· wonderful views ·
Berkshire cannot predict the success or failure of every investment, but we know what we are doing. What we do every day is to put your money in a safe and high-quality place.
We always have a lot of cash on hand and plan ahead in case the economic crisis happens again.
The reason why they bought allegani and increased their holdings of HP is that they are “more attractive than bonds”
We have always wanted to be rational, which is a trait that the investment industry needs.
“Visual illusion” makes people realize the truth in a moment, and this insight may change people’s life
We cannot predict the dangers of nuclear weapons, and investing in them is bound to be a dangerous game.
Many bad things will happen because of human desire, and we humans have not found a place to fight it in science and technology. Once we catch fire and meet antisocial people, we are likely to return to the cave age overnight.
The best investment is to invest in yourself. Anyway, it will not be taxed. This is not only my important lesson at present, but also my most sincere advice to you.
In the next 100 years, we will unswervingly practice our corporate culture. We not only hope to become a “century old store”, but also hope to become a permanent company.
We do need institutions like the SEC, but they can’t stop people who really want to do bad things.
Bitcoin is not a productive asset, and its value depends on the price the buyer is willing to pay for the bitcoin in the seller’s hands.
Compared with Chinese leaders, we are really stupid. Chinese leaders are smart enough to ban bitcoin directly, and we are still making various assumptions.
The first is that if you are not interested in doing anything, you will not succeed; The other is that if you are interested but have a wrong attitude, you can’t do it.
After 200 years, oil will be a very precious resource. Although no one has approved of my idea before, I don’t mind.
Oil supply, this is an evil and crazy field. Some work around the world is focused on oil companies.
If you have the ability to do it and the time comes, you will buy back. We think there are many opportunities to buy back shares, but it depends on the valuation of the shares. Considering various factors, we prefer to buy some other companies rather than buy back shares
It seems that people usually prove their intelligence by reading a doctor, writing a lot of articles and reading a lot of books. But it’s actually very simple. You can buy it or not. The focus is on what the opportunity is, whether you want to do it or not, and when to do it.
On May 1, Beijing time, Berkshire’s general meeting of shareholders was held in Omaha. Buffett, 92, and Munger, 98, appeared together.
After two years, the shareholders’ meeting was held offline again. Buffett said he was very happy to see the shareholders. He also “persuaded” the shareholders to buy Xishi candy on the spot. “11 tons of Xishi candy were transported on the spot. If I can’t sell it, I have to take it home.”
The two “Omaha prophets” answered more than 30 questions from global investors in four and a half hours. These include China’s opportunities, high-quality targets under inflation, nuclear war, oil prices, bitcoin and the fate of the company after they leave.
Buffett made it clear that he was optimistic about the opportunities of Chinese technology companies concerned by investors. “These good companies can be bought at a low price. I am willing to take some risks.” Buffett pointed out that “the more you know about Apple, the better you feel about it.”
The following is the 20000 word factual record essence of the shareholders’ meeting (with deletion):
Charlie and I are 190 years old
but at present, we are still very comfortable and happy to run the company
Buffett said at the meeting that it’s great to hold the shareholders’ meeting offline again after two years. It’s nice to meet our shareholders.
Buffett: Charlie and I are 190 years old. I’m 92 years old and Charlie is 98 years old. If an investment manager is 98 years old, you’d like to see him, wouldn’t you? Because you’ll wonder what he’s doing and whether he can work normally. At present, our company is still very comfortable and happy.
Of course, I saw my friends have physical problems. For example, a friend helped us run some businesses in California a few years ago. At that time, I often met him and felt that he was in great health. But suddenly one day, we found that he had Alzheimer’s disease, often forgetful, and forgot some memories of the past. But even so, his business is OK, which is the focus of our attention. Being old is not a problem.
Before the meeting, I’d like to introduce my partner. Sitting next to me is Charlie and sitting on Charlie’s left is Greg EBER, vice chairman of non insurance business. Sitting next to him is Ajit Jain, the vice chairman of our insurance business.
From 12:00 to 5:00 p.m. yesterday (April 29, local time in the United States), 12000 shareholders entered our site and bought some goods of the enterprises we invested in. We have 11 tons of Xishi candy on site. If it can’t be sold out, I have to take them home. So we must try our best to buy some for us, okay? Yesterday’s sales data broke the record, we are also very happy, and thank you.
I also brought a box of Xishi candy to the stage. On the box is a woman. Everyone thinks it’s me. It may be a little like me, but it’s really not me. It’s probably a rumor spread by competitors (laughter). Please don’t believe it.
put your money in a safe place where you can get high-quality returns
keep cash to plan ahead, economic stagnation may happen again
Buffett: first of all, we just released the first quarter financial report of Berkshire this morning. I’d like to take a moment to make a brief comment, and then enter the question and answer session. Becky will ask some collected questions, and the on-site shareholders will also have the opportunity to ask questions, which will be carried out alternately.
Our revenue in the first quarter was $7 billion. We also hold some companies, including 360000 employees, who are responsible for investment and try to get good returns from your investment. Although there will be some risks in the middle, I think it is very good from the results.
Figure 1 Berkshire quarterly operating data
We have a variety of tools to prevent permanent losses. Charlie said before that if I knew where I would die, I wouldn’t go there. So if I think the capital will be permanently lost in an investment, I won’t invest in the beginning.
Berkshire cannot predict the success or failure of every investment, but we know the general direction of the economy and what we are doing. What we do every day is to put your money in a safe and high-quality place.
This is our life now. I think it’s very fun.
In addition, although Berkshire seems to be making little progress in investment activities and doing it slowly, we invested more than $40 billion in the three weeks from February 21.
One thing that won’t change is that we always have a lot of cash on hand. In March 2020, the economy stopped because of the outbreak of the epidemic, almost repeating the situation from 2008 to 2009. Later, US Federal Reserve Chairman Colin Powell quickly took action (releasing water and rescuing the economy) to avoid the crisis. If a similar crisis repeats, Berkshire, which holds a lot of cash, can deal with it as calmly as the Fed, which rescued the market.
Paul Walker, then chairman of the Federal Reserve in the 1980s, told me that the Federal Reserve could do anything it needed to do, both in 2008 and 2020. We should plan ahead because economic stagnation may happen again.
acquisition of alleghani and increased holdings of HP
because they are “more attractive than bonds”
question: in the shareholder letter written on February 26, you wrote that there are not many things that excite us in the market. But Berkshire bought Alleghany Corp. on March 10 and later increased its stake in HP. What happened between you wrote this shareholder letter and the subsequent large-scale increase in holdings? Why are there so many objects attracting you in a month?
Munger: the reason is simple because we found something more attractive than bonds.
Buffett: Charlie always tells you the complete answer easily. I don’t know how to add it.
There is an opportunity to make investment decisions. The release date of our shareholders’ letter is February 26. On February 25, I saw a note on my desk, which was sent to me by a friend of mine in Berkshire a few years ago. He wrote on the note, “I have now become the president of Allegheny”. And I’ve been following alejani for more than 60 years.
The note also said, “this is my first annual report since taking office as CEO. When I write the financial report, I feel very similar to your shareholder letter, so I want to share this information with you.”
Then I wrote back that I would read the annual report at the weekend and go to New York on March 7. Would you like to meet and talk?
In fact, before that day, I had no plan to invest in this company, but I had a psychological price. If I didn’t receive the note that day, or we didn’t meet on March 7, the acquisition wouldn’t happen. It’s a coincidence.
don’t gamble in the stock market
the key to making money from investment is the long-term economic development
Buffett: in the past two years, the environment of the whole capital market is difficult to figure out. Sometimes, this market is investment oriented, but sometimes, this market is like a casino where people gamble. Especially in the past two years, the market trend has been strong, so this phenomenon is particularly obvious.
If you bought Berkshire stock in 1965, you can get a good return. But if a trader does, he starves to death.
The way Wall Street makes money is speculation. 200 years ago, many people did not think that capitalism would continue until now and that they could benefit from long-term ism. Therefore, the way for investment managers or traders to make money is to benefit when others operate, and to benefit more when everyone gambles and trades quickly. They like investors to trade, and the market is dominated by this situation.
The process of investing in Western oil companies is the same. I think the annual report of Western oil companies is very good. The short-term fluctuations caused by the “gambling mentality” in the market since late February have allowed us to find good buying opportunities. Within two weeks, we acquired 14% of the outstanding shares of Western oil companies, worth more than $7 billion.
Figure 2 transaction record of Berkshire buying western oil
Munger: what we see now is almost some kind of speculative frenzy. Some computers with algorithms trade with other computers that also use algorithms. Subsequently, those inexperienced market participants are also accepting the broker’s advice (admission). It is strange that these “casino activities” are legally mixed with long-term investments.
If your trading method is like playing dice or roulette in a casino, isn’t it crazy? But this is happening in the stock market.
Buffett: when it comes to our acquisition of Western oil, in retrospect, we could actually buy more equity, so I will make more money now. But at that time, no one could think that although we had enough money to buy more equity, we still had to follow some initial judgment results. Because when making investment, we can’t predict the future.
It’s like some people buy farms and leave them to their children. But children will not sit in the field and observe plants every day to see which day they sprout and which day they grow fruit. We all hope that the price of the farm will be higher, but when we buy the farm, we won’t see that the value of the crop can rise 15 times or many times after it grows.
Buying a car factory or building an apartment is an investment. Investment in the stock market is the same, but in the stock market, traders will “persuade” you to buy and sell a stock quickly within three days. This is completely different from the investment farm. The investment farm will not buy and sell for a short time within three days, but the stock market will do so, so the volatility of the stock market is very high.
Berkshire won’t do that. It doesn’t mean we’re smarter, but we always want to be rational. I think this is a trait that the investment industry needs.
Gambling and fast trading are not advantages. I don’t think it’s the glory of capitalism. It’s just a group of people throwing dice. After throwing dice, close their eyes and wait to see what will happen. Of course, it’s not a bad thing to be rich in this system, but you need to know how much energy you have.
I have a lot of friends on Wall Street. Of course, if I keep saying that, these people will soon be friends (laugh). They make a lot of decisions every day, but what’s the key point? The key point is that the American system has worked well for a long time. Although it may still be unfair in many places, it has brought us a lot of benefits.
We agree that with the development of capitalism, our era has been very good. And because of this crazy gambling behavior, we can find the price difference to buy, which is a very important point in our investment decision-making. It seems that we are very dependent on this. But we will not be responsible for this price difference. We adhere to long-term ism with a correct attitude, which has nothing to do with IQ factors.
Berkshire is willing to acquire high-quality companies
but not actively looking for
question: are you interested in German companies? It seems that you have acquired several companies in the past, and it is a wholly-owned acquisition. If you are interested, will you passively answer their incoming calls or will you take the initiative to contact them? Is there any intention to sell?
Buffett: we want to bring Berkshire to the world, which we did 20 or 30 years ago.
At that time, at least $5 billion was spent on three securities transactions in Germany – in fact, one, which integrated some of Berkshire’s investments in Germany.
We are willing to buy it, but they (German companies) think we are not moving fast enough.
I don’t need anyone to email me and ask me if I want to buy a company, such as alleghani company. I’ve been paying attention to it for 60 years. Of course, this situation is difficult to happen outside the United States, because the environment is different. At least it will be easier for us in the United States. It does not mean that we seem biased. We may buy some companies in 10 minutes, but it is much more complicated to buy a company in other countries than in the United States, and there are some rules that must be observed.
I remember that many years ago, a German company called us. At that time, two people were running the company. Maybe they’re sitting in our audience today. They are really great. They operate with integrity and the company operates very well. There are pictures of them in the short film just now, and they have also become the managers of our company. It is really difficult to find such a perfect company, but we must not ignore that such a company must have sufficient scale.
I was very lucky to buy the German company, and I am optimistic about their operation mode. I am very pleased to establish a close relationship with them. It not only brought financial impact to Berkshire and realized greater benefits, but also we enjoyed the deal at that time. However, we can’t do this all the time, and we won’t sell it easily when we buy it.
However, if we receive a call (seeking to buy a company) tomorrow, we still need to see the situation and it is possible to make a transaction. It is possible to make a transaction of US $10 billion to US $20 billion in Germany, France, the UK, Japan, etc.
About a few years ago, we bought the shares of five leading trading companies in Japan and made some integration one after another. I told them we wouldn’t buy too much because we might change our position for a period of time. Now, all these equities should account for 5.85% of the total position, which is the way we make foreign investment.
We will not take the initiative to find such companies. We may prefer these companies to take the initiative to throw them into our arms. If I want to buy a company and our board of directors thinks it’s good, I won’t buy it because it may increase debt. So look at the example of alejani, we lost $11 billion in cash (acquisition money) in one day. So I think the opportunity can come from anywhere. For example, our operation in Israel is very good, and the scale is considerable. Of course, we also hope to invest in such a company again.
The key is to find it. Charlie, what do you think?
listed company repurchase is the embodiment of “master” consciousness
the more information you know about Apple, the better it feels
Munger: if you think about it, to buy a company for $60 billion, of course, we must like the company, we must like the price, and there is no other cost or labor input. But think about it, is this a waste of time?
Buffett: you can look at our stock repurchase figures. This law is not complicated. For example, if you know someone who sells lemon juice and someone wants to buy his business, if the price is appropriate and beneficial to both sides, the transaction will happen. That’s such a simple truth.
What’s interesting to me is, what can you achieve in the middle? But many people are not very concerned about it. When you think about 1998, we held about 150 million shares of American Express, with 11.2% of the shares. This is a great company. They give us checks for dividends every quarter, so we also collect cash from there little by little. Now we have a 20% stake in American Express, which is because their share repurchase has increased our shareholding.
Although repo will not solve any problems, repo is really a good thing. It shows that they have a sense of ownership and are willing to do so. It is also because of this that our shareholding ratio has increased from 11.2% to 20%. If you also use American Express card today, 20% of the income will contribute to our dividend, and we don’t spend more money on investment.
Imagine if you have a farm. Suppose the farm is about 640 hectares. You work hard every year, enjoy the harvest brought by the farm, and earn a little money every year. In about 20-30 years, its area may expand to 1100 hectares or 1200 hectares. So, over time, everything is possible. Of course, you might say that in the United States, the cost of capital should be taken into account, and so on.
But I want to say that as long as the price is right, repurchase – investing in what you hold again is a good thing. You see, our interest in apple is also due to the continuous growth of Apple repurchase. Their annual income can even reach $100 billion. As long as our dividend increases by 0.01%, it will bring great income. So our stake in apple is also growing. We also hope to have more equity in apple. We are interested in apple. The more we know about Apple, the better we feel about it.
So I won’t think too much about looking for projects you mentioned.
railway and insurance business has snowballing characteristics
can expect to contribute a steady stream of profits
question: bnsf Railway Company (Burlington Northern Santa Fe Railway Transportation Company) and GEICO (government employee insurance company) are the two most important companies, but they have a poor foundation of 400 points. BNSF can still maintain some profits combined with GEICO. Therefore, what policies do they have in the face of some challenges? What do you think of the current situation of GEICO and competitor progressive?
Greg: we have done very well in BNSF, and the efficiency and mechanism of operation are very precise and accurate. For BNSF, we first understand the needs of customers and hope to provide them with the best service, so as to contribute the maximum profit to our shareholders. We have also made different arrangements at different levels, operation mechanisms and all policies. For example, we have some connecting cars on the train or railway connecting cars. We are very proud today. We have not ignored any facts. We have paid attention to the most important matters that customers pay attention to. All our current leaders, management and employees are the best group of people employed by BNSF. In terms of long-term improvement, we have very accurate and valuable long-term results.
Munger: you did offer some of the best opportunities, and you made the best decisions in trading.
Our team and management are the best today.
Greg: thank Charlie for his guidance.
Buffett: Greg and Ajit are both my best and main partners. We feel that we have found the perfect manager. We put everything they can do into their hands, which is a thing to cheer. Now we have changed the results of BNSF operation (double the performance in 2021), which is really great.
We have a track length of 21000 miles, so the work to be done is really cumbersome. We need to continue some railways, which is a great undertaking for a century. It is impossible to change a railway there at any time or move to another city. For example, when I first arrived in Omaha, the city already had railways. The original railways and the rivers it passed through remained unchanged. After we opened our business in the central and western regions, we really made some arrangements for a century’s great cause. Of course, in other parts, our assets are also very important. The more important part is that Berkshire will do better, more precise and better deployment of some combinations.
Over the past 150 years, great changes have taken place in our world. We will find ways to accept all this. But don’t forget that these railways have 10, 100, 1000 miles and can’t be changed at any time. So, Berkshire shareholders, we sometimes do something over and over again. I think in 100 years, the current railway system will be better. Of course, I can’t completely promise you that we can do it, but this is our goal.
These railways can cross different fields and carry out subversive transformation on freight transportation, and can have magical results. Therefore, railway transportation is changing greatly every day. I don’t know how many bridges there are in our country. A few years ago, it might cost 3 billion to 4 billion dollars a year to operate all railways and iron bridges, but we can accept such a cost. Charlie and I should think the same. However, if we want to build the next bridge, we may call it “super Charlie Munger bridge”.
Ajit: now answer the second question, which is also about the insurance industry I am responsible for. This is a very competitive industry. GEICO and progressive are two very successful competitors in this industry.
These two companies have their own advantages and disadvantages. In the past few decades, progressive has undergone great changes. Their insurance business has gone a long way, and I think they are trustworthy. Both in terms of profit margin and growth, progressive has done better than GEICO recently. For more than 10 years, progressive has been catching up with the trend of telematics, but GEICO didn’t get involved in telematics until recently. We expect GEICO to catch up with progressive in the next year or two under the operation mode of telematics We also hope to catch up with them and bring us higher profit margin and growth rate.
Buffett: auto insurance industry is really wonderful. Insurance products have a very long history, and so is auto insurance. GEICO was founded in 1936. At that time, it didn’t think of doing auto insurance. Goodwin (the founder of GEICO) may have wanted to get rich by running this company at that time. So did progressive. Many such companies have such ideas, but in the end, only companies like mutual funds became rich.
Progressive’s current boss is very smart and has run the company for a long time. However, only one in six people in Illinois may know the company. They have been selling the same products for a long time. Of course, it took us a long time to do this.
The rise of progressive’s market value is by no means accidental. They are very self disciplined in writing insurance policies, and there was a blowout in investment in the first quarter. Of course, because they have bonds, everyone does so. Sometimes half of the enterprises do what everyone does, that is, follow the trend, and the other half want to do a division with everyone to do what they want to do.
Progressive’s boss came to my office about 40 years ago. He was really a very smart man. I said at that time that this man was likely to become Berkshire’s main competitor. He knows insurance very well, but he ignores the investment links, including underwriting, etc., so it’s really interesting how a company or organization operates and how to play its functions.
I want to say that Charlie and I have actually encountered a lot of blind spots, so we have to be careful when criticizing others. The auto insurance industry must be well studied in business schools, but now many schools do not teach this.
we are not good at timing, if we set the pace, it is also because we bought American enterprises
question: about the timing of the market, you have always said that it is very difficult to grasp the timing, but looking at your historical records, you grasp the timing very well every time you make a key decision. For example, in 1969 and 1970, you caught the trend of the stock market. In 1974 and 1975, when the stock market was cheap, you also made a lot of investment, as did 1987, 1999 and 2000. Today, you have a lot of cash and the market is going down, so my question is, how can you grasp the timing of these markets so well?
Buffett: you know our history very well. We have no idea what the stock market will look like when it opens on Monday.
Charlie and I have always been like this. I can tell you the previous story later. How did we learn at that time, but we never had to make a decision. We bought and sold because of what the market wanted to do, and we didn’t do business according to the economic situation, because we didn’t know at all.
Sometimes people will say, how good are your previous investments? You see, when the stock market fell sharply in 2008, we remained optimistic. We spent a large part of our money on investment during the severe economic recession. Now, in the past few weeks, about three to four weeks, we have spent about 15 billion to 16 billion (US dollars).
In 2008, the crisis broke out in Goldman Sachs and the whole economy went down. I remember an article in the New York Times that said, we should trust the United States and buy the United States. I would like to say that if we really knew this opportunity, we might have to wait another six months at that time, but in fact, I completely missed this opportunity at that time, and I also missed the opportunity of the sharp decline of the stock market in March 2020.
Therefore, we are not particularly good at timing, although we do well. Of course, we also hope to maintain the downward trend for a long time, so that we can make more investment, because if the price is cheap, we will certainly have more asset purchases.
This is the truth you can learn in the fourth grade of primary school, but you don’t learn much in school.
However, since you have said so, we dare to admit that we are good at grasping the opportunity, but to be honest, we have no intention to grasp the opportunity, and we have no so-called unique market insight. I remember in March 1942, the day I bought my first stock, the Dow Jones index was 90 in the morning, it seemed to be 99 when the market was closed, and now it has exceeded 30000 points. This is a simple decision. This is the decision when doing business in the United States.
It’s a good thing that you own an American enterprise. We operate in the United States and stick to doing it in the United States for 50 years – anyway, I will do well in investing in stocks. This is the advantage brought by the American environment. If we all know that this is a very simple game, as long as you persist in the United States for a long time, in fact, many such speculators will disappear, because of human nature, sometimes some things they do will not bring any value.
I hate to use such an example: if a group of monkeys are doing something, whether it’s rolling dice or whatever, I will invest in them because they don’t have so much greedy human nature.
This is really an interesting industry. It’s good to get rich here. If you have a child who wants to make money, if he has enough IQ and energy, go to work on Wall Street! You don’t have to let him go to school if that’s what you want to do. Because there is the elimination of advantages and disadvantages, because human nature is like this. Human nature is to act in accordance with their own interests. It may not be so in the long term, but at least in the short term. They just want to make money.
the danger of nuclear weapons is unpredictable
investing in them is a dangerous game
question: if we are attacked by nuclear weapons, what will Berkshire’s insurance company do?
bafi special: since August 1945, I have been thinking about things related to nuclear weapons. The risk of nuclear weapon attack must exist, but the probability of this event is very small. It’s like rolling dice in Las Vegas. There is only one in eight million hope of winning the prize. Many times we are worried that the earth will be destroyed, but the probability is very small.
Unfortunately, many people bought stocks related to nuclear weapons. We cannot predict the dangers of nuclear weapons, and investing in them is bound to be a dangerous game. Facing the unknown, if there is really danger, I can only choose to drill under the table (laugh).
Like most people in the world, Berkshire does not want a nuclear war to happen, but many major countries will make mistakes in decision-making, such as the Cuban missile crisis. Because we have experienced that period, in a potential sense, many bad things will happen because of human desire, and we humans have not found a place to counterattack it in science and technology. Once we catch fire and meet antisocial people, we are likely to return to the cave age overnight.
We have no answer to your question just now. We can’t write an insurance policy for such a situation, and Berkshire may be helpless in this degree of risk.
Ajit: the example given by Warren just now worries me that we can estimate the risk of natural disasters, but we still can’t predict the risk exposure caused by nuclear weapons. If a nuclear war really breaks out, I can only “surrender”. So we will rule out this kind of situation in the insurance contract. If our regulators or courts are opposed to this, we will also consider rewriting the policy.
In addition, if it is a fire caused by nuclear war, the insurance involved is also a complex issue. I will argue with the regulators to determine which responsibilities need to be undertaken and which responsibilities do not need to be undertaken.
the best investment is to invest in yourself
question: in the past four months, we have experienced inflation continuously, with the highest inflation rate reaching 7%, a new high since 1982. You experienced inflation from 1970 to 1975, when your portfolio also suffered losses, but you made the best investment decision at that time. In the context of similar inflation, at this moment, if you choose only one stock to invest, which one would you choose?
Buffett: you’re so cunning that you stopped me at once. The essence of this question is, in the case of inflation, what factors can support the strength of a stock? According to this logic, my answer may be to invest in more than one stock.
I think listed companies, like people, must have “skills”. For example, if a person becomes the best doctor, the best lawyer or the best singer, their abilities will not be taken away by others, let alone disappear with inflation. Therefore, there will always be people willing to pay high fees for their services or performances. This is essentially a trade in “talent”. Once a very famous dancer came to Omaha to perform. We paid a lot of money to see it. Even if the other party asked us to wear high heels, we would do so.
In fact, the best investment is to invest in yourself. Anyway, it will not be taxed. This is not only my important lesson at present, but also my most sincere advice to you. In many people’s opinion, ability is innate, and some people think it has something to do with their education, but in fact it doesn’t matter much. I think it’s the most important who you want to be in your heart. Your future appearance is determined by your ideological height.
In addition, we not only need others to tell us what to do, but also study Becky quick (American consumer news and business TV host) to see what can make us do better, or naturally find our value… The exploration of ability may take a lot of time.
For example, Manny Pacquiao spent 10000 hours becoming a champion, but now I can’t become a heavyweight champion even if I want to. However, we will also have a job that we like, are good at, is beneficial to the society, and enjoy no matter how much we earn or how little we earn. These are all self choices. As for the best stock to buy at present, I have made my own decision. Making money after paying the principal is a great investment. Of course, it would be great if I could double the income.
99.9% of the company’s fate is determined by the company’s culture
question: my family and I are long-term shareholders of Berkshire. In the past, we thought that the company’s insurance business had a high risk tolerance, but what would happen to the future of the company if Warren and Ajit were gone in the future?
Buffett: I can’t predict the right answer in the future, which is very similar to the unknown situations I often encounter when investing in stocks. But we should know that 99.9% of the company’s fate is determined by the company’s culture, and Berkshire is no exception. First, we take hard work as the company culture; Second, we have all the shareholders here. We care about our shareholders very much.
If you invest in our company, you must trust us. We are doing pure business and some simple operations wholeheartedly; At the same time, we are also committed to establishing a good relationship with our shareholders, which will not be shaken. In the next 100 years, we will unswervingly practice our corporate culture. We hope to become not only a “century old store”, but also a company that can exist forever.
Although we are all doing our existing work, we will still tangle or even waver when we face new job opportunities. Therefore, the operating company is not immutable, so we have no way to re-establish an identical company according to the existing model. It’s also interesting to look back at Berkshire’s past. Our first 20 years in the textile industry was a bad start, but we still moved forward step by step.
With the progress of my ideas, I invested in the Flamingo Hotel and began to work with Charlie. Later, I bought some media companies. I also hope that our shareholders’ ideas can keep pace with us and jointly grasp investment opportunities, rather than not at the same pace with us, just to guess whether we can meet the requirements of your hearts. I hope that all of you here and future generations can become shareholders of Berkshire and our true partners. I will also find the right person to take over our work.
Many people have a question in mind: whether to invest in Berkshire or the S & P index? I think this is the same as choosing to buy more or sell short, long-term or short-term. I hope our position is unshakable.
In the process of looking for talents for the company, I have also met inappropriate people, but now we have many excellent talents who firmly believe in our ideas. I can safely pay them to work for me. Whether they can do things according to the company’s culture is different, but we need to supervise whether they can do things according to the company’s development process.
Although, with the continuous expansion of the scale of our company, we have also considered fine-tuning the corporate culture, the most important thing for us and our shareholders is to abide by the law and discipline first, and then hand over the corresponding responsibilities to the people we believe in in the process of operation.
Munger: I will never forget the time in the textile factory. At that time, the operation was very difficult, and the company’s CPA was only 60%, so that it was hopeless or even desperate. However, after 25 years, we no longer continue to invest in it. The reason why we can turn the situation around is that we can understand the fundamentals of the company and some other facts. This is not brilliant. This is basic common sense.
Buffett: the manager we were looking for for for the textile factory was very honest, credible and professional. It was certainly feasible to choose him as the operator, but we unfortunately stepped on the “thunder” of the industry. Fortunately, we were lucky to start the insurance business later. Later, I met Louis and found that he has ability circles in different industries and has his own unique views in many industries. Therefore, Berkshire has also developed investment territory in different industries, which is really crazy.
When Charlie remembered why we did it, he thought it was because we were too stupid. We bought the department store for $6. Even though the stock price rose to $15 after continuously adding the principal, it still failed to reach the height of $30 we expected. It was a failure. When summing up the reasons, we found that Berkshire wanted to do too many things at that time. Why did we choose people who were not fully proficient in this industry to do this business at that time?
investment truth epiphany in a flash
and this insight may change one’s life
Buffett: I was deeply shocked when my father took me to visit the New York Stock Exchange at the age of 9. I saved enough money at the age of 11 to start investing in stocks. I spent a lot of time in the library, trying to buy a lot of books about stock trading and technology, and so on.
When I was about 19 or 20 years old, I was in Lincoln, Nebraska. I read a book. A passage in the book made me feel that what I had done before was stupid.
You can look at the slide. Look at this picture. Some people will see two faces and some people will see one face. This thinking can be changed. This is called fuzzy illusion.
Let’s look at another picture. What can you see? One side looks like a rabbit, the other side looks like a duck. So people’s thinking is also very interesting. This is the so-called apperceive mass. Suddenly, you may see some different places, which are different from everything you have seen before. This is the moment I experienced at that time.
I have a good IQ. I read a lot of books every day and keep thinking about how to make money. But suddenly read Chapter 8 of “smart investors”, and the Epiphany truth appeared at that moment. And it was this epiphany that changed my life.
Many things in this book make me find that all the information I have read before is useless. Charlie must have experienced such a moment in his life. There may be times in your life when you suddenly see what is really important in front of you.
Why should I emphasize this here? Maybe a week ago, a year ago, five years ago, maybe you were learning how to get along with people better. Should you give people the greatest kindness? In general, you were learning what to do to make the people around you love you more. Maybe you haven’t seen this for ten years, but you suddenly realize it in an instant one day, and so does business.
For example, I’ve been following a company for ten years, but a sudden thing has changed my whole way of thinking. It reorganizes everything. I’ll ask myself why I didn’t see this five years ago. I have seen this situation several times in my life, and I believe everyone is the same. You may encounter it in different fields and different stages of life. You may even ask yourself why you were so stupid at that time.
Charlie must have encountered this situation when he was a lawyer. Every smart person will encounter problems and setbacks. This is our so-called “apperception group”. At this time, it will bring us more insight, let us adjust our behavior and guide us how to make money, but some people never make good use of it. They don’t know why their children hate them and why the world around them can’t care about them.
Buffett: Charlie, what do you think of the “apperception group”?
Munger: in fact, this is one of the ways the brain works. Sometimes it’s easy to get things wrong. But it will also make you correct automatically. In fact, we have done a lot of such things, making mistakes and then correcting them.
Buffett: but sometimes we go too far or make up for it, but at least we do a good job in error correction, right?
Munger : sometimes some good ideas may be pursued too much by you.
Buffett: can you tell me a slightly positive example?
Munger: take a look at robbinhood, a retail brokerage. The stock price soared all at once. After its listing, many people have joined short-term gambling speculation.
Buffett: last year they made a lot of money by speculating in stocks, but now they have retribution. Many insider traders are traders on this platform and are now watching them get retribution.
Buffett: yes, I agree with that. But we can’t make enemies everywhere. Why should we criticize others here?
Munger: I don’t think we should criticize, but I really can’t help it.
Buffett: you see, the 98 year old wise old beside me can’t bear his painting style a little now. We all gave up. (laughs)
having professional knowledge in many fields is beneficial to investment
but pretending to understand may be “disgusting”
question: what do you think of President Biden’s plan to impose a minimum income tax of 20% on families earning more than $100 million?
Buffett: if it’s $100 million, few people will be affected. I have no opinion on this point.
Munger: in terms of tax, I will pay all the taxes that the government wants to deduct from me. I don’t have many views.
Buffett: let me add that some of them really make us feel bad. For example, some tobacco companies don’t care about high taxes. After all, their products are easy to sell. But on the other hand, you can see that we are operating some energy, railway and insurance companies, which have passed a high degree of rule of law planning. We hope to support some energy companies.
question: Charlie is my idol and I have always admired you. I want to ask Charlie, how can we invest in a multi intention or multi-mode framework? What is the more practical way to make money by investing in different fields?
Munger: it’s best to know more about different fields. When you make decisions, professional knowledge in many fields can help you invest. But if you suddenly want to get involved in other people’s majors and act like an expert, many people will hate you.
no one knows how serious inflation will be in the next 10 years
having your own talents is the best way to deal with inflation
question : you actually experienced similar inflation in the 1970s. At that time, your portfolio also suffered losses, but you made the best investment decision in your life. What would you do at this moment?
Buffett: I’ll tell you a story. I wrote an article for fortune magazine before, which was about 7000 words, but fortune didn’t want to publish such a long article. My friend told me that 7000 words is too long. But I was very stubborn at that time, and even some male chauvinism. I felt that my article could not be deleted like gold. They found an editor and he explained to me that too many words were not good. But my answer is, if you don’t want to publish it, I can publish it in other media. My attitude was really not very good at that time.
Then I sent the article to my friend, who is a good editor and a reporter of the Washington Post. I asked him what he thought of the article. His answer was, Warren, you don’t need to explain everything you know in one article. I thought he was right, and then I shortened the article.
Therefore, if the monetary unit you use can have a completely stable monetary status in the next 100 years, it is good for our industry and investors. We need to understand how serious inflation is, but no one is completely clear about this situation. What stage will inflation develop in the next decade? People have been talking about it. People want to know the answer to this question. Many people talk about how much inflation will rise after inflation. It seems that if you give them enough money, they can help you manage your money, but in fact, they don’t know anything and we don’t know.
I think the best way to deal with inflation is your own talent. If your ability is strong enough, such as you play the violin well enough, no matter what happens, talent will not run. So your talent will not be affected by inflation. Your money may, but your talent will never.
treat the shareholders’ meeting honestly
we will admit our mistakes
question: as you mentioned before, there are as many shareholders as there are companies. In this year’s letter, you mentioned that the most satisfied and happy thing is to serve long-term shareholders. With the increasing influence of many institutional index funds, how can you continue to encourage this shareholder culture of Berkshire?
Buffett: we are lucky to have such a shareholder culture, and we are willing to keep it. Your question is very interesting. We have excellent shareholders now. If we own a church, we even hope these people can come for several weeks. Of course, if there are some vacant positions, we also hope to have new people come in, but we won’t replace all others. We won’t let 50 ~ 100 people go out and recruit 50 ~ 100 new people. We won’t do that.
Every company seems to be constantly recruiting new people. It seems that only new people can improve or change us, but I think this is a crazy behavior. We don’t like this. We like our existing shareholders. We won’t be like those institutional index funds.
Now many companies have such a crazy process. They communicate with analysts or so-called financial masters. Many companies even do it very frequently. But sometimes what the CEO says is completely different from what the executives say. It’s all noisy.
However, these people will not admit mistakes. For example, after the new CEO succeeds, in order to achieve the income figure, or it is difficult to avoid some cheating problems. But even if their predecessors are found to have fraud problems, few people will take the initiative to say these problems, because they are afraid to affect their earnings as CEO, which forms a vicious circle.
And we need to admit our mistakes at some time. We hope to find all kinds of problems and bring enough growth and service to our shareholders. We have done some stupid things, but we never cheat. We should always be responsible for our team. I want to tell shareholders that our stock is the best choice compared with other stocks, so we need to set an example.
Munger: I think our Berkshire culture will remain and flourish even after we leave.
Buffett: I don’t know about other American enterprises. I feel very different every decade, and now I’m full of doubts many times. Soon, many companies will hold shareholders’ meetings online, and shareholders will not attend the on-site meeting. This situation is difficult for me to accept. Many index funds will use all kinds of hands and feet when choosing the CEO. It is difficult for them to find a good successor. Their successor will not speak ill of their predecessor, but this is a big problem. No one is willing to point out the problems of their predecessor. Once they start to lie, the snowball will roll bigger and bigger, and they don’t know where the end is.
sec has no way to stop people who really want to do bad things
question: if you want to change GAAP, what would you do?
Buffett: I will resign. I think it’s a problem that can’t be solved. What should GAAP reflect? I think the current GAAP does not reflect its due value. If someone thinks it’s wrong, I can only shrug my shoulders.
For example, the neighbor next to my house, if I want to leave for two weeks, I will let my child stay with him, which is reassuring. In other words, if I lose my wallet, my neighbor will return the money to me. I need such an environment. But the current accounting standards are very embarrassing. If there is a little problem, there will be complaints. Therefore, the current accounting standards are designed for people who want to make small reports. And everyone is playing the number game. If you go out of line a little, a lot of problems will come.
I was looking forward to your question 15 years ago, because I wrote four suggestions on these aspects at that time, but no one did so later. Charlie used to be on Solomon’s audit committee to audit some large-scale contracts with some figures submitted by enterprises. He found that there was an omission of $20 million in the book of a company (now gone, but it was a large company they audited at that time). The company explained that it was an omission, but if a company said it had an omission at that time, the company would be doomed.
I was still hearing in Congress, and I sat in front of these people in Congress and told them what I knew and what I didn’t know. Seriously, I’ve only been in Solomon for 10 days. I haven’t seen everything they (the people in Congress) want to know, but there are a lot of things that surprise me because it’s really too bad. Those transactions are really heinous.
I think there is no problem with this system. The securities and Exchange Commission (SEC) is indeed very helpful to us, but the problem is that some rules formulated by the SEC are not well understood. A writer friend of mine described it this way: “it’s not the things that break the law that make people angry, but the things that abide by the law are too difficult.” We do need institutions like the SEC, but they can’t stop people who really want to do bad things.
bitcoin is an asset without production capacity
value depends on the price the buyer is willing to pay
question: have you changed your view of bitcoin (virtual currency)?
Buffett: although I don’t want to repeat it, I still want to say a few words today. Some of the participants today bought bitcoin. If the investment object is all farms in the United States, even if it is only 1% of the shares, I am willing to send a check to buy it; But if the target is bitcoin, even if it is all bitcoin, I won’t buy it. Because one day, I will sell bitcoin to others. It doesn’t create any value. But farms are different. Farms have production capacity.
Bitcoin is not a productive asset, and its value depends on the price the buyer is willing to pay for the bitcoin in the seller’s hands. It circulates in the hands of different people. Only by changing the owner, it produces gain and loss. This process does not produce any tangible assets. There are many mysteries behind bitcoin. Everyone can create this mysterious story and invent various virtual currencies. Berkshire can even launch its own digital currency.
I have tried to avoid two kinds of things in my life: one is very evil and the other is hurting others. Bitcoin negotiation accounts for both. Obviously, the final value of bitcoin will become zero. Saying bitcoin is evil is an implicit statement: it reduces the ability of our national currency and the Federal Reserve System, which is a key to maintaining the credibility of our government. Compared with Chinese leaders, we are really stupid. Chinese leaders are smart enough to ban bitcoin directly, and we are still making all kinds of assumptions.
want to work with people you admire
question: you have learned to be an investor since childhood. What do you think a person needs to pay attention to if he wants to do it?
Buffett: this is a very interesting question. I am very lucky because I have invested since I was a child and found what I love most. Originally, I was not interested in reading, but I read a book that aroused my interest. I’m really happy. This is not the so-called professional or really professional boxer book I read in college. I just entered this industry by chance.
My idea is that when you see something, it doesn’t mean you have to love it. I often tell some students that this is also written in some of my reports. Why do you think you should do something all over the world? What are you willing to do all your life? If you want to work with someone you hate very much, how unhappy it is. Therefore, I think you can work with him who you respect and admire most.
What I like most is working with my old professor. Even if he doesn’t pay me, I like working with him. I followed him for three years. Since that job was finished, I haven’t applied for a job with anyone. I’ve been working for myself. I worked with my father and my grandfather. Charlie, why on earth did you decide to work in my grandfather’s shop?
Munger: I worked 12 hours a day in your grandfather’s shop at that time, just looking for work experience.
Buffett: is it worth it?
Munger: of course.
I’ve never done it before, so I think it’s OK to do it. In fact, I’m just fighting here and didn’t do anything. Now I want to make a suggestion to the child (questioner) who was just in college, that is, you should be like Mr. Buffett, find the job you like, and don’t be like me again.
Buffett is the person I admire, so I found him and worked with him. So my suggestion is to find the person you admire, and then you go to this person and ask him for a job. There’s nothing to be ashamed of.
Buffett: this is not a bad suggestion. Because we (Charlie and I) didn’t have many choices in the 1940s, and there were some things we wanted to do but couldn’t seem to do.
There are two things that are not easy to succeed: the first is that if you are not interested in doing anything, you will not succeed; The other is that if you are interested but have a wrong attitude, you can’t do it. I’ve been enjoying what I’ve done all my life.
Charlie, do you have anything to add?
Munger: there are some things you do very well and interesting, but you just can’t do it. Is that the same situation? Absolutely. I’m an example myself.
do not approve the government to curb the development of passive index funds
if these funds occupy 9 components of the market, be vigilant
question: at present, the investment scale of passive index funds is becoming larger and larger. Now the management scale of passive index funds accounts for more than 50% of the U.S. stock market and has become the most influential trading tool in the market, but it has also brought some negative effects to the market. Can some measures be taken to curb the impact of this passive investment on the market?
Munger: I do not approve of curbing passive fund investment through regulation, which does not bring a good trend to the development of the industry. For index funds, if the scale of management accounts for 90% of the stock market, we need to be vigilant at this moment.
Buffett: for what is happening in the market, public opinions are of little help to solve the existing problems. The American people don’t like that a few people, such as “three people” can control some things, but when we vote, we also care about the result of our own choice. In the long run, we can see that sometimes the federal government of the United States will take some wrong paths, which is possible.
I assure you
Berkshire energy will bring more benefits to shareholders
question: you often mention how to deleverage. Bhe (Berkshire Hathaway energy) also has high leverage if Berkshire. Hathaway owns 100% of bhe. Will it still use the same degree of leverage to run the company?
Buffett: Berkshire Hathaway energy needs to operate in accordance with the requirements of public utilities regulation. It will operate in different states according to different regulatory agencies and forms, and also has different levels of debt requirements. In any state, for example, Iowa, these regulators will say that if you can get cheaper bond funds than your equity fund, this is the best.
We need to make money from holding stocks, such as 9% return, which can be invested through 3% cost. We hope to own 100%, but the regulation does not allow it. Berkshire Hathaway energy belongs to a relatively traditional industry. In Iowa, we just got an approval to invest about $3 billion. But this is different from Nebraska. Nebraska’s electricity is a public utility. They hope that a certain proportion of the money in this public utility is composed of debt. In this way, the price of electricity will be cheaper and beneficial to consumers.
Therefore, if we own 100% equity of Berkshire Hathaway energy, our operation will also meet the requirements of regulators as required. We have a 91% controlling stake in Berkshire Hathaway energy. I don’t think there is much difference between 100% and 91%. Our main purpose is to bring more benefits to Berkshire.
In this process, we will not let Greg or Scott (referring to Greg Abel and Walter Scott Jr., who jointly hold 91% of bhe with Berkshire Hathaway) do something detrimental to Berkshire because of their own interests. This will not happen.
One thing I can guarantee is that Berkshire’s shareholders will benefit from it. If I’m wrong, you can sue me later. In general, if I’m still there, it’s relatively easy to do these things.
investment in China
is a company that can gain a lot
question: for investment in China, will the investment strategy be changed due to some policy factors?
Munger: that’s a good question. The behavior of the Chinese government sometimes makes investors, especially those in the United States, worry, especially in recent times. Indeed, there are some factors that affect the prices of some zhonggai technology stocks. Dealing with the Chinese government is different from dealing with the US government. China has its own culture and Chinese enterprises also have their own loyalty.
The reason why I invest in China is because I think I can harvest many good companies in China, and I can harvest these good companies at a relatively low price. I am willing to take this risk.
inflation is caused by the flood
but the money the Fed gives people will eventually be spent
question: what is the expectation of the stability of floating deposits? Will costs remain stable? Do you have enough confidence in Berkshire Hathaway’s insurance business?
Buffett: we keep the float according to our previous judgment, and it is also very useful for us at present. Sometimes we predict events accurately, which is better than that of other companies. But emergencies like 9 / 11 can hardly be expected. This is not a matter of black or white. We really like our float best, and we may be able to use all our float at the most appropriate time.
Who could have thought that a few decades ago, someone would come to your office and say that I would sell this thing to you? Berkshire has done a lot of things for Berkshire today.
I think this is a company with opportunities and also our business opportunities.
question: how do you view the impact of inflation?
Buffett: now a lot of money has been sent to people. No matter which way it is, many people don’t spend in many places as before. But in the end, they will spend the money, but the way they spend it will be strange. For example, when you come to the furniture city in Nebraska, you will see that the price of these furniture is rising, but the rich will continue to buy. For example, in some jewelry stores, two years ago, these people who rented land to open jewelry stores were wondering how to get the rent back. Now basically all jewelry stores are doing better than before, and the inventory has become less and less, because everyone began to consume after the epidemic, because they have money and are willing to consume, so what we are seeing now is that after they have more money, The release of people’s consumption power is such a phenomenon, which is what is happening now.
The Fed is a money printer. If they didn’t send money to people, the situation could be worse. So this is a very important decision, but it also inevitably brings inflation.
oil supply is an evil and crazy field
question: when talking about global oil production, Berkshire annual conference in 2008 said that there will be 8500 barrels in 25 years, but when it comes to today’s oil reserves 14 years later, is the United States doing something different now? What will happen if the next decade does not actively start to change again?
Buffett: Charlie, you answer first. You are an oil and gas expert.
Munger: I think I may have different opinions on this matter. I hope to have more oil stocks, so I will not use some of our current stocks, but will retain all our resources. After 200 years, oil will be a very precious resource. Although no one agreed with my idea before, I don’t mind. I think my idea is right, but anyway, this view may not be normal now.
Buffett: this is a very flexible view. In fact, our current federal government has a storage capacity of more than 1 billion barrels of oil. For our economy, I think it won’t take long for about 1 billion barrels, because when talking about the number of barrels, some people say that there are only 11 million barrels, but in fact, these 11 million barrels may be used tomorrow. Everyone has different ideas in this regard. So just asking such a question, different people will have different ideas, which is not a bad thing.
At this moment, everyone’s idea is that it’s a good thing that this country has so much oil reserves, but it’s not enough when you think about it, so you don’t know what problems will happen in the past three or five years. Maybe the stock will become very low.
Charlie, your speech is more dramatic. You’d better make this speech.
Munger: if you think about it carefully, the current situation makes people feel a little negative. Today, unexpected things may happen to people. In the financial industry, more people seem to say things that people can’t trust, especially in the United States.
I think oil supply is an evil and crazy field. Some work around the world focuses on oil companies.
repurchase when the opportunity is right
now prefer to buy other companies
question: this is my 20th time to attend the shareholders’ meeting of Berkshire. You two have brought us a lot of joy, and your wisdom has also made us happier and enjoy life. So first of all, I would like to thank Mr. Buffett and Mr. Munger for the joy you have brought me.
Buffett: great, you try to publish this kind of questions, I like to listen. Can you stand up and sing? Or can we stop asking questions now?
question: I asked about the repurchase. Berkshire bought back some two years ago, twice at about $1 billion or $3 billion per month. So the intrinsic value of 3 billion and 1 billion repurchases a month is different. Now you talk about the value of 0.1% and I also know that there are about 20 different factors that will affect these shares and repurchase in the future. So please tell me what your original intention of repurchase is? Why did you do that?
Buffett: I’m very glad you just introduced a history. If someone told me that you offered me 50 billion to buy my shares, of course, this is a very important point of view. In the past three, four or five months, I want to explain to you very simply that we now have more shares to repurchase.
If you have the ability to do it and the time comes, you will buy back. But it depends on our stock valuation and our own investment. Our purpose is to improve the rights and interests of all shareholders.
If appropriate, we will buy back; Don’t buy it if it’s not suitable. We are deciding whether to buy back shares or buy other companies. Considering various factors, we prefer to buy some other companies rather than buy back shares.
In fact, the principle of our work is very simple. If we like this price, we will buy this part of the shares; Don’t buy if you don’t like it. We have no obligation to do something. Of course, it doesn’t mean that everything we do has no risk or complete wisdom. We can’t predict many situations. As just mentioned, for example, there will be a nuclear war one day. It doesn’t have such a big factor for us to consider as you said.
Charlie bought 89% of the stock of a company before. Because he bought it when the stock price rose, some people always think we are wrong. Berkshire should also have such an opportunity to buy back its own shares, because our shareholders are also rational.
The second stock I bought at that time was a trust stock in Texas, which operated the railway in Texas. Later, it went bankrupt. They also had a lot of land, but the quality of the land was very poor. They also wrote a charter at that time, which planned how to use the money for land sales.
We buy some stocks from them every year. I said when I was about 13 or 14, I said if I lived to be 100, I would buy the whole place. I haven’t lived to be 100 years old, and I don’t know if I will buy it all.
This is an excellent company. They will talk about how to increase the cost every year, for example, to 6000 or 7000. At that time, the whole area is about 3 million hectares. They will continue to find more oil on their land.
Every month I slowly buy some shares of this company. I don’t know how long it will take before I can take all of this company as my own.
It is obvious to me that they have 3 million hectares of land, and all the qualifications for mining mineral resources are also in their hands. Moreover, they were bought at a very cheap price at that time, which is beneficial to all of us. But at first, many people didn’t know if they could find oil there.
So, sometimes the truth is very simple, but people usually seem to have to read a doctor, write a lot of articles and read a lot of books to prove their intelligence. In fact, it’s very simple. You can buy it or not. The focus is on what the opportunity is, whether you want to do it or not, and when to do it. If you think there are other smarter investments, don’t do so.
Charlie, what were you doing in 1940? Are you in military service? We are really lucky to do long-term service in such a good company. I’m almost certain that if someone wants to buy Berkshire shares, we won’t sell them. Of course, our shareholders are very smart. We don’t want to squeeze everyone’s income, but we also hope that what we do can help people who have been with us for a long time and increase their wealth value.
We can buy back stocks and invest in other places. The principle has been made clear to you. I think my successor can do the same calculation in this regard, act rationally and contribute to Berkshire’s life. Thank you for coming.
the idea of independent directors is unreasonable
director independence is as nonsense as slave independence
question: as you mentioned, is it a better way to let Greg make his own decision without joining the opinions of the board of directors?
Buffett: some people may not have much experience and see much. Maybe they think the laws of other states will better protect us. But every company listed on the exchange has an insurance policy to protect itself.
I think one thing is very interesting. We hope that the board of directors of museums and universities can provide financial support. We think these people should raise money for universities or museums.
I think the Berkshire board is more interesting than the boards of universities, hospitals and museums. In our board of directors, for example, we can earn 300000 yuan a year, which is insignificant for many people. But if we don’t pay this salary, no one wants to be a director.
However, I think the idea of independent directors is unreasonable. It is nonsense to say that director independence is the same as slave independence, because in fact, no one is independent.
I saw a letter many years ago. The writer said that he was writing this letter to me with a very embarrassing attitude. He said that all his salary came from his remuneration as a director.
I searched who this person was and found that he had served as a director of five very famous companies and some small and medium-sized companies. He is an independent director in every company, which is an amazing phenomenon for me.
In 2006, I held a 9% stake in Coca Cola company. They also gave us some free coke. There are no other benefits. When voting that year, some other shareholders voted against us. At that time, ice queen also bought some shares of Coca Cola and voted against us becoming a director. Another company also voted against us. They felt that we did not exercise our responsibilities as a director. Once my approval rate dropped from 98% to 84%, which seems absurd and crazy to me.
It’s understandable that some directors want more income, but the question is what your lifestyle is. For example, the person I mentioned above, if he doesn’t get those director fees, he will go bankrupt. And Walter Scott just mentioned, they are not independent directors.
Rules are rules. We must follow all rules. It is impossible to give up these rules suddenly.
Munger: Warren is right. We must be more independent, but a habit or a horse or a cow has its rules to follow.
Buffett: if I want to make money as a director, I will choose the company with the best value, the best and the best democratic atmosphere in the country as a director. For example, I called the CEO and he said that the directors of their company didn’t have so much trouble. And as long as I don’t make mistakes on the board of directors, can I become a millionaire? In fact, obviously not
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