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Okay. If everyone will please take their seats. This is my is my sixtieth annual meeting, and and it's the biggest and I think it'll be the best yet. And I would before I start, I'd like to give you a few figures from from yesterday because we set all kinds of records. Yesterday we had 19,700 people that joined us in the afternoon between noon and 05:00, that was up from 16,200, which was a previous record the year before.

And in every aspect, we set records. Sees Candid is $317,000 against 283,000 the year before. And most of these were limited by capacity. I mean, there were there were lines there throughout the total day. Brooks did 310,000.

Those was all time records sales day for them, and I think they have close to 3,000 runners lined up for Sunday, which is a lot of people to get up. That I I think we've we've had 2,200 or 2,400 before, but but 3,000 and that doesn't count me and it won't count me. And I could go up and down the line. Jazz Jazz wears around 250,000 double the previous years. They they just sell the sashes they can sell.

Most of most every every place had had had people lined up at the at the cash register sometimes for a lot longer wait than wish we had, but but we'll learn the game eventually. And it goes on and on. Every every company set records. And and there's no way of knowing how many people we have here today. We have people listening in around the world.

But I think we're setting we'll probably set records in a great variety of ways. And I would we're going to have in a minute, we'll get to the question and answer, but I'd like to first introduce our directors. And and I'm I'm Warren Buffett and I was born and bred right here in Omaha. We have Greg Abel, he was born and bred in Canada. And we have a G.

Jane who was born and bred in India. We we have a very diverse group. And in the audience, and I will introduce them alphabetically and if they'll stand as I introduce them. And I know it'll be an effort, but withhold your applause till the end so that so that we can get through the list. But we'll start alphabetically with Howard Buffett.

Howie would you stand? Withhold the applause and go to his head. Susan Buffett. We have Steve Burke, Ken Chenault, Chris Davis, Sue Decker, Sue's our lead director, Charlotte Diamond, Tom Murphy Junior, Ron Olsen, and I'll have a few and when we finish, I'll have a few more things to add about him. Wally Whites and Merrill Whitmer.

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

And I think I'll do something else that isn't done usually at annual meetings, but I haven't had a chance. I listened to them on Thursday afternoon. I it's the only it's the only it's the only investment quarterly call that I listen to, but I listen to Tim Cook and I understand. It'll be tough for me to see him from up here, but Tim Cook, there he is. I'm somewhat embarrassed to say that Tim Cook has made the Berkshire a lot more money than I've ever made Berkshire Hathaway.

I credit credit should be given to him for I knew Steve Jobs briefly, and Steve, of course, did things that nobody else could have done in developing Apple. But but Steve picked out Tim to succeed him and he really made the right decision. Steve died young, as you know. And nobody but Steve could have created Apple, but nobody could but but Tim could have developed it like it has. So so on behalf of all of Berkshire, thank you.

There's a couple other people I'd like to thank. I don't do any work in terms of the show or anything else around Berkshire, but what you see today is the product of a lot of people at Berkshire. They forget, you know, they don't think of themselves as the one who's supposed to screw a light in and leave for somebody else and specialist to come along and do other things. The people of Berkshire put on this this show every year. And, you know, our our chief financial officer and just everybody pitches in.

It's a remarkable organization that way. But it's led this year, in the last few years by Melissa Shapiro, and she's made this whole thing work. Melissa? And then we got an idea a while back, well many years ago. Well, I'll take it all the way back.

Maybe sixty five years ago, I met Carrie Solva's grandfather and his wife. Well, they had nine children. And Susie and I joined a a playhouse group. And I don't look like the kind of guy that would join a playhouse group, but it would turn out to be a great a great move in many ways. First of all, I enjoyed the place.

But beyond that, I met not only not only Carrie's grandfather who ran an insurance company in Omaha, Bill Kaiser, but I also met the Pumpkin boys' parents Louis and Francis. In one sort of accident, when I was in my twenties, came up with all kinds of good things. And in connection with Carrie, her father ran a company called, Central States. And later on, we bought that company. And then her father ran the company.

Her sister went to work for Berkshire some years ago and then she decided to have a family and subsequently had four kids. So she left, but Kerry moved right in. And Kerry had amazing talent behind just like a good many people do. They they they have talent you don't you don't realize till you give them some responsibility. And so ten or eleven years ago, I asked Carrie to do a fiftieth anniversary book about Berkshire and just use her imagination.

And and she never she didn't need to check with me or do anything. She just she never edited the book. She never published the book. She never dealt with the printers before. But she just went out and promptly put together this fiftieth anniversary book.

And then this year, well, then Carrie, of course, got married and had three kids. So she had to leave us, but but and we have a we go to a baseball game once a year, and we invite some of our distinguished alumni like Carrie to join us. And Carrie, even though she was raising three children, and you may have met one or two of them in the last day or so, she volunteered to bring bring together a sixtieth anniversary book and which I I asked for. And again, she took the whole thing. She just did it.

She kept doing the things with her kids and every now and then she'd I'd ask her how it was going and she'd tell me how it was going. And so she put together the sixtieth anniversary book and got it done by, you know, maybe a week before the meeting because I I gave her the assignment very late. And yesterday, we sold, I think it was 4,000 plus, four to 4,500 maybe. We we 4,400. We printed 8,000.

We intended to print 5,000, but so we sold 4,400 books yesterday. And we'll have 30, I guess roughly 3,600 left out there today. And it's kind of a whimsical and but but accurate. And she came out with just the book I hope she would come out with. And and then as we went through this publishing experience, Carrie wouldn't take a dime, but I did get her to name her favorite charity and Stephens Center, takes care of homeless people, and does a great many other things.

It's located about five or six miles from where we are here south, has been doing a wonderful job. Her grandfather helped form it. Her husband has now joined the board, and we are selling 20 copies of this is a commercial place, isn't it? We are selling 20 copies that we sold 10 prior to the meeting. That's all we let them sell.

And we raised a few hundred thousand dollars doing that. I think we sold one for a hundred thousand dollars. And but we limited it at that to 10. And the only difference in them these and the $25 version is that Carrie and I sound signed them. But we saved six for yesterday, and the six brought a hundred and $48,000, which is a pretty good average per book of about 20 odd thousand dollars.

And I then I had them say four more. So this afternoon when we disband at 01:00, the area right behind us that has all the goods in it, the bookstore, they will sell the final four. And when we get all through, I'll match whatever we've raised for the the 20 and and we'll give the Steven Center a a boost both in financially, but also in awareness. So anyway, that and when you look at that book, Carrie really did the whole thing. I mean, there's a lot of information in there and she dug through it and and she came through a couple times maybe to check a fact or two.

But she she she got all she got material from the Munger family. She she just did a wonderful job and and and I I couldn't get her to take a penny for it. So I'm gonna ask her to do a lot of other things in the future. With that, I think we've we've covered all the the business. So we will move to Becky.

There's questions that she's received from I don't know how many she's received, but from all over the country and perhaps outside the country. And she's picked out a group of them, which she has not shared with me. And we will alternate questions between Becky and the audience, which we have by zones. And and and with that, I will turn things over to Becky for the first question.

Yeah. The world's import certificates weren't distinct, but they they their goal was to balance imports against exports and so that the trade deficit would not grow in an enormous way. In fact, it would have and it had various other provisions in it to help third world countries at that time as they were called to perhaps catch up a little bit. And they they they had a variety of aspects to them, but basically they were designed to balance trade. And, I think you can make some very good arguments for the fact that balanced trade is good for the world and the more balanced trade there is, the better.

It will continue to be better for cocoa to be raised in Ghana and coffee and Colombia and a few things. And over time, the American industry has gone from being an agricultural country. This was this was nothing but an ag country. I mean, was virtually and that was only two hundred and fifty years ago. And we have become a very industrial country, and we did not wanna make that a situation, in my view, where we ran greater and greater deficits, building up greater and greater debts against the country.

So I I designed this import certificate thing, which Charlie thought was a little rude too much like Rube Goldberg. I don't know whether that time name is but it it's gimmicky. But it's certainly a lot better than anything I I think than we're talking about now. And there's no question that trade trade can be an act of war. And and I think it's led to bad things.

Just the attitudes that's brought out in The United States. I mean, we should be looking to trade with the rest of the world, and we should do what we do best, and they should do what they do best. And, I don't think it That's that's what we did originally. I mean, we were good at producing tobacco and cotton two hundred and fifty years ago, and we and we traded it. And we want a prosperous world with eight countries with nuclear weapons, including a few that are what I would call quite unstable.

I do not think it's a great idea to try and design a world where a few countries say, we've won, and other countries are envious. So so my my my import certificate idea, which went no place, I think we've got extra copies, Rob. We've not a great demand for the copies. Anybody did and if you'd like and write the office, I think we could we could probably send you a copy of it. But the main thing to do is not use trade should not be a weapon.

And The United States United States, we've won. I mean, we have become an incredibly important country starting from nothing. Two hundred and fifty years ago, there's nothing been anything like it. And it's a big mistake in my view when you have seven and a half billion people that don't like you very well, and you got 300,000,000 that are crowing in some way about how well they've done. And I don't think it's right, and I don't think it's wise.

I do think that the more support the more prosperous the rest of the world becomes, it won't be at our expense, the more prosperous we'll become. And within the safer we'll feel and your children will feel someday. So that's but don't don't expect my import certificate ID to go to up down there with Adam Smith's wealth of nations or anything. Okay. Let's go to Area 1.

Thank you. Well, I'm gonna extend the same goodwill to Japan that you've just extended to me. I I I all of the people of Japan determine their best course of action in terms of economics. It's it's an incredible story. And five it's been about six years now as you pointed out.

I was just going through a little handbook that probably had two or 3,000 Japanese companies in it. One problem I have is that I can't read that handbook anymore. The print's too small. But the and there were these five trading companies. They have a special name, Form in Japan, but they were selling at ridiculously low prices.

And so I spent about a year acquiring them and then we got to know the people better and everything that Greg and I saw we liked better as we went along. So we got fairly close to the 10% limit that we'd we told the company we would never exceed without their permission. And so we did ask them recently whether that limit could be relaxed and it's in the process of being relaxed somewhat. We I'd I I would I would say that I'll speak for Greg beyond me that I'll in the next fifty years, and I hope he's running things in. We we won't give a thought to to selling those.

I mean, they had Japan's record has been extraordinary actually in terms of that. My guess is that Tim would tell you Tim Cook would tell you that iPhone sales there are about as great as any country outside The United States. American Express would tell you that they sell their product very, very well in Japan. Coca Cola that we do business with another big investment of ours. They do extraordinarily well in Japan.

They have a number of habits in a civilization that operates differently than ours. Japan is by far the biggest. They this is the container they've always preferred. They're soft drinks and and they have they have a whole different sort of distribution system there. But we have been treated extremely well by the five companies.

They they they talk with Greg primarily. I went over there a year or two ago. Greg Greg's Greg's more cosmopolitan than I am, so he he's which isn't saying much actually. But Very little. But he is And I don't know.

How many times do you think you've met with representatives of one company to the other?

Yeah. When you think of the five, there's definitely a couple meetings a year, Warren. And I think the thing we're building with the five five companies is, one, it's it's been a very good investment. But we are really, as Warren touched on, we we envision holding the investment for fifty years or or forever. But I think we also are building relationships to do incremental things with each of those companies.

And we really do hope to do big things with them, globally. They bring different perspectives and different opportunities, and we see, and that's the, that's why we're building that long term relationship with them.

It's long term. And and and they have a much diff- they have a, they have different customs, they have different approaches to business. That's that's true around the world. And and and we're not we we don't have any intention in any way of trying to change what they've done because do because they they do it very successfully. And and our our our main activity is just to is just to cheer and clap.

And and that I can still do at 94. So we will own those. You know, we we will we we will not be selling any stock. I mean, that is just it's that that won't happen in in decades if then. And I my guess is that they will find things because they cover the world pretty much, the five trading companies.

We will find things occasionally that may be very large for any individual company there. They may, in some way, be assisted by some some help we bring to the situation. But that will be an expanding relationship. It's too bad that Berkshire has gotten as big as it is because we love that position and I'd like it to be a lot larger than than it is. But even with the five companies being they're very large companies and they're large companies in Japan.

And we've got that market that that, you know, in the in the range of $20,000,000,000 invested, but I'd rather I'd rather have a hundred billion than 20,000,000,000. And that's the way I feel about it. Several other investments we have, but size is an enemy of performance at Berkshire, and I don't know any good way to solve that problem. But but Charlie always told me that having a few problems was good for me. I never quite understood that, but he if you listen to him moralize, you would understand.

And and and it's not an impossible problem at all. It and the Japan the Japan investment is is just been right up our alley. Do you add anything on this?

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

Yeah. Yeah. I would say that they they want or they would like to present us with opportunities. We would like to receive them. We've got the money.

We both get along well very well with each other. And they have different they have some different customs than than we have. They drink the number one Coca Cola product. They drink over there something called Georgia coffee. So I'm I'm I haven't converted them to Cherry Coke and they're not gonna convert me to Washington and Georgia coffee.

But it's a it's a perfect relationship. I just wish we had could get more like it. And I never dreamt of that when I picked up that little wasn't so little, was about that thick, but sometimes two companies to a page and and a couple thousand pages, believe. But it's amazing what you can find when you just turn turn the page. We showed a movie last year that about turn every page.

And I would say that turning every page is one important ingredient to bring to the investment field. It and very few people do turn every page and the ones who turn every page aren't going to tell you what they're finding. So you you gotta do a little of it yourself. Okay. Becky?

Yeah. Well, I wouldn't do anything nearly so noble as to withhold investing myself just so that Greg could look good later on. Now if he if he gets any edge when I leave, I'll resent it. So the now the the amount of cash we have is we we we would spend well, we came pretty close to spending 10,000,000,000 not that long ago, for But we'd spend a hundred billion. I mean, and and and those decisions are not tough to make.

When when something is offered that is that makes sense to us and that we understand and offers good value and where we don't worry about losing. And the one problem with the investment business is that things don't come along in an orderly fashion and they never will. I mean, it isn't like every day. You know, the long term record is sensational, but that is not a product. And I've been in see, I've had two hundred trading days times eighty years.

I'm yeah, man. It's it's sixteen million trading days. It'd be kind of I mean, thousand trading days. It it would be nice if every day you got four opportunities or something like that and, you know, you could and they were expected to be equally attractive. You know, if I if I was running a numbers racket, you know, every day would have the same expectancy of that I would keep 40% of whatever the handle was.

And so the only question would be is how much would transact it. But we're not running that kind of a business. So we're running a business which is very, very, very opportunistic. And Charlie always thought I did too many things. He thought if we did about five things in our lifetime, we could we could we'd end up doing better than if we did 50 and and and that we never concentrated enough.

So that we would rather have, if we've got 335,000,000,000 now in treasuries, we would rather have conditions that have developed where we would have like 50,000,000,000 or something like that. But that that just isn't the way the business works. And we have made a lot of money by not wanting to be fully invested at all times. And we don't think it's improper actually for people who are passive investors just to make a few simple investments and sit with their life sit for their life in them. But we've made the decision to be in the business, so we think we can do a little better than that by behaving in a very irregular manner.

But if you told me that I had to invest well, our let's say that we have a roughly 40,000,000,000 a year coming in, and we start with $3.35. If you told me I had to invest 50,000,000,000 every year till we got down to 50,000,000,000, that would be the dumbest thing in the world to invest in that manner. Things get extraordinarily attractive very occasionally. The long term trend is up. Nobody knows.

And I certainly don't know. Greg doesn't know. Ajit doesn't know. Nobody knows what the market is going to do tomorrow, next week, next month. Nobody knows what business is gonna do tomorrow, next week, or next month.

But they spend all their time talking about it because it's easy to talk about. And but it it has no value. I've never found anybody I wanted to listen to on the subject. And the on the other hand, I found that leafing through things like that big Japanese book that I can't read anymore. The that's it's a that's a treasure hunt.

And every now and then you find something and occasionally, very occasionally, but it'll happen again. It I don't know when. It won't it could be next week. It could be five years off, but it won't be fifty years off. He will have we will be bombarded with offerings that that we'll be glad we have the cash for.

And it'd be a lot more fun if it would happen tomorrow, but it's very unlikely to happen tomorrow. Very, very unlikely to happen tomorrow. But it's not unlikely to happen in five years, and then it gets the probabilities get higher as you go along. It's kind of like death. I mean, if you're 10 years old, the chances that you're gonna die the next day are low, get to be a hundred and 15 or something like that, it's almost a cinch.

Particularly if you're a male. I mean all the records are held by females in terms of age and I tried to get Charlie to have a sex change so he could test out whether and he did pretty well for being a male. I'll put it that way. Okay. Station station two.

Well, in respect to real estate, it's so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties in the ownership usually when when when real estate gets in trouble, you find out you're dealing with more than equity holder. But there have been times when large amounts of real estate have changed hands at bargain prices. But usually stocks were cheaper, but they were a lot easier to do. So Charlie did more real estate. Charlie enjoyed real estate transactions.

And he actually did a fair number of them in the last five years of his life. But he was, you know, he was playing a game then, and it was an interesting game to him. But I think if he you'd asked him to make a choice when he was 21, he had to either be in stocks exclusively the rest of his life or, let's say, the rest of his life, he would have chosen stocks in the second. And the there's just so much more opportunity, at least in The United States, there's so much more opportunity that presents itself in the security market than it does in real estate. And in real estate, you're dealing with a usually dealing with a single owner or a family that owns maybe a large property they've had a long time.

Maybe they've borrowed too much money against them. Maybe the population trends are against them. But but to them, it's an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars worth of business totally anonymous, and you can do it in five minutes. And the trades are complete when they're complete.

In real estate, when you make a deal, a big deal with a distressed lender, it you know, when you sign the deal, then you go into another phase. I mean, then people start negotiating more things and more things, and and it's it's it's a whole different game. And a different type of person to some extent enjoys the game. We we we did a few real estate deals that came our way in 02/1989, but but the amount of time that they would take us compared to doing something intelligent and probably better And securities, there was just no comparison. I mean, in a real estate deal, every sentence is as important as a person and in stocks.

If somebody needs to sell 20,000 shares of Berkshire or something and they call us and the price is right, it's done in five seconds. And and it closes all the time. People who you certainly wouldn't want to marry your daughter or they behave well actually in stocks. Partly that's because they're probably having their their wires or phones or whatever it is recorded as to what they've said and everything. But but the the completion rate for working on anything in stocks is if assuming you got a meeting in the minds on prices, essentially a % in real estate.

It just begins when you agree on deals and that they take forever. That for a guy 94, it's it's not it's not the most interesting thing to get involved in something where the where the negotiations could take years. And we we have the capability. There have been some huge failures in in in in fact, it it if go all the way back to Zechendorf in the 1960s, he was gonna change the world and Century City out in California is a product of his. If you go to Uris, if you go to he was sitting on top of the world with the Eurus buildings.

People tend to get in trouble in that business. The banks usually don't want to recognize it, but that takes a long time to go through the through the bank processes. They just got through redoing the Musk loan that he made when he was buying it three years ago, the company that's now X. And, you know, three years to work out a transaction that where you've got parties on both sides We find it much better when people are just ready to pick up the phone and you can do hundreds of millions of dollars worth of business in a day.

I've been spoiled, but I like being spoiled, so we'll keep it that way. Okay. Becky.

Okay, Becky. And and she's got about a hundred points of IQ on me, and he's just gonna be here this morning. So I'm gonna let him answer the question first.

Well, there is no question in my mind that AI is gonna be a real game changer. And it's gonna change the way we assess risk, we price risk, we sell the risk, and then the way we end up paying claims. Having said that, I certainly also feel that people end up spending enormous amount of money trying to chase the next new new fashionable thing. We are not very good in terms of being the being the fastest or the first mover. Our approach is more to wait and see until the opportunity crystallizes and we have a better point of view in terms of risk of failure, upside, downside.

So right now, the individual insurance operations do dabble in AI and try and figure out what is the best way to exploit it. But we have not yet made a conscious big time effort in terms of pouring a lot of money into this opportunity. And my guess is we will be in a state of readiness. And should that opportunity pop up, we'll be in a state where we'll jump in promptly.

Yeah. And I would just add, I wouldn't trade. I wouldn't trade everything that's developed in AI in the next ten years for for a g. So if you gave me a choice that gave me a choice of having a hundred billion dollars available to participate in the insurance property casualty insurance business for the next ten years, and a choice of getting the top AI product out of whoever's whoever's developing it or having a Jeep making the decision, I would I would take a Jeep any time. And I'm not kidding about that.

Okay. Station three.

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

I think I gotta call a friend on this one. Yeah. I I

we we own a lot of companies, but I do like to think I know most of them. But but the maybe a subsidiary of a subsidiary in some way, but but I I really don't know a thing about it. I'm sorry to Yeah. That may be a good thing. I do know something about hot dogs, though.

Sorry.

And and we do have a lot of companies in Chicago, Warren Yeah. Through Marmon. And it that's been a great opportunity where we've accumulated a variety of, excellent companies under that portfolio. But as you noted, I don't believe Portillo's fault under that. Yeah.

No. I I look at I I look at the financial statements of about, yeah, perhaps 50 or 60 of our companies every every month. But in the case of Marmon, for example, Marmon itself owns over a hundred companies. And Yeah. It was the creature of it was created by Jay Pritzker and and his brother Bob.

And it was a remarkable company when we bought it, but it was highly diversified already and then we've diversified it further. So it is it is something of a Berkshire within Berkshire. And we found we found that that's working very good as arrangement. It was interesting. Gay Pritzker was a remarkable manager and there's various branches of the Pritzker family so you'll it really goes back to A and Pritzker before J and so on.

But in 1954, they changed the federal tax code very dramatically in The United States. It was quite a blow to me because I've been at Columbia and I've been reading a JK Lasser book about the tax code and then they went and changed the whole damn thing. But '54 was a big year, a big change. Those years come every now and then like 1986 and and you may see a big one one of these days. And there was a company called Rockwood Chocolates in Brooklyn, and they made Rockwood chocolate bits which we used to sell at the Buffett grocery store and people made chocolate chip cookies out of them and everything.

And then it turned out that cocoa, which lately has had a big run to, cocoa was 5¢ a pound in 1941 when LIFO was first allowed for for insurance for for tax purposes. And the Rockwood Charter Company went into on the LIFO message, so they they owned, like, 30,000,000 or thereabouts of Coco. And then Coco took a run-in 1955, and I just moved to New York. And there was a provision in the new tax code that if you were in two or more companies and you did certain things and you've been in them for five years and you got out of one of them, that there would be no capital gains tax on LIFO inventory gains. And tax rates were around 48%, maybe 52%.

And so you there was this huge profit because because the cocoa had gone up in price, but that made it terrible for them in selling Rockwood chocolate bits because the price of retail of the chocolate bits did not match what was going on at wholesale. Something almost identical has been happening in the chocolate business. Recently, Hershey chocolate just came out and said they're going to have a bad quarter, and we're paying $4.50 a pound for chocolate from cocoa because things are going on in West Africa that that make cocoa prices go up dramatically. In any event, Jay Pritzker bought control of Rockwood, the chocolate company. And like I say, I was 24 or five years old and they called the meeting to split off the two one of the chocolate businesses in a way that would enable them to recognize the gain on these cocoa beans without paying 50%, roughly 50% federal taxes on the gain.

So I went to the meeting, which was in Brooklyn, and nobody was there. This is in the turn every page category, except one guy, and I was 24 and he was 29, and it was Jay Pritzker. And nobody had showed up at the meeting and it was kind of a crummy building they had, but they had a lot of corporal there. And Jay just gave me a lecture or a a lesson really, I should say, on on the tax code. And I made it with that.

Could have gone to graduate school for years and never learned as much as he did. And then later, we actually bought the company, that Rockwood company, but after he did some other things, became the basis for Marmon. And Marmon, among other things, developed the car that won the first Indianapolis Speedway race, and it invented the rear view mirror, which I'm not sure is a great great advantage in economics or anything. But but the guy that would that used to have on the Indianapolis five hundred, had two people in the car. One guy was to look back and see what the other people were doing and the other guy was to drive the car.

And our guy got sick and so they invented a rearview mirror. So if you wanna look at the kind of you know, what's going on in the laboratories of Berkshire Hathaway and we we've got people working on things like the rearview mirror. Hey, Warren. Yep.

I'm happy a friend did call. So that's that's still works Peter Eastwood who runs one of our Berkshire subsidiaries and does a great job of running it track down that Portello's is owned by a private equity firm called Berkshire Partners. So that was the basis of the question, but it's not associated with, with Berkshire. So we got we got to the bottom of that one. Yeah.

Thank you, Peter.

That's just a sample the way we operate around. Okay. Becky.

would say that Jessica, who I believe is that sounds as if she is the step granddaughter of one of our managers that I I mentioned in the annual report. It may not be the same one. But in any event, America's been America's been insignificant and revolutionary changing, really ever since it was developed. I mentioned that, you know, we started out as an agricultural society. We started out as a society with with high promises and we didn't deliver on it very well.

We said all men were created equal and then we wrote a constitution and said blacks get three counted as three fifths and in article two, you'll find male pronouns used 20 times and no female pronouns used. So, you know, it took till February I mean, yeah, February and or 1920, I should say, till the nineteenth till the nineteenth amendment was passed saying, oh, yeah, we promised the women this back in 1776 and now we'll do something about it. And then we didn't do something about it for a long time. So we're always in the process of change. We'll always find all kinds of things to criticize in the country.

But the luckiest day in my life is the day I was born. You know, I was born in The United States. And at the time, about three percent of all the births in the world were taking place in The United States. And I'd like to say that I had something to do, you know, listen. Sent messages out to my parents, for God's sakes.

Move to The United States before I born or anything. But I was just lucky. And I was lucky to be born male. I was lucky to be born white. I was like kinds of things.

But it's been if you don't think The United States has changed since I was born in 1930, it's been we've gone through all kinds of things. And we've gone through great recessions. We've gone through world wars. We've gone through the development of an atomic bomb that that we never dreamt of, you know, at the time I was born. So I would not get discouraged about the fact that it doesn't look like it.

Solved the very problem that's come along. And if I were being born today, you know, I I would just keep negotiating in the womb until they they said you can be in The United States. So it we're all pretty lucky. Do you wanna give any we've got two non United States guys here just to get the other side.

Now live in The US?

Okay. Station 4.

Well, that's a good question. And there are times when you have to act fast. In fact, we made a great deal of money because we're willing to act faster than anybody around. Jessica Toombs is think she's the stepdaughter of of or step granddaughter of Ben Rosner, manager of ours. And in 1966, I got a call from a fellow named Paul Steiner in New York, and he said I I represent missus Annenberg.

And there were there were actually nine Annenberg sisters, I believe, before Warwick Annenberg came along as the son. But he said, we have a business we'd like to sell you. So I called Charlie up, and I got a few details, and it sounded very interesting. And Charlie and I went back to the office of Will Faulsteiner in New York, was a marvelous guy. Never met him since, but but he was handling things for missus well, a ace Simon, but she had her name was Annaberg.

And her husband had been the partner of of Ben Rosner, but he had died. And Ben got kind of tense about working with her. And so he offered us this business at a bargain price. He offered us a business for $6,000,000. It had 2,000,000 of cash.

It had a $2,000,000 piece of property in the 900 block of of what's the key street in Philadelphia down there? Market Street. And was making 2,000,000 a year pre tax, and the price was 6,000,000. And Charlie and I went back to this place, and Ben Rosner was there, and he really, he just was upset about doing business with his partner's widow. She was extremely wealthy and he just didn't he wasn't enjoying it.

He was very nervous about selling it. And he he said to me and Charlie, he said he said, I'll run this business for you until December 31, and then I'm out of here. And I got Charlie. We went out in the hallway, and I said, if this guy quits at the end of the year, can throw away every book on psychology you've ever read. I mean, he and so that began a wonderful we bought the company and had a great relationship.

And did I know that morning when I got a phone call from Will Falsteiner that did his background about I've had a couple of times, and that was one of them, where people in the East felt that they had a stereotype in their mind of what people from the Midwest were like. And Ben had been married, his first marriage was to a woman from Iowa, he just figured that anybody from the Midwest was okay. And trick when you do when you get in the business with somebody, or you get in a room with somebody like that and they wanna sell you something for $6,000,000 that's got 2,000,000 of cash and a couple million of real estate and just making 2,000,000 a year. You don't don't want to be patient then. You want to be patient and waiting to get the occasional call.

My phone will ring sometime, you know, and with something that, you know, wakes me up. May be sleeping in there or something, it you just never know when it'll happen and that's what makes it what makes it fun. I mean, it it it so patience. It it's a combination of of of patience and a willingness to do something that afternoon if it comes to you. You don't wanna be you don't wanna be patient about about acting on deals that make sense.

And you don't wanna be very patient with people that are talking to you about things that will never happen. So it's it's not a it's not a constant asset. It's not a constant liability to be patient. Greg, you

Well, Warren, I was gonna add, as you're being patient, I I happen to know and I think that goes for our, Ajit also and all our managers. Very patient when we're looking at opportunities. And as you touched on, we wanna act quickly. But while we're being patient, Never underestimate the amount of reading and work that's being done to be prepared To act quickly. Because we we do know be it equities but I would include a variety of of private companies that when the opportunity presents itself, we're ready to act.

And and that's a large part of, being patient, is is using it to be prepared. Yeah. And

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

You just forget it. It's not gonna work. It going to some other activity. But you also I mean, one of the great pleasures, it is the great pleasure actually in this business, is having people trust you. And that's that's really the why why work at ninety when you've got more money than anybody could count?

You know, if they started today and having machines that are helping them and everything else. And it's and that it means nothing in terms of of how you're going to live or how your children are gonna live or anything else. And but it it it but both Charlie and I, we just enjoyed the fact that people trusted us and they trusted us sixty years ago or seventy years ago. And and and partnerships we had, and we never sought out professional investors to join our partnerships. Among all of my partners, I never had a single institution.

I never I never wanted an institution. I wanted people. And I I didn't want people that were sitting around having people present to them every three months and and tell them what they wanted to hear and all that sort of thing. And that's what we got and that's why we've got this group here today. It it's all worked out.

But that it it's you don't wanna be patient when things are going your way. When when the time comes to act. But you you wanna get it done that day. Okay. Becky?

Yeah. Todd has done a great job for us in terms of turn turning around the operations. When he took over, there were two major issues that GEICO was behind its competitors on. Firstly, the term we Warren used it, we all have been using is matching rate to risk. And secondly, telematics.

We were at the bottom of the list and so far as telematics are concerned about five, six years ago. Since then, we have made rapid strides and telematics, which used to be a source of competitive disadvantage to us, is no longer so. And I would argue that our telematics at GEICO is about as good as anyone else's today. So that's been one huge catch up. Secondly, in terms of matching rate to risk, there again, I think we have caught up with our competitors and we are as good as anyone else in in the field.

All this together with the cost reduction effort that GEICO and Todd gets a lot of credit for, he has basically reduced the workforce by 20,000, starting with something close to 50 odd thousand. He's brought it down to 20,000 and that translates to, I guess, at least $2,000,000,000 per year. So all this has allowed GEICO to become a much focused competitor. So much so in the last seven quarters, GEICO has shown a combined ratio that has an eight in front of it. And I never thought I'd live to see the day when anyone could have a combined ratio at so low as it is right now.

So I think GEICO has done a great job. It's 80 combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business. So, you know, we've achieved a lot. Todd has achieved a lot, but I do not want to be so arrogant as to say that mission accomplished. We've achieved a lot, but I still think we need to do a lot more in technology.

AI, as we talked about, is gonna be a big force, and we need to play catch up there. Not catch up, but we are to be in a state of readiness. So I think GEICO is in a great shape right now. Warren, you want to add anything?

No. I it's it's it's a fascinating case study, but and that's what's so interesting about the whole game of business, but particularly about our businesses is that that each one is a little different, but they're all they all have challenges of certain sorts and but they also many certain numbers have opportunities. We we paid $50,000,000 for half of GEICO in 1976. What turned out to be half of GEICO? Fifty million.

Fifty fifty per not a %, but 50% of 2,000,000,000 that we earned in the first quarter is a billion dollars, which on a $50,000,000 investment is, you know, 20 for one and a quarter. So it it takes years to develop, but the interesting thing is the auto insurance policy, which didn't even exist a hundred years ago. I mean, you you didn't you just well, I should say a hundred and twenty years ago. But it's by far the largest item in the property casualty insurance business. It's it's it's huge.

The only thing I'd like to add is in addition to the underwriting profit, GEICO provides $39,000,000,000

of float.

Oh, yeah. In addition. Yeah. And and that's not unimportant when you paid $50,000,000 to get the businesses given you $29,000,000,000 to work with for nothing. And on top of that, it gives you a billion dollars of of profit in the quarter.

The interesting thing about auto insurance is that we're the company was started in 1936, we're selling the same product as 1936. We're being more sophisticated about pricing it than we were then. Somebody just made the judgment, a fellow that came from USAA made the judgment that that government employees, the name GEICO stands for government employees insurance company, that government employees were better drivers than average. And I don't think he was an actuary or anything else, but he just made an observation. And so he left USAA, which is still a very successful company, and he started GEICO for a few hundred thousand dollars, and he made money the first year for my underwriting, he made money the second year.

This is not a public offering type thing, you know. He was phony accounting for ten years and all that sort of thing. He just priced it to make money, and that's exactly what's been done since 1936. The policy really, you know, your insurance, your auto insurance policy looks a lot like the one that you had then. And this huge field has sprung up around us and it's still growing.

And of course nobody likes to buy insurance but they sure like to drive. GEICO is it's a fascinating story. And about three times over the years, the company has gotten sidetracked one way or another, and and then it gets back to its basics and and it's a wonderful, wonderful business. And we showed at this annual meeting one time a a message from Romer Davidson. And Romer Davidson in in January of nineteen fifty I was the only person in the building that I'd gone down on a Saturday to visit, but turned out they didn't work on Saturdays in Washington and I pounded on the door till finally a janitor let me in.

And I said to the janitor, is there anybody else I can talk to here except you? He didn't take it personally and he said there was this one guy up on the Sixth Floor and a fellow named Larimer Davidson did wonderful things for me. You you get a few breaks in life in terms of people you will meet who could just change your life dramatically. And if you if you need a handful of those, and when you get them you treasure them. And we've had them on this board at Berkshire.

You know, if you take Tom Murphy and Sandy Gottesman and Walter Scott and Bill Scott. We we one thing we've done is we've held on to human assets. We've made lifelong assets out of people that are the right sort, and with incredible talent, but also just lots of fun to work with and always doing more than their share. And, you know, to get a chance to talk to a little Armour Davidson on a Saturday afternoon, you just listen carefully. And that comes in the category of turn every page, you know.

Some of them you want to turn pretty fast, but you just get lucky in life, and you wanna take advantage of your luck. Okay. Station five.

Yeah. That's a nice way of saying it's not normal, actually, but I appreciate it.

Thank you. Thank you. Well, you you've hit on the most important question. And now in terms of the business, we've got a wonderful group of businesses, we've got a, we've got an ability to do things that nobody else can do, which is hard to get in the capitalistic system that's been developed as fully as as as The United States has been. I mean, being able to create something that is in a very, very, very big playing field.

You we could really be very, very hard to develop anything like that. I don't think you could develop the people around it, let alone the capital position, you know, and the history and everything else. And the answer, of course, is that it it does take a long long time, and it takes getting around you a small cadre of people which then spreads out somewhat. But where you've got mutual trust, where people do more than their share. And I've been around a lot of businesses over the years.

And by nature, I'm somewhat critical of everything. Mean, I'm looking for what's wrong in things because that's part of investing is is looking, you know, what aren't you what are you missing? But we have you know, we've got people that if they're asked to put on a show like this instead of doing whatever their regular job is, they they participated. I went around the groups of people who were exhibiting yesterday for an hour and a half, And these are people who are thanking me, you know, and totally enthused about coming and doing a lot of work for which they don't get paid anything extra. I don't know anything about the arrangements the individual companies make, but they work hard and they enjoy their work.

And, you know, you really wanna work at something you enjoy. I've always had I've had five bosses in life and I liked every one of them. And they were all interesting. I still decided that I'd rather work for myself than anybody else. But but if you if you find people that are wonderful to work with, you know, that's the place to go.

And I've I've told my kids that basically, that you don't get lucky like I did when I found it. Seven or eight years of age, what really interested me, you know, it could have taken a lot longer, but you want to find the song, find the sound as there's a movie called The Glenn Miller Story and Glenn Miller went on from having a broken down band for fifteen years to turning out the first he found the sound and and created the first gold record. I don't know whether any of you know what it was, but it was the Chattanooga Choo Choo in 1941, I think it was. And he turned around from being nothing in with the band that he had till he found the sound. And I always have told my kids ever since that their their their sound isn't my sound, you know, but and you don't find it necessarily on the first job you take because you gotta eat, you know, and but if you get lucky like I did, you find it to be find it when you're very young.

And then, you know, just keep doing it and don't worry too much about starting salaries and don't worry about be very careful who you work for because you will take on the habits of the people around you. So there's certain certain jobs you shouldn't take. And but you've got the greatest country in the world, and you've the greatest time in the world. So I would say that that well, while I'm handing this over to Greg at the you know, you can't even dream all the dreams that you could have about a place like Berkshire, but big thing you have to do though is always is to be sure you can play the next day. I mean, in terms of in terms of financial activities on a meaningful scale, you know, you you don't wanna go you don't there was a book about what was the name of that book?

You only have to get rich once. I mean, you don't don't wanna do anything that risks what's been created. So you don't if if very stupid things are happening around you, you do know and not wanna participate. If people are making more money because they're borrowing money, or they're participating in securities that are really pieces of junk, but but but they hope to find a bigger sucker later on. You just have to forget that.

That'll bite you at some point, and the basic game is so good, and you've been so lucky to be born now. I mean, if I've been born in 1700, I'd say I wanna go back in the womb. What the hell with this? I mean, it's just too hard. And but now I've come along to do something where I can just play around all day with things I enjoy doing.

And and it's really it's pretty wonderful life. Anything, Greg, you wanna add or subtract from that?

Nothing to subtract. But, I I would always just say it couldn't be more, as I've said in the past, more humbled than honored obviously to be in this role. But to to have actually been part of Berkshire for Warren, it's now twenty five plus years, had the opportunity to be part of Berkshire and to to work with you and Ajit and our our board, but many other people in our company. And as you touched on, when you find something like that and you find something like that, like Berkshire that's so special, it's you fall in love with it, and it's it becomes just what you wanna do every day, and it's just an incredible opportunity. So thank you.

And the gentleman who asked the question, if if you don't find it immediately, you know, don't starve to death or anything in the meantime. But but but you will find it. And and you'll you'll find it in in the right individual. In in the sense, it's almost like finding the right person in marriage. Mean, and it probably the first some of you married may have married the person you meet met on your first date.

Although I guess they don't even have dates anymore. But but the but, you know, it's it's sometimes it pays to wait too. Okay, Becky.

Yeah. Well, we always have, pretty much. The Japanese situation is different because we we do intend to stay so long with that position. And the funding situation is so cheap that we essentially have have attempted to some degree to match purchases against yen denominated funding. But that's not a policy of ours.

In fact, that's the first time we've we've we've done that. And and we've owned lots of securities of of of in in foreign currency. So we do nothing in in terms of the question about its impact on quarterly and annual earnings. We don't do anything based on its impact on quarterly and annual earnings. I mean, there's never been a board meeting I can remember where I or the conversation I had with Charlie when I said where I say, if we do this, our annual earnings will be this, you know, and therefore we ought to whether it's accounting or whether anything, we just, you know, the number will turn out to be what it'll be.

What counts as where we are five or ten or twenty years from now. And and if you start focusing on what number you're going to produce, you will quickly get tempted, at least based on the experience I've seen from viewing 20 companies. You will get so you'll, one way or another, play around with the numbers and sometimes seriously play around with the numbers. And I've seen people that that, you know, I trust them in all kinds of other ways, but they regard playing around with numbers as perfectly okay. And that's just not something, you know, we just don't think about that.

Actually, the the n the relationship of the n, behavior of the n in the last quarter, resulted in certain gap charges and but it doesn't make it it doesn't make any difference. It'll change next, you know, next month or next year. And and obviously we wouldn't wanna be owning anything that we thought was in a currency that was really going to hell. And that's the big thing we worry about with The United States currency. I mean, it's the the tendency of a government to want to debase its currency over time is there's no system that beats that.

You know, you can pick dictators, you can pick representatives, you can do anything. But but the people there there will be a a push toward weaker currencies. And of course, that is I mentioned very briefly in the annual report that that that fiscal policy is what scares me in The United States because it's it's made the way it is. And and all the motivations are to doing a lot of things that will cause can cause trouble with with money. But that's not limited to The United States.

It's all over the world. And some places, it gets out of control regularly as I know they know they know know They they devalue it, rates that are breathtaking and that's con that's continued. I mean, people can study economics and you can have all kinds of arrangements. But in the end, if you've got people that control the currency, you can can issue paper money and you will, or you can engage in clipping currencies like they used to centuries ago or There will always be people. And it's the nature of their job.

I don't I don't I'm not singling them out as particularly evil or anything like that. But the natural course of government is to is to make the currency worthless over time. And and that's got important consequences. And it's very hard to build checks and balances into the system to keep that from happening. And we've had a lot of fun here in the last either the first hundred days or the last hundred days, whatever you wanna call it, the watching what happens when people try to make sure that they aren't running fiscal risks.

And that game isn't over and it never will be over, you know, in finality. If you look if you look up in in search, the great inflations of post World War two, it's just the list that goes on forever and the same names keep popping up and everything. Currency is the value of currency is a scary thing. And and we don't have any great system for beating that we do in this particular Japanese position because we expect to hold it for fifty or a hundred years or more. And we will be owning something that's denominated in yen, easily predictable.

And we'll just as long as the the carry on it is right and everything, we'll we'll we'll attempt to issue Japanese denominated liabilities. But that that's not because of anything we carry about in terms of quarterly or annual earnings. Greg, do you have anything to say on that?

I was just gonna say that, relative to the question, that there's no question we were fundamentally very comfortable with investing in the five Japanese companies and recognizing we're investing in yen. The fact we could then borrow in yen was a almost just like a nice incremental opportunity. But we are very comfortable both with the Japanese companies and with the currency we would ultimately realize, I. E. In the yen.

Yeah. We we only made, as I referred to earlier, one big currency play, which was connected a little bit with when I wrote that article for Fortune. And we got along 12 other currencies as I remember only four or five of them are really big currencies. But when when I say we got long, that means we're short the dollar. And so we held that position for a couple years and we we made several billion dollars on it, which was significant to us then.

Still is. The Charlie always felt that if if he had to pick an area outside of stocks in which to invest, And he knew a lot about bonds, he knew a lot about real estate, he knew a lot about a lot of things. But he he said the he thought he could he could he thought he could make a lot of money out of being in foreign currency. But we just we've done it once. It's not inconceivable we would do it again, but it's unlikely.

But there could be things happen in The United States that would make us wanna own a lot of other currencies. And I suppose if we if we made some very large investment, European country or some there might be a situation where we would do a lot of financing in in their currency. But it's it's not a it it was something that just was sort of obvious to do in the Japanese situation where we had the ability to borrow yen at very, very low carrying cost. And and we felt very good about the income we'd be receiving from these securities and we and if the present condition, which it won't, I mean it never does, but prevail for decades and decades, we would probably keep doing the same sort of thing. But things change in the world too, so don't take that as a prediction.

Okay. Section six.

Oh, thank you. Yeah. I I have trouble planning a trip to Council Bluffs, is just a few miles from here, but Takes an optimist. Actually, met a fellow here at the annual meeting, oh, probably twenty years ago or more, who did a lot in Mongolia. And he's he did very well in Mongolia and actually moved there for quite a while.

I would say that if you're looking for advice to give the government over there, it's to develop a reputation for for having a solid currency over time. I mean that we we don't really wanna go into any country where we think there's a chance I mean, a significant probability of runaway inflation. It's just it's it's too hard to figure. People other people have figured out ways to make money in in hyperinflationary situations, but that's not our game, and I I I don't think I'd play it well. So, we wouldn't be that would be a factor with us.

The chances are we won't find anything in Mongolia that fits our size requirements aside from that. But I but like I say, I've had I think my friend that I met here twenty years ago has done very well in in Mongolia. And if if the country develops a reputation for being business friendly and currency conscious conscious, you know, I think that that bodes very well for the the residency the residents of that country, particularly if it has some other natural assets that it can build around. I don't know that much about the minerals there or anything of the sort, but but I mean who would have been on The United States in 1790, but we didn't we didn't have to have perfection, we just had to be better than the other guys for quite a while. And we started out with nothing and we ended up with close to 25% of the world's GDP and faster growth rates and generally sounder currencies and all kinds of things.

But, so, I wish you well. Okay. Becky?

Rajiv. Okay.

Yeah. Part of the question is very easy. There's no question the private equity firms have come into this space, and we are no longer competitive in this space. We used to do a fair amount in this space, but in the last three, four years, I don't think we've done a single deal. Now you ought to separate this whole segment in two separate segments.

One is the property casualty end of the business and the life end of the business. The private equity firms that you mentioned are all very active in the life end of the business, not the property casualty end of the business. You are right in identifying the risks in these private equity firms that are taking on both in terms of leverage and in terms of credit risk. And while the economy is doing great and credit spreads are low, these the private equity firms who've taken the assets from very conservative investments. And I wouldn't say high octane, they've certainly invested these assets in situations where that where they get a lot more return on the investment.

And as I said, as long as the economy is good and credit spreads are low, they will make money, they'll make a lot of money because of leverage. However, there is always a danger that at some point the regulators might get cranky and say, you're taking too much risk on behalf of your policyholders and that could end in tears. We do not like the risk reward that these situations offer And therefore, we put up the white flag and said, you know, we can't compete in this segment right now.

Yeah. And I think there are people who wanna copy Berkshire's model. But usually they don't wanna copy it by also copying the model of the CEO having all of his money in the company forever. And I mean, they they've got a different equation. They're they're interested in and and and that's capitalism, but they have a whole different situation and then they probably have a somewhat different fiduciary feeling about what they're doing.

And and sometimes it works and sometimes it doesn't work. And if it doesn't work, they go on to other things. And if I what we do here at Berkshire doesn't work, I spend the end of my life regretting what I've created. So it's it's it's just a whole different personal equation. And there is no property casualty company that can basically replicate Berkshire.

That that wasn't the case at the start. I mean, at the start, we just had national indemnity a few miles from here and anybody could have duplicated what we had. But but that was before a g. The g came with us in 1986 and and at that point the other fellow should have given up. Yeah.

Station seven, please.

Well, those are good questions. I wish I I thought of them myself earlier in my life. The you know, who you associate with is just enormously important. And don't expect that you'll make every decision right on that. I mean, but you you are going to go into you're going to have your life progress in the general direction of the people that you that you work with, that you admire, that become your friends.

I mentioned a few fellows that that have died in the last couple years. Well, all of those people were people that that that that, you know, if we were working together on something one ten thousandth the size of Berkshire, I mean they'd be the kind of people you'd choose. It's just, there are people that make you wanna be better than you are. And you wanna hang out with people that are better than you are, and that you feel are better than you are because you're gonna go in the direction of the people that you you associate with. And and that's that's something you learn and of course you learn it late in life and that you you it it's hard to really appreciate how important some of those factors are until you get much older.

But when you've got people around you like Tom Murphy and and like like well, like, just name him, Goddessman at Walter Scott, you're just gonna live a better life than than you do if you just go out and look at somebody just making a lot of money and decide you're gonna try and copy them or something of the sort. So I would I would I would try to I'd try to be associated with smart people too where I could learn a lot from them. And I would try to look for something that I would do if I didn't need the money. I mean, what you're really looking for in life is something where you've got a job that you'd hold if you didn't need the money. And I've had that.

And surely I it for a very, very long time. In fact, all the fellows I named had it. And and they also, every one of those ones I named, they always did more than their share. And they sought they never sought more than their share of the credit. They just behaved as the way you'd you'd like anybody you'd you'd work with.

And when you find them, you treasure them. And and when you don't find them, you still keep doing whatever causes you to eat or enables you to eat. But but you don't you don't give up on on looking around and you will find you'll find people do wonderful things for you. I mentioned I mentioned earlier the, you know, going down to GEICO and knocking on the door when the door was locked. I mean, who knows what was behind that door like went in.

But but, you know, in ten minutes I found that I had a man that was gonna be just wonderfully helpful to me. And of course, if somebody's gonna be helpful to you, you wanna try to figure out ways to be helpful to them. So you get a compounding of of good intentions and good behavior. And unfortunately, you can get the reverse of that in life too. And and, you know, with a lot of I I was lucky in having a a good environment for living that kind of a life and other people, you know, have a whole different environmental situation.

They have to overcome it. But don't be don't feel guilty about your good luck if you've got if if if you know, if you've got well, if you live in The United States, you you know, you you you've you've there are 8,000,000,000 people in the world and there's 330,000,000 in The United States. You've already won the game to a great degree and then just keep making the most of it. But you you don't wanna you don't wanna associate with people or enterprises that ask you to do something that or tell you to do something that you shouldn't be doing. And that's one of the problems.

I mean, different professions select for different types of people. And there's it's interesting to me that in the investment business, so many people get out of it after they've made a pile of money. It it you really want something that you'll stick around for. You know, whether you need the money Greg doesn't need the money, or G doesn't need the money remotely. And they but they enjoy what they do and they're so damn good at it.

It's it's you know, it just well, I've had the advantage of seeing how that works over time. The best manager I ever knew, and there's a lot of contention for who that would be, but actually it was Tom Murphy senior that who lived almost 98, and I've never seen anybody that could get the potential out of other people more than than Murph could. I mean, if if if you wanted to if you wanted to become a better person, you want to work for for Tom Murphy. And there are all kinds of successful people that that really don't have that sort of don't bring that to the party. And I'm not saying that's the only way to succeed, but I think it's I it's the most pleasant way to succeed for sure.

And I think that the Berkshire experience is pretty dramatic. I mean, to operate with Sandy Gottesman from 1963 until he died a couple years ago. And then Walters got thirty years and Clayton operated with him for twenty five years or so.

Right. Yeah, thirty.

Yeah. And and, you you really can't miss. It's, You know, you'll learn all the time, but you'll you'll not only learn how to be successful at business, you'll learn how to be successful at life. And so that's that's that's my recommendation and that and and for some reason, I apparently you live longer too because it's pretty amazing. I mean, these people I'm talking about, including myself, I mean, I mean, you know, I you can I like to attribute it to this and a few other things?

I I I think a happy person lives longer than somebody that that that's doing some things that they don't really admire that much in life. Okay. Let's move on to I guess it's Becky next.

Well, then I can give you a good answer to the second part of which is no. But 10,000,000,000 wouldn't have done that much, you know. That's the other side another side of it. What has happened in the last thirty, forty five days, hundred days, whatever whatever you wanna pick up, whatever this this period has been, is is is really nothing. There's been three times since we acquired Berkshire that Berkshire has gone down 50% in a very short period of time, three different times.

Nothing was fundamentally wrong with the company at any time, but but this is not a huge move. The Dow Jones averaged at 381 in September of nineteen twenty nine, it got down to 42. So that's by going from a hundred to 11. This is not this has not been a dramatic bear market or anything of the sort. I mean, it it it was you know, I'd like to point it out if I've I've had two hundred and fifty trading days a day, you know, for however many years I've been old enough to trade stocks, I've got seventeen or eighteen thousand days.

There's been plenty of periods that just are dramatically different than this. I mean, the day I was born, the Dow Jones was at 02:40. And my first that was 08/30/1930. And between that and the low it went from $2.40 to 41. I mean, that's so if people think that it made a really major change.

It it didn't if it if it's going up 15% instead of down 15%, people think they take that with remarkable grace. But but if it makes a difference to you whether your stocks are down 15% or not, you need to get a somewhat different investment philosophy because the world is not going to adapt to you. You're gonna have to adapt to the world and you will see a period in the next certainly in the next twenty years, you'll see a period that that that will be in what somebody in the market described one time as a hair curler compared to anything you've seen before. I mean that just it just happens periodically. The world makes big, big, big mistakes and surprises happen in dramatic ways.

And the more sophisticated the system gets, the more the surprises can be out of right field. That's that's just that's part of the stock market. And that's what makes it a good place to to focus your efforts if you've got the proper temperament for it and a terrible place to get involved if if you get frightened by markets that decline and and get excited when stock markets go up. I don't mean to sound particularly critical. I mean, I know people have emotions, but you gotta check them at the door when you invest.

Okay. Station eight, please.

Yeah. Well, everybody gets setbacks, and some people have particularly bad luck in that respect and others get through with fairly minors. But Charlie, you know, but he had setbacks, I had setbacks. I mean, it it it's it's part of life and and they're not fun. I don't have any great advice for you about about, you know, having the time of your life while you're having some major setback.

But but it's it's, you know, it it comes with lifetime. You it you certainly have a setback when you die. And so everybody's got that setback guaranteed to them. And but some people get and I mean, it it isn't a laughing matter in a sense because, I mean people get extraordinary bad luck and other people get extraordinary good luck. Usually the people who get good luck don't really think it was so much luck as themselves, but but you're just going to have it.

I think you're going to I think that you're less likely to have it in terms of medical problems, in terms of, you know, various things in life. I mean, you were born at a good time. I mean, if you look all the way through the history of China, when when would you rather have been born? You know, a hundred years ago, five hundred years ago, a thousand years ago, or now? You know, it it it's just hands down.

You'd be lucky. I mean, you know, if if I came from 20 generations of shepherds, I I I think I get kinda tired of, you know, my life just looking at these sheep every day. But, you know, we can sit here and I can I can watch Nebraska not quite play the same game of football that we played twenty years ago, but but I mean everything in life has been made so much better that you've gotta figure that you do a lucky store straw by, you know, staying in the womb for a couple hundred thousand years and then just emerging at the right time? So I would I would focus on the things that have been good in your life rather than than than than the bad things that happen. Because bad things do happen but but it it it's it can often be a wonderful life.

You could get terrible breaks in it. Mean, you know, it so far that really hasn't happened with me, but it's happened with some of my friends. But they get some bad breaks from time to time. But for ninety four years, I've been able to drink whatever I wanna drink and get on the thing. They predict all kinds of terrible things for me but it hasn't happened yet so and it's true.

I mean, if you look at what pro football players are making now and everything compared to what they were making thirty or forty years ago, you can say, well, isn't that wonderful? But if you look at the if you look at the lifespan of professional athletes, after a while you get used to you really can decide that you're better off if you if you really weren't weren't the first one chosen to be on the baseball team or the basketball team or anything anything else. The human body well, Charlie and I, and I think I speak for the others to some extent, we never did. We never really exercised that much or did anything. Were we were carefully preserving ourselves for look at the bright side of things to the extent that you can.

And that and, you know, you're lucky enough to you're you're here today, you're healthy, you're you've come from a long distance and and and you're getting a chance to learn more about something that interests you and compare that with the situation a couple hundred years ago that you would have been offered. So anyway, that's enough moralizing. Okay. Becky?

Well, Ajit? Yeah. There's no question that insurance for automobile is going to

dramatically once self driving cars become a reality. The big change that we will see is what you identified. Most of the insurance that is sold and bought revolves around operator errors and how often they happen, how severe they are and therefore what premium we ought to charge. To the extent these new self driving cars are more safe and are involved in fewer accidents, that insurance will be less required. Instead, it'll be substituted by, as you mentioned, product liability.

So we at GEICO and elsewhere are certainly trying to get ready for that switch where we move from providing insurance for operator errors and be more ready to provide protection for product errors and errors and omissions in the construction of these automobiles.

Yeah. We expect we expect change in all our businesses. And good thing we didn't. Charlie pushed me into it, but but if I'd settled for being in New England textiles, and even though it worked well for seventy years or so prior there too, you know, the world changes. And and if the game didn't change at all, it really wouldn't be very interesting.

You know, it's if every time you if you ever every time you'd been swung at a baseball, had a hole in the game, it wouldn't be interesting. If every time you hit a golf a golf ball, you had a hole in one, it wouldn't be interesting. So in the fact that there will be things you have to think about all the time as you go along and you'll make mistakes and all that. And that's really part of the fun. I mean, that that that that your brain would turn to mush if you didn't have a few problems now and then.

So I I, you know, auto insurance will change, although it's remarkable how little it has changed. But it's only been around since, you know, for a relatively small time and who knows what we're doing to move in transportation a hundred years from now. If you go back a couple hundred years ago, who could have predicted The United States would look like what it does and people would move like they do and people would enjoy themselves like they do. I mean it's just it it it's it's a dynamic world and the biggest thing we have to worry about unfortunately is that that we've learned how to destroy the world too. And in in in in recent years.

And so we've got this wonderful world, which now we we know that there are eight countries that and probably a ninth coming on that can destroy and and and we don't have what I would consider the necessarily the perfect people leading each one of the nine or or some of the nine countries. And, you know, when Einstein came up with the equals m c squared back in nineteen o five, he he didn't dream of the fact, I mean, that that energy could really be converted or mass could be converted into energy and the way that we change the world. When I was born in 1930, they had known about the law of physics that that Einstein had come up with twenty five years earlier. Nobody, to my knowledge, had thought what can this do to change warfare in the future? And literally, it just wasn't thought.

Einstein didn't think about it at at that point. And and then in 1939, Roosevelt got a letter around a month before Germany moved into Poland and got around August 1. It's the most famous letter in history from from Leo Szilard. Leo Szilard couldn't get his letter in front of Roosevelt because whoever heard of Leo Szilard, but but he got Einstein to sign it. And Roosevelt probably understood about as much about physics as I do, so he he didn't understand it, but he understood that Einstein signed it.

So he calls in General Grover, may not have been General then, and said, we should do something about this. And all we did was learn how to destroy the world, and we needed to do it. And Germany had Heisenberg, and he looked like he was he was ahead of us. And we can't put that genie back in the waddle. And it's the world does change, and we've got all these one we've got wonderful things, but but we also have, you know, we have a guy in North Korea.

If you if we criticize his haircut, know, who knows what he might decide to do with. What does what does North Korea need? Need nuclear weapons for? I mean, it can that be a good thing in the world? But they're not gonna go away, so it's a it's it's a world of change, and we are enjoying incredible change that's contributed to everybody in this room living so much better than people were living a couple hundred years ago.

But we haven't been able to to avoid we haven't changed human beings very much so far. We've we've certainly changed weapons of mass destruction and and but we haven't made much progress with the human race and and we'll see what happens with that. But in the meantime, we'll see changes in auto insurance too, and cars, and and that will be more and it'd be easier for us to deal with it than it was when we had to deal with the problems of turning out textiles in New England, and you deal with the world as it develops. And like I say, everybody here is living in the luckiest period, but but but, you know, enjoy your luck and and and you still try to figure out the answers to what's gonna happen. Yeah.

Yeah. In auto insurance as we go along and we've we've done pretty well. Actually adapting to the answers. There's a few big problems in insurance, and I don't know how the insurance industry adapts to them particularly, but but that makes the game interesting. You really don't want you wouldn't wanna go out and play golf if you'd already gonna hit the ball in the hole, on every hole.

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

I'll give you two interesting figures to ponder. When I walked into Geico's office in 1950, the average price of a policy was around $40 a year. It varies all over the lot depending on location and everything, but but it's pretty easy to get up to $2,000 and depending on how urban your areas are and everything you can get considerably higher. During that same time, the number of people killed in auto accidents have fallen from roughly six per hundred million miles driven So the cars become incredibly safer, and it costs 50 times as much down or thereabout to my insurance policy.

When people talk about the developments in car driving and all that sort of thing, It's a lot easier sometimes. I mean the Buck Rogers aspect of it, people look at it but they don't actually think of what really happens to the math of the business. The insurance, auto insurance industry has been a huge growth industry. And for that matter, homeowners insurance prices in Nebraska have doubled in the last ten years, adjusted for general inflation and convective storms, you know, have just gone on to terror and it's still unprofitable to ride a home homeowner's insurance in Nebraska after doubling the price in the last ten years. So it's very hard to predict what these big changes mean and you just got to keep thinking all the time.

But you don't want to read some research report that says the world's coming to an end or the world's gonna be wonderful because of this or that. Because there's about 50 other developments going on at the same time that you you need to think about. That and that you needed to keep observing as you go along. You don't never reach an answer in this business. You reach a point of action that you take.

But but but we try to get into as high probability things as we think we can do and play the game in the same way. But but it will be different than you think. And and you should wake up every morning and think about that too if you're if you're in the business of of managing businesses.

Hey, Warren, as we approach the break, would you like to address the operating earnings?

Oh, yeah. First word? Yeah. Let's put up the, we released our 10 q this morning. And we always try to do it on a Saturday so nobody gets a jump on other people.

And we just have three simple charts. You'll see that our insurance underwriting income was down dramatically for the first quarter. And last year was as good a year as you'll see in insurance. It's always unpredictable insurance, but everything broke our way or the insurance industry's way last year. Prices are down this year.

Risks are up this year, so you don't have to be a genius to figure out what the answer is on that. But we have we do have unusual advantages in the insurance business that can't really be replicated by our competition. That doesn't mean they aren't trying to get advantages we don't have. But we'll try to replicate anything that seems better. In fact, we'll try and chop it.

But we I wouldn't talk about our insurance business as much as I do it unless I really thought we had some really permanent advantages in a very, very large industry. We just announced within the last twenty four hours that we in Zurich and Chubbuff have arranged a joint operation to be the writer of really large sums that that very few people can do. And of course, we gotta write them at the right price in terms of liability. But but we can do that sort of thing without blinking. And anybody that wants to do it wants to get us in it.

I mean it so anyway, in our investment income did not change that much because we have a float that grows a little bit, which gives us more money for investment. And then we have retained earnings, which grows. So we would expect in a year to have like 40,000,000,000 or more that that will build up investments unless we find things to do with it. So the investment income rates on treasuries are less than they were or short term bills, I should say, are are less than they were before. So you had that negative effect pulling it down, but not that much and we had more money.

So we came up with a little more in the way of earnings. The railroad is earning a little more than than last year, but it's not earning, but it should be earning at the present time and but that that's solvable and and and is getting getting solved. And it's it's still an incredible asset for Berkshire. The energy company last year was having particular problems and those were absent this year, so those earnings are up. And then among our range of general businesses, they were pretty much a push.

And I think I think you did a little calculation the other day on how many were up and how many were down to to Greg.

Yeah. Of our 49 that we measure closely, twenty twenty one were up and 28 were down. So you can tell it was really a mixed quarter when you go go across the operating the non insurance operating businesses.

Yeah. The next slide. I'm getting a five minute warning here. The we'll throw the long ball now. The shows our financial condition which continues to hold a lot more in cash and treasury bills than I would like, but I but that's simply a question of what opportunities occur.

If you get real opportunities every five or six years, you're you know, you have to be patient. Charlie always pointed out that we make most of our money out of about eight or nine ideas over fifty years. And and we talked about it every day and we read every report and we did everything else. But but if you think you can get an idea a day from listening to your Frederick Booker or doing a lot of reading of the of the financial information published or forget it because every now and then you get extraordinary opportunities. And most of the time, you don't have much of an edge.

So we also have on that thing, our float which continues to build. I don't think any there's no company that has property casualty company that has our full reserve achievement.

Yeah. Clearly, are heads and shoulders above anyone else. Yeah.

It so that is money that, as long as we're writing it in an underwriting profit, is absolutely free money. And and we would expect that over a fifty year, hundred year period that that we would be able to say the same thing. But there will be will be years when you have a very bad underwriting record and and it'll lead into the full earnings. But so far in the last twenty years, think we've only had what one underwriting loss of any.

Yeah. I think if you look at the entire range including life insurance, our cost of float is 2.2 negative. That means we've got the float plus somebody's given us 2.2% of that of cash too.

Yeah. It's like running a running a bank where people leave their money with you and and you pay a minus 2.2% and you don't have any check clearing or anything else to do. And it's included in that, so But we run our business actually with a different mindset than than any other PC company, I think probably of the world. And and I wouldn't be talking about it if I thought they could duplicate it. And then the final final page is on share repurchases, and clearly we haven't made any we have not made share repurchases so far this year.

And share repurchases, if Berkshire buys Berkshire shares and repurchases, we now pay more than you will pay if you buy Berkshire shares. I don't think people generally know that but but there is a a tax that was introduced a year or so ago, where we pay one percent. And that not only hurts us, because we pay more for it than you do. It's a better deal for you than for us. But it actually hurt some of our investee companies quite substantially.

And Tim Cook has done a wonderful job. I mean, really wonderful job running running Apple, but he spent a hundred billion dollars roughly in a year repurchasing shares and there's a 1% charge attached to that now, so that's a billion dollars a year that he pays when he buys Apple stock in which we like compared to what you pay. And and it doesn't sound like much but, well a billion dollars sounds like a lot still. But there are people that want to increase that that particular rate dramatically and and and you you won't read about it or anything like that, but it does make it slightly less attractive than than it was before and we will only buy in our shares if we think that they are almost certainly underpriced as valued very conservatively. And and we get that opportunity occasionally, but the higher that charge goes that the federal government charges us for doing it, unless we won't be able to do our repurchases.

So on that happy note, we will rejoin at 01:00 and we will I'm sorry. Correct that correct that to 11:00 and then we will Yeah. 11:00. And then we'll continue to 01:00. And then in the meantime, enjoy yourself.

And and I think all our stores are still open, bring the cash register.

I'm sure I'll help you here.

Yeah. Okay. Good.

a few years

The United States, I mean, we should be looking to trade with the rest of the world, and we should do what we do best and they should do what they do best. I don't think it That's that's what we did originally. I mean, we were good at producing tobacco and cotton two hundred and fifty years ago and we and we traded it. And we want a prosperous world with eight countries with nuclear nuclear weapons, including a few that are what I would call quite unstable. I do not think it's a great idea to try and design a world where a few countries say, we've won, and other countries are envious are envious.

Trade should not be a weapon be a weapon. And and The United States United States States United United States. We've won. I mean, we have become an incredibly important country starting from nothing. Two hundred fifty years ago, there's nothing been anything like it.

And it's a big mistake in my view when you have seven and a half billion people that don't like you very well, and you got 300,000,000 that are crowing in some way about how well they've done. And I don't think it's right, and I don't think it's wise. I do think that the more support the more prosperous the rest of the world becomes, it won't be at our expense, the more prosperous we'll become and will and the the safer we'll feel and your children will feel someday.

Every now and then you find something and occasionally, very occasionally, but it'll happen again. It I don't know when. It won't it could be next week. It could be five years off, but it won't be fifty years off. He will have we will be bombarded with offerings that that we'll be glad we have the cash for.

And it'd be a lot more fun if it would happen tomorrow, but it's very unlikely to happen tomorrow. Very, very unlikely to happen tomorrow. But it's not unlikely to happen in five years, and then it gets the probability to get higher as you go along.

The world makes big, big, big mistakes and surprises happen in dramatic ways. And the more sophisticated the system gets, the more the surprises can be out of right field. That's that's just that's part of the stock market. And that's what makes it a good place to to focus your efforts if you've got the proper temperament for it, and a terrible place to get involved if if you get frightened by markets that decline and and get excited when stock markets go up. I don't mean to sound particularly critical.

I mean, I know that that and and people have emotions.

right.

of So,

Yeah.

Right.

Sure.

Yeah. For sure.

Great to see you too.

Well, it's very interesting. It's very disruptive. It's tough to make a plan, and we've been very patient in just waiting it out. And, you know, we've got alternative strategies to deal with it depending on what we know they're exactly gonna do. We're at a point right now where we've got July 9 is a big time for us to figure out what to ship, what not to ship.

July ninth.

That's the date somebody's gonna need to make a decision whether the tariffs stay in the

the Okay. The tariff stays or it goes up to 40 or 50 depending on what country we get it from.

So we're trying to ship as much as we can by mid May. So the the goods we have, we know exactly what we're gonna pay. And then we're just gonna take a wait and see and be patient, be able to adapt. We have a lot of resources both domestically, that we can rely on and gives us a broad base to be able to make those kinds of decisions and

warehouses that brought in goods that they'll they'll have plenty of goods to cover themselves for a very short period of time because there is going to be a time where depending

on

what happens after the ninety days, where you may see a short supply of goods from overseas.

though.

The sourcing, in our case, other than about 10%, has moved to Vietnam, Cambodia, Malaysia, Indonesia. And, you know, again, that's where, cheaper labor had been. That's where the furniture industry has migrated to. There's still some electronic stuff coming out of, China, and there's a couple categories that those countries haven't been able to produce at this point in time, but I'm sure there are a lot of people working towards those countries to figure out alternatives.

It's interesting. I just came back from North Carolina last week, and it's a long process. I I seriously doubt there's gonna be a lot of manufacturing brought back to The US. And, you know, you just gotta figure out alternatives. We we do about 25% of our business in The US on US made domestic product or imported products in parts, and then they assemble them here.

But I don't see it as a big as a big opportunity over the long term.

Thank you very much. Great to see you all.

And they're starting to use the vertical integration we have, and that's been a blessing with the the tariffs. We've had no price increase as a result Really? Because can I it helped the Canadian lumber end? Yeah. As long as it's used for housing, no tariff on that.

No tariff But also 27 supply companies of our own and great procurement teams, we've been able to offset all that.

You know, tariffs are a challenge for for everybody, and the biggest concern we have is the impact on the consumer.

After years of high interest rates and high inflation, consumers are pretty weary. And now it's fear. Right? It's the uncertainty that's causing them to become a little more cautious in their purchasing decisions. That will have the biggest impact on our business.

During Trump number one, the supply chain really started to reconfigure itself too. It was almost like a circulatory system that found a new path. And so we're going through wave two of that right now. And we're in touch basically daily right now with all the key vendors working through this together, and it's gonna it's gonna end up fine. But we're gonna have a third quarter that's gonna be

a little challenging as everything settles. We're preparing as if things were to slow down a little bit. But some of our areas, Joanne's business is responsible on the commercial side of the business. Yep. Data centers doing extremely well.

Right? I think she'll have, hopefully, her best year. And and some very good years prior to that. So so there's a lot of pockets of that, and and I think we're in a good spot on that.

We're fortunate we manufacture all of our products here in The United States, and most of our inputs are sourced in The United States or North America. So we haven't seen any significant impact. From a tariff perspective, we do do a lot of business in Canada. And with this by Canadian backlash, so to speak, we are concerned about that. So we stopped manufacturing in Canada in 2015.

But I'm happy to say we're gonna be starting manufacture in Canada again here later this month. And throughout the summer, we'll be adding more SKUs to the offering being manufactured there just to be supportive of Canadian retailers.

I don't know exactly when I started. It was when I bought my first Berkshire share. I I think that was in '94, but I don't remember exactly.

For me, you know, this is the probably the most important event that's a reminder of how important capitalism is as the foundation of democracy. And so that's, you know, it's almost like a religious experience from that perspective. Just the constant reminder of like how integral to our democracy capitalism is.

Well, you know, I I think probably the greatest insight I just took away from the last couple of hours is there's this great perception of market volatility that's existed over the, you know, let's say the last three or four months. But as Warren pointed out, the S and P is down 3%. That's not much volatility. And I think it takes someone like Warren with the clarity of thought to actually remind us that there's been historically a lot more volatility in markets than what we've seen in the last five

I I think that the greater challenge though is if you think about where we are fiscally as a country, you know, 37 and a half trillion and growing of debt, for now more than five years, a debt to GDP ratio at a 20% or more. You know, I think one of the things that we have to start to come to terms with is you can't have successive years of a trillion and a half and $2,000,000,000,000 of deficits, a debt at 37 and a half trillion dollars with a trillion dollars a year of interest, and not address spending. And it's not just federal spending. It's gonna be municipal spending, state spending, but spending has gotten out of control. And, you know, when you think about 5% of individual taxpayers contributing 66% of taxes and twenty twenty companies contributing 25% of corporate taxes, We need to do a better job of making sure that we're not actually putting a greater tax burden on the on The US.

I don't know that it's sustainable, but we have to start addressing spending.

Well, think about it. Medicaid and Medicare in the last four years are up 45 to 50%.

That's just not sustainable. And then you look at the things that nobody wants to talk about. You know, k through 12 US expenditures are something in the neighborhood of a trillion dollars, but we're now at a place where kids are graduating at 30% of their grade level expectation. Graduating in math and science and reading at 30% of grade level. I think let's say there's 50,000,000 plus people in the k through 12 system, but in almost every grade and every subject, if you're averaging 30%, and that's now two generations, you're we're not gonna have a competitive workforce.

do it.

For a trillion dollars, you should expect an excellent outcome. That that is so much money. One of the challenges though is you've seen the shift of expenditures is largely towards administrative expense and not the classroom. State of California, eighty percent of the 22,000,000,000 annual k through 12 budget goes to administrative expense. 80%.

I I think hopefully we'll we'll hear more about what I'd like to hear. What what are the areas of opportunity that might exist and, you know, Warren's never gonna give you any specifics. I mean, you asked the question on the what was the $10,000,000,000 opportunity? But maybe we'll gain some insight. But for the most part for me, I just wanna hear the reminders of, you know, what's important in the way that you run a business, you think about society, what really matters, and No.

I get that. And so, that's why I come.

That's not easy, you know. Steve and Elaine were my parents and original investors and, you know, it's it's not quite real yet, but it's an incredible loss. Not just for me, but, you know, for so many people, for all the work that she did in education, in the arts, and it's it's been difficult.

Thank you for having me.

It's kind of you to say something. Thank you for having me. I really

appreciate it.

We're right at she's not here yet, but she just come up. She's coming up. Okay. Our directors are just coming in.

Oh, yeah.

We'll give it a cut. May not start right on eleven, but it's close.

Okay, everyone. Okay. We're ready to go and I'm going to lead off by actually recommending a movie. I know that's why you came. But I would recommend to all of you that you go to Amazon Prime.

I've got no financial interest in this, but you go to Amazon Prime and click on a a documentary called becoming Catherine Graham. It's an incredible story from fifty or so years ago. And to some extent, I had the good luck to be kind of a a viewer of some some American history So if if if you feel that that I misled you, you can write me a note and I promise to report how many how many readers didn't agree with. But click on click on to becoming Catherine Graham and you'll see a story of a remarkable story of American history.

And there are a good many portions in there that I who lived through that period didn't know about at the time. And I think I don't think really every American citizen ought to watch it. So with that, I hope you all spend some more money out there in our friendly shops, and we will go to Station 9.

Yeah. I will turn this over to Greg in just one second. But now the main thing I'd like to be known for is old age.

Well, Warren is, obviously a remarkable teacher and and I benefit from that every day and and and as I've already touched on for many years. I'm fortunate that if I had to, be remembered as something right now, obviously, I'd, wanna be remembered as a great father, but equally a coach. And I and that goes to family, friends, and just being involved with the kids I coach in hockey or baseball or whatever it may be. I think we've got a a great opportunity to give back to them at a very young age. Obviously, those would be how I'd wanna be remembered and hopefully that'll be, many, many years from now.

But, but and I I love thinking of Warren truly as a teacher and and and he's in every day get the opportunity to continue to learn. Warren and I, his dialogue is strong every week and we're always talking around opportunities in Berkshire or things that are going on globally or in The US and each one's Truly a truly a learning moment I'll I'll maybe go back to the very first meeting with Warren And because it still stands out in my mind obviously it was incredible opportunity we Warren was Buying over Acquiring mid American energy holdings company at that time or or or thinking about it and we had the I had the opportunity With my partners go over there on a a Saturday morning and we're discussing. The the business and Warren had the financial statements in front of them. And, like anybody, I I was sort of expecting a few questions on how the business was performing or a variety of things, but Warren locked in immediately to what was on the balance sheet and the fact we had some derivative contracts, the weapons of mass destruction. And associated with the utility business, we do have them because they they use them to match certain positions and they they're never matched perfectly, but you do have them and were required in the regulated business.

But I I just remember Warren going to it immediately and asking the composition of it and what was the underlying risk in it and wanting to thoroughly underlie understand it. It wasn't that big of a position but it was absolutely one of the risks he was concerned about as he was acquiring MidAmerican. And obviously, light of Enron and everything that gone on, it was a very pertinent question. And then the follow-up to that was then there's an energy crisis in The US, around electricity and natural gas, and a variety of folks were were making significant sums of money. This is a year, eighteen months later.

And Warren's follow-up question, couple years later to me was, and I knew it was more just checking or testing. So how much money are we making during this energy crisis? Are we making a lot? Do, you know, do we, are are are the speculative positions in place? And are we making it?

The answer was, we're really not making any more today than we would have been, six months ago because all those derivatives were truly to support our business and weren't speculative. Just just that focus on understanding the business of what he was acquiring, understanding the risks around it, still stand out in my mind. Warren?

Yeah. It's it's that's one thing we've ever really never talked about here but I spend more time looking at balance sheets than I do income statements. And Wall Street really doesn't pay much attention to balance sheets, but I I like to look at balance sheets over an eight or ten year period before I even look at the income account. Because there are certain things that's harder to hide or play games with on the balance sheet than than you can with the income statement. And yeah, I mean neither one gives you the total answer on anything, but you you still ought you ought to understand what the figures are are saying and what they don't say and what they can't say and what the management will like them to say that the auditors wouldn't like them to say.

And I mean, there's just a lot to be learned. And and you do learn more. You learn more from from balance sheets, in my view, than most people give them credit for. In in terms of I really haven't I'm not worried about being remembered about that. People people don't remember.

Well, they don't remember enough about Catherine Graham, for example, in in terms of this story that shaped America in many ways, certainly, it had just all kinds of impact. And I I think I mean history is so fascinating. And Charlie was probably the best person you could imagine in what he learned. Charlie was never satisfied with just superficial things about any subject. He really wanted to understand it.

And he always would tell me that, you know, don't take a position on anything and and Joe, you can describe the arguments against it better than the person who is arguing with you, that you should be able to argue their case better than they can. He was he was a remarkable teacher and but so and so were those other fellows I mentioned. I've had a and of course my dad was an incredible teacher. So you make the most of the people you meet that are going to make you a better person and probably forget about the rest to quite an extent. Okay.

Let's move on to number Becky, you're next.

Sure. So

this bar is not too high. No, it's, but very fortunate when you think of Berkshire again, and we've we've talked about this where we start from and I'll I'll clearly touch on the investment and the related investment allocation. But we start from a great great place where we've got a a great culture within the business. We have values that we, a management team, and and and really as defined by Warren and and those, Charlie and and everybody associated with the business, we've got great values that really set Berkshire Berkshire up well for the for the future. And obviously, as we deploy capital, and allocate capital, it's critical to Berkshire as we go forward.

And equally, it's around, managing risk. But when I think of our our our values, there are a couple that are absolutely critical. One, we'll maintain the reputation of of Berkshire and and that of our our company. And and I view that in investing or how we operate things across each of our businesses. That will always be a priority and something that will will ensure is in the forefront of our minds.

I think equally as we, then look at our our various our back to Warren's balance sheet comment, we will have a fortress of a balance sheet. And we want to I thought Sue Decker, our lead director, said it well yesterday. We've got a we've got a significant set of cash right now. But it it's an enormous asset to have that. And that will continue to be a philosophy.

Yes. When we can deploy it, we'll deploy it well, and I'll come to that. But equally, we do recognize it as a strategic asset, and it allows us to weather the difficult times and and at the same and and and not be dependent on anybody. So, again, that will be an, an investment philosophy. We will remain Berkshire, and we will never be dependent on a bank or some other party for Berkshire to be, successful.

I would thank you. I would then move to to touch on allocation of capital be absolutely critical. But with that comes, management of risk and and understanding risk. And that falls upon, all our managers, insurance, non insurance, but we'll bring that across Berkshire. And then the other value I would touch on, but that really relates to where I'm going is, ultimately, we have a great set of operating companies that do produce significant cash flows, be it in the insurance companies creating float, or various non insurance companies producing significant cash flows on a on an annual basis.

We intend to continue to ensure that's the strength of Berkshire as we go forward. It's absolutely critical to our to our long term success. Now, with those cash flows and with the float, and then equally as touched on, we have significant resources already on our balance sheet. We'll really continue to move forward with a very similar philosophy or it's an identical philosophy to what we've had currently and and and for the past sixty years. We'll start by looking at those opportunities within our business.

And by that, I mean within our insurance, non insurance businesses. Are they are they properly capitalized and have the opportunity to manage their business? And that, that will continue to exist. They'll operate in an autonomous way. But in the end, Berkshire still manages the capital that will go into that those businesses or what potentially will come out of those businesses.

Equally, the next opportunity is to acquire businesses in their totality or a %. And there are great times when we can do that. Warren touched on, we had one that was interesting in the last quarter, the $10,000,000,000 acquisition. But again, the value relative to the risk have to be right. And if it's right, we wanna own it.

If it's not the time, there'll be another time to own assets like that. And then there's the opportunity to own pieces of of companies through the equity. But as Warren's always highlighted, and again, this will be our approach to to how we think around those companies. Though we we own a piece of a company. We own a a piece of that cash flow.

We own a piece of their balance sheet. It's not just a a share certificate. And as we approach that, and really, we'll approach it with the thought that we're gonna own this company for the long term. It's again, understanding what, be it the % company or the 1% company, do we thoroughly understand? And thoroughly, do we have a strong view of what those economic prospects of those companies will look like?

And Warren said it earlier, five years from now, ten years from now, twenty years from now. If if we don't have a view of that, we won't be investing, be it a % or 2% of a company through equities. We have to thoroughly understand what those prospects look like. And associated with understanding those prospects, we need to understand the underlying risk of the businesses. And it's it's really the investment philosophy and and and how we how Warren and and the team have allocated capital for the past sixty years, you know, really, the the it it will not change and it's it's it's the approach we'll take as we go forward.

Warren? Yeah.

And I don't wanna go on too long on this, but Sorry, I covered it. No, no, no. But this is this is important because the, you know, it's it's very obvious that the country, for example, needs incredible improvement, rethinking, redirection even to some extent in the grid. I mean, we've outgrown what would be the model that America should have. And in a sense, it's a problem something akin to the interstate highway system where you needed the power of the government really to get things done because it doesn't work so well.

When you get 48 or 50 jurisdictions, that each has their own way of thinking about things. And of course in World War two, we called in people a dollar an hour and we knew we had to turn out ships like crazy and we knew that we had to convert Ford Motor from from being a car manufacturer into an aircraft manufacturer in a matter of days, not weeks, not months. So you need the there are certain really major investment situations where we have capital like nobody else has in the private system. We have particular know how in in in in the whole generation transmission arena. The country is going to need it, but we have to figure out a way that makes sense from the standpoint of the government, that stands from the standpoint of the public and from the standpoint of Berkshire, and we haven't figured that out yet.

Don't know whether Greg wants to even explain a few of the major problems, but but that is a that is a clear and present use of hundreds of billions of dollars. And, you know, you have people that set up funds and say, you know, they're getting they're getting paid for just assembling something. It it it's it it it that's not the way to handle it. The way the way to handle it is to have some kind of a a government private industry cooperation similar to what you do in in a war. And and I don't think when they were doing the highway system, don't think the government set up its own guys that were gonna pour all cement or anything like that.

But they you needed a cooperation and and and we're at that point I think in terms of energy. But I don't think I don't think we've made any progress particularly though. Tell us more about that, Larry.

Yeah. And I think these are very unique in that, not unique in that it's sort of reflective of where we're at. There will be very significant investment opportunities across a variety of industries. As Warren touched on in the electrics in the electric industry, or the energy space, we obviously know that well with our with our existing business. And the capital required to meet the long term needs of of of what's currently projected as demand is enormous.

And and we, as Berkshire, will be in a good position to, help address those needs. But the the model around it and the risks that need to be addressed to deploy that type of capital will be will be different than they are today, Warren's point. Yeah.

The muscle of the federal government will be needed, but the test of whether you can have 48 or 50 depending on the nature of things, jurisdictions that are cooperating to do something that has opposition will have opposition in every single state. If they'd taken a vote on during World War two, or if they'd taken a vote on the, you know, the interstate highway system, it had it it would have been slowed slowed down to an incredible degree. I so the question is how to use these strengths that this country has to actually turn it in to what it should be capable of while still preserving, you know, a republic with 48 and connected and couple of unconnected states. And and it it is it'll be interesting to see what happens. But we do have capital and we actually have some knowledge that that very few very few places have.

I mean, we we we know what the game's about. But putting together that energy with knowledge and with capital and everything is it's just not easy. And it should be something that we're capable of in the country, but but the country was not designed for having, in a certain way, was not designed for having 48 different jurisdictions that could mess up anything that you were attempting to do. And during wartime, it's one thing to get agreement, but during during peacetime, it's something it's it's a it's a different problem. That's gonna be one for the next generation, but I'm just it's it's it's important.

Okay. Station ten.

Well, if about the future, you better talk to Greg. So we'll let Greg answer that.

Okay. Thank you.

Yes. Well, I think, your dad your dad said it best. He highlighted that to become part of Berkshire to own some Berkshire shares, you're gonna have to work hard. And I think, hard work takes all of us a long ways in life. And and I would never diminish that.

There's a lot of things that matter in life. But if you start with a great work ethic and have that attitude that you're you want to contribute, you're gonna go a long ways in life. And and that'll and and you'll you'll find great enjoyment because as Warren said, you'll then if you work hard, you're gonna find the things you love in life, and it'll lead to that. And, we we truly, look forward to the day you're part of Berkshire. Thank you.

Yeah. Keep keep a lot of curiosity and read a lot, as Charlie would say. Okay, Becky.

Well, that's a very good question. And and we've we've we've made some mistakes in the past when we bought Pacific Corp. In February, what, '5? Yes. Morris Scott and and David Sokol and myself, three guys who who capitalists at heart and had had but we're dealing with our own money, but we we made a mistake by not carving it up into the seven states that we were buying.

And it came it came with an aggregation where it wasn't state by state, and we we kept the same the same structure, and that was a that was a big mistake. There are well, every part of the country is gonna need electricity, and there are gonna be places where where public electric or privately held electric utilities would be very foolish to operate. And how that gets resolved in a democracy, we will find out. But those are the facts as they stand now, would say. Greg?

Yeah. The the reality, the risk around the wildfires, I. E. That do the wildfires occur, they're not going away. No.

And and we know that and the risk probably goes up each year or so. But what we can do to reduce the risk of it impacting our system and our underlying assets and the, unfortunately, the liabilities that come with such events, we can change that and manage that. We can't eliminate the risk, but we can reduce it. And that's where we've got, our teams in the in the West, but we really are approaching it across all our energy infrastructure. Because the the reality is the wildfires have now occurred in, Texas.

They've had a variety of them throughout The US, and and we're all very focused on how we manage that risk. How we manage it is we start by addressing the actual assets, how we're maintaining them, and where we invest them, invest into them. So we try to make sure that they're either not causing the fire or potentially even hardening the system as to what can they withstand. So it's very much, that we start with the operational folk, focus. We then take it even further, and this is something Warren and I've discussed many times, is that the utilities started to recognize when we have these unusual weather events, and Warren touched on what's been happening in Nebraska with storms, but they're equally occurring or or significant events occurring out west.

But when we have those, we've gotten very, very good at saying, we have to manage the system differently. We'll potentially de energize because there's likely to be an event. But the one thing we hadn't tackled, and this is very relevant to the one significant event we had back in 2020 in Pacific Corp, is we didn't de energize the system as the fire was approaching. Because our our employees and the whole management team have been, all their lives, trained to keep the lights on. And the last thing they wanna do is turn those lights off and and have a system de energized.

And after those events and as we really looked at how we're gonna move forward in in managing the the assets and reducing that risk, we we have clearly recognized as as a team that we have to de energize those assets. So now as we get fires encroaching at a certain, number of miles, we de energize because we do not want to contribute to the fire, nor obviously harm any of our consumers or contribute, unfortunately, if there's a death. And and that's really where we had to take our team, that we're managing a different risk now. It's not around keeping the lights on. It's around protecting the general public and ensuring the fire does not spread further.

So we've gone as far as that. And I would, I'll stand corrected on this one, but we're probably the one utility or across our utilities that does that today. And we strongly believe that. Becky?

We're we we've, you know, fortunately, that's something that we do deal with a lot because we have power outages that occur by accident. So when we look at critical infrastructure, because it's excellent point, and we're constantly reevaluating it, And we do receive a lot of feedback from our customer groups as to how do we manage that. But that is something we deal with on a a more routine basis than we'd ever like. The lights go out, we have to make sure the hospitals stay on, emergency units can respond and all that. But there is risk there.

So then we spend a lot more time educating the consumers and our consumer groups, our customers. Okay. This is what will happen. We need to understand your unusual situations and how can we best tackle that again so we just don't take on another liability. So there's a lot around de energization.

And then just to take it to the last step, and Warren's touched on that just in general on energy policy, we have to work with our states and our regulators to ensure this was never a risk we took on or or envisioned when we were investing in utilities, nor would any of the investors who've invested in other energy companies. You earn a you earn a very set return for taking on a very set defined risk associated with that asset. And this has gone well beyond that. We don't earn the type of returns, nor can you earn a large enough return to take on these risks. So it's it's not just about solving the return side.

We really have to solve the risk side, which means we work with our regulators. We're working with our state legislators to get to the right answer. And that's really just that'll be an ongoing process. There are not silver bullets out there, but every day our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away.

Yeah. Warren? But there's some prop yeah. There's some there's some problems that can't be solved. And we we shouldn't be in the business of taking our money, investors' money, and and and tackling things that we don't know the solution for.

And there's you can present the arguments, but it it's a political decision when you are dealing with states or the federal government. And if you're in something where you're going to lose, the big thing to do is quit. And you present your case as well as you can and everything else. But if you don't hold the pen in the end, you know, we don't have any business taking your money and doing dumb things with us. And and we can do our best to explain what the intelligent things are.

But it's your money. And so it's it's very hard to tell how to handle the questions of politically determined decisions that are going to go to court in many cases. But you know that that it just doesn't it doesn't make sense. We we know what we think a sensible system would be, but and we ought to explain what what what we think it is and and, you know, do the best to get our position because it's pro social to have the right solution to have it. But the right solution, for example, in the interstate wasn't to let 48 states each decide on their own way of doing it and award contractors the jobs based.

You know, there's just there's some problems that can't that can't be solved, and we are not in the business of trying to solve insolvable problems.

Yeah. I didn't go for example But

then the problem you have, of course, is that the people that work for you, That's that it's their job. So they they they they they wanna have reasons to keep going. And that's a that's a it's those are tough choices if you're managing, but that's what's that's why they have managers.

And Warren, I was just gonna add because you touched on something really important there that effectively, as for example, the utilities and the wildfires. We we can't just become the insurer of last resort, And that we're gonna cover any cost and all costs irrespective of what occurred. And that's a little bit of the situation we're in right now with our largest Challenge of 2020 wildfire where there were one of four or five there were four fires occurring at a a challenging time. One, we've always asserted was a lightning strike that was not inside our service territory. The fire burnt into our service territory, and we became responsible for that fire, effectively through the courts.

And we've continued to hold firm that we're not responsible for that. Rightfully, I mean, we didn't contribute to it. And we didn't initiate it nor did we feel we ever contributed to it. But it's getting, again, if you look at the risks that's there, we have to manage through things like that. We'll get through that litigation.

We're happy to report, for example, on that one. After five years, the Oregon forestry department has come out and said the the the fires, the other fires we did have that we were able to manage and extinguish did not contribute to that fire. And that fourth fire is the largest fire of the four. It can it's 60% of the claims. We're five years into effectively getting that information into the courts.

Now, that will outline our legal strategy, obviously, going forward, but it's things we're dealing with. But we continue to learn from this as a as a utility So we're in very much each of the legislatures, as I said, making sure we get clear definition where liability falls, what can the economic damages be, but most importantly, what can the non economic damages be? And again, with the thought, we can't be the insurer of last resort. We just can't be responsible for everything that happens in in a state.

Yeah. If we wanna do it with our own money, we we can do it. But we're not gonna we're not gonna do things with your money that we think are stupid. I mean, you ought to get rid of us if if if if we do it. And it's easy to it's easier to do stupid things with other people's money than it is with your own money.

That's one of the problems government has. Just generally, we don't wanna bring it to private enterprise. But it is important that The United States have an intelligent energy policy just as it was important during World War two that we learned how to make ships instead of cars extremely fast. And we figured out the answer. We combined private enterprise with with with with with the power of the of of of of government.

And but how feasible that is in a in a democracy, and it was clearly obvious during World War what needed to be done, and we did it. But it's not so clear when when you get 330,000,000 people all arguing their own self interest and and of course deciding what will happen and and and having the people often who are making the decisions reacting as they did twenty years earlier, you know, when they don't really bear the responsibility for the decision. Right. Anyway, that's management, and, we'll do our best. Station eleven.

I'll let you write I'll I'll let you write my biography, but I I I think I've got the point of your question.

Thank you. And and I will say this, I grant grant an hour to everybody of the 40,000 here. Well, we'll have an interesting I'll have an interesting time the rest of my life. But I will I will I'll give you one tip. I found that when I was very young and I would I would drive around to various companies all over the country.

And because I was very young and these were companies were off beat and they didn't have investor relations departments then. Almost every CEO would see me because they figured I never they never see me again. And and they didn't they weren't getting calls like that. And I would ask them two questions. I would I would explain to them, it's not a bad idea incidentally.

If you're gonna walk into somebody's office and you say you want ten minutes of their time, take a hourglass and stick it on the on the desk of the person you're talking to and turn it up so that it's gonna go for ten minutes and you say you're gonna get you're gonna leave in ten minutes unless they ask you to stay. And that sets the terms. But then once you have that, you if if they're in the coal business, we'll say, which happened to be one that I was interested in seventy years ago or so. He just asked them one question that if they were to be stuck on a desert island and they had to own only one of their competitors stock during the ten years they were gonna be on that island. Which one would it be and why?

And then after they give you that answer, you said the same thing. You're gonna short your net worth while you were on that audit, which would it be and why? Because every manager likes to talk about their competitors. They're they're they're like a bunch of school kids, you know, when they when they get into talking about their competitors. I probably learned more about various industries by just making sure that they didn't think I'd stay too long and that in the meantime they would have the floor and talk about their competitors.

I kept my own mouth shut in those days. That's that's a lesson I've lost somewhere along the line. But the you're you're not you're you're you're essentially they've outsourced. Or I shouldn't say outsourced, but they've they've they've departmentalized investor relations of all companies of size practically now. So you've got, you know, 3,000 companies or whatever they have, and they all have departments.

And each one of them has an investor relations department practically. And their job is to say this is the best thing you can do today is buy our stock. Well, that's the whole concept is totally idiocy. But it's a big business and it gets bigger and the investor relations department gets bigger and and, you know, and and get it's what we have now. But do a little of your own work, own way.

But Berkshire Hathaway has got plenty of material out there for you to read. And when you get through reading it all, you'll know way more than most of the people that work at Berkshire. So you don't need a personal interview. If we take it if we take an hour times, even the 40,000 people we may have here, plus Becky's many of the listeners and viewers. It just doesn't work.

I admire I admire your effort, but but but you'll just have to settle for that as the admiration that you get in this. Okay. Becky?

Well, we don't know how much we'll lose out of Pacific Corp and decisions that are made, but we also know that that certain of the attitudes demonstrated by that particular example have got analogs throughout the utility system and and we there's a lot there's a lot of states that that so far have been very good, decent to operate in. And there are some now that are rat poison, as Charlie would say, to operate in. And that knowledge was was accentuated when we saw what happened in the Pacific Northwest, and it's accentuated by what we've seen as to how utilities have been treated in certain other situations. And then on top of that so that it wasn't just a direct question of what was involved at Pacific Corp. It was an extrapolation of of a societal trend.

And secondly, we also had a decision we didn't expect out of all the real estate business and and and those kind of things can change values and courts can change values. And it's a lot easier to make those decisions when you just own marketable securities and when you own businesses. And I've made plenty of those decisions as I watch what have happened in various industries and companies in over seventy years. But Greg made the decision, which was fine with us to get out. Well, and he had no knowledge of what was going to be happening in either the real estate field or the utility field.

And we wouldn't we don't we're not in the mood to sell any business, Berkshire Hathaway Energy is worth considerably less money than it was two years ago based on societal factors. And that happens in some of our businesses. It certainly happened in our textile business and it's it's happened. It's the public utility business is not as good a business as it was a couple years ago. And if anybody doesn't believe that, they can look at Hawaiian Electric and they can look at Edison in the current wildfires situation in California.

And there's societal trends that are oh, I just got a note here on my monitor. It says the books are now sold out, so Go ahead. You'll have to spend your money on other things. Here's fudge. This is what I'm eating, so But that's the explanation.

Values change and they don't always change upward. And when we made the deal with with Greg, we would have we're happy to buy out Scott Family at that price. And when we made a deal with the Scott Company, we wouldn't have been happy to pay Greg the price that he received. But that that's like Berkshire shares. We bought in stock at x, and we buy in stock at less than x.

If if if conditions change poor and we pay over the years, we pay more and more because it builds in value, but it doesn't do it in a straight line. And I would say that our enthusiasm for buying public utility companies is different than it would be would have been a couple years ago. That happens in other industries too. But it's pretty dramatic in public utilities, and it's particularly dramatic in public utilities because they are going to need lots of money. So if you're going to need lots of money, you probably ought to behave in a way that encourages people to give you lots of money and and we will see where we go.

We'd like to see public utilities do well, but we our responsibilities to the shareholders of Berkshire Hathaway. Okay. Station station one again.

Yeah. Well, I think our underlying earning power was affected negatively here a while back by what happened in the utility field. Think that our earning power was not not enlarged by any large acquisitions that come along, but they come along periodically. So we will see something at some point that that well, could be, you know, on the one that was 10,000,000,000, we would have added the earning power. I mean, why else would we do it?

So that's that's very situational. And of course, it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. You know, that's been true ever since I was nineteen thirty. Yeah.

Born in 1930. When I was born, things got much more attractive over the next two years, and apparently, didn't do anything about it there. But, you know, that was the opportunity of a lifetime and and I blew it by, you know, worrying about the kid in the next crib or something. But over my lifetime, you know, I've had fabulous opportunities sometimes. And and they happen because humans are human.

And I don't, you know, I'm fearful of all kinds of things. I don't wanna try and, you know, be one of the Walundas and walk on a tiny strip between a couple of twin towers or something or whatever it may be. But I don't get I I I just I I don't get fearful by things that that other people get are afraid of in in in the financial in a financial way. And, you know, the idea that if Berkshire went let's say Berkshire went down 50% next week, I would regard that as a fantastic opportunity and and it wouldn't bother me in the least. And and most people aren't.

They just react differently. And so it doesn't it's not that I don't have emotions, but I don't have emotions about the prices of stocks. I mean, I actually those decisions get all the way to my brain, whereas emotions can get bogged down some other place. So Berkshire will increase its earning power over time as we retain money. I mean, we we are doing things, making decisions every day.

People are working or retaining earnings. We we will build the earning power, but it won't be coming in any even stream, and it certainly won't be matched dollar for dollar on either the upside or the downside and market prices. But that's what makes it a good business. You know, the investment business is that everything isn't properly appraised. And and the subtler your other people get, the better your opportunities get.

Okay. Becky?

Well, it's always better to make a lot of money with without putting up anything, than it is to make a lot of money by putting up a lot of money. And so a business that takes no capital to speak of. Coca Cola, it the finished product, which has gone through bottling companies and everything, that takes a lot of capital. But in terms of the selling the syrup or the concentrate that goes to it, it doesn't take a lot of capital. So one is a fabulous business and one is a yeah.

It depends where it is and everything like that. Cocoa is popular every place. But some places that I mean, if you're in the bottling business, it costs real money. You have real trucks out there and you have all kinds of machinery and and and you have capital expenditures coming up. And, you know, we've got businesses that take very little capital, that make high re really high returns on capital.

And and the ones the politicians talk about as making high returns actually aren't making high returns usually in terms of capital. Insurance, property casualty insurance is kind of a rare business because you need capital as a guarantee fund that you will keep your promises. But you can use it to buy other low intensive capital business. I mean, you can even buy a whole you can buy Apple and that would support that business. So that can be a pretty good business and it's one of the reasons we've done well over time.

But the well, it'll be interesting to see how much capital intensity there certainly, there's more capital intensity going on with the Magnificent Seven than there were was a few years ago. I mean, basically Apple has not really needed any any capital over the years and it's repurchased shares that that dramatic amount of reduction. Whether that world is the same in the future or not is something. Hollywood's answer was always to get their their money from other people to put up the capital. It's it's it a lot of people have gotten very rich in the country by essentially figuring out how how get others put up the capital.

And that's what people do in the in the money management business, and they get very, very rich because they they get an override on other people's capital. And incidentally, all of you were paying 1% for investment management fees at Bircher last year, would have paid $8,000,000,000 for managing and you really wouldn't have had to do it. But, you know, investment management is a very good game because other people put up the capital and you you charge them for the capital, whether they do well or not, and then you can charge them a lot more if they do well. I mean, it's it it it's a it's a well designed business for the people who practice it. And who can blame them.

I mean, that's that is capitalism. But and I I saw that in operation when I was working at Sullivan, but I didn't need to see it. I I knew what existed anyway. The trick in life is to get somebody else's capital and get an override on it. Charlie and I decided it wasn't too elegant in business after a while, but we we weren't we were not criticizing the efficacy of it.

We were just it just didn't appeal to us after a while. I did it for twelve years though or something like not really. The the one difference that Charlie and I did from other people is we put all our own money in and do it. So so we really we did share the losses in with our own capital, but we got an override on other people's capital. And that's been people have made advances where they get the override on other people's capital without putting up any of their own capital to speak of.

And that's that's a very good business, but it it it leads it it can lead to a lot of abuse. Greg, you've watched capital management in United States and would you say that Canada's behind your head or her in this respect? Well,

I think when it comes to their capital system, Warren, it it it is very comparable. There's no question. Other than as as we know, I mean, I think The US, as far as having a capitalist system, it would it would be tough to be touched by any country. And I think when I think of Canada, there's just certain responsibilities or the or obligations that the government wants to take on and aren't going to leave with the public sector. And that's just a a decision that's made by society or by the by the Canadian people or if you look at another country, Australia, wherever it may be.

But so there's it's different. But when you think when I think of capitalism, that that drive is there and and and and the desire to, you know, allocate capital properly. It's very similar. It it's produced wonders

in The United States if you think about it. But, originally, with the Rockefeller's and Kennedy and and Carnegie's and all that, they actually put up money to build steel mill, you know, whatever it may have been with Rockefeller refineries and pipelines and all that sort of thing. They put up money to do it. Now, the trick is to use other people's money, basically. And and and, you know, you can't you can't blame human beings for behaving like humans, but you should be aware of what their motivations are.

It's a capitalism in The United States has succeeded like nothing you've ever seen, but it has what it is is it's a combination of this magnificent cathedral, which has produced an economy like nothing the world's ever seen. And then it's got this massive casino attached. So you got the cathedral and the casino. And in the casino, everybody's having a good time and there's lots of money changing hands and everything, but the cathedral is what gotta make sure the cathedral gets gets fed too because the temptation, and the temptation is very high now, is to go over to the casino where people say, you know, we've got magic boxes and all kinds of things that will do wonderful things for you. And that's where people are happiest.

That's where you get the most promise to you. That's where the most money is for the people that are pushing things. And, you know, the balance between the capital the casino and the and the cathedral are it's very important that that The United States in the next hundred years make sure that the cathedral is not overtaken by the casino. Because people really like to go to casinos. And it's just so much more fun and they they bring bells and when you win and, you know, they they bring you drinks and everything else.

And it's it's designed to move money from one pocket to another. But and and the cathedrals, they basically are designing things that will be reproducing goods and services for 300 and some million people like it's never been done before in in in history. It's an interesting system we've developed, but it's worked. It it it dispenses rewards in what seems like a terribly capricious manner. I mean, the idea that people get what they deserve in life.

And it's it's hard to make that argument. But if you argue with any other system where it seems to work better, the answer is we haven't found one. So I'll leave it to the next generation to send me the answer and my Ouija board or whatever. Station two.

Well, that's good question. The the teachers you get in your life have this incredible impression and on you and and a lot of it are the formal teachers you have, but some are informal teachers too. I mean, learned from certain employers, you know, so much. You really hope you're learning from everybody you find who's well intentioned and has had a lot of experience and I had a lot of good luck in that. But I would I would say that what what what what what what I was really lucky was my dad was in the investment business.

So I would go down on Saturday and I'd wait for him to go on lunch with, and I'd read the books that were around there that nobody else ever read. And and they just they talked to me. Numbers talked to me. And I could never get my fill of them and then I discovered the public library and I read every book there was on investments, literally, in the Omaha Public Library at Nineteenth At Harney. And, you know, I I enjoyed learning about that.

And unlike Charlie, if Charlie was reading about electricity, he would want to know on everything that Thomas Edison knew and more. And and that goes with the same thought process and understand how everything worked. I didn't care whether how it worked. I just cared whether it worked. And that's a limitation.

I'm I'm I'm confessing here. I'm not bragging. But, you know, the as as Charlie would say, I mean, people would always say if you could only have lunch with one person living or dead, who would it be? And Charlie said, I've already had lunch with all of them because I've read all their books, you know, basically. And and so and he really did it.

I think having curiosity and and actually finding sympathetic teachers is very useful. I I ran into a couple of teachers that both in high school and college. In fact, I would say that I went to three different higher, know, three different universities. And I went to high school in Washington and at each place, I found about two or three really outstanding people. And and I just spent my time with them and didn't pay much attention to the other classes.

And and I was lucky to find something that that really fit me very early on. If my ambition had been to become a ventriloquist or, you know, whatever the hell it might have been, then it wouldn't work. You know, I'd have been I just spent hours and hours and hours and I wouldn't have been any good when I got through. So I don't believe that. I I think there was that book that talked about spending ten thousand hours at something.

I could spend ten thousand hours at tap dancing and and and you'd throw up if you watched me, you know. But but if I spent if I spent up ten hours reading Ben Graham, I would I would be damn smart when I got through. So mines are really, really different. I watch great bridge players and I watch great physicians, great I mean, people really, really, really have different talents. And, you know, I don't know.

I think you're supposed to have 88,000,000,000 cells in your brain. I'm not sure that all of mine are flashing bright lights, but but you are different than anybody else. That's what my dad always used to tell me that essentially that, you know, you're something different. It may not be good at the moment, but but you you find your own you find your own path And you will you will find the people in schooling that that wanna talk to you, people to teach in general. They love having a young student who's actually really interested in the subject, and they'll spend extra time with you.

They'll do all kinds of things that and I I ran into that. And Graham and Dodd at at Columbia. Well, Dave Dodd treated me like a son, basically. And but I was interested excuse me. I was interested in what they were saying, and and they found it kind of entertaining.

And then I was so interested. So I would just I would I would I would look around and do you you know, what really fascinates you, I wouldn't try and be somebody else. And then I would you'll you'll find the teachers at a school, and and you'll find some outstanding people that are are teachers. I've I've had at least 10 people that have had huge impacts on my life. And every one of them was positive, you know, because I got to select in a sense and and and a number of people really like helping younger people.

You know, I've I've found that in school. And probably it helps to look a little bit lost at all. You need help. But I would say my school experiences were good, but were really very good. But I attribute it much more to the individual than to the institutions.

Okay. I've already told you more than I know, so we'll go on to. Becky, you're next.

Well, why don't you give me a hard one? I think that I think that bureaucracy is something that is amazingly prevalent and contagious even in our capital system. And that big corporations, you know, overwhelmingly, most of them look like they could be run better. I'm sure Berkshire does in many way many respects. And it it, you know, and government is the ultimate.

So it it it it it really doesn't have any checks on it. And that's why it scares you to some extent about about what the future of the currency will be because they can print currency. And and if you have people that get elected by promising people things, and that doesn't mean that they aren't sincere about all kinds of items, but there's no politician that says to anybody that, at least if they have money, that, you know, I really think you have bad breath. And if you don't mind, would you step over and away from me? It just doesn't happen.

They and so I I think the problem of how you control revenue and expenses in government is the one that is never fully solved and has has really hurt dramatically certain many civilizations. And I don't think we're immune from it and we've come close to it. But if you tell me how in in democracy, you go in and really change things. You know, we're we're operating at a fiscal deficit now that is unsustainable over a very long period We don't know whether that means two years or twenty years.

That because there's never been a country like The United States. But you know that if something can't go on forever, it will end, the quote of Herbert Schneider, famous economist. And we are doing something that is unsustainable. And and it has the it has the aspect to it that it gets uncontrollable at a certain point. I mean, essentially, you just give up on it.

And Paul Volker, you know, kept that from happening in The United States, but we came close. We've come close multiple times. And, you know, the we've still had very substantial inflation in The United States, but it's never been run away yet. And and that's not something you wanna try and experiment with because it feeds on itself. So I I wouldn't want the job of of trying to correct what's going on in revenue and the expenditures of The United States with roughly a 7% gap when probably a 3% gap is sustainable.

And then the further away you get from that, the more you get to where the uncontrollable begins. And I think that it's it's a job I don't want, but it's a job I think should be done. And congress does not seem good at doing it. Well, it sounds like you should quit while I'm ahead. It it's it's well, we've got a lot of problems always as a country, but but this is one we bring on ourselves.

I mean, it it we have a revenue stream, a capital producing stream, a brains producing machine like the world has never seen. And if you picked a way to screw it up, it would involve the currency. And and that's happened a lot of places and and the incentives plus the checks, well, there aren't there aren't any real change. In theory, you would make it so there was substantial downside for anybody that screwed things up. But there isn't downside.

There's upside. So it it's the the problem of the most successful company in the history of the country in the history of the world. And at this point, we got a little room to go in in solving them. With that, I'll shut up and go on to Station 3.

Well, thank you.

Well, I I probably that's a good question, but it I would probably say to Ben Franklin, you just keep thinking and don't talk to me because you'll you'll come up with some better ideas than I will. He was, you know, incredibly remarkable person. Mean, would say he's almost probably the last person to almost have a grasp of every every aspect of of of activity in the country. He invented all kinds of things and he incidentally, we were talking about power of interest and that sort of thing. He he left a will that left a sub of money to Philadelphia and another some to Boston that would serve as an example for a couple hundred years, you know, of the power of compounding and all all kinds of things.

I'm he he was so far ahead of his time that that the best thing I could do if I was under that tree with him was be to to get out get out of his way and let him just keep thinking. But it he saw the problems that success could bring to a society as well as other problems. I mean, more immediate problems that that in all kinds of fields. But the problems of how how to cause how to take 8,000,000,000 people because there's no way we can separate ourselves from the rest of the world. We can be an example for the rest of the world and I think it behooves us since we have had all this good fortune in this country and we do have a pretty good system.

I don't think it I don't think you get I don't think you get very far by lecturing the world on how the you are the one that you tell them what they should do with our lives. I think that I think you get a certain amount of resentment when just a few hundred years ago, a whole different group of countries were running a world. And and now you start giving them advice and it it it I think I think it's a real mistake in communication or in persuasion to to lecture a bunch of people, or you've just won the game. I mean, it that's but anyway, I I would say that I would advise Ben to figure out how to win the game and keep a certain amount of humility at the same time. And I would tell him to try and design a system that doesn't invent too many things that can destroy the planet, you know, that become uncontrollable once you get them out there.

There was no alternative to us to follow me that had a bomb, but but but the expansion of the number of people that have the ability from one to eight and and nine probably pretty soon with Iran. I mean, that that's a mistake that society just cannot afford to make. I mean, solving the problem with nine variables instead of simply one. Now it's totally understandable. My dad was in congress when when the atom bomb was, first used.

It's amazing how how, Sam Rayburn kept the House of Representatives uninformed. They're supposed to appropriate all the money and and 435 congressmen there and they had no idea they were appropriating money for for Los Alamos or what was going on in Chicago or what was going on in Tennessee. But anyway, we we we do have a society that is far beyond anything that Ben Franklin dreamt of. It's achieved some of the or is it it's moving toward in the right direction, towards solving some problems where we made kind of broad declarations about all men being created equal and and etcetera. And then we did some of the things we did.

But generally speaking, we moved in the right direction. But we face problems that I don't know what how how how Ben Franklin would would attack the problem of of what you do once you get weapons of mass destruction in many hands. And when you essentially look at the world as something where there are winners and losers. And that the winners are, you know, humiliate the losers and do all kinds of things. But I'll I'll let the people who are a lot younger who figure out the answers on that.

But it's it's still the most wonderful. There's never been anything you could dream like what has happened in The United States. So we still it's it's the best place and the best time to be alive by by miles in the street. Just think of a couple hundred years ago and somebody, you know, yanking out a few of your teeth and pouring whiskey down you, doing I mean, and and the subsistence and and particularly in this Midwest, just imagine waiting till the Missouri froze over every year just to see whether you get your wagon across and maybe have a pregnant woman in the back. You know, when it is just amazing what has happened of a positive nature during my lifetime.

And then the question is is how do you how do you keep it and how do you improve it? And I I do think that fundamental to all of it though, is having a is having a currency that that does not get debased. What that does to the stability of a society where all the people that trust their government get screwed, and all the people that figure out ways to profit off of it become rich or richer. I I I don't think you want a society that operates in that manner. So anyway.

Let's see. That was section three. So we're going to Becky. Is that right? Yep.

Better.

Well, we've got our managers over there. And it I I would say going back to 2018, it's been a it's been very fortunate to be in this role because, one, I had to learn a lot of the businesses. And there's no question as Warren bought the businesses, had that general knowledge, I absolutely had to engage with each of them and they've been great in sharing their their business models, their approach, their thoughts around where the risks and opportunities are. And I think as we went through that, there's no question I had questions and wanted to engage with them. And Warren talks about the curiosity being important as you go through things.

That would be my style to have questions and comments around their business, their frameworks. At the same time, they have great businesses and and they run them very autonomously, and that that remains in place. But if there's opportunities to see where, maybe you've seen something in another business or an opportunity I may see in their industry, we're gonna discuss it and see if that's something we should pursue or we properly addressing the risk. And I found all our managers to be absolutely engaging on that and and and want to have those dialogues. And I'd say that's a reflection of of my approach.

I'd also say that, when you think of our managers, again, very autonomous. They they run their businesses. They know it better than I ever will. But if I see an opportunity that it's well worth their time to talk to another one of our managers. If it's GEICO and they've gone through a technology transformation, they're not by themselves that need to be thinking that way.

We want to make sure the right folks are talking and figuring out how we can benefit from the prior experiences. So it's, I would say more active. But hopefully in a very positive way and they and we got an exceptional group. So it's worked out exceptionally well as as I've gone through that period

of time. It's working way better with Greg than with me because, you know, I I just I didn't wanna work as hard as he works and and and I could get away with it because we've got a basically good business, very good business and and I wasn't in danger of you firing me by virtue of both ownership and the fact that we would do pretty well. But the fact that you can do pretty well doesn't mean you couldn't do better and and Greg can do better at many things. Many people want to be managed, need help in being managed. Some don't.

Some you just leave alone. You know, we've had managers that would have been crazy to start giving instructions to because they just quit. And and I wouldn't blame them because I'd be the same type myself. But a lot of people I mean, people really do welcome direction and help and and and, you know, and particularly when they're getting it from somebody like Greg that really lives the life himself and doesn't just come down from high and say, you know, here's what you do while I do something else. You know, and and a manager that behaves differently than than what he's asking the people beneath them to behave.

It it it just doesn't work over time. And people want a manager that they that they admire, and they're not gonna admire them if those people profess to behave in one manner and behave in another manner. It's easier, this is a sad thing, but it's it's easier for an organization to see its quality move downward than it is upward. I mean, if the boss behaves badly, it causes everybody to behave. I mean, it it it that is really catching.

It's not as catching on the way in upper management, but the manager is doing a lot of little things to grease his own situation, pretty soon let's say you're running a retail establishment. Pretty soon, all the employees or or or a lot of the employees are telling their friends that they they get a discount, you know, with the retail operation. And if they want they want if their friend wants something, they'll put it on their account and then forward, get the discount. Once you start deviating downward, it is really contagious and it is hard to rebuild. So you really need someone that behaves well on top and is not playing games for their own benefit.

And and we get a lot of managers that bend over backwards not to do that sort of thing. And then we get a few that bend over forwards. And and if you get enough companies, you're gonna get a lot of different forms of behavior. And Greg does something about it, and I I've generally been lax in doing something about it, but he's done a way better job as that than I have. Okay.

Station four.

Thank you for your your your both your question and your comments because it is it is important to to understand, say, Berkshire Hathaway Energy, but also how they operate. And and maybe using Iowa at least as a starting example, because I think that was one of the states cited in the report. One of the important things that I'd say early in us acquiring our energy companies, and I go back to when we acquired MidAmerican, We acquired it in 1999. Berkshire purchased MidAmerican in February. But one thing that became very clear to myself and our teams was that what we do within our utilities is really driven in two fronts.

One, we absolutely have to meet the requirements and the law that's laid out federally. But most importantly, we had to recognize we implement public policy across these states. And that was an interesting conversation when I go back to to Iowa. And again, the report cited that as a a significant problem. It was early in the February when, for the first time in Iowa, we were going to, as a utility, be short of power.

So we didn't have the energy, and we entered into significant discussion with our governor at the time. And really sat down and said, where do you want us to go as, as Mid American? And what resources do you want as as a state? And at that time, we were predominantly a a coal based state. And and we recognize that, obviously, and and fundamentally, personally viewed it as a risk.

But we we needed to have that conversation with our state. And as to how we would manage that going forward, the interesting thing was that as we had that conversation in the early two thousands, again, with the leadership of our state, it was clearly decided we wanted to continue to be long power, so I. E. Not be short for our customers. We discussed the type of resource and I I remember, a very clear conversation around we wanted to stay balanced across a variety of energy sources.

And at and at that time, it was really coal and natural gas. And at that time, we made the decision to build the largest wind project in the in The US, in Iowa. So we undertook an effort to build three resources, a coal plant, a gas plant, and a, what was the first wind project we owned in Mid American. And again, it was very consistent with what the state wanted, but we also laid some important groundwork there because we started to define the importance of, renewable energy, non carbon resources, but it has to be consistent with what the state wanted. And we've gone on over the since that period of time, to deploy 16,000,000,000 into Iowa associated with renewable energy.

Again, very consistent with what our state wanted us to do, I. E, the underlying policy. We don't get to make that decision and just spend 16,000,000,000. It's done in conjunction with our governors, our legislatures, our regulators. And at the same time, we've had the opportunity to retire five of the 10 coal units.

Now, as the report highlighted, I I understand people would like those other five coal units retired at this time. But to think we deployed 16,000,000,000 to retire five, And and it's a very good outcome for our customers. We've been able to maintain our rates. They're the some of the lowest in the country. So it's been done very efficiently.

But the reality is we still need those five coal units to keep the system stable. We cannot have a Spain, Portugal situation. So we absolutely respect the input. We absolutely respect the process, and we'll continue to work with each of our states to identify the path they would like to chart. And we work hard to ensure, you know, there's good balanced outcomes because we recognize the challenges they're associated with others other folks' desire.

So I think you'll continue to see our utilities implement policy consistent with the with the needs of of their stakeholders or customers, and at the same time, respecting what, what's required by any any of the federal standards. So thank you for your for your comments.

Okay. 31. Let's see. Becky.

we're spending close. It's it's hard to get the precise figure, close to 20% of GDP on health. And if you go back to 1960, there were a number of countries that were each spending around 5%. And then they the lines began to diverge dramatically. But the mathematical fact that there are only a hundred percentage points in the equation didn't change.

So we tried that experiment with JPMorgan and Amazon. And we had three people that didn't think they knew the answer and but thought that, in my case I used the term that that it was a tapeworm in the economy. And we also found out that that the tapeworm was alive in every in every part of the country. Mean, the the hospitals liked it. The hospitals had prominent people who work with people.

People generally like their doctor, didn't like the but didn't like the system. I mean, all kinds of things. But in the end, JPMorgan and Amazon and Berkshire were not going to have any effect on changing that 20%. Now that 20%, there are only a hundred percentage points available, and one of the countries spends six or 7% and perhaps use our system to their advantage, which is also very true. You know, that is an enormous percentage of of an economy, and we simply that it was too entrenched to really do much in the way of change.

And we spent some money on it, we did some work, and we learned a good bit about our own systems. And we saw the degree to which the present system was ingrained in so many people's, you know, whether the health care providers or whether everybody these aren't evil people. I mean, they're just they're just going about something and trying to trying to save lives. But but we found that whether it was in Canada or France or Britain or wherever it might be, And if you looked at our costs, they were just far higher. And to some extent, we were subsidizing the rest of the world and people would come to The United States to do the really unusual or challenging aspects of health in terms of operations and that sort of thing.

But we we made no progress. And there comes a point where the government's, you know, I mean it's so involved in the situation and health is so important to most to everybody. And we couldn't we we we've what was I said to Jamie and Jeff, I said, well, the tapeworm won. And there are problems in society when you get 20% of your GDP going into a given industry. The degree of enthusiasm for changing that industry, the political power that the industry will have, and that doesn't mean they're evil.

It's and and, you know, everybody, they just end up there. And so I don't know the I we did we we came to conclusion we didn't know the answer, three of us. And we had the money to do it. And we didn't know how to change how 330,000,000 people felt about their doctor, felt about their health care, what they felt to and it's it won't change by itself. And government is the only one that can change it.

And the only people in government that can change it are getting majority of 435 people and a hundred people. And and my dad lost one election in his life in 1948. And he was a very strong Republican. And in 1950, he went back and beat the guy that beat him in 1948 and he got the doctors behind him. And and he did very, you know, they're very well and they believe a % of what they're doing.

They're helping people every day. And during the pandemic, the sacrifices made by people, save other people, just incredible. Can you imagine working in something where they're bringing in people that are, you know, gonna die by the dozens and dozens and dozens and you try to somehow keep your own morale up and keep working with them. So you can't argue about the importance of it, but our costs are so different than any country in the world that it's a it is just it's a huge element. And we're a very rich country, so we can do other we can do things other countries can't do.

And through our elected representatives and a whole variety of things over time, we've developed a system that is enormously resistant to any kind of major major change and it's important in every community that it's in. So I wish we had an answer for you, but but I was somewhat pessimistic going in, I was a little more pessimistic when we came out. But I'm glad I'm glad we did what we did, and and we learned something about our own failings in the process. So Berkshire, in effect, got its money's worth, but we didn't kill the tapeworm. Okay.

Trying to change things in government is, it's an interesting proposition in the country because you get self selection in terms of the people that go into government and continue in it. And to some extent, they keep they have to make decisions that they don't like as they go along. And they learn to accept them or to rationalize them or whatever it may be, but it's still about, you know, this country's worked out better than any country in the world. So it but you can't argue it was a failure, but you can argue that there is that there are certain problems that are terribly tough to figure out ways to solve. And of course, one of them gets back to the fiscal problem I mentioned before because it's it's easy to spend money and it's hard to cut people's receipts.

And and if you get elected, you know, you were going to you're going to say to yourself, well, I can do more good if I stay in than if I really vote my conscience on this sort of thing. You give away a little bit here, and a little bit there, and a little bit there, and finally you don't recognize yourself in the mirror anymore. And and that's I grew up in a political family, but but and I watched I watched how people behaved and and and they behaved like human beings, which is what you have to expect. And I behave like human beings. Still manage to keep moving forward in a dramatic way.

It's so much better to live here than it was a hundred years ago or two hundred years ago. It's it's dramatic. So you can't say the system's a failure, but you can say that it is very difficult to make major changes in it. Okay. Station five.

No. That's a good question. I see we call him mister Apple even. Yeah. Thank you.

And I'll tell you, you'll take it. And It's a lot tougher to be an operator. I mean, it it is it's easier to sit in a room like I do and play around with money. It's just an easier life. That doesn't mean it's a more admirable life.

It doesn't but it's been actually been a pleasant life for me, so I I don't complain at least. And and I've I've been able to choose my friends, which has made an enormous difference in my life. I've never had to work anybody that I really didn't admire. I mean, that's a luxury in life. I had five different people I worked for.

And, you know, I just they were fantastic whether it was with the manager of the local pennies, which is located well, it used to be located a couple miles from here, and newspaper managers, everything there. Have never been really disappointed by any teacher I've had. So but I would have to admit that that I've been able to choose what I do with my day to an extraordinary degree compared to be a business operator. And and in many cases, I wouldn't like to compete to be a top notch business operator in terms of some of the some of the some of the behavior that would might be forceful on me. I I am the master.

I mean, I'm I'm I'm I'm found myself in this position where I can I can run the kind of company I wanna run and and that that that's an extraordinary luxury? With the with that, I should say that I'm getting a a section that says five minute warning exclamation point, five minute warning exclamation point. So I would now like to turn to a subject that I wanna discuss with you a few minutes and then when I'm through discussing this, I'll let Becky ask me a question or two, which may want you may want some elaborate questions that come to you as I I make these comments. Tomorrow, we're having a board meeting of Berkshire, and we have 11 directors. Two of the directors who are my children, how he and Susie know of what I'm going to talk about there.

The rest of them, this will come as news too. But I think it it's the time has arrived where Greg should become the chief executive officer of the company at year end. And I wanna spring that on the directors effectively and then give that as my recommendation. Let them have the time to think about what questions or what structures or anything they want. And then there's a meeting following that, which will come in a few months, we'll take action on whatever the view is of the 11 directors.

I I think they'll be unanimously in favor of it. And that would mean that at year end, Greg would be the chief executive officer of Berkshire and I would still hang around and conceivably be useful in a few cases. But the but the final word would be what Greg said in operations, in capital deployment, whatever it might be. I could be helpful, I believe, in that in certain respects if we ran into periods of great opportunity or anything. I I think that Berkshire has a special reputation that when there's times of trouble for the government, that we are an asset and not a liability, which is a position that very hard to have because usually the the public and and government get very negative on on business if there's a time like that.

But I so I think I could there might be a time when I'll I'd be over, Greg would have the tickets and and he would make, like I said, whether it's acquisitions, I think the board would be more welcome to giving him more authority on large acquisitions probably if they knew I was around. But he would be the chief executive period. And I can say the plan is to and Greg doesn't know anything about this until what he's hearing right now. But that yeah. The board will be able to ask me questions tomorrow as to a little more of the specifics of of what they should be thinking and all that.

But they they'll they'll they'll digest it. And and then at the next board meeting after that, If we, as I would guess we would, if they act, then obviously we we have something to announce to the world. It's a material change and perkure, and we'll go forward with that operation. And and I will play with a Ouija board or whatever, and that comes out in terms of doing things. But but I will not.

I have no intention, zero, of selling one share of Berkshire Hathaway. It'll get get given away gradually. Yeah. It just won't. Thank you.

Okay. Drink a Coke and calm down. I I would say that I would add this. The the decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under regs management than than mine. And and but, you know, I will I will come in and and and there may come a time when we get a chance to invest a lot of money.

And and and if that time comes, I think it may be helpful with the board. The fact that they know I've got all my money in the the company and that I think it's smart. I've seen what Greg has done. So that's the news hook for the day, follow and thanks for coming. The enthusiasm shown by that response could be interpreted in two ways, but I'll take a surprise.

Thank you.

Greg should become the chief executive officer of the company at year end and I wanna spring that on the directors effectively and then give that as my recommendation. Let them have the time to think about what questions or what structures or anything that they want. And then there's a meeting following that, which will come in a few months. We'll take action on whatever the view is of the 11 directors. I I think they'll be unanimously in favor of it.

And that would mean that at year end, Craig would be the chief executive officer of Berkshire.

Thank you. That