Berkshire Hathaway’s 2022 Shareholder Meeting

The much-anticipated 2022 Berkshire Hathaway shareholder meeting was held this past month. For the first time in 3 years, the event took place in person at Warren’s longtime home of Omaha, Nebraska. He and his partner, Charlie Munger, were enthused to resume the annual event face to face. Warren started the session with some of his well-known humor.

“It feels good to be back…The two of us are 190 years old…if you’re the owner of the company, and you’ve got two guys 98 and 91, you’re entitled to actually see them in person. It shouldn’t be too much to ask.”

Berkshire had an active first quarter of 2022, deploying a net $41.6 billion of capital into equities. They acquired the insurance company Alleghany and initiated positions in Chevron, Occidental Petroleum, and HP – while adding to existing stakes in Apple and Activision Blizzard.

The question and answer session was a little quieter than usual. However, Warren and Charlie found time during the 5 hour session to touch on inflation, market timing, and bitcoin. We’ve included a few snippets from the meeting below.

Inflation: “It swindles almost everyone”

With inflation running rampant over the past few months, it’s no surprise it was quick to be brought up during Q&A.  Buffet explains in his own words how inflation impacts everyone, and believes it is a fool’s game trying to predict in the short run. He believes the best inflation hedge is investing in yourself.

“Inflation swindles the bond investor…It swindles the person who keeps their cash under their mattress. It swindles almost everybody…It’s extraordinary how much [inflation] we’ve seen…The question is how much…and the answer is nobody knows”

“The best protection against inflation is your own personal earning power…No one can take your talent away from you…If you do something valuable and good for society, it doesn’t matter what the U.S. dollar does.”

Market Timing: “We have not been good at timing”

One shareholder asked the two famed investors, looking at their investment track record, “How do you time the market so well?” Buffet strongly disagreed that he or Charlie had any insight into the market’s future. Instead, they both take an approach that you could learn in the fourth grade.

“We haven’t the faintest idea what the stock market was gonna do when it opens on Monday… I don’t think we’ve ever made a decision where either one of us has either said or been thinking we should buy or sell based on what the market is going to do, or for that matter, on what the economy’s going to do. We don’t know”

“We have not been good at timing…We’ve been reasonably good at figuring out when we were getting enough for our money. And we had no idea when we bought anything, but we always hoped it would go down for a while so we could buy more. … I mean, that stuff, you could learn in fourth grade.” 

Bitcoin: “Just say no”

Warren and Charlie have both been long-time critics of bitcoin, and cryptocurrencies more broadly. However, Warren does not attempt to predict the future price movements of bitcoin, instead opting for assets that “deliver something to somebody.” He references farmland, apartments, and art specifically.

“Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything…It’s got a magic to it and people have attached magic to lots of things.”

Buffet explains he would pay $25 billion to own either 1% of all U.S. farmland or 1% of all U.S. apartments. However, when it comes to bitcoin, the offering price changes dramatically.

“If you told me you own all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it, because what would I do with it? I’d have to sell it back to you one way or another. It isn’t going to do anything.”

“Assets, to have value, have to deliver something to somebody. And there’s only one currency that’s accepted. You can come up with all kinds of things. We can put up Berkshire coins, put up Berkshire money but in the end, this is money,” he said, holding up a $20 bill. “And there’s no reason in the world why the United States government … is going to let Berkshire money replace theirs.”

Charlie added his own perspective on the topic as well.

“In my life, I try and avoid things that are stupid, evil, and make me look bad in comparison to someone else,” Munger said. “Bitcoin does all three.”

Important Note: This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. The opinions expressed herein are those of the named advisors at the time written.  Actual economic or market events may turn out differently than as presented. © 2022 Madison Wealth Management