伯克希尔·哈撒韦BRK-B

I'm Warren Buffett, and that's me with Charlie in an unscripted and spontaneous photos taken in Savannah, Georgia early in 1982. Our wives could tell us apart as long as we wore nametags. When Charlie and I first met in 1959, it was if twins who had been separated at birth were reunited. But there were a few important differences between Charlie and me that many people missed. Let me elaborate.

For one thing, I was only interested in whether things worked. Charlie wanted to know how things worked. I would turn on a switch and if the TV or light bulb went on, could not care less about what had caused that miracle. Charlie, however, would want to understand every aspect of how the generator worked, how electricity traveled to his home, the merits of AC versus DC, whatever. You could say that Charlie understood electricity better than Thomas Edison ever did.

Like his hero Ben Franklin, Charlie wanted to understand everything and he pretty well succeeded. Additionally, Charlie liked to design things. When we met in 1959, he was designing and building the house in which he lived throughout his life. He once wanted to design a home for me in Santa Barbara on a piece of property Berkshire inherited, fat chance, in 1958. I bought the house I now live in, but I would have been happy with any of 100 or more houses as long as it was in the general neighborhood where I was done renting.

Of course, I wanted my wife to waghen. I wanted to have room for 4 or 5 kids. But what it looked like inside, outside was irrelevant. The difference, of course, was of supreme importance to Berkshire. Charlie's architectural thoughts led to the Berkshire Through a small partnership, I had bought control of Berkshire Through a small partnership, I had bought control of Berkshire early in 1965.

Charlie then didn't have a penny invested in Berkshire, but he immediately told me my purchase was just plain dumb, which it was. Charlie then did, for me, what needed to be done to correct my error. And over time, we worked together to achieve his vision. Charlie, in effect, became the architect of today's Berkshire. The architect is the person who dreams of and designs and finally supervises the construction of great structures.

The carpenters and the roofers, that's me, are needed, But the architect is the genius who provides the blueprint. Berkshire has become a great company with a unique group of owners. The directors of Berkshire are the trustees of the structure Charlie designed that lives beyond his lifetime and will live far beyond mine. I'm now going to introduce these directors and give you a short Q1 report and the outlook for the company. After that, we will take your questions.

Please turn up the lights, and I hope you'll join me in applauding Charlie Munger, the architect of Berkshire. Yeah. Yeah. Don't worry. I'll call you clapping on Charlie.

I mean, because In addition, well, we have, 1st of all, Greg Abel, a director and And a Jain setting a stimulus insurance. And moving then to this back of this first section, if each of the directors there would remain standing till we finish, we'll we'll go alphabetically down the line. And we've got Howard Buffett. We have Susan Buffett. Steve Burke.

Ken Chenault, Chris Davis, Sue Decker, Charlotte Diamond, Tom Murphy Junior, Ron Olson, Wally Weitz, and Merle Whitmer. Okay. There are 2 people I would like to thank and then we'll get on to the brief description of the results of the Q1. First of all, I'd like to thank Melissa Shapiro who put this whole event together. You can't imagine the work that goes into it.

She just reported to me that we set a new record for See's Candy. I think they brought along 6 tons and they will sell out. And one thing I do want to mention, we have only one book at the bookstore of the bookworm this year. Normally, we have about 25, but we have poor Charlie's Almanac 4th edition. And I think we sold about 2,400 of them yesterday.

And that will be the only book. Next year, we'll go back to having our usual selection. But we thought we would just turn it over to Charlie this year. And then, I would like to introduce one further person, and that's, the person who put that movie together. And you can't imagine the amount of work it is because, for example, on those scenes that we've used from the past, if they involved Hollywood stars or various people, we needed to get permission all over again to show it because we're they told them originally we would only show it within the confines of our auditorium here.

And of course it went out on CNBC. And you just can't imagine how much effort, but also the great cooperation we got from all those desperate housewives and Jamie Lee. With the desperate housewives, we had to get Disney's okay. And that was easy to get. But running down 5 desperate housewives, That one came in toward the end.

But the job of putting this together has been handled by the same fellow that handles us, been doing these for years years years years. And I just would appreciate it if you could just put the spotlight on Brad Underwood for just a minute. Okay. We put out some results for the Q1 this morning at 7 o'clock our time. And some new sharp eyed analysts and press people already picked up

1 or 2 items from it, which I'm sure

we'll get some questions on later. But if we could start out with Slide number 1, which is should be showing now, you'll see that in the Q1, the way and we talk about operating earnings at Berkshire, we've explained that many times. That's why we think these figures that we give you are the most descriptive of what's really going on in the business and take out the wild swings in the market that otherwise just and that was reporting big earnings 1 quarter and big losses another quarter. We pay no attention to those at Berkshire. But you will see that we had a better than average quarter.

And Ajit Jain wants me to point out to everyone that you cannot take the insurance earnings of the Q1 and multiply by 4. It just doesn't work that way in insurance. And while we insure storms around the world, the major storms, for example, that would affect our earnings would be probably number 1 would be something that went along the that came in at the wrong place from our standpoint and that just kept going up the East Coast. And that's our that's our number one risk as we evaluate things. But we're in all kinds of risks.

There can be an earthquake tomorrow. There can be an earthquake 10 years from now. And then they're going to, you know, we're in that sort of business, but the Q1 does does hit the should be our best quarter, certainly shouldn't be our worst quarter. The most likely

quarter to be the worst quarter

is the Q3. But anything can happen in insurance. But fortunately, nothing much happened in insurance during the Q1. So we had much improved earnings in insurance underwriting and then our investment income was almost bound well, it was almost certain to increase. And I said that in the annual report because yields are so much higher than they were last year.

And we have a lot of fixed short term investments that are very responsive to the changes in interest rates. So that figure is up substantially and I can predict that that one will be up for the year. We've got more money to invest, as we'll get to in a minute. And that's fairly predictable. So that number will be up.

When you get into the railroad, the railroad earnings, we're down modestly. And but we should not immediately, but we should be earning somewhat more money than we are earning under present traffic conditions and then traffic conditions could also hit the earnings. It's a potential earnings of the railroad. And if you want, every Wednesday, you can get car loadings from the previous week. And I'll regard those a little deranged if you do get them, but I get them every week.

They're available and you'll see that car loanings have been running for the industry have been running down modestly. And these earnings were as is expected, but we should earn somewhat more money than that on the equivalent amount of car holdings. And within the energy company, we had better earnings, but our earnings were distorted. They were affected by conditions that I wrote about in the annual report and we'll undoubtedly discuss more this morning. But off a low base of last year, they were up somewhat.

And so you get down to the final figure and 11,200,000,000 is quite an improvement from last year. But we would expect our earnings should go up modestly from year to year because after all, we're retaining like $37,000,000,000 last year of earnings. So if we put $37,000,000,000 more, you left it with us. We should do something that's satisfactory. And the goal of Berkshire, economic goal, is to increase the operating earnings and decrease the shares outstanding.

It's that simple to describe. It's not quite so simple to pull off necessarily, but that's what we're attempting to do. And if we'll turn to slide 2, please. I've got the history and I just picked the pre pandemic year when we hit $24,000,000,000 and then we fell off in the first year of the pandemic. And then as you see, we've moved up from $27,000,000,000 to $30,000,000,000 to $37,000,000,000 And interesting thing about these earnings is they're after depreciation and amortization and taxes and all that sort of thing.

So you can figure that essentially Berkshire has a little over $100,000,000 per day including weekends and holidays coming in to deploy. And we've set out many times that we're attempting to deploy that money, but we have that responsibility. And sometimes, if you'll turn to the next page, well, you'll see how that's built up the shareholders' equity so that Berkshire had at March 31, dollars 574,000,000,000 and through retaining earnings and we've been retaining earnings ever since we took control of Berkshire Hathaway except one day, as I remember, I think it was maybe 1968 or 9, The directors declared a $0.10 a share dividend and I think I must have been in the restroom or something at the time. So, if you leave out that period of madness, we've been retaining our view. We've been saving your money, putting it to work.

And sometimes we've done things that were big mistakes. And but never we never get close to fatal mistakes and every now and then we do something that really works. And as Charlie had pointed out in the past, you know, it's really it's probably been half a dozen over 57 or 58 or whatever it would be. Really important big decisions. And there's been nothing close to fatal.

So that continues to be the guideline. And we have accumulated $571,000,000,000 and I couldn't help but look at who's second. And JPMorgan had $327,000,000,000 at year end and they're up to 338,000,000 I believe on the end of the quarter. And but they pay significant dividends, they repurchase shares, they've got a business that earns better returns on equity, but they don't pull it and they shouldn't. They don't pull it back exactly like we have.

And it, this does show what can be done, really without any miracles. If you save money over time and we have a group of shareholders, We have a group of partners originally, Charlie and I did, that wanted to save money and left their money with like in that norm you just saw. You saw Eddie and Dorothy Davis. And the Davis family and the children and the grandchildren periodically did some other things with the money, but they also basically left it with us. And we were a savings vehicle and they were able to do live very well.

But they weren't trying to live like the kings and queens of earlier capitalism and used to build the houses in New England and have a servant that's type people that are attracted. There's nothing wrong with it, but they just go someplace else. And they are spending sort of unbelievable sums after a while by the standards of the past. And our people, nobody, we have nobody that's a miser or a hoarder or anything like that in our group. They live very well.

But the math of compounding and a long, long runway have done wonders and we will talk a little later. Right before lunch, we'll give an illustration of that of what can be done with that sort of philosophy. So our cash and Treasury bills were $182,000,000,000 at the quarter end and I think it's a fair assumption that they brought probably about 200,000,000,000 at the end of the this quarter. We'd love to spend it, but we won't spend it unless we think we're doing something that has very little risk and can make us a lot of money. And our stock is at a level where it adds slightly to value when we buy in shares, but we would really buy it in a big way.

Except you can't buy it in a big way because people don't want to sell it in a big way. But under certain market conditions, we could deploy quite a bit of money in repurchases. And as you'll see on the final slide, we have bought it in the last 5 years. We can't buy them like a great many other companies because it just doesn't trade that way. The volume isn't the same because we have investors and we and the investors the people in this room really they don't think about selling.

They probably I would hope many of you don't even check the price daily or weekly. The people who check the price daily have not made the money that the people who've forgotten about it basically have over the years. And that's sort of the story of Berkshire. We'll try to increase operating earnings and we will try to reduce shares when it makes sense to do so And we will hope for an occasional big opportunity. And we're quite satisfied with the position we're in.

So with that background, I think we'll turn it over to Becky Quick and we will alternate questions between Becky and those of you in the audience. And Becky, do you want to start with the first question?

Sure. Thanks Warren. Let's start just given what you mentioned there was some news that came out in the 10 Q this morning. It shows that Berkshire sold another 115,000,000 shares of Apple in this last quarter. That's Berkshire's largest holding.

And I think in that vein, we'll start with a question from Sherman Lam. He is a 27 year old Berkshire Hathaway Class B shareholder from Malaysia. And he asks, last year, you mentioned Coca Cola and American Express being Berkshire's 2 long duration partial ownership positions. And you spent some time talking about the virtues of both these wonderful businesses in your recent shareholder letter. I noticed that you have excluded Apple from this group of businesses.

Have you or your investment managers' views of the economics of Apple's business or its attractiveness as an investment changed since Berkshire first invested in 2016?

No. I would the but we have sold shares. And I would say that at the end of the year, I would think it's extremely likely that Apple is the largest common stock holding we have now. One interesting thing is that Charlie and I, looked at common stocks or marketable equities or the things that people love to look at as being businesses. And so when we own a Dairy Queen or we own whatever it may be, we look at that as a business.

And when we own Coca Cola, or American Express or Apple, we look at that as a business. Now, we can buy really wonderful companies in the market. As businesses, we can't buy all of them. I mean, all of the shares. We can't buy 90% or 80% or anything like that.

But when we look at Coca Cola and American Express and Apple, we look at them as businesses. Now there's differences in tax factors, there's difference in managerial responsibility, a whole bunch of things. But in terms of deploying your money, we always look at every stock as a business and we don't we have no way, no attempt made to predict markets. We have no attempt made to pick stocks. I went through many, many years doing the wrong thing.

I got interested in stocks very early and I was fascinated by them. And I wasn't wasting my time because I was reading every book possible and everything else. But finally, I picked up a copy of The Intelligent Investor in Lincoln and there was a few sentences in there that said much more eloquently than I can say it. But if you look at stocks as a business and treat the market as something that doesn't tell you, isn't there to instruct you, but it's there to serve you, you'll do a lot better over time than if you try to take charts and listen to people talk about moving averages and look at the Fed pronouncements and all of that sort of thing. And so that made a lot of sense to me then.

And the way I've been allowed to deploy it, Charlie and I talked about this, of course, constantly. It's changed over the years as the amount of capital we have and the kind of has changed and all of that. But the basic principle was laid out by Ben Graham in that book which I picked up for a couple of dollars and which basically said to me, you've been wasting your time now, but maybe you can use what you've learned or been reading about and put it to better use. And then Charlie came along and told me how to put it to even better use. And that's sort of the story of why we own American Express, which is a wonderful business.

We own Coca Cola, which is a wonderful business. And we own Apple, which is an even better business. But, and we will own unless something really extraordinary happens. We will own Apple and American Express and Coca Cola when Greg takes over this place. And

it's

such a simple approach that it's almost deceptive. Most things if you keep working harder and harder, you know, you learn a little more math or you learn a little more physics. But investments you don't really have to do that. You really have to have your mind set properly. So, we will end up unless something dramatically happens that really changes capital allocation, strategy.

We will have Apple as our largest investment. But I don't mind at all under current conditions building the cash position. I think when I look at the alternative of what's available in the equity markets and I look at the composition of what's going on in the world, We find it quite attractive and one thing that may surprise you but we almost everybody I know pays a lot more attention to not paying taxes than I think they should. We don't mind paying taxes at Berkshire and we are paying a 21% federal rate on the gains we're taking in Apple. And that rate was 35% not that long ago and it's been 52% in the past, when I've been operating.

And, it, the government owns the federal government owns a part of the earnings of the business we make. They don't own the assets, but they own a percentage of the earnings. And they can change that percentage in a year and the percentage that they've decreed currently is 21%. And I would say with the present fiscal policies, I think that something has to give and I think that higher taxes are quite likely and the government wants to take a greater share of your income or mine or Berkshire's, they can do it. And they may decide that someday they don't want the fiscal deficit to be this large because that has some important consequences and they may not want to decrease spending a lot and they may decide they'll take a larger percentage of what we earn and we'll pay it.

And we always hope at Berkshire to pay substantial federal income taxes. We think it's appropriate that a company, a country that's been as as generous to our owners. It's been the place. I was lucky, Berkshire was lucky he was here. And if we send in a check like we did last year, we sent in over $5,000,000,000 to the U.

S. Federal Government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, other income taxes. No social security taxes, no estate taxes, no It's up and down the line. Now that's that I would I would like to I hope things develop well enough with Berkshire that we say we're in the 800 club and maybe even move up a few notches.

It doesn't bother me in the least to write that check. And I would really hope with all that America has done for all of you, and it shouldn't bother you that we do it. And if I'm doing it at 21% this year and we're doing it at a higher percentage later on, I don't think you'll actually mind the fact that we sold a little Apple this year. Okay. Let's go to Section 1.

Hi, Mr. Buffet. This is Matthew Lai from China, Hong Kong. I'm running my less debt listing company called F Stop, and we are so grateful that you learn from you and you really inspire us. My question is besides the electrical car company, BRD, under what circumstances you will reinvest and reconsider to invest Hong Kong and China Company?

Thank you.

Well, our primary investments will always be in the United States. We do think it The companies we invest in the United States, American Express does business around the world and no company hardly does business around the world like Coca Cola. I mean they're they are the preferred soft drink. You know, something maybe like 170 or 180 out of 200 companies 200 countries. Those are rough approximations from a few years back probably, but that degree of acceptance worldwide is, I think it's almost unmatched.

I can't really think of any company that has it. American Express has a position in the credit card deal, which I think is extremely strong. And part of that was one of the directors part of the reasons for that is one of the directors that introduced a few minutes ago Ken Chenault. But it has strengthened dramatically over the last 20 years for a lot of reasons. So we will the BYD investment was a and well, we made the commitment in Japan, which I did 5 years ago and that was just overwhelmingly was compelling.

It was extraordinarily compelling. And we bought it as fast as we could. And we spent a year and you know we got a few percent of our assets in 5 very big companies but that's the problem of being our size. But you won't find us making a lot of investments outside the United States, although we're participating through these other companies in the world economy. But I understand the United States rules weaknesses, strengths, whatever it may be.

I don't I don't have the same feeling for for, economies generally around the world. I don't I don't pick up on other cultures extremely well. And and the lucky thing is I don't have to because, you know, I don't live in some tiny little country that has no, just doesn't have a big economy, but I'm in an economy already that has, you know, after starting out with a half a percent of the world's population has ended up with well over 20% of the world's output in an amazingly short period of time. So, I we will be American oriented. I mean, if we do something really big, it's extremely likely to be in the United States.

Charlie, in all those years, there's only 2 times he told me that this one is really, you know, it would always go along with me and say, well, when I was suggesting something, he said, well, this is really not that great, but but it's probably the best you'll come up with. So, I'll go along with the idea. But, Charlie twice has pounded the table with me and just said, you know, buy, buy, buy. And BYD was one of them and Costco was the other. And we bought a certain amount of Costco and we bought quite a bit of BYD.

But looking back, he already was aggressive, but I should have been more aggressive, in in Costco. It wasn't fatal that we weren't, but he was right big time in both companies. And I will I'm aware of what goes on in most markets, but I think it's unlikely that we make any large commitments in almost any country you can name, although we don't rule it out entirely. And I feel extremely good about our Japanese position and we'll have that, I don't know how many years. Greg will be sitting with that at some point, and we couldn't be happier with that.

But you really have to we really have a different outlook. And looking at while we look at your money, which we couldn't bear to lose, and we feel that we are very less likely to make any truly major mistakes in the United States than in many other countries. Okay, Becky?

This next letter to shareholders, Chairman Buffett noted the severe earnings disappointment experienced at Berkshire Hathaway Energy last year and expressed concern about earnings and asset values in the utility industry. Recognizing that investors are worried about climate change related expenses and that new uncertainties cloud the regulatory environment, the chairman suggested that some jurisdictions may adopt the public power model. There are now signs that policymakers in Utah stating citing state sovereignty may already be poised to move in that direction. The Utah legislature recently mandated state's right to serve as sole purchaser of energy from an in state power plant and under some circumstances purchased the power plant before it can be retired. The state utility regulator will be legally bound to prioritize public purchases of power and facilities that could include assets owned by Berkshire Hathaway Energy's Pacific Corp utility Rocky Mountain Power.

Will Berkshire, through BHE, continue to invest resources in jurisdictions where corporate assets may be subject to confiscatory state policies and actions? And how is Berkshire Energy working with officials in Utah to minimize potential corporate losses if and when state control is asserted over its electrical utility sector?

Yeah. I will let Greg join with me in the answer on this, but I would say our feeling is that Utah is actually very likely to treat us fairly whether the action is in granting appropriate rates that give us the return we expected, generally expected in terms of our own properties or if they decide for some reason to go to public power, I think they would compensate us fairly. In the 1930s, George Norris, a Senator from Nebraska just turned Nebraska into a public power state. And, our experience in Iowa would indicate that free enterprise has its roles and that we can run a privately owned utility company that will be more efficient for society than at least in most states people can do with public power. But what has happened is that there's going to be enormous amounts of money, enormous amounts of money spent on power.

And we've been we're if you're going to do it with with private owners, there's nobody better situated than Berkshire to satisfy the portion, but a large portion of the needs of the country and and we will do it at at a rate of return that is is not, you know, it's not designed to make us make us rich or anything like that. It's it's a sensible rate of return, but we won't do it if we think we're not going to get any return. It'd be kind of crazy. And we've seen actions in a few states where some of the costs associated with climate change are not being regarded as as cost that the utility shouldn't incur. Well, believe me, if it was publicly owned, they would have incurred it too, but but we will we'll do what society tells us.

And we have got the money and we've got we've got the knowledge to participate big in something that is enormously important for the country, but we're not going to do it. We're not going to we're not going to throw good money after after bad and feel. I don't worry about my understanding is and Greg can elaborate on this now immediately, but I don't regard Utah as being unfriendly to the idea of utilities being treated fairly. Charlie? Charlie, I'm so used to that.

I had actually checked myself a couple of times already, but I'll slip again.

That's a great honor, Ward. Yes, when we well, Warren, you touched on it initially in your letter relative to the challenges in the industry and then you've just alluded to the significant investment that has to go into the energy industry, the utility sector for many years to come. And I think if we start there, if I think of our different utilities, it will definitely come to Utah and Pacific Corp. But if you look at the underlying demand that is building in each of those utilities and the amount of dollars that are going to have to go in to meet that demand, it's absolutely incredible. So when you raised it in your letter, it's a really important issue.

We have to have a regulatory compact that works between if it's a public utility, it has to work in concert with the state Utah being an example or it ultimately becomes potentially a public power entity. So just to set the frame a little bit, if I think of Iowa, which you mentioned, and the underlying, we've made substantial investments there. It's been very consistent with both the public policy that the state and legislator wanted and they enacted very specific laws to encourage that. But that utility is more than 100 years old right now. And if we look at the demand that's in place for mid american Iowa Iowa utility over the next, say into the mid 2030s associated with AI and the data centers that that demand doubles in that short period of time.

And that happened and it took 100 years plus to get where we are today. And now it's going to double. And for and that will require substantial amounts of capital from the from Mid American and its shareholders. And how that will function is if we have a proper regulatory compact in place, which you've highlighted. If we then go to, say, Nevada, where we own 2 utilities there, and cover the lion's share in Nevada.

If you go over a similar timeframe and you look at the underlying demand in that utility and say go into the later 2030s, it triples the underlying demand and 1,000,000,000 and 1,000,000,000 of dollars have to be put in. Our rate base will literally go from it's not a modest level now, but you're talking probably an incremental $6,000,000,000 to $10,000,000,000 at least of rate base going into that type of entity which requires again alignment with the state and their policies and a proper recovery of our underlying both capital and a return on capital.

So when we come to

the wildfires, that's been a substantial challenge because it's the first time there's been a lot of discussion around one of our utilities, 1, experienced significant losses associated with the wildfires. What portion of those costs will be recovered? And that's really the dialogue we're in and does that properly, properly work. When I think of the wildfires, we're there's been many claims in a recent additional claim last week for $30,000,000,000 and it's we don't take that lightly, but it is an incremental claim to an already existing lawsuit that's in place. And when I think of Pacific Corp, we're in a place where 1st and foremost all the litigation will be challenged because the basis for it, At least we believe there's places where it's unfounded and we'll continue to challenge it.

And it will take many years to be resolved as Warren highlighted in the letter. But if you think of Pacific Corp and the litigation there, number 1, how we think and operate those assets have to change. Because we've had a we have worked with the states across all our states for many years with the fundamental goal to be to keep the power on. And our teams and our employees worked incredibly hard to keep the power on day in, day out through storms, Unfortunately, through the 2020 fires, the instincts were not to turn off the power. The instinct was to keep the power on to keep hospitals, fire stations responding.

It's not in their mind or at least culturally it wasn't in our minds to de energize. So the first thing we had to do was step back and say we've got to fundamentally change the culture, not just at Pacific Corp but across all our utilities. The first thing we have to recognize is that there's now going to be situations where we prioritize de energizing the assets. And that's completely different than how we've operated those assets as I've highlighted for 100 plus years. So we start with the culture.

We had to change that. The second thing is we've now changed our operating systems so that we can turn off the power very quickly if there's a fire that's encroaching. We will turn off our systems now and we'll go the minute the conditions are safe again. We'll re energize it. But we've had to do that.

And then the third thing is continuing to invest in a way that allows us to try to minimize the risk of the fire. But when you get back to Utah and Pacific Corp, the challenge we do have is within Pacific Corp as we go through both litigation and through continuing to operate that entity, it generates a certain amount of capital and profits that will remain in that entity and being reinvested back into that business. But fundamentally, as we go forward, we need both legislative and regulatory reform across the Pacific Corp States. If we're going to deploy incremental capital, make incremental contributions into that business. As Warren said, we don't want to throw good capital after bad capital.

So we'll be very disciplined there. But the reality is there are opportunities to both solve the legislative and regulatory solutions. And the best example we actually have and I think it's the gold standard across the country is Utah. So as Warren touched on, it's a state we're happy we're investing in. It is part of Pacific Corp.

So there's a certain amount of balance there as to how we do it. But in the last legislative session that existed, Utah actually passed a bill that does a couple of very important things. 1, it caps non economic damages on wildfire claims. So if you go back to the wildfires we have in Oregon and the claims you're hearing filed for, there's economic damages associated with them and those harms should receive the economic damages associated with that. But unfortunately, even though there's legislature and case law in Oregon that says, wildfire non economic damages should not be awarded.

There's very substantial non economic damages being awarded there. Utah took a very proactive position to say we will cap those non economic damages. And it creates an environment again, it's back to that is there an environment where you want to invest in? Yes. And then incrementally, they've created a very substantial fund.

It's literally called the wildfire fund for fires in Utah that will help facilitate both liquidity and the ability to resolve the situation. So Utah, we believe, including the legislation that a lot of other things came out of it, is the actual gold standard as we go forward. So very important issue for Berkshire Hathaway Energy. But at the same time, it is a Pacific Corp issue. The risk of regulatory compacts not being respected is a much broader one that will always evaluate and be careful how we deploy our capital.

But both Pacific Corp will manage through it and I see other very good and significant opportunities in Pacific Corp. I mean in Berkshire Hathaway Energy.

The return on the return on equity investment, it's been been promulgated and has been achieved over the years has been, particularly in recent years, well below the return on equity that has been achieved by American industry generally. And so the whether whether you earn x or x plus 0.5 percent or x minus 0.5 percent, That differs by state and some states are more attractive than others. But whether you earn x or go broke is not an equation that works. And, you know, we won't we won't put our shareholders money. They didn't give it to us to lose it all.

And they might like it if it's better when it's at plus a half a percent, the next minus a half a percent. But the electric utility industry will never be as good as I mean just remotely as good as you know the kind of businesses we own in other arenas. I mean you look at the return on tangible equity Coca Cola or American Express or to really top it off Apple. It's just a whole different game. But in utilities, the trade has been the compact has been that you get a modest return and climate change comes along and it causes away more fires, that's just the cost of doing business.

And it doesn't mean that we can't do things to mitigate, fires in the future and you can make different policies on it when you turn off the lights. But somebody's going to do, somebody's going to put up many, many 100 of 1,000,000,000,000, maybe in the 1,000,000,000,000,000, and climate change enters into that. And, it can be done through public power or it can be done through private enterprise to quite a degree, and we would be certainly good for $100,000,000,000 or more, but we're not going to throw good money after bad. Okay. Let's do Station 4.

Hi, I'm Joe visiting from San Francisco.

How do you think about

the role of technological advances especially generative AI on more traditional industries? Thank you.

Yeah. I made a mistake in calling on 4, but I'll get back to 2 later on. The, the, I don't know anything about about AI. But I do I do have I don't that doesn't mean I deny its existence or importance or anything of the sort. And and last year I said, you know, that we let a genie out of the bottle when we when we developed nuclear weapons and that genie has been doing some terrible things lately and the power of that genie is what scares the hell out of me.

And on the event, I don't know any way to get the genie back in the bottle and AI is somewhat similar. It's part of the way out of the bottle and it's enormously important and it's going to be done by somebody. So, we may wish we'd never seen that genie or may do wonderful things and I'm certainly not the person that can evaluate that. And I probably wouldn't have been the person that could have evaluated it during World War II whether we tested a 20,000 ton, a bomb that we felt was absolutely necessary for the United States and would actually save lives in the long run. But where we also had Edmond Teller, I think it was, it was on a parallel with Einstein in terms of saying you may, with this test, ignite the atmosphere in such a way that civilization doesn't continue.

And we decided to let the genie out of the bottle and it accomplished the immediate objective. But whether it's going to change the future of society, We will find out later. Now AI, I had one experience that does make me a little nervous. I'll just explain it that very, very recently, fairly recently, I I saw an image in front of my eyes on screen, and it was it was me and it was my voice and wearing the kind of clothes I wear and my wife or my daughter wouldn't have been able to detect any difference. And it was delivering a message that no way came from me.

So it when you think of the potential for scamming people, if you can reproduce images that I can't even tell that say I need money, you know, I'm, you know, it's your daughter. I've just had a had a car crash. I need $50,000 wired. I mean, scamming has always been part of the American scene. But this would make me, if I was interested in investing in scamming, it's going to be the growth industry of all time and it's enabled in a way.

Now maybe, obviously AI has potential for good things too but I don't know how you based on the one I saw recently, I practically would send money to myself over in some crazy country. So I don't have any advice on how the world handles it because I don't think we we know how to handle what we did with the nuclear genie. But I do think as someone who doesn't understand a damn thing about it, that it is it has enormous potential for good and enormous potential for harm and I just don't know how that plays out. I'd like to mention to Becky that Ajit will not be participating in the afternoon session. So if you could focus on any if there are insurance questions you want to ask, that'd be a good one.

Yeah. This next question is for both Warren and Ajit. It's from Ben Knoll, who's a Minneapolis shareholder, who's been a shareholder since 1995. And he says, in an interview this past year, Todd Combs said that in first meeting you in 2010, he told you GEICO is better at marketing and branding. Progressive is a data company, and data is going to win in the long run.

But it appears you did not prioritize data analytics at GEICO until a decade later when you made Todd CEO. As business units like GEICO age and need new strategic direction, I wonder if Berkshire's hands off management approach is a source of vulnerability. Will you please review your thinking on changes made at GEICO and explain how Berkshire is structured to react if the Berkshire CEO sees that a business unit is strategically off track? And Ajit, I hope you will continue to update us on yours and Todd's progress at remedying the data analytics shortcomings at GEICO.

Ajay, would you like to?

Yes. As Warren has pointed out in the past, One of the drawbacks that Geico is faced with. It hasn't been doing as good a job as matching rate with risk and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at Caicos for a few years now. We are trying to still play catch up.

Technology is something that is unfortunately a bottleneck. But there again, we are making progress. And equally importantly, we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data. So yes, I recognize we are still behind. We're taking steps to bridge the gap and hopefully by the certainly by the end of 2025, we should be able to be along with the best of players when it comes to data analytics, whether it's pricing, whether it's claims or any other factor that drives the economics of the insurance business.

I would add that equating rate with risk obviously is important in every line of insurance business. I mean that's what you're involved with us deciding whether a given rate offers us the chance of the probability that we will make a little money on it and that sometimes we're only risking losing a little and sometimes we're risking losing you as your mouse. But GEICO and Progressive has done a better job in that recently, but our fundamental advantage at GEICO of course is that we have lower costs than virtually anybody and that cost advantage has been dramatic. We've driven our underwriting expense ratio below 10% and there's there are probably just very, very, very few companies that can compete with us. So it isn't it's not in the least a survival question and it isn't even exactly a profitability thing, but you know, we would rather have x percent of the market than a half of x percent.

But we roughly, I think in the month of March, we were just, we didn't lose policyholders and we got $16,000,000 or whatever it is of them. And and we've got the lowest cost operations. So it's it's it's it's not a threat. It's not remotely a threat to survival. It's not a throat to it's not a threat to to even profitability.

But on the other hand, we would like to be growing with with something that is the best model around in the insurance business of delivering at a low cost and we now have a recognition that we didn't have back when Leo Goodwin started in 1930 6, but the same principle that worked then is that if you can offer somebody a good product cheaper than the other guy and and everybody particularly has to buy it. And it's a big business. You know, it's very attractive to be in and GEICO is a very attractive business and has got its lowest cost thing and it does have to do a better job of matching rate to risk. But our low costs have amassed the fact that for a while that we could do without progressing as much as we should have in the matching of rate to risk. And now Todd has been working intensively at that and he's made a lot of progress but there's still work to be do to be done.

But in the meantime, we're not going to shrink. And we're going to we should make better underwriting profits than most companies in the auto insurance business. Okay. I'm going to back up and go to, I think I left Station 2 out of it earlier. So do we have somebody there?

Yeah. Good morning. My name is Sebastian Sartorte. I'm from Munich, Germany. But I have is very respective, this company in Germany.

And my question is, who are your trusted advisers today? Is it Ted and Todd? Is it Greg and Ajit? Is it your wife, your children? And what do you value about them?

Thank you.

Well, it depends whether they're advising me on money or on other things. I I trust my children and my wife totally, but that doesn't mean I ask them what stocks to buy. But the, you know, I was in terms of managing money, there wasn't anybody better in the world to talk to for many, many decades than Charlie. And that doesn't mean I didn't talk to other people, but if I didn't think I could do it myself, I wouldn't have done it. I mean, so I to some extent I talk to myself on investments and I think my children have gotten a whole lot wiser over the years.

And so I listen to them on a lot of things. I'll listen to my my daughter on who to vote for locally because she knows a lot more about that than I do. And I'll listen to my wife on a lot of things, and I won't get into details. So it is important. You don't live a life where you surround yourself and limit yourself to people you trust, it won't be much fun.

I mean I literally have been in the position ever since I was in my 20s of being able to have people I trusted around me and I've made mistakes occasionally, but they filled her out over time. You learn. And when I found Charley, for example, in all kinds of matters, not just investment, You know, I knew I'd have somebody that that, well, I'll put it this way, you can think about this. Charlie and all the years we worked together not only never once lied to me ever, But he didn't even shape things so that he told half lives or quarter lives to sort of stack the deck in the direction he wanted to go. He was he absolutely he considered it total of utmost importance that he never lied.

Now that occasionally got him in trouble at dinner parties or something. If if he said to the woman, I really prefer the way you used to do your hair or the way that somebody over across the room does it. I mean, he was, but in terms of having a partner, I I simply cannot think of a conversation I ever had with Charlie that in the least he misled me or shaped it his way or anything of the sort. So when you get that in your life, you know, you cherish those people and you sort of forget about the rest. Okay.

Like California because of wildfire and flooding risks combined with payouts increasing. How does Mr. Jain see this risk expanding to other regions? And how has the thesis on insurance investments changed because of it?

Climate change, climate risk is certainly a factor that has become, has come into focus in a very, very big way more recently. Now the one thing that mitigates the problem for us, especially in some of the reinsurance operations we are in, is our contractual liabilities are limited to a year in most cases. So as a result of which at the end of a year, we get the opportunity to reprice including the decision to get out of the business altogether if we don't like the pricing in the business. But the fact that we are making bets that tie us down to 1 year at a time certainly makes it possible for us to stay in the business longer term than we might have otherwise. Because of climate change.

Clearly, prices need to go up. It is difficult to be very scientific about how much the prices need to go up. They need to go up a lot, and we keep increasing prices and hope we stay above the ahead of the curve. But that doesn't happen in all cases. The regulators don't make it any easier by tying our feet to the ground and making it difficult for us to withdraw from certain territories or to make dramatic changes in the pricing of certain products.

As a result of which a number of insurance carriers, including ourselves, have decided to not write business in certain states. I think the regulators are getting a little more realistic about the and they are waking up to the fact that the that the insurance carriers need to make some kind of a return a decent return for us to keep deploying our capital. It's a constant battle back and forth. It's been against the capital providers these last few years, but I think we are coming back into balance. If you look at the results that have been recently announced by the insurance carriers, everyone's now making record profits.

Obviously, that will not last, but certainly for the next several months, I think the insurance industry, in spite of climate changing, in spite of increased risk of fires and flooding, it's going to be an okay place to be in.

Yeah. Climate climate change increases risk and in the end it makes our business bigger over time. But not if we misprice them, we'll also go broke. But we do it 1 year at a time overwhelmingly. And I would say this, I would rather have a G assessing us than any 100 riders or insurance managers in the world.

I mean, the the factors aren't, you know, we'll we'll take Atlantic hurricanes, which would be our probably our biggest risk. There's no question that you can measure the temperature of the water in the Atlantic and, you know, what more water does to hurricanes. But you don't know whether necessarily whether that's good or bad because it may cause them to turn faster. It may change the path as well as the intensity and frequency of losses. But we'll write it 1 year at a time and we'll have budget underwriting it and, you know, we don't have to tell you what's going to happen 5 years from now or 10 years from now.

And, people who don't have sort of analytical insurance minds that comment on this subject really don't expand our knowledge. It's, it's, we get a lot of letters from people that I'm sure have good IQs, but they they don't really know. They've not, they don't understand the insurance business. And, And they're not wrong, I don't think, in my mind about climate change. But, if there was no risk, there would be no insurance business.

And we're in the business of evaluating it and we do it 1 year at a time. And there's some exceptions where you can't do it, where your decisions extend for a long time in the future. And we try to avoid those. But again, you don't need a 1000 people analyzing water currents. I think you need one very, very, very smart guy and we've got him.

Okay.

Yeah. The only thing I'd add is that climate change, much like inflation done right, can be a friend of the risk bearer.

And it has been for us. If you look at GEICO, it had 175,000 policies roughly in 1950 and it was getting roughly $40 a car. So that was $7,000,000 of volume. And, you know, now we have, we're getting over $2,000 Well, all the advances in technology and everything like that. If we had been wetted to some formulas of what we did with $40 we'd have had a terrible business.

But in effect by making the cars much safer they've also made it much more expensive to repair and a whole bunch of things have happened including inflation. So now we have a $40,000,000,000 business from something that was 7,000,000 dollars back when I called on it. So, if we'd operated in a noninflationary world, GEICO would not be a $40,000,000,000 company. Okay, we're now finally coordinated to work Station 3, I believe.

Hello. Hi, everyone. I'm Liam. I'm 27 for Numark Ontario, Canada. I got Invest from Berkshire thanks to my dad who brought me down to this meeting.

I'm so excited to be here. Most 27 year old titles who are rappers but instead my Warren, Charlie, who will miss forever. And also your cousin Jimmy, who unfortunately had to go this year to, it's been a tough year. As a Canadian, similar with Greg, I always wonder about our Canadian economy and what you think about Canadian economy. We've got some beat down bank stocks right now and I don't know what your opinions are on these And I also wonder at in their nineties.

If the rumors are true, and you're still able to McDonald's. I like fast food myself, but I always wonder at 93, he's still able to eat those and enjoy the Coca Cola. Thanks, Warren.

Okay. Well, we've got a Canadian here, so we'll let him answer the first part. And if you watch me, you'll see what I got. I like to eat. I mean, go to it, Greg.

Okay. Yeah, well, we are fortunate to have a number of operations up in Canada. It goes across many of our operating entities. And then as Warren touched on, all the businesses that we have a piece of that we're invested in are up in Canada. So the presence is significant.

We're always looking at making incremental investments there because it's an environment we're very comfortable with. Warren touched on understanding the U. S. Environment, business environment. And I would put Canada equally in that bucket that we understand it and would be comfortable.

And I would say the economy moves very closely to the U. S. So the results we're seeing out of our various businesses that report both the U. S. And Canadian operations aren't drastically different.

And there's a few that were on the energy side. For example, we make very substantial investments up there in Alberta. But again it's very consistent with how that economy is growing and I would see it being very consistent with what we see here. Warren, anything to

Yes, no, we can't even obviously, there aren't as many big companies up there as there are in the United States. But when we get I got one from Canada just the other day that I sent over to Greg too. When we see anything that's suggesting an idea that's of a size with interest here and meets other requirements, we don't have any hesitancy about putting big money in Canada. And there are things we actually can do fairly well that, or Canada could, you know, benefit from from Berkshire's participation. We did it some years ago, not that many years ago, but there was a financial institution up there and they had a problem and they didn't.

As I remember, 30 plus, you know, various other people that were kicking it around. And meanwhile, the place was getting close to the edge for not a fundamental problem. And Ted Wechsler from our office went up there. I heard about it on a Monday or something. And Ted Wechsler went up there and we offered a solution in a couple of days to something that was getting close to the brink.

So, it we do not feel uncomfortable in any way, shape, or form putting our money into Canada. In fact, we're actually we're actually looking at one thing now. And but, you know, they they still have to meet our standards on terms of what we get for our money. But they but they don't have a they don't have a mental we don't have any mental blocks about that country. And of course, there's a lot of countries we don't understand at all.

So so Canada, it's it's terrific when you've got a major economy, not the size of the U. S. But a major economy that you absolutely you feel confident about operating there. Okay, Becky?

Warren, you just said that you'd rather have a G running risk assessment at the insurance operations than any other 1,000 insurance adjusters in the world. So I'd like to follow-up with a question that came in from Mark Blackley in Tulsa, Oklahoma. He said, Warren, for years, you have spoken about the incredible impact a jeet has had on Berkshire. You've often joked, if you and a jeet are in a sinking boat and we can only save 1 of you, swim to Ajit. While we often discuss plans for the next CEO of Berkshire, little is mentioned on who will one day replace Ajit.

How should we think about the future of the Berkshire insurance operations given how challenging it may be to find another Ajit? And like to hear Ajit's thoughts on this as well.

Well, I would say we won't find another Ajit. But fortunately, he's a good bit younger than I am. So, I hope you have to worry a little bit about me first before you start worrying about the jade. We won't find another Jeep, but we have an operation that he has created and that at least part of it is there are certain parts of it that are almost impossible for competitors to imitate. And and if I was in their shoes, I wouldn't I wouldn't try and imitate them.

And so we've institutionalized some of our advantages, but Ajit isn't well, he his presence allowed us to do it and he did it. But now we've created a structure that didn't exist when he came in 1986. Nothing close to it existed with us or with anybody else. And insurance is the most important business at Berkshire. Marketable securities are important, but they're not in the class exactly as our insurance business.

And Ajit, We we won't have the same business if Ajit isn't running it, but we'll have a very good business. And again, that's thanks to Ajit. You know, I'd been in the business when he came in 1986. You know, I'd first went to GEICO in 1950. We first bought National Indemnity in 1957 and it was something that we'd made quite a bit of money in the stocks of of insurance companies.

But, we needed we needed an aide. Unfortunately, he came into the office on a Saturday, and he was tired of working at something where he really didn't. It it it it just didn't challenges his intellect. And I said, well, we got a lot of challenges. So, you know, nobody's perfect.

So you've never seen an insurance policy or own an insurance stock but here are the keys and that's worked out very well.

Thank you very much, Warren. Thank you very much, everyone.

But the fact

of the matter is nobody is irreplaceable. And we have Tim Cook here in the audience, I believe, who has proved that and has set an example for a lot of people who follow.

That's a great observation.

Having said that, I will also add that our board is conscious of the succession issue, not only at Warren's level, but also at my level. And every year they have me sitting in front of them answering questions and having me share my ideas with them in terms of what would happen to the operations if I get hit by a truck. We go through the various operations we have. I review with them a short list of people I think ought to be candidates for replacing me. And in addition to that, I go a step further and identify a particular individual as the person I would hand over the keys to if something would have happened to me.

Obviously, that could subject to change, but we take this issue fairly seriously. And I think at the end of the day, as as Tim Cook has proved to us, it will be the biggest non issue of the day. The earth will keep still keep revolving around the axis.

Okay. We know what we we we know what we will we'll do. We know it's a good answer, but we know it isn't it isn't we won't have another agenda. Station 5.

Hi. My name is Ang and I'm wondering if you had one more day with Charlie. What would you do with him?

Well, it's kind of interesting because, in effect, I did have one more day. I mean, it wasn't a full day or anything, but, but he, we we always lived in a way where we were happy with what we were doing every day. I mean, Charlie, Charlie liked learning. He liked, as I mentioned in the movie, he liked a wide variety of things. So he was much broader than I was.

But I didn't have any great to be as broad as he was and he didn't have any great desire to be as narrow as I. But we had a lot of fun doing anything. And we played golf together. We played tennis together. We did everything together.

And this you may find kind of interesting, we had as much fun, perhaps even more to some extent, with things that failed because then we really had to work and work our way out of them. And and in a sense, there's more there's more fun having having somebody that's, your partner in in digging your way out of a foxhole when there is just sitting there and watching an idea that you got 10 years ago just continually produce more and more profit. So it wasn't, you know, he really he really fooled me though. He went to 99.9 years. I mean, if you pick 2 guys, you know, he never he publicly said he never did a day of exercise except where it was required when he was in the army.

He never did a day of voluntary exercise. He never thought about what he ate. You know, it it it you know, we started every day and Charlie had he was interested in more things than I was. But we never had any doubts about the other person, period. And so if I had another day with them, we'd probably do them the same thing we were doing the earlier days.

And we wouldn't have wanted another way only had one day. That's a great advantage in not knowing where you're going to what day you're going to die. But, and Charlie always said, you know, that just tell me where I'm going to die so I'll never go there. Well, It, the truth is, you know, he went everywhere with his mind. And and therefore, he was not only interested in the world at 99, but the world was interested in him.

It's remarkable. You know, they he I wouldn't I I told him, Troy, in the last few years, I'd never seen anybody that was peaking, you know, at 99 and and and and, well, the world wanted to come and see him. I mean, they actually wanted to go off of 351 North June Street. And whether it was well, I could name a whole bunch of names but just I'll start with Elon Musk or but get on the list. And they all wanted to meet Charlie and Charlie was happy to talk with them.

And I I the only the only, person I could think of otherwise was the Dalai Lama. I don't know that they had a lot of ulcer in common, but but but but, it was he he lived his life the way he wanted to. And, he got to say what he wanted to say. He, like I, loved having a podium. And again, I can't remember any time that he was mad at me or I was mad at him.

It just didn't happen. And calling him was fun back when long distance rates were high and and we didn't talk as often as the years in recent years as we used to be on daily, for long periods. And we did keep learning and we liked learning together. But you know, I mean, it we tended to be a little smarter because when as the years went by because we had mistakes and we had other things that where we learned something and and the fact that he and I were on the same wavelength in that respect meant that that the world was still a very interesting place to us when it got to be 99 and I got to be 93. So I don't have a perfect answer for you there, but I can tell you the ingredients that would go into, sometimes people would say to me or Charlie at one of these meetings, you know, if you could only have lunch with one person that, and flipped over the last 2000 or so years, you know, who would you want to have it with?

Charlie says I've already met all of them, you know, because he he read all the books. I mean, he he he and he eliminated all the trouble of going to restaurants to meet him or anything like that. He just went through a book and he met Ben Franklin and he he really he was remarkable. He had no one else to meet because he read all their stuff and they liked Ben stuff better than he liked mine. But with Ben Franklin he just had to read about it.

He didn't have to go have lunch with him or anything of the sort. But it's an interesting question. What you should probably ask yourself is that who do you feel that you'd want to start spending the last day of your life with and, and then figure out a way to start meeting them for tomorrow and, and meet them as often as you can. That's why wait a little last day. And don't bother with the others.

Okay, Becky.

This question comes from Carol De Gend in Switzerland, in Europe. And this is for both Mr. Buffet and Mr. Jane. As political instability in the world is growing with the rise in the number of armed conflicts and trade tension, there is also increasing risk of cyber attacks.

What are your views on cybersecurity insurance? Asking this question in general for retail, small businesses and large companies, including critical key infrastructure such as power plants, harbors, airports, nuclear plants, etcetera. Do you see a potential for profit making in cybersecurity insurances? And what are the key challenges?

Okay, let me start. Cyber secure cyber insurance has become a very fashionable product these days. Over these last few years, it is at least a $10,000,000,000 market right now globally. And profitability has also been fairly high. I think profitability is at least 20% of the total premium has ended up as profit in the pockets of the insurance bearers.

Now having said that, we at Berkshire tend to be very, very careful when it comes to taking on cyber insurance liabilities. For the part of actually for two reasons. One is, it's very difficult to know what is the quantum of losses that can be subject to a single occurrence. And the aggregation potential of cyber losses, especially if some cloud operation comes to a standstill, that aggregation potential can be huge and not being able to have a worst case cap on it is what scares us. Secondly, it's also very difficult to have some sense of the what we call loss cost or the cost of goods sold could potentially be.

It's not just for a single loss, but for losses across over time. They have been fairly well contained out of 100 cents of the dollar of the premium losses over the last 4 or 5 years, I think have not been beyond $0.40 on the dollar, leaving a decent profit margin. But having said that, there's not enough data to be able to hang your hat on and see what your true loss cost is. So in our insurance operations, I have told the people running the operations is I've discouraged them from writing cyber insurance to the extent they need to write it so as to satisfy certain client needs. I have told them no matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you're losing money.

We can argue about how much money you're losing, but the mindset should be you're not making money on it. You're losing money, and then we should go from there. So it is good. It's projected to be a huge business. My guess is at some point, it might become a huge business, but it might be associated with huge losses.

And our approach is to sort of stay away from it right now until we can have access to some meaningful data and hang our hat on

data. Well, you've just made you've just heard why Agit is invaluable because that when you insure something, you really want to think of what how much can you lose. And the question, I remember the first time it was happened I think in the 1968 when there were the riots in various cities because I think Bob I think it was the Bobby Kennedy death that set it off or the Martin Luther King death. I'm not sure which one. But in any event, when you write a policy, you have a limit in that policy.

But the question is, is what is one event? So if if if somebody is assassinated in some town and that causes losses at thousands of businesses all over the country, If you've written all those thousands of policies, you have one event. Lord, you have a 1,000 events. And there's no place where that kind of a dilemma enters into more than cyber. Because if you think about it, if you know, let's say you're writing $10,000,000 of limit per risk and decide that's fine and you're if you lose $10,000,000 you know, for some event, you can take it.

But the problem is if that one event turns out to affect a 1,000 policies and somehow they're all linked together in some way, and the courts decide that way. You've written something that in no way we're getting the proper price for and and could break the company. And I will tell you that most people want to be in anything that's fashionable when they write insurance. And cyber's an easy issue. You can write a lot of it.

The agents like it. You know, they're getting a commission on every policy they write and you've got to have somebody in charge of things that understands that you may get an aggregation of risk that you never dreamt of and maybe worse than some earthquake happening someplace just because you have a whole bunch of policies with a $1,000,000 limit. And I would say that human nature is such that most insurance companies will get very excited and their agents will get very excited and it's very fashionable and it's kind of interesting and as Charlie would say it may be rat poison. Okay, with that cheerful view, we'll go to station 6.

Good morning. This question is for Warren Buffett and Greta Abel. My name is Maria Prentice. I am a retiree from Las Vegas, Nevada. I am here today as a member of Nevada, a group developed Latin Leaders for the environment of Justices.

I am almost here representing Maryland families in Nevada who are struggling to pay their utility bills and want access to affordable clean electricity. I want to add today why is NB Energy, which is owned by the Berkshire Hathaway Building, new gas plants instead of investing in solar energy with Nevada 1 and the sunniest state in the country. Can I expect to see future leadership take dangerous investments in the fossil levels more seriously? Thank you.

And thank you, Mario. Greg, you want to?

Sure. Thank you. So as we touched on with NV Energy even earlier, there's a lot going on there. And when I think of there's no question solar is a great opportunity for NV Energy and we'll continue to utilize that as a resource and continue to invest in it, in that utility and the other utility we have in Nevada. We're also in a point where when you think of a transition that's going on within the energy sector, we are transitioning from carbon resources to renewable resources as was noted, but it will not occur overnight.

That transition will take many years. And as we use be it renewable resources such as solar or wind, they are in intermittent and we do try to combine it with batteries, but it does at this point in time, we cannot transition completely away from the carbon resources. So if I think of Nevada in the next 2 years, our last 2 coal units are well actually in the next year, our last 2 coal units will retire, but we are replacing them with a new gas unit, which is truly needed to make sure that system remains reliable and available to our customers. And that's and that's done in conjunction with our with the state, representatives and our regulatory agencies to make sure we can serve those customers every day and every minute. We have great examples in Iowa where at times 100% of our energy comes from wind.

And we're and we're thrilled with that. And I believe we hit that, for example, on Earth Day. Every we had enough wind that we could meet the demand of that state. But the next day if the wind is not blowing, we need our gas resources or gas plants to fill that gap. And really, that's the situation we still have been in Nevada, so we'll continue the transition to renewable resource is be it solar in Nevada and wind and other areas combined with batteries.

But for the foreseeable future, we do see gas being a very important resource to help maintain reliability and meet our customer needs and to meet it in an affordable way is also an important piece of that. So thank you for your comments. All right. Yeah, we

and and we we've got the capital to do whatever makes the most sense in a place like Nevada and the Nebraska. Nevada, I don't know. Each state calls their ruling commission something different, but they probably call it the Public Service Commission or something like that. And they they're making the decision as to what they think can and should be done in terms of getting from where a vastly complicated utility business moves towards something different without messing things up in the meantime. And then having the lights go off and they I think they would probably agree with you very much, Maria, that they what they what they want to get, but they can't they can't do it tomorrow, you know, because they intermittent problems.

And, their job is to make sure the lights stay on. And their job is also to move toward better sources. But solar will never be the only source of electricity because that well Greg may know more about this but I'm borrowing some real breakthroughs in storage and that sort of thing.

Right. Yeah. Generally, a battery right now to do it in an economical way is a 4 hour battery. And when you think of the time without the sun being available, that's a challenge. Now there's a lot of technology advancements and that's stretching out and you throw dollars at a lot of things you can accomplish things.

But the reality is that there's a careful balance of the reliability and also balancing as you as it was noted, the rates do matter and how much customers are paying. So delicate balance of both delivering reliability but doing it in an affordable way.

My friend Bill Gates, he's working on shortening up that, or losing the time the battery works. And so you've got some very smart people working on it, but it isn't something that you actually do overnight. And I can understand why people want it done overnight, but it is going to take a lot of money. It's going to take a lot of good ideas and smart people like Bill and Greg. Not me.

I don't I don't understand why the damn lights go on when I even turn a switch, but those those fellows really do know. And there's plenty of them working on it, and we got plenty of money to implement it. But there are there are certain things that, that just take a certain amount of time. My daughter hates it when I use this example, but it's really true that you can't create a baby in 1 month by getting 9 women pregnant. I mean, that's just, you know, you may want a baby, but so there are certain laws of nature that you have to work with.

Okay, Becky.

This question comes from Rich McCloskey in Dunedin, Florida. He says, Warren in a Jeep, would you let us know what you think about the car and property insurance situation in Florida? As a resident, both seem out of control. Since the Florida market seems to be so mismanaged, is this an opportunity for Berkshire?

Yes. The Florida market, both for auto insurance and for homeowners insurance, has had a few tough years. The 2 problems we face in Florida and all the risk bearers face in Florida. One is the lawyers and the amount of corruption that takes place in the Florida market is keeps skyrocketing, making it difficult for us to price price the product and make a profit. And secondly, the amount of activity in terms of storms, both the frequency and the severity is also so severe that the losses in Florida tend to make it very difficult for a risk bearer to make money.

Having said that, we've had a we fortunately had a very good run at Florida last year. We increased our exposure in Florida as we talked about last year, and fortunately, nothing bad happened. So a lot of our premiums that were in the top line flows straight to the bottom line. Florida is a large market. Florida is a market that's subsidized by the rest of the country.

I don't think those That's going to stand the test of time. The Florida market that legislators are trying to improve it. They have passed law that is bringing down the amount of fraud that takes place in Florida, and I hope Florida will be fairly buoyant insurance market because at the end of the day, they do believe in the free market more than some of the other states that have insurance crisis like California and New York. So yes, Florida has a problem. Prices will go up fairly substantially.

But at the end of the day, I think we'll achieve a degree of balance so that the risk bearers can make a decent profit and will be deploying capital out there.

Okay. Station 7, please.

Hi, Warren. My name is Christine Hone Garcia, and I'm from Agora Health California. Thank you for being an excellent teacher and imparting your wisdom to us throughout the years. What advice would you like to share today that you believe everyone needs to hear?

Well, too bad you didn't add. You added that what the rest of us would like to hear. Oh, I would say that if if I had one piece of advice, I would try to Well, and you're lucky you live in this country because it just to start with because you've got opportunities here that wouldn't exist in much of the world. But I would like the sort of use Charlie's advice of the thinking how you would like your obituary to read and then start selecting the educational paths, the social paths, you know, the whatever may fit your particular situation in terms of associating. And perhaps, certainly in my day, it would have been marrying the person that would best help you do that.

Well, Charlie would say you are offering some similar benefit to the partner. And you know, the opportunity in this country is, you know, is basically limitless. That, when you think of going back not that many centuries, you know, if you were going to be a shepherd or something like that, you know, 100 years from now, you're you're going to, you know, your grandson was a granddaughter was gonna be a shepherd. I mean nothing nothing really happened. And what has happened in the last 200 years with the combination of the industrial revolution and whether whether it's science or education or health or, you know, you name it.

We are so lucky to be born, when we were the people in this room, and and many of us were lucky enough to be born in the United States as well, that, that you have had the you're entering the best world that's ever existed and you want to find the people to share it with and the activities to participate in, that fits you. And if you get lucky, like Charlie and I did, you find things that interest you young. But if you don't find them right away, you keep looking. And, I always tell students that take the job, that you, I mean, find the job that you want, would like to have if you didn't need a job. And sometimes you can find that very early and sometimes sometimes you go through various experiences but don't forget what you're trying actually are trying to do.

And there's no place to do it like this country and find a person that you'd like to share your life with, in many cases. And, you know, sometimes you get lucky into that early. And sometimes you make mistakes. And but I would I would try to in a very, very general way, I would try to figure out how you'd want to look back on your life and think about yourself and start today to go on the path that leads to that goal and expect some difficulties along the way. But if you're thinking that way, you're more likely to get there.

This question comes from Axel Meyersik in Hamburg, Germany. What has changed for Berkshire's operating CEOs since Greg Abel and Ajit Jain became Vice Chairman? For example, can and do the operating CEOs still reach out to Warren Buffett directly?

Well, that's the answer might surprise you, but they they overwhelmingly, the operating executives, Well, they prefer to talk

to Gregor,

to, the J. And, that's understandable because I don't really do much and I don't operate at the same level of efficiency that I would have 30 years ago or 40 years ago. I don't know the managers as well as I would have when we were smaller and when I could get more accomplished in a day than I can now. And you've got when you've got somebody like Greg in the jeep, you know, why settle for me? I mean, basically.

So it's worked out extremely well. I almost can't imagine anything working better because Greg in the year accomplishes. I mean, he sees more of them, understands more about their problems, you know, can give them suggestions. He's got incredible amounts of energy. And nobody has more wisdom than a G about insurance.

And they've got access in the insurance to them. Now, they had it before we stuck some of those titles on in insurance, Whereas with Greg, he much expanded things when he became, the Vice Chairman in charge of really everything except insurance. So he is if you poll our managers that fall under his jurisdiction, which would be a lot of them, they they would much prefer to unless like a few, they weren't paying as much attention to their business and I wouldn't do anything about it but but Greg would and and they still like it when he does it. He can deliver He can he can deliver news very well to to people who, you know, there's some there'll be some people if you have if you have 20 children and you're very rich, you'll have some that will be go getters anyway and you'll have some that won't. And we are a very, very rich company.

And we don't we haven't had a history of being very tough on people that coasted and we've had some that would do that and Greg will do something about it, and Charlie and I wouldn't have, not because we didn't know it should be done, but because we were doing so well ourselves. It just wasn't it's we didn't we wouldn't make the effort. We didn't want to change our lives that way. Plus we slowed down in various ways physically and everything. So So I would say that the number of calls I get from managers is essentially and awfully close to 0.

And Greg is handling those. I don't know quite how he does it, but we've got the right person, I can tell you that. And with the g, he does less physical moving and and the insurance people are more used to working with the g obviously over the years. So I wouldn't say that changing the title really changed as much there because he was in charge of insurance anyway. And so that's, you know, you can you can go to a business school and and they can give you way better answers than I've just given you.

But that's the way we do it at Berkshire.

Steve raised his hand.

Yeah. If I can add a comment, from my perspective, the transition has worked out very, very well. But I think the credit really goes to how Warren has handled the situation. What I mean by that is after the transition was announced And a lot of the operating managers used to be. They were used to calling Warren directly on some issue or the other.

When they after the transition when they would continue to do so, Warren would very skillfully in his in his manner, handle them such that he would not answer what they were looking for, but at the same time made them feel good and told them that he sort of enjoyed hearing from them and talking to them. So as a result of which, you know, the transition took place. People got the message. They got the message and were very responsive to it. And it's a non issue as far as today's concerned.

I would probably add. Yeah. The only thing I would add is we do have an exceptional set of managers across both the non insurance and insurance. And yes, Warren made it incredibly easy, but so did they. It was a very easy transition because they care deeply about Berkshire.

They care deeply about the culture and they very much wanted it to be a success and we're fortunate to have those managers and insurance and non insurance. So thank

you. Yes. What Greg is talking about is they really wanted more direction in in in some cases than than I gave them. You know, I mean, it it I just sat there reading the Wall Street Journal or whatever. And then, Greg is I don't you know, there one way or another, there are more than 24 hours in his day.

And I just don't know how he covers the ground. He does. But he knows more about the people. We got the same feeling in terms of judging the attractiveness of businesses and making capital decision and that sort of thing. But but he's willing to work.

I mean, I'm, you know, I I, you know, and I couldn't get as much done anyway. You know, what I could do in in couple of hours, you know, may may take hours now. It it it I just don't read as fast and everything's said. But, it's it's working very well. And and, this place, if anything happened to me, it would be working extremely well the next day.

I don't get any phone calls. You can actually we can we can bring something up so we got some answering machine that people think I'm still around you know or something. So anyway, that's that's much much less than you'd learn in business school, but that's the way we do

it at Berkshire.

Okay. Station 8.

Dear Warren, Greg, and Ajit, thank you for having us. Your teachings have not only made us better investors, but more importantly, better people. Thank you for that. My name is Rajiv Agarwal, and I am from New Jersey. I run an India focused fund called Doordarshi India Fund.

My question is related to India. Indian economy and Indian equities have done quite well in the last five, 10, 20 years. It is the 5th largest economy and will be the 3rd largest in the next few years. My question is, is Berkshire actively looking for opportunities in the Indian equity market And what will allow you to buy anything meaningful there? Thank you.

Yeah. Well, it's a very good question. And obviously, India, you know, it it's I'm sure there are loads of opportunities in a place like India. And, the question is do we have any advantage in either insights into those businesses or context that will make possible some some transaction that might when the parties in India would particularly want us to participate. I would say that that's something that a more energetic management at at at Berkshire could pursue, because we do have the reputation now.

Berkshire is known, not like it's known in the United States, but it's known around the world. And and, you know, our Japanese experience has been fascinating in that respect. So there may be an unexplored or unattended to opportunity in that area. I'm not the one to do it. But that may be something that in the future, it might be opportunities.

There are opportunities. The question is, does Berkshire have some kind of advantage in actually pursuing those opportunities against particularly against people that are using other people's money that that what they get paid based on asset on assets managed or something of sort. I mean, there are plenty of people in the game who are buying and running businesses that do not really have our philosophy. I mean, they're going to get rich no matter what happens. And their payment may be based on how much they buy rather than what they buy.

So we'll see how the next management plays the game out at Berkshire. And fortunately, you don't have too long to wait on that. Generally, I feel fine, but I know a little bit about actuarial tables. And I just, well, I would say that's I shouldn't be taking on any 4 year employment contracts like several people are doing in this world in an age where you can't be quite that sure where you're going to be in 4 years. Okay.

But you're absolutely right about if you were energetic, had some way to become a buyer of a party that people particularly wanted to do business with. Japan was great and India could be great, but India and Japan aren't the same. I mean, I don't adapt myself terribly well to different cultures. And some people are really good at it. And almost anybody's better than I am, but I stumbled into 1 or 2.

But that could happen in act 2 of Berkshire Hathaway. Becky?

This is a question from Rafael De Pino from Spain. Berkshire has grown tremendously, thanks to, and among other things, its architect, Mr. Munger, and you, its general contractor. We're all tremendously thankful to you for taking us along the way. We are aware that both of you and many others have spent an enormous amount of time ensuring Berkshire's culture provides a solid footing on which to grow the building.

You also currently have a very talented bench of what we may label in Mr. Abel, Mr. Jain, Mr. Combs, and Mr. Wechsler.

However, for a long time, you've had the advantage that talented subcontractors have wanted to work with a once in a generation architect and general contractor. How do you envision Berkshire will overcome the loss of set advantage when the contractor bench needs to be renewed again? And what are potential renovation works in this great building that may necessitate a new architect?

Yeah. Well, that's a great question to which Charlie and I obviously talked a lot about over time. And of course, we, we will not for sure to the extent it remains the sort of entity that it is, will not need to attract people very often. It would be absolutely crazy for anybody, for our board of directors to ever pick anybody to run this business that thought you should retire at 65. It may be that they should retire the next day, you know, when you learn what they're really like managing something or may turn that you want to keep them around till they really start being affected by old age which hits different people at different times but it hits everybody eventually.

And so we it's very likely that if it's if the directors and it's very tough because they will be acting against conventional wisdom which is always difficult. And, but I think we've got the group on that and they will not have to make a decision very often If they if they pick the right, CEO, that's 99% of the job of the directors. And if they the other 1% is is do you have a good method to correct it if you made a wrong decision? And that's extremely hard to do in our present system. It's not impossible, but it's just not something that happens.

It's too good a job to be a director to try and throw over somebody at, particularly if you can use the money from directorships and you want to be on other boards and everything. We we we do not have a perfect system in terms of boards of directors at all and it's it doesn't operate at all. Well, I shouldn't say it all, but it doesn't it it doesn't operate as as people may think it generally operates. So we will, we really got the problem solved for the next 20 years unless something untoward happens. And if something untoward happens, then then the directors need to find probably within our own organization, somebody that they've got confidence in to maintain the special advantages we have, over another 20 years period.

It's there's various things that are low probabilities, but you still have to think about them. And, and we are in that position now. Now if you asked me whether if something happened to Greg today, everybody says don't travel in the same plane. The thing to do is not travel in the same auto. Planes don't go down that often.

Auto crash all the time. I've seen all these corporate policies on that which are kind of crazy when you think about the real risk. But in any event, we do if anything happens to him. And, that's not an easy thing to do. And, I don't have.

Well, it will be his decision and then the directors really to decide whether he's made the right one. But he will he will make the right one. And what you really have to hope is that you get lucky on how long managers stick around. I mean, you might need 3 in a century and you might need 6 or 7. But the answer is you need a little luck and you need some break on the mortality tables.

But we've got an entity that if you really aspire to be a certain kind of manager of a really large entity, there's nothing like it in the world. So, we've got something to offer the person who we want to have. You know, it's Sort of like Charlie said about marrying the best person that will have you. Well, we we have, we've got something that the right person would want to marry, you know, basically in terms of Berkshire. And if we get the wrong person, then the directors have to do something about it.

And that probably won't happen, but it's always a contingency. A possibility, I should say. Greg having been put on the spot like that didn't. You don't have to name anybody now but I'm sure the crowd would love it and make news. Well, the

only thing I would add, Warren, is and it's really how the comment started was around culture. The culture we have at Berkshire and that being our shareholders being our partners and our managers of our business having that ownership mentality, that's never going to change. And that will attract the right managers at every level. So I think as Warren said, we have a very special company in Berkshire, but it's that culture that makes it special and that's not going to change.

Okay. Station 9. I'm never sure where 9 is.

Hi. I'm Sherman Lam, a Berkshire shareholder, and I work for a family office in Kuala Lumpur, Malaysia. Mine and many, many other Malaysian and Southeast Asians' lives, not only financially, but also in how we navigate our lives and relationships. Thank you very, very, very much.

Well, thank you. Thank you. That makes us feel good.

Question is, what have your team's greatest learnings been on business, capital allocation, stock picking and portfolio allocation throughout the COVID-nineteen pandemic period over the last 5 years? And Warren, appreciate it if you can get your views as well as your representations on TED and Todd, as well as directly from Greg and Ajit, too, on their respective businesses? Thank you.

Yeah. Don't think I want to give individual appraisals. And but what really what you're doing is, in terms of capital allocation, which is is my job. I don't go out and sell insurance policies or anything of the sort. And you represent a group of shareholders like we do represent.

We we are totally clear on our mission. And, you know, it may be that other people don't agree with them, but I would say it in a great many places. You know, I just don't agree with our mission. And I would say that for example that anybody that wants to retire 65 would be disqualified from being CEO of Berkshire then. They might get just they might get retired the next day if they were the wrong person.

But that there's just certain things we don't want. And we're well fixed now. And that the odds are very good, but far from certainty that that takes care of the next 20 years. Now, the but you have to provide for the contingency and and I there are several people on the board that know what I would do on that, but it's up to Greg. But if Greg and I go at the same time, then you'll move into making another decision.

And a few people will know my thoughts on that. But but they the job of the directors is then to come up with the right CEO. And the right CEO can't make a terrible business great. Tom Murphy, who was the best, he was the best business manager I've ever known. And Tom Murphy, you know, he said the real key was buying the right business.

And now, Murphy brought a 1000000 other attributes to it after that. But, you know, it's Charlie, you know, said we we you know, what was his he had a saying on that but but basically we could have brought in Tom Murphy and told him his job was to run the textile business and it would have done a little bit better. But it still would have failed. And one of the reasons I stuck with the textile business as long as I did was that I liked Ken Chase so much and I thought he was a terrific guy and he was a very good manager and if he'd been a jerk we'd have quit the textile business much faster and we'd have been better off. So the answer was for him to get in the TV business like Murph had done and ad supported the, you know, Murph's figured that out early and he started with a pathetic operation which was a VHF in Albany, New York competing against GE He had one car dashing around town and he called it news truck number 6.

But from that he built an incredible company and he built it because he was the best manager I've ever met. But beyond that, he was in a good business. And the key will be to have it will be to find another Tom Murphy and then add him a bunch of good businesses and and he or she will know what to do with it. Now that's not as precise as you would get in most companies, but you really can't get more precise than that. I mean, you can have committees and management consultants and everybody.

But it wasn't a management consultant that hired Tom Murphy and I forget whether he was doing his sales volume was a couple 1,000 a week at first and then as soon as he hit, that was his goal or it got to 2,000. He says, now my goal is 3 He kept doing that. And he surpassed all these people like CBS and ABC that only had the world by the tail. And, it was just a wonderful lesson in life to get just to be able to view something like that. I learned an awful lot from what he said to me, but I just learned by watching somebody like him operate.

I mean, it's like watching a great golfer, a great tennis player, and you got to learn something about the kind of swing you're trying to develop or something of sort. So that's not a great answer for you, but it's so far it's worked and I think it works. I'm very sure it works with Greg And it's up to people in the future when, you know, at, I'm underground or wherever they put me to really make a decision every 20 years or something like that on average. It's the right decision, but correct it if it turns out to be the wrong decision. That's what a Board of Directors is for.

And, and we've got the people on the Board that really understand that responsibility. They take it seriously, but they don't take themselves too seriously. And, so therefore they don't they don't want to they don't necessarily want to do a lot of things just to look busy, and they aren't using us as a stepping stone to get on other boards. But we've got people that really believe in what we're doing and they're the ones that are going to have to make this place work. And if they got lucky on Greg's mortality, they they can do just what Ruben would go and go to sleep for 20 years or so.

And then make another decision and Berkshire has every tool in the world available to be what it is now and continue to be what it is now. I mean, we've gotten from from 20,000,000 of net worth to 570,000,000,000 And, you know, we there aren't as many things to do, but we can do a few big things better than anybody else can do. And there will be occasional times when we're the only one willing to act. And at those times, we want to be sure that the US government thinks we're an asset to the situation and not a liability or a supplicant. And as the banks were, we'll say, in 2,008, and 9, that they were they were all tarred with the same brush, but we want to be sure that the brush that determines our future that, you know, is not hard.

And, and I think we're in the I don't think anybody's got a better position to do it than Berkshire.

This question is from Johan Halen, who writes, you're sitting on $168,000,000,000 of cash, which you told us today is now more than $182,000,000,000 His questions are, 1, what is Buffett waiting for? And 2, why not at least deploy some of it?

Well, I think that's pretty easy to answer. I don't think anybody sitting at this table has any idea of how to use it effectively and therefore we don't use it and we don't use it now at 5.4%, but we wouldn't use it if it was at 1%. Don't tell the Federal Reserve that, but but but prefer it. But the, we don't we only swing at pitches we like and if anybody tried to swing at every pitch, or felt that because they hadn't swung at a pitch for 2 for the last two pitches they ought to swing at the 3rd one or something like that. It's just it's there are times and obviously, but I would say this, I would not like to be running 10,000,000,000 now.

10,000,000 I think we could I think Charlie or I could earn high returns on because I think there's just a few things that happen on a very, very small scale. But but it it it if we had 10,000,000,000 we wouldn't I wouldn't basically see, I don't many more opportunities than we found. Now it's true that something like Japan, we could have done. It's a company that had a 30 or 40,000,000,000 and we'd make we'd have had great returns on equity. But if I saw one of those now, I'd do it for Berkshire.

It isn't like I've got a hunger strike or something like that going on. It's just that they things aren't attractive and and there's there's certain ways that can change and we'll see whether they do. Okay. Station 10.

Mister Buffet, this is an incredible meeting that you host every year. My name is Sean Cawley. I am a real estate agent with, Berkshire Hathaway Home Services in Arizona and California. My mother Cindy, my brother, and my 2 sisters all sell real estate with Berkshire Hathaway Home Services for many years. We love being a part of the Berkshire family, along with the 70,000 other agents that sell real estate for the company.

Mr. Buffett, Home Services of America recently settled our class action lawsuit regarding commissions for $250,000,000 last week. This is, this dollar amounts about $100,000,000 more than Keller Williams, dollars 100 $66,500,000 more than anywhere real estate, which is Better Homes and Gardens and Coldwell Banker. As a realtor with Berkshire Hathaway Home Services in multiple markets and a shareholder who's been coming to this meeting for 15 straight years, that's one of the reasons I got involved with real estate is because of this meeting. What are your thoughts on buying and selling a home in light of this recent settlement?

And maybe ask the note to Greg and Ajit too, Would you consider a Berkshire agent when buying your next home? Well,

I don't buy them that often, as some people have noted but I certainly would consider them but I'd say the probability of that happening is low And I really appreciate the fact you've joined up with us. But I'm going to in terms of the settlement, I mean, Craig, get me informed, but I turned it over 100% to him. So, Greg, you want to talk about it?

Sure. So thank you for you and your family for being an agent and working for our company Berkshire Hathaway Home Services. I think there is a few questions in there. One, there is no question the industry will go through some transitions because of that settlement. Ours and the every other major player in the industry settled.

The National Association of Realtors settled for more than $400,000,000 So effectively everybody was swept up in that settlement. And it did set the grounds for the both home services and for the industry to move forward. There's a lot of changes that happen in or are being proposed associated with that settlement. But the one thing that I think you hopefully would absolutely agree with, the real estate agent is still an important part of these transactions. It's the one time in our lives where we make these massive investments and having that counseling guidance is critical.

And that's really what our business and those other businesses rely on how the commission structures change and how it's negotiated, which is really what the settlement was. It was no longer that a buyer would automatically pay a commission agent to the selling agent that now has to be negotiated. That will impact things. But I think the realtors will continue to be a very important part of that. And I think home services in the industry will remain very relevant.

And then the only thing I would share with our shareholders on a broader basis is that obligation resides with home services and can be met by home services. And that was an important condition because they were also pursuing Berkshire and Berkshire Hathaway Energy. And we said you can pursue us separately, but that settlement will reside with home services and be an obligation of that. And they decided the ultimate settlement and we'll go forward from there. So Warren, any other comments?

Well, yes, I've sold 2 houses in the last, well, the last 93 fraction years. And I've bought 1 that I still have but I obviously bought the other 2. And I have not negotiated down the commission even though the last one sold for 7,000,000 or something like that. People do negotiate down commissions to some extent. But I can tell you I've looked at the figures and I think the system has really worked out very well.

When I got out of school they had what they called FSBO, you know, for sale by owner. And so I've been involved to some degree in watching the whole system operate. And I know what our average agent makes. I know how long they work on things sometimes that get don't materialize. I mean, it it it it it, I don't think we'll we'll end up with a better system and, but, you know, it's up to Greg and the people at home services, how we work it through here.

But I like our agency group and we've got a very large number of real estate agents and I've encouraged us the expansion we've done in the real estate agent, the real estate brokerage business, now it was just 1 or 2 operations when we bought Berkshire Hathaway Energy and we really built up quite a company and I think it's a very fundamental business. You need help. 90% of the people need help, you know, in buying them, buying a home or selling 1. And, and I've watched it operate all my life and been involved with lots of people who have been in the business. But there was a decision in court and I told Greg to handle whatever it would be, what seemed best to him.

And I'm quite I'm perfectly happy with the way we've handled I think. I'm surprised at the decision but but we get surprised in decisions in in the insurance business lots of times. I mean, just just think of the the various things we faced and and, you know, when 9eleven came along, you know, we never thought something like that could happen, but it happened and then we didn't know what was one event or more events. I mean, if you if they closed down the New York Stock Exchange and a bunch of brokers, well, every all kinds of people lose their jobs or lose their income for a while. Is that one of our multiple events?

Well, there's all kinds of things come up in business and and we just we play the ball wherever we find it and I was surprised by the decision. Was it in Missouri?

Missouri, yes. Yeah. But

we've gotten surprised by some other decisions and we'll keep doing sensible things as we move forward. Greg, do you want to?

No, I think the only thing I would add back maybe to how the model has changed in the ask one, yes, we'll always I can't speak for Jeep, but we'll always use Home Services Agents. But it's interesting. I have bought a home abroad because I lived over in the United Kingdom in Newcastle running our utility over there and it is a completely different experience to buy a home outside of the US. Our agents take great responsibility for the whole transaction in the U. S.

They put, as Warren said, time and capital at risk to ensure the transaction closes. And when you do close it, they make sure what you bought, you actually what you thought you were purchasing you end up with. And that's not the way it is always around the world and there are more affordable models but it's the old saying you get what you pay for. So I think our real estate agents still provide incredible value within our business and as Warren touched on it it'll it'll survive the form maybe a little bit different but there's no question it'll it'll it'll continue to thrive. Yeah.

We still we still will want to buy real estate brokerages at

the right price. And I hope we're bigger in the industry 10 years from now 20 years from now than we are currently. And I did sell a house for $7,000,000 I did not negotiate the 6% down, and I feel I got my money's worth and then some and I'm cheap by nature so it is it is not careless about it I just I got my money's worth and so let's move on to Becky.

This question is for Warren and Ajit. It's from Jeff Oyster. As a Berkshire and Tesla shareholder, I would like to hear your thoughts on the potential financial effects to Geico, assuming Elon Musk delivers on his fully autonomous driving goal. On Tesla's most recent earnings call, Elon said, if you've got at scale a statistically significant amount of data that shows conclusively that the autonomous car has, let's say, half the accident rate of a human driven car, I think that's difficult to ignore. Assuming Elon succeeds in reducing accidents by 50% versus human drivers, wouldn't auto insurance rates fall to reflect the reduced underwriting risk thereby adversely impacting GEICO's revenues and float and perhaps margins too?

Well, yeah. If it's if it's if it's if it's well, let's just take the extreme example. Let's say there are only going to be 3 accidents in the United States next year for some crazy reason that that anything that reduces accidents is going to reduce cost, but that's been harder to do than people have done before but obviously but if it really happens, the figures will show it and our data will show it and the prices will come down. I wouldn't there have been a lot of people talk about doing that in the past. I mean, General Motors used to be very big in the insurance business and and when Uber first started, they they use some firm which now is I think Agit will confirm they're close to bankruptcy now aren't they because of taking things out at the wrong prices.

Is that true? Yep,

yep.

Yeah, Insurance always looks easier than it is and it's so much fun because you get the money at the start. You know and then you find out whether you've done something stupid later on. But you know it's a very tempting business when somebody hands you money and you hand them a little piece of paper. But really knowing whether you're I mean if accidents get reduced 50%, it's going to be good for society and it's going to be bad for insurance companies volume. But but but but you know, good for society is what we're looking for.

So far, this you might find kind of interesting. I mean, the the number of people killed per 100,000,000 passenger miles, driven. I think it actually was in the when I was young it was like 15, but even post World War II, it only fell to like 7 or thereabouts and Ralph Nader probably has done more for the American consumer than just about anybody in history because that 7 or 6 has now come down to under 2 and I don't think it would have come down that way without him. There have been some kind of fluke figures of what people did during the pandemic, which are quite interesting because they they didn't drive immediately. They didn't drive as many miles, but they drove more dangerously, didn't they?

Is that right, Eugene?

Yeah. Yeah. So the point I want to make in terms of Tesla and the fact that they feel that because of their technology, the number of accidents do come down. And that is certainly prove provable. But I think what needs to be factored in as well is the rate cost of each one of these accidents has skyrocketed.

So if you multiply the number of accidents times the cost of each accident, I'm not sure, that total number has come down as much as Tesla would like us to believe. Tesla has been toying with the idea of writing insurance directly or indirectly. And so far, it hasn't really sort of been much of a success. Time will tell, but I think, you know, automation just shifts a lot of the expense from the operator to the equipment provider.

Okay. We're getting close to noon when we're going to break for lunch. I just want to tell everybody that I would appreciate it very much if they will get in their seats and be ready at 1 o'clock when we reconvene because we will have another very short little movie and we'll just have a little explanation of something that I think will be of interest certainly of interest to me. But it so I would like to we will break promptly at 12 and I would like everybody to really make an attempt to be in their seat and quiet at 1 o'clock. And if you can't do that, if you'll wait a few minutes and watch in the halls and all that.

But we will we do not want to be seating people and have people knowing here at 1 o'clock and just like a play in New York or something, it'll take a few minutes and only a few minutes to cover what we're going to at at 1 But, we don't want to be, seeding people during that period. But now let's, we'll go on until 12 and then we'll have a break until 1 and we will go to Station 11.

My name is Humphrey Liu and I am from Charlottesville, Virginia. I asked the question last year and wish to pose it again. It can be considered a follow-up. There is something to be said for traditions. It is the same question, but it is a changing and different world we are in.

Looking at global trends, it increasingly does seem that 0 emission vehicles may have finally reached the cusp of massive adoption. Do you see any opportunities in this space either in specific vehicle manufacturers or in related technologies. As an addendum, I will note that Berkshire has very relevant interest in energy, Pilot Flying J and BYD? Thank you.

Yeah. Well, we will. I hope you're right. And massive adoption has been sort of a moving target so far. But I hope we get there, but Berkshire would not be I don't think that we bring any special talent to that field, you've got vehicle manufacturers and I would certainly not know how to pick the winners in an industry like that.

But I'll be delighted if there are some winners. But don't count on us foreseeing who the winners will be and don't count on us for predicting when something will happen. It obviously has been a moving target so far and it is an incredible problem that society faces and and it may be that it may be that governments are not very good at solving it for a while. It's it's, all of climate change is a it's got a terrible problem just in the fact that, you know, in the fact that the United States particularly has been the one that's caused the problem the most and then we're asking poor societies to say, well, you've got to change the way you live because we lived the way we did. And, you know, that that really hasn't been settled yet.

It, you know, it it it It's a fascinating problem to me, but I don't have anything to add to how you really slice through the world. When I was born in 1930, there were just essentially 2,000,000,000 people in the world. Population statistic. Now there's 8,000,000,000. Now if you'd asked anybody in 1930, if you take the 50 smartest people in the world and you said what's the optimum population for the world?

And when you're 93 years old they would have not said 8,000,000,000. There wouldn't be anybody who would have been close to it but we did it. Now we're reaping some of the consequences of having having done that. And we got the benefits in the United States. I'm exaggerating here to some extent, but the developed world basically got it and then we're telling a whole bunch of other people that we want them to change the way they're live live because of the way they live we we lived, the way they live.

So we will see what happens with it, but that's that's a problem that that is very, very, very hard to solve that is solved among a couple 100 countries. And I really don't have anything to be to be, to contribute on it. And now I've got instructions from the thing, the the the monitor in front of me. I would like to introduce one person here, that

has

you all know because she's been there so many times, but my friend Carol Loomis, who is now well, she's going to be 95 on June 25th, The consent president is care of our office. And Carol has edited the Berkshire annual report. Since 1977, There we are, Ben. And there's there are 2 points I'd like to mention. Every year, I give Carol a little item for a bracelet that is a replica of the front page of the report that year and there are different colors and all of that sort of thing.

And so she now has what? Since 1977, 47 of them. And I think she's put 10 on each one. But I I've I've always wondered, you know, if she put them all on one one arm, whether one arm would now be 4 or 5 inches longer than the other. But I'm sure she's she foresaw that.

But I want to reveal one other. I want to reveal I want to ask one more question while Carol was here because I'm sure almost everybody in this audience grew up like I did, knowing that Thai cop's lifetime batting average was 3.67. I mean, he's the leader among everyone. And it may be that that record is never broken. And Ty Cobb, 367 is immortal.

But Carol has a distinction that probably most of you don't know, but she dated a type cop. And Carol was officed at 6th Avenue and 50th Street in the Time Life Building. And NBC was right across the street in in Rockefeller Center. And the quiz shows became the head of TV and Carol being the kind of person she is, walked across the street at lunchtime and went on the quiz show of the late 1950s and they gave her the industry or they gave her the questions regarding baseball. And Carol answered them all correctly.

Of course, she was an encyclopedic on all kinds of things. But so she knows all the answers. And she proceeded in. She was single at the time and she proceeded back to her office at Fortune. And at some point, she got a phone call from sounded like a fairly young man in Georgia and he said my uncle is Ty Cobb and he would like to take you to lunch at 21.

And so Carroll went to lunch with DiCobb at 21, and I think he subsequently had one more lunch. And then she decided to call it off. But those of you who follow baseball may have noticed that in the 19 nineties, they found that the statistics have been faulty when Ty Cobb played and that he actually only batted 366, that there were a couple of bad bets they didn't count. So the real question, I want to know whether it's from Carol, and I think she should maybe tell us, is that would she have dated Ty Cobb? Has she not?

I mean, I know she wouldn't have I know she wouldn't have dated Ty Cobb if his batting average had been 300 or something like that. But where was the cutoff point at which she would have told Ty Cobb to stay in Atlanta and forget about coming up to New York? And if Carol would if anybody has a microphone, Carol would care to express herself on that question. It's the unanswered question that I've had and all inquiring minds have had. And only she knows the answer.

And she's with her daughter. She married a wonderful guy, John Lewis and Barbara's Barbara's with her. I'm sure Barbara's been always wanting to ask this question, but it's kind of tough when you're in the family, but I am I'm sort of a non conscious guy who will do it in front of a lot of people. Carol? Or are we going to have Barbara's guess?

Either one was.

She would have been happy to go either way, right? Yeah.

Thank you. Carol.

Carol is the best business She comes to the baton of Coal Camp, Missouri. You know, I don't know Bob Kelly says around 1,000 probably. She never took an accounting course. And she ended up becoming the best business writer in the United States. And we, you know, she didn't want to be an editor actually.

I mean, she could have done other things at Fortune, but she just plain liked writing business stories. And like I say, she said that nobody came close to her and she started from scratch. But in 1977, I asked her to end my report and she turned out to be just as an editor. She was a writer. And all the way through this year, including this year, Carol has edited the Berkshire report.

And to the extent that anybody enjoys reading them, let's give a hand to Carol. Okay, and I've been told to show a video right before you go to lunch because it's only 30 some seconds and then we'll talk a little bit about more about it when we come. So if we'll dim the lights, we will have we're showing what a Berkshire shareholder did when she sold us $1,000,000,000 worth of stock the other day and you'll beat somebody that I hope is I know she is the prototype. She may have more zeros, but she's the prototype of a good many Berkshire Hathaway shareholders. It will be the first thing we talk about when we come back.

But some of you may have noticed, whatever it was, a few weeks back when Ruth Gottesman gave $1,000,000,000 to Albert Einstein to take care of all of them. And Ruth doesn't like a lot of attention drawn to herself, but here's how they felt at Albert Einstein when they announced that Ruth Gottesman had just made a decision to take care of all the all of the costs of education at Albert Einstein. And it's going to be in perpetuity. So let's just show the film.

I'm happy to share with you that starting in August this year, the Albert Einstein College of Medicine will be tuition free.

And that's why Charlie and I have had such fun running Berkshire. She transferred $1,000,000,000 to other people. She happened to do a Berkshire stock. And and, you know, they offered to name renamed the school after and everything like that, but she said, Albert Einstein, that's a pretty good name to start with. So, yeah, there's no ego involved, no nothing.

She just decided that she'd rather have 100 plus, closer to 150 eventually, of students be able to start out debt free and and proceed in life. And she did it happily and she did it without somebody asking, you know, name it, you know, put my name on all four sides of neon lights. And I salute her. So let's all have a lunch and we'll come back and talk a little bit more about that. Thanks.

Welcome back to CNBC special coverage of the Berkshire Hathaway shareholder meeting. I'm Mike Santoli live in Omaha, Nebraska. After taking questions for almost 3 hours, Warren Buffett has called a lunch break, promising to be back on stage in 1 hour. We have a big hour for you right here. Becky Quick is heading back over to join us.

And we will also speak live with Berkshire Board Member Ron Olson, Hummer Winblad Co Founder and Managing Partner and Winblad, Benjamin Moore Chief Dan Calkins and Graham Holdings CEO Tim O'Shaughnessy. You'll also hear from other Berkshire managers and a special guest Warren Buffett's sister, Bertie. In the morning session, Buffett along with Vice Chairs Greg Abel and Ajit Jain covered lots and lots of topics from the rationale for the company's recent sale of Apple shares to how high the cash pile at Berkshire will likely rise to the need for more analytics at GEICO and Warren's 2¢ on AI thrown in there as well. He also admitted that he's starting to slow down just a touch. He said, quote, he doesn't get any phone calls anymore and maybe it is not the time for him to take on any 4 year employment contracts or other agreements.

Let's start with Apple and what sounded like a rationale for why Berkshire sold a chunk of its shares, taxes. Buffett said selling shares this year, Berkshire paid a rate of 21% on the capital gains. He sounded as if he expects taxes are going to go up because the government, of course, is not going to stop spending, we'll need more money to tackle rising deficits.

One thing that may surprise you, but we almost everybody I know pays a lot more attention to not paying taxes than I think they should. We don't mind paying taxes at Berkshire, and we are paying a 21% federal rate on the gains we're taking in Apple. And that rate was 35% not that long ago, and it's been 52% in the past, when I've been operating. And, it, the government owns the federal government owns a part of the earnings of the business we make. They don't own the assets, but they own a percentage of the earnings.

And they can change that percentage in a year. And the percentage that they've decreed currently is 21%. And I would say with the present fiscal policies, I think that something has to give, and I think that that higher taxes are are quite likely and the government wants to take a greater share of your income or mine or Berkshire's, they can do it.

And just to put some numbers on that Apple sale, it was about 13% of Berkshire's holdings, something like 120,000,000 shares, 115,000,000 shares. So the gain the total proceeds, let's call it $20,000,000,000 would have paid $5,000,000,000 ish in 21 percent tax rate on that. So it seemed as if he was kind of softening perhaps the reasoning behind the Apple sale saying there's no real fundamental change in his view of the company. He said he fully expects it to continue to be Berkshire's largest holding. He also said he didn't mind building some cash right here and of course there is a lot of it that had piled up about 183,000,000,000 total at the end of the Q1.

He basically projected that would likely get to 200,000,000,000 or so by the end of the current quarter. That's probably just as cash comes in and he's not redeploying it very quickly and they're earning obviously very handsome yields on that 5%.

That's what I

thought was one of the weirdest things was. That's what I actually thought, one of the strangest things was. He said that he did this because he didn't mind building up the cash hoard at this point because of the environment that's taking place, I guess the economic environment, the stock outlook. I mean, I tried to pull a little more out of him later with another question and he didn't bite on it. But what are you going to do with all that cash?

Why do you need all that cash? He says he can't find good places to put it and that makes you wonder if he thinks the entire market's overvalued.

Yeah. That's the obvious inference. Although I guess you have to think of it as what would he put new money into that gets over that hurdle of 5%

P does? 5.4 percent, yes.

And also maybe that is big enough for him to feel as if it's interesting or material to the company.

I know he also said that he'd keep it in those T bills even if it was 1 percent. Don't don't try the Federal Reserve. But the hurdle is, yeah, you got to get more than 5% that you can earn in treasuries in a very safe environment. But I still don't have a great sense of whether he thinks the market is just overvalued or whether it's hard to do things when you're that big and you have much cash.

Yes, he clearly doesn't mind to have the financial cushion building up. He has never minded that. I also feel as if and he doesn't pay attention to just exactly where the stock is trading or anything, but it's not as if the market is penalizing Berkshire Hathaway for having $200,000,000,000 in cash. I mean it's got to you know it's trading at a good premium to book value. The value seems to be recognized at the underlying businesses.

There's nothing really impelling him to do much more. The other piece on the Apple side of it is the American Express and Coca Cola Holdings are all profit. It's all on paper gain. So you could if you were selling something because you think taxes are going on, you'd only sell something you think you might eventually sell and pay higher taxes on which Apple, again, the position got very big and the stock was up 40 plus percent last year.

I'm just looking at the market again. We'll try and get something else out of this because the shareholders don't mind to have a big cushion of cash. It's great if you can be opportunistic if there are bad things coming or opportunities that pop up down the road. But there are a lot of questions possibility that sell my shares to do some of these things. Is there the possibility for either a regular dividend or a special dividend at some point down the road?

Yes, it's definitely a question that's going to get louder. Obviously, people are looking toward whatever policies might change. Of course, so much of the conversation is what happens after Warren is no longer in the role. And in fact, I'm sure you're interested in your impressions of several times he's sort of gesturing toward he's kind of slowing down a little bit. The managers seem to call Greg and Ajit more than they do him directly.

Although I thought Ajit's answer was brilliant and that he said, yeah, it's because Warren would talk to them and say nice things to them, but he wouldn't let them basically do a run around. Right. Which I can think of a lot of managers that would be good news for you.

But he also said, I'm no longer as efficient as I used to be. And when he had the question about investments potentially in India, he said, I'm sure there's great things to do there, maybe a more energetic management would find them. So he's being self deprecating,

of course.

But I do think that that's something that is building in the conversation.

Yes. Okay. Berkshire's insurance portfolio took up a lot of the time in the morning session and Ajit Jain, Berkshire's Vice Chair of Insurance Operations did spend some time addressing one of GEICO's issues. That would be data analytics.

This has been a disadvantage at GEICO for a few years now. We are trying to still play catch up. Technology is something that is unfortunately a bottleneck, but there again we are making progress and equally importantly we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data. So yes, I recognize we are still behind. We're taking steps to bridge the gap and hopefully by the certainly by the end of 2025, we should be able to be along with the best of players when it comes to data analytics.

Hi, guys.

Right now, we want to bring in Berkshire Hathaway board member, Ron Olson. He is seated with us right now and ready to take some questions coming straight out of this. Ron, look, this was a pretty Berkshire intense series of questions that shareholders sent in just really getting to the heart of how Berkshire operates. And I think in a post Charlie world, and eventually post Warren, I think there were very pointed questions that came from shareholders on those questions. You're on the board.

You discuss this all the time. What were you thinking?

I was thinking how smart our shareholders are. The questions were right on. If I, I mean, these are the questions, I guess, I would say that the board has asked and want to ask and they've sharpened our every year, the commitment of these shareholders, their ownership adds to the value of the company. And I thought that's what came out of today's discussion. And Warren and Greg and Ajit's answers have been sensational.

Do we miss Charlie? Absolutely. Nobody's going to have quips like that first, like the movie review, but the substance was I think better than ever. It was just great.

And just actually we haven't mentioned it here yet. Just about the way that Warren kind of characterized this as the company that Charlie designed, he being the architect, first of all incredibly generous for somebody in Warren's position to essentially give that kind of credit. But I guess it also suggests because of all the questions are about what are you going to do to make sure this place stays the same as it is. It shows you that it's not like there's any big problems or challenges that the next person seems to have instead of except for preserving it.

Well, I think, yes, stay the same as it is in the fundamental call. Restructure, yes. But he also has underscored that Greg, Ajit, the next group of leaders of this company are going to be their own people, and they're going to make judgments that they have been empowered to make. And will they be different than Warren and Charlie? Perhaps.

But they

will all in the end have a base of the fundamental culture that this is a company owned by people who have an ownership interest. It's a company that wants to be around forever, and we want to have the opportunity to take advantage of the special advantages we have such as $180,000,000,000 of cash. I could go on and on about the culture, but these, Ajit, Greg, they own the culture as much as Warren has.

Hey, Ram, one of the advantages that Berkshire has is the ability to move very quickly in times of opportunity, times of uncertainty, market displacement. And that's in large part because Warren Buffett has been able to make decisions the average CEO would not be able to make. He can choose to spend $30,000,000,000 and check with the board kind of as an afterthought. Will Greg have that ability to move so quickly in times of chaos or in times of opportunity?

The board is as much aware of what Warren's ability to move quickly has made how it's made the company unique and better. We're not going to slow that down. Decision making, And let me say about Greg, I recently had an opportunity to work very closely with him in the very disappointing pilot dispute that we had. This is a person who is strategic, who has the ability to make quick and solid judgments, and, the board wants him to make those. You know, the unique deference the board's had to warn is is special, no doubt.

And will there be changes? I don't know. We will take a step at a time. But getting in the way of quick decision,

uh-uh.

And from my perspective, we want quick lawyering. We had that last deal with Allegheny put together in 10 days. And that's the way Berkshire operates. It's not complicated. It's simple.

You mentioned the deference that the board does pay to warrant. Implicitly the investors, the shareholders deferred to Warren on capital allocation and we were talking about the dividend situation. And of course he's always said we're going to create more returns, more wealth by me allocating that capital internally than just distributing it out as cash. Do you think that will be the case on to the next regime?

Let me say this, I think it's been the case and I think it's been the right way to go because frankly as a shareholder I'm a lot richer from that in effect for savings. Going forward, will there be an opportunity to deploy the capital in a way that that will continue? That will be a judgment that Greg will make. And will there be the possibility of dividends? I don't think anybody rule that out.

Frankly, I learned something today. I had forgotten that there was one dividend payment made early on.

The $0.10 when Warren said he went to the bathroom. Right.

He wouldn't have made it today, I guarantee you. But I think we will have opportunity. But as Warren and Charlie have demonstrated, patience is an incredible asset and they have had it and I think Gray will have it. He's not going to go out and willy nilly throw that money.

Very quickly Ron, the biggest issue probably facing Berkshire at this point outside of any of those is the legal liabilities associated with Berkshire Hathaway Energy. You're a lawyer, you know this stuff inside out, the legal liabilities that exist with that. And Warren really pointed it back to Pacificorp and what might happen in a state like California or Oregon with regulatory overreach potentially or oversight and legislative changes. What are

you doing that front? It's a very real risk. There are multiple causes for the great losses that are being experienced in the fires in the West and elsewhere around the world. And there's no way under the current system of allocating those damages basically 100% to the utilities that that can survive. These are issues that have to be recognized by the regulators or there will not be investor owned utilities.

And I think that is something that I was pleased to hear a little bit more about Utah today, how they've recognized it. You know, the United States government recognized it when nuclear power first came into being, and they created a special insurance for excess losses. Will that be done nationally or perhaps state by state? You know, that's yet to be determined, but I hope we have leaders, governmental leaders, who recognize this is a serious issue if we want to keep the power, dependability, reliability that I think the private investor owned entities have had. And frankly, as Warren said, I believe investor owned utilities can be more efficient than government owned utilities.

But somebody is going to have to carry it and it can't for long be just the utilities.

Ron Olson, Berkshire Board Member. Thank you, Ron.

Thank you.

Great to see you. In his 2024 annual letter, Warren Buffett described his younger sister, Bertie, as his perfect mental model when he is writing these letters. She's the reader that he pictures when he's writing to shareholders. I got a chance to sit down and speak with Bernie Buffett Elliott right here in Omaha about her big brother.

He's been with me my whole life and still is. And there are not many of us in our generation left now, so that even makes it more special. But even without that, you know, he's the one that has always been there. And in a way, he's my big brother, and he's protected me or always helped me if I need it. And he's, for length of time, you know, my biggest ever and still is emotional support.

Warren pointed out in the annual letter that you are a really smart savvy investor, that you're somebody who reads many newspapers every day. You have an opinion about financial issues, but you're also somebody who is a very smart investor in her own right that you've something like 45 years ago. You kind of decided to take all of the others things that you were trading. And what happened? You you put everything into Berkshire for the

most part. Well, I

figured out that Warren was better at it than I was. That was easy.

I mean, I'm That was easy. I mean, it sounds so simple, but it you know, that's just what happened. And and I thought, this is ridiculous. You know? He is so good.

And it was a little the the the hardest thing for me, and I think it's hard for a lot of investors, is that Berkshire Hathaway doesn't pay dividends, and I was in a place in my life where I wanted some dividends, you know, and and why I said, well, you just sell stock, you know? It's like, sell stock. You don't know. You can't sell principal, you know, whatever. I didn't say that to him, you know, because I just listen and do what he tells me to do.

So anyway but once I got over that hump and realized, well, that's wonderful. I, you know, I can decide when I declare a dividend. I can declare one for myself, you know, in its essence by selling some stock. And, you know, once that was that didn't stop me from doing it, but I had to get used to that emotionally, but I did pretty fast.

And and he said then you you made that change and then you did nothing. Like, the patience.

And and there were a lot of times along the way because I had a brokerage account and and people, you know, who were brokers or this or that or wanted money to start something or whatever, you know, approached me about that. But luckily, I didn't even have to think about it much. I mean, I knew I was I was all in with Warren and still am and all the way.

So you and Warren have always had this wonderful relationship. He says you all have never had a fight, but he does say that there are some competitive streaks.

Yes. Yes.

What what comes to mind when you think about competitive games or issues with

Warren? Well, when we played Monopoly, when we were and I was really little, of course, and he was a little bit older. But, I I remember this so distinctly, but I was so happy because I had this money, and I was saving up the money in little piles in front of me. But as I noticed as the game went on, I was landing on more and more properties and then they had houses and hotels. Pretty sure all my money was gone.

And I realized too late that it was a better strategy to buy property than hoard the money. But my joke with him about that is, and we laugh about it because it is actually a joke, but that I train him to be a winner because since he was winning all the time, playing against me, that he owes his great success to the fact that I trained him to win. And he loved it so much, he just kept going. But that's a joke. It's it's good work, Bert.

Thank you so much for taking the time to talk with us.

Yeah. Well, well, it's a pleasure. And and I just want to say thing say one thing because many people ask me about Warren, you know, and they find out about him and stuff. And and to me, he's always been my big brother. He's he's my big brother.

You know, I know he's this tycoon and stuff, and I sort of know that in my head, but that has nothing to do with my reality. He's my big brother and he's always been a wonderful big brother and I love him and I feel so lucky that he's my big brother.

Again, that was, Birdie just talking a little bit yesterday. She's her his younger sister. She's 90 years old and she went back and talked about how he's always they were always very competitive. She lost nearly every single time, but she's got another great story that maybe we'll talk about later or on the podcast where she finally beat him in bridge a few years ago back in the 90s, not just a few years ago, but back in the 1990s. And, she has a very funny story about how he handled that.

We'll try and get into that at some point too. But she's the type of investor he thinks of because she moved everything 45 years ago or so into Berkshire and sat and has done nothing since. And it's that patience that you hear preached about again and again here, the willingness to do nothing and sit with what makes most investors uncomfortable and uneasy to not be moving and not be running around. It saves you money from the tax perspective rather than jumping in and out of stocks and that patience has been what's paid off certainly for long term shareholders.

And the fact that that's the ideal reader he has in mind when he writes his letters explains why he's mostly just using that to reinforce the message that people presumably have absorbed over the years. So I'm going to guess maybe Buffett doesn't like to lose more. Is that going to be the punch line?

He didn't behave very well, you're right.

Okay. Excellent. Well, the monopoly stuff is great too. Well, we are now joined by Notatec Investor Anne Winblad. She's the founder of Hummer Winblad Venture Partners.

Good to see

you Anne.

Good to see you too.

So we were I guess just remarking the morning seemed to go nice and smoothly Warren seemed to be on his game. What were your impressions?

The energy was really high in the room in an event where you thought it might start out softer, but Warren was on his game for sure.

HE AGAIN WAS ASKED ABOUT AI AND BASICALLY SAID I'M NOT Really DON'T Really KNOW How IT WORKS NOT AN EXPERT seems like it might have some dangers, maybe it's going to foster a new golden age of scamming, I guess. He was introduced to an AI version of himself. How are you thinking about it though? And just in terms of the way the investment flows have been so massive, but mostly on the hardware side, at least initially? And how are you thinking about exploiting it?

Well, the investments have been pretty high on the software side as well. I mean, we had at least 3 to 4 large platform vendors that on their earnings calls, with the exception of Apple, talked about AI quite substantially and how this wave is really important to their future products and their future customers. So we really are seeing that as part of the digital economy. This conference is this meeting is interesting because it sort of ignores the digital economy with the exception of Apple, which is presented to everybody as a consumer brand.

That's why you're such a unique character and you've been coming to this meeting for a very long time. You're a VC investor. You look at growth stocks. You are interested in what's happening in the lands of technology and yet you're here in this value investing bubble. And I just wonder having a foot in each camp, what you take out of this weekend and what you kind of think from the Valley perspective at the same time?

Well, I'm originally from the Midwest, Bueno Rates in Minnesota. So I am a Midwesterner. So at my heart, I probably am a value investor. The message to take away here is that we're all playing the long game. And that's really important to consider right now in technology.

When you get Silicon Valley, you get excited about the short game. What do we do today, tomorrow, what's right in front of me? Warren talked about a couple of things where the deal flow he has is enormous. And he mostly says no. We're in the business of saying no as well.

Our job is to audition the future. And at the same time, our job is to build products that serve customers. And many of our U. S. Customers and global customers are right here at this conference.

So it really gives you a feel of the customer to be here as well as this concept that is more than a concept. It's really a core strategy that we're all playing a long game.

So your job, you feel like, is to say no most of the time too. I think that's interesting because a lot of people look at what's happening in Silicon Valley and they say, I was just buying a bunch of lottery tickets and figuring one of them will hit. You sound like you

do things very differently. I think true venture capitalists really are in the long game. They really are looking for technology change. They can sit on the sidelines and not do deals. They build investors in their funds who really understand that we're really looking to build substantial companies, not to flip companies or sell them, but we're really there to build value and long term value.

We're really part of an industry. We're a focused investor. We are only software, although software is almost a $600,000,000,000 industry in the U. S. Alone, about half the size of our largest industry, banking.

So there's a lot going on at all times, but very few choices that will turn into large companies.

If the, I don't know, a couple dozen companies that were represented here as Berkshire subsidiaries. If they were each a public company and most of them could be, they would all have an AI strategy or they would be talking about an AI strategy. They're talking about how they're going to basically be able to take advantage of it. How are you viewing that in terms of the application? Because when I said before that it's mostly on the hardware side, you know, Amazon, Microsoft, Meta, Google, they are absolutely more software players, but they're building data centers and they're acquiring a lot of hardware to do what they want to do.

Yes, this wave of technology AI is more capital intensive than the cloud, which was more capital intensive than software before it. It. So it seems that each wave is requiring more integration into hardware and semiconductor technology, NVIDIA being the analytics wave. It's going to be very, very challenging for companies that are behind on the previous waves to catch up here because this wave eclipses data analytics. It's not AI, it's generative AI.

So we really do see fast moving innovation here, which is an opportunity for those who can be extremely agile, have technical skills embedded in their company, really know how to integrate this into value for their company, whether it's productivity gains or new products, we'll end up ahead of the game.

I think we're going to actually hear what Warren had to say about AI when he was asked.

If I was interested in investing in scamming, it's going to be the growth industry of all time and it's enabled in a way. Now maybe, you know, obviously AI has potential for good things too, but I don't know how you based on the one I saw recently, I practically would send money to myself over in some crazy country. I do think, as someone who doesn't understand a damn thing about it, that it is it has enormous potential for good and enormous potential for harm and I just don't know how that plays out.

So clearly that's the case. There's always potential for good and harm. Do you feel as if there's any kind of consensus gathering about how we might manage the risks

here? I think that's starting to gather. It's really not going to be through regulation because that's too slow and this is moving way too fast. But I do think we'll see more industry coherence in this case on this particular wave of technology of how to limit the bad actors. Because this is a powerful tool for good, as Warren said.

And bad actors have caught on to digital technology some time ago. And the better tools we provide ourselves, the better tools we provide the bad actors.

Even if you can control it and have industry consensus within the United States and maybe even some of the Western countries, It's a different story when you know places like China are digging into this and maybe they have a different viewpoint of some of those things or some of the bad actors to be able to pick up on that? How do you stay ahead of it?

You can't. So this is why we also invest in security companies. So what happens in the investment strategy here is you see the platforms first, you then see probably a couple application companies emerge like Salesforce did in the cloud. But around it, we build the picks and shovels of security. Those are great investment opportunities for us.

And we really start getting ahead of it even at the coding level. What's embedded as companies are coding. These are the first set of companies that are being invested in that help the software that's being developed not have malicious stuff embedded in it. But that's the only way to do it is to use innovation to combat innovation.

Anne, great to see you. Thanks a lot.

Thank you.

We were here on the floor of the convention hall yesterday and it wasn't just Warren Buffett who was touring through the boots of the Berkshire Companies on Shareholder Shopping Day. We caught up not only with Warren, but also with the actor and shareholder Bill Murray, who had a surprise role in an annual Berkshire Hathaway tradition.

Every year, when March Madness comes around, we have everybody at Berkshire can enter a tournament to pick out, fill up their bracket. And the winner this year got $250,000 but and it's limited to people that are on our payroll on our March 1st of the year. But this year, I invited 2 more people to participate in this affair. And today, I wanna report the results that Uh-oh. Uh-oh.

We got the results. We got the results.

Here we go.

Let's go to the scorecard. Alright. We opened

it up a whole

New Jersey.

A whole New Jersey. And we go to the scorecard, and there were approximately 64,000 employees that entered the contest and the winner got $250,000 And Becky, I am happy to report. She finished 29,480. So she was slightly above the slightly above average. Wow.

But mister Murray, who has a son that is dynamite, and and knows basketball and all that sort of thing. But he came in 54,309. Wow. Wow. Wow.

Wow. Not only Talk

where you would, Kim.

I was I I came in about where Becky No.

You didn't

do that pose.

Well, I didn't want to be beaten by girl. Right? But I knew I wouldn't be beating my girl.

They went on to talk a little bit about it. He was referencing Bill Murray's son, Luke Murray, who's the assistant coach at Yukon, which has now won the national title 2 years running. And, they went back and forth about

that, but Warren had

some very nice things

to say. I mean, I hope they'll at least pick Yukon to win even though he didn't

do well.

He he explained it. He actually had his bracket folded up in his pocket. He's been carrying around. It was completely creased. He explained that the reason he did so poorly as he he basically didn't put in any team he didn't like.

So he was it was the teams he wanted to win, not the ones he thought would win.

Yeah. So Yukon got

the path to

the final. Everything was

Everything else

was going

to come by the way.

Yeah, well, I have a brother who's a Yukon alum who was very thrilled with all that and with Luke Murray. All right, if you've watched the Berkshire meeting before, our next guest may be a familiar face. She's been attending this meeting since she was 7 years old and asked a question here when she was just 8.

And why specifically have you invested Burlington Northern instead of buying a capital efficient company like American Express?

You're killing me, Daphne.

I'm certainly glad she's not 9 years old. Yeah.

She's taken the mic a few times since then. CNBC producer Katie Kramer is live on the showroom floor with Daphne and her dad. Katie.

Thanks Mike. Yes, Daphne Kalia Starr is here. She's been a Berkshire Hathaway shareholder for more than half of her life at this point. Daphne, tell me about your plan this morning. What time did you get here in line today?

Well, we got here later than usual. Our goal is usually around like 12 30, but we slept in. We got here at 3. Yeah. And it was a mad dash.

And so I think we camped out. The doors opened at 7. It was like 4, 3 and a half hours. It was intense.

And what happens when the doors open? You went straight to a mic position?

Yeah, it's a stampede. I left my backpack with my dad, and I sprinted to get seats. And then I saw the mic directly above me and I was like, okay, this is it.

And how'd you do this year on the lottery? Where is your position?

You know, I got I got 5th speaker and so it doesn't look like it's going to happen this year.

But you've not only asked a question when you were 7 years old, 8 years old in 2018, but you've asked how many times, 4?

4. I've been really lucky.

What's your process about how to come up with a great question?

Well, I don't know about great, but I usually sift through current events. My first year, I had had a question beforehand because I had read the snowball and then my dad gave me some investing lessons. But every year since, I've tried to do something topical. So this year, I wanted to do something about the National Debt because it's become a really big issue now. So

Do you help Daphne at all writing the questions?

I don't help in the writing. At the end, when she's done, like she's written it out, I invite her if she wants to practice it once before she actually does it because she's got we discovered she learned the 1st year that, like, there's an echo with the mic, and so it's just helpful for

her to have.

It really threw me off, the echo. Yeah.

It helped her to have practiced it once if she knows she's gonna say it. So that's that's my role.

Yeah. You're a really scary audience too. You're like, your hands are crossed and everything.

So it's a tough job to be a shareholder. It's a tough job to do something like this when you're so young, but you're going to come back next year, right? You'll be out there in line again?

I really hope so. Yes.

Sarah,

great. Well, guys, thank you so much. Daphne and Erez, and we're at the Switch Mallows booth here, which has been the other crazy line in addition to the shareholder line outside this morning. But lots of stuff to do here on the floor during lunchtime and we'll cross our fingers for Daphne. She's a position number 5 for Mic 3.

Maybe we'll see

you next year though. Yes. Thank you.

Thanks guys. I'll send it back to you.

Katie, thank you. And you can tell Daphne not to worry. I have seen lot of other questions that kind of came into that same idea. She's not the only one who's thought that this is a really rich area, just the U. S.

Debt and deficit. So you might get that question asked whether or not she gets to be the one who reads it. Again, it's amazing to see Daphne here after so many years and to be that lucky because it's not easy to get a position at the bike.

No. Well, I hear it 3 AM instead of 12:30.

Yeah. That's my reply. Well, the other thing I'll say is there was a guy who the very first question I asked was written by a shareholder who later made his way to one of the microphones and asked it. And that's the first time I've ever seen somebody able to get 2 questions in at once. I was like, what?

My, when I heard the guy say his name, I'm like, I know that name.

Practical code.

Yeah. All right. Joining us right now is Tim O'Shaughnessy. He's the CEO of Graham Holdings, whose operations include educational services, television broadcasting, auto dealerships and hospitality companies. And Tim, it's great to see you today.

Wonderful to be here.

I know you've been coming for over a decade. I think it's even longer than that. It's been a very long time that you've been a regular visitor here. And you're somebody who is thinking of Graham Holdings, as you're trying to model it as a baby Berkshire, you like to find interesting companies that maybe other people haven't found yet. I know you take all kinds of trips to out off the beaten fast places to find those companies.

What did you hear today as somebody who's been here for a long time and as somebody who is trying to take that same sort of investing approach? Well, I

thought there was a lot of focus on cash and the importance of making sure that the cash balance at Berkshire continues to be strong. That being part of the reason for selling down some of Apple was pretty fascinating. 21 percent tax rate versus 35% working into that. And when you look at the opportunities from the equity markets and what else is happening in the world wanting to be more comfortable with the cash balance, I mean that was something that stuck in pretty hard when it's already at 180,000,000,000 and going to 200,000,000,000, that's not necessarily where you would think to start.

And we were having a conversation about that right at the beginning of this, this half hour or whatever we're doing this hour right now. To me, I thought, holy cow, does he see a really big potential problem coming where he can be opportunistic? Or does he think stocks are overvalued here? I was running through those scenarios in my head. What were you thinking?

Those are the same scenarios that were going through my head. It really seemed like there was an emphasis on it's not really attractive right now and there's a lot going on in the world that could be kind of problematic and the opportunities that could change in a hurry and I want to have a lot of cash to do it.

A perennial theme of course of his remarks and for that of Charlie's remarks is sort of like knowing where your confidence lies and staying within it. Multiple times he sort of lets things go by and since whole parts of the world maybe are not a place where Berkshire has a particular advantage. Talk about India in particular, why Japan was an exception to that, why China maybe isn't a place that's that fruitful right now. But just more broadly in terms of that idea of like having some kind of a narrow expertise and then kind of parlaying that into what comes next. How does that apply to what you do in your various verticals?

Warren has this idea of a too hard box and that's one that I steal as well. There's a lot of things that just don't make any SENSE. THERE ARE MANY PEOPLE MUCH SMARTER THAN THE PEOPLE LIKE ME THAT WORK AT GRAM HOLDINGS. SO WE PUT A LOT IN THE TOO HARD BOX. BUT you look at Warren's framework of insurance is narrow as a vertical, but you have to understand a lot about the world.

And that building up that framework that can exist. So when you do see something that comes across, and it makes sense because it goes into your pre existing framework, We are one of our businesses is the largest producer of fire retardant wood in the United States.

Of what wood?

Fire retardant wood. It's called Hoover Treated Wood Products. It's one of those companies that's off the beaten path that you never would have thought of, but it's really important societally and you kind of realize, well, the world isn't going to want buildings to be more combustible in the future. So that wasn't a real hard one to figure out if you could if you could understand the business pretty well.

All right. Tell us about another big fat pitch, something that you felt was really in your field of expertise.

Yeah. Well, it's we've really gone and built some large businesses in home health care. And once again, you really had to think about, well, what does society want? Hospitals want to have post acute care occur at home. People would rather recover at home.

Payers would rather have lower cost treatments happen at home. So if you think about those, what are those societal trends and then how can you go build off of it? So we have a company at this point in time that is all about providing in home healthcare services, whether it's with nurses, physicians assistants, etcetera. And that's the type of thing that you can see, well that trend probably isn't going to change. And you don't have

to be you have to

be a genius to figure out that that's something that the world is going to want more of 10 years from now than today.

What's the company and do you own it outright?

Yes. So we have it's called Graham Health Care Group and and it's in home health, hospitality, infusion services, actually even things like in home Botox, esthetician services. There's a lot of things people will be willing to do at home at this point in time.

And at this point I mean the big opportunities are usually also though not a secret. So everyone knows kind of the demographics and even the employment trends. You look at the jobs report every single time it's healthcare a big hiring area. So how do you cut it I guess play an advantage or maybe it's just scale?

Well I think it's thinking a little bit about the things that aren't going to change as well. Health care is 17%, 18% of U. S. GDP. It's probably going to remain that for a while.

And so really just kind of figuring out where are the niches that you can understand within those big sectors is something that I think can be pretty important overall.

Tim O'Shaughnessy. Tim, thank you for being with us again from Graham Holdings. Great to see you. Right here on the convention center floor, shareholders can shop from all of these Berkshire businesses that are here that have set up camp. We've shown you a lot of booths over the last couple of days.

And at the start of the morning's Q and A session, Buffett mentioned some pretty eye popping numbers. See's candies brought along a record 6 tons of candy. I mean, that's what he said, but I'm pretty sure the CEO said it was even more candy than that. I think they got those numbers wrong. I think it's quite a bit more than that that they brought along.

They do expect to sell out the bookstore by the way, the bookstore that's here and usually sells 20 to 25 different business books that are related to Berkshire Hathaway. It's only selling one book. That's poor Charlie, Charlie's Almanac, the 4th edition, hundreds and hundreds of copies sold yesterday. They brought 5,000 and I bet they sell out of those books too. And Dairy Queen is expected to sell over 20,000 treats.

We're talking dilly bars, I think is most of it. We've seen dilly bars and maybe, what else do they have down

there? There was somebody hawking, is it called a Buster bar or something

like that?

Yeah. I don't know them.

We're not the ones that have

been eating

as much of them, but we've been seeing them because they're right next door. I spoke with the heads of some of those companies and we got the chance to talk through some of those numbers also. Here's what they had to say.

In our categories, it's been challenging. And the industries that we face, flooring, furniture, appliance, electronics, they definitely have had their challenges and you can read all the public reports. It's just consumers having a challenge, inflation, housing's down. And so we just have to figure out a way to grow and to figure out a way to take share.

Yeah. And I guess that's a big part of it too with mortgage rates so high. People don't want to move out of their homes. They want to hold on to their 3% mortgage rate. And that means that people aren't moving, which would spur more buying too.

Exactly right. Exactly. There's a just traffic in general is down. And but there's always a silver lining like this weekend at Berkshire because it gives us the opportunity to really do great things and give the customers great values. And it's like Christmas time and Black Friday.

So this is a great week for us.

What are the bright spots just in terms of categories that

Appliances is doing fairly well. But again, it's driven by a replacement cycle now versus new construction. And there are certain furniture categories that are doing mattresses are still doing very well. But I would say in general terms, there's not any of the industries that we're in that are positive as an industry.

Overall, I think the consumer is feeling healthy, but that doesn't tell the whole picture. There are certainly areas where the consumer is kind of tapped out. What are you seeing right now?

I mean, I think the consumer is definitely showing some resilience. I think consumer confidence has remained high despite all the indicators in the economy that might say otherwise. But there are beginning, I think, to be some pressures on consumers. I think the inflationary environment is taking a little toll, especially at the lower income levels. Across our customer base, I think we see some price pressure, very price sensitive, discount sensitive, especially in the lower income groupings.

So we are seeing a little bit pressure on average ticket. So we're seeing healthy shopping trends. Fortunately, jewelry resonates even in tough times. People still get engaged and still have big milestones in their lives. So I would say it's kind of mixed.

I mean, we're a little bit cautious as we look to the balance of the year with so much uncertainty in the global environment. And in the U. S, with the election year, who knows what will happen. We're being a little cautious as we look forward. But overall, our business is doing pretty well and the consumer is kind of hanging in there.

When the consumer feels some of those pricing pressures, do they trade down and do they trade down for things like engagement rings or do they just trade down for the other gifts that they're buying?

We're seeing trading down kind of across the board. We're not seeing that so much, I would say, at our higher income customers, but at lower income for sure. It's kind of interesting in our business. There is some deflationary pressure right now in the engagement space because of the market dynamics with lab grown diamonds. Yes.

So that's a contributor a little bit, I think, to the downward trend. But people are definitely buying down kind of across the board.

Where do things stand right now just in terms of commodity prices, what you see? Have prices come back down? Is it a lot easier to manage through this stuff now?

We've seen prices absolutely moderate since the COVID peaks. And we look to bring value every single day to our customers. So our products are typically a very small component in that final finished bottle that you would buy. So we just look to bring value to our customers every day.

What were you guys

We brought 11.5 tons and we also brought a little more merch this year. So we've got a candle, we've got t shirts, we've got a couple of other things people have been asking for for the last few years. And so we want to take care of our customers and we brought a lot more product this year.

You anticipate you'll sell out?

We do.

Yeah 11.5 tons.

We do. We do. And anything that's left over. We're actually going to reach out to a food bank here and donate what's left instead of trucking it back to California.

Wow. Okay, that's a lot. What's the most popular thing that you sell?

The most well, it's always the peanut brittle, peanut brittle in the staples And particularly this year because we put a sleeve on the peanut brittle with a wonderful quote from Charlie. And so, yeah, that's going incredibly well. And the Berkshire box that has a picture of Warren and, and and Mary on it as well. So those are flying like crazy.

Yeah. Because peanut brittle, that was Charlie's favorite.

Yeah. Yeah.

So we have an animation of Charlie on the front of it, leaning on some peanut brittle and kind of had to give him the tip of the cap.

Okay. This is your home crowd.

Oh, man. Yeah.

Fans all over the place. Yeah. I mean, our shops are always filled with people who love the brand, but this is different. These are these are these are our owners.

The most important driver in our business is new home sales. And so, you know, with interest rates being high, inventory levels being low, and affordability of housing being upwardly moving, it's been a slower time over the last 12 to 14 months, I would say. And so it's it's a big driver because think about it, when somebody goes to sell their home, they usually fix up, do a little bit of painting. They sell the home, somebody buys it, they go in, they repaint what they didn't like about the old owners' taste. So it's really 2 paint projects every time an existing home sale happens.

And so as that slows, driven by interest rates, it definitely impacts our business.

Well, the afternoon Q and A session, just moments away. Let's bring in cnbc.com markets reporter Yoon Lee for more on the day's events so far. Yoon, great to see you.

Thanks, great to see you too.

We've gone through this continued selling down of the Apple position by Berkshire Hathaway. He gave a nod in the direction of maybe there were some tax considerations. Any clues in what you heard from Warren about whether he's looking to redeploy some of this cash?

Yes. So I think he seemed a little bit more in the mood to Canada. And, you know, he's he was very vague about it. We don't know if it's private or public, but just the fact that he's looking and overseas is very interesting. Now he's invested in Canada before, a couple of years ago buying a mortgage underwriter just a few years ago.

And as things get more expensive in the U. S, he started to look more overseas and we know he's been very successful with his Japan bet That paid off very, very well.

And of course, there's also this undisclosed position that seems to have been building.

Yeah. There's a lot of speculation as to this secret holding that he's been buying or it could be his one of his managers. Berkshire has been buying for the past 3 quarters straight. And we know it's something in the bank insurance or finance sector. And it is in a $1,000,000,000 it's in a couple of $1,000,000,000 so it is very significant bet.

And that we don't know that yet. I hope somebody asked that question in the afternoon.

Yeah, exactly. I mean pretty hard to think he would actually name it, but who knows, you never know. What else in terms of obviously a lot of attention on succession questions both for Warren and even for Ajay Jain, it was a very specific question about what happens to leadership in the insurance division after that.

Yes, and also about the equity portfolio because I've been talking to shareholders here on the ground, and they asked me, you know, what's going to happen to Berkshire's top holdings like Coca Cola, American Express? And Warren said, you know, firstly, Apple will extremely likely to be continue to be the largest position. And when Greg takes over, they will still have Coca Cola or the long time holdings that Berkshire has.

Sure. I think we do have a little bit of what Warren might have said, some of these indications that maybe things are sort of slowing down on his side.

One way or another, there are more than 24 hours in his day. And I just don't know how he covers the ground. He does. He's willing to work. I mean, I'm, you know, I I, you know, and I couldn't get as much done anyway, you know, what I could do in in couple of hours, you know, may may take hours now.

It it it I just don't read as fast and everything's said. But it's working very well. And this place, if anything happened to me, it would be working extremely well the next day. I don't get any phone calls. It could actually we can we can bring something up so we got some answering machine that people think I'm still around you know or something.

Yes. And then as we were saying before, he even was saying in reference to the idea of there being opportunities in India, he sort of said, well, maybe some other management team might have the energy to look into that stuff. Right.

Yeah. It's something that because he said Berkshire has built this reputation as this prominent deal maker and investor, but something in India, he may not have the energy to do anymore, different cultures and so forth. But in terms of Japan, it worked out very well. And he's apparently looking at Canada.

Yes. In response to a question, he did point to that a couple of times. Also really a little skeptical about potentially doing more in China at this point as well. And I guess just to circle back to the Apple thing quickly, he seemed to take pains both by talking about taxes and also saying it's an even better business than Coca Cola and American Express to suggest that he hasn't necessarily reassessed the business in terms of its long term value.

Right. And he said one of the bigger motives is tax reasons. But at the same time, when you look at Apple, the stock was getting very expensive, right? Last time I checked, it was trading 27 times forward earnings and it rallied almost 50% in 2023 and now it's slowed down a little bit. There was also a lot of concerns about China demand, also antitrust issue.

I don't think it gets talked about enough. So a lot of issues. We didn't hear that from Orin himself, but it's interesting that he did reveal the tax risk.

Yeah. Well, tax Tim Cook was in the audience.

I know. It's a little bit

tricky. He bought

a whole lot more about that. He also said he would love to buy back more Berkshire stock, but it doesn't trade enough.

Maybe it's

also a little bit expensive.

Yes. They bought back about $2,600,000,000 in the Q1, a little bit more than Q4, but in line, yes.

All right. Yun Lee, great to see you. Thanks so much. We have been talking about the first morning Q and A session of the Berkshire Hathaway annual meeting. We are now going to start and go to the other afternoon session Q and A.

Warren Buffett is going to be taking questions again, those that have been vetted by Becky from shareholders as well as directly from shareholders who've come from all around the world. We heard that in the morning. We also did close the morning session with kind of a moving tribute to Ruth Gottesman who has used $1,000,000,000 in appreciated Berkshire Hathaway stock to make a donation to Albert Einstein Medical College, of course, as we all know. Q and A now getting underway.

Marchez, we'll have to talk about various questions you may have. I just like to follow on however with that film we showed just before we left for launch because it says something about Berkshire. There are all kinds of public companies and wealthy public companies and throughout America. And there are certainly cases where in one family, somebody has made a very large amount of money and is devoting it to philanthropy or much of it to philanthropy such as the Walton family would be the number one thing in Walmart. And certainly Bill did the same thing at Bill Gates did the same thing at Microsoft.

But what is unusual about Berkshire is that a very significant number of Berkshire shareholders located all over the United States, not just in Omaha. But the number of different Berkshire holders who have contributed $100,000,000 or more to their local charities, usually with people not knowing about it. I think it's many multiples of any other public company in the country. It's not more multiples than those put a whole lot into philosophy. And I don't know the details of the family, but clearly there's a huge sum of money that the Walmart family, I'm sure has done all kinds of things philanthropic and will continue to do it.

But I don't think you'll find any company where a group of shareholders who aren't related to each other, So many of them have done something along the lines of what Ruth did a few weeks ago just to exchange a little piece of paper that they've held for 5 decades and they've lived well themselves, they haven't denied their family anything. But they don't feel that they have to create a dynasty or anything and they give it back to society. And a great many do it anonymously. They do it in many states. To some extent, we see a little some concentration of it in Nebraska because generally when you're giving away a lot of money, they call it in the philanthropic world, they call it absorption capacity.

And truth is it's very hard to give away $1,000,000,000 to $10 at a time to people who are needy or something of the sort. And so large institutions have this absorption capacity which tend to be universities or colleges or that sort of thing. And some philanthropies are much more imaginative than others. But the one thing I've never well, most of them want to do it anonymously, so I can't tell specific stories. But I have to say one thing that was astounding is that the same day we bought $1,000,000,000 worth of Berkshire Class A stock from Ruth so that and I guess we were actually buying it from the school at that point because he's just given them and so the transaction was with them.

But Mark Mallard in our office bought $1,000,000,000 from them, but he also bought $500,000,000 worth of stock from somebody else that nobody will ever have heard of and in a different state. And I won't elaborate beyond that. But we have had a very significant number of people and there's more to come. And obviously they had to be people that came in early or their parents did or their grandparents did. But they've all lived good lives.

They haven't denied themselves anything. I mean, they have second homes and they but they generally, I would say that almost universally they people knew them in the community everything but they they've they've used what they accomplished, what they saved. They denied themselves consumption themselves. That's what savings are, Is consumption deferred? And they've given they've financed everything all over the country.

And usually they like to do it anonymously. I outed my sister when I thought about her in the annual report. But, Ernie's here today. And told her she should wear a T shirt or something, said no solicitors allowed or something. But they just do it.

And it's really both Charlie and I thought it's really it's really fun to work for a group of people like that rather than for index funds or for hedge funds or whatever it may be. I mean, you're just seeing what people actually it sort of restate restores your faith in humanity that people defer their own consumption within the family for decades decades. And then they could do something like enable, I think it may end up being 150 people to pursue different lives and talent of the people and diverse people to become a dream of being a a doctor and and not have to incur incredible debt to do it or whatever may be the case. There's a million different examples. And I want you to know that you're very you're a unique actually group of shareholders among public companies as far as I know in terms of the way you've deferred your own consumption while living fine to help other people.

And it takes a lot of years, but it can really amount to something very substantial. And what Ruth did was, you know, at roughly my age, she looked at a little piece of paper, which actually was a claim check on the output of others in the future. And she said, instead of the output being for her, the output would be for a continuing stream of people for decades decades decades to come that we're having a different life in the pursuit of becoming doctors than they otherwise would have. And Berkshire has been part of her husband Sandy contributed substantially to Berkshire's record. Sandy was a wonderful partner to have.

So he it was both input by him and then there was deferred consumption by his family and then there was ultimately this final gift to Albert Einstein and like I said the same day, there's only $500,000,000 it will go to in a different way. But it's happening all over and I don't think any companies like that. So I just want to tell you that it's inspiring to work for a group of shareholders. And Becky, go to it.

All right. The next question comes from Slavin Vukobrat. As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffet has been managing?

Or will this function be exercised by Mr. Combs and Mr. Wechsler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions such as large acquisitions be separated from the common stock selection process?

Yes, I would say that decision actually will be made when I'm not around. And I may try and come back and haunt them if they do it differently. But

I'm not sure the Ouija board or

they will get that job done. So that job, I'll never know the answer on whether it got covered. But I feel very comfortable about the fact that it will be made by a board that they've got loads of brainpower, they've got a dedication to an unusual institution. And they will figure things out. But I would say that if I were on that board and we're making the decision, I would probably, knowing Greg, I would just leave the capital allocation to Greg.

And he understands businesses extremely well. And if you understand businesses, you understand you understand common stocks. I mean, if you really know how business works, you are an investment manager. What how much you manage? It, maybe just your own funds or maybe other people.

And if you really are primarily interested in getting assets under management, which is where the money is, you don't really have to understand that sort of thing. But that's not the case with Ted or Todd obviously, but I think the responsibility ought to be entirely with Greg. The responsibility has been with me and I farmed out some of it and I used to think differently about how that would be handled. But I think the responsibility should be that of the CEO and whatever that CEO decides may be helpful in effectuating that responsibility. That's up to Amber Heard to decide at the time they're running the money.

But so I would say that my thinking on that has developed to some extent. As the sums have grown so large at Burchard and we do not want to try and have, 200 people around that are managing a billion. HHS just doesn't work. And I think that when you're handling the sums that we will have, you've got to think very strategically about how to do very big things. And I think Greg is capable of doing that.

I think I've missed a lot of stuff in the past. So I'm actually wiser about doing that now. You know, I would do it better this time around than 2,008, 2009 if something akin to that happened. But it won't be exactly like 2,008 or 2009. You can be sure of that.

But you also can say that there will be times when having huge sums available extremely quickly, maybe it will be once every 5 years, maybe it will probably be more like once every 10 years or something. But the way as the world gets more sophisticated, complicated and intertwined, more can go wrong. And there are no sense going through here, exploring the possibilities of the different things that could happen. But you do want to be able to act when it happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move.

It wasn't that people didn't have money in 2,008. It's that they were paralyzed. And we did have the advantage of having some capital and a willingness to an eagerness even to act and the government that in effect looks at us as a asset instead of a liability. And I think that all of those qualities will be even more important as our capital pile grows. And so I think Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go.

You never know whether it will be next week, next year, next decade, but you won't be in all of me. It won't be a century from now, that is for sure. And the more intertwined and sophisticated the world financial situation gets, the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to large problems. Greg, does that bother you at all or not?

Without directly answering the question, I think there is one important thing is I think as we go through any transition, it's important to know that the capital allocation principles that Berkshire lives by today will continue to survive Warren. And I think that's what the thing I'd want to communicate that we'll we have our operating businesses, insurance, non insurance. We're going to cap that we'll provide them the capital necessary to be successful and grow if it's appropriate. At the same time, we're expecting return of always looking at potentially new businesses as a whole or in a piece. And as you've always highlighted and I fully agree, we'll always look at equities as we're investing in a business, either 1% or 100%.

But we're looking at the business, we're looking at the economic prospects of that business and how sustainable it is and what it will look like 10 years from now and is our the capital we originally put in at exponential risk or where is that risk set that profile? And then of course, and then we'll obviously have our continue to always put excess cash in the safest investment there is in U. S. Treasuries knowing we want to maintain that fortress of a balance sheet for two reasons. 1, to act but also to always protect our shareholders.

If we have a we want to maintain the position Berkshire is in now realistically for the to ensure the insurers.

Well, when he says that, it makes me wish I'd stayed around to be number 2 instead of number 1 in this process over the years. It's it doesn't get more fun than what we're doing and we're better positioned than ever before. We're not positioned, no, however, to earn extraordinary returns versus what American business generally earns. As I'm you know, I would hope it could be slightly better. But nobody's going to be dramatically better in some and you know, over the next century, it gets very hard to

it gets very hard to predict who the winner will be.

And And if you look back as we did a few meetings ago as the top 20 companies in the world at 10 year intervals, you realize the game isn't quite as easy as it looks. But getting a decent result actually is reasonably should be reasonably easy if you just don't get talked out of doing what has worked in the past and don't get carried away with fads and don't listen to people who have different interests in in, mine than the the interest of our shareholders. Okay. We'll go to station number 1.

Hello, Mr. Buffet. My name is Tomo Droge. I'm from Dusseldorf, Germany.

This is

my first time out here in Omaha, so thank you for having us here today. So my question is directed to you, Mr. Buffet and Mr. Abel. In 2019, you reportedly made a bid for the IT distribution business, Tech Data, and commented that you understand its role as a middleman.

I wonder if you could kindly elaborate on the criteria you look at when evaluating IT distribution businesses like Tech Data and their competitive position? Thank you.

Well, we had some experience with distribution businesses and we know their potential to a degree and their limitations. And Greg, you were involved in that more than I was. I mean that was a case where there had been a bid made and there was a go shop provision and I think the management probably would have preferred that we buy it. And when we went in with a better bid, the original party raised their bid and we never make the same offer twice. So Greg, tell them what.

Yeah. So absolutely in 2019 we saw Tech Data as a unique opportunity when we saw the other bid and the underlying value of that distribution business, we did Warren Warren and I were talking and others made the conclusion we should talk to management. We talked to the team. They were very interested in Berkshire being their long term owner. And we still saw good value in the opportunity and we had a good understanding of distribution businesses.

We have TTI. It's not exactly identical to tech data in that they're very specific to the who their customers are and who they serve and supply and who they purchase from because on the distribution side, it's important to have that input coming in from folks who want their product and you know it's needed on the other side that there's demand for it. They have an excellent model. If you think of TTi, for example, Warren's talked about Paul many times and the person who founded this business, But it's a unique business in that, our revenues on that business is approximately $10,000,000,000 The average part they sell is a little over $0.09 95,000,000,000 parts go through their warehouse every year. But it's a model that if you have the right people on both sides of the equation and you understand that well, there's a unique opportunity there.

And that is something we saw in Tech Data and as Warren highlighted, we made our bid. Unfortunately, it was then topped by the original bidder and we moved on, but we thought very highly of it.

We've probably seen at least 5 of them in aggregate that over the last 3

or 4 or 5 years.

It's not a business that you can dream about because it's a decent business. But for example, many of the items that the manufacturer just they don't want to tie up their capital. You tie up if you have, you know, a million plus SKUs, the goal of stock keeping you guys, it's like selling jellybeans or something like that. And then and you do you're serving a purpose to a degree, but you don't you don't really it isn't your product in effect. I mean you're just a good system for the producer of the equipment to get it to the end user without tying up a lot of capital being in a business they don't want to be in.

And so we understand. We but there's no magic to it. There was a with DTI, you had a marvelous man running things. And and and he's and he's and he he when you get a marvelous person running something to some extent that's a lot for for better people Underneath Greg and I went to Paul Andrews' funeral a few years ago and there were 300 people or so there and there wasn't one person that had to say something particularly nice but stretched a little bit about about the D. C.

I mean, everybody, Paul Andrews was the real McCoy and he was he was an amazing man and he behaved wonderfully with Berkshire. I mean he wanted to do more for Berkshire than Berkshire would do for him. I mean it was very and you run into those people. As I say, you run into people that bend over backwards for us and then some bend over forwards. But that's just the way it is in this world.

And we've had quite a few that have bent over backwards for us. And the distribution business is not a wonderful business, but it is a business and it's a business that if it's big enough, it's one we would look at and we would buy additional. And TTi makes some smaller acquisitions on its own all the time. I don't even hear about them until I read the quarterly reports. And so we want to build up we want to build our businesses in every area that we operate and we've got unlimited capital to do it.

So we're willing to have small acquisitions take place if they fit in with something we already have. But we're not in the business of going out after small acquisitions. And if we did, we would we just don't have the people for it. And it wouldn't move the needle anyway at Berkshire. We would have been happy doing the deal with the questioner asked about.

But if we don't do it, it just doesn't make that much difference. We want to do it. If we do it, we'll do it well. We'll do it right. They'll make the right decision.

If they don't, you know, we will find something else to do with the money in the end. And we can always buy a little more of TTi for you, the shareholders, by just buying in our stock too.

Exactly.

Okay. Let's see, we need Becky next, don't we? Yeah, Becky?

All right, Warren, earlier you talked about selling some of the Apple shares in order to build up your cash supply. And I think it's had a lot of people wondering where you see opportunities or what might be coming or market valuation. So I'll ask this question from Foster Taylor. At the 1999 annual meeting, you mentioned that if you owned all of America's 500 businesses, you would be making $334,000,000,000 while paying $10,500,000,000,000 You emphasized that this was not a good return on investment. Today, by my math, the S and P 500 has a market capitalization of around $44,000,000,000,000 with profits of around $1,450,000,000,000 This is a very similar return on investment to the

well, from 1990 about from 1990. I'm a misunderstood on the 1999, but there have been times in my life that I've been awash in so many opportunities that I could have invested everything by nightfall. And then there's other times when the year goes well, not in the early days, but now. We just we haven't seen anything that makes sense that moves the needle. Now we've made small acquisitions during the year.

Our companies have made acquisitions and we you know, Greg and I may talk about something that involves a $300,000,000 purchase or something like that. And you know, if it fits well enough, we do it. But and if our managers see things that fit them, we want to look at them because our managers do not have necessarily the same equations in mind that we do. But there's some managers which we would end up give just say, you know, whatever you decide to do. And then there's other managers that wouldn't that would not know how to allocate capital particularly.

And that they don't have to be able to be great capital allocators if they happen to be great at serving customers and understand their own industry and all of that. They can be great managers. A good many of them are capital allocators and others are. But the this is not this is not a time when when the phone is going to be ringing often, but there are times from that and Greg will know how to handle them as well or better than I have over time. And Charlie and I, you know, we missed a lot of things.

And, what we really regretted was missing something that you're not be very big. We never We never worried about missing something that we didn't understand. I mean, why should we be able to, to predict the future of every business any more than we can predict what wheat yields are likely to be in Illinois next year. Well, not wheat in Illinois, wheat in Kansas, but corn in Illinois. So I wouldn't I don't really think of whether it's similar to 1999 because I'm not that good on chronology anyway unless something really dramatic happened at the time.

I mean, I remember things from 2,008, 2009 better much better than I remember whether something happened in 2015 or 1987 or well, 1987 I remember because of October 19th. But I just don't think that way. I just look at what I can do every day. Greg?

I'm going to have to use it. Nothing. Sorry. Nothing to add.

Okay. We'll go to station 2. Station 2.

Hello. My name is Stefan Ruhlenbacher. I am a shareholder from Hamburg, Germany. I've been coming to Omaha since 2007 and I'm deeply grateful for all the things I could learn here both about investing and about life, in particular creating circumstances that will enable me to lead a productive life during my entire healthy lifespan. So thank you for that.

My question to Warren, your favorite holding period is forever. Holding American Express or Coca Cola for decades. Berkshire recently went in and out of Markel and you, I believe sold and later bought Oxy, which I think happens to everyone all the time. But can you maybe to us give examples of your thought process when you exit positions? Thank you.

Well, there are various reasons for exiting positions. One is if you need the money, but that doesn't happen very often with us. But it used to happen on every decision I made when I started when I was 20 years old, which I consider the post Graham period, although I actually started in 1940 2 if you just talk about buying stocks. But in any event, the decision process is really quite interesting in a certain way because we made Charlie and I made decisions extremely fast. But in effect after years of thinking about the parameters that would enable us to make the quick decision when the one that presented itself.

And people have speculated on how I've decided to really put a lot of money into Apple. And for a reason, I can't one thing that Charlie and I both learned a lot about was consumer behavior. That didn't mean we thought we could run a a furniture store or anything else, but we we did learn a lot when we bought a furniture chain in Baltimore and we quickly really realized that it was a mistake. But having made that mistake made us smarter about actually thinking through what the capital allocation process would be and how people are likely to behave in the future with department stores and all kinds of things that we wouldn't really be focused on. So we learned something about consumer behavior from that.

We didn't learn how to run a department store. Now, the next one was See's Candy. And See's Candy was also a study of consumer behavior. We didn't know how to make candy. We didn't there were all kinds of things we didn't know.

But we've learned more about consumer behavior as we go along. And that sort of background in a very general way led up to the side of consumer behavior in terms of Apple's products. And in that case, while I watched what was happening at the Furniture Mart in terms of people leaving the store even though we were selling Apple at a price where we weren't even making any money. But it was just so popular that if we didn't have it, people left the store and went to Best Buy or someplace. And if you know the they can't stand anybody leaving the store.

So they behave accordingly. But then you learned that had the interest in the brand. And then you have a 1000000 different inputs. But I think the psychologists call this aperceptive mass, but there is something that comes along that takes a whole bunch of observations that you've made and knowledge you have and then crystallizes your thinking into action, big action in the case of Apple. And there actually is something which I don't mean to be mysterious, but I really can't talk about.

But it was perfectly legal, everything I'm sure you hear that. But it just happened to be something that entered the picture that took all the other observations and I guess my mind reached what they call aperceptive mass which I really don't know anything about. But I've I know the phenomenon when I experience it. And that is we saw something that I felt was well, enormously underpriced and maybe I've used this example before. But if you talk to most people, if they have an iPhone and they have a second car, the second car cost them $30,000 or $35,000 and they were told that they never could have the iPhone again or they could never have the 2nd car again.

They would give up the 2nd car, but the 2nd car cost them 20 times. So now people don't think about their purchases that way, but I think about their behavior. And so we just say without knowing I don't know at the faint there may be some little guy inside the iPhone or something. I have no idea how it works. But I also know what I mean.

I know what it means to people and I know how to use it and I think I know enough about consumer behavior to know this one of the great products, maybe the greatest product of all time and the value it offers is incredible. And I think it has and Tim Cook, I think it has somebody that in in his own way is the equivalent of a partner partner with Steve Jobs that could do one thing extraordinarily well and more than one application. But one thing and Tim was the perfect partner to serve sequentially with them. So it's you sort of know it when you see it. I actually saw it with GEICO when I went there in 1950.

I didn't know exactly what I was seeing. But, Lorimer Davidson, on a Saturday in 4 hours taught me enough about what I understood what auto insurance was and I knew what a car was and I knew what people went through people's minds. And I know I knew they didn't like to buy it, but I knew they couldn't drive without it. So that was pretty interesting. And then but he filled in all the blanks in my mind as I sat there on that Saturday afternoon.

And, every now and then it happens. Why do you have this? The person you met, there are all these different potential spouses in the room and then something happens that you decide that this is the one for you. I think it was Rogers and Hammerstein that some Enchanted Evening wrote about that. Well, our idea of Enchanted Evening is to come up with a business, no Charlie and me.

And there is an aspect of knowing a whole lot and having a whole lot of experiences and then seeing something that turns on the light bulb. And that will continue to happen and I hope it happens a few times to you, but you can't make it happen tomorrow, but you can prepare yourself for it happening tomorrow and it will happen sometimes.

Hey Warren, he mentioned Oxy, which I think is a great example where you made the original decision basically on a weekend with some thought, but as the more you learned about Oxy and the asset position they had, their ability to operate in an exceptional manner and then a strong CEO around capital allocation. I think your confidence in which was reflected in continuing to acquire more shares is sort of that type of process.

Yeah, It's exactly to the point. I mean, I just learned more as I went along. I learned enough. You know, I'd never I'd heard of Occidental Petroleum. Occidental Petroleum happens to to, then a descendant to some not a descendant, but a continuation of city service, which was the first stock I bought.

And of course, I knew a lot about the oil and gas business, but I didn't know anything about geology. And so I knew the economics of it. I had a lot of various things stored in my mind about the business. But I never heard of Vicky until I guess it was Friday or Saturday and we met on Sunday morning, we made a deal. But that was one sort of deal.

And then as time passed, all the kinds of different events happened and, you know, Taikon came in. I mean, there are a million nations couldn't predict it to start. And I formed certain opinions as I went along, but then, I learned more as I went along. And then at a point when I heard an investor call that it was on, it put things together for me in a way. It didn't mean I knew I had a sure thing or anything like that.

I don't know what the price of oil was going to be next year. But I knew that it was something to act on. So we did. And we're very happy we did and we still don't know what the price of oil is going to be next year. Nobody does.

But I think the odds are very good that it was and but not a cinch that it was a good decision and we've got options to buy more stock and you know when we get through with it, we could it could be a worthwhile investment for Berkshire and we're in it and we're under for keeps. And there are other things that we own that we aren't in for keeps. Oh, incidentally, I should just throw this out since there's been speculation on it. We've sold. A, I was 100% responsible for the Paramount decision.

I read speculation that either Ted or Todd had some involvement of that. No, it was 100% my decision. And we sold it all and we lost quite a bit of money. And that happens in this business too. But actually owning Paramount made me think even further.

I like to think deeper, but I certainly want harder even about the whole question of what people do with their leisure time and what the governing principles are of running an entertainment business of any sort, whether it's sports or movies or whatever it might be. And I think I'm smarter now than I was a year or 2 a couple of years ago, but I also think I'm poorer because I acquired the knowledge of the manner I did. But, if it I just want to be very clear that, a, we lost money on PERMA and, b, I did it all by myself, folks.

I don't

know whether I've anticipated one of Becky's questions now, but we will find out. Let's see now. Yeah, you're next, Becky.

Yes, you did anticipate one of the questions. Let's go to another one. This question comes from Vincent James in Munich, Germany. In the Chairman's letter, Warren points out that the profit margins for BNSF have slipped relative to all 5 other railroads. However, Warren comments in the letter, BNSF carries more freight and spends more on capital expenditures than any of the other 5 major railroads and has a vast service territory second to none.

Given the comments from Warren about the clear strengths of BNSF, what explains the decline in revenue and profit and in particular the profit margins relative to the other 5 railroads? What are the issues relative to the other railroads and what is being done to address them? Please be specific.

Okay. And I will well, how specific we get depends on what, Greg wants to say. But Greg is that it's Greg's responsibility. It's my responsibility for the purchase and for the operation up till Greg to roll over. But I think I'll let Greg answer that.

Sure.

Yeah, the Warren touched on it in the comments from the as reflected there are very accurate. If you look at this quarter's results or our last year's results, they were both they're disappointing as shareholders and disappointing in the relative to the other Class 1 railroads. And as highlighted in the question, there's 5 other Class 1 railroads. So it's pretty easy to understand how you're performing versus the others and there's a lot of other variables, but there's some very simple things to look at. When we look at where we've been on with associated with Burlington, I would just back up a little bit because if you go back to 2021, the Burlington team and management team and the group, we're making excellent progress on a lot of fronts when it comes to our operating and both being efficient and effective in how we're operating the railroad.

And I remember very specific comments from myself in 2022 where I commented that that was the year that resolved the supply chain issues, a lot going on in the West Coast ports, our trains were backed up in a variety of places, and we called that a reset year. And I think we did need a reset year on the operational side. But as we moved into 'twenty three, the business cost level, cost structure, we didn't reset it to the underlying demand we are seeing. We anticipated more demand and we did not reset our cost structure. And the team is working very hard as we speak to both reset the cost structure and allocate the cost resources where they need to be.

And when you go through something like that, what we've recognized as an organization, yes, the demand of the rail will drive a certain amount of the cost. But the reality is that the rail industry, if you go back many, many years, it's flat. There's not a lot of growth in the industry. There's opportunities to become more efficient, effective and our margins can go up. But the reality is the demand is going to be flat, but it does move within different sectors of the rail.

It can be in the consumer products, it can be in industrial, it can be in ag. But overall, it's generally going

to be relatively flat. So we need to

get our cost structure right and we need going to And that means it's going to be a continuous exercise. We can't stop. We can't say we've gotten far enough because our competitors and we compete with the other rails, but we also do compete with the truck industry. We have to have a cost structure that allows us to compete both within our rail industry and within the transportation sector as a whole. So the team at Burlington is working very hard to address the cost structure, just like we have in the past.

I think one thing we do recognize when the other railroads have implemented precision scheduled railroading, There's other metrics that we have to continue to pay attention to and challenge ourselves if we're not at their level, what are the things that are driving it. So we're going to when they ask for specifics, I'll give you a few. We have to look at our rail yards and understand how we're managing that. We have to look at our locomotive fleet, both the size and how we're utilizing that and challenge ourselves. And we have to then go back to how we're using our employee resources and allocating them across the business.

So there's a lot to be done there. Our team is 100% committed to driving to the right cost structure that's consistent with the underlying demand in the business. And then we can't stop there is the answer. So a lot to be done, but we have a team that's absolutely engaged and committed to it and we'll make we're going to make good progress in this current year.

At Berkshire, we want everybody to have the ideas that there's a lot to be done with every business. So it is we are not only peaky with Bill, a remarkable company and Omaha building company, really remarkable. And it is a question after everything they did that something that was done particularly well, digging a tunnel under the East River or something when it said it couldn't be done. He would say he would be he was pleased but not satisfied. And that is exactly the way we want the attitude to be at Berkshire forever.

Omaha is a railroad town. If if president Lincoln in 18/62, I think it was, had decided to pick Saint Joe or Plattsmouth or any place else to build the transcontinental railroad at Omaha. It would probably be a little tired of 20,000 or something on the banks of Missouri. But making with Lincoln's desire to make this the Eastern connection and make a transcontinental railroad, almost just took off. So it's been railroading at its base.

And anybody that is interested in financial matters had to think about railroads, plus they have a certain glamour to them anyway. But the interesting thing is that UP, which is our main competitor, themselves fell way behind 20 or 25 years ago before Jim before Jim Young came in. And in 2000, whenever it was, 'eight or so, I started buying free railroad socks and Union Pacific, BNSF and Norfolk Western, I believe. I don't know why I wasn't buying CNO, but in any event, Jim Young had done a marvelous job with being with the Union Pacific. So we owned all 3 stocks.

But what we did in 2,009 is we were able well, we already own 22 percent of it, but overall it was $35,000,000 $1,000,000,000 which was a significant part of our capital. We were able to put it to work in a business we liked and we there are certain tax advantages that come in terms of making money in something that's more than 80% on, but call it 100% on in this case versus making it through stocks. So it has a net benefit to us from making the same amount of money owning 1 of the other railroads by owning all of the railroads, and they got 35,000,000,000 out during a recessionary period. I think that was the worst quarter, the Q3 of 2009. Maybe the rails had had it for a long time.

So it's worked out. Actually, it's worked out very well, but it's because we were putting out capital in 2,008 and 2,009 and if we put money in anything, we'd have made a lot of money. But it's more satisfying and it's actually better in certain ways tax wise You'll make it from something that's 100% owned and all bunch of 5% or 10% owned businesses. We're, you know, as I mentioned in the annual report, railroads are absolutely essential to the country. That doesn't mean they're on the cutting edge of everything.

They're just essential to the country. And, you know, it, that's why the government, you know, I think they took them over one time and they they negotiate what our labor settlements will be and everything. And and if you shut down the railroads of the country, it would be incredible, the effects. But and it would be impossible to construct now. I mean, look at what's happening in California when they're trying to build the line.

I mean, you know, everybody's worried about the environmental effect of every mile and, you know, and what will happen to the various species of birds. Can you imagine the rail system of the United States being built? It it it would it would take decades unless the war was on and the government took over things and just ordered them. It can't create it. So we love owning a business like that.

It's going to be around 100 years from now. It won't be the best growth business in the world at all during that period, but it will be essential. And what it earns in its relation to its its replacement value is a pittance, but we'll do fine in terms of what we paid for it. And we'll distribute substantial amounts in relation to what we paid to Berkshire in a very tax efficient way. And so it's when when the question is, what are the issues relative to the other railroads?

You know, it wouldn't have been the end of the world if at all if we bought the Union Pacific and Jim Young had stayed alive to run it for us. That would have been great too, but we had the opportunity to buy BNSF and it's been good for them and it's been good for us. We think it's been a very important asset to the country and I just hope we can find something in other industries that where it makes as much sense as that where we can put a whole bunch of money to work at an advantageous time. So let's go on to Station 3. Is that correct or not?

Yes.

Okay. Kia or good afternoon Mr. Buffet, Mr. Abel. My name is Sirapod Woo, a resident of New Zealand, but originally from Thailand.

This is my first time in America and the first time attending the meeting. The journey was quite rough, but it was all worth it though because I can now personally thank you, Mr. Buffet, and the late Charlie Munger, while he is still with us, for sharing your wisdom with us all these years. So thank you.

Thank you for coming.

So here's my question for you, Mr. Buffet. Towards the end of 2018, you mentioned that you guarantee you could make a 50% annual return if you had to start again with under $1,000,000 The question is, if tomorrow you woke up in the body of Your body. 20 year

old America.

Your body. But that's

fine. And your name was now Warren Alacotte. And you had some money to invest on a full time basis. What method or methods would you use to achieve that return? Would it involve flipping through 20,000 pages of Moody's manual or similar publications or finding 25 gigawatts or would it be hunting for great companies at a fair price as Mr.

Mungo would or would it be a combination of both with opportunity costs serving as the final arbiter or which method to use given that your investing opportunity has now brought in significantly? Thank you. Cop and cop.

Good question. I'm glad you came. The answer would be, in my particular case, it would be going through the 20,000 pages. And since we were talking about railroads, you know, I went through the Moody's transportation manual a couple of times. That was 1500 or 2000 pages or probably 1500 pages.

And I found all kinds of interesting things when I was 50 or when I was 20 or 21. And I don't imagine there's anybody here that knows about the Green Bay and Western Railroad Company. But there were 100 and 100 of railroad companies and I like to read about every one of them. The Green Bay and Western, in those days everybody had a nickname for for railroads. I mean, that was that was just what Northern Pacific was the nipper and, you know, Phoebe Snow was one of them in the east that used to go up to Cornell.

And, the Green Band Western was known as grab baggage and walk and GB and W. And they had a bond that was actually the common stock and they had a common stock that was actually a bond. And, you know, that could lead to unusual things. But they wouldn't lead to unusual things that would work for you with many 1,000,000 of dollars. But but if you collected a whole bunch of those, which I set out to do, and actually that's what impressed Charlie when I first met him because I knew all the details of all these little companies on the West Coast that he thought I would never have heard of.

But but I knew about the Los Angeles Athletic Club or whatever it might be. And he thought he was the only one that knew about that. And that became an instant point of connection. So to answer your question, I would I would I don't know what the equivalent of Moody's manuals or anything would be but I would I would try and know everything about everything small. And I would find something.

And with $1,000,000 you could earn 50% a year. But you have to be in love with the subject. You can't just be in love with the money. You really got to just find it like a essentially like people find other things in other fields because they just love looking for them. A biologist looks for something because they may they want to find something.

They And it's built in. I don't know how the human brain works that much and I don't think anybody understands too well how the human brain works. But there's different people that just find it exciting to expand their knowledge in a given area. I know great British players, I know great chess players actually. Kasparov came to Omaha and met Mrs.

B. I've had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas. So all I know is the human brain is complicated and but it does its best when you find out what your brain is really suited for and then you just pound that out from that point and that's what I would be doing if I had a small amount of money and I wanted to make 50% a year. But I also wanted to just play the game. And you can't do it if you really if you don't find the game of interest, whether it's bridge or whether, you know, whatever it may be, chess or in this case finding securities that are undervalued.

But it sounds to me like you're on the right track. I mean anybody who will come all the way to this annual meeting has got something in their mind other than bridge or chess. So I'm glad you came and come again next year. And now we move now we move to Becky.

This question comes from Denny Poland, a shareholder from Pittsburgh. When describing the principal agent problem, mister Munger said that capitalism often works best when the people managing the property also own the property. In recent years, agents of pension funds and asset management firms who do not have significant personal ownership stakes in Berkshire have forwarded proposals that were not in the economic interest of shareholders. What can be done to limit the negative influence of these agents in the decades after you're no longer able to cast significant votes against them?

Well, that's that's a very perceptive question and and it's been answered in a temporary manner, but who knows what these how the situation will develop in the future. All I know is that you have a wonderful hand at Berkshire Hathaway, but you have to you have to be able to think your way. I mean, obviously, you have to think your way through political realities or you have to think your way for what will cause you want a, you want to be on you want you want to be regarded as an asset to the country because you'll find more solutions if you are an asset you owe to the country anyway. But the Ahmed, you'll find more solutions than if you regard it as evil or or something and worse yet if you deserve it. So it's it's it's it's something that's constantly in our mind and it needs to be in the mind of the directors.

And they need to think for themselves on this rather than about the conventional wisdom, which, you know, in a sense you don't want to become a cynic about life, but almost everybody that approaches you if you have tons of resources that's got some interest in figuring out how to use your resources to their advantage. And that's true whether they're in politics or whether they're in investment banking or whether they're selling you, whatever it may be that they're selling. I don't want to do any injury to anybody, but life insurance agents see the advantage of buying life insurance. And investment managers get paid based on assets managed to get interested in selling you their services. Imagine if everybody in this room were following the investment advice of somebody that said, you know, for 1% a year, I'll tell you how to invest your money.

And in 1950, when we started in 19 65, they would have they would have said, well, buy Berkshire Hathaway. And if they were around now and they saw their 1% deal, they'd be collecting $8,000,000,000 a year from people who aren't getting any dividends from us. So they would have a different interest in the kind of contract they worked out with you than you would have. And best thing to do was just pay them a commission one time and own the stock. But you have to be alert to how what human nature does to both other people and to you.

And then you, you know, if you think it if you think it through well and actually listen to what Charlie has told

you,

you'll have a big head start on most people. Charlie, there's one thing that I should mention that really is terribly interesting about Charlie. Charlie knew the importance of psychology and human behavior and incentives and all of that. He he figured that out very early. And of course, he gave some talks even on, you know, 25 or so ways, whatever it happened to be.

I don't remember the exact number, but different ways that one person could take advantage of another by understanding how humans behave. And then after doing a magnificent job of explaining it, he believed in understanding what others would do, but he thought it was beneath him. And to actually use those methods to manipulate people. It's a really interesting human being that thinks through the psychology of human behavior and figures out, you know, how you become a great insurance salesman or manager on Wall Street or accumulative assets under management or whatever it may be and you get very rich by understanding the weaknesses of others to some extent and then decide that it's very important for you to recognize these when they occur. It's very important for you to know them better than the person that actually is using them, but not that you don't have to stoop to using them yourself.

And and Charlie told me that that, you know, in his lifetime, after he figured this out, There were a couple of times when he used them. He wasn't proud of it, but he also never lied to me. So he explained to me that there were a couple of times when he used some of these techniques, but he it wasn't he didn't plan on using them anymore, but he also wanted me to know that if if if I ever did something like that, I wasn't really behaving terribly that he allowed for he allowed for the fact that he was he was may misbehave. So I'm sure that I behaved somewhat better before my marriage than I did afterwards in my enthusiasm for different activities like dancing or something. And he said that's, you know, we all do it, but don't do it again.

So that's, that's part of acquiring human wisdom. And speaking of human wisdom, we've just got that one book out there by Charlie, I mean, the Poor Charlie's Almanac, and that's worth reading 3 or 4 times. I think I read Ben Graham's book about 5 or 6 times. And each time I read it, I realized that I just needed to think a little more deeply about certain things. They weren't complicated or anything.

But you know, it's better to if you've got some great instruction like you get with Charlie, it's better to read it several times than to just figure you'll just read every book once and it's in the library. Okay, let's go to section 4.

Jeff Rabiller from Tulsa, Oklahoma. And I'm thinking of Doctor. Graham, Mr. Munger, your father. And my question is for all of us, but it's probably especially for the younger people in the room, the importance of picking the right heroes in life, choosing friends wisely, And maybe tell us a story, if you could, about each of those folks.

Thank you, sir.

Well, there's no question you're 100% right in terms of having the right heroes. And, you know, you're lucky if you get them. I mean, Charlie had Charlie Adam, I Adam. And the interesting thing, my sister is here today, my younger sister that was the 2 survivors. And we both experienced having the same hero, even though as we grew older, we saw that we didn't agree with plenty of his ideas, but we did agree with his values and motivation.

And that's that's a better lesson than having somebody that that's reading to you from a catechism that is has got a lot of rules in it, which are pretty good rules, but but there's a special special place for somebody that that is going to continue loving you even if you break some of the rules. And that's what Charlie had in his life, was what Bernie and I had in our life. So I would just repeat what you said. I don't need to give you a bunch of

well, I'm

when I ran away from home. I'll give you a specific example with me. When I ran away from home and went and we hitchhiked up to Hershey, Pennsylvania and got picked up by the state police and everything and I talked these other 2 guys into it. And we lied like crazy to the state police saying we had our parents' permission, some kid at the place where we stayed and kept them off that we'd run away from home and we started like I said when the state police picked us up we decided that 2 things, you know, we decided to tell them much lies above the fact we had our parents' permission and we decided we better get out of Pershing because these cops were going to find out sooner or later. And so anyway, we end up back in Washington that for a couple of days.

And when I walked in the door, well, one of the boys' mother and this other kid was the congressman Roger Bell. And his mother was in the hospital over this whole thing. He'd taken out his cash and his savings bonds. And so she was sick and Judge Bell, her husband was all concerned and everything. And I walked in the door in Washington and my mother said, how come you came back so soon?

And my father said, he said, I know you can do better. And I just paid more attention to my father than my mother. And so you want to have the right heroes and you don't have to have them. It's not the heroes based on what they've accomplished and it's it's just, you know, it's it's it's it's it's the people that you want to be yourself. And if you copy the right people, you're off to a great start.

And I don't mean a great start about making money. I mean a great start about living your life. So you can check with my sister, Bertie, who is here and see if I've told the story correctly. She ran away from home too incidentally, she didn't get as far as I got. But she was running away to go over to my grandfather's house, which was about 2 miles away.

But I don't want to denigrate her runaway abilities because she is much more accomplished than I am in all kinds of other things. But when it comes to running away, I definitely outclassed her. Okay, let's go to Becky.

This question comes from Vedant Sharma in India. Warren, you and Charlie have often said that you were able to identify the people you want to go into business with and have had an exceptional record in that. However, in the case of Pilot, we noticed that the final stake purchase ended up in a dispute and had a sense of smart accounting to put it one way to squeeze a little more out from the deal than was deserved by the seller. Knowing well that this has been settled out of court and needs confidentiality, I would like your views on some of the lessons learned that may be beneficial for future deals to watch for and for coming leadership to look out for as well.

I'll make two comments on that. A couple of the directors had our doubts about their doubts about going in. And in any event, pilot is working out well for us. And as my friend Sam Butler one time said to me that and he was talking in general about certain kinds of situations, but he said, well, Warren, he said, all is well that ends. And that's where we are.

So we'll go to station 5. Well, while we're getting to Station 5, I'll tell you a little bit more about the fellow that is now running pilot. I knew you may have met here that Greg had known for a long, long time. And he grew up in Omaha and came from a poor family and was raised by his mother. And went to the same high school, public high school that my wife went to North High, went to University of Omaha, set an all time record in rushing yardage and playing there.

He was a bouncer. Yes. Crafted by the New York Giants as I remember.

Exactly. Yeah.

And, but then injured actually in spring training, as I remember, in some way. And so he ended up being an intern. Not an intern, but a trainee, I might say, right, for Mid American before I was there. And now here he is still relatively young and he's running a huge company and we've got incredible confidence in what he will do and we like very, very, very much the business that was created by Big Jim Haslam and the, you know, it really is almost an only in an America type story, but it it does show you what somebody was some real stuff and with a mother that believes in them and with bad breaks along the way. I mean, imagine how you'd feel if you were drafted by the New York Giants and then you suffered some injury in the spring training or something.

I mean, it just hurts. But it's not an experience I would have ever had. It's another I mean, that was the last guy chosen. But the in order to see that, he's running a company, well, depends on the price of the deal, but it's a huge company. And what does he have, 20, 25,000?

Right. Yeah, of employees. Yeah. 5,000. Yeah.

And he's got many, many, many years to go. So I couldn't be more pleased about not only the acquisition of Pilot, but but just what it tells you about America. You can catch what do you have to look up to read about them in Google or interview with Adam?

Yeah. I'm trying to think if it's a podcast.

Yeah. He's got a podcast. A podcast that will just blow you away. And if you don't think this is a great country and has a lot of great people. All you got to do is read that podcast.

So we

but we do have a great set of assets here. Oh, yeah. If you look at pilot, we have 800 more than 800 station travel centers. And just so everybody knows, I mean, the beauty of that and there is a question regarding this morning around fuel choices at Pilot. And the exciting thing is in the end, Pilot's going to serve whatever fuel our customers need.

It can be electric, it can be renewable diesel, it can be diesel, or any of the various sustainable fuels. But the point is it has exceptional locations that are on the interstate highways.

Hundreds of them.

Hundreds of them. And we bought an incredible franchise, and now we have a great leadership team in both Adam and his team that's around them. So we're pleased where that opportunity will go. Yeah, we've got probably

the average one might be 10 or 12 acres or something like that zone commercial on interstates throughout the whole United States. I mean, it who knows? But what was created there is amazing, too. He had a fellow that played at University of Pennsylvania I mean, University of Tennessee, and undefeated and came away from this football team. And you think, well, another football player, you know, maybe he goes out and there may be some intermediate parts in the story about a little bit, but he buys a gas station and he turns it into something that is huge.

So it's we're really delighted with with it and and, you know, it's another kind of only in America story. And, you know, how many of us can become an all American number one ranks team, let alone start a business that goes on to these sort of heights. So we feel very good about it. Becky?

No, I think they're ready for 5 now.

Oh, I see. I think he's

up there now. Oh, okay. Ready to go.

Okay. Go do it.

Hello, Mr. Buffet. My name is Zhang Yabo. I came from micro city, Hainan, China. So I want to express my sincere gratitude for you, for the extraordinary value you generated for shareholders and the positive influences you've had on younger generation of investors like us.

And my question relates to the concept of maximizing the duration of compounding. As individuals age, the quality of compounding inevitably diminishes. What are your secrets in maintaining your sharp man, extraordinary judgment and great physical condition? We wish you well. Thank you.

Well, you don't know me well, but that's I like just keep talking. I mean, well, you have to be just plain lucky. I mean, there's no question about it that there's 100 or 1000, you know, multiply number of times that some drunk could have pulled out of the car and broadsided me or, you know, just all the bad luck that you can have in life. And you know, you can say that my my great skill has been avoiding bad luck, but that isn't a skill that's luck or bad bad bad activities. And and, you know, and then they get to be, you know, I would not have been if you'd taken my high school class and you say, you know, a couple of you are going to live to be 90, men are going to live to be 90.

3, I mean, I've got, you know, I wouldn't I would not have been a heavy favorite, I can tell you that. And I wouldn't have bet on myself. But, you just you know, you you should make the most of your luck when you get it. And sometimes I've done that and sometimes I haven't. I mean, it is absolutely true that if I had to do over again, there'd be a lot of different choices I would make.

Whether they would have ended up working out as well as things have worked out. It's hard to imagine how they could have worked out any better. So, but it is interesting how many mistakes you can make if you just keep going. And Charlie, you know, when you used to talk about that, that you just soldier through, you just keep going. And but you still need luck.

You don't want to anybody that says I did it all myself is just getting at me. It's just it's a delusional. And, you know, actually live in a country where the life expectancy is pretty darn good, you know? So that alone is a huge plus. I was born.

If I've been born, my sister's here and she was born female and she's just as smart as I would and everything. But even my own family who really did particularly my dad love us all equally, and and and in a terrific manner. But he still told me that that this is 10 well, he was born 10 years after the the 19th amendment was passed. And but he told basically told my my sisters, you know, that Mary Young will you still have your looks and he told me that the world, you know, that power in you is new in nature. And that, you really could do anything.

Well, I thought there were a lot of things I couldn't do. But but it it it the message given to females and males was incredibly, different by the most well meaning and loving of parents. You know, like I say, in 1930, I mean, it had been that way for 1000000 of years. It's exchanged quite dramatically, but obviously not completely. But during my lifetime, but it's been during the latter half of my lifetime.

If you take my sisters, if they've been born even 5 or 10 years later, they would they still would have been, you know, getting instructions when they went away to college to be sure and be sure and get married while or get arranged so that you're going to be married, you know, while you're in school because after you get up, all the good ones are taken. That was Bertie was telling me that was a message that basically had been imparted to most of a lot of the women she had met, obviously. And so it really it's extraordinary how much progress we've made, but it's unbelievable how long it took to get it made. I mean, it it really does make you wonder about, you know, we've got all these heroes from American history and all the wonderful things they did, but But how could they say all men are created equal and then by the constitution that women, you know, allowed women not to be able to own property and then depending on the state. I mean, just terrible conditions.

But anyway, that's how you learn about what the humans can do. And I feel and you've got to feel better about the future for your kids than you would have felt 100 years ago, no matter what the situation is. Anyway, we'll move to Becky.

This question comes from Linda Fraser in Westport, Connecticut. Dear Mr. Buffet, in the past, you've specified that 90% of your wife's inheritance be invested in a low cost S and P 500 index fund and 10% in short term government bonds. But the market cap of the magnificent 7 tech stocks now represents more than 1 quarter of the market cap weighted S and P 500 index, which seems like a big bet on the tech sector. I was wondering if you would now recommend investing some portion of the funds in a low cost equal weight S and P 500 Index Fund rather than having all of the equities exposure in a tech heavy market cap weighted fund?

Well, that's an interesting question. And I will tell you that I revise my will about every 3 years or so when I get little thoughts from time to time. And then you don't change it every time you do it. You get a tiny thing. But, the one section I haven't changed is that that with my wife that she she got left a huge amount of money by frankly anybody's measurement except, patents compared to what I've accumulated in total.

And it doesn't it won't make one bit of difference to her in life, whether she beats the S and P or anything else. All all I want to leave is plenty of money to take care of way beyond anything she'll ever spend and at the same time give her as much peace of mind as possible. And really make sure that the trustee who administers it doesn't really have to she doesn't have to worry about whether it just doesn't make any difference whether she beats the S and P or not. And the main thing is that she feels that she's in a financial position, which, of course, she will be, that, didn't even need to think about it. And the trustee doesn't have to worry about getting sued or anything else.

So it's it's it's it's simply not an economic condition. Now obviously, with 99% plus of what I have going to to philanthropy and and, you know, and I've got my 3 children. The one good thing is that they've at the age of 70, 69, and 65, They have matured remarkably, probably more than their father. And, that's, but at the same time, they've got less time to work with the money than they would have, you know, they were 50 or something like that. So you do the best in accomplishing your objectives in your will.

And and in the end, you know, you can't you don't know what's going to happen after you die, but you make sure that that to the extent that you leave, you have a lot of money to leave, you take obviously you, you want to say thanks to a lot of people and quite a few people in terms of specific requests you want to take care of your family. But in my case, that requires practically no money and a fair amount for taxes, but I have and then my children are in charge of what happens to the funds that are left. But like I say, the problem is when you live as long as I have and the kids get older, you know, and who knows what happens to mortality tables and they're the ones that I really want to see to handle the distributions and they will and they'll be very good about it. And but if we're all alive 3 years from now, they'll be 3 years older. So everything you can't solve everything in life.

You do the best you can with it. And People do interesting things that I've been around probably as many rich people as almost anybody and a fair number of I know what they're doing or have done with their funds. And the idea that you can have a huge amount of money and leave everybody very rich and have people liking each other less when it all happens. It's it's it's it's humans are really they're interesting to watch. Some of them handle it beautifully and others are terrible.

The one thing lawyers will always tell you is, don't use codicils. In other words, you know, when you change your mind on a will, just write a new one, but tear up the old one. Don't do it by just adding codicils. But I believe I'm correct. Was the richest man in the world presumably at one point in the 1950s or 60s.

And he's a very interesting guy to read about. And he had 5 wives and he's the one whose grandson was kidnapped and they sent Paul Getty an ear of the child and everything. I mean, it's not a happy life when you get through it. But the one one thing he did that was kind of interesting, he actually liked to use consoles because I think he had like 25 of them. And it was kind of his way of writing, well, I'm taking you out of the will because, you know.

And so he he he sort of delighted in explaining through his will what, how he felt about all these people. I mean, you really get some strange things rebuild and well, I just read about a well of fellow that made a whole lot of money. I'm just leaving it to his, I don't know whether his children, grandchildren, whatever it may have been. But in any event, his opening line and his will is and this was done some years ago, but I know something about the family. His opening line in effect said, I'm writing this will while I'm writing in the economy session of Eastern Airlines number such and such.

I mean, he believed in getting right to the point of what what what the people who were recipients, how they should live. And I think he was gonna be judging. And and it's just so damn interesting to watch people's wills. But, you know, 1 guy left a lot of money to his wife on the condition that she remarries so that at least one man would mourn his passing. Well, I'm not giving legal advice here as I always say but I feel I feel very, very, very good about how things have turned out.

And, and I wish I could figure it out ways better to use the really vast resources I've got in some of the really important questions of the world. But when I haven't been able to do that, I mean, I had a few goals when I was 30 or 40 and may have written them in the wills then in terms of what the world needed done and how the money could be used. And unfortunately, decided that just what they weren't feasible to accomplish. And of course I was setting out to accomplish things that that were important, but nobody had solved yet. So you got to expect that, why should I be able to solve them?

But nevertheless, it's an interesting but and the one thing about it is everybody here, I don't know about the ones who've come from other countries, but they should you should have a will. Because if you don't have a will, you still have a will. And it'll be whatever the state says. And it's amazing. 4 American presidents died and tested without Wells Fargo.

And we've only had 45. And imagine becoming president of the United States and not having a will. But you can look up somebody recent. I think Lincoln. I'm certain Lincoln was one of the 4.

And here's a man, I mean, I don't know what you can always say, well, he didn't get around to it, but that that that that's hard to imagine that that, why the Abraham Lincoln would have died and tested. I'm sure we've got some Lincoln scholars out there that will write me after this and explain why. But I and I'll be interested to receive their letters. But human beings are human beings and we all have weaknesses and peculiarities and everything else. And don't be too hard on yourself because you have some of those, but don't be totally forgiving either.

You can change the future. You can't change the past, but you can't change the future. Okay. Station 6.

Good afternoon. My name is Caroline, and I'm a lawyer in San Diego. Remember, mister Munger was once an attorney too.

Right.

First, I'd like to sincerely thank you, mister Buffet, for your business integrity, tireless leadership, and generous contribution to philanthropy. My question for the distinguished panel of 2 is, now that the AI genie is out of the bottle, as someone astutely put it earlier today, What business in Berkshire Hathaway may be most at risk with AI?

Well, that's a wonderful question. The problem is that we don't know anything about AI. But, obviously, anything that's labor intensive and that it can create an enormous amount of leisure time. Now what the world does with leisure time is another question. Whether more leisure time.

I know an awful lot of people think when they go to work at first that what they want is leisure time. And what I like is actually having more problems to solve. But AI is profound. That's what makes it a genie, you know, is what can happen. I could tell a few G and E jokes, but I better not.

I guess Warren,

we probably I don't know what but, you know, in terms of our businesses, they'll figure things out. I mean, we've got smart people. And it's obviously, if it's used in a pro social way, it's got terrific benefits to society. But I don't know how you make sure that that's what happens any more than I know how to be sure that when you use 2 2 atomic bombs in World War II that you know that you hadn't created something that could destroy the world later on.

I think when we think of AI as a lot of the business units, I mean, we're truly Warren trying to think how does it make us more efficient, more effective. I mean, it results in more idle time and we're probably not thinking of the iterative AI where we're looking at very specific processes where our people can implement it and either at times it displaces the labor, but then hopefully there's other opportunities for them within the business. But I think, when you think of all our businesses, I mean, we do have a heavy labor workforce in a lot of them, but I think we at the stage we're at as a company and maybe where it's at right now, it's really around how do we do things more effective, more efficiently, more safely if it involves dangerous processes. So it's we're early innings.

John Maynard Keynes was just wonderful to read and incredible mind. But in around the time I was born, he he wrote a book about what could happen. I don't know whether it was in the next 100 years or whatever. And he predicted correctly that output per capita would grow at this incredible rate that it has. But in terms of speculating as what people would do with that, I mean, this this guy was unbelievably smart.

And and but, it hasn't developed exactly the way he predicted. He was right about what was going to go into the equation, but he wasn't he didn't have it figured out exactly what at all what what what would be the result. So it's it is it is really well, we didn't know when we were developing the bomb that there would probably be as very soon, 9 countries, 3 of whom we should worry about plenty that we'll have what they have, but we didn't really have any choice. And you could have had all kinds of papers written on and everything else, but we were going to do it anyway. We needed to do it.

And if you haven't read it, it's fascinating to go to Google and read the letter by Leo Szilard and Albert Einstein to President Roosevelt written about a month before, almost exactly a month before the Germany or had removed into Poland and it laid out. Well, Lilsvard knew what was going to happen or had a good hunch of what was gonna happen in terms of nuclear bomb development, and he he couldn't get through to Roosevelt but he Roosevelt, but he knew that a letter signed by Albert Einstein would. So it's probably the most important letter ever written. And you can read it, which is just fascinating to me. But that started the Manhattan Project that started, you know, it just everything flowed out of it.

And like I'll bet anything that Roosevelt didn't understand it, but he understood that Albert Einstein has sent a letter and and and he probably knew what he was talking about and he better get he better start the Manhattan Project. It is it is just unbelievable what happens in this world. Anyway, let's move on to Becky, I guess, is next, right?

Yep. Randy Jeffs from Irvine, California. The March 25, 2024 Wall Street Journal reported that the treasury market is about 6 fold larger than before the 2,008, 2009 crisis. Do you think that at some point in time, the world market will no longer be able to absorb all of the US debt being offered?

Well, I would say the the the answer is, of course, I don't know. But the but the my best speculation is that US debt will be acceptable, but, for a very long time because there's not much alternative. But it won't be the quantity that You know, the national debt was nothing to speak of, like, you know, for a long, long time. And then it won't be the quantity. It'll be whether in any way inflation would get let loose in a way that that really threatened the whole world economic situation and there really isn't any alternative to the dollar as a reserve currency.

And you get a lot of people who give you a lot of speeches on that, but that really is the answer. And Paul Volcker worried about that back in 19, you know, well before 1980. But but he had threats on his life and I happened to have a little contact with him at that time. And he was an amazing, amazing fellow that, that in effect decided that he had to act or know really the financial system would fall apart in some way that he couldn't predict. And he did it and he's you know, had people threatening his life and do all kinds of things and but he was the man for that crisis.

But it wasn't the quantity of US debt that was being offered that threatened the system then. It was the fact that inflation and the future value of the dollar, you know, the cash is trash type thinking that turn that, you know, that we're setting up something that could really affect, the future of the world in terms of its economic system. And Paul Walker took it on. And he was gutty as could be. And if you haven't read a book or 2 about him or the one he last wrote, you'd be able to take a look at it.

It is I don't worry about the quantity. I worry about the fiscal deficit, you know, if it but I'm not a worrier just generally. I mean, I think about it and, but I don't sit and get up to work myself into a stew about it in the least, but I but I can't help thinking about it. And that's we've got a we've got a great attention. It's interesting.

I think the media enters into this and the focusing that focuses on the Fed. And they just love it because things are always happening and economists are always saying what's going to happen with the Fed and everything else. But the fiscal deficit is what should be focused on. And Jay Powell is a a not only a great human being, but he's he's a very, very wise man. But he doesn't control fiscal policy.

And every now and then, he he sends out a kind of a disguised plea for, please please pay attention to this because that's where the trouble will be if if we have it. Yeah. As one of the comics used to say, there's a stand up comic used to say, who have I forgotten to offend after this talk? And I always feel like that after these meetings, but we've got time for at least one question and maybe 2 but let's go to station 7.

Hello. My name is Dennis from Gifford, Germany. If I'm my first time here, I'm here with my friend who would by the way love to invite you to dinner. You talked about the importance of heroes and we are very happy to and thankful that we have you as our hero with great values and thank you for that first of all. My question is, it is clear that you achieved great success in life.

Earlier you talked about every investment having opportunity cost. From what I've learned in life, that does not only apply to investing your money but to investing your time. Every hour you spend in your office is an hour you cannot spend with your spouse or children. With the life experience you have now, if you had the possibility to start all over again, would you set your priorities any different? If yes, how and why and what's the best way to invite you to dinner?

Well, that definitely won't be one of my priorities if I figure out how to do that. But that doesn't don't take it personally because, when when you can figure out, at the maximum of a longer period I've got. And, I don't think I mean I can figure out all kinds of things that should have been done differently. But so what? You know, I mean, I'm not perfect.

I I don't believe in lots of self criticism or being unrealistic about either what you are or what you've accomplished or what you'd like to do. You do the you know, you do a lot of things and who knows whether somewhat different trade offs you just can't you can't you don't know what the past would have led. I feel I don't think there's any room in beating up yourself over what's happened in the past. It's happened and you get to live the rest of the life and you don't know how long it's going to be. And you keep trying to do the things that are important to you.

And if I was a doctor or if I was in all kinds of different professions, I might do different things. But I really enjoy managing money for people who trust me. I don't have any reason to do it for financial reasons. You know, I'm not running a hedge fund or getting an override on anything. But I just like the feeling of being trusted.

Charlie feels the same way. You know, that's a good way to feel in life. And it continues to be a good feeling. So I'm not really looking to change much. And if I'm very lucky, I get to play it out for 6 or 7 years and it could end tomorrow.

But that's true of everybody, although the equation isn't exactly the same. But I don't believe in beating yourself up all over anything you've done in the past. And I don't believe in well, I believe in I believe in trying to find, you know, what what you're good at, what you enjoy. And then I think the one thing that you can aspire to be, and because this can be done by anybody and it's amazing, doesn't have anything to do with money, but you can be kind. You know that's you can be kind if you're, and then the world's better off.

Yeah. I'm not I'm not sure that the world will be better off, though I'm richer. But there's no question that I mean, and you know kind people and in the end, aspire to be more. I'm sure many of you are yourself but just aspire to be more so. And I guess we can take one more question from Becky and then we'd wind up.

This question comes from Devin Spurgeon. On March 4th, Charlie's will was filed with the County of Los Angeles. The first codicil contained an unusual provision. It reads, averaged out, my long life has been a favored one made better by duty imposed by family tradition requiring righteousness and service. Therefore, I follow an old practice that I wish was more common now, inserting an ethical bequest that gives priority not to property, but to transmission of duty.

If you were to make an ethical bequest to Berkshire shareholders, what duties would you impose and why?

I'd probably say read Charlie. I mean, he's expressed it well. And, I would well, I would say that that if they're not financially well off, if you're being kind, you're doing something that most of the rich people don't do when they even when they give away money. But that's on the question of whether you're rich or poor. And I would say if you're lucky in life, make sure bunch of other people are lucky too.

Okay. Just in case you know my advice to myself would be has been during this period. So we only got 30 questions or whatever it is. Thank you very, very much for coming. And I not only hope that you come next year but I hope I come next year.