Buffett Munger Investing Wisdom: Analyzing the 2025 Meeting
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Welcome to the DupDive. Today, we're plunging into a really rich collection of material, all centered on Berkshire Hathaway's 2025 annual shareholder meeting and also the reflections in Buffett and Munger Unscripted.

Think of this as your shortcut to understanding the key insights, you know, from the formal meeting transcript itself, which is full of market wisdom, but also personal stories, timeless investing principles. Right. Our mission basically is to make you remarkably well informed quickly, but thoroughly, hopefully sparking some aha moments without overwhelming you.

Okay, so let's dig in. What makes this collection so significant? Well, I think what immediately grabs you is just the sheer scale and the global pull of the Berkshire meeting. I mean, just imagine a shareholder meeting in Omaha potentially drawing a record crowd in 2025. Yeah. And you've got listeners tuning in from literally everywhere. And it's worth thinking about the...

the really international leadership team guiding this whole thing warren buffett obviously omaha gray gable from canada and jane originally from india that diverse perspective right at the top that's that's a key thing absolutely and you know early in the meeting there was this moment that really jumped out at me buffett's very clear very appreciative acknowledgement of tim cook oh yeah and his huge contribution to berkshire success through that apple investment

It's fascinating how Buffett almost downplayed his own role, suggesting, you know, Cook's leadership actually generated more value for Berkshire than maybe some of his own earlier moves. Right. It's that recognition and respect for just exceptional talent, isn't it? Even when it highlights someone else's success. Exactly. And.

It really was a classy moment.

Now, shifting gears a bit to something completely different and actually quite heartwarming was the story behind the Berkshire Anniversary Books.

Ah, yes. This whole thing was led by Carrie, who has a family connection to Berkshire. And she like single handedly brought both the 50th and 60th anniversary books to life. Yeah. And what's amazing is she had basically zero prior experience in editing or publishing. She just had the idea. And, you know, as Buffett said, used her imagination to pull off these really complex projects. And the proof is in the pudding. Right. Over 4,400 copies of the 60th anniversary book were just snapped up at the meeting and

It shows how much those personal touches matter. Definitely. And the generosity part, too. Carrie didn't want any payment for all that work. But, you know, typical Buffett gesture. He insisted on making a big donation to her chosen charity, the Stephen Center, which helps the homeless. And there's a family link there, too, isn't there? Yeah. Yeah, a powerful connection. Her grandfather helped found the center and her husband's on the board now. It's just a great example of...

You know, unexpected contributions being really valued and recognized by Berkshire in a meaningful way. It really is. It shows the human side of this massive company. Okay, so let's shift focus now to the bigger economic picture. Trade deficits, tariffs that came up. Right. Someone asked about Buffett's view back in 2003 on import certificates, you know, as a way to manage trade imbalances.

and contrasted that with his more recent talk about tariffs being like economic war. Yeah, that was an interesting question. It raises that point about how his thinking might have evolved on global trade. So what's the key difference there? Well, the crucial thing, as Buffett explained it, is that those import certificates were a very specific mechanism really aimed at balancing trade, and they even had provisions for developing countries. His worry now about tariffs

seems more about the potential for escalating negative feelings globally, especially given how fragile things are geopolitically with so many nuclear powers. He really pushed the idea of countries focusing on their strengths and just trading with each other for mutual benefit. So the insight is his sort of nuanced take, distinguishing between specific tools for balance,

versus the broad, potentially harmful impact of terrorists on international relations. That makes sense. A targeted tool versus a blunt instrument, kind of.

Now, following that global thread, let's get into Berkshire's investments in those five Japanese trading companies. That's been going on for about six years now. Yeah, that's a fascinating story. It's interesting how Buffett framed the start. He said they bought them at what he thought were just incredibly low prices. Really highlights finding those undervalued assets globally, right? Absolutely. And what's really telling is the long-term conviction.

Berkshire started out setting this limit, just under 10 percent ownership, you know, respecting the Japanese company's preferences. But because the experience has been so positive, they're now gradually increasing those stakes. And then in a really strong statement, Buffett, speaking for himself and Greg Gable, said they intend to hold these investments for.

Wait for it. 50 years. 50 years. Wow. That really emphasizes a generational outlook on investing. It really does. It shows incredible faith in the long term prospects there for the businesses and Japan itself. And it's not just Berkshire doing well in Japan, right? Big U.S. names like Apple, Amex, Coca-Cola are thriving there, too. Exactly. And Coca-Cola, apparently Japan is its biggest market for soft drink containers.

That just underscores the deep economic links, you know. Definitely. Plus, Greg Gable talked about how they're actively working on building strong relationships with these Japanese partners, thinking about maybe future collaborations globally. So it's not just the money. It's about strategic ties. Right. And Buffett's advice to turn every page, that just perfectly sums up the hard work needed to find opportunities like these. Which leads us neatly to another big point about Berkshire right now, that massive cash pile. Oh, yeah.

We're talking over $300 billion in cash and short-term stuff. That's, what, 27% of their total assets, nearly 5% of the whole U.S. Treasury market. It's staggering. So the obvious question is, why sit on so much cash? Well, there are basically two main reasons. First, they need plenty of liquidity for their business.

massive insurance obligations. It's non-negotiable. And second, they're patiently waiting for what Buffett famously calls those fat pitch investment opportunities. They're deliberately not feeling pressure to just deploy capital constantly. Like Buffett said, you just can't predict when the really great opportunities will show up. It shows that discipline in capital allocation, quality over quantity. It's that treasure hunt idea he mentioned, always looking, sifting through things, even if it takes time.

Exactly. He thinks big opportunities will come eventually, but who knows when. He even made that interesting comparison between, like,

Stock trades being quick versus real estate deals often dragging on and maybe falling apart. Yeah, and it's important you brought up history there, mentioning past real estate blowups like Second Dorf and Reichman. It reminds you that even seemingly solid deals can go sideways. So that huge cash position, it's very much a strategic choice, not just because they can't find anything. Okay, bringing us into the modern day a bit, artificial intelligence.

There was a question about AI's potential impact on insurance that was for both Buffett and Ajit Jain. What was the key insight there? Well, Ajit Jain was very direct. He said AI will be a real game changer across the board in insurance risk assessment, pricing, sales, claims, everything.

His conviction about AI's disruptive force was really strong. But then Buffett came in with a different but equally powerful angle, didn't he? He absolutely did. He said he wouldn't trade Ajit Jain's judgment in the insurance business for all the potential AI advancements over the next decade. Wow. That's an incredible vote of confidence in human expertise. It really is. The takeaway is the lasting value of deep industry knowledge and seasoned judgment, even when faced with revolutionary tech. It highlights Buffett's immense faith in people.

and experience, especially in complex areas like insurance underwriting. He basically said, when it comes down to crucial insurance calls,

He trusts Ajit's insight more than any AI right now, or even in the near future. - Okay, on a later note, Portillo's hot dogs. Someone from Chicago asked if Berkshire had bought them. - Yeah, that was funny. - Buffett's reaction was classic. He claimed he knew nothing about it, joked maybe Greg Abel bought it behind his back. It definitely lightened the mood in a very dense session. - And Greg Abel chimed in that Portillo's isn't part of their Marmon group, adding to the fun and probably clearing up some confusion for the questioner.

A welcome little break for sure. Belonging that, though, we got into a really fascinating historical story about Rockwood Chocolates in Brooklyn. Oh, the LIFO story. Yeah. And a key tax lesson Buffett learned early on, which connects directly to Berkshire later buying Marmon, which grew out of Rockwood. So what was the business insight in that chocolate story? The core was Rockwood using LIFO accounting last in, first out for their cocoa beans.

Cocoa prices went up, creating this big paper profit, but actually realizing the profit had tricky tax consequences. And it was Jay Pritzker who gave a young Buffett some crucial advice on navigating those tax code complexities when they were thinking about spinning off part of the chocolate business.

That early lesson clearly stuck with Buffett, impacting his understanding of finance and tax and influencing the later Marmon deal. He even connected it to Hershey's recent struggles with high cocoa prices, showing how these economic principles keep coming back. Amazing. A simple chocolate story with a deep financial lesson. OK, shifting again, more philosophical. American resilience. Are investors too pessimistic about the U.S. economy? Buffett?

Buffett had strong views. He really did. He strongly reaffirmed his belief in the American tailwind, you know, the incredible luck of being born in the U.S. And while he acknowledged all the huge changes since he was born in 1930, recessions, wars, massive tech shifts, his message was basically, don't get discouraged by today's challenges.

Change is constant. And the U.S. has this amazing track record of adapting and overcoming. And building on that idea of navigating challenges, the conversation moved to balancing decisive action with patient waiting and investing.

That's a duality Buffett often talks about. It is, yeah. He stressed needing patience to find the really good opportunities, but then needing to act fast and decisively when you see one. He told that story about quickly buying Mrs. Annenberg's business once he saw its value. Right. And Greg Abel added a really good point that being able to act quickly often comes from all the homework, the research you do while you're patiently watching. That makes total sense. It's not passive waiting. It's active preparation. Well,

which then led into talking about trust and building long-term relationships in business. Yeah, Buffett mentioned preferring individual partners over institutions early on. He really emphasized mutual trust, partners who pull more than their weight. You can tell he genuinely enjoys working with talented, enthusiastic people who are in it for the long haul. Okay, let's dive into a specific Berkshire success story that kind of embodies these ideas.

The Geico turnaround under Todd Combs. OG Jane gave a really detailed overview. What drove that success? The speed and scale of Geico's improvement is just remarkable. Jane pointed to two key areas where they'd fallen behind. Yeah. Accurately matching rate to risk and getting telematics right. OK. Said Geico's now not just caught up, but maybe even leading in telematics.

Plus, they did a major strategic cost-cutting effort, including reducing headcount by 20,000, saving a huge amount annually. Wow. And these things have led to fantastic underwriting profits. Geico's hitting combined ratios now that, frankly, Jane himself didn't think were possible just a few years back. Remember, under 100 is profit, so their low ratio is a huge turnaround.

It's phenomenal. And Buffett added his view, right? Highlighting the incredible return on that initial $50 million JICO investment from 76. Yeah, now bringing in billions in profit and providing that massive $29 billion float money they hold but don't own that they can invest. It's incredible. And the stability of the core product is interesting too. Buffett noted the basic auto insurance product hasn't changed that much since 1936.

The difference is in the sophistication of pricing and risk assessment. The company's history of overcoming problems, getting back to basics, plus that early mentorship Buffett got from Lorimer Davidson. They're all key parts of this long success story. It's a powerful reminder about resilient business models. Okay, shifting to advice for people starting out. Early career lessons, advice for young investors.

What were Buffett's main points? He really hammered home the importance of surrounding yourself with the right people. People who inspire you, make you better. He advised young folks to actively look for work they genuinely find interesting, even if finding that passion takes time. And to prioritize who you work for, the quality of your boss, your mentors, over just the starting salary.

He used that analogy of Glenn Miller finding his unique sound. Right. And he also warned against getting into financial stuff that could risk your long-term stability, avoiding stupid things, as he put it.

But overall, he was optimistic about the opportunities out there today. Solid, timeless advice. Now, currency risk that came up, especially thinking about the U.S. dollar in 2025. What's Berkshire's approach? Buffett made it clear their Japanese yen borrowing is very specific. It's tied to those long term Japanese investments and really low borrowing costs there.

It's not a general policy to hedge currency risk across the board. He stressed again that Berkshire doesn't make decisions based on short-term earnings impact quarterly or annual. They're thinking 5, 10, 20 years out. He did voice a broader concern, though, didn't he, about governments tending to devalue currency over time? Yes, he did.

He expressed unease about U.S. fiscal policy and this global trend. He pointed to history, lots of examples of major currency devaluations and how hard it is to create real checks against that tendency. Interestingly, he mentioned a big currency play they made in the past, shorting the dollar against 12 other currencies. Yeah, he alluded to that multi-year bet that apparently made them several billion dollars. Yeah.

But he suggested something on that scale is pretty unlikely now. So it seems like while they're aware of currency risks, their main defense is just owning strong businesses that have enduring value regardless of currency swings. Exactly. With the Japanese yen borrowing being a specific opportunistic exception. Someone even invited them to invest in Mongolia. What was Buffett's take on emerging markets? Well, he was polite about the invitation, but hesitant, mainly citing the difficulty of planning investments from so far away.

He did remember someone who did well investing there in the past, though. His main advice for emerging market governments was simple: build a reputation for a solid, stable currency over time. He said Berkshire generally avoids places with a high chance of runaway inflation. But despite the caution, he did sound optimistic about Mongolia's future. OK, let's talk competition. Private equity firms moving into insurance.

How does that affect Berkshire? Ajit Jain was very candid about this. He really was. He flat out acknowledged Berkshire isn't competitive anymore in certain parts of the insurance market, especially life insurance. Why is that? Mainly because many private equity firms use higher leverage and more aggressive investment strategies.

Jayne said, while that can boost returns when times are good, he's worried about potential regulatory issues and risks to policyholders if the economy turns down. Right. And Berkshire, he stated very clearly, just isn't willing to take on that kind of risk. So they stepped back from those segments. But he also confidently said no other property and casualty insurer can really copy Berkshire's unique model, especially not since he joined. Sounds like a deliberate choice, stability and discipline over chasing potentially riskier returns.

OK, let's circle back to some more foundational advice for people starting their investment journey. Buffett, again, literally stressed associating with people who inspire you, who make you better, people you can learn from constantly. Find work you do, even if you didn't need the money. He mentioned the huge advantage of being born in the U.S., urged young people to make the most of it, but also consciously avoid anyone or any business asking you to compromise your ethics and finding truly fulfilling work.

That often takes time.

And speaking of time, market volatility. Did the recent ups and downs create opportunities for Berkshire? Buffett gave some great historical perspective there. He talked about huge Dow Jones drops early in his career to show that downturns aren't new. Right. His point was investors need to adapt to the market swings, not expect the market to bend to their wishes. Setbacks are just part of life, part of investing. And again, he strongly believes this is an exceptionally good time to be alive considering overall human progress.

Now, looking ahead at potential disruptions again, autonomous vehicles, how could they shake up Jai Aiko's traditional auto insurance model? Ajit Jain fully agreed that self-driving cars will fundamentally change auto insurance.

He expects a big shift in liability away from covering driver mistakes towards product liability for the car and software companies. Interesting. So while accidents might go down overall, the cost to fix these high-tech cars when they do crash will likely soar. So the net effect on total insurance cost is... Uncertain. That's the key takeaway. It's really hard to predict the full impact of such a massive technological change on the industry's economics. A huge unknown, really. Okay, but...

Briefly, Berkshire's investment income and future growth prospects. Buffett explained their investment income is pretty stable and robust. It keeps growing thanks to the insurance float increasing and retained earnings from all their businesses. They expect a significant pileup of funds each year unless they find really attractive large acquisitions.

Lower short-term interest rates have had a bit of a negative effect recently, but the overall trend is still positive. And this brings us back to that theme, truly great investment ideas are rare. Exactly. Buffett repeated Charlie Munger's point. Most of Berkshire's massive long-term gains came from just a handful of really great ideas over many, many years. He warned against expecting constant hot tips from brokers or the media.

patience, waiting for those rare high conviction opportunities is absolutely key for long-term success. There's also that new 1% tax on stock buybacks in the U.S. What's the impact on Berkshire and companies like Apple that buy back a lot of stock? Buffett acknowledged the tax makes buybacks slightly less attractive financially for companies. He noted Berkshire has always been very disciplined, only buying back shares when they think the stock is significantly undervalued.

But this tax does change the calculation a bit. And yes, it affects companies like Apple that have used buybacks heavily. Before the afternoon session, Buffett recommended a documentary. Yes, he strongly recommended Becoming Catherine Graham on Amazon Prime. Called A Remarkable Story of American History, really urged everyone to watch it. OK, afternoon session. Derivatives in the utility business came up. Right.

Greg Abel explained they use derivatives in their regulated utilities mainly for necessary hedging against financial risks. Not speculation. Definitely not.

He stressed Buffett's intense scrutiny of all derivative positions, especially after Enron, and that they're only used to support the core business. Buffett also shared some intellectual advice from Charlie Munger about understanding the other side of an argument. Yeah, that was great. Munger's idea that you should be able to argue the case against your own position even better than the person actually holding that opposing view.

It really underscores the need for deep understanding and intellectual honesty. Looking ahead to Berkshire's future leadership, Greg Abel, the designated successor, talked about capital allocation.

Abel stressed continuity with Buffett's philosophy. His priorities are, first, reinvesting in their existing businesses, second, looking for acquisitions of whole businesses that fit their criteria, and third, making selective stock investments. He emphasized needing a really deep understanding of the long-term economics and risks of any potential investment.

He even mentioned a recent $10 billion deal they walked away from due to concerns about valuation and risk. Then Buffett raised a big infrastructure issue, the U.S. electric grid.

He feels very strongly about this. He argued there's an urgent need for huge investment and a re-syncing of the grid, comparing it to the interstate highway system build-out needing government and private sector cooperation. And Berkshire's role. He pointed out Berkshire has the capital and the expertise in energy generation and transmission, but also acknowledged the massive challenges of dealing with multiple states and regulations.

There was also advice for a young, aspiring Berkshire shareholder from Hong Kong. Yes. Greg Abel agreed with the young man's father, hard work is fundamental. Buffett added the importance of staying curious and reading widely, echoing Munger's lifelong advice. The big risk of wildfire liabilities for Berkshire's Western utilities was also discussed at length. It

It was. Buffett admitted buying Pacificor as one large entity across seven states was, in hindsight, a mistake because of this unforeseen escalating wildfire risk. And what are they doing about it? Greg Abel detailed their strategies.

intense asset maintenance, hardening the system, and sometimes having to proactively shut off power during high-risk weather, which is tough. He stressed meeting to educate consumers and work with regulators on liability, arguing utilities can't just become the insurer of last resort for all wildfire damage. He mentioned a specific 2020 fire and ongoing legal battles, highlighting how complex this is.

Buffett then shared that clever trick he used to evaluate management early on the desert island question. Right, asking managers which competitors stock they'd own or short if stranded.

He said it often got surprisingly honest answers about competitors' real strengths and weaknesses. Different from today's polished investor relations, maybe? Definitely. He encouraged listeners to do their own digging on Berkshire, using all the public info available. There was also a question about the valuation difference in the two stages of buying the rest of Berkshire Hathaway Energy, BHE. Buffett explained the lower valuation in the second step.

was because they reassessed the business due to changing societal factors, especially those increasing risks in the public utility sector. Like wildfires, regulations. Exactly. Wildfire liabilities, tougher regulatory environments, general headwinds. He compared it to the declining value of their old textile business.

suggesting the outlook for investing in public utilities just isn't as good now. But he did still praise the property casualty insurance model, right? Yes, highlighting that advantage.

You need capital as a guarantee, but you can invest that capital in other businesses to generate extra returns. And he noted the rise of capital light businesses. Yeah, pointing out how many big companies today don't need huge capital reinvestment. Apple is his example, being able to return so much cash via buybacks because its core business wasn't super capital intensive historically. He also talked about the temptation of businesses built on managing other people's money. Right, like Hollywood or asset management. Yeah. The focus is on managing others' capital.

often with big incentives for the managers. He contrasted that with his and Munger's preference for mainly investing their own money. And then came that great analogy, the U.S. economy as a cathedral and a casino. Yeah, the cathedral being the productive economy, the casino being all the speculative activity attached.

He worried the focus now was too much on the casino and stressed the need to keep the cathedral, the real value creation, strong for society's long-term health. The influence of teachers and the joy of learning also came up. Buffett talked about how much formal teachers and informal mentors meant to him. His early love of reading investment books just driven by curiosity.

He noted his approach to understanding businesses was different from Munger's more does it work than how does it work. Right. He emphasized finding teachers passionate about their subject who are willing to mentor while also recognizing everyone has unique talents. He also revisited the issue of government finances and currency debasement. Yes. Reiterating the fundamental challenge governments have balancing income and spending.

He pointed to history, unchecked spending and currency debasement have damaged civilizations before. And his concern about the current U.S. situation. The significant gap between revenue and spending and the inherent risk that poses to currency stability and society over the long run. He also touched on global issues and the need for humility. Cautioning against any one nation thinking it can dictate solutions to the world.

emphasizing leading by example, staying humble despite success, and highlighting managing weapons of mass destruction as a critical global challenge. But despite all these challenges, he kept coming back to the idea that this is an amazing time to be alive. Absolutely. He strongly believes this is the best time and place in history, comparing modern life to the past. But he added that crucial point. Maintaining a stable currency is fundamental to keeping society prosperous. And then the big news.

The succession plan announcement. Yes, a very significant moment. He formally recommended Greg Abel to take over as CEO of Berkshire by year end and said he'd discuss it with the board. But Buffett's staying involved. He plans to, yes, to be available and helpful. But with Abel having the final say, he also repeated he'll never sell his Berkshire shares. They'll be given away. And the economic reason he believes Berkshire will do even better under Abel's leadership.

Wow. OK, finally, our deep dive also covered key insights from the book Buffett and Munger Unscripted. Right. We noted the book mirrors the investment process, principles, valuation, capital allocation, management, case studies, limitations, the value of real examples like See's Candies, Jai Co-O, those gems in miscellaneous topics like derivatives or book recommendations. Even the dedications reflecting core value. And the timeless investing principles.

Absolutely. Value investing, rejecting the rigid growth versus value idea, waiting for fat pitches, dangers of over diversification if you know your stuff, long term focus, skepticism of projections, focus on intrinsic value, management integrity, all hammered home again and again.

Plus, Berkshire's unique structure and approach. Yeah, the decentralized management, treating owners right, the advantages of their structure, lessons from mistakes like Dexter's shoe, attracting long-term shareholders, conservative risk management. Specific business insights, too. Lots. The reinsurance cycle, stock option accounting issues, honest reporting, staying in your circle of competence, stocks as businesses, Mr. Market.

Constant learning. The power of compounding. Crucial. Compounding effective reinvestment. Coke, CCs. Letting efficient companies thrive. Auto insurance example. Adapting to tech shifts.

JICO and telematics. JICO came up a lot as a case study, didn't it? It really did. Recurring themes there about value creation, avoiding catastrophic risks even if they seem low probability, the importance of weekend phone calls for opportunities. And those prescient warnings about derivatives. Yes, and insights into tough industries like airlines,

The advice to just hold good businesses long term, the unique national indemnity insurance approach, even details on book publishing. And always, that reminder about the limits of specialization stick to what you know. So wrapping up this deep dive into the 2025 meeting and Unscripted, the core themes really stand out, don't they? Value investing, quality management, long-term thinking, adapting to change. They absolutely do. And those memorable moments Buffett

praising Tim Cook, the anniversary book story, admitting mistakes, the succession news. They add real color. Definitely. We really hope that you listening feel you've got a solid grasp of the key takeaways now gained efficiently without getting buried in detail. So maybe a final thought to ponder.

In today's world, where do you see the cathedrals of production versus the casinos of speculation? What's your own circle of competence and how do you balance that patience versus action in what you do? Good questions to reflect on. We definitely encourage you to explore the source materials further if specific topics caught your interest. Thanks so much for joining us on this deep dive.