Deep Dive
Shownotes Transcript
$317,000 against $283,000 the year before. And most of these were limited by capacity. I mean, there were lines there throughout the total day. Brooks did $310,000. It was an all-time record sales day for them. And I think they have close to 3,000 runners lined up for Sunday.
which is a lot of people to get up that i i think we've had 2200 to 2400 before but but 3 000 and uh that doesn't count me and it won't count me and uh i could go up and down the line jazz jazz wars uh uh around 250 000 double the previous years they just sell as fast as they can sell most of most every every place had had uh
And people lined up at the cash register sometimes. They're a lot longer away than which we had, but we'll learn the game eventually. And it goes on and on. Every company set records. And there's no way of knowing how many people we have here today. We have people listening in around the world. But I think we're setting, we'll probably set records in
a great variety of ways. And I would, we're going to have, in a minute, we'll get to the question and answer, but I'd like to first introduce our directors. And I'm Warren Buffett, and I was born and bred right here in Omaha. We have Greg Abel. He was born and bred in Canada. And we have Ajit Jain, who was born and bred in India. So we...
We have a very diverse group in the audience, and I will introduce them alphabetically, and if they'll stand as I introduce them. And I know it'll be an effort, but withhold your applause till the end so that we can get through the list. But we'll start alphabetically with Howard Buffett. How would you stand?
Withhold the applause. It'll go to his head. Susan Buffett. We have Steve Burke, Ken Chennault, Chris Davis, Sue Decker. Sue's our lead director. Charlotte Diamond, Tom Murphy Jr., Ron Olson, and I'll have a few, when we finish, I'll have a few more things to add about him. Wally Weitz and Merrill Whitmer. And with that, you've got our all-star cast.
And, Ron, if you don't mind standing, I would like to point out that, Ron, they finally got through an age director thing at Berkshire. I think we had five that were over 90 here not so long ago, but we put in the highest, Sue tells me anyway, that it's the highest age limit that any of the companies she checked out came up with, but...
Ron has been on the board for 28 years and been associated with Charlie Munger at Munger Tolls for many years beyond that and has been around at a variety of times of crisis and joy and disappointments and surprises and everything else at Berkshire and has been a valuable help to us. So I think I'd like to give a special hand to Ron Olson. Thank you.
And I think I'll do something else that isn't done usually at annual meetings, but I haven't had a chance. I listened to him on Thursday afternoon. It's the only investment quarterly call that I listen to, but I listened to Tim Cook, and I understand. It'll be tough for me to see him from up here, but Tim Cook, there he is.
I'm somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I've ever made Berkshire Hathaway. So credit should be given to him for... I knew Steve Jobs briefly, and Steve, of course, did things that nobody else could have done in developing Apple. But Steve picked out Tim to succeed him, and he really made the right decision. Steve died young, as you know.
And nobody but Steve could have created Apple, but nobody could. But Tim could have developed it like it has. So on behalf of all of Berkshire, thank you. There's a couple other people I'd like to thank. I don't do any work in terms of the show or anything else around Berkshire, but what you see today is the product of a lot of people at Berkshire. They forget Berkshire.
They don't think of themselves as the one who's supposed to screw a light in and leave for somebody else, a specialist to come along and do other things. The people of Berkshire put on this show every year. And our chief financial officer and just everybody pitches in. It's a remarkable organization that way. But it's led this year and the last few years by great.
Melissa Shapiro, and she's made this whole thing work. And then we got an idea a while back. Well, many years ago. Well, I'm thinking all the way back. Maybe 65 years ago, I met Kary Sova's grandfather and his wife. They had nine children. And Susie and I joined a...
And I don't look like the kind of guy that would join a playhouse group, but it turned out to be a great move in many ways. First of all, I enjoyed the plays. But beyond that, I met not only Terry's grandfather, who ran an insurance company in Omaha, Bill Kaiser, but I also met the Pumpkin Boys' parents, Louie,
in France. So in one sort of accident, when I was in my 20s, came up with all kinds of good things. And in connection with Carrie, her father ran a company called Central States. And later on, we bought that company. And then her father ran the company. Her sister went to work for Berkshire some years ago. And then
She decided to have a family and subsequently had four kids, so she left. But Carrie moved right in and Carrie had amazing talent behind, just like a good many people do. They have talents you don't realize until you give them some responsibility. And so 10 or 11 years ago, I asked Carrie to do a 50th anniversary book about Berkshire.
and just use her imagination. And she never, she didn't need to check with me or do anything. She just, she never edited a book. She never published a book. She'd never dealt with the printers before, but she just went out and promptly put together this 50th anniversary book. And then this year, well, then Carrie, of course, got married and had three kids. So she had to leave us, but we have a, we go to a baseball game once a year and
we invite some of our distinguished alumni like carrie to join us and uh carrie even though she was raising three children and you may have met one or two of them uh in the last day or so she volunteered to bring bring together a 60th anniversary book and uh which i i asked for and again she took the whole thing she just did it she kept doing the things with her kids and every now and then she'd
I'd ask her how it was going and she'd tell me how it was going. And so she put together the 60th anniversary book and got it done by maybe a week before the meeting because I gave her the assignment very late. And yesterday we sold, I think it was 4,000 plus, 4,500 maybe, 4,400. We printed 8,000. We intended to print 5,000, but...
So we sold 4,400 books yesterday, and we'll have 30, I guess roughly 3,600 left out there today. And it's kind of a whimsical but accurate. And she came out with just the book I hoped she would come out with. And then as we went through this publishing experience, Carrie wouldn't take a dime about
I did get her to name her favorite charity and the Statement Center, which takes care of homeless people and does a great many other things. It's located about five or six miles from where we are here south. It's been doing a wonderful job. Her grandfather helped form it. Her husband's now joined the board, and we're selling 20 copies of it.
This is a commercial place, isn't it? We are selling 20 copies that we sold 10 prior to the meeting. That's all we let them sell. And we raised a few hundred thousand dollars doing that. I think we sold one for $100,000. But we limited that to 10. And the only difference in these and the $25 version is that
Carrie and I signed them. But we saved six for yesterday, and the six brought $148,000, which is a pretty good average per book of about $20,000. And then I had them save four more. So this afternoon when we disbanded at 1 o'clock, the area right behind us that has all the goods in it, the bookstore,
uh they will sell the final four and when we get all through I'll match whatever we've raised for the the 20 and uh and we'll give the uh Stevens Center a a boost both in financially but also in awareness so anyway that and when you look at that book Gary really did the whole thing I mean there's a lot of information in there and she dug through it and
And she came through a couple of times maybe to check a fact or two, but she got material from the Munger family. She just did a wonderful job, and I couldn't get her to take a penny for it. So I'm going to ask her to do a lot of other things in the future. Okay. With that, I think we've covered all the business, so we will move to...
Becky has questions that she's received from, I don't know how many she's received, but from all over the country and perhaps outside the country. And she's picked out a group of them, which she has not shared with me. And we will alternate questions between Becky and the audience, which we have by zones. And with that, I will turn things over to Becky for the first question.
Thanks, Warren. This first question comes from Bill Mitchell. I received more questions about this than any other question. He writes, "Warren, in a 2003 Fortune article, you argued for imports of certificates to limit trade deficits and said these import certificates basically amounted to a tariff. But recently, you called tariffs an act of economic war.
Has your view on trade barriers changed, or do you see import certificates as somehow distinct from tariffs? Yeah, well, the import certificates were distinct, but their goal was to balance imports against exports, and so that the trade deficit would not grow in an enormous way. In fact, it had various other provisions in it to help trade.
Third world countries at that time, as they were called, perhaps catch up a little bit. They had a variety of aspects to them, but basically they were designed to balance trade. And I think you can make some very good arguments for the fact that balance trade is good for the world. And the more balanced trade there is, the better. It will continue to be better for cocoa to be raised in Ghana and coffee in France.
call me on a few things. And over time, the American industry has gone from being an agricultural country. This was nothing but an ag country. I mean, virtually. And that was only 250 years ago. And we have become a very industrial country. And we did not want to make that a situation, in my view, where we ran...
greater and greater deficits, building up greater and greater debts against the country. So I designed this import certificate thing, which Charlie thought was a little too much like Rube Goldberg. I don't know whether that name is, but it's gimmicky. But it's certainly a lot better than anything I think that we're talking about now. And there's no question that trade can be an act of war.
And I think it's led to bad things. Just the attitudes it's brought out. In the United States, I mean, we should be looking to trade with the rest of the world, and we should do what we do best, and they should do what they do best. I don't think it... That's what we did originally. I mean, we were good at producing tobacco and cotton 250 years ago, and we traded it. And we want...
prosperous world with eight countries with nuclear weapons including a few that are what I would call quite unstable I do not think it's a great idea to try and design a world where a few countries say ha ha we've won and other countries are envious so so my my import certificate idea which went no place
I think we've got extra copies, Rob. We have not a great demand for the copies. If anybody did, and if you'd like and write the office, I think we could, we could probably send you a copy of it. But the main thing to do is not use, trade should not be a weapon. And the United States, the United States, we've won. I mean, we have become an incredibly important country starting from nothing.
250 years ago there's nothing been anything like it it's a big mistake in my view when you have seven and a half billion people that uh don't like you very well and you have 300 million that are crowing in some way about how well they've done and uh i don't think it's right and i don't think it's wise i do think that the more
The more prosperous the rest of the world becomes, it won't be at our expense, the more prosperous we'll become and the safer we'll feel and your children will feel someday. But don't expect my import certificate idea to go down there with Adam Smith's Wealth of Nations or anything. Okay, let's go to area one.
Mr. Buffett, Mr. Abel and Mr. Jin, good morning. I'm S.T. Cheung. I'm from Hong Kong. Mr. Buffett and Mr. Munger did a very good and successful investment in Japan in the past five or six years. The recent CPI in Japan is currently above 3%.
not far away from its 2% target. Bank of Japan seems very determined in raising rates, while Fed, ECB and other central banks are considering to cut them. Do you think BOJ Bank of Japan makes sense to proceed the rate hike?
Will its planned rate hike deter you from further investing Japanese stock market or even considering to realize your current profits? Thank you very much for arranging this greatest event every year. Finally, I wish you healthy always and keep holding this shareholder meeting.
Well, I'm going to extend the same goodwill to Japan that you've just extended to me. A lot of the people in Japan determine their best course of action in terms of economics. It's an incredible story. And it's been about six years now, as you pointed out. It was just going through a little handbook that probably had 2,000 or 3,000 Japanese companies in it.
One problem I have is that I can't read that handbook anymore. The print's too small. And here were these five trading companies. They have a special name for them in Japan. But they were selling at ridiculously low prices. And so I spent about a year acquiring them. And then we got to know the people better. And everything that Greg and I saw, we liked better as we went along. So we got fairly close to the...
10% limit that we told the company we would never exceed without their permission. And so we did ask them recently whether limit could be relaxed, and it's in the process of being relaxed somewhat. I would say that I'll speak for Greg beyond me that in the next 50 years, and I hope he's running things then, we won't give a thought to it.
selling those. I mean, Japan's record has been extraordinary, actually, in terms of that. My guess is that Tim would tell you, Tim Cook would tell you that iPhone sales there are about as great as any country outside the United States. American Express would tell you that they sell their product very, very well in Japan. Coca-Cola, that we do business with another company
big investment of ours they do extraordinarily well in japan they have a number of habits in uh in a civilization that operates differently than ours japan is by far the biggest they this is the container they've always preferred uh their soft drinks and and they have uh have a whole different sort of distribution system there but we have been treated extremely well by the five companies they
They talk with Greg primarily. I went over there a year or two ago. Greg's more cosmopolitan than I am, which isn't saying much, actually. Very little. But he is...
How many times do you think you've met with representatives of one company or the other? Yeah, when you think of the five, there's definitely a couple meetings a year, Warren. And I think the thing we're building with the five companies is, one, it's been a very good investment. But we are really, as Warren touched on, we envision holding the investment for years.
50 years or forever. But I think we also are building relationships to do incremental things with each of those companies. And we really do hope to do big things with them globally. They bring different perspectives and different opportunities. And we see, and that's the, that's why we're building that long-term relationship with them. It's super long-term. And they have a much, they have different customs. They have different,
approaches to business. That's true around the world. And we don't have any intention in any way of trying to change what they've done because they do it very successfully. And our main activity is just to cheer and clap. And I can still do it, 94. So we will own those. You know, we...
We will not be selling any stock. I mean, that will not happen in decades if then. And my guess is that they will find things because they cover the world pretty much, the five trading companies. We will find things occasionally that may be very large for any individual company there.
They may in some way be assisted by some help we bring to the situation, but that will be an expanding relationship. It's too bad that Berkshire has gotten as big as it is because we love that position and I'd like it to be a lot larger than it is. But even with the five companies being, they're very large companies and they're large companies in Japan. And we've got at market that position.
you know in the range of 20 billion dollars invested but i'd rather i'd rather have 100 billion than 20 billion and that's the way i feel about it several other investments we have but size is an enemy of performance for sure and uh i don't know any good way to solve that problem but but uh
Charlie always told me that having a few problems was good for me. I never quite understood that, but if you listen to him moralize, you would understand. And it's not an impossible problem at all. And the Japan investment has just been right up our alley. Do you want to add anything on that, Kurt? No, I think you've touched it, but...
As you said, it's right up our alley, and I absolutely agree, Warren. I do believe we'll see some very large opportunities long term. And that's just been a great plus of that relationship. Yeah, I would say they would like to present us with opportunities. We would like to receive them. We've got the money. We both get along very well with each other. And they have some different customs and traditions.
then we have uh they drink the number one coca-cola product they drink over there something called georgia coffee uh so uh i'm i haven't converted them to cherry coke and they're not going to convert me to georgia coffee but it's uh it's a perfect relationship i just wish we had could get more like it uh and i never dreamt of that when i picked up that little wasn't so little was about that thick but
Sometimes two companies to a page and a couple thousand pages, I believe. But it's amazing what you can find when you just turn the page. We showed a movie last year that about turn every page. And I would say that turning every page is one important ingredient to bring to the investment field. Very few people do.
turn every page and the ones that turn every page aren't going to tell you what they're finding. So you got to do a little of it yourself. Okay, Becky. This next question comes from Advait Prasad in New York.
He writes, today, Berkshire holds over $300 billion in cash and short-term investments, representing about 27% of total assets, a historically high figure compared to the 13% average over the last 25 years. This has also led Berkshire to effectively own nearly 5% of the entire U.S. Treasury market.
Beyond the need for liquidity to meet insurance obligations, is the decision to raise cash primarily a de-risking strategy in response to high market valuations?
Or is it also a deliberate effort to position Berkshire's balance sheet for a smoother leadership transition, providing Greg Abel with maximum flexibility and a clean slate for future capital allocation decisions? And I will add one line from another shareholder, Mike Conway, who asks, are you encouraged you may see some fat pitches coming your way? Well, I wouldn't do anything nearly so noble as to
withhold, investing myself just so that Greg could look good later on. Now, if he gets any edge when I leave, I'll resent it. So the amount of cash we have is, we would spend, well, we wouldn't.
We came pretty close to spending $10 billion not that long ago, for example. We'd spend $100 billion. I mean, those decisions are not tough to make. When something is offered that makes sense to us and that we understand and offers good value and where we don't worry about losing. And the one problem with the investment business is that...
things don't come along in an orderly fashion and they never will. I mean, it is like every day, you know, the launch record is sensational, but that is not a product. And I've been, let's see, I've had 200 trading days times 80 years. I've had 16 million trading days. I mean, 16,000 trading days. It would be nice if every day
You've got four opportunities or something like that. And they were expected to be equally attractive. If I was running a numbers racket, every day would have the same expectancy of that I would keep 40% of whatever the handle was. And so the only question would be is how much we transacted. But we're not running that kind of a business. And so we're running a business which is very, very, very opportunistic. And
Charlie always thought I did too many things. He thought if we did about five things in our lifetime, we'd end up doing better than if we did 50 and that we never concentrated enough. So that we would rather have, if we've got $335 billion now in Treasuries, we would rather have conditions that have developed where we would have like
50 billion or something like that. But that just isn't the way the business works. And we have made a lot of money by not wanting to be fully invested at all times. And we don't think it's improper, actually, for people who are passive investors just to make a few simple investments and sit for their life. But we've made the decision to be in the business. So we think we can do a little better than that.
by behaving in a very irregular manner. But if you told me that I had to invest, well, let's say that we have roughly $40 billion a year coming in, and we start with $335 billion. If you told me I had to invest $50 billion every year until we got down to $50 billion, that would be the dumbest thing in the world, to invest in that manner. Things get extraordinarily attractive very occasionally.
the long-term trend is up nobody knows and uh i certainly don't know greg doesn't know ajit doesn't know nobody knows what the market is going to do tomorrow next week next month and nobody knows what business is going to do tomorrow next week or next month but they spend all their time talking about it because it's it's easy to talk about and uh but it has no value i've never found anybody i wanted to listen to on the subject and uh
On the other hand, I've found that leafing through things like that big Japanese book that I can't read anymore, that's a treasure hunt. And every now and then you find something. And occasionally, very occasionally, but it'll happen again. I don't know when. It could be next week. It could be five years off, but it won't be 50 years off. We will be bombarded again.
with offerings that we'll be glad we have the cash for. And it'd be a lot more fun if it would happen tomorrow, but it's very unlikely to happen tomorrow. Very, very unlikely to happen tomorrow. But it's not unlikely to happen in five years. And then the probabilities get higher as you go along. It's kind of like death. I mean, if you're 10 years old, the chances that you're going to die the next day are low. You get to be 101.
15 or something like that's almost a cinch Particularly if you're a male, I mean all the records are held by females in terms of age and I tried to get Charlie to have a sex change so he could test out He did pretty well for being a male I'll put it that way Okay station station two
Good morning, Warren, Greg, and Ajit. My name is Jackie Han. I'm from China and now work in Toronto, Canada. This is my eighth Berkshire Hathaway meeting at this point. I've probably spent more time with you than most people spend on Netflix. As you might guess, coming from a Chinese family, we always had a soft spot for real estate.
So your question isn't why don't you own a house, it's why are you still buying stocks instead of more property. So here is my question: with today's high interest rates and global uncertainty, do you still believe in being greedy when others are fearful or the value investing facing new challenges in today's environment? Thank you. Yeah, well in respect to real estate, it's so much harder than stocks in terms of
uh negotiation of deals time spent the involvement of multiple parties in the ownership usually when when real estate gets in trouble so you find out you're dealing with more than equity holder but there have been times when uh large amounts of real estate have changed hands at bargain prices but usually stocks were cheaper but there were a lot easier to do so uh charlie did more
He's certainly enjoyed real estate transactions, and he actually did a fair number of them in the last five years of his life. He was playing a game that was an interesting game to him, but I think if you'd asked him to make a choice when he was 21, he had to either be in stocks exclusively the rest of his life, or the rest of his life he would have chosen stocks in the second.
There's just so much more opportunity, at least in the United States, there's so much more opportunity that presents itself in the security market than it does in real estate. And in real estate, you're usually dealing with a single owner or a family that owns
Maybe a large property they've had a long time, maybe they've borrowed too much money against it, maybe the population trends are against them, but to them it's an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars worth of business totally anonymous, and you can do it in five minutes, and the trades are complete when they're complete. In real estate, when you make a deal, a big deal with a distressed lender,
When you sign the deal, then you go into another phase. Then people start negotiating more things and more things. It's a whole different game. And a different type of person, to some extent, enjoys the game. We did a few real estate deals that came our way in 2008 and 2009. But the amount of time that they would take us...
compared to doing something intelligent and probably better and securities. There was just no comparison. I mean, in a real estate deal, every sentence is as important as a person. And in stocks, if somebody needs to sell 20,000 shares of Berkshire or something and they call us and the price is right, it's done in five seconds. And it closes all the time. People who you certainly wouldn't want to have marry your daughter
or that they behave well actually in stocks. Partly that's because they're probably having their wires or phones or whatever it is recorded as to what they've said and everything. But the completion rate for working on anything in stocks is assuming you've got a meeting of the minds on prices,
essentially 100 in real estate it just begins when you agree on deals and that they take forever so that's pretty guy 94 it's it's not it's not the most interesting thing to get involved in something where the where the negotiations could take years uh and uh we we have the capability there have been some huge failures in in in fact
If you go all the way back to Zeckendorf in the 1960s, he was going to change the world, and Century City out in California is a product of his. And if you go to Uris, if you go to... He was sitting on top of the world with the Uris buildings. So people tend to get in trouble in that business.
The banks usually don't want to recognize it, but that takes a long time to go through the bank processes. They just got through redoing the Musk loan that he made when he was buying it three years ago, the company that's now X. And, you know, three years to work out a transaction that, or you've got parties on both sides that aren't ready to act. We find it much better when people are just ready to
Pick up the phone and you can do hundreds of millions of dollars worth of business in a day. I've been spoiled, but I like being spoiled, so we'll keep it that way. Okay, Becky. This question comes from Sam England in San Francisco, and it's for Warren and Ajit.
As AI systems become more capable and harder to interpret, how do you see that affecting the insurance industry's ability to assess price and transfer risk? Are there parallels to past disruptions Berkshire has navigated in underwriting or capital allocation? Okay, back in.
and he's got about 100 points of iq on me and he's just going to be here this morning so i'm going to let him answer the question first well uh there is no question in my mind that ai is going to be a real game changer and it's going to change the way we assess risk we price risk we sell the risk and then the way we end up paying claims having said that i certainly also feel that
people end up spending enormous amount of money trying to chase the next new fashionable thing. We are not very good in terms of being the fastest or the first mover. Our approach is more to wait and see until the opportunity crystallizes and we have a better point of view in terms of risk of failure, upside, downside.
So right now, the individual insurance operations do dabble in AI and try and figure out what is the best way to exploit it. But we have not yet made a conscious big-time effort in terms of pouring a lot of money into this opportunity. And my guess is we will be in a state of readiness. And should that opportunity pop up, we'll be in a state where we'll jump in promptly. Yeah, I was just saying I wouldn't trade.
I wouldn't trade everything that's developed in AI in the next 10 years for a Jeep. So if you gave me a choice, that gave me a choice of $100 billion available to participate in an insurance property, casualty insurance business for the next 10 years, and a choice of getting the top AI product out of whoever's
Lovers developing it or having a Jeep making the decision. I would take the Jeep any time And I'm not kidding about that Okay station free. Oh, I'm Sean Siegel from Chicago, Illinois Thank you for investing your time to you and the executive committee for putting on this meeting and for bringing together a diverse group of people and attendance under one roof
Out of all the companies that Berkshire Hathaway owns, there was one that you acquired, the Chicago-based company Portillo's Hot Dogs. How did you know that this would be a good fit for the overall company's portfolio? Well, I'll have to ask Greg about that because I don't know anything about it. So maybe he bought it when I was looking the other way. But...
I think I got to call a friend on this one. Yeah, we own a lot of companies, but I do like to think I know most of them. But it may be a subsidiary of a subsidiary in some way, but I really don't know a thing about it. I'm sorry. That may be a good thing.
I do know something about hot dogs, though. And we do have a lot of companies in Chicago, Warren, through Marmon. And that's been a great opportunity where we've accumulated a variety of excellent companies under that portfolio. But as you noted, I don't believe Portillo's falls under that. No, I look at the financial statements of about perhaps...
50 or 60 of our companies uh every every month but in the case of marman for example marman itself owns over a hundred companies and uh yeah it was it uh it was the creature of it was created by jay pritzker and uh and his brother bob and it was a remarkable company when we bought it but it was highly diversified already and then we've diversified it further so it is
It is something of a Berkshire within Berkshire. And we found that that's working very good as an arrangement. It was interesting. Jay Pritzker was a remarkable manager. And there's various branches of the Pritzker family. So it really goes back to A.N. Pritzker before Jay and so on. But in 1954...
They changed the federal tax code very dramatically in the United States. It was quite a blow to me because I've been at Columbia and I'd been reading a J.K. Lassert book about the tax code and then they went and changed the whole damn thing. So it did. But 54 was a big year, a big change. Those years come every now and then, like 1986. And you may see a big one one of these days. And there was a company called Rockwood Tax.
in Brooklyn, and they made Rockwood Chocolate Bits, which we used to sell at the Buffett Grocery Store, and people made chocolate chip cookies out of them and everything. And then it turned out that Coco, which lately has had a big run, too. Coco was five cents a pound in 1941 when LIFO was first allowed for insurance for tax purposes. And the Rockwood Chocolate Company went into business
on the LIFO message. So they owned like 30 million pounds or thereabouts of Cocoa. And then Cocoa took a run in 1955, and I had just moved to New York. And there was a provision in the new tax code that if you were in two or more companies and you didn't
did certain things and you've been in them for five years and you got out of one of them that there would be no capital gains tax on LIFO inventory gains. And the tax rates were around 48%, maybe 52%. And so there was this huge profit because the cocoa had gone up in price, but that made it terrible for them in selling Rockwood Chocolate Bits because the price of retail of the chocolate bits did not match
What was going on at wholesale? Something almost identical has been happening in the chocolate business. Recently, Hershey Chocolate just came out and said they're going to have a bad quarter and we're paying $4.50 a pound for chocolate from cocoa because things are going on in West Africa that make cocoa prices go up dramatically. In any event, Jay Pritzker bought control of Rockwood
the chocolate company. And like I say, I was 24 or 5 years old and they called a meeting to split off one of the chocolate businesses in a way that would enable them to recognize the gain on these cocoa beans without paying roughly 50% federal taxes on the gain. So I went to the meeting, which was in Brooklyn, and nobody was there. This is in the turn-every-page category.
Except one guy. And I was 24 and he was 29. And it was Jay Pritzker. And nobody had showed up at the meeting. And it was kind of a crummy building they had. But they had a lot of cocoa there. And Jay just gave me a lecture or a lesson, really, I should say, on the tax code. And I could have gone to graduate school for years and never learned as much as he did. And then later, we actually bought the company.
That Rockwood Company, after he did some other things, became the basis for Marmon. And Marmon, among other things, developed the car that won the first Indianapolis Speedway race. And it invented the rearview mirror, which I'm not sure is a great advantage in economics or anything, but the guy that used to help on the Indianapolis Speedway
they had two people in the car. One guy was to look back and see what the other people were doing, and the other guy was to drive the car. And our guy got sick, and so they invented a rearview mirror. So if you want to look at the kind of
what's going on in the laboratories of Berkshire Hathaway. We've got people working on things like the rear view mirror. - Hey Warren? - Yep. - I'm happy a friend did call. So that still works.
Peter Eastwood, who runs one of our Berkshire subsidiaries and does a great job of running it, tracked down that Portello's is owned by a private equity firm called Berkshire Partners. So that was the basis of the question, but it's not associated with Berkshire. So we got to the bottom of that one. Thank you, Peter. Thank you.
That's just a sample of the way we operate around furniture. Okay. Becky. All right. This question comes from Jessica Poon, who says, you've long been a strong believer in the American tailwind and the resilience of the United States, and history has proven you correct.
Today, the U.S. appears to be undergoing significant and potentially revolutionary changes. Some investors are now questioning the concept of American exceptionalism. In your view, are investors being overly pessimistic about the U.S. economy, or is the country indeed entering a period of fundamental change that requires a reassessment from a new perspective? Well, I would say that Jessica, who I believe is in some instances
She is the step-granddaughter of one of our managers that I mentioned in the annual report. It may not be the same one. But in any event, America's been in significant and revolutionary change really ever since it was developed. I mentioned that we started out as an agricultural society. We started out as a society with high promises, and we didn't deliver on them very well. We said all men were created equal, and
Then we wrote a constitution that said blacks get three, counted as three-fifths and in article two you'll find male pronouns used 20 times and no female pronouns used. So, you know, it took until 2000, I mean, 2000 and, or 1920, I should say, until the 19th Amendment was passed.
Saying, oh yeah, we promised the women this back in 1776 and now we'll do something about it. And then we didn't do something about it for a long time. So we're always in the process of change. We'll always find all kinds of things to criticize in the country. But the luckiest day in my life is the day I was born. I was born in the United States and at the time about...
3% of all the births in the world were taking place in the United States. I'd like to say that I had something to do, you know, listen, sent messages out to my parents, for God's sakes, moved to the United States before I'm born or anything. But I was just lucky. And I was lucky to be born male. I was lucky to be born white. I was like all kinds of things.
But it's been, if you don't think the United States has changed since I was born in 1930, it's been, we've gone through all kinds of things. And we've gone through great recessions, we've gone through world wars, we've gone through the development of an atomic bomb that we never dreamt of, you know, at the time I was born. So I would not get discouraged about the fact that it never doesn't look like we've solved every problem that's come along. And if I were being born today,
I would just keep negotiating in the womb until they said, you can be in the United States. We're all pretty lucky. We've got two non-United States guys here just to get the other side. Who now live in the U.S. Okay, station four.
Hi, Mr. Buffett. My name is Daniel and I'm from Tenafly, New Jersey. First of all, I just want to say how grateful I am for getting the opportunity to ask you a question. When it comes to your principles of investing, you often talk about how important it is to be patient. Has there ever been a situation in your investing career where breaking that principle and acting fast has benefited you? Thank you. Well, that's a good question. And I
There are times when you have to act fast. In fact, we made a great deal of money because we're willing to act faster than anybody around. Jessica Toombs, I think she's the stepdaughter of, or step-granddaughter of Ben Rosner, a manager of ours. And in 1966, I got a call from a fellow named Bill Steiner in New York, and he said, I represent Mrs. Annenberg.
And there were actually nine Annenberg sisters, I believe, before Walter Annenberg came along as the son. But he said, we have a business we'd like to sell you. So I called Charlie up, and I got a few details. And it sounded very interesting. And Charlie and I went back to the office of Will Falstiner in New York. He was a marvelous guy. Never met him since, but he was handling things for Mrs. Falstiner.
Well, Ace Diamond, but her name was Hannaberg, and her husband had been the partner of Ben Rosner, but he had died, and Ben got kind of tense about working with her, and so he offered us this business at a bargain price. He offered us a business for $6 million. It had $2 million of cash. It had a $2 million piece of property and a 900 block of property,
what's the key street in Philadelphia down there? Market Street. And it was making $2 million a year pre-tax, and the price was $6 million. And Charlie and I went back to this place, and Ben Rosner was there, and he really just was upset about doing business with his partner's widow. She was extremely wealthy, and he just wasn't enjoying it. He was very nervous about selling it, and he
he said to me and charlie he said uh he said i'll run this business for you until december 31st and then i'm out of here and i got charlie we went out in the hallway and i said if this guy quits at the end of the year you can throw away every book on psychology and so that began a wonderful we bought the company had a great relationship did i know that morning when i got a phone call from will fall steiner there'd be this background about it
i've had a couple of times and that was one of them people in the east felt that they had a a stereotype in their mind of what people from the midwest were like and ben had been married his first marriage was to a woman from iowa and he just figured that anybody from the midwest was okay and uh
The trick when you do it, when you get in a business with somebody, or you get in a room with somebody like that, and they want to sell you something for $6 million that's got $2 million of cash and a couple million of real estate and maybe $2 million a year, you don't want to be patient then. You want to be patient and waiting to get the occasional call. My phone will ring sometime with something, but
you know wakes me up i may be sleeping in there or something but it you just never know when it'll happen and that's what makes it what makes it fun i mean it uh so patience it's a combination of of of patience and a willingness to do something that afternoon if it comes to you you don't want to be you don't want to be patient about about acting on deals that make sense
And you don't want to be very patient with people that are talking to you about things that will never happen. So it's not a constant asset. It's not a constant liability to be patient. Greg, you. Well, Warren, I was going to add, as you're being patient, I happen to know, and I think that goes for Ajit also and all our managers here,
Very patient when we're looking at opportunities and as you touched on, we want to act quickly. But while we're being patient, never underestimate the amount of reading and work that's being done to be prepared to act quickly.
Because we do know, be it equities, but I would include a variety of private companies that when the opportunity presents itself, we're ready to act. And that's a large part of being patient, is using it to be prepared. Yeah. And of course, it doesn't come in anything like an even flow. I mean, the most uneven sort of activity you could get into. And...
The main thing you have to do is you have to be willing to hang up after five seconds and you have to be willing to say yes after five seconds. Absolutely. And you can't be filled with self-doubt in the business. You just forget it and it doesn't work. Going to some other activity, you also, I mean, one of the great pleasures, it is the great pleasure actually in this business, is having people trust you.
That's really why work at 90 when you've got more money than anybody could count. You know, if they started today and having machines that are helping them and everything else. It means nothing in terms of how you're going to live or how your children are going to live or anything else. But both Charlie and I, we just enjoyed the fact that people
trusted us and they trusted us 60 years ago or 70 years ago and in partnerships we had and We never sought out professional investors to join our Partnerships among all my partners. I never had a single institution. I never I never wanted an institution I wanted people and I didn't want people that were sitting around having people present to him every three months and
and tell them what they wanted to hear and all that sort of thing. And that's what we got, and that's why we've got this group here today. It's all worked out. But you don't want to be patient when things are going your way, when the time comes to act. You want to get it done that day. Okay. Becky? This question is from Flavio Montenegro, a shareholder from Guatemala.
A couple of years ago in this meeting, Mr. Jain outlined the significant challenges GEICO faced in modernizing and integrating its IT systems. It was also mentioned that competitors were ahead in their pricing strategies because of the use of telematics.
Today, GEICO's turnaround is evident through strong pricing and operational improvements. Could you provide more details on the specific actions taken under Todd's leadership and how those changes will help sustain a long-term competitive advantage in the coming years? Yeah. Todd has done a great job for us in terms of turning around the operations. When he took over, there were two major changes.
that GEICO was behind its competitors on. Firstly, the term Warren used and we all have been using is matching rate to risk. And secondly, telematics. We were at the bottom of the list in so far as telematics have concerned about five, six years ago. Since then, we have made
rapid strides and telematics which used to be a source of competitive disadvantage to us is no longer so and I would argue that our telematics at GEICO is about as good as anyone else's today. So that's been one huge catch-up. Secondly in terms of matching rate to risk there again I think we have caught up with our competitors and we're as good as anyone else in the field.
All this together with the cost reduction effort that GEICO and Todd gets a lot of credit for, he has basically reduced the workforce by 20,000, starting with something close to 50-odd thousand. He's brought it down to 20,000, and that translates to, I guess, at least $2 billion per year. So all this has allowed GEICO to become a much better
focused competitor, so much so in the last seven quarters, GEICO has shown a combined ratio that has an eight in front of it. And I never thought I'd live to see the day when anyone could have a combined ratio at so low as it is right now. So I think GEICO has done a great job. Its 80 combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business.
So, you know, we've achieved a lot, Todd has achieved a lot, but I do not want to be so arrogant as to say that mission accomplished. We've achieved a lot, but I still think we need to do a lot more in technology. AI, as we talked about, is going to be a big force, and we need to play catch up there. Not catch up, but we ought to be in a state of readiness. So I think Geico is in great shape right now.
warren you want to add anything no i it's it's it's a fascinating case study but and that's what's so interesting about the whole game of business but particularly about our businesses is that that each one is a little different but they're all they all have challenges of certain sorts and but also many certain numbers have opportunities we we paid 50 million dollars for half of geico in 1970s
six, which turned out to be half of GEICO, 50 million. 50, no, 100%, but 50% of $2 billion that we earned in the first quarter is $1 billion, which on a $50 million investment is, you know, 20 for one and a quarter. So it takes years to develop. But the interesting thing is the auto insurance policy, which didn't even exist before,
100 years ago. I mean, it didn't, it just, well, I should say 120 years ago. But it's by far the largest item in the property casualty insurance business. It's huge. The only thing I'd like to add is in addition to the underwriting profit, GEICO provides $29 billion of float. Oh, yeah, in addition, yeah.
And that's not unimportant when you paid $50 million to get the businesses to giving you $29 billion to work with for nothing. And on top of that gives you a billion dollars of profit in a quarter. The interesting thing about auto insurance is that we are the company was started in 1936. We're selling the same product as 1936. We're being more sophisticated about pricing it than we were then. Somebody just made the judgment
a fellow that came from USAA, made the judgment that government employees, the name GEICO stands for Government Employees Insurance Company, that government employees were better drivers than average. And I don't think he was an actuary or anything else, but he just made an observation. And so he left USAA, which is still a very successful company, and he started GEICO for a few hundred thousand dollars.
And he made money the first year for underwriting. He made money the second year. This is not a public offering type thing. He was only accounting for 10 years and all that sort of thing. Just prices to make money. And that's exactly what's been done since 1936. The policy really, your auto insurance policy looks a lot like the one that you had then. And this huge field has sprung up
around us and it's still growing. And of course nobody likes to buy insurance but they sure like to drive. And GEICO is a fascinating story and about three times over the years the company has gotten sidetracked one way or another and then it gets back to its basics and it's a wonderful, wonderful business.
And we showed at this annual meeting one time a message from Lorimer Davidson. And Lorimer Davidson, in January of 1950, was the only person in the building that I'd gone down on a Saturday to visit, but it turned out they didn't work on Saturdays in Washington. And I pounded on the door until finally a janitor brought me in.
And I said to the janitor, "Is there anybody else I can talk to here except you?" He didn't take it personally and he said, "Well, there's one guy up on the sixth floor and a fellow named Larry Ormer Davidson did wonderful things for me." You get a few breaks in life in terms of people you will meet who just change your life dramatically.
You need a handful of those and when you get them, you treasure them. And we've had them on this board of Berkshire. If you take Tom Murphy and Sandy Gottesman and Walter Scott and Bill Scott, one thing we've done is we've held on to human assets. We've made lifelong assets out of people that are the right sort.
with incredible talent, but also just lots of fun to work with and always doing more than their share. And to get a chance to talk to a little Ormberg Davidson on a Saturday afternoon, you just listen carefully. And that comes in the category of turn every page. Some of them you want to turn pretty fast, but you just get lucky in life. And you want to take advantage of your luck. Okay.
station five my name is benjamin graham sanderson from pasadena california warren thank you for all you've taught us over the years earlier you said nobody but steve jobs could have created apple but nobody but tim cook could have developed it like he has warren nobody but you could have created berkshire and i presume you view greg as an outlier among outliers but he seems so normal
Sorry, Greg. That's a nice way of saying it's not normal, actually, but I appreciate it. So I was hoping you could share what specifically about Greg makes him your preferred successor. And Greg, we're excited to get to know you more over the next few decades. Thank you. Thank you. Thank you. Well, you've hit on the most important question in terms of the business. We've got a wonderful group of businesses. We've got a...
we've got an ability to do things that nobody else can do which is hard to get it in the capitalistic system that's been developed as fully as as as the united states has been i mean imagine being able to create something that in a very very very big playing field you know you really be very very hard to develop anything like that i don't think you can develop the people around us let alone the capital position and you know and the history and everything else
And the answer, of course, is that it does take a long, long time. And it takes getting around you a small cadre of people, which then spreads out somewhat. But you've got mutual trust where people do more than their share. And I've been around a lot of businesses over the years. And
By nature, I'm somewhat critical of everything. I mean, I'm looking for what's wrong in things because that's part of investing is looking, you know, what aren't you, what are you missing? But we have, you know, we've got people that if they're asked to put on a show like this instead of doing whatever their regular job is, they participated. I went around the groups.
of people who were exhibiting yesterday for an hour and a half and these are people who are thanking me you know and totally enthused about coming and doing a lot of work for which they don't get paid anything extra and i don't know anything about the arrangements the individual companies make but they they work hard and they enjoy their work and you know you really want to work as something you enjoy i've always had i've had five bosses in life and i liked every one of them and
They were all interesting. I still decided that I'd rather work for myself than anybody else. But if you find people that are wonderful to work with, that's the place to go. And I've told my kids that basically, that you don't get lucky like I did when I found it. Seven or eight years of age, what really interested me could have taken a lot longer. But you want to find the song. If it's find the sound, it's
There's a movie called The Glenn Miller Story, and Glenn Miller went on from having a broken-down band for 15 years to turning out the first. He found the sound and created the first gold record. I don't know whether any of you know what it was, but it was the Chattanooga Choo Choo in 1941, I think it was. And he turned around from being a nothing with the band that he had until he found the sound.
And I always have told my kids ever since that their sound isn't my sound. And you don't find it necessarily on the first job you take because you've got to eat. But if you get lucky like I did, you find it when you're very young. And then just keep doing it. And don't worry too much about starting salaries. Don't worry about...
about uh and be very careful who you work for because you will take on the habits of the people around you so there's certain certain jobs you shouldn't take but that's the greatest country in the world and you've got the greatest time in the world so i would say that that uh well i while i'm handing this over to greg that uh you know you can't even dream all the dreams that you could have about a place like berkshire but
The big thing you have to do, though, as always, is to be sure you can play the next day. I mean, in terms of financial activities on a meaningful scale, you don't want to go... There was a book about... What was the name of that book? You only have to get rich once. I mean, you don't want to do anything that risks what's been created. So you don't...
If very stupid things are happening around you, you do know how to participate. If people are making more money because they're borrowing money or they're participating in securities that are really pieces of junk, but they hope to find a bigger sucker later on, you just have to forget that. That'll bite you at some point. And the basic game is so good that
And you've been so lucky to be born now. I mean, if I'd been born in 1700, I'd say, I want to go back in the womb. What the hell is this? It's too hard. But now I've come along to do something where I can just play around all day with things I enjoy doing. And it's really, it's a pretty wonderful life. Greg, you want to?
Add or subtract from that? Nothing to subtract, but I would always just say it couldn't be more, as I've said in the past, more humble than honored, obviously, to be in this role. But to have actually been part of Berkshire for, Warren, it's now 25-plus years, had the opportunity to be part of Berkshire and to work with you and Ajit and our board, but many other people in our company. And as you touched on...
When you find something like that, and you find something like Berkshire that's so special, you fall in love with it, and it becomes just what you want to do every day, and it's just an incredible opportunity. So thank you. And to the gentleman who asked the question, if you don't find it immediately, you know, don't starve to death or anything in the meantime. But...
you will find it and you'll find it in the right individual. In a sense, it's almost like finding the right person in marriage. I mean, probably the first, some of you may have married the person you met on your first date, although I guess they don't even have dates anymore. But, you know, sometimes it pays to wait, too. Okay, Becky.
This is a question from Mark Bonkey and Helen Friedrickson in Rapid City, South Dakota. As the U.S. dollar quickly loses value in relation to other foreign currencies in 2025, is Berkshire Hathaway taking steps to minimize this currency risk and its impact on quarterly and annual earnings? If so, please explain. And I'll just add from Mary Cheng, another shareholder,
Berkshire currently borrows in Japanese yen to offset its currency risk and its Japanese stock investments. In the future, will you invest in foreign currency denominated assets unhedged? Yeah, we always have, pretty much. The Japanese situation is different because we do intend to stay so long with that position, and the funding situation is so cheap that we essentially...
i've attempted to some degree to to match purchases against yen denominated of funding but that's not a policy of ours in fact that's the first time we we've we've done that and and we've owned lots of securities of uh of of in in foreign currency so we do nothing in in uh in terms of the question about its impact on quarterly and annual earnings we don't do anything
based on its impact on quarterly and annual earnings. I mean, there's never been a board meeting, I can remember, where I had a conversation with Charlie when I said, where I say, if we do this, our annual earnings will be this, you know, and therefore we ought to, whether it's accounting or anything, we just, you know, the number will turn out to be what it'll be, what counts as where we are five or 10 or 20 years from now. And if you start
focusing on what number you're going to produce, you will quickly get tempted, at least based on the experience I've seen from viewing 20 companies, you will get so you'll, one way or another, play around with the numbers and sometimes seriously play around with the numbers. And I've seen people that, you know, I trust them in all kinds of other ways, but they regard playing around with numbers as perfectly okay. And that's just not something...
We just don't think about that. Actually, the relationship of the end, behavior of the end in the last quarter resulted in certain gap charges. But it doesn't make any difference. It will change next month or next year. And obviously, we wouldn't want to be
owning anything that we thought was in a currency that was really going to hell. And that's the big thing we worry about with the United States currency. I mean, the tendency of a government to want to debase its currency over time, there's no system that beats that. You can pick dictators, you can pick representatives, you can do anything. But the people, there will be a push toward that.
weaker currencies and of course that is i mentioned very briefly in the annual report that the fiscal policy is what scares me in the united states because it's it's made the way it is and uh and uh all the motivations are doing a lot of things will cause could cause trouble
with money. But that's not limited to the United States. It's all over the world. And some places it gets out of control regularly. They devalue at rates that are breathtaking. And that's continued. I mean, people can study economics and you can have all kinds of arrangements. But in the end, if you've got people that control the currency, you can...
You can issue paper money, and you will, or you can engage in clipping currencies like they used to centuries ago. There will always be people, it's the nature of their job. I'm not saying they come out as particularly evil or anything like that. The natural course of government is to make the currency worth less over time and more.
And that's got important consequences. And it's very hard to build checks and balances into the system to keep that from happening. And we've had a lot of fun here in the last, either in the first hundred days or the last hundred days, whatever you want to call it, watching what happens when people try to make sure that they aren't running fiscal risks and
That game isn't over and never will be over, you know, in finality. If you look up in search the great inflations of post-World War II, it's just a list that goes on forever and the same names keep popping up and everything. So currency is, the value of currency is a scary thing. And we don't have any great system yet.
for beating that we do in this particular Japanese position because we expect all of it for 50 or 100 years or more and we will be owning something that's denominated in the end easily predictable and we'll just as long as the the carry-on it is right and everything we'll we'll uh we'll attempt to issue Japanese denominated liabilities but that that's not
because of anything we carry about in terms of quarterly or annual earnings. Greg, do you have anything to say? I was just going to say that relative to the question, that there's no question we were fundamentally very comfortable with investing in the five Japanese companies and recognizing we're investing in yen. The fact we could then borrow in yen was almost just like a nice incremental opportunity.
But we are very comfortable both with the Japanese companies and with the currency we would ultimately realize, i.e. in the yen. Yeah, we only made, as I referred to earlier, one big currency play, which was connected a little bit with when I wrote that article for Fortune. And we got long 12 other currencies, as I remember, only four or five of them were really big currencies. But when I say we got long, that means we're short the dollar. And...
So we held that position for a couple of years and we made several billion dollars on it, which was significant to us then. Still is. Charlie always felt that if he had to pick an area outside of stocks in which to invest, and he knew a lot about bonds, he knew a lot about real estate, he knew a lot about a lot of things, but he said he thought he could make a lot of money out of it.
being in foreign currency. But we've done it once. It's not inconceivable we would do it again, but it's unlikely. But there could be things happen in the United States that would make us want to own a lot of other currencies. And I suppose if we made some very large investment, European country or some, there might be a situation where we would do a lot of financing in Europe.
in their currency, but it was something that just was sort of obvious to do in the Japanese situation where we had the ability to borrow yen at very, very low carrying costs. And we felt very good about the income we'd be receiving from these securities. And if the present condition, which it won't, I mean, it never does, but prevailed for decades
decades and decades. We would probably keep doing the same sort of thing, but things change in the world too. So don't take that as a prediction. Okay. Section six. Uh,
Good morning, Warren and Greg, Ajit. Thank you so much for hosting this event. Good to be here. My name is Dashboyun Dilger and I'm from the great country of Mongolia. A little bit background about my country entry.
Mongolia is an emerging market and landlocked country sandwiched between Russia and China. But we are rich in history and minerals and have full democracy and growing economy. Last week, we hosted our second annual Mongolia Investor Conference in New York to attract investors like yourself.
I know you may not give advice informally to government leaders such as South Korea, China and India. What advice would you give to government business leaders of emerging markets like Mongolia to attract institutional investors like yourself?
It would be great if you have long-term plans for exposure to emerging markets as a hedge or an opportunistic investment. Lastly, I welcome all of you to Mongolia and my country folks would be very happy if you can make it to our economic forum this July. Thank you.
I have trouble planning a trip to Council Bluffs, which is just a few miles from here. Thanks to Optimist. Actually, I met a fellow here at the annual meeting probably 20 years ago or more who did a lot in Mongolia. And he did very well in Mongolia and actually moved there for quite a while. I would say that if you're looking for advice to give to people,
government over there it's a developer reputation for having a solid currency over time i mean that we we don't really want to go into any country where we think that there's a chance i mean a significant probability of runaway inflation it's just it's too hard to figure people the other people figured out ways to make money in in hyperinflationary situations but
That's not our game, and I don't think I'd play it well. So we wouldn't be... That would be a factor with us. The chances are we won't find anything in Mongolia that fits our size requirements aside from that. But like I say, I think my friend that I met here 20 years ago has done very well in Mongolia. And if the country develops a reputation for being...
business-friendly and currency conscious. I think that that bodes very well for the residents of that country, particularly if it has some other natural assets that it can build around. I don't know that much about the minerals there or anything of the sort, but I mean, who would have been on the United States in 1790? But we
We didn't have to have perfection. We just had to be better than the other guy for quite a while. And we started out with nothing, and we ended up with close to 25% of the world's GDP and faster growth rates and generally sounder currencies and all kinds of things. So I wish you well. Okay. Becky? Thank you.
This question is from Peter Shen in New Jersey. It's for Mr. Buffett and Mr. Jane. In recent years, large private equity firms like Blackstone, Apollo, and KKR have aggressively expanded into insurance, raising permanent capital, managing float, and aiming to replicate the model that Berkshire pioneered decades ago.
Given that these firms are now directly competing for insurance assets, often using higher leverage and more aggressive investment strategies, how do you view their impact on Berkshire's insurance operations and underwriting discipline? Do you believe that the private equity model poses risks to policyholders in the broader financial system? And has this competition made it more challenging for Berkshire to find and price insurance opportunities safely and profitably today?
Part of the question is very easy. There's no question the private equity firms have come into this space and we are no longer competitive in this space. We used to do a fair amount in this space, but in the last three, four years, I don't think we've done a single deal. Now, you have to separate this whole segment in two separate segments. One is the property casualty end of the business and the life end of the business.
The private equity firms that you mentioned are all very active in the life end of the business, not the property casualty end of the business. You are right in identifying the risks in these private equity firms are taking on both in terms of leverage and in terms of credit risk. And while the economy is doing great and credit spreads are low,
The private equity firms who have taken the assets from very conservative investments, and I wouldn't say high octane, but they've certainly invested these assets in situations where they get a lot more return on the investment. And as I said, as long as the economy is good and credit spreads are low, they will make money, they'll make a lot of money because of leverage.
However, there is always the danger that at some point the regulators might get cranky and say, you know, you're taking too much risk on behalf of your policyholders. And that could end in tears. We do not like the risk report that these situations offer. And therefore, we put up the white flag and said, you know, we can't compete in this segment right now. Yeah, I think there are people who want to copy
Berkshire's model. But usually they don't want to copy it by also copying the model of the CEO having all of his money in the company forever. And I mean, they've got a different equation. They're interested in, you know, and that's capitalism. But they have a whole different situation and they probably have a somewhat different fiduciary feeling about what they're doing. And
and sometimes it works and sometimes it doesn't work and if it doesn't work they go on to other things and if i what we do here at berkshire doesn't work i spend the end of my life regretting what i've created so it's uh it's just a whole different personal equation and uh there is no property casually company that can basically replicate berkshire that wasn't the case at the start i mean at the start
We just had national indemnity a few miles from here, and anybody could have duplicated what we had, but that was before a G. And the G came with us in 1986, and at that point, the other fellows should have given up. Station 7, please. Hi. My name is Marie. I'm from Melrose, Massachusetts. Thank you for the time today.
As a young person interested in investing like myself, I would love to hear your insights, Mr. Buffett. What were some pivotal lessons you learned early in your career and what advice do you have for young investors who are looking to develop their investment philosophy? Thank you. Well, those are good questions. I wish I'd thought of them myself earlier in my life. The, you know, who you associate with
It's just enormously important. And don't expect that you'll make every decision right on that. I mean, but you are going to go into, you're going to have your life progress in the general direction of the people that you work with, that you admire, that become your friends. I mentioned a few fellows that have died in the last couple of years. Well, all of those people were people that...
you know, if we were working together on something, one 10,000th the size of Berkshire, I mean, they'd be the kind of people you choose. You just, there, there are people that make you want to be better than you are. And you want to hang out with people that are better than you are and that you feel are better than you are because you're going to go in the direction of the people that you, you associate with. And, and that's, that's something you learn. And of course you've learned it late in life. And, and, uh,
It's hard to really appreciate how important some of those factors are until you get much older. But when you've got people around you like Tom Murphy and, well, just name them, Sandy Gottesman and Walter Scott, you're just going to live a better life than you do if you just go out and look at somebody that's making a lot of money and decide you're going to try and copy them or something of the sort.
So I would try to be associated with smart people, too, where I could learn a lot from them. And I would try to look for something that I would do if I didn't need the money. I mean, what you're really looking for in life is something where you've got a job that you'd hold if you didn't need the money. And I've had that, and Charlie had it for a very, very long time. In fact, all the fellows I named had it. And they also...
Every one of those ones I named, they always did more than their share. And they never sought more than their share of the credit. They just behaved as the way you'd like anybody you work with. And when you find them, you treasure them. And when you don't find them, you still keep doing whatever causes you to eat or enables you to eat. But you don't give up on looking around. And you will find people who do wonderful things for you.
I mentioned earlier, you know, going down to GEICO and knocking on the door when the door was locked. I mean, who knows what was behind that door when I went in, but, you know, in 10 minutes I found that I had a man that was going to be just wonderfully helpful to me. And of course, if somebody's going to be helpful to you, you want to try to figure out ways to be helpful to them. So you get a compounding of good intentions and good behavior.
And unfortunately, you can get the reverse of that in life too. And, you know, with a lot of... I was lucky in having a good environment for living that kind of a life. And other people, you know, have a whole different environmental situation and have to overcome it. Don't feel guilty about your good luck if you've got... You know, if you've got... Well, if you live in the United States, you know, you...
There are 8 billion people in the world and there's 330 million in the United States. You've already won the game to a great degree and then just keep making the most of it. But you don't want to associate with people or enterprises that ask you to do something or tell you to do something that you shouldn't be doing.
That's one of the problems. Different professions select for different types of people. And it's interesting to me that in the investment business, so many people get out of it after they've made a pile of money. You really want something that you'll stick around for, whether you need the money. Craig doesn't need the money. Ajit doesn't need the money remotely.
But they enjoy what they do, and they're so damn good at it. It's, you know, it's just, well, I've had the advantage of seeing how that works over time. The best manager I ever knew, and there's a lot of contention for who that would be, but actually it was Tom Murphy Sr. that lived almost 98. I've never seen anybody that could get the potential out of other people more than me.
than Murph could. I mean, if you wanted to become a better person, you went to work for Tom Murphy. And there are all kinds of successful people that really don't have that sort of, don't bring that to the party. And I'm not saying that's the only way to succeed, but I think it's the most pleasant way to succeed for sure. And I think that the Berkshire experience is pretty direct.
I mean, to operate with Sandy Gottesman from 1963 until he died a couple years ago, Walter Scott for 30 years, and Creighton operated with him for 25 years or so, whatever it was. Yeah, 30. Yeah, and you really can't miss it.
You know, you'll learn all the time, but you'll not only learn how to be successful at business, you'll learn how to be successful at life. And so that's my recommendation. And for some reason, apparently it'll live longer too because it's pretty amazing. I mean...
These people I'm talking about, including myself, I mean, I like to attribute it to this and a few other things, but I think a happy person lives longer than somebody that's doing some things that they don't really admire that much in life. Okay, let's move on to, I guess it's Becky next.
The first quarter ended March 31st, and it did show that Berkshire's cash pile expanded from the end of the last year. But the greatest market turmoil came in April. Martin Devine, a shareholder from Scotland who is attending the meeting today, wants to know, has the recent market volatility presented Berkshire with opportunities? And Martin just wrote in an addendum in the last 40 minutes or so.
pointing out that you mentioned Berkshire almost invested $10 billion recently and wanting to know if you could talk more about that. Well, I can give you a good answer to the second part, which is no. But $10 billion wouldn't have done that much. That's the other side of it. What has happened in the last 30, 45 days, 100 days, whatever you want to pick up, whatever this...
This period has been, it's really nothing. There's been three times since we acquired Berkshire that Berkshire has gone down 50% in a fairly short period of time, three different times. Nothing was fundamentally wrong with the company at any time, but this is not a huge move. The Dow Jones average hit 381 in September of 1929. It got down to 42.
So that's by going from 100 to 11. This has not been a dramatic bear market or anything of the sort. I mean, it's, you know, like I pointed out, if I've had 250 trading days a day, you know, for however many years I've been old enough to trade stocks, I've got 17 or 18,000 days. There's been plenty of periods that...
just dramatically different than this. I mean, the day I was born, the Dow Jones was at 240. And my first, that was August 30th, 1930. And between that and the law, it went from 240 to 41. I mean, that's, so, people think that it,
made a really major change it it didn't if it if it going up 15 instead of down 15 people like they take that with remarkable grace but uh but uh if it makes a difference to you whether your stocks are down 15 or not you need to get a somewhat different investment philosophy because
The world is not going to adapt to you. You're going to have to adapt to the world. And you will see a period in the next, certainly in the next 20 years, you'll see a period that will be in, somebody in the market described one time as a hair curler compared to anything you've seen before. I mean, it just happens periodically. The world makes big, big, big mistakes and surprises sometimes.
happen in dramatic ways and the more sophisticated the system gets, the more the surprises can be out of right field. That's just part of the stock market and that's what makes it a good place to focus your efforts if you've got the proper temperament for it and a terrible place to get involved if you get frightened by markets that decline and get excited when stock markets go up.
I don't mean to sound particularly critical. I mean, I know people have emotions, but you've got to check them at the door when you invest. Okay. Station 8, please. Good morning, Mr. Murphy, Mr. Gregg, and Mr. Ajay. My name is Peter Chen. I'm from Shanghai, China. This is my first time attending this shareholders meeting. I would like to ask a question about the wisdom of life.
Have you ever encountered any major setbacks or low points in your life? And how did you get through and overcome them? Thank you very much. Well, everybody gets setbacks. And some people have particularly bad luck in that respect, and others get through with fairly minor. But Charlie, you know, but...
He had setbacks. I had setbacks. I mean, it's part of life, and they're not any fun. I don't have any great advice for you about having the time of your life while you're having some major setback, but it comes with lifetime. Yeah.
you certainly have a setback when you die. So everybody's got that setback guaranteed to them. And some people get, and I mean, it isn't a laughing matter in a sense, because, I mean, people get extraordinary bad luck, and other people get extraordinary good luck. Usually the people who get good luck don't really think it was so much luck as themselves, but...
You're just going to have it. I think you're going to, I think that you're less likely to have it in terms of medical problems, in terms of various things in life. I mean, you were born at a good time. I mean, if you look all the way through the history of China, when would you rather have been born? You know, 100 years ago, 500 years ago, 1,000 years ago, or now? You know, it's just hands down, you'd be lucky. I mean...
If I came from 20 generations of shepherds, I think I'd get kind of tired of my life just looking at these sheep every day. But we can sit here and I can watch Nebraska not quite play the same game of football that we played 20 years ago. But, I mean, everything in life has been made so much better that you've got to figure that you...
do a lucky store straw by you know staying in the womb for a couple hundred thousand years and then just emerging it at the right time uh so i would always i would focus on the things that have been good in your life rather than than than the bad things that happen because bad things do happen but but uh it it it's uh
it can often be a wonderful life you can get terrible breaks in it i mean you know it uh so far that really hasn't happened with me but it's happened with some of my friends but you get some bad breaks from time to time for 94 years i've been able to drink whatever i want to drink and you know they predict all kinds of terrible things for me but it hasn't happened yet so
And it's true. I mean, if you look at what pro football players are making now and everything compared to what they were making 30 or 40 years ago, you can say, well, isn't that wonderful? But if you look at the lifespan of professional athletes, after a while you get used to it. You really decide that you're better off if you really weren't the first one chosen to be on the baseball team or the basketball team or anything else. The
human body, and I think I speak for the others to some extent, that we never really exercised that much or did anything. We were carefully preserving ourselves for half a year. So look at the bright side of things to the extent that you can. And you're lucky enough, you're here today, you're healthy, you're
come from a long distance and and uh and you're getting a chance to learn more about something that interests you and compare that with the situation a couple hundred years ago that you would have been offered so anyway that's enough moralizing okay becky
This question comes from Himanshu Bindal for Ajit and Warren. Autonomous vehicles are already driving across roads in American cities with no driver involvement. How do Warren and Ajit think about any disruption risk from these autonomous vehicles to GEICO's auto insurance business, which is built around understanding and underwriting human drivers?
Wouldn't what we call auto insurance today just become product liability for autonomous vehicles and autonomous software companies? Well, Ajit. Yeah, there's no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality. The big change that we will see is what you identified. Most of the insurance that is sold and bought
It revolves around operator errors and how often they happen, how severe they are, and therefore what premium we ought to charge. To the extent these new self-driving cars are more safe and are involved in fewer accidents, that insurance will be less required. Instead, it will be substituted by, as you mentioned, product liability.
We at GEICO and elsewhere are certainly trying to get ready for that switch where we move from providing insurance for operator errors and be more ready to provide protection for product errors and errors and omissions in the construction of these automobiles. Yeah, we expect change in all our businesses. And the good thing we did, Charlie pushed me into it, but...
If I'd settled for being in New England Textiles, even though it worked well for 70 years or so prior there too, the world changes. And if the game didn't change at all, it really wouldn't be very interesting. If every time you swung at a baseball, you hit a home run, the game wouldn't be interesting. If every time you hit a golf ball,
a golf ball yeah it wouldn't be interesting so in the fact that there will be things you have to think about all the time as you go along and you'll make mistakes and all that and that's really part of the fun i mean that your your brain would turn to mush if you didn't have a few problems now then so i i uh auto insurance will change although it's remarkable how little it has changed
but it's only been around since, you know, for a relatively small time. And who knows what we're doing to move in transportation 100 years from now. If you go back a couple hundred years ago, who could have predicted the United States would look like what it does and people would move like they do and people would enjoy themselves like they do. I mean, it's just, it's a dynamic world. And the biggest thing we have to worry about, unfortunately, is that the
We've learned how to destroy the world, too, in recent years. And so we've got this wonderful world, which now we know that there are eight countries and probably a ninth coming on that can destroy. And we don't have what I would consider necessarily the perfect people leading each one of the nine or some of the nine countries. And when Einstein came up with the equals MC squared back in 1910,
1905. He didn't dream of the fact, I mean, that energy could really be converted, or mass could be converted into energy in a way that would change the world. When I was born in 1930, they had no one about the law of physics that Einstein had come up with. 25 years earlier, nobody, to my knowledge, had thought, what can this do to change warfare in the future?
And literally, it just wasn't thought. Einstein didn't think about it at that point. And then in 1939, Roosevelt got a letter around a month before Germany moved into Poland. It got around August 1st. It's the most famous letter in history from Leo Szilard.
Leo's Alarm couldn't get his letter in front of Roosevelt because whoever heard of Leo's Alarm but he got Einstein to sign it and Roosevelt probably understood about as much about physics as I do so he didn't understand it but he understood that Einstein signed it so he calls in General Grover may not have been general then and said we should do something about this and all we did was learn how to destroy the world and we needed to do it and
Germany had Heisenberg, and he looked like he was ahead of us. And we can't put that genie back in the waddle. And the world does change. And we've got all these wonderful things, but we also have a guy in North Korea. If we criticize his haircut, who knows what he might decide to do with it. What does North Korea need? Need...
nuclear weapons for. I mean, can that be a good thing in the world? But they're not going to go away. So it's a world of change. And we are enjoying incredible change that's contributed to everybody in this room living so much better than people were living a couple hundred years ago. But we haven't been able to avoid. We haven't changed human beings very much so far. We've certainly changed
weapons of mass destruction and and uh but we haven't made much progress with the human race and and uh we'll see what happens with that but in the meantime we'll see changes in auto insurance too and cars and uh and uh that that will be more and it'd be easier for us to deal with it than it was when we had to deal with the problems of of turning out textiles in new england and uh
You deal with the world as it develops. And like I say, everybody here is living in the luckiest period, but enjoy your luck. And you still try to figure out the answers to what's going to happen. In all insurances, we go along and we've done pretty well actually adapting to the answers. There's a few big problems in insurance. And
don't know how the insurance industry adapts to them particularly but but that makes the game interesting you really don't want to go out and play golf if you don't hit the ball no I just like to add we talked about the shift to product liability into protection for accidents that take place because of a error in terms of how the product was designed or supplied the only thing I want to add is in addition to this that shift
I think what we'll see is a major shift and the number of accidents that take place and need to be provided for will drop dramatically because of automatic driving. But on the other hand, the cost per repair, every time there's an accident, the cost of repairing and bringing everything back to where it used to be would go up very significantly because of the amount of technology that's going into the car.
How those two variables interact with each other in terms of the total cost of providing the insurance, I think is still an open issue. I'll give you two interesting figures to ponder. When I walked into Geico's offices in 1950, the average price of a policy was around 40 bucks a year. It varies all over the lot depending on location and everything, but, you know,
It's pretty easy to get up to $2,000, depending on how urban your areas are and everything can get considerably higher. During that same time, the number of people killed in auto accidents have fallen from roughly six per 100 million miles driven, just a little over one. So the cars become incredibly safer, and it costs 50 times as much now, or thereabouts,
to buy insurance policies so when people talk about the developments in car driving and all that sort of thing it's a lot easier sometimes i mean the buck rogers aspect of it people look at but they don't actually think of what really happens to the math of the business the insurance auto insurance industry has been a huge growth industry and for that matter homeowners insurance prices in nebraska have doubled
in the last 10 years adjusted for general inflation and convective storms you know have just gone on a terror and it's still unprofitable to write homeowner's insurance in Nebraska after doubling the price in the last 10 years so it's very hard to predict
what these big changes mean and you just got to keep thinking all the time but you don't want to read some research report that says the world's coming to an end or the world's going to be wonderful because of this or that because there's about 50 other developments going on at the same time that you uh that you need to think about but uh and that you need to keep observing as you go along you don't re you never reach an answer in this business you reach a point of action that you take but but
But we try to get into as high probability things as we think we can do and play the game in the same way. But it will be different than you think. And you should wake up every morning and think about that, too, if you're in the business of managing businesses. Hey, Warren, as we approach the break, would you like to address the operating earnings? Oh, yeah. Yeah, let's put up the... We released our 10Q this morning.
And we always try to do it on a Saturday so nobody gets a jump on other people. And we just have three simple charges. You'll see that our insurance underwriting income was down dramatically for the first quarter. And last year was as good a year as you'll see in insurance. It's always unpredictable in insurance, but everything broke our way or the insurance industry's way last year. Prices are down this year.
risks are up this year so you don't have to be a genius to figure out what the answer is on that so but we have we do have unusual advantages in the insurance business that can't really be replicated by our competition that doesn't mean they aren't trying to get advantages we don't have but we'll try to replicate anything that seems better in fact we'll try and chop it but we
I wouldn't talk about our insurance business as much as I do unless I really thought we had some really permanent advantages in a very, very large industry. We just announced within the last 24 hours that we in Zurich and Chubb have arranged a joint operation to be the writer of really large sums.
that very few people can do and of course we've got to write about the right price in terms of liability but but we can do that sort of thing without blinking and anybody that wants to do it wants to get us in it i mean that uh so anyway our investment income did not change that much because we have a float that grows a little bit which gives us more money for investment and then we have retained earnings which grow so we would expect
in any year to have like 40 billion or more that will build up investments unless we find things to do with it. So the investment income rates on treasuries are less than they were, or short-term bills, I should say, are less than they were before. So you had that negative effect pulling it down, but not that much. And we had more money. So we came up with a little more in the way of earnings. The railroad is earning a little more than
than last year, but it's not earning what it should be earning at the present time. But that's solvable and is getting solved. And it's still an incredible asset for Berkshire. The energy company last year was having particular problems. Those are absent this year, so those earnings are up.
our range of general businesses, they were pretty much a push. And I think you did a little calculation the other day on how many were up and how many were down. Of our 49 that we measure closely, 21 were up and 28 were down. So you can tell it was really a mixed quarter when you go across the non-insurance operating businesses. Yeah.
The next slide, I'm getting a five-minute warning here. We'll throw the long ball now. It shows our financial condition, which continues to hold a lot more in cash and treasury bills than I would like, but that's simply a question of when opportunities occur. And if you get real opportunities every five or six years, you have to be patient. Charlie always says,
pointed out that we made most of our money out of about eight or nine ideas over 50 years. And we talked about it every day and we read every report and we did everything else. But if you think you can get an idea a day from listening to your friend or doing a lot of reading of the financial information published or forget it, because every now and then you get extraordinary opportunities. And most of the time,
you don't have much of an edge. So we also have on that thing, our float which continues to build. I don't think any company, there's no company that has, property casualty company that has our float as their achievement. - Yeah, clearly we are heads and shoulders above anyone else. - Yeah, so that is money that as long as we're riding it and underwriting profit,
is absolutely free money. And we would expect that over a 50-year, 100-year period that we would be able to say the same thing. But there will be years when you have very bad underwriting record. And it'll lead into the full earnings. But so far in the last 20 years, I think,
We've only had one underwriting loss of any. Yeah, I think if you look at the entire range, including life insurance, our cost of float is 2.2 negative. That means we've got the float plus somebody has given us 2.2% of that cash. Yeah, it's like running a bank where people leave their money with you and you pay a minus 2.2%.
and you don't have any check clearing or anything else to do. But we run our business actually with a different mindset than any other PC company, I think, probably in the world. And I wouldn't be talking about it if I thought they could duplicate it. And then the final page is on share repurchases. And clearly we haven't made any. We have not made share repurchases so far this year.
and share repurchases. If Berkshire buys Berkshire shares and repurchases, we now pay more than you will pay if you buy Berkshire shares. I don't think people generally know that, but there is a tax that was introduced a year or so ago where we pay 1%, and that only hurts us because we pay more for it than you do. It's a better deal for you than for us. But
It actually hurt some of our investing companies quite substantially. Tim Cook has done a wonderful job, I mean, really wonderful job running Apple. He spent $100 billion roughly in a year repurchasing shares and there's a 1% charge attached now. So that's a billion dollars a year that he pays when he buys Apple stock in which we like compared to what you pay.
That doesn't sound like much, but, well, a billion dollars sounds like a lot still. But there are people that want to increase that particular rate dramatically, and you won't read about it or anything like that, but it does make it slightly less attractive than it was before, and we will only buy in our shares if we think that they are almost certainly underpriced.
as valued very conservatively and we get that opportunity occasionally but the higher that charge goes that the federal government charges us for doing it the less we will be able to do our repurchases. Did I misled you? You can write me a note and I promise to report how many readers didn't agree with Criconda becoming Catherine Graham and you'll see a story of a remarkable story of American history.
And there are a good many portions in there that I, who lived through that period, didn't know about at the time. And I don't think really every American citizen ought to watch it. So with that, I hope you all spend some more money out there in our friendly shops. And we will go to Station 9.
Hi Warren, my name is Robert and I'm a shareholder from Toronto, Canada. So Warren, three years ago Charlie Rose asked you a question to the effect of what you wanted to be remembered for and your reply was "he was a teacher".
So in that spirit, Greg, I'm curious to hear maybe a story of where you learned something very profound from Warren. I'm sure you've learned many things, but if there is a story that kind of comes up in your mind, we'd love to hear it. And vice versa, if we have the time, Warren, what's something that you maybe learned from Greg? Thank you.
Yeah, I will turn this over to Greg in just one second, but now the main thing I'd like to be known for is old age. Well, Ward is obviously a remarkable teacher, and I benefit from that every day, and as I've already touched on for many years, I'm fortunate that if I had to be remembered as something right now, obviously I'd want to be
remembered as a great father but equally a coach and i and that goes to family friends and just being involved with uh the kids i coach in hockey or baseball or whatever it may be i think we've got a a great opportunity to give back to them at a very young age so obviously those would be um how i'd want to be remembered and hopefully that'll be uh
Many, many years from now. But I love thinking of Warren truly as a teacher and he's in every day get the opportunity to continue to learn. Warren and I, his dialogue is strong every week and we're always talking around opportunities in Berkshire or things that are going on globally or in the U.S. and each one's truly a learning moment.
I'll maybe go back to the very first meeting with Warren and because it still stands out in my mind obviously it was an incredible opportunity Warren was buying or acquiring MidAmerican Energy Holdings Company at that time or thinking about it and I had the opportunity with my partners to go over there on a Saturday morning and we're discussing
the business and Warren had the financial statements in front of him. And like anybody, I was sort of expecting a few questions on how the business was performing or a variety of things, but Warren locked in immediately to what was on the balance sheet and the fact we had some derivative contracts, the weapons of mass destruction. And
associated with the utility business, we do have them because they use them to match certain positions and they're never matched perfectly, but you do have them and were required in the regulated business. But I just remember Warren going to it immediately and asking the composition of it and what was the underlying risk in it and wanting to thoroughly understand. And it wasn't that big of a position, but it was absolutely one of the risks he was concerned about.
about as he was acquiring MidAmerican. And obviously in light of Enron and everything that had gone on, it was a very pertinent question. And then the follow-up to that was then there's an energy crisis in the U.S.,
around electricity and natural gas, and a variety of folks were making significant sums of money. This is a year, 18 months later. And Warren's follow-up question a couple years later to me was, and I knew it was more just checking or testing,
So how much money are we making during this energy crisis? Are we making a lot? Are the speculative positions in place and are we making it? And the answer was, we're really not making any more today than we would have been six months ago. Because all those derivatives were truly to support our business and weren't speculative. So just that focus on understanding the business of what he was acquiring, understanding the risks involved,
around it still stand out in my mind. Warren? Yeah, that's one thing we've really never talked about here, but I spend more time looking at balance sheets than I do income statements. And Wall Street really doesn't pay much attention to balance sheets, but I like to look at balance sheets over an eight or 10 year period before I even look at the income account. Because there are certain things that's harder to hide
or play games with on the balance sheet than you can with the income statement. And I mean, neither one gives you the total answer on anything, but you still ought to understand what the figures are saying and what they don't say and what they can't say and what the management would like them to say that the auditors wouldn't like them to say. I mean, there's just a lot to be learned. And you do learn more. You learn more from balance sheets.
in my view, than most people give them credit for. In terms of, I really haven't, I'm not worried about being remembered about. People don't remember, well, they don't remember enough about Catherine Graham, for example, in terms of this story that shaped America in many ways. Certainly, it had just all kinds of impact. And I think, I mean, history is so fascinating to me.
And Charlie was probably the best person you could imagine in what he learned. Charlie was never satisfied with just superficial things about any subject. He really wanted to understand it. And he always would tell me that, you know, don't take a position on anything until you can describe the arguments against it better than the person who is arguing with you that
you should be able to argue their case better than they can. He was a remarkable teacher. And so were those other fellows I mentioned. And of course my dad was an incredible teacher. So you make the most of the people you meet that are going to make you a better person and probably forget about the rest to quite an extent.
Okay, let's move on to number 12. Becky, you're next. This question comes from David Rubin, a shareholder from Scottsdale, Arizona. It's a question for Greg. We've heard over the decades and are familiar with Warren and Charlie's investment thesis and their circle of competence. During the first 10 years after taking over as CEO, Greg will be tasked with allocating more capital during that time than Berkshire has had to allocate in its history.
Given this, I'd like to hear from Greg about his views on capital allocation, particularly into new businesses. Sure. So this bar is not too high. No, it's but.
Very fortunate when you think of Berkshire, again, and we've talked about this, where we start from, and I'll clearly touch on the investment, the related investment allocation. But we start from a great place where we've got a great culture within the business. We have values that we, as a management team, and really...
as defined by Warren and those, Charlie and everybody associated with the business, we've got great values that really set Berkshire up well for the future. And obviously, as we deploy capital and allocate capital, it's critical to Berkshire as we go forward. And equally, it's around managing risk. But when I think of our
Our values are a couple that are absolutely critical. One, we'll maintain the reputation of Berkshire and that of our company. And I view that in investing or how we operate things across each of our businesses. That will always be a priority and something that we'll ensure is in the forefront of our minds.
I think equally as we then look at our various back to Warren's bound sheet comment, we will have a fortress of a bound sheet. And we want to, I thought Sue Decker, our lead director said it well yesterday, we've got a significant set of cash right now, but it's an enormous asset to have that.
And that will continue to be a philosophy. Yes, when we can deploy it, we'll deploy it well, and I'll come to that. But equally, we do recognize it as a strategic asset, and it allows us to weather the difficult times and not be dependent on anybody.
So again, that will be an investment philosophy. We will remain Berkshire and we will never be dependent on a bank or some other party for Berkshire to be successful. I would, thank you, I would then move to touch on allocation of capital will be absolutely critical, but with that comes management of risk and understanding risk.
And that falls upon all our managers, insurance, non-insurance, but we'll bring that across Berkshire. And then the other value I would touch on, but that really relates to where I'm going, is ultimately we have a great set of operating companies that do produce significant cash flows, be it in the insurance companies creating float,
or various non-insurance companies producing significant cash flows on an annual basis. We intend to continue to ensure that's a strength of Berkshire as we go forward. It's absolutely critical to our long-term success. Now, with those cash flows and with the float, and then equally as touched on, we have significant resources already in our balance sheet.
We'll really continue to move forward with a very similar philosophy. It's an identical philosophy to what we've had currently and for the past 60 years. We'll start by looking at those opportunities within our business. And by that, I mean within our insurance, non-insurance businesses. Are they properly capitalized and have the opportunity to manage their business?
and that will continue to exist. They'll operate in an autonomous way, but in the end, Berkshire still manages the capital that will go into those businesses or what potentially will come out of those businesses. Equally, the next opportunity is to acquire businesses in their totality or 100%.
There are great times when we can do that. Warren touched on, we had one that was interesting in the last quarter, the $10 billion acquisition. But again, the value relative to the risk have to be right. And if it's right, we want to own it. If it's not the time, there'll be another time to own assets like that. And then there's the opportunity to own pieces of property.
of companies through the equity. But as Warren's always highlighted, and again, this will be our approach to how we think around those companies. We own a piece of a company. We own a piece of that cash flow. We own a piece of their balance sheet. It's not just a share certificate. And as we approach that, and really we'll approach it with the thought that we're going to own this company for the long term.
It's, again, understanding what, be it the 100% company or the 1% company, do we thoroughly understand and thoroughly do we have a strong view of what those economic prospects of those companies will look like? And Warren said it earlier, five years from now, 10 years from now, 20 years from now. If we don't have a view of that, we won't be investing, be it 100% or 100%.
of a company through equities. We have to thoroughly understand what those prospects look like and associated with understanding those prospects, we need to understand the underlying risk of the businesses. And it's really the investment philosophy and how Warren and the team have allocated capital for the past 60 years really
It will not change, and it's the approach we'll take as we go forward. Warren? Yeah, I don't want to go on too long on this, but... Sorry, I covered it. No, no, but this is important because it's very obvious that the country, for example, needs an incredible...
improvement, rethinking, redirection even to some extent in the grid. I mean, we've outgrown what would be the model that America should have. And in a sense, it's a problem, something akin to the interstate highway system where you needed the power of the government really to get things done because it doesn't work so well when you get...
48 or 50 jurisdictions that each has their own way of thinking about things. And, of course, in World War II, we called in people an hour an hour, and we knew we had to turn out ships like crazy, and we knew that we had to convert Ford Motor from being a car manufacturer into an aircraft manufacturer in a matter of days, not weeks, not months. So you need the... There are certain really major investment plans
situations where we have capital like nobody else has in the private system. We have particular know-how in the whole generation and transmission arena. The country is going to need it, but we have to figure out a way that makes sense from the standpoint of the government. Since
from the standpoint of the public and from the standpoint of Berkshire. And we haven't figured that out yet. I don't know whether Greg wants to even explain a few of the major problems. But that is a clear and present use of hundreds of billions of dollars. And, you know, you have people that set up funds and say, you know, they're getting paid for just assembling stuff. But that's not the way to handle it. The way to handle it is to have some kind of a
a government private industry cooperation similar to what you do in in a war and uh and i don't think when they were doing the highway system i don't think that the government set up his own guys that weren't going to pour a whole cement or anything like that but they you needed a cooperation and and and uh we're at that point i think in in in terms of energy but uh
I don't think we've made any progress particularly though. Tell us more about that. Yeah, and I think these are
Very unique in that, not unique in that it's sort of reflective of where we're at. There will be very significant investment opportunities across a variety of industries. As Warren touched on in the electric industry or the energy space, we obviously know that well with our existing business. And the capital required to meet the long-term needs of what's currently...
projected as demand is enormous. And we as Berkshire will be in a good position to help address those needs. But the model around it and the risks that need to be addressed to deploy that type of capital will be different than they are today. Yeah. The muscle of the federal government will be needed. But the test of whether you can have 48 million
or 50, depending on the nature of things, jurisdictions that are cooperating to do something that has opposition, will have opposition in every single state. If they'd taken a vote during World War II, or if they'd taken a vote on the interstate highway system, it would have been slowed down to an incredible degree. So the question is how to use these strengths that this country has
to actually turn it into what it should be capable of while still preserving a republic with 48 connected and a couple of unconnected states. It'll be interesting to see what happens. But we do have capital, and we actually have some knowledge that very few places have. I mean, we know what the game's about.
But putting together that energy with knowledge and with capital and everything is just not easy. And it should be something that we're capable of in the country, but the country was not designed for having, in a certain way, it was not designed for having 48 different jurisdictions that could mess up anything that you were attempting to do. And during wartime, it's one thing to get agreement, but during war,
During peacetime, it's a different problem. That's going to be one for the next generation, but I'm just... It's important. Okay, station 10.
Good morning, Mr. Buffett and Mr. Abel. I'm Dorcas Tang. I'm 14 years old. My father, Moer Tang, MGRT CEO, brought me here for two consecutive years. And I promise I will come back every year since I queue up at 2 in the morning every meeting you hold. My dad owned BRK A shares and he said...
I need to work hard to earn my piece of BRKB. We are both from China, Hong Kong, and I would like to ask, what's the
essential element for a global teenager like me if we want to be part of Berkshire like Mr. Greg Apple like what piece of knowledge I should learn so you hire me in the future
If you're talking about the future, you better talk to Greg. So we'll let Greg answer that. My final words, finally, Mr. Buffett, I learned a lot from this meeting and of course I will come here every year and I wish you can attend as many as possible.
as you and Mr. Charlie Munger, the most respectful people, have inspired me and my father a lot. I wish you happy and healthy, and maybe one day in the future, we can make the world more prosperous, all together, like you said. Thank you. Okay, thank you.
Yes, well, I think your dad said it best. He highlighted that to become part of Berkshire, to own some Berkshire shares, you're going to have to work hard.
And I think hard work takes all of us a long ways in life. And I would never diminish that there's a lot of things that matter in life. But if you start with a great work ethic and have that attitude that you want to contribute.
You're going to go a long ways in life, and you'll find great enjoyment because, as Warren said, if you work hard, you're going to find the things you love in life, and it'll lead to that. We truly look forward to the day you're part of Berkshire. Thank you. Keep a lot of curiosity and read a lot, as Charlie would say. Okay, Becky?
This question comes from Matthew Tezak in Layton, Utah. He said, please discuss your strategy on how to protect our company from future liabilities due to wildfires blamed on our electric utility companies out west. Well, that's a very good question. And we've made some mistakes in the past when we bought Pacific Corp.
In 2000, what, five? Yes. Or Scott and David Sokol and myself, three guys who were capitalists at heart, and we're dealing with our own money, but we made a mistake by not carving it up into the seven states that we were buying. And it came with an aggregation where it wasn't state by state, and we kept the same money.
the same structure and that was a big mistake. Every part of the country is going to need electricity and there are going to be places where privately held electric utilities would be very foolish to operate and how that gets resolved in a democracy we will find out. But those are the facts as they stand now, I would say. Greg? Yeah.
The reality, the risk around the wildfires, i.e. do the wildfires occur, they're not going away. And we know that, and the risk probably goes up each year. But what we can do to reduce the risk of it impacting our system and our underlying assets and, unfortunately, the liabilities that come with such events, we can change that and manage that. We can't eliminate the risk, but we can reduce it.
And that's where we've got our teams in the West. But we really are approaching it across all our energy infrastructure because the rail ladies, the wildfires have now occurred in Texas. They've had a variety of them throughout the U.S. And we're all very focused on how we manage that risk. How we manage it is we start by addressing the actual assets or maintaining them.
and where we invest them, invest into them. So we try to make sure that they're either not causing the fire or potentially even hardening the system as to what can they withstand. So it's very much, we start with the operational focus.
We then take it even further, and this is something Warren and I have discussed many times, is that the utilities started to recognize when we have these unusual weather events, and Warren touched on what's been happening in Nebraska with storms, but they're equally occurring or significant events occurring out west.
But when we have those, we've gotten very, very good at saying, OK, we have to manage the system differently. We'll potentially de-energize because there's likely to be an event. But the one thing we hadn't tackled, and this is very relevant to the one significant event we had back in 2020 in Pacific Corp, is we didn't de-energize the system as the fire was approaching. Because our employees and the whole management team have been all their lives trained to keep the lights on.
And the last thing they want to do is turn those lights off and have a system de-energized. And after those events, and as we really looked at how we're going to move forward in managing the assets and reducing that risk, we have clearly recognized as a team that we have to de-energize those assets. So now as we get fires encroaching at a certain rate,
number of miles, we de-energize because we do not want to contribute to the fire, nor obviously harm any of our consumers or contribute, unfortunately, if there's a death. And that's really where we had to take our team, that we're managing a different risk now. It's not around keeping the lights on. It's around protecting the general public and ensuring the fire does not spread further. So we've gone as far as that, and I'll stand corrected on this one, but we're probably the one
or across our utilities that does that today. And we strongly believe that. Becky? Can I just follow up on that? Yeah. Doesn't that open you up to other risk if you shut down your system, a hospital gets shut down, somebody dies? We've...
You know, fortunately, that's something that we do deal with a lot because we have power outages that occur by accident. So when we look at critical infrastructure, because it's an excellent point and we're constantly reevaluating it and we do receive a lot of feedback from our customer groups as to how do we manage that. But that is something we deal with on a more routine basis than we'd ever like. The lights go out. We have to make sure the hospitals stay on. Emergency units can respond and all that.
But there is risk there. So then we spend a lot more time educating the consumers and our consumer groups, our customers,
Okay, this is what will happen. We need to understand your unusual situations and how can we best tackle that again so we just don't take on another liability. So there's a lot around de-energization. And then just to take it to the last step, and Warren's touched on that just in general on energy policy, we have to work with our states and our regulators to ensure that
This was never risk we took on or envisioned when we were investing in utilities, nor would any of the investors who've invested in other energy companies. You earn a very set return for taking on a very set defined risks associated with that asset. And this has gone well beyond that. We don't earn the type of returns, nor can you earn a large enough return to take on these risks.
So it's not just about solving the return side, we really have to solve the risk side, which means we work with our regulators, we're working with our state legislators to get to the right answer. And that's really just, that'll be an ongoing process. There are not silver bullets out there, but every day our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away.
But there's some problems that can't be solved. And we shouldn't be in the business of taking your money, investors' money, and tackling things that we don't know the solution for. And you can present the arguments, but it's a political decision when you are dealing with states or the federal government and the government.
If you're in something where you're going to lose, the big thing to do is quit. And you present your case as well as you can and everything else, but if you don't hold the pen in the end, you know, we don't have any business taking your money and doing dumb things with us. And we can do our best to explain what the intelligent things are, but it's your money. And so...
It's very hard to tell how to handle the questions of politically determined decisions that are going to go to court in many cases, but you know that it just doesn't make sense. We know what we think a sensible system would be, and we ought to explain what we think it isn't.
you know, do the best to get our position because it's pro-social to have the right solution to have it. But the right solution, for example, in the interstate wasn't to let 48 states each decide on their own way of doing it and award contractors the jobs based, you know, there's just, there's some problems that can't be solved and we are not in the business of trying to solve insolvable problems.
I'd even go, for example— But then the problem you have, of course, is the people that work for you. It's their job, so they want to have reasons to keep going. And those are tough choices if you're managing, but that's why they have managers. And Warren, I was just going to add, because you touched on something really important there, that effectively, for example, with the utilities and the wildfires—
We can't just become the insurer of last resort and that we're going to cover any cost and all costs, irrespective of what occurred. And that's a little bit of the situation we're in right now with our largest challenge, a 2020 wildfire, where there were four fires occurring at a challenging time. One we've always asserted was a lightning strike that was not inside our service territory.
The fire burnt into our service territory and we became responsible for that fire effectively through the courts. And we've continued to hold firm that we're not responsible for that.
I mean, we didn't contribute to it and we didn't initiate it, nor did we feel we ever contributed to it. But it's getting, again, if you look at the risks, it's there. We have to manage through things like that. We'll get through that litigation. We're happy to report, for example, on that one.
After five years, the Oregon Forestry Department has come out and said the fires, the other fires we did have that we were able to manage and extinguish did not contribute to that fire. And that fourth fire is the largest fire of the four. It's 60% of the claims. We're five years into effectively getting that information into the courts.
Now, that will outline our legal strategy, obviously, going forward, but it's things we're dealing with. But we continue to learn from this as a utility industry. So we're in very much each of the legislatures, as I said, making sure we get clear definition where liability falls.
What can the economic damages be? But most importantly, what can the non-economic damages be? And again, with the thought, we can't be the insurer of last resort. We just can't be responsible for everything that happens in a state. If we want to do it with our own money, we can do it. But we're not going to do things with your money that we think are stupid. You ought to get rid of us if we do it. And
it's easy it's easier to do stupid things with other people's money than it is with your own money that's one of the problems government has just generally we don't want to bring it to private enterprise it is important that the united states have an intelligent energy policy just as it was important during world war ii that we learned how to make ships instead of cars extremely fast and we figured out the answer we combined private enterprise with
with with with with the power of the of of of government and uh but how feasible that is in a in a democracy and you know it was clearly obvious during world war what needed to be done and we did it it's not so clear when when uh you get 330 million people all arguing their own self-interest and and of course
Deciding what will happen and having the people often who are making the decisions reacting as they did 20 years earlier, you know, when they don't really bear the responsibility for the decision. Anyway, that's management, and we'll do our best. Station 11.
Hello, my name is Alicja Burek and I'm from Poland, but I currently live in Chicago. This question is on behalf of an inspiring man that I know, Walid Ahmed, who's here with us today.
Mr. Buffett, nearly 74 years ago on a cold Saturday in January 1951, you traveled eight hours by train from New York to Washington. You went all the way on nothing but hope that someone might teach you more about the insurance industry. Arriving at GEICO's office to find the doors locked, you persisted until a janitor let you inside.
You created that meeting with Lorimer Davidson for the insurance float that was the rocket fuel behind Berkshire's success. In 2011, when I was 15, I wrote you with similar determination, asking to meet. You kindly wrote back saying you had only 3,000 days left and more pressing priorities. Well, Mr. Buffett, it's now been 5,000 days since you replied.
And so inspired by your persistence in 1951 and the tenacity of Mrs. B, I humbly renew my request for just a quarter of the time Davy gave you, a single hour in your office. You may wonder why must it be you? You have often shared an anecdote about Polish Jew who survived Auschwitz, who said to you once, "Warren, I'm very slow to make friends because when I look at someone,
I asked myself would they hide me? You said that the number of people would hide you was the best test of life well lived. Well, I believe that at this meeting you don't have 40,000 trail hoarders, but you have 40,000 people who would hide you. You are a testament to a life extraordinarily well lived.
Yet even you have not fully witnessed the transformative power of a client. I'll let you write my biography, but I think I've got the point of your question. So respectfully, I ask again, Mr. Buffett, before father time wins, will you please grant Walid Ahmed an hour of your time or any time you can dedicate? Thank you so much for your time. Thank you.
I will say this, I grant an hour to everybody of the 40,000 here. Well, I'll have an interesting time the rest of my life. But I'll give you one tip. I found that when I was very young, and I would drive around to various companies all over the country. And because I was very young, and these were companies that were off-beat,
And they didn't have investor relations departments then. Almost every CEO would see me because they figured they'd never see me again. And they weren't getting calls like that. And I would ask them two questions. I would explain to them. It's not a bad idea, incidentally, if you're going to walk into somebody's office and you say you want 10 minutes of their time. Take a hourglass and stick it on the desk.
the desk of the person you're talking to and turn it up so that it's going to go for 10 minutes and you say you're going to go you're going to leave in 10 minutes unless I ask you to stay and That sets the terms but then once you have that If they're in the coal business will say which happened to be one that I was interested in 70 years ago or so You just ask them one question that if they were to be stuck on a desert island and they had to own
only one of their competitors stocked during the 10 years they were going to be on that island which one would it be and why and then after they give you that answer you said the same thing and if you were in the short uh your net worth while you were on that island which would it be and why because every manager likes to talk about their competitors they're they're they're like a bunch of school kids you know when they get into talking about their competitors and
I probably learned more about various industries by just making sure that they didn't think I'd stay too long. And in the meantime, they would have the floor and talk about their competitors. I kept my own mouth shut in those days. That's a lesson I've lost somewhere along the line. But essentially, they've outsourced companies.
Or I shouldn't say outsourced, but they've departmentalized investor relations at all companies of size, practically. Now, so you've got 3,000 companies or whatever they have, and they all have departments.
And each one of them has an investor relations department practically. And their job is to say, this is the best thing you can do today is buy our stock. Well, the whole concept is totally idiocy. But it's a big business and it gets bigger and the investor relations department gets bigger. And it's what we have now. But do a little of your own work your own way.
Berkshire Hathaway has got plenty of material out there for you to read and when you get through reading it all you'll know way more than most of the people that work at Berkshire. So you don't need a personal interview. If we take an hour at times, even the 40,000 people we may have here plus Becky's many listeners and viewers, it just doesn't work.
I admire your effort, but you'll just have to settle for that as the admiration that you get at this. Okay. Becky?
This is a question that you touched on in a lot of ways in the last answer from before, but I did get this question from a few different people, so I'd like to ask it. Ricardo Briz, a longtime shareholder based in Panama, says that he was very happy to see Berkshire acquire 100% of BAG shares.
It was done in two steps. One, in late 2022, 1% was purchased from Greg Abel for $870 million, implying a valuation of BHE of $87 billion.
And then two, in 2024, the remaining 8% was purchased from the family of Walter Scott Jr. for $3.9 billion, implying a valuation of $48.8 billion for the enterprise. That second larger transaction represented a 44% reduction in valuation in just two years.
Ricardo writes that Pacific Corp liabilities seem too small to explain this. Therefore, what factors contributed to the difference in value for BHE between those two moments in time? Well, we don't know how much we'll lose out of Pacific Corp and decisions that are made, but we also know that certain of the attitudes demonstrated by that particular example have got analogs throughout the utility system and
And we, there's a lot of states that so far have been very good, decent to operate in. And there are some now that are rat poison, as Charlie would say, to operate in. And that knowledge was accentuated when we saw what happened in the Pacific Northwest. And it's accentuated by what we've seen as to how utilities have been treated in certain other situations. And then on top of that,
So that it wasn't just a direct question of what was involved at the Ciri Corp is an extrapolation of a societal trend and secondly we also had a decision we didn't expect out of all the real estate business and and and those kind of things can change values and courts can change values and
And it's a lot easier to make those decisions when you just own marketable securities and when you own businesses. And I've made plenty of those decisions as I've watched what have happened in various industries and companies in over 70 years. But Greg made the decision, which was fine with us, to get out. And he had no knowledge of what was going to be happening in either the real estate field or the utility field. And...
We're not in the mood to sell any businesses, but Berkshire Hathaway Energy is worth considerably less money than it was two years ago based on societal factors. And that happens in some of our businesses. It certainly happened in our textile business. And it's happened in the public utility businesses and not as good a business as it was a couple of years ago. And...
IF ANYBODY DOESN'T BELIEVE THAT, THEY CAN LOOK AT HAWAIIAN ELECTRIC AND THEY CAN LOOK AT THE EDISON IN THE CURRENT WILDFIRES SITUATION IN CALIFORNIA. AND THERE'S SOCIETAL TRENDS THAT ARE-- OH, I JUST GOT A NOTE HERE ON MY MONITOR. IT SAYS THE BOOKS ARE NOW SOLD OUT. YOU DON'T HAVE TO SPEND YOUR MONEY ON OTHER THINGS. YOURS IS FUDGED. THIS IS WHAT I'M EATING SOMETIME.
But that's the explanation. Values change, and they don't always change upward. And when we made the deal with Greg, we were happy to buy out Scott Family at that price. And when we made the deal with the Scott Company, we wouldn't have been happy to pay Greg the price that he received. But that's like Berkshire shares. We bought in stock at X, and we buy in stock at less than X if conditions change poor, and we pay...
Over the years, we pay more and more because it builds in value, but it doesn't do it in the straight line. And I would say that our enthusiasm for buying public utility companies is different now than it would have been a couple years ago. That happens in other industries too, but it's pretty dramatic in public utilities, and it's particularly dramatic in public utilities because they are going to need lots of money. So if you're going to need lots of money, you probably ought to behave in a way that
encourages people to give you lots of money and we will see where we go. We'd like to see public utilities do well, but our responsibility is to the shareholders of Berkshire Hathaway. Okay, station one again. Dear Warren, dear Greg, and dear fellow owners, it's such a pleasure to be here. My name is Revy Panida. I was born in communist Albania, but I'm now teaching economics in London, England.
The wonderful writing of Warren and Charlie has significantly shaped my thinking and teaching. I thank you both very much for the many insights over the years. Warren has often written about the importance of Berkshire's earning power to owners. My question is, what was, in your estimate, Berkshire's earning power in the latest fiscal year? It would be great if you can comment on any significant items that either increased or decreased the earning power as compared to reported net earnings.
income measures for Berkshire. Thank you. Well, I think our underlying earning power was affected negatively here a while back by what happened in the utility field. I think that our earning power was not enlarged by any large acquisitions that come along, but they come along periodically. So we will see something at some point that, well, on the one that was $10 billion, we would have had it
to earning power. I mean, why else would we do it? So that's very situational. And of course, it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. You know, that's been true ever since I was 1930, born in 1930. When I was born,
Things got much more attractive over the next two years and apparently I didn't do anything about it. But, you know, that was the opportunity of a lifetime and I blew it by worrying about the kid in the next crib or something. But over my lifetime, you know, I've had fabulous opportunities sometimes and they happen because humans are human.
And I don't, you know, I'm fearful of all kinds of things. I don't want to try and, you know, be one of the Wollenders and walk on a tiny strip between a couple of twin towers or something or whatever it may be. But I don't get, I just, I don't get fearful by things that other people get, are afraid of in a financial way. You know, the idea that
if berkshire went let's say berkshire went down 50 next week i would regard that as a fantastic opportunity and it wouldn't bother me in the least and and most people aren't they just react differently and so it doesn't it's not that i don't have emotions but i don't have emotions about the prices of stocks i mean i actually those decisions get all the way to my brain whereas emotions
get bogged down some other place so virtue will increase its earning power over time as we retain money i mean we we are doing things making decisions every day people are working we're retaining earnings we will build the earning power but it won't be coming in any even stream and it certainly won't be matched dollar for dollar on either the upside or the downside
and market prices and but that's what makes it a good business you know the investment businesses that everything isn't properly appraised and and the cellular other people get the better your opportunities get okay this question comes from achit patel and it's about the big cap technology stocks
In the 2017 annual meeting, you said, Warren, you really don't need any money to run these companies and referred to them as ideal businesses, referring to the big tech companies Apple, Alphabet, Microsoft, and Amazon.
With all of those companies now announcing massive capital investment endeavors around AI ambitions, have you rethought the above comment just in terms of them being asset light and what you think of them as a result? Well, it's always better to make a lot of money without putting up anything than it is to make a lot of money by putting up a lot of money. And so a business that takes no capital to speak of, Coca-Cola, it's
The finished product, which has gone to bottling companies and everything, that takes a lot of capital. But in terms of the selling the syrup or the concentrate that goes to it, it doesn't take a lot of capital. So one is a fabulous business and one is a, you know, it depends where it is and everything like that. Cocoa is popular every place.
But some places that, I mean, if you're in the bottling business, it costs real money. You have real trucks out there and you have all kinds of machinery and you have capital expenditures coming up. And we've got businesses that take very little capital, that make really high returns on capital. And the ones the politicians talk about as making high returns actually aren't making high returns usually in terms of capital.
insurance, property casualty insurance is kind of a rare business because you need capital as a guarantee fund that you will keep your promises. But you can use it to buy other low-intensive capital businesses. I mean, you can buy Apple and that would support that business. So that can be a pretty good business and it's one of the reasons we've done well over time. But it'll be interesting to see how much
capital intensity there certainly there's more capital intensity going on with the magnificent seven than there was a few years ago i mean basically apple has not really needed any any capital over the years and it's repurchased shares that a dramatic amount of reduction whether that world is the same in the future or not is something hollywood's answer was always to get their their money from
other people to put up the capital. A lot of people have gotten very rich in the country by essentially figuring out how to get others to put up the capital. And that's what people do in the money management business, and they get very, very rich because they get an override on other people's capital. Incidentally, if all of you were paying 1% for investment management fees...
at berkshire last year you would have paid eight billion dollars for managing and you really wouldn't have had to do it but uh investment management is a very good game because other people put up the capital and you you charge them for the capital whether they do well or not and then you can charge them a lot more if they do well i mean it's uh it it uh it's uh it's a well-designed business for the people who practice it
And who can blame them? I mean, that is capitalism. But I saw that in operation when I was working at Solomon, but I didn't need to see it. I knew what existed anyway. The trick in life is to get somebody else's capital and get an override on it. Charlie and I decided it wasn't too elegant a business after a while, but we were not criticizing the efficacy of it. It just didn't appeal to us after a while.
I did it for 12 years or so or something. The one difference that Charlie and I did from other people is we put all our own money into it. So we really, we did share the losses with our own capital, but we got an override on other people's capital. And that's been, people have made advances where they get the override on other people's capital without putting up any of their own capital to speak of. And that's a very good business, but it's
it leads, it can lead to a lot of abuse. Greg, you've watched capital management in the United States, and would you say that Canada is behind or ahead in this respect? Well, I think when it comes to their capital system, Warren, it is very comparable, there's no question, other than as we know, I mean, I think the U.S., as far as having a
a capitalist system, it would be tough to be touched by any country. And I think when I think of Canada, there's just certain...
the responsibilities or obligations that the government wants to take on and aren't going to leave with the public sector. And that's just a decision that's made by society or by the Canadian people or if you look at another country, Australia, wherever it may be. So it's different, but when I think of capitalism, that drive is there and...
in the desire to allocate capital properly. It's very similar. It's produced wonders in the United States, if you think about it. Originally, with the Rockefellers and Carnegie's and all that, they actually put up money to build steel mills, whatever it may have been, with the
with broader forward refineries and pipelines and all that sort of thing. They put up money to do it. Now the trick is to use other people's money, basically. And, you know, you can't blame human beings for behaving like humans, but you should be aware of what their motivations are. It's a capitalism in the United States has succeeded like nothing you've ever seen.
But what it is is a combination of this magnificent cathedral, which has produced an economy like nothing the world's ever seen. And then it's got this massive casino attached. So you've got the cathedral and the casino. And in the casino, everybody's having a good time and there's lots of money changing hands and everything. But the cathedral is what... You've got to make sure the cathedral gets fed too because the temptation...
And the temptation is very high now is to go over to the casino where people say, you know, we've got magic boxes and all kinds of things that will do wonderful things for you. And that's where people are happiest. That's where you get the most promise to you. That's where the most money is for the people that are pushing things. And, you know, the balance between the casino and the cathedral, it's very important that people,
the united states in the next hundred years make sure that the cathedral is not overtaken by the casino because people really like to go to casinos and it's just so much more fun and they bring bells and when you win and you know they bring you drinks and everything else and and uh it's it's designed to move money from one pocket to another but um
And in the cathedrals, they basically are designing things that will be reproducing goods and services for 300 and some million people like it's never been done before in history. It's an interesting system we've developed, but it's work. It dispenses rewards in what seems like a terribly capricious manner. I mean, the idea that people get what they deserve in life.
It's hard to make that argument. If you argue with any other system where it seems to work better, the answer is we haven't found one. So I'll leave it to the next generation to send me the answer by Ouija board or whatever. Okay, station two. Hi, my name is Patrick Nestor. I'm 13 years old and from Tampa, Florida. I'm here with my brother John, who's 15, and my dad.
Thank you for hosting this meeting. This is my first ever shareholder meeting. My question is, what high school class or activity helped influence you to who you are today as the greatest investor of all time? Well, that's a good question. The teachers you get in your life have this incredible impression on you, and a lot of it
are the formal teachers you have, but some are informal teachers too. I mean, I've learned from certain employers, you know, so much. You really hope you're learning from everybody you find who's well-intentioned and has had a lot of experience. And I had a lot of good luck in that. But I would say that, well, where I was really lucky was my dad was in the investment business.
So I would go down on Saturday and I'd wait for him to go to lunch with, and I'd read the books that were around there that nobody else ever read. And, uh, uh, and they just, they talked to me, numbers talked to me, uh, and, uh, I could never get my fill of them. And then I discovered the public library and I read every book there was on investments, literally in the Omaha public library at 19th and Harney. And, uh,
you know i i enjoyed learning about that unlike charlie if charlie was reading about electricity he would want to know on everything that thomas edison knew and more and and that goes with the same thought processes and understand how everything worked i didn't care whether how it worked i just cared whether it worked and that's a limitation i'm i'm confessing here i'm not bragging uh but i you know the
As Charlie would say, I mean, people would always say, if you could only have lunch with one person living or dead, who would it be? And Charlie said, I've already had lunch with all of them because I've read all their books, you know, basically. And he really did it. I think having curiosity and actually finding sympathetic teachers is very useful. I ran into a couple of teachers that both in high school and college. In fact, I would say that
I went to three different universities, and I went to high school in Washington. And at each place, I found about two or three really outstanding people. And I just spent my time with them and didn't pay much attention to the other classes. And I was lucky to find something that really fit me.
very early on. If my ambition had been to become a ventriloquist or whatever the hell it might have been, it wouldn't have worked. I'd have spent hours and hours and hours and I wouldn't have been any good when I got through. So I don't believe that. I think there was that book that talked about spending 10,000 hours at something. I could spend 10,000 hours at tap dancing and you'd throw up if you watched me. But...
But if I spent 10 hours reading Ben Graham, I would be damn smart when I got through. So minds are really, really different. I watch great bridge players and I watch great physicians. I mean, people really, really, really have different talents. And, you know, I don't know. I think you're supposed to have 88 billion cells in your brain. I'm not sure that all of mine are.
flashing bright lights but but you are different than anybody else that's what my dad always used to tell me that uh essentially that you know you're something different it may not be good at some moment but but uh you find your own you find your own path and you will you will find the people in schooling that
that want to talk to you. People that teach in general, they love having a young student who's actually really interested in the subject and they'll spend extra time with you. They'll do all kinds of things. I ran into that. I had Graham and Dot at Columbia where they treated me like a son, basically. I was interested in what they were saying and
they found it kind of entertaining that i was so interested in so i would just i would i would look around or do you you know what really fascinates you i wouldn't try and be somebody else and then i would uh you'll find the teachers uh out of school and you'll find some outstanding people that are teachers i've i've had at least 10 people that have had huge impacts
my life and every one of those positive, you know because I got to select in a sense and and and a number of people Really like it helping younger people. You know, I found that in school and Helps to look a little bit lost at all. You need help but I I was in my school experiences were good, but Really very good
But I attribute it much more to the individual than to the institutions. Okay. I've already told you more than I know, so we'll go on to Becky, you're next. This question comes from Scott Williams in Portland, Oregon. He said, do you think the net benefit of Doge will be positive or negative for the long-term health of the United States? Well, why don't you give me a hard one?
I think that bureaucracy is something that amazingly prevalent and contagious even in our capital system. And the big corporations, you know, overwhelmingly, most of them look like they could be run better. I'm sure Berkshire does in many respects. And it...
And government is the ultimate. So it really doesn't have any checks on it. And that's why it scares you to some extent about what the future of the currency will be because they can print currency. And if you have people that get elected by promising people things, and that doesn't mean that they aren't sincere about all kinds of items, but there's no politician...
that says to anybody that, at least if they have money, that, you know, I really think you have bad breath and if you don't mind, would you step over and away from me? It just doesn't happen. And so I think the problem of how you control revenue and expenses in government is the one that is never fully solved and has really hurt dramatically many civilizations.
And I don't think we're immune from it and we've come close to it. But if you tell me how in democracy, you go in and we need to change things. We're operating at a fiscal deficit now that is unsustainable over a very long period of time. We don't know whether that means two years or 20 years. Because there's never been a country like the United States. But
You know that if something can't go on forever, it will end, to quote Herbert Schneier, a famous economist. And we are doing something that is unsustainable. And it has the aspect to it that it gets uncontrollable at a certain point. I mean, essentially, you just give up on it. And Paul Volcker kept that from happening in the United States. But we came close. We've come close.
times and we've still had very substantial inflation in the United States, but it's never been run away yet. And that's not something you want to try and experiment with because it feeds on itself. So I wouldn't want the job of trying to correct what's going on in revenue and expenditures in the United States with roughly a 7% gap when probably a 3% gap
gap is sustainable and then the further away you get from that the more you get to where the uncontrollable begins and I think that it's it's a job I don't want but it's a job I think should be done and Congress does not seem good at doing it well it sounds like you should quit while I'm ahead it's it's well we've got a lot of problems always as a country but but
This is one we bring on ourselves. I mean, we have a revenue stream, a capital producing stream, a brains producing machine like the world has never seen. And if you picked a way to screw it up, it would involve the currency. And that's happened a lot of places. And the incentives plus the checks, well, there aren't any real changes. You've got
In theory, you would make it so there was substantial downside for anybody that screwed things up. But there isn't downside, there's upside. So it's the problem of the most successful company in the history of the country and the history of the world. And at this point, we got a little room to go in solving. And with that, I'll shut up and go on to station three. Hello, Mr. Buffett.
My name is Saskia from Germany. And first of all, I want to thank you because you made such a great impact in my life and the life of the people I love. And that's priceless. Well, thank you. Mr. Buffett, imagine it's 1776 and you're sitting alongside Benjamin Franklin.
helping to shape the foundation of a new nation. What core economic principles would you advocate for building a fair, resilient and opportunity-driven capitalism society? One that supports long-time prosperity for future generations. Well, I probably, that's a good question, but I would probably say to Ben Franklin,
you just keep thinking and don't talk to me because you'll come up with some better ideas than I will. He was an incredibly remarkable person. I mean, he would say he's almost probably the last person to almost have a grasp of every aspect of activity in the country. He invented all kinds of things. And he, incidentally, we were talking about...
power of compound interest and that sort of thing. He left a will that left a sum of money to Philadelphia and another sum to Boston that serve as an example for a couple hundred years, you know, of the power of compounding and all kinds of things. He was so far ahead of his time that the best thing I could do if I was under that tree with him was be to get out and
Get out of his way, a lot of you just keep thinking. But he saw the problems that success could bring to a society as well as other problems. I mean, more immediate problems that in all kinds of fields. The problems of how to take 8 billion people because there's no way we can separate ourselves from the rest of the world. We can be an example to the rest of the world and I think that
It behooves us, since we have had all this good fortune in this country, and we do have a pretty good system, I don't think you get very far by lecturing the world on how you are the one that should tell them what they should do with their lives. I think you get a certain amount of resentment when just a few hundred years ago, a whole different group of countries were running the world.
And now you start giving them advice. I think it's a real mistake in communication and persuasion to lecture a bunch of people where you've just won the game. But anyway, I would say that I would advise Ben to figure out how to win the game and keep a certain amount of humility at the same time. And I would...
Tell them to try and design a system that doesn't invent too many things that can destroy the planet, you know, that become uncontrollable once you get them out there. There was no alternative to us developing the atom bomb, but the expansion of the number of people that have the ability from one to eight and nine probably pretty soon with Iran, I mean, that...
That's a mistake that society just could not afford to make. I mean, solving the problem in nine variables instead of simply one. Now, it's totally understandable. My dad was in Congress when the atom bomb was first used. It's amazing how Sam Rayburn kept the House of Representatives uninformed because they are supposed to appropriate all the money and
he had 435 congressmen there and they had no idea they were appropriating money for los alamos or what was going on in chicago or what was going on in tennessee but anyway we we do have a society that is far beyond anything that ben franklin dreamt of it's achieved some of the or is it it's moving toward in the right direction
towards solving some problems where we made kind of broad declarations about all men being created equal and and etc and then we did some of the things we did but generally speaking we moved in the right direction but we faced problems that i don't know what how ben franklin would would uh attack the problem of of what you do once you get weapons of mass destruction in many hands and when you
essentially look at the world as something where there are winners and losers and that the winners are you know humiliate the losers and do all kinds of things but i'll let the people who are a lot younger here figure out the answers on that but it's it's still the most wonderful there's never been anything you could dream like what has happened in the united states so we still it's it's the best place the best time
to be alive by by miles in the street just think of a couple hundred years ago and somebody you know yanking out a few of your teeth and pouring whiskey down you know that's doing i mean and it's subsistence and and particularly in this midwest just imagine waiting until the missouri froze over every year just to see whether you get your wagon across maybe have a pregnant woman in the back you know and it's just amazing what has happened
a positive nature during my lifetime and then the question is how do you how do you keep it and how do you improve it and uh i i do think that fundamental to all of it though is having a uh it's having a currency that that does not get debased what that does to the stability of a society where all the people that trust their government get screwed and all the people that
Figure out ways to profit off of it, become rich or richer. I don't think you want a society that operates in that manner. So anyway, let's see. That was section three. So we're going to Becky. Is that right? Yep. That's right. Greg, this question's for you. It comes from a shareholder named Jay Milroy, who writes, Mr. Buffett has a hands-off approach to managing the operating subsidiaries. How would you describe your approach? Mm-hmm.
Better. Well, we've got our managers over there. And I would say going back to 2018, it's been very fortunate being in this role because, one, I had to learn a lot of the businesses. And there's no question, as Warren bought the businesses, had that general knowledge. I absolutely had to engage with each of them. And they've been great in
sharing their business models, their approach, their thoughts around where the risks and opportunities are. And I think as we went through that, there's no question, I had questions.
and wanted to engage with them. And Warren talks about the curiosity being important as you go through things. That would be my style, to have questions and comments around their business, their frameworks. At the same time, they have great businesses and they run them very autonomously. And that remains in place. But if there's opportunities to see where maybe you've seen something in another business,
or an opportunity I may see in their industry, we're going to discuss it and see if that's something we should pursue or are we properly addressing the risk. And I found all our managers to be absolutely engaging on that and want to have those dialogues. And I'd say that's a reflection of my approach. I'd also say that...
When you think of our managers, again, very autonomous. They run their businesses. They know it better than I ever will. But if I see an opportunity that it's well worth their time to talk to another one of our managers, if it's Geico and they've gone through a technology transformation process,
They're not by themselves that need to be thinking that way. We want to make sure the right folks are talking and figuring out how we can benefit from the prior experiences. So it's, I would say, more active, but hopefully in a very positive way. And we've got an exceptional group, so it's worked out exceptionally well as I've gone through that period of time. It's working way better with Greg than with me because...
You know, I just didn't want to work as hard as he worked, and I could get away with it because we've got a basically good business, very good business, and I wasn't in danger of you firing me by virtue of all the ownership and the fact that we would do pretty well. But the fact that you can do pretty well doesn't mean you couldn't do better, and Greg can do better at many things. Many people want to be managed, right?
need help in being managed. Some don't. Some you just leave alone. You know, we've had managers who would have been crazy to start giving instructions to because they just quit. And I wouldn't blame them because I'd be the same type myself. But a lot of people, I mean, people really do welcome direction and help. And, you know, and particularly when they're getting it from somebody like Greg that
really lives the life himself and doesn't just come down from high and say, you know, here's what you do while I do something else. You know, a manager that behaves differently than what he's asking the people beneath them to behave, it just doesn't work over time. People want a manager that they admire, and they're not going to admire them
if those people profess to behave in one manner and behave in another manner. It's easier, this is a sad thing, but it's easier for an organization to see its quality move downward than it is upward. I mean, if the boss behaves badly, it causes everybody to behave. I mean, that is really catching.
It's not as catching on the way in upper management, but if the manager is doing a lot of little things to grease his own situation, pretty soon, let's say you're running a retail establishment, pretty soon all the employees or a lot of the employees telling their friends that they get a discount with the retail operation and that they want money.
if their friend wants something they'll put it on their account and then before get the discount once you start deviating downward it is really contagious and it is hard to rebuild so you really need someone that behaves well on top and is not playing games for their own benefit and and we get
lot of managers that bend over backwards not to do that sort of thing and then we get a few of bend over forwards and And if you get enough companies, you're going to get a lot of different forms of behavior and Greg does something about it I've generally been lax and doing something about it, but he's done way better job as that than I have Okay station for
Hello, Mr. Buffett and Mr. Abel. My name is Kansas Lohmeyer. I am a junior at Elkhorn South High School and was born and raised in Omaha. My question is directed to Greg Abel. Berkshire Hathaway is the second largest utility provider in the United States. And a 2025 Reuters investigation found that is the Colfley is the dirtiest in the nation.
There is currently no concrete plans to retire coal and fully transition to renewable energy. I'm 17 years old. Considering that, what do you have to say to young people like me who will live with the consequences of climate change caused by companies like Berkshire?
Thank you for your, both your question and your comments because it is important to understand say Berkshire Hathaway Energy but also how they operate and maybe using Iowa at least as a starting example because I think that was one of the states cited in the report.
One of the important things that I'd say early in us acquiring our energy companies, and I go back to when we acquired MidAmerican, we acquired it in 1999, purchased MidAmerican in 2000. But one thing that became very clear to myself and our teams was that
What we do within our utilities is really driven in two fronts. One, we absolutely have to meet the requirements and the law that's laid out federally. But most importantly, we had to recognize we implement public policy across these states. And that was an interesting conversation when I go back to Iowa. And again, the report cited that as a significant problem.
It was early in the 2000s when, for the first time in Iowa, we were going to, as a utility, be short of power. So we didn't have the energy, and we entered into a significant discussion with our governor at the time and really sat down and said, where do you want us to go as Mid-American? And what resources do you want as a state?
And at that time, we were predominantly a coal-based state. And we recognize that, obviously, and fundamentally, personally viewed it as a risk. But we needed to have that conversation with our state. And as to how we would manage that going forward, the interesting thing was that as we had that conversation in June,
the early 2000s, again with the leadership of our state, it was clearly decided we wanted to continue to be long power, so i.e. not be short for our customers. We discussed the type of resource, and I remember a very clear conversation around we wanted to stay balanced across a variety of energy sources. And at that time, it was really coal and natural gas.
And at that time, we made the decision to build the largest wind project in the U.S., in Iowa. So we undertook an effort to build three resources, a coal plant, a gas plant, and what was the first wind project we owned in Mid-American.
And again, it was very consistent with what the state wanted. But we also laid some important groundwork there because we started to define the importance of renewable energy, non-carbon resources. But it has to be consistent with what the state wanted. And we've gone on over the since that period of time to deploy $16 billion into Iowa associated with renewable energy.
Again, very consistent with what our state wanted us to do, i.e., the underlying policy. We don't get to make that decision and just spend $16 billion. It's done in conjunction with our governors, our legislatures, our regulators. And at the same time, we've had the opportunity to retire five of the ten coal units. Now,
As the report highlighted, I understand people would like those other five coal units retired at this time. But to think we deployed 16 billion to retire five, and it's a very good outcome for our customers. We've been able to maintain our rates. They're some of the lowest in the country. So it's been done very efficiently. But the reality is we still need those five coal units to keep the system stable.
We cannot have a Spain-Portugal situation. So we absolutely respect the input. We absolutely respect the process. And we'll continue to work with each of our states to identify the path they would like to chart. And we work hard to ensure there's good balanced outcomes because we recognize...
the challenges they're associated with other folks' desires. So I think you'll continue to see our utilities implement policy consistent with the needs of their stakeholders, their customers, and at the same time always respecting what's required by any of the federal standards. So thank you for your comments. Okay, 31. Let's see. Becky. Thank you.
This question comes from Billy DeRoss. He writes, Mr. Buffett, as a nurse from New York State, I've spent years struggling to secure good health insurance for myself, even while working on the front lines to save lives. In New York, accessing insurance means navigating a confusing state-run system that feels like it's designed to overwhelm.
I'm curious, what ultimately led to the end of your healthcare venture with J.P. Morgan and Amazon? And given your commitment to value and long-term thinking, would you ever consider taking another look at health insurance reform in the U.S.? Yeah, we're spending close, it's hard to get the precise figure, close to 20% of GDP on health. And if you go back to 1960, there were
countries that were each spending around 5%. And then the lines began to diverge dramatically. But the mathematical fact that there are only 100 percentage points in the equation didn't change. So we tried that experiment with J.P. Morgan and Amazon. And we had three people that didn't think they knew the answer. And
but thought that, in my case, I used the term that it was a tapeworm in the economy. And we also found out that the tapeworm was alive in every part of the country. I mean, the hospitals liked it. The hospitals had prominent people working with people. People generally liked their doctor, but didn't like the system. I mean, all kinds of things. But in the end, J.P. Morgan and
Amazon and Berkshire were not going to have any effect on changing that 20%. Now, that 20%, there are only 100 percentage points available, and one of the countries spent 6% or 7% and perhaps used our system to their advantage, which is also very true. You know, that is an enormous percentage of an economy, and we simply, it was too entrenched.
to really do much in the way of change and we spent some money on it and we did some work and we learned a good bit about our own systems and we saw the degree to which the present system was ingrained in so many people's you know whether the health care providers or whether everybody and these aren't evil people i mean they're just
They're just going about something and trying to save lives. But we found that whether it was in Canada or France or Britain or wherever it might be, if you looked at our costs, that they were just far higher. And to some extent, we were subsidizing the rest of the world. And people would come to the United States to do the really unusual or challenging jobs.
health in terms of operations and that sort of thing. But we made no progress. And there comes a point where a lot of the governments, you know, I mean, it's so involved in the situation and health is so important to everybody. And we couldn't, we, as I said to Jamie and Jeff, I said, well, the tapeworm won. And
There are problems in society when you get 20% of your GDP going into a given industry. The degree of enthusiasm for changing that industry, the political power that the industry will have, and that doesn't mean they're evil. Everybody, they just end up there. So I don't know the...
We came to the conclusion we didn't know the answer, the three of us. And we had the money to do it, and we didn't know how to change how 330 million people felt about their doctor, felt about their health care, what they felt entitled to. And it won't change by itself. And government is the only one that can change it. And the only people in government that can change it are
getting majority of 435 people 100 people and and my dad lost one election in his life in 1948 he he was a very strong republican and in 1950 he went back and beat the guy that beat him in 1948 and he got the doctors behind him and and uh he did very you know they're very well and they believe 100 of what they're doing they're helping people every day and during the
pandemic, the sacrifices made by people to save other people, just incredible. Can you imagine working in something where they're bringing in people that are going to die by the dozens and dozens and dozens, and you try to somehow keep your own morale up and keep working with them? So you can't argue about the importance of it. Our costs are so different than any country in the world that it's a
It is just, it's a huge element. And we're a very rich country, so we can do other, we can do things other countries can't do. And through our elected representatives and a whole variety of things over time, we've developed a system that is enormously resistant to any kind of major change. And it's important in every community that it's in. So I wish we had an answer for you, but I was...
somewhat pessimistic going in and I was a little more pessimistic when we came out but I'm glad we did what we did and we learned something about our own failings in the process so Berkshire in effect got its money's worth but we didn't kill the tapeworm. Okay trying to change things in government is it's an interesting proposition in the country because you get self-selection in terms of the people that go into government and continue in it
and to some extent they keep they have to make decisions that they don't like as they go along and they learn to accept them or to rationalize them or whatever it may be but it's still about you know this country's worked out better than any country in the world so it uh you can't argue it was a failure but you can't argue that there is there are certain problems that are terribly tough to figure out ways to solve
and of course one of them gets back to the fiscal problem i mentioned before because it's it's easy to spend money and it's hard to cut people's receipts and uh and if you get elected you know you were going to you're going to say to yourself well i can do more good if i stay in than if i really vote my conscience on this sort of thing so you give away a little bit here and a little bit there and a little bit there and finally you don't recognize yourself in the mirror anymore and
And I grew up in a political family, but, and I watched how people behaved and they behaved like human beings, which is what you have to expect. And I behaved like human beings. We still manage to keep moving forward in dramatic ways. It's so much better to live here than it was 100 years ago or 200 years ago. It's dramatic. So you can't say the system's a failure, but you can say that it is very difficult to make progress
Major changes in it. Okay. Station five.
Hi, Warren Gregg. My name is Ping-Huang Chen. I'm from Taiwan. This is my seventh time here. First of all, I want to thank you, Warren, for your generosity of sharing your wisdom and lesson. You changed my life, and you're my role model and my hero. And my question is, Warren, you mentioned that Mr. Apple would be in charge of capital allocation in the future.
And I'd like to know your perspective on is it easier for a business operator to be an investor or for an investor to be a business operator? Thank you. That's a good question. I see we're calling him Mr. Apple even. Thank you. It's a lot tougher to be an operator. I mean, it's easier to sit in a room like I do and play around with money.
It's just an easier life. That doesn't mean it's a more admirable life. It doesn't. But it's actually been a pleasant life for me, so I don't complain the least. And I've been able to choose my friends, which has made an enormous difference in my life. I've never had to work for anybody that I really didn't admire. I mean, that's a luxury in life. I had five different people I worked for, and
You know, I just, they were fantastic, whether it was the manager of the local Penny's, which is located, well, it used to be located a couple miles from here, and newspaper managers, everything. I've never been really disappointed by any teacher I've had. So I would have to admit that I've been able to choose what I do with my day to an extraordinary degree compared to being
a business operator and in many cases I wouldn't like to compete to be a top notch business operator in terms of some of the behavior that might be forced upon me I am the master I found myself in this position where I can run the kind of company I want to run and that's an extraordinary luxury and with that I should say that I'm getting a
a section that says five-minute warning, exclamation point, five-minute warning, exclamation point. So I would now like to turn to a subject that I want to discuss with you a few minutes, and then when I'm through discussing this, I'll let Becky ask me a question or two, which you may want. Some of the questions that come to you as I make these comments. Tomorrow we're having a broadcast
board meeting of Berkshire and we have 11, two of the directors who are my children, Holly and Susie, know what I'm going to talk about there. The rest of them, this will come as news too. But I think it's the time has arrived where Greg should become the chief executive officer of the company at year end. And I want to
bring that on the directors effectively and then give that as my recommendation. Let them have the time to think about what questions or what structures or anything they want. And then there's a meeting following that, which will come in a few months. We'll take action on whatever the view is of the 11 directors. I think they'll be unanimously in favor of it. And
That would mean that at year end, Greg would be the chief executive officer of Berkshire, and I would still hang around and could conceivably be useful in a few cases. But the final word would be, Greg said, in operations, in capital deployment, whatever it might be. I could be helpful, I believe, in that in certain respects,
If we ran into periods of great opportunity or anything, I think that Berkshire has a special reputation that when there's times of trouble for the government, that we are an asset and not a liability, which is a position that's very hard to have because usually the public and government get very negative on business if there's a time like that. So I think I could...
There might be a time when I'd be hopeful that Greg would have the tickets and he would make, like I said, whether it's acquisitions, I think the board would be more welcome to giving him more authority on large acquisitions, probably if they knew I was around. He would be the chief executive, period. And like I say, the plan is to, and Greg doesn't know anything about this until what he's hearing right now, but that
Yeah, the board will be able to ask me questions tomorrow as to a little more of the specifics of what they should be thinking and all that. But they'll digest it. And then at the next board meeting after that, if we, as I would guess we would, if they act, then obviously we have something to do.
announced to the world that some material change in Berkshire and we'll go forward with that operation and I will play with a Ouija board or whatever that comes out in terms of doing things, but I will not. I have no intention, zero, of selling one share of Berkshire Hathaway or it'll get given away gradually. It just won't
Thank you. Okay, drink your Coke and calm down. I would say that I would add this.
The decision to keep every share is an economic decision because I think the prospects for sure will be better under Greg's management than mine. But, you know, I will come in and there may come a time when we get a chance to invest a lot of money. And if that time comes, I think it may be helpful with the board.
the fact that they know I've got all my money in the company and I think it's smart. I've seen what Greg has done. So that's the news hook for the day, fellas. And thanks for coming. The enthusiasm shown by that response can be interpreted in two ways, but I'll take it as a problem.
Thank you.