Happy Cinco de Mayo!

Today, we'll get right to it: Let’s discuss everything you need to know from Warren Buffett’s Berkshire Hathaway Annual Shareholders Meeting. Buffett always delivers a wealth of knowledge and wisdom.

All this, and more, in just 5 minutes to read.

— Matthew

Quote of the Day

"There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning.

I think you are out of your mind if you keep taking jobs that you don't like because you think it will look good on your resume.”

— Warren Buffett

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What Else We’re Into

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Trivia

Sage of Omaha: Lessons from the Oracle

Buffett’s world

If you had invested $1,000 in the S&P 500 in 1965 when Warren Buffett started at Berkshire Hathaway, you would have about $300,000 today. 

If you had bought Berkshire instead, you’d have more than $42.5 million.

That’s one reason tens of thousands of investors flock to Omaha every spring for the Berkshire Hathaway Annual Shareholders Meeting: Buffett’s performance has been remarkable. 

But Buffett also has a special way with words, an ability to distill complex financial concepts into simple yet profound, insights. His folksy wisdom and unwavering principles have endeared him to millions of investors worldwide. 

In Buffett's world, success is measured not just by financial wealth but also by the integrity of one's character and the impact on others. His legacy extends far beyond the realm of finance. As he ended the meeting Saturday, he received a standing ovation from the crowd. 

"I not only hope that you come next year, but I hope I come next year," he said, laughing. 

Here are a few key takeaways from Buffett’s latest shareholder meeting, during which he addressed over 30 questions in about five hours.

Fat pitch

Buffett maintains a fairly cautious stance, with a record $189 billion in cash and cash equivalents. He emphasized the importance of patience, stating, “We only swing at pitches we like… today things aren’t attractive.”

Berkshire reported a rise in operating earnings to $11.2 billion in the first quarter. Despite lower investment income, earnings remain strong across its insurance businesses and railroad unit. Berkshire shares are up about 10% this year, 24% since the last meeting, and 92% in the past five years.

Buffett also said the cash pile could soon hit $200 billion. 

“I don’t think anyone at this table has any idea of how to use it [$189B in cash] effectively, and therefore we don’t use it…We’re not using it at 5.4%, but I wouldn’t use it at 1% either. But don’t tell the Federal Reserve that. I don’t mind at all, given current conditions, building our cash position. When I look at the equity markets and the composition of what’s going on in the world, we find cash quite attractive.”

Since it’s on no spending spree, Berkshire keeps buying back its shares. It spent about $2.6 billion doing that in the first quarter alone. 

Money moves

Berkshire slashed its massive stake in Apple by about 13%, though it remains its largest holding. Buffett hinted that tax considerations may have influenced the decision, leaving it with $135.4 billion of the iPhone maker’s shares at the end of March.

Despite selling a portion of its Apple stake, Buffett praised the company as "an even better business" than American Express and Coca-Cola. 

“Unless something really extraordinary happens, we will own Apple, American Express, and Coca-Cola when Greg takes over this place,” Buffett said, adding that it’s “extremely likely” Apple will remain its largest stock position. 

Buffett has been open about his mistakes and missed opportunities for decades. This year is no different. Buffett said Berkshire sold its position in Paramount Global, whose shares have fallen about 13% this year. 

“We’ve sold it all, and we lost quite a bit of money,” said Buffett, taking the blame. “I did it all by myself.”

Thoughts on the economy and policy

Buffett commended Federal Reserve Chair Jerome Powell but highlighted the need for fiscal policy to address the growing U.S. deficit. He expressed concerns about potential economic challenges.

Powell is a “very wise man,” he said, but he noted that the central bank needs lawmakers' help reining in the growing U.S. deficit. 

Powell “doesn’t control fiscal policy, and every now and then he sends out a disguised plea … because that’s where the trouble will be, if we have it,” Buffett said.

Concerns about AI

Buffett said that artificial intelligence scamming could be the next big “growth industry,” likening it to nuclear weapons.

The Oracle of Omaha said he doesn’t “know anything” about AI, but said an encounter with an AI-generated image of himself (a deep fake) made him nervous about the landscape. 

“When you think about the potential for scamming people, if you can reproduce images that I can’t even tell, that say, ‘I need money,’ as your daughter, ‘I just had a car crash, I need $50,000 wired.’ I mean, scamming has always been part of the American scene, but this would make me, if I were interested in investing in scamming, it’s going to be the growth industry of all time,” he said.

“I said we let the genie out of the bottle when we developed nuclear weapons and that genie has been doing some terrible things lately, and the power of that genie is what, you know, scares the hell out of me,” he added. “And I don’t know any way to get the genie back in the bottle, and AI is somewhat similar.”

Four final things

• Succession planning: Buffett assured that Greg Abel — chairman and CEO of Berkshire Hathaway Energy and vice-chairman of non-insurance operations of Berkshire Hathaway since January 2018 — will likely be responsible for capital allocation when Buffett’s time is up. 

  
  “That decision will be made when I’m not around. I would leave the capital allocation to Greg. He understands businesses extremely well, and if you understand businesses, you understand common stocks.”
  

• Missed chances: Buffett pointed out that he and Charlie Munger missed many opportunities but only regretted a handful.
  
  “We missed a lot of things, and what we really regretted was missing something that turned out to be very big, we never worried about something that we didn’t understand,” Buffett said. “Why should we be able to predict the future of every business any more than we can predict what wheat yields are likely to be in the next year?” 
  

• Honoring Munger: Buffett emphasized prioritizing meaningful relationships and shared experiences. He shared fond memories of his partnership with Munger, highlighting their enduring friendship and mutual respect. Buffett said they used to speak daily on the phone “for long periods,” and he couldn’t remember a time they were ever angry at each other. “Calling him was fun,” Buffett said. 

  
  “We had as much fun, perhaps even more to some extent, with things that failed because then we really had to work…in a sense, there’s more fun having somebody that’s your partner and digging your way out of a foxhole than there is just sitting there and watching an idea you got ten years ago continually produce more and more profits.”
  

• Choosing wisely: A young boy asked Buffett what he would do with one more day with Munger, and Buffett said they’d do what they’d always done: hang out, have fun, and learn new things together. 

  
  “Ask yourself who you’d want to spend the last day of your life with and then meet with them as often as you can. Then figure out a way to start meeting them tomorrow and meet them as often as you can. Why wait until the last day?" 

Dive deeper

Check out Buffett’s full library of shareholder letters, including his latest letter, plus more quotes from Saturday’s meeting and additional details on Berkshire’s latest earnings report.

See you next time!

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