Morning Session

1. Introductions

WARREN BUFFETT: (Applause) Yeah, don’t wear out all your clapping on Charlie, I mean, we got(Laughs)

In addition, well, we have, first of all, Greg Abel, our director, and -(Applause)

And Ajit Jain, sitting next to him on insurance. (Applause)

And moving, then, to the 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 -(applause) Susan Buffett (applause) Steve Burke, Ken Chenault, Chris Davis, Sue Decker, Charlotte Guyman, Tom Murphy, Jr., Ron Olson, Wally Weitz, and Meryl Witmer. OK. (Applause)

2. Two people to thank

WARREN BUFFETT: 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. (Applause)

She just reported to me that we set a new record for See’s 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 at the Bookworm this year. Normally we have about 25.

But we have Poor Charlie’s Almanack, fourth edition. And I think we sold about 24 hundred of them yesterday.

And that will be the only book. Next year we’ll go back to having our usual selection. But we thought we would just turn it over to Charlie this year.

And then I would like to introduce one further person. And that’s the person who put that movie together.

And you can’t imagine the amount of work it is, because, for example, on those scenes that we’ve used from the past, if they involved Hollywood stars or various people, we needed to get permission all over again to show it because we 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 [Curtis]. (Laughs)

And with the Desperate Housewives we had to get Disney’s OK.

And that was easy. But running down five Desperate Housewives -(laughs) 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 Underwood for just a minute. (Applause)

3. First quarter results and $182B in cash

WARREN BUFFETT: OK. We put out some results for the first quarter this morning at 7 o‘clock our time.

And some a few sharp-eyed analysts 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 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 that’s why we think these figures that we give you are the most descriptive of what’s really going on in the business and take out the wild swings in the market that otherwise just, you know, is going to have us 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 Jain wants 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 went along the that came in at the wrong place from our standpoint and that just kept going up the East Coast. And that’s our number one risk as we evaluate things.

But we’re in all kinds of risk. There can be an earthquake tomorrow. There can be an earthquake ten years from now. And then they‘re going to you know we’re in that sort of business.

But the first quarter does it does hit the it should be our best 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 (laughs) during the first quarter.

So, we had much-improved earnings in insurance underwriting.

And then our investment income was almost bound well it was almost certain to increase. And I said that in the annual report because yields are so much higher than they were last year.

And we have a lot of fixed short 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 into the railroad the railroad earnings we’re down modestly, and

But we should not immediately but we should be earning somewhat more money than we are earning under present traffic conditions. And then traffic conditions could also hit the earnings. It’s a potential earnings at the railroad.

And if you want, every Wednesday, you can get car loadings from the previous week.

It‘s a little deranged if you do get them, but I get them every week. They’re available and you’ll see that car loadings 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 amount of car loadings. 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 last year, they were up somewhat.

And so, you get down to the final figure, and 11.2 billion is it‘s quite an improvement from last year.

But we would expect our earnings should go up modestly from year to year, because after all, we’re retaining like 37 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 at Berkshire economic goal is to increase the operating earnings and decrease the shares outstanding. It’s that simple to describe. It’s not quite so simple to pull off, necessarily.

But that’s what we’re attempting to do.

And if we’ll turn to slide two, please I’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 30 to 37 billion.

And interesting thing about these earnings is they’re after depreciation and amortization and taxes and all that sort of thing. So, you can figure that, essentially, Berkshire has a little over a hundred million dollars per day, including weekends and holidays, coming in to deploy.

And we’ve set out many times what we’re attempting to are attempting to deploy that money. But we have that responsibility, and

Sometimes if you’ll turn to the next page well, you’ll see how that’s built up the shareholders’ equity so that Berkshire had at March 31st 574 billion through retaining earnings.

And we’ve been retaining earnings ever since we took control of Berkshire Hathaway except one day, as I remember I think it was maybe 1968 or 9 the directors declared a ten cent a share dividend. And I think I must’ve been in the restroom or something at the time. (Laughter)

So, if you leave out that period of madness, we’ve been retaining earnings we’ve been saving your money putting it to work.

And sometimes sometimes, we’ve done things that were big mistakes, and

But but never we never get close to fatal mistakes. And every now and then we do something that really works.

And, as Charlie pointed out in the past, you know, there’s really there‘s probably been half a dozen to a dozen over 57 or 58 years whatever it would be really important, big decisions. And there’s been nothing close to fatal. So that continues to be the guideline, and

We have accumulated 571 billion, and I couldn’t help but look at who’s second. And JPMorgan had 327 billion at year end, and they’re up to 338, I believe, at the end of the quarter. 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 it this does show what can be done really, without any miracles if you save money over time.

And we have a group of shareholders we had 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

And we were a savings vehicle. And they were able to do live very well. But they weren’t they weren‘t trying 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 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 they just go someplace else. And they are spending sort of unbelievable sums after a while, by the standards of the past.

And our people nobody we‘ve had nobody that’s a that‘s a miser or a hoarder or anything like that in our group. They live very well.

But the math of compounding and a long long runway have done wonders. And we will talk a little later right before lunch, we’ll give an illustration of that, of what can be done with that sort of philosophy.

So, our cash and Treasury bills were 182 billion at the quarter end.

And I think it’s a fair assumption that they’ll probably be about 200 billion at the end of the this quarter.

We’d love to spend it, but we won’t spend it unless we think there doing something that has very little risk and can make us a lot of money, and

And our stock is at a level where it‘s it‘s adds slightly to the value when we buy-in shares.

But we would we would really buy it in in a big way, except you can’t buy it in in a big way because people don’t want to sell it in a big way.

But under certain market conditions, we could deploy quite a bit of money in in repurchases.

And, as you’ll see on the final slide, we have bought-in in the last five years.

We can’t buy them like a great many other companies because it just doesn’t it doesn‘t trade that way. The volume isn’t the same because we have investors, and the investors you know, the people in this room, really they don’t think about selling. They probably

I would hope many of you don’t even check the price daily, or weekly. You know, it

The people who check the price daily have not made the money that the people who’ve forgotten about it (laughs) basically have over the years.

And that’s sort of the story of Berkshire.

We’ll try to increase operating earnings. And we will try to reduce shares when it makes sense to do so. And we will hope for an occasional big opportunity. And we’re quite satisfied with the position we’re in.

4. Selling some Apple shares now with higher tax rates expected later

WARREN BUFFETT: So, with that background, I think we’ll turn it over to Becky Quick. And we will alternate questions between Becky and those of you in the audience.

And Becky, you want to start with the first question?

BECKY QUICK: Sure. Thanks, Warren.

Let’s start, just given what you mentioned there was some news that came out in the 10-Q this morning. It shows that Berkshire sold another 115 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 Lam. He is a 27-year-old Berkshire Hathaway Class B shareholder from Malaysia.

And he asks, “Last year you mentioned Coca-Cola and American Express being Berkshire’s 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 managers’ views of the economics of Apple’s business or its attractiveness as an investment changed since Berkshire first invested in 2016?”

WARREN BUFFETT: No, I would the but we have sold shares. And I would say that at the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have.

Now, one interesting thing is that Charlie and I looked at common stocks, or marketable equities, or the things that people love to look at, as being businesses.

And so, when we own a Dairy Queen, or if 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 their shares. We can’t buy 90 percent or 80 percent or anything like that.

But when we look at Coca-Cola, and American Express, and Apple, we look at them as businesses.

Now, there’s differences in tax factors. There’s difference in managerial responsibility, a whole bunch of things.

But in terms of deploying your money, we always look at every stock as a business. And we don‘t we have no way no attempt made to predict markets. We have no attempt made to pick stocks.

I went through many, many years doing the wrong thing. I got interested in stocks very early. And I was fascinated by them.

And I wasn’t wasting my time because I was reading every book possible and everything else. But finally, I picked up a copy of The Intelligent Investor in Lincoln.

And there was a few sentences in there that said, much more eloquently than I can say it, but if you look at stocks as a business and treat the market as something that doesn’t tell you isn’t there to instruct you but is there to serve you, you’ll do a lot better over time than if you try to take charts and listen to people talking about moving averages, and look at the Fed pronouncements, and all of that sort of thing.

And so that made a lot of sense to me then. And the way I’ve been allowed to deploy it and Charlie and I talked about this, of course, constantly has changed over the years as the amount of capital we have has changed and all of that.

But the basic principle was laid out by Ben Graham in that book, which I picked up for a couple of dollars. And which basically said to me, “You’ve been wasting your time now. But maybe you can use what you’ve learned or been reading about and put it to better use.”

And then Charlie came along and told me I could put it to even better use. And that’s sort of the story of why we own American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business. And we own Apple, which is an even better business.

But and we will own unless something really extraordinary happens we will own Apple, and American Express, and Coca-Cola when Greg takes over this place. And

It’s such a simple approach that it’s almost deceptive. Most things, if you keep working harder and harder at it, you know, you learn a little more math, or you learn a little more physics.

But investments, you don’t really have to do that. You really have to have your mind set properly.

So, we will end up unless something dramatically happens that really changes capital allocation and strategy we will have Apple as our largest investment.

But I don’t mind at all, under current conditions, building the cash position.

I think when I look at the alternative of what’s available in the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.

And one thing that may surprise you, but we almost everybody I know pays a lot more attention to not paying taxes than I think they should.

We don’t mind paying taxes at Berkshire. And we are paying a 21% federal rate on the gains we’re taking in Apple.

And that rate was 35 percent not that long ago, and it’s been 52 percent in the past when I’ve been operating.

It the government owns the federal government owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings.

And they can change that percentage any year. And the percentage that they’ve decreed currently is 21 percent.

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 if the government wants to take a greater share of your income, or mine, or Berkshire’s, they can do it.

And they may decide that someday they don’t want the fiscal deficit to be this large because that has some important consequences, and they may not want to decrease spending a lot. And they may decide they’ll take a larger percentage of what we earn. And we’ll pay it.

And we always hope at Berkshire to pay substantial federal income taxes. We think it’s appropriate that a company a country that’s been as generous to our owners

It’s been the place I was lucky Berkshire was lucky it was here.

And if we send in a check like we did last year we sent in over five billion dollars to the U.S. federal government and if 800 other company had done the same thing, no other person in the United States would have had to pay a dime of federal taxes -(applause) 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 club, and maybe even move up a few notches. It doesn’t bother me in the least to write that check.

And I would really hope with all that America’s done for all of you, that it shouldn’t bother you that we do it.

And if I’m doing it at 21 percent this year, and we’re doing it at a lot higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year.

5. We like our Japanese investments, but we will remain ‘American-oriented‘

WARREN BUFFETT: OK. Let’s go to section one. (Applause)

AUDIENCE MEMBER: Hi, Mr. Buffett. This is Matthew Lai (PH) from China, Hong Kong. I’m running my (unintelligible) listed company called F-Dub (PH). And we are so grateful to learn from you. And you really inspire us.

My question is, besides the electrical car company, BYD, under what circumstances you will reinvest and reconsider to invest Hong Kong and China companies? Thank you.

WARREN BUFFETT: Yeah. (Applause)

Well, our primary investments will always be in the United States. We do think it -(Applause)

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 Coca-Cola.

I mean, they are the preferred soft drink, you know, in something maybe like 170 or 180 out of 200 company 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 American Express has a position in the credit card field which I think is extremely strong. And part of that was one of the directors one of the reasons for that is one of the directors that I introduced a few minutes ago, Ken Chenault.

But it has strengthened dramatically over the last 20 years for a lot of reasons.

So, we will the BYD investment was a

And well, we made the commitment in Japan, which I did five years ago, and that was just overwhelmingly 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 with being our size.

But you won’t find us making a lot of investments outside the United States, although we’re participating through these other companies in the world economy.

But I understand the United States rules. Weaknesses, strengths, whatever it may be. I don’t 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’m in an economy already that has, you know, after starting out with a half a percent of the world’s population, has ended up with well over 20 percent of the world’s output, and in an amazingly short period of time.

So I we will be American-oriented.

I mean, if we do something really big, it’s extremely likely to be in the United States.

Charlie, in all those years, there‘s only two times he’s told me that, you know, this one is really you know?

He would always go along with me, you know, and say, well when I was suggesting something, he’d 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.” (Laughs)

But Charlie twice has pounded the table with me and just said, you know, “Buy, buy, buy.”

And BYD was one of them. And Costco was the other. And we bought a certain amount of Costco, and we bought quite a bit of BYD. But, looking back

He already was aggressive, but I should’ve been more aggressive. And in Costco, it wasn’t fatal that we weren’t.

But he was right, big time, in both companies. I will

I’m aware of what goes on in most markets. But I think it’s unlikely that we make any large commitments in almost any country you can name. Although, you know, we don’t rule it out entirely.

And I feel extremely good about our Japanese position, and we’ll have that in, 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 while we 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.

6. Our utilities won’t throw good money after bad if states impose excessive climate change costs

WARREN BUFFETT: OK, Becky?

BECKY QUICK: This next question comes from Stanley Holmes, who is a Berkshire shareholder from Salt Lake City.

He 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 state sovereignty, may already be poised to move in that direction.

“The Utah legislature recently mandated the state’s right to serve as sole purchaser of energy from an in-state power plant, and under some circumstances, purchase the power plant before it can be retired.

The state utility regulator will be legally bound to prioritize public purchases of power and facilities that could include assets owned by Berkshire Hathaway Energy’s PacifiCorp utility, Rocky Mountain Power.

Will Berkshire, through BHE, continue to invest resources in jurisdictions where corporate assets may be subject to confiscatory state policies and actions?

And how is Berkshire Energy working with officials in Utah to minimize potential corporate losses, if and when state control is asserted over its electrical utility sector?”

WARREN BUFFETT: I will let Greg join with me in the answer on this.

But I would say our feeling is that Utah is actually very likely to treat us fairly, whether the action is in granting appropriate rates that give us the return we expected generally expected in terms of our own properties, or if they decide for some reason to go to public power. I think they would compensate us fairly.

In the 1930s, George Norris, the senator from Nebraska, just turned Nebraska into a public-power state. And our experience in Iowa would indicate 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 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 private owners, there’s nobody better situated than Berkshire to satisfy the portion but a large portion of the needs of the country.

And we will do it at a rate of return that is not, you know, it‘s not designed to make us make us rich or anything like that. It’s a sensible rate of return.

But we won’t do it if we think we’re not going to get any return. It’d be kind of crazy.

And we’ve seen actions in a few states where some of the costs associated with climate change are not being regarded as costs that the utility shouldn’t incur.

Well, believe me, if it was publicly owned, they would’ve incurred it too.

But we’ll do what society tells us. And we have got the money. We‘ve got we‘ve got the knowledge to participate big in something that is enormously important for the country.

But we’re not going to do we‘re not going we‘re not going to throw good money after bad.

I don‘t worry about my understanding is, and Greg’s going to elaborate on this now immediately, but I don’t regard Utah as being unfriendly to the idea of utilities being treated fairly.

Charlie?

Oh, Charlie. I’m so used to it. (Laughter and applause)

I had actually checked myself a couple times already. But I’ll slip I‘ll slip again.

GREG ABEL: That’s a great honor.

Yeah, 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, and we’ll definitely come to Utah and PacifiCorp. 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 legislature wanted, and they enacted very specific laws to encourage that.

But that utility is more than a hundred years old right now. And if we look at the demand that’s in place for MidAmerican Iowa utility over the next, say, into the mid-2030s, associated with AI and the data centers, that demand doubles in that short period of time.

And that happened and it took a hundred years-plus to get where we are today. And now it’s going to double.

And that will require substantial amounts of capital from MidAmerican and its shareholders. And how that will function is if we have a proper regulatory compact in place, which you’ve highlighted.

If we then go to, say, Nevada, where we own two utilities there, and cover the lion’s share 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 modest level now but you’re talking probably an incremental six to ten 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, experience 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 work?

When I think of the wildfires, there’s been many claims and a recent additional claim last week for 30 billion dollars. 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 PacifiCorp, we’re in a place where, first and foremost, all that litigation will be challenged because the basis for it, at least we believe, there‘s places where it’s unfounded. And we’ll continue to challenge it. And it will take many years to be able to resolve this, as Warren highlighted in the letter.

But if you think of PacifiCorp and the litigation there, number one, how we think and operate those assets have to change. Because we‘ve had a regulatory we have worked with the states, across all our states, for many years with the fundamental goal to be to keep the power on.

And our teams and our employees worked incredibly hard to keep the power on day in, day out, through storms, unfortunately through the 2020 fires. The instincts were not to turn off the power. The instinct was to keep the power on to keep hospitals, fire stations responding.

It’s not in their mind, or at least culturally it wasn’t in our minds, to de-energize.

So, the first thing we had to do was step back and say, we’ve got to fundamentally change the culture. Not just at PacifiCorp, 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 with how we’ve operated those assets, as I’ve highlighted, for a hundred-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 reenergize 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 a fire.

But when you get back to Utah and PacifiCorp, the challenge we do have is, within PacifiCorp, as we go through both the 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 PacifiCorp 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 where we’re happy we’re investing in.

It is part of PacifiCorp, so there’s a certain amount of balance there as to how we do it. But in the last legislative session that existed, Utah actually passed a bill that does a couple of very important things.

One, it caps non-economic damages on wildfire claims.

So if you go back to the wildfires we have in Oregon, and the claims you’re hearing filed for, there‘s economic damages associated with them. And those harms should receive the economic damages associated with that.

But unfortunately, 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.

Utah took a very proactive position to say we will cap those non-economic damages, and increase an environment again it’s back to that is there an environment where you want to invest in, yes. And then incrementally, they‘ve created a very substantial fund.

It’s literally called The Wildfire Fund for fires in Utah that will help facilitate both liquidity and the ability to resolve the situation.

So, Utah, we believe, including the legislation that a lot of other things came out of it, is the actual gold standard as we go forward.

So very important issue for Berkshire Hathaway Energy.

But at the same time, it is a PacifiCorp issue. The risk of regulatory compacts not being respected is a much broader one that we’ll always evaluate and be careful how we deploy our capital. But both PacifiCorp will manage through it, and I see other very good and significant opportunities in PacifiCorp I mean, in Berkshire Hathaway Energy.

WARREN BUFFETT: The return on the the return on equity investment, it’s been promulgated and 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 others.

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 than X 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, to really top it off, Apple.

It’s just it‘s, 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 return.

And climate change comes along and it causes way 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, and climate change enters into that.

And it can be done through public power or it can be done through private enterprise to quite a degree.

And we would be certainly good for a hundred billion or more, but we’re not going to throw good money after bad.

7. Artificial intelligence (AI) could make fraud “the growth industry of all time”

WARREN BUFFETT: OK. Let’s do station four.

AUDIENCE MEMBER: Hi, I’m Joe, visiting from San Francisco.

How do you think about the role of technological advances, especially generative AI, on more traditional industries? Thank you.

WARREN BUFFETT: Yeah. I made a mistake in calling on four, but I’ll get back to two later on. (Laughs)

The I don’t know anything about AI. But I do I do have I don‘t that doesn’t mean I deny its existence or importance or anything of the sort.

And last year I said, you know, that we let the genie out of the bottle when we developed nuclear weapons, and that genie has been doing some terrible things lately.

And the power of that genie is what, you know, scares the hell out of me. And on, the other hand, 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 it’s enormously important, and it’s going to be done by somebody.

So we may wish we’d never seen that genie or it 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’ve evaluated during World War II whether we tested a 20,000-ton bomb that we felt was absolutely necessary for the United States and would actually save lives in the long run, but where we also had Edmund [Edward] Teller, I think it was, it was on a parallel with Einstein, in terms of saying, you may, with this test, ignite the atmosphere in such a way that civilization doesn’t continue.

And we decided to let the genie out of the bottle, and it accomplished the immediate objective. But whether it’s going to change the future of society, we will find out later.

Now AI, I had one experience that does make me a little nervous. And I’ll just explain it.

Very recently fairly recently I saw an image in front of my eyes on the screen, and it was me, and it was my voice and wearing the kind of clothes I wear. And my wife or my daughter wouldn’t have been able to detect any difference. And it was delivering a message that no way came from me.

So it when you think of the potential for scamming people, if you can reproduce images that I can’t even tell, that say, I need money, you know, it’s your daughter, I’ve just had a car crash. I need fifty thousand dollars wired.

I mean, scamming has always been part of the American scene. But this would make me, if I was interested in investing in scamming, it’s going to be the growth industry of all time.

And it’s enabled in a way 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. (Laughter)

So I don’t have any advice on how 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 harm, and I just don’t know how that plays out.

8. GEICO is catching up with competitors on using data technology to set rates

WARREN BUFFETT: I’d like to mention to Becky that Ajit [Jain] will not be participating in the afternoon session, so if you could focus on any if there are insurance questions you want to ask, that he’d be a good one.

BECKY QUICK: Yeah. This next question is for both Warren and Ajit. It’s from Ben Knoll, who’s a Minneapolis shareholder, who’s been a shareholder since 1995.

And he says, “In an interview this past year, Todd Combs said that in first meeting you in 2010, he told you GEICO is better at marketing and branding but Progressive is a data company and data is going to win in the long run.

“But it appears you did not prioritize data analytics at GEICO until a decade later when you made Todd CEO.

As business units like GEICO age and need new strategic direction, I wonder if Berkshire’s hands-off management approach is a source of vulnerability.

“Will you please review your thinking on changes made at GEICO and explain how Berkshire is structured to react if the Berkshire CEO sees that a business unit is strategically offtrack.

And, Ajit, I hope you will continue to update us on yours and Todd’s progress and remedying the data analytics shortcomings at GEICO.”

WARREN BUFFETT: Ajit, would you like to

AJIT JAIN: Yeah. As Warren has pointed out in the past, one of the drawbacks that GEICO is faced with, it hasn’t been doing as good a job as matching rate with risk and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at GEICO for a few years now.

We are trying to still play catch-up. Technology is something that is unfortunately a bottleneck. But there again, we are making progress. And equally importantly, we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data.

So, yes, I recognize we are still behind. We’re taking steps to bridge the gap and hopefully by the certainly by the end of ’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.

WARREN BUFFETT: I would add that equating rate with risk, obviously, is important in every line of the insurance business. I mean, that’s what you’re involved with is deciding whether a given rate offers us the chance or the probability that we will make a little money on it and that sometimes we’re only risking losing a little and sometimes we’re risking losing huge amounts.

But GEICO and Progressive has done a better job in that recently.

But our fundamental advantage at GEICO, of course, is that we have lower costs than virtually anybody. And that cost advantage has been dramatic. We’ve driven our underwriting expense ratio below 10 percent, and there’s well, 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 percent of the market than a half of X percent.

But we roughly I think in the month of March we were just we didn’t lose policyholders, and we’ve got 16 million, or whatever it is, of them. And we’ve got the lowest cost of operation.

So, it’s not a threat it’s not remotely a threat to survival. It’s not a throat it‘s not a threat 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 it in 1936, but the same principle that worked then is that if you can offer somebody a good product cheaper than the other guy then everybody practically has to buy it.

And it’s a big business. You know, it’s very attractive to be in, and GEICO is a very attractive business and has got its lowest cost thing. And it does have to do a better job of matching rate to risk.

But our low costs have masked the fact that, for a while, that we could do without progressing as much as we should’ve in the matching of rate to risk.

And now Todd has been working intensively at that, and he’s made a lot of progress. But there’s still work to be do be done.

But in the meantime, we’re not going to shrink, and we‘re going we should make underwriting profits than most companies in the auto insurance business.

9. Surround yourself with people you trust, like Charlie Munger

WARREN BUFFETT: OK. 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?

AUDIENCE MEMBER: Yeah. Good morning. My name is Sebastian Zartorter (PH). I’m from Munich, Germany. Berkshire Hathaway is a very respected 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.

WARREN BUFFETT: Well, it depends whether they’re advising me on money or on other things. (Laughs)

I trust my children and my wife totally, but that doesn’t mean I ask them what stocks to buy. (Laughs)

The but the you know, I was in terms of managing money, there wasn’t anybody better in the world to talk to for, you know, 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, it so I to some extent I talk to myself on investments. And

I think my children have gotten a whole lot wiser over the years. And so I listen to them on a lot of things.

You know, I listen to my daughter on who to vote for locally because she knows a lot more about that than I do.

And I‘ll I‘ll listen to my wife on a lot of things. And I won’t get into details. (Laughs)

So it it is it is important.

If 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 twenties, of being able to have people I trusted around me.

And I’ve made mistakes occasionally, but they filter out over time. You learn.

And when I found Charlie, 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, and you can think about this.

Charlie, in 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 it 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 really prefer the way you used to do your hair, or the way that somebody over across the room does it.

I mean, he was but in terms of having a partner, I simply cannot think of a conversation I ever had with Charlie that in the least he misled me or shaped it his way or anything of the sort.

So, when you get that in your life, you know, you cherish those people, and you sort of forget about the rest. OK. (Applause)

10. Limiting many policies to one year greatly reduces climate change risk

WARREN BUFFETT: Becky?

BECKY QUICK: This question’s for Ajit. It comes from Meher Bharucha.

“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.

How does Mr. Jain see this risk expanding to other regions, and how has the thesis on insurance investments changed because of it?”

AJIT JAIN: Climate change, climate risk, is certainly a factor that has become has come into focus in a very, very big way more recently.

Now, the one thing that mitigates the problem for us, especially in some of the reinsurance operations we are in, is our contractual liabilities are limited to a year in most cases.

So as a result of which, at the end of a year, we get the opportunity to reprice, including the decision to get out of the business altogether if we don’t like the pricing of 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 above the ahead of the curve. But that doesn’t happen in all cases.

The regulators don’t make it any easier by tying our feet to the ground and making it difficult for us to withdraw from certain territories or to make dramatic changes in the pricing of certain products.

As a result of which, a number of insurance carriers, included 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’re coming back into bounds.

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 and in spite of increased risk of fires and flooding, it’s going to be an OK place to be in.

WARREN BUFFETT: Yeah, climate climate change increases risk. And, you know, it 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 rather have Ajit assessing this than any thousand underwriters or insurance managers in the world.

I mean, the factors aren’t you know, well, we’ll take Atlantic hurricanes that 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 warm water does to hurricanes, but you don’t know 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 losses.

But we’ll write it one year at a time and we’ll have Ajit 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. (Laughs)

Now, it’s we get 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, where your your decisions extend for a long time in the future. We try to avoid those.

But again, you don’t need a thousand people analyzing water currents or anything. You need one very, very, very smart guy, and we’ve got him. (Laughs)

OK.

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

WARREN BUFFETT: And it has been for us. If you look at GEICO, it had 175,000 policies, roughly, in 1950, and it was getting roughly 40 bucks a car. So that was 7 million of volume.

And, you know, now we have we’re getting over two thousand dollars.

Well, all the advances in technology and everything like that if we had been wedded to some formula, what we did with 40 dollars, we’d have had a terrible business.

But in effect, by making the cars much safer they’ve also made them much more expensive to repair and a whole bunch of things have happened, including inflation.

So now we have a 40-billion-dollar 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-dollar company.

11. We‘re not ‘uncomfortable‘ investing in Canada

WARREN BUFFETT: OK. We’re now finally coordinated to where station three, I believe.

AUDIENCE MEMBER: Hello. Hey. Hey, everyone.

Hi, Warren. I’m Liam. I’m 27 from Newmarket, Ontario, Canada.

I got invested in Berkshire thanks to my dad who brought me down to this meeting. I’m so excited to be here.

Most 27-year-olds have idols who are rappers, but instead my idols are Warren, Charlie, who we’ll 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 stocks right now, and I don’t know what your opinions on are on these.

And I also wonder at, in your nineties, if the rumors are true and you’re still able to eat McDonald’s.

I like fast food myself, but I always wonder, at 93, he’s still able to eat those and enjoy the Coca-Cola. Thanks, Warren.

WARREN BUFFETT: OK. Well, we’ve got a Canadian here, so we’ll let him answer that first part. (Laughter)

And if you if you watch me, you’ll see what I like to eat, I mean. (Laughs)

Go to it, Greg.

GREG ABEL: OK. Yeah, well, we are fortunate to have a number of operations up in Canada.

It goes across many of our operating entities, and then, as Warren touched on, all the businesses that we have a piece of, that we’re invested in, are up in Canada.

So the presence is significant.

We’re always looking at making incremental investments there because it’s an environment we’re very comfortable with.

Warren touched on understanding the U.S. environment business environment and I would put Canada equally in that bucket, that we understand it and would be comfortable.

And I would say the economy moves very closely to the U.S. So, the results we’re seeing out of our various businesses that report both their U.S. and Canadian operations aren’t drastically 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’s growing, and I would see it being very consistent with what we see here.

Warren, anything to

WARREN BUFFETT: Yeah. No, we Canadian 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. That

When we see anything that’s suggesting an idea that’s of a size that would interest [us] here and meets other requirements, we don’t have any hesitancy about putting big money in Canada.

It’s just and there are things we actually can do fairly well that or Canada could you know, 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’d 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 it we do not feel uncomfortable in any way, shape, or form putting our money into Canada. In fact, we’re actually looking at one thing now.

But, you know, they still have to meet our standards in 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, 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 confident about operating there.

12. Ajit Jain has built Berkshire‘s insurance operations to last

WARREN BUFFETT: OK. Becky?

BECKY QUICK: And, Warren, you just said that you’d rather have Ajit 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 Blakley 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, swim to Ajit.

While we often discuss plans for the next CEO of Berkshire, little is mentioned on who will one day replace Ajit.

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

WARREN BUFFETT: Well, I would say we won’t find another Ajit. But, fortunately, he’s a good bit younger than I am.

So, I hope you have to worry a little bit about me first, before you start worrying about Ajit. (Laughter)

You know, we won’t find another Ajit, 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 try to imitate them.

And so we’ve institutionalized some of our advantages. But Ajit, is a well, he allowed his presence allowed us to do it. And he did it.

But now, we’ve created a structure that didn’t exist when he came in 1986. Nothing close to it existed with us or with anybody else.

And insurance is the most important business at Berkshire.

Marketable securities are important, but they’re not in the class, exactly, as our insurance business.

And Ajit we 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 made quite a bit of money in the stocks of of insurance companies.

But we needed we needed an Ajit.

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 didn’t challenge his intellect.

And I said, well, we’ve got a lot of challenges, so -(Laughs)

You know nobody’s perfect. So you’ve never seen an insurance policy or (laughs) owned an insurance stock, but here are the keys. And that’s worked out very well. (Applause)

AJIT JAIN: Thank you very much, Warren. Thank you very much, everyone.

But the fact of the matter is, nobody is irreplaceable. And we have [Apple CEO} Tim Cook here in the audience, I believe, who has proved that

WARREN BUFFETT: Yeah.

AJIT JAIN: and has set an example for a lot of people who follow. (Applause)

WARREN BUFFETT: That’s a great observation.

AJIT JAIN: 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 had 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 case to, if something were to happen to me.

Obviously, that could be 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 keep still keep revolving around the axis.

WARREN BUFFETT: OK. We know what we -(applause) we know what we will do. We know it’s a good answer. But we know isn‘t we won’t have another Ajit.

13. Charlie Munger was ‘peaking‘ at the age of 99

WARREN BUFFETT: Station five.

AUDIENCE MEMBER: Hi. My name is Ange Enunikis (PH).

And I’m wondering, if you had one more day with Charlie, what would you do with him?

WARREN BUFFETT: Hmm. (Laughs) (Applause)

Well, it’s kind of interesting because, in effect, I did have one more day. I mean, it wasn’t a full day or anything, but but he

We we always lived in a way where we were happy with what we were doing every day.

I mean, Charlie liked learning. He liked, as I mentioned in the movie, he liked a wide variety of things.

So, he was much broader than I was. But I didn’t have any great desire to be as broad as he was. And he didn’t have any great desire to be as narrow as I. But we had a lot of fun, doing anything.

And, you know, we’d play golf together. We’d play tennis together. We did everything together.

And this, you may find kind of interesting, we had as much fun, perhaps even more, to some extent, with things that failed because then, we really had to work and work our way out of them.

And, in a sense, there’s more fun having somebody that’s your partner and digging your way out of a foxhole than there is just sitting there and watching an idea that you got ten years ago just continually produce more and more profit. So

It wasn‘t you know he really he really fooled me, though, on he went to 99.9 years. I mean

If you had picked two guys, you know he publicly said he never did a day of exercise, except what was required when he was in the Army. So, he never did a day of voluntarily exercise. He never thought about what he ate, you know? It you know

We started every day and Charlie had he was interested in more things than I was.

But we never had any doubts about the other person, period.

And so if I’d had another day with him, we’d probably do the same thing we were doing the earlier days. But

And we wouldn’t have wanted to know that we only had one day. (Laughs)

There’s a great advantage in not knowing where you‘re going what day you’re going to die.

And Charlie always said, you know, just tell me where I’m going to die so I’ll never go there. (Laughter)

It 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. It’s remarkable.

You know, they he he I would I told him, in the last few years, I’d never seen anybody that was peaking, you know, at 99. And -(Laughs)

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, I could name a whole bunch of names but just I‘ll start with Elon Musk, but go down the list, and they all wanted to meet Charlie. And Charlie was happy to talk with them.

And the only the only person I could think of, otherwise, was the Dalia Lama. I don’t know that they had a lot else in common, but -(laughs)

It was he lived his life the way he wanted to. And he got to say what he wanted to say. He, like I, loved having a podium.

And, again, I can’t remember any time that he was mad at me, or I was mad at him. It just didn’t happen.

And calling him was fun, back when long distance rates were high. And we didn’t talk as often, as the years in recent years. We used to be on, daily, for long periods.

And we did keep learning. And we liked learning together. But, you know

We tended to be a little smarter, because as the years went by because we had mistakes and we had other things, where we learned something.

And the fact that he and I were on the same wavelength, in that respect, meant 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

Sometimes, people would say to me or Charlie, at one of these meetings, you know, if you could only have lunch with one person that lived over the last 2,000 or so years, you know, who would you want to have it with?

Charlie says, I’ve already met all of them, you know, because he he read all their books. I mean

And he eliminated all of the trouble of going to restaurants to meet them or anything like that. He just went through a book.

He had met Ben Franklin. And he really he was remarkable. He’s had, really, no one else to meet because he’d read all their stuff. And he liked Ben Franklin’s stuff better than he liked mine, but

But Ben Franklin, he just had to read about it. He didn’t have to he didn‘t have to go have lunch with him or anything of the sort.

But it’s an interesting question. What you should probably ask yourself is that, who do you feel that you’d want to start spending the last day of your life with, and then figure out a way to start meeting them tomorrow.

And meet them as often as you can, because why wait until the last day. And don’t bother with the others? (Applause)

14. Cyber insurance is hot but too risky for now

WARREN BUFFETT: OK, Becky.

BECKY QUICK: This question comes from Karel De Gend in Switzerland, in Europe. And this is for both Mr. Buffett and Mr. Jain.

“As political instability in the world is growing with the rise in the number of armed conflicts and trade tension, there is also increasing risk of cyberattacks.

What are your views on cybersecurity insurance? I’m asking this question, in general, for retail, small businesses, and large companies, including critical key infrastructure, such as power plants, harbors, airports, nuclear plants, et cetera.

Do you see a potential for profit making in cybersecurity insurances? And what are the key challenges?”

AJIT JAIN: OK. Let me start.

Cyber insurance has become a very fashionable product, these days. Over these last few years, it is, at least, a 10-billion-dollar market right now, globally.

And profitability has also been fairly high. I think profitability of at least 20 percent of the total premium, has ended up as profit in the pockets of the insurance barons.

Now, having said that, we at Berkshire tend to be very, very careful when it comes to taking on cyber insurance liabilities actually, for two reasons.

One is it’s very difficult to know what is the quantum of losses that can be subject to a single occurrence. And the aggregation potential of cyber losses, especially if some cloud operation comes to a standstill, you know, can aggregation potential can be huge. And not being able to have a worst-case cap on it is what scares us.

Secondly, it’s also very difficult to have some sense of what we call lost cost, or the cost of goods sold, could potentially be. It’s not just for a single loss, but for losses across over time.

They have been fairly well contained. Out of a hundred cents of the dollar, the premium losses over the last four of five years, I think have not been beyond forty 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 say what your true lost cost is.

So, in our insurance operations, I have told the people running the operations is I have discouraged them from writing cyber insurance.

To the extent that 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.

WARREN BUFFETT: Well, you’ve just made you‘ve just heard heard why Ajit is invaluable, because

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 it happened, I think, in the 1968, when there were the riots in various cities because I think it was the Bobby Kennedy death that set it off or the Martin Luther King death. I’m not sure which one.

But, in any event, when you had a policy, you have a limit in that policy. But the question is, what is one event?

So, if somebody is assassinated in some town and that causes losses at thousands of businesses all over the country, if you’ve written all of those thousands of policies, do you have one event or do you have a thousand events?

And there’s no place where that kind of a dilemma enters into it more than cyber, because if you think about it, if you know let’s say you’re writing 10 million dollars of limit per risk. And 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 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’s an easy issue. You can write a lot of it. The agents like it. You know, they’re getting a commission on every policy they write.

And you’ve got to have somebody in charge of things that understands that you may get an aggregation of risks that you never dreamt of and, maybe, worse than some earthquake happening some place just because you have a whole bunch of policies with a million-dollar limit.

And I would say that human nature is such that most insurance companies will get very excited. And their agents will get very excited. And it’s very fashionable. And it’s kind of interesting.

And, as Charlie would say, it may be rat poison. (Laughter)

15. Solar and wind aren‘t reliable enough yet to totally stop using fossil fuels

WARREN BUFFETT: OK. Well, that cheerful view, we’ll go to station six.

AUDIENCE MEMBER: Good morning. This question is for Warren Buffett and Greg Abel.

My name is Maria Perenes (PH). I am a retiree from Las Vegas, Nevada. I am here today as a member of (unintellligible) Nevada, a group (unintelligible) Latine leaders for the environment of justices.

I am also I am almost here, represented in many Latine in families in Nevada who are struggling to pay their utility bills and want access to affordable, clean electricity.

I want to [ask] today, why is NV Energy, which is owned by the Berkshire Hathaway, building new gas plants instead of investing in solar energy with Nevada, one of the sunniest states in the country?

Can I expect to see future leadership take dangerous investments in the fossils levels more seriously? Thank you.

WARREN BUFFETT: And thank you, Maria. Greg, you want to?

GREG ABEL: 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‘s a great opportunity for NV Energy and we’ll continue to utilize it as a resource and continue to invest in it in that utility and the other utility we have in Nevada.

We’re also in a point where when you think of a transition that’s going on within the energy sector, we are transitioning from carbon resources to renewable resources, as was noted. But it will not occur overnight. That transition will take many years.

And as we use the 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 our with the state representatives and our regulatory agencies to make sure we can serve those customers, every day and every minute.

We have great examples in Iowa, where, at times, a hundred percent of our energy comes from wind. And we’re thrilled with that. And I believe we did 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 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. (Applause)

WARREN BUFFETT: And we’ve got the capital to do whatever makes the most sense in a place like Nevada. And Nevada, I don’t know, each state calls their ruling commission something different, but they probably call it the Public Service Commission or something like and they’re making the decision as to what they think can and should be done in terms of getting from a vastly complicated utility business moves toward something different without messing things up in the meantime, and, you know, having the lights go off.

They I think they would probably agree with you very much, Maria, that they what they where they want to get. But they can’t they can‘t do it tomorrow, you know, because of the intermittent problems.

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

GREG ABEL: Right.

WARREN BUFFETT: Yeah.

GREG ABEL: Yeah, generally, a battery right now, to do it in an economical way, is a four-hour battery. And when you think of the time without the sun being available, that’s a challenge.

Now, there’s a lot of technology advancements. And that’s stretching out. And you throw dollars at a lot of things, you can accomplish things.

But the reality is that there’s a careful balance of the reliability and also balancing, as you as it was noted, the rates do matter and how much customers are paying.

So, delicate balance of both delivering reliability but doing it in an affordable way.

WARREN BUFFETT: Yeah. My friend, Bill Gates he’s working on shortening up that or lengthening the time the battery works.

And so you’ve had some very smart people working on it. But it isn‘t something that you actually do overnight. And I can understand why people want it done overnight.

But it is going to take a lot of money. It’s going to take a lot of good ideas and smart people, like Bill and Greg not me. I don’t understand why the damn lights go on when I even turn the switch. But those fellows really do know. And there’s plenty of them working on it. And we’ve 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, that‘s just, you know -(laughter)

You may want you may want a baby, but

So, there are certain laws of nature that you have to work with.

16. Florida‘s insurance market is difficult, but the state is trying to improve it

WARREN BUFFETT: OK. Becky?

BECKY QUICK: 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 JAIN: Yeah. The Florida market, both for auto insurance and for homeowner‘s insurance, has had a few tough years.

The two problems we face in Florida, and all the risk bearers face in Florida, one is the lawyers and the amount of corruption that takes place in the Florida market is keeps skyrocketing, making it difficult for us to price the product and make a profit.

And, secondly, the amount of activity, in terms of storms, both the frequency and the severity, is also so severe that the losses in Florida tend to make it very difficult for a risk bearer to make money.

Having said that, we’ve had a we fortunately had a very good run in 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 flew 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 the time.

The Florida market, the legislators are trying to improve it. They have passed a 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 we’ll be deploying capital out there.

17. Life advice: set goals and take the paths that achieve them

WARREN BUFFETT: OK. Station seven, please?

AUDIENCE MEMBER: Hi, Warren. My name is Christine Hoenig Garcia. And I’m from Agoura 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?

WARREN BUFFETT: Well, too bad you didn’t add you added that what the rest of us would like to hear. (Laughs)

Well, I would say that if I had one piece of advice, I would well, and you’re lucky you live in this country because just to start with, because you’ve got opportunities here that wouldn’t exist in (applause) much of the world.

But I would like I would like really sort of use Charlie’s advice of thinking how you would like your obituary to read and then start selecting the educational paths, the social paths, you know, the whatever -(unintelligible) that your particular situation, in terms of associating, and perhaps certainly in my day, it would have been marrying the person that would best help you do that.

Well, Charlie would say you are offering some similar benefit to the partner.

And, you know, the opportunity in this country is, you know, it‘s basically limitless.

But 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 know, your grandson was granddaughter was going to be a shepherd.

I mean, 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, or 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.

You know, you 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 to take the job that you I mean, find the job that you want would like to have if you didn’t need a job. And sometimes you can find that very early. And sometimes sometimes you go through various experiences.

But don’t forget what you‘re trying actually are trying to do. And there’s no place to do it like this country. And find the person that you like to share your life with, in many cases.

And, you know, sometimes you get lucky and do that early. And sometimes you make mistakes.

But I would I would try to you know, in a very, very general way, I would try to figure out how you’d want to look back on your life and think about yourself and start today to go on the path that leads to that goal and expect some difficulties along the way.

But if you’re thinking that way, you’re more likely to get there. (Applause)

18. Greg Abel is now working directly with Berkshire‘s managers

WARREN BUFFETT: Becky.

BECKY QUICK: This question comes from Axel Meyersiek in Hamburg, Germany.

What has changed for Berkshire’s operating CEOs since Greg Abel and Ajit Jain became vice chairmen? For example, can and do the operating CEOs still reach out to Warren Buffett directly?

WARREN BUFFETT: Well, that‘s the answer might surprise you. But they overwhelmingly, the operating executives, well they prefer to talk to Greg or to Ajit. (Laughs)

And that’s understandable because I don’t really do much. And I don’t operate at the same level of efficiency that I would have 30 years ago or 40 years ago.

I don’t know the managers as well as I would have when we were smaller and when I could get more accomplished in a day than I can now.

And you‘ve got when you’ve got somebody like Greg and Ajit, you know, why settle for me, I mean, basically? (Laughs)

So it’s worked out extremely well.

And I almost can’t imagine anything working better. Because 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 Ajit about insurance. 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, which would be a lot of them, they they would much prefer it, 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 people who

You know, there’ll be some people, if you have 20 children and you’re very rich, you’ll have some that will be go-getters anyway. And you’ll have some that won’t. And we are a very, very rich company.

And we don‘t we haven’t had a history of being very tough on people that coasted. And we’ve had some that would do that.

And Greg will do something about it. And Charlie and I wouldn’t have. Not because we didn’t know it should be done, but because we were doing so well ourselves. (Laughs)

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, I would I would say that the number of calls I get from managers is essentially awfully close to zero. And Greg is handling those.

And I don’t know quite how he does it. But but we’ve got the right person. I can tell you that.

And with Ajit, he does less physical moving. And the insurance people are more used to working with Ajit, obviously, over the years.

So, I wouldn’t say that changing the title really changes much there. Because he was in charge of insurance anyway. So that‘s you know, you can 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. (Laughs)

BECKY QUICK: Ajit raised his hand.

AJIT JAIN: Yeah, if I can add a comment. From my perspective, the transition has worked out very, very well.

But I think the credit really goes to how Warren has handled the situation. 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.

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 were very responsive to it. And it’s a non-issue as far as today is concerned.

GREG ABEL: Ajit, I‘d probably add -(applause) yeah Ajit, the only thing I would add is we do have an exceptional set of managers across both the non-insurance and insurance.

And yes, Warren made it incredibly easy, but so did they. It was a very easy transition because they care deeply about Berkshire. They care deeply about the culture. And they very much wanted it to be a success.

And we’re fortunate to have those managers in insurance and non-insurance. So, thank you.

WARREN BUFFETT: Yeah -(applause) 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 Greg is I don‘t you know, there 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 get the same feeling in terms of judging the attractiveness of businesses and making capital decisions and that sort of thing. But but he’s willing to work.

I mean, you know, and I couldn’t get as much done anyway. You know, what I could do in a couple of hours, you know, may take eight hours now. I just don’t read as fast and everything.

But it’s working very well. And this place, if anything happened to me, it would be working extremely well the next day.

I don’t get any phone calls. You could actually we can rig something up, so we get some answering machine that people think I’m still around, you know, or something, in terms -(Laughter)

So anyway, that’s that‘s much much less than you’d learn in business school. But that’s the way we do it at Berkshire.

• ‘Loads of opportunities‘ in India that ‘more energetic‘ future Berkshire management could explore

WARREN BUFFETT: OK. Station eight.

AUDIENCE MEMBER: Yeah, Warren, Greg, and Ajit. Thank you for having us.

Your teachings have not only made us better investors, but more importantly better people. Thank you for that.

My name is Rajeev Agrawal and I am from New Jersey. I run an India-focused fund called DoorDarshi India Fund.

My question is related to India. Indian economy and Indian equities have done quite well in the last five, 10, 20 years. It is the fifth largest economy, and it 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.

WARREN BUFFETT: Yeah, well, it’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 contacts that will make possible some some transaction that might where 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 unattended to opportunity in that area. I’m not the one to do it. But that may be something that in the future it might be opportunities. There are opportunities.

The question is, does Berkshire have some kind of advantage in actually pursuing those opportunities against particularly against people that are using other people’s money 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 they buy.

So we’ll see how the next management plays the game out at Berkshire. And fortunately, you don’t have too long to wait on that, generally.

I feel fine. But I I know a little bit about actuarial tables, and -(laughter)

I just well, I would say this. 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 quite that sure of where you’re going to be in four years. (Laughs)

OK. (Applause)

But you’re absolutely right about if you were energetic, had some way to become a buyer or a party that people particularly wanted to do business with, Japan was great.

And India could be great. But India and Japan aren’t the same. I mean, I don’t adapt myself terribly well to different cultures. And some people are really good at it. And almost anybody is better than I am. But I stumbled into one or two.

But that could happen in, you know, act two of Berkshire Hathaway.

20. Berkshire will remain attractive to managers who share its culture

WARREN BUFFETT: Becky.

BECKY QUICK: This is a question from Rafael del Pino from Spain.

Berkshire has grown tremendously thanks to, and among things, its architect, Mr. Munger, and you, it’s 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 sub-contractors in Mr. Abel, Mr. Jain, Mr. Combs, and Mr. Weschler.

However, for a long time, you’ve had the advantage that talented sub-contractors 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?

WARREN BUFFETT: Yeah, well, that’s a great question to which Charlie and I obviously talked a lot about over time.

And of course, we we will not Berkshire, 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.

And maybe 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 want to keep them around till they really start being affected by old age, which hits different people at different times. But it hits everybody eventually.

And so we it’s very likely that if the directors, and it’s very tough, because they will be acting against conventional wisdom, which is always difficult.

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 percent of the job of the directors. And the other 1 percent is, do you have a good method to correct it if you made a wrong decision?

And that’s extremely hard to do in our present system. It’s not impossible. But it’s just not something that happens. It’s too good a job to be a director to try and throw over somebody, 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 of directors at all. And it doesn’t operate at all well, I shouldn’t say at all but it doesn’t operate as people may think it generally operates.

So, we will you know we 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’s 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, 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, we do Greg is going to have to tell the directors about what if something happened tomorrow, he has to tell the directors about what should be done if anything happens to him. And that’s not an easy thing to do.

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. You might need three in a century. And you might need 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.

Greg, having been put on the spot like that (laughs), you don’t have to name anybody now. But I’m sure the crowd would love it and make news. (Laughter)

GREG ABEL: Well, the only thing I would add, Warren, is and it’s really how the comments 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.

WARREN BUFFETT: OK. (Applause)

21. Board‘s job is to pick the right CEO every 20 years

WARREN BUFFETT: Station nine. I’m never sure where nine is.

AUDIENCE MEMBER: Hi. I’m Sherman Lam, a Berkshire shareholder. And I work for a family office in Kuala Lampur, Malaysia.

Just really happy to see you, Warren, and the team. And where I come from, you’re a hero. And both you and Charlie have positively transformed mine and many, many other Malaysians and Southeast Asians lives, not only financially, but also in how we navigate our lives and relationships. Thank you very, very, very much. (Applause)

WARREN BUFFETT: Well, thank you. Thank you. That makes us feel good. (Laughs)

AUDIENCE MEMBER: Question is, what have your teams’ greatest learnings been on business, capital allocation, stock picking, and portfolio allocation throughout the COVID-19 pandemic period over the last five years?

And, we would appreciate it if we 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.

WARREN BUFFETT: Yeah. I don’t think I want to give individual appraisals.

But really what you’re doing is in terms of capital allocation, which is my job I don‘t go out and sell insurance policies or anything of the sort. And you represent a group of shareholders like we do represent.

We are totally clear on our mission. And, you know, it may be that other people don’t agree with them. But I would say that in great many places, you know, I just don’t agree with their mission. (Laughs)

And, you know, I would say that, for example, that anybody that wants to retire at 65 would be disqualified from being CEO of Berkshire.

They might get they might get retired the next day if they were the wrong person. But there’s just certain things we don’t want. And, the

We’re well fixed now. And the odds are very good, but far from certainty, that that takes care of the next 20 years. Now, the but you have to provide for the contingency.

And I there’s several people on the board that know what I would do on that. But it’s up to Greg. But if Greg and I go at the same time, then you’ll move into making another decision.

And, you know, there are a few people who know my thoughts on that. But the job of the director is then to come up with the right CEO.

And the right CEO can 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, as Charlie said, you know, he had 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. (Laughs)

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 have quit the textile business much faster and (laughs) we’d have been better off.

But so, the answer was for him to get in the TV business like Murph had done and add some (unintelligible). 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 a home for retired nuns. And he only painted the side that faced the street.

He had one car dashing around town. And he called it “news truck number six.” But from that he built an incredible company. And he built it because he was the best manager I’ve ever met. But beyond that, it wasn’t a good business.

And the key will be to have the key will be to find another Tom Murphy and then hand him a bunch of good businesses, and he or she will know what to do with it.

Now that’s not as precise as you would get in most companies. But you really can’t get more precise than that.

I mean, you can have committees and management consultants and everybody. But it wasn’t a management consultant that hired Tom Murphy.

And I forget whether he was doing his sales volume was a couple thousand a week at first. And then soon as he hit that what was his goal, or if he got to 2,000, he says, now, my goal is 3,000. (Laughs) And he kept doing that.

And he surpassed all these people like CBS and ABC that owned the world by the tail.

And it was just a wonderful lesson in life to get just to be able to view something like that. I learned an awful lot from what he said to me. But I just learned by watching somebody like him operate.

I mean, it’s like watching a great golfer or a great tennis player. And you ought to learn something about the kind of swing you’re trying to develop or something of the sort.

So that’s not a great answer for you. But it‘s so far it’s worked. And I think it works I’m very sure it works with Greg.

And it’s up to people in the future when, you know, I’m underground or wherever they put me, to really make a decision every 20 years or something like that on average. It’s the right decision. But correct it if it turns out to be the wrong decision.

That’s what a board of directors is for. And we’ve got the people on the board that really understand that responsibility. They take it seriously. But they don’t take themselves too seriously. And so therefore they don’t they don‘t want to they don‘t necessarily want to do a lot of things just to look busy.

And they aren’t using us as a steppingstone to get on other boards.

But we’ve got people that really believe in what we’re doing. And they’re the ones that are going to have to make this place work.

And if they get lucky on Greg’s mortality, they can do just what Rip van Winkle did and go to sleep for 20 years or so and then make another decision.

And Berkshire has every tool in the world available.

I mean, what it is now and continue to be what it is now. I mean, we’ve gotten from 20 million of net worth to 570 billion.

And, you know, we there aren’t as many things to do, but we can do a few big things better than anybody else can do. And there will be occasional times when we’re the only one willing to act.

And at those times, we want to be sure that the U.S. government thinks we’re an asset to the situation and not a liability or a supplicant, you know, as the banks were, we’ll say in 2008 and ’09. They were all tarred with the same brush.

But we want to be sure that the brush that determines our future, you know, is not tarred. And I think we‘re in the I don’t think anybody’s got a better position to do it than Berkshire. (Applause)

22. Berkshire has a lot of cash, but ‘things aren‘t attractive‘ to buy now

WARREN BUFFETT: Becky?

BECKY QUICK: This question’s from Johan Heylen, who writes, “You’re sitting on a 168 billion of cash, which you told us today is now more than 182 billion dollars.” His questions are, “One, what is Buffett waiting for? And two, why not at least deploy some of it?”

WARREN BUFFETT: Well, I think that’s pretty (laughs) 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 percent, but we wouldn’t use it if it was at 1 percent.

Don’t tell the Federal Reserve that -(laughter) 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 the last two pitches they ought to swing at the third one or something like that, it’s just there are times and obviously but I would say this.

I would not like to be running 10 billion now. Ten million I think we could I think Charlie or I could earn high returns on, because I think there are just a few things that happen on a very, very small scale.

But that if we had 10 billion, we wouldn’t I wouldn’t basically see many more opportunities than we’ve found.

Now, it’s true that something like Japan we could’ve done if the company had had a 30 or 40 billion and we’d make we‘d have had great returns on equity.

But if I saw one of those now, I’d do it for Berkshire.

You know, it isn’t like I’ve got a hunger strike or something like that going on. It’s just that they things aren’t attractive. And there is well, there are certain ways that can change, and we’ll see whether they do.

23. Settlement may change commission structure, but real estate agents still have important role

WARREN BUFFETT: OK. Station 10.

AUDIENCE MEMBER: Mr. Buffett, this is an incredible meeting that you host every year. My name is Sean Cawley. I am a real estate agent with Berkshire Hathaway Home Services in Arizona and California.

My mother Cindy, my brother, and my two sisters all sell real estate with Berkshire Hathaway Home Services for many years.

We love being a part of the Berkshire family along with the 70,000 other agents that sell real estate for the company.

Mr. Buffett, Home Services of America recently settled our class action lawsuit regarding commissions for $250 million last week.

This is this dollar amount’s about a hundred million more than Keller Williams, 166.5 million more than Anywhere Real Estate, which is Better Homes and Gardens and Coldwell Banker.

As a realtor with Berkshire Hathaway Home Services in multiple markets and a shareholder who’s been coming to this meeting for 15 straight years that’s one of the reasons I got involved with real estate is because of this meeting what are your thoughts on buying and selling a home in light of this recent settlement?

And I’d maybe ask the note to Greg and Ajit, too would you consider a Berkshire agent when buying your next home? (Laughter)

WARREN BUFFETT: Well, I don’t buy them that often as some people have noted. (Laughter)

But I certainly would consider them. But I’d say the probability of that happening is low. And I really appreciate the fact you’ve joined up with us.

But I’m going to in terms of the settlement, I mean Greg kept me informed but I turned it over a hundred percent to him.

So, Greg, you want to talk about it?

GREG ABEL: Sure. So, thank you for you and your family for being an agent and working for our company, Berkshire Hathaway Home Services.

I think there’s a few questions in there. One, there is no question the industry will go through some transitions because of that settlement.

Ours and the every other major player in the industry settled. The National Association of Realtors settled for more than 400 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.

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 counsel and 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 how now has to be negotiated.

That’ll impact things, but I think the realtors will continue to be a very important part of that. And I think Home Services and the industry will remain very relevant.

And then the only thing I would share with our shareholders on a broader basis is that obligation resides with Home Services and can be met by Home Services.

And that was an important condition because they were also pursuing Berkshire and Berkshire Hathaway Energy and we said, you can pursue us separately, but that settlement will reside with Home Services and be an obligation of that. And they decided the ultimate settlement and will go forward from there.

So, Warren, any other comments

WARREN BUFFETT: Well, yeah. I’ve sold two houses in the last well, in the last 93-and-a-fraction years, (Laughs)

And I’ve I don’t know I’ve bought one that I still have, but I obviously bought the other two.

And I have not negotiated down the commission, even though well, 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 think the system has really worked out very well.

When I got out of school they had, you know, what they called FSBO, you know, for sale by owner.

And so I’ve been involved to some degree in watching the whole system operate. And I know what our average agent makes. I know, you know, how long they work on things sometimes that don’t materialize. It I don’t think we’ll end up with a better system.

And but, you know, it’s up to Greg and the people at Home Services how we work it through here.

But I like our agency group, and I we’ve got a very large number as you of real estate agents. And I’ve encouraged the expansion we’ve done in the real estate agent real estate brokerage business.

You know, it was just one or two operations when we bought Berkshire Hathaway Energy, and we’ve really built up quite a company. And I think it’s a very fundamental business.

You need help. Ninety percent of the people need help, you know, in 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 and bought there was a decision in court, and I told Greg to handle it whatever way that seemed best to him. And I’m quite I’m perfectly happy with the way we’ve handled it, I think.

I’m surprised at the decision, but it we get surprised in decisions in the insurance business lots of times.

I mean, you know, 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 all kinds of people lose their jobs or 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 play the ball wherever (laughs) we find it.

And I was surprised by the decision. Was it in Missouri that

GREG ABEL: Missouri, yes.

WARREN BUFFETT: Yeah. But, you know, we’ve gotten surprised by some other decisions, and we’ll keep doing sensible things as we move forward.

Greg, do you want to, yeah

GREG ABEL: Yeah. 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 Ajit but we’ll always use Home Services agents.

But it’s interesting. I have bought a home abroad because I lived over in the United Kingdom, in Newcastle, running our utility over there.

And it is a completely different experience to buy a home outside of the 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.

WARREN BUFFETT: 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, and I did not negotiate the 6 percent down. And I feel like I got my money’s worth and then some.

And I’m cheap by nature so -(laughs) and it is not careless about it. I just I got my money’s worth.

24. Insurance companies may lose volume if Tesla is right about fewer accidents with self-driving cars

WARREN BUFFETT: So, let’s move on to Becky.

BECKY QUICK: This question’s for Warren and Ajit. It’s from Jeff Oyster.

“As a Berkshire and Tesla shareholder, I would like to hear your thoughts on the potential financial effects to GEICO, assuming Elon Musk delivers on his fully autonomous driving goal.

“On Tesla’s most recent earnings call, Elon said, ‘If you’ve got at scale a statistically significant amount of data that shows conclusively that the autonomous car has, let’s say, half the accident rate of a human-driven car, I think that’s difficult to ignore.’

“Assuming Elon succeeds in reducing accidents by 50 percent 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?”

WARREN BUFFETT: Well, the truth yeah, 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 cost.

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 prices will come down. I would

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 Ajit will confirm they’re close to bankruptcy now, aren’t they, because of taking things on at the wrong prices? Is that true of

AJIT JAIN: Yeah. Yeah.

WARREN BUFFETT: Yeah. Yeah, it insurance always looks easier than it is. And it’s so much fun because you get the money at the start, you know, and then you find out whether you’ve done something stupid later on, but

You know, it’s a very tempting business when somebody hands you money and you hand them a little piece of paper.

But really knowing whether you’re I mean, if accidents get reduced 50 percent it’s going to be good for society, and it’s going to be bad for insurance companies’ volume. But, you know, good for society is what we’re looking for.

So far, this you might find kind of interesting I mean, the number of people killed per hundred million passenger miles driven, I think it actually was in the when I was young it was, like, 15, but even post-World War II it only fell to, like, seven or thereabouts.

And Ralph Nader probably has done more for the American consumer than just about anybody in history because that seven or six has now come down to under two. And I don’t think it would’ve 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?

AJIT JAIN: Yeah

WARREN BUFFETT: Is that right, Ajit?

AJIT JAIN: Yeah. Yeah.

So, the point I want to make in terms of Tesla and the fact that they feel that because of their technology the number of accidents do come down, and that is certainly provable.

But I think what needs to be factored in as well is the repair cost of each one of these accidents has skyrocketed.

So, if you multiple 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.

25. Please be in your seats for start of second session

WARREN BUFFETT: OK. We’re getting close to noon when we’re going to break for lunch. I just want to tell everybody that I would appreciate it very much if they will get in their seats and be ready at 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 so I would like them 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 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 we’ll it’ll take a few minutes and only a few minutes to cover what we’re going to at one o‘clock. But we don’t want to be seating people during that period.

26. Berkshire isn‘t trying to predict winners in controlling climate change

WARREN BUFFETT: 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.

AUDIENCE MEMBER: My name is Humphrey Liu, and I’m from Charlottesville, Virginia.

I asked a question last year and wish to pose it again. It can be considered a follow-up.

There is something to be said for traditions. It is the same question, but it is a changing and different world we are in.

Looking at global trends, it increasingly does seem that 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.

WARREN BUFFETT: Yeah. Well, we will I hope you’re right.

And massive adoption has been sort of a moving target so far. But I hope we get there.

But Berskshire would not be I don’t think that we bring any special talent to that field. You’ve got vehicle manufacturers, and I would certainly not know how to pick the winners in an industry like that.

But I’ll be delighted if there are some winners. But don’t count on us foreseeing who the winners will be, and don’t count on us for predicting when something will happen.

It obviously has been a moving target so far, and it is an incredible problem that society faces.

And it may be that it may be that governments are not very good at solving it for a while. It’s

All of climate change is it’s got a terrible problem just 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 poorer 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.

You know, it’s a fascinating problem to me, but I don’t have anything to add to how you really slice through the world.

When I was born in 1930, there were just essentially two billion people in the world population statistic now there’s eight 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’ve not said eight billion.

There wouldn’t be anybody even 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 a

And then we’re telling a whole bunch of other people that we want them to change the way they live because of the way they live we lived and the way they lived.

So, we will see what happens with it. But that’s a problem that is be very, very, very hard to solve among a couple hundred countries.

And I really don’t have anything to be to contribute on it.

27. Carol Loomis once briefly dated Ty Cobb

WARREN BUFFETT: 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 here so many times.

But my friend Carol Loomis, who is now well, she’s going to be 95 on June 25th. You can send presents care of our office.

And Carol has edited the Berkshire annual report -(applause) since 1977.

There we are. (Applause)

And there are two points I’d like to mention.

Every year, I give Carol a little item for her bracelet that is a replica of the front page of the report that year, and they’re different colors and all of that sort of thing.

And so she now has, what, since 1977, what, 47 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 arm whether one arm wouldn’t now be four or five inches longer (laughter) than the other. But I’m sure she foresaw that.

But I want to reveal one other I want to reveal well, I want to ask one more question while Carol is 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 maybe 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, but she dated Ty Cobb. And -(Laughter)

Carol was officed at Sixth 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 hit 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 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 she was single at the time and she proceeded back to her office at Fortune.

And at some point she got a phone call from sounded like a fairly young man in Georgia, and he said, my uncle is Ty Cobb, and he would like to take you to lunch at 21.

And so Carol went to lunch with Ty Cobb at 21, and I think he subsequently had one more lunch. And then she decided to call it off.

But those of you who follow baseball may have noticed that in the 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 at-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 (laughter) if she’d known I mean, I know she wouldn’t have I know she wouldn‘t have dated Ty Cobb if his batting average had been. 300 or something like that. (Laughter)

But where was the cutoff point at which she would’ve told Ty Cobb to stay in Atlanta and forget about coming up to New York?

And if Carol would if anybody has a microphone Carol would care to express herself on that question. It’s the unanswered question that I’ve had and all inquiring minds have had and only she knows the answer.

And she’s with her daughter. She married a wonderful guy, John Loomis, and Barbara’s with her. I’m sure Barbara’s been always wanting to ask this question, but I’ve -(laughter) it’s kind of tough when you’re in the family.

But I am sort of an obnoxious guy who will do it in front of a lot of people. Carol? (Laughs)

CAROL LOOMIS: Zero. (Laughter)

WARREN BUFFETT: Or we can have Barbara’s guess. Either one will

BARBARA: She would’ve been she would have been happy to go either way, right?

CAROL LOOMIS: Yeah

BARBARA: You would’ve gone

CAROL LOOMIS: Right. (Laughter)

BARBARA: Thank you.

WARREN BUFFETT: Carol -(Applause)

Carol is the best business writer. She comes from the town of Cole Camp, Missouri. You know, I don’t know, the whole place is around a thousand, probably.

She never took an accounting course, and she ended up becoming the best business writer in the United States.

And we you know, she didn’t want to be an editor, actually. I mean, she could’ve done other things at Fortune, but she just plain liked writing business stories.

And like I say, she that nobody came close to her, and she started from scratch.

But in 1977, I asked her to edit my report, and she turned out to be just as good an editor as she was a writer. And it

All the way through this year, including this year, Carol has edited the Berkshire report. And to the extent that anybody enjoys reading them, let’s give a hand to Carol. (Applause)

28. Shareholder Ruth Gottesman donates $1 billion to make Bronx medical school tuition-free

WARREN BUFFETT: OK. And I’ve been told to show a video right before you go to lunch because it’s only 30-some seconds, and then we’ll talk a little bit more about it when we come.

So, if we’ll dim the lights, we will we will have we’ll show what a Berkshire shareholder did when she sold us a billion dollars’ worth of stock the other day. And you’ll meet somebody that I hope is I know she is the prototype she may have more zeroes, but she’s the prototype of a good many Berkshire Hathaway shareholders, and it’ll be the first thing we talk about when we come back.

But some of you may have noticed, whenever it was, a few weeks back, when Ruth Gottesman gave one billion dollars to [the] Albert Einstein [College of Medicine] to take care of all the -(Applause)

Ruth doesn’t like a lot of attention drawn to herself, but here’s how they felt at Albert Einstein when they announced that Ruth Gottesman had just made a decision to take care of all the all of the costs costs of education at Albert Einstein. And it’s going to be in perpetuity. So, let’s just show the film.

RUTH GOTTESMAN (on video): I‘m happy to share with you that starting in August this year, the Albert Einstein College of Medicine will be tuition-free.

(Audience of students shown in video erupts into extended cheers and applause)

WARREN BUFFETT: And that’s why Charlie and I have had such fun running Berkshire. (Applause)

She transferred a billion dollars to other people. She happened to do it with Berkshire stock.

And, you know, they offered to rename the school after her and everything like that, but she said, Albert Einstein, that’s a that‘s a pretty good name to start with, so

You know, there’s no ego involved, you know, nothing. She just decided that she’d rather have a hundred-plus closer to 150, eventually 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 all four sides in neon lights. And I salute her. (Applause)

Afternoon Session

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1. Berkshire shareholders are unusually generous with philanthropic contributions

WARREN BUFFETT: So please take your seats. Were going to finish at 3 so the sooner we start, the sooner - more chance well have to talk about various questions you may have.

Id just like to follow on however with that film we showed just before we left for lunch because it says something about Berkshire.

There are, you know, all kinds of public companies and wealthy public companies and - throughout America.

And there are certainly cases where in one family somebodys made a very large amount of money and is devoting it to philanthropy, or much of it to philanthropy, such as the Walton family would be the number one thing in the - in Walmart.

And certainly Bill did the same thing at - Bill Gates - did the same thing at Microsoft.

But what is unusual about Berkshire is that a very significant number of Berkshire shareholders, located all over the United States - not just in Omaha - but the number of different Berkshire holders who have contributed a hundred million dollars or more to their local charities - usually with people not knowing about it - I think is many multiples of any other public company in the country.

Its not more multiples than - you know, Bills put a whole lot into philanthropy. (Applause)

And I dont know the details of the family, but clearly theres a huge sum of money that the Walmart family, Im sure, has done all kinds of things philanthropic and will continue to do it.

But I dont think youll find any company where a group of shareholders who arent related to each other, so many of them, have done something along the lines of what Ruth [Gottesman] did, you know, a few weeks ago.

Just to exchange a little piece of paper that theyve held for five decades - and theyve lived well themselves. They havent denied their family anything.

But they dont feel that they have to create a dynasty or anything and they give it back to society. And a great many do it anonymously. They do it in many states.

To some extent we see a little - some concentration of it in Nebraska because, generally -

When youre giving away a lot of money they call it - in the philanthropic world - they call it, absorption capacity.

And the truth is its very hard to give away a billion dollars, 10 dollars at a time, to people who are needy or something of the sort.

And so large institutions have this absorption capacity, which tend to be universities or colleges or that sort of thing. And some philanthropies are much more imaginative than others.

But the one thing - Ive never - well, most of them want to do it anonymously so I cant tell their specific stories.

But I have to say one thing that was astounding is that the same day we bought a billion dollars worth of Berkshire Class A stock from Ruth so that - and I guess we were actually buying it from the school at that point because shed just given them the - so the transaction was them - was with them - but Mark Millard in our office bought a billion dollars from them, but he also bought 500 million dollars worth of stock from somebody else that nobody will ever have heard of and - in a different state - and I wont elaborate beyond that.

But we have had a very significant number of people, and theres more to come. And obviously they had to be people that came in early, or their parents did, or their grandparents did.

But theyve all lived good lives. They havent denied themselves anything.

I mean, you know, they have second homes and they - but they - they generally - well, in fact I would say almost universally they - people knew them in the community and everything, but theyve used what they accomp - what they saved. They denied themselves consumption, themselves. Thats what savings are, is consumption deferred.

And they’ve - theyve given - they’ve financed everything, all over the country. And usually, they like to do it anonymously.

I outed my sister when I wrote about her in the annual report, but Berties here today. And I told her she should wear a t-shirt or something that said no solicitors allowed, or something that - (laughter) - but they -

But they just do it.

And its really - both Charlie and I felt its really - it’s really fun to work for a group of people like that rather than for index funds or for hedge funds or whatever it may be.

I mean, youre just seeing what people actually - it sort of restores your faith in humanity that people defer their own consumption within a family for decades and decades, and then they can do something like enable, I think it may end up being 150 people, to pursue different lives - and talented people and diverse people - to become a dream of being a doctor and not have to incur incredible debt to do it or whatever may be the case. Theres a million different examples.

And I want you to know that youre very - you’re very - well, youre a unique, actually, group of shareholders among public companies, as far as I know, in terms of the way youve deferred your own consumption, while living fine, to help other people.

And it - you know, it takes a lot of years, but it can really amount to something very substantial.

And what Ruth did was - you know, at roughly my age she looked at a little piece of paper which actually was a claim check on the output of others in the future and she said instead of the output being for her that the output would be for a continuing stream of people for decades and decades and decades to come that were having a different life in the pursuit of becoming doctors than they otherwise wouldve.

And Berkshire has been - and of course her husband Sandy contributed substantially to Berkshires record. Sandy was a wonderful partner to have.

So he - it was both input by him and then there was deferred consumption by his family, and then there was ultimately this final gift to Albert Einstein.

And like I said, the same day - it was only 500 million. Itll go to - in a different way.

But its happening all over, and I dont think any companys like that. So I just want to tell you that its inspiring to work for a group of shareholders. (Applause)

2. Buffett would make Abel, when he is CEO, responsible for deciding both which businesses and which stocks to buy

WARREN BUFFETT: And, Becky, go to it. (Laughs)

BECKY QUICK: All right. The next question comes from Slaven Vukobrat.

“As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing? Or will this function be exercised by Mr. Combs and Mr. Weschler?

As investing could be defined as the discipline of relative selection, can major capital allocation decisions such as large acquisitions be separated from the common stock selection process?”

WARREN BUFFETT: Yeah, I would say that decision actually will be made when Im not around. I may try and come back and haunt them if they do it differently than - (laughs)

But - Im not sure the Ouija board (unintelligible) will get that job done.

So that job - Ill never know the answer on whether it got covered.

But I feel very comfortable about the fact that it will be made by a board that - theyve got loads of brain power. Theyve got a dedication to an unusual institution. And they will figure things out.

But I would say that if I were on that board and were making the decision, I would probably - knowing Greg - I would - I would just leave - I would leave the capital allocation to Greg. And -

He understands businesses extremely well. And if you understand businesses, you understand - you understand common stocks.

I mean, if you really know how business works, you are - you are an investment manager. How much you manage - it may be just your own funds or may be other people.

And if you really are primarily interested in getting assets under management, which is where the money is, you know, you dont really have to understand that sort of thing.

But thats not the case with Ted or Todd, obviously.

But I think the responsibility ought to be entirely with Greg.

The responsibility has been with me, and I farmed out some of it. And I used to think differently about how that would be handled.

But I think the responsibility should be that of the CEO, and whatever that CEO decides may be helpful in effectuating that responsibility, you know, thats up to him or her to decide at the time theyre running the money.

But so I would say that my thinking on that has developed to some extent as the sums have grown so large at Berkshire.

And we do not want to try and have, you know, 200 people around that are managing a billion each. It just doesnt work.

And I think that when youre handling the sums that we will have, youve got to think very strategically about how to do very big things. And I think Greg is capable of doing that.

I think Ive missed a lot of stuff in the past, so Im actually wiser about doing that now.

But I - you know, I would do it better this time around than 2008 and ’09 if something akin to that happened.

But it wont be exactly like 2008 or ’09. You can be sure of that.

But you also can say that there will be times when having huge sums available extremely quickly -maybe itll be once every five years - maybe - it will probably be more like once every ten years or something - but as the world gets more sophisticated, complicated, and intertwined, more can go wrong.

And theres no sense going through here exploring the possibilities of the different things that could happen.

But you do want to be able to act when it happens, and I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move.

It wasnt that people didnt have money in 2008. Its that they were paralyzed.

And we did have the advantage of having some capital and a willingness to - an eagerness even - to act and a government that, in effect, looked at us as an asset instead of a liability.

And I think that all of those qualities will be even more important as our capital pile grows.

And so I think Greg may have even more fun than I had in a period when extraordinary things were happening and we were the logical place to go.

Well, it - you never know whether it will be next week, next year, next decade.

But it wont be a century from now. That is for sure.

And the more intertwined and sophisticated the world financial situation gets, the more vulnerable it gets, in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to large problems.

Greg, does that bother you at all, or not? (Laughter)

GREG ABEL: Without directly answering the question, I think theres - one important thing is, I think, as we go through any transition, its important to know that the capital allocation principles that Berkshire lives by today will continue to survive, Warren.

And I think thats what - the thing Id want to communicate. That well - we have our operating businesses, insurance, non-insurance. Were going to - well provide them the capital necessary to be successful and grow if its appropriate.

At the same time, were expecting a return of capital from them when they have excess cash.

And then, as weve discussed or youve touched on, always looking at potentially new businesses as a whole or in a piece. And as youve always highlighted - and I fully agree - its - well always look at equities as were investing in a business, either one percent or a hundred percent.

But were looking at the business. Were looking at the economic prospects of that business and how sustainable it is and what it will look like 10 years from now and is our - the capital we originally put in at exponential risk, or where does that risk sit, that profile?

And then, of course - and then well obviously have our contingent to always put excess cash in the safest investment there is in U.S. Treasurys, knowing we want to maintain that fortress of a balance sheet for two reasons.

One, to act, but also to always protect our shareholders. If we have - we want to maintain the position Berkshire is in now realistically for the - to ensure - to ensure it endures.

WARREN BUFFETT: Well, when he says that it makes me wish Id stayed around to be number two instead of number one in this process (laughs) over the years. It’s -

You know, it doesnt get more fun than what were doing, and were better positioned than ever before.

Were not positioned, though, however, to earn extraordinary returns versus what American business generally earns.

You know, I would hope we could be slightly better. But nobodys going to be dramatically better in some - you know, over the next century, it gets very hard to - it gets very hard to predict who the winner will be.

And if you look back, as we did a few meetings ago, as to the top 20 companies in the world at 10-year intervals, you realize the game isnt quite as easy as it looks.

But getting a decent result actually is - reasonably - should be reasonably easy, if you just dont get talked out of doing what (laughs) has - works in the past. And dont get carried away with fads and dont listen to people who have different interests in mind than the interest of our shareholders.

3. Distribution companies don’t have a ‘wonderful’ business, but Berkshire will look at them

WARREN BUFFETT: OK. Well go to station number one.

AUDIENCE MEMBER: Hello, Mr. Buffett. My name is (unintelligible). Im from Dusseldorf, Germany. This is my first time out here in Omaha so thank you for having us here today.

So my question is directed to you, Mr. Buffett and Mr. Abel. In 2019, you reportedly made a bid for the IT distribution business Tech Data and commented that you understand its role as a middleman.

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

WARREN BUFFETT: Well, we had some experience with distribution businesses and we know their potential, to a degree, and their limitations.

And, Greg, you were involved in that more than I was so - I mean, that was a case where there had been a bid made and there was a go shop provision and I think the management probably wouldve preferred that we buy it.

And when we went in with a better bid, the original party raised their bid. And we never make the same offer twice. So, Greg, tell him more.

GREG ABEL: Yeah. So, absolutely.

In 2019, we saw Tech Data as a unique opportunity when we saw the other bid and the underlying value of that distribution business.

We did - when Warren and I were talking - and others - made the conclusion we should talk to management. We talked to the team. They were very interested in Berkshire being their long-term owner.

And we still saw good value in the opportunity. And we have a good understanding of distribution businesses.

We have TTI. Its not exactly identical to Tech Data in that theyre very specific to the - who their customers are and who they serve and supply and who they purchase from, because on the distribution side its important to have that input coming in from folks who want their product and you know its needed on the other side, that theres demand for it.

And they had their - they had an excellent model.

If you think of TTI, for example - Warrens talked about Paul [Andrews] many times and the person who founded this business. But its a unique business in that our revenues on that business is approximately 10 billion dollars.

The average part they sell is a little over nine cents. Ninety-five billion parts go through their warehouse every - every year.

But its a model that if you have the right people on both sides of the equation and you understand that well, theres a unique opportunity there.

And that is something we saw in Tech Data. And, as Warren highlighted, we made our bid.

Unfortunately, it was then topped by the original bidder, and we moved on. But we thought very highly of it.

Warren -

WARREN BUFFETT: Yeah. Weve probably seen at least five of them in aggregate - over the last three or four or five years.

Its not a business that you can dream about because - its a decent business. But, for example, many of the items that - the manufacturer just - they dont want to tie up their capital.

You tie up - if you have a million-plus SKUs - what they call stock keeping units - its like selling jelly beans or something like that.

And you do - youre serving a purpose to a degree, but you dont - you don’t really - it isnt your product, in effect.

I mean, youre just a good system for the producer of the equipment to get it to the end user without tying up a lot of capital and being in a business they dont want to be in.

And so we understand. But theres no magic to it. There was - with TTI you had a marvelous man running things.

And he - when you get a marvelous person running something, to some extent that selects for better people underneath.

And Greg and I went to Paul Andrews funeral, what, like, a few years ago. And there were 300 people or so there. And there wasnt one person that had to say something particularly nice but stretched a little bit about the deceased.

I mean, everybody - Paul Andrews was the real McCoy, and he was an amazing man.

And he behaved wonderfully with Berkshire. I mean, he wanted to do more for Berkshire than Berkshire would do for him. I mean, it was very sim -

And you run into those people, and as I say, you run into people who bend over backwards for us and then some bend over forwards. (Laughs)

But thats just the way it is in this world.

And weve had quite a few that have bent over backwards for us.

And the distribution business is not a wonderful business, but it is a business and its a business that, if its big enough, its one we would look at and we would buy additional -

And TTI makes some smaller acquisitions on its own all the time. I dont even - I don’t even hear about them until I read the quarterly reports.

And so we want to build up - we want to build our businesses in every area that we operate. And weve got unlimited capital to do it, so were willing to have small acquisitions take place if they fit in with something we already have.

But were not in the business of going out after small acquisitions. If we did, we would - we just dont have the people for it. And it wouldnt move the needle anyway at Berkshire.

So we may or - we wouldve been happy doing the deal that the questioner asked about, but if we dont do it, you know, it just doesnt make that much difference.

And we want to do it - if we do it, well do it well. Well do it right. Theyll have made the right decision.

If they dont, you know, we will find something else to do with the money in the end.

And we can always buy a little more of TTI for you, the shareholders, by just buying in our stock, too.

GREG ABEL: Exactly.

WARREN BUFFETT: Yeah.

4. We havent seen anything that makes sense

WARREN BUFFETT: OK. Lets see, we need Becky next, dont we? Yeah. Becky?

BECKY QUICK: All right, Warren. Earlier you talked about selling some of the Apple shares in order to build up your cash supply.

And I think its got a lot of people wondering where you see opportunities or what might be coming or market valuations.

So Ill ask this question from Foster Taylor. “At the 1999 annual meeting, you mentioned that if you owned all of Americas 500 businesses you would be making 334 billion dollars, while paying ten-and-a-half trillion dollars. You emphasized that this was not a good return on investment.

“Today, by my math, the S&P 500 has a market capitalization of around 44 trillion with profits of around 1.45 trillion. This is a very similar return on investment to the 1999 levels.

“Do you see similarities in the market today and the 1999 levels?”

WARREN BUFFETT: Well, one thing thats changed dramatically from - well, from 1990 - I misunderstood on the 1999.

But there have been times in my life that Ive been awash in so many opportunities that I could have invested everything by nightfall. And then theres other times when the year goes - well, not in the early days, but now.

We just - we havent seen anything that makes sense. That moves the needle.

Now, weve made small acquisitions during the year. Our companies have made acquisitions, and we - you know - Greg and I may talk about something that involves a 300-million-dollar purchase or something like that.

And, you know, if it fits well enough, we do it. But -

And if our managers see things that fit them, we want to look at them, because our managers do not have necessarily the same equations in mind that we do.

But there are some managers which we would have - just say, you know, whatever you decide to do, and then theres other managers that would not know how to allocate capital, particularly.

And they dont have to be able to be great capital allocators, if they happen to be great at serving customers and understand their own industry and all of that. You know, they can be great managers. But many of them arent capital allocators and others are.

But this is not - this is not a time when the phone is going to be ringing often, but there are times. And Greg will know how to handle them as well or better than I have over time.

And Charlie and I would - you know, we missed a lot of things. And what we really regretted was missing something that turned out to be very big.

We never worried about missing something we didnt understand. I mean, why should we be able to, you know, predict the future of every business any more than we can predict, you know, what wheat yields are likely to be in Illinois next year. (Laughs)

Well, not wheat in Illinois. Wheat in Kansas. But corn in Illinois.

So, I wouldnt - I dont really think of whether its similar to 1999, because Im not that good on chronology anyway unless something really dramatic happened at the time.

I mean, I remember things from 2008 and ’09 much better than I remember whether something happened in 2015 or 1987 or - well, 1987 I remember because of October 19th.

But I just dont think - I dont think that way. I just look at what I can do every day.

Greg?

GREG ABEL: Im going to have to use it. Nothing - sorry, nothing to add.

WARREN BUFFETT: OK. Well go to station two. (Applause)

I mean - its nice to know what lines you can get applause for. (Laughter)

5. ‘Seeing something that turns on the lightbulb’

WARREN BUFFETT: Station two?

AUDIENCE MEMBER: Hello. My names Stefan Wunbafam (PH). I am a shareholder from Hamburg. Hamburg, Germany. Ive been coming to Omaha since 2007.

And Im deeply grateful for all the things I could learn here, both about investing and about life. In particular, creating circumstances that will enable me to lead a productive life during my entire healthy lifespan. So, thank you for that.

My question. My question to Warren. Your favorite holding period is forever. Holding American Express or Coca-Cola for decades.

Berkshire recently went in and out of Markel, and you, I believe, sold and later bought OXY, which I think happens to everyone all the time.

But can you maybe to us give examples of your thought process when you exit positions? Thank you.

WARREN BUFFETT: Well, there are various reasons for exiting positions.

One is if you need the money, but that doesnt happen very often with us. But it used to happen on every decision I made when I started it when I was 20 years old, which I consider the post-Graham period, although I actually started in 1942 if you just talk about buying stocks.

But in any event, the decision process is really quite interesting in a certain way, because it - we made - Charlie and I made decisions extremely fast, but in effect, after years of thinking about (laughs) the parameters that would enable us to make the quick decision when it presented itself.

People have speculated on how Ive decided to really put a lot of money into Apple. And for a reason I cant - well, one thing that Charlie and I both learned a lot about was consumer behavior. That didnt mean we thought we could run a furniture store or anything else.

But we did learn a lot when we bought a furniture chain in Baltimore, and we quickly realized that it was a mistake.

But having made that mistake made us smarter about actually thinking through what the capital allocation process would be and how people were likely to behave in the future with department stores, and all kinds of things that we wouldnt have really focused on.

So we learned something about consumer behavior from that. We didnt learn how to run a department store.

Now, the next one was Sees Candy. And Sees Candy was also a study of consumer behavior.

We didnt know how to make candy. You know, we didnt - there were all kinds of things we didnt know. But weve learned more about consumer behavior as we go along.

And that sort of background, in a very general way, led up to the study of consumer behavior in terms of Apples products.

And in that case, while I watched what was happening at the [Nebraska] Furniture Mart, in terms of people leaving the store, even though we were selling Apple at a price where we werent even making any money. But it was just so popular that if we didnt have it, people left the store and went to Best Buy or someplace.

And if you know the Blumkins, they cant stand anybody leaving the store. So theyd behave accordingly.

But then you learned - that had to interest you in the brand. And then you had a million different inputs. But I think the psychologists call this apperceptive mass.

But there is something that comes along that takes a whole bunch of observations that youve made, and knowledge you have, and then crystallizes your thinking into action. Big action, in the case of Apple.

And there actually is something which - I dont mean to be mysterious - but I really cant talk about.

But it was perfectly legal (laughs) and everything, I can assure you of that.

But it just happened to be something that entered the picture that took all the other observations - and I guess my mind reached what they call apperceptive mass, which I really dont know anything about, but I know the phenomenon when I experience it.

And, you know, that is - we saw something that I felt was, well, enormously enterprising.

Maybe Ive used this example before. But if you talk to most people, if they have an iPhone and they have a second car - the second car cost them 30 or 35 thousand dollars - and they were told that they never could have the iPhone again or they could never have the second car again, they would give up the second car.

But the second car cost them 20 times what the (laughs) iPhone did.

So, now people dont think about their purchases that way, but I think about their behavior.

And so we just - so without knowing - I dont know - have the faintest - there may be some little guy inside the iPhone or something. I have no idea how it works.

But I also know what - I know what it means to people, and I know how they use it. And I think I know enough about consumer behavior to know that its one of the great products - maybe the greatest product - of all time. And the value it offers is incredible.

And I think it has - in Tim Cook - I think it has somebody that, in his own way, is the equivalent of a partner with Steve Jobs, that could do one thing extraordinarily well, and more than one application. But one thing - and Tim was the perfect partner to serve sequentially with him.

So it‘s - you sort of know it when you see it.

I actually saw it with GEICO when I went there in 1950. I didnt know exactly what I was seeing.

But Lorimer Davidson, on a Saturday, in four hours, taught me enough about what - I understood what auto insurance was, and I knew what a car was, and I knew what people - went through peoples minds.

You know, I knew they didnt like to buy it, but I knew they couldnt (laughs) drive without it. So that was pretty interesting.

And then - but he filled in all the blanks in my mind as I sat there on that Saturday afternoon.

And, you know, every now and then it happens. You know?

Why do you have this - the person you met. You know, there are all these different potential spouses in the room, and then something happens that you decide that this is the one for you. You know?

I think, was it Rogers and Hammerstein that “Some Enchanted Evening” (laughs) wrote about that?

Well, our idea of an enchanted evening is to come up with a business, Charlie and me. (Laughs)

And there is an aspect of knowing a whole lot and having a whole lot of experiences, and then seeing something that turns on the light bulb, and -

That will continue to happen, and I hope it happens a few times to you. But you cant make it happen tomorrow, but you can prepare yourself for it happening tomorrow. And it will happen sometimes.

GREG ABEL: Hey Warren?

WARREN BUFFETT: Yeah?

GREG ABEL: He mentioned OXY, which I think is a great example.

WARREN BUFFETT: Yeah.

GREG ABEL: Where you made the original decision, basically, on a weekend with some thought.

But as the more you learned about OXY and the asset position they had, their ability to operate in an exceptional manner, and then a strong CEO around capital allocation.

I think your confidence, which was reflected in continuing to acquire more shares, is sort of that type of process, where -

WARREN BUFFETT: Yeah.

GREG ABEL: - basically -

WARREN BUFFETT: Yeah. Its exactly to the point. I mean I just learned more as I went along.

I learned enough - you know, Id never - Id heard of Occidental Petroleum. Occidental Petroleum happens to have been a descendant to something - not a descendant, but a continuation of Cities Service, which was the first stock I bought.

And of course, I knew a lot about the oil and gas business, but I didnt know anything about geology.

And so I knew the economics of it. I had a lot of various things stored in my mind about the business.

But I never heard of [OXY CEO] Vicki [Hollub] until - I guess it was a Friday or a Saturday, and we met on Sunday morning, and we made a deal. But that was one sort of deal.

And then as time passed, all the kinds of different events happened, and, you know, [Carl] Icahn came in. I mean there are a million things you couldnt predict at the start.

And Ive formed certain opinions as I went along, but then I learned more as I went along.

And then at a point when I heard an investor call, I think it was on - it put things together for me in a way.

Didnt mean I knew I had a sure thing or anything like that. I dont know what the price of oil is going to be next year.

But I knew that it was something to act on. And so we did. And were very happy we did, and we still dont know what the price of oils going to be next year. Nobody does.

But I think the odds are very good that it was - but not a cinch - that it was a good decision. And, you know, weve got options to buy more stock.

And, you know, when we get through with it, we could - it could be a worthwhile investment for Berkshire. And were in it. And were in it for keeps.

And there are other things that we own that we arent in for keeps.

6. Buffett: I was ’100% responsible’ for buying Paramount stock and ‘we lost quite a bit of money’

WARREN BUFFETT: Oh, incidentally, I should just throw this out there, since theres been speculation on it.

Weve sold - A, I was a hundred percent responsible for the Paramount decision. I read speculation that one of - either Ted or Todd - had some involvement in that.

No. It was a hundred percent my decision.

And weve sold it all, and we lost quite a bit of money. And that happens in this business, too.

But, actually, owning Paramount made me think even further. I like to think deeper, but I certainly have - not harder even about the whole question of what people do with their leisure time.

And, you know, what the governing principles are of running an entertainment business of any sort, whether its sports or movies or whatever it might be.

And I think Im smarter now than I was couple years ago. But I also think Im poorer because I acquired the knowledge in the manner I did.

But I just want to be very clear that A, we lost money on Paramount, and B, you know, I did it all by myself, folks. (Laughs)

I dont know whether Ive anticipated one of Beckys questions now, but well - we will - we will find out. I dont know. Lets see.

7. BNSF is trying to reduce costs to better compete with rival railroads

WARREN BUFFETT: Yeah, youre next, Becky.

GREG ABEL: Yep.

BECKY QUICK: Yes, you did anticipate one of the questions. (Laughs)

Lets go to another one. This question comes from Vincent James in Munich, Germany.

“In the chairmans letter, Warren points out that the profit margins for BNSF have slipped relative to all five other railroads.”

“However, Warren comments in the letter, BNSF carries more freight and spends more on capital expenditures than any of the other five major railroads and has a vast service territory second to none.′

“Given the comments from Warren about the clear strengths of BNSF, what explains the decline in revenue and profit?”

“And, in particular, the profit margins, relative to the other five railroads? What are the issues relative to the other railroads, and what is being done to address them? Please be specific.”

WARREN BUFFETT: OK. And I will - well, how specific we get depends on what Greg wants to say.

But Greg is - its Gregs responsibility. It is my responsibility for the purchase and for the operation up till Greg took over, but I think Ill let Greg answer that.

GREG ABEL: Sure. Yeah, Warren touched on it in the comments from the - as reflected, there are very accurate.

If you look at this quarters results or our last years results, they were both - theyre disappointing as shareholders and disappointing in the - relative to the other Class I railroads.

And as highlighted in the question, theres five other Class I railroads, so its pretty easy to understand how youre performing versus the others. And theres a lot of other variables, but there are some very simple things to look at.

When we look at where weve been on - associated with Burlington - I would just back up a little bit.

Because if you go back to 2021, the Burlington team and management team in the group, we were making excellent progress on a lot of fronts when it comes to our operating, in both being efficient and effective in how were operating the railroad.

And I remember very specific comments from myself in 2022 where I commented that that was a year there was all the supply chain issues. A lot going on in the West Coast ports. Our trains were backed up in a variety of places. And we called that a reset year.

And I think we did need a reset year on the operational side.

But as we moved into 23, the business cost level - cost structure - we didnt reset it to the underlying demand we were seeing. We anticipated more demand, and we did not reset our cost structure.

And the teams working very hard, as we speak, to do - both reset the cost structure and allocate the cost resources where they need to be.

And when you go through something like that, what weve recognized as an organization, yes, the demand of the rail will drive a certain amount of the costs.

But the reality is that the rail industry, if you go back many, many years, its flat. Theres not a lot of growth in the industry. Theres opportunities to become more efficient and effective, and our margins can go up. But the reality is demands going to be flat.

But it does move within different sectors of the rail. It can be in the consumer products. It can be in industrial. It can be in ag.

But overall, its generally going to be relatively flat. So we need to get our cost structure right, and we need to get it right both for the coming year, but for the long-term.

And that means its going to be a continuous exercise. We cant stop. We cant say weve gotten far enough, because our competitors - and we compete with the other rails, but we also do compete with the truck industry.

We have to have a cost structure that allows us to compete both within our rail industry and within the transportation sector as a whole.

So the team at Burlingtons working very hard to address the cost structure, just like we have in the past.

I think one thing we do recognize, when the other railroads have implemented precision scheduled railroading, theres other metrics that we have to continue to pay attention to, and challenge ourselves. If were not at their level, what are the things that are driving it.

So were going to - when they ask for specifics, Ill give you a few.

We have to look at our rail yards and understand how were managing that.

We have to look at our locomotive fleet. Both the size and how were utilizing that and challenge ourselves.

And we have to then go back to how were using our employee resources and allocating them across the business.

So theres a lot to be done there. Our teams one hundred percent committed to driving to the right cost structure thats consistent with the underlying demand in the business.

And then we cant stop there, is the answer.

So a lot to be done, but we have a team thats absolutely engaged and committed to it, and we’ll make - were going to make good progress in this current year.

WARREN BUFFETT: At Berkshire, we want everybody to have the idea that theres a lot to be done with every business. You know?

So, I mean - it is - you know - we -you know - a fellow named Pete Kiewit built a remarkable company [Kiewit Corporation] in Omaha - building company. Really remarkable.

And it is - the question after everything they did, that when something was done particularly well, theyll - digging a tunnel under the East River or something when they said it couldnt be done - he would say it would be - he was pleased but not satisfied.

And that is exactly the way we want the attitude to be at Berkshire forever.

Omaha is a railroad town. If President Lincoln, in 1862, I think it was, had decided to pick St. Joe or Plattsmouth or anyplace else to build the transcontinental railroad, Omaha would probably be a little town of 20,000 or something on the banks of the Missouri.

But making - with Lincolns desire to make this the eastern connection, and make a transcontinental railroad, Omaha just took off.

So its been railroading at its base. The -

And anybody thats interested in financial matters had to think about railroads. Plus, they have a certain glamour to them anyway.

But the interesting thing is that UP [Union Pacific], which is our main competitor, themselves fell way behind 20 or 25 years ago, before Jim -

GREG ABEL: Right.

WARREN BUFFETT: - before Jim Young came in.

And in 2000, whenever it was, ’08 or so, I started buying three railroad stocks. And - Union Pacific, BNSF, and Norfolk Western, I believe. I dont know why I wasnt buying C&O.

But in any event, Jim Young had done a marvelous job with Union Pacific.

So we owned all three stocks. But what we did in 2009 is we were able - well, we already owned 22 percent of it, but overall, it was 35 million dollars - a billion dollars - which was a significant part of our capital. We were able to put it to work in a business we liked.

And there are certain tax advantages that come in terms of making money in something thats more than 80 percent owned - we’ll call it a hundred percent owned in this case - versus making it through stocks.

So it has a net benefit to us from making the same amount of money owning one of the other railroads by owning all of the railroads.

And we got 35 billion out during a recessionary period. I think that was the worst quarter, the third quarter of 2009, maybe that the rails had had for a long time.

So its worked out. Actually, its worked out very well, but its because we were putting out capital in 2008 and 09.

And if we put money in anything, wed have made a lot of money. But its more satisfying, and is actually better in certain ways tax-wise, to make it from something thats a hundred percent owned. Not all, but once youve - you know, 5 percent or 10 percent owned businesses.

Were - you know, as I mentioned in the annual report, railroads are absolutely essential to the country. That doesnt mean theyre on the cutting edge of everything. Theyre just essential to the country.

And, you know, thats why the government - you know, I think they took them over one time.

And they negotiated what our labor settlements will be and everything.

And if you shut down the railroads in the country, it would be incredible, the effects.

But - and it would be impossible to construct now. I mean look at whats happening in California when theyre trying to build a line.

I mean, you know, everybodys worried about the environmental effect of every mile, you know, and whatll happen to the various species of birds.

Can you imagine the rail system in the United States being built? (Laughs)

It would take decades, unless a war was on and the government took over things and just ordered them. You cant create it.

So we love owning a business like that. Its going to be around a hundred years from now.

Wont be the best growth business in the world at all during that period, but it will be essential.

And what it earns in its - relation to its replacement value is a pittance. But well do fine in terms of what we paid for it. And well distribute substantial amounts in relation to what we paid to Berkshire in a very tax-efficient way.

And so its - well, the question is, what are the issues relative to the other railroads.

You know, it wouldnt have been the end of the world if - at all - if we bought the Union Pacific and Jim Young had stayed alive to run it for us. That would have been great, too.

But we had the opportunity to buy BNSF, and its been good for them, and its been good for us. And we think it‘s been - its a very important asset to the country.

And, you know, I just hope we can find something in other industries that - where it makes as much sense as that, where we can put a whole bunch of money to work at an advantageous time. (Laughs)

8. You can find deeply undervalued securities, but you have to love the game, not the money

WARREN BUFFETT: So lets go on to - station three. Is that correct or not?

GREG ABEL: Yeah. Yep. Yep.

WARREN BUFFETT: OK.

AUDIENCE MEMBER: Good afternoon, Mr. Buffett, Mr. Abel.

My name is (unintelligible) Woo, a resident of New Zealand but originally from Thailand.

This is my first time in America and the first time attending the meeting. The journey was quite rough, but it was all worth it though, because I can now personally thank you, Mr. Buffett, and the late Charlie Munger, were he still with us, for organizing such a wonderful event. And, most importantly for being such an exceptional role models and sharing your wisdom with us all these years. So, thank you.

WARREN BUFFETT: Well, thank you for coming. (Applause)

AUDIENCE QUESTION: So heres my question for you, Mr. Buffett.

Towards the end of 2018 you mentioned that you guarantee you could make a 50 percent annual return (Buffett laughs) if you had to start again with under one million dollars.

The question is, if tomorrow you woke up in the body of -

WARREN BUFFETT: Your body.

AUDIENCE QUESTION: - a 20-year-old American.

WARREN BUFFETT: Yeah, your body. But thats fine. (Laughter)

AUDIENCE QUESTION: And your name was now Warren Ellicott, and you had some money to invest on a full-time basis, what method or methods would you use to achieve that return? Would it involve flipping through 20,000 pages of Moodys manual or similar publications?

WARREN BUFFETT: Yeah.

AUDIENCE QUESTION: Or finding [cigar] butts? Or would it be hunting for great companies at a fair price, as Mr. Munger would? Or would it be a combination of both with opportunity costs being as the final arbiter of which method to use, given that your investing opportunity has now broadened significantly? Thank you.

WARREN BUFFETT: Good question. Im glad you came.

The answer would be, in my particular case, it would be going through the 20,000 pages.

And since we were talking about railroads, you know, I went through the Moodys Transportation Manual a couple of times, that was 15 hundred or two thousand pages. Or, well, probably 15 hundred pages.

WARREN BUFFETT: And I found all kinds of interesting things when I was 20 or 21. And I dont imagine theres anybody here that knows about the Green Bay and Western Railroad Company. But there were hundreds and hundreds of railroad companies. And I liked to read about every one of them.

The Green Bay and Western - in those days everybody had a nickname for railroads. I mean, that was just what - Northern Pacific was the “Nepper,” and, you know, “Phoebe Snow” was one of them in the east that used to go up to Cornell.

And the Green Bay and Western was known as “grab baggage and walk ” - G, B and W.

And they had an - they had a bond that was actually the common stock, and they had a common stock that was actually a bond.

And, you know, that could lead to unusual things. But they wouldnt lead to unusual things that would work for you with many millions of dollars.

But if you collected a whole bunch of those, which I set out to do - and actually thats what impressed Charlie when I first met him, because I knew all the details of all these little companies on the West coast that he thought I would never have heard of.

But I knew about the Los Angeles Athletic Club, or whatever it might be. And he thought he was the only one that knew about that. And that became an instant point of connection.

So to answer your question, I dont know what the equivalent of Moodys manuals or anything would be now.

But I would try and know everything about everything small. And I would find something. And with a million dollars you could earn 50 percent a year.

But you have to be in love with the subject. You cant just be in love with the money, youve really got to just find it.

You know, essentially like, you know, people find other things in other fields because they just love looking for them. A biologist looks for something because they may - they want to find something. And thats built into that.

I dont know how the human brain works that much, and I dont think anybody understands too well how the human brain works.

But theres different people that just find it exciting to expand their knowledge in a given area.

You know, I know great bridge players. I know great chess players.

Actually, [Garry] Kasparov came to Omaha and met Mrs. B [Rose Blumkin].

Ive had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas.

So all I know is the human brain is complicated. But it does - it’s best when you find out what your brain is really suited for, and then you just pound the hell out of it from that point.

And thats what I would be doing if I had a small amount of money and I wanted to make 50 percent a year, but I also wanted to just play the game.

And you cant do it if you really - if you dont find the game of interest, whether its bridge or whether - you know, whatever it may be - chess - or in this case finding securities that are undervalued.

But it sounds to me like youre on the right track.

I mean, anybody that will come all the way to this annual meeting, has (laughs) got something in their mind other than bridge or chess.

So, Im glad you came, and come again next year. (Applause)

9. ‘You have to be alert to what human nature does to both other people and to you’

WARREN BUFFETT: And now we move - (applause) - now we move to Becky.

BECKY QUICK: This question comes from Denny Poland, a shareholder from Pittsburgh.

“When describing the principal-agent problem, Mr. Munger said that capitalism often works best when the people managing the property also own the property.

“In recent years, agents of pension funds and asset management firms who do not have significant personal ownership stakes in Berkshire have forwarded proposals that were not in the economic interest of shareholders.

“What can be done to limit the negative influence of these agents in the decades after youre no longer able to cast significant votes against them?”

WARREN BUFFETT: Well, thats a very perceptive question.

And its been answered in a temporary manner. But who knows what these - how the situation will develop in the future.

All I know is that you have a wonderful hand at Berkshire Hathaway.

But you have to - you have to be able to think your way - I mean, obviously - you have to think your way through political realities. You have to think your way for what - who caused - A, you want to be on - you want to be regarded as an asset to the country, because youll find more solutions if you are an asset. You owe it to the country anyway.

But beyond that, youll find more solutions than if youre regarded as evil or something, and worse yet if you deserve it.

So its something thats constantly on our mind. And it needs to be in the mind of the directors.

And they need to think for themselves on this rather than bow to conventional wisdom. Which - you know - in a sense, you dont want to become the cynic about life.

But almost everybody that approaches you, if you have tons of resources, has got some interest in figuring out how to use your resources to their advantage. (Laughs)

And thats true whether theyre in politics or whether theyre in investment banking or whether theyre selling you - well, whatever it may be that theyre selling.

I dont want to do any injury to anybody. But, you know, life insurance agents see the advantage of buying life insurance. And investment managers, who get paid based on assets managed, get interested in selling you their services.

Imagine if everybody in this room were following the investment advice of somebody that said, you know, for 1 percent a year, Ill tell you how to invest your money, and in 1950 - when we started in 1965, they wouldve - they would‘ve said, well, buy Berkshire Hathaway.

And if they were around now and they still had their 1 percent deal, theyd be collecting 8 billion dollars a year from people who arent getting any dividends from us. (Laughs)

So yeah, they would have a different interest in the kind of contract they worked out with you than you would have. And the best thing to do is just pay them a commission one time and own the stock.

But you have to be alert to how - what human nature does to both other people and to you.

And then you, you know, if you think it - if you think it too well, and you actually listen to what Charlie has told you, youll have a big head start on most people.

Charlie - theres one thing that I should mention that really is terribly interesting about Charlie.

Charlie knew the importance of psychology and human behavior and incentives and all of that. He figured that out very early.

And, of course, he gave some talks, even on 25 or so ways - whatever it happened to be, I dont remember the exact number - but the different ways that one person could take advantage of another by understanding how humans behave.

And then, after doing a magnificent job of explaining it, he believed in understanding what others would do. But he thought it was beneath him to actually use those methods to manipulate people.

Thats a really interesting human being that thinks through the psychology of human behavior and figures out, you know, how you become a great insurance salesman or manager on Wall Street or accumulative assets under management, or whatever it may be.

And you get very rich by understanding the weaknesses of others, to some extent, and then decide that its very important for you to recognize these when they occur. Its very important for you to know them better than the person that actually is using them, but not - but you dont have to stoop to using them yourself.

And Charlie told me that - that, you know, in his lifetime, after he figured this out, there were a couple of times when he used them. He wasnt proud of it, but he also never lied to me.

So he explained to me that, you know, there were a couple times when he used some of these techniques.

But he - it wasn’t - he didnt plan on using them anymore. But that he also wanted me to know that if I ever did something like that, I wasnt really behaving terribly, that he allowed for the fact that humans may misbehave.

So Im sure that I behaved somewhat better before my marriage than I did afterwards in my enthusiasm for different activities, like dancing or something.

And he said, thats, you know, we all do it. But dont do it again. (Laughter)

And so thats part of acquiring human wisdom.

And speaking of human wisdom, weve just got that one book out there by Charlie. I mean Poor Charlies Almanack. And thats worth reading three or four times.

I think I read Ben Grahams book about five or six times. And each time I read it, I realized that I just needed to think a little more deeply about certain things.

They werent complicated or anything.

But, you know, its better to - if youve got some great instruction, like you get with Charlie, its better to read it several times than to just figure youll just read every book once thats in the library.

10. How Buffett’s parents reacted when he ran away from home

WARREN BUFFETT: OK, lets go to section four.

AUDIENCE MEMBER: Jeff Roblyer from Tulsa, Oklahoma. And Im thinking of Dr. [Benjamin] Graham, Mr. Munger, your father.

And my question is for all of us, but its probably especially for the younger people in the room - the importance of picking the right heroes in life, choosing friends wisely, and maybe tell us a story if you could about each of those folks. Thank you, sir.

WARREN BUFFETT: Well, theres no question, youre a hundred percent right, in terms of having the right heroes.

And, you know, youre lucky if you get them.

I mean, Charlie had - Charlie had them. I had them.

And the interesting thing - my sister is here today - my younger sister that - were the two survivors - and we both experienced having the same hero, even though as we grew older, we saw that we didnt agree with plenty of his ideas. But we did agree with his values and motivation.

And thats a better lesson than having somebody thats reading to you from a catechism that has got a lot of rules in it, which are pretty good rules.

But theres a special - a special place for somebody that is going to continue loving you even if you break some of the rules.

And thats what Charlie had in his life. It was what Bertie and I had in our lives.

So, I would - I would just repeat what you said. I dont need to give you a bunch of - well, when I ran away from home - Ill give you a specific example with me.

When I ran away from home and went and we hitchhiked up to Hershey, Pennsylvania and got picked up by the state police and everything. And I talked these other two guys into it and we lied like crazy to the state police, you know, and saying we had our parents permission.

Some kid at the place where we stayed had tipped them off that wed run away from home.

And we started, like I said, when the state police picked us up, we decided that two things, you know, - - we decided to tell them a bunch of lies about the fact we had our parents permission.

And we decided we better get out of Hershey, because these cops were going to find out sooner or later.

And so anyway, we end up back in Washington after a couple of days.

And when I walked in the door - well, one of the boys mother - and this other kid was a congressman, Roger Bell - and his mother was in the hospital over this whole thing.

Hed taken out his cash and his savings bonds, and so she was sick. And Judge Bell, her husband, was all concerned and everything.

And I walked in the door in Washington and my mother said, “How come you came back so soon?”

And my father said - (laughs) - he said, “I know you can do better.” (Laughter)

And I just paid more attention to my father than my mother.

So you want to have the right heroes. And you dont have to have them - its not the heroes based on what theyve accomplished. It’s - you know - it’s -

Its the people that you want to be yourself. And if you copy the right people, youre off to a great start.

And I dont mean a great start about making money, I mean a great start about living your life.

So, you can check with my sister, Bertie, who is here and see if Ive told the story correctly.

She ran away from home, too, incidentally. But she didnt get as far as I got. But -

She was running away to go to my grandfathers house, which was about two miles away. (Laughs)

But I dont want to denigrate her runaway abilities, because she is much more accomplished than I am in all kinds of other things.

But when it comes to running away, I definitely outclassed her. (Laughs)

11. Buffett on Pilot deal dispute: ‘All’s well that ends’

WARREN BUFFETT: OK, lets go to Becky.

BECKY QUICK: This question comes from Vedaant Sharma in India.

“Warren, you and Charlie have often said that you were able to identify the people you want to go into business with and have had an exceptional record in that.

“However, in the case of Pilot, we noticed that the final stake purchase ended up in a dispute and had a sense of smart accounting, to put it one way, to squeeze a little more out from the deal than was deserved by the seller.

“Knowing well that this has been settled out of court and needs due confidentiality, I would like your views on some of the lessons learned that may be beneficial for future deals to watch for, and for coming leadership to look out for as well.”

WARREN BUFFETT: Well, Ill make two comments on that.

A couple of the directors had their doubts about going in.

And in any event, Pilot is working out well for us.

And as my friend Sam Butler one time said to me - and he was talking in general about certain kinds of situations - but he said, “Well, Warren,” he said, “Alls well that ends.”

And thats where we are. (Laughter)

12. Pilot and new CEO Adam Wright are ‘only in America’ stories

WARREN BUFFETT: So well go to station five. (Laughter)

Well, while were getting to station five, Ill tell you a little bit more about the fellow [Adam Wright] that is now running Pilot, and who you may have met here, that Greg had known for a long, long time. And he grew up in Omaha. And came from a poor family and was raised by his mother.

GREG ABEL: Right.

WARREN BUFFETT: And went to the same high school, public high school, that my wife went to, North High.

Went to the University of Omaha. Set an all-time record in the rushing yardage playing there. He was a bouncer.

GREG ABEL: Yes.

WARREN BUFFETT: Drafted by the New York Giants, as I remember, but -

GREG ABEL: Exactly.

WARREN BUFFETT: Yeah. And but then - injured - actually, in spring training, as I remember, in some way.

So he ended up being an intern. Not an intern, but a trainee you might say -

GREG ABEL: Right.

WARREN BUFFETT: - for MidAmerican before I was there.

And now here he is, still relatively young. And hes running a huge company. And weve got incredible confidence in what he will do. And we like very, very, very much the business that was created by big Jim Haslam.

And the - you know - it really is almost an “only in America” type story.

But it does show you what somebody with some real stuff, and with a mother that believes in them. And with bad breaks along the way, I mean, imagine how youd feel if you were drafted by the New York Giants and then you suffered some injury in spring training or something.

I mean, you know, you spend your life - it just, it hurts.

But its not an experience I would have ever had, incidentally. (Laughter)

I mean, I was the last guy chosen.

But - you know, to see that hes running the company - well, depends on the price of the deal - but a huge company. And what does he have? Twenty - 25 thousand or so?

GREG ABEL: Right.

WARREN BUFFETT: Yeah - employees -

GREG ABEL: About 25 thousand employees.

WARREN BUFFETT: Yeah. And hes got many, many, many years to go.

So I couldnt be more pleased about - not only the acquisition of Pilot, but just what it tells you about America.

You can - can’t you - what do you have to look up to read about him in Google, or an interview with Adam?

GREG ABEL: Yeah, Im trying to think if its a podcast.

WARREN BUFFETT: Yeah. Hes got a podcast that will just blow you away.

And if you dont think this is a great country and has a lot of great people in it, all youve got to do is read that podcast.

GREG ABEL: But we do have a great set of assets here.

WARREN BUFFETT: Oh, yeah.

GREG ABEL: You know, if you look at Pilot, we have 800 - more than 800 stations - well, travel centers.

And just so everybody knows, the beauty of that - and there was a question regarding this morning around fuel choices at Pilot - and the exciting thing is, in the end, Pilots going to serve whatever fuel our customers need.

It can be electric, it can be renewable diesel, it can be diesel, or any of the various sustainable fuels.

But the point is, it has exceptional locations that are on the interstate highways. And we -

WARREN BUFFETT: Hundreds of them.

GREG ABEL: Hundreds of them. And we bought an incredible franchise.

And now we have a great leadership team in both Adam and his team thats around him. So were pleased where that opportunity will go.

WARREN BUFFETT: Yeah. Weve got - probably the average one might be ten or 12 acres or something like that -

GREG ABEL: Yeah, yeah.

WARREN BUFFETT: - zoned commercial on interstates throughout the whole United States. I mean, who knows?

But what was created there is amazing, too. You had a fellow [Jim Haslam] that played at University of Tennsylvania - I mean University of Tennessee - undefeated.

GREG ABELL: Yeah.

WARREN BUFFETT: And came away from this football team. And you’d think, well, another football player, you know.

He goes out - and there may be some intermediate parts in the story a little bit - but he buys a gas station and he turns it into something that is huge.

So it’s - were really delighted with it. And, you know -

Thats another kind of “only in America” story.

And, you know, how many of us can become an All-American, a number one-ranked team, let alone start a business that (laughter) goes on to these sort of heights?

So we feel very good about it.

Becky?

GREG ABEL: No, I think theyre ready for five now.

WARREN BUFFETT: Oh, I see. Im sorry -

GREG ABEL: I think hes up there now.

WARREN BUFFETT: Oh, OK -

GREG ABEL: Hes ready to go.

WARREN BUFFETT: OK, go to it.

13. ‘Anybody that says I did it all myself is just - delusional’

AUDIENCE QUESTION: Hello Mr. Buffett. My name is Chung Yao Bo (PH). I came from (unintelligible) Hainan, China.

So I want to express my sincere gratitude for you for the extraordinary value you generated for shareholders, and the positive influences you have on younger generations of investors like us.

And my question relates to the concept of maximizing the duration of compounding.

As individuals age, the quality of compounding inevitability diminishes. What are your secrets in maintaining your sharp mind, extraordinary judgment, and great physical condition? We wish you well. Thank you.

WARREN BUFFETT: Well, you dont know me well. But that’s - I like - (laughter) - just keep talking., I mean -

Well, you know, you have to be just plain lucky.

I mean, theres no question about it that theres a hundred or a thousand, you know - multiply a number of times that some drunk couldve pulled out a car and broadsided me or, you know - just all the bad luck that you can have in life.

And you can say that my great skill has been avoiding bad luck, but that isnt a skill. Thats luck - or bad activities.

And, you know - and then to get to be - you know - I would not have been a -

If youd taken my high school class and you said, you know, a couple of you are going to live to be 90 - men are going to live to be 93, you know, I would not have been a heavy favorite, I can tell you that.

And I wouldnt have bet on myself. But - you just -

Now you - you should make the most of your luck when you get it. And sometimes Ive done that and sometimes I havent. I mean -

It is absolutely true that if I had it to do over again there would be a lot of different choices I would make.

But that they would have ended up working out as well as things have worked out, its hard to imagine how they could have worked out any better. So -

But it is interesting how many mistakes you can make if you just keep going. And Charlie, you know, used to talk about that, that you just soldier through. You just keep going. And -

But you still need luck, you know? You don’t want to -

Anybody that says I did it all myself is just kidding. Its just - you’re delusional.

And, you know, actually live in a country where the life expectancy is pretty darn good, you know? So that alone is a huge plus.

I was born - if I had been born - my sister is here, and she was born female. And shes just as smart as I was and everything. But even my own family, who really did - well, particularly my dad loved us all equally - and in a terrific manner - but he still told me that - that - this is ten or - well - I was born ten years after the 19th Amendment was passed.

But he told - he basically told my sisters, you know, to marry young while you still have your looks. And he told me that the world, you know, that power in you is new in nature, and that you really could do anything.

Well, I found out there were a lot of things I couldnt do. (Laughs)

But the message given to females and males was incredibly different, by the most well-meaning and loving of parents.

Like I say, in 1930, I mean, it had been that way for millions of years. It’s changed quite dramatically, but obviously, not completely.

But during my lifetime - but its been during the latter half of my lifetime - if you take my sisters, if theyd been born even five or ten years later they still wouldve been, you know, getting instructions when they went away to college to be sure - to be sure and get married - or arrange so youre going to be married, you know, while youre in school. Because after you get out, all the good ones are taken.

That was - Bertie was telling me that was a message that, you know, basically had been imparted to most of - a lot of the women shed met, obviously.

And so it really - its extraordinary how much progress weve made. But its unbelievable how long it took to get it made.

It really does make you wonder about, you know, weve got all the heroes from American history and all the wonderful things they did, but how could they say, “All men are created equal,” and then write a Constitution (laughs) that women, you know, women not to be able to own property, and depending on the state, I mean, just terrible conditions.

But anyway, thats how you learn about what the humans can do. (Applause)

And if you - and youve got to feel better about the future for your kids than you wouldve felt a hundred years ago, no matter, you know, what the situation is.

14. ‘You really get some strange things revealed in a will’

WARREN BUFFETT: Anyway, well move to Becky.

BECKY QUICK: This question comes from Linda Frazer in Westport, Connecticut.

“Dear Mr. Buffett, in the past youve specified that 90 percent of your wifes inheritance be invested in a low-cost S&P 500 index fund, and 10 percent in short-term government bonds.

“But the market cap of the Magnificent Seven tech stocks now represents more than one-quarter of the market cap weighted S&P 500 index, which seems like a big bet on the tech sector.

“I was wondering if you would now recommend investing some portion of the funds in a low-cost equal weight S&P 500 index fund, rather than having all of the equitys exposure in a tech-heavy market cap weighted fund?”

WARREN BUFFETT: Well, thats an interesting question. And I will tell you that I revise my will about every three years or so when I get little thoughts from time to time, and then - you dont change it every time you do it. You get a tiny thing.

But the one section I havent changed is that - with my wife - that she get left a huge amount of money by practically anybodys measurement, except a pittance compared to what Ive accumulated in total.

And it doesnt - it wont make one bit of difference to her in life, whether she beats the S&P or (laughs) anything else.

All I want to leave is plenty of money to take care way beyond anything shell ever spend, and at the same time give her as much peace of mind as possible.

And really make it so that the trustee who administers it doesnt really have to - doesn’t have to worry about whether - it just doesnt make any difference whether she beats the S&P or not.

And the main thing is that she feels - that she feels that shes in a financial position, which of course she will be, that she doesnt even need to think about it, and the trustee doesnt have to worry about getting sued or anything else. (Laughs)

So its - it’s simply not an economic condition.

Now, obviously with 99 percent-plus of what I have going to philanthropy, you know, and Ive got my three children that -

The one good thing is that they - at the age of 70, 69, and 65 - they have matured remarkably. Probably more than their father.

And that - but at the same time, theyve got less time to work with the money than they would if, you know, they were 50 or something like that.

So you do the best in accomplishing your objectives in your will. And in the end, you know, you can’t - you dont know whats going to happen after you die, but you make sure that, to the extent that you leave - you have a lot of money to leave, you take - obviously, you want to say thanks to a lot of people - and quite a few people, in terms of specific requests. You want to take care of your family.

But in my case, that requires practically no money, and there - a fair amount for taxes.

But I have - my children are in charge of what happens to the funds that are left.

But like I say, the problem is when you live as long as I have, and your kids get older, you know, who knows what happens in the mortality tables. And theyre the ones that I really want to see handle the distributions. And they will, and theyll be very good about it. And -

But if were all alive three years from now, theyll be three years older, and thats - so everything - you cant solve everything in life. You do the best you can with it, and -

People do interesting things. Ive been around probably as many rich people as almost anybody. And a fair number of them I know what theyre doing or have done with their funds.

And the idea that you can have a huge amount of money, and leave everybody very rich, and have people liking each other less (laughs) when it all happens is -

Humans are really - they are interesting to watch. Some of them handle it beautifully and others are terrible at it.

One thing lawyers will always tell you is dont use codicils. In other words, you know, when you change your mind on a will, just write a new one, but tear up the old one. Dont do it by just adding codicils.

But I believe Im correct - certainly read it - that Paul Getty, who was the richest man in the world, presumably, at one point in the 1950s or 60s - and hes a very interesting guy to read about.

And he had five - five wives. And hes the one whose grandson was kidnapped. And they sent Paul Getty an ear of the child and everything.

I mean its not a happy life, when you get through it.

But the one thing he did that was kind of interesting, he actually liked to use codicils, because I think he had, like, 25 of them.

And it was kind of his way of writing, well, Im taking you out of the will because, you know?

And so he sort of delighted in explaining through his will what - how he felt about (laughs) all these people.

I mean, you really get some strange things revealed in a will.

I just read about a will of a fellow who made a whole lot of money and was leaving it to his - I dont know whether his children, grandchildren, or whatever it may have been - but in any event, his opening line in his will is - and this was done some years ago - but I know something about the family.

His opening line, in effect said, Im writing this will while Im I am riding in the economy section of Eastern Airlines number such and such.

I mean he believed in getting right to the point of what - (laughs) - what the people who were recipients, how they should live. (Laughs)

And he was going to be judging them.

And its just so damned interesting to watch peoples wills. But -

One guy left a lot of money to his wife on the condition that she remarry so that at least one man would mourn his passing. You know? (Laughter)

Well, Im not giving legal advice here, as they always say, but - (Laughter)

I feel very, very, very good about how things have turned out. And I wish I could figure out ways better to use, you know, the really vast resources Ive got in some of the really important questions of the world. But - but I haven‘t been able to do that.

I mean, I had a few goals when I was 30 or 40, and may have written them into wills then, in terms of what the world needed done, and how the money could be used.

And unfortunately, I decided that it just - they just werent feasible to accomplish. And of course, I was setting out to accomplish things that were important, but nobody had solved yet. So you got to expect (laughs) why should I be able to solve them?

And nevertheless, its an interesting - and the one thing about it is everybody here - I dont know about the ones who have come from other countries - but they should - you should have a will.

Because if you dont have a will, you still have a will, and it will be whatever the state says.

And its amazing. Four American presidents died intestate, without wills. Four. You know, weve only had 45. And imagine becoming president of the United States and not having a will?

But you can look up - somebody recently - I think Lincoln. Im certain Lincoln was one of the four.

And heres a man - I mean - I dont know whether - you can always say, well, he didnt get around to it, but thats hard to imagine that why Abraham Lincoln would have died intestate. Im sure weve got some Lincoln scholars out there that will write me after this and explain why, but I - and Ill be interested to receive their letters.

But human beings are human beings. And we all have weaknesses and peculiarities and everything else. And dont be too hard on yourself because you have some of those.

But dont be totally forgiving either. (Laughs)

You can change the future. You cant change the past, but you can change the future.

15. Too early to predict how AI will affect Berkshire and the world

WARREN BUFFETT: OK. Station six.

AUDIENCE MEMBER: Good afternoon. My name is Caroline, and Im a lawyer in San Diego -

WARREN BUFFETT: I’m already in trouble! (Laughs)

AUDIENCE MEMBER: - but please don’t hold that against me.

Remember, Mr. Munger was once an attorney, too.

WARREN BUFFETT: Right.

AUDIENCE MEMBER: First, Id like to sincerely thank you, Mr. Buffett, for your business integrity, tireless leadership, and generous contribution to philanthropy.

My question for the distinguished panel of two is, now that the AI genie is out of the bottle, as someone astutely put it earlier today, what business in Berkshire Hathaway may be most at risk with AI?

WARREN BUFFETT: Well, thats a wonderful question.

The problem is I really dont know anything about AI.

But - (laughter) - obviously, you know, anything thats labor intensive and that - it can create an enormous amount of leisure time. Now, what the world does with leisure time is another question.

Whether more leisure time - I know an awful lot of people think when they go to work at first that what they want is leisure time. And what I like is actually having more problems to solve.

But AI is profound. I mean, thats what makes it - makes it a genie. You know, is what can happen.

I’ll - I could tell a few genie jokes, but I better not. (Laughs)

GREG ABEL: I guess, Warren, we probably dont -

WARREN BUFFETT: I dont know what -you know - in terms of our businesses, theyll figure things out. I mean weve got smart people and its -

Obviously, if its used in a pro-social way, its got terrific benefits to society. But I dont know how you make sure that thats what happens any more than I know how to be sure that when you use two atomic bombs in World War II that you knew that you hadnt created something that could destroy the world later on.

GREG ABEL: Yeah. Yeah, I think when we think of AI at a lot of the business units, I mean were truly, Warren, trying to think how does it make us more efficient, more effective?

I mean, it results in more idle time, and were probably not thinking of the iterative AI where were looking at very specific processes where our people can implement it and either -

At times, it displaces the labor, but then hopefully theres other opportunities for them within the business.

But I think, you know, when you think of all our businesses, I mean, we do have a heavy labor workforce in a lot of them, but I think at the stage were at, as a company and maybe where its at right now, its really around how do we do things more effective, more efficiently. More safely, if it involves dangerous processes. So it’s - were early innings. (Laughs)

WARREN BUFFETT: John Maynard Keynes, who was just wonderful to read, an incredible mind, but in around the time I was born, he wrote a book about what could happen - I dont know whether it was in the next 100 years or whatever - and he predicted, correctly, that output per capita would grow at this incredible rate that it has.

But, in terms of speculating as what people would do with that - I mean, this guy was unbelievably smart. (Laughs)

But it hasnt developed exactly the way he predicted. He was right about what was going to go into the equation, but he wasnt - he didnt have it figured out exactly what - at all - what would be the result.

So it’s - it is - it is really - well, we didnt know when we were developing the bomb that there would probably be as - very soon - nine countries, three of whom we should worry about plenty that will have what they have. But we didnt really have any choice.

And you could have had all kinds of papers written on it and everything else, but we were going to do it anyway. We needed to do it.

And if you havent read it, its fascinating to go to Google and read the letter by Leo Szilard and Albert Einstein to President Roosevelt, written about a month before - well, almost exactly a month before the Germany - or Hitler - moved into Poland [in 1939.]

And it laid out - well, Leo Szilard knew what was going to happen, or had a good hunch of what was going to happen, in terms of nuclear bomb development.

And he couldnt get through to Roosevelt, but he knew that a letter signed by Albert Einstein would.

So its probably the most important letter ever written. And you can read - which - its just fascinating to me - but that started the Manhattan Project, that started - you know, it just - everything flowed out of it.

And like, Ill bet anything that Roosevelt didnt understand it, but he understood that Albert Einstein had (laughs) sent a letter, and he probably knew what he was talking about. And he better get - he better start the Manhattan Project.

It is - it is just unbelievable what happens in this world.

16. Buffett more worried about fiscal deficits than quantity of U.S. debt

WARREN BUFFETT: Anyway, lets move on to Becky, I guess, whos next, right?

BECKY QUICK: Yep. Randy Jeffs from Irvine, California.

“The March 25, 2024 Wall Street Journal reported that the Treasury market is about sixfold larger than before the 2008-2009 crisis.

“Do you think that at some point in time the world market will no longer be able to absorb all of the U.S. debt being offered?”

WARREN BUFFETT: Well, I would say - and the answer is, of course, I dont know.

But the - my best speculation is that U.S. debt will be acceptable, but - for a very long time, because theres not much alternative - but it wont be the quantity - you know, any - you know, the national debt was nothing to speak of like, you know, for a long, long time. And then -

It wont be the quantity. Itll be whether, in any way, inflation would get let loose in a way that really threatened the whole world economic situation. And there really isnt any alternative to the dollar as a reserve currency.

And you get a lot of people who will give you a lot of speeches on that, but that really is the answer.

And Paul Volcker worried about that back in 19 - you know - well, before 1980.

But - but he had threats on his life, and I happened to have a little contact with him at that time.

And he was an amazing, amazing fellow that, in effect, decided that he had to act or the whole - really the financial system would fall apart in some way that he couldnt predict.

And he did it, and, you know, had people threatening his life and do all kinds of things. But he was the man for that crisis.

But it wasnt the quantity of U.S. debt that was being offered that threatened the system then. It was the fact that inflation and the future value of the dollar, you know, the cash is trash type thinking that turn - and, you know - that was setting up something that could really affect the future of the world, in terms of its economic system.

And Paul Volcker took it on. And he was gutty it could be.

And if you haven’t read a book or two about him - or the one he last wrote - youd be able to take a look at it.

But it is - I dont worry about the quantity. I worry about the fiscal deficit.

You know, if it - but Im not a worrier, just generally.

I mean, I think about it, and - but I dont sit and get up - work myself into a stew about it in the least. But I cant help thinking about it. And thats -

Weve got a - we’ve got a great attention - its interesting - I think it maybe enters into this in the - focusing - that focuses on the Fed.

And they, you know, they just love it, because things are always happening and economists are always saying whats going to happen with the Fed and everything else.

But the fiscal deficit is what should be focused on.

And [Federal Reserve Chair] Jay Powell is a - not only a great human being, but hes a very, very wise man.

But he doesnt control fiscal policy, and every and now then he sends out a kind of a disguised plea for, (laughs) please - please pay attention to this, because thats what the trouble will be, if we have it. Yeah. (Applause)

As one of the comics used to say - theres a stand-up comic who used to say, “Who have I forgotten to offend?” after - at his talk. And (laughs) I always feel like that after these meetings.

17. ‘Be kind - and the world’s better off’

WARREN BUFFETT: But weve got time for at least one question, and maybe two. But lets go to station seven.

AUDIENCE MEMBER: Hello, my name is Dennis (PH) from Gifhorn, Germany. Im a first time here. Im here with my friend who would, by the way, love to invite you to dinner.

You talked about the importance of heroes, and we are very happy to - and thankful that we have you as our hero with great values, and thank you for that, first of all.

My question is, it is clear that you achieved great success in life. Earlier, you talked about every investment having opportunity cost. From what Ive learned in life, that does not only apply to investing your money but also to investing your time.

WARREN BUFFETT: Right.

AUDIENCE MEMBER: And every hour you spend in your office is an hour you cannot spend with your spouse or children.

With the life experience you have now, if you had the possibility to start all over again, would you set your priorities any different? If yes, how and why? And whats the best way to invite you to dinner? (Laughter)

WARREN BUFFETT: Well, that definitely wont be one of my priorities, if I figure out how to - (Laughter)

But that doesn’t - dont take it personally, because - you know - you can figure out, at the maximum, how long a period Ive got, and -

No, I dont think - I mean, I can figure out all kinds of things that should have been done differently, but so what? You know, I mean, Im not perfect.

I dont believe in lots of self-criticism or being unrealistic about either what you are, or what youve accomplished, or what youd like to do.

You do the - you know, you do a lot of things. And who knows whether somewhat different tradeoffs - you know - you just cant - you can‘t - you dont know where the paths wouldve led.

I feel - I dont think theres any room in beating up yourself over whats happened in the past. You know, its happened, and you get to live the rest of the life. And you dont know how long its going to be.

And you keep trying to do the things that are important to you.

And if I was a doctor or if I was in, you know, all kinds of different professions, I might do different things.

But I really enjoy managing money for people who trust me.

I dont have any reason to do it for financial reasons. You know, Im not running a hedge fund or getting an override or anything.

But I just like the feeling of being trusted.

Charlie felt the same way. You know, thats a good way to feel in life. And it continues to be a good feeling.

So Im not really looking to change much.

And, you know, if Im very lucky, I get to play it out for six or seven years and it could end tomorrow, but thats true of everybody, although the equation isnt exactly the same.

But I dont believe in beating yourself up, though, over anything youve done in the past. And I dont believe in - well, I believe in trying to find, you know, what youre good at, what you enjoy.

And then I think the one thing that you can aspire to be - because this can be done by anybody and its amazing - doesnt have anything to do with money - but you can be kind. You know, thats -

You can be kind if youre - and then the worlds better off. (Applause)

Im not sure that the world will be better off if Im richer. But theres no question that - I mean, and you know kind people. And in the end, aspire to be more - or Im sure many of you are yourself - but just aspire to be more so.

18. ‘If youre lucky in life, make sure a bunch of other people are lucky, too’

WARREN BUFFETT: And I guess we can take one more question from Becky, and then well wind up.

BECKY QUICK: This question comes from Devon Spurgeon.

(Buffett chuckles)

“On March 4th, Charlies will was filed with the County of Los Angeles. The first codicil contained an unusual provision. It reads, Averaged out, my long life has been a favored one, made better by duty imposed by family tradition requiring righteousness and service.

“Therefore, I follow an old practice that I wish was more common now, inserting an ethical bequest that gives priority not to property but to transmission of duty.

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

WARREN BUFFETT: Id probably say read Charlie. (Laughs)

Hes expressed it well. And I would - well, I would say that if theyre not financially well off, if youre being kind, youre doing something that most of the rich people dont do (laughs) even when they give away money.

But thats not a question of whether youre rich or poor.

And I would say if youre lucky in life, make sure a bunch of other people are lucky, too. (Applause)

19. ‘I not only hope you come next year, but I hope I come next year’

WARREN BUFFETT: OK. Theres -

Just in case you [want to] know what my advice to myself would be - has been during this period.

(Buffett holds up sign that had been facing him that says, “SHUT UP!”)

(Laughter)

So we only got thirty, what, -three questions or whatever it is.

But thank you very, very much for coming.

And I not only hope that you come next year, but I hope I come next year. (Laughter and applause)

Thank you.