On Saturday, local time, this year's Berkshire Hathaway shareholder meeting was held in Omaha, and "stock god" Warren Buffett (Warren Buffett) and old partner Charlie Munger (Charlie Munger) met with investors offline for the first time since 2019.
The host CHI Convention Center was almost full, which was no less than in previous years.
At the meeting, the "Oracle of Omaha" was full of punchlines, not only talking about the views on the US economic prospects and investment options, but also warning of the current market speculation atmosphere.
The latest financial report shows that Berkshire Hathaway’s operating profit in the first quarter was $7.04 billion, a year-on-year increase of 0.3%.
Net profit was US$5.46 billion, down 53% year-on-year.
Earnings in the manufacturing, services and retail sectors rose 15.5% to $3.03 billion, while earnings in the railroads and utilities sector rose slightly.
But insurance underwriting revenue fell to $47 million from $764 million a year earlier, and the investment business, which was hit by the economic downturn, lost $1.58 billion.
Emphasize the importance of cash
"Always have a lot of cash on hand," Buffett said at the start of the conference, recalling the 2008 financial crisis.
Talking about inflation in the second half of the meeting, Buffett said the massive stimulus during the coronavirus pandemic is a key reason why prices are rising right now.
But he thinks Powell did what he had to do.
Buffett revealed that Berkshire Hathaway is always flush with cash and can be "better than banks" at extending lines of credit to companies in need.
Why do you frequently
In its February letter to shareholders, Berkshire Hathaway had about $146.72 billion in cash reserves.
At the time, Buffett explained that little had been found to "pique" their interest.
Then Berkshire Hathaway made frequent moves. As of the end of the first quarter, Berkshire Hathaway's cash reserves quickly dropped to $106.3 billion, a new low since the third quarter of 2018.
During that time, the company spent $11.6 billion to buy insurer Alleghany and bought a $4.2 billion stake in HP.
Berkshire increased its stake in Chevron to $25.9 billion from $4.5 billion at the end of last year as the situation in Ukraine pushed oil prices soaring, while increasing its holdings of Occidental Petroleum by more than $6 billion for a cumulative transaction size of more than $51 billion .
When asked by investors about the timing and rationale for the decision to trade, Munger said it was because he found something more attractive than bonds.
Buffett disclosed the process of acquiring Alleghany, saying that he had followed the other party for nearly 60 years. The company's CEO and a friend who worked for Berkshire Hathaway sent him an email, introducing After meeting the company's performance, the two parties quickly reached an acquisition intention.
A German investor asked, Berkshire Hathaway has bought companies outside the United States before. Is this opportunity actively seeking out or contacting the other party?
Buffett says Berkshire Hathaway is willing to invest in companies anywhere.
"It's hard for us to find good ideas, and we can't ignore any of them." He said that while he was indeed looking for new investment, he preferred to be proactive. "We would pay any price to climb any mountain to find business, but we Actually prefer them to fall into our trap."
The "Casino Theory" of the Stock Market
Talking about the deal to buy Occidental, Buffett said the good performance prompted his decision to invest.
He showed the entire process of the buy operation on the screen, acquiring 14% of the latter's outstanding shares in two weeks.
He then said that the stock market environment has become elusive in the past two years, like casinos, or it may be that the stock market has been too bullish in the past two years.
This is mostly driven by Wall Street institutions, their way of being speculative is to make more money from people's frequent trades, and the market is sometimes misguided.
Some large transactions, many people only need two or three days to complete.
Buffett specifically mentioned index funds, whose holdings tend to be very high.
"It's not an investment, Berkshire Hathaway can't do that, and the vast majority of big U.S. companies have become poker chips," he said.
However, Buffett believes that short-term volatility caused by a "gambling mentality" earlier this year has led him to good long-term opportunities.
Munger then named Internet brokerage platform robinhood, whose shares fell below $10 a share last week after announcing layoffs and a drop in active users, a far cry from a peak of $38 in the early days of its listing.
"Look at what happened, peak to trough. Isn't it obvious what's going to happen?" he said.
How to seize the moment
Buffett said he never figured out how to time the market in time and missed the opportunity to buy stocks at the bottom in March 2020.
"We have no idea what's going to happen when the stock market opens on Monday," he said in response to questions from the audience.
Sticking to a value investing strategy rather than focusing on short-term volatility in the stock market is an important characteristic of Berkshire Hathaway.
"We're not good at timing," Buffett said. "What we're good at is figuring out when to get enough money for us. We don't know when to buy what, but we keep hoping that (the market) will be there for a while. Downside, so we might buy more."
Buffett also recalls investing, buying his first stock at age 11, and reading Benjamin Graham's "The Intelligent Investor" when he was 19 or 20. The way of investing has completely changed.
"I read the book and saw a paragraph that told me my whole approach was wrong," Buffett said.
He later said he wasn't the only one with Berkshire Hathaway's decision to buy shares.
"I see headlines over and over again in newspapers that say 'What Buffett is buying,'" he said. "Not me, Berkshire Hathaway. The headline says Buffett buys. This company, will attract more people, and the purpose of the title is to get people involved.”
The "stock god" revealed in a shareholder letter in February that the 15 largest holdings were partly selected by Todd Combs and Ted Weschler, who invested $34 billion in the two Has full power, including last year's purchase of Activision Blizzard, and currently owns 9.5% of the company.
learn to invest in yourself
Asked about his previous remarks about inflation "robbing" stock investors, Buffett said the damage from rising prices goes far beyond that.
“Inflation also hits bond investors, robbing people who have their money under the mattress. It robs pretty much everyone,” he said.
Buffett pointed out that inflation also increases the capital required by businesses, and maintaining inflation-adjusted profits is not as simple as simply raising product prices.
He advises against listening to those who claim to be able to predict inflation trends.
"The answer is no one knows."
Buffett reiterated that the best defense against inflation is to invest in your skills.
At this time, what is more important is your personal ability. What others trade is your ability. The best investment is to develop yourself.
stay away from bitcoin
When an investor asks which stocks to invest in amid rising inflation.
Munger took the opportunity to reiterate his distaste for Bitcoin.
“When you have your own retirement account and your advisor recommends that you put all your money in bitcoin, just say no,” he said.
Why is Bitcoin "evil", Munger says?
It really reduces the capacity of our national currency and the Federal Reserve system, both of which we absolutely need, and which is a key part of our need to maintain the credibility of our government.
His answer implicitly referred to a message from Fidelity Investments this week.
Fidelity Investments will now allow employees to add a bitcoin account to their 401(k) accounts, the report said.
All the while, Munger has remained hawkish on Bitcoin.
At last year's shareholders meeting, he said: "I don't like this virtual currency kidnapping our existing monetary system. Bitcoin is like a financial product that was born out of thin air. The development of civilization is the opposite."
Buffett also warned shareholders about "new forms of money."
Unlike farms and apartments, bitcoin doesn’t generate value, he said, and its price is only determined by how much the next person who buys it is willing to pay.
Cryptocurrencies may have magical appeal right now because of the hype, but they are not productive by themselves.
If someone told him that he could own all the bitcoins at a certain price, he wouldn't take it because he wasn't sure what he could do with it.
Future plan
Munger responded to shareholders ousting Buffett as chairman.
"That's the most ridiculous criticism I've ever heard," he said. "It's like Odysseus coming back after winning the battle of Troy and someone saying, 'I don't like you winning that battle with a spear in your hand. look.'" he said.
Earlier this month, the California Public Employee Retirement System (CalPERS), the largest public pension fund in the U.S., said it would vote for a shareholder proposal to remove Buffett from the chairmanship while retaining the CEO job. Concerns about corporate governance of one person holding multiple roles.
"There are people who have never run any business and don't know anything," Munger said. "I don't take this kind of proposal seriously."
Regarding the company's future, Buffett said Berkshire Hathaway has a culture.
While there will inevitably be heated speculation about the company's path following his departure, the company's structure means that, hopefully, the superiority of this culture may be better understood over time.
Future generations of managers will be "the guardians of corporate culture," he said.
"We have directors and equity, and the size can deter any attempt to change the culture," Buffett said.
Considering Buffett's upcoming 92nd birthday, the selection of his successor has been the focus of the outside world in recent years.
At last year's shareholder meeting, Buffett said Abel, who oversees the company's non-insurance business, would be the best candidate to succeed him if he stepped down.
Author: Fan Zhijing