Yeah. Don’t wear out all your clapping on Charlie. I mean, we got, in addition, well, we have, first of all, Greg Abel, a director, and Ajit Jain. Then to the back of this first section.
If each of the directors there would remain standing until we finish. We’ll go alphabetically down the line. And we’ve got Howard Buffet, we have Susan Buffett, Steve Burke, Ken Chenault, Chris Davis, Sue Decker, Charlotte Guyman, Tom Murphy junior, Ron Olson, Wally Weitz, and Merrill Whitmer. Okay, there are two people I would like to thank, and then we’ll get on to the brief description of the results of the first quarter.
First of all, I’d like to thank Melissa Shapiro, who put this whole event together. You can’t imagine the work that goes into it.
She just reported to me that we set a new record for seas candy. I think they brought along six tons and they will sell out. And one thing I do want to mention, we have only one book at the bookstore of the bookworm this year. Normally we have about 25, but we have poor Charlie’s Almanac, fourth edition, and I think we sold about 2400 of them yesterday. And that will be the only book next year.
We’ll go back to having our usual selection, but we thought we would just turn it over to Charlie this year. And then I would like to introduce one further person, and that’s the person who put that movie together. And you can’t imagine the amount of work it is because, for example, on those scenes that we’ve used from the past, if they involve Hollywood stars or various people, we needed to get permission all over again to show it because we told them originally, we would only show it within the confines of our auditorium here. And of course, it went out on CNBC. And you just can’t imagine how much effort.
But also, the great cooperation we got from all those desperate housewives and Jamie Lee. And with the desperate housewives, we had to get Disney’s okay, and that was easy to get. But running down five desperate housewives, that one came in toward the end. But the job of putting this together has been handled by the same fellow that handles us. Been doing these for years and years and years and years.
And I just would appreciate it if you could just put the spotlight on Brad Underwood for just a minute.
Okay. We, we put out some results for the first quarter this morning at 07:00 our time. And some few sharp-eyed analysts and press people already picked up one or two items from it, which I’m sure we’ll get some questions on later. But if we could start out with slide number one, which should be showing now, you’ll see that in the first quarter. The way, and we talk about operating earnings at Berkshire, we’ve explained that many times, is why we think these figures that we give you are the most descriptive of what’s really going on in the business and take out the wild swings in the market that otherwise just, you know, and that was reporting big earnings one quarter and big losses another quarter.
We pay no attention to those at Berkshire, but you will see that we had a better than average quarter. And Ajit, Jane wants me to point out to everyone that you cannot take the insurance earnings of the first quarter and multiply by four. It just doesn’t work that way in insurance. And while we insure storms around the world, the major storms, for example, that would affect our earnings would be probably number one, would be something that went along the. That came in at the wrong place from our standpoint, and that just kept going up the east coast.
And that’s our. That’s our number one risk as we evaluate things. But we’re in all kinds of risks. There can be an earthquake tomorrow, there can be an earthquake ten years from now, and we’re in that sort of business. But the first quarter does hit the.
Should be our best quarter, certainly shouldn’t be our worst quarter. The most likely quarter to be the worst quarter’s the third quarter. But anything can happen. Insurance. But fortunately, nothing much happened in insurance during the first quarter, so we had much improved earnings in insurance underwriting, and then our investment income was almost bound to.
Well, it was almost certain to increase. And I said that in the annual report, because yields are so much higher than they were last year. And we have a lot of fixed short-term investments that are very responsive to the changes in interest rates. So that figure is up substantially, and I can predict that that one will be up for the year. But we’ve got more money to invest as we’ll get to in a minute, and that’s fairly predictable.
So that number will be up when you get into the railroad. The railroad earnings. We’re down modestly, but we should. Not immediately, but we should be earning somewhat more money than we are earning under present traffic conditions. And then traffic conditions can also hit the earnings, hit the potential earnings of the railroad.
And if you want, every Wednesday, you can get car loadings from the previous week. And I’ll regard goes a little deranged if you do get them. But I get them every week. They’re available. And you’ll see that car loaning have been running for the industry, have been running down modestly, and these earnings were as is expected.
But we should earn somewhat more money than that on the equivalent amount of car loadings. And in the energy company, we had better earnings, but our earnings were distorted. Well, they were affected by conditions that I wrote about in the annual report, and we’ll undoubtedly discuss more this morning. But off a low base of last year, they were up somewhat. And so, you get down to the final figure, and 11.2 billion is quite an improvement from last year.
But we would expect our earnings should go up modestly from year to year, because, after all, we’re retaining, like, 37 billion last year of earnings. So, if we put 37 billion more, you left it with us, we should do something that’s satisfactory. And the goal of Berkshire economic goal is to increase the operating earnings and decrease the shares outstanding. It’s that simple to describe. It’s not quite so simple pull off, necessarily.
But that’s what we’re attempting to do. And if we’ll turn to slide two, please. I’ve got the history, and I just picked the pre pandemic year of when we hit 24 billion, and then we fell off in the first year of the pandemic. And then, as you see, we’ve moved up from 27 to 30 to 37 billion. And interesting thing about these earnings is they’re after depreciation and amortization and taxes and all that sort of thing.
So, you can figure that, essentially, Berkshire has a little over $100 million per day, including weekends and holidays, coming in to deploy. And we’ve set out many times when we’re attempting to. We’re attempting to deploy that money, but we have that responsibility. And sometimes, if you’ll turn to the next page, well, you’ll see how that’s built up the shareholders equity so that Berkshire had March 31, 574 billion, and through retaining earnings. And we’ve been retaining earnings ever since we took control of Berkshire Hathaway, except one day, as I remember, I think it was maybe 1968, or the directors declared a ten cent a share dividend, and I think I must have been in the restroom or something at the time.
So, if you leave out that period of madness, we’ve been retaining. We’ve been saving your money, putting it to work, and sometimes we’ve done things that were big mistakes, but we never get close to fatal mistakes, and every now and then, we do something that really works. And as Charlie pointed out in the past, you know, it’s really, there’s probably been a half a dozen to a dozen over 57 or 58 or whatever. It would be really important, big decisions, and there’s been nothing close to fatal. So that continues to be the guideline.
And we have accumulated 571 billion. And I couldn’t help but look at who’s second. And JP Morgan had 327 billion at year end, and they’re up to 338, I believe, at the end of the quarter. But they pay significant dividends. They repurchase shares.
They’ve got a business that earns better returns on equity, but they don’t pull it, and they shouldn’t. They don’t pull it back exactly like we have. And this does show what can be done, really, without any miracles, if you save money over time. And we have a group of shareholders, we had a group of partners, originally, Charlie and I did, that wanted to save money and left their money with, like in that film you just saw. You saw Eddie and Dorothy Davis and the Davis family and the children and the grandchildren, periodically did some other things with the money, but they also basically left it with us.
And we were a savings vehicle and they were able to do live very well, but they weren’t trying to live like the kings and queens of earlier capitalism and used to build the houses in New England and have a servant standing behind everybody eating and all that sort of thing. So, we’ve had very few, what I would call, look at me type people that are attracted. There’s nothing wrong with it, but they just go someplace else. And they are spending sort of unbelievable sums after a while, by the standards of the past. And our people, nobody.
We have nobody that’s a miser or a hoarder or anything like that in our group, they live very well. But the math of compounding and a long Runway have done wonders. And we will talk a little later, right before lunch. We’ll give an illustration of that, of what can be done with that sort of philosophy. So, our cash and treasury bills were 182 billion at the quarter end.
And I think it’s a fair assumption that they brought probably about 200 billion at the end of this quarter.
We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money.
And our stock is at a level where it adds slightly to the value when we buy in shares. But we would. We would really buy it in a big way, except you can’t buy it in a big way because people don’t want to sell it in a big way, but under certain market conditions, we could deploy quite a bit of money in repurchases. And as you’ll see on the final slide, we have bought it in the last five years. We can’t buy them like a great many other companies because it just doesn’t trade that way.
The volume isn’t the same because we have investors, and the investors, the people in this room, really, they don’t think about selling. They probably would hope. Many of you don’t even check the price daily or weekly.
The people who check the price daily have not made the money that the people who have forgotten about it basically have over the years.
And that’s sort of the story of Berkshire. We’ll try to increase operating earnings, and we will try to reduce shares when it makes sense to do so. And we will hope for an occasional big opportunity. And we’re quite satisfied with the position we’re in. So, with that background, I think we’ll turn it over to Becky quick, and we will alternate questions between Becky and those of you in the audience.
Becky, you want to start with the first question? Sure. Thanks, Warren. Let’s start. Just given what you mentioned, there was some news that came out in the ten Q this morning.
It shows that Berkshire sold another 115 million shares of Apple in this last quarter. That’s Berkshire’s largest holding. And I think in that vein, we’ll start with a question from Sherman Lamb. He is a 27-year-old Berkshire Hathaway class b shareholder from Malaysia. And he asks, last year you mentioned Coca Cola and American Express being Berkshire’s two long duration partial ownership positions, and you spent some time talking about the virtues of both these wonderful businesses.
And your recent shareholder letter, I noticed that you have excluded Apple from this group of businesses. Have you or your investment manager’s views of the economics of Apple’s business or its attractiveness as an investment changed since Berkshire first invested in 2016? No, I would. But we have sold shares, and I would say that at the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have now. One interesting thing is that Charlie and I looked at common stocks or marketable equities or the things that people love to look at as being businesses.
And so, when we own a dairy queen or we own whatever it may be, we look at that as a business. And when we own Coca Cola or American Express, we look at that as a business. Now we can buy really wonderful companies in the market as businesses. We can’t buy all of them. I mean, all of their shares.
We can’t buy 90% or 80% or anything like that. But when we look at Coca Cola and American Express and Apple, we look at them as businesses. Now, there’s differences in taxes, factors, there’s difference in manageable responsibility, a whole bunch of things. But in terms of deploying your money, we always look at every stock as a business, and we don’t. We have no way, no attempt made to predict markets.
We have no attempt made to pick stocks. I went through many, many years doing the wrong thing. I got interested in stocks very early, and I was fascinated by them.
I wasn’t wasting my time, because I was reading every book possible and everything else. But finally, I picked up a copy of the intelligent investor in Lincoln, and there were a few sentences in there that said, much more eloquently than I can say it. If you look at stocks as a business and treat the market as something that doesn’t tell you, isn’t there to instruct you, but it’s there to serve you, you’ll do a lot better over time than if you try to take charts and listen to people talk about moving averages and look at the pronouncements and all of that sort of thing. And so that made a lot of sense to me then, the way I’ve been allowed to deploy it. Charlie and I talked about this, of course, constantly.
It’s changed over the years; is the amount of capital we have and has changed and all that. But the basic principle was laid out by Ben Graham in that book, which I picked up for a couple of dollars, and which basically said to me, you’ve been wasting your time now, but maybe you can use what you’ve learned or been reading about and put it to better use. And then Charlie came along and told me how to put it to even better use. And that’s sort of the story of why we own American Express, which is a wonderful business. We own Coca Cola, which is a wonderful business, and we own apple, which is an even better business.
And we will own, unless something really extraordinary happens, we will own Apple and American Express in Coca Cola when Greg takes over this place. And it’s such a simple approach that it’s almost deceptive. Most things, if you keep working harder and harder at it, you learn a little more math or you learn a little more physics, but investments, you don’t really have to do that. You really have to have your mindset properly. So, we will end up something dramatically happens that really changes capital allocation strategy.
We will have Apple as our largest investment, but I don’t mind at all, under current conditions, building the cash position. I think when I look at the alternative of what’s available, the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive. And one thing that may surprise you, but we.
Almost everybody I know pays a lot more attention to not paying taxes, and I think they should.
We don’t mind paying taxes at Berkshire, and we are paying a 21% federal rate on the gains we’re taking in apple. And that rate was 35% not that long ago, and it’s been 52% in the past when I’ve been operating. And the government owns. The federal government owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings, and they can change that percentage any year.
And the percentage that they’ve decreed currently is 21%. And I would say with the present fiscal policies, I think that something has to give, and I think that higher taxes are quite likely, and the government wants to take a greater share of your income, or mine or Berkshire’s, they can do it. And they may decide that someday they don’t want the fiscal deficit to be this large, because that has some important consequences, and they may not want to decrease spending a lot, and they may decide they’ll take a larger percentage of what we earn and we’ll pay it. We always hope, at Berkshire to pay substantial federal income taxes. We think it’s appropriate that a company, a country that’s been as been as generous to our owners, it’s been the place.
I was lucky. Berkshire was lucky, was here. And if we. If we send in a check like we did last year, we sent in over $5 billion to the US federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no Social Security taxes, no.
Estate taxes. It’s open down the line now. That’s.
I would like to. I hope things develop well enough with Berkshire that we say we’re in the 800 club and maybe even move up a few notches. It doesn’t bother me in the least to write that check. I would really hope, with all America has done for all of you, it shouldn’t bother you that we do it. And if I’m doing it at 21% this year and we’re doing it at a higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little apple this year.
Okay, let’s go to section one.
Hi, Mister Buffet, this is Matthew Lai from China Hong Kong. I’m running my listed listing company called FW, and we are so grateful that you learned from you and you really inspire us. My question is, besides the electrical car company, BRD, under what circumstances you will reinvest and reconsider to invest? Hong Kong and China company. Thank you.
Well, our primary investments will always be in the United States. We do think it.
The companies we invest in the United States, American Express does business around the world. And no company hardly does business around the world like cola. I mean, they are the preferred soft drink. You know, something maybe like 170 or 180 out of 200 countries. Those are rough approximations from a few years back, probably, but that degree of acceptance worldwide is, I think it’s almost unmatched.
I can’t really think of any company that has it. American Express has a position in the credit card deal, which I think is extremely strong. And part of that was one of the direct part of the reason for that is one of the directors that introduced a few minutes ago, Ken Chenault. But it has strengthened dramatically over the last 20 years for a lot of reasons. So, we will.
The BYD investment was a.
And, well, we made the commitment in Japan, which I did five years ago, and that was just overwhelmingly, it was compelling. It was extraordinarily compelling. And we bought it as fast as we could, and we spent a year and we got a few percent of our assets in five very big companies. But that’s the problem of being our size. But you won’t find us making a lot of investments outside the United States, although we’re participating through these other companies in the world economy.
But I understand the United States rules, weaknesses, strengths, whatever it may be.
I don’t have the same feeling for economies generally around the world. I don’t pick up on other cultures extremely well. And the lucky thing is, I don’t have to, because I don’t live in some tiny little country that just doesn’t have a big economy. I’m in an economy already, that is, after starting out with half a percent of the world’s population, has ended up with well over 20% of the world’s output in an amazingly short period of time. So, we will be American oriented.
I mean, if we do something really big, it’s extremely likely to be in the United States. Charlie, in all those years, there’s only two times he’s told me that this one is really.
He would always go along with me and say, well, when I was suggesting something, he’d say, well, this is really not that great, but it’s probably the best you’ll come up with. So, I’ll go along with the idea. But Charlie twice pounded the table with me and just said, you know, buy, buy, buy. And Byd was one of them and Costco was the other. And we bought a certain amount of Costco and we bought quite a bit of Byd.
But looking back, he already was aggressive. But I should have been more aggressive in Costco. It wasn’t fatal that we weren’t. But he was right big time in both companies. And I will.
I’m aware of what goes on in most markets, but I think it’s unlikely that we make any large commitments in almost any country you can name, although we don’t rule it out entirely. And I feel extremely good about our Japanese position, and we’ll have that.
I don’t know how many years. Greg will be sitting with that at some point, and we couldn’t be happier with that. But you really have to. We really have a different outlook in looking at. Well, we look at your money, which we couldn’t bear to lose, and we feel that we’re very less likely to make any truly major mistakes in the United States than in many other countries.
Okay, Becky, this next question comes from Stanley Holmes, who is a Berkshire shareholder from Salt Lake City. He asks. In his 2024 annual letter to shareholders, Chairman Buffett noted the severe earnings disappointment experienced at Berkshire Hathaway Energy last year and expressed concern about earnings and asset values in the utility industry. Recognizing that investors are worried about climate change related expenses and that new uncertainties cloud the regulatory environment, the chairman suggested that some jurisdictions may adopt the public power model. There are now signs that policymakers in Utah, citing state sovereignty, may already be poised to move in that direction.
The Utah legislature recently mandated the state’s right to serve as sole purchaser of energy from an in-state power plant and under some circumstances, purchase the power plant before it can be retired. The state utility regulator will be legally bound to prioritize public purchases of power and facilities that could include assets owned by Berkshire Hathaway Energy specific Cork utility Rocky Mountain power. Will Berkshire, through BHE, continue to invest resources in jurisdictions where corporate assets may be subject to confiscatory state policies and actions? And how is Berkshire energy working with officials in Utah to minimize potential Rocky Mountain corporate losses if and when state control is asserted over its electrical utility sector. I will let Greg join with me, and the answer on this, but I would say our feeling is that Utah is actually very likely to treat us fairly.
Whether the action is in granting appropriate rates that give us the return, we expect that generally expected in terms of our own properties or if they decide for some reason to go to public power, I think they would compensate us fairly in the 1930s. George Norris, a senator from Nebraska, just turned Nebraska into a public power state. And our experience in Iowa would indicate that free enterprise has its role and that we can run a privately owned utility company that will be more efficient for society than, at least in most states, people can do with public power. But what has happened is that there’s going to be enormous amounts of money, enormous amounts of money spent on power. And if you’re going to do it with private owners, there’s nobody better situated than Berkshire to satisfy the portion, but a large portion of the needs of the country.
And we will do it at a rate of return that is not, you know, it’s not designed to make us rich or anything like that. It’s a sensible rate of return, but we won’t do it if we think we’re not going to get any return. It would be kind of crazy. And we’ve seen actions in a few states where some of the costs associated with climate change, they’re not being regarded as cost of the utility shouldn’t incur. Well, believe me, if it was publicly owned, they would have incurred it too.
But we’ll do what society tells us and we have got the money and we’ve got the knowledge to participate big in something that is enormously important for the country. But we’re not going to do it. We’re not going to; we’re not going to throw good money after bad in the field. I don’t worry about, my understanding is, and Greg can elaborate on this now immediately, but I don’t regard Utah as being unfriendly to the idea of utilities being treated fairly. Charlie.
Charlie, I’m so used to that.
I had actually checked myself a couple times already, but I’ll slip again. That’s a great honor. Yeah. When we touched on it initially in your letter relative to the challenges in the industry, and then you’ve just alluded to the significant investment that has to go into the energy industry, the utility sector, for many years to come. And I think if we start there, if I think of our different utilities, it will definitely come to Utah and Pacific Corp.
But if you look at the underlying demand that is building in each of those utilities and the amount of dollars that are going to have to go in to meet that demand, it’s absolutely incredible. So, when you raised it in your letter, it’s a really important issue. We have to have a regulatory compact that works between, if it’s a public utility, it has to work in concert with the state, Utah being an example, or it ultimately becomes potentially a public power. So just to set the frame a little bit, if I think of Iowa, which you mentioned, and the underlying, we’ve made substantial investments there, it’s been very consistent with both the public policy that the state and legislator wanted, and they enacted very specific laws to encourage that. But that utility is more than 100 years old right now.
And if we look at the demand that’s in place for mid-American Iowa utility over the next, say, into the mid-2030’s associated with AI and the data centers, that demand doubles in that short period of time, and it took 100 years plus to get where we are today, and now it’s going to double. And that will require substantial amounts of capital from mid-American and its shareholders. And how that will function is if we have a proper regulatory compact in place, which you’ve highlighted, if we then go to, say, Nevada, where we own two utilities there and cover the lion’s share in Nevada, if you go over a similar timeframe and you look at the underlying demand in that utility and say, go into the later 2030s, it triples the underlying demand and billions and billions of dollars have to be put in. Our rate base will literally go from, it’s not a modest level now, but you’re talking probably an incremental six to 10 billion at least of rate base going into that type of entity, which requires, again, alignment with the state and their policies and a proper recovery of our underlying both capital and a return on capital. So, when we come to the wildfires, that’s been a substantial challenge because it’s the first time there’s been a lot of discussion around one of our utilities.
One experienced significant losses associated with the wildfires. What portion of those costs will be recovered? And that’s really the dialogue we’re in. And does that properly work? When I think of the wildfires, there’s been many claims in a recent additional claim last week for $30 billion, and we don’t take that lightly, but it is an incremental claim to an already existing lawsuit that’s in place.
And when I think of PacifiCorp, we’re in a place where first and foremost, all the litigation will be challenged because the basis for it, at least we believe there’s places where it’s unfounded and will continue to challenge it. And it will take many years to be resolved, as Warren highlighted in the letter. But if you think of Pacificorp and the litigation there, number one, how we think and operate those assets have to change. Change because we’ve had a regulate, we have worked with the states, across all our states for many years with the fundamental goal to be to keep the power on. And our teams and our employees worked incredibly hard to keep the power on, day in, day out, through storms.
Unfortunately, through the 2020 fires, the instincts were not to turn off the power. The instinct was to keep the power on, to keep hospitals, fire stations responding. It’s not in their mind, or at least culturally, it wasn’t in our minds to de energize. So, the first thing we had to do was step back and say, we’ve got to fundamentally change the culture, not just at Pacific Corp. But across all our utilities.
The first thing we have to recognize is that there’s now going to be situations where we prioritize de energizing the assets, and that’s completely different than we’ve operated those assets, as I’ve highlighted, for 100 plus years. So, we start with the culture. We had to change that. The second thing is we’ve now changed our operating systems so that we can turn off the power very quickly. If there’s a fire that’s increasing, approaching, we will turn off our systems now and we’ll go, the minute the conditions are safe again, we’ll reenergize it.
But we’ve had to do that. And then the third thing is continuing to invest in a way that allows us to try to minimize the risk of the fire. But when you get back to Utah and Pacific Corp. The challenge we do have is within Pacific Corp. As we go through both litigation and through continuing to operate that entity, it generates a certain amount of capital and profits that will remain in that entity and being reinvested back into that business.
But fundamentally, as we go forward, we need both legislative and regulatory reform across the Pacific Corp. States if we’re going to deploy incremental capital, make incremental contributions into that business. As Warren said, we don’t want to throw good capital after bad capital, so we’ll be very disciplined there. But the reality is there are opportunities to both solve the legislative and regulatory solutions. And the best example we actually have, and I think it’s the gold standard across the country, is Utah.
So as Warren touched on. It’s a state we’re happy we’re investing in. It is part of Pacific Corp. So, there’s a certain amount of balance there as to how we do it. But in the last legislative session that existed, Utah actually passed the bill that does a couple very important things.
One, it caps non-economic damages on wildfire claims. So, if you go back to the wildfires we have in Oregon and the claims you’re hearing filed for, there’s economic damages associated with them, and those harms should receive the economic damage damages associated with that. But unfortunately, and even though there’s legislature and case law in Oregon that says wildfire non-economic damages should not be awarded, there’s very substantial non-economic damages being awarded there. Utah took a very proactive position to say, we will cap those non-economic damages and it creates an environment. Again, it’s back to that.
Is there an environment where you want to invest in? Yes, and then incrementally they’ve created a very substantial fund. It’s literally called the wildfire Fund for fires in Utah that will help facilitate both liquidity and the ability to resolve the situation. So, Utah, we believe, including the legislation, that a lot of other things came out of it is the actual gold standard as we go forward. So very important issue for Berkshire Hathaway Energy, but at the same time, it is a Pacific Corp.
Issue. The risk of regulatory compacts not being respected is a much broader one that will always evaluate and be careful how we deploy our capital. But both Pacific Corp. Will manage through it. And I see other very good and significant opportunities in Pacific Corp.
I mean, in Berkshire Hathaway Energy, the. Return on equity investment that’s been been promulgated and been achieved over the years has been, particularly in recent years, well below the return on equity that has been achieved by American industry generally. And so, whether you earn x or x plus a half a percent or x minus a half a percent, that differs by state, and some states are more attractive than others. But whether you earn x or go broke is not an equation that works. And, you know, we won’t put our shareholders money.
They didn’t give it to us to lose it all, and they might like it if it’s better when it’s plus a half a percent, the next minus a half a percent. But the electric utility industry will never be as good as, I mean, just remotely as good as, you know, the kind of businesses we own in other arenas. I mean, you look at the return on tangible equity at Coca Cola or American Express or to really top it off, Apple. It’s just, it’s, you know, it’s just a whole different game. But in utilities, the trade has been, the compact has been that you get a modest return and climate change comes along and it causes way more fires.
That’s just the cost of doing business. And it doesn’t mean that we can’t do things to mitigate fires in the future. And you can make different policies on when you turn off the lights, but somebody’s going to do, somebody’s going to put up many, many hundreds of billions, maybe in the trillions, and climate change enters into that, and it can be done through public power or it can be done through private enterprise to quite a degree. And we would be certainly good for 100 billion or more, but we’re not going to throw good money after bad.
Okay, let’s do station four.
Hi, I’m Joe, visiting from San Francisco. How do you think about the role of technological advances, especially generative AI, on more traditional industries? Thank you. Yeah, I made a mistake in calling on four, but I’ll get back to two later on.
I don’t know anything about AI, but I do have, that doesn’t mean I deny its existence or importance or anything of the sort. And last year I said that we let a genie out of the bottle when we, when we developed nuclear weapons, and that Genie has been doing some terrible things lately. And the power of that genie is what, you know, scares the hell out of me. And then I don’t know any way to get the genie back in the bottle. And AI is somewhat similar.
It’s part way out of the bottle, and it’s enormously important, and it’s going to be done by somebody. We may wish we’d never seen that genie or may do wonderful things, and I’m certainly not the person that can evaluate that, and I probably wouldn’t have been the person that could have evaluated it during World War Two, whether we tested a 20,000-ton bomb that we felt was absolutely necessary for them United States, and would actually save lives in the long run. But where we also had Edmund Teller, I think it was, it was on a parallel with Einstein in terms of saying, you may, with this test, ignite the atmosphere in such a way that civilization doesn’t continue. And we decided to let the genie out of the bottle and it accomplished the immediate objective. But whether, whether it’s going to change the future of society, we will find out later.
Now, AI, I had one experience that does make me a little nervous, and I’ll just explain it that very, very recently, fairly recently, I saw a. An image in front of my eyes on the screen, and it was me and it was my voice. And wearing the kind of clothes I wear, and my wife or my daughter wouldn’t have been able to detect any difference. And it was delivering a message that no way came from me. So it.
When you think of the potential for scamming people, if you can reproduce images that I can’t even tell that, say, I need money, you know, it’s your daughter, I’ve just had a car crash. I need $50,000 wired. I mean, scamming has always been part of the American scene, but this would make me, if I was interested in investing in scamming. It’s going to be the growth industry of all time, and it’s enabled in a way. Obviously, AI has potential for good things, too, but I don’t know how you.
Based on the one I saw recently; I practically would send money to myself over some crazy country. So, I don’t have any advice on how the world handles it because I don’t think we know how to handle what we did with the nuclear genie. But I do think, as someone who doesn’t understand a damn thing about it, that it has enormous potential for good, an enormous potential for harm. And I just don’t know how that plays out. I’d like to mention to Becky that Ajit will not be participating in the afternoon session, so if you could focus on any, if there are insurance questions you want to ask, that be a good one?
Yeah. This next question is for both Warren and Ajit. It’s from Ben Noll, who’s a Minneapolis shareholder who’s been a shareholder since 1995. And he says in an interview this past year, Todd Combs said that in first meeting you in 2010, he told you Geico is better at marketing and branding, progressive is a data company, and data is going to win in the long run. But it appears you did not prioritize data analytics at Geico until a decade later, when you made Todd CEO.
As business units like Geico Age and need new strategic direction, I wonder if Berkshire’s hands off management approach is a source of vulnerability. Will you please review your thinking on changes made at Geico and explain how Berkshire is structured to react? If the Berkshire CEO sees that a business unit is strategically off track and Ajit, I hope you will continue to update us on yours and Todd’s progress at remedying the data analytics shortcomings at Geico. Ajay, would you like to. Yeah.
As Warren has pointed out in the past one of the drawbacks that Geico is faced with, it hasn’t been doing as good a job as matching rate with risk and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at Geico for a few years now. We are trying to still play catch up. Technology is something that is unfortunately a bottleneck. But there again, we are making progress.
And equally importantly, we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data. So, yes, I recognize we are still behind. We’re taking steps to bridge the gap, and hopefully by the, certainly by the end of 25, we should be able to be along with the best of players when it comes to data analytics, whether it’s pricing, whether it’s claims or any other factor that drives the economics of the insurance business. I would add, equating rate with risk obviously is important in every line of insurance business. I mean, that’s what you’re involved with, is deciding whether a given rate offers us the chance or the probability that we will make a little of money on it, and that sometimes we’re only risking losing a little and sometimes we’re risking losing huge amounts.
But Geico and progressive has done a better job in that recently. But our fundamental advantage at Geico, of course, is that we have lower costs than virtually anybody. And that cost advantage has been dramatic. We’ve driven our underwriting expense ratio below 10%, and there’s just very, very, very few companies that can compete with us. So it isn’t, it’s not in the least a survival question, and it isn’t even exactly a profitability thing.
But, you know, we would rather have x percent of the market than a half of x percent. But we roughly, I think in the month of March, we, we were just, we didn’t lose policyholders and we got 16 million or whatever it is, of them, and we’ve got the lowest cost operations. So, it’s not a threat. It’s not remotely a threat to survival, it’s not a throat, it’s not a threat to even profitability. But on the other hand, we would like to be growing with something that is the best model around in the insurance business of delivering at a low cost.
And we now have a recognition that we didn’t have back when Leo Goodwin started in 1936. But the same principle that worked then is that if you can offer somebody a good product, cheaper than the other guy, and everybody has to buy it, and it’s a big business you know, it’s very attractive to be in, and GEICO is a very attractive business and has got its lowest cost thing, and it does have to do a better job of matching rate to risk. But our low costs have amassed the fact that for a while that we could do without progressing as much as we should have in the matching of right to risk. And now Todd has been working intensively at that, and he’s made a lot of progress, but there’s still work to be done. But in the meantime, we’re not going to shrink, and we should make better underwriting profits than most companies in the auto insurance business.
Okay, I’m going to back up and go to. I think I left station two out of it earlier. So, do we have somebody there? Yeah. Good morning.
My name is Sebastian Sartre. I’m from Munich, Germany. Berkshire is a very respective company in Germany. And my question is, who are your most trusted advisors today? Is it Ted and Todd?
Is it Greg and Ajit? Is it your wife, your children? And what do you value about them? Thank you. Well, it depends whether they’re advising me on money or on other things.
I trust my children and my wife totally, but that doesn’t mean I ask them what stocks to buy.
But the.
In terms of managing money, there wasn’t anybody better in the world to talk to for many, many decades than Charlie. And that doesn’t mean I didn’t talk to other people. But if I didn’t think I could do it myself, I wouldn’t have done it. So, to some extent, I talked to myself on investments, and I think my children have gotten a whole lot wiser over the years. And so, I listened on a lot of things.
I’ll listen to my daughter on who to vote for locally, because she knows a lot more about that than I do. And I’ll listen to my wife on a lot of things and I won’t get into details. So, it is important.
If you don’t live a life where you surround yourself and limit yourself to people you trust, it won’t be much fun. I mean, I literally have been in the position ever since I was in my twenties of being able to have people I trusted around me. And I’ve made mistakes occasionally, but they filled her out over time. You learn. And when I found Charlay, for example, in all kinds of matters, not just investment, I knew I’d have somebody that.If you don’t live a life where you surround yourself and limit yourself to people you trust, it won’t be much fun. I mean, I literally have been in the position ever since I was in my twenties of being able to have people I trusted around me. And I’ve made mistakes occasionally, but they filled her out over time. You learn. And when I found Charlay, for example, in all kinds of matters, not just investment, I knew I’d have somebody that.
Well, I’ll put it this way. You can think about this, Charlie. In all the years we worked together, not only never once lied to me, ever but he didn’t even shape things so that he told half lies or quarter lies to sort of stack the deck in the direction he wanted to go. He was, he absolutely considered total of utmost importance that he never lied. Now, that occasionally got him in trouble at dinner parties or something.
If he said to the woman, I really prefer the way you used to do your hair, the way that somebody over across the room does. I mean, he was. But in terms of having a partner, I simply cannot think of a conversation I ever had with Charlie that in the least he misled me or shaped it his way or anything of the sort. So, when you get that in your life, you know, you cherish those people and you sort of forget about the rest. Okay.
Again, this question is for Ajit comes from Meher Barucha. Climate change seems to be impacting the insurance industry heavily, with major players pulling out of markets like California because of wildfire and flooding risks combined with payouts increasing. How does Mister Jain see this risk expanding to other regions, and how has the thesis on insurance investments changed because of it?
Climate change. Climate risk is certainly a factor that has come into focus in a very, very big way more recently. Now, the one thing that mitigates the problem for us, especially in some of the reinsurance operations we are in, is our contractual liabilities are limited to a year in most cases. So as a result of which, at the end of a year, we get the opportunity to reprice, including the decision to get out of the business altogether if we don’t like the pricing in the business. But the fact that we are making bets that tie us down to one year at a time certainly makes it possible for us to stay in the business longer term than we might have otherwise because of climate change.
Clearly, prices need to go up. It is difficult to be very scientific about how much the prices need to go up. They need to go up a lot. And we keep increasing prices and hope we stay ahead of the curve. But that doesn’t happen in all cases.
The regulators don’t make it any easier by tying our feet to the ground and making it difficult for us to withdraw from certain territories or to make dramatic changes in the pricing of certain products, as a result of which a number of insurance carriers, including ourselves, have decided to, to not write business in certain states. I think the regulators are getting a little more realistic about the. And they are waking up to the fact that the insurance carriers need to make some kind of a return, a decent return for us to keep deploying our capital. It’s a constant battle back and forth it’s been against the capital providers these last few years, but I think we are coming back into balance. If you look at the results that have been recently announced by the insurance carriers, everyone’s now making record profits.
Obviously, that will not last, but certainly for the next several months. I think the insurance industry, in spite of climate change, in spite of increased risk of fires and flooding, it’s going to be an okay place to be in. Climate change increases risks and in the end, it makes our business bigger over time. But not if we, if we misprice them, we’ll also go broke. But we do it one year at a time, overwhelmingly.
And I would say this, I would rather have a jeep assessing us than any thousand under riders or insurance managers in the world. I mean, the factors aren’t, you know, we’ll take Atlantic hurricanes, which would be probably our biggest risk.
There’s no question that you can measure the temperature of the water in the Atlantic and you know, what warm water does, hurricanes. But you don’t know whether necessarily whether that’s good or bad because it may cause them to turn faster, you know, and it may, it may change the path as well as the intensity and frequency of losses. But we’ll write it one year at a time and we’ll have Vegeta underwriting it and, you know, we don’t have to tell you what’s going to happen fast five years from now or ten years from now. And people who don’t have sort of analytical insurance minds that comment on this subject really don’t expand our knowledge.
We get a lot of letters from people that I’m sure have good iqs, but they, they don’t really know, they don’t understand the insurance business and they’re not wrong. I don’t think in my mind about climate change, but if there was no risk, there’d be no insurance business. And we’re in the business of evaluating it and we do it one year at a time. And there’s some exceptions where you can’t do it, where your decisions extend for a long time in the future.
We try to avoid those. But again, you don’t need a thousand people analyzing water currents. I think you need one very, very, very smart guy. And we’ve got him. Okay?
Yeah. The only thing I’d add is that climate change, much like inflation done right, can be a friend of the risk bearer.
And it has been for us. If you look at GEICO, it had 175,000 policies roughly in 1950, and it was getting roughly $40 a car. So that was 7 million of volume.
You know, now we have. We’re getting over $2,000. Well, all the advances in technology and everything like that, if we had been wedded this formula, what we did with $40, we’d have had a terrible business. But in effect, by making the cars much safer, they’ve also made it much more expensive to repair. And a whole bunch of things have happened, including inflation.
So now we have a $40 billion business from something that was 7 million back when I called on it. So if we’d operated in a non inflationary world, Geico would not be a $40 billion company.
Okay, we’re now finally coordinated towards station three. Believe.
Hello. Hey, everyone. I warren. I’m Liam. I’m 27, from Newmark, Ontario, Canada.
I got invested in Berkshire, thanks to my dad, who brought me down to this meeting. I’m so excited to be here. Most 27 year olds had idols who are rappers, but instead, my idols are Warren, Charlie, who will miss forever, and also your cousin Jimmy, who unfortunately had to go this year, too. It’s been a tough year as a Canadian. Similar with Greg, I always wonder about our canadian economy and what you think about the Canadian economy.
We got some beat down bank stocks right now, and I don’t know what your opinions are on these. And I also wonder at, in their nineties, if the rumors are true and you’re still able to eat McDonald’s. I like fast food myself, but I always wonder at 93, he’s still able to eat those and enjoy the Coca Cola. Thanks, Warren. Okay, well, we’ve got a Canadian here, so we’ll let him answer the first part.
And if you watch me, you’ll see what I like to eat. Go to it, Greg. Okay. Yeah. Well, we are fortunate to have a number of operations up in Canada.
It goes across many of our operating entities. And then, as Warren touched on, all the businesses that we have, a piece of that we’re invested in are up in Canada. So the presence is significant where we’re always looking at making incremental investments there, because it’s an environment we’re very comfortable with. Warren touched on understanding the US environment, business environment, and I would put Canada equally in that bucket that we understand it and would be comfortable. And I would say the economy moves very closely to the US.
So the results we’re seeing out of our various businesses that report both the US and canadian operations aren’t drastically different. And there’s a few that we’re on the energy side. For example, we make very substantial investments up there in Alberta. But again, it’s very consistent with how that economy is growing, and I would see it being very consistent with what we see here. Warren, anything to.
Yeah, no, obviously there aren’t as many big companies up there as there are in the United States. But when we get. I got one from Canada just the other day that I sent over to Greg, too. When we see anything that’s suggesting an idea that’s of a size that would interstere and meets other requirements, we don’t have any hesitancy about political. Putting big money in Canada.
And there are things we actually can do fairly well that where Canada could benefit from Berkshire’s participation. We did it some years ago, not that many years ago, but there was a financial institution up there. They had a problem and they did, as I remember, 30 plus various other people that were kicking it around. And meanwhile, the place was getting close to the edge for not a fundamental problem. And Ted Weschler from our office went up there.
I heard about it on a Monday or something. Ted Wesler went up there and we offered a solution in a couple of days to something that was getting close to the brink. So we do not feel uncomfortable in any way, shape or form putting our money into Canada. In fact, we’re actually looking at one thing now. But, you know, they still have to meet our standards in terms of what we get for our money.
But they don’t have a, they don’t have a mental, we don’t have any mental blocks about that country. And of course, there’s a lot of countries we don’t understand at all. So Canada, it’s terrific. When you’ve got a major economy, not the size of the US, but a major economy that you absolutely give them, you feel confident about operating there. Okay, Becky, Warren, you just said that you’d rather have a jeet running risk assessment at the insurance operations than any other thousand insurance adjusters in the world.
So I’d like to follow up with a question that came in from Mark Blackley in Tulsa, Oklahoma. He said, warren, for years you have spoken about the incredible impact Ajeet has had on Berkshire. Often joked, if you and Ajit are in a sinking boat and we can only save one of you, swim to Ajit. While we often discuss plans for the next CEO of Berkshire, little is mentioned on who will one day replace Ajit. How should we think about the future of the Berkshire insurance operations, given how challenging it may be to find another Ajit?
And I’d like to hear Ajit’s thoughts on this as well. Well, I would say we won’t find another Ajit, but fortunately, he’s a good bit younger than I am, so I hope you have to worry a little bit about me first before I start working by the jeep.
We won’t find another jeep, but we have an operation that he has created and that at least part of it. There are certain parts of it that are almost impossible for competitors to imitate, and if I was in their shoes, I wouldn’t try and imitate them. And so we’ve institutionalized some of our advantages, but Ajit is. Well, his presence allowed us to do it and he did it. But now we’ve created a structure that didn’t exist when he came in 1986.
Nothing close to it existed with us or with anybody else. And insurance is the most important business at Berkshire.
Marketable securities are important, but they’re not in the class exactly as our insurance business. And Ajit.
We won’t have the same business if Ajit isn’t running it, but we’ll have a very good business. And again, that’s thanks to Ajit. I’d been in the business when he came in 1986.
I first went to Geico in 1950. We first bought national indemnity in 1957, and it was something that we’d made quite a bit of money in the stocks of insurance companies, but we needed an Ajit, unfortunately, he came into the office on a Saturday and he was tired of working at something where he really didn’t.
It just challenges his intellect. And I said, well, we got a lot of challenges. Nobody’s perfect. So you’ve never seen an insurance policy or owned an insurance stock, but here are the keys, and that’s worked out very well.
Thank you very much, Warren. Thank you very much, everyone. But the fact of the matter is, nobody is irreplaceable. And we have Tim Cook here in the audience, I believe, who has proved that and has set an example for a lot of people who follow.
That’s a great observation. Now, having said that, I will also add that our board is conscious of the succession issue, not only at Warren’s level, but also at my level. And every year they have me sitting in front of them answering questions and having me share my ideas with them in terms of what would happen to the operations if I get hit by a truck.
We go through the various operations we have. I review with them a short list of people I think ought to be candidates for replacing me. And in addition to that, I go a step further and identify a particular individual as the person I would hand over the keys to if something were to happen to me. Obviously that would be subject to change. But we take this issue fairly seriously.
And I think at the end of the day, as Tim Cook has proved to us, it will be the biggest non issue of the day. The earth will still keep revolving around the axis.
Okay, we know what we will do. We know it’s a good answer, but we know it isn’t. It isn’t. We won’t have another agenda. Station five.
Hi, my name is Ange. Andrew Nickes and I’m wondering, if you. Had one more day with Charlie, what would you do with him?
Well, it’s kind of interesting because, in effect, I did have one more day. I mean, it wasn’t a full day or anything, but he.
We always lived, in a way where we were happy with what we were doing every day. I mean, Charlie. Charlie liked learning. He liked, as I mentioned in the movie, he liked a wide variety of things. So he was much broader than I was.
But I didn’t have any great desire to be as broad as he was. And he didn’t have any great desire to be as narrow as I. But we had a lot of fun doing anything. And, you know, we played golf together, we played tennis together, we did everything together. And this you may find kind of interesting.
We had as much fun, perhaps even more to some extent, with things that failed, because then we really had to work and work our way out of them. And in a sense, there’s more fun having somebody that’s your partner in digging your way out of a foxhole than there is just sitting there and watching an idea that you got ten years ago just continually produce more and more profits. So it wasn’t, you know, he really fooled me, though. He went to 99.9 years. I mean, if you pick two guys, you know, he never publicly said he never did a day of exercise except where it was required when he was in the army.
He never did a day of voluntary exercise. He never thought about what he ate. You know, we started every day, and Charlie had. He was interested in more things than I was, but we never had any doubts about the other person, period. And so if I’d had another day with him, we’d probably have done the same thing we were doing the earlier days and we wouldn’t have wanted another.
We only had one day. There’s a great advantage in not knowing where you’re going, what day you’re going to die. And Charlie always said that, just tell me where I going to die, so I’ll never go there. Well, the truth is he went everywhere with his mind, and therefore he was not only interested in the world at 99, but the world was interested in him. It’s remarkable, you know, they, he.
I would, I told him toward that. In the last few years, I’d never seen anybody that was peaking, you know, in 99 and where the world wanted to come and see him. I mean, they actually wanted to go out to 351 North Yune street. And whether it was, well, I could name a whole bunch of names, but just. I’ll start with Elon Musker, but go down the list.
And they all wanted to meet Charlie, and Charlie was happy to talk with them. And the only person I could think of otherwise was the Dalai Lama. I don’t know that they had a lot else in common, but it was, he lived his life the way he wanted to, and he got to say what he wanted to say. He like, I loved having a podium again. I can’t remember any time that he was mad at me or I was mad at him.
It just didn’t happen.
And calling him was fun back when long distance rates were high and we didn’t talk as often as the years in recent years, as we used to be on daily for long periods. And we did keep learning and we liked learning together, but, you know, we tended to be a little smarter because as the years went by, because we had mistakes and we had other things where we learned something. And the fact that he and I were on the same wavelength in that respect meant that the world was still a very interesting place to us when he got to be 99 and I got to be 93. So I don’t have a perfect answer for you there, but I can tell you the ingredients that would go into. Sometimes people would say to me or Charlie at one of these meetings, you know, if you had only have lunch with one person that lived over the last 2000 or so years, you know, who would you want to have it with?
Charlie says, I’ve already met all of them. You know, because he read all the books. I mean, he, and he eliminated all the trouble of going to restaurants to meet him or anything like that. He just went through a book and he met Ben Franklin. And he really, he was remarkable.
He said he really had no one else to meet because he’d read all their stuff and he liked Ben Franklin’s stuff better than he liked mine. But with Ben Franklin, he just had to read about it. He didn’t have to go have lunch with him or anything of the sort. But it’s an interesting question. What you should probably ask yourself is that who do you feel that you’d want to start spending the last day of your life with?
And then figure out a way to start meeting them, or tomorrow, and meet them as often as you can, because why wait a little last day and don’t bother with the others?
Okay, Becky, this question comes from Carol de Gend in Switzerland, in Europe, and this is for both Mister Buffett and Mister Jain. As political instability in the world is growing with a rise in the number of armed conflicts and trade tension, there is also increasing risk of cyberattacks. What are your views on cybersecurity insurance? Asking this question in general, for retail, small businesses and large companies, including critical key infrastructure such as power plants, harbors, airports, nuclear plants, etcetera, do you see a potential for profit making in cybersecurity insurances, and what are the key challenges?
Okay, let me start. Cyber secure. Cyber insurance has become a very fashionable product these days over these last few years. It is at least a $10 billion market right now globally, and profitability has also been fairly high. I think profitability is at least 20% of the total premium has ended up as profit in the pockets of the insurance bearers.
Now, having said that, we at Berkshire tend to be very, very careful when it comes to taking on cyber insurance liabilities for the part of. Actually for two reasons. One is it’s very difficult to know what is the quantum of losses that can be subject to a single occurrence, and the aggregation potential of cyber losses, especially if some cloud operation comes to a standstill. That aggregation potential can be huge, and not being able to have a worst case gap on it is what scares us. Secondly, it’s also very difficult to have some sense of what we call loss cost, or the cost of goods sold could potentially be.
It’s not just for a single loss, but for losses across over time, they have been fairly well contained out of 100 cents of the dollar. The premium losses over the last four or five years, I think, have not been beyond forty cents of the dollar, leaving a decent profit margin. But having said that, there’s not enough data to be able to hang your hat on and say what your true loss cost is. So in our insurance operations, I have told the people running the operations is I’ve discouraged them from writing cyber insurance to the extent they need to write it so as to satisfy certain client needs. I have told them, no matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you’re losing money.
We can argue about how much money you’re losing, but the mindset should be you’re not making money on it, you’re losing money. And then we should go from there. So it is good. It’s projected to be a huge business. My guess is at some point it might, it might become a huge business, but it might be associated with huge losses.
And our approach is to sort of stay away from it right now until we can have access to some meaningful data and hang our hat on data. Well, you’ve just made, you’ve just heard why Ageita is invaluable. Because when you insure something, you really want to think of what, how much can you lose? And the question, I remember the first time it was happened, I think in the 1968 when there were the riots in various cities, because I think it was the Bobby Kennedy death that set it off for the Martin Luther King death. I’m not sure which one.
But in any event, when you write a policy, you have a limit in that policy. But the question is, what is one event? So if somebody is assassinated in some town and that causes losses at thousands of businesses all over the country, if you’ve written all those thousands of policies, you have one event, nor do you have a thousand events. And there’s no place where that kind of a dilemma enters into more than cyber. Because if you think about it, if, you know, let’s say you’re writing $10 million of limit per risk, and that’s fine, if you lose 10 million for some event, you can take it.
But the problem is if that one event turns out to affect 1000 policies and somehow they’re all linked together in some way and the courts decide that way.
You’ve written something that in no way we’re getting the proper price for and could break the company. And I will tell you that most people want to be in anything that’s fashionable when they write insurance. And Cyber’s an easy issue. You can write a lot of it. The agents like it.
You know, they’re getting the commission on every policy they write. And you’ve got to have somebody in charge of things that understands that you may get an aggregation of risks that you never dreamt of and maybe worse as, and some earthquake happening someplace just because you have a whole bunch of policies with a million dollar limit. And I would say that human nature is such that most insurance companies will get very excited and their agents will get very excited, and it’s very fashionable and it’s kind of interesting, and as Charlie would say, it may be rat poison.
Okay, well, that cheerful view. We’ll go to station six.
Good morning. This question is for Warren Buffet and Greg Abel. My name is Maria Preenas. I am a retiree from Las Vegas, Nevada. I am here today as a member of ChiC Spike Nevada, a group of developed latin leaders for the environment of justices.
I am almost here representing Maryland families in Nevada who are struggling to pay their utility bills and want access to affordable, clean electricity. I want to add today, why is NV Energy, which is owned by the Berkshire Hathaway, building new gas plants instead of investing in solar energy? With Nevada one and the sunniest state in the country, can I expect to see future leadership take dangerous investments in the fossils levels more seriously? Thank you. And thank you, Maria.
Greg, you want them? Sure. Thank you. So, as we touched on with Nv energy even earlier, there’s a lot going on there. When I think of.
There’s no question solar is a great opportunity for nv energy, and we’ll continue to utilize that as a resource and continue to invest in it in that utility and the other utility we have in Nevada. We’re also in a point where, when you think of a transition that’s going on within the energy sector, we are transitioning from carbon resources to renewable resources, as was noted, but it will not occur overnight. That transition will take many years. And as we use, be it renewable resources such as solar or wind, they are intermittent, and we do try to combine it with batteries. But at this point in time, time, we cannot transition completely away from the carbon resources.
So if I think of Nevada in the, in the next two years, our last two coal units are. Well, actually, in the next year, our last two coal units will retire, but we are replacing them with a new gas unit, which is truly needed to make sure that system remains reliable and available to, to our customers. And that’s done in conjunction with our, with the state representatives and our regulatory agencies to make sure we can serve those customers every day and every minute. We have great examples in Iowa where at times, 100% of our energy comes from wind. And we’re thrilled with that.
And I believe we hit that example on earth day. We had enough wind that we could meet the demand of that state. But the next day, if the wind’s not blowing, we need our gas resources, our gas plants, to fill that gap. And really, that’s the situation we still have in Nevada. So we’ll continue the transition to renewable resources, be it solar in Nevada.
And wind and other areas combined with batteries. But for the foreseeable future, we do see gas being a very important resource to help maintain reliability and meet our customer needs. And to meet it in an affordable way is also an important piece of that. So thank you for your comments. Yeah, we’ve got the capital to do whatever makes the most sense in a place like Nevada and the Nevada, I don’t know.
Each state calls their ruling commission something different, but they probably call it the public service commission or something like that. And they’re making the decision as to what they think can and should be done in terms of getting from where a vastly complicated utility business moves towards something different without messing things up in the meantime and having the lights go off. And they, I think they would probably agree with you very much, Maria, that they what they where they want to get, but they can’t do it tomorrow because of the intermittent problems. And their job is to make sure the lights stay on. And their job is also to move toward better sources.
But solar will never be the only source of electricity because, well, Greg may know more about this, but I’m barring some real breakthroughs in storage and that sort of thing. Right? Yeah. Yeah. Generally a battery right now to do it in an economical way is a four hour battery.
And when you think of the time without the sun being available, that’s a challenge. Now there’s a lot of technology advancements and that’s stretching out and you throw dollars, a lot of things, you can accomplish things, but the reality is that there’s a careful balance of the reliability and also balancing. As it was noted, the rates do matter and how much customers are paying. So delicate balance of both delivering reliability but doing it in an affordable way. My friend Bill Gates, he’s working on shortening up that, lengthening the time the battery works on.
And so you got some very smart people working on it, but it isn’t something that you actually do overnight. And I can understand why people want it done overnight, but it is going to take a lot of money. It’s going to take a lot of good ideas and smart people like Bill and Greg, not me. I don’t understand why the damn lights go on when I even turn the switch, but those, those fellas really do. And there’s plenty of them working on it and we got plenty of money to implement it.
But there are certain things that just take a certain amount of time. My daughter hates it when I use this example, but it’s really true that you can’t create a baby in one month by getting nine women pregnant. I mean, you may want a baby, so there are certain laws of nature that you have to work with. Okay, Becky, this question comes from Rich. McCloskey in Dunedin, Florida.
He says, Warren and Ajit, would you let us know what you think about the car and property insurance situation in Florida as a resident? Both seem out of control since the Florida market seems to be so mismanaged. Is this an opportunity for Berkshire?
Yeah. The Florida market, both for auto insurance and for homeowners insurance, has had a few tough years. The two problems we face in Florida and all the risk bearers face in Florida, one is the lawyers and the amount of corruption that takes place place in the Florida market keeps skyrocketing, making it difficult for us to price the product and make a profit. And secondly, the amount of activity in terms of storms, both the frequency and the severity, is also so severe that the losses in Florida tend to make it very difficult for a risk bearer to make money. Having said that, we’ve had a, we fortunately had a very good run at Florida last year.
We increased our exposure in Florida as we talked about last year, and fortunately nothing bad happened. So a lot of our premiums that were in the top line flew straight to the bottom line. Florida is a large market. Florida is the market that’s subsidized by the rest of the country. I don’t think those that’s going to stand the test of time.
The Florida market, the legislators are trying to improve it. They have passed law that is bringing down the amount of fraud that takes place in Florida. And I hope Florida will be a fairly buoyant insurance market because at the end of the day, they do believe in the free market more than some of the other states that have an insurance crisis, like California and New York. So, yes, Florida has a problem. Prices will go up fairly substantially, but at the end of the day, I think we’ll achieve a degree of balance so that the risk bearers can make a decent profit and will be deploying capital out there.
Okay. Station seven, please.
Hi, Warren. My name is Christine Hone Garcia and I’m from Agora Hills, California. Thank you for being an excellent teacher and imparting your wisdom to us throughout the years. What advice would you like to share today that you believe everyone needs to hear?
Well, too bad you didn’t add that. What the rest of us would like to hear.
I would say that if I had one piece of advice, I would try to. Well, and you’re lucky to live in this country just to start with, because you’ve got opportunities here that wouldn’t exist in much of the world.
But I would like. I would. I would like to really sort of use Charlie’s advice of the thinking how you like your obituary to read, and then start selecting the educational past, the social pass, whatever. Maybe that your particular situation in terms of associating, and perhaps certainly in my day, it would have been marrying the person that would best help you do that. Well, Charlie would say you were offering some similar benefit to the partner and.
But the opportunity in this country is basically limitless. When you think of going back not that many centuries, if you were going to be a shepherd or something like that, 100 years from now, your grandson was a granddaughter, was going to be a shepherd, nothing really happened. And what has happened in the last 200 years with the combination of the industrial revolution, whether it’s science or education or health, you name it. We are so lucky to be born when we were the people in this room, and many of us were lucky enough to be born in the United States as well, that you.
You’re entering the best world that’s ever existed, and you want to find the people to share it with and the activities to participate in that fit you. And if you get lucky, like Charlie and I did, you find things that interest you young. But if you don’t find them right away, you keep looking. And I always tell students to take the job. I mean, find the job that you would like to have if you didn’t need a job.
And sometimes you can find that very early, and sometimes you go through various experiences, but don’t forget what you actually are trying to do, and there’s no place to do it like this country. Find the person that you like to share your life with in many cases. And, you know, sometimes you get lucky into that early, and sometimes you make mistakes.
But I would try to, in a very, very general way, I would try to figure out how you’d want to look back on your life and think about yourself and start today to go on the path that leads to that goal and expect some difficulties along the way. But if you’re thinking that way, you’re more likely to get there.
Becky. This question comes from Axel Mayerseek in Hamburg, Germany. What has changed for Berkshire’s operating CEO’s since Greg Abel and Ajit Jain became vice chairman, for example? Can and do the operating CEO’s still reach out to Warren Buffet directly?
Well, that’s the answer. Might surprise you, but they overwhelmingly, the operating executives, well, they prefer to talk to Gregor, to Ajit. And that didn’t. And that’s understandable because I don’t really do much and I don’t operate at the same level of efficiency than I would have 30 years ago or 40 years ago. I don’t know the managers as well as I would have when we were smaller and when I could get more accomplished in a day than I can now.
And you’ve got. When you’ve got somebody like Greg in Ajit, why settle for me, basically? So it’s worked out extremely well.
And I almost can’t imagine anything working better because Greg in a year accomplishes. I mean, he sees more of them, understands more about their problems, you know, can give them suggestions. He’s got incredible amounts of energy and nobody has more wisdom than Ajit about insurance. And they’ve got access and insurance to him now. They had it before we stuck some of those titles on insurance.
Whereas with Greg, he much expanded things when he became the vice chairman in charge of really everything except insurance. So he is. If you polled our managers that fall under his jurisdiction, which would be a lot of them, they would much prefer, unless like a few, they weren’t paying as much attention to their business and I wouldn’t do anything about it, but Greg would. And they still like it when he does it. He can deliver news very well to people who.
There will be some people. If you have. If you have 20 children and you’re very rich, you’ll have some that will be go getters anyway, and you’ll have some that won’t. And we are a very, very rich company and we don’t.
We haven’t had a history of being very tough on people that coasted. And we’ve had some that would do that. And Greg will do something about it. And Charlie and I wouldn’t have. Not because we didn’t know it should be done, but because we were doing so well ourselves.
It just wasn’t. We wouldn’t make the effort. We didn’t want to change our lives that way. Plus, we slowed down in various ways, ways physically and everything. So I would say that the number of calls I get from managers is essentially awfully close to zero.
And Greg is handling those. I don’t know quite how he does it, but we’ve got the right person, I can tell you that. And with the jeep, he does less physical moving and the insurance people are more used to working with the jeep, obviously, over the years. So I wouldn’t say that changing the title really changed as much there because he was in charge of insurance. Anyway, you can go to a business school and they can give you way better answers than I’ve just given you, but that’s the way we do it at Berkshire.
Yeah. If I can add a comment. From my perspective, the transition has worked out very, very well, but I think the credit really goes to how Warren has handled the situation. And what I mean by that is, after the transition was announced, and a lot of the operating managers used to be. They were used to calling Warren directly on some issue or the other.
After the transition, when they would continue to do so, Warren would very skillfully, in his manner, handle them such that he would not answer what they were looking for, but at the same time made them feel good and told them that he sort of enjoyed hearing from them and talking to them. So as a result of which, you know, the transition took place, people got the message. They got the message and were very responsive to it. And it’s a non issue as far as today is concerned. I would probably add.
Yeah, the only thing I would add is we do have an exceptional set of managers across both the non insurance and insurance. And, yes, Warren made it incredibly easy, but so did they. It was a very easy transition because they cared deeply about Berkshire, they cared deeply about the culture, and they very much wanted it to be a success it. And we’re fortunate to have those managers in insurance and non insurance. So.
Thank you. Yeah. What Greg is talking about is they really wanted more direction in some cases than I gave them. You know, I mean, I just sat there reading the Wall Street Journal or whatever, and Greg is. I don’t, you know, one way or another, there are more than 24 hours in his day, and I just don’t know how he covers the ground.
He does, but he knows more about the people.
We got the same feeling in terms of judging the attractiveness of businesses and making capital decisions and that sort of thing. He’s willing to work. I mean, I, you know, I, you know, and I couldn’t get as much done anyway. You know, what I could do in a couple of hours, you know, may take 8 hours now. I just don’t read as fast and everything said, but it’s working very well.
And this place, if anything happened to me, it would be working extremely well the next day. I don’t get any phone calls. You can actually. We can. We can rig something up so we got some answering machine that people think I’m still around, you know, or something.
So, anyway, that’s. That’s much, much less than you’d learn in business school, but that’s the way we do it at Berkshire. Okay. Station eight.
Dear Warren, Greg n Ajit, thank you for having us. Your teachings have not only made us better investors, but more importantly, better people. Thank you for that. My name is Rajiv Agarwal, and I am from New Jersey. I run an India focused fund called Do Darshi India Fund.
My question is related to India. Indian economy and indian equities have done quite well in the last 510 20 years. It is the fifth largest economy and will be the third largest in the next few years. My question is, is Berkshire actively looking for opportunities in the indian equity market and what will allow you to buy anything meaningful there? Thank you.
Yeah. Well, that’s a very good question. And obviously India, you know, I’m sure there are loads of opportunities in a place like India. And the question is, do we have any advantage in either insights into those businesses or contexts, it will make possible some transaction that might what the parties in India would particularly want us to participate.
I would say that that’s something that a more energetic management at Berkshire could pursue, because we do have the reputation. Now, Berkshire is known, not like it’s known in the United States, but it’s known around the world. And, you know, our japanese experience has been fascinating in that respect. So there may be an unexplored or unattended to opportunity in that area. I’m not the one to do it, but that may be something that in the future, it might be opportunities.
There are opportunities. The question is, does Berkshire have some kind of advantage in actually pursuing those opportunities against, particularly against people that are using other people’s money, that where they get paid based on asset met, on assets managed or something of this sort. I mean, there are plenty of people in the game who are buying and running businesses that do not really have our philosophy. I mean, they’re going to get rich no matter what happens, and their payment may be based on how much they buy rather than what they buy. So we’ll see how the next management plays the game out at Berkshire.
Fortunately, you don’t have too long to wait on that. Generally, I feel fine, but I know a little bit about actuarial tables, and I just. Well, I would say this. I shouldn’t be taking on any four year employment contracts like several people doing in this world in an age where you can’t be quite that sure where you’re going to be in four years. Okay.
But you’re absolutely right about, if you were energetic, had some way to be become a buyer or a party that people particularly wanted to do business with.
Japan was great, and India could be great, but India and Japan aren’t the same. I mean, I don’t adapt myself terribly well to different cultures, and some people are really good at it, and almost anybody’s better than I am. But I stumbled into one or two, but that could happen in act two of Berkshire Hathaway. Becky, this is a question from Rafael DePino from Spain. Maine.
Berkshire has grown tremendously thanks to, and among other things, its architect, Mister Munger, and you, its general contractor, were all tremendously thankful to you for taking us along the way. We are aware that both of you and many others have spent an enormous amount of time ensuring Berkshire’s culture provides a solid footing on which to grow the building. You also currently have a very talented bench of what we may label as subcontractors. Mister Abel, Mister Jain, Mister Combs, and Mister Weschler. However, for a long time, you’ve had the advantage that talented subcontractors have wanted to work with a once in a generation architect and general contractor.
How do you envision Berkshire will overcome the loss of said advantage when the contractor bench needs to be renewed again? And what are potential renovation works in this great building that may necessitate a new architect? Yeah, well, that’s a great question, which Charlie and I obviously talked a lot about over time. And of course, we will not be sure to the extent it remains the sort of entity that it is, will not need to attract people very often. It would be absolutely crazy for anybody, for our board of directors to ever pick anybody to run this business that thought, you should retire at 65.
It may be that they should retire the next day when you learn what they’re really like managing something, or it may turn that you want to keep them around till they. They really start being affected by old age, which hits different people at different times, but it hits everybody eventually. And so we. It’s very likely that if it’s. If the directors, and it’s very tough, because they will be acting against conventional wisdom, which is always difficult.
But I think we’ve got the group on that, and they will not have to make a decision very often. If they pick the right CEO, that’s 99% of the job of the directors. And if they. The other 1% is, do you have a good method to correct it if you’ve made a wrong decision? And that’s extremely hard to do in our present system.
It’s not impossible, but it’s just not something that happens. It’s too good a job to be a director, to try and throw over somebody, particularly if you can use the money from directorships and you want to be on other boards and everything. We do not have a perfect system in terms of boards or directors at all. And it’s. It doesn’t operate at all.
Well, I shouldn’t say at all, but it doesn’t. It doesn’t operate as people may think. It generally operates. So we will.
We’ve really got the problem solved for the next 20 years unless something untoward happens. And if something untoward happens, then. Then the directors need to find, probably within our own organization, somebody that they’ve got confidence in to maintain the special advantages we have over another 20 years period. There’s various things that are low probabilities, but you still have to think about them, and we are in that position now. Now, if you asked me whether.
If something happened to Greg today, everybody says, don’t travel on the same plane. The thing to do is not travel in the same auto. Planes don’t go down that often. Autos crash all the time. I’ve seen all these corporate policies on that, which are kind of crazy when you think about the real risk.
But in any event, Greg is going to have to tell the directors about what if something happened tomorrow. He has to tell the directors about what should be done if anything happens to him. And that’s not an easy thing to do, and I don’t have.
Well, it will be his decision, and then the director’s really to decide whether he’s made the right one, but he will make the right one. And what you really have to hope is that you get lucky on how long managers stick around. I mean, you might need three in the century, and you might need six or seven, but the answer is you need a little luck, and you need some break in the mortality tables. But we’ve got an entity that if you really aspire to be a certain kind of manager, of a really large entity, there’s nothing like it in the world. So we’ve got something to offer the person who we want to have.
It’s sort of like Charlie said about marrying the best person that will have you. Well, we’ve got something that the right person would want to marry, basically, in terms of Berkshire. And if we get the wrong person, then the directors have to do something about it, and that probably won’t happen. But it’s always a contingency, a possibility, I should say, Greg, having been put on the spot like that, you don’t have to name anybody now, but I’m sure the crowd would love it and make news. Well, the only thing I would add, Warren, is, and it’s really how the comment started, was around culture, the culture we have at Berkshire and that being our shareholders, being our partners and our managers of our business, having that ownership mentality, that’s never going to change and that will attract the right managers at every level.
So I think, as Warren said, we have a very special company in Berkshire, but it’s that culture that makes it special, and that’s not going to change.
Okay, station nine.
I’m never sure where nine is. Hi, I’m Sherman Lam, a Berkshire shareholder, and I work for family office in Kuala Lumpur, Malaysia. Just really happy to see you, Warren and the team. And where I come from, you’re a hero. And both you and Charlie have positively transformed mine and many, many other Malaysians and Southeast Asians lives, not only financially, but also in how we navigate our lives and relationships.
Thank you very, very, very much. Thank you. Thank you. That makes us feel good.
Question is, what have your team’s greatest learnings been on business? Capital allocation, stock picking and portfolio allocation throughout the COVID-19 pandemic period over the last five years? And, Warren, appreciate it if you can get your views, as well as your representations on TeD and Todd, as well as directly from Greg and Ajit, too, on their respective businesses. Thank you. Yeah, I don’t think I want to give individual appraisals, but really what you’re doing is in terms of capital allocation, which is my job, I don’t go out and sell insurance policies or anything sort.
And you represent a group of shareholders like we do represent. We are totally clear on our mission. And, you know, it may be that other people don’t agree with them, but I would say that in a great many places, you know, I just don’t agree with our mission.
I would say that, for example, that anybody that wants to retire at 65 would be disqualified from being CEO of Berkshire. They might get retired the next day if they were the wrong person. But there’s just certain things we don’t want, and the were well fixed now, and that the odds are very good, but far from certainty that that takes care of the next 20 years. Now, the but you have to provide for the contingency. And there are several people on the board that know what I would do on that, but it’s up to Greg.
But if Greg and I go at the same time, then you’ll move into making another decision.
There are a few people who know my thoughts on that, but the job of the director is then to come up with the right CEO, and the right CEO can’t make a terrible business great. Tom Murphy, who was the best, he was the best business manager I’ve ever known. And Tom Murphy, you know, he said the real key was buying the right business. And now Murph brought a million other attributes to it after that. But, you know, Charlie said, what was this?
He had a saying on that. But basically, we could have brought in Tom Murphy and told him his job was to run the textile business, and it would have done a little bit better, but it still would have failed. And one of the reasons I stuck with the textile business as long as I did was that I liked Ken Chase so much, and I thought he was a terrific guy, and he was a very good manager. If he’d been a jerk, you know, we’d have quit the textile business much faster, and we’d have been better off. But.
So the answer was for him to get in the tv business, like Murph had done and ad supported. You know, Murph figured that out early, and he started with a pathetic operation, which was a VHF in Albany, New York, competing against GE and everything. And he was operating out of a home for retired nuns, and he only painted the side that faced the street. He had one car dashing around town, and he called it news truck number six. But from that, he built an incredible company, and he built it because he was the best manager I’ve ever met.
But beyond that, he was in a good business. And the key will be to have Tom Murphy and then hand them a bunch of good businesses, and he or she will know what to do with it.
Now, that’s not as precise as you would get in most companies, but you really can’t get more precise than that. I mean, you can have committees and management consultants and everybody. But it wasn’t a management consultant that hired Tom Murphy. And I forget whether he was doing. His sales volume was a couple thousand a week at first.
And then as soon as he hit, that was his goal. It got to 2000, he says. Now my goal is 3000. He kept doing that, surpassed all these people, like CB’s and ABC, that only had the world by the tail. And it was just a wonderful lesson in life to get.
Just to be able to view something like that. I learned an awful lot from what he said to me, but I just learned by watching somebody like him operate. I mean, it’s like watching a great golfer, a great tennis player, then you ought to learn something about the kind of swing you’re trying to develop or something of sort. So that’s not a great answer for you. But so far, it’s worked, and I think it works.
I’m very sure it works with Greg, and it’s up to people in the future when, you know, I’m underground or wherever they put me, to really make a decision every 20 years or something like that. On average, it’s the right decision, but correct it if it turns out to be the wrong decision. That’s what a board of directors is for. And we’ve got the people on the board that really understand that responsibility. They take it seriously, but they don’t take themselves too seriously, and so therefore, they don’t.
They don’t wanna. They don’t necessarily wanna do a lot of things just to look busy. And they aren’t using us as a stepping stone to get on other boards, but we’ve got people that really believe in what we’re doing, and they’re the ones that are going to have to make this place work. And if they got lucky on Greg’s mortality, they can do just what Revan would go to sleep for 20 years or so and then make another decision. And Berkshire has every tool in the world available to be what it is now and continue to be what it is now.
I mean, we’ve gotten from 20 million of net worth to 570 billion. And, you know, we. There aren’t as many things to do, but we can do a few big things better than anybody else can do. And there will be occasional times when we’re the only one willing to act. And at those times, we want to be sure that the US government thinks we’re an asset to the situation and not liability or a supplicant, as the banks were.
We’ll say in 2008 and nine, they were all tarred with the same brush. But we want to be sure that the brush that determines our future is not tarred. And I think we’re in the. I don’t think anybody’s got a better position to do it than Berkshire.
Becky? This question’s from Johan Halen, who writes, you’re sitting on $168 billion of cash, which he told us today is now more than $182 billion. His questions are, one, what is Buffett waiting for? And two, why not at least deploy some of it? Well, I think that’s pretty easy to answer.
I don’t think anybody sitting at this table has any idea of how to use it effectively. And therefore, we don’t use it. And we don’t use it now at 5.4%. But we wouldn’t use it if it was. If it was at 1%.
Don’t tell the Federal Reserve that, but prefer it. But the.
We don’t. We only swing at pitches we like. And if anybody tried to swing at every pitch, or felt that because they hadn’t swung at a pitch for the last two pitches, they ought to swing at the third one or something like that. It’s just.
There are times, and obviously. But I would say this, I would not like to be running 10 billion now. 10 million. I think we could. I think Charlie or I could earn high returns on, because I think there are just a few things that happen on a very, very small scale.
But if we had 10 billion, I wouldn’t basically see many more opportunities than we found now. It’s true that something like Japan, we could have done, if the company had had a 30 or 40 billion, and we’d make. We’d have had great returns on equity. But if I saw one of those now, I’d do it for Berkshire. It isn’t like I’ve got a hunger strike or something like that going on.
It’s just that things aren’t attractive, and there’s certain ways that can change, and we’ll see whether they do.
Okay. Station ten.
Mister Buffett, this is an incredible meeting that you host every year. My name is Sean Cawley. I am a real estate agent with Berkshire Hathaway Home Services in Arizona and California. My mother, Cindy, my brother, and my two sisters all sell real estate with Berkshire Hathaway Home Services for many years. We love being a part of the Berkshire family, and along with the 70,000 other agents that sell real estate for the company, Mister Buffett Home Services of America recently settled our class action lawsuit.
Regarding commissions for $250 million last week. This dollar amounts about 100 million more than Keller Williams. 166.5 million more than anywhere. Real estate, which is better homes and gardens in Coldwell. Banker as a realtor with Berkshire Hathaway home services in multiple markets, and a shareholder who’s been coming to this meeting for 15 straight years.
That’s one of the reasons I got involved with real estate, is because of this meeting. What are your thoughts on buying and. Selling a home in light of this recent settlement? And maybe ask the note to Greg and Ajit, too. Would you consider a Berkshire agent when.
Buying your next home?
I don’t buy them that often, as some people have noted.
I certainly would consider him but I say the probability of that happening is low. And I really appreciate the fact you’ve joined up with us, but I’m going to. In terms of the settlement, I mean, Craig kept me informed, but I turned it over 100% to him. So, Greg, you want to talk about it? Sure.
So, thank you for you and your family for being an agent and working for our. For our company, Berkshire Hathaway Home Services. I think there’s a few questions in there. One, there’s no question the industry will go through some transitions because of that settlement. Ours and the every other major player in the industry settled.
The National Association, association of Realtors settled for more than 400 million. So effectively everybody was swept up in that settlement, and it did set the grounds for both home services and for the industry to move forward. There’s a lot of changes that happen in, or are being proposed associated with that settlement. The one thing that I think you hopefully would absolutely agree with, the real estate agent, is still an important part of these transactions. It’s the one time in our lives where we make these massive investments, and having that counseling guidance is critical.
And that’s really what our business and those other businesses rely on, how the commission structures change and how it’s negative negotiated, which is really what the settlement was. It was no longer that a buyer would automatically pay a commission agent to the. To the selling agent. That now has to be negotiated. That’ll impact things, but I think the realtors will continue to be a very important part of that.
And I think home services and the industry will remain very relevant. And then the only thing I would share with our shareholders on a broader basis is that obligation resides with home services and can be met by home services. And that was an important condition because they were also pursuing Berkshire and Berkshire Hathaway Energy. And we said, you can pursue us separately, but that settlement will reside with home services and be an obligation of that. And they decided the ultimate settlement.
And. We’Ll go forward from there. So, Warren, any other comments? Well, yeah, I’ve sold two houses in the last. Well, the last 93 refraction years, and I’ve bought one that I still have, but I obviously bought the other two, and I have not negotiated down the commission, even though the last one sold for 7 million or something like that.
People do negotiate down commissions to some extent, but I can tell you, I’ve looked at the figures and I think the system has really worked out very well. When I got out of school, they had what they called Fizzbowl for sale by owner and so I’ve been involved to some degree in watching the whole system operate, and I know what our average agent makes. I know how long they work on things sometimes that don’t materialize.
I don’t think we’ll end up with a better system, but it’s up to Greg and the people at home services we work through here. But I like our agency group, and we’ve got a very large number of real estate agents, and I’ve encouraged the expansion we’ve done in the real estate brokerage business. It was just one or two operations when we bought Berkshire Hathaway Energy, and we really built up quite a company. And I think it’s a very fundamental business. You need help.
90% of the people need help in buying a home or selling one. And I’ve watched it operate all my life and been involved with lots of people who have been in the business. But there was a decision in court, and I told Greg to handle it, whatever seemed best to him. And I’m quite. I’m perfectly happy with the way we’ve handled.
I think I’m surprised at the decision, but we get surprised indecisions in the insurance business lots of times. I mean, just think of the various things we faced, and when 911 came along, we never thought something like that could happen, but it happened, and then we didn’t know what was one event or more events. If they closed down the New York Stock Exchange, a bunch of brokers. Well, all kinds of people lose their jobs or lose their income for a while. Is that one event or multiple events?
There’s all kinds of things come up in business, and we just play the ball wherever we find it. And I was surprised by the decision. Was it in Missouri? Missouri, yes. Yeah.
But we’ve gotten surprised by some other decisions, and we’ll keep doing sensible things as we move forward. Greg, do you want to. No, I think the only thing I would add back, maybe to how the model has changed. And he asked one. Yes, we’ll always, I can’t speak for jeep, but we’ll always use home services agents.
But it’s interesting. I have bought a home abroad. I lived over in the United Kingdom, in Newcastle, running our utility over there. And it is a completely different experience to buy a home outside of the US. Our agents take great responsibility for the whole transaction.
In the US, they put, as Warren said, time and capital at risk to ensure the transaction closes. And when you do close, they make sure what you bought, you actually what you thought you were purchasing, you end up with, and that’s not the way it is always around the world. And there are more affordable models, but it’s the old saying, you get what you pay for. So I think our real estate agents still provide incredible value within our business, and as Warren touched on it, it’ll survive. The form may be a little bit different, but there’s no question it’ll continue to thrive.
Yeah, we still will want to buy real estate brokerages at the right price, and I hope we’re bigger in the industry ten years from now and 20 years from now than we are currently. And I did sell a house for 7 million. I did not negotiate the 6% down, and I feel I got my money’s worth and then some. And I’m cheap by nature, so it isn’t. I’m careless about it.
I just. I got my money’s worth. And so let’s move on to becky. This question’s for Warren and Ajit. It’s from Jeff Oyster.
As a Berkshire and Tesla shareholder, I would like to hear your thoughts on the potential financial effects to Geico, assuming Elon Musk delivers on his fully autonomous driving goal. On Tesla’s most recent earnings call, Elon said, if you’ve got, at scale, a statistically significant amount of data that shows conclusively that the autonomous car has, let’s say, half the accident rate of a human driven car, I think that’s difficult to ignore. Assuming Elon succeeds in reducing accidents by 50% versus human drivers, wouldn’t auto insurance rates fall to reflect the reduced underwriting risks, thereby adversely impacting GEIco’s revenues and float and perhaps margins, too? Well, yeah.
Well, let’s just take the extreme example. Let’s say there are only going to be three accidents in the United States next year for some crazy reason that anything that reduces accidents is going to reduce costs. But that’s been harder to do than people have done before. But obviously. But if it really happens, the figures will show it, and our data will show it, and the prices will come down.
There have been a lot of people talk about doing that in the past. I mean, General Motors used to be very big in the insurance business, and when Uber first started, they. They used some firm, which now is, I think a Jeetl confirmed they’re close to bankruptcy now, aren’t they? Because of taking things on at the wrong prices. Is that true?
Yep. Yeah. Yeah. Insurance always looks easier than it is, and it’s so much fun because you get the money at the start, you know, and then you find out whether you’ve done something stupid later on. But it’s a very tempting business when somebody hands you money and you hand them a little piece of paper, but really knowing whether you’re.
I mean, if accidents get reduced 50%, it’s going to be good for society and it’s going to be bad for insurance companies. Volume. But, you know, but for society is what we’re looking for so far you might find kind of interesting. I mean, the number of people killed per 100 million passenger miles driven. I think it actually, when I was young, it was like 15, but even post world war two, it only fell like seven or thereabouts.
And Ralph Nader probably has done more for the american consumer than just about anybody in history because that seven or six has now come down to under two. And I don’t think it would have come down that way without him. There have been some kind of fluke figures of what people did during the pandemic, which are quite interesting because they, they didn’t drive immediately, they didn’t drive as many miles, but they drove more dangerously, didn’t they? Is that right, Ajit? Yeah.
Yeah. So the point I want to make in terms of Tesla and the fact that they feel that because of their technology, the number of accidents do come down, and that is certainly provable. But I think what needs to be factored in as well is the repair cost of each one of these accidents has skyrocketed. So if you multiply the number of accidents times the cost of each accident, I’m not sure that total number has come down as much as Tesla would like us to believe. Tesla has been toying with the idea of writing insurance directly or indirectly.
And so far it hasn’t really sort of been much of a success. Time will tell. But I think, you know, automation just shifts a lot of the expense from the operator to the equipment provider.
Okay, we’re getting close to noon when we’re going to break for lunch. I just want to tell everybody that I would appreciate it very much if they. We’ll get in their seats and be ready at 01:00 when we reconvene, because we will have another very short little movie and we’ll just have a little explanation of something that I think will be of interest, certainly of interest to me, but it. So I would like to. We will break promptly at twelve, and I would like everybody to really make an attempt to be in their seat and quiet at 01:00 and if you can’t do that, if you’ll wait a few minutes and watch in the halls and all that.
But we do not want to be seating people and have people milling here at 01:00 and just like a play in New York or something. It’ll take a few minutes and only a few minutes to cover what. We’re going to it at 01:00 but we don’t want to be seating people during that period. But now let’s. We’ll go on till 12:00 and then we’ll have a break until 01:00 and we will go to station.
My name is Humphrey Liu, and I. Am from Charlottesville, Virginia. I asked the question last year and wish to pose it again. It can be considered a follow up. There is something to be said for traditions.
It is the same question, but it. Is a changing and different world we. Are in looking at global trends, it. Increasingly does seem that zero emission vehicles may have finally reached the cusp of massive adoption. Do you see any opportunities in this space, either in specific vehicle manufacturers or in related technologies?
As an addendum, I will note that Berkshire has very relevant interests in energy, pilot, flying J and BYD. Thank you. Yeah, well, we will. I hope you’re right. And massive adoption has been sort of a moving target so far, but I hope we get there.
But Berkshire would not be. I don’t think that we bring any special talent to that field. You’ve got vehicle manufacturers, and I would certainly not know how to pick the winners in an industry like that. But I’ll be delighted if there are some winners.
But don’t count on us foreseeing who the winners will be, and don’t count on us for predicting when something will happen.
It obviously has been a moving target so far, and it is an incredible problem that society faces, and it may be that governments are not very good at solving it for a while.
All of climate change, it’s got a terrible problem just in the fact that the United States particularly has been the one that’s caused the problem the most. And then we’re asking poorer societies to say, well, you’ve got to change the way you live, because we live the way we did. But that really hasn’t been settled yet.
It’s a fascinating problem to me, but I don’t have anything to add to how you really slice through the world. When I was born in 1930, there were just essentially 2 billion people in the world population statistic. Now there’s 8 billion. Now, if you’d asked anybody in 1930, if you take the 50 smartest people in the world and you said, what’s the optimum population for the world. When you’re 93 years old, they would have not said 8 billion.
There wouldn’t be anybody close to it. But we did it. Now we’re reaping some of the consequences of happening, having done that, and we got the benefits in the United States. I’m exaggerating here to some extent, but the developed world basically got it. And then we’re telling a whole bunch of other people that we want them to change the way they live because of the way we lived.
So we will see what happens with it. But that’s a problem that is very, very, very hard to solve, solved among a couple hundred countries. And I really don’t have anything to be, to contribute on it. And now I’ve got instructions from the thing, the monitor in front of me. I would like to introduce one person here that has, you all know, because she’s been here so many times, but my friend Carol Loomis, who is now, well, she’s going to be 95 on June 25.
You can send president’s care of our office. And Carol has edited the Mercury annual report since 1977. There we are.
And there’s, there are two points I’d like to mention. Every year I give Carol a little item for a bracelet that is a replica of the front page of the report that year and their different colors and all of that sort of thing. And so she now has, what, since 1977, what, 47 of them. I think she’s put ten on each one. But I’ve always wondered if she put them all on one arm, whether one arm would now be four or five inches longer than the other.
But I’m sure she foresaw that. But I want to reveal one other. Well, I want to ask one more question while Carol was here, because I’m sure most everybody in this audience grew up like I did, knowing that Ty cop’s lifetime batting average was 367. I mean, he’s the leader among everyone, and it may be that that record is never broken. And Ty Cobb, 360 seven’s immortal.
But Carol has a distinction that probably most of you don’t know, but she dated Ty Coppa.
And Carol was officed at 6th Avenue and 50th street in the Time Life building. And NBC was right across the street in, in Rockefeller center. And the quiz shows became the head of tv. And Carol, being the kind of person she is, walked across the street at lunchtime and went on the quiz show of the late 1950s. And they gave her the, they gave her the questions regarding baseball.
And Carol answered them all correctly, of course, she was encyclopedic on all kinds of things. So she knew all the answers. And she proceeded. And she was single at the time. And she proceeded back to her office at fortune.
And at some point she got a phone call from. Sounded like a fairly young man in Georgia. And he said, my uncle is Ty Cobb, and he would like to take you to lunch at 21. And so Carol went to lunch with Tycob at 21. And I think he subsequently had one more lunch.
And then she decided to call it off. But those of you who follow baseball may have noticed that in the 1990s, they found that the statistics had been faulty when Tyb played. And that he actually only batted 366, that there were a couple of bad bats. They didn’t count. So the real question I want to know from Carol, and I think she should maybe tell us, is that would she have dated Ty Cobb if she not.
I mean, I know she wouldn’t have. I know she wouldn’t have dated Ty Cobb if his batting average had been 300 or something like that. But where was the cut off point at which she would have told Ty Cobb to stay in Atlanta and forget about coming up to New York? And if Carol would. If anybody has a microphone, Carol would care to express herself on that question.
It’s the unanswered question that I’ve had and all inquiring minds have had, and only she knows the answer.
And she’s with her daughter. She married a wonderful guy, John Lewis. And Barbara’s. Barbara’s withered. I’m sure Barbara’s been always wanting to ask this question, but it’s kind of tough when you’re in the family.
But I’m sort of a non anxious guy. Older, in front of a lot of people. Carol. Cyril. Or are we gonna have Barbara’s guests?
Either one will. She would have been happy to go either. Right.
Thank you, Carol.
Carol is the best business writer. She comes from a town of Col camp, Missouri. I don’t know, around a thousand, probably. She never took an accounting course. And she ended up becoming the best business writer in the United States.
And we. You know, she didn’t want to be an editor, actually. I mean, she could have done other things at Fortune, but she just plain liked writing business stories. And like I say, that nobody came close to her. And she started from scratch.
But in 1977, I asked her to edit my report, and she turned out to be just an editor. She was a writer. And all the way through this year, including this year, Carol has edited the Berkshire report. And to the extent anybody enjoys reading them. Let’s give a hand to Carol.
Okay. And I’ve been told to show a video right before you go to lunch, because it’s only 30 some seconds, and then we’ll talk a little bit about more about it when we come. So if we’ll dim the lights, we will have was showing what a Berkshire shareholder did when she sold us a billion dollars worth of stock the other day. And you’ll meet somebody that I hope is. I know she is the prototype.
She may have more zeroes, but she’s the prototype of a good many Berkshire Hathaway shareholders. It’ll be the first thing we talk about when we come back. But some of you may have noticed whenever it was a few weeks back, when Ruth Gottesman gave $1 billion to Albert Einstein to take care of all of us, and Ruth doesn’t like a lot of attention drawn to herself. But here’s how they felt at Albert Einstein when they announced that Ruth Gottesman had just made a decision to take care of all of the costs of education at Albert Einstein, and it’s going to be in perpetuity. So let’s just show the film.
I’m happy to share with you that starting in August this year, the Albert Einstein College of Medicine will be tuition-free.
And that’s why Charlie and I have had such fun running Berkshire.
She transferred a billion dollars to other people. She happened to do it with Berkshire stock, and, you know, they offered rename the school after and everything like that. But she said, albert Einstein. That’s a pretty good name to start with. So there’s no ego involved in it, no nothing.
She just decided that she’d rather have 100 plus, closer to 150 eventually, of students be able to start out debt free and proceed in life. And she did it happily, and she did it without somebody asking, you know, name it, you know, put my name on for all four sides of neon lights, and I salute her.
So let’s all have lunch, and we’ll come back and talk a little bit more about that. Thanks.
Afternoon Session
So please take your seats. We’re going to finish at three, so the sooner we start, the sooner more chance we’ll have to talk about various questions you may have. I just like to follow on, however, with that film we showed just before we left for lunch, because it says something about Berkshire.
There are all kinds of public companies and wealthy public companies throughout America, and there are certainly cases where in one family, somebody has made a very large amount of money and is devoting it to philanthropy, or much of it to philanthropy, such as the Walton family would be the number one thing in Walmart. And certainly Bill did the same thing, Bill Gates did the same thing at Microsoft. But what is unusual about Berkshire is that a very significant number of Berkshire shareholders located all over the United States, not just in Omaha, but the number of different Berkshire holders who have contributed $100 million or more to their local charities, usually with people not knowing about it. I think it’s many multiples of any other public company in the country. It’s not more multiples than those put a whole lot into philanthropy, and I don’t know the details of the family, but clearly there’s a huge sum of money that the Walmart family, I’m sure, has done all kinds of things philanthropic and will continue to do it.
But I don’t think you’ll find any company where a group of shareholders who aren’t related to each other. So many of them have done something along the lines of what Ruth did a few weeks ago, just to exchange a little piece of paper that they’ve held for five decades, and they’ve lived well themselves. They haven’t denied their family anything, but they don’t feel that they have to create a dynasty or anything, and they give it back to society. And a great many do it anonymously. They do it in many states to some extent.
We see some concentration of it in Nebraska, because generally, when you’re giving away a lot of money, they call it, in the philanthropic world, they call it absorption capacity. And the truth is, it’s very hard to give away a billion dollars to $10 at a time to people who are needy or something of the sort. And so large institutions have this absorption capacity, which tend to be universities or colleges or that sort of thing. And some philanthropies are much more imaginative than others. But the one thing I’ve never.
Well, most of them want to do it anonymously, so I can’t tell their specific stories. But I have to say one thing that was astounding is that the same day we bought a billion dollars worth of Berkshire class a stock from Ruth. So that. And I guess we were actually buying it from the school at that point because he’s just given them. And then.
So the transaction was them, was with them. But Mark Millard in our office bought a billion dollars from them, but he also bought $500 million worth of stock from somebody else that nobody will ever have heard of and in a different state. And I won’t elaborate beyond that, but we have had a very significant number of people, and there’s more to come. And obviously, they had to be people that came in early, or their parents did, or their grandparents did, but they’ve all lived good lives. They haven’t denied themselves anything.
You know, they have second homes, and they. But they generally. In fact, I would say almost universally, they. People knew them in the community, everything. But they’ve used what they accomplished, what they saved.
They denied themselves consumption themselves. That’s what savings are, is consumption deferred. And they’ve given. They’ve financed everything all over the country. And usually they like to do it anonymously.
I outed my sister when I wrote about her in the annual report, but Bertie’s here today.
I told her she should wear a t shirt or something, said no solicitors allowed or something, but they just do it. And it’s really both, Charlie. I felt it’s really fun to work for a group of people like that rather than for index funds or for. For hedge funds or whatever it may be. I mean, you’re just seeing what people actually.
It sort of restores your faith in humanity, that people defer their own consumption within a family for decades and decades, and then they could do something like. And they will. I think it may end up being 150 people to pursue different lives and talented people and diverse people to become a dream of being a doctor and not have to incur incredible death to do it, or whatever may be the case. There’s a million different examples. And I want you to know that.
That you’re very.
You’re a unique, actually, group of shareholders among public companies, as far as I know, in terms of the way you’ve deferred your own consumption while living fine to help other people. And it takes a lot of years, but it can really amount to something very substantial. And what Ruth did was roughly my age. She looked at a little piece of paper which actually was a claim check on the output of others in the future. And she said instead of the output being for her, that the output would be for a continuing stream of people, for decades and decades and decades to come, that we’re having a different life in the pursuit of becoming doctors than they otherwise would have.
And Berkshire has been. Of course, her husband Sandy contributed substantially to Berkshire’s record. Sandy was a wonderful partner to have. So it was both input by him, and then there was deferred consumption by his family. And then there was ultimately this final gift to Albert Einstein.
And like I say, the same day, there’s only 500 million it’ll go to in a different way. But it’s happening all over, and I don’t think any, any companies like that. So I just want to tell you that it’s inspiring to work for a group of showers.
And Becky, go to it. All right, the next question comes from Slavin Vucelbrot. As CEO, will Mister Abel be in charge of the portfolio of common stocks that Mister Buffett has been managing, or will this function be exercised by Mister Combs and Mister Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process? Yeah, I would say that decision actually will be made when I’m not around, and I may try and come back and haunt them if they do it differently.
But I’m not sure the Ouija board will get that job done. So that job, I’ll never know the answer on whether it get covered, but I feel very comfortable about the fact that it will be made by a board, that they’ve got loads of brainpower, they’ve got a dedication to an unusual institution, and they will figure things out. But I would say that if I were on that board and were making the decision, I would probably, knowing Greg, I would just leave. I would leave the capital allocation to Greg. And he understands businesses extremely well.
And if you understand businesses, you understand. You understand common stocks. I mean, if you really know how business works, you are, you are an investment manager. How much you manager, maybe just your own funds or maybe other people. And if you really are primarily interested in getting assets under management, which is where the money is, you know, you don’t really have to understand that sort of thing.
But that’s not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. The responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled, but I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility.
That’s up to amber heard to decide at the time they’re running the money. So I would say that my thinking on that has developed to some extent as the sums have grown so large at Berchard, and we do not want to try and have 200 people around that are managing a billion each of just doesn’t work. And I think that when you’re handling the sums, that we will have, you’ve got to think very strategically about how to do very big things, and I think Greg capable of doing that. I think I’ve missed a lot of stuff in the past, so I’m actually wiser about doing that now. But I, you know, I would do it better this time around in 2008 and zero nine, if something akin to that happened.
But it won’t be exactly like 2008 or nine, you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly. Maybe it will be once every five years, probably be more like once every ten years or something. But as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there’s no sense going through here exploring the possibilities of the different things that could happen.
But you do want to be able to act when it happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn’t that people didn’t have money in 2008. It’s that they were paralyzed. And we did have the advantage of having some capital and eagerness even to act, and a government that, in effect, looked at as us as an asset instead of a liability.
And I think that all of those qualities will be even more important as our capital pile grows. So I think Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go.
You never know whether it’ll be next week, next year, next decade, but you won’t be, you know, it won’t be a century from now, that is for sure, and be more intertwined. It’s sophisticated. The world financial situation gets the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to large problems.
Greg, does that bother you at all or not?
Without directly answering the question? I think there’s one important thing, is I think as we go through any transition, it’s important to know that the capital allocation principles that Berkshire lives by today will continue to survive. Warren and I think that’s what the thing I’d want to communicate will we have our operating businesses, insurance, non-insurance, we’re going to cap that. We’ll provide them the capital necessary to be successful and grow, if it’s appropriate. At the same time, we’re expecting return of capital from them when they have excess cash.
And then, as we’ve discussed, or you’ve touched on always looking at potentially new businesses as a whole or in a piece, and as you’ve always highlighted, and I fully agree, it’s, we’ll always look at equities as we’re investing in a business, either 1% or 100%, but we’re looking at the business, we’re looking at the economic prospects of that business, how sustainable it is, and what it will look like ten years from now. And is our, the capital we originally put in at exponential risk, or where’s that risk? Set that profile. And then, of course, and then we’ll obviously have our continue to always put excess cash in the safest investment there is in us treasuries, knowing we want to maintain that fortress of a balance sheet for two reasons. One, to act, but also to always protect our shareholders if we have a.
We want to maintain the position Berkshire is in now, realistically for the. To ensure it, to ensure it endures. Well, when he says that, it makes me wish I’d stayed around to be number two instead of number one in this process over the years. It’s, you know, it doesn’t get more fun than what we’re doing, and we’re better positioned than ever before. We’re not positioned though, however, to earn extraordinary returns versus what american business generally earns.
I would hope we could be slightly better, but nobody’s going to be dramatically better in some over the next century. It gets very hard. It gets very hard to predict who the winner will be. If you look back, as we did a few meetings ago, as the top 20 companies in the world at ten year intervals, you realize the game isn’t quite as easy as it looks. Getting a decent result actually is reasonably, should be reasonably easy if you just don’t get talked out of doing what has works in the past, and don’t get carried away with fads, and don’t listen to people who have different interests in mind than the interests of our shareholders.
Okay, we’ll go to station number one.
Hello, Mister Buffett, my name is Tomo Drge. I’m from Dusseldorf, Germany. This is my first time out here in Omaha, so thank you for having us here. Today. So my question is directed to you, Mister Buffett and Mister Abel.
In 2019, you reportedly made a bit for the IT distribution business, tech data, and commented that you understand its role as a middleman. I wonder if you could kindly elaborate on the criteria you look at when evaluating it distribution businesses like tech data and their competitive position. Thank you. Well, we had some experience with distribution businesses, and we know their potential to a degree and their limitations. And, Greg, you were involved in that more than I was.
I mean, that was a case where there had been a bid made and there was a go shop provision, and I think the management probably would have preferred that we buy it. And when we went in with a better bid, the original party raised their bid, and we never make the same offer twice, so. Greg, tell. Yeah, so, absolutely. In 2019, we saw tech data as a unique opportunity.
When we saw the other bid and the underlying value of that distribution business, we did. Warren, Warren and I were talking, others made the conclusion we should talk to management. We talked to the team. They were very interested in Berkshire being their long term owner, and we still saw good value in the opportunity. And we had a good understanding of distribution businesses.
We have TTI. It’s not exactly identical to tech data in that they’re very specific to the, who their customers are and who they serve and supply and who they purchase from. Because on the distribution side, it’s important to have that input coming in from folks who want their product. And, you know, it’s needed on the other side that there’s demand for it. And they had an excellent model, if you think of TTI, for example, that Warren stocked about Paul many times and the person who founded this business.
But it’s a unique business in that our revenues on that business is approximately $10 billion. The average part they sell is a little over nine cents. Ninety five billion parts go through their warehouse every, every year. But it’s a model that if you have the right people on both sides of the equation and you understand that, well, there’s, there’s a unique opportunity there. And, and that is something we saw in tech data.
And as Warren highlighted, we made our bid. Unfortunately, it was then taught by the original bidder and we moved on. But we thought very highly of it. We’ve probably seen at least five of them in aggregate, that over the last three or four, five years. It’s not a business that you can dream about because it’s a decent business.
But, for example, many of the items that the manufacturer just, they don’t want to tie up their capital you tie up. If you have, you know, a million plus skus, they go stock keeping us, it’s like selling jelly beans or something like that. And you do. You’re serving a purpose to a degree, but you don’t. You don’t really.
It isn’t your product, in effect. I mean, you’re just a good system for the producer of the equipment to get it to the end user without tying up a lot of capital. Being in a business they don’t want to be in, we understand, but there’s no magic to it. With TTI, you had a marvelous man running things, and when you get a marvelous person running something, to some extent, that’s deluxe for better people underneath. Greg and I went to Paul Andrews funeral a few years ago, and there were 300 people or so there, and there wasn’t one person that had to say something particularly nice, but stretched a little bit about the deceased.
I mean, everybody. Paul Andrews was the real McCoy, and he was an amazing man. He behaved wonderfully with Berkshire. I mean, he wanted to do more for Berkshire than Berkshire would do for him. I mean, it was very simple.
And you run into those people, as I say, you run into people that bend over backwards for us and then some bend over forwards. But that’s just the way it is in this world, and we’ve had quite a few that have been over backwards for us.
The distribution business is not a wonderful business, but it is a business, and it’s a business that, if it’s big enough, it’s one we would look at and we would buy additional, and TTI makes some smaller acquisitions on its own all the time. I don’t even. I don’t even hear about them until I read the quarterly reports. And so we. We want to build up.
We want to build our businesses in every area that we operate, and we’ve got unlimited capital to do it. So we’re willing to have small acquisitions take place if they fit in with something we already have. But we’re not in the business of going out after small acquisitions, and if we did, we would. We just don’t have the people for it, and it wouldn’t move the needle anyway. At Berkshire, we may or we would have been happy doing the deal with the questioner asked about.
But if we don’t do it, you know, it just doesn’t make that much difference. We want to do it. If we do it, we’ll do it well. We’ll do it right. They’ll make the right decision.
If they don’t, you know, we will find something else to do with the money in the end. And we can always buy a little more of TTI for you, the shareholders, by just buying in our stock, too. Exactly. Yeah. Okay.
Let’s see. We need Becky next, don’t we? Yeah, Becky. All right, Warren, earlier you talked about selling some of the apple shares in order to build up your cash supply. And I think it’s had a lot of people wondering where you see opportunities or what might be coming or market valuations.
So I’ll ask this question from Foster Taylor. At the 1999 annual meeting, you mentioned that if you owned all of America’s 500 businesses, you would be making $334 billion while paying $10.5 trillion. You emphasize that this was not a good return on investment. Today. By my math, the S and P 500 has a market capitalization of around 44 trillion, with profits of around 1.45 trillion.
This is a very similar return on investment to the 1999 levels. Do you see similarities in the market today and the 1999 levels? Well, one thing has changed dramatically from. Well, from 1990.
I misunderstood on the 1999, but there have been times in my life that I’ve been awash in so many opportunities that I could have invested everything by nightfall. And then there’s other times when the year goes. Well, not in the early days, but now we just. We haven’t seen anything that makes sense that moves the needle. Now, we’ve made small acquisitions during the year.
Our companies have made acquisitions. And we. You know, Greg and I may talk about something that involves a $300 million purchase or something like that. And, you know, if it fits well enough, we do it. But.
And if our managers see things that fit them, we want to look at them, because our managers do not have necessarily the same equations in mind that we do. But there’s some managers which we would have just say, you know, whatever you decide to do. And then there’s other managers that would not know how to allocate capital, particularly, and that they don’t have to be able to be great capital allocators. If they happen to be great at serving customers and understand their own industry and all of that, they can be great managers. A good many of them are capital allocators and others are.
But this is not a time when the phone is going to be ringing often. But there are times from that, and Greg will know how to handle them as well or better than I have. Over time, Charlie and I, we missed a lot of things, and what we really regretted was missing something that sure not be very big. We never worried about missing something that we didn’t understand. Why should we be able to predict the future of every business any more than we can predict what wheat eels are likely to be in Illinois next year?
Well, not Wheaton, Illinois, Wheaton, Kansas, but Cornyn, Illinois. So I don’t really think of whether it’s similar to 1999 because I’m not that good on chronology anyway. Unless something really dramatic happened at the time. I mean, I remember things from 2008 and zero nine much better than I remember whether something happened in 2015 or. Or 1987 or.
Well, 1987 I remember because of October 19. But I just don’t think. I don’t think that way. I just look at what I can do every day. Greg.
I’m gonna have to use it. Nothing. Sorry. Nothing to add. Okay, well, we’ll go to station two.
I mean, it’s nice to know what lines you can get. An applause for session two. Hello. My name is Stefan Wuernbacher. I am a shareholder from Hamburg, Germany.
I’ve been coming to Omaha since 2007, and I’m deeply grateful for all the things I could learn here, both about investing and about life, in particular, creating circumstances that will enable me to lead a productive life during my entire healthy lifespan. So thank you for that.
My question to Warren, your favorite holding period is forever holding, American Express or Coca Cola for decades. Berkshire recently went in and out of Markel, and you, I believe, sold and later bought Oxy, which I think happens to everyone all the time. But can you maybe to us, give examples of your thoughts process when you exit positions? Thank you. Well, there are various reasons for exiting positions.
One is if you need the money, but that doesn’t happen very often with us. But it used to happen on every decision I made when I started when I was 20 years old, which I consider the postgraham variant, although I actually started in 1942, if you just talk about buying stocks. But in any event, the decision process is really quite interesting in certain ways because we made. Charlie and I made decisions extremely fast. But in effect, after years of thinking about the parameters that would enable us to make the quick decision when it presented itself.
People have speculated on how I’ve decided to really put a lot of money into Apple, and for a reason I can’t. One thing that Charlie and I both learned a lot about was consumer behavior. That didn’t mean we thought we could run a furniture store or anything else. But we did learn a lot when we bought a furniture chain in Baltimore. And we quickly realized that it was a mistake.
But having made that mistake, made us smarter about actually thinking through what the capital allocation process would be and how people were likely to behave in the future with department stores and all kinds of things that we wouldn’t have really focused on. So we learned something about consumer behavior from that. We didn’t learn how to run a department store. Now, the next one was seized candy. And seized candy was also a study of consumer behavior.
We didn’t know how to make candy. You know, we didn’t. There were all kinds of things we didn’t know. But we’ve learned more about consumer behavior as we go along. And that sort of background, in a very general way, led up to the study of consumer behavior in terms of Apple’s products.
And in that case, while I watched what was happening at the furniture mart, in terms of people leaving the store, even though we were selling Apple at a price where we weren’t even making any money, but it was just so popular that if we didn’t have it, people left the store and went to best buy or someplace. And if you know the Blumkins, they can’t stand anybody leaving the store, so they behave accordingly. But then you learned that had the interest in the brand, and then you had a million different inputs. But I think the psychologists call this apperceptive mass. But there is something that comes along that takes a whole bunch of observations that you’ve made and knowledge you have and then crystallizes your thinking into action.
Big action in the case of Apple. And there actually is something, which I don’t mean to be mysterious, but I really can’t talk about, but it was perfectly legal, I’m sure, you know, that. It just happened to be something that entered the picture that took all the other observations. And I guess my mind reached what they call apperceptive mass, which I really don’t know anything about, but I know the phenomenon when I experience it. And that is, we saw something that I felt was, well, enormously enterprise.
Maybe I’ve used this example before, but if you talk to most people, if they have an iPhone and they have a second car, the second car cost them 30 or $35,000, and they were told that they never could have the iPhone again, or they could never have the second car again. They would give up the second car. But the second car cost them 20 times. Now, people don’t think about their purchases that way, but I think about their behavior. And so we just decide without knowing.
I don’t know. There may be some little guy inside the iPhone or something. I have no idea how it works. But I also know what it means. I know what it means to people, and I know how they use it.
And I think I know enough about consumer behavior to know that it’s one of the great products, maybe the greatest product of all time. And the value it offers is incredible. And I think it has, and Tim Cook, I think it has somebody that, in his own way, is the equivalent of a partner, partner with Steve Jobs that could do one thing extraordinarily well and more than one application, but one thing. And Tim was the perfect partner to serve sequentially with him. So it’s, you sort of know it when you see it.
I actually saw it with GEICo when I, I went there in 1950. I didn’t know exactly what I was seeing, but Lormer Davidson on a Saturday, in 4 hours, taught me enough about what I understood what auto insurance was, and I knew what a car was, and I knew what people went through people’s minds. I knew they didn’t like to buy it, but I knew they couldn’t drive without it. So that was pretty interesting. And then, but he filled in all the blanks in my mind as I sat there on that Saturday afternoon.
And, you know, every now and then it happens. You know, why do you have this, the person you met? You know, there are all these different potential spouses in the room, and then something happens that you decide that this is the one for you. You know, I think Rogers and Hammerstein, that some enchanted evening, wrote about that. Well, our idea of an enchanted evening is to come up with a business, Charlie and me, and there is an aspect of knowing a whole lot and having a whole lot of experiences and then seeing something that turns on the light bulb.
And that will continue to happen. And I hope it happens a few times to you, but you can’t make it happen tomorrow, but you can prepare yourself for it happening tomorrow, and it will happen sometimes. Hey, Warren, he mentioned Oxy, which I think is a great example where you made the original decision basically on a weekend with some thought. But as the more you learned about Oxy and the, the asset position, they had their ability to operate in an exceptional manner, and then a strong CEO around capital allocation. I think your confidence, which was reflected in continuing to acquire more shares, is sort of that type of process.
Yeah, it’s exactly to the point. I mean, I just learned more as I went along. I learned enough. You know, I’d never, I’d heard of Occidental Petroleum. Occidental petroleum happens to been a descendant, not a descendant, but it’s a continuation of city service, which was the first stock I bought.
And, of course, I knew a lot about the oil and gas business, but I didn’t know anything about geology, so I knew the economics of it. I had a lot of various things stored in my mind about the business, but I never heard of Vicki until, I guess, it was a Friday or Saturday, and we met on Sunday morning. We made a deal, but that was one sort of deal. And then as time passed, all the kinds of different events happened. You know, icon came in.
I mean, there are a million things you couldn’t predict at the start, and I formed certain opinions as I went along, but then a, I learned more as I went along. And then at a point when I heard an investor call that it put things together for me in a way it didn’t mean I knew I had a sure thing or anything like that. I don’t know what the price of oil was going to be next year, but I knew that it was something to act on. So we did, and we’re very happy we did, and we still don’t know what the price of oil is going to be next year. I don’t know what he does, but I think the odds are very good that it was, but not a cinch that it was a good decision, and we’ve got options to buy more stock, and when we get through with it, it could be a worthwhile investment for Berkshire.
We’re in it, and we’re in it for keeps.
There are other things that we own that we aren’t in for. Keeks.
Oh, incidentally, I should just throw this out, since there’s been speculation on it. We’ve sold a. I was 100% responsible for the paramount decision. I read speculation that either Ted or Todd had some involvement in that. No, it was 100% my decision, and we sold it all, and we lost quite a bit of money, and that happens in this business, too.
But actually owning Paramount made me think even further.
I like to think deeper, but I certainly thought harder even about the whole question of what people do with their leisure time and what the governing principles are of running an entertainment business of any sort, whether it’s sports or movies or whatever it might be. And I think I’m smarter now than I was a couple years ago. But I also think I’m poorer because I acquired the knowledge in the manner I did. But I just want to be very clear that, a, we lost money on Paramount, and, b, and I did it all by myself, folks, I don’t know whether I’ve anticipated one of Becky’s questions now, but we will find out. Let’s see now.
Yeah, you’re next, Becky. Yes, you did anticipate one of the questions. Let’s go to another one. This question comes from Vincent James in Munich, Germany. In the chairman’s letter, Warren points out that the profit margins for BNSF have slipped relative to all five other railroads.
However, Warren comments in the letter, BNSF carries more freight and spends more on capital expenditures than any of the other five major railroads, and has a vast service territory second to none. Given the comments from Warren about the clear strengths of BNSF, what explains the decline in revenue and profit, and in particular, the profit margins relative to the other five railroads? What are the issues relative to the other railroads, and what is being done to address them? Please be specific. Okay.
And I will. Well, how specific we get depends on what Greg wants to say. But Greg is that. It’s Greg’s responsibility. It’s my responsibility for the purchase and for the operation up till Greg took over.
But I think I’ll let Greg answer that. Sure. Yeah, the Warren touched on it. And the comments from the. As reflected there are very accurate.
If you look at this quarter’s results or our last year’s results, they were both. They’re disappointing as shareholders and disappointing in the. Relative to the other class one railroads. And as highlighted in the question, there’s five other class one railroads. So it’s pretty easy to understand how you’re performing versus the others.
And there’s a lot of other variables, but there’s some very simple things to look at. When we look at where we’ve been on with, associated with Burlington, I would. I would just back up a little bit, because if you go back to 2021, the Burlington team and management team and the group, we’re making excellent progress on a lot of fronts when it comes to our operating and both being. Being efficient and effective in how we’re operating the railroad. And I remember very specific comments from myself in 2022, where I commented that that was the year there was all the supply chain issues, a lot going on in the west coast ports.
Our trains were backed up in a variety of places, and we called that a reset year. And I think we did need a reset year on the operational side. But as we moved into 23, the business cost level, cost structure, we didn’t reset it to the underlying demand we were seeing. We anticipated more demand, and we did not reset our cost structure. And the team’s working very hard as we speak, to both reset the cost structure and allocate the cost resources where they need to be.
And when you go through something like that, what we’ve recognized as an organization, yes, the demand of the rail will drive a certain amount of the cost, but the reality is that the rail industry, if you go back many, many years, it’s flat. There’s not a lot of growth in the industry. There’s opportunities become more efficient, effective, and our margins can go up. But the reality is the demand is going to be flat. But it does move within different sectors of the rail.
It can be in the consumer products, it can be an industrial, it can be an egg. But overall, it’s generally going to be relatively flat. So we need to get our cost structure right, and we need to get it right, both for the coming year, but for the long term. And that means it’s going to be a continuous exercise. We can’t stop.
We can’t say we, we’ve gotten far enough because our competitors, and we compete with the other rails, but we also do compete with the truck industry. We have to have a cost structure, allows us to compete both within our rail industry and within the transportation sector as a whole. So the team at Burlington is working very hard to address the cost structure, just like we have in the past. I think one thing we do recognize, when the other railroads have implemented precision scheduled railroading, there’s other metrics that we have to continue to pay attention to and challenge ourselves. If we’re not at their level, what are the things that are driving it?
So we’re gonna. When they ask for specifics, I’ll give you a few. We have to look at our rail yards and understand how we’re managing that. We have to look at our locomotive fleet, both the size and how we’re utilizing that, and challenge ourselves. And we have to then go back to how we’re using our employee resources and allocating them across the business.
So there’s a lot to be done there. Our team’s 100% committed to driving to the right cost structure that’s going consistent with the underlying demand in the business, and then we can’t stop there is the answer. So, a lot to be done, but we have a team that’s absolutely engaged and committed to it, and we’re going to make good progress in this current year. At Berkshire, we want everybody to have the idea that there’s a lot to be done with every business, you know? So, I mean, it is.
We built a remarkable, remarkable company and Omaha building company, really remarkable. And there’s this question, after everything they did, that was something that was done particularly well, you know, digging a tunnel under the East river or something, said it couldn’t be done. He would say he would be. He was pleased, but not satisfied. And that is exactly the way we want the attitude to be at Berkshire forever.
Omaha is a railroad town. If President Lincoln, in 1862, I think it was, had decided to pick St. Joe or Plattsmith or anyplace else to build the transcontinental railroad, Omar would probably build a little town of 20,000 or something on the banks of the Missouri. But making, with Lincoln’s desire to make this the eastern connection and make a transcontinental railroad, Omar just took off. So it’s been.
It’s been railroading at its base. The. You know. And anybody that was interested in financial matters had to think about railroads. Plus they had a certain glamor to them anyway.
But the interesting thing is that up, which is our main competitor themselves, fell way behind 20 or 25 years ago. Before Jim Young came in, in 2000, whenever it was eight or so, I started buying three railroad stocks and Union Pacific, BNSF and Norfolk Western, I believe. I don’t know why I wasn’t buying C and O, but in any event, Jim Young had done a marvelous job with being with Union Pacific. So we were on all three stocks. But what we did in 2009 is we were able.
Well, we already owned 22% of it, but overall, it was $35 million a billion dollars, which was a significant part of our capital. We were able to put it to work in a business we liked. And there’s certain tax advantages that come in terms of making money in something that’s more than 80% owned. We call it 100% owned, in this case, versus making it through stocks. So it has a net benefit to us from making the same amount of money owning one of the other railroads, by owning all of the railroads, and we got 35 billion out during a recessionary period.
I think that was the worst quarter, the third quarter of 2009, maybe the rails had had for a long time. So it’s worked out. Actually, it’s worked out very well, but it’s because we were putting out capital in 2008 and nine, and if we put money in anything, we’d have made a lot of money. But it’s more satisfying, and it’s actually better in certain ways, tax wise, to make it from something that’s 100% owned and a bunch of 5% or 10% owned businesses. As I mentioned in the annual report, railroads are absolutely essential to the country.
That doesn’t mean they’re on the cutting edge of everything. They’re just essential to the country. And that’s why the government, I think they took them over one time, and they negotiate what our labor settlements will be and everything. And if you shut down the railroads of the country, it would be incredible, the effects, but. And they would be impossible to construct now.
I mean, look at what’s happening in California when they’re trying to build a line. I mean, you know, everybody’s worried about the environmental effect of every mile, and, you know, and what will happen to the various species of birds. Can you imagine the rail system of the United States being built? It would take decades, unless the war was on and the government took over things and just ordered them. You can’t create it.
So we love owning a business like that. It’s going to be around 100 years from now, won’t be the best growth business in the world at all during that period, but it will be essential. And what it earns in its relation to its replacement value is a pittance. But we’ll do fine in terms of what we paid for it. And we’ll distribute substantial amounts in relation to what we paid to Berkshire in a very tax efficient way.
So it’s when. The question is, what are the issues relative? The other railroads.
It wouldn’t have been the end of the world at all if we bought the Union Pacific and Jim Young had stayed alive to run it for us. That would have been great, too. But we had the opportunity to buy BNSF, and it’s been good for them, and it’s been good for us. And we think it’s been a very important asset to the country. And I just hope we can find something in other industries that makes as much sense as that, where we can put a whole bunch of money to work at an advantageous time.
So, let’s go on to station three. Is that correct or not? Yeah. Okay.
Kia ora, good afternoon. Mr. Buffett, Mr. Able.
My name is Sirapob Wu.
A resident of New Zealand but originally from Thailand.
This is my first time in America and first time attending the meeting. The journey was rough, but it was all worth it because I can now personally thank you, Mr. Buffett—and the late Charlie Munger, were he still with us—for organising such a wonderful event and, most importantly, for being such exceptional role models and sharing your wisdom with us all these years. So, thank you.
Here’s my question for you, Mr. Buffett. Towards the end of 2018, you mentioned that you guarantee you could make a 50% annual return if you had to start again with under $1 million. The question is: if tomorrow you woke up in the body of a 20-year-old American, your name was now Warren À la carte, and you had some money to invest on a full-time basis, what method or methods would you use to achieve that return? Would it involve flipping through 20,000 pages of Moody’s Manual and similar publications to find cigar butts? Or would it be hunting for great companies at a fair price, as Mr. Munger would? Or would it be a combination of both, with opportunity cost serving as the final arbiter of which method to use, given that your investing universe had now broadened significantly? Thank you. Kob khun krab.
Good question. I’m glad you came. The answer would be, in my particular case, it would be going through the 20,000 pages. And since we were talking about railroads, you know, I went through the Moody’s transportation manual a couple of times. That was 1500 or 2000 pages or probably 1500 pages.
And I found all kinds of interesting things when I was 50 or when I was 20 or 21. And I don’t imagine there’s anybody here that knows about the Green Bay and Western Railroad Company, but there were hundreds and hundreds of railroad companies, and I like to read about every one of them. The Green Bay and western. In those days, everybody had a nickname for railroads. I mean, that was just what northern Pacific was, the Nipper.
And, you know, Phoebe Snow was one of them in the east that used to go up to Cornell and the green band, Western was known as grab baggage and walk and GBMW. And they had an. They had a bond that was actually the common stock, and they had a common stock that was actually a bond. And, you know, that that could lead to unusual things, but they wouldn’t lead to unusual things that would work for you with many millions of dollars, but if you collected a whole bunch of those, which I set out to do. And actually, that’s what impressed Charlie when I first met him, because I knew all the details of all these little companies on the west coast that he thought I would never have heard of, but I knew about the Los Angeles athletic Club, or whatever it might be, and he thought he was the only one that knew about that.
And that became an instant point of connection. So to answer your question, I don’t know what the equivalent of Moody’s manuals or anything would be now, but I would try and know everything about everything small, and I would find something. And with a million dollars you could earn 50% a year. But you have to be in love with the subject. You can’t just be in love with the money.
You really got to just find it like a true, you know, essentially, like, you know, people find other things in other fields because they just love looking for it. A biologist looks for something because they want to find something, and it’s built into. I don’t know how the human brain works that much, and I don’t think anybody understands too well how the human brain works. But there’s different people that just find it exciting to expand their knowledge in a given area.
I know great british players, I know great chess players. Actually, Kasparov came to. Oh, mom met misses B. I’ve had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas. So all I know is the human brain is complicated, but it does its best when you find out what your brain is really suited for, and then you just pound the hell out of it from that point.
And that’s what I would be doing if I had a small amount of money and I wanted to make 50% a year, but I also wanted to just play the game. And you can’t do it if you really, if you don’t find the game of interest, whether it’s bridge, or whether, you know, whatever it may be, chess, or in this case, finding securities that are undervalued. But it sounds to me like you’re on the right track. I mean, anybody that’ll come all the way to this annual meeting has got something in their mind other than bridge or chassis. So I’m glad you came and come again next year.
And now we move.
Now we move to Becky. This question comes from Denny Poland, a shareholder from Pittsburgh. When describing the principal agent problem, Mister Munger said that capitalism often works best when the people managing the property also own the property. In recent years, agents of pension funds and asset management firms who do not have significant personal ownership stakes in Berkshire have forwarded proposals that were not in the economic interest of shareholders. What can be done to limit the negative influence of these agents in the decades after you’re no longer able to cast significant votes against them?
Well, that’s a very perceptive question, and it’s been answered in a temporary manner, but who knows how the situation will develop in the future? All I know is that you have a wonderful hand at Berkshire Hathaway, but you have to be able to think your way. I mean, obviously, you have to think your way through political realities. You have to think your way for what will cause a. You want to be on.
You want to be regarded as an asset to the country because you’ll find more solutions. If you are an asset, you owe to the country anyway. But beyond that, you’ll find more solutions than if you’re regarded as evil or something, and worse yet, if you deserve it. So it’s something that’s constantly in our mind, and it needs to be in the mind of the directors, and they need to think for themselves on this rather than bow to conventional wisdom, which, you know, in a sense, you don’t want to become a cynic about life, but almost everybody that approaches you, if you have tons of resources that’s got some interest in figuring out how to use your resources to their advantage, and that’s true whether they’re in politics or whether they’re in investment banking or whether they’re selling you.
Well, whatever it may be that they’re selling, I don’t want to do any injury to anybody, but life insurance agents see the advantage of buying life insurance, and investment managers who get paid based on assets managed to get interested in selling you their services. Imagine if everybody in this room were following the investment advice of somebody that said, you know, for 1% a year, I’ll tell you how to invest your money. And in 1950, when we started in 1965, they would have said, well, by Berkshire Hathaway, and if they were around now and they saw the 1% deal, they’d be collecting $8 billion a year from people who aren’t getting any dividends from us. So they would have a different interest in the kind of contract they worked out with you than you would have. And best thing to do was just pay them a commission one time and own the stock.
But you have to be alert to how what human nature does to both other people and to you. And then, you know, if you think it through well and actually listen to what Charlie has told you, you’ll have a big head start on most people. Charlie. There’s one thing that I should mention that really is terribly interesting about Charlie. Charlie knew the importance of psychology and human behavior and incentives and all of that.
He figured that out very early. And, of course, he gave some talks, even on 25 or so ways, whatever it happened to be. I don’t remember the exact number different ways that one person could take advantage of another by understanding how humans behave. And then after doing a magnificent job of explaining it. He believed in understanding what others would do, but he thought it was beneath him to actually use those methods to manipulate people.
Really interesting human being that thinks through the psychology of human behavior and figures out, you know, how you become a great insurance salesman or manager on Wall street, or accumulative assets under management or whatever it may be. And you get very rich by understanding the weaknesses of others to some extent, and then decide that it’s very important for you to recognize these when they occur. It’s very important for you to know them better than the person that actually is using them, but not that you don’t have to stoop to using them yourself. And Charlie told me that in his lifetime after he figured this out, there were a couple of times when he used them. He wasn’t proud of it, but he also never lied to me.
So he explained to me that there were a couple times when he used some of these techniques, but he didn’t plan on using them anymore. Also wanted me to know that if I ever did something like that, I wasn’t really behaving terribly, that he allowed for the fact that humans may misbehave. So I’m sure that I behaved somewhat better before my marriage than I did afterwards in my enthusiasm for different activities, like dancing or something. And he said, we all do it, but don’t do it again.
So that’s part of acquiring human wisdom. And speaking of human wisdom, we’ve just got that one book out there by Charlie, I mean, poor Charlie’s Almanac, and that’s worth reading three or four times. I think I read Ben Graham’s book about five or six times. And each time I read it, I realized that I just needed to think a little more deeply about certain things. They weren’t complicated or anything.
But, you know, it’s better to. If you’ve got some great instruction, like you get with Charlie, it’s better to read it several times than to just figure you’ll just read every book once it’s in the library. Okay, let’s go to section four. Jeff Rabelir from Tulsa, Oklahoma. And I’m thinking of Doctor Graham, Mister Munger, your father.
And my question is, for all of. Us, but it’s probably especially for the. Younger people in the room, the importance. Of picking the right heroes in life. Choosing friends wisely, and maybe tell us.
A story, if you could, about each of those folks. Thank you, sir. Well, there’s no question you’re 100% right in terms of having the right heroes. And, you know, you’re lucky if you get them. I mean, Charlie had Charlie, Adam, I.
Adam. And the interesting thing, my sister is here today, my younger sister, with the two survivors. And we both experienced having the same hero, even though as we grew older, we saw that we didn’t agree with plenty of his ideas, but we did agree with his values and motivation. And that’s, that’s a better lesson than having somebody that reading to you from a catechism, that has got a lot of rules in it, which are pretty good rules, but, but there’s a special, special place for somebody that is going to continue loving you even if you break some of the rules. And that’s what Charlie had in his life, was what Bernie and I had in our life.
So I would just repeat what you said. I don’t need to give you a bunch of, well, when I ran away from home, I’ll give you a specific example with me. When I ran away from home and went and we hitchhiked up to Hershey, Pennsylvania, and got picked up by the state police and everything. And I talked these other two guys into it and we lied like crazy to the state police, you know, saying we had our parents permission. Some kid at the place where we stayed had tipped them off that we’d run away from home.
And we started, like I said, state police picked us up. We decided two things. You know, we decided to tell them a bunch of lies about the fact we had our parents permission. And we decided we better get out of Percy because these cops were going to find out sooner or later. And so anyway, we end up back in Washington after a couple days.
And when I walked in the door, well, one of the boys mother and this other kid was the congressman, Roger Bell. And his mother was in the hospital over this whole thing. He’d taken out his cash and his savings bonds. And so she was sick. And Judge Bell, her husband, was all concerned and everything.
And I walked in the door in Washington and my mother said, how come he came back so soon? And my father said, he said, I know you can do better.
And I just paid more attention to my father than my mother. So you want to have the right heroes and you don’t have to have them. It’s not the heroes based on what they’ve accomplished.
It’s the people that you want to be yourself. And if you copy the right people, you’re off to a great start. And I don’t mean great start about making money. I mean a great start about living your life. So you can check with my sister birdie who’s here, and see if I’ve told the story correctly.
She ran away from home, too, incidentally, but she didn’t get as far as I got. She was running away to go over to my grandfather’s house, which was about 2 miles away.
But I don’t want to denigrate her runaway a bill, at least, because she was much more accomplished than I am in all kinds of other things. But when it comes to running away, I definitely outclassed her. Okay, let’s go to Becky. This question comes from Vedant Sharma in India. Warren, you and Charlie have often said that you were able to identify the people you want to go into business with and have had an exceptional record in that.
However, in the case of Pilot, we noticed that the final stake purchase ended up in a dispute and had a sense of smart accounting, to put it one way, to squeeze a little more out from the deal than was deserved by the seller. Knowing well that this has been said, settled out of court, and needs due confidentiality, I would like your views on some of the lessons learned that may be beneficial for future deals to watch for and for coming leadership to look out for as well. Well, I’ll make two comments on that. A couple of the directors had their doubts about going in, and in any event, pilot is working out well for us. And my friend Sam Butler one time said to me that, and he was talking in general about certain kinds of situations, but he said, well, Warren, he said, all is well that ends, and that’s where we are.
So we’ll go to station five.
Well, while we’re getting to station five, I’ll tell you a little bit more about the fellow that is now running pilot. I knew you may have met here that Greg had known for a long, long time. And he grew up in Omaha and came from a poor family and was raised by his mother. Right. And went to the same high school, public high school that my wife went to, North High.
Went to University of Omaha, set an all time record in russian yardage playing there. He was a bouncer, yes. Drafted by the New York Giants, as I remember. Exactly. Yeah.
And. But then injured, actually, in spring training, I remember, in some way. And so he ended up being an intern. Not an intern, but a trainee, you might say, for mid American before I was there. And.
And now here he is, still relatively young, and he’s running a huge company, and we’ve got incredible confidence in what he will do. And we like very, very, very much the business that was created by Big Jim Haslam. And it really is almost an only in an american type story, but it does show you with somebody with some real stuff and with a mother that believes in them and with bad breaks along the way. I mean, imagine how you’d feel if you were drafted by the New York giants and then you suffered some injury in spring training or something. I mean, you spend your life, it just, it hurts, but it’s not an experience I would have ever had.
That was the last guy chosen. But to see that he’s running a company depends on the price of deal, but it’s a huge company.
What does he have, 2020, 5000 or something?
And he’s got many, many, many years to go. So I couldn’t be more pleased about not only the acquisition of Pilot, but just what it tells you about America. You can, what do you have to look up to? Read about them in Google or an interview with Adam? Yeah, I try and think if it’s.
A podcast, yeah, he’s got a podcast. Podcast that will just blow you away. And if you don’t think this is a great country, it has a lot of great people. All you got to do is read that podcast. So.
But we do have a great set of assets. Oh, yeah. You know, if you look at Pilot, we have 800, more than 800 stations, travel stations, centers, and just so everybody knows, I mean, the beauty of that, and there’s a question regarding this morning around fuel choices at Pilot. And the exciting thing is, in the end, pilot’s going to serve whatever fuel our customers need. It can be electric, it can be renewable diesel, it can be diesel or any of the various sustainable fuels.
But the point is, it has exceptional locations that are on the interstate highways. Hundreds of them. Hundreds of them. And we bought an incredible franchise and now we have a great leadership team in both Adam and his team that’s around him. So we’re pleased where that opportunity will go.
Yeah, we’ve got probably the average one might be ten or twelve acres or something like that zone commercial on interstates throughout the whole United States. Who knows? But what was created there is amazing, too. You had a fellow that played at University of Tnsylvania, I mean, University of Tennessee, and undefeated and came away from this football team and you think, well, another football player, you know, maybe he goes out and, and there may be some intermediate parts in the story a little bit, but he buys a gas station and he turns it into something that is huge. So we’re really delighted with it.
And it’s another kind of only an american story.
You know, how many of us can become an all american, number one ranked team, let alone start a business that goes on these sort of heights. So we feel very good about it. Becky? No, I think they’re ready for five now. Oh, I see.
He’s up there now, ready to go. Okay, go do it. Hello, Miss Buffett. My name is Zhang Yabo. I came from micro City, Hainan, China.
So I want to express my sincere gratitude for you, for the extraordinary value you generated for shareholders and the positive influences you’ve had on younger generation of investors like us. And my question relates to the concept of maximizing the duration of compounding. As individuals age, the quality of compounding inevitably diminishes. What are your secrets in maintaining your sharp man? Extraordinary judgment and great physical condition.
We wish you well. Thank you. Well, you don’t know me well, but that’s. I like. Just keep talking.
Well, I. You know, you have to be just plain lucky. I mean, there’s no question about it that there’s 100 or a thousand. You know, multiply a number of times that some drunk could have pulled out of the car and broadsided me, or, you know, just the bad luck you can have in life. And I can say my great skill has been avoiding bad luck, but that isn’t a skill.
That’s luck or bad activities. And then to get to be. I would not have been if you’d taken my high school class. And you say a couple of you are going to live to be 90. Men are going to live to be 93, maybe I’ve got.
You know, I wouldn’t. I would not have been a heavy favorite, I can tell you that. And I wouldn’t have bet on myself. But you just. Now, you should make the most of your luck when you get it.
And sometimes I’ve done that and sometimes I haven’t.
I mean, it is absolutely true that if I had to do over again, there’d be a lot of different choices I would make, whether they would have ended up working out as well as things that worked out. It’s hard to imagine how they could have worked out any better. So. So. But it is interesting how many mistakes you can make if you just keep going.
And Charlie, you know, when he used to talk about that, that you just soldier through, you just keep going, and. But you still need luck, you know, you don’t want to. Anybody that says I did it all myself is just kidding. I mean, it’s just. They’re delusional and, you know, actually living a country with a life expectancy is pretty darn good, you know, so that alone is a huge plus.
I was born, if I’d been born, my sister’s here, and she was born female, and she’s just. Just as smart as I was and everything. But even my own family, who really did well, particularly my dad, love us all equally in a terrific manner. But he still told me that this is tender. Well, was born ten years after the 19th amendment was past, but he basically told my sisters that marry young, well, you still have your looks.
And he told me that the world, that power in you is new in nature and you really could do anything. Well, I found there were a lot of things I couldn’t do, but the message given to females and males was incredibly different by the most well meaning and loving of parents. You know, like I say, in 1930, I mean, it’s been that way for millions of years. It’s changed quite dramatically, but obviously not completely, but during my lifetime, but it’s been during the latter half of my lifetime. If you take my sisters, if they’d been born even five or ten years later, they still would have been getting instructions when they went away to college, to be sure, and get married while we get arranged so that you’re going to be married while you’re in school, because after you get out, all the good ones are taken.
Birdie was telling me that was a message that that basically had been imparted to a lot of the women she had met, obviously. So it really. It’s extraordinary how much progress we’ve made, but it’s unbelievable how long it took to get it made. I mean, it really does make you wonder about, you know, we’ve got all these heroes from american history and all the wonderful things they did, but how could they say all men are created equal and then write a constitution that women, you know, allowed women not to be able to own property and depending on the state. I mean, just terrible conditions.
But anyway, that’s how you learn about what the humans can do.
And I feel, and you’ve got to feel better about the future for your kids than you would have felt 100 years ago, no matter what the situation is. Anyway, we’ll move to becky. This question comes from Linda Frazier in Westport, Connecticut. Dear Mister Buffet, in the past, you’ve specified that 90% of your wife’s inheritance inheritance be invested in a low cost s and p 500 index fund and 10% in short term government bonds. But the market cap of the magnificent seven tech stocks now represents more than one quarter of the market cap weighted s and p 500 index, which seems like a big bet on the tech sector.
I was wondering if you would now recommend investing some portion of the funds in a low cost, equal weight s and p 500 index fund, rather than having all of the equity exposure and a tech heavy market cap weighted fund. Well, that’s an interesting question. And I will tell you that I revise my will about every three years or so, and I get little thoughts from time to time, and then you don’t change it. Every time you do it, you get a tiny thing. But the one section I haven’t changed is that, that with my wife, that she got left a huge amount of money by practically anybody’s measurement except pittance, compared to what I’ve accumulated in total.
And it won’t make one bit of difference to her in life whether she beats the s and p or anything else. All I want to leave is plenty of money to take care of way beyond anything she’ll ever spend, and at the same time, give her as much peace of mind as possible and really make sure that the trustee who administers it doesn’t really have to worry about whether, it just doesn’t make any difference whether she beats the S and P or not. And the main thing is that she feels that. She feels that she’s in a financial position, which, of course, she will be, that she doesn’t even need to think about it. And the trustee doesn’t have to worry about getting sued or anything else.
So it’s simply not an economic condition. Now, obviously, with 99% plus of what I have going to philanthropy, and I’ve got my three children. The one good thing is that at the age of 70, 69 and 65, they have matured remarkably, probably more than their father.
But at the same time, they’ve got less time to work with the money than they would have. You know, they were 50 or something like that. So you do, you do the best in accomplishing your objectives in your will, and, and in the end, you know, you can’t, you don’t know what’s going to happen after you die, but you make sure that, that to the extent that you leave, you have a lot of money to leave. You take. Obviously, you want to say thanks to a lot of people and quite a few people in terms of specific requests, you want to take care of your family.
But in my case, that requires practically no money and a fair amount for taxes. But I have, and my children are in charge of what happens to the funds that are left. But like I say, the problem is when you live as long as I have. And the kids get older, who knows what happens with mortality tables? And they’re the ones that I really want to see handle the distributions.
And they will, and they’ll be very good about it.
But if we’re all alive three years from now, they’ll be three years older. So everything, you can’t solve everything in life. You do the best you can with it.
People do interesting things. I’ve been around probably as many rich people as almost anybody, and a fair number of, I know what they’re doing or have done with their funds. And the idea that you can have a huge amount of money and leave everybody very rich and have people liking each other less when it all happens.
Humans are really, they are interesting to watch. Some of them handle it beautifully and others are terrible. The one thing lawyers will always tell you is don’t use coddles. In other words, you know, when you change your mind on a will, just write a new one, but tear up the old one. Don’t do it by just adding codicils.
But I believe I’m correct. Certainly read it. That Paul Getty, who was the richest man in the world, presumably at one point in the 1950s or sixties, and it was a very interesting guy to read about, and he had five wives, and he’s the one whose grandson was kidnapped, and they sent Paul Getty an ear of the child and everything. I mean, it’s not a happy life when you get through it. But the one, one thing he did that was kind of interesting, he actually liked to use codicils because I think he had like 25 of them.
And it was kind of his way of writing, well, I’m taking you out of the will because, you know, and so he sort of delighted in explaining through his will how he felt about all these people. I mean, you really get some strange things revealed in a will. I just read about a will of a fellow that made a whole lot of money and was leaving it to his, I don’t know whether it was children, grandchildren, whatever it may have been, but in any event, his opening line and his will is, and this was done some years ago, but I know something about the family. His opening line, in effect, said, I’m writing this will while I am writing in the economy section of Eastern Airlines, number such and such. I mean, he believed in getting right to the point of what the people who were recipients, how they should live, and he was going to be judging them.
It’s just so damned interesting to watch people’s wills. But one guy left a lot of money to his wife on the condition that she remarry, so that at least one man would mourn his passing.
Well, I’m not giving legal advice here, as I always say, but I feel very, very, very good about how things have turned out.
And I wish I could figure out ways better to use the really vast resources I’ve got into some of the really important questions of the world, but I haven’t been able to do that. Goals when I was 30 or 40, and may have written them in the wills then, in terms of what the world needed done and how the money could be used. And unfortunately, I decided that they weren’t feasible to accomplish. And of course I was setting out to accomplish things that were important. Nobody’s solved yet, so you got to expect that why should I be able to solve them?
But nevertheless, it’s an interesting. And the one thing about it is everybody here, I don’t know about the ones who’ve come from other countries, but you should have a will, because if you don’t have a will, you still have a will, and it’ll be whatever the state says. And it’s amazing. Four american presidents died intestate without wills. Four, you know, we’ve only had 45.
And imagine becoming president of the United States and not having a will. But you can look up somebody recently, I think, Lincoln, I’m certain Lincoln was one of the four. And here’s a man, I mean, I don’t know what you can always say. Well, he didn’t get around to it, but that’s hard to imagine why Abraham Lincoln would have died intestine. I’m sure we’ve got some Lincoln scholars out there that will write me after this and explain why, and I’ll be interested to receive their letters.
But human beings are human beings, and we all have weaknesses and peculiarities and everything else. And don’t be too hard on yourself, because you have some of those. But don’t be totally forgiving either. You can change the future. You can’t change the past, but you can change the future.
Okay? Station six.
Good afternoon. My name is Caroline and I’m a lawyer in San Diego. Please don’t hold that again with me. Remember, Mister Munger was once an attorney too, right? First, I’d like to sincerely thank you, Mister Buffet, for your business integrity, tireless leadership, and generous contribution to philanthropy.
My question for the distinguished panel of two is, now that the AI genie is out of the bottle, as someone astutely put it earlier today, what business in Berkshire Hathaway may be most at risk with AI. Well, that’s a wonderful question.
The problem is I really don’t know anything about AI, obviously, anything that’s labor intensive and that it can create an enormous amount of leisure time. Now, what the world does with leisure time is another question, whether more leisure time. I know an awful lot of people think when they go to work at first what they want is leisure time. And what I like is actually having more problems to solve.
But AI is profound.
That’s what makes it. Makes it a genie. Is what going to happen?
I could tell a few genie jokes about better or not, but. I guess. When we probably, I don’t know what, you know, in terms of our businesses, they’ll figure things out. I mean, we’ve got smart people. It’s obviously, if it’s used in a pro social way, it’s got terrific benefits to society.
But I don’t know how you make sure that that’s what happens any more than I know how to be sure that when you use two atomic bombs in World War Two that you knew that you hadn’t created something that could destroy the world later on. Yeah, I think when we think of AI at a lot of the business units, I mean, we’re truly one, trying to think how does it make us more efficient, more effective? I mean, it results in more idle time. And we’re probably not thinking of the iterative AI where we’re looking at very specific processes where our people can implement it. And either at times it displaces the labor, but then hopefully there’s other opportunities firm within the business.
But I think when you think of all our businesses, I mean, we do have a heavy labor workforce and a lot of them, but I think at the stage we’re at as a company and maybe where it’s at right now, it’s really around how do we do things more effective, more efficiently, more safely, if it involves dangerous processes? So we’re early innings. John Maynard Keynes was just wonderful to read and incredible mind. But in around the time I was born, he wrote a book about what could happen. I don’t know whether it was in the next hundred years or whatever.
And he predicted correctly that that output per capita would grow at this incredible rate that it has. But in terms of speculating as what people would do with that, I mean, this guy was unbelievably smart, but it hasn’t developed exactly the way he predicted. He was right about what was going to go into the equation, but he wasn’t. He didn’t have it figured out exactly what at all, what would be the result? So it is really, well, we didn’t know when we were developing the bomb that there would probably be this very soon nine countries, three of whom we should worry about plenty that will have what they have, but we didn’t really have any choice.
And you could have had all kinds of papers written on and everything else, but we were going to do it anyway. We needed to do it. And if you haven’t read it, it’s fascinating to go to Google and read the letter by Leo Szilard and Albert Einstein to President Roosevelt, written about a month before, almost exactly a month before the Germany removed into Poland. And it laid out well, Leo’s Lord knew what was going to happen or had a good hunch of what was going to happen in terms of nuclear bomb development. And he couldn’t get through the Roosevelt.
Roosevelt. But he knew that a letter signed by Albert Einstein would. So it’s probably the most important letter ever written and you can read it, which is just fascinating to me, but that started the Manhattan project. That started it. Just everything flowed out of it.
And I’ll bet anything that Roosevelt didn’t understand it, but he understood that Albert Einstein is sent a letter and he probably knew what he was talking about and he better get, he better start the Manhattan project. It is just unbelievable what happens in this world. Anyway, let’s move on to Becky, I guess, is next, right? Yep. Randy Jeffs from Irvine, California.
The March 25, 2024 Wall Street Journal reported that the treasury market is about six fold larger than before the 2008 2009 crisis. Do you think that at some point in time the world market will no longer be able to absorb all of the US debt being offered? Well, I would say the answer, of course, I don’t know, but my best speculation is that us debt will be acceptable but for a very long time because there’s not much alternative. But it won’t be the quantity.
The national debt was nothing to speak of for a long, long time.
It won’t be the quantity. It will be whether in any way inflation would get let loose in a way that really threatened the whole world economic situation. And there really isn’t any alternative to the dollar as a reserve currency. And you get a lot of people who give you a lot of speeches on that, but that really is the answer. And Paul Volcker worried about that back in 19, before 1980, but he had threats on his life.
And I happened to have a little contact with him at that time.
He was an amazing amazing fellow that in effect decided that he had to act or though really the financial system would fall apart in some way that he couldn’t predict. And he did it and he had people threatening his life and do all kinds of things, but he was the man for that crisis. But it wasn’t the quantity of us debt that was being offered that threatened the system then. It was the fact that inflation and the future value of the dollar, the cash is trash type thinking that turned, that was setting up something that could really affect the future of the world in terms of its economic system. And Paul Volcker took it on and he was got his could be.
And if you haven’t read a book or two about him or the one he last wrote, you really ought to take a look at it.
But it is, I don’t worry about the quantity, I worry about the physical deficit, but I’m not a worrier just generally, I mean I think about it, but I don’t sit and get up, work myself into a stew about it in the least. But I, but I can’t help thinking about it and that’s, we’ve got a, we’ve got a great attention. It’s interesting, I think media enters into this and the focusing that focuses on the Fed and they, you know, they just love it because things are always happening and economists are always saying what’s going to happen with the fed and everything else. But the fiscal deficit is what should be focused on. And Jay Powell is not only a great human being, but he’s, he’s a very, very wise man, but he doesn’t control fiscal policy.
And every now and then he sends out a kind of a disguised plea for please pay attention to this because that’s where the trouble will be if we have it.
As one of the comics used to say, there was a stand up comic used to say, who have I forgotten to offend after this talk? And I always feel like that after these meetings. But we’ve got time for at least one question and maybe two. But let’s go to station seven. Hello, my name is Dennis from Giffon, Germany.
By my first time here, I’m here with my friend who would, by the way, love to invite you to dinner. You talked about the importance of heroes, and we are very happy to and thankful that we have you as our hero with great values and thank you for that. First of all, my question is, it is clear that you achieved great success in life. Earlier you talked about every investment having opportunity cost. From what I’ve learned in life, that does not only apply it to investing your money, but also to investing your time.
Every hour you spend in your office is an hour you cannot spend with your spouse or children. With the life experience you have now, if you had the possibility to start all over again, would you set your priorities any different? If yes, how and why? And what’s the best way to invite you to dinner?
That definitely won’t be one of my priorities if I figure out how to do that.
But don’t take it personally, because you can figure out at the maximum longer period I’ve got.
I don’t think, I mean, I can figure out all kinds of things that should have been done differently, but so what, you know, I mean, I’m not perfect. I don’t believe in lots of self criticism or being unrealistic about either what you are or what you’ve accomplished or what you’d like to do. You do the, you know, you do a lot of things and who knows whether somewhat different trade offs.
You know, you just can’t, you can’t. You don’t know what the paths would have led. I feel. I don’t think there’s any, any room in beating up yourself over what’s happened in the past. It’s happened and you get to live the rest of the life and you don’t know how long it’s going to be.
And you keep trying to do the things that are important to you. If I was a doctor or if I was all kinds of different professions, I might do different things, but I really enjoy managing money for people who trust me. I don’t have any reason to do it for financial reasons. I’m not running a hedge fund or getting an override anything, but I just like the feeling of being trusted. Charlie felt the same way.
You know, that’s a good way to feel in life and it continues to be a good feeling. So I’m not really looking to change much. And, you know, if I’m very lucky, I get to play it off for six or seven years and it could end tomorrow. But that’s. That’s true of everybody.
Although the equation isn’t exactly the same. But I don’t believe in beating yourself up over anything you’ve done in the past. And I don’t believe in, well, I believe in trying to find what you’re good at, what you enjoy. And then I think the one thing that you can aspire to be, because this can be done by anybody and it’s amazing, doesn’t have anything to do with money. But you can be kind.
You can be kind if you’re. And then the world’s better off.
I’m not sure that the world will be better off if I’m richer, but there’s no question that. I mean, you know, kind people, and in the end, aspire to be more. Or I’m sure many of you are yourself, but just aspire to be more. So. And I guess we can take one more question from Becky, and then we’d wind up.
This question comes from Devon Spurgeon.
On March 4, Charlie’s will was filed with the county of Los Angeles. The first codicil contained an unusual provision. It reads, averaged out, my long life has been a favored one, made better by duty, imposed by family tradition, requiring righteousness and service. Therefore, I follow an old practice that I wish was more common. Now, inserting an ethical bequeath that gives priority not to property, but to transmission of duty.
If you were to make an ethical bequest to Berkshire shareholders, what duties would you impose and why?
I’d probably say Reed, Charlie. I mean, he’s expressed it well, and I would. Well, I would say that if they’re not financially well off, if you’re being kind, you’re doing something that most of the rich people don’t do, even when they give away money. But that’s on the question of whether you’re rich or poor. And I would say, if you’re lucky and life, make sure a bunch of other people are lucky, too.
Okay.
Just in case. You know what my advice to myself would be has been during this period.
So we only got 33 questions, or whatever it is.
But thank you very, very much for coming, and I not only hope that you come next year, but I hope I come next year.