Buffett Says He Had Underestimated Jeff Bezos
Get live updates on the Q&A with Warren Buffett at the Berkshire Hathway AGM.
Key Highlights
On Amazon
Buffett: Whats Jeff Bezos has done is a miracle. I had underestimated him.
Don’t think of businesses as technology or not. I am more interested in whether businesses are understandable to us, have durable competitive advantages or not and whether price is favourable.Warren Buffett
On Cryptocurrencies
Buffett: Anytime you are buying a non-productive asset, you are basically hoping someone else in the future buys it an even more inflated price hoping to repeat the same.
Advice To Investors
Buffett: Investors can learn a lot by going out and doing things yourself.
What can Berkshire do to increase women’s participation at senior levels and board levels?
Buffett: I feel optimistic about the future because there will be lot more selection by merit than by inheritance.
On Corporate Profit Uptick Due To Tax Breaks
The American industry has gotten incredibly more profitable in the last 20-30 years. People haven’t been able to gauge the impact of the tax breaks introduced in the U.S.Warren Buffett
On Medical Costs Going Up
Buffett: It’s a tape worm eating into the competitiveness of American businesses! Need creative solutions.
On Emerging Market Investing
Buffett: There are far more opportunities to do with smaller amounts of money than we can do. Our problem is size not geography. But the first choice even with a smaller corpus would be to comb the U.S.
What can the younger generation of both China and the U.S. do?
Buffett: It’s better you can understand the culture of another society, the more beneficial it is...I’m bullish on the futures of the U.S., China and the world at large. People will lead better lives in the years ahead.
On Newspaper Business
Munger: Going to miss newspapers if they disappear, and the figures are not looking good.
On Investments In Capital-Intensive Businesses
Buffett: Buying into capital-intensive businesses because we aren’t finding capital-light businesses at cheap valuations.
On Apple
Buffett: Delighted to see Apple re-purchasing shares; may end up owning 6-7 percent of Apple with passage of time due to buybacks.
- Would be difficult for Apple to make a worthwhile $100-150-billion acquisition.
Would you look for mis-priced stock opportunities?
Munger: If the gap between value and price isn’t attractive, just move on to other opportunities. If you want a formula, you should go to graduate school.
On Elon Musk
Elon may turn things upside down in some areas. I don’t think he’d want to take us on in businesses like candy.Warren Buffett, Chairman, Berkshire Hathaway
Munger On Bureaucracy
Bureaucracy is like a cancer -- and it functions like a cancer. And we’re very anti-bureaucracy. In that case, we’re very different from Anheuser-Busch at its peak.Charlie Munger, Vice-Chairman, Berkshire Hathaway
On Fed Rates And Bonds
Low interest rates were unfair to old savers, but favourable to Berkshire Hathaway’s shareholders said Munger at the AGM today. "We are all a bunch of undeserving people, and hope we continue to be so”.
Long-term bonds are a terrible investment at current rates or closer to current rates, Buffett said.
It’s almost ridiculous when you think about it — the Federal Reserve is doing all in its power to make sure you don’t get more than half a percent a year. I would stick with productive business or productive assets.”Warren Buffett, Chairman, Berkshire Hathaway
On Special Dividends
On being asked about his views on a one-time special dividend to return capital to shareholders, Buffet said that it was unlikely that he would ever do one.
If we thought we couldn’t use capital effectively, we would try and think of means of returning capital.Warren Buffett, Chairman, Berkshire Hathaway
Billion Dollar Question
Where would you invest $1 billion right now?
My first inclination would be to comb through things in the U.S. ... I probably wouldn’t get into very small markets.
On Emerging Markets
Would you consider more investing opportunities in emerging markets if you had lesser money?
Buffett: There are opportunities to do with smaller amounts of money that we can’t do. Our problem is size, than geography.
'Even Donald Trump Can Be Right,' Says Munger
On being asked about how the trade tariffs between U.S. and China affect Berkshire Hathaway, Buffett said that while steel costs have increased lately "I don't think either country will dig themselves into something that precipitates ... any real trade war...The president needs to be an ‘Educator-in-chief’ when it comes to trade.”
Munger agreed that the conditions in steel were almost unbelievably adverse to the American steel industry.
Even Donald Trump can be right on some of this stuff.Charlie Munger, Vice-Chairman, Berkshire Hathaway
Buffett On Wells Fargo
If Wells Fargo is a chronically leaking vessel, at what levels of leakage would Berkshire consider changing vessels?
Buffett: Wells Fargo had a faulty incentive system, which is a cardinal sin. It’s not unique for big institutions to have troubles. Wells Fargo made a big mistake. I like it as an investment. I see no reason why Wells Fargo can’t come out stronger...I see no reason why Wells Fargo as a company, from both moral and investment standpoint, is inferior than any other big bank.
Munger: If I have to say which bank is likely to behave the best going ahead, I’d say it will be Wells Fargo, of all of them...I think Harvey Weinstein has done a lot for improving behavior too.
The bank has been grappling with a number of issues arising from a consumer banking scandal that arose in September 2016. Employees of the company had opened as many as 3.5 million bogus accounts. The bank still faces a bevy of other lawsuits on related matters.
Buffett On Cyber Risks To Companies
Buffett said that he was skeptical on the being a pioneer of doing business in the cyber security area. It is uncharted territory and will only get worse, he said.
We have a very good idea of natural disasters, but don’t know what we are doing with insuring cyber risk. We don’t want to be a pioneer of doing business in the cyber arena...Frankly, I don’t think we or anybody else really knows what they’re doing ... It’s just really, really early in the game. We don’t know the interpretation of the policies will be.Warren Buffett, Chairman, Berkshire Hathaway
Buffett Says
Buffett On Potential Acquisitions
My phone is not ringing off the hook with good deals.Warren Buffett, Chairman, Berkshire Hathaway
Win-Win Situation For U.S., China
On being asked about the trade talks between U.S. and China, Buffett said that the world "will not sacrifice world prosperity based on differences that arise on trade”. U.S. and China’s current trade gap is close to 3 percent of the gross domestic product, he said, adding that he wouldn’t want the gap to get wider.
It is a win-win situation when the world trades. Both Democrats and Republicans believe in the benefits of free trade. We will have disagreements with each other and other countries on trade... It’s just too big and too obvious. The benefits from trade are huge and the world depends on it.Warren Buffett, Chairman, Berkshire Hathaway
Munger On Buffett's Semi-Retirement
Charlie Munger, the vice-chairman of Berkshire Hathaway spoke about Buffett’s semi-retirement at the AGM.
He sits around reading most of the time and thinking, and every once in a while he talks on the phone. I can’t see any difference… Warren is very good at doing nothing.Charlie Munger, Vice-Chairman, Berkshire Hathaway
Buffett Says
Long Term Investment Vs Short Term Reactions
Warren Buffett starts the session by talking about long term investing versus short term reactions. “In investment, you cant really fail at it unless you buy the wrong stock or get excited at the wrong time,” he said, speaking about the advantages of long term investments.
Q&A With Buffett
The question and answer round with Warren Buffett starts.
What To Expect From The AGM
Investors from across the world will converge on Omaha for the annual general meeting of Warren Buffett’s Berkshire Hathaway Inc. If asked, the world’s most famous stock picker is likely to say stocks will continue to go up, writes Stephen Gandel for Bloomberg Gadfly. If pressed, however, the Oracle of Omaha this time may have a harder time than usual justifying his rosy crystal ball, Gandel writes.
Berkshire Marks First Net Loss Since 2009
A change in accounting rules fueled a $1.14 billion loss at Warren Buffett’s Berkshire Hathaway Inc. in the first quarter. This was the company's first net loss since 2009.
The rule will produce some “truly wild and capricious swings in our GAAP bottom line,” Buffett had said in his annual letter to shareholders, released in February. The accounting change “will severely distort Berkshire’s net income figures and very often mislead commentators and investors.”