Buffett AGM Comments

[Xerxes]

These folks complaining all the time on Barron's need to consider the following questions:

 

- How many public companies existed when Buffet took over Berkshire

- How many of them went bankrupt, got bought out and are former shell of themselves (i.e. GE)

- Of those left, how many of them have top 20 market cap

 

It is a marathon, that requires to outlast everybody else by doing less mistakes over time.

Any moron can create a set of arguments on Excel how it is good to invest in A, B and C. and how dry powder drags on performance.

[Munger_Disciple]

https://www.barrons.com/articles/warren-buffett-is-too-cautious-berkshire-needs-an-activist-investor-says-51588611940

 

"Swing you bum!"

 

:)

 

There is a very good comment posted by a reader below this Barron's article:

 

Although I certainly did expect Buffett to buy back more stock, I am disappointed, but not shocked that he hasn't spent his cash on other things yet.  I like Bill Smead and understand his frustration, but let's look at the facts.  The tech stocks that Buffett likes truly never took the deep dive that other stocks did March 23rd.  If he thought that FANG's, etc were overpriced a few months ago, then it's not much different now.  As for Travel and Entertainment, which got crushed down to 25% of their previous value, he basically acknowledged (by selling the airlines) that the world has changed (in his opinion) for airlines, hotels, etc for the foreseeable future.  I don't think he'll ever buy an airline stock again, but he can still pick up a hotel stock, etc. if a vaccine comes along...but I doubt he will.  As for financials, the big banks are not really much higher than their March 2rd lows.  Maybe 10-20% or so?  He said that although he thinks the banks are fine, he did state clearly that there is still potential exposure if things continue to deteriorate (and let's not forget that rates are almost at zero!)  Combine all of the above with the fact that The Buffett Indicator is near an all time high, I can understand why he hasn't spent his cash yet.  Am I frustrated?  Yes!  But who the heck am I to argue with the greatest investor of all time!  I will be patient, as he has been for years...and I hope he will be right eventually. If not, I'll retire to a smaller home.

[scorpioncapital]

Industrials and military defense did tank, and that is within his circle of competence.

Philips 66 hit 40 and it had a huge dividend is not directly exposed to oil and he didn't touch it. Instead he touched the OXY junk.

I really can't reconcile some of his behaviour with what was available in mid March and within his circle of competence.

What was wrong with Lockheed martin with a PE of like 10-11?

And this is only a few of the stuff I have in my portfolio that seem quite decent back in March and big megacaps.

[Guest cherzeca]

https://www.barrons.com/articles/warren-buffett-is-too-cautious-berkshire-needs-an-activist-investor-says-51588611940

 

"Swing you bum!"

 

:)

 

There is a very good comment posted by a reader below this Barron's article:

 

Although I certainly did expect Buffett to buy back more stock, I am disappointed, but not shocked that he hasn't spent his cash on other things yet.  I like Bill Smead and understand his frustration, but let's look at the facts.  The tech stocks that Buffett likes truly never took the deep dive that other stocks did March 23rd.  If he thought that FANG's, etc were overpriced a few months ago, then it's not much different now.  As for Travel and Entertainment, which got crushed down to 25% of their previous value, he basically acknowledged (by selling the airlines) that the world has changed (in his opinion) for airlines, hotels, etc for the foreseeable future.  I don't think he'll ever buy an airline stock again, but he can still pick up a hotel stock, etc. if a vaccine comes along...but I doubt he will.  As for financials, the big banks are not really much higher than their March 2rd lows.  Maybe 10-20% or so?  He said that although he thinks the banks are fine, he did state clearly that there is still potential exposure if things continue to deteriorate (and let's not forget that rates are almost at zero!)  Combine all of the above with the fact that The Buffett Indicator is near an all time high, I can understand why he hasn't spent his cash yet.  Am I frustrated?  Yes!  But who the heck am I to argue with the greatest investor of all time!  I will be patient, as he has been for years...and I hope he will be right eventually. If not, I'll retire to a smaller home.

 

good analysis.  but here is my question about WEB.  in many ways I believe, the GFC was a greater crisis than I expect this covid crisis to be...of course WEB may differ.  but I remember talking to brokers who had clients asking them how they could withdraw quickly all of their money in real cash...the green stuff.  now that was a real financial panic, let's remind ourselves.  this is a health panic which I believe will dissipate at some point w/in 12 months, at which point behaviors will revert and there will be a return to normal...not a new normal.  again WEB can disagree.  but if anyone thinks like I do, then it is startling to see WEB's inactivity....especially banks should be a fat pitch for him

[Viking]

Here is a very good summary of Buffett’s comments from a long time BRK follower Jim Sloan. The comment section is also a worthwhile read

 

Buffett Gives A Seminar On Risk, Cash, Debt, Discipline And The Future Of Berkshire

- https://seekingalpha.com/article/4342835-buffett-gives-seminar-on-risk-cash-debt-discipline-and-future-of-berkshire

 

Buffett's Q&A at Berkshire's virtual annual meeting addressed risk, cash, debt, discipline and Berkshire's future.

 

Buffett explained that Berkshire's calculable risks were very manageable but that a large incalculable risk hung over the economy; he suggested that this required a larger cash set aside than previously.

 

Berkshire's cash set aside for emergencies has a message for ordinary investors: start with a bucket for cash you need to sustain your lifestyle for the foreseeable future.

 

Buffett explained his reasons for dumping the airlines in a way that should focus investors on the true risks for many industries.

 

In February, the world changed to a degree which may not have been fully recognized; Buffett showed that he is in the process of learning and changing with it.

 

"In times of change learners inherit the earth while the learned find themselves beautifully equipped to deal with a world that no longer exists." - Eric Hoffer

[LightWhale]

Anyone has a transcript of the entire meeting?

[gokou3]

Anyone has a transcript of the entire meeting?

 

https://twitter.com/ShaiDardashti/status/1257008469233692674

 

https://www.rev.com/transcript-editor/shared/D5W8NfZq08dBcfCzXRI8ggUfBFtf5tna49t4GRlcdfVzZfdF0G5z_03OZTTBlBZtiPXWB3tiuOiTzIBx6Aore7QCUr8

[LightWhale]

That's a great source, thanks.

[scorpioncapital]

I found this quote from 1995 kinda funny given the pandemic of 2020

 

"So, to sit there and hope that you buy them in the throes of some panic, you know, that you sort of take the

attitude of a mortician, you know, waiting for a flu epidemic or something, I mean — (laughter) — it — I’m not

sure that will be a great technique"

 

Guess he was thinking of epidemics even 20 years before Gates lecture of 2015!

[Peter_Falk]

Buffett was criticized a lot for not putting his cash pile to work; I do not share that criticism at large. It is far too early to judge whether Buffett was right or wrong in his positioning. Let‘s discuss that by the end of the year.

 

The main issue, though, why I didn‘t buy Berkshire stock when it was at 240k, is that I couldn‘t justify why I would need Buffett for buying Apple and Airlines, and that in the operating businesses, I was worried about PCP (which was a 30B investment), given that its business model became impaired. I just didn‘t think it was cheap - and Buffet did as well, given his comments on share repurchases.

 

But the markets are tricky these days - being prudent might not be rewarded ultimately. While we see a huge gap between Wall Street and Main Street, Investors, who bid up the S&P to 2900, might not be completely dumb. Consider the following.

1) In the future, there will be no alternatives to stocks, and residential real estate - to some extent. Treasury (and to a certain extent, corporate bond) yields will stay low for very long, given the measures implemented, and, consider that when the Fed buys securities, the seller will look for other securities to acquire - bidding up prices for anything that has a yield - at large.

2) 20% of the S&P are just a few big tech players, who might turn out as net beneficiaries of the Pandemic (Think about this happening just 10 years ago without their capabilities)

3) Big companies might enjoy lower competition on the other side, as weak ones might be forced to exit the market.

4) Summing up, the Fed ensures that there is plenty of money around that will seek to be invested, but not consumed. The injection is into Wall Street, not Main Street. Will that money go away? Not for many years (or decades) to come.

 

A lot of businesses might come out of this with a huge financial burden, though, so the best way to deploy capital might be to start an „unburdened“ business competing with burdened ones.

[mattee2264]

 

  I think it is easy to forget that Buffett is primarily an owner-operator rather than an investor. Most businesses out there are exercising caution. Even the ones with strong financial positions. Also Buffett is opportunistic and I think he is right in saying there aren't really that many attractive opportunities at the moment within his circle of competence that offer the mixture of quality and certainty and reasonableness of price that he looks for.

 

Most of the stuff which looks cheap is justifiably so given the future uncertainty e.g. financials, energy, media, real estate

 

Most of the stuff which looks bulletproof and likely to prosper is either expensive and/or outside his circle of competence and/or doesn't offer the long term certainty he looks for e.g. consumer staples, healthcare, technology

 

And just as most homeowners aren't selling their houses until the situation becomes a bit clearer I cannot imagine many businesses are putting themselves up for sale either.

[Gregmal]

Yea, IDK but it seems the narrative has shifted quite a bit over the years. Buffett is widely regarded as one of the greatest INVESTORS ever. Guy in his heyday used leverage and was trading like a madman. Its at best an excuse that now he is an operator. Or that he's actually not a stock guy, but someone who runs businesses.

 

I thought this(below) was interesting and probably mirrored some of the chat that happened here in another thread regarding Buffett and Musk. Buffet is not an innovator or business builder(in the organic sense), he's a capital allocator. And one of the greatest ever. Well, up until maybe 15 years ago that is. Now, for whatever reason, he does so little investing that people seem to think he is something that he's never been.

 

https://www.marketwatch.com/story/warren-buffett-may-be-one-of-the-most-admired-men-in-all-of-finance-but-elon-musk-isnt-buying-into-the-mystique-2020-05-07

[RadMan24]

Yea, IDK but it seems the narrative has shifted quite a bit over the years. Buffett is widely regarded as one of the greatest INVESTORS ever. Guy in his heyday used leverage and was trading like a madman. Its at best an excuse that now he is an operator. Or that he's actually not a stock guy, but someone who runs businesses.

 

I thought this(below) was interesting and probably mirrored some of the chat that happened here in another thread regarding Buffett and Musk. Buffet is not an innovator or business builder(in the organic sense), he's a capital allocator. And one of the greatest ever. Well, up until maybe 15 years ago that is. Now, for whatever reason, he does so little investing that people seem to think he is something that he's never been.

 

https://www.marketwatch.com/story/warren-buffett-may-be-one-of-the-most-admired-men-in-all-of-finance-but-elon-musk-isnt-buying-into-the-mystique-2020-05-07

 

Amazing how much dumb crap you spread around. What do you think the value of BNSF is if it were public today? How about the Apple investment? When he makes big bets, he wins huge.

[jgyetzer]

The comment from AGM that's been on my mind is Buffett's statement that he is managing Berkshire for those that have essentially their entire net worth in the company.  At first blush, that mindset seems like a conservative and prudent way of approaching management. 

 

The more I think about it though, the more it seems like that perspective might cause paralysis.  I mean, how can you make rational decisions if you CANNOT fail.  After all - your dear friends, in their old-age, are counting on you to protect their entire fortune!  For me, it would be difficult to function with that mindset.  Buffett is probably beyond petty fears most of us encounter, but it's something that has been bothering me.

 

For others who do not have 100% of net worth in BRK, does this seem like an issue?

[LC]

It does to me but my opinion isn’t worth hundreds of billions.

[Xerxes]

What’s there to not like ... he is got 99% of his wealth in there.

If you put your 90 plus percent wealth (equities) your and Warren interests are aligned.

 

 

[scorpioncapital]

"For others who do not have 100% of net worth in BRK, does this seem like an issue?"

 

No because even at 1/3 of my portfolio it counteracts my defects of temperament. I know he has better temperament than me so for me it is insurance against modest failure in the other 2/3 of my portfolio.

[jgyetzer]

That’s a good point.  I suppose it depends on the role it’s intended to serve in a given portfolio. 

[wescobrk]

I'm wondering what was the information that Buffett changed his view (almost a 180 degree change) from his late Feb interview on CNBC when he sounded like every other interview for the last decade to his very cautious view at the AGM.

He told Becky that he spoke to his science advisor Bill Gates that he is bullish on a vaccine over the long term. He talked about buying stocks in the quarter.

 

It was a radical change based on the same pandemic that he was aware of and had spoken to Gates over a roughly 6 week time frame.

[rranjan]

I'm wondering what was the information that Buffett changed his view (almost a 180 degree change) from his late Feb interview on CNBC when he sounded like every other interview for the last decade to his very cautious view at the AGM.

He told Becky that he spoke to his science advisor Bill Gates that he is bullish on a vaccine over the long term. He talked about buying stocks in the quarter.

 

It was a radical change based on the same pandemic that he was aware of and had spoken to Gates over a roughly 6 week time frame.

 

He said something like ,

 

I wouldn't blame anyone for decision making due to many unknowns initially......

We are doing an experiemnt with voluntarily shutting down economy .......

Most countries get F grade for handling this ......

 

Just going by my memory, but you can look it up.

 

He hardly criticizes directly, but you can put 2 and and 2 together here. Pandemic was not an unforseen outcome for him in Feb. How most countries and government have reacted was surely a surprize. Even developing countries have followed lockdown steps taken by developed countries despite not having resource to maintain low infection rate for too long. It's alway easy to focus on what can be easily counted so focus is on Covid-deaths.

 

Long-term damage is not due to virus here, but due to reactions.

[Peter_Falk]

He told Becky that he spoke to his science advisor Bill Gates that he is bullish on a vaccine over the long term. He talked about buying stocks in the quarter.

 

It was a radical change based on the same pandemic that he was aware of and had spoken to Gates over a roughly 6 week time frame.

 

When the facts change, you change your mind, sir.

 

The world is filled with hope on thin air.

 

Vaccine news is either cheerleading by the administration, pharma co‘s pitching their businesses to shareholders, or pharma team‘s soliciting budget.

 

Buffett said it - a crisis doesn‘t fold out over a couple of weeks.

 

The wheel started turning, and there will be second and third order effects (and so on). Whoever talks about an „artificial“ recession (because it was caused my a „planned“ shutdown) is also the one who values businesses on the basis of „earnings as if Corona never happened“

 

Liquidity doesn‘t fix valuations... We just need to be patient...

[DooDiligence]

He told Becky that he spoke to his science advisor Bill Gates that he is bullish on a vaccine over the long term. He talked about buying stocks in the quarter.

 

It was a radical change based on the same pandemic that he was aware of and had spoken to Gates over a roughly 6 week time frame.

 

When the facts change, you change your mind, sir.

 

The world is filled with hope on thin air.

 

Vaccine news is either cheerleading by the administration, pharma co‘s pitching their businesses to shareholders, or pharma team‘s soliciting budget.

 

Buffett said it - a crisis doesn‘t fold out over a couple of weeks.

 

The wheel started turning, and there will be second and third order effects (and so on). Whoever talks about an „artificial“ recession (because it was caused my a „planned“ shutdown) is also the one who values businesses on the basis of „earnings as if Corona never happened“

 

Liquidity doesn‘t fix valuations... We just need to be patient...

 

Ira Flatow's Science Friday was exceptionally good today.

 

www.sciencefriday.com/person/ira-flatow/

 

They spent quite a bit of time debunking nonsense & discussing what we know, and more importantly, what we don't know about COVID.

[wescobrk]

He sold all of the airlines now he is selling Goldman and JP Morgan.

[Spekulatius]

He sold all of the airlines now he is selling Goldman and JP Morgan.

 

And BK and USB:

https://www.sec.gov/Archives/edgar/data/36104/000120919120029062/xslF345X03/doc4a.xml

[wescobrk]

Buffett raising all of this capital has nothing to do with insurance claims. The CEO of Lloyds of London thinks there will be about $100 billion of claims for the virus and maybe another $100 billion if you take into account insurance companies having to sell assets at low prices. If we take the high end of his prediction, in the past, Buffett has said Berkshire will have no further damage than 3% of the industry. Let's double that on the high end prediction of $200 billion which is 6% of $200 billion is $12 billion. Buffett further says he wants to have $20 billion at all times. $137 billion minus 32 billion equals $105 billion of dry powder AND he is continuing to sell stocks such as Goldman, JP, BK.

His comments about having to pay claims for people and others that have 99% of their net worth in Berkshire strikes me as complete bullshit. I love Buffett but as someone as said on this board watch his actions and not his comments. Buffett is speculating there will be a monster drop in equites . He wasn't buying at 35% drop. He thinks we will drop 50% plus. That is what I'm getting from his actions and ignoring his comments.