At 4:45 am on May 3, Beijing time, the annual Buffett shareholders' meeting was held as scheduled, but this is the first time Berkshire Hathaway has held the shareholders' meeting online in more than half a century's history.
This year, Buffett announced that Munger would not attend the general meeting of shareholders. Instead, Greg Abel, the 57 year old vice-chairman of Berkshire's non insurance business, will be present. In this special shareholders' meeting, Buffett also unexpectedly revealed a lot of information. He said that the crisis was not similar to 2008. In April, Berkshire only repurchased $426 million of its own company's shares, but sold $6.509 billion of shares in the same period, a net sale of $6 billion of shares! At present, he holds a large amount of cash and has not made any large-scale acquisition because he does not see any attractive opportunities.
And frankly, he made a mistake in investing in airlines, and has liquidated all aviation stocks at a loss.
Although Buffett stressed that he was optimistic about stock investment in the long run, this shareholders' meeting revealed many unexpected information points.
The following is a summary of the highlights of this Buffett General Meeting:
Buffett: It's more risky to buy aviation stocks now. All aviation stocks have been cleared and admitted to making mistakes
Buffett said that the aviation industry is a very challenging and difficult industry, especially in the current situation. Now everyone is told not to fly or travel again. Today, we still don't know what the future trend of all businesses will be, especially in the so-called tourism or aviation, cruise ships and oil tankers. However, airlines have been greatly affected.
The world is undergoing major changes, as is the case for airlines. I now wish them well, because we also own the shares of these airlines. Now if you buy again, the risk will be greater.
Buffett: All the stocks of the four major American airlines with US $7-8 billion have been sold
Buffett confirmed that Berkshire Hathaway has sold "all (stock) positions" of the four major American airlines (American Airlines, Delta Airlines, Southwest Airlines and United Airlines).
At the Berkshire Hathaway annual video conference, Chairman Buffett said that the four major American airlines (American Airlines, Delta Airlines, Southwest Airlines, United Airlines), except Southwest Airlines, all other airlines have international routes. Airlines have suffered especially huge losses due to the epidemic. "We bought these four major airlines and invested $7 billion to $8 billion in them. Now we want to take them out, which is our fault. We are not talking about partial reduction, we change our mind, or we want to sell them all." I am not sure now. The impact of the epidemic on the future of airlines, and whether the United States will change its living habits, It took me 7 weeks to put on my tie and cut my hair for the first time.
Buffett: No large-scale acquisition, no attractive opportunities
Buffett said that we did not make any large-scale acquisitions because we did not see any attractive opportunities to do so. Now, this situation may change soon, but it may not change.
Buffett: Not optimistic about airlines and aircraft manufacturers
Buffett said he is not optimistic about airlines and aircraft manufacturers. The epidemic has an impact on many industries, and it is particularly doubtful whether the market needs so many planes after the epidemic, and I don't know what the future of Boeing and Airbus will be.
Buffett talks about Xishi Candy: he will not sell this investment 48 years ago
Buffett said when talking about See's Candies, which he acquired in 1972, that although the company faces great changes due to the COVID-19 pandemic, it is still his favorite investment. Buffett said: "Easter is a big sales period for Xishi... although we are basically closed. In the final analysis, this is a very seasonal business. But we have a lot of Easter candy. We will not sell it. We have it since 1972, we love it, and we will continue to love it."
Buffett: All Berkshire shares will be donated
In response to investors' questions, Buffett said at the shareholders' meeting that Berkshire's spin off might be a good result, but it would incur a lot of expenses, taxes or other expenses. At present, Berkshire's structure is also very favorable for the deployment of capital. All Berkshire shares he holds will be donated to charity in the future. This decision was made 14 years ago.
The epidemic will lead to further recession of some industries
Buffett: The epidemic is too crazy to predict its future development
Due to the impact of the COVID-19 epidemic, Berkshire cancelled all offline activities of the shareholders' meeting and changed to live broadcast on the whole line, with Buffett and Abel answering shareholders' questions at the Omaha meeting. Facing the empty seats, Buffett could not help feeling that the epidemic has completely subverted life, and he also stressed that health and economy are mutually reinforcing.
Buffett said that accounting was good at school, but biology was a mess, so I know as much about the COVID-19 epidemic as everyone, and the results may not be worse. At present, I cannot fully predict the future development of COVID-19. "What you do not know, I do not know.
The death rate of COVID-19 is not as high as that of the Spanish influenza pandemic in 1918, but it is highly infectious. The recent measures taken by various countries to block the virus are "quite a big experiment". It is believed that the US economy can overcome the difficulties brought by the new coronavirus.
Buffett pointed out that he would like to thank Anthony Fauci, the White House health adviser, for letting him know and understand the development of the COVID-19 epidemic in the United States. Buffett said that he owed Fusi a "great gratitude". In addition, Buffett also pointed out that it is "very, very lucky" for the United States to have people like Fauci who can communicate with the global health crisis in a "very direct way".
Buffett: At present, the banking system will not have too big a problem
Buffett said at the shareholders' meeting that at present, the banking system will not have too big a problem. Although there may be some problems with energy companies or consumer credit, the banking system has sufficient capital and reserves, so banking is not our main concern.
Buffett: Never waste a serious crisis
Buffett cited some historical events (such as the American Civil War and the Great Depression) at the shareholders' meeting to show that the United States has the ability to withstand adversity. The PPT at Buffett's annual meeting quoted Rahm Emanuel, the former White House chief executive, as saying: "Never waste a serious crisis".
Buffett: The Great Depression also has "benefits"
In 1929, the US stock market collapsed during the Great Depression. At that time, the automobile industry, household appliances, aircraft and other modern industries were ready to start, but the Dow fell 48% in a very short time. In that year, Buffett's father was 26 years old and engaged in securities trading in a local bank. One stock fell by 40%. He felt unable to face his customers, so he began to "isolate himself at home". During this period, Buffett was born. When he was born, his market value was 1000 yuan. Within two years, the market value of the stock shrank to 170 yuan.
But the Great Depression also had "benefits": it gave birth to the Federal Deposit Insurance Corporation, which could solve the problems of bank bankruptcy and continuous loss of residents. This was the best thing that emerged after the Great Depression and provided a good guarantee. It should also be noted that after World War II, the United States accepted Keynesianism and deficit generation, such as transforming GDP 2% into deficit.
Buffett: The epidemic will lead to further recession in some industries, such as newspaper industry and automobile industry
Buffett said that the epidemic has led to further recession in some industries. Maybe customers in these industries will have other consumption habits and stop using these products. Many changes have taken place in the retail industry. These industries have had problems before, but now they have more problems. For example, in the newspaper industry, we have increased more investment in the newspaper industry and helped them repay their debts. But now the newspaper industry, before the epidemic, their advertising, sales, circulation has declined. After the epidemic, the situation worsened and became more serious. The same is true for the automobile industry. Now, the influence on the automobile industry will be reduced to the fact that these auto dealers will not advertise in newspapers. Therefore, this situation has occurred before, but now it is only intensified and serious.
Buffett: The epidemic will change the lifestyle for a long time. Some small businesses may not open their doors again
At the shareholders' meeting, Buffett repeatedly stressed that the epidemic has changed the living habits of residents, which may completely change some business rules or affect some industries for a long time, Buffett could not help feeling that the epidemic has completely subverted life, and he also stressed that health and the economy complement each other.
Buffett: Don't make a wrong bet. Be careful when shorting the United States
Buffett said that the United States has been tested, such as the Great Depression. Don't bet on the United States. The United States is quite strong. Compared with 1789, we are now a better and richer country.
I don't think anyone knows what the market will be like tomorrow, next week, next month or next year. I believe in the United States. My past career is to seize the opportunity of success in the United States.
If you want to bet against the United States, you should be very careful. Because you should be very careful when you bet in this area, because anything may happen in the market, that is, in October 1987, the market fell by 21% on that day. After "911", the market was closed for 4 days and then opened again, but no one knew what would happen.
Buffett: None of our companies have received government assistance
At Berkshire Hathaway's annual video conference, investors asked: Does Berkshire now have the Federal Reserve or the state begin to protect you from difficulties and accept some subsidies from them? Buffett: There are such (situations) in airlines. We have invested in airlines, but the questions I am talking about are that we do not have any fully owned companies. Greg, have any of our companies received government assistance? Abel: No. We don't have any of these businesses now. We all know what every Berkshire company looks like. Today, when it comes to government subsidy projects, we do not have them. The companies we fully own do not participate.
Berkshire sold net in April and maintained high cash flow
Buffett: Buy the whole enterprise directly if you want to buy it
Buffett pointed out that Berkshire's way of working is different from that of other American enterprises. When we buy, we buy the whole enterprise, and we often do so. Now I often choose some businesses I know before buying. Of course, when buying, I buy all industries. It is not possible for us to find good business or buy business that we think is very good, because they are not necessarily to sell.
If we can buy some equity, we can do the same. For example, 6%, 7% and 8% of the shares are acceptable regardless of the cooperation or purchase of shares.
Buffett: We have always maintained relatively high cash
Buffett said at the shareholders' meeting that Berkshire's operating income in the first quarter was much lower than before, and the situation that some businesses may be closed now may be more serious. In fact, insurance business and railway companies have also undergone some changes. In fact, their positions are quite ideal.
We don't have any cash promises. But now we have always maintained a high level of cash, including after the "911", when the market was closed, we also have a lot of cash reserves.
Buffett: Berkshire sold a net $6 billion of shares in April
Buffett said at the shareholders' meeting that Berkshire bought $4 billion of shares, sold 2.16 billion of shares and bought 1.74 billion of bonds in the first quarter. In April, Berkshire repurchased $426 million of shares, but sold $6.509 billion of shares in the same period, a net sale of $6 billion of shares.
Abel: Now is a good time to borrow money, but Berkshire won't do it. Our money should be used for cutting edge
Abel said that the current period is a good time to borrow money. Not everyone is willing to borrow money. For all Americans, this is the best time to borrow money. For Berkshire, this is not necessarily the time for us to do it. Our money should be used for cutting edge.
Abel: Whether Buffett or Charlie is in the company or not, there will be no change in the investment culture
Abel said that no matter whether Buffett or Charlie is in or out, there will be no change in the company's investment culture. The company's management team is working hard to find more investment opportunities to maintain the original strong momentum. "We have business acumen, can make economic deployment and make positive changes, and Berkshire managers have this ability."
Buffett: Berkshire split is bad for shareholders
Regarding the question of whether Berkshire will be split, Buffett responded that if Berkshire is split, it will generate huge taxes and expenses, which is not good for shareholders, and the current structure is also very favorable for capital deployment.
Buffett: Crude oil production will decline significantly in the next few years, and the future of oil enterprises is unpredictable
Buffett said that the crude oil production will decline significantly in the next few years because of the sharp decline in demand. The oil price of $20 a barrel will make it impossible for oil companies to continue, and drilling activities will decline. I wonder if the oil price will increase significantly in the future. The future of oil producing enterprises is unpredictable. There will be many bad debts in the energy industry in the future, so you can imagine what it means to the shareholders of the energy industry.
Buffett talks about Xishi Candy: he will not sell this investment 48 years ago
Buffett said that although the company is facing great changes due to the COVID-19 pandemic, this is still his favorite investment.
Buffett said: "Easter is a big sales period for Xishi... although we are basically closed. In the final analysis, this is a very seasonal business. But we have a lot of Easter candy. We will not sell it. We have it since 1972, we love it, and we will continue to love it."
Now is a good time to buy stocks
Buffett: There is no reason to stop investing in S&P 500 index funds
Buffett said there was no reason to stop investing in index funds. I suggest you buy the S&P 500 fund. Compared with any stock, Berkshire's stock is no inferior.
Buffett: American stocks are still the best investment choice, but don't borrow money to buy stocks
Buffett said that investors should not borrow money to invest in the stock market. Betting on the US market is still the best choice, but at the same time, he pointed out that in view of the uncertainty of the COVID-19 pandemic, people should not borrow money to buy stocks: "When a pandemic like this happens, it is difficult to consider its impact. Because of this, you should never borrow money to invest, at least in my opinion. There is no reason to borrow money to invest in the 'good wind' in the United States, but there is no reason to do so now. "
Buffett: If the interest rate is negative, investors should hold stocks
Buffett said that if the interest rate falls to a negative range, investors should hold stocks, or at least hold "other assets other than debt".
Buffett: In the long run, stock returns will be higher than national debt. Investment is not gambling
Buffett said that when people lost confidence, they did not see the potential of the stock market. At present, the yield of 30-year U.S. government bonds is only 1%, and the inflation rate is only 2%. In the long run, the return of stocks will be higher than that of government bonds, and higher than that of cash hidden under the mattress. Investment is not gambling, but serious investment.
I hope everyone can have a kind of thinking when buying stocks. That means you don't buy stocks, but part of the company.
Buffett: Diversified investment is better
Buffett said that diversification is good, and I did the same and achieved good results. For many investors, the best thing to do is to hold S&P 500 index funds.
Many people pay a lot of money for advice they don't need. If you bet on the United States and keep this holding for decades, you will eventually get higher returns than holding national debt or following the advice of those who tell you what to invest.
Buffett: Now is a good time to buy stocks
Buffett said at the shareholders' meeting that it is still a good time to buy stocks, but we should be prepared to deal with the epidemic in the long term, and it may fall if we buy them. "It may be right to buy now, but it may also fall when the market opens next Monday. We cannot predict that we should be prepared for the epidemic in the long run." (Top School of Finance and Stock: http://58188.com )
About this special Buffett shareholders' meeting
Buffett: Munger is in good condition and will return to the annual meeting in 2021
Buffett said that he used to talk with Charlie Munger here. Charlie Munger is 96 years old now and he is still strong. But he thinks the best choice this year is to let Munger not come to the meeting. Charlie Munger is in good shape and will be back in 2021. Ajit Jain, the vice chairman, did not have to leave New York to attend the meeting.
Buffett: Thank you Abel for coming to the meeting
Greg Abel is on the stage. He is our vice-chairman. He is responsible for business outside the insurance industry. The industry led by Greg Abel is about 150 billion yuan in size. I am very grateful to Greg Abel, especially for his coming to the meeting with us today.
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