TIP810: Berkshire Hathaway 2026 Valuation w/ Chris Bloomstran

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30:49He'll have a shorter leash with all of the Berkshire watchers, both in the media and otherwise. And he's seemingly perfectly fine with that. I mean, he gets what his role is. And I thought he conveyed it pretty adequately and nicely in this year's letter, his first of what I hope are many. Yeah. I wanted to speak with you about a specific paragraph in his letter. This is page 16 for anyone who is so inclined to print it out. So I'm just going to quote it here, Chris. At Berkshire, equity investments are fundamental to our capital allocation activities. responsibility ultimately resides with me as CEO.

31:25Ted Wessler manages about 6 % of our investments, including a portion of the portfolio formerly overseen by Ted Coombs. Ted's impact extends beyond these investments as he continues to play a broader role in accessing significant opportunities, providing valuable input on our businesses and supporting Berkshire in various other ways." Chris, whenever I read that, I put that in my magic market here and I made an exclamation point. And then I said, ask Chris that question. I was really curious to hear what your take was. There's a few interesting notes about that. I mean, A, Warren and Charlie hired Ted and Todd.

32:04Todd left to join JP Morgan. He'd been running Geico, wearing different hats. He was part of the triumvirate with JP Morgan and Goldman to try to fix healthcare. And they threw up their hand said, this is unfixable. I'm not sure that there was a role at Berkshire that matched what Todd thought his role might be. And so he moved on, which was fine. I think Ted probably picked up, Ted's a good investor. I think he picked up Todd's portfolio. My guess is a bunch of that portfolio has probably been sold, which we'll see, I would guess in the next 13F filing. But I like the structure. And when he said that Ted is running 6 % of the investments, he didn't specify whether that was of the$300 billion stock portfolio or the$700 billion combined assets, which are now over$120 billion at the holding company, or if it was just the 580 or whatever that are in the insurance operation.

33:04So whether he's running 6 % of$700 billion or 6 % of$300 billion, don't know. It's north of$18 billion. I like how Greg's role and even Ted's role have evolved in that capital allocation needs to be done by Greg. It needs to be done by Warren's replacement, because when you get into the teeth of a financial crisis or a recession, you're weighing opportunity cost. And so of the$370 plus billion in cash, there's probably$100 billion round number that's dedicated to the insurance operation that either needs to be held as cash or fixed income. Berkshire doesn't have a lot of fixed income securities.

33:49They have mostly T-bills. So Berkshire has, call it 270 billion, plus another 40 billion a year that are generated by the operating companies to put to work. I think instead of judging his letter, judging what Berkshire does at the next opportunity, and he said, we need to be opportunistic. Warren acknowledged that in 08, 09, he screwed up and he didn't do enough. So he got the 5 billion and the$3 billion into the GE and the Goldman Preferreds, got some of the Dow Preferreds, the warrants, later did some of the Bank of America. But on the stock portfolio, he didn't do a lot in the stock portfolio.

34:23And Berkshire has had cash reserves that have averaged about 14 % of firm assets since 1998. He could have swung a lot harder and acknowledged that he should have swung a lot harder. We're all going to judge Greg. I'm going to judge Greg by how hard he leans into opportunity when that comes and it's only going to come in a crisis or a recession. You may get a chance to buy the one-off business, but you're going to do some of it in the stock portfolio. You're going to do some of it buying whole businesses. And as Greg in the letter elaborated on Ted's role, I mean, Ted's running a sizable amount of capital, but I'm certain that they're talking regularly.

35:04The next big opportunity to buy an entire business are to get a big chunk of money at cost. Warren got$36 billion invested in Apple at cost. Ted's role may be running a farm system. I think my guess would be when Greg does an OxyChem deal, one of the folks inside Berkshire he's going to lean on for an opinion is going to be Ted. So Ted's role is beyond just running his little corner of the stock portfolio, but he's looking at deals. If they're looking at buying companies, Greg's going to have more than his own set of eyes on these deals. He'll have folks on the board that have expertise in various industries that he'll rely on.

35:48So Greg's got a Rolodex. He's got his network of managers within the business. And so as he approaches capital allocation, it's not just Greg sitting in an office in Des Moines making decisions, he's got the Berkshire empire at his disposal and Ted's going to wind up being an indispensable part of that. I mean, that's how, if I was running it, that's how I would do it. I think that's how it's evolved. And so I like that commentary because it confirms what I think is probably the right way to tackle the capital allocation levers, which is Greg's role. It's hugely important that he gets it and then he's got the willingness to swing hard when it makes sense to swing hard.

36:28And just because the media tells you, oh my God, this cash pile is out of control. They're too conservative. Now, they're going to do it on Berkshire's terms. And I hope he's the right guy for the job because we're going to get those opportunities. And as you know, it's not easy when you're staring down the barrel of a financial crisis. It's not that easy to pull the trigger. In retrospect, it's always really easy because you can pinpoint how ridiculously low prices were and how great the opportunity was. I think he'll do it, but I'm not going to judge Greg until after the fact. And that may be this year, it may be five years from now, maybe 10 years from now.

37:07I hope it's not 10 years, and I don't think it'll be 10 years because I've got that little section in my letter about the opportunity cost of holding cash. And you will never recover if you're sitting on cash earning 3 % for too long. If you compound stocks linearly at 10%, this is what my table shows. You take$100, it becomes$110. At year one, it becomes$121. At year two, it becomes$259 at year 10. I mean, pretty soon at five or six years, and stocks don't compound linearly, nor does Berkshire, but you get to the point where you've got to have a 30 or 40 or 50 % drawdown to have justified owning the cash.

37:44And so at the next big opportunity, he's got to put$300 billion on the order of$300 billion to work if sufficient opportunity exists. And if you get through a cycle like that in a period and they find they can't do it, that they don't have the opportunities to buy whole companies, there are plenty of places in the stock market to put that capital to work. I mean, there are among the largest cap companies in the world and in the United States, there are some really good businesses that they could buy 10 % of, 15 % of, and that are liquid enough to do it pretty easily, but you got to do it at the right price.

38:18And so I'll judge him harshly. The shareholder community should judge him harshly if he doesn't swing hard at the next big chance. Preston Pysh, It'll be interesting to see when that happens. Chris, I was speaking with your mutual friend, Tobias Carlisle, here the other day, who actually, not that it's super important for the listeners, he was actually the one who introduced us back in the day. And we talked about Berkshire's valuation. For the record, I came up with a very lazy method and$547 per BESIA. I should probably send Toby a message and say, don't listen to me. You should probably just read Chris's letter.

38:56I'm sure he already is doing that and us. He's not listening to me. Anyways, Chris, we talked about Greg Abel's compensation. That was actually the way I wanted to take it. And we talked about how his new compensation as the CEO of$25 million, in a way, was an obscene amount of money, in a way, it wasn't compared to what's the angle? Are you comparing to what others in that position would make? Are you comparing it to the$100 ,000 that Buffett were making before? Then there is the dynamic with how many shares do you have? And there are so many other things to this. And so I wanted to ask you, Chris, what are your thoughts on the compensation package for Greg Abel and which compensation model would you have preferred?

39:38To me, it's the right way to do it. When Greg and Ajit got promoted, moved up, kicked up to vice chair of operations and insurance, they had matching salaries. And I don't remember where they started, but they were$17 million and they were$18 million. and a couple of years ago, they were 20 or 20, I guess, 21. Well, Greg, now that he's CEO, he's 25 million. I don't think that there's no better way to do it. Compensation is a hard thing. He's already rich and he's in his early 60s. I mean, he's at the age where the typical CEO who knows that he or she's going to be in that chair for four years and they're going to get an obscene amount of stock options and restricted shares.

40:23they're highly motivated to get the stock up and then you've got these goofy compensation schemes and different performance hurdles some of which are better aligned with shareholders than others greg's already rich he was paid out for his modest one percent ownership position in berkshire hathaway energy three years ago four years ago whatever it was for 870 million dollars so call it 600 million net attacks. He turned around. And prior to that, I was a little, I wouldn't say concerned. And I don't know how much liquidity he had. And he had that big BHE position that was illiquid, privately owned on paper.

41:05But I think he owned five A shares and just a couple B shares. And so I own more than Greg. And Greg was running around as vice chairman for a bunch of years. And you thought, gosh, you really want to see the CEO or the CEO to be own more of the stock. But when he was paid for his BHE position, he turned around pretty quickly and has cumulatively bought, I don't know,$100 plus million,$110 million at cost of Berkshire, which on a market value basis is pushing$180 or$190 million. And presumably, he's got other equity market investments. I don't think he's going to be a guy that has 30 homes and owns islands.

41:47I mean, he's going to live within his means like Warren has. And so, I don't think there's a performance hurdle that would be suitable other than the fact that Warren trusted him in a role that we hope he's in for a long time. the shareholders trust him. He's got a responsibility to Berkshire and I think he's taken that on very positively. And so, if I were in his shoes, I wouldn't want to disappoint Warren, I wouldn't want to disappoint the board, I wouldn't want to disappoint the shareholders, I wouldn't want to disappoint myself. So, I'm going to exert every ounce of energy that I have. This is me speaking for Greg.

42:24I mean, I'm going to do everything I can to make sure that Berkshire and I are successful over what hopefully is a 20-year run. And he said, I'm not going to get as long of a run as Warren because 1965, Warren was 35 and I'm 62 or 63. But hopefully I get a couple of decades doing this thing. And because he gets the culture and he's not going to put the business in harm's way, there's no return on equity hurdle. There's no hurdle that would wind up being short-term in nature that I think would be an improvement over being paid a sum of money, a good sum of money. It's not outrageous. It's way less than a lot of CEOs make.

43:02It's not a trillion-dollar pay package. And then to turn around and say, yeah, I'm going to buy the stock with all my money is essentially Warren for years and years and years and Charlie making$100 ,000. I don't need the money. I'm already rich. I'm motivated by the responsibility of running Berkshire Hathaway. So I think in Berkshire's case, and it's rare, but they've never given a stock option away to anybody. They have never given a restricted share away. The board is extremely, I mean, silly how little they're paid per board meeting, a few hundred dollars per board meeting. You make a little bit more if you're on the audit committee.

43:39But the board all owns big positions in the stock. And everybody's bought them and paid for them out of pocket. Ajit owns far more than Greg, but he's been around Berkshire since 1986, every share he bought was paid for out of pocket. And so there's an alignment when you reach into your own pocket and chunk down very real capital, your livelihood is driven by how Berkshire does. And you could argue that Ajit's compensation should be tied to how the insurance operation does and Gregg's should have been compensated by how the operating companies do. But no, I mean, they're in it for the entirety of Berkshire.

44:17And there's a benefit to having all of these businesses under the Berkshire umbrella. And so Ajit is approaching his role no differently than Greg, and that's A, maintain the culture, B, never put the business in harm's way, and let's just grow the economic earning power of the business as best we can without subjecting the business to under risk. And so I like the comp structure. You know, I like the comp structure too, Chris. I think that there are a lot of people who might be thinking, shouldn't it be tied to this KPI or that KPI? And I'm going to use a metaphor here that's probably not going to work well.

44:54But we did start our conversation before we hit record talking a bit about the Stones and music. And aside from the Stones, I've been listening to a lot of The Beatles throughout my entire life and probably read too many books about the lyrics. And there's still this interview that Paul McCartney is doing where he's being asked about the meaning of this and that. And he would very often come back to, don't overthink it. In this case, it just rhymed. And so, of course, there are then a lot of other meanings with a lot of other songs. But I don't know if I can necessarily use this metaphor here to talk about the comp structure, because I think for a company like Berkshire Hathaway, there is a lot to be said about, quote unquote, the optimal comp structure, but it really comes down to the integrity of the person.

45:38And I've seen a lot of obscene compensational structures, and we're going to talk more about that later, Chris. But at the end of the day, it really comes down, what I've seen, it comes down to integrity. I've seen some terrible structures that sometimes led to good results, not because of the structure, but because the person who managed that company was just a really, really good person. And I think there's only so much you can do with incentives. And this is not going to be very helpful. I think, and this is my own, I'm not a psychologist by any means, but I think a lot of it comes down to good parenting.

46:11That's my own conclusion. Sometimes it's like, why is this person behaving so well? He probably had good parents. It's definitely not because of this thing here in his compensation. No, he's just an honorable guy, and that's why he's managing that company well. Yeah, there's a lot to integrity and morality, and either you've got it or you don't. And there's no pay package. There's no compensation structure that's going to alter behavior in how you're wired. I think it's unfortunate the way most compensation systems are structured with a modest salary, performance bonus that may or may not have hurdles.

46:49And then you've got longer term and shorter term hurdles on your performance shares, your restricted shares. There's just too much short termism that comes with the way most comp structures are structured. And it's the ones that align properly things like return on capital, where you tend to get better behavior. But you're right, it boils down to the people. So speaking of which, your gentleman famously said, show me the incentive, I'll show the outcome. And of course, there are a lot of caveats to that. But I was looking at your portfolio here the other day, Chris, at least with what is publicly available.

47:25And I was curious, whenever you look across your portfolio, what do you think is the most shareholder-aligned compensation structure and what concerns you the most? And then if I can add another question to that, how much misalignment with shareholders do you tolerate if the underlying business is exceptionally good? So none of these are perfect. You just don't find a comp structure might, oh, that's the gold standard. I found the arc of the covenant. So what I found over my 35 years managing money, reading proxy statements is you just have to get used to tasting a little bit of your vomit. And if it's too much vomit, then you need to move on.

48:06And that's generally when you found somebody that doesn't have the integrity or what have you. It's funny. I love AI for its search capability. And so recently I said, run the Semper 13F, Gemini, I said, run Semper's 13F portfolio and summarize the top 20 holdings by through their proxy statements on how each company's compensation systems work. And I wanted to see how accurate it was. I'll be good. I mean, it was absolutely accurate. I mean, it pulled out my top 20 holdings, US holdings, the ones that we disclose in order and summarize the bonus hurdles, the short-term hurdles, the performance hurdles and it nailed the ones that i think get it right i mean cummins i've i've talked about cummins many many times and how they've got a return on on capital hurdle motivation dollar general has a three-year rolling return on invested capital then they throw in their bonus which uses ebitda which is a terrible way to do it olin does an adjusted cash flow and a return on invested capital they don't have an opportunity set to reinvest in the business So you want to measure the business by its operating cash flow in a cyclical business over time.

49:21The ones that I really struggle with are the ones that are adjusted EBITDA heavy or where you're motivated by sales growth with no tie to profitability. So Starbucks is in the middle of turning around. They've got a new CEO that I like. Couldn't stand the prior one. And I forget the name of the acronym for their program, but they're measuring return, measuring comp based on, back to Starbucks, based on same store sales growth and operating income. Well, there's no tie to the capital earned at each of the stores. Deckers, which we made a big position, they've been a huge growth story and they're compensated based on revenue growth and pre-tax income.

50:06It's suitable for what they do. They don't have an EBITDA structure. They run net cash on the balance sheet. They've never resorted to leverage, so you wouldn't run an EBITDA. But EBITDA, which is above all the lines, if you're motivated by EBITDA and revenue growth, you can put a whole bunch of business on the books and not have any of it make any money. Because if you've got a lot of interest expense and your capital-intensive business and you've got big maintenance capex, you may throw off a lot of EBIT.cash flow, but you may not make any return on capital. And so those structures wind up being pretty poor.

50:41And more often than not, you see it in the way companies make acquisitions and how they deal with their own company shares. And so you've got to be careful with comp and make sure you're not too disaligned, but you almost always taste a little bit of your vomit with everything you own. I love the way you said that. And I'm sure after testing out Jim and I, you went straight out and bought more alphabet stock. No, it's just a bad joke. Chris, I wanted to tie two of my favorite annual letters together here. Of course, your letter and then Buffett's. And specifically, I'm talking about the 1999. And I really like that in such good company, because you're actually one of the people here who would set me straight if I don't quote the right letter, even if it's back in the 90s.

51:26But back then, Warren talked about profit margin, mean reverting. And I guess you could say he was ultimately wrong, but historically correct. And in your recent letter, you point out that, and I've got a quote here from the letter, the S &P 500 now trades for 26 times current earnings against the second highest profit margin in the history of the stock market. That's against all stock markets anywhere in the world, ever. High prices mixed with high margins are typically a recipe for mediocre returns or worse." And so, first of all, very eloquently written, but I wanted to ask you, some would say that we entered a new normal.

52:04And I know it's always painful whenever you say new normal, but some would say that we have entered a new normal. Technology has allowed profit margins to fundamentally be higher due to just new business models. Now, what would you say to them? Robert Leonard Well, I think that's right. Profit margins are durably higher than they were when we were more of a manufacturing-based economy. Warren's 1999 article in Fortune was an amalgamation of a series of speeches that he gave one honoring Ben Graham, I think, at Columbia. But essentially, he was saying we're at a secular peak without saying we're at a secular peak.

52:43And margins and multiples were high. And he noted correctly but ultimately wrongly that margins were range bound and i think he used a range of four percent to six and a half percent and in 99 the profit margin on the sb 500 got up to seven and a half or 7.6 wherever it wound up getting so that was above the historical norm now at a moment they hit 8.9 percent in 1929 but from the point of that secular peak he was right and a high multiple to earnings mid-20s multiple to earnings contracted when margins came back down to 5.8 percent so he was correct where he was wrong and what he didn't see was margins by 2021 growing to 13.3 percent and then falling in 2022 but recovering back to 12.8 percent most recently now of that increase from mid sevens or mid sixes wherever you would have put the prior range, double it to current levels.

53:463 % of the increase has come from lower and lower interest rates, even though rates ran up in the last few years. We still have an extraordinarily high amount of debt on the corporate balance sheet, but the interest rates are so much lower than they were for several decades that the interest burden, the interest expense has been lower. And that contributed three points to profit margin. The tax code at the corporate level for a lot of years was 35%. It changed a handful of years ago to 21%. That added 1 % to the after-tax margin, which I thought would get competed away right away. It did not. But then what you wouldn't have known in 99, and maybe you would have for the Microsofts of the world, the cap light, but Microsoft in 99 was doing a 37 % or 38 % margin on 20 billion of sales.

54:36So they were making$7.5 billion and it didn't take any capital to run that business. And then along came Google and along came the others. And so the profit margins of those businesses, with the exception of the retail side of Amazon, but the AWS side of Amazon, you've got a handful of very, very profitable businesses from a margin standpoint. And so margins double. Now, I do think there's still a mean reverting aspect of margins, But I've seen papers and commentary say that because margins are higher, multiple should be higher. Well, I don't think that's right at all. I mean, if you could argue that returns on capital are durably higher, then I think the multiple on a higher return on capital business should be higher.

55:22But if you look at the return on equity and nuances to how it gets overstated in the current environment based on sherry purchases above book value, based on write-offs and write-downs over time, based on the number of the amount of historical assets that are carried at historical cost in what's been an inflationary period for the last few years, book values are understated, meaning returns on equity are overstated. So I don't think you've had a durably wide, meaning across the whole stock market, across the whole S &P 500, increase in returns on equity. You sure have had it in a handful of tech businesses and other companies.

55:58And I'd say two things, and I've got my five-factor work that we've had in the letter for two or three years, four years maybe, where I take the five variables that make up return, dollar sales growth, change in the share count, the multiple and the margin, which all four of those are multiplicative factors. and then whatever your dividend yield winds up being. To argue that the high current margins coupled with very high multiples, you can bake in scenarios for each of the five variables, and it's really hard to get to more than a 5 % return. And depending on where margins and multiples head from here, you can get to a loss for a decade, which is what happened after the 1999 peak.

56:44Two interesting things. One, when Warren talked at length many times about the tailwind that he enjoyed from growth in real GDP per capita, the United States was the economic engine of the world. That was the case. And real GDP per capita, and I've got a table in the letter that breaks this out by deciles, grew at over 2%, 2.5 % for decade, decade, decade. It wasn't it wasn't the same rate of growth every decade. But when total credit market debt reached 250 % of GDP in 2000, now almost 350%. And in even more recent years, post the financial crisis, the government piece of total credit market debt is now over 100 % of GDP.

57:33At a point, more and more leverage is deleterious to economic growth. It's law of diminishing returns. And so So indeed, for the last 25 years, real GDP per capita is growing 1%, a little bit less than half its rate of growth. And this is adjusting for population growth and for inflation. And I would say if the long-term PE, which was always 15 in the last quarter century, if you take it now over 100 years, it's probably 16 or 17 would be the long-run average PE. Growth is a big component to what you should pay for an asset. faster growing asset warrants a higher PE, lower growing asset, lower PE.

58:13If aggregate growth on a real population adjusted growth in the economy, maybe the long run average is not 17 or 16 or even 15, maybe it's supposed to be 13. And then you take these capitalite businesses that have been just unbelievably successful. The MAG7 were 8 % of the S &P 500 14 or 15 years ago. They're 37 % of the stock market today and they're trading at 30 plus times earnings. They also have very high profit margins on average in the low 20s. Well, my roundtable to Lipomania in the fall, I made the joke, these things are rapidly turning into EBITDA stories, which is incredible because they were net cash on the balance sheet, free cash generating machines that didn't take any capital.

58:59And here you are all of a sudden in this AI arms race. And all of a sudden, increasing proportion of cash flow from operations is going to CapEx. These companies have gone from net cash in some cases to a little bit of net debt. You don't have enough cash flow from operations to support cherry purchases, to support all of the things that companies spend money on if they're going to dedicate this vast amount of money to CapEx. And so when you put CapEx on the balance sheet, regardless of the number of years over which you amortize it for depreciation. You're putting depreciation expense, which largely is maintenance, on the balance sheet.

59:38And now you're putting interest on the balance sheet, which is interest expense. And so all of a sudden, you've got depreciation charges, which are going to grow very rapidly. They will trail the growth in CapEx. So to me, the profit margins of what had been Capilite businesses are not only at risk, but they're far more likely than not to contract over the next period of years. How quickly they contract, I don't know, but they're going to come down. I don't see that there's enough revenue possibility relative to the AI money being spent, the CapEx on AI being spent for chips and data centers and what have you to support current margins.

1:00:18And when you overlay high margins with high multiples, which is what you have at an extreme with those handful of tech businesses, which were properly rewarded for their economic success, and they were properly rewarded with high multiples. I think you're at an inflection point, and you could say it's an inflection point for the S &P 500, but it's probably an inflection point for the most richly valued of this large corner of the S &P 500. So long answer to your question, but Warren was wrong, and I don't think the margin goes back to a range of 4.5 % to 6%. You take margins down from today's 12.8 % to 10%, and you're going to crucify a 26 multiple to earnings.

1:00:59So multiples come in when margins come in. Wall Street investors in general don't like compressing profit margins and they punish the stocks with lower multiples, lower and lower multiples when margins come in. And I think there's a heck of a lot of risk margins for reasons related to the CapEx, but also reasons related to how the economy is structured and competitive forces. So to me, there's a mean reverting, but it's at a higher level. It's at a durably higher level. But I think Warren then was right about the mean reversion. And he would likely, if you put him on the spot, say the same thing today.

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1:05:03Well, Chris, we should continue talking about multiples, but perhaps it's more multiples on revenue more than multiples on profits. You have this wonderful section here in your letter about your contrast, the era of AI with canals, railroads, autos, electric fiber, telecom. It was very thoughtful. And what I would really like to zoom in on is this section here you have about valuing open AI. So that goes back to my initial point about speaking about multiples. And you break down each funding round, and then you ask, what can go wrong? So let me, tongue in cheek, admittedly, Chris, ask you, what can go wrong?

1:05:41Chris Harkin Well, broadly, I touched on it in my comments just recently. The CapEx numbers, even just out of the big hyperscalers, were just shy of$400 billion last year. on$400 billion of CapEx, if you're writing off the asset over 10 years, which is too long, there's a debate over whether it should be three or four years or five or six years. It's not about the debate. You're putting depreciation on the income statement, depreciation expense, and it's a real expense. It's a real charge. If your depreciation schedule linearly on a straight line basis is 10 years, on$400 billion of CapEx, that's$40 billion of depreciation expense.

1:06:21As far as I can tell, aggregate revenues supported on this incremental CapEx are about$30 billion. And now we're going to spend projections of perhaps$3 or more trillion cumulatively over a five or six-year period of time. On$3 trillion to make a 15 % return on the capital that's spent, you need$450 billion in profit. The four big hyperscalers all have cash flow from operations at just over$100 billion dollars and i'm talking incremental profitability required from revenues that are now 30 billion dollars so who knows who winds up winning if there can be a winner i equated ai to past capital cycles capital cycles involve big capital expenditures in the past largely funded by debt the current iteration oddly being funded by these companies that have enormous free cash and cash from operations, which is changing rapidly because those numbers are starting to exceed cash flow from operations.

1:07:25And then you've got peripheral players like OpenAI. And they're all vying to create these models that train first and then infer. But the dollars being spent are incredible. So if you go back over the history of OpenAI, I thought it'd be fun to go through the various of their 16 or 17 funding rounds. And Microsoft came in early with a couple of funding rounds at$11 billion, the valuation at those moments was something like$28 or$29 billion. And so to me, I'm not a venture capitalist, so I would be a terrible venture capitalist because I don't have vision. But if I'm going to put$11 billion in a business, I want to own$11 billion of the capital or the assets.

1:08:06And there may be a lot of growth to come and I get that. And so I'm kind of tongue in cheek about that. But Microsoft was pretty be rational. But then they had these successive funding rounds. And I think cumulatively, OpenAI has raised something like$73 billion by year-end. They're doing a$100 billion funding round at what they hoped was an 830 billion valuation. I think they just did it at 750. But NVIDIA came in with capital, Masa came in, SoftBank came in with capital. And so, here's an entity, SAM A's OpenAI that's raised, call it 73. They've already burned through 50. They're burning through it fast.

1:08:45And the valuation rounds just went higher and higher. So, two years ago, not even two years ago, a year and a half ago, they did one. This is after Microsoft. Microsoft stopped putting money into it. And they negotiated it well because they own the IP. So if OpenAI fails, Microsoft owns OpenAI, chat GPT's AI. So you had a funding round in October of 24, they raised$6.6 billion at$157 billion valuation. $157 is a lot greater than 6.6, but 6.6 would be for a fraction of the business. Then they did one a few months later,$40 billion they raised at a$300 billion valuation. Then they did one just this past October at a$500 billion valuation, but the same$6.6 billion that they collected in the earlier one, insiders were cashing out.

1:09:34So they did a$500 billion valuation and the insider sold$6.6 billion worth of the private company stock. Now they're running out of cash and they're raising another$100 billion. So you and I could build car plants, we can build models if somebody's willing to give us a whole bunch of money. But you ask what could go wrong? Well, the entities that have more resources and that are embedded in more architecture. So Google has essentially committed to outspending everybody. And they've all committed to outspending each other. And most of the CEOs of these companies have said, yeah, we could be making a big mistake, but we can't afford not to do this.

1:10:11But Google's got, they're already their ad-supported platform. Meta, which has their llama free is massively ad supported. Anthropic is just, my understanding is, and there's even an article in this morning's journal, they're just killing open AI with the success in corporate and corporations with their clawed models. And so open AI's share of AI search has dropped from mid 80s to mid 60s, and it's falling fast. You've got regulatory risk. We're going to find out on fair use. The Europeans are very aggressive in this front. And then you've got a lawsuit from Elon when Sam A flipped from, we're going to do this thing as a not-for-profit, which is what he and Elon agreed to at the outset.

1:10:58Elon put, I think,$38 million into this thing. Sam A flipped over a couple different degrees to now a fully for-profit. They're planning on going public. And Elon's suing him. And it's not going to be a lawsuit with an M in front of the aliens. It's not going to be a millions lawsuit. It's going to be a billions lawsuit. So there's opening eye specific. And the guy, Sam, went to high school, same school as my daughter, three quarters of a mile from where I'm sitting right now. I don't cheer against people. But when the guy sits there on a stage a couple of days ago and says, intelligence, we're going to sell it like a utility, like water or electricity, my skin crawls a little bit.

1:11:38And so I don't think they will raise enough money to have the resources to be the one that wins this thing. Maybe they do. Maybe they don't. I don't need to play in the game, but I think it's a tough hurdle, but it's a proxy for it's going to be a tough hurdle for the aggregate of all of these guys in this arms race, because the numbers are just frankly staggering. And I don't see how you've got enough revenue and then profit opportunity to make the whole thing generate a return on capital. Trey Lockerbie, Ph.D.: Yeah. I'll just casually mention that for those of you who are watching the video, that Chris is sure to say Telepomania and the name of his company is Semper Augustus.

1:12:18Trey Lockerbie, Ph.D.: I'm not hinting at anything. I'm just casually mentioning that, Chris. I can't help myself. I should probably preface this by saying that one of the favorite parts of your letters is whenever you talk about share repurchases, and here we're not talking about Berkshire, we're talking about the general stock market. And I have to say this year's letter did not disappoint. So you point out that once reported for 2025, the S &P 500 combined share repurchase has liked to exceed a trillion dollars. That's a T, I just want to say for the record. And so someone tuning in might be thinking, wow, that a trillion dollars has been returned to shareholders.

1:12:51That must be amazing. And over a quarter of a century, companies have spent more than half of their profit. You're buying back shares. I think you made it out to 2.7 % of market cap annually on average. But then you also look at the aggregate share count, it has not botched really. So impressive, but perhaps not the right way of being impressive. Can you, Chris, think of anything regulatory that could change in favor of shareholders? Or do you think that you're basically at its core fighting a losing battle whenever it comes to basic human nature, whenever you're looking at this creature that's being created with share repurchases?

1:13:29I think you're fighting a losing battle. And you've had various congresspeople, senators, representatives talk about banning sherry purchases. Well, there's nothing evil about a sherry purchase. And done intelligently, the way Berkshire's done it over time, the way we like to see our companies do it is there's an acknowledgement that the stock is trading at a discount to fair value and we don't have a better use for the capital. So buy your share price and when it's cheap. If we've got opportunities to make good and great returns on equity or capital doing something else, then we should do that first.

1:14:00And don't do it with leverage and excessively put the company at risk just for the sake of shrinking the share cap. The trillion is interesting because if you do, I don't know where earnings wound up officially once all the companies reported for the fourth quarter, but I think the estimates when I put my letter together were 263 and change per share for the S &P, which is, I don't know, two and a quarter trillion dollars. So a trillion, which is a big number, and it's the first time that number will be a trillion, is 40, whatever, 44, 45 % of net income. Should probably rather look at the repurchases as a percentage of cash flow from operations.

1:14:39But on average, cash from operations is roughly going to match net income. It's materially different for some businesses, but on average, they tend to be pretty close. And so a third or 40 % of profits on average for the last 40 years have gone to share repurchases or of cash from operations. It's staggering to think that over the last quarter. So if you go back to the late 90s, if you go back to the 90s, the share count for the S &P grew dramatically. It grew by something like 40%. Microsoft share count was just growing exponentially because they were getting 6 % or 7 % of the shares per year to their employees, not just the top executives, but everybody was getting shares and they were getting stock options.

1:15:20And it was wonderful as the stock went up because you got an option at 30 bucks a share. Now it was 60 bucks a share, so you doubled against your cost. And Silicon Valley hadn't figured out offsetting dilution with share purchases. And then you had the big market crash and the tech bubble imploded. The S &P dropped 50%. The NASDAQ dropped 80%. There were people that had exercised stock options where the stocks had then declined so much that they had a tax liability that exceeded the value of what their shares were worth. And so they shifted from stock options to a larger preponderance of restricted shares, which are less dilutive because you're not giving away as many shares.

1:16:00There's no option component to it. With a restricted stock, whether it's got a performance quotient to it or not, is basically the value of the stock at the moment you give it away and you earn it over some vesting period with or without some performance hurdle. So you had a period of 15 or 20 years where the issuance of stock to employees, largely executives, largely the top executives, was about 2 % of outstanding shares per year. And then for a bunch of years, they were buying back on average, they being the S &P 500 aggregate of companies were buying back 2.7%. So there was a period of time where they shrunk the share count by seven-tenths of 1 % per year.

1:16:42Then you get periods like the financial crisis where the banks blow up and they have to recapitalize and the share count balloons up. So what you get is a buy high, sell low mentality because most companies aren't price sensitive to their sharey purchases. They're simply trying to offset the dilution that's coming from giving huge dollar amounts of money. I mean, compensation packages that are way higher than Greg's$25 million. And so we've gotten to the point now where there's more need for capital. So since June 2020, the share count's actually risen by 3.3%, which is staggering to me that you can spend a trillion dollars, and the share count still goes up.

1:17:24And now for 25 years, there's no change to the share count. In fact, for 25 years, it's grown by 1.8%. But you're essentially, if 30 to 40 % of what every company makes goes to retire shares, you have not shrunk the share count, who got rich? The executives. And you could say in the case of the shareholder, those repurchases supported the stocks. And that's why we're trading at 26 times earnings today. And that's probably the case. But those were dollars that didn't go into reinvestment in property, plant and equipment or acquisitions. That was money that was spent simply levitating a stock to make executives rich, driving up the stock price to higher and higher levels.

1:18:05And at 26 times earnings, even if you take the MAG-7 out, 22 times earnings for the S &P 493, the sherry purchases have been largely folly because they're not executed the way they should be executed. I don't know what fixes that because if you get the job as CEO when you're 60. and they give you a bunch of stock on the barrelhead because that's what your competitors get and that's what the compensation consultant says you should get. I'm going to get rich by driving the stock price up for four years. And I may be aggressive with my accounting. I may set performance hurdles back to the aligning shareholders that are not aligned.

1:18:42And I don't know how you fix that. I don't think there's any regulatory scheme that can fix it. more likely than not, the action of the stock market and a deep recession, a really deep recession may serve to fix it. But I guarantee you that the proxy voting companies, when they weigh in on governance, don't look at it the right way. They don't look at it this way. Those folks are not aligned with shareholders' best interests. They're aligned with ESG and DEI and all kinds of crazy stuff. Berkshire should be a proxy on how to do it, but it can't be. And I go back to Greg's compensation and him saying I'm going to buy the stock back.

1:19:22He was fortunate to be in a position to be rich when he became CEO. And he got rich because he owned 1 % of BHE. The next CEO is not going to come to the party with a net worth of six or seven or$800 million at the moment he or she becomes CEO. And so, So the compensation of that person needs to be sufficiently high relative to the 1.2 or 3 trillion of assets. And it'll be a larger number depending on how many shares Berkshire buys back over time. But you want the comp to be high enough. So the CEO might need a$25 million salary. I mean, as crazy as it sounds to somebody needs$25 million, that's a reasonable amount of comp to run a business the size of Berkshire Hathaway.

1:20:07We could talk all day about sherry purchases and executive compensation. It's so badly done in so many places that when you find it done reasonably well, it's pretty glorious. Yeah, I like the way you think about it, Chris. It's almost like saying, what is the buff it says about leverage? That if you're smart, you don't need leverage. And if you're not smart, you definitely should not use leverage. And it's sort of like the same thing about if you're not already financial independent And you probably are not the right person to run Berkshire in the first place. But you should also be compensated really well because you have a lot of responsibilities.

1:20:42But it's sort of like this chicken and egg kind of thing. So thank you for your perspective on that. But I'll add to that sherry purchase thing, even though a trillion is a big number, kind of back to the AI and the CapEx spending, those numbers are so big,$650 to$750 billion for the current year. they're going to consume more than all of the cash flow from operations from Microsoft, Meta, Google, Amazon, that there's less capacity to keep buying the stocks back. And so you've seen share repurchases among some of those 20 largest businesses start to decline. And that also, back to the argument about PEs and multiples and what the right numbers are, even though a trillion is a big number, it's shrinking.

1:21:29I've got a chart in the letter that shows repurchases as a percentage market cap going down and down and down. Well, that's partly a function of the prices, the valuations, the PEs going up and up and up. But if fewer dollars are committed to the share repurchase, one of those big supports for stock prices goes away because now the dollars are going into the ground in data centers or into space, which go off on another tangent. So they may not be the supportive salve that the market has had. And so for that, if we keep giving executives 2 % or 3 % of the companies per year, you may see the dilution factor go up and up and up.

1:22:07It's been pretty modest in the last five years, but that could very well increase. And a rising share count is deleterious to the investor's return. It's one of your four multiplicative factors. Preston Pysh, I wanted to end this interview here on a bit more of a philosophical note, perhaps, because I really like how you started your letter by talking a bit about Guy's choice not to manage outside capital and giving his health situation. And of course, what has unfolded is not defeat by any means. It really shows courage and integrity and putting family and clients first, especially whenever it's incredibly difficult.

1:22:48And I should say you're shifting away from Guy and talking about this in general terms, it really makes one think about how none of us are immune to negative health events, and sometimes cognitive decline can be gradual and hard for us to see. And so, as investors, we often talk about the downside protection in businesses that we invest in. But I'm curious to hear how you think about that for Sembra Augustus. And beyond planning for something catastrophic happening, like being hit by a bus metaphorically, what kind of structures and safeguards have you put in place to ensure that if your judgment were to deteriorate slowly, perhaps in a way that's very difficult to self-detect, that you ensure that your clients are fully protected and you would continue to operate with this discipline?

1:23:39And I feel a bit torn about asking your question because I kind of feel like it comes across as very rude. And that's not at all my tension with the question. And I was curious to hear if you thought about it. Well, for those that don't know what you're talking about, Guy Spear, mutual friend of ours, is deep in the Berkshire world as an acolyte. He runs a really nice business called Aquamarine. He's got a very good long-term track record. He's struggling with a pretty bad form of brain cancer. And he had his family join him at one of my dinners in Omaha last year, and he was in recovery. and we thought full remission and thought he was in good shape.

1:24:14And it came back late last year and, you know, praying that he gets through it. He's got a wonderful family, but he made the very, very difficult decision to focus on his health and his family and close his firm and return the capital to his investors. And that's just a brutal thing because I'm sure like Warren and Charlie, like me, I mean, I hope I'm 57 years old and my plan is to go out either in a pine box, like Charlie did 34 days shy of his 100th birthday, or to struggle enough with my vision where I'm having a hard time reading 10Ks at age 95 to pass the baton. So we'll never sell the firm.

1:25:02I hope at 57, I get at least another three decades to do what I'm doing. I love what I do. I've never felt like I were doing this thing. I've got a responsibility to our clients. If I were to get hit by the proverbial bus, institutions are just going to move capital. We've got an obligation to people that have been with us for a long time that entrust us with capital that if I were to not get hit by a bus and to have cognitive decline, and I worry about it because I played football at a high level and had a number of concussions. So, you know, you sit there on a Saturday or Sunday morning and go, geez, I'm drawing a blank on remembering somebody's name.

1:25:39Hopefully that's not the football. Maybe it's that I'm getting older, or maybe it's the fact that I had too much red wine last night on the weekend, some combination of the three. But I think, so business-wise, if something were to happen suddenly, Chad knows the portfolio like the back of his hand. We've got young investment people working with us that are evolving and growing. We have a plan in place to essentially, respectively, with a good friend of mine, merge our operations in the event that I or he running his firm would depart suddenly. So, he's somebody that I'd be very comfortable having my family's capital with and my client's capital with.

1:26:20So, we've got that in place as well. But I think to your point about a slow cognitive decline, we talk about tulipomania. This is my roundtable where I've got 30, 32, really my best friends, colleagues, contemporaries, peers in the investment world that I've gotten over the years. We get together for four days in St. Louis and go through 12 or 13 companies and have a lot of great discussions and eat well and drink well. Between my family and my colleagues and even my clients, many of whom are as much friends now as they are clients. I've got enough people in my universe that would, I believe, would be candid and say, Chris, you know, you're starting to slow down.

1:27:00You need to do something. You need to think about not being, having your finger on the trigger of capital. I'm confident that there are enough people that think enough of me, that know me well enough and that I trust and mutually, there's a mutual trust that I would do the same for them. and I think they would do the same for me. So, without expressly being able to say that with certitude, I've got friends who would say, Chris, you're an idiot. You need to stop. You've got early dementia and you need to focus on family. And I think we're set on that front. I hope it doesn't come to that. I mean, I really do think the pine box, although I may not get 100 years because as Charlie or Warren said a couple of years ago, after Charlie had passed, he noted that, A, having neither of them been athletes, that the non-athletes bodies tend to live longer and you're sitting like, oh my God, I played college football.

1:27:50That just scratches a few years of my life. But then he said, obviously, the women tend to outlive men and noted that in his later years, he was convincing Charlie to do the sex change operation. You know, I could contemplate something like that to add a few years to the runway. Kidding aside, I think between suddenly, How do you go bankrupt, Bill? Well, gradually at first and then suddenly, well, that's either how you go out and either physically go out suddenly or you mentally go out gradually. And I think we've got a pretty good formal and informal structures in place to accommodate either or any combination of the two.

1:28:29I'm very happy to hear that, Chris. And of course, you thought about it. So thank you for your very eloquent response. Chris, before I let you go and give you a handoff to where people can find the letters, the homepage. Is there anything that we haven't covered that we should cover here in our conversation? No. I mean, I think this is great. I'd encourage everybody. I'll tell the story. So we didn't cover it. We didn't get to it. But a couple of years ago, I started off my letter with my story of, I don't know, 10 years ago, I was trading a bunch of messages with Warren and about something different.

1:29:06But I noted that I just calculated that Berkshire could decline by 99.3 % in share price and still have outperformed the S &P 500. And in his correspondence back with the other stuff, he noted, Ben Graham would be proud, but let's not test the math. So there I was a couple of weeks later at Charlie's meeting at Wesco in Pasadena. I said, hey, I came up with this number and ran a buy him and he said, Chris, that's just simple compound interest. That's not impressive. And so, you just slink away and go back to your seat. He just crushed me. So, in going through last year and then I updated this year with better numbers, we were able to calculate market returns, S &P 500 returns from all of the big secular peaks and troughs over the last 100 years.

1:29:56So, 29 peak, 32 troughs, 37, 42, 66 peak, so on and so forth. And it's pretty amazing the differentials of putting capital to work near a secular peak, not even at, but if you do it at a secular peak or at a secular low, the difference in compounding series. And so, I ran the numbers over time and it's amazing how much disparate, how widely disparate that the returns get from the famous Ibbotson 10.5%. But I realized something. So you've read the letter, and maybe you didn't read this part, but there's a section, I think, from pages 94 to 104 that everybody should read because it's my tribute to Warren.

1:30:36I talk about the track record, and there's several things in it. His performance record versus the S &P at the moment he announced his retirement and first weekend in May, there was no trailing one two three four five six seven eight nine ten year return berkshire outperformed in every yearly interval looking backward as of that date which is pretty incredible but on a 99 return so what would be the single best day in the history of the stock market the u.s stock market to put money to work what single day would it be i'll ask you was it just right after the great depression there was this and you were like people think it's this date but it's the other date was that is that the segment you talked about that is okay yeah good june one so s &p 500 june 1 1932 the s &p had fallen 86.2 or 86.4 percent from its peak in 1929 the dow jones which is what you're talking about had fallen 89 and kind of more famously i think it was july 8 1932 that the dow traded at its low But the S &P's low was on June 1, 1932 at$4.40.

1:31:45On the day of the Dow low, it was$4.41. So it was a penny cheaper a month earlier, five weeks earlier. In any event, from that day. So if you could put money to work on that day, would you for a third of a century, and you would have made 15 % per year and change by having bought the low for the next third of a century through September 30, 1964. So compounding at that rate for that long, you turn each hundred dollars into just about$10 ,000. So a hundred bagger in a third of a century. Wow. Would you be willing to lose 99 % of your money on that date? And you know where I'm going with this. September 30, 1964, and put your money in one company's stock for the next 61 years.

1:32:45Well, yes, you would have. Because on that 99 % decline from the measurement period, the beginning of the fiscal year when Warren got control of Berkshire, Berkshire compounded at 19.7 % and grew each$100 to$6.1 million. The S &P could have fallen 99 % from$10 ,000 to$100 and still grow. So during that period where Berkshire grew to$6.1 million at 19.7 % by growing at 10%, the S &P grew from$100 to$45 ,000. So$45 ,000 to get$6.1 million 1 million. And that's how you can fall 99.26 % or whatever it is. But you can do it twice. Because if you do the whole record from the single best moment in the history of the stock market to buy the S &P 500, June 1, 1932, you compounded it 12 point whatever, I think it was 12.1%, maybe it was 12.5%, but you grew$100 to 4.4 million.

1:33:52Berkshire grew$100 to 6.1 million in 33 fewer years. So Berkshire Hathaway on Warren's watch outperformed the S &P 500 over nearly a century, buying the market at the absolute low. And I think, and I said in the letter and we'll see if Warren will agree because he's going to read that part at least, whether Charlie would have been impressed with that. Because even though it's just pure compound interest and pure algebra, seeing the start to tail S &P compounding at 12 and change from$100 to$4.5 million, knowing that Berkshire grew to$6.1 million for each 100 is pretty impressive. And that's the legacy of the track record.

1:34:37And then I've got more of a testament to what he did for teaching and integrity and the way businesses should be run. So there's a 10-page section of the letter that I hope even if you don't like getting into the accounting nuances of conglomerates, there's about a 10-page testament to Warren that's partly track record and partly human record that is pretty fun reading. At least it was fun writing for me. Yeah. And I should probably also say, Chris, because I heard you, and I think you also mentioned this year on the podcast, the people who read your letter, there is a self-selection of those people.

1:35:12And I very often talk with my team about it when they're like, can we really talk about this? Isn't this too niche? And I'm just like, you probably can because there's a self-selection and the people who are not interested, they're just going to drop off and then you're really going to be with kindred spirits. And so to me, whenever people are telling me that they're reading your letter, Chris, I just know they're awesome people. It's that simple. Well, I think there's a quirkiness to people that are listening to your regular podcasts or reading my letters. There's an intellectual curiosity about the investing world that people self-select into listening to you or reading me or listening to us talk once a year.

1:35:47That's probably true. Yeah, that's probably true. I can't help but sneak in one quick question here before that you go. Would Warren read your letter and send you a note each year? What's kind of the relationship how does it work well one of the biggest honors and surprises that i had was geez might have been 2002 i've got the letter hanging in my office but i've i received a letter from warren letting me know that a friend of his and our letters have only been on our website in public since 2000 the 2015 letter so we would send our letters just to our clients and to my 30 or 40 quirky friends, right?

1:36:26Somehow my letter made its way to him and he wrote that somebody, a friend of mine sent me, a friend of mine, I'm talking Warren now, a friend of mine being Warren, sent me a copy of your January 1, 1999 letter, which I thoroughly enjoyed. And if you'd have any of your prior letters, please send them my way and any future letters, I'd love to read anything you write. And so, he's been reading my letters and we have some back and forth and over the years but so I mean I write the thing at a level where I know Warren's gonna read it I also know my clients are gonna read it some of whom are more sophisticated than others I also know students are gonna read it and learn from it so I try to write to a myriad audience that have different levels of sophistication but I always put a reasonable amount of effort into it knowing that he is looking at it every year.

1:37:15Trey Lockerbie, What a motivation to have. I also can't help but talk about this labor of love that it really is. It seems to me like there is this ethos in the value investing community. It probably comes all the way from Benjamin Graham, where even though you don't have to, you're supposed to help the next generation. It's part of the honor code for a lot of better words. Trey Lockerbie, I'm really happy that you're helping the value investing as much as you are, Chris. So thank you for your service to the value investing community. I don't know if I'm in the position where I can thank you on behalf of the value investing community, but I truly believe that you're doing a massive service to all of us.

1:37:52So thank you for that. Well, you're nice to say that, and I appreciate that. It means more than you'll know. As I said in my trivia to Warren, he didn't have to teach. I mean, the archive of the Berkshire letters, The older letters were Warren teaching about executive compensation and disciplined underwriting and nuances on accounting. And he didn't have to do that. He could have just written a quick three-page letter about the subsidiary and dotted the I's and crossed the T's, but he taught. And then he entertained students and he would speak on campuses. In later years, he would have large groups of students come visit.

1:38:27And so I'm fortunate and blessed that, I don't know, seven, eight, nine, 10 times, there's no consistency to it, but I find myself being asked to speak on college campuses. I've been at Notre Dame every year for the last several years. I've spoken at Columbia a bunch of times in New York. I've spoken in my son's investment principles, Warren Buffett class, which my friend Harvey Eisen put up the money for and tried to get Warren to fly down to attend my talk and have dinner the night before. This was just last year. And not because Warren did it and not because he had to teach, but his mentor, Ben Graham, was such an important figure for him.

1:39:07Warren and Charlie have been such important for us as Berkshire acolytes that what little that I've learned over time, I take immense joy in being able to share. And when young investors or students, I find they're reading the letter, it's pretty gratifying. And I'll never be as great of a teacher as Warren, but what little I know, I'm happy to share. And I do it with more verbosity, for sure. I've been trying to get, I even told Warren, I've been trying to shrink the letter. I told him a few years ago, I was going to shrink it by 2.6 pages a year so that when I was his age, which was then 91, we'd have matching length letters.

1:39:44and he wrote back and said uh you're gonna have to recalibrate because when you read my letter a few days after your release yours you're gonna see it's the shortest one that i've ever written and i've done nothing a while i tried to cut 35 pages of my some of the parts intrinsic value commentary out and a couple friends said chris it's your letter just do it people that think the letter is too wrong anyway they're gonna think it's too long whether you write 50 pages or 180 whatever it was this year so you know it's funny you should mention because i do remember that you mentioned that in the past, he wanted to make it shorter.

1:40:15And then it was like 182 pages, and then we still have some appendix. That was completely unintended. I'm going to commit to you now, Stig, this will be the secular peak of the Semper letter. Okay. Well said. Chris, I won't take up more of your time. Thank you. I just want to say, it's been absolutely amazing, as it always is this time of year that we get to talk about your letter, Berkshire, the stock market. The price is absolutely right whenever it comes to a wonderful, wonderful letter. It's completely free. Where can people find it? Well, you get what you pay for. They're all on the website, SemperAugustis.com.

1:40:54We've got the archives of the letters and a bunch of the podcasts that I've done in recent years, various interviews, some of the stuff with Kate Welling. But as soon as you drop this, we'll have it posted and we'll keep it up. So we've got the archive of the letters, and then a separate tab for interviews and podcasts. And I'm still on Twitter, though, less. In fact, during the letter writing process this year, my Twitter account got hacked. My X account got hacked. Some cryptocurrency group, I got a notice. I was working on the letter and I got a notice saying. So somebody's logged in from an unfamiliar device, changed your password.

1:41:29And by the time I saw that 30 minutes later, my password had been changed. I couldn't get into the account. and in short order there was a solana based outfit that was sending out messages using my user profile and it was it was a process to try to get the service people at x to fix the problem which they finally did but it took a couple weeks and way more man hours and energy on semper's end to try to recover that than we wanted so i'm there but i don't post as much on the site i usually when something material happens at Berkshire, I talk about it and I still have fun. But I only look at my Twitter account, my ex account, once every week or two now.

1:42:11Okay. Wow. That must be a scary experience. And I also just want to say for the record, if anyone named Chris Broomstein are trying to sell me Solana coins, I don't think it's you. You can take that as a compliment. Rest assured it's not. All right. Thank you so much for your time, Chris. Thanks, Dick. This was great. Always fun talking to you. Thanks for listening to TIP. Follow The Investor's Podcast on your favorite podcast app and visit theinvestorspodcast.com for show notes and educational resources. This podcast is for informational and entertainment purposes only and does not provide financial, investment, tax or legal advice.

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