Buffett fielded questions from shareholders and journalists in a five-hour marathon session in Omaha, standing next to his longtime business partner, Charlie Munger.
The meeting came on the heels of first-quarter regulatory filings for his US$711 billion conglomerate Berkshire Hathaway (BRK. A).
For those investors who can’t make it to the “Woodstock of Capitalism” we’ve put together seven takeaways.
Don’t bother timing markets
Buffett doesn’t try to time the markets and encourages you not to, either. He openly acknowledges he’s made “really dumb” investments in the past.
“I don’t think that we’ve ever made a decision where one or both of us has said or has been thinking we should buy or sell based on what the market’s going to do,” he said.
“Or for that matter on where the economy’s going to go. We don’t know.”
Admitting that he “totally missed” the March 2020 crash from the pandemic, Buffett noted that he sometimes got credit he didn’t deserve for the timing of his investing victories.
Investing in China
When asked how one might quantify the risks of investing in an authoritarian regime, Munger went on to describe how he believes investing in China is worth it, even with the accompanying political risks.
“The reason I invest in China is I can get much better companies for much lower prices,” he said.
“I’m willing to take a small political risk and get into the better companies at the better prices.”
Recent comments were "hopeful signs" from President Xi Jinping signalling new government stimulus and a softer stance on the private sector, Munger added.
“If people [take the opposite view], and everyone’s more worried about China than they were 50 years ago,” he said.
Markets are just a ‘gambling parlour’
Buffett targeted Wall Street for promoting a ‘casino-like culture’ among the millions of new investors who flooded markets during the pandemic.
“Some days the stock market is very investment-oriented, and other days it’s almost a complete casino, a gambling parlor,” he said.
In a nod to the surge in options trading among retail investors, he said big US companies had been “poker chips”.
“Wall Street, one way or another, finds a way to make money, catching the crumbs that fall from the table of capitalism,” he said.
Munger also slammed online broker Robinhood for its part in the retail trader phenomenon, saying “God is getting just” in relation to the company’s falling share price, which is down 47% year to date.
So Berkshire is not likely to soon buy Bitcoin
Buffett does not care about Bitcoin. Comparing the digital currency to income-generating assets like farmland and apartments, Buffett said he wouldn’t take all the bitcoin in the world for US$25.
“I don’t know if it goes up or down a year from now, or 5 or 10 years from now.”
“But I know one thing with a high degree of certainty: It produces nothing.” It has a magic to it and people have put magic to a lot of things.”
Inflation bad, Jerome Powell not so much
The Oracle of Omaha also shared his thoughts on the effects of inflation, what’s driving it and where he sees it going.
Declaring inflation damages equity investors, Buffett said: “Inflation also swindles the bond investor. It cheats the person who hides their cash under the mattress. It defrauds nearly everyone.”
While acknowledging the role of huge stimulus from the US Federal Reserve in driving up prices, Buffett defended Fed Chair Jerome Powell for the rapid response to the pandemic.
“What are you thinking of the moment that Jay Powell is a hero in my book? It’s very simple. He did what he had to do,” Buffett said.
Cautioning against trusting anyone claiming to predict the future course of inflation, he said: “The question is how much… and the answer is nobody knows.”
Buffett bets big on Chevron and Activision
Berkshire Hathaway's mountain of cash dwindled in the first quarter after Buffett and his deputies plowed a net US$41 billion into stock buys just months after complaining about a shortage of bargains.
Berkshire's stake in the oil and gas giant increased from US$4.5 billion to US$25.9 billion over the quarter, making Chevron (CVX) one of the top four holdings in the conglomerate.
Buffett also invested billions in an arbitrage bet on Microsoft’s proposed takeover of US video-gaming behemoth Activision Blizzard (ATVI). Shares of Activision are trading below Microsoft’s US$95 per share offer amid doubts about regulatory approval.
Berkshire loaded up on the stock in a wager that the deal can get through and is now the company’s biggest shareholder, with a 9.5% stake. Analysts said they expect the deal to be approved.
The action wraps a busy year for Buffet. Berkshire spent US$11.6 billion on insurer Alleghany Corp in March, in addition to billions for shares of Occidental Petroleum and Hewlett Packard.
During the market sell-off this year, “a few stocks got very interesting to us, and we also spent a lot of money,” Buffett said.
No sign of retirement (yet)
Facing thousands of shareholders, 91-year-old Buffett quipped about his and Munger’s age but showed no indication he would retire.
“If you’re a company’s owner and you’ve got two guys 98 and 91 running the company, you have a right to actually see them in person,” he said.
Buffett’s anointed successor, Greg Abel, who oversees Berkshire’s non-insurance operations, joined Buffett and Munger on stage for part of the event.
Buffett acknowledged that his successor probably would have less freedom than he had to make deals. He argues that the Board is more likely to impose stricter limits on his successor, or exert more oversight.
The oracle is famed for nimbleness, even reportedly making an offer for Alleghany over dinner.
