• 2019年年度股东大会
  • 上午场
    • 1. 欢迎致辞与芒格的”竞选活动”
    • 2. 介绍伯克希尔董事
    • 3. 伯克希尔一季度业绩：关注运营利润
    • 4. 伯克希尔签署20年租约续租奥马哈总部
    • 5. 伯克希尔员工为股东大会倾力奉献
    • 6. 问答环节开始
    • 7. 芒格：“我预测我们会在回购股票上变得更宽松一些”
    • 8. BNSF可能会采用”精确调度铁路运输”
    • 9. BNSF努力提升能源效率
    • 10. 犯下重大错误的银行CEO应损失全部净资产
    • 11. “如果价格合适，我们会花很多钱”回购股票
    • 12. 买入一家富油猎鸭俱乐部的一股
    • 13. 巴菲特以个人身份谈论政治，不代表伯克希尔
    • 14. 巴菲特：“我是坚定的资本主义者”，但需要一定的监管
• 2019年年度股东大会
  • 第2/6部分
    • 18. 互联网对伯克希尔家具零售商的竞争
    • 18. Internet competition for Berkshire’s furniture retailers
    • 19. 养老基金应避免”另类”投资
    • 19. Pension funds should avoid “alternative” investments
    • 27. 伯克希尔无需披露大部分外国股票持仓，因此它不这样做
    • 28. 巴菲特预计精密铸件收益将“显著改善”
    • 29. 年纪越大，越能理解人类行为
    • 30. 阿吉特·贾因谈非常规保险合同的定价
    • 31. 尽管卡夫亨氏存在问题，伯克希尔仍可能再次与3G合作
    • 32. 巴菲特不担心卡夫亨氏品牌实力
    • 33. 巴菲特对苹果最大的问题是股价一直在涨
  • 下午场
    • 1. 联合太平洋铁路的利润率高于北伯林顿铁路
    • 2. 巴菲特：我很幸运能够“掌控自己的时间”
    • 3. “我们不是做解释为什么持有某只股票的生意的”
    • 4. 波音737 MAX事故后，飞行安全公司模拟器需求可能不会增加
    • 9. 伯克希尔在环境方面表现强劲，但不会为证明这一点而花费巨资制作报告
    • 9. Berkshire is strong on the environment but won’t do expensive reports to prove it
    • 10. “独立”董事并非真正的独立
    • 10. “Independent” board members aren’t really independent
    • 11. “我们将在能源领域投入大量资金” 用于公用事业的资本支出
    • 11. “We will put a lot of money into energy” with capital spending at utilities
    • 12. 为什么伯克希尔不将未动用的现金投入股票指数基金
    • 12. Why Berkshire doesn’t put its unspent cash into a stock index fund
    • 13. 房利美和房地美应该为活动房屋提供更多贷款，即使这会损害克莱顿的利润
    • 13. Fannie Mae and Freddie Mac should do more loans for manufactured housing, even if it hurts Clayton’s profits
    • 14. “巧妙的”资本主义将取代自动化所取代的工作岗位
    • 14. “Ingenious” capitalism will replace jobs lost to automation
    • 15. 监管可能“令人恼火”，但银行和保险业需要监管
    • 15. Regulations can be “irritating,” but they’re needed for banks and insurance
    • 16. 股东不希望也不需要子公司的详细信息
    • 16. Shareholders don’t want or need very detailed information on the subsidiaries
    • 21. 伯克希尔 vs 标普，考虑税收因素
    • 21. Berkshire vs the S&P, with taxes thrown in
    • 22. NV Energy 如何努力从赌场流失中恢复
    • 22. How NV Energy is working to recover from casino defections
    • 23. 投资组合经理韦施勒和库姆斯大致与标普指数持平，但做出了其他贡献
    • 23. Portfolio managers Weschler and Combs roughly matching the S&P but making other contributions
    • 24. 美国运通品牌的力量将有助于抵御激烈的信用卡竞争
    • 24. Power of American Express’s brand will help fend off heavy credit card competition
    • 25. 西方石油公司来找我们提供100亿美元贷款，因为我们能快速完成
    • 25. Occidental came to us for a $10B loan because we could do it quickly
    • 26. 我们没有评估风险的公式
    • 26. We have no formula for assessing risk
    • 27. 巴菲特描述了一些收到的欺诈性商业提案
    • 27. Buffett describes some of the dishonest business propositions it gets
    • 28. 巴菲特会打赌像特斯拉这样的汽车公司无法在汽车保险领域竞争
    • 28. Buffett would bet against a car company like Tesla being able to compete on auto insurance
    • 29. 巴菲特：我用我所有的财富打赌伯克希尔的文化会延续下去
    • 29. Buffett: I’m betting all my wealth on the survival of Berkshire’s culture
    • 30. “在生活中拥有正确的伙伴极其重要”
    • 30. “Having the right partners in life is enormously important”
    • 34. 正式商务会议及董事会选举
    • 34. Formal business meeting and election of board members

WARREN BUFFETT: Thank you. Good morning and welcome to Berkshire Hathaway. And for those of you who have come from out of state, welcome to Omaha. The city is delighted to have you here at this event. And for those of you who came from outside of the country, welcome to the United States. So, we’ve got people here from all over the world. We’ve got some overflow rooms that are taking care of people. And we will just have a few preliminaries and then we will move right into the Q&A period. We’ll break about noon for about an hour. We’ll come back and do more Q&A until about 3:30. Then we’ll adjourn for a few minutes, and then we’ll conduct the meeting. I understand that in the room adjacent, that Charlie has been conducting a little insurgency campaign. I don’t know whether you’ve seen these, but these are the buttons that are available for those of you — you keep asking questions about succession. And Charlie wants to answer that question by getting your vote today.

So, it says — this one says, “Maturity, experience, why accept second best? Vote for Charlie.” (Laughter) I, however, have appointed the monitors who have — collect the votes, so I feel very secure. (Laughter)

WARREN BUFFETT: The first thing I’d like to do — Charlie is my partner of 60 years, a director and vice chairman, and we make the big decisions jointly. It’s just that we haven’t had any big decisions. So, (laughter) we haven’t — we’re keeping him available for the next big one. But now at the formal meeting today, we’ll elect 14 directors, and you’re looking at two of them. And I’d like to introduce the 12 that will be on the ballot at 3:45. And I’m going to proceed alphabetically. And if they’ll stand. If you’ll withhold your applause because some of them get sensitive if certain people get more applause than others, and (Laughter) they’ll — and if you’ll withhold it till I’m finished, then you can applaud or not, as you see fit, having looked at these directors. (Laughter) So, we’ll start on my left. Greg Abel, who’s both a chairman and a director. Greg? Yeah, oh, there we are.

Right, OK. And going along alphabetically, Howard Buffett, Steve Burke, Sue Decker, Bill Gates, Sandy Gottesman— (applause) — Charlotte Guyman, Ajit Jain, who is also a vice chairman, Tom Murphy, Ron Olson, Walter Scott, and Meryl Witmer. Now you can applaud. (Applause)

WARREN BUFFETT: Now, this morning we posted on our website the quarterly, the 10Q that’s required to be filed with the SEC. We published it at 7 o’clock Central Time. And we also published an accompanying press release. And if we’ll put slide one up — these figures as usual require some explanation. As we’ve mentioned in the annual report, the new GAAP rule of Generally Accepted Accounting Principles require that we mark our securities to market and then report any unrealized gains in our earnings. And you can see, I’ve warned you about the distortions from this sort of thing. And, you know, the first quarter of 2019 actually was much like the first quarter of 2018, and I hope very much that newspapers do not read headlines saying that we made $21.6 billion in the first quarter this year against a loss of last year. These — the bottom line figures are going to be totally capricious, and what I worry about is that not everybody studied accounting in school, or they can be very smart people but that doesn’t mean that they’ve spent any real time on accounting.

And I really regard these bottom line figures, particularly if they’re emphasized in the press, as doing — as potentially being harmful to our shareholders, and really not being helpful. So, I encourage you now, and I encourage all the press that’s here, focus on what we call our operating earnings, which were up a bit. And forget about the capital gains or losses in any given period. Now, they’re enormously important over time. We’ve had substantial capital gains in the future; we have substantial unrealized capital gains at the present time; we expect to have more capital gains in the future. They are an important part of Berkshire, but they have absolutely no predictive value or analytical value on a quarterly basis or an annual basis. And I just hope that nobody gets misled in some quarter when stocks are down and people say, “Berkshire loses money,” or something of the sorts. It’s really a shame that the rules got changed in that way, but we will report.

But we will also explain, and we will do our best to have the press understand the importance of focusing on operating earnings, and that we do not attract shareholders who think that there’s some enormous gain because in the first quarter the stock market was up. There’s one other footnote to these figures that I should point out. It’s already been picked up by the wires from our 7 o’clock filing. We report on Kraft Heinz, of which we own about 27 percent or so. We report on what they call the equity method. Now, most stocks, when you get dividends, that goes into our earnings account, and their undistributed earnings don’t affect us. They affect us in a real way, but they don’t affect us in an accounting way. We are part of a control group at Kraft Heinz, so instead of reporting dividends, we report what they call equity earnings. Kraft Heinz has not filed their 10K for the 2018 year with the SEC. And therefore, they have not released the first quarter of 2019 earnings. Now, normally, we would include our percentage share of those earnings, and we’ve done that every quarter up till this quarter.

But because we do not have those figures, we’ve just — we’ve not included anything. We received 40 cents times — $130 million of dividends in the first quarter from our shares, but that reduces our carrying basis and it is not reflected in the earnings. So, that’s an unusual item which we have mentioned, specifically pointed out in our press release as well as included in our own. But there is nothing in here, plus or minus, for Kraft earnings, Kraft Heinz earnings this year, whereas there was last year. And when we have the figures, obviously we will report them. Let’s see what beyond that I want to tell you.

WARREN BUFFETT: I think — oh yes, I’d wanted to mention to you, the Kiewit Company, which has been our landlord since 1962 — 57 years — has owned the building in which Berkshire is headquartered. Kiewit Company is moving their headquarters and, in the process, will be doing something with the building. And they very generously, as they always have been, they came and said, “What kind of a lease would you like? Since we’re leaving, and we’ve always sort of worked these things out as we’ve gone along.” And so Bruce Grewcock, who runs Kiewit, said, “You just sort of — you name your terms and what you’d like. So, you — no matter with happens with the building, you’re all set.” So, I was about to sign a ten-year lease for the present space, but Charlie said, “Ten years might be long enough for me but,” he said he would like me to sign one for 20 years, considering.

And — so we are entering a 20-year lease, and I confess to you that we now occupy one full floor, as we have for decades, and the new lease provides for two floors. So, I just want you to know that your management is loosening up just a little bit. (Laughter) And whether or not we fill them is another question. But we will have that, and I would like to say to Omaha that I think the fact that Berkshire has signed up for 20 years is very good news for the city over time. It — (Applause) OK.

WARREN BUFFETT: And now I would like to tell you something about the people that make all of this possible. This is totally a — this is a homegrown operation. We started with a few people, meeting in the lunchroom at National Indemnity many years ago. And I think we will probably set another record for attendance today. Yesterday afternoon, 16,200 people came in five hours, and that broke the previous record by a couple thousand. On Tuesday, the Nebraska Furniture Mart did $9.3 million worth of business. And if any of you are in the retail business, you’ll know that that’s the yearly volume for some furniture stores, and here in Omaha, the 50th or so largest market in the country, maybe even a little less, $9.3 billion (million) I think probably exceeds anything any home furnishing store’s ever done in one day. And we have people pitching, and we have all the people, virtually all of the people from the home office, some of them, you know, are — they’ll take on any task.

We have a bunch of people from National Indemnity, for example, that come over, and they’ve been some of the monitors around. And in terms of the exhibit hall, more than 600 people from our various subsidiaries give up a weekend to come to Omaha, work very hard, and tomorrow, 4:00 or 4:30, or I should say today at 4:00 or 4:30, they will start packing up things and heading back home. And they come in, and I saw them all yesterday, and they were a bunch of very, very happy, smiling faces. And, you know, they work hard all year, and then they come in and help us out on this meeting. And then, finally, if we could get a spotlight, I think Melissa Shapiro is someplace here — she runs the whole show. I mean, we — Melissa, where are you? (Applause) Melissa’s name was Melissa Shapiro before she got married, then she married a guy named Shapiro, so now she’s Melissa Shapiro Shapiro. So — (Laughter) but she can handle that sort of thing. She handles everything, and never — totally unflappable. Totally organized. Everything gets done.

Everybody likes her when they get through. So, I — it’s marvelous to get a chance to work with people like this. I think it’s a special quality that — at Berkshire. I think other people would hire some group to put on the meeting and all be very professional and all of that. But I don’t think you can get — I don’t think you can buy the enthusiasm and energy and help-the-next-guy feeling that you’ve seen out on that exhibition floor, and you’ll see as you meet people here at the hall, and as you meet the people around Omaha. They’re very, very happy that you’re here.

WARREN BUFFETT: And with that, I would like to start on the questions. We’ll do it just as we’ve done it in recent years. We’ll start with the press group. They’ve received emails from a great many people — perhaps they can tell you how many — and selected the questions they think would be most useful to the Berkshire shareholders. Yahoo is webcasting this as they’ve done for several years now, they’ve done a terrific job for us. So, this meeting is going out, both in English and in Mandarin, and I hope our results translate well, or our — (laughs) our comments translate well. Sometimes we have trouble with English. But we’re going to — we’ll start in with Carol Loomis, my friend of 50 years, but you’ll never know it by the questions she’s going to ask me. (Laughter)

CAROL LOOMIS: I’m going to start, very briefly — this is for the benefit of people who send us questions next year. There are kind of two things that you get wrong a lot of the time. You can’t send two-part questions or three-part, et cetera. We need a one-part question. And the other thing is the questions all need to have some relevance to Berkshire, because Warren said when he started it that his hope was that shareholders would come out of the questions with a further education about the company. So, keep those in mind for next year.

CAROL LOOMIS (RETIRED FORTUNE MAGAZINE EDITOR): Many people — a number of people — wrote me about repurchases of stock. And, hence, the question I picked for my first one. The question, this particular question comes from Ward Cookie (PH), who lives in Belgium and who was still emailing me this morning in reference to the first quarter report. And he asked, “My question concerns your repurchase of Berkshire shares. In the third quarter of last year, you spent almost 1 billion buying Berkshire B stock at an average price of $207. “But then you got to a period between December 26th and April 11th when the stock languished for almost four months under 207. And yet, you purchased what I think of as a very limited amount of stock, even as you were sitting on an enormous pile of 112 billion. “My question is why you did not repurchase a lot more stock? Unless, of course, there was for a time an acquisition of, say, 80 billion to 90 billion on your radar.”

WARREN BUFFETT: Yeah, the question — whether we had 100 billion or 200 billion would not make a difference — or 50 billion — would not make a difference in our approach to repurchase of shares. We repurchase shares — we used to have a policy of tying it to book value. But that became — really became obsolete. It did not — The real thing is to buy stock — repurchase shares — only when you think you’re doing it at a price where the remaining shareholders have had — are worth more the moment after you repurchased it than they were the moment before. It’s very much like if you were running a partnership and you had three partners in it and the business was worth 3 million, and one of the partners came and said, “I’d like you to buy back my share of the partnership for a billion” — I started out with millions, so I’ll stay with millions — “for $1.1 million?” And we said, “Forget it.” And if he said, “1 million?”

we’d probably say, “Forget it,” unless — and if he said, “900,000,” we’d take it because, at that point, the remaining business would be worth 2-million-1, and we’d have two owners, and our interest in value would have gone from a million to a million and fifty-thousand. So, it’s very simple arithmetic. Most companies adopt repurchase programs and they just say, “We’re going to spend so much.” That’s like saying, you know, “We’re going to buy XYZ stock, and we’re going to spend so much here.” “We’re going to buy a company.” “We’re going to spend whatever it takes.” We will buy stock when we think it is selling below a conservative estimate of its intrinsic value. Now, the intrinsic value is not a specific point, it’s probably a range in my mind that might have a band maybe of 10 percent. Charlie would have a band in his mind, and it would probably be 10 percent.

And ours would not be identical, but they’d be very close. And sometimes he might figure a bit higher than I do, a bit lower. But we want to be sure, when we repurchase shares, that those people who have not sold shares are better off than they were before we repurchased them. And it’s very simple. And in the first quarter of the year, they’ll find we bought something over a billion worth of stock, and that’s nothing like my ambitions. But it — what that means is that we feel that we’re OK buying it, but we don’t salivate over buying it. We think that the shares we repurchased in the first quarter leave the shareholders better off than if we hadn’t — the remaining shareholders — better off than if we hadn’t bought it. But we don’t think the difference is dramatic. And you will — you could easily see periods where we would spend very substantial sums if we thought the stock was selling at, say, 25 or 30 percent less than it was worth, and we didn’t have something else that was even better.

But we have no ambition in any given quarter to spend a dime unless we think you’re going to be better off for us having done so. Charlie?

CHARLIE MUNGER: Well, I predict that we’ll get a little more liberal in repurchasing shares. (Laughter)

WARREN BUFFETT: I was going to give you equal time, but then — (Laughter)

WARREN BUFFETT: OK, Jon Brandt. JONATHAN BRANDT (RESEARCH ANALYST, RUANE, CUNNIFF & GOLDFARB): Hi, Warren and Charlie. Thanks for having me, as always. Every major North American railroad other than Burlington Northern has adopted at least some aspects of precision-scheduled railroading, generally to good effect to their bottom line. Some believe that point-to-point schedule service and minimal in-transit switching is good for both returns on capital and customer service. Others believe precision railroading has done little for on-time performance, and its rigidity has jeopardized the compact that railroads have had with both regulators and customers. Do you and current BNSF management believe that it’s now a good idea for BNSF to adopt precision railroading playbook? Or do you agree with its critics?

WARREN BUFFETT: Yeah, precision railroading, as it’s labeled, was probably invented by a fellow named Hunter Harrison. I think maybe he was at the Illinois Central Railroad at the time; there’s a book that came out about Hunter, who died maybe a year ago or thereabouts. And it describes the — his procedure toward railroading. It’s an interesting read if you’re interested in railroading. And he took that to Canadian National, CN. There are six big railroads in North America, and he took that to CN, and he was very successful. And actually, Bill Gates is probably the largest holder of CN, and I think he’s done very well with that stock. And then later, Canadian Pacific was the subject of an activist, and when they — as they proceeded, they got Hunter to join them and brought in an associate, Keith Creel, who — and they instituted a somewhat similar program. Now the same thing has happened at CSX. And all of those companies dramatically improved their profit margins, and they had varying degrees of difficulty with customer service in the implementing of it.

But I would say that we watch very carefully — Union Pacific is doing a somewhat modified version. But the — we are not above copying anything that is successful. And I think that there’s been a good deal that’s been learned by watching these four railroads, and we will — if we think we can serve our customers well and get more efficient in the process, we will adopt whatever we observe. But we don’t have to do it today or tomorrow, but we do have to find something that gets at least equal, and hopefully better, customer satisfaction and that makes our railroad more efficient. And there’s been growing evidence that — from the actions of these other four railroads — there’s been growing evidence that we can learn something from what they do. Charlie?

CHARLIE MUNGER: Well, I doubt that anybody is very interested in un-precision in railroading. (Laughter)

WARREN BUFFETT: Well, Jonny, has Charlie answered your question? (Laughter)

JONATHAN BRANDT: Yes, thank you.

WARREN BUFFETT: OK. Station number 1, from the shareholder group up on my far right.

AUDIENCE MEMBER: Good morning. My name is Bill Moyer and I’m from Vashon Island, Washington. And I’m part of a team called “The Solutionary Rail Project.” Interestingly, only 3.5 percent of the value of freight in the U.S. moves on trains. Berkshire Hathaway is incredibly well positioned with its investments in the northern and southern transcon through BNSF to grab far more of that freight traffic off of the roads and get diesel out of our communities, as well as harness transmission corridors for your Berkshire renewable energy assets, for which you’re obviously very proud. Would you consider meeting with us to look at a proposal for utilizing your assets and leveraging a public/private partnership to electrify your railroads and open those corridors for a renewable energy future?

WARREN BUFFETT: No, I — we’ve examined a lot of things in terms of LNG. I mean, they’re — obviously, we want to become more energy efficient, as well as just generally efficient. And I’m not sure about the value of freight. You mentioned 3 1/2 percent. I believe — I mean, I’m not sure what figure you’re using as the denominator there. Because if you look at movement of traffic by ton miles, rails are around 40 percent of the U.S. — we’re not talking local deliveries or all kinds of things like that — but they’re 40 percent, roughly, by rail. And BNSF moves more ton miles than any other entity. We move 15 percent-plus of all the ton miles moved in the United States. But if you take trucking, for example, on intermodal freight, we’re extremely competitive on the longer hauls, but the shorter the haul, the more likely it is that the flexibility of freight, where a truck can go anyplace and we have rails.

So, the equation changes depending on distance hauled and other factors, but distance hauled is a huge factor. We can move a ton mile 500 — we can move 500-plus ton miles of freight for one gallon of diesel. And that is far more efficient than trucks. So, the long-haul traffic, and the heavy traffic, is going to go to the rails, and we try to improve our part of the equation on that all the time. But if you’re going to transport something ten or 20 or 30 miles between a shipper and a receiver, and they’re — you’re not going to move that by rail. So, we look at things all the time, I can assure you. Carl Ice is in — well, he’s probably here now, and he’ll be in the other room — and he’s running the railroad. You’re free to talk to him, but I don’t see any breakthrough like you’re talking about. I do see us getting more efficient year-by-year-by-year. And obviously, if driverless trucks become part of the equation, that moves things toward trucking.

But on long-haul, heavy stuff, and there’s a lot of it, you’re looking at the railroad that carries more than any other mode of transportation. And BNSF is the leader. Charlie?

CHARLIE MUNGER: Well, over the long term, our questioner is on the side of the angels. Sooner or later, we’ll have it more electrified. I think Greg (Abel) will decide when it happens.

WARREN BUFFETT: Yeah. But we’re all working on the technology but — And we’re considerably more efficient than ten, 20, 30 years ago, if you look at the numbers. But it — One interesting figure, I think right after World War II, when the country probably had about 140 million people against our 330 million now, so we had 40 percent of the population. We had over a million-and-a-half people employed in the railroad industry. Now there’s less than 200,000 and we’re carrying a whole lot more freight. Now, obviously there’s some change in passengers. But the efficiency of the railroads compared to — and the safety — compared to what it was even immediately after World War II has improved dramatically. Charlie, anything more?

CHARLIE MUNGER: No.

WARREN BUFFETT: OK, Becky? BECKY QUICK (CNBC): This is a question that comes from Mike Hebel. He says, “The Star Performers Investment Club has 30 partners, all of whom are active or retired San Francisco police officers. Several of our members have worked in the fraud detail, and have often commented after the years-long fraudulent behavior of Wells Fargo employees, should have warranted jail sentences for several dozen, yet Wells just pays civil penalties and changes management. “As proud shareholders of Berkshire, we cannot understand Mr. Buffett’s relative silence compared to his vigorous public pronouncement many years ago on Salomon’s misbehavior. Why so quiet?”

WARREN BUFFETT: Yeah, I would say this. The — (applause) — problem, well, as I see it — although, you know, I have read no reports internally or anything like that — but it looks like to me like Wells made some big mistakes in what they incentivized. And as Charlie says, there’s nothing like incentives, but they can incentivize the wrong behavior. And I’ve seen that a lot of places. And that clearly existed at Wells. The interesting thing is, to the extent that they set up fake accounts, a couple million of them, that had no balance in them, that could not possibly have been profitable to Wells. So, you can incentivize some crazy things. The problem is — I’m sure is that — and I don’t really have any inside information on it at all — but when you find a problem, you have to do something about it. And I think that’s where they probably made a mistake at Wells Fargo. They made it at Salomon. I mean, John Gutfreund would never have played around with the government. He was the CEO of Salomon in 1991.

He never would have done what the bond trader did that played around with the rules that the federal government had about government bond bidding. But when he heard about it, he didn’t immediately notify the Federal Reserve. And he heard about it in late April, and May 15th, the government bond auction came along. And Paul Mozer did the same thing he’d done before, and gamed the auction. And at this point, John Gutfreund — you know, the destiny of Salomon was straight downhill from that point forward. Because, essentially, he heard about a pyromaniac, and he let him keep the box of matches. And at Wells, my understanding, there was an article in The Los Angeles Times maybe a couple years before the whole thing was exposed, and, you know, somebody ignored that article. And Charlie has beaten me over the head all the years at Berkshire because we have 390,000 employees, and I will guarantee you that some of them are doing things that are wrong right now. There’s no way to have a city of 390,000 people and not need a policeman or a court system. And some people don’t follow the rules.

And you can incentivize the wrong behavior. You’ve got to do something about it when it happens. Wells has become, you know, exhibit one in recent years. But if you go back a few years, you know, you can almost go down — there’s quite a list of banks where people behaved badly. And where they — I would not say — I don’t know the specifics at Wells — but I’ve actually written in the annual report that they talk about moral hazard if they pay a lot of people. The shareholders of Wells have paid a price. The shareholders of Citicorp paid a price. The shareholders of Goldman Sachs, the shareholders of Bank of America, they paid billions and billions of dollars, and they didn’t commit the acts. And of course, nobody did go — there were no jail sentences. And that is infuriating. But the lesson that was taught was not that the government bailed you out because the government got its money back, but the shareholders of the various banks paid many, many billions of dollars.

And I don’t have any advice for anybody running a business except, when you find out something is leading to bad results or bad behavior, you know, you — if you’re in the top job, you’ve got to take action fast. And that’s why we have hotlines. That’s why we get — when we get certain anonymous letters, we turn them over to the audit committee or to outside investigators. And we will have — I will guarantee you that we will have some people who do things that are wrong at Berkshire in the next year or five years, ten years, and 50 years. It’s — you cannot have 390,000 people — and it’s the one thing that always worries me about my job, but — because I’ve got to hear about those things, and I’ve got to do something about them when I do hear about them. Charlie?

CHARLIE MUNGER: Well, I don’t think people ought to go to jail for honest errors of judgment. It’s bad enough to lose your job. And I don’t think that any of those top officers was deliberately malevolent in any way. I just — we’re talking about honest errors in judgment. And I don’t think (former Wells Fargo CEO) Tim Sloan even committed honest errors of his judgment, I just think he was an accidental casualty that deserve the trouble. I wish Tim Sloan was still there.

WARREN BUFFETT: Yeah, there’s no evidence that he did a thing. But he stepped up to take a job that — where he was going to be a piñata, basically, for all kinds of investigations. And rightfully, Wells should be checked out on everything they do. All banks should. I mean, they get a government guarantee and they receive trillions of dollars in deposits. And they do that basically because of the FDIC. And if they abuse that, they should pay a price. If anybody does anything like a Paul Mozier did, for example, with Salomon, they ought to go to jail. Paul Mozier only went to jail for four months. But if you’re breaking laws, you should be prosecuted on it. If you do a lot of dumb things, I wish they wouldn’t go away — the CEOs wouldn’t go away — so rich under those circumstances. But people will do dumb things. (Applause) I actually proposed — think it may have been in one of the annual reports even.

I proposed that, if a bank gets to where it needs government assistance, that basically the responsible CEO should lose his net worth and his spouse’s net worth. If he doesn’t want the job under those circumstances, you know (Applause) And I think that the directors — I think they should come after the directors for the last five years — I think I proposed — of everything they’d received. But it’s the shareholders who pay. I mean, if we own 9 percent of Wells, whatever this has cost, 9 percent of it is being borne by us. And it’s very hard to tie it directly. One thing you should know, incidentally though, is that the FDIC, which was started — I think it was started January 1st, 1934 — but it was a New Deal proposal. And the FDIC has not cost the United States government a penny. It now has about $100 billion in it. And that money has all been put in there by the banks. And that’s covered all the losses of the hundreds and hundreds and hundreds of financial institutions. And I think the impression is that the government guarantee saved the banks, but the government money did not save the banks.

The banks’ money, as an industry, not only has paid every loss, but they’ve accumulated an extra $100 billion, and that’s the reason the FDIC. assessments now are going back down. They had them at a high level. And they had a higher level for the very big banks. When you hear all the talk about — the political talk — about the banks, they had not cost the federal government a penny. There were a lot of actions that took place that should not have taken place. And there’s a lot fewer now, I think, than there were in the period leading up to 2008 and ‘09. But some banks will make big mistakes in the future. Charlie?

CHARLIE MUNGER: I’ve got nothing to add to that.

WARREN BUFFETT: OK. Jay Gelb from Barclays. Barclays just had a proxy contest of sorts, didn’t it? JAY GELB (INSURANCE ANALYST, BARCLAYS): That’s right, Warren. (Laughs) I also have a question on Berkshire Hathaway — I’m sorry — on share buybacks. Warren, in a recent Financial Times article, you were quoted as saying that the time may come when the company buys back as much as $100 billion of its shares, which equates to around 20 percent of Berkshire’s current market cap. How did you arrive at that $100 billion figure? And over what time frame would you expect this to occur?

WARREN BUFFETT: Yeah. I probably arrived at that $100 billion figure in about three seconds when I got asked the question. (Laughter) It was a nice round figure and we could do it. And we would like to do it if the stock was — we’ve got the money to buy in $100 billion worth of stock. And bear in mind, if we’re buying in $100 billion stock, it probably would be that the company wasn’t selling at 500 billion. So, it might buy well over 20 percent. We will spend a lot of money. We’ve been involved in companies where the number of shares has been reduced 70 or 80 percent over time. And we like the idea of buying shares at a discount. We do feel, if shareholders — if we’re going to be repurchasing shares from shareholders who are partners, and we think it’s cheap, we ought to be very sure that they have the facts available to evaluate what they own.

I mean, just as if we had a partnership, it would not be good if there were three partners and two of them decided that they would sort of freeze out the third, maybe in terms of giving him material information that they knew that that third party didn’t know. So, it’s very important that our disclosure be the same sort of disclosure that I would give to my sisters who are the imaginary — they’re not imaginary — but they’re the shareholders to whom I address the annual report every year. Because I do feel that you, if you’re going to sell your stock, should have the same information that’s important, that’s available to me and to Charlie. But we will — if our stock gets cheap, relative to intrinsic value, we would not hesitate. We wouldn’t be able to buy that much in a very short period of time, in all likelihood. But we would certainly be willing to spend $100 billion. Charlie?

CHARLIE MUNGER: I think when it gets really obvious, we’ll be very good at it. (Laughter)

WARREN BUFFETT: Let me get that straight. What’d you say, exactly?

CHARLIE MUNGER: When it gets really obvious, we’ll be very good at it.

WARREN BUFFETT: Oh, yeah. I was hoping that’s what you said. (Laughter) Yeah, we will be good at it. We don’t have any trouble being decisive. We don’t say yes very often. But if it’s something obvious — I mean, Jay, if you and I are partners, you know, and our business is worth a million dollars and you say you’ll sell your half to me for 300,000, you’ll have your 300,000 very quickly.

WARREN BUFFETT: OK, station two.

AUDIENCE MEMBER: Good morning. My name is Patrick Donahue from Eden Prairie, Minnesota, and I’m with my ten-year-old daughter, Brooke Donahue.

AUDIENCE MEMBER: Hi, Warren. Hi, Charlie.

WARREN BUFFETT: Hi. It’s Brooke, is it?

AUDIENCE MEMBER: It is.

WARREN BUFFETT: Yeah.

AUDIENCE MEMBER: First, I’m a proud graduate of Creighton University. And I need to say a personal thank you for coming over the years to share your insights. And it’s been a tradition since I graduated in 1999 to come to the annual meeting, and thank you for a lifetime of memories.

WARREN BUFFETT: Thank you. (Applause)

AUDIENCE MEMBER: Brooke is a proud Berkshire shareholder and read the letter and had some questions regarding investments that have been made in the past. And she had made some interesting comments about what she thought was a lot of fun. So, our question for both of you is: outside of Berkshire Hathaway, what is the most interesting or fun personal investment you have ever made? (Laughter)

WARREN BUFFETT: Well, they’re always more fun when you make a lot of money off of them. (Laughter) Well, one time, I bought one share of stock in the Atled Corp. That’s spelled A-T-L-E-D. And Atled had 98 shares outstanding and I bought one. And not what you call a liquid security. (Laughter) And Atled happened to be the word “delta” spelled backwards. And a hundred guys in St. Louis had each chipped in 50 or $100 or something to form a duck club in Louisiana and they bought some land down there. Two guys didn’t come up with their — there were a hundred of them — two of them defaulted on their obligation to come up with a hundred dollars — so there were 98 shares out. And they went down to Louisiana and they shot some ducks. But apparently somebody shot — fired a few shots into the ground and oil spurted out. And — (laughter) — those Delta duck club shares — and I think the Delta duck club field is still producing. I bought stock in it 40 years ago for $29,200 a share.

And it had that amount in cash and it was producing a lot, and they sold it. If they kept it, that stock might’ve been worth 2 or $3 million a share, but they sold out to another oil company. That was certainly — that was the most interesting — Actually, I didn’t have any cash at the time. And I went down and borrowed the money. I bought it for my wife. And I borrowed the money. And the loan officer said, “Would you like to borrow some money to buy a shotgun as well?” (Laughter) Charlie, tell them about the one you missed. (Laughter)

CHARLIE MUNGER: Well, I got two investments that come to mind. When I was young and poor, I spent a thousand dollars once buying an oil royalty that paid me 100,000 a year for a great many years. But I only did that once in a lifetime. On a later occasion, I bought a few shares of Belridge Oil, which went up 30 times rather quickly. But I turned down five times as much as I bought. It was the dumbest decision of my whole life. So, if any of you have made any dumb decisions, look up here and feel good about yourselves. (Laughter)

WARREN BUFFETT: I could add a few, but — Andrew?

ANDREW ROSS SORKIN (NEW YORK TIMES/CNBC): Warren and Charlie, this is a question — actually, we got a handful of questions on this topic. This is probably the best formulation of it. Warren, you have been a long-time, outspoken Democrat. With all the talk about socialism versus capitalism taking place among Democratic presidential candidates, do you anticipate an impact on Berkshire in the form of more regulations, higher corporate taxes, or even calls for breakups among the many companies we own if they were to win? And how do you think about your own politics as a fiduciary of our company, and at the same time, as someone who has said that simply being a business leader doesn’t mean you’ve put your citizenship in a blind trust?

WARREN BUFFETT: Yeah. I have said that you do not put your citizenship in a blind trust. But you also don’t speak on behalf of your company. You do speak as a citizen if you speak. And therefore, you have to be careful about when you do speak, because it’s going to be assumed you’re speaking on behalf of your company. Berkshire Hathaway certainly, in 54 years, has never — and will never — made a contribution to a presidential candidate. I don’t think we’ve made a contribution to any political candidate. But I don’t want to say, for 54 years, that — (Applause) We don’t do it now. We operate in several regulated industries. And our railroad and our utility, as a practical matter, they have to have a presence in Washington or in the state legislatures in which they operate. So, we have some — a few — I don’t know how many — political action committees which existed when we bought it — when we bought the companies at subsidiaries. And I think, unquestionably, they make some contributions simply to achieve the same access as their competitors.

I mean, if the trucking industry is going to lobby, I’m sure the railroad industry’s going to lobby. But — the general — well, the rule is, I mean, that people do not pursue their own political interests with your money here. We’ve had one or two managers over the years, for example, that would do some fundraising where they were fundraising from people who were suppliers of them or something of the sort. And if I ever find out about it, that ends promptly. My position, at Berkshire, is not to be used to further my own political beliefs. But my own political beliefs can be expressed as a person, not as a representative of Berkshire, when a campaign is important. I try to minimize it. But it’s no secret that in the last election, for example, I raised money. I won’t give money to PACs. I accidentally did it one time. I didn’t know it was a PAC. But I don’t do it. But I’ve raised substantial sums. I don’t like the way money is used in politics.

I’ve written op-ed pieces for the New York Times in the past on the influence of money in politics. I spent some time with John McCain many years ago before McCain-Feingold, on ways to try to limit it. But the world has developed in a different way.

CAROL LOOMIS: This question comes from Vincent James of Munich, Germany. “There has been a lot written about the recent impairment charge at Kraft Heinz. You were quoted as stating that you recognize that Berkshire overpaid for Kraft Heinz. Clearly, major retail chains are being more aggressive in developing house brands. “In addition, Amazon has announced intentions to launch grocery outlets, being that, as Mr. Bezos has often stated, ‘Your margin is my opportunity.’ The more-fundamental question related to Kraft Heinz may be whether the advantages of the large brands and zero-based budgeting that 3G has applied are appropriate and defensible at all in consumer foods. “In other words, will traditional consumer good brands, in general, and Kraft Heinz, in particular, have any moat in their future? My question is, to what extent do the changing dynamics in the consumer food market change your view on the long-term potential for Kraft Heinz?”

WARREN BUFFETT: Yeah, actually, what I said was, we paid too much for Heinz — I mean Kraft — I’m sorry — the Heinz part of the transaction, when we originally owned about half of Heinz, we paid an appropriate price there. And we actually did well. We had some preferred redeemed and so on. We paid too much money for Kraft. To some extent, our own actions had driven up the prices. Now, Kraft Heinz, the profits of that business, 6 billion — we’ll say very, very, very roughly, I’m not making forecasts — but 6 billion pretax on 7 billion of tangible assets, is a wonderful business. But you can pay too much for a wonderful business. We bought See’s Candy. And we made a great purchase, as it turned out. And we could’ve paid more. But there’s some price at which we could’ve bought even See’s Candy, and it wouldn’t have worked. So, the business does not know how much you paid for it. I mean, it’s going to earn based on its fundamentals.

And we paid too much for the Kraft side of Kraft Heinz. Additionally, the profitability has basically been improved in those operations over the way they were operating before. But you’re quite correct that Amazon itself has become a brand. Kirkland, at Costco, is a $39 billion brand. All of Kraft Heinz is $26 billion. And it’s been around for — on the Heinz side — it’s been around for 150 years. And it’s been advertised — billions and billions and billions of dollars, in terms of their products. And they go through tens of thousands of outlets. And here’s somebody like Costco, establishes a brand called Kirkland. And it’s doing 39 billion, more than virtually any food company. And that brand moves from product to product, which is terrific, if a brand travels. I mean, Coca Cola moves it from Coke to Cherry Coke and Coke Zero and so on. But to have a brand that can really move — and Kirkland does more business than Coca Cola does. And Kirkland operates through 775 or so stores. They call them warehouses at Costco. And Coca Cola is through millions of distribution outlets.

So, brands — the retailer and the brands have always struggled as to who gets the upper hand in moving a product to the consumers. And there’s no question, in my mind, that the position of the retailer, relative to the brands, which varies enormously around the world. In different countries, you’ve had 35 percent, even, maybe 40 percent, be private-label brands in soft drinks. And it’s never gotten anywhere close to that in the United States. So, it varies a lot. But basically, retailers — certain retailers — the retail system — has gained some power. And particularly in the case of Amazon and Walmart and their reaction to it, and Costco — and Aldi and some others I can name — has gained in power relative to brands. Kraft Heinz is still doing very well, operationally. But we paid too much. If we paid 50 billion, you know, it would’ve been a different business. It’d still be earning the same amount. You can turn any investment into a bad deal by paying too much. What you can’t do is turn any investment into a good deal by paying little, which is sort of how I started out in this world.

But the idea of buying the cigar butts that are declining or poor businesses for a bargain price is not something that we try to do anymore. We try to buy good businesses at a decent price. And we made a mistake on the Kraft part of Kraft Heinz. Charlie?

CHARLIE MUNGER: Well, it’s not a tragedy that, out of two transactions, one worked wonderfully, and the other didn’t work so well. That happens.

WARREN BUFFETT: The reduction of costs, you know — there can always be mistakes made, when you’ve got places, and you’re reorganizing them to do more business with the same number of people. And we like buying businesses that are efficient to start with. But the management — the operations — of Kraft Heinz have been improved over the present management overall. But we paid a very high price, in terms of the Kraft part. We paid an appropriate price, in terms of Heinz.

18. Internet competition for Berkshire’s furniture retailers

WARREN BUFFETT: Jonathan?

JONATHAN BRANDT: Internet-based furniture retailers, like Wayfair, appear willing to stomach large current losses acquiring customers in the hope of converting them to loyal online shoppers. I’ve been wondering what this disruptive competition might do to our earnings from homefurnishing retail operations like Nebraska Furniture Mart. If we have to transition to more of an online model, might we have to spend more heavily to keep shoppers without a corresponding increase in sales? The sharp decline in first-quarter earnings from home furnishings suggest, perhaps, some widening impact from intensifying competition. Do you believe Wayfair’s customers first, profits later model is unsustainable? Or do you think our furniture earnings will likely be permanently lower than they were in the past?

WARREN BUFFETT: I think furnishings — the jury’s still out on that, whether the operations which have grown very rapidly in size but still are incurring losses, how they will do over time. It is true that in the present market, partly because of some successes, like, most dramatically, Amazon, in the past, that investors are willing to look at losses as long as sales are increasing, and hope that there will be better days ahead. We do a quite significant percentage of our sales online in the furniture operation. That might surprise you. We do the highest percentage in Omaha. And what’s interesting is that we — I won’t give you the exact numbers, but it’s large — we do a significant dollar volume, but a very significant portion of that volume, people come to the store to pick up, so that they will order something from us online, but they don’t seem to mind at all — and they don’t have to do it — but they get a pick up at the store.

So, you know, you learn what customers like, just like people learned in fast food, you know, that people would buy a lot of food by going through a drive-in, that they don’t want to stop and go into the place. We learn about customer behavior as it unfolds. But we did do, now — on Tuesday, we did 9.2 million of — or 9.3 million of profitable volume at the Nebraska Furniture Mart. And I think that company had paid-in capital of $2,500. And I don’t think anything’s been added since. So, it’s working so far. The first quarter — It’s interesting — the first quarter was weak at all four of our furniture operations. But there are certain other parts of the economy — well, just home building, generally — it’s considerably below what you would’ve expected, considering the recovery we have had from the 2008-9 period. I mean, if you look at single-family home construction, the model has shifted more to people living in apartment rentals. I think it’s gone from 69-and-a-fraction percent. It got down to 63 percent.

It’s bounced up a little bit. But people are just not building — or moving to houses as rapidly as I would have guessed they would, based on figures prior to 2008 and ‘09, and considering the recovery we’ve had, and considering the fact that money is so cheap. And that has some effect on our furniture stores. But I think we’ve got a very good furniture operation, not only with the Nebraska Furniture Mart, but at other furniture operations. And we will see whether the models work over the long run. But I think, you know, they have a reasonable chance. Some things people — we’re learning that people will buy some things that they’ve always gone to the mall or to a retail outlet to buy, that they will do it online. And others don’t work so well. Charlie?

CHARLIE MUNGER: I think that we’ll do better than most furniture retailers.

WARREN BUFFETT: I think that’s a certainty overall, overall. But we’ve got some good operations there. But we don’t want to become a showroom for the online operations and have people come and look around the place and then order someplace else. So, we have to have the right prices. And we’re good at that at the Furniture Mart.

19. Pension funds should avoid “alternative” investments

WARREN BUFFETT: Station 4.

AUDIENCE MEMBER: Warren and Charlie, my name is Brent Muio. I’m from Winnipeg, Canada. First, thank you for devoting so much time and energy to education. I’m a better investor because of your efforts. But more important, I’m a better partner, friend, son, brother, and soon-to-be first-time father. There’s nothing more important than these relationships. And my life is better, because you’re willing to pass on your experience and wisdom. My path into finance was unconventional. I worked as an engineer for 12 years, while two years ago, I began a career in finance, working for the Civil Service Superannuation Board, a $7 billion public pension fund in Winnipeg. I work on alternative investments, which include infrastructure, private equity, and private credit. I go to work every day knowing that I’m there to benefit the hardworking current and future beneficiaries of the fund. Like most asset classes, alternative purchase multiples have increased. More of these assets are funded with borrowed money. And the terms and covenants on this debt are essentially nonexistent.

With this in mind and knowing the constraints of illiquid, closed-end funds, please give me your thoughts on private, alternative investments, the relevancy in public pension funds, and your view on long-term return expectations.

WARREN BUFFETT: Yeah, if you leveraged up investments in just common stocks, and you’d figured a way so that you would have staying power, if there were any market dip, I mean, you’d obviously retain extraordinary returns. I pointed out, in my investing lifetime, you know, if an index fund would do 11 percent, well, imagine how well you would’ve done if you’d leveraged that up 50 percent whatever the prevailing rates were over time. So, a leveraged investment in a business is going to beat an unleveraged investment in a good business a good bit of the time. But as you point out, the covenants to protect debtholders have really deteriorated in the business. And of course, you’ve been in an upmarket for businesses. And you’ve got a period of low interest rates. So, it’s been a very good time for it. My personal opinion is, if you take unleveraged returns against unleveraged common stocks, I do not think what is being purchased today and marketed today would work well.

But if you can borrow money, if you can buy assets that will yield 7 or 8 percent, you can borrow enough money at 4 percent or 5 percent, and you don’t have any covenants to meet, you’re going to have some bankruptcies. But you’re going to also have better results in many cases. It’s not something that interests us at all. We are not going to leverage up Berkshire. If we’d leveraged up Berkshire, we’d have made a whole lot more money, obviously, over the years. But both Charlie and I, probably, have seen some more high-IQ people — really extraordinarily high-IQ people — destroyed by leverage. We saw Long-Term Capital Management, where we had people who could do in their sleep math that we couldn’t do, at least I couldn’t do, you know, working full time at it during the day and, I mean, really, really smart people working with their own money and with years and years of experience of what they were doing. And you know, it all turned to pumpkins and mice in 1998. And actually, it was a source of national concern, just a few hundred people.

And then we saw some of those same people, after that happened to them once, go on and do the same thing again. So, I would not get excited about so-called alternative investments. You can get all kinds of different figures. But there may be — there’s probably at least a trillion dollars committed to buying, in effect, buying businesses. And if you figure they’re going to leverage them, you know, two for one on that, you may have 3 trillion of buying power trying to buy businesses in — well, the U.S. market may be something over 30 trillion now — but there’s all kinds of businesses that aren’t for sale and that thing. So, the supply-demand situation for buying businesses privately and leveraging them up has changed dramatically from what it was ten or 20 years ago. And I’m sure it doesn’t happen with your Winnipeg operation, but we have seen a number of proposals from private equity funds, where the returns are really not calculated in a manner than — well, they’re not calculated in a manner that I would regard as honest.

And so I — it’s not something — if I were running a pension fund, I would be very careful about what was being offered to me. If you have a choice in Wall Street between being a great analyst or being a great salesperson, salesperson is the way to make it. If you can raise $10 billion in a fund, and you get a 1 1/2 percent fee, and you lock people up for ten years, you know, you and your children and your grandchildren will never have to do a thing, if you are the dumbest investor in the world. But — Charlie?

CHARLIE MUNGER: Well, I think what we’re doing will work more safely than what he’s doing. And — but I wish him well.

WARREN BUFFETT: Yeah, Brent, you sound — actually, you sound like a guy that I would hope would be working for a public pension fund. Because frankly, most of the institutional funds, you know — well, we had this terrible — right here in Omaha — you can get a story of what happened with our Omaha Public Schools’ retirement fund. And they were doing fine until the manager started going in a different direction. And the trustees here — perfectly decent people — and the manager had done OK to that point, and —

CHARLIE MUNGER: Yeah, but they are smarter in Winnipeg than they are here.

WARREN BUFFETT: Yeah. Well — (Laughter)

CHARLIE MUNGER: That was pretty bad here.

WARREN BUFFETT: It’s not a fair fight, actually, usually, when a bunch of public officials are listening to people who are motivated to really just get paid for raising the money. Everything else is gravy after that. But if you run a fund, and you get even 1 percent of a billion, you’re getting $10 million a year coming in. And if you’ve got the money locked up for a long time, it’s a very one-sided deal. And you know, I’ve told the story of asking the guy one time, in the past, “How in the world can you — why in the world can you ask for 2-and-20 when you really haven’t got any kind of evidence that you are going to do better with the money than you do in an index fund?” And he said, “Well, that’s because I can’t get 3-and-30,” you know. (Laughter)

CHARLIE MUNGER: What I don’t like about a lot of the pension fund investments is I think they like it because they don’t have to mark it down as much as it should be in the middle of the panics. I think that’s a silly reason to buy something. Because you’re given leniency in marking it down.

WARREN BUFFETT: Yeah, well, and a father-in-law who gave me everything he had in the world, you know. And I didn’t mind taking everything he had in the world, as long as he would stick with me and wouldn’t get panicked by headlines and that sort of thing. And so, it’s enormously important that you don’t take people that have expectations of you that you can’t meet. And that means you turn down a lot of people. It means you probably start very small, and you get an audited record. And when you’ve got the confidence, where if your own parents came to you and they were going to give you all their money, and you were going to invest for them, I think that’s the kind of confidence that you’ll say, “I may not get the best record, but I’ll be sure that you get a decent record over time,” that’s when you’re ready to go on the —

CHARLIE MUNGER: Let me tell you story that I tell young lawyers who frequently come to me and say, “How can I quit practicing law and become a billionaire instead?” (Laughter) So, I say, well, it reminds me of a story they tell about Mozart. A young man came to him, and he said, “I want to compose symphonies. I want to talk to you about that.” And Mozart said, “How old are you?” And the man said, “Twenty-two.” And Mozart said, “You’re too young to do symphonies.” And the guy says, “But you were writing symphonies when you were ten years old.” He says, “Yes, but I wasn’t running around asking other people how to do it.” (Laughter)

WARREN BUFFETT: Carol? We wish you well. (Laughter) And we, and actually, we really do, because the fact you asked that sort of a question is to some extent indicative of the fact you got the right attitude going in.

CHARLIE MUNGER: It isn’t that easy to be a great investor. I don’t think we’d have made it.

CAROL LOOMIS: This question is from Franz Traumburger (PH) of Austria and his son, Leon, who are both Berkshire shareholders. And it’s interesting to me that in the years we’ve been doing this, nobody has ever asked this question, as far as I know. Their question is, “Mr. Buffett, I believe it is correct that in its SEC filings — that is the Securities and Exchange Commission — Berkshire does not have to give information about foreign stocks it holds. “Assuming we hold foreign stocks, could you please tell us what our five largest positions are?”

WARREN BUFFETT: No, the fellow wants investment information. We really aren’t in the investment information business. We disclose what we have to disclose, but we could set up an investment advisory firm and probably take in a lot of money, but we haven’t done it. And we aren’t giving away what belongs to our shareholders for nothing. But he’s correct that — I’m 99 percent sure he’s correct, and Marc Hamburg can correct me from our office — but we do not have to report foreign stocks. And we do have — in certain important countries, there’s lower thresholds at which we have to report our holdings, as a percentage of the company stock outstanding — there’s lower thresholds than there are in the United States. So, in a sense — in certain stocks. I think when we bought Munich Re stock or bought Tesco stock, or there are certain stocks we’ve had to report at — before we would have had to report in the United States.

But we will never unnecessarily advise if we plan to buy some land some place, if we plan to develop a business — we are not about giving business information that’s proprietary to Berkshire. We don’t give it unless we’re required by law. And he is correct that, I’m virtually certain that we do not have to report our foreign stocks on the SEC filings. And he’ll have to find his own holdings in Austria. But I think this Mozart story may have encouraged that particular question from Austria, what stocks we’re going to own in Austria. OK, Charlie, do you have any comments on that?

CHARLIE MUNGER: No.

WARREN BUFFETT: No, I didn’t think you would. (Laughs)

WARREN BUFFETT: Jonny?

JONATHAN BRANDT: Precision Castparts’ pre-tax profit margins, while perfectly fine relative to American industry as a whole, continue to be almost 10 percentage points below where they were in the years preceding the acquisition. And I’m guessing they’re lower than contemplated when the purchase price was determined. The annual report hints that unplanned shutdowns, the learning curve on new plane models, and a shift of oil and gas capacity to aerospace, might all be temporarily depressing margins. But it’s unclear what a reasonable, long-term margin expectation is for this unit. Now, I know you won’t want to issue a specific margin target or forecast, but I do have a question that I hope you can answer. Is the downward trend in earning since 2015 mostly due to these transitory items, or have the competitive structure of the industry and Precision’s relationship with its customers changed to the point that meaningful increases from current margin levels are probably unlikely?

WARREN BUFFETT: Yeah. Your prelude is quite correct. I mean, they are below what we projected a few years ago. And my expectation — but I would have told you this a year ago — and they have improved somewhat. My expectation is, based on the contracts we have and the fact that the initial years in anything in the aircraft industry, for example, tend to be less profitable as you go further down the learning curve and the volume curve, tend to be lower in the near-term. My expectation is that the earnings of Precision will improve fairly significantly. And I think I mentioned maybe to you last year, in those earnings, there is about $400 million a year of purchase amortization, which are economic earnings in my viewpoint. So — but even including that 400 million a year, which they would be reporting if they were independent, and we don’t report, because we bought them and there’s a purchase amortization charge. Even without that, they are below what I would anticipate by a fair margin within a year or two. That’s the present expectation on my part. Charlie?

CHARLIE MUNGER: No, I don’t have anything.

WARREN BUFFETT: You’ll have that question for me next year, and I think I’ll be giving you a different answer.

WARREN BUFFETT: OK, station 7.

AUDIENCE MEMBER: Good morning Mr. Buffett, Mr. Munger. My name is JC. (PH) I am 11 years old, and I came from China. This is my second year at the meeting. Mr. Munger, it’s great to see you again after the Daily Journal meeting in February. Mr. Buffett, you mentioned that the older you get, the more you understood about human nature. Could you elaborate more about what you’ve learned, and how can the differences of human nature help you make a better investment? I would also like Mr. Munger to comment on that, please. Thank you very much. (Applause)

WARREN BUFFETT: You should wait for Charlie’s answer, because he’s even older. (Laughter) He can tell you more about being old than I can even. It’s absolutely true that virtually any yardstick you use, I’m going downhill. And, you know, if I would take an SAT test now, and you could compare it to a score of what I was in my early 20s, I think it’d be quite embarrassing. (Laughs) And Charlie and I can give you a lot of examples, and there’s others we won’t tell you about how things decline as you get older. But I would say this. It’s absolutely true in my view that you can and should understand human behavior better as you do get older. You just have more experience with it. And I don’t think you can read — Charlie and I read every book we could on every subject we were interested in, you know, when we were very young. And we learned an enormous amount just from studying the lives of other people.

And — but I don’t think you can get to be an expert on human behavior at all by reading books, no matter what your I.Q. is, no matter who the teacher is. And I think that you really do learn a lot about human behavior. Sometimes you have to learn it by having multiple experiences. I actually think I, despite all the other shortcomings — and I can’t do mental arithmetic as fast as I used to, and I can’t read as fast as I used to. But I do think that I know a lot more about human behavior than I did when I was 25 or 30 —

CHARLIE MUNGER: I’ll give you — do you want one mantra? It comes from a Chinese gentleman who just died, Lee Kuan Yew, who was the greatest nation builder probably that ever lived in the history of the world. And he said one thing over and over and over again all his life. “Figure out what works, and do it.” If you just go at life with that simple philosophy from your own national group, you will find it works wonderfully well. Figure out what works, and do it.

WARREN BUFFETT: And figuring out what works means figuring out how other people —

CHARLIE MUNGER: Of course.

WARREN BUFFETT: — behave.

CHARLIE MUNGER: Of course.

WARREN BUFFETT: And Charlie and I have seen the extremes in human behavior, in so many unexpected ways.

CHARLIE MUNGER: Now we get it every night, extremes in human behavior. All you got to do is turn on the television.

WARREN BUFFETT: Yeah. I’m glad he used that example. (Laughter)

WARREN BUFFETT: OK, Becky?

BECKY QUICK: Warren, you mentioned, in response to an earlier question, that Ajit (Jain) and Greg (Abel) are both here to answer questions, and so I thought I’d ask this question that comes from Will in Seattle. He says, his question is for Mr. Ajit Jain and Mr. Warren Buffett. “You have said that you communicate regularly about unconventional insurance contracts that expose the company to extremely unlikely but highly costly events. I’m curious about how you think about and safely price these unconventional insurance contracts. What analyses and mental checks do you run through your head, to make sure that Berkshire Hathaway will profit without being unduly exposed to catastrophic risk? “Furthermore, Mr. Buffett, would you want a future CEO to continue a similarly close collaboration with the chief underwriter?”

WARREN BUFFETT: We will get a microphone to Ajit and a spotlight in just a second. And there he is. Ajit, why don’t you answer first, if you’d like to?

AJIT JAIN: Hi. Obviously, the starting point, I mean, these situations where there’s not enough data to hang your hat on, it’s more of an art than a science. We start off with as much science as we can use, looking at historical data that relates to the risk in particular, or something that comes close to relating to the risk that we’re looking at. And then beyond that, if there’s not enough historical data we can look at, then clearly, we have to make a judgment in terms of, what are the odds of something like that happening? We try — we absolutely, in situations like that, we absolutely make sure we cap our exposure. So, that if something bad happens or we’ve got something wrong, we absolutely know that how much money we can lose and whether we can absorb that loss without much pain to the income statement or the balance sheet. In terms of art, it’s a difficult situation. More often than not, it’s impossible to have a point of view, and we end up passing on it.

But every now and then, we think we can get a price where the subjective odds we have of something like that happening has a significant margin of safety in it. So, we feel it’s a risk that’s worth taking. Then finally, the absolute acid test is, I pick up the phone and call Warren. “Warren, here’s a deal. What do you think?” (Laughter) OK. Your turn, Warren.

WARREN BUFFETT: OK. (Applause)

CHARLIE MUNGER: It’s not easy, and you wouldn’t want just anybody doing it for you.

WARREN BUFFETT: No, no. In fact, the only one I would want doing it for us on the kind of things we have sometimes received is Ajit. I mean, it’s that simple. There isn’t anybody like him. And as Ajit said, we’ll look at a worst case, but we are willing, if we like the odds, and like you say, there’s no way to look these up. We can tell you how many 6.0 or greater earthquakes have happened in the last hundred years in Alaska or California or so on. And there’s a lot of things you can look up figures on. Sometimes those are useful, and sometimes they aren’t. But there’s a lot where you can get a lot of data. And then there’s others that — well, after 9/11, you know, was that going to be the first of several other attacks that were going to happen very quickly? There were planes flying that couldn’t — well they couldn’t land in Hong Kong, as I remember.

I think it was Cathay Pacific couldn’t land in Hong Kong the following Monday unless they had a big liability coverage placed with somebody. I mean, the world had to go on. The people that held mortgages on the Sears Tower all of a sudden wanted coverage. —I think that actually was one — but they were just pouring in, of people that hadn’t been worried about something a week earlier, and now they were worried about things involving huge sums. And there were really only a couple people in the world that would even listen and had the capacity to take on a lot of the deals we were proposed. And there’s no book to look up. So, you do — there’s a big element of judgment. Ajit and I — I mean, Ajit’s a hundred times better at this than I am, but we do tend to think alike on this sort of thing. You don’t want to think too much alike, but we think alike. I’ve got a willingness to lose a lot of money. And most, well, virtually every insurance company if they get up to higher limits, they’ve got treaties in place, and they can only take this much.

So, the world was paralyzed on that. We don’t get those, but now obviously. But we do occasionally get inquiries about doing things that really nobody else in the world can do. It’s a little like our investment situation, only transferred over to insurance. We don’t build a business around it, but we are ready when the time comes. And Ajit is an asset that no other company in the world has. And we work him. And we actually enjoy a lot talking to each other about these kind of risks, because he’ll ask me to think about what the price should be. And he’ll think about — we don’t tell each other ahead of time. And then I’ll name it, and then he’ll say, “Have you lost your mind, Warren?” (Laughs) And then he’ll point something out to me that I’ve overlooked. And it’s a lot of fun, and it’s made us a lot of money. And the shareholders of Berkshire Hathaway are extraordinarily lucky. You can’t hire people like Ajit. I mean, you get them once in a lifetime. Charlie?

CHARLIE MUNGER: I don’t think we helped him very much. It’s really difficult.

WARREN BUFFETT: There will be a time when — I mean, I probably won’t be around then — but there will be a time occasionally, just like in financial markets, when things are happening in the insurance world, and basically, Berkshire will be the only one — virtually the only one — people turn to.

CHARLIE MUNGER: But in the past, Ajit, talking to you, has added more than $50 billion to the balance sheet at Berkshire, by making these oddball calls.

WARREN BUFFETT: And if he hadn’t talked to me, it’d be probably 49.9 billion, you know? (Laughs) But you don’t want to try — don’t try this at home.

CHARLIE MUNGER: Yeah, that doesn’t mean it’s easy.

WARREN BUFFETT: No. And it’s not very teachable.

CHARLIE MUNGER: No, it isn’t very teachable, you’re right.

WARREN BUFFETT: No, it is not something that Berkshire has some secret formula someplace for it. It basically is a very unusual talent with Ajit, and —

CHARLIE MUNGER: We’re not holding anything back. It’s hard.

WARREN BUFFETT: OK, Jay? (Applause)

JAY GELB: This question is on Berkshire’s relationship with 3G Capital. Kraft Heinz’s recent challenges have raised questions about whether Berkshire’s partnership with 3G has become a weakness for Berkshire. Warren, what are your thoughts on this? And would Berkshire be open to partnering again with 3G in a major acquisition?

WARREN BUFFETT: Yeah, they are our partners, and we joined them. We had a one-page agreement, which I haven’t even actually ever reread. I mean, Jorge Paulo, I mean, is a good friend of mine. I think he’s a marvelous human being. And I’m pleased that we are partners. It’s conceivable that something would come up. They have more of a taste for leverage than we do, and they probably have more of a taste for paying up, but they also are, in certain types of situations, they’d be way better operators than we would. I mean, they go into situations that need improvement, and they have improved them. But I think both they and we, I know we did underestimate, not what the consumer is doing so much, but what the retailer is. And at See’s Candy, we sell directly to the consumer, but at Kraft Heinz, they’re intermediaries. And those intermediaries are trying to make money. We’re trying to make money. And the brand is our protection against the intermediaries making all the money.

Costco tried to drop Coca-Cola back in, I think 2008, and you can’t drop Coca-Cola, you know, and not disappoint a lot of customers. Snickers bars are the number one candy that Mars makes. And they’ve been number one for 30 or 40 years. And if you walk into a drugstore, and the guy says, “The Snickers are 75 cents or whatever it might be, and I’ve got this special little bar my wife and I make in the back of the store, and it’s only 50 cents, and it’s just as good,” you don’t buy it, you know. When you’re at some other place the next time, you buy the Snickers bar. So, brands can be enormously valuable, but many of the brands are dependent, most of them — Geico is not, Geico goes directly to the consumer. If we save the consumer money on insurance, they’re going to buy it from us.

And our brand, you know — and we’ll spend well over a billion and a half on advertising this year, and you think, my God, we started this in 1936, and we were saying the same thing then about saving 15 percent in 15 minutes or something of the sort — not exactly the same — but that brand is huge, and we have to come through on the promise we give, which is to save people significant money on insurance — a great many people. That brand is huge, and we’re dealing directly with the consumer. And when you’re selling Kool-Aid or ketchup or, you know, Heinz 57 sauce or something, you are going through a channel, and they would — the phrase was used earlier today. You know, our gross margin is their opportunity, and we think that the ultimate consumer is going to force them to have our product, and that we will get the gross margin. And that fight, that tension, has increased in the last five years and I think is likely to increase the next five or ten years. And Charlie is a director of a company that has caused me to think a lot about that subject. Charlie?

CHARLIE MUNGER: Well. What I think is interesting about the 3G situation, it was a long series of transactions that worked very well, and finally there was one transaction at the end that didn’t work so well. That is a very normal outcome of success in a big place with a lot of young men who want to get rich quick. And it just happens again and again. And you do want to be careful. It’s so much easier to take the good ideas and push them to wretched excess.

WARREN BUFFETT: Yeah, that is — no idea is good at any price, and the price settlement is probably something that we worry more about generally than our partners, but we are their partners in Kraft Heinz. And it’s not at all inconceivable that we could be partners in some other transaction in the future.

WARREN BUFFETT: OK. Station 8.

AUDIENCE MEMBER: Hello Warren and Charlie. Consumer tastes are changing. I think if we asked how many people here in the arena have eaten Velveeta cheese in the last year or so, there’d be only a small handful, maybe more for Jell-O. 3G’s playbook of cutting R&D looks to have stifled new product development amidst changing preferences. So, here’s my question. Why continue to hold when the moat appears to be dry? Or do you think it is filling back up?

CHARLIE MUNGER: Well, I don’t think the problem was that they cut research or something. I think the problem was, they paid a little too much for the last acquisition.

WARREN BUFFETT: That Jell-O — I can’t give you the exact figures. There are certain brands that may be declining 2 percent a year or 3 percent a year in unit sales, and there’s others that are growing 1 or 2 percent. There’s not dramatic changes taking place at all. I mean, Kraft Heinz is earning more money than Kraft and Heinz were earning six or seven years ago. I mean, and the products are being used in a huge way. Now it’s true that certain — that there are always trends going to some degree, but they have not fallen apart, remotely. And they have widened the margin somewhat. But it is tougher, in terms of the margin and the price negotiations, probably to go through to the actual consumer. It’s become a somewhat tougher passageway for all food companies, than it was ten years ago. It’s still a terrific business. I mean, you know, you mentioned Jell-O or Velveeta. Charlie worked at my grandfather’s grocery store in 1940, I worked there in ’41. And they were buying those products then, and they buy the products now.

The margins are still very good. They earn terrific returns on invested capital. But we paid too much in the case of Kraft. You can pay too much for a growing brand. I mean, you can pay way too much for a growing brand, probably be easier to be sucked into that. So, I basically don’t worry about the brands. A certain number are very strong, and a certain number are declining a bit. But that was the case 10 years ago. It’ll be the case 10 years from now. There’s nothing dramatic happening in that.

WARREN BUFFETT: OK, we’ll take one more, and then we’ll break for lunch. Andrew.

ANDREW ROSS SORKIN: Thank you, Warren. Question on technology and the company’s biggest holding now. “Given that Apple is now our largest holding, tell us more about your thinking. What do you think about the regulatory challenges the company faces, for example? Spotify has filed a complaint against Apple in Europe on antitrust grounds. Elizabeth Warren has proposed ending Apple’s control over the App Store, which would impact the company’s strategy to increase its services businesses. Are these criticisms fair?”

WARREN BUFFETT: Well, again, I will tell you that all of the points you’ve made I’m aware of, and I like our Apple holdings very much. I mean, it is our largest holdings. And actually, what hurts, in the case of Apple, is that the stock has gone up. You know, we’d much rather have the stock — and I’m not proposing anything be done about it — but we’d much rather have the stock at a lower price so we could buy more stock. And importantly, if Apple — I mean, they authorized another 75 billion the other day — but let’s say they’re going to spend a hundred billion dollars in buying in their stock in the next three years. You know, it’s very simple. If they buy it at 200, they’re going to get 500 million shares. They’ve got 4 billion, 600 million out now. And so they’ll end up with 4.1 billion under that circumstance. If they’re buying at 150, they buy in 667 million shares.

And instead of owning what we would own in the first case, we’d now — the divisor would be less than 4 billion, and we’d own a greater percentage of it. So, in effect, a major portion of earnings — at least possibly, it’s at least been authorized — will be spent in terms of increasing our ownership without us paying out a dime, which I love for a wonderful business. And the recent development, when the stock has moved up substantially, actually hurts Berkshire over time. We’ll still do — In my opinion, we’ll do fine, but we’re not going to dissect our expectations about Apple, you know, for people who may be buying it against us tomorrow or something of the sort. We don’t give away investment advice on that for nothing. But we have — all the things you’ve mentioned, obviously we know about, and we’ve got a whole bunch of other variables that we crank into it. And we like the fact that it’s our largest holding. Charlie?

CHARLIE MUNGER: Well, in my family, the people who have Apple phones, it’s the last thing they’ll give up. (Laughter)

WARREN BUFFETT: OK. If you’ll take your seats, we’ll proceed in a minute. And it looks like we’re ready for Gregg.

GREGG WARREN: Good morning, Charlie. I have a follow up on the railroad business. By nearly all measures, BNSF had a solid year in 2018, full-year revenue growth of 11 1/2 percent was better than the 7 1/2 percent topline growth at Union Pacific — which is BNSF’s largest direct competitor — came up with, with Burlington Northern seeing both larger increases in average revenue per car unit and total volumes than its closest peer. Even so, Burlington Northern once again fell short of Union Pacific when it came to profitability, with its operating ratio declining 130 basis points to 66.9 percent, while Union Pacific’s ratio fell only 120 basis points to 62.7, further cementing the spread that exists between the two companies’ margins, at more than 400 basis points. Can you explain what is driving the difference in profitability between Burlington Northern and Union Pacific, as theoretically we should not see that wide of a spread between two similarsized companies that are basically competing for the same business, with the same customers in the western half of the United States?

And while you noted that Burlington Northern is in a wait and see mode with regards to precision-schedule railroading, we’ve kind of heard the same line historically with regards to GEICO’s approach to telematics. And what worries me here is that the potential now exists for a much wider gap to emerge between profitability levels at Burlington Northern and Union Pacific, which has recently adopted a version of PSR some of which Union Pacific could eventually use to get more price competitive.

CHARLIE MUNGER: Well, Warren knows the answer to that a lot better than I do. My guess is that they work a little harder than we do at billing the rates. But Warren, you answer that one.

WARREN BUFFETT: Yeah. Well, it’s true that we receive the lowest ton mile revenue of any of the six big railroads in North America, and there’s some explanation for that — obviously, a significant explanation — in the particular types of hauls we have and that sort of thing. We have longer hauls, generally. But the answer — Union Pacific’s profit margin, they talk about operating ratios, but that goes back to the Interstate Commerce Commission. It’s really profit margin, pre-tax, pre-interest profit margin. And Union Pacific, at one time, probably 15 or maybe a little more years ago, they really went off the tracks, so to speak. But they’ve done a very good job of getting — well, they got a lot of underpriced coal contracts that worked out, as did we. But they’ve also — they’ve done a very good job on expenses. And there’s no fundamental reason why the BNSF franchise — I always like the western railroads better than the eastern — not by a dramatic margin — but I think the west will do better in terms of ton miles over time than the eastern roads.

And we’ve got some great routes, some of which were underwater in March for a while. (Laughs) We pay a lot of attention to what’s going on at the Union Pacific, as we should. And the future, it’s not like we’re losing business to anybody. But they have been operating more efficiently, in effect, than we have during the last few years. And like I said, we take notice of it. They’ve cut a lot of people, right here in Omaha. And we’ll see what that does in terms of passengers — or in terms of shipper satisfaction. But we are measuring ourselves very carefully against what they do. And if changes are needed, we’ll do that. We’ve got a wonderful asset in that business. And when I bought it, I said it’s for a hundred years. It’s for a lot more than a hundred years. It is a very, very fundamental business. And we’ve got a wonderful franchise, and we should have margins comparable to other railroads. Charlie?

CHARLIE MUNGER: I don’t know much about it.

WARREN BUFFETT: You don’t? (Laughter)

WARREN BUFFETT: Station 9.

AUDIENCE MEMBER: Hi, Warren and Charlie. My name is Rob Lee (PH) from Vancouver, Canada. Could you please share with us what you value the most in life now? Thank you.

WARREN BUFFETT: Well —

CHARLIE MUNGER: I’d like to have a little more of it. (Laughter and applause)

WARREN BUFFETT: It’s the two things you can’t buy, time and love. And that, I value those for a long time. And I’ve been very, very, very lucky in life, in being able to control my own time to an extreme degree. Charlie’s always valued that, too. That’s why we really wanted to have money, was so we could do what we damn pleased, basically — (laughs) — in our life. It wasn’t six houses or boats or anything. Well, Charlie’s got a boat. But it doesn’t do us that much good. But time is valuable. And we are very, very lucky to be in jobs where physical ability doesn’t make any difference. And, you know, we’ve got the perfect job for a couple of guys with aging bodies. And we get to do what we love to do every day. I mean, I literally could do anything that money could buy, pretty much. And I’m having more fun doing what I do than doing anything else, and Charlie is designing dormitories.

And I mean, he’s got an interesting life, and he brings a lot to it. He still reads, you know, more books in a week than I get done in a month, and he remembers what he reads. So, we’ve got it very good, but we don’t have unlimited time. And whatever we do to free up the time to do what we like to do — and we both maximize that in our lives — we do.

CHARLIE MUNGER: Anybody’s lucky if he so that what he spends his time at, he really likes doing. That’s a blessing.

WARREN BUFFETT: Yeah, we’ve had so much good luck in life. It sort of blows your mind. Starting with being born in the United States. And Canada would be fine too, incidentally. I don’t want to offend anybody. (Laughter)

WARREN BUFFETT: OK, Carol?

CAROL LOOMIS: This question is from Brian Neal (PH), who writes from the Mayo Clinic Education Site. “Berkshire owns approximately 200 billion in publicly traded stocks. I appreciate the disclosure of Berkshire’s holdings, but I am disappointed by the lack of specific performance information. “Since investing in publicly owned stocks is so much a part of Berkshire’s business, why do you not tell us every year how our portfolio performed?”

WARREN BUFFETT: Well, obviously it could be calculated fairly easily, and it’s about 40 percent of Berkshire’s value. But 60 percent is the businesses. And if you look at the top ten stocks I would guess, you know, you’re down to where beyond those ten stocks you’re talking about less than — probably less than 10 percent of Berkshire’s value. So, I — again — we’re not in the business of explaining why we own a stock. We’re not looking for people to compete to buy it. We have a portfolio of companies where I would say that, of that 200 billion or so, at least 150 billion of them are buying in their stock and increasing our interest every year. And why in the world should we want to tell a whole bunch of people to go out and buy those stocks so that we end up paying — or the company on our behalf — ends up paying more money for them? I mean, people get very happy when their stocks go up.

But if we’re going to own whatever, whether it’s Bank of America, whether it’s Apple, whether it’s any of the big holdings, we will do considerably better in the next ten years if their stocks do terribly during certain periods and that they buy lots of stock in. It’s just exactly like buying it ourselves, except we’re using their — they’re using our money. But it’s so elementary. And why in the world would we want to go out and tell the world that these stocks should go up so that maybe they can sell or something when it costs us money? And we’re not going to be able to move in and out of the stocks to our advantage. So, our holdings are filed quarterly — our domestic holdings, as it was pointed out earlier — filed quarterly.

But we would rather not tell the world what we own, any more than we’d like to tell them what our strategy is at NetJets or what we’re going to do with Lubrizol and what we’re working on in the way of better advances in additives or whatever it may be, or where we plan to build a new store for the Furniture Mart or something. That’s proprietary information. And we have to disclose a certain amount, but we’re certainly not going to be touting the stocks to other people. In terms of calculating our performance, you can take the top ten or 12 stocks, and anybody could make the calculation. I mean, at the end of the year the Wall Street Journal runs — all the papers run something — where it says a year-to-date performance or something of the sort. So that’s a simple calculation. Charlie?

CHARLIE MUNGER: I’ve got nothing to add to that.

WARREN BUFFETT: OK. Jonathan.

JONATHAN BRANDT: No one’s ever asked a question about FlightSafety, but perhaps this year it’s somewhat topical given the 737 MAX controversy. The New York Times spoke to engineers who said that Boeing explicitly designed the MAX in a manner that allowed airline customers to avoid paying for simulators to train their pilots. Do you expect the worldwide regulatory and commercial response to the MAX’s problems to result in increased demand for FlightSafety simulators? And could you please more generally discuss FlightSafety’s competitive position and growth prospects?

WARREN BUFFETT: Yeah, well, FlightSafety is — their specialty would be with corporate pilots. They train our NetJets pilots, for example. They have a major facility with simulators for that. I don’t think what’s happened with the 737 MAX will have any particular effect. I mean, we have — I don’t know how many of the Fortune 100 companies that we do business with, but it’s a very significant percentage. And they train their pilots with FlightSafety because we’ve got the talent and the simulators like nobody else has for that business. And Charlie, didn’t you have that friend of yours that was trying to get Al Ueltschi to pass him when he shouldn’t?

CHARLIE MUNGER: What?

WARREN BUFFETT: You remember that story of your friend that wanted to have FlightSafety —

CHARLIE MUNGER: Oh yes.

WARREN BUFFETT: Yeah, why don’t you tell them? I mean, Al Ueltschi, who started FlightSafety with a few thousand dollars and a little visual simulator, or whatever it may have been at, LaGuardia, I mean, he really cared about saving lives. And he made a lot of money in the process, but he was dedicated throughout his lifetime to truly train better pilots and reduce the chance of accidents dramatically. It was a mission with him. And that spirit still continues. And as I say we’ve got a — I can’t tell you the percentages, I don’t know, but I know it’s very high — of certainly the corporate business. We have government business, we have some airline businesses and all of that. But I don’t expect any great change in the flight training business. But tell them about your friend, Charlie.

CHARLIE MUNGER: Well, of course, people pass those tests with flying colors, and then some of them just barely pass. And one of my friends just barely passed and they called me and told me. It’s (inaudible) of the business.

WARREN BUFFETT: FlightSafety would not —

CHARL

标题：2019年年度会议

第四部分/共六部分

听众提问：巴菲特先生和芒格先生，感谢你们回答我的问题。我叫Feroz Qayyum，来自加拿大密西沙加，现居纽约。我的问题是，如何最好地效仿你们在构建能力圈方面的成功。鉴于当今的投资环境比你们起步时竞争激烈得多，你们在构建能力圈时，如果有任何不同做法，会是什么？你们仍然会构建一个非常广泛、通才型的框架吗？还是会更深入但更狭窄地聚焦，比如说专注于行业、市场，甚至一个国家？如果是这样，哪些领域会吸引你们？谢谢。

沃伦·巴菲特：是的，你说得对。现在比我起步时竞争激烈得多。我起步时，真的可以拿着穆迪工业手册和穆迪银行与金融手册，一页一页地翻，至少扫过每一家公司，考虑哪些公司值得我更深入地思考。重要的是——我会做大量的阅读。我会尽可能多地了解各种企业，并试图找出哪些企业我拥有一些重要的知识和理解，而这些很可能与绝大多数竞争对手不同。我还会努力找出哪些是我理解不了的，我会专注于拥有尽可能大的能力圈，同时也要尽可能现实地认识自己能力圈的边界在哪里。1951年1月，当我见到（GEICO高管）洛里默·戴维森时，我就知道我能理解保险业。

我是说，在那个星期六与他相处的三四个小时里，他所说的一切对我而言都非常合理。所以我深入研究，并且能够理解。我的思维在这方面很擅长。但我认为我理解不了零售业。我所做的只是在查理也工作过的那家杂货店工作过，我们俩都没有学到太多关于零售业的东西，只知道这比我们喜欢的要辛苦得多。你也必须做同样的事情，但现在的竞争要激烈得多。但如果你能在一个相对较小的领域比其他人更了解，并且不感到必须频繁行动的冲动，只是等待胜算对你非常有利的时机，这仍然是一个非常有趣的游戏。只是比以前更难了。查理？

查理·芒格：嗯，我认为对绝大多数人来说，最好的策略是专业化。没有人想找一个一半是肛肠科医生、一半是牙医的医生，你知道吧？（笑声）所以，通常的成功之道是狭窄的专业化。沃伦和我其实并没有这样做。我们没有这样做是因为我们更喜欢另一种类型的活动。但我不认为我们可以向其他人推荐这种做法。

沃伦·巴菲特：是的，在我们那个时代更像是寻宝，而且很容易发现宝藏——

查理·芒格：我们让它成功了，但这多少有点运气成分。

沃伦·巴菲特：是的。

查理·芒格：这不是标准的做法。

沃伦·巴菲特：实际上，我最了解的业务是保险。我的意思是——而且我当时的竞争对手很少。你知道，我去过宾夕法尼亚州哈里斯堡的保险部门。我记得有一次我开车去那里只是为了查一家宾夕法尼亚州的公司。那时候你无法从互联网上获取所有这些信息。我走进去，问了一家公司的信息，那个人说：“你是第一个问起那家公司的人。”而且当时信息并不多。我去了标准普尔在休斯顿街——我想他们是这样叫的——的图书馆。我会去那里查找各种晦涩的信息。周围几乎没有人。他们有很多桌子，你可以坐下来研究东西。所以竞争较少。但如果你能精通某一件事情，它总会在某个时刻给你带来优势。你知道，就像IBM的老汤姆·沃森说的那样。

“我不是天才，但我在某些方面很聪明，并且我会待在那些方面。”这基本上就是查理和我试图做的。我认为你大概也能做到。但你会找到那些方面——

查理·芒格：是的，我们在几个领域都做到了。这很难。

沃伦·巴菲特：而且我们也有几次被当头棒喝。

9. 伯克希尔在环境方面表现强劲，但不会为证明这一点而花费巨资制作报告

沃伦·巴菲特：好的，安德鲁？

安德鲁·罗斯·索尔金：谢谢，沃伦。来自一位股东的公司治理问题。贝莱德的拉里·芬克预测，在不久的将来，所有投资者都将使用ESG——环境、社会和治理——指标来帮助判断一家公司的价值。我担心我们在从气候到多样性再到包容性的各个方面得分都不高。你认为伯克希尔在这些指标上表现如何？这些指标有价值吗？

沃伦·巴菲特：我认为实际上我们得分很高，但我们不会为任何询问此事的人准备报告。我们有一个理念，尽管所有股东都是平等的，但我们有点——我们更偏好个人股东。我们实际上更喜欢我们认识的共同所有者。我们不想准备大量报告，并要求60家子公司各自做点什么，他们会组建团队，把材料寄到总部，然后我们提供给那些可能股票涨了就卖掉的人。我们希望我们的经理做正确的事情。我们给他们很大的自由去这么做。我认为我们的平均成功率其实相当不错。你们在影片中看到了，我们谈到在爱荷华州销售的所有电力百分之百来自风力发电。但这并不意味着我们一天24小时都能做到。我们卖一些，也买一些。但本质上，我们将创造出与我们所有客户用电量相等的风能。

有一个竞争对手——还有一家公用事业公司——电力公司——规模和我们差不多——在爱荷华州，他们几乎没有任何风能资源。风也在他们那里吹。但我们有——我们将拥有那百分之百——事实上，这是一个移动的目标，因为我们做得太好了——部分原因——我们在风力发电方面做得非常好，以至于许多高科技公司希望在爱荷华州设厂，以很低的价格从我们这里获得清洁能源。因此，移动的目标就变成了我们在该地区客户量的增长。但我们不会——我们不会花费伯克希尔哈撒韦能源公司员工的时间去回应问卷或试图在某个评分机构那里获得更高的分数。我们信任我们的经理，我认为他们的表现至少是体面的。我们在伯克希尔将开支和多余的报告控制在最低限度。

我们不会——我在年报中提到过这一点——我无法想象还有另一家像这样的公司——但我们在这里，市值5000亿美元——我们没有每月的合并损益表。我们不需要。现在我无法想象任何其他组织会这样做，但我们不需要。我们不会为了做那些我们不需要做的事情而占用资源——人力资源——仅仅因为这是美国企业的标准程序。而美国企业界普遍非常担心，他们非常担心是否会有人推翻他们的现状，比如激进投资者等等。所以他们想确保每个股东在诸如此类的问题上都满意。最终，幸运的是，我们不必担心这一点。所以我们不必为了做那些实际上并不能让我们更好经营业务的事情而花费大量开支。查理？

查理·芒格：嗯，我认为在伯克希尔，环境方面的工作是在我们下面一个层级完成的。我认为格雷格·阿贝尔在这方面做得非常出色。所以我认为我们得分很高。当涉及到所谓的公司最佳实践时，我认为那些谈论它们的人并不真正知道最佳实践是什么。他们只知道他们认为是最佳实践的东西。他们根据什么东西能卖座来决定，而不是根据什么东西能奏效。所以我更喜欢我们的做事方式，胜过他们的，我祈求上帝我们永远不要追随他们的‘最佳实践’。（掌声）

10. “独立”董事并非真正的独立

沃伦·巴菲特：我想指出关于独立董事的一件事。我是说，我曾在20家上市公司的董事会任职，不包括伯克希尔的任何子公司。所以我见过很多公司董事会的运作方式。在很多情况下，独立董事是最不独立的。我的意思是，如果你作为公司董事获得的报酬——通常每年大约25万美元——如果这是你收入的重要组成部分，并且你希望其他公司CEO打电话问：“某某某作为董事怎么样？”而现任CEO——你的CEO——会说：“哦，他很好，从来不制造麻烦。”然后你又在另一个董事会获得25万美元，而这是你收入的重要部分，这怎么能叫独立呢？我只是说，一个观察而已。

（掌声）我特别想不起来，有哪些独立董事——当董事会的收入对他们很重要时——我记不起他们在董事会会议或委员会会议上做过任何真正违背公司利益的事情——你知道，他们被安排在薪酬委员会。他们不会去搅乱现状，因为他们——我处在同样位置可能也会这样做。我的意思是，如果每年25万美元对你很重要，你他妈的为什么要做出一些事情，导致你的CEO对下一个CEO说：“这家伙有点太爱惹事了。你最好找别人。”事情就是这样运作的。但他们——

查理·芒格：我认为实际情况比沃伦告诉你的还要糟糕一些。（笑声）

沃伦·巴菲特：是的，查理和我——

查理·芒格：真的很糟糕。

沃伦·巴菲特：很糟糕。我是说，我们——

查理·芒格：不仅如此，沃伦和我在自以为是方面也占据了一席之地。我们不需要更多了。（笑声）

沃伦·巴菲特：查理和我曾在同一个董事会。嗯，很久以前我曾在一个董事会任职，我们持有该公司非常重要的股份。而董事会的其他成员几乎全是该公司的客户。但不是所有者。他们持有的是绝对象征性的股份。有一次，我们正在考虑一个涉及税务决策的事项，关于某些证券的分配。这涉及一大笔钱。其中一位董事说：“我们就把税吞了吧。”嗯，他的“吞了”大约相当于15美元——（笑声）我说：“我们来分析一下这句话。‘我们把税吞了。’那就是让我们把税吞了。那么，谁想和我吞下同样多的钱呢？”你知道，如果你在餐桌上打嗝太频繁，你就不会被邀请加入董事会——

查理·芒格：嗯，在蓝筹印花公司，有一位董事说：“我不明白为什么你们这些人仅仅因为拥有所有股份就这么重要。”

沃伦·巴菲特：是的。（笑声）查理和我过去常常在蓝筹印花公司会议后需要冷静一下，因为我和里克·加勒特拥有多少股份，大概？

查理·芒格：哦，50%。

沃伦·巴菲特：是的，50%，他们任命了所有这些——

查理·芒格：他们都是扶轮社的成员。

沃伦·巴菲特：这源于某个政府和解或其他什么东西。这不是一种理想的决策形式。他们心里有和我们不同的算盘。我能理解，但我不会重复那样做。（笑声）

11. “我们将在能源领域投入大量资金” 用于公用事业的资本支出

沃伦·巴菲特：好的，格雷格。

格雷格·沃伦：沃伦和查理，美国电力需求在过去十年中持平，但未来十年可能会随着三种新兴需求来源——电动汽车充电、数据中心和大麻种植——而回升，预计这些将占美国总电力需求的5%以上。公用事业公司必须努力工作才能从这种新需求中受益，尽管大部分需求可能会流向南大西洋、中部、西部和山区各州，最大的收益将归于投资于电网扩张、智能网络、可靠性和可再生能源的公司。虽然伯克希尔能源公司在资本投资方面一直很积极，并且在其竞争区域已经拥有一些最低的电价，但看起来该公司在可能需要更多投资的时候，却在缩减年度支出。预计年度支出将从平均每年约60亿美元下降到2021年的约40亿美元，其中三分之二的支出更多是维护驱动而非增长驱动。

您是否认为伯克希尔能源公司需要在未来十年内投入更多资本的某个领域，以确保抓住未来预期的需求增长，就像它在爱荷华州西部风力发电方面所做的那样——那里现在拥有许多数据中心——对于那些预计需求增长最强但伯克希尔尚未涉足的地区，除了收购之外，公司是否有其他途径可以投入资本？

沃伦·巴菲特：我马上就把这个问题交给阿吉特。但我要告诉你，伯克希尔哈撒韦能源公司有三个所有者。我们是91%的所有者。没有比这三个所有者更热衷于在公用事业行业内进行明智交易的了，也没有比我们拥有的人员更能最大化任何机会的了。我们拥有中美能源公司近20年来，从未拿过一分钱股息。其他公用事业公司支付高额股息。他们真的——本质上，他们没有我们这样的资本胃口。所以这只是一个寻找明智项目的问题。我想说，没有哪个团队能像我们的团队一样聪明、有动力。接下来我把它交给格雷格。

查理·芒格：简而言之，我们已经做到了最好，你应该担心别的事情。

沃伦·巴菲特：是的。（笑声）但是格雷格，你能站起来谈谈吗？我们真的希望在能源领域投入大量资金。

格雷格·阿贝尔：是的，是的。下午好。是的，格雷格，你提到了。展望未来，我们在2021、2022年的时间框架内需要现实地看待几个关键领域。因为正如你提到的，我们在2019、2020年结束时拥有一个很好的投资组合。它主要集中在爱荷华州建设新的可再生能源项目、扩大电网。但同样，我们在其他公用事业公司也有这些机会。现实地说，爱荷华州的足迹已经相当满了。当我们达到100%的可再生能源——沃伦提到了——每次我们获得一个新的数据中心，就意味着我们可以再建设300兆瓦的可再生能源。我们会继续这样做。但当你看看PacifiCorp，我们在西北部为六个州服务，我们实际上才刚刚开始在那里进行扩张计划。第一部分是建设重要的输电线路，以扩大电网，然后开始建设可再生能源。但让你了解一下存在的监管情况，我们是在2008年启动那个项目的。而我们实际上只建成了它的三分之一。

但我们确实为第二阶段和第三阶段制定了计划，你们将在2021年和2023年看到这些计划落实。现实情况是，我们会在NV Energy继续这样做，同样，重点是电网扩张，以便我们能够调动资源，并用可再生能源进行补充。所以，这完全是你提到的情况。我们还没有确定具体的项目，所以我们从未将它们放入我们向人们披露的资本预测中。但随着它们确定下来，我们知道它们会推进，显然你会看到一些增量资本。这些资本在我们部署时，显然是为伯克希尔股东赚取的。谢谢。

沃伦·巴菲特：我们将在能源领域投入大量资金。（笑声）

查理·芒格：是的，我们在这一领域确实处于极好的状态。

沃伦·巴菲特：顺便说一句，你知道，沃尔特·斯科特，他看到所有这些项目就非常兴奋，还出去视察。他对这个行业的了解比我多得多——他忘记的都比我知道的多。但我们有一个伟大的合作伙伴关系。我们有无限的资本。我们将继续拥有它。而且这个行业对巨额资本有需求。所以，我认为10年或20年后，人们回过头来看我们的记录，会发现能源行业没有能与之媲美的。

查理·芒格：那么，格雷格，在能源方面，有谁比我们在爱荷华州做得更好吗？

格雷格·阿贝尔：查理，现实地说，在美国没有人比我们做得更好，更不用说在爱荷华州了。当你看看我们生产的能源相对于我们客户消耗的能源量，我们确实领先全国和爱荷华州。

查理·芒格：而且，我们的电价不也是我们在爱荷华州主要竞争对手的一半左右吗？

沃伦·巴菲特：大约一半。差不多。

格雷格·阿贝尔：没错。我们正好在这个范围内。

查理·芒格：如果这对你来说还不够好，那我们也帮不了你了。（笑声）

沃伦·巴菲特：顺便说一句，我们卖电的地方离这里只有五英里。格雷格，对吗？

格雷格·阿贝尔：就在河对岸。

沃伦·巴菲特：是的，就在河对岸。你知道，风同样地吹着，诸如此类。而这里的公共电力区，内布拉斯加州的公共电力区，追溯到乔治·诺里斯时代，一直是一个公营电力州。不存在——内布拉斯加州的电力行业没有资本主义。所以，他们拥有销售免税债券的优势。我们必须销售应税债券，这在一定程度上提高了成本。他们有大量的盈余，不必为此支付股息或其他任何东西。而我们的电价基本上比他们的便宜。我是说，我们为我们的公用事业运营感到非常自豪。

12. 为什么伯克希尔不将未动用的现金投入股票指数基金

沃伦·巴菲特：卡罗尔？

卡罗尔·卢米斯：“沃伦，你是指数投资和不要试图择时的大力倡导者。但在我看来，伯克希尔持有如此大量的现金和国库券，你并没有身体力行。我想到一个很好的替代方案，将伯克希尔大部分多余现金投资于一个充分多元化的指数基金，直到你找到一个有吸引力的收购对象或回购股票。如果你在过去15年里一直这样做，同时保留你想要的200亿美元现金缓冲，我估计到2018年底，公司持有的1120亿美元现金、现金等价物、短期投资和国库券，其价值将约为1550亿美元。这两个数字之间的差额相当于伯克希尔当前账面价值的12%以上的机会成本。你对此有何回应？”我忘了说，这个问题来自佛罗里达州博卡拉顿的科洛尼集团的迈克·埃尔扎尔。

沃伦·巴菲特：这是一个完全合理的问题，我不会质疑这些数字。我想说，这是一个替代方案，例如，我的继任者可能希望采用这种方案。因为总的来说，我更愿意持有指数基金而不是国库券。我想说，如果我们在2007年或2008年就实行这种政策，我们在2008年末或2009年的行动能力可能会处于不同的境地。所以，当涉及数千亿美元时，它有一些执行上的问题，而如果你对10亿或20亿美元左右的资金采取类似政策，则没有这些问题。但这是一个完全理性的观察。当然，回顾一个长达十年的牛市，这一点尤其突出。但我认为，如果你操作的资金规模较小，这会很有意义。如果你操作的资金规模很大，那么未来伯克希尔以这种方式运作可能也很有意义。你知道，我们一周前承诺了100亿美元。

在某些情况下——这些情况并不遥远，在任何一个星期、一个月或一年里都不太可能发生——但在某些情况下，我们可能非常非常快地花掉1000亿美元。如果我们这样做了——如果那些情况存在——那将是资本非常出色的部署，并且比投入指数基金好得多。所以，我们一直——我们运作的基础是我们将有机会部署资本。这些机会很可能会成批出现。它们会在其他人不想配置资本的时候出现。查理，你怎么看？

查理·芒格：嗯，我承认在现金方面我比其他人保守一点。但我认为这没什么问题。在事后看来，我们本可以把所有资金投入许多表现优于标普指数的证券。记住，在整个期间我们都有那么多额外的现金，以防出现机会等等。我不认为像我们这样的大公司现金多一些是什么罪过。我们不必——我目睹哈佛大学利用他们最后的现金，包括所有来自家长们的预付学费，在完全错误的时机一头扎进市场，并对私募股权做出了很多远期承诺。他们经历了大约两三年的绝对痛苦。我们不想像哈佛那样。

沃伦·巴菲特：还有木材和一大堆——

查理·芒格：什么？

沃伦·巴菲特：还有木材。我是说——

查理·芒格：是的，是的。我们不会改变。（笑声和掌声）

沃伦·巴菲特：我们确实喜欢拥有大量资金，以便能够非常快速和大量地运作。我们知道——也许我们不会——我们知道我们不会经常得到这些机会。我不认为——当然，你知道，在未来二三十年里，会有两三次天降黄金，你只需要走出去。但我们不知道它们何时会发生。我们有大量资金可以投入。我想说，如果你告诉我，我必须要么持有短期国库券，要么持有指数基金，让这些钱普遍投资于美国，我会选择指数基金。但我们仍然抱有希望。关于伯克希尔，你们应该非常清楚的一件事是，我们经营业务的方式，我们认为与服务于那些将几乎所有净资产都放在伯克希尔的股东是一致的。我自己恰好就是这种情况，但无论如何我都会这样做。

我们有很多信任我们的人，如果按照标准的投资程序，他们持有的伯克希尔股票相对于其净资产而言比例过高。我们希望为所有人赚钱，但我们希望非常非常确保，那些在大致接近内在商业价值时买入我们股票的人，不会永久性地亏损。我们只是反感让一百多万股东，也许多达两百万股东，在他们愿意和我们待一段时间的情况下，真的亏钱。我们知道当世界普遍动荡时人们的行为方式。他们希望与某种东西在一起——我认为他们希望与某种让他们感觉像直布罗陀岩石一样稳固的东西在一起。我们对那个群体有一种真正的倾向。

13. 房利美和房地美应该为活动房屋提供更多贷款，即使这会损害克莱顿的利润

沃伦·巴菲特：乔纳森？

乔纳森·勃兰特：房利美和房地美为活动房屋贷款推出了新的融资项目，我猜这最终可能会让需要抵押贷款购买这类房屋的购房者，与购买现场建造房屋的购房者处于一个稍微公平一些的竞争环境。您预计这些新项目会对活动房屋的需求产生多大的积极影响？这些项目可能会如何影响克莱顿公司从贷款中获得的可观利润？克莱顿会向房利美和房地美出售更多贷款吗？即使利差收窄，这是否有助于利润？

沃伦·巴菲特：嗯，这可能无助于利润，但如果房利美和房地美获准发放更多针对活动房屋的贷款，这绝对是有好处的。活动房屋是人们获得体面住房和拥有一个家的非常合理的方式。而它们在某种程度上难以获得融资。当地银行经常做这类贷款，但大型银行不愿意做。房利美和房地美有可能，或者说有可能扩大业务。我们已经——我不知道是每月1000万美元的贷款还是什么——向房利美和房地美出售贷款。但如果房利美和房地美在这个领域做更多的事情，在我看来对美国会非常好。显然，我们会卖出更多房屋，但我们会失去融资，我们可能会落后，也可能会领先。但我认为这是一件好事。查理？

查理·芒格：嗯，我认为房利美和房地美会为越来越多的房屋提供融资，而且我认为它们会越来越多地通过克莱顿来做这件事。它们会这样做是因为克莱顿非常值得信赖，并且会以低廉的价格为人们建造好的住房方面做得非常出色。我认为克莱顿会越来越大，在可预见的未来都是如此。而且负责人很年轻，看起来不像沃伦和我。一点都不像。

沃伦·巴菲特：我们在克莱顿有一个完美的管理团队，而且我们正在扩大现场建造房屋的业务。我们刚刚在几天前完成了一起建筑商的收购。现在我们有九个不同的——我相信是九个——不同的现场建造房屋业务，而几年前我们一个都没有。我们对凯文·克莱顿和他的团队评价极高。我们的董事去年在诺克斯维尔开会，第二次参观了克莱顿的运营。所以，我们喜欢克莱顿扩张的想法，我们也喜欢让更多的人拥有非常负担得起的住房的想法。在2008年和2009年的经济衰退期间，我们的借款人——他们的FICO分数平均很低，我说的是与典型的购房者相比——如果他们保住了工作，他们就会还款。我是说，他们想要那个家，而那个家对他们来说极其重要。我们也有各种项目帮助他们。但我们的贷款经验比人们在当时存在的压力下预期的要好得多。这是因为家对人们来说真的意味着什么。

在没有失业或生病的情况下——而且，就像我说的，我们有一些项目帮助人们——他们会还款，并且拥有非常体面的生活。但如果房利美和房地美扩大他们的项目，他们甚至能更便宜地获得住房。就像我说的，我希望他们这样做。

14. “巧妙的”资本主义将取代自动化所取代的工作岗位

沃伦·巴菲特：好的，2号站。

听众：嗨。嗨，沃伦，嗨，查理。我叫卡丽，这是我女儿克洛伊。她11周大。这是她第一次参加伯克希尔会议。（笑声）我们来自旧金山，我们有一个关于就业的问题想问你们。作为大型雇主和消费品生产商，随着自动化和临时就业的兴起，您如何看待良好的全职工作的不确定前景？

沃伦·巴菲特：嗯，如果我们在200年前问这个问题，有人说：“随着农业机械、拖拉机和联合收割机等的发展前景——”这意味着90%的农场人口将失业——那看起来会很可怕，不是吗？但我们的经济、我们的人民、我们的制度，在实现我们现在拥有的——1.6亿个工作岗位方面，一直非常巧妙。自从1776年以来，我们一直在想办法减少工作岗位。这就是资本主义的作用，它使每个人生产出越来越多的商品。我们永远不知道这些工作岗位会从哪里来。我的意思是，我不知道你当时从事什么职业——嗯，如果你在客运列车行业，我的意思是，那将会改变。但在这个经济体系中，我们找到了雇用越来越多人的方法。

尽管重工业等领域的公司一个接一个地，很自然地，一直在想办法提高生产率，这意味着用更少的人生产同样数量的商品，或者用同样数量的人生产更多的商品，但现在我们国家的就业人数比历史上任何时候都多。这就是资本主义。我认为你不需要担心美国人的创造力会枯竭。我的意思是，如果你看看各行各业的人，他们喜欢赚钱，但他们也真的喜欢创新，你知道。他们喜欢做事。这个经济体系，它运转良好。它会继续运转下去。在某些行业会非常艰难，会出现错位。你知道，当汽车出现时，我们不会制造那么多马蹄铁之类的东西。但现在我们确实找到了方法来雇用我们正在雇用的——1.55亿，不管多少——人，并养活3.3亿人口，而我们从只有400万人口开始，那时80%的劳动力受雇于农场。

所以，这个体系是有效的，并且会继续有效。我不知道下一个大事是什么。但我知道一定会有下一个大事。查理？

查理·芒格：嗯，我们希望在可能的范围内将苦差事转移给机器人。正如沃伦所说，这就是我们200年来一直在做的事情。没有人想回去当铁匠，或者在街上铲马粪，或者不管人们过去做什么。我们很高兴这些工作被淘汰了。很多关于未来的担忧来自左派，他们非常担心经济金字塔底层的人们在一段时间内，当顶层的人领先更快时，会经历一些困难。这发生得很偶然，因为我们遇到了很大的麻烦，不得不向世界注入大量资金，并将利率降至零。当然，这推高了资产价格，帮助了富人。没有人这样做是因为他们突然爱上了富人，这只是一个意外，很快就会过去。我们想要所有这些生产率的提高，我们不应该因为某个阶层在一段时间内领先一点而担心。

沃伦·巴菲特：查理和我——（掌声）——我们在杂货店工作过。当人们订一罐豌豆时，我们得爬梯子去够那罐豌豆，然后把它放在折叠盒里，再把它装上卡车。如果你看看实际从生产者转移到消费者手中的食物数量，以及参与交易的人数，你知道，它的效率——我不知道是现在的三分之一、四分之一还是五分之一。而且——

查理·芒格：食物也更差。

沃伦·巴菲特：（笑）我的祖父，你知道，他对这种特定的赊账送货商店会被淘汰感到沮丧。它确实被淘汰了，但社会——

查理·芒格：它正在回归。

沃伦·巴菲特：——解决了——你说什么？

查理·芒格：它正在回归。

沃伦·巴菲特：它正在回归，但效率更高了。（笑声）不管怎样，我们看到了一些创造性的破坏。坦率地说，我们很高兴它解放了我们，让我们进入了投资行业。对我们来说结果更好。

15. 监管可能“令人恼火”，但银行和保险业需要监管

沃伦·巴菲特：贝基？

贝基·奎克：这个问题来自威斯康星州格拉夫顿的布莱恩·古斯特。他问的是监管机构和政客。信中说：“伯克希尔哈撒韦的投资组合中持有几家大型金融机构，这些机构受到严格监管，并且充满政治色彩。您是否认为，在某些情况下，监管机构和/或政客正在经营大银行，而不是CEO和董事会？”

查理·芒格：当然。（笑声）但也不完全是。

沃伦·巴菲特：不，保险业一直受到监管——它碰巧主要是由各州监管的——但自从我们进入这个行业以来，保险业就一直受到监管，而且并没有——你知道，当我研究GEICO时，它的业务量是700万美元。而现在它的业务量将超过300亿美元——是300亿。而且它一直受到监管。监管总体上可能令人头疼，但另一方面，我们不希望一群骗子在保险业经营。实际上，保险业容易招致骗子，因为你拿到钱，然后给对方一个承诺。我喜欢保险业或银行业存在监管的事实。这并不意味着它不会有时让你抓狂或什么的，但这些行业应该受到监管。它们太重要了。任何时候，只要你拿别人的钱，他们带着一个承诺回家，你带着钱回家，我不介意这些行业有一定程度的监管。查理？

查理·芒格：是的。你使用的是政府的信用，因为你有存款保险，这有一个隐含的契约。你不能太疯狂地处理这些钱。这是完全合理的——而且我绝对相信，我们应该有一个涉及银行风险承担监管的监管体系。在房地产危机最严重的时候，投资银行的情况尤其糟糕，其行为——只有一个词来形容这种行为——令人作呕。而且几乎是所有人。沃伦，你——在那个繁荣时期，很难想到有谁保持了理智。他们觉得别人在做蠢事，我也必须这样做，否则我会被落下。多么疯狂的行为方式。所以，当然，有一些干预，但可能必须有。

沃伦·巴菲特：你需要一个食品药品监督管理局。是的。如果你在这个行业，你会对他们的做法不满意，但——你知道，我觉得任何形式的监管都很烦人。但尽管如此，这对系统有好处。实际上，我认为许多监管机构在监管方面确实相当明智。但当你被告知如何经营你的业务时，你就不会有这种感觉了。但正如查理所说，你肯定不希望在一个不受监管的系统中经营一家银行，任何人都可以进来做各种事情，而这些事情实际上会把你拖入他们自己造成的问题中。很久以前，我们在银行业有过“狂野西部”，这在19世纪带来了很多问题。

16. 股东不希望也不需要子公司的详细信息

沃伦·巴菲特：杰伊？

杰伊·盖尔布：过去几年，在伯克希尔的年度股东信中，关于其运营业务和财务业绩的细节越来越少了。例如，公司不再提供金融和金融产品部门的详细信息，或制造业、服务业和零售业的资产负债表，或保险业务按部门划分的浮存金细目。对于像伯克希尔这样庞大且多元化的公司，为什么投资者获得的信息比以前少了？

沃伦·巴菲特：嗯，我不认为我们实际上提供了更少的信息。我们可能每年以略微不同的形式呈现——只是——然后今年，例如，你知道，我开始写信，像往常一样，在心里是说：“亲爱的多丽丝和伯迪，”我的姐妹们，告诉她们我会告诉任何在伯克希尔持有非常重要比例净资产的人，他们很聪明，不了解我们各种业务的所有术语，但会读很多字，因为他们确实有大量的投资。所以，如果我解释任何事情，并且做得不错，他们会理解我在说什么。我用我认为能够被一百多万股东中相当大比例的人理解的语言告诉他们，这些股东对会计等等有各种不同的理解。我告诉他们我作为另一方想听到的信息。现在，如果我是竞争对手，我想知道我们某家家具店的盈利情况或类似信息，你可能会喜欢，但这实际上没什么区别。

如果你说的是一个5000亿美元的组织，如果你理解我们的保险业务，为了给你一个全景，我认为在三、四或五页内——你知道，实际上，我们有大量SEC要求的关于损失准备金发展的东西。我认为你可以写一份300页的报告，但提供的信息远少于一份50页的报告。而且你会让人们失去兴趣。所以我尽量告诉他们——就像我说的，在我心里，是我的姐妹们——我尽量告诉她们我会告诉她们什么，如果我们有一个私营企业，她们每人拥有三分之一，我拥有三分之一，每年她们想了解情况。她们不知道综合成本率是什么意思，因为这是一个大家都在用的愚蠢术语。重要的是称其为利润率。她们不知道铁路行业的运营比率是什么，这是一个过时的术语。最好称其为利润率。但术语——我们不是为分析师写的。

我们是为股东写的，我们试图告诉他们一些东西，以便他们能够——他们不仅能够了解我们现在拥有什么，还能了解我们如何看待运营，我们长期试图做什么。我们每年都尽力做到最好。我不认为——如果某人对细节极其感兴趣，他们实际上可能错过了全局。因为如果你知道1965年我们纺织业务的所有细节，我们可以告诉你我们从衬里赚了多少钱，从手帕赚了多少钱，但你会处于一个完全不同的世界。我的意思是，重要的是我们如何看待资金运作，以及我们长期会怎么做。如果你在1980年或1985年阅读它，并寻找喜诗糖果向东扩张的详细情况，你知道，我们会告诉你总体上是失败的，就扩大地域而言。

但是，搞一大堆分析师可能非常感兴趣，但对股东而言，他们必须决定谁在管理他们的钱，以及如何管理，他们长期做了什么，以及他们未来希望做什么，以及如何衡量。再说一遍，我们是针对个人来写的。查理？

查理·芒格：嗯，我想我应该关注每一个微小的业务，直到最后一分钱，但我不这样做。我不想要那么多细节。我认为我们的竞争对手会喜欢它，但它对我们的股东没有任何好处。所以我们可能只会继续像现在这样报告。

沃伦·巴菲特：你可以看到我们这里有多灵活。（笑声）