2025 年股东大会 · 上午场

Introduction and quarterly numbers

WARREN BUFFETTEveryone will please take their seats. This is my 60th annual meeting, and it’s the biggest, and I think it’ll be the best yet. Before I start, I’d like to give you a few figures from yesterday because we have set all kinds of records. Yesterday, we had 19,700 people join us in the afternoon between noon and 5:00, and that was up from 16,200, which was the previous record the year before, and in every aspect, we set records. See’s Candy to the $317,000 against $283,000 the year before, and most of these were limited by capacity. I mean, there were lines throughout the day. Brooks did this 310,000. This was an all-time record sale for them, and I think they have close to 3000 runners lined up for Sunday, which is a lot of people that get up I think we’ve had 2200 to 2400 before, but 3000, and that doesn’t count me, and it won’t count me, and I could go up, and down the line. Jazwares, around 250,000, doubled from the previous year. They just sell as fast as they can, and most place has people lined up at the cash register.

WARREN BUFFETTSometimes they’re a lot longer wait than we wish they were, but we’ll learn the game eventually, and it goes on, and on. Every company sets records, and there’s no way of knowing how many people we have here. Today, we have people listening in around the world, but I think we’ll probably set records in a great variety of ways, and we’re going to have, in a minute, we’ll get to the question, and answer, but I would like to first introduce our directors, and I’m] Warren Buffett, and I was born, and bred right here in Omaha. We have Greg Abel. He was born and bred in Canada, and we have Ajit Jain, who was born and bred in India, so we have a very diverse group.

WARREN BUFFETTIn the audience, I will introduce them alphabetically, and if they stand as I introduce them, I know it will be an effort. But withhold your applause till the end so that we can get through the list, but we’ll start alphabetically with Howard Buffett, how I wish you would stand. Withhold the applause, and go to his head. Susan Buffett. We have Steve Burke, Ken Chenault, Chris Davis, and Sue Decker. Sue’s our lead director. Charlotte Diamond, Tom Murphy Jr, Ron Olsen, and I’ll have a few, and when we finish all of it, a few more things to know about him. Wally White, Merrill Whitmer, and with that, you’ve got our All-Star cast.

WARREN BUFFETTAnd Ron, if you don’t mind standing, I would like to point out that Ron and they finally got through an age director thing at Berkshire, I think we had five that were over 90 here not so long ago. But we put in the highest. Sue tells me anyway that it’s the highest age limit any of the companies she checked out came up with. But Ron has been on the board for 28 years and has been associated with Charlie Munger. Munger tolls for many years beyond that, and has been around it in a variety of times of crisis, joy, disappointments, surprises, and everything else at Berkshire, and has been of invaluable help to us. So I think I’d like to give a special hand to Ron Olson.

WARREN BUFFETTAnd I think I’ll do something else that isn’t done usually in annual meetings, but I haven’t had a chance. I listened to him on Thursday afternoon. It’s the only investment quarterly call that I listened to, but I listened to Tim Cook, and I understand it’ll be tough for me to see him from up here. But Tim Cook, there he is. I’m somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I’ve ever made for Berkshire Hathaway. So, credit should be given to him, for I knew Steve Jobs briefly, and Steve, of course, did things that nobody else could have done in developing Apple, but Steve picked out Tim to succeed him, and he really made the right decision. Steve died young, you know, and nobody but Steve could have created Apple, but nobody couldn’t. But Tim could have developed it. I have to ask so. So, on behalf of all of Berkshire, thank you, Tim. There are a couple of other people I’d like to thank. I don’t do any work, in terms of the show or anything else around Berkshire, but what you see today is the product of a lot of people at Berkshire.

WARREN BUFFETTYou know that they don’t think of themselves as the ones who are supposed to screw a light in and leave for somebody else specialists to come along, and do other things. The people of Berkshire put on this show every year, and our Chief Financial Officer and just everybody pitch in. It’s a remarkable organization that way, but it’s been led this year, in the last few years, by Melissa Shapiro, and she’s made this whole thing work. And then we got an idea a while back. Well, many years ago. Well, I’m thinking all the way back, maybe 65 years ago. I met Carrie Sova’s grandfather, and his wife, who had nine children, and Susie, and I joined a playhouse group. I don’t look like the kind of guy who would join the playhouse group, but it turned out to be a great move in many ways. First of all, I enjoy the plays, but beyond that, I met not only Carrie’s grandfather, who ran an insurance company in Omaha, Bill Kizer.

WARREN BUFFETTBut I also met the pumpkin boys’ parents, Louie and Francis. So in one sort of accident, when I was in my 20s, I came up with all kinds of good things, and in connection with Carrie, her father ran a company called Central States, and later on, we bought that company, and then her father ran the company. Her sister worked for Berkshire some years ago, and then she decided to have a family, and subsequently had four kids, so she left, but Carrie moved right in, and Carrie has amazing talent behind, just like I’ve got many people who have talent you don’t realise. You give them some responsibility, and so, 10 or 11 years ago, I asked Carrie to do a 60th-anniversary book about Berkshire, and just use your imagination, she didn’t need to check with me or do anything. She never edited the book. She’d never published the book. She’d never dealt with the printers before, but she just went out and promptly put together this 60th-anniversary book.

WARREN BUFFETTAnd then this year, well then, Carrie, of course, got married, and had three kids, so she had to leave us. But we go to a baseball game once a year, and we invite some of our distinguished alumni, like Carrie, to join us, and Carrie, even though she was raising three children, and you may have met one or two of them on the last day or so, she volunteered to bring together the 60th-anniversary book, and which I asked for, and again, she took the whole thing. She just did it. She kept doing the things with her kids, and every now, and then I’d ask her how it was going, and she tells me how it was going, and so she put together this 60th anniversary book, and got it done by maybe a week before the meeting, because I get rid of the assignment very late.

WARREN BUFFETTAnd yesterday, we sold, I think it’s 4000 plus, 4500 maybe. Wait, wait, 4400. We printed 8000. We intended to print 5000, but we sold 4400 books yesterday, and we’ll have, I guess, some roughly 3600 out there today, it is kind of whimsical but accurate, and she came out with just the book. I hope she will come out with it, and then, as we went through this publishing experience, Carrie wouldn’t take a dime. But I did get her to name her; they were charity, and this Stevens Center, which takes care of all those people, and does a great many other things. It’s located about five or six miles from where we are here, south, and she has been doing a wonderful job. Her grandfather helped, Forman. Her husband now joins the board, and we are selling 20 copies of–this is a commercial place, isn’t it? We are selling 20 copies which we have sold 10 prior to the meeting. That’s all we let them sell, and we raised a few hundred thousand dollars in doing that. I think we sold one for $100,000.

WARREN BUFFETTBut we limited it to 10, and the only difference in the $25 version is that Carrie and I signed them, but we saved six for yesterday, and the six brought $148,000, which is a pretty good average per book of about $20,000, and then I had them save four more. So this afternoon, when we disbanded at 1:00, the area right behind us had all the goods in the bookstore. They will sell the final four, and when they get all through, they’ll match whatever we’ve raised for the 20, and we’ll give the Stevens Center a boost both financially and in awareness.

WARREN BUFFETTAnd when you look at that book, Carrie really did the whole thing. I mean, there’s a lot of information in there, and she dug her within, and she came through a couple of times, maybe to check a fact or two, but she got material from the Munger family. She did a wonderful job, and I couldn’t get her to take a penny for it. So I’m going to have to do a lot of other things in the future.

WARREN BUFFETTOK. With that, I think we’ve covered all the business. Becky has questions that she’s received from all over the country, and perhaps outside the country, and she’s picked out a group of them that she has not shared with me, we will alternate questions between Becky, and the audience, which we have by zones, and that I will turn things over to Becky for the first question.

Warren Buffett’s view on tariffs

BECKY QUICKThanks, Warren. This first question comes from Bill Mitchell. I received more questions about this than any other question. He writes, “Warren, in a 2003 Fortune article, you argued for import certificates to limit trade deficits, and said these import certificates basically amounted to a tariff. But recently, you called tariffs an act of economic war. Has your view on trade barriers changed, or do you see import certificates as somehow distinct from tariffs?”

WARREN BUFFETTYeah, well, the import certificates were distinct, but their goal was to balance imports against exports. So that the trade deficit would not grow in an enormous way. In fact, it had various other provisions in it that helped third world countries, at that time as they were called, perhaps catch up a little bit, and they had a variety of aspects to them, but basically, they were designed to balance trade, and I think you can make some very good arguments for the fact that balanced trade is good for the world, and the more balanced trade there is the better it will continue to be better.

WARREN BUFFETTFor cocoa to be raised in Ghana, coffee in Colombia, and a few things, and over time, the American industry has gone from being an agricultural country. This was nothing but an ag country, I mean, but virtually, and that was only 250 years ago. We have become a very industrial country, and we did not want to make that a situation. In my view, we run greater, and greater deficits, building up greater, and greater debts against every side. I designed this import certificate thing, which Charlie thought was too much like a Rube Goldberg. I don’t know where they got, at the time, the name is, but it’s gimmicky. It’s certainly a lot better than, I think, we’re talking about now, and there’s no question that trade can be an act of war.

WARREN BUFFETTAnd I think it’s led to bad things. Just the attitudes that have been brought out in the United States. I mean, we should be looking to trade with the rest of the world, and we should do what we do best, and they should do what they do best. That’s what we did originally. I mean, we’re producing tobacco, and cotton 250 years ago, and we traded it, and we want a prosperous world. With eight countries with nuclear weapons, including a few others, what I would call quite unstable. I do not think it’s a great idea to try and design a world where a few countries say, “Hahaha, we’ve won”, and other countries are envious. So, my import certificate idea went to no place. I think we’ve got extra copies, with not a great demand for them copies, and if you’d like, and write to the office, I think we could probably send you a copy of it, but the main thing to do is that trade should not be a weapon.

WARREN BUFFETTAnd the United States, we’ve won. I mean, we have become an incredibly important country starting from nothing 250 years ago. There’s nothing been anything like it, and it’s a big mistake in my view when you have 7 1/2 billion people that don’t like you very well, and you have 300 million that are crawling in some way about how well they’ve done. I don’t think it’s right, and I don’t think it’s wise. I do think that the more prosperous the rest of the world becomes, it won’t be at our expense. The more prosperous we become, and we’ll then the safer we’ll feel, and your children will feel someday. But don’t expect my import certificate idea to go down there with Adam Smith’s Wealth of Nations. OK. Let’s go to Area 1.

Interest rates in Japan

ST JANGMr. Buffett, Mr. Abel, and Mr. Jaen. Good morning. I’m ST Jang. I’m from Hong Kong. Mr. Buffett and Mr. Munger made a very good and successful investment in Japan in the past five or six years. The recent CPI in Japan is currently above 3%. Not far away from its 2% target. The Bank of Japan seems very determined to raise rates while the Fed, ECB, and other central banks are considering cutting them. Do you think the BOJ, Bank of Japan, makes sense to proceed with the rate hike? Will its planned rate hike deter you from further investing Japanese stock market or even considering realising your current profits? Thank you very much for arranging this great event every year. Finally, I wish you healthy always and keep holding this shareholder meeting.

WARREN BUFFETTThank you. Well, I’m going to extend the same goodwill to Japan that you just extended to me. I let the people in Japan determine their best course of action in terms of economics. It’s an incredible story, and it’s been about six years now, as you pointed out, I was just going through a little handbook that probably had two or 3000 Japanese companies. The one problem I have is that I can’t read that handbook anymore because the print is too small, and there were these five trading companies that had a special name form in Japan, but they were selling it at ridiculously low prices.

WARREN BUFFETTSo I spent about a year acquiring them, and then we got to know the people better, and everything that Greg and I saw we liked better as we went along. So we got fairly close to the 10% limit that we told the company we would never exceed without their permission, and so we did ask them recently whether that limit could be relaxed, and it’s in the process of being relaxed somewhat. I would say that I’ll speak for the great beyond me that in the next 50 years, and I hope he’s running things in, we won’t give a thought to selling those. I mean, Japan’s record has been extraordinary. My guess is that Tim Cook would tell you that iPhone sales there are about as great as any country outside the United States. American Express would tell you that they sell their product very, very well in Japan. Coca-Cola, our investment, does extraordinarily well in Japan. They have a number of habits in a civilization that operate differently from ours.

WARREN BUFFETTIn Japan, their containers, their soft drinks, they have a whole different sort of distribution system there. But we have been treated extremely well by the five companies. They talked with Greg primarily. I went over there a year or two ago. Greg’s more cosmopolitan than I am, so he isn’t saying much, actually. I don’t know how many times you think you’ve met with representatives of one company or the other?

GREG ABELYeah. When you think of the five, there’s definitely a couple of meetings a year, Warren, and I think the thing we’re building with the five companies is one, it’s been a very good investment, but we are really, as Warren touched on, we envision holding the investment for 50 years or forever. But I think we are also building relationships to do incremental things with each of those companies, and we really do hope to do big things with them globally. They bring different perspectives and different opportunities, and we see that’s why we’re building that long-term relationship with them.

WARREN BUFFETTIt’s super long term, and they have different customs, they have different approaches to business, that’s true around the world. We don’t have any intention, in any way, of trying to change what they’ve done because they do it very successfully, and our main activity is just to cheer and clap. I can still do it, 94. So, we will own those.

WARREN BUFFETTWe will not be selling any stock. I mean, that will not happen in decades. My guess is that they will find things because they cover the world pretty much, the five trading companies. We will find things occasionally that may be large for any individual company there. They may, in some way, be assisted by some help we bring to the situation, but that will be an expanding relationship. It’s too bad that Berkshire has gotten as big as it is because we love that position, and I’d like it to be a lot larger than it is. But even with the five companies, being very large, and they’re large companies in Japan, and we’ve got a market in the range of $20 billion invested, but I’d rather have 100 billion than 20 billion, and that’s the way I feel about it.

WARREN BUFFETTWe have several other investments, but size is an enemy of performance at Berkshire, and I don’t know any good way to solve that problem. Charlie always told me that having a few problems was good for me. I never quite understood that, but if you listen to him more, you will understand that it’s not an impossible problem at all. The Japan investment has been right up our alley. Did you want to add anything to that?

GREG ABELNo, I think you’ve touched it. As you said, it’s right up our alley, and I absolutely agree, Warren. I do believe we’ll see some very large opportunities long term, and that’s just been a great plus of that relationship.

WARREN BUFFETTYeah, I would say they would like to present us with opportunities. We would like to receive them. We’ve got the money. We both get along very well with each other, and they have different they have different customs than we have. They drink the number one Coca-Cola product. They drink over there, something called Georgia Coffee. So I haven’t converted them to Cherry Coke, and they’re not going to convert me to Georgia coffee. But it’s a perfect relationship. I just wish we could get more like it.

WARREN BUFFETTI never dreamt of that when I picked up that little handbook, it was about that thick, but sometimes two companies to a page, and a couple of thousand pages, I believe. But it’s amazing what you can find when you just turn the page. We showed a movie last year about Turn Every Page, and I would say that turning every page is one important ingredient to bring to the investment field. That’s what very few people do: turn every page, and the ones that turn every page aren’t going to tell you what they’re finding.

WARREN BUFFETTSo you’ve got to do a little of it yourself, OK? Becky?

Berkshire Hathaway’s cash

WARREN BUFFETTI wouldn’t do anything nearly so noble as to withhold investing myself just so that Greg could look good later on. Now, if he gets any edge from what I leave, I’ll resent that. The amount of cash we have–We came pretty close to spending ten billion not that long ago, for example. We spend 100 billion, I mean, and those decisions are not tough to make. When something is offered that makes sense to us, and that we understand, offers good value, and where we don’t worry about losing. The one problem with the investment business is that things don’t come along in an orderly fashion, and they never will. I mean, it isn’t like every day the long-term record is sensational. But that is not a product.

WARREN BUFFETTSee how we had 200 trading days times 80 years on it. I mean, 16,000 trading days. It would be nice if every day you got four opportunities or something like that, and they were expected to be equally attractive. You know, if I were running a numbers racket, you know, every day would have the same expectancy of that I would keep 40% of whatever the handle was, and so the only question would be is how much we transacted, but we’re not running that kind of business. We’re running a business which is very, very, very opportunistic. Charlie always thought I did too many things. I thought if we did about five things in our lifetime, we’d end up doing better than if we did 50, and that we never concentrated enough.

WARREN BUFFETTIf we’ve got 335 billion now in treasuries, we would rather have conditions that have developed where we would have like 50 billion or something like that, but that just isn’t the way the business works. We have made a lot of money by not wanting to be fully invested at all times. We don’t think it’s improper, actually, for people who are passive investors just to make a few simple investments, and sit for their life in. But we’ve made the decision to be in the business. So we think we can do a little better than that by behaving in a very irregular manner.

WARREN BUFFETTIf you told me that I had to invest, well, let’s say that we have roughly 40 billion a year coming in, and we start with 335. If you told me I had to invest 50 billion every year till we got down to 50 billion, that would be the dumbest thing in the world to invest in that manner. Things get extraordinarily attractive very occasionally. The long-term trend is up. Nobody knows, and I certainly don’t know. Greg doesn’t know. Ajit doesn’t know. Nobody knows what the market is going to do tomorrow, next week, or next month, and nobody knows what business is going to do tomorrow, next week or next month. But they spend all their time talking about it because it’s easy to talk about, but it has no value.

WARREN BUFFETTI’ve never found anybody I wanted to listen to on the subject. On the other hand, I’ve found the leafing through things like those big Japanese books that I can’t read anymore. That’s a treasure hunt, and every now and then, you find something, and occasionally, very occasionally, but it’ll happen again, that I don’t know when. It could be next week, it could be five years off, but it won’t be 50 years off. We will be bombarded with offerings that we’ll be glad we have the cash for, and it’d be a lot more fun if that happened tomorrow, but it’s very unlikely to happen tomorrow. Very, very unlikely to happen tomorrow, but it’s not unlikely to happen in five years, and then the probabilities get higher as you go along. It’s kind of like that. I mean, if you’re 10 years old, the chances that you’re going to die the next day are low. If you get to be 115 or something like that, it’s almost a cinch, particularly if you’re a male. I mean, all the records are held by females in terms of age, and I tried to get Charlie to have a sex change so he could test that. He did pretty well for being a male, I’ll put it that way. OK, station 2.

Real estate investing

JACKIE HANGood morning, Warren, Craig, and Ajit. My name is Jackie Han. I’m from China and now work in Toronto, Canada. This is my 8th Berkshire Hathaway meeting at this point. I’ve probably spent more time with you than most people spend on Netflix. As you might guess, coming from a Chinese family, we always have a soft spot for real estate. So the usual question isn’t Why don’t you own a house? Is it why you are still buying stocks instead of more property? So here is my question. With today’s high interest rates and global uncertainty, do you still believe in being greedy when others are fearful, or the value investing facing new challenges in today’s environment? Thank you.

WARREN BUFFETTWith respect to real estate, it’s so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties, and the ownership. Usually, when real estate gets in trouble, you’ll find out you’re dealing with more than the equity holder. But there have been times when large amounts of real estate have changed hands at bargain prices, but usually, stocks were cheaper, and they were a lot easier to do. So, Charlie did more real estate. Charlie enjoyed real estate transactions, and he actually did a fair number of them in the last five years of his life. He was playing a game that was interesting to him. But I think if you’d asked him to make a choice when he was 21. He had to be in stock exclusively. The rest of his life was in real estate. For the rest of his life, he would have chosen the stocks in the second. There’s just so much more opportunity, at least, in the United States. There’s so much more opportunity that presents itself in the security market than it does in real estate.

WARREN BUFFETTIn real estate, you’re usually dealing with a single owner or a family that owns maybe a large property they’ve had a long time. Maybe they’ve borrowed too much money against it. Maybe the population trends are against them. But to them, it’s an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars worth of business, totally anonymous, and you can do it in five minutes, and the trades are complete when they’re complete.

WARREN BUFFETTIn real estate, when you make a deal, a big deal with a distressed lender, and you know, when you sign the deal, then you go into another phase, then people start negotiating more things, and more things. It’s a whole different game, and a different type of person, to some extent, enjoys the game. We did a few real estate deals that came our way in 2008 and 9, but the amount of time that they would take us compared to doing something intelligent, and probably better, and securities, there was just no comparison. I mean, in a real estate deal, every sentence is as important as a person.

WARREN BUFFETTIn stocks, if somebody needs to sell 20,000 shares of Berkshire or something, they call us, and the price is right, it’s done in five seconds, and it closes all the time. In stocks, partly that’s because they’re probably having their wires or phones or whatever it is recorded as to what they’ve said, and everything but the completion rate for working on anything. In stocks, assuming you got a meeting of the minds on prices, essentially 100%. In real estate, it just begins when you agree, and it takes forever. For a guy, 94, it’s not the most interesting thing to get involved in something where the negotiations could take years. In fact, if you go all the way back to Zeckendorf in the 1960s, he was going to change the world, and Century City, out in California, is a product of this. He was sitting on top of the world with the years building.

WARREN BUFFETTSo people tend to get in trouble in that business. The banks usually don’t want to recognize it, but that takes a long time to go through the bank processes. They just got through redoing the Musk loan that he made when he was buying, three years ago, the company that’s now X, and you know, three years to work out a transaction where you’ve got parties on both sides that aren’t ready to act. We find it much better when people are just ready to pick up the phone, and you can do hundreds of millions of dollars worth of business in a day. I’ve been spoiled, but I like being spoiled, so we’ll keep it that way. OK, Becky.

AI and insurance

BECKY QUICKThis question comes from Sam England in San Francisco, and it’s for Warren and Ajit. “As AI systems become more capable and harder to interpret, how do you see that affecting the insurance industry’s ability to assess price, and transfer risk? Are there parallels to past disruptions Berkshire has navigated in underwriting for capital allocation?”

WARREN BUFFETTOK, Becky. Ajit got about a hundred points of IQ on me, and he’s just going to be here this morning, so I’m going to let him answer the question first.

AJIT JAINThere is no question in my mind that AIs are going to be a real game changer, and it’s going to change the way we assess risk. The price risk, the sell risk, and then the way we end up paying claims. Having said that, I certainly also feel that people end up spending an enormous amount of money trying to chase the next new fashionable thing. We are not very good in terms of being the fastest or the first mover. Our approach is more to wait and see until the opportunity crystallizes, and we have a better point of view in terms of risk of failure, upside, and downside. So right now, individual insurance operations do dabble in AI, and try, and figure out what is the best way to exploit it. But we have not yet made a conscious, big-time effort in terms of pouring a lot of money into this opportunity, and my guess is we will be in a state of readiness, and should that opportunity pop up, we’ll be in a state where we’ll jump in promptly.

WARREN BUFFETTI wouldn’t trade everything that’s developed in AI in the next 10 years for Ajit. So, if you gave me a choice of having a hundred billion dollars available to participate in the insurance property casualty insurance business for the next 10 years and a choice of getting the top AI product out of whoever’s developing it or having Ajit making the decision, I would take Ajit anytime, and I’m not kidding about that. OK, Station 3.

Portillo’s Hot Dogs

SEAN SIEGELHello, I’m Sean Siegel from Chicago, IL. Thank you for investing your time, and to the executive committee for putting on this meeting, and for bringing together a diverse group of people in attendance under one roof Out of all the companies that Berkshire Hathaway owns, there was one that you acquired, the Chicago-based company Portillo’s Hot Dogs. How did you know that this would be a good fit for the overall company’s portfolio?

WARREN BUFFETTWell, I’ll have to ask Greg about that because I don’t know anything about it. So maybe he bought it when I was looking the other way.

GREG ABELI think I’ve got to call a friend on this one.

WARREN BUFFETTWe own a lot of companies, but I do like to think I know most of them, but maybe a subsidiary of a subsidiary in some way. But I really don’t know anything about it. I’m sorry, but that may be a good thing. I do know something about hot dogs, though.

GREG ABELWe do have a lot of companies in Chicago, Warren, through Marmon, and that’s been a great opportunity where we’ve accumulated a variety of excellent companies under that portfolio, but as you noted, I don’t believe Portillo’s falls under that.

WARREN BUFFETTI look at the financial statements of about, perhaps, 50 or 60 of our companies every month but in the case of Marmon, for example, Marmon itself owns over 100 companies. It was created by Jay Pritzker, and his brother Bob, and it was a remarkable company when we bought it. But it was highly diversified already, and then we diversified it further.

WARREN BUFFETTSo it is something of a Berkshire within Berkshire. We found that that’s working very good as an arrangement. It was interesting. Jay Pritzker was a remarkable manager, and there are various branches of the Pritzker family. So it really goes back to A.N. Pritzker before Jay, and so on. But in 1954, they changed the federal tax code very dramatically in the United States. It was quite a blow to me because I’ve been at Columbia, and I’ve been reading a J.K. Lasser book about the tax code, and then they went and changed the whole damn thing.

WARREN BUFFETTBut ‘54 was a big year. Big change. Those years come every now, and then like 1986, and you may see a big one of these days. There was a company called Rockwood Chocolates in Brooklyn, and they made Rockwood Chocolate Bits, which we used to sell at the Buffet grocery store, and people made chocolate chip cookies out of them, and everything, and then it turned out that cocoa, which lately has had a big run to cocoa was $0.05 a pound in 1941 when LIFO was first allowed for insurance, for tax purposes. The Rockwood Chocolate company went into the LIFO. So they owned 30 million pounds of cocoa.

WARREN BUFFETTThen, cocoa took a run in 1955, and I just moved to New York. There was a provision in the new tax code that if you were in two or more companies, and you did certain things, and you’ve been in them for five years, and you got out of one of them there would be no capital gains tax on LIFO inventory gains, and tax rates were around 48%, maybe 52%, and so there was this huge profit cause the cocoa had gone up in price, but that made it terrible for them in selling Rockwood Chocolate Bits because the price of retail, which of the chocolate bits did not match what was going on at wholesale. Something almost identical has been happening in the chocolate business. Recently, Hershey Chocolate just came out, and they’re going to have a bad quarter, and we’re paying $4.50 a pound for chocolate because things are going on in West Africa that make cocoa prices go up dramatically.

WARREN BUFFETTIn any event, Jay Pritzker bought control of Rockwood, the chocolate company, and as I say, I was 24 or 25 years old, and they called the meeting to split off one of the chocolate businesses in a way that would enable them to recognize the gain on this these cocoa beans without paying roughly 50% federal taxes on the gain. So I went to the meeting, which was in Brooklyn, and nobody was there, this was in the turned every page category, except one guy. I was 24, and he was 29, and it was Jay Pritzker. Nobody had shown up at the meeting, and it was kind of a crummy building they had. But they had a lot of corporates there, and Jay just gave me a lecture or a lesson, I should say, on the tax code, and I could have gone to graduate school for years, and never learned as much as he did, and then later, we actually bought the company, that Rockwood Company, but after he did some other things became the basis for Marmon, and Marmon, among other things, developed the car that won the first Indianapolis Speedway race, and it invented the rearview mirror, which I’m not sure is a great advantage in economics or anything. They used to have, at the Indianapolis 500, two people in the car. One guy was to look back and see what the other people were doing, and the other guy was to drive the car. Our guy got sick, and so they invented a rear-view mirror. So if you want to see what’s going on in the laboratories of Berkshire Hathaway, we’ve got people working on things like the rear-view mirror.

GREG ABELHey, Warren? I’m happy a friend called. So that still works. Peter Eastwood, who runs one of our Berkshire subsidiaries, and does a great job of running it, tracked down that Portillo’s is owned by a private equity firm called Berkshire Partners. So that was the basis of the question. But it’s not associated with Berkshire. So, we got to the bottom of that one. Thank you, Peter.

American exceptionalism

WARREN BUFFETTThat’s just the sample of the way we operate around. OK, Becky.

BECKY QUICKThis question comes from Jessica Poon, who says, “You’ve long been a strong believer in the American tailwind, and the resilience of the United States, and history has proven you correct. Today, the US appears to be undergoing significant, and potentially revolutionary changes. Some investors are now questioning the concept of American exceptionalism. In your view, are investors being overly pessimistic about the US economy, or is the country indeed entering a period of fundamental change that requires a reassessment from a new perspective?”

WARREN BUFFETTI would say that Jessica quite believes this. In some sense, she is the step-granddaughter of one of our managers that I mentioned in the annual report. It may not be the same one. But in the event, America has been an insignificant, and revolutionary change, ever since it was developed. I mentioned that we started out as an agricultural society. We started out a society with high promises, and we didn’t deliver on it very well. We said all men were created equal, and then we wrote a constitution that counted blacks as three-fifths of a person. In Article 2, you’ll find male pronouns used 20 times, and no female pronouns used. So it took till, I should say until the 19th amendment was passed saying, “Oh yeah, we promised the women back in 1776, and now we’ll do something about it.”, and then we didn’t do something about it for a long time. We’re always in the process of change. We’ll always find all kinds of things to criticize in the country.

WARREN BUFFETTThe luckiest day in my life was the day I was born. You know, I was born in the United. States, and at the time about 3% of all the births in the world are taking place in the United States. I’d like to say that if I had something to do was to send messages out to my parents, for God’s sake, move to the United States before I was born or anything. But I was just lucky, and I was lucky to be born pale, I was lucky to be born white, and all kinds of things. But if you don’t think the United States has changed since I was born in 1930, we’ve gone through all kinds of things, and we’ve gone through great recessions, we’ve gone through world wars, we’ve gone through the development of atomic bomb that we never dreamt of the time I was born.

WARREN BUFFETTSo I would not get discouraged about the fact that that’s not like we solve every problem that comes along. If I were being born today, you know, I would just keep negotiating in the womb until they said you can be in the United States. So we’re all pretty lucky. We’ve got two non-United States guys here just to get the other side. OK, Station 4.

Being patient vs acting fast

DANIELHi, Mr. Buffett. My name is Daniel, and I’m from Tenafly, NJ. First of all, I just want to say how grateful I am for getting the opportunity to ask you a question. When it comes to your principles of investing. You often talk about how important it is to be patient. Has there ever been a situation in your investing career where breaking that principle, and acting fast has benefited you? Thank you.

WARREN BUFFETTWell, that’s a good question. There are times when you have to act fast. In fact, we made a great deal of money because we’re willing to act faster than anybody around. Jessica Toonskel, I think she’s the step-granddaughter of Ben Rosner, manager of ours.

WARREN BUFFETTIn 1966, I got a call from a man named Felstiner in New York, and he said, I represent Mrs. Annenberg. There were actually nine Annenberg sisters, I believe before Moe Annenberg came along as a son. But he said we have a business we’d like to sell you. So I called Charlie, and I got a few details, and it sounded very interesting. Charlie, and I went back to the office of Will Felstiner in New York, who was a marvellous guy. Never met him since, but he was handling things for Mrs. EAS, E. A Simon, but she was named Annenberg. Her husband had been the partner of Ben Rosner, but he had died and then got kind of tense about working with her. So he offered his business at a bargain price. He offered us a business for $6 million, 2 million in cash, and another 2 million dollar piece of property in the 900 block of Market Street.

WARREN BUFFETTIt was making 2 million a year pretax, and the price was 6 million. Charlie and I went back to this place, and Ben Rosner was there. He was just upset about doing business with his partner’s widow. She was extremely wealthy. He wasn’t enjoying it. He was very nervous about selling it, and he said to me, and Charlie, I’ll run this business for you until December 31st, and then I’m out of here. I got Charlie, we went down the hallway, and I said, If this guy quits at the end of the year, you can throw away every book on psychology. So we bought the company and had a great relationship.

WARREN BUFFETTI’ve had a couple of times, and I’m one of them where people in the East felt that they had a stereotype, in their mind, of what people from the Midwest were like. Ben had been married. His first marriage was to a woman from Iowa, and he just figured that anybody from the Midwest was okay, and the trick when you get in the business with somebody, they’re getting the room with somebody like that, and they want to sell you something for $6 million, it’s got 2 million in cash, and couple million real estate, and it’s making 2 million a year. You know. You don’t want to be patient then, you want to be patient, then wait to get the occasional call.

WARREN BUFFETTMy phone will ring sometimes, and it’s something that wakes me up. I may be sleeping in there or something. You just never know when that will happen, and that’s what makes it fun. So it’s a combination of patience, and willingness to do something that afternoon if it comes to you. You don’t want to be patient about acting on deals that make sense, and you don’t want to be very patient with people talking to you about things that will never happen. So it’s not a constant asset. It’s not a constant liability to be patient. Well, when I was going to add.

GREG ABELWell, I was going to add as you’re being patient, I happen to know, and I think that goes for our Ajit also, and all our managers, very patient when we’re looking at opportunities, and as you touched on, we want to act quickly. But while we’re being patient, never underestimate the amount of reading, and work that’s being done to be prepared to act quickly because we do know, be it equities, but I would include a variety of private companies that when the opportunity presents itself, we’re ready to act, and that’s a large part of being patient is using it to be prepared.

WARREN BUFFETTYeah, and of course it doesn’t come in anything like an even flow. I mean, the most uneven sort of activity you could get into. The main thing you have to do is you have to be willing to hang up after five seconds, and you have to be willing to say yes after five seconds. You can’t be filled with self-doubt in the business.

WARREN BUFFETTYou just forget it in your work, and go to some other activity. One of the great pleasures–it is a great pleasure actually in this business–is having people trust you. Why work at 90 when you’ve got more money than anybody could count? You know, if they started today, and have machines that are helping them, and everything else. It means nothing in terms of how you’re going to live, how your children are going to live or anything else.

WARREN BUFFETTBoth Charlie, and I just enjoyed the fact that people trusted us, and they trusted us 60 years ago or 70 years ago, and in partnerships we had, and we never sought out professional investors to join our partnerships. Among all my partners, I never had a single institution. I never wanted an institution. I wanted people. I didn’t want people who were sitting around having people present to them every three months and tell them what they wanted to hear, and all that sort of thing. That’s what we got, and that’s why we’ve got this group here today. So it’s all worked out. But you don’t want to be patient when the time comes to act, you want to get it done that day. OK, Becky.

Modernizing GEICO

BECKY QUICKThis question is from Flavio Montenegro, a shareholder from Guatemala “A couple of years ago, in this meeting, Mr. Jain outlined the significant challenges GEICO faced in modernizing, and integrating its IT systems. It was also mentioned that competitors were ahead in their pricing strategies because of the use of telematics. Today GEICO’s turnaround is evident through strong pricing and operational improvements. Could you provide more details on the specific actions taken under Todd’s leadership, and how those changes will help sustain a long-term competitive advantage in the coming years?

AJIT JAINYeah. Todd has done a great job for us in terms of turning around the operations. When he took over, there were two major issues that GEICO was behind its competitors on.

AJIT JAINFirstly, the term Warren used, and we all have been using is “matching rate to risk.”, and secondly, telematics. We were at the bottom of the list, and so far as telematic circuits about five or six years ago. Since then, we have made rapid strides, and telematics, which used to be a source of competitive disadvantage to us, is no longer so. I would argue that our telematics at GEICO is about as good as anyone else is today.

AJIT JAINSo that’s been one huge catch-up. Secondly, in terms of matching rate-to-risk there again, I think we have caught up with our competitors, and we are as good as anyone else in the field. All this together with the cost reduction effort that GEICO and Todd get a lot of credit for. He has basically reduced the workforce by 20,000. Starting with something close to 50,000. He’s brought it down to 20,000, and that translates to, I guess, at least $2 billion. All this has allowed GEICO to become a much-focused competitor. So in the last seven quarters, GEICO has shown a combined ratio that has eight in front of it.

AJIT JAINAnd I never thought I’d live to see the day when anyone could have a combined ratio as low as it is right now. So I think GEICO has done a great job. Its 80 combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business. We’ve achieved a lot. Todd has achieved a lot, but I do not want to be so arrogant as to say that mission accomplished. We’ve achieved a lot, but I still think we need to do a lot more in technology. AI, as we talked about, is going to be a big force, and we need to play catch-up there, not catch up. But we are to be in a state of readiness. So I think GEICO is in great shape right now. Warren, don’t you want to add anything?

WARREN BUFFETTIt’s a fascinating case study, but that’s what’s so interesting about the whole game of business, but particularly about our businesses, is that each one is a little different. They all have challenges of certain sorts, but they also many certain numbers have many opportunities. We paid $50 million for half of GEICO in 1976. What turned out to be half of GEICO, 50 million. We now own 100%, but 50% of the 2 billion that we earned in the first quarter is a billion dollars, which on a $50 million investment is you know 20 to one in a quarter.

WARREN BUFFETTSo that takes years to develop, but the interesting thing is the auto insurance policy, which didn’t even exist a hundred years ago. Well, I should say 120 years ago. It’s by far the largest item in the property casualty insurance business. It’s huge.

AJIT JAINThe only thing I’d like to add is that in addition to the underwriting profit, GEICO provides $39 billion of float.

WARREN BUFFETTOh yeah. In addition, yeah, and that’s not unimportant. You paid $50 million to get the businesses giving you $29 billion to work with for nothing, and on top of that gives you a billion dollars of profit in the quarter. The interesting thing about auto insurance is that we are a company that was started in 1936. We’re selling the same product as in 1936. We’re being more sophisticated about pricing it than we were then. Somebody just made the judgment. That’s all that came from USAA, which made the judgment that government employees–the name GEICO stands for Government Employees Insurance Company– the government employees were better drivers than average.

WARREN BUFFETTI don’t think he was an actuator or anything else, but he just made an observation, and so he left USAA, which is still a very successful company, and he started GEICO for a few hundred thousand dollars, and he made money the first year from underwriting. He made money the second year. This is not a public offering type of thing. They aren’t, you know. He’s only accounting for 10 years, and all that sort of thing. They just price it to make money, and that’s exactly what’s been done since 1936. Your auto insurance policy looks a lot like the one from back then. This huge field has sprung up around us, and it’s still growing. Of course, nobody likes to buy insurance, but they sure like to drive.

WARREN BUFFETTGEICO is a fascinating story, and about three times over the years, the company has gotten sidetracked one way or another, and then it gets back to its basics, and it’s a wonderful, wonderful business. We showed at this annual meeting one time a message from Lorimer Davidson. In January of 1950, he was the only person in the building. I had gone down on a Saturday to visit but turned out they didn’t work on Saturdays in Washington, I pounded on the door till finally a janitor let me in, and I said to the janitor, “Is there anybody else I can talk to here except you?” He didn’t take it personally, and he said, “Well, there’s one guy on the 6th floor.”, and a fellow named Lorimer Davidson did wonderful things for me.

WARREN BUFFETTYou get a few breaks in life, in terms of people you will meet who will just change your life dramatically. If you’ve had a handful of those, and when you get them, you treasure them. We’ve had them on this board of Berkshire: Tom Murphy, Sandy Gottesman, Walter Scott, and Bill Scott. One thing we’ve done is we’ve held on to human assets, we’ve made lifelong assets out of people that are the right sort, and with incredible talent, but also just lots of fun to work with, and always doing more than their share, and to get a chance to talk to Lorimer Davidson on a Saturday afternoon, you just listen carefully. That comes in the category of “turn every page”, you know, some of them you want to turn pretty fast, But you just get lucky in life, and you want to take advantage of your luck. OK, Station 5.

Greg Abel’s successor qualities

BENJAMIN GRAHAM SANDERSONMy name is Benjamin Graham Sanderson from Pasadena, CA Warren, thank you for all you’ve taught us over the years. Earlier, you said, “Nobody but Steve Jobs could have created Apple, but nobody but Tim Cook could have developed it like he has.” Warren, nobody but you could have created Berkshire, and I presume you view Greg as an outlier among outliers? But he seems so normal. Sorry, Greg.

WARREN BUFFETTThat’s a nice way of saying not normal, actually, but I appreciate it.

WARREN BUFFETT[01:20:33 Benjamin Graham Sanderson: So I was hoping you could share what specifically about Greg makes him your preferred successor, and Greg, we’re excited to get to know you more over the next few decades. Thank you.

GREG ABELThank you.

WARREN BUFFETTWell, you’ve hit on the most important question, and now in terms of the business, they’ve got a wonderful group of businesses. We’ve got an ability to do things that nobody else can do, which is hard to get in a capitalistic system that’s been developed as fully as the United States has been. I mean, imagine being able to create something that in a very, very, very big playing field it would be very, very hard to develop anything like that. I don’t think you could develop the people around you with that, let alone the capital position, the history, and everything else.

WARREN BUFFETTAnd the answer, of course, is that it does take a long, long time. It takes getting around a small cadre of people, which then spreads out somewhat, where you’ve got mutual trust, where people do more than their share. I’ve been around a lot of businesses over the years, and by nature, I’m somewhat critical of everything. I mean, I’m looking for what’s wrong in things because that’s part of investing is looking. What are you missing? But we’ve got people who, if they’re asked to put on a show like this, instead of doing their regular job, they participate.

WARREN BUFFETTI went around the groups of people who were exhibiting yesterday for an hour, and a half, and these are people that are thanking me, you know, and totally enthused about coming and doing a lot of work for which they don’t get paid anything extra, and I don’t know anything about the arrangements the individual companies make, but they work hard, and they enjoy their work, and you really want to work in something you enjoy.

WARREN BUFFETTI’ve had five bosses in life, and I liked every one of them, and they were all interesting. I still decided that I’d rather work for myself than anybody else. But if you find people that are wonderful to work with, you know that’s the place to go. I’ve told my kids that you don’t get lucky like I did when I found that seven or eight years of age, which really interested me but it could have taken a lot longer. There’s a movie called The Glenn Miller Story, and Glenn Miller went on from having a broken-down band for 15 years. He found the sound and created the first gold record, and you know what it was, but it was the Chattanooga Choo Choo in 1941.

WARREN BUFFETTHe turned around from being a nothing with the band that he had till he found the sound, and I have always told my kids ever since that their sound isn’t my sound, and you don’t find it necessarily on the first job you take because you got to eat, you know. But if you get lucky like I did, you find it when you’re very young, and then just keep doing it. Don’t worry too much about starting salaries, and be very careful who you work for because you will take on the habits of the people around you, so there are certain jobs you shouldn’t take. But you’ve got the greatest country in the world, and you got the greatest time in the world. So I would say that I’m handing this over to Greg.

WARREN BUFFETTYou can’t even dream all the dreams that you could have about a place like Berkshire, but the big thing you have to do though, is always to be sure you can play the next day. I mean, in terms of financial activities on a meaningful scale.

WARREN BUFFETTThere was a book about how you only have to get rich once. I mean, you don’t want to do anything but risks. If very stupid things are happening around you, you do not want to participate. If people were making more money because they’re borrowing money or they’re participating in securities that are really pieces of junk but they hope to find a bigger sucker later on, you just have to forget that. That will bite you at some point.

WARREN BUFFETTThe basic game is so good, and you’ve been so lucky to be born now. I mean, if I’ve been born in 1700, I’d say, “I want to go back in the womb. What the hell with this? It’s too hard.” But now I’ve come along to do something where I can just play around all day with things I enjoy doing, and it’s a pretty wonderful life. Anything, Greg, you want to add or subtract from that.

GREG ABELNothing to subtract, but I would always just say it couldn’t be more, as I’ve said in the past, more humble than honoured obviously be in this role, but to have actually been part of Berkshire. Warren, it’s now 25-plus years. I had the opportunity to be part of Berkshire and to work with you, Ajit, our board, and many other people in our company, and as you touched on when you find something like that, and you find something like that like Berkshire that’s so special, you fall in love with it, and it becomes just what you want to do every day, and it’s just an incredible opportunity. So, thank you.

WARREN BUFFETT, and to the gentleman who asked the question. If you don’t find it immediately, you know, don’t starve to death in the meantime, but you will find it, and you’ll find it in the right individual. In this sense, it’s almost like finding the right person in marriage. I mean, probably some of you may have married the person you met on your first date, although I guess they don’t even have dates anymore. But you know, sometimes it pays to wait too. OK, Becky.

Investments in foreign currency-denominated assets

BECKY QUICKThis is a question from Mark Bonki and Helen Fredrickson in Rapid City South Dakota. “As the US dollar quickly loses value in relation to other foreign currencies in 2025, is Berkshire Hathaway taking steps to minimize this currency risk, and its impact on quarterly, and annual earnings? If so, please explain. I’ll just add Mary Chang, another shareholder. “Berkshire currently borrows in Japanese yen to offset its currency risk and its Japanese stock investments. In the future, will you invest in foreign currency-denominated assets unhedged?”

WARREN BUFFETTYeah. Well, we always have–pretty much. The Japanese situation is different because we intend to stay long in that position, and the funding situation is so cheap. I’ve attempted to some degree to match purchases against yen-denominated funding but that’s not a policy of ours. In fact, that’s the first time we’ve done that, and we’ve owned lots of securities in foreign currency. So, we do nothing in terms of the question about its impact on quarterly, and annual earnings. We don’t do anything based on its impact on quarterly, and annual earnings. I mean, there’s never been a board meeting. I can remember the conversation I had with Charlie when I said, “If we do this, our annual earnings will be this, you know, and therefore we ought to– Whether it’s accounting or with anything, the number will turn out to be what it will be. What counts is where we are five 10 or 20 years from now.

WARREN BUFFETTAnd if you start focusing on what number you’re going to produce, you will quickly get tempted, at least based on the experience I’ve seen from viewing 20 companies. One way or another, I’ll play around with the numbers, and sometimes seriously play around with the numbers, and I’ve seen people that you know, I trust them in all kinds of other ways, but they regard playing around with numbers as perfectly okay, and that’s just not something. We just don’t think about that.

WARREN BUFFETTActually, the relationship with the yen in the last quarter resulted in certain GAAP charges, but it doesn’t make any difference. It will change next month or next year, and obviously, we wouldn’t want to own anything that we thought was in a currency that was really going to hell. That’s the big thing, we worry about with the United States currency. I mean, it’s the tendency of a government to want to debase its currency over time. There’s no system that beats that. You can pick dictators. You can pick representatives. You can do anything. But the people, there will be a push toward weaker currencies.

WARREN BUFFETTAnd of course, I mentioned very briefly in the annual report that fiscal policy is what scares me in the United States because it’s made the way it is, and all the motivations are doing a lot of things that will cause trouble with money, but that’s not limited to the United States. It’s all over the world, and in some places, it gets out of control regularly. As you know, they devalue it. Rates that are breathtaking and that’s continued. I mean, people can study economics, and you can have all kinds of arrangements. But in the end, if you’ve got people that control the currency, you can issue pay for money, and you will or you can engage in clipping currencies like they used to centuries ago, and there will always be people. It’s the nature of their job.

WARREN BUFFETTI’m not singling them out as particularly evil or anything like that, but the natural course of government is to make the currency worth less over time, and there are important consequences. It’s very hard to build checks and balances into the system to keep that from happening, and we’ve had a lot of fun here, either the first 100 days or the last 100 days, whatever you want to call it. What happens when people try to make sure that they aren’t running fiscal risks, and that the game isn’t over, and never will be over. You know, in finality, if you look up, and you search the great inflations of post-World War 2, it’s just a list that goes on forever, and the same names keep popping up, and everything. So value of currency is a scary thing, and we don’t have any great system for beating that. We do in this particular Japanese position because we expect to hold it for 50 or 100 years or more, and we will be owning something that’s denominated in the end, and easily predictable, and we’ll just as long as the carry-on is right. We’ll attempt the issue of Japanese-denominated liabilities, but that’s not because of anything we care about in terms of quarterly or annual earnings. Greg, do you have anything to say?

GREG ABELI was just going to say that relative to the question, there’s no question we were fundamentally very comfortable with investing in the five Japanese companies, and recognizing we’re investing in yen. The fact we could then borrow in yen was almost just like a nice incremental opportunity, but we are very comfortable both with the Japanese companies and with the currency we would ultimately realize, IE, in the yen.

WARREN BUFFETTWe only made, as I referred to earlier one big currency play which was connected a little bit with when I wrote that article for Fortune. We got along 12 other currencies, as I remember, only four or five of them are really big currencies. But when I say we got long, it means we’re short the dollar. So we held that position for a couple of years, and we made several billion dollars on it which was significant to us then. Charlie always felt that if you had to pick an area outside of stocks in which to invest—And he knew a lot about bonds. He knew a lot about real estate. He knew a lot about a lot of things.—But he said he thought he could make a lot of money out of being in foreign currency.

WARREN BUFFETTWe’ve done it once. It’s not inconceivable that we would do it again, but it’s unlikely, there could be things happen in the United States that would make us want to own a lot of other currencies, and I suppose if we made some very large investment, European country or some, there might be a situation where we would do a lot of financing in their currency, but it was something that just was sort of obvious to do. In the Japanese situation where we had the ability to borrow yen at a very, very low carrying cost, and we felt very good about the income we’d been receiving from these securities.

WARREN BUFFETTIf the present condition–which it won’t, I mean, it never does— prevail for decades and decades, we would probably keep doing the same sort of thing, but things change in the world too, so don’t take that as a prediction. OK. Section 6.

Advice for Emerging Markets

DASH FROM MONGOLIAGood morning, Warren, and Greg, Ajit, thank you so much for hosting this event. It’s good to be here. My name is Dash, and I’m from the great country of Mongolia. A little bit of background about my country. Mongolia is an emerging market and a landlocked country sandwiched between Russia, and China. But we are reaching history, and minerals, and have a full democracy, and a growing economy. Last week, we hosted our second annual Mongolia Investor conference in New York to attract investors like yourself. I know you needn’t give advice informally to government leaders such as South Korea, China, and India. What advice would you give to government business leaders of emerging markets like Mongolia to attract institutional investors like yourself? It would be great if you had long-term plans for exposure to emerging markets as a hedge or an opportunistic investment. Lastly, I welcome all of you to Mongolia, and my country’s folks would be very happy if you could make it to our Economic Forum this July.

WARREN BUFFETTThank you. Yeah, I have trouble planning a trip to Council Bluffs, which is just a few miles from here, but it takes an optimist. Actually, I met a fellow here at the annual meeting probably 20 years ago or more who did a lot of Mongolia, and he did very well in Mongolia, and actually moved there for quite a while. I would say that if you’re looking for advice to give the government over there is to develop a reputation for having a solid currency over time. I mean, we don’t really want to go into any country where we think there’s a chance, I mean, a significant probability of runaway inflation. It’s just too hard to figure.

WARREN BUFFETTThe other people figured out ways to make money in hyperinflationary situations, but that’s not our game, and I don’t think I’d play it well. So, that would be a factor with us. The chances are we won’t find anything in Mongolia that fits our size requirements aside from that. But like I say I think my friend that I met here 20 years ago has done very well in Mongolia. If the country develops their reputation for being business-friendly, and currency-conscious. You know, I think that bodes very well for the residents of that country, particularly if it has some other natural assets that it can build around. I don’t know that much about the minerals there or anything of the sort, but I mean, who would have bet on the United States in 1790? We didn’t have to have perfection. We just had to be better than the other guy for quite a while. We started out with nothing, and we ended up with close to 25% of the world’s GDP, faster growth rates, generally sounder recurrences, and all kinds of things. So I wish you well. OK, Becky.

Private equity “competition”

BECKY QUICKThis question is from Peter Shen in New Jersey. It’s for Mr. Buffett and Mr. Jain. In recent years, large private equity firms like Blackstone, Apollo, and KKR have aggressively expanded into insurance, raising permanent capital, managing float, and aiming to replicate the model that Berkshire pioneered decades ago, given that these firms are now directly competing for insurance assets, often using higher leverage and more aggressive investment strategies, how do you view their impact on Berkshire’s insurance operations and underwriting discipline? Do you believe that the private equity model poses risks to policyholders in the broader financial system, and has this competition made it more challenging for Berkshire to find, and price insurance opportunities safely, and profitably today?

AJIT JAINOK. Yeah. Part of the question is very easy. There’s no question that private equity firms have come into this space, and we are no longer competitive in this space. We used to do a fair amount in this space. But in the last three to four years, I don’t think we’ve done a single deal. Now you are to separate this whole segment into two separate segments. One is the property casualty end of the business and the life end of the business. The private equity firms that you mentioned are all very active in the life end of the business, not the property casualty end of the business. You are right in identifying the risks these private equity firms are taking on both in terms of leverage, and in terms of credit risk, and while the economy is doing great, credit spreads are low. These private equity firms who’ve taken the assets from very conservative investments, and I wouldn’t say high octane, but they’ve certainly invested these assets in situations where they get a lot more return on the investment, and as I said, as long as the economy is good, and credit spreads are low, they will make money. They’ll make a lot of money because of leverage. However, there is always the danger that at some point, the regulators might get cranky, and say, you know, you’re taking too much too much risk on behalf of your policyholders, and that could end in tears. We do not like the risk-reward that these situations offer, and therefore, we put up the white flag, and said, you know, we can’t compete in this segment right now.

WARREN BUFFETTThere are people who want to copy Berkshire’s model, but usually they don’t want to copy it by also copying the model of the CEO having all of this money in the company forever. I mean, they’ve got a different equation. They’re interested in—and that’s capitalism. But they have a whole different situation, and they probably have a somewhat different fiduciary feeling about what they’re doing. Sometimes it works, and sometimes it doesn’t work. If it doesn’t work, they go on to other things. If what we do here at Berkshire doesn’t work, I spend the end of my life regretting what I’ve created. So it’s just a whole different personal equation. There is no property casualty company that can basically replicate Berkshire that wasn’t the case at the start. I mean, at the start, we just have National Indemnity a few miles from here, and anybody could have duplicated what we had, but that was before Ajit came with us in 1986, and at that point, the other fellow should have given up. Yeah, Station 7, please.

Advice for young investors

MARIEHi, my name is Marie. I’m from Melrose, MA Thank you for the time today. As a young person interested in investing like myself. I would love to hear your insights, Mr. Buffett. What were some pivotal lessons you learned early in your career, and what advice do you have for young investors who are looking to develop their investment philosophy? Thank you.

WARREN BUFFETTThose are good questions. I wish I thought of them myself earlier in my life. Who you associate with it’s just enormously important, and don’t expect you’ll make every decision right on that. I mean, you’re going to have your life progress in the general direction of the people that you work with, that you admire, that become your friends.

WARREN BUFFETTI mentioned a few fellows who have died in the last couple of years. Well, all of those people were people, if they were working together on something ten-thousandth the size of Berkshire, I mean, they’d be the kind of people you choose. There are people who will make you want to be better than you are, and you want to hang out with people who are better than you are, and that you feel are better than you are, because you’re going to go in the direction of the people that you associate with, and that’s something you’ll learn.

WARREN BUFFETTOf course, you’ve learned late in life. It’s hard to really appreciate how important some of those factors are until you get much older. But when you’ve got people around you, like Tom Murphy, Sandy Gottesman, and Walter Scott, then you’re just going to live a better life. If you just go out and look, and somebody is just making a lot of money, and decide you’re going to try, and copy them or something of the sort. So I would try to be associated with smart people, too, where I could learn a lot from them.

WARREN BUFFETTI would try to look for something that I would do if I didn’t need the money. I mean, what you’re really looking for in life is something where you’ve got a job that you’d hold if you didn’t need the money, and I’ve had that Charlie out for a very, very long time. All the fellows that I named had it. Every one of those I named, always did more than their share, and they thought like they never sought more than their share of the credit. They just behave the way you’d like anybody you work with, and when you find them, you treasure them, and when you don’t find them, you still keep doing whatever causes you to eat or enables you to eat but you don’t give up on looking around, and you will find people do wonderful things for you.

WARREN BUFFETTSo, I mentioned earlier that you know, going down to GEICO, and knocking on the door when the door was locked. I mean, who knows what was behind that doorway? I went in, and in 10 minutes, I found the man who was going to be just wonderfully helpful to me. Of course, if somebody’s going to be helpful to you, you want to try to figure out ways to be helpful to them so you get a compounding of good intentions and good behaviour, and unfortunately, you can get the reverse of that in life, too.

WARREN BUFFETTI was lucky to have a good environment for living that kind of life, and other people, you know, have a whole different environmental situation, they have to overcome it. But don’t feel guilty about your good luck if you’ve got it. If you live in the United States, there are 8 billion people in the world, and there are 330 million in the United States, you’ve already won the game to a great degree, and then just keep making the most of it. But you don’t want to associate with people or enterprises that ask you to do something or tell you to do something that you shouldn’t be doing. That’s one of the problems.

WARREN BUFFETTI mean, different professions select for different types of people. It’s interesting to me that in the investment business, many people get out of it after they’ve made a pile of money. If you really want something that you’ll stick around for, whether you need the money– Greg doesn’t need the money, Ajit doesn’t need the money, remotely, but they enjoy what they do, and they’re so damn good at it. I’ve had the advantage of seeing how that works over time. The best manager I ever knew, and there’s a lot of contention for who that would be, but actually was Tom Murphy Sr, who lives in his almost 98, and I’ve never seen anybody who could get the potential out of other people more than Murph.

WARREN BUFFETTIf you want to become a better person, you want to work for Tom Murphy, and there are all kinds of successful people who really don’t bring that to the party. I’m not saying that’s the only way to succeed. I think it’s the most pleasant way to succeed for sure. The Berkshire experience is pretty dramatic. I mean, to operate with Sandy Gottesman from 1963 until he died a couple of years ago, Walter Scott for 30 years. You really can’t miss it. You’ll learn all the time. You’ll not only learn how to be successful in business, you’ll learn how to be successful in life. So, that’s my recommendation, and for some reason, apparently, you live longer too. It’s pretty amazing, I mean, these people I’m talking about, including myself, I mean, I’d like to attribute it to this, and a few other things, but I think a happy person lives longer than somebody that’s doing some things that they don’t really admire that much in life. OK. Let’s move on to, I guess, it’s Becky next.

Purchaeses in the recent market volatility

BECKY QUICKThe first quarter ended March 31st, and it did show that Berkshire’s cash pile expanded from the end of last year. But the greatest market turmoil came in April. Martin Devine, a shareholder from Scotland who is attending the meeting today, wants to know, “Has the recent market volatility presented Berkshire with opportunities?” Martin just wrote in an addendum in the last 40 minutes or so, pointing out that you mentioned Berkshire almost invested $10 billion recently and wanted to know if you could talk more about that.

WARREN BUFFETTI can give you a good answer to the second part, which is no. But $10 billion wouldn’t have done that much. That’s the other side and another side of it. What has happened in the last 45 days, 100 days, whatever you want to pick up, whatever this period has been, it’s really nothing. There have been three times since we acquired Berkshire that Berkshire has gone down 50% in a fairly short period of time. Three different times. Nothing was fundamentally wrong with the company at any time, but this was not a huge move. The Dow Jones average hit 381 in September 1929. It got down to 42, so that’s by going from 100 to 11. This has not been a dramatic bear market or anything of the sort. I mean, as I pointed out, I’ve had 250 trades per day for many years. I’ve been old enough to trade stock. I’ve got 17,000 or 18,000 trading days. There have been plenty of periods that are dramatically different from this.

WARREN BUFFETTI mean, the day I was born, the Dow Jones was 240, and that was August 30th, 1930, and between that and the low, it went from 240 to 41. So, if people think that it made a really major change, it didn’t. If it had gone up 15% instead of down 15%, people would take that with remarkable grace. But if it makes a difference to you whether your stocks are down 15% or not, you need to get a somewhat different investment philosophy. The world is not going to adapt to you, you’re going to have to adapt to the world.

WARREN BUFFETTThe world is not going to adapt to you, you’re going to have to adapt to the world.

WARREN BUFFETTYou will see a period in the next, certainly in the next 20 years, you’ll see a period that will be in. Somebody in the market described it one time as a “hair curler” compared to anything you’ve seen before. I mean, it just happens periodically. The world makes big, big, big mistakes, and surprises happen in dramatic ways. The more sophisticated the system gets, the more the surprises can be out of the right field. That’s part of the stock market, and that’s what makes it a good place to focus your efforts. If you’ve got the proper temperament for it, and a terrible place to get involved. If you get frightened by markets that decline and get excited when stock markets go up, I don’t mean to sound particularly critical. I mean, I know people have emotions, but you’ve got to check them at the door when you invest. OK. Station 8, please.

Major setbacks or low points in life

PETER CHANGood morning, Mr. Buffett, Mr. Greg, and Mr. Ajit. My name is Peter Chan. I’m from Shanghai, China. This is my first time attending this shareholders’ meeting. I would like to ask a question about the wisdom of life. Have you ever encountered any major setbacks or low points in your life, and how did you get through, and overcome them? Thank you very much.

WARREN BUFFETTWell, everybody gets setbacks, and some people have particularly bad luck in that respect, and others get through with fairly minor setbacks. Charlie had setbacks. I had setbacks, and it’s part of life, and they’re not fun. I don’t have any great advice for you about having the time of your life while you’re having some major setbacks, but it comes with a lifetime. You certainly have a setback when you die. So everybody’s got setbacks guaranteed to them. But some people get, and I mean, it is no laughing matter in a sense, because people get extraordinary bad luck, and other people get extraordinary good luck.

WARREN BUFFETTUsually, the people who get good luck don’t really think it was so much luck as themselves. Think that you’re less likely to have it in terms of medical problems. In terms of, you know, various things in life. I mean, you were born at a good time. If you look all the way through the history of China, when would you rather have been born? You know, 100 years ago, 500 years ago, a thousand years ago or now? You know it’s just hands down. You’d be lucky. If I came from 20 generations of shepherds, I think I get kind of tired of my life just looking at these sheep every day. But you know, we can sit here, and I can watch Nebraska. Not quite play the same game of football that we played 20 years ago.

WARREN BUFFETTBut I mean, everything in life has been made so much better that you’ve got to figure that you do a lucky straw by staying in the womb for a couple hundred thousand years, and then just emerging it at the right time. So I would focus on the things that have been good in my life rather than the bad things that have happened. Bad things do happen, but it can often be a wonderful life. You could get terrible breaks in it. So far, that really hasn’t happened. But it happened with some of my friends, but he gets some bad breaks from time to time. But for 94, I’ve been able to drink whatever I want to drink.

WARREN BUFFETTThey predict all kinds of terrible things for me, but it hasn’t happened yet. If you look at what pro football players are making now, and everything compared to what they were making 30 or 40 years ago, you can say, well, isn’t that wonderful? But if you look at the lifespan of professional athletes, after a while, you get to decide that you’re better off if you really weren’t the first one chosen to be on the baseball team or the basketball team, or anything else.

WARREN BUFFETTCharlie, and I, and I think I speak for the others to some extent, that we never did, we never really exercised that much or did anything. We have been carefully preserving ourselves for years. So look at the bright side of things to the extent that you can. You’re lucky enough you’re here today. You’re healthy, and you come from a long distance, and you’re getting a chance to learn more about something that interests you, and compare that with the situation a couple of hundred years ago that you would have been offered. So anyway, that’s enough moralizing. OK, Becky.

Autonomous vehicles and GEICO

BECKY QUICKThis question comes from Himanshu Bindal for Ajit and Warren. “Autonomous vehicles are already driving across roads in American cities with no driver involvement. How do Warren, and Ajit think about any disruption risk from these autonomous vehicles to GEICO’s auto insurance business, which is built around understanding, and underwriting human drivers? Wouldn’t what we call auto insurance today just become a product liability for autonomous vehicles and autonomous software companies?

WARREN BUFFETTWell, Ajit.

WARREN BUFFETTYeah, we expect a change in all our businesses and good thing we did— Charlie pushed me into it, but if I’d settle for being in New England textiles, you know, and even though it worked well for 70 years or so prior–the world changes. If the game didn’t change at all, it really wouldn’t be very interesting. If every time you swung the baseball, you hit a home run in the game, it wouldn’t be interesting. If every time you hit a golf ball, you had a hole-in-one, it wouldn’t be interesting. So the fact that there will be things you have to think about all the time as you go along, and you’ll make mistakes, and all that, and then that’s really part of the fun. I mean, your brain would turn to mush if you didn’t have a few problems now, and then.

WARREN BUFFETTSo, auto insurance will change, although it’s remarkable how little it has changed. But it’s only been around since, you know, for relatively a short time. Who knows what we’ll be doing in transportation a hundred years from now? Going back a couple of hundred years ago, who could have predicted the United States would look like what it does, and people would move like they do, and people would enjoy themselves like they do? I mean, it’s a dynamic world, and the biggest thing we have to worry about, unfortunately, is that we’ve learned how to destroy the world.

WARREN BUFFETTWe’ve got this wonderful world, which now we know that there are eight countries that, and probably a ninth coming, that can destroy it. We don’t have what I would consider necessarily the perfect people leading each one of the nine or some of the nine countries. When Einstein came up with the E=mc² in 1905. He didn’t dream of the fact that mass could be converted into energy in a way that would change the world.

WARREN BUFFETTWhen I was born in 1930, knowing about the law of physics that Einstein had come up with 25 years earlier, nobody, to my knowledge, had thought about what can this do to change warfare in the future. Literally, it wasn’t thought. Einstein didn’t think about it at that point, and then in 1939, Roosevelt got a letter around the month before Germany moved into Poland. He then got it around August 1st. The most famous letter in history was from Leo Szilard. Leo Szilard couldn’t get his letter in front of Roosevelt, because whoever heard of Leo Szilard? But he got Einstein to sign it.

WARREN BUFFETTRoosevelt probably understood about as much about physics as I do, so he didn’t understand it. But he understood that Einstein signed. So he calls in—General Groves may not have been general then—and said we should do something about this, and all we did was learn how to destroy the world, and we needed to do it. Germany had Heisenberg. He looked like he was ahead of us, and we couldn’t put that genie back in the bottle.

WARREN BUFFETTThe world does change, and we’ve got wonderful things. But we have a guy in North Korea. If we criticize his haircut, who knows what he might decide to do? What does North Korea need nuclear weapons for? I mean, can that be a good thing in the world? But they’re not going to go away. So it’s a world of change, and we are enjoying incredible change that’s contributed to everybody in this room living so much better than people were living a couple of hundred years ago. We haven’t changed human beings very much so far. We’ve certainly changed weapons of mass destruction but we haven’t made much progress with the human race.

WARREN BUFFETTWe’ll see what happens with that, but in the meantime, we’ll see changes in auto insurance, too, of course. That will be more, and it is easier for us to deal with it than it was when we had to deal with the problems of turning textiles in New England, and you deal with the world as it develops, and like I say, everybody here is living in the luckiest period. Enjoy your luck, and you still try to figure out the answers to what’s going to happen, and all insurance as we go along, we’ve done pretty well. There are a few big problems in insurance, and I don’t know how the insurance industry adapts to them, particularly, but that makes the game interesting.

AJIT JAINI’d just like to add we talked about the shift to product liability into protection for accidents that take place because of an error, in terms of how the product was designed or supplied. The only thing I want to add is in addition to that shift, I think what we’ll see is a major shift where the number of accidents that take place and need to be provided for will drop dramatically because of automatic driving. But on the other hand, the cost per repair every time there’s an accident. The cost of repairing, and bringing everything back to where it used to be would go up very significantly because of the amount of technology that’s going into the car. How those two variables interact with each other in terms of the total cost of providing the insurance, I think, is still an open issue.

WARREN BUFFETTI’ll give you two interesting figures to ponder. When I walked into GEICO’s office in the 1950s. The average price of a policy was around 40 bucks a year. It varies all over the law depending on location. It’s pretty easy to get up to $2000, and depending on how urban your areas are, and everything, you can get them considerably higher. During that same time, the number of people killed in auto accidents has fallen from roughly six per 100 million miles, rather than a little over one.

WARREN BUFFETTSo cars become incredibly safer, and it costs 50 times as much down or thereabouts to buy an insurance policy. So, when people talk about the developments in car driving and all that sort of thing, it’s a lot easier sometimes. I mean, the Buck Rogers aspect of it, people look at it, but they don’t actually think of what really happens to the math of the business. The auto insurance industry has been a huge growth industry, and for that matter, homeowners’ insurance prices in Nebraska have doubled in the last 10 years. Adjusted for general inflation, and convective storms.

WARREN BUFFETTIt just going on to terror, and it is still unprofitable to write home homeowners insurance in Nebraska after doubling the price in the last 10 years. So, it’s very hard to predict what these big changes mean, and you just have to keep thinking all the time, but you don’t want to read some research report that says the world’s coming to an end or the world’s going to be wonderful because of this or that. There are about 50 other developments going on at the same time that you need to think about, and that you need to keep observing as you go along. You never reach an answer in this business. You reach a point of action that you take but we try to get into as high probability things as we think we can do, and play the game in the same way, but it will be different than you think.

WARREN BUFFETTYou should wake up every morning, and think about that, too, if you’re in the business of managing businesses.

Operating earnings

GREG ABELWarren, as we approach the break. Would you like to address the operating earnings?

WARREN BUFFETTOh, yeah. We released our 10-Q this morning. We always try to do it on a Saturday, so nobody gets a jump on other people. We just have three simple charts. You’ll see that our insurance underwriting income was down dramatically for the first quarter, and last year was as good a year as you’ll see in insurance. And it’s always unpredictable insurance, but everything broke our way. The insurance industry’s way last year, prices are down this year. Risks are up this year. So, you don’t have to figure out what the answer is on that. We do have unusual advantages in the insurance business that can’t really be replicated by our competition.

WARREN BUFFETTThat doesn’t mean they aren’t trying to get advantages we don’t have. But we’ll try to replicate anything that seems better. I wouldn’t talk about her insurance business as much as I do unless I really thought we had some really permanent advantages in a very, very large industry. We just announced within the last 24 hours that we, Zurich, and Chubb, have arranged a joint operation to be the writer of really large sums that very few people can do.

WARREN BUFFETTAnd of course, we’ve got to write about the right price in terms of liability. But we can do that sort of thing without blinking, and anybody who wants to do it wants to get us in it. So anyway, our investment income did not change that much because we have a float that grows a little bit, which gives us more money for investment, and then we have retained earnings, which grow. So we would expect in a year to have like 40 billion or more that we’ll build up investments unless we find things to do with it.

WARREN BUFFETTSo the investment income rates on treasuries are less than– they were short-term bills, I should say or less than they were before. So you had that negative effect pulling it down, but not that much, and we had more money. So we came up with a little more in the way of earnings. The railroad is earning a little more than last year. But it’s not earning, but it should be earning at the present time, and that’s solvable, and it’s getting solved, and it’s still an incredible asset for Berkshire.

WARREN BUFFETTThe energy company last year was having particular problems, and those were absent this year. So those earnings are up, and then among our range of general businesses, they were pretty much a push, and I think you did a little calculation the other day on how many were up, and how many were down.

GREG ABELOf our 49 that we measured closely, 21 or up, and 28 were down. So you can tell it was really a mixed quarter when you go across the non-insurance operating businesses.

WARREN BUFFETTThe next slide. I’m getting a five-minute warning here, but for the long ball now. It shows our financial condition, which continues to hold a lot more. Cash, and US. Treasury Bills, I would like, but that’s simply a question of what opportunities occur, and if you get real opportunities every five or six years, you know, you have to be patient. Charlie always pointed out that we made most of our money. I’m above about eight or nine ideas over 50 years, and we talked about it every day, and we read every report, and we did everything else but if you think you can get an idea day from listening to your Frederick Booker or doing a lot of reading of the financial information published, forget it, because every now, and then you get extraordinary opportunities, and most of the time, you don’t have much of an edge. So, we also have on that thing our float, which continues to build. There’s no property casualty company that has our float, Ajit?

AJIT JAINYeah, clearly we are head and shoulders above anyone else.

WARREN BUFFETTYeah. So, that is money that, as long as we’re writing it in an underwriting profit, is absolutely free money, and we would expect that over a 50 or 100-year period, we would be able to say the same thing. But there will be years when you have a very bad underwriting record, and it will lead to the float earnings. But so far in the last 20 years, I think we’ve only had one underwriting loss?

AJIT JAINIf you look at the entire range, including life insurance, our cost of flow to 2.2% negative, that means we’ve got the float plus somebody has given us 2.2% of that of cash.

WARREN BUFFETTYeah, it’s like running a bank where people leave their money with you, and you pay a minus 2.2%, and you don’t have any check clearing or anything else. We run our business actually with a different mindset than any other P&C company, I think, probably, in the world.

WARREN BUFFETTI wouldn’t be talking about it if I thought they duplicated. The final pages on share repurchases, and clearly we haven’t made any, we have not made share repurchases so far this year. If Berkshire buys Berkshire shares, and repurchases, we’ve now paid more than you will pay. If you buy Berkshire shares. I don’t think people generally know that, but there is a tax that was introduced a year or so ago where we pay 1%, and that not only hurts us because we pay more for it than you do pay. It’s a better deal for you than for us.

WARREN BUFFETTBut it is actually for some of our investing companies quite substantially. Tim Cook has done a wonderful job. I mean, really wonderful job running Apple. But he spent a hundred billion dollars roughly in a year repurchasing shares, and there’s a 1% charge attached now, so that’s a billion dollars a year. He buys Apple stock which we like compared to what you pay. It doesn’t sound like much, but well, a billion dollars sounds like a lot still. But there are people that want to increase that particular rate dramatically, and we won’t read about it or anything like that, but it’s slightly less attractive than it was before, and we will only buy in our shares if we think that they are almost certainly underpriced as valued very conservatively.

WARREN BUFFETTWe get that opportunity occasionally, but the higher that charge goes that the federal government charges us for doing it unless we are able to do a repurchase. So on that happy note, we will rejoin at 11:00, and then we’ll continue until 1:00. In the meantime, enjoy yourself, and I think all our stores are still open, So, ring the cash register.