[0:00]
WarrenYeah, don't wear out all your clapping on Charlie. I mean, we got, in addition, well, we have, first of all, Greg Abel, the director, and Aegee Jane, sending a stem one's insurance, and moving then to this back of this first section, if each of the directors there would remain standing until we finish, we'll go alphabetically down the line. And we've got Howard Buffett, we have Susan Buffett, Steve Burke, Ken Chen Chenal, Chris Davis, Sue Decker, Charlotte Geimann, Tom Murphy Jr., Ron Olson, Wally Weitz, and Merrill Whitmer. Okay. There are two people I would like to thank, and then we'll get on to the brief description of the results of the first quarter. First of all, I'd like to thank Melissa Shapiro, who put this whole event together. You can't imagine the work that goes into it, but she just reported to me that we set a new record for Seas Candy. I think they brought along six tons, and they will sell out. And one thing I do want to mention, we have only one book at the bookstore of the bookworm this year. Normally we have about 25, but we have poor Charlie's Almanac, fourth edition. And I think we sold about 2,400 of them yesterday. And that will be the only book. Next year, we'll go back to having our usual selection. But we thought we would just turn it over to Charlie this year. And then I would like to introduce one for the person, and that's the person who put that movie together. And you can't imagine the amount of work it is because, for example, on those scenes that we've used from the past, if they involved Hollywood stars or various people, we needed to get permission all over again to show it. because we told them originally we would only show it within the confines of our auditorium here. And of course, it went out on CNBC, and you just can't imagine how much effort, but also the great cooperation we got from all those desperate housewives and Jamie Lee. And with the desperate housewives, we had to get Disney's okay, and that was easy to get. But running down five desperate housewives, that one came in toward the end. But the job of putting this together has been handled by the same fellow that handles us. been doing these for years and years and years and years. And I just would appreciate it if you could just put the spotlight on Brad the Underwood for just a minute. Okay, we put out some results for the first quarter this morning at 7 o'clock our time.
[4:30]
WarrenAnd some few sharp-eyed analysts and and press people already picked up one or two items from it, which I'm sure we'll get some questions on later. But if we could start out with slide number one, which is, that it should be showing now, you'll see that in the first quarter, the way, and we talk about operating earnings at Berkshire, we've explained that many times, this is why we think these figures that we give you are the most descriptive of what's really going on in the business. and take out the wild swings in the market that otherwise just, you know, and that was reporting big earnings one quarter and big losses another quarter. We pay no attention to those at Berkshire. But you will see that we had a better than average quarter. And Ajit Jane wants me to want me to. point out to everyone that you cannot take the insurance earnings of the first quarter and multiply by four. It just doesn't work that way in insurance. And while we insure storms around the world, the major storms, for example, that would affect our earnings would be, probably number one, would be something that came in at the wrong place from our standpoint. and then just kept going up the East Coast, and that's our, that's our number one risk as we evaluate things. We're in all kinds of risks. There can be an earthquake tomorrow. They're going to be an earthquake 10 years from now, and we're going to, you know, we're in that sort of business. But the first quarter does hit the, should be our best quarter, certainly shouldn't be our worst quarter, certainly shouldn't be our worst quarter. the most likely quarter to be the worst quarter is the third quarter but anything can happen in insurance but fortunately nothing much happened in insurance during the first quarter so we had much improved earnings and in insurance underwriting and then our investment income is was almost bound to well it was almost certain to increase and I said that in the annual report because yields are so much higher than they were last year and And we have a lot of fixed short, short-term investments that are very responsive to the changes in interest rates. So that figure is up substantially, and I can predict that that one will be up for the year. We've got more money to invest, as we'll get to in a minute, and that's fairly predictable. So that number will be up. When you get into the railroad, the railroad earnings were down modestly and but we should, not immediately, but we should be earning somewhat more money than we are earning under present traffic conditions and then traffic conditions could also hit the earning.
[8:10]
WarrenIt's a potential earnings. the railroad and if you want every Wednesday you can get car loadings from the previous week and I'll regard it goes a little deranged if you do get them but I get them every week they're available and you'll see that car loings have been running for the industry have been running down modestly and these earnings are were as is expected, but we should earn somewhat more money than that on the equivalent of the model card holdings. And we in the energy company, we had better earnings, but our earnings were distorted. Well, they were affected by conditions that I wrote about in the annual report, and we'll undoubtedly discuss more this morning. But off a low base of the last year, they were up somewhat. And so you get down to the final figure, and 11.2 billion is quite an improvement from last year. But we would expect our earnings should go up modestly from year to year because after all, we're retaining, we're retaining like 30, billion last year of earnings. So if we put 37 billion more, you left it with us. We should do something that's satisfactory. And the goal of Berkshire, economic goal, is to increase the operating earnings and decrease the shares outstanding. It's that simple to describe. It's not quite so simple to pull off necessarily, but that that's what we're attempting to do. And if we'll turn to slide two, please. We've got the history, and I just picked the pre-pandemic year when we hit $24 billion, and then we fell off in the first year of the pandemic, and then as you see, we've moved up from $27 to $27 billion. And the interesting thing about these earnings is they're after depreciation and amortization and taxes and all that sort of So you can figure that essentially Berkshire has a little over $100 million per day, including weekends and holidays, coming in to deploy. And we've set out many times when we're attempting to deploy that money, but we have that responsibility. And sometimes, if you'll turn into the next page, well you'll see how that's build up the shareholders equity so that Berkshire had at March 31st 574 billion and through retaining earnings and we've been retaining earnings ever since we took control of Berkshire Athaway except one day as I remember I think it was maybe 1968 or nine I'm I the director's declared a 10 cent of share dividend, and I think I must have been in the restroom or something at the time.
[11:58]
WarrenSo if you leave out that period of madness, we've been retaining or you, we've been saving your money, putting it to work. And sometimes we've done things that were big mistakes, and we never get close to fatal mistakes. And every now and then we do something that really works. And as Charlie had pointed out in the past, you know, it's really, there's probably been a half a dozen to a dozen, over 57 or 58 or whatever it would be, really important, big decisions. And there's been nothing close to fatal. So it continues to be the guideline. And we have accumulated $571 billion, and I couldn't help. But look at who's second. And J.P. Morgan had $327 billion at year end. And they're up to $3.38, I believe, at end of the quarter. And, but they pay significant dividends. They repurchase shares. They've got a business that earns better returns on equity. But they don't plow it. And they shouldn't. They don't plow it back exactly like we have. And this does show what can be done, really without any miracles. If you, if you save money over time. And we have a group of shareholders. We have a group of partners originally, Charlie and I did, that wanted to save money and left their money with like in that film you just saw you saw Eddie and Dorothy Davis. And the Davis family and the children and the grandchildren periodically did some other things with the money, but they also basically left it with us. And we were a savings vehicle and they were able to do, live very well. But they weren't trying to do it. to live like the kings and queens of earlier in capitalism and used to build the houses in New England and, you know, have a servant but standing behind everybody eating and all that sort of thing. So we've had very few, what I would call look at me type people that are attracted. There's nothing wrong with it, but, but they just go someplace else. they are spending sort of unbelievable sums after a while by the standards of the past. And our people, nobody, we have nobody that's a miser or a hoarder or anything like that in our group. They live very well. But the math of compounding and a long runway have done wonders and we will talk a little later right before lunch we'll give an illustration of that of what can be done with that sort of philosophy so our cash and Treasury bills were 182 billion at the quarter end and I think it's a fair assumption that they probably about 200 billion at the end of the end of the
[15:49]
Warrenthis quarter. We'd love to spend it, but we won't spend it unless we think we're doing something that has very little risk and can make us a lot of money. And our stock is a level where it adds slightly to value when we buy in shares, but we would really really buy it in a big way, except you can't buy it in it a big way because people don't want to sell it in a big way. But under certain market conditions, we could deploy quite a bit of money in repurchases. And as you'll see on the final slide, we have bought in the last five years. We can't buy them like a great many other companies because it just doesn't trust. that way the volume isn't the same because we have investors and we and the investors you know the people in this room really uh they don't think about selling they probably would hold many of you don't even check the price daily uh or weekly uh you know it uh the people who check the price daily have not made the money that the people who've forgotten about it basically have over the years uh And that's sort of the story of Berkshire. We'll try to increase operating earnings and we will try to reduce shares when it makes sense to do so. And we will hope for an occasional big opportunity and we're quite satisfied with the position we're in. So with that background, I think we'll turn it over to it over to Becky quick and we will alternate questions between Becky and those of you in the audience. And Becky, you want to start with the first question?
QuestionerSure. Thanks, Warren. Let's start just given what you mentioned, there was some news that came out in the 10 Q this morning. It shows that Berkshire sold another 115 million shares of Apple in this last quarter. That's Berkshire's largest holding. And I think in that vein we'll start with a question from Sherman Lamb. He is a 27-year-old Berkshire Hathaway Class B shareholder from Malaysia. He asks, last year you mentioned Coca-Cola and American Express being Berkshire's two long-duration partial ownership positions, and you spent some time talking about the virtues of both these wonderful businesses in your recent shareholder letter. I noticed that you have excluded Apple from this group of businesses. have you or your investment manager's views of the economics of Apple's business or its attractiveness as an investment changed since Berkshire first invested in 2016?
WarrenNo, I would, the, but we have sold shares, and I would say that at the end of the year,
[19:10]
WarrenI would think it'd be extremely likely that that Apple is the largest common stock holding we have. Now, one interesting thing. is that Charlie and I looked at common stocks or marketable equities or the things that people love to look at as being businesses. And so when we own a dairy queen or we own whatever it may be, we look at that as a business and when we own Coca-Cola or American Express or Apple, we look at that as a business. Now, we can buy really wonderful companies in the market. As businesses, we can't buy all of them, I mean, all of the shares, we can't buy 90% or 80% or anything like that. But when we look at Coca-Cola, American Express and Apple, we look at them as businesses. Now, there's differences in tax factors. There's difference in manager responsibility, a whole bunch of things. But in terms of deploying your money, We always look at every stock as a business. And we don't, we have no way, no attempt to make to predict markets. We have no attempt made to pick stocks. I went through many, many years doing the wrong thing. I got interested in stocks very early, and I was fascinated by him. And I wasn't wasting my time. because I was reading every book possible and everything else. But finally, I picked up a copy of the intelligent investor in Lincoln, and there was a few sentences in there that said much more eloquently than I can say it. But if you look at stocks as a business and treat the market as something that doesn't tell you, isn't there to instruct you, but it's there to serve you, you'll do. a lot better over time than if you try to take charts and listen to people talk about moving averages and look at the bed pronouncements and all that sort of thing. And so that made a lot of sense to me then. And the way I've been allowed to deploy it, and Charlie and I talked about this, of course, constantly, it's changed over the years as the amount of capital we have. and it's changed and all of that. But the basic principle was laid out by Ben Graham in that book, which I picked up for a couple of dollars, and which basically said to me, you've been wasting your time now, but maybe you can use what you've learned or been reading about and put it to better use. And then Charlie came along and told me how to put it to even better use. And that's sort of the story of why we own. American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business.
[22:32]
WarrenAnd we own Apple, which is an even better business. But, and we will own, unless something really extraordinary happens. We will own an Apple on American Express and Coca-Cola when Greg takes over this place. And it's, it's something something really extraordinary happens. It's such a simple approach that it's almost deceptive. Most things, if you keep working harder and harder at her, you learn a little more math or you learn a little more physics. But investments, you don't really have to do that. You really have to have your mindset properly. So we will end up, unless something dramatically happens that really changes capital allocation, a strategy, We will have Apple as our largest investment. But I don't mind at all, under current conditions, building the cash position. I think when I look at the alternative of what's available in the equity markets, and I look at the composition of what's going on in the world, We find it quite attractive, and one thing that may surprise you, but we, almost everybody I know pays a lot more attention to not paying taxes than I think they should. We don't mind paying taxes at Berkshire, and we are paying taxes at Berkshire, and we are paying a $21% federal. rate and the gains we're taking in in Apple and that rate was 35% not that long ago and it's been 52% in the in the past when I've been operating and it's the government owns the federal government owns a part of the earnings of the business we make they don't own the assets but they own a of the earnings. And they can change that percentage any year. And the percentage that they've decreed currently is 21%. And I would say with the present fiscal policies, I think that something has to give. And I think that higher taxes are quite likely. And the government's If the government wants to take a greater share of your income or mine or burghires, they can do it. And they may decide that someday they don't want the fiscal deficit to be this large because that has some important consequences and they may not want to decrease spending a lot. And they may decide they'll take a larger percentage of what we earn and we'll pay it. And we'll pay it. We always hope at Berkshire to pay substantial federal income taxes. We think it's appropriate that a company, a country that's been as generous to our owners. It's been the place, I was lucky, Berkshire was lucky it was here. And if we, if we send in a check like we did last year, we send in over $5 billion to deal,
[26:39]
Warrenthe U.S. federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no Social Security taxes, no estate taxes, no, it's open down the line. Now, that's, I would like to, I hope things develop well enough with Berkshire that we say we're in the 800's club and maybe even move up a few notches. It doesn't bother me in the least to write that check. And I would really hope that all the America is done for all of you. It shouldn't bother you that we'd do it. And if I'm doing it at 21% this year and we're doing it at a higher percentage later on, I don't think you'll actually mind the fact that we sold a little apple this year. Okay, let's go to Section 1.
QuestionerHi, Mr. Buffett. This is Matthew Lai from China, Hong Kong. I'm running my last-statist company called F-du. And we are so grateful that to learn from you and you really inspire us. My question is, besides the electrical car company, B.R.D, Under what circumstances you will reinvest and reconsider to invest to invest Hong Kong and China company. Thank you.
WarrenWell, our primary investments will always be in the United States. We do think that the companies we invest in in the United States, American Express does business around the world, and no company hardly does business around the world like a recall. I mean, they are the preferred soft drink, you know, and something maybe like 170 or 180 out of 200 companies, 200 countries. Those are rough approximations from a few years back probably, but that degree of acceptance worldwide is, I think it's almost unmatched. I can't really think of any company that has an American Express has a position in the credit card bill, which I think is extremely strong. And part of that was one of the director, part of the reasons for that was one of the directors that introduced a few, a few minutes ago, Ken Chen Chenault. But it, it is, it has strengthened dramatically over the last 20 years for a lot of reasons. So we will, the BYD investment was a, well, we made them, we made the commitment. in Japan, which I did five years ago, and that was just overwhelmingly, it was compelling. It was extraordinarily compelling. And we put, we bought it as fast as we could, and we spent a year, and, you know, we got a few percent of our assets in five very big companies, but that's the problem of being our size.
[30:35]
WarrenBut you won't find us making a lot of investments. outside the United States, although we're participating through these other companies in the world economy. But I understand the United States rules, weaknesses, strengths, whatever it may be. I don't have the same feeling for economies generally around the world. I don't pick up on other cultures. extremely well. And the lucky thing is I don't have to because, you know, I don't live in some tiny little country that has no, just doesn't have a big economy, but I've been in an economy already that has, you know, after starting out with a half a percent of the world's population has ended up with well over 20% of the world's output in an amazingly short period of time. So, so I, we will, we will be American-oriented. I mean, if we do something really big, it's extremely likely to be in the United States. Charlie, in all those years, there's only two times. He's told me that, you know, this one is really, you know, he would always go along with me and say, well, you know, and I don't say, well, when I was suggesting something, you say, well, this is really not that great, but it's probably the best you'll come up with, so I'll go along with the idea. But Charlie twice has pounded the table with me and just said, you know, buy, buy, buy, and B.YD was one of them, and Costco was the other, and we bought a certain amount of Costco, and we bought a certain amount of Costco, and we bought quite a bit of bought. B-YD, but, but looking back, he already wasn't as aggressive, but I should have been more aggressive in Costco. It wasn't fatal that we weren't, but he was right big time in both companies, and I will, I will, I'm aware of what goes on in most markets, but I think it's unlikely that we're not that we make any large commitments in almost any country you can name, although, you know, we don't rule it out entirely, and I feel extremely good about our Japanese position, and we'll have that, I don't know how many years. Greg will be sitting with that at some point, and we couldn't be happier with that, but you really have to, we really have a different outlook in looking at, at, well, we're look at your money, which we couldn't bear to lose, and we feel that we're very less likely to make any truly major mistakes in the United States than in many other countries.
QuestionerOkay, Becky. This next question comes from Stanley Holmes, who is a Berkshire shareholder from Salt Lake City.
[34:16]
QuestionerHe asks, in his 2024 annual letter to shareholders, Chairman Buffett noted the severe earnings disappointment experienced at Berkshire Hathaway Energy last year and expressed concern about earnings and asset values in the utility industry. Recognizing that investors are worried about climate change-related expenses and that new uncertainties cloud the regulatory environment, the chairman suggested that some jurisdictions may adopt the public power model. There are now signs that policymakers in Utah citing states of Rennity may already be poised to move in that direction. The Utah legislature recently mandated the state's right to serve a sole purchaser of energy from an in-state power plant and, under some circumstances, purchased the power plant before it can be retired. The state utility regulator will be legally bound to prioritize public purchases of power and facilities that could include assets owned by Berkshire-Hathaway Energy-specific work utility, Rocky Mountain Power. Will Berkshire, through BHA, continue to invest resources in jurisdictions where corporate assets may be subject to confiscatory state policies and actions and how is Berkshire Energy working with officials in Utah to minimize potential corporate losses if and when state control is asserted over its electrical utility sector?
WarrenI will let Greg join with me and the answer on this, but I would say our feeling is that Utah is actually very likely to treat us fairly whether the action is in granting appropriate rates that give us the return we expected, generally expected in terms of our own properties, or if they decide for some reason to go to public power, I think they would compensate us fairly. In the 1930s, George Norris, the senator from Nebraska, just turned Nebraska into a public power state. And our experience in Iowa would indicate that that Free Enterprise has its role and that we can run a privately owned utility company that will be more efficient for society than at least in most states people can do with public power. But what has happened is that there's going to be an enormous amounts of money, enormous amounts of money, spent on power. And we've been, we're, if you're going to do it with, with private owners, there's nobody better situated than Berkshire to satisfy the portion, a large portion of the needs of the country. and we will do it at a rate of return that is not designed to make us rich or anything like that.
[37:44]
Greg AbelIt's a sensible rate of return, but we won't do it if we think we're not going to get any return. It'd be kind of crazy. And we've seen actions in a few states where some of the costs associated with climate change. You're not being regarded as cost of the utility shouldn't incur. Well, believe me, if it was publicly owned, they would have incur it too. But we will do what society tells us, and we have got the money, and we've got the knowledge to participate big in something that is enormously important for the country. But we're not going to do. do it. We're not going to throw good money after after bad and the field. I don't worry about, my understanding is, and Briggs can elaborate on this now immediately, but I don't regard Utah as being unfriendly to the idea of utilities being treated fairly.
WarrenCharlie?
CharlieCharlie, I'm so used to. I had actually checked myself a couple times already, but I'll slip again. That's a great honor word.
Greg AbelYeah, when we, well, Warren, you touched on it initially in your letter, relative to the challenges in the industry, and then you've just alluded to the significant investment that has to go into the energy industry, the utility sector, for many years to come. And I think if we start there, if I think of our different utilities, it will definitely come to Utah and Pacific Corp. But if you look at the underlying demand that is building in each of those utilities and the amount of dollars that are going to have to go in to meet that demand, it's absolutely incredible. So when you raised it in your letter, it's a really important issue. We have to have a regulatory compact that works between if it's a public utility, it has to work in concert with the state, Utah being an example, or it ultimately becomes potentially a public power entity. So just to set the frame a little bit, if I think of Iowa, which you mentioned, and the underlying, we've made substantial investments there, it's been very consistent with both the public policy that the state and legislator wanted, and they enacted very specific laws to encourage that. But that utility is more than 100 years old right now. And if we look at the demand that's in place for mid-American Iowa utility over the next, say, into the mid-2030s, associated with AI and the data centers, that demand doubles in that short period. a time. And that happened, and it took 100 years plus to get where we are today,
[41:12]
Greg Abeland now it's going to double. And for, and that will require substantial amounts of capital from the, from mid-American and its shareholders. And how that will function is if we have a proper regulatory compact in place, which, which you've highlighted. If we then go to, say, Nevada, where we We own two utilities there and cover the lines here in Nevada. If you go over a similar time frame and you look at the underlying demand in that utility and, say, go into the later 2030s, it triples the underlying demand. And billions and billions of dollars have to be put in. Our rate base will literally go from, it's not a model. level now, but you're talking probably an incremental $6 to $10 billion, at least of rate base, going into that type of entity, which requires, again, alignment with the state and their policies and a proper recovery of our underlying both capital and a return on capital. So when we come to the wildfires, that's been a substantial challenge because it's the first time there's been a lot of discussion around one of our utilities, one, experienced significant losses associated with the wildfires. What portion of those costs will be recovered? And that's really the dialogue we're in, and does that properly, properly work. When I think of the wildfires, there's been many claims in a recent additional claim last week for... $30 billion, and it's, we don't take that lightly, but it is an incremental claim to an already existing lawsuit that's in place. And when I think of Pacific Corp, we're in a place where, first and foremost, all the litigation will be challenged because the basis for it, at least we believe there's places where it's unfounded and will continue to challenge it. And it will take. many years to be resolved as Warren highlighted in the letter. But if you think of Pacific Corp and the litigation there, number one, how we think can operate those assets have to change. Because we've had a regular, we have worked with the states across all our states for many years with the fundamental goal to be to keep the power on. And our teams and our employees worked incredibly hard to keep the power on. on day in, day out, through storms, unfortunately, through the 20-20 fires. The instincts were not to turn off the power. The instinct was to keep the power on to keep hospitals, fire stations responding. It's not in their mind, or at least culturally, it wasn't in our minds
[44:28]
Greg Abelto de-energize. So the first thing we had to do was step back and say, we've got to fundamentally change the culture, not just at Pacific Corp, but across all our utilities. The first thing we have to recognize is that there's now going to be situations where we prioritize de-energizing the assets. And that's completely different than how we've operated those assets, as I've highlighted for 100-plus years. So we start with the culture. We had to change that. The second thing is we've now changed our operating systems so that we can turn off the power very quickly if there's a fire that's encroaching. We will turn off our systems now and we'll go the minute the conditions are safe again, we'll re-energize it, but we've had to do that. And then the third thing is continuing to invest in a way that allows us to try to minimize the risk of the fire. But when you get back to Utah and Pacific Corp, the chance The challenge we do have is within Pacific Corp, as we go through both litigation and through continuing to operate that entity, it generates a certain amount of capital and profits that will remain in that entity and be reinvested back into that business. But fundamentally, as we go forward, we need both legislative and regulatory reform across the Civic Corp states if we're going to deploy incremental capital, make incremental contributions into that business. As Warren said, we don't want to throw good capital after bad capital. So we'll be very disciplined there. But the reality is there are opportunities to both solve the legislative and regulatory solutions. And the best example we actually have, and I think it's the gold standard. across the country is Utah. So as Warren touched on, it's a state we're happy we're investing in. It is part of Pacific Corp, so there's a certain amount of balance there as to how we do it. But in the last legislative session that existed, Utah actually passed a bill that does a couple very important things. One, it caps non-economic damages on wilds. fire claims. So if you go back to the wildfires we have in Oregon and the claims you're hearing filed for, there's economic damages associated with them and those harms should receive the economic damages associated with that. But unfortunately, and even though there's legislature and case law in Oregon that says wildfire, non-economic damages should not be awarded, there's very substantial non-economic damages being awarded there.
[47:39]
Greg AbelUtah took a very proactive position to say, we will cap those non-economic damages. And it creates an environment, again, it's back to that, is there an environment where you want to invest in? Yes. And then incrementally, they've created a very substantial fund. It's literally called the wildfire fund for fires in Utah that will help facilitate. facilitate both liquidity and the ability to resolve the situation. So Utah, we believe, including the legislation, that a lot of other things came out of it, is the actual gold standard as we go forward. So very important issue for Berkshire Hathaway Energy, but at the same time, it is a Pacific Corp issue. The risk of regulatory compacts not being respected as much more. it's a much broader one that will always evaluate and be careful how we deploy our capital. But both Pacific Corp will manage through it, and I see other very good and significant opportunities in Pacific Corp. I mean, in Berkshire Hathaway Energy. The return on the, return on equity investment, it's been promulgated and been achieved over the years, has been, particularly in recent years, well below the return on equity that has been achieved by American industry generally. And so whether you earn X or X plus a half a percent or X minus a half a percent, that differs by state and some states are more attractive than other. But whether you earn X or go broke is not an equation that works. And, you know, we won't put our shareholders. Money, they didn't give it to us to lose it all. And we might like it if it's better when it's X plus a half a percent, the next minus a half a percent. But the electric utility industry will never be as good as, I mean, just remotely as good as, you know, the kind of businesses we own in other arenas. I mean, you look at the return on tangible equity. at Coca-Cola or American Express or and to really top it off, Apple. It's just, you know, it's just a whole different game. But in utilities, the trade has been, the compact has been that you get a modest has been that you get a modest return. And climate change comes along and it causes away more fires. That's just a cost of doing business. And it doesn't mean that we can't do things to mitigate fires in the future. And you can make different policies on when you turn off the lights. But somebody's going to do, somebody's going to put up many, many hundreds of billions, maybe in the trillions.
[50:59]
WarrenAnd climate change enters into that. And it can be done through public power or it can be done through private. enterprise to quite a degree. And we would be certainly good for a hundred billion or more. But we're not going to throw good money after that.
OtherOkay. Let's do station four.
QuestionerHi, I'm Joe, visiting from San Francisco. How do you think about the role of technological advances, especially generative AI, on more traditional industries? Thank you.
WarrenYeah. I made a mistake in calling on four, but I'll get back to two later on. The, uh, the, uh, the, uh, I don't know anything about, about AI, uh, but I do, I do have, I don't, that doesn't mean I deny it's existence or importance or anything of a sort of. And, and last year I said, you know, that, uh, we let a genie out of the bottle when we, when we developed nuclear weapons and that genie has been done doing some terrible things lately. And the power of that genie is, you know, scares the hell out of me. And under that, I don't know any way to get the genie back in the bottle. And AI is somewhat similar. It's out, it's part way out of the bottle. And, uh, it's enormously important and it's going to be done by somebody. So, uh, we may wish we'd never seen that genie or may do wonderful things. And I'm certainly not the person that can evaluate that. And I probably wouldn't have been the person that could have evaluated during World War II, whether we tested a 20,000 ton, a bomb that we felt was absolutely necessary for the United States and would actually save lives in the long run. But more, we also had Edmund Teller, I think it was, it was on a parallel with Einstein in terms of saying you may, with this test ignite the, the atmosphere in such a way that civilization doesn't continue. And we decided to let the genie out of the bottle, and it accomplished the immediate objective, but whether it's going to change the future of society, we will find out later. Now AI, I had one experience that does make me a little nervous, and I'll just explain it. that very, very recently, fairly recently, I saw an image in front of my eyes on the screen, and it was, it was me, and it was my voice, and wearing the kind of clothes I were, and a wife, or my daughter, wouldn't have been able to detect any difference, and it was delivering a message that no way came from me. So it, when you think of the potential for scamming people, if you can reproduce images that I can't even tell that say, I need
[54:37]
Warrenmoney, you know, I'm, you know, it's your daughter, I've just had a, had a car crash, I need $50,000 wired. I mean, scamming has always been part of the American scene. But this would make me, if I was interested in investing and scamming, it's going to be the growth industry of all time, and it's enabled in a way. Now maybe, you know, obviously AI has potential for good things too, but I don't know how you, based on the one I saw recently, I practically would send money to myself over in some crazy country. I don't have any advice on all the world handles it, because I don't think we know how to handle what we did with the nuclear genie. But I do think, as someone who doesn't understand a damn thing about it, that it is, it has enormous potential for good and enormous potential for good and enormous potential for harm, and I just don't know how that plays out. I'd like to mention to Becky that Ajit will not be participating in the afternoon session. So if you could focus on any, if there are insurance questions, they want to ask, that it be a good one.
OtherYeah, this next question is for both Warren and Ajit. It's from Ben Noel, who's a Minneapolis shareholder, who's been a shareholder since 1995. And he says, in an interview this past year, Todd Cohn. said that in first meeting you in 2010, he told you GEICO is better at marketing and branding, but progressive as a data company and data is going to win in the long run. But it appears you did not prioritize data analytics at GEICO until a decade later when you made Todd's CEO. As business units like GEICO age and need new strategic direction, I wonder if Berkscher's hands-off management approach is a source of vulnerability. Will you please review your thinking on changes made at GEICO and explain how much Berkshire is structured to react if the Berkshire CEO sees that a business unit is strategically off track. And Ajit, I hope you will continue to update us on yours and Todd's progress at remediting the data analytics shortcomings at GEICO. Ajit, would you like to?
Ajit JainYeah. As Warren has pointed out in the past, one of the drawbacks that Geico is faced with, it hasn't been doing as good job as matching. rate with risk and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at GEICO for a few years now. We are trying to still play catch-up. Technology is something that is unfortunately a bottleneck, but there again, we are making progress
[57:42]
Ajit Jainand equally importantly, we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data. So, yes, I recognize we are still behind. We're taking steps to bridge the gap, and hopefully, certainly by the end of 25, we should be able to be along with the best of players when it comes to data analytics, whether it's pricing, whether it's claims, or any other factor that drives the economics of the insurance business. I would add equating rate with risk, obviously, is it. It's important in every line of insurance business. I mean, that's what you're involved with is deciding whether a given rate offers us the chance of the probability that we will make a little of money on it, and that sometimes we're only risking losing a little, and sometimes we're risking losing huge amounts. But GEICO, and Progressive has done a better job. that in that recently. But our fundamental advantage at GEICO, of course, is that we have lower costs than virtually anybody, and that cost advantage has been dramatically driven our underwriting expense ratio below 10 percent, and there's, there's just very, very, very few companies that can compete with that. So it isn't, it's not in the least a survival question, and it isn't even exactly a profitability thing, but, you know, we would rather have X% of the market than a half of X percent, but we roughly, I think in the month of March, we were just, we didn't, we didn't lose policyholders, and we've got 16 million or whatever it is of them. And we've got the lowest cost operations. So it's not a threat, it's not remotely a threat of survival, it's not a threat to, it's not a threat to, to even profitability. But on the other hand, we would like to be growing with something that is the best model around in the insurance business of delivering at a low cost, and we now have a recognition that we didn't have back when Leo Goodwin. started at 1936, but the same principle to work then is that if you can offer somebody a good product cheaper than the other guy, and everybody has to buy it, and it's a big business, you know, it's very attractive to be in, and GEICO is a very attractive business and has got its lowest cost thing, and it does have to do a better job of matching rate to risk. but our low costs of amassed the fact that for a while that we could do without progressing as much as we should have been the matching of rate to risk.
[1:01:05]
WarrenAnd now Todd has been working intensively at that, and he's made a lot of progress, but there's still work to be due, be done. But in the meantime, we're not going to shrink. And we should make better underwriting profits than most companies in the auto insurance business. Okay, I'm going to back up and go to, I think I left station two out of it earlier. So do we have somebody there?
OtherYeah. Good morning. My name is Sebastian Zartortar. I'm from Munich, Germany, which I have halfway. It's very respective. respective to this company in Germany. And my question is, who are your most trusted advisors today? Is it Ted and Todd? Is it Greg and Ajit? Is it your wife, your children? And what do you value about them? Thank you.
WarrenWell, it depends whether they're advising me on money or on other things. I trust my children and my wife totally, but that doesn't mean I ask them what stocks to buy. But the, I was, in terms of managing money, there wasn't anybody better in the world to talk to for many, many decades than Charlie. And that doesn't mean I didn't talk to other people. But if I didn't think I could do it myself, I wouldn't have done it. I mean, so I, to some extent, I talked to myself on investments. And I think my children have gotten a whole lot wiser over the years. And so I listened to a lot on a lot of things. I'll listen to my daughter on who to vote for locally because she knows. a lot more about that than I do. And I'll listen to my wife on a lot of things. And I won't get into details. So it is, it is important. I mean, you don't live a life where you surround yourself and limit yourself to people you trust. It won't be much fun. I mean, I literally, have been in the position ever since I was in my 20s of being able to have people I trusted around me. And I've made mistakes occasionally. But they filled her out over time. You learn. And when I found Charley, for example, in all kinds of matters, not just investment, you know, I knew I'd have somebody that, well, I'll put it this way, you can think about this. Charlie, and all the years we worked together, not only never once lied to me, ever, but he didn't even shape things so that he told half-lies or quarter lies to sort of stack the deck in the direction he wanted to go. He was, he absolutely he considered the total of utmost importance that he never lied. Now that occasionally got him in trouble at dinner parties or something. If he said to the woman, I'd really
[1:05:06]
Warrenprefer the way you used to do your hair or the way that somebody over the cross the room does. I mean, he was, but in terms of having a partner, I, I simply cannot think of a conversation I ever had with Charlie that in the least he missed a or shaped it his way or anything of the sort. So when you get that in your life, you know, you cherish those people and you sort of forget about the rest. Okay. Becky.
QuestionerThis question is for Ajit. It comes from Mayor Baruka. Climate change seems to be impacting the insurance industry heavily, with major players pulling out of markets like California because of wildfire and flooding risks combined with payouts increasing. increasing. How does Mr. Jane see this risk expanding to other regions and how has the thesis on insurance investments change because of it?
Ajit JainYeah. Climate change, climate risk is certainly a factor that has come into focus in a very, very big way more recently. Now the one thing that mitigates the problem for us, especially in some of the reinsurance operations we are in, is our contractual liabilities are limited to a year in most cases. So as a result of which at the end of a year, we get the opportunity to reprise, including the decision to get out of the business altogether if we don't like the pricing in the business. But the fact that we are making bets that tie us down to one year at a time certainly makes it possible for us to stay in the business longer term than we might have otherwise. Because of climate change, clearly prices need to go up. It is difficult to be very scientific about how much the prices need to go up. They need to go up a lot and we keep increasing prices and hope we stay ahead of the curve. But that doesn't happen in all cases. The regulators don't make it any easier by tying our feet to the ground and making it difficult for us to withdraw from certain territories or to make dramatic changes in the pricing of certain products. As a result of which, a number of insurance carriers including ourselves, have decided to not write business in certain states. I think the regulators are getting a little more realistic about the, and they are waking up to the fact that the insurance carriers need to make some kind of a return, a decent return for us to keep deploying our capital. It's a constant battle back and forth. It's been against the capital providers these last few years, but I think we are coming back
[1:07:58]
Ajit Jaininto balance. If you look at the results that have been recently announced by the insurance carriers, everyone's now making record profits. Obviously, that will not last, but certainly for the next several months, I think the insurance industry, in spite of climate change, in spite of increased risk of fires and flooding, it's going to be an okay place to be in. Yeah, climate change increases risks. And, you know, in the end, it makes our business bigger over time. But not if we, if we misprice them, we'll also go broke. But we do it one year at a time, overwhelmingly. And I would say this, I would, I would rather have a jeet assessing this than any thousand hundred riders or insurance managers in the world. I mean, the factors aren't, you know, we'll take Atlantic hurricanes, which would be probably our biggest risk, you know, there's no question that you can measure the temperature of the water in the Atlantic and, you know, what more water does the hurricanes, but you don't know whether necessarily, whether that's good or bad, because it may cause them to turn faster, you know, and it may change the path as well as the intensity and frequency of, of, of the, of the, of the, of the, of the, of the, of the, of the, of the, of the, of losses. But we'll write it one year at a time and we'll have Bejita underwriting it. And, you know, we don't have to tell you what's going to happen five years from now or ten years from now. And people who don't have sort of analytical insurance minds that comment on this subject really don't expand our knowledge. It's, it's, we get a lot of letters from people. a lot of letters from people that I'm sure have good IQs, but they don't really know, they don't understand the insurance business. And they're not wrong. I don't think in my mind about climate change. But if there was no risk, there'd be no insurance business. And we're in the business of evaluating it. And we do it one year at a time. And there's some exceptions where you can't do it. decisions extend for a long time in the future. And we try to avoid those. But again, you don't need 1,000 people analyzing water currents. I think you need one very, very, very smart guy. And we've got him. Okay.
WarrenYeah, the only thing I'd add is that climate change, much like inflation, done right, can be a friend of the risk bearer. And it has been for us. If you look at GEICO, it had 175,000 policies
[1:11:18]
Warrenroughly in 1950, and it was getting roughly 40 bucks a car. So that was 7 million of of volume. And, you know, now we have, we're getting over $2,000. Well, all the advances in technology and everything like that. If we had been wedded this formula, what we did with $40, we'd have had a terrible business. But in effect, by making the cars much safer, they've also made it much more expensive to repair. And a whole bunch of things have happened, including inflation. So now we have a $40 billion business from something that was $7 million back when I called on it. So if we'd operated in a non-inflationary world, GEICO would not be a $40 billion company. Okay, we're now finally coordinated to where station three, I believe.
QuestionerHello. Hi, hey, everyone. I worry not. I'm Liam. I'm 27 from Newmark Ontario, Canada. I got investment in Berkshire thanks to my dad, who brought me down to this meeting. I'm so excited to to be here. Most 27-year-olds who are rappers, but instead my idols are Warren, Charlie who will miss forever, and also your cousin Jimmy, who unfortunately had to go this year too, it's been a tough year. As a Canadian, similar with Greg, I always wonder about our Canadian economy and what you think about the Canadian economy. We've got some beat-down bank stock here right now, and I don't know what your opinions on are on these. And I also wonder at, in their 90s, if the rumors are true and you're still able to eat McDonald's. I like Fast Moon myself, but I always wonder at 93, he's still able to eat those and enjoy the Coca-Cola. Thanks, Warren.
WarrenOkay, well, we've got a Canadian here, so we'll let him answer the first part. And if you, if you watch me, you'll see what I like to eat. I mean, go to it, Greg.
Greg AbelYeah, well, we are fortunate to have a number of operations up in Canada. It goes across many of our operating entities, and then as Warren touched on, all the businesses that we have a piece of that we're invested in are up in Canada. So the presence is significant. We're always looking at making incremental investments there because it's an environment. We're very comfortable with Warren touched on understanding the U.S. environment, business, environment and I would put Canada equally in that bucket that we understand it and would be comfortable. And I would say the economy moves very closely to the U.S., so the results we're seeing out of our various businesses that report both the U.S. and Canadian operations aren't
[1:14:32]
Greg Abeldrastically different. And there's a few that we're on the energy side, for example, we make very substantial investments up there in Alberta. But again, it's very consistent with how that economy is growing, and I would see it being very consistent with what we see here.
QuestionerWarren, anything to...
WarrenYeah, no, we... Can I even... Obviously, there aren't as many big companies up there as there are in the United States, but when we get a... I got one from Canada just the other day that I sent over to Greg, too. When we see... anything that's suggesting an idea that's of a size that would interest here and meets other requirements, we don't have any hesitancy about putting big money in Canada. And there are things we actually can do fairly well that or Canada could benefit from Berkshire's participation. We did it some years ago, not that many years ago, but there was a financial institution up there, and they had a problem, and they had, as I remember, 30 plus, you know, various other people that were kicking it around. And meanwhile, the place was getting close to the edge for not a fundamental problem. and Ted Weschler from our office went up there. I heard about it on a Monday or something, and Ted Weschler went up there and we offered a solution in a couple of days to something that was getting close to the brink. So we do not feel uncomfortable in any way, shape, or form, putting our money into Canada. In fact, we're actually, we're actually looking at one thing now. And, but, you know, they still have to meet our standards on terms of what we get for our money. But they don't have a, they don't have a mental, we don't have any mental blocks about that country. And of course, there's a lot of countries we don't understand at all. So, so Canada, it's terrific when you've got a major economy, not the size of the U.S., but a major economy that you absolutely, you feel kind of. You feel confident about operating there.
QuestionerOkay. Nucky. Warren, you just said that you'd rather have a jeet running risk assessment at the insurance operations than any other thousand insurance adjusters in the world. So I'd like to follow up with a question that came in from Mark Blackley in Tulsa, Oklahoma. He said, Warren, for years, you have spoken about the incredible impact Ajit has had on Berkshire. You've often joked if you and Ajit are in a sinking boat and we can only save one of you,
[1:17:40]
Questionerswim to Ajit. While we often discuss plans for the next CEO of Berkshire, little is mentioned on who will one day replace Ajit. How should we think about the future of the Berkshire insurance operations, given how challenging it may be to find another Ajit? And I'd like to hear Ajit's thoughts on this as well.
WarrenWell, I would say we won't find another Ajit, but fortunately he's a good bit younger than I am, so I hope you have to worry a little bit about me. first before we start working by the jeep. We won't find another jeep, but we have an operation that he has created and that at least part of it. There are certain parts of it that are almost impossible for competitors to imitate. And if I was in their shoes, I wouldn't, I wouldn't try it. imitate him. And so we've institutionalized some of our advantages, but Ajit is, well, his presence allowed us to do it, and he did it. But now we've created a structure that didn't exist when he didn't exist when he came in 1986, nothing close to it existed with us or with anybody else. And insurance is the most important business at Berkshire. Marketable securities are important, but they're not in the class exactly as our insurance business. And A jeet, we won't have the same business. We won't have the same business if a jeet. We won't have the same business if Ajit isn't running it, but we'll have a very good business. And again, that's thanks to Ajit. You know, I'd been in the business. When he came in 1986, you know, I'd first went to Geico in 1950. We first bought National Indemnity in 1957, and it was something that we'd made quite a bit of money in the stocks of, of insurance companies. But, uh, uh, uh, uh, we, we'd made quite a bit of money in the stocks of the stocks of insurance companies. But, uh, we needed, we needed energy. And fortunately, he came into the office on a Saturday and he was tired of working at something where he really didn't, it just in challenges his intellect. And I said, well, we got a lot of challenges, so, you know, nobody's perfect. So he's, you know, nobody's perfect. So he's, So he's never seen an insurance policy or owned an insurance stock, but here are the keys. And that's worked out very well.
Ajit JainThank you very much, Warren. Thank you very much, everyone. But the fact of the matter is nobody is irreplaceable. And we have Tim Cook here in the audience, I believe, who has proved that, and
[1:21:13]
Greg Abelhas set an example for a lot of people who follow. That's a great observation. Now, having said that, I will also add that our board is conscious of the succession issue not only at Warren's level, but also at my level. And every year, they have me sitting in front of them answering questions and having me share my ideas with them in terms of what would happen to the operations if I get hit by a truck. We go through the various operations we have. I review with them a short list of people I think ought to be candidates for replacing me. And in addition to that, I go a step further and identify a particular individual as the person I would hand over the keys to, if something would have happened to me. Obviously, that could subject to change, but we take this issue fairly seriously. And I think at the end of the day, as Tim Cook has proved to us, it'll be the biggest non-issue of the day. The earth will still keep revolving around the axis.
QuestionerOkay. what we will we will do we know it's a good answer but we know it isn't it isn't it isn't we won't have another achievement uh station five hi my name is ang and you're nickis and i'm wondering if you had one more day with charlie what would you do with him
Warrenit's kind of interesting because in effect i did have one more day i mean it wasn't a full day or anything but uh But he, uh, we, we always lived in a way where we were happy with what we were doing every day. I mean, Charlie, Charlie liked learning. He liked, as I mentioned the movie, he liked wide variety of things. So he was much broader than I was, but I didn't have any great desire to be as broad as he was. and he didn't have any great desire to be as narrow as uh but we had a lot of fun doing anything and um you know we play golf together we played tennis together we we did everything together and and uh and this you may find kind of interesting we we had as much fun perhaps even more to some extent with things that failed because then we really had to work and work our way out of them and and and And in a sense, there's more, there's more fun having somebody that's your partner in digging your way out of a foxhole than there is just sitting there and watching an idea that you got 10 years ago just continually produce more and more profits. So it, it wasn't, you know, he really, he really fooled me though. He went to 99.9.9 years. If you'd pick two guys, you know, he never, he publicly said he never did a day of exercise, except for it was required when he was in the Army.
[1:25:02]
WarrenSo he never did a day of voluntary exercise. He never thought about what he ate. You know, we started every day and Charlie had, he was interested in more things than I was. But we never had any doubts about the other person, period. And so if I'd had another day with them, we'd probably do them the same thing we were doing the earlier days, but we wouldn't have wanted another we only had one day. And there's a great advantage in not knowing where you're going to, what day you're going to die. And Charlie always said, you know, that just tell me where I'm going to die, so I'll never go there. Well, it's the truth is, you know, he went everywhere with his mind, and therefore he was not only interested in the world at 99, but the world was interested in him. And it's remarkable. You know, they, he, I told him toward, in the last few years, I'd never seen anybody that was peaking, you know, in 99 and, and where the world wanted to come and see him. I mean, they actually wanted to go out to 351 North June Street. And whether it was, well, like that. could name a whole bunch of names, but just I'll start with Elon Musk or but go down the list. And they all wanted to meet Charlie and Charlie was happy to talk with him. And I, I, the only, the only, uh, uh, uh, uh, person I could think of otherwise was the Dalai Lama. I don't know that they had a lot else in common, but, but, but, uh, it was, he, he lived his life. way he wanted to do. And, uh, he got to say when he wanted to say, he, like I, loved having a podium. And, and, again, I can't remember any time that he was mad at me or I was mad at him. It just didn't happen. And, uh, uh, and calling him was fun back when long-distance rates were high and, and the, and we didn't. didn't talk as often as the years, in recent years as we used to be on daily, uh, for long periods. And, and we did keep learning, and we liked learning together. But, uh, you know, I mean, we tended to be a little smarter because when, as the years went by, because we had mistakes and we had other things that, well, we learned something. And, and, and And the fact that he and I were on the same wavelength in that respect meant that, uh, that the world was still a very interesting place to us when he got to be 99 and I got to be 93. So I don't have a perfect answer for you there, but I can tell you the ingredients that would go into, uh, uh, uh, sometimes people would say to me or Charlie at one of these meetings, you
[1:28:55]
Warrenknow, if you'd only have lunch with one person that, uh, uh, I've lived over the last two thousand or so years, you know, who would you want to have it with it? Charlie says, I've already met all of them, you know, because he, he, he read all the books. I mean, he, he, and he eliminated all the trouble of going to restaurants to meet him or anything like that. He just went through a book, and he'd met Ben Franklin, and he, he really, uh, he was remarkable. He, uh, he said he really had no one else to meet because he'd read all their stuff and they liked Ben Franklin's stuff better than he liked mine, but, but, uh, but, uh, but with Ben Franklin, he just had to read about it, it didn't have to, they didn't have to go have lunch with them or anything of the sort. Uh, but it's an interesting question. What you should probably ask yourself is that, who do you feel that, uh, you didn't want to start spending the last day of your life with? And, uh, and then figure out a way to start meeting them or tomorrow and, uh, and, uh, and then figure out a way to start meeting them or tomorrow and uh and meet them as often as you can because why wait a little last day that uh and don't bother with the others okay Becky
Questioneruh this question comes from Carol de Gend and Switzerland in Europe and this is for both Mr. Buffett and Mr. Jane. As political instability in the world is growing with a rise in the number of armed conflicts and trade tension, there is also increasing risk of cyber attacks. What are your views on cyber security insurance asking this question in general for retail, small businesses, and large companies, including critical key infrastructure, such as power plants, harbors, airports, nuclear plants, etc. Do you see a potential for profit making in cyber security insurances and what are the key challenges?
Ajit JainOkay, let me start. Cyber secure, cyber insurance has become a very fast product these days. Over these last few years, it is at least a $10 billion market right now globally. And profitability is also being fairly high. I think profitability is at least 20% of the total premium has ended up as profit in the pockets of the insurance bearers. Now, having said that, we at Berkshire tend to be very, very careful when it comes to taking on cyber insurance liabilities for the part of actually for two reasons one is it's very difficult to know what is the quantum of losses that can be subject to a
[1:31:51]
Ajit Jainsingle occurrence and the aggregation potential of cyber losses especially if some cloud operation comes to a standstill you know that aggregation potential can be huge and not being able to have a worst-case gap on it is what scares us. Secondly, it's also very difficult to have some sense of what we call loss cost, or the cost of good sold could potentially be. It's not just for a single loss, but for losses across over time. They have been fairly well contained out of 100 cents of the dollar of the premium losses over the last four, five years, I think have not been beyond 40 cents on the dollar leaving a decent profit margin. But having said that, there's not enough data to be able to hang your hat on and see what your true loss cost is. So in our insurance operations, I have told the people running the operations, I have discouraged them from writing cyber insurance. To the extent they need to write it so as to satisfy certain client needs, I have told them no matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you're losing money. We can argue about how much money you're losing, but the mindset should be you're not making money on it, you're losing money, and then we should go from there. So it is projected to be a huge business. My guess is at some point it might become a huge business, but it might be associated with huge losses. And our approach is to sort of stay away from it right now until we can have access to some meaningful data and hang our hat on data.
WarrenWell, you've just made, you just heard of why Ajit is invaluable because that when you insure something, you really want to think of what, how much can you lose? And the question, I remember the first time it was, happened, I think, in the 1968, when there were the riots in various cities. Because I think Bob, I think it was the Bobby Kennedy death that set it off for the Martin Luther King of death. I'm not sure which one. But in any event, when you write a policy. You have a limit in that policy, but the question is, is, what is one event? So if somebody is assassinated in some town and that causes losses of thousands of businesses all over the country, if you've written all those thousands of policies, you have one event, or do you have a thousand events? And there's no place where that kind of a dilemma enters into more than cyber. Because if you think about it, if, you know, let's say you're writing $10 million of limit per risk,
[1:35:03]
Warrenand you decide that's fine, and if you lose $10 million, you know, for some event, you can take it. But the problem is if that one event turns out to affect a thousand, you know, you can take it. and policies and somehow they're all linked together in some way. And the courts decide that way. You've written something that in no way we're getting the proper price for and could break the company. And I will tell you that most people want to be in anything that's fashionable when they write insurance and cyber is an easy issue. You can write a lot of it. The agents like it. you know they're getting the commission on every policy they write and you've got to have somebody in charge of things that understands that you may get an aggregation of risk that you never dreamt of and maybe worse than some earthquake happening someplace just because you have a whole bunch of policies with a million dollar limit and i would say that uh human nature is such that that most insurance companies will get very excited and their agents will get very excited and their agents will get very excited and it's very fashionable and it's kind of interesting and uh as charlie would say it may be rat poison okay well that's cheerful view we'll go to station six good morning this question is for warrenfair and great able my name is maria preiness i am a retiree from las vegas nevada i am here today as a member of shispa nevada a group developed Latin leaders for the environment of justices. I am almost here representing Mary Latin families in Nevada who are struggling to pay their utility bills and want access to affordable clean electricity. I want to add today why is NB energy energy and which is owned by the Berkshire Hathaway building, new gas plants instead of investing in solar energy with Nevada one and the sunniest state in the country. Can I expect to see future leadership take dangerous investments in the fossils level? levels more seriously? Thank you. And thank you, Maria.
Greg AbelGreg, you want to? Sure. Thank you. So as we touched on with NV Energy even earlier, there's a lot going on there. And when I think of, there's no question, solar is a great opportunity for NV energy and we'll continue to utilize that as a resource and continue to invest in it in that utility and the other utility we have in Nevada. We're also in a point where when you think of a transition that's going on within the energy sector,
[1:38:38]
Greg Abelwe are transitioning from carbon resources to renewable resources, as was noted. But it will not occur overnight. That transition will take many years. And as we use, be it, it renewable resources such as solar or wind, they are intermittent, and we do try to combine it with batteries. But at this point in time, we cannot transition completely away from the carbon resources. So if I think of Nevada, in the next two years, our last two coal units are, well, actually in the next year, our last two coal units will retire. but we are replacing them with a new gas unit, which is truly needed to make sure that system remains reliable and available to our customers. And that's done in conjunction with the state representatives and our regulatory agencies to make sure we can serve those customers every day and every minute. We have great examples in Iowa where at times 100% of our energy comes from, wind and we're thrilled with that. And I believe we hit that, for example, on Earth Day. Every, we had enough wind that we could meet the demand of that state. But the next day, if the wind's not blowing, we need our gas resources, our gas plants to fill that gap. And really, that's the situation we still have in Nevada. So we'll continue the transition to renewable resources, be it solar in Nevada. in Nevada and wind in other areas combined with batteries. But for the foreseeable future, we do see gas being a very important resource to help maintain reliability and meet our customer needs and to meet it in an affordable way is also an important piece of that. So thank you for your comments.
WarrenYeah, we've got the capital to do whatever makes the most sense in a place like Nevada and the Nebraska, I don't know, each state calls their ruling commission something different, but they probably call it the public service commission or something like that. And they're making the decision as to what they think can and should be done in terms of getting from where a vastly complicated utility business, moves towards something different without messing things up in the meantime. And, you know, having the lights go off. And they, I think they would probably agree with you very much, Maria, that they, what they, or they want to get, but they can't do it tomorrow. You know, because they intermittent problems. And their job is to make sure the lights stay on, and their job is also to move.
[1:41:52]
Warrenalso the move toward better sources. But solar will never be the only source of electricity because that, well, Greg may know more about this, but I'm borrowing some real breakthroughs in storage and that sort of thing.
QuestionerRight. Yeah. Yeah,
Greg Abelgenerally a battery right now to do it in an economical way is a four battery. And when you think of the time without the sun being available, that's a that's a challenge. Now, there's a lot of technology advancements and that's stretching out. And you throw dollars at a lot of things you can accomplish things. But the reality is that's, there's a careful balance of the reliability and also bouncing. As it was noted, the rates do matter and how much customers are paying. So delicate balance. delicate balance of both delivering reliability but doing it in an affordable way.
WarrenYeah. My friend Bill Gates said, who's working on, shortening up that, lengthening the time the battery works on. And so you've got some very smart people working on, but it isn't something that you actually do overnight. And I can understand why people want it done overnight, but it is going to take a lot of money. It's going to take a lot of good ideas and smart people like Bill and Bill and Greg, not me. I don't understand why the damn lights go on when I even turn a switch. But those fellows really do know. And there's plenty of them working on it. And we got plenty of money to implement it. But there are certain things that just take a certain amount of time. My daughter hates it when I use this example. But it's really true that you can't create a baby. in one month by getting nine women pregnant. I mean, you may want a baby, but so there are certain laws of nature that you have to work with. Okay, Becky. This question comes from Rich McCloskey in Dunedin, Florida. He says, Warren and Ajit, would you let us know what you think about the car and property insurance situation in Florida? As a resident, both seem out of control. Since the Florida market seems to be so mismanaged, is this an opportunity for Berkshire?
Ajit JainYeah. The Florida market, both for auto insurance and for homeowners insurance, has had a few tough years. The two problems we face in Florida and all the risk barriers face in Florida. One is the lawyers and the amount of corruption that takes place in the Florida market keeps skyrocketing, making it difficult for us to price the product and make a profit.
[1:44:56]
Ajit JainAnd secondly, the amount of activity in terms of storms, both the frequency and the severity, is also so severe that the losses in Florida tend to make it very difficult for a risk bearer to make money. Having said that, we've fortunately had a very good run at Florida last year. We increased our exposure in Florida as we talked about last year, and fortunately nothing bad happened. So a lot of our premiums. that were in the top line, flow straight to the bottom line. Florida is a large market. Florida is a market that's subsidized by the rest of the country. I don't think those, that's going to stand the test of time. The Florida market, the legislators are trying to improve it. They have passed law that is bringing down the amount of fraud that takes place in Florida. And I hope Florida will be a fairly buoyant insurance market, because at the end of the day, they do believe in the free market more than some of the other states that have an insurance crisis like California and New York. So, yes, Florida has a problem. Prices will go up fairly substantially, but at the end of the day, I think we'll achieve a degree of balance so that the risk bearers can make a decent profit and will be deploying capital out there.
OtherOkay. Station 7, please.
QuestionerHi Warren. My name is Christine Hone Garcia. and I'm from McGora Hills, California. Thank you for being an excellent teacher and imparting your wisdom to us throughout the years. What advice would you like to share today that you believe everyone needs to hear?
WarrenWell, too bad you didn't that? He added that what you, but the rest of us would like to hear. They, uh, no, they, uh, well, I would say that, um, they, well, I would say that, and the, If I had one piece of advice, I would try to a, well, and you're lucky you live in this country because it's just to start with, because you've got opportunities here that wouldn't exist in much of the world. But I would like, I would like, I would like the, really sort of use Charlie's advice of thinking how you like your obituary to read and then, uh, uh, uh, start. selecting the educational pass, the social paths, you know, whatever may fit your particular situation in terms of associating and perhaps certainly in my day it would have been marrying the person that would best help you do that, well, Charlie would say, you were offering some similar benefit to the partner. And, you know, the opportunity in this country is, you know, it's basically limitless.
[1:48:22]
WarrenBut when you think of going back not that many centuries, you know, if you were going to be a shepherd or something like that, you know, a hundred years from now, you're, you're, you know, your grandson was a grand door was going to be a shepherd. I mean, nothing, nothing really happened. And what has happened in the last 200 years. with the combination of the Industrial Revolution, and whether it's science or education or health, you know, you name it. We are so lucky to be born when we were the people in this room. And many of us were lucky enough to be born in the United States as well. That, you know, you've had the, you're entering the best world that's ever existed. and you want to find the people to share it with and the activities to participate in that fit you. And if you get lucky, like Charlie and I did, you find things that interest you young. But if you don't find them right away, you keep looking. And I always tell students that take the job that you, that you don't, I mean, find them right away, you keep looking. I mean, find the job that you would like to have if you didn't need a job. And sometimes you can find that very early, and sometimes you go through various experiences, but don't forget what you're trying, you actually are trying to do. And there's no place to do it like this country, and find the person that you like to share your life with in many cases. And then, you know, sometimes you get lucky and do that early. And sometimes you make mistakes. And, uh, but, uh, I would, I would try to, in a very, very general way, I would try to figure out how you'd want to look back on your life and think about yourself and, and, uh, and start today to go on the path that leads to that goal and expect, expect some, some, uh, difficulties along the way. But if you're, if you're thinking that way, you'll, you'll. you're more likely to get there.
QuestionerBecky?
OtherThis question comes from Axel Mayer Seek in Hamburg, Germany. What has changed for Berkshire's operating CEOs since Greg Abel and Ajit Jane became vice chairman? For example, can and do the operating CEOs still reach out to Warren Buffett directly?
WarrenWell, that's, the answer might surprise you, but they overwhelmingly the operating executives, well, they prefer to talk to Greg or to, to, to, the jeat. And that's understandable because I don't really do much and I don't operate at the same level of efficiency that I would have 30 years ago or 40 years ago.
[1:51:58]
WarrenI don't know the managers as well as I would have when we were smaller. and when I could get more accomplished in the day than I can now. And you've got, when you've got somebody like Greg and the Jeep, you know, why subtle for me? I mean, basically, so it's, it's worked out extremely well. And I almost can't imagine anything working better because Greg and I almost can't imagine anything working better because as Greg in a year accomplishes, I mean, he sees more of them, understands more about their problems, you know, can give them suggestions, he's got incredible amounts of energy, and nobody has more wisdom than the jeet about insurance, and they've got access in insurance to and they've got access in insurance to him. Now, they had it before we stuck some of those titles on in insurance, whereas with Greg, he much expanded things when he became the vice chairman in charge of really everything except insurance. So he is, if you polled our managers that fall under his jurisdiction, that fall under his jurisdiction. which would be a lot of them, they would much prefer unless, like a few, they weren't paying as much attention to their business, and I wouldn't do anything about it, but Greg would. And they still like it when he does it. He can deliver, he can deliver news very well to the people who, you know, there's some, there'll be some, they'll be some people, if you have, if you have 20 children and you're very rich, you'll have some that will be go-getters anyway, and you'll have some that won't. And we are a very, very rich company. And we don't, we haven't had a history, we haven't had a history of being very tough on people that coasted. And we've had some that would do that. And Greg, we'll do something about it, and Charlie and I wouldn't have, not because we didn't know it should be done, but because we were doing so well ourselves and everything. It just wasn't, we didn't, we wouldn't make the effort, we didn't want to change our lives that way, plus we slowed down in various ways physically and everything. So, so I would, I would, I would say that the number of calls I get for managers is essentially, and often close to zero. And Greg is handling those, you know, I don't, I don't know quite how he does it, but, but we've got the right person, I can tell you that. And with the Jeep, he does less physical moving. And the insurance people are more used to working with the Jeep, obviously, over the year. So I wouldn't say that changing the
[1:55:36]
Warrenchanging the title really changed as much there because he was in charge of insurance anyway. And so that's, you know, you can go to a business school and they can give you way better answers than I've just given you. But that's the way we do it at Berkshire.
QuestionerCould she raised his hand?
Ajit JainYeah. If I can add a comment, from my perspective, the transition has worked out very, very well. But I think the credit really goes to how Warren has handled the situation. And what I mean by that is after the transition was announced, and a lot of the operating managers used to be, they were used to calling Warren directly on some issue or the other. When they, after the transition, when they would continue to do so, Warren would very skillfully in his manner handle them such that he would not answer what they were looking for, but at the same time, made them feel good and told them that he sort of enjoyed hearing from them and talking to them. So as a result of which, you know, the transition took place, people got the message, they got the message, and we're very responsive to it, and it's a non-issue as far as today is concerned.
Greg AbelAs you, I'd probably add, yeah, the only thing I would add is we do have an exceptional set of managers across both the non-insurance and insurance. Yes, Warren made it incredibly easy, but so did they. It was a very easy transition because they cared deeply about Berkshire. They cared deeply about the culture, and they very much wanted it to be a success, and we're fortunate to have those managers in insurance and non-insurance. So, thank you.
WarrenYeah, what Greg is talking about is they really wanted more direction in some cases than I gave them. You know, I mean, I just sat there reading the Wall Street Journal or whatever, and then Greg is, I don't, you know, there are, one way or another, there are more than 24 hours in his day, you know, and I just don't know how he covers the ground he does, but he knows more about the people. We've got the same feeling in terms of judging the attractive. of businesses and making capital decisions and that sort of thing, but, but he's willing to work. I mean, I, you know, I, I, you know, I, you know, and I couldn't get as much done anyway, you know, what I could do in, in a couple of hours, you know, may take eight hours now. It, I just don't read as fast and different things said, but, uh, it's working very well, and, and, and, uh, it's working very well. And, and, uh, uh, it's working very well.
[1:58:39]
WarrenThis place, if anything happened to me, it would be working extremely well the next day. I don't get any phone calls. You could actually, we can, we can rig something up, so we have some answering machine that people think I'm still around, you know, or something. You know, or something in terms of it. So, anyway, that's, that's, uh, much, much less than you'd learn in business school, but that's the way we do it at Berkshire.
OtherOkay. Station 8. Greg and Ajik. Thank you for having us. Your teachings have not only made us better investors, but more importantly, better people. Thank you for that. My name is Rajiv Agarwal, and I am from New Jersey. I run an India-focused fund called Doodarshi India Fund. My question is related to India. Indian economy and Indian equities have done quite well in the last five, ten, 20 years. It is the fifth largest economy and will be the third largest in the next few years. My question is, is Berkshire actively looking for opportunities in the Indian equity market and what will allow you to buy anything meaningful there? Thank you.
WarrenYeah, well, that's a very good question. And obviously, India, you know, I'm sure there are loads of opportunities in a place like India. And the question is, do we have any advantage in either insights into those businesses or context that will make possible some transaction that might, when the parties in India, would particularly want us to participate? I would say that that's something that a more energetic management at Berkshire could pursue because we do have the reputation now. Berkshire is known, not like it's known in the United States, but it's known around the world. And, you know, our Japanese experience has been fascinating in that respect. So there may be unexplored or attended to opportunity in that area. I'm not the one to do it. But that may be something that in the future, it might be opportunities. There are opportunities. The question is, does Berkshire have some kind of advantage in actually pursuing those opportunities against, particularly against people that are using other people's money that, where they get paid based on assets managed or something of the sort. I mean, there are plenty of people in the game who are buying and running businesses that do not really have our philosophy. I mean, they, they're going to get rich no matter what happens and their payment may be based on how much they buy rather than what
[2:02:26]
Warrenthey buy. So we'll see how the next management plays the game out at Berkshire. And fortunately, you don't have too long to wait on that generally. I feel fine, but I know a little bit about actuarial tables and I just, well, I would say this, that I shouldn't be taking on any four-year employment contracts like several people are doing in this world at an age where you can't be that sure where you're going to be in four years. Okay, but you're absolutely right about about if you were energetic had some way to become a a buyer of a or a party that people particularly wanted to do business with Japan was great and it could be great and it could be great but Indian Japan aren't the same. I mean, I don't adapt myself terribly well to different cultures. And some people are really good at it. And almost anybody's better than I am, but I stumbled into one or two. But that could happen in, you know, Act 2 of Berkshire Hathaway.
QuestionerBecky.
OtherThis is a question from Raphael de Pino from Spain. Berkshire has grown tremendously thanks to, and among other things, it's architect Mr. Munger and you, its general contractor. We're all tremendously thankful to you for taking us along the way. We are aware that both of you and many others have spent an enormous amount of time ensuring Berkshire's culture provides a solid footing on which to grow the building. You also currently have a very talented bench of what we may label as subcontractors in Mr. Abel, Mr. Jane, Mr. Combs, and Mr. Weschler. I. However, for a long time, you've had the advantage that talented subcontractors have wanted to work with a once-in-a-generation architect and general contractor. How do you envision Berkshire will overcome the loss of said advantage when the contractor bench needs to be renewed again, and what are potential renovation works in this great building that may necessitate a new architect?
WarrenYeah, well, that's a great question to which Charlie and I obviously talked a lot about over time. And, of course, we We will not pursue, to the extent it remains, the sort of entity that it is, will not need to attract people very often. It would be absolutely crazy for anybody, for our board of directors, to ever pick anybody to run this business that thought you should retire at 65. It may be that they should retire the next day. you know when you learn what they're really like managing something or it may turn that you
[2:05:58]
Warrenwant to keep them around until they they really start being affected by old age which hits different people at different times but it hits everybody eventually and so we it's very likely that if it's if the directors and it's very tough because they will be acting against conventional wisdom which which is always difficult and But I think we've got the group on that, and they will not have to make a decision very often. If they pick the right CEO, that's 99% of the job of the directors. And if they, the other 1% is, is, do you have a good method to correct it if you've made a wrong decision? And that's extremely hard to do. in our present system. It's not impossible. But it's just not something that happens. It's too good a job to be a director to try and throw over somebody at particularly if you can use the money from directorships. And you want to be on other boards and everything. We do not have a perfect system in terms of boards or directors at all. And it's, it doesn't operate at all while. I shouldn't say at all, but it doesn't, it doesn't operate, as people may think it generally operates. So we will, you know, we've really got the problem solved for the next 20 years unless something untoward happens. And if something untoward happens, then the directors need to find probably within our own organization. somebody that they've got confidence in to maintain the special advantages we have over another 20 years period. There are various things that are low probabilities, but you still have to think about them. And we are in that position now. Now, if you ask me whether, if something happened to Greg today, everybody says, just don't travel on the same plane. The thing to do is not travel in the same auto. Planes don't go down that often. Autos crash all the time. I've seen all these corporate policies on that, which are kind of crazy when you think about the real risk. But in any event, Greg is going to have to tell the directors about, but if something happened tomorrow, he has to tell the directors about what should be done if anything happens to him. And that's not a lot. That's not an easy thing to do. And I don't have, well, it will be his decision. And then the directors really have to decide whether he's made the right one. But he will make the right one. And what you really have to hope is that you get lucky on how long managers stick around. I mean, yeah.
[2:09:38]
WarrenAnd you might need three in a century, and you might meet six or seven. But the answer is you need a little luck and you need some break in the mortality tables. But we've got an entity that if you really aspire to be a certain kind of manager of a really large entity, there's nothing like it in the world. So we've got something to offer. the person who we want to have, you know, it's sort of like Charlie said about marrying the best person that will have you. Well, we've got something that the right person would want to marry, you know, basically in terms of Berkshire. And if we get the wrong person, then the directors have to do something about it. And that probably won't happen, but it's always a contingency, a possibility, I should say.
QuestionerGreg, having been put on the spot like that, you don't have to name anybody now, but I'm sure the crowd would love it and make news.
Greg AbelWell, the only thing I would add, Warren, is, and it's really how the comment started was around culture. The culture we have at Berkshire and that being our shareholders, being our partners and our managers of our business having that ownership mentality, that's never going to change. and that will attract the right managers at every level. So I think, as Warren said, we have a very special company in Berkshire, but it's that culture that makes it special, and that's not going to change.
QuestionerOkay. Station 9. I'm never sure where 9 is. Hi. I'm Sherman Lam, a Berkshire shareholder, and I work for a family office in Kuala Lump, in Kuala Lumpur, Malaysia. Just really happy to see Warren and the team, and where I come. from your hero, and both you and Charlie have positively transformed mine and many, many other Malaysians and Southeast Asian's lives, not only financially, but also in how we navigate our lives and relationships. Thank you very, very, very much.
WarrenWell, thank you. Thank you. That makes us feel good.
QuestionerThe question is, what have your team's greatest learnings being? on business, capital allocation, stock banking, and portfolio allocation throughout the COVID-19 pandemic period over the last five years. And Warren, appreciate it if you can get your views, as well as your representations on TED and Todd, as well as directly from Greg and Ajit, too, on their respective businesses. Thank you.
WarrenYeah. I don't think I want to give individual appraisals. Yes. And, but what, really what you're doing is in terms of capital allocation, which is, is my job.
[2:13:05]
WarrenI don't go out and sell insurance policies or anything of the sort. And you represent a group of shareholders like we do represent. We are totally clear on our mission. And, you know, it may be that other people. people don't agree with them, but I would say that in the great many places, you know, I just don't agree with their mission. And, you know, I would say that, for example, that anybody that wants to retire at 65 would be disqualified from being CEO of Berkser that they might get, they might get retired the next day if they were the wrong person, but that there's just certain things we don't want. And we're well fixed now, and that the odds are very good, but far from certainty. That takes care of the next too many years. Now the, but you have to provide for the contingency and I, there are several people on the board that know what I would do on that, but it's up to great. But if Greg and I go at the same time, then you'll move into making another decision. And a few people to know my thoughts on that, but they, the job of the directors is then to come up with the right CEO. And the right CEO can't make a terrible business great. Tom Murphy, who was the best, he was the best business manager I've ever. known. And Tom Murphy, you know, he said the real key was buying the right business. And now Murph brought a million other attributes to it after that. But, you know, it, Charlie, you know, said we, you know, what was this? He had a saying on that. But basically, we could have brought in Tom Murphy and told him his job was to run the textile business. And it would have done a little bit better. But it still would have failed. And one of the reasons I stuck with the textile business as long as I did was that I liked Ken Chase so much. And I thought he was a terrific guy. And he was a very good manager. And if he'd been a jerk, you know, we'd acquit the textile business much faster and we'd have been better off. So, so the answer was for him to get in the TV business like Murph had done and had supported, you know. Murph figured that out early and he started with a pathetic operation, which was a VHF in Albany, New York, competing against GE and everything. And he was operating out of a home for retired nuns. And he only painted the side that faced the street. He had one car dashing around. around town and he called a news truck number six but from that he built an incredible
[2:16:54]
Warrencompany and he built it because he was the best manager I've ever met but beyond that it was in a good business and the key will be that it will be to find another Tom Murphy and then hand him a bunch of good businesses and and he or she will know what to do with it now that's not as precise as you get a in most companies but you really can't get more precise than that i mean you can have committees and management consultants and everybody but it wasn't a management consultant that hired tom murphy and and i forget whether he was doing his sales volume was a couple thousand a week at first and then as soon as he had that was his goal or i got to two thousand he says now my goal is three thousand and he kept doing that and And he surpassed all these people like CBS and ABC that all them had the world by the tail and it was just a wonderful lesson in life to get just to be able to view something like that. I learned an awful lot from what he said to me, but I just learned by watching somebody like him operate. I mean it's like watching a great golf or a great analyst player. and you ought to learn something about the kind of swing you're trying to develop or something. So that's not a great answer for you, but it's, it's, so far it's worked, and I think it works, I'm very sure it works with Greg. And it's up to people in the future when, you know, I'm underground or wherever they put me, to really make a decision every 20 years or something like that on average. it's the right decision, but correct that if it turns out to be the wrong decision. That's what a board directors is for. And we've got the people on the board that really understand that responsibility. They take it seriously, but they don't take themselves too seriously. And so therefore they don't want to, they don't necessarily want to do a lot of things just to look busy. And they aren't using us as a stepping stone to get on other boards. But we've got people that really believe in what we're doing and the ones that are going to have to make this place work. And if they got lucky on Greg's mortality, they can do just what we've been. We didn't go to sleep for 20 years or so. And then make another decision. And Berkshire has every tool in the world available what it is now and continue to be what it is now. I mean, we've gotten from from 20 million in that worth to 570 billion. And, you know, there's many things to do, but we can do a few big things better than anybody else can do.
[2:20:40]
WarrenAnd there will be occasional times when we're the only one willing to act. And at those times, we want to be sure that the U.S. government thinks we're an asset to the situation and not a liability or a supplicant. And as the banks were, we'll say in 2008 and 9, they were all tarred with the same brush. But we want to be sure that determines our future, you know, it's not hard. And I think we're in the, I don't think anybody's got a better position to do it than Berkshire.
QuestionerBecky?
OtherThis question is from Johann Halen, who writes, you're sitting on 168 billion of cash, which you told us today is now more than $182 billion. His questions are, one, what is Buffett waiting for? two, why not at least deploy some of it?
WarrenWell, I think that's pretty easy to answer. I don't think anybody sitting at this table has any idea of how to use it effectively, and therefore we don't use it. And we don't use it now at 5.4%, but we wouldn't use it if it was at 1%. Don't tell the Federal Reserve that, but prefer it. But the, we don't, we only swing at pitches we like. And if anybody tried to swing at every pitch or felt that because they hadn't swung at a pitch for two, for the last two pitches, they ought to swing of the third one or something like that. It's just, it's, there are times, obviously, but I would say this, I would not like to be running 10 billion now. 10 million, I think we could, I think Charlie, or I could earn high returns on because I think there's just a few things that happen on a very, very small scale. But, but it, it, it, it, if we had 10 billion, we wouldn't. And I wouldn't basically see many more opportunities than we found. Now, it's true that something like Japan, we could have done, if the company had had a 30 or 40 billion, and we'd have had great returns on equity. But if I saw one of those, now I'd do it for Berkshire. That, you know, it isn't like I'm got a hunger strike or something like that going on. It's just that they, things aren't attractive. And there's, there's certain ways that can change, and we'll see whether they do.
OtherOkay, Station 10.
QuestionerMr. Buffett, this is an incredible meeting that you host every year. My name is Sean Colley. I am a real estate agent with Berkshire Hathaway Home Services in Arizona and California. My mother, Cindy, my brother, and my two sisters, all sell real estate with Berkshire Hathaway Home Services for many years.
[2:24:29]
QuestionerWe love being a part of the Berkshire family, and along with the Berkshire family. the 70,000 other agents that sell real estate for the company. Mr. Buffett, Home Services of America recently sold our class action lawsuit regarding commissions for $250 million last week. This is, this dollar meant about $100 million more than Keller Williams, 166.5 million more than anywhere real estate, which is better homes and gardens in Coldwell Banker. As a realtor with Berkshire Hathaway Home Services and multiple markets and a shareholder, who's been coming to this meeting for 15 straight years, That's one of the reasons I got involved with real estate is because of this meeting. What are your thoughts on buying and selling a home in light of this recent settlement? And I'd maybe ask the note to Greg and Ajit, too. Would you consider a Berkshire agent when buying your next home?
WarrenWell, I don't buy them that often, as some people have noted. But I certainly would consider them, but I'd say the probability of that happening is low. And I really appreciate that. the fact you've joined up with us. But I'm going to, in terms of the settlement, I mean, Craig kept me informed, but I turned it over 100% to him. So, Craig, you want to talk about it?
OtherSure. So thank you for, you and your family for being an agent and working for our company, Berkshire Outtheway Home Services. I think there's a few questions in there. There's no question the industry will go through some transitions because of that settlement. Ours and every other major player in the industry settled. The National Association of Realtors settled for more than 400 million. So effectively everybody was swept up in that settlement. And it did set the grounds for the both home services and for the industry to move forward. move forward. There's a lot of changes that happen in or are being proposed associated with that settlement. But the one thing that I think you hopefully would absolutely agree with, the real estate agent is still an important part of these transactions. It's the one time in our lives where we make these massive investments. And having that counseling guidance is critical. And that's really what our business and those other businesses rely on how the commission structures change and how it's negotiated, which is really what the settlement was. It was no longer that a buyer would automatically pay a commission agent to the selling agent that now has to be negotiated.
[2:27:23]
Greg AbelThat'll impact things, but I think the realtors will continue to be a very important part of that. And I think home services and industry will remain very relevant and then the only thing I would share with our shareholders on a broader basis is that obligation resides with home services and can be met by home services and that was an important condition because they were also pursuing Berkshire and Berkshire Hathaway Energy and we said you can pursue us separately but that settlement will reside with home services and be an obligation of that and they decided the the ultimate settlement and and we'll go forward from there. So weren't any other comments?
WarrenWell, yeah, I've sold two houses in the last, well, the last 93 fraction years. And I've bought one that I still have, but I obviously bought the other to it. And I have about the other to it. And I have not negotiated down the commission even though the last one sold for $7 million or something like that. People do negotiate down commissions to some extent. But I can tell you, I've looked at the figures and I did. I think the system has really worked out very well. When I got out of school, they had what they called FISBOL, you know, with for sale by owner. And so I've I've been involved to some degree in watching the whole system operate. And I know what our average agent makes. I know, you know, how long they work on things sometimes that don't materialize. I mean, it, it, I don't think, I don't think, we'll end up with a better system. And but, you know, it's up to, it's up to Greg and the people at home services are we work it through here, but I like our agency group. And I, we've got a very large number of real estate agents. And I've encouraged the expansion we've done in the real estate agency, you know, it was just one of real estate agents. And we've encouraged the expansion we've done in the real estate brokerage business. You know, it was just one or two operations when we bought Berkshire Hathaway Energy. And we've really built a up quite a company and I think it's a very fundamental business. You need help. 90% of the people need help, you know, in buying them, buying a home or selling one. And I've watched it operate all my life and been involved with lots of people who have been in the business. But there was a decision in court and I told, I told Greg to handle it whatever they were able. seemed best to him. And I'm quite, I'm perfectly happy with the way we've handled.
[2:30:33]
WarrenI think I'm surprised at the decision, but, but we get surprised in decisions in the insurance business lots of times. I mean, just think of the various things we've faced. And, you know, when 9-11 came along, you know, we never thought, something like that could happen. But it happened and then we didn't know what was one event or more events. I mean, if you, if they closed down the New York Stock Exchange and a bunch of brokers, well, every, all kinds of people lose their jobs and lose their income for a while. Is that one event or multiple events? Well, there's all kinds of things come up in business and we just, we, we, we play the, play the ball war, but we find it. And I was surprised by the decision, was it in Missouri? Missouri, yes. Yeah, but we've gotten surprised by some other decisions and we'll keep doing sensible things as we move forward. Greg, do you want to?
Greg AbelYeah. No, I think the only thing I would add back maybe to how the model has changed, and he asked, one, yes, we'll always, I can't speak for Jeep, but we'll always use home services agents, but it's interesting. I have bought a home abroad. abroad because I lived over in the United Kingdom in Newcastle running our utility over there. And it is a completely different experience to buy a home outside of the U.S. Our agents take great responsibility for the whole transaction in the U.S. They put, as Warren said, time and capital at risk to ensure the transaction closes. And when you do close it, they make sure what you bought, you actually, what you thought you were purchasing, you end up with. And that's not the way it is always around the world. And there are more affordable models, but it's the old saying, you get what you pay for. So I think our real estate agents still provide incredible value within our business. And as Warren touched on it, it'll survive. The form may be a little bit different, but there's no question. It'll continue to thrive.
WarrenYeah. Yeah, we still will want to buy real estate brokerages at the right price. And I hope we're bigger in the industry 10 years from now and 20 years from now than we are currently. And I did sell a house for $7 million. I did not negotiate the 6% down, and I feel I got my money's worth and then some. And I'm cheap by nature, so it isn't I'm careless about it. I just, I got my money's worth. And so let's move on to Becky. This question is for Warren Energy.
[2:33:32]
QuestionerIt's from Jeff Oyster. As a Berkshire and Tesla shareholder, I would like to hear your thoughts on the potential financial effects to GEICO, assuming Elon Musk delivers on his fully autonomous driving goal. On Tesla's most recent earnings call, Elon said, if you've got at scale a statistically significant amount of data that shows conclusively that the autonomous car has, let's say, has half the accident rate of a human driven car, I think that's difficult to ignore. Assuming Elon succeeds in reducing accidents by 50% versus human drivers, wouldn't auto insurance rates fall to reflect the reduced underwriting risk, thereby adversely impacting Geico's revenues and float and perhaps margins, too?
WarrenWell, yeah, if it, if it, well, let's just take the extreme example. Let's say there are only going to be three accidents in the United States next year. for some crazy reason that anything that reduces accidents is going to reduce reduce costs, but that's been harder to do than people have done before. But obviously, if it really happens, the figures will show it, and our data will show it, and the prices will come down. I wouldn't, there have been a lot of people talk about doing that in the past. I mean, General Motors used to be very big in the insurance business. And when Uber first started, they used some firm, which now is, I think, EGEDA will confirm. They're close to bankruptcy now, aren't they, because of taking things on at the wrong prices? Is that true?
Ajit JainYep, yep.
WarrenYeah. Yeah, yeah. Insurance always looks easier than it is, and it's so much fun because you get the money at the start, you know, and then you find out whether you've done something stupid later on. But, but, you know, it's, it's a very tempting business when somebody hands you money and you hand them a little piece of paper. But really knowing whether you're, I mean, if accidents get reduced 50%, it's going to be good for society and it's going to be bad for insurance companies volume, but, but, you know, good for society is what we're looking for. So far, you might find kind of interesting, I mean, the number of people killed per 100 million passenger miles driven. I think it actually, when I was young, it was like 15, but even post-World War II. It only fell to like seven or thereabouts, and Ralph Nader probably is. has done more for the American consumer than just about anybody in history because at seven
[2:36:34]
Otheror six has now come down to under two, and I don't think it would have come down that way without him. There have been some kind of fluke figures of what people did during the pandemic, which are quite interesting because they didn't drive immediately they didn't drive as many miles, but they drove more dangerously didn't they? Is that right, the Jean? Yeah.
WarrenSo the point I want to make in terms of Tesla and the fact that they feel that because of their technology, the number of accidents do come down, and that is certainly provable. But I think what needs to be factored in as well is the big cost of each one of these accidents has skyrocketed. So if you multiply the number of accidents times, the cost of each accident I'm not sure that total number has come down as much as Tesla would like us to believe. Tesla has been toying with the idea of writing insurance directly or indirectly, and so far it hasn't really sort of been much of a success. Time will tell, but I think, you know, automation just shifts a lot of the expense from the operator to the equipment provider. Okay, we're getting close to noon. we're going to break for lunch. I just want to tell everybody that I would appreciate it very much if they will get in their seats and be ready at one o'clock when we reconvene because we will have another very short little movie and we'll just have a little explanation of something that I think will be of interest, certainly of interest to me, but it, uh, so I would like to, we will break promptly at 12 and I would like everybody to really make an attempt to be in their seat and quiet at one o'clock. And if you can't do that, if you'll wait a few minutes and watch in the halls and all that. But we will, we do not want to be seating people and have people milling here at one o'clock. And just like a play in New York. or something. It'll take a few minutes and only a few minutes to cover what we're going to it at 1 o'clock. But we don't want to be seating people during that period. But now let's, we'll go on till 12 o'clock and then we'll have a break until 1 o'clock and we will go to station 11.
QuestionerMy name is Humphrey Lou and I am from Charlottesville, Virginia. I asked the question last year and wish to pose it again. It can be considered a follow-up. There is something to be said for traditions. It is the same question, but it is a changing and different world we are in.
[2:39:52]
QuestionerLooking at global trends, it increasingly does seem that zero-emission vehicles may have finally reached the cusp of massive adoption. Do you see any opportunities in this space, either in specific vehicle, manufacturers or in related technologies. As an addendum, I will note that Berkshire has very relevant interests in energy, pilot flying J and BYD. Thank you.
WarrenYeah, well, we will, I hope you're right. And massive adoption has been sort of a moving target so far, but I hope we get there, but Berkshire would not be I don't think that we bring any special talent to that field. You've got vehicle manufacturers, and I would certainly not know how to pick the winners in an industry like that, but I'll be delighted if there are some winners. But don't count on us for seeing who the winners will be, and don't count on us for predicting when something will happen. It obviously has been a moving target so far, and it is an incredible problem that society faces. And it may be that governments are not very good at solving it for a while. It's all of climate change is got a terrible change is got a terrible problem. in the fact that, you know, in effect that the United States particularly has been the one that caused the problem the most, and then we're asking poor societies to say, well, you've got to change the way you live because we lived the way we did. And, you know, that really hasn't been settled yet. It, you know, it's a fascinating problem to me, but I don't have any anything to add to how you really slice through the world. When I was born in 1930, there were just essentially two billion people in the world, a population statistic. Now there's 8 billion. Now if you'd asked anybody in 1930, if you take the 50 smartest people in the world and you said, what's the optimum population for the world? When you're 93 years old, they would have not said 8 billion. There wouldn't be anybody who would have been close to it. But we did it. Now, we're reaping some of the consequences of having done that. And we got the benefits in the United States. I'm exaggerating here, to some extent, but the developed world basically got it. And then we're telling a whole bunch of other people that we want them to change the way they lived because of the way they lived, we lived, we lived. So we will see what happened. So we will see what happens with it, but that's a problem that is very, very, very hard to solve
[2:43:31]
Warrenthat it's solved among a couple hundred countries. And I really don't have anything to be, to contribute on it. And now I've got instructions from the thing, the monitor in front of me. I would like to introduce one person here. that has, you all know, because she's been her so many times. But my friend Carol Loomis, who is now, well, she's going to be 95 on June 25th. You can send President Caravar office. And Carol has edited the Berkshire Annual Report. report. Since 1970, there we are. And there are two points I'd like to mention. Every year, I give Carol, a little item for a bracelet that is a replica of the front page of the report that year, and there are different colors and all of that sort of thing. And so she now has, what, since 1977, what, 47 of what, 47 of of them and she, I think she's put 10 on each one, but I've always wondered, you know, if she put them all on one, one arm, whether one arm would now be four or five inches longer than the other, but I'm sure she's, she foresaw that, but I want to reveal one other, I want to reveal one other, well, I want to ask one more question while Carol was here because I'm sure almost everybody in this audience grew up like I did, knowing that Ty Cobb's lifetime batting average was 367. I mean, he's the leader among everyone, and it may be that that record is never broken, and Ty Cobb, 367's immortal. But Carol has a distinction that probably most of you don't know. I don't know, but she dated a Thai cop. And Carol was officed at 6th Avenue and 50th Street in the time life building. And NBC was right across the street in Rockefeller Center. And the quiz shows became the head of TV. And Carol being the kind of person she is, walked across the street at lunchtime and went on the quiz show of the late 1950s. And they gave her the industry, or they gave her the questions regarding baseball. And Carol answered them all correctly. Of course, she was encyclopedic on all kinds of things. but so she knew all the answers. And she proceeded in, she was single with the time, and she proceeded back to her office at Fortune, and at some point she got a phone call from, it sounded like a fairly young man in Georgia, and he said, my uncle is Ty Cobb, and he would like to take you to lunch at 21. And so Carol went to lunch with Ty Cobb. with Ty Cobb at 21, and I think he subsequently had one more lunch. And then she decided to call it off.
[2:48:11]
WarrenBut those of you who followed baseball, may have noticed that in the 1990s, they found that the statistics had been faulty when Ty Cobb played, and that he actually only batted 366, that there were a couple of bad bets. a couple of bad bats, they didn't count. So the real question I want to know from Carol, and I think she should maybe tell us, is that would she have dated Ty Cobb? If she not, I mean, I know she wouldn't have, I know she wouldn't have dated Ty Cobb if his batting average would have been 300 or something like that. But where was the cutoff point at which she would have told Ty Cobb to stay in Atlanta and forget about coming up to New York? And if Carol would, If anybody has a microphone, Carol wouldn't care to express herself on that question. It's the unanswered question that I've had in all inquiring minds have had, and only she knows the answer. And she's with her daughter. She married a wonderful guy, John Lewis, and Barbara's with her. I'm sure Barbara's been always wanting to ask this question, but I've... It's kind of tough when you're in the family, but I am... I am sort of an odd, anxious guy old in front of a lot of people. Carol? Zero. Or are we going to have Barbara's guests? Either one will. She would have been happy to go either way, right? Yeah, right. Thank you. Carol. Carol is the best business writer. She comes up in town of Colcampus or, you know, I don't know, about what he says, around a thousand probably. She never took an accounting course. accounting course, and she ended up becoming the best business writer in the United States. And we, you know, she didn't want to be an editor, actually. I mean, she could have done other things at fortune, but she's just plain, like, writing business stories. And like I say, nobody came close to her, and she started from scratch. But in 1977... In 1977, I asked her to edit my report, and she turned out to be just, as the owner-ed editor, she was a writer. And it, all the way through this year, including this year, Carol has edited the Urshire report. And to the extent of anybody enjoys reading them, let's give a hand to Carol. Okay. told to show a video right before you go to lunch because it's only 30-some seconds, and then we'll talk a little bit more about it when we come. So if we'll dim the lights, we will have, we will have, we're showing what a Berkshire shareholder did when she sold us a billion dollars worth of stock the other day, and you'll meet somebody
[2:51:57]
Warrenthat I is the hope is. I know she is the prototype. She may have more zeros, but she's the prototype of a good many Berkshire-Hathaway shareholders. It'll be the first thing we talk about when we come back. But some of you may have noticed, whatever it was, a few weeks back, when Ruth Goddessman gave $1 billion to Albert Einstein to take care of all of it. And Ruth doesn't like a lot of attention drawn to herself. But here's how they felt at Albert Einstein when they announced that Ruth Goddismund had just made a decision to take care of all of the costs of education at Albert Einstein, and it's going to be in perpetuity. So let's just show the film on the front. I'm happy to share with you that starting in August this year, the Albert Einstein, the Albert Einstein, and College of Medicine will be tuition-free. And that's why Charlie and I have had such fun running Berkshire. She transferred a billion dollars to other people. She happened to do with Berkshire stock. And, you know, they offered the name, rename the school after and everything like that. But she said, Albert Einstein's, that's a pretty good name to start with. So, yeah, yeah. There's no ego. involved in it, no, nothing. She just decided that she'd rather have 100 plus, closer to 150 eventually, of students be able to start out debt-free and proceed in life. And she did it happily, and she did it without somebody asking, you know, name it, you know, put my name on four, all four sides in the honor. lights and I salute her. So let's all have lunch and we'll come back and talk a little bit more about that. Thanks.