What Warren Buffett ‘Oracle of Omaha’ said about China, Donald Trump, tariffs, Apple and retiring at annual Q&A with Berkshire shareholders
The shareholder meeting celebrates the successes of the conglomerate that Buffett built with Berkshire Vice Chairman Charlie Munger while offering a chance to learn from the two accomplished businessmen
Billionaire investor Warren Buffett and Berkshire Hathaway Inc Vice Chairman Charlie Munger answered five hours of questions from shareholders, journalists and analysts at Berkshire’s annual meeting in Omaha, Nebraska.
The weekend known as “Woodstock for Capitalists” is unique in corporate America, a celebration of Buffett’s success at a conglomerate whose businesses range from Geico insurance to the BNSF railroad to See’s candies to Ginsu knives.
Below are the comments from Buffett, the “Oracle of Omaha,” on a wide range of investments and other topics:
Large acquisitions outside the United States
“Outside the United States ... we are not embedded in (sellers’) minds in the same way. We are on the radar screen big-time in the United States ... I hope tomorrow I’ll get a call from Germany or Britain ... or Australia ... and we’ll get an opportunity.”
“In terms of getting a lot of money into something, many billions ... that can be tougher in markets that you’re unfamiliar working in. Accumulating a $6 or $8 or $10 billion position outside the United States can be very difficult.
“Charlie keeps pushing me to do more in China.”
Trump’s proposed tariffs
Buffett: “We’ve seen steel costs increase somewhat. I don’t think either (the US or China) will dig themselves into something that precipitates and continues any real trade war ... The benefits of trade are basically not visible. No one thinks about benefits day by day ... The negatives, and there are negatives, are very apparent and very painful.”
Munger: “The conditions in steel were almost unbelievably adverse to the American steel industry. Even Donald Trump can be right on some of this stuff.”
“In August, I will be 88, in a year that ends in an 8. Eight is a lucky number in China. ... The United States and China are going to be the two superpowers of the world, economically and in other ways for a long, long, long time. We have a lot of common interests and like any two big economic entities there are times when there will be tensions. But it is a win-win situation when the world trades.”
Amazon and Alphabet
“We’ve certainly looked that them ... the truth is, I’ve watched Amazon from the start and what Jeff Bezos has done is something close to a miracle. If I think something is a miracle, I tend not to bet on it. Bill Gates told me early on (to look at) Google ...
“I’ll miss a lot of things that I don’t feel I understand well enough, and there is no penalty in investing if you don’t swing at a ball that’s in the strike zone, as long as you swing at something at some point ... We’ll try to stay within our circle of competence, and Charlie and I generally agree on where that circle ends ... We’ll try to stay within our circle of competence ... We’re going to miss a lot of things.”
“I made the wrong decision on Google and Amazon.”
Munger: “I’ve been to Google headquarters – it looks like a kindergarten.”
Apple’s cash hoard
“It’s extremely hard to find acquisitions that would be accretive to Apple (in) the $50-$100 billion range. As I look around the horizon, I don’t see anything that would make sense for them, whereas I do see a business that they know everything about ... I’m delighted to see them repurchasing shares ... Mentally, you can say we own 5 per cent of it ... Over the passage of time, we may own 6 or 7 per cent because they repurchase shares.”
No one except The Wall Street Journal, The New York Times and (now) The Washington Post has come up with a digital product that will in a significant way replace the revenue being lost as print newspapers lose circulation and advertising ... the Journal, the Times and probably the Post have an economically viable model in the digital world.”
“Where the daily newspaper was a primary (source of information), they’re no longer primary.”
“This country really, really works ... this country has six times the per capita GDP growth that it had when I was born ... this is a remarkable, remarkable country ... I would love to be a baby born in the United States today.”
Cryptocurrencies being a bubble
“(They’re) non-productive assets. It essentially will not deliver anything other than supposed scarcity. What does it produce itself? ... Anytime you buy non-productive assets, you are counting on someone later on buying a non-productive asset. It does come to a bad ending ... cryptocurrencies will come to bad endings.”
“Long-term bonds are a terrible investment at current rates, or anything close to current rates. Rates (on short-term bills) have gone up lately, so in 2018 my guess is we’ll have at least $500 million (more) in pre-tax income than we had last year.”
“I do not worry about the slowing deal flow. My phone is not ringing off the hook with good deals but we will still be the first (point) of call, irrespective of me or Charlie not being there.”
“I do not believe in imposing my political opinions on the activities of our businesses.”
Berkshire in 50 years
“I think the reputation of Berkshire being a good home for companies ... I don’t think that’s dependent on me and Charlie.”
“The answer is I don’t know, and I didn’t know what it would look like 50 years ago ... We will be as shareholder-oriented as any large company in the world. Who knows what will be happening then.”
Munger on Buffett being ‘semi-retired’
“He sits around reading most of the time and thinking, and every once in a while he talks on the phone. I can’t see any difference … Warren is very good at doing nothing.”