Buffett talks on global investment, artificial intelligence, present Indian markets, US debt, inflation, and more at the 2024 Berkshire Annual Meeting

Buffett talks on global investment, artificial intelligence, present Indian markets, US debt, inflation, and more at the 2024 Berkshire Annual Meeting

At Berkshire's 2024 Annual Meeting, which he chaired, Warren Buffett spoke on AI, market perspectives, and US debt. Buffett's investing philosophies, Berkshire's capital allocation strategies, and lessons learned about success and leadership were among the highlights.

At the Berkshire Annual Meeting 2024, everything was going according to plan. Ajit Jain, Greg Abel, and Warren Buffett answered inquiries from shareholders while Charlie Munger was away. Buffett handled everything that was thrown at him, sometimes responding without providing a response in his trademark lighthearted manner. Topics covered included how the transition at Berkshire Hathaway was going, the US dollar, the stock market, his decision to sell his stake in Apple, and how eager Berkshire was to invest abroad. The main conclusions are as follows:

1) US debt and inflation: Buffett said that the US budget deficit was more concerning to him than the total amount of national debt. It won't be the amount of the country's debt. The dollar is the only option available as a reserve currency, he said. He stated, "The fiscal deficit should be the focus, but the Fed is getting most of the attention." Although Powell has little influence over fiscal policy, that is where the problems lie. "Jerome Powell is a highly intelligent guy in addition to being a terrific human being. However, he has no say over budgetary policy. He said, "Every now and again, he makes a covert appeal, asking that people pay attention to this. He expressed his concern that inflation might explode out of control and endanger the global economy.

2) Investing 101: Buffett reaffirmed several of his fundamental investing principles, emphasizing the value of avoiding blunders and things that are too complex to grasp, among other things. We have sometimes made serious blunders. But we never come close to making deadly errors. Additionally, he noted, "every now and then," they took a "really effective" action. Buffett added, "This does show what can be done — really, without any miracles — if you save money over time," referring to Berkshire's $571 billion in total profits. We were truly sorry for missing something that turned out to be really significant; we never gave whatever we didn't understand any thought. We missed a lot of things. Buffett also mentioned Berkshire's advantage in making quick decisions. "Charlie and I made decisions very quickly, but only after years of deliberating over the criteria that would allow us to act quickly." Additionally, Buffett said that he would not try to forecast the market when allocating funds.

3) Present market perspective: When asked whether the S&P 500's present value was appropriate, Buffett said, "This is not the time when the phone is ringing off." He remarked that there have been periods in the past when he has been inundated with chances and could have invested everything by dusk, and there have also been periods in the past when the year passes and nothing significant happens. He said that he and Greg Abel sometimes examine purchases ourselves when they believe the managers may not be using the same formulas.

4) Investing in India: In response to a query about the expansion of the Indian markets and whether Berkshire would make an investment there, Buffett stated that there might be an opportunity that hasn't been fully explored. However, it remains to be seen whether BRK has an advantage over other investors who receive payment for managing assets and who profit more from their purchasing decisions than their purchases themselves.

5) International investing: According to Buffett, the United States will remain Berkshire Hathaway's main investment target. "We have primarily chosen to invest in the United States; the companies here are unparalleled." Because of how fascinating Japan was, we did decide to commit. According to him, Berkshire Hathaway makes investments in US-based businesses that operate internationally. For instance, Buffett said that Coca-Cola, a well-liked soft drink brand, is present in more than 170 nations. Due to significant undervaluation, Berkshire Hathaway raised its ownership in four Japanese trading corporations last year: Marubeni, Mitsui, Mitsubishi, and Sumitomo. Furthermore, the only other notable investment made by Berkshire is in the Chinese electric car manufacturer BYD.

6) Artificial Intelligence: Warren Buffett said that scamming may become a lucrative business in the future. He related a recent encounter with AI in which he viewed a video of himself claiming that his daughter or wife couldn't tell it wasn't real. Buffett said he knew nothing about artificial intelligence (AI), but there is a lot of potential for both good and bad, and we won't know for sure whether AI will transform civilization until later. He joked, "Scamming is going to be the growth industry of all time if I was interested in investing in it." Given the immense potential change it may bring about, he likened the development of AI to the creation of nuclear weapons. "The development of nuclear weapons allowed us to let a genie out of the bottle, and that genie has been doing some awful things recently. And I'm terrified as hell of that genie's power. Furthermore, he said, "I don't know how to put the genie back in the bottle under that. Regarding the kinds of Berkshire enterprises that artificial intelligence (AI) may disrupt, Buffett said that because AI increases idle time and replaces work, it would affect anything that requires a lot of labor. “It can create an enormous amount of leisure time. Artificial Intelligence is deep. For that reason, it's a Genie.

7) Reducing Stake in Apple: According to Buffett, unless Apple significantly modifies their capital allocation, Berkshire Hathaway will keep its stake in the company. Buffett restated Munger's shift in investing strategy from purchasing firms at deep discounts to purchasing exceptional companies at reasonable rates. "We own some amazing companies, like Apple, Coca-Cola, and American Express." Apple is Berkshire's biggest holding even after reducing its position over the last several quarters. Attending the Berkshire Meeting, Tim Cook told CNBC that the business considers Berkshire to be a "privileged" stakeholder.

8) Berkshire's capital allocation: According to Warren Buffett, the company may have $200 billion in cash by the conclusion of the current quarter. "We'd love to spend it, but we won't spend it unless we believe they're doing something that can make us a lot of money and has very little risk," indicating that there aren't many options to purchase in current market. In the same breath, he added that in order to boost profits, Berkshire would be considering raising operational income and reducing the number of outstanding shares (buy-back). According to Buffett, Berkshire hasn't paid dividends since 1968. The company does not currently pay dividends. He chuckled, "I must have been in the bathroom then."

He said, "Greg understands businesses extremely well and if you understand businesses, you understand common stocks," in reference to potential changes in capital allocation after Buffett. Greg Abel should be held accountable, and when it comes to managing the funds, he should make the final decision. "The capital allocation policies that Berkshire follows will be maintained after Warren Buffett," Abel said. In order to safeguard our stockholders and take action when the chance arises, we want to keep the capital stronghold intact.

9) Ajit Jain shared a leadership lesson, stating that Buffett's astute handling of managers enabled the change. He mentioned that numerous managers would still contact Buffett for different problems long after the changeover. But Buffett handled those conversations with such expertise, speaking to them in a way that made them feel important and wonderful while at the same time denying them the answers they were looking for. Consequently, the changeover happened. People understood the message and responded to it with great vigor. We don't really care about it right now," Jain said nonchalantly. Buffett, however, played down his part.

10) Life and success: Buffett has often stressed at annual meetings that the secret to success in life is to do what you love. In response to a query on how he would build a million-dollar portfolio today, Buffett emphasized the significance of pursuing one's passion and giving it their whole attention. He remembered reading the Moody's Manual, which had between 1,500 and 2,000 pages. "I would make an effort to be well-versed in all things minor. You can't be in love only with the money; you have to be in love with the topic. According to him, the human brain functions best when it discovers what is appropriate. The significance of selecting the appropriate heroes was the second life lesson he shared. He advised having the correct role models, emphasizing that what matters is what you want to become, not what they have achieved. "Someone who loves you despite your transgressions has a special place in the world." Buffett also discussed the impact of compounding, the importance of luck in life, and investment. “My great skill has been avoiding bad luck. I wouldn't have gambled on myself if someone had told me I would live to be 90 years old. Declaring that being an American citizen is a big advantage, he said, "Anyone who claims to have done everything by themselves is fooling themselves," he said.