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Transcript
So please take your seats. We're going to finish at 3, so the sooner we start, the sooner Morchez will have to talk about various questions you may have. I'd just like to follow on, however, with that film we showed just before we left for lunch, because it says something about Berkshire.
There are, you know, all kinds of public companies and wealthy public companies throughout America.
And there are certainly cases where in one family, somebody has made a very large amount of money and is devoting it funding. And that could be philanthropy or much of it to philanthropy, such as the Walton family would be the number one thing in Walmart.
And certainly Bill did the same thing, Bill Gates did the same thing at Microsoft. But what is unusual about Berkshire is that a very significant number of Berkshire shareholders, located all over the United States, the audience. The number of Berkshire holders who have contributed $100 million or more to their local charities, usually with people not knowing about it, I think is many multiples of any other public company in the country. It's not more multiples than, you know, Bill's put a whole lot into philanthropy.
And I don't know the details of the family, but clearly there's a huge sum of money that the Wal-Mart family, I'm sure, has done all kinds of things philanthropic and will continue to do it. But I don't think you'll find any competition. There's a company where a group of shareholders who aren't related to each other, so many of them have done something along the lines of what Ruth did a few weeks ago, just to exchange a little piece of paper that they've held for five decades. And they've lived well themselves. They haven't denied their family anything.
you are ready own decisions in the future. I I had the stock from Ruth, so, and I guess we were actually buying it from the school at that point, because he'd just given them the — and so the transaction was with them. But Mark Millard and our office bought $1 billion from them. But he also bought $500 million worth of stock from somebody else that nobody will ever have heard of. and in a different state, and won't elaborate beyond that, but we have had a very significant number of people, and there's more to come. And obviously, they had to be people that came in early, or their parents did, or their grandparents did, but they've all lived good lives. They haven't denied themselves anything, I mean, you know, and they have second homes, and they, but they generally, well, in fact, I would say almost universally, they, people knew them in the community and everything, but they've used what they accomplished, what they saved. They denied themselves consumption themselves, that's what savings are, is consumption deferred. And they, you know. And they've given, they've financed everything all over the country, and usually they like to do it anonymously. I outed my sister when I wrote about her in the annual report, but Bertie's here today, and I told her she should wear a t-shirt or something, said no solicitors allowed or something, but they just do it. And, And, uh, it's really, uh, both Charlie and I thought, it's really, uh, it's really fun to work for a group of people like that, rather than for index funds or for, for, uh, hedge funds or whatever it may be. I mean, the, the, you're just seeing what people actually, it, it sort of restares, restores. Or, uh. Uh, your faith in humanity that people defer their own consumption within a family for decades and decades. And then they can do something like enable, uh, I think it may end up being 150 people to pursue different lives and talented people and diverse people, uh, to become a dream of being a, a doctor. And, uh. And that'll have to incur incredible loss. Uh, some people will have to do it, or whatever may be the case. There's a million different examples. And I want you to know that, uh, that, uh, you're very, you're very, uh, well, you're a unique actually group of, of, shareholders among public companies as far as I know in terms of the way you've deferred your own consumption while living fine. To help other people. And, you know, it takes a lot of years, but it can really amount to something very substantial. What Ruth did was, you know, at roughly my age, she looked at a little piece of paper which actually was a claim check on the output of others in the future, and she said instead of the output being for her, that the output would be for a continuing stream of people for decades and decades and decades to come that were having a different life in the pursuit of becoming doctors than they otherwise would have. And Berkshire has been — course, her husband, Sandy, contributed substantially to Berkshire's — Berkshire's record. Sandy was a wonderful partner to have, so he — it was both input by him and then there was deferred consumption by his family, and then there was ultimately this final gift to Albert Einstein. And like I said the same day, it was only 500 million, it'll go in a different way. But it's happening. It's all over, and I don't think any company is like that. So I just want to tell you that it's inspiring to work for Gruber Schauer.
All right, the next question comes from Slavin Vukobrat. As CEO, will Mr. Abel be in charge of the portfolio of common stocks that Mr. Buffett has been managing, or will this function be exercised by Mr. Combs and Mr. Weschler? As investing could be defined as the discipline of relative selection. Yeah. Can major capital allocation decisions, such as large acquisitions, be separated from the common stock selection process?
Yeah, I would say that decision actually will be made when I'm not around, and I may try and come back and haunt them if they do it differently.
But I'm not sure that Ouija board or anything will get that job done. So that job — I'll never know the answer on whether it'll get covered, but I feel very comfortable about the fact that it will. It will be made by a board that — they've got loads of brainpower, they've got a dedication to an unusual institution, and they will figure things out. But I would say that if I were on that board and were making the decision, I would probably, knowing Greg. Yeah. I would just leave the capital allocation to Greg. And he understands businesses extremely well. And if you understand businesses, you understand common stocks. I mean, if you really know how business works, you are — you are a business. You are an investment manager. How much you manage, maybe just your own funds or maybe other people. And if you really are primarily interested in getting assets under management, which is where the money is, you know, you don't really have to understand that sort of thing. But that's not the case with Ted or Todd, obviously. But I think the responsibility ought to be entirely yours. With Greg, the responsibility has been with me, and I've farmed out some of it. And I used to think differently about how that would be handled. But I think the responsibility should be that of the CEO. And whatever that CEO decides may be helpful in effectuating that responsibility, that's up to him or her to decide. At the time, they're running the money. But — so I would say that my thinking on that has developed to some extent. As the sums have grown so large at Berkshire, and we do not want to try and have, you 200 people around that are managing a billion each, it just doesn't work, and I think that when you're handling the sums that we will have — You've got to think very strategically about how to do very big things. And I think Greg is capable of doing that. I think missed a lot of stuff in the past, so I'm actually wiser about doing that now. But I — you know, I would do it better this time around in 2008 and 2009 if something akin to that happened. But it won't be exactly like 2008 or 2009, you can be sure of that. But you also can say that there will be times when having huge sums available extremely quickly — maybe it'll be once every five years, and it'll probably be more like once every 10 years or something. But the way — as the world gets more sophisticated, complicated, and intertwined, more can go wrong. And there's no sense going through here and exploring the possibilities of the different things that could happen. But you would — do want to be able to act when it happens, and I think the chief executive should be somebody that can weigh buying businesses, buying stocks, doing all kinds of things that might come up at a time when nobody else is willing to move. It wasn't the day. The people didn't have money in 2008. It's that they were paralyzed. And we did have the advantage of having some capital and a willingness to — an eagerness even to act. And a government that, in effect, looked at us as an asset instead of a liability. And I think that all of those qualities will be — Even more important as our capital pile grows. So I think Greg may have even more fun than I had in a period when extraordinary things were happening, and we were the logical place to go.
You never know whether it'll be next week, next year, next decade, but you won't be — you know, I mean, it won't be a century from now, that is for sure. And the more intertwined and sophisticated the world financial situation gets, the more vulnerable it gets in a certain sense. It solves a lot of small problems, but it leaves it more vulnerable to large problems.
Sorry, I'm not directly answering the question. I think there's — one important thing is, I think as we go through any transition, it's important to know that the capital allocation principles that Berkshire lives by today will continue to survive on. And I think that's what — the thing I'd want to communicate that we'll — we have our operating businesses, insurance, non-insurance, we're going to cap — we'll provide them the capital necessary to be successful and grow if it's appropriate, at the same time we're expecting a return of capital. of Audio
10 years from now, and is the capital we originally put in at exponential risk, or where does that risk sit, that profile? And then, of course, and then we'll obviously have our, continue to always put excess cash in the safest investment there is in U.S. Treasuries, knowing we want to maintain that fortress of a balance sheet for two reasons. One, to act, but also to always protect our shareholders. If we have a, we want to maintain the position Berkshire is in now, realistically, for the, to ensure it, to ensure it endures.
Well, when he says that, it makes me wish I'd stayed around to be number two instead of number one in this process over the years. It's, you know, it doesn't get more fun than what we, what we're doing, and we're better positioned than ever before. We're not positioned, though, however, to earn extraordinary returns versus what American business generally earns, and it, as I'm, you know, I would, I would hope we could be slightly better, but nobody's going to be dramatically better in some, you know, over the next century, it gets very hard to, it gets very hard to predict who the winner will be. And, and if you look back, as we did a few meetings ago, as the, the top 20 companies in the world at 10-year intervals, you realize the game isn't quite as easy as, as it looks. But getting a decent result actually is reasonably, should be reasonably easy if you just don't get talked out of doing what, you know, that hasn't worked in the past. Right. And don't get carried away with fads, and don't, don't listen to people who have different interests in, in mind than the, the interests of our shareholders. Okay, we'll go to station number one.
Hello, Mr. Buffett. My name is Tomo Dröge. I'm from Düsseldorf, Germany, and this is my first time out here in Omaha, so thank you for having us here today. So my question is directed to you, Mr. Buffett. And Mr. Abel, in 2019, you reportedly made a bid for the IT distribution business, TechData, and commented that you understand its role as a middleman. I wonder if you could kindly elaborate on the criteria you look at when evaluating IT distribution businesses like TechData and their competitive position. Thank you.
Well, we had some experience with distribution. We had some experience with distribution businesses, and we know their potential to a degree and their limitations, and Greg, you were involved in that more than I was. So that, I mean, that was a case where there had been a bid made, and there was a go-shop provision. Right. And I think the management probably would have preferred that we buy it, and, and when we went in with a better bid, the original party raised their bid, and, and, you know, we never make the same offer twice. So Greg, tell them about it. Yeah.
Yeah. So, absolutely. In 2019, we saw TechData as a unique opportunity when we saw the other bid and, and the underlying value of that distribution business. We did, Warren Warren and I were talking, and others made the conclusion we should talk to management. We talked to the team. They were very interested in Berkshire being their long-term owner. And we still saw good value in the, you know, the distribution business. We, in the opportunity, and we had a good understanding of distribution businesses. We have TTI. It's not exactly identical to TechData in that they're very specific to the, who their customers are and who they serve and supply, and who they purchase from, because on a distribution side it's important to have that input coming in from, from folks who want their product, and you know it's needed on the other side that there's demand for it. And they had a, they had an excellent model. If you think of TTI, for example, that Warren's talked about Paul many times and the person who founded this business, but, but it's a unique business in that our revenues on that business is approximately $10 billion. The average part they sell is a little over nine cents, 95 billion parts go through their warehouse. . It's a unique business. It's a unique business every year. But it's a model that if you have the right people on both sides of the equation and you understand that well, there's, there's a unique opportunity there. And, and that is something we saw in, in TechData and, and as Warren highlighted, we made our bid. Unfortunately, it was then taught by the original bidder and we moved on, but we, we thought very highly of it. Warren?
We've probably seen at least five of them. . We've seen so many of them. In aggregate, that, uh, over the last three or four or five years. Uh. It's not a business you can dream about because, uh, uh, it's a, it's a decent business. But uh, for example, many of the items that the manufacturer just, they don't want to tie up their capital. You tie up, if you have, you know, a million plus SKUs is the goal of stock giving it's,
You're serving a purpose to a degree, but you don't really, it isn't your product, in effect. I mean, you're just a good system for the producer of the equipment to get it to the end user, without tying up a lot of capital. Right. Being in a business they don't want to be in, and so we understand.
But there's no magic to it. There was a — with TTI, you had a marvelous man running things, and he — when you get a marvelous person running something, to some extent, that's selection for better people underneath. Greg and I went to Paul Andrews' funeral a few years ago, and there were 300 people or so there, and there wasn't one person that had to say something particularly nice but stretched a little bit about the deceased. I mean, everybody — Paul Andrews was the real McCoy, and he was an amazing man, and he behaved wonderfully. I mean, he was a great man. I mean, he wanted to do more for Berkshire than Berkshire would do for him. I mean, it was very — and you run into those people — as I say, you run into people that bend over backwards for us, and then some bend over forwards. But that's just the way it is in this world.
we've had — we've had quite a few that have bent over backwards for us, and
the distribution business is not a wonderful business. But it is a business, and it's a business that, if it's big enough, it's one we would look at and we would buy additional. And TTI makes some small acquisitions on its own all the time. I don't even — I don't even hear about them until I read the quarterly reports. And so we want to build up want to build our businesses in every area that we operate. And we've got unlimited capital to do it. So we want capital to do it. We're willing to have small acquisitions take place if they fit in with something we already have. But we're not in the business of going out after small acquisitions. And if we did, we would — we just don't have the people for it. And it wouldn't move the needle anyway at Berkshire, so we may or — would have been happy doing the deal that the questioner asked about. But if we don't do it — You know, it just doesn't make that much difference. We want to do it. If we do it, we'll do it well. We'll do it right. They'll have made the right decision. If they don't, you know, we will find something else to do with the money in the end. And we can always buy a little more of TTI for you, the shareholders, by just buying in our stock, too.
All right. Warren, earlier you talked about selling some of the Apple shares in order to build up your cash supply. And I think it's had a lot of people wondering where you see opportunities or what might be coming or market valuation. So I'll ask this question from Foster Taylor. At the 1999 annual meeting, you mentioned that if you owned all of America's 500 businesses, you would be making $334 billion while paying $10.5 trillion. You emphasized that this was not a good return on investment. Today, by my math, the S&P 500 has a market capitalization of around $44 trillion with profits of around $1.45 trillion. This is a very similar return on investment to the 1999 levels. Do you see similarities in the market today and the 1999 levels?
Well, one thing has changed dramatically from, well, from 1990. I misunderstood you on the 1999 level. But there have been times in my life that I've been awash in so many opportunities that I could have invested everything by nightfall. And then there's other times when the year goes—well, not in the early days. But now, we just—we haven't seen anything that makes sense, that moves the needle. Now, we've made small acquisitions during the year. Our companies have made. We've made acquisitions. And we—you know, Greg and I may talk about something that involves a $300 million purchase or something like that. And, you know, if it fits well enough, we do it.
But—and if our managers see things that fit them, we want to look at them because our managers do not have necessarily the same equations in mind that we do. But there's some managers which we would have to give— just say, you know, whatever you decide to do. And then there's other managers that wouldn't—that would not know how to allocate capital particularly. And that—they don't have to be able to be great capital allocators if they happen to be great at serving customers and understand their own industry and all of that. You know, they can be great managers. And a good many of them aren't capital allocators, and others are.
But the—this is not— is not a time when—when the phone is going to be ringing often. But there are times when—and Greg will know how to handle them as well or better than I have over time. And Charlie and I would—you know, we missed a lot of things. And what we really regretted was missing something that out to be very big. We never—we never worried about money. We were missing something that we didn't understand. I mean, you know, why—why should we be—be able to, you know, predict the future of every business any more than we can predict, you know, what—what wheat yields are likely to be in Illinois next year? Well, not wheat in Illinois, wheat in Kansas, but corn in Illinois. So I wouldn't—I don't really think of whether it's similar to 1999, because I'm not that good on chronology anyway. Unless something really dramatic happened at the time. I mean, I remember things from 2008 and 2009 much better than I remember whether something happened in 2015 or 1987 or— well, 1987 I remember because of October 19th.
But—but I'm—I just don't think—I don't think that way. I just look at what I can do every day. Greg?
My name is Stefan Uhrenbacher. I am a shareholder from Hamburg—Hamburg, Germany. I've been coming to Omaha since 2007. And I'm deeply grateful for all the things I could learn here, both about investing and about life, and particularly creating circumstances that will enable me to lead a productive life during my entire healthy lifespan. So thank you for that. My question—my question to Warren. Your favorite holding period is forever. Holding American Express, or Coca-Cola, for decades. Berkshire recently went in and out of Markel, and you, I believe, sold and later bought Oxy, which I think happens to everyone all the time. But can you maybe, to us, give examples of your thought process when you exit positions? Thank you.
Well, there are various reasons for exiting positions. One is if you need the money, but that doesn't happen very often with us. But it used to happen on every decision I made when I started when I was 20 years old, which I consider the post-Graham period, although I actually started in 1942, if you just talk about buying stocks. But in any event,
is really quite interesting in a certain way, because it—we made—Charlie and I made decisions extremely fast, but in effect, after years of thinking about the parameters that would enable us to make the quick decision, one that presented itself. And people have speculated on, on how I've decided to really put a lot of money into Apple. And for a reason I can't— one thing that Charlie and I both learned a lot about was consumer behavior. That didn't mean we thought we could run a furniture store or anything else, but we did learn a lot when we bought a furniture chain in Baltimore, and we quickly realized that it was a mistake. But having made that mistake made us smarter about actually thinking through what the capital allocation process would be and how people were likely to behave in the future with department stores and all kinds of things that we wouldn't have really focused on. So we learned something about consumer behavior from that. We didn't learn how to run a department store. Now, the next one was See's Candy. And See's Candy was also a study of consumer behavior. We didn't know how to make candy. You know, we didn't— there were all kinds of things we didn't know. But we've learned more about consumer behavior as we go along. And that sort of background, in a very general way, led up to the study of consumer behavior in terms of Apple's products. And in that case, while I watched what was happening at the furniture mart in terms of people leaving the store, even though we were selling Apple at a price where we weren't even making any money, but it was just so popular that if we didn't have it, people left the store and went to Best Buy or someplace. And if you know the Blumpkins, they can't stand anybody leaving the store, so they behave accordingly. But then you learned— that had the interest in the brand. And then you had the— a million different inputs. But think the psychologists call this apperceptive mass. But there is something that comes along that takes a whole bunch of observations that you've made and knowledge you have and then crystallizes your thinking into action, big action in the case of Apple. And there actually is something which— I don't mean to be mysterious, but I really can't talk about, but it was perfectly legal. I'm sure of that. But it just happened to be something that entered the picture that took all the other observations and I guess my mind reached what they call apperceptive mass, which I really don't know anything about. But I've— I know the phenomenon when I experience it. And that is— we saw something that I felt was, well, enormously underpriced. Maybe I've used this example before. But if you talk to most people, if they have an iPhone and they have a second car, the second car costs them $30,000 or $35,000, and they were told that they never could have the iPhone again or they could never have the second car again, they would give up the second car. But the second car cost them 20 times what the iPhone did. So now people don't think about their purchases that way, but I think about their behavior. And so we just decide without knowing— I don't know. There may be some little guy inside the iPhone or something. I have no idea how it works. But I also know what it means. I know what it means to people. And I know how they use it. And I think I know enough about consumer behavior to know that it's one of the great products, maybe the greatest product of all time. And the value it offers is incredible. And I think it has— and Tim Cook, I think it has somebody that, in his own way, is the equivalent of a partner with Steve Jobs that could do one thing extraordinarily well and more than one application. But one thing— and Tim was the perfect partner and served sequentially with him. So it's—
you sort of know it when you see it. I actually saw it with GEICO when I went there. I went there in 1950. I didn't know exactly what I was seeing. Lorimer Davidson, on a Saturday in four hours, taught me enough about what— I understood what auto insurance was, and I knew what a car was, and I knew what people went through people's minds. You know, I knew they didn't like to buy it, but I knew they couldn't drive without it. So that was pretty interesting. And then— but he filled in all the blanks in my mind as I sat there on that Saturday afternoon. And, you know, every now and then it happens, you know. Why do you have this? The person you met, you know, there are all these— all these different potential spouses in the room, and then something happens that you decide that this is the one for you, you know. I think, was it Rodgers and Hammerstein that some Enchanted Evening wrote about that? Well, our idea of Enchanted Evening is to come up with a business. Charlie and me. And there is an aspect of knowing a whole lot and having a whole lot of experiences and then seeing something that turns on the light bulb. And that will continue to happen, and I hope it happens a few times to you, but you can't make it happen tomorrow, but you can prepare yourself for it happening tomorrow, and it will happen sometimes.
Hey, Warren. He mentioned Oxy, which I think is a great example where you made the original decision basically on a weekend with some thought, but as the more you learned about Oxy and the asset position they had, their ability to operate in an exceptional manner and then a strong CEO around capital allocation, I think your confidence, which was reflected in continuing to acquire more shares, is sort of that type of process. Yeah. Yeah.
It's exactly to the point. I mean, I just learned more as I went along. I learned enough. You know, I'd never... I'd heard of Occidental Petroleum. Occidental Petroleum happens to have been a descendant, not a descendant, but a continuation of City Service, which was the first stock I bought. And, of course,
I knew a lot about the oil and gas business, but I didn't know anything about geology. And so I knew the economics of it. I had a lot of various things stored in my mind about the business, but I never heard of Vicki until, I guess it was Friday or Saturday, and we met on Sunday morning and we made a deal. But that was one sort of deal. And then as time passed, all the kinds of different events happened, and, you know, Icon came in. I mean, there are a million things you couldn't predict at the start. And I formed certain opinions as I went along, but then, A, learned more as I went along. And then at a point when I heard an investor call that Vicki was on,
put things together for me in a way. It didn't mean I knew I had a sure thing or anything like that. I don't know what the price of oil is going to be next year. But I knew that it was something to act on, and so we did. And we're very happy we did, and we still don't know what the price of oil is going to be next year. Nobody does. But I think the odds are very good that it was, but not a cinch, that it was a good decision. And, you we've got options to buy more stock. And, you know, when we get through with it,
it could be a worthwhile investment for Berkshire. And we're in it. And we're in it for keeps.
Oh, incidentally, I should just throw this out there, since there's been speculation on it. We've sold all. A, I was 100 percent responsible for the Paramount decision. I read speculation that either Ted or Todd had some involvement in that. No, it was 100 percent my decision. And we've sold it all, and we lost quite a bit of money. And that happens in this business, too. But actually, owning Paramount made me think even further.
I like to think deeper, but I certainly want harder even about the whole question of what people do with their leisure time and, you know, what the governing principles are of running an entertainment business of any sort, whether it's sports or movies or whatever it might be. And I think I'm smarter now than I was a couple years ago. But I also think I'm poorer because I acquired the knowledge in the manner I did. But I just want to be very clear that A, we lost money on Paramount, and B, I did it all by myself, folks.
I don't know whether I've anticipated one of Becky's questions now, but we will... We will find out. Let's see. Yeah, you're next, Becky.
Yes, you did anticipate one of the questions. Let's go to another one. This question comes from Vincent James in Munich, Germany. In the chairman's letter, Warren points out that the profit margins for BNSF have slipped relative to all five other railroads. However, Warren comments in the letter, BNSF carries more freight and spends more on capital gains and capital expenditures than any of the other five major railroads and has a vast service territory second to none. Given the comments from Warren about the clear strengths of BNSF, what explains the decline in revenue and profit, and in particular, the profit margins relative to the other five railroads? What are the issues relative to the other railroads and what is being done to address them? Please be specific.
Greg wants to say, but Greg is... It's Greg's responsibility, it is my responsibility for the purchase and for the operation up till Greg took over, but I think I'll let Greg answer that. Sure.
Yeah, the... Warren touched on it in the comments from the... As reflected there are very accurate. If you look at this quarter's results or our last year's results, they were both... They're disappointing as shareholders and disappointing in the... Relative to the other class one railroads and as highlighted in the question, there's five other class one railroads, so it's pretty easy to understand how you're performing versus the others and there's a lot of other variables, but there's some very simple things to look at. When we look at where we've been on... With associated with Burlington, I would just back up a little bit because if you go back to 2021, the Burlington team and management team and the group, we're making excellent progress on a lot of fronts when it comes to our operating and both being efficient and effective in how we're operating the railroad. And I remember very specifically some of the comments from myself in 2022 where I commented that that was the year there was all the supply chain issues, a lot going on in the West Coast ports, our trains were backed up in a variety of places, and we called that a reset year. And I think we did need a reset year on the operational side, but as we moved into 23,
the business cost level, cost structure, we didn't reset it to the underlying demand we were seeing. We anticipated more demand and we did not reset our cost structure. And the team's working very hard as we speak to to both reset the cost structure and allocate the cost resources where they need to be. And when you go through something like that, what we've recognized as an organization, yes, the demand of the rail will drive a certain amount of the cost, but the reality is that the rail industry, if you go back many, many years, it's flat. There's not a lot of growth in the industry. There's opportunities to become more efficient, effective, and our margins can go up, but the reality is the demand's going to be flat, but it does move within different sectors of the rail. It can be in the consumer products, it can be in industrial, it can be in ag, but overall it's generally going to be relatively flat. So we need to get our cost structure right and we need to get it right both for the coming year but for the long term. And that means it's going to be a continuous exercise. We can't stop. We can't say we've gotten far enough because our competitors, and we compete with the other rails, but we also do compete with the truck industry. We have to have a cost structure that allows us to compete both within our rail industry and within the transportation sector as a whole. So the team at Burlington's working very hard to address the cost structure just like we have in the past. I think one thing we do recognize when the other railroads have implemented precision scheduled railroading, there's other metrics that we have to continue to pay attention to and challenge ourselves. If we're not at their level, what are the things that are driving it? So we're going to, when they ask for specifics, I'll give you a few. We have to look at our rail yards and understand how we're managing that. We have to look at our locomotive fleet, both the size and how we're utilizing that, and challenge ourselves. And we have to then go back to how we're using our employee resources and allocating them across the business. So there's a lot to be done there. Our team's 100% committed to driving to the right cost structure that's consistent with the underlying demand in the business. And then we can't stop there, is the answer. So a lot to be done, but we have a team that's absolutely engaged and committed to it and we're going to make good progress in this current year.
At Berkshire, we want everybody to have the idea that there's a lot to be done with every business. You know, so it is, know, we, a fellow named Pete Kiewit built a remarkable company in Omaha, a building company, really remarkable. And there's a question after everything they did, something that was done particularly well, you know, digging a tunnel under the East River or something when it said it couldn't be done. He would say he would be, he was pleased but not satisfied. And that is exactly the way we want the attitude to be. We want the attitude to be at Berkshire forever. Omaha is a railroad town. If President Lincoln in 1862, I think it was, had decided to pick St. Joe or Plattsmouth or any place else to build the transcontinental railroad, Omaha would probably be a little town of 20,000 or something on the banks of Missouri. But making, with Lincoln's desire to make this the, the eastern, eastern connection, make a transcontinental railroad, Omaha just took off. So it's been, it's been, it's been railroading at its base. The, you know, and anybody that was interested in financial matters had to think about railroads. Plus they had a certain glamour to them anyway. But the interesting thing is that, UP, which is our main competitor,
themselves fell way behind 20 or 25 years ago before Jim, before Jim Young came in. And in 2000, whenever it was, eight or so, I started buying three railroad stocks in, in the Union Pacific, BNSF, and, and Norfolk Western, I believe. I don't know why I wasn't buying C&O, but in any event,
Jim Young had done a marvelous job with being, with Union Pacific. So we, we owned all three stocks. But what we did in 2009 is we were able, well, we already owned 22% of it, but overall it was $35 million, a billion dollars, which was a significant part of our capital. We were able to put it to work in a, in a business we liked. And, we, there's certain tax advantages that come in terms of making money in something that's more than 80% owned, we call it 100% owned in this case, versus making it through stocks. So, it has a, a net benefit to us from making the same amount of money owning one of the other railroads. By owning all of the railroads, and we got $35 billion out during a recessionary period, I think that was the worst quarter, the third quarter of 2009, maybe the rails it had for a long time. So it's, it's worked out, actually it's worked out very well, but it's because we, we were putting out capital in 2008 and 9, and if we put, money in anything, we'd have made a lot of money. But, it's more satisfying, and it's actually better in certain ways tax-wise, to make it from something that's 100% owned at all, but, a bunch of, you know, 5% or 10% owned
businesses. We're, you know, as I mentioned in the annual report, railroads are absolutely essential to the country. That doesn't mean they're on the cutting edge of everything. They're just essential to the country. And, you know, it, it, that's why the government, you know, I think they took them over one time, and, they, they, negotiate what our labor settlements will be and everything. And, and, if you shut down the railroads of the country, it would be incredible, the effects. But, and it would be impossible to construct now. I mean, look at what's happening in California when they're, trying to build a line. I mean, you know, everybody's worried about the environmental effect of, of every mile and, you know, and what'll happen to the various species of birds. Can you imagine the rail system of the United States being built? It it would take decades unless the war was on and the government took over things and just ordered them. It can't create it. So, we love owning, a business like that. It's going to be around 100 years from now. It won't be the best growth business in the world at all during that period, but it will be essential. And, and, what it earns in its relation to its, its, its replacement value is a pittance. But, we'll do fine in terms of what we paid for it. And we'll, we'll distribute substantial amounts in relation to what we paid, to Berkshire in a very tax efficient way. And, so it's, it's, when the question is what are the issues relative to the other railroads, know, it wouldn't have been the end of the world if, at all, if we bought the Union of the Pacific and Jim Young had stayed alive to run it for us. That would have been great too, but, but we had the opportunity to, to buy BNSF and it's been good for them and it's been good for us. And we think it's been, it's a very important asset to the country. And, know, I just hope we can find something in other industries that, where it makes as much sense as that, where we can put a whole bunch of money to, to work at an advantageous time. So let's go on to Station 3. Is that correct or not? Yeah. Yeah. Yeah.
Okay. Kia ora. Kia ora. Good afternoon, Mr. Buffett. Mr. Abel. My name is Sirapob Wu. I'm a resident of New Zealand, but originally from Thailand. This is my first time in America and the first time attending the meeting. The journey was quite rough, but it was all worth it though, because I can now personally thank you, Mr. Buffett and the late Charlie Munger, while he's still with us, for organizing such a wonderful event and most importantly, for being such an exceptional role models and sharing your wisdom with us all these years. So thank you. Thank you for coming.
So here's my question for you, Mr. Buffett. Towards the end of 2018, you mentioned that you guarantee you could make a 50% annual return if you had to start again with under $1 million. The question is, if tomorrow you woke up in the body of a... Your body. 20-year-old American. Yeah, your body. But that's fine.
Your name was now Warren a la carte. And you had some money to invest on a full-time basis. What method or methods would you use to achieve that return? Would it involve flipping through 20,000 pages of Moody's Manual or similar publications? Or finding, you know, two fancy kibbutz? Or would it be hunting for great companies at a fair price as Mr. Munger would? Or would it be a combination of both, with opportunity costs serving as the final arbiter? Or which method to use, given that your investing opportunity has now broadened significantly? Thank you. Good question.
I'm glad you came. And the answer would be, in my particular case, it would be going through the 20,000 pages. And since we were talking about railroads, you know, I went through the Moody's Transportation Manual a couple of times. That was 1,500 or 2,000 pages, or probably 1,500 pages. And I found all kinds of interesting things when I was 20 or 21. And I don't imagine there's anybody here that knows about the Green Bay and Western Railroad Company. But there were hundreds and hundreds of railroad companies, and I like to read about every one of them. The Green Bay and Western, in those days, everybody had a nickname for railroads. I mean, that was just what... Northern Pacific was the nipper, and Phoebe Snow was one of them in the East that used to go up to Cornell. And the Green Bay and Western was known as Grab Baggage and Walk, and GB&W. And they had a bond that was actually the common stock, and they had a common stock that was actually a bond. And, you know, that could lead to unusual things. But they wouldn't lead to unusual things that would work for you with many millions of dollars. But if you collected a whole bunch of those, which I set out to do, and actually that's what impressed Charlie when I first met him, because I knew all the details of all these little companies on the West Coast that he thought I would never have heard of. But I knew about the Los Angeles Athletic Club, or whatever it might be. And he thought he was the only one that knew about that. And that became an instant point of connection. So to answer your question,
I don't know what the equivalent of Moody's manuals or anything would be now, but I would try and know everything about everything small. And I would find something. And with a memory, with a million dollars, you could earn 50% a year. But you have to be in love with the subject. You can't just be in love with the money. You really have to just find it. You know, it's essentially like, you know, people find other things in other fields because they just love looking for them. A biologist looks for something because they want to find something. And it's built into, I don't know how the human brain works that much, and I don't think anybody understands too well how the human brain works. But there's different people that just find it exciting to expand their knowledge in a given area. You know, I know great bridge players. I know great chess players, actually. Kasparov came to Omaha and met Mrs. B. I've had the luck of meeting a lot of people that are unbelievably smart in their own arena and do some unbelievably dumb things in other areas. So all I know is the human brain is complicated. But it does its best when you find out what your brain is really suited for, and then you just pound the hell out of it from that point. And that's what I would be doing if I had a small amount of money and I wanted to make 50% a year. But I also wanted to just play the game. And you can't do it if you really, if you don't find the game of interest, whether it's bridge or whether, you know, whatever it may be, chess, or in this case, finding securities that are undervalued. But it sounds to me like you're on the right track. I mean, anybody that'll come all the way to this annual meeting has got something in their mind other than bridge or chess. So I'm glad you came and come again next year. And now we move to Becky.
This question comes from Denny Poland, a shareholder from Pittsburgh. When describing the principal-agent problem, Mr. Munger said that capitalism often works best when the people managing the property also own the property. In recent years, agents of pension funds and asset management firms who do not have significant personal ownership stakes in Berkshire have forwarded proposals that were not in the economic interest of shareholders. What can be done to limit the negative influence of these agents in the decades after you're no longer able to cast significant votes against them?
Well, that's a very perceptive question, and it's been answered in a temporary manner, but who knows how the situation will develop in the future. All I know is that you have a wonderful hand at Berkshire Hathaway, but you have to be able to think your way. I mean, obviously, you have to think your way through political realities. You have to think your way for what will cause... A, you want to be on... You want to be regarded as an asset to the country because you'll find more solutions if you are an asset you owe to the country anyway. But beyond that, you'll find more solutions than if you're regarded as evil or something. And worse yet, if you deserve it. So it's something that's constantly in her mind, and it needs to be in the mind of the directors. And they need to think for themselves on this rather than bow to conventional wisdom,
which, you know, a sense, you don't want to become a cynic about life, but almost everybody that approaches you, if you have tons of resources, has got some interest in figuring out how to use your resources to their advantage. And that's true whether they're in politics or whether they're in investment banking or whether they're selling you,
well, whatever it may be that they're selling. I don't want to do any injury to anybody, but, you know, life insurance agents see the advantage of buying life, life insurance and investment managers who get paid based on assets managed, get interested in selling you their services. Imagine if everybody in this room were following the investment advice of somebody that said, you know, for 1% a year, I'll tell you how to invest your money in 1950. When we started in 1965, they would have said, well, buy Berkshire Hathaway. And if they were around now and they still had their 1% deal, they'd be collecting $8 billion a year from people who aren't getting any dividends from us. So, yeah, they would have a different interest in the kind of contract they worked out with you than you would have. And the best thing to do is just pay them a commission one time and own the stock. But you have to be alert to what human nature does to both other people and to you. And then you, you know, if you think it through well and actually listen to what Charlie has told you,
you'll have a big head start on most people. Charlie, there's one thing that should mention that really is terribly interesting about Charlie. Charlie knew the importance of psychology and human behavior and incentives and all of that. He figured that out very early. And of course, he gave some talks even on, you know, 25 or so ways, whatever it happened to be. I don't remember the exact number, but different ways that one person could take advantage of another by understanding how humans behave. And then after doing a magnificent job of explaining it, he believed in understanding what others would do, but he thought it was beneath him to actually use those methods to manipulate people. That's a really interesting human being that thinks through the psychology of human behavior and figures out, know, how you become a great insurance salesman or manager on Wall Street or accumulative assets under management or whatever it may be. And you get very rich by understanding the weaknesses of others to some extent and then decide that it's very important for you to recognize these when they occur. It's very important for you to know them better than the person that actually is using them, but you don't have to stoop to using them yourself. And Charlie told me that in his lifetime, after he figured this out, there were a couple of times when he used them. He wasn't proud of it, but he also never lied to me. So he... He explained to me that, you know, there were a couple of times when he used some of these techniques, but he wasn't... He didn't plan on using them anymore, but he also wanted me to know that if I ever did something like that, I wasn't really behaving terribly, that he allowed for the fact that humans may misbehave. So I'm sure that I behaved somewhat better before my marriage than I did afterwards in my enthusiasm for different activities, like dancing or something. And he said, you know, we all do it, but don't do it again.
So that's part of acquiring human wisdom. And speaking of human wisdom, we've just got that one book out there. By Charlie. I mean, Poor Charlie's Almanac. And that's worth reading three or four times. I think I read Ben Graham's book about five or six times. And each time I read it, I realized that I... I just needed to think a little more deeply about certain things. They weren't complicated or anything. But, know, it's better to... If you've got some great instruction like you get with Charlie, it's better to read it several times than to just figure you'll just read every book once and it's in the library. Okay. Let's go to section four.
Jeff Rabalier from Tulsa, Oklahoma. And I'm thinking of Dr. Graham, Mr. Munger, your father. And my question is for all of us, but it's probably especially for the younger people in the room. The importance of picking the right heroes in life, choosing friends wisely, and maybe tell us a story, if you could, about each of those folks. Thank you, sir.
Well, there's no question you're 100% right in terms of having the right heroes. And, you know, you're lucky if you get them. I mean, Charlie had them. Charlie had them. I had them. And the interesting thing, my sister is here today, my younger sister with the two survivors.
And we both experienced having the same hero, even though as we grew older, we saw that we didn't agree with plenty of his ideas, but we did agree with his values and motivation. And that's a better lesson than having somebody that's reading to you from a catechism that has got a lot of rules in it, which are pretty good rules. But there's a special place for somebody that is going to continue loving you, even if you break some of the rules. And that's what Charlie had in his life. It was what Bernie and I had in our life. So I would just repeat what you said. I don't need to give you a bunch of — Well, when I ran away from home — I'll give you a specific example with me. When I ran away from home and went — and we hitchhiked up to Hershey, Pennsylvania and got picked up by the state police and everything. And I talked these other two guys into it. And we lied like crazy to the state police, you know. Saying we had our parents' permission. Some kid at the place where we stayed had tipped them off that we'd run away from home. And we started — like I said, when the state police picked us up, we decided that — two things, you know. We decided to tell them bunch of lies about the fact we had our parents' permission and we decided we better get out of Hershey because these cops were going to find out sooner or later. And so anyway, we end up back in Washington after a couple of days. And when I walked in the door —
Well, one of the boys' mother and this other kid was the Congressman Roger Bell. And his mother was in the hospital over this whole thing. He'd taken out his cash and his savings bonds. And so she was sick and Judge Bell, her husband, was all concerned and everything. And I walked in the door in Washington and my mother said, how come you came back so soon? And my father said, he said, I know you can do better.
I just paid more attention to my father than my mother. And so you want to have the right heroes. And you don't have to have them — it's not the heroes based on what they've accomplished. And it's, you know, it's the people that you want to be. You want to be yourself. And if you copy the right people, you're off to a great start. And I don't mean a start about making money. I mean a great start about living your life.
So you can check with my sister, Bertie, who's here, and see if I've told the story correctly. She ran away from home, too, incidentally. But she didn't get as far as I got. But she was running away to — go over to my grandfather's house, which was about two miles away.
But I don't want to denigrate her runaway abilities, because she was much more accomplished than I am in all kinds of other things. But when it comes to running away, I definitely outclassed her. OK, let's go to Becky.
This question comes from Vedant Sharma in India. Warren, you and Charlie have often said that you were able to identify the people you want to go into business with and have had an exceptional record in that. However, in the case of Pilot, we noticed that the final stake purchase ended up in a dispute and had a sense of smart accounting, to put it one way, to squeeze a little more out from the deal than was deserved by the seller. Knowing well that this has been settled out of court and needs due confidentiality, I would like your views on some of the lessons learned that may be beneficial for future deals to watch for, and for coming leadership to look out for as well.
Well, I'll make two comments on it. A couple of the directors had their doubts about going in. And in any event, Pilot is working out well for us. And my friend Sam Butler one time said to me that, and he was talking in general about certain kinds of situations, but he said, well, Warren, he said, all's well that ends. And that's where we are.
we're getting to station five, I'll tell you a little bit more about the fellow that is now running Pilot, and who you may have met here, that Greg had known for a long, long time. And he grew up in Omaha,
from a poor family, and was raised by his mother. Right. And went to the same high school, public high school that my wife went to, North High. Went to University of Omaha. Set an all-time record in rushing yardage, playing there. He was a bouncer. Yes. Crafted by the New York Giants, as I remember. Exactly. Yeah. But then injured, actually, in spring training, as I remember, in some way. So he ended up being an intern. Not an intern, but a trainee, you might say, for MidAmerican before I was there. now here he is, still relatively young, and he's running a huge company. And we've got incredible confidence in what he will do. And we like very, very, very much the business that was created by big Jim Haslam. And it really is almost an only in America type story, but it does show you what somebody with some real stuff, and with a mother that believes in them, with bad breaks along the way. I mean, imagine how you'd feel if you were drafted by the New York Giants. And then you suffered some injury in spring training or something. I mean, you know, it just hurts. But it's not an experience I would have ever had. I mean, that was the last guy chosen. But, you know, to see that. He's running a company that depends on the price of the deal, but it's a huge company. And what does he have, 20, 25,000? Right. Yeah. And he's got many, many, many years to go. So I couldn't be more pleased about not only the acquisition of Pilot, but just what it tells you about America. You can catch it. What do you have to look up? Read about them in Google or interview with Adam?
He's got a podcast that will just blow you away. And if you don't think this is a great country and has a lot of great people, all you've got to do is read that podcast.
But we do have a great set of assets here. Oh, yeah. You know, if you look at Pilot, we have more than 800 travel centers. And just so everybody knows, I mean, the beauty of that, and there is a question regarding this morning around fuel choices at Pilot. And the exciting thing is, in the end, Pilot's going to serve whatever fuel our customers need. It can be electric. It can be renewable diesel. It can be diesel or any of the various sustainable fuels. But the point is it has exceptional locations that are on the interstate highways. Hundreds of them. Hundreds of them. And we bought an incredible franchise. And now we have a great leadership team in both Adam and his team that's around him. So we're pleased where that opportunity will go.
Yeah, we've got probably the average one might be 10 or 12 acres here or something like that. Zone commercial on interstates throughout the whole United States. I mean, who knows? But what was created there is amazing, too. You had a fellow that played at University of Pennsylvania. I mean, University of Tennessee, undefeated, and came away from this football team. And you'd think, well, another football player, you know, maybe. He goes out and there may be some intermediate parts in the story, but a little bit. But buys a gas station and he turns it into something that is huge. So it's. We're really delighted with it. And, you it's another kind of only in America story. And how many of us can become an all-American number one ranked team, let alone start a business that goes on these sort of heights? So we feel very good about it. Becky?
No, I think they're ready for five now. Oh, I'm sorry. He's up there now. Oh, okay. He's ready to go.
Hello, Mr. Buffett. My name is Zhang Yibo. I came from micro city, Hainan, China. So I want to express my sincere gratitude for you for the extraordinary value you generated for shareholders and the positive influences you had on younger generation of investors like us. And my question relates to the concept of maximizing the duration of a compounding. As individuals age, the quality of a compounding inevitably diminishes. What are your secrets in maintaining your sharp mind, extraordinary judgment, and great physical condition? We wish you well. Thank you.
Well, you don't know me well, but that's. I like. Just keep talking. I mean.
Well, I, you know, I'm just, you have to be just plain lucky. I mean, there's no question about it that, that there's a hundred or a thousand, you know, multiply number of times that some drunk could have pulled out a car and broadsided me or, you know, just all the bad luck. You can have in life and I, you know, you can say that my, my great skill has been avoiding bad luck, but that isn't a skill. That's luck or bad, bad, bad, bad activities. And, you know, and then to get to be, you know, I would not have been a, if you'd taken my high school class and you say, you know, a couple of you are going to live to be 90 men are going to live to be 93. I've got, you know, I wouldn't, I would not have been a heavy favorite. I can tell you that. And I wouldn't have bet on myself.
But you just, now you, you shouldn't make the most of your luck when you get it. And sometimes I've done that. And sometimes I haven't.
I mean, it is absolutely true that if I had it to do over again, there'd be a lot of different choices I would make. Whether they would have ended up working out as well as, as things have worked out. It's hard to imagine how they could have worked out any better. So, so I, but it is interesting how many mistakes you can make if you just keep going. And Charlie, you know, when you used to talk about that, that you just soldier through, you just keep going. And, but you still need luck. You don't, you don't want to, anybody that says I did it all myself is just kidding. I mean, it's just, it's, they're delusional. And, know, actually. Living in a country where the life expectancy is pretty darn good. You know, so that alone is a huge plus. I was, was born, if I'd been born, my sister's here. And she was born female. And she's just as smart as I was and everything. But, but even my own family who really did, well, particularly my dad, love us all equally. And, and, and. And in a terrific manner. But he still told me that, that this is tender. Well, I was born 10 years after the, the 19th Amendment was passed. And, but he told, basically told my, my sisters, you know, that marry young while you still have your looks. And he told me that the world, you know, that power in you is new in nature. And that you really could do anything. Well, I found there were a lot of things I couldn't do. But, but it, it, the message given to females and males was incredibly different. By the most well-meaning and loving of parents. You know, like I say, in 1930, I mean, it had been that way for millions of years. It's, it changed quite dramatically. But obviously not. Not completely, but during my lifetime. But it's been during the latter half of my lifetime. If you take my sisters, if they'd been born even five or 10 years later, they would, they still would have been, you know, getting instructions when they went away to college to be sure and, be sure and get married while, or get arranged so that you're going to be married, you know, while you're in school. Because after you get out, all the, all the good ones are taken. That was, Bertie was telling me that was a message that, that, you know, basically was, had been imparted to most, a lot of the women she'd met, obviously. And so it, it, it really, it's, it's extraordinary how much progress we've made. But it's, it's unbelievable how long it took to get it made. I mean, it, it, it really does make you. Wonder about, you know, we've got all these heroes from American history and all the wonderful things they did. But, but how could they say all men are created equal and then write a constitution that, that women, you know, allowed women not to be able to own property. And then depending on the state, I mean, just terrible conditions. But anyway, that's how you learn about what the humans can do. Yeah.
And I feel, and, and you've got to feel better about the future for your kids than you would have felt 100 years ago, no matter, you know, what the situation is. Anyway, we'll move to Becky.
This question comes from Linda Frazier in Westport, Connecticut. Dear Mr. Buffett, in the past, you've specified that 90% of your wife's inheritance be invested in a low-cost S&P 500 index fund and 10% in short-term government bonds. But the market continues. The market cap of the magnificent seven tech stocks now represents more than one quarter of the market cap-weighted S&P 500 index, which seems like a big bet on the tech sector. I was wondering if you would now recommend investing some portion of the funds in a low-cost, equal-weight S&P 500 index fund rather than having all of the equities exposure in a tech-heavy, market-cap-weighted fund.
Well, that's an interesting question. And I will tell you that I revise my will about every three years or so. And I get little thoughts from time to time. And then you don't change it every time you do it. You get a tiny thing. But the one section I haven't changed is that, with my wife, that she got left a huge amount of money by practically anybody's measurement except pittance, compared to what I've accumulated in total. And it doesn't it won't make one bit of difference to her in life, whether she beats the S&P or anything else. All I want to leave is plenty of money to take care of way beyond anything she'll ever spend. And at the same time, give her as much peace of mind as possible. And really make sure that the trustee who administers it doesn't regret it. She doesn't have to worry about whether — it just doesn't make any difference whether she beats the S&P or not. And the main thing is that she feels — she feels that she's in a financial position, which, of course, she will be, that she doesn't even need to think about it. And the trustee doesn't have to worry about getting sued or anything else. So it's simply not an economic condition. Now, obviously, with 99 percent of the — 99 percent plus of what I have going to philanthropy and, you know, and I've got my three children. The one good thing is that they — at the age of 70, 69, and 65, they have matured remarkably, probably more than their father. And that — but at the same time, they've got less time to work with the money than they would if, you know, they were 50 or something like that. So you do — you do the best in accomplishing your objectives in your will. And in the end, you know, you can't — you don't know what's going to happen after you die. But you make sure that, to the extent that you leave, you have a lot of money to leave. You take — obviously, you want to say thanks to a lot of people. And — quite a few people in terms of specific requests. You want to take care of the — your family. But — but in my case, that requires practically no money. And — and they're a fair amount for taxes. But I have — and my children are in charge of what happens to the funds that are left. But like I say, the — the problem is when you live as long as I have and the kids get older, you — who knows what happens to the mortality tables. And they're the ones that I really want to see handle the distributions. And they will. And they'll be very good about it. And — but if we're all alive three years from now, they'll be three years older. And that's — so everything — you can't solve everything in life. You do the best you can with it. And people do interesting things. I've been around probably as many rich people as almost anybody. And a fair number of them, I know what they're — they're doing or have done with their funds. And the idea that you can have a huge amount of money and leave everybody very rich and have people liking each other less when it all happens is — humans are really — they are interesting to watch. Some of them handle it beautifully, and others are terrible. I — the one thing — lawyers will always tell you is don't — don't use codicils. In other words, you know, when you change your mind on a will, just write a new one, but tear up the old one. Don't do it by just adding codicils. But I believe I'm correct. I've certainly read that Paul Getty, who was the richest man in the world, presumably, at one point in the 1950s or 60s — he's a very interesting guy to read about. And he had five — five wives. And he's the one whose grandson was kidnapped. And they sent Paul Getty an ear of the child and everything. I mean, it's not a happy life when you get through it. But the one thing he did that was kind of interesting, he actually liked to use codicils, because I think he had like 25 of them. And it was kind of his way of writing, well, I'm taking you out of the will because, you know. And so he — he — he sort of delighted in explaining, through his will, what — how he felt about all these people. I mean, you really get some strange things revealed in a will. I just — I just read about a will of a fellow that made a — whole lot of money and was leaving it his — I don't know whether his children, grandchildren, whatever it may have been. But in any event, his opening line in his will is — is — and this was done some years ago, but I know something about the family. His opening line, in effect, said, I'm writing this will while I'm writing in the economy session of Eastern Airlines, number such and such. I mean, he believed in getting — getting right to the point of what — what — what the people who were recipients how they should live. And he was going to be judging them. It's just so damned interesting to watch people's wills. But, you know, one — one guy left a lot of money to his wife on the condition that she remarry so that at least one man would mourn his passing. You know.
I feel — I feel very, very, very good about how things have turned out. And — and I wish I could figure out ways better to use, you know, the really vast resources I've got in the — some of the really important — questions of the world. But but I haven't been able to do that. I mean, I had a few goals when I was 30 or 40 and may have written them into wills then in terms of what the world needed done and how the money could be used. And, unfortunately, I decided that it just — they weren't feasible to accomplish. And, of course, I was setting out to accomplish things that had — that were important, but nobody had solved them. So you've got to expect that. Why should I be able to solve them? But, nevertheless, it's — it's an interesting — and the one thing about it is everybody here — don't know about the ones who have come from other countries, but they should — you should have a will. Because if you don't have a will, you still have a will. And it'll be whatever the state says. And it's amazing. Four American presidents died, intestate, without wills. Four. You know, we've only had 45. And becoming president of the United States and not having a will.
But you can look up somebody recent — I think Lincoln. certain Lincoln was one of the four. here's a man — I mean, I don't know what — you can always say, well, he didn't get around to it, but that — that's hard to imagine that.
Why Abraham Lincoln would have died intestant. I'm sure we've got some Lincoln scholars out there that will write me after this and explain why. But I — and I'll be interested to receive their letters.
But human beings are human beings. And we all have weaknesses and peculiarities and everything else. And don't be too hard on yourself.
Because you have some of those. But don't be totally forgiving either. You can change the future. You can't change the past, but you can change the future. Okay. Station six.
Good afternoon. My name is Caroline, and I'm a lawyer in San Diego. I'm already in trouble. But please don't hold that against me. Remember, Mr. Munger was once an attorney, too. Right. First, I'd like to sincerely thank you, Mr. Buffett, for your business integrity, tireless leadership, and generous contribution to philanthropy. My question for the distinguished panel of two is now that the AI genie is out of the bottle, as someone astutely put it earlier today, what business in Berkshire Hathaway may be most at risk with AI?
Well, that's a wonderful question. The problem is I really don't know anything about AI. But —
it can create an enormous amount of leisure time. Now, what the world does with leisure time is another question. Whether more leisure time — I know an awful lot of people think when they go to work at first that what they want is leisure time. And what I like is actually, you know, having more problems to solve.
But AI is profound. I mean, that's what makes it a genie, you know, is what can happen.
I don't know what — You know, in terms of our businesses, they'll figure things out. I mean, we've got smart people. And it's — Obviously, if it's used in a pro-social way, it's got terrific benefits to society. But I don't know how you make sure that that's what happens any more than I know how to be sure that when you used two atomic bombs in World War II that you knew that you hadn't created something that could destroy the world later on.
Yeah. Yeah, I think when we think of AI at a lot of the business units, I mean, we're truly, Warren, trying to think, how does it make us more efficient, more effective? I mean, it results in more idle time. And we're probably not thinking of the iterative AI where we're looking at very specific processes where our people can implement it and either — At times, it displaces the labor, but then hopefully there's other opportunities for them within the business. But I think, know, when you think of all our businesses, I mean, we do have a heavy labor workforce in a lot of them, but I think at the stage we're at as a company and maybe where it's at right now, it's really around how do we do things more effective, more efficiently, more safely if it involves dangerous processes. So it's
We're early innings. Yeah. John Maynard Keynes was just wonderful to read and incredible mind. But in around the time I was born, he wrote a book about what could happen. I don't know whether it was in the next hundred years or whatever, and he predicted correctly that output per capita would grow at this incredible rate that it had. But in terms of speculating, it's what people would do with that. I mean, this guy was unbelievably smart.
But it hasn't developed exactly the way he predicted he was right about what was going to go into the equation, but he wasn't — He didn't have it figured out exactly what at all what would be the result. So it's It is — It is really — Well, we didn't know when we were developing the bomb that there would probably be, as very soon, nine countries, three of whom we should worry about. Plenty that will have what they have, but we didn't really have any choice. And you could have had all kinds of papers written on it and everything else, but we were going to do it anyway. We needed to do it. And if you haven't read it, it's fascinating to go to Google and read the letter by Leo Szilard and Albert Einstein to President Roosevelt, written about a month before — almost exactly a month before Germany had moved into Poland. And it laid out, well, Leo Szilard knew what was going to happen, or had a good hunch of what was going to happen in terms of nuclear bomb development, and he couldn't get through to Roosevelt, but he knew that a letter signed by Albert Einstein would. So it's probably the most important letter ever written. And you can read it, which is just fascinating to me.
But that started the Manhattan Project. That started — You know, it just — Everything flowed out of it. And, like, I'll bet anything that Roosevelt didn't understand it, but he understood that Albert Einstein had sent a letter. And he probably knew what he was talking about. And he better get — better start the Manhattan Project. It is — It's just unbelievable what happens in this world. Anyway, let's move on to — Becky, I guess, is next, right?
Yep. Randy Jeffs from Irvine, California. The March 25, 2024 Wall Street Journal reported that the Treasury market is about six-fold larger than before the 2008-2009 crisis. Do you think that at some point in time, the world market will no longer be able to absorb all of the U.S. debt being offered?
Well, I would say — The answer, of course, I don't know. But the — My best speculation
is that U.S. will be acceptable, but for a very long time, because there's not much alternative. But it won't be the quantity.
You know, any — You know, the national debt was nothing to speak of, like, you know, for a long, long time. And then it won't be the quantity. It'll be whether, in any way,
inflation would get let loose in a way that really threatened — the whole world economic situation. And there really isn't any alternative to the dollar as a reserve currency. And you get — A lot of people will give you a lot of speeches on that, but that really is the answer. And Paul Volcker worried about that in 19 — You know, well, before 1980. But he had threats on his life, and I happened to have a little contact with him at that time. And he was an amazing, amazing fellow that, in effect, decided that he had to act or the whole — really, the financial system would fall apart in some way that he couldn't predict. And he did it. And he, you know, had people threatening his life. And he'd do all kinds of things. But he was the man for that crisis.
But it wasn't the quantity of U.S. debt that was being offered that threatened the system then. It was the fact that inflation and the future value of the dollar, you know, the cash-is-trash type thinking that turned — know, that was setting up something that could really affect future of the world in terms of its economic system. And Paul Volcker took it on. And he was as gutty as could be. And if you haven't read a book or two about him, or the one he last wrote, you'd be able to take a look at it.
It is — I don't worry about the quantity. I worry about the fiscal deficit. You know, if it — But I'm not a worrier, just generally. I mean, I think about it. And — But I don't sit and get up, work myself into a stew about it in the least. But I can't help thinking about it. And that's —
We've got a — We've got a great attention. It's interesting. I think the media understands it. They understand it. They're always into this. They're always into this. And the — Focusing — It focuses on the Fed. And they — You know, they just love it, because things are always happening, and economists are always saying what's going to happen with the Fed and everything else. But the — Uh, The fiscal deficit is what should be focused on. And — And —
And, uh — Jay Powell is a — a — a — not only a great speaker, with me, but he's a very, very wise man, but he doesn't control fiscal policy, and every now and then he sends out a kind of a disguised plea for, please pay attention to this, because that's where the trouble will be, if we have it.
As one of the comics used to say, there was a stand-up comic, he used to say, who have I forgotten to offend, after his talk, and I always feel like that after these meetings, but we've got time for at least one question, maybe two, but let's go to station seven.
Hello, my name is Dennis from Gifhorn, Germany, it's my first time here, I'm here with my friend who would, by the way, love to invite you to dinner. You talked about the importance of heroes, and we are very happy to, and thankful that we have you as our hero with great values, and thank you for that. Thank you for that, first of all. My question is, it is clear that you achieved great success in life, earlier you talked about every investment having opportunity cost, from what I've learned in life, that does not only apply to investing your money, but also to investing your time. Every hour you spend in your office is an hour you cannot spend with your spouse or children, with the life experience you have now, if you had the possibility to start all over again, would you set your priorities any different? If yes, how and why, and what's the best way to invite you to dinner?
Well, that definitely won't be one of my priorities, if I figure out how to do that.
But don't take it personally, because you can figure out at the maximum how long a period I've got. And, you know, I don't think, I mean, I can figure out all kinds of things that should have been done differently, but so what, you know, I mean, I'm not perfect, I don't believe in lots of self-criticism, or being unrealistic about either what you are, or what you've accomplished, or what you'd like to do, you do the, you know, you do a lot of things and, and. Who knows whether somewhat different trade-offs, you know, you just can't, you can't, you don't know what the past would have led. I feel, I don't think there's any, any, any room in beating up yourself over what's happened in the past, you know, it's happened, and you, and you get to live the rest of the life, and you don't know how long it's going to be. And keep trying. Yeah. think, you know, trying to do the things that are important to you, and, and if I was a doctor, or if I was, in all kinds of different professions, I might do different things, but I really enjoy managing money for people who trust me. I don't have any reason to do it for financial reasons, you know, I'm not running a hedge fund, or getting an override on, or anything, but I just like the feeling of being trusted. Charlie felt the same way. You know, that's, that's a good thing. It's a good way to feel in life, and it continues to be a good feeling. So I'm not really looking to change much, and, you know, if I'm very lucky, I get to play it off for six or seven years, and it could end tomorrow. But that's true of everybody, although the equation isn't exactly the same. But I don't believe in beating yourself up over anything you've done in the past, and I don't believe in, well, I believe in trying to find, you know, what you're good at, what you enjoy, and then I think the one thing that you can aspire to be, because this can be done by anybody and it's amazing, it doesn't have anything to do with money, but you can be kind. You know, that's, you can be kind if you're, you know, you can be kind if you're, you know, and the world's better off.
I'm not, I'm not sure that the world will be better off if I'm richer, but there's no question that, I mean, and you know kind people, and in the end aspire to be more, or you're, I'm sure many of you are yourself, but just aspire to be more so. And I guess we can take one more question from Becky and then we wind up.
This question comes from Devin Spurgeon. Devin Spurgeon. Hi. On March 4th, Charlie's will was filed with the County of Los Angeles. The first codicil contained an unusual provision. It reads, averaged out, my long life has been a favored one, made better by duty imposed by family tradition requiring righteousness and service. Therefore, I follow an old practice that I wish was more common now, inserting an ethical bequest that gives priority not to property, but to transmission of duty. If you were to make an ethical bequest to Berkshire shareholders, what duties would you impose and why?
I'd probably say read Charlie. I mean, he's expressed it well, and I would, well, I would say that, that if they're not financially well off, if you're being kind, you're doing something that most of the rich people don't, don't do when they, even when they give away money. But that's not the question. The question is whether you're rich or poor, and, and I would, I would say if you're lucky in life, make sure a bunch of other people are lucky, too.
Just in case you know what my advice to myself would be, has been during this period.
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