2025 年股东大会 · 下午场

Transcript

WARREN BUFFETTOK, everyone. OK, we’re ready to go, and I’m going to lead off by actually recommending a movie. I know that’s why you came, but I would recommend all of you. You go to Amazon Prime—I’ve got no financial interest in this— but you go to Amazon Prime. Click on a documentary called Becoming Katharine Graham . It’s an incredible story from 50 or so years ago. And to some extent, I had the good luck to be kind of a viewer of some American history that I think is fascinating. So if you feel that I have misled you can write me a note, and I promise to report how many didn’t agree with it, but click on Becoming Katharine Graham, and you’ll see a story of a remarkable story of American history. There are a good many portions in there who lived for that period didn’t know about at the time. I don’t think every American citizen ought to watch it. So with that I hope you all spend some more money out there and in our friendly shops. We will go to Station 9.

What did Warren Buffett learn from Greg Abel?

ROBERTHi, Warren. My name is Robert, and I’m a shareholder from Toronto, Canada. So, Warren, three years ago, Charlie Rose asked your question to the effect of what you wanted to be remembered for. And your reply was, “He was a teacher.” So in that spirit, Greg, I’m curious to hear maybe a story of where you learned something very, you know, profound from Warren. I’m sure you learned many things, but if there is a story that kind of comes up in your mind, we’d love to hear it, and vice versa, if we have the time. Warren, what’s something that you may be learned from Greg? Thank you.

WARREN BUFFETTYeah, I will turn this over to Greg in just one second, but now the main thing I’d like to be known for is old age.

GREG ABELWell, Warren is obviously a remarkable teacher and I benefit from that every day and as I’ve already touched on for many years, I’m fortunate that if I had to be remembered as something right now, obviously, I want to be remembered as a great father, but equally, a coach and that goes to family, friends and just being involved with the kids I coach in hockey or baseball or whatever it may be.

GREG ABELI think we’ve got a great opportunity to get back to him at a very young age, so obviously, those would be how I’d want to be remembered, and hopefully that will be many, many years from now, but I love thinking of Warren truly as a teacher and he and every day get the opportunity to continue to learn. Warren and I this dialogue is strong every week and we’re always talking about opportunities in Berkshire or things that are going on globally or in the US and each one is truly a learning moment.

GREG ABELI’ll maybe go back to the very first meeting with Warren because it still stands out in my mind, obviously, it was an incredible opportunity. Warren was buying or acquiring Mid-America Energy Holdings company at that time, or thinking about it, I had the opportunity with my partners to go over there on a Saturday morning, and we discussed the business, and Warren had the financial statements in front of them.

GREG ABELLike anybody, I was sort of expecting a few questions on how the business was performing or a variety of things, but Warren locked in immediately to what was on the balance sheet and the fact that we had some derivative contracts, the weapons of mass destruction. And associated with the utility business, we do have them because they use them to match certain positions, and they never match perfectly. But you do have them, and we’re required in the regulated business. I just remember Warren going to it immediately and asking about the composition of it and what the underlying risk was, and wanting to thoroughly understand.

GREG ABELIt wasn’t that big of a position, but it was absolutely one of the risks he was concerned about as he was acquiring Mid-American and obviously, in light of Enron and everything that had gone on, it was a very pertinent question. The follow-up to that was then there was an energy crisis in the US around electricity and natural gas, and a variety of folks who were making significant sums of money. This is a year, 18 months later. And Warren’s follow-up question, a couple of years later, to me was, and I knew it was more just checking or testing, “So how much money are we making during this energy crisis? Are we making a lot? Do we have the speculative positions in place and are we making?” And the answer was we’re really not making any more today than we would have been six months ago, because all those derivatives were truly to support our business and weren’t speculative. So, just that focus on understanding the business of what he was acquiring, understanding the risks around it, still stands out in my mind. Warren?

WARREN BUFFETTYeah, that’s one thing we’ve really never talked about here, but I spend more time looking at balance sheets than I do income statements and Wall Street really doesn’t pay much attention to balance sheets, but I like to look at balance sheets over an 8 or 10 year period before I even look at the income account. There are certain things that are harder to hide or play games with on the balance sheet than you can with the income statement. I mean, neither one gives you the total answer on anything, but you still want to understand what the figures are saying and what they don’t say and what they can’t say and what the management will like them to say, that the auditors wouldn’t like them to say.

WARREN BUFFETTAnd I mean, there’s just a lot to be learned, and you do learn more from balance sheets in my view than most people give them credit for. I’m not worried about being remembered for that, people don’t remember. Well, they don’t remember enough about Katharine Graham, for example, in terms of this story that shaped America in many ways. Certainly, had just all kinds of impact, and I think I mean history is so fascinating, and Charlie was probably the best person you could imagine in what he learned. Charlie was never satisfied with just superficial things about any subject. He really wanted to understand it, and he always would tell me not to take a position on anything until you can describe the arguments against it better than the person who is arguing with you. That you should be able to argue their case better than they can.

WARREN BUFFETTHe was a remarkable teacher and but so and so with those other fellows I mentioned. And, of course, my dad was an incredible teacher. So you make the most of the people you meet who are going to make you a better person, and probably forget about the rest to quite an extent. OK, let’s move on to number 12. Becky, here. Next.

Greg Abel’s view on capital allocation

BECKY QUICKThis question comes from David Rubin, a shareholder from Scottsdale, AZ. It’s a question for Greg. “We’ve heard over the decades and are familiar with Warren and Charlie’s investment thesis and their circle of competence. During the first ten years after taking over as CEO, Greg will be tasked with allocating more capital during that time than Berkshire has had to allocate in its history. Given this, I’d like to hear from Greg about his views on capital allocation, particularly into new businesses.”

GREG ABELSure. It’s very fortunate when you think of Berkshire again, and we’ve talked about this where we start from and clearly touch on the investment in the related investment allocation, but we start from where great place where we’ve got a great culture within the business. We have values that we as a management team and really as defined by Warren and those of Charlie and everybody associated with the business, got great values that really set Berkshire up well for the future, and obviously as we deploy capital and allocate capital, it’s critical to Berkshire as we go forward and equally it’s around managing risk.

GREG ABELBut when I think of our values, there are a couple that are absolutely critical. One will maintain the reputation of Berkshire and that of our company. I view that in investing or how we operate things across each of our businesses, that will always be a priority and something that will ensure it is in the forefront of our minds. I think equally, as we then look at our— back to Warren’s balance sheet comment—we will have a fortress of a balance sheet. I thought Sue Decker, our lead director, said it well yesterday. We’ve got a significant set of cash right now, but it’s an enormous asset to have that, and that will continue to be a philosophy. When we can deploy it, we’ll deploy it well.

GREG ABELBut equally, we do recognize it as a strategic asset and it allows us to weather the difficult times and at the same and not be dependent on anybody. So, again, that will be an investment philosophy. We will remain Berkshire, and we will never be dependent on a bank or some other party for Berkshire to be successful. I would then touch on allocation of capital being absolutely critical, but with that comes management of risk and understanding risk, and that falls upon all our managers, insurance, non-insurance, but we’ll bring that across Berkshire.

GREG ABELThe other value I would touch on, but that really relates to where I’m going, is that, ultimately, we have a great set of operating companies that do produce significant cash flows. Be it in the insurance companies creating flow or various non-insurance companies producing significant cash flows on an annual basis. We intend to continue to ensure that’s the strength of Berkshire as we go forward. It’s absolutely critical to our long-term success. Now, with those cash flows and with the float, and then equally as touched on, we have significant resources already in our balance sheet. We’ll really continue to move forward with a very similar philosophy, or it’s an identical philosophy to what we’ve had currently and for the past 60 years.

GREG ABELWe’ll start by looking at those opportunities within our business. And by that, I mean, within our insurance, non-insurance businesses. Are they properly capitalized and have the opportunity to manage their business, and will that continue to exist? They’ll operate in an autonomous way. But in the end, Berkshire still manages the capital that will go into those businesses or what potentially will come out of those businesses. Equally, the next opportunity is to acquire businesses in their totality or 100%. There are great times when we can do that. Warren touched on. We had one that was interesting in the last quarter, the $10 billion acquisition, but again, the value relative to the risk has to be right. And if it’s right, we want to own it. If it’s not the time, there’ll be another time to own assets like that.

GREG ABELThen there’s the opportunity to own pieces of companies through equity. But as Warrens always highlighted, and again, this will be our approach to how we think around those companies. Though we own a piece of the company. We own a piece of that cash flow. We own a piece of their balance sheet. It’s not just a share certificate. And as we approach that, really, we’ll approach it with the thought that we’re going to own this company for the long term. It’s again understanding what—be it the 100% company or the 1% company. Do we thoroughly understand, and do we have a strong view of what the economic prospects of those companies will look like? And Warren said it earlier, five years from now, 10 years from now, 20 years from now, if we don’t have a view of that, we won’t be investing, be it 100% or 2% of a company through equities.

GREG ABELWe have to thoroughly understand what those prospects look like, and associated with understanding those prospects, we need to understand the underlying risk of the businesses and it’s really the investment philosophy and how Warren and the team have allocated capital for the past 60 years. It will not change, and it’s the approach we will take as we go forward.

WARREN BUFFETTI don’t want to go on too long on this, but this is important because it’s very obvious that the country, for example, needs an incredible improvement, rethinking, redirection, even to some extent. We’ve outgrown what would be the model that America should have. And in a sense, it’s a problem something akin to the interstate highway system, where you needed the power of the government really to get things done because it doesn’t work so well when you get 48 or 50 jurisdictions that each have their own way of thinking about things. Of course, in World War Two, we called in people at a dollar an hour, and we knew we had to turn out ships like crazy, and we knew that we had to convert Ford Motor from being a car manufacturer into an aircraft manufacturer in a matter of days, not weeks, not months.

WARREN BUFFETTThere are certain really major investment situations where we have capital like nobody else has in the private system. We have particular knowhow in the whole generation and transmission arena. The country is going to need it. But we have to figure out a way that makes sense from the standpoint of the government, from the standpoint of the public, and from the standpoint of Berkshire, and we haven’t figured that out yet. I don’t know whether Greg wants to even explain a few of the major problems, but that is a clear and present use of hundreds of billions of dollars. You know, you have people that set up funds and say, they’re getting paid for just assembling stuff. But that’s not the way to handle it. The way to handle it is to have some kind of government-private industry cooperation similar to what you do in a war. I don’t think when they were doing the highway system, that the government set up his own guys that were going to pour a whole cement or anything like that, but they you needed a cooperation and we’re at that point, I think in terms of energy, but I don’t think we’ve made any progress particularly. Tell us more about that.

GREG ABELYeah. And I think these are not unique in that it’s sort of reflective of where we’re at. There will be very significant investment opportunities across a variety of industries. As Warren touched on in the electric industry or the energy space, we obviously know that well with our existing business. The capital required to meet the long-term needs of what’s currently projected as demand is enormous and we as Berkshire we’ll be in a good position to help address those needs, but the model around it and the risks that need to be addressed to deploy that type of capital will be different than they are today.

WARREN BUFFETTYeah, the muscle of the federal government will be needed. But the test of whether you can have 48 or 50, depending on the nature of things, jurisdictions that are cooperating to do something that has opposition–we’ll have opposition in every single state. And if they took in the vote during World War 2 or they took a vote on the Interstate Highway system, it would have been slowed down to an incredible degree. So the question is how to use the strengths of this country to actually turn it into what it should be capable of or self-preserving in a republic with 48 connected and a couple of unconnected States.

WARREN BUFFETTIt will be interesting to see what happens, but we do have capital, and we actually have some knowledge that very few places have. I mean, that we know what the games are about, but putting together that energy with knowledge and with capital and everything is it’s just not easy. It should be something that we’re capable of in the country, but the country was not designed in a certain way; it was not designed for having 48 different jurisdictions that could mess up anything that we’re attempting to do. During wartime, it’s one thing to get agreement, but during peacetime, it’s a different problem. That’s going to be one for the next generation, but it’s important. OK, station 10.

How to get hired from Berkshire Hathaway

DARCUS TANGGood morning, Mr. Buffett and Mr. Abel. I’m Dorcus Tang. I’m 14 years old. My father, Roy Tang MGRTCO, brought me here for two consecutive years. And I promise I will come back every year since I queue up at 2:00 in the morning for every meeting you hold. My dad owned BRKA shares, and he said I need to work hard to earn my peace of BRKB. We are both from China, Hong Kong, and I would like to ask, what’s the essential element for a global teenager like me if we want to be part of Berkshire like Mr. Greg Abel? What piece of knowledge should I learn so you will hire me in the future?

WARREN BUFFETTIf you’re talking about the future, you better talk to Greg. So we’ll let Greg answer that.

DARCUS TANGMy final words. Finally, Mr. Buffett, I learned a lot from this meeting, and of course, I will come here every year, and I wish you could attend as many as possible, as you and Mr. Charlie Munger, the most respectful people, have inspired me and my father a lot. I wish you happiness and health, and maybe one day in the future we can make the world more prosperous altogether, like you said. Thank you.

WARREN BUFFETTOK. Thank you.

GREG ABELWell, I think your dad, your dad said it best. He highlighted that to become part of Berkshire to own some Berkshire shares, you’re going to have to work hard, and I think hard work takes all of us a long way in life, and I would never diminish that there are a lot of things that matter in life. But if you start with a great work ethic and have that attitude that you want to contribute, you’re going to go a long ways in life and you’ll find great enjoyment because as Warren said, if you work hard, you’re going to find the things you love in life and it’ll lead to that and we truly look forward to the day you’re part of Berkshire. Thank you.

WARREN BUFFETTKeep a lot of curiosity and read a lot, as Charlie would say. OK, Becky.

Wildfire liabilities

BECKY QUICKThis question comes from Matthew Tisak in Layton, UT. He said, “Please discuss your strategy on how to protect our company from future liabilities due to wildfires blamed on our electric utility companies out West.”

WARREN BUFFETTWell, that’s a very good question. We’ve made some mistakes in the past when we bought PacifiCorp in 2005. Walter Scott, David Sokol, and myself—three guys who were capitalists at heart, and we’re dealing with our own money. But we made a mistake by not carving it up into the seven states that we were buying. It came with an aggregation where it wasn’t state by state, and we kept the same structure, and that was a big mistake. Well, every part of the country is going to need electricity, and there are going to be places where privately held electric utilities would be very foolish to operate and how that gets resolved. In a democracy, we will find out. But those are the facts as they stand now, I would say. Greg?

GREG ABELThe risk around the wildfires, i.e. do the wildfires occur, they’re not going away, and we know that, and the risk probably goes up each year. So what can we do to reduce the risk of it impacting our system and our underlying assets, and unfortunately, the liabilities with such events? We can change that and manage that. We can’t eliminate the risk, but we can reduce that. And that’s where we’ve got our teams in the West, but we really are approaching it across all our energy infrastructure, because the reality is the wildfires have now occurred in Texas. They’ve had a variety of them throughout the US, and we’re all very focused on how we manage that risk.

GREG ABELHow we manage it is we start by addressing the actual assets, how we’re maintaining them and where we invest them, or invest in them. So we try to make sure that they’re either not causing the fire or potentially even hardening the system as to what they can withstand. We start with the operational focus. We then take it even further, and this is something Warren and I’ve discussed many times, that the utilities started to recognise when we have these unusual weather events. And Warren touched on what’s been happening in Nebraska with storms, but they’re equally occurring or significant events occurring out West.

GREG ABELBut when we have those, we’ve gotten very, very good at saying, OK, we have to manage the system differently. We’ll potentially deenergize because there’s likely to be an event. But the one thing we hadn’t tackled, and this is very relevant to the one significant event we had back in 2020 in PacifiCorp, is that we didn’t deenergize the system as the fire was approaching. Because our employees and the whole management team have been all their whole lives to keep the lights on and the last thing they want to do is turn those lights off and have a system deenergized.

GREG ABELAfter those events and as we really looked at how we’re going to move forward in managing the assets and reducing that risk, we have clearly recognized as a team that we have to deenergize those assets. So now, as we get fires encroaching at a certain number of miles, we deenergize because we do not want to contribute to the fire, nor obviously harm any of our consumers or contribute, unfortunately, if there’s a death. And that’s really where we had to take our team that we’re managing at different risks now. It’s not about keeping the lights on, it’s about protecting the general public and ensuring the fire does not spread further. So we’ve gone as far as that, and I’ll stand corrected on this one, but we’re probably the one utility or across our utilities that does that today, and we strongly believe that. Becky?

BECKY QUICKCan I just follow up on that? Doesn’t that open you up to other risks if you shut down your system, a hospital gets shut down, somebody dies?

GREG ABELYou know, fortunately, that’s something that we do deal with a lot because we have power outages that occur by accident. So when we look at critical infrastructure because it’s an excellent point, and we’re constantly reevaluating it, and we do receive a lot of feedback from our customer groups as to how we manage that. But that is something we deal with on a more routine basis than we’d ever like. The lights go out, and we have to make sure the hospitals stay on, emergency units can respond and all that. But there is a risk there.

GREG ABELSo then we spend a lot more time educating the consumers and our consumer groups, our customers. OK, this is what will happen. We need to understand your unusual situations and how we can best tackle them, again. So we just don’t take on another liability. So there’s a lot around deenergization. Then, just to take it to the last step, and Warren touched on that, in general on energy policy, we have to work with our States and our regulators to ensure this was never a risk we took on or envisioned when we were investing in utilities, nor would any of the investors who’ve invested in other energy companies. You were in a very set return for taking on a very set defined risk associated with that asset, and this has gone well beyond that.

GREG ABELWe don’t earn the type of returns, nor can you earn a large enough return to take on this risk. So it’s not just about solving the return side. We really have to solve the risk side, which means we work with our regulators, we’re working with our state legislators to get to the right answer, and that will be an ongoing process. There are no silver bullets out there, but every day our teams across utilities are working hard to reduce that risk, recognizing the fundamental risk of the wildfires is not going away.

WARREN BUFFETTThere are some problems that can’t be solved, and we shouldn’t be in the business of taking your money, investors’ money and tackling things that we don’t know the solution for. You can present the arguments, but it’s a political decision when you are dealing with states or the federal government. If you’re in something where you’re going to lose, the big thing to do is quit.

WARREN BUFFETTIf you do present your case as well as you can, and everything else, but if you don’t hold the pen in the end, you know we don’t have any business taking your money and doing dumb things with us. We can do our best to explain what the intelligent things are, but it’s your money. So it’s very hard to tell on that. I have all the questions about politically determined decisions that are going to go to court in many cases, but you know that it doesn’t make sense. We know what we think a sensible system would be, and we ought to explain what we think it is and do our best to get our position because it’s pro-social. They have the right solution to have it. But the right solution, for example, in the Interstate, wasn’t to let 48 states each decide their own way of doing it, and award contractors the jobs. You know, there are some problems that can’t be solved, and we are not in the business of trying to solve insolvable problems.

WARREN BUFFETTBut then the problem we have, of course, is that the people who work for you, that’s their job. So they want to have reasons to keep going, and those are tough choices if you’re managing, but that’s why they have managers.

GREG ABELHey, Warren. Can I just add, because you touched on something really important there, that effectively is, for example, with the utilities and the wildfires. we can’t just become the insurer of last resort. And that we’re going to cover any costs and all costs irrespective of what occurred. And that’s a little bit of the situation we’re in right now with our largest challenge, the 2020 wildfire, there were four fires occurring at a challenging time.

GREG ABELOne, we’ve always asserted was a lightning strike that was not inside our service territory. The fire burned into our service territory, and we became responsible for that fire, effectively, through the courts, and we’ve continued to hold firm that we’re not responsible for that. Rightfully, I mean, we didn’t contribute to it, and we didn’t initiate it, nor did we feel we ever contributed to it.

GREG ABELAgain, if you look at the risks that are there, we have to manage through things like that. We’ll get through that litigation. We’re happy to report, for example, on that one. After five years, the Oregon Forestry Department has come out and said the fires, the other fires we did have that we were able to manage and extinguish, did not contribute to that fire. And that fourth fires the largest fire of the four, it’s 60% of the claims. We’re five years into effectively getting that information into the courts.

GREG ABELNow that will outline our legal strategy obviously going forward, but it’s things we’re dealing with, but we continue to learn from this as a utility in the industry. So we’re in very much each of the legislatures, as I said, making sure we get a clear definition where liability falls, what the economic damages be, but most importantly, what the non-economic damages be. And with the thought, we can’t be the insurer of last resort. We just can’t be responsible for everything that happens in a state.

WARREN BUFFETTIf we want to do it with our own money, we can do it, but we’re not going to do things with your money that we think are stupid. You ought to get rid of us if we do. It’s easier to do stupid things with other people’s money than it is with your own money. That’s one of the problems the government has, generally. We don’t want to bring it to private enterprise.

WARREN BUFFETTBut it is important that the United States have an intelligent energy policy, just as it was important during World War II that we learned how to make ships instead of cars extremely fast. We figured out the answer. We combined private enterprise with the power of government. But how feasible is that in a democracy? You know, it was clearly obvious during World War II what needed to be done, and we did it. But it’s not so clear when you have 330 million people all arguing their own self-interest, and of course deciding what will happen and having the people often who are making the decisions, reacting as they did 20 years earlier, when they don’t really bear the responsibility for the decision. Anyway, that’s management, and we’ll do our best. Station 11.

How to get a meeting with Warren Buffett

ALITIA BUREKHello, my name is Alitia Burek, and I’m from Poland, but I currently live in Chicago. This question is on behalf of an inspiring man that I know, Wid Ahmed, who’s here with us today. Mr. Buffett, nearly 74 years ago, on a cold Saturday in January 1951. You travelled 8 hours by train from New York to Washington. You went all the way on nothing but hope that someone might teach you more about the insurance industry.

ALITIA BUREKArriving at GEICO’s office to find the doors locked. You persisted until a janitor led you inside. You credit that meeting with Lorimer Davidson for the insurance float. That was the rocket fuel behind Berkshire’s success. In 2011, when I was 15, I wrote to you with similar determination, asking to meet. You kindly rolled back, saying you had only 3000 days left and more pressing priorities.

ALITIA BUREKWell, Mr. Buffett, it’s now been 5000 days since you replied. And so, inspired by your persistence in 1951 and the tenacity of Mrs. B, humbly renewed my request for just a quarter of the time Davey gave you—a single hour in your office. You may wonder why it must be you have often shared an anecdote about a Polish Jew who survived Auschwitz, who said to you once, “Warren, I’m very slow to make friends because when I look at someone, I ask myself, would they hide me?” You said that the number of people who would hide you was the best test of a life well-lived. Well, I believe that at this meeting you don’t have 40,000 shareholders, but you have 40,000 people who would hide you. You are a testament to a life extraordinarily well lived. Yet even you have not fully witnessed this transformative power of a client–

WARREN BUFFETTI’ll let you write my biography, but I think that’s the point of your question.

ALITIA BUREKSo respectfully, I ask again, Mr. Buffett, before Father Time wins, will you please grant Wid Ahmed an hour of your time or any time you can dedicate? Thank you so much for your time.

WARREN BUFFETTThank you, and I will say this to grant an hour to everybody of the 40,000 here. We’ll have an interesting time the rest of my life. But I will give you one tip. I found that when I was very young, and these companies were offbeat, they didn’t have investor relations departments then. Almost every CEO would see me because they figured they’d never see me again, and they weren’t getting calls like that.

WARREN BUFFETTI would ask two questions, as I would have to explain to them, it’s not a bad idea, incidentally. If you’re going to walk into somebody’s office and you say you want 10 minutes of their time, take an hourglass and stick it on the desk of the person you’re talking to and turn it up. So it’s going to go for 10 minutes and just say you’re going to get, you’re going to leave in 10 minutes. Unless they ask you to stay, and that’s the terms. But then once you have that—If they’re in the coal business, we’ll say, which happened to be one that I was interested in 70 years ago or so—they just ask one question that if they were to be stuck on a desert island and they had to own only one of their competitors stocked during the 10 years, which one would it be and why?

WARREN BUFFETTAnd then after they give you the answer, you ask the same thing if you would be short your net worth while you were on that island, which would it be, and why? Because every manager likes to talk about their competitors. They’re like a bunch of school kids when they get into talking about their competitors. I probably learned more about various industries by just making sure that they didn’t think I’d stay too long, and that in the meantime, they would have the floor and talk about their competitors. I kept my own mouth shut in those days.

WARREN BUFFETTThey’ve departmentalised investor relations. All companies of size, frankly, now. So you’ve got, you know, 3000 companies or whatever they have, and they all have departments, and each one of them has an Investor Relations department practically. And their job is to say, This is the best thing you can do today is buy our stock. We’ll let the whole concept is totally idiocy. But it’s a big business, and it gets bigger, and the Investor Relations department gets bigger, and it’s what we have now. But do a little of your own work, your own way. But Berkshire Hathaway has got plenty of material out there for you to read, and when you get through reading it all, you’ll know way more than most of the people who work at Berkshire.

WARREN BUFFETTSo you don’t need a personal interview. If we take an hour times even the 40,000 people we may have here, plus Becky’s many listeners and viewers, it just doesn’t work. So I admire your effort, but you’ll just have to settle for that, as the admiration that you get in this. OK. Becky.

BHE’s valuation

BECKY QUICKThis is a question that you touched on in a lot of ways, and the last answer from before, but I did get this question from a few different people. So I’d like to ask it. Ricardo Briz, a long-time shareholder based in Panama, says that he was very happy to see Berkshire acquire 100% of BHE. It was done in two steps, one in late 2022, 1% was purchased from Greg Abel for $870 million, implying a valuation of BHE of $87 billion. And then two, in 2024, the remaining 8% was purchased from the family of Walter Scott Jr. for $3.9 billion, implying a valuation of $48.8 billion for the enterprise. That second larger transaction represented a 44% reduction in valuation in just two years. Ricardo writes that PacifiCorp’s liabilities seemed too small to explain this. Therefore, what factors contributed to the difference in value for BHE between those two moments in time?

WARREN BUFFETTWe don’t know how much we’ll lose out on PacifiCorp and decisions that are made, but we also know that certain of the attitudes demonstrated by that particular example, I’ve got analogues throughout the utility system and there’s a lot of States that so far have been very good, decent to operate in. And there are some, now, they’re rat poison.

WARREN BUFFETTAs Charlie would say, to operate in that knowledge was accentuated. When we saw what happened in the Pacific Northwest and it’s accentuated by what we’ve seen as to how utilities have been treated in certain other situations. And then on top of that, it wasn’t just a direct question of what was involved at PacifiCorp. It’s an extrapolation of a societal trend.

WARREN BUFFETTSecondly, we also had a decision we didn’t expect at all in the real estate business. Those kinds of things can change values, and courts can change values. It’s a lot easier to make those decisions when you just own marketable securities than when you own businesses. I’ve made plenty of those decisions as I’ve watched what has happened in various industries and companies over 70 years. But Greg made the decision, which was fine with us, to get out. He had no knowledge of what was going to be happening in either the real estate field or the utility field, and we’re not in the mood to sell any business of it.

WARREN BUFFETTBut Berkshire Hathaway Energy is worth considerably less money than it was two years ago, based on societal factors, and that happens in some of our businesses. It certainly happened to our textile business. The public utility business is not as good a business as it was a couple of years ago, and if anybody doesn’t believe that thing, look at Hawaiian Electric and they look and look at Edison in the current wildfires situation in California and their societal trends.

WARREN BUFFETTOh, I just got a note here on my monitor that says, “The books are now sold out.” So you spend your money on other things. Here’s fudge. This is what I’m eating.

WARREN BUFFETTBut that’s the explanation—values change, and they don’t always change upwards. When we made the deal with Greg, we would have been happy to buy out the Scott family at that price, and when we needed to deal with the Scott Company, we wouldn’t have been happy to pay Greg the price he received. But that’s like Berkshire shares we bought in stock at X, and we buy in stock at less than X if conditions change. Over the years, we pay more and more because it builds in value, but it doesn’t do it in a straight line.

WARREN BUFFETTI would say that our enthusiasm for buying public utility companies is different now than it would have been a couple of years ago. That happens in other industries, too, but it’s pretty dramatic in public utilities. And it’s particularly dramatic in public utilities because they are going to need lots of money. So, if you’re going to need lots of money, you probably ought to behave in a way that encourages people to give you lots of money, and then we will see where we go. We’d like to see Public Utilities do well, but our responsibilities to the shareholders of Berkshire Hathaway. OK, station 1, again.

Berkshire Hathaway’s earning power

BREVI PANILADear Warren, dear Greg and dear fellow owners, it’s such a pleasure to be here. My name is Brevi Panila. I was born in Communist Albania, but I’m now teaching economics in London, England. The wonderful writing of Warren and Charlie has significantly shaped my thinking and teaching. I thank you both very much for the many insights over the years. Warren often writes about the importance of Berkshire’s earning power to owners. My question is what was in your estimate of Berkshire’s earning power in the latest fiscal year? It will be great if you can comment on any significant items that either increased or decreased the earning power as compared to the reported net income measures for Berkshire. Thank you.

WARREN BUFFETTWell, I think our underlying earning power was affected negatively here a while back by what happened in the utility field. I think that our earning power was not enlarged by any large acquisitions that come along, but they come along periodically. So we will see something at some point that—Well, on the one that was 10 billion, we would have added to earning power. I mean, why else would we do it?

WARREN BUFFETTSo that’s very situational, and of course it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. You know that’s been true ever since I was born in 1930. When I was born, things got much more attractive over the next two years, and apparently, I didn’t do anything about it then. But you know, that was the opportunity of a lifetime, and I blew it by worrying about the kid in the next crib or something.

WARREN BUFFETTOver my lifetime, you know, I’ve had fabulous opportunities sometimes, and they happen because humans are human. I’m fearful of all kinds of things. I don’t want to try to be one of the launders and walk on a tiny strip between a couple of twin towers or something or whatever it may be, but I don’t get fearful of things that other people get afraid of in a financial way. And you know the idea that if Berkshire went, let’s say Berkshire went down 50% next week, I would regard that as a fantastic opportunity, and then it wouldn’t bother me in the least, and most people aren’t, they just react differently.

WARREN BUFFETTIt’s not that I don’t have emotions, but I don’t have emotions about the prices of stocks. I mean, those decisions get all the way to my brain, whereas emotions can get bogged down somewhere. So Berkshire will increase its earning power over time, as we retain money, I mean, we are doing things, making decisions every day, people are working or retaining earnings. We will build the earning power, but it won’t be coming in any even stream, and it certainly won’t be matched dollar for dollar on either the upside or the downside in market prices, and that’s what makes it a good business, and you know the investment businesses that everything isn’t properly appraised and the sillier other people get, the better your opportunities get. OK, Becky.

Investing in big-tech

BECKY QUICKThis question comes from Achit Patel, and it’s about the big-cap technology stocks. In the 2017 annual meeting, you said Warren, you really don’t need any money to run these companies and referred to them as ideal businesses, referring to the big tech companies, Apple, Alphabet, Microsoft and Amazon. With all of those companies now announcing massive capital investment endeavours and around AI ambitions, have you rethought the above comment just in terms of them being asset-light and what you think of them as a result?

WARREN BUFFETTWell, it’s always better to make a lot of money without putting up anything than to make a lot of money by putting up a lot of money.

WARREN BUFFETTSo, a business that takes no capital to speak of—Coca-Cola. The finished product, which has gone through bottling companies and everything, takes a lot of capital. But in terms of selling the syrup or the concentrate that goes into it, it doesn’t take a lot of capital. So one is a fabulous business, and one is a, yeah, it depends where it is and everything like that. Coca-Cola is popular in every place. But some places, and I mean, if you’re in the bottling business, it costs real money. You have real trucks out there, and you have all kinds of machinery, and you have capital expenditures coming up.

WARREN BUFFETTWe’ve got businesses that take very little capital that make really high returns on capital, and the ones the politicians talk about are making high returns, actually aren’t making high returns, in terms of capital. Property casualty insurance is kind of a rare business because you need capital as a guarantee fund that you will keep your promises, but you can use it to buy other low-intensive capital.

WARREN BUFFETTI mean, you can buy Apple, and that would support that business. So that can be a pretty good business, and that’s one of the reasons we’ve done well over time. It’ll be interesting to see how much capital intensity. There’s more capital intensity going on with the magnificent 7 than there was a few years ago. I mean, basically, Apple has not really needed any capital over the years and its repurchased shares that dramatic amount of reduction. Whether that world is the same in the future or not is something.

WARREN BUFFETTHollywood’s answer was always to get their money from other people to put up the capital. A lot of people have gotten very rich in the country by essentially figuring out how to get others to put up the capital, and that’s what people do in the money management business. They get very, very rich because they get an override on other people’s capital.

WARREN BUFFETTIncidentally, if all of you were paying 1% for investment management fees at Berkshire last year, you would have paid $8 billion for managing, and you really wouldn’t have had to do it, but investment management is a very good game because other people put up the capital and you charge them for the capital, whether they do well or not. And then you can charge them a lot more if they do well.

WARREN BUFFETTI mean it’s a well-designed business for the people who practice it, and who can blame them, I mean, that is capitalism. I saw that in operation when I was working at Solomon, but I didn’t need to see it. I knew it existed anyway. The trick in life is to get somebody else’s capital, get an override on it. Charlie and I decided it wasn’t too elegant the business after a while, but we were not criticizing the efficacy of it. It just didn’t appeal to us after a while. I did it for 12 years, though, or something.

WARREN BUFFETTThe one difference that Charlie and I did from other people is that we put all our own money in and did it so we really did share the losses with our own capital, but we got an override on other people’s capital. And that’s been people have made advances where they get the override on other people’s capital without putting up any of their own capital to speak of. And that’s a very good business, but it can lead to a lot of abuse.

WARREN BUFFETTGreg, you’ve watched capital management in the United States, and would you say that Canada’s behind or any in that respect?

GREG ABELWell, I think when it comes to their capital system, Warren, it’s very comparable. There’s no question other than as we know, I mean I think the US as far as having a capitalist system, it would be tough to be touched by any country, and when I think of Canada, there’s just certain responsibilities or obligations that the government wants to take on and aren’t going to leave with the public sector. And that’s just a decision that’s made by society or by the Canadian people, or if you look at another country, Australia or wherever it may be, it’s different. But when I think of capitalism, that drive is there and the desire to, you know, allocate capital properly. It’s very similar.

WARREN BUFFETTIt’s produced wonders in the United States if you think about it. But originally, with the Rockefellers and Kennedys and Carnegies and all that, they actually put up money to build a steel mill, whatever it may have been, with refineries and pipelines and all that sort of thing. They put up money to do it. Now the trick is to use other people’s money, basically. And you know you can’t blame human beings for behaving like humans, but you should be aware of what their motivations are. Capitalism in the United States has succeeded like nothing you’ve ever seen. It’s a combination of this magnificent cathedral, which has produced an economy like nothing the world’s ever seen. And then it’s got this massive casino attached.

WARREN BUFFETTSo you got the cathedral and the casino, and then the casino, everybody’s having a good time, and there’s lots of money changing hands and everything. You’ve got to make sure the cathedral gets fed, too, because of the temptation. And the temptation is very high now to go over to the casino where people say, you know, we’ve got magic boxes and all kinds of things that will do wonderful things for you. That’s where people are happiest. That’s where you get the most promised to you. That’s where the most money is for the people who are pushing things.

WARREN BUFFETTThe balance between the capital and the casino and the cathedral is very important that the United States in the next 100 years make sure that the cathedral is not overtaken by the casino, because people really like to go to casinos. And it’s just so much more fun. They bring bells, and when you win, they bring you drinks and everything else, and it’s designed to move money from one pocket to another. In the cathedrals, they are basically designing things that will be producing goods and services for 300 and some million people, like it’s never been done before in history.

WARREN BUFFETTThat’s an interesting system we developed, but it works. It dispenses rewards in what seems like a terribly capricious manner. I mean, the idea that people get what they deserve in life, and it’s hard to make that argument. But if you argue with that, any other system always seems to work better; the answer is we haven’t found one. So we’ll leave it to the next generation to send me the answer by Ouija board or whatever. OK. Station 2.

Early influence

PATRICK NESTERHi, my name is Patrick Nester. I am 13 years old and from Tampa, FL. I’m here with my brother John, who’s 15, and my dad. Thank you for hosting this meeting. This is my first ever shareholder meeting. My question is what high school class or activity helped influence you to who you are today as the greatest investor of all time?

WARREN BUFFETTWell, that’s a good question. The teachers you get in your life have an incredible impression on you, and a lot of them are the formal teachers you have, but some are informal teachers too. I mean, I’ve learned from certain employers so much. You really hope you’re learning from everybody, and you find that it was well-intentioned and there’s had a lot of experience. I had a lot of good luck in that, but I would say that where I was really lucky was my dad was in the investment business, so I would go down on Saturday and I’d wait for him to go to lunch with and I’d read the books that were around there, that nobody else have ever read.

WARREN BUFFETTAnd they just talk to me, numbers talk to me, and I could never get my feel of them, and then I discovered the public library and I read every book there was on investments, literally, in the Omaha Public Library on 19th at Harney. I enjoyed learning about that. Unlike Charlie֫, if Charlie was reading about electricity, he would want to know everything that Thomas Edison knew and more and that goes with the same thought process and understand how everything worked. I didn’t care how it worked; I just cared whether it worked, and that’s a limitation. I’m confessing here. I’m not bragging.

WARREN BUFFETTAs Charlie would say, people would always ask, “If you could only have lunch with one person, living or dead, who would it be?” And Charlie said, “I’ve already had lunch with all of them because I’ve read all their books.” And he really did it. I think having curiosity and actually finding sympathetic teachers is very useful. I ran into a couple of teachers that both in high school and college. In fact, I would say that I went to three different universities. I went to high school in Washington, and at each place I found about two or three really outstanding people, and I just spent my time with them and didn’t pay much attention to the other classes. I was lucky to find something that really fit me very early on.

WARREN BUFFETTIf my ambition had been to become a ventriloquist or, you know, whatever the hell it might have been and it wouldn’t work. You know, even I just spent hours and hours and hours, and I would have been any good when I got through. So I don’t believe that. I think there was a book that talked about spending 10,000 hours as something. I could spend 10,000 hours tap dancing, and you’ll throw up if you watch me.

WARREN BUFFETTIf I spend 10 hours reading Ben Graham. I would be damn smarter when I got through. So minds are really, really different. I watch great bridge players, and I watch great physicians. I mean, people really, really, really have different talents. I think you’re supposed to have 88 billion cells in your brain. I’m not sure that all of mine are flashing bright lights. But you are different from anybody else. My dad always used to tell me that you know you’re something different, it may not be good, but you find your own path.

WARREN BUFFETTYou will find the people in school who want to talk to you. People who teach, in general. They love having a young student who’s actually really interested in the subject, and they’ll spend extra time with you. They’ll do all kinds of things, and I ran into that. And Graham and Dodd at the Columbia, well, they’ve treated me like a son, basically, but I was interested in what they’re saying, and they found it kind of entertaining. I was so interested. So look around at what really fascinates you. I wouldn’t try and be somebody else. You’ll find the teachers at a school, and you’ll find some outstanding people who are teachers.

WARREN BUFFETTAt least 10 people would have had huge impacts on my life, and every one of those positive, you know, because I got selected in the sense, and a number of people really like helping younger people. I’ve found that in school. And probably it helps to look a little bit lost at all. You need help, but I was at my school experiences, we’re good, but really very good, but I attribute it much more to the individual, to the institutions. OK, I’ve already told you more than I know. So we’re going to Becky, you’re next.

BECKY QUICKThis question comes from Scott Williams in Portland, OR. He said, “Do you think the net benefit of DOGE will be positive or negative for the long-term health of the United States?”

WARREN BUFFETTWell, why don’t you give me a hard one? I think that bureaucracy is something that is amazingly prevalent and contagious, even in our capitalist system and the big corporations. Overwhelmingly, most of them look like they could be run better. I’m sure Berkshire does in many respects. And the government is the ultimate. So it really doesn’t have any checks on it. That’s why it scares you to some extent about what the future of the currency will be, because they can print currency and if you have people that get elected by promising people things and that doesn’t mean that they aren’t sincere about all kinds of items, but there’s no politician that says to anybody that, “I really think you have bad breath and if you don’t mind would just step over that away from me.” It just doesn’t happen.

WARREN BUFFETTI think the problem of how you control revenue and expenses in government is the one that is never fully solved and has really hurt dramatically many civilizations. I don’t think we’re immune to it, and we’ve come close to it. But if you tell me how in the democracy you go in and really change things, you know, we’re operating at a fiscal deficit now that is unsustainable. Over a very long period of time, we don’t know whether that means two years or 20 years because there’s never been a country like the United States, but you know that, “If something can’t go on forever, it will end.” The quote is from Herbert Stein, a famous economist.

WARREN BUFFETTWe are doing something that is unsustainable, and it has the aspect that it becomes uncontrollable to a certain point. I mean, essentially, you just give up on it. And Paul Volcker, you know, kept that from happening in the United States. But we came close multiple times. We still had very substantial inflation in the United States, but it’s never run away yet, and that’s not something you want to try and experiment with because it feeds on itself.

WARREN BUFFETTSo I wouldn’t want the job of trying to correct what’s going on in revenue and the expenditures of the United States, with roughly a 7% gap when probably a 3% gap is sustainable and then the further away you get from that, the more you get to where the uncontrollable begins and I think that it’s a job I don’t want, but it’s a job I think should be done and Congress does not seem good at doing it.

WARREN BUFFETTWe’ve got a lot of problems always as a country, but this is one we bring on ourselves. We have a revenue stream, a capital-producing stream, a brains-producing machine like the world has never seen. And if you picked a way to screw it up, it would involve the currency. That’s happened a lot of places. In theory, you would make it so there was a substantial downside for anybody that screw things up. There is a downside, there’s upside. It’s the problem of the most successful company in the history of the world. At this point, we have a little room to go and solve. With that, I’ll shut up and go on to Station 3.

A fair capitalism

SASHAHello, Mr. Buffett. My name is Sasha from Germany. And first of all, I want to thank you because you made such a great impact on my life and the lives of the people I love, and that’s priceless. Mr. Buffett, imagine it’s 1776. And you’re sitting alongside Benjamin Franklin, helping to shape the foundation of a new nation. What core economic principles would you advocate for building a fair, resilient and opportunity-driven capitalism society, one that supports long-term prosperity for future generations?

WARREN BUFFETTWell, that’s a good question, but I would probably say to Ben Franklin, you just keep thinking and don’t talk to me because you’ll come up with some better ideas than I will. He was an incredibly remarkable person. I mean, he’s almost probably the last person to have a grasp of every aspect of activity in the country. He invented all kinds of things, and he incidentally—We were talking about the power of compound and that sort of thing–he left a will that left some money to Philadelphia and another sum to Boston that would serve as an example for a couple of hundred years. You know the power of compounding and all kinds of things that he was so far ahead of his time that the best thing I could do if I were under that tree with him was to get out of his way and let him keep thinking.

WARREN BUFFETTHe saw the problems that success could bring to a society as well as other problems, I mean, more immediate problems in all kinds of fields, but the problems of how to take 8 billion people, because there’s no way we can separate ourselves from the rest of the world. We can be an example for the rest of the world, and I think it behooves us since we have had all this good fortune in this country, and we do have a pretty good system.

WARREN BUFFETTI don’t think you get very far by lecturing the world on how. You were the one who should tell them what they should do with our lives. I think you get a certain amount of resentment when just a few hundred years ago, a whole different group of countries were running the world and now you start giving them advice, and I think it’s a real mistake in communication and persuasion to lecture a bunch of people where you just won the game.

WARREN BUFFETTI would advise Ben to figure out how to win the game and keep a certain amount of humility at the same time. And I would tell him to try and design a system that doesn’t invent too many things that can destroy the planet. You know, they become uncontrollable once you get them out there. There was no alternative to us developing the atom bomb, but the expansion of the number of people who have the ability from one to eight, and nine, probably pretty soon, with Iran. I mean, that’s a mistake. This society just could not afford to make, I mean, solve the problem in nine variables instead of simply one.

WARREN BUFFETTNow it’s totally understandable. My dad was in Congress when the atom bomb was first used, it’s amazing how Sam Rayburn kept the House of Representatives uninformed because they are supposed to appropriate all the money and 435 congressmen there and they had no idea they were probating money for Los Alamos or what was going on in Chicago or what was going on in Tennessee.

WARREN BUFFETTBut anyway, we do have a society that is far beyond anything that Ben Franklin dreamed of. It’s moving in the right direction. Towards solving some problems the way we made the kind of broad declarations about all men being created equal, etc. Then we did some of the things we did, but generally speaking, we moved in the right direction, but we faced problems. I don’t know how Ben Franklin would attack the problem of what you do once you get weapons of mass destruction in many hands, and when you essentially look at the world and something where there are winners and losers.

WARREN BUFFETTAnd that the winners humiliate the losers and do all kinds of things. I’ll let the people are a lot younger here. I’ll let them figure out the answers on that, but it’s still the most wonderful. There’s never been anything you could dream of like what happened in the United States. So it’s the best place and the best time to be alive by miles in the street. Just think of a couple of hundred years ago, and somebody yanking out a few of your teeth and pouring whiskey down you. I mean, it’s subsistence and particularly in this Midwest, just imagine waiting till the Missouri froze over every year just to see whether you get your wagon across, and maybe they have a pregnant woman in the back.

WARREN BUFFETTIt’s just amazing what has happened of a positive nature during my lifetime. And then the question, how do you keep it in? How do you improve it? I do think that the fundamentals of it all, though, are having a currency that does not get debased. What that does to the stability of a society where all the people that trust their government get screwed and all the people that figure out ways to profit from it become rich or richer. I don’t think you want a society that operates in that manner. So anyway. Let’s see, that was Section 3. So we’re going to Becky, right?

Greg Abel’s approach to managing the operating subsidiaries

BECKY QUICKGreg, this question is for you. It comes from a shareholder named Jay Milroy, who writes, “Mr. Buffett has a hands-off approach to managing the operating subsidiaries. How would you describe your approach?”

WARREN BUFFETTBetter.

GREG ABELWell, we’ve got our managers over there and I would say going back to 2018, it’s been very fortunate being this role because one I had to learn a lot of the businesses and there’s no question as Warren bought the businesses, he had that general knowledge. I absolutely had to engage with each of them, and they’ve been great in sharing their business models, their approach, and their thoughts around where the risks and opportunities are.

GREG ABELAnd I think as we went through that, there’s no question I had questions and wanted to engage with them. And Warren talks about the curiosity being important as you go through things. That would be my style, but have questions and comments around their business, their frameworks. At the same time, they have great businesses, and they run them very autonomously and that remains in place. But if there’s opportunities to see where maybe seen something in another business or an opportunity, I may see in their industry, we’re going to discuss it and see if that’s something we should pursue or are we’re properly addressing the risk.

GREG ABELI found all our managers to be absolutely engaging on that and want to have those dialogues. And I’d say that’s a reflection of my approach. I’d also say that when you think of our managers, again, very autonomous, they run their businesses, they know it better than I ever will. But if I see an opportunity that it’s well worth their time to talk to another one of our managers. If it’s GEICO, and they’ve gone through a technology transformation. They’re not by themselves that need to be thinking that way. We want to make sure the right folks are talking and figuring out how we can benefit from the prior experiences. So I would say, more active, but hopefully in a very positive way, and we got an exceptional group. So it’s worked out exceptionally well as I’ve gone through that period of time.

WARREN BUFFETTIt’s working way better with Greg than with me because I just didn’t want to work as hard as he worked and I could get away with it because we’ve got a basically good business, very good business and I wasn’t in danger of you firing me by virtue of both ownership and the fact that we would do pretty well. But the fact that you can do pretty well doesn’t mean you couldn’t do better. And Greg can do better at many things. Many people want to be managed, need help in being managed. Some don’t. Some you just leave alone.

WARREN BUFFETTWe’ve had managers it would have been crazy to start giving instructions to because they just quit. And I wouldn’t blame them because I’d be the same type myself. But a lot of people really do welcome direction and help, particularly when they’re getting it from somebody like Greg that really lives the life himself and doesn’t just come down from on high and say, “Here’s what you do”, while I do something else. A manager who behaves differently than what he’s asking the people beneath them to behave—it just doesn’t work over time.

WARREN BUFFETTPeople want a manager that they admire, and they’re not going to admire them if those people profess to behave in one manner and behave in another manner. It’s easier for an organization to see its quality move downward than it upward. I mean, if the boss behaves badly, it causes everybody to behave badly. I mean, that is really catching. It’s not as catching on the way in upper management, but if the manager is doing a little things to grease his own situation, pretty soon— Let’s say you’re running a retail establishment—pretty soon, all the employees are telling their friends that they get a discount. If their friend wants something, they’ll put it on their account and then get the discount. Once you start deviating downward, it is really contagious and it’s hard to rebuild, so you really need someone who behaves well on top and is not playing games for their own benefit. And we get a lot of managers that bend over backwards not to do that sort of thing, and then we get a few that bend over forwards. If you get enough companies, you’re going to get a lot of forms of behaviour, and Greg does something about it, and I’ve generally been lax in doing something about it, but he’s done a way better job with that than I have. OK. Station 4.

Coal phase out

KANSAS LOMIREHello, Mr. Buffett and Mr. Abel. My name is Kansas Lomire. I am a junior at Elkhorn South High School and was born and raised in Omaha. My question is directed to Greg Abel. Berkshire Hathaway is the second-largest utility provider in the United States, and a 2025 Reuters investigation found that its coal fleet is the dirtiest in the nation. There are currently no concrete plans to phase out coal and fully transition to renewable energy. I’m 17 years old, considering that, what do you have to say to young people like me who will live with the consequences of climate change due to companies like Berkshire?

GREG ABELThank you for both your question and your comments because it is important to understand, say, Berkshire Hathaway Energy, but also how they operate and maybe using Iowa, at least, as a starting example, because I think that was one of the States cited in the report. One of the important things that I’d say early in is acquiring our energy companies, and I go back to when we acquired MidAmerican, we acquired it in 1999, Berkshire purchased MidAmerican in 2000.

GREG ABELBut one thing that became very clear to me and our teams was that what we do within our utilities is really driven on two fronts. One, we absolutely have to meet the requirements in the law that’s laid out federally, but most importantly, we had to recognise that we implement public policy across these states. And that was an interesting conversation when I went back to Iowa, and again, the report cited that as a significant problem. It was early in the 2000s when, for the first time in Iowa, we were going to as a utility, be short of power.

GREG ABELSo we didn’t have the energy, and we entered into a significant discussion with our governor at the time, and really sat down and said, “Where do you want us to go as MidAmerican? And what resources do you want as a state?” At that time, we were predominantly a coal-based state, and we recognised that obviously and fundamentally, we personally viewed it as a risk, but we needed to have that conversation with our state as to how we would manage that going forward.

GREG ABELThe interesting thing was that as we had that conversation in the early 2000s, again with the leadership of our state, it was clearly decided we wanted to continue to be long power, i.e. not be short for our customers. We discussed the type of resource, and I remember a very clear conversation around we wanted to stay balanced across a variety of energy sources, and at that time, it was really coal and natural gas.

GREG ABELAnd at that time, we made the decision to build the largest wind project in the US, in Iowa. So we undertook an effort to build three resources: a coal plant, a gas plant, and a what was the first wind project we owned in MidAmerican. And again, it was very consistent with what the state wanted, but we also laid some important groundwork there because we started to define the importance of renewable energy, non-carbon resources, but it has to be consistent with what the state wanted and we’ve gone on over since that period of time to deploy $16 billion into Iowa associated with renewable energy.

GREG ABELAgain, very consistent with what our state wanted us to do, i.e. the underlying policy. We don’t get to make that decision and spend 16 billion. It’s done in conjunction with our governors, legislators, and regulators, and at the same time, we’ve had the opportunity to retire five of the 10 coal units. Now, as the report highlighted, I understand people would like those other five coal units retired at this time. But to think we deployed 16 billion to retire five, and it’s a very good outcome for our customers. We’ve been able to maintain our rates, which are some of the lowest in the country. So it’s been done very efficiently, but the reality is we still need those five coal units to keep the system stable. We cannot have a Spain-Portugal situation.

GREG ABELSo we absolutely respect the input. We absolutely respect the process, and we’ll continue to work with each of our states to identify the path they would like to chart. And we work hard to ensure there are good, balanced outcomes because we recognize the challenges associated with other folks’ desires. So I think you’ll continue to see our utilities implement policy consistent with the needs of their stakeholders or customers, and at the same time, always respecting what’s required by any of the federal standards. So, thank you for your comments.

US health insurance reform

WARREN BUFFETTOK, 31. Let’s see. Becky?

BECKY QUICKThis question comes from Billy de Ross. He writes, “Mr. Buffett, as a nurse from New York State, I’ve spent years struggling to secure good health insurance for myself, even while working on the front lines to save lives. In New York, accessing insurance means navigating a confusing state-run system that feels like it’s designed to overwhelm. I’m curious what ultimately led to the end of your healthcare venture with JP Morgan and Amazon, and given your commitment to value and long-term thinking, would you ever consider taking another look at health insurance reform in the US?”

WARREN BUFFETTWe’re spending close—it’s hard to get the precise figure—but close to 20% of GDP on health. And if you go back to 1960, there were a number of countries that were each spending around 5% and then the lines began to diverge dramatically. But the mathematical fact that there are only 100 percentage points in the equation didn’t change. So we tried that experiment with JP Morgan and Amazon. We had three people who didn’t think they knew the answer, but thought that—In my case, I used the term that it was a tapeworm in the economy—the tapeworm was alive in every part of the country. The hospitals liked it. The hospitals had prominent people who worked with people. Their doctor didn’t like the system. I mean, all kinds of things. But in the end, JP Morgan, Amazon and Berkshire, we’re not going to have any effect on changing that 20%.

WARREN BUFFETTNow that 20%, there are only 100 percentage points available, and one of the countries spends 6 or 7%, and perhaps uses our system to their advantage, which is also very true. That is an enormous percentage of the economy. It was too entrenched to really do much in the way of change, and we spent some money on it. We did some work and we learned a good bit about our own systems, and we saw the degree to which the present system was ingrained in so many people, whether the healthcare providers or whether everybody. And these aren’t evil people. I mean, they’re just going about something and trying to save lives. But we found that whether it was in Canada or France or Britain, or wherever might be. And they do look at our cost, but they were just far higher and to some extent, we were subsidizing the rest of the world, and people would come to the United States to do the really unusual or challenging aspects of health, in terms of operations and that sort of thing. But we made no progress.

WARREN BUFFETTThere comes a point where the governments, that I mean, it’s so involved in the situation and health is so important to everybody. What I said to Jamie and Jeff, I said, well, the tape worm won. There are problems in society when you get 20% of your GDP going into a given industry. The degree of enthusiasm for changing that industry, the political power that the industry will have, and that doesn’t mean they’re evil, it’s everybody they just ends up there.

WARREN BUFFETTSo we came to a conclusion, we didn’t know the answer. Three of us had the money to do it. And we didn’t know how to change of 330 million people felt about their doctor, felt about their health care, what they felt entitled to. It won’t change by itself, and the government is the only one that can change it, and the only people and governments that can change it are getting the majority of 435 people and hundred people.

WARREN BUFFETTMy dad lost one election in his life in 1948, and he was a very strong Republican. In 1950, he went back and beat the guy who beat him in 1948. And he got the doctors behind him, and they’re very well, and they believe 100% in what they’re doing. They’re helping people every day. And during the pandemic, the sacrifices made by people to save other people are just incredible. Can you imagine working in something where they’re bringing in people that are, you know, going to die by the dozens and dozens and dozens, and you try to somehow keep your own morale up and keep working with them. So you can’t argue about the importance of it.

WARREN BUFFETTBut our costs are so different from any country in the world. It’s a huge element, and we’re a very rich country, so we can do things other countries can’t do. And through our elected representatives, and all varieties of things over time. We develop a system that is enormously resistant to any kind of major change, and it’s important in every community that it’s in.

WARREN BUFFETTSo, I wish we had an answer for you, but I was somewhat pessimistic going in, and I was a little more pessimistic going out, but I’m glad we did what we did, and we learned something about our own failings in the process. So Berkshire, in effect, got his money’s worth, but we didn’t kill the tapeworm. Trying to change things in government is an interesting proposition in the country because you get self-selection in terms of the people who go into government and continue in it. And to some extent, they have to make decisions that they don’t like as they go along, and they learn to accept them or rationalize them or whatever it may be, but it’s still about them.

WARREN BUFFETTThis country has worked out better than any country in the world, so you can’t argue as a failure, but you can’t argue that there are certain problems that are terribly tough to figure out ways to solve. And of course, one of them gets back to the fiscal problem, I mentioned before, because it’s easy to spend money, and it’s hard to cut people’s receipts and if you get elected, you’re going to say to yourself, well, I can do more good if I stay in. Then, if I really vote my conscience on this sort of thing, you give away a little bit here and a little bit there and a little bit there. And finally, you don’t recognize yourself in the mirror anymore.

WARREN BUFFETTI grew up in a political family, and I watched how people behaved, and they behave like human beings, which is what you have to expect, and I behave like a human being. So we still managed to keep moving forward in a dramatic way. It’s so much better to live here than it was 100 years ago, or 200 years ago. It’s dramatic. So you can’t say the systems of failure, but you can say that it’s very difficult to make major changes in it. OK. Station 5.

Is it easier for a business operator to be an investor or for an investor to be a business operator?

PIG HUANG CHENHi, Warren, Greg. My name is Pig Huang Chen. I’m from Taiwan. This is my seventh time here. First of all, I want to thank you, Warren, for your generosity of sharing your wisdom. You changed my life, and you are my role model. You mentioned that Mr. Abel would be in charge of capital allocation in the future, and I’d like to know your perspective. Is it easier for a business operator to be an investor or for an investor to be a business operator? Thank you.

WARREN BUFFETTNo, that’s a good question. I see we call them Mr. Abel. I even like it. It’s a lot tougher to be an operator, I mean, it’s easier to sit in a room like I do and play around with money. This is an easier life. That doesn’t mean it’s a more admirable life. It doesn’t, but it’s actually been a pleasant life for me, so I don’t complain the least. I’ve been able to choose my friends, which has made an enormous difference in my life. I’ve never had to work for anybody that I really didn’t admire, I mean, that’s the luxury of life. And five different people I work for were fantastic.

WARREN BUFFETTThere was a manager of the local pennies, which is located, well, it used to be located a couple of miles from here, and newspaper managers and everything there. I’ve never been really disappointed by any teacher I’ve had, but I would have to admit that I have been able to choose what I do with my day to an extraordinary degree compared to being a business operator. In many cases, I would like to compete to be a top-notch business operator in terms of some of the behaviours that might be forced upon me.

WARREN BUFFETTI’ve found myself in this position where I can run the kind of company I want to run, and that’s an extraordinary luxury. And with that, I should say that I’m getting a section that says 5-minute warning, exclamation point, 5-minute warning, exclamation point. So I would now like to turn to a subject that I want to discuss with you a few minutes, and then when I’m through discussing this, I’ll let Becky ask me a question or two, which you may want some of the questions that come to you as either I make these comments. Tomorrow we’re having a board meeting of Berkshire and we have 11 directors. Two of the directors, who are my children, Holly and Susie, know what I’m going to talk about there. The rest of them, this will come as news, too.

WARREN BUFFETTBut I think the time has arrived where Greg should become the chief executive officer of the company at year-end, and I want to bring that to the directors effectively and then get that as my recommendation. Let them have the time to think about what questions or what structures or anything that they want, and then at the meeting following that, which will come in a few months. We’ll take action whatever the view is of the 11 directors. I think they’ll be unanimously in favour of it. And that would mean that the year-end, Greg would be the chief executive officer of Berkshire, and I would still hang around and could conceivably be useful in a few cases, but then, the final word would be what Greg said in operations and capital deployment, whatever it might be.

WARREN BUFFETTI could be helpful, I believe, in certain respects, if we ran into periods of great opportunity or anything. I think that Berkshire has a special reputation that when there are times of trouble for the government that we are an asset and not a liability, which is a position that is very hard to have because usually the public and then the government get very negative on business if there’s a time like that.

WARREN BUFFETTBut so I think I could there might be a time without I’d be home, but Greg would have the tickets and he would make, like I said whether it’s acquisitions, I think the board would be more welcome to giving him more authority on large acquisitions, probably if they knew it was around. But He would be the chief executive, period. And I can say the plan is to—And Greg doesn’t know anything about this until what he’s hearing right now—but that the board will be able to ask me questions tomorrow, as a little more of the specifics of what they should be thinking and all that. But they’ll digest it.

WARREN BUFFETTAnd then at the next board meeting after that. If we, as I would guess, we would if they act, then obviously we have something to announce to the world as a material change in Berkshire, and we’ll go forward with that operation and I will play with the Ouija board or whatever comes out in terms of doing things but I have no intention—zero—of selling one share of Berkshire Hathaway. It’ll get given away gradually.

WARREN BUFFETTOK, bring your Coke and calm down. I would add this decision to keep every share is an economic decision because I think the prospects of pressure will be better under Greg’s management than mine and but you know, I will come in, and there may come a time when we get a chance to invest a lot of money, and if that time comes, I think it may be helpful with the board the fact that they know I’ve got all my money in the company, and that I think it’s smart and I’ve seen what Greg has done. So that’s the news hook for the day, fellow. And thanks for coming.

WARREN BUFFETTThe enthusiasm shown by that response can be interpreted in two ways, but I’ll take it. Thank you.