[0:02]
WarrenOkay, we're ready to go, and I'm going to lead off by actually recommending a movie. I know that's why you came. I would recommend to all of you that you go to Amazon Prime. I've got no financial interest in this, but you go to Amazon Prime and click on a a documentary called Becoming Catherine Graham. It's an incredible story from 50 or so years ago. And to some extent, I had the good luck to be kind of a viewer of some American history that I think is fascinating. So if you feel that that I... I misled you, you can write me a note, and I promise to report how many readers didn't agree with it, but I got to becoming Catherine Graham, and you'll see a story of a remarkable story of American history, and there are a good many portions in there that I, who lived through that period, didn't know about at the time. And I think, I don't think really every American citizen ought to watch it. So with that, but I hope you all spend some more money out there in our friendly shops, and we will go to Station 9.
QuestionerHi, Warren. My name is Robert, and I'm a shareholder from Toronto, Canada. So, Warren, three years ago, Charlie Ray, Rose asks you a question to the effect of what you wanted to be remembered for. And your reply was, he was a teacher. So in that spirit, Greg, I'm curious to hear maybe a story of where you learn something very, you know, profound from Warren. I'm sure you learn many things, but if there's a story that kind of comes up in your mind, we'd love to hear it. And vice versa, if we have the time, Warren, what's something that you maybe learned from Greg? Thank you.
WarrenYeah, I will turn this over to Greg in just one second, but now the main thing I'd like to be known for is old age.
Greg AbelWell, Ward is obviously a remarkable teacher, and I benefit from that every day. And as I've already touched on for many years, I'm fortunate that if I had to be remembered as something right now, obviously, I want to be remembered as a great father, but equally a coach. And that goes to family, friends, and just being involved with the kids I coach in hockey or baseball or whatever it may be. I think we've got a great opportunity to get back to them at a very young age. So obviously those would be. how I'd want to be remembered, and hopefully that'll be many, many years from now. But I love thinking of Warren truly as a teacher and he's in every day get the opportunity to continue to learn.
[4:08]
Greg AbelWarren and I, his dialogue is strong every week, and we're always talking around opportunities in Berkshire or things that are going on globally or in the U.S. and each one's a truly a learning moment. I'll maybe go back to the very first meeting with Warren, and because it still stands out in my mind, obviously, it was an incredible opportunity. Warren was buying or acquiring Min American Energy Holdings Company at that time or thinking about it, and I had the opportunity with my partners to go over there. They're on a Saturday morning and we're discussing the business, and Warren had the financial statements in front of them. And like I came by, I was sort of expecting a few questions on how the business was performing or a variety of things, but Warren locked in immediately to what was on the balance sheet, and that fact, we had some derivative contracts, the weapons of master's. construction. And associated with the utility business, we do have them because they use them to match certain positions and they're never matched perfectly, but you do have them and were required in the regulated business. But I just remember Warren going to it immediately and asking the composition of it and what was the underlying risk in it and wanting to thoroughly understand it. It wasn't that big of a position, but it was absolutely one of the risks he was concerned about as he was acquiring Min American and obviously in light of Enron and everything that had gone on it was a very pertinent question and then the follow-up to that was then there's an energy crisis in the U.S. around electricity and natural gas and a variety of folks who were making significant sums of money. This is a year, 18 months later. And Warren's follow-up question, a couple years later to me, was, and I knew it was more just checking or testing, so how much money are we making during this energy crisis? Are we making a lot? Do, you know, do we, are the speculative positions in place, and are we making it? The answer was, we're really not making any more today than we would have been six months ago, because all those derivatives were truly to support our budget. business and weren't speculative. So just that focus on understanding the business of what he was acquiring, understanding the risks around it still stand out in my mind. Warren?
WarrenYeah, it's, that's one thing we've really never talked about here, but I spend more
[7:10]
Warrentime looking at balance sheets than I do income statements. And Wall Street really doesn't pay much attention to balance sheets, but I like to look at balance sheets over an eight or 10-year period before I even look at the income account, because there are certain things that's harder to hide or play games with on the balance sheet than you can with the income statement. And, I mean, neither one gives you the total answer on anything, but you still ought to understand what the figures are saying and what they don't say and what they don't say and what they can't say. and what the management would like them to say that the auditors wouldn't like them to say. And I mean, there's just a lot to be learned. And you do learn more, you learn more from balance sheets, in my view, than most people give them credit for. In terms of really, I'm not worried about being remembered about that. People don't remember, well, they don't remember enough about Catherine Graham, for example, in terms of this story that shaped America in many ways. Certainly, they had just all kinds of impact. And I think, I mean, history is so fascinating. And Charlie was probably the best person you could imagine in what he learned. Charlie was never satisfied with superficial things about any subject. He really wanted to understand it. And he always would tell me that, you know, don't take a position on anything until you can describe the arguments against it better than the person who is arguing with you, that you should be able to argue their case better than they can. He was a remarkable teacher. And, uh, he was, he was a remarkable teacher. And, uh, But so were those other fellows I mentioned. I've had a, and of course, my dad was an incredible teacher. So you make the most of the people you meet that are going to make you a better person and probably forget about the rest to quite an extent. Okay, let's move on to number, well, Becky, here next.
QuestionerThis question comes from David Rubin, a shareholder from Scott. It's a question for Greg. We've heard over the decades and are familiar with Warren and Charlie's investment thesis and their circle of competence. During the first 10 years after taking over a CEO, Greg will be tasked with allocating more capital during that time than Berkshire has had to allocate in its history. Given this, I'd like to hear from Greg about his views on capital allocation, particularly into new businesses.
Greg AbelSure. So, so
[10:40]
Greg AbelUm, this bar is not too high. No, it's, uh, but very fortunate when you think of Berkshire, again, and we've, we've talked about this, where we start from, and I'll clearly touch on the, uh, investment, the related investment allocation, but we start from a great place where we've got a, a great culture within the business. We have values that we, as a management team and, and, and really, as defined by Warren and those, Charlie and everybody associated with the business, we've got great values that really set Berkshire up well for the future. And obviously, as we deploy capital and allocate capital, it's critical to Berkshire as we go forward, and equally it's around managing risk. But when I think of our, our values, there are a couple that are absolutely critical. One, we'll maintain the reputation of Berkshire and that of our company. And I view that in investing or how we operate things across each of our businesses. That will always be a priority in something that will ensure is in the forefront of our minds. I think equally as we then look at our various, our back to Warren's bound sheet comment, we will have a fortress of a bound sheet. And we want to, I thought Sue Decker, our lead director said it well yesterday, we've got a, we've got a significant set of cash right now, but it's an enormous asset to have that. And that will come. And that will continue to be a philosophy. Yes, when we can deploy it, we'll deploy it well, and I'll come to that. But equally, we do recognize it as a strategic asset. And it allows us to weather the difficult times and not be dependent on anybody. So again, that will be an investment philosophy. We will remain Berkshire and we will never be dependent on a bank or some other party for Berkshire to be successful. I would thank you I would then move to to to touch on allocation of capital be absolutely critical but with that comes management of risk and understanding risk and that falls upon all our managers insurance, not insurance, but we'll bring that across Berkshire. And then the other value I would touch on, but that really relates to where I'm going, is ultimately we have a great set of operating companies that do produce significant cash flows, be it in the insurance companies creating float or various non-insurance companies producing significant cash flows on an annual basis. We intend to continue to ensure that's
[14:09]
Greg Abelstrength of Berkshire as we go forward. It's absolutely critical to our to our long-term success. Now, with those cash flows and with the float, and then equally as touched on, we have significant resources already on our balance sheet. We'll really continue to move forward with a very similar philosophy. It's an identical philosophy to what we've had currently and for the past 60 years. We'll start by looking at those opportunities within our business and by that I mean within our insurance non-insurance businesses are they are they properly capitalized and have the opportunity to manage their business and that that will continue to exist they'll operate in an autonomous way but in the end Berkshire still manages the capital that will go into that those businesses or what potentially will come out of those businesses Equally, the next opportunity is to acquire businesses in their totality, or 100%. And there are great times when we can do that. Warren touched on. We had one that was interesting in the last quarter, the $10 billion acquisition. But again, the value relative to the risk have to be right. And if it's right, we want to own it. If it's not the time, there'll be another time to own assets like that. And then there's the opportunity to own pieces of companies through the equity. But as Warren's always highlighted, and again, this will be our approach to how we think around those companies. We own a piece of a company. We own a piece of that cash flow. We own a piece of their balance sheet. It's not just a share certificate. And as we approach that, we approach that and really we'll approach it with the thought that we're going to own this company for the long term. It's, again, understanding what, be it the 100% company or the 1% company, do we thoroughly understand, and thoroughly, do we have a strong view of what those economic prospects of those companies will look like? And Warren said it earlier, five years from now, 10 years from now, 20 years from now. If we don't have a view of a view of of that, we won't be investing, be it 100% or 2% of a company through equities. We have to thoroughly understand what those prospects look like. And associated with understanding those prospects, we need to understand the underlying risk of the businesses. And it's really the investment philosophy and how Warren and the team of allocated capital, for the past 60 years, you know, really, it will not change, and it's the approach we'll take as we go forward.
[17:22]
WarrenYeah, and I don't want to go on too long on this, but, but sorry, I covered. No, no, but this is important because the, you know, it's very obvious that the country, for example, needs. uh, incredible improvement, rethinking, redirection even, to some extent, uh, in the grid. I mean, we, we've outgrown would be the model that America should have. And in a sense, it's a problem, something akin to the interstate highway system where you needed the power of the government really to get things done. because it doesn't work so well when you get 48 or 50 jurisdictions that each has their own way of thinking about things. And, of course, in World War II, we called in people the hour and hour, and we knew we had to turn out ships like crazy, and we knew that we had to convert Ford Motor from being a car manufacturer into an aircraft manufacturer in a matter of days, not weeks, not months. So you need that there are certain really major investment situations where we have capital like nobody else has in the private system. We have particular know-how in the whole generation and transmission arena. The country is going to need it. But we have to figure out a way, make sense from the standpoint of the government, it stands from the standpoint of the public and from the standpoint of Berkshire. And we haven't figured that out yet. I don't know whether Greg wants to even explain a few of the major problems. But that is a clear and present use of hundreds of billions of dollars. And, you know, you have people that set up funds and say, you know, they're getting paid for just a sense. something. It's it's not the way to handle it. The way to handle it is to have some kind of a government, private industry cooperation, similar to what you do in a war. And I don't think when they were doing the highway system, I don't think that the government set up his own guys that were going to pour a whole cement or anything like that. But they, you needed a cooperation. And, and we're at that. point, I think, in, in terms of energy, but I don't think, I don't think we've made any progress particularly, though.
QuestionerTell us more about that.
Greg AbelYeah. And I think these are very unique in that, not unique in that it's sort of reflective over where we're at. There will be very significant investment opportunities across a variety of industries. As Warren touched on in the electric, in the electric industry or the energy space,
[20:58]
Greg Abelobviously know that well with our existing business. And the capital required to meet the long-term needs of what's currently projected as demand is enormous. And we, as Berkshire, will be in a good position to help address those needs. But the model around it and the risks that need to be addressed to deploy that type of capital will be, we'll be be different than they are today, Warren's point. Yeah, the muscle of the federal government will be needed, but the test of whether you can have 48 or 50, depending on the nature of things, jurisdictions that are cooperating to do something that has opposition, we'll have opposition in every single state. If they'd taken a voter during World War II, or they'd taken a vote on the, you know, the, you know, the, you know, the interstate highway system, it had, it would have been slowed down to an incredible degree. So the question is how to use these strengths that this country has to actually turn it in to what it should be capable of while self-preserving, you know, a republic with 48 and connected in a couple unconnected states. And it is, it'll be interesting to see what happens. But we do have capital and we actually have some knowledge that very few places have. I mean, we know what the game's about. But putting together that energy with knowledge and with capital and everything is just not easy. And it should be something that we're capable of in the country. But the country was not designed for having in a certain way it was not designed for having 48 different jurisdictions that could mess up anything that you were attempting to do. And during wartime, it's one thing to get agreement. But during peace time, it's something, it's a different problem. That's going to be one for the next generation. But I'm just, it's important.
OtherOkay. Station 10. Good morning, Mr. Buffett and Mr. Abel. I'm Dorcas Tang. I'm 14 years old. My father, Moortang, M-G-R-T-C-E-O, brought me here for two consecutive years. And I promise I will come back every year since I queue up at two in the morning, every meeting you hold. My dad owned BRKA shares, and he said, I need to work hard to earn my piece of BRKB. We are both from China, Hong Kong, and I would like to ask, what's the essential element for a global teenager like me if we want to be part of Berkshire like Mr. Greg Apple? Like what piece of knowledge I should learn? So you to hire me in the future.
[24:40]
WarrenWell, if you're talking about the future, you better talk to Greg, so we'll let Greg answer that.
QuestionerMy final words, finally Mr. Buffett. I learned a lot from this meeting, and of course I will come here every year. And I wish you can attend as many as possible as you and Mr. Charlie Munger, the most respectful, the most respectful. respectful people have inspired me and my father a lot. I wish you happy and healthy, and maybe one day in the future, we can make the world more prosperous altogether, like you said. Thank you.
OtherOkay, thank you.
Greg AbelYes, well, I think your dad said it best. He highlighted that to become part of Berkshire, to own, to own some Berkshire, to own some Berkshire. your shares, you're going to have to work hard. And I think hard work takes all of us a long ways in life. And I would never diminish that, you know, there's a lot of things that matter in life, but if you start with a great work ethic and have that attitude that you want to contribute, you're going to go a long ways in life. And that'll, and you'll find great enjoyment because, as Warren said, you'll then, if you work hard, you're going to find the things you'll in life and it'll lead to that. And we truly look forward to the day you're part of Berkshire. Thank you.
WarrenYeah. Keep a lot of curiosity and read a lot, as Charlie would say.
OtherOkay, Becky.
QuestionerThis question comes from Matthew Teesak in Layton, Utah. He said, please discuss your strategy on how to protect our company from future liabilities due to wildfires blamed on our electric utility companies at West?
Greg AbelWell, that's a very good question. And we've made some mistakes in the past. When we bought Pacific Corp in 2000, what, five? Yes. Warren, Scott and David Salko and myself, three guys who, capitalists at heart, we're dealing with our own money, but we made a mistake by not carving. bringing up into the seven states that we were buying. And it came with an aggregation where it wasn't state by state. And we kept the same structure. And that was a big mistake. A part of the country is going to need electricity. And there are going to be places where public electric or privately held electric utilities would be very fully fully to operate and how it gets resolved in a democracy, we will find out. But those are the facts as they stand now, I would say, Greg.
Greg AbelYeah. The reality, the risk around the wildfires, i.e., that do the wildfires occur, they're not going away. And we know that, and the risk probably
[28:17]
Greg Abelgoes up each year. So, but what we can do to reduce the risk of it impacting our system and our underlying assets and the, unfortunately, the liabilities that come with such events, we can change that and manage that. We can't eliminate the risk, but we can reduce it. And that's where we've got our teams in the, in the West, but we really are approaching it across all our energy infrastructure because the railways, the wildfires have now occurred in Texas. They've had a variety of variety of them throughout the U.S. and we're all very focused on how we manage that risk. How we manage it is we start by addressing the actual assets, how we're maintaining them, and where we invest them, invest into them. So we try to make sure that they're either not causing the fire or potentially even hardening the system as to what can they withstand. So it's very much, we start with the operational focus. We then take it even further, and this is something Warren and I've discussed many times, is that the utilities started to recognize when we have these unusual weather events and Warren touched on what's been happening in Nebraska with storms, but they're equally occurring or significant events occurring out west. But when we have those, we've gotten very, very good at saying, okay, we have to manage the system different will potentially de-energize because there's likely to be an event. But the one thing we hadn't tackled, and this is very relevant to the one significant event we had back in 2020 in Pacific Corp, is we didn't de-energize the system as the fire was approaching. Because our employees and the whole management team have been all their lives trained to keep the lights on. And the last thing they want to do is turn those lights off and have a system de-energized. And after those events and as we really looked at how we're going to move forward in managing the assets and reducing that risk, we have clearly recognized as a team that we have to de-energize those assets. So now as we get fires encroaching at a certain number of miles, we de-energize because we do not want to contribute to the fire, or obviously harm any of our consumers or contribute, unfortunately, if there's a death. And that's really where we had to take our team, that we're managing a different risk now. It's not around keeping the lights on, it's around protecting the general public and ensuring
[31:06]
Greg Abelthe fire does not spread further. So we've gone as far as that, and I would, I'll stand corrected on this one, but we're probably the one utility or across our utilities that does that today. And we strongly believe that.
QuestionerBecky?
QuestionerCan I just follow up on that? Yeah. Doesn't that open you up to other risk? If you shut down your system, a hospital gets shut down, somebody dies?
Greg AbelWe've, you know, fortunately that's something that we do deal with a lot because we have power outages that occur by accident. So when we look at critical infrastructure, because it's an excellent point, and we're constantly reevaluating it, and we do receive a lot of feedback from our customer groups as to how do we manage that? But that is something we deal with on a more routine basis than we'd ever like. The lights go out. We have to make sure the hospitals stay on. Emergency units can respond and all that. But there is risks there. So then we spend a lot more time educating the consumers in our consumer groups, our customers, okay, this is what will happen. We need to understand your unusual situations. And how can we best tackle that again, so we just don't take on another liability. another liability. So there's a lot around de-energization. And then just to take it to the last step, and Warren's touched on that, just in general, on energy policy, we have to work with our states and our regulators to ensure this was never a risk we took on or envisioned when we were investing in utilities, nor would any of the investors who've invested in other energy companies. You were, you earn a very set return for taking on a very set defined risks associated with that asset. And this has gone well beyond that. We don't earn the type of returns, nor can you earn a large enough return to take on these risks. So it's not just solving the return side. We really have to solve the risk side, which means we work with our regulators. We're working with our state legislators to get to the right answer. And that's really just really just, that'll be an ongoing process. There are not silver bullets out there, but every day our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away. But there's some problems, yeah. There's some problems that can't be solved. And we shouldn't be in the business of taking your money, investors' money, and tackling things that we don't
[33:48]
Warrenknow the solution for. You can present the arguments, but it's a political decision when you are dealing with states or the federal government. And if you're in something where you're going to lose, the big thing to do is quit. And you present your case as well as you can and everything else, but if you don't hold the pen in the end, you don't have any business taking your money. and doing dumb things with us and we can do our best to explain what the intelligent things are. But it's your money. And so it's very hard to tell how to handle the questions of politically determined decisions of politically determined decisions that are going to go to court in many cases, but you know that it's just doesn't make sense. We know what we think a sensible system would be, but, and we ought to explain what we think it isn't. And, you know, do the best to get our position because it's pro-social to have the right solution to have it. But the right solution, for example, in the interstate, wasn't to let 48 states each decide on their own. way of doing it and award contractors, the jobs based, you know, there's just, there's some problems that can't, that can't be solved and we are not in the business of trying to solve insolvable problems. Yeah. I'd even go for example. But then the problem you have, of course, is that the people that work for you. That's their job, so they would, they, they, they, they want to have reasons to keep going. And that's a, that's a, that's, those are tough choices if you're managing, but that's what's, that's why they have managers. And one I was just going to add, because you touched on something really important there, that effectively, for example, with the utilities and the wildfires, we can't just become the insurer of last resort and that we're going to cover any costs and all costs, irrespective of what occurred. And that's a little bit of the situation we're in right now with our largest, challenge a 2020 wildfire where there were one of four, there were four fires occurring at a challenging time. One, we've always asserted was a lightning strike that was not inside our service territory. The fire burnt into our service territory, and we became responsible for that fire effectively through the courts. And we've continued to hold firm that we're not responsible for that. Rightfully, I mean, we didn't contribute to it, and we didn't initiate it, nor did we feel we ever contributed to it.
[37:09]
Greg AbelBut it's getting, again, if you look at the risks, it's there, we have to manage through things like that. We'll get through that litigation. We're happy to report, for example, on that one. After five years, the Oregon Forestry Department has come out and said the fires, the other fires we did have that we were able to manage and extinguish, did not contribute to that fire. And that fourth fire is the largest fire of the fort. It's 60% of the claims. We're five years into effectively getting that information into the courts. Now, that will outline our legal strategy, obviously, going forward, but it's things we're dealing with. But we continue to learn from this as a utility industry. So we're in very much each of the legislatures, as I said, making sure we get clear definition where liability falls, what can the economic damages be, but most importantly, what can the non-economic damages be? And again, with the thought, we can't be the insurer of last resort. We just can't be responsible for everything that happens in a state. Yeah. If we want to do it with our own money, we can do it, but we're not going to do things with your money that we think are stupid. You ought to get rid of us if we do it. And it's easier to do stupid things with other people's money than it is with your own money. That's one of the problems government has, just generally. We don't want to bring it to private enterprise. It is important that the United States have an intelligent energy policy, just as it was important during World War II that we learned how to make ships. instead of cars, extremely fast. And we figured out the answer. We combined private enterprise with the power of the power of government. And how feasible that is in a democracy. And, you know, it was clearly obvious during World War what needed to be done. And we did it. But it's not so clear clear when. When you get 330 million people all arguing their own self-interest and, of course, deciding what will happen. And having the people often who are making the decisions reacting as they did 20 years earlier, you know, when they don't really bear the responsibility for the decision. Anyway, that's management. And we'll do our best.
QuestionerStation 11. Hello. My name is Alicia Burek, and I'm from Poland, but I currently live in Chicago. This question is on behalf of an inspiring man that I know, Walida Ahmed, who's here with us today.
[40:26]
QuestionerMr. Buffett, nearly 74 years ago, on a cold Saturday in January, 1951, you traveled eight hours by train from New York to Washington. You won all the way on nothing but hope that someone might teach you more about the insurance industry. Arriving at GEICO's office to find the doors locked, you persisted until a janitor led you inside. You credit that meeting with Lorimer Davidson for the insurance float that was the rocket fuel behind Berkshire's success. In 2011, when I was 15, I wrote you with similar determination, asking to meet. You kindly wrote back saying you had only 3,000 days left and more pressing priorities. Well, Mr. Buffett, it's now been 5,000. days since you replied. And so inspired by your persistence in 1951 and the tenacity of Mrs. B, I humbly renew my request for just a quarter of the time Davy gave you a single hour in your office. You may wonder, why must it be you? You have often shared an anecdote about Polish Jew who survived Auschwitz, who said to you once, Warren, I'm very slow to make friends, because when I look at someone, I ask myself, would they hide me? You said that the number of people would hide you was the best test of life well lived. Well, I believe that at this meeting, you have four, you don't have 40,000 trail hoarders, but you have 40,000 people who would hide you. You are a testament to a life extraordinarily well lived. Yet even you have not fully witnessed the transformative power of a I'll let you write. I'll let you write my biography, but I think I've got the point of your question. So respectfully, I ask again, Mr. Buffett, before father time wins, will you please Grant, Will lead Ahmed, an hour of your time, or any time you can dedicate? Thank you so much for your time. Thank you.
WarrenAnd I will say this is my great, grant an hour to everybody of the 40,000 here. Well, I'll have an interesting time the rest of my life. But I will, I'll give you one tip. I found that when I was very young, and I would drive around the various companies all over the country, and because I was very young, and these were companies were off being, and they didn't have investor relations departments there. Almost every CEO would see me, because they figured I'd never, they'd never see me again. And they didn't, they weren't getting calls like that. And I would ask them two questions. I would, I would explain to them. It's not a bad idea, incidentally.
[43:27]
WarrenIf you're going to walk into somebody's office and you say you want 10 minutes of their time, take a hourglass and stick it on the desk of the person you're talking to and turn it up. So it's going to go for 10 minutes and you say, you're going to leave in 10 minutes unless I ask. you to say. And that sets the terms. But then once you have that, if they're in the coal business, we'll say, which happened to be one that I was interested in 70 years ago or so. You just ask them one question that if they were to be stuck on a desert island and they had only one of their competitors stock during the 10 years they were going to be on that island, which one would it be and why and then after they give you that answer you said the same thing and if you were going to short your net worth while you were on that out of which would it be and why because every manager likes to talk about their competitors they're they're like a bunch of school kids you know when they get into talking about their competitors and i probably learn more about various industries by just making sure that they didn't think i'd stay too long And in the meantime, they would have the floor and talk about their competitors. I kept my own mouth shut in those days. That's a lesson I've lost somewhere along the line, but the, you're not, you're not, you're, you're, you're, you're, you're essentially, they've outsourced, or I shouldn't say outsourced, but they've, they've departmentalized investor relations of all companies of size, frankly. Now, so you've got. You know, 3,000 companies or whatever they have, and they all have departments. And each one of them has an investor relations department practically, and their job is to say, this is the best thing you can do today is buy our stock. Well, the whole concept is totally idiocy. But it's a big business, and it gets bigger, and the investor relations department gets bigger, and, you know, and it's what we have now. But do a little of your own work. your own way, but Berkshire Hathaway has got plenty of material out there for you to read. And when you get through reading it all, you'll know way more than most of the people that work at Berkshire. So you don't need a personal interview. If we take it, if we take an hour of times, even the 40,000 people we may have here, or bless Becky's many listeners and viewers, it just doesn't work. So I admire your effort, but you'll just have to settle for that as the admiration that you get in this.
[46:35]
QuestionerOkay. Becky? This is a question that you've touched on in a lot of ways in the last answer from before, but I did get this question from a few different people, so I'd like to ask it. Ricardo Briss, a longtime shareholder based in Panama, says that he was, very happy to see Berkshire acquire 100% of BHE. It was done in two steps. One, in late 2022, 1% was purchased from Greg Abel for $870 million, implying evaluation of BHE of $87 billion. And then two, in 2024, the remaining 8% was purchased from the family of Walter Scott Jr. for $3.9 billion, implying evaluation of $48.8 billion for the enterprise. that second larger transaction represented a 44% reduction in valuation in just two years. Ricardo writes that Pacific Corp liabilities seem too small to explain this. Therefore, what factors contributed to the difference in value for BHA between those two moments in time?
WarrenWell, we don't know how much we'll lose out of Pacific Corp and decisions that are made, but we also know that that certain of the attitudes demonstrated By that particular example, I've got analogs throughout the utility system and we, there's a lot of states that so far have been very good, decent to operate in, and there are some now, they're rat poison, as Charlie would say, to operate in, and that knowledge was accentuated. when we saw what happened in the Pacific Northwest, and it's accentuated by what we've seen as to how utilities have been treated in certain other situations. And then on top of that, so that it wasn't just a direct question of what was involved, that Pacific Corp, was an extrapolation of a societal trend. And secondly, we also had a decision we didn't expect that at all of the real estate business and and those kind of things can change values and courts can change values and it's a lot easier to make those decisions when you just own marketable securities and when you own businesses and I've made plenty of those decisions as I watched what have happened in various industries and companies and over 70 years but Greg made the decision, which was fine with us to get out. Well, and he had no knowledge of what was going to be happening in either the real estate field or the utility field, and we would, we don't, we're not in the mood to solve any business, but the Berkshire-Hathaway energy is worth considerably less money than it was two years ago based on societal factors.
[50:02]
WarrenAnd that happens in some of our businesses. It certainly happened to our textile business, and it's happened. The public utility business is not as good a business as it was a couple of years ago. And if anybody doesn't believe that, they can look at Hawaii and electric, and they look in the Edison in the current wildfires situation in California, and there's societal little trends that are, oh, I just got a note here on my monitors that the books are now sold out. So, you know, I'm spending your money on other things. Here's fudge. This is what I'm eating, so, yeah. But that's the explanation that the values change and they don't always change upward. And when we made the deal with Greg, we would happy to buy out. Scott family at that price. And when we made a deal with the Scott company, we wouldn't have been happy to pay Greg the price that he received. But that's like Berkshire shares. We bought in stock at X and we buy in stock at less than X if conditions change poor. And we pay, over the years, we pay more and more because it builds in value. But it doesn't do it in the straight line. And I would say that our enthusiasm for buying. public utility companies is different than now than it would be would have been a couple years ago. That happens in other industries too, but it's pretty dramatic in public utilities and it's particularly dramatic in public utilities because they are going to need lots of money. So if you're going to need lots of money, you probably ought to behave in a way that encourages people to give you lots of money and we will see where we go. We'd like to see public utilities do well, but we are responsible. responsibilities with the shareholders of Berkshire Hathaway.
QuestionerOkay, station, station one again. Dear Warren, dear Greg, and your fellow owners, it's such a pleasure to be here. My name is Rev. Paneda. I was born in Communist Albania, but I'm now teaching economics in London, England. The wonderful writing of Warren and Charlie has significantly shaped my thinking and teaching. I thank you both very much for the many insights over the years. Warren is often written about the important. of Berkshire's earning power to owners. My question is, what was in your estimate, Berkshire's earning power in the latest fiscal year? It will be great if you can comment on any significant items that either increased or decreased the earning power
[53:06]
Questioneras compared to reported net income measures for Berkshire. Thank you.
WarrenYeah, well, I think our underlying earning power was affected negatively here a while back by what happened in the utility field. I think that our underlying earning power was affected negatively here a while back by what happened in the utility field. I think that our earning power was not enlarged by any large by any large acquisitions that come along, but they come along periodically. So we will see something at some point that, well, you know, on the one that was $10 billion, we would have added to our earning power. I mean, why else would we do it? So that's very... be situational. And of course, it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. You know, that's been true. Ever since I was 1930, born in 1930, when I was born, things got much more attractive over the next two years, and apparently I didn't do anything about it there. But, you know, that was the opportunity of a lifetime, and I blew it by worrying about the kid in the next crib or something. But over my lifetime, you know, I've had fabulous opportunities sometimes, and they happen because humans are human. And I don't, you know, I'm fearful of all kinds of things. I don't want to try and, you know, be one of the Walundas and walk on a tiny strip between a couple of Twin Towers or something or whatever it may be, but I don't get, you know, I just, I don't get fearful by things that other people get, are afraid of in the financial, in the financial way. And, you know, the idea that if Berkshire went, let's say Berkshire went down 50 percent. next week, I would regard that as a fantastic opportunity, and it wouldn't bother me in the least. And most people aren't—they just react differently. And so it doesn't—it's not that I don't have emotions, but I don't have emotions about the prices of stocks. I mean, I actually—those decisions get all the way to my brain, whereas emotions can—get bogged down some other place. sure will increase its earning power over time as we retain money. I mean, we are doing things, making decisions every day. People are working who are retaining earnings. We'll build the earning power, but it won't be coming in any even stream, and it certainly won't be matched dollar for dollar on either the upside or the downside and market prices.
[56:30]
WarrenBut that's what makes it a good business. investment businesses is that everything isn't properly appraised and the sell your other people get, the better your opportunities get.
QuestionerOkay. Becky.
OtherThis question comes from Achit Patel, and it's about the big cap technology stocks. In the 2017 annual meeting, you said, Warren, you really don't need any money to run these companies and referred to them as ideal businesses referring to the big tech companies, Apple, Alphabet, Microsoft, and Amazon. With all of those companies now announcing massive capital investment endeavors around AI ambitions, have you rethought the above comment just in terms of them being asset light and what you think of them as a result?
WarrenWell, it's always better to make a lot of money without putting up anything than it is to make a lot of money by putting up a lot of money. And so a business that takes no capital. to speak of Coca-Cola, the finished product, which has gone to a bottling companies and everything, that takes a lot of capital. But in terms of the selling the syrup or the concentrate that goes to it, it doesn't take a lot of capital. So one is a fabulous business and one is a, you know, it depends where it is and everything like that. Coca-Cola is popular every place. But some places, I mean, if you're in the bottling business, it costs real money. You have real trucks out there and you have all kinds of machinery, and you have capital expenditures coming up. And, you know, we've got businesses that take very little capital that make really high returns on capital. And the ones the politicians talk about is making high returns actually aren't making high returns usually in terms of capital. But insurance, property casual insurance is kind of a rare business because you need capital as a guarantee fund that you will keep your promises. But you can use it to buy other low intensive capital business. I mean, you can buy a whole, you can buy Apple and have it support that business. So that can be a pretty good business and it's one of the reasons we've done well over time. But it'll be interesting to see how much capital intensity there. Certainly there's more capital intensity going on with the Magnificent Seven than there was a few years ago. I mean, basically Apple has not really needed any capital over the years. And it's repurchased shares that a dramatic amount of reduction, whether that world is the
[59:48]
Warrensame in the future or not in something. Hollywood's answer was always to get their money from other people to put up the capital. A lot of people have gotten very rich in the country by essentially figuring out how to get others put up the capital. And that's what people do in the money management business, and they get very, very rich because they get an override on other people's capital. And incidentally, if all of you were paying 1% for investment management fees at Berkshire last year you had to pay $8 billion for managing and you really wouldn't have had to do it. But investment management is a very good game because other people put up the capital and you charge them for the capital. if they do well or not, and then you can charge them a lot more if they do well. I mean, it's a well-designed business for the people who practice it and who can blame them. I mean, that's that is capitalism, but, and I saw that in operation when I was working at Solomon, but I didn't need to see it, and I knew what existed anyway. The trick in life is to get somebody else's capital and get an override on it. Charlie and I decided it wasn't too elegant in the business after a while, but we weren't, we were not criticizing the efficacy of it. We were just, it just didn't appeal to us after a while. I did it for 12 years though or something like, not really, the one difference that Charlie and I did from other people is we put all our own money in and do it, so we really, we did share the losses and with our own capital, but we got an override on other people's capital. And that's been—people have made advances where they get the override on other people's capital without putting up any of their own capital, to speak of, and that's—that's a very good business, but it leads—it can lead to a lot of abuse. You've watched capital management in the United States, and would you say? that Canada is behind her in this respect?
QuestionerWell, I think when it comes to their capital system, Warren, it is very comparable. There's no question other than, as we know, I mean, I think the U.S., as far as having a capitalist system, it would be tough to be touched by any country. And I think when I think of Canada, there's just certain responsibilities or the obligations that they're government wants to take on and aren't going to leave with the public sector. And that's just a decision that's made by society or by the Canadian people or if you look
[1:03:16]
Warrenat another country, Australia, or wherever it may be. But so there's, it's different, but when you think, when I think of capitalism, that that drive is there and, and in the desire to, you know, allocate capital properly, it's very similar. It's produced wonders in the United States, if you think about it. But originally, with the Roderfellers and Kennedy and Carnegie's and all it, they actually put up money to build steel mill, you know, whatever it may have been, with the Roger Fowler refineries and pipelines and all that sort of thing, they put up money to do it. Now the trick is to use other people's money, basically, and, you know, you can't blame human beings for behaving like humans, but you should be aware of what their motivations are. It's a capitalism in the United States has succeeded like nothing you've ever seen, but it has, what it is is a combination of this magnificent cathedral. which is produced an economy like nothing the world's ever seen, and then it's got this massive casino attached. So you've got the cathedral and the casino, and in the casino, everybody's having a good time and there's lots of money changing hands and everything, but the cathedral is what, got to make sure the cathedral gets fed too, because the temptation, and the temptation is very high now, is to go over the casino where people say, you know, we've got magic boxes and all kinds of things that will do wonderful things for you. That's where people are happiest. That's where you get the most promise to you. That's where the most money is for the people that are pushing things. And, you know, the balance between the capital, the casino and the cathedral and the cathedral. It's very important that the United States in the next 100 years make sure that the cathedral is not overtaken by the casino. Because people really like to go to casinos. And it's just so much more fun. And they bring bells when you win, and they bring you drinks and everything else. And it's designed to move money from one pocket to another. And in the cathedrals, they basically are designing things that will be producing goods and services for 300 and some million people like it's never been done before. history. It's an interesting system we've developed, but it's work. It dispenses rewards in what seems like a terribly capricious manner. I mean, the idea that people get what they deserve in life. And it's hard to make that argument. If you argue with it any other system
[1:06:35]
Warrenwhere it seems to work better, the answers, we haven't found one. So I'll leave it to the next generation to send me the answer and then by Ouija board or whatever that works.
OtherOkay, station two.
QuestionerHi, my name is Patrick Nestor. I'm 13 years old and from Tampa, Florida. I'm here with my brother John, who's 15, and my dad. Thank you for hosting this meeting. This is my first ever shareholder meeting. My question is what high school class or activity helped influence you to who you are today as the greatest investor of all time.
WarrenWell, that's a good question. The teachers you get in your life have this incredible impression on you, and a lot of it are the formal teachers you have, but some are informal teachers too. I mean, I learned from certain employers, you know, so much. You really I hope you're running from everybody you find who's well-intentioned and has had a lot of experience. And I had a lot of good luck in that, but I would say that what, well, what I was really lucky was my dad was in the investment business. So I would go down on Saturday and I'd wait for him to go to lunch with and I'd read the books that were around there that nobody else ever read. They talked to me, numbers talked to me, and I could never get my fellow of them, and then I discovered the public library, and I read every book there was on investments, literally, in the Omaha Public Library at 19th at Harney. And, you know, I enjoyed learning about that. And unlike Charlie, if Charlie was reading about electricity, he would want to know everything that Thomas Edison knew and more and that goes through the same thought processes and understand how everything worked. I didn't care whether how it worked. I just cared whether it worked. And that's a limitation. I'm confessing here. I'm not bragging. But, you know, the, as Charlie would say, I mean, people would always say if you could only have lunch with one person living or dead, who would it be? And Charlie said, I've already had lunch with all of them, because I've already had lunch with all of them, because read all their books, you know, basically. And so, and he really did a, I think having curiosity and actually finding sympathetic teachers is very useful. I ran into a couple of teachers that, both in high school and college. In fact, I would say that I went to three different higher, you know, three different universities, and I went to high school in Washington and
[1:09:57]
WarrenAt each place, I found about two or three really outstanding people. And I just spent my time with them and didn't pay much attention to the other classes. And I was lucky to find something that really fit me very early on. If my ambition had been to become a ventriloquist or, you know, whatever the hell it might have been. And it wouldn't work. You know, I just spent hours and hours and hours, and I wouldn't have been any good when I got through. So I don't believe that. I think there was that book that talked about spending 10,000 hours at somebody. I could spend 10,000 hours at tap dancing and you'd throw up if you watched me, you know. But if I spent, if I spent up 10 hours reading Ben Graham, I would be damn smarter when I got through. So minds are really, really different. I watch great bridge players, and I watch great physicians, great. I mean, people really, really, really, really have different talents. And, you know, I don't know, I think you're supposed to have 88 billion cells in your brain. I'm not sure that all of mine are flashing bright lights, but you are different than anybody else. my dad always used to tell me that essentially that, you know, you're something different. It may not be good, as a poet, but, but you find your own, you find your own path, and you will find the people in schooling that want to talk to you. People to teach in general, they love having a young student who's really interested in the subject and they'll spend extra time with you and they'll do all kinds of things that and I ran into that, I had Graham and Dodd at Columbia, well Dave Dodd treated me like a son basically and I was interested in, excuse me, I was just in what they were saying and they found it kind of entertaining and I was so interested in. And so I would just, I would look around or do you, you know, what really fascinates you. I wouldn't try and be somebody else. And then I would, you'll find the teachers at a school and you'll find some outstanding people that are teachers. I've had at least 10 people that have had huge impacts on my life. And every one of those positive, you know, because I got to select in a sense. And a number of people really like helping younger people. You know, I found that in school. And probably helps to look a little bit lost at all. Like you need help. But I would say my school experiences were good, but we're really very good, but really very good.
[1:13:35]
Warrenbut I attribute it much more to the individual than to the institutions. Okay, I've already told you more than I know, so we'll go on to, Becky, you're next. This question comes from Scott Williams in Portland, Oregon. He said, do you think the net benefit of Doge will be positive or negative for the long-term health of the United States? Well, why don't you give me a hard one? I think that bureaucracy is something that is something that is amazingly prevalent and contagious, even in our capital system. And that big corporations, you know, overwhelmingly, most of them look like they could be run better. I'm sure Berkshire does in many respects. government is the ultimate. So it really doesn't have any checks on it. And that's why it scares you to some extent about what the future of the currency will be because they can print currency. And if you have people that get elected by promising people things, and that doesn't mean that they aren't sincere about all kinds of things. items, but there's no politician that says to anybody that, at least if they have money, that, you know, I really think you have bad breath. And if you don't mind, would you just step over and away from me? It just doesn't happen. They, uh, and so I, I think the problem of how you control revenue and expenses in government is the one that is never fully solved. And as, it's really, dramatically certain many civilizations and I don't think we're immune from it and we've come close to it. But if you tell me how in democracy you go in and we need change things, you know, we're operating at a fiscal deficit now that is unsustainable over a very long period of time. We don't know whether that means two years or 20 years. Because there's never been a country like the United States. But, you know, that if something can't go on forever, it will end, to quote, Herbert Snyder, a famous economist. And we are doing something that is unsustainable. And it has the aspect to it that it gets uncontrollable to it, that it gets uncontrollable to a certain point. I mean, essentially, you just give up on it. And a vulgar happening in the United States. But we came close. We've come close multiple times. And, you know, the, we've still had very substantial inflation in the United States, but it's never been run away yet. And that's not something you want to try and experiment with because it feeds on itself. So I wouldn't want
[1:17:35]
Warrenthe job of trying to correct what's going on revenue and expenditures in the United States with roughly a 7% gap when probably a 3% gap is sustainable. And then the further away you get from that, the more you get to where the uncontrollable begins. And I think that it's a job I don't want, but it's a job I think should be done. And Congress does not seem good at doing it.
QuestionerWell, it sounds like you should quit while I'm ahead.
Warrenalways as a country, but this is one we bring on ourselves. I mean, we have a revenue stream, a capital producing stream, a brains producing machine, like the world has never seen. And if you picked a way to screw it up, it would involve the currency. And that's happened a lot of places then. And the incentives. the checks. Well, there aren't any real checks. In theory, you would make it. So there was substantial downside for anybody that screwed things up. But there isn't downside. There's upside. So it's the most successful company in the history of the country and the history of the world. And at this point, we got a little room to go and solving them. With that, I'll shut up and go on to Station 3.
QuestionerHello, Mr. Buffett. My name is Saskia from Giffon, Germany. And first of all, I want to thank you because you made such a great impact in my life and the life, the people I love. And that's priceless. Well, thank you. Mr. Buffett, imagine it's 7076. And you are sitting alongside Benjamin Franklin, helping to shape the foundation of a new nation. What core economic principles would you advocate for building a fair, resilient, and opportunity-driven capitalism society, one that supports long-time prosperity for future generations?
WarrenWell, I'm probably, that's a good question, but I would probably, probably said to Ben Franklin, you just keep thinking and don't talk to me because you'll come up with some better ideas than I will. He was, you know, incredibly remarkable person. I mean, he would say he's almost probably the last person to almost have a grasp of every, every aspect of, of activity in the country. He invented all kinds of things, and he invented all kinds of things. And he, incidentally, we were talking about compound interest and that sort of thing. He left a will that left a sum of money to Philadelphia and another sum to Boston that would serve as an example for a couple hundred years, you know, of the power of compounding and all kinds
[1:21:47]
Warrenof things that he was so far ahead of his time that the best thing I could do if I was under that tree with him was to get out of his way. A lot of me just keep thinking, but he saw the problems. Success could bring to a society as well as problems, I mean, more immediate problems that, all kinds of fields. Problems of how to cause, how to take eight billion people, because there's no way we can separate. ourselves from the rest of the world. We can be an example to the rest of the world, and I think it behooves us since we have had all this good fortune in this country, and we do have a pretty good system. I don't think it, I don't think you get, I don't think you get very far by lecturing the world on how, you or the, the, the one that should tell them what they should do with our lives. I think I think you get a certain amount of resentment when just a few hundred years ago, a whole different group of countries were running the world. And now you start giving them advice. And I think it's a real mistake in communication and persuasion to lecture a buncher of people or you've just won the game. I mean, but anyway, I would say that I would advise, Ben, to figure out how to figure out how to win the game and keep a certain amount of humility at the same time. And I would tell them to try and design a system that doesn't invent too many things that can destroy the planet, you know, that become uncontrollable once you get them out there. There was no alternative to us developing that at a bomb, but, but the expansion of the number of people that have the ability from one to eight and nine probably pretty soon with Iran. I mean, that mistake the society just could not afford to make. I mean, solving the problem with nine variables instead of simply one. Now, it's totally understandable. My dad was in Congress when the atom bomb was first used. It's amazing how Sam Ray Brewery and kept the House of Representatives uninformed because they are supposed to appropriate all the money and had 435 congressmen there and they had no idea they were appropriating money for Los Alamos or what was going on in Chicago or what was going on in Tennessee. But anyway, do have a society that is far beyond than they've been Franklin dreamt of. It's achieved some of the the or is it she it's moving toward in the right direction toward solving some problems where we made kind of broad declarations about all men being created equal and and et cetera and then we
[1:25:48]
Warrendid some of the things we did but generally speaking we moved in the right direction uh but we face problems that i don't know what how how ben Franklin would would uh attack the problem of what you do once you get weapons of mass destruction in many hands and when you essentially look at the world as something where there are winners and losers and that the winners are you know humiliate the losers and do all kinds of things I said I'll let the people are a lot younger here figure out the answers on that but it's still the most wonderful that there's never been anything you could dream like what this happened in the United States so we still it's it's the best place and the best time to be alive by by miles in the street just think of a couple hundred years ago and somebody you know yanking out a few of your teeth and pouring whiskey down you and doing it I mean and it's subsistence and and particularly in this Midwest just imagine waiting until the Missouri froze over every year just to see what if you get your wagon across and maybe have a pregnant woman in the back you know with it's just amazing what has happened a positive nature during my lifetime and then the question is is how do you how do you keep it and how do you improve it and uh i do think that fundamental to all of it though is having a it's having a currency that that does not get debaished what that does to the stability of a society where all the people that trust their government get screwed and all the people that figure out ways to profit off of it become rich or richer i i don't think you want a society that operates in that manner so anyway let's see that was section three so we're going to becky is that right
Questioneryep that's right um Greg this question for you it comes from a shareholder named j milroy who writes mr buffett has a hands-off approach to managing the operating subsidiaries how would you describe your approach are managers over there
Greg Abeland it i i would say going back to 2018 it's been a it's been very fortunate being this role because one i had to learn a lot of the businesses and there's no question as uh warren bought the businesses had that general knowledge general knowledge I absolutely had to engage with each of them and they've been great in sharing their their business models or approach their thoughts around where the risk and opportunities are and I think as we went through that there's no question I had questions
[1:29:28]
Greg Abeland wanted to engage with them and Warren talks about the curiosity being important as you go through things that would be my style to have questions and comments around their business their frameworks at the same time they have great businesses and they run them very autonomously and that that remains in place but if there's opportunities to see where maybe you've seen something in another business or an opportunity i may see in their industry we're going to discuss it and see if that's something we should pursue or are we properly addressing the risk and i found all our managers to be absolutely engaging on that and want to have those dialogues and i'd say that's a reflection of of my approach i'd also say that um when you think of our managers again very autonomous they they run their businesses they know it better than i ever will but if i see an opportunity that it's well worth their time to talk to another one of our managers if it's geico and they've gone through a technology transformation they're not by themselves that need to be thinking that way we want to make sure the right folks are talking and figuring out how we can benefit from the prior experiences so it's i would say more active uh but it hopefully in a very positive way and we got an exceptional group so it's worked out exceptionally well as uh as i've gone through that period of time
Warrenit's working way better with the Greg than with me because you know I just I didn't want to work as hard as he works and and I could get away with it because we've got a basically good business very good business and and I wasn't in danger of you firing me by virtue of ownership and the fact that we would do pretty well but the fact that you can do pretty well doesn't mean you couldn't do better and and and great can do better at many things many people want to be managed need help in being managed some don't some you just leave alone uh you know we've had managers it would have been crazy to um uh started giving instructions to because they just quit and and i wouldn't blame them because i'd be the same type myself but uh a lot of people I mean people really do welcome direction and help and and you know and particularly when they're getting it from somebody like Greg that really lives the life himself and doesn't just come down from high and say you know here's what you do while I do something else you know and a manager that behaves differently than than what he's asking the people beneath them
[1:32:38]
Warrento behave it's it just doesn't work over time and uh people want a manager that they that they admire and they're not going to admire them if those people profess to be able in one manner and behave in another manner it's easier this is a sad thing but it's it's easier for an organization to see its quality move down downward than it is upward i mean it if if the boss behaves badly uh it causes everybody to to behave i mean it is really catching it's not as a catching on the way uh in upper management but but if the manager is doing a little things to grease his own situation pretty soon let's say you're running a little things to grease his own situation pretty soon let's say you're running retail establishment pretty soon all the employees or a lot of the employees are telling their friends that they they get a discount you know with the retail operation and if they want they want if their friend wants something they'll put it on their account and then before and get the discount once you start deviating downward it is really contagious and it is hard to rebuild so you really need something someone that that behaves well on top and is not playing games for their own benefit. And we get a lot of managers that bend over backwards not to do that sort of thing. And then we get a few to bend over forwards. And if you get enough companies, you're going to get a lot of different forms of behavior. And Greg does something about it and I've generally been laxed in doing. something about it, but he's done a way better job as that than I have.
QuestionerOkay, station four. Hello, Mr. Buffett, and Mr. Abel. My name is Kansas Loemeyer. I am a junior at Elkhorn South High School and was born and raised in Omaha. My question is directed to Greg Abel. Berkshire Hathaway is the second largest utility provider in the United States. And at 2025, Reuters investigation found that it is the Coal fleet is the dirtiest in the nation. There is currently no concrete plans to retire coal and fully transition to renewable energy. I'm 17 years old. Considering that, what do you have to say to young people like me who will live with the consequences of climate change by companies like Berkshire?
Greg AbelThank you for your, both your question and your comments, because it is, it is a important to understand, say, Berkshire Athaway Energy, but also how they operate. And maybe using Iowa, at least as a starting example, because I think that was one of the states
[1:36:23]
Greg Abelcited in the report. One of the important things that I'd say early in us acquiring our energy companies, and I go back to when we acquired Mid-American, we acquired, we acquired We hired it in 1999, purchased Mid-American in 2000. Well, one thing that became very clear to myself and our teams was that what we do within our utilities is really driven in two fronts. One, we absolutely have to meet the requirements and the law that's laid out federally. But most importantly, we had to recognize we implement public policy across these states. these states. And that was an interesting conversation when I go back to Iowa. And again, the report cited that as a significant problem. It was early in the 2000s when, for the first time in Iowa, we were going to, as a utility, be short power. So we didn't have the energy. And we entered into a significant discussion with our governor at the time. And And really sat down and said, where do you want us to go as mid-American? And what resources do you want as a state? And at that time, we were predominantly a coal-based state. And we recognize that, obviously, and fundamentally, personally, viewed it as a risk. But we needed to have that conversation with our state. And as to how we would manage that going forward, the interesting thing was that as we had that conversation in the early 2000s, again, with the leadership of our state, it was clearly decided we wanted to continue to be long power, so i.e. not be short for our customers. We discussed the type of resource, and I remember a very clear conversation around we wanted to stay bound. across a variety of energy sources. And at that time, it was really coal and natural gas. And at that time, we made the decision to build the largest wind project in the U.S., in Iowa. So we undertook an effort to build three resources, a coal plant, a gas plant, and a what was the first wind project we owned in minimum American. And again, it was very consistent with what the state wanted, but we also laid some important groundwork there because we started to define the importance of renewable energy, non-carbon resources, but it has to be consistent with what the state wanted. And we've gone on over the, since that period of time, to deploy $16 billion into Iowa, associated with renewable energy. Again, very consistent with what our state wanted us to do, i.e. the underlying policy, we don't get to make that decision and just spend $16 billion.
[1:39:49]
Greg AbelIt's done in conjunction with our governors, our legislatures, our regulators, and at the same time, we've had the opportunity to retire five of the 10 coal units. Now, as the report highlighted, I, I, I understand people would like those other five coal units retired at this time. But to think we deployed 16 billion to retire five, and it's a very good outcome for our customers. We've been able to maintain our rates, they're the, some of the lowest in the country. So it's been done very efficiently, but the reality is we still need those five coal units to keep the system stable. We cannot have a Spain-Portugal situation. So we absolutely respect the input. We absolutely respect the process, and we'll continue to work with each of our states to identify the path they would like to chart, and we work hard to ensure there's good, balanced outcomes because we recognize the challenges they're associated with other folks' desires. So I think you'll continue to see our utilities implement policy consistent with the needs of their stakeholders or customers, and at the same time always respecting what's required by any of the federal standards. So thank you for your comments. Okay, 31. Let's see. Becky.
QuestionerThis question comes from Billy DeRoss. He writes, Mr. Buffett, as a nurse from New York. I've spent years struggling to secure good health insurance for myself, even while working on the front lines to save lives. In New York, accessing insurance means navigating a confusing state-run system that feels like it's designed to overwhelm. I'm curious what ultimately led to the end of your health care venture with J.P. Morgan and Amazon, and given your commitment to value in long-term thinking, would you ever consider taking another look at health insurance reform in the U.S.?
WarrenYeah. We're spending close, it's hard to get the precise figure, but close to 20% of GDP on health. And if you go back to 1960, there were a number of countries that were each spending around 5%. And then the lines began to diverge dramatically. But the mathematical fact that there are only 100 percentage points. in the equation didn't change. So we tried that experiment with J.B. Morgan and Amazon. And we had three people that didn't think they knew the answer, but thought that, in my case, I used to term, that it was a tapeworm in the economy. And we also found out that the tapeworm was alive in every part of the country.
[1:43:38]
WarrenI mean, the hospitals liked that the hospitals had prominent people who worked with people. People generally like their doctor, didn't like the, but didn't like the system. I mean, all kinds of things. But in the end, J.P. Morgan and Amazon and Berkshire were not going to have any effect on changing that 20%. Now that 20% are only 100 percentage points available and one of the countries spend six or seven percent and perhaps use our system to their advantage, which is also very true. You know, that is an enormous percentage of an economy and we simply, it was too entrenched. uh we do much in the way of change and uh we spent some money on it and we did some work and we learned a good bit about our own systems and we saw the degree to which the system was ingrained in so many people's you know whether the health care providers or whether everybody and these aren't evil people i mean they're just they're just going about something and trying to to trying to save lives but but we found that whether it was in Canada or France or Britain or whatever it might be and if you looked at our costs that they were just far higher and there some extent we were subsidizing the rest of the world and people would come to the United States to do the really unusual challenging aspects of health in terms of operations that sort of thing. But we made no progress. And governments, you know, I mean, it's so involved in the situation and health is so important to most with, to everybody. And we, as I said to Jamie and Jeff, I said, well, the tapeworm won. And problems of society, when you get 20% percent of your GDP going into a given industry, the theory of enthusiasm for changing that industry, the political power that the industry will have. And that doesn't mean they're evil. It's, and, you know, everybody, they just end up there. And so I don't know the, we came to the conclusion. We didn't know the answer three of us. And we had the money to do it. It's No, 130 million people felt about their doctor, felt about their health care, what they felt entitled to, and it's, you know, it's, it won't change by itself. And, uh, it's the only one that can change it. And the only people in government that can change it are getting a majority of 435 people and 100 people. And, and my dad lost one election in his life in 1940. and he he was very strong Republican and in 1950 he went back and beat the guy that beat him
[1:47:56]
Warrenin 1948 and he got the doctors behind him. And he did very, you know, well, and they believe 100% of what they're doing. They're helping people every day. And during the pandemic, the sacrifices made by people, save other people just incredible. Can you imagine? and working in something where they're bringing in people who are going to die by the dozens and dozens and dozens and you try to somehow keep your own morale up and keep working with them. So you can't argue about the importance of it. The costs are so different than any country in the world that it's a, it is just, it's a huge element. And we're a very rich country so we can do other things other countries can't do. And through our elected representatives and a whole variety of things over time, we've developed a system that is enormously resistant, any kind of major change and it's important in every community that it's in. So I wish we had an answer for you, but I was somewhat pessimistic going in and I was a little more pessimistic when we came out, but I'm glad we did what we did. And we learned something about our own. failings in the process. So Berkshire, in effect, got its money's worth, but we didn't kill the tapeworm. Okay. Trying to change things in government is, it's an interesting proposition in the country because you get self-selection in terms of the people that go into government and continue in it. And to some extent, they keep, they have to make decisions that they don't like. as they go along and they learn to accept them or to rationalize them or whatever it may be. But it's still about, you know, this country's worked out better than any country in the world. So it, you can't argue it was a failure, but you can't argue it's a failure, but you can't argue that there is, that there are certain problems that are terribly tough to figure out ways to solve. And of course, one of them gets back to the the fiscal problem I mentioned before because it's easy to spend money and it's hard to cut people's receipts and if you get elected, you're going to say to yourself, well, I can do more good if I stay and then if I really vote my conscience on this sort of thing. So you give away a little bit here and a little bit there and a little bit there. And finally, you don't recognize yourself in the mirror anymore. And that's, I grew up in a political family, but, but, but, and I watched, I watched
[1:51:11]
Warrenhow people behaved and, and they behaved like human beings, which is what you have to expect. And I behave like human beings, so, uh, still managed to keep moving forward in a dramatic way. It's so much better to live here than it was 100 years ago or 200 years ago. It's dramatic. So you can't say the system's a failure, but you can say that it is very difficult to make major changes in it.
OtherOkay, Station 5. Hi, Warren Gregg. My name is Pink Huang Chen. I'm from Taiwan. This is my seven time here. First of all, I want to thank you, Warren, for your generosity of sharing your wisdom and lesson. You changed my life and you're my role model and my hero. And my question is, Warren, you mentioned that Mr. Apple will be in charge of capital allocation in the future. And I'd like to know your perspective on is it easier for a business operator to be an investor or for an investor to be a business operator? Thank you.
WarrenWell, that's a good question. I see what we call him Mr. Apple, even. Yeah. Thank you. Yeah. You'll take it. It's a lot tougher to be an operator. I mean, it is, it's easier to sit in a room like I do and play around with money. It's just an easier life. That doesn't mean it's a more admirable life. It doesn't, but it's been actually been a pleasant life for me, so I don't complain at the least. And I've been able to choose my friends. which has made an enormous difference in my life. I've never had to work for anybody that I really didn't admire. I mean, that's a luxury in life. And five different people I worked for. And, you know, I just, they were fantastic, whether it was the manager of the local pennies, which is located, well, it used to be located a couple of miles from here. and newspaper managers, everything, they have never been really disappointed by any teacher I've had. So I would have to admit that I have been able to choose what I do with my day, an extraordinary degree, compared to a business operator. And in many cases, I'd like to compete, be a top-notch-notch business. operator in terms of some of the, some of the behavior that would might be forced upon me. I am the master, I mean, I've found myself in this position where I can, I can run the kind of company I want to run, and that's an extraordinary luxury. And with that, I should say that I'm getting a section that says five-minute warning exclamation point, five-minute warning, exclamation point.
[1:54:55]
WarrenSo I would now like to turn to a subject that I want to discuss with you a few minutes, and then when I'm through discussing this, Becky asked me a question or two, which may want, you may want some of our questions that come to you as I make these comments. Tomorrow we're having a board meeting of Berkshire. and we have 11 directors, two of the directors, who are my children. Howie and Susie know of what I'm going to talk about there. The rest of them, this will come as news too. But I think it's the time has arrived. Greg should become the chief executive officer of the company at year end. And I want to spring that on the directors effectively and give that, it's my recommendation. Let them have the time to think about what questions or what structures or anything they go on. And then the meeting following that a few months will take action. The view of the 11 directors. I think they'll be unanimously in favor of it. And that would mean that at year-end, Greg, would be the chief executive or officer of, I would still around and could conceive it would be useful in a few cases. But the final word would be what Greg said in operations, in capital appointment, whatever it might be. I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity or anything. I think that for reputation that when there's times of trouble for the government, that we are an asset and not a liability, which is a position that's a position that's hard to have, because usually the government, and then government. get very negative on business if there's a time like that. But so I think I could, there might be a time when I'll, I'd be helpful, but it would have the tickets. And, and he would make, like I said, whether it's acquisitions, I think the board would be more welcome, being him more authority on large acquisitions, probably if they knew it was around, chief executive, period. And, like I say, the plan is to direct doesn't know anything about this until what he's hearing right now. But that, the board will be able to ask me questions tomorrow, as then a little more of the specifics of what they should be thinking and all about. But they'll digest it, and then at the next board meeting after that, if we, we, we'll digest it. as I would guess we would if they act then obviously we we have something to announce to the world as a material change in Perkshire and operation and with a Ouija board or
[1:59:28]
Warrenwhatever and that comes out in terms of doing things but but it will not I have no intention zero of selling one share of Berkshire a Berkshire half the way it'll get given away Gradually, it just won't. I would, okay, drink a Coke and calm down. I would say that I would add this. The decision to keep every share is an economic decision, because I think the prospects are sure will be better under great advantage of mine. And then, uh, uh, I will, I will come in. I will come in and there may come a time when we get a chance to invest a lot of money. And at that time comes, I think it may be helpful with the board, the fact that they know I've got all my money in the company and that I think it's smart. I've seen what Gregor's done. And so that's the news hook for the day, follow. And thanks for coming.
OtherThe enthusiasm shown by that response could be interpreted in two ways, but I'll take a surprise. Thank you. Thank you.