Walne zgromadzenie Berkshire Hathaway 2025 Transkrypcja (RAW) (BRK.US)(🇬🇧)

Konferencja za czwarty kwartał 2024 (2025-05-03)

Update: 2025-05-04 11:40

Spotkanie online z przedstawicielami zarządu Berkshire Hathaway dla inwestorów

Source: CNBC Live meeting

Greg Abel

Warren you ready to start?

Warren Buffett

I'm ready anytime.

Greg Abel

Okay, let’s go. You can start.

Warren Buffett

Okay. If everyone will please take their seats. This is my 60th annual meeting, and It’s the biggest, and I think it will be the best yet. And I would - before I start, I’d like to give you a few figures from yesterday because we set all kinds of records.

Yesterday, we had 19,700 people that joined us in the afternoon between 12:00 and 5:00, and that was up from 16,200, which was a previous record the year before. And in every aspect, we set records. Sees Candy did $317,000 against $283,000 the year before. And most of these were limited by capacity. I mean, there were lines there throughout the total day.

Brooks did $310,000, an all-time record sales day for them. And I think they have close to 3,000 runners lined up for Sunday. I think we had 2,200 to 2,400 before, but 3,000, and that doesn’t count me and it won’t count me, and I could go up and down the line.

Jazwares around $250,000, double the previous years. They just sell as fast as they can sell. Most every place had people lined up at the cash register. Sometimes, they’re a lot longer wait than wish we had, but we’ll learn the game eventually. And it goes on and on. Every company set records. And there’s no way of knowing how many people we have here today.

We have people listening in around the world. But I think we’re setting — we’ll probably set records in a great variety of ways. And I would — we’re going to have — in a minute, we’ll get to the question and answer, but I’d like to first introduce our Directors, and I’m Warren Buffett and I was born and bred right here in Omaha. We have Greg Abel. He was born and bred in Canada. And we have Ajit Jain, who was born and bred in India.

So we have a very diverse group. And in the audience, and I will introduce them alphabetically, and if they’ll stand as I introduce them. And I know it will be an effort, but withhold your applause till the end of it, so that we can get through the list. But we’ll start alphabetically with Howard Buffett, Howard, would you stand? Withhold the applause and go to his head. Susan Buffett. We have Steve Burke, Ken Chenault, Chris Davis. Sue Decker, Sue is our Lead Director; Charlotte Guyman, Tom Murphy, Jr.; Ron Olson, and I’ll have a few — and when we finish, I’ll have a few more things to add about him. Wally Weitz and Meryl Witmer. And with that, you’ve got our all-star cast.

And Ron, if you don’t mind standing, I would like to point out that Ron, they finally got through an aged Director thing at Berkshire. I think we had 5 that were over 90 here not too long ago, but we put in the highest — or Sue tells me anyway that it’s the highest age limit that any of the companies she checked out came up with. But Ron has been on the Board for 28 years and associated with Charlie Munger. Munger tolls for…

Tim Cook, and I understand and it will be tough for me to see him come up here. But Tim Cook, there he is. I’m somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I’ve ever made Berkshire Hathaway. So I’d — credit should be given to him for — I knew Steve Jobs briefly. And Steve, of course, did things that nobody else could have done in developing Apple. But Steve picked out Tim to succeed him, and he really made the right decision. Steve dies young, as you know. And nobody but Steve could have created Apple, but nobody could — but Tim could have developed it like it has. So on behalf of all of Berkshire, thank you.

There’s a couple of other people I’d like to thank. I don’t do any work in terms of the show or anything else around Berkshire. But what you see today is the product of a lot of people at Berkshire. They forget — they don’t think of themselves as the one who is supposed to screw a light and leave for somebody else, a specialist to come along and do other things.

The people of Berkshire put on this show every year. And our Chief Financial Officer and just everybody pitches in. It’s a remarkable organization that way. But it’s led this year in the last few years by Melissa Shapiro, and she’s made this whole thing work. Melissa?

And then we got an idea a while back, well, many years ago. Well, I’ll take it all the way back. Maybe 65 years ago, I met Carrie Sova’s grandfather and his wife. They had 9 children. And Susie and I joined a playhouse group. And I don’t look like the kind of guy that would join a playhouse group, but it turned out to be a great move in many ways.

First of all, I enjoyed the plays. But beyond that, I met not only Carrie’s grandfather who ran an insurance company in Omaha, Bill Kizer, but I also met the Blumkin boys, parents Louis and Frances. So in one sort of accident when I was in my 20s, came up with all kinds of good things. And in connection with Carrie, her father ran a company called Central States. And later on, we bought that company.

And then her father ran the company. Her sister went to work for Berkshire some years ago. And then she decided to have a family and subsequently had 4 kids. So she left, but Carrie moved right in. And Carrie had amazing talent behind, just like a good many people do. They have talent you don’t realize until you give them some responsibility.

And so 10 or 11 years ago, I asked Carrie to do a 50th anniversary book about Berkshire and just use her imagination. And she never — she didn’t need to check with me or do anything. She just — she never added to the book. She never published the book. She never dealt with the printers before. But she just went out and promptly put together this 50th anniversary book.

And then this year — well, then Carrie, of course, got married and had 3 kids, so she had to leave us. But — and we have a — we go to a baseball game once a year, and we invite some of our distinguished alumni like Carrie to join us. And Carrie, even though she was raising 3 children, and you may have met 1 or 2 of them in the last day or so, she volunteered to bring together a 60th anniversary book and — which I asked for.

And again, she took the whole thing. She just did it. She kept doing the things with her kids. And every now and then, she — I’d ask her how it was going, and she tell me how it was going. And so she put together the 60th anniversary book and got it done by maybe a week before the meeting because I gave her the assignment very late.

And yesterday, we sold, I think, it was 4,000 plus, 4,500 maybe. Wait, 4,400. We printed 8,000. We intended to print 5,000, but — so we sold 4,400 books yesterday, and we’ll have, I guess, some roughly 3,600 left out there today.

And it’s kind of whimsical, but accurate. And she came out with just the book I hope she would come out with. And then as we went through this publishing experience, Carrie wouldn’t take a dime. But I did get her to name her favorite charity and Stephen Center, which takes care of homeless people and does a great many other things. It’s located about 5 or 6 miles from where we are here at the South and has been doing a wonderful job.

Her grandfather helped form it. Her husband has now joined the Board. And we are selling 20 copies of — this is a commercial place, isn’t it? We are selling 20 copies that we sold 10 prior to the meeting. That’s all we let them sell. And we raised a few hundred thousand dollars doing that. I think we sold one for $100,000. And — but we limited that to 10.

And the only difference in these and the $25 version is that Carrie and I signed them, but we saved 6 for yesterday. And the 6 brought $148,000, which is a pretty good average per book of about $20,000-odd. And then I had them save 4 more.

So this afternoon when we disband at 1:00, the area right behind us that has all the goods in it in bookstore, they will sell the final 4. And when we get all through, I’ll match whatever we’ve raised for the 20, and we will give the Stephen Center a boost, both in — financially, but also in awareness.

So anyway, that — and when you look at that book, Carrie really did the whole thing. I mean, there’s a lot of information in there, and she dug through it and she came through a couple of times maybe to check a fact or 2, but she got material from the Munger family. She just did a wonderful job. And I couldn’t get her to take a $0.01 for it. So I’m going to have to do a lot of other things in the future.

Okay. With that, I think we’ve covered all the business, so we will move to Becky. There’s questions that she’s received from — I don’t know how many she’s received, but from all over the country and perhaps outside the country. And she’s picked out a group of them, which she has not shared with me. And we will alternate questions between Becky and the audience, which we have by zones.

And with that, I will turn things over to Becky for the first question.

Becky Quick

Thanks, Warren. This first question comes from [ Bill Mitchell ]. I received more questions about this than any other question. He writes, Warren, in a 2003 Fortune article, you argued for import certificates to limit trade deficits and said these import certificates basically amounted to a tariff.

But recently, you called tariffs an active economic war. Has your view on trade barriers changed? Or do you see import certificates as somehow distinct from tariffs?

Warren Buffett

Yes. The import certificates were distinct, but they — their goal was to balance imports against exports. And so that the trade deficit would not grow in an enormous way. In fact, it would have — and it had various other provisions in it to help third world countries at that time, as they were called, to perhaps catch up a little bit.

They had a variety of aspects to them. But basically, they were designed to balance trade. And I think you can make some very good arguments for the fact that balanced trade is good for the world. And the more balanced trade there is, the better.

It will continue to be better for cocoa to be raised in Ghana and coffee in Colombia and a few things. And over time, the American industry has gone from being an agricultural country. This was nothing but an ag country. I mean, that virtually — and that was only 250 years ago.

And we have become a very industrial country. And we did not want to make that a situation, in my view, where we ran greater and greater deficits, building up greater and greater debts against the country. So I designed this import certificate thing, which Charlie thought was a little, too much like Rube Goldberg. I don’t know whether that — name is, but it’s gimmicky.

But it’s certainly a lot better than anything I think than we’re talking about now. And there’s no question that trade can be an active war, and I think it’s led to bad things. Just the attitudes it’s brought out in the United States, I mean, we should be looking to trade with the rest of the world, and we should do what we do best, and they should do what they do best. And I don’t think it — that’s what we did originally.

I mean, we were good at producing tobacco and cotton 250 years ago, and we traded it. And we want a prosperous world with 8 countries with nuclear weapons, including a few that are, what I would call, quite unstable. I do not think it’s a great idea to try and design a world where a few countries say, “Ha, ha, ha. We won,” and other countries are envious.

So my import certificate idea, which went no place, I think we’ve got extra copies [indiscernible] not a great demand for the copies. Anybody — and if you’d like, I can write the office, I think we could probably send you a copy of it.

But the main thing to do is not — trade should not be a weapon. And in the United States, we’ve won. I mean, we have become an incredibly important country starting from nothing. 250 years ago, there’s nothing been anything like it. And it’s a big mistake in my view, when you have 7.5 billion people that don’t like you very well and you got 300 million that are crowing in some way about how well they’ve done. And I don’t think it’s right, and I don’t think it’s wise.

I do think that the more prosperous the rest of the world becomes, it won’t be at our expense, the more prosperous it will become and within the safer it will feel and your children will feel someday. So that’s — but don’t expect my import certificate idea to go down there with Adam Smith’s Wealth of Nations or anything.

Okay. Let’s go to Area 1.

Shareholder

I’m S. T. Zhang. I’m from Hong Kong. Mr. Buffett and Mr. Munger did a very good and successful investment in Japan in the past 5 or 6 years. The recent CPI in Japan is currently above 3%, not far away from its 2% target. Bank of Japan seems very determined in raising rates, while Fed, ECB and other central banks are considering to cut them.

Do you think BOJ, Bank of Japan, makes sense to proceed the rate hike? Will its planned rate hike deter you from further investing in Japanese stock market or even considering to realize your current profit?

Thank you very much for arranging this greatest event every year. Finally, I wish you healthy always and keep holding this shareholder meeting.

Warren Buffett

Thank you. Well, I’m going to extend the same goodwill to Japan that you’ve just extended to me. I’ll let the people of Japan determine their best course of action in terms of economics. It’s an incredible story, and it’s been about 6 years now, as you pointed out.

I was just going through a little handbook that probably had 2,000 or 3,000 Japanese companies in it. One problem I have is that I can’t read that handbook anymore. The print is too small. But the — and here with these 5 trading companies, they have a special name for them in Japan, but they were selling at ridiculously low prices.

And so I spent about here acquiring them, and then we got to know the people better. And everything that Greg and I saw, we liked better as we went along.

So we got fairly close to the 10% limit that we told the company we would never exceed without their permission. And so we did ask them recently whether that limit could be relaxed, and it’s in the process of being relaxed somewhat.

We — I would say that I’ll speak for Greg beyond me that in the next 50 years, and I hope he’s running things then, we won’t give a thought to selling those. I mean, they — and Japan’s record has been extraordinary actually in terms of that — my guess is that Tim would tell you, Tim Cook would tell you that iPhone sales there are about as great as any country outside the United States.

American Express would tell you that they sell their product very, very well in Japan. Coca-Cola, that we do business with another big investment of ours, they do extraordinarily well in Japan. They have a number of habits and in a civilization that operates differently than ours.

Japan is by far the biggest — they — this is the container they’ve always preferred their soft drinks, and they have a whole different sort of distribution system there. But we have been treated extremely well by the 5 companies.

They talked with Greg primarily. I went over there a year or 2 ago. Greg is more cosmopolitan than I am. So he’s — which isn’t saying much actually.

Greg Abel

Very little.

Warren Buffett

But he is — how many times do you think you’ve met with representatives of one company or the other?

Greg Abel

Yes. When you think of the 5, there’s definitely a couple of meetings a year, Warren. And I think the thing we’re building with the 5 companies is, one, it’s been a very good investment. But we are really — as Warren touched on, we envision holding the investment for 50 years or forever.

But I think we also are building relationships to do incremental things with each of those companies. And we really do hope to do big things with them globally. They bring different perspectives and different opportunities, and we see, and that’s the — that’s why we’re building that long-term relationship with them.

Warren Buffett

It’s super long term. And they have a much — they have different customs. They have different approaches to business. That’s true around the world. And we don’t have any intention in any way of trying to change what they’ve done because they do it very successfully. And our main activity is just to cheer and clap. And that — I can still do it at 94.

So we will own those. We will not be selling any stock. I mean, that is just — it’s — that will not happen in decades, if then. And my guess is that they will find things because they cover the world pretty much, the 5 trading companies.

We will find things occasionally that may be very large for any individual company there. They may, in some way, be assisted by some help we bring to the situation. But that will be an expanding relationship.

It’s too bad that Berkshire has gotten as big as it is because we love that position, and I’d like it to be a lot larger than it is. But even with the 5 companies being — they’re very large companies and they’re large companies in Japan. And we’ve got that market in the range of $20 billion invested, but I’d rather have $100 billion than $20 billion. And that’s the way I feel about it.

Several other investments we have, but size is an enemy of performance at Berkshire. And I don’t know any good way to solve that problem. But Charlie always told me that having a few problems was good for me. I never quite understood that. But if you listen to them moralized, you would understand. And it’s not an impossible problem at all. And the Japan investment has just been right up our alley.

But do you want to add anything on that, Greg?

Greg Abel

No, I think you’ve touched it. But as you said, it’s right up our alley, and I absolutely agree, Warren. I do believe we’ll see some very large opportunities long term. And that’s just been a great plus of that relationship.

Warren Buffett

Yes, yes. I would say they want to — they would like to present us with opportunities. We would like to receive them. We’ve got the money. We both get along well — very well with each other. And they have different — they have some different customs than we have.

They drink the #1 Coca-Cola product. They drink over there something called Georgia Coffee. So I haven’t converted them to Cherry Coke, and they’re not going to convert me to Georgia Coffee.

But it’s a perfect relationship. I just wish we could get more like it. And I never dreamt of that when I picked up that little — it wasn’t so little. It’s about that thick. But sometimes, 2 companies to a page and a couple of thousand pages, I believe. But it’s amazing on what you can find when you just turn the page.

We showed a movie last year that [indiscernible] turn every page. And I would say that turning every page is one important ingredient to bring to the investment field. And very few people do turn every page. And the ones who turn every page aren’t going to tell you what they’re finding. So you got to do a little bit yourself. Okay.

Becky?

Becky Quick

This next question comes from [ Adve Prasad ] in New York. He writes, today, Berkshire holds over $300 billion in cash and short-term investments, representing about 27% of total assets, a historically high figure compared to the 13% average over the last 25 years. This has also led Berkshire to effectively own nearly 5% of the entire U.S. treasury market.

Beyond the need for liquidity to meet insurance obligations, is the decision to raise cash primarily a derisking strategy in response to high market valuations? Or is it also a deliberate effort to position Berkshire’s balance sheet for a smoother leadership transition, providing Greg Abel with maximum flexibility and a clean slate for future capital allocation decisions?

And I will add one line from another shareholder, Mike Conway, who asks, are you encouraged you may see some fat pitches coming your way?

Warren Buffett

Well, I wouldn’t do anything nearly so noble as to withhold investing myself just so that Greg could look good later on. Now if he gets any edge, what I believe, I’ll reset that.

So the amount of cash we have is we would spend — we came pretty close to spending $10 billion not that long ago, for example. But we’d spend $100 billion. I mean, those decisions are not tough to make, when something is offered that makes sense to us and that we understand and offers good value and where we don’t worry about losing.

And the one problem with the investment business is that things don’t come along in an orderly fashion, and they never will. I mean, it isn’t like every day. The long-term record is sensational, but that is not a product. And I’ve been in — I’ve had 200 trading days times 80 years, you’re at 16 million trading days and kind of — I mean, 16,000 trading days.

It would be nice if every day you got 4 opportunities or something like that, and they were expected to be equally attractive. If I was running a numbers record, every day would have the same expectancy that I would keep 40% or whatever the handle was.

And so the only question would be is how much we’ve transacted. But we’re not running that kind of a business. And so we’re running a business which is very, very, very opportunistic. And Charlie always thought I did too many things. He thought if we did about 5 things in our lifetime, we could — we’d end up doing better than if we did 50 and that we never concentrated enough.

So that we would rather have — if we’ve got $335 billion now in treasuries, we would rather have conditions that are developed where we would have, like, $50 billion or something like that. But that just isn’t the way the business works.

And we have made a lot of money by not wanting to be fully invested at all times. And we don’t think it’s improper actually for people who are passive investors just to make a few simple investments and sit for their life in them.

But we’ve made the decision to be in the business. So we think we can do a little better than that by behaving in a very irregular manner. But if you told me that I had to invest — well, let’s say that we have a roughly $40 billion a year coming in and we start with $335 billion. If you told me I had to invest $50 billion every year until we got down to $50 billion, that would be the dumbest thing in the world to invest in that manner.

Things get extraordinarily attractive very occasionally. The long-term trend is up. Nobody knows, and I certainly don’t know. Greg doesn’t know. Ajit doesn’t know. Nobody knows what the market is going to do tomorrow, next week, next month. Nobody knows what business is going to do tomorrow, next week or next month. But they spend all their time talking about it because it’s easy to talk about.

And — but it has no value. I’ve never found anybody I want to listen to on the subject. And the — on the other hand, I found the leafing through things like that big Japanese book that I can’t read anymore, that’s a trigger hunt. And every now and then, you’d find something. And occasionally, very occasionally, but it will happen again.

I don’t know when. It could be next week. It could be 5 years off, but it won’t be 50 years off. We will have — we will be bombarded with offerings that we’ll be glad we have the cash for. And it’d be a lot more fun if it would happen tomorrow, but it’s very unlikely to happen tomorrow. Very, very unlikely to happen tomorrow. But it’s not unlikely to happen in 5 years, and then it gets — the probabilities get higher as you go along.

It’s kind of like death. I mean, if you’re 10 years old, the chances that you’re going to die the next day are low. You get to be 115 or something like that, it’s almost a cinch, particularly if you’re a male. I mean, all the records are held by females in terms of age. And I tried to get Charlie to have a sex change so he could test off. But he did pretty well for being a male, I’ll put it that way.

Okay, station 2.

Shareholder

My name is [ Jacky Han ]. I’m from China and now work in Toronto, Canada. This is my eighth Berkshire Hathaway meetings at this point. I’ve probably spent more time with you than most people spend on Netflix.

As you might guess, coming from a Chinese family, we’ve always had a soft spot for real estate. So your question isn’t why don’t you own a house. It’s why are you still buying stocks instead of more property.

So here is my question. With today’s high interest rates and global uncertainty, do you still believe in being ready when others are fearful or the value investing facing new challenges in today’s environment? Thank you.

Warren Buffett

Yes. Well, in respect to real estate, it’s so much harder than stocks in terms of negotiation of deals, time spent, the involvement of multiple parties. And the ownership, usually when real estate gets in trouble, you find out you’re dealing with more than an equity holder.

But there have been times when large amounts of real estate have changed hands at bargain prices. But usually, stocks were cheaper, but they were a lot easier to do.

So Charlie did more real estate because Charlie enjoyed real estate transactions, and he actually did a fair number of them in the last 5 years of his life. But he was playing a game that was an interesting game to him. But I think if he — if you asked him to make a choice when he was 21 if he had either be in stocks exclusively the rest of his life or real estate the rest of his life, he would have chosen the stocks in the second.

There’s just so much more opportunity. At least in the United States, there’s so much more opportunity that presents itself in the security market than it does in real estate. And in real estate, you’re dealing with — usually dealing with a single owner or a family that owns maybe a large property they’ve had a long time. Maybe they borrowed too much money against it. Maybe the population trends are against them.

But to them, it’s an enormous decision. When you walk down to the New York Stock Exchange, you can do billions of dollars’ worth of business totally anonymous, and you can do it in 5 minutes. And the trades are complete when they’re complete.

In real estate, when you make a deal, a big deal with a distressed lender, and when you sign the deal, then you go into another phase. I mean, then people start negotiating more things and more things. And it’s a whole different game. And a different type of person, to some extent, enjoys the game.

We did a few real estate deals that came our way in 2008 and ’09. But the amount of time that they would take us compared to doing something intelligent and probably better in securities, there was just no comparison. I mean, in a real estate deal, every sentence is as important as a person. And in stocks, if somebody needs to sell 20,000 shares of Berkshire or something and they call us that the price is right, it’s done in 5 seconds. And it closes all the time with the people who you certainly wouldn’t want to have married your daughter or they behave well actually in stocks.

Partly that’s because they’re probably having their wires or phones or whatever it is recorded as to what they’ve said and everything. But the completion rate for working on anything in stocks is, assuming you got a meeting of the minds on prices, essentially 100% in real estate. And it just begins when you agree on deals, and then they take forever.

So for a guy at 94, it’s not the most interesting thing to get involved in something where the negotiations could take years. And we have the capability. There have been some huge failures. And in fact, if you go all the way back to Zeckendorf in the 1960s, he was going to change the world in Century City out in California as a product of his. And if you go to Uris, if you go to — he was sitting on top of the world with the Uris Buildings.

And so people tend to get in trouble in that business. The banks usually don’t want to recognize it, but that takes a long time to go through the bank processes. They just got sort of redoing the musk cologne that he made that — when he was buying it 3 years ago. The company that’s now X.

And 3 years to work out a transaction that — where you’ve got parties on both sides that aren’t ready to act, then we find it much better when people are just ready to pick up the phone and you can do hundreds of millions of dollars’ worth of business in the day. I’ve been spoiled, but I like being spoiled, so we’ll keep it that way.

Okay. Becky?

Becky Quick

This question comes from [ Sam England ] in San Francisco, and it’s for Warren and Ajit. As AI systems become more capable and harder to interpret, how do you see that affecting the insurance industry’s ability to assess price and transfer risk? Are there parallels to past disruptions Berkshire has navigated in underwriting or capital allocation?

Warren Buffett

Okay, Becky. And Ajit has got about 100 points of IQ on me, and he’s just going to be here this morning. So I’m going to let him answer the question first.

Ajit Jain

Well, there is no question in my mind that AI is going to be a real game changer, and it’s going to change the way we assess risk, we price risk, we sell the risk and then the way we end up paying claims.

Having said that, I certainly also feel that people end up spending enormous amount of money trying to chase the next new fashionable thing. We are not very good in terms of being the fastest or the first mover. Our approach is more to wait and see until the opportunity crystallizes, and we have a better point of view in terms of risk of failure, upside, downside.

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

Warren Buffett

Yes. And I would just add, I wouldn’t trade everything that’s developed in AI in the next 10 years for Ajit. So if you gave me a choice that — gave me a choice of having $100 billion available to participate in an insurance — property casualty insurance business for the next 10 years and a choice of getting the top AI product out of whoever is developing it or having Ajit making the decision, I would take Ajit any time. And I’m not kidding about that.

Okay. Station 3.

Shareholder

I’m [ Sean Siegel ] from Chicago, Illinois. Thank you for investing your time, to you and the Executive Committee for putting on this meeting and for bringing together a diverse group of people in attendance under one roof.

Out of all the companies that Berkshire Hathaway owns, there was one that you acquired, the Chicago-based company, Portillo’s Hot Dogs. How did you know that this would be a good fit for the overall company’s portfolio?

Warren Buffett

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

Greg Abel

I think I’ve got to call a friend on this one.

Warren Buffett

Yes. We own a lot of companies, but I do like to think I know most of them. But the — it may be a subsidiary of a subsidiary in some way, but I really don’t know anything about it. I’m sorry. That may be a good thing. I do know something about hotdogs, though, so…

Greg Abel

And we do have a lot of companies in Chicago, Warren, through Marmon. And that’s been a great opportunity where we’ve accumulated a variety of excellent companies under that portfolio. But as you noted, I don’t believe Portillo’s falls under that.

Warren Buffett

I look at the financial statements of about, perhaps, 50 or 60 of our companies every month. But in the case of Marmon, for example, Marmon itself owns over 100 companies. And it was the creature of — it was created by Jay Pritzker and his brother, Bob.

And it was a remarkable company when we bought it, but it was highly diversified already, and then we’ve diversified it further. So it is something of a Berkshire within Berkshire. And we found that, that’s working very good as arrangement. It was interesting.

Jay Pritzker was a remarkable manager, and there’s various branches of the Pritzker family. So you’ll — it really goes back to A.N. Pritzker before Jay and so on. But in 1954, they changed the federal tax code very dramatically in the United States.

It was quite bold to me because I’ve been at Columbia and I’ve been reading a J. K. Lasser book about the tax code, and then they went and change the whole damn thing. So it did. But ’54 was a big year, a big change. Those years come every now and then like 1986. And you may see a big one, one of these days.

And there was a company called Rockwood Chocolate in Brooklyn, and they made Rockwood Chocolate bits, which we used to sell at the Buffett Grocery Store, and people make chocolate chip cookies out of them and everything.

And then it turned out that cocoa, which lately has had a big run, too, cocoa was $0.05 a pound in 1941 when LIFO was first allowed for insurance and for the tax purposes. And the Rockwood Chocolate Company went into — on the LIFO message. So they owned like 30 million pounds or thereabouts of cocoa.

And then cocoa took a run in 1955, and I just moved to New York. And there was a provision in the new tax code that if you were in 2 or more companies and you did certain things, and you’ve been in them for 5 years and you got out of one of them that there would be no capital gains tax on LIFO inventory gains. And the tax rates were on 48%, maybe 52%.

And so there was this huge profit because the cocoa had gone up in price, but that made it terrible for them in selling Rockwood Chocolate bits because the price at retail of the chocolate bits did not match what was going on at wholesale.

Something almost identical has been happening in the chocolate business. Recently, HERSHEY Chocolate just came out and said they’re going to have a bad quarter. And we’re paying $4.50 a pound for chocolate from cocoa because things are going on in West Africa that make cocoa prices go up dramatically.

In any event, Jay Pritzker bought control of Rockwood, the chocolate company. And like I say, I was 24 or 25 years old, and they called the meeting to split off the 2. And one of the chocolate businesses in a way that would enable them to recognize the gain on these cocoa beans without paying 50% — roughly 50% federal taxes on the gain.

So I went to the meeting, which was in Brooklyn, and nobody was there, this is in the turn every page category, except one guy, and I was 24 and he was 29, and it was Jay Pritzker. And nobody had showed up at the meeting, and it was kind of a crummy building they had, but they had a lot of cocoa there.

And Jay just gave me a lecture — or a lesson, really, I should say, on the tax code. And I mean with that, I could have gone to graduate school for years and never learned as much as he did. And then later, we actually bought the company, that Rockwood company, [indiscernible] did some other things, became the basis for Marmon.

And Marmon, among other things, developed the car that won the first Indianapolis Speedway race. And it invented the rearview mirror, which — and I’m not sure is a great advantage in economics or anything. But the guy that would — they used to have on the Indianapolis 500, they had 2 people in the car. One guy was to look back and see what the other people were doing. And the other guy was to drive the car. And our guy got sick.

And so they invented a rearview mirror. So if you want to look at the kind of what’s going on in the laboratories of Berkshire Hathaway, and we’ve got people working on things like the rearview mirror.

Greg Abel

Warren?

Warren Buffett

Yes.

Greg Abel

I’m happy a friend did call. So that still works. Peter Eastwood, who runs one of our Berkshire subsidiaries and does a great job of running it, tracked down that Portillo’s is owned by a private equity firm called Berkshire Partners.

So that was the basis of the question, but it’s not associated with Berkshire. So we got to the bottom of that one. Thank you, Peter.

Warren Buffett

That’s just a sample of the way we operate around here. Of course, you’re happy. Okay. Becky?

Becky Quick

All right. This question comes from [ Jessica Poon ] who says, you’ve long been a strong believer in the American tailwind and the resilience of the United States, and history has proven you correct.

Today, the U.S. appears to be undergoing significant and potentially revolutionary changes. Some investors are now questioning the concept of American exceptionalism.

In your view, are investors being overly pessimistic about the U.S. economy? Or is the country indeed entering a period of fundamental change that requires a reassessment from a new perspective?

Warren Buffett

Well, I would say that, Jessica, who I believe is — it sounds as if she is the step granddaughter of one of our managers that I mentioned in the annual report. May not be the same one.

But in any event, America has been insignificant in revolutionary changing really ever since it was developed. I mentioned that we started out as an agricultural society. We started out as a society with high promises, and we didn’t deliver on it very well.

We said all men were created equal. And then we wrote a constitution that said Blacks get 3 [indiscernible]. And in Article 2, you’ll find male pronouns used 20 times and no female pronouns used. So it took until 2000 — I mean, 2000 — 1920, I should say, until the 19th amendment was passed saying, “Oh, yes, we promised to women.” This was back in 1776. And now we’ll do something about it. And then we didn’t do something about it for a long time.

So we’re always in the process of change. We’ll always find all kinds of things to criticize in the country. But the luckiest day in my life is the day I was born. I was born in the United States. And at the time, about 3% of all the births in the world were taking place in the United States. And I’d like to say that I had something to do, send messages out to my parents for God’s sake, moved to the United States before I born or anything.

But I was just lucky. And I was lucky to be born male. I was lucky to be born white, and it was all kinds of things. But it’s — if you don’t think the United States has changed since I was born in 1930, it’s been — we’ve gone through all kinds of things. And we’ve gone through great recessions. We’ve gone through world wars. We’ve gone through the development of an anatomic bomb that we never dreamt of at the time I was born.

So I would not get discouraged about the fact that it doesn’t look like we’ve solved a big problem that’s come along. And if I were being born today, I would just keep negotiating in the womb until they said, “You can be in the United States.” So it — we’re all pretty lucky.

Do you want to give any — we’ve got 2 non-United States guys here just to get the other side.

Greg Abel

Who now live in the U.S.

Warren Buffett

Okay. Station 4.

Shareholder

Mr. Buffett. My name is Daniel, and I’m from Tenafly, New Jersey. First of all, I just want to say how grateful I am for getting the opportunity to ask you a question. When it comes to your principles of investing, you often talk about how important it is to be patient. Has there ever been a situation in your investing career where breaking that principle and acting fast has benefited you?

Warren Buffett

Well, that’s a good question. And there are times when you have to act fast. In fact, we made a great deal of money because we’re willing to act faster than anybody around. [ Jessica Toonkel ] is — I think she’s the step daughter of — or step granddaughter of [ Ben Rosner ] a manager of ours. And in 1966, I got a call from the phone name, [ Steiner ] in New York, and he said, I represent Mrs. Annenberg. And there were actually nine Annenberg sisters, I believe, before [ Leonore Annenberg ] came along with the son. But he said, we have a business we’d like to sell you.

So I called Charlie up, and I got a few details and it sounded very interesting. And Charlie and I went back to the office of [ Will Steiner ] in New York who was a marvelous guy, never met him since, but he was handling things for Mrs. [indiscernible], hey Simon but her name was Annenberg and her husband had been the partner of Ben Rosner, but he had died and then got kind of tense about working with her. And so he offered us this business at a bargain price.

He offered us a business for $6 million that had $2 million of cash. It had a $2 million piece of property and a 900 block of what’s the K Street in Philadelphia down there, Market Street. And it was making $2 million a year pretax and the price was $6 million. And Charlie and I went back to this place. And Ben Rosner was there. And he really — he just was upset about doing business with his partners [ Whittle ] because he was — she was extremely wealthy. And he just didn’t — he wasn’t enjoying it. He was very nervous about selling it. And he said to me and Charlie, he said — he said, I’ll run this business for you until December 31. And then I’m out of here. And I got Charlie, we went on the hallway and I said, if this guy quits at the end of the year, you can throw away every book on psychology if I ever read. And so that began a wonderful, we bought the company and had a great relationship.

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

My phone will ring sometime, yes, and with something that wakes me up, I may be sleeping in there or something, but you just never know when it will happen, and that’s what makes it fun. I mean — so patience. It’s a combination of patience and willingness to do something that afternoon if it comes to you. You don’t want to be patient about acting on deals that make sense and you don’t want to be very patient with people that are talking to you about things that will never happen. So it’s not a constant asset. It’s not a constant liability to be patient. Greg.

Greg Abel

Warren, I was going to add, as you’re being patient, I happen to know, and I think that goes for Ajit also and all our managers, very patient when we’re looking at opportunities. And as you touched on, we want to act quickly. But while we’re being patient, never underestimate the amount of reading and work that’s being done to be prepared to act quickly. Because we do know, be it equities, but I would include a variety of private companies that when the opportunity presents itself, we’re ready to act. And that’s a large part of being patient is using it to be prepared.

Warren Buffett

Yes. And of course, it doesn’t come in anything like an even flow. I mean almost uneven sort of activity you could get into. And the main thing you have to do is you have to be willing to hang up after 5 seconds, and you have to be willing to say yes after 5 seconds. And you can’t be filled with self-doubt in the business. You just forget it isn’t going to work. It going to some other activity.

But you also — I mean, one of the great pleasures — it is the great pleasure actually in this business is having people trust you. And that’s really why work at 90 when you’ve got more money than anybody could count if they started today and having machines that are helping them and everything else. It means nothing in terms of how you’re going to live or how your children are going to live or anything else. And — but both Charlie and I we just enjoyed the fact that people trusted us and they trusted us 60 years ago or 70 years ago in partnerships we had. And we never sought out professional investors to join our partnerships.

Among all of my partners, I never had a single institution. I never wanted an institution. I wanted people. And I didn’t want people that were sitting around and having people present to them every 3 months and tell them what they want to do and all that sort of thing. So — and that’s what we got, and that’s why we’ve got this group here today. So it’s all worked out. But that it’s — you don’t want to be patient when things are going your way. When the time comes to act. You want to get it done that day.

Okay. Becky?

Becky Quick

This question is from Flavio Montenegro, a shareholder from Guatemala. A couple of years ago in this meeting, Mr. Jain outlined the significant challenges GEICO faced in modernizing and integrating its IT systems. It was also mentioned that competitors were ahead in their pricing strategies because of the use of telematics. Today, GEICO’s turnaround is evident through strong pricing and operational improvements.

Could you provide more details on the specific actions taken under Todd’s leadership and how those changes will help sustain a long-term competitive advantage in the coming years?

Ajit Jain

Yes. Todd has done a great job for us in terms of turning around the operations. When he took over, there were two major issues that GEICO was behind its competitors on. Firstly, the term we — Warren used and we all have been using is matching rate to risk. And secondly, telematics. We were at the bottom of the list in so far as telematics are concerned about 5, 6 years ago. Since then, we have made rapid strides and telematics, which used to be a source of competitive disadvantage to us is no longer so. And I would argue that our telematics at GEICO is about as good as anyone else is today. So that’s been one huge catch-up.

Secondly, in terms of matching rate to risk, there, again, I think we have caught up with our competitors, and we are as good as anyone else in the field. All this, together with the cost reduction effort that GEICO and Todd gets a lot of credit for, he has basically reduced the workforce by 20,000, starting with something close to 50,000-odd. He’s brought it down to 20,000, and that translates to, I guess, at least $2 billion per year.

So all this has allowed GEICO to become a much focused competitor, so much so in the last 7 quarters, GEICO has shown a combined ratio that has an 8 in front of it. And I never thought I’d live to see the day when anyone could have a combined ratio at so low as it is right now.

So I think GEICO has done a great job. It’s 80% combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business. So we’ve achieved a lot. Todd has achieved a lot, but I do not want to be so arrogant as to say that mission accomplished. We’ve achieved a lot, but I still think we need to do a lot more in technology. AI, as we talked about, is going to be a big force, and we need to play catch up there, not catch up, but we ought to be in a state of readiness. So I think GEICO is in a great shape right now.

Warren, do you want to add anything?

Warren Buffett

No. It’s a fascinating case study, but that’s what’s so interesting about the whole game of business, but particularly about our businesses is that each one is a little different, but they all have challenges of certain sorts, but they also — many — certain numbers have opportunities.

We paid $50 million for half of GEICO in 1976, what turned out to be half of GEICO, $50 million. We now own 100%, but 50% of $2 billion that we earned in the first quarter is $1 billion, which on a $50 million investment is [indiscernible]. So that takes years to develop. But the interesting thing is the auto insurance policy, which didn’t even exist 100 years ago. I mean you just — well, I should say, 120 years ago. But it’s by far the largest item in the property casualty insurance business. It’s huge.

Ajit Jain

The only thing I’d like to add is in addition to the underwriting profit, GEICO provides $39 billion of float.

Warren Buffett

Yes, in addition, yes. And that’s not unimportant when you paid $50 million to get the business has given you $29 billion to work with for nothing. And on top of that, gives you $1 billion of profit in the quarter.

The interesting thing about auto insurance is that we are — the company was started in 1936. We’re selling the same product as 1936. We’re being more sophisticated about pricing it than we were then somebody just made the judgment, the fellow that came from USAA made the judgment that government employees, the name GEICO stands for Government Employees Insurance Company, that government employees were better drivers than average. And I don’t think he was an actuary or anything else, but he just made an observation. And so he left USAA, which is still a very successful company. And he started GEICO for a few hundred thousand dollars. and he made money the first year from my underwriting. He made money in the second year. This is not a public offering type thing. He’s phoney accounting for 10 years and all that sort of thing. They just priced it to make money. And that’s exactly what’s been done since 1936.

The policy really — your insurance — your auto insurance policy looks a lot like the one that you had done. And this huge field has sprung up around us, and it’s still growing. And of course, nobody likes to buy insurance, but they sure like to drive. And GEICO is — it’s a fascinating story. And about 3 times over the years, the company has gotten sidetracked one way or another. And then it gets back to its basics. And it’s a wonderful, wonderful business. And we showed at this annual meeting one time a message from Lorimer Davidson, and Lorimer Davidson in January of 1950, was the only person in a building that I’ve gone down on a Saturday visit, but turned out they didn’t work on Saturdays in Washington, and I pounded on the door until finally a janitor to let me in I said to the janitor, is there anybody else I can talk to here except you. And he didn’t take it personally, and he said, take one guy with the sixth floor. And a fellow name Lorimer Davidson did wonderful things for me.

You get a few breaks in life in terms of people you will meet who just change your life dramatically. And if you need a handful of those. And when you get them, you treasure them. And we’ve had them on this Board at Berkshire. If you take Tom Murphy and Sandy Gottesman and Walter Scott and Bill Scott, one thing we’ve done is we’ve held on to the human assets. We’ve made lifelong assets out of people that are the right sort and with incredible talent, but also just lots of fun to work with and always doing more than their share. And to get a chance to talk to Lorimer Davidson on a Saturday afternoon, you just listen carefully. And that comes in the category of turn every page. Some of them you want to turn pretty fast, but you just get lucky in life, and you want to take advantage of your luck.

Okay. Station 5.

Shareholder

My name is Benjamin Graham Sanderson from Pasadena, California. Warren, thank you for all you’ve taught us over the years. Earlier, you said nobody but Steve Jobs could have created Apple, but nobody but Tim Cook could have developed it like he has. Warren, nobody but you could have created Berkshire. And I presume you view Greg as an outlier among outliers, but he seems so normal. Sorry, Greg.

Warren Buffett

That’s a nice way of saying normal actually, but I appreciate it.

Shareholder

So I was hoping you could share what specifically about Greg makes him your preferred successor. And Greg, we’re excited to get to know you more over the next few decades. Thank you.

Warren Buffett

Thank you. Thank you. Well, you’ve hit on the most important question in terms of the business. We’ve got a wonderful group of businesses. We’ve got an ability to do things that nobody else can do, which is hard to get it in capitalistic system that’s been developed as fully as the United States has been. I mean, imagine being able to create something that in a very, very, very big playing field. I think it really be very, very hard to develop anything like it. I don’t think you could develop the people around let alone the capital position and the history and everything else.

And the answer, of course, is that it does take a long, long time and it takes getting around you a small cadre of people, which then spreads out somewhat. But where you’ve got mutual trust where people do more than their share. And I’ve been around a lot of the businesses over the years. And by nature, I’m somewhat critical of everything. I mean I’m looking for what’s wrong in things because that’s part of investing is looking what aren’t you — what are you missing?

But we have — we’ve got people that — if they’re asked to put on a show like this instead of doing whatever their regular job is, they participated I went around the groups of people who were exhibiting yesterday for 1.5 hours. And these are people who are thanking me and totally enthused about coming and doing a lot of work for which they don’t get paid anything extra. I don’t know anything about the arrangements the individual companies make, but they work hard and they enjoy their work. And if you really want to work as something you enjoy.

I’ve always had — I’ve had five bosses in life, and I liked every one of them. And they were all interesting. I still decided that I’d rather work for myself than anybody else. But — but if you find people that are wonderful to work with, that’s the place to go. And I’ve told my kids that basically that you don’t get lucky like I did when I found it 7 or 8 years of age, what really interested me. It would have taken a lot longer.

But you want to find the song if find the sound is there’s a movie called The Glenn Miller Story and Glen Miller went on from having a broken down band for 15 years to turning out the first — he found a sound and created the first gold record. I don’t know whether any of you know what it was, but it was the Chattanooga Choo Choo in 1941, I think it was. And he turned around from being a nothing with the band that he had until he found the sound. And I always have told my kids ever since that their sound isn’t my sound, but — and you don’t find it necessarily on the first job you take because you got to eat. But if you get lucky like I did, you find it when you’re very young and then just keep doing it and don’t worry too much about starting salaries and don’t worry about — be very careful who you work for because you will take on the habits of the people around you. So there are certain jobs you shouldn’t take. And — but you’ve got the greatest country in the world and you got the greatest time in the world.

So I would say that — well, while I’m handing this over to Greg that you can’t even dream all the dreams that you could have about a place like Berkshire. But big thing you have to do, though, is always is to be sure you can play the next day. I mean, in terms of financial activities on a meaningful scale, you don’t want to go — there was a book above what was the name of that book, You Only Have To Get Rich Once. I mean you don’t want to do anything that risks what’s been created.

So you don’t — if very stupid things are happening around you, you do know and not want to participate. If people are making more money because they’re borrowing money or they’re participating in securities that are really pieces of junk, but they hope to find a bigger sucker later on. You just have to forget that, that will bite you at some point. And the basic game is so good, and you’ve been so lucky to be born now.

I mean if I’ve been born in 1,700, I’d say, I want to go back in the room with the hell with this. It’s just too hard. And — but now I’ve come along to do something where I can just play around all day with things I enjoy doing. And it’s really — it’s a pretty wonderful life.

Anything, Greg, you want to add or subtract from that.

Greg Abel

Nothing to subtract. But I would always just say it couldn’t be more, as I’ve said in the past, more humbled and honored obviously, to be in this role. But to have actually been part of Berkshire for Warren, it’s now 25-plus years, had the opportunity to be part of Berkshire and to work with you and Ajit and our Board, but many other people in our company. And as you touched on, when you find something like that and you find something like that like Berkshire that’s so special, it’s — you fall in love with it, and it becomes just what you want to do every day, and it’s just an incredible opportunity. So thank you.

Warren Buffett

And the gentleman who asked the question, if you don’t find it immediately, don’t starve the death in the meantime. But you will find it. And you’ll find it in the right individual in the sense, it’s somewhat like finding the right person in marriage. I mean, probably the first — some of you may have married the person you met on your first date, although I guess they don’t even have dates anymore. But sometimes it pays to wait too. Okay, Becky.

Becky Quick

This is a question from Mark Bonke and Helen Frederickson in Rapid City, South Dakota. As the U.S. dollar quickly loses value in relation to other foreign currencies in 2025, is Berkshire Hathaway taking steps to minimize this currency risk and its impact on quarterly and annual earnings? If so, please explain.

And I’ll just add from Mary Cheng, another shareholder, Berkshire currently borrows in Japanese yen to offset its currency risk and its Japanese stock investments. In the future, will you invest in foreign currency-denominated assets unhedged?

Warren Buffett

Yes. Well, we always have pretty much. The Japanese situation is different because we do intend to stay so long with that position. And the funding situation is so cheap that we essentially have attempted to some degree to match purchases against yen-denominated funding. But that’s not a policy of ours. In fact, that’s the first time we’ve done that. And we’ve owned lots of securities in foreign currency.

So we do nothing in — in terms of the question about its impact on quarterly and annual earnings, we don’t do anything based on its impact on quarterly and annual earnings. I mean, there’s never been a Board meeting. I can remember what I — or the conversation I had with Charlie when I said where I say, if we do this, our annual earnings will be this. And therefore, we ought to — whether it’s accounting or anything, we just — the number will turn out to be what it will be, what counts is where we are 5 or 10 or 20 years from now. And if you start focusing on what number you’re going to produce, you will quickly get tempted, at least based on the experience I’ve seen from viewing 20 companies, you will get so you will one way or another play around with the numbers and sometimes seriously play around with the numbers.

And I’ve seen people that I trust them in all kinds of other ways, but they regard playing around with numbers is perfectly okay. And that’s just not something — we just don’t think about that. So actually, the yen relationship with the behavior of the yen in the last quarter resulted in certain gap charges and — but it doesn’t make any difference. It will change next month or next year.

And obviously, we wouldn’t want to be owning anything that we thought was in a currency that was really going to help. And that’s the big thing we worry about with the United States currency. I mean, the tendency of a government to want to debase its currency over time is — there’s no system that beats that. You can pick dictators, you can pick representatives, you can do anything. But the people — there will be a push toward weaker currencies. And of course, that is — I mentioned very briefly in the annual report that the fiscal policy is what scares me in the United States because it’s made the way it is. And all the motivations are doing a lot of things that will cause — can cause trouble with money.

But that’s not limited to the United States. It’s all over the world. And some places, it gets out of control regularly. They devalue at rates that are breathtaking, and that’s continued. I mean, people can study economics and you can have all kinds of arrangements. But in the end, if you’ve got people that control the currency, you can issue paper money and you will or you can engage in clipping currencies like they used to centuries ago or there will always be people. It’s the nature of their job.

I don’t — I’m not singling them out as particularly evil or anything like that. But the natural course of government is to make the currency worth less over time, and that’s got important consequences. And it’s very hard to build chunks and balances into the system to keep that from happening. And we’ve had a lot of fun here in the last either the first 100 days or the last 100 days, whatever you want to call it, watching what happens when people try to make sure that they aren’t running fiscal risks. And that gave us an over and never will be over in finality, if you look up in search, the great inflations of post World War II, it’s just the list that goes on forever and the same names keep popping up and everything.

So currency is — the value of currency is a scary thing. And we don’t have any great system for beating that we do in this particular Japanese position because we expect to hold it for 50 or 100 years or more. And we will be owning something that’s denominated in yen and easily predictable. And we’ll just — as long as the carry on it is right and everything we’ll attempt to issue Japanese-denominated liabilities. But that’s not because of anything we carry about in terms of quarterly or annual earnings.

Greg, do you have anything to say on that?

Greg Abel

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

Warren Buffett

Yes. We only made, as I referred to earlier, one big currency play, which was connected a little bit with when I wrote that article for Fortune. And we got long 12 other currencies, as I remember, only 4 or 5 of them are really big currencies. But when I say we got long, that means we’re short the dollar. And so we held that position for a couple of years, and we made several billion dollars on it, which was significant to us then still is.

Charlie always felt that if you had to pick an area outside of stocks in which to invest, and he knew a lot about bonds, he knew a lot about real estate, he knew a lot about a lot of things. But he said he thought he could make a lot of money out of being in foreign currency. But we just — we’ve done it once. It’s not inconceivable we would do it again, but it’s unlikely. But there could be things happen in the United States that would make us want to own a lot of other currencies.

And I suppose if we made some very large investment European country or some — there might be a situation where we would do a lot of financing in their currency. But it’s not — it was something that just was sort of obvious to do in the Japanese situation where we had the ability to borrow yen at very, very low carrying cost. And we felt very good about the income we’d be receiving from these securities. And we — and if the present condition, which it won’t, I mean, it never does, but prevail for decades and decades, we would probably keep doing the same sort of thing. But things change in the world, too. So don’t take that as a prediction. Okay. Section 6.

Shareholder

Good morning, Warren and Greg, Ajit. Thank you so much for hosting this event. Good to be here. My name is [indiscernible], and I’m from the great country of Mongolia. A little bit of background about my country. Mongolia is an emerging market and landlocked country sandwiched between Russia and China, but we are reaching history in minerals and have full democracy and growing economy. Last week, we hosted our second annual Mongolia Investor Conference in New York to attract investors like yourself.

I know you need and give advice informally to government leaders such as South Korea, China and India. What advice would you give to government business leaders of emerging markets like Mongolia to attract institutional investors like yourself? It’d be great if you have long-term plans for exposure to emerging markets as a hedge or an opportunistic investment.

Lastly, I welcome all of you to Mongolia and my country folks would be very happy if you can make it to our economic forum this July.

Warren Buffett

Thank you. Yes. I have trouble planning a trip to councils, which is just a few miles from here. Thanks an optimist.

Actually, I met a fellow here at the annual meeting probably 20 years ago or more, who did a lot in Mongolia. And he did very well in Mongolia and actually moved there for quite a while. I would say that if you’re looking for advice to give the government over there, it’s to develop a reputation for having a solid currency over time. I mean that we — we don’t really want to go into any country where we think there’s a chance — I mean, a significant probability of runaway inflation. It just — it’s too hard to figure. People — other people have figured out ways to make money in hyperinflationary situations, but that’s not our game. And I don’t think I play it well. So we wouldn’t be — that would be a factor with us.

The chances are we won’t find anything in Mongolia. It fits our size requirements aside from that. But like I say, I think my friend that I met here 20 years ago has done very well in Mongolia. And if the country develops a reputation for being business-friendly and currency conscious. And I think that, that bodes very well for the residents of that country, particularly if it has some other natural assets that it can build around.

I don’t know that much about the minerals there or anything of the sort. But I mean, who would have been on the United States in 1790, but we didn’t have to have perfection. We just had to be better than the other guys for quite a while. And — we started out with nothing, and we ended up with close to 25% of the world’s GDP and faster growth rates and generally sounder currencies and all kinds of things that — so I wish you well. Okay. Becky?

Becky Quick

This question is from Peter Shen in New Jersey. It’s for Mr. Buffett and Mr. Jain. In recent years, large private equity firms like Blackstone, Apollo and KKR have aggressively expanded into insurance, raising permanent capital, managing float and aiming to replicate the model that Berkshire pioneered decades ago.

Given that these firms are now directly competing for insurance assets, often using higher leverage and more aggressive investment strategies, how do you view their impact on Berkshire’s insurance operations and underwriting discipline — do you believe that the private equity model poses risks to policyholders in the broader financial system? And has this competition made it more challenging for Berkshire to find and price insurance opportunities safely and profitably today?

Warren Buffett

Ajit?

Ajit Jain

Okay. Yes. Part of the question is very easy. There’s no question the private equity firms have come into the space, and we are no longer competitive in this space. We used to do a fair amount in this space. But in the last 3, 4 years, I don’t think we’ve done a single deal.

Now you ought to separate this whole segment in two separate segments. One is the property casualty end of the business and the life end of the business. The private equity firms that you mentioned are all very active in the life end of the business, not the property casualty end of the business.

You are right in identifying the risks in these private equity firms are taking on, both in terms of leverage and in terms of credit risk. And while the economy is doing great and credit spreads are low, these — the private equity firms who have taken the assets from very conservative investments. And I wouldn’t say high octane, but they’ve certainly invested these assets in situations where that — where they get a lot more return on the investment.

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

Warren Buffett

Yes. I think there are people who want to copy Berkshire’s model. But usually, they don’t want to copy it by also copying the model of the CEO having all of his money in the company forever. And I mean, they’ve got a different equation. They’re interested and that’s capitalism, but they have a whole different situation and then they probably have a somewhat different fiduciary feeling about what they’re doing. And sometimes it works and sometimes it doesn’t work. And if it doesn’t work, they go on to other things. And if I — what we do here at Berkshire doesn’t work, I spend the end of my life regretting what I’ve created. So it’s just a whole different personal equation.

And there is no property casualty company that can basically replicate Berkshire. That wasn’t the case at the start. I mean, at the start, we just had national indemnity a few miles from here and anybody could have duplicated what we had. But that was before Ajit. Ajit came with us in 1986. And at that point, the other fellows should have given up. Station 7, please.

Shareholder

My name is Marie. I’m from Melrose, Massachusetts. Thank you for the time today. As a young person interested in investing like myself, I would love to hear your insights, Mr. Buffett. What were some pivotal lessons you learned early in your career? And what advice do you have young for young investors who are looking to develop their investment philosophy?

Warren Buffett

Well, those are good questions. I wish I thought of myself earlier in my life, who you associate with is just enormously important and don’t expect that you’ll make every decision right on that. I mean, but you are going to go into — you’re going to have your life progress in the general direction of the people that you work with, that you admire, that become your friends. I mentioned a few fellows that have died in the last couple of years. Well, all of those people were people that if we were working together on something one 10,000 the size of Berkshire, I mean, they’d be the kind of people you choose. You just — there are people that make you want to be better than you are. And you want to hang out with people that are better than you are and that you feel are better than you are because you’re going to go in the direction of the people that you associate with. And that’s something you learn.

And of course, you’ve learned it late in life that you — it’s hard to really appreciate how important some of those factors are until you get much older. But when you’ve got people around you, like Tom Murphy and like just name them Sandy Gottesman and Walter Scott, that you’re just going to live a better life than you do if you just go out and look at somebody that’s making a lot of money and decide you’re going to try and copy them or something of the sort.

So I would try to — I try to be associated with smart people, too, where I could learn a lot from them. And I would try to look for something that I would do if I didn’t need the money. I mean, what you’re really looking for life is something where you’ve got a job that you’d hold if you didn’t need the money. And I’ve had that Charlie out for a very, very long time.

In fact, all the fellows I named had it. And they also every one of those ones I named, they always did more than their share, and they never sought more than their share of the credit. They just behaved the way you like anybody you work with. And when you find them, you treasure them. And when you don’t find them, you still keep doing whatever causes you to eat or enables you to eat. But you don’t give up on looking around. And you’ll find people do wonderful things for you.

I mentioned earlier going down to GEICO and knocking on the door when the door was locked. I mean, who knows what was behind that door I went in. But in 10 minutes, I found that I had a man that was going to be just wonderfully helpful to me. And of course, if somebody is going to be helpful to you, you want to try to figure out ways to be helpful to them. So you get a compounding of good intentions and good behavior. And unfortunately, you can get the reverse of that in life, too. And with a lot of — I was lucky in having a good environment for living that kind of a life and other people have a whole different environmental situation, have to overcome it.

But don’t — I don’t feel guy about your good luck if you’ve got — well, if you live in the United States, you’ve — there are 8 billion people in the world and there’s 330 million in the United States, you’ve already won the game to a great degree and then just keep making the most of it. But you don’t want to associate with people or enterprises that ask you to do something that — or tell you to do something that you shouldn’t be doing. And that’s one of the problems. I mean different professions select for different types of people. And there’s — it’s interesting to me that in the investment business, so many people get out of it after they’ve made a pile of money that you really want something that you’ll stick around for whether you need the money.

Greg doesn’t need the money or he doesn’t need the money remotely. And they — but they enjoy what they do and they’re so damn good at it. It’s just — well, I’ve had the advantage of seeing how that works over time. The best manager I ever knew, and there’s a lot of contention for who that would be. But actually it was Tom Murphy senior that who lived the almost 98. And I’ve never seen anybody that could get the potential out of other people more than [indiscernible]. I mean if you want to become a better person, you want to work for Tom Murphy.

And there are all kinds of successful people that really don’t have that sort of — don’t bring that to the party. And I’m not saying that’s the only way to succeed, but I think it’s the most pleasant way to succeed for sure.

And I think that the Berkshire experience is pretty dramatic. I mean, to operate with Sandy Gottesman from 1963 until he died a couple of years ago. And Walter Scott 30 years and operate with them for 25 years or so. Yes. And you really can’t miss. you’ll learn all the time, but you’ll not only learn how to be successful in business, you learn how to be successful at life. And so that’s my recommendation.

And for some reason, apparently live longer, too, because it’s pretty amazing. I mean, these people I’m talking about, including myself, I mean, I’d like to attribute it to this and a few other things. But I think a happy person lives longer than somebody that’s doing some things that they don’t really admire that much in life.

Okay. Let’s move on to, I guess, it’s Becky next.

Becky Quick

The first quarter ended March 31, and it did show that Berkshire’s cash pile expanded from the end of the last year, but the greatest market turmoil came in April. Martin Devine, a shareholder from Scotland, who is attending the meeting today, wants to know, has the recent market volatility presented Berkshire with opportunities?

And Martin just wrote in an addendum in the last 40 minutes or so, pointing out that you mentioned Berkshire almost invested $10 billion recently. I wanting to know if you could talk more about that.

Warren Buffett

Well, I can give you a good answer to the second part, which is no. And the $10 billion wouldn’t have done that much. That’s the other — another side of it. What has happened in the last 30, 45 days, 100 days, whatever you want to pick up, whatever this period has been. It’s really nothing. There’s been 3 times since we acquired Berkshire that Berkshire has gone down 50% in a fairly short period of time, 3 different times.

Nothing was fundamentally wrong with the company at any time. But this is not a huge move. The Dow Jones average 381 in September of 1929, it got down to 42. So that’s by going from 100 to 11. This has not been a dramatic bear market or anything of the sort. I mean it — like I pointed out if I’ve had 50 trading days a day for however many years, I’ve been old enough to trade stocks that got 17,000 or 18,000 days. There’s been plenty of periods that just are dramatically different than this. I mean when the day I was born, the Dow Jones was at 240. And my first — that was August 30, 1930. And between that and the low, it went from 240 to 41.

I mean — so if people think that it made a really major change, it didn’t — if it had gone up 15% instead of down 15%, people think they take that with remarkable grace. But if it makes a difference to you whether your stocks are down 15% or not, you need to get a somewhat different investment philosophy because the world is not going to adapt to you, you’re going to have to adapt to the world. And you will see a period in the next — certainly in the next 20 years, you’ll see a period that will be what somebody in the market described one time as a hair cur compared to anything you’ve seen before. I mean it just happens periodically.

The world makes big, big, big mistakes and surprises happen in dramatic ways. And the more sophisticated the system gets, the more the surprises can be out of right field. That’s just — that’s part of the stock market. And that’s what makes it a good place to focus your efforts if you got the proper temperament for it and a terrible place to get involved if you get frightened by markets that decline and get excited when stock markets go up. I don’t mean to sound particularly critical. I mean I know people have emotions, but you got to check them at the door when you invest. Okay. Station 8, please.

Shareholder

Good morning, Mr. Buffett, Mr Greg and Mr. Ajit. My name is Peter Chen. I’m from Shanghai, China. This is my first time attending this shareholders’ meeting. I would like to ask a question about the wisdom of life. Have you ever encountered any major setbacks or low ports in your life? And how did you get through and overcome them?

Warren Buffett

Well, everybody gets setbacks. And some people have particularly bad luck in that respect and others get through with fairly minors. But Charlie, he had setbacks, I had setbacks. I mean it’s part of life, and they’re not fun. I don’t have any great advice for you about having time of your life while you’re having some major setback. But it comes with lifetime. You certainly have a setback when you die. So everybody’s got that setback guaranteed to them. And — but some people get — and I mean, it isn’t a laughing matter in a sense because, I mean, people get extraordinary bad luck and other people get extraordinary good luck.

Usually, the people get good luck don’t really think it was so much luck as themselves. But you’re just going to have it. I think you’re going to — I think that you’re less likely to have it in terms of medical problems, in terms of various things in life. I mean, you were born at a good time. I mean, if you look all the way through the history of China, when would you rather have been born 100 years ago, 500 years ago, 1,000 years ago or now. It just hands down, you’d be lucky. I mean, if I came from 20 generations of shepherds, I think I get kind of tired of my life just looking at these sheep every day. But we can sit here and I can watch Nebraska, not quite play the same game of football that we played 20 years ago. But I mean, everything in life has been made so much better that you’ve got to figure that you do a lucky straw by staying in the room for a couple of hundred thousand years and then just emerging at the right time.

So I would focus on the things that have been good in your life rather than the bad things that happened because bad things do happen. But it’s it can often be a wonderful life. You could get terrible bricks. I mean it so far, that really hasn’t happened with any, but it’s happened with some of my friends. But you get some bad bricks from time to time. But for 94 years, I’ve been able to drink whatever I want to drink and they predict all kinds of terrible things for me, but it hasn’t happened yet.

So, and it’s true. I mean, if you look at what pro football players are making now and everything compared to what they were making 30 or 40 years ago, you can say, well, isn’t that wonderful. But if you look at the if you look at the lifespan of professional athletes, after a while, you get used to really decide that you’re better off if you really weren’t the first one chosen to be on the baseball team or the basketball team or anything else, the human body. Well, Charlie and I — and I think I speak for the others to some extent that we did — we never really exercised that much or did anything. We were carefully preserving ourselves for.

So look at the bright side of things to the extent that you can — and — you’re lucky enough that you’re here today, you’re healthy, you come from a long distance and you’re getting a chance to learn more about something that interests you and compare that with the situation a couple of hundred years ago that you would have been offered. So anyway, that’s not moralizing. Okay. Becky?

Becky Quick

This question comes from Himanshu Bindal for Ajit and Warren. Autonomous vehicles are already driving across roads in American cities with no driver involvement. How do Warren and Ajit think about any disruption risk from these autonomous vehicles to GEICO’s auto insurance business, which is built around understanding and underwriting human drivers. Wouldn’t what we call auto insurance today just become product liability for autonomous vehicles and autonomous software companies?

Warren Buffett

Well, Ajit?

Ajit Jain

Yes. There’s no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality. The big change that we will see is what you identified. Most of the insurance that is sold and bought revolves around operator errors and how often they happen, how severe they are and therefore, what premium we ought to charge.

To the extent these new self-driving cars are most safe and are involved in fewer accidents, that insurance will be less required. Instead, it will be substituted by, as you mentioned, product liability.

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

Warren Buffett

Yes, we expect — we expect change in all our businesses. And the good thing we did — and Charlie pushed me into it, but if I’d settled for being in New England textiles, even though it worked well for 70 years or so prior there too, the world changes. And if the game didn’t change at all, it really wouldn’t be very interesting. If you — every time you swung in a baseball, you had a hole and run the game wouldn’t be interesting. If every time you hit a golf ball, you had a hole and it wouldn’t be interesting. So the fact that there will be things you have to think about all the time as you go along and you’ll make mistakes and all that. That’s really part of the fun. I mean your brain would turn to mush if you didn’t have a few problems now and then.

So I — auto insurance will change, although it’s remarkable how little it has changed. But it’s only been around since a relatively small time. And who knows what we’re doing to move in transportation 100 years from now. If you go back a couple of hundred years ago, who could have predicted the United States would look like what it does and people would move like they do and people would enjoy themselves like they do. I mean it’s just — it’s a dynamic world. And the biggest thing we have to worry about, unfortunately, is that we’ve learned how to destroy the world too in recent years. And so we’ve got this wonderful world, which now we know that there are eight countries that — and probably ninth coming on that can destroy and we don’t have what I would consider the — necessarily the perfect people leaving each of one of the nine — or some of the nine countries.

And when Einstein came up with the equals MC square back in 1905, didn’t dream of the fact, I mean, that energy could really be converted or mass could be converted into energy in the way that would change the world. When I was born in 1930, they had known about the law of physics that Einstein had come up with 25 years earlier, nobody, to my knowledge, had thought what can this do to change warfare in the future. And literally, it just wasn’t thought. Einstein didn’t think about it at that point. And then in 1939, Roosevelt got a letter around a month before Germany moved into Poland and kind around August 1, most famous letter in history from Leo Szilard. Leo Szilard couldn’t get his letter in front of Roosevelt because whoever heard of Leo Szilard, but he got Einstein to sign it.

And Roosevelt probably understood about as much about physics as I do. So he didn’t understand it, but he understood that Einstein sign it. So he calls in [ General Robert ] may not have been general and he said we should do something about this. And all we did was learn how to destroy the world. and we needed to do it. And Germany had Heisenberg, and he looked like he was ahead of us. And — we can’t put that genie back in the bottle. And it’s — the world does change. And we’ve got all these — we’ve got wonderful things, but we also have — we have a guy in North Korea, if we criticize his haircut, who knows what he might decide to do with. What does North Korea need nuclear weapons for? I mean that can that be a good thing in the world, but they’re not going to go away.

So it’s a world of change, and we are enjoying incredible change that’s contributed to everybody in this room living so much better than people were living a couple of hundred years ago, but we haven’t been able to avoid — we haven’t changed human beings very much so far. We’ve certainly changed weapons of mass destruction and — but we haven’t made much progress with the human race. And we’ll see what happens with that.

But in the meantime, we’ll see changes in auto insurance, too, and cars. And that will be more — it’d be easier for us to deal with it than it was when we had to deal with the problems of turning out textiles in New England. And you deal with the world as it develops.

And like I say, everybody here is living in the luckiest period, but enjoy your luck. And you still try to figure out the answers to what’s going to happen in all insurance as we go along, and we’ve done pretty well actually adapting to the answers. There’s a few big problems in insurance. And I don’t know how the insurance industry adapts to them, particularly, but that makes the game interesting. You really don’t — you wouldn’t want to go out and play golf if you’re going to hit the ball in the hole on every hole.

Ajit Jain

I’d just like to add, we talked about the shift to product liability into protection for accidents that take place because of an error in terms of how the product was designed or supplied.

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

Warren Buffett

I’ll give you two interesting figures to ponder. When I walked into GEICO’s offices in 1950, the average price of a policy was around $40 a year. It varies a lot depending on location, everything. But it’s pretty easy to get up to $2,000 depending on how urban your areas are and everything you get considerably higher.

During that same time, the number of people killed in auto accidents have fallen from roughly 6 per 100 million miles driven a little over 1. So the car has become incredibly safer. And it costs 50x as much down or thereabouts to buy insurance policy. So when people talk about the developments in car driving and all that sort of thing, it’s a lot easier sometimes — I mean, the Buck Rogers aspect of it, people look at, but they don’t actually think of what really happens to the math of the business. The insurance — auto insurance industry has been a huge growth industry. And for that matter, homeowners insurance prices in Nebraska have doubled in the last 10 years, adjusted for general inflation and convective storms have just going on a tear, and it’s still unprofitable to write a homeowners insurance in Nebraska after doubling the price in the last 10 years.

So it’s very hard to predict what these big changes mean. And you just got to keep thinking all the time, but you don’t want to read some research report that says the world is coming to an end or the world is going to be wonderful because of this or that because there’s about 50 other developments going on at the same time that you need to think about — and that you need to keep observing as you go along.

You don’t — you never reach an answer in this business. You reach a point of action that you take. But we try to get into as high probability things as we think we can do and play the game in the same way. But it will be different than you think. And you should wake up every morning and think about that, too, if you’re in the business of managing businesses.

Greg Abel

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

Warren Buffett

Yes, let’s put up the - we released our 10-Q this morning. And we always try to do it on a Saturday, so nobody gets a jump on other people. And we just have three simple chart. You’ll see that our insurance underwriting income was down dramatically for the first quarter. And last year wasn’t as good a year as you’ll see in insurance. And it’s always unpredictable insurance, but everything broke our way or the insurance industry’s way last year. Prices are down this year. Risks are up this year. So you don’t have to be a genius to figure out what the answer is on that.

Greg Abel

Yes. Of our 49 that we measure closely, 21 were up and 28 were down. So you can tell it was really a mixed quarter when you go across the operating businesses.

Warren Buffett

Yes. The next slide. I’m getting a 5-minute warning here before the long ball now. It shows our financial condition, which continues to hold a lot more cash and treasury bills than I would like. But that’s simply a question of when opportunities occur. And if you get real opportunities every 5 or 6 years, you have to be patient. Charlie always pointed out that we made most of our money out of about 8 or 9 ideas over 50 years. And we talked about it every day, and we read every report, and we did everything else. But if you think you can get an idea a day from listening to your friend, book or doing a lot of reading of the financial information published or forget it because every now and then, you get extraordinary opportunities. And most of the time, you don’t have much of an edge. So we also have [indiscernible] our float, which continues to build. I don’t think any — there’s no company that has — property casualty company that has our float achieved.

Greg Abel

Yes. Clearly, we are heads and shoulders above anyone else.

Warren Buffett

Yes. So that is money that as long as we’re writing at an underwriting profit is absolutely free money. And we would expect that over a 50-year or 100-year period that we would be able to say the same thing. But there will be years when you have a very bad underwriting record, and it will lead into the float earnings. But so far in the last 20 years, I think we’ve only had one underwriting loss, if any.

Ajit Jain

Yes. So I think if you look at the entire range, including life insurance, our cost of float is 2.2% negative. That means we’ve got the float plus somebody has given us 2.2% of that of cash to…

Warren Buffett

Yes, it’s like running a bank, where people leave their money with you and you pay a minus 2.2%, and you don’t have any check clearing or anything else to do that’s included that. So — but we run our business actually with a different mindset than any other PC company, I think, probably in the world. And I wouldn’t be talking about it if I thought they could duplicate it.

And then the final page is on share repurchases, and clearly we haven’t made any. We have not made share repurchases so far this year. And share repurchases, if Berkshire buys Berkshire shares and repurchases, we’ve now pay more than you will pay if you buy Berkshire shares. I don’t think people generally know that. But there is a tax that was introduced a year or so ago, where we pay 1%, and that not only hurts us because we pay more for it than you do. It’s a better deal for you than for us. But it actually hurts some of our investee companies quite substantially. And Tim Cook has done a wonderful job. I mean, really wonderful job running Apple.

But he spent $100 billion roughly in a year repurchasing shares, and there’s a 1% charge attached to that now. So that’s $1 billion a year that he pays when he buys Apple stock in, which we like, compared to what you pay. And it doesn’t sound like much, but well, $1 billion sounds like a lot still. But there are people that want to increase that particular rate dramatically. And you won’t read about it or anything like that, but it does make — it’s slightly less attractive than it was before, and we will only buy in our shares if we think that they are almost certainly underpriced as valued very conservatively. And we get that opportunity occasionally, but the higher that charge goes that the federal government charges us for doing it, the less we will be able to do our repurchases.

So on that happy note, we will rejoin at 1:00, and we will — I’m sorry. Correct that to 11:00 and then we will…

Greg Abel

Yes, 11:00.

Warren Buffett

And then we’ll continue till 1:00. And in the meantime, enjoy yourself and — and I think all our stars are still up, and so bring the cash register.

[Break]

Greg Abel

Our directors are just coming in.

Warren Buffett

Okay, everyone. Okay, we’re ready to go. And I’m going to lead off by actually recommending a movie. I know that’s why you came. But I would recommend to all of you that you go to Amazon Prime, I’ve got no financial interest in this. But you go to Amazon Prime and click on a documentary called Becoming Katharine Graham. It’s an incredible story from 50 or so years ago. And to some extent, I had the good luck to be kind of a viewer of something — some American history that I think is fascinating.

So if you feel that I misled, you can write me a note, and I promise to report how many readers did agree with. But on Becoming Katharine Graham, and you’ll see a story of a — a remarkable story of American history. And there are a good many portions in there that I lived through that period. Didn’t know about at the time. And I think really every American citizen ought to watch it.

So with that, I hope you all spend some more money out there in our friendly shops. And we will go to Station 9.

Shareholder

Hi, Warren. My name is Robert, and I’m a shareholder from Toronto, Canada. So Warren, 3 years ago, Charlie Rose asked you a question to the effect of what you wanted to be remembered for. And your reply was, “He was a teacher.”

So in that spirit, Greg, I’m curious to hear maybe a story of where you learned something very profound from Warren. I’m sure you’ve learned many things. But if there’s a story that kind of comes up in your mind, we’d love to hear it. And vice versa, if we have the time, Warren, what’s something that you maybe learned from Greg?

Warren Buffett

Yes, I will turn this over to Greg in just 1 second. But now the main thing I’d like to be known for is old age.

Greg Abel

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

And I love thinking of Warren truly as a teacher and he’s — every day get the opportunity to continue to learn. Warren and I, this dialogue is strong every week. And we’re always talking around opportunities in Berkshire or things that are going on globally or in the U.S., and each one is truly a learning moment.

I’ll maybe go back to the very first meeting with Warren because it still stands out in my mind. Obviously, it was an incredible opportunity. Warren was buying or acquiring MidAmerican Energy Holdings company at that time, or thinking about it. And I had the opportunity with my partners to go over there on a Saturday morning, and we’re discussing the business, and Warren had the financial statements in front of him.

And like anybody, I was sort of expecting a few questions on how the business was performing or a variety of things. But Warren locked in immediately to what was on the balance sheet and the fact we had some derivative contracts, the weapons of mass destruction. And associated with the utility business, we do have them because they use them to match certain positions, and they’re never matched perfectly, but you do have them, and we’re required in the regulated business.

But I just remember Warren going through it immediately and asking the composition of it and what was the underlying risk in it, and wanting to thoroughly understand it. It wasn’t that big of a position, but it was absolutely one of the risks he was concerned about as he was acquiring MidAmerican. And obviously, in light of Enron and everything that had gone on, it was a very pertinent question.

And then the follow-up to that was then there’s an energy crisis in the U.S. around electricity and natural gas, and a variety of folks were making significant sums of money. This is a year, 18 months later. And Warren’s follow-up question, a couple of years later to me, was — and I knew it was more just checking or testing, so how much money are we making during this energy crisis? Are we making a lot? Do we — are the speculative positions in place, and are we making it? And the answer was we’re really not making any more today than we would have been 6 months ago because all those derivatives were truly to support our business and weren’t speculative. So just that focus on understanding the business of what he was acquiring, understanding the risks around it still stand out in my mind.

Warren?

Warren Buffett

Yes. That’s one thing we’ve never talked about here, but I spend more time looking at balance sheets than I do income statements. And Wall Street really doesn’t pay much attention to balance sheets. But I like to look at the balance sheets over an 8 or 10-year period before I even look at the income account. Because there are certain things that’s harder to hide or play games with on the balance sheet than you can with the income statement.

And I mean, neither one gives you the total answer on anything, but you still ought to understand what the figures are saying and what they don’t say and what they can’t say and what the management would like them to say that the auditors wouldn’t like them to say. I mean there’s just a lot to be learned. And you do learn more. You learn more from balance sheets, in my view, than most people give them credit for.

In terms of — I really haven’t kind of worried about being remembered about. People don’t remember — well, they don’t remember enough about Katharine Graham, for example, in terms of this story that shaped America in many ways. Certainly, that’s just all kinds of impact. And I think — I mean, history is so fascinating, and Charlie was probably the best person you could imagine in what he learned. Charlie was never satisfied with just superficial things about any subject. He really wanted to understand it. And he always would tell me that, don’t take a position on anything until you can describe the arguments against it better than the person who is arguing with you, that you should be able to argue their case better than they can.

He was a remarkable teacher. But some of those other fellows I mentioned. And of course, my dad was an incredible teacher. So you make the most of the people you meet that are going to make you a better person. And probably forget about the rest to quite an extent.

Okay. Let’s move on to #12. Becky, you’re next.

Becky Quick

This question comes from David Rubin, a shareholder from Scottsdale, Arizona. It’s a question for Greg.

We’ve heard over the decades and are familiar with Warren and Charlie’s investment thesis and their circle of competence. During the first 10 years after taking over as CEO, Greg will be tasked with allocating more capital during that time than Berkshire has had to allocate in its history. Given this, I’d like to hear from Greg about his views on capital allocation, particularly into new businesses.

Greg Abel

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

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

I think equally, as we then look at our various — our — back to Warren’s balance sheet comment, we will have a fortress of a balance sheet. And we want to — I thought Sue Decker, our Lead Director, said it well yesterday. We’ve got a significant set of cash right now, but it’s an enormous asset to have that. And that will continue to be a philosophy. Yes, when we can deploy it, we’ll deploy it well, and I’ll come to that. But equally, we do recognize it as a strategic asset. And it allows us to weather the difficult times and at the — and not be dependent on anybody. So again, that will be an investment philosophy. We will remain Berkshire, and we will never be dependent on a bank or some other party for Berkshire to be successful.

I would — thank you. I would then move to touch on allocation of capital, be absolutely critical. But with that comes management of risk and understanding risk. And that falls upon all our managers, insurance, noninsurance, but we’ll bring that across Berkshire.

And then the other value I would touch on, but that really relates to where I’m going, is, ultimately, we have a great set of operating companies that do produce significant cash flows, be it in the insurance companies creating float or various noninsurance companies producing significant cash flows on an annual basis. We intend to continue to ensure that’s the strength of Berkshire as we go forward. And it’s absolutely critical to our long-term success.

Now with those cash flows and with the float, and then equally as touched on, we have significant resources already in our balance sheet, we’ll really continue to move forward with a very similar philosophy. It’s an identical philosophy to what we’ve had currently and for the past 60 years.

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

Equally, the next opportunity is to acquire businesses in their totality, or 100%. And there are great times when we can do that. Warren touched on we had one that was interesting in the last quarter, the $10 billion acquisition. But again, the value relative to the risks have to be right. And if it’s right, we want to own it. If it’s not the time, there will be another time to own assets like that.

And then there’s the opportunity to own pieces of companies through the equity. But as Warren has always highlighted, and again, this will be our approach to how we think around those companies, though — we own a piece of a company, we own a piece of that cash flow, we own a piece of their balance sheet. It’s not just a share certificate. And as we approach that — and really, we’ll approach it with the thought that we’re going to own this company for the long term. It’s, again, understanding what, be it the 100% company or the 1% company, do we thoroughly understand, and thoroughly, do we have a strong view of what those economic prospects of those companies will look like, and Warren said it earlier, 5 years from now, 10 years from now, 20 years from now.

If we don’t have a view of that, we won’t be investing, be it 100% or 2% of a company through equities. We have to thoroughly understand what those prospects look like. And associated with understanding those prospects, we need to understand the underlying risk of the businesses. And it’s really the investment philosophy and how we — how Warren and the team have allocated capital for the past 60 years, really it will not change. And it’s the approach we’ll take as we go forward.

Warren?

Warren Buffett

Yes. And I don’t want to go on too long on this, but…

Greg Abel

Sorry, I covered…

Warren Buffett

No, no. But this is important because the it’s very obvious the country, for example, needs incredible improvement rethinking, redirection even to some extent in the grid. I mean we’ve outgrown what would be the model that America should have. And in a sense, it’s a problem something akin to the interstate highway system where you needed the power of the government really to get things done because it doesn’t work so well when you get 48 or 50 jurisdictions that each has their own way of thinking about things.

And of course, in World War II, we called in people to the dollar an hour, and we knew we had to turn out ships like crazy, and we knew that we had to convert Ford Motor from being a car manufacturer into an aircraft manufacturer in a matter of days, not weeks, not months. So you need that — there are certain really major investment situations where we have capital like nobody else has in the private system. We have particular know-how in the old generation and transmission arena. The country is going to need it. But we have to figure out a way that makes sense from the standpoint of the government, from the standpoint of the public and from the standpoint of Berkshire. And we haven’t figured that out yet. I don’t know whether Greg even wants to even explain a few of the major problems.

But that is a clear and present use of hundreds of billions of dollars. And you have people that set up funds and say they’re getting paid for just assembling stuff. That’s not the way to handle. The way to handle it is to have some kind of government-private industry cooperation, similar to what you do in a war. And I don’t think, when they were doing the highway system, I don’t think the government set up its own guys that were going to pour all the cement or things like that. But you needed a cooperation. And we’re at that point, I think, in terms of energy, but I don’t think we’ve made any progress particularly though.

Tell us more about that, Greg.

Greg Abel

Yes. And I think these are very unique in that — not unique in that it’s sort of reflective of where we’re at. There will be very significant investment opportunities across a variety of industries. As Warren touched on in the electric industry, or the energy space, we obviously know that well with our existing business. And the capital required to meet the long-term needs of what’s currently projected as demand is enormous. And we, as Berkshire, we’ll be in a good position to help address those needs. But the model around it and the risks that need to be addressed to deploy that type of capital will be different than they are today, to Warren’s point.

Warren Buffett

The muscle of the federal government will be needed, but the test of whether you’re going to have 48 or 50, depending on the nature of things, jurisdictions that are cooperating to do something that has opposition will have opposition in every single state. If they’d taken a vote during World War 2, or if they had taken a vote on the interstate highway system, it would have been slowed down to an incredible degree.

So the question is, how do you use these strengths that this country has to actually chart it in to what it should be capable of while still self-preserving a republic with 48 connected and a couple of unconnected states. And it is — it will be interesting to see what happens.

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

Okay. Station 10.

Shareholder

Good morning, Mr. Buffett and Mr. Abel. I’m [ Dorkis Tang], I’m 14 years old. My father, [ Lloyd Tang ], [ MTR ] CEO, brought me here for 2 consecutive years. And I promise I will come back every year since I queue up at 2:00 in the morning every meeting you hold. My dad owned BRK.A shares, and he said I need to work hard to earn my piece of BRK.B.

We are both — are from China, Hong Kong. And I would like to ask, what’s the essential element for a global teenager like me if we want to be part of Berkshire like Mr. Greg Abel? Like what piece of knowledge I should learn so you will hire me in the future?

Warren Buffett

If you’re talking about the future, you better talk to Greg. So we’ll let Greg answer that.

Shareholder

My final words, finally, Mr. Buffett. I learned a lot from this meeting, and of course, I will come here every year. And I wish you can attend as many as possible as you and Mr. Charlie Munger, the most respectful people, have inspired me and my father a lot. I wish you happy and healthy, and maybe one day in the future, we can make the world more prosperous all together, like you said, Thank you.

Warren Buffett

Okay. Thank you.

Greg Abel

Yes. Well, I think your dad said it best. He highlighted that to become part of Berkshire, to own some Berkshire shares, you’re going to have to work hard. And I think hard work takes all of us a long ways in life. And I would never diminish that there’s a lot of things that matter in life, but if you start with a great work ethic and have that attitude that you want to contribute, you’re going to go a long ways in life. And you’ll find great enjoyment because, as Warren said, you’ll then — if you work hard, you’re going to find the things you love in life, and it will lead to that. And we truly look forward to the day you’re part of Berkshire. Thank you.

Warren Buffett

Keep a lot of curiosity and read a lot, as Charlie would say.

Okay, Becky?

Becky Quick

This question comes from Matthew Tezak in Layton, Utah. He said, please discuss your strategy on how to protect our company from future liabilities due to wildfires blamed on our electric utility companies out west.

Warren Buffett

That’s a very good question. And we made some mistakes in the past when we bought Pacific Corp. in 2005. Walter Scott and Dave Sokol and myself, 3 guys who are capitalists at heart and had — we’re dealing with our own money, but we made a mistake by not carving it up into the 7 states that we were buying. And it came with an aggregation where it wasn’t state by state. And we kept the same structure, and that was a big mistake. There are — well, every part of the country is going to need electricity, and there are going to be places where public or privately held electric utilities would be very foolish to operate. And how that gets resolved in a democracy, we will find out. But those are the facts as they stand now, I would say. Greg?

Greg Abel

Yes. The reality, the risk around the wildfires, i.e., that do the wildfires occur, they’re not going away. And we know that and the risk probably goes up each year. But what we can do to reduce the risk of it impacting our system and our underlying assets and unfortunately, the liabilities that come with such events, we can change that and manage that. We can’t eliminate the risk, but we can reduce it.

And that’s where we’ve got our teams in the West, but we really are approaching it across all our energy infrastructure because the reality is the wildfires have now occurred in Texas. They’ve had a variety of them throughout the U.S., and we’re all very focused on how we manage that risk. How we manage it is we start by addressing the actual assets, how we’re maintaining them and where we invest into them. So we try to make sure that they’re either not causing the fire or potentially even hardening the system as to what can they withstand. So it’s very much — we start with the operational focus.

We then take it even further, and this is something Warren and I have discussed many times, is that the utilities started to recognize when we have these unusual weather events, and Warren touched on what’s been happening in Nebraska with storms, but they’re equally occurring or significant events occurring out West. But when we have those, we’ve gotten very good at saying, okay, we have to manage the system differently. We’ll potentially deenergize because there’s likely to be an event.

But the one thing we hadn’t tackled, and this is very relevant to the one significant event we had back in 2020 in PacifiCorp is we didn’t deenergize the system as the fire was approaching because our employees and the whole management team have been, all their lives, trained to keep the lights on. And the last thing they want to do is turn those lights off and have a system deenergized. And after those events and as we really looked at how we’re going to move forward in managing the assets and reducing that risk, we have clearly recognized as a team that we have to deenergize those assets.

So now as we get fires encroaching at a certain number of miles, we deenergize because we do not want to contribute to the fire nor obviously harm any of our consumers or contribute, unfortunately, if there’s a death. And that’s really where we had to take our team, that we’re managing a different risk now. It’s not around keeping the lights on. It’s around protecting the general public and ensuring the fire does not spread further. So we’ve gone as far as that. And I’ll stand corrected on this one, but we’re probably the one utility or across our utilities that does that today, and we strongly believe that. Becky?

Becky Quick

Can I just follow up on that? Doesn’t that open you up to other risk if you shut down your system, a hospital gets shut down, somebody dies?

Greg Abel

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

But there is risk there. So then we spend a lot more time educating the consumers and our consumer groups, our customers, okay, this is what will happen. We need to understand your unusual situations, and how can we best tackle that again, so we just don’t take on another liability. So there’s a lot around deenergization. And then just to take it to the last step, and Warren has touched on that, just in general on energy policy, we have to work with our states and our regulators to ensure — this was never a risk we took on or envisioned when we were investing in utilities nor would any of the investors who’ve invested in other energy companies.

You earn a very set return for taking on a very set defined risk associated with that asset. And this has gone well beyond that. We don’t earn the type of returns nor can you earn a large enough return to take on these risks. So it’s not just about solving the return side. We really have to solve the risk side, which means we work with our regulators. We’re working with our state legislators to get to the right answer.

And that’s really just — that will be an ongoing process. There are not silver bullets out there. But every day, our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away. Warren?

Warren Buffett

But there are some problems that can’t be solved. And we shouldn’t be in the business of taking your money, investors’ money and tackling things that we don’t know the solution for. And — you can present the arguments, but it’s a political decision when you are dealing with states or the federal government. And if you’re in something where you’re going to lose a big thing to do is quit.

And you present your case as well as you can and everything else. But if you don’t hold the pen in the end, we don’t have any business taking your money and doing dumb things with it. And we can do our best to explain what the intelligent things are, but it’s your money. So it’s very hard to tell how to handle the questions of politically determined decisions that are going to go to court in many cases, but you know that it just doesn’t make sense.

We know what we think a sensible system would be and we ought to explain what we think it is and do the best to get our position because it’s prosocial to have the right solution to have it. But the right solution, for example, in the interstate wasn’t to let 48 states each decide on their own way of doing it and award contractors and jobs based. There’s just — there are some problems that can’t be solved and we are not in the business of trying to solve unsolvable problems.

Greg Abel

Yes. I’d even go, for example…

Warren Buffett

But then the problem we have, of course, is that the people that work for you, it’s their job. So they want to have reasons to keep going. And those are tough choices if you’re managing, but that’s why they have managers.

Greg Abel

And Warren, I was just going to add because you touched on something really important there that effectively, for example, the utilities and the wildfires, we can’t just become the insurer of last resort, and that we’re going to cover any cost and all costs irrespective of what occurred. And that’s a little bit of the situation we’re in right now with our largest challenge, a 2020 wildfire where there were 4 fires occurring at a challenging time.

One, we’ve always asserted, was a lightning strike that was not inside our service territory. The fire burned into our service territory, and we became responsible for that fire effectively through the courts. And we’ve continued to hold firm that we’re not responsible for that, rightfully. I mean, we didn’t contribute to it, and we didn’t initiate it nor did we feel we ever contributed to it. But it’s getting — again, if you look at the risk, it’s there. We have to manage through things like that. We’ll get through that litigation. We’re happy to report, for example, on that one. After 5 years, the Oregon Forestry Department has come out and said the other fires we did have that we were able to manage and extinguish did not contribute to that fire. And that fourth fire is the largest fire of the 4. It’s 60% of the claims. We’re 5 years into effectively getting that information into the courts. Now that will outline our legal strategy, obviously, going forward, but it’s things we’re dealing with. But we continue to learn from this as a utility industry.

So we’re in very much each of the legislatures, as I said, making sure we get clear definition where liability falls, what can the economic damages be, but most importantly, what can the noneconomic damages be. And again, with the thought, we can’t be the insurer of last resort. We just can’t be responsible for everything that happens in a state.

Warren Buffett

Yes. If we want to do it with our own money, we can do it, but we’re not going to do things with your money that we think are stupid. I mean, you ought to get rid of us if we do it. And it’s easier to do stupid things with other people’s money than it is with your own money. That’s one of the problems government has, just generally, we don’t want to bring it to private enterprise.

But it is important that the United States have an intelligent energy policy just as it was important during World War II that we learned how to make ships instead of cars extremely fast. And we figured out the answer. We combined private enterprise with the power of government. But how feasible that is in a democracy and it was clearly obvious during World War what needed to be done, and we did it. But it’s not so clear when you get 330 million people all arguing their own self-interest and, of course, deciding what will happen and having the people often who are making the decisions, reacting as they did 20 years earlier when they don’t really bear the responsibility for the decision, right? Anyway, that’s management, and we’ll do our best. Station 11.

Shareholder

Hello. My name is [indiscernible], and I’m from Poland, but I currently live in Chicago. This question is on behalf of an inspiring man that I know, Walid Ahmed, who’s here with us today. Mr. Buffett, nearly 74 years ago on a cold Saturday in January 1951, you traveled 8 hours by train from New York to Washington. You went all the way on nothing but hope that someone might teach you more about the insurance industry.

Arriving at GEICO’s office to find the doors locked, you persisted until a janitor let you inside. You credit that meeting with Lorimer Davidson for the insurance float that was the rocket fuel behind Berkshire’s success. In 2011, when I was 15, I wrote to you with similar determination, asking to meet. You kindly wrote back saying you had only 3,000 days left and more pressing priorities. Well, Mr. Buffett, it’s now been 5,000 days since you replied.

And so inspired by your persistence in 1951 and the tenacity of Mrs. B, I humbly renew my request for just 1/4 of the time David gave you, a single hour in your office. You may wonder why must it be you? You have often shared an anecdote about Polish Jew who survived Auschwitz, who said to you once, “Warren, I’m very slow to make friends because when I look at someone, I ask myself, would they hide me?” You said that the number of people would hide you was the best test of life well lived.

Well, I believe that at this meeting, you don’t have 40,000 shareholders, but you have 40,000 people who would hide you. You are a testament to a life extraordinarily well lived. Yet even you have not fully witnessed the transformative power of a…

Warren Buffett

I’ll let you write my biography, but I think I’ve got your point.

Shareholder

So respectfully, I ask again, Mr. Buffett, before Father Time wins, will you please grant Walid Ahmed an hour of your time or any time you can dedicate. Thank you so much for your time.

Warren Buffett

Thank you. And I will say this, if I grant an hour to everybody of the 40,000 here — well, I have an interesting time the rest of my life. But I’ll give you one tip. I found that when I was very young, and I would drive around to various companies all over the country because I was very young and these were companies were offbeat and they didn’t have Investor Relations departments then. Almost every CEO would see me because they figured they’d never see me again and they didn’t. They weren’t getting calls like that.

And I would ask them 2 questions. I would explain to them. It’s not a bad idea incidentally. If you’re going to walk into somebody’s office and say you want 10 minutes of their time, take an hour glass and stick it on the desk of the person you’re talking to and turn it up. So it’s going to go for 10 minutes and just say you’re going to leave in 10 minutes unless they ask you to stay. And that sets the terms. But then once you have that, if they’re in the coal business, we’ll say, which happened to be one that I was interested in 70 years ago or so. You just ask them one question that if they were to be stuck on a desert island and they had to own only one of their competitor’s stock during the 10 years they were going to be on that island, which one would it be and why? And then I have to give you that answer, you said the same thing. And if you were going to short your net worth while you’re on that island, which would it be and why? Because every manager likes to talk about their competitors. They’re like a bunch of school kids when they get into talking about their competitors. I probably learned more about various industries by just making sure that they didn’t think I’d stay too long. And in the meantime, they would have the floor and talk about their competitors. I kept my own mouth shut in those days. That’s a lesson I’ve lost somewhere along the line.

But you essentially — they’ve outsourced — or I shouldn’t say outsourced, but they’ve departmentalized Investor Relations at all companies of size, frankly now. So you’ve got 3,000 companies or whatever they have, and they all have departments. And each one of them has an Investor Relations department practically. And their job is to say this is the best thing you can do today is buy our stock. Well, the whole concept is total idiocy.

But it’s a big business and it gets bigger and the Investor Relations department gets bigger. And it’s what we have now. But do a little of your own work, your own way. But Berkshire Hathaway has got plenty of material out there for you to read. And when you get through reading it all, you’ll know way more than most of the people that work at Berkshire. So you don’t need a personal interview. If we take an hour at times, even the 40,000 people we may have here plus Becky’s many of the listeners and viewers, it just doesn’t work. So I admire your effort, but you’ll just have to settle for that is the admiration that you get. Okay. Becky?

Becky Quick

This is a question that you’ve touched on in a lot of ways in the last answer from before, but I did get this question from a few different people, so I’d like to ask it. Ricardo Briz, a longtime shareholder based in Panama says that he was very happy to see Berkshire acquire 100% of BHE. It was done in 2 steps. One, in late 2022, 1% was purchased from Greg Abel for $870 million, implying a valuation of BHE of $87 billion.

And then two, in 2024, the remaining 8% was purchased from the family of Walter Scott, Jr. for $3.9 billion, implying a valuation of $48.8 billion for the enterprise. That second larger transaction represented a 44% reduction in valuation in just 2 years. Ricardo writes that PacifiCorp liabilities seem too small to explain this. Therefore, what factors contributed to the difference in value for BHE between those 2 moments in time?

Warren Buffett

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

And then on top of that, so it wasn’t just a direct question of what was involved at, PacifiCorp was an extrapolation of a societal trend. And secondly, we also had a decision. We didn’t expect at all of the real estate business and those kind of things can change values and courts can change values. And it’s a lot easier to make those decisions when you just own marketable securities and when you own businesses. And I’ve made plenty of those decisions as I’ve watched what have happened in various industries and companies in over 70 years.

But Greg made the decision, which was fine with us to get out, and he had no knowledge of what was going to be happening in either the real estate field or the utility field. And we’re not in the mood to sell any business, but Berkshire Hathaway Energy is worth considerably less money than it was 2 years ago based on societal factors. And that happens in some of our businesses. It certainly happened in our textile business, and it’s happened — the public utility business is not as good a business as it was a couple of years ago.

And if anybody doesn’t believe that, they can look at Hawaiian Electric and they look and look at the Edison in the current wildfires situation in California, and there’s societal trends that are — I just got a note here on my monitors that the books are now sold out. So you have to spend your money on other things. Here’s fudge because it is what I’m eating some. But that’s the explanation that values change and they don’t always change upward. And when we made the deal with Greg, we were happy to buy out Scott family at that price. And when we made the deal with the Scott company, we wouldn’t have been happy to pay Greg the price that he received. But that’s like Berkshire shares. We bought in stock at X and we buy in stock at less than X. If conditions change poor and we pay over the years, we pay more and more because it builds in value, but it doesn’t do it in a straight line. And I would say that our enthusiasm for buying public utility companies is different now than it would have been a couple of years ago.

That happens in other industries, too, but it’s pretty dramatic in public utilities, and it’s particularly dramatic in public utilities because they are going to need lots of money. So if you’re going to need lots of money, you probably ought to behave in a way that encourages people to give you lots of money, and we will see where we go. We’d like to see public utilities do well, but our responsibility is to the shareholders of Berkshire Hathaway. Okay. Station 1 again.

Shareholder

Dear Warren, dear Greg, and dear fellow owners, it’s such a pleasure to be here. My name is [indiscernible]. I was born in Communist Albania, but I’m now teaching economics in London, England. The wonderful writing of Warren and Charlie has significantly shaped my thinking and teaching. I thank you both very much for the many insights over the years.

Warren has often written about the importance of Berkshire’s earning power to owners. My question is, what was, in your estimate, Berkshire’s earning power in the latest fiscal year? It will be great if you can comment on any significant items that either increased or decreased the earning power as compared to reported net income measures for Berkshire.

Warren Buffett

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

So that’s very situational. And of course, it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. That’s been true ever since I was born in 1930. When I was born, and things got much more attractive over the next 2 years. And apparently, I didn’t do anything about it there. But that was the opportunity of a lifetime, and I blew it by worrying about the kid in the next crib or something.

But over my lifetime, I’ve had fabulous opportunities sometimes. And they happen because humans are human. And I’m fearful of all kinds of things I don’t want to try and be one of the [indiscernible] and walk on a tiny strip between a couple of twin towers or something or whatever it may be. But I don’t get fearful by things that other people are afraid of in a financial way. The idea that if Berkshire went — let’s say, Berkshire went down 50% next week, I would regard that as fantastic opportunity. And it wouldn’t bother me in the least.

And most people aren’t. They just react differently. And so it’s not that I don’t have emotions, but I don’t have emotions about the prices of stocks. I mean, I actually — those decisions get all the way to my brain, whereas emotions can get bogged down in some other place. So Berkshire will increase its earning power over time as we retain money. I mean, we are doing things, making decisions every day. People are working. We’re retaining earnings. We will build the earning power, but it won’t be coming in any even stream, and it certainly won’t be matched dollar for dollar on either the upside or the downside in market prices. But that’s what makes it a good business. The investment business is that everything isn’t properly appraised and the seller your other people get, the better your opportunities get. Okay. Becky?

Becky Quick

This question comes from Ajit Patel, and it’s about the big cap technology stocks. In the 2017 annual meeting, you said, Warren, you really don’t need any money to run these companies and referred to them as ideal businesses, referring to the big tech companies, Apple, Alphabet, Microsoft and Amazon. With all of those companies now announcing massive capital investment endeavors around AI ambitions, have you rethought the above comment just in terms of them being asset-light and what you think of them as a result?

Warren Buffett

Well, it’s always better to make a lot of money without putting up anything than it is to make a lot of money by putting up a lot of money. And so a business that takes no capital to speak of, Coca-Cola, the finished product, which has gone through bottling companies and everything, that takes a lot of capital. But in terms of selling the syrup or the concentrate that goes to it, it doesn’t take a lot of capital. So one is a fabulous business and one is a — it depends where it is and everything like that. Coca-Cola is popular every place. But some places — I mean, if you’re in the bottling business, it costs real money. You have real trucks out there and you have all kinds of machinery and you have capital expenditures coming up.

And we’ve got businesses that take very little capital that make really high returns on capital. And the ones the politicians talk about is making high returns actually aren’t making returns usually in terms of capital. Insurance, property casualty insurance is kind of a rare business because you need capital as a guarantee fund that you will keep your promises, but you can use it to buy other low intensive capital business. I mean, you can even buy Apple and have it support that business.

So that can be a pretty good business, and it’s one of the reasons we’ve done well over time. But well, it will be interesting to see how much capital intensity there. Certainly, there’s more capital intensity going on with the Magnificent 7 than there was a few years ago. I mean, basically, Apple has not really needed any capital over the years, and it’s repurchased shares at dramatic amount of reduction. Whether that world is the same in the future or not is something.

Hollywood’s answer was always to get their money from other people to put up the capital. And a lot of people have gotten very rich in the country by essentially figuring out how to get others put up the capital. And that’s what people do in the money management business, and they get very, very rich because they get an override on other people’s capital. And incidentally, if all of you were paying 1% for investment management fees at Berkshire last year, you would have paid $8 billion for managing and you really wouldn’t have had to do it. But investment management is a very good game because other people put up the capital and you charge them for the capital whether they do well or not and then you charge them a lot more if they do well. I mean, it’s a well-designed business for the people who practice it, and who can blame them. I mean, that is capitalism. And I saw that in operation when I was working at Solomon, but I didn’t need to see it. I knew what existed anyway. The trick in life is to get somebody else’s capital and get an override on it. Charlie and I decided it wasn’t too elegant the business after a while, but we were not criticizing the efficacy of it. We were just — it just didn’t appeal to us after a while. I did it for 12 years though or something like, not really — the one difference that Charlie and I did from other people is we put all our own money in and do it. So we did share the losses with our own capital, but we got an override on other people’s capital. And that’s been — people have made advances where they get the override on other people’s capital without putting up any of their own capital to speak of, and that’s a very good business, but it can lead to a lot of abuse. Greg, you’ve watched capital management in United States. And would you say that Canada is behind or ahead in this respect?

Greg Abel

Well, I think when it comes to their capital system, Warren, it is very comparable. There’s no question other than as we know, I mean, I think the U.S. as far as having a capital system, it would be tough to be touched by any country. And I think when I think of Canada, there’s just certain responsibilities or obligations that the government wants to take on and aren’t going to leave with the public sector.

And that’s just a decision that’s made by society or by the Canadian people or if you look at another country, Australia, wherever it may be. It’s different, but when I think of capitalism, that drive is there and the desire to allocate capital properly. It’s very similar.

Warren Buffett

It’s produced wonders in the United States if you think about it. But originally, with the Rockefellers and Carnegies and all, they actually put up money to build steel mill or whatever it may have been with [indiscernible] refineries and pipelines and all that sort of thing. They put up money to do it. Now the trick is to use other people’s money basically. And you can’t blame human beings for behaving like humans, but you should be aware of what their motivations are.

Capitalism in the United States has succeeded like nothing you’ve ever seen, but what it is, is it’s a combination of this magnificent cathedral which has produced an economy like nothing the world has ever seen. And then it’s got this massive casino attached. So you’ve got the cathedral and the casino. And at the casino, everybody is having a good time, and there’s lots of money changing hands and everything, but the cathedral is what — got to make sure the cathedral gets fed, too, because the temptation, and the temptation is very high now, is to go over to the casino where people say, we’ve got magic boxes and all kinds of things that will do wonderful things for you. And that’s where people are happiest. That’s where you get the most promise to you. That’s where the most money is for the people that are pushing things. And the balance between the casino and the cathedral — it’s very important that the United States in the next 100 years makes sure that the cathedral is not overtaken by the casino because people really like to go to casinos. And it’s just so much more fun and they bring bells when you win and they bring you drinks and everything else. And it’s designed to move money from one pocket to another.

And in the cathedral, they basically are designing things that will be producing goods and services for 300-and-some million people like it’s never been done before in history. It’s an interesting system we developed, but it’s worked. It dispenses rewards in what seems like a terribly capricious manner. I mean the idea that people get what they deserve in life, and it’s hard to make that argument. But if you argue with any other system or seem to work better, the answer is we haven’t found one. So I’ll leave it to the next generation to send me the answer by Ouija board or whatever. Okay. Station 2.

Shareholder

Hi. My name is Patrick Nester. I’m 13 years old and from Tampa, Florida. I’m here with my brother, John, who’s 15 and my dad. Thank you for hosting this meeting. This is my first ever shareholder meeting. My question is what high school class or activity helped influence you to who you are today as the greatest investor of all time?

Warren Buffett

Well, that’s a good question. The teachers you get in your life have this incredible impression on you. And a lot of it are the formal teachers you have, but some are informal teachers, too. I mean, I learned from certain employers so much. You really hope you’re learning from everybody that you find who is well intentioned and has had a lot of experience. And I had a lot of good luck in that. But I would say that where I was really lucky was my dad was in the investment business. So I would go down on Saturday and I’d wait for him to go to lunch with and I’d read the books that were around there that nobody else ever read. And they just — they talked to me, numbers talk to me. And I could never get my [indiscernible] and then I discovered a public library and I read every book there was on investments, literally in the Omaha public library in 19th and Harney. And I enjoyed learning about that.

I’m like Charlie. If Charlie was reading about electricity, he would want to know everything that Thomas Edison knew and more and go through the same thought process and understand how everything worked. I didn’t care how it worked. I just cared whether it work. And that’s a limitation. I’m confessing here. I’m not bragging. But as Charlie would say, I mean, people would always say, if you could only have lunch with one person living or dead, who would it be? And Charlie said, I’ve already had lunches with all of them because I’ve read all their books basically.

And he really did it. I think having curiosity and actually finding sympathetic teachers is very useful. I ran into a couple of teachers that, both in high school and college — in fact, I would say that I went to 3 different universities, and I went to high school in Washington and at each place, I found about 2 or 3 really outstanding people. And I just spent my time with them and didn’t pay much attention to the other classes. And I was lucky to find something that really fit me very early on.

If my ambition has been to become a ventriloquist or whatever the hell it might have been, it wouldn’t have worked. I’d just spend hours and hours and hours, and I wouldn’t have been any good when I got through. So I don’t believe that. I think there was that book that talked about spending 10,000 hours or something. I could spend 10,000 hours at tap dancing and you’d throw up if you watched me. But if I spent 10 hours reading Ben Graham, I would be damn smart when I got through. So minds are really, really different. I watch great bridge players and I watch great physicians.

I mean people really, really, really have different talents. And I don’t know. I think you’re supposed to have 88 billion cells in your brain. I’m not sure that all of mine are flashing bright lights, but you are different than anybody else. That’s my dad always used to tell me that essentially that you’re something different. You may not be good at the moment. But you find your own path. And you will find the people in schooling that want to talk to you, people to teach in general, they love having a young student who’s actually really interested in the subject, and they’ll spend extra time with you, they’ll do all kinds of things that — I ran into that. I had Graham and Dodd at Columbia. Well, Dave Dodd treated me like a son basically.

But I was interested in what they were saying And they found it kind of entertaining that I was so interested in. So I would look around to do what really fascinates you. I wouldn’t try and be somebody else. And then I would — you’ll find the teachers out of school, and you’ll find some outstanding people that are teachers. I’ve had at least 10 people that have had huge impacts on my life. And every one of them was positive because I got to select in a sense. And a number of people really like it, helping younger people. I found that in school, and probably helps to look a little bit lost at all like you need help. But I would say my school experiences were really good, but I attribute it much more to the individual than to the institutions. Okay. I’ve already told you more than I know so we’ll go on to — Becky, you’re next.

Becky Quick

This question comes from Scott Williams in Portland, Oregon. He said, do you think the net benefit of DOGE will be positive or negative for the long term of the United States?

Warren Buffett

Well, why don’t you give me a hard one. I think that bureaucracy is something that is amazingly prevalent and contagious even in our capital system and that big corporations overwhelmingly, most of them look like they could be run better. I’m sure Berkshire does in many respects. And government is the ultimate. So it really doesn’t have any checks on it. And that’s why it scares you to some extent about what the future of the currency will be because they can print currency. And if you have people that get elected by promising people things, and that doesn’t mean that they aren’t sincere about all kinds of items.

But there’s no politician that says to anybody that at least if they have money that I really think you have bad breath and if you don’t mind, would you step away from me. It just doesn’t happen. And so I think the problem of how you control revenue and expenses in government is the one that is never fully solved and has really hurt dramatically many civilizations. And I don’t think we’re immune from it, and we’ve come close to it.

But if you tell me how in a democracy, you go in and really change things. We’re operating at a fiscal deficit now that is unsustainable over a very long period of time. We don’t know whether that means 2 years or 20 years because there’s never been a country like the United States. But you know that if something can’t go on forever, it will end, the quote of Herbert Stein, famous economist. And we are doing something that is unsustainable. And it has the aspect to it that it gets uncontrollable to a certain point. I mean, essentially, you just give up on it. And Paul Volcker kept that from happening in the United States, but we came close. We’ve come close multiple times. And we still had very substantial inflation in the United States but it’s never been run away yet. And that’s not something you want to try and experiment with because it feeds on itself.

So I wouldn’t want the job of trying to correct what’s going on in revenue and expenditures in the United States with roughly a 7% gap when probably a 3% gap is sustainable. And then the further away you get from that, the more you get to where the uncontrollable begins. And I think that it’s a job I don’t want, but it’s a job I think should be done. And Congress does not seem good at doing it. Well, it sounds like you’re quite well ahead. But we’ve got a lot of problems always as a country, but this is one we bring on ourselves. I mean we have a revenue stream, a capital-producing stream, a brains producing machine like the world has never seen. And if you picked a way to screw it up, it would involve the currency. And that’s happened in a lot of places. And the incentives plus the checks, well, there aren’t any real change. In theory, you would make it. So there was substantial downside for anybody that screw things up, but there is a downside. There’s upside.

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

Shareholder

Hello, Mr. Buffett. My name is [indiscernible] from Gifhorn, Germany. And first of all, I want to thank you because you made such a great impact in my life and the life of the people I love, and that’s priceless.

Warren Buffett

Well, thank you.

Shareholder

Mr. Buffett, imagine it’s 1776 and you’re sitting alongside Benjamin Franklin helping to shape the foundation of a new nation. What core economic principles would you advocate for building a fair, resilient and opportunity-driven capitalism society, one that supports long-time prosperity for future generations?

Warren Buffett

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

He was so far ahead of his time that the best thing I could do if I was under that tree with him would be to get out of his way and let him just keep thinking.

He saw the problems that success could bring to a society as well as other problems. I mean, more immediate problems that in all kinds of fields. But the problems of how to take 8 billion people because there’s no way we can separate ourselves from the rest of the world. We can be example to the rest of the world. And I think it behooves us since we have had all this good fortune in this country, and we do have a pretty good system. I don’t think you get very far by lecturing the world on how you are the one that should tell them what they should do with their lives. I think you get a certain amount of resentment when just a few hundred years ago, a whole different group of countries were running the world. And now you start giving them advice. And I think it’s a real mistake in communication or in persuasion to lecture a bunch of people where you just won the game.

I mean, that’s — but anyway, I would say that I would advise Ben to figure out how to win the game and keep a certain amount of humility at the same time. And I would tell him to try and design a system that doesn’t invent too many things that can destroy the planet that become uncontrollable once you get them out there. There was no alternative to us developing the atom bomb, but the expansion of the number of people that have the ability from 1 to 8 and 9 probably pretty soon with Iran. I mean that’s a mistake the society just could not afford to make. I mean, solving the problem with 9 variables instead of simply one.

Now it’s totally understandable. My dad was in Congress when the atom bomb was first used. It’s amazing how Sam Rayburn kept the House of Representatives uninformed because they are supposed to appropriate all the money and he had 435 congressmen there, and they had no idea they were appropriating money for Los Alamos or what was going on in Chicago or what was going on in Tennessee. But anyway, we do have a society that is far beyond anything that Ben Franklin dreamt of. It’s achieved some of the — or it’s moving toward in the right direction, towards solving some problems where we made kind of broad declarations about all men being created equal and et cetera. And then we did some of the things we did.

But generally speaking, we’ve moved in the right direction. But we face problems that I don’t how Ben Franklin would attack the problem of what you do once you get weapons of mass destruction in many hands. And when you essentially look at the world as something where there are winners and losers and that the winners humiliate the losers and do all kinds of things. But I’ll let the people that are a lot younger here to figure out the answers on that. But it’s still the most wonderful — there’s never been anything you could dream like what has happened in the United States. So it’s the best place and the best time to be alive by miles in history. Just think of a couple of hundred years ago and somebody yanking out a few of your teeth and pouring whiskey down.

I mean, the subsistence and particularly in this Midwest, just imagine waiting until the Missouri froze over here just to see whether you get your wagon across maybe have a pregnant woman in the back. It’s just amazing what has happened of a positive nature during my lifetime. And then the question is how do you keep it and how do you improve it? And I do think that fundamental to all of it, though, is having a currency that does not get debased. What that does to the stability of a society where all the people that trust their government gets screwed and all the people that figure out ways to profit off of it become rich or richer. I don’t think you want a society that operates in that manner. So anyway — let’s see — that was Section 3. So we’re going to Becky. Is that right?

Becky Quick

That’s right. Greg, this question is for you. It comes from a shareholder named Jay Milroy, who writes Mr. Buffett has a hands-off approach to managing the operating subsidiaries. How would you describe your approach?

Warren Buffett

Better.

Greg Abel

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

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

I’d also say that when you think of our managers, again, very autonomous. They run their businesses. They know it better than I ever will. But if I see an opportunity that it’s well worth their time to talk to another one of our managers. If it’s GEICO and they’ve gone through a technology transformation, they’re not by themselves that need to be thinking that way. We want to make sure the right folks are talking and figuring out how we can benefit from the prior experiences.

So it’s I would say more active, but hopefully, in a very positive way and we got an exceptional group. So it’s worked out exceptionally well as I’ve gone through that period of time.

Warren Buffett

It’s working way better with the Greg than with me because I just — I don’t want to work as hard as he works and I could get away with it because — we’ve got a basically good business, very good business. And I wasn’t in danger of you firing me by virtue of ownership and the fact that we would do pretty well. But the fact that you can do pretty well doesn’t mean you couldn’t do better and Greg can do better at many things.

Many people want to be managed, need help in being managed. Some don’t. Some you just leave alone. We’ve had managers that would have been crazy to start giving instructions to because they just quit. And I wouldn’t buy them because I’d be the same time myself. But a lot of people — I mean, people really do welcome direction and help. And particularly when they’re getting it from somebody like Greg that really lives the life himself and doesn’t just come down from high and say, here’s what you do well, I do something else. And a manager that behaves differently than what he’s asking the people beneath them to behave. It just doesn’t work over time.

And people want to manage that they admire, and they’re not going to admire them if those people profess to behave in one manner and behave in another manner. It’s easier, this is a sad thing, but it’s easier for an organization to see its quality move downward than it is upward. I mean, if the boss behaves badly, it causes everybody to behave. I mean that is really catching. It’s not as catching on the way in upward management. But if the manager is doing a lot of little things to increase his own on situation. Pretty soon — let’s say you’re running a retail establishment, pretty soon, all the employees are — a lot of the employees are telling their friends that they get a discount at the retail operation. And if they want — if their friend wants something, they’ll put it on their account and then [indiscernible] get a discount.

Once you start deviating downward, it is really contagious and it is hard to rebuild. So you really need someone that behaves well on top and is not playing games for their own benefit. And we get a lot of managers that bend over backwards not to do that sort of thing. And then we get a few that bend over forward. And if you get enough companies, you’re going to get a lot of different forms of behavior, and Greg does something about it. And I’ve generally been relaxed in doing something about it, but he’s done way better job at that than I have.

Okay, Station 4.

Shareholder

Hello, Mr. Buffett and Mr. Abel. My name is [ Kansas Lohmeyer ], I am a junior at Elkhorn South High School and was born and raised Omaha. My question is directed to Greg Abel. Berkshire Hathaway is the second largest utility provider in the United States. And in 2025, Reuters investigation found that the coal fleet is the dirtiest in the nation. There is currently no concrete plans to retire coal and fully transition to renewable energy. I’m 17 years old. Considering that, what do you have to say to young people like me who will live with the consequences of climate change caused by companies like Berkshire.

Greg Abel

Thank you for your — both of your question and your comments because it is important to understand, say, Berkshire Hathaway Energy, but also how they operate. And maybe using Iowa at least as a starting example because I think that was one of the states cited in the report.

One of the important things that I’d say early in us acquiring our energy companies, and I go back to when we acquired MidAmerican, we acquired it in 1999. Berkshire purchased MidAmerican in 2000. But one thing that became very clear to myself and our teams was that what we do within our utilities is really driven in two fronts.

One, we absolutely have to meet the requirements and the law that’s laid out federally. But most importantly, we had to recognize we implement public policy across these states. And that was an interesting conversation when I go back to Iowa. And again, the report cited that as a significant problem. It was early in the 2000s when for the first time in Iowa, we are going to, as a utility, be short of power. So we didn’t have the energy, and we entered into a significant discussion with our governor at the time and really sat down and said, where do you want us to go as MidAmerican? And what resources do you want as a state?

And at that time, we were predominantly a coal-based state. And we recognize that, obviously, and fundamentally personally viewed it as a risk, but we needed to have that conversation with our state and as to how we would manage that going forward. The interesting thing was that as we had that conversation in the early 2000s, again, with the leadership of our state, it was clearly decided we wanted to continue to be long power, so i.e., not be short for our customers. We discussed the type of resource. And I remember a very clear conversation around we wanted to stay balanced across a variety of energy sources.

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

Again, very consistent with what our state wanted us to do, i.e., the underlying policy, we don’t get to make that decision and just spend $16 billion. It’s done in conjunction with our governors, our legislatures, our regulators. And at the same time, we’ve had the opportunity to retire 5 of the 10 coal units. Now as a report highlighted, I understand people would like those other 5 coal units retired at this time. But to think we deployed $16 billion to retire $5 billion. And it’s a very good outcome for our customers. We’ve been able to maintain our rates. They’re some of the lowest in the country.

So it’s been done very efficiently, but the reality is we still need those 5 coal units to keep the system stable. We cannot have a Spain, Portugal situation.

So we absolutely respect the input. We absolutely respect the process, and we’ll continue to work with each of our states to identify the path they would like to chart, and we work hard to ensure there’s good balanced outcomes because we recognize the challenges that are associated with other folks’ desire. So I think you’ll continue to see our utilities implement policy consistent with the needs of their stakeholders, or customers, and at the same time, always respecting what’s required by any of the federal standards. So thank you for your comments.

Warren Buffett

Okay. 31, Let’s see. Becky?

Rebecca Quick

This question comes from [ Billy Dee Ross ]. He writes Mr. Buffett as a nurse from New York, I’ve spent years struggling to secure good health insurance for myself, even while working on the front lines to save lives. In New York, accessing insurance means navigating a confusing state-run system that feels like it’s designed to overwhelm. I’m curious what ultimately led to the end of your health care venture with JPMorgan and Amazon? And given your commitment to value and long-term thinking, would you ever consider taking another look at health insurance reform in the U.S.

Warren Buffett

Yes. We’re spending close — it’s hard to get the precise figure. But close to 20% of GDP on health. And if you go back to 1960, there were a number of countries that were each spending around 5%. And then the lines begin to diverge dramatically, but the mathematical fact that there are only 100 percentage points in the equation didn’t change. So we tried that experiment with JPMorgan and Amazon. And we had 3 people that didn’t think they knew the answer, but thought that in my case, I used the term that it was a tapeworm in the economy. And we also found out that the tapeworm was alive in every part of the country. I mean the hospitals liked that the hospitals have prominent people working with people. People generally like their doctor but didn’t like the system. I mean, all kinds of things. But in the end, JPMorgan and Amazon and Berkshire we’re not going to have any effect unchanging that 20%. All of that 20%, there are only 100 percentage points available and one of the countries spend 6% or 7% and perhaps use our system to their advantage, which is also very true. That is an enormous percentage of an economy.

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

But we made no partners. And there comes a point where — well, the government — I mean, it’s so involved in the situation and health is so important to mostly — to everybody. And we’ve couldn’t — we — as I said to Jamie and Jeff, I said, well, the tapeworm won. And there are problems of society. When you get 20% of your GDP going into a given industry, the degree of enthusiasm for changing that industry, the political power that the industry will have it. That doesn’t mean that they’re evil. And everybody — they just end up there. And so I don’t know the — we came to the conclusion we didn’t know the answer three of us. And we had the money to do it.

And we didn’t know how to change how 330 million people felt about their doctors, felt about their health care, what they felt entitled to and it’s — it won’t change by itself. And government is the only one that can change it. And the only people and governments can change it are getting majority of 435 people and 100 people. And my dad lost one election in his life in 1948. And he was a very strong Republican.

And in 1950, he went back and beat the guy that beat him in 1948, and he got the doctor’s behind him. And he did very — they’re very well, and they believe 100% of what they’re doing. They’re helping people every day. And during the pandemic, the sacrifices made by people, save other people just incredible. Can you imagine working in and something where they’re bringing in people that are going to die by the dozens and dozens and dozens, and you try to somehow keep your own morale up and keep working with them.

So you can’t argue about the importance of it. But our costs are so different than any country in the world that it’s a — it is just — it’s a huge element. And we’re a very rich country, so we can do things other countries can’t do. And through our elected representatives and a whole variety of things over time. We developed the system that is enormously resistant to any kind of major change, and it’s important in every community that it’s in.

So I wish we had an answer for you, but I was somewhat pessimistic going in, and I was a little more pessimistic when we came out. But I’m glad we did what we did. And we learned something about our own feeling in the process of Berkshire in effect, got its money’s worth, but we didn’t kill tapeworm.

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

And if you get elected, you’re going to say to yourself, well, I can do more good if I stay in than if I really vote my conscience on this sort of thing. So you give away a little bit here and a little bit there and a little bit there. And finally, you don’t recognize yourself in the mirror anymore. And that’s — I grew up in a political family, but — and I watched how people behaved, and they behave like human beings, which is what you have to expect. And I behave like human beings. So we still manage to keep moving forward in dramatic ways. So much better than live here than it was 100 years ago or 200 years ago. It’s dramatic. So you can’t say the system is a failure, but you can say that it is very difficult to make major changes in it.

Okay, Station 5.

Shareholder

Warren and Greg. My name is [ King Huan Chen ]. I’m from Taiwan. This is my seventh time here. First of all, I want to thank you, Warren, for your generosity, and sharing your wisdom and lesson. You change my life and you are my role model and my hero. And my question is, Warren, you mentioned that Mr. Abel would be in charge of capital allocation in the future. And I’d like to know your perspective on is it easier for a business operator to be an investor or for an investor to be a business operator?

Warren Buffett

No, that’s a good question. I see you call him Mr. Apple, but [indiscernible] you’ll take it. It’s a lot tougher to be an operator. I mean it’s easier to sit in a room like I do and play around with money. It’s just an easier life. That doesn’t mean it’s a more admirable life. It doesn’t — but it’s been — actually been a pleasant life for me. So I don’t complain at least. And I’ve been able to choose my friends, which has made an enormous difference in my life. I’ve never had to work for anybody that really didn’t admire. I mean that’s a luxury of life and 5 different people that worked for — and I just — they were fantastic whether it was the manager of the [indiscernible], which is located — well, it used to be located a couple of miles from here, and newspaper managers or everything there, I have never been really disappointed by any teacher I’ve had.

So — but I would have to admit it. that I’ve been able to choose what I do with my day to an extraordinary degree compared to be a business operator. And in many cases I wouldn’t like to compete to be a top-notch business operator in terms of some of the behavior that would — might be forced upon me. I am the master. I mean I found myself in this position where I can run the kind of company I want to run and that’s an extraordinary luxury. And with that, I should say that I’m getting a section that says 5-minute warning exclamation point, 5-minute warning exclamation point.

So I would now like to turn to a subject that I want to discuss with you a few minutes. And then when I’m through discussing this, I’ll let Becky ask me a question or two, which you may want, some or later — the questions that come to you as I make these comments.

Tomorrow, we’re having a Board meeting of Berkshire, and we have 11 directors, 2 of the directors who are my children, Howie and Susie know what I’m going to talk about there. The rest of them, this will come as news too. But I think it’s — the time has arrived where Greg, should become the Chief Executive Officer of the company at year-end. And I want to spring that on the directors effectively and give that as my recommendation. Let them have the time to think about what questions or what structures or anything they wanted. And then there’s a meeting following that, which will come in a few months.

We’ll take action on whatever the view is of the 11 directors, I think they’ll be unanimously in favor of it. And that would mean that at year-end, Greg, would be the Chief Executive Officer of Berkshire. And I would still hang around and could conceivably be useful in a few cases, but the final word would be what Greg said, in operations, in capital deployment, whatever it might be. I could be helpful, I believe, in that in certain respects, if we ran into periods of great opportunity or anything. I think that Berkshire has a special reputation that when there’s times of trouble for the government that we are an asset and not a liability, which is a position that very hard to have because usually, the public and government get very negative on business if there’s a time like that.

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

And then at the next board meeting after that, if we — as I would guess we would, if they act, then, obviously, we have something to announce to the world as a material change in Berkshire and we’ll go forward with that operation. And I will play with the ouija board or whatever that comes out in terms of doing things. But I will not — I have no intention, zero, of selling one share of Berkshire Hathaway, it will get given away.

I would say — I would add this, the decision to keep every share is an economic decision because I think the prospects of Berkshire will be better under Greg’s management than mine. And — but I will come at it. And there may come a time when we get a chance to invest a lot of money. And if that time comes, I think it may be helpful with the Board, the fact that they know I’ve got all my money in the company and I think it’s smart. And I’ve seen what Greg has done. And so that’s the news hook for the day. And thanks for coming.

The enthusiasm shown by that response can be interpreted in two ways. But I’ll take it as positive. Thank you.