伯克希爾股東大會 · 2023

伯克希爾-哈撒韋2023年年度股東大會——巴菲特與芒格最後一次同臺

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這是芒格與巴菲特最後一次共同登臺,主持一整場年度股東大會。完整的問答環節盡在於此——兩位年逾九旬的老人,談論旗下的生意、犯過的錯誤,以及將把這一切傳承下去的人。

Berkshire Hathaway investing Warren Buffett capital allocation

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excuse me good morning good morning and thanks for coming oh I'm all loves it I love it Charlie loves it we're glad to have you here we're going to make this uh preliminary before the question is very short because we want to get in at least 60 Questions half divided by the audience outside this Arena and a half from you so I would just like to get right to the to the directors and the earnings that have been put up on the year on our webpage this morning but we'll cover those very fast and we'll get to the questions now I when I woke up this morning I realized that we had a competitive broadcast going out somewhere in the UK and they were they were celebrating a King Charles and we've got our own King Charles here today and next to him we have Greg Abel the who's in charge of all the operations except for insurance next and actually great we have uh a man I ran into a 1986 and has made us look good ever since we have the man in charge of insurance Ajit Jane Jaden and now we have our directors here in front and if they would just stand briefly and then I'll go on to the next one and uh they're all here today first of all doing alphabetically there's Howard Buffett there's Suzy Buffett there's Steve Burke kenshawalt Chris Davis Sue Decker Charlotte Guymon Tom Murphy Jr Ron Olson Wally Weiss and Merrill Whitmer that's as good as you can get and there's one other person I would like to mention before we get on to the earnings that were put on the uh in the press release this morning and uh that's uh well let's see who we have there we've got this is hard to believe can you imagine a name Melissa Shapiro and she was uh Melissa Shapiro until she married another Shapiro and she put this whole thing together with no help from me no help from Charlie and a lot of help from the people of the other room Melissa yeah it's very easy if you can remember her second name you can remember her third name so Melissa shabiro Shapiro and with that I would like to next move on to the earnings in a couple small slides that explain what we're all about and then we're going to get to the Q a and uh the slide is up behind me yeah there it is we reported in the first quarter operating earnings a little over 8 billion and when we talk about operating earnings we're basically referring to the earnings of Berkshire Hathaway as generally well as required under gaap excluding however capital gains both realized and unrealized there's a few other very minor items but basically we expect to make capital gains over time why would we own the stocks otherwise uh it doesn't always work out but overall it works out pretty well over time but in any day any quarter any year even occasionally over a five-year period uh the stock prices move around capriciously now we own a lot of other businesses we consider those stocks businesses we own a lot of other businesses where they get them Consolidated and they don't move around in value now if we had a little bit of Burlington stock outstanding if we had a little bit of the energy stock trading those stocks would move around a lot but the businesses are what count so the operating earnings as you'll see in the first quarter came out at about 8 billion and uh I would say that in the general economy the feedback we get is that uh I would say perhaps the majority of our businesses will actually report lower earnings this year than last year the in various degrees in the last six months or so at various times uh the businesses have left the incredible period which is about as extraordinary as I've seen in business since World War II uh where the government would pour out a lot of money to people who couldn't get Goods it was more extreme in World War II but this was extreme this time and it was just a question of getting Goods to deliver and people bought and they didn't wait for sales and if you couldn't sell them one thing they would put another thing in their backlog it was an extraordinary period and that period uh has ended it hasn't ended with as you know it isn't that employment's fault aren't off a cliff or anything in the least but uh it is a different climate than it was six months ago and a number of our managers uh were surprised some of them had too much inventory on order and then all of a sudden it got delivered and people weren't in the same frame of mind as earlier and now we'll start having sales at places where we didn't need to have sales before but uh despite the fact that this year I think in general will be slower than last year we actually are situated so that I would expect and believe me when I say accept expect it's nothing is sure nothing sure tomorrow nothing sure next year and nothing is ever sure either in markets or in business forecasts or anything else and we don't pay much attention to markets or forecasts unless the Marcus epineph or something interesting to do but nevertheless we are positioned in two respects as you'll see from this uh first report our investment income is going to be a lot larger uh this year than last year and that's that's built in I mean we have as you'll see in a minute we've had 125 billion or so in very short term investments and believe it or not uh not that long ago we were getting four basis points which is next to nothing on that 125 billion which means we were getting 50 million a year and now the same money the other just day or day before yesterday we actually bought because of someone funny twists in the market because of doubts about the deficit ceiling of the debt ceiling uh we bought three billion of bills of the that's 5.9 it was a 5.92 bond equivalent yield so we will have what produced us not that long ago on a 12-month basis was producing 50 million here producing something in the area of 5 billion here so we're in a position where the investment income is essentially well it is certain to increase quite a bit and insurance underwriting is not it uh it does not correlate uh with business activity it depends on things like hurricanes and earthquakes and other events so on a prospective basis on a probability basis we're likely to have a better year this year in Insurance underwriting than we had last year uh it just isn't affected by what you might call the business cycle or uh what applies to generally an industry detailing you name it so I would expect and one massive EarthQuaker one hurricane that came into just the wrong place I would can affect that prediction but on a probable listing basis our insurance looks better this year so if you get two of those two of the elements there of our main elements of earnings that look like they will swing in our Direction I would expect but I can't promise that our operating earnings will be uh greater than last year and if we'll move to the second slide uh I give you those operating earnings figures just to give you a overview of what has happened uh since the pandemic started and off of the yearbook before as a base and we retain all our earnings as you know so if we're retaining 30 or 35 billion or whatever but maybe a year you should expect more operating earnings over time I mean this number should be significantly higher five or 10 or 15 years from now because we have the advantage of retaining earnings and that's what got us to these figures because they were essentially nothing when we started and they got there by retaining earnings and we'll keep retaining earnings so it's no great Triumph if these numbers move up and what we hope is that they move up at a reasonable rate historically they moved up at an unreasonable rate sometimes but we were working with a much smaller Sons then and that can't be repeated with our present Capital base because I note there I believe it's on this slide let's take a look uh now that'll be see it's on the while on the on the next on the next place paid and much smoother the next slide we showed that we had on March 31st now 500 and was it 504 billion of Gap net worth now what might surprise you is that there's no other company in the United States no other company that has a number that is that large now that isn't because we've got the most valuable company in the United States other companies have used their money to repurchase shares that they could have accumulated 504 billion in gap but basically we have more under gab accounting now than any other company in the US and of course if you measure return on Equity that becomes a very big number to increase at a rapid rate but we hope to do so uh not a rapid rate additional rate um and right below that you see something called float and float is money that uh is left in our hands uh somewhat Akin but very importantly different than a bank deposit but it you have to pay interest to get a bank deposit you have to pay more interests these days and you have to run a bank and do a lot of things and basically this is money that represents unpaid losses at this time you get paid in advance in insurance so what shows up as a net liability on our balance sheet is gives us funds uh do exercise with an amount of discretion that no other insurance company that I know of in the world enjoys just because we have so much net worth and our float now comes to 165 billion and the man sitting on the far left is responsible for moving that number up from a pittance in 1986 to this incredible figure which in most years practically all years hasn't cost us anything so it's like having a bank with no employees no interest and no ability to withdraw the money in a hurry that we have working for us and it's a very valuable asset that uh that shows up as a liability and uh Ajit is responsible for building up this treasure uh which has done been done by out competing insurance companies all over the world and then now a number of our insurance companies in turn are run by talented managers who contributed one way or another uh start with Geico the beginning of my career and the uh that float if you think about it just think of a balance sheet you've got liabilities here and you got assets over here and the liability side finances the asset side is very simple and stockholders Equity finances it long-term debt finances and so on but stockholders Equity is very expensive in a real sense long-term debt has been cheap for a while but it can get expensive and it can also become do eventually and it and it may not be available uh but float is another item that shows it's a liability but hasn't cost us anything and it can't disappear in a hurry and it finances the asset side in the same way a stockholders equity and nobody else thinks of it much that way but we've always thought of it that way and it's built up over time so uh a show at the bottom what's happened with cash and treasury bills through March 31st and I will tell you that the in the month of April we probably added about seven billion dollars to that factor now part of that is because we didn't buy as much stock because that reduces cash and treasury bills we bought about 400 million dollars worth of stock in the month of April that's that's a minus ah in terms of cash available and uh we however sold net some stock which produced maybe 4 billion and of course we had operating earnings probably two and a half billion or something in that area and my guess is we probably increased our cash and treasury bills uh six and seven billion in the month and uh I just want to give you a feel for other cash flows at Berkshire and then if we move to the final I think it's the final one next to the last one uh no I think it is let's see is the fourth yeah is this we should have the one up their class a equivalent shares outstanding and uh you'll notice that every year the number of our shares go down so if we own more businesses and the businesses make more money your share as Cheryl as owners a Berkshire increases every year without you laying out any money now you're laying out the alternative which you could receive in dividends but the reason we've gotten to where we are is because we kept the money we did pay a dividend in nineteen sixty seven ten cents to share it was a terrible mistake and uh I always tell people that I'd love for the men's room and the directors voted while he's gone but that isn't true I was there I confessed they uh but we very invested and has produced the 500 billion plus of shareholders equity in the 30 billion plus of operating earnings and we'll continue to follow that policy because it makes a great deal of sense and uh with that I think we've taken care of the preliminaries you can study that the 10q is on the uh on the web page and if you have a week or two vacation you could spend it reading the 10-q and but that is the essence of Berkshire and with that I will start with Becky quick and we will alternate between Becky and the audience and her questions have come in from all over the country and I believe you identified the center and go to it Becky thanks Warren the first question comes in from Randy Jeffs in Irvine California and his question is if Silicon Valley Bank's deposit had not been fully covered what do you think the economic consequences would have been to the nation well I've just simply say it would have been catastrophic and that's why they were covered uh and even though the FDIC limiters 250 000 that's the way the statute reads but that is not the way the us is going to behave uh any more than they're going to let the debt ceiling uh cause the world to go into turmoil and they uh well they're just I can't imagine anybody in the administration in the Congress and the Federal Reserve whatever it may have been FDIC I can't imagine anybody's saying ah I'd like to be the one on television tomorrow and explain the American public why we're keeping uh only 250 000 insured and we're gonna start around every Bank in the country and disrupt the world financial system uh so uh I think it was inevitable Charlie do you have any no I have nothing to add okay well uh incidentally I should mention this now ajeed and Greg will be here in the morning session which ends at noon and so uh if you've got questions to direct to them the time to do it is in the first half of the show and then after lunch it'll uh just Charlie and I will be back okay area one hi nirav Patel Haverhill Massachusetts Mr Buffett Mr Monger it seems like you found the Sweet Spot between being too conservative and too aggressive as investors do you ever make bad investment decisions because of your emotions and what do you do to try to keep that from happening well we make bad investment decisions uh plenty of times I make more than Charlie because I'm I like to think it's because I make more decisions but probably more bad I wish is worse but I can't recall anytime in the history of Berkshire that we made an emotional decision that I know the movie had Jamie Lee in there but that was for Laughs I mean Jamie Lee she's good but she's not good enough to get me or Charlie to make an emotional decision Charlie I'm sure you have something to add on that well it's a different movie than it is shown in the most corporate meetings emotional decision no that's in business we're talking about yeah no you don't want to be a no emotion person in all of your life but you definitely want to be a no more no emotion person in making an investment or business decision that the uh you can argue that uh with it we probably I would say that we 've made an emotional decision perhaps and when a manager has been with us for some period and we haven't we've we've ignored the fact that perhaps they weren't quite what they were earlier but our businesses are so good that they've run better sometimes uh when uh you know I've talked about Westco for example the wonderful Louisville it ran on it ran on automatic pilot for a while but I don't think we suffered by it but you're gonna argue that if Charlie and I hadn't liked Louie as much as we did we might have spotted a little bit early but I don't think it made any difference in the results would you would you agree with that Charlie yeah you gotta be totally with it and I'm glad we behaved the way we did at Wesco by the way we bought the thing for a few tens of millions and it became worth two or three billion yeah that wasn't common in the Savings and Loan businesses you may have noticed and they don't want everybody went crazy in that industry and we had a wonderful guy in Louis and we didn't go crazy yeah we didn't go crazy dumb okay Becky this question comes from Ben Knoll in Minneapolis he says he's a Berkshire shareholder of three decades and he's attended many Berkshire meetings he's here again this year and this is addressed to Ajit and Greg he says last year I asked you about how Geico and BNSF appeared to lose ground to their leading competitors Geico on telematics and BNSF on Precision scheduled railroading a g you responded by saying how you expected Geico to make progress in a year or two Greg you spoke about your pride in BNSF but you didn't directly address the threat of precision scheduled railroading will each of you please provide perspective on these competitive challenges and our company's strategies to address them uh let me in terms of Geico and telematics let me make the observation that Geico has certainly taken the ball by the horns and has made rapid strides in terms of trying to bridge the gap uh in terms of telematics and its competitors they have now reached a point where on all new business close to 90 percent is has a telematics input to the pricing decision unfortunately less than half of that is being taken up by the policyholders the other point I want to make is even though we have made improvements in terms of Bridging the Gap on telematics we still haven't started to realize the true benefit and the real culprit or the bottleneck is technology glycos technology needs a lot more work than I thought it did it has more than 500 actually more than 600 Legacy systems that don't really talk to each other and we're trying to compress them to no more than 15 16 systems that all talk to each other that's a Monumental Challenge and because of that even though we have made improvements in telematics we still have a long way to go because of Technology because of that and because of the whole issue more broadly in terms of matching rate to risk Geico is still work in progress I don't know if you any of you had a chance to look at the first quarter results but Geico has had a very good first quarter coming in at a combined ratio of 93 and change which means a margin of 6 and change even though that's very good it's not something we can take to the bank because they're two unusual items that contributed to it firstly we've had what is called prior year Reserve releases we've reduced reserves for the previous years and that contributed to it and secondly every year the first quarter tends to be a seasonally good quota for auto insurance writers so if you just for those two factors my guess is the end of the year Geico will end up with a combined ratio just south of 100 as opposed to the Target they're shooting for 96. I hope they reach the target of 96 by the end of next year and but instead of getting too excited about it I think it's important to realize that even if we reach 96 it will come at the expense of having lost policyholders there is a trade-off between profitability and growth and clearly we have we're going to emphasize profitability and not growth and that will come at the expense of policyholder so it will not be until two years from now that we'll be back on track fighting the battles on both the profitability and the growth front right yep moving to BNSF I'll start again by expressing great pride in the BNSF team we have an exceptional group of led by Katie and her managers that show up every day to do great work on the railroad at the same time they would be the first to acknowledge there's more to be done there uh the specific reference to Precision scheduled railroading uh the other large railroad Class A uh railroads in the in the U.S follow that and including the two in Canada we're well aware of what they're doing and obviously pay close attention to their operating Matrix and our team strives every day to be more efficient obviously I would say we balance it with the needs of our customers if I look back to pre-2022 so we look at the three-year period of 2019 2020 2021 the BNSF team made significant progress on their efficiencies and delivering overall value back to the shareholders and to their customers and at the same time maintaining a very safe railroad for our employees so we're making excellent progress that didn't stop last year they made great progress again the reality in 2022 as we did go through a period of time where we had to call it reset the railroad we came out of the pandemic there were the supply challenges we had certain other issue labor issues and other things going on at the port and the reality is our team prioritized getting the railroad back in place for the long term not a short-term focus on hitting certain operating metrics in 2022 we're well aware of where we were relative to those metrics but the real Focus was to get the railroad reset in a in a safe manner such that we could deliver long-term value and long-term service to our customers and that's really what we'll continue to see with that team they'll be continual progress there'll be years where it's not as quickly or even we go backwards but over the long term we'll be very uh we'll see exceptional results from that team and couldn't be more proud that we have that asset thank you I wouldn't I would just well he deserves but both of them deserve Applause uh the I would like to add one thing the uh and Geico .com's uh was ajith's Choice my choice go back to guy at Geico to work on the problem of matching right to risk which is what insurance is all about and uh he arrived with exquisite timing right before the pandemic broke out and all kinds of things changed but Todd is doing a wonderful job at Geico and uh and he works closely uh with the Jeep because he saw his home and all Mulligan comes back here and we get together on the weekend sometimes too so uh that's been a remarkable com accomplishment under difficult circumstances and he's not all the way home but he's a he's made a very big change uh in multiple ways Geico and then one other thing I would like to mention there have been a lot of public companies created in the last decade thereabouts in insurance and uh there's none of them that we would like to own and they always started out in their perspective saying this is a tech company not an insurance company of course we're of course they're in a tech company with everybody's whether they're in insurance or a lot of other places are using the facility but you still have to properly match rate to risk and uh that they invariably have reported the huge losses they've eaten up capital but there's been one company that nobody has generally heard of there's only been one that I know of company started in the last 10 years that has been a overwhelming success and that's a company that Ajit and four people who join with them set to develop a new business it's called Berkshire Hathaway specialty it now has the what's the float a Jeep coming up to 12 billion yeah we've we've built more slope than probably all these companies combined we've now it's cost us essentially nothing in terms of an underwriting loss the four people have turned in I don't know 1500 around the world we took on the whole industry and we brought some unique talent and the four people that came and now have like you said 1500 or so worldwide and we brought capital and we brought okay capabilities the really only Berkshire could Supply so it was the it was the combination of brains and talent and energy and money and no one has really successfully entered this space plenty of people in the space who didn't like us coming and we did it without it costing us a dime of Entry and it's been unmatched by any of the public company companies that went public and people have seen us do it but they can't duplicate it and that's what Vegeta's created and Peter Eastwood has led this group Berkshire Hathaway especially and uh it's just remarkable so anyway with that let's go on yeah we'll give him a hand for that okay let's go to section two hi Charlie I'm Lorenz I'm Karen here your priorities are right yes I have a questions on AI and Robotics here's my questions as Ai and Robotics continue to advance what do you believe will be the positive and the negative impact of this technology on both the stocks markets and society as a whole and are there any specific Industrials and companies that you believe will be most impacted Karen I thank you for asking Charlie that question well if you went into byd's factories in China you would see robotics going in the unbelievable rate so we're gonna see a lot more robotics in the world I am personally skeptical of some of the hype that has gone into artificial intelligence I think old-fashioned intelligence works pretty well thank you there won't be anything in AI that replaces the gene the state that unqualifiedly it can do amazing things uh you know Bill Gates brought me out of out the latest maybe not the latest version but one he thought maybe I could handle which that has to be careful with me in terms of leading me too fast uh and it did these remarkable things uh it didn't but it couldn't tell jokes well Bill told me that ahead of time and it prepared me and it just isn't there but you know with things like checking all the legal opinions on you know since the beginning of time and everything and eliminating all the sided I mean it can do all kinds of things and when something can do all kinds of things I get a little bit worried and because I know we won't be able to uninvent it and uh you know we did invent uh for very good reason the atom bomb in World War II and it was you know it was enormously important that we did so but is it good for the next 200 years of the world that the ability to do so has been Unleashed we didn't have a choice but uh when you start something well Einstein said after this has changed everything in the world except how men think and uh I would say the same thing May not the same thing I don't mean that but I mean they with AI uh it can change everything in the world except how men think and behave and that's that's a big step to take it's a good question and it's the best answer we can give Becky this question comes from Tom Seymour he says the first sentence of a recent Financial Times article read Charlie Munger has warned of a brewing storm in the U.S commercial property Market with American Banks full of what he said were bad loans as property prices fall please elaborate on what's going on in commercial real estate how bad will the losses be and what sectors or geographies look particularly bad I'll just add an addendum from another viewer who wrote in and wanted to know if Berkshire would be more active in commercial real estate as a result okay well berkshire's never been very important very active in commercial real estate it works better for taxable investors than it does for corporations tax the way Berkshire is so I don't anticipate huge effects on Berkshire but I do think that the hollowing out of the downtowns in the United States and elsewhere in the world is going to be quite significant and quite unpleasant I think the country will get through it all right but as they say it will awfully it will often involve a different set of owners yeah in the buildings the buildings don't go away but the owners do well but most people like to buy with non-recourse and real estate and one time I asked Charlie there was some real estate guy we were talking to him and you know how do they decide how much they can a building like this is worth and it's the answer is it's whatever they can borrow without signing their name and if you look at real estate generally you'll understand what the phenomena is happening if you do if you remind yourself that's the attitude of most people that have uh become big in the real estate business and uh and it does mean and that the Wonders are the ones that got the property and of course they don't want the property usually so then the real estate operator comes on negotiating with them and the banks tend to you know extend and pretend and there's all kinds of activities that arrive out of out of commercial real estate development which occurs on a big scale but it all has consequences and I think we're we're about well we are starting to see the consequences of people who could borrow it two and a half percent find out it doesn't work at current rates and they hand it back to somebody that gave them all the money they needed to build it done Charlie's had more experience than really Charlie ought to start in real estate though I mean Charlie yes it's difficult I like what we do better well as Charlie once said to me when I was leaving his house a few months ago I was visiting him we talked for a couple of hours and I said to Charlie as I left I just it wasn't anybody else in the house I said except one daughter and I said uh Charlie yellow I'll just keep doing what we've been doing and Charlie said without looking up or pausing a second he said that's all you know how to do Warren yeah he was right too ah station three is it hi uh my name is salazi I'm from Santa Clara California and my question is to Charlie and Warren given the rise of disruptive technologies that can improve productivity significantly and AI being one of them how do you envision the future of value investing in this new era and what adaptations or new principles do you think investors should adopt and any recommendations for investors to remain successful in this rapid changing landscape thank you to take that one I think value investors are going to have a harder time now that there's so many of them competing first a diminished bunch of opportunities so my advice to Value investors is to get used to making less and Charlie was been telling me the same thing the whole time we've known each other we get along wonderfully because we are making less yeah well but that's because that mostly I think is because it's larger we were younger we never thought we could manage 508 billion no one or five yeah but I would argue that uh that uh there's gonna be plenty of opportunities and part of the reason they're going to be plenty of opportunities the tech doesn't make any difference or any of that I mean if you look at how the world changed in them in the years since 1942 when I started and say well how does a kid that doesn't know anything about airplanes it doesn't know anything about the androgens and cars and doesn't know anything about them electricity and all that but that really isn't the that's not the world changing doesn't or new things coming along don't take away the opportunities what gives you opportunities is other people doing dumb things and uh is that and I would say that well the 58 years we've been running Berkshire I would say there's been a great increase uh in the number of people doing dumb things and they do big dumb things and the reason they do it to some extent is because they can get money from other people so much easier than when we started so you could start 10 or 15 dumb insurance companies in the last 10 years and you could become rich uh if you were a Droid at it whether the business succeeded it or not and the underwriters got paid and the lawyers got paid and that creates if that's not on a large scale which it couldn't be done what 58 years ago you couldn't get the money to do some of the dumb things that we wanted to do fortunately uh and uh so I know I think that investing has disappeared so much from this huge capitalistic Market that anybody can play in but the big money is in selling other people ideas that isn't outperforming in outperforming and I think that I think if you don't run too much money which we do but if you're running small amounts of money I think I think the opportunities will be greater but then Charlie and I have always differed on this subject he likes to tell me how gloomy the world is and I like to tell them we'll find something and so far we've both been kind of right on that or not there is so much money now in the hands of so many smart people all trying to outsmart one another and not promote one another getting more money out of other people and it's a radically different world from the world we started in I suppose it will have its opportunities but it's also going to have some unpleasant episodes but they're trying to outsmart each other in arenas you don't have to play I mean the if you look at that Government Bond Market I feel the treasury ball Market I mean you've got this one bill that's out of line with the others when we were over three billion of us the other day and but those are people the world is overwhelmingly short-term focused and if you go to an investor relations call they're all trying to figure out how to fill those other sheet to show the earnings for the year and the management is interested in feeding them expectations that will slightly be beaten I mean that is a world that's made to order for anybody that's trying to think about what you do that should work over five or ten or Twenty Years and uh I just think that I would love to be born today and go out with not too much money and hopefully turn it into a lot of money but and Charlie would too actually just like he would find something to do I will just guarantee you uh and it wouldn't be exactly the same as before but he would have a big pile I would not like the thrill of losing my big pile into a small pie but we like my big piles is the Way It Is Well I like we agree on that incidentally okay we do you're one of the most extreme lovers of the big pile Becky this question is for both Warren and a g it comes from Jason ploner in Livingston New Jersey he says in 2016 you entered it into a very unique transaction with AIG where you assumed up to 20 billion dollars of liabilities in exchange for about 10 billion dollars up front can you please provide us with an update on this transaction in light of the increase in interest rates and then in Tokyo just a few weeks ago you talked about the risks of banks with assets that were susceptible to Rising interest rates any insight as to how Berkshire liabilities are susceptible to duration would be appreciated is that direction to Vegeta or me or what both okay let me introduce my one thing and well but Ajit is the key to this he's the one to put the deal together but we got handed 10 billion we'll say uh and but we weren't restricted to putting that into bonds uh so what the exact interest rate interest rates affect us to some degree maybe in terms of the terms uh of the deal we did with AIG or anybody we would do a similar deal with like that but we don't have we don't have to put it in matching bonds or anything of the sort it goes into a general pool of assets which we manage in the assets you know then well the liquid assets now are 130 billion plus and that but it goes in so it you know it is not set aside in some little compartment like people like to think uh now any other insurance no other insurance company could do it but they can't think that way uh they aren't even used to thinking that way but they can't think that way because they don't have our balance sheet we account for 26 or something like that of the net worth of all property casualty companies in the United States uh so uh so far uh the payments that we have had to make have run modestly and Ajit will correct me on this if I'm wrong because he paid a lot of attention over the amount we have had to pay has runs slightly below the amount we anticipated having to pay in terms of our share of the losses uh but it served aig's purposes it came to us with where we're in a unique position there's nobody else that was able to write that just like when we took on the Lloyds I mean Lloyd's said there was no choice other than Berkshire Hathaway when they essentially resuscitated uh their Market by laying off a lot of liabilities on Berkshire Hathaway so um we won't see those deals very often if they're for 500 million or something like that somebody else will go in there and offer more money and everybody's looking for money in Wall Street but if they start talking with the deal like the AIG deal there isn't any other stop no uh correct me on all my numbers there Jade no um one way to look at how the deal is performing since we did the deal is at the point we in time when we did the deal we had made certain projections of how much we will pay out each year and what we do is Monitor what the actual payments are since the Inception of the deal and how does that compare with what we expect it to pay out as Warren mentioned these two numbers are very close to each other more specifically the actual payouts are 96 percent of what we had projected to pay out at this point in time which is good but not great we are still ahead of the curve if we do end up paying out less than what we projected Not only would we have borrowed money at a very attractive rate meaning less than four percent significantly less than four percent in addition to that we would have made a fee which in 1990 which in 2015 dollars would be a million dollars so if you would have borrowed money at less than four percent and we would have made a million dollar fee which is slightly more than what we were expecting to do so net we're very happy with the deal we're happy we did it uh but the game is not over the taught liabilities they're coming down the pike every second day so I'm cautiously optimistic that the deal will work out better than what we expected it to work out well the really interesting thing is that in within Berkshire the Casualty Insurance companies have four times as much stockholder Capital between behind each dollar of Premium volume four times normal and of course we see the big deals but would you trust if you had a big liability you wanted to dump on somebody and we have 25 or billion or more coming in from things other than insurance uncorrelated to Insurance every year with no obligations we don't pay dividends if you paid evidence and you know and you cut your dividend try going around trying to write insurance the next day I mean it's a business where the people are counting on you to pay and when we take that 10 billion we don't agree to put it in five-year bonds and 10-year bonds we don't even think that way and the people who do business with us know that they have somebody like nobody else on those and that's going to be able to pay 10 billion you know if no matter what happens to the economy so it's not only the presence of enormous strength in the insurance companies it's the fact we got all these earnings that essentially come in every month and we don't have we don't have a lot of debt I mean we have debt at the railroad and the energy level but in terms of the rest of the operation uh and we don't guarantee that debt but it's probably what uh and it's there just isn't another Berkshire and uh and the Jeep recognizes that when he's negotiating so does the other party if sums are big enough there's all kinds of people that love to get 500 million or 300 million and they'll and they can they may think in terms of lending it out because that's what their insurance companies can do at a somewhat higher rate but that is not a game we play in and we don't have any interest in playing in them okay station four hello I'm Marvin Blum an estate planning lawyer from Fort Worth Texas home to many of your companies in fact Warren I met you at the memorial for our beloved Paul Andrews who was manager of TTI I'd like to get your thoughts on a widespread problem in the world of Estate Planning and that's the failure of most parents to prepare the Next Generation for the inheritance coming their way in particular if the estate includes a family business most parents fail to do business succession planning to plan for who will run the business on the day when not if the founder is no longer there to run it the kids aren't prepared unlike uh King Charles the other King Charles not King Charlie Munger who has been preparing for his job as king of England now for more than 70 years I sometimes describe the situation like this picture a football game at one end of the field is a quarterback he has great skills he throws a beautiful pass to the other end of the field and at the other end of the field are the receivers they've never been to a practice they don't know the rules of the game they don't know how to work together as a team they're Clueless so the quarterback is the patriarch and The Matriarch the football is the inheritance or the family business and the receivers are the kids that they're going to catch the football and go score a touchdown probably only around 10 percent I've got the picture on yeah just give me no the I probably observed as many just because of my age and to some extent because of things like the giving Pleasures I probably observed as many particularly wealthy families the problems and they all are they get very particular uh to the family and uh and uh in my family I do not sign a will until my three children have read it understand it and made suggestions now my children are in their 60s and that would not have been a great success if I'd done the same thing as their 20s it depends on the Family it depends on how the kids feel about each other there's all kinds of things depends on the kind of business you have so there's a there's a thousand variables but I do think that it's if the if the children are growing and when the will is read to them it's the first they've heard about what the deceased thought about things the burns have made a terrible mistake and uh people who well I've run into all kinds of situations and some people don't tell their children anything and some of them try and get them to bend to their will by using their own personal will they make a million mistakes and that's when you don't get to correct uh and certainly in my well Charlie's had a lot of experience too with well at Berkshire we have a simple problem of uh estate planning just hold the goddamn stock well but that doesn't fit everybody Charlie I mean that you know it only if it's 95 percent I don't think it necessarily I don't know necessarily whether we have billions of dollars you want to leave it to your all your children I mean that's something that's another question but if you're going to play places somewhere I just as soon as butcher stock oh you're solving the investment problems yeah but you've got the personal problem of the fact that when there were four one of the kids pulled the other kids uh cat's tail or something like that I mean you're dealing with human beings and the biggest thing you want is you want you want your children to get along and you want that all through your life and the estate isn't the only place where you can mess that up but the it's a place where you it's a very easy I mean I know a number of cases where the people did not know what was in the will whether we're using something's involved and you know within about 15 minutes each one of them had a lawyer and you know they don't get a long sense of it's it's a it's important to handle it right and uh it's important if you want your kids do have a certain value certain values it's important that you live those values it is important that you talk about it to them or they're going they're learning from you from the day they're born what you're really like and uh don't think that a cleverly drawn will substitute for your own behavior in teaching your kids the values you hope that they will have and then your will should be in conjunction with that it should start expressing and they grow it older and then they learn to they them they learn to pass along their values in connection with the size of the state if there's Family Farms it's one thing if it's a bunch of marketable Securities is something else but I know in one instance by particularly Rich fellow that once a year he'd get his kids together and have a dinner and do all kinds of things to get them to sign their income tax returns in blank because he didn't want them to know how much money they had and everything well if that isn't going to work I mean I don't know why necessarily real words with him but uh if you want you know but Charlie and I said you know if you want to figure out how you want to live your life you write your obituary on reverse engineer it I mean you know and uh and Paul Andrews incidentally who you mentioned that TTI lived as great a life as anybody I've known and uh he thought about these problems and he came to me he was 61 I think had all the money Way Beyond what he needed didn't care about he'd like to give it to give it to people he had all kinds of good things he wanted to do and he said for a year I've been worried about my business TTI and he said I've got all the money I need the families all the money that I need but what do I do with the business these people have helped me throughout my life and he says I could sell it to a competitor and if I sold it to a competitor they'd fire my people and keep their people when they put it together and if I if I sell it to a private Equity Firm or something they'll they'll be figuring their exit strategy as they sign the sign the papers and he said you're such a great guy he says it's just you're the only one left and we bought it and we lived happily ever after and uh that was a man that knew what life was about so with that let's go on to uh Becky uh this question comes from Don glickstein in Seattle he says Warren has criticized Norfolk Southern's handling of its train derailment yet has been silent about BNSF's conduct a federal judge ruled in March that BNSF intentionally and illegally violated an easement agreement on tribal land in Washington state by transporting long trains of crude oil the same month the judge made his ruling a BNSF Train derailed on tribal lands spilling oil in an environmentally sensitive area what is Warren doing to ensure that BNSF and other Berkshire subsidiaries fulfill their ethical responsibilities he says he's been a Berkshire owner for more than two decades and he's concerned that Berkshire has no systems to identify and dress what he calls reprehensible Behavior at BNSF and other subsidiaries Greg sure so the uh it is a valid issue that our team obviously has been dealing with at BNSF we did move uh crude across that tribal land we had an agreement that allowed us to move X number of uh units per day and we did breach it we went over it there's uh there was some fundamental breakdowns there in that our team didn't understand the number of trains that they could move we have had significant discussions with the tribe looking to resolve the issue recognizing uh we obviously been benefited from moving those trains and those type of discussions will continue um I would say there's Lessons Learned there that we have to when we make a commitment understand what that commitment is and live by it or don't assume we can just move our trains as we wish or the cargo as we wish we have to respect those agreements so there's a there's been a moment learned there but at the same time we've taken it very seriously and attempted to reach a resolution there and at some point I hope we do come to a true resolution that's fair both to the tri-band to BNSF on the derailment side we did have a an issue around the track derailed we worked very closely with the tribe to mitigate that issue instantly where at least over a very reasonable period of time they were very responsive our team was very responsive and there were really no long-term environmental impacts to that to that's Bill and as our team's highlighted in other comments obviously derailments do occur in the industry we take them incredibly serious they're not all hazardous but irrespective of that we're constantly looking at how do we prevent them how do we detect them when we potentially have one that's going to occur and what do we do with our trains and then ultimately it comes down to responding properly because they will occur and I think we have an incredibly dedicated team that's always ready to respond to the communities they're impacting there are derailments how many how many a year yeah well there's uh a thousand plus in the industry the yeah it's you start hauling right and we're a common carrier we and we take heavy very heavy Freight and we take them at 100 degrees when it's the weather and it's we take it at zero and we go around curves and we have grades and uh even a one percent rate if you're going down a hill with I don't know how much weight behind you I mean there are a lot of railroading is not an easy business and of course the systems were designed you know in the and basically in the in the late 1800s amid the late 1800s and we have 22 000 I think it is miles of track and that doesn't count sightings and some other things it is not an easy business we'll make mistakes our job we're not making a mistake because we have a derailment you're gonna we will have the derailments 10 and 20 years or 30 years from now I mean that but we and we have to carry certain products we wish we didn't have to carry we're a common carrier do we like carrying chlorine and ammonia and all that no but they're going to move from one place to another in this society and we are a common carrier and uh we load them and uh if they select our railroad but we are better than we used to be but we got a long way to go I didn't was that fair enough statement absolutely yeah okay station five hi Mr Warren and Miss Manga my name is from China company and first of all I'm so excited and very honored to be here today and my question is with more and more people focusing on environmental computation protection and the government supporting the new energy industry as well so what are your thoughts on the continued development of new energy how made the new energy firm achieve better development in future yeah well Greg I think it's the best answer that because he since we bought a company called Mid-American but now called Berkshire Hathaway energy but he's been talking about a yearly preparing reports hoping that we can help solve a number of the problems and we probably spent more money than any utility I'm I would guess in the United States absolutely and uh and we've just crashed the surface but it is not easy when you cross state lines I mean it's uh you've got different jurisdictions and we should this country should be ahead of word is in terms of transmission and uh we have been the biggest factor in helping that uh but why don't you tell them a little bit about it sure things weren't so there's no question there's an energy transformation going on around the globe and as Warren touched on in the U.S and in some ways I would hope in here in the U.S it would be um we'd at least have a clear plan Across the Nation as to how to uh approach that but the reality is it is state by state uh with some exceptions but so as a result when you think of Berkshire Hathaway energy we own uh three U.S utilities there and they'll participate in multiple States but they're developing plans state by state and then trying to integrate them across the various States the opportunities are significant because there is a transformation going on uh We've outlined our goal on where we're going relative to carbon at bhe where they'll buy 20 30 reduce their carbon footprint by uh 50 relative to 2005 so that's the Paris Accord and the standard they want to hold the utility industry or the utility companies do and we're well on that path but to achieve it is a true Journey uh I've often talked to Warren when we bought Pacific Corp back in the mid 2000s we immediately recognized to build a lot of renewable energy like we've been doing in the midwest in Iowa but that was basically in a single stay now Pacific Corp were in Six States uh we started that in the back in the mid 2000s here we are and we laid out a great transmission plan here's how we're going to build it here's how we're gonna uh effectuate it and all the benefits for our customers over that period of time here we are in 2023 and we have a little more than a third of that at the time it was a six billion dollar transmission project today we have a little more than a third of it built and we've spent probably closer to seven billion dollars and it's the right outcome it's still a great outcome for our customers but that transmission you absolutely as part of the transformation you absolutely have to build it to remove to move all that renewable energy and that's sort of the complexity Warren was highlighting it is a uh you can't just wake up one day and solve this problem you start with transmission and then you build the resources but at that same company and if we look at what we're doing across bhe and energy and that energy transformation we have 70 billion dollars of known projects that are really required to properly serve our customers and Achieve that type of energy uh transformation across those utilities and that and that's in the coming next in the coming 10 years so um we have a team that's absolutely up to the challenge they're delivering on their commitments and it's a very uh very good business opportunity for each of our companies and for our shareholders because as we deploy that Capital we obviously are in a return on Equity of it so um but it will be a long journey it hap it'll happen over an extended period of time and the further you get out there the more dependent more dependent upon the uh the evolution of a variety of technologies that are progressing but not there yet so you've raised a question I want to just take an extra minute on because it's so important and I don't really know whether our form of government um is ideal at all in terms of solving uh the problem you describe we have solved it one time in World War II we took a country that was semi-lumping along and we found ourselves in a World War and what we did in a World War is we brought a bunch of people to Washington at a dollar a year you know whether it was Sydney Weinberg of Goldman's actually you just name him and we gave them enormous power to reorient the resources of the United States to face the problem that they faced which was to create a war machine and what they did was they found Henry Kaiser you know and told them to build ships and they went to the Ford Motor Company and said you build tanks and some airplanes and they reordered the industrial Enterprise of the United States in a way that was unbelievable because they had the power of the federal government and they had the ingenuity of American Business and they had the facilities of American Business and it led to a very successful outcome but can we do that in a peace time where you've got 50 states and you have to get them to cooperate and you don't have anyone that you can you can issue orders but you can't you can't designate where the capital goes as the other end and you know we try and do it with tax incentives and all that sort of thing but we haven't we haven't created the unity of purpose and the Machinery that worked in World War II were essentially everybody felt their one job was to win the war and we figured out how to use our industrial capacity to uh in fact defeat the Axis powers and uh how do you recreate that uh with the present democratic system I'm not sure I know the answer but I sure know the problem but um and I think that it if you can think of a if you've got an emergency on your hand I mean you really need to re-engineer the engineer energy system in the United States I don't think I don't think you can do it uh without something resembling the Machinery the urgency whatever the capital is there the people are there ah the objective is obvious and uh we just don't seem to be able to do it in a peacetime where they're used to following a given set of a procedure and uh and you know China you've got one country and we've got we've got 50 states and we got a whole different system of government that we should be up to the test but so far it hasn't worked but uh so thank you for the question Becky this question comes from Chris freed in Philadelphia he says we know that Greg Abel and Ajit Jain are the next generation of Berkshire leaders who are currently behind Greg and Ajit in their prospective roles respective well that will be the question that they give their well Greg will be have some things extraordinary circumstances but he's going to succeed me and then he will have be sitting in a position where he needs his equivalent or something close to the corner because he's better at many things than I've been uh he will need that a substitute and when the when the question comes word we know of Jesus opinion on that uh and but Greg will probably be the one that will make the final decision I mean it says it was being his responsibility and Ajit will give him his best advice and I think the other very high that great would follow him so but it's not those are not easy questions it isn't like we've everybody talks about the executive bench and all of that sort of thing which is baloney I mean you know it uh they don't have that many people that can run five the largest gap net worth company and all kinds of diverse businesses uh but you don't need five people either and you need a lot of good operating managers and you need somebody at the top that allocates capital and make sure that you've got the right operating manager and we've decided to design something where we separate the insurance and the rest of the business and I think it's a very good design but they would not be smart we wouldn't wish Martin name that decision now about the two different uh areas of the business because a lot can change between now and then and the most likely changes that this job changes Charlie I got nothing to add we have a lot of good people that have risen in the Berkshires and City areas and there's a reason why our operations have by and large done better than other big conglomerate companies and one of them is that is that we change managers way less frequently than other people do and that's helped us when Paul Andrews died we know we know who he thought should take over there but there wasn't any reason to announce that I mean that Paul Anderson would I wish he'd lived to be honored we had we had one of our managers die not longer going how old was he at Karen yeah mid 90s Seymour yeah see more away from the scene and Seymour I wrote him a letter when he was 80 and I said you know I'm glad you're 80. and I'll write you again when you're 90. and uh I wrote him again when he was 90 and he didn't make it to 100 but he had a terrific uh fellow following him and it really Managed IT jointly to some extent as the years went by but it's Case by case and the main thing to do is have the right person running the whole place okay station six good morning my name's hatch okamot I'm from Miyazaki Japan a Mr Buffett I was one of the 8 000 employees at Solomon Brothers that you saved I was younger back then I was working at seven World Trade Center I've always wanted to thank you in person for saving the company it's employees including myself and my family so thank you Mr Buffett thank you and thank Derek thank Derek Martin who actually had been over in Japan before that and who I met for the first time the day before I put him in and he turned out to it wouldn't have it wouldn't work if Derek hadn't come so whatever you taught him in Japan thank you thank you sir now my question time to time you have reminded us to not bet against America what do you think are the most important things for U.S to remain strong and on the risk side if the strength of the country is undermined what could be the reasons but we've been we've had a lot of tests I mean we're such a young country you know when you think about Japan and you think about the United States it's just incredible how new we are to the block I mean you know what are we uh 234 years old since we started that's that's that's nothing I mean you know Charlie and I combined are two-thirds of two-thirds of the life of the country so and I mean it really has I mean we've we've been tested at 46 national elections but and we made some bad choices and we've had a Civil War I mean it so the country has had an enormous advantages though in some way because we started with one half of one percent of the world's population in 1790 and we now have something close to 25 percent of the world's GDP and it wasn't because we had some incredible advantage in terms it was nice to have two oceans and oceans on each side back when uh people tried to rule away Rule the World by ruling the waves but it you know and we had good neighbors in Canada and Mexico but it's a miracle and you say how do we keep the good parts of the system while calling out our obvious defects and we do it in a very herky-jerky manner but net the United States it was a better place to live but it was when I was born by a huge Factor I mean I just got a root canal a week ago and I was just thinking I don't know who even invented Nova came but I'm for him you know I mean but in a million ways I mean you can roll you can romanticize about the past but forget it uh it is it is work but now we do have an atom bomb and we wish nuclear power you know we wish the item had never been split but uh it has been and you can't put it back in the bottle so the challenges are huge our government always looks you know my dad was in Congress back in the 1940s and it looked like a mess then you know it all it was unified by the war to some degree but it was still very partisan now the problem we have I think is that partisanship and it seems to me has moved toward tribalism and tribalism just doesn't work as well I mean when it gets to tribalism you don't even hear the other side and tribalism can lead to mobs I mean it just it flows I mean you've seen it all explore you've we've seen it to a degree here so we have to refine in a certain way our democracy as we go along and we deal with the world we live in but if I still had a choice of any post to be born in the in the world I'd want to be born in the United States and I'd want to be born today I mean it's it is a it is a better world than we've ever had and with present-day Communications we can all see associ much more how terrible it is in many ways and it's got problems when I was born in there were two billion people in the world and now there's maybe 7.7 billion and growing and we want Millennium with really no change in population so we and of course we've introduced energy into uh in an incredible way into something where we now have 7.7 billion people using way more energy than they did when I was born when there were two billion people so it's an exciting world it's a challenging world and I've uh you know I don't know the solutions on things I do think that we do need to think about different solutions in terms of how we get important problem solved and that we don't kid ourselves that something magic will happen or that everybody will get together and we'll all just cheer and they'll go away by 2050 or anything it uh and how well we adapt to them we will see I would say so far it doesn't look very promising but then I'm sure that when Lincoln looks at it what was going on the Civil War didn't look very promising either so I think that the US is capable of doing remarkable things and I think I wouldn't surprise me if they do it again Charlotte Charlie Maiden are you well I'm slightly less optimistic and more I think the best wrote ahead to human happiness is expect less I think it's going to get I think it's going to get tougher and I think the solution of having a huge proportion of the young and brilliant people all the way into Wealth Management is a crazy development in terms of its natural consequences for American civilization we don't need as many wealth managers as we have Charlie was born on January 1st 1924. and you'd hate to go back to that wouldn't you Troy yes I would and I like more worlds managers who were just merely reflecting the fact there's more wealth but we've got I don't like everybody going into wealth management right all over MIT or something it's I think the world's a little crazy now take your choice okay Becky now this question comes from Dennis degennaro as Warren stated in the 2022 annual report Berkshire will always hold a boatload of cash in U.S treasury bills it will also avoid behavior that could result in any uncomfortable cash needs at inconvenient times including Financial panics and unprecedented Insurance losses after Warren passes away his a shares will be converted into B shares and distributed to various foundations these foundations will then sell the shares to fund their causes Warren estimates it will take 12 to 15 years for all his shares to be sold I worry that a corporate Raider like Cairo icon or a group will buy up enough of these shares to take control of Berkshire and completely disregard Warren's philosophy of holding a lot of cash in U.S treasury bills and instead be greedy Reckless and highly speculative and ruin berkshire's position as a rock-solid financial Fortress I also worry that changes might be made in how Berkshire subsidiaries are run do Warren and Charlie worry that these things could happen well I think it's fair to say we think about a plenty but I don't I don't I don't I don't worry enormously if we it is true that uh Greg and the directors will have a honeymoon period for a long time because simply because uh of the boats it will still remain I mean it and uh but it's true that eventually they won't get judged based on how well our operation fairs versus others now if we don't pay any dividends and in 12 or 15 years you're talking a trillion and a half that it would take to take over and uh I think if we can't that limits the group they like to think about how much they can borrow against it doesn't work when you uh and some of these there's nobody to come close to doing it themselves and I think that the important thing is that Berkshire regarded the be regarded as a National Asset rather than a national liability we've got to be a plus to the country with our form of operation and we certainly have got a record which will then be 12 or 15 years longer done with much more Capital more companies more things will have happened where our hundreds of billions can work its way into the economy in terms of lots of jobs lots of products lots of behavior and it can be compared with other things so I think we went out of if we deserve to win out and I think uh I think the odds of that happening are very high Charlie well we I don't spend much time worrying about fluent can happen 50 years ago and ever I'm dead I think you sort of take care of each day's responsibilities pretty well and think ahead as well as you can and you just take the results as they fall so I'm I'm philosophical but I'm not I think he's spreading unnecessarily okay neither one of us are worried basically uh but we but we plan we do plan and you know I've got a model in my mind of what Berkshire has been that model's getting it's been modified plenty of times over 58 years and the one thing I know initially is or very quickly was it shouldn't be a textile company that was that was an important decision and I mean we've just played the hand as a as a come along and we made a few really good decisions and we will never make a decision that kills us only things that are a threat to the planet um we don't have any answer for those but we do we keep ourselves in better shape than anybody else that and we just aren't going to have big maturities of debt that come along we aren't going to have uh insurance policies and be can be cashed in at mass and we will sit with the Lord what looks like a huge amount of capital and but it is a huge amount of capital but there's a huge amount of earning power there's a huge amount of diversity everything so our business model will be graded and it'll be graded against a lot of a lot of people that we'd like to be graded against so uh I think we're handling something very secure over to the Future and I think we've got the shareholder base like nobody has I mean there isn't anybody in the country that I know of unless they've had a shareholder an employee-owned company prior to going public or something of the sort but this is the product of you know the 58 years of regarding the shareholder as the owner of the company but what does that mean that means having happy customers it means being it being means being welcomed by your community rather than having them they'll turn you away it means that the government feels better with you if there's a financial crisis because you're you can provide something that actually the company the country can't under some circumstances and you'll be there and if it may and same time it'll be good for the business uh and we will have crises of one sort or another but if they aren't challenging the planet which worries you in terms of some of the threats that we have we're will be a plus to the United States and if we're close to the United States we'll we'll survive okay station Seven Mr Buffett and Mr Munger thank you for having us this weekend my name is Beau Clayton and I'm from Durham North Carolina one of the reasons that we are all here is that your great storytellers and we carry those stories back home with us can you please share a couple stories that maybe we haven't heard before about Mr Abel and Mr Jane that capture their character and their caliber as leaders I'll start out with a Jeep he walked into the office and 1986 and I'd gotten the bright idea of going into the reinsurance business I think in maybe 1969 so I'd stumbled along uh for 17 years and I had a wonderful guy that ran it uh but he also liked certain Brokers and I mean he was running at the traditional wave top quality and everything else but uh but he fell into he didn't try and change the system he tried to improve the system and uh to some degree and we just we went nowhere 17 years wandering around in the wilderness when I thought I was um I knew we could have something good and then the G came in on a Saturday and uh Mike Goldberg and steered him in I think and uh Mike deserves to be enshrined and perpetuity for that act and uh I talked with him a while I think maybe I was opening the mail on Saturday while I talked with him and he had absolutely zero experience with insurance but it actually seen a good bit of how Corporate America operated because they 've been in management consulting and after talking with them I knew I'd start golden and uh so I hired him and gave him the backing of some money uh and we had a very good period in the market almost right away for him to act and the Jeep uh you know if I had the top pick of 10 Insurance managers in the world I'm I could take all ten and they wouldn't you can't replace a Jeep and uh we still enjoy talking I don't we don't talk as frequently as he used to but we should talk about every day but he is he's one of a kind and you know what if they're going to stick around long enough you only need one of a kind Paul Andrews stuck around a TTI had all the money in the world every time I talk to him about getting a raise or something of the sort he said we'll talk about that next year I just he was not what you get when you get the top draft picks from the leading Business Schools and I will say this I have never looked at where anybody went to school in terms of hiring I mean I just somebody mailed me a resume or something I don't care where they went to school uh and it just so happens that she went to some pretty good schools but he isn't a g because he went to the schools and uh Charlie didn't tell a story or two um how'd you find Louis vincenti well he was there I but you got to recognize him I asked Louie once how he managed to play first string football at I think Stanford when he only weighed 165 pounds and he said well he says I was pretty quick and he was pretty quick but we have found a lot of people within our companies who were pretty quick it's it's a yeah we had we everyone got the fourth grade didn't in Ben Rosner Am I Wrong oh yeah totally self-educated Ben Rosner knew more about retailing and difficult neighborhoods and anybody and he watched everything in his business like a hawk and he was a it was amazing now there was an example we never found anybody who could do what when Ben died that bill the animal he left us yeah and you want a story it's kind of interesting because Ben Rosner had a partner Leo Simon at least Leo Simon was uh Moe annenberg's son-in-law and Leo therefore it was very wealthy and uh and then started with nothing but they liked each other and one time well before they got involved in the in the business uh the business we bought but they got the idea of buying a submarine from World War One and taking it to the century of progress or which was the World's Fair in effect in Chicago I think in 1933 so they bought the submarine for not practically nothing and they figured you know the average guy from Walmart was going to his first World's Fair getting a submarine for a quarter or something that they'd pay it so they hauled it from Florida wherever they got they hauled it to Chicago and then they got into Chicago and they were hauling a submarine down the streets of Chicago and it was creating traffic problems like nobody could imagine so a cop came over and he said to Ben he says what do you think you guys are going with a submarine Ben says he says well he said you'll have to talk to my partner Mr Capone the cop the cop says girl I know just keep going and that was that was Ben Roger and then Leo Simon died and when he died in 1967 or so ah Ben Rosner kept delivering half thee prophets to his widow who was incredibly Rich of course being no Anna Birds first born daughter I think I think I think Moe had nine girls in a row before Waller came along the tenth I may be lost by one but anyway I went to this fancy apartment and anyway then kept her in for a half the deal and he had her signed the rent checks to social she would look like she was doing something in this business and she didn't need the money obviously but he just felt he was obligated once his partner Leo died and then she started criticizing him and at that point then went to her his lawyer was her lawyer actually will felsteiner I don't know whatever happened to will but he gave me he gave me a call because Ben wanted to call me because he wanted me to buy it and he wanted me if I bought it he'd be rid of the partners ex-partner's wife and uh and he'd gotten he had me and Charlie come back and we went to will falsteiner's office and businesses I'll work till the end of the year and that's all but I'll show you this thing for six million bucks and I had two million to cash and a couple million in real estate and a couple million of operating earnings that this is crazy but he fell off he was getting a lousy prize she was taking a half of the lousy price for half the money so uh he looked at me at some point Charlie you described the rest of it again he said I heard here you're the fastest draw in the west he says draw we're in a New York lawyer's office yeah and this guy is he's selling he's selling his baby and he told us he's leaving I got Charlie on this side I said if this guy leaves at the end of the year he can throw away every psychology book that's ever been written I mean it isn't going to happening and uh so we bought it and we lived happily ever after with Ben and one time he was taking me over to see a property we had in Brooklyn and uh and along the way I said uh Ben I you know I promised you I wouldn't interfere in the business when we started and he knew a butt was coming and he just said Thank You Warren and they're shooting him he was a lot of fun we have so many Ben rozen stories but now you've heard one that hasn't been published before okay Becky this question comes from chai gohil he writes this is for a G reinsurance industry is going through one of the hardest pricing environments in the last 15 years Berkshire historically has participated during these stress times when economic returns are very attractive this year it appears Berkshire has not been interested in deploying its resources towards property cat reinsurance despite such strong returns can you elaborate on reasons for not participating despite these returns and your broader view on how you're planning to shape your reinsurance business post acquisition of Allegheny in terms of Allegheny that's an easy response we look we treat our operating units independent of each other and as far as Allegheny is concerned they have a major presence in the reinsurance business under the brand name of transatlantic Gray that company will operate the way it's been operating in the past there'll be no change in terms of strategy or management and they will keep doing what they're doing they've been very successful and hopefully they'll keep being successful now in terms of the property cat businesses that I have been active in over these last several years you are right that the last 15 years has been a difficult time prices have not been attractive and even though we have had some presence in the property cat business in the last 15 years it really is been minimal uh this December 31st which is a big renewal date for Cattery insurance we were hoping that we would get a few days in the Sun and we'd be able to deploy our capital and be able to write some fairly attractive business as it happened towards the end of December till about the third week of December I was very optimistic that we would get a chance to put several billion dollars on the books but in the last 10 days of uh December unfortunately a lot of capacity came out of the Woodworks pricing that we were expecting to realize didn't really come and meet our pricing requirements as a result of which January 1 was a big disappointment we did not write as much as we were hoping to write now fast forward to April 1 which is another big renewal date we had a lot of powder dry and we were lucky that we kept the powder dry because April 1 suddenly prices zoomed up again a lot higher than what they were on January 1 and started to look attractive to us so now we have a portfolio that is very heavily exposed to property catastrophe uh to put that in perspective our exposure today is almost 50 percent more than what it was uh five six months ago so you know we I think we have written as much as our capacity will allow us to write we are very happy with what we've written the margins have been healthy the only thing that I want to mention to you is that while the margins have been healthy we have a very unbalanced portfolio what that means is if there's a big hurricane in Florida we will have a very substantial loss as opposed to that if we have a very big loss anywhere other than Florida relative to our competition we will have a much smaller loss net I'm very happy with the portfolio it's been a lot better it is a lot better than what it's been in the past uh I don't know how long it'll last and of course if the hurricane happens in Florida we could lose across all the units we could lose as much as 15 billion dollars and if there isn't a loss we'll make several billion dollars as profit and LG tell them how long when you call me and said you'd like to expose us to whatever was a couple billion more of exposure how long I took to say yes yeah uh so the way we think about our exposure is you know in the property in the insurance operations collectively across the entire company uh given that we have about a little less than 300 billion of capital we think of that as a 55 exposure that you're willing to take on so to complete Warren's story a few weeks ago we had about 13 billion dollars of exposure all across like uh the globe and I called up war and I said we have to 13 it'll be nice if we can go up to 15 that's a good round number and that was less than a 30 second phone call I think Warren said yes without even listening to what the numbers I hope he calls me again okay station eight hello my name is adal Flores and I've been a shoeholder for about 16 years and I'm coming from Guadalajara Mexico my question is for Warren and Charlie companies have the Eternal dilemma between Building Products that can make profits and increase their company competitive position in the best case you can build products that have both characteristics at the same time like Google did but most of the time companies need to choose between short-term profits and long-term defensibility for example Amazon was focused on building their famous Amazon flywheel with limited profits initially in order to abstain obtain stronger Network effects with the hope of getting more defensible profits in the future when you invest you constantly speak about the importance of building competitive modes what advice would you give to CEOs about how to balance this dilemma which is essentially short-term profit versus long-term definitibility thank you well the answer to control your destiny which we've been able to do it uh Berkshire so we have we feel no pressure from Wall Street uh you know we don't have investor calls we don't have to make promises we get a chance to make our own mistakes and occasionally find something that works well but we recognize that the people in this room and people like them uh are the ones we're working for and we're not working for a bunch of people that care about whether we meet the quarter estimate or anything so it was we have a freedom uh that we that we get to use and we're interested in men we're interested in owning a wonderful business forever well there aren't very many wonderful businesses but we do learn a lot as we go along we Charlie and I have often mentioned how we learn so much when we bought C's candy which we did but we learned when we bought Ben Rogers chain of women's dress shops spread all over the eastern part of the country we learned when we tried them getting into the department store business back in 1966 and as the ink was drawing on our purchase price we realized we'd done something dumb I mean what we're learning all the time how consumers behave I'm not going to be able to learn the technical aspects of businesses but that you know that be nice if I knew it but it isn't essential and you know we are obviously uh we've got a business at Apple which is larger than our energy business and we may only own Five Points six or seven percent but our ownership goes up every year and I don't understand the phone at all but I do understand consumer Behavior and I know how people think about whether to buy a second car I know wow they go out to different We Own auto dealerships we own that we're learning all the time from all of our businesses how people react to Garanimals versus you know selling them something else and so cease was a sort of breakthrough but it just we just keep learning uh as to more about how people behave and how a good business can turn into a bad business and how some good businesses can maintain uh they're competitive advantage over time and so um we don't have some formula that person people we just but we can also tell them in 10 seconds whether it's something of Interest I mean with you know when uh I get these calls and we want to send decks and all that sort of which is nonsense I mean it uh it's a bunch of guys sitting that get paid for drawing up these projections of the future and everything like that if they knew the future you know we don't know the future but we do know certain kinds of businesses we know what the right price is and we know what we think we can project out in terms of consumer Behavior Uh and consumer and threats to a business and then and that's what we've been about and that's what we'll continue to about we do get we don't get smarter over time we get we get a little wiser though uh following it over time and you can do it while sitting in the office with a telephone too which we like Charlie well tell them the story of the Japanese investment that should be told again that's that's a nice story you know well it was pretty simple I mean I you know other back when I started other people were going through Playboy and I was going through Moody so that you know basically and uh there's a movie out called Turn every page which I saw again for the second time a couple of days ago Lizzie got leaving I recommend everybody in this world watch that because I turned every page in the past and uh I did it for thousands and thousands of pages and booties and I did it at the Department of Public Utilities in Boston I did it in Newton the insurance department that it just kept turning Pages well that goes on for a while but now we need Big Ideas in order to find things and uh and what was your question Charlie tell them about the Japanese well the Japanese thing was simple I mean it kind of I like looking at companies every I mean I like looking at figures about companies and here were five very substantial companies understandable companies most of them uh maybe all of them we'd done business with them in a dozen different ways if you go a couple miles from where this place is the our last coal generating plant was built by one of the companies that so here they were they were sitting as a group where they were earning we'll say 14 percent uh on what we were going to pay to buy them they were paying decent dividends they were going to repurchase shares in some cases they owned a whole bunch of businesses that we could understand as a group although we didn't mean we had deep understanding on anything but we've seen them operate and everything that there wasn't anything to it and at the same time we could take out the currency risk by financing in the and that was going to cost us a half of one percent well if you get 14 on one side a half a percent on the other side and you've got money that you know forever and they're doing intelligent things and they're sizable so we just started buying them I didn't even probably tell Greg until maybe six months after we'd gotten going and then we hit five percent uh in all of them we announced on my birthday and uh at 90th and we owned over five percent and recently when over for the first time to visit with him and move more than pleasantly surprised delighted with what we find there and now we own 7.4 percent of them we won't go over 9.9 without their agreeing and we sold another 164 or whatever it is uh billion of us again would have done for us if we only had five billion dollars or something and it made 10 billion dollars simply in that way yeah we would look like Heroes now 10 billion just sort of disappears as it's a little dot in person's reports but it's fun and it is fun and it is 10 billion dollars and Charlie says it keeps and Charlie says it keeps me out of bars talk to him about it and I probably talked to Charlie about this app the year after I started but who knows I mean I knew he'd like it I mean obviously and uh we try to do every dollar we would do we could only do about 10 billion yeah well not even that quite that much yeah but you know we are four or five billion ahead plus dividends and we've got to carry that's terrific and you know uh and they welcome us and they should welcome us and but we love it the way they're operating we're not there to tell them what to do in the least uh so we didn't and but we did say we never go over 9.9 and we mean it and then they know that will be true to our word and I went over there partly to introduce Greg to those people because we're going to be with them 10 20 30 40 years from now and they may occasionally find something that we can do jointly and they look they look forward to doing that we look forward to it and in addition we have some other operating businesses in Japan so the only thing I would add is that one has one you went over there it was to build the build the trust with these Japanese companies because we do hope there's long-term opportunities but fundamentally as you highlighted uh they're an incredible uh they've been a very good investment I'd also highlight the five meetings we had we're really quite remarkable I mean these companies the culture and the history around it and how proud they are you know there's just moments of learning from them so it was it was just a great experience to spend really two days with the five companies and an issue that we intended to be 56 billion of Yen that we were issuing and selling turned out to be 164.4 or something like that everything's worked so well and as Charlie says it you know it doesn't move 500 billion of net worth that much but this one is you know it will keep adding over the years to the berkshire's value with us very widespread probably four or 500 million dollars a year and uh you know we'll just keep looking for more opportunities uh and Japan we have bursure is the largest borrower outside of the corporate borrower outside of Japan that exists and yeah we didn't set out to be that but it's it's turned out that way and we're not done I mean it uh you know in terms of what may come along there and uh and we have some direct operations there as I mentioned that uh and we've got some really wonderful Partners working for us and I don't have to do anything okay Becky the next question comes from Ellie Amin Tibet who asks during an episode of investing the Templeton way podcast Professor damodaran who he respects almost as much as Warren and Charlie mentioned that he is not comfortable with positions becoming a large part of his portfolio for example when they reach 25 to 35 percent he mentioned that apple is now 35 percent of berkshire's portfolio and thinks that is near a danger zone wonders if Warren and Charlie can comment well I'd like to make one comment first but Charlie will come up with I think he thought it was mine yeah but apple is not 35 percent of Berkshire portfolio bursters portfolio includes the railroad the energy business Garanimals you name it See's Candy they're all businesses and uh you know the good thing about Apple is that we can go up they buying their stock and instead of owning 5.6 percent you know they got down to they got about 15 billion 700 and some million shares outstanding they get down to 15 and a quarter billion without us doing anything we got six percent so we can't own more than 100 of the NSF we can't own more than 100 percent of Garanimals or See's candy and it'd be nice we'd love it on 200 but it just isn't doable but they're all the same they're good businesses and to think that our Criterion a criteria for apple is different than the other businesses we own it just happens to be a better business than any we own and we put a fair amount of money in it but we haven't got more money in it than we've got in the railroad and apple is a Better Business our railroad is a very good business if it's not remotely as good as Apple's business but uh Apple you know has a position with consumers where they're paying you know maybe they'll pay 1500 bucks or whatever it may be for a phone and these same people pay 35 000 for having a second car and if they had to give up a second car or give up their iPhone they'd give up their second car I mean it's it's an extraordinary probably we don't have anything like that we own 100 of but we're very happy to have 5.6 or whatever it may be percent and we're delighted every tenth of a percent that goes up it's like adding a hundred million dollars to our earnings I mean our share of the earnings and they use their earnings to buy out our partners which we're glad to see them sell out too the index funds have to sell they bring the number of shares down and uh you know I'm good we went up slightly last year and I made a mistake a couple of years ago and I sold some shares when I had certain reasons why gains were useful to take that year from a tax standpoint but having heard having heard me say that it was a dumb decision uh and uh earlier you've already given your comment about it but we do not have 35 percent of berkshire's portfolio berkshire's portfolio is the funds we have to work with and we want to own good businesses and we also want to have plenty of liquidity and beyond that you know the sky's the limiter or are mistakes who knows what the bottom is Charlie do you want to add anything to your earlier comment well I think one of the inane things that's taught in modern University education is it a vast diversification is absolutely mandatory and investing in Common Stocks that is an insane idea it's not that easy to have a vast plethora of good opportunities that are easily identified if you've only got three I'd rather be in my best ideas instead of my worst and now some people can't tell their best ideas from their worst in the act of deciding the investment already is good they get the thing it's better than it is I think we make fewer mistakes like that than other people and that is a blessing to us we're not so smart but we kind of know where the edge of our smartness is that is a very important part of practical intelligence and a lot of people who are geniuses on IQ tests think they're a lot smarter than they are and what they are is dangerous and but if you know the edge of your own ability pretty well you should ignore most of the Notions of our experts about what I call diversification of portfolios okay yeah station nine hi Charlotte hi Charlie and Warren thank you for this superb shareholder meeting celebration my name is David Chung from Hong Kong and a proud graduate of Chicago Booth I'm also here with my two sons Aiden and Ashen who's currently studying University of Chicago as a freshman and sophomore this is my second time attending the conference last being 2019 four years ago which I was only a guest shareholder of my friend Andrew so after the shareholder meeting I have decided to buy into Berkshire Hathaway which has given me a great return of 62 since 2019. so I want to thank you for that I have also taken one of your advice to give my children a share for each of their birthdays although they want a Berkshire Hathaway eight years they will do just fine with P shares my question is how do you see the current U.S China internet companies valuation and the price disparity given there has been many uncertainties such as geopolitical tensions significant course optimizations with lean and U.S tech firms while China attack has been through all that already thank you Charlie I wanna well there's been some tension in the economic relationship of the United States and China I think that tension has been wrongly created on both sides I think we're equally guilty of being stupid there's one thing we should do let's get along with China and we should have a lot of free trade with China in our mutual interest and I just can't imagine it's just so obvious there's so much safety and so much creativity that's possible think of what Apple has done by engaging in a partnership with China as a big supplier yeah it's been good for apple and good for China that's the kind of business we'll be doing with China and more of it and with everything that increases the tension between the two companies is stupid and all these stopped on each side and each side ought to respond to the other side stupidity with reciprocal kindness that's my view and it creates one enormous problem of course which is that you have the two superpowers of the world and they know they have to get along with each other either one can destroy the other and they're going to be competitive with each other uh but part of it is trying always in the game like that is trying to judge how far you can push the other guy without them reacting wrong and uh you know if either side is a bullying some ways they can get away with it to an extent because the alternative is would drive them both into destruction but if they push it too far they increase the probability that something really does go wrong so it's a you know it's one of those Game Theory dilemmas but you really need the leader of both countries uh and you need the populace to understand at least the general situation in which these countries are going to operate over the next century and know that some leader of the promises too much couldn't get you in a hell of a lot of trouble and that like you know that you've got one kind of a system that gets this leader one way they've got another system that gets his leader another way and keeping either side from trying to play the game too hard uh and thinking the other side will go along you know just like playing checking you know and driving toward a cliff so it is if you've got any diplomacy skills persuasive skills or anything like that you really want people that will convince the other country as well as his own or her own country that this is what we're engaged in we've got to do it right we won't give away the store but we won't try and take the whole story either and it we're just at the beginning of this uh unfortunately and I mean we've we've learned what the situation was it used to be the Soviet mutually assured destruction was it our policy then and that kept a lot of things from happening but it also came with a very close call uh with Cuba and these are not you know these are different games than existed hundreds of years ago you could you know Britain might rule the Caesar France or Spain but now you're playing with a game that you can't really make a huge mistake in and I think that should be the better that's understood in both countries the more the leaders feel that their citizenry does understand that the better off we'll be and that a lot of Democrats uh demography or the a lot of love inflammatory speaking but a lot of authoritarian action I mean it all carries its dangers and the world was stumbled through the years post 1945 with a lot of close calls from the in the nuclear Arena and now we've got pandemics and we've gotten we've got cyber and a whole bunch of other things so we've got more tools of Destruction the world's ever had and it's imperative that China and the United States both understand what the game is and understand that you can't push too hard but working but both places are going to be competitive and both can prosper that's that's what really is that's the vision that is out there that China will have a more wonderful country the United States will have a more wonderful country and the two are not just compatible they're almost imperative uh in terms of uh what's going to happen in the next 100 years or so and uh I think that the leaders of both countries have got an important job and having that understood and not to do inflammatory things and we'll see whether the lock that has taken us from 1945 to present holds out and I think we can affect to some extent that luck and without sure a message we will move to Becky this question comes from Rohit bellany Berkshire bought a substantial position in Taiwan semiconductor and contrary to its normal holding timeline sold almost the entire position within a few short months while you cited in a CNBC interview that geopolitical issues were the Catalyst these issues were seemingly no different when you acquired that stock so what else if anything changed in those few months and prompted The Firm to offload close to five billion dollars worth of Taiwan semiconductor shares at Taiwan semiconductor is one of the best managed companies and important companies in the world and uh there is not and I think you'll be able to say the same thing 5 or 10 or 20 years from now I don't like its location and I've been reevaluated that I mean I don't think it should be any place but Taiwan although they will be obviously opening up chip capacity in this country and actually one of our subsidiaries that we got in Allegheny is uh is participating in their Arizona uh construction activities but uh it's uh it uh it's a question of we would rather have the same kind of company and they're there's nobody in the chip company there's no in the chip industry that's in their league in our bit at least in my view uh and the man that was a 91 year old or so that connected with other than that I think I played Bridge with him and uh in Albuquerque and The Marvelous people marvelous company but I'd rather find a marvelous people and we'll find it in the chip industry but marvelous people and marvelous uh competitive position and everything I'd rather find it in the United States I feel better about the capital that we've got deployed in Japan than in Taiwan it uh wish it weren't so but I think that's the reality and I re-evaluated that uh in the light of certain things that were going on try well my view is that Warren ought to feel comfortable if he wants to yeah put that in the minutes okay station 10. first of all thank you for making our lives better my name is bogumil Baranowski I'm a founding partner of New York we manage multi-generational family fortunes hence my question Mr Buffett in 1976 in your tribute to Benjamin Graham you wrote Walter lippman spoke of men who planned trees that other men will sit under Ben Graham was such a man you're both such people could you share with us your 100 Year vision for Berkshire it's a question to you both yeah I would like to add one thing about Ben Graham uh Ben Graham didn't all kinds of things for me and I never expected one thing in return I mean it just you name it and he did it and there wasn't any hidden you know there's a hint I should say of anything he expected in return and uh I checked uh well he wrote a book in 1949 that in a sense said to me in very persuasive terms that what I'd been spending the previous eight or nine years working at and loving was all wrong and uh that book has been I check it every now and then on Amazon to where it ranks and you know Amazon ranks hundreds and hundreds and hundreds of thousands of books uh by sales and Ben Graham's book has been up there like number 300 or 350 or something like that forever and there isn't there isn't any book like that I wrote Harper Collins and note the other day because they're bringing out another Edition and I have some how many copies have been sold and they said the records didn't go back far enough but they had 7.3 million copies of this little book that changed my life and uh continues to Wild sell every investment book ever investment books come along and you know their number 400 or a thousand or something for a while and then all of a sudden they're numbered 25 000 or 200 000 and this book you know in how many areas can you find any book that has had that sustained position you can't you go back and look at number one in 1950 or number two or number three and you're looking in 51 and 52 they don't continue I mean they just don't continue uh cookbooks maybe one or two of them last for a while but there is nothing and this book lives on and everybody keeps bringing out new books and saying a lot of other things but they aren't saying that you think it's as important as what he said in 1949 in this relatively thin little book so uh you know our vision for Berkshire is exactly what we said today we wanted to be a company that is owned by shareholders and behaves in a way that Society is happy that it exists and not unhappy and we will have unlimited capital we'll get lots of talent and we've got a base that can't be beat and there's no reason why it can't be perpetuated just like Ben's book and maybe be an example to other people and if so we'll be very happy Charlie yeah one of the really interesting things about being he was a really gifted teacher a very honorable profession and that is what has lasted however an interesting fact that he was shebished about in his old age was that more than half of all the investment returned that Billy Graham made in his whole life came from one stock one growth stock Geico bircher's subsidiary and he at the time he operated there were a lot of sort of lousy companies that were too cheap and you could make a little money floating from one to another but the big money he made was one growth stock buying one undervalued great company is a very good thing his Berkshire has found out again and again and again and Ben wrote a post trip to the 49 Edition pointing out exactly that fact and acknowledging it but said but also took the some good lessons from it you know he said that's the way life is that you prepare and you know they don't lose everything along the way and then something comes along and Geico came along because a banker in Fort Worth at a financial Leo Davidson uh and I think the banker got three quarters of it and I don't mean Leo Davis and Leo Goodwin uh who founded Geico then called government employees insurance company and you can figure out the acronym and uh the deal almost fell apart the deal was as I remember from maybe a million and a half or something like a million and a quarter and it almost fell apart because of a difference of twenty five thousand dollars in the net worth delivered this is a business's you know with tens of billions I mean but he pointed out the irony in that too I mean he was honest about it was totally intellectually honest on about us about his the failings and but also the strengths of his approach and he and that to some extent you know Charlie and I have seen that in our lives I mean the sort of the prepared mind the willingness the to act when you need to act and the willingness to ignore it every salesman in the world and the imperative norm and uh is one or two things that make the right decision if you make the right decision on a spouse I mean you've won the game they you know and there's enormous important decision and got all the time I mean in the world we got more time now than used to have when I was a kid to make that decision and uh you know I don't know whether a third or whatever percentage blow that one you know it is it is really interesting the thing to do is just keep trying to trying to think things through and not do too many stupid things and sooner or later you have a Lollapalooza Charlotte would say okay Becky all right this question comes from terrafter a shareholder in Sierra Vista Arizona who is asking a question of Ajit wants to know about electric vehicles getting insurance from the manufacturer instead of car insurance companies a recent article in the Wall Street Journal shows that though EVS are a small but growing percentage of sales Tesla and GM are offering their own Electric Vehicle Insurance what will Geico do to combat this yeah so Geico is talking to a number of original equipment manufacturers as well to try and see how best they can work with the auto manufacturer and offer insurance at the point of sale there haven't been very many success stories as yet uh so we'll wait and see um you know clearly it is a very convenient way to sell auto insurance at the point of sale but there's a there's a fair amount of data that needs to be collected on the driver not just the car and that makes it a little more complicated so we are talking to some auto manufacturers ourselves we are hopeful to that we will strike a deal with some of them before not too long Tesla has made and GM they both have talked a lot in the press in terms of getting into their insurance business and in fact GM I think has projected they'll write three billion dollars of Premium which you know it's hard to imagine where it'll come from but they're all hot to trot I think somebody will find the secret sauce before not too long and we ourselves are in that race yeah I would I would point out that General Motors insurance for decades and I mean this is not a new idea and uh Uber or a lot of insurance for a while they laid it off with somebody and that company got killed by it but I and I don't know the deal between Uber and forget the name of the company that took it on the Jeep would probably know but James approval yeah and you know it there's there's nothing it is not it's not a new idea it's not magic in the lease I mean it is hard to come up with something that is better at missing Max and matching risk to reward uh wrist I'm sorry risk surprise then uh a bunch of very smart people are doing at a progressive and a bunch of very smart people are doing it oh to a graduation and a guy going I mean it is it's just it was fascinating to me when Uber went into it you know and they were going to get their head handed to them but they laid off a good bit of it and very substantial percentage of it was somebody else who got their head initially and uh you know and but it was a story you know Wall Street loves it and uh I went we've got ad car dealerships that do a lot of business uh and you know we've got the people buying the car and the place and we form an insurance company around the group for some reason that writes Insurance you know it's hard to improve on the president's system yeah I have no I it wouldn't I wouldn't pay a penny I'd pay to avoid it actually I mean uh and go ahead yeah the only point I'd like to add is the margins on writing auto insurance are four percent which is a very small number and once there are more people that are trying to take a bite of the Apple it just becomes very difficult to keep all the mouths fed in a profitable manner yeah you can say the there was one big new idea in insurance and property and car insurance back in 1920 or so when State Farm started and State Farm uh and still has it next to Berkshire it's it's our it's the leader in having net worth it's a mutual company but some guy just figured that there was a cartel running car insurance and he farmer from Myrna is the name of the book I think and over in Illinois and he created a system where he really took 20 points or so out of the course and surprise areas you know and nobody's on stock in State Farm it's it's it's an insult to capitalism actually everything you learn at the business school says it shouldn't work because nobody owns it nobody's going public with it no nothing but it's got more net worth it's almost probably double leaving Berkshire out of the picture it's probably double the next guy and nobody's really improved on their system that much uh so it's it's fascinating how people don't really look at the essence you know these are cases that should carry a message uh but the truth is in Wall Street anything that gets the test is whether you can sell it or not but if you can sell it'll get sold and a bunch of insurance companies came along got it sold and this is a this can be a story about this stock or that stock and it sounded good when they talked about it at Uber for a while and it is it is really interesting the investing public does not learn much okay station 11. hi my name is Jeff Miriam I'm from Edina Minnesota we've been coming for years to make that Professor from the earlier question really nervous half our family's wealth is in Berkshire Hathaway well let's make Charlie nervous my question it has to do with voting control in the future there was a question earlier about corporate Raider I was more wondering about who is actually going to own the voting control uh is it going to be institutions uh Calpers BlackRock are they eventually going to get their way with the ESG check boxes that we're gonna have to check and what should we be thinking about that well you're thinking very well and uh the interesting thing is uh the big aggregations look like of course they'd be in index funds but indirect funds want is they want a world in which Society doesn't get upset with them about the fact they've got all the voting power and I was in the last year or two uh it's looked like a better idea for them not quite togethers uh What was a phrase that Charlie used but he backed off a lot yeah they backed off a lot and it's it's in their interest to back out often interest and interestingly enough and looking at money management you know the game is not performance it's assets under management and index funds produce a tiny a fee on assets under management because it was pioneered by Vanguard and uh and it's when it became successful it was very easy to replicate not so easy but I mean it was inevitable to be uh copied but it came with a management fee of two basis points so what people that have offered index funds would really like is you to buy their other funds or level management money in some other way so that they get a higher fee on assets under management which of course is exactly why the index fund was embedded in the first place but so it's gotten it's not lost leader but it is a way to pull money in and then you hope that people ignore what was said by what's the name of you know the John Bogle Jack Volvo uh ignore him and essentially they give up the idea that will offer you a fund that does this in the India and we'll offer you another fund that does that and of course those management fees are higher so they're really counter selling the idea that John Bogle came along with but in the process they have achieved a lot of bolts and that was fun for a while but the last thing in the world I wanted to do is at Washington or the American public decide that they're throwing around their weight too much so on they're tending to back off now if you figure out where their self-interest is you can judge where their behavior is going to go Charlie yeah you wanted defend them no you can square well you just said you're totally right in everything well in that case I won't ask anybody else okay Becky all right this question comes from almu Grinnell and it's about this is for Warren and Greg since 2019 Berkshire repurchased huge amounts of stock about approximately reducing 10 percent of the share count and increasing the intrinsic value per share for the continuing shareholders Greg is expected to be the successor of Warren as CEO so will he be in charge of the main capital allocation decisions including future share BuyBacks Greg has been key in the development of Berkshire Hathaway energy and I think a good Capital allocator does he has he been involved in the share repurchases that have been executed over the past years and do you both Warren and Greg work together in the estimation of berkshire's intrinsic value and the share buyback decisions well then the answer is that Greg I'm going to turn it over to him but the answer is Greg understands Capital allocation as well as I do and that's looking for us and he will make those decisions I think very much in the same framework as I would make them and we've laid out that framework now for 30 years probably or something like that people make it way more complicated I mean particularly if you're working on a doctorate or something it's just a great subject to have lots of footnotes and you know 50 pages or 100 pages but it's it's no more some it's no more complicated than if you and I and Charlie had a business and you want to sell your interest and we could buy it for less than we thought it was worth and without misleading you in any way about what was going on and we'd buy it then but Greg you're on because you're going to be doing in the future right uh yeah well I think Warren you said it really well I mean the framework's been laid out we know how you approach it and with uh and how you and Charlie have approached it and really don't see that framework changing when the opportunity presents itself we'll want to be a an active repurchaser of Berkshire shares we think it's a it's a great outcome for Berkshire shareholders to own a larger piece of each of our operating businesses and our and the uh portfolio of the equity companies when the when the opportunity presents itself it can be the dumbest thing you can do it or can be the smartest thing you can do and is to make it more complicated than that and start getting into all this but you obviously do what the business needs to do first then the opportunities are there grow your present business buy additional business whatever it may be and then you make a decision on dividends but that decision becomes pretty irrevocable because you don't cut dividends and without having them major effects in your shareholder base and a lot of things and then if you've got ample capital and you don't see that you're going to use it all and your stock is attractive and it enhances the intrinsic value for the remaining shareholders it's an old-brainer and if it's if it's above the price of intrinsic value it's a no-brainer that you don't even listen to anybody no matter what investment banker comes in and tells you here's how to do a repurchase program okay station one I'm Tom Nelson a podcast here from North Oaks Minnesota Charlie in 2022 you used phrases like really massively stupid massive kind of ignorance and crazy to describe what you said was the 30 of Americans hesitant to submit themselves to untested mRNA covid gene therapy do you stand behind those quotes today yeah sure well we got time for one more than before lunch Becky okay that I thought I was out but let's see uh how about oh here uh could be how about lunch pretty soon but no okay let's just got one for you this one comes from Drew Estes um this is a question for Warren in your 1969 letter to Partners you said in any company where the founder and chief driving force behind the Enterprise is still active it's still very difficult to evaluate second men the only real way to see how someone is going to do when running a company is to let them run it this wise statement now applies to Berkshire once the second men are running Berkshire what would you advise owners of Berkshire to watch for specifically what actions if taken should give us concern well I think I would just I would have some comfort in the fact that 99 of my net worth is in that company so I probably got a stronger interest in it and perhaps 100 billion or more of philanthropy will be affected by and uh but I would say that I don't have a second choice I mean it is it is that tough Divine but I've also seen Greg in action that I feel 100 percent comfortable and uh and like they say I don't know something happened to Greg I would tell the directors you know they have a problem and they won't I don't have anybody to name and if they put somebody in Berkshire on automatic pilot can work extremely well for a long time I mean it doesn't it doesn't like the businesses go away or any other thing sort uh and you can't it's hard to judge successor management in a really good business because if they if they don't show up at the office it'll keep working for a long time and maybe that like I've been useful input may show itself in five years it may go a long time and uh how are the shareholders you know advised by a bunch of people that are concerned about whether you're meeting earnings projections or something telling them whether the Management's any good thing you know it is very hard it's very hard I've been on the board of 20 companies is very hard to ask me to rank the management of each one it's uh it's it's very difficult to do because some are just better businesses than others some would be better off not managed hardly at all others really need help but they got a lousy business and uh Tom Murphy told me a long time ago is it the secret of business is to buy a good business and it's okay to inherit one too and Greg is inheriting a good business and I think he'll make it better but I don't think it's easy to put any one of the next 10 nominees in and try and judge three years later whether they've done a good job or not it's a it's going to be a that'll be a very interesting job for the board but it shouldn't listen to Wall Street on it they've got the job if they put somebody in there's a surprise we both got out on a plane that put somebody in they've got a real job in assessing that person because it'll depend on how good he or she is as a talker it'll depend on you know them courting Wall Street to be supportive of them all kinds of things and uh we've got some very good people on the board but they would be challenged in that position as would I where I've been in that position and other companies were a very great leader has left and uh on the way back from the funeral you know nobody knows what to do exactly so without jury message we will go to lunch and we will come back we'll see you at one o'clock thank you and we're still going to try and get 60 Questions in we've done 25 so far 20 yeah 25. so keep the question short and I'll try and get the answer short thanks sales are terrific out there so you're my kind of crowd I've been getting reports we're breaking all kinds of records and we're going to start off uh with question number 26. which goes to station two i Warren and chalice my name is James from Malaysia given the reason challenge faced by the major U.S Bank what is your overall outlook on the banking industry how do you assess the risk and the opportunity in this section well anticipating a few questions on banks I decided we should start using Bank language here to describe Charlie huh the situation in banking is uh very similar to what it's always been in banking that fear is contagious always and historically sometimes the fear was justified and sometimes it wasn't my dad lost his job in 1931 because of a bank run and they had a bank run on the State Banks and uh the head of the Omaha National Bank said well we're a national bank and they didn't have a run on the National Banks and of course they both face the same problem so it used to be that if you saw people lining up at a bank the proper response was to get into the line and uh they'll always leave it and the story is that Sydney weibert of Goldman Sachs during one of the great Bank runs back in 1907 or thereabouts had a job as a runner boss if he could take the week off and the boss said sure not much is going on anyway so he got in line whether it's a Knickerbocker trust or wherever and as he got toward the front of the line he sold his place in line to somebody he didn't have an account of the bank but that was an asset and the banking system has changed so much over the years and we did something enormously sensible in my view when we set up the FDIC as many as 2 000 banks have failed in one year back after World War one I mean Bank runs were just part of the picture and if you have people that are worried about whether their money is safe in the bank and I'll find Woodrow you can't run an economy very well so the FDIC was very logical it's got changed over the years some but here we are in you know two thousand twenty three and we actually see the FDIC pay off for the 100 cents on the dollar to everybody or make it available on all demand deposits and yet you still have people very worried about their the periodically geographically all kinds of crazy ways and that just shouldn't happen so the messaging has been very poor it's been poor by the politicians who sometimes have an interest in having it poor it's been poor by the agencies and I'd say it's been poor by the Press I mean you shouldn't have so many people that misunderstand the fact that although there may be a debt ceiling it's going to get changed although there's a two hundred and fifty thousand dollar limit on FDIC the FDIC uh in the U.S government and American public have no interest in having a bank fail and have deposits uh actually lost by people we had a demonstration project the weekend of Silicon Valley Bank and the public is still confused so it's really it's something to have a law that was passed in 19th or a law that became effective in 1934 although modified in some ways not understood about something as important as a banking system I don't think the American public is that dumb and I don't I just uh well I made that offer over in Tokyo incidentally that I haven't heard from anybody that wants to take up my Million Dollar Bet on whether the public will lose money in uh if they have a demand deposit uh at the bank no matter what the size so that's the world we live in it means that a lot of match can turn into a conflagration or it can be blown out and uh who knows what will happen and we don't have any worry we keep our money into cash and treasury balls at Berkshire because we keep a hundred and 28 billion or whatever it was at the end of the quarter and we want to be there if the banking system temporarily even gets stalled in some way uh it shouldn't I don't think it will but I think it could and I think that the incentives in Bank regulation are so messed up and so many people have an interest in having a messed up uh that is it's totally crazy I mean it's the Fannie Mae and Freddie Mac we're doing 40 or so percent of the mortgage business the United States that is huge they were regulated oh just those two companies were regulated by some group I forget what they called but they had 150 people that were in charge of just figuring out whether funny and fatty were doing the right thing but I could have done it you know it's probably it could have done it you know and uh I'm not sure they needed an assistant even to do it but the incentives were all wrong and Freddie and Fanny which we're doing fine in August of apparently doing fine in July and August of two thousand eight were put into conservatorship you know early in September and the things that followed from that were just incredible so they're our second order and third order and fourth order effects uh that are somewhat unpredictable as to what they will be and the sequence and all that but things change and if people think that deposits are sticky anymore they're just living in a different era uh you know you can press a button you don't have to get in the line and wait for days and have the teller counting out the money slowly in Gold so that you hope the line goes away you can you can have a run in a few seconds so uh the way it hasn't been addressed properly is a problem and who knows where it leads but you'll have to have a punishment for the people that do the wrong thing and if you take First Republic for example you could look at their 10K and you could see that they were offering non-government guaranteed mortgages to in jumbo amounts at fixed rates sometimes for 10 years before they change the floating and I mean that's a crazy proposition if it's to the advantage of the bank they get it they get the guy coming in and says I'll repo Finance it one and a half percent and then one percent and if it's that's Advantage the other way the fellow keeps on 10 years you don't give options like that but that's what first Republica was doing it was a plain sight and the world ignored it tell it blew up and uh some of the stock in some of these banks that were held by Insider it was a soul and who knows whether they had a plan or whether they some planet was innocent or whether they started sensing what was coming but you do know that the directors are not going to be able to read some book or anything like that but they do they do have the ability to hold the CEO accountable CEO gets the bank in trouble both the CEO and the director should suffer the stockholders of the future shouldn't suffer they didn't do anything it doesn't teach anybody any lessons or anything it teaches the lesson is that if you run a bank and you screw it up still live you're still a rich guy and the clubs don't drop you and the charity groups don't quit asking it to their benefits and the world goes on that is not a good lesson uh to teach people who are holding the behavior of the economy in their hands so I think there's some work to be done but I don't think it's it's not a difficult problem it's just we've screwed up the answer and we've screwed up the communication of it Charlie well I'm so old-fashioned that I kind of liked it better when Banks didn't do investment banking that makes me very outmoded in the modern world and the country decided it was contrary to public interest for a while and then the banks wanted to get back into it did they ever yeah no I mean I don't think having a bunch of Bankers all of them were trying to get rich leads to good things but I think a banker should be more like an engineer he's more like into avoiding trouble than he is getting rich yeah and they could do fine they can do fine that way and I think we had a big mistake when we go to the bank where everybody who joins us plans to get rich yeah it's a it's a contradiction in values and we came to that conclusion I don't know when class still was passed or anything but then they want to get back in how many of you know and I maybe I'm wrong on this I haven't looked lately but the Federal Reserve actually was given the responsibility for setting margin requirements and they changed margin requirements a lot of times because it was known that people that borrow a lot of money cause the danger to the bank system if you get too many in the picture and all of that sort of thing and uh what's happened the banks figured out a thousand different ways to get so you could borrowing 100 margin you know different I mean through derivatives and everything they just totally distorted uh every all the lessons that were learning the 29 crash imagine taking banking into derivative Trading who in his right mind would have allowed that yeah well there's more money in it well that's why they're in it yeah and but it isn't necessarily a great social outcome for the rest of us that's what that's what those Senate committees decided back in 1931 and 32 and then in the late 1990s particularly I mean you know very decent people but you know Bob Rubin and some of the people that you know they said this is the modern world and here's what the modern world is turned out to hand us and uh banking can have all kinds of new inventions but it needs to have old values and uh well if we don't we don't know what's going to happen you know because uh there are a lot of things that could happen out of the present situation depositors will not lose money stockholders and debt holders of the holding company they should lose money and the people borrowed on out on Commercial Real Estate and now it isn't the loans aren't getting extended they should leave it's too bad I mean that's part of borrowing on 100 margin which is what people were doing I've been doing in commercial real estate you've got to have the penalties hit the people the cause uh the problems and if they took risks that they shouldn't have it needs to fall on them if you're going to change how people are going to behave in the future okay Becky this question comes from Davis Hance in Houston Texas he writes what do you think about the business models of the big Banks as compared to the regional banks in the wake of the events at Silicon Valley Bank and how does the perceived implicit guarantee of all deposits at all banks affect big Banks and those Regional Banks yeah well I can say this if you found if you follow sound banking methods which means not doing some things that other people do huh a bank could be a perfectly decent investment in fact Charlie and I was me originally in 1969 we bought a bank at Berkshire and we had 19 million dollars invested in that bank and we had 17 million I think invested in our insurance companies and if the banking holding company Act of 1970 hadn't been passed we might have ended up owning a lot of banks instead of a lot of insurance companies we were looking at more Banks and Harry Kip was taking us around Chicago and there were other things we could do and then Bingo they passed the 1970 Bank holding company act and we had to divest ourselves of that bank in 10 years which by the way had never had a bad debt oh it never had an unnecessary cost it made nothing but money with no risk and never presented any Deposit Insurance risk to the government zero it was a lovely sound constructive institution in this community and any person already deserved credit could get credit and we were going to buy more we were forced out of it and we were going to buy more Banks and if we bought more Banks we probably wouldn't have expanded the insurance business but you know the law changed and so we divested and we've done all kind of insurance but banking was more attractive to us it was bigger and there were more targets uh to buy and uh you could run a perfectly sound bank then and uh no negotiable certificates advise all these things all the inventions that came later and you could still run them today and you could earn you can learn a lot you can earn good money very good money and we didn't we would have found more Banks but uh were precluded from doing that and we sold Banks Bank stocks uh in the last well we sold them first when the pandemic broke out and then we sold some more in the last six months and uh we don't know where the shareholders of the big Banks necessarily uh or the regional Banks or anybody are heading I've got my bank I've got my own personal money and I'm probably above the FDIC limited I've got it with a local bank and I think I don't worry about it in the least but in terms of owning Banks events will determine their future and you've got politicians involved you've got you've got a whole a lot of people don't really understand how the system works uh and I would say that the event something less than a perfect communication between uh various people and the American public so the American public is probably as confused about banking as ever and that has consequences and nobody knows what the consequences are because uh every event starts recreating a different Dynamic I mean in physics you know that Pi is going to be 3.14 you know infinite number of numbers after that but uh no matter what happens but you don't know what has happened to the stickiness of deposits at all they got changed by 2008 it's gotten Changed by this I mean it and that changes everything and so we're very cautious in a situation like that about ownership uh A Banks and we do remain with One Bank holding a deal that but we originated that deal and uh with the Bank of America and I like Bank of America I like I like the management and I proposed the deals of them so I'm I stick with it but do I know how to project out what's going to happen from her the answer is I don't because I've seen so many things in the last few months which really weren't that unexpected to me to see but which reconfirmed my beliefs that the American public doesn't understand their banking system and some people in Congress perhaps don't understand it any more than I understand I don't understand what the spaceships call I mean there's all kinds of things I don't know about but if you're in Congress you'll take a position on everything and sometimes it's your advantage if you really understand it not to say exactly what you what you feel and uh and here we are Charlie yeah well a lot has happened in banking in my lifetime I welcomed all that early banking of the disturbing immigrants by the early Bank of America and I think all the credit cards when they came in as original bank cards were a great contribution to civilization and but the game year it gets the more it looks like Investment Banking the last I like it as a citizen I'm always I am deeply distrustful situations to which everybody wants to get rich and envies everybody else I regard that atmosphere as utterly toxic and to people who like one story which is again a true story and I'm not naming the name and it wasn't Pete Jeffries because he might fit this name but it wasn't Pete but our hero Gene abeg was going to have to retire at some point and so we hired a future replacement it's got a little problem I talked before about having the perfect business and now we're going to bring in somebody we actually bring in some money but what does Central High with Charlie all over my class yeah and Charlie didn't know I was picking out of this guy and he wasn't he didn't ask me we wouldn't hurt him well if I asked you I probably wouldn't hire anybody but that's another question but this guy comes over a perfectly decent guy but presentable you know it looks like a banker and everything and of course the first thing he wants to do we've got this wonderful bag but we have the crummiest looking building in Rockford and we don't need a great building we just need a great banker and naturally this guy wants to build a new building and uh because we were the most profitable bank but we didn't look like it really was probably back again so I told him he could have any building he wanted as long as it was not higher than it had to be shorter than our nearest competitor and he lost interest totally he wanted to be on the top floor of the of the biggest building in town and I told him to get horizontally do anything he wanted but he couldn't do it vertically it taught me a lot about the guy's motivations in life but and he didn't end up running the bank anyway that's all I know about bagging probably more uh station three Mr Buffett and Mr Munger hi my name is Daphne I'm 13 years old and this is my sixth annual Berkshire halfway sandwich and I've had the privilege to ask you both questions in years past my question for you today is the following as you know the U.S national debt is currently at an estimated 31 trillion dollars making up about 125 percent of the U.S GDP in the meantime over the past few years the Federal Reserve has telegraphed that they intend to monetize the debt by printing trillions of dollars even as they insist that they're fighting inflation already other major economies in the world such as China Saudi Arabia and Brazil are moving away from the dollar in anticipation of this my question is are we likely to face a time in the future when the US dollar is no longer the global Reserve currency how is Berkshire prepared for this possibility and what can we do as American citizens to attempt to shelter ourselves from what's beginning to look like the beginnings of d dollarization well hey I should ask you to come up here and answer some questions I mean hey uh it's very interesting I mean we are the reserve currency and I see no option for any other currency to be the reserve currency and uh I think that nobody understands the situation better than Jay Paul and uh I but he's not in control of fiscal policy and every now and then he drops a few hints uh and there was no question that when the when the in pandemic broke out I mean it was a semi-war-like situation but nobody knows how far you can go with the paper currency before it gets out of control if and particularly if you're the reserve world's Reserve currency Nobody Knows the answer to that and you don't want to try and pick out the point at where it does become a problem because then it's all over uh and uh I think we should be very careful I mean you know we all learned keynesianism and we applied in World War Two to the advantage of the country and we did everything we could to prevent inflation during the war and then the war ended in August the 45 and I think in January 46 and I'm not giving you exact figures at all now but in January 46 I think the rate of inflation was it you know something like one percent or thereabouts and by the end of the year I think it was at like 15 and again I'm doing this from long memories but it's easy for America to do what's a lot but if we do too much it's very hard to see how you recover once you let the genie out of the bottle and people lose faith in the currency and they behave in an entirely different manner than they do when they feel that if they put some money in the bank or have a pension planned or whatever it may be that they're going to get to have something with roughly equal purchasing power and it just changes legal economy and all kinds of things can happen then and I can't predict them and nobody else can predict them but I do know they aren't good and uh we will see and I do this as my you know I voted for both parties and it's it's it's not limited to politicians if either party or anything of the sort uh people take positions some of them understand what they're doing some don't understand what they're doing uh and uh you know if they put me on some Medical Board I don't understand what I'm doing you know it's not there's nothing wrong with the fact that you that you can't master everything it can all be Isaac Newton but you can't go around pretending you do or making decisions on it and we are not as well off in relationship to curbing inflation expectations which become self-fulfilling uh and we don't know as well off as we were earlier and Berkshire is better prepared than most Investments for that kind of a period but I said this in the annual report but we aren't perfectly prepared because there's no there's no way to perfectly prepare you don't know what course of action will occur and uh it's a very political decision now it's a tribal decision to some degree uh and uh you'll hope for leadership that uh actually will do something recognizes the problem and America is an incredible Society Rich you know every we got everything going for us but that doesn't mean we can just print money indefinitely that uh as that and uh it'll be interesting to see how it turns out Charlie well that's that suppressing money to buy votes will be counterproductive yep and we don't we don't know exactly where that comes and if something is going to be dangerous and unproductive you ought to keep it a fair distance away now if you have a culture that is exceptionally strong like Japan they have done some strange things there but they couldn't have been a reserve currency no of course not and but Japan brought back most of the national debt and most of a lot of the Common Stocks and that just the Federal Reserve inspired about everything in Japan and the country's working it's in and 30 years of economic stasis but it's not going to hell I really admire Japan and but I don't think we should try and imitate it I don't think we're as good as good as Japan at taking they have a cohesive culture and we don't Charlie that's exactly right in Japan everybody's supposed to suck it up and cope and in America We complain so I hope you come next year with a tougher question but and thank you and I predict I would love to be being born again today in the United States I mean we can do a we can do a lot of dumb things and get away with it we can't do an unlimited number there are people who care about that and uh you know you have to be willing to be extraordinarily unpopular I mean Paul volcker uh there were there are other Federal Reserve chair people that would not have not have done what they did it's just it's it's too uncomfortable and uh there used to be a politician in Nebraska and if you ask them some really tough question like you know how do you stand on abortion or he would look you right in the eye and say I'm all right on that one and then he moved next door well that's what people have done basically on inflation and they one way or another they uh they say I'm gonna write on that and then they don't really think about what the consequences of their actions could be particularly and it's so much fun there's 435 of you to just be one of 435 instead of being the person actually responsible anyway I am still next to the question of two superpowers and when you get into really destroying a planet destroying the reserve currency of the world when there's really no substitute and forget about all the toys you know with I mean it's a joke uh to think of any tokens or that sort of that's Madness but it's also Madness they just keep printing money yeah and we know how to do it and we actually came from a money printing economy in World War II which was required and we suffered significant inflation the price of a woman I mean there's a million ways to judge it but maybe 10 times what it was then or something like that well that's that's getting close to the edge of where you don't want to you don't want old dollars anymore you want to hold something else uh I'm gonna hold real estate you want an old interest in a business there's a lot of good ones your best your best defense is your own earning power if you're the best doctor in town if you're the best lawyer in town if you have a teacher in town or even if it's the 10th ambassador you're going to make a good living I mean uh you know the economy is productive and you will succeed with your talents but you won't succeed by hoarding dollars you'll just be you'll just succeed by the fact that you're you're valued to the community which is a rich Community overall is sustained and so the best investment is always in yourself that's the answer I would give you well we have a situation where we've learned to print money in gobs and little a big chunk of our young people go right into Wealth Management this is like we did like we do like we did yes we've been bad examples and I want to say that I didn't realize wealth management was going to get so big when I went into it and I also apologize for what's happened yeah well anyway you did well Becky this question comes from Gary Gambino in Parma Ohio who says he's been a Berkshire shareholder since 2004. he says the amount paid this year for the 41.4 stake in Pilot values the entire company at around 19 billion dollars that's about six times what BP is paying for Travel Centers of America but Pilot's market share is Just Three Times Travel Centers of America's was it a big mistake to base the final price on 2022 earnings which has unusually high fuel margins well that's a very good question and the answer is that we arranged to buy it in three stages uh with the third stage being at the option of these owner of 20 the first stage we bought it what turned out to be a very attractive price the second stage turned out to be a very good year for the diesel business which means that the seller got a very good price and I would say that overall we feel very good about the fact we only 80 percent at the price that we do but we would have rather owned a better if we just bought the 80 to start with and the last 20 percent the seller has the option and that's always uh an unintelligent way of structuring something we've had that arrangement with other well we did it with the furniture mart we bought 80 of the Furniture Mart on August 30th 1983 almost 40 years ago and it's worked out perfectly but uh when you give the other person the option they've got some Advantage we have 80 percent novel business we like very much and the comparison to travel America is really Superior because Travel America not only much smaller but they run all their properties we have hundreds and hundreds of locations on the interstate that are zoned for what we commercial and maybe 15 Acres or 20 there's nothing like it and they're not going to move the interstate two miles to the right or something and then you know the swords so we've got a position that uh travel I mean you know BP may have may or may not have made a fine deal I've read the prospectus uh and I can understand I mean it's a big source of output for BP but uh I like I like the management we have had at the at uh pilot I like very much the followers coming in uh the new CEO uh I just have to tell you a little bit about Adam Ryan who's taking that job on he came from Omaha he wasn't selected because he came from Omaha he came from Omaha he came from North High that a public school and my wife graduated from I've got grandchildren that graduated from there he went to the University of Nebraska to almost set the rushing record uh in football which will never be beaten because they've given up football but I think he rushed for maybe 3 600 or he held three jobs while he went through there he interned at Mid-America 20 years ago his mother worked to put him through school I mean it's just it's Horatio Alger squared and we have him to manage pilot and the haslams of giving us a wonderful business they Big Jim you know he uh my advantage I mean great people and here we are uh and I'm glad I'm very glad we owned pilot I just wish we bought 100 percent of it when I first made the deal but that was not the deal where it wasn't for sale it wasn't for sale yeah and then suddenly the last 20 percent of the Furniture Mart wasn't for sale when we bought so we bought 80 of it and that's worked out well and we've done various deals various ways the best way to do it is just write people to check and get the stock was we did that with TTI but you can't always make the same deal we make we find if we like the business well enough and the people well enough we will tailor it differently but our preference is to write a check and own the whole place and keep the management in place no yeah I hope it's really wonderful to watch something like Adam wrightwork I mean the basically you know I don't know what his mother was earning but he went to North High which is probably four or five miles from here public school graduate and worked his way up went for a short period of Pacific Gas and Electric and we brought them home to run pilot and pilot well pilot the prices on diesel were way different last year I brought Pilots close to 80 billion of sales last year but more normal prices it's it's a significant and you know it's half that or thereabouts and maybe a little more but he is I don't know how old Adam would be but it's in his 40s and he came up through he came up through the organization that Greg Abel was involved with and now there he is running a very major business I mean it's good I'd for sure to be able to do that and uh I don't you know somebody else may have gone to war presidents Business Schools or anything so what you know we've seen what Adam can do okay station four good afternoon Mr Buffett Mr Munger my name is JC I'm 15 years old and I'm from Ohio this is my fourth in-person Berkshire meeting I have a lot of passion learning from your speeches interviews and articles thank you for sharing your wisdom all the time Mr Buffett in your annual shareholder letter this year you said that berkshire's Journey consisted of continuous savings the power of commanding the American tailwind and avoidance of major mistakes you have humbly admitted in the past that you have made many mistakes but this is the first time that major mistakes stood out to me could you please advise us on what major mistakes we should learn we should avoid in both investing and in life I would also like to have Mr munger's thoughts to please thank you very much Charlie said the major mistake you can make then you know you're you're lucky if you're in the United States to go around the world they don't have a lot of choices some in some places but you should you should write your obituary and try and figure out how to live up to it uh and uh you know that's that's something you get wiser on as you uh go along the business mistakes uh you just want to make sure you don't make any mistakes to take out of the game or come close to taking out of your game you should never have a night when you're worried about investing I mean assuming you have any money to invest at all and you should you should get to spend a little bit less than you earn and you can spend a little bit more than you earn and then you've got debt and the chances are you'll never get out of debt I'll make an exception in terms of a mortgage on your house but credit card debt and we're in the credit card business big time and the board will stay in the credit card business but why get behind the game and if you're effectively paying 12 or 14 or whatever percent you're paying on a credit card you know you're saying I'm going to earn more than 12 14 of money and if you can do that come to Berkshire Hathaway so it uh it's it's I hate to say this for Charlie's around me but it's straight out of Ben Franklin and uh it's not it's not that complicated but uh you well I'll give you a couple lessons on you know Tom Murphy the first time I met him said two things to me said you know always tell someone to go to hell tomorrow well that was great advice then and think about great advice it is when you when you sit down on the computer and screw your life on Forever by telling somebody to go to hell or something else in 30 seconds and you can't erase it uh and you know you haven't lost the option you know and he said you know praise my name criticized by category well what makes more sense than that I mean who do you like to criticizes you all the time and uh you don't need to you don't need Abilify anybody to make your point on subjects of discussion and uh and then they give you another General piece of advice I've I've never known anybody that was basically kind that died without friends and uh I've known plenty of people with money that have died without friends uh including their family and uh but I've never known anybody and then and uh you know I've seen a few people including Tom Murphy Senior and maybe Junior who's here but certainly his dad uh he I never saw him I watched him for 50 years I never saw him do an unkind act I didn't I didn't seem to do with very many stupid acts either I mean it wasn't he was not a discriminating he just uh he just decided that there's no reason to do it and uh wow what a difference that makes in life Charlie well it's it's so simple to spend less than you earn and industrially and avoid toxic people and toxic activities and try and keep learning all your life etc and do a lot of deferred gratification because you prefer life that way and if you do all those things you are almost certain to succeed and if you don't you're going to need a lot of a lot of luck and you don't want to need a lot of luck you want to go into a game where you're very likely to win without having any unusual look I'd add one more thought too I you need to know how people can manipulate other people then you need to resist the temptation to do it yourself oh yes the toxic people who are trying to fool you or lie to you who aren't reliable meeting their commitments a great lesson of life is get the hell out of your life and do it fast and I would add with Charlie wouldn't totally agree with me do it tactfully if possible too but do get them out of your life yes yeah I don't mind a little tact or even a little Financial cost but the question is getting the hell out of the law okay Becky all right this comes from Roger uh lee town he says my name is Roger from Hong Kong a long-term shareholder of Berkshire admirer and follower of Mr Buffett's amonger's wisdom and principle both of you have said before that the most difficult problems in life are always people problems and one of the key lessons you have learned to be able to live a happy life in a successful life is to stay away from negative people my question is what to do if those negative people are your families that people whom you can't simply stay away from yeah you minimize it but you can't I mean there's no question about it but Charlie gave an answer I thought was a master of attack the other day when he says you're always on a hold on interact with people who behave well he says of course you have to make some exceptions to your family but this but it's true and uh you know you really I don't know what it's like to have you know a drunken you know bullish uh but probably father but parents just generally I mean it you know how do you handle it and uh it's very interesting that the MacArthur family uh the very famous John MacArthur the battle set up the MacArthur Foundation uh he had five kids and four of them turned out to be superstars of one sort or another and they had this crazy generous drunken father but they all decided the thing to do was get the hell out of the house and uh so yeah this the father of the MacArthur Foundation that did that along with three of the siblings out of five cell you know I was lucky I mean Charlie was lucky that uh it uh you know if you if you have a I mean her father saw plenty of shortcomings and both of us but you know it would still be there for us and if you have one that won't be there for you know I uh it's a very tough problem and I think one way or another I probably would have gotten through with that through that if I had that situation but I don't think I think my life would have been a lot different Charlie I have nothing to add but we're okay station five hey wadden I'm childless good afternoon my name is Arkansas Home of Walmart I'm here shareholders since 2019 and my daughters are shareholder since 2020. my question is this is my first time coming to shareholders and my question is Walmart and Berkshire hathway has very great relationship with BNSF McLean and consumer goods like Fruit of the Looms and granimals and Etc my question is granules is exclusively sold at Walmart and Fruit of the Loom is sold at many other retailers how does Berkshire hathway decides some items are sold at some retailers exclusively versus others are sold at many retailers well that's a good question but uh obviously you'd love to control if you have a product you'd love to control the distribution and you're probably going to get better gross emergence if they ask for you by name I mean they just had an article about Bernardo Arnold oh LV I'm H and you know he's got a blue box of Tiffany and the blue box itself means something and the Coca-Cola the bottle meant something in the 1920s I think there was a study of that kind of Hope skirt bottle and blindfolded a very high percentage of the population could recognize it was Coca-Cola when they can recognize not only that the product was a container uh you know you're going to have good gross margins and if you're just another Cola and there have been hundreds of them uh and even if you have distribution through something like Walmart who has Sam's Cola it just doesn't it's not the same I mean here I am you know and 1886 or so John Pemberton in Atlanta uh created it and they spent very significant amount of money advertising on the other hand Hershey's didn't spend any money on Advertising so we have observed Charlie and I balls The Bobs there's so many products so many methods of retail and we really think we know quite a bit a lot of it and we also know how much we don't know about it at the same time and it doesn't mean that we want to going to retailing ourselves but it does mean we've learned to some extent what to avoid uh and we've learned when somebody really has something the animals have something it's just that there's only many you know at Walmart does a great job of distribution for us and it's a good product for Walmart is good product for us and uh on Fruit of the Loom uh they can solve lots of types of underwear and they can do a big volume but we're not going to make as much money rather simply to Capital employed or anything with a product that uh that has a whole bunch of competitors and if the kid wants to go animals uh pajamas or something uh it's not it's not the sort of product that causes people to drive 20 miles out of their way to buy it or anything of the sort but if you're in the Walmart and you're you're picking out pajamas or something for the kid and he or she wants a particular product and it's not and it's reasonably priced and everything and wears well whenever you know we will we're happy to have it distributed through somebody with a distribution power of Walmart and their design they're very happy to have the product uh unbalance is obviously better if you own See's Candy then if you own the no-name candy company uh you know particularly women people buy it as gifts a couple times a year I mean they know that if they give if they give them their girlfriend if they give someone in the hospital if they give a gift to Christmas or going to a dinner they know if they hand the box of candy to somebody they don't say at the same time here I got a wonderful deal on this candy I mean had some kills the moment right what they really want to see is a smile on the other person's face that they're receiving it and they get it so uh knowing what customer and season box chocolates a are not remotely the market that soft drinks are and the product does not travel particularly Hershey's chocolate didn't travel I mean if you look at candy bars what's popular in the UK isn't that popular in the US and all kinds of things Coca-Cola travels there's 200 countries and roughly in probably 180 of them it's the nominal product and uh how do you do it well it helps if you started in 1886 from that point forward uh so we've learned a lot we've got a lot to learn but we did learn something like our animals we understood when it came around nobody ever heard of it we bought it for very low price as it turned out in 20 years ago and still Nobody Knows It hardly that we own it and that's fine but they know what Garanimals are and it has legs it keeps it just keeps going year after year and some things are like pet rocks and we're learning all the time try I have nothing to add okay you probably have never bought anchor animals no I never I don't even wear them you wouldn't fit okay Becky this question comes from Barry Laffer in New York City Berkshire owns about 94 million shares of Paramount Global as of the last published data this asset-rich company is disappointed on recent quarterly earnings reports in just this week slashed its dividend by 80 percent how do you see the streaming Wars evolving and do you still have conviction in your investment thesis is your investment thesis based on the company being an acquisition Target or based on its fundamentals yeah and how would you like to manage my money for nothing of giving stock advice to people and people who don't know anything about stocks can make a lot of money doing that and we don't think it's something we should give away but I will say this it's not good news when any company passes a dividend or because it's dividend dramatically and the streaming business is extremely interesting to watch because there's people love to use their eyeballs watching being entertained on a screen in front of them or on the phone or whatever it may be but uh there's a lot of companies doing it and you need fewer companies or you need higher prices well you need higher prices or doesn't work and you don't lock in people when you get them to join up for the streaming period when your serial runs I mean you know you keep them on for a while but you can't lock them up and uh and we'll see what happens I mean uh I had a gasoline station when I was 21 or 22 in this about three or four months four or four or five miles from here and we had one competitor and uh he determined our profit because he we looked at his price every day and if we cut the price he'd match it and we couldn't raise the price and he did twice the gallery so he won and there's just basic business problems that you see with certain injuries because you don't see what the other Disney was unique uh and it's animated what it offered you know in the 30s and 40s and they wrote the stuff off and then the first showing and then they rejuvenated Snow White and all these other people every seven years and that was fine but this is a different world and uh and the eyeballs aren't going to increase dramatically in the time they can spend or it's not going to increase dramatically and you gotta open which is companies that don't want to quit and uh who knows what pricing does under that but anybody tells you what they know what pricing will do in the future as getting themselves Charlie 's had a lot of experience incidentally with Hollywood I mean he used to before I even met him uh I think the movie business is one tough business yeah that's my view the talent will make the money the agents will make the money and if you've got a theater you know the theaters are now doing 70 percent of the business that they did before the pandemic and big hits you know you have enormous grosses but you can't reduce the supply people have only got so many so many hours in the day they've only got two eyeballs and they got more Choice than ever before and they've got stuff that's cheaper is it uh offers them the same experience and not some of them like to experience you know particularly the big hits of going and but it isn't like you can double the number of people or double the eyeballs or anything like that and you've got a lot of people the talent will always get paid and uh when you essentially are packaging that Talent one way or another uh and you need to get higher prices and you've got a lot of strong companies that don't want to quit uh that's an interesting an interesting equation hey if you think the movies are tough try to invest in a New York show I don't know if a conventional stage there they think it's a breach of faith in that business to let the person put up the money ever get any money back yeah well Charlie saw a lot of that actually yeah I goes businesses don't tell them what happened on Cleopatra Charlie no it uh it's a business that everybody's tempted I love the idea of going in it you know and they get a certain amount of psychic income but uh but I never owned any resources either well I my father-in-law and I used to talk about claiming a horse in the carbon button we never quite got around to it we had a lot of fun to worry the track together okay section six good afternoon my name is Hannah Hayes and I'm a high schooler from Iowa you said earlier today that transitioning to renewable energy has the people and capital to support it so with enough investment and Renewables the development of energy storage technology to soon meet Iowa's energy needs and support from the government system through inflation reduction act funding why hasn't Berkshire Hathaway energy truly invested in the future by accelerating retirement plans for the coal plants which have high operating costs and are currently Iowa's biggest carbon polluter and will continue to be until they're finally retired in 2049 which is too late to be curbing emissions according to the ipcc and it's very interesting we the in Iowa we have actually produced more wind energy than is used the term amount of energy used by our customers but it's not it's not producible 24 hours a day necessarily so the there's problems and incidentally in Iowa a significant majority of counties welcome us when we come around and want to put in wind and some don't want it I mean it you know it is it is a there's a knot in my backyard someplace there's other places where they love the money they get from a small pot of ground and people in the like the taxes that are paid but I would say that if there's one state in the Union that stands out in the development it's it's Iowa but what's also interesting in Iowa is that we have one other major company there's always loads of little co-ops and all kinds of things that sell electricity but we have one major competitor and uh our prices are uh significantly lower and as a matter of fact we are now in the Omaha Public Power District and three miles or four miles away we're selling electricity in Iowa and we are selling it cheaper even though Public Power was invented in Nebraska and has been a uh I think it's George Norris did it back in the 1930s and you know it's it uh it's Nebraska's resisted to some extent uh wind power more than Iowa but like I said our competitor or Alternate Source hasn't really pursued it the way we have but I wouldn't I would say that our record in wind and solar has not been taught by any hotel in the United States and of course it's been aided by the fact that most utilities pay out 70 or 80 percent of earnings and dividends and uh we haven't taken a common dividend out of about a little tiny preferred we haven't taken a common dividend of you know for 20 years we reinvested I don't know how many billion that's the reason why their earnings have gone from 200 million to 4 billion but we're not earning a higher rate of return on Capital than we were when we started we just put way more Capital into the businesses we went along kept reinvesting the capital so I wish Greg were to tell you more details about it but uh but uh I would say that we'd put up we'd really put a Berkshire Hathaway Energy's record against any utility of the United States petroleum you watched it well I have and uh I'm not personally at all sure how bad the global warming is going to be I think I don't think anybody knows for sure whether seeds are going to rise two inches or 20 feet and so I think there's a lot of faults claims here in the world where much is not known yeah we Wyoming there is a lot of wind in Wyoming and we are building trans Mission lines to extend out through the west but it was World War II when they told us to do it and somebody we had a czar and in Washington could say you know just get it done like I said the Henry Kaiser I'm building ships you know you can't believe how far ahead we would be down from where we are but we've got some money we've got the know-how and we do spend about this year our depreciation and our utility companies on the order of four billion dollars and we spend maybe three billion additional left so maybe we spend seven billion and uh and there are very few companies in them in the utility industry that are spending you know that percentage up there to appreciated but we'd love to be spending more but there are people there are people all over that don't want they don't want the pipeline to go through there they don't want to tell whatever it may be and uh that is the problem of a democracy and even as I mentioned within Iowa you've got a great many colonies that majority great majority of the economies I think but welcome the wind power and you've got some counties that don't like it and we're obviously going to work with the ones that don't want to work with us we do not have the ability to go in and tell anybody what to do on that uh and there's a Public Utility Commission in every state uh that basically governs what we earn on it what we do and that's the way the industry is developing that's not bad unless you get into things that in effect uh you know extend they're part of a Country-Wide system rather than Statewide system I think also that even if we weren't worried about global warming it would make sense too sure shift to Renewables to conserve our hydrocarbons there's certain things higher hydrocarbons can do that nothing else can do and there are only so much of them there why not be cautious in conserving them and the and the cost they've got so much more efficient too I mean the winds now I mean if you look at what we're doing now uh those towers are way more efficient and but there's a lot of a lot of people that are talking uh that uh did all my things that can't be done and then there's there's a there's a lot of nonsense in this field yeah you know if you like nonsense this is the feel for you no well we're but we're in the field so I know I know okay Becky this is a question from Monroe Richardson The Wall Street Journal reported in March that oil producers are producing less oil and may have reached their peak in the Permian Basin given the major positions of both Occidental Petroleum and Chevron in the Permian would you please explain the rationale for berkshire's significant Holdings of both those companies considering that future outlook for oil there well there's no question it's really interesting about oil and Charlie knows way more about oil item what when did you buy that royalty and here Bakersfield or wherever it is but that was before I met you right yes no it wasn't before it was but it was yes it was it was just before you're right yeah and it got em early still paid me seventy thousand dollars a year what'd you pay for the a thousand dollars yeah now that's the opposite of the Permian uh my dad bought a thousand or fifteen hundred dollars worth of Royal lease uh before he died in 1964 he left him with my mother my mother left him to her two daughters and my older sister died and my younger sister's here today and she gets these checks every month and she knows about all these different fields and what they're producing and that's the that's the reality of half of the oil production or something around that in the United States and then the other half the Shale and you know if you've gone to the movies uh I never watched oil you've never watched the things that are pumping Charlie's royalties in California you see these you see these gushers of oil well in the Permian and I'm like this should sink in on you and the first day the first day when you bring in a well uh you know it may be 12 000 barrels or maybe 15 000 barrels uh this it even it's dangerous that um Occidental had one come into I think in 19 000 barrels or something like that one day and in a year and a half that it becomes probably nothing it's just it's a different business in effect and the United States it's interesting we use whatever we use maybe 11 or a fraction what we produce at 11 a fraction million barrels of oil equivalent a day but if sales stopped I mean it would drop to six million very fast well just imagine taking 5 million barrels a day out of the production uh in the world and uh and then we're also taking down our strategic petroleum Reserve uh strategic petroleum reserves the ultimate oil field you don't have to drill it's just we've got it was supposed to be strategic but it gets involved in politics and uh so different kinds of businesses and basically and we like them occidental's position in the Permian and we'd we wouldn't like that position that well I got the minus one day it got the minus thirty dollars or a barrel well that was crazy of course but if oil sells it at X you know you do very well and it was also the half of action you know your costs are the same and it doesn't change the production and it doesn't work as well but it also brings down the oil production of the United States very fast so we don't know what oil prices will be but we do very much like the Occidental position they have and that's why we Finance them a few years ago and it looked like it was a terrible mistake uh when the oil Market just totally collapsed and then it changed around and we bought a lot of the common stock uh in the last few months they've reduced are preferred which wouldn't we don't like obviously we'd be disappointed in them if they didn't reduce it uh it's intelligent from their standpoint so we've taken of the 10 billion dollar preferred we've gotten maybe four or five hundred million dollars of it retired at 110 percent of par but uh Vicky Holloman uh is a she's an extraordinary manager of Occidental her first job was with City service that was the first stock I bought in 1942. uh she knows what happens beneath the surface I know the math of it but I wouldn't know I wouldn't have a fantasy idea what to do if I was in an oil field I mean I don't I can dig two defeat down I can't in my backyard and I can that's my that's my understanding of subsoil in the world I can't picture the field that Charlie has been collecting that monthly checked from 50 plus years 60. uh well 60 years roughly uh or my sister's getting at various Fields where they just keep pumping and bumping and bumping in and uh we in the United States and we're lucky to have the ability to produce uh the kind of oil we've got from shell but it is not a long-term source uh like you might think by watching movies about oil or something of the sort Charles dammit again yeah it really dies fast so what those Shale Wells if you like quick death in the URL Wells that we have them for you but Occidental uh they're doing a lot of good things yeah they do a lot of new wells in the yeah they're doing it in a profit but it's it's a different kind of oil it's just different yeah and that's true of almost half the oil produced in the United States and uh there's times of oil down there that nobody knows how to produce and they've been working at it for like 50 years but they worked at it at the existing Shale production for about 50 years before they figured it out and it was weirdly complicated when they finally were able to do it there's only one type of sand that works can you imagine a horizontal pipe you know that maybe a mile and a half or something it's it's just so different than what you think about uh flat early for three miles two miles down yeah how the hell do you drill two or three miles laterally when you're already two or three miles under the Earth they've mastered a lot of very tricky technology to be able to get any oil out of these Wells at all and we love them positioned with Occidental and yeah we love having Becky run it and uh they've been and there's a lot more oil down there if anybody can figure out another magic trick that's all we need is another magic trick but I've sit down and watch some other things too yes but it does but it the price of oil still is incredibly important in terms of the economics of short lived oil I mean question about that uh well if it's and we will incidentally uh you know I there's speculation about us buying control we're not going to buy control we don't want to we've got the right management running on the weekend we wouldn't know what to do with it Charlie wouldn't mind know what to do anything you're buying coal would be like going out and seeking the would acquire a cancer or something you can't even borrow to expand a coal mine now it's really it got very unfashionable yeah and we think frankly some of the things that are ridiculous and on both sides on both in both extremes I mean it's just I mean you're dealing with physics you're dealing with um you know it's the politicization of positions of something that's enormously important in terms of energy it's just uh it just lends itself to demagogues and fundraisers and advisory organizations and everybody in sight but uh and we will make rational decisions and we do not think it's an American to be producing oil and there is no oil Basin in the United States than comparison to the Permian in terms of Promise yeah we were lucky well we didn't know it was there until yes not that many years ago it has ever been used up and they always knew this shallow was there but they thought it was going to stay unrecoverable forever the second or third stock I bought was Texas Pacific Land Trust and they owned three million Acres down there and he and they were they were grazing revenues of ten thousand a year or something like that they were sitting on this incredible amount of oil and basically that company is now actually part of Chevron and it went through Texaco and did all kinds of things and they're still they're still a Texas Pacific land trust but a lot of that property is fee owned by their minerals are owned by Chevron which is some Advantage but it's uh well it's an interesting subject I'll put it that way and we will not be making any offer for control of Occidental but we love the shares we have and we may or may not own more in the future but we certainly have warrants on which we got as part of the original deal on a very substantial amount of stock at around 59 a share and that was once last a long time I'm glad we have them okay station Seven my name is Max Joe and from Toronto Canada I have a question for Charlie regarding statement you made in the past you once mentioned that you would prefer to hire someone with IQ of 130 who believes is 120 over someone with IQ of 150 who thinks is 170. understand that you were referring to Elon Musk given the recent success of his Ventures such as Tesla SpaceX and starlink I'm curious to know if you still hold the view that Elon Musk overestimate himself thank you so much oh yes I think over almost over estimates himself but he has a he is very talented so he's he's over yesterday meeting somebody who doesn't need to overestimate to be very talented there's a Bill Maher program about a week old maybe two weeks old but he interviews Elon and Elon doesn't say it's a terrific job told us all with Bill Maher who it's worth watching and uh and Elon is he's a brilliant guy and I would say that you know he might score over 170 but he you know it's he dreams about things and they his dreams have got a foundation you would not have achieved what he has in life if he hadn't tried for unreasonably extreme objectives he likes taking on the impossible job and doing it we're different and I are looking for the easy job that we can identify yeah if we can do it playing Tic-Tac-Toe we'll do it you know I mean we have a totally different way of going into the hallway yeah but we don't want to compete with Eli in a lot of things I mean you know we don't want that much failure yeah and it takes over your life and I mean in a way that it just doesn't fit us but you know they're going to be well there have been important things done by Elon already and uh it requires fanaticism isn't the word yeah it is the word okay well it isn't quite the word but yeah but it's a dedication dissolving The Impossible and every now and then they'll do it and uh but it would be torturous to Mayor Charlie and uh I just I like the way I'm living and uh I wouldn't enjoy being in it but he wouldn't enjoy being in my shoes either too duh what's what's the Belmar interview okay Becky this question comes from Foster Taylor um at the 2010 Berkshire annual meeting you said the one question that you would ask of the Berkshire CEO would be about the distribution of cash to shareholders as the Berkshire cash pile grows larger and larger so let me ask that question do you still feel confident of the future prospects for our over 100 billion dollars in cash on hand or are we getting closer to cash distributions well are you know the one thing Berkshire Shares are selling for less than we think they're worth that's a pretty that could be a pretty big uh what it is distribute cash that the but we'd rather what we really like to do is buy great businesses if we could buy a company for 50 billion or 75 billion uh 100 billion we could do it and we can do it and our words good uh it's difficult with a public company because in effect if you've been on a company uh you make the bid and their shareholders vote months later and that you're giving an option if we're good for it and the other guy has a way to uh topio or all kinds of things uh they can get out of it and you get paid two percent for that or one percent for that is not an appropriate price and on the other hand uh Delaware will decide whether they should do it or not and that's that's the way the world is I mean that's that's the law so be easier to do with a private company and there aren't very many that are big on the other hand there aren't very there's nobody else that can quite make a deal like we can under certain under the right circumstances and there could be a situation where a bunch of very a number of very decent companies I've got a very uncomfortable uh borrowing structure and money comes due to them the exact wrong time and that's when they pick up a phone is dead Tiffany and Harley Davidson and you name it I mean a whole bunch of companies uh in 2008 there that sort of thing will happen again whether it results in us getting the calls or what the world is exactly at that time but the one thing we know is that the number of phone calls that you can make at a time like that is very limited and it uh and uh there can be good companies they don't want to sell the company necessarily but they may want they just may need 5 or 10 or 20 billion dollars depending on what company you're talking about and uh that can happen and our own shareholders can be selling the stock too cheap but we'll never do anything to make them solid shape and we'll tell them the truth about what the business is but if Market circumstances result in us being able to buy in 50 billion of our own stock will buy it uh so we'll see what we'll see what the world holds but I don't I don't we don't have the opportunities we used to have but we've got we've got enough and we're making money with what the things we have it isn't killing a stall of 100 30 billion of uh bills at five percent plus Bond equivalent yields and everybody says well yo yields are going to get out of the future I don't have a famous idea what else we're going to do in the future and you know the prime rate was 21.5 in 19. 81 or two and people were worried that it was going to go totally out of spin out of control and Boker kept it from happening but if Volker hadn't been in there who the hell knows what would have happened but uh so we're running Berkshire so that uh we'll do okay and maybe we'll do a little bit better than okay Charlie okay maybe fine okay station eight hello Mr buffet I'm Mr Monger my name is Carlos Sanchez and I'm honored to be here from Guadalajara Mexico Mr Monger as a fellow lawyer I have a question regarding corporate law considering your experience and success if you were to offer guidance to someone when he was at the beginning of his career and before becoming bearshake Hathaway company's lawyer what key principles or lessons would you suggest to help him excel in his profession well I'm not sure I quite caught all of that but yeah what I don't think I have a lot of advice about How to Succeed as a lawyer I have a son-in-law who describes modern law practice and a big firm he says it's like a pie eating contest where you win you get to eat more pie and I advise you to avoid that kind of a law firm life is too short to just do nothing but eat pie yeah Charlie is not practiced law since what 1964 maybe whatever it was but 1962 62. and uh Charlie has given me four or five pieces of advice that don't really come from his legal background but because he knows the system so well and you know really did do quite well at Harvard Law School despite his taunting of teachers and a few things uh he has given me four or five Solutions on things that nobody else in the world would have given me a law firm or otherwise and it and it's it's been a within a set within us almost a nanosecond of when I described a problem to him and they just gave me the answer that nobody else would have come up with and uh I told you one of them last year so I won't repeat it at this meeting but it's uh we've got the best lawyer in the world and Charlie if it's something that really matters uh and uh there have been times when I've taken advantage of that uh and I totally didn't want to be a lawyer he didn't want to sell his time maybe at 20 bucks an hour or something to people he thought were making the wrong decisions and he knew more about it and they did and that just did not strike him as a good way to go through a life but I think he's probably right on that I think he'd it had really gotten to be miserable if he had to keep doing that it's just no fun be like me giving investment advice to somebody that or taking it from somebody I had to you know it just I just wouldn't want to do in life and Charlie figured that out and so we decided to work for ourselves and this work been happy happily ever after we have no complaints yeah none uh okay we're at Becky this question comes from Ryan Harding and it's about the new 15 corporate minimum tax rate as he sees it its implementation is currently understood he thinks that as he understands it to apply over a rolling three-year periods and to be based on reported earnings first is the inclusion of unrealized gains and losses and reported earnings Under The Current financial reporting standards contribute to the calculation for corporate minimum tax rate purposes and could it could potentially convert some of those notional deferred taxes Into Cash taxes even if a rise in the market price of a major holding is only Temple temporary but rather extreme and then second could it reduce the effect of some of the renewable energy tax incentives and others yeah I think the answer on the second part probably is no but I don't want to say it is for sure because uh he's asking the same questions I asked of Mark hamburgers smartest guy on combining understanding a business understanding the tax code understanding SEC rules and everything else uh that you'll find in Corporate America and these questions that the particular question uh on marginal security uh I don't think has been answered yet and I think that there are a number of things about the new tax act that were not an exit but I would say this uh the I you know we have said ourselves what we think the proper approach to operating income we didn't design that because this tax law came along with some years back so we're we would think that you wouldn't include capital gains unrealized capital gains uh in but we've got enough I think no matter how things turn out you know the 15 tax doesn't bother me in the least and uh we can figure ways once we know the rules where we will pay the 15 tax and you know we were paying 52 percent taxes federal income taxes one I bought control in the partnership of Berkshire Hathaway I mean the tax rate come down dramatically and the Deferred tax that was embodied for example of Sanborn map when I was involved in the system that was allowed under the tax law to avoid that tax but that was a huge tax 52 so we will we will live with this tax code and we do not think corporations are overtaxed in the United States and uh you know and I think that the conversation about how we lose out to the world and all that sort of thing is really nonsense uh but uh we've got we got a new law that hasn't yet the regulations haven't been written on and when we know what the game is we will absolutely figure out a way to pay 15 percent every year and which generally we've been paying anyway and as I pointed out if there were a thousand corporations in the United States that pay what Berkshire has been paying nobody else in the United States no individual no Corporation would ever pay any income tax Social Security tax gift tax estate tax anything else a thousand like Berkshire Hathaway would produce the revenue that's being produced by the federal government it's being derived under the present tax code from everybody in the United States and I don't feel badly about that and I'd love to get up to where it's one 500th or something of the sort of done uh but I'd like to do it that's right I'm happy to do it I think we are privileged to live in the United States but we also have to control spending and uh that's something that Congress doesn't quite widely like to give like to do and they didn't like to do it but my dad went to Congress but they've dug in more as the years have gone by Charlie well we would cover this subject earlier yeah okay station nine am I right on this yeah my name is Avalon gross and I am from Los Angeles California I am a shareholder and it's my fourth year coming to the Woodstock of capitalism yeah we're glad you came thank you so much for everything Warren and buff Warren Buffett and Charlie Munger what is the funniest story that you have never told about each other and also what is the hardest part of your business I'll answer the second part of your question is that we don't have a heart business we love our business every morning when I get up I feel good I don't know what's going to happen that day maybe nothing will happen but maybe something will happen and if nothing else I'll roll some tea bills or something but it uh I work I work with the greatest group of people you can imagine I mean we uh we like each other and nobody is after anybody else's job or anything of the sort it's ideal working conditions and it's five minutes from my home or thereabouts uh so I haven't spent my life commuting uh I just can't imagine having it having anything better and uh Charlie's got a lot of funny stories you haven't heard but we'll see what she wanted he comes up with well I think Warren and I are naturally so ridiculous that we don't need very many funny stories we each do things that are peculiar enough so that we can keep one another amused tell them what you told the lawyer when we were buying hostile cone I don't remember you tell them well you remember it was nice I and uh we were down in Baltimore buying a department store and we needed a lawyer and we needed a lawyer who was nearby and would do exactly he was told and Charlie came up with them a very good lawyer from Wilmer cutlers I believe and I don't know whether Charlie remembers the instructions he gave the lawyer or not no I don't oh well Charlie told the lawyer but we never met before and he said well he just he says treat Warren like I was 36 at the time or 35. he's a treat worn like any other 90 year old glad this guy knew exactly what he meant and uh we made the deal in a hurry and then we went to the bank the First National Bank and I believe it was a Maryland National Bank actually and there was a fellow named Cami slock there wasn't it Charlie and the week yeah we wanted to borrow six million bucks against a 12 million dollar purchase and Cami looked at his at us and would bewilderment he says you want to borrow six million dollars in this little old hotel and uh Charlie and I said something to the effect well the Maryland National was our first call and if they didn't want to do it we had another bank we go anyway they allowed us the money but he said a little old horsel calling we immediately started thinking maybe this isn't the best deal we've ever seen in our lives and from that point on we were trying to figure out how to sell it so we've had but we had as much fun uh Sandy Garrison was involved with us then too and we had as much fun out of deals that didn't work in a certain sense as the ones that did work I mean it's it uh you know if you knew you were gonna play golf and you're going to hit a hole in one on every ship hole you just hit the ball and then went in the holes 300 yards away or 400 yards away you know nobody'd play golf I mean part of the fun of the game is the fact that you had them into the woods and sometimes you had them get them out and sometimes you don't so we are in the perfect sort of game and we both enjoy it and we have a lot of fun together and we don't have to do anything we don't really believe in doing I mean we are not dictated to by any group uh and so we get to follow our own we look get the forge our own Dustin here and in a sense towards the own principle by which we can run the company and that's a huge luxury in life and we don't want to be president of any other company in the world or CEO or anything else or we have to conform to certain things that we really don't want to conform to kind of fair description Charlie yeah it is yeah okay Becky this question comes from David Cass who is a professor at the business school at University of Maryland he says at last year's annual meeting Warren mentioned that Berkshire had taken a large stake in Activision Blizzard as a merger Arbitrage play since the UK regulator has blocked its acquisition by Microsoft his Berkshire reduced or sold at stake well I think in terms of what we do with stocks we don't give information except when required to which is in the 13. now for whatever we file and uh and there's some there's certain things you can actually figure out by looking at our 10 or on uh yeah 10q which we followed this morning uh but you have to look pretty hard but um I would say this it's I think Microsoft has been remarkably uh what's the word uh willingdom cooperate with governing bodies and I mean they want to do the deal and they met them the opposition it seems to me more than halfway but that doesn't mean that it gets done if uh I've given country in this case the UK uh wants to park it they're in a better position to block it than the United States but just the way the world works and uh that doesn't get solved by offering more money or so it um I don't know how it how it turns out uh but if it doesn't go through I don't think it's through any short coming by either Microsoft or Activision uh but not everything that should happen does happen and uh well we weren't we ran into it when we when we bought what made the deal with Dominion Energy 18 months ago and that they allowed Us by a good bit of what we wanted to buy and then and then there was government in effect said you can't buy something else which I think we would have done a better job with them anybody else did and which the States involved they're not object to it which the customers didn't object to it but you don't take on the United States government you know and you try and figure out things that you won't have a problem with and uh I think in that case the university government made a mistake I think the British government's making a mistake in this case but that's that's life in the big city sure I would say and uh what we do will depend on a lot of things Charlie well I think what we do yeah we you kissed that one off beautifully yeah okay station 10. hi Warren uh hi Charlie my name is Anderson Fuller and I'm from avonport Nova Scotia in Canada and before I ask my question I just want to thank you for all you've done to give us Insight in your minds as investors um so for me the most compelling takeaway from Berkshire is your guys's emphasis on and successful use of properly aligned incentives in my view owning and leading a business has two essential benefits first you directly benefit as the company goes through your equity in it and second you have autonomy incentives for employees are a bit easier to understand such as offering benefits Fair pay and creating a strong culture but I've always struggled to understand them at the highest level even though you say Berkshire gives its managers significant flexibility it must be less than what they had when they were independent Additionally you would think passion and a willingness to sell would be inversely correlated so how exactly does Berkshire bridge this Gap and incentivize owners of its subsidiaries to give up these benefits to Berkshire thank you well what we really hope to find is managers who love their business but don't like a lot of what comes with it as a public company I mean if they have to spend a lot of time listening to people tell them what to do about this or that and they can't afford to irritate them uh or they have to go along with their trade Association because or what you know whatever they may call it um because you don't want to look like a free rider and there's all kinds of things compromises that people have to make in most jobs and uh Charlie and I solved that problem I had five bosses in my life and I liked all five of them and two of them were just huge factors and making my life better but I like all five of them a couple of them are you know some people here JCPenney Cooper Smith you know I worked with 75 cents an hour and I love I love working at Penney's well I didn't love working at pennies but I love working for uh Cooper Smith and uh you know it was 75 cents an hour but I had to do what they told me to do which was to sell men's shirts first then men's clothing then children's clothing and so on and uh I love working for the newspaper and I had a great manager when I was University of Nebraska got to work for Ben Graham I made everything worked out but it there's nothing like working for yourself and if you can't own a big company working at Berkshire Hathaway for running a company uh is the closest thing you will get you don't have to spend time according analysts who you'll probably have contempt for uh in many cases you don't have to spend time with banks you know getting money and particularly in terrible times yeah there's all kinds of you get a lot in the way of freedom than I would think would be meaningful to me and it might be better if you own the whole place yourself but maybe you've got siblings that want out maybe there's a million reasons why you may not be able to achieve that uh unless you some uh to Berkshire and uh that's easier probably if they have a family business where people want to go in different directions than it is with a public company but there's still possibilities there so that's that's why that's why I think if I owned a public company and it was worth many great many billions of dollars and Berkshire Hathaway wanted to buy it and the shareholders were willing to vote it uh I would considered the way I would feel about life but one thing I wouldn't want to retire at 65. I'd want to keep working and uh that I'm waiting we just we there's there are reasons to solve The Berkshire which Charlie and I in certain positions if we were on the other side would take the deal and uh but it isn't for everybody Charlie I think we have a pretty good one we've been very lucky in and I don't know it seems to me that most of the people are going to end up the way we did they almost already know how to do it well the most important purchase in retrospect that we may have made was National Indemnity not because specifically what it did but what it led to and Jack Ringwald controlled the company and I know a woman liked them and uh he knew me and once a year he'd get irritated uh when the Nebraska Department of Insurance or somebody would come around and he said they always came around when the Aksarben racetrack was open you know so they could I mean he had all these theories about why it was a pain in the neck to be regulated and I and I told Charlie heider next time Jack is in that mood where he's ready to sell just because he's tired of fooling around with all these guys be sure and find them and so Charlie called me one day and he says Jack is in the Heat and I said bring him over and we made a deal well that's why Jack sold and he was happy after he made the deal and I was happy after we made the deal so there's a man that controlled the business but just decided these people didn't seem to bother him as much once they were my problem and not his and you just can't tell when lightning will strike and that didn't do magnificent things for us initially but just look at what it led to you know and then uh so you never you know if you knew if you knew how you were gonna again if you know how you're gonna shoot all 18 holes it wouldn't be any fun playing you wouldn't get on the First Tee I mean it's it's the it's the uncertainty the fun of playing the game the opponents all kinds of things that make a game interesting and I think Charlie are in the most interesting game in the world okay Becky here's a question from Simon Withers in Perth in Western Australia it's been a long time since we've heard about See's candy and netjets could you please give us an update on C's performance and when you project it we'll run out of places to open stores in the United States and could you also give us an overview of how netjets has performed since its acquisition and whether it's achieved the potential you saw at the time of that acquisition well with seeds it hasn't been a question of opening stores we found out that we've tried about we've had this wonderful brand that doesn't travel you know uh the Mystique the actual product the feelings people have about some things as we said before I mean it sometimes is it's limited to giving Marcus Dr Pepper sells at a huge rate in Dallas Fort Worth and maybe I'm maybe 10 times the percentage per capita maybe that it has in Detroit or Boston and you say well how can that be will the products been around for a century and people travel and you have National advertising and I'm not sure but I kept learning more as I watch different brands and Charlie and I our economics were so good in California that we tried to in many cases the same experiment over and over again doesn't cost much to experiment and we've tried everything in the world Doom close the brand to travel and we always think we were right for the first week and then we find out that the magic we can we can beat any other candy store pretty much but there aren't it you can't these stores nothing more to speak of as the world has changed so uh sees is a 101 years now it has magic and it has limited Magic and sort of the adjacent West you can almost as gravitational almost and then uh you get to the East and incidentally in the east people prefer dark chocolate to milk chocolate in the west people prefer milk chocolate to dark the easting cell Miniatures in dark the West I mean there's all kinds of crazy things in the world that consumers do but you want to keep observing it because you do learn a little and with Charlie and I'm sorry the temptation to keep trying things because the economics were so good if we succeeded so we tried various things and of course every manager wants to drive that comes along because they 've learned you know it should work but it doesn't work so but that's that's what makes it very interesting in netjets we have really learned how to distinguish and justifiably distinguish uh a service at the people so that if you can you have to be very well to do to use it but if you're very well to do you're in effect you're you're spending your errors money I mean it's what I told my adults after she went from teaching to be worth millions and millions of dollars and she came to see me she never been married and she said can I afford to buy this for a coat in 1968 or nine and I said Alice you aren't buying it your nieces and nephews are buying it because that's who you're leaving your money to and speaking on behalf of your nieces and nephews I've said we want you to buy it and it's the same way you know do your heirs want you to fly around in that gesture do you want to leave a little more money to your foundation or your kids and where to solve that one is to offer your kids a few hours themselves and then their attitude can change so it's it's it's in a class by itself it's it's done what Ferrari has done in a different sort of way in cars Ferrari sells 11 000 cars a year I mean maybe twelve thousand and you know they're known throughout the world and we'll have a Chevy dealership in Austin or something we'll sell as many cars but we're not Ferrari and Net Jets has 600 and well I'm counting Europe I'm at maybe 631 we're going to buy 100 planes this year and we won't sell any because we've got a backlog and we took we took a nutshell flight over to Tokyo and we arrived in good shape and we spent a couple days there we flew back and there's just nothing to it now you can say well you're getting sort of decadent and all that in your old age but uh the money all go to fly into being though the money will probably be 100 billion or more and I forget the philanthropies want me to spend a few bucks on myself all it has to do is be better than the last dollars that are spent by various financing piece which have plenty of problems finding things to do to make lots of sense so uh not just there isn't any competitor I mean we've looked at the other day wheels up stock came out at ten dollars a couple years ago it was selling at 48 cents the other day and they got 12 600 people and have given a bill a billion dollars a little over a billion dollars I'm prepaid cards where they've given them money and they get a certain number of hours later on and uh they don't I think there's a good chance that some people are going to be very disappointed later on when they have money then doing that Jets they know they'll get they'll get on the same planes with the same Pilots uh as I am my family have flown on since before we bought the company so it's not it's not shaped but it wasn't the decision wasn't shaped by some commercial uh objective a couple years before I never heard of Matt Johnson Frank Rooney mentioned it to me and I've watched Sharon share immediately and uh and we bought the company and every welcome my kids have to fly a commercial sometimes but sometimes they get to use ours too but I've never flown anything else and why would I mean it's it's it's the goal Center and uh nobody will match our Fleet I mean they've got you know 600 planes you've got them a lot more places in the United States than that anybody else will have theirs I think we're the second largest Fleet counting the commercial airliners and our fleet's growing like I said the rate of 100 Lanes a year or something it's a marvelous company and Adam Johnson has performed uh you just can't believe what he's done with the business and it was a tough model for a long time but he's brought a word is and we've got we shouldn't have a wonderful company forever Charlie well in that chance has been remarkable you can argue that it's worth as much as any Airline now oh it's so different and Charlie we had a hard time selling Charlie and that just membership and then we figured the way to get him to buy a membership was to put a coach seat in the fuselage and that really knocked him off I mean I think he's the only one we sold on the bases I used to come to the Berkshire annual meetings on coach from Los Angeles and it was full of Rich stockholders and they would clap when I came into the coach section I really like that but I gotta tell you we semi-corrupted him he feels he kind of has to explain it but he still flies up and be crazy not to you know it's uh and your errors are paying for it I mean if you find me anybody who's a state came in at less than zero because what they spend in on that Jets threw him into that position uh let me know but I've I've never seen a case yet it won't be the case for the Buffett Valley and it's the residual bottom beneficiary that's paying uh for your uh your membership and uh it's a little hard to get used to paying that much money though when you look like Charlie and I have most of my life okay we will go to uh section 11. hello my name is Humphrey Liu I'm from Charlottesville Virginia ah first I wanted to ask to wanted to add my thanks to you and Mr Munger and Mr Buffett and all of Berkshire for throwing this Grand Event each year looking at the global Trends it increasingly does seem that zero Mission Vehicles may have finally reached the cusp of mass adoption do you see any opportunities in this space either in specific vehicle manufacturers or in related Technologies well I would say that Charlie and I for longer felt that the Auto industry is just too tough you know the Ford Motor Company I mean Henry Ford uh looked like he owned the world uh with the Model T and then and he brought down the price dramatically he took up wages dramatically he was he might have been with a different personality ah or some different views he might have been elected president of the United States I mean there's a good book that came out on that recently that told about the story of one of them tell us a little about Nebraska in terms of it but Henry Ford and Thomas Edison joining up but maybe a year or two was it if you're interested in Autos you ought to read that book but Henry Ford did that and you know and 20 years later that uh they were losing money and they had a guy with a gun in his pocket I think Harry Bennett you know it was running the Ford Motor Company it was on its way to the junkie when the whiskers came in and Henry Ford II Hank the deuce as they call him brought in Texas Thornton and my friend RJ mother and a few people but it's just it's I've read that I was reading the other day actually the 1932 annual report of General Motors and uh it's one of the best annual reports I've read it's a totally honest you know assessment of exactly where they were they had 19 000 dealers then and then population as I mentioned earlier was about 120 million or so and now with 330 million people all brands in the United States have like 18 000 dealers or something it's just a business where you've got a lot of worldwide competitors they're not going to go away and they'll look like it looks like there are winners at any given time but it doesn't get you a permanent place although as I mentioned I would say Ferrari is in a special place but they only sell 11 or 12 000 cars a year and uh us last year I think there were 14 million something and uh it's it's not a business where we find it fascinating to be in we like our dealership operation but I don't think I can tell you what the Auto industry will look at to look like five or ten years now I do think that you're right that you know there's a you will see a change in the vehicles but you won't see anybody that owns the market because they changed the vehicle Charlie well the electric vehicles coming big time and that's a very interesting development at the moment it's imposing huge Capital costs and huge risks and I don't like huge Capital costs and huge risks and we're subsidizing in the United States and we're actually doing it try putting in a pro labor time I mean it's it is subject to politics like you can't believe the two but it's it's going to be with us we're not going to quit we're driving cars and American public has a love affair with them and uh but I think I know where Apple's going to be in five or ten years and I don't know whether the car companies are going to be in five or ten years and I may be wrong but that's uh we Charlie and I've followed the auto business with intense interest Charlie's firm was the specialist in General Motors on the Pacific coast Stock Exchange and that was that was a franchise it wasn't it Charlie yeah we get by working very hard we can make a minor a lot of money yeah it wasn't minor at the time but it was it wasn't Meyer at the time even yeah well that was pretty minor okay Becky this question comes from Lindsay Peter Schumacher in Cedar Rapids Iowa does the current size of the Federal Reserve balance sheet concern you in particular the result of quantitative easing the Federal Reserve expanded its balance sheet out of nothing the net effect in essence is a form of single entry accounting creating something of value out of nothing other than a series of book entries Andre entries and wondering what Mr Munger thinks about this as well I don't think the Federal Reserve is the problem and I think they can't solve the fiscal problem uh and uh I don't I don't I do not worry about the Federal Reserve and uh I think it's fulfilling the functions for which it was established I probably would not have been if they only they have two objectives and I would not have been one probably that would have changed the inflation objective to two percent a year from zero I think that uh you know I think that if you tell you people that you're shooting to depreciate your currency at two percent a year uh that is a lot of implications although it feels good to a lot of people a lot of people want a little inflation uh but nobody wants a lot of inflation except somebody's got a lot of deaths and uh I do not worry about the Federal Reserve balance sheet I enjoy looking at it and the numbers are big I always like big numbers but uh it is not it's interesting the most one of the most interesting figures to me it's currency in circulation I mean it is gone they were saying cash is trash back in 2007 and eight and all that cash is going to disappear well if you look at the Federal Reserve balance sheet it's gone from 800 billion to two point two trillion and most of us in hundred dollar bills overwhelmingly and I figured out I think there's about fifty one hundred dollar bills per person babies everybody in the United States and uh I would really like to know where all of that is I mean it nope nobody's hoarding Euro dollars you know in South America Africa or whatever and uh the demand for currency now you know it's somewhat maybe usually subtle drug dealers uh activities and all of that but anybody thinks cash is trash Auto uh look at the look at the Federal Reserve balance sheet and actually you can look at how many five dollar bills and two dollar bills and ones and all that and the action has been in one in 100 bills I mean is it is just astounding the way up 100 bills spreading and of course we don't know whether I don't know where they are and I don't think the FED can know exactly but they probably make a lot better guess than I could but I do know what's happened and you can watch it every week and you'll watch currency in circulation probably grow a little bit and uh and believe me cash is not trash Charlie well I don't know where we're headed with all of this it's been very extreme I think that you could be pretty extreme in fighting depressions and so forth if you were versioned afterwards to a period of some discipline but some discipline but if you're going to just keep borrowing and get printing money and spending it I think eventually it causes bad trouble and you can see it in Latin America Latin America let its currency get out of control all the time and of course it lagged the United States an economic achievement greatly so I think we pay a price if we if we ever give up our old ways entirely and go into a new world where we just try and print money to make it easier to get make to get through the air we paid a price in World War II I mean everybody school kids and everybody else myself included I'm with we bought what were originally called war bonds and defense bonds and savings bonds and all that but from 1940 due to the 1944 or five you paid out 1875 and you got 25 back and every kid save savings and Samson all that but when you got all through you know you had 120 percent of GDP in the national debt instead of 30 or 40 percent and we had a lot of inflation subsequently a lot so the people that really that bought those bonds and supported the war at a portion of their purchasing power taken away from them there wasn't anything wrong with that particularly but one of the country gets in the habit of doing that uh I don't think it's I think it's tough to have to figure out where the breaking point is with Society but I don't think I want to come anywhere close to it's also tough to have a massive people unemployed that's the tension yeah well let's that's why they bet us to objectives in terms of employment then inflation and uh but they are not the ones that great the deficitors and so far the system has worked pretty well although like I say it's been so far the man who's jumped off a tall building yeah it's all right until he hits the ground yeah well but you there could be ways we can stop now at the third floor or the sixth floor we don't know what Ford is but we know what this isn't happening at the crowd but the question you know politically it's very tempting to both Appropriations and it's not fun to vote taxism Russell long has the Senate finance committee they've got a building they are from now he said you know don't text you don't tax me tax like am I behind the tree and basically that is the attitude of uh I mean it's the reality of what is useful in politics and so far those countries managed to work very well with a lot of things that could theoretically cause a lot of problems but it doesn't mean it doesn't guarantee us the future on it and being the reserve currency let's just do a lot of things but it also creates a lot of consequences if we screw it up really well we're bidious subject to death but by it is a problem I wish we had a solution okay well that will go to station one and see if we hello uh Mr Buffett and Mr Monger my name is Connor I'm an economic student at the University of Nottingham my question for you today is during the pandemic we witnessed supply chain shortages especially from Asia as a result companies have chosen with political attentions to move production away should companies make these decisions and should the government support them well that's a good question yeah obviously yeah it's logical if you're in business and you can make the thing in Mexico way cheaper it's natural to open a factory in Mexico and in Mexico and get your parts cheaper and a lot of the auto manufacturers have done exactly that on the other hand nobody wants to hollow out the whole country so all the manufacturing jobs are elsewhere and we're all living with a bunch of farmers you know like English colonies in 1820 or something and these ideas are of course in big tension uh we have we don't have that much foreign production all right Warren yeah well but we've lost well originally Berkshire Hathaways the textile manufacturer it lost because the South became feasible versus the North and of course then eventually uh the South got expensive to China sure and uh Society benefits and some people get killed in that sort of a situation and a rich Society should take care one way or another and of people who worked in our shoe factories people worked in our textile companies I mean if you worked in our textile operation and in 1960 or when we took it over half our half our workers only spoke Portuguese and uh you know they and they weren't getting great wages at all but now you could do it in the South and we were doomed to go out of business and it wasn't the fall of the worker in any way shape or form it wasn't the hard fault we kept trying to compete well it was a TVA had cheap power down there and a textiles really congealed power and air conditioning changed everything but the Heat and those damn Pleasures were impossible that's a lot of things but then it moves uh offshore in many ways and now the country is better off because of it but it displaces a lot of people who really can't do something else in life you can't talk about retraining somebody that's 55 or 16 speaks only Portuguese and really tell them they're going to have a great future a New Bedford Mass and you know and so you don't want to be glib about it and we can afford to take care of those people and we've got some systems that work reasonably well but there's a tension between you know a lot about the person that doesn't do anything and all that kind of stuff so these are not easy problems to solve but I would say that by and large we want the whole world to prosper we do not want to be a world we don't want the United States to be a country of extraordinary prosperity and have the rest of the world starving no it isn't going to work and particularly it's going to work in a nuclear world so and you can have your own feelings about it as a Humane person but uh it doesn't it does not it can be done better and we've got the resources to do it I mean the output of this country what can be done with a lot fewer people and doing more specialized things in the course that has been the work week in the United States you know in my lifetime has dropped dramatically and people still feel busy and it will be the human lot to say you know how can I get all these things done but my mother didn't drive three kids any place so if you want to go in a place if you were lucky and got old enough he had a bicycle the world just keeps looking at everything moving up as becoming sort of a base that leaves them somewhat dissatisfied and with our prosperity uh we can do a lot of things we couldn't do in 1930 and including taking care of people that got displaced by the fact that somebody else can do that work and improve their lot in life and we got to make sure that we have the best system that takes care of the people who get displaced by that but doing that and building a system we have and everything will make a lot of mistakes along the way but we got to keep moving in that direction and I'm really interesting thing about it is that the Adam Smith was right that the free market capitalism automatically with a lot of property and private hands and free trade and all that automatically creates GDP per capita that grows and helps everybody including the people at the bottom it helps everybody a lot but a inherent in the process there's a lot of pain in that free market capitalism for instance of the Portuguese workers and the taxable company in New Bedford and nobody's ever figured out how to take all the pain out of it we do have government safety nets to take some of the pain out we make those safety nets a little bigger as time goes by but apart from that if you try and take a little pain out you'll also take all the gains out of her you won't Carrick growing GDP per capita you'll have an economy like Russia's which has been characterized as saying they pretend to pay us and we pretend to work yeah the other systems haven't worked better but yeah it also produces more and more disparities in wealth and people that do nothing but got assets under management without actually performing anything extra make fortunes and I mean it's it's a job of government to keep the best aspects of capitalism while not causing people that only speak Portuguese to suffer in the process I mean the two aren't compatible politically over time and we stumble along making progress on things like Social Security and all that and we are a lot better off than we are when I was born net the United States has done a very good job of this tension between capitalistic growth and growing social safety net we can be pretty proud of our country Looking Backward that may be why we have 25 percent of the world's GDB starting with a half a percent of the population and in a few centuries I mean it's just it's a miracle it wasn't because we were smarter oh you got to say that there must be something to the system that's worked pretty well even though it's produced a Civil War and all kinds of things you know and women you know not getting a shot at anything you know even after they passed the 19th Amendment uh it's it's uh a work in progress I think actually there's been progress but it's Mankind's nature it's a to see the see the things wrong with it if you've a few words expansion Asia to take the progress as a right not something to be earned or strived for but something that should automatically just flow in over the transom and that attitude is what is poison it doesn't do anybody any good okay now ask us an easy question Becky this question comes from Doug deshield since the accounting rules changed requiring Berkshire to report the change in fair value of its Equity Investments through the income statement Mr Buffett has repeatedly told shareholders to ignore those changes as they're not reflective of the long-term returns that those investments will produce recently Mr Buffett has argued that hold to maturity accounting used by the Banks to avoid reflecting the changes in fair value of Bank investment portfolios in the income statement and the shareholder Equity account do a disservice to its various stakeholders can Mr Buffett elaborate on why he views Mark to Market accounting differently for banks in comparison to Berkshire oh I believe in both cases in doing it on the balance sheet and not in the income statement and it's a very tough problem with the Auditors face as is that the obviously the income statement feeds into the balance sheet but the balance sheet tells you whether deposits can be paid it tells you a lot of things and we show it on our balance sheet we believe in showing Market values on our battling sheet we just don't believe in running it through the income account and uh in getting there we would put another comprehensive income like it was for a long time so I sympathize to some extent with the oh far extent with the audit group but they have to really decide whether they want to they want the balance sheet to represent values except it doesn't reflect them on the upside if we buy a Seas Canyon it's worth way more money so it's conservative in that sense but uh or whether they want to have a an income account that becomes meaningless to people because it really changes every five seconds you know I mean while we're all the Market's closed today but uh you know we have days well I guess Apple was up what seven or eight points I'm in on Friday I mean that's seven billion dollars I mean uh that's a crazy income account it is a reflection of where we stand at that point and of course if you're a bank or you're putting out money brilliant and things that people sort of mortgages I mean primarily uh they're a terrible instrument for a bank to own but a great instrument for a consumer to buy and build in the whole society now in a way that was entirely different than the past uh you've got to pay attention to whether they've gotten out of whack in terms of what the value of what they own and what can be demanded of them tomorrow morning and if we had all of our money this could be demanded from us tomorrow morning we'd have to behave a lot differently than Berkshire does so I don't I don't I really think the way to do it is the way we recommend doing which is exactly what was being done until a few years ago I recommend the shareholders look at it that way but we're going to follow the rules obviously the SEC uh you know State authorities and everybody require of us and but I'll still explain to the shareholders exactly what I would explain to my sister about what really counts of Berkshire and I think every management actually has an obligation to that and instead of it they go in the other direction and give them a lot of figures that are total nonsense you know I can't imagine some of the you know EBA da I thought was about as bad as you could get but they kept going you know earnings before everything uh Ebe so uh but that doesn't change but I would tell my sister who's here in the audience I hope uh and uh I should tell all the shareholders and we'll we'll consistently do what is legal and we'll consistently say what we think is right we want owners who understand what they own now that doesn't mean they have to understand the detail of it but that's why we have people that have been around 50 or 60 years that doesn't mean that they read the 10 kills or anything like that but they feel we're telling it to them like you know they live next door to us yeah I don't know what the accountants were thinking when they made that change it strikes me as Bonkers absolutely bonkers I don't see how anybody who understands how businesses really operated and should be operated by owning managers would have made that accounting change the accounts did it just because they had a wild moment 20 25 years ago I suggested the audit progression that they just that the audit committee asked Auditors four questions and uh the shareholders would know a lot more about the company if those questions were asked but it wasn't good for the Auditors to be asked those questions because it might increase their liability if they if they answered them and the client didn't want them to answer them because the management didn't want them no they were they want a system where if they follow certain rules they're safe and that's understandable but I don't think the past year this rule requiring changes and marketable securities to go through the income account quarterly they didn't do that to protect themselves from no liability they just did that for some crazy reason of Their Own you get a bunch of people who are all being drawing a lot of pay out of a big complicated system and rising in it like so many part officers in the army God knows what they'll do if you put them in a little room by themselves and tell them to invent new accounting standards well to our order to remember that's Charlie talking and that's right but I agree with them 100 like he's he's 99 he can get away with more than I can get away with okay station two but what he said is enormously important I mean it just you got to have some insights into what the hell really goes on and even if you're a counting accountant yeah okay station two do you want dear Charlie my name is Victoria renchrop I am 22 years old and I study in Munich at the cdtm the center of digital technology and management as your grandchildren are more in my age group let me ask you how do you transfer your wisdom to your grandchildren and heirs how do you lead them to investing do you see value in investing as a family or individually thank you I'm gonna let Charlie do the answering he's got more well I have my grandchildren but I am quite philosophical about my grandchildren not thinking exactly the way I do it seems to me that's almost a natural course of life and I just live my life my own way and they can observe it as an example if they want to and if they don't they can try some other way I don't like it when they try some other way to pretend that I like some of the boyfriends and girlfriends I don't like but I just struggle through like everybody else and usually I just bite my tongue and keep silent that's my way of handling it well I would say that I think that my case my three children have grown a lot smarter in the last 30 years and I think I've grown smarter and I know but you needed a lot of help that is for sure no I would totally acknowledge that's why I had the room to go I mean I had plenty of room for improvement but we all had a lot to grow I went to I worked a year for U.S steel which was in there uh fabrication department in Los Angeles a big operation the thing was utterly doomed and three years later it went back to Greenfield the whole thing was raised to the ground I did not see it coming now I would to be that ignorant of that as I was at that age it was a sin and my professors by and large were even more ignorant than I was we just know what he had observed the basic economics of business in a scientific way at all when I was young well if we're getting into confession time I have to tell you it's 3 30. so wait we don't want to keep going on who knows what we'll be saying another half hour so yeah so I thank you all very much for coming at 4 30 we will have the shareholders meeting here and the we're continuing to sell goods for another 20 or 25 minutes we've already broken all kinds of Records but let's really make it tougher comparisons next year and I think again I thank you for coming come next year and maybe we'll figure out the answer to a few more of these questions thank you

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