Buffett emphasizes: Abel takes over as CEO at end of year, bullish on U.S. economic resilience, cash reserves to be laid out opportunistically.
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The annual event of the investment community – Berkshire Hathaway shareholders meeting kicked off on May 2, Beijing time at 9:00 p.m. Saturday night into the General Assembly shareholders Q & A session.
The “God of Stocks” once again participated in the whole process, with his CEO successor – the head of Berkshire’s non-insurance business Greg Abel, and the head of the insurance business Ajit Jain, to answer shareholders’ questions.
The key points from Buffett’s shareholder meeting, as summarized by Wall Street Journal, are below:
1) On trade
“Trade should not be a weapon” and the U.S. should seek to trade with other countries and do what each is good at. Protectionist policies are a “serious mistake”.
2) On America
“Fiscal policy is my biggest concern in the U.S.” and the value of the currency can be ‘frightening’ when the government acts irresponsibly.
Warren Buffett hinted at betting fully on the United States and supporting American exceptionalism, saying that his luckiest day was the day he was born in the United States and that the United States is a model of capitalism.
3) On Japan
We don’t take investing overseas lightly unless I think it’s an opportunity that really has great potential.
I intend to continue to hold shares of Nippon Shokai for 50 or 60 years. Even if the Bank of Japan raises interest rates, he would not consider selling.
Berkshire has now invested $20 billion in Japan, and I even wish we had invested $100 billion instead of $20 billion.
4) About U.S. stocks
What U.S. stocks have been experiencing lately is “not a major volatility,” and compared to past crashes, “it’s not a dramatic bear market,” nor is it a similar situation.
5) On record cash reserves
There may be investment opportunities over the next five years for how to utilize Berkshire’s record-sized cash reserves.
Berkshire recently came close to making a $10 billion investment.
6) On Succession
Abel, the head of Berkshire’s non-insurance business, should take over as CEO by the end of the year. he will not sell any of his Berkshire holdings and will donate them gradually.
7) On Berkshire
If Berkshire’s stock price falls by half someday, it would be an opportunity for me instead. It’s not that I don’t have emotions, but the volatility of the stock price won’t sway my rational judgment. It won’t affect my assessment of value.
As a whole, Berkshire’s profitability will continue to grow over time.
8) On investing in companies
Buffett believes that a balance sheet is a good starting point for assessing whether a company is worth investing in.
He says, “I spend more time studying balance sheets than I do looking at income statements. And Wall Street doesn’t really pay much attention to balance sheets, but I like to look at a company’s balance sheet for eight to ten years before I look at the income statement because some things are harder to hide or manipulate on the balance sheet.”
9) On investing in young people
If you have a direction in life, then you need to strive to make friends with those you respect and aspire to be like.
The fastest path to success is to find the kind of people who are really good at what they do and walk with them.
Buffett announced at the end of the Q&A session that he plans to propose to the board of directors that he step down as CEO at the end of this year, which will be the beginning of the end of the “Buffett era” at Berkshire. Investors should be prepared for a Berkshire without Buffett at the helm.
Before the start of the question and answer session at the shareholders meeting, Berkshire Hathaway also released its first-quarter earnings report, some of the key points are as follows:
The company's first-quarter operating profit was $9.64 billion, compared with $11.2 billion in the same period last year, a 14 percent year-over-year decline that fell short of analysts' expectations. The company warned that tariffs could hit company profits further.
Berkshire's overall profit also took a hit from the depreciation of the U.S. dollar in the first quarter. The company said it recorded a loss of about $713 million in foreign exchange, compared with a gain of $597 million in the same period last year due to exchange rate fluctuations.
Berkshire was a net seller of equities for the tenth consecutive quarter, selling $1.5 billion in net equity assets in the first quarter.Berkshire’s cash reserves reached another record high of $347.7 billion for the quarter, the earnings report showed. In an environment of high uncertainty due to tariffs, Buffett is cautious about current investments and expects that there may be good investment opportunities over the next five years, saying that Berkshire’s hold off on buybacks stems in part from a law introduced last year by the Biden administration that imposes a 1 percent excise tax on stock buybacks.
Below is a transcript of the highlights of Buffett’s AGM Q&A session, in the order in which the questions were asked:
21:00 2025 AGM Q&A Session Opening Remarks
Opening of the Shareholder Meeting. Warren Buffett opens the meeting by stating that this is my 60th shareholder meeting. There is thunderous applause.
Buffett introduced 19,700 people came to the AGM this year, a record number of live attendees. The site of the shareholders meeting, See’s Candies candy sales have reached 317,000 U.S. dollars. Brooks Brooks running shoes sales of 310,000 U.S. dollars, Jazwares toys and other products sold 250,000 U.S. dollars.
Buffett introduced a limited number of books commemorating the 60th anniversary of Berkshire’s acquisition for sale at the conference. It was the only book sold at Bookworm, the official bookstore, this year. Berkshire printed and published about 8,000 books, about 3,000 more than initially planned, and about 4,000 have been sold on the convention floor.
21:21 First question of the AGM: Trade
The first question posed to Buffett was about import vouchers, a proposition he made in a 2003 op-ed aimed at narrowing the U.S. trade deficit.
Buffett stated, “Import vouchers are designed to balance trade. I designed this import voucher idea. It has some gimmicky elements, but I think it’s certainly much better than anything we’re talking about right now.”
Buffett criticized tariffs and trade protectionism and said “trade should not be a weapon.” He noted that the U.S. has gone from nothing to a critically important country.
Buffett said, “We should seek to trade with the rest of the world, we should do what we do best and they should do what they do best. The more trade the better.”
In response to a question about trade barriers, Buffett said, “You can make some very good arguments that balanced trade is good for the world. There is no question that trade and tariffs can be an act of war. I think it has had adverse consequences, simply by the attitudes that it has engendered.”
Buffett believes that protectionist policies could negatively impact the U.S. in the long run, especially after the U.S. has become the world’s leading industrialized nation.
He said, “In my opinion, it’s a serious mistake. When you’ve got 7.5 billion people who don’t have much to say about you, and 300 million people who are somehow bragging about what they’ve accomplished. I don’t think that’s right or wise. I do believe that the more the rest of the world gets support and prospers, it doesn’t hurt us.”
We have grown from nothing 250 years ago to a critically important nation like never before in history.
Buffett’s speech earned applause from the room. Buffett did not directly mention US President Donald Trump in his speech.
21:26 Second question of the AGM: Japan
Asked if he would stop investing in Japanese stocks if the Bank of Japan raises interest rates in the future, Buffett said he would not sell his stocks.
Buffett said, “We’re not going to sell these stocks for the next fifty years. These companies in Japan have a very good business history”, and pointed out that Apple, American Express and Coca-Cola and other companies have been doing well in Japan.
Buffett said the investment in Japan is fully consistent with Berkshire’s investment philosophy. Berkshire invested in five Japanese companies have performed very well in the past, and intends to continue to hold the shares of these companies for 50 to 60 years, and hopes to establish a long-term and deep cooperative relationship with them.
Buffett said that these trading houses have different cultures and habits from ours and operate differently, but because of this, we value the partnership even more. “We’re not going to sell any stock. It won’t happen for decades. The Japanese investment is right up our alley.”
Buffett said that Berkshire does not have any current plans to sell any of the aforementioned Japanese trading firm’s shares anytime soon. They are currently running a very successful operation and even though he is now 94 years old, he still thinks so. Berkshire also plans to further expand the partnership.
Buffett said that Berkshire has now invested $20 billion in Japan, and I even wish we had invested $100 billion instead of $20 billion in the first place.
21:35 Third question of the shareholders’ meeting: deployment of Berkshire’s huge amount of cash
Asked about the huge cash reserves Berkshire currently holds, Buffett jokes that he didn’t stop investing to make Greg Abel “look good” in the future.
Buffett is cautious about current investment opportunities. He said he is always looking for investment opportunities, and Berkshire, the company’s “opportunistic color”, he wants to reduce the cash on hand, possibly down to $ 50 billion.
Buffett said Berkshire will find opportunities to put the company’s record-sized cash to work, likely within the next five years, Buffett said.
“Occasionally there are very tantalizing opportunities. But not every day is a good opportunity. It’s unlikely that an excellent deal will come along tomorrow, but not in five years. We have made a lot of money by not being fully invested at some point.”
Buffett revealed that Berkshire came close to spending $10 billion on investments recently.
“For example, not too long ago, we almost spent $10 billion, but we would spend $100 billion now. I mean, it’s not hard to make a decision like that when a project makes sense to us, we understand it and it’s good value.”
Buffett notes that one of the problems with the investment industry is that things are not well organized.
21:43 Fourth question of the AGM: Challenges of investing in real estate in an environment of global uncertainty
Asked how to address the challenges of the real estate industry in the current environment of global uncertainty. Buffett said that investing in real estate is more complex and difficult than stocks. Whether it is communication, negotiation, or bargaining, there are so many people and aspects involved, such as who is the owner, the legal structure, the funding arrangements, and so on. It is really not easy to negotiate a deal and get a good price in real estate, there are so many variables.
If you choose to invest in stocks, there is one huge advantage: you can see countless opportunities every second, especially in the US market. In contrast, real estate transactions are slow-paced and highly dependent on personal communication and negotiation. Real estate investing may be done by one person alone, or it may be a team operation.
On the NYSE, billions of dollars are traded every day, and thousands of unknown investors are participating in the market activity. All you need is the right price and you can trade 20,000 shares of Berkshire stock in five seconds. But that’s not the case with real estate. To complete a real estate transaction is not only a cumbersome process, the cycle time is long. Even if a deal is large today, there are a lot of factors to weigh and coordinate once you get to the negotiation stage.
Buffett said Berkshire has also done real estate investment, such as during the financial crisis in 2008 and 2009. He advises: if you want to do real estate, you have to compare and choose in a more intelligent and strategic way.
21:49 AGM Question 5: The impact of AI on the insurance industry
The question about whether artificial intelligence (AI) can change the insurance industry is answered first by Jain, head of Berkshire’s insurance business.
Jain said that a lot of time and money has been invested in AI, and that AI will be the tool used to change the rules of the industry, and that AI technology could “really change” the way the insurance industry currently evaluates, prices, and sells risk, as well as the way claims are currently handled.
But Jain points out that Berkshire won’t be the first in the industry to adopt AI, and that it takes a more cautious approach to any high-profile new technology claims.
“I certainly do think that people end up investing huge amounts of money chasing the next new wave thing,” Jain said. “We’re not very good at being the fastest or the first to act. Our approach is more of a wait-and-see until the opportunity materializes and we have a clearer understanding of the risks of failure, the pros and cons.”
However, Jahn added that Berkshire will not hesitate to invest once the right opportunity presents itself.
He said, “Right now, some insurers are really experimenting with AI and trying to find the best way to utilize it, but we haven’t consciously invested a lot of money to take advantage of that opportunity. I guess we’ll be ready to invest quickly once the opportunity presents itself.”
Buffett said he’ll leave it up to Jain to decide Berkshire’s insurance business for the next decade. The choice of whether or not to use AI will be Jain’s.
21:52 Shareholder Meeting Question #6: Why Berkshire invested in hot dog company Portillo’s
Someone asked why Berkshire bought Portillo’s, the Chicago hot dog chain, and Buffett replied that he didn’t know much about Portillo’s. He joked that someone else probably secretly voted for it.
Buffett then turned to an anecdote about Jay Pritzker, a relative of Illinois Gov. JB Pritzker who bought a Brooklyn chocolate company decades ago. Buffett said Jayne was a very good manager.
Abel clarified that Berkshire does not own Portillo’s. the company is actually owned by an investment company with a similar name to Berkshire.
22:00 Seventh question of the shareholders’ meeting The United States seems to be going through a huge change, is it pessimistic or optimistic about the US
The questioner said that Warren Buffett has always believed in the long-term strengths of the United States, but today the United States seems to be undergoing some unprecedented, close to “revolutionary” changes, as an investor, how do you assess the current situation, and should you remain optimistic or pessimistic?
To this question, Buffett answered, the questioner is a new generation of investors. In Berkshire’s manager’s annual report, usually do not see these macro-level comments. But he can say that the United States will not experience that kind of dramatic “revolution” type of change.
Buffett said that the United States was an agricultural country, and then social change, the economy has done very well. It used to be a male-dominated era, and then there were fair reforms and constitutional amendments, and women were given the same opportunities.
“As I mentioned, we started as an agrarian society. We were initially a hopeful society but we did not deliver on our promises very well. We’re always changing. We’re always going to find all kinds of criticism in this country, but the luckiest day of my life was the day I was born, [because] I was born in America.”
Buffett said change from 1920 to now, from 1776 to now, we’ve done a lot of things and it’s taken a long time. I was born in the United States and almost everything happened in the United States back then, but not anymore. I’ve been very fortunate as a male born in America – it hasn’t been easy, but America has changed.
“We’ve been through the Great Recession, we’ve been through world wars, we’ve been through the development of the atomic bomb that I never dreamed of when I was born, so even though we don’t seem to have solved all the problems that have arisen, I’m not discouraged. If I were born today, I’d be in the womb negotiating until they allowed you to go to America.”
We’ve been through a lot of things from 1930 to now, like the Great Depression, two world wars, and the tensions that came with the atomic bomb. These are all experiences we’ve had along the way. We are a very fortunate country and I am a very fortunate person. I feel much more fortunate to have been born in the United States than to have been born anywhere else.
22:04 Question 8 of the AGM: Is it possible to break the principle of patience in investing
Someone asked if it is sometimes okay to show impatience and break the principle of patience in investing.
Buffett says that sometimes you have to act quickly. Berkshire has made a lot of money precisely because of its willingness to move quickly. You don’t want to be patient on trades that make sense.
Buffett says, “When a good opportunity arises, you shouldn’t show patience at that point. You should have the patience to wait for those occasional opportunities. But you should not hesitate to take those reasonable trades. Nor should you be patient to listen to empty talks that will never materialize.”
22:13 AGM Question 9: Car insurance company Geico
Geico did face a crisis, but we turned it into a turnaround, says Jain. When we initially took over, there were two overriding problems: the first was that we had an irrational rate structure and the second was that we had systemic problems with our actuarial and pricing mechanisms. Five or six years ago, these were areas of concern for us.
Through rapid technological adjustments and process optimization, these issues have now been resolved. Not only have we improved our pricing models, but we have also done a lot of work on risk matching and optimized our overall pricing system.
Geico, today, is able to price each individual based on a combination of risk levels, and we’ve done a great job at this, which has translated into significant profits.
While we have accomplished a lot, I don’t think the mission is complete. There is still a lot of technology that we can utilize, such as AI and other new tools. Our goal is not to “catch up with others” but to “do better”.
Buffett said, this is a very interesting case study, especially about how a business responds to industry game changers. Every business has its own challenges and opportunities.
Berkshire bought Geico for $50 million in the 1970s, when it was only a partial stake. Geico has since become so profitable for us that we now own 100% of the company and can generate $2 billion in profits in just one quarter. But it’s the result of decades of continued investment and improvement.
A hundred years ago, auto insurance barely existed; but now it’s one of the largest lines of insurance, aside from property and casualty. geico is very profitable, with a whopping $29 billion in liquid cash on hand. When I bought the company for $50 million, it was a very good investment.
Founded in 1936, Geico was originally started by a government employee who was originally a USAA employee. He made a profit in the first year, more in the second, and then the company grew and went public. This is how the auto insurance industry began to take off.
No one likes to buy insurance, but everyone likes to drive, which made auto insurance a necessity, and Geico has had an interesting story of tripling in a couple of years and then going off the rails for a while, but eventually getting back on track. We talk about Geico at our annual meeting almost every year.
Buffett singled out Geico’s CEO, Todd Combs, who, he said, has done an outstanding job in this transition. He’s managed to turn the subsidiary around. Telematics, once seen as a disadvantage, is no longer a competitive disadvantage, and Combs has dramatically streamlined the company’s staffing structure, eliminating thousands of jobs, which has been instrumental in improving efficiency.
22:22 pm Shareholder meeting question 10: Why do you think Abel is the right successor
Buffett didn’t answer the question directly. He said that it is important to surround yourself with good people that you enjoy working with.
Buffett gave advice on choosing a job and starting a career. He said there is a need to “do what you love.” Buffett cautioned that employees’ habits can influence their coworkers, so it’s important to choose where you work carefully.
While one should choose one’s employer “carefully,” one need not get too hung up on factors such as starting salary, Buffett advised. “If you can find great coworkers there, then go there.”
Abel said he was honored to be involved with Berkshire.
22:31 Shareholders’ Meeting Question 11: Weakening dollar and currency risk
A question was asked about the weakening dollar and currency risk. In response to a question about how to reduce exposure to the risk of a weakening dollar, Buffett said his company would not invest in “worthless” currencies. “We don’t want to hold any currency that we think is going to depreciate.”
Buffett also mentioned an increased position in the Japanese yen. He did not rule out the possibility of exploring and focusing on other currencies in the future.
Buffett also emphasized the complexity of the currency game and noted that one of the duties of governments is to devalue their currencies.
Buffett said that no action will be taken to manage currency risk based exclusively on quarterly or annual returns. It is very difficult to construct effective checks and balances in a currency value system.
In addition, Buffett said, “U.S. fiscal policy scares me because of the way it’s formulated and all the motivations to do a lot of things that could get you in trouble with money. But it’s not limited to the U.S., it’s all over the world.”
“I mentioned briefly in my annual report that fiscal policy is my biggest fear in the U.S. because it’s made that way.”
He said, “All the drivers are pushing for behaviors that can and do cause trouble on monetary issues. But it’s not limited to the U.S. It’s true in many places around the globe. In some places, this often gets out of hand.”
Buffett said, “We wouldn’t really invest in a currency that’s about to ‘crash,’” adding that when governments act irresponsibly, the value of currencies can be “frighteningly high “.
Buffett said of the late Vice Chairman Charlie Munger, “Charlie always thought that if he had to choose an investment area outside of stocks, he felt he could make a lot of money in the foreign exchange market.”
Buffett said, “We tried it once. Can’t say we won’t do it again, but it’s unlikely. Unless something happens in the U.S. that gives us the will to hold a lot of other countries’ currencies.”
22:41 hrs AGM Question 12: Mongolia
The questioner stated that Mongolia is an emerging market, located between China and Russia. We have livestock and mining industries and our economy continues to grow. We organized a Mongolian investor conference in New York last year, which attracted many interested investors. What does Buffett think about emerging markets like Mongolia? Does he have long-term investment plans?
Buffett says, I remember about twenty years ago I used to attend an annual conference, and at that time I started to pay attention to Mongolia and heard presentations about it, so I still have some knowledge about Mongolia – that was a long time ago.
Now we listen to some of the reports from the government and also evaluate what are the real business opportunities that can be developed. But we don’t invest overseas lightly unless I think it’s an opportunity that really has great potential.
A lot of people think that to make money you have to go where inflation is high and you can make a lot of money that way, but I don’t see it that way. At this point in time our company doesn’t have any short-term investment plans in Mongolia unless it’s the kind of project that’s very attractive in terms of scale.
Maybe twenty years ago we would have considered going over to take a look. But I don’t know much about your economy, such as the livestock industry, mining and so on. That’s how I see it now.
22:45 pm AGM Question 13: Private equity firms competing for insurance industry
Someone asked what to make of Blackstone, Apollo and KKR private equity firms, among others, expanding in the insurance sector, which is more aggressive.
Jain acknowledged that competition from private equity has made it more difficult for Berkshire to invest in the insurance business. “There’s no question that private equity firms have moved into this space and we’ve lost our competitiveness in this space. We used to be quite involved in this space, but in the last three or four years I don’t think we’ve done a single deal.”
But Jain said private equity uses a model of higher leverage and more aggressive investment strategies. When the economy is performing well, private equity firms take on some risk in terms of leverage and credit risk, especially in the life insurance space. “As long as the economy is good and credit spreads are low, they make a lot of money.”
However, there’s always a risk that at some point, regulators could get upset and say you’re taking too much risk on behalf of policyholders, which could end in tragedy, Jain said. “We don’t like the risk-to-reward ratio in those scenarios, so we chose to raise the white flag and decided not to compete with private equity firms in the life insurance space.”
Buffett said many companies want to emulate the Berkshire model, but their CEOs don’t invest all of their assets in the company like we do.
Buffett added that the difference between Berkshire and its competitors is that he himself takes greater personal responsibility for his investments. He said:
“They may have a somewhat different sense of fiduciary responsibility for what they do; sometimes it works, sometimes it doesn’t, and if it doesn’t they move on to something else. But if what we’re doing in Berkshire doesn’t work, I’ll spend the rest of my life feeling remorse for what I’ve created, so it’s a completely different kind of personal relationship. There’s no company in the property and casualty insurance space that can really replicate the Berkshire model.”
22:50pm AGM Question 14: Young people investing
The questioner is a young girl. She says she’s just starting to learn about investing and would like to hear Buffett’s perspective. What lessons has he learned in the early days of investing.
Buffett said that was a very good question. I wish someone had given me that kind of advice when I was younger.
This whole thing is tied to the kind of people you surround yourself with. Don’t expect every decision you make to be the right one. If you have a direction in life, then you need to work on making those people you respect and aspire to be your friends.
I just mentioned a few people I’ve worked with and worked with in the past, maybe they don’t do things on the scale of what I do, but they’re people I really like and it means a lot to me to spend time with them. It’s invaluable to walk the path of life with like-minded people. Unfortunately, these truths often don’t really hit you until later in life. When you get older, you realize that these are the things that really matter.
Warren Buffett mentions two former Berkshire directors, Tom Murphy and Walter Scott. he says that if you surround yourself with people like Tom Murphy and Walter Scott, your life is bound to be better. But that doesn’t mean you have to follow rich people and copy their life style. I would suggest that you approach people who are really smart and intelligent, learn from them, ask them for advice, and try things out with them.
If you’re looking for a meaningful job and you’re not in a hurry to make money, then I’d suggest you do what Charlie Munger did and spend time with great people. Find opportunities like this and share in their success; if you can’t find them, that’s okay, just keep doing what you’re doing and keep trying. Stick with it and you’ll eventually find people who are as serious about life and thinking as you are.
Buffett recalls that the first time I went to Geico, the door was locked and I had no idea who was behind it. Ten minutes later, I met the man who would go on to have a tremendous impact on my life. When you meet people like that, remember how much they helped you and also think about how you can return the favor and help them in the future. Never forget these valuable people.
Of course, sometimes you may come across some undesirable situations. But if you are really lucky to live in a good environment surrounded by awesome people, then cherish it. You don’t need to feel guilty for being lucky. There are 8 billion people in the world and just over 300 million in the U.S. If you live here, then you’re already ahead of the game, and you should take advantage of that.
If someone at work asks you to do something you don’t even want to do, then don’t be with them. Different industries have different selection criteria for people, but if you find a direction that makes your heart sing, then work hard at it, especially if it’s a career you’ve wanted to do your whole life.
The investment industry is very interesting in that a lot of people don’t want to keep doing it after they make their first bucket of money. But personally, I’ve been fortunate in that I’ve seen the long-term appeal of it from the beginning.
People like Tom Murphy, who lived to be 98, had an ability to see potential in others. We’ve yet to meet another person who can spot talent so keenly as he can. If you want to be a better person, then try to find people like him and work with them.
The world is full of successful people, but not everyone makes the right choices. And the fastest path to success is to find the kind of people who are really good at what they do and walk with them.
The Berkshire experience has been invaluable to me as well, Sandy Gottesman, who managed our assets from 1963 until his death a couple of years ago, and Walter Scott, and Abel, all of whom exemplify what it means to be successful over the long term. You can learn a lot of really valuable things from them.
That’s the advice I can give you. Some people live a long time, maybe because they’re surrounded by good people, or maybe because they drink Coke every day (laughs). But I believe that happy and joyful people live longer because they have been doing what they really love.
22.59pm AGM Question 15: Does the recent market jolt provide investment opportunities
Asked if the recent market volatility provides an opportunity to invest big, Buffett downplayed the recent volatility, saying it’s “really nothing” and that it’s part of investing. He was unimpressed by the stock market volatility that has unnerved investors over the past few weeks.
Buffett said, “What happened in the past 30 days, 45 days, 100 days …… is really nothing.”
Buffett noted that Berkshire’s stock price has fallen 50 percent less than three times in the past 60 years. During that time, the company did not have any fundamental problems.
There have been fewer than three instances in the last 60 years where Berkshire Hathaway’s stock price has fallen 50%. He points out that during this period, the company has not had any fundamental problems.
In light of this, compared to periods such as the stock market crash of 1929, Buffett believes that the recent move in U.S. stocks is “not a huge move,” and that “it’s not quite a dramatic bear market, nor is it a similar situation. Not a similar situation.”
Buffett recalled that on his birthday in 1930, that is, August 30, 1930, the Dow was 240 points, and then once fell to 41 points. Despite some “creepy” events, the Dow closed above 41,300 on Friday.
For those who worry about the cyclical ups and downs of their portfolios, Buffett suggests: they should change their investment philosophy to adapt to the world – rather than the world to adapt to them.
Buffett said: “For you, if it matters to you whether your own stock is down 15%, then you need to change your investment philosophy. The world won’t adapt to you; you have to adapt to the world.”
He added, “People have emotions. But you have to control your emotions when you invest.”
23.03pm AGM Question 16: How to cope with life’s setbacks
A shareholder from Shanghai, China seeks advice on how to deal with life’s setbacks.
Buffett says, “I would focus on the good things, not the bad things. Life can often be wonderful – but it can also suffer bad setbacks.”
23.09pm Question 17 of the AGM Autonomous driving
A question was asked about the fact that autonomous driving is not yet fully available in the United States. If it does take hold in the future, how will Geico’s insurance business be affected? What’s the view on the division of liability, software issues, and broader changes brought about by autonomous driving?
Jain, who is in charge of the insurance business, answered that from an insurance perspective, autonomous driving won’t bring about an immediate and essential change. Most auto insurance premiums today are priced based on how often driver error occurs, and our policies and claims systems work according to that risk calculus.
Jain says self-driving technology does have the potential to reduce the likelihood of accidents, a view shared by Geico and other insurers. But once the technology becomes widespread, we’ll adjust accordingly,” he said.
It reminds me of something Charlie Munger used to say to me, Buffett said. When we first decided to get into textiles, we couldn’t have foreseen the future transformation of the entire industry.
The world is always changing. Just like playing baseball or golf, you don’t hit a home run on every swing or get a hole-in-one on every shot. You have to accept that you’re going to make mistakes.
Today we’re talking about whether or not auto insurance is going to be changed, and that’s a very important question. But as of now, autonomous driving is not fully commercialized, and there has not yet been a massive push in the United States. No one can accurately predict right now what the insurance industry will become in the next hundred years.
But one thing is clear: the world is dynamically changing. People love to drive, and we don’t want to destroy the world. We’ve learned how to better protect the planet, even though it’s been a tough ride. We know that there are eight countries around the globe that have a major impact on the development of all humanity, and we want the best leaders for those countries.
Einstein’s publication of his theory of special relativity in 1905 also advanced the study of the transformation of energy into a powerful force, only to end up with us having to face the threat posed by nuclear weapons. I was born in 1930 and witnessed these consequences. Even Einstein could not have predicted back then the way these inventions would eventually change the world.
We’ve also seen what North Korea has done. No one can really predict what they will do next. These uncertainties aren’t going away anytime soon.
Even so, change has brought many benefits that make us much better off today than we were 100 years ago. But we still have to deal with realities like weapons of mass destruction.
Like auto insurance now, we’re seeing technology evolve quickly, but to me the change hasn’t been as big an impact as the textile industry was back in the day. This is supposed to be one of the “luckiest” periods in the history of mankind, and you should be enjoying your life, while keeping an eye on the changes that are happening in the insurance industry.
Insurance is an industry that we do very well. There are a lot of structural problems with it, but we don’t have full control over everything. If you don’t know how to swing a club, don’t play golf.
It’s true that there are still a lot of clauses that need to be clarified regarding product liability and accidents caused by autonomous driving. In the event of an accident, the cost of repairs will increase significantly due to technological upgrades. Cars nowadays have become more and more like high-tech products, and these new problems related to technology have not yet been fully solved.
For example, when I first went to Geico in 1950, the average premium was about $40 a year, depending on what state you lived in, of course. But now, $2,000 a year is the norm. At the same time, though, traffic fatalities have dropped dramatically. If you look at it another way, driving is actually much safer now than it used to be. It’s hard to predict the future course of an entire industry. You have to look at it in the context of research, reality, and all kinds of data.
There are also changes in the energy sector, healthcare, and the political environment that could cause the industry to restructure. In the business world, there are no “answers” to many questions, only “action points”. The rules of the game are completely different today than they were in the past, so you have to wake up every day and rethink how you run your industry.
Some additional notes on Berkshire’s first quarter results:
The performance of our insurance segment declined significantly in the first quarter of this year. Last year was very strong, while this year it was pressured by declining prices and rising risk.
We have some accomplishments that we can’t replicate, and we don’t recommend that you copy someone else’s model. We do have some strengths.
Our investment income is little changed because we don’t make many mistakes overall. We expect investments to total around $40 billion this year, and while overall earnings will be lower, there are fewer negatives than in the past.
The railroad business is up slightly this year over last, has some issues that are improving, and remains a quality asset for Berkshire. The energy segment’s problems are largely resolved and earnings have picked up this year. The other businesses need us to continue to step up.
We’ve done a lot of measuring, some growth, some decline, and overall it’s not bad. Regarding cash flow, please also remain patient. Munger once told me, “If you have patience and are willing to keep reading earnings reports and listening to politicians every day, you will find very good opportunities.”
We still have plenty of cash, and that cash will come in handy as long as the business we write is profitable. We have the potential to make significant investments over the next 50 or 100 years. Of course, difficult years will come, and then those cash reserves will be especially important.
The life insurance portion of the retention is currently -2.2%. If you’re not prepared for the future, that’s likely to get you into trouble. Running a business has to be a different way of thinking about things.
We didn’t do any acquisitions this year. If you buy Berkshire stock, you also get your fair share.
Buffett said part of the reason Berkshire suspended its stock buyback program this year was that about a year ago, the Inflation Reduction Act was introduced, which imposed a 1 percent excise tax on stock buybacks. That hurt us more than it hurt other companies.
Buffett said, “It does make it [buybacks] slightly less attractive than it used to be.”
Buffett cited the example of a company like Apple, which had a great year and spent $100 billion on buybacks. The taxes they’re paying on those buybacks are also huge. They’re buying back at prices even higher than what you paid when you bought – which is good news.
People today are looking for ways to improve their chances of success, but I want to emphasize this: you have to read carefully. You can’t make informed decisions without in-depth reading.
If there are significant changes ahead, our company will remain committed to a conservative and prudent engagement strategy. Although we have made some buybacks, the tax burden can no longer be underestimated.
0:05 p.m. Second Half Opening Remarks and AGM Question 18: What we’ve learned from Munger and others
Before starting the second half of the Q&A, Buffett recommends a documentary about the late Washington Post publisher Katharine Graham to the audience, Becoming Katharine Graham.
Buffett appears in the movie for his friendship with Graham and his role on the board of the Washington Post.
Jain did not take the stage in the second half, and Buffett and Abel continued to answer questions.
A shareholder asked Abel how he would like to be remembered. He said his role as a father and coach was very important to him.
Buffett joked that he wanted to be remembered for his “advanced age,” prompting laughter from the audience.
Buffett explained why he believes a balance sheet is a good starting point for assessing whether a company is worth investing in.
I spend more time studying balance sheets than I do looking at income statements,” he said. And while Wall Street doesn’t really pay much attention to balance sheets, I like to look at a company’s balance sheet for eight to 10 years before I look at the income statement because some things are harder to hide or manipulate on the balance sheet.”
He added: “Of course, neither will give you all the answers.”
0:13 p.m. Shareholder Meeting Question 19: Berkshire’s Capital Allocation After Abel Replaces Buffett
Someone asked about the investment strategies of Warren Buffett and Charlie Munger that everyone has been following for the past decade or so. Now that Abel will be succeeding Buffett as CEO, there will likely be more capital allocation decisions led by him in the future. How does he see this aspect of the legacy and how does he see the future?
Abel begins by mentioning that Berkshire has a very strong investment culture, which was built over time by Mr. Buffett. All of us share the same values.
Capital allocation is a core part of our business philosophy. We make decisions not just by discussing them among management, but more importantly, we have a very clear sense of risk. These values are the key to our company’s success.
We have always valued Berkshire’s reputation, which is our greatest asset. Warren Buffett used to remind people that the first thing to do when making any investment decision is to look at the income statement and understand the real numbers.
The fact that we now have a lot of cash is a huge advantage, but it also poses a challenge – how do we allocate these funds? This is not a simple question, but a deep philosophy. We have the ability to allocate at any time, but we’re looking for “better allocation”.
We have always emphasized that Berkshire is not dependent on others in any environment, and we do not rely on bank loans for capital. We must have sufficient cash flow to ensure that Berkshire can continue to operate, whether in insurance or non-insurance businesses.
We will continue to focus on quality opportunities in all sectors, not limited to insurance. Our goal is to invest with a full understanding of a company’s vision, whether we are buying 100% of a business or just holding a portion.
As Buffett mentioned earlier: we completed a $10 billion acquisition in the last quarter. Sometimes a full buyout is appropriate, and sometimes just a partial stake can work. The point is, whether we own 1% or 100%, we have to understand what this company wants to be in the next 5, 10, 20 years.
We’ll continue to perpetuate that philosophy. It’s been at the core of Berkshire’s success over the last 60 years and we’re not going to change it.
Buffett went on to say that it’s important to emphasize that the U.S. does face some major transformational needs right now. Our U.S. power grid, our highway system, have all fallen behind the current rate of population and economic growth. To drive
these changes, the U.S. government must take stronger steps. There are 50 states in the U.S., and each one thinks differently. Just like after World War II, we mobilized our entire manufacturing sector to support the war effort in a very short period of time, and it was incredibly efficient at the time. But it’s not easy to achieve the same efficiency in peacetime.
Investing depends on the context. We have the knowledge and the capital, but we also need to make a strategic shift. How to make the most of Berkshire requires programs that make sense both for the country and for the people and the company.
Abel may offer his thoughts on these issues next. But one thing is clear: we need to have sufficient cash reserves ready to step in at critical times.
We’ve done a lot of cooperative projects in the past. The U.S. highway system, for example, was driven by the federal government. It couldn’t have been done by just one company. Similar big projects in the future will require close cooperation between the government and the private sector.
Abel said that from the perspective of the energy industry, we do have a lot of areas where we can move forward. Demand for electricity is growing rapidly at the moment, and the necessary capital investments will have to be made to meet long-term energy needs. We have strong capabilities in this area and are actively addressing the associated risks.
Only by addressing these risks will we be able to deploy the capability to respond to future demand. And we must start preparing now.
Buffett agreed, and went on to say that it is important to draw on the power of the U.S. federal government. Like building the highway system in World War II, it could not have been done quickly without national coordination.
We do have the capital, and we have enough knowledge, which allows us to participate. But the desire to work together is not enough; we also need the ability to “focus on the big picture.”
We were able to do this during the Second World War, but in peacetime it is very difficult to promote similar national construction. This task may ultimately fall to the next generation.
0:26 pm AGM Question 20: 14-year-old girl wants to join Berkshire, how to work on it
A 14-year-old girl from Hong Kong said she would like to join Berkshire in the future and asked what kind of work she could do in the future. Abel said hard work and a desire to contribute will get you far. “We sincerely look forward to the day you become a part of Berkshire.”
Buffett added: “Stay curious and read a lot.”
0:29 p.m. Shareholder Meeting Question 21: Wildfires affect utilities, what’s the strategy to protect them
Speaking about wildfire risk, Abel said, “It’s not going away. The company has decided that when a fire comes, sometimes you need to cut power to equipment. It’s not a matter of turning off the lights.” Wildfires are happening in California, Texas. Where to invest is the first point of view.
Speaking of Berkshire Utilities’ responsibility as the Hill Fire spreads, Abel said, “We can’t just be the insurer of last resort. We can’t be responsible for everything that happens.”
Buffett assured shareholders that Berkshire would not spend their money on things the company considered “stupid.”
If they did, he added, shareholders “should just kick us out.”
“It’s easier to do stupid things with other people’s money than with your own. That’s one of the problems with government in general. We don’t want to bring that to the private sector,” Buffett joked.
0:43pm 22nd question of the AGM: Female fan wants Buffett to arrange a meeting in his office
The question comes from a Polish woman who says that 74 years ago, in January 1951, Buffett traveled eight hours by train to Washington, D.C., just to learn about insurance, and has continued on that path ever since, which was a very moving experience. she was only 15 years old in 2011, but she also set a goal for herself: one day she would meet you. Today, she’s finally fulfilled that promise, and she’d like to ask Warren Buffett to grant her one small wish: if she could have a little time in your office for an hour.
Buffett thanked her for her question, smiled and said you don’t need to announce my biography, but I appreciate your persistence and effort. There are 40,000 people in the room today, and this is a truly special question from you.
Buffett said that when I was younger, I used to drive all over the country to visit various companies. At the time, these companies usually didn’t have investor relations departments, so many times the CEOs hosted me personally. I was also concerned that they might not pay attention to me, but I would prepare two very specific questions in advance. This approach wasn’t a bad idea.
If you want to visit someone and talk to them for ten minutes, then you need to think through what you’re going to say and what you’re going to ask. You set the terms of the ten minutes, not the other person.
You’ll find that most companies now have investor relations departments whose job it is to tell you why you should buy their stock. It’s a growing business. But you’re perfectly capable of learning and understanding the world in your own way. Berkshire has our own way, too, and we don’t copy that from anyone else.
Now we have enough information and talent so we don’t need to do interviews one by one like we used to. There are more than 40,000 people here today, and there’s really no way we can fulfill everyone’s one hour request. But I really appreciate your enthusiasm and persistence and that’s all I can say to you.
0:50 pm Question 23 of the shareholders’ meeting Acquisition of the remaining assets of Berkshire’s own energy division
Regarding Berkshire’s decision to acquire the remaining assets of its own energy division. Buffett is not optimistic about the utility industry, saying, “The utility business is not as good as it was a couple years ago.” He blamed this on social factors, saying that values change and don’t always go up.
Buffett talked about investment opportunities in the U.S. energy sector and the role Berkshire can play. “The solution to this problem is to achieve some kind of cooperation between government and private enterprise, as was done in wartime. I don’t think in building a highway system, the government is sending in its own people to lay a lot of concrete or do anything like that.”
He added, “We do have the capital and we have some knowledge that is only available in very few places.”
0:54 pm Shareholder Meeting Question 24: Berkshire’s Future Earnings
Warren Buffett was asked what his prediction was for the company’s earnings in this most recent fiscal year. Will earnings increase in the future, or might they decline.
Buffett said, I think our utility revenues will be impacted somewhat, and earnings are not necessarily dictated entirely by mergers and acquisitions, but it’s undeniable that we do make mergers and acquisitions from time to time. We spent $10 billion on investments this year alone.
A lot of these types of issues depend on market conditions and the mood of the people. Some people are just more pessimistic. As someone born in the 1930s, I’ve been through very tough times. Sometimes you feel that certain opportunities are particularly attractive, but then you don’t act on them and miss out. This has happened many times in my life.
Often times, I choose not to try something that I don’t feel sure about – like if you asked me to walk a tightrope, I wouldn’t go for it. But when it comes to financial markets, there are things that others would be afraid of that I’m not.
If Berkshire’s stock price were to fall by half one day, it would be an opportunity for me instead. I know a lot of people react differently than I do, but I wouldn’t worry about it. It’s not that I don’t have emotions, but the volatility of the stock price won’t sway my rational judgment. It won’t affect my assessment of value.
Taken as a whole, Berkshire’s profitability will continue to grow over time. All we have to do is keep what we earn and make rational decisions. Everyone has different abilities and risk tolerances, and it’s those differences that create opportunities in the investment markets.
0:59pm Question 25 of the AGM Shares in tech giants
Tech giants are currently investing heavily in capital expenditure and investing in AI. warren Buffett says that tech giants make a lot of money and make a lot of investments. Like Coca-Cola has its own bottling company, and those investments aren’t really that big. The initial investment in the business, such as the machinery needed to be big, and less later.
Buffett says it will be interesting to watch the tech giants (Magnificant 7) become more capital intensive in the future. “There are a lot of people in the US who have gotten very rich by paying attention to how other people invest.”
1:09 p.m. Shareholder meeting question 26: What are some high school programs or activities that will help with making investments in the future
Future school teachers, Buffett says, can be learned on the job.
1:17 p.m. Shareholder meeting question 27: Is DOGE good or bad for the U.S. in the long run
Asked about the Department of Government Efficiency (DOGE), Buffett laughs and says why ask me such a hard question. For me, government bureaucracy has always been a puzzling thing. In capitalist markets, many bureaucratic structures are “contagious,” meaning that their inefficiencies can spread to other areas. In fact, many systems are better managed, and even within Berkshire there is room for streamlining and efficiency.
But government is government. The fact that it doesn’t have a “higher power” that actually regulates it makes one uneasy about the future of governance and finances. Especially when those who are elected say one thing and do another, it’s really worrying.
I’ve always thought that politicians who have money but no credit are a very negative sign to me. In terms of fiscal policy, the United States has not really addressed the issue of fiscal deficits for a long time, and this has never been a topic that has been thoroughly addressed.
In the case of the U.S., “We’re in a deficit situation that is difficult to sustain over a long period of time. We don’t know if that means (it can last) two years or twenty years, because there’s never been a country like the United States where this situation can’t go on forever.”
There are times when you know something can’t last, but you don’t know how to stop it – you end up just spreading your hands and giving up. Think back to the days when it was (former Federal Reserve Chairman) Paul Volcker who kept the U.S. from the worst of the inflationary meltdown. And today, the U.S. has a serious inflation problem, and we’ve experienced the consequences of such policies.
Buffett didn’t speak directly about DOGE, but he did confess that cutting the budget deficit is a daunting but important task.
Honestly, I wouldn’t want to be in charge of fixing the fiscal system and balancing the books – “that’s not a job that wants to be done, but it’s a job that should be done.” It just doesn’t seem like Congress is taking up the issue right now.
We’re a great country with the most innovative talent on the planet, but we also do have a lot of structural problems. If something goes wrong somewhere, those problems won’t explode immediately, but they will certainly fester slowly.
There are certainly incentives and checks and balances in governance. Just like in a company, even the most successful companies are not without problems.
Buffett again mentioned the risk of dollar devaluation. Stating:
“Fundamental to all of this, however, is having a currency that does not devalue. What would devaluation do to the stability of society if all the people who trusted the government were defrauded and all the people who found ways to profit from it became rich or richer? I don’t think you’d want a society that functioned in that way.”
1:23 p.m. Shareholder Meeting Question 28: How to create the foundation of capitalism for the U.S. and support its long-term prosperity, assuming you traveled back to 1776
Buffett says: “We will strike the best deals when people are most pessimistic.” He said Berkshire will continue to grow profitability, but that growth will not be linear. Buffett defended Berkshire’s long-standing decision not to trade with other people’s capital.
Buffett called the U.S. a shining example of capitalism and compared the system to a cathedral with a casino attached. He said, “Capitalism in the United States has succeeded like never before. It’s a combination of a magnificent cathedral, a cathedral that has created an economic system the likes of which the world has never seen, with a huge casino attached to it. The temptation is very great, especially now, and the temptation is to walk into that casino.”
“In that cathedral, people are basically designing systems that can produce goods and services for a population of more than 300 million people on a scale never seen before in history.”
While it’s certainly appealing to devote all your time and energy to the casino in this analogy, Buffett cautions that it’s critical to maintain balance. “In a casino, people are having a great time and money is moving around a lot, but you also have to make sure that the cathedral is being fed. Over the next 100 years, America has to make sure that this cathedral doesn’t get swallowed up by the casinos.”
He added, “We’ve built an interesting system, but it does work. Capitalism seems to be very arbitrary and capricious when it comes to distributing returns.”
1:31 p.m. Shareholder Meeting Question 29: Berkshire’s model for running subsidiaries
Berkshire takes a “non-interventionist” approach to managing its subsidiaries, and someone asked if they could talk specifically about how that works.
Starting in 2018, I began to learn more about Berkshire’s businesses, Abel said. Buffett’s own knowledge is very admirable and he’s very willing to share it: he’ll point out possible risks in the business model and we communicate with him as soon as we run into problems.
He and I communicate more on framework issues, such as how to look at trends in an industry and whether a certain strategy makes sense. However, in day-to-day operations, we have a very large degree of autonomy to make decisions and promote projects independently.
If an opportunity suddenly arises in a certain industry, or we intend to pursue a new direction, we will discuss with Buffett whether it is worthwhile to do so. But at the execution level, we have a high degree of freedom. Berkshire picks managers who understand the workings of their industries, such as the leaders of Geico. Especially in these years when the insurance sector is undergoing change, a visionary leader is critical. That’s exactly what we’ve benefited from in the past.
I’ve worked with Abel for many years, Buffett says with a smile. He takes things very seriously, and sometimes I wish I could take it easy like an artist and not work so hard. But honestly, if a business is run well, then you don’t have to worry about getting fired.
Abel has done a marvelous job. Not everyone is cut out to be a manager. Some people want to be told what to do; some people will quit and leave as soon as you give them an order, and I don’t blame them. But Abel is different; he has autonomy and is open to suggestions or assistance from others. He is a true leader.
At Berkshire, we don’t ask every manager to do things the same way. Some are highly admirable; others may not be. But the quality of an organization’s management can be seen – if the ethos of the organization starts to go downhill, that’s a sign that the leadership may need to make improvements as well.
For example, at one of our retail stores, an employee once told a friend, “Come in and I’ll give you a discount,” and while they meant well, they violated the company’s rules on employee discounts. This behavior is contagious.
We don’t want to see upper management take the lead in changing the rules for their own personal benefit. If they do, the entire organization could go in the wrong direction.
1:38 p.m. AGM Question 30: What does Berkshire think about the changing environment?
Abel said that Berkshire takes this into account when backing and acquiring energy companies, and that this must take into account federal and state requirements.
Abel provided an example of the changing power mix in Iowa at the beginning of the 21st century.
Abel said there was a shortage of electricity in Iowa at the beginning of the 21st century when the state was all coal-fired. He talked with the governor. to determine how to maintain a long-term supply of energy. A variety of energy types were discussed.
Abel emphasized that with the support of state legislators, Iowa built a large wind project and phased out a number of coal-fired units. Berkshire did the largest wind farm project in the U.S. in Iowa, investing $16 billion while phasing out a number of coal-fired units.
Abel added that coal-fired units are still needed to maintain a steady supply of electricity. That comment earned a standing ovation.
Renewable and non-carbon energy sources must be advanced in compliance with state requirements, according to Abel. Berkshire has made decisions that are fully compliant with federal and state requirements, honoring all state processes and working with them. “We will continue to work with the states to determine the course they want to chart.”
Abel warned, “We can’t have a situation like Spain or Portugal.” He was referring to the recent blackouts that swept through Spain and Portugal on the Iberian Peninsula, meaning Berkshire’s energy business still needs coal-fired power plants to continue generating enough electricity for now.
1:44 p.m. Shareholder Meeting Question 31: U.S. Health Care Reform
A nurse asks why Berkshire terminated its partnership with JPMorgan Chase and Amazon in healthcare on the idea of U.S. healthcare reform. Buffett says the partnership was terminated because they faced too much resistance to change.
1:54 p.m. AGM Question 32: Future Abell Role
Someone asks if Abel will take over Berkshire fully in the future, including asset allocation responsibilities, and if his future focus will be as an investor or more in the role of a business operator.
Buffett said, honestly, it’s very difficult to be a business operator, and it’s relatively easy to sit in a room and manage money, and it’s easier to be envied. I’ve always felt fortunate that I’ve had the opportunity to choose who I work with. I have never been let down by my own teachers or partners in my life, which is rare.
I am also grateful that I have the freedom to choose what I want to do each day, a freedom and flexibility that many professional managers do not have. To be honest, I never wanted to be the “top manager” of a business – it’s not a role I’m good at or enjoy.
It is a blessing for me that I can now run the company the way I like. Abel is a very good operator and he is good at handling complex operations. And the reason I was able to give him this job is because I believe he will handle it well.
As for asset allocation, that’s certainly part of the job ahead. But I want to emphasize that the real challenge is not just “investing” but doing the right thing with Berkshire’s resources. Abel will be someone who can combine those two things very well.
1:57 p.m. – Conclusion of the Q&A at the AGM
Buffett announces:
“Greg (Abel) should be CEO of (Berkshire) by the end of the year.”Buffett says he’ll stay with Berkshire and help after he steps down, but that the “final decision” is in Abel’s hands.
Buffett said Abel doesn’t know about it. Neither did any other member of the board except his children.
Buffett said he has no intention of selling any of Berkshire’s stock, but will gradually donate his holdings. He said, “I have absolutely no intention of selling any shares of Berkshire Hathaway, I will give them away gradually.” The remarks elicited a round of applause and cheers from the audience.
Buffett continued, “I’d like to add: the decision to keep all the shares was an economic decision because I think Berkshire’s prospects will be better under Greg’s (Abel’s) stewardship than they were under my stewardship.”
He said the decision also demonstrated his confidence in Abel’s leadership. Buffett concluded:
“But I’ll be on board, and maybe someday we’ll get a chance to put a lot of money in. At that point, I think it could be very helpful to the board – to let them know that I’m putting all my money into the company, which I think is smart, and I’ve seen what Greg has accomplished.”
