Berkshire Hathaway 2022 Shareholder Meeting

back thank you I don't hear anything from the index fund where are they ah it's really uh it's really me it really feels good to get back and be doing this in person we've it's been three years and uh it's a lot better seeing actual shareholders owners partners and uh we we uh Charlie Charlie and I are now uh combined uh she put wrong for fractions uh the two of us are 190 years old and uh and I really think you're entitled if you're the owner of a company and you've got two guys 98 and 91 running the company your entitled look actually see him in person I mean I it it really shouldn't be too much to ask that uh I mean for example if we had a we had a manager someplace that was 98 I might want to send somebody by occasionally to see whether he was cutting about paper dolls or something so so uh uh we probably do things that are a lot more foolish than cutting out paper dolls but but uh but we're having a lot of fun doing it and uh and we really have a lot of fun uh when you come visit us at um uh actually uh we had the to go back you weird we've had a couple uh a couple of managers that uh that suffered from dementia probably many more but I mean I'm just a couple known ones actually and and uh there was one fellow Charlie and I really loved and uh uh he ran a business Wars Charlie was out in California Charlie would see him occasionally and I didn't see him but everything seemed fine and and then we found out that he really been suffering from dementia for quite a while and uh and it really was a wonderful friend of both of ours but but the business had done fine so that's become our our test really is that from new businesses and we we try to find something that Alzheimer's can run actually and uh and you don't have as much competition or businesses like that guy sitting there cutting out paper dolls and you know that's our man uh I'd like to introduce uh two fellows who really work at Berkshire uh uh on Charlie's left Greg Abel who who runs all the operations outside yeah [Music] and next to him is I I ran the insurance business for about 15 15 years on successfully and then fortunately the fellow on the far left came in one day and I've written about her but he came in on a Saturday and and I was opening the mail and and uh he said that uh that made me happy to run our insurance business I said if you ever run an insurance business and he said no and as I mentioned I said well I never won one either so I'm not doing so hot so give it a try and and you know he transformed Berkshire Hathaway and uh and the g Jane is here with us [Applause] uh what we'll do today and I have to remind myself from time to time that the people here of course saw that movie and everything but of course we're webcasting the so I'll probably make some references to the movie or something that'll puzzle millions of people out there but you'll get it so the uh we're going to talk for a little while about uh what's happened uh uh in the last quarter and bring up a few other things that you might be interested in uh and uh uh we will then uh whenever that's finished I will go on to questions and we will take the questions until noon break for an hour that's uh Midwest time for those of you are watching in other time zones we'll go until noon and uh we'll break for an hour and then uh Charlie and I will come back and we'll take more questions uh until 3 30 and then we'll convene the shareholders meeting at 3 45 we'll take a break for 15 minutes the and then we'll do the shareholders meeting and when that's done we'll uh we'll all uh go our various ways uh I do want to report incidentally that uh you've been doing your part in terms of the room we have adjacent to this uh uh location uh where we've been yesterday for five hours from noon to five we had twelve thousand uh shareholders come and just spend money on everything we could think of to solve them at death we we brought in the we brought in 11 tons of See's Candy uh and uh if we don't sell out Charlie and I get the rest so uh but but uh uh you did your part she's she's sold or at least had a record yesterday for the Friday afternoon meeting and and it's uh it's pretty hard thing yeah yeah incidentally I've got a box of See's Candy here and uh it's very it's it's sort of interesting uh on this on this uh cover which I hope you can see um there's a picture of a woman who was born in 1854. and today she probably gets her picture seen more often it's just about anything any woman in America in terms of uh uh a commercial product or something the sort so we've got our picture up in over 200 stores and uh uh on every box of candy that's Murray C born in 1854. a lot of people think this is me in drag but that is not true ah there's there's a certain resemblance but uh it's just not these rumors are started by our competitors don't pay any attention um so uh we will that's our schedule for the day and what we will do we like to give all we like to give shareholders uh owners Partners we like to give everybody the same information at the same time and preferably do it when stock markets aren't open it seems to us that that's everybody ought to be on the same playing field it's very interesting uh we don't know how many shareholders we've got they've changed them their rules over time uh uh as to uh registered holders and getting stock certificates and all that sort of thing so so we can't keep track of it like 50 or 75 years ago where we had an actual shareholders list but we're told we're told by the people who mail out our information uh it's affirm in I think New Jersey uh let's see broad Ridge and they pretty well do this for very significant percentage of American corporations so they they actually mail things out for us and they bill us for three and a half million uh account ah and ah I'll take their word for it I made them more accounts they build us for them we pay them by the account so you know some days I feel like I'd like to count but that that is a that is a lot of a lot of people that trust us and and they rightly in my view overwhelmingly feel that there are Partners uh and some of them well like reading the financial information they've given us that we give you uh uh but most a great many of them just say you know we've saved this money and we trust you and Charlie and that's a great motivator it's trust and uh you know take care of it and and I'm not going to learn accounting and try to read all those statements or anything of sort but we do believe that for those who do use the information we release they should all get it at the same time and we have a few institutions that even though in the third paragraph of my letter every year I um I uh refer to the fact that uh uh we want to have everybody get the same information and that we don't feel that anybody's entitled the special meetings we can't hold three million special meetings with our partners and uh but we like the fact that everybody gets the same deal everybody gets the same information up this morning on the internet we put up our 10q uh for the quarter and I'd like to uh taking fuel through a few comments on that and uh a few other comments and then we'll get to the questions when we get to the questions we will alternate between those mailed in by shareholders which uh in fact he quit the CNBC and people have helped her but sort of curated to get what they think are the most interesting questions from shareholders they're not they're not they're not from CNBC itself they are from shareholders owners and we'll alternate the ones from sent in versus the ones that come here and we don't get the questions ahead of time and we enjoy getting surprised by I'd say almost all questions and uh uh and we will keep doing that like I say with a break for lunch uh until 3 31 we'll have the meeting so uh I would like to uh uh start by putting up the uh first slide and which is q1 and there we have it that's what we published this morning and there really no great surprises uh in in terms of the quarter I mean there are always some companies that are doing very well and there are some companies that are aren't for one reason or another and uh in the end as you can see uh we prefer to use something called operator energies now that is after depreciation and interest and and taxes unlike other companies that prefer to tell you anything but what they earned uh we have but we do separate out capital gains now over time as I've said over the next 20 years I would expect this net to have more capital gains than enough but you know who knows I hope you you know I I'll report to you in 20 years whether that's happened or not but uh as you can see we made about seven billion dollars in the first quarter and and that's real 7 billion I mean with the we basically about income in Cash When the uh when the quarter's over that isn't true every quarter exactly but but uh uh we uh we are talking about seven billion of real money uh in that end those managers who the people here saw in the movie uh they're the people that that work with your money to uh accomplish uh well Charlie and I never thought would never be planned or anything that happened but it just sort of uh came about uh uh I was sort of putting one foot uh and in front of the other uh now obviously the last two years in particular including the first quarter of all kinds of unusual things happen in our various businesses I mean it uh when we had the meeting two years ago in the May of roughly the start of May of uh a 2000 uh 20 . uh we didn't know what was going to happen with the pandemic we didn't know what was going to happen with the economy and uh everybody that thought they did gotten all kinds of surprises since but here we are in 2000 22 and and Berkshire like I say I had seven billion of operating earnings and we've got lots and lots and lots of companies got 360 000 people out there that have taken your savings and uh go to work every day and uh they have jobs we deliver products and you put up the money for it and you deserve to uh you took you took the risks and and uh levo very good about how things have turned out uh and we want to keep feeling good and we have a we have a extreme aversion uh to incurring any permanent loss with your fonza you know if if I went broke it wouldn't really make any difference I mean it just uh I keep doing what I do I forgot a way to read a paper and watch a little TV and I didn't think about things and talk to Charlie and but the idea of losing permanently other people's money people who trust us really really is that's just the future I don't want to have as Charlie says Charlie says all I want to know is where I'll die so I'll never go there and uh that seems pretty solid that works in case you missed it Charlie says it's worked so far and and the uh and we we would die psychologically uh if we lost a lot of other people's money we wouldn't take it in the first place be crazy to take take people's money and lose it if you're going to feel terrible about doing it so the one thing I can tell you about first traffic I can't predict what earnings will be and I can't predict what the stock will do and I can't we don't know we don't know what the economy will do and all of that sort of thing but we do know that we wake up every morning and we want to be safer in terms of your eventual investment uh not whether you make the most money here anyway we do not want you to get a terrible result uh because you've decided to become our partner and uh that's a pleasure to live by now uh let's see what we have here on Q2 it gives some indication of that because we this is kind of interesting I wrote I wrote a letter to our owners and it was dated February 26th uh and that was a Saturday released but I write the letter all through the year in my mind I mean that uh I don't uh no we don't have a anybody sits out and writes out the letter or anything like that I mean it's this is a letter between partners and I write the letter all year in my head and I'm I'm writing next year's letter uh I don't write out the words but I I have things I want to tell my partners my sister's a partner and uh I'm writing to her in my head uh my older sister died not too long ago but I used to be writing to both of them in effect and I want to tell her no what I think and and about the business and what I think she ought to think about it and so on uh so the letters dated in February 26 and I said not much is going on uh and actually uh we might we might jump over to Q3 uh we will uh uh so I said I sent out a letter on February 26th but it that wasn't written on February 26th and I said basically nothing much is happening around here and I said we've re-purchased some shares and uh we we just aren't seeing anything and uh between January 1st and February 18th as you can see we spent 2.2 billion dollars uh which is half the quarter you know so uh probably 30 trading days in there and we sold them so that basically we didn't do anything and then uh in the next uh three weeks or thereabouts we spent 40 billion and uh engine when they say we spent 40 billion there's there's one fellow in the office that does this all I mean he buys all the stocks he buys the government he doesn't have an assistant or anything I just uh but he spent 41 billion at uh yeah and uh he literally I mean and he does other things for me too you know puts together totals it just does what he needs to do and he's worked in other jobs at the Berkshire long ago but but he likes he likes doing what he does and he does it very well and we don't have a department for it then as you can see it fell off after that and uh we did also in the first in the first uh uh quarter we spent about three point one or three point two billion somewhere but in that for repurchasing shares and um we didn't you know we we talked about that in the annual report and uh as Charlie would say it would just keeping us out of bars I mean you know that that gave us something to do uh and it and it we never do anything that we don't think adds to the value of Berkshire Hathaway though so we only repurchase the shares when that is the most attractive thing to do we haven't repurchased any shares at all in April uh and uh uh so it's people who were looking for all these uh Prince on the way you know put footprints in the woods and all that is what we're doing we're just doing it day by day as it comes along and I think this table kind of illustrates that that we spent 40 billion in a hurry there between three weeks and and uh now we're back somewhat in our more lethargic uh mood but like anything could change at Berkshire but the one thing that won't change going back to Q2 I feel is we will always have a lot of cash on hand and when I say cash I don't mean commercial paper when 2008 and 2009 the natural Panic came along we didn't own anybody's commercial paper yeah we didn't have money market funds we didn't we have treasury boats and uh as I may get into a little later I'll explain to you why uh we would we believe in having cash and there are I've been a few times in history and will be more times in history where where if you don't have it you know you don't get to play the next day I mean it uh it's just uh uh it's like oxygen you know it's there all the time but if it disappears for a few minutes it's all over so we our cash was down on March 31st because as you saw we spent that large sum uh there in that brief period during the quarter 40 billion uh we 've committed to biology any Court uh there's something over 11 billion and but we will always have a lot of cash we won't we don't some of our companies have Bank lines I don't know why they have the bank lines we're better than the banks and we will give them the money if they need it but but you know the local Bankers have been calling on them and they need something to do everybody else has Bank lines so it's harmless uh but there's no reason for any of our subsidiaries uh that maglies when Berkshire is stronger than the banks that I didn't hear exactly what I don't know what that was a banker screaming or I don't I don't really like to torture I don't like to torture anybody I mean but but uh and I'm all for banks and we'll talk about that a little later in fact uh we might we might even talk about it right now just for a minute uh money's kind of an interesting thing people seem to like to talk to me about it I mean they don't ask me how to dance or anything like that but they do they ask about money and so uh if we'll put up uh 20-1 uh it's a it's a photo of it twenty dollar bill and it says at the top Federal Reserve notes now Federal Reserved no we we've done all kinds of things with money in this country it's amazing country only a couple hundred years old the number of different experiments we've made with banks and everything when we finally just decided to let the fundraiser do the issuing of money and uh the down in the lower left hand corner and today I think Rosie Rios uh who signed this note I think she signed more or U.S currency than than any other person in history uh so if you see Rosie you know you're cozy up to her I mean this is a woman has issued a lot of currency uh but it says it says this note is legal tender for all debts public and private and that makes it money you you can go in and go into our candy store and if you offer us enough bushels a wheat we'll probably give you a box of candy but but money is the only thing that the IRS is going to take from you that you can you can offer them all kinds of uh you can offer in pain you're going to offer them all whatever but this is what settles debts in the United States and I thought that they'll hear a lot about various kinds of money this is the only kind of money uh you're going to see uh in my opinion uh throughout your lifetime or even throughout Charlie's lifetime I mean this is uh uh uh that's very interesting because it it just says that uh subtle all legal tender for all that's public and private and nothing else says that except I thought you might be interested in seeing uh another twenty dollar bill on this one I own uh uh and on that it's got the same guy's picture Andrew Jackson did everything uh and that's a twenty dollar bill and that one dollar bill was issued during my lifetime and it was done by a bank that Berkshire ended up owning so you'll see the Illinois National Bank Buster Rockford and uh uh we bought that bank back in 1969 and if you look down at the bottom of that one it's signed by a fellow named Eugene abeg and we bought it from Eugene abec so we uh we still have some twenty dollar bills I came in sheets and we can cut them out like paper dolls and there are money uh the Illinois National Bank issued money but just remember the United States government in effect said that this became exchangeable for lawful money of the United States that that's what money is it may turn out that becomes worth dramatically Less in purchasing power uh it can become almost like paper money as it has in many countries but that is all when people tell you that they're issuing new forms of money uh this is the only thing that will pay bills uh under some circumstances and there were there were days a few days in 2008 and we came very close to having a repeat in March in 2020 and uh we had plenty of money on March 20th uh but we were not very very far away from having something that might have been a repeat of 2008 or even worse and we have a bookstore here uh but the Bookworm that's in the other room and they've got a book called trillion dollar triage and for those of you who actually like to read about this sort of thing it's a marvelous account of what took place day by day with the Federal Reserve and the treasury and believe me uh the Federal Reserve hadn't done what they did it at least in my view uh in a very very short period of time uh uh things could have stopped uh in in uh and I tipped my head a couple years ago to Jay Paul for acting as he did so you have to act with speed I mean uh in the old days when he had runs on banks uh back in the 19th century a line formed you know when the bank would go broke but the Apollo would pay out as slowly as possible and hoping something would happen a Wells Fargo trucker Stagecoach would pull up a bunch of gold or something and you'd sweet talk the people into the line dispersing uh you know Omaha in August of 1931 Four State Banks so-called State Banks they had a vote in that they they closed and the National Banks didn't but they were all broke as of that day if they no Bank can pay off in one day all of its liabilities but the Federal Reserve is the only one that's good at that time but I will say I can tell you this Berkshire Hathaway will be there at that time we we run it on the basis that if uh if things are just behaved slightly very Frank Paulson George H.W bush or No George W bush I'm sorry and uh uh Ben Bernanke and a few people hadn't taken action we were at that point where the line was formed except it comes an electronic fund they push buttons and and it's all over uh-huh very fast uh if there's a run on the bank if you ever if you ever buy a bank and there's two banks in town hire a few extras and have them go over and start standing in line that the other guys Bank them uh and there's only one problem with that after a while somebody will stand in front of your bank you know and then both of you are gone but the Federal Reserve is not gone and the Federal Reserve in the United States can do whatever is necessary they've got all kinds of rules about you can do this or that and this and that and uh I one time in the 1980s Paul volcker it was very honest man said to me and I said you know what are the limits of what you can do and he said he very unusual guy and huge looked out at me I said can do whatever we need to do and that's true and that's what that's what happened in 2008-9 and that's what happened in 2020 and you hope it happens again next time but you want to be we want Berkshire Hathaway to to be there and uh uh in a position to operate women the uh if if the economy stops and that can always happen that can always happen some of those cheery words um uh let's see if we uh I think I think we can actually might be a good idea to start with some questions as I said we will have the questions alternate between uh CNBC Becky quick and those are questions that have come in from shareholders and they can be directed to any of the four of us up here and and then we will go alternate and go around the room here and we've got we've got the auditorium broken into 10 or 11. uh sections uh Charlie and I one time because out a form and um I said officers of the company broken down by age and we we just put all of us as an answer to that question but the uh but we'll haven't broken down by categories around here and uh uh we'll keep alternating and uh we will break for lunch at at uh at noon and reconvene at one so let's start off and uh Becky will you lead the way um thanks Warren the first question comes from Jack sisaleski and he says in the annual letter that you wrote in February 26 you mentioned that Charlie and you saw a little that excites Us in the market yet around March 10th the deal for Allegheny was announced and then later the Occidental announcement then did the disclosure of the HP investment his question is what changed from the time you dated the letter to the time the Investments were announced that the name suddenly become interesting in the space of a month and a half or half a month well Charlie you want to give your version I'll give my version and my version would be we found some things we preferred owning to treasury bills hmm and as usual Charlie's given the total answer but I'll talk longer and say less uh we uh actually the uh the letters dated February 20th sixth where we were confessing our inability to find anything which was a Saturday but the day before that uh February 25th I got a email uh actually uh my assistant uh uh Debbie bosani gets it because I can't figure out quite how to handle the Machinery but so she she brought it in and uh actually she puts a bunch on the edge of her desk and I collect them occasionally and uh there was a I know uh just a few lines long from a fellow that uh the friend of mine and and that worked for Berkshire than many years ago and this is on February 25th the day before the thing and he said uh he now becomes CEO of Allegheny Corps I'd been following Allegheny Corps for 60 years I no I I are there any reports I had four big file doors full of it because it was an interesting company and all companies interested me so I I know I know a lot about it like any horrible happened and uh Joe said you know this is my first annual reporter CEO and uh I just wanted to send it along to you just like you write for your sisters he says I'd write this I write this report as if I'm writing to you and uh I sent a note back to Joe and I said you know I'm going to read it uh over the weekend or whatever as I do them on it which was true I mean I look forward to reading it and I said by the way I'm going to be in New York on on March 7th and and um can we get together uh I'd like to see you and I've got I think I may have said I got an idea well I didn't have that idea the day before I mean it just this this thing happened to come in on Friday the 26th and and I I knew I'd buy an Allegheny at a price and and if he hadn't sent me the no it never would have occurred to me to write them and say why don't we to get together on on on March 7th or anything of the sort it just wouldn't have happened except for the fact that Joe uh wanted to send me along this annual report that he just written so that's that's the orderly and uh decision-making progress I didn't call up investment Packers and say you know will you prepare me a report on this and you know what's your advice you know what's up I knew we'd buy Allegheny it at the price we offered and if it was of interest that would be any fine if it wasn't but otherwise if that email hadn't been sent we we would not have made an offer for all again so uh that uh give credit to the fact that Joe uh had written the annual report and to be centered a week earlier uh well you know I wasn't going to make a special trip to New York but I wanted to sit down with him and and tell them what Berkshire would do but that explains 11 billion and uh what happened was that the a few stocks got very interesting to us and we also spent a lot of money at uh what happened the market and this is really important to understand in the last couple of years this our Market is probably it's always been a combination of a casino and a uh and when I talk about Wall Street I'm talking about the whole Capital formation Market uh but the and and trading Market Etc but the market has been extraordinary and it sometimes it's it's quite investment oriented kind of like it always you've read about in the books and everything uh what what capital markets are supposed to do and you study it in school and all that and other times it's it's it's almost totally uh a casino and uh it's a gambling parlor and that existed to an extraordinary degree uh in the last couple years encouraged by Wall Street because the money is in the money has turned isn't turning over stocks I mean people say how wonderful you've done if you bought Berkshire and and you know 1965 or something and and held it but you broke her with the star of the death I mean it's Wall Street makes money I'm on one way or another catching the crumbs to fall off a table of capitalism and and and and and and and and and an incredible economy that nobody could have ever dreamed of a couple hundred years ago but that they don't make money unless people do things and that they get a piece of them uh and it's it's uh uh and they make a lot more money when people are gambling than when they're investing I mean it's much better to have somebody that's going to trade 20 times a day and got all excited about just like paying pulling the handle on the slot machine you know that's who you know you may not say that you would want that person you'd like the other kind of person too maybe but that's where you make the money and the degree to which the market got dominated by that is they're showing on a on a slide some hair somewhere uh yeah here's on oxy one if you'll put up the oxy one that shows how we bought what became well we bought in two weeks uh thereabouts 14 percent of Occidental Petroleum and you'll say well how can you buy 14 of a company in two weeks and it's more extreme than that because if you look at the Occidental proxy you'll see that the standard names BlackRock index funds uh State Street index funds basically Vanguard index funds and then one other firm Dodge and Cox if you take those four entities and they're they're not they're not going to buy and sell stock they may have got their own little oh so they they own 40 of the company roughly those four firms and they didn't do anything during this period so now you're down to 60 percent of the Occidental Petroleum Company that's even available for sale Oxford has been around for years and years and years big company and all kinds of things and with 60 of the stock outstanding uh I go in and tell Mark Millard just follow it is um 30 feet away from miracle and I say in the morning to him you know buy 20 and take blocks or whatever it may be and in two weeks he buys fourteen percent of the Ford 60 percent that's not investment I mean you're not buying from it but that I find it just incredible you wouldn't be able to do that with Berkshire I mean you can't literally buy it you can say you want to buy 14 of the company it's going to take you a long long time but overwhelmingly large companies in America uh well all of them they became they became poker chips and people were buying and selling like three day calls or two-day calls and the the more people times people pull the handle on the machine the more money the machine makes I mean it's very clear and overwhelmingly I mean where did people go the investors just were sitting around and there weren't very many and the money was being made essentially by a bunch of people gambling on things and that enable us in a two-week period to buy fourteen percent of a of a business that's been around for decades and you're trying to imagine trying to buy 14 of the farms in two weeks in this country 14 of the apartment houses or fourteen percent of the auto dealerships or just anything uh one already forty percent were locked up some other place it it's it is it it defies anything that Charlie and I have seen and we've seen a lot uh but I've never seen that percentage of the American public it sounds essentially it was a gambling parlor and and the people that were making money were people that worked with gamblers and then it defined very significantly uh a few weeks ago you can feel it if you're if you're uh if you're around it uh so uh when somebody asks a very good question is why weren't you doing anything on February 20th and why were you doing it on uh starting well in the case of oxygen on February 28th uh you know because things developed in a way and in the case of Occidental specifically uh they'd had a uh an analyst uh presentation of some uh I don't know whether it's a quarter we wondered what it was exactly but I read it over a weekend and that was the weekend when the annual report came out I read it over a weekend and what Vicki Olive was saying ain't nothing but sense and I decided that that it was a good place to put Berkshires Monday and then I found out in the ensuing two weeks it was there in black and white there was nothing mysterious about it but but Vicky was was saying what uh the company has gone through and where it was now and what they put doing the money engine she'll do what she says she doesn't know the price of oil next year nobody does but um we decided it made sense and and two weeks later we had 14 of them of the company and and uh we uh also already had a preferred stock on warrants uh and the story of the preferred stock is we paid 10 billion at per second Awards we paid 10 billion for it and at the end of the March quarter of 2020 we valued that 10 billion uh for 10 kill we valued her the five and a half billion so we had a four and a half billion loss and it would have um the world changed oil sold for minus 37 a barrel one day and uh now it's quite apparent I think that that we want we're very happy we should be very happy that we can produce 11 million barrels a day or something of the sort in the United States rather than being able to produce none and having to find 11 million barrels a day somewhere else in the world to take care of keeping the American industrial machine working Charlie have you got any comments on that assistant how something this crazy could have happened well it happened it's almost a Mania of speculation that we now have we have computers with algorithms trading against other computers we got people know nothing about stocks being advised by stock brokers who know even less I understand the commissions though yeah it's just it's just an incredible crazy situation and it's weird that we ever got a system where always equivalent of the casino activity is all mixed up with a lot of legitimate long-term investment I don't think any wise country would have wanted this outcome why would you want your country's stocks to trade on a casino basis to people who are just like the people who play crapson roulette to the casino I think it's crazy but it happened and it's respectable not with me but other people and look at look at what the country I mean they formed the New York Stock Exchange in 1792 under a Buttonwood tree and it really didn't seem like that was the Eureka moment in America but just look what was happened using the system uh for less than in them well you know three of my lifetimes I mean it's unbelievable so it it's worth not maybe it's worked in spite of itself maybe maybe with the country but one way or another America has worked in an incredible nobody could have dreamed it nobody uh you know they'd have hauled you away if you said you know in three lifetimes you know that that uh you know this place where we're meeting I mean uh it became a state in 1867 that 17. 1789 it asked Ben Franklin or somebody that was walking out of the Constitutional Convention you know is it what do you think the prospects are for Nebraska it's just it's unbelievable it's been accomplished and it's been accomplished uh the people who encouraged the gambling they would like to say it's been accomplished because of the of uh we've got these liquid markets and all these wonderful things Charlie would probably say us in spite of that who knows but uh the uh a the answer is that uh well there's an internet answer the uh my wife when they got married April 19 1952. we got on my ads car we started driving West and we ended up oh drove all over the west but one night we ended up in Las Vegas and uh there were three fellows out there uh that American Sam Zigman Jackie going and all three of these guys were from Omaha and they'd bought little pieces of the flamingo Bugsy signal with had his career ended brother abruptly uh a few years earlier bad boy it was a stray bull looked undoubtedly but in fact there were probably five or six spray bullets but in any event uh Bugsy was gone and uh some people including three guys from Omaha were in the group Sam Sigmund lived about two blocks from where I live not only with Stan lipsy's uncle Stan lipsey ran those of you'll follow Berkshire and the Buffalo News and my partner for 40 or 50 years later on so all kinds of things intersect but I walked into this Casino aged or Flamingo it's kind of a motel like arrangement and I was 21 of them and my bride was 19 and I looked around the room and there were all of these people and they were better dressed then it was more dignified group than perhaps currently but they'd flown thousands of miles in some cases uh you know in in planes that weren't as fast as the current ones and were more expensive probably on a per mile basis adjusted then they've gone to Great Lengths to come out to do something that was mathematically unintelligent they knew it was unintelligent and I mean they couldn't do it fast enough in terms of rolling the dice you know and trying to determine whether they were hot or whatever they maybe and I looked around at that group everybody there knew that they were doing something was mathematically dumb and they'd come thousands of miles to do it and I said my wife I said you know I'm going to get rich I mean how can you miss if people are willing to do this you know this is this is a land of opportunity well it's the way it still is uh you know and the flamingo go to be much bigger and and in Omaha we're very proud of them Jackie and thinks he's the only night of your here or two of us it became sort of the uh the leader a spiritual leader of Vegas and like I say sam zegman's uh nephew went on to save my and Charlie's investment that we made in blue chip in the Buffalo News it's a very accidental society that occurs but there is nothing stranger then what has happened in Finance on the other hand if you go back perhaps the greatest chapter ever written on on the operation of markets and particularly the stock market is in a book that I'm one of the most famous books in economic history the general theory written by John Mayer Keynes I think is 1936. and I don't know whether this chapter I think it's chapter 12 but whatever it is he describes what Market's all about in 1936 and he describes something in beautiful prose uh that explains why the whole country in March of this year was sitting around uh trading Occidental in some crazy way that enabled us to buy a quarter of what wasn't owned by uh for other institutions that work on yourself we're able to buy a quarter of it and we could have bought a lot more I mean it was it you just wondered if there was anybody that really was thinking about investment if you like going back to investing I mean investing is laying out money now with the hope of getting back more later on it's really laying out purchasing power not without getting more purchasing power back but that's the reason you and you know that's the way you learn in the textbooks that you defer consumption now so you can consume more later on so they can take care of your family and all these things about how investment takes place and that is what happens with Farms I mean that uh somebody buys a farm and they generally they hope to leave it with their kids or they got it from their parents and I mean they don't sit there every day and they don't get quotes 15 times a day and say you know I'd like to get a call I'd like to sell a put you know I'm I'm a guy who's Farm next to me and you can have a call on mine and then I'll have something called a straddle or a strangle or whatever it may be and you know they just they they go about making the farm worth more money and and they do the same thing if they got an auto dealership and they do the same thing you know if they've got an apartment house they look for for proven track tenants all those kind of things and um 40 what would it be 40 trillion at least you know of of the ownership of all of the American Business uh people Traders Parker chips sir pulling the handle and and they've got they've got systems set up so that if you want to buy a three-day call on a stock you can you can do it and they make more money selling you calls and if you buy stocks so they teach you about calls nobody's going around selling coals on farms or anything of those sort uh but that's that's why markets do crazy things and occasionally uh Berkshire uh gets a chance to do something uh and it's it's it's not because we're smart it's because we're the only thing I'd say we're qualify on and sometimes I wonder about that but I think we're saying you know I mean that and and that's the main main requirement in this business and and anybody Charlie well I think we've ever had anything quite like what we have now in terms of the volumes of pure gambling activity that go on daily and the people lathering the gamblers up so they can Rook them and it's not pretty and I don't find it it's an engagement glory for capitalism or anything anymore there's a bunch of people throwing dice at a table what goodness that do the rest of the world it's a great way to become rich though just figure out waste insert yourself into the system somehow and uh you know jobs to some extent self-select them and many years ago and and I've got all kinds of friends on Wall Street not as many as I had before I had started talking this way an hour so ago but but I really do I I mean I I people make they make lots of decisions in life and the truth is that overall the American system has worked extremely well it's it may be very unfair in many ways but it has produced incredible difference in the goods and services available to me versus what my grandfather had available you know I do not want to go back to pre-air conditioning and and people pouring whiskey down me while the while they drill my teeth or something of the sword or any I mean this this is a lot better world and and uh well I think we've made more be because of the crazy gambling I think it's made it easier for us net over the decades we've been operating well I mean we've depended on it yeah I mean we depend on Mr Price businesses through mechanism where we're not responsible for the mispricing of them and overall we we learned something a long time ago that doesn't doesn't take a high IQ doesn't take anything it just takes the right attitude we may talk more about that later but I think we ought to prove that we've got an audience here by going to section one good morning my name is Ole pollem I live in Hanover Germany this is my first time in Omaha um my question is on Berkshire buying entire companies outside the US there were a few isca probably the first one uh Lewis in Germany my question is uh would you only answer calls from them if you're interested in or would you proactively approach them if they would like to sell their company um I would we actually made a few trips I think maybe Charlie we tried to stir up interest and all that sort of thing in Berkshire around the world would probably do that 20 or 25 years ago uh during that period that I showed you that burst of action we had we probably spent probably spend at least five billion of that uh yeah it'd be pretty in the area 5 billion of it we bought three German Securities we bought two ah well we bought we bought one Japan we we rounded up on some some of the Holdings we already had there man uh we would we would love them to buy it but we'd they don't think of us as quickly there I mean I don't have somebody that's going to send me an email about a company that I've been following for 60 years and and I know I can see them in New York and you know I can name a number to them and if he likes it he can take it to his board and so on and uh it just doesn't happen that way we haven't had that experience in in well anywhere outside the United States now I didn't say with 40 trillion here you know we should be able to find something here a little closer to home uh but we don't have any bias Against the Wind we there's there's uh their companies you know we buy in 10 minutes if we had somebody on the other end that could do business in 10 minutes it's much more complicated and certain countries than in the United States to purchase businesses and uh [Music] there's certain rules but I would say this you know we got a call whenever it was many years ago on the uh on on our company in Germany and and actually the two two fellows that run it are probably here in the audience feds saw them yesterday and they're marvelous and they run the business and and uh and um they're they I was trustworthy as there are all the pictures were up on the on on the movie we showed uh uh before the meeting started here uh you know we we have so much trouble finding good ideas that we can't afford to ignore any but they do have to be sizable now I mean that that really isn't there isn't a lot a lot of I love the I love the operation we've bought in Germany and it's just a pleasure to be associated with the with them people there I just wish we could add another zero to all the figures and it was a much larger deal it's not going to have an economic impact on Berkshire but they love it they care you can see it you can feel it and that's the kind of business we'd like to happen and we're very happy we've got it in Berkshire but we can't do it One debt of Louis at a time uh and we would never never saw an operation like that ever uh uh I'm looking at you Greg uh the the uh you know but it we if we get a call tomorrow uh and we could make a deal involved 10 or 20 billion dollars it was in Germany or France or Britain or Japan or the name of the whole country would do it we bought them interested in the five leading trading companies and Japan uh uh a couple years ago and and I rounded them up a little bit but I told them originally we weren't going to buy a lot with I mean we're going to change our positions materially without their okay so we actually I think rounded to 5.85 percent based on the latest figures we had then of all five of them and end up put a good money hundreds of millions or maybe a billion or two work uh so we will President Kennedy said well pay any price climb in the Hills you know whatever maybe to find businesses but we actually prefer it when they fall into our lap like getting in the letter from somebody and they hadn't heard from for a couple of years and you know what you pay for the business and and you know if the if the board of directors of that company regards it as attractive you'll be happy to buy it and they know you're going to show up at the closing and the you're not going to pile debt on it or change things or anything no the they've got an answer uh and then you have to see if they've got them the question in their mind is is what's the best thing for Allegheny Corp and in that case we got 11 billion dollars of us at the end of the day or the end of the dinner uh than we had at the start of the day so opportunity can be any place and we do have a terrific operation for example in in Israel made that just terrific and and it's reason it's it's pretty good size uh uh would be like to have another one like it yeah I just don't know where the other one is Charlie well but think in the scheme of things imagine buying in 60 billion dollars worth of our own stock we like the businesses we like the price we're paying no overhead no cost no no nothing just just more interest in what we already owned isn't that we're totally wasting our time yeah and if you look at it there are you can read hundreds of thousands maybe millions of words written on stock repurchases and what this is and what that is and all this kind of things it's not very complicated if you had a partner in a lemonade stand and they wanted to sellout sell our interests or two partners and what I want to sell their interest I mean and the business had the money to buy it or the lemonade stand and and they were offering at a price that was good for the other two people are going to remain they'd buy them you'd buy it now the thing that was fascinating to me is what you can accomplish and still people won't pay any attention to it we owned in 1998 you know this is more than 20 years ago uh we owned uh about 150 million I don't know where they've split whatever it is if it's if they swim it's split adjusted but we owned 150 million shares of American Express ah I think we bought our last share in 1998 or something like that so and we then owned 11.2 percent of the American Express company wonderful company and since then they've sent us a check every quarter is a dividend and so we've taken some cash a little bit as they've gone along and now we own 20 percent of American Express one um that's what's happened because they've repurchased shares that happens to work out extremely well if they overpaid for the stock and all that it doesn't solve every problem but it's a wonderful thing if you've got an asset you like and they take your ownership and interest up and like I say we we've gone from 11.2 percent to 20 percent if you're using your American Express card or whatever it may be 20 of whatever earnings our attributable to our interest and they used to be 11. 2 percent and we've done it without putting up any money now imagine imagine if you owned a farm and he had 640 acres and you farmed it every year and you made a little money on it and enjoyed farming and somehow 20-year so years later it had turned into 1100 or 1200 Acres I mean you'd say you know how long has this been going on you know why what could possibly be you know is this an American or whatever it may be I mean is it you know sensible use to meet its cost to Capital blah blah blah blah blah if you do it at the right price there's nothing better than buying in your own business we owned I mentioned use Capital as an example uh of how our interest in apple you know the retirement company that earns 100 billion a year you know it means of our interest and it goes up a tenth of a percent you know we've added another 100 million earnings well I think I mean it takes a lot of work 100 million earnings and uh you know in the first quarter they just reported uh they're on a fiscal year but they just reported their March quarter and you know they earned more money and they had fewer shares outstanding and we actually bought a little more Apple uh in the first quarter so we decided we wanted a greater interest and on top of that we knew that we would own an even greater interest if uh uh they kept buying in their shares which we didn't have any Insider information or anything but certainly would seem to wait a bat and uh you know we feel better because we bought the shares we bought in the market and we feel just just as good as the fact by the fact they use their cash to buy with some of the other people it it is the simplest thing in the world and then I read all the stuff it is unbelievable uh oh people can't figure out something that you know if they owned a farm and the guy next to him at a farm and somehow you were getting more of this Farm all the time without putting up any money while you park your own farm that at least it you know you're using some of the earnings for that I feel very good about it and uh have you got any explanation for it Charlie well I have another thing that interests me in the presidency we get all these suggestions from index funds a letter saying we the chairman and the president of the chief executive officer the same person and that they have some Professor somewhere that thinks that American Business would work better if at a separate the foreign to me it's the most ridiculous criticism I've ever heard that they're like it would like well odessa's would come back from winning the battle in Troy and so forth and some guy was saying I don't like the way you are holding your spear when you won that battle there's some guy that's never run any business and doesn't know anything don't think too much of this activity [Music] well let's see some are in here I may find it at some point oh here it is uh we wrote we wrote in the annual report that in the third paragraph of a nine page report we said we're going to treat everybody the same you know maybe a crazy concept we have but but we really feel that somebody that gave us our savings and 1960 or 1970 or 1980 and just left them with us and trusted us we feel that they're entitled to the same sort of respect and attention that uh somebody that was accumulating like crazy assets under management gets paid based on assets under management that that knows that they just need to have policies that essentially are popular in Washington the only problem the only threat they have really is that Washington that sometimes says that you're getting too damn big and we're going to do something about you so they they try to be very sure that they're doing things that people will share so anyway I say well we're going to treat you all alike we've got three million people or shareholders out there we're going to treat you all alike and uh on March 25th uh about a month after I wrote that letter it's in the third paragraph you'd think that they would get that far they they had 101 million B shares down if somebody ought to read to the third paragraph but anyway we got our letter and says we would like to meet with you in advance of Berkshire Hathaways 2022 annual meeting of shareholders to discuss Berkshire Hathaway's perspective uh on governance and sustainability well hey I've written probably more on that that's been honestly written from by the guy that runs the company but why in hell would they think that we should meet with them and not heal people all individually come here I I grew up in a very very very Republican household but I feel like a you know some raving populist or something but I I just can't imagine uh well anyway you've heard it and and you know I somebody gets paid to uh well there's a lot of people I'm sure in public relations and they hire advisors and advice because it looks better if they have advisors to tell them whether the chairman of the CEO should be the same person or not and those people get paid for it and then they discuss it at their board meeting and then you know in the end believe me if if 90 of Congress for some reason felt it was better to have the chairman of the CEO be the same person the index funds would not be writing those letters because all they have to worry about is whether for some reason people start wondering why some some institution should have 10 percent of the votes and in every major corporation in the country and I like the idea of index funds but it is interesting to watch where incentives and bureaucracy and whatever it may be lead people the guy that wrote me the letters probably a very nice guy I haven't but you know that's his job and uh uh well anyway they didn't get a special meeting and you people were here and I we appreciate the fact you're here [Applause] okay back to Becky this question is for Ajit and Greg it comes from Ben Nall who's a shareholder of 30 years he's a Nebraska native and he says he'll be attending the meeting here today um BNSF and Geico appear to be losing ground to their two primary competitors Union Pacific and Progressive over the past several years Up's operating ratio has been about 400 basis points better than bnsfs and Progressive has grown faster while maintaining a lower combined ratio than Geico on an operating basis Up's Precision scheduled railroading and progressives telematics appear to have jumped ahead of the Berkshire businesses he wants to know what Greg and ajeed are doing to address those business challenges there you go first okay and thank you Becky let me just start by saying when we think of BNSF we have an exceptional franchise there and a great business and we do compete with other Railways and we're very well aware of how they operate including their operating ratios and and the metrics they operate to and and precision railroading and it's all part of it but what I would say what I would share with is when I think of BNSF we start with focusing on our customer understanding how we can best service them and yes we want to do it in an efficient effective way that delivers great results back to our our shareholders and and that will continue to be our Focus so yes we learn from all the uh metrics they report and how they operate their their Rail and we observe it but I would put our team up right beside them on on any operating day and we're gonna we're gonna move our our train our rail cars as as well as any other rail company in America and we're going to do it on behalf of our customers so we're we're very proud but we're not ignoring the fact that there's more to be done both operationally and and for our customers so we'll continue to see Improvement there we've got a great leadership team there we've got a great employee group within BNSF and what I like is we're just going to see long-term Improvement there we have a an exceptional Intermodal franchise out of the West it's it's incredibly valuable to our shareholders long term our partners and that's what our team is focused on building that franchise out so couldn't be more proud of where we're at but we also know we have a journey ahead of us and we're going to continue to get better and better Greg if we wherever the opportunity would you trade our operation for theirs never never and we love he knows a lot about it Phil we have a great we have a great franchise and we have a great leadership team running it so well said Charlie thank you and I I just love this before I go to a Jeep and Greg you know was a major partner uh for 20 years uh more lessons a little over that since we we bought the Energy company and and uh uh his boss was Dave sulkelvin and and the two of them I mean they know how to run they know how to run businesses I mean and they you know it's like we don't we we don't read what other numbers are and all that but we we uh we've got the perfect person running in Katy farmer we've got the perfect person running uh the NSF and you know she'll do a great job and it it changing around a railroad various ways and I've got 20 20 uh 1000 or something miles of my own track and all kinds of other that doesn't count sightings and double tracking and you've got a lot of things to do from something that they started building a couple hundred years ago and and you not quite a couple hundred but and you can't you can't move things around easily and towns yeah you know when you came into Omaha in 1862 well the railroad didn't even go across the river I mean even though we'd become the major rail Center for for the Western the opening to the West End uh it we're going to be here 100 years from now we will be an important a really vital asset of the country and it will be a very big part very important part of Berkshire and uh we will take what is an incredible assemblage I think of 300 and some railroads or something I get over time and and and and uh you know the trucks got laid and the Rocks laid out you know 150 years ago the world changes but you have we have to adapt to it but you don't do it you don't put an order out to change a thousand miles and hours operated or anything of the sort so we're running it to have that asset for Berkshire shareholders and and it will redundant to the down to the um the benefit of the the country and what we do it yeah well a little no matter who ran it would be important obviously enormously to the country and the up will be here and and uh at that time too and and and uh it'll be a better railroad 100 years from now than it is now but I can't promise you what will happen if if we get flooding and something in the next few months you know it it can it can uh okay then wipe out a lot of the plans you have and disrupt lots of lives and and disrupt lots of shipments and uh there's there are no magic wands and and railroading to make great great changes on the other hand you ought to be working at it every day to make it better done I forget how many bridges we have but uh uh some years ago we were spending three or four billion dollars a year on on Capital expenditures someone aren't as a Matt Rosa you know I said there's a lot of money to spend you know keeping up a rare blood men no he said well we're gonna have to do that more and so on and I said well I said I can handle this I'm not sure Charlie can I mean I have to explain these numbers to him so the next Bridge they bought they built they called The Charles team Munger Bridge so you can actually go see our railroad has the Charleston mugger Bridge because Charlie Charlie I kind of was asking similar questions 10 years ago uh Ajit okay thank you Becky there's no question that the personal automobile insurance business is a very competitive business having said that both Geico and Progressive are two very successful competitors uh in this segment each one of them have their pluses and minuses but having said that there's no question that more recently Progressive has done a much better job of guy than Geico as you point out both in terms of margins and in terms of growth rate there are a number of causes for that but I think the biggest culprit as far as Geico is concerned and again you rightly pointed out is telematics Progressive has been on the telematics bandwagon for I don't know more than 10 years probably closer to 20 years Geico until recently wasn't involved in telematics and it's been only the last two years that they've made a very serious effort in terms of making using telematics for segmentation and for trying to match rate and risk it's a long journey but the journey has started and the initial results have promising it'll take a while but my hope and expectation is that hopefully in the next year or two Geico will be in a position to catch up with Progressive in terms of telematics and hopefully that will then translate into both growth rate and margins Charlie guy [Applause] it's very interesting I mean Theon the auto insurance industry is is a fascinating one to study that in in the that the largest auto insurance company now and we're talking 2022 and the you know Henry Ford I mean it was 1903 you know or something when when cars really got started and it wasn't too many years after that the it's turning up two million cars a year imagine that you know one guy the two million cars here is a lot of cars so car insurance uh became very important after hundreds of years of when people thought about insurance it was it was it was ships at Sea and and uh fire where they had protective societies and insurances and products been around a long time but Auto Insurance uh has been pretty much the same thing since Leo Goodwin started Geico when in 1936 and we came along with a good idea and lots of big companies and all that but the largest auto insurance company in the United States was started over Illinois bike I didn't know anything about insurance particularly and it's a mutual company it's not supposed to succeed in capitalism I mean you know if you go to business school they teach you that only the only because you have incentives and compensation and all kinds of things can a company succeed well nobody's really gotten rich off State Farm they they just out there and they are the largest insurance company while Leo Goodwin started 80 some years ago and he probably wanted to get rich and probably probably uh uh a progressive uh you know people wanted to get rich in The Travelers and Aetna name off dozens and dozens of company and who wins you know a mutual company in terms of present size they still are the largest company they have I believe our Berkshire they got the largest net worth by far I think they've got 140 billion or something like that a net worth you know and progressiveness had a very very very smart guy running it for a very long period of time they got very smart people running it now but but they have a net worth that's one-sixth out of what some people over in Illinois that nobody knows the name of half after years of they've had the time to solve the same product when they advertise like crazy we spend two billion dollars a year telling people the same thing we've been telling them for 70 or 80 years you know the policy doesn't change but when we get all through State Farm still doing more business than anybody and it it shouldn't exist under capitalism you know if you went there with a plan to start a State Farm today and I would compete with Progressive who would put up the capital I mean a mutual company that I got to get the profits from it doesn't make any sense at all except they've got 140 billion or something like that of net worth and Progressive I don't know what their net worth is but must be somewhere around 20 or so billion and I haven't looked for a long time their net worth in the first incidentally I mean they they are very very very disciplined and underwriting and of course on the investment side they're not worth dropped in the first quarter because they they own a lot of bonds and they say well they would probably ever run Insurance business would say that while we own bonds because that's what people do and here's half the business where you do what people do and the other times another half the businesses spend all kinds of time trying to analyze in every in every County and every every single every single way you can segregate and properly rate business and all of that and uh you know they basically ah Peter Lewis she's at my office for 40 years or yeah 40 years ago and he's smart as hell and and you know this guy was clearly going to be the a major competitor of Berkshires and and he knew Insurance backwards and forwards and and very bright and everything but they just ignored the investment side and that was as important as the as the the underwriting side and and it is interesting how organizations function and and have what I would say Earth to some extent blind spots and of course Charlie and I know we've got all kinds of blind spots ourselves and so they'll have to be kind of careful of criticizing other people for having them it is it's it is the auto insurance business ought to be studied in business school because it essentially refutes so many of the things they're presently teaching so that's my suggestion today to Business Schools okay and thanks to Jeep you couldn't Ajit is responsible for adding more value to Berkshire than the total net worth of progressive is that that's not to knock Progressive I'm just saying one guy foreign okay station two hello Warden and Charlie it is great to see you both and the wonderful Berkshire managers our thanks for everything that you do my name is Rajiv agrawal and I am from New Jersey my question is on Market timing you have always said that it is impossible to time the markets yet if we look at your track record you have had amazing timings with some of your key decisions you got out of the stock markets in 1969-70 you got back in 7270 to 74 when the markets were really cheap you did the same thing in 87 99 2000 and today we are sitting on a significant amount of cash when the markets are going down my question is how do you time the big Market moves so well uh we'd like to offer you a job first I will take it the the interesting thing is you know obviously we have the faintest idea what the stock market is going to do when it opens on Monday we never have had we have never made Charlie and I I don't think in all the time we work together and I'll tell you something later on maybe about how warning takes place but we have we have never ah I don't think we've ever made a decision that were either one of us has either said or been thinking we should buy or sell based on what Demarco is going to do no or for that matter on on what the economy is going to do we don't know and the interesting thing is uh sometimes sometimes I get some credit someplace for the fact that you know how wonderful it was that we were optimistic and 2008 And when everybody was down on stocks and all that sort of thing you know we we spent a big percentage of our net worth at a very dumb time and I shouldn't say we as I we spent about 15 or 16 billion dollars which was a lot bigger to us then than it is now we spent in the last few weeks there were period of three or four weeks between Wrigley and Goldman Sachs in general at a terrible time as it turned out I mean I didn't think I didn't know it was going to be a good time or a bad time but it was a really dumb time and I wrote an article for the New York Times and by American and all these things well if I'd had any sense of timing and waited six months until I think the law was in March and in fact um I think I was on CNBC maybe that day or something but but uh I totally missed that opportunity I totally missed you know and marched we have not been go to timing we've we've been reasonably good and figuring out when we were getting enough for our money and we'd hadn't had no idea when we bought anything well we always hoped it would go down for a while so we could buy more and we hoped even after we were done buying and ran out of money that if it was cheap the company would keep buying and in fact taking our interest out I mean that stuff you could you could learn it in fourth grade but but it's not what's taught in school and I mean so never give us any credit well actually give us all the credit I mean go out and tell everybody how smart we are but we aren't they we [Music] haven't ever timed anything we've never figured out insights into the economy I mean when I was when I was about 11 years old March March 12th I guess 1942 yeah at March 11th you know I bought stock when the Dow was 90. it was 101 in the morning it was 99 at the end of the day I think and uh you know now it's 30 4 000 or maybe it's a thousand lesson it was on Thursday it but I just you know it's one decision that it's a good thing don't American Business and and you know if the Harvard endometer come to see me in 11 year old and you know or General Motors pension fund or something and you know they said well no but we have to have a balance we have to maybe have 60 percent of them and then we have to sit around every three months and listen to a bunch of managers they've just done better if they just taken some darts and throwing them and and just said we're going to be in America 50 years from now and 100 years from now and we'll do better in Saxton we're willing bonds uh it it's it's it's amazing how hard people make what a simple game it is but of course if if they told everybody what a simple game it was then 90 of the income or more of the people that are speaking uh would disappear so it's really a little too much of us to expect of human nature that people will explain why they really aren't adding any value to what you can do by yourself or actually you're you know I hate to use the example but you can't have monkeys throwing throwing darts at the at the page and you know take away the management fees and everything I'll I'll I'll bet on the monkeys but I don't consider them a superior species and I don't want them to move next door instead of my next door neighbor or anything but that is the way it's just the way it has to be trying to get anything cheerful to say well frequently and well the wealth advisory business the way it used to be you go to your investment advisor and you say what should I do to protect myself for the future and he says why don't you give me fifty thousand dollars of your net worth now that's my contribution to your future It's A peculiar business yeah that's a great place to go Rich it's still if you have if you're if you have a son or daughter that that really wants to make money per point of IQ and per ERG of energy and all of that um go to Wall Street I mean don't have manner to the priesthood or I mean if that's what they itself selects and uh it always will be the case I mean there's no reason to despair about Humanity because they behave in their self-interest they may not actually be behaving in their self-interest over time but they uh uh you know are they happier who the hell knows but but if they just want to make money but uh uh people here in the auditorium saw a little session from the Solomon uh Solomon uh episode and Jerry Corgan was then they had a New York fed and that same committee was grilling him and they said Mr Corey they were giving him a hard time and they said uh who was the highest they said something that was the fact that it was the highest paid or uh guy at Solomon last year and then I said well he uh yeah and he named him he said maybe he named him and and you said he got I forget what it was 20 million last year and we're talking 1991 now too he said man got 20 million and uh the guy says well how old is he and you know he said well I think he's Corrigan's and somebody affected he's um you know 26 or something like that and then Corrigan couldn't resist saying and he can't even throw a football and the truth was you know now there's a lot more money in throwing a football out of them there used to be at um uh you know one of my heroes was Ted Williamson you know I think he was making 20 or 25 000 a year and uh it'll just imagine that they some guy the best 230 or 240 you know and he makes it to the banks I mean he's the money flows in and of course ah those peoples should sit down and think the fact that the the stadium that could hold 30 or 40 000 people and it was the source of revenue for the people who paid their paycheck that Stadium went from 30 to 40 000 because somebody first invented television and they came up with cable television and they came up with pay and all that sort of thing and no nobody knows the names of those people but capitalism is very very very peculiar in how it dishes out rewards and for a while it was better to be in Wall Street than Vietnam 2 20 or 2 30 hit Aaron in the in the bags and uh and you know it is now reverse because uh of the development of TV Etc so it's a crazy world rewards seem very very very very very capricious and they are and they don't seem Denny Theologian or or even to Charlie and me in our spare time and the whole thing seems kind of crazy uh but it's worked awfully well and even the people who don't take advantage get Shore Changed by the system are doing far far better than if the system hadn't gotten changed doesn't mean that it doesn't mean that you necessarily shouldn't work for change but you shouldn't recognize the limitations of what you can do with humans I'll put it that way okay Charlie is there any way you'd like to close the sermon well I do think we have a very interesting phenomenon in I would argue that a lot of the wealth advisory business people are charging for skill and delivering closet index as a closet and excisation in other words you nobody can stand being that different from the crowded and results they're afraid they'll lose their fees so everybody does the same thing it's it's mildly ridiculous the world is mildly ridiculous but as Charlie pointed out in the movie with you only a bit weird so but before we were married you know we tried to convince uh a couple young women that we were really more attractive than we were I mean you can't expect people not to behave with their self-injured and that was very important that that uh that uh we didn't dispose all disclose all of our weaknesses uh before the marriage so we're trying to be a little better yeah we may feel a little uh and I don't know about you but I've slightly improved since I was 17. well well that's that's a really interesting point because if fortuners just showered you with all kinds of good things you ought to be a better person in the second half of your life than the first half I mean that is really should not be asking too much of people if they've if they've won the ovarian Lottery at all you know they're born in the United States and all kinds of good things have happened to them uh and you've had a chance to see how stupid you were and all kinds of things you did you know why not have the second half of your life be better than the first half I mean and I would say working from a very low base but I mean I I'm not nearly by any intelligence test or ability to do any of that you know I haven't learned anything but you do learn certain things only by interacting with people and you don't know when you're two years old no matter how much you're picking up all kinds of of Knowledge from the world learning machine that's going on in a two-year-old's head is just unbelievable but it's not the same as having 30 or 40 years of experience with actually how the human animal behaves which is the you really you know you're learning all the time about it but that should make you a better person in the second half of your life in the first time and I would say that if you say you're a better person in the second half I've got reason to say it in the first half you know forget about the first half enjoy the second half and uh uh and they both Charlie and I've had the luxury of well they ain't living a long time so we get to play what we would regard as the the hopeful and respectable second half ah and we have had enough sense to figure out well we figured out what makes us happy and we've gotten somewhat more sensitive to make other people unhappy and all that sort of thing and and I'd rather be judged by the second half of my life than the first half and so would Charlie yeah of course okay I'm very I I don't even look at what I did when I was young because it would embarrass me yeah okay uh any of you who wish to quit Charlie on specifics can do so later [Laughter] Becky this question is is uh there's two-part question it's for Warren and ajeed on the first part and for Greg on the second it comes from Roger clefman he says several years ago Mr Buffett was quoted that a nuclear attack is the greatest risk to Berkshire Hathaway insurance given the present circumstances what would the Fallout be on Berkshire Hathaway insurance if a nuclear event occurred in the populated world and then secondly for Greg has Berkshire Hathaway energy suffered any physical or cyber attacks and irrespective of that as any special hardening of security been put into place yeah well the first half every day since since August of 1945 every day uh and accelerating dramatically when a second a large country had the ability to um kill millions of people which is been magnified by incredible factor that sure is that that there is a risk every day it's a very very tiny risk but there's a Jeep one for anybody at this table could tell you if you if you roll well they had they had some they had a pair of dice out of the Desert Inn in Las Vegas for a while under a glass thing and some guy throwing 32 passes in a row and I don't know maybe the odds are 8 million to one against that or four million four bills in the one against it but uh you know if you if you just keep rolling the dice no everything will happen I mean it uh get 330 million Americans out tomorrow every American says heads or tails uh uh and they do it every day after 10 days you know you you've got 300 30 000 of them called the flip 10 times in a row and if you do the 10 more days you've still got a bunch of people who've done it 20 times in a row and they really think they have learned how to control the flip well the answer is the world is flipping a coin every day as to whether people who can literally destroy the planet as we know it you know we'll do it and and unfortunately uh uh the major problem is with people that have large stocks of nuclear weapons and and uh icbms on what's when they talk about using tactile nuclear weapons because somebody will be upset because they're losing a war I mean has anybody think that somebody's willing to kill hundreds of thousands of people with the tactile weapons I mean why do they stop but you know if they're in it it is a very very very very very dangerous world and uh and we but we don't have any way of not protecting there's no way that's a big nuclear attack I know a man who said I know what I'm going to do if there's a nuclear war I'm going to crawl under the table and kiss my ass goodbye control at Berkshire hey yeah that we have no solution for it no we don't and and there isn't any solution for it and uh you know it's extraordinary when you think about it uh uh in August of 1939 September 1st is y'all know Hitler moved into Poland but nobody really knew that much about it here I mean the news you got you got from the news really went to because the theater was air-conditioned you know or something so so if I went to the movies uh what you wanted to do in the summer because it was air conditioned and in August of well September 1st in the case of the actual movement in the Poland but but uh you know there was a few people on the screen and some guy with an authoritative voice telling you the German forces are just moved into uh Paul and a picture of a few tanks maybe and it's over in a minute now of course all day every day you see people dying who you very much empathize with it could be you instead of them and and it's just so different but in August of 1939 there was a letter sent uh to President Roosevelt about a month ahead of time and why did he get that letter he got the letter because Hitler was so anti-semitic basically drove all the all the Jews good good see it coming out of Germany and among them were some great scientists and uh it was obviously from hungry but somehow we he got driven about Einstein got driven out and uh Leo zolard lands and eventually in the United States and he writes a letter to tell the president of the United States Franklin D Roosevelt that that the the there's a bunch of uranium moving different ways or whatever it may be I don't know anything about physical zero I don't know what the often on sign them up but then in any event I know what the letter did because he writes a letter and says uh you know something big may happen in physics and America better get to it first but then he has the problem how do I get it to Roosevelt oh Leo's alarm who's he the president United States so he figures if he gets Einstein to go sign it the president will pay attention and he's right so he goes and gets Einstein and the two of them send the letter and they sent it to Roosevelt and done they wouldn't necessarily have been in the United States if it you know another different great it hadn't had the crazy views about about Jews basically and so anyway uh that letter went and uh we developed uh the atom bomb uh before anybody else did it was a very very fortunate development that uh uh that pleoz a lard and Einstein happened to end up in the United States rather than perhaps be someplace else who knows but the accidents of history and the acts there's going to be more accidents in connection with Atomic weapon we you know we've come close for various times I mean it uh we had geese flying over you know somewhere up north gets a crazy signal and we've had wrong Training trade tapes we're in the Soviet Union or something you know it looks like things are going on in them it's we can't do anything about it and uh that is one risk that Berkshire absolutely has no interest in even though you can say everybody in the world should have an interest but it doesn't do us any good the feeling doesn't do any good to think about it Tom but that doesn't stop the fact that there are two powers in the world that true miscalculation uh of the other's intentions through all kinds of things you know come close in the past and Charlie and I lived through the Britain through the for the Cuban Missile Crisis and you know we we knew there was some chance but uh weapons of mass destruction would be used and believe me there that uh there's a lot there's a lot more bad that can happen and Humanity has not uh really come up with a counter Force to uh technology I mean if you live back in the caveman ages if you were a sociopath or something you threw a rock at the guy in the next cave you know or something I mean it was sort of proportional to uh and and we kept development and there was this breakthrough where technology is totally outrun Humanity and we'll see whether what happens but huh so far so good and Berkshire does not have an answer though we don't we don't there's no there's certain things we don't write policies on because we wouldn't be able to make good on them anyway you know for that for that and everybody would know we wouldn't be able to make good on them so we're not they you'll have that risk and there's nothing bursary can protect you against uh and we've been very lucky so far a Gigi ever get any questions in terms of in in addition to all what uh Warren has said in terms of the chance of something like this happening the additional thing that concerns me about a nuclear situation is my my lack of ability to really estimate what our real exposure is in the event of a nuclear event when you're talking about you know other big exposures we have earthquake in hurricane and cyber I can with some reasonable degree of accuracy have a point of view in terms of how larger exposures can be and how big our loss can be when it comes to a nuclear thing you know I I sort of surrender I you know it's very difficult for us to estimate how bad bad can be very many different lines of exposures will be affected by it and even though in almost all our contracts we try and exclude nuclear as a covered peril nevertheless if something like that were to happen I'm I'm fairly positive that the regulators and the courts will hold it against the insurers uh and we will be and they'll rewrite the contract and we'll be required to pay for example one thing which is already being talked about uh we issue what are called fire policies and these fire policies try and exclude nuclear as a covered peril but there are several Regulators who feel that gee if it's a fire policy in if the nuclear attack causes a fire then how can you exclude fire and you better include fire so you know debates like that we will have to live with and it'll be very difficult for the insurance industry to fight back both the regulators and the court systems in terms of what is covered in order not covered and there won't be any Regulators or anybody else so we'll leave it to them a million years of reconstruction uh Einstein said that he said I know not what the uh weapons will be for World War III but I know the weapons for World War II will be Sticks and Stones you know there's a lot of things um the I mean it's it's just if you're worried about about the effect of nuclear attacks uh you know you got other things to worry about than the value of your Berkshire I'll put it that way and and what other cheerful things station um you touch on the Cyber oh yeah sure yeah I'll just touch on the on the Cyber because it was raised and when you do think of Berkshire and and they use Berkshire Hathaway energy as a reference but uh cyber risk and managing that risk both at Berkshire really Falls across all of our subsidiaries and it's a it's a constant risk that's there it's one of our greatest risks we're always evaluating and trying to literally defend against and if we use Berkshire Hathaway energy as an example we would uh receive billions of attacks every day against our various operating systems so that's basically what our team is in place for both they Harden the assets to deflect it and then evaluating the underlying attacks we have you know every second of the every second of the day and and by the way that would we'd have a number of operating subsidiaries that experience that but obviously it's the rail and the energy and a few others that we we spend a lot of time on a lot of effort a lot of resources and the good news is that uh today that through to today our teams have done an exceptional job we really haven't had a significant event we've had some minor events at small businesses but across our major businesses across our major operating systems we've had the proper security protocol in place to avoid events but it again it never stops our team would tell you that every day that's a risks they recognize and a risk they're addressing within the within the businesses so a significant risk but a significant priority for all of our operating teams yeah and I would I would add one thing I think Greg knows way more about this than I do but my impression from everything I've seen is that you always have you know historically the the uh the Private Industry has always said the government can't do anything right and and government always says that Private Industry is just thinking about itself all these things the truth is I from everything I've seen is that the cooperation between government and business in terms of Trying to minimize the threat of of cyber problems I think it's been magnificent you know basically yeah excellent point when it comes to cyber the collaboration between a variety of U.S agencies and our individual businesses it's incredibly strong including down to the certain agencies will submit uh basically a lot of our operating data on an on a daily basis where they're helping us go through it to identify if we have a bad character a bad individual who's maybe penetrated into our system so it's a it's a strong collaboration and more and you're absolutely right it's uh it's very unique to see how both the industry and the government's working so closely but I think we both recognize it as such a such a significant risk we have to stay strongly aligned on uh on the approach it's a real partnership it's a real partnership and and we can do better because the government is helping us and the government can do better because we're helping them and there's no lack of will on either side and and I cyber I mean it blows your mind on sort of another the nuclear is the is the the number but it's a very very very low probability yeah someday the sun will burn out too you know but but uh that uh that uh it is there's really no place for two countries with large ICBM possibilities and who knows what else and everything but the we haven't figured that out yet You Know It uh it's easy to go around say this is a solution or that's a solution but but uh you know if you have two people with loaded guns facing each other and you know and not everybody is likely to be totally rational oh well we see so much irrational irrationality and where people's self-interest is involved they're doing all kinds of things to destroy themselves in terms of how they live their lives in their mind and you know what it doesn't stop with I should move up the water and uh you know people people some people do terrible things and just help the very much hope that they aren't in a position where they can do it all by themselves with the rest of the world is there was their supposed prize okay uh if State station three will please us something about motherhood and apple pie or something like that okay Dear Mr Buffett and Mr Munger my name is Daphne I'm from NYC and this is my fifth annual shareholders meeting well we appreciate you coming we do sincerely as you know for the past four consecutive months more inflation with an inflation weight north of seven percent for the first time since 1982. you both have experienced this before from 1970 to 1975 at a time where your portfolio took paper losses and yet you made some of the best investment choices of your life reflecting on that my question is if you had to pick one stock to bet on [Music] you kind of snuck up on us there for a second and viewers jolian and the inflation which would you choose and what's specifically enables that stock to do very well and why very likely be a difficult Market well I'll tell something even better than that one stock maybe we'll get to one stock but the best thing you can do is to be exceptionally good at something you're the best team if you're the best doctor in town if you're the best lawyer in town if you're the best whatever it may be uh you know no matter whether people are paying you with a zillion dollars or paying good they're going to they're going to give you some of what they produce in exchange for what you deliver and if you've got it and if if you're the one they pick out uh to do any particular activity saying or play baseball or or be their lawyer whatever it may be whatever abilities you have can't be taken away from you they can't actually be inflated away from you somebody else will give you some of the wheat they produce or the cotton or whatever it may be and they will trade you for the skill you have so the best investment by far is anything that develops yourself and again it's not taxed so that's what I would do I get some advice for you too [Laughter] when you have your own retirement account and your friendly advisor suggests you put all the money into Bitcoin just say no [Applause] yeah nobody can take away from the other talent you have I mean and the truth is that the world will always be willing they'll need to do something and some people will not have skills and they will get less of the product of the society uh then somebody who has other skills and sometimes that has something to do with education but a good bit of the time it doesn't have anything to do with education I mean it it uh but to figure out figure out what you'd like to be and figure out how and what you'd like to be is what you're going to likely be the world will we'll always need somebody on that tube to tell us what's going on so you know study Becky quick or somebody and figure out you know what makes her good and and what you sort of sort of naturally bring to the game I mean I could have who's the guy that says you got to spend ten thousand hours doing this or that and then that uh Malcolm Gladwell Malcolm Gladwell you know I would say just spend ten thousand dollars on something well I could have spent ten thousand hours trying to become a heavyweight boxer but I don't think I'd have felt very good at the another ten thousand hours I mean you stumble in what you really like doing what you're good at what's is useful to society and then it doesn't make any difference whether the dollar bill you know it's not worth in terms of the purchasing power a cent or a half a cent or a hundredth of a cent um if you're the best doctor in town you know you will they'll bring you chickens I mean whatever they may do but they can't take it away from you and my guess is that uh if you've come to five meetings you know you've got a very good future ahead of you I mean that that shows it it self-selects I mean so uh if you want to sell a piece of yourself you know that they'll buy that as the best investment we can make we'll take 10 of your future earnings and we'll give you a cash payment now and you know we'll we'll have a terrific asset and you can have a hundred percent of your future earnings and if you make it develop your time right maybe you'll be a great dancer people people pay money to watch great dancers we had Freda siren sister adelva came from Omaha you know her name was Australis then but but they could dance and uh Adele um did whatever she did with him moved to England and pedestar went on to do a whole bunch of other things and Ginger Rogers had to do it all the same backwards and high heels and she didn't get paid as much because she was a woman but you're going to do just fine I've been a lot of money on you okay Becky uh this question is for Warren and a gene and it comes from someone named Modi in Israel who writes my family and I are long-term shareholders of Berkshire and we plan to hold it forever we like that the current management thinks in the long term to increase shareholder intrinsic value but we aren't sure that at the time of the management change the new management will act the same way you do they might take risks in the insurance field where it's hard to find on the balance sheet and that might take years to realize we would like to know how we can assess the insurance risk today and in the future or to know in time when you are in ajeed are not here anymore well I would say that the future for a long time is about as assured as you can have in the world we don't have the answer for the nuclear problem or anything but we have a culture that a is work B has the shares and the shareholders uh that uh will carry it a long way and you know the first year let's say I Die Tomorrow the first year you know everybody says you know what's going to happen are they going to spend all they can do all these things you've got the shares held in a place that it can't happen you've got a a board of directors that understands that our culture is 99.9 percent of of running the business they don't think that having meetings of the Committees and bringing in outside experts or anything like that I mean a thing I mean it's a process of the that the world is adopted and and they've done it for reasons we understand but Berger is just plain different we are a business that exists for people that trust us and all we have to do to fulfill that trust is fairly simple things we've got the people do it we've got unbelievable resources to do it and it isn't that difficult as long as you've got the freedom essentially to do it and the world will write stories a year after so a year later what has happened you know the rail will be run the same way then it it uh the big the big worry of course is that somebody comes in the figures they can make billions of as a group or you know people that sell the businesses and say it's better to be private because you know or it's better to be pure this or something like that well you know we're a pure partnership is we're pure and and we do have what we think is a special relationship with our owners and uh I don't think the relationship changes and the ownership doesn't change that much and true there's nobody can take us over for a long long time and by that point we would hope that maybe the superiority of this culture might be somewhat better understood uh by the world and and we will be here we have the same culture we'll be here 100 years from now assuming with the you know we haven't had nuclear exchange or something but Berkshire is built forever there is no finish Point yeah nobody's waiting to retire or have their options vested or thinking about we don't have anybody that's thinking about should I take another job it just doesn't you know they're doing what they want to do in life and it isn't because you know we're topping somebody else's offer or that that that head hunters come around and say we want this person or that person and what will it take to get them they can't get them I mean the now let's uh I don't know whether we could build it again but we've got it and we didn't know we were building it exactly when we took over one you know we had a lousy textile oh I mean it doesn't like Charlie and I sat down and he didn't happen to be in Berkshire but he was my partner and everything and so we we were metal Partners I we didn't sit out and work out some plan that said well we'll run the dumb textile business for 20 years and then we'll finally have to fold it and then we'll do this and that and everything we just kept putting one foot in front of the other and but we did we didn't know we did know how we felt about the running a public company and one thing we wanted to do always was we wanted to have people that were in sync with us we didn't really want that group I saw in the flamingo uh you know in nineteen 52 we wanted people who trusted us and we started my case in a partnership we started with seven Charlie started a partnership and this is the same thing it was we didn't go to institutions and we didn't pay fees to people to bring in money or anything like that we sat down with people my case I handed them a little sheet of paper and it said the ground rules and I I wanted to be sure we were on the same page I said you don't have to read the partnership agreement I mean there's no way in the world I would be taking advantage of it he shouldn't be here if you think I did but I do want you to I do want you to be I'm the same page and measuring me by the same yardsticks I measure myself and and those people stayed with me and they're still certain they're their children their children's children their shareholders apart sure but they're partners and and uh you really could be hard to do that again but I would do it with whatever if I were going to be in this field I would try and do the same thing I would try to find people to trusted me and uh uh I don't want to be with people are saying how'd you do versus the s p you know last month or you know what's your long short position or anything like that I I sold Securities for three years and it just I just didn't want to be in that position where essentially they thought maybe that I could do things that I couldn't do so I finally found a way to get a few people I mean I didn't actually stumbled into it but a few people that that trusted me in and they just gave me their money and we've lived happily ever after so it's it's uh and no Management's got a well and the management for them and the management after them they're just excuse me they're just custodians of a a culture is embedded the owners believe in it people that work there believe in it and we're not saying others other things can't do better or sort we're just saying this is what we've got and we have got the directors we've got the share ownership and all of that to uh and the size that essentially can ward off any attempts to change the culture and you know it's something to talk about about our board members did this and did that and you know and in the end uh obviously we're always going to follow the law and we're a Delaware company we follow Delaware law but that doesn't mean that we have to do what every other Delaware Corporation does and how they look at the Delaware statute we will follow the law and then we'll we'll we'll run it as a group of people who trust us and and we appreciate that trust Charlie well I remember when you had a textile mill and it can I forget it the textiles aren't really just congealed electricity the way modern technology works and the tdva rates were 60 percent lower than the rates in New England it was an absolutely hopeless hand and you had the sense to hold it ah well 25 years later well you didn't pour more money into it no that's right and no I recognize recognizing reality when it's really awful and taking appropriate action is just involves often just the most Elementary good sense not only how can you run a textile mill New England when your competitors are paying way lower power rates I'll tell you another problem with it too I mean the fellow that I put in to run it was a really good guy and I mean he was a hundred percent honest with me in every way and it was he was a decent human being any new textiles and uh they'd been a jerk it would have been a lot easier uh I would have probably thought differently about it but uh he just stumbled along for a while and then you know we got lucky either if you got green Walls decided as I was insurance company and we did this and that uh but I even bought a second textile company in New Hampshire I mean I don't know how many seven or eight years later I mean I'm going to talk something about dumb decision maybe maybe after lunch we'll do it a little and uh it it is incredible how many dumb decisions we made Charlie and I bought that and Sandy gottisman what about that department store and that was 1966 and we were working with our own money and why in the world did we think and Charlie flew to Baltimore and I mean we used to really work in those days and and that there again we had wonderful people Luke Lewis Cohen couldn't have been a better guy but everybody in that business had a different reference point no they wanted to expand their company well who can blame them for that and you know they were planning the couple of new stores in each department the shoe department said well we'll do it better at this time and all that kind of thing but the whole idea was crazy and and uh we got there for a little while and we figured it out finally and uh we reverse course yeah but why the hell did we do in the first place well because we were stupid yeah okay well that's important to realize we paid six dollars a share for that stock and uh uh if the department store has succeeded it might be worth you know thirty dollars a share now and we do and it failed so but we but we did other things and we merged it into Berkshire and we'll talk about that a little later uh and you know but I don't know whether it's 150 000 a year an hour or something like that from the six bucks so if it succeeded we would have made a we would have maybe made a few dollars and because it failed we made hundreds of thousands of dollars per share but that's the way life is you just keep going and keep learning that's the Deep learning keep learning keep learning and you can say why would it take guys that long to learn and uh we only got a few minutes before lunch we should let's address that problem because I did bring something along on that it there have been well I started buying stocks when I was 11. I've been reading every book in the library on it I loved it my dad you know his business and I get to get honors office I'd read the books down there and they save the money and finally by the time I was 11 I could buy a stock and I could tell you at that time uh I want the nerve Stock Exchange when I was nine my dad took us to New York each kid in New York once uh and he took me I went to New York Stock Exchange and I was in awe of it I could tell you how the specialist system works and the Odd Lot arrangements and I could tell you history of finance and all of these things and then I then I started I got very interested in technical analysis in chartered socks and then all kinds of crazy things hours and hours and hours and and uh and save money to buy other stocks and tried shorting and and I just did everything and then when I was either 19 or 20 and I can't remember exactly where I did it or something uh I picked up a book someplace it wasn't a textbook at school but it was in Lincoln Nebraska and I uh you know I looked at this book and I saw one paragraph and it told me I've been doing everything wrong I just had the whole approach wrong I was I thought I thought I was in the business of trying to pick stocks that would go up and in one paragraph I I saw that that was totally foolish and I left I brought something that it's really interesting let's put up let's put up uh what do we call this chart hmm I don't think we oh here we are yeah let's put up illusion illusion one done yeah there we have it you know now if you look at that some people will see two faces some people will say a base and something people will look a long time and only see two faces there but the Mind flips from one side to another and that's another sign some name for it that uh they call it ambiguous Illusions or something of the sort uh there's other things that talk about aha moments or or in the old comic strips with Popeye Wimpy would have a little balloon over his head and a light bulb would go on there's this point where all of a sudden you see something you haven't seen well it took me I had an illusion that I was looking at we'll say in that one two phases go to the let's go to the uh one labeled two and if you're if you're looking at it from one side you look it looks like a rabbit and if you look the other way it looks like it you're looking at a duck and you know the mind is a very funny place add I think people call it an appreceptive Mass when you have all kinds of things going on in your mind and they've gone for years and they sit there and get lost and then all of a sudden you see something different than what you were seeing before Donna took me in stocks which I was intensely interested in I had a decent IQ and I was reading and thinking and you know and and it's important to me to make some money on it everything every motivation in the world and then I read a chapter I read a paragraph actually in chapter eight I think it was of the intelligent investor and it just it told me that I wasn't looking at the duck I was looking you know now it was the rabbit whatever it may be and what do you call it a light bulb what do you call it you know a moment of truth whatever it may be and that's happened that happened to me in Lincoln I mean it changed my life if I hadn't read that book I don't know how long I would have gone on looking for Head and Shoulders formations and 200-day moving averages and the other lot ratios and a zillion things and I love that kind of stuff except it wasn't it was the wrong stuff I was looking at it and I've had that happen and Charlie's had it happen I'm sure it happens a few times in your life and all of a sudden you see something important the why in the hell didn't I see this in the first place maybe it's a week ago maybe it's a year ago maybe it's five years ago maybe it's maybe it's learning how to get along with people you know I mean whether actually it's it's better to be you know kind or not you know or whether I mean they're just learning how to have if you want the world to love you what you have to do or whatever it's it's you know what when you see it but she doesn't see it for 10 years before and I don't know whether Charlie's got some thoughts on that or not but that's happened in a few situations in business where I've looked at a company for for a decade and and then there's something that just all gets rearranged in your mind and you you know you can say well why didn't I see this five years ago or no but usually I've had it happen a few times obviously and and everybody here has and just in different areas of their lives and you think how could I have been so stupid well that's what Charlie's when he was in the law practice uh he had a partner well he told him every smart guy that would get in trouble usually with it was guys and usually it was with women and the and and the you know they'd come into the office and they'd looked you know down faced everything and it's a it seemed like a good idea at the time you know I mean and their lives unraveled you know in many cases so there's there is that a perceptive Mass that's sitting in there inside somehow and every now and then it produces some insight it's better actually if it produces insight into your behavior then whether it produces insight to make money I mean that and some people never get it and they wonder why they're you know whether the kids hate them or whether there's no way in the world that would give a damn whether they live or die in fact they prefer they die because then they've been courting them for their art collection or whatever it may be it just Charlie would say you know just write your obituary and reverse engineer it and not a not a crazy idea but Charlie I don't know what do you know about our perceptive masses which are electrical Illusions well I know that that's the way the brain works and that it's easy to get it wrong and part of the trick is to get so you correct your own mistakes and we've done a lot of that way too late yeah we've done better with the mistakes than we have with the good reasonably good ideas well it's so easy to overdo a good idea that's what's going on now you have a lot of good ideas that are being ghostly overdone well just tell me tell me about one that hasn't been but tell me later when the crowd isn't listening but look what happened to Robin Hood everyone's peaked to its trough wasn't that pretty obvious that something like that was going to happen tell me again Robin Hood when they came out and went public and he got a little alert on everybody and all the short-term gambling and big commissions and hidden Kickbacks and so on so on it was disgusting yeah and you said so last year and they got mad at you and they sold a bunch of their stock and they've got the money and yeah but now they're it's unraveling God is getting just but a lot of the Insiders are great God no but they've gotten a lot of money from them I mean they were big Sellers as I remember that maybe but yeah there's a there's been some justice well yeah I have to agree with that whether it's a good idea to go around making enemies of people love it it's an another question which we we do is it why is it wise to criticize people at all probably not but I can't help it [Laughter] [Applause] this guy knowing he's 98 he hasn't figured it out yet so give up enjoy well for that we'll go to lunch and we'll try to come back wiser at one o'clock and thank you thank you thank you [Applause] okay let's reconvene ah I think we sold 15 bolts so far I was told about a while a little while ago out there so get them while they last we won't have the first one available for delivery for about a year but but people are getting 10 off whatever that means uh who ordered one and I've ordered one myself and we're things are going well in the other room and we only got seven questions which is the new low in the first half so we'll try and move a little faster I can't imagine why it went that slowly I mean who's who's doing all that talking okay station four High Warren and Charlie I'm Jeff wolboy shareholder from San Francisco in recent years American companies have taken on a more active role in the political Realm whether it is speaking out against specific bills or promoting various social causes often at the behest of shareholder or employee groups while the goals of these movements can be laudable they risk alienating significant portions of customer and employee bases how should CEOs decide which issues to take a stand on or whether their companies should engage in the political realm at all thank you um that's a terrific question and that is one obviously I've had to think about plenty and at one point I said I don't put my citizenship in a blind trust I want to take the job as CEO of Berkshire but I've also learned that uh you can make a whole lot more people sustainably mad then you can make temporarily Happy by speaking on any subject and on certain subjects they will take it out on our companies and that means that the people that are employed by us some of them we would end up letting go it means that the shareholders get hurt and do I really think that so important that I talk on every possible subject that people can get very upset about whether they should be asked to pay that price and I've come to conclusion the answer is no why why in the world do I want to hurt the people in that other room that do all kinds of things for a Berkshire why do I want to hurt you because I say something that 20 of the country is going to instantly disagree with and sometimes they will be so upset about us that they will try and take it out and since they can't scream at me they'll they may have campaigns against their companies or anything else so I I think that uh surprised to me I'm not going to go around and and uh uh take positions where instead of saying Warren Buffett says uh it will be it will say you know Berkshire Hathaway or Warren Buffett up Berkshire Hathaway I get a identified and I I do not want to make the lives of you and I just decided I'm not gonna be doing that and if I want to do that I should I should quit my job if I think I'm my citizenship speaking out is that important I'll give up what I love the most which is having this job I don't want to do that so I've decidedly backed off I I don't want to say anything that will get attributed basically to Berkshire uh and have somebody else bear the consequences of of what I talk about and that uh so that's where I stand and I can tell you that at most companies or many that isn't fair but in a great many companies you know the CEOs uh to have to think about what their board says to them and they they've made a point of electing people to their boards because it's socially acceptable who represent different consistency sometimes very strongly and if they think they're stakeholders for this group and that group and that group uh they're gonna they'll get pressured by their boards to take positions and and it it just the territory that that we don't we're not going to get into it Charlie how do you feel about that well I even more than you I have to be very careful about what I say now and the difference between the two of us I can't resist saying a little warm it uh I see headlines and papers just Time After Time After Time that say Buffett's buying such and such well I'm not buying such and such Berkshire Hathaway is buying it and it may be the work of two other people that work at Bertrand that people who write the Articles don't have the faintest idea whether it was Maya my at my instigation or without even ever heard of it and uh but the headline says the headline will attract more people if it says Buffett buying this and if it says Berkshire Hathaway and we don't know whether it's his the people that work for him or him the headline is designed to bring people into the story so it's it the confusion is terrible uh and the easiest thing to do is to um basically shut up and uh and uh not not have a bunch of people happen facing consequences that they didn't ask for them in the first place so with that uh but I'm glad you asked that question that is a good question and I probably thought more about that question I think about whether the stock or that stock is cheating but and with that we'll go to uh and let's see that with station four we'll go back to Becky on that note let's go to a question from David Cass he writes in President Biden's fiscal 2023 budget request would impose a 20 minimum tax on the unrealized capital gains for households worth at least 100 million dollars what are your views on this issue and if you don't want to answer maybe Charlie does thank you well we'll find out I I and we should and for all honesty we would we should both say that we we would be affected by if it's 100 million we'd both be affected so our point of view is we're and I have no point of view Charlie I I have no uh or no no point of view that I would want a trivia to do I tend to stay out of the income tax things like this my policy is I pay whatever taxes they they passed and I don't want to engage in lobbying about taxes yeah we and I would add one thing lobbing is really distasteful uh I once did it for a candidate and I ended up in a room with a bunch of lobbyists for cigarette companies they didn't care about Nebraska they didn't care about it they didn't have anything they just they were there because uh they were handing over a contribution they didn't and I was convenient uh accessory and and you know it made you want to throw up basically uh uh on the other hand we operate in the railroad business energy business uh Insurance business and they're extensively regulated and uh I don't also want to be the only railroad that stays out of the railroad group only the only insurance company that says the Insurance Groups you know other people can rightly figure that we're a free rider under those circumstances so I I tell the the Managers generally yep don't spend berkshire's money on candidates that you like don't pressure suppliers to do what I mean Berkshire is not a weapon to use but she and it's been used by certain people in the organization but don't don't use it to muscle money out of anybody else for who you like or what school your wife went to or whatever it may be um and some of it goes on anyway but I I don't tell our people that don't belong to any trade associations Charlie wrote one of the great letters of all time and if you go to search type in I think 1989 monger savings alone or something we resigned from the U.S savings and loan League I guess it was and we warned them we said we just cannot stand you know what you're doing to the country and what a bunch of very nice people get together but they decide it's in the interest of their savings alone do they get to do this or that and we warned him and finally Charlie wrote a letter which is like I say available on search that's one of the should be one of the proudest letters certainly one of the promise letters has ever come out of Berkshire and he just said we can't stand it anymore and we're residing and uh but that's that's a very tough thing to do you get yeah you can't it's it's a tough way to live just go around criticizing the people you work with the neighbors and and they're perfectly decent people but that run into institutions that are doing things that are very distasteful to them and and we belong support uh some of our subsidiaries uh in energy and and you know we I don't want to find people who are doing it for personal reasons I mean in that case they're in trouble but I don't say they can't do it because I don't want there hands tied if something comes up and essentially they're either there competitors within the industry or the industry versus this uh we're not going to stand alone and say well we're morally Superior to us so you'll put your money up and bite it so that's that's that's where I end up Charlie I've got nothing to add okay it never bothers me when I don't have anything to add but he seems stuck on that and I anyway um Becky did that come from you it did yeah okay then station five oh thank you Warren and Charlie my name is Hong Yao I'm from China and now studying in the University of Chicago I really admire you to especially Charlie you are my idol since I was a child and my question is also for Charlie my question is how to practice the multidisciplinary framework in making investment decisions and in life like how to make it more practical thank you Charlie well obviously it it helps you to know more than one discipline there's an old saying you know the a man who carries only a hammer thinks everything else is a nail and if you make a lot of wrong decisions if you don't have the some command of all the disciplines that's all I ever said and but you do irritate people terribly when you come into their territory you see I'm a multidisciplinary you're the expert and I know better than you they hate you for it I can test to do it I've done it several times thank you and you know China well there's a certain degree in the court they have a culture that that to some extent Revere's age so Charlie's Got Me a Beat I don't even try and compete with him on China I can't catch him on age okay I'm gonna try to though uh let's see we've got Becky coming next to him uh this question comes from Philip King he writes in the 70s you wrote an article entitled how inflation swindles the equity investor you said that stocks cannot keep Pace with inflation because companies cannot increase the return on Equity do you believe that this is still the case yeah and I of course bonds can Swindle the equity investor do everything inflation I should say swindle's the bond investor too and it's it's when there was a person who keeps their cash under their mattress it swindles almost everybody and um the problem if you have a business that doesn't take any capital and let's just say the dollar depreciates 90 or something so things cost 10 times as much if it doesn't take any capital you can charge 10 times as much and you've kept your relative position but most businesses take some Capital if our utility business if just say that the dollar worth one tenth uh some years hence from now we have to have 10 times the capital investment basically and we get paid to return on that but we have forced capital investment uh to essentially keep them in the same place and uh I wrote an article that related to that and I will tell you a very one famous story which you will all sympathize with and that I wrote that story for fortune and when I finished it it was about seven thousand words and Fortune doesn't didn't like publishing seven thousand words and they had my friend Carol Loomis explain that to me knowing that I would pay more attention to her than anybody else but being stubborn and male I said uh you know every word is precious then they can either run it or not so then they sent an editor a very nice guy out to Omar and this guy explained to me that this wasn't right to use that many words and uh I said well that's fine but if you don't do it I'll write it someplace else or whatever you're very disgusting behavior on my part and then I sent it was beginning to bother me a little so I sent it to my friend Meg Greenfield the Meg was a great great great editor at the Washington Post and we were very very good friends wonderful woman and Meg who was tough as nails with most writers but he was kind of nice she was she didn't want to really hurt me too much so she said I said well mate what do you think and she said well Warren she says you don't have to tell everything you know in this article and it it made it made the point and so I write that letter I'd write that article shorter and uh but I'd say more or less the the same thing no and you're better off if if you really could have a totally stable unit of of of of of of of a monetary use uh for the next hundred years it would be better better for better for uh business and investors in general Charlie yeah we will go to station six inflation inflation is the question is how much and the question is whether you can you can decide that two percent and keep it the answer is nobody knows you know I mean you you do not know and nobody no you listen to all kinds of stuff but you know nobody knows what the how much inflation there will be over the next 10 years or 20 years or or 50 years or next month and and people talk about it all the time because you're interested in knowing the answer to your question and they don't know the answer but but there are a lot of people that will tell you they know the answer if they if you pay him enough and other people that will tell you for nothing because they think it enhances their Prestige and makes them more valuable but the answer is they don't know and we don't know either um the best protection against inflation though still is your own personal earning bar if you play the violin very well you will do reasonably well during inflation I mean it's it's way better than other people people will pay you for doing that if you know all kinds of things so your skills can't will not be taken away and your money may be okay station six oh wait a second was that is it Becky next Becky station six yeah station six okay my name is Martin Wiegand I live in Nashville Tennessee Mr Buffett and Mr Munger thank you for your lifetime of teachings and for hosting us back in Omaha this year well thank you [Applause] [Music] you have mentioned that companies get the shareholders they deserve and in this year's letter you mentioned a great satisfaction of yours is working for the individual long-term shareholders with a growing influence of institutional index funds how can management teams Foster a shareholder culture like the one we have at Berkshire thank you well fortunately we have it and we know more about how to keep it than to to Institute one in it's very interesting uh we have we have a million four hundred and seventy thousand uh Class A shares outstanding today that's fewer than we had a year ago on there hello those seats are filled I mean you are the shareholders are in place we like the group we have so why in the world when we got a fixed number of seats would you please should we go out and recruit other people to replace you yeah I mean the ideal shareholder is the group Sierra little group we can have is the group we have today and white you know we had a church we'd want the people to keep coming back week after week after week if we had a limited number of seats and we had some wonderful parishioners and uh we would not go out and recruit another 50 or 100 of them and have to throw out 50 or 100 of the ones we already had we've done and uh every company I know virtually you know is wooing new people to come in on whether they're improving the group they get or not this is another I mean it's it's it it strikes us as basically crazy we we don't want anybody different than we have now and and uh you know we're not going to get rid of the index funds so uh we have to get rid of of people like you and we don't want to get rid of people like you and I I just don't understand why if you had a neighborhood yeah not and the size of the terrain or whatever it was would be such that you could have ten ten neighbors and they were all great Neighbors why in the world would you go out and say to a whole bunch of people going up down the street you know why don't you buy the house of the guy next to me you know it is it is weird but there's an awful lot of people who make their living by doing that and they never really question uh I would I would sort of ask any company that's making animals uh presentations every month or something which of the present ones yours you're trying to get rid of you know basically because you're not going to have more I hope you're not going to have more shares outstanding at the end of the year than you have now and and uh am I supposed to you know get out of the way so some some other fund that is thinking about what your soccer is going to do next week replaces me it it is a very very very weird situation and of course the really the really uh crazy process that has developed is people talking to will say analyst group you know the sort of the high Priests of Finance you know some companies are doing it more than once a month well just imagine if you go if you work for that company you go to work for that company and every month people are repeating these things about their company that it's important that we have more Services per customer and it's 6.2 and we got to get the seven or something like that and they'd say that month after month after month it becomes a catechism and CEO says it at Earth his or her representative says it and it goes how do you go on the next month and say by the way we were really wrong and this is what we should be working on you don't say that and it's a terrible problem the new CEO has coming in after a previous CEO is sort of the important thing to do is to hit your earnings targets well you know you have to he's been meeting him in All probability by cheating from some time to time and this guy hands you the Baton and are you going to sit come out and say well we've really been cheating a little and it's really counter and productive to the development of the company you know combination not to make earnings projections and just to give you the results as they come rather than than making up a few things in the accounting department now they can't do it you can't it's not a human nature besides you wouldn't get a point of the successor but you just don't go in and say we've been perpetuating these myths that we can always deliver eight percent growth or we can do this or do that or the most important thing is this you can't go in and change that if every month you've been preaching to people that this is what we stand for and just ask another question and carry this message out to the masses to the analysts and all that and it it's it's a totally destructive uh policy I mean I can you know I can Within Gap accounting and uh I I can play a lot of games with numbers we have never we've done a lot of dumb things at Berkshire we have never told anybody that the number had to be this or that or to change anything I mean it's just uh once you started it it's all over it you can't quit it's liking taking five dollars out of the cash register you know the first time you take the five bucks out you say well I'm going to put it back and then do it a few times and you'll ever stop in fact do it once and you probably never stop but it it's uh if something is going to be destructive the thing to do is not start it and forecasting earnings I can't imagine anything more destruction I got 360 000 people out there and they know whether I'm lying or not but many of them and they know what they send in figures and they get changed you know what what message are you telling we've we've got one dramatic illustration of that with him for sure and it uh it's it it's just you know we we want to if it started lying it got a big problem it's that simple and uh and uh and if you start saying to your theme that somehow you've got a job he got you got Cheryl relations your job is to go out and tell everybody that our stock is the best thing among thousands of choices to buy every day well that's crazy and and uh so what do you tell them well they they try to you know see which way the wind is blowing and figure out what they have to tell people and then they go out and tell them and and then if you're a human and you've said we're going to learn 3.59 cents a share you can get to 359. and get there quite a while and you know you can have all that committee you have all these processes but if you have a culture of lying the processes really don't they just disappear and Charlie and I've seen it well right every time we've gone on a board but uh um Charlie tell them about it well I think berkshire's culture is going to last a long time after we're gone and I think it should and I think it'll Prosper pretty well the rest of corporate America is quite different and it gets more different I think with each passing decade it's getting very peculiar pretty soon they're going to hold all the shareholders Meetings online and and the showers won't even come and it's just it's getting very peculiar and the index funds get more and more important than the voting and it's like everything else in life it changes I'm not always in ways you like and it ends up for selecting different CEOs and all kinds of things I mean you're not going to appoint a successor CEO that's going to come in and said everything that's been done before us you know it's been kind of fraudulent you know I mean if we needed a book books an extra sale after the end of the quarter if we needed to adjust the reserves and it's just it's once you start lying it's all over and uh I just don't know where any way around that except to try every way you can uh do not you sure can't if you set the wrong example at the top you got a real problem yeah but we don't we've never told we never told anybody to change a figure that we never will and uh if they had been changing figures you know we've been in all kinds of trouble because they know it and I Know It And the next person would know it and it just deteriorates and we've we've we've really seen it we've already sent it Time After Time born the way boards operate well I'm you know it's it has to be process oriented I mean I understand the problems the Delaware housing writing a statute a judge's face when they look at things but it's extraordinary uh it's just extraordinary what uh an emphasis on process can do to an organization because they think they can do anything if it if it's allowed and uh eventually the foundation crumbles um okay oh I I should make a little news here so uh uh you've come you've all come and uh you may or may not see this by this very possible one of the things we bought one of the things I bought was bought for a different purpose by a different manager months earlier uh he bought roughly 15 million shares of Activision and I never paid I knew about the company but I I would just see it at the monthly report but then on January I don't know 17th or 18th something like that Microsoft announced that we're going to buy Activision for 95 a share now when they announced that at that point Activision becomes a different kind of security it becomes what Charlie and I used to call uh well everybody didn't 50 years ago uh we call them workouts or something like that and they've become known as Arbitrage well they're not really Arbitrage but they're their Securities are those kinds of common stock who's value depends not on what the market price does but whether a given corporate event occurs an announced corporate event occurs well Microsoft wants to buy Activision will say well they they said at 95 a share and they've got the money and obviously mergers and big mergers tech companies all kinds of things I've got all kinds of problems uh with the world generally in terms of opinion so you don't know what the justice department will do or you don't know what the EU will do and all kinds of things but at that point it becomes a different security and Charlie and I uh 50 years ago we used to do a lot of that sort of thing and and we and definitely be dead Goldman Sachs and we even went back one time I think on British Columbia power didn't we Charlie yeah we certainly did yeah a guy named Bennett was up there and we were trying to figure out whether some some takeover of the power business I mean we spent a lot of time analyzing the probabilities of announced deals going through and we call them workouts now the term became hard and it hasn't worked where overall too well in recent years now every now and then uh I see something that I want to do in that field and but very seldom because they got to be big the profit is limited you know if they say you're going to get 95 you're not going to get 96 and you may the deal blows up you may have a stock that's at 40 or something so it's a but we did it with monsant old five or six years ago when Bayer was buying it and we got very lucky because it turned out to be a terrible acquisition per bear but but it it did go through because Bayer had the money and they they went through the deal even though monsoon came with a problem that nobody I really understand so the extent of and we did it with red hat when IBM bought it so in any event on September whatever I mean on January whatever it was 17th 18th 19th Microsoft announces it and the stock which had been at 60 . let's see what it I may have a slider which I'll find but in any of the stock which had been in the 60s uh went up to the 81 or two and that looked like not a big enough spread to me for a few days then to settled back a little so anyway we now own uh nine and a half percent not something like nine and a half percent of Activision and if we went over 10 percent we would file a report so uh in order that the news people don't feel that there's no new there I can tell you that as of yesterday well about nine and a half percent if we go past ten percent there'll be a forum file with the SEC and so on but it is it is a it is my purchases not the manager who bought it some months ago uh and uh if if the deal goes through we make some money and if the deal doesn't go through who knows what happens uh but that's I just want to be sure that if we do file that report people understand very clearly because there's been some very mixed up stories on that in the past uh we want to be very clear that that it was Warren Buffett's decision in that particular case and uh and he doesn't go with the Justice Department's gonna do he doesn't know what he was going to do he'd never talked to anybody Microsoft about anything he's just read a document he's made his own assessment and it can change and uh uh at one time I think we sold a few shares even uh when I thought it was a little higher than I should be and turned out those sales were not bad sales but so I just want to I want to create a little news for you and uh I want to if possible head off stories which have been incorrect in the past and which can then get picked up by other media and Corrections never get written uh that all the corrections were written by uh one inaccurate story and they apologized even to me uh both the reporter and the Ed and the editor sent me a personal note of apology they didn't expect to make a mistake but uh but when the other Publications picked up the story they didn't bother to pick up the correction and and millions of people were misinformed and probably uh literally by the time it gets spread around and and uh this one I will attempt to head off by telling you exactly what the facts are right now and we'll see whether it go beyond ten percent but if you know it could easily be to put one up a few dollars I'd it's still a 95 deal it's still done we don't know what the judge department will do we don't know what what the the evil do we don't know what 30 other jurisdictions we we'll do one one thing we do know is Microsoft has the money so that takes that one risk out of it uh so anyway Charlie do you have any news to break no yeah and and instantly I don't even I don't talk this over with Charlie I mean you know he knows he knows what occasionally I'll see an Arbitrage deal and do it and you know 50 years ago we were doing it together and and this general feeling is why is Warren fooling around with this kind of stuff even but but uh um it uh it's uh the old fire horse but occasionally it looks like the odds are in our favor but absolutely we can lose money on that company and uh fairly large sums of money depending on what happened if the deal blows up and there will be a lot of people that want the deal to blow up but Microsoft doesn't want us to blow up Souls I have to see what happens okay I love Becky um you know Charlie just mentioned index funds and passing so let's go to this question from Matt feigel his question is related to the growth of passive investing through index funds and ETFs he says passive investment vehicles now control upwards of 50 percent of the United States stock market the actual owners of these passive investment vehicles decided passive investing makes the most sense for them yet in doing so passive investors have empowered the large index funds to become the biggest activists in the market these passive managers now enjoy enormous and I would argue undue influence over corporate governance do Warren or Charlie see any benefit or logic to a rule that would prohibit passive investment vehicle Managers from voting the shares they control for their passive investment clients well I'll take that I didn't think I was right I think anything good thing is out of control and counterproductive and and uh I don't think it's good for the country to have three passive investors with bright young men from Harvard or what oh telling them what proper governance the corporations is it's not a good development and it is and I think indexing if it gets to 90 then it won't work very well at all but at the moment it's worked fine yeah well the one you can count on too is that if it does look like it's going to uh uh if if the public opinion shifts over to the idea that it really is a good idea to let three people decide the fate of every company in Corporate America the three people and they won't collaborate or do anything oh they're evil peoples at least I mean they're just doing what you and I would do they would figure they don't care that much about voting what we do care about a lot of assets under management so we'll we'll figure out something that ends up reflecting public opinion and then politicians won't get mad at us and our only threat really is the politicians get badass and regulate Us in some ways so we'll head It Off and I I would predict fairly confidently that if the American public doesn't like the idea of three people controlling things the three people and their organizations and everything there what they want to do is they want to get bigger and they wouldn't be where they are in life if they hadn't wanted to get bigger those things don't happen by accident and it doesn't mean it's the only thing they want they want their investors to get good results and everything but they are certainly not going to follow a policy which is going to cause a backlash but causes them to be a lot smaller there they can figure out their self-interest I mean and it's and it just so happens that in this case it would achieve the right result which is that they would not control America but the uh damn they don't know what's good for themselves and and what they have to do what's politically acceptable the only thing that really could mess up what is a very good deal for them is to have Congress change the rules and and the rules were the Investment Company Act of 1940 really changed how people behaved and and it's governing things uh in a big way for a very long time and and uh anybody that takes on the federal government loses him and you're talking about it trying to do that sort of thing and they don't need to do it and they just just say well we'll we'll give up voting or we'll vote our shares as the rest of people do and of course if you vote your shares of the rest of them as the rest of the people do then if the passive if the if the index funds had 90 percent of the country you could take take over a company by somebody else buying three or four percent because you automatically get ah the the funds to follow your very small little percentage you'll see it all play out I mean it's it's not a it's a big case but it's not an unusual case okay station Seven uh yeah Eric erda and I live in Albuquerque New Mexico so I want to First say thank you so much for a lifetime of knowledge you're both graciously shared with all of us you've contributed greatly to push our species forward moreover you've taught all of us here along with many many millions not here how to behave more rationally treat one another with more love and lead more fulfilling lives and for that I want to say a very a very sincere thank you thank you [Music] as for my question I want to ask about Berkshire Hathaway energy and the unique structure that has evolved there given that Berkshire doesn't own 100 of the company the first part of that question is related to Greg's ownership and his corresponding incentive alignment uh with overall Berkshire now there's a wise man named Charlie that in 1995 at a speech to Harvard taught us how important incentives are to human behavior I would conservatively say that Greg's steak and bhe is worth more than 500 million at present and I'm curious if you if you can share any plans that you have to convert his Berkshire Hathaway energy ownership to Berkshire stock and if there isn't a plan to do this can you please explain why we shouldn't be concerned about Greg's incentive structure going forward the second part is about leverage at at the entity you've always said that bhe operates with an appropriate amount of Leverage given its earning power with that said it's still a very very large debt figure in relation to current earnings especially uh with what we have become accustomed to at Berkshire and I'm curious if Berkshire owned 100 of Berkshire Hathaway energy would you still operate the business with the same amount of Leverage okay thank you the second the second part is the easiest one to answer so I'll take that and I'll throw a first first one back to Charlie but the uh Berkshire Hathaway energy actually is required with this regulated utilities and it basically started pretty much with regulated utilities and and still those dominated by that and we're interested in buying more regulated utilities it's required in different ways by different states and by different regulatory authorities to have a large amount of debt because the regulatory authorities will say in Iowa or or to pick any state uh the regulatory authorities are going to say you can get that money cheaper than you can get Equity money which historically has largely been almost always been true and though they say that since we're going to allow you a return on Equity will say just pick a figure but let's say the law is return on Equity of nine percent and we can borrow a lot of capital at three percent of those they say it'll result in higher rates to customers if you use it putting in all Equity we would love to have all equity and and are you utility uh but we wouldn't the regulator wouldn't stand for it because it would result in under the traditional system it would result in higher prices to Consumers so that's built into the system and uh we would well our regulator wouldn't allow us essentially to get the same return on equity and and then and have an all-equity structure uh the and the answer is uh you know we we put well you actually saw in the in the film earlier which the people that are listening were hearing the webcast didn't see but but just in Iowa you know we recently got approval to spend 300 fraction billion dollars but but they want us I will as a history and like every other state in the Union it's not except in Nebraska which is all public power but every private Powers you know they have a history of wanting X percent to be in in debt they want you to raise a lot of money in debt because it's cheaper means cheaper power for the consumer so uh the answer is if we owned 100 of Berkshire uh energy we would be we would absolutely be following the same we would be operating pursuant to what the utility commissions tell us they want us to do that they represent the people of those States oh Charlie do you know one of the other ones simple to it's a historical accident it's not causing any big tension or breaches a fiduciary Duty we had the same problem with Walter Scott who was the director for years and years no one's talking the same company also in historical accident yeah I just don't think it's a big problem at all no behavior from Greg ever that isn't in the best interest of Berkshire yeah and we we've had various percentages of Berkshire Hathaway energy ever since we bought it in around 2000 and it happened we were my sister who's here we were at our house and there was a party going on and 20 or 30 probably 30 people and Walter said to me uh uh have you got a minute or two I'd like to Walter says you know we've got this company and it doesn't seem to fit the public mold very well and would you learn would you want to buy it and go private I said sure you know depends on the price and uh when we got back to Omaha I was out on the west coast we got back to Oman and we met with Davis local who was the big older aside from Walter and uh we agreed on a prize and I remember Walter saying to Dave don't negotiate with Warren he'll tell you he'll tell you to forget it and do something else and uh uh so we bought it and at um so it was it was kind of a weird structure from the start and we had a public utility holding up any act deal with and all kinds of things and it's evolved and it now has us with 91 roughly and it has Waller's estate and I don't know where that goes and uh uh at all and more never talked to me about it and I never asked him about it uh but it's one way or another interest connected with him uh or in the end of the estate now um close to Aid I guess and and and Greg's got one of them and the E you know from our standpoint yep we made a a deal with with if they ever came to us and the Scott interest wanted to do something you know we we'd say fine well and we'll do the same thing with Greg if he wants to and he probably wouldn't want to win I mean but from our standpoint I've never seen any decision remotely if I thought that would make a difference you know it would not be it just wouldn't be the right kind of person to run um Berkshire and and the problem of course is that you've got lots of process that can be involved with insiders and everything and and I've got no interest in as long as I'm alive my interests are 100 with Berkshire and the board probably and to some extent a little relatively but they just say well Warren thinks the deal is okay I must be okay which is true [Laughter] uh so I could make a deal uh with anybody and it doesn't get all messed up with process but on the other hand if I'm not around you know the pressures are the directors to do whatever the lawyers tell them to do and the lawyers tell them to do this and that and then they want to bring in investment bankers to make a value and the whole thing is a game from that point forward and uh it's expensive it takes a lot of time the people so it would be better if it happened what while I'm alive and around but there's no reason we'd rather have 100 than 91 obviously because more earnings for Berkshire but there's no reason to try and do anything with either the Scott interests or or or Greg unless they want to do it and the logical thing is if if if anything happened with the Scots we certainly offered to Greg but that who knows what happens in the future the one thing I guarantee you Berkshire Hathaway holders will never be taken advantage of and you know you can you can sue my estate or something like that if anybody felt differently about that it isn't going to happen but it's a lot easier if it's done while I'm around actually than if it's done later but I wish we had 20 more complex offenders just like it yeah that's exactly true yeah it's it's a perfectly logical question I mean but it uh it is not a problem and any answer that's arrived at will be good for all concern and right now I've got no I've got no feeling that what no I have no way no knowledge at all of them um worth of stock that the Scots have goals or what they how they feel about it or anything and and that's up to them they're fine I don't know Walter was our partner and as far as we concerned we're concerned we treat anybody connected with them as our partner and they know that don't have to worry about us taking advantage of them and and we can understand why if they don't do anything we can understand that if they want to do something we can understand that it's a good question though thank you okay Becky this question comes from Steve Blackmore in Bozeman Montana this is to Charlie he says in the past you've made favorable statements about investing in China in part based upon valuation metrics what is your opinion now and how much weight do you put on the actions of the government in your analysis do the recent Communist party activities in China including human rights violations blatant cyber theft from U.S companies and others crackdowns on speech from business and media Etc cause you to change your opinion on investing in China and how do you evaluate the clear dangers of investing under authoritarian regimes as recently evidenced by Russian atrocities in Ukraine well those are good questions and there's no question about the fact that that the government of China has worried the investors from the United States who invest in China more in recent months and years than he did in earlier periods so there's been some tension and it's affected the prices of some of the Chinese stocks particularly entered uh internet stocks just in the last day or two in the Chinese leader as sort of reverse coursed on that and said he went too far and he's going to pull way back and so on and so on so we're having some hopeful signs but yes there are more difficulties invest in I mean dealing with the regime in China than there are in the United States and it's different it's a long way away and they've got their own culture and their own loyalties and so on and so on and the reason that I invested in China is I could get so much more so much better companies it's it's so much lower prices and I was willing to take a little political risk to get them to get into the better companies the lower prices other people might reach the opposite conclusion and everybody is more worried about China now than they were two or three years ago so that's that's just the way it is I have nothing to add okay [Applause] station eight hi Warren and Charlie my name is Tom ringe I'm from Wayne Pennsylvania it's great to be back here after two years thank you very much thanks for coming in this year's letter you talked about insurance float the evolution of float the per share float the effect on repurchase to increase the per share of float and in regard to the repurchase I would say thank you as your partner for your careful repurchase as well as careful issuance of our shares um my question is about your expectation for the likelihood that float will be stable and the cost will be zero or close to that over time with adverse years from time to time what about berkshire's Insurance businesses give you the confidence to make that statement when your competitors are trying to do the same thing but haven't been able to come close to achieving berkshire's record in cost and growth of float thank you well they they really aren't trying to do the same thing which is kind of interesting uh the um the answer to your question is we wouldn't be in the business unless it was my judgment that the likelihood uh the weighted probabilities are higher that the flow will be useful to us rather than costly to us and uh nobody will know the answer to that for a very long time so far so good but but it is a judgment and absolutely I could be wrong about it but no the the I think both Charlie and I would say that we think the odds are that it's a winning bet and the odds are pretty good and that we're quite well positioned to do it if anybody does it but you know did we know 911 was coming or you know I mean okay I mean it is not a sure thing just think of what the potential is though when you're reviewing it if we could buy Common Stocks we were virtually sure would give us eight percent after taxes with our whole float that would be a hell of a lot of money I can tell you what it'd be but until Under 12 million yes it's an enormous amount of money annually yes and and the vote has been growing so relax we're glad to have the float but Charlie Charlie's stuck in a couple of this there if we could earn it and if we could the answer is you know it's our job and we think we can do it as well as anybody or we wouldn't be doing it but it's our job to figure out what businesses we want to be in and and when they don't make sense reluctantly occasionally to give up on them like the textile business but but that those are the those are the hard decisions and and insurance you have the faintest idea back in 1967 when jock ring won't stop by the office a quarter stop by about a quarter of 12. and Charlie heider set him up and Jack about once a year he'd get mad at The Regulators he just didn't like being regulated and it it he'd say to himself you know I'm going to sell this damn thing and Charlie caught him one day and he he said Jack was in the heat you know I said bring him wrong so he came up and quarter of 12 and Jack certainly wanted to get rid of this damn business The Regulators were driving him nuts or something I said fine I'll buy it and uh I said what what price do you want and he said I think fifty dollars a share then I said fine we've done we've done it we don't we don't need an audit we don't need anything and then Jack started and he said well he says immediately it really changed his mind but he was too horrible to back out so he said well I suppose you'll want me to sell you the agencies and I said no and of course if I'd said yes and then he said well I can't do it so I just said no you keep them Jack you know and he says I suppose you'll want me to do this I said no no I won't want you to do that he was hoping I would just give him an out but after after doing that for 15 or 20 minutes he saw that I was going to agree to everything he said and he said he'd sell it to me at 50. so he followed through and that was that you know it was pure luck and never we really like our float don't we pardon me we really like our float oh yeah we love it oh we've we've we made the most of it but we didn't make the most of it tillage came along and uh you know who knew that the guy was going to walk into my office in 1986 and and uh you know I would decide that he was the guy to make this damn thing work that I hadn't been able to make work the way I wanted to do and who knew the Geico would come along later and who knew it there's just all kinds of things the one thing you have to do is be prepared when opportunity comes you really do have to just you just move and fortunately I operate in an environment and I wouldn't operate in any other environment I get I get out of there but I operate an environment where I can do it and to be crazy if the board to say we want to set up a committee to review every acquisition and all that and I would say that's that's fine but you can work with somebody else because I I just don't like to go through all that stuff you know I've got other things to do the rest of my life as well so it there's so much so much luck but there is that you do have to be mentally prepared and to do something when it makes sense and do it big time but do it instantly and then you got to be sure you've got the resources to do it and many of those the relative absence of bureaucracy at Berkshire unbelievable has made the company a lot of extra money for a very very long time and it's made my life happier and yes but that that that's ideal oh it uh but in the end we are extraordinarily well positioned to do exactly what we want to do with float while at the same time never putting ourselves in the position never coming close to making a promise we can't keep we had two small Insurance subsidiaries uh before well before we eat the two companies I bought one I really didn't know that much about the other one I did it all by myself and uh they were disasters and left alone which they could have been they'd have gone bankrupt and we just didn't want to do it so with you know we we could pay the liabilities and if the parent company got involved and or we put it in another insurance company or something and we just we did it I mean it's it's uh for sure you know in the crazy way I look I look at Berkshire as a painting you know and it's it's Unlimited in size it's kind of ever expanding campus and I get to paint what I want and if somebody wants to paint something else then I'll go someplace and I'll get a smaller little thing and I'll paint away and uh you know I actually you know I'm no good I don't know anything about pains take me to an art museum and you know all I really want to know is where the men's room is but but it it I'm just not interested and other people look at things and they see something and then they see something additionally later on and I mean they really have a different sort of perception ability in relation to that and to me berkshire's a painting and I got the paint and you know the object obviously I want my partner to come out well on but the real thing I I like is the painting and as long as you know it's in my head and I see different things in it as I go along and and you know it's uh it's you know it's the closest thing I can come you enjoying myself every minute of the day and it's not I don't prescribe it for other people and occasionally I I see things in the painting you know I think well I should have done that differently and go back and paint it over and and uh it's it's satisfying and uh who knows why human beings react in that manner but I I do know what makes me happy and what doesn't make me happy and uh I found what makes me happy so why in the world will I change it so that's um that's a short answer to a question that I can't remember what it was I okay uh Becky this question comes from Andrew kisau from Minneapolis Minnesota he says last year Warren mentioned that inflation had noticeably impacted the prices that berkshire's businesses were paying and charging given those inflationary Trends have continued and in some cases accelerated since last year's meeting could you comment on how this particular inflationary period ranks among previous such periods in the United States like the 1970s and 1980s and what can American businesses and citizens do to reduce the negative impacts that inflation brings about well we've sort of attacked them would you do yourself and and you know you develop skills that that people are willing to pay for in the future regardless of what the unit of exchange is but uh but in terms of inflation in our own businesses it's extraordinary how much we've seen you know with uh the I think you interviewed herb Lumpkin at the Furniture Mart and for two years uh you know the prices have just kept coming in higher for these things and with and we saw them for higher prices and people have more money than they've had before and uh they like to buy and there's certain things they can't buy it's like during World War II got a lot of money created and people couldn't buy cars and they couldn't Buy refrigerators and they could couldn't even buy as much sugar or coffee or things as they wanted they had little stamps and gasoline and all kinds of things well eventually we get a lot of money in people's hands and you don't have very many Goods prices go up now you can do all kinds of things uh to uh you know try and talk it down and of course inflation is never the same nothing in economics is the same the second time after it happens in the first because the first affects people's attitudes in the second and this their attitude has always influence the the the activity itself I mean it is it is an interesting phenomena there are people write a textbook and they really run it based on the last experience and people read the textbooks so they behave differently next time and they then they wonder why they got they're getting a different result and they got the time before so anyway we have we have sent out lots and lots and lots when I say we I mean the United States government we've the government has set out lots of money to people and at some point you know that the money can't be worth as much as it was when there was less money out here's an um here's an interesting figure that uh I think probably will Astound you sounds me anyway the Federal Reserve every Thursday puts out a balance sheet the Federal Reserved and it's very great they're complicated institutions but they do put out this kind of Consolidated statement of all the various federal reserve banks all these things that have entered into legislation over the years and and but there's a balance sheet and 15 years ago roughly um if you look you know the Federal Reserve issues those notes I talked about a while back and uh that's the one here's the current one and they print these pieces of paper and they one way or another they got on the hands of people well the interesting thing is people said cash is dead and all that sort of thing you know cashless Society well there were 800 billion go back 10 or 15 years but it was about 800 billion of currency in circulation and if you look at last Thursday's report you'll see there's something like now 2.2 trillion dollars of currency and circulation 2.2 trillion now there's about um there's 300 300 there's 100 there's 330 million people in the United States let's look at it that way and with 330 million people and you have almost 2.3 trillion of currency in circulation that's seven thousand dollars per person every man woman and child in theory has seven thousand dollars worth of currency well you know that isn't right but you but you do know that the federal reserve's bookkeeping is essentially right they've got that much that's out there I don't know whether where it is and I mean I don't know whether it's in Russia I don't know whether it's in South America I don't know where you know I don't know whether Charlie's got it all I mean it's it's a staggering something you know cash is dead and yet we on average have seven thousand dollars for every person in the United States now uh while you're absorbing that think for a moment what would happen if the US government said well they're working out in private and they decide that they're going to send better reserve and I'm not going to blame the Federal Reserve for there's somebody back in Washington they're sizes they're going to sit on a million dollars to every household in the United States and uh they're 130 million households in the United States or something like that you know and and they're going to mail them a million dollars in cash and there were a couple Provisions attached to it um one is if you talked about it in the next 30 days the money disappeared so it was like in one of those old TV shows or something in post disappears and uh after 30 days uh you could spend it well all of a sudden you the household wealth of the United States Federal Reserve puts out an estimate it was 130 trillion or something like that so basically you've doubled the household wealth and all you've done is mail people but they don't tell them you're doing it with everybody you just say they won the lottery or whatever it may be and now you've got an amount equal to household wealth uh you've got a on average people have doubled it they've got they've got this extra hundred uh 30. um a well brilliant of wealth and in a month I can spend it well what's going to happen boom that uh what prices are going to go up but they're going to go up immediately you know uh well you don't know the other guy got it you just know you've got it so you don't really feel like it got to rush out and buy things but as soon as wood gets around well we've mailed out if you look at the amount we've distributed the federal government I'm going to talk about I'm just talking about the distribution of resources we're talking numbers like that and and it it affects prices it has to affect prices we had 10 times as much if you want a home and you find a 10 times the net worth you had yesterday but everybody else did the same thing it had doesn't increase the amount of brother in the economy or the number of cars that it just means that the price the value of this is going to go down and and uh and and it's purchasing power you can't buy more than exists so it's a very strange period where we had lots of money sent out to people One Way Or Another We're getting it that that didn't find as many places things to buy as before and we had Supply changes we have all these things happen but the end of it is they go out to the Nebraska Furniture Mart and they start buying things and they do it with our other companies and they do it uh in very peculiar ways and now they're buying I mean one thing you know jewelry stores were generally speaking not a very good business and and two years ago uh every landlord that had a jewelry store or multiple jewelry stores in their Mall you know was wondering how they were going to get their rent and uh now every jewelry store virtually is is doing incredibly better than they ever dreamed with weight loss inventory because people are just committed by I mean and they don't wait for sales you know when they walk into the store they're going to walk out and they're going to watch something and uh they pay for it they got the money so we are seeing an unleashing of the fact that we've just mailed a lot of money to people one way or another it's very indirect and it all gets complicated we talk about a big system but this is what's happened and uh I will guarantee you that if we just if we mail out a million dollars to every household the United States tonight and you don't know that it's happened you you know you don't really expect much to happen in Behavior tomorrow but somehow at some point and then if you start doing it every month we'll say people really know you're doing it then they start anticipating and buying at a time and forward I mean there's a million things that happen in economics but the the answer is we've had a lot of inflation and it was almost impossible not to have if you're going to mail off the kind of money we've built up and it's probably a good thing we did it in fact I think there was one point when the Federal Reserve that which in fact creates the money uh the if they hadn't done it your lives would be a lot worse a whole lot worse now and that was an important decision and uh that's the way the that's the that's why you've had inflation and heaven knows I mean it could end you can throw the country into recession you can do all kinds of things country is going to have recessions incidentally and it's going to have depressions periodically and and things don't things will happen differently and you'll read a newspaper today and you'll want to hear from now why was I reading the newspaper a year ago I mean it it it's it's just the way it works when I bought the first stock in 1942 did I know everything was going to happen afterwards of course not I didn't know a damn thing but uh I just needed to have one idea and that idea wasn't really well formed it was just it was just probably the way frankly every kid fell about the country when we just gone into a war you know we thought America was going to win and America was going to win then it was going to win just generally and and savings bonds were paying 2.9 percent I remember that because we we bought them they called them war bombs originally and they called them to the first response and they called them statement sponsors but they were the same thing and uh it's you you print loads of money and money is going to be worth less not worthless I got in trouble doing that one time when CNBC because I said it was going to be worth separately less but got contracted down to worthless so I I took me a few years to learn to separate those words somehow uh anyway that's everything I know about economics and more and Charlie can probably improve on it well it happened on a scale this time we've never seen before those checks that were just mailed out to everybody who claimed to have a business and claimed to have employees they probably drowned the country in money for a while and then you say they probably had to do it but it it was something that had never been done on that scale before but we had a problem we hadn't had before yes no I'm not I'm I'm not saying it wasn't a good idea I mean in my book Jay Paul is a hero I mean it's very very simple I mean he did what he had to do you know when when the if he had done nothing it would be the I mean he would be uh you know be very easy to engage in what you would call thumb sucking then and plenty of I shouldn't say plenty of but there are other fed chairman that would have been sucking their thumbs and the world would have fallen around them and nobody would have exactly blamed them they would have blamed the virus and the Chinese and all kinds of things well the really interesting company is Japan where they first say about all the death and they start buying back all the Common Stocks now that's really weird and what did they get 25 years of stasis who would have predicted that well nobody produced anything I mean there's nobody's predictions that we're interested in including our own I mean it's very simple the what we do know is that we can we can we can deserve your trust uh and there's no reason to do things that don't deserve it and we can't tell what but basically we think we're trying to build a Berkshire that cannot can't withstand a nuclear exchange but it can understand just about we'll stand as much as then anything victim that we can do anything about and uh and uh that leaves us feeling good it doesn't leave us feeling perfect we'd like to even promise you more than that but we can't promise more than that so it's very simple but uh uh and with that we'll move on to 18. let's see that's station nine Dear Mr Buffett and Mr Munger I'm Eli Abu Shakra from Montreal Canada I would like to thank you for everything you've done for us your fellow shareholder my question is regarding the Gap rules if you were to change it what would you change what we would look like thank you well I would resign the job what would you do Charlie no it's an impossible problem because first of all you have to decide whether what Gap is supposed to reflect and it doesn't reflect value but in certain cases of course it is important to say that this is value and so on I mean it is a it's it's a it's a convention and it is done so but the auditor generally is protected because otherwise everybody sues everybody in this country for anything and it's designed to uh uh cause people who want to report a given amount of whatever is desired by the market they'll largely be able to do it and I I don't know how I would write the rules I mean I've watched people who I would be delighted to have lived next to me you know if I was going away for two weeks and my kids were to stay at somebody's house it'd be fine with me if they they stayed there if I lost my wallet someplace and they found it they'd return it to me well they play it they'd play games with any number that came to them and of course and it's a very awkward thing to be on the Auto Committee of a company where people are playing around with the numbers and and that and they don't want you if you raise a stink you've got all kinds of problems and I actually wrote something some years ago up four I was kind of anticipating your question about 15 years ago I guess and I I wrote four suggestions for questions to be asked of the audit committee and uh I don't know whether I was on the auto committee then of Coke or wire but anyway I mean it's just clear to me what was what was happening but you had to you really had to follow the Super 8 or you got in all kinds of trouble for doing that too and so uh I just put four questions out that that I would want to know and they were perfectly logical questions and and then nobody adopted them I mean it the system was fine as it was the Auditors got sued but not that often and and uh the SEC had lots of rules and I admired the SEC enormously I think I think the country is better off because the FCC but but it is a hopeless question the question or problem to devise rules that that people can't get around I mean it's uh it's a it's not I think it was who was it that uh uh my friend that was a writer said it's not the it's not the illegal things that are outrageous it's the legal things uh it's just it's very hard you try and it's worthwhile and you need an FCC but the SEC can't really stop the stuff that that you know you would find outrageous you know uh explain them the Auditors have the same the same question I mean the auditors uh really one of they want rules and they want processes and they want to be so they can operate Charlie found a he was on the auto Committee of Solomon and we had probably literally millions of contracts where people put numbers in and uh and he found that 20 million we had the largest auditing firm of the country that Arthur Anderson as I remembered they're gone now yeah they're gone now but they were but they were the largest and Charlie found a 20 million dollar error I think one time they called it as a plug well your accountant starts talking about a plug it's not good well I'll tell you a story I haven't told before it's all in that movie people who are here saw a testify in August before some committee who were out you know get their way and and uh and I I just decided I'm just going to answer every question honestly and I was not going to try and draw up anything so I just sat in front of them and uh and instead of what I knew it didn't know and one of the things I said which was absolutely true is that I'd only been there 10 days or so at Solomon but I said I really haven't seen anything yet that strikes me is terrible and accounting but I've been there 10 days but uh but but this guy who got us in all this trouble so far he's the only thing I found I don't know what else is going to be found how in the hell could I know would have gone in a place that was doing you know incredible numbers of transactions and everything well uh but I said you know what I've seen the accounting strikes me as as legit ah about a month later I was so happy I had testified earlier not later uh a very fine CFO and these are decent people they're very decent people and he comes in and he said Warren there's there's probably something you should know and I said well what's that and he said well 12 years earlier or whatever it was Solomon emerged with Fiverr which is a huge Trading Company Solomon was a huge Investment Banking Company and they became his huge Powerhouse and he said 12 years ago when we merged with him uh we sort of couldn't find exactly they were on a trade basis and we were on a settlement basis and and they said we've never really figured out how to put the books together this is the largest uh Auto Company in the United States Arthur Anderson that's responsible for signing this thing so we have this number and every day it moves around and it's just put in there to make assets equal liabilities and and you know today it's 173 million four hundred and twelve thousand you know it's not a little Penny and tomorrow it'll be something different you know and I thought to myself I am sure glad I testify or congress a month ago because I did not know then but uh if they ever ask ask me again I'm gonna I'm gonna tell them exactly what happened we just got this number that floats around every every day and we haven't found it in 12 years and Arthur Anderson doesn't know where it is and you know you got to make the assets equal to liabilities right so what else do you do and that's exactly what happened and strange things happen in this world there's one thing my name was the floating plug no yeah yeah and Charlie's on the auto committee yeah yeah the one thing I've always suggested nobody ever wants to do this yeah I can understand why but you've got trillions of dollars worth of contracts and everything that people are putting down little numbers for every day at Banks and investment Banks and all over the world I mean commodity Traders and at Berkshire we we stick down something you know there's certain hedging that even The Regulators want us to do in terms of giving utilities we put a little Lumber in and I made the discussion once or twice if you really want to do something sort of interesting you know just get some young guy that uh give them a couple of weeks and pick the 100 most kind of complicated long-term you know lots of wording the replica contracts and look at what one side who promises to do something values of that and look at what the other side who also reports um and and just let them do it for a hundred operations at random I just like to know if somebody's values them we're valuing a contract at 28 million the other guy's valuing it at 33 million you know and you've got the same auditing for on in both cases and there's they're they're signing their name to them nobody ever I don't think anybody's ever done anything with that suggestion and it's you know that would be the first thing I would do actually if I really wanted to sort of dig into what was happening in accounting but but there's a lot of things in life you can't change and nobody is going to go looking for ways to create lawsuits and newspaper stories and all kinds of things that I don't blame them I did I said I brought one thing I just couldn't resist I was hoping I'd get a question so I'll ask myself uh I was hoping they got a question that how could these some guy be so idiotic as to propose a price uh that of 848 dollars and two cents or whatever it was or is probably getting Court I mean that isn't that getting a little scientific and and of course I did provide when I made the offer that it'd be 800 fifty dollars less whatever was paid to whatever investment banker they wanted to select alleghen this case and and they're bound to have to do it because Delaware laws developed in such a way that the directors are protected if they get expert opinions all that sort of thing so I I don't I don't follow anybody in the system but I just thought it might be useful actually maybe the Delaware judges someday Delaware Delaware statute makers maybe people that are writing papers who knows but I suggest that that we just since I'm willing to pay 850 a share for the place has this you know if the audit fees or I mean if the if the advisory fees are 10 million or 40 million that it makes a difference to someone and and uh and it's always made a difference to us as the buyer but that's just the way the game was well there's a little history to that and I went back and there's been twice in the nobody's ever paid attention to this but but it uh there's been twice in the history of Berkshire Hathaway 57 years twice that Berkshire was required to get a fairness opinion and it was perfectly logical that we'd be required to get a fairness opinion in those two cases because in one case Diversified retailing which was a company I was invested in in both of them that came out of our partnership but one had a group of stareholders that were different than the other group of shareholders at Berkshire and the two of them on the merge so you have two companies with leaving the biggest beneficiary in between and uh and it really it wasn't up to me to determine the ratio I mean even though I had the most involved but but I had a little more of one company than the other so anyway a fairness and opinion was required and this has only been twice in the history of Berkshire that one was required so naturally I went to Charlie I said Charlie you know we do have to I mean Charlie told me he knew a better idea we need to fairness opinion of this case and uh I said you know I know what's the pair you know what's fair Sandy's knows what he thinks is fair if the three of us owned it in 10 minutes we could have worked out a deal that all three of us regarded as fair but because there were public shareholders and everything it wasn't right to do it that way and and the first time the first one we have two of these but the first one was November 27 1978. and I told the shareholders essentially that uh my personal belief is that both Diversified and Berkshire shareholders will benefit from the merger but I will not I will I will vote for the merger only if a majority of the shares which are voted by other shareholders of each company are voters are supported so I which was fine I commit it myself you know that that let the other people decide whether this is fair but on top of that we needed to get a fairness opinion from an investment bank with a big name and everything and so I said to Charlie I said you know these things are going for a million or two million bucks where they get some guy that they hired last week and he he writes up a little thing and and then we got a bill for a millionaire told me they really haven't done anything they don't they don't know either company and you know there's a million things they're not going to know about it but but they're going to write an opinion and uh and we need the opinion I said so what do I do I go to Charlotte with these kind of problems I said Warren it's very simple he said um pick out ten prestigious investment Banks and do exactly what I say so okay Charlie uh what do I do want to call get these ten he says well put them in order one through ten and he said call the guy at the top of the list and tell them you'll pay him sixty thousand dollars for doing a fairness opinion and you know that it's an insolving price and it's ridiculous for him to do it because it'll affect what he can get from other people down the line they'll look back and they'll say well Buffett only paid sixty thousand why should I pay 2 million and it's it's but he says just tell him that's what you'll pay and if if they're installed by it which they probably should be and then you'll go to number two and they'll offer them the same deal and you'll just keep going down until you get to number 10. and if you don't have anybody by number 10 you've told the other people you'll come back to number one again and you'll say well I'll pay 80 000 and then you'll be down the list and everything well so I picked 10 names out and number one name was Jack shot and Jack Shad was a friend of Tom Murphy he's in front of Bill Wayans and he was running EF hunting and he was he it was a very very very successful investment banker I didn't know him as well as the others but I'd I'd met him from my friends so I called up and I said Jack I said I've got this crazy requests he says only because everybody admires you so much and my friends are your friends and blah blah blah and he have hotness so well regarded I said I'm going to do something this I'm going to ask you something that is totally against your interest and I fully understand the fact that you're going to say you're an idiot to call me on this and slammed out on the phone but I said Jack here's here's our procedure and I describe this procedure that he gets called first and if he turns it down then I go to pain Weber and then I go to the and then it goes wrong I tell them there's these 10 people and if we don't get any yeses I'm going to come back to you again and I'll offer you 75 and we'll do the same thing until somebody says yes uh and I said Jack you know but you are the first call so um sixty thousand dollars and it's going to screw up your business if you do this because every client you get in the future is going to say well you did it for Diversified retailing and Berkshire and why in the world should we pay you two million dollars when he Pages sixty thousand and Jack said don't worry about it Warren I can take care of that he says we're in and uh so we got a fairness opinion but but for one side now the next call I made was the pain Weber and I gave him the same story and uh uh I said EF Hutton was dumb enough to take the one side for sixty thousand bucks you know I don't know why the hell they're doing it you know they're destroying their reputation and all that and pain Weber said we'll take the other side for 60 000. so we have a perspective we have we have a thing that describes the whole process and they go well they sent out an amiable alcoholic they had to do something with well what they did bucks paid it that's what you get for sixty thousand books no no no we we got the same thing everybody else got and and and of course Jack shad uh this was 1978. he was appointed chairman of the FCC about seven years I mean Jack Jack likes to do business and and it was true it didn't hurt him they paid those 60 000 and they went back and charged somebody else two million you know the next week and those guys it's all play money and uh so we did the same thing when we got the Blue Chip Stamps where we were similarly conflicted four or five years later we went back to the same two guys and there'd been a lot of inflation and everything like that so we we said 110 000 then I've got the prospectus for that and both of them said you know send it in don't worry about our other clients we can we we'll figure out some story to tell them you know whatever it may be but I just thought it would be interesting at some point have people realize that it's not play money somebody pays it and it's a game and you know it it uh but it's it's it's what passes muster in Delaware and the directors will have it explained to them by the lawyers that they're not going to get sued if they do it in a certain kind of way and you know it it's uh uh so I just decided that somebody at some point out what that actually is happening in this situation and that's why we did it that way and and uh you know they go down with our earlier attempts to educate the world on the realities of finance and its various interactions and why it's better to teach your son to be an investment banker than to be an electrician you know or something but uh it's uh you've got an eccentric chairman and that's what he did Charlie how do you feel about this whole matter it was your idea I'm originally well it's we're a little peculiar and it's not all all the peculiarities are not bad I talked to Charlie before but I didn't talk to Charlie before I did the uh this time but yeah it but Charlie has given me four ideas and together that on extremely practical matters it was so much uh I mean they just changed everything I think you really ought to talk about the experience with the Frog what on the fraud claim it you know that the Fidelity claim with a guy you know yet he had uh very well-known insurance company that you don't have to name names but uh well then you know you basically just told them just raise the stakes to make the the game fair this was back in the 1960s do you remember that I don't remember well I do I remember well tell them ah [Laughter] Charlie had this tiny little operation which he ran his fund also had a seat on the Pacific Coast Soccer shakes the firm is called wheeler monger it's called wheeler mugger at first later it changed itself to Margaret wheeler and Jack Wheeler said well pretty soon it'll be a bugger and Company but that's okay they Jack Wheeler was a very interesting guy and he had the specialist position in General Motors and a few things and some employee stole like I don't know 12 000 bucks or something like that yeah well you hit I remember he hid the trading tickets I'm going to steal some money and Charlie's firm we learned marker was required to have a Fidelity Bond and all these things that covered in dishonest employees and all of that sort so this guy's clearly dishonest he's clearly stolen the money so Charlie puts in a claim for twelve thousand dollars or something like that whatever the loss was and sends it to this very big imprest is just Insurance Company and of course the insurance company denies this claim they say you know the guy really wasn't employed he doesn't exist you don't have a dog you know and I mean the whole thing and Charlie gets this letter back and they're not going to pay the claim and uh so Charlie writes a letter to this very well known big name uh person that runs the insurance company and he said look it he said we have this twelve thousand dollar claim and he said this guy stole the money uh and we thought we had a insurance policy against people's people stole money and he said he said we're in this very interesting position because you've got a bunch of people on the payroll and they're going to get their weekly check for monthly check whatever they do so they just say we're not going to pay and Life Goes On whereas I'm sitting here and I've got my time I've got to work on this thing and it isn't worth the twelve thousand dollars for me to fool around with us claim against the company and they'll appeal it and all these things so he said I know that you would be offended by the thought that you might be using this inequality a bargaining position to avoid playing at the claim that never could be your intention so what I suggest in order to really live up to your code of behavior is why don't we make the twelve thousand dollar claim business we'll just multiply it by 10 and call it 120 000 either way and if you lose you pay me 120 000 if I lose I'll pay you 120 000. now it's worth my while and uh he addresses the letter to the chairman and says that's the guy he gets a twelve thousand dollar check by return mail it's not a bad lesson he's taught me two others but the tricks are too good I don't even want to share them now I may use it myself someday okay uh let's go to uh Becky uh we got a lot of questions on this topic I'll ask this one that came from Raj he says have you changed your views on bitcoin and or cryptocurrency in any respect I'm conflicted about this because his own views have slightly evolved during the past two years from Bitcoin as a fraud in waste to bitcoin is in a speculative bubble but might have some uses well I shouldn't answer any questions on the subject but I will you know there's there's all kinds of people watching this that are long Bitcoin and there's nobody that's short and nobody nobody wants their win but stepped on it I don't blame them I don't like people to step on my windpipe but I would say this that if all the people listen if the people in this room uh owned all of the Farmland in the United States um and you offered me a one percent interest in it and you said from one percent interest in all the Farmland in the United States uh pay me uh pay our group um now let's see ah it says bargain priced 25 billion dollars I'll write you a check this afternoon 25 billion now I own one percent of the farmland if you tell me you own one percent of the apartment houses in the United States uh and you offer me uh a one percent interest so I'll have a one percent in all the apartment houses in the country and you want whatever it may be for it um another 25 billion or something I'll write you a check you know it's very simple now if you told me you owned all of the Bitcoin in the world and you offered it to me for 25 dollars I wouldn't take it because what would I do with it um I have to sell it back to you one way or another I mean they've had the same people but it isn't going to do anything the apartments are going to produce run on and the Farms are going to produce food and uh uh if I've got all the Bitcoin you know I'm back where whatever his name was who may or may not have existed was you know if I've got it all he could create a mystery about it but everybody knows what I'm like I mean so if I'm trying to get rid of it you know people will say well uh you know why should I buy some Bitcoin right I mean why don't you call it buffer coin you know make your own or something what do something but I'm not going to give you anything for it and you'd be right incidentally but that explains the difference between productive assets and something that depends on the next guy paying you more than the last guy got now net if you look at it a lot of commissions have been paid and then there's I mean there's all kinds of frictional costs that are very real that somebody is paid to a bunch of people who facilitate this game but whatever one group of the public has taken out or one group of owners has come in from other people I mean it's other people have entered the room and they move money around but but no money has there's no more money in the room it's just changed hands with a lot of maybe fraud and costs involved and you know a whole bunch of things you lose you know you forget the numbers and get the equation and the uh you can do that with a lot of things I mean it's been done throughout history uh certain things have value that don't produce something tangible I mean you can you can say a great painting you know probably will have some value 500 years from now may not but the odds are pretty good that if it was a big enough name at some point there will be a few things I mean you know you can uh you can find something private if somebody wants to sell you a pyramid or something and you can charge the viewers or you know it'll be around a long time and and won't produce anything but but but uh people will find it interesting to go there because I read about the parents but basically uh assets to be that value they have to deliver something to somebody and uh uh and there's only one currency that's acceptable in the United States I mean you can come up with all kinds of things uh we can put out Berkshire coins or you know we put up Berkshire money or anything like that but uh we get in trouble I guess if we call it money but uh in the end this is money and and there's no reason in the world why the United States government whose currency people prefer literally there's 2.3 just under 2.3 trillion just of these little pieces of paper floating around some places seven thousand for every man woman a child in the United States and of course most of them probably are in the United States who knows but this is the only thing that's money and anybody that thinks the United States is going to change the way they let it Berkshire money replace theirs you know it's out of their mind I mean so anyway uh with those few deficiencies uh you know you can whether it goes up or down in the next year or five years ten years I don't know but the one thing I'm pretty sure of is that it it doesn't it doesn't multiply it doesn't produce anything it's it's uh it's got a magic to it and people have attached Magics to lots of things I mean it's a golden Wall Street Green magic you know we are not an insurance company we're a tech company well they're an insurance company but a dozen people or so I've raised a lot of money they just say just don't pay any attention to the fact that we sell insurance we are a tech company well in the end they brought insurance and overwhelmingly they 've lost a lot of money since then that it you can you can make up things that work well and getting money from other people and that's why well I have a slightly different way of looking at it I'll sell you something well I the in my life I try and avoid things that are stupid an evil and made me look bad in comparison with somebody else and Bitcoin does all three yeah and the first place it's stupid because it's very likely to go to zero the same place is evil because it undermines they've had a Reserve System and the national currency system which we desperately need to maintain its integrity and government control and so on and third it makes us look foolish compared to the communist leader in China he was smart enough to ban Bitcoin in China with all of our presumed advantages of civilization we are a lot dumber than the communist leader in China yeah and when 25 percent of the people of the country get mad because we've said what we've said today just remember Charlie spoke last and was the most [Applause] the one development that I really do think is actually important but I don't know any way to do anything about it but I would my general assessment and there's no way to prove it but I essentially believed people are now behaving somewhat more tribal than they have for a long time and I mean people are always going to be partisan and they're they're going to have religious beliefs they're going to have all kinds of things but but it gets pretty it gets pretty tribal and I want to tell you I speak from experience because I've been tribal and you know we're confessing today uh and uh you know Nebraska football is tribal and when I watch a television set and I see our guys step Nebraska stepping out of bounds by a foot but some other rough misses it and calls it in and then they feel six replays I'll continue to believe it was then even though it's right in front of my eyes they stepped out you know that's tribal behavior and and it's fun I mean I mean participated but it gets it can get very dangerous when people one group of people say two plus two is five another say it's two plus two is three you know and they're going to give you those answers if you call them and the interesting thing is to me at least and partly because of my age but I actually think that just from memory uh that the last time that the country was seen this tribal was actually when I was a kid and Roosevelt was in either you hated Roosevelt or you loved him I mean nobody cared about the fact Alpha and it was running her window woke he was running against them they just had these feelings they either had Roosevelt's picture on the wall and name their kids after Roosevelt or they hated them and uh and they thought he was going to now no third term and you know I mean a million things and the country was very very tribal in the 30s but Roosevelt's tribe was bigger and in my opinion they did some wonderful things but I happened to grow up in a household where we didn't get served dessert until we said something nasty about roosevelty and believe me if you don't get dessert you're going to say something nasty about Roosevelt and so you trained them young and yeah all kinds of things and so I've been I've seen it I I think I've seen a period that it wasn't that way when you know Eisenhower was running against Stevenson or you know or whatever it might be I mean it uh you know people they didn't they didn't just they had a partisan behavior and they had a certain amount of tribal always but I I think that I don't think it's a good development for society generally when people get tribal regardless [Applause] [Music] Charlie what tribes are you a member of them well in California we have a legislature which is completely gerrymandered so no nobody can ever be thrown out by the voters and therefore the only people in the legislature are insane rightists and insane leftists they get together every 10 years and they're usually six moderates somewhere in the legislature and so they re-jigger all the districts to throw them out because neither party can stand them now that is government in California yeah and and you lived there and you have to go back and I prefer living the early living in Russia [Laughter] [Applause] okay who who haven't we gotten in trouble with him no not what was it Lenny Bruce that you say is there anyone ever forgotten to offend you the uh section 10 I believe uh hello Mr Buffett and Mr Munger my name is sahaj I am from New Jersey and I'm currently a freshman at Rutgers University um you knew quite early on that you wanted to be investors and you've obviously been amazing at it what advice would you have for someone who's still trying to figure out what they want to focus on and find their calling well that isn't it is a very interesting question because I got I was very very lucky in that I I found what I wanted to do because my dad happened to be in the business that he wasn't interested in but they had some books down there and I loved my dad and I could have him read the books and they interested me and you know I'm I'm glad it wasn't the you know a professional professional boxers I mean I you know I wouldn't have any teeth left or anything it was it was accident just totally accident but I do think I do think you know it when you see it and it doesn't mean you can follow right I would tell the students that I wrote a report I mean you know find out what you love doing in there you spend most of your life doing it and that uh why in the world would you want to be around for a lifetime uh working with people that you didn't like unless you had to which sometimes happens and uh just work for whomever you admire the most and I gave the talk at Stanford one time and somebody showed up and Tom Murphy's office I think a couple of days later I mean that person was right and of course it's what I did when I got out of school I wanted to work for Ben Graham I mean as I just I didn't get what I got paid it didn't make any you know it just is I just knew that that's what I wanted to do and then I pestered him for three years and he finally hired me ah and then I found somebody else that I'd even rather work for than Ben who happened to be myself and so so I've been working for myself ever since but I worked for I had about four bosses in my life uh you know I've done the Lincoln Journal with uh uh uh names close to my mind at the moment is wonderful boss it was Cooper Smith at JC Penney's here in Omaha they all were wonderful people but I still prefer working for myself and of course Charlie and I both work for my grandfather and and we just didn't we didn't find it that interesting that uh uh I I never I don't remember how why'd you ever decide to go to work at the store apparently Charlie worked there in 1940. I worked just for the experience of working I didn't need the money my father gave me an ample allowance and I also had a private business so uh uh I was kind of working as a lark in your grocery store 12 hours a day yes for alarm yeah as a lark yes do you consider that a good investment in your time I'm looking back on it well I had never done it before and I wanted to have a little of that experience and I wasn't going to do it very long that sure as hell wasn't the reason I worked well but I did give that young lady the advice figure out what you're mad at and avoid all of it it's the way Warren and I found our provision absolutely we yeah we failed at everything else we worked at everything until we found the ideal employers ourselves you know and that that was an organ that was something we really admired was I know one should work for somebody you admire the only one he knew was the one who was shaving because he was shaving but it isn't bad advice it isn't bad advice I mean who wants this if they've got an option I mean if you're you know Charlie went into the service and whatever year it was in the 40s and he didn't really have a choice of who he was going to work for and as I remember it didn't really work out that well we worked for Charlie did it well if you stop to think about it the two things that neither one of us has ever succeeded at one we've never succeeded anything that didn't interest us right right and we've never succeeded anything that was really hard where we didn't have much aptitude for it yeah and we've been doing whatever we've placed yeah I mean and we get you know we have fun in our way and I'm just amazed you think if you're smart you could do things that don't interest you well but you can't well I've certainly got a lot of examples in my own case in them but we won't get into them here and we will go to Becky this question comes from Foster Taylor in Tulsa Oklahoma he said he recently listened to the Berkshire Hathaway 2008 annual meeting where you talked about global oil production at the time you talked about major ramifications of global oil production went below 85 million Barrels in 25 years we are at the 14-year Mark in global oil production looks to be 79 million barrels at the same time we're depleting our strategic oil reserves should the United States be doing something differently and do you see consequences to these actions in the next 10 years if we do not become more proactive well Charlie's the expert on oil well I bet only compared to me Samuel Johnson said it's harder hard to determine the order of presidency between a loss and a flea it's hard to tell which of us is more incompetent in oil the yeah still competing I have a different view on this subject I like having baby preserved so well if I were running the benevolent death of the United States I would just leave most of the oil we have here and I'd pay whatever the Arabs charge for their oil and I'd pay it cheerfully and conserve my own I think it's going to be very precious stuff over the next 200 years and so and nobody else has my view so I it doesn't bother me I just think they're all wrong yeah foreign that is not the normal View and we've been pretty flexible in our own deal I mean actually the the you know the federal government is serving up over many billion barrels of of the stuff that that into the into the economy and it was not long ago that you know the idea that anybody produced a barrel of oil was somehow uh something terrible I mean just try doing without 11 million barrels of that and see what happens tomorrow and it is it is something that everybody has a feeling on immediately and and uh you know this gets into uh a whole bunch of different uh tribes of sorts and and the offend an awful lot of people if you talk in any way about it but then in the end I think at the moment at least most people feel that it's nice to have some oil in this country than not have it and and we're using a lot of it and if we were to try and change over and three years or five years nobody knows what would happen but the odds that it would work well or extremely low it seems to me Charlie why don't you say something more dramatic so you'll be the one to offended the most people well if you stop to think about it the Earl industry is being so vilified now I can hardly think of a more useful industry more and I don't know about wildcatters but certainly the petroleum Engineers I I know and the people who design our oil refineries and pipelines are some of the finest and most reliable people they know and I see very little trouble with the oil supply thing in the United States so I'm basically in love with standard oil so and I I don't have this feeling that it's an evil crazy place I I wish the rest of the world worked as well as our big oil companies well we better move on to station 11. I'm not sure where the station 11 is operative there that then well we're here um greetings from the Overflow room my name is Glenn Tung I'm a shareholder from New York this is my 20th Berkshire annual meeting and I'm delighted that we're able to once again be here in person you two have brought tremendous joy to all of us through the years and speaking personally your wisdom has not only made me a better investor but more importantly a better happier person it's a privilege and honor to thank you so Warren and Charlie thank you well that's my kind of a question yeah that that's fine let's have more of those yeah or you might say it again I mean maybe you could sing it [Laughter] should quit at this point don't do it my question relates to share repurchases since you started buying back Berkshire shares in size two years ago the repurchases have ranged between 1 billion and 3 billion per month by my estimate it appears that the buyback rate is about 3 billion per month when berkshire's trading at a 20 or so percent discount to intrinsic value 2 billion per month at about a 10 discount and a billion per month at a zero to ten percent value do I have that about right and approximately approximately right and do any other factors influence the rate of share repurchases well uh after you were so nice in your introduction I have to say that yeah you're actually wrong if somebody offered us 50 billion dollars worth of stock uh at a certain point in the last reform five months uh we'd have taken them you know it's that simple and as I mentioned earlier we haven't bought any stock in April it uh it's something that when we can do it and we know at least we think the probabilities are very high we certainly believe it in terms of our own and evaluation and our own investment we think that we're improving things for the remaining shareholder uh we'll buy it back and if we don't we don't buy it back and and if we have the choice of buying businesses that we like or buying back stock controlling factors how much money we have we'd rather buy businesses and so it isn't you know we don't want but don't stay awake at night uh working out formulas or anything of the sort uh but we don't ever do it if we think that we're not doing something at the time if we had a lemonade stand and Charlie and I and you on the and the lemonade stand was making us about a buck a weed or something and we divided it up and and you said you wanted to get out and uh if you said one number of waiting which have the funds in the our little boy lemonade company and we'd buy you out and if we didn't like the price we wouldn't buy off it's uh it's the same way we feel we don't but we do feel an obligation to do things that we think are intelligent and in no way risk absolutely no way in present any risk of financial problems under any circumstances we we can Envision it except maybe something like nuclear war uh you know we will we will do it but uh it never can be that big a factor certain companies well Charlie I think spoke the other day and I was going to Henry Singleton uh I think he bought back 89 percent of the the company over time and he sold stock like crazy or issued it much earlier when it was overpriced and they bought it back underpriced but the key to that of course is how big people think you're wrong and doing it so he was able to buy a ton of it and there's some other companies that have bought a ton of it and Berkshire isn't going to get the chance to do that because we know we if people think we're buying them we've got sensible shareholders is what it amounts to if we had the same group of shareholders that own two-day puts and they were our shareholders we buy back the whole company you know and in a very short period of time but it's such an easy concept to assess I mean the second stock I bought what city service preferred that was the first one second stock I bought was a company called Texas Pacific Land Trust and that came out of the bankruptcy of the Texas and Pacific Railroad back in the 1880s or nothing like that and they had three million some makers and they owned the minerals and they owned the surface and everything else but it was it was terrible land in the 1880s but they had some kind of a charter that decided to use the proceeds from land so whatever it was they were going to buy in stock every year and uh and and you know I sat there when I was 13 or 14 and I figure if I lived to be a hundred I would own the whole place well I haven't lived to be a hundred yet and I didn't buy the whole I wouldn't have bought the whole place so both calculations are so far imperfect but it it's been a remarkable company I'm just plain remarkable because they would talk about raising fees of six thousand dollars or a year or something like that you know maybe when they had three million acres and then they kept finding oil and more oil and more oil and and they've changed the form and all kinds of things but they bought in stock week after week after week and I sat there and figured out how long it would take until I own the whole company and and I obviously made some improper calculations because it wouldn't work that way but uh it still was apparent to me it'll be a very good idea if they had three million Acres down there that they got all through with and they kept the mineral rights and all kinds of things which they were doing uh you know a lot of at a very cheap price it ought to work out well for anybody who sat around for a long time and it has worked out extremely well for anybody sat around a long time but but nobody knew that they were going to find a lot of oil and eventually El Paso would grow out far enough so that the surface lands became worse some money that they were somewhat near El Paso and they had to go a couple hundred more miles to find the next person but that was another problem so uh it's it's so some of the stuff is so simple you know but but you know people want to get their PHD or something so they they work out hundreds of pages and have lots of Greek letters in it and all that sort of thing and and you know either you're buying buying out your partner at an attractive price or you're not buying them out you're prizes if you got the money around to do it and the price is attractive you don't have some other opportunities you know why not I mean he's got to come out of the head by doing it and if certain other if you've got other things that are more intelligent you don't do it and and if it isn't intelligent on an absolute basis you also don't do it hardly if you got anything to add to that what were you doing in 1940 three you were in there you're in the service we'd be crazy if we didn't rather enjoy having come a considerable distance some Small Beginnings and to do that in Good Company it's it's a favored life yeah we've been very fortunate yeah and tomorrow [Music] Monday I can tell you it's almost certain that if anybody offers us well they'll be shared straight to Berkshire and we won't buy any but it's also a pretty fair chance someday a lot of shares quite a few shares not a lot versus got the our shareholders are too smart that's one of our problems that we want to repurchase shares but we really don't want to squeeze it we don't want to squeeze out anybody but but we also are here to do things that increase the value to the people who stick with us I mean it's not very complicated and and uh we'll get well there'll be times when we'll do it and there'll be times when we won't but it won't it won't be any formula but there will be the principles that I've just expressed and and uh and my guess is that my successor and their successor well have a similar calculation because we're looking for people that are rational and devoted to Berkshire so Glenn thanks for coming and uh Becky here next this question was sent in by Dave Shane from Brooklyn New York he's responding to something he heard earlier today he said in the future will Greg be able to act with the same spontaneity that you mentioned earlier and make immediate multi-billion dollar decisions without board approval well my guess is that the board it's just the responders people do they'll be they'll put some more restrictions or they'll have some more consultation not a lot of matters that that or some matters uh then they they do with me I mean that they won't need to but they'll feel that they haven't had the experience they haven't seen them as long and then a whole bunch of things and they'll feel that the Delaware loss protects them better and necessarily they don't have directors and officers liability insurance I mean it virtually every company I'm the nurse Stock Exchange has it and uh we just don't buy it I mean to come on the board and you're a trustee for a whole bunch of people with trust you and me I'm talking about the directors and me uh you know find another but it it's very interesting people people go on museum boards you know and they're expected to contribute people go on College boards and they're expected to contribute money and it's they say it's a great honor to be on a university board or Museum board or whatever it's great on Earth and therefore you should raise money for us well frankly I think our board's more interesting than being on the University board or you know or a hospital board or something I wouldn't know what they were talking about in any way and on museum board or artboard and so in uh in uh uh you know but people have found that they can make three hundred thousand dollars a year uh you know which is way more which is enormously important to some people and as meaningless to others uh and I mean that chances of Earth if somehow they'd arranged it so that directors didn't get paid at all there'd be plenty of people who want to be directors I'm going to be a prestigious sort of thing and all that but but in the fact that it's it's money I that comes very easily I did the whole idea of the independent director frankly is it just doesn't really make any sense you don't think a director is independent who needs 300 000 he needs the money yeah I mean he's independent of the way a slave is independent I am I am willing to read a few sentences which are absolutely the case except I'm doctoring there's just I don't want I don't want anybody to be identified obviously with us and these are just but these are word for word excerpts was a no I'm not I'm not telling it whether it's a a woman or a man I'm going to use a male pronoun because it's just because it's easier but I picked out a few sentences from a letter I received many years ago and this letter said I'm writing to you with a great deal of reluctance and a sense of personal embarrassment I have tried all of the conventional means of raising the money this person needed a couple million dollars and I wouldn't have known the person if I saw him on the street you know but but uh but it wrote this letter and said I need a couple of million dollars and uh and then this is the item that I think you might find interesting and I've kept the letter my income is composed 100 percent of my board fees well yeah I just looked him up and the time he was a director of five prestigious companies and have been directors of others and directors and he's going to be directed a whole bunch of things but he was desperate for money and he says he's getting 100 of a reward fees and he was an independent director who classified as an independent director at every one of these companies uh and uh it's just astounding to me uh that uh you know we're going to have a shareholders meeting just a couple of minutes we're gonna we're gonna start it and uh um it's just astounding to me that uh uh uh in 2006 we own nine percent of the Coca-Cola Company I mean maybe they gave me a free Coke I mean but nine percent of Berkshire Hathaway we can obviously cared about the future and uh this so happened and in that era Calpers and a few others I recommended that may be voted against or something or other and and at one time there were two big institutional ambassadors but voted because they didn't think I was independent because Dairy Queen bought some Coca-Cola uh or actually the people without our franchises want some Coca-Cola I mean do they think I can't add things and if we've got billions and billions and billions of dollars that I'm going to be compromised and but it's it's just nutty and uh so one year my my vote fell from 90 96 percent maybe it was 98 vote approval it's 84 because uh I'd forget whether it's 2004 or 2000 somewhere along the line they just decided that that I wasn't the right sort of person to be able to handle these responsibilities and uh you know the idea that somebody it's an important part of their income I mean what they want they may want to do a lot of other good things it does it does mean they're terrible people but if the if the difference is whether you how you live and in this case whether the person might go broke uh how in the world you can call somebody like that independent and say that anybody owns a lot of you know women walrus God's been not independent or maybe it's just ridiculous but it's the way the the rules are and we we will we follow the rules but one they don't want them just independent now they want one horse one rabbit one cow one what whatever I mean I you know I feel like Galileo Independence is not enough you got to have a very diverse kind of Independence yeah yeah and and if if you desperately need the money in this case 100 of the income coming from it uh you're on five of the most prestigious boards in there in the country and and classify as independent on each and other and all you're hoping is that well if your CEO gets called we can buy another CEO and says is this guy okay and you say of course he's okay which means of course he doesn't cause trouble and so he gets on the sixth board anyway I know I always says it's not our idea of an independent director it's all a little crazy which brings us the fact that we're now going to have our annual meeting here and about 15 minutes we'll we'll reconvene it 3 45 and then we'll do the the business of the meeting that is required and uh and you're all welcome to stay here and uh it's very thank you we're now come to the moment you've all been waiting for we'll all we will have the annual meeting uh Charlie doesn't join me for this because once or twice in the past he was caught on camera uh sleeping so we've solved that one and uh and uh we're now going to have a an annual meeting where I follow a script and uh you may think that's impossible but I'll do it so the meeting will now come to order I'm Warren Buffett chairman of the board of directors of the company I welcome you to this 2022 annual meeting of shareholders Mark Hamburg is Secretary of Berkshire Hathaway and he will make a written record of the proceedings Rebecca amick has been appointed inspector of Elections at this meeting and she will certify to the counter bolts cast in the election for directors and the Motions to be voted upon at this meeting the named proxy holders for this meeting are Greg Abel and Mark Hamburg does the Secretary have a report of the number of Berkshire shares outstanding entitled to vote and representative of the meeting yes I do as indicated in the proxy statement that accompanied the notice of this meeting that was sent to All shareholders of record on March 2nd 2022 the record date for this meeting there were 614 692 shares of Class A Berkshire Hathaway common stock outstanding with each share entitled to one vote and motions considered at this meeting and 1 billion 287 600 33 million 719 shares of Class B Berkshire Hathaway common stack outstanding with each share entitled to one tenth thousandth of one vote on motions considered at this meeting of that number 423 719 Class A shares and 759 million 159 354 Class B shares are represented at this meeting by proxies returned through Thursday evening April 28th okay and uh I will interrupt this meeting for one second to announce that we're still selling things next door and we've sold 15 boats so with that uh brief commercial and uh uh and if anybody leaves I will not be offended uh thank you the number represents the Quorum and we will therefore directly proceed with the meeting first order of business will be a reading of the minutes of the last meeting of shareholders I recognize Mr Decker who will place a motion before the meeting I move that the reading of the minutes from the last meeting of shareholders be dispensed with and the minutes be approved do I hear a second a second the motion the motion is carried the next item of business is to elect directors if a shareholder is president who did not send in a proxy or wishes to withdraw proxy previously sent in you may vote in person on the election of directors and other matters to be considered at this meeting please identify yourselves to one of the meeting officials in the aisle so that you can receive a ballot I recognize Miss Sue Decker to play some motion before the meeting with respect to election directors I move that Warren Buffett Charles Munger Gregory Abel Howard Buffett Susan Buffett Stephen Burke Kenneth Chenault Christopher Davis Susan Decker Davis Scott David goddessman Charlotte Guymon Ajit Jain Ronald Olson Wallace whites and Merrill Whitner be elected as directors I second the motion it has been moved in Sacramento that the 15 individual named in Miss deckers motion be elected as directors the nominations are ready to be acted upon are there any shareholders voting in person they should now mark their ballot on the motion does that make when you are ready you may give you a report my report is ready the ballot of the proxy holders in response to proxies that were received through last Thursday evening cast not less than 449 190 votes for each nominee that number exceeds a majority of the number of the total votes of all Class A and Class B shares outstanding the certification required by Delaware law of the precise count of the votes will be given to the secretary to place with the minutes of this meeting thank you Miss hammock the 15 nominees have been elected as directors the next four items of business relate to four shareholder proposals that are each set forth in the proxy statement that can be accessed at Berkshire hathaway.com the first proposal requests that the company adopt a policy and amend the bylaws to require the chair of the board of directors to be an independent member of the board the directors have recommended that the shareholders vote against the proposal I will now recognize Peter Flaherty a representative of national legal and policy Center to present the proposal good afternoon I am Peter Flaherty chairman of the national and legal and policy Center I'm from Washington D.C but please don't hold that against me our proposal would separate the roles of chairman and CEO Sorry Charlie but I would take it one step further and suggest that Berkshire remove itself from corporate America's assault on American institutions and culture I'm proud to say I'm in a capitalist but it is obvious to me that capitalism is failing to deliver for the American people real wages have been falling for years wealth disparity has never been greater and right outside my hotel window here in Omaha is a homeless encampment and all too familiar sight in American cities we don't have a free economy we have bailout capitalism when small businesses lose money they go out of business but when billionaires bet wrong government steps in money printing by the Federal Reserve and irresponsible debt-fueled spending by politicians what they call fiscal stimulus have artificially inflated asset values so those with the most assets benefit the most wage earners get ruinous inflation but even worse than the wealth Gap is the values Gap the top one percent now seek to impose their corrupt morality upon the rest of us whether it's in the form of critical race Theory transgenderism and or the Myriad of other woke causes that permeate corporate advertising and messaging why has Corporate America embraced both economic and cultural radicalism it's pretty simple when you have so much money your fortune is going to come under scrutiny the best way to insulate yourself and keep anti-business off your back is to embrace their causes even if in the process you undermine the system that produces your wealth that is what allowed Mr Buffett to advocate for higher taxes even though they will fall in the middle class the Federal Reserve has offered free money to Corporate America for over a decade now creating a class of oligarchs and greatly enhancing corporate political power Executives now believe that they can tell elected Governors and legislators what to do as we've seen in Indiana Georgia Texas and Florida last year Coca-Cola CEO James Quincy a British and citizen sought to kill George's new voter Integrity law by making inaccurate and inflammatory statements about it he also instituted diversity training whereby white employees were encouraged to try to be less white despite being Koch's most celebrated shareholder Warren Buffett is nothing about Quincy in fact Mr Buffett jumped on the America is racist bandwagon by signing a statement by corporate leaders suggesting that Republicans seek to restrict ballot access based on race all this did not prevent Coke from sponsoring the Winter Olympics in China which has never had a free election and where minority communities are the victims of genocidal policies and what about Apple a large part of Apple supply chain is in China the company removes apps from the App Store at the request of the Chinese government because they are used by human rights activists and of course apple is the world's most successful corporate tax minimizer famous from routing profits through offshore attack shelters over at American Express the company instituted an anti-racist Initiative for employees that teach us that capitalism is fundamentally racist and requires workers to engage in an exercise to determine whether they are the oppressor or the oppressed activism by woke CEOs may be reaching its limits the people of Florida are fighting back against Disney's Robert chapek who not only Embraces the view that gender is a form of Oppression but that kindergartens must be forced to confront it Mr Buffett has praised the brand endurance of Disney's characters in the trust parents place and its content to be safe and appropriate for children but now the company is adding warnings to Dumbo Peter Pan in Aladdin about the stereotypes they allegedly portray in poor Prince Charming has been excised for kissing Snow White quote unquote without consent Warren Buffett has yet to address the crisis drip in Corporate America and I fear in every will yes Berkshire may be a holding company and Mr Buffett may stay out of the way of managers but what happens when these Executives use their companies to wage a social Revolution that most Americans don't want is he not responsible he can't have it both ways in this country wealth has been admired and even celebrated because our system allows anyone to become rich but what happens when Americans suddenly find their history and future under attack by Corporate America the social compact that permits such affluence will be broken Mr Buffett if you are the face of the capitalism why don't you do something to save it thank you okay thank you Mr Flaherty well uh if there are any shareholders um bully impersonation now should Mark their battle on the motion is that like when you're ready you may give your report my report is ready the ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 72 298 votes for the motion and 421 181 votes against the motion as as as the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly cast on the matter the motion has failed the certification required by Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting thank you Ms amick The Proposal failed um [Applause] the second proposal second proposal request that the company published an annual assessment addressing of the company manages physical and transitional climate related risks and opportunities their records have recommended the shareholders vote against the proposal I now will now recognize Tim humans a representative of Federated probation to present the proposal I thank the chair the board and fellow shareholders I'm Tim Yeomans lead North America EOS at Federated Hermes here today to talk about ballot item three a proposal that is co-sponsored by Brunell pension partnership limited represented by EOS caste Depot a plaza Mandu Quebec California public employees retirement system and state of New Jersey common prevention fundee on behalf of their combined millions of ultimate beneficiaries EOS Calpers and cdbq co-sponsored her similar proposal last year asking the company to commence climate-related risk reporting which the company has not started the context for this year's parent company climate reporting proposal is however different in three ways first we've added New Jersey common pension fund d second we stand before this annual meeting of shareholders backed by in our estimate the majority of non-insider votes cast at last year's annual meeting we provided the company tallies showing that the majority of non-insider votes cast supported last year's proposal as a glass Lewis has also corroborated this result the company disagrees but has not shared its reasoning third the parent company began engaging with the co-sponsors this year and the company recently published a supplement to the chair's letter from Vice chair Abel discussing climate change matters in the company's energy and rails subsidiaries also the parent company's audit committee has amended his Charter to now include climate risk oversight we welcome the company's new engagement approach Vice chair Abel's supplement and the revised audit committee Charter however these changes do not address in any meaningful way what last year's non-insider majority supported shareholder proposal asked for and what this year's ballot item 3 asked for which is that the parent company should a commence annual climate related financial reporting for its subsidiaries where material and for the parent company as a whole following the recommendations of the task force on climate-related financial disclosures B explain how the board oversees climate-related risks for the combined Enterprise and C explore the feasibility of the parent company and its subsidiaries establishing science-based greenhouse gas reduction targets here's why all shareholders including the non-insider shareholders who supported last year's shareholder proposal should once again this year tell the board to change course and support parent company climate risk reporting Vice chair Abel's supplement talks about emissions reductions we asked the parent company to report on climate-related financial risks not just emissions reductions as these risks may be material Abel's letter also talks about emissions reductions in Rail and energy two of the four giants of Berkshire Hathaway as they are referred to in the chair's annual letter what about climate risk and insurance the company has 60 subsidiaries and more than a few large investment Holdings the company should disclose material climate-related Financial risks Beyond Rail and energy in a composite parent company picture we asked the company to allocate a small portion of its more than 100 billion dollars in cash equivalents to climate risk reporting at the parent company level climate Financial Risk may be significant even material at the parent company on page k26 of the 2021 annual report the company states that climate related risks could produce losses and significantly affect financial results the company audit however is silent on climate risk we have asked the auditor Deloitte to explain its inconsistency we asked the audit committee to explain why Deloitte has not disclosed how it considered climate related risks in its review of financial statements when the company itself disclosed this is a significant risk investors representing 68 trillion dollars in assets make up the climate action 100 plus collaborative engagement on climate change Berkshire Hathaway is the only major public company in the U.S the only one to earn now for two years in a row a score of zero on the ca 100 plus Net Zero assessment of climate progress the Undisputed worst performer this stands in stark contrast to Berkshire Hathaway's track record of usually strong long-term financial performance in response to last year's non-insider majority shareholder vote the company has made a start towards climate action muskmore is needed Vice chair Abel is the name CEO successor his annual meeting remarks both in 2020 and last year and his recent letter Shoei has a solid grasp of climate risk we ask Vice chair able to commence climate risk reporting at the parent company level this would give the company an a head start in complying with the sec's new proposed climate disclosure rules that ask for more disclosure than we asked for in item three we ask all shareholders both non-insiders and insiders including the chair to cast their votes for item three in support of parent company climate risk disclosures starting before the 2023 annual meeting thank you thank you um I I do think it's worth discussing just a little bit uh who the actual um the actual constituency is a public pension plans it uh generally speaking we hear from various pencils it's not limited to California at least uh but then you know they're protecting their their the holders of the pensions of the retired people and all of that and therefore they're they're usually suggesting that something that we may or may not agree with in terms of whether it's actually in the economics but but they do and they honestly feel incidentally that they are representing the pension holders people are getting who's going to get these checks every month now they're getting them now they're making them later it's a very understandable position but of course in essence that's not who they represent uh the people that are promised the pensions whether it's in California or any other state in the Union they're going to get their checks it's obvious the United States American people of California are simply not going to stand for the fact that people don't get their checks so one way or another they're going to get their checks and the to the extent possible the states a little attempt to realize from the taxpayers of the state in the future enough money so they can pay the checks I mean that's why states have adopted pension plans and that sort of thing and many of the states upon their taxes to go up I mean the fact no state government public opinion in the United States they're not going to allow people not to get their pension checks and the state does have the right to tax income and property and various things of people within their state and they'll exercise the power or they'll look to the federal government for Grant so they'll do anything but the one thing they aren't going to do is stiff the pensioners so you're probably representing if you're uh on a public pension more years is essentially are are representing the future taxpayers of the state now there's one problem about future taxpayers they can leave the state and it gets awkward in certain States particularly when people start leaving the state because the revenue that goes with those people from income taxes and sales tax and so on so people have a fair amount of freedom of wounds they don't feel the same way about U.S taxes not very many people are going to move from one place to another but they may even be in the United States they move and it's gradual sometimes it isn't so gradual and of course as the tax base goes down the past pensions stay so they become kind of like an aging Steel company or something of those sort that uh whatever it may be uh or the pension patterns may become insolvent but they're going to keep paying the people just like we're paying on you know we've adopted certain policies on on multi-employer pension plans and so on the country the United States is not going to stiff a bunch of people particularly people that vote but they're the moral feeling is to do it so uh the real the people that are that that the trustee should be worried about because they of course is the future taxpayers and if they really mess things up uh those taxpayers become more and more likely to leave and it has a lot of effects interestingly enough you know one of the calculations that might go on in berkshire's mind if we're going to build a plant someplace it's going to sit there for 50 years is whether they're going to be any people around that are going to pay the tax and we can't move our plant so all these invisible decisions go on all the time and uh uh uh it I don't think there's anything wrong with representing me the taxpayers of the future I don't think there's anything wrong with uh sitting on a pension board but I do think they ought to actually figure out who really is uh they really are representing and they're representing future taxpayers and in some cases they're creating some tremendous problems for future taxpayers because like politicians so I mean they you know they've got promises they're going to fill fulfill but they've got to do it from revenue that comes in in the future and they can't print money and people can leave their state so it's it's an interesting set of subtle problems and uh I can't resist mentioning in 1991 you've seen that Solomon tape when Solomon was essentially might or might not have gone down the drain and uh and had a bankruptcy which was in my opinion would have spread like wildfire and uh and uh um who knows what would have happened just like in 2008-9 you know when Lehman fell on a few things I mean who knows what's going to happen after something like that so Solomon was a bigger relatively by far than Lehman was in 2008-9 and on the Sunday in August the treasury Department the Securities Exchange Commission the Federal Reserve all decided on a Sunday the something they did on Sunday morning really was a mistake and that they better change it on a Sunday or the whole economic system might go down the tubes and this book which we have for sale on here the other trillion dollar triage in the first early patient it describes that period I didn't know some of the stuff that's in the book even that was going on but essentially the Federal Reserve Alan Greenspan was brought at one time uh uh Jerry Corgan was there Nick Brady was Secretary of the tragedy they decided with various degrees of conviction but they did decide because they had to decide by roughly 2 30 in the afternoon whether something they did at 10 o'clock which was kind of unprecedented they were going to reverse themselves now can you imagine trying to get institutions and the treasury Department to reverse themselves but they did realize that they had probably done something it was going to cause a huge bankruptcy which could turn into a whirlwind in Wall Street so they reversed themselves and tells the story in this trillion dollar triage and I knew some of what was going on there was other parts I didn't know what was going on anyway all of those institutions reverse themselves very reluctantly big institutions do not like to reverse themselves and they particularly not four hours later when some guy from Walmart [Laughter] we're going to declare bankruptcy in in Tokyo because we're going to have a multi-billion dollar run and we can't pay it and directors who who approve preferential payments when they know the place is going bus to have all kinds of legal liability and the whole thing was falling apart and and and to their credit enormous credit you basically had the fat in the SEC uh mostly it was the fed and the treasury and they they said we just can't have this happen it could produce an uh a national catastrophe and for some weeks we had about a hundred and 130 or 40 billion dollars of funding and 130 or 40 billion dollars was a lot of money in those days we were the one of the three or four largest borrowers in the United States and we borrowed daily and we borrowed against government bonds we had inventory there but we only had four billion of equity and we have 130 billion and there was a guy a wonderful guy John McFarland he was the treasurer he slept down at the downtown uh offices or right near their offices of Solomon for days and days and days and days because a billion dollars a day was draining out there was a run on Solomon and it was a run that the treasury and the Fed the SEC did not want to have happened that reverse themselves and everything and a few days into it uh for whatever reason but Calpers was a big lender to us and they decided they weren't going to do business with with Solomon anymore so they were going to precipitate them they were going to accelerate the run and uh then I was one day that they kind of approved of everything was going on but they just didn't want anything to do with us even though we were giving them government bonds of security and this was accentuating the problems for the Federal Reserve the U.S treasury at SEC and no one knew how it was going to come out uh but they pulled and other people pulled and John McFarland stayed downtown and kept trying to raise a billion dollars every day to pay all people in terms of run that was occurring and did not want this run to get our land but they couldn't give us the money and the treasury didn't want the run to get out of hand but they couldn't give us money and so on and it was it was a terrible problem and uh Calpers like they say they they said well we don't want anything to do with these guys so we won't let government securities even though the loan is good and then uh a little later it was sent they sent word to me uh that if I would come out to California and talk to the people the trustees that the name would be considered so that was that was what they wanted uh as part of their deal not to cause a keep participating in this run and and take a different position and I never would have done this for anything except for the fact that it was it was solid I mean so basically I got on a plane and I flew to California and I met with the Calpers people and I wasn't charging them anything if I've been charging him a lot of money that would have paid attention and they still paid attention they were very nice to me when I went out there and I talked to him and and they were happy and they clapped and they paid and paid pay attention to what I said because I wasn't charging a big fee or anything of sort and I went back to New York and then they started doing business with us and announced that really they had decided Solomon was fit to do business so I have a little bias in terms of when they come around and they they present a percent a proposal and and they say that in their proposal and this is in our proxy statement and we filed this with the SEC we're not going to say it if it isn't true and basically they they make a mistake they and some other people that that they make a mistake and say something about the sharehold we're voting uh it says the 2021 annual meeting this is part of the supporting proposal where a significant majority of non-inside shareholders supported the similar version of this resolution well we say in our response the proponent's assertion that at the 2021 annual meeting is a significant majority of not inside shareholders supported a similar resolution is incorrect and in fact a significant majority of such shareholders did not support the proposal that's either true or false and you know I have the the last report submitted by that same firm and that handles our material and at uh Rod Moore about as a broad bridge and it reports the number of shareholders it's the the last day before the voting or something like that and it's got the the number of of shareholders that that support us and against us and it's it's four to one in our favor and something like that and and it just doesn't make any difference to them I mean it it's fascinating to me that uh [Applause] and You Know It uh I I would I would be willing to wager somebody if we could find an impartial judge and a few goals to any group you want to pick let's take the CEOs of the five leading utility companies in the United States the CEOs of the 10 league and ask them you know whether Berkshire Hathaway energy has been a a leader in in the field of Renewables and so on and it all say yes but but essentially you've got a group of people that that uh write this letters and say we want to be we want you to do things our way and you've got three million other shareholders but forget about them and spend some money on this and and have a meeting with us and here's our way of measuring that and admittedly we've got all kinds of information up about what we've done and they can come out to Iowa and look around and this is the it is the it is the Renewables capital of the world practically and we're the ones that have done it and uh ah they just that isn't what they want so I like you know I'm for shareholder democracy and all that sort of thing but the answer is that the resolution you know they pay lots of money to somebody that probably works in these groups and they've got groups of the you know if they they've got their way of doing I get letters from from institutions in Europe and they say well you know you've got you may have 40 pages or a history of going back to 2006 of explaining what you're doing but here's what we the way we want you to do it and you know and yeah how much energy is Garanimals which we own this it's just it it you have to think you know as a person sitting there and oh my you know it's it's it's it's it's it's not able to these are the rules you get on the proxy statement under certain circumstances most companies they don't want a lot of resolutions so it's just easier for them to you know set up a department and uh you know pay a bunch of people to pay attention to him just like Warren did when he flew across the whole country because he had it wasn't money I just I was worried about a company surviving that that the people in Washington the supervisor were about to survive again and uh and uh if I came if I flew across country and and uh paid them sufficient respect I mean it was kind of like The Godfather or something you know I just bought out and then flew back that uh so I I have a certain reservation about about uh shareholder proposals should have some meaning I mean I I kind of thing I argued for when I was younger but you know basically it's become uh in my opinion uh there's certain items that you can put on the balance certain that you can't and practically every executive of the country now is the chief executive wants to have a virtual meeting the last thing he wants to have a shareholders and people stand up and propose things and we'll just keep talking about it the way we see it is and in the end we will have a report as to the boat and uh this time and and I can hear you we're not we're not stopping The Ballot Box this you know we're not doing anything I mean voter fraud You Know It uh it's not like Chicago in the old days where you waited for the cemetery vote to come in and that sort of thing we we don't count the votes you know we don't say where they come from we don't know where they come from but we can tell when two or three institutions have got huge amounts of shares but they're one one hour and they they vote a certain way and then they feel pure and they don't really what they care about is whether we check their boxes and the people that work for them certain number of people are getting employed by them and and their hearts are pure but ours aren't impure and with that I think we ought to uh well I I won't do this again but I I I it just uh it's it's uh it's a really interesting uh development in terms of getting more rules based type of situation where basically every no company almost every company figures out how to negotiate with the people later and they all have con a good many of the CEOs I mean they don't they just figure it's something that they endure in the business and they set up a department to answer the questions and meet with the people and show the proper respect and so on and and uh it's it's um being done to carry through on something which I think the substance of is is pretty similar if I thought if I thought Berkshire Hathaway energy was behaving in a way that was bad for society worse than other utility companies but no company and the reason of course is that we don't take dividends out so we we pop tens of billions of dollars into the business most most in fact every utility pays out the dividends and it's not to fall the utility management that's just a policy that's been the case in the utility industry but they don't really have much cash left over and we have plenty of cash and we'll put in more cash and we'll we're willing to build you know whatever amount transmission lines and all kinds of things that would be helpful to the country and and uh and we're doing a fair amount of that we could do a whole lot more and we're better positioned to do it really than than any utility company in the country and I think if you talk to other utility exactly I don't advise you to go and put them on the spot or anything but um they would agree but they also know that their life is easier if they just have somebody to take care of people that want to be catered do basically and I cater to them in the time of Sullivan in 1991 because 8 000 people were working there and and John McFarland was trying to raise a billion dollars a day and the treasury in the fed and that's easy he wanted us to stay alive and and in fact uh that caused me to go under you pay my respects to The Godfather and I came back but I do think a little background is kind of interesting on this and with that we'll we'll ask Ms hammock uh [Applause] can you give your report [Applause] my report is ready The Ballad of the proxy holders in response to proxies that were received through last Thursday evening cast 127 214 votes for the motion and 370 415 votes against the motion as the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly casts on the matter the motion has failed the certification required by Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting yeah and I will just add the you know I got a report a day or two ago the last report they sent me from from this for a minute and it's for the wonder if I want to be glad to share it with anybody in terms of number of shareholders that are number of shareholders that based on what these people New Jersey told me the boat was uh we're against it and uh you know and if they would reintroduce The Proposal next year I just hope they leave that line out because it uh I would just uh should guess the the somebody read what the proposal is or what the facts are before they they spent yeah they announced their proposals and all that sort of thing okay well the third proposal requested the company is your report addressing if and if and how it intends to measure into Scrolls and reduce ghd emissions associated with us underwriting ensuring and investing activities the directors are recommended the shareholders vote against the proposal I will now recognize Jalen Spann representative of Whistle Stop Capital present The Proposal afternoon my name is Jalen Spann and I want to first thank you for the opportunity to present proposal number four on behalf of shareholder representative as you saw this proposal asks Berkshire to measure disclose and begin reducing the greenhouse gas emissions supported by its insuring underwriting and investment activities in its most simple terms The Proposal asks Berkshire to take responsibility for its contribution to climate change the U.S commodity Futures Trading commission has acknowledged that climate change can impair the productive capacity of the national economy the Litany of national and Global events associated with climate change the fires in California and Colorado floods across the Midwest the growing strength of hurricanes the Deep Freeze in Texas to name just a few demonstrate the growing risk and costs of climate change 2021 was the second most costly year on record for the world's insurers assured losses totaling 120 billion dollars from natural catastrophes significantly these losses can no longer be categorized as simply a bad year as noted by Munich re economic losses caused by natural catastrophes are trending upward the insurance industry faces year-on-year growth and insured losses related to climate change Berkshire is not only exposed to climate-related risks but it is actively amplifying these risks through its continued investment in and underwriting of high carbon activities Berkshire is one of the largest providers of coverage to the oil and gas industry surpassing peers such as Chubb and Liberty Mutual its shareholdings and coal alone amounts to 5.1 billion dollars once again far surpassing its American peers of financial institutions investment and underwriting activities are by far the greatest source of its total carbon footprint highlighting the need for Berkshire to measure disclose and begin taking responsibility for the emissions it enables the global financial sector is rising to the challenge of meeting the Paris agreements goal to maintain Global temperature rise at 1.5 degrees Celsius The Net Zero Insurance Alliance has grown to 22 members seven of which are in the top 30 largest global insurers by market cap all members have committed to reach net zero emissions from their insurance and reinsurance underwriting portfolios by 2050. AIG and the Hartford have also recently committed to reach net zero emissions from their underwriting and investment portfolios by 2050 or sooner Berkshire is lagging both it's American and its European peers a position that increases climate risk globally and to its own portfolios the insurance industry and Berkshire specifically has a key role to play in the ongoing low-carbon transition and we believe Berkshire has the ability to become a climate leader on this critical issue and the first steps are to quantify the emissions associated with its underwriting and investing activities disclose those emissions and begin developing plans to reduce those emissions in alignment with the Paris goal to ensure Global success in protecting this planet and its inhabitants every business must take responsibility for its own contribution to climate change and we look forward to working with Berkshire to address this vital issue thank you [Applause] the motion is not ready to be acted upon Authority shareholders voting in person Mission now how about a little light up here they should not mark their proposal they're about on the on the motion Ms hammock when you already make every report my report is ready the ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 127 065 votes for the motion and 370 630 votes against the motion as the number of votes against the motion exceeds a majority of the number of the votes of all Class A and Class B shares properly cast on the matter the motion has failed the certification required by the Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting thank you Miss amick proposal fails fourth proposal request the company report to shareholders on the outcome of the diversity equity and inclusion efforts directors are recommended shareholders vote against the proposal I will now recognize Jalen's band representative Whistle Stop to present the proposal hello I'm Jalen Spann I'm speaking on behalf of the non-profit advocacy organization as you sew and Whistle Stop capital I formally move proposal number five asking for Berkshire Hathaway to report on the outcomes of their diversity equity and inclusion efforts by publishing quantitative data on their Workforce composition and recruitment retention and promotion rates of employees by gender race and ethnicity Warren Buffett once mentioned that he had grown up with two sisters who to quote Mr Buffett are absolutely smart as I am and better personalities he also bravely admitted that he only placed women on his board after his wife suggested it in 2003 40 years after he started his company it's one thing to know that people of all genders races and ethnicities can contribute to Berkshire Hathaway it is another thing entirely to intentionally and proactively create the space opportunity and training needed within a company for those people to be able to contribute without facing harassment and discrimination in the absence of data we must instead assume that Berkshire Hathaway companies are no better nor any worse than any company in America the statistics for American companies are unacceptable particularly when we consider the strong link found by The Wall Street Journal McKinsey Credit Suisse and others between diversity equity and inclusion programs and corporate outperformance 42 percent of Americans have witnessed or experienced racism at work 64 percent of black employees say that discrimination is an issue in their own workplace many people of color are barred from entering the workplace at all a meta study reviewing data from 1989 to 2017 found that on average whites received 24 more callbacks than blacks and 36 percent more callbacks than Latinos if we take a look at berkshire's executive team we can see that headquarters should be proud of the gender and racial diversity present in its leadership team the culture that exists at Berkshire Hathaway headquarters appears to be one that recruits hires promotes and retains diverse employees Mr Buffett stresses the importance of culture and the value that it has on the long-term success of a company he said that culture more than rule books determines how an organization behaves investors are looking for assurances that this culture is successfully implemented within the famously decentralized Berkshire Hathaway companies as well in order to allow their investors to understand their workplace diversity 87 of the s p 100 companies have released or have committed to releasing their ee01 form which is a standardized government mandated accounting of gender race and ethnicity breakdown by employment Levels by contrast of the more than 60 companies Berkshire owns only one has publicly released this form one company this is not the leadership that Mr Buffett is known for the company's inclusion data and the hiring retention and promotion rates of diverse employees must also be shared for investors to have a full understanding of the actual experience of not only berkshire's employees but of its portfolio companies employees as well the board has released insufficient information to assure investors that it is attentive to diversity equity and inclusion at Berkshire Hathaway companies we encourage transparency even in the face of imperfection in order to show that the company's leaders are truly committed to change and to attracting retaining and promoting the best possible employees thank you [Applause] I certainly agree with you that that uh my sisters were better looking smarter had better personalities and in 1930 uh they had a father and mother teachers who love them like they love me and if I'd been born female black in various other countries I would not have had remotely the life I've enjoyed but um I if if what the people with the top believe is important in terms of how our subsidiaries behave they certainly there's everybody that runs any one of our subsidiaries knows how I feel they also know that they're in charge of their own business and uh that we think we've got great leaders in every virtually every company we have every now and then we finally made a mistake obviously but uh if the idea that I should replace any of the people who are run run the businesses and they're doing I I I just don't think that's the way to to operate and I will tell you just so that the question doesn't come up later in terms of our shareholders by again a four or five to one vote so the owners of The Berkshire company whether not forgetting about forgetting about A or B shares you know basically the big funds that uh are worried about what their perception is and but also May well believe it who knows what people's motivations are somebody said that the word motivation should never be used in the singular because you really don't know but the one thing is that it's very hard to find people that are running big institutions that uh you know are acting against their self-interest no it doesn't mean they're acting for their self-interest necessarily they're acting for a lot of reasons but uh it it's uh something that I could if you could change that in people it would do a lot more for American Americans in the future but you can't basically can't change that I mean it's a situation about people behave in protecting essentially their own interests and and their own interests uh 40 or 50 years ago was essentially the regard Corporate America is a boys club and and that's not acceptable anymore so they change but they haven't changed as much Pilots of financial margin in relation to to box and uh that's where we are as a society but overwhelmingly uh uh our shareholders don't agree with you even though they had a chance to uh you gave them a chance to express there if you wanted so Ms emmick when you're ready you may give your report my report is ready the ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 123 614 votes for the motion and 373 925 votes against the motion as a number of votes against the motion exceeds a majority of the number of votes of all Class A in class B shares properly cast on the matter the motion has failed the certification required by Delaware law of the precise count of the votes given to the secretary to be placed within minutes of this meeting thank you Miss Hammond proposal fails I move that this meeting be adjourned I second the motion to adjourn motion [Applause]

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Length: 370min 18sec (22218 seconds)

Published: Tue May 03 2022