excuse me
good morning good morning and thanks for
coming
I love it Charlie loves it we're glad to
have you here
we're going to make this
this uh
preliminary before the question is very
short
because we want to get in at least
60 Questions half divided by the
the audience outside this
Arena and a half from you so I would
just like to get
right to the
to the directors and the earnings that
have been put up
on the uh
on our web page this morning but we'll
cover those very fast and we'll get to
the questions now
I
when I woke up this morning
I realized
that we had a competitive
broadcast going out
somewhere in the UK and and
they were they were celebrating
a King Charles and we've got our own
King Charles here today
[Applause]
and next to him we have
Greg Abel the who's in charge of all the
operations except for
insurance
next
[Applause]
and actually great we have
uh
a man I ran into a 1986 and
has made us look good ever since we have
the man in charge of insurance Ajit Jane
Jaden
[Applause]
and now we have our our directors here
in front and if they would
just stand briefly and then I'll go on
to the next one and and uh
they're all here today first of all
doing alphabetically there's Howard
Buffett
there's Suzy Buffett
there's Steve Burke
[Applause]
Ken Chanel
[Applause]
Chris Davis
[Applause]
Sue Decker
[Applause]
Charlotte Guymon
[Applause]
Tom Murphy Jr
[Applause]
Ron Olson
[Music]
Wally Weiss
[Applause]
and Merrill Whitmer
[Applause]
[Music]
that's as good as you can get and
there's one other person I would like to
mention before we get on to the earnings
that were put on the uh
uh in the press release this morning and
uh
that's uh
well let's see who we have there we've
got
this is hard to believe
can you imagine a name
Melissa Shapiro Shapiro
and she was uh Melissa Shapiro until she
married another Shapiro and she put this
whole thing together with no help from
me no help from Charlie and a lot of
help from the people of the other room
Melissa
[Applause]
yeah it's very easy if you can remember
her second name you can remember her
third name so Melissa shabiro Shapiro
and with that I would like to
next move on to the
earnings in a couple
small slides that that explain what
we're all about and then we're going to
get to the Q a and uh
the slide is up behind me yeah there it
is we reported in the first
quarter
operating earnings a little over 8
billion and when we talk about operating
earnings we're basically referring
to the earnings
a Berkshire Hathaway as generally well
as required under gaap excluding however
capital gains both realized and
unrealized there's a few other very
minor items but basically
we expect to make capital gains over
time why would we own the stocks
otherwise uh doesn't always work out but
overall it works out pretty well over
time but in any day any quarter any year
even occasionally over a five-year
period uh
the stock prices move around
capriciously now we own a lot of other
businesses we consider those stocks
businesses we own a lot of other
businesses where they get them
Consolidated and they don't move around
in value now if we had a little bit of
Burlington
stock outstanding if we had a little bit
of the energy stock trading those stocks
would move around a lot but the
businesses are what count so the
operating earnings as you'll see in the
first quarter came in at about 8 billion
and
uh I would say that
in the general economy
the feedback we get is that uh
I would say perhaps the majority of our
businesses will actually report
lower earnings this year than last year
the
in various degrees in the last six
months or so at various times uh
the the businesses have left
the incredible
period which is about as extraordinary
as I've seen in business since World War
II uh where the government would pour
out a lot of money to people
who couldn't get Goods it was more
extreme in World War II but this was
extreme this time
and it was just a question
of getting Goods to deliver
and people bought and they didn't wait
for sales and if you couldn't sell them
one thing they would put another thing
in their backlog it was an extraordinary
period and that period uh
has ended it hasn't ended with as you
know it isn't that employment's fall
born off a cliff or anything in the
least but but
it is a different climate
than it was six months ago and and a
number of our managers
uh were surprised some of them had too
much inventory on order and then all of
a sudden it got delivered and people
weren't in the same frame of mind as
earlier
and now we'll start having sales at
places where we didn't need to have
sales before
but
uh despite the fact
that this year I think in general will
be slower
than last year
we actually are
situated so that I would expect and
believe me when I say accept expect
it's
nothing is sure nothing sure tomorrow
nothing sure next year and nothing is
ever sure
either in markets or in business
forecasts or anything else and we don't
pay much attention to markets or
forecasts unless the Marcus Epping off
or something interesting to do but
nevertheless we are positioned in two
respects as you'll see from
from this uh first report our investment
income is going to be a lot larger
uh this year than last year and that's
that's built in I mean we have as you'll
see in a minute we've had 125
billion or so in
very short term
investments and
and believe it or not
uh not that long ago
we were getting
four basis points which is next to
nothing
on that 125 billion which means we were
getting 50 million a year and now the
same money the other just day or day
before yesterday we actually bought
because of someone funny twist in the
market because of doubts about the
deficit ceiling or the debt ceiling uh
we bought three billion of bills at the
590
[Music]
that's 5.9 is it 5.92 Bond equivalent
yield so
we will have what produced us not that
long ago on a 12-month basis was
producing 50 million here producing
something in the area of 5 billion here
so we're in a position where the
investment income is essentially well it
is certain to increase quite a bit
and insurance underwriting
is not
it uh
it does not correlate
with business activity it depends on
things like hurricanes and earthquakes
and and other events
so
on a prospective basis on a probability
basis we're likely to have a
a better year
uh this year in Insurance underwriting
than we had last year uh it just isn't
affected
by what you might call the business
cycle or uh what applies to generally an
industry detailing you name it uh so I
would expect
and one
massive EarthQuaker
one one hurricane that came into just
the wrong place
I would
can affect that prediction but on a
probable listing basis our insurance
looks better this year so if you get two
of those
two of the elements there of our main
elements of earnings that look like they
will swing in our Direction I would
expect but I can't promise that our
operating earnings will be uh greater
than last year
and if we'll move to
the second slide
uh I give you those operating earnings
figures
just to give you
a overview of what has happened
uh
since the pandemic started and off of
the year
the yearbook before as a base
and
we retain all our earnings as you know
so if we're retaining 30 or 35 billion
or whatever but maybe a year you should
expect more operating earnings over time
I mean this I mean this this number
should be
significantly higher five or 10 or 15
years from now because we have the
advantage of retaining earnings and
that's what got us to these figures
because they were essentially nothing
when we started and they got there by
retaining earnings and we'll keep
retaining earnings so it's no great
Triumph if these numbers move up and
what we hope is that they
move up at a reasonable rate
historically
they moved up at an unreasonable rate
sometimes but we were working with a
much smaller Sons then and that can't be
repeated with our present Capital base
because I note there
I believe it's on this slide let's take
a look
uh
now that'll be
see it's on the
well on the on the next on the next
place paid and much smoother the next
slide
we showed that we had on March 31st
now 500 and
was it
504 billion
of Gap net worth
now what might surprise you
is that there's no other company in the
United States no other company
that has a number
that is that large now that isn't
because we've got the most valuable
company in the United States
other companies
have used their money to repurchase
shares that they could have accumulated
504 billion in gap
but basically we have more
under Gap accounting now
than any other company in the US and of
course if you measure return on
on Equity that becomes a very big number
to increase
at a rapid rate but we hope to do so
uh not a rapid rate additional rate
um and right below that you see
something called float
and float
is money
that
uh is left in our hands
uh somewhat Akin
but very importantly different
a little bank deposit but it
you have to pay interest to get a bank
deposit you have to pay more interests
these days and you have to run a bank
and do a lot of things and
basically this is money that represents
unpaid losses at this time you get paid
in advance in insurance
so what shows up as a net liability
on our balance sheet
is gives us funds uh
do exercise with an amount of discretion
that no other
insurance company that I know of in the
world enjoys just because we have so
much net worth
and our float now
comes to 165 billion
and the man sitting on the far left is
responsible for moving that number up
from a pittance
in 1986
to this incredible figure which in most
years practically all years
hasn't cost us anything so it's like
having a bank with no employees no
interest
and no ability to withdraw
the money in a hurry
that we have working for us and it's a
very valuable asset that uh
that shows up as a liability and uh
Ajit is responsible for building up this
treasure
uh which has done been done by
out competing insurance companies all
over the world and then now a number of
our insurance companies in turn are run
by talented managers
who contributed
one way or another
uh start with Geico
the beginning of my career and the uh
that float
if you think about it just think of a
balance sheet you've got liabilities
here and you got assets over here and
and the liability side finances the
asset side is very simple and
stockholders Equity finances it
long-term debt finances and so on but
stockholders Equity is very expensive in
a real sense
long-term debt has been cheap for a
while but it can get expensive and it
can also become
do eventually and if and it may not be
available
uh but float
is another item that shows a it's a
liability but hasn't cost us anything
and it it can't disappear in a hurry and
it finances the asset side in the same
way as stockholders equity
and nobody else thinks of it much that
way but but we've always thought of it
that way and it's built up over time so
uh I show at the bottom what's happened
with cash and treasury bills
through March 31st and I will tell you
that the
in the month of April
we probably
added
about seven billion dollars to that
factor now part of that is because we
didn't buy as much stock because that
reduces reduces cash and treasury bills
we bought about 400 million dollars
worth of stock in the month of April
that's that's a minus uh in terms of
cash available and uh
we we
however sold net some stock which
produced maybe 4 billion and of course
we had operating earnings probably two
and a half
billion or something in that area and my
guess is we probably increased our cash
and treasury bills uh six and seven
billion in the month and uh I just want
to give you a feel for other cash flows
at Berkshire
and then if we move to the final I think
it's the final one next to the last one
uh
no I I think it is the last let's see
it's the fourth
yeah is this we should have the one of
their class a equivalent shares
outstanding and and uh
you'll notice that every year
the number of our shares go down so if
we own more businesses and the
businesses make more money
your chair as shareholders as owners
a Berkshire increases every year without
you laying out any money now you're
laying out the
the
alternative which you could receive in
dividends but the reason we've gotten to
where we are is because we
we kept the money we did pay a dividend
in nineteen
sixty seven ten cents to share
it was a terrible mistake and I
I always tell people that I I'd love for
the men's room and the directors voted
it while I was gone but that isn't true
I was there I confessed they uh but we
were invested and has produced the
500 billion possible shareholders equity
in the 30 billion plus of operating
earnings and and we'll continue to
follow that policy because it makes a
great deal of sense and uh
with that
I think we've taken care of the
preliminaries you can study that the 10q
is is on the uh
on the
web page and if you have a
week or two vacation you could spend it
reading the 10-q and but that is the
essence of Berkshire and with that I
will
start with Becky quick and and uh we
will alternate between Becky and and the
audience and her questions have come in
from all over the country and I believe
you identified the center and go to it
Becky thanks Warren the first question
comes in from Randy Jeffs in Irvine
California and his question is if
Silicon Valley Bank's deposit had not
been fully covered what do you think the
economic consequences would have been to
the nation
well I've just simply say it would have
been catastrophic and that's why they
were covered uh and even though the FDIC
limit is 250 000 that that's the way the
statute reads but that is not the way
the us is going to behave
uh any more than they're going to let
the debt ceiling uh uh cause the world
to go into turmoil and they
ah
well they're just I I can't imagine
anybody
in the administration and the Congress
and the Federal Reserve whatever it may
have been FDIC I can't imagine anybody's
saying uh I'd like to be the one on
television tomorrow and explain the
American public why we're keeping uh
uh only two hundred and fifty thousand
dollars insured and we're gonna start
around every Bank in the country and
disrupt the world financial system uh so
uh I think it was inevitable Charlie do
you have any
no I have nothing to add okay well
uh incidentally I should mention this
now ajeed and Greg will be here in the
morning session which ends at noon and
so uh if you've got questions to direct
to them the time to do it is in the
first half of the show and and then
after lunch
it'll uh just Charlie and I will be back
okay
area one
hi nirav Patel Haverhill Massachusetts
Mr Buffett Mr Monger it seems like you
found the Sweet Spot between being being
too conservative and too aggressive as
investors
do you ever make bad investment
decisions because of your emotions and
what do you do to try to keep that from
happening
well we make
bad investment decisions uh
plenty of times I make more than Charlie
because I'm I like to think it's because
I make more decisions but the public
normatic average is worse but
I can't recall
anytime
in the history of Berkshire
that we made an emotional decision that
I know the movie had Jamie Lee in there
but that that was for Laughs
I mean Jamie
Jamie Lee she's good but she's not good
enough to get me or Charlie to make an
emotional decision
[Applause]
Charlie
I'm sure you have something to add on
that
well it's a different movie than it is
shown in the most corporate meetings
[Laughter]
but have we ever made an emotional
decision no no
that's in business we're talking about
yeah
yeah no you don't want to be a no
emotion person in all of your life but
you you definitely want to be a no more
no emotion person of making an
investment or business decision that uh
you can argue that that uh uh
with it
we probably I would say that we
've made an emotional decision perhaps
and when a manager has been with us for
some period
and we haven't
we've
we we've ignored the fact
that perhaps they weren't quite what
they were
earlier but our businesses are so good
that they they've run better sometimes
when uh you know I've talked about
West Coast for example the wonderful
Louisville
it ran on
it ran on automatic pilot
for a while but I don't think we
suffered by it but you're going to argue
that if Charlie and I hadn't liked Louie
as much as we did we might have spotted
a little bit early but I don't think it
made any difference in the results would
you would you agree with that Charlie
yeah yeah you'd be totally with it
and
I'm glad I'm glad we behaved the way we
did at Wesco
by the way we bought the thing for a few
tens of millions and it became worth two
or three billion
yeah that wasn't common in the Savings
and Loan businesses you may have noticed
and they don't want they really want
crazy in that industry and and we had a
wonderful guy in Louis and we didn't go
crazy yeah we didn't go crazy
um
okay Becky
this question comes from Ben Knoll in
Minneapolis he says he's a Berkshire
shareholder of three decades and he's
attended many Berkshire meetings he's
here again this year
and this is addressed to Ajit and Greg
he says last year I asked you about how
Geico and BNSF appeared to lose ground
to their leading competitors Geico on
telematics and BNSF on Precision
scheduled railroading Ajit you responded
by saying how you expected Geico to make
progress in a year or two Greg you spoke
about your pride in BNSF but you didn't
directly address the threat of
precision's scheduled railroading will
each of you please provide perspective
on these competitive challenges and our
company's strategies to address them
let me
in terms of Geico and telematics let me
make the observation that Geico has
certainly taken the ball by the horns
and has made rapid strides in terms of
trying to bridge the gap
in terms of telematics and its
competitors
they have now reached a point where on
all new business
close to 90 percent is has a telematics
input to to the pricing decision
unfortunately less than half of that is
being taken up by the policyholders the
other point I want to make is even
though we have made improvements in in
terms of Bridging the Gap on telematics
we still haven't started to realize the
true benefit and the real culprit or the
bottleneck is technology
Geico's technology needs a lot more work
than I thought it did it has more than
500 actually more than 600 Legacy
systems that don't really talk to each
other and we are trying to compress them
to no more than 15 16
systems that all talk to each other
that's a Monumental Challenge and
because of that even though we have made
improvements in telematics we still have
a long way to go
because of Technology
uh
because of that and because of the whole
issue more broadly in terms of matching
rate to risk Geico is still work in
progress
I don't know if you any of you had a
chance to look at the first quarter
results but Geico has had a very good
first quarter coming in at a combined
ratio of 93 and change which means a
margin of six and change
even though that's very good it's not
something we can take to the bank
because they're two unusual items that
contributed to it firstly we've had what
is called prior year Reserve releases
we've reduced results for the previous
years and that contributed to it and
secondly every year the first quarter
tends to be a seasonally good quota for
auto insurance writers
so if you just for those two factors my
guess is the end of the year Geico will
end up with a combined ratio just south
of 100 as opposed to the Target they're
shooting for 96.
I hope they reach the target of 96 by
the end of next year
uh and but instead of getting too
excited about it I think it's important
to realize that even if we reach 96 it
will come at the expense of
having lost policy holders there is a
trade-off between profitability and
growth and clearly we have we're going
to emphasize
profitability and not growth and that
will come at the expense of policyholder
so it will not be until two years from
now that we'll be back on track fighting
the battles on both the profitability
and the growth front
okay yep
moving to BNSF
I'll start again by expressing great
pride in the BNSF team we have an
exceptional group of led by Katie and
and her managers that uh show up every
day to do great work on on the railroad
at the same time they would be the first
to acknowledge there's more to be done
there uh the specific reference to
Precision scheduled railroading uh the
other large railroad Class A uh on the
railroads in the in the U.S follow that
and including the two in Canada we're
well aware of what they're doing and and
obviously pay close attention to their
operating Matrix and our team strives
every day to be more efficient obviously
I would say we balance it with the needs
of our customers
if I look back to
pre-2022 so we look at the three-year
period of 2019 2020 2021 the BNSF team
made significant progress on their
efficiencies and and and delivering
overall value back to the shareholders
and and to their customers and at the
same time maintaining a very safe
railroad for our employees so we're
making excellent progress that didn't
stop last year they made great progress
again the reality in 2022 as we did go
through a period of time where we had to
call it reset the railroad we came out
of the pandemic there were the supply
challenges we had certain other issue
labor issues and other things going on
at the port and the reality is our team
prioritized getting the railroad back in
place for the long term not a short-term
focus on hitting certain operating
metrics in in
2022 we're well aware of where we were
relative to those metrics but the real
Focus was to get the railroad reset in a
in a safe manner such that we could
deliver long-term value and long-term
service to our customers and and that's
really what we'll continue to see with
that team they'll be continual progress
there'll be years where it's not as
quickly or even we go backwards but over
the long term we'll be very we'll see
exceptional results from from that team
and and couldn't be more proud that we
have that asset thank you
I wouldn't I would just
well he deserves but both of them
deserve Applause uh the I would like to
add one thing
the
and Geico
dot Combs
was Jake's Choice my choice
go back to guy at Geico
to work on the problem of matching
rate to risk which is what
insurance is all about
and uh
he arrived
with exquisite timing right before the
pandemic broke out and all kinds of
things changed but Todd is doing
a wonderful job at Geico and and he
works closely
uh with the Jeep because he saw his home
and all Mulligan comes back here and we
we get together on the weekend
sometimes too so uh
that's been a
a remarkable com accomplishment under
difficult circumstances and he's not all
the way home but he said he just made a
very very big change
uh in multiple ways at Geico and then
one other thing I would like to mention
there have been a lot of public
companies created in the last decade
thereabouts in insurance
and uh there's none of them
that we would
like to own and and they always started
out
in their perspective saying this is a
tech company not an insurance company of
course we're of course they're in a tech
company with it everybody's
whether they're in insurance or a lot of
other places are using the facility but
you still have to properly match rate to
risk and uh uh that they invariably have
reported a huge losses they've eaten up
capital
but there's been one company that nobody
has generally heard of there's only been
one that I know of
company started in the last 10 years
that has been a overwhelming success and
that's a company that Ajit
and four people who join with them set
to develop a new business
it's called Berkshire Hathaway specialty
it now has
yeah
what's the float a Jeep coming up to 12
billion yeah yeah we've we've built more
slope than probably all these companies
combined
we've now
it it's cost us essentially nothing in
terms of an underwriting loss
the four people have turned in I don't
know 1500 around the world we we took on
the whole industry and we brought
some unique
talent and the four people that came and
now have like you said 1500 or so
worldwide and we brought capital and we
brought
okay
capabilities that really only Berkshire
could Supply so it was the it was the
combination
of of
brains and talent and energy and money
and no one has really successfully
entered this
this space
plenty of people in the space who didn't
like us coming
and we did it without it
costing us a dime of Entry
and it's been unmatched by any of the
public companies that went public
and people who've seen us do it but they
can't duplicate it and that's
what Vegeta's created and Peter Eastwood
has led this group Berkshire Hathaway
specially and uh it's just remarkable so
anyway with that let's go on yeah we'll
give him a hand for that
[Applause]
[Music]
okay let's go to section two
hi Charlie
I'm
Lorenz I'm Karen here
your priorities are right
yes I have questions on AI and Robotics
here's my questions as Ai and Robotics
continue to advance what do you believe
will be the positive and an active
impact of this technology
on both the stocks markets and society
as a whole and are there any specific
Industrials and companies that you
believe will be most impacted
Karen I thank you for asking Charlie
that question
well
if you went into byd's factories in
China you would see robotics going in
the unbelievable rate
so we're gonna see a lot more robotics
in the world
I am personally
skeptical of some of the hype that has
gone into artificial intelligence
I think old-fashioned intelligence works
pretty well
[Applause]
there won't be a
there won't be anything in AI
that replaces the gene
the
state that unqualifiedly they can do
amazing things uh
you know Bill Gates brought me out of
them out
the latest maybe not the latest version
but one he thought maybe I could handle
which
has to be careful with me in terms of
leading me too fast uh and it did it did
these remarkable things uh it didn't but
it it it couldn't tell jokes Bill told
me that ahead of time and it prepared me
and it it just isn't there but you know
things like
checking all the legal opinions on you
know
since the beginning of time and
everything and eliminating all the
sided I mean it can do all kinds of
things and
when something can do all kinds of
things
I get a little bit worried and because I
know we won't be able to uninvent it and
uh
you know we did invent
uh for very very good reason
the atom bomb and in World War II and it
was you know it was enormously important
that we did so
but
is it good for the next 200 years of the
world that that the ability to do so has
been Unleashed we didn't have a choice
but uh uh
when you start something well Einstein
said after
this has changed everything in the world
except how men think
and uh
I would say the same thing May
not not the same thing I don't mean that
but I mean they with with AI
uh it it can change everything in the
world
except
how men think and behave and
that's that's a big step to take
it's a good question and it's the best
answer we can give Becky
this question comes from Tom Seymour he
says the first sentence of a recent
Financial Times article read Charlie
Munger has warned of a brewing storm in
the U.S commercial property Market with
American Banks full of what he said were
bad loans as property prices fall please
elaborate on what's going on in
commercial real estate how bad will the
losses be and what sectors or
geographies look particularly bad I'll
just add an addendum from another viewer
who wrote in and wanted to know if
Berkshire would be more active in
commercial real estate as a result
okay
well berkshire's never been very
important very active in commercial real
estate
it it works better for taxable investors
than it does for corporations tax the
way Berkshire is
so
I I don't anticipate huge
effects on Berkshire but I do think that
the hollowing out of the downtowns
in the United States and elsewhere in
the world is going to be quite
significant and quite unpleasant
I think the country will get through it
all right
but as they say it will awfully it will
often involve a different set of owners
yeah in the buildings the buildings
don't go away but the owners do well but
but most people like to buy with
non-recourse in in real estate and and
one time I asked Charlie there was some
real estate guy we were talking to him
and you know how do they decide how much
they can a building like this is worth
and it's the answer is it's whatever
they can borrow without signing their
name and if you look at
real estate generally you'll understand
what the phenomena that's happening if
you do if you remind yourself that
that's the attitude of most people that
have
uh
become big in in the real estate
business and and uh
and it does mean that the lenders are
the ones that
got the property and of course they
don't want the property usually so then
the real estate operator comes on
negotiating with them and and the banks
tend to
you know
extend and pretend and there's all kinds
of activities that arrive out of out of
commercial real estate development which
occurs on a big big scale but it all has
consequences and and I think we're
we're about
well we are starting to see the
consequences of people who could borrow
it
two and a half percent
find out it doesn't work at current
rates and they hand it back to somebody
that gave them all the money they needed
to build it
done
Charlie's had more experience than
really Charlie got it started in real
estate though I mean Charlie Charlie
yes it
it's difficult
I like what we do better
well as Charlie once said to me when I
was leaving his house a few months ago I
was visiting him we talked for a couple
of hours and I said to Charlie as I left
I just it wasn't anybody else in the
house and I said except
one daughter and I said uh Charlie hello
I'll just keep
doing what we've been doing and
Charlie said without looking up or
pausing a second he said that's all you
know how to do Warren yeah
he was right too ah station
three is it
hi uh my name is salazi I'm from Santa
Santa Clara California and my question
is to Charlie and Warren given the rise
of disruptive technologies that can
improve productivity significantly and
AI being one of them how do you envision
the future of value investing in this
new era and what adaptations or new
principles do you think investors should
adopt and any recommendations for
investors to remain successful in this
rapid changing landscape thank you
take that one I think value investors
are going to have a harder time now that
there's so many of them competing first
a diminished bunch of opportunities
so my advice to Value investors is to
get used to making less
and
Charlie was been telling me the same
thing the whole time we've known each
other we we get along wonderfully
because we are making less
yeah well but that's because that mostly
I think is because it's larger we were
younger we never thought we could manage
508 billion no one or five yeah but
I I would argue that uh that uh
there's gonna be plenty of opportunities
and part of the reason they're going to
be plenty of opportunities
the tech doesn't make any difference or
any of that I mean if you look at how
the world changed in them
in the years since 1942 when I started
to say well
how do the kid that doesn't know
anything about airplanes it doesn't know
anything about androgens and cars and
doesn't know anything about them
electricity and all that but that really
isn't the that's not there the world
changing doesn't or new things coming
along don't take away the opportunities
what gives you opportunities is other
people doing dumb things and uh is that
[Applause]
and
I would say
that
well the 58 years we've been running
Berkshire I would say there's been a
great increase
uh and the number of people doing dumb
things and they do big dumb things and
the reason they do it to some extent is
because they they can get money from
other people so much easier
than when we started so you could start
10 or 15 dumb insurance companies in the
last 10 years and you could become rich
uh if you were a Droid at it whether the
business succeeded it or not and the
underwriters got paid and the lawyers
got paid and that creates
if that's not on a large scale which it
couldn't be done what 58 years ago you
couldn't get the money
to do some of the dumb things that we
wanted to do fortunately uh and uh so
I know I think that
investing has disappeared so much from
this huge
capitalistic Market
that anybody can play in
but the big money is in selling other
people ideas that isn't outperforming in
outperforming and
I think that
I think if you don't run too much money
which we do but if you're running small
amounts of money
I think I think the opportunities
will be greater but then Charlie and I
have always differed on this subject he
he likes to tell me how gloomy the world
is and I I like to tell them we'll find
something and and so far we've both been
kind of right
on that or not
there
there is so much money now in the hands
of so many smart people
all trying to outsmart one another
and not promote one another getting more
money out of other people
and
it's a radically different world from
the world we started in
I suppose it will have its opportunities
but
it's also going to have some unpleasant
episodes but they're trying to outsmart
each other
in arenas
you don't have to play I mean if you
look at that Government Bond Market I
feel the treasury ball Market I mean
you've got this one bill that's out of
line with the others when we were over
three billion of us the other day and
and but
those are people the world is
overwhelmingly
short-term focused and if you go to an
investor relations call they're all
trying to figure out how to fill those
out of sheet to show the earnings for
the year and the management is
interested in feeding them expectations
that will slightly be beaten I mean that
that is the world was made to order for
anybody that's trying to think about
what you do that should work over five
or ten or Twenty Years and uh
I I just think that
I would love to be born today and go out
with not too much money and hopefully
turn it into a lot of money
but
and Charlie would too actually just like
he he would find something to do I will
just guarantee you uh and it wouldn't be
exactly the same as before but he would
have a big big big
pile I would not like the thrill of
losing my big pile into a small pie
but we like my big piles is the Way It
Is Well I like
we agree on that incidentally okay we do
you're one of the most extreme lovers of
the big pile
Becky
this question is for both Warren and a g
it comes from Jason ploner in Livingston
New Jersey he says in 2016 you entered
into a very unique transaction with AIG
where you assumed up to 20 billion
dollars of liabilities in exchange for
about 10 billion dollars up front can
you please provide us with an update on
this transaction in light of the
increase in interest rates and then in
Tokyo just a few weeks ago you talked
about the risks of banks with assets
that were susceptible to Rising interest
rates any insight as to how Berkshire
liabilities are susceptible to duration
would be appreciated is that direction
to Vegeta or me or what both okay let me
introduce my one thing and well but
Egypt is the key to this he's the one
that put the deal together but we got
handed 10 billion we'll say uh uh
and but we weren't restricted to putting
that into into bonds uh so
what the exact interest rate interest
rates affect us to some degree maybe in
terms of the terms uh of the deal we did
with AIG or anybody we would do a
similar deal with like that
but we don't have we don't have to put
it in matching bonds or anything of the
sort it goes into a general pool of
assets which we manage and the assets
you know then well the liquid assets now
are 130 billion plus and that but it
goes in so it you know it it it is not
set aside in some little compartment
like people like to think uh now any any
other insurance no other insurance
company could do it but they can't think
that way uh they aren't even used to
thinking that way but they can't think
that way because they don't have our our
balance sheet we account for 26 or
something like that of the net worth of
all property casualty companies in the
United States uh so
uh so far
uh the payments that we have had to make
have run modestly and Ajit will correct
me on this if I'm wrong because he paid
a lot of attention over the the amount
we have had to pay has runs slightly
below
the amount we anticipated having to pay
in terms of our share of the losses uh
but
it served aig's purposes
it came to us with
where we are in a unique position
there's nobody else that was able to
write that just like when when we took
on the Lloyds I mean Lloyd's said there
was no choice other than Berkshire
Hathaway when they they essentially
resuscitated uh their Market
by laying off a lot of liabilities on on
Berkshire Hathaway so
um we won't see those deals very often
if if they're for 500 million or
something like that somebody else will
go in there and offer more money and
everybody's looking for money in Wall
Street but if they start talking with
the deal like the AIG deal there isn't
any other stop now
uh correct me on all my numbers there a
jade
no um
one way to look at how the deal is
performing since we did the deal is at
the point we in time when we did the
deal we had made certain projections of
how much we will pay out each year
and what we do is Monitor what the
actual payments are since the Inception
of the deal and how does that compare
with what we expect it to pay out
as Warren mentioned these two numbers
are very close to each other more
specifically the actual payouts are 96
percent of what we had projected to pay
out at this point in time
which is good but not great we are still
ahead of the curve if we do end up
paying out less than what we projected
Not only would we have borrowed money at
a very attractive rate meaning less than
four percent significantly less than
four percent in addition to that we
would have made a fee which in 1990
which in 2015 dollars would be a million
dollars so if you would have borrowed
money at less than four percent and we
would have made a million dollar fee
which is slightly more than what we were
expecting to do so net net we're very
happy with the deal we're happy we did
it uh but the game is not over the
taught liabilities are coming down the
pike every second day so I'm cautiously
optimistic that the deal will work out
better than what we expected it to work
out well the really interesting thing is
that
in within Bircher the Casualty Insurance
companies have four times as much
stockholder Capital between behind each
dollar of Premium volume
four times
normal
and of course we see the big deals who
would you trust if you had a big
liability you wanted to dump on somebody
and we have 25 or
billion or more
coming in from things other than
insurance
uncorrelated to Insurance every year
with no obligations we don't pay
dividends if you paid evidence and
you know and you cut your dividend try
going around trying to write insurance
the next day I mean it's a business
where the people are counting on you to
pay
and
when we take that 10 billion we don't
agree to put it in five-year bonds and
10-year bonds we don't even think that
way and the people who do business with
us know that they have somebody like
nobody else on those and it's going to
be able to pay 10 billion you know if no
matter what happens to the economy so
it's not only the presence of enormous
strength in the insurance companies this
is the fact we got all these earnings
that essentially come in every month and
we don't have we don't have a lot of
debt I mean we we have debt at the
railroad and the energy level but but in
terms of the rest of the operation uh
and and we don't guarantee that that but
but it's probably good uh
and it's there just isn't another
Berkshire and uh and the Jeep recognizes
that when he's negotiating so does the
other party if sums are big enough
there's all kinds of people that love to
get 500 million or 300 million and
they'll and they can
they may think in terms of lending it
out because that's what their insurance
companies can do at a somewhat higher
rate but that is not a game we play in
and we don't have any interest in
playing in them
okay
station four
hello I'm Marvin Blum an estate planning
lawyer from Fort Worth Texas home to
many of your companies in fact Warren I
met you at the memorial for our beloved
Paul Andrews who was manager of TTI
I'd like to get your thoughts on a
widespread problem in the world of
Estate Planning and that's the failure
of most parents to prepare the Next
Generation for the inheritance coming
their way
in particular if the estate includes a
family business most parents fail to do
business succession planning to plan for
who will run the business on the day
when not if the founder is no longer
there to run it the kids aren't prepared
unlike uh King Charles the the other
King Charles not King Charlie Munger who
has been preparing for his job as king
of England now for more than 70 years
I sometimes describe the situation like
this picture a football game at one end
of the field is a quarterback
he has great skills he throws a
beautiful pass to the other end of the
field
and at the other end of the field are
the receivers
they've never been to a practice they
don't know the rules of the game
they don't know how to work together as
a team they're Clueless
so the quarterback is the patriarch and
The Matriarch the football is the
inheritance or the family business
and the receivers are the kids
that they're going to catch the football
and go score a touchdown probably only
around 10 percent I've got the picture
on on the question
no
they uh
I probably observed as many just because
of my age and to some extent because of
things like the giving Pleasures I
probably observed
as many
particularly wealthy families the
problems and they all are
they get very particular
uh to the family and uh uh
and
uh in my family
I do not sign a will
until my three children
have read it
understand it and made suggestions now
my children are in their 60s
and that would not have been a great one
success if I'd done the same thing as
their 20s it depends on the Family
it depends on how the kids feel about
each other there's all kinds of things
depends on the kind of business you have
so there's a there's a thousand
variables but I do think
that it's
if the children are grown and when the
will is read to them it's the first
they've heard about what the deceased
thought about things
the burns have made a terrible mistake
and uh
people
people who well I've run into all kinds
of situations and some people don't tell
their children anything and some of them
try and get them to bend to their will
by using their their own personal World
they make a million mistakes
and that's when you don't get to correct
uh
and certainly in my well Charlie's had a
lot of experience too well at Berkshire
we have a simple
problem of
uh
estate planning just hold the goddamn
stock
well
but that doesn't fit everybody Charlie I
mean uh you know if it's 95 percent
I don't think it necessarily
I don't know necessarily whether we have
billions of dollars you want to leave it
to your all your children I mean that's
something that's another question but if
you're going to play places somewhere I
just as soon as Berkshire stock is down
oh you're solving the investment problem
yeah but you've got the personal problem
of the fact that when there were four
one of the kids pulled the other kids
uh cat's tail or something like that I
mean you're dealing with human beings
and the biggest thing you want
is you want
you want your children to get along and
you'll want that all through your life
and the estate isn't the only place
where you can mess that up but the it's
a place where you it's a very easy I
mean I know a number of cases where the
people did not know what was in the will
whether we're using something's involved
and you know within about 15 minutes
each one of them had a lawyer and you
know they don't get a long sense of it
it's it's a it's important to handle it
right and uh uh it's important if you
want your kids
do have a certain value certain values
it's important that you live those
values it's important that you talk
about it to them or
they're going they're learning from you
from the day they're born what you're
really like and uh don't think that a
cleverly drawn will will substitute for
your own behavior in teaching your kids
the values you hope that they will have
and then your will should be in
conjunction with that it should start
expressing and they grow older and then
they they they learn to
they them they learn to
pass along their values in connection
with the size of the state if there's
Family Farms it's one thing if it's a
bunch of marketable Securities is
something else but I know in one
instance
by particularly Rich fellow that once a
year
he'd get those kids together and have a
dinner and do all kinds of things to get
them to sign their income tax returns in
blank because he didn't want them to
know how much money they had and
everything well
if that that isn't going to work I mean
I don't know why necessarily real words
with him but uh
if you want
you know about Charlie and I've said it
you know if you want to figure out how
you want to live your life who you write
your obituary and reverse engineer it I
mean you know and uh and Paul Andrews
incidentally who you mentioned that TTI
lived as great a life as anybody I've
known and uh he he thought about these
problems
he came to me
he was 61 I think had all the money Way
Beyond what he needed didn't care about
he'd like to give it to give it to
people he had all kinds of good things
he wanted to do and he said for a year
I've been worried about my business TTI
and he said I've got all the money I
need the families all the money that I
need but what do I do with the business
these people have have helped me
throughout my life and he says I could
sell it to a competitor and if I sold it
to a competitor they'd fire my people
and keep their people when they put it
together and if I if I sell it to a
private Equity Firm or somebody they'll
they'll be figuring their exit strategy
as they sign the sign the papers and he
said
so I've been thinking about a year and
uh he said it isn't that you're such a
great guy he says it's just you're the
only one left
and we bought it and we lived happily
ever after and uh that was a man that
knew what life was about so with that
let's go on to Becky
[Applause]
uh this question comes from Don
glickstein in Seattle he says Warren has
criticized Norfolk Southern's handling
of its train derailment yet has been
silent about BNSF bnsf's conduct a
federal judge ruled in March that BNSF
intentionally and illegally violated an
easement agreement on tribal land in
Washington state by transporting long
trains of crude oil the same month the
judge made his ruling a BNSF Train
derailed on tribal lands spilling oil in
an environmentally sensitive area what
is Warren doing to ensure that BNSF and
other Berkshire subsidiaries fulfilled
their ethical responsibilities he says
he's been a Berkshire owner for more
than two decades and he's concerned that
Berkshire has no systems to identify and
dress what he calls reprehensible
Behavior at BNSF and other subsidiaries
Greg sure
so the uh it it is a valid issue that
our team obviously has been dealing with
at BNSF we did move uh crude across that
tribal land we had an agreement that
allowed us to move X number of of uh
units per day
and we did breach it we went over it
there's uh there was some fundamental
breakdowns there in that our team didn't
understand the number of of trains that
they could move we have had significant
discussions with the tribe looking to
resolve the issue recognizing uh we
obviously been benefited from moving
those trains and those type of
discussions will continue
um I would say there's Lessons Learned
there that we have to when we make a
commitment understand what that
commitment is and and live by it or
don't assume we can just
move our trains as we wish or the the
cargo as we wish we have to respect
those agreements so there's a there's
been a moment learned there but at the
same time we've taken it very seriously
and attempted to reach a resolution
there and at some point I I hope we do
come to a true resolution that's fair
both to the tri-band to BNSF on the
derailment side we did have a an issue
around the track derailed we worked very
closely with the tribe to mitigate that
issue instantly where at least over a
very reasonable period of time they were
very responsive our team was very
responsive and there were really no
long-term environmental impacts to to
that to that's Bill and as our teams
highlighted in other comments obviously
derailments do occur in the industry we
take them incredibly serious they're not
all hazardous but irrespective of that
we're constantly looking at how do we
prevent them
how do we detect them when we
potentially have one that's going to
occur and what do we do with our trains
and then ultimately it comes down to
responding properly because they will
occur and I think we have an incredibly
dedicated team that's always ready to
respond to the communities they're
impacting
there are derailments how many how many
a year yeah well there's uh a thousand
plus in the industry the the yeah yeah
it's you start hauling
right and we're a common carrier we and
we take heavy very heavy Freight and we
take them at 100 degrees when it's the
weather and it's we take it at zero and
and we go around curves and we have
grades and uh even a one percent rate if
you're going down
down a hill with I don't know how much
weight behind you I mean there's a lot
of railroading is not an easy business
and of course the systems
were designed you know in the and
basically in the in the late
1800s amid the late 1800s and we have 22
000 I think it is miles of track and
that doesn't count sightings and some
other things it is not an easy business
we'll make mistakes our job
we're not making a mistake because we
have a derailment you're gonna we will
have the derailments 10 and 20 years or
30 years from now I mean that but we and
we have to carry certain products we
wish we didn't have to carry we're a
common carrier
do we like carrying chlorine and ammonia
and all no but they're going to move
from one place to another in this
society and we are a common carrier and
uh we load them and uh if they select
our railroad but
we are better than we used to be but we
got a long way to go I didn't was that a
fair enough statement absolutely yeah
okay station five
hi Mr Warren and Miss Manga my name is
from China
company and first of all I'm so excited
and very honored to be here today and my
question is with more and more people
focusing on environmental competition
protection and the government supporting
the new energy industry as well so what
are your thoughts on the continued
development of new energy how made the
new energy firm achieve better
development in future
yeah well Greg I think it's the best
answer that because he
since we bought a company called
Mid-American but now called Berkshire
Hathaway energy but he's been talking
about a yearly preparing reports hoping
that we can help solve a number of the
problems and we probably spent more
money than any utility I'm I would guess
in the United States absolutely and uh
and we've just crashed the surface but
it is not easy
when you cross state lines I mean it's
uh uh you've got different jurisdictions
and we should
this country should be ahead of word is
in terms of transmission and uh
we have been the biggest factor in
helping that uh but why don't you tell
them a little bit about it sure things
weren't so there's no question there's
an energy transformation going on around
the globe and and as Warren touched on
in the U.S and in some ways I would hope
in here in the U.S it would be
um we'd at least have a a clear plan
Across the Nation as to how to uh
approach that but the reality is it is
state by state uh with some exceptions
but so as a result when you think of
Berkshire Hathaway energy
we we own uh three U.S utilities there
and and they'll participate in multiple
States but they're developing plans
state by state and then trying to
integrate them across the the various
States the the opportunities are
significant because there is a
transformation going on uh We've
outlined our goal on on where we're
going relative to carbon at bhe where
they'll buy 20 30 reduce their carbon
footprint by uh 50 relative to 2005 so
that's the Paris Accord and the standard
they want to hold the the utility
industry or the utility companies do and
and we're well on that path but to
achieve it is a true Journey uh I've
often talked to Warren when we bought
Pacific Corp back in the mid 2000s we
immediately recognized uh to build a lot
of renewable energy like we've been
doing in the midwest in Iowa but that
was basically in a single stay 8 now
Pacific Corp were in Six States we
started that in the back in the mid
2000s here we are and we laid out a
great transmission plan here's how we're
going to build it here's how we're gonna
uh effectuate it and all the benefits
for our customers over that period of
time here we are in 2023 and we have a
little more than a third of that at the
time it was a six billion dollar
transmission project today we have a
little more than a third of it built and
we've spent probably closer to seven
billion dollars and it's the right
outcome it's still a great outcome for
our customers but that transmission you
absolutely as part of the transformation
you absolutely have to build it to
remove to move all that renewable energy
and that's sort of the complexity Warren
was highlighting it is a uh you you
can't just wake up one day and and solve
this problem you start with transmission
and then you build the resources but at
that same same company and if we look at
what we're doing across VA G Energy and
that energy transformation
we have 70 billion dollars of known
projects that are really required to
properly serve our customers and Achieve
that type of energy uh transformation
across those utilities and that and
that's in the coming next in the coming
10 years so
um we have a team that's absolutely up
to the challenge they're delivering on
their commitments and it's a very uh
very good business opportunity for for
each of our companies and for our
shareholders because as we deploy that
Capital we obviously are in a return on
Equity of it so
um but it will be a long journey it it
hap it'll happen over an extended period
of time and and the further you get out
there the more dependent more dependent
upon the uh the evolution of a variety
of technologies that are progressing but
not there yet so you you've raised a
question I want to just take an extra
minute on because it's so important and
and I don't really know whether our form
of government
uh
is ideal at all in terms of solving uh
the problem you described we have solved
it one time
in World War II we took a
country that was semi-lumping along and
we found ourselves
in a World War
and what we did in a World War
is we brought a bunch of people to
Washington at a dollar a year
you know whether it was Sydney Weinberg
or Goldman's actually you just name him
and we gave them
enormous power
to
reorient the resources of the United
States to face the problem that they
faced which was to create a war machine
and what they did was they found Henry
Kaiser you know and told them to build
ships and they went to the Ford Motor
Company and said you build tanks and
some airplanes and they they reordered
the industrial
Enterprise of the United States in a way
that was unbelievable because they had
the power of the federal government
and they had the ingenuity
of American Business and they had the
facilities of American Business
and it led to a very successful
outcome
but can we do that in a peacetime where
you've got 50 50 states and you have to
get them to cooperate and you don't have
anyone that you can you can issue orders
but you can't
you can't designate where the capital
goes as the other end and you know we
try and do it with tax incentives and
all that sort of thing but we haven't we
haven't created the unity of purpose and
the Machinery that worked in World War
II were essentially everybody felt their
one job was to win the war and we
figured out how to use our
industrial capacity to uh in effect
defeat the axis of powers and uh
how do you recreate that
uh uh with
the present democratic system I I'm not
sure I know the answer but I sure know
the problem but um and I think that
it
if you can think of a if you've got an
emergency on your hand I mean you really
need to re-engineer the engineer energy
system in the United States I don't
think I don't think you can do it uh
without something
resembling the Machinery the urgency
whatever
the capital is there the people are
there
uh
the the objective is obvious
and uh uh we just don't seem to be able
to do it in a peacetime where where
they're used to following a given set of
a procedure and uh and you know
China you've got one country and we've
got we've got 50 states and we got a
whole different system of government
that
we should be up to the test but so far
it hasn't worked but uh so thank you for
the question
Becky
this question comes from Chris freed in
Philadelphia he says we know that Greg
Abel and Ajit Jain are the next
generation of Berkshire leaders who are
currently behind Greg and Ajit in their
prospective roles
respective
well that
will be
the question that they give their
well
Greg will be
have some things extraordinary
circumstances but but he's going to
succeed me and then
he will have
be sitting in a position
where he needs
his equivalent
or something close to the corner because
he's better at many things than I've
been uh
he will need that a substitute and when
the when the question comes word we know
ajit's opinion on that
uh
and but Greg will probably be the one
that will make that make the final
decision I mean it says it was being his
responsibility and
Ajit will give him his best advice and I
think the others are very very very high
that great would follow him so
but it's not those are not easy
questions it doesn't like we've
everybody talks about the executive
bench and all of that sort of thing
which is baloney I mean you know
it they don't have that many people that
can run five the largest gap net worth
company and all kinds of diverse
businesses uh
but you don't need five people either
and you need a lot of good operating
managers and you need somebody at the
top that allocates capital and make sure
that you've got the right operating
manager and we've decided
to design something where we separate
the insurance
and the rest of the business and I think
it's a very good design
but they would not be smart
we wouldn't wish Martin name that
decision now about the two different
different uh areas of the business
because a lot can change between now and
then and the most likely changes that
this job changes
Charlie
I I got nothing to add
we have a lot of good people that have
risen and the Berkshires and City areas
and
there's a reason why our operations have
by and large done better than other big
conglomerate companies
and one of them is that
is that we change managers
way less frequently than other people do
and that's helped us
when Paul Andrews died we know we know
who he thought
to take over there but there wasn't any
reason to
to announce that I mean that Paul
Anderson would I wish he'd lived to be
honored we had we had one of our
managers die
not longer going
how old was he at Karen yeah mid 90s
Seymour yeah see more away from the
scene and Seymour
I wrote him a letter when he was 80 and
I said you know
I'm glad you're 80. and I'll write you
again when you're 90. and uh I wrote him
again one of his 90 and he didn't make
it to 100 but but he had a terrific
uh following him and it really Managed
IT jointly to some extent as the years
went by but
it's Case by case and the main thing to
do is have the right person running the
whole place
okay
station six
good morning
my name's hatch okamot I'm from Miyazaki
Japan
a Mr Buffett I was one of the 8 000
employees at Solomon Brothers that you
saved I was younger back then I was
working at seven World Trade Center I've
always always wanted to thank you in
person for saving the company its
employees including myself and my family
so thank you Mr Buffett thank you
and and and thank Derek thank Derek
Martin who actually had been over in
Japan before that and who I met for the
first time the day before I put him in
and he turned out to it wouldn't have it
wouldn't have worked if Derek hadn't
come so whatever you taught him in Japan
thank you
thank you sir now my question
time to time you have reminded us to not
bet against America
what do you think are the most important
things for U.S to remain strong and on
the risk side if the strength of the
country is undermined what could be the
reasons
but we've been
we've had a lot of tests
I mean we're such a young country you
know when you think about Japan and you
think about the United States it's just
incredible
how new we are to the block I mean you
know what what are we 234 years old
since
since we started that that's that's
that's nothing I mean you know Charlie
and I combined are two-thirds of we look
two-thirds of the life of the country
so and I mean it really has I mean we've
we've been tested at 46 national
elections but and and
we've made some bad choices and we've
got a Civil War I mean it so the the
country
has had an enormous Advantage as though
in some way because we started with one
half of one percent of the world's
population in 1790. and we now have
something close to 25 percent of the
world's GDP
and it wasn't because we had some
incredible
advantage in terms of the line it was
nice to have two oceans and oceans on
each side back when
when uh people tried to rule away Rule
the World by ruling the waves but it
you know and we've had good neighbors in
Canada and Mexico but
it's a miracle and you say how do we
keep the good parts of the system
while
calling out our obvious defects and we
do it in a very herky-jerky manner but
net
the United States
it's a better place to live
but almost when I was born by a huge
Factor
I mean I just got a root canal a week
ago
and I was just thinking I don't know who
even invented Nova game but I'm for him
you know I mean
but in a million ways I mean you can
roll you can romanticize about the past
but forget it uh
it is it is work
but now we do have an atom bomb and we
we wish nuclear power yeah you know we
wish the item had never been split but
but uh it has been and you can't put it
back in the bottle so the challenges are
huge
our government always looks
you know my dad was in Congress back in
the 1940s and
it looked like a mess then you know it
all it was unified by the war to some
degree but it was still very partisan
now the problem we have I think
is that partisanship
and it seems to me has moved toward
tribalism
and tribalism
just doesn't work as well I mean when it
gets to tribalism you don't even hear
the other side and tribalism can lead to
mobs I mean it just it it flows I mean
you've seen it all Explorers we've seen
it to a degree here
so
we
we have to refine in a certain way
our democracy as we go along and we deal
with the world we live in
but if I still had a choice of any post
to be born in the
in the world I'd want to be born in the
United States and I'd want to be born
today I mean it's it is a
it is a better world than we've ever had
and with
present-day Communications we can also
see it seem much more how terrible it is
in many ways
and it's got problems when I was born in
1930
there were two billion people in the
world
and now there's maybe 7.7 billion and
growing
and we went Millennium with really no
change in population so we and of course
we've introduced energy into
uh in an incredible way
into something where
we now have
7.7 billion people using way more energy
than they did when I was born when there
were two billion people so
it's
it's an exciting world it's a
challenging world and I I you know I
don't know the solutions on things I do
think that we do need to think about
different solutions in terms of how we
get important
problem solved and that we don't kid
ourselves that something magic will
happen or that everybody will get
together and we'll all just cheer and
they'll go away by 2050 or anything it
uh uh and how well we adapt to them we
will see I would say
so far it doesn't look very promising
but then I'm sure that
when Lincoln looks at it
what was going on in the Civil War
didn't look very promising either so I
think that that the U.S is capable of
doing remarkable things and I think
I wouldn't surprise me if they do it
again Charlotte charleming are you
well I'm slightly less optimistic than
warranty
I think the best
wrote ahead to human happiness as we
expect less
I think it's going to get I think it's
going to get tougher
and I think the solution of having a
huge proportion of the young and
brilliant people all the way to wealth
management
is a crazy development in terms of
its natural consequences for American
civilization we don't need as many
wealth managers as we have
Charlie was born on January 1st 1924.
and
you'd hate to go back to that wouldn't
you Troy yes I would and I I I like more
worlds managers who were just merely
reflecting the fact there's more wealth
but we've got
I don't like everybody going into wealth
management of MIT or something it's I
think the world's a little crazy now
take your choice okay Becky
now this question comes from Dennis
degennaro
as Warren stated in the 2022 annual
report Berkshire will always hold a
boatload of cash in U.S treasury bills
it will also avoid behavior that could
result in any uncomfortable cash needs
at inconvenient times including
Financial panics and unprecedented
Insurance losses
after Warren passes away his a shares
will be converted into B shares and
distributed to various foundations these
foundations will then sell the shares to
fund their causes Warren estimates it
will take 12 to 15 years for all his
shares to be sold I worry that a
corporate Raider like Cairo icon or a
group will buy up enough of these shares
to take control of Berkshire and
completely disregard Warren's philosophy
of holding a lot of cash in U.S treasury
bills and instead be greedy Reckless and
highly speculative and ruin berkshire's
position as a rock-solid financial
Fortress I also worry that changes might
be made in how Berkshire subsidiaries
are run do Warren and Charlie worry that
these things could happen
well I think it's fair to say we think
about it plenty but I don't I don't I
don't I don't worry enormously if we
it is true that
that
uh Greg and the directors will have a
honeymoon period for a long time because
simply because uh of the boats it will
still remain I mean it and and uh
but it's true that eventually they will
get judged
based on how well
our operation fairs versus others now if
we don't
pay any dividends and
in 12 or 15 years
you're talking a trillion and a half and
it would take to take over and and uh
I think if we can't
that that limits the group they like to
think about how much they can borrow
against it it doesn't work when you uh
and and some of these
there's nobody to come close to doing it
themselves and I think that the
important thing is that Berkshire
regarded the be regarded as a National
Asset rather than a national liability
we've got to be a plus to the country
with our form of operation and we
certainly have got a record
which
will then be 12 or 15 years longer done
with much more Capital more companies
more things will have happened where our
hundreds of billions can work its way
into the economy in terms of lots of
jobs lots of products lots of behavior
and it can be compared with other things
so I
I I think we went out of if we deserved
to win out and I think uh I think the
odds of that happening are very very
very high
Charlie
well we
I don't spend much time worrying about
fluent can happen 50 years ago and ever
I'm dead
I I think you sort of take care of each
day's responsibilities pretty well and
think ahead as well as you can
and you just take the results as they
fall
so I'm I'm philosophical
but I I'm not I'd be spreading
unnecessarily
okay
neither one of us are worried basically
uh but we but but we plan we do plan and
and you know I've got a model in my mind
of what
Berkshire has been that model's getting
it's been modified plenty of times over
58 years and the one thing I know
initially is or very quickly was it
shouldn't be a textile company that was
that was an important decision and and I
mean we've just played the hand as a as
a come along and
and we made a few really good decisions
and we will never make a decision that
kills us only things that are a threat
to the planet
um we don't have any answer for those
but we do we keep ourselves in better
shape than anybody else that and we just
aren't going to have big maturities of
debt that come along we aren't going to
have
uh insurance policies that be can be
cashed in at mass and we will sit with
the Lord what looks like a huge amount
of capital and but there's a huge amount
of capital but there's a huge amount of
earning power there's a huge amount of
diversity everything so our business
model
will be graded and it'll be graded
against a lot of a lot of people that
we'd like to be graded against so uh I
think we're handling something very
secure
over to the Future and I think we've got
the shareholder base like nobody has I
mean there isn't anybody in the country
that I know of unless they've had a
shareholder an employee-owned company
prior to going public or something of
the sort but but
this is the product of you know the
58 years of of
regarding the shareholder as the owner
of the company
but what does that mean that means
having happy customers it means being it
being means
being welcomed by your community rather
than having them turn you away it means
that the government feels better with
you if there's a financial crisis
because you're
you can provide something that actually
the company the country can't under some
circumstances and you'll be there and if
it may and same time it'll be good good
for the business uh and we will have
crises of one sort or another but if
they aren't challenging the planet which
worries you in terms of some of the
threats that we have
were
will be a plus to the United States and
if we're close to the United States
we'll we'll survive
okay
station Seven
Mr Buffett and Mr Munger thank you for
having us this weekend
my name is Beau Clayton and I'm from
Durham North Carolina
one of the reasons that we are all here
is that your great storytellers
and we carry those stories back home
with us
can you please share a couple stories
that maybe we haven't heard before
about Mr Abel and Mr Jane
that capture their character and their
caliber as leaders
well
I'll start out with a Jeep
he walked into the office and
1986 and I had gotten the bright idea of
going into the reinsurance business I
think in maybe 1969 so I'd stumbled
along
uh for 17 years and
I
wonderful guy that ran it uh
uh but he also liked certain Brokers and
I mean he was running at the traditional
wave
top calls top quality and everything
else but but uh but he fell into he he
didn't try and change the system he
tried to improve the system and uh to
some degree and
we just we went nowhere 17 17 years
wandering around to the Wilderness and I
thought I was
um I knew we could have something good
and then the Jeep came in on a Saturday
and uh uh Mike Goldberg and
steered him in I think and and uh Mike
deserves to be enshrined and perpetuity
for that act and uh I talked with him a
while I think maybe I was opening the
mail on Saturday while I talked with him
and and he had absolutely zero
experience with
with insurance
but it actually seen a good bit of how
Corporate America operated
because they
've been in management consulting and
after talking with him I
I knew I'd struck golden and uh
so I hired him and
gave him the backing of some money
uh and we had a very good period in the
market almost right away for him to act
and and the Jeep uh
you know if I had the
top pick of 10 Insurance managers in the
world I'm I I could take all ten and
they wouldn't you can't replace
Ajit and uh
we still
enjoy talking I don't we don't talk as
frequently as he used to but we should
talk about every day
but
he is
he's one of a kind and
you know what if they're going to stick
around long enough you only need one of
a kind Paul Andrews stuck around a TTI
had all the money in the world
every time I talk to him about getting a
raise or something of the sort he said
we'll talk about that next year I just
he was not what you get when you get the
top draft picks from the leading
Business Schools and I will say this I
have never looked at where anybody went
to school
in terms of
of hiring I mean I I just somebody
mailed me a resume or something I don't
care where they went to school uh
uh and it just so happens that
that she went to some pretty good
schools but he isn't the Jeep because he
went to the schools and uh
Charlie didn't tell a story or two um
how'd you find Louis vincenti
well he was there
I I but you got to recognize him I asked
Louie once how he managed to play first
string football at I think Stanford
when he only weighed 165 pounds
and he said well he says I was pretty
quick
and
he was pretty quick but
we have found a lot of people within our
companies who were pretty quick
it's it's a
yeah we had we had one guy that quit at
fourth grade didn't in Ben Rosner Am I
Wrong oh yeah totally self-educated
Ben Rosner knew more about retailing and
difficult neighborhoods and anybody
and
he watched everything in his business
like a hawk and he was a he was amazing
now there was an example
we never found anybody who could do what
when band died that billability left us
yeah and you want a story it's kind of
interesting because Ben Rosner
had a partner Leo Simon
at least Leo Simon was uh Moe
annenberg's son-in-law
and Leo therefore
it was very very very wealthy
and uh
and then started with nothing but they
they liked each other
and
one time
well before they got
involved in the in the business
uh the business we bought but they got
the idea of buying a
submarine from World War One
and taking it to the century of progress
or the World's Fair in effect in Chicago
I think in 1933
so they bought the submarine for not
probably nothing and they figured you
know the average
guy from Walmart was going to his first
World's Fair getting a submarine for a
quarter or something that they'd pay it
so they hauled it
from Florida wherever they got they
hauled it to Chicago and then they got
into Chicago
and they were hauling a submarine down
the streets of Chicago and it was
creating traffic problems like nobody
could imagine so a cop came over
and he said
to Ben
he says what do you think you guys are
going with a submarine Ben says he says
well he said you'll have to talk to my
partner Mr Capone and the cop the cop
says girl I know just keep going and
that was that was Ben Roger and then Leo
Simon died
and when he died in
1967 or so
uh Ben Rosner kept delivering half thee
prophets to his widow
who was incredibly Rich of course being
no Anna birks first born born daughter I
think I think I think Moe had nine
nine girls in a row before Waller came
along the tenth I may be lost by one but
anyway I went to this fancy
apartment and anyway
then
then kept her in for a half
the deal and he had her sign the rent
checks just so she would look like she
was doing something in this business
and she didn't need the money obviously
but he just felt he was obligated once
his partner Leo died
and then she started criticizing him
and at that point
then
went to her his lawyer
was her lawyer actually will felsteiner
I don't know whatever happened to will
but he gave me he gave me a call because
Ben wanted to
call me because he wanted me to buy it
and he wanted me if I bought it
he'd be rid of the partners ex-partner's
wife
and uh and he'd gotten he had me and
Charlie come back
and we went to will felsteiner's office
and Ben says I'll work till the end of
the year and that's all but I'll show
you this thing for six million bucks and
I had two million to cash and a couple
million in real estate and a couple
million of operating earnings this is
crazy
but he fell off he was getting a lousy
prize
she was taking a half of the lousy price
for half the money
so uh
uh
he looked at me at some point
Charlie you described the rest of it
again he said I heard here you're the
fastest draw in the west he says draw
we're one of the New York lawyer's
office yeah and this guy is he's selling
he's selling his baby and and he told us
he's leaving I got Charlie on this side
I said if if this guy leaves at the end
of the year he can throw away every
psychology book that's ever been written
I mean it isn't happening and uh so we
bought it and we lived happily ever
after with Ben and
one time
he was taking me over to see a property
we had in Brooklyn
and uh and along the way I said
uh
then I
you know I promised you I wouldn't
interfere in the business when we
started and he knew a butt was coming
and he just said Thank You Warren and
they're shooting him
he was a lot of fun we had so many Ben
Rosner stories but now you've heard one
that hasn't been published before okay
Becky
this question comes from chai gohil
he writes this is for a G reinsurance
industry is going through one of the
hardest pricing environments in the last
15 years Berkshire historically has
participated during these stress times
when economic returns are very
attractive this year it appears
Berkshire has not been interested in
deploying its resources towards property
cat reinsurance despite such strong
returns can you elaborate on reasons for
not participating despite these returns
and your broader view on how you're
planning to shape your reinsurance
business post acquisition of Allegheny
in terms of Allegheny that's an easy
response we look we treat our operating
units independent of each other and as
far as Allegheny is concerned they have
a major presence in the reinsurance
business
under the brand name of transatlantic
Ree that company will operate the way
it's been operating in the past there'll
be no change in terms of strategy or
management and they will keep doing what
they're doing they've been very
successful and hopefully they'll keep
being successful
now in terms of the property cat
business that I have been active in over
these last several years you are right
that the last 15 years has been a
difficult time prices have not been
attractive and even though we have had
some presence in the property cat
business in the last 15 years it really
is been minimal
this December 31st which is a big
renewal date for Cattery insurance we
were hoping that we would get a few days
in the Sun and we'd be able to deploy
our capital and be able to write some
fairly attractive business
as it happened
towards the end of December till about
the third week of December I was very
optimistic that we would get a chance to
put put several billion dollars on on
the books
but in the last 10 days of uh December
unfortunately a lot of capacity came out
of the Woodworks pricing that we were
expecting to realize didn't really come
and meet our pricing requirements as a
result of which January 1 was a big
disappointment we did not write as much
as we were hoping to write now fast
forward to April 1 which is another big
renewal date we
had a lot of powder dry and we were
lucky that we kept the powder dry
because April 1 suddenly prices zoomed
up again a lot higher than what they
were on January 1 and started to look
attractive to us
so
now we have a portfolio that is very
heavily exposed to property catastrophe
uh to put that in perspective our
exposure today is almost 50 percent more
than what it was uh five six months ago
so you know we I think we have written
as much as our capacity will allow us to
write we are very happy with what we've
written the margins have been healthy
the only thing that I want to mention to
you is that while the margins have been
healthy we have a very unbalanced
portfolio what that means is if there's
a big hurricane in Florida
we will have a very substantial loss as
opposed to that if we have a very big
loss anywhere other than Florida
relative to our competition we will have
a much smaller loss net net I'm very
happy with the portfolio it's been a lot
better it is a lot better than what it's
been in the past uh I don't know how
long it'll last and of course
if the hurricane happens
in Florida we could lose
across all the units we could lose as
much as 15 billion dollars
and if there isn't a loss we'll make
several billion dollars as profit
and LG tell them how long when you
called me and said you'd like to expose
us to
whatever was a couple billion more of of
exposure how long I took to say yes yeah
uh so the way we think about our
exposure is you know in in the property
in the insurance operations collectively
across the entire company uh given that
we have about a little less than 300
billion of capital we think of that as a
55
exposure that we're willing to take on
so to complete Warren's story
a few weeks ago we had about 13 billion
dollars of exposure all across like uh
the globe and I called up war and I said
we have to 13 it'll be nice if we can go
up to 15 that's a good round number and
that was less than a 30 second phone
call
I think Warren said yes without even
listening to what the numbers
I hope he calls me again
okay station eight
hello
my name is adal Flores and I've been a
shareholder for about 16 years and I'm
coming from Guadalajara Mexico
my my question is for Warren and Charlie
companies have the Eternal dilemma
between bought Building Products that
can make profits and increase their
company competitive position in the best
case you can build products that have
both characteristics at the same time
like Google did but most of the time
companies need to choose between
short-term profits and long-term
defensibility for example Amazon was
focused on building their famous Amazon
flywheel with limited profits initially
in order to abstain obtain stronger
Network effects with the hope of getting
more defensible profits in the future
when you invest you constantly speak
about the importance of building
competitive modes what advice would you
give to CEOs about how to balance this
dilemma which is essentially short-term
profit versus long-term definitibility
thank you
well the answer to control your destiny
which we've been able to do it uh
Berkshire so
we have we feel no pressure
from Wall Street uh
you know we don't have investor calls we
don't have to make promises we we get a
chance to make our own
mistakes and and occasionally find
something that that works well but we
recognize that the people in this room
and people like them
uh are the ones we're working for and
we're not working for a bunch of people
that that care about whether we meet the
quarter estimate or anything so we have
a freedom
uh
that we that we get to use and
we're interested in men we're interested
in owning a wonderful business forever
we'll learn very many wonderful
businesses but we do learn
a lot as we go along we we Charlie and I
have often mentioned how we learn so
much when we bought C's candy which we
did but we learned when we bought Ben
Rogers
chain of women's dress shops spread all
over the
the eastern part of the country we
learned when we tried them
getting into the department store
business back in 1966 and
as the ink was drawing on our purchase
price we realized we'd done something
dumb I mean but we're learning all the
time how consumers behave
I'm not going to be able to learn the
technical aspects of businesses but that
you know that that be nice if I knew it
but but it isn't essential and you know
we are obviously uh
we've got
a business at Apple which is larger than
our energy business and we may only own
Five Points six or seven percent but our
ownership goes up every year and I don't
understand the phone at all but I do
understand consumer Behavior
and I know how people think about
whether to buy a second car I know how
they go out to different We Own auto
dealerships we only we're learning all
the time from all of our businesses how
people react to Garanimals versus you
know selling them something else and and
so seize was a sort of breakthrough but
but it just we just keep learning uh
as to more about how people behave and
how a good business can turn into a bad
business and how some good businesses
can maintain uh uh they're competitive
advantage over time and and so
um
we don't
we don't have some formula that person
people we just
but we can also tell them
in 10 seconds whether it's something of
Interest I mean with you know when when
uh I get these calls and we want to send
decks and all that sort of which is
nonsense I mean it uh uh it's a bunch of
guys sitting
that get paid for drawing up these
projections of the future and everything
like that if they knew the future you
know we don't know the future but we do
know certain kinds of businesses we know
what the right price is and we know
what we think we can project out in
terms of consumer Behavior Uh and
consumer and threats
do a business and then and that's what
we've been about and that's what we'll
continue to about we do get
we don't get smarter over time we get we
get a little wiser though uh
following it over time and and you can
do it while sitting in the office with a
telephone too which we like Charlie well
tell them the story of the Japanese
investment that that should be told
again that that that's
that's a nice story
you know well it was pretty simple I
mean I
you know other
back when I started other people for
going through Playboy and I was going
through Moody so that you know basically
and uh uh there's a movie out called
Turn every page but which I
saw again for the second time a couple
of days ago Lizzie got leaving I
recommend everybody in this world watch
that because I turned every page in the
past and uh I did it for thousands and
thousands of pages and Moody's and I did
it at the Department of Public Utilities
in in Boston I did it in Newton the
insurance department that it just kept
turning Pages well that that goes on for
a while but now we need Big Ideas
in order to find things and uh and what
was your question Charlie tell them
about the Japanese well the Japanese
thing was was simple I mean it kind of I
like looking at companies every I mean I
like looking at
figures about companies and and here
were five
very very
substantial companies understandable
companies
most of them uh maybe all of them we'd
done business with them in a dozen
different ways if you go a couple miles
from where this place is the our last
coal generating plant was built by one
of the companies that so
here they were
they were sitting
as a group
where they were earning we'll say 14
percent
uh on what we were going to pay to buy
them they were paying decent dividends
they were going to repurchase the shares
in some cases they owned a whole bunch
of businesses that we could understand
as a group although we didn't mean we
had deep understanding on anything but
we've seen them operate and everything
there wasn't anything to it
and at the same time
we could take out the currency risk
by financing in in the
and that was going to cost us a half of
one percent well if you get 14 on one
side a half a percent on the other side
and you've got money that you know
forever and they're doing intelligent
things and they're sizable
so we just
started buying them I didn't even
probably tell Greg until
maybe six months after we'd gotten going
and and then we hit five percent
uh in all of them we announced on my
birthday and uh at 90th at the we owned
over five percent and recently went
over for the first time to visit with
him and move
more than pleasantly surprised delighted
with what we find there and now we own
7.4 percent of them we won't go over 9.9
without their agreeing and we sold
another
164 or whatever it is uh
billion of us again would have done for
us if we only had five billion dollars
or something and it made 10 billion
dollars
simply in that way yeah we would look
like Heroes now 10 billion just sort of
disappears as it's
an Old Dot in person's reports but it's
fun and it is fun and it is 10 billion
dollars and Charlie says it keeps and
Charlie says it keeps me out of bars
right talk show up about it and I
probably talked to Charlie about this
app the year after I started but who
knows I mean I knew he'd like it I mean
obviously and and
uh we try to do every dollar we would do
we could only do about 10 billion yeah
yeah well not even that quite that much
yeah but
you know we are four or five billion
ahead plus dividends and we got a carry
that's terrific and and you know uh and
they welcome us and they should welcome
us and but we
we love it the way they're operating
we're not there to tell them what to do
in the least uh uh so
we didn't and but we did say we never go
over 9.9 and we mean it and then they
they know that will be true to our word
and I went over there partly to
introduce Greg the those people because
we're going to be
Willem 10 20 30 40 years from now and
they may occasionally find something
that we can do jointly and they look
they look forward to doing that we look
forward to it and in addition we have
some other operating businesses in Japan
so
great gaming
now the only thing I would add is that
one has warned you when over there it
was to build the build the trust with
these Japanese companies because we do
hope there's long-term opportunities but
fundamentally as you highlighted uh
they're an incredible uh they've been a
very good investment I'd also highlight
the five meetings we had were really
quite remarkable I mean these companies
the culture and the history around it
and how proud they are you know there's
just moments of learning from them so it
was it was just a great experience to to
spend really two days with the five
companies
and an issue that we intended to be 56
billion of
Yen that we were issuing and selling
turned out to be
164.4 or something like that
everything everything's worked so well
and as Charlie says it
you know it doesn't move 500 billion of
net worth that much
but this one is you know it will keep
adding
over the years to the berkshire's value
with us
very widespread probably four or five
hundred million dollars a year and uh
you know we'll just keep looking for
more opportunities and
Japan we have Berkshire is the largest
borrower
outside of corporate borrower outside of
Japan that exists and yeah we didn't set
out to be that but it's it's turned out
that way and and we're not done I mean
it uh you know in terms of
what may come along there and uh
and we have some direct operations there
as I mentioned the
uh
and we've got some
really wonderful Partners working for us
and I don't have to do anything
[Laughter]
okay Becky
the next question comes from Ellie Amin
Tibet
who asks during an episode of investing
the Templeton way podcast Professor
damodaran who he respects almost as much
as Warren and Charlie mentioned that he
is not comfortable with positions
becoming a large part of his portfolio
for example when they reach 25 to 35
percent he mentioned that apple is now
35 percent of berkshire's portfolio and
thinks that that is near a danger zone
wonders if Warren and Charlie can
comment I like to make one comment first
but Charlie will come up with
yeah but
apple is not 35 percent of of Berkshire
portfolio bursar's portfolio includes
the railroad the energy business or
animals you name it See's Candy they're
all businesses and
uh you know the the good thing about
Apple
is that we we can go up they buy in
their stock and instead of owning 5.6
percent
you know they got down to
I got about
15 billion 700 and some million shares
outstanding they get down to 15 and a
quarter billion without us doing
anything we've got six percent so we
can't own more than 100 of the NSF we
can't own more than 100 of Garanimals or
See's candy and
it'd be nice we'd live alone 200 but it
just isn't doable but they're all the
same they're good businesses and to
think that
are Criterion
a criteria for
apple is different than the other
businesses we own it just happens to be
A Better Business than any we own and we
put a fair amount of money in it but we
haven't got more money in it than we've
got in the railroad and apple is a
Better Business our railroad is a very
good business it's not remotely as good
as Apple's business but uh Apple
you know has a position with consumers
where they're paying
you know
maybe they'll pay 1500 bucks or whatever
it may be for a phone
and these same people pay 35
000 for having a second car
and if they had to give up a second car
or give up their iPhone they'd give up
their second car I mean it's an
extraordinary probably we don't have
anything like that that we own 100 of
but we're very very very happy to have
5.6 or whatever it may be percent and
we're delighted every tenth of a percent
that goes up it's like adding a hundred
million dollars to our earnings I mean
our share of the earnings and they use
their earnings to buy out
our partners which
we're glad to see them sell out too the
index funds have to sell they bring the
number of shares down and uh you know
I'm good we went up slightly
last year and
I made a mistake a couple of years ago
and I sold some shares when I had
certain
reasons why ah games were useful to take
that year from a tax standpoint but
having heard having heard me say that it
was a dumb decision and
uh
Charlie you've already given your
comment about it but but we do not have
35 percent
of berkshire's portfolio berkshire's
portfolio is the funds we have to work
with
and we want to own good businesses and
we also want to have plenty of liquidity
and beyond that
you know
the sky's the limiter or
are mistakes who knows what the bottom
is
Charlie do you want to add anything to
your earlier comment well
I think
one of the inane things is taught in
modern University education
is it a vast diversification is
absolutely mandatory and investing in
Common Stocks
that is an insane idea
it's not that easy to have a vast
plethora of
good opportunities that are easily
identified and if you've only got three
I'd rather read my best ideas instead of
my worst
and
now some people can't tell their best
ideas
from their worst in in the act of
deciding the investment already is good
they they get the thing gets better than
it is
I think we make fewer mistakes like that
than other people and that is a blessing
to us
it we're not so smart but we kind of
know where the edge of our smartness is
that is a very important part of
practical intelligence and a lot of
people who are geniuses on IQ tests
think they're a lot smarter than they
are and what they are is dangerous
and
and but but if you know the edge of your
own ability pretty well
you should ignore most of the Notions of
our experts about
what I call diversification of
portfolios
okay yeah
station nine
hi Charlotte hi Charlie and Warren thank
you for this superb shareholder meeting
celebration
my name is David Chung from Hong Kong
and a proud graduate of Chicago Booth
I'm also here with my two sons Aiden and
Ashen who's currently studying
University of Chicago as a freshman and
sophomore
this is my second time attending the
conference last being 2019 four years
ago which I was only a guest shareholder
of my friend Andrew so after the
shareholder meeting I have decided to
buy into Berkshire Hathaway which has
given me a great return of 62 since
2019. so I want to thank you for that
thank you
I have also taken one of your advice to
give my children a share for each of
their birthdays
although they won a Berkshire Hathaway
eight years
they will do just fine with pre-shares
my question is
how do you see the current U.S China
internet companies valuation and the
price disparity
given there has been many uncertainties
such as geopolitical tensions
significant course optimizations with
lean at U.S tech firms while China
attack has been through all that already
thank you
Charlie I wanna
well
there's been some tension in the
economic relationship of
the United States and China I think that
that tension has been wrongly created on
both sides I think we're equally guilty
of being stupid
there's one thing we should do let's get
along with China
and we should have a lot of free trade
with China
in our mutual interest
and
I just can't imagine
it's just so obvious there's so much
safety and so much creativity that's
possible
think what Apple has
done by engaging in a
partnership with China as a big supplier
yeah
it's been good for apple and good for
China that's the kind of business we'll
be doing with China and more of it and
with everything that increases the
tension between the two companies is
stupid stupid
you know at least stopped on each side
and each side ought to respond to the
other side stupidity with reciprocal
kindness that's my view
and it creates one enormous problem of
course which is that you have the two
superpowers of the world
and they know they have to
get along with each other either one can
destroy the other
and they're going to be competitive with
each other
uh but part of it
is trying always in the game like that
is trying to judge
how far you can push the other guy
without them reacting wrong and uh
you know if either side is a bullying
some ways they can get away with it to
an extent because the alternative
is would drive them both into
destruction
but if they push it too far
they increase the probability that
something really does go wrong so it's a
you know it's one of those Game Theory
dilemmas
but you really need
the leader
of
both countries uh and you need the
populace to understand at least the
general
situation in which these countries are
going to operate over the next century
and know that
that some leader of the promises too
much
couldn't get you on a hell of a lot of
trouble and that like you know that
you've got one kind of a system that
gets this leader one way they've got
another system that gets his leader
another way
and
keeping
keeping either side from trying to play
the game too hard
uh and thinking the other side will
will go along
you know it's like playing chicken you
know and driving toward a cliff so
it is
if you've got any diplomacy skills
persuasive skills or anything like that
you really want
people that will
convince
the other country as well as his own or
her own country
that that
this is what we're engaged in we've got
to do it right we won't give away the
story but we won't try and take the
whole story either and it it we we're
just at the beginning of this uh
unfortunately and I mean we've we've
learned what the situation was it used
to be the Soviet
mutually assured destruction
was our policy
then and
that kept a lot of things from happening
but it also came
with a very very very close call
uh with Cuba and
these are not
you know these are different games than
existed hundreds of years ago you could
you know Britain might rule the Caesar
France or Spain but
but now you're playing with a game that
you can't really make
a huge mistake in and I think that
that
should be the better that's understood
in both countries
the more the leaders feel that their
citizenry does
understand that
the better off we'll be and that
a lot of
democr the the
uh
demography or the a lot of
a lot of inflammatory speaking but a lot
of authoritarian action I mean that it
all carries its dangers and
the world was
stumbled through
the years post 1945 with a lot of close
calls
from the
in the nuclear Arena
and now we've gotten
pandemics and we've gotten
we've got cyber and a whole bunch of
other things so we've got more tools of
Destruction
the world's ever had
and
it it's imperative that
China and the United States
both understand what the game is and
understand that you can't push too hard
but working but both places are going to
be competitive and both can prosper
that's that's what really is
that's that's the vision
that is out there that
China will have a more wonderful country
the United States will have a more
wonderful country and and and
the two are not
just compatible they're almost
imperative
uh in terms of
uh what's going to happen in the next
100 years or so and uh
uh
I think that
the leaders of both countries have got
an important job and
and having that
understood
and not to do inflammatory things
and we'll see whether
the lock that has taken us from 1945 to
present holds out and and I think we can
affect to some extent that luck
and without sure a message we will move
to Becky
this question comes from Rohit bellany
Berkshire bought a substantial position
in Taiwan semiconductor and contrary to
its normal holding timeline sold almost
the entire position within a few short
months while you cited in a CNBC
interview that geopolitical issues were
the Catalyst these issues were seemingly
no different when you acquired that
stock so what else if anything changed
in those few months and prompted The
Firm to offload close to five billion
dollars worth of Taiwan semiconductor
shares
at Taiwan semiconductor is one of the
best
managed companies
and important companies in the world
and uh
there is not
and I think you'll be able to say the
same thing 5 or 10 or 20 years from now
I don't like its location and and uh
reevaluated that I mean I don't think it
should be any place but Taiwan although
they will be obviously opening up
chip capacity in this country and
actually one of our subsidiaries that we
got in Allegheny is is uh is
participating in in in their Arizona
uh construction activities but
uh it's
uh
it uh
it's a question of we would rather have
the same
yeah kind of company and they're there's
nobody in the chip company there's no in
the chip industry that's in their league
in our bit at least in my view uh
and the man that was a 91 year old or so
that
connected with us and that I think I
played Bridge with and and uh in
Albuquerque and The Marvelous people
marvelous company but
I'd rather find a
marvelous people I won't find it in the
chip industry but marvelous people and
marvelous
uh competitive position and everything
I'd rather find it in the United States
I feel
better about the capital that we've got
deployed
in Japan than in Taiwan it uh
I wish it weren't so but I think that's
the reality and I've reevaluated that uh
in the light of certain things that were
going on try well my view is that we're
in ought to feel comfortable if he wants
to
yeah put that in the minutes
okay station 10.
first of all thank you for making our
lives better
my name is bogumil Baranowski I'm a
founding partner of
New York
we manage multi-generational family
fortunes hence my question
Mr Buffett in 1976 in your tribute to
Benjamin Graham you wrote Walter lippman
spoke of men who plant trees that other
men will sit under
Ben Graham was such a man
you're both such people
could you share with us your 100 Year
vision for Berkshire it's a question to
you both
yeah I would like to add one thing about
Ben Graham uh
Ben Graham didn't
all kinds of things
for me and I never expected one thing in
return I may just you name it and he did
it and and there wasn't any hidden you
know there's a hint I should say of of
anything he expected in return and uh
I I checked
uh well he wrote a book in 1949
that in a sense said to me in very
persuasive terms
that what I'd been
spending
on the previous
eight or nine years
working at and loving was all wrong
and
that book
has been I check it every now and then
on Amazon to where it ranks and you know
Amazon ranks
hundreds and hundreds and hundreds of
thousands of books uh
by sales
and
Ben Graham's book
has been up there like number 300 or 350
or something like that forever and there
isn't
there isn't any book I got I wrote
harpercollins and note the other day
because they're bringing out another
Edition
and I asked them how many copies have
been sold and they said the records
didn't go back
far enough but they they had 7.3 million
copies of this little book
that changed my life
and uh uh
continues
to outsell every investment book
investment will come along and you know
their number
400 or a thousand or something for a
while and then all of a sudden they're
numbered 25
000 or 200 000 and and this this book
you know
in how many areas
can you find any book
that has had that sustained position you
can't you go back and look at number one
in 1950 or number two or number three
and you're looking in 51 and 52 they
don't continue I mean they just don't
continue uh
cookbooks maybe one or two of them last
for a while but there is nothing and
this book lives on and everybody keeps
bringing out new books and saying a lot
of other things but they aren't saying
anything it's as important as what he
said in 1949 in this relatively thin
little book so uh
our vision
for Berkshire
is exactly what we said today we we
wanted to be a company
that
is owned by shareholders and behaves in
a way
Society is happy that it exists and not
unhappy
and we
will have unlimited capital
we'll get lots of talent
and we've got a base
that can't be beat and there's no reason
why it can't be perpetuated just like
Ben's book and maybe be an example to
other people and and if so we'll be very
happy Charlie
yeah one of the really interesting
things about vinegar he was a really
gifted teacher
a very honorable profession
and
that is what has lasted however
an interesting fact that he was sheepish
about in his old age was
that more than half of all the
investment returned that Benny Graham
made in his whole life came from one
stock one growth stock Geico
Birches subsidiary
and
he at the time he operated there were a
lot of sort of lousy companies that were
too cheap and you can make a little
money floating from one to another
but the big money he made was one growth
stock buying one undervalued great
company
uh is a very good thing as Berkshire is
found out again and again and again
and and Ben wrote a post trip to the 49
Edition pointing out exactly
that fact and acknowledging it but said
but also took the some good lessons from
it you know he said that's the way life
is that that you prepare and you
you know you don't lose everything along
the way and then something comes along
and Geico came along because
a banker in Fort Worth at a financial
Leo Davidson uh
and I think the banker got three
quarters of it and I don't mean Leo
Davis and Leo Goodwin uh who founded
Geico then called government employees
insurance company and you can figure out
the acronym and uh
the deal almost fell apart the deal was
as I remember from maybe a million and a
half or something like a million and a
quarter and it almost fell apart because
of a difference of twenty five thousand
dollars
in the net worth delivered this is a
business's
you know we're tens of billions I mean
but he pointed out the irony in that too
I mean he was honest about it was
totally intellectually honest on about
us about his
the failings and but also the strengths
of his approach and he and that to some
extent you know Charlie and I have seen
that in our lives I mean the sort of the
prepared mind the willingness to
to act when you need to act and the
willingness to ignore it every salesman
in the world and and the imperative norm
and uh
is one or two things that make the right
decision if you make the right decision
on a spouse I mean you've won the game
they you know and there's enormous
important decision and you got all the
time I mean in the world we got more
time now than used to have when I was a
kid to make that decision and and uh
you know
I don't know whether a third or
whatever percentage blow that one you
know it it is it is really interesting
the thing to do is just
keep trying to
trying to think things through not do
too many stupid things and
and sooner or later you have a lot of
Polo so Charlotte would say
okay Becky
all right this question comes from
terrafter a shareholder in Sierra Vista
Arizona who is asking a question of Ajit
wants to know about electric vehicles
getting insurance from the manufacturer
instead of car insurance companies a
recent article in the Wall Street
Journal shows that though EVS are a
small but growing percentage of sales
Tesla and GM are offering their own
Electric Vehicle Insurance what will
Geico do to combat this
yeah so Geico is talking to a number of
original equipment manufacturers as well
to try and see how best they can work
with the auto manufacturer and offer
insurance at the point of sale
they haven't been very many success
stories as yet
so we'll wait and see you know clearly
it is a very convenient way to sell auto
insurance at the point of sale
but there's a there's a fair amount of
data that needs to be collected on the
driver not just the car and that makes
it a little more complicated so we are
talking to some auto manufacturers
ourselves we are hopeful to that we will
strike a deal with some of them before
not too long
Tesla has made NGM they both have talked
a lot in the press in terms of getting
into their insurance business and in
fact GM I think has projected they'll
write three billion dollars a premium
which you know it's hard to imagine
where it'll come from but they're all
hot to trot I think somebody will find
the secret sauce before not too long and
we ourselves are in that race
yeah I would I would point out that
General Motors Motors insurance
for decades and I mean this is not a new
idea and uh
Uber
or a lot of insurance for a while they
laid it off with somebody and that
company got killed by it but I and I
don't know the deal between Uber and
forget the name of the company that took
it on the Jeep would probably know but
yeah James River yeah and
you know it
there's there's nothing it is not it's
not a new idea it's not magic in the
lease I mean it is hard
to come up with something that is better
at missing Max in matching risk to
reward
I'm sorry risk to price then then uh a
bunch of very smart people are doing at
a progressive and a bunch of very smart
people are doing it uh to a greater
extent at Geico and I mean it it is
it's just it was fascinating to me when
Uber wanted to do it you know and they
were going to get their head handed to
them but they laid off a good bit of it
and very very substantial percentage of
it was somebody else who got their head
out in this way and uh you know and but
it was a story you know Wall Street
loves it and uh uh I with
we've got 80 car dealerships that do a
lot of business uh and
you know we've got the people buying the
car and the place and and
we form an insurance company around the
group for some reason that rights
Insurance you know it it's hard to
improve on the president's system and
yeah I I have no it wouldn't I wouldn't
pay a penny I'd pay to avoid it actually
I mean uh and go ahead yeah the only
point I'd like to add is the virgins on
writing auto insurance are four percent
which is a very small number and once
there are more people that are trying to
take a bite of the Apple it just becomes
very very difficult to keep all the
mouths fed in a profitable manner
yeah you can say the there was one big
new idea in insurance and property and
car insurance back in 1920 or so when
State Farm started and State Farm
uh
and still has it next to Berkshire it's
it's our it's the leader in having net
worth it's a mutual company but some guy
just figured that there was a cartel
running
car insurance and
P Farmer for murder is the name of the
book I think in over in Illinois and he
created a system where he really took 20
points or so
out of the cost and surprise surprise
areas you know
and nobody's own stock in State Farm
it's it's it's an insult to capitalism
actually everything you learn at the
business school says it shouldn't work
because nobody owns it nobody's going
public with it no nothing but it's got
more net worth it's almost probably
double leaving Berkshire out of the
picture it's probably double the next
guy and and nobody's really improved on
their system that much uh so it's
fascinating how
people don't really look at the essence
you know you
these are cases that that should carry a
message
but the truth is in Wall Street anything
can get the test is whether you can sell
it or not but if if you can sell it
it'll get sold and a bunch of insurance
companies came along got a sold and this
is this can be a story about this stock
or that stock and it sounds a good one
they talked about it at Uber for a while
and it is it is really interesting the
investing public does not learn much
okay station 11.
hi my name is Jeff Miriam I'm from Edina
Minnesota we've been coming for years
to make that Professor from the earlier
question really nervous half our
family's wealth is in Berkshire Hathaway
well let's make Charlie nervous
that question has to do
control in the miniature there was a
question earlier about corporate Raider
I was more wondering about
who is actually going to own the voting
control is it going to be institutions
Calpers BlackRock are they eventually
going to get their way with the ESG
check boxes that we're gonna have to
check and what should we be thinking
about that well you're thinking very
well and uh
the interesting thing is uh the big
aggregations look like of course they'd
be in index funds but
what indirect funds want is they want a
world in which
Society
doesn't get upset with them about the
fact they've got all the voting power
and and I was in the last year or two
uh
it's looked like a better idea
for them not quite togethers uh uh
What was a
phrase that Charlie use
but he backed off a lot yeah they backed
off a lot and and it's it's in their
interest to back out off an interesting
interestingly enough
and looking at money management
you know the game
is not performance it's assets under
management and index funds produce a
tiny tiny tiny
uh fee on assets under management
because it was pioneered by Vanguard and
uh and it's
when it became successful it was very
easy to replicate not so easy but I mean
it was inevitable to be
uh copied
but it came with a management fee of two
basis points so what people that have
offered index funds would really like is
you to buy their other funds
or level management money in some other
way
so that they get a higher
higher fee on assets under management
which of course is exactly why the index
fund was embedded in the first place but
so it's gotten it's not a loss leader
but it is a way to pull money in and
then you hope that people ignore what
was said by
by
what's the name of you know the John
Bogle Jack Vogel ignore him and
essentially they give up the I say idea
that will offer you a fund that does
this in the Indian will offer you
another fund that does that and of
course those management fees are higher
so they're really counter selling the
idea that John Bogle came along with but
in the process they have achieved a lot
of bolts add
that was fun for a while but the last
thing in the world I wanted to do is at
Washington or the American public decide
that they're throwing around their
weight too much so they're tending to
back off now if you figure out where
their self-interest is you can judge
where their behavior is going to go
Charlie yeah
you're one of the defend them no you can
square me what you just said
you're totally right on everything
well in that case I won't ask anybody
else okay Becky
all right this question comes from almu
Grinnell
and it's about
this is for Warren and Greg since 2019
Berkshire repurchased huge amounts of
stock about approximately reducing 10
percent of the share count and
increasing the intrinsic value per share
for the continuing shareholders Greg is
expected to be the successor of Warren
as CEO so will he be in charge of the
main capital allocation decisions
including future share BuyBacks Greg has
been key in the development of Berkshire
Hathaway energy and I think a good
Capital allocator does he has he been
involved in the share repurchases that
have been executed over the past years
and do you both Warren and Greg work
together in the estimation of
berkshire's intrinsic value and the
share buyback decisions
well then the answer is that Greg I'm
going to turn it over to him but the
answer is Greg understands Capital
allocation as well as I do and that's
lucky for us and
he will make those decisions I think
very much in the same framework as I
would make them and we've laid out that
framework now for 30 years probably or
something like that people make it way
more complicated I mean particularly if
you're working on a doctorate or
something it's just a great subject to
have lots of footnotes and you know 50
pages or 100 pages but it is it's no
more some it's no more complicated than
if you and I and Charlie had a business
and you want to sell
yours your interest in we could buy it
for less than we thought it was worth
and and without misleading you in any
way about what was going on and we'd buy
it then but Greg you're on because
you're going to be doing in the future
right uh
yeah well I think Warren you said it
really well I mean the framework's been
laid out we know how you approach it and
with the and and how you and Charlie
have approached it and and really don't
see that framework changing when the
opportunity presents itself we'll want
to be a an active repurchaser of
Berkshire shares we think it's a it's a
great outcome for Berkshire shareholders
to own a a larger piece of each of our
operating businesses and our and the uh
portfolio of the equity companies when
the when the opportunity presents itself
it can be the dumbest thing you can do
it or can be the smartest thing you can
do and
to make it more complicated than that
and start getting into all this but you
obviously do what the business needs to
do first then the opportunities are
there grow your present business buy
additional business whatever it may be
and then then you make a decision on
dividends but that decision becomes
pretty irrevocable because you don't cut
dividends and without
having them major effects
and your shareholder base and a lot of
things and uh and then if you've got
ample capital and you don't see that
you're going to use it all and your
stock
is attractive and it enhances the
intrinsic value for the remaining
shareholders it's an old-brainer and if
it's if it's above the price of
intrinsic value it's a no-brainer that
you don't even listen to anybody no
matter what investment banker comes in
and tells you here's how to do a
repurchase program
okay
station one
I'm Tom Nelson a podcast here from North
Oaks Minnesota
Charlie in 2022 you used phrases like
really massively stupid massive kind of
ignorance and crazy to describe what you
said was the 30 of Americans hesitant to
submit themselves to untested mRNA covid
gene therapy do you stand behind those
quotes today
yeah sure
well we got time for one more than
before lunch
Becky
okay that
I thought I was out but let's see uh
how about
oh uh
could be how about lunch pretty soon but
no no okay let's just got one for you
this one comes from Drew Estes
um
this is a question for Warren in your
1969 letter to Partners you said in any
company where the founder and chief
driving force behind the Enterprise is
still active it's still very difficult
to evaluate second men the only real way
to see how someone is going to do when
when running a company is to let them
run it this wise statement now applies
to Berkshire once the second men are
running Berkshire what would you advise
owners of Berkshire to watch for
specifically what actions if taken
should give us concern well I think I
would just I would have some comfort in
the fact that 99 of my net worth is in
that company so I I probably got a
stronger interest in it and and perhaps
100 billion or more of philanthropy will
be affected by and and uh but
I would say that I don't have a
second choice I mean it is it is that
tough
Divine but I've also seen
Greg in action that I feel 100 percent
comfortable and uh uh
and like I say I don't know something
happened to Greg I would tell the
directors you know they have a problem
and they won't
I don't have anybody to name and if they
put somebody in
Bergeron automatic pilot
couldn't work extremely well
for a long time I mean it doesn't it
doesn't like the businesses go away or
any other thing sort uh
and you can't
it's hard to judge
successor management
in a really good business because if
they if they don't show up at the office
it'll keep working for a long time and
maybe
maybe that
like event useful input
may show itself in five years it may go
a long long long
time and uh
how how are the shareholders
you know advised by a bunch of
people that are concerned about whether
you're meeting earnings projections or
something telling them whether the
Management's any good thing you know it
is very very hard it's very hard I've
been on the board of
20 companies is very hard to
ask me to rank the management of each
one it's uh it's it's very difficult to
do because some are just better
businesses than others some would be
better off not managed hardly at all
others really need help but they got a
lousy business
and uh
Tom Murphy told me a long long time ago
is it the secret of business is to buy a
good business and it's okay to inherit
one too and Greg is inheriting a good
business and I think he'll make it
better but I don't think it's easy
to put any one of the next 10 nominees
in and try and judge three years later
whether they've done a good job or not
so it's going to be the that'll be a
very interesting job for the board
but it shouldn't listen to Wall Street
on it it they've got the job if they put
somebody in there's a surprise we both
go down on a plane that put somebody in
they've got a real job in assessing that
person because it'll depend on how good
he or she is as a talker it'll depend on
you know them courting Wall Street to be
supportive of all kinds of things and
and uh uh we've got some very good
people on the board but they would be
challenged in that position as would I
where I've been in that position and
other companies were
a very great leader
has left and uh
on the way back from the funeral you
know nobody knows what to do exactly
so with that cheery message we will go
to lunch
and we will come back
[Applause]
we'll see you at one o'clock thank you
and and we're still going to try and get
60 Questions in we've done 25 so far
20 yeah 25.
so keep the question short and I'll try
and keep the answer short thanks
[Music]