I was fortunate enough to attend the Berkshire Hathoway annual meeting and wanted to provide a recap to readers. I’ll try to skip much of the fluff questions that were asked.

But to kick it off, I think its important to recap how Buffett started the meeting. He noted that he expects to receive many “macro” questions, such as what the fed will do with interest rates, risks from an unpredictable president, and the tariffs and to put these topics into context, he brought an actual, physical NY times newspaper from March 1942. The Phillipines had just been lost to Japan. The US had been bombed by Japan in the previous December. The outcome of World War II was far from certain.

Despite all this, 11 year old Warren Buffet decided to invest. And although he did not have this much money at the time, he noted if you bought $10,000 in the S&P500, it would be $51 million today. If you had bought productive US assets, they would have compounded at a fantastic rate of return.  At the same time, if you bought gold in fear and left it, it would be worth $400,000, higher than you invested but significantly less than the amount generated by stocks. Also, the yield on bonds at the time was 2.9% and there was encouragement by the government to “support the cause” and buy war bonds. Buffett & Munger did not partake much in this by simple math -> 2.9% minus taxes less 2% inflation leads to a minuscule return.

• Succession planning:
  • Many questions related to succession planning, which makes sense given Mr. Munger and Mr. Buffett’s age (87 and 94 respectively). However, based on their responses, their ability  to work all day from ~7:30am to ~5:00pm all while eating peanut brittle and coca-cola, made me confident that Buffett and Charlie are in solid mental health at least.
  • “I’ve been semi-retired for decades”, Buffett’s response to succession planning. Ted Weschler and Todd Combs have assumed some investment responsibilities and Ajit Jain and Greg Abel now oversee Berkshire’s operating businesses.
  • However, Ted and Todd manage ~$25BN compared to Berkshire’s $100BN in cash as well as his current investment decisions. Bottom line: Buffett is still in charge
  • That being said, it should give some confidence that Buffett is relinquishing the reins responsibly.
• Dark clouds on the horizon
  • Buffett was asked about Amex, given there are “dark clouds on the horizon” in payments. By this, he meant changes are happening in the industry and many technologies are trying to disrupt the industry.
  • However, he reiterated that the business is terrific, global payments are increasing, and Amex is a great brand. Over time, through share buybacks, Buffett will increase his stake.
  • In response to dark clouds, Buffett said something along the lines of, we used to buy outright declines (e.g. the textile business Berkshire is named after) so they are improving.
• Dividends & Share buybacks
  • When asked to clarify why Buffett does not pay a special dividend or conduct buybacks, yet Buffett is favorable on Apple’s massive share buyback plan.
  • For starters, Buffett thinks Apple’s stock is cheap, and recently added 75MM shares to his portfolio. It then would make sense for Apple to buyback its stock if it also thinks it is cheap.
  • Second, it is unlike that Apple can find acquisitions in size “that they can make at remotely sensible price that really become additive to them.”
  • “The reason companies are buying their stocks is that they are smart enough to know it’s better for them than anything else,” Mr. Munger said.
  • Therefore it makes sense for them to acquire shares. Buffett on the other hand, has said he is open to share repurchases if he can’t find a way to deploy it (but he think he can).
• Cryptocurrencies
  • Much has been said about what Buffett and Charlie said on crypto, but it bears repeating.
  • First, like gold, cryptocurrencies are non-productive assets and therefore depend on a “greater fool” to buy at a higher price than you bought it.
  • Charlie called this idiotic and immoral (given the greater fool piece). However, the BEST PIECE, was when he compared it to turds.
  • “To me, it’s just dementia. It’s like somebody else is trading turds and you decide you can’t be left out.”