[0:02]
OtherSo please take your seats. We're going to finish at three, so the sooner we start, the sooner more chance we'll have to talk about various questions you may have.
WarrenI'd just like to follow on, however, with that film we showed just before we left for lunch, because it says something about Berkshire. there are, you know, all kinds of public companies and wealthy public companies and throughout America. And there are certainly cases where in one family somebody has made a very large amount of money and is devoting it to philanthropy or much of it to philanthropy or much of it to and to be such as the Walton family would be the number one thing in Walmart and certainly Bill did the same thing at Bill Gates did the same thing at Microsoft but what is unusual about Berkshire is that a very significant number of Berkshire shareholders located all over the United States not just in Omaha But the number of different Berkshire holders who have contributed $100 million or more to their local charities, usually with people not knowing about it, I think it's many multiples of any other public company in the country. It's not more multiples than, you know, those put a whole lot into philanthropy. And I don't know the details of the family, but clearly there's a huge sum of money that the Walmart family, I'm sure, has got all kinds of things philanthropic and will continue to do it. But I don't think you'll find any company where a group of shareholders who aren't related to each other, so many of them, have done. something along the lines of what Ruth did a few weeks ago, just to exchange a little piece of paper that they've held for five decades, and they've lived well themselves. They haven't denied their family anything, but they don't feel that they have to create a dynasty or anything and they don't feel that they have to create a dynasty or anything and they give it back to society and the great many do it of an honor They do it in many states. To some extent, we see a little, some concentration of it in Nebraska because generally, when you, when you're giving away a lot of money, they call it in the philanthropic world, they call it absorption capacity. And truth is it's very hard to give away a billion dollars to $10 at a time to people who are needy or something of the sort. And so large institutions have this absorption capacity, which tend to be universities or colleges or that sort of thing.
[3:58]
WarrenAnd some philanthropies are much more imaginative than others. But the one thing, I've never, well, most of them want to do it anonymously, so I can't tell there's specific stories. But I have to say, one thing that was astounding is that the same day we bought a billion dollars or worth of of Berkshire Class A stock from Ruth, so that, and I guess we were actually buying it from the school at that point, because he's just given them the, and then, so the transaction was them, was with them. But Mark Millard in our office bought a billion dollars from them, but he also bought $500 million worth of stock from somebody else that nobody will ever have heard of. and in a different state, and I won't elaborate beyond that. But we have had a very significant number of people, and there's more to come. And obviously, they had to be people that came in early, or their parents did, or their grandparents did. But they've all lived good lives. They haven't denied themselves anything. I mean, you know, and they have second homes, and they have, but they'd, They generally, well, in fact, I would say almost universally, they, people knew them in the community or everything, but they've used what they accompanied, what they saved. They denied themselves consumption themselves. That's what savings are, is consumption deferred. And they've given, they've financed everything all over the country, and usually they like to do it anonymously. I outed my sister when I wrote about her on the annual report, but Bertie's here today and I told her she should wear a t-shirt or something that said, no solicitors allowed or something. But they just do it. And it's really, both Charlie and I thought, it's really, it's really fun to work for a group of people like that rather than for index funds or for hedge funds or whatever it may be. I mean, you're just seeing what people actually, it's sort of really, it's sort of really. stairs restores your faith in humanity that people defer their own consumption within a family for decades and decades and then they can do something like and they will I think it may end up being 150 people to pursue different lives and talent of the people and diverse people to become a dream of being a doctor and And now I'll have to incur incredible death to do it or whatever it may be the case. There's a million different examples and I want you to know that you're very, you're a very, well, you're a unique actually, group of shareholders among public companies as far as I know in terms of the way you've deferred your own consumption while living fine.
[7:59]
Warrento help other people and and it, you know, it takes a lot of years, but it can really amount to something very substantial. And what Ruth did was, you know, roughly my age. She looked at a little piece of paper, which actually was a claim check on the output of others in the future. And she said instead of the output being, uh, for her, that the output would be for a continuing stream of people for decades and decades and decades to come, that we're having a different life in the pursuit of becoming doctors than they otherwise would have. And Berkshire has been, for sure, her husband, Sandy, contributed substantially to Berkshire's record. Sandy was a wonderful partner to have, so he was both input by him and then there was deferred consumption by his family and then there was ultimately this final gift to Albert Einstein and like I say the same day, it was only 500 million, it will go in a different way. But it's happening. all over, and I don't think any, any companies like that. So I just want to tell you that it's inspiring to work for a group of shareholders. And Becky, go to it. All right.
OtherThe next question comes from Slavin Vuclbrot.
QuestionerAs CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection, can major capital allocation decisions such as large acquisitions be separated from the common stock selection process?
WarrenYeah, I would say that decision actually will be made when I'm not around. And I may try and come back and haunt them if they do it differently. But I'm not sure that Ouija Board or they will get that job done. So that job, I'll never know the answer on whether it get covered. But I feel very comfortable about the fact that it will be. be made by a board that they've got loads of brain power, they've got a dedication to an unusual institution, and they will figure things out. But I would say that if I were on that board and were making the decision, I would probably knowing Greg. I would just leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand businesses, you understand common stocks. I mean, if you really know how business works, you are an investment manager. how much you manage, maybe just your own funds or maybe other people.
[11:46]
WarrenAnd if you really are primarily interested in getting assets under management, which is where the money is, you know, you don't really have to understand that sort of thing. But that's not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely with Greg. And the responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled. But I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility, you know, that's up to the him or herd of the side at the time they're running the money. And so I would say that my thinking on that has developed to some extent. As the sums have grown so large at Berkshire, and we do not want to try and have, you know, 200 people around that are managing a billion, each it just doesn't work. And I think that when you're handling the sums that we will have, you've got to think very strategic. about how to do very big things. And I think Greg is capable of doing that. I think I've missed a lot of stuff in the past. So I'm actually wiser about doing that now. But I, you know, I would do it better this time around than 2008 and 9 if something akin to that happened. But it won't be exactly like 2000. or nine. You can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly. Maybe it'll be once every five years, maybe it'll probably be more like once every 10 years or something. But the way, as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there's You know, since going through here, exploring the possibilities of the different things that could happen. But you do want to be able to act when it happens. And I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn't that people didn't have money in 2008. It's that they were paralyzed. And we did have the advantage of having some capital and a willingness to, an eagerness even to act. And the government that in effect looked at us as an asset instead of a liability. And I think that all of those qualities will be even more important as our capital goes. And so I think Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go.
[15:34]
QuestionerYou never know whether it'll be next week, next year, next decade. But you won't be, you know, it won't be a century from now, that is for sure. the more intertwined and sophisticated the world financial situation gets, the more vulnerable gets in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to the large problems. Greg, does that bother you at all or not?
Greg AbelWithout directly answering the question, I think there's one important thing is I think as we go through any transition, it's important to know that the capital allocation principles that Berkshire lives by today will continue to survive one. And I think that's what the thing I'd want to communicate that we have our operating businesses, insurance, not insurance. We're going to cap that we'll provide them the capital necessary to be successful and grow if it's appropriate. At the same time, we're expecting a return of capital from them when they have excess cash. And then as we've discussed, or you've touched on always looking at potentially new businesses as a whole or in a piece. And as you've always highlighted, and I fully agree, we'll always look at equities as we're investing in a business, either 1% or 100%, but we're looking at the business. We're looking at the economic prospects of that business and how sustainable it is and what it will look like 10 years from now is the capital we originally put in at exponential risk or where is that risk set, that profile? And then of course, and then we'll obviously have our continue to always put excess cash in the safest investment there is in U.S. Treasuries knowing we want to maintain that fortress of a balance sheet for two reasons. One to act, but also to always protect our shareholders. If we have a, we want to maintain that. the position Berkshire is in now, realistically for the, to insure it, to insured in jurors.
WarrenWell, when he says that, it makes me wish I'd stayed around to be number two instead of number one in this process over the years. It, it's, you know, it doesn't get more fun than what we, what we're doing, and, and, and we're better positioned than ever before. We're not positioned, though, however, to earn extraordinary retirement. turns versus what American business generally earns. I'm, you know, I would, I would hope we could be slightly better, but nobody's going to be dramatically better in some, you know, over the next century, it gets very hard to, it gets very hard to predict who the winner will be.
[18:43]
WarrenAnd if you look back, as we did a few meetings ago, as the top 20 companies in the top 20 companies in the, the world at 10-year intervals, you realize the game isn't quite as easy as it looks. But getting a decent result actually is reasonably, should be reasonably easy if you just don't get talked out of doing what that has works in the past and don't get carried away with fads and don't, don't listen to people who have different interests. in mine and the interests of our shareholders.
OtherOkay, we'll go to station number one.
QuestionerHello, Mr. Buffett. My name is Tomodrugel. I'm from Dissildo of Germany. This is my first time out here in Omaha, so thank you for having us here today. So my question is directed to you, Mr. Buffett and Mr. Abel. In 2019, you reported reportedly made a bid for the IT distribution business tech data and commented that you understand its role as a middleman. I wonder if you could kindly elaborate on the criteria you look at when evaluating IT distribution businesses like tech data and their competitive position. Thank you.
WarrenWell, we had some experience with distribution businesses and we know their potential to a degree in their limitations. And Greg, you were involved in that more than I was. So, I mean, that was a case where there'd been a bid made and there was a go shop provision. Right. And I think the management probably would have preferred that we buy it. And when we went in with a better bid, the original party raised their bid. And we never make the same offer twice. So Greg, tell them what.
Greg AbelYeah. So absolutely, in 2019, we saw TechData as a unique opportunity when we saw the other bid and the underlying value of that distribution business. We did, Warren and I were talking, others made the conclusion. We should talk to management. We talked to the team. They were very interested in Berkshire being their long-term owner. And we still saw a good value in the opportunity. And we had a good understanding of distribution. businesses. We have TTI. It's not exactly identical to tech data in that they're very specific to the who their customers are and who they serve and supply and who they purchase from. Because on the distribution side, it's important to have that input coming in from folks you want their product and you know it's needed on the other side that there's demand for it. And they had an excellent model. If you think of TTI, for example, that warns talked about Paul many times and the person who founded this business.
[22:01]
Greg AbelBut it's a unique business in that our revenues on that business is approximately $10 billion. The average part they sell is a little over $9.9.5 billion parts go through their warehouse every year. But it's a model that if you have the right people on both sides of the equation and you understand that well, there's a unique opportunity there. And that is something we saw in tech data. And as Warren highlighted, we made our bid. Unfortunately, it was then taught by the original bidder and we moved on. But we thought very highly of it. Yeah, we've probably seen at least five of them in aggregate. over the last three or four or five years. It's not a business that you can dream about because it's a decent business. But, for example, in many of the items, the manufacturer just, they don't want to tie up their capital. You tie up, if you have, you know, a million plus SKU, this is the whole stockkeeping is. It's like selling jelly beans or something like that. And you do, you're serving a purpose to a degree, but you don't, you don't really, it isn't your product in effect of it. I mean, you're just a good system for the producer of the equipment to get it to the end user without tying up a lot of capital. Right. Being in a business, they don't want to be in. And so we understand it. We, we, we, we, we, but there's no magic to it. There was a, with TTI, you had a marvelous man running things. And he, you know, and he's, and he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he, he.
WarrenHe, he, when you get a marvelous person running something, to some extent, that's the luck for, for, for, for better people underneath and i went to paul andrews andrews funeral a few years ago and there were 300 people or so there and there wasn't one person that had to say something particularly nice but stretched a little bit about about the deceased i mean everybody paul andrews was the real mccoy and he was an amazing man and he behaved one wonderfully with berkshire i mean he wanted to do more for berkshire than berkshire would do for him i mean it was very simple and you run into those people and as i say you run into people to bend over backwards for us and then some bend over forwards but that's just the way it is of this world and we've had we've had quite a few that have been over backwards for us and uh the distribution business is not a wonderful business
[25:19]
Warrenbut it is a business and it's a business that that if it's big enough it's one we would look at and we would buy additional and tt i make some small acquisitions on its own all the time i don't even i don't even hear about them until i read the quarterly reports and so we we we want to build up we want to build our businesses in every area that we operate and we've got unlimited capital to do it so we're willing to have small acquisitions take place if they fit in with something we already have but we're not in the business of going out after small acquisitions and if we did we would we just don't have the people for it and and it wouldn't move the needle anyway at berkshire so we may we would we would have been happy doing uh the deal with the questioner asked about but if we don't do it you know it just doesn't make that much difference we want to do it if we do it we'll do it well we'll do it right they'll make the right decision if they don't uh you know we will find something else to do with the money in the end and and and we can always buy a little more of tti for you the shareholders by just buying in our stock too exactly yeah okay let's see we need becky next don't we yeah becky all right warren earlier you you talked about selling some of the apple shares in order to build up your cash supply and i think it's had a lot of people wondering what where you see opportunities or what might be coming or market valuation so i'll ask this question from foster taylor at the 1999 annual meeting you mentioned that if you owned all of america's 500 businesses you would be making three hundred billion dollars while paying 10 and a half trillion dollars you emphasize that this was not a good return on investment today by my math the s mp 500 has a market capitalization of around 44 trillion with profits of around 1.45 trillion this is a very similar return on investment to the 1999 levels do you see similarities in the market today and the 1999 levels well one thing has changed dramatically from uh well from 1990 i'm a misunderstanding in the 1999 but uh there have been times in my life that i've been a wash in so many opportunities that i could have invested everything by nightfall and then there's other times when the year goes well not in the early days but now uh we we just we haven't seen anything that makes sense that's it moves the needle now we've made small acquisitions during the year our
[28:18]
Warrencompanies have made acquisitions and and we you know Greg and I may talk about something that involves a 300 million dollar purchase or something like that and you know if if it fits well enough we do it but uh and if our managers see things that fit them we want to look at them because our managers do not have necessarily the same equations in mind that we do but there's some managers which we would have to have to say you know whatever you decide to do and then there's other managers that wouldn't that would not know how to allocate capital particularly and that they don't have to be able to be great capital allocators if they happen to be great at serving customers and understand their own industry and all of that you know they can be great managers and a good many of them are capital allocators and others are it did but the uh this is not this is not a time when when the phone is going to be ringing often but there are times from that and we will know how to handle them as well or better than than uh i have over time and charlie and i would you know we we missed a lot of things and uh what we really regretted was missing something that turned out be very big we never we never worried about missing something we didn't understand I mean why why should we be be able to you know predict the future of every business any more than we can predict you know what what wheat yields are like to be in Illinois next year well not wheat in Illinois wheat in Kansas but corn in Illinois uh so I wouldn't I don't really think of whether it's similar to 1999 because I'm not that good on chronology anyway unless something really dramatic happened at the time i mean i remember things from 2008 and nine but better much better than i remember whether something happened in 2015 or or in 1987 or well 1987 i remember because of october 19 19th but but uh i'm i just don't think i don't think that way i just look at what i can do every day What the, Greg?
CharlieI'm going to have to use that nothing, sorry, nothing to add.
WarrenOkay. Well, we go to station two. I mean, it's nice to know what lines you can get a applause for. I mean, Session two.
QuestionerHello. My name is Stefan Urenbacher. I am a shareholder from Hamburg, Hamburg, Germany. I've been coming to Omaha since 2007. 2007. And I'm deeply grateful for all the things I could learn here, both about investing and about life, in particular creating circumstances that will enable me to lead a productive life during my entire healthy lifespan.
[31:49]
QuestionerSo thank you for that. My question, my question to Warren, your favorite holding period is forever holding American Express or Coca-Cola for decades. Berkshire recently went in and out of Markell, and you, I believe, sold and later bought Oxy, which I think happens to everyone all the time. But can you maybe to us give examples of your thought process when you exit positions? Thank you.
WarrenWell, there are various reasons for exiting positions. One is if you need the money, but that doesn't happen very often with us. But it used to happen on every decision I made when I started when I was 20 years old, which I consider the post-gram period, although I actually started in 19402 if you just talk about buying stocks. But in any event, the decision process is really quite quite the decision process is pretty quite interesting in a certain way because it we made, Charlie and I made decisions extremely fast, but in effect after years of thinking about the parameters that that would enable us to make the quick decision when the one that presented itself. And people have speculated on how I've decided to really put a lot of money in. Apple and for a reason I can't one one thing that Charlie and I both learned a lot about was consumer behavior that didn't mean we thought we could run a furniture store or anything else but we we did learn a lot when we bought a furniture chain in Baltimore and we quickly really realized that it was a mistake. but having made that mistake, made us smarter about actually thinking through what the capital allocation process would be and how people were likely to behave in the future with department stores and all kinds of things that we wouldn't really focused on. So we learned something about consumer behavior from that. We didn't learn how to run a department store. Now, the next one was seize candy, and seize candy was also a study of consumer behavior. behavior. We didn't know how to make candy. You know, we didn't, there were all kinds of things we didn't know. But we've learned more about consumer behavior as we go along. And that sort of background, in a very general way, led up to the study of consumer behavior in terms of Apple's products. And in that case, while I watched what was happening at the furniture mart in terms of people leaving the store, even though we were selling Apple at a price where we weren't even making any money.
[35:26]
CharlieBut it was just so popular that if we didn't have it, people left the store and went to Best Buyer someplace. And if you know, the Blumkins, they can't stand or anybody leaving the store. So, yeah, they behave according to you. But then you learned, you know, that had the interest in the brand. And then you have a million different inputs. But I think the psychologist called this apperceptive mass, but there is something that comes along that takes a whole bunch of observations that you've made and knowledge you have, and then crystallizes your thinking into action, big action in the case of Apple. And there actually is something which, which you have. I don't mean to be mysterious, but I really can't talk about. But it was perfectly legal, I'm sure you're that. But it just happened to be something that entered the picture that took all the other observations. And I guess my mind reached what they call that perceptive mass, which I really don't know anything about. But I've, I know the phenomenon when I, when I experience it. You know, that is, we saw something that I felt was, well, enormously underpriced. Maybe I've used this example before. But if you talk to most people, if they have an iPhone and they have a second car, the second car costs them 30 or $35,000. And they were told that they never could have the iPhone again or they could never have the second car again. They would give up the second car, but the second car cost them 20 times. So now people don't think about their purchases that way, but, but I think about their behavior. And so we just decide without knowing, I don't know, have the fainted, there may be some little guy inside the iPhone or something. I have no idea how it works, but I also know what it means. I know what it means to people, and I know how they use it. And I think I know enough about consumer behavior to know that's one of the great products, maybe the greatest product of all time, and the value it offers is incredible. And I think it has, in Tim Cook, I think it has somebody that, in his own way, is the equivalent of a partner with Steve Jobs that could do one thing extraordinarily well and more than one application. But one thing, and Tim was the perfect partner to serve sequentially with him. So it's, you sort of know it when you see it. I actually saw it with Geico when I went there in 1950. I didn't know exactly what I was seeing.
[38:40]
WarrenBut Lormer Davidson on a Saturday in four hours taught me enough about what I understood what auto insurance was, and I knew what a car was, and I knew what people went through people's minds. You know, I knew they didn't like to buy it, but I knew they couldn't drive without it. So that was pretty interesting. And then, but he filled in all the blanks in my mind, as I sat there on that Saturday afternoon. And, you know, every now and then it happens. You know, why do you have this? The person you met, you know, there are all these, all these different potential spouses in the room and then something happens that you decide that this is the one for you. I think it was it Rogers and Hammerstein that some enchanted evening wrote about that. Well, our idea of enchanted evening is to come up with a business, and now Charlie and me. And there is an aspect of knowing a whole lot and having a whole lot of experiences and then seeing something that turns on the light bulb. And that will continue to happen, and I hope it happens a few times to you, but you can't make it happen tomorrow, but you can prepare yourself for it happening tomorrow, and it will happen sometimes.
QuestionerHey, Warren, he mentioned Oxy, which I think is a great example. Yeah. Where you made the original decision basically on a weekend with some thought, but as the more you learned about Oxy and the asset position they had, their ability to operate in an exceptional manner and then a strong CEO around capital allocation. I think your confidence in which was reflected in continuing to acquire more shares is sort of that type of process.
WarrenYeah, yeah, it's exactly to the point. I mean, I just learned more as I went along. I learned enough. You know, I had never I'd heard of Occidental Petroleum. Occidental Petroleum happens to, to, been a descendant, not a descendant, but a continuation of city service, which was the first stock I bought. And of course, I knew a lot about the oil and gas business, but I didn't know anything about geology. And so I knew the economics of it. I had a lot of various things. stored in my mind about the business. But I never, I never heard of Vicky until, I guess it was a Friday or Saturday, and we met on Sunday morning, we made a deal. But that was one sort of deal. And then as time passed, all the kinds of different events happened, and, you know, Hygon came in. I mean, there are a million things you couldn't predict at the start.
[41:48]
WarrenAnd I formed certain opinions. as I went along, but then A, I learned more as I went along, and then at a point when I heard an investor call that Biggie was on, it put things together for me in a way. It didn't mean I knew I had a sure thing or anything like that. I don't know what the price of oil was going to be next year. But I knew that it was something to act on. And so we did. And we're very happy. We did. And we still don't know what the price of oil is going to be next year and know what he does. But I think the odds are very good that it was, but not a cinch, that it was a good decision. And, you know, we've got options to buy more stock. And, you know, when we get through with it, we could, it could be a worthwhile investment for for Berkshire. And we're in it. And we're under for keeps. And there are other things that we own that we aren't in for keeps. But, oh, incidentally, I should just throw this out since there's been speculation on it. We've sold, A, I was 100% responsible for the Paramount decision. I read speculation that that one of them, either Ted or Todd had some involvement of that. No, it was 100% my decision. And we've sold it all and we lost quite a bit of money. And that happens in this business, too. But actually, owning Paramount made me think even further. I like to think deeper, but I certainly don't think harder, even, about the whole question of what people do with their leisure time. And, you know, what the government. governing principles are of running an entertainment business of any sort, whether it's sports or movies or whatever it might be. And I think I'm smarter now than I was a year or two, a couple years ago, but I also think I'm poor because I acquired the knowledge in the manner I did. But I just want to be very clear that, that, A, we lost money on Paramount, and B, And I did it all by myself, folks. I don't know whether I've anticipated one of Becky's questions now, but we will, we will find out. Let's see, no, you, yeah, you're next, Becky.
QuestionerYes, you did anticipate one of the questions. Let's go to another one. This question comes from Vincent James in Munich, Germany. In the chairman's letter, Warren points out that the profit margins for BNSF have slipped relative to all five other railroads. However, Warren comments in the letter, BNSF carries more freight and spends more on capital expenditures than any of the other five major railroads, and has a
[45:13]
Questionervast service territory second to none. Given the comments from Warren about the clear strengths of BNSF, what explains the decline in revenue and profit, and in particular the profit margins relative to the other five railroads? What are the issues relative to the other railroads and what is being done to address them, please be specific.
WarrenOkay, and I will, well, I'll specifically get, depends on what Greg wants to say. But Greg is, that it's Greg's responsibility, is my responsibility for the purchase and for the operation up till Greg took over. But I think I'll let Greg answer that.
Greg AbelSure. Yeah, the, the, the, uh, Warren touched on it and the comments from the, um, the, the comments from the, as reflected there are very accurate. If you look at this quarter's results or our last year's results, they were both, they're disappointing as shareholders and disappointing in the relative to the other class one railroads. And it's highlighted in the question, there's five other class one railroads. So it's pretty easy to understand how you're performing versus the others. And there's a lot of other variables, but there's some very simple things to look at. When we look at where we've been on with associated with Burlington, I would just back up a little bit because if you go back to 2021, the Burlington team and manager team and the group, we're making excellent progress on a lot of fronts when it comes to our operating and both being efficient and effective. and how we're operating the railroad. And I remember very specific comments from myself in 2022, where I commented that that was a year there was all the supply chain issues, a lot going on in the West Coast ports. Our trains were backed up in a variety of places, and we called that a reset year. And I think we did need a reset year on the operational side. But as we moved into 23, the the business cost level, cost structure, we didn't reset it to the underlying demand we are seeing. We anticipated more demand and we did not reset our cost structure. And the team's working very hard as we speak to to both reset the cost structure and allocate the cost resources where they need to be. And when you go through something like that, what we've recognized as an organization, yes, the demand of the rail will drive a certain amount of the cost, but the reality is that the rail industry, if you go back many, many years, it's flat. There's not a lot of growth in the industry. There's opportunities become
[48:20]
Greg Abelmore efficient, effective, and our margins can go up. But the reality is the demand's going to be flat, but it does move within different sectors of the rail. It can be in the consumer products, it can be an industrial, it can be an egg. But overall, it's generally going to be relatively flat. So we need to get our cost structure right, and we need to get it right both for the coming year, but for the long term. And that means it's going to be a continuous exercise. We can't stop. We can't say we've gotten far enough because our competitors and we compete with the other rails, but we also do compete with the truck industry. We have to have a cost structure that allows us to compete both. both within our rail industry and within the transportation sector as a whole. So the team at Burlington is working very hard to address the cost structure, just like we have in the past. I think one thing we do recognize when the other railroads have implemented precision scheduled railroading, there's other metrics that we have to continue to pay attention to and challenge ourselves. If we're not at their level, what are the things that are driving it? So we're going to, when they ask for specifics, I'll give you a few. We have to look at our rail yards and understand how we're managing that. We have to look at our locomotive fleet, both the size and how we're utilizing that and challenge ourselves. And we have to then go back to how we're using our employee resources and allocating them across the business. So there's a lot to be done there. Our team's 100% committed to driving to the right cost structure. that's consistent with the underlying demand in the business. And then we can't stop there is the answer. So a lot to be done, but we have a team that's absolutely engaged and committed to it. And we're going to make good progress in this current year.
WarrenAt Berkshire, we want everybody to have the idea that there's a lot to be done with every business. You know, it's, I mean, it is, Uh, you know, we, they're a fellow named Pete He would be a remarkable company in Omaha building company, really remarkable. And there's a question after everything they did that one, something that was done particularly well, you know, digging a tunnel under the East River or something when it said it couldn't be done. He would say he would be, he was pleased but not satisfied. And that is exactly the way we want the added.
[51:01]
Warrento be at Berkshire forever. Omaha is a railroad town. If President Lincoln in 1862, I think it was, had decided to pick St. Joe or Plath Smith or anyplace else to build the transcontinental railroad. Omaha would probably be a little town of 20,000 or something on the banks of Missouri. But making, with Lincoln's desire to make this the the Eastern connection, make a Transcontinental Railroad, almost just took off. So it's been, it's been railroading at its base. The, you know, and anybody that was interested in financial matters had to think about railroads. Uh, because they had a certain glamour to him anyway. But the interesting thing is that you, which is our main competitor, uh, themselves fell way behind 20 or 25 years ago before Jim, before Jim Young came in. And in 2000, whenever it was, eight or so, I started buying three railroad stocks in the Union Pacific, BNSF, and, uh, Norfolk, Western, I believe. I don't know why I wasn't buying C&O, but, In any event, Jim Young had done a marvelous job with Union Pacific, so we were owned all three stocks. But what we did in 2009 is we were able, well, we already owned 22% of it, but overall it was $35 million, a billion, which was a significant part of our capital. We were able to put it to work in a $35 million, a billion dollars, which was a significant part of our capital. in a business we liked, and we, there's certain tax advantages that come in terms of making money in something that's more than 80% on, we call it 100% on in this case, versus making it through stocks. So it has a net benefit to us from making the same amount of money owning one of the other railroads by owning all of the railroads, and we got 30, billion out during a recessionary period. I think that was the worst quarter, the third quarter of 2009, maybe the rails that had for a long time. So it's, it's worked out, actually it's worked out very well, but it's because we were putting out capital in 2008 and 9. And if we put money in anything, we'd have made a lot of money, but it's more satisfying. and it's actually better in certain ways tax-wise. They'll make it from something that's 100% owned at all, but a bunch of, you know, 5% or 10% owned businesses. We're, you know, as I mentioned in the annual report, railroads are absolutely essential to the country. That doesn't mean they're on the cutting edge of everything. They're just essential to the country.
[54:30]
WarrenAnd, you know, it, it, uh, that's why they're, uh, that's why the country. the government, you know, I think they took them over one time and they negotiate what our labor settlements will be in everything. And if you shut down the railroads of the country, it would be incredible the effects. But, and it would be impossible to construct now. I mean, look at what's happening in California when they're trying to build the line. I mean, you know, everybody. Everybody's worried about the environmental effect of every mile and, you know, and what will happen to the various species of birds. Can you imagine the rail system of the United States being built? It would take decades unless the war was on and the government took over things and just ordered them. It can't create it. So we love owning a business like that. It's going to be around 100 years from now. Won't be the best growth business in the world at all. in the world at all growing up very, but it will be essential. And what it earns in its relation to its pit, its replacement values of pittance, but we'll do fine in terms of what we paid for it. And we'll distribute substantial amounts in relation to what we paid to Berkshire in a very tax-efficient way. And so it's, it's, it's, uh, it's. When the question is, what of the issues relative to the other railroads, you know, it wouldn't have been the end of the world if at all, if we bought the Union of Pacific and Jim Young had stayed alive to run it for us. That would have been great too, but we had the opportunity to buy the NSF and it's been good for them and it's been good for us. And we think it's been it's a very important asset to the country. And, you know, I just hope we can find something in. other industries that where it makes as much sense as that where we can put a whole bunch of money to work at an advantageous time. So let's go on to Station 3. Is that correct or not? Yeah. Yeah. Okay. Kira, good. Kira, good afternoon, Mr. Buffett, Mr. Abel. My name is Cyrapov Wu, a resident of New Zealand, but originally from Thailand. This is my first time. I'm in America and the first time attending the meeting. The journey was quite rough, but it was all worth it though, because I can now personally thank you, Mr. Buffett, and the late Charlie Munger, were he still with us, for organizing such a wonderful event, and most importantly, for being such an exceptional role models and sharing your
[57:32]
Questionerwisdom with us all these years. So thank you. Thank you for coming. So here's my question for you, Mr. Buffett. Towards the end of 2018, you mentioned that you guarantee you could make a 50% annual return if you had to start again with under $1 million. The question is, if tomorrow you woke up in the body of a man, of, of, of, your body, yeah, your body. But that's fine. And your name was now Warren Alacat. And you had some money to invest. on a full-time basis. What method or methods would you use to achieve that return? Would it involve flipping through 20,000 pages of Moody's manual or similar publications or finding, you know, two five gigabuts? Or would it be hunting for great companies at a fair prize as Mr. Mungerwood? Or would it be a combination of both with opportunity costs serving as the final arbiter or which method to use, given that your investing opportunity has now brought in significantly. Thank you, Coppin, Cap.
WarrenGood question. I'm glad you came. And the answer would be, in my particular case, it would be going through the 20,000 pages. And since we were talking about railroads, you know, I went through the Moody's transportation manual a couple of times. That was 1,500 or 2,000 pages or probably 1,500 pages. And I found all kinds of interesting things when I was 50 or, or when I was just 20 or 21. And I don't imagine there's anybody here that knows about the Green Bay and Western Railroad Company. But there were hundreds and hundreds of railroad companies, and I like to read about every one of them. The Green Bay and Western, in those days, everybody had a nickname for railroads. I mean, that was just what Northern Pacific was the Nipper and, you know, Phoebe Snow. was one of them in the east that used to go up to Cornell. And the Green Van Western was known as grab baggage and walk and GBM. And they had a, they had a bond that was actually the common stock, and they had a common stock that was actually a bond. And, you know, that could lead to unusual things. But they wouldn't lead to unusual things that would lead to unusual things that would work for you with many millions of dollars. But, but if you collected a whole bunch of those, which I set out to do, and actually that's what impressed Charlie when I first met him, because I knew all the details of all these little companies on the West Coast that he thought I would never have heard of. But I knew about the Los Angeles Athletic Club or whatever it might be.
[1:00:38]
WarrenAnd he thought he was the only one to know about that. And that, that, that, uh, that, that, that, that, that, that, that, that, that, that, that, that, that, came an instant point of connection. So to answer your question, I would, I would, I don't know what the equivalent of Moody's manuals or anything would be now, but I would, I would, I would try and know everything about everything small. And I would find something. And with a million dollars, you could earn 50% a year. But you have to be in love with the subject. You can't just be in love with the money. You really have to just find it. Like, you know, essentially like, you know, people find other things in other fields because they just love looking for it. A biologist looks for something because they want to find something. And it's built in the, I don't know how the human brain works that much. I don't think anybody understands too well how the human brain works. But, but there's different people that just find it exciting to expand their knowledge in a given area. We, you know, I know great bridge players, I know, great chess players, actually. Kasparov came to Omaha and met Mrs. B. I've had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas. So all I know is the human brain is complicated. But it does its best when you find out what your brain is really suited for, and then you just pound the hell out from that point. And that's what I would be doing if I had a small amount of money and I wanted to make 50% a year. But I also wanted to just play the game. And you can't do it if you really, if you don't find the game of interest, whether it's bridge or whether, you know, whatever it may be, chess or, you know, whatever it may be, chess or, you know, this case. finding securities that are undervalued. But it sounds to me like you're on the right track. I mean, anybody will come all the way to this annual meeting. That's something in their mind other than Bridge or Chess. So I'm glad you came and come again next year.
OtherAnd now we move to Becky.
QuestionerThis question comes from Denny Poland, a shareholder from Pittsburgh. When describing the principal agent problem, Mr. Munger said that capitalism often works best when the people managing the property also own the property. In recent years, agents of pension funds and asset management firms
[1:03:29]
Questionerwho do not have significant personal ownership stakes in Berkshire have forwarded proposals that were not in the economic interest of shareholders. What can be done to limit the negative influence of these agents in the decades after you're no longer able to cast significant votes against them?
WarrenWell, that's a very perceptive question. And it's been answered in a, temporary manner but but but who knows what these other situation will develop in the future all I know is that you have a wonderful hand at Berkshire Hathaway but you have to you have to be able to think your way I mean obviously you have to think your way through political realities or you have to think your way for what will cause you want A you want to be on you want to be regarded as an asset to the country because you'll find more solutions if you are an asset you owe to the country anyway. But beyond that, you'll find more solutions than if you're regarded as evil or something. And worse yet if you deserve it, so it's something that's something that's constantly in her mind. And it needs to be in the mind of the directors. And they need to think for themselves on this rather than bow to. conventional wisdom, which, you know, in a sense, you don't want to become a cynic about life, but almost everybody that approaches you if you have tons of resources, it's got some interest in figuring out how to use your resources to their advantage in. And that's true, whether they're in politics or whether they're in investment banking or whether they're selling you, well, whatever it may be that they're selling. I don't want to do any injury to anybody, but, you know, life insurance agents see the advantage of buying life insurance and investment managers will get paid based on assets managed to get interested in selling you their services. Imagine if everybody in this room were following the investment advice. of somebody that said, you know, for 1% a year, I'll tell you how to invest your money. And in 1950, when we started in 1965, they would have said, well, by Berkshire Hathaway. And if they were around now, and they still had their 1% deal, they'd be collecting $8 billion a year from people who aren't getting any dividends from us. So, yeah, they would have a different interest in the kind of contract they worked out with you than you would have. And the best thing to do is just pay him a commission one time and on the stock.
[1:06:36]
WarrenBut you have to be alert to how, what Newman nature does to both other people and to you. And then you, you know, if you think it, if you think it through well. listen to what Charlie has told you. You'll have a big head start on most people. Charlie, there's one thing that I should mention that really is terribly interesting about Charlie. Charlie knew the importance of psychology and human behavior and incentives and all of that. He figured that out very early. And of course, he, he, he, he, he, he, He gave some talks, even on, you know, 25 or so ways, whatever it happened to be. I don't remember the exact number, but different ways that one person could take advantage of another by understanding how humans behave. And then, after doing a magnificent job of explaining it, he believed in understanding what others would do, but he thought it was beneath him and to actually use those methods to manipulate people. That's a really interesting human being that thinks through the psychology of human behavior and figures out, you know, how you become a great insurance salesman or manager on Wall Street or accumulative assets under management or whatever it may be. And you get very rich by understanding the weaknesses of others to some extent. and then decide that it's very important for you to recognize these when they occur. It's very important for you to know them better than the person that actually is using them, but not, but you don't have to stoop to using them yourself. And Charlie told me that, that, you know, in his lifetime, after he figured this out, there were a couple of times when he used them. He wasn't proud of it. But he also never lied to me. So he explained to me that, you know, there were a couple of times when he used some of these techniques. But, but he wasn't, he didn't plan on using them anymore, but he also wanted me to know that if, if I ever did something like that, I wasn't really behaving terribly that he allowed for, he allowed for the fact that that, humans may misbehave, so I'm sure that I behaved somewhat better before my marriage than I did afterwards in my enthusiasm for different activities like dancing or something. And he said, you know, we all do it, but don't do it, but don't do it again. And so that's part of acquiring human wisdom. And speaking of human wisdom, we've been. just got that one book out there by Charlie, I mean, poor Charlie's Almanac, and that's
[1:10:09]
Warrenworth reading three or four times. I think I read Ben Graham's book about five or six times. And each time I read it, I realized that I just needed to think a little more deeply about certain things. They weren't complicated or anything. But, you know, it's better to, if you've got some great instruction like you get with Charlie, it's better to read it several times than to just figure you'll just read every book once and it's in the library.
OtherOkay, let's go to section four. Jeff Robillier from Tulsa, Oklahoma, and I'm thinking of Dr. Graham, Mr. Munger, your father. And my question is for all of us, but it's probably especially for the younger people in the room, the importance of picking the right heroes in life, choosing friends wisely, and maybe tell us a story, if you could, about each of those folks. Thank you, sir.
WarrenWell, there's no question you're 100% right in terms of having the right heroes. And, you know, you're lucky if you get them. I mean, Charlie had, Charlie had them. I Adam. And the interesting thing, my sister is here today, my younger sister with the two survivors. And we both experienced having the same hero, even though as we grew older, we saw that we didn't agree with plenty of his ideas, but we did agree with his values and motivation. And that's a better lesson than having somebody that's reading to you from a catechism that has got a lot of rules in it, which are pretty good rules. But there's a special place for somebody that is going to continue loving you, even if you break some of the rules. And that's what Charlie had in his life was what Bernie and I had. in our life. So, so I would, I would just repeat what you said. I don't need to give you a bunch of, well, when I ran away from home, I'll give you a specific example with me. I, when I ran away from home and went, and we hitchhiked up to Hershey, Pennsylvania and got picked up by the state police and everything, and I talked these other two guys into it. And we lied like crazy to the state police, you know, saying we had our parents' permission. Some kid at the place where we stayed had tipped them off that we'd run away from home. And we started, like I said, when the state police picked us up, we decided that two things, you know, we decided to tell them a bunch of lies about the fact we had our parents' permission and we decided we better get out of Percy because these cops were going to find
[1:13:33]
Warrenout soon or later. And so anyway, we end up back in Washington after a couple of days. And And when I walked in the door, well, one of the boys' mother, and the other kid was the Congressman Roger Bell. And his mother was in the hospital over this whole thing. He'd taken out his cash and his savings bonds. And so she was sick and Judge Bell. Her husband was all concerned and everything. And I walked in the door in Washington. And my mother said, how come he came back so soon? And my father said, But he said, I know you can do better. And I just paid more attention to my father than my mother. So you want to have the right heroes. And you don't have to have them. It's not the heroes based on what they've accomplished. And it's, you know, it's, it's, it's, it's, it's, it's the people that you want to be yourself. And if you, uh, it's, it's, it's, it's the people that you want to be yourself. And, uh, it's, it's, it's, it's, it's the people. If you, if you copy the right people, you're off to a great start. And I don't mean a great start about making money. I mean a great start about living your life. So you can check with my sister Bertie who's here and see if I've told the story correctly. She ran away from home too, incidentally, but, but she didn't get as far as I got. But she was running away to go to my grandfather's house, which was about two miles away. But I don't want to denigrate her run away a bill or at least because she was much more accomplished than I am in all kinds of other things. But when it comes to running away, I definitely outclassed her. Okay, let's go to Becky. This question comes from VDant Sharma in India. Warren, you and Charlie have often said that you were able to identify the people you want to go into business with. had an exceptional record in that. However, in the case of pilot, we noticed that the final stake purchase ended up in a dispute and had a sense of smart accounting, to put it one way, to squeeze a little more out from the deal than was deserved by the seller. Knowing well that this has been settled out of court and needs due confidentiality, I would like your views on some of the lessons learned that may be beneficial for future deals to watch for and for coming leadership to look out for as well. two comments on it. A couple of the directors had our doubts about their doubts about going in. And in any event, Pilot is working out well for us. And my friend Sam Butler
[1:16:27]
Warrenone time said to me that, and he was talking in general about certain kinds of situations. But he said, well worn, he said, all's well-worn. He said, all's well that ends. And And that's where we are. So we'll go to Station 5. While we're getting to Station 5, I'll tell you a little bit more about the fellow that is now running pilot. I knew you may have met here that Greg had known for a long, long time. And he grew up in Omaha and came from a poor family. family and was raised by his mother. Right. And went to the same high school, public high school that my wife went to North High, went to University of Omaha, set an all-time record in rushing yard each at playing there. He was a bouncer. Yes. Crafted by the New York Giants, as I remember. Exactly. Yeah. And, uh, uh, uh, uh, but then injured, actually in spring train. I was, I remember, in some way. And so he ended up being an intern, not an intern, but a trainee, you might say, for men American before I was there. And, uh, and now he, here he is, uh, still relatively young. And he's running a huge company. And we've, we've got incredible confidence in what he will do. And we like very, very, very much the business that was created by, by Big Jim Haslam. And, uh, uh, the, you know, it, it really is almost and only in an American type story, but it, it does show you what somebody was some real stuff and with the mother that believes in them. And with bad breaks along the way, I mean, imagine how you'd feel if you were drafted by the there are giants and and then you suffered some injury in the spring train or something. I mean, you know, it's just, it hurts, but, uh, it's not like experience I would have ever had, isn't it? I mean, that was the last guy chosen. But the, uh, uh, uh, you know, to see that, he's running a company of, uh, depends on the price of deal, but it's a huge company. And, uh, what does he have 20, 25,000? Right. Yeah. Yeah, and, and he's got many, many, many years to go, so I couldn't be more pleased about not only the acquisition of pilot, but, but just what it, it tells you about America, you can catch, what, what do you have to look up, read about him in Google or an interview with Adam? Yeah, I'm trying to think if it's a podcast. Yeah, he's got a podcast, podcast that will just blow you away. And if you don't think this is a little, a great country and has a lot of great people.
[1:20:03]
Greg AbelAll we got to do is read that podcast. So we, but we do have a great set of assets there. Oh, yeah. You know, if you look at Pilot, we have 800, more than 800 stations, travel centers, and just everybody knows, I mean, the beauty of that, and there is a question regarding this morning around fuel choices at Pilot. And the exciting thing is, in the end, pilot's going to serve whatever fuel our customers need. It can be electric. It can be renewable diesel or any of the various sustainable fuels. But the point is it has exceptional locations that are on the interstate highways. Hundreds of them. Hundreds of them. And we bought an incredible franchise. And now we have a great leadership team in both Adam and his team that's around them. So we're pleased where that opportunity will go. Yeah, we've got probably the average one might be. 10 or 12 acres or something like that, zone commercial on interstates throughout the whole United States. I mean, it, who knows, but, but what was created there is amazing, too. He had a fellow that played at University of Pennsylvania, I mean, University of Tennessee, and undefeated, and came away from this football team, and you'd think, well, another football player. You know, maybe. He goes out and there may be some intermediate parts in the story a little bit, but he buys a gas station, and he turns it into something that is huge. So it's, we're really delighted with, with it, and, you know, it's, it's another kind of only in America story. And how many of us can become an all-American, number one right team, let alone start a business that goes on these sort of heights. So we feel very good about it.
OtherBecky?
OtherNo, I think they're ready for five now.
OtherOh, I'm sorry. I think he's up there now. He's ready to go.
OtherOkay. Go to it.
QuestionerHello, Ms. Buffett. My name is Zhang Yabo. I came from microcity, Hainanan, China. So I want to express my sincere gratitude for. for you, for the extraordinary value you generated for shareholders, and the positive influences you have had on younger generation of investors like us. And my question relates to the concept of maximizing the duration of compounding. As individuals age, the quality of compounding inevitably diminishes. What are your secrets in maintaining your sharp man? sharp man, extraordinary judgment, and great physical condition. We wish you well. Thank you.
WarrenWell, you don't know me well, but that's, I like, just keep talking.
[1:23:15]
WarrenI mean, they, well, I, you know, I'm just, you have to be just plain lucky. I mean, there's no question about it, that, uh, that, that, uh, there's a hundred or a thousand, you you know, multiple a number of times that some drunk could have pulled out a car and broadsided me or, you know, just all the bad luck that you can have in life and I, you know, you can say that my, my great skill has been avoiding bad luck, but that isn't a skill, that's luck, or bad, bad, bad activities. And, you know, and then to get to be, you know, I would not have been a, if you'd taken my high school class and you to say, you know, a couple of you are going to live to be 90, men are going to live to be 93. I've got, you know, I wouldn't, I would not have been a heavy favorite, I can tell you that, and I wouldn't have better on myself. But, you just, you know, you, you, you should make the most of your luck when you get it, and sometimes I've done that, and sometimes I haven't. I mean, it is absolutely true that if I had it to do over again, there'd be, there'd be, there, there's been, there's been, you know, there's been, you know, there's been. there'd be a lot of different choices I would make. Whether they would have ended up working out as well as things have worked out. It's hard to imagine how they could have worked on any better. So, so I, but it is interesting how many mistakes you can make, uh, if you just keep going. And Charlie, you know, when you used to talk about that, that you just soldier through, you just keep going. And, but you still need luck. You know, you don't want to, anybody that says, I did it all myself. I was just kidding. I mean, it's just, it's, uh, they're delusional. And, uh, you know, actually live in a country where the life expectancy is pretty darn good, you know, so that alone is a huge plus. I was, was born, if I've been born, my sister's here, and she was born female, and she's just as smart as I was and everything, but, but even my own family who really, really, you know, did, well, particularly my dad, love us all equally, uh, and, and, and, and, and, and, and, in a terrific manner, but he still told me that, that this is 10 or, well, he was born 10 years after the, the, the 19th amendment was passed, and, but he told, basically told my, my sisters, you know, that Mary Young, well, you still have your looks, and he told me that the world, you know, you know,
[1:26:05]
Warrenthat power knew is new in nature and that, uh, you really could do anything. Well, I thought a lot of things I couldn't do, but, but, uh, it's, it, it's, it, the message given to females and males was incredibly, uh, different by the most well-meaning and loving of parents, you know, like I say, in 1930, I mean, I've been that way for millions of years. it's changed quite dramatically, but obviously not completely, but during my lifetime, but it's been during the latter half of my lifetime. If you take my sisters, if they've been born even five or ten years later, they would, they still would have been, uh, you know, getting instructions when they went away to college to be sure and get married while, or get range so that you're going to be married. you know, while you're in school, because after you get out, all the, all the good ones are taken, that was, Bertie was telling me that was a message that, that, you know, basically was, it had been imparted to most, a lot of the women she'd met, obviously, and so it, it really, it really, it's, it's extraordinary how much progress we've made, but it's unbelievable how long it took to get made. I mean, it, it, uh, it really does make you wonder about, you know, we've got all these heroes from American history and all the wonderful things they did, but, but how could they say all men are created equal and then rather constitute that women, you know, allowed women not to be able to own property and then, depending on the state, I mean, just terrible conditions. But anyway, that's how to be able to own property. you learn about what the humans can do. And I feel, and you've got to feel better about the future for your kids than you would have felt a hundred years ago, no matter, you know, what the situation is. Anyway, we'll move to Becky. This question comes from Linda Frazier in Westport, Connecticut. Dear Mr. Buffett, in the past, you've specified that 90% of your wife's inheritance be invested in a low-cost S&P 500 index fund and 10% in short-term government bonds. But the market cap of the magnificent seven tech stocks now represents more than one quarter of the market cap-weighted S&P 500 index, which seems like a big bet on the tech sector. I was wondering if you would now recommend investing some portion of the funds in a low-cost, equal-weight S&P-500 index fund, rather than having all of the equities exposure and a tech-heavy market
[1:29:04]
Warrencap-weighted fund. Well, that's an interesting question, and I will tell you that I revise my will about everything. three years or so and I get little thoughts from time to time and then you don't you don't change it every time you do it you get a tiny thing but the one section I haven't changed is that that with my wife that she she got left a huge amount of money by probably anybody's measurement except a pitton's compared to what I've accumulated in total. And it doesn't, it won't make one bit of difference to her in life, whether she beats the S&P or anything else. All I want to leave is plenty of money to take care of way beyond anything she'll ever spend, and at the same time, give her as much peace of mind as possible, and really make sure that the trust of you administers it doesn't really have to, she doesn't have to worry about whether it just doesn't make any difference whether she beats the S&P or not. And the main thing is that she feels, that she feels that she feels that she's in a financial position, which of course she will be, that she didn't even need to think about it. And the trustee doesn't have to worry about getting sued or anything else. So it's, it's simply not an economic condition. Now, obviously, with 99% plus of what I have going to philanthropy and, you know, and I've got my three children. The one good thing is that they've, at the age of 70, 69, and 65, they have matured remarkably, probably more than their father. And that's, but at the same time, they've got less time to work with the money than they would have, you know, they were 50 or something like that. So, you do, you do the best in accomplishing your objectives in your will, and in the end, and in the end, you know, you can't, you don't know what's going to happen after you die, but you make sure that, that, that, uh, to the extent that you leave, you have a lot of money to leave, you take, obviously, you, uh, you want to say thanks to a lot of people in quite a people in terms of specific requests you want to take care of your family but but in my case that requires practically no money and they're a fair amount for taxes but i have and my children are in charge of what happens to the funds that are left but like i say the the the problem is when you live as long as i have and the kids get older you know who knows what happens with mortality tables and they're the ones that i've
[1:32:21]
Warrenreally want to see to handle the distributions and they will and they'll be very good about it. And, but if we're all alive, three years from now, they'll be three years older and that's, so everything, you can't solve everything in life. You do the best you can't with it. And people do interesting things. I've been around probably as many rich people as almost anybody and a fair number of, I know, know what they're doing or have done with their funds. And the idea that you can have a huge amount of money and leave everybody very rich and have people liking each other or less when it all happens. Humans are really, they are interesting to watch some of them handle it beautifully and others are terrible. The one thing lawyers will always tell you is don't Don't use codsals. In other words, you know, when you change your mind on a will, just write a new one, but tear up the old one. Don't do it by just adding codicels. But I believe I'm correct. Certainly read it that Paul Getty, who was the richest man of the world, presumably, at one point in the 1950s or 60s, and it's a very interesting guy to read about it. And he had five with five, five, um, uh, uh, uh, uh, uh, uh, uh, he was a very interesting guy to read about it. uh, wives. And he's the one whose grandson was kidnapped, kidnapped. And they, they sent, sent Paul Getty an ear of the child and everything. I mean, it's not, it's not a happy life when you get through it. But the one thing he did that was kind of interesting, he actually liked to use codisoles because I think he had like 25 of them. And it was kind of his way of writing, well, I'm taking you out of the world because, you You know, and so he, he, uh, he, uh, he, he, he, he sort of delighted in explaining through his will what, uh, uh, how he felt about all these people. I mean, you really get some strange things revealed that will. I just, I just, I just read about, uh, a will of a fellow that made a whole lot of money and was leaving it to his, I don't know whether there's children, grandchildren and whatever I mean. may have been, but in any event, his opening line and his will is, is, and this was done some years ago, but I know something about the family. His opening line, in effect, said, I'm writing this will while I'm writing in the economy session of Eastern Airlines number such and such. I mean, he believed in getting, getting right to the point of what the people who were recipients,
[1:35:31]
Warrenhow they should live and I don't know, he was going to be judging them. It's just so damn interesting to watch people's wills, but, you know, one guy left a lot of money to his wife on the condition that she remarries so that at least one man would mourn his passing, you know. You know, well, I'm not giving legal advice here, as I always say, but, but I feel, I feel very, very, very, you know, I feel very, very good, but how things have turned out. And I wish I could figure out ways better to use, you know, the really bashed resources I've got into some of the really important questions of the world. But I haven't been able to do that. I mean, I had a few goals when I was 30 or 40 and may have written them into wills then in terms of what the world what the world needed done and how the money could be used. And unfortunately, I decided that it just, they weren't feasible to accomplish. And, of course, I was setting out to accomplish things that were important, but nobody had solved yet. So you've got to expect that, why should I be able to solve them? And nevertheless, it's an interesting, and the one thing about it is everybody here, I don't know about the ones who've come from other countries. But you should have a will. Because if you don't have a will, you still have a will. And it'll be whatever the state says. And it's amazing. Four American presidents died, intestated, without wills. It's four, you know, we've only had 45. And imagine becoming president of the United States and not having a will. But you can look up. There's nobody recent, I think Lincoln. I'm certain Lincoln was one of the four. And here's a man, I mean, I don't know, you can always say, well, he didn't get around to it. But that's hard to imagine that why Abraham Lincoln would have died intestine. I'm sure we've got some Lincoln scholars out there that will write me after this and explain why. And I'll be interested to receive their letters. but human beings are human beings and and we all have weaknesses and peculiarities and everything else and don't be too hard on yourself because you have some of those but don't be totally forgiving either you can change the future you can't change the past but you can't change the future okay station six um good afternoon my name is caroline and i'm a lawyer in san Diego. But please don't hold that against me. Remember, Mr. Munger was once an attorney, too.
[1:38:50]
QuestionerRight. First, I'd like to sincerely thank you, Mr. Buffett, for your business integrity, tireless leadership, and generous contribution to philanthropy. My question for the distinguished panel of two is, now that the AI genie is out of the bottle, as someone astutely put it earlier today, what business in Berkshire Hathaway may be most at risk with AI.
WarrenWell, that's a wonderful question. The problem is I really don't know anything about AI, but obviously, you know, anything that's labor intensive, and that it can create an enormous amount of leisure time. Now, what the world is, does with leisure time is another question. Whether more leisure time, I know an awful lot of people think when they go to work at first, what they want is leisure time. And what I like is actually having more problems to solve. But AI is profound. I mean, that's what makes it, it makes it a gene, you know, is what going to happen. I'll, I could tell a few genie jokes, but I better not. But, I guess, where am we probably... I don't know what, you know, in terms of our businesses, they'll figure things out. I mean, we've got smart people. And it's, obviously, if it's used in a pro-social way, it's got terrific benefits. terrific benefits to society, but I don't know how you make sure that that's what happens any more than I know how to be sure that when you use two atomic bombs in World War II that you knew that you hadn't created something you could destroy the world later on. Yeah.
Greg AbelYeah, I think when we think of AI at a lot of the business units, I mean, we're truly trying to think, how does it make us more efficient, more effective? I mean, it results in more idle time. And we're probably not thinking of the iterative AI where we're looking at very specific processes where our people can implement it and either at times it displaces the labor, but then hopefully there's other opportunities for them within the business. But I think, you know, when you think of all our businesses, I mean, we do have a heavy labor workforce in a lot of them, but I think we, at the stage we're at, as a company. company and maybe where it's at right now. It's really around how do we do things more effective, more efficiently, more safely if it involves dangerous processes. So it's, we're early innings. John, John Maynard Keynes, it was just wonderful to read and incredible mind. But in around the time I was born, he wrote a book about what could happen.
[1:42:20]
WarrenI don't know whether it was in the next 100 years or whatever. And he predicted correctly that that output per capita would grow at this incredible rate that it has. But in terms of speculating, it's what people would do with that, I mean, this guy was unbelievable. But it hasn't developed. exactly the way he predicted he was right about what was going to go into the equation, but he wasn't, he didn't have it figured out exactly what at all, what, what, what would be the result. So it's, it is, it is really, well, we didn't know when we were developing the bomb that there would probably be, that's very soon nine countries, three of whom we should worry about. plenty that we'll have what they have, but we didn't really have any choice. And you could have had all kinds of papers written on it and everything else, but we were going to do it anyway. We needed to do it. And if you haven't read it, it's fascinating to go to Google and read the letter by Leo Zillard and Albert Einstein to President Roosevelt written about a month before, almost exactly a month before the Germany, or had removed into Poland. It laid out, well, Lil's Lord knew what was going to happen, or had a good hunch of what was going to happen in terms of nuclear bomb development, and he couldn't get through to Roosevelt, but he knew that a letter signed by Albert Einstein would, so it's probably the most important letter ever written. And you can read, which is just fascinating to me. But that started the Manhattan Project. You know, it's just everything flowed out of it. And like, I'll bet anything that Roosevelt didn't understand it, but he understood that Albert Einstein has sent a letter. And he probably knew what he was talking about, and he better get, he better start the Manhattan Project. It is, it is, it is just unbelievable what happens in this world. Anyway, let's move on to Becky, I guess, is next. right?
OtherYep. Randy Jeffs from Irvine, California. The March 25th, 2024, Wall Street Journal reported that the Treasury market is about sixfold larger than before the 2008-2009 crisis. Do you think that at some point in time, the world market will no longer be able to absorb all of the U.S. debt being offered?
WarrenWell, I would say the answer, of course, I don't know. But my best speculation. is that U.S. debt will be acceptable, but for a very long time, because there's not much alternative.
[1:45:43]
WarrenBut it won't be the quantity. You know, any, you know, the national debt was nothing to speak up, like, you know, for a long, long time. And then it won't be the quantity. It'll be whether in any way. inflation would get let loose in a way that really threatened the whole world economic situation. And there really isn't any alternative to the dollar as a reserve currency. And you get a lot of people who'll give you a lot of speeches on that. But that really is the answer. And Paul Volker worried about that back in 19, you know. before 1980, but he had threats on his life, and I happened to have a little contact with him at that time. And he was an amazing, amazing fellow that, uh, that, that in effect, decided that he had to act or the whole, really the financial system would fall apart in some way that he couldn't predict and, and, uh, and, and he did it and he said, you know, had people threatening his life and do all kinds of things. And, but he was the man for that crisis, uh, but it, it wasn't the quantity of U.S. debt that was being offered that threatened the system. And it was, it was the fact that that inflation and the future value of the dollar, you know, the cash is trash type thinking that turned, you know, the cash. turn, you know, that, that was setting up something that could really affect the future of the world in terms of its economic system and Paul Walker took it on and he was gutty as could be. And if you haven't read a book or two about him, or the one he last wrote, you'd be able to take a look at it. But it is, it is, I don't worry about it. I don't worry about it. the quantity. I worry about the fiscal deficit, you know, if it, but I'm not a worrier, just generally. I mean, I think about it and, uh, uh, but, uh, I don't sit and get up, work myself into a stew about it in the least, but I, but I can't help thinking about it. And that's, uh, we've got a, we've got a great attention. It's interesting. It's interesting and I think the media enters into this and the focusing, the focuses on the Fed. And they, you know, they just love it because things are always happening and economists are always saying what's going to happen with the Fed and everything else. But the fiscal deficit is what should be focused on. And, uh, and, uh, and, uh, uh, and, uh, uh, Jay Powell is a, a, not only a brain human being, but he's, he's a very, very wise man, but he doesn't
[1:49:28]
Warrencontrol fiscal policy and every now and then he, he sends out a kind of a disguise plea for, please, please pay attention to this, because that's where the trouble will be, if, if we have it. As one of the comics used to say, there was a stand-up comic, he used to say, who have I forgotten to offend? after his talk. And I always feel like that after these meetings, but we've got it, we've got time for at least one question and maybe two, but let's go to Station 7.
QuestionerHello, my name is Dennis from Giffon, Germany. I'm my first time here. I'm here with my friend who would, by the way, love to invite you to dinner. You talked about the importance of heroes, and we are very happy to, and thankful that we have you as our hero with great values and thank you for that, thank you for that first of all. My question is, it is clear that you achieved great success in life. Earlier, you talked about every investment having opportunity cost from what I've learned in life that does not only apply it to investing your money, but also to investing your time. Right. And every hour you spend in your office is an hour you cannot spend with your spouse or children. With the life experience you have now, if you had the possibility to start all over again, would you set your priorities any different? If yes, how and why, and what's the best way to invite you to dinner?
WarrenWell. Well, that definitely won't be one of my priorities if I figure out how to do it. But that doesn't, don't take it personally, because, you know, you can figure out at the maximum how long a period I've got. And, you know, I don't think, I mean, I can figure out all kinds of things that should have been done differently. But so what? You know, I mean, I'm not perfect. I don't believe in lots of self-criticism or being unrealistic about either what you are or what you've accomplished or what you'd like to do. You do the, you know, you do a lot of things. and who knows whether somewhat different trade-offs, you just can't, you can't, you don't know with the past, but I feel, I don't think there's any, any, any, any, any room in beating up yourself over what's happened in the past, you know, it's happened, and you, and you get to live the rest of the life, and you don't know how long it's going to be, and, and, uh, you keep, trying to do the things that are important to you. And if I was a doctor or if I was in all kinds of different professions,
[1:52:40]
WarrenI might do different things, but I really enjoy managing money for people who trust me. I don't have any reason to do it for financial reasons. You know, I'm not running a hedge fund or getting an override on or anything, but I just like the feeling of being trusted. Charlie Field felt the same way. You know, that's a good way to feel in life. And it continues to be a good feeling, so I'm not really looking to change much. And, you know, if I'm very lucky, I get to play it out for six or seven years and it could end tomorrow. But that's true of everybody, although the equation isn't exactly the same. But I don't believe in beating yourself up, though, over anything you've done in the past. don't believe in, well, I believe in trying to find, you know, what you're good at, what you enjoy. And, and then I think the one thing that you can aspire to be in, because this can be done by anybody, and it's amazing, doesn't have anything to do with money, but you can be kind. You know, that's, you can be kind if you're, uh, And then the world's better off. I'm not, I'm not sure that the world will be better off if I'm richer. But there's no question that, I mean, and you know kind people, and in the end, uh, aspire to be more. Or, I'm sure many of you are yourself, but just aspire to be more. So, and I guess we can take one more question from Becky and then we wind up.
OtherThis question comes from Devin Spurgeon. On March 4th. Charlie's will was filed with the County of Los Angeles. The first codicil contained an unusual provision. It reads, averaged out, my long life has been a favored one, made better by duty imposed by family tradition, requiring righteousness and service. Therefore, I follow an old practice that I wish was more common now, inserting an ethical bequest that gives priority not to property, but to transmission of duty. If you were to make an ethical bequest. to Berkshire shareholders, what duties would you impose and why?
WarrenI'd probably say read Charlie. I mean, he's expressed it well, and I would, well, I would say that if they're not financially well off, if you're being kind, you're doing something that most of the rich people don't do when they, even when they give way money. But that's not the question of whether you're rich, you're poor. And I would say, if you're lucky in life, make sure a bunch of other people are lucky, too. Okay. Just in case you know what my advice to myself would be, has been during this period. So we only got 30, what, three questions or whatever is. But thank you very, very much for coming. And I not only hope that you come next year, but I hope I come next year. Thank you.