WEBVTT

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excuse me

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good morning good morning and thanks for

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coming

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I love it Charlie loves it we're glad to

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have you here

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we're going to make this

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this uh

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preliminary before the question is very

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short

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because we want to get in at least

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60 Questions half divided by the

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the audience outside this

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Arena and a half from you so I would

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just like to get

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right to the

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to the directors and the earnings that

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have been put up

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on the uh

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on our web page this morning but we'll

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cover those very fast and we'll get to

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the questions now

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I

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when I woke up this morning

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I realized

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that we had a competitive

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broadcast going out

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somewhere in the UK and and

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they were they were celebrating

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a King Charles and we've got our own

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King Charles here today

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[Applause]

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and next to him we have

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Greg Abel the who's in charge of all the

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operations except for

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insurance

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next

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[Applause]

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and actually great we have

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uh

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a man I ran into a 1986 and

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has made us look good ever since we have

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the man in charge of insurance Ajit Jane

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Jaden

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[Applause]

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and now we have our our directors here

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in front and if they would

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just stand briefly and then I'll go on

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to the next one and and uh

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they're all here today first of all

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doing alphabetically there's Howard

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Buffett

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there's Suzy Buffett

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there's Steve Burke

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[Applause]

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Ken Chanel

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[Applause]

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Chris Davis

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[Applause]

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Sue Decker

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[Applause]

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Charlotte Guymon

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[Applause]

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Tom Murphy Jr

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[Applause]

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Ron Olson

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[Music]

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Wally Weiss

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[Applause]

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and Merrill Whitmer

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[Applause]

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[Music]

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that's as good as you can get and

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there's one other person I would like to

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mention before we get on to the earnings

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that were put on the uh

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uh in the press release this morning and

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uh

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that's uh

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

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got

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this is hard to believe

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can you imagine a name

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Melissa Shapiro Shapiro

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and she was uh Melissa Shapiro until she

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married another Shapiro and she put this

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whole thing together with no help from

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me no help from Charlie and a lot of

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help from the people of the other room

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Melissa

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[Applause]

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yeah it's very easy if you can remember

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her second name you can remember her

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third name so Melissa shabiro Shapiro

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and with that I would like to

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next move on to the

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earnings in a couple

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small slides that that explain what

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

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get to the Q a and uh

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the slide is up behind me yeah there it

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is we reported in the first

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quarter

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operating earnings a little over 8

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billion and when we talk about operating

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earnings we're basically referring

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to the earnings

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a Berkshire Hathaway as generally well

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as required under gaap excluding however

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capital gains both realized and

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unrealized there's a few other very

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minor items but basically

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we expect to make capital gains over

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time why would we own the stocks

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otherwise uh doesn't always work out but

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overall it works out pretty well over

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time but in any day any quarter any year

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even occasionally over a five-year

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period uh

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the stock prices move around

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capriciously now we own a lot of other

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businesses we consider those stocks

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businesses we own a lot of other

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businesses where they get them

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Consolidated and they don't move around

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in value now if we had a little bit of

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Burlington

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stock outstanding if we had a little bit

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of the energy stock trading those stocks

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would move around a lot but the

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businesses are what count so the

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operating earnings as you'll see in the

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first quarter came in at about 8 billion

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and

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uh I would say that

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in the general economy

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the feedback we get is that uh

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I would say perhaps the majority of our

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businesses will actually report

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lower earnings this year than last year

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the

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in various degrees in the last six

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months or so at various times uh

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the the businesses have left

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the incredible

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period which is about as extraordinary

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as I've seen in business since World War

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II uh where the government would pour

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out a lot of money to people

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who couldn't get Goods it was more

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extreme in World War II but this was

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extreme this time

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and it was just a question

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of getting Goods to deliver

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and people bought and they didn't wait

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for sales and if you couldn't sell them

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one thing they would put another thing

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in their backlog it was an extraordinary

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period and that period uh

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has ended it hasn't ended with as you

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know it isn't that employment's fall

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born off a cliff or anything in the

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least but but

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it is a different climate

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than it was six months ago and and a

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number of our managers

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uh were surprised some of them had too

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much inventory on order and then all of

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a sudden it got delivered and people

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weren't in the same frame of mind as

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earlier

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and now we'll start having sales at

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places where we didn't need to have

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sales before

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but

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uh despite the fact

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that this year I think in general will

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be slower

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than last year

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we actually are

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situated so that I would expect and

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believe me when I say accept expect

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it's

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nothing is sure nothing sure tomorrow

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nothing sure next year and nothing is

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ever sure

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either in markets or in business

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forecasts or anything else and we don't

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pay much attention to markets or

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forecasts unless the Marcus Epping off

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or something interesting to do but

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nevertheless we are positioned in two

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respects as you'll see from

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from this uh first report our investment

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income is going to be a lot larger

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uh this year than last year and that's

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

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see in a minute we've had 125

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billion or so in

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very short term

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investments and

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and believe it or not

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uh not that long ago

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we were getting

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four basis points which is next to

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nothing

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on that 125 billion which means we were

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getting 50 million a year and now the

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same money the other just day or day

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before yesterday we actually bought

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because of someone funny twist in the

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market because of doubts about the

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deficit ceiling or the debt ceiling uh

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we bought three billion of bills at the

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590

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[Music]

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that's 5.9 is it 5.92 Bond equivalent

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yield so

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we will have what produced us not that

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long ago on a 12-month basis was

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producing 50 million here producing

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something in the area of 5 billion here

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so we're in a position where the

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investment income is essentially well it

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is certain to increase quite a bit

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and insurance underwriting

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is not

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it uh

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it does not correlate

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with business activity it depends on

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things like hurricanes and earthquakes

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and and other events

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so

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on a prospective basis on a probability

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basis we're likely to have a

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a better year

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uh this year in Insurance underwriting

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than we had last year uh it just isn't

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affected

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by what you might call the business

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cycle or uh what applies to generally an

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industry detailing you name it uh so I

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would expect

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and one

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massive EarthQuaker

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one one hurricane that came into just

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the wrong place

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I would

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can affect that prediction but on a

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probable listing basis our insurance

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looks better this year so if you get two

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of those

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two of the elements there of our main

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elements of earnings that look like they

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will swing in our Direction I would

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expect but I can't promise that our

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operating earnings will be uh greater

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than last year

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and if we'll move to

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the second slide

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uh I give you those operating earnings

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figures

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just to give you

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a overview of what has happened

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uh

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since the pandemic started and off of

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the year

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the yearbook before as a base

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and

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we retain all our earnings as you know

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so if we're retaining 30 or 35 billion

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or whatever but maybe a year you should

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expect more operating earnings over time

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I mean this I mean this this number

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should be

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significantly higher five or 10 or 15

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years from now because we have the

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advantage of retaining earnings and

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that's what got us to these figures

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because they were essentially nothing

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when we started and they got there by

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retaining earnings and we'll keep

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retaining earnings so it's no great

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Triumph if these numbers move up and

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what we hope is that they

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move up at a reasonable rate

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historically

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they moved up at an unreasonable rate

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sometimes but we were working with a

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much smaller Sons then and that can't be

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repeated with our present Capital base

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because I note there

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

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a look

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uh

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now that'll be

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see it's on the

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well on the on the next on the next

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place paid and much smoother the next

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slide

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we showed that we had on March 31st

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now 500 and

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was it

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504 billion

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of Gap net worth

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now what might surprise you

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is that there's no other company in the

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United States no other company

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that has a number

00:13:10.440 --> 00:13:16.200
that is that large now that isn't

00:13:13.078 --> 00:13:18.599
because we've got the most valuable

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company in the United States

00:13:18.600 --> 00:13:22.320
other companies

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have used their money to repurchase

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shares that they could have accumulated

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504 billion in gap

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but basically we have more

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under Gap accounting now

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than any other company in the US and of

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course if you measure return on

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on Equity that becomes a very big number

00:13:40.559 --> 00:13:45.439
to increase

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at a rapid rate but we hope to do so

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uh not a rapid rate additional rate

00:13:49.200 --> 00:13:54.600
um and right below that you see

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something called float

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and float

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is money

00:13:58.200 --> 00:14:03.360
that

00:13:59.458 --> 00:14:06.899
uh is left in our hands

00:14:03.360 --> 00:14:09.659
uh somewhat Akin

00:14:06.899 --> 00:14:12.500
but very importantly different

00:14:09.659 --> 00:14:14.759
a little bank deposit but it

00:14:12.500 --> 00:14:16.500
you have to pay interest to get a bank

00:14:14.759 --> 00:14:17.819
deposit you have to pay more interests

00:14:16.500 --> 00:14:20.759
these days and you have to run a bank

00:14:17.820 --> 00:14:24.899
and do a lot of things and

00:14:20.759 --> 00:14:28.319
basically this is money that represents

00:14:24.899 --> 00:14:30.419
unpaid losses at this time you get paid

00:14:28.320 --> 00:14:33.720
in advance in insurance

00:14:30.419 --> 00:14:35.879
so what shows up as a net liability

00:14:33.720 --> 00:14:39.540
on our balance sheet

00:14:35.879 --> 00:14:42.419
is gives us funds uh

00:14:39.539 --> 00:14:43.980
do exercise with an amount of discretion

00:14:42.419 --> 00:14:45.838
that no other

00:14:43.980 --> 00:14:48.180
insurance company that I know of in the

00:14:45.839 --> 00:14:49.560
world enjoys just because we have so

00:14:48.179 --> 00:14:51.419
much net worth

00:14:49.559 --> 00:14:54.539
and our float now

00:14:51.419 --> 00:14:56.939
comes to 165 billion

00:14:54.539 --> 00:14:59.578
and the man sitting on the far left is

00:14:56.940 --> 00:15:00.899
responsible for moving that number up

00:14:59.578 --> 00:15:03.239
from a pittance

00:15:00.899 --> 00:15:07.078
in 1986

00:15:03.240 --> 00:15:10.440
to this incredible figure which in most

00:15:07.078 --> 00:15:12.838
years practically all years

00:15:10.440 --> 00:15:15.959
hasn't cost us anything so it's like

00:15:12.839 --> 00:15:16.980
having a bank with no employees no

00:15:15.958 --> 00:15:20.458
interest

00:15:16.980 --> 00:15:23.278
and no ability to withdraw

00:15:20.458 --> 00:15:27.479
the money in a hurry

00:15:23.278 --> 00:15:31.259
that we have working for us and it's a

00:15:27.480 --> 00:15:36.920
very valuable asset that uh

00:15:31.259 --> 00:15:36.919
that shows up as a liability and uh

00:15:37.139 --> 00:15:44.180
Ajit is responsible for building up this

00:15:42.839 --> 00:15:47.220
treasure

00:15:44.179 --> 00:15:50.458
uh which has done been done by

00:15:47.220 --> 00:15:52.560
out competing insurance companies all

00:15:50.458 --> 00:15:54.778
over the world and then now a number of

00:15:52.559 --> 00:15:57.059
our insurance companies in turn are run

00:15:54.778 --> 00:15:58.919
by talented managers

00:15:57.059 --> 00:16:00.719
who contributed

00:15:58.919 --> 00:16:03.419
one way or another

00:16:00.720 --> 00:16:06.800
uh start with Geico

00:16:03.419 --> 00:16:09.059
the beginning of my career and the uh

00:16:06.799 --> 00:16:10.979
that float

00:16:09.059 --> 00:16:13.078
if you think about it just think of a

00:16:10.980 --> 00:16:14.879
balance sheet you've got liabilities

00:16:13.078 --> 00:16:17.819
here and you got assets over here and

00:16:14.879 --> 00:16:21.120
and the liability side finances the

00:16:17.820 --> 00:16:22.980
asset side is very simple and

00:16:21.120 --> 00:16:25.560
stockholders Equity finances it

00:16:22.980 --> 00:16:28.379
long-term debt finances and so on but

00:16:25.559 --> 00:16:29.698
stockholders Equity is very expensive in

00:16:28.379 --> 00:16:32.159
a real sense

00:16:29.698 --> 00:16:34.259
long-term debt has been cheap for a

00:16:32.159 --> 00:16:35.458
while but it can get expensive and it

00:16:34.259 --> 00:16:38.639
can also become

00:16:35.458 --> 00:16:39.719
do eventually and if and it may not be

00:16:38.639 --> 00:16:42.360
available

00:16:39.720 --> 00:16:44.820
uh but float

00:16:42.360 --> 00:16:47.300
is another item that shows a it's a

00:16:44.820 --> 00:16:52.199
liability but hasn't cost us anything

00:16:47.299 --> 00:16:55.379
and it it can't disappear in a hurry and

00:16:52.198 --> 00:16:57.240
it finances the asset side in the same

00:16:55.379 --> 00:16:59.820
way as stockholders equity

00:16:57.240 --> 00:17:02.039
and nobody else thinks of it much that

00:16:59.820 --> 00:17:04.220
way but but we've always thought of it

00:17:02.039 --> 00:17:06.659
that way and it's built up over time so

00:17:04.220 --> 00:17:09.240
uh I show at the bottom what's happened

00:17:06.660 --> 00:17:12.058
with cash and treasury bills

00:17:09.240 --> 00:17:13.199
through March 31st and I will tell you

00:17:12.058 --> 00:17:15.240
that the

00:17:13.199 --> 00:17:17.539
in the month of April

00:17:15.240 --> 00:17:19.140
we probably

00:17:17.539 --> 00:17:21.659
added

00:17:19.140 --> 00:17:23.459
about seven billion dollars to that

00:17:21.660 --> 00:17:25.259
factor now part of that is because we

00:17:23.459 --> 00:17:28.140
didn't buy as much stock because that

00:17:25.259 --> 00:17:30.419
reduces reduces cash and treasury bills

00:17:28.140 --> 00:17:32.040
we bought about 400 million dollars

00:17:30.419 --> 00:17:35.160
worth of stock in the month of April

00:17:32.039 --> 00:17:39.558
that's that's a minus uh in terms of

00:17:35.160 --> 00:17:41.720
cash available and uh

00:17:39.558 --> 00:17:45.000
we we

00:17:41.720 --> 00:17:47.279
however sold net some stock which

00:17:45.000 --> 00:17:48.960
produced maybe 4 billion and of course

00:17:47.279 --> 00:17:50.038
we had operating earnings probably two

00:17:48.960 --> 00:17:52.200
and a half

00:17:50.038 --> 00:17:54.660
billion or something in that area and my

00:17:52.200 --> 00:17:57.660
guess is we probably increased our cash

00:17:54.660 --> 00:18:01.500
and treasury bills uh six and seven

00:17:57.660 --> 00:18:03.480
billion in the month and uh I just want

00:18:01.500 --> 00:18:04.558
to give you a feel for other cash flows

00:18:03.480 --> 00:18:07.019
at Berkshire

00:18:04.558 --> 00:18:08.940
and then if we move to the final I think

00:18:07.019 --> 00:18:11.940
it's the final one next to the last one

00:18:08.940 --> 00:18:11.940
uh

00:18:14.400 --> 00:18:18.120
no I I think it is the last let's see

00:18:16.679 --> 00:18:21.059
it's the fourth

00:18:18.119 --> 00:18:22.558
yeah is this we should have the one of

00:18:21.058 --> 00:18:25.740
their class a equivalent shares

00:18:22.558 --> 00:18:28.139
outstanding and and uh

00:18:25.740 --> 00:18:30.419
you'll notice that every year

00:18:28.140 --> 00:18:32.580
the number of our shares go down so if

00:18:30.419 --> 00:18:34.380
we own more businesses and the

00:18:32.579 --> 00:18:37.980
businesses make more money

00:18:34.380 --> 00:18:41.880
your chair as shareholders as owners

00:18:37.980 --> 00:18:43.679
a Berkshire increases every year without

00:18:41.880 --> 00:18:45.780
you laying out any money now you're

00:18:43.679 --> 00:18:47.038
laying out the

00:18:45.779 --> 00:18:49.200
the

00:18:47.038 --> 00:18:52.019
alternative which you could receive in

00:18:49.200 --> 00:18:54.480
dividends but the reason we've gotten to

00:18:52.019 --> 00:18:57.660
where we are is because we

00:18:54.480 --> 00:18:59.160
we kept the money we did pay a dividend

00:18:57.660 --> 00:19:01.740
in nineteen

00:18:59.160 --> 00:19:06.000
sixty seven ten cents to share

00:19:01.740 --> 00:19:08.579
it was a terrible mistake and I

00:19:06.000 --> 00:19:10.859
I always tell people that I I'd love for

00:19:08.579 --> 00:19:12.119
the men's room and the directors voted

00:19:10.859 --> 00:19:15.719
it while I was gone but that isn't true

00:19:12.119 --> 00:19:18.119
I was there I confessed they uh but we

00:19:15.720 --> 00:19:20.700
were invested and has produced the

00:19:18.119 --> 00:19:23.038
500 billion possible shareholders equity

00:19:20.700 --> 00:19:26.160
in the 30 billion plus of operating

00:19:23.038 --> 00:19:27.960
earnings and and we'll continue to

00:19:26.160 --> 00:19:30.960
follow that policy because it makes a

00:19:27.960 --> 00:19:32.700
great deal of sense and uh

00:19:30.960 --> 00:19:34.319
with that

00:19:32.700 --> 00:19:37.798
I think we've taken care of the

00:19:34.319 --> 00:19:40.319
preliminaries you can study that the 10q

00:19:37.798 --> 00:19:41.779
is is on the uh

00:19:40.319 --> 00:19:46.319
on the

00:19:41.779 --> 00:19:49.079
web page and if you have a

00:19:46.319 --> 00:19:51.480
week or two vacation you could spend it

00:19:49.079 --> 00:19:52.980
reading the 10-q and but that is the

00:19:51.480 --> 00:19:53.940
essence of Berkshire and with that I

00:19:52.980 --> 00:19:57.660
will

00:19:53.940 --> 00:20:01.620
start with Becky quick and and uh we

00:19:57.660 --> 00:20:04.798
will alternate between Becky and and the

00:20:01.619 --> 00:20:06.178
audience and her questions have come in

00:20:04.798 --> 00:20:09.480
from all over the country and I believe

00:20:06.179 --> 00:20:12.059
you identified the center and go to it

00:20:09.480 --> 00:20:14.279
Becky thanks Warren the first question

00:20:12.058 --> 00:20:16.859
comes in from Randy Jeffs in Irvine

00:20:14.279 --> 00:20:19.079
California and his question is if

00:20:16.859 --> 00:20:20.939
Silicon Valley Bank's deposit had not

00:20:19.079 --> 00:20:22.558
been fully covered what do you think the

00:20:20.940 --> 00:20:24.900
economic consequences would have been to

00:20:22.558 --> 00:20:28.319
the nation

00:20:24.900 --> 00:20:31.200
well I've just simply say it would have

00:20:28.319 --> 00:20:34.980
been catastrophic and that's why they

00:20:31.200 --> 00:20:39.058
were covered uh and even though the FDIC

00:20:34.980 --> 00:20:41.519
limit is 250 000 that that's the way the

00:20:39.058 --> 00:20:43.379
statute reads but that is not the way

00:20:41.519 --> 00:20:45.660
the us is going to behave

00:20:43.380 --> 00:20:49.919
uh any more than they're going to let

00:20:45.660 --> 00:20:54.538
the debt ceiling uh uh cause the world

00:20:49.919 --> 00:20:54.538
to go into turmoil and they

00:20:55.019 --> 00:20:59.519
ah

00:20:56.700 --> 00:21:01.798
well they're just I I can't imagine

00:20:59.519 --> 00:21:03.960
anybody

00:21:01.798 --> 00:21:06.359
in the administration and the Congress

00:21:03.960 --> 00:21:09.360
and the Federal Reserve whatever it may

00:21:06.359 --> 00:21:12.000
have been FDIC I can't imagine anybody's

00:21:09.359 --> 00:21:13.740
saying uh I'd like to be the one on

00:21:12.000 --> 00:21:17.220
television tomorrow and explain the

00:21:13.740 --> 00:21:19.620
American public why we're keeping uh

00:21:17.220 --> 00:21:21.720
uh only two hundred and fifty thousand

00:21:19.619 --> 00:21:23.519
dollars insured and we're gonna start

00:21:21.720 --> 00:21:27.120
around every Bank in the country and

00:21:23.519 --> 00:21:30.538
disrupt the world financial system uh so

00:21:27.119 --> 00:21:32.839
uh I think it was inevitable Charlie do

00:21:30.538 --> 00:21:32.839
you have any

00:21:33.480 --> 00:21:40.319
no I have nothing to add okay well

00:21:37.440 --> 00:21:44.038
uh incidentally I should mention this

00:21:40.319 --> 00:21:46.200
now ajeed and Greg will be here in the

00:21:44.038 --> 00:21:49.379
morning session which ends at noon and

00:21:46.200 --> 00:21:51.840
so uh if you've got questions to direct

00:21:49.380 --> 00:21:53.460
to them the time to do it is in the

00:21:51.839 --> 00:21:55.199
first half of the show and and then

00:21:53.460 --> 00:21:58.380
after lunch

00:21:55.200 --> 00:22:00.419
it'll uh just Charlie and I will be back

00:21:58.380 --> 00:22:02.760
okay

00:22:00.419 --> 00:22:06.200
area one

00:22:02.759 --> 00:22:10.019
hi nirav Patel Haverhill Massachusetts

00:22:06.200 --> 00:22:13.140
Mr Buffett Mr Monger it seems like you

00:22:10.019 --> 00:22:15.779
found the Sweet Spot between being being

00:22:13.140 --> 00:22:17.100
too conservative and too aggressive as

00:22:15.779 --> 00:22:19.259
investors

00:22:17.099 --> 00:22:21.839
do you ever make bad investment

00:22:19.259 --> 00:22:24.298
decisions because of your emotions and

00:22:21.839 --> 00:22:26.658
what do you do to try to keep that from

00:22:24.298 --> 00:22:26.658
happening

00:22:28.259 --> 00:22:33.839
well we make

00:22:30.240 --> 00:22:35.640
bad investment decisions uh

00:22:33.839 --> 00:22:37.678
plenty of times I make more than Charlie

00:22:35.640 --> 00:22:39.538
because I'm I like to think it's because

00:22:37.679 --> 00:22:43.980
I make more decisions but the public

00:22:39.538 --> 00:22:43.980
normatic average is worse but

00:22:44.759 --> 00:22:49.980
I can't recall

00:22:48.000 --> 00:22:52.500
anytime

00:22:49.980 --> 00:22:55.319
in the history of Berkshire

00:22:52.500 --> 00:22:57.179
that we made an emotional decision that

00:22:55.319 --> 00:23:00.619
I know the movie had Jamie Lee in there

00:22:57.179 --> 00:23:03.600
but that that was for Laughs

00:23:00.619 --> 00:23:06.298
I mean Jamie

00:23:03.599 --> 00:23:09.240
Jamie Lee she's good but she's not good

00:23:06.298 --> 00:23:12.079
enough to get me or Charlie to make an

00:23:09.240 --> 00:23:12.079
emotional decision

00:23:12.579 --> 00:23:18.058
[Applause]

00:23:16.619 --> 00:23:19.739
Charlie

00:23:18.058 --> 00:23:21.980
I'm sure you have something to add on

00:23:19.740 --> 00:23:21.980
that

00:23:24.119 --> 00:23:29.000
well it's a different movie than it is

00:23:27.298 --> 00:23:31.379
shown in the most corporate meetings

00:23:29.000 --> 00:23:33.298
[Laughter]

00:23:31.380 --> 00:23:37.020
but have we ever made an emotional

00:23:33.298 --> 00:23:38.700
decision no no

00:23:37.019 --> 00:23:40.619
that's in business we're talking about

00:23:38.700 --> 00:23:42.419
yeah

00:23:40.619 --> 00:23:44.759
yeah no you don't want to be a no

00:23:42.419 --> 00:23:46.980
emotion person in all of your life but

00:23:44.759 --> 00:23:49.079
you you definitely want to be a no more

00:23:46.980 --> 00:23:52.919
no emotion person of making an

00:23:49.079 --> 00:23:57.058
investment or business decision that uh

00:23:52.919 --> 00:23:59.880
you can argue that that uh uh

00:23:57.058 --> 00:24:03.418
with it

00:23:59.880 --> 00:24:07.080
we probably I would say that we

00:24:03.419 --> 00:24:10.140
've made an emotional decision perhaps

00:24:07.079 --> 00:24:11.460
and when a manager has been with us for

00:24:10.140 --> 00:24:13.380
some period

00:24:11.460 --> 00:24:15.179
and we haven't

00:24:13.380 --> 00:24:18.840
we've

00:24:15.179 --> 00:24:20.940
we we've ignored the fact

00:24:18.839 --> 00:24:21.959
that perhaps they weren't quite what

00:24:20.940 --> 00:24:25.320
they were

00:24:21.960 --> 00:24:28.620
earlier but our businesses are so good

00:24:25.319 --> 00:24:32.399
that they they've run better sometimes

00:24:28.619 --> 00:24:34.500
when uh you know I've talked about

00:24:32.400 --> 00:24:36.480
West Coast for example the wonderful

00:24:34.500 --> 00:24:37.919
Louisville

00:24:36.480 --> 00:24:40.259
it ran on

00:24:37.919 --> 00:24:41.820
it ran on automatic pilot

00:24:40.259 --> 00:24:44.158
for a while but I don't think we

00:24:41.819 --> 00:24:47.339
suffered by it but you're going to argue

00:24:44.159 --> 00:24:49.140
that if Charlie and I hadn't liked Louie

00:24:47.339 --> 00:24:50.399
as much as we did we might have spotted

00:24:49.140 --> 00:24:52.020
a little bit early but I don't think it

00:24:50.400 --> 00:24:55.080
made any difference in the results would

00:24:52.019 --> 00:24:57.900
you would you agree with that Charlie

00:24:55.079 --> 00:25:00.500
yeah yeah you'd be totally with it

00:24:57.900 --> 00:25:00.500
and

00:25:01.500 --> 00:25:04.679
I'm glad I'm glad we behaved the way we

00:25:03.419 --> 00:25:08.100
did at Wesco

00:25:04.679 --> 00:25:10.860
by the way we bought the thing for a few

00:25:08.099 --> 00:25:13.439
tens of millions and it became worth two

00:25:10.859 --> 00:25:15.359
or three billion

00:25:13.440 --> 00:25:17.159
yeah that wasn't common in the Savings

00:25:15.359 --> 00:25:20.699
and Loan businesses you may have noticed

00:25:17.159 --> 00:25:23.520
and they don't want they really want

00:25:20.700 --> 00:25:25.679
crazy in that industry and and we had a

00:25:23.519 --> 00:25:28.558
wonderful guy in Louis and we didn't go

00:25:25.679 --> 00:25:30.559
crazy yeah we didn't go crazy

00:25:28.558 --> 00:25:30.558
um

00:25:30.960 --> 00:25:35.819
okay Becky

00:25:33.179 --> 00:25:37.679
this question comes from Ben Knoll in

00:25:35.819 --> 00:25:39.720
Minneapolis he says he's a Berkshire

00:25:37.679 --> 00:25:41.400
shareholder of three decades and he's

00:25:39.720 --> 00:25:42.839
attended many Berkshire meetings he's

00:25:41.400 --> 00:25:45.360
here again this year

00:25:42.839 --> 00:25:47.939
and this is addressed to Ajit and Greg

00:25:45.359 --> 00:25:50.278
he says last year I asked you about how

00:25:47.940 --> 00:25:52.440
Geico and BNSF appeared to lose ground

00:25:50.278 --> 00:25:54.538
to their leading competitors Geico on

00:25:52.440 --> 00:25:57.120
telematics and BNSF on Precision

00:25:54.538 --> 00:25:59.158
scheduled railroading Ajit you responded

00:25:57.119 --> 00:26:01.439
by saying how you expected Geico to make

00:25:59.159 --> 00:26:03.419
progress in a year or two Greg you spoke

00:26:01.440 --> 00:26:05.159
about your pride in BNSF but you didn't

00:26:03.419 --> 00:26:07.380
directly address the threat of

00:26:05.159 --> 00:26:09.000
precision's scheduled railroading will

00:26:07.380 --> 00:26:11.220
each of you please provide perspective

00:26:09.000 --> 00:26:14.960
on these competitive challenges and our

00:26:11.220 --> 00:26:14.960
company's strategies to address them

00:26:16.278 --> 00:26:19.460
let me

00:26:19.980 --> 00:26:25.500
in terms of Geico and telematics let me

00:26:23.159 --> 00:26:27.480
make the observation that Geico has

00:26:25.500 --> 00:26:29.819
certainly taken the ball by the horns

00:26:27.480 --> 00:26:31.380
and has made rapid strides in terms of

00:26:29.819 --> 00:26:33.538
trying to bridge the gap

00:26:31.380 --> 00:26:35.100
in terms of telematics and its

00:26:33.538 --> 00:26:37.919
competitors

00:26:35.099 --> 00:26:39.899
they have now reached a point where on

00:26:37.919 --> 00:26:44.400
all new business

00:26:39.900 --> 00:26:47.340
close to 90 percent is has a telematics

00:26:44.400 --> 00:26:49.679
input to to the pricing decision

00:26:47.339 --> 00:26:53.038
unfortunately less than half of that is

00:26:49.679 --> 00:26:54.298
being taken up by the policyholders the

00:26:53.038 --> 00:26:57.240
other point I want to make is even

00:26:54.298 --> 00:26:59.879
though we have made improvements in in

00:26:57.240 --> 00:27:02.940
terms of Bridging the Gap on telematics

00:26:59.880 --> 00:27:05.760
we still haven't started to realize the

00:27:02.940 --> 00:27:08.038
true benefit and the real culprit or the

00:27:05.759 --> 00:27:10.558
bottleneck is technology

00:27:08.038 --> 00:27:13.379
Geico's technology needs a lot more work

00:27:10.558 --> 00:27:15.359
than I thought it did it has more than

00:27:13.380 --> 00:27:17.580
500 actually more than 600 Legacy

00:27:15.359 --> 00:27:20.219
systems that don't really talk to each

00:27:17.579 --> 00:27:22.460
other and we are trying to compress them

00:27:20.220 --> 00:27:24.720
to no more than 15 16

00:27:22.460 --> 00:27:26.759
systems that all talk to each other

00:27:24.720 --> 00:27:28.980
that's a Monumental Challenge and

00:27:26.759 --> 00:27:30.658
because of that even though we have made

00:27:28.980 --> 00:27:32.159
improvements in telematics we still have

00:27:30.659 --> 00:27:34.380
a long way to go

00:27:32.159 --> 00:27:35.880
because of Technology

00:27:34.380 --> 00:27:38.100
uh

00:27:35.880 --> 00:27:40.320
because of that and because of the whole

00:27:38.099 --> 00:27:43.259
issue more broadly in terms of matching

00:27:40.319 --> 00:27:44.099
rate to risk Geico is still work in

00:27:43.259 --> 00:27:45.720
progress

00:27:44.099 --> 00:27:46.798
I don't know if you any of you had a

00:27:45.720 --> 00:27:49.679
chance to look at the first quarter

00:27:46.798 --> 00:27:51.778
results but Geico has had a very good

00:27:49.679 --> 00:27:54.240
first quarter coming in at a combined

00:27:51.778 --> 00:27:56.538
ratio of 93 and change which means a

00:27:54.240 --> 00:27:58.980
margin of six and change

00:27:56.538 --> 00:28:00.419
even though that's very good it's not

00:27:58.980 --> 00:28:03.120
something we can take to the bank

00:28:00.419 --> 00:28:06.720
because they're two unusual items that

00:28:03.119 --> 00:28:08.759
contributed to it firstly we've had what

00:28:06.720 --> 00:28:10.558
is called prior year Reserve releases

00:28:08.759 --> 00:28:13.079
we've reduced results for the previous

00:28:10.558 --> 00:28:14.759
years and that contributed to it and

00:28:13.079 --> 00:28:17.399
secondly every year the first quarter

00:28:14.759 --> 00:28:19.980
tends to be a seasonally good quota for

00:28:17.400 --> 00:28:22.860
auto insurance writers

00:28:19.980 --> 00:28:24.599
so if you just for those two factors my

00:28:22.859 --> 00:28:27.240
guess is the end of the year Geico will

00:28:24.599 --> 00:28:30.359
end up with a combined ratio just south

00:28:27.240 --> 00:28:32.460
of 100 as opposed to the Target they're

00:28:30.359 --> 00:28:35.699
shooting for 96.

00:28:32.460 --> 00:28:37.319
I hope they reach the target of 96 by

00:28:35.700 --> 00:28:40.200
the end of next year

00:28:37.319 --> 00:28:41.759
uh and but instead of getting too

00:28:40.200 --> 00:28:44.519
excited about it I think it's important

00:28:41.759 --> 00:28:46.200
to realize that even if we reach 96 it

00:28:44.519 --> 00:28:49.679
will come at the expense of

00:28:46.200 --> 00:28:52.140
having lost policy holders there is a

00:28:49.679 --> 00:28:54.600
trade-off between profitability and

00:28:52.140 --> 00:28:56.600
growth and clearly we have we're going

00:28:54.599 --> 00:28:58.619
to emphasize

00:28:56.599 --> 00:29:00.538
profitability and not growth and that

00:28:58.619 --> 00:29:02.579
will come at the expense of policyholder

00:29:00.538 --> 00:29:04.919
so it will not be until two years from

00:29:02.579 --> 00:29:07.079
now that we'll be back on track fighting

00:29:04.919 --> 00:29:09.538
the battles on both the profitability

00:29:07.079 --> 00:29:11.819
and the growth front

00:29:09.538 --> 00:29:15.359
okay yep

00:29:11.819 --> 00:29:17.399
moving to BNSF

00:29:15.359 --> 00:29:19.500
I'll start again by expressing great

00:29:17.400 --> 00:29:22.200
pride in the BNSF team we have an

00:29:19.500 --> 00:29:25.140
exceptional group of led by Katie and

00:29:22.200 --> 00:29:27.419
and her managers that uh show up every

00:29:25.140 --> 00:29:29.640
day to do great work on on the railroad

00:29:27.419 --> 00:29:31.620
at the same time they would be the first

00:29:29.640 --> 00:29:34.679
to acknowledge there's more to be done

00:29:31.619 --> 00:29:38.278
there uh the specific reference to

00:29:34.679 --> 00:29:42.659
Precision scheduled railroading uh the

00:29:38.278 --> 00:29:44.579
other large railroad Class A uh on the

00:29:42.659 --> 00:29:47.520
railroads in the in the U.S follow that

00:29:44.579 --> 00:29:49.558
and including the two in Canada we're

00:29:47.519 --> 00:29:52.500
well aware of what they're doing and and

00:29:49.558 --> 00:29:54.418
obviously pay close attention to their

00:29:52.500 --> 00:29:56.398
operating Matrix and our team strives

00:29:54.419 --> 00:29:59.100
every day to be more efficient obviously

00:29:56.398 --> 00:30:00.839
I would say we balance it with the needs

00:29:59.099 --> 00:30:03.558
of our customers

00:30:00.839 --> 00:30:06.599
if I look back to

00:30:03.558 --> 00:30:12.178
pre-2022 so we look at the three-year

00:30:06.599 --> 00:30:14.339
period of 2019 2020 2021 the BNSF team

00:30:12.179 --> 00:30:17.640
made significant progress on their

00:30:14.339 --> 00:30:19.740
efficiencies and and and delivering

00:30:17.640 --> 00:30:22.200
overall value back to the shareholders

00:30:19.740 --> 00:30:23.640
and and to their customers and at the

00:30:22.200 --> 00:30:25.620
same time maintaining a very safe

00:30:23.640 --> 00:30:28.020
railroad for our employees so we're

00:30:25.619 --> 00:30:30.538
making excellent progress that didn't

00:30:28.019 --> 00:30:34.019
stop last year they made great progress

00:30:30.538 --> 00:30:36.419
again the reality in 2022 as we did go

00:30:34.019 --> 00:30:39.480
through a period of time where we had to

00:30:36.419 --> 00:30:41.038
call it reset the railroad we came out

00:30:39.480 --> 00:30:43.679
of the pandemic there were the supply

00:30:41.038 --> 00:30:45.898
challenges we had certain other issue

00:30:43.679 --> 00:30:48.600
labor issues and other things going on

00:30:45.898 --> 00:30:51.000
at the port and the reality is our team

00:30:48.599 --> 00:30:53.699
prioritized getting the railroad back in

00:30:51.000 --> 00:30:55.380
place for the long term not a short-term

00:30:53.700 --> 00:30:57.558
focus on hitting certain operating

00:30:55.380 --> 00:31:00.179
metrics in in

00:30:57.558 --> 00:31:01.980
2022 we're well aware of where we were

00:31:00.179 --> 00:31:05.100
relative to those metrics but the real

00:31:01.980 --> 00:31:06.720
Focus was to get the railroad reset in a

00:31:05.099 --> 00:31:09.178
in a safe manner such that we could

00:31:06.720 --> 00:31:12.120
deliver long-term value and long-term

00:31:09.179 --> 00:31:13.860
service to our customers and and that's

00:31:12.119 --> 00:31:15.898
really what we'll continue to see with

00:31:13.859 --> 00:31:18.298
that team they'll be continual progress

00:31:15.898 --> 00:31:21.119
there'll be years where it's not as

00:31:18.298 --> 00:31:24.179
quickly or even we go backwards but over

00:31:21.119 --> 00:31:26.398
the long term we'll be very we'll see

00:31:24.179 --> 00:31:28.500
exceptional results from from that team

00:31:26.398 --> 00:31:30.959
and and couldn't be more proud that we

00:31:28.500 --> 00:31:34.380
have that asset thank you

00:31:30.960 --> 00:31:36.298
I wouldn't I would just

00:31:34.380 --> 00:31:38.940
well he deserves but both of them

00:31:36.298 --> 00:31:41.599
deserve Applause uh the I would like to

00:31:38.940 --> 00:31:41.600
add one thing

00:31:48.000 --> 00:31:52.380
the

00:31:50.159 --> 00:31:55.500
and Geico

00:31:52.380 --> 00:31:58.260
dot Combs

00:31:55.500 --> 00:32:01.019
was Jake's Choice my choice

00:31:58.259 --> 00:32:04.259
go back to guy at Geico

00:32:01.019 --> 00:32:07.379
to work on the problem of matching

00:32:04.259 --> 00:32:09.419
rate to risk which is what

00:32:07.380 --> 00:32:12.299
insurance is all about

00:32:09.419 --> 00:32:13.980
and uh

00:32:12.298 --> 00:32:16.019
he arrived

00:32:13.980 --> 00:32:18.298
with exquisite timing right before the

00:32:16.019 --> 00:32:21.240
pandemic broke out and all kinds of

00:32:18.298 --> 00:32:25.619
things changed but Todd is doing

00:32:21.240 --> 00:32:26.819
a wonderful job at Geico and and he

00:32:25.619 --> 00:32:31.859
works closely

00:32:26.819 --> 00:32:33.599
uh with the Jeep because he saw his home

00:32:31.859 --> 00:32:35.398
and all Mulligan comes back here and we

00:32:33.599 --> 00:32:38.119
we get together on the weekend

00:32:35.398 --> 00:32:40.319
sometimes too so uh

00:32:38.119 --> 00:32:42.479
that's been a

00:32:40.319 --> 00:32:45.058
a remarkable com accomplishment under

00:32:42.480 --> 00:32:47.339
difficult circumstances and he's not all

00:32:45.058 --> 00:32:50.058
the way home but he said he just made a

00:32:47.339 --> 00:32:54.000
very very big change

00:32:50.058 --> 00:32:56.398
uh in multiple ways at Geico and then

00:32:54.000 --> 00:32:57.740
one other thing I would like to mention

00:32:56.398 --> 00:33:02.719
there have been a lot of public

00:32:57.740 --> 00:33:05.058
companies created in the last decade

00:33:02.720 --> 00:33:09.240
thereabouts in insurance

00:33:05.058 --> 00:33:10.980
and uh there's none of them

00:33:09.240 --> 00:33:14.038
that we would

00:33:10.980 --> 00:33:14.759
like to own and and they always started

00:33:14.038 --> 00:33:16.619
out

00:33:14.759 --> 00:33:18.599
in their perspective saying this is a

00:33:16.619 --> 00:33:20.219
tech company not an insurance company of

00:33:18.599 --> 00:33:22.918
course we're of course they're in a tech

00:33:20.220 --> 00:33:25.019
company with it everybody's

00:33:22.919 --> 00:33:28.320
whether they're in insurance or a lot of

00:33:25.019 --> 00:33:30.240
other places are using the facility but

00:33:28.319 --> 00:33:36.298
you still have to properly match rate to

00:33:30.240 --> 00:33:38.339
risk and uh uh that they invariably have

00:33:36.298 --> 00:33:39.480
reported a huge losses they've eaten up

00:33:38.339 --> 00:33:42.000
capital

00:33:39.480 --> 00:33:43.919
but there's been one company that nobody

00:33:42.000 --> 00:33:45.298
has generally heard of there's only been

00:33:43.919 --> 00:33:48.320
one that I know of

00:33:45.298 --> 00:33:53.278
company started in the last 10 years

00:33:48.319 --> 00:33:55.500
that has been a overwhelming success and

00:33:53.278 --> 00:33:58.919
that's a company that Ajit

00:33:55.500 --> 00:34:00.898
and four people who join with them set

00:33:58.919 --> 00:34:03.600
to develop a new business

00:34:00.898 --> 00:34:05.699
it's called Berkshire Hathaway specialty

00:34:03.599 --> 00:34:06.658
it now has

00:34:05.700 --> 00:34:10.079
yeah

00:34:06.659 --> 00:34:13.858
what's the float a Jeep coming up to 12

00:34:10.079 --> 00:34:15.418
billion yeah yeah we've we've built more

00:34:13.858 --> 00:34:17.059
slope than probably all these companies

00:34:15.418 --> 00:34:19.679
combined

00:34:17.059 --> 00:34:22.440
we've now

00:34:19.679 --> 00:34:24.358
it it's cost us essentially nothing in

00:34:22.440 --> 00:34:26.220
terms of an underwriting loss

00:34:24.358 --> 00:34:29.219
the four people have turned in I don't

00:34:26.219 --> 00:34:32.398
know 1500 around the world we we took on

00:34:29.219 --> 00:34:35.299
the whole industry and we brought

00:34:32.398 --> 00:34:35.299
some unique

00:34:35.940 --> 00:34:40.619
talent and the four people that came and

00:34:38.280 --> 00:34:43.919
now have like you said 1500 or so

00:34:40.619 --> 00:34:45.000
worldwide and we brought capital and we

00:34:43.918 --> 00:34:46.500
brought

00:34:45.000 --> 00:34:50.398
okay

00:34:46.500 --> 00:34:53.760
capabilities that really only Berkshire

00:34:50.398 --> 00:34:55.199
could Supply so it was the it was the

00:34:53.760 --> 00:34:56.720
combination

00:34:55.199 --> 00:35:00.358
of of

00:34:56.719 --> 00:35:03.059
brains and talent and energy and money

00:35:00.358 --> 00:35:04.440
and no one has really successfully

00:35:03.059 --> 00:35:06.480
entered this

00:35:04.440 --> 00:35:08.940
this space

00:35:06.480 --> 00:35:10.380
plenty of people in the space who didn't

00:35:08.940 --> 00:35:13.500
like us coming

00:35:10.380 --> 00:35:15.900
and we did it without it

00:35:13.500 --> 00:35:19.559
costing us a dime of Entry

00:35:15.900 --> 00:35:21.720
and it's been unmatched by any of the

00:35:19.559 --> 00:35:25.380
public companies that went public

00:35:21.719 --> 00:35:27.539
and people who've seen us do it but they

00:35:25.380 --> 00:35:31.440
can't duplicate it and that's

00:35:27.539 --> 00:35:33.659
what Vegeta's created and Peter Eastwood

00:35:31.440 --> 00:35:37.559
has led this group Berkshire Hathaway

00:35:33.659 --> 00:35:40.739
specially and uh it's just remarkable so

00:35:37.559 --> 00:35:42.170
anyway with that let's go on yeah we'll

00:35:40.739 --> 00:35:42.429
give him a hand for that

00:35:42.170 --> 00:35:45.590
[Applause]

00:35:42.429 --> 00:35:45.589
[Music]

00:35:46.739 --> 00:35:50.419
okay let's go to section two

00:35:55.858 --> 00:35:58.880
hi Charlie

00:35:57.599 --> 00:36:02.960
I'm

00:35:58.880 --> 00:36:02.960
Lorenz I'm Karen here

00:36:05.239 --> 00:36:12.719
your priorities are right

00:36:08.940 --> 00:36:16.139
yes I have questions on AI and Robotics

00:36:12.719 --> 00:36:19.259
here's my questions as Ai and Robotics

00:36:16.139 --> 00:36:21.900
continue to advance what do you believe

00:36:19.260 --> 00:36:24.359
will be the positive and an active

00:36:21.900 --> 00:36:27.240
impact of this technology

00:36:24.358 --> 00:36:30.239
on both the stocks markets and society

00:36:27.239 --> 00:36:32.879
as a whole and are there any specific

00:36:30.239 --> 00:36:36.919
Industrials and companies that you

00:36:32.880 --> 00:36:36.920
believe will be most impacted

00:36:39.659 --> 00:36:44.420
Karen I thank you for asking Charlie

00:36:41.760 --> 00:36:44.420
that question

00:36:51.420 --> 00:36:54.420
well

00:36:54.900 --> 00:37:01.019
if you went into byd's factories in

00:36:58.019 --> 00:37:04.199
China you would see robotics going in

00:37:01.019 --> 00:37:07.019
the unbelievable rate

00:37:04.199 --> 00:37:08.819
so we're gonna see a lot more robotics

00:37:07.019 --> 00:37:10.980
in the world

00:37:08.820 --> 00:37:13.740
I am personally

00:37:10.980 --> 00:37:15.960
skeptical of some of the hype that has

00:37:13.739 --> 00:37:18.299
gone into artificial intelligence

00:37:15.960 --> 00:37:20.659
I think old-fashioned intelligence works

00:37:18.300 --> 00:37:20.660
pretty well

00:37:21.610 --> 00:37:28.858
[Applause]

00:37:27.059 --> 00:37:31.078
there won't be a

00:37:28.858 --> 00:37:33.299
there won't be anything in AI

00:37:31.079 --> 00:37:34.339
that replaces the gene

00:37:33.300 --> 00:37:37.440
the

00:37:34.338 --> 00:37:41.279
state that unqualifiedly they can do

00:37:37.440 --> 00:37:41.280
amazing things uh

00:37:41.460 --> 00:37:45.838
you know Bill Gates brought me out of

00:37:43.800 --> 00:37:48.660
them out

00:37:45.838 --> 00:37:50.820
the latest maybe not the latest version

00:37:48.659 --> 00:37:52.519
but one he thought maybe I could handle

00:37:50.820 --> 00:37:54.960
which

00:37:52.519 --> 00:37:58.500
has to be careful with me in terms of

00:37:54.960 --> 00:38:01.679
leading me too fast uh and it did it did

00:37:58.500 --> 00:38:04.739
these remarkable things uh it didn't but

00:38:01.679 --> 00:38:06.539
it it it couldn't tell jokes Bill told

00:38:04.739 --> 00:38:10.379
me that ahead of time and it prepared me

00:38:06.539 --> 00:38:11.880
and it it just isn't there but you know

00:38:10.380 --> 00:38:14.160
things like

00:38:11.880 --> 00:38:14.820
checking all the legal opinions on you

00:38:14.159 --> 00:38:16.500
know

00:38:14.820 --> 00:38:19.380
since the beginning of time and

00:38:16.500 --> 00:38:21.719
everything and eliminating all the

00:38:19.380 --> 00:38:24.119
sided I mean it can do all kinds of

00:38:21.719 --> 00:38:25.618
things and

00:38:24.119 --> 00:38:26.760
when something can do all kinds of

00:38:25.619 --> 00:38:30.480
things

00:38:26.760 --> 00:38:33.060
I get a little bit worried and because I

00:38:30.480 --> 00:38:34.079
know we won't be able to uninvent it and

00:38:33.059 --> 00:38:37.199
uh

00:38:34.079 --> 00:38:40.560
you know we did invent

00:38:37.199 --> 00:38:45.419
uh for very very good reason

00:38:40.559 --> 00:38:48.539
the atom bomb and in World War II and it

00:38:45.420 --> 00:38:50.519
was you know it was enormously important

00:38:48.539 --> 00:38:52.019
that we did so

00:38:50.519 --> 00:38:54.179
but

00:38:52.019 --> 00:38:57.838
is it good for the next 200 years of the

00:38:54.179 --> 00:39:00.118
world that that the ability to do so has

00:38:57.838 --> 00:39:03.480
been Unleashed we didn't have a choice

00:39:00.119 --> 00:39:05.940
but uh uh

00:39:03.480 --> 00:39:07.699
when you start something well Einstein

00:39:05.940 --> 00:39:09.900
said after

00:39:07.699 --> 00:39:11.519
this has changed everything in the world

00:39:09.900 --> 00:39:13.320
except how men think

00:39:11.519 --> 00:39:16.679
and uh

00:39:13.320 --> 00:39:19.079
I would say the same thing May

00:39:16.679 --> 00:39:22.500
not not the same thing I don't mean that

00:39:19.079 --> 00:39:25.920
but I mean they with with AI

00:39:22.500 --> 00:39:27.059
uh it it can change everything in the

00:39:25.920 --> 00:39:28.260
world

00:39:27.059 --> 00:39:31.858
except

00:39:28.260 --> 00:39:34.920
how men think and behave and

00:39:31.858 --> 00:39:37.259
that's that's a big step to take

00:39:34.920 --> 00:39:40.380
it's a good question and it's the best

00:39:37.260 --> 00:39:43.440
answer we can give Becky

00:39:40.380 --> 00:39:45.420
this question comes from Tom Seymour he

00:39:43.440 --> 00:39:48.659
says the first sentence of a recent

00:39:45.420 --> 00:39:51.059
Financial Times article read Charlie

00:39:48.659 --> 00:39:53.219
Munger has warned of a brewing storm in

00:39:51.059 --> 00:39:55.799
the U.S commercial property Market with

00:39:53.219 --> 00:39:58.858
American Banks full of what he said were

00:39:55.800 --> 00:40:00.420
bad loans as property prices fall please

00:39:58.858 --> 00:40:03.179
elaborate on what's going on in

00:40:00.420 --> 00:40:05.280
commercial real estate how bad will the

00:40:03.179 --> 00:40:07.739
losses be and what sectors or

00:40:05.280 --> 00:40:09.599
geographies look particularly bad I'll

00:40:07.739 --> 00:40:10.739
just add an addendum from another viewer

00:40:09.599 --> 00:40:12.480
who wrote in and wanted to know if

00:40:10.739 --> 00:40:15.179
Berkshire would be more active in

00:40:12.480 --> 00:40:17.599
commercial real estate as a result

00:40:15.179 --> 00:40:17.598
okay

00:40:19.800 --> 00:40:24.060
well berkshire's never been very

00:40:21.539 --> 00:40:25.019
important very active in commercial real

00:40:24.059 --> 00:40:28.380
estate

00:40:25.019 --> 00:40:30.900
it it works better for taxable investors

00:40:28.380 --> 00:40:32.280
than it does for corporations tax the

00:40:30.900 --> 00:40:33.480
way Berkshire is

00:40:32.280 --> 00:40:36.300
so

00:40:33.480 --> 00:40:39.480
I I don't anticipate huge

00:40:36.300 --> 00:40:42.660
effects on Berkshire but I do think that

00:40:39.480 --> 00:40:44.760
the hollowing out of the downtowns

00:40:42.659 --> 00:40:46.139
in the United States and elsewhere in

00:40:44.760 --> 00:40:48.540
the world is going to be quite

00:40:46.139 --> 00:40:50.219
significant and quite unpleasant

00:40:48.539 --> 00:40:51.300
I think the country will get through it

00:40:50.219 --> 00:40:54.899
all right

00:40:51.300 --> 00:40:58.560
but as they say it will awfully it will

00:40:54.900 --> 00:41:00.119
often involve a different set of owners

00:40:58.559 --> 00:41:04.559
yeah in the buildings the buildings

00:41:00.119 --> 00:41:06.420
don't go away but the owners do well but

00:41:04.559 --> 00:41:10.279
but most people like to buy with

00:41:06.420 --> 00:41:13.619
non-recourse in in real estate and and

00:41:10.280 --> 00:41:15.060
one time I asked Charlie there was some

00:41:13.619 --> 00:41:17.220
real estate guy we were talking to him

00:41:15.059 --> 00:41:19.078
and you know how do they decide how much

00:41:17.219 --> 00:41:21.899
they can a building like this is worth

00:41:19.079 --> 00:41:23.820
and it's the answer is it's whatever

00:41:21.900 --> 00:41:27.000
they can borrow without signing their

00:41:23.820 --> 00:41:29.160
name and if you look at

00:41:27.000 --> 00:41:31.739
real estate generally you'll understand

00:41:29.159 --> 00:41:33.960
what the phenomena that's happening if

00:41:31.739 --> 00:41:36.838
you do if you remind yourself that

00:41:33.960 --> 00:41:37.800
that's the attitude of most people that

00:41:36.838 --> 00:41:39.119
have

00:41:37.800 --> 00:41:41.400
uh

00:41:39.119 --> 00:41:43.880
become big in in the real estate

00:41:41.400 --> 00:41:46.559
business and and uh

00:41:43.880 --> 00:41:48.119
and it does mean that the lenders are

00:41:46.559 --> 00:41:49.799
the ones that

00:41:48.119 --> 00:41:51.559
got the property and of course they

00:41:49.800 --> 00:41:54.180
don't want the property usually so then

00:41:51.559 --> 00:41:57.000
the real estate operator comes on

00:41:54.179 --> 00:41:58.319
negotiating with them and and the banks

00:41:57.000 --> 00:41:59.820
tend to

00:41:58.320 --> 00:42:02.700
you know

00:41:59.820 --> 00:42:06.119
extend and pretend and there's all kinds

00:42:02.699 --> 00:42:08.819
of activities that arrive out of out of

00:42:06.119 --> 00:42:12.180
commercial real estate development which

00:42:08.820 --> 00:42:15.000
occurs on a big big scale but it all has

00:42:12.179 --> 00:42:16.259
consequences and and I think we're

00:42:15.000 --> 00:42:18.719
we're about

00:42:16.260 --> 00:42:21.180
well we are starting to see the

00:42:18.719 --> 00:42:22.199
consequences of people who could borrow

00:42:21.179 --> 00:42:24.299
it

00:42:22.199 --> 00:42:26.279
two and a half percent

00:42:24.300 --> 00:42:28.039
find out it doesn't work at current

00:42:26.280 --> 00:42:30.480
rates and they hand it back to somebody

00:42:28.039 --> 00:42:31.800
that gave them all the money they needed

00:42:30.480 --> 00:42:33.059
to build it

00:42:31.800 --> 00:42:34.740
done

00:42:33.059 --> 00:42:36.299
Charlie's had more experience than

00:42:34.739 --> 00:42:38.879
really Charlie got it started in real

00:42:36.300 --> 00:42:41.760
estate though I mean Charlie Charlie

00:42:38.880 --> 00:42:44.338
yes it

00:42:41.760 --> 00:42:48.420
it's difficult

00:42:44.338 --> 00:42:51.358
I like what we do better

00:42:48.420 --> 00:42:54.838
well as Charlie once said to me when I

00:42:51.358 --> 00:42:56.759
was leaving his house a few months ago I

00:42:54.838 --> 00:42:58.500
was visiting him we talked for a couple

00:42:56.760 --> 00:43:00.480
of hours and I said to Charlie as I left

00:42:58.500 --> 00:43:02.940
I just it wasn't anybody else in the

00:43:00.480 --> 00:43:05.940
house and I said except

00:43:02.940 --> 00:43:07.858
one daughter and I said uh Charlie hello

00:43:05.940 --> 00:43:10.200
I'll just keep

00:43:07.858 --> 00:43:12.480
doing what we've been doing and

00:43:10.199 --> 00:43:14.578
Charlie said without looking up or

00:43:12.480 --> 00:43:18.019
pausing a second he said that's all you

00:43:14.579 --> 00:43:18.019
know how to do Warren yeah

00:43:19.019 --> 00:43:25.880
he was right too ah station

00:43:22.679 --> 00:43:25.879
three is it

00:43:26.039 --> 00:43:33.119
hi uh my name is salazi I'm from Santa

00:43:30.059 --> 00:43:36.838
Santa Clara California and my question

00:43:33.119 --> 00:43:39.780
is to Charlie and Warren given the rise

00:43:36.838 --> 00:43:42.719
of disruptive technologies that can

00:43:39.780 --> 00:43:46.019
improve productivity significantly and

00:43:42.719 --> 00:43:48.539
AI being one of them how do you envision

00:43:46.019 --> 00:43:52.318
the future of value investing in this

00:43:48.539 --> 00:43:54.358
new era and what adaptations or new

00:43:52.318 --> 00:43:56.759
principles do you think investors should

00:43:54.358 --> 00:43:59.578
adopt and any recommendations for

00:43:56.760 --> 00:44:04.079
investors to remain successful in this

00:43:59.579 --> 00:44:08.280
rapid changing landscape thank you

00:44:04.079 --> 00:44:10.440
take that one I think value investors

00:44:08.280 --> 00:44:14.280
are going to have a harder time now that

00:44:10.440 --> 00:44:17.280
there's so many of them competing first

00:44:14.280 --> 00:44:20.040
a diminished bunch of opportunities

00:44:17.280 --> 00:44:23.359
so my advice to Value investors is to

00:44:20.039 --> 00:44:23.358
get used to making less

00:44:24.179 --> 00:44:27.598
and

00:44:25.920 --> 00:44:29.338
Charlie was been telling me the same

00:44:27.599 --> 00:44:31.680
thing the whole time we've known each

00:44:29.338 --> 00:44:33.659
other we we get along wonderfully

00:44:31.679 --> 00:44:36.299
because we are making less

00:44:33.659 --> 00:44:38.039
yeah well but that's because that mostly

00:44:36.300 --> 00:44:40.800
I think is because it's larger we were

00:44:38.039 --> 00:44:45.119
younger we never thought we could manage

00:44:40.800 --> 00:44:50.760
508 billion no one or five yeah but

00:44:45.119 --> 00:44:53.039
I I would argue that uh that uh

00:44:50.760 --> 00:44:55.380
there's gonna be plenty of opportunities

00:44:53.039 --> 00:44:57.000
and part of the reason they're going to

00:44:55.380 --> 00:44:59.039
be plenty of opportunities

00:44:57.000 --> 00:45:00.719
the tech doesn't make any difference or

00:44:59.039 --> 00:45:02.759
any of that I mean if you look at how

00:45:00.719 --> 00:45:05.818
the world changed in them

00:45:02.760 --> 00:45:07.260
in the years since 1942 when I started

00:45:05.818 --> 00:45:08.519
to say well

00:45:07.260 --> 00:45:09.960
how do the kid that doesn't know

00:45:08.519 --> 00:45:11.639
anything about airplanes it doesn't know

00:45:09.960 --> 00:45:13.139
anything about androgens and cars and

00:45:11.639 --> 00:45:16.139
doesn't know anything about them

00:45:13.139 --> 00:45:18.838
electricity and all that but that really

00:45:16.139 --> 00:45:21.420
isn't the that's not there the world

00:45:18.838 --> 00:45:22.980
changing doesn't or new things coming

00:45:21.420 --> 00:45:25.920
along don't take away the opportunities

00:45:22.980 --> 00:45:31.039
what gives you opportunities is other

00:45:25.920 --> 00:45:33.480
people doing dumb things and uh is that

00:45:31.039 --> 00:45:35.279
[Applause]

00:45:33.480 --> 00:45:37.079
and

00:45:35.280 --> 00:45:38.640
I would say

00:45:37.079 --> 00:45:40.380
that

00:45:38.639 --> 00:45:42.900
well the 58 years we've been running

00:45:40.380 --> 00:45:44.338
Berkshire I would say there's been a

00:45:42.900 --> 00:45:47.338
great increase

00:45:44.338 --> 00:45:49.679
uh and the number of people doing dumb

00:45:47.338 --> 00:45:51.599
things and they do big dumb things and

00:45:49.679 --> 00:45:53.879
the reason they do it to some extent is

00:45:51.599 --> 00:45:56.400
because they they can get money from

00:45:53.880 --> 00:45:59.160
other people so much easier

00:45:56.400 --> 00:46:02.940
than when we started so you could start

00:45:59.159 --> 00:46:05.639
10 or 15 dumb insurance companies in the

00:46:02.940 --> 00:46:09.300
last 10 years and you could become rich

00:46:05.639 --> 00:46:11.098
uh if you were a Droid at it whether the

00:46:09.300 --> 00:46:13.318
business succeeded it or not and the

00:46:11.099 --> 00:46:17.579
underwriters got paid and the lawyers

00:46:13.318 --> 00:46:20.699
got paid and that creates

00:46:17.579 --> 00:46:23.519
if that's not on a large scale which it

00:46:20.699 --> 00:46:24.899
couldn't be done what 58 years ago you

00:46:23.519 --> 00:46:27.239
couldn't get the money

00:46:24.900 --> 00:46:32.639
to do some of the dumb things that we

00:46:27.239 --> 00:46:34.519
wanted to do fortunately uh and uh so

00:46:32.639 --> 00:46:38.098
I know I think that

00:46:34.519 --> 00:46:40.519
investing has disappeared so much from

00:46:38.099 --> 00:46:42.480
this huge

00:46:40.519 --> 00:46:44.818
capitalistic Market

00:46:42.480 --> 00:46:47.099
that anybody can play in

00:46:44.818 --> 00:46:50.219
but the big money is in selling other

00:46:47.099 --> 00:46:52.800
people ideas that isn't outperforming in

00:46:50.219 --> 00:46:54.598
outperforming and

00:46:52.800 --> 00:46:57.180
I think that

00:46:54.599 --> 00:47:00.599
I think if you don't run too much money

00:46:57.179 --> 00:47:01.858
which we do but if you're running small

00:47:00.599 --> 00:47:04.800
amounts of money

00:47:01.858 --> 00:47:07.259
I think I think the opportunities

00:47:04.800 --> 00:47:09.000
will be greater but then Charlie and I

00:47:07.260 --> 00:47:11.099
have always differed on this subject he

00:47:09.000 --> 00:47:14.159
he likes to tell me how gloomy the world

00:47:11.099 --> 00:47:16.980
is and I I like to tell them we'll find

00:47:14.159 --> 00:47:19.460
something and and so far we've both been

00:47:16.980 --> 00:47:19.460
kind of right

00:47:20.719 --> 00:47:24.139
on that or not

00:47:26.099 --> 00:47:30.960
there

00:47:28.440 --> 00:47:33.300
there is so much money now in the hands

00:47:30.960 --> 00:47:36.000
of so many smart people

00:47:33.300 --> 00:47:38.099
all trying to outsmart one another

00:47:36.000 --> 00:47:39.780
and not promote one another getting more

00:47:38.099 --> 00:47:41.400
money out of other people

00:47:39.780 --> 00:47:44.099
and

00:47:41.400 --> 00:47:48.079
it's a radically different world from

00:47:44.099 --> 00:47:48.079
the world we started in

00:47:48.119 --> 00:47:51.300
I suppose it will have its opportunities

00:47:50.099 --> 00:47:53.760
but

00:47:51.300 --> 00:47:55.980
it's also going to have some unpleasant

00:47:53.760 --> 00:47:57.780
episodes but they're trying to outsmart

00:47:55.980 --> 00:47:59.880
each other

00:47:57.780 --> 00:48:02.700
in arenas

00:47:59.880 --> 00:48:04.380
you don't have to play I mean if you

00:48:02.699 --> 00:48:06.299
look at that Government Bond Market I

00:48:04.380 --> 00:48:08.280
feel the treasury ball Market I mean

00:48:06.300 --> 00:48:09.660
you've got this one bill that's out of

00:48:08.280 --> 00:48:11.400
line with the others when we were over

00:48:09.659 --> 00:48:13.980
three billion of us the other day and

00:48:11.400 --> 00:48:16.800
and but

00:48:13.980 --> 00:48:19.260
those are people the world is

00:48:16.800 --> 00:48:23.099
overwhelmingly

00:48:19.260 --> 00:48:25.560
short-term focused and if you go to an

00:48:23.099 --> 00:48:27.539
investor relations call they're all

00:48:25.559 --> 00:48:29.099
trying to figure out how to fill those

00:48:27.539 --> 00:48:30.838
out of sheet to show the earnings for

00:48:29.099 --> 00:48:32.640
the year and the management is

00:48:30.838 --> 00:48:35.759
interested in feeding them expectations

00:48:32.639 --> 00:48:38.699
that will slightly be beaten I mean that

00:48:35.760 --> 00:48:39.839
that is the world was made to order for

00:48:38.699 --> 00:48:42.358
anybody that's trying to think about

00:48:39.838 --> 00:48:46.679
what you do that should work over five

00:48:42.358 --> 00:48:48.779
or ten or Twenty Years and uh

00:48:46.679 --> 00:48:52.259
I I just think that

00:48:48.780 --> 00:48:54.119
I would love to be born today and go out

00:48:52.260 --> 00:48:56.339
with not too much money and hopefully

00:48:54.119 --> 00:48:57.960
turn it into a lot of money

00:48:56.338 --> 00:49:00.380
but

00:48:57.960 --> 00:49:03.179
and Charlie would too actually just like

00:49:00.380 --> 00:49:05.818
he he would find something to do I will

00:49:03.179 --> 00:49:08.338
just guarantee you uh and it wouldn't be

00:49:05.818 --> 00:49:10.619
exactly the same as before but he would

00:49:08.338 --> 00:49:13.318
have a big big big

00:49:10.619 --> 00:49:18.140
pile I would not like the thrill of

00:49:13.318 --> 00:49:18.139
losing my big pile into a small pie

00:49:19.139 --> 00:49:23.940
but we like my big piles is the Way It

00:49:21.480 --> 00:49:26.780
Is Well I like

00:49:23.940 --> 00:49:29.519
we agree on that incidentally okay we do

00:49:26.780 --> 00:49:32.119
you're one of the most extreme lovers of

00:49:29.519 --> 00:49:32.119
the big pile

00:49:32.338 --> 00:49:37.679
Becky

00:49:34.219 --> 00:49:40.318
this question is for both Warren and a g

00:49:37.679 --> 00:49:43.679
it comes from Jason ploner in Livingston

00:49:40.318 --> 00:49:46.139
New Jersey he says in 2016 you entered

00:49:43.679 --> 00:49:48.419
into a very unique transaction with AIG

00:49:46.139 --> 00:49:50.519
where you assumed up to 20 billion

00:49:48.420 --> 00:49:53.039
dollars of liabilities in exchange for

00:49:50.519 --> 00:49:54.719
about 10 billion dollars up front can

00:49:53.039 --> 00:49:56.400
you please provide us with an update on

00:49:54.719 --> 00:49:58.980
this transaction in light of the

00:49:56.400 --> 00:50:00.780
increase in interest rates and then in

00:49:58.980 --> 00:50:02.519
Tokyo just a few weeks ago you talked

00:50:00.780 --> 00:50:04.260
about the risks of banks with assets

00:50:02.519 --> 00:50:07.380
that were susceptible to Rising interest

00:50:04.260 --> 00:50:09.720
rates any insight as to how Berkshire

00:50:07.380 --> 00:50:11.700
liabilities are susceptible to duration

00:50:09.719 --> 00:50:14.939
would be appreciated is that direction

00:50:11.699 --> 00:50:17.519
to Vegeta or me or what both okay let me

00:50:14.940 --> 00:50:19.200
introduce my one thing and well but

00:50:17.519 --> 00:50:21.358
Egypt is the key to this he's the one

00:50:19.199 --> 00:50:26.098
that put the deal together but we got

00:50:21.358 --> 00:50:29.400
handed 10 billion we'll say uh uh

00:50:26.099 --> 00:50:33.539
and but we weren't restricted to putting

00:50:29.400 --> 00:50:36.059
that into into bonds uh so

00:50:33.539 --> 00:50:38.579
what the exact interest rate interest

00:50:36.059 --> 00:50:42.659
rates affect us to some degree maybe in

00:50:38.579 --> 00:50:44.640
terms of the terms uh of the deal we did

00:50:42.659 --> 00:50:46.440
with AIG or anybody we would do a

00:50:44.639 --> 00:50:48.420
similar deal with like that

00:50:46.440 --> 00:50:50.159
but we don't have we don't have to put

00:50:48.420 --> 00:50:52.380
it in matching bonds or anything of the

00:50:50.159 --> 00:50:56.039
sort it goes into a general pool of

00:50:52.380 --> 00:50:58.619
assets which we manage and the assets

00:50:56.039 --> 00:51:01.619
you know then well the liquid assets now

00:50:58.619 --> 00:51:05.160
are 130 billion plus and that but it

00:51:01.619 --> 00:51:07.019
goes in so it you know it it it is not

00:51:05.159 --> 00:51:10.199
set aside in some little compartment

00:51:07.019 --> 00:51:11.940
like people like to think uh now any any

00:51:10.199 --> 00:51:14.759
other insurance no other insurance

00:51:11.940 --> 00:51:17.460
company could do it but they can't think

00:51:14.760 --> 00:51:18.780
that way uh they aren't even used to

00:51:17.460 --> 00:51:20.400
thinking that way but they can't think

00:51:18.780 --> 00:51:22.920
that way because they don't have our our

00:51:20.400 --> 00:51:25.019
balance sheet we account for 26 or

00:51:22.920 --> 00:51:26.760
something like that of the net worth of

00:51:25.019 --> 00:51:29.900
all property casualty companies in the

00:51:26.760 --> 00:51:32.579
United States uh so

00:51:29.900 --> 00:51:36.960
uh so far

00:51:32.579 --> 00:51:40.920
uh the payments that we have had to make

00:51:36.960 --> 00:51:42.358
have run modestly and Ajit will correct

00:51:40.920 --> 00:51:45.539
me on this if I'm wrong because he paid

00:51:42.358 --> 00:51:48.719
a lot of attention over the the amount

00:51:45.539 --> 00:51:49.920
we have had to pay has runs slightly

00:51:48.719 --> 00:51:52.858
below

00:51:49.920 --> 00:51:55.858
the amount we anticipated having to pay

00:51:52.858 --> 00:51:56.818
in terms of our share of the losses uh

00:51:55.858 --> 00:51:59.639
but

00:51:56.818 --> 00:52:02.219
it served aig's purposes

00:51:59.639 --> 00:52:04.739
it came to us with

00:52:02.219 --> 00:52:07.019
where we are in a unique position

00:52:04.739 --> 00:52:09.719
there's nobody else that was able to

00:52:07.019 --> 00:52:13.259
write that just like when when we took

00:52:09.719 --> 00:52:14.939
on the Lloyds I mean Lloyd's said there

00:52:13.260 --> 00:52:18.020
was no choice other than Berkshire

00:52:14.940 --> 00:52:21.838
Hathaway when they they essentially

00:52:18.019 --> 00:52:26.280
resuscitated uh their Market

00:52:21.838 --> 00:52:29.039
by laying off a lot of liabilities on on

00:52:26.280 --> 00:52:31.440
Berkshire Hathaway so

00:52:29.039 --> 00:52:33.539
um we won't see those deals very often

00:52:31.440 --> 00:52:34.800
if if they're for 500 million or

00:52:33.539 --> 00:52:37.380
something like that somebody else will

00:52:34.800 --> 00:52:39.059
go in there and offer more money and

00:52:37.380 --> 00:52:42.119
everybody's looking for money in Wall

00:52:39.059 --> 00:52:44.400
Street but if they start talking with

00:52:42.119 --> 00:52:46.099
the deal like the AIG deal there isn't

00:52:44.400 --> 00:52:49.200
any other stop now

00:52:46.099 --> 00:52:50.039
uh correct me on all my numbers there a

00:52:49.199 --> 00:52:52.199
jade

00:52:50.039 --> 00:52:54.358
no um

00:52:52.199 --> 00:52:57.058
one way to look at how the deal is

00:52:54.358 --> 00:52:58.858
performing since we did the deal is at

00:52:57.059 --> 00:53:01.980
the point we in time when we did the

00:52:58.858 --> 00:53:05.338
deal we had made certain projections of

00:53:01.980 --> 00:53:08.280
how much we will pay out each year

00:53:05.338 --> 00:53:10.500
and what we do is Monitor what the

00:53:08.280 --> 00:53:12.240
actual payments are since the Inception

00:53:10.500 --> 00:53:14.519
of the deal and how does that compare

00:53:12.239 --> 00:53:17.399
with what we expect it to pay out

00:53:14.519 --> 00:53:19.380
as Warren mentioned these two numbers

00:53:17.400 --> 00:53:22.619
are very close to each other more

00:53:19.380 --> 00:53:25.140
specifically the actual payouts are 96

00:53:22.619 --> 00:53:27.480
percent of what we had projected to pay

00:53:25.139 --> 00:53:30.539
out at this point in time

00:53:27.480 --> 00:53:32.760
which is good but not great we are still

00:53:30.539 --> 00:53:35.519
ahead of the curve if we do end up

00:53:32.760 --> 00:53:38.280
paying out less than what we projected

00:53:35.519 --> 00:53:40.318
Not only would we have borrowed money at

00:53:38.280 --> 00:53:41.700
a very attractive rate meaning less than

00:53:40.318 --> 00:53:43.980
four percent significantly less than

00:53:41.699 --> 00:53:46.679
four percent in addition to that we

00:53:43.980 --> 00:53:49.380
would have made a fee which in 1990

00:53:46.679 --> 00:53:50.940
which in 2015 dollars would be a million

00:53:49.380 --> 00:53:53.519
dollars so if you would have borrowed

00:53:50.940 --> 00:53:54.838
money at less than four percent and we

00:53:53.519 --> 00:53:57.300
would have made a million dollar fee

00:53:54.838 --> 00:54:00.239
which is slightly more than what we were

00:53:57.300 --> 00:54:01.920
expecting to do so net net we're very

00:54:00.239 --> 00:54:05.219
happy with the deal we're happy we did

00:54:01.920 --> 00:54:07.019
it uh but the game is not over the

00:54:05.219 --> 00:54:10.139
taught liabilities are coming down the

00:54:07.019 --> 00:54:12.059
pike every second day so I'm cautiously

00:54:10.139 --> 00:54:14.279
optimistic that the deal will work out

00:54:12.059 --> 00:54:16.920
better than what we expected it to work

00:54:14.280 --> 00:54:18.660
out well the really interesting thing is

00:54:16.920 --> 00:54:21.599
that

00:54:18.659 --> 00:54:24.679
in within Bircher the Casualty Insurance

00:54:21.599 --> 00:54:28.019
companies have four times as much

00:54:24.679 --> 00:54:30.299
stockholder Capital between behind each

00:54:28.019 --> 00:54:32.280
dollar of Premium volume

00:54:30.300 --> 00:54:33.599
four times

00:54:32.280 --> 00:54:36.720
normal

00:54:33.599 --> 00:54:38.220
and of course we see the big deals who

00:54:36.719 --> 00:54:41.699
would you trust if you had a big

00:54:38.219 --> 00:54:45.598
liability you wanted to dump on somebody

00:54:41.699 --> 00:54:47.939
and we have 25 or

00:54:45.599 --> 00:54:49.920
billion or more

00:54:47.940 --> 00:54:52.220
coming in from things other than

00:54:49.920 --> 00:54:54.900
insurance

00:54:52.219 --> 00:54:56.759
uncorrelated to Insurance every year

00:54:54.900 --> 00:54:58.920
with no obligations we don't pay

00:54:56.760 --> 00:55:01.319
dividends if you paid evidence and

00:54:58.920 --> 00:55:02.818
you know and you cut your dividend try

00:55:01.318 --> 00:55:04.800
going around trying to write insurance

00:55:02.818 --> 00:55:06.539
the next day I mean it's a business

00:55:04.800 --> 00:55:07.318
where the people are counting on you to

00:55:06.539 --> 00:55:08.519
pay

00:55:07.318 --> 00:55:11.279
and

00:55:08.519 --> 00:55:14.818
when we take that 10 billion we don't

00:55:11.280 --> 00:55:16.440
agree to put it in five-year bonds and

00:55:14.818 --> 00:55:19.199
10-year bonds we don't even think that

00:55:16.440 --> 00:55:22.139
way and the people who do business with

00:55:19.199 --> 00:55:24.838
us know that they have somebody like

00:55:22.139 --> 00:55:27.719
nobody else on those and it's going to

00:55:24.838 --> 00:55:30.719
be able to pay 10 billion you know if no

00:55:27.719 --> 00:55:32.699
matter what happens to the economy so

00:55:30.719 --> 00:55:34.618
it's not only the presence of enormous

00:55:32.699 --> 00:55:36.000
strength in the insurance companies this

00:55:34.619 --> 00:55:39.119
is the fact we got all these earnings

00:55:36.000 --> 00:55:41.219
that essentially come in every month and

00:55:39.119 --> 00:55:42.960
we don't have we don't have a lot of

00:55:41.219 --> 00:55:46.799
debt I mean we we have debt at the

00:55:42.960 --> 00:55:50.280
railroad and the energy level but but in

00:55:46.800 --> 00:55:52.619
terms of the rest of the operation uh

00:55:50.280 --> 00:55:55.200
and and we don't guarantee that that but

00:55:52.619 --> 00:55:57.720
but it's probably good uh

00:55:55.199 --> 00:56:01.980
and it's there just isn't another

00:55:57.719 --> 00:56:04.199
Berkshire and uh and the Jeep recognizes

00:56:01.980 --> 00:56:06.119
that when he's negotiating so does the

00:56:04.199 --> 00:56:08.039
other party if sums are big enough

00:56:06.119 --> 00:56:10.318
there's all kinds of people that love to

00:56:08.039 --> 00:56:12.179
get 500 million or 300 million and

00:56:10.318 --> 00:56:14.759
they'll and they can

00:56:12.179 --> 00:56:16.078
they may think in terms of lending it

00:56:14.760 --> 00:56:17.880
out because that's what their insurance

00:56:16.079 --> 00:56:19.980
companies can do at a somewhat higher

00:56:17.880 --> 00:56:22.260
rate but that is not a game we play in

00:56:19.980 --> 00:56:23.400
and we don't have any interest in

00:56:22.260 --> 00:56:24.660
playing in them

00:56:23.400 --> 00:56:27.420
okay

00:56:24.659 --> 00:56:31.318
station four

00:56:27.420 --> 00:56:33.838
hello I'm Marvin Blum an estate planning

00:56:31.318 --> 00:56:37.259
lawyer from Fort Worth Texas home to

00:56:33.838 --> 00:56:40.739
many of your companies in fact Warren I

00:56:37.260 --> 00:56:46.260
met you at the memorial for our beloved

00:56:40.739 --> 00:56:48.719
Paul Andrews who was manager of TTI

00:56:46.260 --> 00:56:51.000
I'd like to get your thoughts on a

00:56:48.719 --> 00:56:53.639
widespread problem in the world of

00:56:51.000 --> 00:56:56.519
Estate Planning and that's the failure

00:56:53.639 --> 00:56:59.338
of most parents to prepare the Next

00:56:56.519 --> 00:57:01.019
Generation for the inheritance coming

00:56:59.338 --> 00:57:04.679
their way

00:57:01.019 --> 00:57:08.039
in particular if the estate includes a

00:57:04.679 --> 00:57:10.980
family business most parents fail to do

00:57:08.039 --> 00:57:13.318
business succession planning to plan for

00:57:10.980 --> 00:57:17.880
who will run the business on the day

00:57:13.318 --> 00:57:20.579
when not if the founder is no longer

00:57:17.880 --> 00:57:24.300
there to run it the kids aren't prepared

00:57:20.579 --> 00:57:28.559
unlike uh King Charles the the other

00:57:24.300 --> 00:57:30.960
King Charles not King Charlie Munger who

00:57:28.559 --> 00:57:34.319
has been preparing for his job as king

00:57:30.960 --> 00:57:36.720
of England now for more than 70 years

00:57:34.318 --> 00:57:40.139
I sometimes describe the situation like

00:57:36.719 --> 00:57:42.239
this picture a football game at one end

00:57:40.139 --> 00:57:44.338
of the field is a quarterback

00:57:42.239 --> 00:57:46.199
he has great skills he throws a

00:57:44.338 --> 00:57:47.039
beautiful pass to the other end of the

00:57:46.199 --> 00:57:49.139
field

00:57:47.039 --> 00:57:51.000
and at the other end of the field are

00:57:49.139 --> 00:57:53.460
the receivers

00:57:51.000 --> 00:57:55.500
they've never been to a practice they

00:57:53.460 --> 00:57:57.300
don't know the rules of the game

00:57:55.500 --> 00:57:59.579
they don't know how to work together as

00:57:57.300 --> 00:58:02.039
a team they're Clueless

00:57:59.579 --> 00:58:04.920
so the quarterback is the patriarch and

00:58:02.039 --> 00:58:07.679
The Matriarch the football is the

00:58:04.920 --> 00:58:10.700
inheritance or the family business

00:58:07.679 --> 00:58:12.659
and the receivers are the kids

00:58:10.699 --> 00:58:15.719
that they're going to catch the football

00:58:12.659 --> 00:58:17.759
and go score a touchdown probably only

00:58:15.719 --> 00:58:22.039
around 10 percent I've got the picture

00:58:17.760 --> 00:58:22.040
on on the question

00:58:22.199 --> 00:58:26.039
no

00:58:23.818 --> 00:58:28.920
they uh

00:58:26.039 --> 00:58:30.838
I probably observed as many just because

00:58:28.920 --> 00:58:32.220
of my age and to some extent because of

00:58:30.838 --> 00:58:33.900
things like the giving Pleasures I

00:58:32.219 --> 00:58:35.818
probably observed

00:58:33.900 --> 00:58:37.920
as many

00:58:35.818 --> 00:58:39.659
particularly wealthy families the

00:58:37.920 --> 00:58:41.700
problems and they all are

00:58:39.659 --> 00:58:45.539
they get very particular

00:58:41.699 --> 00:58:46.919
uh to the family and uh uh

00:58:45.539 --> 00:58:49.739
and

00:58:46.920 --> 00:58:52.260
uh in my family

00:58:49.739 --> 00:58:54.719
I do not sign a will

00:58:52.260 --> 00:58:56.339
until my three children

00:58:54.719 --> 00:59:00.358
have read it

00:58:56.338 --> 00:59:02.818
understand it and made suggestions now

00:59:00.358 --> 00:59:04.858
my children are in their 60s

00:59:02.818 --> 00:59:07.318
and that would not have been a great one

00:59:04.858 --> 00:59:09.900
success if I'd done the same thing as

00:59:07.318 --> 00:59:11.699
their 20s it depends on the Family

00:59:09.900 --> 00:59:13.740
it depends on how the kids feel about

00:59:11.699 --> 00:59:15.358
each other there's all kinds of things

00:59:13.739 --> 00:59:17.399
depends on the kind of business you have

00:59:15.358 --> 00:59:20.279
so there's a there's a thousand

00:59:17.400 --> 00:59:21.960
variables but I do think

00:59:20.280 --> 00:59:25.319
that it's

00:59:21.960 --> 00:59:26.818
if the children are grown and when the

00:59:25.318 --> 00:59:29.880
will is read to them it's the first

00:59:26.818 --> 00:59:32.338
they've heard about what the deceased

00:59:29.880 --> 00:59:34.318
thought about things

00:59:32.338 --> 00:59:36.599
the burns have made a terrible mistake

00:59:34.318 --> 00:59:38.579
and uh

00:59:36.599 --> 00:59:42.119
people

00:59:38.579 --> 00:59:44.400
people who well I've run into all kinds

00:59:42.119 --> 00:59:46.200
of situations and some people don't tell

00:59:44.400 --> 00:59:48.298
their children anything and some of them

00:59:46.199 --> 00:59:51.000
try and get them to bend to their will

00:59:48.298 --> 00:59:53.400
by using their their own personal World

00:59:51.000 --> 00:59:56.940
they make a million mistakes

00:59:53.400 --> 00:59:59.220
and that's when you don't get to correct

00:59:56.940 --> 01:00:01.500
uh

00:59:59.219 --> 01:00:03.659
and certainly in my well Charlie's had a

01:00:01.500 --> 01:00:05.099
lot of experience too well at Berkshire

01:00:03.659 --> 01:00:06.960
we have a simple

01:00:05.099 --> 01:00:08.160
problem of

01:00:06.960 --> 01:00:11.159
uh

01:00:08.159 --> 01:00:12.440
estate planning just hold the goddamn

01:00:11.159 --> 01:00:15.440
stock

01:00:12.440 --> 01:00:15.440
well

01:00:15.798 --> 01:00:23.480
but that doesn't fit everybody Charlie I

01:00:18.960 --> 01:00:23.480
mean uh you know if it's 95 percent

01:00:24.358 --> 01:00:28.920
I don't think it necessarily

01:00:26.480 --> 01:00:30.358
I don't know necessarily whether we have

01:00:28.920 --> 01:00:31.858
billions of dollars you want to leave it

01:00:30.358 --> 01:00:33.420
to your all your children I mean that's

01:00:31.858 --> 01:00:35.519
something that's another question but if

01:00:33.420 --> 01:00:37.858
you're going to play places somewhere I

01:00:35.519 --> 01:00:40.079
just as soon as Berkshire stock is down

01:00:37.858 --> 01:00:41.818
oh you're solving the investment problem

01:00:40.079 --> 01:00:43.798
yeah but you've got the personal problem

01:00:41.818 --> 01:00:46.679
of the fact that when there were four

01:00:43.798 --> 01:00:49.980
one of the kids pulled the other kids

01:00:46.679 --> 01:00:52.139
uh cat's tail or something like that I

01:00:49.980 --> 01:00:54.960
mean you're dealing with human beings

01:00:52.139 --> 01:00:56.578
and the biggest thing you want

01:00:54.960 --> 01:00:58.920
is you want

01:00:56.579 --> 01:01:00.200
you want your children to get along and

01:00:58.920 --> 01:01:03.059
you'll want that all through your life

01:01:00.199 --> 01:01:06.058
and the estate isn't the only place

01:01:03.059 --> 01:01:09.420
where you can mess that up but the it's

01:01:06.059 --> 01:01:11.339
a place where you it's a very easy I

01:01:09.420 --> 01:01:13.798
mean I know a number of cases where the

01:01:11.338 --> 01:01:15.900
people did not know what was in the will

01:01:13.798 --> 01:01:17.880
whether we're using something's involved

01:01:15.900 --> 01:01:19.980
and you know within about 15 minutes

01:01:17.880 --> 01:01:21.539
each one of them had a lawyer and you

01:01:19.980 --> 01:01:24.838
know they don't get a long sense of it

01:01:21.539 --> 01:01:29.579
it's it's a it's important to handle it

01:01:24.838 --> 01:01:31.078
right and uh uh it's important if you

01:01:29.579 --> 01:01:35.039
want your kids

01:01:31.079 --> 01:01:37.260
do have a certain value certain values

01:01:35.039 --> 01:01:39.358
it's important that you live those

01:01:37.260 --> 01:01:42.260
values it's important that you talk

01:01:39.358 --> 01:01:45.358
about it to them or

01:01:42.260 --> 01:01:48.480
they're going they're learning from you

01:01:45.358 --> 01:01:52.440
from the day they're born what you're

01:01:48.480 --> 01:01:56.159
really like and uh don't think that a

01:01:52.440 --> 01:01:58.980
cleverly drawn will will substitute for

01:01:56.159 --> 01:02:01.639
your own behavior in teaching your kids

01:01:58.980 --> 01:02:04.380
the values you hope that they will have

01:02:01.639 --> 01:02:06.598
and then your will should be in

01:02:04.380 --> 01:02:08.579
conjunction with that it should start

01:02:06.599 --> 01:02:11.700
expressing and they grow older and then

01:02:08.579 --> 01:02:14.339
they they they learn to

01:02:11.699 --> 01:02:17.338
they them they learn to

01:02:14.338 --> 01:02:19.318
pass along their values in connection

01:02:17.338 --> 01:02:21.298
with the size of the state if there's

01:02:19.318 --> 01:02:22.739
Family Farms it's one thing if it's a

01:02:21.298 --> 01:02:24.780
bunch of marketable Securities is

01:02:22.739 --> 01:02:25.919
something else but I know in one

01:02:24.780 --> 01:02:30.000
instance

01:02:25.920 --> 01:02:30.960
by particularly Rich fellow that once a

01:02:30.000 --> 01:02:33.420
year

01:02:30.960 --> 01:02:36.599
he'd get those kids together and have a

01:02:33.420 --> 01:02:39.059
dinner and do all kinds of things to get

01:02:36.599 --> 01:02:40.859
them to sign their income tax returns in

01:02:39.059 --> 01:02:42.420
blank because he didn't want them to

01:02:40.858 --> 01:02:44.098
know how much money they had and

01:02:42.420 --> 01:02:47.039
everything well

01:02:44.099 --> 01:02:48.838
if that that isn't going to work I mean

01:02:47.039 --> 01:02:50.940
I don't know why necessarily real words

01:02:48.838 --> 01:02:52.380
with him but uh

01:02:50.940 --> 01:02:54.900
if you want

01:02:52.380 --> 01:02:56.160
you know about Charlie and I've said it

01:02:54.900 --> 01:02:58.380
you know if you want to figure out how

01:02:56.159 --> 01:03:00.719
you want to live your life who you write

01:02:58.380 --> 01:03:04.140
your obituary and reverse engineer it I

01:03:00.719 --> 01:03:06.659
mean you know and uh and Paul Andrews

01:03:04.139 --> 01:03:08.578
incidentally who you mentioned that TTI

01:03:06.659 --> 01:03:12.659
lived as great a life as anybody I've

01:03:08.579 --> 01:03:13.740
known and uh he he thought about these

01:03:12.659 --> 01:03:16.078
problems

01:03:13.739 --> 01:03:20.098
he came to me

01:03:16.079 --> 01:03:22.019
he was 61 I think had all the money Way

01:03:20.099 --> 01:03:24.119
Beyond what he needed didn't care about

01:03:22.019 --> 01:03:25.920
he'd like to give it to give it to

01:03:24.119 --> 01:03:27.720
people he had all kinds of good things

01:03:25.920 --> 01:03:30.059
he wanted to do and he said for a year

01:03:27.719 --> 01:03:33.179
I've been worried about my business TTI

01:03:30.059 --> 01:03:34.920
and he said I've got all the money I

01:03:33.179 --> 01:03:36.899
need the families all the money that I

01:03:34.920 --> 01:03:39.539
need but what do I do with the business

01:03:36.900 --> 01:03:41.160
these people have have helped me

01:03:39.539 --> 01:03:43.500
throughout my life and he says I could

01:03:41.159 --> 01:03:46.379
sell it to a competitor and if I sold it

01:03:43.500 --> 01:03:48.780
to a competitor they'd fire my people

01:03:46.380 --> 01:03:51.298
and keep their people when they put it

01:03:48.780 --> 01:03:53.460
together and if I if I sell it to a

01:03:51.298 --> 01:03:55.739
private Equity Firm or somebody they'll

01:03:53.460 --> 01:03:58.500
they'll be figuring their exit strategy

01:03:55.739 --> 01:03:59.578
as they sign the sign the papers and he

01:03:58.500 --> 01:04:02.880
said

01:03:59.579 --> 01:04:04.740
so I've been thinking about a year and

01:04:02.880 --> 01:04:06.358
uh he said it isn't that you're such a

01:04:04.739 --> 01:04:08.959
great guy he says it's just you're the

01:04:06.358 --> 01:04:08.960
only one left

01:04:09.059 --> 01:04:15.359
and we bought it and we lived happily

01:04:11.760 --> 01:04:18.299
ever after and uh that was a man that

01:04:15.358 --> 01:04:20.599
knew what life was about so with that

01:04:18.298 --> 01:04:25.190
let's go on to Becky

01:04:20.599 --> 01:04:25.190
[Applause]

01:04:25.559 --> 01:04:30.660
uh this question comes from Don

01:04:27.780 --> 01:04:32.400
glickstein in Seattle he says Warren has

01:04:30.659 --> 01:04:34.798
criticized Norfolk Southern's handling

01:04:32.400 --> 01:04:38.460
of its train derailment yet has been

01:04:34.798 --> 01:04:40.920
silent about BNSF bnsf's conduct a

01:04:38.460 --> 01:04:43.380
federal judge ruled in March that BNSF

01:04:40.920 --> 01:04:45.960
intentionally and illegally violated an

01:04:43.380 --> 01:04:48.599
easement agreement on tribal land in

01:04:45.960 --> 01:04:51.119
Washington state by transporting long

01:04:48.599 --> 01:04:53.160
trains of crude oil the same month the

01:04:51.119 --> 01:04:55.920
judge made his ruling a BNSF Train

01:04:53.159 --> 01:04:58.440
derailed on tribal lands spilling oil in

01:04:55.920 --> 01:05:00.780
an environmentally sensitive area what

01:04:58.440 --> 01:05:03.240
is Warren doing to ensure that BNSF and

01:05:00.780 --> 01:05:05.579
other Berkshire subsidiaries fulfilled

01:05:03.239 --> 01:05:06.899
their ethical responsibilities he says

01:05:05.579 --> 01:05:08.760
he's been a Berkshire owner for more

01:05:06.900 --> 01:05:11.460
than two decades and he's concerned that

01:05:08.760 --> 01:05:13.140
Berkshire has no systems to identify and

01:05:11.460 --> 01:05:15.659
dress what he calls reprehensible

01:05:13.139 --> 01:05:18.779
Behavior at BNSF and other subsidiaries

01:05:15.659 --> 01:05:23.639
Greg sure

01:05:18.780 --> 01:05:25.440
so the uh it it is a valid issue that

01:05:23.639 --> 01:05:29.900
our team obviously has been dealing with

01:05:25.440 --> 01:05:33.720
at BNSF we did move uh crude across that

01:05:29.900 --> 01:05:37.740
tribal land we had an agreement that

01:05:33.719 --> 01:05:40.078
allowed us to move X number of of uh

01:05:37.739 --> 01:05:42.539
units per day

01:05:40.079 --> 01:05:44.579
and we did breach it we went over it

01:05:42.539 --> 01:05:46.139
there's uh there was some fundamental

01:05:44.579 --> 01:05:49.500
breakdowns there in that our team didn't

01:05:46.139 --> 01:05:52.858
understand the number of of trains that

01:05:49.500 --> 01:05:55.440
they could move we have had significant

01:05:52.858 --> 01:05:58.739
discussions with the tribe looking to

01:05:55.440 --> 01:06:00.900
resolve the issue recognizing uh we

01:05:58.739 --> 01:06:02.219
obviously been benefited from moving

01:06:00.900 --> 01:06:05.160
those trains and those type of

01:06:02.219 --> 01:06:08.159
discussions will continue

01:06:05.159 --> 01:06:09.659
um I would say there's Lessons Learned

01:06:08.159 --> 01:06:11.039
there that we have to when we make a

01:06:09.659 --> 01:06:13.139
commitment understand what that

01:06:11.039 --> 01:06:17.000
commitment is and and live by it or

01:06:13.139 --> 01:06:19.920
don't assume we can just

01:06:17.000 --> 01:06:21.659
move our trains as we wish or the the

01:06:19.920 --> 01:06:23.338
cargo as we wish we have to respect

01:06:21.659 --> 01:06:24.960
those agreements so there's a there's

01:06:23.338 --> 01:06:26.578
been a moment learned there but at the

01:06:24.960 --> 01:06:29.338
same time we've taken it very seriously

01:06:26.579 --> 01:06:32.160
and attempted to reach a resolution

01:06:29.338 --> 01:06:34.619
there and at some point I I hope we do

01:06:32.159 --> 01:06:39.000
come to a true resolution that's fair

01:06:34.619 --> 01:06:42.180
both to the tri-band to BNSF on the

01:06:39.000 --> 01:06:45.358
derailment side we did have a an issue

01:06:42.179 --> 01:06:49.440
around the track derailed we worked very

01:06:45.358 --> 01:06:52.500
closely with the tribe to mitigate that

01:06:49.440 --> 01:06:55.679
issue instantly where at least over a

01:06:52.500 --> 01:06:57.780
very reasonable period of time they were

01:06:55.679 --> 01:07:00.179
very responsive our team was very

01:06:57.780 --> 01:07:03.119
responsive and there were really no

01:07:00.179 --> 01:07:06.779
long-term environmental impacts to to

01:07:03.119 --> 01:07:08.760
that to that's Bill and as our teams

01:07:06.780 --> 01:07:11.400
highlighted in other comments obviously

01:07:08.760 --> 01:07:13.380
derailments do occur in the industry we

01:07:11.400 --> 01:07:15.358
take them incredibly serious they're not

01:07:13.380 --> 01:07:17.700
all hazardous but irrespective of that

01:07:15.358 --> 01:07:18.779
we're constantly looking at how do we

01:07:17.699 --> 01:07:21.000
prevent them

01:07:18.780 --> 01:07:23.760
how do we detect them when we

01:07:21.000 --> 01:07:25.858
potentially have one that's going to

01:07:23.760 --> 01:07:27.740
occur and what do we do with our trains

01:07:25.858 --> 01:07:30.298
and then ultimately it comes down to

01:07:27.739 --> 01:07:32.279
responding properly because they will

01:07:30.298 --> 01:07:34.380
occur and I think we have an incredibly

01:07:32.280 --> 01:07:36.660
dedicated team that's always ready to

01:07:34.380 --> 01:07:39.260
respond to the communities they're

01:07:36.659 --> 01:07:39.259
impacting

01:07:39.599 --> 01:07:45.780
there are derailments how many how many

01:07:42.119 --> 01:07:48.440
a year yeah well there's uh a thousand

01:07:45.780 --> 01:07:51.420
plus in the industry the the yeah yeah

01:07:48.440 --> 01:07:54.000
it's you start hauling

01:07:51.420 --> 01:07:56.280
right and we're a common carrier we and

01:07:54.000 --> 01:07:58.920
we take heavy very heavy Freight and we

01:07:56.280 --> 01:08:01.319
take them at 100 degrees when it's the

01:07:58.920 --> 01:08:04.079
weather and it's we take it at zero and

01:08:01.318 --> 01:08:08.460
and we go around curves and we have

01:08:04.079 --> 01:08:09.539
grades and uh even a one percent rate if

01:08:08.460 --> 01:08:13.619
you're going down

01:08:09.539 --> 01:08:15.900
down a hill with I don't know how much

01:08:13.619 --> 01:08:17.940
weight behind you I mean there's a lot

01:08:15.900 --> 01:08:20.039
of railroading is not an easy business

01:08:17.939 --> 01:08:23.579
and of course the systems

01:08:20.039 --> 01:08:26.600
were designed you know in the and

01:08:23.579 --> 01:08:31.019
basically in the in the late

01:08:26.600 --> 01:08:33.179
1800s amid the late 1800s and we have 22

01:08:31.020 --> 01:08:34.859
000 I think it is miles of track and

01:08:33.179 --> 01:08:37.100
that doesn't count sightings and some

01:08:34.859 --> 01:08:40.500
other things it is not an easy business

01:08:37.100 --> 01:08:42.120
we'll make mistakes our job

01:08:40.500 --> 01:08:43.798
we're not making a mistake because we

01:08:42.119 --> 01:08:45.719
have a derailment you're gonna we will

01:08:43.798 --> 01:08:49.979
have the derailments 10 and 20 years or

01:08:45.719 --> 01:08:52.140
30 years from now I mean that but we and

01:08:49.979 --> 01:08:53.879
we have to carry certain products we

01:08:52.140 --> 01:08:55.079
wish we didn't have to carry we're a

01:08:53.880 --> 01:08:57.838
common carrier

01:08:55.079 --> 01:09:00.778
do we like carrying chlorine and ammonia

01:08:57.838 --> 01:09:02.460
and all no but they're going to move

01:09:00.779 --> 01:09:05.540
from one place to another in this

01:09:02.460 --> 01:09:10.020
society and we are a common carrier and

01:09:05.539 --> 01:09:12.659
uh we load them and uh if they select

01:09:10.020 --> 01:09:14.759
our railroad but

01:09:12.659 --> 01:09:16.439
we are better than we used to be but we

01:09:14.759 --> 01:09:18.838
got a long way to go I didn't was that a

01:09:16.439 --> 01:09:22.219
fair enough statement absolutely yeah

01:09:18.838 --> 01:09:22.219
okay station five

01:09:23.759 --> 01:09:30.738
hi Mr Warren and Miss Manga my name is

01:09:28.579 --> 01:09:34.679
from China

01:09:30.738 --> 01:09:37.259
company and first of all I'm so excited

01:09:34.679 --> 01:09:39.838
and very honored to be here today and my

01:09:37.259 --> 01:09:42.779
question is with more and more people

01:09:39.838 --> 01:09:45.778
focusing on environmental competition

01:09:42.779 --> 01:09:48.660
protection and the government supporting

01:09:45.779 --> 01:09:51.239
the new energy industry as well so what

01:09:48.659 --> 01:09:54.840
are your thoughts on the continued

01:09:51.238 --> 01:09:56.819
development of new energy how made the

01:09:54.840 --> 01:09:59.640
new energy firm achieve better

01:09:56.819 --> 01:10:01.679
development in future

01:09:59.640 --> 01:10:03.660
yeah well Greg I think it's the best

01:10:01.679 --> 01:10:06.619
answer that because he

01:10:03.659 --> 01:10:08.880
since we bought a company called

01:10:06.619 --> 01:10:11.219
Mid-American but now called Berkshire

01:10:08.880 --> 01:10:14.940
Hathaway energy but he's been talking

01:10:11.219 --> 01:10:17.340
about a yearly preparing reports hoping

01:10:14.939 --> 01:10:18.960
that we can help solve a number of the

01:10:17.340 --> 01:10:21.360
problems and we probably spent more

01:10:18.960 --> 01:10:24.020
money than any utility I'm I would guess

01:10:21.359 --> 01:10:27.059
in the United States absolutely and uh

01:10:24.020 --> 01:10:29.400
and we've just crashed the surface but

01:10:27.060 --> 01:10:31.800
it is not easy

01:10:29.399 --> 01:10:34.859
when you cross state lines I mean it's

01:10:31.800 --> 01:10:36.840
uh uh you've got different jurisdictions

01:10:34.859 --> 01:10:39.599
and we should

01:10:36.840 --> 01:10:44.039
this country should be ahead of word is

01:10:39.600 --> 01:10:45.780
in terms of transmission and uh

01:10:44.039 --> 01:10:48.960
we have been the biggest factor in

01:10:45.779 --> 01:10:50.759
helping that uh but why don't you tell

01:10:48.960 --> 01:10:53.399
them a little bit about it sure things

01:10:50.760 --> 01:10:55.980
weren't so there's no question there's

01:10:53.399 --> 01:10:58.259
an energy transformation going on around

01:10:55.979 --> 01:11:01.319
the globe and and as Warren touched on

01:10:58.260 --> 01:11:04.140
in the U.S and in some ways I would hope

01:11:01.319 --> 01:11:06.899
in here in the U.S it would be

01:11:04.140 --> 01:11:09.420
um we'd at least have a a clear plan

01:11:06.899 --> 01:11:11.579
Across the Nation as to how to uh

01:11:09.420 --> 01:11:14.460
approach that but the reality is it is

01:11:11.579 --> 01:11:17.340
state by state uh with some exceptions

01:11:14.460 --> 01:11:19.439
but so as a result when you think of

01:11:17.340 --> 01:11:24.300
Berkshire Hathaway energy

01:11:19.439 --> 01:11:26.698
we we own uh three U.S utilities there

01:11:24.300 --> 01:11:28.980
and and they'll participate in multiple

01:11:26.698 --> 01:11:30.779
States but they're developing plans

01:11:28.979 --> 01:11:33.359
state by state and then trying to

01:11:30.779 --> 01:11:35.939
integrate them across the the various

01:11:33.359 --> 01:11:37.380
States the the opportunities are

01:11:35.939 --> 01:11:40.500
significant because there is a

01:11:37.380 --> 01:11:42.779
transformation going on uh We've

01:11:40.500 --> 01:11:45.960
outlined our goal on on where we're

01:11:42.779 --> 01:11:48.539
going relative to carbon at bhe where

01:11:45.960 --> 01:11:53.460
they'll buy 20 30 reduce their carbon

01:11:48.539 --> 01:11:55.679
footprint by uh 50 relative to 2005 so

01:11:53.460 --> 01:11:57.840
that's the Paris Accord and the standard

01:11:55.679 --> 01:12:00.239
they want to hold the the utility

01:11:57.840 --> 01:12:02.159
industry or the utility companies do and

01:12:00.238 --> 01:12:04.439
and we're well on that path but to

01:12:02.158 --> 01:12:05.939
achieve it is a true Journey uh I've

01:12:04.439 --> 01:12:10.500
often talked to Warren when we bought

01:12:05.939 --> 01:12:13.979
Pacific Corp back in the mid 2000s we

01:12:10.500 --> 01:12:15.779
immediately recognized uh to build a lot

01:12:13.979 --> 01:12:18.059
of renewable energy like we've been

01:12:15.779 --> 01:12:20.460
doing in the midwest in Iowa but that

01:12:18.060 --> 01:12:23.460
was basically in a single stay 8 now

01:12:20.460 --> 01:12:24.899
Pacific Corp were in Six States we

01:12:23.460 --> 01:12:27.658
started that in the back in the mid

01:12:24.899 --> 01:12:29.579
2000s here we are and we laid out a

01:12:27.658 --> 01:12:31.339
great transmission plan here's how we're

01:12:29.579 --> 01:12:34.079
going to build it here's how we're gonna

01:12:31.340 --> 01:12:35.760
uh effectuate it and all the benefits

01:12:34.079 --> 01:12:40.019
for our customers over that period of

01:12:35.760 --> 01:12:42.360
time here we are in 2023 and we have a

01:12:40.020 --> 01:12:43.800
little more than a third of that at the

01:12:42.359 --> 01:12:46.380
time it was a six billion dollar

01:12:43.800 --> 01:12:48.119
transmission project today we have a

01:12:46.380 --> 01:12:50.940
little more than a third of it built and

01:12:48.119 --> 01:12:52.979
we've spent probably closer to seven

01:12:50.939 --> 01:12:54.779
billion dollars and it's the right

01:12:52.979 --> 01:12:56.579
outcome it's still a great outcome for

01:12:54.779 --> 01:12:58.639
our customers but that transmission you

01:12:56.579 --> 01:13:01.198
absolutely as part of the transformation

01:12:58.640 --> 01:13:03.420
you absolutely have to build it to

01:13:01.198 --> 01:13:06.119
remove to move all that renewable energy

01:13:03.420 --> 01:13:09.658
and that's sort of the complexity Warren

01:13:06.119 --> 01:13:11.760
was highlighting it is a uh you you

01:13:09.658 --> 01:13:12.899
can't just wake up one day and and solve

01:13:11.760 --> 01:13:16.079
this problem you start with transmission

01:13:12.899 --> 01:13:18.179
and then you build the resources but at

01:13:16.079 --> 01:13:21.359
that same same company and if we look at

01:13:18.179 --> 01:13:23.579
what we're doing across VA G Energy and

01:13:21.359 --> 01:13:26.579
that energy transformation

01:13:23.579 --> 01:13:30.238
we have 70 billion dollars of known

01:13:26.579 --> 01:13:32.698
projects that are really required to

01:13:30.238 --> 01:13:35.099
properly serve our customers and Achieve

01:13:32.698 --> 01:13:37.859
that type of energy uh transformation

01:13:35.100 --> 01:13:39.840
across those utilities and that and

01:13:37.859 --> 01:13:41.579
that's in the coming next in the coming

01:13:39.840 --> 01:13:43.319
10 years so

01:13:41.579 --> 01:13:44.819
um we have a team that's absolutely up

01:13:43.319 --> 01:13:47.399
to the challenge they're delivering on

01:13:44.819 --> 01:13:50.039
their commitments and it's a very uh

01:13:47.399 --> 01:13:51.899
very good business opportunity for for

01:13:50.039 --> 01:13:54.000
each of our companies and for our

01:13:51.899 --> 01:13:56.279
shareholders because as we deploy that

01:13:54.000 --> 01:13:58.079
Capital we obviously are in a return on

01:13:56.279 --> 01:14:00.479
Equity of it so

01:13:58.079 --> 01:14:02.819
um but it will be a long journey it it

01:14:00.479 --> 01:14:05.519
hap it'll happen over an extended period

01:14:02.819 --> 01:14:07.799
of time and and the further you get out

01:14:05.520 --> 01:14:10.860
there the more dependent more dependent

01:14:07.800 --> 01:14:14.219
upon the uh the evolution of a variety

01:14:10.859 --> 01:14:16.920
of technologies that are progressing but

01:14:14.219 --> 01:14:18.960
not there yet so you you've raised a

01:14:16.920 --> 01:14:20.699
question I want to just take an extra

01:14:18.960 --> 01:14:22.980
minute on because it's so important and

01:14:20.698 --> 01:14:24.359
and I don't really know whether our form

01:14:22.979 --> 01:14:26.039
of government

01:14:24.359 --> 01:14:30.479
uh

01:14:26.039 --> 01:14:33.658
is ideal at all in terms of solving uh

01:14:30.479 --> 01:14:35.279
the problem you described we have solved

01:14:33.658 --> 01:14:39.179
it one time

01:14:35.279 --> 01:14:42.719
in World War II we took a

01:14:39.179 --> 01:14:44.819
country that was semi-lumping along and

01:14:42.719 --> 01:14:46.739
we found ourselves

01:14:44.819 --> 01:14:49.380
in a World War

01:14:46.738 --> 01:14:51.059
and what we did in a World War

01:14:49.380 --> 01:14:53.699
is we brought a bunch of people to

01:14:51.060 --> 01:14:55.260
Washington at a dollar a year

01:14:53.698 --> 01:14:57.238
you know whether it was Sydney Weinberg

01:14:55.260 --> 01:14:59.940
or Goldman's actually you just name him

01:14:57.238 --> 01:15:02.158
and we gave them

01:14:59.939 --> 01:15:03.678
enormous power

01:15:02.158 --> 01:15:06.479
to

01:15:03.679 --> 01:15:09.779
reorient the resources of the United

01:15:06.479 --> 01:15:12.839
States to face the problem that they

01:15:09.779 --> 01:15:14.759
faced which was to create a war machine

01:15:12.840 --> 01:15:17.340
and what they did was they found Henry

01:15:14.760 --> 01:15:19.079
Kaiser you know and told them to build

01:15:17.340 --> 01:15:20.940
ships and they went to the Ford Motor

01:15:19.079 --> 01:15:25.019
Company and said you build tanks and

01:15:20.939 --> 01:15:27.479
some airplanes and they they reordered

01:15:25.020 --> 01:15:29.880
the industrial

01:15:27.479 --> 01:15:31.619
Enterprise of the United States in a way

01:15:29.880 --> 01:15:33.600
that was unbelievable because they had

01:15:31.619 --> 01:15:35.939
the power of the federal government

01:15:33.600 --> 01:15:38.520
and they had the ingenuity

01:15:35.939 --> 01:15:41.279
of American Business and they had the

01:15:38.520 --> 01:15:44.760
facilities of American Business

01:15:41.279 --> 01:15:46.198
and it led to a very successful

01:15:44.760 --> 01:15:48.300
outcome

01:15:46.198 --> 01:15:51.839
but can we do that in a peacetime where

01:15:48.300 --> 01:15:54.300
you've got 50 50 states and you have to

01:15:51.840 --> 01:15:56.880
get them to cooperate and you don't have

01:15:54.300 --> 01:15:58.920
anyone that you can you can issue orders

01:15:56.880 --> 01:16:00.779
but you can't

01:15:58.920 --> 01:16:03.480
you can't designate where the capital

01:16:00.779 --> 01:16:05.219
goes as the other end and you know we

01:16:03.479 --> 01:16:08.099
try and do it with tax incentives and

01:16:05.219 --> 01:16:11.039
all that sort of thing but we haven't we

01:16:08.100 --> 01:16:14.400
haven't created the unity of purpose and

01:16:11.039 --> 01:16:17.760
the Machinery that worked in World War

01:16:14.399 --> 01:16:19.859
II were essentially everybody felt their

01:16:17.760 --> 01:16:21.840
one job was to win the war and we

01:16:19.859 --> 01:16:25.639
figured out how to use our

01:16:21.840 --> 01:16:30.179
industrial capacity to uh in effect

01:16:25.640 --> 01:16:32.640
defeat the axis of powers and uh

01:16:30.179 --> 01:16:36.359
how do you recreate that

01:16:32.640 --> 01:16:39.119
uh uh with

01:16:36.359 --> 01:16:40.738
the present democratic system I I'm not

01:16:39.119 --> 01:16:45.119
sure I know the answer but I sure know

01:16:40.738 --> 01:16:46.738
the problem but um and I think that

01:16:45.119 --> 01:16:49.679
it

01:16:46.738 --> 01:16:52.019
if you can think of a if you've got an

01:16:49.679 --> 01:16:54.960
emergency on your hand I mean you really

01:16:52.020 --> 01:16:57.060
need to re-engineer the engineer energy

01:16:54.960 --> 01:17:00.239
system in the United States I don't

01:16:57.060 --> 01:17:01.920
think I don't think you can do it uh

01:17:00.238 --> 01:17:05.039
without something

01:17:01.920 --> 01:17:06.359
resembling the Machinery the urgency

01:17:05.039 --> 01:17:09.238
whatever

01:17:06.359 --> 01:17:10.259
the capital is there the people are

01:17:09.238 --> 01:17:11.698
there

01:17:10.260 --> 01:17:14.400
uh

01:17:11.698 --> 01:17:18.719
the the objective is obvious

01:17:14.399 --> 01:17:22.079
and uh uh we just don't seem to be able

01:17:18.719 --> 01:17:25.020
to do it in a peacetime where where

01:17:22.079 --> 01:17:30.198
they're used to following a given set of

01:17:25.020 --> 01:17:32.640
a procedure and uh and you know

01:17:30.198 --> 01:17:36.299
China you've got one country and we've

01:17:32.640 --> 01:17:37.380
got we've got 50 states and we got a

01:17:36.300 --> 01:17:38.760
whole different system of government

01:17:37.380 --> 01:17:41.159
that

01:17:38.760 --> 01:17:44.039
we should be up to the test but so far

01:17:41.158 --> 01:17:45.179
it hasn't worked but uh so thank you for

01:17:44.039 --> 01:17:47.219
the question

01:17:45.179 --> 01:17:49.920
Becky

01:17:47.219 --> 01:17:52.500
this question comes from Chris freed in

01:17:49.920 --> 01:17:54.119
Philadelphia he says we know that Greg

01:17:52.500 --> 01:17:56.579
Abel and Ajit Jain are the next

01:17:54.119 --> 01:17:58.800
generation of Berkshire leaders who are

01:17:56.579 --> 01:18:00.238
currently behind Greg and Ajit in their

01:17:58.800 --> 01:18:03.140
prospective roles

01:18:00.238 --> 01:18:03.139
respective

01:18:03.658 --> 01:18:08.158
well that

01:18:05.539 --> 01:18:11.640
will be

01:18:08.158 --> 01:18:12.960
the question that they give their

01:18:11.640 --> 01:18:15.780
well

01:18:12.960 --> 01:18:17.460
Greg will be

01:18:15.779 --> 01:18:19.979
have some things extraordinary

01:18:17.460 --> 01:18:22.319
circumstances but but he's going to

01:18:19.979 --> 01:18:24.479
succeed me and then

01:18:22.319 --> 01:18:26.698
he will have

01:18:24.479 --> 01:18:29.039
be sitting in a position

01:18:26.698 --> 01:18:31.079
where he needs

01:18:29.039 --> 01:18:33.000
his equivalent

01:18:31.079 --> 01:18:34.979
or something close to the corner because

01:18:33.000 --> 01:18:37.500
he's better at many things than I've

01:18:34.979 --> 01:18:39.479
been uh

01:18:37.500 --> 01:18:42.359
he will need that a substitute and when

01:18:39.479 --> 01:18:44.339
the when the question comes word we know

01:18:42.359 --> 01:18:45.719
ajit's opinion on that

01:18:44.340 --> 01:18:48.900
uh

01:18:45.719 --> 01:18:51.239
and but Greg will probably be the one

01:18:48.899 --> 01:18:53.399
that will make that make the final

01:18:51.238 --> 01:18:55.738
decision I mean it says it was being his

01:18:53.399 --> 01:18:58.379
responsibility and

01:18:55.738 --> 01:19:00.779
Ajit will give him his best advice and I

01:18:58.380 --> 01:19:03.719
think the others are very very very high

01:19:00.779 --> 01:19:06.979
that great would follow him so

01:19:03.719 --> 01:19:09.179
but it's not those are not easy

01:19:06.979 --> 01:19:11.279
questions it doesn't like we've

01:19:09.179 --> 01:19:12.658
everybody talks about the executive

01:19:11.279 --> 01:19:14.899
bench and all of that sort of thing

01:19:12.658 --> 01:19:20.279
which is baloney I mean you know

01:19:14.899 --> 01:19:23.819
it they don't have that many people that

01:19:20.279 --> 01:19:26.279
can run five the largest gap net worth

01:19:23.819 --> 01:19:28.439
company and all kinds of diverse

01:19:26.279 --> 01:19:30.119
businesses uh

01:19:28.439 --> 01:19:32.339
but you don't need five people either

01:19:30.119 --> 01:19:33.899
and you need a lot of good operating

01:19:32.340 --> 01:19:36.060
managers and you need somebody at the

01:19:33.899 --> 01:19:37.198
top that allocates capital and make sure

01:19:36.060 --> 01:19:40.260
that you've got the right operating

01:19:37.198 --> 01:19:42.599
manager and we've decided

01:19:40.260 --> 01:19:44.340
to design something where we separate

01:19:42.600 --> 01:19:47.159
the insurance

01:19:44.340 --> 01:19:48.840
and the rest of the business and I think

01:19:47.158 --> 01:19:52.319
it's a very good design

01:19:48.840 --> 01:19:55.079
but they would not be smart

01:19:52.319 --> 01:19:59.039
we wouldn't wish Martin name that

01:19:55.079 --> 01:20:01.559
decision now about the two different

01:19:59.039 --> 01:20:04.198
different uh areas of the business

01:20:01.560 --> 01:20:06.480
because a lot can change between now and

01:20:04.198 --> 01:20:08.579
then and the most likely changes that

01:20:06.479 --> 01:20:10.139
this job changes

01:20:08.579 --> 01:20:13.979
Charlie

01:20:10.140 --> 01:20:16.260
I I got nothing to add

01:20:13.979 --> 01:20:19.619
we have a lot of good people that have

01:20:16.260 --> 01:20:21.300
risen and the Berkshires and City areas

01:20:19.619 --> 01:20:24.359
and

01:20:21.300 --> 01:20:26.300
there's a reason why our operations have

01:20:24.359 --> 01:20:28.799
by and large done better than other big

01:20:26.300 --> 01:20:30.779
conglomerate companies

01:20:28.800 --> 01:20:35.039
and one of them is that

01:20:30.779 --> 01:20:38.819
is that we change managers

01:20:35.039 --> 01:20:42.019
way less frequently than other people do

01:20:38.819 --> 01:20:42.019
and that's helped us

01:20:42.479 --> 01:20:46.198
when Paul Andrews died we know we know

01:20:44.939 --> 01:20:47.879
who he thought

01:20:46.198 --> 01:20:49.559
to take over there but there wasn't any

01:20:47.880 --> 01:20:51.119
reason to

01:20:49.560 --> 01:20:53.159
to announce that I mean that Paul

01:20:51.119 --> 01:20:54.658
Anderson would I wish he'd lived to be

01:20:53.158 --> 01:20:56.158
honored we had we had one of our

01:20:54.658 --> 01:20:58.198
managers die

01:20:56.158 --> 01:21:01.500
not longer going

01:20:58.198 --> 01:21:03.658
how old was he at Karen yeah mid 90s

01:21:01.500 --> 01:21:06.060
Seymour yeah see more away from the

01:21:03.658 --> 01:21:07.920
scene and Seymour

01:21:06.060 --> 01:21:09.199
I wrote him a letter when he was 80 and

01:21:07.920 --> 01:21:12.060
I said you know

01:21:09.198 --> 01:21:14.939
I'm glad you're 80. and I'll write you

01:21:12.060 --> 01:21:17.580
again when you're 90. and uh I wrote him

01:21:14.939 --> 01:21:21.658
again one of his 90 and he didn't make

01:21:17.579 --> 01:21:25.260
it to 100 but but he had a terrific

01:21:21.658 --> 01:21:26.939
uh following him and it really Managed

01:21:25.260 --> 01:21:28.820
IT jointly to some extent as the years

01:21:26.939 --> 01:21:32.279
went by but

01:21:28.819 --> 01:21:34.679
it's Case by case and the main thing to

01:21:32.279 --> 01:21:36.000
do is have the right person running the

01:21:34.679 --> 01:21:37.920
whole place

01:21:36.000 --> 01:21:41.000
okay

01:21:37.920 --> 01:21:41.000
station six

01:21:42.479 --> 01:21:47.039
good morning

01:21:43.800 --> 01:21:48.119
my name's hatch okamot I'm from Miyazaki

01:21:47.039 --> 01:21:51.060
Japan

01:21:48.119 --> 01:21:53.399
a Mr Buffett I was one of the 8 000

01:21:51.060 --> 01:21:55.620
employees at Solomon Brothers that you

01:21:53.399 --> 01:21:58.559
saved I was younger back then I was

01:21:55.619 --> 01:22:01.019
working at seven World Trade Center I've

01:21:58.560 --> 01:22:03.000
always always wanted to thank you in

01:22:01.020 --> 01:22:05.239
person for saving the company its

01:22:03.000 --> 01:22:10.100
employees including myself and my family

01:22:05.238 --> 01:22:10.099
so thank you Mr Buffett thank you

01:22:13.979 --> 01:22:18.299
and and and thank Derek thank Derek

01:22:16.859 --> 01:22:20.279
Martin who actually had been over in

01:22:18.300 --> 01:22:21.960
Japan before that and who I met for the

01:22:20.279 --> 01:22:24.658
first time the day before I put him in

01:22:21.960 --> 01:22:26.100
and he turned out to it wouldn't have it

01:22:24.658 --> 01:22:27.559
wouldn't have worked if Derek hadn't

01:22:26.100 --> 01:22:29.640
come so whatever you taught him in Japan

01:22:27.560 --> 01:22:32.940
thank you

01:22:29.640 --> 01:22:36.719
thank you sir now my question

01:22:32.939 --> 01:22:38.939
time to time you have reminded us to not

01:22:36.719 --> 01:22:41.100
bet against America

01:22:38.939 --> 01:22:44.879
what do you think are the most important

01:22:41.100 --> 01:22:47.460
things for U.S to remain strong and on

01:22:44.880 --> 01:22:50.039
the risk side if the strength of the

01:22:47.460 --> 01:22:52.079
country is undermined what could be the

01:22:50.039 --> 01:22:53.880
reasons

01:22:52.079 --> 01:22:56.698
but we've been

01:22:53.880 --> 01:22:58.980
we've had a lot of tests

01:22:56.698 --> 01:23:01.619
I mean we're such a young country you

01:22:58.979 --> 01:23:02.819
know when you think about Japan and you

01:23:01.619 --> 01:23:03.899
think about the United States it's just

01:23:02.819 --> 01:23:06.238
incredible

01:23:03.899 --> 01:23:09.658
how new we are to the block I mean you

01:23:06.238 --> 01:23:10.799
know what what are we 234 years old

01:23:09.658 --> 01:23:13.559
since

01:23:10.800 --> 01:23:16.199
since we started that that's that's

01:23:13.560 --> 01:23:18.480
that's nothing I mean you know Charlie

01:23:16.198 --> 01:23:21.000
and I combined are two-thirds of we look

01:23:18.479 --> 01:23:23.639
two-thirds of the life of the country

01:23:21.000 --> 01:23:25.500
so and I mean it really has I mean we've

01:23:23.640 --> 01:23:28.199
we've been tested at 46 national

01:23:25.500 --> 01:23:30.060
elections but and and

01:23:28.198 --> 01:23:33.359
we've made some bad choices and we've

01:23:30.060 --> 01:23:35.280
got a Civil War I mean it so the the

01:23:33.359 --> 01:23:37.139
country

01:23:35.279 --> 01:23:39.059
has had an enormous Advantage as though

01:23:37.140 --> 01:23:41.219
in some way because we started with one

01:23:39.060 --> 01:23:44.340
half of one percent of the world's

01:23:41.219 --> 01:23:46.319
population in 1790. and we now have

01:23:44.340 --> 01:23:48.060
something close to 25 percent of the

01:23:46.319 --> 01:23:49.920
world's GDP

01:23:48.060 --> 01:23:51.659
and it wasn't because we had some

01:23:49.920 --> 01:23:53.520
incredible

01:23:51.658 --> 01:23:55.439
advantage in terms of the line it was

01:23:53.520 --> 01:23:56.880
nice to have two oceans and oceans on

01:23:55.439 --> 01:24:00.359
each side back when

01:23:56.880 --> 01:24:03.480
when uh people tried to rule away Rule

01:24:00.359 --> 01:24:06.000
the World by ruling the waves but it

01:24:03.479 --> 01:24:09.119
you know and we've had good neighbors in

01:24:06.000 --> 01:24:12.600
Canada and Mexico but

01:24:09.119 --> 01:24:15.119
it's a miracle and you say how do we

01:24:12.600 --> 01:24:16.679
keep the good parts of the system

01:24:15.119 --> 01:24:19.500
while

01:24:16.679 --> 01:24:22.079
calling out our obvious defects and we

01:24:19.500 --> 01:24:23.698
do it in a very herky-jerky manner but

01:24:22.079 --> 01:24:25.559
net

01:24:23.698 --> 01:24:28.319
the United States

01:24:25.560 --> 01:24:30.480
it's a better place to live

01:24:28.319 --> 01:24:31.500
but almost when I was born by a huge

01:24:30.479 --> 01:24:34.678
Factor

01:24:31.500 --> 01:24:35.760
I mean I just got a root canal a week

01:24:34.679 --> 01:24:37.859
ago

01:24:35.760 --> 01:24:39.900
and I was just thinking I don't know who

01:24:37.859 --> 01:24:42.619
even invented Nova game but I'm for him

01:24:39.899 --> 01:24:46.019
you know I mean

01:24:42.619 --> 01:24:48.059
but in a million ways I mean you can

01:24:46.020 --> 01:24:50.640
roll you can romanticize about the past

01:24:48.060 --> 01:24:53.159
but forget it uh

01:24:50.640 --> 01:24:55.800
it is it is work

01:24:53.158 --> 01:24:58.979
but now we do have an atom bomb and we

01:24:55.800 --> 01:25:00.539
we wish nuclear power yeah you know we

01:24:58.979 --> 01:25:03.718
wish the item had never been split but

01:25:00.539 --> 01:25:07.079
but uh it has been and you can't put it

01:25:03.719 --> 01:25:08.279
back in the bottle so the challenges are

01:25:07.079 --> 01:25:11.158
huge

01:25:08.279 --> 01:25:13.500
our government always looks

01:25:11.158 --> 01:25:15.539
you know my dad was in Congress back in

01:25:13.500 --> 01:25:17.698
the 1940s and

01:25:15.539 --> 01:25:19.679
it looked like a mess then you know it

01:25:17.698 --> 01:25:22.319
all it was unified by the war to some

01:25:19.679 --> 01:25:25.679
degree but it was still very partisan

01:25:22.319 --> 01:25:28.679
now the problem we have I think

01:25:25.679 --> 01:25:31.140
is that partisanship

01:25:28.679 --> 01:25:32.460
and it seems to me has moved toward

01:25:31.140 --> 01:25:34.380
tribalism

01:25:32.460 --> 01:25:37.020
and tribalism

01:25:34.380 --> 01:25:38.460
just doesn't work as well I mean when it

01:25:37.020 --> 01:25:41.580
gets to tribalism you don't even hear

01:25:38.460 --> 01:25:44.460
the other side and tribalism can lead to

01:25:41.579 --> 01:25:46.859
mobs I mean it just it it flows I mean

01:25:44.460 --> 01:25:48.480
you've seen it all Explorers we've seen

01:25:46.859 --> 01:25:49.679
it to a degree here

01:25:48.479 --> 01:25:51.599
so

01:25:49.679 --> 01:25:56.100
we

01:25:51.600 --> 01:25:58.860
we have to refine in a certain way

01:25:56.100 --> 01:26:00.600
our democracy as we go along and we deal

01:25:58.859 --> 01:26:03.119
with the world we live in

01:26:00.600 --> 01:26:04.739
but if I still had a choice of any post

01:26:03.119 --> 01:26:06.539
to be born in the

01:26:04.738 --> 01:26:07.859
in the world I'd want to be born in the

01:26:06.539 --> 01:26:11.399
United States and I'd want to be born

01:26:07.859 --> 01:26:13.819
today I mean it's it is a

01:26:11.399 --> 01:26:16.198
it is a better world than we've ever had

01:26:13.819 --> 01:26:18.359
and with

01:26:16.198 --> 01:26:21.059
present-day Communications we can also

01:26:18.359 --> 01:26:22.439
see it seem much more how terrible it is

01:26:21.060 --> 01:26:26.039
in many ways

01:26:22.439 --> 01:26:27.599
and it's got problems when I was born in

01:26:26.039 --> 01:26:29.399
1930

01:26:27.600 --> 01:26:30.360
there were two billion people in the

01:26:29.399 --> 01:26:33.899
world

01:26:30.359 --> 01:26:34.920
and now there's maybe 7.7 billion and

01:26:33.899 --> 01:26:39.119
growing

01:26:34.920 --> 01:26:42.420
and we went Millennium with really no

01:26:39.119 --> 01:26:45.198
change in population so we and of course

01:26:42.420 --> 01:26:48.539
we've introduced energy into

01:26:45.198 --> 01:26:50.460
uh in an incredible way

01:26:48.539 --> 01:26:51.800
into something where

01:26:50.460 --> 01:26:54.920
we now have

01:26:51.800 --> 01:26:57.360
7.7 billion people using way more energy

01:26:54.920 --> 01:26:59.039
than they did when I was born when there

01:26:57.359 --> 01:27:01.198
were two billion people so

01:26:59.039 --> 01:27:03.420
it's

01:27:01.198 --> 01:27:06.299
it's an exciting world it's a

01:27:03.420 --> 01:27:08.100
challenging world and I I you know I

01:27:06.300 --> 01:27:09.779
don't know the solutions on things I do

01:27:08.100 --> 01:27:12.300
think that we do need to think about

01:27:09.779 --> 01:27:14.099
different solutions in terms of how we

01:27:12.300 --> 01:27:16.380
get important

01:27:14.100 --> 01:27:19.560
problem solved and that we don't kid

01:27:16.380 --> 01:27:21.900
ourselves that something magic will

01:27:19.560 --> 01:27:24.000
happen or that everybody will get

01:27:21.899 --> 01:27:26.939
together and we'll all just cheer and

01:27:24.000 --> 01:27:31.800
they'll go away by 2050 or anything it

01:27:26.939 --> 01:27:34.259
uh uh and how well we adapt to them we

01:27:31.800 --> 01:27:36.060
will see I would say

01:27:34.260 --> 01:27:38.520
so far it doesn't look very promising

01:27:36.060 --> 01:27:40.320
but then I'm sure that

01:27:38.520 --> 01:27:41.880
when Lincoln looks at it

01:27:40.319 --> 01:27:44.039
what was going on in the Civil War

01:27:41.880 --> 01:27:46.500
didn't look very promising either so I

01:27:44.039 --> 01:27:49.019
think that that the U.S is capable of

01:27:46.500 --> 01:27:51.000
doing remarkable things and I think

01:27:49.020 --> 01:27:53.900
I wouldn't surprise me if they do it

01:27:51.000 --> 01:27:56.579
again Charlotte charleming are you

01:27:53.899 --> 01:27:58.819
well I'm slightly less optimistic than

01:27:56.579 --> 01:28:01.139
warranty

01:27:58.819 --> 01:28:04.500
I think the best

01:28:01.139 --> 01:28:06.000
wrote ahead to human happiness as we

01:28:04.500 --> 01:28:07.800
expect less

01:28:06.000 --> 01:28:09.238
I think it's going to get I think it's

01:28:07.800 --> 01:28:13.440
going to get tougher

01:28:09.238 --> 01:28:15.779
and I think the solution of having a

01:28:13.439 --> 01:28:17.460
huge proportion of the young and

01:28:15.779 --> 01:28:18.479
brilliant people all the way to wealth

01:28:17.460 --> 01:28:21.719
management

01:28:18.479 --> 01:28:24.000
is a crazy development in terms of

01:28:21.719 --> 01:28:26.760
its natural consequences for American

01:28:24.000 --> 01:28:30.500
civilization we don't need as many

01:28:26.760 --> 01:28:34.739
wealth managers as we have

01:28:30.500 --> 01:28:36.420
Charlie was born on January 1st 1924.

01:28:34.738 --> 01:28:38.099
and

01:28:36.420 --> 01:28:41.340
you'd hate to go back to that wouldn't

01:28:38.100 --> 01:28:43.920
you Troy yes I would and I I I like more

01:28:41.340 --> 01:28:45.539
worlds managers who were just merely

01:28:43.920 --> 01:28:48.600
reflecting the fact there's more wealth

01:28:45.539 --> 01:28:50.639
but we've got

01:28:48.600 --> 01:28:54.000
I don't like everybody going into wealth

01:28:50.639 --> 01:28:57.859
management of MIT or something it's I

01:28:54.000 --> 01:28:57.859
think the world's a little crazy now

01:28:58.800 --> 01:29:03.679
take your choice okay Becky

01:29:04.800 --> 01:29:08.940
now this question comes from Dennis

01:29:07.020 --> 01:29:11.520
degennaro

01:29:08.939 --> 01:29:13.678
as Warren stated in the 2022 annual

01:29:11.520 --> 01:29:15.780
report Berkshire will always hold a

01:29:13.679 --> 01:29:18.060
boatload of cash in U.S treasury bills

01:29:15.779 --> 01:29:19.979
it will also avoid behavior that could

01:29:18.060 --> 01:29:22.199
result in any uncomfortable cash needs

01:29:19.979 --> 01:29:25.138
at inconvenient times including

01:29:22.198 --> 01:29:27.119
Financial panics and unprecedented

01:29:25.139 --> 01:29:29.639
Insurance losses

01:29:27.119 --> 01:29:31.139
after Warren passes away his a shares

01:29:29.639 --> 01:29:33.779
will be converted into B shares and

01:29:31.139 --> 01:29:35.520
distributed to various foundations these

01:29:33.779 --> 01:29:37.738
foundations will then sell the shares to

01:29:35.520 --> 01:29:39.900
fund their causes Warren estimates it

01:29:37.738 --> 01:29:42.479
will take 12 to 15 years for all his

01:29:39.899 --> 01:29:44.638
shares to be sold I worry that a

01:29:42.479 --> 01:29:46.259
corporate Raider like Cairo icon or a

01:29:44.639 --> 01:29:47.699
group will buy up enough of these shares

01:29:46.260 --> 01:29:49.619
to take control of Berkshire and

01:29:47.698 --> 01:29:51.479
completely disregard Warren's philosophy

01:29:49.619 --> 01:29:54.300
of holding a lot of cash in U.S treasury

01:29:51.479 --> 01:29:56.698
bills and instead be greedy Reckless and

01:29:54.300 --> 01:29:58.079
highly speculative and ruin berkshire's

01:29:56.698 --> 01:30:01.319
position as a rock-solid financial

01:29:58.079 --> 01:30:03.059
Fortress I also worry that changes might

01:30:01.319 --> 01:30:05.519
be made in how Berkshire subsidiaries

01:30:03.060 --> 01:30:07.320
are run do Warren and Charlie worry that

01:30:05.520 --> 01:30:10.139
these things could happen

01:30:07.319 --> 01:30:12.960
well I think it's fair to say we think

01:30:10.139 --> 01:30:16.739
about it plenty but I don't I don't I

01:30:12.960 --> 01:30:18.719
don't I don't worry enormously if we

01:30:16.738 --> 01:30:20.039
it is true that

01:30:18.719 --> 01:30:22.920
that

01:30:20.039 --> 01:30:24.840
uh Greg and the directors will have a

01:30:22.920 --> 01:30:28.199
honeymoon period for a long time because

01:30:24.840 --> 01:30:32.100
simply because uh of the boats it will

01:30:28.198 --> 01:30:33.779
still remain I mean it and and uh

01:30:32.100 --> 01:30:34.980
but it's true that eventually they will

01:30:33.779 --> 01:30:37.019
get judged

01:30:34.979 --> 01:30:39.539
based on how well

01:30:37.020 --> 01:30:40.320
our operation fairs versus others now if

01:30:39.539 --> 01:30:42.238
we don't

01:30:40.319 --> 01:30:44.158
pay any dividends and

01:30:42.238 --> 01:30:46.138
in 12 or 15 years

01:30:44.158 --> 01:30:49.679
you're talking a trillion and a half and

01:30:46.139 --> 01:30:51.420
it would take to take over and and uh

01:30:49.679 --> 01:30:54.060
I think if we can't

01:30:51.420 --> 01:30:55.079
that that limits the group they like to

01:30:54.060 --> 01:30:58.199
think about how much they can borrow

01:30:55.079 --> 01:31:01.139
against it it doesn't work when you uh

01:30:58.198 --> 01:31:04.079
and and some of these

01:31:01.139 --> 01:31:07.020
there's nobody to come close to doing it

01:31:04.079 --> 01:31:09.539
themselves and I think that the

01:31:07.020 --> 01:31:13.500
important thing is that Berkshire

01:31:09.539 --> 01:31:15.359
regarded the be regarded as a National

01:31:13.500 --> 01:31:17.238
Asset rather than a national liability

01:31:15.359 --> 01:31:19.738
we've got to be a plus to the country

01:31:17.238 --> 01:31:22.198
with our form of operation and we

01:31:19.738 --> 01:31:23.698
certainly have got a record

01:31:22.198 --> 01:31:27.299
which

01:31:23.698 --> 01:31:29.638
will then be 12 or 15 years longer done

01:31:27.300 --> 01:31:33.600
with much more Capital more companies

01:31:29.639 --> 01:31:36.840
more things will have happened where our

01:31:33.600 --> 01:31:39.659
hundreds of billions can work its way

01:31:36.840 --> 01:31:42.659
into the economy in terms of lots of

01:31:39.658 --> 01:31:44.460
jobs lots of products lots of behavior

01:31:42.658 --> 01:31:45.839
and it can be compared with other things

01:31:44.460 --> 01:31:48.719
so I

01:31:45.840 --> 01:31:51.600
I I think we went out of if we deserved

01:31:48.719 --> 01:31:53.579
to win out and I think uh I think the

01:31:51.600 --> 01:31:55.679
odds of that happening are very very

01:31:53.579 --> 01:31:58.340
very high

01:31:55.679 --> 01:31:58.340
Charlie

01:31:59.100 --> 01:32:03.960
well we

01:32:01.979 --> 01:32:07.019
I don't spend much time worrying about

01:32:03.960 --> 01:32:08.639
fluent can happen 50 years ago and ever

01:32:07.020 --> 01:32:11.580
I'm dead

01:32:08.639 --> 01:32:14.340
I I think you sort of take care of each

01:32:11.579 --> 01:32:16.619
day's responsibilities pretty well and

01:32:14.340 --> 01:32:18.659
think ahead as well as you can

01:32:16.619 --> 01:32:20.579
and you just take the results as they

01:32:18.658 --> 01:32:24.238
fall

01:32:20.579 --> 01:32:26.460
so I'm I'm philosophical

01:32:24.238 --> 01:32:29.299
but I I'm not I'd be spreading

01:32:26.460 --> 01:32:29.300
unnecessarily

01:32:30.719 --> 01:32:34.739
okay

01:32:32.639 --> 01:32:38.639
neither one of us are worried basically

01:32:34.738 --> 01:32:41.039
uh but we but but we plan we do plan and

01:32:38.639 --> 01:32:42.300
and you know I've got a model in my mind

01:32:41.039 --> 01:32:44.279
of what

01:32:42.300 --> 01:32:46.380
Berkshire has been that model's getting

01:32:44.279 --> 01:32:48.420
it's been modified plenty of times over

01:32:46.380 --> 01:32:51.119
58 years and the one thing I know

01:32:48.420 --> 01:32:52.739
initially is or very quickly was it

01:32:51.119 --> 01:32:55.859
shouldn't be a textile company that was

01:32:52.738 --> 01:32:58.138
that was an important decision and and I

01:32:55.859 --> 01:32:59.880
mean we've just played the hand as a as

01:32:58.139 --> 01:33:03.000
a come along and

01:32:59.880 --> 01:33:05.219
and we made a few really good decisions

01:33:03.000 --> 01:33:08.219
and we will never make a decision that

01:33:05.219 --> 01:33:10.500
kills us only things that are a threat

01:33:08.219 --> 01:33:11.880
to the planet

01:33:10.500 --> 01:33:15.840
um we don't have any answer for those

01:33:11.880 --> 01:33:20.520
but we do we keep ourselves in better

01:33:15.840 --> 01:33:23.639
shape than anybody else that and we just

01:33:20.520 --> 01:33:26.159
aren't going to have big maturities of

01:33:23.639 --> 01:33:27.060
debt that come along we aren't going to

01:33:26.158 --> 01:33:29.939
have

01:33:27.060 --> 01:33:32.039
uh insurance policies that be can be

01:33:29.939 --> 01:33:34.259
cashed in at mass and we will sit with

01:33:32.039 --> 01:33:36.060
the Lord what looks like a huge amount

01:33:34.260 --> 01:33:37.500
of capital and but there's a huge amount

01:33:36.060 --> 01:33:38.940
of capital but there's a huge amount of

01:33:37.500 --> 01:33:42.000
earning power there's a huge amount of

01:33:38.939 --> 01:33:43.198
diversity everything so our business

01:33:42.000 --> 01:33:45.899
model

01:33:43.198 --> 01:33:48.539
will be graded and it'll be graded

01:33:45.899 --> 01:33:52.679
against a lot of a lot of people that

01:33:48.539 --> 01:33:54.179
we'd like to be graded against so uh I

01:33:52.679 --> 01:33:55.199
think we're handling something very

01:33:54.179 --> 01:33:57.239
secure

01:33:55.198 --> 01:34:00.000
over to the Future and I think we've got

01:33:57.238 --> 01:34:01.678
the shareholder base like nobody has I

01:34:00.000 --> 01:34:03.899
mean there isn't anybody in the country

01:34:01.679 --> 01:34:06.179
that I know of unless they've had a

01:34:03.899 --> 01:34:07.920
shareholder an employee-owned company

01:34:06.179 --> 01:34:09.420
prior to going public or something of

01:34:07.920 --> 01:34:13.079
the sort but but

01:34:09.420 --> 01:34:15.840
this is the product of you know the

01:34:13.079 --> 01:34:19.139
58 years of of

01:34:15.840 --> 01:34:20.940
regarding the shareholder as the owner

01:34:19.139 --> 01:34:22.800
of the company

01:34:20.939 --> 01:34:25.979
but what does that mean that means

01:34:22.800 --> 01:34:27.119
having happy customers it means being it

01:34:25.979 --> 01:34:29.579
being means

01:34:27.119 --> 01:34:33.059
being welcomed by your community rather

01:34:29.579 --> 01:34:35.760
than having them turn you away it means

01:34:33.060 --> 01:34:37.560
that the government feels better with

01:34:35.760 --> 01:34:38.880
you if there's a financial crisis

01:34:37.560 --> 01:34:40.920
because you're

01:34:38.880 --> 01:34:43.560
you can provide something that actually

01:34:40.920 --> 01:34:46.739
the company the country can't under some

01:34:43.560 --> 01:34:49.320
circumstances and you'll be there and if

01:34:46.738 --> 01:34:51.779
it may and same time it'll be good good

01:34:49.319 --> 01:34:55.859
for the business uh and we will have

01:34:51.779 --> 01:34:57.960
crises of one sort or another but if

01:34:55.859 --> 01:34:59.399
they aren't challenging the planet which

01:34:57.960 --> 01:35:01.980
worries you in terms of some of the

01:34:59.399 --> 01:35:03.719
threats that we have

01:35:01.979 --> 01:35:05.698
were

01:35:03.719 --> 01:35:06.779
will be a plus to the United States and

01:35:05.698 --> 01:35:09.779
if we're close to the United States

01:35:06.779 --> 01:35:12.439
we'll we'll survive

01:35:09.779 --> 01:35:12.439
okay

01:35:14.460 --> 01:35:17.420
station Seven

01:35:19.560 --> 01:35:25.260
Mr Buffett and Mr Munger thank you for

01:35:23.158 --> 01:35:28.138
having us this weekend

01:35:25.260 --> 01:35:30.659
my name is Beau Clayton and I'm from

01:35:28.139 --> 01:35:33.300
Durham North Carolina

01:35:30.658 --> 01:35:37.019
one of the reasons that we are all here

01:35:33.300 --> 01:35:39.779
is that your great storytellers

01:35:37.020 --> 01:35:41.520
and we carry those stories back home

01:35:39.779 --> 01:35:44.819
with us

01:35:41.520 --> 01:35:49.139
can you please share a couple stories

01:35:44.819 --> 01:35:53.698
that maybe we haven't heard before

01:35:49.139 --> 01:35:58.020
about Mr Abel and Mr Jane

01:35:53.698 --> 01:36:01.859
that capture their character and their

01:35:58.020 --> 01:36:04.340
caliber as leaders

01:36:01.859 --> 01:36:04.339
well

01:36:07.279 --> 01:36:13.099
I'll start out with a Jeep

01:36:10.800 --> 01:36:16.560
he walked into the office and

01:36:13.100 --> 01:36:18.239
1986 and I had gotten the bright idea of

01:36:16.560 --> 01:36:20.580
going into the reinsurance business I

01:36:18.238 --> 01:36:21.539
think in maybe 1969 so I'd stumbled

01:36:20.579 --> 01:36:25.319
along

01:36:21.539 --> 01:36:26.760
uh for 17 years and

01:36:25.319 --> 01:36:31.079
I

01:36:26.760 --> 01:36:35.699
wonderful guy that ran it uh

01:36:31.079 --> 01:36:38.579
uh but he also liked certain Brokers and

01:36:35.698 --> 01:36:39.779
I mean he was running at the traditional

01:36:38.579 --> 01:36:42.359
wave

01:36:39.779 --> 01:36:47.039
top calls top quality and everything

01:36:42.359 --> 01:36:50.219
else but but uh but he fell into he he

01:36:47.039 --> 01:36:53.760
didn't try and change the system he

01:36:50.219 --> 01:36:55.380
tried to improve the system and uh to

01:36:53.760 --> 01:36:59.520
some degree and

01:36:55.380 --> 01:37:01.319
we just we went nowhere 17 17 years

01:36:59.520 --> 01:37:02.699
wandering around to the Wilderness and I

01:37:01.319 --> 01:37:04.920
thought I was

01:37:02.698 --> 01:37:07.678
um I knew we could have something good

01:37:04.920 --> 01:37:12.119
and then the Jeep came in on a Saturday

01:37:07.679 --> 01:37:15.239
and uh uh Mike Goldberg and

01:37:12.119 --> 01:37:18.539
steered him in I think and and uh Mike

01:37:15.238 --> 01:37:22.138
deserves to be enshrined and perpetuity

01:37:18.539 --> 01:37:23.880
for that act and uh I talked with him a

01:37:22.139 --> 01:37:25.859
while I think maybe I was opening the

01:37:23.880 --> 01:37:29.579
mail on Saturday while I talked with him

01:37:25.859 --> 01:37:31.439
and and he had absolutely zero

01:37:29.579 --> 01:37:33.359
experience with

01:37:31.439 --> 01:37:36.119
with insurance

01:37:33.359 --> 01:37:38.819
but it actually seen a good bit of how

01:37:36.119 --> 01:37:40.139
Corporate America operated

01:37:38.819 --> 01:37:43.559
because they

01:37:40.139 --> 01:37:45.659
've been in management consulting and

01:37:43.560 --> 01:37:48.840
after talking with him I

01:37:45.658 --> 01:37:51.839
I knew I'd struck golden and uh

01:37:48.840 --> 01:37:54.239
so I hired him and

01:37:51.840 --> 01:37:58.079
gave him the backing of some money

01:37:54.238 --> 01:38:01.559
uh and we had a very good period in the

01:37:58.079 --> 01:38:05.340
market almost right away for him to act

01:38:01.560 --> 01:38:07.860
and and the Jeep uh

01:38:05.340 --> 01:38:10.860
you know if I had the

01:38:07.859 --> 01:38:14.880
top pick of 10 Insurance managers in the

01:38:10.859 --> 01:38:17.339
world I'm I I could take all ten and

01:38:14.880 --> 01:38:19.859
they wouldn't you can't replace

01:38:17.340 --> 01:38:21.719
Ajit and uh

01:38:19.859 --> 01:38:23.819
we still

01:38:21.719 --> 01:38:25.679
enjoy talking I don't we don't talk as

01:38:23.819 --> 01:38:27.738
frequently as he used to but we should

01:38:25.679 --> 01:38:29.460
talk about every day

01:38:27.738 --> 01:38:31.019
but

01:38:29.460 --> 01:38:33.600
he is

01:38:31.020 --> 01:38:35.520
he's one of a kind and

01:38:33.600 --> 01:38:37.139
you know what if they're going to stick

01:38:35.520 --> 01:38:41.580
around long enough you only need one of

01:38:37.139 --> 01:38:43.500
a kind Paul Andrews stuck around a TTI

01:38:41.579 --> 01:38:45.359
had all the money in the world

01:38:43.500 --> 01:38:47.939
every time I talk to him about getting a

01:38:45.359 --> 01:38:50.279
raise or something of the sort he said

01:38:47.939 --> 01:38:52.919
we'll talk about that next year I just

01:38:50.279 --> 01:38:54.960
he was not what you get when you get the

01:38:52.920 --> 01:38:57.840
top draft picks from the leading

01:38:54.960 --> 01:38:59.399
Business Schools and I will say this I

01:38:57.840 --> 01:39:00.600
have never looked at where anybody went

01:38:59.399 --> 01:39:02.158
to school

01:39:00.600 --> 01:39:04.980
in terms of

01:39:02.158 --> 01:39:06.839
of hiring I mean I I just somebody

01:39:04.979 --> 01:39:09.419
mailed me a resume or something I don't

01:39:06.840 --> 01:39:13.319
care where they went to school uh

01:39:09.420 --> 01:39:15.779
uh and it just so happens that

01:39:13.319 --> 01:39:17.279
that she went to some pretty good

01:39:15.779 --> 01:39:20.219
schools but he isn't the Jeep because he

01:39:17.279 --> 01:39:23.460
went to the schools and uh

01:39:20.219 --> 01:39:26.340
Charlie didn't tell a story or two um

01:39:23.460 --> 01:39:28.460
how'd you find Louis vincenti

01:39:26.340 --> 01:39:32.400
well he was there

01:39:28.460 --> 01:39:35.100
I I but you got to recognize him I asked

01:39:32.399 --> 01:39:37.920
Louie once how he managed to play first

01:39:35.100 --> 01:39:41.159
string football at I think Stanford

01:39:37.920 --> 01:39:42.899
when he only weighed 165 pounds

01:39:41.158 --> 01:39:44.399
and he said well he says I was pretty

01:39:42.899 --> 01:39:45.420
quick

01:39:44.399 --> 01:39:48.420
and

01:39:45.420 --> 01:39:51.060
he was pretty quick but

01:39:48.420 --> 01:39:52.980
we have found a lot of people within our

01:39:51.060 --> 01:39:54.960
companies who were pretty quick

01:39:52.979 --> 01:39:56.879
it's it's a

01:39:54.960 --> 01:39:59.219
yeah we had we had one guy that quit at

01:39:56.880 --> 01:40:02.460
fourth grade didn't in Ben Rosner Am I

01:39:59.219 --> 01:40:05.039
Wrong oh yeah totally self-educated

01:40:02.460 --> 01:40:08.100
Ben Rosner knew more about retailing and

01:40:05.039 --> 01:40:10.439
difficult neighborhoods and anybody

01:40:08.100 --> 01:40:12.179
and

01:40:10.439 --> 01:40:15.419
he watched everything in his business

01:40:12.179 --> 01:40:17.340
like a hawk and he was a he was amazing

01:40:15.420 --> 01:40:19.679
now there was an example

01:40:17.340 --> 01:40:23.880
we never found anybody who could do what

01:40:19.679 --> 01:40:25.560
when band died that billability left us

01:40:23.880 --> 01:40:28.679
yeah and you want a story it's kind of

01:40:25.560 --> 01:40:31.199
interesting because Ben Rosner

01:40:28.679 --> 01:40:34.920
had a partner Leo Simon

01:40:31.198 --> 01:40:36.539
at least Leo Simon was uh Moe

01:40:34.920 --> 01:40:39.719
annenberg's son-in-law

01:40:36.539 --> 01:40:42.179
and Leo therefore

01:40:39.719 --> 01:40:43.739
it was very very very wealthy

01:40:42.179 --> 01:40:46.679
and uh

01:40:43.738 --> 01:40:48.658
and then started with nothing but they

01:40:46.679 --> 01:40:49.800
they liked each other

01:40:48.658 --> 01:40:51.420
and

01:40:49.800 --> 01:40:53.820
one time

01:40:51.420 --> 01:40:56.658
well before they got

01:40:53.819 --> 01:41:00.719
involved in the in the business

01:40:56.658 --> 01:41:03.719
uh the business we bought but they got

01:41:00.719 --> 01:41:07.500
the idea of buying a

01:41:03.719 --> 01:41:09.899
submarine from World War One

01:41:07.500 --> 01:41:12.539
and taking it to the century of progress

01:41:09.899 --> 01:41:14.819
or the World's Fair in effect in Chicago

01:41:12.539 --> 01:41:16.619
I think in 1933

01:41:14.819 --> 01:41:18.539
so they bought the submarine for not

01:41:16.619 --> 01:41:20.039
probably nothing and they figured you

01:41:18.539 --> 01:41:21.719
know the average

01:41:20.039 --> 01:41:24.300
guy from Walmart was going to his first

01:41:21.719 --> 01:41:26.520
World's Fair getting a submarine for a

01:41:24.300 --> 01:41:29.039
quarter or something that they'd pay it

01:41:26.520 --> 01:41:31.260
so they hauled it

01:41:29.039 --> 01:41:33.238
from Florida wherever they got they

01:41:31.260 --> 01:41:34.860
hauled it to Chicago and then they got

01:41:33.238 --> 01:41:37.500
into Chicago

01:41:34.859 --> 01:41:41.279
and they were hauling a submarine down

01:41:37.500 --> 01:41:44.158
the streets of Chicago and it was

01:41:41.279 --> 01:41:47.880
creating traffic problems like nobody

01:41:44.158 --> 01:41:49.618
could imagine so a cop came over

01:41:47.880 --> 01:41:51.000
and he said

01:41:49.618 --> 01:41:53.279
to Ben

01:41:51.000 --> 01:41:58.020
he says what do you think you guys are

01:41:53.279 --> 01:42:00.238
going with a submarine Ben says he says

01:41:58.020 --> 01:42:04.080
well he said you'll have to talk to my

01:42:00.238 --> 01:42:06.178
partner Mr Capone and the cop the cop

01:42:04.079 --> 01:42:09.179
says girl I know just keep going and

01:42:06.179 --> 01:42:10.859
that was that was Ben Roger and then Leo

01:42:09.179 --> 01:42:12.859
Simon died

01:42:10.859 --> 01:42:15.059
and when he died in

01:42:12.859 --> 01:42:19.738
1967 or so

01:42:15.060 --> 01:42:22.139
uh Ben Rosner kept delivering half thee

01:42:19.738 --> 01:42:24.899
prophets to his widow

01:42:22.139 --> 01:42:27.840
who was incredibly Rich of course being

01:42:24.899 --> 01:42:30.118
no Anna birks first born born daughter I

01:42:27.840 --> 01:42:33.480
think I think I think Moe had nine

01:42:30.118 --> 01:42:36.238
nine girls in a row before Waller came

01:42:33.479 --> 01:42:39.178
along the tenth I may be lost by one but

01:42:36.238 --> 01:42:41.759
anyway I went to this fancy

01:42:39.179 --> 01:42:43.739
apartment and anyway

01:42:41.760 --> 01:42:46.860
then

01:42:43.738 --> 01:42:48.779
then kept her in for a half

01:42:46.859 --> 01:42:51.359
the deal and he had her sign the rent

01:42:48.779 --> 01:42:53.399
checks just so she would look like she

01:42:51.359 --> 01:42:55.319
was doing something in this business

01:42:53.399 --> 01:42:57.479
and she didn't need the money obviously

01:42:55.319 --> 01:42:59.340
but he just felt he was obligated once

01:42:57.479 --> 01:43:01.979
his partner Leo died

01:42:59.340 --> 01:43:03.960
and then she started criticizing him

01:43:01.979 --> 01:43:05.218
and at that point

01:43:03.960 --> 01:43:07.980
then

01:43:05.219 --> 01:43:10.980
went to her his lawyer

01:43:07.979 --> 01:43:12.359
was her lawyer actually will felsteiner

01:43:10.979 --> 01:43:14.399
I don't know whatever happened to will

01:43:12.359 --> 01:43:16.019
but he gave me he gave me a call because

01:43:14.399 --> 01:43:18.839
Ben wanted to

01:43:16.020 --> 01:43:22.320
call me because he wanted me to buy it

01:43:18.840 --> 01:43:25.619
and he wanted me if I bought it

01:43:22.319 --> 01:43:26.579
he'd be rid of the partners ex-partner's

01:43:25.618 --> 01:43:31.079
wife

01:43:26.579 --> 01:43:32.519
and uh and he'd gotten he had me and

01:43:31.079 --> 01:43:35.340
Charlie come back

01:43:32.520 --> 01:43:37.199
and we went to will felsteiner's office

01:43:35.340 --> 01:43:39.179
and Ben says I'll work till the end of

01:43:37.198 --> 01:43:40.799
the year and that's all but I'll show

01:43:39.179 --> 01:43:42.420
you this thing for six million bucks and

01:43:40.800 --> 01:43:43.920
I had two million to cash and a couple

01:43:42.420 --> 01:43:45.600
million in real estate and a couple

01:43:43.920 --> 01:43:46.618
million of operating earnings this is

01:43:45.600 --> 01:43:49.320
crazy

01:43:46.618 --> 01:43:50.519
but he fell off he was getting a lousy

01:43:49.319 --> 01:43:53.880
prize

01:43:50.520 --> 01:43:55.679
she was taking a half of the lousy price

01:43:53.880 --> 01:43:57.179
for half the money

01:43:55.679 --> 01:43:59.340
so uh

01:43:57.179 --> 01:44:01.679
uh

01:43:59.340 --> 01:44:03.679
he looked at me at some point

01:44:01.679 --> 01:44:06.840
Charlie you described the rest of it

01:44:03.679 --> 01:44:10.399
again he said I heard here you're the

01:44:06.840 --> 01:44:12.960
fastest draw in the west he says draw

01:44:10.399 --> 01:44:15.960
we're one of the New York lawyer's

01:44:12.960 --> 01:44:18.960
office yeah and this guy is he's selling

01:44:15.960 --> 01:44:20.819
he's selling his baby and and he told us

01:44:18.960 --> 01:44:23.399
he's leaving I got Charlie on this side

01:44:20.819 --> 01:44:24.539
I said if if this guy leaves at the end

01:44:23.399 --> 01:44:26.339
of the year he can throw away every

01:44:24.539 --> 01:44:29.158
psychology book that's ever been written

01:44:26.340 --> 01:44:31.319
I mean it isn't happening and uh so we

01:44:29.158 --> 01:44:32.879
bought it and we lived happily ever

01:44:31.319 --> 01:44:34.439
after with Ben and

01:44:32.880 --> 01:44:36.900
one time

01:44:34.439 --> 01:44:38.339
he was taking me over to see a property

01:44:36.899 --> 01:44:42.658
we had in Brooklyn

01:44:38.340 --> 01:44:44.880
and uh and along the way I said

01:44:42.658 --> 01:44:46.618
uh

01:44:44.880 --> 01:44:47.940
then I

01:44:46.618 --> 01:44:50.279
you know I promised you I wouldn't

01:44:47.939 --> 01:44:52.079
interfere in the business when we

01:44:50.279 --> 01:44:55.139
started and he knew a butt was coming

01:44:52.079 --> 01:44:57.139
and he just said Thank You Warren and

01:44:55.139 --> 01:44:59.940
they're shooting him

01:44:57.139 --> 01:45:01.500
he was a lot of fun we had so many Ben

01:44:59.939 --> 01:45:03.059
Rosner stories but now you've heard one

01:45:01.500 --> 01:45:05.658
that hasn't been published before okay

01:45:03.060 --> 01:45:05.659
Becky

01:45:06.238 --> 01:45:12.959
this question comes from chai gohil

01:45:09.779 --> 01:45:14.519
he writes this is for a G reinsurance

01:45:12.960 --> 01:45:16.800
industry is going through one of the

01:45:14.520 --> 01:45:19.739
hardest pricing environments in the last

01:45:16.800 --> 01:45:21.300
15 years Berkshire historically has

01:45:19.738 --> 01:45:22.979
participated during these stress times

01:45:21.300 --> 01:45:24.960
when economic returns are very

01:45:22.979 --> 01:45:26.579
attractive this year it appears

01:45:24.960 --> 01:45:28.500
Berkshire has not been interested in

01:45:26.579 --> 01:45:30.420
deploying its resources towards property

01:45:28.500 --> 01:45:33.420
cat reinsurance despite such strong

01:45:30.420 --> 01:45:35.880
returns can you elaborate on reasons for

01:45:33.420 --> 01:45:37.739
not participating despite these returns

01:45:35.880 --> 01:45:39.659
and your broader view on how you're

01:45:37.738 --> 01:45:43.879
planning to shape your reinsurance

01:45:39.658 --> 01:45:43.879
business post acquisition of Allegheny

01:45:44.939 --> 01:45:51.539
in terms of Allegheny that's an easy

01:45:47.340 --> 01:45:54.119
response we look we treat our operating

01:45:51.539 --> 01:45:55.859
units independent of each other and as

01:45:54.118 --> 01:45:57.299
far as Allegheny is concerned they have

01:45:55.859 --> 01:45:58.198
a major presence in the reinsurance

01:45:57.300 --> 01:46:00.119
business

01:45:58.198 --> 01:46:03.178
under the brand name of transatlantic

01:46:00.118 --> 01:46:05.158
Ree that company will operate the way

01:46:03.179 --> 01:46:07.020
it's been operating in the past there'll

01:46:05.158 --> 01:46:10.259
be no change in terms of strategy or

01:46:07.020 --> 01:46:12.179
management and they will keep doing what

01:46:10.260 --> 01:46:13.679
they're doing they've been very

01:46:12.179 --> 01:46:15.840
successful and hopefully they'll keep

01:46:13.679 --> 01:46:18.960
being successful

01:46:15.840 --> 01:46:21.420
now in terms of the property cat

01:46:18.960 --> 01:46:23.520
business that I have been active in over

01:46:21.420 --> 01:46:26.399
these last several years you are right

01:46:23.520 --> 01:46:28.139
that the last 15 years has been a

01:46:26.399 --> 01:46:31.379
difficult time prices have not been

01:46:28.139 --> 01:46:33.179
attractive and even though we have had

01:46:31.380 --> 01:46:35.699
some presence in the property cat

01:46:33.179 --> 01:46:38.658
business in the last 15 years it really

01:46:35.698 --> 01:46:41.698
is been minimal

01:46:38.658 --> 01:46:44.519
this December 31st which is a big

01:46:41.698 --> 01:46:46.738
renewal date for Cattery insurance we

01:46:44.520 --> 01:46:49.080
were hoping that we would get a few days

01:46:46.738 --> 01:46:53.099
in the Sun and we'd be able to deploy

01:46:49.079 --> 01:46:55.260
our capital and be able to write some

01:46:53.100 --> 01:46:56.900
fairly attractive business

01:46:55.260 --> 01:46:59.880
as it happened

01:46:56.899 --> 01:47:02.399
towards the end of December till about

01:46:59.880 --> 01:47:04.859
the third week of December I was very

01:47:02.399 --> 01:47:07.738
optimistic that we would get a chance to

01:47:04.859 --> 01:47:09.059
put put several billion dollars on on

01:47:07.738 --> 01:47:12.319
the books

01:47:09.060 --> 01:47:14.760
but in the last 10 days of uh December

01:47:12.319 --> 01:47:17.039
unfortunately a lot of capacity came out

01:47:14.760 --> 01:47:19.739
of the Woodworks pricing that we were

01:47:17.039 --> 01:47:21.960
expecting to realize didn't really come

01:47:19.738 --> 01:47:23.939
and meet our pricing requirements as a

01:47:21.960 --> 01:47:25.980
result of which January 1 was a big

01:47:23.939 --> 01:47:28.439
disappointment we did not write as much

01:47:25.979 --> 01:47:31.559
as we were hoping to write now fast

01:47:28.439 --> 01:47:33.658
forward to April 1 which is another big

01:47:31.560 --> 01:47:36.060
renewal date we

01:47:33.658 --> 01:47:37.559
had a lot of powder dry and we were

01:47:36.060 --> 01:47:40.560
lucky that we kept the powder dry

01:47:37.560 --> 01:47:42.119
because April 1 suddenly prices zoomed

01:47:40.560 --> 01:47:44.280
up again a lot higher than what they

01:47:42.118 --> 01:47:45.839
were on January 1 and started to look

01:47:44.279 --> 01:47:47.279
attractive to us

01:47:45.840 --> 01:47:51.239
so

01:47:47.279 --> 01:47:53.880
now we have a portfolio that is very

01:47:51.238 --> 01:47:56.218
heavily exposed to property catastrophe

01:47:53.880 --> 01:48:00.118
uh to put that in perspective our

01:47:56.219 --> 01:48:03.658
exposure today is almost 50 percent more

01:48:00.118 --> 01:48:07.859
than what it was uh five six months ago

01:48:03.658 --> 01:48:11.399
so you know we I think we have written

01:48:07.859 --> 01:48:13.559
as much as our capacity will allow us to

01:48:11.399 --> 01:48:15.738
write we are very happy with what we've

01:48:13.560 --> 01:48:18.900
written the margins have been healthy

01:48:15.738 --> 01:48:21.379
the only thing that I want to mention to

01:48:18.899 --> 01:48:25.799
you is that while the margins have been

01:48:21.380 --> 01:48:28.800
healthy we have a very unbalanced

01:48:25.800 --> 01:48:30.980
portfolio what that means is if there's

01:48:28.800 --> 01:48:35.100
a big hurricane in Florida

01:48:30.979 --> 01:48:36.839
we will have a very substantial loss as

01:48:35.100 --> 01:48:39.020
opposed to that if we have a very big

01:48:36.840 --> 01:48:41.760
loss anywhere other than Florida

01:48:39.020 --> 01:48:45.600
relative to our competition we will have

01:48:41.760 --> 01:48:47.820
a much smaller loss net net I'm very

01:48:45.600 --> 01:48:49.860
happy with the portfolio it's been a lot

01:48:47.819 --> 01:48:52.079
better it is a lot better than what it's

01:48:49.859 --> 01:48:55.319
been in the past uh I don't know how

01:48:52.079 --> 01:48:57.658
long it'll last and of course

01:48:55.319 --> 01:49:01.579
if the hurricane happens

01:48:57.658 --> 01:49:01.579
in Florida we could lose

01:49:01.618 --> 01:49:05.639
across all the units we could lose as

01:49:03.899 --> 01:49:08.158
much as 15 billion dollars

01:49:05.639 --> 01:49:11.039
and if there isn't a loss we'll make

01:49:08.158 --> 01:49:14.099
several billion dollars as profit

01:49:11.039 --> 01:49:16.260
and LG tell them how long when you

01:49:14.100 --> 01:49:17.400
called me and said you'd like to expose

01:49:16.260 --> 01:49:20.280
us to

01:49:17.399 --> 01:49:23.879
whatever was a couple billion more of of

01:49:20.279 --> 01:49:26.639
exposure how long I took to say yes yeah

01:49:23.880 --> 01:49:29.279
uh so the way we think about our

01:49:26.639 --> 01:49:31.618
exposure is you know in in the property

01:49:29.279 --> 01:49:35.099
in the insurance operations collectively

01:49:31.618 --> 01:49:37.198
across the entire company uh given that

01:49:35.100 --> 01:49:40.560
we have about a little less than 300

01:49:37.198 --> 01:49:41.719
billion of capital we think of that as a

01:49:40.560 --> 01:49:43.860
55

01:49:41.719 --> 01:49:47.158
exposure that we're willing to take on

01:49:43.859 --> 01:49:49.679
so to complete Warren's story

01:49:47.158 --> 01:49:52.500
a few weeks ago we had about 13 billion

01:49:49.679 --> 01:49:55.199
dollars of exposure all across like uh

01:49:52.500 --> 01:49:57.479
the globe and I called up war and I said

01:49:55.198 --> 01:50:00.719
we have to 13 it'll be nice if we can go

01:49:57.479 --> 01:50:02.579
up to 15 that's a good round number and

01:50:00.719 --> 01:50:04.859
that was less than a 30 second phone

01:50:02.579 --> 01:50:06.600
call

01:50:04.859 --> 01:50:09.238
I think Warren said yes without even

01:50:06.600 --> 01:50:13.219
listening to what the numbers

01:50:09.238 --> 01:50:13.218
I hope he calls me again

01:50:13.979 --> 01:50:17.479
okay station eight

01:50:19.139 --> 01:50:23.279
hello

01:50:20.340 --> 01:50:25.800
my name is adal Flores and I've been a

01:50:23.279 --> 01:50:28.920
shareholder for about 16 years and I'm

01:50:25.800 --> 01:50:33.179
coming from Guadalajara Mexico

01:50:28.920 --> 01:50:35.520
my my question is for Warren and Charlie

01:50:33.179 --> 01:50:37.859
companies have the Eternal dilemma

01:50:35.520 --> 01:50:39.719
between bought Building Products that

01:50:37.859 --> 01:50:42.420
can make profits and increase their

01:50:39.719 --> 01:50:44.219
company competitive position in the best

01:50:42.420 --> 01:50:46.020
case you can build products that have

01:50:44.219 --> 01:50:48.600
both characteristics at the same time

01:50:46.020 --> 01:50:50.219
like Google did but most of the time

01:50:48.600 --> 01:50:52.260
companies need to choose between

01:50:50.219 --> 01:50:55.380
short-term profits and long-term

01:50:52.260 --> 01:50:57.179
defensibility for example Amazon was

01:50:55.380 --> 01:51:00.359
focused on building their famous Amazon

01:50:57.179 --> 01:51:03.239
flywheel with limited profits initially

01:51:00.359 --> 01:51:05.399
in order to abstain obtain stronger

01:51:03.238 --> 01:51:07.618
Network effects with the hope of getting

01:51:05.399 --> 01:51:10.319
more defensible profits in the future

01:51:07.618 --> 01:51:11.519
when you invest you constantly speak

01:51:10.319 --> 01:51:14.158
about the importance of building

01:51:11.520 --> 01:51:16.920
competitive modes what advice would you

01:51:14.158 --> 01:51:18.839
give to CEOs about how to balance this

01:51:16.920 --> 01:51:21.000
dilemma which is essentially short-term

01:51:18.840 --> 01:51:22.920
profit versus long-term definitibility

01:51:21.000 --> 01:51:25.020
thank you

01:51:22.920 --> 01:51:27.420
well the answer to control your destiny

01:51:25.020 --> 01:51:29.219
which we've been able to do it uh

01:51:27.420 --> 01:51:32.639
Berkshire so

01:51:29.219 --> 01:51:36.539
we have we feel no pressure

01:51:32.639 --> 01:51:38.880
from Wall Street uh

01:51:36.539 --> 01:51:42.118
you know we don't have investor calls we

01:51:38.880 --> 01:51:43.679
don't have to make promises we we get a

01:51:42.118 --> 01:51:45.839
chance to make our own

01:51:43.679 --> 01:51:48.719
mistakes and and occasionally find

01:51:45.840 --> 01:51:51.300
something that that works well but we

01:51:48.719 --> 01:51:52.859
recognize that the people in this room

01:51:51.300 --> 01:51:56.219
and people like them

01:51:52.859 --> 01:51:58.380
uh are the ones we're working for and

01:51:56.219 --> 01:52:01.859
we're not working for a bunch of people

01:51:58.380 --> 01:52:03.840
that that care about whether we meet the

01:52:01.859 --> 01:52:04.859
quarter estimate or anything so we have

01:52:03.840 --> 01:52:06.239
a freedom

01:52:04.859 --> 01:52:11.158
uh

01:52:06.238 --> 01:52:14.158
that we that we get to use and

01:52:11.158 --> 01:52:16.500
we're interested in men we're interested

01:52:14.158 --> 01:52:17.879
in owning a wonderful business forever

01:52:16.500 --> 01:52:21.359
we'll learn very many wonderful

01:52:17.880 --> 01:52:24.659
businesses but we do learn

01:52:21.359 --> 01:52:26.158
a lot as we go along we we Charlie and I

01:52:24.658 --> 01:52:29.939
have often mentioned how we learn so

01:52:26.158 --> 01:52:32.399
much when we bought C's candy which we

01:52:29.939 --> 01:52:33.779
did but we learned when we bought Ben

01:52:32.399 --> 01:52:36.420
Rogers

01:52:33.779 --> 01:52:37.439
chain of women's dress shops spread all

01:52:36.420 --> 01:52:40.980
over the

01:52:37.439 --> 01:52:43.559
the eastern part of the country we

01:52:40.979 --> 01:52:45.000
learned when we tried them

01:52:43.560 --> 01:52:47.699
getting into the department store

01:52:45.000 --> 01:52:49.618
business back in 1966 and

01:52:47.698 --> 01:52:51.238
as the ink was drawing on our purchase

01:52:49.618 --> 01:52:54.539
price we realized we'd done something

01:52:51.238 --> 01:52:56.939
dumb I mean but we're learning all the

01:52:54.539 --> 01:52:59.698
time how consumers behave

01:52:56.939 --> 01:53:02.759
I'm not going to be able to learn the

01:52:59.698 --> 01:53:06.059
technical aspects of businesses but that

01:53:02.760 --> 01:53:09.840
you know that that be nice if I knew it

01:53:06.060 --> 01:53:13.320
but but it isn't essential and you know

01:53:09.840 --> 01:53:15.779
we are obviously uh

01:53:13.319 --> 01:53:19.979
we've got

01:53:15.779 --> 01:53:22.618
a business at Apple which is larger than

01:53:19.979 --> 01:53:26.339
our energy business and we may only own

01:53:22.618 --> 01:53:29.158
Five Points six or seven percent but our

01:53:26.340 --> 01:53:32.039
ownership goes up every year and I don't

01:53:29.158 --> 01:53:34.319
understand the phone at all but I do

01:53:32.039 --> 01:53:38.039
understand consumer Behavior

01:53:34.319 --> 01:53:40.380
and I know how people think about

01:53:38.039 --> 01:53:43.800
whether to buy a second car I know how

01:53:40.380 --> 01:53:46.199
they go out to different We Own auto

01:53:43.800 --> 01:53:49.380
dealerships we only we're learning all

01:53:46.198 --> 01:53:52.678
the time from all of our businesses how

01:53:49.380 --> 01:53:54.960
people react to Garanimals versus you

01:53:52.679 --> 01:53:58.920
know selling them something else and and

01:53:54.960 --> 01:54:02.819
so seize was a sort of breakthrough but

01:53:58.920 --> 01:54:06.840
but it just we just keep learning uh

01:54:02.819 --> 01:54:09.359
as to more about how people behave and

01:54:06.840 --> 01:54:11.159
how a good business can turn into a bad

01:54:09.359 --> 01:54:15.299
business and how some good businesses

01:54:11.158 --> 01:54:21.238
can maintain uh uh they're competitive

01:54:15.300 --> 01:54:21.900
advantage over time and and so

01:54:21.238 --> 01:54:23.579
um

01:54:21.899 --> 01:54:27.118
we don't

01:54:23.579 --> 01:54:29.880
we don't have some formula that person

01:54:27.118 --> 01:54:31.920
people we just

01:54:29.880 --> 01:54:34.079
but we can also tell them

01:54:31.920 --> 01:54:36.359
in 10 seconds whether it's something of

01:54:34.079 --> 01:54:39.840
Interest I mean with you know when when

01:54:36.359 --> 01:54:41.639
uh I get these calls and we want to send

01:54:39.840 --> 01:54:45.300
decks and all that sort of which is

01:54:41.639 --> 01:54:47.000
nonsense I mean it uh uh it's a bunch of

01:54:45.300 --> 01:54:49.619
guys sitting

01:54:47.000 --> 01:54:51.060
that get paid for drawing up these

01:54:49.618 --> 01:54:52.979
projections of the future and everything

01:54:51.060 --> 01:54:54.539
like that if they knew the future you

01:54:52.979 --> 01:54:56.218
know we don't know the future but we do

01:54:54.539 --> 01:54:58.260
know certain kinds of businesses we know

01:54:56.219 --> 01:55:01.198
what the right price is and we know

01:54:58.260 --> 01:55:05.039
what we think we can project out in

01:55:01.198 --> 01:55:07.259
terms of consumer Behavior Uh and

01:55:05.039 --> 01:55:10.139
consumer and threats

01:55:07.260 --> 01:55:11.340
do a business and then and that's what

01:55:10.139 --> 01:55:14.279
we've been about and that's what we'll

01:55:11.340 --> 01:55:17.279
continue to about we do get

01:55:14.279 --> 01:55:20.219
we don't get smarter over time we get we

01:55:17.279 --> 01:55:22.679
get a little wiser though uh

01:55:20.219 --> 01:55:24.239
following it over time and and you can

01:55:22.679 --> 01:55:26.760
do it while sitting in the office with a

01:55:24.238 --> 01:55:28.379
telephone too which we like Charlie well

01:55:26.760 --> 01:55:31.079
tell them the story of the Japanese

01:55:28.380 --> 01:55:33.300
investment that that should be told

01:55:31.079 --> 01:55:35.100
again that that that's

01:55:33.300 --> 01:55:37.320
that's a nice story

01:55:35.100 --> 01:55:38.340
you know well it was pretty simple I

01:55:37.319 --> 01:55:40.259
mean I

01:55:38.340 --> 01:55:42.179
you know other

01:55:40.260 --> 01:55:44.340
back when I started other people for

01:55:42.179 --> 01:55:46.020
going through Playboy and I was going

01:55:44.340 --> 01:55:49.619
through Moody so that you know basically

01:55:46.020 --> 01:55:52.920
and uh uh there's a movie out called

01:55:49.618 --> 01:55:54.599
Turn every page but which I

01:55:52.920 --> 01:55:56.340
saw again for the second time a couple

01:55:54.600 --> 01:55:58.619
of days ago Lizzie got leaving I

01:55:56.340 --> 01:56:01.139
recommend everybody in this world watch

01:55:58.618 --> 01:56:04.618
that because I turned every page in the

01:56:01.139 --> 01:56:06.659
past and uh I did it for thousands and

01:56:04.618 --> 01:56:08.339
thousands of pages and Moody's and I did

01:56:06.658 --> 01:56:11.399
it at the Department of Public Utilities

01:56:08.340 --> 01:56:13.380
in in Boston I did it in Newton the

01:56:11.399 --> 01:56:18.179
insurance department that it just kept

01:56:13.380 --> 01:56:23.039
turning Pages well that that goes on for

01:56:18.179 --> 01:56:25.980
a while but now we need Big Ideas

01:56:23.039 --> 01:56:27.420
in order to find things and uh and what

01:56:25.979 --> 01:56:29.279
was your question Charlie tell them

01:56:27.420 --> 01:56:32.460
about the Japanese well the Japanese

01:56:29.279 --> 01:56:34.439
thing was was simple I mean it kind of I

01:56:32.460 --> 01:56:35.760
like looking at companies every I mean I

01:56:34.439 --> 01:56:38.519
like looking at

01:56:35.760 --> 01:56:39.780
figures about companies and and here

01:56:38.520 --> 01:56:41.340
were five

01:56:39.779 --> 01:56:43.500
very very

01:56:41.340 --> 01:56:44.579
substantial companies understandable

01:56:43.500 --> 01:56:48.238
companies

01:56:44.579 --> 01:56:50.219
most of them uh maybe all of them we'd

01:56:48.238 --> 01:56:51.658
done business with them in a dozen

01:56:50.219 --> 01:56:55.340
different ways if you go a couple miles

01:56:51.658 --> 01:56:58.859
from where this place is the our last

01:56:55.340 --> 01:57:02.639
coal generating plant was built by one

01:56:58.859 --> 01:57:04.259
of the companies that so

01:57:02.639 --> 01:57:06.179
here they were

01:57:04.260 --> 01:57:08.159
they were sitting

01:57:06.179 --> 01:57:10.139
as a group

01:57:08.158 --> 01:57:11.359
where they were earning we'll say 14

01:57:10.139 --> 01:57:13.980
percent

01:57:11.359 --> 01:57:16.738
uh on what we were going to pay to buy

01:57:13.979 --> 01:57:18.118
them they were paying decent dividends

01:57:16.738 --> 01:57:20.579
they were going to repurchase the shares

01:57:18.118 --> 01:57:22.019
in some cases they owned a whole bunch

01:57:20.579 --> 01:57:24.658
of businesses that we could understand

01:57:22.020 --> 01:57:26.219
as a group although we didn't mean we

01:57:24.658 --> 01:57:27.420
had deep understanding on anything but

01:57:26.219 --> 01:57:29.698
we've seen them operate and everything

01:57:27.420 --> 01:57:31.679
there wasn't anything to it

01:57:29.698 --> 01:57:34.319
and at the same time

01:57:31.679 --> 01:57:37.679
we could take out the currency risk

01:57:34.319 --> 01:57:39.960
by financing in in the

01:57:37.679 --> 01:57:41.880
and that was going to cost us a half of

01:57:39.960 --> 01:57:43.639
one percent well if you get 14 on one

01:57:41.880 --> 01:57:46.980
side a half a percent on the other side

01:57:43.639 --> 01:57:50.639
and you've got money that you know

01:57:46.979 --> 01:57:52.500
forever and they're doing intelligent

01:57:50.639 --> 01:57:53.880
things and they're sizable

01:57:52.500 --> 01:57:55.500
so we just

01:57:53.880 --> 01:57:57.480
started buying them I didn't even

01:57:55.500 --> 01:58:00.359
probably tell Greg until

01:57:57.479 --> 01:58:03.299
maybe six months after we'd gotten going

01:58:00.359 --> 01:58:06.960
and and then we hit five percent

01:58:03.300 --> 01:58:10.739
uh in all of them we announced on my

01:58:06.960 --> 01:58:14.579
birthday and uh at 90th at the we owned

01:58:10.738 --> 01:58:16.919
over five percent and recently went

01:58:14.579 --> 01:58:18.479
over for the first time to visit with

01:58:16.920 --> 01:58:21.000
him and move

01:58:18.479 --> 01:58:23.759
more than pleasantly surprised delighted

01:58:21.000 --> 01:58:27.359
with what we find there and now we own

01:58:23.760 --> 01:58:29.760
7.4 percent of them we won't go over 9.9

01:58:27.359 --> 01:58:31.399
without their agreeing and we sold

01:58:29.760 --> 01:58:36.320
another

01:58:31.399 --> 01:58:36.319
164 or whatever it is uh

01:58:37.139 --> 01:58:42.719
billion of us again would have done for

01:58:40.319 --> 01:58:45.000
us if we only had five billion dollars

01:58:42.719 --> 01:58:46.618
or something and it made 10 billion

01:58:45.000 --> 01:58:49.319
dollars

01:58:46.618 --> 01:58:52.139
simply in that way yeah we would look

01:58:49.319 --> 01:58:53.939
like Heroes now 10 billion just sort of

01:58:52.139 --> 01:58:56.819
disappears as it's

01:58:53.939 --> 01:59:00.118
an Old Dot in person's reports but it's

01:58:56.819 --> 01:59:02.759
fun and it is fun and it is 10 billion

01:59:00.118 --> 01:59:04.460
dollars and Charlie says it keeps and

01:59:02.760 --> 01:59:07.739
Charlie says it keeps me out of bars

01:59:04.460 --> 01:59:09.000
right talk show up about it and I

01:59:07.738 --> 01:59:11.638
probably talked to Charlie about this

01:59:09.000 --> 01:59:13.618
app the year after I started but who

01:59:11.639 --> 01:59:15.239
knows I mean I knew he'd like it I mean

01:59:13.618 --> 01:59:18.839
obviously and and

01:59:15.238 --> 01:59:21.118
uh we try to do every dollar we would do

01:59:18.840 --> 01:59:23.159
we could only do about 10 billion yeah

01:59:21.118 --> 01:59:25.439
yeah well not even that quite that much

01:59:23.158 --> 01:59:27.658
yeah but

01:59:25.439 --> 01:59:29.879
you know we are four or five billion

01:59:27.658 --> 01:59:34.019
ahead plus dividends and we got a carry

01:59:29.880 --> 01:59:35.340
that's terrific and and you know uh and

01:59:34.020 --> 01:59:37.320
they welcome us and they should welcome

01:59:35.340 --> 01:59:38.880
us and but we

01:59:37.319 --> 01:59:40.559
we love it the way they're operating

01:59:38.880 --> 01:59:45.000
we're not there to tell them what to do

01:59:40.560 --> 01:59:47.639
in the least uh uh so

01:59:45.000 --> 01:59:49.800
we didn't and but we did say we never go

01:59:47.639 --> 01:59:52.500
over 9.9 and we mean it and then they

01:59:49.800 --> 01:59:54.840
they know that will be true to our word

01:59:52.500 --> 01:59:57.479
and I went over there partly to

01:59:54.840 --> 01:59:58.860
introduce Greg the those people because

01:59:57.479 --> 02:00:02.098
we're going to be

01:59:58.859 --> 02:00:03.598
Willem 10 20 30 40 years from now and

02:00:02.099 --> 02:00:06.900
they may occasionally find something

02:00:03.599 --> 02:00:09.000
that we can do jointly and they look

02:00:06.899 --> 02:00:12.059
they look forward to doing that we look

02:00:09.000 --> 02:00:14.819
forward to it and in addition we have

02:00:12.060 --> 02:00:15.960
some other operating businesses in Japan

02:00:14.819 --> 02:00:18.238
so

02:00:15.960 --> 02:00:20.579
great gaming

02:00:18.238 --> 02:00:23.098
now the only thing I would add is that

02:00:20.579 --> 02:00:26.340
one has warned you when over there it

02:00:23.099 --> 02:00:27.840
was to build the build the trust with

02:00:26.340 --> 02:00:29.940
these Japanese companies because we do

02:00:27.840 --> 02:00:32.520
hope there's long-term opportunities but

02:00:29.939 --> 02:00:34.500
fundamentally as you highlighted uh

02:00:32.520 --> 02:00:36.719
they're an incredible uh they've been a

02:00:34.500 --> 02:00:39.359
very good investment I'd also highlight

02:00:36.719 --> 02:00:41.279
the five meetings we had were really

02:00:39.359 --> 02:00:43.019
quite remarkable I mean these companies

02:00:41.279 --> 02:00:45.118
the culture and the history around it

02:00:43.020 --> 02:00:46.920
and how proud they are you know there's

02:00:45.118 --> 02:00:49.198
just moments of learning from them so it

02:00:46.920 --> 02:00:50.880
was it was just a great experience to to

02:00:49.198 --> 02:00:52.259
spend really two days with the five

02:00:50.880 --> 02:00:55.079
companies

02:00:52.260 --> 02:00:56.219
and an issue that we intended to be 56

02:00:55.079 --> 02:00:58.198
billion of

02:00:56.219 --> 02:00:59.779
Yen that we were issuing and selling

02:00:58.198 --> 02:01:02.178
turned out to be

02:00:59.779 --> 02:01:04.979
164.4 or something like that

02:01:02.179 --> 02:01:07.380
everything everything's worked so well

02:01:04.979 --> 02:01:10.138
and as Charlie says it

02:01:07.380 --> 02:01:12.480
you know it doesn't move 500 billion of

02:01:10.139 --> 02:01:15.420
net worth that much

02:01:12.479 --> 02:01:16.500
but this one is you know it will keep

02:01:15.420 --> 02:01:19.319
adding

02:01:16.500 --> 02:01:20.520
over the years to the berkshire's value

02:01:19.319 --> 02:01:22.559
with us

02:01:20.520 --> 02:01:27.540
very widespread probably four or five

02:01:22.560 --> 02:01:29.340
hundred million dollars a year and uh

02:01:27.539 --> 02:01:32.579
you know we'll just keep looking for

02:01:29.340 --> 02:01:37.500
more opportunities and

02:01:32.579 --> 02:01:39.420
Japan we have Berkshire is the largest

02:01:37.500 --> 02:01:42.420
borrower

02:01:39.420 --> 02:01:46.560
outside of corporate borrower outside of

02:01:42.420 --> 02:01:49.319
Japan that exists and yeah we didn't set

02:01:46.560 --> 02:01:51.719
out to be that but it's it's turned out

02:01:49.319 --> 02:01:54.599
that way and and we're not done I mean

02:01:51.719 --> 02:01:58.800
it uh you know in terms of

02:01:54.599 --> 02:02:00.900
what may come along there and uh

02:01:58.800 --> 02:02:03.239
and we have some direct operations there

02:02:00.899 --> 02:02:04.379
as I mentioned the

02:02:03.238 --> 02:02:06.500
uh

02:02:04.380 --> 02:02:09.060
and we've got some

02:02:06.500 --> 02:02:10.949
really wonderful Partners working for us

02:02:09.060 --> 02:02:14.159
and I don't have to do anything

02:02:10.949 --> 02:02:16.139
[Laughter]

02:02:14.158 --> 02:02:18.960
okay Becky

02:02:16.139 --> 02:02:20.159
the next question comes from Ellie Amin

02:02:18.960 --> 02:02:23.340
Tibet

02:02:20.158 --> 02:02:26.000
who asks during an episode of investing

02:02:23.340 --> 02:02:28.920
the Templeton way podcast Professor

02:02:26.000 --> 02:02:31.260
damodaran who he respects almost as much

02:02:28.920 --> 02:02:32.819
as Warren and Charlie mentioned that he

02:02:31.260 --> 02:02:34.980
is not comfortable with positions

02:02:32.819 --> 02:02:37.380
becoming a large part of his portfolio

02:02:34.979 --> 02:02:40.259
for example when they reach 25 to 35

02:02:37.380 --> 02:02:42.900
percent he mentioned that apple is now

02:02:40.260 --> 02:02:44.699
35 percent of berkshire's portfolio and

02:02:42.899 --> 02:02:46.920
thinks that that is near a danger zone

02:02:44.698 --> 02:02:49.198
wonders if Warren and Charlie can

02:02:46.920 --> 02:02:51.440
comment I like to make one comment first

02:02:49.198 --> 02:02:55.439
but Charlie will come up with

02:02:51.439 --> 02:02:55.439
yeah but

02:02:57.198 --> 02:03:02.698
apple is not 35 percent of of Berkshire

02:03:00.539 --> 02:03:05.399
portfolio bursar's portfolio includes

02:03:02.698 --> 02:03:08.339
the railroad the energy business or

02:03:05.399 --> 02:03:10.500
animals you name it See's Candy they're

02:03:08.340 --> 02:03:13.199
all businesses and

02:03:10.500 --> 02:03:14.520
uh you know the the good thing about

02:03:13.198 --> 02:03:17.519
Apple

02:03:14.520 --> 02:03:19.320
is that we we can go up they buy in

02:03:17.520 --> 02:03:20.280
their stock and instead of owning 5.6

02:03:19.319 --> 02:03:22.439
percent

02:03:20.279 --> 02:03:23.639
you know they got down to

02:03:22.439 --> 02:03:27.839
I got about

02:03:23.639 --> 02:03:29.579
15 billion 700 and some million shares

02:03:27.840 --> 02:03:30.719
outstanding they get down to 15 and a

02:03:29.579 --> 02:03:33.420
quarter billion without us doing

02:03:30.719 --> 02:03:36.840
anything we've got six percent so we

02:03:33.420 --> 02:03:40.380
can't own more than 100 of the NSF we

02:03:36.840 --> 02:03:43.079
can't own more than 100 of Garanimals or

02:03:40.380 --> 02:03:45.840
See's candy and

02:03:43.079 --> 02:03:47.760
it'd be nice we'd live alone 200 but it

02:03:45.840 --> 02:03:50.699
just isn't doable but they're all the

02:03:47.760 --> 02:03:51.719
same they're good businesses and to

02:03:50.698 --> 02:03:53.879
think that

02:03:51.719 --> 02:03:56.219
are Criterion

02:03:53.880 --> 02:03:58.679
a criteria for

02:03:56.219 --> 02:04:00.779
apple is different than the other

02:03:58.679 --> 02:04:05.158
businesses we own it just happens to be

02:04:00.779 --> 02:04:07.198
A Better Business than any we own and we

02:04:05.158 --> 02:04:08.399
put a fair amount of money in it but we

02:04:07.198 --> 02:04:10.738
haven't got more money in it than we've

02:04:08.399 --> 02:04:13.379
got in the railroad and apple is a

02:04:10.738 --> 02:04:15.598
Better Business our railroad is a very

02:04:13.380 --> 02:04:20.460
good business it's not remotely as good

02:04:15.599 --> 02:04:23.340
as Apple's business but uh Apple

02:04:20.460 --> 02:04:25.679
you know has a position with consumers

02:04:23.340 --> 02:04:27.060
where they're paying

02:04:25.679 --> 02:04:29.279
you know

02:04:27.060 --> 02:04:32.039
maybe they'll pay 1500 bucks or whatever

02:04:29.279 --> 02:04:34.079
it may be for a phone

02:04:32.039 --> 02:04:36.300
and these same people pay 35

02:04:34.079 --> 02:04:38.039
000 for having a second car

02:04:36.300 --> 02:04:40.619
and if they had to give up a second car

02:04:38.039 --> 02:04:42.719
or give up their iPhone they'd give up

02:04:40.618 --> 02:04:44.759
their second car I mean it's an

02:04:42.719 --> 02:04:47.279
extraordinary probably we don't have

02:04:44.760 --> 02:04:50.239
anything like that that we own 100 of

02:04:47.279 --> 02:04:53.399
but we're very very very happy to have

02:04:50.238 --> 02:04:55.259
5.6 or whatever it may be percent and

02:04:53.399 --> 02:04:57.420
we're delighted every tenth of a percent

02:04:55.260 --> 02:04:59.099
that goes up it's like adding a hundred

02:04:57.420 --> 02:05:01.139
million dollars to our earnings I mean

02:04:59.099 --> 02:05:02.819
our share of the earnings and they use

02:05:01.139 --> 02:05:04.560
their earnings to buy out

02:05:02.819 --> 02:05:06.899
our partners which

02:05:04.560 --> 02:05:08.940
we're glad to see them sell out too the

02:05:06.899 --> 02:05:12.479
index funds have to sell they bring the

02:05:08.939 --> 02:05:16.019
number of shares down and uh you know

02:05:12.479 --> 02:05:17.819
I'm good we went up slightly

02:05:16.020 --> 02:05:19.560
last year and

02:05:17.819 --> 02:05:21.658
I made a mistake a couple of years ago

02:05:19.560 --> 02:05:24.500
and I sold some shares when I had

02:05:21.658 --> 02:05:29.158
certain

02:05:24.500 --> 02:05:32.099
reasons why ah games were useful to take

02:05:29.158 --> 02:05:34.799
that year from a tax standpoint but

02:05:32.099 --> 02:05:38.699
having heard having heard me say that it

02:05:34.800 --> 02:05:38.699
was a dumb decision and

02:05:39.179 --> 02:05:42.480
uh

02:05:41.219 --> 02:05:44.340
Charlie you've already given your

02:05:42.479 --> 02:05:45.839
comment about it but but we do not have

02:05:44.340 --> 02:05:47.579
35 percent

02:05:45.840 --> 02:05:50.639
of berkshire's portfolio berkshire's

02:05:47.579 --> 02:05:51.359
portfolio is the funds we have to work

02:05:50.639 --> 02:05:53.340
with

02:05:51.359 --> 02:05:55.618
and we want to own good businesses and

02:05:53.340 --> 02:05:57.420
we also want to have plenty of liquidity

02:05:55.618 --> 02:05:58.920
and beyond that

02:05:57.420 --> 02:06:01.039
you know

02:05:58.920 --> 02:06:03.539
the sky's the limiter or

02:06:01.039 --> 02:06:05.340
are mistakes who knows what the bottom

02:06:03.539 --> 02:06:06.899
is

02:06:05.340 --> 02:06:10.159
Charlie do you want to add anything to

02:06:06.899 --> 02:06:12.539
your earlier comment well

02:06:10.158 --> 02:06:15.658
I think

02:06:12.539 --> 02:06:18.300
one of the inane things is taught in

02:06:15.658 --> 02:06:20.638
modern University education

02:06:18.300 --> 02:06:23.579
is it a vast diversification is

02:06:20.639 --> 02:06:25.079
absolutely mandatory and investing in

02:06:23.579 --> 02:06:27.899
Common Stocks

02:06:25.079 --> 02:06:30.359
that is an insane idea

02:06:27.899 --> 02:06:31.738
it's not that easy to have a vast

02:06:30.359 --> 02:06:33.719
plethora of

02:06:31.738 --> 02:06:36.479
good opportunities that are easily

02:06:33.719 --> 02:06:38.939
identified and if you've only got three

02:06:36.479 --> 02:06:40.259
I'd rather read my best ideas instead of

02:06:38.939 --> 02:06:42.598
my worst

02:06:40.260 --> 02:06:45.060
and

02:06:42.599 --> 02:06:46.260
now some people can't tell their best

02:06:45.060 --> 02:06:48.539
ideas

02:06:46.260 --> 02:06:51.659
from their worst in in the act of

02:06:48.539 --> 02:06:53.639
deciding the investment already is good

02:06:51.658 --> 02:06:54.960
they they get the thing gets better than

02:06:53.639 --> 02:06:57.239
it is

02:06:54.960 --> 02:07:00.118
I think we make fewer mistakes like that

02:06:57.238 --> 02:07:01.799
than other people and that is a blessing

02:07:00.118 --> 02:07:04.859
to us

02:07:01.800 --> 02:07:08.820
it we're not so smart but we kind of

02:07:04.859 --> 02:07:11.158
know where the edge of our smartness is

02:07:08.819 --> 02:07:14.158
that is a very important part of

02:07:11.158 --> 02:07:16.439
practical intelligence and a lot of

02:07:14.158 --> 02:07:18.299
people who are geniuses on IQ tests

02:07:16.439 --> 02:07:21.238
think they're a lot smarter than they

02:07:18.300 --> 02:07:22.500
are and what they are is dangerous

02:07:21.238 --> 02:07:25.919
and

02:07:22.500 --> 02:07:27.840
and but but if you know the edge of your

02:07:25.920 --> 02:07:30.599
own ability pretty well

02:07:27.840 --> 02:07:32.880
you should ignore most of the Notions of

02:07:30.599 --> 02:07:35.340
our experts about

02:07:32.880 --> 02:07:38.239
what I call diversification of

02:07:35.340 --> 02:07:38.239
portfolios

02:07:39.000 --> 02:07:42.479
okay yeah

02:07:46.560 --> 02:07:49.580
station nine

02:07:51.599 --> 02:07:56.460
hi Charlotte hi Charlie and Warren thank

02:07:53.819 --> 02:07:57.779
you for this superb shareholder meeting

02:07:56.460 --> 02:07:59.698
celebration

02:07:57.779 --> 02:08:03.300
my name is David Chung from Hong Kong

02:07:59.698 --> 02:08:06.299
and a proud graduate of Chicago Booth

02:08:03.300 --> 02:08:07.860
I'm also here with my two sons Aiden and

02:08:06.300 --> 02:08:10.920
Ashen who's currently studying

02:08:07.859 --> 02:08:12.420
University of Chicago as a freshman and

02:08:10.920 --> 02:08:15.179
sophomore

02:08:12.420 --> 02:08:18.899
this is my second time attending the

02:08:15.179 --> 02:08:22.139
conference last being 2019 four years

02:08:18.899 --> 02:08:24.479
ago which I was only a guest shareholder

02:08:22.139 --> 02:08:26.579
of my friend Andrew so after the

02:08:24.479 --> 02:08:29.399
shareholder meeting I have decided to

02:08:26.579 --> 02:08:33.420
buy into Berkshire Hathaway which has

02:08:29.399 --> 02:08:37.559
given me a great return of 62 since

02:08:33.420 --> 02:08:39.679
2019. so I want to thank you for that

02:08:37.560 --> 02:08:39.679
thank you

02:08:40.738 --> 02:08:45.899
I have also taken one of your advice to

02:08:43.439 --> 02:08:47.339
give my children a share for each of

02:08:45.899 --> 02:08:49.738
their birthdays

02:08:47.340 --> 02:08:52.400
although they won a Berkshire Hathaway

02:08:49.738 --> 02:08:52.399
eight years

02:08:52.639 --> 02:08:57.380
they will do just fine with pre-shares

02:08:58.859 --> 02:09:03.658
my question is

02:09:00.779 --> 02:09:06.899
how do you see the current U.S China

02:09:03.658 --> 02:09:08.399
internet companies valuation and the

02:09:06.899 --> 02:09:10.679
price disparity

02:09:08.399 --> 02:09:13.460
given there has been many uncertainties

02:09:10.679 --> 02:09:16.560
such as geopolitical tensions

02:09:13.460 --> 02:09:19.618
significant course optimizations with

02:09:16.560 --> 02:09:21.599
lean at U.S tech firms while China

02:09:19.618 --> 02:09:24.559
attack has been through all that already

02:09:21.599 --> 02:09:24.560
thank you

02:09:24.658 --> 02:09:29.039
Charlie I wanna

02:09:26.579 --> 02:09:31.219
well

02:09:29.039 --> 02:09:33.779
there's been some tension in the

02:09:31.219 --> 02:09:38.520
economic relationship of

02:09:33.779 --> 02:09:42.420
the United States and China I think that

02:09:38.520 --> 02:09:45.179
that tension has been wrongly created on

02:09:42.420 --> 02:09:46.980
both sides I think we're equally guilty

02:09:45.179 --> 02:09:48.960
of being stupid

02:09:46.979 --> 02:09:50.339
there's one thing we should do let's get

02:09:48.960 --> 02:09:52.560
along with China

02:09:50.340 --> 02:09:53.940
and we should have a lot of free trade

02:09:52.560 --> 02:09:57.619
with China

02:09:53.939 --> 02:09:57.618
in our mutual interest

02:09:58.139 --> 02:10:03.079
and

02:09:59.819 --> 02:10:03.079
I just can't imagine

02:10:04.319 --> 02:10:09.658
it's just so obvious there's so much

02:10:07.380 --> 02:10:10.800
safety and so much creativity that's

02:10:09.658 --> 02:10:13.019
possible

02:10:10.800 --> 02:10:16.679
think what Apple has

02:10:13.020 --> 02:10:20.099
done by engaging in a

02:10:16.679 --> 02:10:21.599
partnership with China as a big supplier

02:10:20.099 --> 02:10:23.880
yeah

02:10:21.599 --> 02:10:26.460
it's been good for apple and good for

02:10:23.880 --> 02:10:29.099
China that's the kind of business we'll

02:10:26.460 --> 02:10:31.560
be doing with China and more of it and

02:10:29.099 --> 02:10:33.599
with everything that increases the

02:10:31.560 --> 02:10:35.119
tension between the two companies is

02:10:33.599 --> 02:10:38.159
stupid stupid

02:10:35.118 --> 02:10:40.920
you know at least stopped on each side

02:10:38.158 --> 02:10:43.738
and each side ought to respond to the

02:10:40.920 --> 02:10:45.840
other side stupidity with reciprocal

02:10:43.738 --> 02:10:48.000
kindness that's my view

02:10:45.840 --> 02:10:49.860
and it creates one enormous problem of

02:10:48.000 --> 02:10:51.840
course which is that you have the two

02:10:49.859 --> 02:10:53.939
superpowers of the world

02:10:51.840 --> 02:10:56.340
and they know they have to

02:10:53.939 --> 02:10:57.839
get along with each other either one can

02:10:56.340 --> 02:11:00.060
destroy the other

02:10:57.840 --> 02:11:01.560
and they're going to be competitive with

02:11:00.060 --> 02:11:04.199
each other

02:11:01.560 --> 02:11:07.080
uh but part of it

02:11:04.198 --> 02:11:09.539
is trying always in the game like that

02:11:07.079 --> 02:11:12.059
is trying to judge

02:11:09.539 --> 02:11:16.560
how far you can push the other guy

02:11:12.060 --> 02:11:19.679
without them reacting wrong and uh

02:11:16.560 --> 02:11:21.539
you know if either side is a bullying

02:11:19.679 --> 02:11:23.639
some ways they can get away with it to

02:11:21.539 --> 02:11:26.158
an extent because the alternative

02:11:23.639 --> 02:11:27.659
is would drive them both into

02:11:26.158 --> 02:11:29.698
destruction

02:11:27.658 --> 02:11:31.979
but if they push it too far

02:11:29.698 --> 02:11:34.439
they increase the probability that

02:11:31.979 --> 02:11:36.779
something really does go wrong so it's a

02:11:34.439 --> 02:11:37.979
you know it's one of those Game Theory

02:11:36.779 --> 02:11:41.340
dilemmas

02:11:37.979 --> 02:11:43.439
but you really need

02:11:41.340 --> 02:11:44.880
the leader

02:11:43.439 --> 02:11:48.598
of

02:11:44.880 --> 02:11:50.940
both countries uh and you need the

02:11:48.599 --> 02:11:52.560
populace to understand at least the

02:11:50.939 --> 02:11:55.500
general

02:11:52.560 --> 02:11:57.380
situation in which these countries are

02:11:55.500 --> 02:11:59.819
going to operate over the next century

02:11:57.380 --> 02:12:02.460
and know that

02:11:59.819 --> 02:12:04.019
that some leader of the promises too

02:12:02.460 --> 02:12:05.639
much

02:12:04.020 --> 02:12:08.340
couldn't get you on a hell of a lot of

02:12:05.639 --> 02:12:10.079
trouble and that like you know that

02:12:08.340 --> 02:12:11.639
you've got one kind of a system that

02:12:10.079 --> 02:12:13.019
gets this leader one way they've got

02:12:11.639 --> 02:12:14.099
another system that gets his leader

02:12:13.020 --> 02:12:16.020
another way

02:12:14.099 --> 02:12:17.639
and

02:12:16.020 --> 02:12:20.099
keeping

02:12:17.639 --> 02:12:22.319
keeping either side from trying to play

02:12:20.099 --> 02:12:25.440
the game too hard

02:12:22.319 --> 02:12:27.899
uh and thinking the other side will

02:12:25.439 --> 02:12:30.839
will go along

02:12:27.899 --> 02:12:33.059
you know it's like playing chicken you

02:12:30.840 --> 02:12:34.800
know and driving toward a cliff so

02:12:33.060 --> 02:12:37.080
it is

02:12:34.800 --> 02:12:39.779
if you've got any diplomacy skills

02:12:37.079 --> 02:12:41.698
persuasive skills or anything like that

02:12:39.779 --> 02:12:43.738
you really want

02:12:41.698 --> 02:12:45.419
people that will

02:12:43.738 --> 02:12:48.238
convince

02:12:45.420 --> 02:12:49.440
the other country as well as his own or

02:12:48.238 --> 02:12:51.718
her own country

02:12:49.439 --> 02:12:53.939
that that

02:12:51.719 --> 02:12:56.158
this is what we're engaged in we've got

02:12:53.939 --> 02:12:58.319
to do it right we won't give away the

02:12:56.158 --> 02:13:02.219
story but we won't try and take the

02:12:58.319 --> 02:13:04.920
whole story either and it it we we're

02:13:02.219 --> 02:13:07.078
just at the beginning of this uh

02:13:04.920 --> 02:13:08.639
unfortunately and I mean we've we've

02:13:07.078 --> 02:13:11.420
learned what the situation was it used

02:13:08.639 --> 02:13:11.420
to be the Soviet

02:13:11.840 --> 02:13:16.679
mutually assured destruction

02:13:14.520 --> 02:13:18.300
was our policy

02:13:16.679 --> 02:13:20.819
then and

02:13:18.300 --> 02:13:22.199
that kept a lot of things from happening

02:13:20.819 --> 02:13:25.019
but it also came

02:13:22.198 --> 02:13:28.039
with a very very very close call

02:13:25.020 --> 02:13:30.000
uh with Cuba and

02:13:28.039 --> 02:13:32.460
these are not

02:13:30.000 --> 02:13:35.039
you know these are different games than

02:13:32.460 --> 02:13:37.319
existed hundreds of years ago you could

02:13:35.039 --> 02:13:39.479
you know Britain might rule the Caesar

02:13:37.319 --> 02:13:41.578
France or Spain but

02:13:39.479 --> 02:13:43.859
but now you're playing with a game that

02:13:41.578 --> 02:13:46.799
you can't really make

02:13:43.859 --> 02:13:48.059
a huge mistake in and I think that

02:13:46.800 --> 02:13:50.279
that

02:13:48.060 --> 02:13:52.500
should be the better that's understood

02:13:50.279 --> 02:13:54.899
in both countries

02:13:52.500 --> 02:13:56.639
the more the leaders feel that their

02:13:54.899 --> 02:13:58.379
citizenry does

02:13:56.639 --> 02:14:01.139
understand that

02:13:58.380 --> 02:14:02.819
the better off we'll be and that

02:14:01.139 --> 02:14:07.199
a lot of

02:14:02.819 --> 02:14:08.340
democr the the

02:14:07.198 --> 02:14:13.019
uh

02:14:08.340 --> 02:14:16.500
demography or the a lot of

02:14:13.020 --> 02:14:19.380
a lot of inflammatory speaking but a lot

02:14:16.500 --> 02:14:21.779
of authoritarian action I mean that it

02:14:19.380 --> 02:14:23.760
all carries its dangers and

02:14:21.779 --> 02:14:25.380
the world was

02:14:23.760 --> 02:14:28.320
stumbled through

02:14:25.380 --> 02:14:29.760
the years post 1945 with a lot of close

02:14:28.319 --> 02:14:31.439
calls

02:14:29.760 --> 02:14:33.420
from the

02:14:31.439 --> 02:14:35.279
in the nuclear Arena

02:14:33.420 --> 02:14:37.500
and now we've gotten

02:14:35.279 --> 02:14:39.599
pandemics and we've gotten

02:14:37.500 --> 02:14:42.060
we've got cyber and a whole bunch of

02:14:39.599 --> 02:14:43.560
other things so we've got more tools of

02:14:42.060 --> 02:14:45.840
Destruction

02:14:43.560 --> 02:14:47.460
the world's ever had

02:14:45.840 --> 02:14:50.520
and

02:14:47.460 --> 02:14:53.399
it it's imperative that

02:14:50.520 --> 02:14:55.920
China and the United States

02:14:53.399 --> 02:14:58.319
both understand what the game is and

02:14:55.920 --> 02:15:00.960
understand that you can't push too hard

02:14:58.319 --> 02:15:03.118
but working but both places are going to

02:15:00.960 --> 02:15:05.460
be competitive and both can prosper

02:15:03.118 --> 02:15:08.098
that's that's what really is

02:15:05.460 --> 02:15:11.520
that's that's the vision

02:15:08.099 --> 02:15:13.860
that is out there that

02:15:11.520 --> 02:15:15.540
China will have a more wonderful country

02:15:13.859 --> 02:15:17.779
the United States will have a more

02:15:15.539 --> 02:15:20.340
wonderful country and and and

02:15:17.779 --> 02:15:22.198
the two are not

02:15:20.340 --> 02:15:23.460
just compatible they're almost

02:15:22.198 --> 02:15:25.618
imperative

02:15:23.460 --> 02:15:27.840
uh in terms of

02:15:25.618 --> 02:15:31.139
uh what's going to happen in the next

02:15:27.840 --> 02:15:32.699
100 years or so and uh

02:15:31.139 --> 02:15:34.980
uh

02:15:32.698 --> 02:15:36.839
I think that

02:15:34.979 --> 02:15:39.118
the leaders of both countries have got

02:15:36.840 --> 02:15:40.860
an important job and

02:15:39.118 --> 02:15:42.839
and having that

02:15:40.859 --> 02:15:46.799
understood

02:15:42.840 --> 02:15:49.199
and not to do inflammatory things

02:15:46.800 --> 02:15:52.440
and we'll see whether

02:15:49.198 --> 02:15:55.738
the lock that has taken us from 1945 to

02:15:52.439 --> 02:15:59.339
present holds out and and I think we can

02:15:55.738 --> 02:16:01.198
affect to some extent that luck

02:15:59.340 --> 02:16:03.060
and without sure a message we will move

02:16:01.198 --> 02:16:06.178
to Becky

02:16:03.060 --> 02:16:08.099
this question comes from Rohit bellany

02:16:06.179 --> 02:16:10.739
Berkshire bought a substantial position

02:16:08.099 --> 02:16:12.719
in Taiwan semiconductor and contrary to

02:16:10.738 --> 02:16:14.759
its normal holding timeline sold almost

02:16:12.719 --> 02:16:17.279
the entire position within a few short

02:16:14.760 --> 02:16:19.199
months while you cited in a CNBC

02:16:17.279 --> 02:16:21.840
interview that geopolitical issues were

02:16:19.198 --> 02:16:23.819
the Catalyst these issues were seemingly

02:16:21.840 --> 02:16:26.279
no different when you acquired that

02:16:23.819 --> 02:16:28.019
stock so what else if anything changed

02:16:26.279 --> 02:16:30.000
in those few months and prompted The

02:16:28.020 --> 02:16:31.800
Firm to offload close to five billion

02:16:30.000 --> 02:16:32.879
dollars worth of Taiwan semiconductor

02:16:31.800 --> 02:16:34.859
shares

02:16:32.879 --> 02:16:36.358
at Taiwan semiconductor is one of the

02:16:34.859 --> 02:16:38.700
best

02:16:36.359 --> 02:16:41.700
managed companies

02:16:38.700 --> 02:16:44.599
and important companies in the world

02:16:41.700 --> 02:16:46.679
and uh

02:16:44.599 --> 02:16:49.139
there is not

02:16:46.679 --> 02:16:52.620
and I think you'll be able to say the

02:16:49.138 --> 02:16:55.938
same thing 5 or 10 or 20 years from now

02:16:52.620 --> 02:16:58.800
I don't like its location and and uh

02:16:55.939 --> 02:17:00.599
reevaluated that I mean I don't think it

02:16:58.799 --> 02:17:03.539
should be any place but Taiwan although

02:17:00.599 --> 02:17:05.819
they will be obviously opening up

02:17:03.540 --> 02:17:07.500
chip capacity in this country and

02:17:05.819 --> 02:17:10.679
actually one of our subsidiaries that we

02:17:07.500 --> 02:17:14.638
got in Allegheny is is uh is

02:17:10.679 --> 02:17:17.638
participating in in in their Arizona

02:17:14.638 --> 02:17:21.000
uh construction activities but

02:17:17.638 --> 02:17:22.819
uh it's

02:17:21.000 --> 02:17:26.819
uh

02:17:22.819 --> 02:17:26.819
it uh

02:17:27.179 --> 02:17:31.620
it's a question of we would rather have

02:17:30.058 --> 02:17:34.799
the same

02:17:31.620 --> 02:17:37.320
yeah kind of company and they're there's

02:17:34.799 --> 02:17:39.659
nobody in the chip company there's no in

02:17:37.319 --> 02:17:43.920
the chip industry that's in their league

02:17:39.659 --> 02:17:46.859
in our bit at least in my view uh

02:17:43.920 --> 02:17:47.819
and the man that was a 91 year old or so

02:17:46.859 --> 02:17:51.059
that

02:17:47.819 --> 02:17:54.179
connected with us and that I think I

02:17:51.058 --> 02:17:57.619
played Bridge with and and uh in

02:17:54.179 --> 02:18:00.540
Albuquerque and The Marvelous people

02:17:57.620 --> 02:18:02.399
marvelous company but

02:18:00.540 --> 02:18:04.320
I'd rather find a

02:18:02.398 --> 02:18:06.478
marvelous people I won't find it in the

02:18:04.319 --> 02:18:07.439
chip industry but marvelous people and

02:18:06.478 --> 02:18:09.539
marvelous

02:18:07.439 --> 02:18:11.819
uh competitive position and everything

02:18:09.540 --> 02:18:13.740
I'd rather find it in the United States

02:18:11.819 --> 02:18:16.019
I feel

02:18:13.739 --> 02:18:18.058
better about the capital that we've got

02:18:16.019 --> 02:18:22.500
deployed

02:18:18.058 --> 02:18:24.420
in Japan than in Taiwan it uh

02:18:22.500 --> 02:18:27.780
I wish it weren't so but I think that's

02:18:24.420 --> 02:18:29.340
the reality and I've reevaluated that uh

02:18:27.780 --> 02:18:32.340
in the light of certain things that were

02:18:29.340 --> 02:18:34.319
going on try well my view is that we're

02:18:32.340 --> 02:18:36.380
in ought to feel comfortable if he wants

02:18:34.319 --> 02:18:36.379
to

02:18:37.138 --> 02:18:41.420
yeah put that in the minutes

02:18:41.638 --> 02:18:45.500
okay station 10.

02:18:47.459 --> 02:18:51.598
first of all thank you for making our

02:18:50.340 --> 02:18:54.478
lives better

02:18:51.599 --> 02:18:56.239
my name is bogumil Baranowski I'm a

02:18:54.478 --> 02:18:57.840
founding partner of

02:18:56.239 --> 02:19:00.539
New York

02:18:57.840 --> 02:19:02.880
we manage multi-generational family

02:19:00.540 --> 02:19:07.080
fortunes hence my question

02:19:02.879 --> 02:19:10.438
Mr Buffett in 1976 in your tribute to

02:19:07.079 --> 02:19:13.500
Benjamin Graham you wrote Walter lippman

02:19:10.439 --> 02:19:15.599
spoke of men who plant trees that other

02:19:13.500 --> 02:19:18.179
men will sit under

02:19:15.599 --> 02:19:20.159
Ben Graham was such a man

02:19:18.179 --> 02:19:22.920
you're both such people

02:19:20.159 --> 02:19:25.739
could you share with us your 100 Year

02:19:22.920 --> 02:19:27.719
vision for Berkshire it's a question to

02:19:25.739 --> 02:19:29.579
you both

02:19:27.718 --> 02:19:32.938
yeah I would like to add one thing about

02:19:29.579 --> 02:19:35.398
Ben Graham uh

02:19:32.939 --> 02:19:37.559
Ben Graham didn't

02:19:35.398 --> 02:19:40.379
all kinds of things

02:19:37.558 --> 02:19:43.679
for me and I never expected one thing in

02:19:40.379 --> 02:19:47.879
return I may just you name it and he did

02:19:43.679 --> 02:19:50.639
it and and there wasn't any hidden you

02:19:47.879 --> 02:19:55.099
know there's a hint I should say of of

02:19:50.639 --> 02:19:55.099
anything he expected in return and uh

02:19:55.379 --> 02:20:02.579
I I checked

02:19:57.659 --> 02:20:05.819
uh well he wrote a book in 1949

02:20:02.579 --> 02:20:07.739
that in a sense said to me in very

02:20:05.819 --> 02:20:09.779
persuasive terms

02:20:07.739 --> 02:20:11.639
that what I'd been

02:20:09.780 --> 02:20:13.920
spending

02:20:11.639 --> 02:20:16.199
on the previous

02:20:13.920 --> 02:20:19.799
eight or nine years

02:20:16.200 --> 02:20:21.479
working at and loving was all wrong

02:20:19.799 --> 02:20:23.699
and

02:20:21.478 --> 02:20:26.760
that book

02:20:23.700 --> 02:20:29.579
has been I check it every now and then

02:20:26.760 --> 02:20:31.620
on Amazon to where it ranks and you know

02:20:29.579 --> 02:20:33.359
Amazon ranks

02:20:31.620 --> 02:20:35.939
hundreds and hundreds and hundreds of

02:20:33.359 --> 02:20:37.380
thousands of books uh

02:20:35.939 --> 02:20:39.180
by sales

02:20:37.379 --> 02:20:40.858
and

02:20:39.180 --> 02:20:43.920
Ben Graham's book

02:20:40.859 --> 02:20:46.680
has been up there like number 300 or 350

02:20:43.920 --> 02:20:47.520
or something like that forever and there

02:20:46.680 --> 02:20:49.520
isn't

02:20:47.520 --> 02:20:51.659
there isn't any book I got I wrote

02:20:49.520 --> 02:20:53.100
harpercollins and note the other day

02:20:51.659 --> 02:20:54.359
because they're bringing out another

02:20:53.100 --> 02:20:56.520
Edition

02:20:54.359 --> 02:20:57.960
and I asked them how many copies have

02:20:56.520 --> 02:20:59.520
been sold and they said the records

02:20:57.959 --> 02:21:05.099
didn't go back

02:20:59.520 --> 02:21:07.319
far enough but they they had 7.3 million

02:21:05.100 --> 02:21:09.120
copies of this little book

02:21:07.318 --> 02:21:12.139
that changed my life

02:21:09.120 --> 02:21:13.800
and uh uh

02:21:12.139 --> 02:21:15.478
continues

02:21:13.799 --> 02:21:18.599
to outsell every investment book

02:21:15.478 --> 02:21:19.978
investment will come along and you know

02:21:18.600 --> 02:21:22.500
their number

02:21:19.978 --> 02:21:23.459
400 or a thousand or something for a

02:21:22.500 --> 02:21:24.898
while and then all of a sudden they're

02:21:23.459 --> 02:21:29.699
numbered 25

02:21:24.898 --> 02:21:30.959
000 or 200 000 and and this this book

02:21:29.700 --> 02:21:33.840
you know

02:21:30.959 --> 02:21:36.119
in how many areas

02:21:33.840 --> 02:21:38.398
can you find any book

02:21:36.120 --> 02:21:40.140
that has had that sustained position you

02:21:38.398 --> 02:21:42.239
can't you go back and look at number one

02:21:40.139 --> 02:21:45.299
in 1950 or number two or number three

02:21:42.239 --> 02:21:47.219
and you're looking in 51 and 52 they

02:21:45.299 --> 02:21:49.279
don't continue I mean they just don't

02:21:47.219 --> 02:21:51.779
continue uh

02:21:49.280 --> 02:21:55.380
cookbooks maybe one or two of them last

02:21:51.780 --> 02:21:57.960
for a while but there is nothing and

02:21:55.379 --> 02:22:00.179
this book lives on and everybody keeps

02:21:57.959 --> 02:22:02.398
bringing out new books and saying a lot

02:22:00.180 --> 02:22:04.079
of other things but they aren't saying

02:22:02.398 --> 02:22:07.139
anything it's as important as what he

02:22:04.079 --> 02:22:10.978
said in 1949 in this relatively thin

02:22:07.139 --> 02:22:10.978
little book so uh

02:22:11.280 --> 02:22:14.579
our vision

02:22:12.959 --> 02:22:16.739
for Berkshire

02:22:14.579 --> 02:22:18.600
is exactly what we said today we we

02:22:16.739 --> 02:22:20.579
wanted to be a company

02:22:18.600 --> 02:22:23.520
that

02:22:20.579 --> 02:22:24.539
is owned by shareholders and behaves in

02:22:23.520 --> 02:22:27.600
a way

02:22:24.540 --> 02:22:28.740
Society is happy that it exists and not

02:22:27.600 --> 02:22:31.200
unhappy

02:22:28.739 --> 02:22:33.659
and we

02:22:31.200 --> 02:22:35.640
will have unlimited capital

02:22:33.659 --> 02:22:38.398
we'll get lots of talent

02:22:35.639 --> 02:22:42.599
and we've got a base

02:22:38.398 --> 02:22:44.879
that can't be beat and there's no reason

02:22:42.600 --> 02:22:47.939
why it can't be perpetuated just like

02:22:44.879 --> 02:22:51.299
Ben's book and maybe be an example to

02:22:47.939 --> 02:22:54.200
other people and and if so we'll be very

02:22:51.299 --> 02:22:54.199
happy Charlie

02:22:54.359 --> 02:22:58.500
yeah one of the really interesting

02:22:56.040 --> 02:23:00.240
things about vinegar he was a really

02:22:58.500 --> 02:23:03.780
gifted teacher

02:23:00.239 --> 02:23:05.219
a very honorable profession

02:23:03.780 --> 02:23:09.239
and

02:23:05.219 --> 02:23:11.699
that is what has lasted however

02:23:09.239 --> 02:23:13.859
an interesting fact that he was sheepish

02:23:11.700 --> 02:23:16.020
about in his old age was

02:23:13.859 --> 02:23:17.818
that more than half of all the

02:23:16.020 --> 02:23:20.100
investment returned that Benny Graham

02:23:17.818 --> 02:23:24.359
made in his whole life came from one

02:23:20.100 --> 02:23:26.880
stock one growth stock Geico

02:23:24.359 --> 02:23:28.920
Birches subsidiary

02:23:26.879 --> 02:23:32.398
and

02:23:28.920 --> 02:23:34.799
he at the time he operated there were a

02:23:32.398 --> 02:23:36.719
lot of sort of lousy companies that were

02:23:34.799 --> 02:23:39.059
too cheap and you can make a little

02:23:36.719 --> 02:23:42.478
money floating from one to another

02:23:39.059 --> 02:23:45.119
but the big money he made was one growth

02:23:42.478 --> 02:23:46.260
stock buying one undervalued great

02:23:45.120 --> 02:23:49.560
company

02:23:46.260 --> 02:23:52.500
uh is a very good thing as Berkshire is

02:23:49.559 --> 02:23:56.879
found out again and again and again

02:23:52.500 --> 02:24:00.600
and and Ben wrote a post trip to the 49

02:23:56.879 --> 02:24:03.000
Edition pointing out exactly

02:24:00.600 --> 02:24:05.760
that fact and acknowledging it but said

02:24:03.000 --> 02:24:07.859
but also took the some good lessons from

02:24:05.760 --> 02:24:11.760
it you know he said that's the way life

02:24:07.859 --> 02:24:14.340
is that that you prepare and you

02:24:11.760 --> 02:24:16.340
you know you don't lose everything along

02:24:14.340 --> 02:24:19.920
the way and then something comes along

02:24:16.340 --> 02:24:22.559
and Geico came along because

02:24:19.920 --> 02:24:25.559
a banker in Fort Worth at a financial

02:24:22.559 --> 02:24:27.000
Leo Davidson uh

02:24:25.559 --> 02:24:29.159
and I think the banker got three

02:24:27.000 --> 02:24:31.739
quarters of it and I don't mean Leo

02:24:29.159 --> 02:24:34.379
Davis and Leo Goodwin uh who founded

02:24:31.739 --> 02:24:36.420
Geico then called government employees

02:24:34.379 --> 02:24:40.438
insurance company and you can figure out

02:24:36.420 --> 02:24:43.680
the acronym and uh

02:24:40.439 --> 02:24:45.898
the deal almost fell apart the deal was

02:24:43.680 --> 02:24:47.398
as I remember from maybe a million and a

02:24:45.898 --> 02:24:49.978
half or something like a million and a

02:24:47.398 --> 02:24:52.920
quarter and it almost fell apart because

02:24:49.978 --> 02:24:54.059
of a difference of twenty five thousand

02:24:52.920 --> 02:24:55.978
dollars

02:24:54.059 --> 02:24:57.239
in the net worth delivered this is a

02:24:55.978 --> 02:24:59.959
business's

02:24:57.239 --> 02:25:02.879
you know we're tens of billions I mean

02:24:59.959 --> 02:25:05.938
but he pointed out the irony in that too

02:25:02.879 --> 02:25:07.739
I mean he was honest about it was

02:25:05.939 --> 02:25:10.079
totally intellectually honest on about

02:25:07.739 --> 02:25:13.318
us about his

02:25:10.079 --> 02:25:17.340
the failings and but also the strengths

02:25:13.318 --> 02:25:19.920
of his approach and he and that to some

02:25:17.340 --> 02:25:22.318
extent you know Charlie and I have seen

02:25:19.920 --> 02:25:24.960
that in our lives I mean the sort of the

02:25:22.318 --> 02:25:28.199
prepared mind the willingness to

02:25:24.959 --> 02:25:29.879
to act when you need to act and the

02:25:28.200 --> 02:25:32.960
willingness to ignore it every salesman

02:25:29.879 --> 02:25:36.059
in the world and and the imperative norm

02:25:32.959 --> 02:25:37.919
and uh

02:25:36.059 --> 02:25:39.719
is one or two things that make the right

02:25:37.920 --> 02:25:43.260
decision if you make the right decision

02:25:39.719 --> 02:25:46.500
on a spouse I mean you've won the game

02:25:43.260 --> 02:25:49.318
they you know and there's enormous

02:25:46.500 --> 02:25:51.600
important decision and you got all the

02:25:49.318 --> 02:25:53.760
time I mean in the world we got more

02:25:51.600 --> 02:25:57.840
time now than used to have when I was a

02:25:53.760 --> 02:26:00.059
kid to make that decision and and uh

02:25:57.840 --> 02:26:02.579
you know

02:26:00.059 --> 02:26:05.459
I don't know whether a third or

02:26:02.579 --> 02:26:07.920
whatever percentage blow that one you

02:26:05.459 --> 02:26:10.619
know it it is it is really interesting

02:26:07.920 --> 02:26:12.299
the thing to do is just

02:26:10.620 --> 02:26:15.120
keep trying to

02:26:12.299 --> 02:26:16.799
trying to think things through not do

02:26:15.120 --> 02:26:18.960
too many stupid things and

02:26:16.799 --> 02:26:22.099
and sooner or later you have a lot of

02:26:18.959 --> 02:26:22.099
Polo so Charlotte would say

02:26:22.200 --> 02:26:26.220
okay Becky

02:26:24.659 --> 02:26:29.219
all right this question comes from

02:26:26.219 --> 02:26:32.719
terrafter a shareholder in Sierra Vista

02:26:29.219 --> 02:26:35.279
Arizona who is asking a question of Ajit

02:26:32.719 --> 02:26:37.799
wants to know about electric vehicles

02:26:35.280 --> 02:26:40.140
getting insurance from the manufacturer

02:26:37.799 --> 02:26:41.159
instead of car insurance companies a

02:26:40.139 --> 02:26:43.500
recent article in the Wall Street

02:26:41.159 --> 02:26:45.000
Journal shows that though EVS are a

02:26:43.500 --> 02:26:47.280
small but growing percentage of sales

02:26:45.000 --> 02:26:49.799
Tesla and GM are offering their own

02:26:47.280 --> 02:26:53.239
Electric Vehicle Insurance what will

02:26:49.799 --> 02:26:53.239
Geico do to combat this

02:26:53.459 --> 02:26:58.799
yeah so Geico is talking to a number of

02:26:56.520 --> 02:27:01.800
original equipment manufacturers as well

02:26:58.799 --> 02:27:04.019
to try and see how best they can work

02:27:01.799 --> 02:27:05.840
with the auto manufacturer and offer

02:27:04.020 --> 02:27:08.520
insurance at the point of sale

02:27:05.840 --> 02:27:10.398
they haven't been very many success

02:27:08.520 --> 02:27:14.340
stories as yet

02:27:10.398 --> 02:27:17.340
so we'll wait and see you know clearly

02:27:14.340 --> 02:27:19.739
it is a very convenient way to sell auto

02:27:17.340 --> 02:27:22.079
insurance at the point of sale

02:27:19.739 --> 02:27:23.879
but there's a there's a fair amount of

02:27:22.079 --> 02:27:26.100
data that needs to be collected on the

02:27:23.879 --> 02:27:29.398
driver not just the car and that makes

02:27:26.100 --> 02:27:31.979
it a little more complicated so we are

02:27:29.398 --> 02:27:34.739
talking to some auto manufacturers

02:27:31.978 --> 02:27:36.599
ourselves we are hopeful to that we will

02:27:34.739 --> 02:27:38.119
strike a deal with some of them before

02:27:36.600 --> 02:27:42.780
not too long

02:27:38.120 --> 02:27:44.700
Tesla has made NGM they both have talked

02:27:42.780 --> 02:27:46.620
a lot in the press in terms of getting

02:27:44.700 --> 02:27:49.380
into their insurance business and in

02:27:46.620 --> 02:27:50.819
fact GM I think has projected they'll

02:27:49.379 --> 02:27:52.799
write three billion dollars a premium

02:27:50.818 --> 02:27:55.619
which you know it's hard to imagine

02:27:52.799 --> 02:27:58.500
where it'll come from but they're all

02:27:55.620 --> 02:28:01.319
hot to trot I think somebody will find

02:27:58.500 --> 02:28:03.898
the secret sauce before not too long and

02:28:01.318 --> 02:28:06.719
we ourselves are in that race

02:28:03.898 --> 02:28:09.599
yeah I would I would point out that

02:28:06.719 --> 02:28:12.478
General Motors Motors insurance

02:28:09.600 --> 02:28:17.100
for decades and I mean this is not a new

02:28:12.478 --> 02:28:17.099
idea and uh

02:28:18.600 --> 02:28:21.260
Uber

02:28:21.299 --> 02:28:24.059
or a lot of insurance for a while they

02:28:22.799 --> 02:28:26.099
laid it off with somebody and that

02:28:24.059 --> 02:28:28.139
company got killed by it but I and I

02:28:26.100 --> 02:28:29.700
don't know the deal between Uber and

02:28:28.139 --> 02:28:31.379
forget the name of the company that took

02:28:29.700 --> 02:28:34.439
it on the Jeep would probably know but

02:28:31.379 --> 02:28:37.398
yeah James River yeah and

02:28:34.439 --> 02:28:37.398
you know it

02:28:37.920 --> 02:28:42.600
there's there's nothing it is not it's

02:28:40.260 --> 02:28:45.300
not a new idea it's not magic in the

02:28:42.600 --> 02:28:48.600
lease I mean it is hard

02:28:45.299 --> 02:28:52.799
to come up with something that is better

02:28:48.600 --> 02:28:54.979
at missing Max in matching risk to

02:28:52.799 --> 02:29:00.239
reward

02:28:54.978 --> 02:29:01.679
I'm sorry risk to price then then uh a

02:29:00.239 --> 02:29:03.299
bunch of very smart people are doing at

02:29:01.680 --> 02:29:05.579
a progressive and a bunch of very smart

02:29:03.299 --> 02:29:09.840
people are doing it uh to a greater

02:29:05.579 --> 02:29:12.600
extent at Geico and I mean it it is

02:29:09.840 --> 02:29:15.478
it's just it was fascinating to me when

02:29:12.600 --> 02:29:16.739
Uber wanted to do it you know and they

02:29:15.478 --> 02:29:19.500
were going to get their head handed to

02:29:16.739 --> 02:29:22.020
them but they laid off a good bit of it

02:29:19.500 --> 02:29:23.340
and very very substantial percentage of

02:29:22.020 --> 02:29:26.939
it was somebody else who got their head

02:29:23.340 --> 02:29:29.219
out in this way and uh you know and but

02:29:26.939 --> 02:29:33.960
it was a story you know Wall Street

02:29:29.219 --> 02:29:37.858
loves it and uh uh I with

02:29:33.959 --> 02:29:40.858
we've got 80 car dealerships that do a

02:29:37.859 --> 02:29:43.020
lot of business uh and

02:29:40.859 --> 02:29:45.659
you know we've got the people buying the

02:29:43.020 --> 02:29:48.239
car and the place and and

02:29:45.659 --> 02:29:50.939
we form an insurance company around the

02:29:48.239 --> 02:29:54.000
group for some reason that rights

02:29:50.939 --> 02:29:56.340
Insurance you know it it's hard to

02:29:54.000 --> 02:29:59.879
improve on the president's system and

02:29:56.340 --> 02:30:02.639
yeah I I have no it wouldn't I wouldn't

02:29:59.879 --> 02:30:06.119
pay a penny I'd pay to avoid it actually

02:30:02.639 --> 02:30:08.879
I mean uh and go ahead yeah the only

02:30:06.120 --> 02:30:10.920
point I'd like to add is the virgins on

02:30:08.879 --> 02:30:13.500
writing auto insurance are four percent

02:30:10.920 --> 02:30:15.180
which is a very small number and once

02:30:13.500 --> 02:30:17.639
there are more people that are trying to

02:30:15.180 --> 02:30:19.920
take a bite of the Apple it just becomes

02:30:17.639 --> 02:30:24.500
very very difficult to keep all the

02:30:19.920 --> 02:30:24.500
mouths fed in a profitable manner

02:30:25.079 --> 02:30:31.079
yeah you can say the there was one big

02:30:27.840 --> 02:30:33.898
new idea in insurance and property and

02:30:31.079 --> 02:30:36.840
car insurance back in 1920 or so when

02:30:33.898 --> 02:30:38.340
State Farm started and State Farm

02:30:36.840 --> 02:30:41.280
uh

02:30:38.340 --> 02:30:44.280
and still has it next to Berkshire it's

02:30:41.280 --> 02:30:46.859
it's our it's the leader in having net

02:30:44.280 --> 02:30:48.359
worth it's a mutual company but some guy

02:30:46.859 --> 02:30:49.380
just figured that there was a cartel

02:30:48.359 --> 02:30:51.960
running

02:30:49.379 --> 02:30:55.079
car insurance and

02:30:51.959 --> 02:30:58.739
P Farmer for murder is the name of the

02:30:55.079 --> 02:31:00.478
book I think in over in Illinois and he

02:30:58.739 --> 02:31:01.978
created a system where he really took 20

02:31:00.478 --> 02:31:05.459
points or so

02:31:01.978 --> 02:31:07.739
out of the cost and surprise surprise

02:31:05.459 --> 02:31:10.079
areas you know

02:31:07.739 --> 02:31:12.299
and nobody's own stock in State Farm

02:31:10.079 --> 02:31:14.100
it's it's it's an insult to capitalism

02:31:12.299 --> 02:31:16.619
actually everything you learn at the

02:31:14.100 --> 02:31:18.960
business school says it shouldn't work

02:31:16.620 --> 02:31:21.180
because nobody owns it nobody's going

02:31:18.959 --> 02:31:23.279
public with it no nothing but it's got

02:31:21.180 --> 02:31:25.559
more net worth it's almost probably

02:31:23.280 --> 02:31:26.880
double leaving Berkshire out of the

02:31:25.559 --> 02:31:29.939
picture it's probably double the next

02:31:26.879 --> 02:31:33.358
guy and and nobody's really improved on

02:31:29.939 --> 02:31:35.460
their system that much uh so it's

02:31:33.359 --> 02:31:38.460
fascinating how

02:31:35.459 --> 02:31:40.079
people don't really look at the essence

02:31:38.459 --> 02:31:43.919
you know you

02:31:40.079 --> 02:31:45.079
these are cases that that should carry a

02:31:43.920 --> 02:31:47.460
message

02:31:45.079 --> 02:31:49.318
but the truth is in Wall Street anything

02:31:47.459 --> 02:31:51.839
can get the test is whether you can sell

02:31:49.318 --> 02:31:54.840
it or not but if if you can sell it

02:31:51.840 --> 02:31:56.760
it'll get sold and a bunch of insurance

02:31:54.840 --> 02:31:58.978
companies came along got a sold and this

02:31:56.760 --> 02:32:01.318
is this can be a story about this stock

02:31:58.978 --> 02:32:02.879
or that stock and it sounds a good one

02:32:01.318 --> 02:32:06.359
they talked about it at Uber for a while

02:32:02.879 --> 02:32:09.858
and it is it is really interesting the

02:32:06.359 --> 02:32:09.859
investing public does not learn much

02:32:10.620 --> 02:32:14.479
okay station 11.

02:32:15.600 --> 02:32:21.479
hi my name is Jeff Miriam I'm from Edina

02:32:18.299 --> 02:32:23.639
Minnesota we've been coming for years

02:32:21.478 --> 02:32:25.619
to make that Professor from the earlier

02:32:23.639 --> 02:32:29.099
question really nervous half our

02:32:25.620 --> 02:32:32.479
family's wealth is in Berkshire Hathaway

02:32:29.100 --> 02:32:32.479
well let's make Charlie nervous

02:32:32.700 --> 02:32:36.479
that question has to do

02:32:34.379 --> 02:32:38.459
control in the miniature there was a

02:32:36.478 --> 02:32:40.438
question earlier about corporate Raider

02:32:38.459 --> 02:32:42.719
I was more wondering about

02:32:40.439 --> 02:32:46.220
who is actually going to own the voting

02:32:42.719 --> 02:32:49.559
control is it going to be institutions

02:32:46.219 --> 02:32:54.000
Calpers BlackRock are they eventually

02:32:49.559 --> 02:32:55.680
going to get their way with the ESG

02:32:54.000 --> 02:32:57.780
check boxes that we're gonna have to

02:32:55.680 --> 02:32:59.700
check and what should we be thinking

02:32:57.780 --> 02:33:02.399
about that well you're thinking very

02:32:59.700 --> 02:33:05.640
well and uh

02:33:02.398 --> 02:33:08.099
the interesting thing is uh the big

02:33:05.639 --> 02:33:11.099
aggregations look like of course they'd

02:33:08.100 --> 02:33:13.500
be in index funds but

02:33:11.100 --> 02:33:15.359
what indirect funds want is they want a

02:33:13.500 --> 02:33:16.859
world in which

02:33:15.359 --> 02:33:19.020
Society

02:33:16.859 --> 02:33:20.399
doesn't get upset with them about the

02:33:19.020 --> 02:33:24.000
fact they've got all the voting power

02:33:20.398 --> 02:33:25.379
and and I was in the last year or two

02:33:24.000 --> 02:33:27.978
uh

02:33:25.379 --> 02:33:33.719
it's looked like a better idea

02:33:27.978 --> 02:33:35.760
for them not quite togethers uh uh

02:33:33.719 --> 02:33:37.879
What was a

02:33:35.760 --> 02:33:40.739
phrase that Charlie use

02:33:37.879 --> 02:33:43.199
but he backed off a lot yeah they backed

02:33:40.739 --> 02:33:45.318
off a lot and and it's it's in their

02:33:43.200 --> 02:33:48.300
interest to back out off an interesting

02:33:45.318 --> 02:33:51.719
interestingly enough

02:33:48.299 --> 02:33:53.639
and looking at money management

02:33:51.719 --> 02:33:56.039
you know the game

02:33:53.639 --> 02:33:59.939
is not performance it's assets under

02:33:56.040 --> 02:34:01.740
management and index funds produce a

02:33:59.939 --> 02:34:04.020
tiny tiny tiny

02:34:01.739 --> 02:34:07.020
uh fee on assets under management

02:34:04.020 --> 02:34:10.140
because it was pioneered by Vanguard and

02:34:07.020 --> 02:34:12.540
uh and it's

02:34:10.139 --> 02:34:14.639
when it became successful it was very

02:34:12.540 --> 02:34:16.620
easy to replicate not so easy but I mean

02:34:14.639 --> 02:34:18.959
it was inevitable to be

02:34:16.620 --> 02:34:21.600
uh copied

02:34:18.959 --> 02:34:25.379
but it came with a management fee of two

02:34:21.600 --> 02:34:28.739
basis points so what people that have

02:34:25.379 --> 02:34:30.839
offered index funds would really like is

02:34:28.739 --> 02:34:33.600
you to buy their other funds

02:34:30.840 --> 02:34:34.439
or level management money in some other

02:34:33.600 --> 02:34:36.479
way

02:34:34.439 --> 02:34:38.639
so that they get a higher

02:34:36.478 --> 02:34:42.000
higher fee on assets under management

02:34:38.639 --> 02:34:43.858
which of course is exactly why the index

02:34:42.000 --> 02:34:48.120
fund was embedded in the first place but

02:34:43.859 --> 02:34:51.359
so it's gotten it's not a loss leader

02:34:48.120 --> 02:34:53.939
but it is a way to pull money in and

02:34:51.359 --> 02:34:55.200
then you hope that people ignore what

02:34:53.939 --> 02:34:56.579
was said by

02:34:55.200 --> 02:34:58.500
by

02:34:56.579 --> 02:35:02.639
what's the name of you know the John

02:34:58.500 --> 02:35:05.159
Bogle Jack Vogel ignore him and

02:35:02.639 --> 02:35:06.840
essentially they give up the I say idea

02:35:05.159 --> 02:35:08.280
that will offer you a fund that does

02:35:06.840 --> 02:35:09.478
this in the Indian will offer you

02:35:08.280 --> 02:35:11.460
another fund that does that and of

02:35:09.478 --> 02:35:13.920
course those management fees are higher

02:35:11.459 --> 02:35:16.799
so they're really counter selling the

02:35:13.920 --> 02:35:19.739
idea that John Bogle came along with but

02:35:16.799 --> 02:35:22.019
in the process they have achieved a lot

02:35:19.739 --> 02:35:24.959
of bolts add

02:35:22.020 --> 02:35:27.239
that was fun for a while but the last

02:35:24.959 --> 02:35:29.759
thing in the world I wanted to do is at

02:35:27.239 --> 02:35:31.199
Washington or the American public decide

02:35:29.760 --> 02:35:33.898
that they're throwing around their

02:35:31.200 --> 02:35:35.700
weight too much so they're tending to

02:35:33.898 --> 02:35:37.978
back off now if you figure out where

02:35:35.700 --> 02:35:41.300
their self-interest is you can judge

02:35:37.978 --> 02:35:41.299
where their behavior is going to go

02:35:41.879 --> 02:35:45.779
Charlie yeah

02:35:43.318 --> 02:35:47.898
you're one of the defend them no you can

02:35:45.780 --> 02:35:51.780
square me what you just said

02:35:47.898 --> 02:35:53.579
you're totally right on everything

02:35:51.780 --> 02:35:57.439
well in that case I won't ask anybody

02:35:53.579 --> 02:35:57.439
else okay Becky

02:35:58.020 --> 02:36:02.460
all right this question comes from almu

02:36:00.420 --> 02:36:05.398
Grinnell

02:36:02.459 --> 02:36:08.099
and it's about

02:36:05.398 --> 02:36:10.260
this is for Warren and Greg since 2019

02:36:08.100 --> 02:36:12.540
Berkshire repurchased huge amounts of

02:36:10.260 --> 02:36:13.800
stock about approximately reducing 10

02:36:12.540 --> 02:36:15.660
percent of the share count and

02:36:13.799 --> 02:36:18.358
increasing the intrinsic value per share

02:36:15.659 --> 02:36:20.579
for the continuing shareholders Greg is

02:36:18.359 --> 02:36:23.100
expected to be the successor of Warren

02:36:20.579 --> 02:36:24.780
as CEO so will he be in charge of the

02:36:23.100 --> 02:36:27.600
main capital allocation decisions

02:36:24.780 --> 02:36:29.100
including future share BuyBacks Greg has

02:36:27.600 --> 02:36:30.600
been key in the development of Berkshire

02:36:29.100 --> 02:36:33.359
Hathaway energy and I think a good

02:36:30.600 --> 02:36:35.280
Capital allocator does he has he been

02:36:33.359 --> 02:36:37.280
involved in the share repurchases that

02:36:35.280 --> 02:36:40.140
have been executed over the past years

02:36:37.280 --> 02:36:41.460
and do you both Warren and Greg work

02:36:40.139 --> 02:36:43.260
together in the estimation of

02:36:41.459 --> 02:36:45.000
berkshire's intrinsic value and the

02:36:43.260 --> 02:36:48.420
share buyback decisions

02:36:45.000 --> 02:36:49.920
well then the answer is that Greg I'm

02:36:48.420 --> 02:36:51.659
going to turn it over to him but the

02:36:49.920 --> 02:36:54.719
answer is Greg understands Capital

02:36:51.659 --> 02:36:56.879
allocation as well as I do and that's

02:36:54.719 --> 02:36:59.159
lucky for us and

02:36:56.879 --> 02:37:01.679
he will make those decisions I think

02:36:59.159 --> 02:37:03.898
very much in the same framework as I

02:37:01.680 --> 02:37:06.120
would make them and we've laid out that

02:37:03.898 --> 02:37:08.099
framework now for 30 years probably or

02:37:06.120 --> 02:37:10.560
something like that people make it way

02:37:08.100 --> 02:37:11.818
more complicated I mean particularly if

02:37:10.559 --> 02:37:13.139
you're working on a doctorate or

02:37:11.818 --> 02:37:15.600
something it's just a great subject to

02:37:13.139 --> 02:37:18.959
have lots of footnotes and you know 50

02:37:15.600 --> 02:37:20.880
pages or 100 pages but it is it's no

02:37:18.959 --> 02:37:22.919
more some it's no more complicated than

02:37:20.879 --> 02:37:25.139
if you and I and Charlie had a business

02:37:22.920 --> 02:37:27.780
and you want to sell

02:37:25.139 --> 02:37:29.579
yours your interest in we could buy it

02:37:27.780 --> 02:37:32.640
for less than we thought it was worth

02:37:29.579 --> 02:37:35.159
and and without misleading you in any

02:37:32.639 --> 02:37:37.739
way about what was going on and we'd buy

02:37:35.159 --> 02:37:38.939
it then but Greg you're on because

02:37:37.739 --> 02:37:41.159
you're going to be doing in the future

02:37:38.939 --> 02:37:43.020
right uh

02:37:41.159 --> 02:37:44.700
yeah well I think Warren you said it

02:37:43.020 --> 02:37:47.760
really well I mean the framework's been

02:37:44.700 --> 02:37:50.040
laid out we know how you approach it and

02:37:47.760 --> 02:37:51.960
with the and and how you and Charlie

02:37:50.040 --> 02:37:54.060
have approached it and and really don't

02:37:51.959 --> 02:37:56.398
see that framework changing when the

02:37:54.059 --> 02:37:58.859
opportunity presents itself we'll want

02:37:56.398 --> 02:38:01.079
to be a an active repurchaser of

02:37:58.859 --> 02:38:03.000
Berkshire shares we think it's a it's a

02:38:01.079 --> 02:38:05.398
great outcome for Berkshire shareholders

02:38:03.000 --> 02:38:08.459
to own a a larger piece of each of our

02:38:05.398 --> 02:38:10.500
operating businesses and our and the uh

02:38:08.459 --> 02:38:12.539
portfolio of the equity companies when

02:38:10.500 --> 02:38:14.760
the when the opportunity presents itself

02:38:12.540 --> 02:38:16.319
it can be the dumbest thing you can do

02:38:14.760 --> 02:38:19.398
it or can be the smartest thing you can

02:38:16.318 --> 02:38:19.398
do and

02:38:19.439 --> 02:38:24.600
to make it more complicated than that

02:38:21.600 --> 02:38:26.460
and start getting into all this but you

02:38:24.600 --> 02:38:29.040
obviously do what the business needs to

02:38:26.459 --> 02:38:31.318
do first then the opportunities are

02:38:29.040 --> 02:38:32.760
there grow your present business buy

02:38:31.318 --> 02:38:36.119
additional business whatever it may be

02:38:32.760 --> 02:38:37.680
and then then you make a decision on

02:38:36.120 --> 02:38:39.600
dividends but that decision becomes

02:38:37.680 --> 02:38:41.460
pretty irrevocable because you don't cut

02:38:39.600 --> 02:38:44.340
dividends and without

02:38:41.459 --> 02:38:46.919
having them major effects

02:38:44.340 --> 02:38:51.000
and your shareholder base and a lot of

02:38:46.920 --> 02:38:52.680
things and uh and then if you've got

02:38:51.000 --> 02:38:54.478
ample capital and you don't see that

02:38:52.680 --> 02:38:55.260
you're going to use it all and your

02:38:54.478 --> 02:38:58.079
stock

02:38:55.260 --> 02:39:00.000
is attractive and it enhances the

02:38:58.079 --> 02:39:02.159
intrinsic value for the remaining

02:39:00.000 --> 02:39:04.079
shareholders it's an old-brainer and if

02:39:02.159 --> 02:39:05.818
it's if it's above the price of

02:39:04.079 --> 02:39:07.260
intrinsic value it's a no-brainer that

02:39:05.818 --> 02:39:09.299
you don't even listen to anybody no

02:39:07.260 --> 02:39:10.620
matter what investment banker comes in

02:39:09.299 --> 02:39:12.299
and tells you here's how to do a

02:39:10.620 --> 02:39:14.220
repurchase program

02:39:12.299 --> 02:39:17.119
okay

02:39:14.219 --> 02:39:17.119
station one

02:39:19.859 --> 02:39:24.720
I'm Tom Nelson a podcast here from North

02:39:22.978 --> 02:39:29.340
Oaks Minnesota

02:39:24.719 --> 02:39:33.659
Charlie in 2022 you used phrases like

02:39:29.340 --> 02:39:37.139
really massively stupid massive kind of

02:39:33.659 --> 02:39:41.100
ignorance and crazy to describe what you

02:39:37.139 --> 02:39:45.299
said was the 30 of Americans hesitant to

02:39:41.100 --> 02:39:48.300
submit themselves to untested mRNA covid

02:39:45.299 --> 02:39:49.739
gene therapy do you stand behind those

02:39:48.299 --> 02:39:52.759
quotes today

02:39:49.739 --> 02:39:52.760
yeah sure

02:40:00.239 --> 02:40:04.520
well we got time for one more than

02:40:01.859 --> 02:40:04.520
before lunch

02:40:05.219 --> 02:40:09.559
Becky

02:40:06.719 --> 02:40:14.599
okay that

02:40:09.559 --> 02:40:14.600
I thought I was out but let's see uh

02:40:15.000 --> 02:40:20.840
how about

02:40:16.559 --> 02:40:20.840
oh uh

02:40:21.079 --> 02:40:25.260
could be how about lunch pretty soon but

02:40:23.520 --> 02:40:28.260
no no okay let's just got one for you

02:40:25.260 --> 02:40:29.340
this one comes from Drew Estes

02:40:28.260 --> 02:40:31.139
um

02:40:29.340 --> 02:40:33.840
this is a question for Warren in your

02:40:31.139 --> 02:40:35.760
1969 letter to Partners you said in any

02:40:33.840 --> 02:40:37.620
company where the founder and chief

02:40:35.760 --> 02:40:39.359
driving force behind the Enterprise is

02:40:37.620 --> 02:40:42.240
still active it's still very difficult

02:40:39.359 --> 02:40:43.859
to evaluate second men the only real way

02:40:42.239 --> 02:40:46.020
to see how someone is going to do when

02:40:43.859 --> 02:40:48.540
when running a company is to let them

02:40:46.020 --> 02:40:50.399
run it this wise statement now applies

02:40:48.540 --> 02:40:52.200
to Berkshire once the second men are

02:40:50.398 --> 02:40:54.000
running Berkshire what would you advise

02:40:52.200 --> 02:40:56.280
owners of Berkshire to watch for

02:40:54.000 --> 02:40:58.200
specifically what actions if taken

02:40:56.280 --> 02:41:00.479
should give us concern well I think I

02:40:58.200 --> 02:41:03.359
would just I would have some comfort in

02:41:00.478 --> 02:41:05.579
the fact that 99 of my net worth is in

02:41:03.359 --> 02:41:08.399
that company so I I probably got a

02:41:05.579 --> 02:41:10.978
stronger interest in it and and perhaps

02:41:08.398 --> 02:41:15.358
100 billion or more of philanthropy will

02:41:10.978 --> 02:41:18.840
be affected by and and uh but

02:41:15.359 --> 02:41:22.559
I would say that I don't have a

02:41:18.840 --> 02:41:23.398
second choice I mean it is it is that

02:41:22.559 --> 02:41:25.799
tough

02:41:23.398 --> 02:41:29.099
Divine but I've also seen

02:41:25.799 --> 02:41:33.978
Greg in action that I feel 100 percent

02:41:29.100 --> 02:41:33.979
comfortable and uh uh

02:41:34.318 --> 02:41:38.818
and like I say I don't know something

02:41:36.959 --> 02:41:40.379
happened to Greg I would tell the

02:41:38.818 --> 02:41:42.659
directors you know they have a problem

02:41:40.379 --> 02:41:44.818
and they won't

02:41:42.659 --> 02:41:46.579
I don't have anybody to name and if they

02:41:44.818 --> 02:41:49.199
put somebody in

02:41:46.579 --> 02:41:51.780
Bergeron automatic pilot

02:41:49.200 --> 02:41:53.640
couldn't work extremely well

02:41:51.780 --> 02:41:55.200
for a long time I mean it doesn't it

02:41:53.639 --> 02:41:58.799
doesn't like the businesses go away or

02:41:55.200 --> 02:42:00.899
any other thing sort uh

02:41:58.799 --> 02:42:03.420
and you can't

02:42:00.898 --> 02:42:05.699
it's hard to judge

02:42:03.420 --> 02:42:08.340
successor management

02:42:05.700 --> 02:42:09.659
in a really good business because if

02:42:08.340 --> 02:42:12.180
they if they don't show up at the office

02:42:09.659 --> 02:42:13.379
it'll keep working for a long time and

02:42:12.180 --> 02:42:15.600
maybe

02:42:13.379 --> 02:42:18.619
maybe that

02:42:15.600 --> 02:42:22.079
like event useful input

02:42:18.620 --> 02:42:24.060
may show itself in five years it may go

02:42:22.079 --> 02:42:27.859
a long long long

02:42:24.059 --> 02:42:27.859
time and uh

02:42:29.159 --> 02:42:34.318
how how are the shareholders

02:42:31.559 --> 02:42:36.779
you know advised by a bunch of

02:42:34.318 --> 02:42:38.818
people that are concerned about whether

02:42:36.780 --> 02:42:40.200
you're meeting earnings projections or

02:42:38.818 --> 02:42:43.079
something telling them whether the

02:42:40.200 --> 02:42:45.479
Management's any good thing you know it

02:42:43.079 --> 02:42:46.799
is very very hard it's very hard I've

02:42:45.478 --> 02:42:49.079
been on the board of

02:42:46.799 --> 02:42:51.000
20 companies is very hard to

02:42:49.079 --> 02:42:55.260
ask me to rank the management of each

02:42:51.000 --> 02:42:57.180
one it's uh it's it's very difficult to

02:42:55.260 --> 02:42:58.739
do because some are just better

02:42:57.180 --> 02:43:00.540
businesses than others some would be

02:42:58.739 --> 02:43:03.119
better off not managed hardly at all

02:43:00.540 --> 02:43:04.439
others really need help but they got a

02:43:03.120 --> 02:43:06.060
lousy business

02:43:04.439 --> 02:43:09.359
and uh

02:43:06.059 --> 02:43:11.219
Tom Murphy told me a long long time ago

02:43:09.359 --> 02:43:13.859
is it the secret of business is to buy a

02:43:11.219 --> 02:43:17.579
good business and it's okay to inherit

02:43:13.859 --> 02:43:19.260
one too and Greg is inheriting a good

02:43:17.579 --> 02:43:22.379
business and I think he'll make it

02:43:19.260 --> 02:43:24.600
better but I don't think it's easy

02:43:22.379 --> 02:43:26.579
to put any one of the next 10 nominees

02:43:24.600 --> 02:43:28.020
in and try and judge three years later

02:43:26.579 --> 02:43:31.139
whether they've done a good job or not

02:43:28.020 --> 02:43:33.120
so it's going to be the that'll be a

02:43:31.139 --> 02:43:34.739
very interesting job for the board

02:43:33.120 --> 02:43:38.579
but it shouldn't listen to Wall Street

02:43:34.739 --> 02:43:41.039
on it it they've got the job if they put

02:43:38.579 --> 02:43:43.079
somebody in there's a surprise we both

02:43:41.040 --> 02:43:45.240
go down on a plane that put somebody in

02:43:43.079 --> 02:43:48.359
they've got a real job in assessing that

02:43:45.239 --> 02:43:50.639
person because it'll depend on how good

02:43:48.359 --> 02:43:53.760
he or she is as a talker it'll depend on

02:43:50.639 --> 02:43:55.619
you know them courting Wall Street to be

02:43:53.760 --> 02:43:59.700
supportive of all kinds of things and

02:43:55.620 --> 02:44:01.380
and uh uh we've got some very good

02:43:59.700 --> 02:44:05.159
people on the board but they would be

02:44:01.379 --> 02:44:07.019
challenged in that position as would I

02:44:05.159 --> 02:44:09.119
where I've been in that position and

02:44:07.020 --> 02:44:11.040
other companies were

02:44:09.120 --> 02:44:13.200
a very great leader

02:44:11.040 --> 02:44:15.359
has left and uh

02:44:13.200 --> 02:44:17.760
on the way back from the funeral you

02:44:15.359 --> 02:44:19.739
know nobody knows what to do exactly

02:44:17.760 --> 02:44:20.700
so with that cheery message we will go

02:44:19.739 --> 02:44:24.680
to lunch

02:44:20.700 --> 02:44:24.680
and we will come back

02:44:24.940 --> 02:44:28.280
[Applause]

02:44:29.818 --> 02:44:34.799
we'll see you at one o'clock thank you

02:44:31.920 --> 02:44:37.739
and and we're still going to try and get

02:44:34.799 --> 02:44:40.199
60 Questions in we've done 25 so far

02:44:37.739 --> 02:44:41.879
20 yeah 25.

02:44:40.200 --> 02:44:43.240
so keep the question short and I'll try

02:44:41.879 --> 02:44:46.369
and keep the answer short thanks

02:44:43.239 --> 02:44:46.369
[Music]