Berkshire's 2023 annual shareholder meeting: Watch the full afternoon session with Warren Buffett

sales are terrific out there so you're my kind of crowd I've been getting reports we're breaking all kinds of Records and we're going to start off uh with question number 26. which goes to station two I one and Charlize my name is James from Malaysia given the reason challenge faced by the major U.S Bank what is your overall outlook on the banking industry how do you assess the risk and the opportunity in this section well anticipating a few questions on banks I decided we should start using Bank language here to describe [Music] Charlie [Applause] the

the situation in banking is is very similar to what it's always been in banking that that fear is contagious always and historically sometimes the fear was justified and sometimes it wasn't my dad lost his job in 1931 because of a bank run and they had a bank run on the State Banks and uh the head of the Omaha National Bank said well we're a national bank and they didn't have a run on the National Banks and of course they both face the same problem so it it used to be that if you saw people lining

up at a bank the proper response was to get into the line and uh you'll always leave it and the story is that Sydney weiberg of Goldman Sachs during one of the great Bank runs um back in 1907 or thereabouts had a job as a runner Goldman Sachs and asked us a boss if he could take the week off and your boss said sure not much is going on anyway so he got in line whether it's a Knickerbocker trust or wherever and as he got toward the front of the line he sold his place in

line to somebody he didn't have an account of the bank but that was an asset and uh the banking system has changed so much over the years and we did something enormously sensible in my view uh when we set up the FDIC as many as 2 000 banks have failed in one year back after World War one I mean Bank runs were just part of the picture and if you have people that are worried about whether their money is safe in the bank and all signed withdrawals you can't run an economy very well so the

FDIC was very logical it got changed over the years some but here we are in you know 2000 23 and we actually see the FDIC pay off for the 100 cents on the dollar to everybody or make it available on all demand deposits and yet you still have people very worried about their the periodically geographically all kinds of crazy ways and that just shouldn't happen so the messaging has been very poor it's been poured by the politicians who sometimes have an interest in having it poor it's been poor by the agencies and I'd say it's

been poor by the Press I mean you shouldn't have so many people that misunderstand the fact that although there may be a debt ceiling it's going to get changed although there's a 250 000 limit on FDIC the FDIC uh in the U.S government and American public have no interest in having a bank fail and have deposits actually lost by people we had a demonstration project the weekend of Silicon Valley Bank and the public is still confused so it really something to have a law that was passed in 19th or a law that became effective in

1934 although modified in some ways not understood about something as important as a banking system I don't think the American public is that dumb and I just uh well I made that offer over in Tokyo incidentally that I haven't heard from anybody that wants to take up my Million Dollar Bet on on whether the public will lose money in in in if they have a demand deposit uh at the bank no matter what the size so that's the world we live in it means that a lot of match can turn into a conflagration or it

can be blown out and uh who knows what will happen and we don't have any worry we keep our money into cash and treasures you both at Berkshire because we keep a hundred and 28 billion or whatever it was at the end of the quarter and we want to be there if the banking system temporarily even gets stalled in some way uh it shouldn't I don't think it will but I think it could and uh I think that the incentives in Bank regulation are are so messed up and so many people have an interest in

having them messed up uh that is it's totally crazy I mean it's the Fannie Mae and Freddie Mac we're doing 40 or so percent of the mortgage business in the United States that is huge they were regulated oh just those two companies were regulated by some group I forget what they called it but they had 150 people that were in charge of just figuring out whether funny and fatty we're doing the right thing but I could have done it you know it's probably it could have done it you know and uh I'm not sure they

needed an assistant even to do it but the incentives were all wrong and Freddie and Fanny which we're doing fine in August of apparently doing fine in July and August of two thousand eight were put into conservatorship you know early in September and the things that followed from that were just incredible so there are second order and third order and fourth order effects uh that are somewhat unpredictable as to what they will be and the sequence and all that but things change and if people think that deposits are sticky anymore they're just living in a

different era uh you know press a button you don't have to get in the line and wait for days and have the teller counting out the money slowly and gold so I think the line goes away you can you you can have a running in a few seconds so the way it hasn't been addressed properly is is a problem and who knows where it leads but you'll have to have a punishment for the people that do the wrong thing and if you take First Republic for example you could look at their 10K and you could

see that they were offering non-government guaranteed mortgages to in jumbo amounts at fixed rates sometimes for 10 years before they change the floating and I mean that's a crazy proposition if it's to the advantage of the bank they get it they get the guy coming in and says I'll read Finance it one and a half percent and then one percent and if it's Advantage the other way the fellow keeps it out 10 years you don't give options like that but but that's what first Republica was doing it was a plain sight and the world ignored

it tell it blew up and uh uh some of the stock in some of these banks that were held by Insider it was a soul and who knows whether they had a plan or whether they some plan that was innocent or whether they started sensing what was coming but but you do know that the directors are not going to be able to read some book or anything like that but they do they do have the ability to hold the CEO accountable CEO gets gets the bank in trouble both the CEO and the director should suffer

the stockholders of the future shouldn't suffer they didn't do anything it doesn't teach anybody any lessons or anything it teaches the lesson is that if you run a bank and you screw it up you still live you're still a rich guy and the clubs don't drop you and and the charity groups don't quit asking it to their benefits and the world goes on that is not a good lesson uh to teach people who are holding the behavior of the economy in their hands so I think there's some work to be done but I don't think

it's it's not a difficult problem it's just we've screwed up the answer and we've screwed up the communication of it Charlie well I'm so old-fashioned that I kind of liked it better when Banks didn't do investment banking that makes me very outmoded in the modern world and the country decided it was contrary to public interest for a while and then then the banks want to get back into it did they ever yeah no I mean I don't think having a bunch of Bankers all of them were trying to get rich leads to good things but

I I think a banker should be more like an engineer he's more like into avoiding trouble than he is getting rich yeah and they could do fine they they can do fine that way and I think we had a big mistake when we go to the bank where everybody who joins the funds to get rich yeah it's a it's a contradiction and values and we came to that conclusion I don't know when class still passed or anything but but then they want to get back in how many of you know and maybe I'm wrong on

this I haven't looked lately but the Federal Reserve actually was given the responsibility for setting margin requirements and they changed margin requirements a lot of times because it was known that people that borrow a lot of money cause the danger to the bank system if you get too many in the picture and all of that sort of thing and uh what's happened the banks figured out a thousand different ways to get so you could borrow on 100 margin you know different I mean through through derivatives and everything they just totally distorted uh every all the

lessons that were learned in the 29 crash imagine taking banking into derivative Trading who in his right mind would have allowed that yeah well there's more money in it well that's why they're in it yeah and and and but it isn't necessarily a great social outcome for the rest of us that's what that's what those Senate committees decided back in 1931 and 32 and then in the late 1990s particularly I mean you know very decent people but you know Bob Rubin and some of the people that you know they they said this is the modern

world and here's what the modern world has turned out to hand us and uh banking banking can have all kinds of of new inventions but it needs to have old values and uh uh well if we don't we don't know what's going to happen you know because uh there are a lot of things that could happen out of the present situation depositors will not lose money stockholders and debt holders of the holding company they should lose money and the people borrowed on out on Commercial Real Estate and now it isn't the loans aren't getting extended

they should leave it's too bad I mean that's part of borrowing 100 margin which is what people were doing I've been doing in commercial real estate you've got to have the penalties hit the people the cause uh the problems and if they took risks that they shouldn't have it it needs to fall on them if you're going to change how people are going to behave in the future okay Becky this question comes from Davis Hance in Houston Texas he writes what do you think about the business models of the big Banks as compared to the

regional banks in the wake of the events at Silicon Valley Bank and how does the perceived implicit guarantee of all deposits that all banks affect big Banks and those Regional Banks yeah well I I I can say this if if you found if you follow sound banking methods which means not doing some things that other people do a bank could be a perfectly decent investment in fact Charlie and I was me originally in 1969 we bought a bank at Berkshire and we had 19 million dollars invested in that bank and we had 17 million I

think invested in our insurance companies and if the banking holding company Act of 1970 hadn't been passed we might have ended up owning a lot of banks instead of a lot of insurance companies we were looking at more Banks and Harry Kip was taking us around Chicago and there were other things we could do and then bingo they passed the 1970 uh Bank holding company act and we had to divest ourselves of that bank in in in 10 years which by the way had never had a bad debt oh it never had an unnecessary cost

it made nothing but money with no risk and never presented any Deposit Insurance risk to the government zero it was a lovely sound constructive institution in this community and any person who really deserved credit could get credit and we were going to buy more we were forced out of it and we were going to buy more Banks and if we bought more Banks we probably wouldn't have been expanded the insurance business but you know the law changed and so we divested and and we've done all kind of insurance but banking was more attractive to us

it was bigger than there were more targets uh to buy and uh you could run a perfectly sound bank then and uh no negotiable certificate said all these things all the inventions that came later and you could still run them today and you could earn you're gonna learn a lot you can earn good money very good money and we didn't we would have found more Banks but uh were precluded from doing that and we sold Banks Bank stocks uh in the last well we sold them first when the pandemic broke out and then we sold

some more in the last six months and uh uh we don't know where the shareholders of the big Banks necessarily uh or the regional Banks or anybody are heading I've got my bank I've got my own personal money and I'm probably above the FDIC limited I've got it with a local bank and I think I don't worry about it in the least but in terms of owning Banks events will determine their future and you've got politicians involved you've got you've got a whole a lot of people don't really understand how the system works uh and

I would say that the event something less than a perfect communication between uh various people and the American public so the American public is probably as confused about banking as ever and that has consequences and nobody knows what the consequences are because uh every event starts recreating a different Dynamic I mean in physics you know that Pi is going to be 3.14 you know infinite number of numbers after that but uh no matter what happens but you don't know what has happened to the stickiness of deposits at all it got changed by 2008 it's gotten

Changed by this I mean it and that changes everything and so we're very cautious in a situation like that about ownership uh A Banks and we we do remain with One Bank holding a a a a deal but we originated that deal and uh with the Bank of America I like Bank of America I like I I I I I I I like the management and I proposed the deals of them so I'm I'm I stick with it but do I know how to project out what's going to happen from her the answer is I

don't because I've seen so many things in the last few months which really weren't that unexpected to me to see but which reconfirmed my beliefs that the American public doesn't understand their banking system and some people in Congress perhaps don't understand it any more than I understand I don't understand what the spaceships Go I mean there's all kinds of things I don't know about uh if you're in Congress you've taken position on everything and sometimes it's to your advantage if you really understand it not to say exactly what you what you feel and uh and

here we are Charlie yeah well a lot has happened in Bengali in my lifetime I welcomed all that early banking of the disturbing immigrants by the early Bank of America and I think all the credit cards when they came in as original bank cards were a great contribution to civilization and but the game year it gets and the more it looks like Investment Banking the less I like it as a citizen I'm always I I am deeply distrustful situations in which everybody wants to get rich and envies everybody else I regard that atmosphere is utterly

toxic and the people who like one story which is again a true story and I'm not naming the name and it wasn't Pete Jeffries because he might fit this name but it wasn't Pete but our hero Gene abeg was going to have to retire at some point and so we we hired a future replacement it's got a little problem I talked before about having the perfect business and now we're going to bring in somebody we actually bring in some money but what does Central High with Charlie all over my class yeah and Charlie didn't know

I was picking up this guy and he wasn't he didn't ask me we wouldn't hired him well if I asked you I probably wouldn't hire anybody but that's another question but this guy comes over a perfectly decent guy but presentable you know it looks like a banker and everything and of course the first thing he wants to do we've got this wonderful bag but we got the crummiest looking building in Rockford and we don't need a great building we just need a great banker and naturally this guy wants to build a new building and uh

because we were the most profitable bank but we didn't look like we're the most problems so I told him he could have any building he wanted as long as it was not higher than I'd had to be shorter than the our nearest competitor and he he lost interest totally he wanted to be on the top floor of the of the biggest building in town and I told him to get horizontally do anything he wanted but he couldn't do it vertically it taught me a lot about the guy's motivations in life but and and he didn't

end up running the bank anyway anyway that's all I know about banking probably more uh station three Mr Buffett and Mr Munger hi my name is Daphne I'm 13 years old and this is my sixth annual Berkshire halfway chain controllers meeting and I've had the privilege to ask you both questions in years past my question for you today is the following as you know the U.S national debt is currently at an estimated 31 trillion dollars making up about 125 percent of the U.S GDP in the meantime over the past few years the Federal Reserve has

telegraphed that they intend to monetize the debt by printing trillions of dollars even as they insist that they're fighting inflation already other major economies in the world such as China Saudi Arabia and Brazil are moving away from the dollar in anticipation of this my question is are we likely to face a time in the future when the U.S dollar is no longer the global Reserve currency how is Berkshire prepared for this possibility and what can we do as American citizens to attempt to shelter ourselves from what's beginning to look like the beginnings of dedolarization well

hey I should ask you to come up here and answer some questions I mean hey uh it's very interesting I mean we are the reserve currency and I see no option for any other currency to be the reserve currency and and uh I think that nobody understands the situation better than Jay Paul and uh I but he's not in control of of fiscal policy and every now and then he drops a few hints uh and there was no question that when the when when when the pandemic broke out I mean it was a semi-warl-like situation

but nobody knows how far you can go with the paper currency before it gets out of control if and particularly if you're the reserve world's Reserve currency Nobody Knows the answer to that and you don't want to try and pick out the point at where it does become a problem because then it's all over uh and I think we should be very careful I mean you know we all learned keynesianism and we applied in World War Two to the advantage of the country and and we did everything we could to prevent inflation during the war

and then the war ended in August the 45 and I think in January 46 and I'm not giving you exact figures at all now but in January 46 I think the rate of inflation was it you know something like one percent or thereabouts and by the end of the year I think it was like 15 and again I'm doing this from long memories but but it's it's easy for America to do what's a lot but if we do too much it's very hard to see how you recover once you let the genie out of the

bottle and people lose faith in the currency and they behave in an entirely different manner than they do when they feel that if they put some money in the bank or have a pension planned or whatever it may be that they're going to get to have something with roughly equal purchasing power and it just changes legal economy and all kinds of things can happen then and I can't predict them and nobody else can predict them but I do know they aren't good and uh we will see and I I do this as my you know

I I voted for both parties and it's it's uh it's not limited to politicians of either party or anything of the sort uh uh people take positions some of them understand what they're doing some don't understand what they're doing uh and uh you know if they put me on some Medical Board I don't understand what I'm doing you know it's not there's nothing wrong with the fact that you that you can't master everything can all be Isaac Newton but but you can't go around pretending you do or making decisions on it and and we are

not as well off in relationship to curbing inflation expectations which become self-fulfilling uh um we are not as well off as we were earlier and Berkshire is better prepared than most Investments for that kind of a period but I said this in the annual report but we aren't perfectly prepared because there's no there's no way to perfectly prepare you don't know what course of action will occur and uh it's a very political decision now it's a tribal decision to some degree uh and uh you'll hope for leadership that that uh actually will do something recognizes

the problem and America's an incredible Society Rich you know every we got everything going for us but that doesn't mean we can just print money indefinitely that as as that and uh uh it'll be interesting to see how it turns out Charlie well at some point ing money to buy votes will be counterproductive yep and we don't we don't know exactly where that comes and if something is going to be dangerous and unproductive you ought to keep it a fair distance away now if you have a culture that is exceptionally strong like Japan they have

done some strange things there but they couldn't have been the reserve currency no of course not and but Japan brought back most of the national debt and most of a lot of the Common Stocks and that just the Federal Reserves practically everything in Japan and the countries working it's in in 30 years of economic stasis but it's not going to hell I really admire Japan and but I don't think we should try and imitate it I don't think we're as good as good as Japan at taking they have a cohesive culture and we don't Charlie

that's exactly right in Japan everybody's supposed to suck it up and cope and in America we've been playing so I hope you come next year with a tougher question but and thank you and I I predict I would love to be being born again today in the United States I mean we we can do a we can do a lot of dumb things and get away with it we can't do an unlimited number there are people who care about that and uh you know you have to be willing to be extraordinarily unpopular I mean Paul

volcker uh there were there are other Federal Reserve chair people that would not have not have done what they did it's just it's it's too uncomfortable and uh uh there used to be a politician in Nebraska and if you ask them some really tough question like you know how do you stand on abortion or he would look you right in the eye and say I'm all right on that one and then he moved next door well that's what people have done basically on inflation and they they one way or another they uh they say I'm

all right on that and then they they don't really think about what the consequences of their actions could be particularly and it's so much fun if there's 435 of you it'll just be one of 435 instead of being the person actually responsible anyway I am still next to the question of two superpowers and when you get into really destroying a planet destroying the reserve currency of the world when there's really no substance and forgettable all the toys you know with with I mean it's a joke uh to think of any tokens or of that sort

of that that that's Madness but but it's also Madness to just keep printing money yeah and we know how to do it and we actually came from a money pretty money printing economy in World War II which was required and we suffered significant inflation the price level I mean there's a million ways to judge it but maybe 10 times what it was then or something like that well that's that's getting close to the edge of where you don't want to you don't want old dollars anymore you want to hold something else uh I want to

hold real estate you want an old interest in a business there's a lot of good ones your best your best defense is your own earning power if you're the best doctor in town if you're the best lawyer in town if you have a teacher in town or even if it's the 10th ambassador you're going to make a good living I mean uh you know the economy is productive and you will succeed with your talents but you won't succeed by hoarding dollars you'll just be you'll just succeed by the fact that you're your value to the

community which is a rich Community overall is sustained and so the best investment is always in yourself that that's the answer I would give you well we have a situation where we've learned to print money in gobs and a little a big chunk of our young people go right into Wealth Management this is like we did yeah like we did yes we've been bad examples and I want to say that I didn't realize wealth management was going to get so big when I went into it and I also apologize for what's happened yeah well anyway

you did well Becky this question comes from Gary Gambino in Parma Ohio who says he's been a Berkshire shareholder since 2004. he says the amount paid this year for the 41.4 stake in Pilot values the entire company at around 19 billion dollars that's about six times what BP is paying for Travel Centers of America but Pilot's market share is Just Three Times Travel Centers of America's was it a big mistake to base the final price on 2022 earnings which has unusually high fuel margins well that's a very good question and the answer is that we

arranged to buy it in three stages uh with the third stage being at the option of these owner of twenty percent the first stage we we bought it what turned out to be a very attractive price the second stage turned out to be a very good year for the diesel business which means that the seller got a very good price and I would say that overall we feel very good about the fact we only 80 percent at the price that we do but we would have rather owned a better if we just bought the 80

to start with and the last 20 percent the seller has the option and that's always uh an unintelligent way of structuring something we've had that arrangement with other well we've had it with the furniture mart we bought 80 percent of the Furniture Mart on August 30th 1983 almost 40 years ago and it's worked out perfectly but uh when you give the other person the option they've got some Advantage we we have 80 novel business we like very much and the comparison to travel America is really Superior because Travel America not only much smaller but they

run all their properties we have hundreds and hundreds of locations on the interstate that are zoned for what we commercial and maybe 15 Acres or there's nothing like it and they're not going to move the interstate two miles to the right or something and then you know the swords so we've got a position that that uh travel I mean you know BP may have may or may not have made a fine deal I'd read the prospectus uh and I can understand I mean it's a big big source of output for for BP but uh I

like I like the management we have had at the at at uh pilot I like very much the followers coming in uh that's the new CEO uh uh I just have to tell you a little bit about Adam Wright who's taking that job on he came from Omaha he wasn't selected because he came from Omaha he came from Omaha he came from North High that a public school and my wife graduated from I've got grandchildren that graduated from there he went to the University of Nebraska to almost set the rushing record uh in football which

will never be beaten because they've given up football but I think he rushed for maybe 3 600 or he held three jobs while he went through there he interned at Mid-American 20 years ago his mother worked to put him through school I mean it's just it's Horatio Alger squared and we have him to manage pilot and the aslams of giving us a wonderful business they Big Jim you know he he uh my advantage I mean great people and here we are uh and I'm glad I'm very glad we owned pilot I just wish we bought

100 percent of it when I first made the deal but that was not the deal where it wasn't for sale it wasn't for sale yeah and and then suddenly the last 20 percent of of of the Furniture Mart wasn't for sale when we bought so we bought 80 of it and that's worked out well and and we've done various deals various ways the best way to do it is just write people to check and and get the stock was we did that with TTI but but you can't always make the same deal we make we

find if we like the business well enough and the people well enough we we will tailor it differently but our preference is to write a check and own the whole place and and keep the management in place no yeah I hope it's really wonderful to watch something like Adam wrightwork I mean the basically you know I don't know what his mother was earning but but he went to North High which is probably four or five miles from here public school graduate and worked his way up went for a short period of Pacific Gas and Electric

and we brought them home to run pilot and pilot well pilot the prices on diesel were way different last year I brought Pilots close to 80 billion of sales last year but more normal prices it's it's a significant and you know it's half that or thereabouts and maybe a little more but he is I don't know how old Adam would be but it's in his 40s and and he came up through he came up through the organization that Greg Abel was involved with and and now here he is running a very major business it's good

I'd for sure to be able to do that and uh I don't you know somebody else may have gone to warp press stitches Business Schools or anything so what you know we've seen what Adam can do okay station four good afternoon Mr Buffett Mr Munger my name is JC I'm 15 years old and I'm from Ohio this is my fourth in-person Berkshire meeting I have a lot of passion learning from your speeches interviews and articles thank you for sharing your wisdom all the time Mr Buffett in your annual shareholder letter this year you said that

berkshire's Journey consisted of continuous savings the power of commanding the American tailwind and avoidance of major mistakes you have humbly admitted in the past that you have made many mistakes but this is the first time that major mistakes stood out to me could you please advise us on what major mistakes we should learn we should avoid in both investing and in life I would also like to have Mr munger's thoughts too please thank you very much Charlie Charlie said the major mistake you can make then you know you're you're lucky if you're in the United

States people around the world they don't have a lot of choices some in some places but but you should you should write your obituary and try and figure out how to live up to it uh and uh you know that's that's something you get wiser on as you uh go along the business mistakes uh you just want to make sure you don't make any mistakes to take out of the game or come close to taking out of your game you should never have a night when you're worried about investing I mean assuming you have any

money to invest at all and you should you should get to spend a little bit less than you earn and you can spend a little bit more than you earn and then then you've got debt and the chances are you'll never get out of debt I'll make an exception in terms of of a mortgage on your house but but credit card debt and we're in the credit card business big time and the board will stay in the credit card business but why get behind the game and if you're effectively paying 12 or 14 or whatever

percent you're paying on a credit card you know you're saying I'm going to earn more than 12 14 of money and if you can do that come to Berkshire Hathaway so it uh it's it's I hate to say this for Charlie's around me but it's straight out of Ben Franklin and uh uh it's not it's not it's not that complicated but uh you well I'll I'll give you a couple lessons on you know Tom Murphy the first time I met him said two things to me said you know always tell someone to go to hell

tomorrow well that was great advice then and think about great advice it is when you when you sit down on the computer and screw your life on Forever by by telling somebody to go to hell or something else in 30 seconds and you can't erase it uh and you know you haven't lost the option you know and and then and he said you know praise praise my name criticized by category well what makes more sense than that I mean who do you like to criticizes you all the time and uh you don't need to you

don't need Abilify anybody to make your point on on on subjects of discussion and and uh and then they give you another General piece of advice I'm I've never known anybody that was basically kind that died without friends and uh I've known plenty of people with money that who died without friends uh including their family and uh but I've never known anybody and then and uh you know I've seen a few people including Tom Murphy Senior and and maybe Junior who's here certainly his dad uh he I never saw him I watched him for 50

years I never saw him do an unkind act I didn't I didn't seem to do it very many stupid acts either I mean it wasn't it was not a discriminating he just uh he just decided that um that there was no reason to do it and uh wow what a difference that makes in life Charlie well it's it's so simple to spend less than you earn and industrially and avoid toxic people and toxic activities and try and keep learning all your life etc etc and do a lot of deferred gratification because you prefer life that

way and if if you do all those things you are almost certain to succeed and if you don't you're going to need a lot of luck a lot of luck and you don't want to need a lot of luck you want to go into a game where you're very likely to win without having any unusual luck I'd add one more thought too I you need to know how people can manipulate other people then you need to resist the temptation to do it yourself oh yes the the toxic people who are trying to fool you or

lie to you who aren't reliable meeting their commitments a great lesson of life is get the hell out of your life and do it fast do it fast and I would add would Charlie wouldn't totally agree with me do it tactfully if possible too but do get them out of your life yes yeah I don't mind a little tact or even a little Financial cost but the question is getting the hell out of the lot okay Becky all right this comes from Roger uh lee town he says my name is Roger from Hong Kong a

long-term shareholder of Berkshire admirer and follower of Mr Buffett's amonger's wisdom and principle both of you have said before that the most difficult problems in life are always people problems and one of the key lessons you have learned to be able to live a happy life in a successful life is to stay away from negative people my question is what to do if those negative people are your families the people whom you can't simply stay away from yeah you minimize it but you can't I mean there's no question about it but Charlie gave an answer

I thought was a master of attack the other day whether he says you always how would I interact with people who behave well he says of course you have to make some exceptions to your family but that's it was but it's true and uh you know you really I don't know what it's like to have you know a drunken you know bullish uh but probably father but parents just generally I mean it you know how do you handle it and uh it's very interesting that the MacArthur family uh the very famous John MacArthur the battle

set up the MacArthur Foundation uh he had five kids and four of them turned out to be superstars of one sort or another and they had this crazy generous drunken father but they all decided the thing to do was get the hell out of the house and so yeah this the father of the MacArthur Foundation that did that along with three of the siblings out of five cell you know I I was lucky I mean Charlie was lucky at uh it uh you know if you if you have a I mean her father saw plenty

of shortcomings and and and both of us but you know it would still be there for us and if you have one that won't be there for you you know I uh it's a very tough problem and I think one way or another I probably would have gotten through with that through that if I had that situation but I don't think I think my life would have been a lot different Charlie I I have nothing to add but we're okay station five hey wadden I'm childless good afternoon my name is Arkansas Home of Walmart I'm

her shareholders since 2019 and my daughters are shareholder since 2020. my question is this is my first time coming to shareholders and my question is relationship with BNSF McLean and consumer goods like Fruit of the Looms and granimals and Etc my question is granules is exclusively sold at Walmart and Fruit of the Loom is sold at many other retailers how does Berkshire hathway decides some items are sold at some retailers exclusively versus others are sold at many retailers well that's a good question but obviously you'd love to control if you have a product you'd love

to control the distribution and you're probably going to get better gross margins if they ask for you by name I mean they just had an article about Bernardo Arnold oh lvmh and you know he's got a blue box of Tiffany and the blue box itself means something and a Coca-Cola the bottle I met something in the 1920s I think there was a study of that kind of hook shirt bottle and blindfold with a very high percentage of the population could recognize it was Coca-Cola when they can recognize not only the the product was a container

uh you know you're going to have good gross margins and if you're just another Cola and there have been hundreds of them uh and even if you have distribution through something like Walmart who has Sam's Cola it just doesn't it's not the same I mean here I am you know and 1886 or so John Pemberton in Atlanta uh created it and they they spent very significant amount of money advertising on the other hand Hershey's didn't spend any money on Advertising so we have observed Charlie and I both have observe so many products so many methods

of retail and we really think we know quite a bit a lot of it and we we also know how much we don't know about it at the same time and it doesn't mean that we want to going to retailing ourselves but it does mean we've learned to some extent what to avoid uh and we've learned when somebody really has something Incredibles have something it's just that there's only many you know at Walmart does a great job of distribution for us and it's a good product for Walmart it's a good product for us and uh

on Fruit of the Loom uh they can solve lots of types of underwear and they can do a big volume but we're not going to make as much money rather simply to Capital employed or anything with a product that uh that has a whole bunch of competitors and if the kid wants to go animals uh pajamas or something uh it's not it's not the sort of product that causes people to drive 20 miles out of their way to buy it or anything of the sort but if you're in the Walmart and you're you're picking out

pajamas or something for the kid and and he or she wants a particular product and it's not and it's reasonably priced and everything and wears well whenever you know we will we're happy to have it distributed through somebody with a distribution power of Walmart and their design they're very happy to have the product uh unbalance is obviously better if you own See's Candy then if you own the no-name candy company uh you know particularly women people buy it as gifts a couple times a year I mean they they know that if they give if they

give them their girlfriend if they give someone in the hospital if they give a gift to Christmas or going to a dinner they know if they hand the box of candy to somebody they don't say at the same time here I got a wonderful deal on this candy I mean had some kills the moment right what they really want to see is a smile on the other person's face that they're receiving it and they get it so uh knowing what customers and season box chocolates a are not remotely the market that soft drinks are and

the product does not travel particularly Hershey's chocolate is in trouble I mean if you look at candy bars what's popular in the UK isn't that popular in the US and all kinds of things Coca-Cola travels there's 200 countries and roughly in probably 180 of them it's the nominal product and uh how do you do it well it helps if you started in 1886 from that point forward so we've learned a lot we've got a lot to learn but we did learn that something like our animals we understood when it came around nobody ever heard of

it we bought it for very low price as it turned out in 20 years ago and still Nobody Knows It hardly that we own it and that's fine but they know what Garanimals are and and it has legs it keeps it just keeps going year after year and some some things are like pet rocks and and we're learning all the time Charlie I have nothing to add okay you probably have never bought anything around them also no I never I don't even wear them [Laughter] okay Becky this question comes from Barry Laffer in New York

City Berkshire owns about 94 million shares of Paramount Global as of the last published data this asset rich company is disappointed on recent quarterly earnings reports and just this week slashed its dividend by 80 percent how do you see the streaming Wars evolving and do you still have conviction in your investment thesis is your investment thesis based on the company being an acquisition Target or based on its fundamentals yeah and and how how would you like to manage my money for nothing they we are not in the business of of uh giving stock advice to

people and people who don't know anything about stocks can make a lot of money doing that and we don't think it's something we should give away but I will say this it's not good news when any company passes a dividend or because it's dividend dramatically and the streaming business is extremely interesting to watch because there's people people love to use their eyeballs watching being entertained on on a screen in front of them or a phone or whatever it may be but uh uh there's a lot of companies doing it and you need fewer companies or

you need higher prices and well you need higher prices or doesn't work and you don't lock in people when you get them to to join up for the streaming period when your serial runs I mean you know you keep them on for a while but you can't look them up and uh and we'll see what happens I mean uh I had a gasoline station when I was 21 or 22 and it's about three or four months four or four or five miles from here and we had one competitor and and uh he determined our profit

because he we looked at his price every day and if we cut the price he'd match it and we couldn't raise the price and he did twice the gallery so he won and there's just basic business problems that you see with certain injuries because you don't see what the other Disney was unique uh and it's animated what it offered you know in the 30s and 40s and and they wrote the stuff off and then the first showing and then they they rejuvenated Snow White and all these other people every seven years and that was fine

but this is a different world and uh and the eyeballs aren't going to increase dramatically in the time they can spend or it's not going to increase dramatically and you gotta open which is companies that don't want to quit and uh who knows what pricing does under that but anybody tells you what they know what pricing will do in the future as as getting themselves Charlie 's had a lot of experience incidentally with Hollywood I mean he used to before I even met him uh I think the movie business is one tough business yeah that's

my view the talent will make the money the agents will make the money and if you've got a theater you know the theaters are now doing 70 percent of the business that they did before the pandemic and big hits you know you have enormous grosses but you can't reduce the supply people have only got so many so many hours in the day they've only got two eyeballs and and they got more Choice than ever before and they've got substance cheaper that uh offers them the same experience and not some of them like to experience you

know particularly the big hits of going and but it isn't like you can double the number of people or double the eyeballs or anything like that and and you've got a lot of people the talent will always get paid and uh when you essentially are packaging that Talent one way or another uh and you need to get higher prices and you've got a lot of strong companies that don't want to quit uh that's an interesting an interesting equation hey if you think the movies are tough try to invest in a New York show I don't

know if a conventional stage there they think it's a breach of faith in that business to let the person put up the money ever get any money back yeah yeah well Charlie saw a lot of that actually yeah I like those businesses don't tell them what happened on Cleopatra Charlie no it it uh it's a business that everybody's tempted they love the idea of going in it you know and they get a certain amount of psychic income but uh but I never owned any resources either well I my father and I and I used to

talk about claiming a horse in the carbon button we never quite got around to it and we had a lot of fun to wear the track together okay section six good afternoon my name is Hannah Hayes and I'm a high schooler from Iowa you said earlier today that transitioning to renewable energy has the people and capital to support it so with enough investment and Renewables the development of energy storage technology to soon meet Iowa's energy needs and support from the government system through inflation reduction act funding why hasn't Berkshire Hathaway energy truly invested in the

future by accelerating retirement plans for the coal plants which have high operating costs and are currently Iowa's biggest carbon polluter and will continue to be until they're finally retired in 2049 which is too late to be curbing emissions according to the ipcc and it's very interesting we the in Iowa we have actually produced more uh wind energy than is used the term amount of energy used by our our customers but it's not it's not producible 24 hours a day necessarily so the there's problems and incidentally in in Iowa a significant majority of counties welcome us

when we come around and want to put in wind and some don't want it I mean it it you know it is it is a there's a knot in my backyard someplace there's other places where they love the money they get from a small pot of grounds and and people in the like the taxes that are paid but I would say that if there's one state in the Union that stands out in the development it's it's Iowa but what's also interesting in Iowa is that we have one other major company there's always loads of little

co-ops and all kinds of things that sell electricity but we have one major competitor and uh our prices are uh significantly lower and as a matter of fact we are now in the Omaha Public Power District and three miles or four miles away we're selling electricity in Iowa and we are selling it cheaper even though Public Power was invented in Nebraska and has been a uh I think it's George Norris did it back in the 1930s and you know it's it uh it's Nebraska's resisted to some extent uh wind power more than Iowa but like

I said our competitor or Alternate Source hasn't really pursued it the way we have but I wouldn't I would say that our record in wind and solar has not been taught by any hotel in the United States and of course it's been aided by the fact that most utilities pay out 70 or 80 percent of earnings and dividends and uh uh we haven't taken a common dividend out of we had a little tiny preferred we haven't taken a common dividend of you know for 20 years we reinvested I don't know how many billions that's the

reason why their earnings have gone from 200 million to 4 billion but we're not earning a higher rate of return on Capital than we were when we started we just put way more Capital into the businesses we went along kept reinvesting the capital so I wish Greg were to tell you more details about it but but uh but uh I would say that we'd put up we'd really put a Berkshire Hathaway Energy's record against any utility of the United States petroleum you've watched it well I have and uh I'm not personally at all sure how

bad the global warming is going to be I think I don't think anybody knows for sure whether seeds are going to rise two inches or 20 feet and so I think there's a lot of faults claims here in the world where much is not known yeah we Wyoming [Applause] there is a lot of wind in Wyoming and we are building trans Mission line to extend out through the west but it was World War II and they told us to do it and somebody and we had a czar and in Washington could say you know just

get it done like I said the Henry Kaiser I'm building ships you know you can't believe how far ahead we would be down from where we are but we've got some money we've got the know-how and we do spend about this year our depreciation and our utility companies on the order of four billion dollars and we spend maybe three billion additional left so maybe we spend seven billion and uh and there are very few companies in them in the utility industry that are spending you know that percentage of their depreciate one but we'd love to

be spending more but there are people there are people all over that don't want they don't want the pipeline to go through there they don't want to tell if whatever it may be and uh that is the problem of a democracy and and even as I mentioned within Iowa you've got a great many counties that majority great majority of the economies I think but welcome the wind power and you've got some counties that don't like it and we're obviously going to work with the ones that don't want to work with us we do not have

the ability to go in and tell anybody what to do on that uh and there's a Public Utility Commission in every state uh that basically governs what we earn on it what we do and that's the way the industry is developing that's not bad unless you get into things that that that in effect uh you know extend they're part of a Country-Wide system rather than Statewide system I think also that even if we weren't worried about global warming it would make sense too sure shift to Renewables to conserve our hydrocarbons there are certain things hydrocarbons

can do that nothing else can do and they're only so much of them there why not be cautious in conserving them and and the cause they've got so much more efficient too I mean the the Winston I mean if you look at what we're doing now uh those towers are way more efficient and and but there's a lot of a lot of people that are talking uh that uh did all my things that can't be done and then there's there's a there's a lot of nonsense in this field yeah you know if you like nonsense

this is the feel for you no well we're but we're in the field so I know I know okay Becky this is a question from Monroe Richardson The Wall Street Journal reported in March that oil producers are producing less oil and may have reached their peak in the Permian Basin given the major positions of both Occidental Petroleum and Chevron in the Permian would you please explain the rationale for berkshire's significant Holdings of both those companies considering that future outlook for oil there well there's no question it's really interesting about oil and Charlie knows way more

about all of them what when did you by that royalty and your Bakersfield or whatever it is but that was before I met you right yes no it wasn't before it was but it was yes it was it's just before you're right yeah and and that got him early still paying me seventy thousand dollars a year what'd you pay for the a thousand dollars yeah yeah now that's the opposite of the Permian uh my dad bought a thousand or fifteen hundred dollars worth of royalties uh before he died in 1964 he left over my mother

my mother left him to her two daughters and my older sister died and my younger sister's here today and she gets these checks every month and she knows about all these different fields and what they're producing and that's the that's the reality of half of the oil production or something around that in the United States and then the other half uh the Shale and and you know if you've gone to the movies uh I never watched oil you've never watched the things that are pumping childish royalties in California you you see these you see these

gushers of oil well in the Permian and I'm like this should sink in on you and the first day the first day when you bring in a well uh you know it may be 12 000 barrels or maybe 15 000 barrels uh and it's even it's dangerous that um Occidental had one come into I think in 19 000 barrels or something like that one day and in a year year and a half that it becomes probably nothing it it's just it's a different business in effect and the United States it's interesting we use whatever we

use maybe 11 or a fraction what we produce at 11 a fraction million barrels of oil equivalent a day but if sales stopped I mean it would drop to six million very fast well just imagine taking 5 million barrels a day out of the production uh in the world and uh and then we're also taking down our strategic petroleum Reserve uh strategic petroleum reserves the ultimate oil field you don't have to drill it's just we've got it it was supposed to be strategic but but it gets involved in politics and uh so different kinds of

businesses and basically and and we like them occidental's position in the Permian and we'd we wouldn't like that position that well I got the minus one day it got the minus thirty dollars or a barrel well that was crazy of course but but if oil sells it at X you know you do very well and it was also the half of action you know your costs are the same and it doesn't change the production and it doesn't work as well but it also brings down the oil production of the United States very fast so we

don't know what oil prices will be but we do very much like the Occidental position they have and that's why we Finance them a few years ago and it looked like it was a terrible mistake uh when the oil Market just totally collapsed and and then it changed around and we bought a lot of the common stock uh in the last few months they've reduced are preferred which wouldn't we don't like obviously we'd be disappointed in them if they didn't reduce it uh it's intelligent from their standpoint so we've taken of the 10 billion dollar

preferred we've gotten maybe four or five hundred million dollars of it retired at 110 percent of par but uh Vicky hollombe uh is a she's an extraordinary manager of Occidental her first job was with City service that was the first stock I bought in 1942. uh she knows what happens beneath the surface I know though I know the math of it but I wouldn't know I would never find this idea what to do if I was in an oil field I mean I don't I can dig two defeat down I I can't in my backyard

and I can that's my that's my understanding of subsoil in the world I can't picture the field that Charlie has been collecting that monthly checked from from 50 plus years 60. uh well 60 60 years roughly uh or my sister's getting various Fields where they just keep pumping and pumping and bumping in and uh we in the United States are lucky to have the ability to produce uh the kind of oil we've got from shell but it is not a long-term source uh like you might think by by watching movies about oil or something of

the sort Charlie Daniel yeah it really dies fast so what those Shale Wells if you like quick death of the URL Wells that we have them for you no but Occidental uh they're doing a lot of good things yeah they do a lot of new wells and yeah they they're doing it in a profit but it's it's a different kind of oil it's just different yeah yeah and and that's true of almost half the oil produced in the United States and uh there's times more oil down there that nobody knows how to produce and they've

been working at it for like 50 years but they worked at the at the existing Shale production for about 50 years before they figured it out and it was weirdly complicated when they finally were able to do it there's only one type of sand that works can you imagine a horizontal pipe you know that maybe a mile and a half or something it's it's just so different than what you think about uh you can drive laterally for three miles two miles down yeah how the hell do you drill two or three miles laterally when you're

already two or three miles under the Earth they've mastered a lot of very tricky technology to be able to get any oil out of these Wells at all and we love them positioned with Occidental and yeah we love having Becky run it and uh they've been there's a lot more oil down there if anybody can figure out another magic trick that's all we need is another magic trick but Occidental have some other things too yes yes but it does but it the price of oil still is incredibly important in terms of the economics of short

lived oil I mean no question about that uh well if it's and we we will incidentally uh you know I there's speculation about us buying control we're not going to buy control we don't want to we've got the right management money and we can't we wouldn't know what to do with it Charlie wouldn't mind know what to do in oilfield sitting here buying coal would be like going out and seeking the would acquire a cancer or something you can't even borrow to expand a coal mine now it's really it got very unfashionable yeah and we

think frankly some of the things that are ridiculous and on both sides on both in in both extremes I mean it's just I mean you're dealing with physics you're dealing with um you know it's the politicization of of positions of something that's enormously important in terms of energy is just uh it just lends itself to demagogues and and fundraisers and advisory organizations and everybody inside but uh and we will make rational decisions and we do not think it's an American to be producing oil and there is no oil Basin in the United States than compares

to the Permian in terms of Promise yeah we were lucky well we didn't know it was there until yes not that many years ago it has ever been used up and they always knew that shallow was there but they thought it was going to stay unrecoverable forever the second or third stock I bought was Texas Pacific Land Trust and they owned three million Acres down there and pee and they were there were grazing revenues of ten thousand a year or something like that they were sitting on this incredible amount of oil and basically that company

is now actually part of Chevron and it went through Texaco and did all kinds of things and and they're still they're still a Texas Pacific land trust but a lot of that property is is fee fee owned by by their minerals are owned by by Chevron which is some Advantage but it's uh well it's an interesting subject I'll put it that way and and we will not be making any offer for control of oxy none of it but we love the shares we have and we may or may not on more in the future but

but we certainly have warrants on on which we got as part of the original deal on a very substantial amount of stock at around 59 a share and and that moved once lasted a long time and I'm glad we have them okay station Seven my name is Max Joe and from Toronto Canada I have a question for Charlie regarding statement you made in the past you once mentioned that you would prefer to hire someone with IQ of 130 who believes is 120 over someone with IQ of 150 who thinks is 170. understand that you were

referring to Elon Musk given the recent success of his Ventures such as Tesla SpaceX and starlink I'm curious to know if you still hold the view that Elon Musk overestimate himself thank you so much [Applause] well yes I think over Elon Musk over estimates himself but he has a he is very talented so he's he's over as they're meeting somebody who doesn't need to overestimate to be very talented there's a Bill Maher program about a week old maybe two weeks old but but he interviews Elon and Elon does a terrific job told us all with

Bill Maher who I mean it's worth watching and uh elonism he's a brilliant brilliant guy and I would say that you know he might score over 170 but but he you know it's he he dreams about things and and they they his dreams have got a foundation he would not have achieved what he has in life if he hadn't tried for unreasonably extreme objectives he likes taking on the impossible job and doing it we're different and I are looking for the easy job that we can identify yeah if we can do it playing Tic-Tac-Toe we'll

do it you know I mean we have a totally different way of going in the hallway yeah but we don't want to compete with Elon and a lot of things I mean you know we don't want that much failure [Applause] yeah and and it takes over your life and I mean in a way that it just doesn't fit us but but you know they're going to be well there have been important things done by Elon already and and uh it requires fanaticism isn't the word yeah it is the word okay well it isn't quite the

word but yeah but but it's a dedication dissolving The Impossible and and every now and then they'll do it and uh but it would be torturous to Mayor Charlie and uh I like the way I'm living and and uh I wouldn't enjoy being in this but he wouldn't enjoy being in my shoes either no no what's what's the Belmar interview okay Becky this question comes from Foster Taylor um at the 2010 Berkshire annual meeting you said the one question that you would ask of the Berkshire CEO would be about the distribution of cash to shareholders

as the Berkshire cash pile grows larger and larger so let me ask that question do you still feel confident of the future prospects for our over 100 billion dollars in cash on hand or are we getting closer to cash distributions well our our you know the one thing if Berkshire Shares are selling for less than we think they're worth that's a pretty that could be a pretty big uh uh whether to distribute cash that the Bob we'd rather what we really like to do is buy great businesses if we could buy a company for 50

billion or 75 billion uh 100 billion we could do it and we can do it and our words good uh it's difficult with a public company because in effect if you've been on a company uh you make the bid and their shareholders vote months later and that you're giving an option if we're good for it and the other guy has a way to uh topio or all kinds of things uh they can get out of it and you you get paid two percent for that or one percent for that that is not an appropriate price

and on the other hand uh Delaware will decide whether whether they should do it or not and that's that's the way the world is I mean that's that's the law so be easier to do with a private company and and there aren't very many that are big on the other hand there aren't very there's nobody else that can quite make a deal like we can under certain under the right circumstances and there could be a situation where a bunch of very a number of very decent companies I've got a very uncomfortable uh uh borrowing structure

and money comes to do it due to them it's the exact wrong time and that's when they pick up a phone is dead Tiffany and Harley Davidson and you name it I mean a whole bunch of companies uh in 2008 that sort of thing will happen again whether whether it results in us getting the calls or what the world is exactly at that time but the one thing we know is that that the number of phone calls that you can make at a time like that is very very limited and it uh and and uh

there can be good companies they don't want to sell the company necessarily but they may want they just may need 5 or 10 or 20 billion dollars depending on what company you're talking about and uh that can happen and our own shareholders can be selling the stock too cheap and we'll never do anything to make them solid shape and we'll tell them the truth about what the business is but if Market circumstances result in us being able to bind 50 billion of our own stock we'll buy it uh so we'll see what we'll see what

the world holds but I I don't I don't we don't have the opportunities we used to have but we've got we've got enough and and we're making money with what the things we have it isn't killing a stole a hundred and Thirty billion of of uh bills at five percent plus Bond equivalent yields and everybody says well yo yields are going to get out of the future I don't have a famous idea what else we're going to do in the future and you know the prime rate was 21.5 in 19. 81 or two and people

were worried that it was going to go totally out it's been out of control and Boker kept it from happening but if Volker hadn't been in there who the hell knows what would happen but uh so we're running Berkshire so that uh we'll do okay and maybe we'll do a little bit better than okay Charlie okay maybe fine okay station eight hello Mr Buffet Buffett I'm Mr Monger my name is Carlos Sanchez and I'm honored to be here from Guadalajara Mexico Mr Monger as a fellow lawyer I have a question regarding corporate law considering your

experience and success if you were to offer guidance to someone like when he was at the beginning of his career and before becoming bearshake Hathaway company's lawyer what key principles or lessons would you suggest to help him excel in his profession well I'm not sure I quite caught all of that but yeah what I don't think I have a lot of advice about How to Succeed as a lawyer I have a son-in-law who describes modern law practice on a big firm he says it's like a pie eating contest where you win you get to eat

more pie [Laughter] and I advise you to avoid that kind of a offer life is too short to just do nothing but eat pie yeah yeah Charlie is not practiced law since what 1964 maybe or not whatever it was but 1962 62. and uh Charlie has given me four or five pieces of advice that don't really come from his legal background but but because he knows the system so well and and you know really did do quite well at Harvard Law School despite his [Laughter] taunting of teachers and a few things uh he has given

me four or five Solutions on things that nobody else in the world would have given me Law Firm or otherwise and it and it's it's been a within a set within us almost a nanosecond of when I described a problem to him and they just gave me the answer that nobody else would have come up with and uh I I told you one of them last year so I won't repeat it at this meeting but but it's uh we've got the best lawyer in the world and Charlie it was something that really matters uh and

uh uh there have been times when I've taken advantage of that uh and I totally didn't want to be a lawyer he didn't want to sell his time maybe at 20 bucks an hour or something to people he thought were making the wrong decisions and he knew more about it and they did and that just did not strike him as a good way to go through a life but I think he's probably right on that I think he'd it had really gotten to be miserable if he had to keep doing that it's just no fun

be like me giving investment advice to somebody that or taking it from somebody I had to you know it just I just wouldn't want to do in life and Charlie figured that out and so we decided to work for ourselves and this worked been happy happily ever after we have no complaints yeah none uh okay where is Becky this question comes from Ryan Harding and it's about the new 15 corporate minimum tax rate as he sees it its implementation is currently understood he thinks it as he understands it to apply over a rolling three-year periods

and to be based on reported earnings first is the inclusion of unrealized gains and losses and reported earnings Under The Current financial reporting standards contribute to the calculation for corporate minimum tax rate purposes and could it could potentially convert some of those notional deferred taxes Into Cash taxes even if a rise in the market price of a major holding is only Temple temporary but rather extreme and then second could it reduce the effect of some of the renewable energy tax incentives and others yeah I I think the answer on the second part probably is no

but I don't want to say it is for sure because uh he's asking the same questions I Ask of Mark Hamburg who's the smartest guy on combining understanding a business understanding the tax code understanding SEC rules and everything else uh that you'll find in Corporate America and and these questions that that the particular question uh on multiple security then uh I don't think has been answered yet and I think that there are a number of things about the new tax act that were not an accent but I would say this uh the I you know

we have said ourselves what we think the proper approach to operating income we didn't design that because this tax law came along with some years back so we we're we would think that you wouldn't include capital gains unrealized capital gains uh in but we we've got enough I I think no matter how things turn out you know the 15 tax doesn't bother me in the least and uh we can figure ways once we know the rules where we will pay the 15 tax and you know we were paying 52 percent taxes federal income taxes one

I bought control in the partnership of Berkshire Hathaway I mean the tax rate come down dramatically and the Deferred tax that was embodied for example a Sanborn map when I was involved in a system that was allowed under the tax law to avoid that tax but that was a huge tax 52 percent so we we will let them we will live with this tax code and we do not think corporations are over taxed in the United States and uh you know and I think that the conversation about how we lose out to the world and

all that sort of thing it's really nonsense uh but uh we've got we got a new law that hasn't yet the regulations haven't been written on and when when we know what the game is we will absolutely figure out a way to pay 15 percent every year and which generally we've been paying anyway and as I I pointed out if there were a thousand corporations in the United States that paid what Berkshire has been paying nobody else in the United States no individual no Corporation would ever pay any income tax Social Security tax gift tax

estate tax anything else a thousand like Berkshire Hathaway would produce the revenue that's being produced by the federal government it's being derived under the present tax code from everybody in the United States and I don't feel badly about that and I'd love to get up to where it's one 500 or something of the sort of done uh but I'd like to do it endorsed us right I'm happy to do it I think we are privileged to live in the United States but we also have to control spending and uh that's something that Congress doesn't quite

widely like to give like to do and they didn't like to do it but my dad went to Congress but but they've dug in more as the years have gone by Charlie well we would cover this subject earlier yeah okay station nine am I right on this yeah my name is Avalon gross and I am from Los Angeles California I am a shareholder and it's my fourth year coming to the Woodstock of capitalism yeah yeah we're glad you came thank you so much for everything Warren and buff Warren Buffett and Charlie Munger what is the

funniest story that you have never told about each other and also what is the hardest part of your business I'll answer the second [Applause] second part of your question is that that we don't have a heart business we love our business every morning when I get up I feel good I don't know what's going to happen that day maybe nothing will happen but maybe something will happen and if nothing else I'll roll some t-bills or something but it it uh I work I work with the greatest group of people you can imagine I mean we

we uh we like each other and nobody is after anybody else's job or anything of the sort it's ideal working conditions and it's five minutes from my home or thereabouts uh so I haven't spent my life commuting uh I just can't imagine having it having anything better and and Charlie's got a lot of funny stories you haven't heard but we'll see which one he comes up with well I think Warren and I are naturally so ridiculous that we don't need very many funny stories we each do things that are peculiar enough so that we can

keep one another amused tell them what you told the lawyer when we were buying hostile cone I don't remember you tell them well well remember it was nice I and uh we were down in Baltimore buying a department store and we needed a lawyer and we needed a lawyer who was nearby and would do exactly as told and Charlie came up with them a very good lawyer from Wilma cutlers I believe and I don't know whether Charlie remembers the instructions he gave the lawyer or not yeah no I don't oh well Charlie told the lawyer

who we'd never met before and he said well he just he says treat Warren like I was 36 at the time or 35. he's a treat treat worn like any other 90 year old glad [Laughter] this guy knew exactly what he meant and uh we made the deal in a hurry and then we we went to the bank the First National Bank and I believe it was a Maryland National Bank actually and there was a fellow named Cami slack there wasn't it Charlie and we yeah we wanted to borrow six million bucks against a 12

million dollar purchase and Cami looked at his house and would bewilderment he says you want to borrow six million dollars in this little old hostel and uh Charlie and I said something to the effect well the Maryland National was our first call and if they didn't want to do it we had another bank we'd go to and anyway they allowed us the money but but when he said a little old wholesale coin we immediately started thinking maybe maybe this isn't the best deal we've ever seen in our lives and from that point on we were

trying to figure out how to sell it so we've had but we we had as much fun uh Sandy got us one was involved with us then too and we had as much fun out of deals that didn't work in a certain sense as the ones that did work I mean it's it uh you know if you knew you were gonna play golf and you're going to hit a hole in one on every ship hole you just hit the ball and then went in the holes 300 yards away or 400 yards away he was nobody'd

play golf I mean part of the fun of the game is the fact that you had them into the woods and sometimes you had to get them out and sometimes you don't so we are in the perfect sort of game and we both enjoy it and we we have a lot of fun together and and we we don't have to do anything we don't really believe in doing I mean we we are not dictated to by by any group uh and so we get to follow our own we get to forge our own Dustin Aaron

and in a sense towards the own principle by which we can run the company and that's a huge luxury in life and and we don't want to be president of any other company in the world or CEO or anything else or we have to conform to certain things that we really don't want to conform to kind of fair description Charlie yeah it is yeah okay Becky this question comes from David Cass who is a professor at the business school at University of Maryland he says at last year's annual meeting Warren mentioned that Berkshire had taken

a large stake in Activision Blizzard as a merger Arbitrage play since the UK regulator has blocked its acquisition by Microsoft his Berkshire reduced or sold at stake well I think in terms of what we do with stocks we don't give information except when required to which is in the 13th out for whatever we file and uh and there's some there's certain things you can actually figure out by looking at our 10 or 10q which we followed this morning uh but you have to look pretty hard but um I would say this it's I think Microsoft

has been remarkably uh uh what's the word uh uh willing to cooperate with governing bodies and I mean they want to do the deal and they met them the opposition it seems to me more than halfway but that doesn't mean that it gets done if if I've given country in this case the UK wants to park it there they're in a better position to block it than the United States but just the way the world works and uh that doesn't get solved by offering more money or so it it um I don't know how it

how it turns out uh but if it doesn't go through I don't think it's through any short coming by either Microsoft or Activision uh but not everything that should happen does happen and uh uh well we weren't we ran into it when we when we bought what made the deal with Dominion Energy 18 months ago and that they let us buy a good bit of what we wanted to buy and then and then there was government in effect said you can't buy something else which I think we would have done a better job with them

anybody else did and which the States involved they're not object to it which the customers didn't object to it but but you don't you don't take on the United States government you know and and you try and figure out things that that you won't have a problem with and uh I think in that case the NOS government made a mistake I think the British government's making a mistake in this case but but that's that's life in the big cities sure I would say and uh what we do will depend on a lot of things Charlie

well I think what we do yeah we you kissed that one off beautifully okay station 10. hi Warren uh hi Charlie my name is Anderson Fuller and I'm from avonport Nova Scotia in Canada and before I ask my question I just want to thank you for all you've done to give us insight into your minds as investors um so for me the most compelling takeaway from Berkshire is your guys's emphasis on and successful use of properly aligned incentives in my view owning and leading a business has two Central benefits first you directly benefit as the

company goes through your equity in it and second you have autonomy incentives for employees are a bit easier to understand such as offering benefits Fair pay and creating a strong culture but I've always struggled to understand them at the highest level even though you say Berkshire gives its managers significant flexibility it must be less than what they had when they were independent Additionally you would think passion and a willingness to sell would be inversely correlated so how exactly does Berkshire Bridge's Gap and incentivize owners of its subsidiaries to give up these benefits to Berkshire thank

you well what we really hope to find is managers who love their business but don't like a lot of what comes with it as a public company I mean if they have to spend a lot of time listening to people tell them what to do about this or that and they can't afford to irritate them uh or they have to go along with their trade Association because or what you know whatever they may call it um because you don't want to look like a free rider and then there's all kinds of things compromises that people

have to make in most jobs and uh Charlie and I solved that problem I had five bosses in my life and I liked all five of them and two of them were just huge factors and making my life better but I like all five of them a couple of them are you know some people here JCPenney Cooper Smith you know I worked with 75 cents an hour and I love them I love working at Penney's well I didn't love working at pennies out but I love working for uh Cooper Smith and and uh you know

it was 75 cents an hour but I had I had to do what they told me to do which was to sell men's shirts first then men's clothing then children's clothing and so on and uh I love working for the newspaper and I had a great manager when I was University of Nebraska got to work for Ben Graham I made everything worked out but but it there's nothing like working for yourself and if you can't own a big company working at Berkshire Hathaway for running a company uh is the closest thing you will get you

don't have to spend time according analysts who you'll probably have contempt for uh in many cases you don't have to spend time with banks you know getting money and and particularly in terrible times yeah there's all kinds of you get a lot in the way of Freedom then I would think would be meaningful to me and it might be better if you own the whole place yourself but maybe you've got siblings that want out maybe there's a million reasons why you may not be able to achieve that uh unless you some uh to Berkshire and

uh that's easier probably if you have a family business where people want to go in different directions than it is with a public company but there's still possibilities there so that's that's why that's why I I think if I owned a public company and it was worth many great many billions of dollars and Berkshire Hathaway wanted to buy it and the shareholders were willing to vote it uh I would consider the way I would feel about life but one thing I wouldn't want to retire at 65. I'd want to keep working and uh uh that

I'm waiting we just we there's there are reasons that saw the Berkshire which Charlie and I in certain positions if we were on the other side would take the deal and and uh uh but it isn't for everybody Charlie I think we have a pretty good one we've been very lucky Ian and I don't know it seems to me that most of the people are going to end up the way we did they almost already know how to do it well the most important purchase in retrospect that we may have made was National Indemnity not

because specifically what it did but what it led to and Jack Ring Mall control the company and I know a woman liked them and and uh he knew me and once a year he'd get irritated uh when the Nebraska Department of Insurance or somebody would come come around and he said they always came around when the Aksarben racetrack was open you know so they could I mean he had all these theories about why it was a pain in the neck to be regulated and I and I told Charlie heider next time Jack is in that

mood where he's ready to sell just because he's tired of fooling around with all these guys be sure and find them and so Charlie called me one day and he says Jack is in the Heat and I said bring him over and we made a deal well that's why Jack sold and he was happy after he made the deal and I was happy after we made the deal so there's a man that controlled the business but just decided these people didn't seem to bother him as much once they were my problem and not his and

you just can't tell when lightning will strike and and that didn't do magnificent things for us initially but just look at what it led to you know and then uh so you never you know if you knew if you knew how you were gonna again if you know how you're gonna shoot all 18 holes it wouldn't be any fun playing you wouldn't get on the First Tee I mean it's it's the it's the uncertainty the fun of playing the game the opponents all kinds of things that make a game interesting and and I think Charlie

or are in the most interesting game in the world okay Becky here's a question from Simon Withers in Perth in Western Australia it's been a long time since we've heard about See's candy and netjets could you please give us an update on C's performance and when you project it we'll run out of places to open stores in the United States and could you also give us an overview of how netjets has performed since its acquisition and whether it's achieved the potential you saw at the time of that acquisition well with seeds it hasn't been a

question of opening stores we found out that we we've tried about we've had this wonderful brand that doesn't travel you know uh the Mystique the actual product the feelings people have about some things as we said before I mean it sometimes it's it's limited to giving Marcus Dr Pepper sells at a huge rate in Dallas Fort Worth and maybe I'm maybe 10 times the percentage per capita maybe that it has in Detroit or Boston and you say well how can that be with the product's been around for a century and people travel and you have

National advertising and I'm not sure but I I kept learning more as I watch different brands and Charlie and I our economics were so good in California that we tried to in many cases the same experiment over and over again it doesn't cost much to experiment we've tried everything in the world Doom close the band brand to travel and we always think we were right for the first week and then we find out that that the magic we can we can beat any other candy store pretty much but there aren't any candy stores anymore to

speak of as the world has changed so uh sees is a 101 years now it has magic and it has limited Magic and sort of the adjacent West you can almost as gravitational almost and and then uh you get to the East and incidentally in the east people prefer dark chocolate them to milk chocolate in the west people prefer milk chocolate to dark the easting saw managers in dark the West I mean there's all kinds of crazy things in the world that consumers do but you want to keep observing it because you do learn a

little and with Charlie and I'm sorry the the temptation to keep trying things because the economics were so good if we succeeded so we tried various things and of course every manager wants to try as it comes along because they 've learned you know it should work but it doesn't work so but that's that's what makes it very interesting in netjets we we have really learned how to distinguish and justifiably distinguish uh a service at the people so that if you can you have to be very well to do to use it but if you're

very well to do you're in effect you're you're spending your errors money I mean it's what I told my Aunt owls after she went from teaching to be worth millions of millions of dollars and she came to see me she never been married and she she said can I afford to buy this for a coat in 1968 or nine and I said Alice you aren't buying it your nieces and nephews are buying it because that's who you're leaving your money to and speaking on behalf of your nieces and nephews I've said we want you to

buy it and it's the same way you know do your heirs want you to fly around an address or do you want to leave a little more money to your foundation or your kids and and where to solve that one is to offer your kids a few hours themselves and then their attitude can change so it's it's it's in a class by itself it's it's done what Ferrari has done in a different sort of way in cars Ferrari sells 11 000 cars a year I mean maybe twelve thousand and you know they're known throughout the

world and we'll have a Chevy dealership in Austin or something we'll sell as many cars but we're not Ferrari and netjets has 600 and well the county Europe I mean it's maybe 651 we're going to buy 100 planes this year and we won't sell any because we've got a backlog and we took we took a nutshell flight over to Tokyo and we arrived in good shape and we spent a couple days there we flew back and there's just nothing to it now you can say well you're getting sort of decadent and all that in your

old age but uh the money will go to philantha being though the money will probably be 100 billion or more and and I forget the philanthropies want me to spend a few bucks on myself and all it has to do is be better than the last dollars that are spent by various Florence a piece which have plenty of problems finding things to do that make lots of sense so uh not just there isn't a competitor I mean we've looked at the other day wheels up stock came out of ten dollars uh a couple years ago

I was selling at 48 cents the other day and they got 12 600 people they've given a bill a billion dollars a little over a billion dollars on prepaid prepaid cards where they they've given them money and they get a certain number of hours later on and uh they don't I think there's a good chance that that some people are going to be very disappointed later on when they have money then doing that Jets they they know we'll get they'll get on the same planes with the same Pilots uh as I am my family have

flown on since before we bought the company so it's not it's not shaped but it wasn't the decision was shaped by some commercial uh objective a couple years before I never heard of Matt Johnson Frank Rooney mentioned it to me and I've watched Sharon share immediately and and we bought the company and and every welcome my kids have to fly a commercial sometimes but sometimes they get to use ours too but I've never flown anything else and why would I I mean it's it's it's the goal Center and uh uh nobody will match our Fleet

I mean if you've got you know 600 planes you've got them a lot more places in the United States than that anybody else will have theirs I think we're the second largest Fleet counting the commercial airliners and and our fleet's growing like I said the rate of 100 Lanes a year or something it's a marvelous company and Adam Johnson has performed uh you just can't believe what he's done with the business and it was a tough model for a long time but he's brought a word is and we've got we should have a wonderful company

for forever Charlie well that just has been remarkable you can argue that it's worth as much as any Airline now oh it's so different and Charlie we had a hard time selling Charlie and that just membership and then we figured the way to get him to buy a membership was to put a coach seat in the fuselage and that really knocked him off I mean I think he's the only one we sold on the basis I used to come to the Berkshire annual meetings on coach from Los Angeles and it was full of Rich stockholders

and they would clap when I came into the coach section I really like that [Applause] but I got to tell you we semi-corrupted him he he he he he feels he kind of has to explain it but he still flies up and be crazy not to you know it's uh and your errors are paying for it I mean if you find me anybody who's a state came in at less than zero because what they spend in on that Jets threw them into that position uh let me know but I've I've never seen a case yet

it won't be the case for the Buffett Valley and and it's the residual bottom beneficiary that's paying uh for your uh your membership and and uh it's a little hard to get used to paying that much money though when you look like Charlie and I have most of my life okay we will go to uh section 11. hello my name is Humphrey Liu I'm from Charlottesville Virginia ah first I wanted to ask to wanted to add my thanks to you and Mr Munger and Mr Buffett and all of Berkshire for throwing this Grand Event each

year looking at the global Trends it increasingly does seem that zero Mission Vehicles may have finally reached the cusp of mass adoption do you see any opportunities in this space either in specific vehicle manufacturers or in related Technologies well I would say that that Charlie and I for longer felt that the Auto industry is just too tough you know the Ford Motor Company I mean Henry Ford uh looked like he owned the world with the Model T and then and he brought down the price dramatically he took up wages dramatically he was he might have

been with a different personality ah or some different views he might have been elected president of the United States I mean there's a good book that came out on that recently that told about the story of one of them tell us a little about Nebraska in terms of it but Henry Ford and and Thomas Edison joining up but maybe a year or two was it if you're interested in in Autos you ought to read that book but Henry Ford did that and you know and 20 years later that uh they were losing money and they

had a guy with a gun in his pocket I think Harry Bennett you know it was was running the Ford Motor Company it was on its way to the junkie when the whiskers came in and and Henry Ford II Hank the deuce as they call them brought in Tex Thornton and my friend RJ might learn a few people but it's just it's not I've read that I was reading the other day actually the 1932 annual report of General Motors and uh it's one of the best annual reports I've I've read it's a totally honest you

know assessment of exactly where they were they had 19 000 dealers then and the population as I mentioned earlier was about 120 million or so and now with 330 million people all brands in the United States have like 18 000 dealers or something it's just a business where you've got a lot of worldwide competitors they're not going to go away and they'll look like it looks like there are winners at any given time but it doesn't get you a permanent place although as I mentioned I would say Ferrari is in a special place but I

only saw 11 or 12 000 cars a year and uh us last year I think there were 14 million something and uh uh it's it's not a business where we find it fascinating to be in we like our dealership operation but I don't think I can tell you what the Auto industry will look at look like five or ten years now I do think that you're right that that that you know there's a you will see a change in the vehicles but you won't see anybody that owns the market because they changed the vehicle Charlie

well the electric vehicles coming big time and that's a very interesting development at the moment it's imposing huge Capital costs and huge risks and I don't like huge Capital costs and huge risks and we're subsidizing in the United States and we're actually doing it try putting in a pro labor time I mean it's it is subject to politics like you can't believe it too but but it's it's going to be with us we're not going to quit we're driving cars and American public has a love affair with them and uh but I I think I

know where Apple's going to be in five or ten years and I don't know whether the car companies are going to be in five or ten years and I may be wrong but that's uh uh we Charlie and I follow the auto business with with intense interest Charlie's firm was the specialist in General Motors on the Pacific coast Stock Exchange and that was that was a franchise it wasn't it Charlie yeah we get by working very hard we can make a minor amount of money yeah yeah it wasn't minor at the time but it was

it wasn't fired at the time even yeah well that was pretty minor okay Becky this question comes from Lindsay Peter Schumacher in Cedar Rapids Iowa does the current size of the Federal Reserve balance sheet concern you in particular the result of quantitative easing the Federal Reserve expanded its balance sheet out of nothing the net effect in essence is a form of single entry accounting creating something of value out of nothing other than a series of book entries Andre uh entries and wondering what Mr Munger thinks about this as well well I don't think the Federal

Reserve is the problem and I think they can't solve the fiscal problem uh and uh I don't I don't I do not worry about the Federal Reserve and uh uh I think it's fulfilling the functions for which it was established I probably would not have been if they only they have two objectives and I would not have been one probably that would have changed the inflation objective to two percent a year from from zero I I think that that uh you know I think that if you tell you people that you're shooting to depreciate your

currency at two percent a year uh that is a lot of implications although it feels good to a lot of people a lot of people want a little inflation uh but nobody wants a lot of inflation except somebody's got a lot of deaths and uh uh uh I I do not worry about the Federal Reserve balance sheet I I enjoy looking at it and the numbers are big I always like big numbers but but uh it is not it's interesting the most one one of the most interesting figures to me is currency in circulation I

mean it is gone they were saying cash is trash back in 2007 and eight and all that cash is going to disappear well if you look at the Federal Reserve balance sheet it's gone from 800 billion to two point two trillion and most of us in hundred dollar bills overwhelmingly and I figured out I think there's about fifty one hundred dollar bills per person babies everybody in the United States and uh I would really like to know where all of that is I mean it nope nobody's hoarding Euro dollars you know in South America Africa

or whatever and uh the demand for currency now you know it's somewhat maybe usually subtle drug dealers uh activities and all of that but anybody thinks cash is trash Auto uh look at the look at the Federal Reserve balance sheet and actually you can look at how many five dollar bills and two dollar bills and ones and all that and the action has been in one in 100 bills I mean it was it is just astounding the way up 100 bills spreading and of course we don't know whether I don't know where they are and

I don't think the FED can know exactly but they probably make a lot better guess than they could but I do know what's happened and you can watch it every week and you'll watch currency in circulation probably grow a little bit and uh and believe me cash is not trash Charlie well I don't know where we're headed with all of this it's been very extreme I think that you you could be pretty extreme in fighting depressions and so forth if you were versioned afterwards to a period of some discipline but some discipline but if you're

going to just keep borrowing your printing money and spending it I think eventually it causes bad trouble and you can see it in Latin America Latin America let its currency get out of control all the time and of course it lagged the United States an economic achievement greatly so I think we pay a price if we if we ever give up our old ways entirely and go into a new world where we just try and print money to make it easier to get make to get through the air we paid a price in World War

II I mean everybody school kids and everybody else myself included I'm with we bought our work originally called war bonds and defense bonds and savings bonds and all that but but from 1940 due to the 1944 or five you paid out 1875 and you got 25 back and every kid save savings and Samson all that but when you got all through you know you had 120 percent of GDP in the national debt instead of 30 or 40 percent and we had a lot of inflation subsequently a lot so the people that really that bought those

bonds and supported the war had a portion of their purchasing power taken away from them well there wasn't anything wrong with that particularly but one of the country gets in the habit of doing that uh I don't think it's I think it's tough to tough to figure out where the breaking point is with Society but I don't think it want to come anywhere close to it it's also tough to have a massive people unemployed that's the tension yep well let's that's why the pet us to objectives in terms of employment and inflation and uh but

they are not the ones that great that officers and so far the system has worked pretty well although like I say it's been so far the man who's jumped off a tall building yeah it's all right until he hits the ground yeah well but but you there could be ways we can stop now at the third floor or the sixth floor we don't know what Ford is but we know what this hasn't happened at the ground but the question you know politically it's very very very tempting to to both Appropriations and it's not fun to

vote taxism Russell long has the Senate finance committee they've got a building they matter from now he said you know don't tax you don't tax me tax like are behind the tree and basically that is the attitude of uh I mean it's the reality of what is useful in politics and so far those countries managed to work very well with a lot of things that could theoretically cause a lot of problems but it doesn't mean it doesn't guarantee us the future on it and and being the reserve currency let's just do a lot of things

but it also creates a lot of consequences if we screw it up Charlie well we're bidding is subject to death but by it is a problem I wish we had a solution okay well that we'll go to station one and see if we hello uh Mr Buffett and Mr Munger my name is Connor I'm an economic student at the University of Nottingham my question for you today is during the pandemic we witnessed supply chain shortages especially from Asia as a result companies have chosen with political attentions to move production away should companies make these decisions

and should the government support them okay well that's a good question yeah obviously yeah it's logical if you're in business and you can make the thing in Mexico way cheaper it's natural to open a factory in Mexican and in Mexico and get your parts cheaper and a lot of the auto manufacturers have done exactly that on the other hand nobody wants to hollow out the whole country so all the manufacturing jobs are elsewhere and we're all living a bunch of farmers you know like English colonies in 1820 or something and and these ideas are of

course in in big tension uh we have we don't have that much foreign production all right Warren yeah well but we've lost well originally Berkshire Hathaways the textile manufacturer it lost because the South became feasible versus the North and of course then eventually uh the South got expensive compared to China sure and and uh Society benefits and some people get killed in that sort of a situation and a rich Society should take care one way or another and of people who worked in our shoe factories people worked in our textile companies I mean if you

worked in our textile operation and in 1960 or when we took it over half our half our workers only spoke Portuguese and uh you know they and they weren't getting great wages at all but now you could do it in the South and we were doomed to go out of business and it wasn't the fall of the worker in any way shape or form it wasn't the hard fault we kept trying to compete well it was a TVA had cheap power down there and a textiles really congealed power and air conditioning changed everything but the

Heat and those damn Pleasures were impossible that's a lot of things but then then it moves uh offshore in many ways and and now the country is better off because of it but it displaces a lot of people who really can't do something else in life you can't talk about retraining somebody that's 55 or 16 speaks only Portuguese and really tell them they're going to have a great future a New Bedford Mass and you know and and so you don't want to be glib about it and we can afford to take care of those people

and we've got some systems that work reasonably well but but there's a tension between you know what about the person that doesn't do anything and all that kind of stuff so these are not easy problems to solve but I would say that by and large we want the whole world to prosper we do not want to be a world we don't want the United States to be a country of extraordinary prosperity and have the rest of the world starving no it it it it isn't going to work and particularly it's going to work in a

nuclear world so and you can have your own feelings about it as a Humane person but but uh it doesn't it it it does not it it can be done better and and we've got the resources to do it I mean the output of this country what can be done with a lot fewer people and and doing more specialized things in the course that has been the work week in the United States you know in my lifetime has dropped dramatically and people still feel busy and it will be the human lot to say you know

how can I get all these things done but but my mother didn't drive three kids any place so if you want to go in a place if you were lucky he hadn't got old enough he had a bicycle the world just keeps looking at everything moving up as becoming sort of a base that leaves them somewhat dissatisfied and with our prosperity uh we can do a lot of things we couldn't do it in 1930 and including taking care of people that got displaced by the fact that somebody else can do that work and and improve

their lot in life and we got to make sure that we have the best system that takes care of the people who who get displaced by that but doing that and building a system we have and everything will make a lot of mistakes along the way but we got to keep moving in that direction and I'm really interesting thing about it is that the Adam Smith was right that the the free market capitalism automatically with a lot of property and private hands and free trade and all that automatically creates GDP per capita that grows and

helps everybody including the people at the bottom it helps everybody a lot but a inherent in the process there's a lot of pain in that free market capitalism for instance of the Portuguese workers and the taxable company in New Bedford and nobody's ever figured out how to take all the pain out of it we do have government safety nets to take some of the pain out we make those safety nets a little bigger as time goes by but apart from that if you try and take all the pain out you'll also take all the gains

out of it you won't carry growing GDP per capita you'll have an economy like Russia's which has been characterized as saying they pretend to pay us and we pretend to work yeah the other systems haven't worked better but yeah it also produces more and more disparities in wealth and people that do nothing but got assets under management without actually performing anything extra make fortunes and I mean it's it's a job of government to keep the best aspects of capitalism while not causing people that only speak Portuguese to suffer in the process I mean the two

aren't compatible politically over time and we stumble along making progress on things like Social Security and all that and and we are a lot better off than we are when I was born net the United States has done a very good job of this tension between capitalistic growth and growing social safety net we can be pretty proud of our country Looking Backward that may be why we have 25 percent of the world's GDP starting with a half a percent of the population and in a few centuries I mean it's just it's a miracle it wasn't

because we were smarter oh you got to say that there must be something to the system that's worked pretty well even though it's produced a Civil War and all kinds of things you know and women you know not getting a shot at anything you know even after they passed the the 19th Amendment uh it's it's a work in progress I think actually there's been progress but it's Mankind's nature to to see the see the things wrong with it if you've a few words expansion Asia to take the progress as a right not something to be

earned or strived for but something that should automatically just flow in over the transom and that attitude is what is poison it doesn't do anybody any good okay now ask us an easy question Becky this question comes from Doug deshield since the accounting rules changed requiring Berkshire to report the change in fair value of its Equity Investments through the income statement Mr Buffett has repeatedly told shareholders to ignore those changes as they're not reflective of the long-term returns that those investments will produce recently Mr Buffett has argued that hold to maturity accounting used by the

Banks to avoid reflecting the changes in fair value of Bank investment portfolios in the income statement and the shareholder Equity account do a disservice to its various stakeholders can Mr Buffett elaborate on why he views Mark to Market accounting differently for banks in comparison to Berkshire oh I believe in in both cases in doing it on the balance sheet and not in the income statement and and it's a very tough problem with the Auditors face as is that the obviously the income statement feeds into the balance sheet but the balance sheet tells you whether deposits

can be paid it tells you a lot of things and we show it on our balance sheet we believe in showing Market values on our balance sheet we just don't believe in running it through the income account and uh in getting there we would put another comprehensive income like it was for a long time so I I sympathize to some extent with the oh a far extent with the audit group but they have to really decide whether they want to they want the balance sheet to represent values except it doesn't reflect them on the upside

if we buy a Seas Canyon it's worth way more money so it's conservative in that sense but uh or whether they want to have a an income account that becomes meaningless to people because it it really changes every five seconds you know I mean while we're all the Market's closed today but but uh you know we have days well I guess Apple was up what seven or eight points I'm in on Friday I mean that's seven billion dollars I mean uh that's a crazy income account it is a reflection of where we stand at that

point and of course if you're a bank where you're putting out money brilliant and things that people sort of mortgages I mean primarily uh uh they're a terrible instrument for a bank to own but a great instrument for a consumer to buy and build into the whole society now in a way that was entirely different than the past uh you've got to pay attention to whether whether they've gotten out of whack in terms of of what the value of what they own and what can be demanded of them tomorrow morning and if we had all

of our money this could be demanded from us tomorrow morning we'd have to behave a lot differently than than Berkshire does so I I don't I don't I really think the way to do it is the way we recommend doing which is exactly what was being done until a few years ago I recommend the shareholders look at it that way but we're going to follow the rules obviously the SEC uh you know State authorities and everybody require of us but I'll still explain to the shareholders exactly what I would explain to my sister about what

really counts of Berkshire and I think every management actually has an obligation to that and instead of it they go in the other direction and give them a lot of figures that are total nonsense you know I can't imagine some of the you know EBA da I thought was about as bad as you could get but they kept going you know earnings before everything uh Ebe and so uh uh but that doesn't change but I would tell my sister who's here in the audience I hope uh and uh I should tell us all the shareholders

and we'll we'll consistently do what is legal and we'll consistently say what we think is right sorry yeah [Applause] we want owners who understand what they own now that doesn't mean they have to understand the detail of it but that's why we have people that have been around 50 or 60 years that doesn't mean that they read the 10 cues or anything like that but they they they feel we're telling it to them like you know hello next door to us yeah I don't know what the accountants were thinking when they made that change it

strikes me as Bonkers absolutely bonkers I don't see how anybody who understands how businesses really operated and should be operated by owning managers would have made that accounting change the accounts did it just because they had a wild moment 20 25 years ago I suggested the audit progression that they just that the auto committee asked Auditors four questions and uh the shareholders would know a lot more about the company if those questions were asked but it wasn't good for the Auditors to be asked those questions because it might increase their liability if they if they

answered them and the client didn't want them to answer them because the man even didn't want them to no they were they want a system where if they follow certain rules they're safe and that's understandable but I don't think the past year this rule requiring changes in marketable Securities to go through the income account quarterly they didn't do that to protect themselves from no liability they just did that for some crazy reason of Their Own you get a bunch of people who are all being drawing a lot of pay out of a big complicated system

and rising in like so many officers in the army God knows what they'll do if you put them in a little room by themselves and tell them to invent new accounting standards well to our order to remember that's Charlie talking and that's right but I agree with them 100 like he's 99 he can get away with more than I can get away with okay station two but what he said is enormously important I mean it just you got to have some insights into what the hell really goes on and and even if you're a counting

accountant yeah okay station two do you want dear Charlie my name is Victoria runtrop I am 22 years old and I study in Munich at the cdtm the center of digital technology and management as your grandchildren are more in my age group let me ask you how do you transfer your wisdom to your grandchildren and heirs how do you lead them to investing do you see value in investing as a family or individually thank you I'm gonna let Charlie do the answering he's got more well I have my grandchildren but I am quite philosophical about

my grandchildren not thinking exactly the way I do it seems to me that's almost a natural course of life and I just live my life my own way and they can observe it as an example if they want to and if they don't they can try some other way I don't like it when they try some other way [Laughter] to pretend that I like some of the boyfriends and girlfriends I don't like but I just struggle through like everybody else and usually I just bite my tongue and keep silence that's my way of handling it

well I would say that I think that my case my three children have grown a lot smarter in the last 30 years and I think I've grown smarter and and I know but you needed a lot of help that is for sure no I I would totally acknowledge that that's why I had the room to go I mean I I had plenty of room for improvement but but I all had a lot to grow I went to I worked a year for U.S steel which was in there uh fabrication department in Los Angeles a big

operation the thing was utterly doomed and three years later it went back to Greenfield the whole thing was raised to the ground I did not see it coming now I would like to be that ignorant of that as I was at that age it was a sin and my professors by and large were even more ignorant than I was we we just know what he had observed the basic economics of business in a scientific way at all when I was young I was young well if we're getting into confession time I have to tell you

it's 3 30. so we don't want to keep going on who knows what we'll be saying another half hour so yeah so I thank you all very much for coming at 4 30 we will have the shareholders meeting here and the the we're continuing to sell goods for another 20 or 25 minutes we've already broken all kinds of Records but let's really make it tougher comparisons next year and I think again I thank you for coming come next year and maybe we'll figure out the answer to a few more of these questions [Music] thank you