Berkshire's 2023 annual shareholder meeting: Watch the full morning session with Warren Buffett

0:45

on our web page this morning but we'll

0:47

cover those very fast and we'll get to

0:49

the questions now

0:51

I

0:53

when I woke up this morning

0:55

I realized

0:57

that we had a competitive

1:01

broadcast going out

1:05

somewhere in the UK and and

1:10

they were they were celebrating

1:14

a King Charles and we've got our own

1:18

King Charles here today

1:19

[Applause]

1:32

and next to him we have

1:36

Greg Abel the who's in charge of all the

1:39

operations except for

1:42

insurance

1:43

[Applause]

1:51

and actually great we have

1:53

uh

1:55

a man I ran into a 1986 and

1:59

has made us look good ever since we have

2:01

the man in charge of insurance Ajit Jane

2:04

Jaden

2:05

[Applause]

2:12

and now we have our our directors here

2:15

in front and if they would

2:17

just stand briefly and then I'll go on

2:20

to the next one and and uh

2:22

they're all here today first of all

2:25

doing alphabetically there's Howard

2:27

Buffett

2:34

there's Suzy Buffett

2:41

there's Steve Burke

2:43

[Applause]

2:47

Ken Chanel

2:49

[Applause]

2:53

Chris Davis

2:54

[Applause]

2:58

Sue Decker

2:59

[Applause]

3:03

Charlotte Guymon

3:04

[Applause]

3:07

Tom Murphy Jr

3:09

[Applause]

3:12

Ron Olson

3:13

[Music]

3:16

Wally Weiss

3:18

[Applause]

3:20

and Merrill Whitmer

3:22

[Applause]

3:24

[Music]

3:26

that's as good as you can get and

3:28

there's one other person I would like to

3:31

mention before we get on to the earnings

3:33

that were put on the uh

3:35

uh in the press release this morning and

3:39

uh

3:41

that's uh

3:45

well let's see who we have there we've

3:48

got

3:49

this is hard to believe

3:52

can you imagine a name

3:55

Melissa Shapiro Shapiro

3:58

and she was uh Melissa Shapiro until she

4:01

married another Shapiro and she put this

4:04

whole thing together with no help from

4:06

me no help from Charlie and a lot of

4:09

help from the people of the other room

4:11

Melissa

4:12

[Applause]

4:17

yeah it's very easy if you can remember

4:20

her second name you can remember her

4:21

third name so Melissa shabiro Shapiro

4:23

and with that I would like to

4:26

next move on to the

4:29

earnings in a couple

4:32

small slides that that explain what

4:35

we're all about and then we're going to

4:36

get to the Q a and uh

4:39

the slide is up behind me yeah there it

4:42

is we reported in the first

4:45

quarter

4:47

operating earnings a little over 8

4:50

billion and when we talk about operating

4:53

earnings we're basically referring

4:56

to the earnings

5:00

a Berkshire Hathaway as generally well

5:04

as required under gaap excluding however

5:08

capital gains both realized and

5:11

unrealized there's a few other very

5:13

minor items but basically

5:15

we expect to make capital gains over

5:17

time why would we own the stocks

5:20

otherwise uh doesn't always work out but

5:23

overall it works out pretty well over

5:24

time but in any day any quarter any year

5:29

even occasionally over a five-year

5:31

period uh

5:33

the stock prices move around

5:35

capriciously now we own a lot of other

5:37

businesses we consider those stocks

5:39

businesses we own a lot of other

5:41

businesses where they get them

5:42

Consolidated and they don't move around

5:44

in value now if we had a little bit of

5:47

Burlington

5:48

stock outstanding if we had a little bit

5:50

of the energy stock trading those stocks

5:54

would move around a lot but the

5:56

businesses are what count so the

5:59

operating earnings as you'll see in the

6:02

first quarter came in at about 8 billion

6:05

and

6:07

uh I would say that

6:09

in the general economy

6:12

the feedback we get is that uh

6:16

I would say perhaps the majority of our

6:18

businesses will actually report

6:22

lower earnings this year than last year

6:25

the

6:26

in various degrees in the last six

6:29

months or so at various times uh

6:33

the the businesses have left

6:36

the incredible

6:39

period which is about as extraordinary

6:41

as I've seen in business since World War

6:43

II uh where the government would pour

6:47

out a lot of money to people

6:49

who couldn't get Goods it was more

6:50

extreme in World War II but this was

6:52

extreme this time

6:54

and it was just a question

6:57

of getting Goods to deliver

7:00

and people bought and they didn't wait

7:02

for sales and if you couldn't sell them

7:05

one thing they would put another thing

7:06

in their backlog it was an extraordinary

7:08

period and that period uh

7:12

has ended it hasn't ended with as you

7:15

know it isn't that employment's fall

7:17

born off a cliff or anything in the

7:19

least but but

7:21

it is a different climate

7:24

than it was six months ago and and a

7:27

number of our managers

7:29

uh were surprised some of them had too

7:32

much inventory on order and then all of

7:34

a sudden it got delivered and people

7:36

weren't in the same frame of mind as

7:38

earlier

7:39

and now we'll start having sales at

7:41

places where we didn't need to have

7:42

sales before

7:44

but

7:45

uh despite the fact

7:48

that this year I think in general will

7:51

be slower

7:52

than last year

7:54

we actually are

7:56

situated so that I would expect and

7:59

believe me when I say accept expect

8:03

it's

8:04

nothing is sure nothing sure tomorrow

8:07

nothing sure next year and nothing is

8:10

ever sure

8:11

either in markets or in business

8:13

forecasts or anything else and we don't

8:15

pay much attention to markets or

8:17

forecasts unless the Marcus Epping off

8:19

or something interesting to do but

8:23

nevertheless we are positioned in two

8:25

respects as you'll see from

8:27

from this uh first report our investment

8:32

income is going to be a lot larger

8:35

uh this year than last year and that's

8:37

that's built in I mean we have as you'll

8:41

see in a minute we've had 125

8:45

billion or so in

8:48

very short term

8:49

investments and

8:51

and believe it or not

8:53

uh not that long ago

8:57

we were getting

8:58

four basis points which is next to

9:01

nothing

9:02

on that 125 billion which means we were

9:05

getting 50 million a year and now the

9:08

same money the other just day or day

9:11

before yesterday we actually bought

9:14

because of someone funny twist in the

9:16

market because of doubts about the

9:18

deficit ceiling or the debt ceiling uh

9:22

we bought three billion of bills at the

9:25

590

9:26

[Music]

9:28

that's 5.9 is it 5.92 Bond equivalent

9:33

yield so

9:36

we will have what produced us not that

9:39

long ago on a 12-month basis was

9:41

producing 50 million here producing

9:44

something in the area of 5 billion here

9:46

so we're in a position where the

9:49

investment income is essentially well it

9:52

is certain to increase quite a bit

9:54

and insurance underwriting

9:58

is not

9:59

it uh

10:01

it does not correlate

10:03

with business activity it depends on

10:07

things like hurricanes and earthquakes

10:09

and and other events

10:12

so

10:13

on a prospective basis on a probability

10:16

basis we're likely to have a

10:20

a better year

10:22

uh this year in Insurance underwriting

10:25

than we had last year uh it just isn't

10:28

affected

10:29

by what you might call the business

10:31

cycle or uh what applies to generally an

10:36

industry detailing you name it uh so I

10:40

would expect

10:42

and one

10:43

massive EarthQuaker

10:45

one one hurricane that came into just

10:48

the wrong place

10:50

I would

10:52

can affect that prediction but on a

10:55

probable listing basis our insurance

10:57

looks better this year so if you get two

10:59

of those

11:00

two of the elements there of our main

11:03

elements of earnings that look like they

11:06

will swing in our Direction I would

11:07

expect but I can't promise that our

11:10

operating earnings will be uh greater

11:13

than last year

11:15

and if we'll move to

11:17

the second slide

11:20

uh I give you those operating earnings

11:22

figures

11:24

just to give you

11:25

a overview of what has happened

11:29

uh

11:30

since the pandemic started and off of

11:33

the year

11:34

the yearbook before as a base

11:37

and

11:39

we retain all our earnings as you know

11:42

so if we're retaining 30 or 35 billion

11:45

or whatever but maybe a year you should

11:47

expect more operating earnings over time

11:50

I mean this I mean this this number

11:51

should be

11:53

significantly higher five or 10 or 15

11:56

years from now because we have the

11:58

advantage of retaining earnings and

12:01

that's what got us to these figures

12:02

because they were essentially nothing

12:04

when we started and they got there by

12:06

retaining earnings and we'll keep

12:08

retaining earnings so it's no great

12:10

Triumph if these numbers move up and

12:13

what we hope is that they

12:16

move up at a reasonable rate

12:17

historically

12:19

they moved up at an unreasonable rate

12:21

sometimes but we were working with a

12:23

much smaller Sons then and that can't be

12:25

repeated with our present Capital base

12:27

because I note there

12:30

I believe it's on this slide let's take

12:32

a look

12:33

uh

12:35

now that'll be

12:38

see it's on the

12:41

well on the on the next on the next

12:44

place paid and much smoother the next

12:46

slide

12:48

we showed that we had on March 31st

12:52

now 500 and

12:54

was it

12:55

504 billion

12:59

of Gap net worth

13:01

now what might surprise you

13:04

is that there's no other company in the

13:06

United States no other company

13:08

that has a number

13:10

that is that large now that isn't

13:13

because we've got the most valuable

13:16

company in the United States

13:18

other companies

13:20

have used their money to repurchase

13:22

shares that they could have accumulated

13:24

504 billion in gap

13:26

but basically we have more

13:30

under Gap accounting now

13:32

than any other company in the US and of

13:36

course if you measure return on

13:38

on Equity that becomes a very big number

13:40

to increase

13:42

at a rapid rate but we hope to do so

13:45

uh not a rapid rate additional rate

13:49

um and right below that you see

13:52

something called float

13:54

and float

13:56

is money

13:58

that

13:59

uh is left in our hands

14:03

uh somewhat Akin

14:06

but very importantly different

14:09

a little bank deposit but it

14:12

you have to pay interest to get a bank

14:14

deposit you have to pay more interests

14:16

these days and you have to run a bank

14:17

and do a lot of things and

14:20

basically this is money that represents

14:24

unpaid losses at this time you get paid

14:28

in advance in insurance

14:30

so what shows up as a net liability

14:33

on our balance sheet

14:35

is gives us funds uh

14:39

do exercise with an amount of discretion

14:42

that no other

14:43

insurance company that I know of in the

14:45

world enjoys just because we have so

14:48

much net worth

14:49

and our float now

14:51

comes to 165 billion

14:54

and the man sitting on the far left is

14:56

responsible for moving that number up

14:59

from a pittance

15:00

in 1986

15:03

to this incredible figure which in most

15:07

years practically all years

15:10

hasn't cost us anything so it's like

15:12

having a bank with no employees no

15:15

interest

15:16

and no ability to withdraw

15:20

the money in a hurry

15:23

that we have working for us and it's a

15:27

very valuable asset that uh

15:31

that shows up as a liability and uh

15:37

Ajit is responsible for building up this

15:42

treasure

15:44

uh which has done been done by

15:47

out competing insurance companies all

15:50

over the world and then now a number of

15:52

our insurance companies in turn are run

15:54

by talented managers

15:57

who contributed

15:58

one way or another

16:00

uh start with Geico

16:03

the beginning of my career and the uh

16:06

that float

16:09

if you think about it just think of a

16:10

balance sheet you've got liabilities

16:13

here and you got assets over here and

16:14

and the liability side finances the

16:17

asset side is very simple and

16:21

stockholders Equity finances it

16:22

long-term debt finances and so on but

16:25

stockholders Equity is very expensive in

16:28

a real sense

16:29

long-term debt has been cheap for a

16:32

while but it can get expensive and it

16:34

can also become

16:35

do eventually and if and it may not be

16:38

available

16:39

uh but float

16:42

is another item that shows a it's a

16:44

liability but hasn't cost us anything

16:47

and it it can't disappear in a hurry and

16:52

it finances the asset side in the same

16:55

way as stockholders equity

16:57

and nobody else thinks of it much that

16:59

way but but we've always thought of it

17:02

that way and it's built up over time so

17:04

uh I show at the bottom what's happened

17:06

with cash and treasury bills

17:09

through March 31st and I will tell you

17:12

that the

17:13

in the month of April

17:15

we probably

17:17

added

17:19

about seven billion dollars to that

17:21

factor now part of that is because we

17:23

didn't buy as much stock because that

17:25

reduces reduces cash and treasury bills

17:28

we bought about 400 million dollars

17:30

worth of stock in the month of April

17:32

that's that's a minus uh in terms of

17:35

cash available and uh

17:39

we we

17:41

however sold net some stock which

17:45

produced maybe 4 billion and of course

17:47

we had operating earnings probably two

17:48

and a half

17:50

billion or something in that area and my

17:52

guess is we probably increased our cash

17:54

and treasury bills uh six and seven

17:57

billion in the month and uh I just want

18:01

to give you a feel for other cash flows

18:03

at Berkshire

18:04

and then if we move to the final I think

18:07

it's the final one next to the last one

18:08

uh

18:14

no I I think it is the last let's see

18:16

it's the fourth

18:18

yeah is this we should have the one of

18:21

their class a equivalent shares

18:22

outstanding and and uh

18:25

you'll notice that every year

18:28

the number of our shares go down so if

18:30

we own more businesses and the

18:32

businesses make more money

18:34

your chair as shareholders as owners

18:37

a Berkshire increases every year without

18:41

you laying out any money now you're

18:43

laying out the

18:45

the

18:47

alternative which you could receive in

18:49

dividends but the reason we've gotten to

18:52

where we are is because we

18:54

we kept the money we did pay a dividend

18:57

in nineteen

18:59

sixty seven ten cents to share

19:01

it was a terrible mistake and I

19:06

I always tell people that I I'd love for

19:08

the men's room and the directors voted

19:10

it while I was gone but that isn't true

19:12

I was there I confessed they uh but we

19:15

were invested and has produced the

19:18

500 billion possible shareholders equity

19:20

in the 30 billion plus of operating

19:23

earnings and and we'll continue to

19:26

follow that policy because it makes a

19:27

great deal of sense and uh

19:30

with that

19:32

I think we've taken care of the

19:34

preliminaries you can study that the 10q

19:37

is is on the uh

19:40

on the

19:41

web page and if you have a

19:46

week or two vacation you could spend it

19:49

reading the 10-q and but that is the

19:51

essence of Berkshire and with that I

19:52

will

19:53

start with Becky quick and and uh we

19:57

will alternate between Becky and and the

20:01

audience and her questions have come in

20:04

from all over the country and I believe

20:06

you identified the center and go to it

20:09

Becky thanks Warren the first question

20:12

comes in from Randy Jeffs in Irvine

20:14

California and his question is if

20:16

Silicon Valley Bank's deposit had not

20:19

been fully covered what do you think the

20:20

economic consequences would have been to

20:22

the nation

20:24

well I've just simply say it would have

20:28

been catastrophic and that's why they

20:31

were covered uh and even though the FDIC

20:34

limit is 250 000 that that's the way the

20:39

statute reads but that is not the way

20:41

the us is going to behave

20:43

uh any more than they're going to let

20:45

the debt ceiling uh uh cause the world

20:49

to go into turmoil and they

20:55

ah

20:56

well they're just I I can't imagine

20:59

anybody

21:01

in the administration and the Congress

21:03

and the Federal Reserve whatever it may

21:06

have been FDIC I can't imagine anybody's

21:09

saying uh I'd like to be the one on

21:12

television tomorrow and explain the

21:13

American public why we're keeping uh

21:17

uh only two hundred and fifty thousand

21:19

dollars insured and we're gonna start

21:21

around every Bank in the country and

21:23

disrupt the world financial system uh so

21:27

uh I think it was inevitable Charlie do

21:30

you have any

21:33

no I have nothing to add okay well

21:37

uh incidentally I should mention this

21:40

now ajeed and Greg will be here in the

21:44

morning session which ends at noon and

21:46

so uh if you've got questions to direct

21:49

to them the time to do it is in the

21:51

first half of the show and and then

21:53

after lunch

21:55

it'll uh just Charlie and I will be back

21:58

okay

22:00

area one

22:02

hi nirav Patel Haverhill Massachusetts

22:06

Mr Buffett Mr Monger it seems like you

22:10

found the Sweet Spot between being being

22:13

too conservative and too aggressive as

22:15

investors

22:17

do you ever make bad investment

22:19

decisions because of your emotions and

22:21

what do you do to try to keep that from

22:24

happening

22:28

well we make

22:30

bad investment decisions uh

22:33

plenty of times I make more than Charlie

22:35

because I'm I like to think it's because

22:37

I make more decisions but the public

22:39

normatic average is worse but

22:44

I can't recall

22:48

anytime

22:49

in the history of Berkshire

22:52

that we made an emotional decision that

22:55

I know the movie had Jamie Lee in there

22:57

but that that was for Laughs

23:00

I mean Jamie

23:03

Jamie Lee she's good but she's not good

23:06

enough to get me or Charlie to make an

23:09

emotional decision

23:12

[Applause]

23:16

Charlie

23:18

I'm sure you have something to add on

23:19

that

23:24

well it's a different movie than it is

23:27

shown in the most corporate meetings

23:29

[Laughter]

23:31

but have we ever made an emotional

23:33

decision no no

23:37

that's in business we're talking about

23:38

yeah

23:40

yeah no you don't want to be a no

23:42

emotion person in all of your life but

23:44

you you definitely want to be a no more

23:46

no emotion person of making an

23:49

investment or business decision that uh

23:52

you can argue that that uh uh

23:57

with it

23:59

we probably I would say that we

24:03

've made an emotional decision perhaps

24:07

and when a manager has been with us for

24:10

some period

24:11

and we haven't

24:13

we've

24:15

we we've ignored the fact

24:18

that perhaps they weren't quite what

24:20

they were

24:21

earlier but our businesses are so good

24:25

that they they've run better sometimes

24:28

when uh you know I've talked about

24:32

West Coast for example the wonderful

24:34

Louisville

24:36

it ran on

24:37

it ran on automatic pilot

24:40

for a while but I don't think we

24:41

suffered by it but you're going to argue

24:44

that if Charlie and I hadn't liked Louie

24:47

as much as we did we might have spotted

24:49

a little bit early but I don't think it

24:50

made any difference in the results would

24:52

you would you agree with that Charlie

24:55

yeah yeah you'd be totally with it

24:57

and

25:01

I'm glad I'm glad we behaved the way we

25:03

did at Wesco

25:04

by the way we bought the thing for a few

25:08

tens of millions and it became worth two

25:10

or three billion

25:13

yeah that wasn't common in the Savings

25:15

and Loan businesses you may have noticed

25:17

and they don't want they really want

25:20

crazy in that industry and and we had a

25:23

wonderful guy in Louis and we didn't go

25:25

crazy yeah we didn't go crazy

25:28

um

25:30

okay Becky

25:33

this question comes from Ben Knoll in

25:35

Minneapolis he says he's a Berkshire

25:37

shareholder of three decades and he's

25:39

attended many Berkshire meetings he's

25:41

here again this year

25:42

and this is addressed to Ajit and Greg

25:45

he says last year I asked you about how

25:47

Geico and BNSF appeared to lose ground

25:50

to their leading competitors Geico on

25:52

telematics and BNSF on Precision

25:54

scheduled railroading Ajit you responded

25:57

by saying how you expected Geico to make

25:59

progress in a year or two Greg you spoke

26:01

about your pride in BNSF but you didn't

26:03

directly address the threat of

26:05

precision's scheduled railroading will

26:07

each of you please provide perspective

26:09

on these competitive challenges and our

26:11

company's strategies to address them

26:16

let me

26:19

in terms of Geico and telematics let me

26:23

make the observation that Geico has

26:25

certainly taken the ball by the horns

26:27

and has made rapid strides in terms of

26:29

trying to bridge the gap

26:31

in terms of telematics and its

26:33

competitors

26:35

they have now reached a point where on

26:37

all new business

26:39

close to 90 percent is has a telematics

26:44

input to to the pricing decision

26:47

unfortunately less than half of that is

26:49

being taken up by the policyholders the

26:53

other point I want to make is even

26:54

though we have made improvements in in

26:57

terms of Bridging the Gap on telematics

26:59

we still haven't started to realize the

27:02

true benefit and the real culprit or the

27:05

bottleneck is technology

27:08

Geico's technology needs a lot more work

27:10

than I thought it did it has more than

27:13

500 actually more than 600 Legacy

27:15

systems that don't really talk to each

27:17

other and we are trying to compress them

27:20

to no more than 15 16

27:22

systems that all talk to each other

27:24

that's a Monumental Challenge and

27:26

because of that even though we have made

27:28

improvements in telematics we still have

27:30

a long way to go

27:32

because of Technology

27:34

uh

27:35

because of that and because of the whole

27:38

issue more broadly in terms of matching

27:40

rate to risk Geico is still work in

27:43

progress

27:44

I don't know if you any of you had a

27:45

chance to look at the first quarter

27:46

results but Geico has had a very good

27:49

first quarter coming in at a combined

27:51

ratio of 93 and change which means a

27:54

margin of six and change

27:56

even though that's very good it's not

27:58

something we can take to the bank

28:00

because they're two unusual items that

28:03

contributed to it firstly we've had what

28:06

is called prior year Reserve releases

28:08

we've reduced results for the previous

28:10

years and that contributed to it and

28:13

secondly every year the first quarter

28:14

tends to be a seasonally good quota for

28:17

auto insurance writers

28:19

so if you just for those two factors my

28:22

guess is the end of the year Geico will

28:24

end up with a combined ratio just south

28:27

of 100 as opposed to the Target they're

28:30

shooting for 96.

28:32

I hope they reach the target of 96 by

28:35

the end of next year

28:37

uh and but instead of getting too

28:40

excited about it I think it's important

28:41

to realize that even if we reach 96 it

28:44

will come at the expense of

28:46

having lost policy holders there is a

28:49

trade-off between profitability and

28:52

growth and clearly we have we're going

28:54

to emphasize

28:56

profitability and not growth and that

28:58

will come at the expense of policyholder

29:00

so it will not be until two years from

29:02

now that we'll be back on track fighting

29:04

the battles on both the profitability

29:07

and the growth front

29:09

okay yep

29:11

moving to BNSF

29:15

I'll start again by expressing great

29:17

pride in the BNSF team we have an

29:19

exceptional group of led by Katie and

29:22

and her managers that uh show up every

29:25

day to do great work on on the railroad

29:27

at the same time they would be the first

29:29

to acknowledge there's more to be done

29:31

there uh the specific reference to

29:34

Precision scheduled railroading uh the

29:38

other large railroad Class A uh on the

29:42

railroads in the in the U.S follow that

29:44

and including the two in Canada we're

29:47

well aware of what they're doing and and

29:49

obviously pay close attention to their

29:52

operating Matrix and our team strives

29:54

every day to be more efficient obviously

29:56

I would say we balance it with the needs

29:59

of our customers

30:00

if I look back to

30:03

pre-2022 so we look at the three-year

30:06

period of 2019 2020 2021 the BNSF team

30:12

made significant progress on their

30:14

efficiencies and and and delivering

30:17

overall value back to the shareholders

30:19

and and to their customers and at the

30:22

same time maintaining a very safe

30:23

railroad for our employees so we're

30:25

making excellent progress that didn't

30:28

stop last year they made great progress

30:30

again the reality in 2022 as we did go

30:34

through a period of time where we had to

30:36

call it reset the railroad we came out

30:39

of the pandemic there were the supply

30:41

challenges we had certain other issue

30:43

labor issues and other things going on

30:45

at the port and the reality is our team

30:48

prioritized getting the railroad back in

30:51

place for the long term not a short-term

30:53

focus on hitting certain operating

30:55

metrics in in

30:57

2022 we're well aware of where we were

31:00

relative to those metrics but the real

31:01

Focus was to get the railroad reset in a

31:05

in a safe manner such that we could

31:06

deliver long-term value and long-term

31:09

service to our customers and and that's

31:12

really what we'll continue to see with

31:13

that team they'll be continual progress

31:15

there'll be years where it's not as

31:18

quickly or even we go backwards but over

31:21

the long term we'll be very we'll see

31:24

exceptional results from from that team

31:26

and and couldn't be more proud that we

31:28

have that asset thank you

31:30

I wouldn't I would just

31:34

well he deserves but both of them

31:36

deserve Applause uh the I would like to

31:38

add one thing

31:48

the

31:50

and Geico

31:52

dot Combs

31:55

was Jake's Choice my choice

31:58

go back to guy at Geico

32:01

to work on the problem of matching

32:04

rate to risk which is what

32:07

insurance is all about

32:09

and uh

32:12

he arrived

32:13

with exquisite timing right before the

32:16

pandemic broke out and all kinds of

32:18

things changed but Todd is doing

32:21

a wonderful job at Geico and and he

32:25

works closely

32:26

uh with the Jeep because he saw his home

32:31

and all Mulligan comes back here and we

32:33

we get together on the weekend

32:35

sometimes too so uh

32:38

that's been a

32:40

a remarkable com accomplishment under

32:42

difficult circumstances and he's not all

32:45

the way home but he said he just made a

32:47

very very big change

32:50

uh in multiple ways at Geico and then

32:54

one other thing I would like to mention

32:56

there have been a lot of public

32:57

companies created in the last decade

33:02

thereabouts in insurance

33:05

and uh there's none of them

33:09

that we would

33:10

like to own and and they always started

33:14

out

33:14

in their perspective saying this is a

33:16

tech company not an insurance company of

33:18

course we're of course they're in a tech

33:20

company with it everybody's

33:22

whether they're in insurance or a lot of

33:25

other places are using the facility but

33:28

you still have to properly match rate to

33:30

risk and uh uh that they invariably have

33:36

reported a huge losses they've eaten up

33:38

capital

33:39

but there's been one company that nobody

33:42

has generally heard of there's only been

33:43

one that I know of

33:45

company started in the last 10 years

33:48

that has been a overwhelming success and

33:53

that's a company that Ajit

33:55

and four people who join with them set

33:58

to develop a new business

34:00

it's called Berkshire Hathaway specialty

34:03

it now has

34:05

yeah

34:06

what's the float a Jeep coming up to 12

34:10

billion yeah yeah we've we've built more

34:13

slope than probably all these companies

34:15

combined

34:17

we've now

34:19

it it's cost us essentially nothing in

34:22

terms of an underwriting loss

34:24

the four people have turned in I don't

34:26

know 1500 around the world we we took on

34:29

the whole industry and we brought

34:32

some unique

34:35

talent and the four people that came and

34:38

now have like you said 1500 or so

34:40

worldwide and we brought capital and we

34:43

brought

34:45

okay

34:46

capabilities that really only Berkshire

34:50

could Supply so it was the it was the

34:53

combination

34:55

of of

34:56

brains and talent and energy and money

35:00

and no one has really successfully

35:03

entered this

35:04

this space

35:06

plenty of people in the space who didn't

35:08

like us coming

35:10

and we did it without it

35:13

costing us a dime of Entry

35:15

and it's been unmatched by any of the

35:19

public companies that went public

35:21

and people who've seen us do it but they

35:25

can't duplicate it and that's

35:27

what Vegeta's created and Peter Eastwood

35:31

has led this group Berkshire Hathaway

35:33

specially and uh it's just remarkable so

35:37

anyway with that let's go on yeah we'll

35:40

give him a hand for that

35:42

[Applause]

35:42

[Music]

35:46

okay let's go to section two

35:55

hi Charlie

35:57

I'm

35:58

Lorenz I'm Karen here

36:05

your priorities are right

36:08

yes I have questions on AI and Robotics

36:12

here's my questions as Ai and Robotics

36:16

continue to advance what do you believe

36:19

will be the positive and an active

36:21

impact of this technology

36:24

on both the stocks markets and society

36:27

as a whole and are there any specific

36:30

Industrials and companies that you

36:32

believe will be most impacted

36:39

Karen I thank you for asking Charlie

36:41

that question

36:51

well

36:54

if you went into byd's factories in

36:58

China you would see robotics going in

37:01

the unbelievable rate

37:04

so we're gonna see a lot more robotics

37:07

in the world

37:08

I am personally

37:10

skeptical of some of the hype that has

37:13

gone into artificial intelligence

37:15

I think old-fashioned intelligence works

37:18

pretty well

37:21

[Applause]

37:27

there won't be a

37:28

there won't be anything in AI

37:31

that replaces the gene

37:33

the

37:34

state that unqualifiedly they can do

37:37

amazing things uh

37:41

you know Bill Gates brought me out of

37:43

them out

37:45

the latest maybe not the latest version

37:48

but one he thought maybe I could handle

37:50

which

37:52

has to be careful with me in terms of

37:54

leading me too fast uh and it did it did

37:58

these remarkable things uh it didn't but

38:01

it it it couldn't tell jokes Bill told

38:04

me that ahead of time and it prepared me

38:06

and it it just isn't there but you know

38:10

things like

38:11

checking all the legal opinions on you

38:14

know

38:14

since the beginning of time and

38:16

everything and eliminating all the

38:19

sided I mean it can do all kinds of

38:21

things and

38:24

when something can do all kinds of

38:25

things

38:26

I get a little bit worried and because I

38:30

know we won't be able to uninvent it and

38:33

uh

38:34

you know we did invent

38:37

uh for very very good reason

38:40

the atom bomb and in World War II and it

38:45

was you know it was enormously important

38:48

that we did so

38:50

but

38:52

is it good for the next 200 years of the

38:54

world that that the ability to do so has

38:57

been Unleashed we didn't have a choice

39:00

but uh uh

39:03

when you start something well Einstein

39:05

said after

39:07

this has changed everything in the world

39:09

except how men think

39:11

and uh

39:13

I would say the same thing May

39:16

not not the same thing I don't mean that

39:19

but I mean they with with AI

39:22

uh it it can change everything in the

39:25

world

39:27

except

39:28

how men think and behave and

39:31

that's that's a big step to take

39:34

it's a good question and it's the best

39:37

answer we can give Becky

39:40

this question comes from Tom Seymour he

39:43

says the first sentence of a recent

39:45

Financial Times article read Charlie

39:48

Munger has warned of a brewing storm in

39:51

the U.S commercial property Market with

39:53

American Banks full of what he said were

39:55

bad loans as property prices fall please

39:58

elaborate on what's going on in

40:00

commercial real estate how bad will the

40:03

losses be and what sectors or

40:05

geographies look particularly bad I'll

40:07

just add an addendum from another viewer

40:09

who wrote in and wanted to know if

40:10

Berkshire would be more active in

40:12

commercial real estate as a result

40:15

okay

40:19

well berkshire's never been very

40:21

important very active in commercial real

40:24

estate

40:25

it it works better for taxable investors

40:28

than it does for corporations tax the

40:30

way Berkshire is

40:32

so

40:33

I I don't anticipate huge

40:36

effects on Berkshire but I do think that

40:39

the hollowing out of the downtowns

40:42

in the United States and elsewhere in

40:44

the world is going to be quite

40:46

significant and quite unpleasant

40:48

I think the country will get through it

40:50

all right

40:51

but as they say it will awfully it will

40:54

often involve a different set of owners

40:58

yeah in the buildings the buildings

41:00

don't go away but the owners do well but

41:04

but most people like to buy with

41:06

non-recourse in in real estate and and

41:10

one time I asked Charlie there was some

41:13

real estate guy we were talking to him

41:15

and you know how do they decide how much

41:17

they can a building like this is worth

41:19

and it's the answer is it's whatever

41:21

they can borrow without signing their

41:23

name and if you look at

41:27

real estate generally you'll understand

41:29

what the phenomena that's happening if

41:31

you do if you remind yourself that

41:33

that's the attitude of most people that

41:36

have

41:37

uh

41:39

become big in in the real estate

41:41

business and and uh

41:43

and it does mean that the lenders are

41:46

the ones that

41:48

got the property and of course they

41:49

don't want the property usually so then

41:51

the real estate operator comes on

41:54

negotiating with them and and the banks

41:57

tend to

41:58

you know

41:59

extend and pretend and there's all kinds

42:02

of activities that arrive out of out of

42:06

commercial real estate development which

42:08

occurs on a big big scale but it all has

42:12

consequences and and I think we're

42:15

we're about

42:16

well we are starting to see the

42:18

consequences of people who could borrow

42:21

it

42:22

two and a half percent

42:24

find out it doesn't work at current

42:26

rates and they hand it back to somebody

42:28

that gave them all the money they needed

42:30

to build it

42:31

done

42:33

Charlie's had more experience than

42:34

really Charlie got it started in real

42:36

estate though I mean Charlie Charlie

42:38

yes it

42:41

it's difficult

42:44

I like what we do better

42:48

well as Charlie once said to me when I

42:51

was leaving his house a few months ago I

42:54

was visiting him we talked for a couple

42:56

of hours and I said to Charlie as I left

42:58

I just it wasn't anybody else in the

43:00

house and I said except

43:02

one daughter and I said uh Charlie hello

43:05

I'll just keep

43:07

doing what we've been doing and

43:10

Charlie said without looking up or

43:12

pausing a second he said that's all you

43:14

know how to do Warren yeah

43:19

he was right too ah station

43:22

three is it

43:26

hi uh my name is salazi I'm from Santa

43:30

Santa Clara California and my question

43:33

is to Charlie and Warren given the rise

43:36

of disruptive technologies that can

43:39

improve productivity significantly and

43:42

AI being one of them how do you envision

43:46

the future of value investing in this

43:48

new era and what adaptations or new

43:52

principles do you think investors should

43:54

adopt and any recommendations for

43:56

investors to remain successful in this

43:59

rapid changing landscape thank you

44:04

take that one I think value investors

44:08

are going to have a harder time now that

44:10

there's so many of them competing first

44:14

a diminished bunch of opportunities

44:17

so my advice to Value investors is to

44:20

get used to making less

44:24

and

44:25

Charlie was been telling me the same

44:27

thing the whole time we've known each

44:29

other we we get along wonderfully

44:31

because we are making less

44:33

yeah well but that's because that mostly

44:36

I think is because it's larger we were

44:38

younger we never thought we could manage

44:40

508 billion no one or five yeah but

44:45

I I would argue that uh that uh

44:50

there's gonna be plenty of opportunities

44:53

and part of the reason they're going to

44:55

be plenty of opportunities

44:57

the tech doesn't make any difference or

44:59

any of that I mean if you look at how

45:00

the world changed in them

45:02

in the years since 1942 when I started

45:05

to say well

45:07

how do the kid that doesn't know

45:08

anything about airplanes it doesn't know

45:09

anything about androgens and cars and

45:11

doesn't know anything about them

45:13

electricity and all that but that really

45:16

isn't the that's not there the world

45:18

changing doesn't or new things coming

45:21

along don't take away the opportunities

45:22

what gives you opportunities is other

45:25

people doing dumb things and uh is that

45:31

[Applause]

45:33

and

45:35

I would say

45:37

that

45:38

well the 58 years we've been running

45:40

Berkshire I would say there's been a

45:42

great increase

45:44

uh and the number of people doing dumb

45:47

things and they do big dumb things and

45:49

the reason they do it to some extent is

45:51

because they they can get money from

45:53

other people so much easier

45:56

than when we started so you could start

45:59

10 or 15 dumb insurance companies in the

46:02

last 10 years and you could become rich

46:05

uh if you were a Droid at it whether the

46:09

business succeeded it or not and the

46:11

underwriters got paid and the lawyers

46:13

got paid and that creates

46:17

if that's not on a large scale which it

46:20

couldn't be done what 58 years ago you

46:23

couldn't get the money

46:24

to do some of the dumb things that we

46:27

wanted to do fortunately uh and uh so

46:32

I know I think that

46:34

investing has disappeared so much from

46:38

this huge

46:40

capitalistic Market

46:42

that anybody can play in

46:44

but the big money is in selling other

46:47

people ideas that isn't outperforming in

46:50

outperforming and

46:52

I think that

46:54

I think if you don't run too much money

46:57

which we do but if you're running small

47:00

amounts of money

47:01

I think I think the opportunities

47:04

will be greater but then Charlie and I

47:07

have always differed on this subject he

47:09

he likes to tell me how gloomy the world

47:11

is and I I like to tell them we'll find

47:14

something and and so far we've both been

47:16

kind of right

47:20

on that or not

47:26

there

47:28

there is so much money now in the hands

47:30

of so many smart people

47:33

all trying to outsmart one another

47:36

and not promote one another getting more

47:38

money out of other people

47:39

and

47:41

it's a radically different world from

47:44

the world we started in

47:48

I suppose it will have its opportunities

47:50

but

47:51

it's also going to have some unpleasant

47:53

episodes but they're trying to outsmart

47:55

each other

47:57

in arenas

47:59

you don't have to play I mean if you

48:02

look at that Government Bond Market I

48:04

feel the treasury ball Market I mean

48:06

you've got this one bill that's out of

48:08

line with the others when we were over

48:09

three billion of us the other day and

48:11

and but

48:13

those are people the world is

48:16

overwhelmingly

48:19

short-term focused and if you go to an

48:23

investor relations call they're all

48:25

trying to figure out how to fill those

48:27

out of sheet to show the earnings for

48:29

the year and the management is

48:30

interested in feeding them expectations

48:32

that will slightly be beaten I mean that

48:35

that is the world was made to order for

48:38

anybody that's trying to think about

48:39

what you do that should work over five

48:42

or ten or Twenty Years and uh

48:46

I I just think that

48:48

I would love to be born today and go out

48:52

with not too much money and hopefully

48:54

turn it into a lot of money

48:56

but

48:57

and Charlie would too actually just like

49:00

he he would find something to do I will

49:03

just guarantee you uh and it wouldn't be

49:05

exactly the same as before but he would

49:08

have a big big big

49:10

pile I would not like the thrill of

49:13

losing my big pile into a small pie

49:19

but we like my big piles is the Way It

49:21

Is Well I like

49:23

we agree on that incidentally okay we do

49:26

you're one of the most extreme lovers of

49:29

the big pile

49:32

Becky

49:34

this question is for both Warren and a g

49:37

it comes from Jason ploner in Livingston

49:40

New Jersey he says in 2016 you entered

49:43

into a very unique transaction with AIG

49:46

where you assumed up to 20 billion

49:48

dollars of liabilities in exchange for

49:50

about 10 billion dollars up front can

49:53

you please provide us with an update on

49:54

this transaction in light of the

49:56

increase in interest rates and then in

49:58

Tokyo just a few weeks ago you talked

50:00

about the risks of banks with assets

50:02

that were susceptible to Rising interest

50:04

rates any insight as to how Berkshire

50:07

liabilities are susceptible to duration

50:09

would be appreciated is that direction

50:11

to Vegeta or me or what both okay let me

50:14

introduce my one thing and well but

50:17

Egypt is the key to this he's the one

50:19

that put the deal together but we got

50:21

handed 10 billion we'll say uh uh

50:26

and but we weren't restricted to putting

50:29

that into into bonds uh so

50:33

what the exact interest rate interest

50:36

rates affect us to some degree maybe in

50:38

terms of the terms uh of the deal we did

50:42

with AIG or anybody we would do a

50:44

similar deal with like that

50:46

but we don't have we don't have to put

50:48

it in matching bonds or anything of the

50:50

sort it goes into a general pool of

50:52

assets which we manage and the assets

50:56

you know then well the liquid assets now

50:58

are 130 billion plus and that but it

51:01

goes in so it you know it it it is not

51:05

set aside in some little compartment

51:07

like people like to think uh now any any

51:10

other insurance no other insurance

51:11

company could do it but they can't think

51:14

that way uh they aren't even used to

51:17

thinking that way but they can't think

51:18

that way because they don't have our our

51:20

balance sheet we account for 26 or

51:22

something like that of the net worth of

51:25

all property casualty companies in the

51:26

United States uh so

51:29

uh so far

51:32

uh the payments that we have had to make

51:36

have run modestly and Ajit will correct

51:40

me on this if I'm wrong because he paid

51:42

a lot of attention over the the amount

51:45

we have had to pay has runs slightly

51:48

below

51:49

the amount we anticipated having to pay

51:52

in terms of our share of the losses uh

51:55

but

51:56

it served aig's purposes

51:59

it came to us with

52:02

where we are in a unique position

52:04

there's nobody else that was able to

52:07

write that just like when when we took

52:09

on the Lloyds I mean Lloyd's said there

52:13

was no choice other than Berkshire

52:14

Hathaway when they they essentially

52:18

resuscitated uh their Market

52:21

by laying off a lot of liabilities on on

52:26

Berkshire Hathaway so

52:29

um we won't see those deals very often

52:31

if if they're for 500 million or

52:33

something like that somebody else will

52:34

go in there and offer more money and

52:37

everybody's looking for money in Wall

52:39

Street but if they start talking with

52:42

the deal like the AIG deal there isn't

52:44

any other stop now

52:46

uh correct me on all my numbers there a

52:49

jade

52:50

no um

52:52

one way to look at how the deal is

52:54

performing since we did the deal is at

52:57

the point we in time when we did the

52:58

deal we had made certain projections of

53:01

how much we will pay out each year

53:05

and what we do is Monitor what the

53:08

actual payments are since the Inception

53:10

of the deal and how does that compare

53:12

with what we expect it to pay out

53:14

as Warren mentioned these two numbers

53:17

are very close to each other more

53:19

specifically the actual payouts are 96

53:22

percent of what we had projected to pay

53:25

out at this point in time

53:27

which is good but not great we are still

53:30

ahead of the curve if we do end up

53:32

paying out less than what we projected

53:35

Not only would we have borrowed money at

53:38

a very attractive rate meaning less than

53:40

four percent significantly less than

53:41

four percent in addition to that we

53:43

would have made a fee which in 1990

53:46

which in 2015 dollars would be a million

53:49

dollars so if you would have borrowed

53:50

money at less than four percent and we

53:53

would have made a million dollar fee

53:54

which is slightly more than what we were

53:57

expecting to do so net net we're very

54:00

happy with the deal we're happy we did

54:01

it uh but the game is not over the

54:05

taught liabilities are coming down the

54:07

pike every second day so I'm cautiously

54:10

optimistic that the deal will work out

54:12

better than what we expected it to work

54:14

out well the really interesting thing is

54:16

that

54:18

in within Bircher the Casualty Insurance

54:21

companies have four times as much

54:24

stockholder Capital between behind each

54:28

dollar of Premium volume

54:30

four times

54:32

normal

54:33

and of course we see the big deals who

54:36

would you trust if you had a big

54:38

liability you wanted to dump on somebody

54:41

and we have 25 or

54:45

billion or more

54:47

coming in from things other than

54:49

insurance

54:52

uncorrelated to Insurance every year

54:54

with no obligations we don't pay

54:56

dividends if you paid evidence and

54:58

you know and you cut your dividend try

55:01

going around trying to write insurance

55:02

the next day I mean it's a business

55:04

where the people are counting on you to

55:06

pay

55:07

and

55:08

when we take that 10 billion we don't

55:11

agree to put it in five-year bonds and

55:14

10-year bonds we don't even think that

55:16

way and the people who do business with

55:19

us know that they have somebody like

55:22

nobody else on those and it's going to

55:24

be able to pay 10 billion you know if no

55:27

matter what happens to the economy so

55:30

it's not only the presence of enormous

55:32

strength in the insurance companies this

55:34

is the fact we got all these earnings

55:36

that essentially come in every month and

55:39

we don't have we don't have a lot of

55:41

debt I mean we we have debt at the

55:42

railroad and the energy level but but in

55:46

terms of the rest of the operation uh

55:50

and and we don't guarantee that that but

55:52

but it's probably good uh

55:55

and it's there just isn't another

55:57

Berkshire and uh and the Jeep recognizes

56:01

that when he's negotiating so does the

56:04

other party if sums are big enough

56:06

there's all kinds of people that love to

56:08

get 500 million or 300 million and

56:10

they'll and they can

56:12

they may think in terms of lending it

56:14

out because that's what their insurance

56:16

companies can do at a somewhat higher

56:17

rate but that is not a game we play in

56:19

and we don't have any interest in

56:22

playing in them

56:23

okay

56:24

station four

56:27

hello I'm Marvin Blum an estate planning

56:31

lawyer from Fort Worth Texas home to

56:33

many of your companies in fact Warren I

56:37

met you at the memorial for our beloved

56:40

Paul Andrews who was manager of TTI

56:46

I'd like to get your thoughts on a

56:48

widespread problem in the world of

56:51

Estate Planning and that's the failure

56:53

of most parents to prepare the Next

56:56

Generation for the inheritance coming

56:59

their way

57:01

in particular if the estate includes a

57:04

family business most parents fail to do

57:08

business succession planning to plan for

57:10

who will run the business on the day

57:13

when not if the founder is no longer

57:17

there to run it the kids aren't prepared

57:20

unlike uh King Charles the the other

57:24

King Charles not King Charlie Munger who

57:28

has been preparing for his job as king

57:30

of England now for more than 70 years

57:34

I sometimes describe the situation like

57:36

this picture a football game at one end

57:40

of the field is a quarterback

57:42

he has great skills he throws a

57:44

beautiful pass to the other end of the

57:46

field

57:47

and at the other end of the field are

57:49

the receivers

57:51

they've never been to a practice they

57:53

don't know the rules of the game

57:55

they don't know how to work together as

57:57

a team they're Clueless

57:59

so the quarterback is the patriarch and

58:02

The Matriarch the football is the

58:04

inheritance or the family business

58:07

and the receivers are the kids

58:10

that they're going to catch the football

58:12

and go score a touchdown probably only

58:15

around 10 percent I've got the picture

58:17

on on the question

58:22

no

58:23

they uh

58:26

I probably observed as many just because

58:28

of my age and to some extent because of

58:30

things like the giving Pleasures I

58:32

probably observed

58:33

as many

58:35

particularly wealthy families the

58:37

problems and they all are

58:39

they get very particular

58:41

uh to the family and uh uh

58:45

and

58:46

uh in my family

58:49

I do not sign a will

58:52

until my three children

58:54

have read it

58:56

understand it and made suggestions now

59:00

my children are in their 60s

59:02

and that would not have been a great one

59:04

success if I'd done the same thing as

59:07

their 20s it depends on the Family

59:09

it depends on how the kids feel about

59:11

each other there's all kinds of things

59:13

depends on the kind of business you have

59:15

so there's a there's a thousand

59:17

variables but I do think

59:20

that it's

59:21

if the children are grown and when the

59:25

will is read to them it's the first

59:26

they've heard about what the deceased

59:29

thought about things

59:32

the burns have made a terrible mistake

59:34

and uh

59:36

people

59:38

people who well I've run into all kinds

59:42

of situations and some people don't tell

59:44

their children anything and some of them

59:46

try and get them to bend to their will

59:48

by using their their own personal World

59:51

they make a million mistakes

59:53

and that's when you don't get to correct

59:56

uh

59:59

and certainly in my well Charlie's had a

1:00:01

lot of experience too well at Berkshire

1:00:03

we have a simple

1:00:05

problem of

1:00:06

uh

1:00:08

estate planning just hold the goddamn

1:00:11

stock

1:00:12

well

1:00:15

but that doesn't fit everybody Charlie I

1:00:18

mean uh you know if it's 95 percent

1:00:24

I don't think it necessarily

1:00:26

I don't know necessarily whether we have

1:00:28

billions of dollars you want to leave it

1:00:30

to your all your children I mean that's

1:00:31

something that's another question but if

1:00:33

you're going to play places somewhere I

1:00:35

just as soon as Berkshire stock is down

1:00:37

oh you're solving the investment problem

1:00:40

yeah but you've got the personal problem

1:00:41

of the fact that when there were four

1:00:43

one of the kids pulled the other kids

1:00:46

uh cat's tail or something like that I

1:00:49

mean you're dealing with human beings

1:00:52

and the biggest thing you want

1:00:54

is you want

1:00:56

you want your children to get along and

1:00:58

you'll want that all through your life

1:01:00

and the estate isn't the only place

1:01:03

where you can mess that up but the it's

1:01:06

a place where you it's a very easy I

1:01:09

mean I know a number of cases where the

1:01:11

people did not know what was in the will

1:01:13

whether we're using something's involved

1:01:15

and you know within about 15 minutes

1:01:17

each one of them had a lawyer and you

1:01:19

know they don't get a long sense of it

1:01:21

it's it's a it's important to handle it

1:01:24

right and uh uh it's important if you

1:01:29

want your kids

1:01:31

do have a certain value certain values

1:01:35

it's important that you live those

1:01:37

values it's important that you talk

1:01:39

about it to them or

1:01:42

they're going they're learning from you

1:01:45

from the day they're born what you're

1:01:48

really like and uh don't think that a

1:01:52

cleverly drawn will will substitute for

1:01:56

your own behavior in teaching your kids

1:01:58

the values you hope that they will have

1:02:01

and then your will should be in

1:02:04

conjunction with that it should start

1:02:06

expressing and they grow older and then

1:02:08

they they they learn to

1:02:11

they them they learn to

1:02:14

pass along their values in connection

1:02:17

with the size of the state if there's

1:02:19

Family Farms it's one thing if it's a

1:02:21

bunch of marketable Securities is

1:02:22

something else but I know in one

1:02:24

instance

1:02:25

by particularly Rich fellow that once a

1:02:30

year

1:02:30

he'd get those kids together and have a

1:02:33

dinner and do all kinds of things to get

1:02:36

them to sign their income tax returns in

1:02:39

blank because he didn't want them to

1:02:40

know how much money they had and

1:02:42

everything well

1:02:44

if that that isn't going to work I mean

1:02:47

I don't know why necessarily real words

1:02:48

with him but uh

1:02:50

if you want

1:02:52

you know about Charlie and I've said it

1:02:54

you know if you want to figure out how

1:02:56

you want to live your life who you write

1:02:58

your obituary and reverse engineer it I

1:03:00

mean you know and uh and Paul Andrews

1:03:04

incidentally who you mentioned that TTI

1:03:06

lived as great a life as anybody I've

1:03:08

known and uh he he thought about these

1:03:12

problems

1:03:13

he came to me

1:03:16

he was 61 I think had all the money Way

1:03:20

Beyond what he needed didn't care about

1:03:22

he'd like to give it to give it to

1:03:24

people he had all kinds of good things

1:03:25

he wanted to do and he said for a year

1:03:27

I've been worried about my business TTI

1:03:30

and he said I've got all the money I

1:03:33

need the families all the money that I

1:03:34

need but what do I do with the business

1:03:36

these people have have helped me

1:03:39

throughout my life and he says I could

1:03:41

sell it to a competitor and if I sold it

1:03:43

to a competitor they'd fire my people

1:03:46

and keep their people when they put it

1:03:48

together and if I if I sell it to a

1:03:51

private Equity Firm or somebody they'll

1:03:53

they'll be figuring their exit strategy

1:03:55

as they sign the sign the papers and he

1:03:58

said

1:03:59

so I've been thinking about a year and

1:04:02

uh he said it isn't that you're such a

1:04:04

great guy he says it's just you're the

1:04:06

only one left

1:04:09

and we bought it and we lived happily

1:04:11

ever after and uh that was a man that

1:04:15

knew what life was about so with that

1:04:18

let's go on to Becky

1:04:20

[Applause]

1:04:25

uh this question comes from Don

1:04:27

glickstein in Seattle he says Warren has

1:04:30

criticized Norfolk Southern's handling

1:04:32

of its train derailment yet has been

1:04:34

silent about BNSF bnsf's conduct a

1:04:38

federal judge ruled in March that BNSF

1:04:40

intentionally and illegally violated an

1:04:43

easement agreement on tribal land in

1:04:45

Washington state by transporting long

1:04:48

trains of crude oil the same month the

1:04:51

judge made his ruling a BNSF Train

1:04:53

derailed on tribal lands spilling oil in

1:04:55

an environmentally sensitive area what

1:04:58

is Warren doing to ensure that BNSF and

1:05:00

other Berkshire subsidiaries fulfilled

1:05:03

their ethical responsibilities he says

1:05:05

he's been a Berkshire owner for more

1:05:06

than two decades and he's concerned that

1:05:08

Berkshire has no systems to identify and

1:05:11

dress what he calls reprehensible

1:05:13

Behavior at BNSF and other subsidiaries

1:05:15

Greg sure

1:05:18

so the uh it it is a valid issue that

1:05:23

our team obviously has been dealing with

1:05:25

at BNSF we did move uh crude across that

1:05:29

tribal land we had an agreement that

1:05:33

allowed us to move X number of of uh

1:05:37

units per day

1:05:40

and we did breach it we went over it

1:05:42

there's uh there was some fundamental

1:05:44

breakdowns there in that our team didn't

1:05:46

understand the number of of trains that

1:05:49

they could move we have had significant

1:05:52

discussions with the tribe looking to

1:05:55

resolve the issue recognizing uh we

1:05:58

obviously been benefited from moving

1:06:00

those trains and those type of

1:06:02

discussions will continue

1:06:05

um I would say there's Lessons Learned

1:06:08

there that we have to when we make a

1:06:09

commitment understand what that

1:06:11

commitment is and and live by it or

1:06:13

don't assume we can just

1:06:17

move our trains as we wish or the the

1:06:19

cargo as we wish we have to respect

1:06:21

those agreements so there's a there's

1:06:23

been a moment learned there but at the

1:06:24

same time we've taken it very seriously

1:06:26

and attempted to reach a resolution

1:06:29

there and at some point I I hope we do

1:06:32

come to a true resolution that's fair

1:06:34

both to the tri-band to BNSF on the

1:06:39

derailment side we did have a an issue

1:06:42

around the track derailed we worked very

1:06:45

closely with the tribe to mitigate that

1:06:49

issue instantly where at least over a

1:06:52

very reasonable period of time they were

1:06:55

very responsive our team was very

1:06:57

responsive and there were really no

1:07:00

long-term environmental impacts to to

1:07:03

that to that's Bill and as our teams

1:07:06

highlighted in other comments obviously

1:07:08

derailments do occur in the industry we

1:07:11

take them incredibly serious they're not

1:07:13

all hazardous but irrespective of that

1:07:15

we're constantly looking at how do we

1:07:17

prevent them

1:07:18

how do we detect them when we

1:07:21

potentially have one that's going to

1:07:23

occur and what do we do with our trains

1:07:25

and then ultimately it comes down to

1:07:27

responding properly because they will

1:07:30

occur and I think we have an incredibly

1:07:32

dedicated team that's always ready to

1:07:34

respond to the communities they're

1:07:36

impacting

1:07:39

there are derailments how many how many

1:07:42

a year yeah well there's uh a thousand

1:07:45

plus in the industry the the yeah yeah

1:07:48

it's you start hauling

1:07:51

right and we're a common carrier we and

1:07:54

we take heavy very heavy Freight and we

1:07:56

take them at 100 degrees when it's the

1:07:58

weather and it's we take it at zero and

1:08:01

and we go around curves and we have

1:08:04

grades and uh even a one percent rate if

1:08:08

you're going down

1:08:09

down a hill with I don't know how much

1:08:13

weight behind you I mean there's a lot

1:08:15

of railroading is not an easy business

1:08:17

and of course the systems

1:08:20

were designed you know in the and

1:08:23

basically in the in the late

1:08:26

1800s amid the late 1800s and we have 22

1:08:31

000 I think it is miles of track and

1:08:33

that doesn't count sightings and some

1:08:34

other things it is not an easy business

1:08:37

we'll make mistakes our job

1:08:40

we're not making a mistake because we

1:08:42

have a derailment you're gonna we will

1:08:43

have the derailments 10 and 20 years or

1:08:45

30 years from now I mean that but we and

1:08:49

we have to carry certain products we

1:08:52

wish we didn't have to carry we're a

1:08:53

common carrier

1:08:55

do we like carrying chlorine and ammonia

1:08:57

and all no but they're going to move

1:09:00

from one place to another in this

1:09:02

society and we are a common carrier and

1:09:05

uh we load them and uh if they select

1:09:10

our railroad but

1:09:12

we are better than we used to be but we

1:09:14

got a long way to go I didn't was that a

1:09:16

fair enough statement absolutely yeah

1:09:18

okay station five

1:09:23

hi Mr Warren and Miss Manga my name is

1:09:28

from China

1:09:30

company and first of all I'm so excited

1:09:34

and very honored to be here today and my

1:09:37

question is with more and more people

1:09:39

focusing on environmental competition

1:09:42

protection and the government supporting

1:09:45

the new energy industry as well so what

1:09:48

are your thoughts on the continued

1:09:51

development of new energy how made the

1:09:54

new energy firm achieve better

1:09:56

development in future

1:09:59

yeah well Greg I think it's the best

1:10:01

answer that because he

1:10:03

since we bought a company called

1:10:06

Mid-American but now called Berkshire

1:10:08

Hathaway energy but he's been talking

1:10:11

about a yearly preparing reports hoping

1:10:14

that we can help solve a number of the

1:10:17

problems and we probably spent more

1:10:18

money than any utility I'm I would guess

1:10:21

in the United States absolutely and uh

1:10:24

and we've just crashed the surface but

1:10:27

it is not easy

1:10:29

when you cross state lines I mean it's

1:10:31

uh uh you've got different jurisdictions

1:10:34

and we should

1:10:36

this country should be ahead of word is

1:10:39

in terms of transmission and uh

1:10:44

we have been the biggest factor in

1:10:45

helping that uh but why don't you tell

1:10:48

them a little bit about it sure things

1:10:50

weren't so there's no question there's

1:10:53

an energy transformation going on around

1:10:55

the globe and and as Warren touched on

1:10:58

in the U.S and in some ways I would hope

1:11:01

in here in the U.S it would be

1:11:04

um we'd at least have a a clear plan

1:11:06

Across the Nation as to how to uh

1:11:09

approach that but the reality is it is

1:11:11

state by state uh with some exceptions

1:11:14

but so as a result when you think of

1:11:17

Berkshire Hathaway energy

1:11:19

we we own uh three U.S utilities there

1:11:24

and and they'll participate in multiple

1:11:26

States but they're developing plans

1:11:28

state by state and then trying to

1:11:30

integrate them across the the various

1:11:33

States the the opportunities are

1:11:35

significant because there is a

1:11:37

transformation going on uh We've

1:11:40

outlined our goal on on where we're

1:11:42

going relative to carbon at bhe where

1:11:45

they'll buy 20 30 reduce their carbon

1:11:48

footprint by uh 50 relative to 2005 so

1:11:53

that's the Paris Accord and the standard

1:11:55

they want to hold the the utility

1:11:57

industry or the utility companies do and

1:12:00

and we're well on that path but to

1:12:02

achieve it is a true Journey uh I've

1:12:04

often talked to Warren when we bought

1:12:05

Pacific Corp back in the mid 2000s we

1:12:10

immediately recognized uh to build a lot

1:12:13

of renewable energy like we've been

1:12:15

doing in the midwest in Iowa but that

1:12:18

was basically in a single stay 8 now

1:12:20

Pacific Corp were in Six States we

1:12:23

started that in the back in the mid

1:12:24

2000s here we are and we laid out a

1:12:27

great transmission plan here's how we're

1:12:29

going to build it here's how we're gonna

1:12:31

uh effectuate it and all the benefits

1:12:34

for our customers over that period of

1:12:35

time here we are in 2023 and we have a

1:12:40

little more than a third of that at the

1:12:42

time it was a six billion dollar

1:12:43

transmission project today we have a

1:12:46

little more than a third of it built and

1:12:48

we've spent probably closer to seven

1:12:50

billion dollars and it's the right

1:12:52

outcome it's still a great outcome for

1:12:54

our customers but that transmission you

1:12:56

absolutely as part of the transformation

1:12:58

you absolutely have to build it to

1:13:01

remove to move all that renewable energy

1:13:03

and that's sort of the complexity Warren

1:13:06

was highlighting it is a uh you you

1:13:09

can't just wake up one day and and solve

1:13:11

this problem you start with transmission

1:13:12

and then you build the resources but at

1:13:16

that same same company and if we look at

1:13:18

what we're doing across VA G Energy and

1:13:21

that energy transformation

1:13:23

we have 70 billion dollars of known

1:13:26

projects that are really required to

1:13:30

properly serve our customers and Achieve

1:13:32

that type of energy uh transformation

1:13:35

across those utilities and that and

1:13:37

that's in the coming next in the coming

1:13:39

10 years so

1:13:41

um we have a team that's absolutely up

1:13:43

to the challenge they're delivering on

1:13:44

their commitments and it's a very uh

1:13:47

very good business opportunity for for

1:13:50

each of our companies and for our

1:13:51

shareholders because as we deploy that

1:13:54

Capital we obviously are in a return on

1:13:56

Equity of it so

1:13:58

um but it will be a long journey it it

1:14:00

hap it'll happen over an extended period

1:14:02

of time and and the further you get out

1:14:05

there the more dependent more dependent

1:14:07

upon the uh the evolution of a variety

1:14:10

of technologies that are progressing but

1:14:14

not there yet so you you've raised a

1:14:16

question I want to just take an extra

1:14:18

minute on because it's so important and

1:14:20

and I don't really know whether our form

1:14:22

of government

1:14:24

uh

1:14:26

is ideal at all in terms of solving uh

1:14:30

the problem you described we have solved

1:14:33

it one time

1:14:35

in World War II we took a

1:14:39

country that was semi-lumping along and

1:14:42

we found ourselves

1:14:44

in a World War

1:14:46

and what we did in a World War

1:14:49

is we brought a bunch of people to

1:14:51

Washington at a dollar a year

1:14:53

you know whether it was Sydney Weinberg

1:14:55

or Goldman's actually you just name him

1:14:57

and we gave them

1:14:59

enormous power

1:15:02

to

1:15:03

reorient the resources of the United

1:15:06

States to face the problem that they

1:15:09

faced which was to create a war machine

1:15:12

and what they did was they found Henry

1:15:14

Kaiser you know and told them to build

1:15:17

ships and they went to the Ford Motor

1:15:19

Company and said you build tanks and

1:15:20

some airplanes and they they reordered

1:15:25

the industrial

1:15:27

Enterprise of the United States in a way

1:15:29

that was unbelievable because they had

1:15:31

the power of the federal government

1:15:33

and they had the ingenuity

1:15:35

of American Business and they had the

1:15:38

facilities of American Business

1:15:41

and it led to a very successful

1:15:44

outcome

1:15:46

but can we do that in a peacetime where

1:15:48

you've got 50 50 states and you have to

1:15:51

get them to cooperate and you don't have

1:15:54

anyone that you can you can issue orders

1:15:56

but you can't

1:15:58

you can't designate where the capital

1:16:00

goes as the other end and you know we

1:16:03

try and do it with tax incentives and

1:16:05

all that sort of thing but we haven't we

1:16:08

haven't created the unity of purpose and

1:16:11

the Machinery that worked in World War

1:16:14

II were essentially everybody felt their

1:16:17

one job was to win the war and we

1:16:19

figured out how to use our

1:16:21

industrial capacity to uh in effect

1:16:25

defeat the axis of powers and uh

1:16:30

how do you recreate that

1:16:32

uh uh with

1:16:36

the present democratic system I I'm not

1:16:39

sure I know the answer but I sure know

1:16:40

the problem but um and I think that

1:16:45

it

1:16:46

if you can think of a if you've got an

1:16:49

emergency on your hand I mean you really

1:16:52

need to re-engineer the engineer energy

1:16:54

system in the United States I don't

1:16:57

think I don't think you can do it uh

1:17:00

without something

1:17:01

resembling the Machinery the urgency

1:17:05

whatever

1:17:06

the capital is there the people are

1:17:09

there

1:17:10

uh

1:17:11

the the objective is obvious

1:17:14

and uh uh we just don't seem to be able

1:17:18

to do it in a peacetime where where

1:17:22

they're used to following a given set of

1:17:25

a procedure and uh and you know

1:17:30

China you've got one country and we've

1:17:32

got we've got 50 states and we got a

1:17:36

whole different system of government

1:17:37

that

1:17:38

we should be up to the test but so far

1:17:41

it hasn't worked but uh so thank you for

1:17:44

the question

1:17:45

Becky

1:17:47

this question comes from Chris freed in

1:17:49

Philadelphia he says we know that Greg

1:17:52

Abel and Ajit Jain are the next

1:17:54

generation of Berkshire leaders who are

1:17:56

currently behind Greg and Ajit in their

1:17:58

prospective roles

1:18:00

respective

1:18:03

well that

1:18:05

will be

1:18:08

the question that they give their

1:18:11

well

1:18:12

Greg will be

1:18:15

have some things extraordinary

1:18:17

circumstances but but he's going to

1:18:19

succeed me and then

1:18:22

he will have

1:18:24

be sitting in a position

1:18:26

where he needs

1:18:29

his equivalent

1:18:31

or something close to the corner because

1:18:33

he's better at many things than I've

1:18:34

been uh

1:18:37

he will need that a substitute and when

1:18:39

the when the question comes word we know

1:18:42

ajit's opinion on that

1:18:44

uh

1:18:45

and but Greg will probably be the one

1:18:48

that will make that make the final

1:18:51

decision I mean it says it was being his

1:18:53

responsibility and

1:18:55

Ajit will give him his best advice and I

1:18:58

think the others are very very very high

1:19:00

that great would follow him so

1:19:03

but it's not those are not easy

1:19:06

questions it doesn't like we've

1:19:09

everybody talks about the executive

1:19:11

bench and all of that sort of thing

1:19:12

which is baloney I mean you know

1:19:14

it they don't have that many people that

1:19:20

can run five the largest gap net worth

1:19:23

company and all kinds of diverse

1:19:26

businesses uh

1:19:28

but you don't need five people either

1:19:30

and you need a lot of good operating

1:19:32

managers and you need somebody at the

1:19:33

top that allocates capital and make sure

1:19:36

that you've got the right operating

1:19:37

manager and we've decided

1:19:40

to design something where we separate

1:19:42

the insurance

1:19:44

and the rest of the business and I think

1:19:47

it's a very good design

1:19:48

but they would not be smart

1:19:52

we wouldn't wish Martin name that

1:19:55

decision now about the two different

1:19:59

different uh areas of the business

1:20:01

because a lot can change between now and

1:20:04

then and the most likely changes that

1:20:06

this job changes

1:20:08

Charlie

1:20:10

I I got nothing to add

1:20:13

we have a lot of good people that have

1:20:16

risen and the Berkshires and City areas

1:20:19

and

1:20:21

there's a reason why our operations have

1:20:24

by and large done better than other big

1:20:26

conglomerate companies

1:20:28

and one of them is that

1:20:30

is that we change managers

1:20:35

way less frequently than other people do

1:20:38

and that's helped us

1:20:42

when Paul Andrews died we know we know

1:20:44

who he thought

1:20:46

to take over there but there wasn't any

1:20:47

reason to

1:20:49

to announce that I mean that Paul

1:20:51

Anderson would I wish he'd lived to be

1:20:53

honored we had we had one of our

1:20:54

managers die

1:20:56

not longer going

1:20:58

how old was he at Karen yeah mid 90s

1:21:01

Seymour yeah see more away from the

1:21:03

scene and Seymour

1:21:06

I wrote him a letter when he was 80 and

1:21:07

I said you know

1:21:09

I'm glad you're 80. and I'll write you

1:21:12

again when you're 90. and uh I wrote him

1:21:14

again one of his 90 and he didn't make

1:21:17

it to 100 but but he had a terrific

1:21:21

uh following him and it really Managed

1:21:25

IT jointly to some extent as the years

1:21:26

went by but

1:21:28

it's Case by case and the main thing to

1:21:32

do is have the right person running the

1:21:34

whole place

1:21:36

okay

1:21:37

station six

1:21:42

good morning

1:21:43

my name's hatch okamot I'm from Miyazaki

1:21:47

Japan

1:21:48

a Mr Buffett I was one of the 8 000

1:21:51

employees at Solomon Brothers that you

1:21:53

saved I was younger back then I was

1:21:55

working at seven World Trade Center I've

1:21:58

always always wanted to thank you in

1:22:01

person for saving the company its

1:22:03

employees including myself and my family

1:22:05

so thank you Mr Buffett thank you

1:22:13

and and and thank Derek thank Derek

1:22:16

Martin who actually had been over in

1:22:18

Japan before that and who I met for the

1:22:20

first time the day before I put him in

1:22:21

and he turned out to it wouldn't have it

1:22:24

wouldn't have worked if Derek hadn't

1:22:26

come so whatever you taught him in Japan

1:22:27

thank you

1:22:29

thank you sir now my question

1:22:32

time to time you have reminded us to not

1:22:36

bet against America

1:22:38

what do you think are the most important

1:22:41

things for U.S to remain strong and on

1:22:44

the risk side if the strength of the

1:22:47

country is undermined what could be the

1:22:50

reasons

1:22:52

but we've been

1:22:53

we've had a lot of tests

1:22:56

I mean we're such a young country you

1:22:58

know when you think about Japan and you

1:23:01

think about the United States it's just

1:23:02

incredible

1:23:03

how new we are to the block I mean you

1:23:06

know what what are we 234 years old

1:23:09

since

1:23:10

since we started that that's that's

1:23:13

that's nothing I mean you know Charlie

1:23:16

and I combined are two-thirds of we look

1:23:18

two-thirds of the life of the country

1:23:21

so and I mean it really has I mean we've

1:23:23

we've been tested at 46 national

1:23:25

elections but and and

1:23:28

we've made some bad choices and we've

1:23:30

got a Civil War I mean it so the the

1:23:33

country

1:23:35

has had an enormous Advantage as though

1:23:37

in some way because we started with one

1:23:39

half of one percent of the world's

1:23:41

population in 1790. and we now have

1:23:44

something close to 25 percent of the

1:23:46

world's GDP

1:23:48

and it wasn't because we had some

1:23:49

incredible

1:23:51

advantage in terms of the line it was

1:23:53

nice to have two oceans and oceans on

1:23:55

each side back when

1:23:56

when uh people tried to rule away Rule

1:24:00

the World by ruling the waves but it

1:24:03

you know and we've had good neighbors in

1:24:06

Canada and Mexico but

1:24:09

it's a miracle and you say how do we

1:24:12

keep the good parts of the system

1:24:15

while

1:24:16

calling out our obvious defects and we

1:24:19

do it in a very herky-jerky manner but

1:24:22

net

1:24:23

the United States

1:24:25

it's a better place to live

1:24:28

but almost when I was born by a huge

1:24:30

Factor

1:24:31

I mean I just got a root canal a week

1:24:34

ago

1:24:35

and I was just thinking I don't know who

1:24:37

even invented Nova game but I'm for him

1:24:39

you know I mean

1:24:42

but in a million ways I mean you can

1:24:46

roll you can romanticize about the past

1:24:48

but forget it uh

1:24:50

it is it is work

1:24:53

but now we do have an atom bomb and we

1:24:55

we wish nuclear power yeah you know we

1:24:58

wish the item had never been split but

1:25:00

but uh it has been and you can't put it

1:25:03

back in the bottle so the challenges are

1:25:07

huge

1:25:08

our government always looks

1:25:11

you know my dad was in Congress back in

1:25:13

the 1940s and

1:25:15

it looked like a mess then you know it

1:25:17

all it was unified by the war to some

1:25:19

degree but it was still very partisan

1:25:22

now the problem we have I think

1:25:25

is that partisanship

1:25:28

and it seems to me has moved toward

1:25:31

tribalism

1:25:32

and tribalism

1:25:34

just doesn't work as well I mean when it

1:25:37

gets to tribalism you don't even hear

1:25:38

the other side and tribalism can lead to

1:25:41

mobs I mean it just it it flows I mean

1:25:44

you've seen it all Explorers we've seen

1:25:46

it to a degree here

1:25:48

so

1:25:49

we

1:25:51

we have to refine in a certain way

1:25:56

our democracy as we go along and we deal

1:25:58

with the world we live in

1:26:00

but if I still had a choice of any post

1:26:03

to be born in the

1:26:04

in the world I'd want to be born in the

1:26:06

United States and I'd want to be born

1:26:07

today I mean it's it is a

1:26:11

it is a better world than we've ever had

1:26:13

and with

1:26:16

present-day Communications we can also

1:26:18

see it seem much more how terrible it is

1:26:21

in many ways

1:26:22

and it's got problems when I was born in

1:26:26

1930

1:26:27

there were two billion people in the

1:26:29

world

1:26:30

and now there's maybe 7.7 billion and

1:26:33

growing

1:26:34

and we went Millennium with really no

1:26:39

change in population so we and of course

1:26:42

we've introduced energy into

1:26:45

uh in an incredible way

1:26:48

into something where

1:26:50

we now have

1:26:51

7.7 billion people using way more energy

1:26:54

than they did when I was born when there

1:26:57

were two billion people so

1:26:59

it's

1:27:01

it's an exciting world it's a

1:27:03

challenging world and I I you know I

1:27:06

don't know the solutions on things I do

1:27:08

think that we do need to think about

1:27:09

different solutions in terms of how we

1:27:12

get important

1:27:14

problem solved and that we don't kid

1:27:16

ourselves that something magic will

1:27:19

happen or that everybody will get

1:27:21

together and we'll all just cheer and

1:27:24

they'll go away by 2050 or anything it

1:27:26

uh uh and how well we adapt to them we

1:27:31

will see I would say

1:27:34

so far it doesn't look very promising

1:27:36

but then I'm sure that

1:27:38

when Lincoln looks at it

1:27:40

what was going on in the Civil War

1:27:41

didn't look very promising either so I

1:27:44

think that that the U.S is capable of

1:27:46

doing remarkable things and I think

1:27:49

I wouldn't surprise me if they do it

1:27:51

again Charlotte charleming are you

1:27:53

well I'm slightly less optimistic than

1:27:56

warranty

1:27:58

I think the best

1:28:01

wrote ahead to human happiness as we

1:28:04

expect less

1:28:06

I think it's going to get I think it's

1:28:07

going to get tougher

1:28:09

and I think the solution of having a

1:28:13

huge proportion of the young and

1:28:15

brilliant people all the way to wealth

1:28:17

management

1:28:18

is a crazy development in terms of

1:28:21

its natural consequences for American

1:28:24

civilization we don't need as many

1:28:26

wealth managers as we have

1:28:30

Charlie was born on January 1st 1924.

1:28:34

and

1:28:36

you'd hate to go back to that wouldn't

1:28:38

you Troy yes I would and I I I like more

1:28:41

worlds managers who were just merely

1:28:43

reflecting the fact there's more wealth

1:28:45

but we've got

1:28:48

I don't like everybody going into wealth

1:28:50

management of MIT or something it's I

1:28:54

think the world's a little crazy now

1:28:58

take your choice okay Becky

1:29:04

now this question comes from Dennis

1:29:07

degennaro

1:29:08

as Warren stated in the 2022 annual

1:29:11

report Berkshire will always hold a

1:29:13

boatload of cash in U.S treasury bills

1:29:15

it will also avoid behavior that could

1:29:18

result in any uncomfortable cash needs

1:29:19

at inconvenient times including

1:29:22

Financial panics and unprecedented

1:29:25

Insurance losses

1:29:27

after Warren passes away his a shares

1:29:29

will be converted into B shares and

1:29:31

distributed to various foundations these

1:29:33

foundations will then sell the shares to

1:29:35

fund their causes Warren estimates it

1:29:37

will take 12 to 15 years for all his

1:29:39

shares to be sold I worry that a

1:29:42

corporate Raider like Cairo icon or a

1:29:44

group will buy up enough of these shares

1:29:46

to take control of Berkshire and

1:29:47

completely disregard Warren's philosophy

1:29:49

of holding a lot of cash in U.S treasury

1:29:51

bills and instead be greedy Reckless and

1:29:54

highly speculative and ruin berkshire's

1:29:56

position as a rock-solid financial

1:29:58

Fortress I also worry that changes might

1:30:01

be made in how Berkshire subsidiaries

1:30:03

are run do Warren and Charlie worry that

1:30:05

these things could happen

1:30:07

well I think it's fair to say we think

1:30:10

about it plenty but I don't I don't I

1:30:12

don't I don't worry enormously if we

1:30:16

it is true that

1:30:18

that

1:30:20

uh Greg and the directors will have a

1:30:22

honeymoon period for a long time because

1:30:24

simply because uh of the boats it will

1:30:28

still remain I mean it and and uh

1:30:32

but it's true that eventually they will

1:30:33

get judged

1:30:34

based on how well

1:30:37

our operation fairs versus others now if

1:30:39

we don't

1:30:40

pay any dividends and

1:30:42

in 12 or 15 years

1:30:44

you're talking a trillion and a half and

1:30:46

it would take to take over and and uh

1:30:49

I think if we can't

1:30:51

that that limits the group they like to

1:30:54

think about how much they can borrow

1:30:55

against it it doesn't work when you uh

1:30:58

and and some of these

1:31:01

there's nobody to come close to doing it

1:31:04

themselves and I think that the

1:31:07

important thing is that Berkshire

1:31:09

regarded the be regarded as a National

1:31:13

Asset rather than a national liability

1:31:15

we've got to be a plus to the country

1:31:17

with our form of operation and we

1:31:19

certainly have got a record

1:31:22

which

1:31:23

will then be 12 or 15 years longer done

1:31:27

with much more Capital more companies

1:31:29

more things will have happened where our

1:31:33

hundreds of billions can work its way

1:31:36

into the economy in terms of lots of

1:31:39

jobs lots of products lots of behavior

1:31:42

and it can be compared with other things

1:31:44

so I

1:31:45

I I think we went out of if we deserved

1:31:48

to win out and I think uh I think the

1:31:51

odds of that happening are very very

1:31:53

very high

1:31:55

Charlie

1:31:59

well we

1:32:01

I don't spend much time worrying about

1:32:03

fluent can happen 50 years ago and ever

1:32:07

I'm dead

1:32:08

I I think you sort of take care of each

1:32:11

day's responsibilities pretty well and

1:32:14

think ahead as well as you can

1:32:16

and you just take the results as they

1:32:18

fall

1:32:20

so I'm I'm philosophical

1:32:24

but I I'm not I'd be spreading

1:32:26

unnecessarily

1:32:30

okay

1:32:32

neither one of us are worried basically

1:32:34

uh but we but but we plan we do plan and

1:32:38

and you know I've got a model in my mind

1:32:41

of what

1:32:42

Berkshire has been that model's getting

1:32:44

it's been modified plenty of times over

1:32:46

58 years and the one thing I know

1:32:48

initially is or very quickly was it

1:32:51

shouldn't be a textile company that was

1:32:52

that was an important decision and and I

1:32:55

mean we've just played the hand as a as

1:32:58

a come along and

1:32:59

and we made a few really good decisions

1:33:03

and we will never make a decision that

1:33:05

kills us only things that are a threat

1:33:08

to the planet

1:33:10

um we don't have any answer for those

1:33:11

but we do we keep ourselves in better

1:33:15

shape than anybody else that and we just

1:33:20

aren't going to have big maturities of

1:33:23

debt that come along we aren't going to

1:33:26

have

1:33:27

uh insurance policies that be can be

1:33:29

cashed in at mass and we will sit with

1:33:32

the Lord what looks like a huge amount

1:33:34

of capital and but there's a huge amount

1:33:36

of capital but there's a huge amount of

1:33:37

earning power there's a huge amount of

1:33:38

diversity everything so our business

1:33:42

model

1:33:43

will be graded and it'll be graded

1:33:45

against a lot of a lot of people that

1:33:48

we'd like to be graded against so uh I

1:33:52

think we're handling something very

1:33:54

secure

1:33:55

over to the Future and I think we've got

1:33:57

the shareholder base like nobody has I

1:34:00

mean there isn't anybody in the country

1:34:01

that I know of unless they've had a

1:34:03

shareholder an employee-owned company

1:34:06

prior to going public or something of

1:34:07

the sort but but

1:34:09

this is the product of you know the

1:34:13

58 years of of

1:34:15

regarding the shareholder as the owner

1:34:19

of the company

1:34:20

but what does that mean that means

1:34:22

having happy customers it means being it

1:34:25

being means

1:34:27

being welcomed by your community rather

1:34:29

than having them turn you away it means

1:34:33

that the government feels better with

1:34:35

you if there's a financial crisis

1:34:37

because you're

1:34:38

you can provide something that actually

1:34:40

the company the country can't under some

1:34:43

circumstances and you'll be there and if

1:34:46

it may and same time it'll be good good

1:34:49

for the business uh and we will have

1:34:51

crises of one sort or another but if

1:34:55

they aren't challenging the planet which

1:34:57

worries you in terms of some of the

1:34:59

threats that we have

1:35:01

were

1:35:03

will be a plus to the United States and

1:35:05

if we're close to the United States

1:35:06

we'll we'll survive

1:35:09

okay

1:35:14

station Seven

1:35:19

Mr Buffett and Mr Munger thank you for

1:35:23

having us this weekend

1:35:25

my name is Beau Clayton and I'm from

1:35:28

Durham North Carolina

1:35:30

one of the reasons that we are all here

1:35:33

is that your great storytellers

1:35:37

and we carry those stories back home

1:35:39

with us

1:35:41

can you please share a couple stories

1:35:44

that maybe we haven't heard before

1:35:49

about Mr Abel and Mr Jane

1:35:53

that capture their character and their

1:35:58

caliber as leaders

1:36:01

well

1:36:07

I'll start out with a Jeep

1:36:10

he walked into the office and

1:36:13

1986 and I had gotten the bright idea of

1:36:16

going into the reinsurance business I

1:36:18

think in maybe 1969 so I'd stumbled

1:36:20

along

1:36:21

uh for 17 years and

1:36:25

I

1:36:26

wonderful guy that ran it uh

1:36:31

uh but he also liked certain Brokers and

1:36:35

I mean he was running at the traditional

1:36:38

wave

1:36:39

top calls top quality and everything

1:36:42

else but but uh but he fell into he he

1:36:47

didn't try and change the system he

1:36:50

tried to improve the system and uh to

1:36:53

some degree and

1:36:55

we just we went nowhere 17 17 years

1:36:59

wandering around to the Wilderness and I

1:37:01

thought I was

1:37:02

um I knew we could have something good

1:37:04

and then the Jeep came in on a Saturday

1:37:07

and uh uh Mike Goldberg and

1:37:12

steered him in I think and and uh Mike

1:37:15

deserves to be enshrined and perpetuity

1:37:18

for that act and uh I talked with him a

1:37:22

while I think maybe I was opening the

1:37:23

mail on Saturday while I talked with him

1:37:25

and and he had absolutely zero

1:37:29

experience with

1:37:31

with insurance

1:37:33

but it actually seen a good bit of how

1:37:36

Corporate America operated

1:37:38

because they

1:37:40

've been in management consulting and

1:37:43

after talking with him I

1:37:45

I knew I'd struck golden and uh

1:37:48

so I hired him and

1:37:51

gave him the backing of some money

1:37:54

uh and we had a very good period in the

1:37:58

market almost right away for him to act

1:38:01

and and the Jeep uh

1:38:05

you know if I had the

1:38:07

top pick of 10 Insurance managers in the

1:38:10

world I'm I I could take all ten and

1:38:14

they wouldn't you can't replace

1:38:17

Ajit and uh

1:38:19

we still

1:38:21

enjoy talking I don't we don't talk as

1:38:23

frequently as he used to but we should

1:38:25

talk about every day

1:38:27

but

1:38:29

he is

1:38:31

he's one of a kind and

1:38:33

you know what if they're going to stick

1:38:35

around long enough you only need one of

1:38:37

a kind Paul Andrews stuck around a TTI

1:38:41

had all the money in the world

1:38:43

every time I talk to him about getting a

1:38:45

raise or something of the sort he said

1:38:47

we'll talk about that next year I just

1:38:50

he was not what you get when you get the

1:38:52

top draft picks from the leading

1:38:54

Business Schools and I will say this I

1:38:57

have never looked at where anybody went

1:38:59

to school

1:39:00

in terms of

1:39:02

of hiring I mean I I just somebody

1:39:04

mailed me a resume or something I don't

1:39:06

care where they went to school uh

1:39:09

uh and it just so happens that

1:39:13

that she went to some pretty good

1:39:15

schools but he isn't the Jeep because he

1:39:17

went to the schools and uh

1:39:20

Charlie didn't tell a story or two um

1:39:23

how'd you find Louis vincenti

1:39:26

well he was there

1:39:28

I I but you got to recognize him I asked

1:39:32

Louie once how he managed to play first

1:39:35

string football at I think Stanford

1:39:37

when he only weighed 165 pounds

1:39:41

and he said well he says I was pretty

1:39:42

quick

1:39:44

and

1:39:45

he was pretty quick but

1:39:48

we have found a lot of people within our

1:39:51

companies who were pretty quick

1:39:52

it's it's a

1:39:54

yeah we had we had one guy that quit at

1:39:56

fourth grade didn't in Ben Rosner Am I

1:39:59

Wrong oh yeah totally self-educated

1:40:02

Ben Rosner knew more about retailing and

1:40:05

difficult neighborhoods and anybody

1:40:08

and

1:40:10

he watched everything in his business

1:40:12

like a hawk and he was a he was amazing

1:40:15

now there was an example

1:40:17

we never found anybody who could do what

1:40:19

when band died that billability left us

1:40:23

yeah and you want a story it's kind of

1:40:25

interesting because Ben Rosner

1:40:28

had a partner Leo Simon

1:40:31

at least Leo Simon was uh Moe

1:40:34

annenberg's son-in-law

1:40:36

and Leo therefore

1:40:39

it was very very very wealthy

1:40:42

and uh

1:40:43

and then started with nothing but they

1:40:46

they liked each other

1:40:48

and

1:40:49

one time

1:40:51

well before they got

1:40:53

involved in the in the business

1:40:56

uh the business we bought but they got

1:41:00

the idea of buying a

1:41:03

submarine from World War One

1:41:07

and taking it to the century of progress

1:41:09

or the World's Fair in effect in Chicago

1:41:12

I think in 1933

1:41:14

so they bought the submarine for not

1:41:16

probably nothing and they figured you

1:41:18

know the average

1:41:20

guy from Walmart was going to his first

1:41:21

World's Fair getting a submarine for a

1:41:24

quarter or something that they'd pay it

1:41:26

so they hauled it

1:41:29

from Florida wherever they got they

1:41:31

hauled it to Chicago and then they got

1:41:33

into Chicago

1:41:34

and they were hauling a submarine down

1:41:37

the streets of Chicago and it was

1:41:41

creating traffic problems like nobody

1:41:44

could imagine so a cop came over

1:41:47

and he said

1:41:49

to Ben

1:41:51

he says what do you think you guys are

1:41:53

going with a submarine Ben says he says

1:41:58

well he said you'll have to talk to my

1:42:00

partner Mr Capone and the cop the cop

1:42:04

says girl I know just keep going and

1:42:06

that was that was Ben Roger and then Leo

1:42:09

Simon died

1:42:10

and when he died in

1:42:12

1967 or so

1:42:15

uh Ben Rosner kept delivering half thee

1:42:19

prophets to his widow

1:42:22

who was incredibly Rich of course being

1:42:24

no Anna birks first born born daughter I

1:42:27

think I think I think Moe had nine

1:42:30

nine girls in a row before Waller came

1:42:33

along the tenth I may be lost by one but

1:42:36

anyway I went to this fancy

1:42:39

apartment and anyway

1:42:41

then

1:42:43

then kept her in for a half

1:42:46

the deal and he had her sign the rent

1:42:48

checks just so she would look like she

1:42:51

was doing something in this business

1:42:53

and she didn't need the money obviously

1:42:55

but he just felt he was obligated once

1:42:57

his partner Leo died

1:42:59

and then she started criticizing him

1:43:01

and at that point

1:43:03

then

1:43:05

went to her his lawyer

1:43:07

was her lawyer actually will felsteiner

1:43:10

I don't know whatever happened to will

1:43:12

but he gave me he gave me a call because

1:43:14

Ben wanted to

1:43:16

call me because he wanted me to buy it

1:43:18

and he wanted me if I bought it

1:43:22

he'd be rid of the partners ex-partner's

1:43:25

wife

1:43:26

and uh and he'd gotten he had me and

1:43:31

Charlie come back

1:43:32

and we went to will felsteiner's office

1:43:35

and Ben says I'll work till the end of

1:43:37

the year and that's all but I'll show

1:43:39

you this thing for six million bucks and

1:43:40

I had two million to cash and a couple

1:43:42

million in real estate and a couple

1:43:43

million of operating earnings this is

1:43:45

crazy

1:43:46

but he fell off he was getting a lousy

1:43:49

prize

1:43:50

she was taking a half of the lousy price

1:43:53

for half the money

1:43:55

so uh

1:43:57

uh

1:43:59

he looked at me at some point

1:44:01

Charlie you described the rest of it

1:44:03

again he said I heard here you're the

1:44:06

fastest draw in the west he says draw

1:44:10

we're one of the New York lawyer's

1:44:12

office yeah and this guy is he's selling

1:44:15

he's selling his baby and and he told us

1:44:18

he's leaving I got Charlie on this side

1:44:20

I said if if this guy leaves at the end

1:44:23

of the year he can throw away every

1:44:24

psychology book that's ever been written

1:44:26

I mean it isn't happening and uh so we

1:44:29

bought it and we lived happily ever

1:44:31

after with Ben and

1:44:32

one time

1:44:34

he was taking me over to see a property

1:44:36

we had in Brooklyn

1:44:38

and uh and along the way I said

1:44:42

uh

1:44:44

then I

1:44:46

you know I promised you I wouldn't

1:44:47

interfere in the business when we

1:44:50

started and he knew a butt was coming

1:44:52

and he just said Thank You Warren and

1:44:55

they're shooting him

1:44:57

he was a lot of fun we had so many Ben

1:44:59

Rosner stories but now you've heard one

1:45:01

that hasn't been published before okay

1:45:03

Becky

1:45:06

this question comes from chai gohil

1:45:09

he writes this is for a G reinsurance

1:45:12

industry is going through one of the

1:45:14

hardest pricing environments in the last

1:45:16

15 years Berkshire historically has

1:45:19

participated during these stress times

1:45:21

when economic returns are very

1:45:22

attractive this year it appears

1:45:24

Berkshire has not been interested in

1:45:26

deploying its resources towards property

1:45:28

cat reinsurance despite such strong

1:45:30

returns can you elaborate on reasons for

1:45:33

not participating despite these returns

1:45:35

and your broader view on how you're

1:45:37

planning to shape your reinsurance

1:45:39

business post acquisition of Allegheny

1:45:44

in terms of Allegheny that's an easy

1:45:47

response we look we treat our operating

1:45:51

units independent of each other and as

1:45:54

far as Allegheny is concerned they have

1:45:55

a major presence in the reinsurance

1:45:57

business

1:45:58

under the brand name of transatlantic

1:46:00

Ree that company will operate the way

1:46:03

it's been operating in the past there'll

1:46:05

be no change in terms of strategy or

1:46:07

management and they will keep doing what

1:46:10

they're doing they've been very

1:46:12

successful and hopefully they'll keep

1:46:13

being successful

1:46:15

now in terms of the property cat

1:46:18

business that I have been active in over

1:46:21

these last several years you are right

1:46:23

that the last 15 years has been a

1:46:26

difficult time prices have not been

1:46:28

attractive and even though we have had

1:46:31

some presence in the property cat

1:46:33

business in the last 15 years it really

1:46:35

is been minimal

1:46:38

this December 31st which is a big

1:46:41

renewal date for Cattery insurance we

1:46:44

were hoping that we would get a few days

1:46:46

in the Sun and we'd be able to deploy

1:46:49

our capital and be able to write some

1:46:53

fairly attractive business

1:46:55

as it happened

1:46:56

towards the end of December till about

1:46:59

the third week of December I was very

1:47:02

optimistic that we would get a chance to

1:47:04

put put several billion dollars on on

1:47:07

the books

1:47:09

but in the last 10 days of uh December

1:47:12

unfortunately a lot of capacity came out

1:47:14

of the Woodworks pricing that we were

1:47:17

expecting to realize didn't really come

1:47:19

and meet our pricing requirements as a

1:47:21

result of which January 1 was a big

1:47:23

disappointment we did not write as much

1:47:25

as we were hoping to write now fast

1:47:28

forward to April 1 which is another big

1:47:31

renewal date we

1:47:33

had a lot of powder dry and we were

1:47:36

lucky that we kept the powder dry

1:47:37

because April 1 suddenly prices zoomed

1:47:40

up again a lot higher than what they

1:47:42

were on January 1 and started to look

1:47:44

attractive to us

1:47:45

so

1:47:47

now we have a portfolio that is very

1:47:51

heavily exposed to property catastrophe

1:47:53

uh to put that in perspective our

1:47:56

exposure today is almost 50 percent more

1:48:00

than what it was uh five six months ago

1:48:03

so you know we I think we have written

1:48:07

as much as our capacity will allow us to

1:48:11

write we are very happy with what we've

1:48:13

written the margins have been healthy

1:48:15

the only thing that I want to mention to

1:48:18

you is that while the margins have been

1:48:21

healthy we have a very unbalanced

1:48:25

portfolio what that means is if there's

1:48:28

a big hurricane in Florida

1:48:30

we will have a very substantial loss as

1:48:35

opposed to that if we have a very big

1:48:36

loss anywhere other than Florida

1:48:39

relative to our competition we will have

1:48:41

a much smaller loss net net I'm very

1:48:45

happy with the portfolio it's been a lot

1:48:47

better it is a lot better than what it's

1:48:49

been in the past uh I don't know how

1:48:52

long it'll last and of course

1:48:55

if the hurricane happens

1:48:57

in Florida we could lose

1:49:01

across all the units we could lose as

1:49:03

much as 15 billion dollars

1:49:05

and if there isn't a loss we'll make

1:49:08

several billion dollars as profit

1:49:11

and LG tell them how long when you

1:49:14

called me and said you'd like to expose

1:49:16

us to

1:49:17

whatever was a couple billion more of of

1:49:20

exposure how long I took to say yes yeah

1:49:23

uh so the way we think about our

1:49:26

exposure is you know in in the property

1:49:29

in the insurance operations collectively

1:49:31

across the entire company uh given that

1:49:35

we have about a little less than 300

1:49:37

billion of capital we think of that as a

1:49:40

55

1:49:41

exposure that we're willing to take on

1:49:43

so to complete Warren's story

1:49:47

a few weeks ago we had about 13 billion

1:49:49

dollars of exposure all across like uh

1:49:52

the globe and I called up war and I said

1:49:55

we have to 13 it'll be nice if we can go

1:49:57

up to 15 that's a good round number and

1:50:00

that was less than a 30 second phone

1:50:02

call

1:50:04

I think Warren said yes without even

1:50:06

listening to what the numbers

1:50:09

I hope he calls me again

1:50:13

okay station eight

1:50:19

hello

1:50:20

my name is adal Flores and I've been a

1:50:23

shareholder for about 16 years and I'm

1:50:25

coming from Guadalajara Mexico

1:50:28

my my question is for Warren and Charlie

1:50:33

companies have the Eternal dilemma

1:50:35

between bought Building Products that

1:50:37

can make profits and increase their

1:50:39

company competitive position in the best

1:50:42

case you can build products that have

1:50:44

both characteristics at the same time

1:50:46

like Google did but most of the time

1:50:48

companies need to choose between

1:50:50

short-term profits and long-term

1:50:52

defensibility for example Amazon was

1:50:55

focused on building their famous Amazon

1:50:57

flywheel with limited profits initially

1:51:00

in order to abstain obtain stronger

1:51:03

Network effects with the hope of getting

1:51:05

more defensible profits in the future

1:51:07

when you invest you constantly speak

1:51:10

about the importance of building

1:51:11

competitive modes what advice would you

1:51:14

give to CEOs about how to balance this

1:51:16

dilemma which is essentially short-term

1:51:18

profit versus long-term definitibility

1:51:21

thank you

1:51:22

well the answer to control your destiny

1:51:25

which we've been able to do it uh

1:51:27

Berkshire so

1:51:29

we have we feel no pressure

1:51:32

from Wall Street uh

1:51:36

you know we don't have investor calls we

1:51:38

don't have to make promises we we get a

1:51:42

chance to make our own

1:51:43

mistakes and and occasionally find

1:51:45

something that that works well but we

1:51:48

recognize that the people in this room

1:51:51

and people like them

1:51:52

uh are the ones we're working for and

1:51:56

we're not working for a bunch of people

1:51:58

that that care about whether we meet the

1:52:01

quarter estimate or anything so we have

1:52:03

a freedom

1:52:04

uh

1:52:06

that we that we get to use and

1:52:11

we're interested in men we're interested

1:52:14

in owning a wonderful business forever

1:52:16

we'll learn very many wonderful

1:52:17

businesses but we do learn

1:52:21

a lot as we go along we we Charlie and I

1:52:24

have often mentioned how we learn so

1:52:26

much when we bought C's candy which we

1:52:29

did but we learned when we bought Ben

1:52:32

Rogers

1:52:33

chain of women's dress shops spread all

1:52:36

over the

1:52:37

the eastern part of the country we

1:52:40

learned when we tried them

1:52:43

getting into the department store

1:52:45

business back in 1966 and

1:52:47

as the ink was drawing on our purchase

1:52:49

price we realized we'd done something

1:52:51

dumb I mean but we're learning all the

1:52:54

time how consumers behave

1:52:56

I'm not going to be able to learn the

1:52:59

technical aspects of businesses but that

1:53:02

you know that that be nice if I knew it

1:53:06

but but it isn't essential and you know

1:53:09

we are obviously uh

1:53:13

we've got

1:53:15

a business at Apple which is larger than

1:53:19

our energy business and we may only own

1:53:22

Five Points six or seven percent but our

1:53:26

ownership goes up every year and I don't

1:53:29

understand the phone at all but I do

1:53:32

understand consumer Behavior

1:53:34

and I know how people think about

1:53:38

whether to buy a second car I know how

1:53:40

they go out to different We Own auto

1:53:43

dealerships we only we're learning all

1:53:46

the time from all of our businesses how

1:53:49

people react to Garanimals versus you

1:53:52

know selling them something else and and

1:53:54

so seize was a sort of breakthrough but

1:53:58

but it just we just keep learning uh

1:54:02

as to more about how people behave and

1:54:06

how a good business can turn into a bad

1:54:09

business and how some good businesses

1:54:11

can maintain uh uh they're competitive

1:54:15

advantage over time and and so

1:54:21

um

1:54:21

we don't

1:54:23

we don't have some formula that person

1:54:27

people we just

1:54:29

but we can also tell them

1:54:31

in 10 seconds whether it's something of

1:54:34

Interest I mean with you know when when

1:54:36

uh I get these calls and we want to send

1:54:39

decks and all that sort of which is

1:54:41

nonsense I mean it uh uh it's a bunch of

1:54:45

guys sitting

1:54:47

that get paid for drawing up these

1:54:49

projections of the future and everything

1:54:51

like that if they knew the future you

1:54:52

know we don't know the future but we do

1:54:54

know certain kinds of businesses we know

1:54:56

what the right price is and we know

1:54:58

what we think we can project out in

1:55:01

terms of consumer Behavior Uh and

1:55:05

consumer and threats

1:55:07

do a business and then and that's what

1:55:10

we've been about and that's what we'll

1:55:11

continue to about we do get

1:55:14

we don't get smarter over time we get we

1:55:17

get a little wiser though uh

1:55:20

following it over time and and you can

1:55:22

do it while sitting in the office with a

1:55:24

telephone too which we like Charlie well

1:55:26

tell them the story of the Japanese

1:55:28

investment that that should be told

1:55:31

again that that that's

1:55:33

that's a nice story

1:55:35

you know well it was pretty simple I

1:55:37

mean I

1:55:38

you know other

1:55:40

back when I started other people for

1:55:42

going through Playboy and I was going

1:55:44

through Moody so that you know basically

1:55:46

and uh uh there's a movie out called

1:55:49

Turn every page but which I

1:55:52

saw again for the second time a couple

1:55:54

of days ago Lizzie got leaving I

1:55:56

recommend everybody in this world watch

1:55:58

that because I turned every page in the

1:56:01

past and uh I did it for thousands and

1:56:04

thousands of pages and Moody's and I did

1:56:06

it at the Department of Public Utilities

1:56:08

in in Boston I did it in Newton the

1:56:11

insurance department that it just kept

1:56:13

turning Pages well that that goes on for

1:56:18

a while but now we need Big Ideas

1:56:23

in order to find things and uh and what

1:56:25

was your question Charlie tell them

1:56:27

about the Japanese well the Japanese

1:56:29

thing was was simple I mean it kind of I

1:56:32

like looking at companies every I mean I

1:56:34

like looking at

1:56:35

figures about companies and and here

1:56:38

were five

1:56:39

very very

1:56:41

substantial companies understandable

1:56:43

companies

1:56:44

most of them uh maybe all of them we'd

1:56:48

done business with them in a dozen

1:56:50

different ways if you go a couple miles

1:56:51

from where this place is the our last

1:56:55

coal generating plant was built by one

1:56:58

of the companies that so

1:57:02

here they were

1:57:04

they were sitting

1:57:06

as a group

1:57:08

where they were earning we'll say 14

1:57:10

percent

1:57:11

uh on what we were going to pay to buy

1:57:13

them they were paying decent dividends

1:57:16

they were going to repurchase the shares

1:57:18

in some cases they owned a whole bunch

1:57:20

of businesses that we could understand

1:57:22

as a group although we didn't mean we

1:57:24

had deep understanding on anything but

1:57:26

we've seen them operate and everything

1:57:27

there wasn't anything to it

1:57:29

and at the same time

1:57:31

we could take out the currency risk

1:57:34

by financing in in the

1:57:37

and that was going to cost us a half of

1:57:39

one percent well if you get 14 on one

1:57:41

side a half a percent on the other side

1:57:43

and you've got money that you know

1:57:46

forever and they're doing intelligent

1:57:50

things and they're sizable

1:57:52

so we just

1:57:53

started buying them I didn't even

1:57:55

probably tell Greg until

1:57:57

maybe six months after we'd gotten going

1:58:00

and and then we hit five percent

1:58:03

uh in all of them we announced on my

1:58:06

birthday and uh at 90th at the we owned

1:58:10

over five percent and recently went

1:58:14

over for the first time to visit with

1:58:16

him and move

1:58:18

more than pleasantly surprised delighted

1:58:21

with what we find there and now we own

1:58:23

7.4 percent of them we won't go over 9.9

1:58:27

without their agreeing and we sold

1:58:29

another

1:58:31

164 or whatever it is uh

1:58:37

billion of us again would have done for

1:58:40

us if we only had five billion dollars

1:58:42

or something and it made 10 billion

1:58:45

dollars

1:58:46

simply in that way yeah we would look

1:58:49

like Heroes now 10 billion just sort of

1:58:52

disappears as it's

1:58:53

an Old Dot in person's reports but it's

1:58:56

fun and it is fun and it is 10 billion

1:59:00

dollars and Charlie says it keeps and

1:59:02

Charlie says it keeps me out of bars

1:59:04

right talk show up about it and I

1:59:07

probably talked to Charlie about this

1:59:09

app the year after I started but who

1:59:11

knows I mean I knew he'd like it I mean

1:59:13

obviously and and

1:59:15

uh we try to do every dollar we would do

1:59:18

we could only do about 10 billion yeah

1:59:21

yeah well not even that quite that much

1:59:23

yeah but

1:59:25

you know we are four or five billion

1:59:27

ahead plus dividends and we got a carry

1:59:29

that's terrific and and you know uh and

1:59:34

they welcome us and they should welcome

1:59:35

us and but we

1:59:37

we love it the way they're operating

1:59:38

we're not there to tell them what to do

1:59:40

in the least uh uh so

1:59:45

we didn't and but we did say we never go

1:59:47

over 9.9 and we mean it and then they

1:59:49

they know that will be true to our word

1:59:52

and I went over there partly to

1:59:54

introduce Greg the those people because

1:59:57

we're going to be

1:59:58

Willem 10 20 30 40 years from now and

2:00:02

they may occasionally find something

2:00:03

that we can do jointly and they look

2:00:06

they look forward to doing that we look

2:00:09

forward to it and in addition we have

2:00:12

some other operating businesses in Japan

2:00:14

so

2:00:15

great gaming

2:00:18

now the only thing I would add is that

2:00:20

one has warned you when over there it

2:00:23

was to build the build the trust with

2:00:26

these Japanese companies because we do

2:00:27

hope there's long-term opportunities but

2:00:29

fundamentally as you highlighted uh

2:00:32

they're an incredible uh they've been a

2:00:34

very good investment I'd also highlight

2:00:36

the five meetings we had were really

2:00:39

quite remarkable I mean these companies

2:00:41

the culture and the history around it

2:00:43

and how proud they are you know there's

2:00:45

just moments of learning from them so it

2:00:46

was it was just a great experience to to

2:00:49

spend really two days with the five

2:00:50

companies

2:00:52

and an issue that we intended to be 56

2:00:55

billion of

2:00:56

Yen that we were issuing and selling

2:00:58

turned out to be

2:00:59

164.4 or something like that

2:01:02

everything everything's worked so well

2:01:04

and as Charlie says it

2:01:07

you know it doesn't move 500 billion of

2:01:10

net worth that much

2:01:12

but this one is you know it will keep

2:01:15

adding

2:01:16

over the years to the berkshire's value

2:01:19

with us

2:01:20

very widespread probably four or five

2:01:22

hundred million dollars a year and uh

2:01:27

you know we'll just keep looking for

2:01:29

more opportunities and

2:01:32

Japan we have Berkshire is the largest

2:01:37

borrower

2:01:39

outside of corporate borrower outside of

2:01:42

Japan that exists and yeah we didn't set

2:01:46

out to be that but it's it's turned out

2:01:49

that way and and we're not done I mean

2:01:51

it uh you know in terms of

2:01:54

what may come along there and uh

2:01:58

and we have some direct operations there

2:02:00

as I mentioned the

2:02:03

uh

2:02:04

and we've got some

2:02:06

really wonderful Partners working for us

2:02:09

and I don't have to do anything

2:02:10

[Laughter]

2:02:14

okay Becky

2:02:16

the next question comes from Ellie Amin

2:02:18

Tibet

2:02:20

who asks during an episode of investing

2:02:23

the Templeton way podcast Professor

2:02:26

damodaran who he respects almost as much

2:02:28

as Warren and Charlie mentioned that he

2:02:31

is not comfortable with positions

2:02:32

becoming a large part of his portfolio

2:02:34

for example when they reach 25 to 35

2:02:37

percent he mentioned that apple is now

2:02:40

35 percent of berkshire's portfolio and

2:02:42

thinks that that is near a danger zone

2:02:44

wonders if Warren and Charlie can

2:02:46

comment I like to make one comment first

2:02:49

but Charlie will come up with

2:02:51

yeah but

2:02:57

apple is not 35 percent of of Berkshire

2:03:00

portfolio bursar's portfolio includes

2:03:02

the railroad the energy business or

2:03:05

animals you name it See's Candy they're

2:03:08

all businesses and

2:03:10

uh you know the the good thing about

2:03:13

Apple

2:03:14

is that we we can go up they buy in

2:03:17

their stock and instead of owning 5.6

2:03:19

percent

2:03:20

you know they got down to

2:03:22

I got about

2:03:23

15 billion 700 and some million shares

2:03:27

outstanding they get down to 15 and a

2:03:29

quarter billion without us doing

2:03:30

anything we've got six percent so we

2:03:33

can't own more than 100 of the NSF we

2:03:36

can't own more than 100 of Garanimals or

2:03:40

See's candy and

2:03:43

it'd be nice we'd live alone 200 but it

2:03:45

just isn't doable but they're all the

2:03:47

same they're good businesses and to

2:03:50

think that

2:03:51

are Criterion

2:03:53

a criteria for

2:03:56

apple is different than the other

2:03:58

businesses we own it just happens to be

2:04:00

A Better Business than any we own and we

2:04:05

put a fair amount of money in it but we

2:04:07

haven't got more money in it than we've

2:04:08

got in the railroad and apple is a

2:04:10

Better Business our railroad is a very

2:04:13

good business it's not remotely as good

2:04:15

as Apple's business but uh Apple

2:04:20

you know has a position with consumers

2:04:23

where they're paying

2:04:25

you know

2:04:27

maybe they'll pay 1500 bucks or whatever

2:04:29

it may be for a phone

2:04:32

and these same people pay 35

2:04:34

000 for having a second car

2:04:36

and if they had to give up a second car

2:04:38

or give up their iPhone they'd give up

2:04:40

their second car I mean it's an

2:04:42

extraordinary probably we don't have

2:04:44

anything like that that we own 100 of

2:04:47

but we're very very very happy to have

2:04:50

5.6 or whatever it may be percent and

2:04:53

we're delighted every tenth of a percent

2:04:55

that goes up it's like adding a hundred

2:04:57

million dollars to our earnings I mean

2:04:59

our share of the earnings and they use

2:05:01

their earnings to buy out

2:05:02

our partners which

2:05:04

we're glad to see them sell out too the

2:05:06

index funds have to sell they bring the

2:05:08

number of shares down and uh you know

2:05:12

I'm good we went up slightly

2:05:16

last year and

2:05:17

I made a mistake a couple of years ago

2:05:19

and I sold some shares when I had

2:05:21

certain

2:05:24

reasons why ah games were useful to take

2:05:29

that year from a tax standpoint but

2:05:32

having heard having heard me say that it

2:05:34

was a dumb decision and

2:05:39

uh

2:05:41

Charlie you've already given your

2:05:42

comment about it but but we do not have

2:05:44

35 percent

2:05:45

of berkshire's portfolio berkshire's

2:05:47

portfolio is the funds we have to work

2:05:50

with

2:05:51

and we want to own good businesses and

2:05:53

we also want to have plenty of liquidity

2:05:55

and beyond that

2:05:57

you know

2:05:58

the sky's the limiter or

2:06:01

are mistakes who knows what the bottom

2:06:03

is

2:06:05

Charlie do you want to add anything to

2:06:06

your earlier comment well

2:06:10

I think

2:06:12

one of the inane things is taught in

2:06:15

modern University education

2:06:18

is it a vast diversification is

2:06:20

absolutely mandatory and investing in

2:06:23

Common Stocks

2:06:25

that is an insane idea

2:06:27

it's not that easy to have a vast

2:06:30

plethora of

2:06:31

good opportunities that are easily

2:06:33

identified and if you've only got three

2:06:36

I'd rather read my best ideas instead of

2:06:38

my worst

2:06:40

and

2:06:42

now some people can't tell their best

2:06:45

ideas

2:06:46

from their worst in in the act of

2:06:48

deciding the investment already is good

2:06:51

they they get the thing gets better than

2:06:53

it is

2:06:54

I think we make fewer mistakes like that

2:06:57

than other people and that is a blessing

2:07:00

to us

2:07:01

it we're not so smart but we kind of

2:07:04

know where the edge of our smartness is

2:07:08

that is a very important part of

2:07:11

practical intelligence and a lot of

2:07:14

people who are geniuses on IQ tests

2:07:16

think they're a lot smarter than they

2:07:18

are and what they are is dangerous

2:07:21

and

2:07:22

and but but if you know the edge of your

2:07:25

own ability pretty well

2:07:27

you should ignore most of the Notions of

2:07:30

our experts about

2:07:32

what I call diversification of

2:07:35

portfolios

2:07:39

okay yeah

2:07:46

station nine

2:07:51

hi Charlotte hi Charlie and Warren thank

2:07:53

you for this superb shareholder meeting

2:07:56

celebration

2:07:57

my name is David Chung from Hong Kong

2:07:59

and a proud graduate of Chicago Booth

2:08:03

I'm also here with my two sons Aiden and

2:08:06

Ashen who's currently studying

2:08:07

University of Chicago as a freshman and

2:08:10

sophomore

2:08:12

this is my second time attending the

2:08:15

conference last being 2019 four years

2:08:18

ago which I was only a guest shareholder

2:08:22

of my friend Andrew so after the

2:08:24

shareholder meeting I have decided to

2:08:26

buy into Berkshire Hathaway which has

2:08:29

given me a great return of 62 since

2:08:33

2019. so I want to thank you for that

2:08:37

thank you

2:08:40

I have also taken one of your advice to

2:08:43

give my children a share for each of

2:08:45

their birthdays

2:08:47

although they won a Berkshire Hathaway

2:08:49

eight years

2:08:52

they will do just fine with pre-shares

2:08:58

my question is

2:09:00

how do you see the current U.S China

2:09:03

internet companies valuation and the

2:09:06

price disparity

2:09:08

given there has been many uncertainties

2:09:10

such as geopolitical tensions

2:09:13

significant course optimizations with

2:09:16

lean at U.S tech firms while China

2:09:19

attack has been through all that already

2:09:21

thank you

2:09:24

Charlie I wanna

2:09:26

well

2:09:29

there's been some tension in the

2:09:31

economic relationship of

2:09:33

the United States and China I think that

2:09:38

that tension has been wrongly created on

2:09:42

both sides I think we're equally guilty

2:09:45

of being stupid

2:09:46

there's one thing we should do let's get

2:09:48

along with China

2:09:50

and we should have a lot of free trade

2:09:52

with China

2:09:53

in our mutual interest

2:09:58

and

2:09:59

I just can't imagine

2:10:04

it's just so obvious there's so much

2:10:07

safety and so much creativity that's

2:10:09

possible

2:10:10

think what Apple has

2:10:13

done by engaging in a

2:10:16

partnership with China as a big supplier

2:10:20

yeah

2:10:21

it's been good for apple and good for

2:10:23

China that's the kind of business we'll

2:10:26

be doing with China and more of it and

2:10:29

with everything that increases the

2:10:31

tension between the two companies is

2:10:33

stupid stupid

2:10:35

you know at least stopped on each side

2:10:38

and each side ought to respond to the

2:10:40

other side stupidity with reciprocal

2:10:43

kindness that's my view

2:10:45

and it creates one enormous problem of

2:10:48

course which is that you have the two

2:10:49

superpowers of the world

2:10:51

and they know they have to

2:10:53

get along with each other either one can

2:10:56

destroy the other

2:10:57

and they're going to be competitive with

2:11:00

each other

2:11:01

uh but part of it

2:11:04

is trying always in the game like that

2:11:07

is trying to judge

2:11:09

how far you can push the other guy

2:11:12

without them reacting wrong and uh

2:11:16

you know if either side is a bullying

2:11:19

some ways they can get away with it to

2:11:21

an extent because the alternative

2:11:23

is would drive them both into

2:11:26

destruction

2:11:27

but if they push it too far

2:11:29

they increase the probability that

2:11:31

something really does go wrong so it's a

2:11:34

you know it's one of those Game Theory

2:11:36

dilemmas

2:11:37

but you really need

2:11:41

the leader

2:11:43

of

2:11:44

both countries uh and you need the

2:11:48

populace to understand at least the

2:11:50

general

2:11:52

situation in which these countries are

2:11:55

going to operate over the next century

2:11:57

and know that

2:11:59

that some leader of the promises too

2:12:02

much

2:12:04

couldn't get you on a hell of a lot of

2:12:05

trouble and that like you know that

2:12:08

you've got one kind of a system that

2:12:10

gets this leader one way they've got

2:12:11

another system that gets his leader

2:12:13

another way

2:12:14

and

2:12:16

keeping

2:12:17

keeping either side from trying to play

2:12:20

the game too hard

2:12:22

uh and thinking the other side will

2:12:25

will go along

2:12:27

you know it's like playing chicken you

2:12:30

know and driving toward a cliff so

2:12:33

it is

2:12:34

if you've got any diplomacy skills

2:12:37

persuasive skills or anything like that

2:12:39

you really want

2:12:41

people that will

2:12:43

convince

2:12:45

the other country as well as his own or

2:12:48

her own country

2:12:49

that that

2:12:51

this is what we're engaged in we've got

2:12:53

to do it right we won't give away the

2:12:56

story but we won't try and take the

2:12:58

whole story either and it it we we're

2:13:02

just at the beginning of this uh

2:13:04

unfortunately and I mean we've we've

2:13:07

learned what the situation was it used

2:13:08

to be the Soviet

2:13:11

mutually assured destruction

2:13:14

was our policy

2:13:16

then and

2:13:18

that kept a lot of things from happening

2:13:20

but it also came

2:13:22

with a very very very close call

2:13:25

uh with Cuba and

2:13:28

these are not

2:13:30

you know these are different games than

2:13:32

existed hundreds of years ago you could

2:13:35

you know Britain might rule the Caesar

2:13:37

France or Spain but

2:13:39

but now you're playing with a game that

2:13:41

you can't really make

2:13:43

a huge mistake in and I think that

2:13:46

that

2:13:48

should be the better that's understood

2:13:50

in both countries

2:13:52

the more the leaders feel that their

2:13:54

citizenry does

2:13:56

understand that

2:13:58

the better off we'll be and that

2:14:01

a lot of

2:14:02

democr the the

2:14:07

uh

2:14:08

demography or the a lot of

2:14:13

a lot of inflammatory speaking but a lot

2:14:16

of authoritarian action I mean that it

2:14:19

all carries its dangers and

2:14:21

the world was

2:14:23

stumbled through

2:14:25

the years post 1945 with a lot of close

2:14:28

calls

2:14:29

from the

2:14:31

in the nuclear Arena

2:14:33

and now we've gotten

2:14:35

pandemics and we've gotten

2:14:37

we've got cyber and a whole bunch of

2:14:39

other things so we've got more tools of

2:14:42

Destruction

2:14:43

the world's ever had

2:14:45

and

2:14:47

it it's imperative that

2:14:50

China and the United States

2:14:53

both understand what the game is and

2:14:55

understand that you can't push too hard

2:14:58

but working but both places are going to

2:15:00

be competitive and both can prosper

2:15:03

that's that's what really is

2:15:05

that's that's the vision

2:15:08

that is out there that

2:15:11

China will have a more wonderful country

2:15:13

the United States will have a more

2:15:15

wonderful country and and and

2:15:17

the two are not

2:15:20

just compatible they're almost

2:15:22

imperative

2:15:23

uh in terms of

2:15:25

uh what's going to happen in the next

2:15:27

100 years or so and uh

2:15:31

uh

2:15:32

I think that

2:15:34

the leaders of both countries have got

2:15:36

an important job and

2:15:39

and having that

2:15:40

understood

2:15:42

and not to do inflammatory things

2:15:46

and we'll see whether

2:15:49

the lock that has taken us from 1945 to

2:15:52

present holds out and and I think we can

2:15:55

affect to some extent that luck

2:15:59

and without sure a message we will move

2:16:01

to Becky

2:16:03

this question comes from Rohit bellany

2:16:06

Berkshire bought a substantial position

2:16:08

in Taiwan semiconductor and contrary to

2:16:10

its normal holding timeline sold almost

2:16:12

the entire position within a few short

2:16:14

months while you cited in a CNBC

2:16:17

interview that geopolitical issues were

2:16:19

the Catalyst these issues were seemingly

2:16:21

no different when you acquired that

2:16:23

stock so what else if anything changed

2:16:26

in those few months and prompted The

2:16:28

Firm to offload close to five billion

2:16:30

dollars worth of Taiwan semiconductor

2:16:31

shares

2:16:32

at Taiwan semiconductor is one of the

2:16:34

best

2:16:36

managed companies

2:16:38

and important companies in the world

2:16:41

and uh

2:16:44

there is not

2:16:46

and I think you'll be able to say the

2:16:49

same thing 5 or 10 or 20 years from now

2:16:52

I don't like its location and and uh

2:16:55

reevaluated that I mean I don't think it

2:16:58

should be any place but Taiwan although

2:17:00

they will be obviously opening up

2:17:03

chip capacity in this country and

2:17:05

actually one of our subsidiaries that we

2:17:07

got in Allegheny is is uh is

2:17:10

participating in in in their Arizona

2:17:14

uh construction activities but

2:17:17

uh it's

2:17:21

uh

2:17:22

it uh

2:17:27

it's a question of we would rather have

2:17:30

the same

2:17:31

yeah kind of company and they're there's

2:17:34

nobody in the chip company there's no in

2:17:37

the chip industry that's in their league

2:17:39

in our bit at least in my view uh

2:17:43

and the man that was a 91 year old or so

2:17:46

that

2:17:47

connected with us and that I think I

2:17:51

played Bridge with and and uh in

2:17:54

Albuquerque and The Marvelous people

2:17:57

marvelous company but

2:18:00

I'd rather find a

2:18:02

marvelous people I won't find it in the

2:18:04

chip industry but marvelous people and

2:18:06

marvelous

2:18:07

uh competitive position and everything

2:18:09

I'd rather find it in the United States

2:18:11

I feel

2:18:13

better about the capital that we've got

2:18:16

deployed

2:18:18

in Japan than in Taiwan it uh

2:18:22

I wish it weren't so but I think that's

2:18:24

the reality and I've reevaluated that uh

2:18:27

in the light of certain things that were

2:18:29

going on try well my view is that we're

2:18:32

in ought to feel comfortable if he wants

2:18:34

to

2:18:37

yeah put that in the minutes

2:18:41

okay station 10.

2:18:47

first of all thank you for making our

2:18:50

lives better

2:18:51

my name is bogumil Baranowski I'm a

2:18:54

founding partner of

2:18:56

New York

2:18:57

we manage multi-generational family

2:19:00

fortunes hence my question

2:19:02

Mr Buffett in 1976 in your tribute to

2:19:07

Benjamin Graham you wrote Walter lippman

2:19:10

spoke of men who plant trees that other

2:19:13

men will sit under

2:19:15

Ben Graham was such a man

2:19:18

you're both such people

2:19:20

could you share with us your 100 Year

2:19:22

vision for Berkshire it's a question to

2:19:25

you both

2:19:27

yeah I would like to add one thing about

2:19:29

Ben Graham uh

2:19:32

Ben Graham didn't

2:19:35

all kinds of things

2:19:37

for me and I never expected one thing in

2:19:40

return I may just you name it and he did

2:19:43

it and and there wasn't any hidden you

2:19:47

know there's a hint I should say of of

2:19:50

anything he expected in return and uh

2:19:55

I I checked

2:19:57

uh well he wrote a book in 1949

2:20:02

that in a sense said to me in very

2:20:05

persuasive terms

2:20:07

that what I'd been

2:20:09

spending

2:20:11

on the previous

2:20:13

eight or nine years

2:20:16

working at and loving was all wrong

2:20:19

and

2:20:21

that book

2:20:23

has been I check it every now and then

2:20:26

on Amazon to where it ranks and you know

2:20:29

Amazon ranks

2:20:31

hundreds and hundreds and hundreds of

2:20:33

thousands of books uh

2:20:35

by sales

2:20:37

and

2:20:39

Ben Graham's book

2:20:40

has been up there like number 300 or 350

2:20:43

or something like that forever and there

2:20:46

isn't

2:20:47

there isn't any book I got I wrote

2:20:49

harpercollins and note the other day

2:20:51

because they're bringing out another

2:20:53

Edition

2:20:54

and I asked them how many copies have

2:20:56

been sold and they said the records

2:20:57

didn't go back

2:20:59

far enough but they they had 7.3 million

2:21:05

copies of this little book

2:21:07

that changed my life

2:21:09

and uh uh

2:21:12

continues

2:21:13

to outsell every investment book

2:21:15

investment will come along and you know

2:21:18

their number

2:21:19

400 or a thousand or something for a

2:21:22

while and then all of a sudden they're

2:21:23

numbered 25

2:21:24

000 or 200 000 and and this this book

2:21:29

you know

2:21:30

in how many areas

2:21:33

can you find any book

2:21:36

that has had that sustained position you

2:21:38

can't you go back and look at number one

2:21:40

in 1950 or number two or number three

2:21:42

and you're looking in 51 and 52 they

2:21:45

don't continue I mean they just don't

2:21:47

continue uh

2:21:49

cookbooks maybe one or two of them last

2:21:51

for a while but there is nothing and

2:21:55

this book lives on and everybody keeps

2:21:57

bringing out new books and saying a lot

2:22:00

of other things but they aren't saying

2:22:02

anything it's as important as what he

2:22:04

said in 1949 in this relatively thin

2:22:07

little book so uh

2:22:11

our vision

2:22:12

for Berkshire

2:22:14

is exactly what we said today we we

2:22:16

wanted to be a company

2:22:18

that

2:22:20

is owned by shareholders and behaves in

2:22:23

a way

2:22:24

Society is happy that it exists and not

2:22:27

unhappy

2:22:28

and we

2:22:31

will have unlimited capital

2:22:33

we'll get lots of talent

2:22:35

and we've got a base

2:22:38

that can't be beat and there's no reason

2:22:42

why it can't be perpetuated just like

2:22:44

Ben's book and maybe be an example to

2:22:47

other people and and if so we'll be very

2:22:51

happy Charlie

2:22:54

yeah one of the really interesting

2:22:56

things about vinegar he was a really

2:22:58

gifted teacher

2:23:00

a very honorable profession

2:23:03

and

2:23:05

that is what has lasted however

2:23:09

an interesting fact that he was sheepish

2:23:11

about in his old age was

2:23:13

that more than half of all the

2:23:16

investment returned that Benny Graham

2:23:17

made in his whole life came from one

2:23:20

stock one growth stock Geico

2:23:24

Birches subsidiary

2:23:26

and

2:23:28

he at the time he operated there were a

2:23:32

lot of sort of lousy companies that were

2:23:34

too cheap and you can make a little

2:23:36

money floating from one to another

2:23:39

but the big money he made was one growth

2:23:42

stock buying one undervalued great

2:23:45

company

2:23:46

uh is a very good thing as Berkshire is

2:23:49

found out again and again and again

2:23:52

and and Ben wrote a post trip to the 49

2:23:56

Edition pointing out exactly

2:24:00

that fact and acknowledging it but said

2:24:03

but also took the some good lessons from

2:24:05

it you know he said that's the way life

2:24:07

is that that you prepare and you

2:24:11

you know you don't lose everything along

2:24:14

the way and then something comes along

2:24:16

and Geico came along because

2:24:19

a banker in Fort Worth at a financial

2:24:22

Leo Davidson uh

2:24:25

and I think the banker got three

2:24:27

quarters of it and I don't mean Leo

2:24:29

Davis and Leo Goodwin uh who founded

2:24:31

Geico then called government employees

2:24:34

insurance company and you can figure out

2:24:36

the acronym and uh

2:24:40

the deal almost fell apart the deal was

2:24:43

as I remember from maybe a million and a

2:24:45

half or something like a million and a

2:24:47

quarter and it almost fell apart because

2:24:49

of a difference of twenty five thousand

2:24:52

dollars

2:24:54

in the net worth delivered this is a

2:24:55

business's

2:24:57

you know we're tens of billions I mean

2:24:59

but he pointed out the irony in that too

2:25:02

I mean he was honest about it was

2:25:05

totally intellectually honest on about

2:25:07

us about his

2:25:10

the failings and but also the strengths

2:25:13

of his approach and he and that to some

2:25:17

extent you know Charlie and I have seen

2:25:19

that in our lives I mean the sort of the

2:25:22

prepared mind the willingness to

2:25:24

to act when you need to act and the

2:25:28

willingness to ignore it every salesman

2:25:29

in the world and and the imperative norm

2:25:32

and uh

2:25:36

is one or two things that make the right

2:25:37

decision if you make the right decision

2:25:39

on a spouse I mean you've won the game

2:25:43

they you know and there's enormous

2:25:46

important decision and you got all the

2:25:49

time I mean in the world we got more

2:25:51

time now than used to have when I was a

2:25:53

kid to make that decision and and uh

2:25:57

you know

2:26:00

I don't know whether a third or

2:26:02

whatever percentage blow that one you

2:26:05

know it it is it is really interesting

2:26:07

the thing to do is just

2:26:10

keep trying to

2:26:12

trying to think things through not do

2:26:15

too many stupid things and

2:26:16

and sooner or later you have a lot of

2:26:18

Polo so Charlotte would say

2:26:22

okay Becky

2:26:24

all right this question comes from

2:26:26

terrafter a shareholder in Sierra Vista

2:26:29

Arizona who is asking a question of Ajit

2:26:32

wants to know about electric vehicles

2:26:35

getting insurance from the manufacturer

2:26:37

instead of car insurance companies a

2:26:40

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