Berkshire Hathaway 2016 Meeting - Live Stream / Saturday

[Gamecock-YT]

I enjoyed the webcast.  My biggest takeaway was that Warren seems to be slowing down, unfortunately.

 

I did not think so at all. He was sharp as a tack. Munger even sharper.

 

The meeting goes as well as the questions. 

 

The proportion of stupid questions is increasing. If not stupid, rather ordinary. The panelists were supposed to make it better, but in my opinion, it has gone worse. They represent the interests of the long term shareholder less and less. I rather liked the old format with audience only asking questions. Sorkin took the cake for the stupidest ones. I guess he represents the peanut gallery. He seemed to grab Munger's attention..."Let me take that question" it was hilarious.The only question he asked that had some gravity was the one about incentives for subs chiefs. It was a question I sent to all three journalists for the 2015 meeting. Not that it matters or am I willing to take credit for it (surely someone else asked it as well), he did not acknowledge who sent that question. (Loomis did with each question). Among the analysts, G Warren's were rather ordinary. He represents the run of the mill side of investing, the mediocrity-guaranteed-crowd, why would we expect anything more. Many in the audience asked better questions. Of course there were stupid ones there, as well as 3- 4- part and page long questions. WEB struggled with these. Anyone would. Truth be told, all those non-english native accents made it harder as well. It is amazing that Munger caught even those!

 

I hope WEB does a poll of shareholders to see if they like this format. I will vote to go back. Maybe a shareholder proposition to vote on?

I'd pick Loomis and Russo as the only two on stage in the current format. They'll vet the questions better and keep it long term oriented. Otherwise, the questions will be repeatedly stupid and the answers will appear canned.

Ditto. I sent an email to all three of the journalist. The only one that responded was Loomis and this was over a month before meeting.

[merkhet]

Anything in particular that makes you think so?

 

I'm not saying he is mentally slowing down.  But literally the pace of his answers was very slow, which kind of gave me the impression of fatigue.  And he did certainly have trouble catching the gist of some of the questions, although I agree that some of those questions went on and on and on at ridiculous lengths.

 

I had at the same

 

He did seem to measure his answers as he gave them out. Wonder how much of it was because of the new format where the whole world could be listening, not just the shareholders. He's in his element with this being a shareholder only event, the intimacy goes out with the webcast.

 

I had the same thought for the morning portion, but Buffett seemed to have gone back to normal by the afternoon. Maybe he was just hungry. The afternoon felt like the other years.

[Mephistopheles]

 

I mean, let's be real. Smoking 5 cigs daily, cancer is coming your way. Drinking 5 cans of coke daily, leaves u obese with diabetes.

 

Eating 5 tomatoes daily is gonna make most people healthier.

 

So I get what ur sayin that cigs are worse than soda, but soda is waaaay worse than fruits and veggies. Buffett ain't shilling kale and quinoa here.

 

Yea, 5 cokes a day is pretty bad, but that's the extreme. 5 cigs is probably on the lower end of consumption among smokers.

 

On the other hand, 1 coke a day or every few days with an otherwise balanced diet, imo the pleasure outweighs the damage.

 

Again I'm not saying that I'm personally against investing in big tobacco but in terms of the pleasure derived being not worth it, I can see why they've avoided it while embracing KO, See's Candies, Heinz-Kraft, Burger King, McDonald's, etc.

[tng]

The amount of calories, or sugar in particular, in a can of Coke actually isn't that bad. Compare it to a Starbucks mixed drink or a glass of orange juice. A lot of stuff has a lot of calories in it, but soft drinks have become the punching bag for everything wrong with the American diet. Realistically, it is portion control. It's not about substituting away from Coke, as people usually replace it with even higher calorie/sugar alternatives like fruit juices. People just need to consume less. I suspect that the anti-soda campaign is heavily funded by food companies that want to push their "healthy" (not really) alternatives that often costs more.

 

People act like juices or some other miracle vegetable shake is better than Coke because it has nutritional value, but who actually lacks nutrients in the developed world? Most people eat far more nutrients than they need. If you need to cut calories, replacing Coke with water helps. So does eating less of other stuff too. But you can't just replace Coke with other stuff that have calories (even if the other stuff has nutrients, because excessive nutrients do not make you healthier), which is what a lot of people do. You have to eat less in total.

[LC]

The amount of calories, or sugar in particular, in a can of Coke actually isn't that bad. Compare it to a Starbucks mixed drink or a glass of orange juice. A lot of stuff has a lot of calories in it, but soft drinks have become the punching bag for everything wrong with the American diet. Realistically, it is portion control. It's not about substituting away from Coke, as people usually replace it with even higher calorie/sugar alternatives like fruit juices. People just need to consume less. I suspect that the anti-soda campaign is heavily funded by food companies that want to push their "healthy" (not really) alternatives that often costs more.

 

People act like juices or some other miracle vegetable shake is better than Coke because it has nutritional value, but who actually lacks nutrients in the developed world? Most people eat far more nutrients than they need. If you need to cut calories, replacing Coke with water helps. So does eating less of other stuff too. But you can't just replace Coke with other stuff that have calories (even if the other stuff has nutrients, because excessive nutrients do not make you healthier), which is what a lot of people do. You have to eat less in total.

A can of coke has 40g of sugar...here's the easy visualization:

http://4.bp.blogspot.com/-OmlMothduYY/Ty5IKpW78hI/AAAAAAAABP0/g-kCIa4uFaI/s1600/DSC_0563

 

In terms of portion control, two apples (or 4 oranges) have the same amount of sugar as a can of coke, but they also have a ton of fiber which satiates you, slows your metabolism, and enforces portion control on a biological/reflexive/subconscious level.

 

Plus Coke has no taste memory so you don't get "sick" of the flavor. It's a product designed to eliminate portion control.

 

Here's where my gripe is: You have these two guys (Buffett and Munger) who talk constantly about psychological biases, how humans are generally poor at making rational decisions and exercising self-control. But then they back a product which is designed to eliminate human's reflexive portion control, knowing full well most people suck at self-control/rational decision making?

[KCLarkin]

A can of coke has 40g of sugar...here's the easy visualization:

http://4.bp.blogspot.com/-OmlMothduYY/Ty5IKpW78hI/AAAAAAAABP0/g-kCIa4uFaI/s1600/DSC_0563

 

The real issue is not a can of coke. A can is a reasonable serving size. But I assume most of the volume of Coke in America is not drunk from a can:

http://jbawm.com/wp-content/uploads/2012/07/Michael-Bloomberg.jpg

 

The moral argument is a red herring. The question is whether the new science that links Coke (and other sugary diseases) to heart disease, cancer, and diabetes will significantly reduce consumption. When I grew up, sugar was just considered "empty calories". Buffett seems to still believe this theory. But science is finding out that sugar is much worse than previously believed.

[Mephistopheles]

Here's where my gripe is: You have these two guys (Buffett and Munger) who talk constantly about psychological biases, how humans are generally poor at making rational decisions and exercising self-control. But then they back a product which is designed to eliminate human's reflexive portion control, knowing full well most people suck at self-control/rational decision making?

 

But then don't most companies market most products in ways to trick you into spending more or consuming more than you would otherwise? That's the goal of every company. Personal responsibility should be exercised here. You shouldn't blame anyone but yourself for not eating right.

[LC]

Here's where my gripe is: You have these two guys (Buffett and Munger) who talk constantly about psychological biases, how humans are generally poor at making rational decisions and exercising self-control. But then they back a product which is designed to eliminate human's reflexive portion control, knowing full well most people suck at self-control/rational decision making?

 

But then don't most companies market most products in ways to trick you into spending more or consuming more than you would otherwise? That's the goal of every company. Personal responsibility should be exercised here. You shouldn't blame anyone but yourself for not eating right.

Yes but most CPG products haven't caused the health problems coca cola has. Nobody is developing diabetes from buying $8 razor blades from gillette or $4 on crest or colgate toothpaste.

 

Personal responsibility only goes so far. At what point is the seller partly responsible as well?

 

Crackheads should exercise personal responsibility too, no problem legalizing crack I presume? New parents and homebuyers should have independently tested lumber liquidator flooring for formaldehyde levels. Let em sell that stuff, screw the kids crawling around on it, their parents should have exercised personal responsibility.

 

To clarify, I have no issue with selling this stuff. My issue is the hypocritical moral high ground you can pretend to have while doing so.

 

Just come out and say, "We're selling this stuff to all of the human race, many of whom lack self control and will most likely develop health problems over time, which society will bear. In the meantime we're going to make a lot of money for our shareholders. And we're OK with that."

[woltac]

"Just come out and say, 'We're selling this stuff to all of the human race, many of whom lack self control and will most likely develop health problems over time, which society will bear. In the meantime we're going to make a lot of money for our shareholders. And we're OK with that.'"

 

Maybe not in those words, but that is what I understood their answer was with an offsetting happiness caveat.

[Charlie]

"Anyone see a good transcript floating around?"

 

This looks pretty good:

 

https://www.biznews.com/global-investing/2016/04/30/berkshire-agm-warren-buffett-charlie-munger-part-one/

 

 

Cheers!

 

 

[Mephistopheles]

Here's where my gripe is: You have these two guys (Buffett and Munger) who talk constantly about psychological biases, how humans are generally poor at making rational decisions and exercising self-control. But then they back a product which is designed to eliminate human's reflexive portion control, knowing full well most people suck at self-control/rational decision making?

 

But then don't most companies market most products in ways to trick you into spending more or consuming more than you would otherwise? That's the goal of every company. Personal responsibility should be exercised here. You shouldn't blame anyone but yourself for not eating right.

Yes but most CPG products haven't caused the health problems coca cola has. Nobody is developing diabetes from buying $8 razor blades from gillette or $4 on crest or colgate toothpaste.

 

Personal responsibility only goes so far. At what point is the seller partly responsible as well?

 

Crackheads should exercise personal responsibility too, no problem legalizing crack I presume? New parents and homebuyers should have independently tested lumber liquidator flooring for formaldehyde levels. Let em sell that stuff, screw the kids crawling around on it, their parents should have exercised personal responsibility.

 

To clarify, I have no issue with selling this stuff. My issue is the hypocritical moral high ground you can pretend to have while doing so.

 

Just come out and say, "We're selling this stuff to all of the human race, many of whom lack self control and will most likely develop health problems over time, which society will bear. In the meantime we're going to make a lot of money for our shareholders. And we're OK with that."

 

Well again I don't think it's possible to enjoy crack in moderation without getting addicted or it completely taking over your life.

 

Yes but most CPG products haven't caused the health problems coca cola has.

 

The health problems are occuring in those who a) overconsume and b) shouldn't be consuming at all. It's not Coke's fault if someone decides to drink 6 cans a day. The difference between crack and coke is that you can have a coke every now and then and be fine. Yes it can be addicting but I don't see the vast majority of people hooked on the product. And then those who weigh 300 lbs or have Type 2 Diabetes shouldn't be consuming at all, but again, it's not Coke's fault if they do.

 

Regarding personal responsibility; most Americans are overweight, and this is caused by so much more than Coca Cola. So if you think KO is immoral on the level of Tobacco, then you should equate all fat food and sugary drink companies to the same level. If you think people aren't capable of having the personal responsibility to avoid excess consumption these products, then I can see why you think Buffett is a hypocrite, but note that this precedent should then apply far more broadly than KO - to everything from sugary drink beverage makers, to fast foods, to packaged foods, to restaurants, grocery stores, etc.

 

For me the distinction between coke vs. crack/tobacco is: can the average person enjoy moderate consumption without causing harm or forming an addiction? And my guess is yes.

[LC]

If you think people aren't capable of having the personal responsibility to avoid excess consumption these products, then I can see why you think Buffett is a hypocrite, but note that this precedent should then apply far more broadly than KO - to everything from sugary drink beverage makers, to fast foods, to packaged foods, to restaurants, grocery stores, etc.

 

So here's the thing, it's not just me who thinks people en masse aren't capable of making the best choices for themselves, it's Warren and Charlie who say that. And then, they own and sell a product designed to take further advantage of that. But then they say it's up to the individual, and don't mention that they are kind of enabling the behavior? It seems hypocritical to me.

 

Frankly I have no problem with them owning KO or the company selling the product. I would have no problems if they owned Altria either. Just save the holier-than-thou act while doing so.

 

Also, you can very well label KO as worse than most others. There is no taste memory of Coke, as designed. Most foods are self-limiting. Your stomach gets full. You get sick of the taste. With Coke I can drink and drink and drink it all day and not get physically sick of it.

[writser]

I tend to agree with LC. I have absolutely no problem with anyone owning Coke shares (or drinking Coke) but it sounds like Buffett is trying to downplay / ignore / sidestep any health issues. Saying: "I drink a lot of coke and I can't imagine anybody feeling better than I do" is basically a very childish argument by example. If the CEO of PM would say a similar thing about cigarettes he would be sued immediately. One of WEB's other arguments: "I'm happier because I drink a lot of Coke, that has to be taken into account". Again, imagine the CEO of PM saying such a thing about cigarettes. Another one: "the junk food market has staying power because it makes people happy". So does smoking (in the short run). In the long run it is addictive and bad for you.

 

Granted, Coke is probably far less dangerous than cigarettes, drinking it moderately is probably fine, other fastfoods are bad as well, people have their own responsibilities etc. etc. That's all true but please leave discussing the health risks / benefits to objective people with no skin in the game. Society is suffering from obesity and soft drinks are one contributing factor. Buffett is probably never going to admit that.

[Mephistopheles]

If you think people aren't capable of having the personal responsibility to avoid excess consumption these products, then I can see why you think Buffett is a hypocrite, but note that this precedent should then apply far more broadly than KO - to everything from sugary drink beverage makers, to fast foods, to packaged foods, to restaurants, grocery stores, etc.

 

So here's the thing, it's not just me who thinks people en masse aren't capable of making the best choices for themselves, it's Warren and Charlie who say that. And then, they own and sell a product designed to take further advantage of that. But then they say it's up to the individual, and don't mention that they are kind of enabling the behavior? It seems hypocritical to me.

 

Frankly I have no problem with them owning KO or the company selling the product. I would have no problems if they owned Altria either. Just save the holier-than-thou act while doing so.

 

Also, you can very well label KO as worse than most others. There is no taste memory of Coke, as designed. Most foods are self-limiting. Your stomach gets full. You get sick of the taste. With Coke I can drink and drink and drink it all day and not get physically sick of it.

 

I see. So my understanding is that you are referring to the human biases that Buffett&Munger always talk about such as lack of self control, and that owning KO makes this hypocritical? If I am misinterpreting your point let me know, but I believe this is what you are saying.

 

Funny thing is that I also have a problem with Buffett acting holier than thou - but that's with his tax policy, and how incredibly misleading what he says is about his secretary paying a higher rate than him and grouping payroll and income taxes together, so by all means I'm not saying the man is holy.

 

Imo with the KO issue though, I haven't heard them ever particularly talk about people's lack of control with food and beverages. I've only seen them talk about human flaws in general, which can be applicable to everything from eating to gambling to investing or fraud. So I don't necessarily think it's hypocritical in this case. In fact I think their understanding of human flaws has made them superior investors all around, not just with Coca Cola. It would be one thing if Buffett chose to deal with obesity or healthcare as a central philanthropic/political issue, but it's not.

[LC]

I see. So my understanding is that you are referring to the human biases that Buffett&Munger always talk about such as lack of self control, and that owning KO makes this hypocritical? If I am misinterpreting your point let me know, but I believe this is what you are saying.

 

Kind of. Owning KO doesn't make them hypocritical.

 

Owning KO and saying, "well the problems it causes customers are totally their fault and not ours, therefore don't blame us!", is hypocritical when they know full well they are enabling those customers using a variety of means.

[Ballinvarosig Investors]

A whole bunch of videos from his appearance on CNBC today - https://www.youtube.com/user/cnbc/videos

[adesigar]

I see. So my understanding is that you are referring to the human biases that Buffett&Munger always talk about such as lack of self control, and that owning KO makes this hypocritical? If I am misinterpreting your point let me know, but I believe this is what you are saying.

 

Kind of. Owning KO doesn't make them hypocritical.

 

Owning KO and saying, "well the problems it causes customers are totally their fault and not ours, therefore don't blame us!", is hypocritical when they know full well they are enabling those customers using a variety of means.

 

Why all this argument about Coke. Its simple Buffett and Munger are wrong. Buffett/Munger wont say anything negative about a company BRK is invested in. I personally think KO is a blind spot for Buffett. Its why he didn't sell it 18 years ago and its also why he wont come out against KO executive compensation(If KO is a company any moron could run why does management need so much compensation) and now this defense of sugary drinks.

[PatientCheetah]

Are we going to make better investment decisions/make more money by discussing coke/sugar?

[CorpRaider]

Put an excise tax on sugar, high fructose corn syrum. or Aspertame (perhaps one that goes into the Medicare and Medicaid trust funds) or don't, what's the big deal?  He invests (or has) in petrochemical companies who are subject to excise taxes (maybe some of those should go into Medicaid/Medicare funds as well for cancer caused by their pollutants).  You better be ready to apply these taxes to beef and milk and fried foods next.  You will soon be voted out of office because you have nannied and ticked off every american.  Isn't democracy grand?  Maybe the Chinese can blaze the trail on this path, assuming they can get the air pollution low enough that you can see your hand in front of your face.

[LC]

Are we going to make better investment decisions/make more money by discussing coke/sugar?

Absolutely. The issue is not coke or sugar, but intellectual honesty. The argument WB/CM make publicly is IMHO hypocritical and intellectually disingenuous. Discussing it not only exercises our collective critical thinking but also the halo effect around famous investors. Would've saved me money in ZINC, that's for sure.

 

I don't care if Brk invests in coke, tobacco, coal, or payday loans to crack dealers as long as they are honest and open about the business including all the costs and externalities.

[Graham Osborn]

I don't care if Brk invests in coke, tobacco, coal, or payday loans to crack dealers as long as they are honest and open about the business including all the costs and externalities.

 

OK guys, let's move this worthy discussion over to the KO thread.  And if BRK starts making payday loans to crack dealers, I'll happily double my current holdings (1 B-share) :)

[Graham Osborn]

Oh, and if buying 1 B-share to attend the meeting sounds pathetic, here's an extract from an actual conversation I had at the Borsheim's reception:

 

Me: Hi there

Guy in suit: Hi!

Me: [brave stab at conversation] So what brings you to the meeting?

GIS: Oh, well I'm a student at Creighton College.

Me: Oh really, so why do you own Berkshire?

GIS: I don't, they sell the tickets on campus for $5 so we just come for the free drinks.

Me: Oh really, so is that - er - popular?

GIS: Oh yeah, most of the people here are in college.

Me: [politely] Don't you have anything better to do than gate-crash the annual meeting for a top-10 insurer?

GIS: Not really.  There's not much to do in Omaha.

 

He was NOT lying.  Most of the people I talked with were Omaha natives and seemed about as happy to talk about Berkshire as the local temperance society.  Rather than the world's largest congregation of value investors, it felt like Omaha's largest frat party.

[Guest]

Have you guys seen the meeting archived anywhere?  I missed part of it.

[KCLarkin]

http://finance.yahoo.com/brklivestream

[rb]

Does anyone know if the meeting has been recorded somewhere so it can be downloaded? I kinda want to put in my records. It turns out to be surprisingly hard to pull the video from the yahoo site.