THE REASON WE'RE DOING IT
FROM HERE IS BECAUSE OF THE MAN
ON MY LEFT, NOT BECAUSE HE ASKED
FOR IT BUT BECAUSE ALL OF US
WANTED TO DO IT WITH CHARLIE
HERE IN LOS ANGELES.
SO I'LL INTRODUCE THE THREE VICE
CHAIR MEN OF BERKSHIRE IN A
MINUTE.
I'LL SHOW YOU THE FIRST QUARTER
EARNINGS.
WON'T TAKE MUCH TIME ON THAT.
I'LL HAVE ONE OR TWO VERY SHORT
LESSONS FOR PERHAPS THE NEW
INVESTORS WHO ARE NOT
NECESSARILY IN BERKSHIRE
HATHAWAY BUT PEOPLE WHO HAVE
ENTERED THE STOCK MARKET IN THE
PAST YEAR, I THINK THERE HAVE
BEEN A RECORD NUMBER THAT HAVE
ENTERED THE STOCK MARKET.
I'LL HAVE A COUPLE OF EXAMPLES
FOR THEM AND THEN WE'LL SWING
INTO A Q&A LED BY BECKY QUICK,
WHO'S LOOKED AT THOUSANDS OF
QUESTIONS THAT HAVE BEEN
SUBMITTED BUT MORE CAN BE
SUBMITTED DURING THIS MEETING
AND WE WILL PUT UP ON CAMERA
FROM TIME TO TIME THE WAY YOU
CAN COMMUNICATE DIRECTLY WITH
HER IF YOU WANT TO SEND
QUESTIONS IN DURING THE MEETING.
SHE GOT FLOODED WITH THEM LAST
TIME.
SHE MIRACULOUSLY KEEPS SORTING
THEM OUT.
SO FEEL FREE TO SEND IN A
QUESTION AND WE WILL HAVE A
QUESTION PERIOD FOR ABOUT 3 1/2
HOURS.
THEN WE WILL FINALLY HAVE THE
ANNUAL MEETING, WHICH WON'T TAKE
LONG, AT THE END.
SO WITH THAT, I WOULD LIKE TO
FIRST INTRODUCE THE THREE VICE
CHAIR MEN OF BERKSHIRE HATHAWAY.
I'LL TELL YOU JUST A LITTLE BIT
ABOUT THEM AND THEN I'LL HAVE A
MILD SURPRISE FOR YOU AT THE END
PERHAPS.
ON MY LEFT IS CHARLIE MUNGER,
AND I MET CHARLIE 62 YEARS AGO.
HE WAS PRACTICING LAW IN LOS
ANGELES.
HE WAS BUILDING A HOUSE AT THAT
TIME A FEW MILES FROM HERE, AND
62 YEARS LATER HE'S STILL LIVING
IN THE SAME HOUSE.
KIND OF INTERESTING BECAUSE I
WAS BUYING A HOUSE JUST A FEW
MONTHS BEFORE 62 YEARS AGO AND
I'M STILL LIVING IN THE SAME
HOUSE.
SO YOU'VE GOT A COUPLE OF FAIRLY
PECULIAR GUYS JUST TO START WITH
IN TERMS OF THEIR LOVE AFFAIR
WITH THEIR HOMES.
AND CHARLIE -- CHARLIE AND I HIT
IT OFF IMMEDIATELY.
I WOULD SAY HE'S -- HE'S
PROBABLY THE VICE CHAIRMAN IN
CHARGE OF CULTURE, AMONG OTHER
THINGS, BUT IF I EVER WANT TO
GET QUESTIONS ABOUT WHERE TRUE
NORTH IS, I TALK TO CHARLIE AND
HE HAS BEEN AN ENORMOUS HELP.
HE'S DONE IT WITH A LOT FEWER
HOURS AND A LOT LESS TALKING AND
EVERYTHING THAT I'VE HAD, BUT
HE'S CONTRIBUTED IN AN
INCREDIBLE WAY TO BERKSHIRE.
SO CHARLIE'S BEEN OUT HERE IN
LOS ANGELES FOR 60 PLUS YEARS.
ON MY RIGHT, YOUR LEFT, I HAVE
THE VICE CHAIRMAN IN CHARGE OF
EVERYTHING EXCEPT INSURANCE AND
INVESTMENTS, GREG ABEL.
GREG WAS BORN AND RAISED IN
EDMONTON, ALBERTA.
CANADIAN.
PLAYS HOCKEY.
80-YEAR-OLD,
AND HE CAME TO THE UNITED STATES
SOMETIME AFTER HE GRADUATED FROM
COLLEGE IN CANADA AND HE IS IN
CHARGE OF A BUSINESS WHICH HAS
WELL OVER 150 BILLION IN SALES
AND EMPLOYS 200 -- MORE THAN
250,000, PROBABLY 275,000
PEOPLE.
AND DOES A MUCH BETTER JOB AT
DOING THAT THAN I WAS DOING
PREVIOUSLY.
AND ON MY FAR LEFT, YOUR RIGHT,
WE HAVE AJIT JAIN.
AJIT WAS BORN AND RAISED IN
INDIA AND GRADUATED FROM COLLEGE
THERE.
I MET AJIT ON A SATURDAY IN
1986, AND I'VE BEEN IN THE
INSURANCE BUSINESS -- BERKSHIRE
HAD BEEN IN THE INSURANCE
BUSINESS FOR A WHILE.
I WAS STUMBLING AROUND IN A
NUMBER OF WAYS.
AJIT CAME INTO THE OFFICE.
SATURDAY I WAS OPENING THE MAIL.
I SAID, YOU KNOW, ABOUT
INSURANCE AND HE SAID, NOTHING.
I SAID, WELL, NOBODY'S PERFECT.
LET'S TALK ABOUT IT SOME.
AND BY THE END OF THE MORNING I
KNEW I HAD SOMEBODY THAT WAS
GOING TO BUILD A GREAT INSURANCE
BUSINESS, AND STARTING FROM THAT
POINT THIS IMPROBABLE LITTLE
COMPANY IN OMAHA BECAME THE
LARGEST PROPERTY CASUALTY
COMPANY IN THE WORLD IN TERMS OF
NETWORK.
IT WRITES RISKS THAT -- IT
WRITES RISKS OCCASIONALLY AND IN
A 24-HOUR PERIOD THAT OTHER
COMPANIES SIMPLY COULDN'T TAKE
ON THEMSELVES.
THEY'D HAVE TO ASSEMBLE OTHER
PEOPLE AND IT WOULD TAKE THEM A
LONG TIME TO COME TO A DECISION.
THAT WAS VARIOUS AT OTHER TIMES
IN THE PAST.
NOT SO IMPORTANT NOW.
HE'S BUILT AN INCREDIBLE -- THE
WORLD'S LEADING PROPERTY AND
CASUALTY INSURANCE COMPANY.
SO HERE WE HAVE CHARLIE FROM
L.A., 60 SOME YEARS.
WE'VE GOT GREG FROM CANADA.
WE'VE GOT AJIT FROM INDIA AND
THE ONE THING IN COMMON THAT
THESE THREE FELLOWS HAVE ASIDE
F
BERKSHIRE AND DOING A GREAT JOB,
THE AT ONE PERIOD OF TIME OR
ANOTHER THEY LIVED WITHIN A MILE
OF ME IN OMAHA, NEBRASKA.
AND CHARLIE IN 1934 MOVED ABOUT
100 YARDS AWAY FROM WHERE I NOW
LIVED AND WENT TO HIGH SCHOOL,
EVENTUALLY WENT INTO THE SERVICE
AND KNOWS THE NEIGHBORHOOD AS
WELL AS I DO.
WENT TO THE SAME GRADE SCHOOL MY
KIDS WENT TO AND SO ON.
GREG SPENT SIGNIFICANT TIME IN
LIVING IN OMAHA.
LIVED ABOUT FIVE OR SIX BLOCKS
FROM ME AND NOW LIVES IN DES
MOINES.
AND AJIT WAS IN OMAHA, ABOUT A
MILE AWAY, FOR A COUPLE O
YEARS.
SO WE STARTED IN VERY DIFFERENT
PLACES AND SORT OF CAME TOGETHER
AND NOW GO OUR SEPARATE WAYS,
BUT IT'S ALL WORKED VERY WELL.
I WOULD -- AND YOU'LL HEAR FROM
THEM.
I URGE YOU TO SEND QUESTIONS IF
YOU'RE SAYING YOU COULD DIRECT
THEM TO ME OR YOU COULD DIRECT
THEM TO ANY ONE OF THE OTHER
THREE AND IT WILL BE A BIG
RELIEF TO ME IF YOU DIRECT A
FAIR NUMBER TO THE OTHER PEOPLE.
SO WE THIS MORNING, AS WE ALWAYS
DO, WE ALWAYS DO IT ON A S
SATURDAY, WE PUBLISHED OUR 10Q
WHICH GAVE THE QUARTERLY
EARNINGS THAT'S UP ON OUR
WEBSITE, BERKSHIREHATHAWAY.COM.
AND IT'S VERY INTERESTING.
WE PUT THESE OUT ON SATURDAY
MORNING, THAT'S NOT BECAUSE THE
MEDIA LIKES US TO DO IT THAT
WAY, THAT'S NOT BECAUSE THE
ANALYSTS LIKE TO DO IT THAT WAY,
BUT WE WANT TO GIVE YOU THE
MAXIMUM TIME TO DYE IGEST AN AW
LOT OF INFORMATION THAT'S IN
THAT 10Q.
IT CAN'T BE SUMMARIZED IN A
PERFECT WAY.
WE'LL GIVE YOU SOME SUMMARY
FIGURES, BUT THEY'RE REALLY A
STUDENT OF THE PLACE.
MOST OF OUR INVESTORS SIMPLY
HAVE FAITH IN THESE OTHER THREE
FELLOWS TO DO A GOOD JOB.
AND IT'S NOT A MISPLACED FAITH,
BUT IF YOU REALLY ENJOY GOING
INTO THE DETAILS AND YOU WANT TO
UNDERSTAND THE NUTS AND BOLTS OF
THE VARIOUS OPERATIONS, YOU
SHOULD READ
IT WILL TAKE YOU -- IT MAY TAKE
YOU A COUPLE OF HOURS.
I MEAN, IT'S NOT A SMALL
INVESTMENT OF TIME, BUT IT'S GOT
A LOT OF INFORMATION ABOUT ALL
OF OUR VARIOUS BUSINESSES AND
FOR THOSE OF YOU WHO ARE
BUSINESS STUDENTS OF A SORT, I
RECOMMEND YOU GO TO IT.
THE SUMMARY FIGURES YOU SEE
HERE, WHICH ARE THE ONES WE PUT
IN OUR PRESS RELEASE, SHOW KIND
OF AN INTERESTING PAIR OF
NUMBERS.
DOWN THERE AT THE BOTTOM.
YOU KNOW, WE HAVE -- LAST
YEAR -- WHEN YOU SEE THOSE
BRACKETS AROUND NUMBERS, YOU'VE
GOT TO START WORRYING.
AND FIRST QUARTER WE ACTUALLY
SHOWED A LOSS OF ALMOST $50
BILLION.
I NEVER THOUGHT I WOULD SEE A
FIGURE LIKE THAT.
THINKING BACK, I WAS TRYING TO
REMEMBER WHETHER I HAD GONE ON
VACATION DURING THAT QUARTER AND
TURNED THINGS OVER TO THE OTHER
GUYS OR WHAT?
BUT I CHECKED THE CALENDAR AND
THAT WAS ME.
THAT FIGURE THIS YEAR IS A
POSITIVE FIGURE UP 11.7 BILLION,
AND NEITHER FIGURE IS VERY
MEANINGFUL IN ITSELF.
THE ACCOUNTING STANDARDS BOARD A
FEW YEARS AGO FOR MANY, MANY,
MANY, MANY YEARS UNREALIZED
GAINS OR LOSSES OF A COMPANY
LIKE BERKSHIRE WHERE THEY MADE
ADJUSTMENTS TO THE KNELT WORTH
OF BERKSHIRE BUT THEY DID NOT
RUN THROUGH EARNINGS.
AND A FEW YEARS AGO THE RULE WAS
CHANGED SO THAT EVERY TIME
STOCKS GO UP OR DOWN, IT GOES
THROUGH OUR EARNINGS ACCOUNT.
SO IN THE FIRST QUARTER OF LAST
YEAR WHEN STOCKS WENT DOWN A
LOT, WE HAD A HUGE SUM OF
UNREALIZED -- WELL, IT WAS A
REDUCTION OF UNREALIZED GAINS
AND WHEN YOU START SAYING THINGS
LIKE THAT YOU START LOSING
PEOPLE BUT THAT ITEM, MILD PLUS
THIS YEAR.
IF WE REPORTED EARNINGS DAILY
YOU WOULD SEE EARNINGS ONE DAY
OF 3 BILLION, NEXT DAY MINUS 2
BILLION.
IT'S AN ACCOUNTING TREATMENT
THAT WE DON'T THINK IS
PARTICULARLY APPROPRIATE BUT
IT'S REQUIRED AND WE'VE
EXPLAINED VERY CAREFULLY AND I
TRY TO WRITE IN MY LETTER AND
EXPLAIN I DON'T THINK THAT'S THE
WAY TO LOOK AT BERKSHIRE.
WE THINK OVER TIME WE WILL HAVE
INVESTMENT GAINS FOR REASONS I
LAY OUT IN MY LETTER.
OVER A PERIOD OF TIME THE
COMPANIES WE OWN STOCK IN,
RETAIN EARNINGS, AND THEY USE
THOSE REINVESTED EARNINGS
USUALLY TO OUR BENEFIT AND THAT
SHOWS UP IN CAPITAL GAINS SOME
DAY.
BUT REPORTED EARNINGS FOR A
COMPANY THAT HAS A LOT OF COMMON
STOCKS, MARGINABLE STOCKS LIKE
OURS, YOU DON'T WANT TO LOOK AT
THE FINAL LINE.
YOU DO WANT TO LOOK AT THE
OPERATING EARNINGS LINE.
NOW I WOULD SAY THAT IF YOU HAD
TAKEN THE FIRST TWO MONTHS OF
LAST YEAR AND COMPARED TO THE
FIRST TWO MONTHS OF THIS YEAR,
THOSE FIGURES WOULD HAVE BEEN
QUITE COMPARABLE, BUT OF COURSE
IN MARCH OF 2020 THE ECONOMY WAS
SHUT DOWN IN EFFECT.
I MEAN, IT WAS A SELF-INDUCED
RECESSION, AND AN ABRUPT ONE,
VERY ABRUPT.
SO THE ECONOMY WENT OFF A CLIFF.
IN MARCH IT WAS RESURRECTED IN
AN EXTRAORDINARILY EFFECTIVE WAY
BY FEDERAL RESERVE ACTION AND
LATER ON THE FISCAL FRONT BY
CONGRESS, AND WE'LL GET INTO
THAT LATER, BUT THE FIGURE YOU
S
SEE, THE DIFFERENCE WAS MARCH
BASICALLY.
WHAT OUR BUSINESSES HAVE DONE
WE'LL GET INTO MORE SPECIFIC
LATER.
OUR BUSINESSES HAVE DONE QUITE
WELL.
THIS HAS BEEN A VERY, VERY, VERY
UNUSUAL RECESSION IN THAT IT'
BEEN LOCALIZED AS THE INDUSTRY
TO AN EXTRAORDINARY EXTENT.
RIGHT NOW BUSINESS IS REALLY
VERY GOOD.
GREAT IN MANY SEGMENTS OF THE
ECONOMY WHICH WE'LL TALK ABOUT
LATER, BUT THERE'S STILL
PROBLEMS IF YOU'RE IN A FEW
TYPES OF BUSINESSES THAT HAVE
BEEN DECIMATED SUCH A
INTERNATIONAL TRAVEL AND THE
SORT.
SO WITH THAT, WE'LL GO BACK TO
THE FIGURES LATER ON.
PERHAPS IN SOME OF THE
QUESTIONS.
I WOULD LIKE TO JUST GO OVER TWO
ITEMS THAT WOULD LIKE
PARTICULARLY NEW ENTRANTS TO THE
STOCK MARKET TO PONDER JUST A
BIT BEFORE THEY TRY AND DO 30 OR
40 TRADES A DAY IN ORDER TO
PROFIT FROM WHAT LOOKS LIKE A
VERY EASY GAME.
I WOULD LIKE TO GO TO SLIDE L1.
PUT THAT UP.
AND THESE -- ON MARCH 31st I RAN
OFF A LIST OF THE 20 LARGEST
COMPANIES IN THE WORLD BY STOCK
MARKET VALUE, AND THOSE NAMES, A
GOOD MANY OF WHICH WILL BE
FAMILIAR TO YOU, BUT THEY WERE
LED BY APPLE THAT'S SLIGHTLY
OVER 2 TRILLION.
AND IT WENT DOWN TO THE NUMBER
20th WAS WORTH 330 ODD BILLION.
THOSE ARE THE 20 LARGEST
COMPANIES IN THE WORLD BY MARKET
VALUE ON MARCH 31st.
NOW IF I HAD A LITTLE -- I WAS
HOPING I COULD GET A LITTLE QUIZ
MACHINE SO I COULD HAVE EVERYONE
WEIGH IN ON THIS ANSWER AND WE
COULD FLASH IT UP LATER.
WHAT I WOULD LIKE YOU TO DO IS
LOOK AT THAT LIST.
STARTS OFF WITH APPLE, SAUDI
ARAMCO'S A SPECIALIZED
COUNTRY -- COMPANY.
I DON'T KNOW WHETHER IT'S 95%
OWNED BY THE GOVERNMENT OR WHAT,
BUT IT'S ESSENTIALLY A COUNTRY
FOR SALE IN TERMS OF THAT
BUSINESS.
THE TOP -- OF THE TOP SIX
COMPANIES, FIVE OF THEM ARE
AMERICAN.
I CAN HEAR PEOPLE SAY AMERICA
HAS -- IT'S NOT WORKING VERY
WELL OR SOMETHING OF THE SORT.
SIX TOP COMPANIES IN VALUE, FIVE
OF THEM ARE IN THE UNITED STATES
AND IF YOU THINK ABOUT IT, WE
TALKED A LITTLE ABOUT THIS LAST
YEAR.
IN 1790 WE HAD 1/2 OF 1% OF THE
WORLD'S POPULATION.
A LITTLE LESS.
OOF,000 PEOPLE WERE SLAVES.
IRELAND HAD MORE PEOPLE THAN THE
UNITED STATES HAD.
RUSSIA HAD AS MANY TIMES AS --
>> UKRAINE HAD TWICE AS MANY
PEOPLE.
WHAT DID WE HAVE?
WE HAD A MAP OF THE FUTURE,
ASPIRATIONAL MAP THAT SOMEHOW
NOW ONLY 200 -- WELL, AFTER THE
CONSTITUTION, 232 YEARS LATER
LEAVES SUS WITH FIVE OF THE TOP
SIX COMPANIES IN THE WORLD.
THAT'S NOT AN ACCIDENT AND IT'S
NOT BECAUSE WE WERE WAY SMARTER,
WAY STRONGER OR ANYTHING OF THE
SORT.
WE HAD GOOD SOIL, DECENT
CLIMATE, BUT SO DID SOME OF THE
OTHER COUNTRIES I NAMED.
THIS SYSTEM HAS WORKED VERY
WELL.
IMAGINE THINKING OF A COUNTRY
WITH 1/2 OF THE LIST.
WHAT I WOULD LIKE YOU TO DO IS
LOOK AT THAT LIST FOR A MINUTE
OR TWO IF YOU WANT TO AND THEN
MAKE AN ESTIMATE, YOUR YOEN OWN
GUEST.
HERE THEY ARE, THESE POWE S
POWERHOUSES.
IT'S NOT GOING TO BE ALL 20.
IT MAY NOT BE ALL 20 TODAY OR
TOMORROW.
THIS WAS MARCH 31st, BUT WHAT
WOULD YOU GUESS?
THINK ABOUT THAT YOURSELF.
WOULD YOU PUT DOWN FIVE, EIGHT?
WHATEVER IT WOULD BE, I WOULD
NOW INVITE YOU TO LOOK AT SLIDE
2 -- WELL, 2, WHICH GOES BACK A
LITTLE MORE THAN 30 YEARS.
LOOK AT THE TOP 20 FROM 1989 AND
IF YOU LOOK AT THE TOP 20 FROM
1989, THERE ARE TWO THINGS THAT
SHOULD GRAB YOUR INTEREST, AT
LEAST TWO.
NONE OF THE 20 FROM 30 YEARS AGO
ARE ON THE PRESENT LIST, NONE,
ZERO.
DUH, THERE WERE SIX U.K.
COMPANIES ON THE LIST AND THEIR
NAMES ARE FAMILIAR TO YOU.
WE HAVE GENERAL ELECTRIC, WE
HAVE EXXON, IBM CORP.
MERCK HAS DONE THEIR NUMBER.
YUN MADE IT.
I ASKED YOU TO PLAY THE QUIZ.
I DON'T THINK IT WILL BE ZERO
BUT IT IS A REMINDER OF WHAT
EXTRAORDINARY THINGS ARE GOING
TO HAPPEN, THINGS THAT SEEM
OBVIOUS TO YOU.
JAPAN HAD THIS WONDERFUL BULL
MARKET FOR A LONG TIME.
YOU HAD A NUMBER OF JAPANESE
COUPLES ON THE CASE.
UNITED STATES HAS THE 6, AND I
WOULD INVITE YOU TO LOOK AT ONE
OTHER THING AS YOU LOOK AT THIS
ADD
ADDRESS.
WE WEREN'T JUST KISS COVERING
CAPITALISM.
PEOPLE THOUGHT THEY WERE IN.
IT WAS NOT A BACKWARD TIME AND
IF YOU LOOKED AT THE TOP COMPANY
AT THAT TIME HAD A MARKET VALUE
OF 104 BILLION.
SO THE LARGEST COMPANY IN THE
WORLD OF TITLE IN JUST A SHADE
OVER 30 YEARS HAS GONE FROM 100
BILLION TO 2 TRILLION.
AT THE BOTTOM THE NUMBER 20 HAS
GONE FROM 34, A LITTLE OVER TEN
TIMES THAT.
THIS TELLS YOU WHAT'S HAPPENED.
IT TELLS YOU A LITTLE BIT ABOUT
INFLATION, BUT THIS WAS NOT A
HIGHLY INFLATIONARY PERIOD AS A
WHOLE.
BUT IT TELLS YOU THAT CAPITALISM
HAS WORKED INCREDIBLY WELL,
ESPECIALLY IF YOU'RE THE
CAPITALIST.
IT'S A PRETTY A STAUNDING
NUMBER.
DO YOU THINK YOU COULD TAKE 2
TRILLION FOR THE THE R FINE
COMPANIES.
THAT'S FOR THE LEADER.
IT SEEMS IMPOSSIBLE.
MAYBE IT IS IMPOSSIBLE.
WE WERE JUST AS SURE OF
OURSELVES AS INVESTORS OUT OF
WALL STREET WAS IN 1989 AS WE
ARE TODAY, BUT THE WORLD DIDN'T
CHANGE.
I'LL JUST GIVE YOU ONE OTHER
EXAMPLE YOU MIGHT PONDER.
ONE THING IT SHOWS IS THAT IT'S
A GREAT ARGUMENT.
THE AMAZING THING WAS TO BE
ABOARD A SHIP.
THEY WERE GOING TO A BETTER
PROMISED LAND, THEY DIDN'T KNOW
WHICH ONE THEY NIECELY GOT ON.
YOU OO OO GROUP.
>> THEY NEED U.S. EQUITIES, MY
PURPOSE.
DO A HOLDOVER, YEAR-TO-YEAR
PERIOD.
>> IF YOU THINK HELEN WILL
REBUILD THESE.
OVERALL EQUITIES WERE ABSOLUTELY
THE PLACE TO BE.
SECONDLY, PEOPLE GET ENORMOUSLY
ATTRACTED TO VARIOUS INDUSTRIES.
I MEAN, DO YOU THINK IF PEOPLE
SAY IT'S IN THE X, Y, Z COMPANY.
YOU CAN SEM I P OOs MP YOU KNOW,
IT'S
SO BERKSHIRE HATHAWAY, WHERE WAS
THE PLACE TO BE IN 1903 WHEN MY
DAD WAS BORN IN 1903?
THAT'S BIG NEWS.
THIS HAS HAD A COUPLE OF TIMES
BEFORE.
HE WAS GREAT.
WITHOUT THE AUTOS, WE WOULDN'T
HAVE GEICO.
BUT IT TRANSFORMED THE COUNTRY.
AND HENRY FORD BROUGHT IN THE $5
DAILY WAGE.
THAT WAS A HUGE THING.
SIMPLY LINES OUT THE WHOLE
THING.
A
AUTO, LET'S JUST ASSUME THAT YOU
HAD SEEN A QUICK GLANCE BACK IN
1903 AFTER YOU WILL THE EE
FINANCE.
EVERYTHING ABOUT IT SAID, WELL,
THIS IS PRETTY EASY.
IT'S GOING TO BE CARS.
IT'S GOING TO BE AUTOS.
WELL, BERKSHIRE ZSH LET'S SEE
WHAT WE'VE GOT UP THERE.
YEAH, NO, STAY WHERE YOU WERE.
GO BACK.
I DON'T WANT TO CHANGE SLIDES
YET.
BERKSHIRE BY ACCIDENT -- WELL,
WE OWN A COMPANY CALLED MARMON.
WE BOUGHT IT SOME YEARS AGO.
PRITZKERS HAD BUILT THIS
BUSINESS FROM MANY, MANY, MANY
COMPANIES THAT THEY HAD ACQUIRED
AND THE NAME OF THEIR COMPANY
WAS CALLED MARMOM.
I DON'T KNOW EXACTLY WHY THEY
DECIDED TO NAME IT MARMAN, BUT
THEY DID OWN A COMPANY CALLED
HARMON.
THE MARMON COMPANY -- GETTING
SLIGHTLY AHEAD OF ME ON THE
SLIDES AGAIN BUT THAT'S OKAY.
WE CALLED IT -- IT WAS -- THEY
OWNED THIS COMPANY, MARMON,
WHICH IN 1911 HAD BEEN A -- THE
COMPANY WHOSE CAR WON THE FIRST
INDIANAPOLIS 500.
MAYBE THAT'S WHY THEY CALLED
THEM MARMON.
THEY FOUNDED THE COMPANY THEN
AND WON THE FIRST INDIANAPOLIS
500.
>> I'M NOT SURE THAT WAS A BIG
CONTRIBUTION TO SOCIETY.
THE CAR THAT WAS ENTERED IN THE
INDIANAPOLIS 500, THE GUY WHO
SATURDAY NEXT TO HIM AND LOOKED
BACKWARDS, THEY INVENTED THE
REAR-VIEW MIRROR.
LET'S JUST ASSUME THAT THEY
DECIDED THAT AUTOS WERE THIS
INCREDIBLE THING AND SOME DAY
THERE WOULD BE AN INDIANAPOLIS
500, THEY WOULD HAVE REAR VIEW
MIRRORS AND 290 MILLION CARS
WOULD BE BUZZING.
AND SO I DECIDED TO LOOK AT THE
HISTORY AND I THOUGHT I PUT UP A
LIST FROM THE -- AND I WAS
ORIGINALLY GOING TO PUT UP THE
Ms SO I COULD GET THEM ON ONE
SLIDE BUT WHEN I WENT TO THE Ms,
I WENT ON AND ON AND ON.
I DECIDED TO PUT UP ONES THAT
STARTED WITH MA.
AS YOU CAN SEE, THERE WERE
ALMOST 40 COMPANIES THAT WENT
INTO THE AUTO BUSINESS.
MA.
MARCHMAN PRODUCT.
1930s WERE REALLY QUITE SPECIAL.
THERE WERE AT LEAST 2,000
COMPANIES THAT ENTERED THE AUTO
BUSINESS BECAUSE IT CLEARLY HAD
THIS INCREDIBLE FUTURE.
OF COURSE, YOU REMEMBER THAT IN
2009 THERE WERE THREE LEFT, TWO
OF WHICH WENT BANKRUPT.
SO THERE WAS A LOT MORE TO
PICKING STOCKS THAN TRYING TO
FIGURE OUT WHAT'S GOING TO BE A
WONDERFUL FUTURE THE MAIN
STREET -- THERE WAS NEBRASKA
MOTOR COMPANY.
EVERYBODY STARTED CAR COMPANIES
JUST LIKE EVERYBODY IS STARTING
SOMETHING NOW WHERE YOU CAN GET
MONEY FROM PEOPLE.
BUT THERE WERE VERY, VERY, VERY
FEW PEOPLE THAT PICKED THE
WINNER AND GOT THE OPPORTUNITY
AT FORD MOTOR.
HENRY FORD HAD A FEW PARTNERS
THAT HE DIDN'T LIKE AND HE
FIGURED, WAY TO BUY THEM OUT.
THAT WAS SORT OF THE -- IT WAS
SORT OF THE BEGINNING OF THE
AUTO FINANCE.
THAT'S A LONG STORY.
>> GENERAL MOTORS BECAME THE
DOMINANT COMPANY.
THEY SHIFTED FROM THE MODEL T TO
THE MODEL A VERY QUICKLY.
I JUST WANT TO TELL YOU, IT'S
NOT AS EASY AS THAT SOUNDS.
WITH THAT, WE WILL GO TO BECKY
QUICK AND SHE WILL ASK ANY OF
THE FOUR OF US QUESTIONS SHE HAS
SELECTED AND WHICH WE DON'T --
SHE DOESN'T SHARE WITH US AND WE
WILL DO THAT FOR A CONSIDERABLE
PERIOD OF TIME.
YOU CAN BE SENDING IN QUESTIONS
TO HER AND THEN LATER ON AFTER
ABOUT 3 1/2 HOURS WE WILL HAVE
THE ANNUAL MEETING WHICH WON'T
TAKE LONG.
BECKY, OVER TO YOU.
>> THANKS, WARREN.
HELLO TO EVERYBODY.
THIS FIRST QUESTION THAT CAME IN
CAME IN FROM ANDY SEAS.
HE SAID HE'S THE OWNER OF NOT
NEARLY ENOUGH B SHARES.
MR. BUFFETT, YOU'RE WELL KNOWN
TO SAY BE FEARFUL WHEN OTHER
PEOPLE ARE GREEDY.
DUMPING AIRLINE STOCKS AT OR
NEAR THE LOW, NOT TAKING
ADVANTAGE OF THE FEAR OF
GRIPPING THE MARKET TO BUY
SHARES OF PUBLIC COMPANIES AND
BEING INFLEXIBLE.
BERKSHIRE APPROACHED THE
DECISION MAKING SPECIFICALLY
AFTER IT WAS ASSURED THROUGH THE
C.A.R.E.S. ACT IT WOULD PROVIDE
A ROBUST BACKSTOP IN THE
MARKETS.
>> UNTIL BOTH MONETARY AND
FISCAL POLICY KICKED IN -- WELL,
WE HAD AN INCREDIBLE PROBLEM.
JUST AS CHARLIE IS THE CHIEF
CULTURE OFFICER, I'M CHIEF RISK
OFFICER AT BERKSHIRE.
THAT'S MY JOB.
WE HOPE WE DO WELL BUT WE WANT
TO BE SURE WE DON'T DO TERRIBLY.
BUT WE DIDN'T SELL A
SUBSTANTIAL -- WE'RE A COMPANY
WITH 6, PROBABLY $700 BILLION
WORTH OF BUSINESSES, SOME WE OWN
IN THEIR ENTIRETY, SOME WE OWN A
PIECE OF.
AND I DON'T KNOW WHETHER WE WERE
SELLERS IN MAYBE 1% OF THE VALUE
OF ALL THE BUSINESSES WE HAD BUT
JUST GOT TO MENTION THE AIRLINE
BUSINESSES IN PARTICULAR AND
THEN I'LL GET ON WITH WHAT WAS
DONE IN FISCAL MONETARY POLICY.
WE HAD A FEW PEOPLE, VARIOUS
AREAS OF BERKSHIRE, THAT WANTED
TO GO IN FOR HELP FROM THE
GOVERNMENT AND IN SOME CASES
THEY HAD MINORITY SHAREHOLDERS
OWNING A FEW PERCENT.
WE'RE GOING TO GET KILLED BY
WHAT'S HAPPENING WITH THE
REGULATIONS THAT ARE BEING PUT
OUT STOPPING THE ECONOMY.
THEY SAID, EVERYBODY'S GOING IN
FOR THEM, WHY DON'T WE GO IN?
I SAID, BERKSHIRE CAN HANDLE IT.
THIS IS FOR PEOPLE THAT CAN'T
HANDLE IT SO WE'RE NOT APPLYING
FOR IT.
THE AIRLINES WERE THE MOST
PROMINENT BENEFICIARIES OF WHAT
TOOK PLACE IMMEDIATELY AT THIS.
GRANTS NOT LOANS.
AND I THINK THAT WAS FINE PUBLIC
POLICY.
I WISH IT COULD GO TO EVERY pRE
BUSINESS THAT WAS OUT OF
BUSINESS AND HAD NO -- THEY
WERE -- THEY WERE -- THEY WERE
MADE TOAST OF BASICALLY, BUT THE
AIRLINES CLEARLY WHAT HAPPENED
WAS NOT THEIR FAULT IN ANY WAY,
SHAPE, OR FORM.
IT WASN'T LIKE IN 2008-2009 --
>> NOW AIRLINES OPERATE IN
BANKRUPTCY.
THREE OF THE FOUR VICTIMS WENT
THROUGH A
THE AIRLINES WERE BECOMING USED
TO OPERATING IN -- IT WAS
PERFECTLY PROPER FOR THE AIRLINE
INDUSTRY.
YOU LOOK AT THE FIGURES OF 2
TRILLION FOR APPLE.
THE ENTIRE BIG FOUR AIRLINES,
THEY WERE -- THEY SOLD FOR ABOUT
$100 BILLION ALMOST.
VERY, VERY SMALL.
COMBINED THEY WOULDN'T COME
CLOSE TO MAKING THE CUT.
I MEAN, THEY WOULDN'T BE IN THE
TOP 50.
SO, ANYWAY, THEY WENT INTO THE
GOVERNMENT.
THEY NEEDED THE GOVERNMENT HELP
OR THEY NEEDED -- OR THEY WOULD
GO BANKRUPT, SOME OF THEM.
AND REALLY CONGRESS AND STEVE
MNUCHIN TOO, THEY DECIDED THEY
DESERVED HELP, WHICH I DO NOT
QUARREL WITH AT ALL, BUT IMAGINE
IF BERKSHIRE WAS THE 10% HOLDER,
WHICH THEY HAD BEEN.
BERKSHIRE, IT WOULD BE LIKE ONE
OF OUR -- THEY MIGHT VERY WELL
HAVE HAD A VERY, VERY, VERY
DIFFERENT RESULT IF THEY HAD HAD
A VERY, VERY, VERY RICH
SHAREHOLDER THAT OWNED 8 OR 9%.
THEY DIDN'T HAVE THAT.
YOU MIGHT NOT HAVE GOTTEN THE
SAME RESULT.
IN FACT, YOU PROBABLY WOULDN'T.
I CAN SEE THE HEADLINES BECAUSE
YOU'VE SEEN THE HEADLINES ON
SOME COMPANIES THAT TOOK 100
MILLION, THE AIRLINE DIDN'T NEED
IT, SOME OF THEM GAVE IT BACK.
MOST OF THEM GAVE IT BACK.
BUT YOU'RE ACTUALLY LOOKING AT A
DIFFERENT RESULT THAN IF WE HAD
KEPT OUR STOCK.
BUT IN ANY EVENT, AN INDUSTRY
THAT WAS SELLING FOR LESS THAN
$100 MILLION.
THEY LOST A SIGNIFICANT AMOUNT
OF MONEY.
THEY LOST PERSPECTIVE EARNING
POWER.
I WOULD SAY THE ECONOMIC
RECOVERY HAS GONE FAR BETTER AND
I CUT BACK SOME OF THE BANK
INVESTMENT.
BASICALLY OUR NET SALES WERE
1.5%.
I CONSIDERED IT A GREAT MOMENT
IN BERKSHIRE HISTORY BUT WE'VE
GOT MORE NET WORTH THAN ANY
OTHER COMPANY IN THE UNITED
STATES UNDER ACCOUNTING
PRINCIPLES AND WE'VE GOT 6 OR
700 BILLION IN BUSINESSES AND AS
I THINK THE AIRLINE BUSINESSES
HAVE DONE BETTER BECAUSE WE SOLD
AND I WISH THEM WELL.
I STILL WOULDN'T WANT TO BUY THE
AIRLINE BUSINESS INTERNATIONAL.
PEOPLE REALLY WANT TO -- THEY
WANT TO TRAVEL FOR PERSONAL
REASONS AND BUSINESS TRAVEL IS
THE OTHER THING.
WE'VE GOT A BIG EXPOSURE TO
BUSINESS TRAVEL, OF COURSE,
THROUGH THE FACT THAT WE OWN 19%
OF AMERICAN EXPRESS AND WE OWN
PRECISION GAS PARTS WHICH
SERVICES THE AIR BUSINESS.
WE'VE STILL GOT A BIG BUSINESS
INVESTMENT IN AIR TRAVEL, A BIG
COMMITMENT TO IT.
WE WISH THE BIG 4 THE BEST AND I
THINK OUR MANAGEMENT'S HAVE DONE
A VERY GOOD JOB DURING THIS
PERIOD.
>> MORE SPECIFICALLY BEYOND THE
AIRLINES THOUGH, JUST THE IDEA
THAT -- AND THIS CAME FROM
SEVERAL QUESTIONS, TOO,
INCLUDING ONE FROM CHRIS BLAINE.
YOU SPENT YEARS INSISTING YOU
HAD YOUR ELEPHANT GUN READY.
YOU SAT ON YOUR HANDS.
PLEASE HELP ME UNDERSTAND WHAT I
MISSED.
>> I DIDN'T GET THE LAST PART.
>> PLEASE HELP ME UNDERSTAND
WHAT I
WHY DIDN'T YOU USE MORE OF THE
CASH AT HAND?
>> WELL, WE HAVE ABOUT -- OUR
CASH ON HAND HAS BEEN ABOUT 15%
OF OUR VALUES OF OUR BUSINESSES
AND THAT'S A HEALTHY CHUNK.
I SAY I'LL NEVER GET BELOW 20
BILLION BUT WE'RE GOING TO RAISE
THE SIZE.
WE COULD HAVE DEPLOYED 50 OR 75
BILLION AND RIGHT BEFORE THE FED
ACT -- I MEAN, AT A POINT WHERE
THE CALLS WERE -- TWO CALLS CAME
IN, BUT THERE WAS TWO OR THREE
DAYS THAT NOTHING COULD HAPPEN.
WHEN JAY POWELL ACTED AS HE DID,
THAT WAS INCREDIBLY IMPORTANT.
I MEAN, I SHOULD SAY THE FED
ACTED AS THEY DID, BUT THEY
MOVED WITH SPEED AND A
DECISIVENESS ON MARCH 23rd THAT
CHANGED THE SITUATION WHERE THE
ECONOMY HAD STOPPED, THE
GOVERNMENT BOND MARKET WAS EVEN
DISRUPTED.
BERKSHIRE HATHAWAY PROBABLY
COULD NOT HAVE GONE OUT WITH A
DEBT OFFERING THE DAY BEFORE.
DIDN'T GET A LOT OF PUBLICITY,
BUT THERE WAS A RUN ON MONEY
MARKET FUNDS, VERY SUBSTANTIAL
RUN.
AND IF YOU LOOK AT THE
NUMBERS -- DAILY NUMBERS ON
THAT, IT WAS A REPEAT OF
SEPTEMBER 2008.
AND THIS TIME I GIVE GREAT
CREDIT TO WHAT BERNANKE AND
PAULSEN DID, BUT THIS TIME THE
FED KNEW THAT SAYING WHATEVER IT
TAKES AND SAYING IT AND
DEMONSTRATING IT, WHICH THEY DID
ON MARCH 23rd, THEY TOOK A
MARKET WHERE BERKSHIRE COULDN'T
SELL BONDS ON THE DAY BEFORE AND
TURNED IT INTO ONE WHERE
CARNIVAL CRUISE LINES, A DAY OR
TWO LATER, RECORD ISSUANCE OF
CORPORATE DEBT.
COMPANIES LOSING MONEY.
COMPANIES WERE CLOSED.
WHATEVER.
IT WAS THE MOST DRAMATIC MOVE
THAT YOU COULD IMAGINE.
AND AT THE TIME AS I REMEMBER
THE CHAIRMAN SAYING, YOU KNOW,
HOW ABOUT A LITTLE HELP ON THE
FISCAL FRONT?
AND THEN CONGRESS ACTED VERY,
VERY BIG AGAIN IN 2008 AND NINE,
THEY ARGUED ABOUT, YOU KNOW, WE
DON'T WANT TO GIVE MONEY TO
THOSE DIRTY BANKS, THAT SORT OF
THING.
THIS TIME THERE WAS NOBODY TO
BLAME.
THEY SAW WHAT WAS NECESSARY AND
CONGRESS RESPONDED IN A WAY THAT
WAS INCREDIBLE AND IT DID THE
JOB AND IT DID -- I THINK IT DID
A BETTER JOB THAN EITHER THE FED
OR THE TREASURY OR ANYBODY
EXPECTED.
THIS ECONOMY RIGHT NOW IS -- 85%
OF IT IS RUNNING IN SUPER HIGH
GEAR AND PEOPLE CAN'T -- AND
YOU'RE SEEING SOME INFLATION AND
ALL OF THAT.
IT'S RESPONDED IN AN INCREDIBLE
WAY.
WE'VE LEARNED SOMETHING OUT OF
2008 AND 9 BUT I DON'T THINK IT
WAS A SURE THING THAT WOULD
HAPPEN.
THE ONE THING ABOUT BERKSHIRE,
WE NEVER WANT -- WE DON'T WANT
TO DEPEND ON ANYBODY.
WE'RE NOT A BANK.
WE CAN'T GO TO THE FEDERAL
RESERVE IF WE NEED MONEY.
WE'VE GOT TO BE SURE THAT UNDER
ANY CIRCUMSTANCES, ANY
CIRCUMSTANCES WE CAN'T SOLVE
NUCLEAR WAR AND WE CAN'T -- BUT
IN "A STREET CAR NAMED DESIRE"
SAID I DEPEND ON THE KINDNESS OF
STRANGERS.
YOU CAN'T DEPEND ON OTHERS IF
THINGS ARE STOPPED.
WE WERE SEEING IT IN THE MIDDLE
OF MARCH.
EVERYBODY WAS DRAWING DOWN THEIR
CREDIT LINES.
THE BANKS DID NOT EXPECT THAT.
THEY JUST WEREN'T SURE THEY WERE
GOING TO BE ABLE TO DRAW DOWN
THEIR CREDIT LINES TEN DAYS
LATER.
THEY DREW THEM DOWN.
TOOK MONEY OUT OF MONEY MARKET
FUNDS.
WE GOT -- I GIVE GREAT CREDIT ON
THE MONETARY FISCAL SIDE WHAT
WAS DONE.
I DIDN'T THINK IT WAS A SURE
THING THAT WOULD HAPPEN.
I DIDN'T KNOW HOW IT WOULD BE
IMPLEMENTED.
I THINK IT'S WORKED BETTER THAN
JUST ABOUT ANYBODY HAS EXPECTED
AND I THINK -- WELL, YOU'RE
SEEING IT NOW.
CHARLIE'S GOT SOME VIEWS ON
THIS, TOO.
WE SHOULDN'T LEAVE HIM OUT OF
IT.
>> WELL, IT'S CRAZY TO THINK
ANYBODY IS GOING TO BE SMART
ENOUGH TO HAVE MONEY AND COME
OUT ON THE TAKE IN SOME CRAZY
CRISIS AND SPEND IT ALL.
THERE'S ALWAYS SOME PERSON THAT
DOES IT BY ACCIDENT BUT THAT'S
TRUE TO STANDARD.
ANYBODY WHO EXPECTS THAT OF
BERKSHIRE HATHAWAY IS OUT OF HIS
MIND.
>> CHARLIE AND I WERE NEVER
REALLY GOOD AT DANCING BUT WE
CAN DO THAT DANCE.
>> NO, WE CAN'T.
ALMOST NOBODY ELSE CAN.
>> NOT WITH TENS OF BILLIONS OR
HUNDREDS OF BILLIONS.
BUT IT'S WORKED OUT WELL.
WE FORGOT TO SHOW ON THE
FINANCIAL SIDE BACK TO THE
BALANCE SHEET.
WE DID BUY IN.
YOU'LL SEE THE SHARES
OUTSTANDING IF YOU GO BACK TO
WHAT IS IT E-3.
>> E-2.
>> I THINK IT'S E-2.
THE
>> THERE IT SHOWS THE SHARES
OUTSTANDING IN THE BOTTOM.
WE HAVE -- WE SPENT ABOUT 25
BILLION IN THE FIRST QUARTER AND
MORE MONEY SINCE THEN.
IT'S THE BEST THING.
WE CAN'T BUY COMPANIES AND WE
CAN'T BUY STOCKS AS CHEAP AS WE
CAN BUY OUR OWN.
WE'VE DONE THAT WIT A FAIR
AMOUNT OF MONEY.
I MEAN, YOU KNOW, DEFINITELY WE
COULD HAVE DONE BETTER THINGS.
WE WOULD HAVE SOLD -- WE WOULD
HAVE SOLD AIRLINES AND CUT BACK
ON BANKS REGARDLESS.
WHETHER WE SHOULD HAVE BOUGHT
SOMETHING ELSE AT THE SAME TIME
IS ANOTHER QUESTION.
>> THIS QUESTION COMES FROM A
LONG-TERM SHAREHOLDER WHO'S BEEN
HERE FOR MORE THAN 25 YEARS.
HIS NAME IS BEN KNOLL.
HE'S FROM MINNEAPOLIS,
MINNESOTA.
HE SAYS, MR. MUNGER AND MR.
BUFFETT, AFTER A 15 YEAR PERIOD
OF MARKET UNDER PERFORMANCE,
YOU'RE CAUTIOUS PREDICTING
BERKSHIRE BEING ABLE TO
OUTPERFORM THE MARKET IN THE
FUTURE.
GIVEN THIS WHAT DO YOU SEE IS
THE MARKETS OF LONG-TIMESHARE
HOLDERS HOLDING THEIR STOCKS
VERSUS DIVERSIFYING THEIR RISK
ACROSS AN INDEX?
>> CHARLIE, YOU WANT TO ANSWER
THAT?
>> SURE.
WELL, I PERSONALLY PREFER
HOLDING BERKSHIRE TO HOLDING THE
MARKET SO I'M QUITE COMFORTABLE
HOLDING BERKSHIRE.
I THINK OUR BUSINESSES ARE
BETTER THAN THE AVERAGE.
>> IS IT BECAUSE YOU DON'T THINK
THE MARKET VALUES IT FAIRLY?
>> WELL, THESE ARE JUST
ACCIDENTS OF HISTORY AND THINGS
ARE FLUCTUATING AT ALL TIMES.
ON A COMPOSITE BASIS, I'D BET ON
BERKSHIRE OVER THE MARKET.
THAT'S ASSUMING WE'RE ALL DEAD.
>> I RECOMMEND IT.
I RECOMMEND THE S&P 500 INDEX
FUND AND HAVE FOR A LONG, LONG
TIME TO PEOPLE.
AND I'VE NEVER RECOMMENDED
BERKSHIRE TO ANYBODY BECAUSE I
DON'T WANT PEOPLE TO BUY IT
BECAUSE THEY THINK I'M TIPPING
THEM -- NO MATTER WHAT IT WAS
SELLING FOR.
AND, YOU KNOW, I MADE IT PUBLIC.
ON MY DEATH THERE'S A FUND FOR
MY -- THAT THEN WIDOW AND 90%
WILL GO INTO AN S&P 500 INDEX
FUND, 10% INTO TREASURY.
ON THE OTHER HAND, I'M VERY
HAPPY HAVING MY FUTURE
CONTRIBUTIONS TO A GROUP OF
CHARITIES THAT WE SPREAD OVER.
I THINK THE ODDS ARE
BERKSHIRE -- BERKSHIRE IS -- I
LIKE IT BUT I'M NOT -- I
DON'T -- I DO NOT THINK THE
AVERAGE PERSON CAN PICK STOCKS.
WE HAPPEN TO HAVE A LARGE GROUP
OF PEOPLE THAT DIDN'T PICK
STOCKS BUT THEY PICKED CHARLIE
AND ME TO MANAGE MONEY FOR THEM
50, 60 YEARS AGO.
WE HAVE A VERY UNUSUAL GROUP OF
SHARE HOLD I THINK WHO LOOK AT
BERKSHIRE AS A LIFETIME SAVINGS
VEHICLE AND ONE THEY DON'T HAVE
TO THINK ABOUT AND ONE THAT
THEY'LL -- YOU KNOW, THEY DON'T
LOOK AT IT AGAIN FOR 10 OR 20
YEARS THAT WILL HAVE TAKEN CARE
OF THE MONEY REASONABLY WELL.
I WOULDN'T ARGUE THE S&P 500
OVER TIME.
I LIKE BERKSHIRE BUT I -- I
THINK THAT THE PERSON WHO
DOESN'T KNOW ANYTHING ABOUT THE
STOCKS AT ALL AND DOESN'T HAVE
ANY SPECIAL FEELINGS ABOUT
BERKSHIRE, I THINK THEY OUGHT TO
BUY THE S&P 500 INDEX.
>> AS A FOLLOW-UP TO THAT,
GERALD SILVER WRITES IN THE
TRUSTEES TO YOUR STATE -- I
BELIEVE YOU'VE DIRECTED THE
MANAGERS TO INVEST IN THE FUND.
ISN'T THAT A VOTE OF NO
CONFIDENCE?
>> NO, WE'RE TALKING WAY LESS
THAN 1% OF MY ESTATE.
ONE THING I'M GOING TO DO,
INCIDENTALLY -- ALL RICH PEOPLE
GET ADVISED BY THEIR LAWYERS TO
SET UP A TRUST SO NOBODY CAN SEE
YOUR WILL.
MY WILL IS GOING TO BE PUBLIC
RECORD.
YOU CAN CHECK AT SOME POINT IF
I'VE BEEN TELLING YOU THE TRUTH
ABOUT WHAT'S GOING TO GET DONE.
99.7% ROUGHLY OF MY ESTATE WILL
EITHER GO TO PHILANTHROPIES OR
TO THE FEDERAL GOVERNMENT AND
BEFORE IT DOES T I THINK
BERKSHIRE IS A VERY GOOD THING
TO HOLD.
BUT FOR A GIVEN INDIVIDUAL,
PARTICULARLY MY WIFE, I JUST
THINK THAT HAVING A TINY
FRACTION, WHICH IS ALL IT TAKES
FOR HER TO DO VERY WELL FOR THE
REST OF HER LIFE, I THINK THAT
THE BEST THING TO DO IS TO BUY
90% IN AN S&P 500 INDEX FUND.
NOW THE INDEX FUND PEOPLE
NATURALLY HAVE STARTED OVER THE
TIME THEY MARKET MORE AND MORE
PRODUCTS THAT GO TO OTHER
INDICES AND EVERYTHING.
THEY'RE REALLY STARTING TO SAY
TO THE AMERICAN PUBLIC, THEY'RE
SAYING, WELL, YOU CAN PICK WHAT
TO INVEST IN AND WE'LL SELL YOU
SOMETHING.
WHEN THEY HAVE GOTTEN THROUGH,
YOU DON'T KNOW ANYTHING IN
STOCKS.
SO I NAMED THE 500 INDEXES ONE
BUT IT'S A TINY PORTION BUT IT
WILL BE -- IT WILL BE HER
LIVELIHOOD.
SHE'LL HAVE ALL THE MONEY SHE
NEEDS AND WAY BEYOND IT AND
THAT'S THAT.
I DON'T MIND HAVING THE 99.7%.
A LARGE PORTION OF IT, ASSUMING
THE LAW'S THE SAME AS NOW GO TO
PHILANTHROPY, IT WILL BE KEPT IN
BERKSHIRE UNTIL THEY FINALLY ARE
DISPOSED OF.
>> THIS QUESTION COMES FROM
ANDREW DICKSON IN THE U.K.
HE SAYS, MY QUESTION IS IN
RELATION TO THE OIL AND GAS
BUSINESS AND YOUR PURCHASE OF
CHEVRON STOCK.
WHEN BEING ASKED A QUESTION ON
TOBACCO STOCKS IN 1997 YOU
MENTIONED THAT INDIVIDUALS AND
COMPANIES OCCASIONALLY HAVE TO
DRAW MORAL LINES ABOUT WHAT
THEY'RE WILLING TO DO.
YOU STATED AT THE TIME THAT YOU
WERE NOT COMFORTABLE IN MAKING A
BIG COMMITMENT IN TOBACCO STOCKS
AND YOU WERE UNCOMFORTABLE ABOUT
THEIR PROSPECTS.
CHARLIE HAS ALSO REFERENCED
PASSING ON A PRIVATE TOBACCO
DEAL THAT YOU KNEW WAS A CINCH
AND YOU HAD NO REGRETS SAYING NO
TO THE TRANSACTION.
I'M NOT SUGGESTING THAT THE OIL
AND GAS BUSINESS HAS THE SAME
KNOWN NEGATIVE EXTERNALITIES AS
CIGARETTES, THEY DO NOT.
WITH TOBACCO THE CAUSE AND
EFFECT IS DIRECT, OBVIOUS AND
MEASURABLE.
WITH HYDROCARBONS THE SOCIETAL
COSTS AN BENEFITS ARE FAR MORE
COMPLEX TO DEBATE.
IT'S DRAWING THEIR LINES IN SUCH
A WAY THAT THEIR PAINTING DOES
NOT INCLUDE HYDROCARBONS,
PERIOD.
MY QUESTION IS AS THE ALARMISM
FROM THE CLIMATE COMMUNITY
BECOME PERVASIVE ENOUGH TO WHERE
IT'S IRRATIONAL.
IS THIS BECOMING AN OVERLY
EXPENSIVE TASK?
CAN WE GATHER FROM YOUR PURCHASE
OF CHEVRON STOCK YOU DO NOT
BELIEVE THE HOWLING FROM
SOCIETY, REGULATORS AND
POLITICIANS WILL IMPACT AND
CHEVRON FOR THE NEXT TEN YEARS?
CAN CONSUMERS ASSUME THIS CAN
GENERATE A SUFFICIENT RETURN ON
CAPITAL FOR A LONG TIME TO COME?
>> WELL, I'LL GIVE YOU A
TEN-WORD ANSWER TO THAT.
I CAN'T REMEMBER ALL OF THE
QUESTIONS THAT WERE THERE, BUT I
WOULD SAY THAT PEOPLE THAT ARE
ON THE EXTREMES OF BOTH SIDES
ARE A LITTLE NUTS.
I WOULD HATE TO HAVE ALL THE
HYDROCARBONS BANNED IN THREE
YEARS.
YOU KNOW, YOU WOULDN'T WANT A
WORLD -- IT WOULDN'T WORK AND ON
THE OTHER HAND, YOU KNOW, WHAT'S
HAPPENING WILL BE ADAPTED TO
OVER TIME JUST AS WE'VE ADAPTED
TO ALL KINDS OF THINGS.
I'M INTERESTED IN THE QUOTE FROM
1997.
WE'VE TALKED ABOUT THIS BEFORE.
WE HAVE NO PROBLEM OWNING COSTCO
OR WALMART AND A SUBSTANTIAL
NUMBER OF THEIR STORES.
YOU KNOW, THEY SELL CIGARETTES.
BIG ITEM.
IT'S SOMETHING THAT BRINGS
PEOPLE IN.
THEY KNOW THE PRICE OF
CIGARETTES AND THEY PUT THEM OUT
FRONT.
IT'S A VERY TOUGH SITUATION.
WE MADE THAT DECISION A LONG
TIME AGO WHEN WE WENT TO MEMPHIS
AND WE LOOKED AT A BUSINESS THAT
WAS A VERY, VERY GOOD BUSINESS.
IT WAS MUCH LESS HARMFUL, AT
LEAST FROM EVERYTHING I COULD
FIND OUT.
IT WAS MUCH LESS HARMFUL THAN
SMOKING TOBACCO, CHEWING TOBACCO
WAS.
THESE WERE DECENT PEOPLE.
THEY WERE RUNNING A LEGAL
BUSINESS AND THEY ALL CHEWED
TOBACCO THEMSELVES.
THEY TOLD ME THAT THEIR MOTHER
WAS 100 AND CHEWING TOBACCO AND
ALL OF THESE THINGS.
CHARLIE AND I DID GO DOWN IN THE
LOBBY OF THAT HOTEL AND WE JUST
SAID TO OURSELVES, THIS IS
PROBABLY THE BEST BUSINESS WE'VE
EVER SEEN.
I CALLED MY THEN SON-IN-LAW, HE
HAD STUDIED CHEWING TOBACCO AND
ITS EFFECTS WHEN HE WAS WORKING
FOR A NADER RELATED ORGANIZATION
AND WE DECIDED NOT TO DO IT.
YOU KNOW, I SEE -- I USED TO SEE
ADS IN OUR PAPER FROM FINANCIAL
COMPANIES WHERE I KNEW THEY WERE
TERRIBLE.
IT'S A VERY TOUGH THING TO
DECIDE WHETHER YOU GET IN OR OUT
OF A BUSINESS.
VERY TOUGH TIME TO DECIDE WHAT
COMPANIES BENEFIT SOCIETIES MORE
THAN OTHERS.
I DON'T KNOW WHETHER I THINK
CHEVRON'S BENEFITTED SOCIETIES
IN ALL KINDS OF WAYS AND I THINK
IT WILL CONTINUE TO.
I DO THINK THAT THE WORLD'S
MOVING AWAY FROM THEM, TOO.
THAT COULD CHANGE.
I DON'T LIKE MAKING THE MORAL
JUDGMENTS ON STOCKS IN TERMS OF
ACTUALLY RUNNING THE BUSINESSES,
BUT THERE'S SOMETHING ABOUT
EVERY BUSINESS THAT YOU KNEW
WHAT YOU WOULDN'T LIKE AND, YOU
KNOW, MEAT PACK ERS, YOU KNOW.
IF YOU EXPECT PERFECTION IN YOUR
SPOUSE OR YOUR FRIENDS OR IN
COMPANIES, YOU'RE NOT GOING TO
FIND IT.
WHAT YOU ELECT TO DO YOURSELF,
IF YOU OWN AN INDEX FUND, YOU
OWN -- BELIEVE ME, CHEVRON IS
NOT AN EVIL COMPANY IN THE LEAST
AND I HAVE NO COMPUNCTION ABOUT
OWNING -- IN THE LEAST ABOUT
OWNING CHEVRON.
AND IF WE OWNED THE ENTIRE
BUSINESS, I WOULD NOT FEEL
UNCOMFORTABLE ABOUT BEING IN
THAT BUSINESS.
CHARLIE?
>> WELL, I AGREE.
YOU CAN IMAGINE TWO THINGS.
YOUNG MAN MARRIES INTO YOUR
FAMILY.
HE'S AN ENGLISH PROFESSOR AT
SWARTHMOREAR HE WORKS FOR
CHEVRON?
WHICH WOULD YOU PICK SIGHT
UNSEEN?
I WILL ADMIT I WOULD TAKE THE
GUY FROM CHEVRON.
>> I HOPE YOUR DAUGHTERS AGREE
WITH YOU.
>> ON THE OTHER SIDE OF THAT
ARGUMENT, BECAUSE THERE WERE
LOTS OF EMAILS THAT CAME IN ON
BOTH SIDES OF THESE ESG
QUESTIONS.
THIS ONE COMES FROM CHRISTINA
GALAGOS WHO'S BEEN A
SHAREHOLDERS SINCE 2018.
ON ITEMS 2 AND 3 OF THE PROXY
MATERIALS THE BOARD RECOMMENDED
VOTING AGAINST REGARDING THE
REPORTING OF CLIMATE RELATED
RISKS AND OPPORTUNITIES AS WELL
AS ON THE SHAREHOLDER PROPOSAL
REGARDING DIVERSITY AND
INCLUSION REPORTING.
BERKSHIRE IS SUCH A FORCE FOR
GOOD WHEN IT COMES TO FINANCIAL
LITERACY, WHY NOT BE A FORCE FOR
GOOD AND EXAMPLE WHEN IT COMES
TO THESE TWO VERY IMPORTANT
ISSUES?
PLEASE SHARE WITH US MORE ABOUT
THE AGAINST RECOMMENDATION.
>> WELL, I MEAN, GREG CAN TALK A
LITTLE BIT ABOUT WHAT BERKSHIRE
HAS DONE AS OPPOSED TO -- IN
TERMS OF THE ENVIRONMENTAL.
I WOULD SAY THIS.
IT'S VERY INTERESTING.
WITH EVERYTHING THAT'S BEING
RELEASED, I THINK WE HAVE OVER 1
MILLION SHAREHOLDERS.
CAN'T BE SURE BECAUSE OF THE
STREET NAME AND DUPLICATE
ACCOUNTS.
SEEMS VERY, VERY LIKELY.
I'VE HAD -- AND I GET THE
LETTERS THAT ARE WRITTEN TO ME.
I DON'T THINK I'VE HAD -- I
DON'T THINK I'VE HAD THREE
LETTERS IN THE LAST YEAR FROM
SHAREHOLDERS.
OUR VOTE ON THIS, AS YOU'LL SEE
LATER, IS THAT OVERWHELMINGLY
THE PEOPLE THAT BOUGHT BERKSHIRE
WITH THEIR OWN MONEY VOTED
AGAINST THOSE.
MOST OF THE VOTES FOR IT WERE
BY -- CAME FROM PEOPLE WHO NEVER
PUT A DIME OF THEIR OWN MONEY
INTO BERKSHIRE.
AND SO THEY -- AND I DON'T THINK
THEY READ OUR ANNUAL REPORTS AND
I DON'T THINK THEY READ THE
REPORTS OF BERKSHIRE HATHAWAY
ENERGY AND I DON'T THINK THEY
KNOW -- YOU KNOW, I TALK ABOUT
WHAT WE'RE DOING IN HIGH VOLTAGE
TRANSMISSION, WE'RE DOING MORE
THAN ANY OTHER COMPANY IN THE
COUNTRY.
THE PRESIDENT TALKED ABOUT WHAT
THE GOVERNMENT'S GOING TO DO,
HOW IMPORTANT IT IS, YOU KNOW?
WE HAVE A RECORD THAT OVERALL IS
INCREDIBLY GOOD, BUT WE HAVE A
GROUP OF ORGANIZATIONS, JUST
GENERALLY, AND THEY'RE NICE
PEOPLE BUT THEY WANT US TO
ANSWER A BUNCH OF QUESTIONS
THEIR WAY SO THEY WANT US TO GO
TO DAIRY QUEEN, BORSHIMES, ALL
OF THOSE PEOPLE ARE FILLING OUT
REPORTS AND SHOW A BUNCH OF
FIGURES.
THE REPORTS THAT COUNT ARE THE
REPORTS GREG GETS ON BERKSHIRE
HATHAWAY.
YOU TALK ABOUT THREE OF OUR
COMPANIES, YOU'VE COVERED 95% OF
IT.
IT'S ASININE FRANKLY IN MY VIEW.
WE DO SOME OTHER ASININE THINGS
BECAUSE WE'RE REQUIRED TO DO
THEM.
WE'LL DO THEM BECAUSE WE'RE
REQUIRED.
TO HAVE THE PEOPLE AT BUSINESS
WIRE, DAIRY QUEEN, ALL THOSE
PLACES FILLING OUT REPORTS AND
MAKING SOME COMMON REPORT THAT
COMES IN, WE DON'T DO THAT STUFF
AT BERKSHIRE.
WE'VE GOT -- DURING THE PANDEMIC
WE PROBABLY HAVE ABOUT 12 PEOPLE
THAT COME INTO HEADQUARTERS.
WE'VE GOT 360,000 PEOPLE WORKING
IN THE COMPANY THAT -- ALL KINDS
OF DIVERSE ACTIVITIES AND IT'S
BUILT -- I DON'T WANT TO GET
INTO THE WHOLE THING.
IT'S BUILT ON AUTONOMY.
I AM PROBABLY THE ONLY CEO OF AN
S&P 500 COMPANY THAT DOES NOT
GET A CONSOLIDATED INCOME
STATEMENT EVERY MONTH.
I MEAN, EVERY OTHER COMPANY I'LL
BET IN THE S&P 500 PRINTS OUT
THE EARNINGS THEY HAD AT THE
END, YOU KNOW, FROM FEBRUARY AND
MARCH AND CEO GETS THEM AND A
WHOLE BUNCH OF OTHER PEOPLE GET
IT.
I DON'T GET
I DON'T NEED
I COULD PUT 60 OR 70 COMPANIES
THROUGH A WHOLE LOT OF TROUBLE
AND EVERYTHING, THEY'D HAND ME
SOMETHING AND I KNOW THE ANSWER
TO IT ALREADY.
IT DOESN'T MAKE ANY DIFFERENCE.
THEY'VE GOT THE MONEY THEY NEED.
SO WE DON'T DO THINGS JUST
BECAUSE WE'VE GOT A DEPARTMENT
OF THIS OR A DEPARTMENT OF THAT
AND WE DON'T WANT TO SET UP A
LOT OF DEPARTMENTS LIKE THAT.
WHAT'S IMPORTANT IS WHAT WE'RE
DOING -- WELL, PRIMARILY
BERKSHIRE HATHAWAY AND THE
RAILROAD.
I'LL LET GREG TELL YOU ABOUT
THAT IN JUST ONE SECOND.
BUT -- p>> I DON'T THINK WE THI
KNOW THE ANSWER TO ALL OF THESE
QUESTIONS ABOUT GLOBAL WARMING
AND SO FORTH.
PEOPLE WHO ASK THE QUESTIONS
THINK THEY KNOW THE ANSWERS,
WE'RE JUST MORE MODEST.
>> WELL, BUT EVEN IF WE KNEW THE
ANSWER, IN TERMS OF THE REPORTS
WE WOULD -- WE WOULD NOT COLLECT
A WHOLE LOT OF THINGS THAT DON'T
MEAN ANYTHING TO US TO SATISFY
PEOPLE WHO ACTUALLY DON'T KNOW
WHAT THEY'RE TALKING ABOUT.
IN MANY CASES I CAN TELL THEY
HAVEN'T READ OUR REPORT.
WE, AS I POINT OUT IN THE ANNUAL
REPORT, I NEVER -- NOBODY WOULD
HAVE GUESSED IT.
PEOPLE THINK WE'RE A BUNCH OF
GUYS THAT OWN STOCKS AND ALL OF
THAT SORT OF THING.
BERKSHIRE HATHAWAY OWNS BY GAP
ACCOUNTING MORE PROPERTY PLANT
EQUIPMENT, BUSINESS
INFRASTRUCTURE WHAT THE
PRESIDENT GOT THROUGH TALKING
ABOUT WEDNESDAY NIGHT,
INFRASTRUCTURE.
WE HAVE MEASURED BY GAP
ACCOUNTING THAN ANYBODY ELSE,
MORE THAN ANY OF THOSE COMPANIES
ON THE LIST OF LARGEST COMPANIES
AND WE'VE GOT IT BY A
SUBSTANTIAL MARGIN.
SO WE HAVE AN INVESTMENT IN WHAT
MAKES THIS COUNTRY MOVE AND
WORK.
15% OF THE INTERSTATE GOODS MOVE
ON OUR RAILROAD.
WE'RE BUILDING TRANSMISSION AND
WE STARTED IN 2006 OR 7 PLANNING
HOW WE WOULD CLOSE COAL PLANTS
BUT YOU CAN'T CLOSE COAL PLANTS
UNTIL YOU GET THE ELECTRICITY
FROM WHERE IT'S GENERATED TO THE
CUSTOMER.
IF YOU ARE GOING TO GENERATE IT
IN WYOMING -- THAT'S THE WAY IT
WAS DONE 350 YEARS AGO, 75 YEAR
AGO.
THERE'S NO REASON TO HAVE THE
WIND BLOWING IN WYOMING AND
TRYING TO TURN ON THE LIGHTS IN
LAS VEGAS.
WE WENT ON THE PLAN A LOT
EARLIER THAN PEOPLE WERE TALKING
ABOUT.
WE SAID 16 BILLION OR WHATEVER
IT WAS IN THE ANNUAL REPORT
UNDERWAY.
WE JUST ADDED 2 BILLION SINCE
THE ANNUAL REPORT AND THERE'S NO
UTILITY IN THE COUNTRY COMING
ANYWHERE CLOSE TO THAT.
TELL THEM A LITTLE BIT ABOUT IT.
>> SURE.
THANK YOU.
AS WARREN TOUCHED ON, BHE AND
BHMF HAVE THE SIGNIFICANT CARBON
FOOTPRINT WHEN YOU TALK ABOUT
IT.
YOU'VE TALKED ABOUT THE
DISCLOSURE GOING ALL THE WAY
BACK TO 2007.
I DID PULL THOSE TWO INVESTOR
PRESENTATIONS FROM 2007 AND THE
MOST RECENT ONE FROM 2021.
IF WE CAN PULL UP BHE 1 AS A
SLIDE, IT WOULD HIGHLIGHT GOING
ALL THE WAY BACK TO 2007 WE'VE
BEEN DOING INVESTOR
PRESENTATIONS FOR OUR -- WHAT WE
CALL OUR FIXED INCOME INVESTORS
AND WE'VE DONE THAT THROUGH --
EVERY YEAR THROUGH 2021.
WE'VE PROVIDED VERY SIMILAR
DISCLOSURES TO OUR BOARD ON AN
ANNUAL BASIS AND HAD DISCUSSIONS
AROUND BERKSHIRE HATHAWAY'S
ENERGY TO DECASH BOW NIEZ.
IF YOU GO BACK TO THE INCOME
CONFERENCE, WE WERE HAVING A
CONFERENCE AT THAT TIME, WE HAVE
THIRD PARTY DEBT, CAPITAL IS
RAISED.
IT'S USED ACROSS THE REGULATED
ENTITIES TO MANAGE OUR TOTAL
COSTS TO THE UMS CAN.
WE HAVE INVESTORS.
WE'RE HIGHLIGHTING ON AN ANNUAL
BASIS.
IF YOU GO BACK TO THAT 2007
INVESTOR CONFERENCE, IT'S
INTERESTING.
IN THAT PRESENTATION WE'RE
HIGHLIGHTING CLIMATE CHANGE,
THAT IT'S A FUNDAMENTAL RISK AND
WE DISCUSS WHAT GOOD POLICY
WOULD BE.
WE DISCUSSED INNOVATION.
WE DISCUSSED MARKET
TRANSFORMATION AND THE
IMPORTANCE OF SETTING TARGETS AT
THAT POINT IN TIME.
AND WE HAD RECOMMENDATIONS FOR
OUR INDUSTRY.
THEN SINCE THEN EACH YEAR WE'VE
PRESENTED REALLY A PLAN AND A
STRATEGY AROUND HOW EACH OF OUR
BUSINESSES IN DHE BUT EACH OF
OUR REGULATED ENTITIES, HOW
THEY'RE GOING TO TRANSFORM.
THE WHOLE TRANSFORMATION HAS
BEEN AROUND DECARBONIZATION.
MANAGING THAT RISK ON BEHALF OF
OUR STAKEHOLDERS IN MANY STATES,
CUSTOMERS WE SEARCH, AND FOR
BERKSHIRE'S SHAREHOLDERS.
AS YOU GO THROUGH THOSE
PRESENTATIONS THERE'S A COMMON
THEME AND WARREN TOUCHED ON IT
ALREADY.
YOU HAVE TO BUILD THE FOUNDATION
FIRST AND THAT FOUNDATION IS
AROUND BUILDING THE HIGH
VOLTAGE, THE TRANSMISSION
SYSTEM.
WARREN TOUCHED ON IT IN HIS
ANNUAL REPORT THIS YEAR AND
LETTER.
HE HIGHLIGHTED THAT AT BERKSHIRE
HATHAWAY ENERGY WILL BE SPENDING
JUST IN THE WEST $18 BILLION ON
TRANSMISSION.
5 BILLION OF THAT'S ALREADY BEEN
SPENT AS WE SIT HERE TODAY AND
THAT 13 BILLION WILL BE SPEND
OVER THE NEXT TEN YEARS.
THAT'S A FOUNDATION THAT WORKS
AT BERKSHIRE HATHAWAY ENERGY AND
WELL BEYOND THAT.
I WOULD HIGHLIGHT WE'VE BEEN
BUILDING THE TRANSMISSION
INFRASTRUCTURE IN PLACE, WE HAVE
BEEN BUILDING RENEWABLES.
IF YOU LOOK AT OUR INVESTMENT
THROUGH THE END MUCH 2020 WE'VE
INVESTED $30 BILLION OR IN
EXCESS OF $30 BILLION INTO
RENEWABLES AND HAVE REALLY
COMPLETELY CHANGED THE WAY OUR
BUSINESSES DO BUSINESS, I.E.,,
OUR UTILITY BASES.
THEY'VE BEEN DECARBONIZING AND
DELIVERING A VALUE PRODUCT TO
OUR STAKEHOLDERS, TO OUR
CUSTOMERS.
AND I THINK THE -- AND I THINK
THE RESULTS ARE REALLY AMAZING
WHEN YOU LOOK AT THEM.
I'LL GIVE YOU A COUPLE OF
REFERENCE POINTS.
IF YOU GO BACK TO 2015 WHEN THE
U.S. WAS DISCUSSING, EXCUSE ME,
JOINING THE PARIS AGREEMENT,
VERY SPECIFIC TARGETS WERE BEING
SET.
PRIOR TO THE TARGETS BEING SET
BERKSHIRE HATHAWAY AND 12 OTHER
COMPANIES INCLUDING THE APPLES
OF THE WORLD, GOOGLE, WALMART
COMMITTED TO TARIFFS AND TARGETS
NEEDED TO BE
BERKSHIRE HATHAWAY WAS ONE OF
THOSE.
>> HOW MANY OTHER COMMIT WRMTS
THERE.
>> THERE WERE NONE.
I'M HAPPY TO REPORT WE MADE A
VARIETY OF PLEDGES.
ONE OF THEM WAS AT THAT POINT WE
HAD INVESTED $15 BILLION IN
RENEWABLES AND WE WOULD COMMIT
30 BILLION IN TOTAL.
WELL, WE'VE FAR EXCEEDED THAT
TOTAL NOW.
THERE'S BEEN A CLEAR COMMITMENT
TO REDUCE DECASH BOW NEEDING THE
BUSINESS.
THERE ARE IDENTIFIABLE AND
THAT'S IMPORTANT.
IF YOU LOOK AT THE STANDARDS
THAT ARE SET WITH THE ORIGINAL
U.S. GOVERNMENT'S COMMITMENTS
ASSOCIATED WITH THE PARIS
AGREEMENT, THE TARGET WAS 26 TO
28% REDUCTIONS IN CARBON FOOT
PRINDS GOING BACK TO OO O 5 --
>> NO, WE COMMITTED TO THAT AT
BHE AND I'M HAPPY TO REPORT AND
WE BRIEFED OUR BOARD, WE
ACHIEVED THAT IN 2020.
SO WE MET OUR PLEDGE AND WE MET
THE COMMITMENT UNDER THE PARIS
AGREEMENT AND THEN IF YOU FAST
FORWARD TO THE DISCUSSIONS THAT
ARE OCCURRING RIGHT NOW OR HAVE
OCCURRED AROUND REJOINING THE
PARIS AGREEMENT, THE CURRENT
ADMINISTRATION HAS PROPOSED
THAT, AGAIN, USING 2005 AS THE
STARTING POINT, THAT THE
EMISSION GOALS OR REDUCTIONS
SHOULD BE 2/3.
I'M HAPPY TO BRIEF TO OUR
SHAREHOLDERS AND BRIEFINGS WE'VE
PROVIDED TO OUR BOARD, BUT
BERKSHIRE HATHAWAY ENERGY WILL
ACHIEVE THAT BY 2030.
AGAIN, THE REASON WE CAN DO IT
IS WE'VE BUILD THE FOUNDATION.
WARREN'S HIGHLIGHTED IT AND
FOLLOWED IT UP WITH SPECIFIC
INVESTMENTS ON THE RENEWABLE
SIDE.
I HAVE ONE INCREMENTAL SLIDE
THAT I DON'T -- THINK SORT OF
HOLDS IT ALTOGETHER AND THAT'S
VHAE 2 BECAUSE AS PEOPLE DISCUSS
COAL UNITS.
HOW MANY HAVE YOU OWNED, HOW
MANY HAVE YOU CLOSED?
>> THERE'S NO QUESTION THAT CAN
BE AN IMPORTANT METRIC BUT IT IS
A TRANSITION AND WE HAVE VERY
MUCH FOCUSED ACROSS THE THREE
UTILITIES WE OWN AND THE ONES
WE'VE HIGHLIGHTED ON THE SLIDE
IS TO TRANSITION FROM OUR
EXISTING FLEET TO RENEWABLES
USING TRANSMISSION.
WE HAVE NOT BECOME OVERLY
RESISTANT ON TRANSITIONING TO
GAS.
OVER A PERIOD OF TIME OUR COAL
REQUIREMENTS WILL DECLINE.
I'M PLEASED TO REPORT THROUGH
2020 WE'VE CLOSED 16 UNITS TO
DATE.
IF YOU LOOK AT FROM 2021 THROUGH
2030 THERE WILL BE AN
INCREMENTAL 16 UNITS CLOSED AND
THEN IF YOU GO THROUGH TO THE
END OF 2049 OUR REMAINING 14
UNITS WILL BE CLOSED AND AT THAT
POINT IN TIME ALL OUR UNITS
CLOSE.
THAT'S AN AGGREGATION OF ALL OF
THE ACTIVITIES OUR BUSINESS
UNITS HAVE BEEN TAKING TO HELP
FACILITATE THAT TRANSITION AND
REALLY TRANSITIONING TO A --
DECASH BOW NIEZING THOSE UNITS
AND DECASH BOW NIEZING OUR
BUSINESSES ON BEHALF OF FIRST
AND FOREMOST OUR CUSTOMERS, THE
MANY STAKEHOLDERS THEY REPRESENT
IN THE VARIOUS STATES AND THEN
EQUALLY IMPORTANT DECAR BOW
NIEZING THOSE BUSINESSES ON
BEHALF OF OUR BERKSHIRE HATHAWAY
SHAREHOLDERS.
THE ONLY OTHER THING I WOULD
ADD, BECAUSE IT IS THE ENTITY
THAT HAS A SECOND LARGEST
FOOTPRINT IN BERKSHIRE AND WHEN
YOU COMBINE THEM, YOU'RE TALKING
THE MATERIAL SET OF EMISSIONS
WITHIN BERKSHIRE, BNSF HAS ALSO
BEEN VERY ACTIVE IN MANAGING
THEIR CARBON PROFILE.
THEY'VE COMMITTED TO HAVE
SCIENCE-BASED TARGETS
ESTABLISHED FOR 2030 SO, AGAIN,
THOSE TARGETS WILL AGAIN BE
CONSISTENT WITH THE PARIS
AGREEMENT.
WE'VE SEEN WHAT THE OTHER
PARTICIPANTS OR SOME OF THEM IN
THE CLASS -- IN THE INDUSTRY
THAT HAVE COMMITTED TO AND OUR
COMMITMENT WILL BE VERY SIMILAR,
I.E.,, IT WILL BE CONSISTENT.
SO, AGAIN, IF YOU LOOK AT OUR --
AND THAT'S BEEN PUBLICLY
DISCLOSED.
THAT'S ON THE BSNF WEBSITE.
EVERYTHING I'VE DISCUSSED IS ON
THEIR WEBSITE, FILED IN 8Ks,
COMPLETELY ACCESSIBLE BY OUR
MANY SHAREHOLDERS.
WHEN I LOOK AT IT FROM THE
PERSPECTIVE OF OUR BERKSHIRE
SHAREHOLDERS, I REALLY BELIEVE
THIS RISK IS BEING WELL MANAGED
AND IN POSITIONING OURSELVES FOR
THE LONG TERM.
>> INCIDENTALLY, THE PRESIDENT
THE OTHER NIGHT TALKED ABOUT 100
BILLION FOR INFRASTRUCTURE.
WE'D LOVE TO SPEND 100 BILLION
ON IT.
HE WAS TALKING ABOUT, YOU KNOW,
TRANSMISSION IS REALLY THE
PROBLEM.
A BIG
YOU'VE GOT TO GET MORE OF THE
SUN IS SHINING AND WHERE THE
WIND IS BLOWING ESSENTIALLY TO
CONCENTRATIONS OF POPULATION.
AND IT'LL BE -- YOU CROSS STATE
LINES AND YOU GO THROUGH
PEOPLE'S BACKYARDS.
IT'S -- IT'S -- WHETHER THE
FEDERAL GOVERNMENT HAS A BETTER
LUCK IN JUST SAYING THIS IS THE
WAY IT'S GOING TO BE DONE,
RAMMING IT DOWN THE THROATS OF
WHERE THEY GO AND GETTING IT
DONE, I MEAN, THEY MAY HAVE THAT
POWER AND THEY'LL BE ABLE TO DO
IT FASTER THAN WE CAN.
THE SPEED, WE BOUGHT CARBON IN
2006, WE HAD A BUNCH OF
CUSTOMERS IN THE WEST AND THEY
HAD PEOPLE SERVING THEM.
TO CHANGE THAT YOU HAVE TO GO
WHERE WIND BLOWS AND DELIVER IT.
SO IT'S -- BUT IT IS INTERESTING
THAT WE HAVE PUBLISHED THIS
INFORMATION.
WE SPENT FAR MORE THAN ANY
UTILITY IN TERMS OF RENEWABLES
AND TRANSMISSION IN THE UNITED
STATES.
WE SHARED IT WITH ENOUGH BUT
OUR -- THE PEOPLE WHO BOUGHT THE
STOCK WITH THEIR OWN MONEY, THE
INDIVIDUALS, THEY SEEM TO
UNDERSTAND IT AND THEY READ THE
REPORTS.
WE GET CALLS AND THEY SAY, WELL,
WE WANT TO COME OUT AND TALK TO
YOU ABOUT IT.
WE'RE NOT TALKING TO THEM AND
IGNORING THE MILLION PEOPLE THAT
HAVE BEEN WITH US OVER TIME AND
BOUGHT IT WITH THEIR OWN MONEY.
WE WILL NOT GIVE SPECIAL
TREATMENT TO EITHER THE ANALYSTS
OR TO THE INSTITUTIONS, WHO
TRUST US WITH THEIR SAVINGS.
>> THIS QUESTION IS FOR WARREN
ENERGY.
IT COMES FROM FERNANDO LEWIS.
AS A SHAREHOLDER THAT INTENDS TO
REMAIN SO FOR MANY DECADES, MY
BIGGEST CONCERN IS AROUND
POSSIBLE LOSSES ARISING FROM
HIGHER THAN EXPECTED INSURANCE
LOSSES.
WE'VE SEEN THIS IN OTHER
COMPANIES WHERE UNDERWRITING
MISTAKES CRIPPLE BUSINESSES THAT
ARE EXEMPLAR.
I UNDERSTAND BERKSHIRE'S CULTURE
IS UNIQUE, THIS IS A RISK THAT
CONCERNS ME.
MANY OF US SHAREHOLDERS FEEL
COMFORTABLE NOW GIVEN THE
PRIVILEGE OF HAVING YOU LOOK AT
THESE DEALS, HOWEVER, THERE WILL
BE A DAY WHEN THIS IS NO LONGER
THE CASE.
IS IT REASONABLE TO THINK OVER
THE LONG TERM THEY SHOULD LOOK
AT GEICO AND REDUCE THE
LONG-TAIL RISK?
I HAVE THE BEST GRATITUDE.
I'M CONFIDENT WE HAVE THE TALENT
TO REMAIN LEADERS FOR DECADES TO
COME.
THIS IS BEARSED ON THE INHERENT
OPAQUENESS AND RISK.
>> AJIT, DO YOU WANT TO LEAD
OFF?
>> I MEAN, CLEARLY CONTRACT
CERTAINTY IS AN ISSUE FOR US IN
THE INSURANCE INDUSTRY.
IT IS AN ISSUE THAT CUTS ACROSS
THE LONG TAIL LINE BUT EVEN
SHORT TAIL PROPERTY FOCUS LINES.
MOST RECENT EXAMPLE IS BUSINESS
INTERRUPTION WHICH IS AN
INTEGRAL PART OF ANY INSURANCE
POLICY BOUGHT AND SOLD BY
CRPORATIONS.
IT IS A RISK EVERY TIME WE ISSUE
A CONTRACT THAT EITHER BECAUSE
OF SLOPPINESS IN HOW THAT
CONTRACT IS WRITTEN OR BECAUSE
OF THE REGULATORY ENVIRONMENT WE
ALL HAVE TO LIVE IN THAT THE
WORDS IN THE CONTRACT MAY BE
TORTURED.
NORMALLY WHEN THEY ARE TORTURED,
THEY END UP GOING AGAINST THE
INSURANCE INDUSTRY, NOT IN THEIR
FAVOR.
SO IT IS A RISK.
IT'S AN UNKNOWN RISK IN TERMS OF
HOW BAD IT CAN BE.
I HOPE WE PRICE FOR IT WHEN WE
PRICE FOR THE PRODUCT, THROW IN
SOMETHING FOR THE UNKNOWN
UNKNOWNS, IF YOU WILL.
WE TRY AND AGGREGATE EXPOSURES
BY RISK CATEGORIES.
HOPEFULLY THAT WILL GIVE US SOME
COMFORT IN TERMS OF SOME
BOUNDARIES ON WHAT THE EXPOSURE
REALLY CAN BE.
THERE'S NO QUESTION THE
REGULATORS PLAY AN IMPORTANT
ROLE IN TERMS OF THE ECONOMICS
OF THE BUSINESS, ESPECIALLY IN
THE U.S. WHERE THE 50 STATE
REGULATORS WHO WE HAVE TO DEAL
WITH IN TERMS OF PRICING, IN
TERMS OF CONTRACTS.
>> MOST OF THOSE SURPRISES IN
INSURANCE, MOST OF THEM ARE
UNPL
UNPLEASANT.
YOU GET THE PREMIUM UNFRONT,
THAT'S PLEASANT.
YOU GET SOME VERY IMAGINATIVE
LOSSES.
WE ARE WILLING TO LOSE IN TERMS
OF THE OUTSIDE LIMIT.
WE'RE WILLING TO LOSE $10
BILLION IN A SINGLE EVENT.
WE WANT TO GET PAID VERY
APPROPRIATELY FOR THAT, BUT
WE'VE GOT THE RESOURCE TOSS DO
IT.
BUT WE DON'T WANT TO LOSE 10
BECO
BILLION IN SOMETHING WHERE WE
THOUGHT WE WOULD LOSE 50 MILLION
OR SOMETHING LIKE THAT.
THE CURRENT SITUATION, FOR
EXAMPLE, WITH THE BOY SCOUTS OF
AMERICA, I THINK THERE WERE 1100
CLAIMS OR SOMETHING LIKE THAT
THAT HAD BEEN FILED AND NOW
THERE'S 17,000 --
>> NO, NO, CLOSE TO 100,000.
UP BY 50 TIMES.
>> THESE GO BACK TO 1950 AND
1960.
YOU HAVE PEOPLE ADVERTISING FOR
CLAIMS.
I'M SURE A LOT OF THEM ARE VALID
OR INVALID?
>> IT GOES BACK TO THE ISSUE
THAT YOU JUST RAISED.
THE REASON WHY THE NUMBER OF
CLAIMS HAS SKYROCKETED FROM LESS
THAN 200,000 IS BECAUSE THE
STATUTE OF LIMITATIONS HAD
EXPIRED, BUT IN SEVERAL STATES
IF NOT IN MORE STATES THEY HAVE
UNILATERALLY EXTENDED THE
DEADLINE BY WHEN YOU CAN MAKE
CLAIMS AND EXPANDED IT BY A FEW
YEARS AS A RESULT OF WHICH A LOT
OF MORE CLAIMS APPEARED.
FUNDED BY PLAINTIFF LAWYERS THAT
ARE VERY WELL FUNDED.
THAT RESULTS IN CLAIMS JUST
SKYROCKETING.
>> YEAH.
A LOT OF UNPLEASANT SURPRISES IN
INSURANCE.
WE'VE GOT A VERY -- I'M VERY
BIASED ON THIS.
I THINK WE'VE GOT THE BEST
INSURANCE OPERATION IN THE WORLD
AND AJIT IS THE GUY THAT CREATED
IT.
THE PEOPLE AT GEICO, WE BOUGHT
THAT AND DID WONDERFULLY OVER
TIME TO CONTRIBUTE TO
OTHER PEOPLE HAVE.
AJIT IS A SYMPHONY CONDUCTOR.
>> THIS QUESTION COMES FROM
HENRY ZOO.
IT LOOKS LIKE CHARLIE AND WARREN
HAVE SOME DIFFERENT OPINIONS
RECENTLY LIKE COSTCO, WELLS
FARGO.
WHERE IS THAT TAKING BERKSHIRE?
>> CHARLIE?
>> WE'RE NOT ALL THAT DIFFERENT.
AND COSTCO IS A COMPANY I VERY
MUCH ADMIRE AND I HAVE ENJOYED
MY LONG ASSOCIATION WITH IT,
WITH THAT COMPANY.
AND BERKSHIRE, TOO.
SO -- AND LUCKILY THERE'S NO N
CONFLICT.
>> WE HAVE NEVER HAD A
ARGUMENT.
62 YEARS.
IT'S NOT THAT WE AGREE O
EVERYTHING, BUT WE LITERALLY I
62 YEARS -- WE'VE NEVER GOTTE
MAD AT EACH OTHER.
>> NO.
NO.
>> JUST DOESN'T HAPPEN.
>> THIS QUESTION'S FROM JASO
PLANNER.
HE SAID MR. JAIN AND MR. ABEL,
THIS QUESTION IS FOR YOU.
ONE OF THE SUCCESSFUL FEATURES
IS THE STRONG BOND BETWEEN MR.
BUFFETT AND MR. MUNGER WHO
MANAGE IT BETTER BECAUSE THEY
HAD EACH OTHER.
CAN YOU PLEASE TELL US ABOUT HOW
YOU INTERACT WITH EACH OTHER OR
SOME OF THE OTHER INCREDIBLY
COMPETENT BERKSHIRE MANAGERS YOU
SEEK FOR ADVICE.
>> WHO'S THAT DIRECTED AT?
>> AT GREG AND AJIT.
>> OKAY.
>> THERE'S NO QUESTION THE
RELATIONSHIP WARREN HAS WITH
CHARLIE IS UNIQUE.
IT'S NOT GOING TO BE DUPLICATED,
CERTAINLY NOT BY ME AND GREG.
I CAN'T THINK OF ANYBODY THAT
CAN DUPLICATE T. NEVERTHELESS,
BOTH GREG AND I, AT LEAST
CERTAINLY FROM MY PERSPECTIVE
AND I'M SURE GREG WILL SPEAK FOR
HIMSELF.
WE'VE KNOWN EACH OTHER FOR A
VERY LONG TIME.
I CERTAINLY HAVE A LOT OF
RESPECT, BOTH AT A PROFESSIONAL
LEVEL AND PERSONAL LEVEL IN
TERMS OF WHAT GREG'S ABILITIES
ARE, WE DO NOT INTERACT WITH
EACH OTHER AS OFTEN AS WARREN
AND CHARLIE DO, BUT EVERY
QUARTER WE WILL TALK TO EACH
OTHER ABOUT OUR RESPECTIVE
DECISIONS.
DURING THE COURSE OF THE QUARTER
WHILE WE MAY NOT HAVE ANY FORMAL
MEETINGS, IF YOU WILL, BUT EVERY
TIME THEY'LL PICK UP THE PHONE
AND CALL ME.
IF THERE'S ANY QUESTION RELATING
TO THE NON-INSURANCE OPERATION
THAT GREG IS IN CHARGE OF LIKE
WE HAD RECENTLY WHERE A CLIENT
OF MINE IS LOOKING FOR -- TRYING
TO FIND A BUYER.
I PICKED UP THE PHONE AND TALKED
TO GREG ABOUT, YOU KNOW, HOW
BEST TO PROCEED.
SO THERE'S THAT THAT HAPPENS
DURING THE COURSE OF THE
QUARTER.
EVERY QUARTER WE EXCHANGE NOTES.
WE HAVE A PERFECTLY
WELL-FUNCTIONING RELATIONSHIP
BETWEEN THE TWO OF US, AND I
HOPE IT REMAINS THAT WAY.
GREG?
>> YES.
WELL, AJIT, WELL SAID.
AND AS HE TOUCHED ON, WARREN AND
CHARLIE HAVE AN EXCEPTIONAL
RELAT
RELATIONSHIP.
VERY PROUD OF THE RELATIONSHIP
I'VE HAD.
AS AJIT TOUCHED ON, IT'S
DEVELOPED OVER MANY YEARS.
WE'VE HAD THE OPPORTUNITY OR
I'VE SEEN THE OPPORTUNITY TO SEE
HOW AJIT'S ONE THE BUSINESS.
I'VE HAD THE ABILITY TO OBSERVE
THAT.
EQUALLY OVER THE YEARS THAT
RELATIONSHIP HAS JUST BUILT AND
BECOME GREATER AND GREATER AND
AS AJIT TOUCHED ON, I HAVE MORE
RESPECT FOR HIM BOTH PERSONALLY
AND PROFESSIONALLY.
EVEN THOUGH THE INTERACTION MAY
BE DIFFERENT THAN SAY HOW WARREN
AND CHARLIE DO IT, AS AJIT
TOUCHED ON, THERE IS A REGULAR
DIALOGUE BOTH AROUND
OPPORTUNITIES WITHIN OUR TWO
BUSINESSES AND UNITS, BOTH IF WE
SEE INDIVIDUAL SHOOTS THERE.
WE MAKE SURE WE'RE ALWAYS
FOLLOWING UP WITH EACH OTHER BUT
IT GOES BEYOND
AJIT HAS A GREAT UNDERSTANDING
OF THE BERKSHIRE CULTURE.
I STRONGLY BELIEVE I DO, TOO.
ANY TIME WE SEE ANYTHING UNUSUAL
IN ONE OF OUR BUSINESSES, IT'S
AJIT WHO I'M GOING TO CALL AND
SAY ARE YOU COMFORTABLE THAT
WE'RE TAKING THIS APPROACH?
IS IT CONSISTENT WITH HOW YOU
THINK ABOUT IT.
IT GOES BEYOND DISCUSSING THE
BUSINESSES BUT THAT MAINTAINING
THE EXCEPTIONAL CULTURE WE HAVE
AT BERKSHIRE AND BUILDING UPON
THAT.
VERY FORTUNATE TO HAVE AJIT AS A
COLLEAGUE AND IMMENSELY ENJOY
WORKING WITH HIM EVERY DAY.
THANK YOU.
>> THIS QUESTION COMES FROM GLEN
GREENBERG.
HE SAYS -- IT'S ON THE
PROFITABILITY OF GEICO AND BNSF.
HE SAID WHY DO THEY OPERATE AT
MEANINGFULLY LOWER PROFIT
MARGINS THAN THEIR MAIN
COMPETITORS, PROGRESSIVE AND
UNION PACIFIC?
CAN WE EXPECT CURRENT MANAGEMENT
TO ACHIEVE PARITY?
>> GEICO AND --
>> BNSF.
>> OH, ACTUALLY IF YOU LOOK AT
THE FIRST QUARTER FIGURES YOU'LL
SEE THAT THE BERKSHIRE HATHAWAY
UNION PACIFIC PERSON HAS GOTTEN
BETTER.
K.T. FARMER IS DOING AN
INCREDIBLE JOB AT BNSF.
BE AN INTERESTING QUESTION
WHETHER FIVE YEARS FROM NOW OR
15 YEARS FROM NOW BNSF OR UNION
PACIFIC HAS HAD HIGHER EARNINGS.
WE'VE HAD HIGHER EARNINGS IN THE
PAST.
THE FIRST QUARTER YOU CAN LOOK
AT AND, YOU KNOW, THEY THINK
THEY'VE GOT A SLIGHTLY BETTER
FRANCHISE.
WE THINK WE'VE GOT A SLIGHTLY
BETTER
WE'RE LARGER THAN UNION PACIFIC.
WE SHOULD.
WE SHOULD MAKE A LITTLE MORE
MONEY THAN WE DID BUT WE HAVEN'T
THE LAST FEW YEARS.
IT'S QUITE A RARE ROAD.
I FEEL PRETTY GOOD ABOUT THAT.
I SHOULD GO BACK TO THE PREVIOUS
QUESTION.
PEOPLE TALK ABOUT THE AGING
CULTURE.
I ASSUME THEY'RE TALKING ABOUT
CHARLIE.
I WOULD LIKE TO POINT OUT IN
THREE MORE YEARS CHARLIE WILL BE
AGING AT 1% A YEAR AND HE IS
THE -- NO ONE'S AGING LESS THAN
IF YOU COULD TAKE SOME OF THESE
NEW COMPANIES WITH 25-YEAR-OLDS,
THEY'RE AGING AT 4% A YEAR.
WE WILL HAVE THE SLOWEST AGING
MANAGEMENT PERCENTAGEWISE BY FAR
THAN ANY CORPORATE COMPANY --
ANY AMERICAN COMPANY HAS.
>> DID YOU WANT TO TALK ABOUT
GEICO VERSUS PROGRESSIVE?
I HAVE A LOT OF QUESTIONS ON
THAT PROGRESSIVE HAS HAD THE
BEST OPERATION IN THE LAST -- IN
RECENT YEARS IN TERMS OF
MATCHING RATE TO RISK.
THAT'S WHAT INSURANCE IS ALL
ABOUT, AMONG OTHER THINGS.
YOU HAVE TO HAVE THE RIGHT RATE.
IF YOU THINK 90-YEAR-OLDS AND
20-YEAR-OLDS HAVE AN EQUAL
CHANCE OF DYING, YOU'RE GOING TO
BE OUT OF BUSINESS VERY QUICKLY,
THE LIFE INSURANCE BUSINESS.
YOU WILL GET ALL OF THE
90-YEAR-OLD RISKS AND THE OTHER
GUY WILL GET ALL OF THE AUTO
INSURANCE.
THERE'S A DIFFERENCE BETWEEN
60-YEAR-OLD MALES AND
40-YEAR-OLD MARRIED, EMPLOYED
PEOPLE.
SO THE COMPANIES THAT DO THE
BEST JOB OF ACTUALLY HAVING THE
APPROPRIATE RATE FOR EVERY ONE
OF THEIR POLICYHOLDERS IS GOING
TO DO VERY WELL.
PROGRESSIVE HAS DONE A VERY GOOD
JOB AT THAT.
WE'RE DOING A MUCH BETTER JOB ON
THAT ALREADY.
TODD COMBS HAS GONE THERE.
VERY INTERESTING BUSINESS.
BOTH PROGRESSIVE AND GEICO WERE
STARTED IN THE 30s.
WE HAVE HAD THE BETTER PRODUCT
FOR A LONG, LONG TIME IN TERMS
OF COST AND HERE WE ARE 85 YEARS
LATER IN OUR CASE AND WE HAVE
ABOUT 13% OR SO IN THE MARKET,
THE TWO ARE AT 25% IN THE
MARKET.
THE HUGE MARKET AFTER 87 YEARS
OF HAVING A BETTER PRODUCT, SO
IT'S A VERY SLOW CHANGING
COMPETITIVE SITUATION BUT
PROGRESSIVE HAS DONE A VERY,
VERY GOOD JOB RECENTLY.
WE'VE DONE A VERY GOOD JOB OVER
THE YEARS.
WE HAVE MADE SOME ARE VERY
SIGNIFICANT IMPROVEMENT.
OUR PROFITABILITY IN THE FIRST
QUARTER WAS GOOD.
BUT WE GAVE BACK MORE MONEY
UNDER OUR GIVEBACK ARRANGEMENT
WHEN THE VIRUS BROKE OUT, 2.8
BILLION ON THE GIVEBACK PROGRAM
THAT WAS LARGER THAN ANY COMPANY
AS WELL.
ONE OF THE LARGEST, I THINK, IN
THE COUNTRY.
AND GEICO AND PROGRESSIVE ARE
BOTH GOING TO DO VERY WELL IN
THE FUTURE.
UNION PACIFIC AND BNSF ARE GOING
TO DO WELL IN
IN EACH CASE WE WANT TO DO
BETTER THAN THE OTHER GUY.
>> CAN I JUST --
>> YEAH.
>> THERE'S NO QUESTION
PROGRESSIVE IS A MACHINE.
THEY ARE VERY GOOD AT WHAT THEY
DO.
UNDERWRITING IN TERMS OF WHAT
WARREN TALKED ABOUT.
HAVING SAID THAT, I THINK GEICO
IS CATCHING UP WITH PROGRESSIVE.
MORE THAN A YEAR AGO -- ABOUT A
YEAR AGO PROGRESSIVE HAD MARGINS
ALMOST TWICE AS MUCH AS GEICO.
GROWTH RATES TWICE AS MUCH AS
GEICOS.
IF YOU LOOK AT IT NOW,
PROGRESSIVE IS CRUSHING IT IN
TERMS OF GROWTH.
GEICO HAS CAUGHT UP WITH
PROGRESSIVE IN TERMS OF MARGIN.
HOPEFULLY THAT GAP WILL BE
NONEXISTENT.
>> THE SECOND I WANT TO TALK
ABOUT IS THE VALUE.
THEY HAVE WOKEN UP TO THE FACT
THAT TELEMATICS HAS PLAYED A BIG
ROLE.
THEY HAVE A NUMBER OF
INITIATIVES AND HOPEFULLY WILL
SEE THE LIGHT OF DAY BEFORE NOT
TOO LONG AND WILL ALLOW THEM TO
CATCH UP.
>> I WILL PREDICT THAT FIVE
YEARS FROM NOW STATE FARM IS
STILL THE LARGEST AUTO INSURER.
I WILL PREDICT THAT FIVE YEARS
FROM NOW IT'S VERY LIKELY THAT
THE TOP TWO WILL BE GEICO AND
PROGRESSIVE AND IN WHICH ORDER
WE'LL SEE, BUT BOTH COMPANIES
ARE GOING TO DO VERY WELL IN MY
GEICO'S DONE EXTREMELY WELL BUT
PROGRESSIVE WAS BETTER AT
SETTING THE RIGHT RATE AND WE'RE
CATCHING UP, I THINK FAIRLY
FAST.
>> EXCUSE ME.
PROGRESSIVE HAS DONE BETTER BUT
WHEN IT COMES TO BRANDING,
GEICO, I THINK, IS MILES AHEAD
OF PROGRESSIVE AND IN TERMS OF
MANAGING EXPENSES, I THINK GEICO
DOES A MUCH BETTER JONATHAN
ANYONE ELSE IN THE INDUSTRY.
>>> THIS QUESTION COMES FROM
AGRIRCI FROM SWEATSHIRTSERLAND.
DID BERKSHIRE SELL SOME OF THE
DEMONSTRATE STOCKS?
WHY DIDN'T BERKSHIRE BUY MORE
APPLE STOCKS IN 2020?
THIS SEEMS TO BE COUNTERINTU
ACTIVE.
>>> WE HAVE 5.3% OR SOMETHING
RIGHT NOW.
WE PAT IN OUR SHARES WHICH HELPS
OUR OWN SHAREHOLDERS EXPAND
THEIR INTEREST IN APPLE WITHOUT
LAYING OUT A PENNY AND APPLE
JUST ANNOUNCED ANOTHER
REPURCHASE PROGRAM, SO LET'S SAY
TSH WE LOOK AT APPLE, THE
BUSINESS THAT WE OWN, 5.3%.
WE'VE GOT -- IT'S A MARKETABLE
SECURITY, SO IT SHOWS UP AS WAY
GREATER THAT ANY OTHER
MARKETABLE SECURITY WE HAVE, BUT
OF COURSE, IF YOU LOOK AT OUR
RAILROAD, AND WE MENTIONED --
WELL YUP PACIFIC IS SELLING FOR
ABOUT 150 BILLION IN THE MARK.
WE TOOK ONE THAT TOOK LARGER
THAN UNION PACIFIC AND MAKING IT
LESS MONEY, BUT NOT MUCH LESS.
SO IT'S A -- IT'S AN
EXTRAORDINARILY APPLE -- IT'S
GOT -- GOT A FANTASTIC -- HE WAS
UNDER APPRECIATED FOR A WHILE.
I'VE SEEN A LOT OF MANAGERS,
HE'S ONE OF THE BEST.
HE'S GOT A PRODUCT THAT PEOPLE
ABSOLUTELY LOVE.
THERE'S A SOLID BASE OF PEOPLE
AND THE DISSATISFACTION RATES OF
99% AND I GET THE FIGURES FROM
FURNITURE MART AS TO WHAT'S
BEING SOLD.
IF PEOPLE COME IN THEY WANT
ANDROID PHONE.
IF THEY WANT AN APPLE, YOU
CAN'T -- THE BRAND AND THE
PRODUCT, IT'S AN INBREBL
PRODUCT, A HUMAN, HUGE BARGAIN
TO PEOPLE.
THE PART IT PLAYS IN THEIR LIVES
IS HUGE.
I USE IT AS A PHONE.
I'M THE ONLY PERSON IN THE
COUNTRY, MAYBE ALEXANDER GRAHAM
BELL IS DOING THE SAME THING,
BUT IT IS INDISPENSABLE TO
PEOPLE, AND IT COSTS -- COSTS
$35,000 AND I'M SURE SOME PEOPLE
WILL BE ASKING IF THEY HAD TO
GIVE UP THEIR APPLE OR GIVE UP
THE CAR, YOU KNOW, AND REALLY
MAKE THE CHOICE FOR THE NEXT
FIVE YEARS.
WHO KNOWS WHAT THEY DO?
BUT IT IS -- AND WE GOT A CHANCE
TO BUY IT AND I SOLD SOME STOCK
LAST YEAR, ALTHOUGH OUR
SHAREHOLDERS HAD THEIR
PERCENTAGE GO UP BECAUSE WE
REPURCHASED SHARE.
BUT THAT WAS PROBABLY A MISTAKE.
IN FACT, CHARLIE IN HIS USUAL
LOW-KEY WAY LET ME KNOW THAT HE
THOUGHT IT WAS A MISTAKE, TOO,
DIDN'T YOU CHARLIE?
>> YES.
>> I COULD ONLY DO SO MANY
THINGS THAT I CAN GET AWAY WITH
CHARLIE AND I KIND OF USED THEM
UP BETWEEN COSTCO AND APPLE.
SO -- AND VERY LIKELY WAS RIGHT
IN BOTH CIRCUMSTANCES.
IT'S AN EXTRAORDINARY BUSINESS.
BUT I DO WANT TO EMPHASIZE THAT
IN ITS OWN WAY, IT'S A DIFFERENT
WAY, BUT TEN FOCUS -- WE SEE A
LOT OF MANAGERS OF A LOT OF
BUSINESSES AND YOU'RE LOOKING AT
TWO GREAT ONES ON BOTH ENDS
HERE.
HE'S HANDLED THAT BUSINESS SO
WELL.
HE COULDN'T DO WHAT STEVE JOBS
OBVIOUSLY COULD DO IN TERMS OF
CREATION.
BUT I DON'T -- BUT STEVE JOBS
COULDN'T REALLY, I DON'T THINK,
DO WHAT TIM COOK WAS DONE IN
MANY RESPECTS.
>> I ALSO THINK IT'S CLEAR THAT
THAT LIST YOU SHOWED OF THE
AMERICAN COMPANIES, IT'S BEEN
VERY IMPORTANT FOR AMERICA THAT
WE'VE DONE SO WELL IN THIS NEW
TECH FIELD AND I PERSONALLY
WOULD NOT LIKE TO SEE OUR
PRESENT GIANTS BROUGHT DOWN TO
SOME LOW LEVEL BY SOME
REASONINGS.
I DON'T THINK THEY'RE DOING A
LOT OF HARM, ANYWAY, A
COMPETITIVE ONE.
I THINK THERE'S A CREDIT TO
AMERICANS, CREDIT TO OUR
CIVILIZATION.
AND THEY'RE HUGE.
AND THEY'RE HUGE, AND THAT'S
GOOD FOR US.
>> WELL, LET ME ASK A FOLLOW-UP
QUESTION.
THIS COMES FROM JACK ZANE WHO
SAYS WHAT'S YOUR MIND SET WHEN
YOU SEE THESE HIGH FLYERS.
THE BIG TECH GROWTH STOCKS, 200%
ETC. IN A MATTER OF OR LESS.
HOW DO YOU ASSESS IF THESE HIGH
FLYERS ARE CAPABLE OF
INVESTMENT?
>> WE DON'T THINK THEY'RE CRAZY.
BUT WE DON'T -- AT LEAST
CHARLIE -- I FEEL THAT I
UNDERSTAND APPLE AND IT'S FUTCH
WITH CONSUMERS AROUND THE WORLD
BETTER THAN I UNDERSTAND SOME OF
THE OTHERS, BUT I DON'T REGARD
PRICES AND THAT GETS BACK --
WELL, IT GETS BACK TO SOMETHING
FUNDAMENTAL AS INVESTMENTS.
I MEAN, INTEREST RATES, YOU
KNOW, BASICALLY ARE TO THE VALUE
OF ASSETS WHAT GRAVITY IS TO
MATTER, ESSENTIALLY, AND ON THE
WAY OUT HERE, I TORE OUT A
LITTLE CLIPPING FROM THE WALL
STREET JOURNAL YESTERDAY.
PROBABLY THE ONLY ONE READ IT,
SO SMALL, HAVE TROUBLE FINDING
IT.
BUT ANYWAY, ON THURSDAY, THE
U.S. PRESSURERY SOLD SOME
EIGHT -- SOME FOUR WEEK NOTES
TREASURE BILLS AND THE PRICE
WAS -- IF YOU LOOKED AT THE WALL
STREET JOURNAL IN A LITTLE
CORNER NEXT TO THE LAST PAGE IN
MY PAPER, IN THE VERY BOTTOM
CORNER, THEY -- HERE IT IS.
THE RESULTS OF THE TREASURY
AUCTION.
LITTLE TINY THING.
THEY SOLD FOUR -- THEY HAD
APPLICATIONS ON THE FOUR WEEK
TREASURY BILLS FOR A HUNDRED AND
SOME BILLION.
THEY ACCEPTED BIDS FOR 40 -- 43
BILLION WORTH, AND IT SAYS
AVERAGE -- AVERAGE PRICE,
100.000000.
SIX ZEROS.
AND ESSENTIALLY, PEOPLE WERE
GIVING 40-SOME BILLION TO THE
TREASURY AND THEY OFFERED 30
BILLION, WHATEVER THE AMOUNT
WAS.
THE TREASURY RECEIVED THE MONEY
AT ZERO AND JANET YELLEN HAS
TALKED A COUPLE OF TIMES ABOUT
THE REDUCED CARRYING COST OF THE
DEBT.
I THINK IN THE LAST FISCAL
QUARTER, U.S. TREASURY, WHICH
U.S. GOVERNMENT WHICH HOLDS A
FEW BILLION -- A FEW TRILLION
DOLLARS THAN A YEAR AGO.
THE EXPENSE WAS DOWN 8%, SO YOU
HAD THIS INCREDIBLE REDUCTION IN
THE SO-CALLED SUPER RISK-FREE
GROUP, THE SHORT-TERM TREASURY
BILL, AND THAT IS THE YARD STICK
AGAINST WHICH OTHER VALUES ARE
MEASURED.
I MEAN, IF I COULD REDUCE
GRAVITY, IGRAVITY'S PULL BY ABOT
80%, I'D BE IN THE TOKYO
OLYMPICS JUMPING.
ESSENTIALLY IF INTEREST RATES
WERE 10% VALUATIONS, THIS
INCREDIBLE CHANGE IN THE
VALUATION OF EVERYTHING THAT
PRODUCES MONEY, BECAUSE THE RISK
FREE RATE PRODUCES REALLY SHORT
ENOUGH.
RIGHT NOW, NOTHING.
VERY INTERESTING.
I BROUGHT THIS BOOK ALONG,
BECAUSE FOR 25 OR MORE YEARS,
PAUL SANDALSON'S BOOK WAS THE
DEFINITIVE BOOK ON ECONOMICS.
IT'S TAUGHT IN EVERY SCHOOL.
AND PAUL WAS THE FIRST -- HE WAS
THE FIRST NOBEL PRIZE WINNER.
IT'S SORTS OF A COUSIN TO THE
NOBEL PRICE.
THEY STARTED GIVING IT TO
ECONOMICS IN THE EARLY 60s.
PAUL SAMUELSSON.
AMAZINGLY ENOUGH, THE SECOND
WINNER THAT IS KEN ARROW AND
BOTH OF THEM ARE THE UNCLES OF
LARRY SOMERS.
HE HAS THE FIRST TWO AS UNCLES.
PAUL WAS A WONDERFUL GUY, A
WONDERFUL WRITER, THE DEFINITIVE
WRITER, AND SO I GOT OUT TO '73
ECONOMICS BOOK AND BEAR IN MIND
ECONOMICS STARTED AS KIND OF AN
INTERESTING SCIENCE.
ADAM SMITH WROTE THE WEALTH OF
NATIONS IN 1776, SOME BOOKS, BUT
SORT OF DATE IT FROM KIND OF
WHAT OUR COUNTRY STARTED AND YOU
HAVE ALL THESE GREAT ECONOMISTS.
I LOOKED UP IN THE BACK UNDER
INTEREST RATES, I LOOKED FOR
NEGATIVE INTEREST RATES.
THERE'S NOTHING THERE.
SO I FINALLY FOUND ZERO INTEREST
RATES AND PAUL SAMUELSSON,
BRILLIANT MAN, AFTER A COUPLE
HUNDRED YEARS WE'VE HAD OF
STUDYING ECONOMICS, BASICALLY,
HE SAID THAT -- HE SAID YOU CAN
CONCEIVABLY, TECHNICALLY, YOU
CAN COP SIEVE PERHAPS OF
NEGATIVE INTEREST RATES, BUT IT
CAN'T EVER REALLY HAPPEN.
AND THAT WAS IN THE 1970s.
THIS WASN'T IN DARK AGES.
NO ECONOMIST ROLLED UP AND SAID
THIS IS A TERRIBLE LINE.
AND HERE WE ARE IN THIS WORLD
WHERE WE HAD ZERO INTEREST RATES
LAST YEAR -- I MEAN LAST WEEK --
OR THIS WEEK OUT OF FOUR WEEK
NOTE, AND BERKSHIRE HATHAWAY
WHICH HAS MORE THAN THIS BUT
LET'S SAY WE HAD A HUNDRED
BILLION IN TREASURY BILLS.
WE HAVE MORE THAN THAT.
BEFORE THE EPIDEMIC -- PANDEMIC,
WE WERE GETTING ABOUT A BILLION
AND A HALF FROM THAT A YEAR.
AT PRESENT RATES, IF IT'S TWO
BASIS POINTS, WE'D GET 20
MILLION.
IMAGINE YOUR WAGES GOING FROM
$15 TO $1.20 AN HOUR.
IT'S BEEN A SEA CHANGE.
IT WAS DESIGNED TO BE THAT.
THAT'S WHY THE FED MOVED THE WAY
THEY DID.
THEY WANTED TO GIVE A MASSIVE
PUSH LIKE MARIO DRAGGY DID IN
EUROPE.
HE SPED WHATEVER IT TAKES AND
THEY WENT TO NEGATIVE RATES, AND
WE -- FAIR TOO SAY DIDN'T WANT
TO GO TO NEGATIVE RATES.
BUT IF PRESENT RATES WERE
DESTINED TO BE APPROPRIATE,
TEN-YEAR SHOULD REALLY BE AT THE
PRICE IT IS, THOSE COMPANIES
THAT WAS MENTIONED IN THIS
QUESTION, THEY'RE -- THEY HAVE
THE ABILITY TO DELIVER CASH AT A
RATE THAT'S IF YOU DISCOUNT IT
BACK AND YOU'RE DISCOUNTING AT
PRESENT INTEREST RATES, STOCKS
ARE VERY, VERY CHEAP.
NOW THE QUESTION IS WHAT
INTEREST RATES DO OVER TIME.
BUT THERE'S A VIEW OF WHAT THE
RATES WILL BE BASED ON YIELD OUT
30 YEARS AND SO ON.
IT'S A FASCINATING TIME.
WE'VE NEVER REALLY SEEN WHAT
SHOVELING MONEY IN ON THE BASIS
THAT WE'RE DOING IT ON A FISCAL
BASIS WHILE FOLLOWING A MONETARY
POLICY IN THE CLOSE ZERO
INTEREST RATES AND IT IS
ENORMOUSLY PLEASANT.
BUT IN ECONOMICS THERE'S ONE
THING ALWAYS.
YOU CAN NEVER DO ONE THING.
YOU ALWAYS HAVE TO SAY AND THEN
WHAT.
AND WE'RE SENDING OUT HUGE SUMS,
I MEAN, PRESIDENT SEND ON 85%
ARE GOING TO GET A CHECK.
COUPLE OF YEARS AGO WE WERE
SAYING 40% COULD NEVER COME UP
WITH $400 OF CASH.
WE'VE GOT 85% OF THE PEOPLE
GETTING THOSE SUMS AND SO FAR
WE'VE HAD NO PLEASANT
CONSEQUENCES ABOUT IT.
PEOPLE WHO GET THE MONEY FEEL
BETTER AND PEOPLE WHO ARE
LENDING MONEY DOESN'T.
IT CAUSES AN ELECTRIC TO BE
HAPPY AND WE'LL SEE IF IT CAUSES
ANYTHING ELSE.
AND IF IT DOESN'T CAUSE ANYTHING
ELSE, YOU CAN COUNT ON IT
CONTINUING IN A VERY BIG WAY.
BUT THERE ARE CONSEQENCES TO
EVERYTHING IN ECONOMICS.
THAT IS -- THAT IS WHY THE
APPLES WHEN WE OPEN MICROSOFT,
BUT THEY ARE INCREDIBLE
COMPANIES IN WHAT THEY EARN ON
CAPITAL.
THEY DON'T REQUIRE A LOT OF
CAPITAL AND THEY GUSH OUT MORE
MONEY, AND IF YOU'RE TRYING TO
POINT BONDS THAT GUSH OUT MORE
MONEY FROM THE FEDERAL
GOVERNMENT, WE GOT A HUNDRED
BILLION.
LIKE 30 OR $40 MILLION A YEAR,
WHATEVER IT MAY BE, DEPENDING ON
THE SHORT-TERM INTEREST RATE.
WHICH PUT THE PRESSURE ON, WHICH
IS EXACTLY WHAT THE AUTHORITIES
WANT.
I MEAN, THAT'S -- THEY ARE
PUSHING THE ECONOMY IN A -- AND
THEY'RE DOING IT IN EUROPE, EVEN
MORE EXTREME, AND THEY'RE
PUSHING IT AND WE'RE AIDING IT
WITH FISCAL POLICY.
PEOPLE HAVE BECOME NUMB TO
NUMBERS.
TRILLIONS DON'T MEAN ANYTHING TO
ANYBODY.
AND $1400 DOES MEAN SOMETHING TO
THEM.
WE'LL SEE WHERE IT ALL LEADS,
BUT CHARLIE AND I CONSIDER THE
MOST INTERESTING MOVIE BY FAR
WE'VE EVER SEEN IN TERMS OF
ECONOMICS.
>> YES, AND THE PROFESSIONAL
ECONOMISTS ARE VERY SURPRISED BY
WHAT'S HAPPENED.
IT REMINDS ME OF WHAT CHURCHILL
SAID.
HE SAID HE WAS A MODEST MAN AND
A GREAT DEAL MODEST ABOUT AND
THAT'S EXACTLY WHAT'S HAPPENING
WITH THE ECONOMISTS.
THEY'RE SO COMMON ON EVERYTHING
TURNS OUT THE WORLD IS MORE
COMPLICATED THAN THEY THOUGHT.
>> AS A FOLLOW-UP TO THAT,
WHAT'S YOUR OPINION ABOUT THE
ECONOMIC THEORY MMT, ESPECIALLY
THE UNITED STATES BECAUSE IT'S
THE RESERVE KURPSY OF THE WORLD.
>> I THINK THE MONETARY THEY'RE
LISTS ARE MORE CONFIDENT THAN
THEY NEED TO BE.
I DON'T THINK ANYBODY OF US KNOW
WHAT'S GOING TO HAPPEN.
I DO THINK THERE'S A GOOD CHANCE
THAT THERE'S EXTREME CONDUCT IS
MORE FEASIBLE THAN EVERYBODY
THOUGHT.
I KNOW IF YOU KEEP DOING IT
WITHOUT ANY LIMIT, IT WILL END
IN DISASTER.
>> UNRELATED QUESTION, AL CANDLE
WROTE IN ON THIS TOO AND SAID IF
YOU CAN BORROW MONEY FOR A LOW
INTEREST RATE, IS IT STILL WORTH
BORROWING THAT MONEY?
>> IT REDUCES THE VALUE BY A
SUBSTANTIAL AMOUNT, AND WE HAVE
THE FLEXIBILITY THAT VIRTUALLY
NO ONE HAS.
I'VE WRITTEN ABOUT THIS IN THE
ANNUAL LETTER, BUT THE -- THE
VALUE HAS GONE DOWN
DRAMATICALLY, BECAUSE EVERYTHING
IS -- EVERYTHING IS OFF OF
INTEREST RATES,S AND WHEN YOU
GET TO NEGATIVE INTEREST RATES,
THE COUNTRY CAN BORROW NEGATIVE
INTEREST RATES, YOU GET
SOMETHING ABOUT THE ST.
PETERSBURG PARADOX.
THOSE OF YOU WHO WANT TO GO TO
CHURCH.
IT'S A CRAZY GLIMPSE OF A BUNCH
OF ABSTRACT MATHEMATICS FOR YOU
TO GET THERE, BUT YOU'LL LOSE
GRAVITY ENTIRELY AND YOU KNOW,
IF YOU TELL ME THAT THAT I'M
GOING TO HAVE TO LEND MONEY FOR
THE GOVERNMENT AT MINUS 2% A
YEAR AND I'M TALKING PHENOMENAL
FIGURES, NOT -- YOU KNOW, YOU'RE
TALKING HOW I'LL GO BROKE OVER
TIME.
IF I DO THAT.
SO IT PUSHES YOU TO DO OTHER
THINGS, AND OF COURSE WE'VE SEEN
IT.
WE SAW THE ROAST OF THE WORLD DO
IT IN MORE EXTREME FASHION, BUT
NOBODY, SAMUELSSON, BRILLIANT
MAN.
NOBODY THOUGHT YOU COULD DO
THIS.
WE DON'T REALLY KNOW WHAT THE
CONSEQUENCES ARE BUT WE KNOW
THERE ARE CONSEQUENCES
OBVIOUSLY.
>> THIS QUESTION COMES FROM SAM
BUTLER AND IT SAYS HE'S BEEN A
SHAREHOLDER FOR MANY YEARS AND
ASKS WHAT DOES THE IMPACT OF THE
LIVES OF SO MANY NEW SPACS TO
FIND AND CLOSE NEW OPPOSITIONS.
>> WELL, IT'S A KILLER.
THE SPACS GENERALLY HAVE TO
SPEND THEIR MONEY IN TWO YEARS,
AS I UNDERSTAND IT.
IF YOU HAVE TO BUY A BUSINESS IN
TWO YEARS, YOU PUT A GUN TO MY
HEAD AND SAID YOU GOT TO BUY A
BUSINESS IN TWO YEARS, I'D BUY
ONE BUT IT WOULDN'T BE MUCH OF
ONE.
WE LOOKED AND LOOKED AND NOW
THERE ARE -- I DON'T KNOW HOW
MANY.
THERE'S HUNDREDS -- THERE'S
ALWAYS BEEN THE PRESSURE FROM
PRIVATE EQUITY FUNDS.
IF YOU'RE RUNNING MONEY FOR
SOMEBODY ELSE AND YOU GET A FEE
AND YOU GET THE UP SIDE AND YOU
DON'T HAVE THE DOWN SIDE, YOU
GOT TO BUY SOMETHING.
I COULD TELL YOU, BUT I HAD A
VERY FAMOUS -- I HAD A CALL FROM
A VERY FAMOUS FIGURE MANY YEARS
AGO THAT WAS INVOLVED IN AND
WONDERED ABOUT REINSURANCE.
I SAID I DON'T THINK IT'S A VERY
GOOD BUSINESS.
HE SAID, YEAH, THE MONEY IN SIX
MONTHS AND I HAVE TO GIVE IT
BACK TO THE VERSE.
IT'S A DIFFERENT EQUATION WHERE
YOU WORK WITH OTHER PEOPLE'S
MONEY WHERE YOU GET THE UP SIDE
AND YOU HAVE TO GIVE IT BACK TO
THEM IF NOTHING -- THAT WILL GO
ON FOREVER.
IT'S WHERE THE MONEY IS NOW AND
WALL STREET GOES WHERE THE MONEY
IS AND IT DOES ANYTHING,
BASICALLY, THAT -- THE WORKS,
AND SPACS HAVE BEEN WORKING FOR
A WHILE AND YOU SEEK STICK A
FAMOUS NAME ON IT, YOU CAN SELL
ALMOST ANYTHING, AND I GUESS --
ICE AN EXAGGERATED VERSION OF
WHAT WE'VE SEEN IN KIND OF --
WELL, GAMBLING DONE TYPE MARKET.
I DID HAVE A COLT FROM KANES
THAT WE MIGHT PUT UP ON THE --
LET'S SEE IF I'VE GOT -- YEAH.
THIS IS PROBABLY THE MOST -- ONE
OF THE MOST FAMOUS QUOTES IN
HISTORY.
BECAUSE IT REALLY SUMS UP THE
PROBLEM OF THE FACT WE'VE GOT
THE GREATEST MARKETS THE WORLD
COULD EVER IMAGINE.
IMAGINE BEING ABLE TO OWN PARTS
OF THE BIGGEST BUSINESSES IN THE
WORLD AND PUTTING BILLIONS OF
DOLLARS AND TAKE IT OUT, YOU
KNOW, TWO DAYS LATER.
I MEAN, COMPARED TO FARMS OR
APARTMENT HOUSES OR OFFICE
BUILDINGS WHERE IT TAKES MONTHS
TO CLOSE A DEAL, THE MARKETS OFF
A CHANCE TO PARTICIPATE IN
INVEST -- IN EARNING ASSETS ON A
BASIS THAT'S VERY, VERY LOW
COST.
INSTANTANEOUS, HUGE, ALL KINDS
OF GOOD THINGS.
IT MAKES IT REAL MONEY IF THEY
CAN GET THE GAMBLERS TO COME IN.
THEY'RE WILLING TO TAKE MORE
ACTION.
YOU HAVE THIS INCREDIBLE, HUGE
ASSET TO HUMANITY BUT IT REALLY
MAKES US MONEY WHEN PEOPLE ARE
DOING STUPID THINGS.
THAT'S WHERE THE MONEY REALLY
IS.
GAINES WROTE THIS IN 1936.
IT SAYS IS 39 ON THE SLIDE BUT
HE WROTE IT IN 1936.
SPECULATORS, MANY DO NO HARM AS
BUBBLES ON THE STEADY STREAM OF
ENTERPRISE BUT THE POSITION IS
SERIOUS WHEN ENTERPRISE BECOMES
THE BUBBLE ON SPECULATION.
WHEN THE CAPITAL DEVELOPMENT OF
THE COUNTRY BECOMES A BYPRODUCT
OF THE TIFS OF A CASINO, THE JOB
IS LIKELY TO BE ILL DONE.
WE'VE HAD A LOT OF PEOPLE IN THE
CASINO, THE LAST YEAR.
MILLIONS AND MILLIONS OF PEOPLE
HAVE SET UP ACCOUNTS WHERE
THEY'RE DAY TRADING, PUTS AND
CALLS, AND I'D SAY YOU HAVE THE
GREATEST INCREASE IN THE NUMBER
OF GAMBLERS, ESSENTIALLY,
THAT -- AND THERE'S NOTHING
WRONG WITH GAMBLING.
THEY GOT BETTER ODDS THAN THEY
PLAY THE STATE LOTTERY, BUT
THEY'VE HAD CASH IN THEIR
POCKET.
THEY'VE HAD ACTION, AND THEY
ACTUALLY HAVE A LOT OF GOOD
RESULTS AND IF THEY JUST BOUGHT
STOCKS THEY'D DO FINE, AND HELD
THEM, BUT THE GAMBLING IMPULSES
IN VERY STRONG IN PEOPLE
WORLDWIDE AND OCCASIONALLY IT
GETS AN ENORMOUS SHOVE AND
CONDITIONS LEAD TO THIS WHERE
MORE PEOPLE ARE BUYING.
THEY'RE LEAVING EVERY DAY AND
THAT CREATES ITS OWN RAEMT FOR A
WHILE AND NOBODY TELLS YOU WHEN
THE CLOCK IS GOING TO STRIKE
MIDNIGHT AND IT ALL TURNS INTO
PUMPKINS.
WHEN THE COMPETITION IS PLAYING
WITH OTHER PEOPLE'S MONEY OR
WHETHER THEY'RE -- AND IF
THEY'RE PLAYING TOOLISHLY WITH
THEIR OWN MONEY BUT THE BIG
STUFF IS DONE WITH OTHER
PEOPLE'S MONEY.
THEY'RE GOING TO BEAT US.
WE'RE NOT -- WE'RE NOT -- THAT'S
A DIFFERENT GAME AND THEY'VE
GOT -- THEY'VE GOT A LOT OF
MONEY, SO WE'RE NOT GOING TO
HAVE MUCH LUCK ON ACQUISITIONS
WHILE IS THIS SORT OF A PERIOD
CONTINUES, BUT IT'S HAPPENED
BEFORE.
THIS IS ABOUT AS EXTREME AS
WE'VE SEEN ITS, HASN'T, CHARLIE?
I CALL IT FEE DEVELOPMENT.
THE ADVISOR GETS A FEE, AND OF
COURSE, THE MORE THAT YOU GET,
THE SILLIER YOUR CIVILIZATION IS
GETTING, AND TO SOME EXTENT IT'S
A MORAL FAILING, TOO.
BECAUSE THE EASY MONEY MADE BY
THINGS LIKE SPACS AND RETURN
DERIVATIVES AND SO ON AND SO ON.
YOU PUSH THAT TO EXCESS, IT
CAUSES HORRIBLE PROBLEMS IN
CIVILIZATION AND REFLECTS NO
CREDIT ON THE PEOPLE WHO ARE
DOING IT AND NO CREDIT ON THE
PEOPLE -- THE REGULATORS.
I THINK WE HAVE A LOT TO BE
ASHIEMD OF IN CURRENT
CONDITIONS.
BUT IT'S WHERE THE MONEY IS.
IT'S SHAMEFUL WHAT'S GOING ON.
IT'S NOT JUST STUPID, IT'S
SHAMEFUL.
IT'S NOT -- I DON'T REGARD IT AS
A SHAMEFUL ON A LOT -- THE
PEOPLE THAT GAMBLE.
I MEAN -- GAMBLING IS A HUMAN
INSTINCT AND THEY'VE GOT MONEY
IN THEIR POCKET AND THEY KNOW
SOMEBODY ELSE THAT'S MADE MONEY
THAT THEY DON'T THINK ARE
SMARTER THAN THEM.
I DON'T LIKE THE PROFESSIONALS
THAT TAKE THE SUCKERS.
>> ALL RIGHT.
MOSHE LAVINE WRITES IN -- HE'S
AN AMERICAN LIVING IN ISRAEL.
HE SAID IF YOU DEEM STOCK PRICES
TO BE OVERVALUED DO YOU THINK
I'S BETTER TO HOLD IN CASH OR
WOULD IT BE A BETTER IDEA TO
INVEST THIS MONEY IN SOME WAY
WHILE WAITING FOR STOCK PRICES
ARE FAIR AGAIN AND SELL THE
INVESTMENT TO BUY THE STOCKS.
>> CHARLIE AND I HAVE HAD THAT
DISCUSSION ON A LOT OF THINGS.
WE BOUGHT SOME STOCKS WE REALLY
DON'T KNOW THAT MUCH ABOUT BUT
I'M NOT REALLY COMFORTABLE DOING
THAT.
YOU USED TO SHOOTING FISH IN A
BARREL, BUT THAT'S GOTTEN
HARDER.
WE'VE GOT PROBABLY 10 TO 15% OF
OUR TOTAL ASSETS IN CASH BEYOND
WHAT I WOULD LIKE TO HAVE JUST
AS A WAY OF PROTECTING OUR --
THE OWNERS, THE PEOPLE THAT ARE
PARTNERS FROM EVER HAVING --
HAVING US EVER GET IN A PICKLE.
WE REALLY RUN BERKSHIRE THAT --
WE DON'T WANT TO LOSE OTHER
PEOPLE'S MONEY WHO STICK WITH US
FOR YEARS.
WE CAN'T HELP IF SOMEBODY BUYS
IT TODAY AND SELLS IT TOMORROW.
WE'VE GOT A GENE THAT PUSHES US
IN THAT DIRECTION.
BUT WE'VE GOT PROBABLY 70 OR 80
BILLION, SOMETHING LIKE THAT,
MAYBE, THAT WE'D LOVE TO PUT TO
WORK.
BUT THAT'S 10% OF OUR ASERSETS,
ROUGHLY, AND WE PROBABLY
WON'T -- WELL, WE WILL GET A
CHANCE UNDER THESE CONDITIONS,
BUT CONDITIONS CHANGE VERY,
VERY, VERY RAPIDLY SOMETIMES IN
MARKETS, AND WE DO HAVE PEOPLE
THAT WOULD LIKE TO JOIN US, BUT
THE MARKET OPTION THEY HAVE IS
JUST -- IS TOO GREAT FOR THEM.
IF THEY'RE PUBLICLY TRADED, I
MEAN, THEY BASICALLY CAN'T --
THEY WOULD HAVE GREAT DIFFICULTY
MAKING A DEAL WITH US BECAUSE
SOMEBODY ELSE WOULD A COME ALONG
USING OTHER PEOPLE'S MONEY.
IT'S -- YOU KNOW, WE MAY BE
UNHAPPY ABOUT THE 70 BILLION BUT
WE'RE VERY HAPPY ABOUT THE OTHER
700 BILLION.
IT'S NOT LIKE WE SHOULD
COMPLAIN.
>> WHEN WE SPOKE AT THE ANNUAL
MEETING YOU SAID IT WAS OK IF I
ASKED A FOLLOW-UP.
>> YEAH.
>> YOU SAID YOU BOUGHT A LOT OF
STOCKS THAT YOU DON'T KNOW
ABOUT.
WHAT ARE THEY?
>> I WILL NOT GET INTO NAMING
THE STOCKS, AND IT MAY BE THAT
THERE'S SOME THERE THAT I THINK
I DON'T KNOW ABOUT BUT I KNOW
CHARLIE AND I, I MEAN, WE KNOW
THE BUSINESS JIMMY BUT WE DON'T
HAVE ANY INSIGHTS, AND THEY ARE
AS A GROUP -- IF I HAD TO --
TOLD ME I WAS GOING TO BE
SHOCKED AS I GOT THE BEST
RESULT, I'D RATHER OWN THOSE
STOCKS THAN THE TREASURY BILLS
THAT WE OWN BUT WE WORK WITH
QUANTITIES OF MONEY WHERE BE WE
PUT 50 BILLION, THINGS I'M KIND
OF SOCIAL ABOUT, BUT BETTER THAN
TREASURY BILLS.
I'M NOT WILDLY COMFORTABLE ABOUT
THAT, EVEN THOUGH IT CONCLUDE
UNDONE.
SELLING 50 BILLION WHEN IT'S
REALLY ATTRACTIVE TO BUY
SOMETHING ELSE, THERE'S A LOT OF
SLIPPAGE THAT'S GOING TO HAPPEN
IN MOVING SUMS LIKE THAT AROUND.
THAT'S SOMETHING WE TALK ABOUT A
LOT OF TIME.
THEY'RE GOOD COMPANIES, FINE
COMPANIES.
BUT DO WE KNOW SOMETHING ABOUT
THOSE COMPANIES OR HAVE A WAY OF
EVALUATING THAT GIVES US THE
EDGE O, THE ANSWER, I THINK --
WHAT DO YOU FEEL ABOUT IT,
CHARLIE.
WE'VE TALKED ABOUT IT A LOT.
OF COURSE, IT'S ALL HARDER.
I THINK ONE CONSEQUENCE OF THE
PRESENT SITUATION IS THAT BERNIE
SANDERS HAS BASICALLY WON AND
THAT'S BECAUSE THE -- WITH
THE -- EVERYTHING BOOMED UP SO
HIGH AND INTEREST RATES SO LOW,
WHAT'S GOING TO HAPPEN IS THE
MILLENNIAL GENERATION IS GOING
TO HAVE A HELL OF A TIME GETTING
RATES COMPARED TO OUR
GENERATION, SO THE DIFFERENCES
BETWEEN THE RICH AND THE POOR IN
THE GENERATION THAT'S RISING IS
GOING TO BE A LOT LESS.
SO BERNIE HAS WON.
THEY IT BY ACCIDENT, BUT HE WON.
>> ALL RIGHT.
THIS QUESTION COMES FROM DENNY
POLAND FROM PITTSBURGH.
A PROMINENT SENATOR RECENTLY
CATEGORIZED SHARE BUY BACKS AS
MARKET MA LIP LAS VEGAS.
COULD YOU AND CHARLIE PLEASE
ELABORATE ON THE HIGHER ORDER
EFFECT THAT THE SHARE
REPURCHASES HAVE ON SOCIETY?
>> THEIR WAY ESSENTIALLY OF
DISTRIBUTING CASH TO THE PEOPLE
THAT WANT THE CASH WHEN OTHER
CO-OWNERS MOSTLY WANT YOU TO
REINVEST.
IT'S A SAVINGS VEHICLE.
IF THE FOUR OF US SITTING AT
THIS TABLE DECIDED WE'D FORM A
LITTLE CUP P COMPANY AND BUY A
FEW FRANCHISES.
WE EACH PUT IN A BILLION,
SOMETHING LIKE THAT, AND BUY THE
FRANCHISE.
THREE OF THE FOUR OF US WANT TO
KEEP BUYING DWRAR QUEEN
FRANCHISES, AND WE'RE IN THE
WEALTH CREATION BUSINESS AND THE
FOURTH ONE SAYS, I'VE GOTTEN
RICH ENOUGH, I'D RATHER TAKE
SOME MONEY OUT AND, WELL,
THERE'S ONLY TWO WAYS TO DO IT.
WE CAN PAY DIVIDENDS ALL FOUR OF
US, THREE OF US WHO DON'T WANT
IT AND WE CAN REPURCHASE THE
SHARE AT A FAIR PRICE, THE
FOURTH ONE NATION A FAIR PRICE
AND GETS BOUGHT OUT.
IT -- I FIND IT ALMOST
IMPOSSIBLE TO BELIEVE SOME OF
THE ARGUMENTS THAT ARE MADE THAT
IT'S TERRIBLE TO DO REPURCHASE
SHARES FROM A PARTNER IF THEY
WANT TO GET OUT OF SOMETHING AND
YOU'RE ABLE TO DO IT AT PRICES
ADD ADVANTAGE D VANDAL TABLES.
WE HAD A VOTE ON.
WE'VE GOT SAVERS.
THAT'S PARTLY BECAUSE WE'VE
ADVERTISED OURSELVES AS BEING
THAT SORT OF A VEHICLE.
WE'VE CREATED THAT AND STUCK
WITH IT FOR 50-SOMETHING YEARS.
A HUGE NUMBER OF PEOPLE LOOK AT
BERKSHIRE THAT THEY'RE GOING TO
OWN TILL THEY DIE.
THE SAVERS GENERALLY KEEP
SAVING.
WE JUST RECENTLY HAD SOMEBODY
THAT FATHER CAME US 60 YEARS AGO
AND BILLIONS OF DOLLARS.
THEY JUST -- THEY WEREN'T SAVING
EXACTLY FOR THEIR OLD AGE.
IT'S JUST SORT OF BUILT INTO
THEM THAT THEY DO IT.
IT'S THE MOST -- WHAT COULD BE
MORE LOGICAL THAN IF A VERY
SMALL NORTH MINORITY OF YOUR
HOLDERS WANT TO GET IN AND THE
OTHERS WANT TO STAY IN.
YOU GIVE THE MONEY TO THE ONE
WHO WANTS IT AND YOU DO IT AT A
PRICE THAT IS BENEFICIAL TO MOST
PARTIES.
ON A PRIVATE DEAL YOU'D WORK OUT
THE FAIR VALUE.
THE MARKET TELLS YOU THE VALUE
IN THE CASE OF A PUBLICLY TRADED
COMPANY.
CHARLIE, GOT ANY --
>> WELL, I -- WHEN PURCHASING
STOCK, JUST A BULLET HIGHER,
IT'S DEEPLY IMMORAL, BUT IF
YOU'RE REPURCHASING STOCK
BECAUSE IT'S A FAIR THING TO DO
IN THE INTEREST OF YOUR EXISTING
SHAREHOLDERS, IT'S A HIGHLY
MORAL ACT AND THE PEOPLE WHO ARE
CRITICIZING IT ARE BONKERS.
>> OK.
THIS COMES FROM GARY GAMBINO.
HE WANTS TO KNOW IF BERKSHIRE
WOULD SWITCH ITS CAPITAL RETURN
POLICY TO DIVIDENDS FROM
BUYBACKS IF THE CAPITAL RATES
GAIN GOES UP.
DIVIDENDS WOULD BE FAR MORE
TAXED ADVANTAGE FOR SHARE OLDERS
UNDER THAT SCENARIO.
>> YEAH.
WE HAD A -- WE LITERALLY DID
HAVE A VOTE BY SHAREHOLDERS.
WE HAVE DIFFERENT SHAREHOLDERS
THAN A REIT HAVE.
PEOPLE SELECT WHAT THEY GO INTO.
PEOPLE GOING INTO SPACS HOPES IT
GOES UP NEXT WEEK, BASICALLY.
AND WE'VE GOT A BUNCH OF PEOPLE
WHO WERE ASSEMBLED OVER 55
YEARS.
THEY STARTED WITH A BASE OF
PEOPLE THAT IT WAS A LIFETIME
INVESTMENT, AND IF THEY WANTED
TO CASH OUT, THEY THOUGHT THEY'D
GET A FAIR PRICE AT THAT TIME.
BUT THEY BOUGHT IT WITH NO
INTENTIONS LIKE THAT, SO WE HAD
A VOTE AND I FEEL SOMETHING LIKE
97% OR SOMETHING OF THE SHARES
THAT -- THEY DON'T WANT A
DIFFICULT DENIED.
THAT WOULDN'T BE TRUE AT OTHER
KMGS.
YOU'D BE CRAZY TO PAY A REGULAR
EVENT LIKE COCA-COLA HAS DONE
MANY YEARS AND THEY ALL OF A
SUDDEN CHANGE THE POLICY ON
MILLIONS OF PEOPLE WHO BOUGHT IT
WITH ONE EXPECTATION IN MIND AND
TRY TO CHANGE IT INTO A
DIFFERENT ANIMAL.
BUT COCA-COLA ISN'T GOING CHANGE
TO BERK IRAND BERKSHIRE WON'T
CHANGE INTO COCA-COLA.
PEOPLE HAVE A CHOICE EVERY DAY
WHICH DO YOU WANT -- SORT OF
THING YOU WANT TO BE IN.
AND BERKSHIRE IS A CERTAIN KIND
OF ANIMAL IN THAT RESPECT.
>> SO WE WILL NOT -- IF THEY JIG
AROUND THE TAX LAWS, THAT'S NOT
NOTHING TO DO WITH THE DECISION,
WE'VE GOT A VERY SUBSTANTIAL
MAJORITY OF PEOPLE THAT WANT US
TO REINVEST THE MONEY AND WHAT
THEY'RE MORE CONCERNED ABOUT IT,
WHETHER WE FIND SOMETHING TO DO
WITH THE MONEY AND REPURCHASING
SHARES IS SOMETHING THAT HELPS
THEM.
THEY OWN A LARGER PERCENTAGE OF
BERKSHIRE AS THEY GO ALONG.
THEY'D LOVE TO SEE US BUY
ANOTHER BUSINESS BUT THEY DON'T
MIND INTENSIFYING THEIR
INTEREST.
>> I'LL RUN THROUGH A FEW TAX
QUESTIONS.
WE'LL SEE HOW MANY OF YOU ANSWER
BEFORE WE GET TO
THIS CAME FROM ARTHUR LEWIS IN
DENVER.
WHAT ARE YOUR THOUGHTS ON
CORPORATE TAX AND STEPPED UP
BASIS TAX INCREASES?
>> WELL, IF CHARLIE WANTS TO
ANSWER THAT, I'LL BE GLAD TO
HAVE HIM DO IT.
I LONG AGO MANY TIMES HAVE SAID
THAT I DON'T PUT MY OPINIONS OR
ANYTHING IN A BLIND TRUST WHEN I
TAKE THIS JOB BUT I ALSO DON'T
SPEAK FOR BERKSHIRE HATHAWAY.
PEOPLE HAVE DIFFERENT VIEWS ON
TAXES.
I'VE EXPRESSED SOME THINGS IN
THE PAST -- I DON'T LIKE TO
SPEAK ON BEHALF WHEN I'M SITTING
IN AN ANNUAL MEETING PRESUMY
SPEAKING FOR BERKSHIRE, I DON'T
REALLY LIKE TO GET INTO
POLITICAL QUESTIONS.
I DON'T THINK I SHOULD.
I ALSO THINK SOMEBODY ASKED ME
WHO I VOTED FOR, PEOPLE BUY IT
BUT I'VE NEVER ASKED A SINGLE
EMPLOYEE OF OURS WHO THEY VOTED
FOR, ANYTHING OF THE KIND, AND I
AM NOT AUTHORIZED TO GO AROUND
SIGNING MY NAME AS CHAIRMAN OF
BERKSHIRE HATHAWAY.
THAT -- PROPOSALS.
IF I WRITE OP ED PIECES, I DO IT
AS AN INDIVIDUAL.
I TROO TO MAKE IT CLEAR, BECAUSE
I WOULDN'T WANT TO USE THE
MEETING TO GET A LOT ON TAXES.
CHARLIE.
>> NO, BUT I THINK IT'S PROBABLY
A MISTAKE TO BE BASICALLY ANY
CAPITALIST, I THINK CAPITALISM
IS WHAT RAISES GDP FOR
EVERYBODY, AND SO -- AND I HAVE
ALSO A FEELING THAT -- SOMEBODY
WAS RIGHT WHEN HE SAID IT'S HARD
FOR AN EMPTY SACK TO STAND
UPRIGHT.
IN SOME RESPECT IT HELPS THEM
BEHAVE BETTER.
NOW, THERE ARE EXCEPTIONS.
AND PROMOTIONAL FINANCE IS THE
ONE.
BY AND LARGE, FRANKLIN WAS
RIGHT.
SO I'M A LITTLE WARY OF JUST
CONSTANTLY BEING MAD AT PEOPLE
BECAUSE THEY HAVE MORE MONEY.
>> CHARLIE, THERE WAS A QUESTION
THAT CAME IN SPECIFICALLY TO YOU
ON TAX ISSUE.
OVER THE YEARS AND WITH EMPHASIS
IN 2020 WE'VE HEARD PEOPLE
LEAVING CALIFORNIA FOR VARIOUS
REASONS.
I UNDERSTAND YOU BELIEVE IT'S
DUMB FOR STATES TO HAVE POLICIES
AND LAWS THAT PROMOTE RICH
RESIDENTS LEAVING.
WHAT ARE YOUR THOUGHTS ON THOSE
PEOPLE LEAVING.
WHAT KEEPS YOU IN CALIFORNIA?
>> THAT'S A INTERESTING
QUESTION.
I HAD ONE SAID I WOULDN'T MOVE
ACROSS THE STREET TO DO THE
TAXES.
THAT'S MY PERMANENT VIEW ON THE
SUBJECT.
BUT I DO THINK IT'S SAFER FOR
STATES TO DRIVE OUT THEIR
WEALTHIEST CITIZENS.
THE OLD PEOPLE DON'T COMMIT
CRIMES, THEY DON'T PLEDGE TO THE
LOCAL CHARITY.
WHO IN THE HELL IN THEIR RIGHT
MAP WOULD DRIVE OUT THE RICH
PEOPLE.
FLORIDA AND PLACES LINING THAT
ARE SHREWD AND PLACES LIKE
CALIFORNIA ARE BEING VERY
STUPID.
IT'S CONTRARY TO THE INTEREST OF
THE STATE.
>> JACK ROB IPS ASKS, HOW WILL
THE TAX RATE AFFECT BERKSHIRE
COMPANIES?
>> WELL, I DON'T THINK IT WOULD
BE THE END OF THE WORLD.
WE'LL ADAPT TO THE INTEREST
RATE, WHATEVER IT IS.
>> I WOULD SAY IF THEY RAISE THE
TAX RATE, THEY'RE OWNING -- THE
FEDERAL GOVERNMENT'S OPENING A
LARGER PERCENTAGE OF BUSINESS.
I'M NOT SAYING WHAT THE TAX RATE
IS BUT WE HAVE A CLASS A STOCK
AND A CLASS B STOCK.
THE ENGLISH GOVERNMENT OWNS WHAT
I CALL THE CLASS AA STOCK.
THEY GET A PERCENTAGE OF THE
EARNINGS BUT THEY DON'T OWN THE
ASSETS AND DON'T VOTE ON WHO
RUBS THE PLACE OR ANYTHING ELSE.
BUT IF THE GOVERNMENT WANTS TO
START -- WHEN I STARTED WITH 52%
THE GOVERNMENT DID FOR CORPORATE
PROFITS, AND THEY'VE GOT -- WHAT
WOULD YOU PAY TO OWN THE
GOVERNMENT'S CLASS A DOUBLE-A
STOCK?
IF THERE WAS A PUBLIC ISSUE BY
THE U.S. TREASURY AND THEY SAID
THIS VEHICLE, GIVEN A NAME LIKE
SPAC OR SOMETHING, EVEN SEXIER,
BUT ALL IT WILL DO IS IT OWNS
THE FUTURE TAX PAYMENTS OF
BERKSHIRE HATHAWAY FOREVER.
AND HOW MUCH IS THAT STOCK NOW
WORTH?
IF IT WILL PAY A BIG CASH
DIVIDEND.
IT'S WORTH MORE IF IT'S -- IF
THE TAX RATE IS 25% OR 28% OR
52% OR 21%.
THEY OWN A SPECIAL STOCK AND
WHEN PEOPLE TALK ABOUT PASSING
THROUGH TO THE CUSTOMER, IN THE
KMRG BUSINESS IT DOES BUT IT
DOESN'T IN MOST OF OUR
BUSINESSES.
IT'S A CORPORATE FICTION WHEN
THEY PUT OUT SEGMENTS ABOUT THE
FACT THAT THIS WILL BE TERRIBLE
FOR ALL OF YOU PEOPLE WHO PAY
MORE TAXES.
IT HURTS THE BERKSHIRE
SHAREHOLDERS IF RATES ARE
HIGHER.
THAT MAY BE QUITE APPROPRIATE
BUT TO SAY OTHERWISE, IT DOESN'T
MAKE ANY SENSE.
I WOULD LOVE TO SEE THE
GOVERNMENT ACTUALLY ISSUE --
THEY COULD HAVE -- I MEAN, THEY
COULD SET UP A COMPANY, CALL IT
DID BERKSHIRE HATHAWAY TAX
COMPANY AND IT WOULD TAKE ALL
THE TAXES WE PAY EVERY YEAR.
HOW MUCH WOULD THEY BE ABLE TO
SELL THAT ASSET FOR?
THEY TALK ABOUT UNFUNDED
OBLIGATIONS OF THE GOVERNMENT.
THAT'S AN UNREPORTED ASSET OF
THE FEDERAL GOVERNMENT.
THEY OWN PART OF BHERKERKSHIRE
THEY GET TO DETERMINE A LOT.
IT'S AN INTERESTING QUESTION.
>> ONE LAST TAX QUESTION.
THIS ONE COMES FROM WILLIAM
BARNARD WHO SAYS A PORTION OF
YOUR ANNUAL REPORT YOU STATE ON
MY DEATH NONE OF MY STONG WILL
HAVE TO BE SOLD.
WILL THE RECENT BIDEN PROPOSAL
TO TREAT GAINS AS SOLD AND DEATH
43.4% FOR PAGE OF TAXES UPON
YOUR DEATH.
>> THE TAX LAW CAN BE CHANGED
TOMORROW AND I DON'T -- IT CAN
BE DONE A LOT OF DIFFERENT WAYS.
IT'S BEEN DONE A LOT OF
DIFFERENT WAYS IN THE PAST.
I CAN TELL YOU -- I CAN ACTUALLY
MAKE A PROMISE.
99.7% OF WHAT I HAVE WHEN I DIE
WILL GO TO THEM OR THE FEDERAL
GOVERNMENT.
THE FEDERAL GOVERNMENT CAN
DETERMINE THE RULES ON THAT.
AND I WOULD PREFER THAT IT WOULD
GO TO PHILANTHROPY.
I THINK IT WILL ACCOMPLISH MORE
UTILITY IF IT GOES TO BE USED BY
SOME SMART PEOPLE IN FLAP THROW
BY THAN IF IT REDUCES THE
FEDERAL KET WHEN I DIE.
I DON'T THINK IT MAKES A DAMN
BIT OF DIFFERENCE.
IT WON'T CHANGE ANYTHING IN THE
WORLD.
IT DOESN'T SAVE THEM ANYTHING OR
THEY CAN BORROW A BILLION OR
ANYWAY.
BUT THAT CONDITION WON'T
PREVAIL.
I WOULD NOT REGARD -- I'M JUST
TALKING PERSONALLY.
I'M NOT ADVOCATING THIS AS
PUBLIC POLICY, BUT IF THEY TOOK
IT ALL, IT WOULD NOT BOTHER ME.
>> I GUARANTEE IT WON'T BOTHER
YOU.
YOU WON'T KNOW.
>> THE -- YOU KNOW, IF YOU
DECIDE -- IF THE AMERICAN
DEPARTMENT DECIDES IT'S BETTER
TO TAKE IT ALL -- WHICH I DON'T
THINK THEY WILL AND I DON'T
THINK THEY SHOULD, BUT
NEVERTHELESS, SO WHAT?
YOU KNOW, I WOULD LIKE TO SEE IT
USED TO ACCOMPLISH THE MOST FOR
HUMANITY.
AND THAT MEANS HAVING SMART
PEOPLE PROPERLY MOTIVATED AND
MORE IMPORTANTLY, NOT IMPROPERLY
MOTIVATED, DISTRIBUTE IT IN A
WAY AND WHO KNOWS WHAT THE HELL
IT WOULD BE 10, 20, 30, 40 YEARS
FROM NOW.
I KNOW IF IT GOES TO THE
GOVERNMENT IT REDUCES THE
NATIONAL DEBT BY THAT AMOUNT.
I DON'T THINK IT CHANGES WHETHER
THEY CHANGE MINIMUM WAGE LAWS OR
ANYTHING ELSE.
I JUST THINK THAT LITTLE FIGURE
CHANGES, IT WILL SHOW UP IN THE
BUDGET ONE DAY, RECEIVED FROM
BUFFETT X AND A HUGE FIGURE DOWN
BELOW.
I DON'T THINK IT WOULD REALLY --
I WOULD PREFER IT BE USED
PRIVATELY BUT THAT'S UP TO THE
PEOPLE OF THE UNITED STATES THAT
DECIDE THROUGH THEIR
REPRESENTATIVES.
>> NOW, THIS NEXT QUESTION IS
FOR AJIT.
IT COMES FROM SOMEBODY WHO SAYS
MR. JAIN, WHAT HAS IT TAUGHT US
ABOUT SYSTEMIC AND CORRELATED
RISK AND IS THERE ANYTHING WE
WILL WE WOULD DO DIFFERENTLY
FROM NOW ON?
>> WE AUTOMATIC THINK ABOUT
PANDEMIC AS ONE OF THE RISK
FACTORS THAT WE NEED TO HOLD IN
OUR BUSINESS.
HAVING SAID THAT, I THINK THE
BIG LESSON FOR US, HAVING GONE
THROUGH WHOOEF GONE THROUGH
RECENTLY IS THAT WHILE WE WERE
AWARE THAT THE FACT THAT
PANDEMIC RISK IS A RISK FACTOR,
IF IT'S TOTALLY UNDERPRICED BY
ALL OF US IN THE INDUSTRY.
IT'S AN EVENT THAT HAPPENED AT
MOST EVERY HUNDRED YEARS, AND
EVEN THEN, THE ODDS ARE PRETTY
HIGH.
I THINK THE BIG LESSON FOR US IS
TO RETHINK ABOUT WHAT IT IS FOR
A PANDEC RISK.
AND SEPARATELY, WE HAVEN'T YET
DONE A GOOD ENOUGH JOB AS AN
INDUSTRY, I'M SAYING, IN TERMS
OF CORRELATING THE KISK RISK AND
MAKING SURE THEY CAN DEAL WITH
THE AGGREGATE NUMBERS.
FOR EXAMPLE, PANDEMIC RISK HAS
TAKEN PEOPLE'S LIVES, BUT THEN
SEPARATELY A BUNCH OF US USED TO
WRITE SOMETHING CALLED EVENT
CANCELLATION OR CONTINGENCY
POLICY.
IN TERMS OF PRICING FOR THE
CONTINGENCY, SHOULD THE OLYMPICS
CANCEL.
WHEN PRICING SOMETHING LIKE THAT
WE WOULD THINK IN TERMS OF
EARTHQUAKE AND RISK AND MORE
RECENTLY TERRORISM BUT YOU WOULD
NEVER FACTOR SOMETHING LIKE WHAT
PORTION OF THE PRICE SHOULD COME
FROM THE PANDEMIC EXPOSURE.
I THINK THE INDUSTRY WILL BECOME
A LOT MORE SOPHISTICATED.
AS OPPOSED TO IT BEING
LOCALIZED.
>> DON ASKED IF ANYONE ELSE ON
THE STAGE WANTS TO COMMENT AFTER
A
AJIT.
>> HE WANTED TO ASK IF ANYBODY
ELSE ON THE TABLE WANTS TO
COMMENT ON.
>> AS AJIT SAID, LOTS OF PEOPLE
BUY INSURANCE AGAINST THE
OLYMPICS BEING CANCELED OR THE
UNITED STATES NO PARTICIPATING.
YOU THINK OF ALL SORTS OF RISK.
THEY HAVE AD CAMPAIGNS --
THERE'S A LOT OF CANCELLATION
INSURANCE, AND IT WAS PROBABLY
UNDER PRICED THE IMPLICIT PART
OF THAT PREMIUM THAT WAS
ATTRIBUTABLE TO A PANDEMIC RESK.
BILL GATES GAVE A TERRIFIC TALK
AND TED FIVE OR SINGS YEARS AGO
AND PEOPLE IGNORED IT AND IT'S
VERY INTERESTING.
THIS ISN'T A WORST CASE WHAT
WE'VE SEEN AND YET IT'S
STAGGERING MANY TERMS OF WHAT
HAS HAPPENED AND PEOPLE THAT
BOTH INSURANCE THAT -- THEY MAY
HAVE THOUGHT OUT SOMETIMES THEY
WERE COVERING THINGS THEY DIDN'T
INTEND TOP COVER AND MAYBE
INSURANCE P DIDN'T THINK THEY
WERE BUYING BUT NEVERTHELESS
AFTER THE FACT IS THEY GET
INSLEPTIVE IN COMING AFTER THEM.
THERE ARE CERTAIN RISKS THAT ARE
TOO BIG.
THE NUKE RISK, FOR EXAMPLE.
THE FEDERAL GOVERNMENT IS VERY
EARLY ON RECOGNIZING THAT
PRIVATE INSURANCE INDUSTRY, THEY
CAN'T HANDLE A -- THE RISK
INVOLVED IN -- THE FINANCIAL
RISK THAT WOULD BE INVOLVED IN
TERMS OF A MASSIVE NUCLEAR
STRIKE OR SOMETHING LIKE THAT.
SO IT'S -- PANDEMICS, THE
WORDING WILL BE MUCH MORE
CAREFUL IN FUTURE POLICIES ON
TRYING TO DIVIDE IT VERY
PRECISELY.
INCIDENTALLY IN THE WAY THE
CASES HAVE COME SO FAR, IN THE
UNITED KINGDOM -- I THINK THERE
WAS ONE PARTICULARLY INSURER --
THE CASES ARE COMING DOWN MUCH
TOUGHER ON THE INSURERS, THE
UNITED STATES, I MEAN, THE
POLICIES WERE WRITTEN
DIFFERENTLY.
YOU DON'T GET INSURANCE ON
SOMETHING YOU DON'T BUY AGAINST.
GENERALLY THE COURT DECISIONS
HAVE COME DOWN FAVORABLE TO THE
INSURERS AND AT BERKSHIRE IT
HAPPENS THAT WE'RE NOT A BIG
PLAYER BRKS BUT THAT'S IN
COMMERCIAL MOLDABLE MIGHT BE
WHERE -- IT'S NOT A HUGE FACTOR
FOR BERKSHIRE.
>> THIS IS FROM MARTIN DEFINE
AND ASKED AJIT AND WARREN WHAT'S
YOUR BEST ESTIMATE OF THE
INSURANCE EXPOSURE FROM THE
PANDEMIC?
>> WELL, IN TERMS OF RESERVES
STARTING FROM LAST YEAR TO THE
END OF THE FIRST QUARTER OF THIS
YEAR, WE HAVE PUT UP A BILLION
SIX IN CHANGE.
WHAT THAT DOESN'T TAKE INTO
ACCOUNT IS SOME OF THE FREQUENCY
BENEFIT BECAUSE OF COVID-19 THAT
RESULTS BECAUSE OF FEWER
ACCIDENTS AND GEICO HAS HAD A
HUGE TAIL WIND BECAUSE OF THAT.
IN TERMS OF WHAT THE INSURANCE
OPERATIONS COLLECTIVELY ARE
GOING TO BE WRITING CHECKS FOR,
THAT NUMBER AS OF NOW IS ABOUT A
BEING SIX.
MY QUESTIONS IS IT WILL PROBABLY
GROW.
IF YOU LOOK UPON IT -- THE
INDUSTRY AS A WHOLE, WE
RESERVED.
THE ASTRO AS A WHOLE HAS RESCHED
ABOUT 25 TO $30 BILLION FOR 19
AS OF NOW.
IF YOU BELIEVE THE PUNDITS THEY
WILL TELL YOU THAT NUMBER IS
PROBABLY CLOSER TO A HUNDRED
BILLION.
THERE'S ABOUT A HUNDRED, 175
LOSSES THAT NEED TO FLOW
THROUGH, INSURANCE, INCOME
STATEMENT.
THE FAVOR OF 1.6 WE HAVE AS OF
NOW IS GOING TO BE A LOT, LOT
HIGHER BUT IT'S NOT SOMETHING WE
CAN'T MANAGE.
>> WE WILL NOT BE IN THE TOP
FIVE --
>> RIGHT.
>> -- PAIRS OF INSURANCE CLAIMS,
EVEN THOUGH WE'RE -- AND IT'S --
WE WRITE A MUCH SMALLER AMOUNTED
OF BOTH LIFE INSURANCE AND
ANNUITIES.
WE HAVE MORE LIFE INSURANCE
CRIMES.
MORE PEOPLE WOULD HAVE DIED THAT
OTHERWISE WOULD HAVE GOT
PAYMENTS UNDER
IT CUTS A LOT OF WASTE.
IT'S A -- ONE OF THE GREAT HUMAN
TAFRS OF ALL TIME BUT IS NOT --
THAT IS BEING INSURANCE -- IF
THE INSURANCE INDUSTRY THINK
THEY'RE GOING TO LOSE A HUNDRED
BILLION DOLLARS, THE HUNDRED
BILLION OUGHT TO BE ON THEIR
BOOKS NOW.
YOU'VE GOT A LIABILITY, AND OUR
GOAL IS NOT -- OUR GOAL IS TO
HAVE -- PUT UP THE LIABILITY
WHEN WE THINK IT'S HAPPENED AND
THEN IF -- WE SHOULD NOT BE AT A
BILLION SIX, I WOULD SAY THIS.
IF WE REALLY THINK WE'RE GOING
TO HAVE SOME PROPORTIONAL SHARE
OF A HUNDRED BILLION, BUT --
WELL, THAT'S ENOUGH SAID ON
THAT.
>> FOR GREG AND WARREN AND
CHARLIE.
BLARE MILLER ASKS WHAT DOES THE
COMBINATION OF KANSAS CITY
SOUTHERN WITH EITHER CANADIAN
PACIFIC OF CANADIAN NATIONAL BE
TO SF IN TERMS OF COMPETITION
AND DO YOU THINK THE SYNERGIES
OF THE MERGER WILL JUSTIFY THE
MULTIPLE PAID?
>> SURE.
SO OBVIOUSLY, A TRANSACTION WE
FOLLOW CLOSELY WITH BOTH
CANADIAN NATIONAL AND CANADIAN
PACIFIC BIDDING TO PURCHASE
KANSAS CITY SOUTHERN, EITHER OF
THOSE COMPANIES ACQUIRING KANSAS
CITY SOUTHERN WILL HAVE AN
IMPACT ON BNSF.
WHAT THEY'RE BASICALLY PROPOSING
IS TO CREATE A NORTH-SOUTH
RAILWAY THAT GOES FROM CANADA
INTO MEXICO.
WE DO HAVE A STRONG PRESENCE IN
MEXICO, NOT AS STRONG AS SOME OF
OUR COMPETITION, BUT WE WOULD
FEEL COMPETITION THERE, SO WE'LL
FOLLOW THAT TRANSACTION VERY
CLOSELY.
AS IT GOES BEFORE THE SURFACE
TRANSPORTATION BOARD, THE
STANDARD THAT WILL BE APPLIED IS
COMPETITION HAS TO BE PROTECTED
OR ENHANCED, SO THAT'S OUR
OPPORTUNITY TO PROTECT OUR
FRANCHISE ON BEHALF OF OUR
CUSTOMERS.
SO WE MOVE IN A MOBILE BUSINESS
BOTH IN AND OUT OF THERE ON
BEHALF OF CERTAIN
WE'LL WANT TO PROTECT THE RIGHTS
OF OUR CUSTOMERS THERE, SO WE'LL
BE ACTIVE IN THE APPROVAL
PROCESS, BUT THERE'S NO QUESTION
AT THE END IT IMPACTS OUR
FRANCHISE.
WARREN.
>> YEAH.
IT'S NOT HUGE, BUT IT AFFECTION
BOTH THE UNION PACIFIC AND BNSF
TO A SBHAUL DEGREE, PROBABLY
SMALL DEGREE BUT THAT'S NOT THE
WORRY OF THE SERVICE
TRANSPORTATION BOARD.
THEIR JOB IS TO DO WHAT'S BEST
FOR THE SCHIPPERS, AND IN TERMS
OF THE PRICE THAT'S BEING PAID,
YOU KNOW, LIKE I SAY, WHEN -- IF
YOU CAN BORROW THE MONEY NOTHING
FOR NOTHING, IT WOULDN'T MAKE
MUCH DIFFERENCE TO PEOPLE AND
THIS WOULD NOT BE BEING PAID
UNDER A DIFFERENT INTEREST RATE
ENVIRONMENT.
IT'S VERY SIMPLE, BUT IT WOULD
MAKE -- THERE'S NO MAGIC TO THE
KANSAS CITY SOUTHERN.
IT'S GOT A -- I THINK -- THE OLD
MEXICO ENDS IN 2047.
IT'S -- IT WILL -- THE NUMBER OF
CAR LOADS CARRIED, WHATEVER, IS
NOT GOING TO CHANGE THAT MUCH.
BUT IT IS KIND OF INTERESTING.
THERE'S ONLY -- THERE'S TWO
MAJOR CANADIAN WHAT THEY CALL
CLASS ONE RAILROADS AND THERE'S
FIVE IN THE UNITED STATES, AND
THIS WILL RESULT IN ESSENTIALLY
THREE OF THE UNITS BEING
CANADIAN, FOUR BEING U.S., WHICH
IS NOT THE WAY IT NORMALLY --
THE WAY THE DEVELOPMENT OF THE
RAILROAD SYSTEM WOULD WORK IN
THE UNITED STATES.
BUT IT'S -- WE'VE TALKED ABOUT
IT PLENTY AND CP OR EITHER
CANADIAN NATIONAL LIKELY TO
GET -- I THINK THE
TRANSPORTATION BOARD WHO VOTED
THE OTHER DAY DIDN'T GET --
>> THEY VOTED ON AN INITIAL
TRUST STRUCTURE THAT THEY HAD TO
APPROVE FOR CANADIAN PACIFIC AND
THAT WAS A 4-1 VOTE, AS YOU
NOTED, WARREN.
>> YEAH.
NORMALLY RAILROAD DEALS ARE A
VERY LONG -- TAKES A LONG TIME
FOR THEM TO EVALUATE.
IN THIS CASE I THINK THEY HAVE
TWO OPPOSING TRUST PROPOSALS AND
IN EFFECT, BY MAKING A -- IF
THEY MAKE A QUICK DECISION ON
WHICH TRUST PROPOSAL WILL THEY
ALLOW, I DON'T SAY THEY ALLOW
TWO PROPOSALS EXACTLY.
SO IT MAY BE A VERY ACCELERATED
DECISION.
I DON'T KNOW.
IT'S UP TO THE TRANSPORTATION
BOARD TO DO WHAT'S WEST FOR WHAT
THEIR OBLIGATION IS TO THE
COUNTRY TO DO.
>> THERE WAS A FOLLOW-UP
QUESTION --
>> SURE.
>> DO YOU THINK THE VALUATION
THAT THEY'RE PAYING IS WORTH IT?
>> WELL, I -- WE HAVE -- IN A
VERY, VERY MILD WAY.
EVERYBODY'S KIND OF PLAYED DEALS
WITH DIFFERENT RAILROADS EVER
SINGS I'VE BEEN IN THE RAILROAD
BUSINESS, SO -- WE'VE TALKED
ABOUT IT.
ONE CP, WHEN -- HARRISON CAME
AFTER -- WAS IT C.P. KIND OF LED
THE WAY WE LOOKED AT BUYING CP.
EVERYBODY LOOKS AT EVERYTHING
AND WE WOULD NOT PAY THIS PRICE
AND APPLIES FOR A PRICE OF BNSF
THAN WHAT THE UP IS SELLING FOR.
BUT IT'S KIND OF PLAIN MOPLAY
MONEY.
CP AND CN, THERE'S ONLY ONE KC
SOUTHERN.
THEY'RE NOT GOING TO BUY US,
THEY'RE NOT GOING TO BUY THE
U.P. AND THE JUICES FLOW AND THE
PRICES GO UP --
>> HANDLE SOMEBODY ELSE'S
>> SOMEBODY ELSE'S MONEY AND
YOU'RE GOING TO RETIRE IN FIVE
OR TEN YEARS AND PEOPLE WON'T
REMEMBER WHAT YOU PAID BUT THE
INVESTMENT BANKERS ARE CHEERING
YOU ON AT EVERY MOVE.
THEY'RE MOVING THE FIGURES
AROUND, THE SPREADSHEETS ARE OUT
AND THE THINGS ARE FLOWING FROM.
>> THIS QUESTION COMES FROM
ASHER HAFT IN BROOKLYN, WHO
SAYS -- HE'S BEEN A SHAREHOLDER
SINCE 2016.
SAYS THAT HE APPRECIATES YOUR
HONESTY AND CANDIDNESS IN
EXPLAINING COSTLY ERRORS YOU
MADE.
YOU MADE A MISTAKE IN 2016 WHEN
AVERAGE AMOUNT OF FUTURE
EARNINGS WHICH PAID BERKSHIRE IN
ACQUIRING ITS.
THEY DECLINED IN 2020 BECAUSE OF
THE PANDEMIC AND THE EFFECT ON
AIRLINE AND TRAVEL INDUSTRY.
WHAT CALCULATIONS COULD YOU HAVE
MADE IN 2016 THAT MIGHT HAVE
ALTERED YOUR DECISION TO HAVE IT
AND ARE THE PROBLEMS THEY'RE
CURRENTLY FACING LARGER THAN THE
PANDEMIC.
>> BERKSHIRE DIDN'T MAKE THE
MISTAKE.
I MADE THE
THE -- NO.
I -- ANYTIME WE LOOK AT BUYING A
BUSINESS, WE'RE EVALUATING THE
STRENGTH OF THE BUSINESS, THE
PRICE WE HAVE TO PAY, THE
MANAGEMENT WE GET AND EVERYTHING
AND WE DIDN'T MAKE A MISTAKE ON
THE MANAGEMENT, BUT IN TERMS OF
THE EARNING POWER ON AVERAGE AND
WHEN BOEING HAS TROUBLE WITH
MAXWELL, THAT'S A PROBABILITY.
HIM IN ANY CUSTOMERS HAVE BIG --
ALL KINDS OF THINGS COULD
HAPPEN, AND WE HAVE SEEN SOME OF
THOSE THINGS HAPPEN AND
THEREFORE, I PAID TOO MUCH IN
RELATION TO AVERAGE EARNINGS.
IT'S A TERRIFIC COMPANY AND, YOU
KNOW, IT'S -- I'LL HAPPY WITH
THE MANAGEMENT AND EVERYTHING,
BUT G.E. DOESN'T
THEY GET INTO THE POWER
BUSINESS, A VARIETY OF THINGS.
AND WE'RE IN THE BUSINESSES.
BUT WE DID NOT THINK THOSE
BUSINESSES WOULD NECESSARILY BE
IN SOMETHING CLOSE TO A
DEPRESSION WHEN OTHER BUSINESSES
THAT WE BOUGHT END UP SOMETIMES
DOING BETTER THAN WE THINK.
BUT WE'LL CONTINUE MAKING
MISTAKES.
I MEAN -- AND I SHOULDN'T SAY WE
WILL.
I
>> THE OTHERS WILL HELP.
>> AND, WELL, YOU KNOW, WE'VE
GOT SOME WONDERFUL DEALS AND
SOME TERRIBLE DEALS.
AND THE NICE THING ABOUT IT IS,
AS I POINTED OUT, THIS DOESN'T
REALLY APPLY IN THE CASE OF
PRECISION, BUT WHEN WE'RE
DISAPPOINTED IN THE BUSINESS IT
USUALLY BECOMES A SMALLER AND
SMALLER PERCENTAGE OF OUR
BUSINESS JUST BY THE NATURE OF
THINGS BECAUSE IT ISN'T GOING
ANY PLACE.
WHEN WE GET A SUCCESSFUL
BUSINESS, LIKE A GEICO --
THEY'RE DOING 15 TIME AS MUCH
BUSINESS AS WHEN WE BOUGHT
CONTROL OF THEM.
THEY'VE BECOME A MORE IMPORTANT
PART OF OUR MIX.
SO YOU REALLY GET JUST THROUGH
NATURAL FORCES YOU GET MORE OF
YOUR MONEY IN THINGS THAT HAVE
DEVELOPED MORE FAVORABLY THAN
YOU THOUGHT.
YOU ACTUALLY END UP GETTING A
GREATER CONCENTRATION IN THE
THINGS THAT WORK OUT.
AS CHARLIE WOULD SAY, IT'S NOT
LIKE HAVING CHILDREN.
THE BAD ONES CAUSE YOU MORE
PROBLEMS.
BUT IN THE CHILDREN OF
BUSINESSES, THE SMALL ONES KIND
OF -- WE STARTED WITH THREE
BUSINESSES, CHARLIE AND I, AND
BERKSHIRE WAS TEXTILES, AND
DEPARTMENT STORE AND TRADING
STAMPS, BLUE CHIPS BUSINESS, AND
THOSE WERE THE THREE COMPANIES
WE PUT TOGETHER, AND ALL THREE
OF THE ORIGINAL BUSINESSES
FAILED, WHICH SORT OF GETS ME IN
TERMS OF PEOPLE THAT ARE WORRIED
ABOUT, DON'T WE KNOW THAT COAL
IS GOING TO BE PHASED OUT OVER
TIME?
OF COURSE WE KNOW THAT.
THAT DOESN'T MEAN WE'RE GOING TO
BE PHASED OUT OVER TIME.
EVERY BUSINESS HAS A LOT TO
THINK ABOUT THAT WAY.
THE BIGGEST DANGER, THEY HAVE
THAT SECTION IN THE PERSPECTIVES
CALLED -- WHAT DO THEY CALL THAT
ABOUT CERTAIN --
>> RISK FACTORS?
>> RISK FACTORS, YEAH.
THE YOU BE IN ONE RISK FACTOR IS
THAT THIS BUSINESS GETS THE
WRONG MANAGEMENT.
AND GET A GUY OR A WOMAN IN
CHARGE OF IT THAT THEY ARE
PERSONABLE, THE DIRECTORS LIKE
THEM.
THEY DON'T KNOW WHAT THEY'RE
DOING, BUT THEY LIKE TO PUT ON
AN APPEARANCE.
THAT'S THE SINGLE BIGGEST
DANGER.
THEN THAT PERSON STAYS AND RUNS
IT AND STAYS IN THE TEXTILE OR
DEPARTMENT STORE BUSINESS.
AND IT EXPANDS.
I LOOKED AT A LOT OF BUSINESSES.
THAT'S WHAT'S CAUSED THE NUMBER
ONE PROBLEM.
IT ISN'T THE THING THAT THEY
LIST BECAUSE THE LAWYERS TELL
THEM TO LIST.
>> THIS QUESTION IS FOR BOTH
WARREN AND CHARLIE.
NOW THAT THE CRYPTO MARKET
OVERALL IS VALUED AT
$2 TRILLION, DO YOU STILL C O
CRYPTOS AS WORTHLESS ARTIFICIAL
GOLD?
>> I KNEW THERE WOULD BE A
QUESTION ON BITCOIN.
I THOUGHT TO MYSELF, WELL, I'VE
WATCHED THESE QUESTIONS DODGE
POLITICIANS ALL THE TIME.
THE TRUTH IS, I'M GOING DODGE
THAT QUESTION, BECAUSE WE'VE
PROBABLY GOT HUNDREDS OF
THOUSAND OF PEOPLE WATCHING THAT
THAT OWN BITCOIN, AND TWO PEOPLE
THAT ARE SHORT.
WE'VE GOT A CHOICE OF MAKING
THOUSANDS OF PEOPLE MAD AT US OR
MAKING TWO PEOPLE HAPPY.
I THOUGHT ABOUT IT, WE HAD A
GOVERNOR ONE TIME IN NEBRASKA, A
LONG TIME AGO, BUT HE WOULD GET
A TOUGH QUESTION -- WHAT DO YOU
THINK ABOUT PROPERTY TAXES?
OR WHAT SHOULD WE DO ABOUT
SCHOOLS?
AND HE'D LOOK RIGHT AT THE
PERSON AND SAY, I'M ALL RIGHT ON
THAT ONE.
AND HE'D JUST WALK OFF.
WELL, I'M ALL RIGHT ON
WE'LL SEE HOW CHARLIE IS.
>> WELL, THOSE WHO KNOW ME WELL
ARE JUST WAVING THIS RED FLAG AT
THE BULL.
OF COURSE I HATE THE BITCOIN
SUCCESS, AND I DON'T WELCOME A
CURRENCY THAT'S SO USEFUL TO
KIDNAPPERS AND EXTORTIONISTS AND
SO FORTH.
NOR DO I LIKE SHUFFLING OUT A
FEW EXTRA BILLIONS AND BILLIONS
AND BILLIONS OF DOLLARS TO
SOMEBODY WHO JUST INVENTED A NEW
FINANCIAL PRODUCT OUT OF THIN
AIR.
SO, I THINK I SHOULD SAY
MODESTLY THAT THE WHOLE
DEVELOPMENT IS DISGUSTING AND
CONTRARY TO THE INTEREST OF
CIVILIZATION.
AND I'LL LEAVE THE CRITICISM TO
OTHERS.
>> I'M ALL RIGHT ON THAT ONE.
>> THE NEXT SERIES OF QUESTIONS
ARE FROM JAMES HERNANDEZ.
HE HAS TWO QUESTIONS.
ONE FOR AJIT.
ONE FOR GREG.
THEY BOTH CONCERN ELON MOSQUE.
ELON MUSK STATED BERKSHIRE
HATHAWAY'S ENERGY PROPOSAL FOR
TEXAS IS WRONG.
INSTEAD, MR. MUSK ARGUES THAT
LOAD BALANCING USING BATTERY
STORAGE IS THE APPROPRIATE
COURSE OF ACTION.
CAN YOU EXPLAIN WHY THE BHE
PROPOSAL IS THE BETTER COURSE OF
ACTION FOR GOVERNOR ABBOTT IN
THE STATE OF TEXAS?
SPECIFICALLY, WHAT AMOUNT OF
SAVINGS CAN THE CITIZENS EXPECT
ABOVE AND BEYOND WHAT MR. MUSK
IS PROPOSING?
>> SURE.
OBVIOUSLY THERE'S THE VERY
UNFORTUNATE EVENT IN TEXAS IN
FEBRUARY AND IT BASICALLY LASTED
FOUR DAYS.
MANY LIVES WERE LOST.
THE ECONOMIC DAMAGE WAS
SIGNIFICANT.
TEXAS HAS HIGHLIGHTED THAT
ANYWHERE FROM 80 TO $130 BILLION
AND INCURRED LOSSES OVER THAT
PERIOD OF TIME.
I THINK WHEN YOU LOOK AT THE
POWER SECTOR IT FUNDAMENTALLY
LET THE CITIZENS DOWN.
IT DIDN'T PERFORM AS THEY
EXPECTED.
AND THEN WHEN IT DID PERFORM IT
WAS EXTREMELY EXPENSIVE.
THEY INCURRED BILLIONS AND
BILLIONS OF DOLLARS OF ENERGY
COSTS VERSUS A MULTIPLE OF
BASICALLY TEN TIMES WHAT THEY
PAID.
THEY PAID TEN TIMES IN ENERGY
COSTS OVER THOSE FOUR DAYS WHAT
THEY PAID IN THE PAST YEAR.
SO A VERY SUBSTANTIAL EVENT FOR
TEXAS.
WE'VE GONE TO TEXAS WITH WHAT WE
BELIEVE IS A GOOD SOLUTION.
WE SPENT A LOT OF TIME PULLING
IT TOGETHER, UNDERSTANDING THE
FUNDAMENTAL ISSUES AROUND IT.
AND OUR PROPOSAL IS BASED ON THE
FACT THAT THE HEALTH AND WELFARE
OF TEXANS WERE AT RISK, AND WE
NEEDED TO HAVE EFFECTIVELY AN
INSURANCE POLICY IN PLACE FOR
THEM.
THAT IF THEY NEEDED TO POWER ON
SHORT NOTICE, IT WOULD BE ABLE
TO BE DISPATCHED AND IT WOULD BE
THERE FOR THE FOUR DAYS WE'RE
PROPOSING IT COULD BE THERE FOR
SEVEN DAYS.
AND THE FUNDAMENTAL CONCEPT OF
OUR PROPOSAL HAS ALWAYS BEEN, IF
THERE'S A BETTER PROPOSAL THAT'S
BROUGHT FORWARD, WE'VE
ACCOMPLISHED OUR MISSION.
WE'VE JUST REALLY BEEN THERE
TO -- IT'S THE BEST PROPOSAL OR
OPTION WE COULD COME UP WITH,
AND OBVIOUSLY WITH TEXAS OR ELON
OR SOMEBODY COMES UP WITH A
BETTER PROPOSITION, WE'VE ALWAYS
SAID, TEXAS, YOU SHOULD PURSUE
IT.
WE STRONGLY BELIEVE RIGHT NOW WE
HAVE WHAT REMAINS IS A VERY GOOD
PROPOSAL FOR TEXAS, AND IT WILL
CONTINUE TO BE DISCUSSED AND
EVALUATED.
THE BIG DIFFERENCE BETWEEN A
BATTERY PROPOSAL AND OUR
PROPOSAL IS THAT WE WILL HAVE
POWER THAT CAN BE GENERATED
CONTINUOUSLY FOR SEVEN
CONSISTENT DAYS.
WHERE IF YOU WENT TO A BATTERY
SOLUTION, YOU MAY RELEASE THAT
POWER THAT'S BEEN STORED FOR
FOUR HOURS, WITH YOU WE'RE
TALKING FOUR DAYS OF A PROBLEM,
NOT FOUR HOURS.
AND IT'S JUST A COMPLETELY
DIFFERENT COST EQUATION AND
SOLUTION.
SO VERY PROUD THAT OUR TEAM'S
BROUGHT FORWARD WHAT I THOUGHT
WAS A VERY UNIQUE
WE WORKED HARD WITH OUR SU R
SUPPLIERS AND PUT TOGETHER WHAT
WE BELIEVE IS A FIRM COST THAT
CAN ALSO BE DELIVERED BY
NOVEMBER OF '23.
SO AGAIN WE PUT A FIRM DATE ON
IT.
IT WON'T BE READY NEXT WINTER,
UNFORTUNATELY.
WON'T BE READY THIS SUMMER BUT
IT'S A VALUABLE SOLUTION AND ONE
THAT WE HOPE AT LEAST LEADS TO
THE RIGHT DISCUSSION AND THE
RIGHT LONG-TERM DISCUSSION FO
THE STATE.
>> YEAH, AND WE'RE ALSO WILLING
TO PUT UP $4 BILLION THAT IF WE
DON'T DELIVER WHEN WE SAY WE'RE
GOING TO DELIVER, WE'LL PAY IT
AS A PENALTY, BASICALLY.
BUT, YOU KNOW, WE WENT TO
GENERAL ELECTRIC, SAID, HOW LONG
COULD WE GET TURBINES.
YOU KNOW, IF YOU'RE GOING TO BE
PREPARED FOR 2023, YOU HAVE TO
START AT A POINT FAIRLY SOON,
AND YOU HAVE INFLATION GOING ON,
AND KEY WAS NOT GOING THE CHANGE
THINGS IN A MONTH.
THEY HAD 100 PEOPLE WORKING ON
IT OR SOMETHING.
>> YEAH, THEY HAD HUNDREDS
WORKING ON IT.
>> AND GE IS COOPERATIVE.
BUT DOESN'T MEAN WE HAVE THE
BEST SOLUTION.
WE JUST KNOW WHAT WE CAN DO.
IF ANYBODY CAN DO IT FASTER,
THEY CAN DO IT CHEAPER,
WHATEVER, THAT'S TERRIFIC.
BUT THEY SHOULD HAVE SOMETHING
TO LOSE TIF THEY DON'T DO IT.
AND WE'LL BACK OUR PROMISE UP BY
$4 BILLION, AND WE WON'T HAVE
ANY RINKY DINK CLAUSES IN THERE
THAT IF THIS HAPPENSER THAT
HAPPENS, WE WON'T PAYMENT BUT WE
WON'T BE ABLE TO DO THAT AIER
FROM NOW.
WE'LL BE ABLE TO DO IT A YEAR
FROM NOW WITH THE COSTS WHAT
THEY ARE THEN.
TEXAS IS A TERRIFIC PLACE TO DO
BUSINESS.
WE DO A LOT OF BUSINESS THERE.
IT'S A GREAT PLACE.
AND THIS WAS OUT OF THE BLUE,
BUT ONE WAY OR ANOTHER -- THE
NATURE OF UTILITY BUSINESS IS
THAT YOU HAVE TO BE PREPARED FOR
SOMETHING THAT PROBABLY ISN'T
GOING TO HAPPEN.
YOU KNOW, YOU DON'T WANT TO SAY,
IT'S A 1 IN 30 YEAR EVENT AND
PEOPLE DIE.
SO, YOU WANT A MARGIN OF SAFETY
IN IT, AND WE'VE GOT ONE
SOLUTION, AND OTHER PEOPLE MAY
HAVE OTHER SOLUTIONS, AND WE
WILL CHEER WHEN A SOLUTION IS
REACHED OF ANY KIND, AND WE'LL
CHEER A LITTLE LOUDER IF IT'S
OURS.
>> AJIT, YOUR QUESTION FROM THIS
GENTLEMAN -- SUPPOSE THE
HYPOTHETICAL SITUATION ARISES
WHERE WARREN BUFFET CALLS YOU ON
THE PHONE TO TELL YOU ELON MUSK
HAS CONTACTED HIM TO WRITE AN
INSURANCE POLICY ON HIS PROPOSED
COME ANIZATION OF MARCH.
SPECIFICALLY TO ENSURE A SPACEX
CAPSULE AND ANY HUMAN LOAD ON
BOARD.
WOULD YOU WRITE ON THAT?
>> THIS IS AN EASY ONE.
NO THANK YOU.
I'LL PASS.
>> I WAS ABLE TO DEPEND ON THE
PREMIUM.
I WOULD PROBABLY HAVE A SOMEWHAT
DIFFERENT RATE IF ELON WAS ON
BOARD OR NOT ON
NO, IT MAKES A DIFFERENCE.
IF SOMEBODY'S ASKING YOU TO
ENSURE SOMETHING -- SO I
WOULD -- THAT'S CALLED GETTING
SKIN IN THE GAME.
>> BUT IN GENERAL I WOULD BE
VERY CONCERNED ABOUT WRITING AN
INSURANCE POLICY WHERE ELON MUSK
IS ON THE OTHER SIDE.
>> TELL HIM HE WANTED TO CALL ME
INSTEAD OF AJIT.
>> THIS QUESTION COMES FROM
MICHAEL LU FROM CALIFORNIA.
THIS IS FOR WARREN AND CHARLIE.
THE YOUR SHAREHOLDER LETTER YOU
MENTION THE BEST RESULTS COME
FROM COMPANIES THAT REQUIRE
MINIMUM ASSETS TO CONDUCT HIGH
MARGIN BUSINESSES TODAY AS WORLD
THESE DEPEND TO BE SOFTWARE
BUSINESSES.
WHILE BERKSHIRE AVOIDED THOSE IN
THE PAST THAT SEEMS TO BE
CHANGING WITH YOUR INVESTMENTS
IN APP AND SNOWFLAKE.
AS SHAREHOLDERS SHOULD WE EXPECT
HIGH MARGIN BUSINESSES WILL
CONSTITUTE A LARGER PORTION OF
BERKSHIRE'S PORTFOLIO OVER TIME,
PARTICULARLY AS TOM AND TED TAKE
OVER ROLES IN THE PROCESS?
>> WELL, WE'VE ALWAYS KNOWN THE
GREEN BUSINESS IS THE ONE THAT
TAKES LITTLE CAPITAL AND GROWS A
LOT.
AND APPLE AND GOOGLE AND
MICROSOFT AND FACEBOOK ARE
TERRIFIC EXAMPLES OF THAT.
I MEAN, APPLE HAS $37 BILLION IN
POVERTY PLANNED EQUIPMENT.
BERKSHIRE HAS $170 BILLION OR
SOMETHING LIKE THAT.
THEY'RE GOING TO MAKE MORE MONEY
THAN WE DO.
IT'S A MUCH BETTER BUSINESS THAN
WE HAVE.
AND MICHAEL AS BUSINESS IS A
BETTER BUSINESS.
GOOGLE AS BUSINESS IS BETTER.
WE'VE ALWAYS LOOKED -- WE'VE
KNOWN THAT A LONG TIME.
WE FOUND THAT OUT WITH SEE'S
CANDY IN 1972.
IT JUST DOESN'T REQUIRE THAT
MUCH CAPITAL.
IT DOESN'T HAVE -- IT HAS
OBVIOUSLY A COUPLE OF
MANUFACTURING PLANTS, THEY CALL
THEM KITCHENS.
BUT IT DOESN'T HAVE A BIG
INVENTORY EXCEPT SEASONALLY FOR
A SHORT PERIOD.
DOESN'T HAVE A LOT OF
RECEIVABLES.
THOSE ARE THE KIND OF
BUSINESS -- THEY'RE THE BEST
BUSINESSES BUT COMMAND THE BEST
PRICES.
WE'RE LOOKING FOR THEM ALL THE
TIME, AND WE'VE GOT A FEW THAT
ARE PRETTY DARN GOOD, BUT WE
DON'T HAVE ANYTHING AS BIG AS
THE BIG GUYS.
BUT THAT'S WHAT EVERYBODY'S
LOOKING FOR.
THAT'S WHAT CAPITALISM IS ABOUT,
PEOPLE GETS A RETURN ON CAPITAL.
AND THE WAY YOU GET IT IS HAVING
SOMETHING THAT DOESN'T TAKE TOO
MUCH CAPITAL.
I MEAN, IF YOU HAVE TO REALLY
PUT OUT TONS AND TONS OF
CAPITAL -- THE UTILITY BUSINESS,
IT'S NOT A SUPER HIGH RETURN
BUSINESS.
YOU JUST HAVE TO PUT OUT A LOT
OF CAPITAL.
YOU GET A RETURN ON THE CAPITAL,
BUT YOU DON'T GET FABULOUS
RETURN.
YOU DON'T GET GOOGLE LIKE
RETURNS OR ANYTHING REMOTELY
CLOSE TO IT.
YOU KNOW, WE'RE PROPOSING A
RETURN IN THE TRANSACTION WITH
THE PROPOSITION WITH TEXAS.
I THINK IT'S 9.3%.
>> YEAH, 9.3%.
>> YEAH, AND THAT -- BUT IF YOU
LOOK AT THE RETURN ON MOST
AMERICAN BUSINESSES, NET
TANGIBLE ASSETS IT'S A LOT
HIGHER THAN 9.3, BUT THEY AREN'T
UTILITY BUSINESSES, EITHER.
>> CHARLIE, DID YOU WANT TO ADD
ANYTHING TO THAT?
>> NO.
>> THIS QUESTION IS FROM RYAN
FAZARO IN NEW YORK CITY, WHO
SAYSED TO TODD AND TED HAVE TA
ON -- INCLUDING THE SIZABLE
APPLE HOLDINGS, PARTICIPATING IN
M AND A STRATEGY AND
PARTICIPATING IN THE NEW
SHUTTERED HEALTH-CARE WITH
AMAZON AND MORGAN.
BUT TODD AND TED ARE NOT
AVAILABLE THE SHAREHOLDERS.
GIVEN THEIR -- TO THE FIRM, CAN
YOU DISCUSS THIS POLICY AND
WHETHER WE EXPECT TO HEAR FROM
THEM MORE IN THE COMING YEARS?
>> THEY'RE BOTH ABSOLUTELY
TERRIFIC, AND THAT'S ONE REASON
I DON'T WANT PEOPLE QUIZZING
THEM ON STOCKS.
THEY'RE ASSETS OF BERKSHIRE.
THERE'S NO REASON FOR THEM TO BE
OUT EDUCATING OTHER PEOPLE ON
HOW TO COMPETE WITH US.
IT WOULDN'T -- IT ALWAYS SEEMS
SO SILLY THAT PEOPLE EXPECT --
THEY DON'T EXPECT MERCK OR
PFIZER TO TELL THEM THE EXACT
SCIENCE THEY'RE WORKING ON.
THE FAILURES, ELIMINATE THOSE.
AND YOU KNOW, THE -- IF YOU'VE
GOT TALENT THAT KNOWS HOW TO
EVALUATE BUSINESSES -- AND THOSE
TWO FELLAS HAVE GONE FAR BEYOND
THAT.
THEY'RE TERRIFIC ASSETS, AND
THEY LOVE BERKSHIRE AND WORK
EXTRAORDINARY HOURS.
BUT WE DON'T REALLY WANT THEM
GOING AROUND WITH PEOPLE ASKING
THEM QUESTIONS ABOUT WHY YOU
LIKE THIS INDUSTRY BETTER OR
ANYTHING OF THE SORT.
>> THIS QUESTION'S FOR CHARLIE.
IT COMES FROM STEVEN TENOR IN
ATLANTA.
HE'S BEEN A BERKSHIRE
SHAREHOLDER FOR TEN YEARS AND
SAYS YOU AND YOUR FRIEND LEELU
HAVE BEEN -- SINCE ITS INITIAL
PURCHASE IN 2008.
IT'S CURRENTLY VALUE AT
$5.3 BILLION.
THE DAILY JOURNAL RECENTLY
BOUGHT A LARGE SHARE OF ALIBABA
AFTER JACK MA WAS -- AND HIS
OTHER WAS NOT ALLOWED TO PREEZ
WITH IPO.
WHAT ARE YOUR THOUGHTS ON CHINA
AND WHETHER BUSINESSES -- THE
GOVERNMENT WILL LET BUSINESSES
WITH STRONG LEADERS TO FLOURISH
IN THE YEARS TO COME?
>> I THINK THE CHINESE
GOVERNMENT WILL ALLOW BUSINESSES
TO FLOURISH.
IT'S THE BEST THING THAT
HAPPENED IN THE HISTORY OF THE
WORLD WHEN A BUNCH OF COMMITTED
COMMUNISTS LOOKED AT THE
PROSPERITY OF PLACES LIKE
SINGAPORE AND SAID, THE HELL
WITH THIS.
WE'RE NOT GOING STAY HERE IN
POWER.
WE'RE GOING TO COPY WHAT WORKS.
THEY CHANGED COMMUNISM.
THEY ACCEPTED ADAM SMITH AND
ADDED IT TO COMMUNISM.
AND NOW WE HAVE COMMUNISM WITH
CHINESE CHARACTERISTICS.
CHINA WITH A FREE MARKET WITH A
BUNCH OF BILLIONAIRES.
AND THEY MADE THAT SHIFT.
AND THEY DESERVE A LOT OF
CREDIT.
WARREN AND I ARE NOT QUITE AS
GOOD AT THAT, CHANGES OUR MINDS
IN MANY CASES, AND THAT WAS A
REMARKABLE CHANGE COMING FROM
SUCH A PLACE, AND OF COURSE IT'S
WORKED LIKE GANGBUSTERS.
THAT IS ENORMOUS GROWTH, THE
AVERAGE INCOME OF THE ARCH
CHINESE.
THEY'VE LIFTED 800 MILLION
PEOPLE OUT OF POVERTY, FAST.
AND THERE WAS NEVER ANYTHING
LIKE IT IN THE HISTORY OF THE
WORLD, SO MY HAT IS OFF TO THE
CHINESE, AND I THINK THEY WILL
CONTINUE TO ALLOW PEOPLE TO MAKE
MONEY.
THEY LEARNED IT WORKS.
I LOVE WHAT THE GUY SAID IN THE
FIRST PLACE -- I DON'T CARE
WHETHER THE CAT IS BLACK AND
WHITE, AS LONG AS IT CATCHES
MICE.
THAT'S MY KIND OF TALK.
>> IN THAT LIST OF THE MOST
VALUABLE COMPANIES, THREE ARE
IF YOU'RE LOOKING OUT 30 YEARS,
MY GUESS IS MORE.
BUT I DON'T THINK IT WILL TOP
THE UNITED STATES.
BUT WHO KNOWS.
IT'S -- IT'S AMAZING WHAT HAS
BEEN ACCOMPLISHED.
>> YEAH, REALLY AMAZING.
>> AND THEY FOUND WHAT WORKS.
NOTHING LIKE FINDING SOMETHING
THAT WORKS IN ORDER TO
REINFOREIN
REINFORCED IDEAS OVER TIME.
WE'LL SEE WHAT HAPPENS.
I WILL BET THERE WILL BE MORE
THAN THREE, BUT I'LL BET THE
UNITED STATES HAS MORE THAN
CHINA HAS, TOO.
>> THIS ONE COMES FROM TIM
MEDLEY IN JACKSON, MISSISSIPPI,
WHO'S BEEN A SHAREHOLDER SINCE
1997.
HE WRITES ON MARCH 19th, THE
FORMER PRESIDENT OF HARVARD
UNIVERSITY, LARRY SUMMERS WAS
CRITICAL OF PRESIDENT
JOE BIDEN'S $1.9 TRILLION
AMERICAN RESCUE STIMULUS PLAN,
AND IN AN INTERVIEW BE BLOOMBERG
TELEVISION SAID, I'M WORRIED
WE'LL HAVE MORE INFLATION OR A
DRAMATIC FISCAL, MONETARY
COLLISION.
THIS GOES WAY BEYOND WHAT IS
NECESSARY.
HE SAID, ALSO, THIS IS THE LEAST
RESPONSIBLE MACROECONOMIC POLICY
WE HAVE HAD IN THE LAST 40
YEARS.
YOUR THOUGHTS?
>> YOU'RE ASKING ME ON THAT.
>> HE DIDN'T WRITE TO WHO, SO
ANYBODY ON THE STAGE.
>> I WOULD SAY LARRY'S BEEN
READING HIS UNCLE'S BOOK.
LARRY IS A VERY, VERY SMART --
ALTHOUGH AND HE'S LETTING OUT
POSSIBILITIES WHICH ACTUALLY NOW
VOICED A LITTLE BIT MORE SINCE
THAT MARCH 19th -- WHATEVER DATE
IT WAS THAT THEY MADE THAT --
YOU CAN'T JUST DO ONE THING IN
ECONOMICS, AND IF WE REALLY
COULD SHOVEL OUT MORE AND MORE
DEBT AND THE COST TURNED OUT TO
BE LOW -- PEOPLE THOUGHT JAPAN
COULDN'T DO WHAT THEY'VE DONE,
BUT, YOU KNOW, USED TO BE CALLED
THE WIDOWMAKER AROUND SOLOMON,
AND PEOPLE WERE SHORTING
JAPANESE BONDS.
BUT THE ANSWER IS, WE DON'T
KNOW.
BUT LARRY'S VIEW IS AN IMPORTANT
VIEW, AND IT'S JUST AS GOOD AS,
IF MY -- THE VIEW ON THE OTHER
SIDE MIGHT BE.
WE DON'T KNOW WHAT HAPPENS FROM
THE PRESENT POLICIES.
WE DO KNOW, AS JAY POWELL SAID
THE OTHER DAY, THAT THE IDEA
THAT 100% OF GDP WAS SOME
TERRIBLY DANGEROUS LEVEL, IN
TERMS OF DEBT, THAT DOESN'T
REALLY MAKE A WHOLE LOT OF SENSE
NOW, AND THAT USED TO BE KIND OF
ACCEPTED WISDOM.
WE'VE LEARNED A LOT OF THINGS WE
THOUGHT BEFORE WEREN'T TRUE, BUT
WE HAVEN'T HEARD IF WHAT WE'RE
DOING NOW IS TRUE.
AND THE BEST THING TO DO IS
RECOGNIZE YOU DON'T KNOW AND
PROCEED IN A WAY WHERE YOU GET A
DECENT RESULT NO MATTER WHAT
HAPPENS, AND THAT'S WHAT WE TRY
TO DO AT BERKSHIRE HATHAWAY.
WE DO NOT THINK WE CAN MAKE
MONEY BY MAKING MACROECONOMIC
PREDICTIONS.
WE DO THINK WE CAN BE PRETTY
DARN SURE WE'LL GET A REASONABLE
RESULT UNDER POLICIES THAT WILL
NONACTION WISE RESULT IF WE
COULD DO THAT SORT OF THING.
>> IT'S NOT AT ALL CLEAR WHETHER
LARRY IS RIGHT OR WRONG.
>> HE'S A SMART MAN, THOUGH.
>> HE IS A SMART MAN, AND IT'S
COURAGEOUS OF HIM TO RAISE IT
TO -- HE'S FRANKLY THE ONLY ONE
TALKING THAT WAY, WHICH I
ADMIRE, BY THE WAY.
>> GUARANTEES HE WON'T GET A
POSITION IN THE ADMINISTRATION.
>> WELL, THAT'S ONE OF THE
REASONS I ADMIRE HIM.
AND NOT THAT THERE'S ANYTHING
WRONG WITH HAVING A POSITION IN
THE ADMINISTRATION, BUT I THINK
PEOPLE WHO KIND OF TELL IT THE
WAY THEY THINK IT IS, I LIKE IT.
>> THIS QUESTION CIRCLES BACK TO
BANKING, WHICH YOU TOUCHED ON
EARLIER.
JEROME BERNARD FROM SWITZERLAND
WRITES, CAN YOU EXPLAIN WHY YOU
EXITED MOST BANK STOCKS IN 2020
EXCEPT BANK OF AMERICA, AND WHAT
IS YOUR FUTURE ON THE BANKING
INDUSTRY?
>> I LIKE BANKS GENERALLY, I
JUST DIDN'T LIKE THE PROPORTION
COMPARED TO THE POSSIBLE RISK
IF -- WHICH SO FAR WE HAVEN'T
GOTTEN.
WE WERE OVER 10% OF BANK OF
AMERICA.
IT'S A REAL PAIN IN THE NECK,
BOTH IN THE BANK, MORE TO THE
BANKS THAN US.
AND I LIKE THE BANK OF AMERICA,
AND I LIKE BERNARD VERY MUCH AND
I LIKE THE BANKING BUSINESS
FINE, SO WE TOOK THAT UP, BUT WE
TOOK THE OVERALL BANK POSITION
DOWN.
WE DIDN'T WANT TO GO ABOVE 10,
AND WE DID WANT TO INCREASE THE
B OF A POSITION, BUT WE OVERALL
DIDN'T WANT AS MUCH IN BANKS AS
WE HAD.
THE BANKING BUSINESS WAS WAY
BETTER THAN IT WAS IN THE UNITED
STATES 10 OR 15 YEARS AGO.
THE BANKING BUSINESS AROUND THE
WORLD IN VARIOUS PLACES MIGHT
WORRY ME, BUT OUR BANKS ARE IN
FAR, FAR BETTER SHAPE THAN 10 OR
15 YEARS AGO.
BUT WHEN THINGS FROZE FOR A
SHORT PERIOD OF TIME, THE
BIGGEST THING THE BANKS HAD
GOING FOR THEM IS THAT THE
FEDERAL RESERVE WAS BUYING THEM.
AND THE FEDERAL RESERVE, THEY'RE
NOT BEHIND BERKSHIRE.
IT'S UP TO US TO TAKE CARE OF
OURSELVES.
>> THIS QUESTION COMES FROM MATT
WHY IN LOS ANGELES.
YOU RECENTLY PURCHASED A LARGE
STAKE IN VERIZON.
FOR EDUCATIONAL PURPOSES COULD
YOU EXPLAIN THIS?
MANY SEE TELECOM AS -- ONLY FOR
THE OTHER TECH COMPANIES TO TAKE
ADVANTAGE AND CABTURE MOST OF
THE VALUE CREATED LIKE FACEBOOK,
UBER, AIRBNB AND DOOR DASH.
>> I THINK HE'S ANALYZED THE
SITUATION WELL, BUT WE ARE NOT
IN THE BUSINESS OF WHY WE OWN A
STOCK WHICH WE MIGHT BUY MORE
OF, SELL, OR WHO KNOWS.
BUT HE'S ON HIS OWN.
BUT HE SOUNDS LIKE HE'S VERY
CAPABLE OF THINKING IT THROUGH
HIMSELF.
>> SLAVEN WRITES IN, SENATOR
JOSH HAWLEY RECENTLY SIGNED A
PROPOSAL THAT WILL BAN -- WHILE
THIS LEGISLATION IS UNLIKELY TO
GO THROUGH, INCREASING
ANTI-TRUST LEGISLATION COULD
PRESENT A RESCUE FOR BERKSHIRE.
HAS BERKSHIRE'S BOARD DISCUSSED
WHAT WOULD HAPPEN OVER THE
LONG-TERM IF BERKSHIRE WERE
BANNED TO ACQUIRING CONTROLLED
BUSINESSES?
>> WE DON'T DISCUSS THAT, BUT
THE BOARD IS VERY, VERY FAMILIAR
WITH WHAT BERKSHIRE DOES, WHY
THEY DO IT, YOU KNOW, HOW WE
THINK IN DEPLOYING CAPITAL.
BUT WE COULD -- EVERYBODY KNOWS
THAT IF YOU CHANGE THE
ANTI-TRUST LAWS IT COULD CHANGE
THINGS FOR BERKSHIRE.
IF YOU CHANGE THE -- IT COULD
CHANGE
WE COULD SPEND HOURS DISCUSSING
THEM, BUT IN THE END, IT IS A
22.3% RISK THAT SOMETHING
CHANGES?
IT'S A GOOD WAY TO FILL THE TIME
AT BOARD MEETINGS, AND IF YOU'RE
GETTING $300,000, $400,000, A
YEAR AS A BOARD DIRECTOR YOU
MIGHT WANT TO SPEND YOUR TIME
DOING THAT, BUT WE REALLY DON'T
FOCUS ON THAT.
THE MAIN THING ABOUT BERKSHIRE
IS HOW TO PRESERVE THE CULTURE,
HOW TO MAKE SURE IF YOU GET THE
WRONG PERSON AS A CEO, YOU CAN
DO SOMETHING ABOUT IT.
THAT'S THE BIGGEST RISK THE
BOARD HAS IS IF YOU PICK THE
WRONG CEO.
I HAVE BEEN ON 20 BOARDS AND
THIS HAPPENED MORE THAN ONCE.
SOMETIMES IT'S A TERRIBLE
PROBLEM TO GET RID OF THEM.
YEARS GO BY, AND, YOU KNOW, IF
YOU JUST SIT THERE AND COLLECT
YOUR $300,000, $400,000, A YEAR
AND THE CHIEF EXECUTIVE KEEPS
PROPOSING YOU GET AN INCREASE
FROM TIME TO TIME -- AND IT'S
WORSE YET IF HE'S A NICE PERSON,
YOU KNOW, DOING HIS BEST.
IT'S -- BUT WE'RE NOT GOING TO
SPEND A LOT OF TIME -- WE MAY DO
IT ON A PERSONAL BASIS, BUT
WE'RE NOT GOING TAKE A LOT OF
PEOPLE -- WE WANT THEM TO KNOW
WHAT'S GOING ON WITH BSF AND HOW
KATIE'S DOING AND IF THE CASEY
THING COULD -- IN A MATERIAL WAY
AND SO ON.
WE REALLY DON'T -- EXCEPT A
PRIVATE SIDE THING, WE DON'T
START TALKING ABOUT WHAT THE
EFFECTS WILL BE IN 2050 IF THIS
PROJECTION OR THAT PROJECTION
ISN'T MET.
CHARLIE?
>> NOTHING TO ADD.
>> THIS QUESTION WAS SENT IN BY
DON GRAHAM DURING THE MEETING
BASED ON SOMETHING YOU SAID
EARLIER TODAY.
HE SAYS, WHY DOES WARREN SAY
BERKSHIRE'S ABILITY TO ENSURE
ENORMOUS RISK QUICKLY IS A LESS
VALUABLE ASSET THAN IT USED TO
BE?
>> WELL, BECAUSE THE DEMAND IS
LESS, BASICBASICALLY, ON THAT.
IF YOU TAKE A PERIOD LIKE
HAPPENED AFTER 9/11, I
REMEMBER -- I MAY BE WRONG ON
THE DETAILS, BUT KAT AID PACIFIC
THEY COULDN'T LAND IN HONG KONG
UNLESS THEY HAD AN INSURANCE
POLICY BY MONDAY OF THE
FOLLOWING WEEK.
WE CAN DO IT.
SHE CALLS ME UP.
HE THINKS OF A PRICE.
I THINK OF A PRICE.
BUT
WE CAN TAKE THE LOSS IF IT
HAPPENS.
THEY CALLED ME IN THE SEARS
TOWER, I THINK, BACK THEN.
NOBODY KNEW -- THEY DIDN'T KNOW
WEATHER BOMBS MIGHT BE PLACED
ALL OVER.
SO THEY WANTED MORE INSURANCE
ALL OF A SUDDEN AND WE GAVE THEM
A PRICE.
SO THAT SORT OF AN ENVIRONMENT
HASN'T REALLY PERSISTED.
THERE WERE TIMES, I THINK,
PERHAPS AIG, HE WOULD DO THE
SAME THING.
BUT THERE WEREN'T 10 OR 20
PEOPLE, AND THEY NEEDED BIG
LIMITS IN SOME CASES.
AND WE WERE GOOD FOR IT.
AND THEY KNEW IF THEY BOUGHT THE
INSURANCE AND IT HAPPENED, WE'D
WRITE A CHECK AND IT WOULD
CLEAR.
AJIT, YOU MIGHT HAVE SOMETHING.
>> YEAH, IN ADDITION TO THE
DEMAND SIDE, THE SUPPLY SIDE HAS
BECOME A LOT MORE.
COMPETITIVE.
A LOT OF PEOPLE WHO CAN PUT UP
BIG LIMITS.
NOT AS MUCH AS WE DO, BUT THEY
CAN PUT UP $1 BILLION PRETTY
EASILY.
THE COMPETITIVE ADVANTAGE WE
HAVE, WE STILL HAVE, BUT IT'S NO
LONGER A BIG A DEAL AS IT USED
TO BE.
>> THIS QUESTION COMES FROM
SHAREHOLDER IN SCOTLAND WHO
WANTS TO KNOW, WARREN, CHARLIE
AND GREG'S VIEWS ON HOW KRAFT
HEINZ HAS PERFORMED OVER THE
LAST 12 MONTHS COMPARED TO THE
DISAPPOINTING PERFORMANCE
PRECOVID AND WHAT ARE YOUR
LONG-TERM VIEWS ON KRAFT HEINZ
PROSPECTS?
>> WELL, I THINK THAT GREG'S ON
THE BOARD, SO HE MIGHT -- I
DON'T KNOW THAT WE'RE IN A
POSITION TO GIVE ADVICE ON KRAFT
HEINZ.
WE ENTERED A -- IN EFFECT, A
SEMIFORMAL PARTNERSHIP WITH 3G
MANY YEARS AGO WHEN IT WAS JUST
THE HEINZ DEAL AND WENT ON TO
ACQUIRE KRAFT.
WE'RE THEIR PARTNERS, AND
THEY'VE DONE MORE THAN -- THEY
HOLD UP THEIR SHARE, AND WE DO
WHAT WE SAID WE'D DO GOING IN,
WHICH IS TO BE A FINANCIAL
PARTNER, AND THEY'RE MORE OF THE
OPERATING PARTNER.
WE PARTICIPATE TO A DEGREE IN
ANY BIG DECISIONS.
AND THEY WOULD LISTEN TO US.
BUT WE'RE NOT MAKING ANY -- IN
TERMS OF KRAFT HEINZ STOCK,
THAT'S UP TO SOMEBODY ELSE TO
EVALUATE.
>> THE ONLY THING I WOULD ADD,
WARREN, IS I THINK WE'RE VERY
COMFORTABLE WITH THE FACT THAT
THEY PUT A STRONG MANAGER IN
PLACE IN MIGUEL, AND HE'S PUT A
VERY GOOD TEAM IN PLACE AT KRAFT
HEINZ, SO WE'RE PLEASE AT WITH
THE LEADERSHIP AND AND
MANAGEMENT TEAM AND THEY'RE
FOCUSED ON EXECUTING AND THEY'VE
GONE FORWARD IN RATIONALIZING
THEIR CAPITAL STRUCTURE AND
MANAGING THEIR DEBT STRUCTURE,
SO PLEASED WITH THE PATH
FORWARD.
>> YEAH, WE FEEL BETTER ABOUT
THE -- ONE OF THE -- THIS IS A
MORE GENERAL SUBJECT, BUT ONE OF
THE SUBJECTS I MIGHT WRITE ABOUT
IN THE FUTURE REPORTS IS THE
PROBLEMS CAUSED BY THE MYTHS
THAT PEOPLE HAVE ABOUT THEIR OWN
ORGANIZATIONS AND I'VE SEEN THAT
SO MANY TIMES IN VARIOUS FORMS.
TO SOME EXTENT, THE PROBLEM HAS
BECOME ACCENTUATED IN THE LAST
20 OR 30 YEARS BECAUSE THE CEO
OFTEN WORKS WITH INVESTOR
RELATIONS.
THEY SAY, WE HAVE TO HAVE
CONSTANT CONTACT WITH THE
ANALYST COMMUNITY SOME THEY GO
ON EVERY COUPLE OF MONTHS AND
REPEAT CERTAIN THINGS ABOUT
THEIR COMPANY, AND IT BECOMES
PART OF -- SORT OF THE CAT M
CATECHISM.
NOBODY'S GOING ON TWO MONTH'S
THE CEO SAID ONE THING AND SAY,
THAT ACTUALLY REALLY ISN'T THE
WAY.
THEY ARE NOT GOING TO CHANGE
COURSE.
SO IF YOU GET THESE MYTHS, AND
THEY CAN OCCUR IN A LOT OF
DIFFERENT WAYS.
I CAN GIVE A LOT OF EXAMPLES,
WHICH I WON'T DO.
WON'T TELL MY FRIENDS IN
CORPORATE, GOING TO SQUEAL ON
THEM.
BUT THERE'S A LOT OF MYTHOLOGY
THAT GETS HANDED DOWN FROM ONE
CEO TO THE NEXT, AND THE
SUCCEEDING CEO, SAY, THE GUY
THAT PICKS HIM, YOU KNOW, WAS ON
THE WRONG COURSE OR HAS BEEN
TELLING YOU SOMETHING SMG THAT
ISN'T TRUE.
THEN HE STARTS REPEATING IT, AND
IT LEADS TO ENORMOUS ERRORS.
BUT IT'S HARD TO TELL THE STORY
WITHOUT GIVING EXAMPLES, AND I
DON'T LIKE TO GIVE EXAMPLES.
SO WE'LL SEE WHEN I WRITE ABOUT
IT SOMETIME.
CHARLIE, YOU'VE PROBABLY GOT
SOME THOUGHTS.
HE'S HAD A RINGSIDE SEAT TO A
LOT OF -- HE'S BEEN ON BOARDS I
HAVEN'T BEEN ON.
EXTENDS BEYOND BUSINESS TO
EDUCATION AND TO, WELL, A LOT OF
AREAS.
>> WHAT'S REALLY INTERESTING IS
THE WAY YOU PRATTLE OUT ALL THE
TIME, YOU'RE POUNDING BACK IN
EVEN IF IT'S WRONG.
SO ONE OF MY FAVORITE REMARKS IN
THE HISTORY OF HUMAN REMARKS WAS
BY SIR CEDRIC HARDWICK WHO IS A
GREAT BRITISH ACTOR.
HE SAID, I HAVE BEEN A GREAT
ACTOR FOR SO LONG THAT I NO
LONGER KNOW WHAT I TRULY THINK
ON ANY SUBJECT, AND I THINK THAT
HAPPENS TO A LOT OF PEOPLE, AND
IT HAPPENS TO VIRTUALLY EVERY
POLITICIAN.
>> AND IT GETS EMBEDDED IN
CORPORATIONS.
AND THE TROUBLE IS NOW THE CEOS
SPEAK OUT SO OFTEN -- SO IF
THEY'VE GOT SOME CRAZY THING
THEY'RE SAYING ABOUT THEIR
COMPANY AND THEY KEEP REPEATING
IT, THE SUBORDINATES AREN'T
GOING TO -- AND CHARLIE SAID,
THEY JUST BELIEVE IT AFTER A
WHILE.
AND IT'S DANGEROUS.
>> YES, AND OBVIOUSLY THE YOUNG
PEOPLE GET THESE IDEAS AFTER
THEIR LIBERAL EDUCATIONS, THINK
THAT GOD HAS GIVEN THEM DIRECT
INSIGHTS, AND THEY'RE JUST AS
CRAZY AS THE POLITICIANS.
>> THERE ARE SOME OLD PEOPLE
THAT HAVE THAT, TOO.
>> WELL, THE OLD PEOPLE ARE
ALREADY CRAZY, BUT --
>> THEY'RE GOING TO DIE SOONER,
SO --
>> WE HAVE OUR OLD INSANITIES.
THE NEW INSANITIES, THE YOUNG
GET.
>> ALL RIGHT, THIS QUESTION
COMES FROM BILL BEGLEY WHO SAID,
COULD YOU TELL US WHAT HAPPENED
TO THE JOINT VENTURE BETWEEN
BERKSHIRE -- AND AMAZON ABOUT
HEALTH-CARE IN THE UNITED
STATES.
THE ONLY ITEM I READ WAS IT WAS
DISBANDED.
DO YOU HAVE ANYTHING TO BE
LEARNED AFTER YOUR EFFORT?
>> WE LEARNED A LOT ABOUT
CHANGING AROUND AN INDUSTRY
THAT'S 17% OF GDP, AND WE
LEARNED -- WE ACCOMPLISHED A
LESSER OBJECTIVE, WHICH WAS
PROBABLY MORE IMPORTANT TO US
EVEN THAN J.P. MORGAN OR AMAZON,
BECAUSE WE KNEW LESS ABOUT OUR
OWN SYSTEM THAN THEY DID.
THEY KNEW -- THEY'RE A MORE
CENTRALIZED OPERATION, SO WE GOT
SOME BENEFITS IN THE SENSE THAT
WE LOOKED AT 60 OR 70 DIFFERENT
OPERATIONS WE HAD PRESENTLY, AND
THAT'S ONE CASE WHERE A CERTAIN
AMOUNT OF CENTRALIZATION, AT
LEAST IN CERTAIN ASPECTS OF IT,
COULD SAVE REAL MONEY.
I MEAN, WE FOUND INEFFICIENCIES,
AND LIKE I SAY, WE PROBABLY
SAVED MORE THAN THE OTHER TWO
PARTNERS, BECAUSE THEY KNEW
THEIR SITUATION BETTER.
WE FOUND SOME DUMB THINGS WE
WERE DOING.
SO WE GOT OUR MONEY'S WORTH, BUT
IN TERMS OF THE BIG PICTURE OF
CHANGING SOMETHING, THAT SO MANY
PEOPLE HAVE A VESTED INTEREST IN
DOING AND THERE'S ONE ADDITIONAL
FACTOR TO IT WHICH IS REALLY
INTERESTING.
THERE'S AN INGENIUS ASPECT TO IT
AND IT GOES BACK TO A FELLOW
NAMED -- WHICH DOESN'T HAVE ANY
DIRECT CONNECTION, BUT BEARDSLY
RUMLE.
NOBODY'S EVER HEARD OF BEARDSLY
RUMMEL, SO HE CAME UP WITH THE
IDEA OF THE HOLDING ATTACKS.
INSAID TO OF APRIL 15th PEOPLE
HAVING TO WRITE A CHECK AND
THINKING OF HOW THEY HATED THEIR
GOVERNMENT, THEY LOOKED AT IT AS
A CHRISTMAS CLUB, THEY GOT A
CHECK WHEN THE FINAL PAYMENT
CAME DUE.
SO WHEN YOU AREN'T WRITING THE
CHECK YOURSELF, YOU MAY KNOW
THAT THE HEALTH BENEFIT FROM
YOUR COMPANY IS WORTH $10,000 A
YEAR TO YOU OR $15,000 AND MAY
COST THEM THAT MUCH, BUT IT MAY
COST THE COMPANY THAT MUCH, BUT
YOU DON'T SEE IT.
SO THE COMPANY PAYS IT, AND MOST
OF THE PEOPLE IN THAT WAITING
ROOM SITTING NEXT TO ME, THEY
ARE NOT SITTING THERE THINKING
ABOUT WHETHER I CAN AFFORD TO DO
THIS, YOU KNOW, OR WHAT'S THIS
GOING TO DO?
THEY'RE GENERALLY UNDER SOME
KIND OF A PLAN.
NOT ALWAYS, OBVIOUSLY, BUT THEY
DON'T THINK IF THE COMPANY
WASN'T PAYING THEM THAT THEY
COULD PAY THAT IN ADDITIONAL
COMPENSATION.
BUT OF COURSE THE WEIRD SYSTEM
IS THE COMPANY GETS A DEDUCTION
IF THEY PAY IT, BUT IF YOU PAY
IT YOURSELF ON A POLICY I DON'T
BELIEVE YOU GET A DEDUCTION.
SO IT'S SOMETHING THAT'S -- MOST
OF THE PEOPLE ARE NOT SEEING AS
A COST TO THEM, AND THEY LIKE
THAT PRETTY WELL.
>> NO KIDDING.
>> WELL, BUT THAT'S TRUE.
THE FEDERAL INCOME TAX WAS AN
ACT OF GENIUS FROM THE
GOVERNMENT TO GO TO A
WITHHOLDING SYSTEM, AND IF YOU
DIDN'T, JUST THINK ABOUT HOW
MANY PEOPLE ON APRIL 15th WOULD
HAVE TO SIT DOWN AND WRITE A
PRETTY GOOD SIZE CHECK AND THEY
WOULD BE MAD.
AND THEY DON'T FEEL IT NOW.
SO WE WERE UP -- THAT'S AN
OBVIOUS POINT, BUT YOU ALSO --
PEOPLE LIKE THEIR DOCTOR IN
GENERAL, AND THEY DON'T LIKE THE
FACT THAT IT'S 17% OF GDP, BUT
ONE IS JUST KIND OF AN AMORPHUS
THING AND THE OTHER IS PRETTY
ISRAEL AND THE MOST PRESTIGIOUS
PEOPLE IN THE COMMUNITY ARE ON
THE HOSPITAL BOARDS.
A LOT OF PEOPLE THAT ARE FAIRLY
HAPPY WITH THE SYSTEM, SO WE DID
NOT MAKE INROADS ON THAT, AND WE
ARE PAYING 17% OF GDP PER HEALTH
CARE, AND NO MAJOR COUNTRY IS
MORE THAN 11%, AND IN THE
PANDEMIC, YOU KNOW, WE HAVE HAD
A DEATH RATE -- OR A DEATH
TOTAL, AS A PERCENTAGE OF
POPULATION, THAT'S WAY HIGHER
THAN THE REST OF THE WORLD.
NOT EVERY SINGLE COUNTRY, BUT
WAY HIGHER.
SO
SO, YOU KNOW, WE'VE LAID OUT
MORE MONEY AND GOT A WORST
RESULT IN TERPS OF THIS
PARTICULAR PANDEMIC.
>> EVEN THOUGH YOU SHOT AND
MISSED, YOU WERE AT LEAST
SHOOTING AT AN ELEPHANT.
THE COST OF HEALTH CARE IN
SINGAPORE IS 20% OF WHAT IT IS
IN THE UNITED STATES, AND THEIR
MEDICAL SYSTEM WORKS BETTER.
SO YOU WERE AT SHOOTING AT A HU
ELEPHANT.
>> BUT AS YOU FOUND OUT, IT'S
HARD TO GET ENTHUSIASTIC ABOUT
PEOPLE LOSING PART OF THEIR
INCOME.
>> I SAID WE WERE FINDING A
TAPEWORM IN THE AMERICAN
ECONOMY, AND THE TAPEWORM WON.
>> THAT'S EXACTLY IT.
WONDERFUL PHRASE
TAPEWORM.
I'LL HAVE TO COPY THAT.
>> WELL, IT WASN'T A PHRASE WE
WERE LOOKING FOR.
>> THIS QUESTION COMES IN FROM
MARK BLINKLY IN TULSA.
THIS IS FOR WARREN AND CHARLIE.
WHEN WE DISCUSS BERKSHIRE WE
OFTEN FOCUS ON THE INSURANCE
OPERATIONS AND THE LARGEST
NONINSURANCE BUSINESSES.
THE REDWOODS AS YOU MENTIONED IN
2019.
HOWEVER, BERKSHIRE OWNS A LARGE
NUMBER OF SUBSIDIARY BUSINESSES,
MOST OF WHICH ARE NEVER
MENTIONED.
IS THERE A POINT AT WHICH IT
BECOMES TOO HARD TO MANAGE AND
SHOULD -- A LACK OF INFORMATION
FOR MOST COMPANIES?
IS THERE A TIME WHEN BERKSHIRE
IS TOO LARGE AND TOO COMPLEX?
>> IT'S TOO LARGE TO DO CERTAIN
THINGS.
THAT'S FOR SURE.
WE CAN'T SPEND OUR TIME LOOKING
FOR $100 MILLION ACQUISITIONS.
BUT WE HAVE A WONDERFUL COMPANY
IN FT. WORTH, AND WE HAD A
MARVELOUS MAN RUNNING IT.
HE DIED RECENTLY.
BUT HE RAN IT UNTIL 15 YEARS
AGO.
HE JUST BASICALLY RAN IT.
I COULDN'T FIND MY WAY TO THE
COMPANY.
WE'VE GOT THIS TERRIFIC COMPANY
THAT MAKES RECREATIONAL VEHICLES
BASED IN INDIANA, AND WE BOUGHT
IT 15 YEARS
I'VE NEVER BEEN THERE.
MAYBE THERE'S SOME KIND OF
CLOSET MAKING UP NUMBERS TO SEND
TO ME, BUT I FEEL I UNDERSTAND
THE BUSINESS PRETTY WELL, BUT
I'VE NEVER SEEN IT AND THE
FELLOW THAT RUNS IT LIKES
RUNNING IT AND LIKES ME KEEPING
MY NOSE OUT OF IT.
HE'LL LET GREG IN A LITTLE MORE
THAN HE'LL LET ME.
BUT WE'VE GOT A SYSTEM THAT WILL
WORK WITH WONDERFUL BUSINESSES
AND WONDERFUL MANAGERS.
AND IT'S UP TO US TO FIND THEM.
BUT IT'S ALSO US TO NURTURE THEM
WHEN WE FIND THEM.
AND IF YOU'LL GET SOMEBODY LIKE
PAUL ANDREWS WHO RAN TTI AND WHO
BUILT IT FROM NOTHING,
ABSOLUTELY NOTHING, AND NOBODY
EVER HEARD OF HIM, AND THE
EARNINGS HAVE OCTUPLED DURING
THE PERIOD HE RAN IT FOR US.
HE WAS HAPPY, THE EMPLOYEES WERE
HAPPY.
HE WAS A WONDERFUL MAN.
WE WERE
AND I'D CALL HIM AT THE END OF
THE YEAR AND SAY, PAUL, THIS
PLACE IS -- YOU'RE SHOOTING THE
LIGHTS OUT.
YOU SHOULD TAKE A RAISE OR A
BONUS.
HE'D SAY, WE'LL TALK ABOUT THAT
NEXT YEAR.
HE JUST LOVED THE BUSINESS.
I LOVED BERKSHIRE.
HE LOVED THE BUSINESS.
AND I WASN'T GOING TO ADD
ANYTHING BY HAVING HIM FILL OUT
A BUNCH OF REPORTS ABOUT HOW
MUCH HE'S USING IN THE WAY OF
CARBON OR THE -- YOU KNOW, IT'S
JUST RIDICULOUS THINK OF A GUY
LIKE PAUL ANDREWS BEHAVING IN AN
ANTI-SOCIAL MANNER OF ANYTHING
OF THE SORT.
AND WE'D LOVE TO HAVE MORE OF
THOSE, AND OBVIOUSLY WE GOT
BIGGER, THEY GET HARDER TO BUY.
BUT WE'VE GOT A NUMBER IN THE
PLACE, AND I DON'T THINK WE
BOUGHT OUR LAST ONE OVER TIME,
BUT I CERTAINLY DON'T SEE
ANYTHING IN THE NEAR FUTURE AT
ALL.
BUT WE'RE INTENSIFYING OUR
INTEREST IN PURCHASING SHARES.
OUR SHAREHOLDERS OWN MORE IN THE
COMPANIES EVERY YEAR, ASSUMING
WE'RE REPURCHASING SHARES, WHICH
IS PRICE SENSITIVE.
>> CHARLIE?
>> YEAH, I DON'T THINK WE'RE
GETTING TOO BIG TO MANAGE,
BECAUSE WE'RE DIFFERENT FROM
PRACTICALLY EVER OTHER
CORPORATION IN THE UNITED STATES
IN THAT WE ARE SO EXCESSIVELY
DECENTRALIZED.
WE HAVE DECENTRALIZED SO MUCH
AND SO MUCH AUTHORITY IN THE
SUBSIDIARIES THAT WE CAN KEEP
DOING IT FOR A LONG, LONG TIME,
AS LONG AS IT KEEPS WORKING.
I WOULD SAY SO FAR OUR DECENT
RALIZATION HAS -- THAT'S TRUE,
BUT I CAN SAY THIS, DECENT RAL
IZATION WON'T WORK IF YOU DON'T
HAVE TO RIGHT CULTURE.
>> YEAH, BUT WE DO, AND GREG
WILL KEEP WORKING ON THE
CULTURE.
>> IF WE HAD A CULTURE OF PEOPLE
TRYING TO MAKE A LOT OF MONEY
FOR THEMSELVES IN THE NEXT FIVE
YEARS AT THE TOP, I WOULD NOT
HAVE WORKED.
>> NO, OF COURSE NOT.
THE CULTURE IS PART OF IT.
ASSUMING WE KEEP THE CULTURE,
THE GO ON A QUITE A WAYS.
LONG, LONG TIME.
I THINK IT WILL AMAZE EVERYBODY.
BY THE WAY, THE ROMAN EMPIRE
WORKED AS LONG AS IT DID BECAUSE
IT WAS SO DECENTRALIZED.
>> AS CHARLIE SAID, WE WON'T
KNOW.
>> THIS QUESTION COMES FROM
KEVIN YOUNG.
IT'S FOR AJIT AND GREG.
WARREN SPENDS THE DAY READING
AND HIS WORK OF CHOICE IS ANNUAL
REPORTS.
HOW DO EACH OF YOU SPEND YOUR
DAYS?
WHAT DO YOU READ AND HOW DO YOU
REACH INVESTMENT DECISIONS?
>> WELL, IN MY JOB I SPEND A LOT
OF MY TIME READING DEALS THAT
BROKERS AND PEOPLE SEND US.
READING WHAT THEY'RE PROPOSING,
TRYING TO ANALYZE THEM, HAVING A
POINT OF VIEW.
IT IS SOMETHING THAT IS OF
INTEREST TO US OR NOT.
I MIGHT ADD, I DO NOT SPEND A
LOT OF TIME READING REPORTS
BECAUSE I'M NOT IN THE STOCK
MAKING BUSINESS PER SE.
BUT IN TERMS OF KEEPING TRACK OF
WHAT'S GOING ON IN THE INSURANCE
BUSINESS, THAT'S WHAT 90% OF MY
READING IS ABOUT.
GREG?
>> YEAH.
SO GENERALLY TODAY WHAT I FOCUS
ON WHEN READING IS REALLY AROUND
OUR BUSINESSES.
WHAT INDUSTRIES ARE IN.
TRYING TO UNDERSTAND WHAT OUR
COMPETITORS ARE DOING, WHAT'S
THE RISK AROUND THE BUSINESSES,
HOW THEY'RE GOING TO GET
DISRUPTED AND IT ALWAYS COMES
BACK TO, ARE WE ALLOCATING
CAPITAL CORRECTLY RELATIVE TO
THE RISKS WE'RE SEEING BOTH IN
BUSINESS AND INDUSTRY?
SO, A LOT OF TIME SPENT ON THAT
AND AS THAT KNOWLEDGE IS BUILT
IT'S SHARING IT BACK AND FORTH
WITH MANAGEMENT TEAMS WITH
RELATIVE SUBSIDIARIES AND SORT
OF FINE TUNING IT IS REALLY THE
APPROACH.
>> BOTH OF THESE FELLOWS CAN
ABSORB INFORMATION TO AN
EXTRAORDINARY DEGREE.
I MEAN, THEY HAVE -- FOR ONE
THING, THEY'RE TERRIBLY
INTERESTED IN IT.
AND IT'S THEIRS.
SO I'M AMAZED AT BOTH OF THEM,
THE DEGREE WITH WHICH THEY SORT
OF KNOW EVERYTHING.
AND -- BUT THEY ENJOY IT.
THEY'RE NOT THINKING ABOUT
WHETHER THEY'LL GET THE NEXT JOB
THAT OPENS UP AT SOME HUGE MACE
OR ANYTHING LIKE THAT.
NOBODY LEAVES US, BASICALLY.
THE ONES WE WANT.
BUT YOU REALLY GOT TO KIND OF BE
IN LOVE WITH YOUR BUSINESS, AND
THAT MAKES A HUGE DIFFERENCE.
THAT MEANS THAT WE'VE GOT TO
HAVE THE CONDITIONS THAT ALLOW
THAT LOVE TO FLOURISH.
AND IT WOULDN'T FLOURISH UNDER
MANY -- WITH MANY ORGANIZATIONS.
>> THIS QUESTION COMES FROM
ROBERT MILES IN NEBRASKA.
THE TRADING APPS, WHAT DO YOU
THINK ABOUT ROBIN HOOD AND OTHER
TRADING APPS OR FIN TECH
COMPANIES ALLOWING ALL AGES TO
PARTICIPATE IN THE STOCK MARKET?
>> WELL, I'M LOOKING FORWARD TO
READING THE S-1 ON ROBIN.
THAT'S A BIG THING YOU FILE WITH
THE S.E.C. WHEN YOU'RE GOING TO
BE OFFERING SECURITIES.
AND IT'S -- YOU KNOW, IT'S
BECOME A VERY SIGNIFICANT PART
OF THE CASINO ASPECT, OF THE
CASINO GROUP THAT HAS JOINED
INTO THE STOCK MARKET IN THE
LAST YEAR OR YEAR AND A HALF.
AND I DO WANT TO SAY I WAS
CNCERNED ABOUT HOW THEY HAND IT
WILL SOURCE OF INCOME.
THEY SAY THEY DON'T CHARGE THE
CUSTOMER OR ANYTHING.
THIS WILL BE INTERESTING.
BUT THEY -- THEY -- HAVE
ATTRACTED -- MAYBE SET OUT TO
ATTRACT, BUT THEY HAVE
ATTRACTED -- I THINK I READ
WHERE 12% OR 13% OF THEIR CASINO
PARTICIPANTS WERE DEALING IN --
I LOOKED UP ON APP IT WILL
NU --
APPLE, THE NUMBER OF SEVEN-DAY
CALLS AND 1446 DAY CALLS
OUTSTANDING.
AND I'M SURE A LOT OF THAT IS ON
ROBIN HOOD.
THEY'RE GAMBLING ON THE PRICE OF
APPLE.
THERE'S NOTHING ILLEGAL ABOUT
IT, THERE'S NOTHING IMMORAL, BUT
I DON'T THINK YOU'D BUILD A
SOCIETY AROUND PEOPLE DOING IT.
IF A GROUP OF US LANDED ON A
DESERT ISLAND, KNEW WE WOULD
NEVER BE RESCUED AND I WAS ONE
OF THE GROUP AND SAID, I'LL SET
UP AN EXCHANGE OVER HERE AND
I'LL TRADE OUR CORN FUTURES AND
EVERYTHING AROUND IT, I THINK
THE DEGREE TO WHICH A VERY RICH
SOCIETY CAN REWARD PEOPLE WHO
KNOW HOW TO TAKE ADVANTAGE,
ESSENTIALLY, OF THE GAMBLING
INSTINCTS OF NOT ONLY THE
AMERICAN PUBLIC, THE WORLDWIDE
PUBLIC, IT, YOU KNOW, IT'S NOT
THE MOST ADMIRABLE PART OF THE
ACCOMPLISHMENT.
BUT I THINK WHAT AMERICANS
ACCOMPLISHED IS PRETTY ADMIRABLE
OVERALL.
AND I THINK ACTUALLY AMERICAN
CORPORATIONS HAVE TURNED OUT TO
BE A WONDERFUL PLACE FOR PEOPLE
TO PUT THEIR MONEY AND SAVE.
BUT THEY ALSO MAKE TERRIFIC
GAMBLING CHIPS, AND IF YOU CATER
TO THOSE GAMBLING CHIPS WHEN
PEOPLE HAVE MONEY IN THEIR
POCKET FOR THE FIRST TIME AND
YOU TELL THEM TAKE MY 30 OR 40
OR 50 TRADES A DAY AND YOU'RE
NOT CHARGING COMMISSION -- I
HOPE WE DON'T HAVE MORE OF IT.
AND I WILL BE INTERESTED IN
READING THE PERSPECTIVES.
CHARLIE?
>> WELL, THAT IS REALLY WAVING
THE RED FLAG AT THE BULL.
IT'S JUST GOT AWFUL THAT
SOMETHING LIKE THAT WOULD DRAW
INVESTMENT FROM CIVILIZED MAN
AND DECENT CITIZENS.
IT'S DEEPLY WRONG.
WE DON'T WANT THE MAKE OUR MONEY
SELLING THINGS THAT ARE BAD FOR
PEOPLE.
>> BUT WE'VE GOT THE STATE DOING
IT WITH THE LOTTERY.
>> BUT THAT'S BAD, TOO.
THAT'S VERY BAD.
THAT'S ONE OF THE THINGS THAT'S
WRONG WITH IT -- IT'S GETTING
RESPECTABLE TO DO THESE THINGS.
THE STATES ARE JUST AS BAD AS
ROBIN HOOD.
>> WELL, IN A SENSE THEY'RE
WORSE.
I MEAN, THEY'RE REALLY TAXING.
>> I KNOW IT'S -- I KNOW, I
KNOW.
>> THEY'RE TAXING HOPE.
>> NOT ONLY THAT --
>> AND THEY DON'T GET MUCH IN
THE WAY OF TAXES.
>> THE STATES IN AMERICA
REPLACED THE MAFIA AS THE P
PROPRIETOR OF THE NUMBERS GAME.
THAT'S WHAT HAPPENED.
THEY PUSHED THE MAFIA ASIDE AND
SAID, THAT'S OUR BUSINESS, NOT
YOURS.
DOESN'T MAKE ME PROUD OF OUR
GOVERNMENT.
>> WHEN I WAS A KID BY DAD WAS
IN CONGRESS AND THEY HAD A
NUMBERS RUNNER IN THE OFFICE.
>> I WILL ASK THE QUESTION.
FROM RAW MATERIAL PURCHASES BY
BERKSHIRE SUBSIDIARIES ARE YOU
SEEING SIGNS OF INFLATION
BEGINNING TO INCREASE?
>> LET ME ANSWER THAT AND THEN
GREG CAN GET MORE -- WE'RE
SEEING SUBSTANTIAL INFLATION.
IT'S INTERESTING.
WE'RE RAISING PRICES.
PEOPLE ARE RAISING PRICES TO US.
AND IT'S BEING ACCEPTED.
I MEAN, IT'S NOT -- IF WE GET --
WELL, YOU KNOW, TAKE-HOME
BUILDING.
THE COST OF -- WE'VE GOT NINE
HOME BUILDERS IN ADDITION TO
MANUFACTURED HOUSING AND
OPERATION WHICH IS THE LARGEST
IN THE COUNTRY, SO WE REALLY DO
A LOT OF HOUSING.
THE COSTS ARE JUST UP, UP, UP.
STEEL COSTS.
YOU KNOW, JUST EVERY DAY THEY'RE
GOING UP.
AND THEY'RE HASN'T YET BEEN,
BECAUSE THE WAGE STUFF FOLLOWS.
I MEAN, IF THE UAW WRITES A
THREE-YEAR CONTRACT, YOU'VE GOT
A THREE-YEAR CONTRACT, BUT IF
YOU'RE BUYING STEEL AT GENERAL
MOTORS OR SOME PLACE YOU'RE
PAYING MORE EVERY DAY.
SO IT'S -- IT'S AN ECONOMY
REALLY -- IT'S RED-HOT.
AND WE WEREN'T EXPECTING IT.
ALL OF COMPANIES THEY THOUGHT
WHEN THEY WERE ALLOWED TO GO
BACK TO WORK OR OPERATIONS --
WHEN WE CLOSED THE FURNITURE
STORES, THEY WERE CLOSED FOR SIX
WEEKS OR SO ON AVERAGE, AND THEY
DIDN'T KNOW WHAT WAS GOING TO
HAPPEN WHEN THEY OPENED.
THEY CAN'T STOP PEOPLE FROM
BUYING THINGS.
AND WE CAN'T DELIVER THEM.
THEY SAY, THAT'S OKAY, NOBODY
ELSE CAN DELIVER THEM EITHER.
WE WAIT FOR THREE MONTHS.
THE BACKLOG GROWS.
AND THEN WE THOUGHT IT WOULD END
WHEN THE $600 PAYMENTED ENDED.
AROUND AUGUST OF LAST YEAR.
JUST KEPT GOING, AND IT KEEPS
GOING AND KEEPS GOING AND KEEPS
GOING.
AND I GET THE FIGURES.
EVERY WEEK I CALL OR HE CALLS ME
AND WE GO OVER DAY BY DAY WHAT
HAPPENED AT THREE DIFFERENT
SCORE STORES IN CHICAGO AND
KANSAS CITY, AND DALLAS.
AND IT JUST WON'T STOP.
PEOPLE HAVE MONEY IN THEIR
POCKET, AND THEY PAY HIGHER
PRICES.
AND WHEN CARPET PRICES GO UP IN
A MONTH OR TWO, HOUSE PRICE
INCREASE, ART COSTS ARE GOING
UP.
SUPPLY CHAINS ALL SCREWED UP FOR
ALL KINDS OF PEOPLE.
BUT IT'S ALMOST A BUYING FRIENZ,
EXCEPT CERTAIN PLACE US CAN'T
BUY YET.
YOU CAN'T BY INTERNATIONAL
TRAVEL.
SO MONEY IS BEING DIVERTED FROM
A PIECE OF THE ECONOMY INTO THE
REST AND EVERYBODY'S GOT MORE
CASH IN THEIR POCKET, EXCEPT FOR
MEANWHILE, YOU KNOW, IT'S A
TERRIBLE SITUATION FOR A
PERCENTAGE OF THE PEOPLE.
YOU KNOW, THIS SUIT -- I HAVEN'T
WORN A SUIT, YOU KNOW, FOR A
YEAR PRACTICALLY, AND THAT MEANS
THAT THE DRY CLEANER JUST WENT
OUT OF BUSINESS.
NOBODY'S BRINGING IN SUITS TO
GET DRY CLEANED AND NOBODY'S
BRINGING IN WHITE SHIRTS TO
GET -- THE SMALL BUSINESS
PERSON, IF YOU DIDN'T HAVE
TAKEOUT AND DELIVERY SERVICES
FOR RESTAURANTS, YOU GOT KILLED.
ON THE OTHER HAND, IF YOU'VE GOT
TAKEOUT FACILITIES THEN, YOU
KNOW, SALES ARE UP A WHOLE LOT.
THEY ADAPTED.
BUT IT'S -- IT IS NOT A PRICE
SENSITIVE ECONOMY RIGHT NOW AT
IN LEAST, AND I DON'T KNOW
EXACTLY HOW ONE SHOWS UP IN
DIFFERENT PRICE INDICES.
BUT THERE'S MORE INFLATION GOING
ON, QUITE A BIT MORE INFLATION
GOING ON THAN PEOPLE WOULD HAVE
ANTICIPATED SIX MONTHS AGO OR
THEREABOUTS.
>> THERE'S ONE VERY INTELLIGENT
MAN WHO THINKS IT'S DANGEROUS,
AND THAT'S JUST THE START.
>> GREG, YOU PROBABLY ARE IN A
GOOD POSITION.
>> I THINK YOU TOUCH ON IT.
WHEN WE LOOK AT STEEL PRICES,
TIMBER PRICES, PETROLEUM OUTPUT,
FUNDAMENTALLY THERE'S PRESSURE
ON THE RAW MATERIALS.
I THINK YOU TOUCH ON SOMETHING,
WARREN, THERE'S A SCARCITY OF
PRODUCT OF CERTAIN RAW
MATERIALS.
IT'S IMPACTING PRICE AND ABILITY
TO DELIVER THE END PRODUCT, BUT
THAT SCARCITY FACTOR IS REAL OUT
THERE AS OUR BUSINESSES ADDRESS
THAT CHALLENGE.
AND IT MAY BE SOME OF THAT HAS
ARISEN FROM THE STORM WE
PREVIOUSLY DISCUSS IN THE TEXAS.
WHEN YOU TAKE DOWN.
THAT PLANTS, WE'RE SEEING IT IN
PRICE BUT OVERALL SCARCITY OF
PRODUCT, WHICH OBVIOUSLY GO
TOGETHER.
BUT THERE'S CHALLENGES, THAT'S
FOR SURE.
>> THIS QUESTION COMES FROM B.J.
CORALA.
WHAT DO YOU THINK OF KWANS?
JIM SIMONS -- PROVES THAT IT
WORKS.
WOULD YOU CONSIDER HIRING A
LIEUTENANT TO WORK WITH TODD OR
TED?
>> I'LL SAY NO TO THE FIRST PART
AND PROBABLY KNOW TO THE SECOND
PART.
>> THAT'S RATHER INTERESTING.
THE THING IT DID FABULOUSLY ON
THE SHORT-TERM TRADING, THEY
FOUND LITTLE ALGORITHMS THAT
WORKED TO MAKE THEM -- HAD
PREDICTIVE VALUE, AND AS LONG AS
THEY KEPT WORKING, THEY KEPT
DOING IT AS LONG AS THE MONEY
KEPT COMING IN.
THEY HAVE TO USE THE SAME SYSTEM
TO FIND SOME LITTLE ALGORITHM
I'M GOING MECHANICALLY FOR
LONG-TERM STOCK PREDICTIONS THE
RECORD WAS NOT NEARLY AS GOOD.
AND IN THE SHORT-TERM STUFF,
THEY FOUND IF THEY TRIED TO DO
IT TOO MUCH THEY DESTROYED THEIR
OWN ADVANTAGE.
THERE WAS A LIMIT ON THE AMOUNT
THEY COULD MAKE.
>> BUT THEY WERE VERY, VERY
SMART.
>> YES, THEY GOT VERY RICH.
>> VERY
>> VERY SMART AND VERY RICH AND
VERY HIGH GRADE, BY THE WAY.
>> BUT WE'RE NOT TRYING TO MAKE
MONEY TRADING STOCKS.
WE DON'T THINK WE KNOW HOW TO DO
IT.
IF WE KNEW HOW TO MAKE A LOT
MORE MONEY TRADING STOCKS WE'D
PROBABLY BE TRADING STOCKS, TOO,
BUT WE DON'T KNOW HOW TO DO IT
AND DON'T TRUST ANYBODY ELSE TO
DO IT FOR US.
IT'S THAT SIMPLE.
>> THIS QUESTION COMES FROM
RICHARD WARNER.
MR. BUFFET ESPOUSED FOR DECADES
THE PHILOSOPHY OF BUY AND HOLD
OR HOLD FOREVER WAS TOO SHORT OF
A TIME PERIOD.
WAS IT A MISCONCEPTION ON MY
PART OR HAVE THINGS CHANGED?
THERE SEEMS TO BE MORE EQUITY ON
THE PORTFOLIO LATELY.
>> I DON'T THINK IT'S CHANGED.
>> IT'S TOO MUCH.
IT'S THE SAME AMOUNT.
IT'S STILL TOO MUCH.
>> I'D AGREE WITH THAT.
THE TRUTH IS, WE OWN -- OUR
BUSINESSES ARE EQUITIES, SO WE
OWN $400 BILLION OR
$500 BILLION, MAYBE MORE IN
BUSINESSES.
WE DON'T TURN THEM OVER AT ALL.
WE DON'T SELL
WE COULD PROBABLY -- WE WON'T
EVEN GET INTO WHAT WE COULD DO,
BUT WE DON'T DO IT.
AND WE DO RELATIVELY -- AS
CHARLIE SAYS WE'D DO BETTER IF
WE -- NOT WE -- IF I'D DUMP US.
>> THIS IS FROM DANIEL GAUTHIER.
WARREN BUFFET'S 2013 LETTER IN
MIDDLE OF PAGE 21 MADE A
PREDICTION THAT THE IN THE NEXT
DECADE YOU'LL SEE BAD NEWS ABOUT
PENSIONS.
GIVEN RECENT EVENTS LIKE
COVID-19 AND THAT 2023 IS TWO
YEARS AWAY, WOULD MR. BUFFET
LIKE TO COMMENT OR ARE A VISE
HIS PREDICTION?
CAN COVID-19 ELIMINATE, DELAY,
ACCELERATE OR NOT CHANGE IT?
>> WELL, IN A TERRIBLE WAY,
COVID IMPROVES THE PENSION
POSITION, BECAUSE IT'S -- YOU
KNOW, YOU HAVE LESS PENSIONERS.
BUT THE PENSION SITUATION IS
TERRIBLE IN A GREAT MANY STATES.
IT'S NOT IS BAD AT THE -- LEVEL.
THERE ARE SOME MULTIEMPLOYER
PLANS THAT HAVE GOT PROBLEMS,
BUT BASICALLY IT'S A TERRIBE
PROBLEM IN SOME STATES AND
STATES ARE GOING TO GO TO
WASHINGTON AND SAY, WE WANT TO
GET A LOT OF MONEY BECAUSE WE
HAD THESE TERRIBLE THINGS HAPPEN
TO US DURING THE PANDEMIC, WHICH
THEY DID, BUT SOME OF THOSE
STATES ARE ENORMOUS PENSION
DEFICITS, AND THEY'LL COME
AGAIN.
IF THEY GET A CHECK ONCE.
IT MAY TURN OUT TO BE A FEDERAL
OBLIGATION, DE FACTO OR
SOMETHING, THAT A STATE -- IT
HAS NOT GOTTEN BETTER.
IT HAS NOT GOTTEN BETTER AT ALL,
OBVIOUSLY, AND TO A CERTAIN
EXTENT, THE PENSION MANAGERS GET
MORE AND MORE DESPERATE AS
INTEREST RATES GO DOWN, SO
THEY'LL LISTEN TO ALMOST ANYBODY
THAT PROMISES THEM -- THEY'VE
ALWAYS HAD THAT TENDENCY, BUT
THEY'LL LISTEN TO PEOPLE THAT
PROMISE THEM THEY'RE GOING TO
ONE WAY OR ANOTHER SOLVE THEIR
PROBLEM FOR THEM, AND THAT ISN'T
GOING TO WORK.
SO IT'S A BIG, BIG, BIG PROBLEM,
AND OF COURSE THE REAL PROBLEM
IS -- LET'S JUST TAKE A
HYPOTHETICAL STATE THAT HAS A
HUGE PENSION DEFICIT AND MAYBE
EVEN HAVE A LOST OF LIVING
FACTOR IN IT, WHICH IS REALLY
GOING TO BE A KILLER.
AND YOU CAN MOVE IF YOU'RE AN
INDIVIDUAL.
CHARLIE WON'T MOVE TO SAVE THAT.
HE'S NOT GOING TO MOVE TO NEVADA
OR SOME PLACE.
BUT YOU CAN MOVE IF YOU'RE AN
INDIVIDUAL TO SOME DEGREE.
PARTICULARLY IF YOU'RE RICH AND
OLD AND RETIRED, AND YOU CAN
ACTUALLY TAKE AWAY AN ASSET FROM
THAT KIND OF ENVIRONMENT AND
GIVE IT TO ANOTHER TATESTATE TH
DOESN'T NEED IT THAT MUCH.
YOU'LL GET ADVERSE SELECTION
OVER TIME.
BUT IF YOU'RE A COMPANY AND PUT
A PLANT THERE, YOU CAN'T MOVE
THE PLANT IN 5, 10, 20 YEARS.
AS THE TAXABLE BASE OF
INDIVIDUALS FALLS DOWN, SHRIMPL
BECAUSE PEOPLE SELECT OUT OF
BEING A PART OF THE POPULATION,
YOU CAN'T SELECT OUT OF BEING A
CORPORATION, SO YOU HAVE TO BE
VERY CAREFUL AND THINK A LONG
TIME BEFORE YOU GO AND A STATE
WITH A HUGE PENSION DEFICIT AND
DECLINING POPULATION BECAUSE
YOU'RE GOING TO HAVE THE LAST
MAN LEFT AND THE PENSIONS WON'T
GO AWAY.
AND I DON'T THINK -- WELL,
ANYBODY WITH A SHORT-TERM
OUTLOOK DOESN'T WORRY ABOUT
THAT.
JUST GET ME PAST THE NEXT
ELECTION AND I'M ALL RIGHT ON
THAT ONE.
BUT THE -- WE DON'T WANT TO
BE -- WE'RE NOT GOING TO --
PLANTS AROUND 50 YEARS IN SOME
PLACE, WHERE THE POPULATION GETS
HALVED AND THE RICHER PART GETS
CUT EVEN MORE DRAMATICALLY.
AND WE'VE STILL GOT A VALUABLE
PLANT THERE AND GOT TO KEEP
OPERATING.
ONE WAY OR THE OTHER, IT'S NOT
GOING TO BE A GOOD PLACE TO BE.
>> WE'RE ALMOST OUT OF TIME SO
I'LL MAKE THE LAST QUESTION.
>> THAT'S A GOOD ANSWER.
MY OLD HARVARD LAW PROFESSOR
USED TO SAY, LET ME KNOW WHAT
YOUR PROBLEM IS AND I'LL MAKE IT
MORE DIFFICULT FOR YOU.
>> THIS IS FOR WARREN AND
CHARLIE.
I HAVE ONE QUESTION, WHICH IS
INSPIRED BY CHARLIE'S MANTRA,
YOU HAVE TO BE A CONTINUOUS
LEARNING MACHINE.
H
HERE'S MY QUESTION -- WHAT'S THE
BIGGEST LESSON BOTH OF YOU
LEARNED OVER THE LAST YEAR?
>> MY BIGGEST LESSON HAS BEEN TO
LISTEN MORE TO
>> HE'S BEEN RIGHT ON SOME
THINGS I HAVE BEEN WRONG ON.
>> IF YOU'RE IN THE A LITTLE
CONFUSED BY WHAT'S GOING ON, YOU
DON'T UNDERSTAND IT.
IT'S JUST -- WE'RE IN SORT OF
UNCHARTED TERRITORY.
>> WE ENJOY, IN A CRAZY WAY,
ACTUALLY SEEING WHAT HAPPENS.
I MEAN, AND THIS HAS MADE US
HALFWAY THROUGH THE MOVIE MUST
HAVE MORE INTERESTED.
THIS IS AN UNUSUAL MOVIE.
WE MAY DISAPPOINT PEOPLE, BUT WE
DON'T -- AND WE'VE SEEN SOME
STRANGE THINGS HAPPEN IN THE
WORLD IN THE LAST YEAR, 15
MONTHS, AND WE'VE ALWAYS
RECOGNIZED THAT FACT THAT
STRANGER THINGS ARE GOING THE
HAPPEN.
I WOULD SAY IF ANYTHING IT'S
REINFORCED OUR DESIRE TO FIGURE
OUT EVERYTHING POSSIBLE WE CAN
DO THE MAKE SURE THAT BERKSHIRE
IS 50 OR 100 YEARS FROM NOW,
EVERY BIT THE ORGANIZATION AND
THEN SOME THAT IT IS NOW.
CHARLIE?
>> OF COURSE THAT'S THE IDEA.
IT'S PRETTY LIKELY TO WORK.
>> BECKY, IS THAT THE LAST
QUESTION?
>> OKAY, WELL, IN THIS CASE
WE'LL MOVE ON TO THE MEETING.
THE OTHER THREE FELLOWS HERE CAN
LEAVE.
IT'S NOT GOING TO BE THAT
EXCITING.
BUT WE'VE GOT A SCRIPT HERE EVEN
SOMEWHAT.
I DON'T LIKE SCRIPTS BUT -- NOT
MY NATURE.
AND ONE OF THE PROPOSERS OF THE
TWO ITEMS ON THE PROXY IS HERE
IN THE BUILDING TO PRESENT HIS
ARGUMENT.
WE'LL GET TO THAT IN JUST A
MINUTE.
WE OFFERED -- EITHER COULD.
I'M HAPPY ONE OF THEM CAME.
SO HERE WE GO, AND MEETING WILL
NOW COME TO ORDER.
I AM WARREN BUFFET.
NOT THAT YOU DIDN'T KNOW AT THIS
TIME, THE CHAIRMAN OF THE BORDER
DIRECTORS OF THE COMPANY.
I WELCOME YOU TO THE 2021 ANNUAL
MEETING OF SHAREHOLDERS.
CHAIRMAN WILL MAKE A WRITTEN
RECORD.
REBECCA HAMMOCK WILL CERTIFY THE
VOTES CAST.
THE NAME PROXY HOLDERS WITH
RETA ARE
WALTER SCOTT AND MARK --
>> YES, I DO.
AS INDICATED IN THE PROXY
STATEMENT THAT ACCOMPANIED THE
NOTE OF THIS MEETING THAT WAS
SENT TO ALL SHAREHOLDERS OF
RECORD ON MARCH 3, 2021, 1
RECORD DAY FOR THIS MEETING
THERE WERE 37,600,000 -- WITH
EACH ENTITLED TO ONE VOTE ON
MOTION CONSIDERED AT THE MEETING
AND 1,000,000,335 MILLION SHARES
OF CLASS "B" BERKSHIRE HATHAWAY
OUTSTANDING WITH EACH SHARE
ENHIT TOLD 1 THOUSANDTH OF ONE
VEHICLE CODE ON MOTIONS
CONSIDERED AT THE MEETING.
OF THAT NUMBER -- 343 MILLION,
442,000 CLASS "B" SHARES ARE
REPRESENTED AT THIS MEETING BY
PROXIES RETURNED THROUGH
THURSDAY EVENING APRIL 29th.
>> THANK YOU.
THAT NUMBER REPRESENTS A -- AND
WE'LL THEREFORE DIRECTLY
PROCEED.
FIRST BUSINESS WILL BE READING
OF THE MINUTES OF LAST MEETING.
>> I MOVE THAT THE READING OF
THE MINUTES OF THE LAST MEETING
OF SHAREHOLDERS BE DISPENSED
WITH AND THE MINUTES BE
APPROVED.
>> DO I HEAR A SECOND?
>> I SECOND THE MOTION.
>> MOTION IS CARRIED.
THE NEXT ITEM IS TO ELECT
DIR
DIRECTORS.
I RECOGNIZE DEBBIE TO PUT A
MOTION BEFORE THE MEETING.
>> I MOVE THAT WARREN BUFFET,
CHARLES MUNGER, GREGORY ABEL.
HOWARD BUFFET, STEVEN BURKE,
KENNETH SHINAUTL, CHARLOTTE
GUYMAN.
AJIT JAIN, THOMAS MURPHY, RONALD
OLSON, WALTER SCOTT, AND MERRILL
WHITMER BE ELECTED AS
>> IT HAS BEEN MOVED AND
SECONDED.
14 INDIVIDUALS NAMED IN THE
MOTION BE ELECTED AS
THE NOMINATIONS ARE READY TO BE
ACTED UPON.
WHEN YOU ARE READY YOU MAY
PROVIDE THE VOTING RESULTS FROM
THE PRELIMINARY REPORT.
>> MS. HAMMOCK REPORTED THAT --
RESPONSE TO LAST THURSDAY
EVENING CAST NOT LESS THAN
363,464 VOTES FOR EACH NOMINEE.
THE REPORT ALSO STATES THAT
EXCEEDS A MAJORITY OF THE NUMBER
OF TOTAL VOTES OF ALL CLASS "A"
AND CLASS "B" SHARES
OUTSTANDING.
THE REPORT ALSO STATES THAT THE
CERTIFICATION REQUIRED BY
DELAWARE LAW OF THE PRECISE
COUNT OF THE VOTES WILL BE
PLACED WITH THE MINUTES OF THIS
MEETING.
>> THANK YOU.
14 NOMINEES HAVE BEEN ELECTED AS
DIRECTORS.
THE NEXT TWO ITEMS OF BUSINESS
RELATE TO TWO SHAREHOLDER
PROPOSALS EACH SET FORTH IN THE
PROXY STATEMENT THAT CAN BE
ACCESSED AT
BERKSHIREHATHAWAY.COM.
IF YOU HAVEN'T READ THE
PROPOSALS GO TO
BERKSHIREHATHAWAY.COM BECAUSE
THEY'RE INTERESTING PROPOSALS
AND THE PROPONENTS VIEWS ARE SET
FORTH AND OURS ARE SET FORTHING
AND I WELCOME YOU READING IT.
THE FIRST PROPOSAL REQUESTS THE
COMPANY PUBLISH AN ANNUAL
ASSESSMENT ON HOW TO COMPANY
MANAGES CLIMATE RELATED RISKS
AND OPPORTUNITIES THE DIRECTORS
HAVE RECOMMENDED.
THE SHAREHOLDERS VOTE AGAINST
THE PROPOSAL.
I WILL NOW RECOGNIZE TIM UMANS,
A REPRESENTATIVE TO PRESENT TO
PROPOSAL.
>> I THINK WE'RE CONNECTED UP.
>> I THANK THE CHAIR, THE BOARD
AND FEDERAL SHAREHOLDERS I'M TIM
YOMANS.
HERE TODAY ON BEHALF OF ITEM TWO
CORESPONSERS FEDERATED MERMES,
CAL PERS, THE CALIFORNIA PUBLIC
EMPLOYEES RETIREMENT SYSTEM AND
CDPQ AND OUR COMBINED MILLIONS
OF ULTIMATE BENEFICIARIES.
FOR WELL MORE THAN A YEAR, THE
PARENT COMPANY HAS BEEN
UNRESPONSIVE TO THE COSPONSOR'S
REQUESTS THE DISCUSS THE PARENT
COMPANY'S LACK OF CLIMATE
RELATED FINANCIAL DISCLOSURES.
IN ORDER TO HAVE SOME KIND OF
DIALOGUE WITH THE PARENT COMPANY
WE HAVE COFILED A PROPOSAL THAT
BERKSHIRE HATHAWAY'S BOARD ISSUE
A REPORT AN NEWELLY, ASSESSING
HOW THE COMPANY MANAGES PHYSICAL
AND TRANSITIONAL CLIMATE RELATED
OPPORTUNITIES.
INCLUDING CLIMATE RELATED
FINANCIAL REPORTING, WHERE
MATERIAL FOR THE SUBSIDIARIES
AND PARENT COMPANY, HOW THE
BOARD OVERSEES CLIMATE RELATED
RISKS FOR THE COMBINED
ENTERPRISE, AND THE FEASIBILITY
OF THE PARENT COMPANY AND ITS
SUBSIDIARIES ESTABLISHING
SCIENCE-BASED GLEAN HOUSE GAS
REDUCTION TARGETS, CONSISTENT
WITH LIMITING CLIMATE CHANGE TO
WELL BELOW 2 DEGREES.
WE ASK THE ANNUAL ASSESSMENT
FOLLOWS THE RECOMMENDATION OF
THE TASK FORCE ON FINANCIAL
DISCLOSURES, TCFD.
THE BOARD ARGUES SINCE IT
MANAGES ITS OPERATING BUSINESSES
ON AN UNUSUALLY DECENTRALIZED
BASIS AND THERE ARE FEW
CENTRALIZED OR INTEGRATED
BUSINESS FUNCTIONS THE BOARD
BELIEVES THE PROPOSAL IS
INCONSISTENT WITH BERKSHIR'S
CULTURE.
THE COSPONSORS NOTE, DESPITE THE
CULTURE AND DECENTRALIZED
MANAGEMENT, SHAREHOLDERS CAN
ONLY PURCHASE SHARES IN THE
COMBINED PARENT COMPANY ENTITY.
SHARES CANNOT BE PURCHASED IN
THE INDIVIDUAL SUBSIDIARIES THAT
MAY OR MAY NOT HAVE THE CLIMATE
DISCLOSURES THAT THE BOARD CITES
IN ITS OPPOSITION STATEMENT.
THE COMPANY HAS MORE THAN
$100 BILLION IN CASH
EQUIVALENTS.
THE COSPONSORS, AND MANY IN THE
$54 TRILLION CLIMATE ACTION 100
PLUS INVESTOR COALITION WANT TO
PARENT COMPANY TO PUT MORE
RESOURCES IN THE FINANCIAL, AND
THE MITIGATING THE IMPACT.
THE COMPANY'S SUSTAINABILITY
REMEMBER WEBSITE CONSISTENTS
ONLY OF LYNCHES TO 15
SUBSIDIARIES.
WE NOTE THE PARENT COMPANY HAS
60
THIS IS INSUFFICIENT DISCLOSURE
TO SHAREHOLDERS WHOT THAT
SUSTAINABILITY RISKS, ESPECIALLY
CLIMATE RISKS, MAY BE MATERIAL
TO THE PARENT COMPANY'S
LONG-TERM FUTURE PROS PEROTECTS.
OF COURSE RECOGNIZING THE
COMPANY'S STRONG PAST FINANCIAL
PERFORMANCE.
NO DOUBT CLIMB CHANGE AND ENERGY
TRANSITION TO A LOW CARBON
ECONOMY POSE A SYSTEMIC RISK TO
THE ECONOMY.
THE COMPANY'S AWE AUDITOR SAYS
ON ITS WEBSITE, CLIMATE CHANGE
IS NOT A CHOICE, IT'S BILLIONS
OF THEM.
WE ARE ALL COMPELLED TO ACT.
DELOITTE DOES NOT ASSESS CLIMATE
CHANGE RELATED FINANCIAL IMPACTS
IN THE COMPANY'S AUDIT.
WHEN ASKED BY THE COSPONSORS WHY
CLIMATE CHANGE IMPACTS ARE
EXCLUDED FROM AUDITS LIKE
BERKSHIRES, DELOITTE FAILED TO
PROVIDE ANY MEANINGFUL REPLY.
IN HIS NEW BOOK, FORMER
BERKSHIRE DIRECTOR BILL GATES
SAYS COMPANIES ACCEPTING MORE
RISK IS NEEDED TO AVOID CLIMATE
DISASTER.
AND SHAREHOLDERS AND BOARD
MEMBERS WILL HAVE TO BE MORE
WILLING TO SHARE IN THIS RISK,
MAKING IT CLEAR TO EXECUTIVES
THEY'LL BACK SMART INVESTMENTS
EVEN IF THEY DON'T ULTIMATELY
PAN OUT.
THIS IS THE GATES POSITION AND
THE CHAIR IS ONE OF THREE GATES
FOUNDATION TRUSTEES.
WE ASKED THE BOARD TO TAKE THE
CULTURAL RISK FOR A MODEST
DEGREE OF CENTRALIZATION NEEDED
TO ISSUE THE CLIMATE RELATED
FINANCIAL ASSESSMENT.
WE ALL NEED TO TAKE ACTION NOW
TO LIMIT CLIMATE CHANGE IMPACT
ON OUR LONG-TERM SUSTAINABILITY.
WE STRONGLY URGE BERKSHIRE
HATHAWAY'S SHAREHOLDERS TO
SUPPORT ITEM TWO AS CLIMATE RISK
MAY BE MATERIAL TO THE COMPANY.
WE HAVE A CHANGE FOR THE CHAIR,
WILL YOU PLEASE CHANGE YOUR MIND
AND VOTE YOUR PERSONAL SHARES IN
SUPPORT OF ITEM TWO?
THANK YOU.
>> THANK YOU, MR. YUMNS.
THE PROPOSELE IS READY TO BE
AXED ONLE WHEN YOU'RE READY YOU
MAY DISCLOSE THE RESULTS IN THE
REPRELIMINARY REPORT.
>> THE REPORT STATES THE BAILOUT
OF SHAREHOLDERS IN RESPONSE CAST
121,376 VOTES FOR THE MOTION.
AS THE NUMBER OF VOTES AGAINST
THE MOTION EXCEEDS A MAJORITY OF
NUMBER OF VOTES OF ALL CLASS "A"
AND CLASS "B" SHARES PROPERLY
CAST ON THE MATTER THE MOTION
HAS FAILED.
THE CERTIFICATION REQUIRED BY
DELAWARE LAW OF PRECISE COUNT OF
THE VOTES WILL BE PLACED WITH
THE MINUTES OF THIS MEETING.
>>
THE PROPOSAL FAILS.
SECOND SHAREHOLDER PROPOSAL
REQUEST BERKSHIRE HATHAWAY
COMPANIES TO ANNUALLY RELEASE
REPORTS SHARING THEIR DIVERSITY
AND INCLUSION EFFORTS.
I WILL NOW ASK THAT THE AUDIO
TAPE PROVIDED BY MEREDITH
BENTON, REPRESENTATIVE, BE
PLAYED TO PRESENT THE PROPOSAL.
> HELLO.
I AM MEREDITH BENTON.
I'M SPEAKING ON BEHALF OF THE
NONPROFIT ADVOCACY ORGANIZATION
AS YOU SOME I'M ALSO THE CEO OF
RESULTS STOP CAPITAL.
I FORMALLY PROPOSAL NUMBER
THREE.
DIVERSITY, EQUITY, AND INCLUSION
EFFORTS, INCLUDING THE PROCESS
THAT THE BOARDLE TO DETERMINING
ITS EFFECTIVENESS OF DIVERSITY
SBIN COLLUSION PROGRAMS AND HOW
IT ASSESSES GOALS, TREND RELATED
TO RECRUITMENT AND RETENTION.
WHAT WOULD I MEAN IF THE
MAJORITY OF BERKSHIRE'S
OPERATING UNITS WEREN'T MANAGING
THEIR DIVERSITY PROGRAMS?
IT WOULD MEAN THAT BERKSHIRE
KPRAENS MISSING OUT ON THE
BENEFITS THAT AN INCLUSIVE
WORKPLACE CULTURE CAN PROVIDE,
SUCH AS ACCORDING TO STUDIES,
ACCESS TO TOP TALENT, BETTER
UNDERSTANDING OF CONSUMER
PREFERENCES, STRONGER MIX OF
LEADERSHIP SKILLS, INFORMED
SKUGS AND IMPROVED RISK
MANAGEMENT.
BEST PRACTICES IN REPORTING
EXIST.
BERKSHIRE COMPANIES CAN PUBLISH
THEIR COMPOSITION THROUGH THEIR
FORM.
THIS IS ALREADY SUBMITTED TO THE
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION SO IT REQUIRES NO --
IT IS A UNIVERSALLY DISLIKED
FORM, BUT IT IS STANDARDIZED AND
COMPANIES WILL OFTEN PUB LESH
THEIR E 01 ALONG WITH A
DISCUSSION OF THEIR OWN INTERNAL
STRUCTURES AND WAYS.
72 OF THE 100 S&P 500 COMPANIES
PUBLICLY SHARE THIS FORM AT TO
MY KNOWLEDGE NO BERKSHIRE
HATHAWAY COMPANY DOES, NOT ONE.
IT'S AKIN TO A BALANCE SHEET
DETAILING DIVERSITY AT A SINGLE
POINT IN TIME.
JUST AS A BALANCE SHEET WOULD BY
ITSELF BE INSUFFICIENT TO
IDENTIFY THE STRENGTH OF A
COMPANY'S FINANCIALS.
SO TOO THE E 01 BY ITSELF IS
INSUFFICIENT IF ASSESSING THE
EFFECTIVENESS OF DEI PROGRAMS
THE COMPANY'S DATA, HIRING
RETE
RETENTION, AND PROMOTION RATES
MUST ALSO BE SHARED.
INVESTORS NEED TO HAVE A FULL
UNDERSTANDING OF THE ACTUAL
EXPERIENCE OF BERKSHIRE
EMPLOYEES.
IN THEORY, COMPANIES SHOULD WANT
TO SHARE THEIR RETENTION DATA.
IF IT'S A GOOD COMPANY TO WORK
FOR, PEOPLE WILL WANT TO STAY.
THEY SHOULD WANT TO SHARE THEIR
PROMOTION DATA IN THEORY.
IF IT'S A COMPANY THAT HIRES
GOOD PEOPLE AND TREATS THEM
WELL, THOSE GOOD PEOPLE WILL
ASCEND WITH MENTORSHIP AND TIME.
70% OF THE S&P 500 SHARE
DIVERSITY AND INCLUSION AT SOME
LEVEL.
ONLY 22% OF THE BERKSHIRE
COMPANIES DO AT ANY
AND ONLY FOUR WORK WITH EQUITY
AT ANY MEANINGFUL DEPTH.
BERKSHIRE IS A SERIOUS OUTLIER
HERE.
BERKSHIRE IS FAMOUSLY
DECENTRALIZED.
ITS UNITS OPERATE REMOTELY.
BUT IF AN ISSUE ISN'T IMPORTANT
FROM HEADQUARTERS, CAN WE EXPECT
IT TO BE PRIORITIZED BY AN
OPERATING UNIT?
HERE'S THE THING.
MR. BUFFET, MR. MUNGER, BOARD
MEMBERS AND THE TEAM
HEADQUARTERS, YOU MAY EACH
INDIVIDUALLY TRULY AND GENERAL
WINLY HIRE, MENTOR, AND PROMOTE
THE BEST PEOPLE FOR THE JOB,
REGARDLESS OF THEIR GENDER,
RACE, ETHNICITY, SEXUAL
ORIENTATION OR ANY INMUTABLE
CHARACTERISTIC, BUT WE CAN'T
CONCLUDE THIS IS THE MIND SET OF
EACH OF YOUR EMPLOYEES, MANAGERS
AND HIRING DIRECTORS.
BERKSHIRE HEADQUARTERS CAN'T SIT
PASSIVE WILL AND I HOPE THEIR
INDEPENDENT UNITS ARE ADDRESSING
BIAS AND DISCRIMINATION IN THE
WORKPLACE.
ACTIVE MANAGEMENT, PROACTIVE
ATTENTION IS NEEDED.
IN ITS STATEMENT IN OP SESSION
TO THE PROPOSAL, THE BOARD SAID,
MR. BUFFET, BERKSHIRE'S CHAIRMAN
AND CEO SET THE TONE AT THE TOP
FOR BERKSHIRE AND ITS EMPLOYEES
FOR OVER 50 YEARS.
IT ALSO STATES MR. BUFFET HAS A
RECORD OF OPPOSING EFFORT SEEN
OR UNSEEN TO SUPPORT DIVERSITY
OR INCLUSION.
HE HOLDS EXTRAORDINARY -- OVER
HIS COMPANIES AND THE BROADER
COMMUNITY.
HE OPPOSES EVIDENTS.
GIVEN THAT WE ASK HIM TO STEP
FORWARD DESACRCISIVELY IN HIS O
WAY THE EXPECTATIONS HE HAS AND
THE EFFORTS HE EXPECTS TO SEE,
THE METRICS THAT WILL BE USED TO
JUDGE SUCCESS.
ACTIONS SPEAK LOUDER THAN WORDS,
BUT SILENCE HERE SPEAKS VOLUMES.
THANK YOU.
>>
THE PROPOSAL IS NOW READY TO BE
ACTED UPON.
MR. HAMBURG, WHEN YOU ARE READY
TO YOU PROVIDE THE VOTING
RESULTS DISCLOSED IN THE
PRELIMINARY REPORT.
>> THE REPORT STATES THE BAIL-IN
OF THE PROXY HOLDERS IN RESPONSE
TO PROXIES RECEIVED THROUGH LAST
THURSDAY EVENING CAST 124,842
VOTES FOR THE MOTION AND 391,662
VOTES AGAINST THE MOTION.
AS THE NUMBER OF VOTES AGAINST
THE MOTION EXCEEDS THE MAJORITY
OF THE NUMBER OF VOTES OF ALL
CLASS "A" AND CLASS "B" SHARES
PROPERLY CAST ON THE MATTER, THE
MOTION HAS FAILED.
THE CERTIFICATION REQUIRED BY
DELAWARE LAW OF THE PRECISE
COUNT OF THE VOTES WILL BE
PLACED WITH THE MINUTES OF THIS
MEETING.
>> THANK YOU.
THE PROPOSAL FAILS.
>> I MOVE THAT THIS MEETING BE
ADJOURNED.
> I SECOND THE MOTION TO
ADJOURN.
>> MOTION TO ADJOURN HAS BEEN
MADE AND SECONDED.
THIS MEETING IS ADJOURNED, AND I
WOULD JUST LIKE TO ADD ONE FINAL
COMMENT THAT I REALLY HOPE --
AND I THINK THE ODDS ARE VERY,
VERY GOOD WE GET TO HOLD THIS
NEXT YEAR IN OMAHA, AND I HOPE
THAT WE GET A RECORD TURNOUT OF
BERKSHIRE SHAREHOLDERS AND WE
REALLY LOOK FORWARD TO MEETING
YOU IN OMAHA.
I GUESS IT WILL BE NEXT APRIL
30th, BUT WE'LL BE SURE OF THAT
DATE A LITTLE LATER.
SO THANK YOU FOR WATCHING, AND
WE WILL SEE YOU NEXT YEAR AND
HOPEFULLY IN OMAHA.
MEETING'S ADJOURNED.
>> THAT CONCLUDES THE 2021
BERKSHIRE HATHAWAY ANNUAL
MEETING TO SHAREHOLDERS, BUT
STICK AROUND.
THERE IS A LOT TO TALK ABOUT, A
LOT TO GO THROUGH WITH OUR PANEL
HERE AT YAHOO FINANCE.
OF COURSE BUFFET AND MUNGER
TALKING ABOUT ALL MANNER OF
SUBJECTS CONCERNING BERKSHIRE,
HOW THE COMPANY PERFORMED, THE
ECONOMY, RAILROADS, TECH STOCKS,
BITCOIN, THE WHOLE GAMUT.
AND THE ATMOSPHERE HERE IN THE
ROOM, YOU GUYS, DIFFERENT FROM
LAST YEAR WHEN THERE WAS
ABSOLUTELY NO ONE IN THE
CAVERNOUS CHI CENTER IN OMAHA.
THERE ARE DIRECTORS.
YOU CAN HEAR THEM TALKING BEHIND
ME NOW.
A GOOD NUMBER OF THEM TURNED
OUT, SO THERE WAS SOME REACTION
AND RESPONSE TO THE ZINGERS IN
PARTICULAR THAT BUFFET AND
MUNGER DELIVERED TO THE CROWD,
BUT STILL, NOT THE SAME AS THE
40,000 PEOPLE WHO ATTEND EACH
YEAR.
YOU HEARD BUFFET AT THE END TALK
ACT HOW HE OPENED EVEN WOULD BE
BACK IN OMAHA NEXT YEAR, AND OF
COURSE HE HAD THE EXACT DATE
RIGHT THERE, APRIL 30th OF 2022.
I WANT TO GO AROUND AND GET
REACTION TOP LINE FROM THE
PANEL.
MILES, WHY DON'T WE START WITH
YOU?
>> ANDY, IT'S FUNNY, EVERY YEAR
YOU COME OUT AND YOU ALWAYS
THINK ABOUT TONE AND TOPICS.
I WAS THINKING ABOUT LAST YEAR'S
MEETING, AND WROTE ABOUT IT A
LITTLE THIS MORNING ON YAHOO
FINANCE.
THAT WAS KIND OF THE BOTTOM OF
SORTS.
IF YOU GO THROUGH AND LOOK AT A
BUNCH OF NATIONAL COVID
STATISTICS.
IF YOU THINK ABOUT WHERE THE
ECONOMY WAS, WHERE EVERYONE'S TU
WAS.
THE MARK OF COURSE WE NOW KNOW
BOTTOMED ABOUT SIX WEEKS BEFORE
THAT MEETING, WHICH I BELIEVE
THE EXACT DATE WOULD HAVE BEEN
MAY 2nd.
BUT IT WAS REALLY KIND OF THE
ABSOLUTE TROUGH, THE COVID
MOMENT IN THE UNITED STATES.
THERE HAVE BEEN MANY DARK DAYS
SINCE THEN, BUT NOW WE'RE
TALKING ABOUT MORE THAN 50% OF
THE POPULATION WITH TAT LEAST OE
SHOT OF THE VACCINE.
WE'RE SEEING THINGS RE-OPEN.
TO THAT END, THE CONVERSATION
THIS YEAR WAS MUCH MORE A
CLASSIC BUFFET CONVERSATION, IF
YOU WILL.
I KNOW WE'LL GET TO KIND OF THE
HISTORY LESSON WE HAD AT THE
BEGINNING WITH THE TOP 20 STOCKS
NOW VERSUS 30 YEARS AGO.
BUFFET KIND OF TALKED ABOUT THE
ECONOMY, NEWS OF THE DAY.
BUT WE HAD A LITTLE -- IT SEEM
LAST YEAR HE WAS TRYING TO PEP
UP THE COUNTRY, PEP UP HIMSELF
AND NOT GOB SO DOUR.
BUT JULIA, IT DID FEEL LIKE YOU
CAN SORT OF THE GET BUFFET
TRYING TO, I DON'T KNOW, MAYBE
SOUND MORE NORMAL.
AT A CERTAIN POINT THE YEARS ALL
RUN TOGETHER, BUT THIS ONE MAYBE
DIDN'T FEEL SO SAD AS LAST
YEAR'S FELT.
>> MILES, I THINK YOU TOTALLY
NAILED IT.
I ACTUALLY REWATCHED LAST YEAR'S
MEETING, AT LEAST THE S-- EVEN
THOUGH HE HAD A BULLISH
UNDERTONE, I THINK LAST YEAR A
LOT OF FOLKS WERE LOOKING TO
WARREN BUFFET BECAUSE IT WAS
SUCH UNCHARTED TERRITORY.
REMEMBER HE DIDN'T EVEN HAVE HIS
HAIRCUT LAST YEAR LIKE THE REST
OF US.
BUT YEAH, I WOULD ALSO AGREE
WITH YOU.
A LOT OF THINGS CHANGED.
HE REFERENCED THAT IN THE
BEGINNING.
WE WILL GET TO THAT AS YOU JUST
MENTIONED.
BUT EVEN IT'S YEAR, TALKING
ABOUT THE RISE OF THE RETAIL
INVESTOR.
EVEN BRINGING UP ROBIN HOOD,
GAMBLING WITHIN -- KIND OF
TALKING ABOUT THE CASINO AND
WARNING ABOUT THAT.
WHILE AMERICAN COMPANIES ARE A
GREAT PLACE TO PUT YOUR MONEY
AND INVEST AND SAVE YOU HAVE TO
BE VERY CAREFUL, TOO.
THOSE WERE MY KEY TAKEAWAYS
HERE.
SHOULD WE BRING IN -- AKIKO,
WHAT DO YOU THINK?
>> I SHOULD POINT OUT, THIS IS
MY FIRST YEAR COVERING THE
EVENT.
IT'S INTERESTING TO SEE JUST HOW
BROAD THE QUESTIONS WERE.
PICKING UP ON YOUR POINT,
THOUGH, ABOUT WHAT WARREN BUFFET
SAYS ABOUT THE ROBIN HOOD TRADE,
WHAT STOOD OUT TO ME IN THESE
HOURS THAT HE ANSWERED PATIENTLY
ALL THE QUESTIONS WAS A BIT OF A
DIVIDE I SAW BETWEEN THE
SENTIMENT OF THE MARKET IS RIGHT
NOW, WHERE SOME OF THE
EXCITEMENT IS VERSUS WHERE BOTH
WARREN BUFFET AND CHARLIE MUNGER
SEE THE OPPORTUNITIES.
WHEN YOU TALK ABOUT BITCOIN FOR
EXAMPLE, NO SURPRISE, STRONG
OPINION THERE FROM CHARLIE
MUNGER SAYING OF COURSE HE HATES
THE BITCOIN SUCCESS, AND HE
THINKS THE WHOLE DEVELOPMENT IS
DISGUSTING AND CONTRARY TO THE
INTEREST OF CIVILIZATION.
THOSE WERE HIS WORDS.
I ALSO THOUGHT IT WAS
INTERESTING THE COMMENT ON THE
CLIMB ISSUE -- AT THE END OF
MEET WING SAW THE PROPOSAL VOTED
DOWN FOR INCREASED DISCLOSURES
ON CLIMATE RISK.
BUT WE HEARD FROM WARREN BUFFET
WHEN HE WAS ASKED ABOUT HIS --
HOW HE FELT ABOUT THAT IN THE
DISCUSSION OF BUILDING CLIMATE
RISK, INVESTING IN A FOSS YOU
WILL FUEL COMPANY.
HE REALLY SEEMED TO DOUBLE DOWN,
SAYING CHEVRON IS NOT AN EVIL
COMPANY.
HE SAYS I HAVE NO COMPUNCTION
ABOUT OWNING IT.
IN FACT WE WENT FURTHER AND
SAID, IF WE OWNED THE ENTIRE
BUSINESS I WOULDN'T FEEL
UNCOMFORTABLE.
THAT SEEMS TO BE A BIT OF DIVIDE
WHERE INVESTMENT SENTIMENT IS.
WE'VE GOT THE S.E.C. WEIGHING IN
ON THAT.
SO NOT SO SURE IN THE END IF
BERKSHIRE IS GOING TO HAVE THEIR
HAND FORCED ESSENTIALLY BECAUSE
OF REGULATION, BUT I THOUGHT
THAT WAS AN INTERESTING
COMMENTARY, TOO.
>> OKAY, THANKS, AKIKO AND
MILES.
WE'RE GOING TO TAKE A QUICK
BREAK, BUT WE'LL BE RIGHT BACK
AFTER THAT.
MUCH MORE TO DISCUSS HERE AT
LOS ANGELES AT THE END OF THE
BERKSHIRE HATHAWAY ANNUAL
MEETING FOR SHAREHOLDER
♪ STAY TUNED.
>>> WELCOME BACK TO YAHOO
FINANCE.
THE NUMBER OF THINGS DISCUSSED
HERE, WARREN BUFFET AS WELL AS
CHARLIE MUNGER WEIGHING IN ON
THE BROADER MACRO PICTURE.
TAKE A LISTEN TO WHAT HE HAD TO
SAY.
>> THIS ECONOMY RIGHT NOW IS 85%
OF IT IS RUNNING IN SUPER HIGH
GEAR, AND PEOPLE CAN'T -- AND
YOU'RE SEEING SOME INFLATION.
RESPOND IN THE AN INCREDIBLE
WAY.
I DON'T THINK IT WAS A SURE
THING THAT WOULD HAPPEN.
>> LET'S BRING IN EMPIRE
FINANCIAL RESEARCH FOUNDER AND
CEO.
LET ME FIRST GET YOUR THOUGHTS
ON WHAT STOOD OUT TO YOU IN
TERMS OF WHAT HE HEARD FROM
WARREN BUFFET AND CHARLIE MUNGER
TODAY.
>> THIS IS MY 23rd CONSECUTIVE
BERKSHIRE MEETING.
THE THING THAT REALLY JUMPED UP
OUT AT ME WAS THEY SPENT SOME
TIME TALKING ABOUT THE FIST RISK
FACTOR OF ANYONE BUYING A STOCK
SHOULD BE BAD MANAGEMENT.
THAT CAN MESS UP A BUSINESS.
THEN THEY LAMENTED THE
DIFFICULTY OF GETTING RID OF A
DIFFICULT
IT GOT BACK TO THE MAIN THING I
FOCUS ON WHEN IT COMES TO
BERKSHIRE, WHICH ISN'T BAD
MANAGEMENT, BUT AGING
MANAGEMENT.
AND WE HAVE SEEN IT OVER AND
OVER AGAIN WHERE YOU GET SOME
LEGENDARY CEO, HE STARTS TO LOSE
HIS MARBLES DUE TO OLD AGE LIKE
WE ALL DO.
SO THE FIRST THING I LOOK FOR AT
ANY ANNUAL MEETING WHEN I SEE
BUFFET OR MUNGER ON TELEVISION
IS, ARE THEY LOSING IT?
WE JUST SAW A 90-YEAR-OLD MAN
BACKED UP BY A 97-YEAR-OLD MAN
GO FOR FOUR CONSECUTIVE HOURS
WITHOUT EVEN A BATHROOM BREAK
BEING ASKED DOZENS OF QUESTIONS
THEY HAD NO ADVANCED KNOWLEDGE
OF.
23 YEARS AGO AT MY FIRST ANNUAL
MEETING THEY SOUNDED THE SAME
TODAY.
IT'S REMARKABLE.
I JUST GOOGLED AVERAGE LIFE
EXPECTANCY OF IS 77 YEARS OLD.
THEY'RE GIVING THE SAME ANSWERS
BUT MIXING IT UP, AND THERE'S
ALWAYS NEW STUFF THROWN IN
THERE.
YOU HAVE TO SIT BACK AND BE IN
AWE THESE GUYS ARE GOING STRONG
AT THEIR RESPECTED AGES.
>> WHAT DID YOU MAKE OF THE
QUESTIONS THAT WENT ALONG THE
LINES OF, YOU GUYS MISSED A HUGE
OPPORTUNITY LAST MARCH, YOU
DIDN'T STEP UP TO THE PLATE, AND
YOU LET US DOWN AS SHAREHOLDERS?
>> IN FACT, SOLD THE AIRLINES.
SOLD THE BANKS.
THAT WAS A $10 BILLION MISTAKE.
BUT HERE'S THE THING -- I WAS
EMAILING WITH ONE OF MY FRIENDS
WHO WAS CRITICIZIING THEM FOR
THAT AND HE SAID 20 YEARS AGO
BUFFET WOULDN'T HAVE MADE THOSE
MISTAKES.
HE WOULD HAVE PLAYED OFFENSE.
I SAID, TRUE, BUT THE BUFFET OF
THE 20 YEARS AGO HAD A RULE, NO
TECH STOCKS.
SO I'M PERFECTLY FINE IF BUFFET
MAKES A COMBINED $15 BILLION
MISTAKE ON AIRLINES AND ON THE
BANKS.
BUT HE'S MADE OVER $100 BILLION
IN PROFITS FROM BERKSHIRE'S
SHAREHOLDER JUST ON APPLE.
I'LL TAKE THAT TRADE ALL DAY
LONG.
>> ONE OF THE HALLMARKS OF THE
ANNUAL MEETING AND OF WARREN AND
CHARLIE IS THAT THEY TALK VERY
OPENLY AND TRANSPARENCY ABOUT
THEIR MISTAKES, SO A LOT OF
FOLKS ARE CERTAINLY LEARNING
FROM THEM, AND SO ONE OF THE
THINGS THAT STOOD OUT TO ME --
FELT LIKE A TRADITIONAL MEETING
IN A LOT OF WAYS BUT FOCUSES ON
THE RISING RETAIL INVESTOR CLASS
AND SHARING THEIR LESSONS WITH
THEM.
WHAT ARE YOUR THOUGHTS ON THAT
AS SOMEONE WHO'S BEEN INVOLVE IN
THE FINANCIAL EDUCATION AS THEY
TALK ABOUT THE WORLD CHANGING,
BRINGS THINGS UP FROM 30 YEARS
AGO AND HOW THOSE STOCK, THEY'RE
NOT EVEN THE ONES THAT ARE WELL
KNOWN TODAY?
>> WELL, LOOK, ONE OF THE FIRST
MEETINGS I EVER WENT TO WAS
1999, 2000 RIGHT AT THE TOP OF
THE BUBBLE WHEN THEY WERE
CRITICIZED.
AND I WAS SHOUT FROM THE
ROOFTOPS, THESE GUYS HAVE NOT
LOST IT.
AND I'M DOING THE SAME THING
TODAY.
IT'S AMAZING HOW HISTORY REPEATS
ITSELF.
I THINK THEY WERE MOSTLY LA
LAMENTING, PARTICULARLY THE
ROBIN HOOD APP AND THE CASINO
NATURE OF INVESTING.
THEY JUST SHOOK THEIR HEAD AND
SAID INVESTORS -- BUFFET WENT ON
A RIP ABOUT BUYING AND SELLING
CALL AND PUT OPTIONS ON APPLE
STOCK.
IT'S JUST PURE SPECULATION, PURE
GAMBLING.
AND I DON'T KNOW IF THEY
ACTUALLY QUITE CAME OUT AND SAID
IT, BUT I FOR SURE HEARD IT.
THEY SAID, THIS IS GOING TO END
BADLY, AND A LOT OF INNOCENT
PEOPLE WHO DIDN'T EXPERIENCE THE
INTERNET BUBBLE AND HOUSING
BUBBLE BURSTING ARE GOING TO GET
INCINERATED.
BUT THEY MAKE NO PREDICTION AS
TO WHEN THAT WILL HAPPEN.
>> APPLE ONE OF THOSE NAMES THAT
CAME UP IN ONE QUESTION WHERE
THEY ASKED SPECIFICALLY WARREN
BUFFET WHETHER OR NOT IT WAS A
MISTAKE TO SELL SOME SHARES LAST
YEAR WHEN WE'VE SEEN STOCK GO UP
SINCE THEN.
TAKE A LISTEN TO WHAT HE HAD TO
SY AND I'LL GET YOUR THOUGHTS
ON THE OTHER END.
>> IT'S AN EXTRAORDINARY
BUSINESS, BUT I DO WANT TO
IT'S A DIFFERENT WAY, BUT TIM --
COOK IS -- WE SEE A LOT OF
MANAGER OF A LOT OF
BUSINESSES -- YOU'RE LOOKING AT
TWO GREAT ONES ON BOTH ENDS
HERE.
HE'S HANDLED THAT BUSINESS SO
WELL.
HE COULDN'T DO WHAT STEVE JOBS,
OBVIOUSLY, COULD DO IN TERMS OF
CREATION, BUT STEVE JOBS
COULDN'T, REALLY,ENING YO, DO
WHAT TIM COOK HAS DONE IN MANY
RESPECTS.
>> WE HEARD WARREN BUFFET SAY
THAT APPLE HAS A PRODUCT THAT IS
INDISPENSABLE TO PEOPLE.
SORT OF COMPARE IT TO THE COST
OF A CAR VERSUS THE COST OF AN
iPHONE.
HOW MUCH MORE WE RELY ON APPLE
DEVICES.
WHAT DID YOU MAKE OF HOW HE
WEIGHED IN ON THIS OPENING
SAYING, LOOK, SELLING APPLE WAS
PROBABLY A MISTAKE.
>> ANY TIME YOU SELL A STOCK AND
IT SUBSEQUENT BY GOES UP, YOU
SORT OF MAYBE WISH YOU DIDN'T
SELL IT, EVEN THOUGH THAT'S
PRUDENT RISK MANAGEMENT.
INSTEAD OF BEMOANING THE FACT HE
SOLD 5% OF HIS APPLE POSITION,
HE HELD ON TO 95%.
AND CONSEQUENTLY -- OVER
$100 BILLION.
AND I SPEAK FROM EXPERIENCELE I
BOUGHT APPLE WAY BACK WHEN.
IT WENT UP 20%, AND I SOLD IT.
APPLE IS NOT A TYPICAL
INVESTMENT FOR BUFFET.
IT'S A TECH STOCK.
AFTER THE FIRST BUBBLE, YOU
THINK HE WOULD HAVE -- AND THE
FACT THAT HE JUST -- IS WHAT'S
EXTRAORDINARY.
WE SHOULD BE CELEBRATING THAT,
NOT CRITICIZING HE SOLD A FEW
SHARES.
>> YEAH, YOU WANT TO JUMP IN
HERE GUYS AND TALK A LITTLE BIT
ABOUT THE THEMES WHITNEY'S BEEN
HITTING ON?
GOING BACK TO THE FIRST SOUND WE
PLAYED WHERE BUFFET IS TALKING
ABOUT THE STRENGTH OF ECONOMY
RIGHT NOW.
AND THAT WAS FRAMED OUT OF A
QUESTION ON, DID BERKSHIRE MISS
AN OPPORTUNITY?
I THINK THE SHAREHOLDERS'
QUESTION WAS, I'M INVESTING WITH
BERKSHIRE, WHICH HAS
$100 BILLION ON THE SHEET.
YOU DIDN'T DEPLOY THAT.
WHITNEY, THIS IS YOUR 23rd.
THIS IS MY 6th MEETING BUT IT
MADE ME THINK ABOUT THE
QUESTIONS I TYPICALLY GET EVERY
YEAR, WHICH ARE VERSIONS OF, WHY
DIDN'T YOU DO THING "X," THING
"Y"?
I BROUGHT IT UP EARLIER IN THE
PROGRAM.
WE DIDN'T HAVE WARREN BUFFET
SITTING THERE AWAY HISTORY
LESSON ABOUT THE ECONOMY SINCE
WORLD WAR II.
HE WASN'T DEFENDING THE STATE OF
THE AMERICAN ECONOMY IN A WAY I
THINK HE'S GOTTEN USED TO OR
ALMOST FELT THE NEED TO, AND I
THOUGHT THAT WAS MAYBE A
REFRESHING IS THE WORD THAT CAME
TO MY MIND, BECAUSE IT'S THE
STUFF THAT COMES UP EVERY ANNUAL
MEETING WITH A LITTLE BIT OF
SECOND GUESSING, BUFFET DOING
HIS MACRO ANALYSIS.
WASN'T THE SAME THING AS LAST
YEAR WHEN EVERYTHING, FOR
OBVIOUS REASONS, BUT EVERYTHING
WAS FRAMED THROUGH THE STATE OF
THE PANDEMIC, WHAT'S GOING TO
HAPPEN NEXT?
WARREN, PLEASE TELL US?
I THINK AS HE SAID -- WHAT WAS
THAT JOKE FROM THE NEBRASKA
GOVERNOR?
I'M ALL RIGHT WITH THAT ONE.
HE DIDN'T REALLY HAVE A COMMENT
ON THAT LAST YEAR, AND IT WAS
SORT OF THE ONLY THING THAT
EVERYONE WANTED TO HEAR.
>> YEAH, I WOULD JUST SAY, THIS
IS THE CORONAVIRUS PANDEMIC IS
THE THIRD BIG BUST IN THE 23
YEARS I HAVE BEEN COMING.
THERE WAS THE AFTERMATH OF THE
INTERNET BUBBLE, THE GLOBAL
FINANCIAL CRISIS.
IT WAS REMARKABLE HOW SIMILAR
THE TONE WAS A YEAR AGO,
REASSURING PEOPLE, NEVER BET
AGAINST AMERICA.
WE'RE GOING TO COME BACK.
ST
SIMILAR TO 2009 WHEN THE
MEETING WAS A MONTH AFTER THE
BOTTOM LIKE LAST YEAR.
PROBABLY THE BIGGEST MISTAKE
INFORMSERS MAKE IS WE'RE TOO
BEARISH AND ALWAYS SEEING THE
NEXT STORM AND ALWAYS GETTING
TOO DEFENSIVE AND SELLING OUR
WINNERS TOO EARLY AND BUFFET TO
HIS CREDIT HAS MANEINTAINED FOR0
PLUS YEAR OPTIMISM ABOUT AMERICA
AND PUT MONEY TO WORK WHEN OTHER
INVESTORS ARE PANICKING.
I WISH HE HAD DONE A LITTLE BIT
MORE OF THAT A YEAR AGO, BUT
GENERALLY SPEAKING THAT'S
QUIBBLING AROUND THE EDGES.
HE HAS FUNDAMENT ALLY BEEN RIGH
HIS ENTIRE REAR AND BEEN
OPTIMISTIC ABOUT AMERICA.
IT'S EASY NOW TO HAVE THAT
VIEWPOINT.
IT WAS NOT A YEAR AGO, BUT HE
WAS.
>> ALL RIGHT.
AGAIN, MORE TO TALK ABOUT HERE.
STAY TUNED.
WE'RE GOING TO GO TO A BREAK.
THIS IS THE POSTGAME SHOW OF THE
2021 BERKSHIRE HATHAWAY ANNUAL
MEETING OF SHAREHOLDERS.
>>> YAHOO FINANCE'S LIVE
COVERAGE OF THE ANNUAL BERKSHIRE
HATHAWAY SHAREHOLDERS MEETING IS
BROUGHT TO YOU BY --
>>> WELCOME BACK TO YAHOO
FINANCE'S LIVE COVERAGE OF THE
BERKSHIRE HATHAWAY'S ANNUAL
SHAREHOLDERS MEETING.
A NUMBER OF ISSUES DISCUSSED
TODAY, BUT ONE OF THE
INTERESTING POINTS MADE BY
WARREN BUFFET IS SORT OF GIVES
ADVICE TO THOSE JUST DIPPING
THEIR TOES IN THE MARKET.
HE MADE A COMPARISON TO TODAY
VERSUS 1989.
TAKE A LISTEN TO WHAT HE HAD TO
SAY.
>> 1989 WASN'T THE DARK AGES.
WE WEREN'T JUST DISCOVERING
CAPITALISM OR ANYTHING ELSE, AND
PEOPLE THOUGHT THEY KNEW A LOT
ABOUT THE STOCK MARKET AND THE
EFFICIENT MARKET THEORY WAS IN.
IT WAS NOT A BACKWARD TIME.
AND IF YOU LOOK, THE TOP COMPANY
AT THE TIME HAD A MARKET OF --
SO THE LARGEST COMPANY IN THE
WORLD HAS GONE FROM $100 MILLION
TO $2 TRILLION.
AT THE BOTTOM, THE NUMBER 20 HAS
GONE FROM 20 MILLION TO
SOMETHING A LITTLE OVER TEN
TIMES THAT.
WELL, THAT TELL US SOMETHING
ABOUT WHAT'S HAPPENED WE
QUALITY, WHICH IS A HOT SUBJECT
IN THIS CURRENT.
TELLS A LITTLE SOMETHING ABOUT
INFLATION.
IT TELLS YOU THAT CAPITALISM
WORKED INCREDIBLY WELL,
ESPECIALLY FOR THE CAPITALISTS.
>> -- TODAY SAYING ESSENTIALLY
HOW MANY OF THOSE ARE GOING TO
BE AT THE TOP OF THE LIST 30
YEARS FROM NOW.
HE WAS SAYING WE WERE AS SURE OF
OU
OURSELVES BACK IN 1989 AS WE ARE
TODAY BUT THE WORLD CAN CHANGE.
>> INTERESTING.
BUFFET DID THE EXERCISE OF H
LOOKING AT THE MARKET CAPS AS HE
ALLUDED TO IN THAT CLIP.
EVERYONE SAW THE MEETING.
DIDN'T WANT TO PLAY ALL SEVEN
MINUTES OF HIS ANSWER.
THE GREAT TAKEAWAY IS THIS IS A
GREAT TIME TO BE AN INVESTOR IN
THE SOCK MARKET.
THE VALUE OF THE BIGGEST
COMPANIES IN THE STOCK MARKET,
ABOUT 20 TIMES HIGHER TODAY --
OR AT LEAST AT THE VERY TOP,
THAN IT WAS JUST 30 YEARS AGO.
BUT HIS LESSON, HIS ADVICE, AS
TENDED TO BE THE CASE OVER THE
LAST -- YOU KNOW, HE'S GOTTEN
MORE VOCAL ABOUT IT IN THE LAST
10 OR 15 YEARS IS THAT YOU HAVE
AN OPTION AS AN INVESTOR TO JUST
BUY ALL THE STOCKS.
YOU CAN GET AN S&P 500 FUND
BASICALLY FOR FREE.
I THINK IT COSTS THREE OR FOUR
BASIS POINTS OVER AT VANGUARD,
OR .3 OR .4 BASIS POINTS, EXCUSE
ME, OVER AT VANGUARD.
YOU'RE BUYING THE ENTIRE MARKET
FOR FREE AND THE ENTIRE MARKET
OVER TIME HAS GONE UP NICELY.
YOU DON'T NEED TO BE ENGAGED IN
TRYING TO GUESS WHICH OF THE
BUSINESSES WILL BE LARGE OVER
THE NEXT 30 YEARS BUT RATHER CAN
ACCESS ALL THE BUSINESSES AND
ALL THE APPRECIATION THEY'RE
LIKELY TO ENJOY OVER THE NEXT 30
YEARS WITHOUT HAVING TO ENGAGE
IN THE VERY DIFFICULT JOB OF
TRYING TO PICK INDIVIDUAL
SECURITIES ON WHICH ONES ARE
GOING TO PERFORM BEST.
>> JULIA, YOU KNOW, IT SEEMED TO
BE A BIT OF A CAUTIONARY TALE
HEAR THAT WARREN ONE BUFFET WAS
TRYING TO TELL.
HE WAS TALKING ABOUT TRADERS
LOOKING TO MAKE 30, 40 TRADES A
DATE.
HE SAID, IF YOU LOOK BACK IN
1989, THE BESTS IN 1989 DIDN'T
NECESSARILY DO WELL.
>> THAT'S RIGHT AND WHEN YOU
LOOK AT THE COMPANIES I THINK
THERE ARE ONLY SIX AMERICAN
COMPANIES ON THAT LIST AT THE
TIME.
THOSE SIX COMPANIES ARE NOWHERE
TO BE FOUND ON TODAY'S LIST,
WHICH IS DOMINATED BY AMERICAN
COMPANIES, SPECIFICALLY SOME OF
THOSE BIG TECH NAMES.
BUT KIND OF BUILDING ON WHAT
MILES SAID, WARREN BUFFET HAS
LONG ADVOCATED FOR INVESTORS
BUYING THESE LOW-COST INDEX
FUN
FUNDS RATHER THAN PAYING SOMEONE
MANAGEMENT FEES TO PICK THE NEW
THING TO SELL THESE DAYS,
WHETHER IT'S THE LATEST IPO OR
LATEST CPAC.
AND THEN ONE OTHER SMALL THING I
WILL ADD, BECAUSE THE LATEST
LIST HE DID SHOW FOR MARCH 2021
WITH THOSE BIG TECH COMPANIES,
LATER IN THE CONVERSATION,
CHARLIE MUNGER DID BRING UP THAT
LIST AND POINT OUT THAT APPLE
HAS BEEN VERY IMPORTANT TO
AMERICA, AND WE'VE DONE SO WELL
IN THIS NEW TECH FIELD.
AND HE ALSO SAID -- MUNGER SAID
HE WOULD NOT LIKE TO PRESENT
GIANTS BE BROUGHT DOWN TO LOW
LEVEL BY ANTI-COMPETITIVE
REASONINGS.
JUST AN INTERESTING POINT HE
BROUGHT UP LATER IN THE MEANING
THAT HE'S VERY MUCH IN SUPPORT
OF THESE BIG TECH COMPANIES
WHICH HAVE BEEN UNDER A LOT OF
SC
SCRUTINY LATELY.
>> YOU'RE RIGHT, JULIA.
ANDY I WONDER WHAT YOU MADE
ABOUT THOSE COMMENTS.
THEY WERE ALSO ASKED ABOUT
VALUATIONS, WHETHER THEY THOUGHT
THEY WERE TOO SKY HIGH.
DIDN'T SOUND LIKE THEY THOUGHT
THEY WERE IN HE TALKED ABOUT
THAT RELATIVE TO INTEREST RATES,
AKIKO, SAYING YOU'VE GOT
INTEREST RATES AT THIS LEVEL, IT
MAKES STOCKS LOOK MUCH LESS
EXPENSIVE.
YOU DIVERSE INTO NEGATIVE
INTEREST RATES, SOME INTERESTING
THINGS THERE.
ANOTHER THING THAT CAUGHT MY EAR
WAS HIS DISCUSSION OF AUTO
STOCKS AND THE HUNDREDS OF AUTO
STOCKS THAT EXISTED 100 YEARS OR
SO IN THIS COUNTRY AND HOW THEY
ALL TURNED OUT TO BE BAD
INVESTMENTS.
THAT WAS INTERESTING.
ANOTHER POINT I THOUGHT WAS
INTERESTING WAS HIS TAKE LATE IN
THE MEETING ABOUT SHORTAGES.
GREG ALSO CHAMI CHIMING IN THER
SAYING THE ECONOMY WAS HOT.
BUFFET SAID IT WAS RED-HOT, AS A
MATTER OF FACT, AND THAT THERE
IS UPWARD PRESSURE ON PRICING
THEY'RE SEEING THROUGHOUT THE
BERKSHIRE HATHAWAY ECOSYSTEM, IF
YOU WILL.
SO A LOT TO CHEW ON THERE FOR
INVESTORS IN BERKSHIRE HATHAWAY
AND INVESTORS IN GENERAL.
MUCH MORE TO DISCUSS HERE COMING
UP.
BUT WE'RE GOING TO TAKE A QUICK
BREAK.
STAY TUNED, AND MORE TO COME.
>>> WELCOME BACK TO THE 2021
BERKSHIRE HATHAWAY ANNUAL
MEETING SHAREHOLDERS POSTGAME
PROGRAM.
BUFFET TALKING A LOT ABOUT THE
STIMULUS WE HAD OVER THE PAST 12
MONTHS AND THAT EFFECT ON THE
ECONOMY.
TAKE A LISTEN TO WHAT HE HAD TO
SAY HERE.
>> IT'S A FASCINATING TIME.
WE'VE NEVER REALLY SEEN WHAT
SHOVELING MONEY IN ON A BASIS
WE'RE DOING IT OFF, ON A FISCAL
BASIS FOLLOWING A MONETARY
POLICY OF SOMETHING CLOSE TO 0%
INTEREST RATES, AND IT IS
ENORMOUSLY PLEASANT.
BUT IN ECONOMICS YOU HAVE TO
REMEMBER, YOU CAN NEVER DO ONLY
ONE THING.
YOU ALWAYS HAVE TO SAY AND THEN
WHAT?
AND WE'RE SENDING OUT HUGE SUMS.
I MEAN, THE PRESIDENT SAID IT ON
WEDNESDAY -- 85% OF THE PEOPLE
ARE GOING TO GET A $1,400 CHECK.
85%.
AND A COUPLE OF YEARS AGO WE
WERE SAYING 40% OF THE PEOPLE
WOULD NEVER COME UP WITH $400 IN
CASH SOME WE'VE GOT 8 5% OF THE
PEOPLE GETTING THOSE SUMS AND SO
FAR WE HAVE HAD NO UNPLEASANT
CONSEQUENCES.
PEOPLE FEEL BETTER.
PEOPLE GET THE MONEY, FEEL
BETTER.
PEOPLE LESSONING MONEY DON'T
FEEL VERY GOOD, BUT IT CAUSES
STOCKS TO GO UP, CAUSES
BUSINESSES TO FLOURISH.
IT CAUSES AN ELECTORATE TO BE
HAPPY, AND WE'LL SEE IF IT CAUSE
ANYTHING ELSE.
IF IT DOESN'T CAUSE ANYTHING
ELSE YOU CAN COUNT ON IT
CONTINUE.
BUT, NO, THERE ARE CONSEQUENCES
TO EVERYTHING IN ECONOMICS.
>> WHITNEY TILSON I WANT TO GO
TO YOU AND GET YOUR REACTION TO
WHAT BUFFET JUST SAID ABOUT
STIMULUS AND THE EFFECT ON
ECONOMY AND MARKETS?
>> RIGHT AFTER THAT, MUNGER
WEIGHED IN AND SAID, IF IT
CONTINUES FOR TOO LONG, THE
CONSEQUENCE WILL BE TERRIBLE,
FURTHER MAKING BUFFET'S POINT.
BUT IT REALLY REFLECTS THEIR
HUMILITY IN THAT WHO COULD HAVE
EVER EXPECTED ANY OF THIS?
THEY SAID AT ONE POINT IT'S JUST
THE MOST REMARKABLE TIME IN
THEIR ENTIRE LIVES TO JUST SIT
BECOME AND BE A SPECTATOR AND
LOOK AT WHAT'S GOING ON.
AND THEY ARE BASICALLY -- TO BE
A SUCCESSFUL INVESTOR YOU HAVE
TO BE VERY ARROGANT TO BELIEVE
THAT YOU CAN OUTWIT ALL THE
OTHER INVESTORS OUTTHERE.
BUT YOU ALSO HAVE TO HAVE A
TREMENDOUS HUMILITY, AND THEY
OUTLINED THIS INCREDIBLE PUZZLE.
THEY DON'T CLAIM TO HAVE THE
ANSWERS.
THEY DON'T KNOW HOW THE STORY'S
GOING END, BUT THEY'RE ENJOYING
THE SHOW, AND IN THE MEANTIME
THEY HAVE THEIR HEADS DOWN,
LOOKING TO BUY BACK THEIR OWN
STACK, MAKE ACQUISITIONS, BUY
STOCKS IN THE MARKET AND DO WHAT
THEY'VE ALWAYS DONE AND THEY'RE
NOT TEMPTED TO STRAY FROM WHAT
THEY'VE ALWAYS DONE.
IT'S A GOOD LESSON FOR ALL OF
US.
>> AKIKO, YOU HAD A TAKE ON
THIS.
SOME FINAL THOUGHTS GOING
AROUND.
YOU FIRST.
>> TO WHITNEY'S POINT, THEY WERE
ANSWERING A QUESTION THAT CAME
IN AND SAID, WHY DID YOU JUST
SIT ON YOUR HAND HERE WHEN THERE
WERE MORE OPPORTUNITIES IN THE
MARKET?
I THINK WHITNEY BRINGS UP A GOOD
POINT.
WE HEARD WARREN BUFFET AS WELL
AS CHARLIE MUNGER SAYING, LOOK,
THE ECONOMY RUNNING IN HIGH
GEAR.
I DON'T THINK ANY OF US COULD
HAVE PREDICTED THAT.
I THOUGHT THEIR PGS ON THE
AIRLINES WERE INTERESTING AS
WELL.
THEY HAVE GOTTEN SOME HEAT.
WE HEARD WARREN BUFFET SAY,
LOOK, THEY WERE THE BIG
BENEFICIARIES OF THE C.A.R.E.S.
ACT, BUT AT THE END OF THE DAY
THEY WOULD HAVE STUCK TO THEIR
POSITIONS, PULLING OUT OF
AIRLINE STOCKS AND PARING BACK
ON BANKS.
>> JULIA, WHAT ABOUT YOU?
REGARDING THE STIMULUS OR JUST
IN GENERAL.
>> SURE.
THEY SAID PEOPLE -- I'M GOING
PARAPHRASE HERE -- NUMB TO
NUMBERS.
TRILLIONS DON'T MEAN ANYTHING TO
ANYBODY, BUT $1,400 MEANS
SOMETHING TO THEM.
BUFFET TALKING ABOUT CHARLIE
MUNGER AND WE'RE ALL WITNESSING
WHAT THEY CALL THE MOST
INTERESTING-.
I AM SO LOOKING FORWARD TO THIS
MEETING IN 2022, BEING BACK IN
PERSON WITH EVERYONE.
IT'S BEEN ONE OF THE MOST
UNPRECEDENTED TIMES OF OUR
LIVES.
I KNOW WE SAY THAT A LOT, BUT
THIS MEETING LEFT ME FEELING
MORE CONFIDENT THAN I DID LAST
TIME THIS YEAR FOR SURE.
>> AND MILES, FINAL THOUGHTS
FROM YOU?
>> THAT'S IT.
WE'LL SEE EVERYBODY AT THE OLD
MATTRESS FACTORY ON 13th STREET
NEXT YEAR AFTER THE 2022 ANNUAL
SHAREHOLDER MEETING.
>> SHORT AND SWEET.
LOTS TO CHEW ON OVER SATURDAY
NIGHT AND INTO SUNDAY FOR
SHAREHOLDERS AND FOR THE MARKETS
IN TERMS OF THINGS WARREN BUFFET
AND CHARLIE MUNGER DISCUSSED.
YES, THE DYNAMIC DUO IS BACK,
AND WE WANT TO THANK YOU ALL
VERY MUCH FOR WATCHING THIS LIVE
STREAM OF THE BERKSHIRE HATHAWAY
2021 ABOUT YULE SHAREHOLDERS
MEETING HERE ON YAHOO FINANCE.
HAVE A GREAT WEEKEND AND A GREAT
YEAR.
UNTIL WE SEE YOU AGAIN NEXT
BYE-BYE.
THANKS.