2024 年股东大会 · 上午场

Introductions

WARREN BUFFETT(Applause) Yeah, don't wear out all your clapping on Charlie, I mean, we got(Laughs) In addition, well, we have, first of all, Greg Abel, our director, and -(Applause) And Ajit Jain, sitting next to him on insurance. (Applause) And moving, then, to the back of this first section. If each of the directors there would remain standing until we finish, we'll go alphabetically down the line. And we've got Howard Buffett. We have -(applause) Susan Buffett (applause) Steve Burke, Ken Chenault, Chris Davis, Sue Decker, Charlotte Guyman, Tom Murphy, Jr., Ron Olson, Wally Weitz, and Meryl Witmer. OK. (Applause)

Two people to thank

WARREN BUFFETTThere are two people I would like to thank, and then we'll get on to the brief description of the results of the first quarter. First of all, I'd like to thank Melissa Shapiro, who put this whole event together. You can't imagine the work that goes into it. (Applause) She just reported to me that we set a new record for See's Candy. I think they brought along six tons. And they will sell out. And one thing I do want to mention, we have only one book at the bookstore at the Bookworm this year. Normally we have about 25. But we have Poor Charlie's Almanack, fourth edition. And I think we sold about 24 hundred of them yesterday. And that will be the only book. Next year we'll go back to having our usual selection. But we thought we would just turn it over to Charlie this year. And then I would like to introduce one further person. And that's the person who put that movie together. And you can't imagine the amount of work it is, because, for example, on those scenes that we've used from the past, if they involved Hollywood stars or various people, we needed to get permission all over again to show it because we told them originally we would only show it within the confines of our auditorium here. And of course, it went out on CNBC. And you just can't imagine how much effort, but also the great cooperation we got from all those Desperate Housewives and Jamie Lee [Curtis]. (Laughs) And with the Desperate Housewives we had to get Disney's OK. And that was easy. But running down five Desperate Housewives -(laughs) that one came in toward the end. But the job of putting this together has been handled by the same fellow that handles us been doing these for years and years and years and years. And I just would appreciate it if you could just put the spotlight on Brad Underwood for just a minute. (Applause)

First quarter results and $182B in cash

WARREN BUFFETTOK. We put out some results for the first quarter this morning at 7 o’clock our time. And some a few sharp-eyed analysts and press people already picked up one or two items from it, which I'm sure we'll get some questions on later. But if we could start out with slide number one, which should be showing now. You'll see that in the first quarter the way and we talk about operating earnings at Berkshire, we've explained that many times that's why we think these figures that we give you are the most descriptive of what's really going on in the business and take out the wild swings in the market that otherwise just, you know, is going to have us reporting big earnings one quarter and big losses another quarter. We pay no attention to those at Berkshire. But you will see that we had a better-than-average quarter. And Ajit Jain wants me to point out to everyone that you cannot take the insurance earnings of the first quarter and multiply by four. It just doesn't work that way in insurance, and While we insure storms around the world the major storms, for example, that would affect our earnings would be probably number one would be something that went along the that came in at the wrong place from our standpoint and that just kept going up the East Coast. And that's our number one risk as we evaluate things. But we're in all kinds of risk. There can be an earthquake tomorrow. There can be an earthquake ten years from now. And then they’re going to you know we're in that sort of business. But the first quarter does it does hit the it should be our best quarter. Certainly shouldn't be our worst quarter. The most likely quarter to be the worst quarter is the third quarter. But anything can happen in insurance. But fortunately, nothing much happened in insurance (laughs) during the first quarter. So, we had much-improved earnings in insurance underwriting. And then our investment income was almost bound well it was almost certain to increase. And I said that in the annual report because yields are so much higher than they were last year. And we have a lot of fixed short short-term investments that are very responsive to the changes in interest rates. So that figure is up substantially. And I can predict that that one will be up for the year. We've got more money to invest, as we'll get to in a minute. And that's fairly predictable. So that number will be up. When you get into the into the railroad the railroad earnings we're down modestly, and But we should not immediately but we should be earning somewhat more money than we are earning under present traffic conditions. And then traffic conditions could also hit the earnings. It's a potential earnings at the railroad. And if you want, every Wednesday, you can get car loadings from the previous week. It’s a little deranged if you do get them, but I get them every week. They're available and you'll see that car loadings have been running for the industry have been running down modestly. And These earnings are were as is expected. But we should earn somewhat more money than that on the equivalent amount of car loadings. And We in the energy company, we had better earnings, but our earnings were distorted. Well, they were affected by conditions that I wrote about in the annual report, and we'll undoubtedly discuss more this morning. But off a low base of last year, they were up somewhat. And so, you get down to the final figure, and 11.2 billion is it’s quite an improvement from last year. But we would expect our earnings should go up modestly from year to year, because after all, we're retaining like 37 billion last year of earnings. So, if we put 37 billion more you left it with us we should do something that's satisfactory. And the goal at Berkshire economic goal is to increase the operating earnings and decrease the shares outstanding. It's that simple to describe. It's not quite so simple to pull off, necessarily. But that's what we're attempting to do. And if we'll turn to slide two, please I've got the history and I just picked the pre-pandemic year, when we hit 24 billion. And then we fell off in the first year of the pandemic. And then, as you see, we've moved up from 27 to 30 to 37 billion. And interesting thing about these earnings is they're after depreciation and amortization and taxes and all that sort of thing. So, you can figure that, essentially, Berkshire has a little over a hundred million dollars per day, including weekends and holidays, coming in to deploy. And we've set out many times what we're attempting to are attempting to deploy that money. But we have that responsibility, and Sometimes if you'll turn to the next page well, you'll see how that's built up the shareholders' equity so that Berkshire had at March 31st 574 billion through retaining earnings. And we've been retaining earnings ever since we took control of Berkshire Hathaway except one day, as I remember I think it was maybe 1968 or 9 the directors declared a ten cent a share dividend. And I think I must've been in the restroom or something at the time. (Laughter) So, if you leave out that period of madness, we've been retaining earnings we've been saving your money putting it to work. And sometimes sometimes, we've done things that were big mistakes, and But but never we never get close to fatal mistakes. And every now and then we do something that really works. And, as Charlie pointed out in the past, you know, there's really there’s probably been half a dozen to a dozen over 57 or 58 years whatever it would be really important, big decisions. And there's been nothing close to fatal. So that continues to be the guideline, and We have accumulated 571 billion, and I couldn't help but look at who's second. And JPMorgan had 327 billion at year end, and they're up to 338, I believe, at the end of the quarter. But they pay significant dividends. They repurchase shares. They've got a business that earns better returns on equity. But they don't plow it and they shouldn't they don't plow it back exactly like we have. And it this does show what can be done really, without any miracles if you save money over time. And we have a group of shareholders we had a group of partners originally, Charlie and I did that wanted to save money. And left their money with like in that film you just saw. You saw Eddie and Dorothy Davis. And the Davis family and the children and the grandchildren periodically did some other things with the money. But they also basically left it with us, and And we were a savings vehicle. And they were able to do live very well. But they weren't they weren’t trying to live like the kings and queens of earlier in capitalism and used to build the houses in New England and, you know, have a servant standing behind everybody eating and all that sort of thing. So, we've had very few what I would call "look at me" type people that are attracted There's nothing wrong with it, but they just go someplace else. And they are spending sort of unbelievable sums after a while, by the standards of the past. And our people nobody we’ve had nobody that's a that’s a miser or a hoarder or anything like that in our group. They live very well. But the math of compounding and a long long runway have done wonders. And we will talk a little later right before lunch, we'll give an illustration of that, of what can be done with that sort of philosophy. So, our cash and Treasury bills were 182 billion at the quarter end. And I think it's a fair assumption that they'll probably be about 200 billion at the end of the this quarter. We'd love to spend it, but we won't spend it unless we think there doing something that has very little risk and can make us a lot of money, and And our stock is at a level where it’s it’s adds slightly to the value when we buy-in shares. But we would we would really buy it in in a big way, except you can't buy it in in a big way because people don't want to sell it in a big way. But under certain market conditions, we could deploy quite a bit of money in in repurchases. And, as you'll see on the final slide, we have bought-in in the last five years. We can't buy them like a great many other companies because it just doesn't it doesn’t trade that way. The volume isn't the same because we have investors, and the investors you know, the people in this room, really they don't think about selling. They probably I would hope many of you don't even check the price daily, or weekly. You know, it The people who check the price daily have not made the money that the people who've forgotten about it (laughs) basically have over the years. And that's sort of the story of Berkshire. We'll try to increase operating earnings. And we will try to reduce shares when it makes sense to do so. And we will hope for an occasional big opportunity. And we're quite satisfied with the position we're in.

Selling some Apple shares now with higher tax rates expected later

WARREN BUFFETTSo, with that background, I think we'll turn it over to Becky Quick. And we will alternate questions between Becky and those of you in the audience. And Becky, you want to start with the first question?

BECKY QUICKSure. Thanks, Warren. Let's start, just given what you mentioned there was some news that came out in the 10-Q this morning. It shows that Berkshire sold another 115 million shares of Apple in this last quarter. That's Berkshire's largest holding. And I think in that vein, we'll start with a question from Sherman Lam. He is a 27-year-old Berkshire Hathaway Class B shareholder from Malaysia. And he asks, "Last year you mentioned Coca-Cola and American Express being Berkshire's two long-duration, partial-ownership positions. And you spent some time talking about the virtues of both these wonderful businesses in your recent shareholder letter. I noticed that you have excluded Apple from this group of businesses. Have you or your investment managers' views of the economics of Apple's business or its attractiveness as an investment changed since Berkshire first invested in 2016?"

WARREN BUFFETTNo, I would the but we have sold shares. And I would say that at the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have. Now, one interesting thing is that Charlie and I looked at common stocks, or marketable equities, or the things that people love to look at, as being businesses. And so, when we own a Dairy Queen, or if we own whatever it may be, we look at that as a business. And when we own Coca-Cola, or American Express, or Apple, we look at that as a business. Now, we can buy really wonderful companies in the market as businesses. We can't buy all of them I mean, all of their shares. We can't buy 90 percent or 80 percent or anything like that. But when we look at Coca-Cola, and American Express, and Apple, we look at them as businesses. Now, there's differences in tax factors. There's difference in managerial responsibility, a whole bunch of things. But in terms of deploying your money, we always look at every stock as a business. And we don’t we have no way no attempt made to predict markets. We have no attempt made to pick stocks. I went through many, many years doing the wrong thing. I got interested in stocks very early. And I was fascinated by them. And I wasn't wasting my time because I was reading every book possible and everything else. But finally, I picked up a copy of The Intelligent Investor in Lincoln. And there was a few sentences in there that said, much more eloquently than I can say it, but if you look at stocks as a business and treat the market as something that doesn't tell you isn't there to instruct you but is there to serve you, you'll do a lot better over time than if you try to take charts and listen to people talking about moving averages, and look at the Fed pronouncements, and all of that sort of thing. And so that made a lot of sense to me then. And the way I've been allowed to deploy it and Charlie and I talked about this, of course, constantly has changed over the years as the amount of capital we have has changed and all of that. But the basic principle was laid out by Ben Graham in that book, which I picked up for a couple of dollars. And which basically said to me, "You've been wasting your time now. But maybe you can use what you've learned or been reading about and put it to better use." And then Charlie came along and told me I could put it to even better use. And that's sort of the story of why we own American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business. And we own Apple, which is an even better business. But and we will own unless something really extraordinary happens we will own Apple, and American Express, and Coca-Cola when Greg takes over this place. And It's such a simple approach that it's almost deceptive. Most things, if you keep working harder and harder at it, you know, you learn a little more math, or you learn a little more physics. But investments, you don't really have to do that. You really have to have your mind set properly. So, we will end up unless something dramatically happens that really changes capital allocation and strategy we will have Apple as our largest investment. But I don't mind at all, under current conditions, building the cash position. I think when I look at the alternative of what's available in the equity markets, and I look at the composition of what's going on in the world, we find it quite attractive. And one thing that may surprise you, but we almost everybody I know pays a lot more attention to not paying taxes than I think they should. We don't mind paying taxes at Berkshire. And we are paying a 21% federal rate on the gains we're taking in Apple. And that rate was 35 percent not that long ago, and it's been 52 percent in the past when I've been operating. It the government owns the federal government owns a part of the earnings of the business we make. They don't own the assets, but they own a percentage of the earnings. And they can change that percentage any year. And the percentage that they've decreed currently is 21 percent. And I would say with the present fiscal policies, I think that something has to give. And I think that higher taxes are quite likely. And if the government wants to take a greater share of your income, or mine, or Berkshire's, they can do it. And they may decide that someday they don't want the fiscal deficit to be this large because that has some important consequences, and they may not want to decrease spending a lot. And they may decide they'll take a larger percentage of what we earn. And we'll pay it. And we always hope at Berkshire to pay substantial federal income taxes. We think it's appropriate that a company a country that's been as generous to our owners It's been the place I was lucky Berkshire was lucky it was here. And if we send in a check like we did last year we sent in over five billion dollars to the U.S. federal government and if 800 other company had done the same thing, no other person in the United States would have had to pay a dime of federal taxes -(applause) whether income taxes. No Social Security taxes, no estate taxes, no It's open down the line. Now that’s I would like to I hope things develop well enough with Berkshire that we say we're in the 800 club, and maybe even move up a few notches. It doesn't bother me in the least to write that check. And I would really hope with all that America's done for all of you, that it shouldn't bother you that we do it. And if I'm doing it at 21 percent this year, and we're doing it at a lot higher percentage later on, I don't think you'll actually mind the fact that we sold a little Apple this year.

We like our Japanese investments, but we will remain ‘American-oriented’

WARREN BUFFETTOK. Let's go to section one. (Applause)

AUDIENCE MEMBERHi, Mr. Buffett. This is Matthew Lai (PH) from China, Hong Kong. I'm running my (unintelligible) listed company called F-Dub (PH). And we are so grateful to learn from you. And you really inspire us. My question is, besides the electrical car company, BYD, under what circumstances you will reinvest and reconsider to invest Hong Kong and China companies? Thank you.

WARREN BUFFETTYeah. (Applause) Well, our primary investments will always be in the United States. We do think it -(Applause) The companies we invest in in the United States American Express does business around the world. And no company hardly does business around the world like Coca-Cola. I mean, they are the preferred soft drink, you know, in something maybe like 170 or 180 out of 200 company 200 countries. Those are rough approximations from a few years back, probably. But that degree of acceptance worldwide is I think it’s almost unmatched. I can't really think of any company that has American Express has a position in the credit card field which I think is extremely strong. And part of that was one of the directors one of the reasons for that is one of the directors that I introduced a few minutes ago, Ken Chenault. But it has strengthened dramatically over the last 20 years for a lot of reasons. So, we will the BYD investment was a And well, we made the commitment in Japan, which I did five years ago, and that was just overwhelmingly was compelling. It was extraordinarily compelling. And we put we bought it as fast as we could. And we spent a year, and, you know, we got a few percent of our assets in five very big companies. But that's the problem with being our size. But you won't find us making a lot of investments outside the United States, although we're participating through these other companies in the world economy. But I understand the United States rules. Weaknesses, strengths, whatever it may be. I don't have the same feeling for economies, generally, around the world. I don't pick up on other cultures extremely well. And the lucky thing is I don't have to, because, you know, I don't live in some tiny little country that has no just doesn't have a big economy. But I'm in an economy already that has, you know, after starting out with a half a percent of the world's population, has ended up with well over 20 percent of the world's output, and in an amazingly short period of time. So I we will be American-oriented. I mean, if we do something really big, it's extremely likely to be in the United States. Charlie, in all those years, there’s only two times he's told me that, you know, this one is really you know? He would always go along with me, you know, and say, well when I was suggesting something, he'd say, "Well, this is really not that great, but it's probably the best you'll come up with, so I'll go along with the idea." (Laughs) But Charlie twice has pounded the table with me and just said, you know, "Buy, buy, buy." And BYD was one of them. And Costco was the other. And we bought a certain amount of Costco, and we bought quite a bit of BYD. But, looking back He already was aggressive, but I should've been more aggressive. And in Costco, it wasn't fatal that we weren't. But he was right, big time, in both companies. I will I'm aware of what goes on in most markets. But I think it's unlikely that we make any large commitments in almost any country you can name. Although, you know, we don't rule it out entirely. And I feel extremely good about our Japanese position, and we'll have that in, I don't know how many years. Greg will be sitting with that at some point. And we couldn't be happier with that. But you really have to we really have a different outlook in looking at while we look at your money, which we couldn't bear to lose, and we feel that we're very less likely to make any truly major mistakes in the United States than in many other countries.

Our utilities won't throw good money after bad if states impose excessive climate change costs

WARREN BUFFETTOK, Becky?

BECKY QUICKThis next question comes from Stanley Holmes, who is a Berkshire shareholder from Salt Lake City. He asks, "In his 2024 annual letter to shareholders, Chairman Buffett noted the severe earnings disappointment experienced at Berkshire Hathaway Energy last year and expressed concern about earnings and asset values in the utility industry. "Recognizing that investors are worried about climate change-related expenses, and that new uncertainties cloud the regulatory environment, the chairman suggested that some jurisdictions may adopt the public power model. There are now signs that policymakers in Utah, citing state sovereignty, may already be poised to move in that direction. "The Utah legislature recently mandated the state's right to serve as sole purchaser of energy from an in-state power plant, and under some circumstances, purchase the power plant before it can be retired. The state utility regulator will be legally bound to prioritize public purchases of power and facilities that could include assets owned by Berkshire Hathaway Energy's PacifiCorp utility, Rocky Mountain Power. Will Berkshire, through BHE, continue to invest resources in jurisdictions where corporate assets may be subject to confiscatory state policies and actions? And how is Berkshire Energy working with officials in Utah to minimize potential corporate losses, if and when state control is asserted over its electrical utility sector?"

WARREN BUFFETTI will let Greg join with me in the answer on this. But I would say our feeling is that Utah is actually very likely to treat us fairly, whether the action is in granting appropriate rates that give us the return we expected generally expected in terms of our own properties, or if they decide for some reason to go to public power. I think they would compensate us fairly. In the 1930s, George Norris, the senator from Nebraska, just turned Nebraska into a public-power state. And our experience in Iowa would indicate that free enterprise has its role. And that we can run a privately owned utility company that will be more efficient for society than, at least in most states, people can do with public power. But what has happened is that there's going to be enormous amounts of money enormous amounts of money spent on power. And we’ve been we’re if you're going to do it with private owners, there's nobody better situated than Berkshire to satisfy the portion but a large portion of the needs of the country. And we will do it at a rate of return that is not, you know, it’s not designed to make us make us rich or anything like that. It's a sensible rate of return. But we won't do it if we think we're not going to get any return. It'd be kind of crazy. And we've seen actions in a few states where some of the costs associated with climate change are not being regarded as costs that the utility shouldn't incur. Well, believe me, if it was publicly owned, they would've incurred it too. But we'll do what society tells us. And we have got the money. We’ve got we’ve got the knowledge to participate big in something that is enormously important for the country. But we're not going to do we’re not going we’re not going to throw good money after bad. I don’t worry about my understanding is, and Greg's going to elaborate on this now immediately, but I don't regard Utah as being unfriendly to the idea of utilities being treated fairly. Charlie? Oh, Charlie. I'm so used to it. (Laughter and applause) I had actually checked myself a couple times already. But I'll slip I’ll slip again.

GREG ABELThat's a great honor. Yeah, when we well, Warren you touched on it initially in your letter relative to the challenges in the industry. And then you've just alluded to the significant investment that has to go into the energy industry, the utility sector, for many years to come. And I think if we start there, if I think of our different utilities, and we'll definitely come to Utah and PacifiCorp. But if you look at the underlying demand that is building in each of those utilities and the amount of dollars that are going to have to go in to meet that demand, it's absolutely incredible. So when you raised it in your letter, it's a really important issue. We have to have a regulatory compact that works between if it's a public utility it has to work in concert with the state, Utah being an example. Or it ultimately becomes, potentially, a public power entity. So just to set the frame a little bit, if I think of Iowa, which you mentioned, and the underlying we've made substantial investments there. It's been very consistent with both the public policy that the state and legislature wanted, and they enacted very specific laws to encourage that. But that utility is more than a hundred years old right now. And if we look at the demand that's in place for MidAmerican Iowa utility over the next, say, into the mid-2030s, associated with AI and the data centers, that demand doubles in that short period of time. And that happened and it took a hundred years-plus to get where we are today. And now it's going to double. And that will require substantial amounts of capital from MidAmerican and its shareholders. And how that will function is if we have a proper regulatory compact in place, which you've highlighted. If we then go to, say, Nevada, where we own two utilities there, and cover the lion's share in Nevada, if you go over a similar time frame and you look at the underlying demand in that utility, and, say, go into the later 2030s, it triples the underlying demand. And billions and billions of dollars have to be put in. Our rate base will literally go from it's not a modest level now but you're talking probably an incremental six to ten billion at least of rate base going into that type of entity, which requires, again, alignment with the state and their policies, and a proper recovery of our underlying, both capital and a return on capital. So when we come to the wildfires, that's been a substantial challenge because it's the first time there's been a lot of discussion around one of our utilities, one, experience significant losses associated with the wildfires. What portion of those costs will be recovered? And that's really the dialogue we're in. And does that properly work? When I think of the wildfires, there's been many claims and a recent additional claim last week for 30 billion dollars. And it’s we don't take that lightly. But it is an incremental claim to an already existing lawsuit that's in place. And when I think of PacifiCorp, we're in a place where, first and foremost, all that litigation will be challenged because the basis for it, at least we believe, there’s places where it's unfounded. And we'll continue to challenge it. And it will take many years to be able to resolve this, as Warren highlighted in the letter. But if you think of PacifiCorp and the litigation there, number one, how we think and operate those assets have to change. Because we’ve had a regulatory we have worked with the states, across all our states, for many years with the fundamental goal to be to keep the power on. And our teams and our employees worked incredibly hard to keep the power on day in, day out, through storms, unfortunately through the 2020 fires. The instincts were not to turn off the power. The instinct was to keep the power on to keep hospitals, fire stations responding. It's not in their mind, or at least culturally it wasn't in our minds, to de-energize. So, the first thing we had to do was step back and say, we've got to fundamentally change the culture. Not just at PacifiCorp, but across all our utilities. The first thing we have to recognize is that there's now going to be situations where we prioritize de-energizing the assets. And that's completely different than with how we've operated those assets, as I've highlighted, for a hundred-plus years. So, we start with the culture. We had to change that. The second thing is we've now changed our operating systems so that we can turn off the power very quickly if there's a fire that's encroaching. We will turn off our systems now. And we'll go the minute the conditions are safe again. We'll reenergize it. But we've had to do that. And then the third thing is continuing to invest in a way that allows us to try to minimize the risk of a fire. But when you get back to Utah and PacifiCorp, the challenge we do have is, within PacifiCorp, as we go through both the litigation and through continuing to operate that entity, it generates a certain amount of capital and profits that will remain in that entity and be reinvested back into that business. But fundamentally, as we go forward, we need both legislative and regulatory reform across the PacifiCorp states if we're going to deploy incremental capital, make incremental contributions into that business. As Warren said, we don't want to throw good capital after bad capital. So we'll be very disciplined there. But the reality is there are opportunities to both solve the legislative and regulatory solutions. And the best example we actually have, and I think it's the gold standard across the country, is Utah. So as Warren touched on, it's a state where we're happy we're investing in. It is part of PacifiCorp, so there's a certain amount of balance there as to how we do it. But in the last legislative session that existed, Utah actually passed a bill that does a couple of very important things. One, it caps non-economic damages on wildfire claims. So if you go back to the wildfires we have in Oregon, and the claims you're hearing filed for, there’s economic damages associated with them. And those harms should receive the economic damages associated with that. But unfortunately, and even though there's legislature and case law in Oregon that says wildfire, non-economic damages should not be awarded, there’s very substantial non-economic damages being awarded there. Utah took a very proactive position to say we will cap those non-economic damages, and increase an environment again it's back to that is there an environment where you want to invest in, yes. And then incrementally, they’ve created a very substantial fund. It's literally called The Wildfire Fund for fires in Utah that will help facilitate both liquidity and the ability to resolve the situation. So, Utah, we believe, including the legislation that a lot of other things came out of it, is the actual gold standard as we go forward. So very important issue for Berkshire Hathaway Energy. But at the same time, it is a PacifiCorp issue. The risk of regulatory compacts not being respected is a much broader one that we'll always evaluate and be careful how we deploy our capital. But both PacifiCorp will manage through it, and I see other very good and significant opportunities in PacifiCorp I mean, in Berkshire Hathaway Energy.

WARREN BUFFETTThe return on the the return on equity investment, it's been promulgated and achieved over the years, has been particularly in recent years well below the return on equity that has been achieved by American industry generally. And so, whether you earn X or X plus a half a percent or X minus a half a percent, that differs by state. And some states are more attractive than others. But whether you earn X or go broke is not an equation that works. And, you know, we won't put our shareholders' money they didn't give it to us to lose it all. And we might like it if it's better when it's X plus a half a percent than X minus a half a percent. But the electric utility industry will never be as good as I mean, just remotely as good as you know, the kind of businesses we own in other arenas. I mean, you look at the return on tangible equity at Coca-Cola or American Express or, to really top it off, Apple. It's just it’s, you know it’s just a whole different game. But in utilities the trade has been the compact has been that you get a modest return. And climate change comes along and it causes way more fires. That's just a cost of doing business, and it doesn't mean that we can't do things to mitigate fires in the future, and you can make different policies on when you turn off the lights. But somebody's going to do somebody's going to put up many, many hundreds of billions, maybe in the trillions, and climate change enters into that. And it can be done through public power or it can be done through private enterprise to quite a degree. And we would be certainly good for a hundred billion or more, but we're not going to throw good money after bad.

Artificial intelligence (AI) could make fraud "the growth industry of all time"

WARREN BUFFETTOK. Let's do station four.

AUDIENCE MEMBERHi, I'm Joe, visiting from San Francisco. How do you think about the role of technological advances, especially generative AI, on more traditional industries? Thank you.

WARREN BUFFETTYeah. I made a mistake in calling on four, but I'll get back to two later on. (Laughs) The I don't know anything about AI. But I do I do have I don’t that doesn't mean I deny its existence or importance or anything of the sort. And last year I said, you know, that we let the genie out of the bottle when we developed nuclear weapons, and that genie has been doing some terrible things lately. And the power of that genie is what, you know, scares the hell out of me. And on, the other hand, I don't know any way to get the genie back in the bottle. And AI is somewhat similar. It's out it's part-way out of the bottle. And it's enormously important, and it's going to be done by somebody. So we may wish we'd never seen that genie or it may do wonderful things. And I'm certainly not the person that can evaluate that. And I probably wouldn't have been the person that could've evaluated during World War II whether we tested a 20,000-ton bomb that we felt was absolutely necessary for the United States and would actually save lives in the long run, but where we also had Edmund [Edward] Teller, I think it was, it was on a parallel with Einstein, in terms of saying, you may, with this test, ignite the atmosphere in such a way that civilization doesn't continue. And we decided to let the genie out of the bottle, and it accomplished the immediate objective. But whether it's going to change the future of society, we will find out later. Now AI, I had one experience that does make me a little nervous. And I'll just explain it. Very recently fairly recently I saw an image in front of my eyes on the screen, and it was me, and it was my voice and wearing the kind of clothes I wear. And my wife or my daughter wouldn't have been able to detect any difference. And it was delivering a message that no way came from me. So it when you think of the potential for scamming people, if you can reproduce images that I can't even tell, that say, I need money, you know, it's your daughter, I've just had a car crash. I need fifty thousand dollars wired. I mean, scamming has always been part of the American scene. But this would make me, if I was interested in investing in scamming, it's going to be the growth industry of all time. And it's enabled in a way you know, obviously AI has potential for good things, too, but I don't know how you based on the one I saw recently, I practically would send money to myself over in some crazy country. (Laughter) So I don't have any advice on how the world handles it because I don't think we know how to handle what we did with the nuclear genie. But I do think, as someone who doesn't understand a damn thing about it, that it is it has enormous potential for good and enormous potential for harm, and I just don't know how that plays out.

GEICO is catching up with competitors on using data technology to set rates

WARREN BUFFETTI'd like to mention to Becky that Ajit [Jain] will not be participating in the afternoon session, so if you could focus on any if there are insurance questions you want to ask, that he'd be a good one.

BECKY QUICKYeah. This next question is for both Warren and Ajit. It's from Ben Knoll, who's a Minneapolis shareholder, who's been a shareholder since 1995. And he says, "In an interview this past year, Todd Combs said that in first meeting you in 2010, he told you GEICO is better at marketing and branding but Progressive is a data company and data is going to win in the long run. "But it appears you did not prioritize data analytics at GEICO until a decade later when you made Todd CEO. As business units like GEICO age and need new strategic direction, I wonder if Berkshire's hands-off management approach is a source of vulnerability. "Will you please review your thinking on changes made at GEICO and explain how Berkshire is structured to react if the Berkshire CEO sees that a business unit is strategically offtrack. And, Ajit, I hope you will continue to update us on yours and Todd's progress and remedying the data analytics shortcomings at GEICO."

WARREN BUFFETTAjit, would you like to

AJIT JAINYeah. As Warren has pointed out in the past, one of the drawbacks that GEICO is faced with, it hasn't been doing as good a job as matching rate with risk and segmenting and pricing product based on the risk characteristics. This has been a disadvantage at GEICO for a few years now. We are trying to still play catch-up. Technology is something that is unfortunately a bottleneck. But there again, we are making progress. And equally importantly, we have hired people who are much better than what they inherited in terms of data analytics and pricing and slicing data. So, yes, I recognize we are still behind. We're taking steps to bridge the gap and hopefully by the certainly by the end of '25, we should be able to be along with the best of players when it comes to data analytics, whether it's pricing, whether it's claims, or any other factor that drives the economics of the insurance business.

WARREN BUFFETTI would add that equating rate with risk, obviously, is important in every line of the insurance business. I mean, that's what you're involved with is deciding whether a given rate offers us the chance or the probability that we will make a little money on it and that sometimes we're only risking losing a little and sometimes we're risking losing huge amounts. But GEICO and Progressive has done a better job in that recently. But our fundamental advantage at GEICO, of course, is that we have lower costs than virtually anybody. And that cost advantage has been dramatic. We've driven our underwriting expense ratio below 10 percent, and there's well, there's just very, very, very few companies that can compete with that. So it isn't it's not in the least a survival question, and it isn't even exactly a profitability thing. But, you know, we would rather have X percent of the market than a half of X percent. But we roughly I think in the month of March we were just we didn't lose policyholders, and we've got 16 million, or whatever it is, of them. And we've got the lowest cost of operation. So, it's not a threat it's not remotely a threat to survival. It's not a throat it’s not a threat to even profitability. But on the other hand, we would like to be growing with something that is the best model around in the insurance business of delivering at a low cost. And we now have a recognition that we didn't have back when Leo Goodwin started it in 1936, but the same principle that worked then is that if you can offer somebody a good product cheaper than the other guy then everybody practically has to buy it. And it's a big business. You know, it's very attractive to be in, and GEICO is a very attractive business and has got its lowest cost thing. And it does have to do a better job of matching rate to risk. But our low costs have masked the fact that, for a while, that we could do without progressing as much as we should've in the matching of rate to risk. And now Todd has been working intensively at that, and he's made a lot of progress. But there's still work to be do be done. But in the meantime, we're not going to shrink, and we’re going we should make underwriting profits than most companies in the auto insurance business.

Surround yourself with people you trust, like Charlie Munger

WARREN BUFFETTOK. I'm going to back up and go to I think I left station two out of it earlier. So Do we have somebody there?

AUDIENCE MEMBERYeah. Good morning. My name is Sebastian Zartorter (PH). I'm from Munich, Germany. Berkshire Hathaway is a very respected company in Germany. And my question is, who are your most trusted advisors today. Is it Ted and Todd? Is it Greg and Ajit? Is it your wife, your children? And what do you value about them? Thank you.

WARREN BUFFETTWell, it depends whether they're advising me on money or on other things. (Laughs) I trust my children and my wife totally, but that doesn't mean I ask them what stocks to buy. (Laughs) The but the you know, I was in terms of managing money, there wasn't anybody better in the world to talk to for, you know, many, many decades, than Charlie. And that doesn't mean I didn't talk to other people. But if I didn't think I could do it myself, I wouldn't have done it. I mean, it so I to some extent I talk to myself on investments. And I think my children have gotten a whole lot wiser over the years. And so I listen to them on a lot of things. You know, I listen to my daughter on who to vote for locally because she knows a lot more about that than I do. And I’ll I’ll listen to my wife on a lot of things. And I won't get into details. (Laughs) So it it is it is important. If you don't live a life where you surround yourself, and limit yourself, to people you trust, it won't be much fun. I mean, I literally have been in the position ever since I was in my twenties, of being able to have people I trusted around me. And I've made mistakes occasionally, but they filter out over time. You learn. And when I found Charlie, for example, in all kinds of matters, not just investment, you know, I knew I'd have somebody that well, I'll put it this way, and you can think about this. Charlie, in all the years we worked together, not only never once lied to me ever but he didn't even shape things so that he told half-lies or quarter-lies to sort of stack the deck in the direction he wanted to go. He was he absolutely he considered it total of utmost importance that he never lied. Now, that occasionally got him in trouble at dinner parties or something, if he said to the woman, I really prefer the way you used to do your hair, or the way that somebody over across the room does it. I mean, he was but in terms of having a partner, I simply cannot think of a conversation I ever had with Charlie that in the least he misled me or shaped it his way or anything of the sort. So, when you get that in your life, you know, you cherish those people, and you sort of forget about the rest. OK. (Applause)

Limiting many policies to one year greatly reduces climate change risk

WARREN BUFFETTBecky?

BECKY QUICKThis question's for Ajit. It comes from Meher Bharucha. "Climate change seems to be impacting the insurance industry heavily, with major players pulling out of markets like California because of wildfire and flooding risks, combined with payouts increasing. How does Mr. Jain see this risk expanding to other regions, and how has the thesis on insurance investments changed because of it?"

AJIT JAINClimate change, climate risk, is certainly a factor that has become has come into focus in a very, very big way more recently. Now, the one thing that mitigates the problem for us, especially in some of the reinsurance operations we are in, is our contractual liabilities are limited to a year in most cases. So as a result of which, at the end of a year, we get the opportunity to reprice, including the decision to get out of the business altogether if we don't like the pricing of the business. But the fact that we are making bets that tie us down to one year at a time certainly makes it possible for us to stay in the business longer-term than we might have otherwise. Because of climate change, clearly, prices need to go up. It is difficult to be very scientific about how much the prices need to go up. They need to go up a lot, and we keep increasing prices and hope we stay above the ahead of the curve. But that doesn't happen in all cases. The regulators don't make it any easier by tying our feet to the ground and making it difficult for us to withdraw from certain territories or to make dramatic changes in the pricing of certain products. As a result of which, a number of insurance carriers, included ourselves, have decided to not write business in certain states. I think the regulators are getting a little more realistic about the and they are waking up to the fact that the insurance carriers need to make some kind of a return, a decent return, for us to keep deploying our capital. It's a constant battle back and forth. It's been against the capital providers these last few years, but I think we're coming back into bounds. If you look at the results that have been recently announced by the insurance carriers, everyone's now making record profits. Obviously, that will not last, but certainly for the next several months I think the insurance industry, in spite of climate change and in spite of increased risk of fires and flooding, it's going to be an OK place to be in.

WARREN BUFFETTYeah, climate climate change increases risk. And, you know, it in the end it makes our business bigger over time, but not if we if we misprice them, we'll also go broke. But we do it one year at a time, overwhelmingly. And I would say this: I would rather have Ajit assessing this than any thousand underwriters or insurance managers in the world. I mean, the factors aren't you know, well, we'll take Atlantic hurricanes that which would be probably our biggest risk. You know, there's no question that you can measure the temperature of the water in the Atlantic, and you know what warm water does to hurricanes, but you don't know necessarily whether that's good or bad because it may cause them to turn faster. You know, and it may change the path as well as the intensity and frequency of losses. But we'll write it one year at a time and we'll have Ajit underwriting it and, you know, we don't have to tell you what's going to happen five years from now or ten years from now. And people who don't have sort of analytical insurance minds that comment on this subject really don't expand our knowledge. (Laughs) Now, it's we get a lot of letters from people that I'm sure have good IQs, but they don't really know they don't understand the insurance business. And they're not wrong, I don't think in my mind, about climate change. But if there was no risk there'd be no insurance business. And we're in the business of evaluating it, and we do it one year at a time. And there's some exceptions where you can't do it, where your your decisions extend for a long time in the future. We try to avoid those. But again, you don't need a thousand people analyzing water currents or anything. You need one very, very, very smart guy, and we've got him. (Laughs) OK.

AJIT JAINYeah, the only thing I'd add is that climate change, much like inflation, done right, can be a friend of the risk bearer.

WARREN BUFFETTAnd it has been for us. If you look at GEICO, it had 175,000 policies, roughly, in 1950, and it was getting roughly 40 bucks a car. So that was 7 million of volume. And, you know, now we have we're getting over two thousand dollars. Well, all the advances in technology and everything like that if we had been wedded to some formula, what we did with 40 dollars, we'd have had a terrible business. But in effect, by making the cars much safer they've also made them much more expensive to repair and a whole bunch of things have happened, including inflation. So now we have a 40-billion-dollar business from something that was 7 million back when I called on it. So, if we'd operated in a non-inflationary world, GEICO would not be a 40-billion-dollar company.

We’re not ‘uncomfortable’ investing in Canada

WARREN BUFFETTOK. We're now finally coordinated to where station three, I believe.

AUDIENCE MEMBERHello. Hey. Hey, everyone. Hi, Warren. I'm Liam. I'm 27 from Newmarket, Ontario, Canada. I got invested in Berkshire thanks to my dad who brought me down to this meeting. I'm so excited to be here. Most 27-year-olds have idols who are rappers, but instead my idols are Warren, Charlie, who we'll miss forever, and also your cousin Jimmy, who unfortunately had to go this year, too. It's been a tough year. As a Canadian, similar with Greg, I always wonder about our Canadian economy and what you think about the Canadian economy. We've got some beat-down bank stocks right now, and I don't know what your opinions on are on these. And I also wonder at, in your nineties, if the rumors are true and you're still able to eat McDonald's. I like fast food myself, but I always wonder, at 93, he's still able to eat those and enjoy the Coca-Cola. Thanks, Warren.

WARREN BUFFETTOK. Well, we've got a Canadian here, so we'll let him answer that first part. (Laughter) And if you if you watch me, you'll see what I like to eat, I mean. (Laughs) Go to it, Greg.

GREG ABELOK. Yeah, well, we are fortunate to have a number of operations up in Canada. It goes across many of our operating entities, and then, as Warren touched on, all the businesses that we have a piece of, that we're invested in, are up in Canada. So the presence is significant. We're always looking at making incremental investments there because it's an environment we're very comfortable with. Warren touched on understanding the U.S. environment business environment and I would put Canada equally in that bucket, that we understand it and would be comfortable. And I would say the economy moves very closely to the U.S. So, the results we're seeing out of our various businesses that report both their U.S. and Canadian operations aren't drastically different. And there's a few that we're on the energy side, for example, we make very substantial investments up there in Alberta. But again, it's very consistent with how that economy's growing, and I would see it being very consistent with what we see here. Warren, anything to

WARREN BUFFETTYeah. No, we Canadian obviously, there aren't as many big companies up there as there are in the United States. But when we get a I got one from Canada just the other day that I sent over to Greg, too. That When we see anything that's suggesting an idea that's of a size that would interest [us] here and meets other requirements, we don't have any hesitancy about putting big money in Canada. It's just and there are things we actually can do fairly well that or Canada could you know, benefit from Berkshire's participation. We did it some years ago not that many years ago but there was a financial institution up there. And they had a problem and they'd had, as I remember, 30-plus, you know, various other people that were kicking it around. And meanwhile, the place was getting close to the edge for not a fundamental problem. And Ted Weschler from our office went up there. I heard about it on a Monday or something, and Ted Weschler went up there and we offered a solution in a couple of days to something that was getting close to the brink. So it we do not feel uncomfortable in any way, shape, or form putting our money into Canada. In fact, we're actually looking at one thing now. But, you know, they still have to meet our standards in terms of what we get for our money. But they don't have a they don’t have a mental we don’t have any mental blocks about that country. And of course, there's a lot of countries we don't understand at all. So, Canada, it's terrific when you've got a major economy not the size of the U.S., but a major economy that you absolutely you feel confident about operating there.

Ajit Jain has built Berkshire’s insurance operations to last

WARREN BUFFETTOK. Becky?

BECKY QUICKAnd, Warren, you just said that you'd rather have Ajit running risk assessment at the insurance operations than any other thousand insurance adjusters in the world, so I'd like to follow up with a question that came in from Mark Blakley in Tulsa, Oklahoma. He said, "Warren, for years, you have spoken about the incredible impact Ajit has had on Berkshire. You've often joked, if you and Ajit are in a sinking boat and we can only save one of you, swim to Ajit. While we often discuss plans for the next CEO of Berkshire, little is mentioned on who will one day replace Ajit. How should we think about the future of the Berkshire insurance operations, given how challenging it may be to find another Ajit?" And I'd like to hear Ajit's thoughts on this, as well.

WARREN BUFFETTWell, I would say we won't find another Ajit. But, fortunately, he's a good bit younger than I am. So, I hope you have to worry a little bit about me first, before you start worrying about Ajit. (Laughter) You know, we won't find another Ajit, but we have an operation that he has created and that, at least, part of it there are certain parts of it that are almost impossible for competitors to imitate. And if I was in their shoes, I wouldn't try to imitate them. And so we've institutionalized some of our advantages. But Ajit, is a well, he allowed his presence allowed us to do it. And he did it. But now, we've created a structure that didn't exist when he came in 1986. Nothing close to it existed with us or with anybody else. And insurance is the most important business at Berkshire. Marketable securities are important, but they're not in the class, exactly, as our insurance business. And Ajit we won't have the same business if Ajit isn't running it. But we'll have a very good business. And, again, that's thanks to Ajit. You know, I'd been in the business when he came in 1986, you know I'd first went to Geico in 1950. We first bought National Indemnity in 1957. And it was something that we made quite a bit of money in the stocks of of insurance companies. But we needed we needed an Ajit. And, fortunately, he came into the office on a Saturday. And he was tired of working at something where he really didn’t it just didn't challenge his intellect. And I said, well, we've got a lot of challenges, so -(Laughs) You know nobody's perfect. So you've never seen an insurance policy or (laughs) owned an insurance stock, but here are the keys. And that's worked out very well. (Applause)

AJIT JAINThank you very much, Warren. Thank you very much, everyone. But the fact of the matter is, nobody is irreplaceable. And we have [Apple CEO} Tim Cook here in the audience, I believe, who has proved that

WARREN BUFFETTYeah.

AJIT JAINand has set an example for a lot of people who follow. (Applause)

WARREN BUFFETTThat's a great observation.

AJIT JAINNow, having said that, I will also add that our board is conscious of the succession issue, not only at Warren's level, but also at my level. And, every year, they had me sitting in front of them, answering questions, and having me share my ideas with them, in terms of what would happen to the operations if I get hit by a truck. We go through the various operations we have. I review with them a short list of people I think ought to be candidates for replacing me. And, in addition to that, I go a step further and identify a particular individual as the person I would hand over the case to, if something were to happen to me. Obviously, that could be subject to change, but we take this issue fairly seriously. And I think, at the end of the day, as Tim Cook has proved to us, it'll be the biggest non-issue of the day. The Earth will keep still keep revolving around the axis.

WARREN BUFFETTOK. We know what we -(applause) we know what we will do. We know it's a good answer. But we know isn’t we won't have another Ajit.

Charlie Munger was ‘peaking’ at the age of 99

WARREN BUFFETTStation five.

AUDIENCE MEMBERHi. My name is Ange Enunikis (PH). And I'm wondering, if you had one more day with Charlie, what would you do with him?

WARREN BUFFETTHmm. (Laughs) (Applause) Well, it's kind of interesting because, in effect, I did have one more day. I mean, it wasn't a full day or anything, but but he We we always lived in a way where we were happy with what we were doing every day. I mean, Charlie liked learning. He liked, as I mentioned in the movie, he liked a wide variety of things. So, he was much broader than I was. But I didn't have any great desire to be as broad as he was. And he didn't have any great desire to be as narrow as I. But we had a lot of fun, doing anything. And, you know, we'd play golf together. We'd play tennis together. We did everything together. And this, you may find kind of interesting, we had as much fun, perhaps even more, to some extent, with things that failed because then, we really had to work and work our way out of them. And, in a sense, there's more fun having somebody that's your partner and digging your way out of a foxhole than there is just sitting there and watching an idea that you got ten years ago just continually produce more and more profit. So It wasn’t you know he really he really fooled me, though, on he went to 99.9 years. I mean If you had picked two guys, you know he publicly said he never did a day of exercise, except what was required when he was in the Army. So, he never did a day of voluntarily exercise. He never thought about what he ate, you know? It you know We started every day and Charlie had he was interested in more things than I was. But we never had any doubts about the other person, period. And so if I'd had another day with him, we'd probably do the same thing we were doing the earlier days. But And we wouldn't have wanted to know that we only had one day. (Laughs) There's a great advantage in not knowing where you’re going what day you're going to die. And Charlie always said, you know, just tell me where I'm going to die so I'll never go there. (Laughter) It the truth is you know he went everywhere, with his mind. And therefore, he was not only interested in the world at 99, but the world was interested in him. It's remarkable. You know, they he he I would I told him, in the last few years, I'd never seen anybody that was peaking, you know, at 99. And -(Laughs) The world wanted to come and see him. I mean, they actually wanted to go out to 351 North June Street. And whether it was well, I could name a whole bunch of names but just I’ll start with Elon Musk, but go down the list, and they all wanted to meet Charlie. And Charlie was happy to talk with them. And the only the only person I could think of, otherwise, was the Dalia Lama. I don't know that they had a lot else in common, but -(laughs) It was he lived his life the way he wanted to. And he got to say what he wanted to say. He, like I, loved having a podium. And, again, I can't remember any time that he was mad at me, or I was mad at him. It just didn't happen. And calling him was fun, back when long distance rates were high. And we didn't talk as often, as the years in recent years. We used to be on, daily, for long periods. And we did keep learning. And we liked learning together. But, you know We tended to be a little smarter, because as the years went by because we had mistakes and we had other things, where we learned something. And the fact that he and I were on the same wavelength, in that respect, meant that the world was still a very interesting place to us, when he got to be 99 and I got to be 93. So, I don't have a perfect answer for you there, but I can tell you the ingredients that would go into Sometimes, people would say to me or Charlie, at one of these meetings, you know, if you could only have lunch with one person that lived over the last 2,000 or so years, you know, who would you want to have it with? Charlie says, I've already met all of them, you know, because he he read all their books. I mean And he eliminated all of the trouble of going to restaurants to meet them or anything like that. He just went through a book. He had met Ben Franklin. And he really he was remarkable. He's had, really, no one else to meet because he'd read all their stuff. And he liked Ben Franklin's stuff better than he liked mine, but But Ben Franklin, he just had to read about it. He didn't have to he didn’t have to go have lunch with him or anything of the sort. But it's an interesting question. What you should probably ask yourself is that, who do you feel that you'd want to start spending the last day of your life with, and then figure out a way to start meeting them tomorrow. And meet them as often as you can, because why wait until the last day. And don't bother with the others? (Applause)

Cyber insurance is hot but too risky for now

WARREN BUFFETTOK, Becky.

BECKY QUICKThis question comes from Karel De Gend in Switzerland, in Europe. And this is for both Mr. Buffett and Mr. Jain. "As political instability in the world is growing with the rise in the number of armed conflicts and trade tension, there is also increasing risk of cyberattacks. What are your views on cybersecurity insurance? I'm asking this question, in general, for retail, small businesses, and large companies, including critical key infrastructure, such as power plants, harbors, airports, nuclear plants, et cetera. Do you see a potential for profit making in cybersecurity insurances? And what are the key challenges?"

AJIT JAINOK. Let me start. Cyber insurance has become a very fashionable product, these days. Over these last few years, it is, at least, a 10-billion-dollar market right now, globally. And profitability has also been fairly high. I think profitability of at least 20 percent of the total premium, has ended up as profit in the pockets of the insurance barons. Now, having said that, we at Berkshire tend to be very, very careful when it comes to taking on cyber insurance liabilities actually, for two reasons. One is it's very difficult to know what is the quantum of losses that can be subject to a single occurrence. And the aggregation potential of cyber losses, especially if some cloud operation comes to a standstill, you know, can aggregation potential can be huge. And not being able to have a worst-case cap on it is what scares us. Secondly, it's also very difficult to have some sense of what we call lost cost, or the cost of goods sold, could potentially be. It's not just for a single loss, but for losses across over time. They have been fairly well contained. Out of a hundred cents of the dollar, the premium losses over the last four of five years, I think have not been beyond forty cents on the dollar, leaving a decent profit margin. But having said that, there's not enough data to be able to hang your hat on and say what your true lost cost is. So, in our insurance operations, I have told the people running the operations is I have discouraged them from writing cyber insurance. To the extent that they need to write it so as to satisfy certain client needs, I have told them, no matter how much you charge, you should tell yourself that each time you write a cyber insurance policy, you're losing money. We can argue about how much money you're losing, but the mindset should be, you're not making money on it, you're losing money. And then, we should go from there. So it is projected to be a huge business. My guess is, at some point, it might become a huge business, but it might be associated with huge losses. And our approach is to sort of stay away from it right now, until we can have access to some meaningful data and hang our hat on data.

WARREN BUFFETTWell, you've just made you’ve just heard heard why Ajit is invaluable, because When you insure something, you really want to think of what how much can you lose. And the question I remember the first time it was it happened, I think, in the 1968, when there were the riots in various cities because I think it was the Bobby Kennedy death that set it off or the Martin Luther King death. I'm not sure which one. But, in any event, when you had a policy, you have a limit in that policy. But the question is, what is one event? So, if somebody is assassinated in some town and that causes losses at thousands of businesses all over the country, if you've written all of those thousands of policies, do you have one event or do you have a thousand events? And there's no place where that kind of a dilemma enters into it more than cyber, because if you think about it, if you know let's say you're writing 10 million dollars of limit per risk. And you decide that's fine, and if you lose 10 million, you know, for some event, you can take it. But the problem is if that one event turns out to affect a thousand policies and somehow they're all linked together in some way, and the courts decide that way, you've written something that, in no way we're getting the proper price for and could break the company. And I will tell you that most people want to be in anything that's fashionable when they write insurance. And cyber's an easy issue. You can write a lot of it. The agents like it. You know, they're getting a commission on every policy they write. And you've got to have somebody in charge of things that understands that you may get an aggregation of risks that you never dreamt of and, maybe, worse than some earthquake happening some place just because you have a whole bunch of policies with a million-dollar limit. And I would say that human nature is such that most insurance companies will get very excited. And their agents will get very excited. And it's very fashionable. And it's kind of interesting. And, as Charlie would say, it may be rat poison. (Laughter)

Solar and wind aren’t reliable enough yet to totally stop using fossil fuels

WARREN BUFFETTOK. Well, that cheerful view, we'll go to station six.

AUDIENCE MEMBERGood morning. This question is for Warren Buffett and Greg Abel. My name is Maria Perenes (PH). I am a retiree from Las Vegas, Nevada. I am here today as a member of (unintellligible) Nevada, a group (unintelligible) Latine leaders for the environment of justices. I am also I am almost here, represented in many Latine in families in Nevada who are struggling to pay their utility bills and want access to affordable, clean electricity. I want to [ask] today, why is NV Energy, which is owned by the Berkshire Hathaway, building new gas plants instead of investing in solar energy with Nevada, one of the sunniest states in the country? Can I expect to see future leadership take dangerous investments in the fossils levels more seriously? Thank you.

WARREN BUFFETTAnd thank you, Maria. Greg, you want to?

GREG ABELSure. Thank you. So, as we touched on, with NV Energy even earlier, there's a lot going on there. And when I think of there's no question solar’s a great opportunity for NV Energy and we'll continue to utilize it as a resource and continue to invest in it in that utility and the other utility we have in Nevada. We're also in a point where when you think of a transition that's going on within the energy sector, we are transitioning from carbon resources to renewable resources, as was noted. But it will not occur overnight. That transition will take many years. And as we use the renewable resources, such as solar or wind, they are intermittent. And we do try to combine it with batteries. But at this point in time, we cannot transition completely away from the carbon resources. So, if I think of Nevada, in the next two years, our last two coal units are well actually, in the next year our last two coal units will retire. But we are replacing them with a new gas unit, which is truly needed to make sure that system remains reliable and available to our customers. And that's done in conjunction with our with the state representatives and our regulatory agencies to make sure we can serve those customers, every day and every minute. We have great examples in Iowa, where, at times, a hundred percent of our energy comes from wind. And we're thrilled with that. And I believe we did that, for example, on Earth Day. Every we had enough wind that we could meet the demand of that state. But the next day, if the wind's not blowing, we need our gas resources, our gas plants to fill that gap. And, really, that's the situation we still have in Nevada. So, we'll continue the transition to renewable resources, be it solar in Nevada and wind in other areas, combined with batteries. But for the foreseeable future, we do see gas being a very important resource to help maintain reliability and meet our customer needs. And to meet it in an affordable way, is also an important piece of that. So thank you for your comments. (Applause)

WARREN BUFFETTAnd we've got the capital to do whatever makes the most sense in a place like Nevada. And Nevada, I don't know, each state calls their ruling commission something different, but they probably call it the Public Service Commission or something like and they're making the decision as to what they think can and should be done in terms of getting from a vastly complicated utility business moves toward something different without messing things up in the meantime, and, you know, having the lights go off. They I think they would probably agree with you very much, Maria, that they what they where they want to get. But they can't they can’t do it tomorrow, you know, because of the intermittent problems. And their job is to make sure the lights stay on. And their job is also to move toward better sources. But solar will never be the only source of electricity because it well, Greg may know more about this, but barring some real breakthroughs in storage and that sort of thing.

GREG ABELRight.

WARREN BUFFETTYeah.

GREG ABELYeah, generally, a battery right now, to do it in an economical way, is a four-hour battery. And when you think of the time without the sun being available, that's a challenge. Now, there's a lot of technology advancements. And that's stretching out. And you throw dollars at a lot of things, you can accomplish things. But the reality is that there's a careful balance of the reliability and also balancing, as you as it was noted, the rates do matter and how much customers are paying. So, delicate balance of both delivering reliability but doing it in an affordable way.

WARREN BUFFETTYeah. My friend, Bill Gates he's working on shortening up that or lengthening the time the battery works. And so you've had some very smart people working on it. But it isn’t something that you actually do overnight. And I can understand why people want it done overnight. But it is going to take a lot of money. It's going to take a lot of good ideas and smart people, like Bill and Greg not me. I don't understand why the damn lights go on when I even turn the switch. But those fellows really do know. And there's plenty of them working on it. And we've got plenty of money to implement it. But there are certain things that just take a certain amount of time. My daughter hates it when I use this example, but it's really true that you can't create a baby in one month by getting nine women pregnant. I mean, that’s just, you know -(laughter) You may want you may want a baby, but So, there are certain laws of nature that you have to work with.

Florida’s insurance market is difficult, but the state is trying to improve it

WARREN BUFFETTOK. Becky?

BECKY QUICKThis question comes from Rich McCloskey in Dunedin, Florida. He says, "Warren and Ajit, would you let us know what you think about the car and property insurance situation in Florida? As a resident, both seem out of control. Since the Florida market seems to be so mismanaged, is this an opportunity for Berkshire?"

AJIT JAINYeah. The Florida market, both for auto insurance and for homeowner’s insurance, has had a few tough years. The two problems we face in Florida, and all the risk bearers face in Florida, one is the lawyers and the amount of corruption that takes place in the Florida market is keeps skyrocketing, making it difficult for us to price the product and make a profit. And, secondly, the amount of activity, in terms of storms, both the frequency and the severity, is also so severe that the losses in Florida tend to make it very difficult for a risk bearer to make money. Having said that, we've had a we fortunately had a very good run in Florida last year. We increased our exposure in Florida, as we talked about, last year. And, fortunately, nothing bad happened. So a lot of our premiums that were in the top line flew straight to the bottom line. Florida is a large market. Florida is a market that's subsidized by the rest of the country. I don't think those that's going to stand the test of the time. The Florida market, the legislators are trying to improve it. They have passed a law that is bringing down the amount of fraud that takes place in Florida. And I hope Florida will be a fairly buoyant insurance market because, at the end of the day, they do believe in the free market more than some of the other states that have an insurance crisis, like California and New York. So, yes, Florida has a problem. Prices will go up fairly substantially. But at the end of the day, I think we'll achieve a degree of balance so that the risk bearers can make a decent profit and we'll be deploying capital out there.

Life advice: set goals and take the paths that achieve them

WARREN BUFFETTOK. Station seven, please?

AUDIENCE MEMBERHi, Warren. My name is Christine Hoenig Garcia. And I'm from Agoura Hills, California. Thank you for being an excellent teacher and imparting your wisdom to us throughout the years. What advice would you like to share today that you believe everyone needs to hear?

WARREN BUFFETTWell, too bad you didn't add you added that what the rest of us would like to hear. (Laughs) Well, I would say that if I had one piece of advice, I would well, and you're lucky you live in this country because just to start with, because you've got opportunities here that wouldn't exist in (applause) much of the world. But I would like I would like really sort of use Charlie's advice of thinking how you would like your obituary to read and then start selecting the educational paths, the social paths, you know, the whatever -(unintelligible) that your particular situation, in terms of associating, and perhaps certainly in my day, it would have been marrying the person that would best help you do that. Well, Charlie would say you are offering some similar benefit to the partner. And, you know, the opportunity in this country is, you know, it’s basically limitless. But when you think of going back not that many centuries, you know, if you were going to be a shepherd or something like that, you know, a hundred years from now, you know, your grandson was granddaughter was going to be a shepherd. I mean, nothing really happened. And what has happened in the last 200 years with the combination of the Industrial Revolution and whether it's science or education or health, or you name it, we are so lucky to be born when we were, the people in this room. And many of us were lucky enough to be born in the United States as well. You know, you you‘ve had the you're entering the best world that's ever existed. And you want to find the people to share it with and the activities to participate in that fit you. And if you get lucky, like Charlie and I did, you find things that interest you young. But if you don't find them right away, you keep looking. And I always tell students to take the job that you I mean, find the job that you want would like to have if you didn't need a job. And sometimes you can find that very early. And sometimes sometimes you go through various experiences. But don't forget what you’re trying actually are trying to do. And there's no place to do it like this country. And find the person that you like to share your life with, in many cases. And, you know, sometimes you get lucky and do that early. And sometimes you make mistakes. But I would I would try to you know, in a very, very general way, I would try to figure out how you'd want to look back on your life and think about yourself and start today to go on the path that leads to that goal and expect some difficulties along the way. But if you're thinking that way, you're more likely to get there. (Applause)

Greg Abel is now working directly with Berkshire’s managers

WARREN BUFFETTBecky.

BECKY QUICKThis question comes from Axel Meyersiek in Hamburg, Germany. What has changed for Berkshire's operating CEOs since Greg Abel and Ajit Jain became vice chairmen? For example, can and do the operating CEOs still reach out to Warren Buffett directly?

WARREN BUFFETTWell, that’s the answer might surprise you. But they overwhelmingly, the operating executives, well they prefer to talk to Greg or to Ajit. (Laughs) And that's understandable because I don't really do much. And I don't operate at the same level of efficiency that I would have 30 years ago or 40 years ago. I don't know the managers as well as I would have when we were smaller and when I could get more accomplished in a day than I can now. And you’ve got when you've got somebody like Greg and Ajit, you know, why settle for me, I mean, basically? (Laughs) So it's worked out extremely well. And I almost can't imagine anything working better. Because Greg, in a year, accomplishes I mean, he sees more of them, understands more about their problems, you know, can give them suggestions. He's got incredible amounts of energy. And nobody has more wisdom than Ajit about insurance. And they've got access in insurance to him. Now, they had it before we stuck some of those titles on in insurance. Whereas with Greg, he much expanded things when he became the vice chairman in charge of really everything except insurance. So, he is if you polled our managers that fall under his jurisdiction, which would be a lot of them, they they would much prefer it, unless, like a few, they weren't paying as much attention to their business. And I wouldn't do anything about it. But Greg would. And they still like it when he does it. He can deliver he can deliver news very well to people who You know, there'll be some people, if you have 20 children and you're very rich, you'll have some that will be go-getters anyway. And you'll have some that won't. And we are a very, very rich company. And we don’t we haven't had a history of being very tough on people that coasted. And we've had some that would do that. And Greg will do something about it. And Charlie and I wouldn't have. Not because we didn't know it should be done, but because we were doing so well ourselves. (Laughs) It just wasn’t we didn’t we wouldn't make the effort. We didn't want to change our lives that way. Plus, we slowed down in various ways physically and everything. So, I would I would say that the number of calls I get from managers is essentially awfully close to zero. And Greg is handling those. And I don't know quite how he does it. But but we've got the right person. I can tell you that. And with Ajit, he does less physical moving. And the insurance people are more used to working with Ajit, obviously, over the years. So, I wouldn't say that changing the title really changes much there. Because he was in charge of insurance anyway. So that’s you know, you can you can go to a business school, and they can give you way better answers than I've just given you. But that's the way we do it at Berkshire. (Laughs)

BECKY QUICKAjit raised his hand.

AJIT JAINYeah, if I can add a comment. From my perspective, the transition has worked out very, very well. But I think the credit really goes to how Warren has handled the situation. And what I mean by that is after the transition was announced and a lot of the operating managers used to be they were used to calling Warren directly on some issue or the other. After the transition, when they would continue to do so, Warren would very skillfully, in his manner, handle them such that he would not answer what they were looking for, but at the same time made them feel good, and told them that he sort of enjoyed hearing from them and talking to them. So as a result of which, you know, the transition took place, people got the message. They got the message and were very responsive to it. And it's a non-issue as far as today is concerned.

GREG ABELAjit, I’d probably add -(applause) yeah Ajit, the only thing I would add is we do have an exceptional set of managers across both the non-insurance and insurance. And yes, Warren made it incredibly easy, but so did they. It was a very easy transition because they care deeply about Berkshire. They care deeply about the culture. And they very much wanted it to be a success. And we're fortunate to have those managers in insurance and non-insurance. So, thank you.

WARREN BUFFETTYeah -(applause) what Greg is talking about is they really wanted more direction in some cases than I gave them. You know, I mean I just sat there reading the Wall Street Journal or whatever. And Greg is I don’t you know, there one way or another, there are more than 24 hours in his day, you know? And I just don't know how he covers the ground he does. But he knows more about the people. We get the same feeling in terms of judging the attractiveness of businesses and making capital decisions and that sort of thing. But but he's willing to work. I mean, you know, and I couldn't get as much done anyway. You know, what I could do in a couple of hours, you know, may take eight hours now. I just don't read as fast and everything. But it's working very well. And this place, if anything happened to me, it would be working extremely well the next day. I don't get any phone calls. You could actually we can rig something up, so we get some answering machine that people think I'm still around, you know, or something, in terms -(Laughter) So anyway, that's that’s much much less than you'd learn in business school. But that's the way we do it at Berkshire.

‘Loads of opportunities’ in India that ‘more energetic’ future Berkshire management could explore

WARREN BUFFETTOK. Station eight.

AUDIENCE MEMBERYeah, Warren, Greg, and Ajit. Thank you for having us. Your teachings have not only made us better investors, but more importantly better people. Thank you for that. My name is Rajeev Agrawal and I am from New Jersey. I run an India-focused fund called DoorDarshi India Fund. My question is related to India. Indian economy and Indian equities have done quite well in the last five, 10, 20 years. It is the fifth largest economy, and it will be the third largest in the next few years. My question is, is Berkshire actively looking for opportunities in the Indian equity market? And what will allow you to buy anything meaningful there? Thank you.

WARREN BUFFETTYeah, well, it's a very good question. And obviously, India, you know I'm sure there are loads of opportunities in a place like India. And the question is, do we have any advantage in either insights into those businesses or contacts that will make possible some some transaction that might where the parties in India would particularly want us to participate? I would say that that's something that a more energetic management at Berkshire could pursue. Because we do have the reputation now. Berkshire is known not like it's known in the United States but it's known around the world. And, you know, our Japanese experience has been fascinating in that respect. So there may be unexplored or unattended to opportunity in that area. I'm not the one to do it. But that may be something that in the future it might be opportunities. There are opportunities. The question is, does Berkshire have some kind of advantage in actually pursuing those opportunities against particularly against people that are using other people's money where they get paid based on assets managed or something of the sort? I mean, there are plenty of people in the game who are buying and running businesses that do not really have our philosophy. I mean, they they're going to get rich no matter what happens. And their payment may be based on how much they buy rather than what they buy. So we'll see how the next management plays the game out at Berkshire. And fortunately, you don't have too long to wait on that, generally. I feel fine. But I I know a little bit about actuarial tables, and -(laughter) I just well, I would say this. I shouldn't be taking on any four-year employment contracts like several people are doing in this world at an age where you can't be quite that sure of where you're going to be in four years. (Laughs) OK. (Applause) But you're absolutely right about if you were energetic, had some way to become a buyer or a party that people particularly wanted to do business with, Japan was great. And India could be great. But India and Japan aren't the same. I mean, I don't adapt myself terribly well to different cultures. And some people are really good at it. And almost anybody is better than I am. But I stumbled into one or two. But that could happen in, you know, act two of Berkshire Hathaway.

Berkshire will remain attractive to managers who share its culture

WARREN BUFFETTBecky.

BECKY QUICKThis is a question from Rafael del Pino from Spain. Berkshire has grown tremendously thanks to, and among things, its architect, Mr. Munger, and you, it's general contractor. We're all tremendously thankful to you for taking us along the way. We are aware that both of you and many others have spent an enormous amount of time ensuring Berkshire's culture provides a solid footing on which to grow the building. You also currently have a very talented bench of what we may label as sub-contractors in Mr. Abel, Mr. Jain, Mr. Combs, and Mr. Weschler. However, for a long time, you've had the advantage that talented sub-contractors have wanted to work with a once-in-a-generation architect and general contractor. How do you envision Berkshire will overcome the loss of said advantage when the contractor bench needs to be renewed again? And what are potential renovation works in this great building that may necessitate a new architect?

WARREN BUFFETTYeah, well, that's a great question to which Charlie and I obviously talked a lot about over time. And of course, we we will not Berkshire, to the extent it remains the sort of entity that it is, will not need to attract people very often. It would be absolutely crazy for anybody for our board of directors to ever pick anybody to run this business that thought you should retire at 65. And maybe that they should retire the next day, you know, when you learn what they're really like managing something. Or it may turn that you want to keep them around till they really start being affected by old age, which hits different people at different times. But it hits everybody eventually. And so we it's very likely that if the directors, and it's very tough, because they will be acting against conventional wisdom, which is always difficult. But I think we've got the group on that. And they will not have to make a decision very often if they pick the right CEO. That's 99 percent of the job of the directors. And the other 1 percent is, do you have a good method to correct it if you made a wrong decision? And that's extremely hard to do in our present system. It's not impossible. But it's just not something that happens. It's too good a job to be a director to try and throw over somebody, particularly if you can use the money from directorships and you want to be on other boards and everything. We do not have a perfect system in terms of boards of directors at all. And it doesn't operate at all well, I shouldn't say at all but it doesn't operate as people may think it generally operates. So, we will you know we really got the problem solved for the next 20 years unless something untoward happens. And if something untoward happens, then the directors need to find, probably within our own organization, somebody that they've got confidence in to maintain the special advantages we have over another 20-years period. There's various things that are low probabilities. But you still have to think about them. And we are in that position now. Now, if you ask me whether if something happened to Greg today everybody says, don't travel on the same plane. The thing to do is not travel in the same auto. Planes don't go down that often. Autos crash all the time. I've seen all these corporate policies on that which are kind of crazy when you think about the real risk. But in any event, we do Greg is going to have to tell the directors about what if something happened tomorrow, he has to tell the directors about what should be done if anything happens to him. And that's not an easy thing to do. I don’t have well, it will be his decision. And then the directors really have to decide whether he's made the right one. But he will make the right one. And what you really have to hope is that you get lucky on how long managers stick around. You might need three in a century. And you might need six or seven. But the answer is, you need a little luck. And you need some break in the mortality tables. But we've got an entity that if you really aspire to be a certain kind of manager of a really large entity, there's nothing like it in the world. So, we've got something to offer the person who we want to have. You know, it's sort of like Charlie said about marrying the best person that will have you. Well, we've got something that the right person would want to marry, you know, basically, in terms of Berkshire. And if we get the wrong person, then the directors have to do something about it. And that probably won't happen. But it's always a contingency a possibility I should say. Greg, having been put on the spot like that (laughs), you don't have to name anybody now. But I'm sure the crowd would love it and make news. (Laughter)

GREG ABELWell, the only thing I would add, Warren, is and it's really how the comments started was around culture. The culture we have at Berkshire, and that being our shareholders being our partners and our managers of our business having that ownership mentality, that's never going to change. And that will attract the right managers at every level. So, I think as Warren said, we have a very special company in Berkshire. But it's that culture that makes it special. And that's not going to change.

WARREN BUFFETTOK. (Applause)

Board’s job is to pick the right CEO every 20 years

WARREN BUFFETTStation nine. I'm never sure where nine is.

AUDIENCE MEMBERHi. I'm Sherman Lam, a Berkshire shareholder. And I work for a family office in Kuala Lampur, Malaysia. Just really happy to see you, Warren, and the team. And where I come from, you're a hero. And both you and Charlie have positively transformed mine and many, many other Malaysians and Southeast Asians lives, not only financially, but also in how we navigate our lives and relationships. Thank you very, very, very much. (Applause)

WARREN BUFFETTWell, thank you. Thank you. That makes us feel good. (Laughs)

AUDIENCE MEMBERQuestion is, what have your teams' greatest learnings been on business, capital allocation, stock picking, and portfolio allocation throughout the COVID-19 pandemic period over the last five years? And, we would appreciate it if we can get your views as well as your representations on Ted and Todd as well as directly from Greg and Ajit too on their respective businesses. Thank you.

WARREN BUFFETTYeah. I don't think I want to give individual appraisals. But really what you're doing is in terms of capital allocation, which is my job I don’t go out and sell insurance policies or anything of the sort. And you represent a group of shareholders like we do represent. We are totally clear on our mission. And, you know, it may be that other people don't agree with them. But I would say that in great many places, you know, I just don't agree with their mission. (Laughs) And, you know, I would say that, for example, that anybody that wants to retire at 65 would be disqualified from being CEO of Berkshire. They might get they might get retired the next day if they were the wrong person. But there's just certain things we don't want. And, the We're well fixed now. And the odds are very good, but far from certainty, that that takes care of the next 20 years. Now, the but you have to provide for the contingency. And I there's several people on the board that know what I would do on that. But it's up to Greg. But if Greg and I go at the same time, then you'll move into making another decision. And, you know, there are a few people who know my thoughts on that. But the job of the director is then to come up with the right CEO. And the right CEO can make a terrible business great. Tom Murphy, who was the best he was the best business manager I've ever known. And Tom Murphy, you know, he said the real key was buying the right business. And now, Murph brought a million other attributes to it after that. But, you know, as Charlie said, you know, he had saying on that. But basically, we could have brought in Tom Murphy and told him his job was to run the textile business. And it would have done a little bit better. But it still would have failed. (Laughs) And one of the reasons I stuck with the textile business as long as I did was that I liked Ken Chase so much. And I thought he was a terrific guy. And he was a very good manager. And if he'd been a jerk, you know, we'd have quit the textile business much faster and (laughs) we'd have been better off. But so, the answer was for him to get in the TV business like Murph had done and add some (unintelligible). Murph figured that out early. And he started with a pathetic operation, which was a VHF in Albany, New York, competing against GE and everything. And he was operating out a home for retired nuns. And he only painted the side that faced the street. He had one car dashing around town. And he called it "news truck number six." But from that he built an incredible company. And he built it because he was the best manager I've ever met. But beyond that, it wasn't a good business. And the key will be to have the key will be to find another Tom Murphy and then hand him a bunch of good businesses, and he or she will know what to do with it. Now that's not as precise as you would get in most companies. But you really can't get more precise than that. I mean, you can have committees and management consultants and everybody. But it wasn't a management consultant that hired Tom Murphy. And I forget whether he was doing his sales volume was a couple thousand a week at first. And then soon as he hit that what was his goal, or if he got to 2,000, he says, now, my goal is 3,000. (Laughs) And he kept doing that. And he surpassed all these people like CBS and ABC that owned the world by the tail. And it was just a wonderful lesson in life to get just to be able to view something like that. I learned an awful lot from what he said to me. But I just learned by watching somebody like him operate. I mean, it's like watching a great golfer or a great tennis player. And you ought to learn something about the kind of swing you're trying to develop or something of the sort. So that's not a great answer for you. But it’s so far it's worked. And I think it works I'm very sure it works with Greg. And it's up to people in the future when, you know, I'm underground or wherever they put me, to really make a decision every 20 years or something like that on average. It's the right decision. But correct it if it turns out to be the wrong decision. That's what a board of directors is for. And we've got the people on the board that really understand that responsibility. They take it seriously. But they don't take themselves too seriously. And so therefore they don't they don’t want to they don’t necessarily want to do a lot of things just to look busy. And they aren't using us as a steppingstone to get on other boards. But we've got people that really believe in what we're doing. And they're the ones that are going to have to make this place work. And if they get lucky on Greg's mortality, they can do just what Rip van Winkle did and go to sleep for 20 years or so and then make another decision. And Berkshire has every tool in the world available. I mean, what it is now and continue to be what it is now. I mean, we've gotten from 20 million of net worth to 570 billion. And, you know, we there aren't as many things to do, but we can do a few big things better than anybody else can do. And there will be occasional times when we're the only one willing to act. And at those times, we want to be sure that the U.S. government thinks we're an asset to the situation and not a liability or a supplicant, you know, as the banks were, we'll say in 2008 and '09. They were all tarred with the same brush. But we want to be sure that the brush that determines our future, you know, is not tarred. And I think we’re in the I don't think anybody's got a better position to do it than Berkshire. (Applause)

Berkshire has a lot of cash, but ‘things aren’t attractive’ to buy now

WARREN BUFFETTBecky?

BECKY QUICKThis question's from Johan Heylen, who writes, "You're sitting on a 168 billion of cash, which you told us today is now more than 182 billion dollars." His questions are, "One, what is Buffett waiting for? And two, why not at least deploy some of it?"

WARREN BUFFETTWell, I think that's pretty (laughs) easy to answer. I don't think anybody sitting at this table has any idea of how to use it effectively and therefore we don't use it and we don't use it now at 5.4 percent, but we wouldn't use it if it was at 1 percent. Don't tell the Federal Reserve that -(laughter) prefer it. But the we don't we only swing at pitches we like. And if anybody tried to swing at every pitch or felt that because they hadn't swung at a pitch for the last two pitches they ought to swing at the third one or something like that, it's just there are times and obviously but I would say this. I would not like to be running 10 billion now. Ten million I think we could I think Charlie or I could earn high returns on, because I think there are just a few things that happen on a very, very small scale. But that if we had 10 billion, we wouldn't I wouldn't basically see many more opportunities than we've found. Now, it's true that something like Japan we could've done if the company had had a 30 or 40 billion and we'd make we’d have had great returns on equity. But if I saw one of those now, I'd do it for Berkshire. You know, it isn't like I've got a hunger strike or something like that going on. It's just that they things aren't attractive. And there is well, there are certain ways that can change, and we'll see whether they do.

Settlement may change commission structure, but real estate agents still have important role

WARREN BUFFETTOK. Station 10.

AUDIENCE MEMBERMr. Buffett, this is an incredible meeting that you host every year. My name is Sean Cawley. I am a real estate agent with Berkshire Hathaway Home Services in Arizona and California. My mother Cindy, my brother, and my two sisters all sell real estate with Berkshire Hathaway Home Services for many years. We love being a part of the Berkshire family along with the 70,000 other agents that sell real estate for the company. Mr. Buffett, Home Services of America recently settled our class action lawsuit regarding commissions for $250 million last week. This is this dollar amount's about a hundred million more than Keller Williams, 166.5 million more than Anywhere Real Estate, which is Better Homes and Gardens and Coldwell Banker. As a realtor with Berkshire Hathaway Home Services in multiple markets and a shareholder who's been coming to this meeting for 15 straight years that's one of the reasons I got involved with real estate is because of this meeting what are your thoughts on buying and selling a home in light of this recent settlement? And I'd maybe ask the note to Greg and Ajit, too would you consider a Berkshire agent when buying your next home? (Laughter)

WARREN BUFFETTWell, I don't buy them that often as some people have noted. (Laughter) But I certainly would consider them. But I'd say the probability of that happening is low. And I really appreciate the fact you've joined up with us. But I'm going to in terms of the settlement, I mean Greg kept me informed but I turned it over a hundred percent to him. So, Greg, you want to talk about it?

GREG ABELSure. So, thank you for you and your family for being an agent and working for our company, Berkshire Hathaway Home Services. I think there's a few questions in there. One, there is no question the industry will go through some transitions because of that settlement. Ours and the every other major player in the industry settled. The National Association of Realtors settled for more than 400 million. So effectively everybody was swept up in that settlement. And it did set the grounds for the both Home Services and for the industry to move forward. There's a lot of changes that happen in or are being proposed associated with that settlement. But the one thing that I think you hopefully would absolutely agree with, the real estate agent is still an important part of these transactions. It's the one time in our lives where we make these massive investments, and having that counsel and guidance is critical. And that's really what our business and those other businesses rely on. How the commission structures change and how it's negotiated, which is really what the settlement was, it was no longer that a buyer would automatically pay a commission agent to the selling agent. That how now has to be negotiated. That'll impact things, but I think the realtors will continue to be a very important part of that. And I think Home Services and the industry will remain very relevant. And then the only thing I would share with our shareholders on a broader basis is that obligation resides with Home Services and can be met by Home Services. And that was an important condition because they were also pursuing Berkshire and Berkshire Hathaway Energy and we said, you can pursue us separately, but that settlement will reside with Home Services and be an obligation of that. And they decided the ultimate settlement and will go forward from there. So, Warren, any other comments

WARREN BUFFETTWell, yeah. I've sold two houses in the last well, in the last 93-and-a-fraction years, (Laughs) And I've I don't know I've bought one that I still have, but I obviously bought the other two. And I have not negotiated down the commission, even though well, the last one sold for 7 million or something like that. People do negotiate down commissions to some extent. But I can tell you I've looked at the figures and I think the system has really worked out very well. When I got out of school they had, you know, what they called FSBO, you know, for sale by owner. And so I've been involved to some degree in watching the whole system operate. And I know what our average agent makes. I know, you know, how long they work on things sometimes that don't materialize. It I don't think we'll end up with a better system. And but, you know, it's up to Greg and the people at Home Services how we work it through here. But I like our agency group, and I we've got a very large number as you of real estate agents. And I've encouraged the expansion we've done in the real estate agent real estate brokerage business. You know, it was just one or two operations when we bought Berkshire Hathaway Energy, and we've really built up quite a company. And I think it's a very fundamental business. You need help. Ninety percent of the people need help, you know, in buying a home or selling one. And I've watched it operate all my life and been involved with lots of people who have been in the business and bought there was a decision in court, and I told Greg to handle it whatever way that seemed best to him. And I'm quite I'm perfectly happy with the way we've handled it, I think. I'm surprised at the decision, but it we get surprised in decisions in the insurance business lots of times. I mean, you know, just think of the various things we've faced. And, you know, when 9/11 came along, you know, we never thought something like that could happen, but it happened. And then we didn't know what was one event or more events. I mean, if you if they closed down the New York Stock Exchange and a bunch of brokers all kinds of people lose their jobs or lose their income for a while, is that one event or multiple events? Well, there's all kinds of things come up in business, and we just we play the ball wherever (laughs) we find it. And I was surprised by the decision. Was it in Missouri that

GREG ABELMissouri, yes.

WARREN BUFFETTYeah. But, you know, we've gotten surprised by some other decisions, and we'll keep doing sensible things as we move forward. Greg, do you want to, yeah

GREG ABELYeah. No, I think the only thing I would add, back maybe to how the model has changed, and he asked one yes, we'll always I can't speak for Ajit but we'll always use Home Services agents. But it's interesting. I have bought a home abroad because I lived over in the United Kingdom, in Newcastle, running our utility over there. And it is a completely different experience to buy a home outside of the U.S. Our agents take great responsibility for the whole transaction in the U.S. They put, as Warren said, time and capital at risk to ensure the transaction closes. And when you do close it, they make sure what you bought you actually what you thought you were purchasing you end up with. And that's not the way it is always around the world. And there are more affordable models, but it's the old saying, you get what you pay for. So, I think our real estate agents still provide incredible value within our business, and, as Warren touched on it, it'll survive. The form may be a little bit different, but there's no question it'll continue to thrive.

WARREN BUFFETTYeah. We still will want to buy real estate brokerages at the right price. And I hope we're bigger in the industry 10 years from now and 20 years from now than we are currently. And I did sell a house for 7 million, and I did not negotiate the 6 percent down. And I feel like I got my money's worth and then some. And I'm cheap by nature so -(laughs) and it is not careless about it. I just I got my money's worth.

Insurance companies may lose volume if Tesla is right about fewer accidents with self-driving cars

WARREN BUFFETTSo, let's move on to Becky.

BECKY QUICKThis question's for Warren and Ajit. It's from Jeff Oyster. "As a Berkshire and Tesla shareholder, I would like to hear your thoughts on the potential financial effects to GEICO, assuming Elon Musk delivers on his fully autonomous driving goal. "On Tesla's most recent earnings call, Elon said, 'If you've got at scale a statistically significant amount of data that shows conclusively that the autonomous car has, let's say, half the accident rate of a human-driven car, I think that's difficult to ignore.' "Assuming Elon succeeds in reducing accidents by 50 percent versus human drivers, wouldn't auto insurance rates fall to reflect the reduced underwriting risk, thereby adversely impacting GEICO's revenues and float and perhaps margins too?"

WARREN BUFFETTWell, the truth yeah, if it well, let's just take the extreme example. Let's say there are only going to be three accidents in the United States next year for some crazy reason that anything that reduces accidents is going to reduce cost. But that's been harder to do than people have done before, but obviously, if it really happens, the figures will show it and our data will show it and prices will come down. I would There have been a lot of people talk about doing that in the past. I mean, General Motors used to be very big in the insurance business, and when Uber first started, they used some firm which now is I think Ajit will confirm they're close to bankruptcy now, aren't they, because of taking things on at the wrong prices? Is that true of

AJIT JAINYeah. Yeah.

WARREN BUFFETTYeah. Yeah, it insurance always looks easier than it is. And it's so much fun because you get the money at the start, you know, and then you find out whether you've done something stupid later on, but You know, it's a very tempting business when somebody hands you money and you hand them a little piece of paper. But really knowing whether you're I mean, if accidents get reduced 50 percent it's going to be good for society, and it's going to be bad for insurance companies' volume. But, you know, good for society is what we're looking for. So far, this you might find kind of interesting I mean, the number of people killed per hundred million passenger miles driven, I think it actually was in the when I was young it was, like, 15, but even post-World War II it only fell to, like, seven or thereabouts. And Ralph Nader probably has done more for the American consumer than just about anybody in history because that seven or six has now come down to under two. And I don't think it would've come down that way without him. There have been some kind of fluke figures of what people did during the pandemic, which are quite interesting because they didn't drive immediately they didn't drive as many miles, but they drove more dangerously, didn't they?

AJIT JAINYeah

WARREN BUFFETTIs that right, Ajit?

AJIT JAINYeah. Yeah. So, the point I want to make in terms of Tesla and the fact that they feel that because of their technology the number of accidents do come down, and that is certainly provable. But I think what needs to be factored in as well is the repair cost of each one of these accidents has skyrocketed. So, if you multiple the number of accidents times the cost of each accident, I'm not sure that total number has come down as much as Tesla would like us to believe. Tesla has been toying with the idea of writing insurance directly or indirectly, and so far, it hasn't really sort of been much of a success. Time will tell, but I think, you know, automation just shifts a lot of the expense from the operator to the equipment provider.

Please be in your seats for start of second session

WARREN BUFFETTOK. We're getting close to noon when we're going to break for lunch. I just want to tell everybody that I would appreciate it very much if they will get in their seats and be ready at one o’clock when we reconvene because we will have another very short little movie and we'll just have a little explanation of something that I think will be of interest certainly of interest to me. But it so I would like them we will break promptly at 12, and I would like everybody to really make an attempt to be in their seat and quiet at one o’clock. And if you can't do that, if you'll wait a few minutes and watch in the halls all that. But we will we do not want to be seating people and have people milling here at one o’clock. And just like a play in New York or something we'll it'll take a few minutes and only a few minutes to cover what we're going to at one o’clock. But we don't want to be seating people during that period.

Berkshire isn’t trying to predict winners in controlling climate change

WARREN BUFFETTBut now let's we'll go on till 12 o’clock and then we'll have a break until 1 o’clock. And we will go to station 11.

AUDIENCE MEMBERMy name is Humphrey Liu, and I'm from Charlottesville, Virginia. I asked a question last year and wish to pose it again. It can be considered a follow-up. There is something to be said for traditions. It is the same question, but it is a changing and different world we are in. Looking at global trends, it increasingly does seem that zero-emission vehicles may have finally reached the cusp of massive adoption. Do you see any opportunities in this space, either in specific vehicle manufacturers or in related technologies? As an addendum, I will note that Berkshire has very relevant interests in energy, Pilot Flying J, and BYD. Thank you.

WARREN BUFFETTYeah. Well, we will I hope you're right. And massive adoption has been sort of a moving target so far. But I hope we get there. But Berskshire would not be I don't think that we bring any special talent to that field. You've got vehicle manufacturers, and I would certainly not know how to pick the winners in an industry like that. But I'll be delighted if there are some winners. But don't count on us foreseeing who the winners will be, and don't count on us for predicting when something will happen. It obviously has been a moving target so far, and it is an incredible problem that society faces. And it may be that it may be that governments are not very good at solving it for a while. It's All of climate change is it's got a terrible problem just in the fact that, you know, in effect that, the United States, particularly, has been the one that caused the problem the most and then we're asking poorer societies to say, well, you've got to change the way you live because we lived the way we did. And, you know, that really hasn't been settled yet. You know, it's a fascinating problem to me, but I don't have anything to add to how you really slice through the world. When I was born in 1930, there were just essentially two billion people in the world population statistic now there's eight billion. Now if you'd asked anybody in 1930 if you take the 50 smartest people in the world and you said, what's the optimum population for the world when you're 93 years old, they would've not said eight billion. There wouldn't be anybody even close to it. But we did it. Now we're reaping some of the consequences of having done that. And we got the benefits in the United States. I'm exaggerating here to some extent, but the developed world basically got a And then we're telling a whole bunch of other people that we want them to change the way they live because of the way they live we lived and the way they lived. So, we will see what happens with it. But that's a problem that is be very, very, very hard to solve among a couple hundred countries. And I really don't have anything to be to contribute on it.

Carol Loomis once briefly dated Ty Cobb

WARREN BUFFETTAnd now I've got instructions from the thing the monitor in front of me. I would like to introduce one person here that has you all know because she's been here so many times. But my friend Carol Loomis, who is now well, she's going to be 95 on June 25th. You can send presents care of our office. And Carol has edited the Berkshire annual report -(applause) since 1977. There we are. (Applause) And there are two points I'd like to mention. Every year, I give Carol a little item for her bracelet that is a replica of the front page of the report that year, and they're different colors and all of that sort of thing. And so she now has, what, since 1977, what, 47 of them. And she I think she's put 10 on each one. But I've always wondered, you know, if she put them all on one arm whether one arm wouldn't now be four or five inches longer (laughter) than the other. But I'm sure she foresaw that. But I want to reveal one other I want to reveal well, I want to ask one more question while Carol is here because I'm sure almost everybody in this audience grew up, like I did, knowing that Ty Cobb's lifetime batting average was .367. I mean, he's the leader among everyone. And maybe that that record is never broken and Ty Cobb, .367's immortal. But Carol has a distinction that probably most of you don't know, but she dated Ty Cobb. And -(Laughter) Carol was officed at Sixth Avenue and 50th Street in the Time-Life Building and NBC was right across the street in Rockefeller Center. And the quiz shows became the hit of TV. And Carol being the kind of person she is, walked across the street at lunchtime and went on the quiz show of the late 1950s and they gave her the they gave her the questions regarding baseball. And Carol answered them all correctly. Of course, she was encyclopedic on all kinds of things but so she knew all the answers. And she proceeded she was single at the time and she proceeded back to her office at Fortune. And at some point she got a phone call from sounded like a fairly young man in Georgia, and he said, my uncle is Ty Cobb, and he would like to take you to lunch at 21. And so Carol went to lunch with Ty Cobb at 21, and I think he subsequently had one more lunch. And then she decided to call it off. But those of you who follow baseball may have noticed that in the 1990s they found that the statistics had been faulty when Ty Cobb played and that he actually only batted. 366, that there were a couple of at-bats they didn't count. So, the real question I want to know from Carol, and I think she should maybe tell us, is that would she have dated Ty Cobb (laughter) if she'd known I mean, I know she wouldn't have I know she wouldn’t have dated Ty Cobb if his batting average had been. 300 or something like that. (Laughter) But where was the cutoff point at which she would've told Ty Cobb to stay in Atlanta and forget about coming up to New York? And if Carol would if anybody has a microphone Carol would care to express herself on that question. It's the unanswered question that I've had and all inquiring minds have had and only she knows the answer. And she's with her daughter. She married a wonderful guy, John Loomis, and Barbara's with her. I'm sure Barbara's been always wanting to ask this question, but I've -(laughter) it's kind of tough when you're in the family. But I am sort of an obnoxious guy who will do it in front of a lot of people. Carol? (Laughs)

CAROL LOOMISZero. (Laughter)

WARREN BUFFETTOr we can have Barbara's guess. Either one will

BARBARAShe would've been she would have been happy to go either way, right?

CAROL LOOMISYeah

BARBARAYou would've gone

CAROL LOOMISRight. (Laughter)

BARBARAThank you.

WARREN BUFFETTCarol -(Applause) Carol is the best business writer. She comes from the town of Cole Camp, Missouri. You know, I don't know, the whole place is around a thousand, probably. She never took an accounting course, and she ended up becoming the best business writer in the United States. And we you know, she didn't want to be an editor, actually. I mean, she could've done other things at Fortune, but she just plain liked writing business stories. And like I say, she that nobody came close to her, and she started from scratch. But in 1977, I asked her to edit my report, and she turned out to be just as good an editor as she was a writer. And it All the way through this year, including this year, Carol has edited the Berkshire report. And to the extent that anybody enjoys reading them, let's give a hand to Carol. (Applause)

Shareholder Ruth Gottesman donates $1 billion to make Bronx medical school tuition-free

WARREN BUFFETTOK. And I've been told to show a video right before you go to lunch because it's only 30-some seconds, and then we'll talk a little bit more about it when we come. So, if we'll dim the lights, we will we will have we'll show what a Berkshire shareholder did when she sold us a billion dollars' worth of stock the other day. And you'll meet somebody that I hope is I know she is the prototype she may have more zeroes, but she's the prototype of a good many Berkshire Hathaway shareholders, and it'll be the first thing we talk about when we come back. But some of you may have noticed, whenever it was, a few weeks back, when Ruth Gottesman gave one billion dollars to [the] Albert Einstein [College of Medicine] to take care of all the -(Applause) Ruth doesn't like a lot of attention drawn to herself, but here's how they felt at Albert Einstein when they announced that Ruth Gottesman had just made a decision to take care of all the all of the costs costs of education at Albert Einstein. And it's going to be in perpetuity. So, let's just show the film. RUTH GOTTESMAN (on video): I’m happy to share with you that starting in August this year, the Albert Einstein College of Medicine will be tuition-free. (Audience of students shown in video erupts into extended cheers and applause)

WARREN BUFFETTAnd that's why Charlie and I have had such fun running Berkshire. (Applause) She transferred a billion dollars to other people. She happened to do it with Berkshire stock. And, you know, they offered to rename the school after her and everything like that, but she said, Albert Einstein, that's a that’s a pretty good name to start with, so You know, there's no ego involved, you know, nothing. She just decided that she'd rather have a hundred-plus closer to 150, eventually students be able to start out debt-free and proceed in life. And she did it happily, and she did it without somebody asking, you know, name it, you know, put my name on all four sides in neon lights. And I salute her. (Applause)