On April 30, local time, at the 2022 Berkshire annual shareholders meeting, the "golden partners" of 91-year-old Buffett and 98-year-old Munger once again appeared on the stage.
Buffett said he was excited about the return of shareholder meetings offline.
This time, he brought 11 tons of See's candies for the shareholders who came to the meeting to buy, and he also brought the goods on the spot, joking that the packaging cover of See's candy, Ms. Mary, was very similar to himself, while the 98-year-old Munger Then try it out on the spot.
Buffett certainly didn't forget to drink his favorite Coca-Cola.
At the same time, he unceremoniously named Wall Street, saying that Wall Street has turned the stock market into a casino -- "Wall Street makes money one way or another," Buffett said, "unless people do something, they can't make it. Money. Wall Street makes a lot more money when people gamble than when people actually invest.”
Investment banks and brokerages have always been Buffett's favorite names.
Speculation in U.S. stocks has reached unprecedented levels in the past two years.
After the outbreak, the Federal Reserve continued to release liquidity and expanded its balance sheet by nearly $5 trillion, which also pushed up U.S. stocks. The scene of retail investors shorting hedge funds is still fresh in my mind.
The influx of retail investors into the stock market during the pandemic has driven share prices to new highs.
Retail investors poured into "meme stocks" represented by Game Station and AMC. These stocks were popular on stock forums such as WallStreetBets, and then fell from highs. .
U.S. stocks have weakened this year, with many new entrants losing money.
The Nasdaq, which gathers many stocks favored by retail investors, is currently in a bear market, having fallen more than 23% from its highs after a crash in April.
Buffett said that large US companies have become "chips" for market speculation.
He cited the surge in the use of call options as an example, saying brokers make more money from these bets than simply investing.
However, he also mentioned that such a situation could lead to market disruption, which could present an opportunity for Berkshire Hathaway.
Buffett said Berkshire spent an incredible $41 billion on stock purchases in the first quarter of this year, freeing up the company's cash hoard after a long hiatus.
About $7 billion of that went to buying a stake in Occidental, bringing the stake to more than 14% of the oil producer.
"That's why the market does crazy things, and Berkshire Hathaway has the occasional opportunity to do something," Buffett said.
Oil stocks have been the best performer this year as oil prices soared and remained above $100, with Occidental Petroleum Corp. up 90% year-to-date, nearly doubling.
"It's almost a speculative frenzy." Munger added that some people who didn't know anything about stocks were advised by stockbrokers who didn't know much about stocks. "It's an incredible, crazy situation. I think No sensible country would want to see that. Why would you let your country's stock trade like a casino?"
Just past April 26, technology stocks once again led the decline in U.S. stocks, the Nasdaq fell by more than 4%, and the Internet giants suffered heavy losses when the first quarter report was released.
FANG (Facebook, Amazon, Netflix, Google) all fell significantly during the year, especially Facebook (now called Meta) and Netflix ⅸ, which fell by 46% and 67% respectively.
The streaming media giant Netflix, which has already announced its financial report, has experienced a thunderous quarterly report, and the growth of users, revenue, and net profit has all performed poorly, and Meta has also entered the stock game.
For Internet companies, user growth, traffic, and advertising are all powerful tools for high growth in the past. Once a growth bottleneck occurs, it is likely to shift from the "high growth" era to the "stock game" era.
If they cannot successfully transform and develop new growth points, the Internet giants may have to "lie down and collect rent".
What is worrying is that valuations can be repaired with changes in monetary policy, but if changes in the life cycle of companies lead to reduced growth, even if the Fed ends the tightening cycle and monetary policy returns to easing in the future, the killed valuations may be lost. Can't go back either.
Buffett has long "ridiculously mocked" investment bankers and their institutions, saying they encourage mergers and spin-offs for a commission rather than a real improvement in the company.
When making acquisitions, he typically avoids investment banks, calling them expensive "money launderers."
According to a regulatory filing on April 11, it took Buffett just two weeks to close Berkshire Hathaway's $11.6 billion acquisition of insurer Alleghany, Buffett's largest deal in six years. acquisition, and he was unwilling to pay the bank charges for the deal.
Alleghany CEO Joseph Brandon dined with Buffett in New York on March 7. After some "small talk", Buffett offered to buy the company for $850 per share in cash, excluding the payment to the investment bank Goldman Sachs. .
The company asked Buffett to raise his bid to either cover a $27 million fee to Goldman Sachs or use Berkshire stock to fund some of the acquisitions.
But the documents show, "Buffett reiterated the terms of his original offer, firmly stating that he did not intend to change his position on these issues." Ultimately, Berkshire Hathaway agreed to pay $848.02 per share, from the original offer. The $850 per share is less than the roughly $27 million that Alleghany paid to hire Goldman Sachs as financial advisor.
Earlier, Buffett noted that Berkshire Hathaway is always flush with cash and that they are "better than banks" at extending lines of credit to businesses when needed.
At this point, a listener made an inaudible comment.
"Is this the banker screaming?" Buffett joked.
Author: Zhou Erin