Warren Buffett & the Berkshire Hathaway 2025 Meeting Part 1 5/3/25

24:57So while we don't know what the future will look like in terms of tariffs, we are enjoying a couple of months of FOMO out there as consumers rush to take advantage of these non-tariff cars in inventory. Jeff, I'll tell you very quickly, we were just watching Tim Cook make his way into the floor of the convention center. You know, this is a little bit of star sighting here. Yes, of course, I understand. Tim Cook making his way through, and we're expecting more people to. It's always great to see Tim here. Yeah, it is. As you were just highlighting, Berkshire's still a significant shareholder. The pull forward effect, the FOMO effect that you're talking about, how's that going to, I mean, how are you planning for that to have an impact down the road?

25:42Is it going to mean you're going to see slower sales in the back half? Or is this like a one-off FOMO that you don't think will have a big impact later? Well, I think that this FOMO syndrome is different than what we saw during COVID. And I think that it is much more temporary and fleeting. In fact, the demand peaked already, we believe, in the month of March with a 17.8 million SAR. The SAR in April, while still above run rate, was just 17.3 million units. And we look for probably another month that's above run rate, maybe in the mid to high 16s next month. But we're already seeing some of that surge in demand moderate.

26:27And I think it is prudent to consider it pull ahead. And so what we would forecast is that we're going to see business normalized over the next few months. And then as vehicles become burdened with tariffs in the second half of the year, that it's likely there will be some offset to these strong sales that we've enjoyed the last couple of months. but we're still optimistic about the year in total. We think it'll be lumpy. But going into this year, most industry experts predicted a 16 to 16 and a half million units SAR. We were at that run rate through the first two months of the year. Then when tariffs were announced again, we had that 17A to 173 last month.

27:11But I think for the full year, I would still guide to a 16 to 16 and a half million sire. Again, you may see Q2 be the peak and Q4 be the trough. And then I think as we turn the page into 26, while we don't have a crystal ball, that that's likely to be the new normal, because we won't have inventories that are fully burdened by tariffs until late in the third quarter and the fourth quarter. It's going to be tough, I guess in that environment, though, to respond to lower. Oh, we're actually seeing Greg Abel here talking to Warren Buffett as well. As well. Yeah. So it looks like they're getting ready to get their stories here.

27:53It's like Warren's making his way back to the ramp that leads up to the stage. Just quick. I was going to say it's going to be tough to try to get prices down or create deals, create incentives in that environment. Right. You already have an affordability issue. Well, affordability. Becky, when we talked last year, that was one of our key topics, and it remains the biggest challenge in our industry. Obviously, the inflation of vehicles over the last four or five years and higher for longer rates have driven car payments to where it is an affordability issue for many consumers. But the consumer has been resilient.

28:26And I do want to share my own perceptions, and that is that the administration, I think, is learning a lot about the unintended consequences of the originally kind of shock and awe announced tariffs. I also think that we've got very, very smart people running the OEMs and in the supply chain. And I think between some prudent compromises from the administration, coupled with some prudent measures by the manufacturers and the suppliers, that the ultimate manifestation of tariffs will be much more moderate than what has been perceived in the headlines. That certainly is the hope. Jeff, thanks for spending some time here.

29:12We're actually seeing Hillary Clinton walk into the meeting. Hillary Rodham Clinton, as Becky mentioned, she would be in attendance here. We are just a couple of minutes away. Becky's making her way into the arena for her official role in moderating the Q &A. Before that first Q &A starts, I do want to remind you of today's schedule. We'll hear from Warren Buffett, Greg Abel, and Ajit Jain in just a few minutes. In that Q &A session, it will last about two and a half hours. Becky will rejoin me for the halftime show.

30:00This is my 60th annual meeting. and

30:09and it's the biggest and I think it'll be the best yet and I would before I start I'd like to give you a few figures from from yesterday because we set all kinds of records yesterday we had

30:3219 ,000 700 people that joined us in the afternoon between noon and 5 o 'clock, and that was up from 16 ,200, which was a previous record the year before.

30:51And in every aspect, we set records. Seas Candy did

31:01$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 it was an all time record sales day for them and I think they have close to 3 ,000 runners lined up for Sunday, which is a lot of people to get up. I think we've had 2 ,200 or 2 ,400 before, but 3 ,000. And that doesn't count me, and it won't count me.

31:41And I could go up and down the line. And Jazz wears around$250 ,000, double the previous years. They just sell as fast as they can sell. Most of every place had people lined up at the cash register sometimes for 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

32:19there'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

33:03we have Greg Abel he was born and bred in Canada

33:11and we have a jeet jain who was born and bred in india so we

33:18we have a very diverse group and uh uh in the audience and i will introduce them alphabetically and if they'll stand as I introduce them. And I know it'll be an effort, but withhold your applause till the end so that we can get through the list, but we'll start alphabetically with Howard Buffett. Howard, would you stand?

33:52Withhold the applause, it'll go to his head. Susan Buffett we have Steve Burke Ken Chennault Chris Davis Sue Decker Sue's our lead director Charlotte Diamond Tom Murphy Jr. Ron Olson and I'll have a few and when we finish off a few more things to add about him Wally Weitz and Merrill Whitmer and with that you've got our all-star cast

34:42and Ron if you don't mind standing I would like to point out that that Ron they finally got through an age director thing at Berkshire. I think we had five that were over 90 here not so 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 been associated with Charlie Munger at Munger Tolls for many years beyond that and has been around at a variety of times of crisis and joy and disappointments and surprises and everything else at Berkshire. and has been an invaluable help to us.

35:42So I think I'd like to give a special hand to Ron Olson.

35:59And I think I'll do something else that isn't done, usually at annual meetings, but I haven't had a chance. I listened to him on Thursday afternoon it's the only it's the only it's the only investment quarterly call that I listened to but I listened to Tim Cook and I understand and it'll be tough for me to see him from up here but Tim Cook there he is applause applause applause applause applause I'm somewhat embarrassed to say that Tim Cook has made Berkshire a lot more money than I've ever made Berkshire Hathaway. So 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.

36:59but Steve picked out Tim to succeed him and he really made the right decision. Steve died 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.

37:31There's a couple 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, you know, they don't think of themselves as the one who's supposed to screw a light in 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, you know, 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

38:35and then we got an idea a while back well many years ago well I'll take it all the way back

38:47Maybe 65 years ago, I met Kerry Solva's grandfather and his wife. They had nine 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 Terry's grandfather, who ran an insurance company in Omaha, Bill Kaiser, but I also met the Pumpkin Boys. parents, Louis and Francis. 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.

40:05And later on, we bought that company. And then her father ran the company. Her sister wanted to work for Berkshire some years ago, and then she decided to have a family and subsequently had four kids, so she left. But Carrie moved right in, and Carrie had amazing talents behind—just like a good many people do. They have talents 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 edited a book.

41:05She'd never published a book. She'd 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 three kids, so she had to leave us. But we go to a baseball game once a year, and we invite some of our distinguished alumni And I'd like Carrie to join us. And Carrie, even though she was raising three children—and you may have met one or two of them in the last day or so—she volunteered to bring together a 60th anniversary book, which I asked for. And again, she took the whole thing.

42:00She just did it. She kept doing the things with her kids, and every now and then I'd ask her how it was going, and she'd tell me how it was going. And so, she put together this 60th anniversary book and got it done by, you know, 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, 4 ,400. We printed 8 ,000. We intended to print 5 ,000. So we sold 4 ,400 books yesterday. day, and we'll have 30—I guess roughly 3 ,600 left out there today, and it's kind of whimsical, but accurate.

43:07And she came out with just the book I hoped 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 the Stevens Center, which takes care of homeless people and does a great many other things. It's located about five or six miles from where we are here south. Has been doing a wonderful job. Her grandfather helped form it. Her husband's 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.

44:13And 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 Gary and I signed them. But we saved six for yesterday, and the six brought$148 ,000, which is a pretty good average per book of about$20 ,000. dollars and i then i had them save four more so uh this afternoon when we disband at one o 'clock uh the uh area right behind us that has all the goods in the bookstore uh they will sell the final four and when we get all through i'll match whatever we've raised for the 20, and will give the Stevens Center a boost, both financially but also in awareness.

45:29So anyway, that—

45:36And 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 times maybe to check a fact or two, but she got material from the Munger family. She just did a wonderful job. And

45:59I couldn't get her to take a penny for it. So I'm going to ask her 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'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. Thanks, Warren. This first question comes from Bill Mitchell.

47:01I 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 act of economic war. Has your view on trade barriers changed, or do you see import certificates as somehow distinct from tariffs? Yeah, well, the import certificates were distinct, but 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.

48:02And 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 raged in Ghana and coffee in Columbia and a few things. And over time, the American industry has gone from being an agricultural country—this This was nothing but an ag country, I mean, 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.

49:04So I designed this import certificate thing, which Charlie thought was a little rube, too much like Rube Goldberg. I don't know what 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 act of 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 applause applause applause That's what we did originally.

50:04I mean, we were good at producing tobacco and cotton 250 years ago, and we traded it. And we want a prosperous world with eight 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've won, and other countries are envious.

50:44So my import certificate idea, which went no place, I think we've got extra copies, It's not a great demand for the copies. If anybody did, and if you'd like and write the office, I think we could probably send you a copy of it. But the main thing to do is not use—trade should not be a weapon. And the United States, 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've got 300 million that are crowing in some way about how well they've done.

51:44And I don't think it's right and I don't think it's wise. I do think that the more the more the more prosperous the rest of the world becomes, it won't be at our expense the more prosperous we'll become and the safer we'll feel and your children will feel someday so that's applause applause applause applause but don't expect my import certificate idea to go down there with Adam Smith's wealth evasion or anything. Okay, let's go to area one.

52:32Mr. Buffett, Mr. Abel, and Mr. Jane. Good morning. I'm S.T. Cheung. I'm from Hong Kong. Mr. Buffett and Mr. Munger did a very good and successful investment in Japan in the past five or six 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 profits?

53:39Thank you very much for arranging this greatest event every year. Finally, I wish you healthy always and keep holding this shareholding meeting. Thank you.

53:59Well, I'm going to extend the same goodwill to Japan that you've just extended to me. I love the people of Japan determine their best course of action in terms of economics. It's an incredible story. And it's been about six 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's too small. And here were these five trading companies. They have a special name for them in Japan. But they were selling at ridiculously low prices. And so I spent about a year 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.

55:06So we got fairly close to the 10 % limit that we'd 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.

55:32I would say that—I'll speak for Greg beyond me—in the next 50 years, and I hope he's running things then. And we won't give a thought to selling those. I mean, they had—and Japan's record has been extraordinary, actually, in terms of

55:59that—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 in a civilization that operates differently than ours. Japan is by far the biggest they this is the container they've always preferred they're soft drinks and they have a whole different sort of distribution system there but we have been treated extremely well by the five companies they talk with Greg primarily I went over there a year or two ago,

57:06Greg's more cosmopolitan than I am, so he's a— which isn't saying much, actually. Very little. But he is— How many times do you think you've met with representatives of one company or the other? Yeah, when you think of the five, there's definitely a couple meetings a year, Warren, And I think the thing we're building with the five 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.

57:54They bring different perspectives and different opportunities, and we see, and that's why we're building that long-term relationship with them. It's super long-term, and they have a much different—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 do, because they do it very successfully. And our main activity is just to cheer and clap. And I can still do it, 94. So, we will own those.

58:51You know, we will not be selling any stock. I mean, that is just—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 five 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.

59:39But 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 five companies being—they're very large companies, and they're large companies in Japan, and we've got at market, you know, 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.

1:00:39I never quite understood that, but if you listen to him more lies, as you would understand. And it's not an impossible problem at all. And the Japan investment has just been right up our alley. Anybody want to add anything on that? 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. Yeah, I would say they would like to present us with opportunities. We would like to receive them. We've got the money. We both get along very well with each other.

1:01:32And they have some different customs than we have. They drink the number one 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 was about that thick. but sometimes two companies to a page, and a couple thousand pages, I believe. But it's amazing what you can find when you just turn the page. We showed a movie last year about turn every page.

1:02:28and I would say that turning every page

1:02:34is 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? This next question comes from Advait Prasad in New York. He writes,

1:03:33a de-risking 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. Well, I wouldn't do anything nearly so noble as to withhold investing myself just so that Greg could look good later on.

1:04:18Now, if he gets any edge of what I think, I'll resent it. So, the amount of cash we have is we would spend, well, 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. You know, the long term record is sensational, but that is not a product.

1:05:19And I've been—let's see, I've had 200 trading days times 80 years. I've had 16 million trading days. It kind of—I mean, 16 ,000 trading days. It would be nice if every day you got four opportunities or something like that, and And they were expected to be equally attractive. If I was running a numbers racket, every day would have the same expectancy that I would keep 40 % of whatever the handle was. And so the only question would be is how much we 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.

1:06:22He thought if we did about five things in our lifetime 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, And we would rather have conditions that have 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.

1:07:08And 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. 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,

1:07:43Well, let's say that we have roughly$40 billion a year coming in, and we start with$335. 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.

1:08:33and uh but it it has no value uh i've never found anybody i wanted to listen to on the subject and uh the on the other hand i found the leafing through things like that big japanese book that i can't read anymore uh the uh that's it's a that's a treasure hunt and every now and then you find something, and occasionally, very occasionally, but it'll happen again. I don't know when. It could be next week. It could be five years off, but it won't be 50 years off. We will be bombarded with offerings that we'll be glad we have the cash for, and it'd be a lot more fun what would happen tomorrow, but it's very unlikely to happen tomorrow.

1:09:28Very, very unlikely to happen tomorrow. But it's not unlikely to happen in five 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. If 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. I tried to get Charlie to have a sex change so he could test out whether—

1:10:09He did pretty well for being a male, I'll put it that way. Okay. Station—

1:10:19Station two.

1:10:25Good morning Warren, Greg, and Ajit. My name is Jackie Han. I'm from China and now work in Toronto, Canada. This is my eighth Berkshire Hathaway meeting 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 always had a soft spot for real estate. So the euro 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 greedy when others are fearful or the value investing facing new challenges in today's environment?

1:11:08Thank you. Yeah. 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 in the ownership usually when real estate gets in trouble you find out you're dealing with more than equity holder but there have been times when

1:11:41large 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. Charlie enjoyed real estate transactions, and he actually did a fair number of them in the last five years of his life. But he was playing a game that, and it was an interesting game to him. But I think if you'd asked him to make a choice when he was 21, he had to either be in stocks exclusively the rest of his life, or if it was to say the rest of his life, he would have chosen stocks in a 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.

1:12:46And 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've borrowed too much money against them. 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 It's totally anonymous, and you can do it in five 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, when you sign the deal, then you go into another phase.

1:13:26I 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.

1:13:42We did a few real estate deals that came our way in 2008 and 2009, 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 to the person. And in stocks, if somebody needs to sell 20 ,000 shares of Berkshire or something, and they call us and the price is right, it's done in five seconds. And it closes all the time. People who you certainly wouldn't want to have marry 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.

1:14:49But the completion rate for working on anything in stocks is assuming you've got a meeting of the minds on prices, essentially 100 % in real estate. It just begins when you agree on deals, and they take forever. So for a guy in 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 were some huge failures. In fact, if you go all the way back to Zeckendorf in the 1960s, he was going to change the world, and Century City out in California is 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.

1:15:51And 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 through redoing the Musk loan that he made when he was buying it three years ago, the company that's now X. and, you know, three years to work out a transaction that, or you've got parties on both sides that aren't ready to act. 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.

1:16:46Okay, Becky. 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? Okay, back in. And he's 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. 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.

1:17:42Having 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.

1:18:27And 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. Yeah, I would just add I wouldn't trade everything that's developed in AI in the next 10 years for a G. 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's developing it or having a jeep making the decision. I would take a jeep any time.

1:19:28And I'm not kidding about that. Okay, station three.

1:19:38Hello, 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? 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 I think I got to call a friend on this one.

1:20:33Yeah, we own a lot of companies, but I do like to think I know most of them. But it may be a subsidiary of a subsidiary in some way, but I really don't know a thing about it. I'm sorry. That may be a good thing. I do know something about hot dogs, though. 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 fault under that. No, I look at the financial statements of about, yeah, perhaps 50 or 60 of our companies every month.

1:21:29But 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 an arrangement. It was interesting. Jay Pritzker was a remarkable manager and there's various branches of the Pritzker family, So, it really goes back to A.N. Pritzker before J. and so on. But in 1954, they changed the federal tax code very dramatically in the United States.

1:22:43It was quite a blow to me because I'd been at Columbia and I'd been reading a J.K. Lasser book about the tax code, and then they went and changed 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 Chocolates in Brooklyn. And they made Rockwood Chocolate Bits, which we used to sell at the Buffett grocery store. and people made chocolate chip cookies out of them and everything. And then it turned out that cocoa, which lately has had a big run to, cocoa was five cents a pound in 1941 when LIFO was first allowed for insurance for tax purposes.

1:23:44And the Rockwood Chalker 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 had just moved to New York. And there was a provision in the new tax code that if you were in two or more companies and did certain things, and you've been in them for five years, and you got out of one of them, that there would be no capital gains tax on LIFO inventory gains. And tax rates were around 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 and selling Rockwood chocolate bits because the price of retail of the chocolate bits did not match what was going on at wholesale.

1:24:51Something 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 5 years old, and they called a meeting to split off the two, one of the chocolate businesses in a way that would enable them to recognize the gain on this, these cocoa beans without paying roughly 50 % federal taxes on the gain.

1:25:47So 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 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 rock wood company after he did some other things became the basis for Marmon and Marmon among other things developed the car that won the first Indianapolis Speedway race.

1:26:46And it invented the rearview mirror, which I'm not sure is a great advantage in economics or anything, but the guy that used to have on the Indianapolis 500, they had two 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, you know, what's going on in the laboratories of Berkshire Hathaway, and we've got people working on things like the rearview mirror. A. Warren? Yep. I'm happy a friend did call. so that's that still works um peter eastwood who runs uh one of our berkshire subsidiaries and does a great job of running it uh tracked down that portellos is owned by a private equity firm called berkshire partners so that was the basis of the question but it's not associated with uh with berkshire so we got we got to the bottom of that one yeah thank you peter

1:28:07that's just a sample of the way we operate around okay

1:28:18Becky 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? 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.

1:29:11But in any event, America's been—America's been insignificant and revolutionary changing, really ever since it was developed. I mentioned that, you know, 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 and said blacks get three—counted as three-fifths. And in Article 2, you'll find male pronouns used 20 times and no female pronouns used. So, you know, it took until 2000, I mean, yeah, 2000, or 1920, I should say, until the 19th, until the 19th Amendment was passed, saying, oh, yeah, we promised the women this back in 1776, and now we'll do something about it.

1:30:14And 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. You know, 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. You know, listen, sent messages out to my parents, for God's sakes, moved to the United States before I was born or anything. But I was just lucky. And I was lucky to be born male. I was lucky to be born white.

1:30:58All kinds of things. But 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 atomic bomb that we never dreamt of, you know, at the time I was born. So I would not get discouraged about the fact that it doesn't look like if we've solved every problem that's come along. And if I were being born today, you know, I would just keep negotiating in the womb until they said you can be in the United States. So, we're all pretty lucky.

1:31:51Do you want to give any—we've got two non-United States guys here just to get the other side. Who now live in the U.S.?

1:32:03Okay, Station 4.

1:32:11Hi, 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? Thank you. 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.

1:32:53Jessica Toomes is, I think she's the step-granddaughter of Ben Rosner, manager of ours. And in 1966, I got a call from a fellow named Val Steiner in New York, and he said, I represent

1:33:22and there were actually nine Annenberg sisters, I believe, before Warmer Annenberg came along as 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.

1:33:44and Charlie and I went back to the office of Will Falsteiner in New York. He was a marvelous guy. Never met him since, but he was handling things for Mrs. Well, A. Simon Bichut, her name was Hanna Berg, and her husband had been the partner of Ben Rosner. But he had died, and Ben 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. It had$2 million of cash. It had a$2 million piece of property in the 900 block of, what's the key street in Philadelphia down there? Market Street. and it was making$2 million a year pre-tax and the price was$6 million.

1:34:47And 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 partner's widow. 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,

1:35:19he said, I'll run this business for you until December 31st and then I'm out of here. And I got Charlie, we went out in the hallway and I said, if this guy quits at the end of the year he can throw away every book on psychology. you've 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 from Will Felsteiner, there's a background roundabout.

1:35:54I'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 Ben had been married. His first marriage was to a woman from Iowa, and he just figured anybody from the Midwest was okay. And the trick, when you get in a business with somebody, or you get in a room with somebody like that, and they want to sell you something for$6 million that's got$2 million in cash, and a couple million in real estate, and maybe maybe two million a year.

1:36:41You don't want to be patient then. You want to be patient and waiting to get the occasional call. My phone will ring sometime, you know, with something that wakes me up. I may be sleeping in there or something, but you just never know when it'll happen, and that's what makes it fun. I mean, it's—so, patience. It's a combination of patience and a 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.

1:37:37It's not a constant liability to be patient. Greg, you? Well, 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.

1:38:24Yeah, and of course it doesn't come in anything like an even flow. I mean, it's the most uneven sort of activity you could get into.

1:38:39And the main thing you have to do is you have to be willing to hang up after five seconds, and you have to be willing to say yes after five seconds. Absolutely. And you can't be filled with self-doubt in the business. You just forget it and you're going to work. It's going to some other activity.

1:39:07But 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. You know, if they started today and had 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.

1:39:43But 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. We never sought out professional investors to join our partnerships. Among all 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 three months and tell them what they wanted to hear and all that sort of thing. And that's what we got, and that's why we've got this group here today. 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.

1:40:45You want to get it done that day. Okay. Becky? 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. Would 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?

1:41:29Yeah. 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 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 have been learned about five, six 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's today.

1:42:19So 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're 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-odd thousand. He's brought it down to 20 ,000, and that translates to, I guess, at least$2 billion per year. So all of this has allowed Geico to become a much focused competitor, so much so in the last seven quarters, Geico has shown a combined ratio that has an eight 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.

1:43:12So I think Geico has done a great job. Its AT combined translates to the largest profit anyone is making on the underwriting side in the personal automobile business. So, you know, 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 great shape right now. Warren, you want to add anything?

1:43:57No, 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.

1:44:39We now own 100%, but 50 % of$2 billion that we earned in the first quarter is$1 billion, dollars, which on a$50 million investment is, you know, 20 for one and a quarter.

1:44:57So, it—you know, 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 didn't—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. The only thing I'd like to add is, in addition to the underwriting profit, GEICO provides$29 billion of float. Oh, yeah, in addition, yeah. And that's not unimportant. When you paid$50 million to get the businesses, it's given you$29 billion to work with for nothing. And on top of that, it gives you a billion dollars of profit in a quarter.

1:45:46The interesting thing about auto insurance is that 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. And 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 for my underwriting, he made money the second year.

1:46:41This is not a public offering type thing. You know, he was phony accounting for ten 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—you know, your auto insurance policy looks a lot like the one that you had then. 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.

1:47:17And Geico is a fascinating story. And about three 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 the building that I'd gone down on a Saturday to visit. But it turned out they didn't work on Saturdays in Washington. And I pounded on the door until finally a janitor let me in. And I said to the janitor, is there anybody else I can talk to here except you?

1:48:13He didn't take it personally. And he said, well, there's one guy up on the sixth floor. And a fellow named Larry Ormer Davidson did wonderful things for me. You get a few breaks in life in terms of people you will meet who can just change your life dramatically. And you need a handful of those. And when you get them, you treasure them. And we've had them on this board of Berkshire. You know, 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 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.

1:49:14And, you know, to get a chance to talk to Lauren Burd-Davidson on a Saturday afternoon, you just listen carefully. And that comes in the category of turn every page. Some of you want to turn pretty fast, but you just get lucky in life. And you want to take advantage of your luck. Okay. Station five.

1:49:47My 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.

1:50:16Sorry, Greg. That's a nice way of saying it's not normal, actually, but I appreciate it. 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. Thank you. Thank you.

1:50:41Well, 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 in a 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, it would be very, very hard to develop anything like that. But I don't think you can develop the people around it, 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.

1:51:32And it takes getting around you a small cadre of people, which then spreads out somewhat. But you've got mutual trust where people do more than their share. And I've been around a lot of 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, you know, What aren't you—what are you missing? But we have—you know, 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 an hour and a half, and these are people who are thanking me, you know.

1:52:39and 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, you know, 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 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 seven or eight years of age, what really interested me.

1:53:31could have taken a lot longer but

1:53:37you want to find the song find the sound there's a movie called The Glenn Miller Story and Glenn Miller went on from having a broken down band for 15 years to turning out the first he found the sound and created the first gold record I don't know whether I don't know if 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, you know, And you don't find it necessarily on the first job you take, because you've got to eat.

1:54:34But if you get lucky like I did, you find it when you're very young. And then, you know, just keep doing it. And don't worry too much about starting salaries. and don't worry about—and 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.

1:55:09But you've got the greatest country in the world, and you've got the greatest time in the world, so I would say that while I'm handing this over to Greg, that you know, you can't even dream all the dreams that you could have about a place like Berkshire, but the big thing you have to do, though, is always to be sure you can play the next day. I mean, in terms of financial activities on a meaningful scale, you know, you don't want to go—you don't—there was a book about—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.

1:56:11So, you know, if very stupid things are happening around you, you do 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'll 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'd been born in 1700, I'd say, I want to go back in the womb. What the hell with this? It's too hard. But now I've come along to do something where I can just play around all day with things I enjoy doing.

1:57:04and it's really, it's a pretty wonderful life. Anything, Greg, you want to add or subtract from that? 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 Berkshire that's so special, you fall in love with it, and it becomes just what you want to do every day, and it's just an incredible opportunity.

1:57:56So thank you.

1:58:05And the gentleman who asked the question, if you don't find it immediately, you know, don't starve to death or anything in the meantime, but you will find it, and you'll find it in the right individual. In a 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, you know, sometimes it pays the way, too. Okay, Becky. This is a question from Mark Bonnke and Helen Friedrichson 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?

1:59:09If so, please explain. And I'll just add from Mary Chang, 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? Yeah, 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.

2:00:02And we've owned lots of securities in foreign currency. So we do nothing 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 the conversation I had with Charlie where I say, if we do this, our annual earnings will be this, and therefore, whether it's accounting or anything, the number will turn out to be what it'll be, what counts as 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.

2:01:06You will get so you'll, one way or another, play around with the numbers, and sometimes seriously play around with the numbers. And I've seen people that, you know, I trust them in all kinds of other ways, but playing around with numbers is perfectly okay. And that's just not something, you know, we just don't think about that. So, actually, the relationship of the end, behavior at the end in the last quarter, you know, resulted in certain gap charges. And, but it doesn't make it, it doesn't make any difference. It'll change next, you know, next month or next year. And, and obviously we wouldn't want to be.

2:02:05owning anything that we thought was in a currency that was really going to hell. 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 fiscal policy is what scares me in the United States, because it's made the way it is. And all the motivations are to doing a lot of things that can cause trouble with money.

2:03:07But that's not limited to the United States. It's all over the world. And some places it gets out of control regularly.

2:03:22They devalue it. 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 do centuries ago. there will always be people it's the nature of their job 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 it's got important consequences and it's very hard to build checks and balances into the system to keep that from happening.

2:04:26And we've had a lot of fun here in the last, either the first hundred days or the last hundred days, whatever you want to call it, but watching what happens when people try to make sure that they aren't running fiscal risks. and that game isn't over and it never will be over in finality. If you look up and search the great inflations of post-World War II it's just a list that goes on forever and the same names keep popping up and everything. So 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 the end and easily predictable.

2:05:40As long as the carry-on 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? 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 were very comfortable both with the Japanese companies and with the currency we would ultimately realize, i.e.

2:06:29in the yen. Yeah, 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 along 12 other currencies, as I remember, only four or five of them were really big currencies. But when I say we got along it, that means we're short the dollar. And so we held that position for a couple years, and we made several billion dollars on it, which was significant to us then. Still is.

2:07:07Charlie always felt that if he 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'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.

2:08:09But it's not a – 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 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.

2:09:01Okay, Section 6.

2:09:11Good morning Warren and Greg Ajit. Thank you so much for hosting this event. Good to be here. My name is Desh Boyun Dilger 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 rich in history and 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 meet and give advice informally to government leaders such as South Korea, China and India.

2:10:04What 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. Thank you.

2:10:47Yeah. I have trouble planning a trip to Council Bluffs, which is just a few miles from here. But it takes an optimist. Actually, I met a fellow here at the annual meeting, oh, 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. Well, 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, we don't really want to go into any country where we think there's a chance, I I mean, a significant probability of runaway inflation.

2:11:49It's just—it's too hard to figure. Other people figured out ways to make money in hyperinflationary situations, but that's not our game, and I don't think I'd 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 that 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, conscious, you know, 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.

2:12:56I 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 percent of the world's GB and faster growth rates and generally sounder currencies and all kinds of things. So I wish you well. Okay. Becky? 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.

2:14:04Given 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 an 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? Okay. Yeah, part of the question is very easy. There's no question the private equity firms have come into this space, and we are no longer competitive in this space.

2:14:45We used to do a fair amount in this space, but in the last three, four 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, the private equity firms who've taken the assets from very conservative investments, and I wouldn't say high octane, but they've certainly invested these assets in situations where they get a lot more return on the investment.

2:15:45And 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 the danger that at some point the regulators might get cranky and say, you know, 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, you know, we can't compete in this segment right now. Yeah, I think, yeah, 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 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 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.

2:17:41But that was before a G. And the G came with us in 1986, and at that point, the other fellows should have given up.

2:18:02Station seven, please. Hi, 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 for young investors who are looking to develop their investment philosophy? Thank you. Well, those are good questions. I wish I thought of myself earlier in my life. The, you know, who you associate with is just enormously important. And don't expect that you'll make every decision right on that.

2:18:52I 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, you know, if we were working together on something one ten thousandth the size of Berkshire, I mean, they'd be the kind of people you'd 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.

2:19:47And that's something you learn. And, of course, you learn it late in life. that you 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 his name Sandy got us Walter Scott 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 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.

2:20:46I mean, what you're really looking for in 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. And Charlie had it for a very, very long time. I probably got 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 as the way you'd 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.

2:21:34And you will find people do wonderful things for you. So 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 when 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's 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, you know, with a lot of—I was lucky in having a good environment for living that kind of a life.

2:22:30And other people, you know, have a whole different environmental situation. They have to overcome it. But don't feel guilty about your good luck if you've got – well, if you live in the United States, you've – if 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.

2:23:05But 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 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. or whether you need the money. Craig doesn't need the money. She doesn't need the money remotely. And they, but they enjoy what they do, and they're so damn good at it.

2:24:10It's, you know, it's just, well, I've had the advantage of seeing how that works over time. They're 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, who lived in almost 98. And I've never seen anybody that could get the potential out of other people more than Murph could. I mean, if you wanted to become a better person, you wanted 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.

2:25:13and I think that the Berkshire experience is pretty dramatic. I mean, to operate with Sandy Gottesman from 1963 until he died a couple years ago and Walter Scott for 30 years and operated with them for 25 years or so, whatever it was. Yeah, 30. Yeah, and you really can't miss.

2:25:56You'll learn all the time, but you'll not only learn how to be successful in business, you'll learn how to be successful at life. And so that's my recommendation.

2:26:17And for some reason, apparently a live walker, too, because it's pretty amazing. I mean, these people I'm talking about, including myself, I mean, I like to attribute it to this and a few other things.

2:26:39But I think a happy person lives longer than somebody that's doing some things that they don't really admire that much in life.

2:26:52Okay, let's move on to—I guess it's Becky next. The first quarter ended March 31st, 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, wanting to know if you could talk more about that. Well, I can give you a good answer to the second part, which is no.

2:27:39But$10 billion wouldn't have done that much. That's another side of it.

2:27:48But 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 three times since we acquired Berkshire that Berkshire has gone down 50%. in a fairly short period of time, three different times. Nothing was fundamentally wrong with the company at any time, but this is not a huge move. The Dow Jones average hit 381 in September of 1929. It got down to 42. So that's probably going from 100 to 11. But this has not been a dramatic bear market or anything of the sort. I mean, it's, you know, like to point it out, if I've had 250 trading days a day, you know, for however many years I've been old enough to trade stocks, that got 17 or 18 ,000 days.

2:29:14There's been plenty of periods that just are dramatically different than this. I mean, the day I was born, the Dow Jones was at 240. And my first—that was August 30, 1930. And between that and the law, 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 curler compared to anything you've seen before.

2:30:28I 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've 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've got to check them at the door when you invest.

2:31:15Okay.

2:31:21Station A, please.

2:31:26Good morning, Mr. Murphy. Mr. Greg and Mr. Ajie. 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 points in your life? And how did you get through and overcome them? Thank you very much. Well, everybody gets setbacks. And some people have particularly bad luck in that respect, and others get through with probably minors. but Charlie he had setbacks I had setbacks it's part of life and they're not fun I don't have any great advice for you about having the time of your life while you're having some major setback but

2:32:35it comes with lifetime You know, but you certainly have a setback when you die. And so everybody's got that setback guaranteed to them. 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 who 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.

2:33:25I mean, if you look all the way through the history of China, when would you rather have been born? You know, a hundred years ago? 500 years ago, 1 ,000 years ago, or now. You know, it's just hands down you'd be lucky. I mean, you know, if I came from 20 generations of shepherds, I think I'd get kind of tired of my life just looking at these sheep every day. But, you know, 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, you know, staying in the womb for a couple hundred thousand years and then just emerging at the right time.

2:34:24So I would focus on the things that have been good in your life rather than the bad things that happen, because bad things do happen, but it can often be a wonderful life. You can get terrible breaks in it. I mean, so far that really hasn't happened with me, but it's happened with some of my friends, but you get some bad breaks from time to time.

2:35:03but for 94 years I've been able to drink whatever I want to drink they predict all kinds of terrible things for me but it hasn't happened yet

2:35:22and it's true 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 lifespan of professional athletes, after a while you get used to, you 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.

2:36:01Well, Charlie and I, and I think I speak for the others to some extent, that we never really exercised that much or did anything. We were carefully preserving ourselves for half of the years.

2:36:20So, look at the bright side of things to the extent that you can.

2:36:26And, you know, you're lucky enough to—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 hundred years ago that you would have been offered. So anyway, that's enough moralizing.

2:36:57Okay, Becky. 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? Well, Ajit. Yeah, there's no question that insurance for automobiles is going to change dramatically once self-driving cars become a reality.

2:37:47The 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 more 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 errors and errors and omissions in the construction of these automobiles?

2:38:45Yeah, we expect change in all our businesses. And good thing we didn't. 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 would be very interesting. You know, if every time you swung at a baseball, you hit a hole and run the game, it wouldn't be interesting. If every time you hit a golf ball, you had a hole and run 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.

2:39:44And that's really part of the fun. I mean, your brain would turn to mush if you didn't have a few problems now. So, you know, auto insurance will change, although it's remarkable how little it has changed. But it's only been around since, you know, for 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 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.

2:40:41And so we've got this wonderful world, which now we know that there are eight countries and probably a ninth coming on that can destroy. And we don't have what I would consider necessarily the perfect people leading each one of the nine or some of the nine countries. And, you know, when Einstein came up with the equals MC squared back in 1905, he 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 we changed 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?

2:41:53And 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. It got around August 1st. It's the most famous letter in history from Leo Szilard. Leo Szilard couldn't get his letter in front of Roosevelt because he would ever 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 signed it. So he calls in General Grover, who may not have been General then, and said, we should do something about this.

2:42:50And 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 waddle and the world does change and we've got wonderful things but we also have you know 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 need nuclear weapons for I mean can that be a good thing in the world but they're not going to go away so it's 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 hundred years ago.

2:44:06But 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, but we haven't made much progress with the human race, and we'll see what happens with that. In the meantime, we'll see changes in auto insurance, too, and cars. And that will 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, you know, enjoy your luck.

2:45:10And you still try to figure out the answers to what's going to happen. In all insurances, 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 want to go out and play golf if you're going to hit the ball in the hole, on every hole. I'd just like to add, we talked about the shift to product liability and to protection for accidents that take place because of an error in terms of how the product was designed or supplied.

2:45:56The 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 the insurance, I think is still an open issue.

2:46:37I'll give you two interesting figures to ponder. When I walked into a guy who's office in 1950, the average price of a policy was around 40 bucks a year. It varies all over the lot depending on location and everything, but it's pretty easy to get up to$2 ,000 depending on how urban your areas are and everything can get considerably higher. During that same time, the number of people killed in auto accidents have fallen from roughly six per 100 million miles driven, just a little over one. So the car has become incredibly safer, and it costs 50 times as much now or thereabouts to my insurance policy.

2:47:45So 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 it, 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 gone under terror and it's still unprofitable to provide homeowner's insurance in Nebraska after doubling the price in the last 10 years.

2:48:44So it's very hard to predict what these big changes mean, and you just have to keep thinking all the time. But you don't want to read some research report that says the world's coming to an end or the world's 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 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.

2:49:28But 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. Hey, Warren, as we approach the break, would you like to address the operating earnings? Oh, yeah. Yeah, let's put up the—we released our 10-Q this morning.

2:49:54And we always try to do it on a Saturday so nobody gets a jump on other people. And we just have three simple charges. You'll see that our insurance underwriting income was down dramatically for the first quarter. And last year was 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. But we do have unusual advantages in the insurance business that can't really be replicated by our competition.

2:50:54That doesn't mean they aren't trying to get advantages we don't have. But we'll try to replicate anything that seems better. In fact, we'll try and top it. But we—I wouldn't talk about our insurance business as much as I do, unless I really thought we had some really permanent advantages in a very, very large industry. We just announced within the last 24 hours that we in Zurich and Chubb have arranged a joint operation to be the writer of really large sums that very few people can do. And, of course, we've got to write about the right price in terms of liability. But we can do that sort of thing without blinking.

2:51:46and anybody that wants to do it wants to get us in it. I mean, so anyway, our investment income did not change that much because we have a float that grows a little bit, which gives us more money for investment, and then we have retained earnings, which grows. So we would expect in a year to have like$40 billion or more that will build up investments. unless we find things to do with it. So the investment income rates on treasuries are less than they were, or short-term bills, I should say, are less than they were before. So you had that negative effect pulling it down, but not that much, and we had more money.

2:52:34So we came up with a little more in the way of earnings. The railroad is earning a little more than last year, but it's not earning what it should be earning at the present time. But that's solvable and is getting solved. And it's still an incredible asset for Berkshire. The energy company last year was having particular problems, and those are absent this year, so those earnings are up. And then among our range of general businesses, they were pretty much a push. And I think you did a little calculation the other day on how many were up and how many were down, didn't you, Greg? Yeah, of our 49 that we measure closely, 21 were up and 28 were down.

2:53:29So you can tell it was really a mixed quarter when you go across the non-insurance operating businesses. Yeah. The next slide. I'm getting a five-minute warning here. We'll throw the long ball now. Shows our financial condition, which continues to hold a lot more in cash and treasury bills than I would like. But that's simply a question of what opportunities occur. And if you get real opportunities every five or six years, you have to be patient. Charlie always pointed out that we made most of our money on about eight or nine ideas over 50 years. And we talked about it every day, and we read every report, and we did everything else.

2:54:30But if you think you can get an idea a day from listening to your friend read book or 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 on that thing our float, which continues to build, I don't think any kind there's no company that has property casualty company that has our folders or Jeep clearly we are heads and shoulders above anyone else yeah so that is money that as long as we're writing it an underwriting profit is absolutely free money and we would expect that over a 50 year 100-year period that we would be able to say the same thing.

2:55:37But there will be years when you have a very bad underwriting record, and it'll lead into the full earnings. But so far, in the last 20 years, I think we've only had one underwriting loss of any. Yeah, 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 cash to... Yeah, 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. And it's included in that. But we run our business actually with a different mindset than any other PC company, I think, probably in the world.

2:56:37And 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.

2:57:03And share repurchases, if Berkshire buys Berkshire shares and repurchases, we 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, but it's a better deal for you than for us. But it actually hurts some of our investing companies quite substantially. 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 now, so that's a billion dollars a year that he pays when he buys Apple stock in which we like compared to what you pay.

2:58:08And it doesn't sound like much, but—well, a billion dollars sounds like a lot still. But there are people who want to increase that particular rate dramatically, and you won't read about it or anything like that, but it does make it slightly less attractive than it was before, and we will only buy in our shares if we think that they are almost most 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 over-a-purchases. So on that happy note, we will rejoin at 1 o 'clock, and we will—I'm sorry.

2:59:16Correct that, correct that to 11 o 'clock and then we will. Yeah, 11 o 'clock. And then we'll continue to one o 'clock and then in the meantime, enjoy yourself. And I think all our stores are still open, so bring the cash register.

2:59:45Welcome back to CNBC's special coverage of the Berkshire Hathaway shareholder meeting. I'm Mike Santoli, live in Omaha, Nebraska. After taking questions for two and a half hours, Warren Buffett, in his 60th annual meeting, has called a break, promising to be back on stage in just 30 minutes. We have a big halftime show for you right here. Becky Quick is heading back over to join us. We'll speak live shortly with Activision founder Bobby Kotick, a longtime Berkshire attendee, and Nebraska Furniture Mart chairman Irv Blumpkin. Warren started the meeting by thanking all the special guests one by one.

3:00:21He also talked, of course, about record-breaking sales on the floor and all the boots from his operating companies. And then near the end of the session, he got around to his take on this morning's results. As he did welcome those special guests, he initiated a special shout-out to Tim Cook, obviously CEO of Apple, who's in attendance and said that Cook had made more money for Berkshire than Buffett himself had. He sold out a lot of that stock, not this past quarter, but in the past year, and obviously still owns about 2 % of that company. He also said he loves the investments in the Japanese trading companies.

3:01:00Those were investments from a few years ago. and he said they won't be selling any stock in those companies for a very long time, if ever. One of the strongest stances that Mr. Buffett took in the morning session came during his answer to a question about tariffs and the impact of our relationships around the world. Listen here. 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

3:01:40that'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 eight 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've won, and other countries are envious. He stayed on that topic and doubled down as he got more questions, calling the Trump administration's protective stance a, quote, big mistake. Trade should not be a weapon. And the United States, the United States, we've won.

3:02:37I 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've got 300 million that are crawling 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 we'll become and the safer we'll feel and your children will feel someday. Buffett also addressed Berkshire's record cash hoard of nearly$350 billion.

3:03:31He says he's sitting on the sidelines for now, but he wants to be ready when a buying opportunity presents itself. Every now and then you find something and occasionally, very occasionally, but it'll happen again. I don't know when. It could be next week. It could be five years off, but it won't be 50 years off. 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 five years and then the probabilities get higher as you go along.

3:04:20Buffett also weighed in on the markets and the rough start to the year. He wasn't exactly concerned, though, about the volatility, saying if you can't take the heat, you might want to stay out of the kitchen. 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 part of the stock market, and that's what makes it a good place to focus your efforts if you've 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.

3:05:04I don't mean to sound particularly critical. I mean, I know people have emotions. Becky is now back with us. We've heard his strong stance, Becky on tariffs, the position on the record cash hoarding, of course, his downplaying of the recent market correction, which I quite enjoyed him mentioning that on the day he was born. and the Dow was at 240, and then it went down to a low of 41, which was in 1932, at the depression low, down 80%. That's how the market greeted him. He basically says, you've got to deal with the bumps. Yeah, he's basically, if your hair's on fire right now about the volatility of the markets, relax.

3:05:42You're not really cut out for this business. I thought you might appreciate that. Yeah, for sure. That's kind of your take on things, Mike, all the time. Well, right. I mean, act like you've been there before. And in his case, he has been there before many times in many cycles. And again. And obviously, that's another theme. He always likes to sort of broaden it out and say, this country's been through a lot over the years. It's going to get through this. And it's a better place now than it ever was before. It's going to be better in the future. That's always a sort of a welcome theme, I always find, to this.

3:06:10He's not going to be one who's going to say, look, it's the end of, you know, American exceptionalism. It's kind of the opposite of what we do in the news business. It is a calming influence. It is a long-term view, a long-term perspective on things. And really interesting to see. He did mention, though, I don't know if you talked about this before I sat down, but he did mention at the very top that, oh, by the way, there was an opportunity to spend$10 billion. We almost did it recently. Somebody else asked later, one of the shareholders wanted to know, what was that? Can you talk more about it?

3:06:41His very simple answer was no. It was fascinating. He also said, as he was discussing all the cash that is built up, he said, you know,$100 billion, that's something very easy to deploy. He says those decisions are easy when they come. For him, I guess they are. If you have$350 billion, I guess they are. But I think he wanted to accentuate that they weren't really making an outright market call, but they do like the idea of having dry powder. being, and he basically said, the willingness to not be fully invested over the years has actually made them a ton of money because it meant that they had the ammunition to act when the time came.

3:07:18It also sounded to me a little like a marketing ploy. Hey, we got a lot of cash and we are willing to put it to work. Our phone lines are open, so call on in. Look, he joked about it being a five second decision where we either hang up or we say yes. That may be an exaggeration, But he and Greg Abel were both very, very clear about the idea that we are doing the work. We are looking around. We know what we would say yes to or how to adjust a deal that we would say yes to pretty quickly. What else jumped out to you? As we were going through with a lot of these things. I thought Ajit made some very interesting commentary on the insurance business.

3:07:57Not something we talk about regularly, but this idea of private equity, really getting into the insurance business in a big way. He said that hasn't happened when you're looking at property and casualty. It has happened on the life insurance end of things. And basically, they're waving a white flag. Hey, we're not going to compete here. You can have that business because you're more aggressive than we would be. They can't get the returns from it. Well, they can get the returns, but I think that's the risk. Yeah, exactly. They worry about it for the price. It's mispricing the risk in their view.

3:08:23Right. That was interesting. We mentioned earlier they bought back no stock in the quarter. Now, we know that the valuation of the stock is not really in his zone where he wants to be aggressive of buying back the stock. However, I found it interesting that he cited the buyback tax that was imposed 1 % on everything you spend buying back your own shares. That seems like a little bit of a rounding error, but I guess he implied it was material to their decision. Look, it costs us more than it costs anybody out in the public to buy a share at Berkshire. Right. And you have two opportunities. For a regular public company, you can issue a dividend that you give back to them and let it figure out themselves, or you can buy back shares.

3:09:02Now, if share buybacks are tax disadvantaged from the government perspective on things, that changes their opinion probably. Of course, he does neither. No, but I think that was a message to the operators of the companies that they own. Maybe we'd rather see a dividend than a tax buyback. He did mention that. Because he cited Tim Cook and Apple. Apple spends a billion dollars in tax to buy a hundred billion back. Right. And we love what Tim Cook is doing. That was really interesting. I mentioned that off the top. I thought that was telling. Yeah, very much so. They didn't look like they had any sales from the best we can tell from this most recent quarter.

3:09:35They slowed down with the sales at the end of last year, too. So maybe that's a message that, hey, Apple is here and here to stay. Sure. And we appreciate what he's doing. The position turned back, too. It was over 40 % of the equity portfolio at one point. It's down toward 2022 or something now. So it's not as if it seemed as if it was this big, glaring. There was an interesting question from a shareholder. or several shareholders wrote in about those Apple share buybacks. We haven't gotten to any of them yet. I may or may not in the second half. But one of the interesting perspectives is, was this because of tax changes you thought might happen if Kamala Harris came into office with this?

3:10:11Right, because he alluded to that last year. Yeah, he did. So it's kind of an interesting perspective on that end, too. We are continuing here at the annual meeting. This is a very quick break before we go back in for more Q &A. But in the meantime, we're going to get the chance to speak with some of the Berkshire managers here today. Retailers are actually in the eye of the storm right now as tariffs disrupt supply chains and drive up costs. For more on how the industry is adapting, we are joined by Irv Blumkin. He's the chairman of Nebraska Furniture Mart. And Irv, it is great to see you today.

3:10:41Great to see you too. So we get the special privilege right now of talking to some of the managers who are actually running the businesses, trying to deal with any of the potential changes that are coming and on their way. Greg may be pretty involved with what some of your companies are doing. I don't get the sense that Warren is paying a close attention. He trusts you to do those things. What are you doing to try and prepare for any potential tariffs that come down or tariffs that you are paying at this point? Well, it's very interesting. It's very disruptive. It's tough to make a plan. And we've been very patient in just waiting it out.

3:11:14And, you know, we've got alternative strategies to deal with it depending on what we know they're exactly going to do. We're at a point right now where we've got July 9th is a big time for us to figure out what to ship, what not to ship. July 9th? July 9th. Why that day? That's the date somebody's going to need to make a decision whether the tariffs stay at 10%. Oh, the 90 days in. The tariff stays or it goes up to 40 or 50, depending on what country we get it first. So what are your dual kind of paths, depending on if there's... So we're trying to ship as much as we can by mid-May. So the goods we have, we know exactly what we're going to pay.

3:11:53And then we're just going to take a wait and see and be patient, be able to adapt. We have a lot of resources, both domestically, that we can rely on and gives us a broad base to be able to make those kinds of decisions. Wait, domestic manufacturers that you can use instead? Domestic warehouses that have brought in goods, that they'll have plenty of goods to cover themselves for a very short period of time. because there is going to be a time where, depending on what happens after the 90 days, where you may see a short supply of goods from overseas. Irv, I want to go back to a long time ago, back in 2007.

3:12:29You and I, I got to travel with you and some of the other Nebraska Furniture Mart executives and Warren to go to China. You were doing some sourcing at that point. and you know where you were doing your sourcing at that point versus now I think is very interesting let's play a clip of that that was a long time ago you've been going to China for how long about 10 years about 10 years for the business what and how much of your stuff comes from China right now probably 75 80 percent comes from China today where did it used to be 10 years ago where was most of the furniture coming from United States North Carolina mostly North Carolina and what What's happened to the cost of furniture over the course of that time as you move from sourcing overseas?

3:13:11It's gone down dramatically and tremendous deflation in the category. Yeah. Wow. And what kind of things are we looking for this trip out? This trip mostly case goods and some upholstery. Sofas, love seats, along with bedroom sets, dining room sets, occasional tables. All right. So that was 18 years ago. You were doing a lot of your sourcing in China at that point. to move from North Carolina. What's the picture look like now in terms of your sourcing? The sourcing, in our case, other than about 10%, has moved to Vietnam, Cambodia, Malaysia, Indonesia. And, you know, again, that's where cheaper labor had been.

3:13:51That's where the furniture industry has migrated to. There's still some electronic stuff coming out of China. And there's a couple categories that those countries haven't been able to produce at this point in time. But I'm sure there are a lot of people working towards those countries to figure out alternatives. Yeah, that's why the stakes are so high for July 9th, right? Because they're very, very high stated tariff levels for those exporters. Right. Is there anything that would bring manufacturing back to the United States, North Carolina, or elsewhere? It's interesting. I just came back from North Carolina last week, and it's a long process.

3:14:24I seriously doubt there's going to be a lot of manufacturing brought back to the U.S. And, you know, you just got to figure out alternatives. We do about 20%, 25 % of our business in the U.S. on U.S.-made domestic product or imported products in parts, and then they assemble them here. But I don't see it as a big opportunity over the long term. Irv, I want to thank you for being with us. And by the way, you haven't changed in 18 years. It's great to still see you. Thank you very much. Great to see you. Thank you. All right, sticking with tariffs, Warren Buffett was fairly vocal this morning. We caught up with a number of his managers on the Berkshire portfolio and talked to them about the adjustments that they are trying to make right now in the face of higher tariffs.

3:15:09And they're starting to use the vertical integration we have. And that's been a blessing with the tariffs. We've had no price increase as a result because it helped the Canadian lumber. As long as it's used for housing, no tariff on that. But also 27 supply companies of our own and great procurement teams, we've been able to offset all that. You know, tariffs are a challenge for everybody. And the biggest concern we have is the impact on the consumer. After years of high interest rates and high inflation, consumers are pretty weary. And now it's fear, right? It's the uncertainty that's causing them to become a little more cautious in their purchasing decisions.

3:15:52That will have the biggest impact on our business. You know, we are dealing with that and managing our price margins, relationships with our customers. We're local for local in most of the markets we serve. So we innovate locally, we manufacture locally, we buy raw materials locally. So, you know, we do have some slight impact from tariffs, but generally it's not a big issue for us. During Trump number one, the supply chain really started to reconfigure itself too. it was almost like a circulatory system that found a new path. And so we're going through wave two of that right now. And we're in touch basically daily right now with all the key vendors working through this together.

3:16:34And it's going to end up fine. But we're going to have a third quarter that's going to be a little challenging as everything settles. We're preparing as if things were to slow down a little bit. But some of our areas, Joanne's business is responsible on the commercial side of the business. Data centers doing extremely well, right? I think she'll have hopefully her best year. There's some very good years prior to that. So there's a lot of pockets of that, and I think we're in a good spot on that. We're fortunate we manufacture all of our products here in the United States, and most of our inputs are sourced in the United States or North America.

3:17:10So we haven't seen any significant impact. From a tariff perspective, we do do a lot of business in Canada, and with this buy Canadian backlash, so to speak, We are concerned about that. So we stopped manufacturing in Canada in 2015, but I'm happy to say we're going to be starting to manufacture in Canada again here later this month and throughout the summer we'll be adding more SKUs to the offering, being manufactured there just to be supportive of Canadian retailers. All right, so that's what you're hearing from the Berkshire managers who are actually on the front lines trying to deal with all of this.

3:17:43There's been a lot more to talk about with them this time around, and we will continue to hear pieces about how they're managing with all of this. Joining us right now to talk more about Berkshire and what we've been seeing over the years is Activision founder Bobby Kotick. He is a longtime Berkshire watcher and been coming here for more than 30 years, I think, Bobby, which is really hard to imagine. I don't know exactly when I started. It was when I bought my first Berkshire share. I think that was in 94, but I don't remember exactly. Why did you start coming? What brings you back every year?

3:18:18For me, this is probably the most important event that's a reminder of how important capitalism is as the foundation of democracy. And so it's almost like a religious experience from that perspective. Just the constant reminder of how integral to our democracy capitalism is. Do you learn something every year when you're here, or is it a resetting of what you already know? Well, you know, I think probably the greatest insight I just took away from the last couple of hours is there's this great perception of market volatility that's existed over the, you know, let's say the last three or four months.

3:19:01But as Warren pointed out, the S &P is down 3%. That's not much volatility. And I think it takes someone like Warren with the clarity of thought to actually remind us that there's been historically a lot more volatility in markets than what we've seen in the last five months. I have to admit, I'm throwing out all these shareholder questions I had as a result because it was what's going on with the treasury markets. Are they going to dump foreign ownership of these things? What's going to happen with the dollar? Like all these questions that were so kind of petrified as to what was happening. Like, oh, I've got to throw all these out now.

3:19:39They were relevant three weeks ago. Now they're not. Almost all the way back. Yeah. Although at the same time, as much as you want to take a big picture perspective and say that we've been through these crises and trials and challenges before, it does seem there's certain extraordinary things happening right now. If you were running a business to say there's such a wide range of potential policy outcomes and what it's going to mean for the economy. Right. With with the tariffs. So I guess that's, you know, the messages were all in suspense for a few months. And and Warren saying, you know, he doesn't really feel like this is the way to wage that fight.

3:20:09I think the greater challenge, though, is if you think about where we are fiscally as a country, you know, 37 and a half trillion and growing of debt. For now, more than five years, a debt to GDP ratio at 120 percent or more. You know, I think one of the things that we have to start to come to terms with is you can't have successive years of a trillion and a half and two trillion dollars of deficits, a debt at thirty seven and a half trillion dollars with a trillion dollars a year of interest and not address spending. And it's not just federal spending. It's going to be municipal spending, state spending.

3:20:53But spending has gotten out of control. And, you know, when you think about 5 % of individual taxpayers contributing 66 % of taxes and 20 companies contributing 25 % of corporate taxes, we need to do a better job of making sure that we're not actually putting a greater tax burden on the U.S. I don't know that it's sustainable, but we have to start addressing spending. But neither one of the political parties seems to have a huge appetite for really going after spending. Doge is trying to make things more efficient, but if you don't go after some of the big ticket items, whether that's Social Security, whether it's Medicare, whether it's defense spending, if you don't go after some of the big, big nuts out there, not to mention interest on what we pay on all of these things, you're not going to be able to bring that down.

3:21:48Well, think about it. Medicaid and Medicare in the last four years are up 45 to 50 percent. That's just not sustainable. And then you look at the things that nobody wants to talk about. You know, K through 12 U.S. expenditures are something in the neighborhood of a trillion dollars. But we're now at a place where kids are graduating at 30 percent of their grade level expectation. graduating in math and science and reading at 30 % of grade level. And I think, you know, let's say there's 50 million plus people in the K-12 system, but in almost every grade and every subject, if you're averaging 30%, and that's now two generations, we're not going to have a competitive workforce.

3:22:40What's the way to address that, though? I mean, just don't spend the trillion dollars doesn't seem in itself the way to do it. For a trillion dollars, you should expect an excellent outcome. That is so much money. One of the challenges, though, is you've seen the shift of expenditures is largely towards administrative expense and not the classroom. State of California, 80 % of the$122 billion annual K-12 budget goes to administrative expense. 80%. Bobby, what are you hoping to still hear from Warren and Greg in the second half of questions? I think hopefully we'll hear more about what I'd like to hear.

3:23:32What are the areas of opportunity that might exist? And Warren's never going to give you any specifics. You asked the question on what was the$10 billion opportunity, but maybe we'll gain some insight, but for the most part, for me, I just want to hear the reminders of what's important in the way that you run a business, you think about society, what really matters. I get that, and so that's why I come. Bobby, before you go, I just want to talk a little bit about Elaine Wynn. She was a dear, dear friend of yours who very recently passed away, and I haven't gotten the chance to talk to you publicly about that sense.

3:24:13How are you doing? Well, it's not easy. You know, Steve and Elaine were my parents and original investors. And, you know, it's not quite real yet, but it's an incredible loss. Not just for me, but, you know, for so many people, for all the work that she did in education and the arts. And it's been difficult. So she was somebody who came here frequently, too. And it was always very good to see Elaine here among people. And I know a lot of people here are remembering her, too. So I want to thank you for being with us today. Thank you for having me. And again, a remembrance for Elaine Wynn. It's kind of you to say so.

3:24:51But thank you for having me. I really appreciate it. Thank you. All right. We've still got some big names on deck for our post-show analysis, including Berkshire board member Ron Olson. But I do think we're going to go to Katie Kramer on the floor. Is that correct? Hi, Mike. I tracked down one of the shareholders today from the morning session. This is Benji Sanderson from Pasadena, California, who asked a question of Warren Buffett this morning. Benji, tell me what time you got here today. Woke up at around 4.20 a.m. and got in line no later than 5 a.m. today. How does it work to be able to ask a question on the floor of the shareholders meeting?

3:25:27Yeah, it's a complete lottery. So I was just lucky number one on zone five today. I completely pulled a number, was randomly selected, so luck. You asked about Greg Abel and about his potential succession of Warren Buffett leading Berkshire Hathaway. Tell me why that was the most important thing for you today. You know, Warren knows thousands and thousands of managers, and he's met them over the years. And he's a very careful selector of people and businesses. So the fact that he's chosen Greg but hasn't talked much about it was pretty interesting to me. I assume he's, like I said, an outlier among outliers.

3:26:02So just wanted him to basically introduce him to us, kind of leave us a little nugget of wisdom about him before he passes. Did you go through a few drafts of the question? Did you workshop it a little bit with people? What was the process like? I was sweating for about an hour from the time I was selected until I asked the question, trying to word it just correctly. Luckily, Warren left us with a little quote about Steve Jobs and Tim Cook earlier today. So that was a good, an easy segue into my question. Were you satisfied with the answer? You know, to be honest, not really. Buffett is a great teacher, and I think he's in a stage of his life right now where he's leaving the wisdom he wants to leave to everybody.

3:26:42So I'm noticing many of the questions are being answered in very indirect ways, for better or for worse. What are you looking forward to hearing this afternoon and the next question session? There are a ton of fantastic questions. So the cash pile is obviously top of mind. He's an investor and he has cash, so we're all on edge. What is he going to do with it? What might you do? What might Greg do? I'm also, I don't think the question about Occidental Petroleum has been answered yet or asked or answered yet. Vicky Holub, the CEO of Occidental, has expressed in the last few days, I think, that it would be a dream come true for her, for Buffett to buy controlling interest of Occidental.

3:27:19So I really hope someone asks that question. I've considered asking it as well, but that'll be very interesting to hear, especially given that Greg is not only the successor, but the energy expert at Berkshire. A lot of thoughtful shareholder questions to come. I'll send it back to you guys. We'll do some more shopping and head into the afternoon session. Katie, thanks. Wow, he has a lot of clear views on what else might be in store in the next session, the Q &A. We do have Warren Buffett and Greg Abel. They are heading back to the stage for the final Q &A session for another couple of hours. This is a compressed program, but they're still out there.

3:27:53Going to take two hours of Q &A on the way in. Did want to mention perhaps the lightest moment in the morning session where somebody asked about Berkshire's ownership of the hot dog chain in Chicago, Portillo's. It turns out this person who got a question to Warren Buffett kind of botched it. The real owner is Berkshire Partners, which is a private equity firm not affiliated with Berkshire Hathaway. So somebody fumbled that opportunity. But yet it still led to a very interesting and fun 10 minute answer from Warren Buffett about the restaurant business.

3:28:45don't.