Warren Buffett (3:00)

Ten years ago, we made a commitment to essentially move 10% of the resources of Berkshire Hathaway. We turned it over to another person who was not that well known at the time. And we did that by spending roughly $35 billion buying stock in Apple Corp.

Bobby Kotick (3:42)

And

Warren Buffett (3:45)

we were going to have that under the management. We're turning that money over to the management essentially of Apple to make Berkshire look good and without any work by us, which is our preferred way of operating. And I would like to report that 10 years later, several things are happening. One is the 35 billion, counting dividends, realized appreciation, unrealized appreciation, but that has turned into 185 billion. And. And I didn't have to do a damn thing.

Mike Santoli (4:43)

Buffett also took a moment to recognize CEO Tim Cook as he gets ready to step down this fall.

Warren Buffett (4:50)

Tim has announced that he's retiring as well. That's an announcement that's just been made in the last couple of years. And so I think it's appropriate if Tim would take a bow and our shareholders would say thanks to him. Tim is right by me.

Mike Santoli (5:18)

Warren did not make mention of the fact that Tim Cook is retiring at an age 30 years younger than that Warren himself did. He's at 65 right now. Now, following all that, Greg Abel then went into the business update. One of the things that struck out was AI and the need for Berkshire to build out its own tech infrastructure to work across all of its businesses.

Greg Abel (5:40)

First and foremost, we recognized we were going to become a builder of technology rather than just a buyer of technology. And that meant that instead of we had a number of systems, and we often bought the related applications or software that came with it. And yes, it's a valued application, but it was disconnected from all our systems. Obviously, we didn't have that ability to then use the information, get to the data. And what they started to talk about is simplifying the infrastructure, making sure we would build what we needed ourselves and deliver solutions back to our customers, and we would have clear access to the data. All things that make a lot of sense, but a massive challenge, and it doesn't happen overnight. So we started down that journey, and one of the first things you have to do is say, okay, we need a different resource base. So now we're hiring engineers, we hire developers in our technology group that help us start to build the solutions we need for these businesses.

Mike Santoli (6:53)

So that was Greg talking about the need for, you know, cross investment across AI. A little bit of a sub theme, of course, in the morning, in various ways.

Becky Quick (7:01)

Yeah. I mean, I think what's so different about this meeting. I know what you said before I got back here is just the amount of information that Greg and then a Jeep kind of unloaded on the investors, about the businesses that they own, on the shareholders, about these businesses that they own. The only thing I'll say, as somebody who sat here for a long time and had a lot of questions from shareholders, I was checking off questions left and right that he was answering before we even got to on some of these things. So he, he went pretty deep into this. And I think if you're a shareholder, you probably feel a lot more comfortable kind of understanding A, not only a lot about these businesses, but also realizing B, Greg knows an awful lot and

Becky Quick (7:38)

very deep on all of these businesses too.

Mike Santoli (7:41)

Definitely conveyed sort of the breadth of his grasp. Without a doubt, there was a density of the information. Also, I think Warren and Charlie, while he was here, they sort of assumed a level of familiarity with the broad outlines of the business, not having to explain necessarily the insurance float and how much flows through. But I do think there's value in bringing people up to that point. And also I, I detected, even though he's never going to have any kind of corny corporate speak about synergy.

Becky Quick (8:07)

Yeah.

Mike Santoli (8:07)

He was drawing connections. He was talking about there's a metals business within the industrials, businesses that all sort of have a connection to each other.

Vicki Holub (8:16)

Yeah.

Mike Santoli (8:16)

And they, whether they were customer of the other. And so it's not to say that the conglomerate magic works because everything fits together.

Becky Quick (8:23)

Right.

Mike Santoli (8:24)

But it's not random.

Becky Quick (8:25)

Right. And again, on the AI, on touching on the idea that you have these centralized office operations, I've still got to go back and look through some of these questions to see which ones still apply on all of those levels. Is this still a decentralized kind of minimally oversight? He said we're not going to have bureaucracy, but it sounds like it's a lot more centralized, at least in notion, than it has been to this point. And there's certainly a lot more attention coming on operations.

Mike Santoli (8:51)

He refers to operational excellence. It seems like it's kind of an internal catchphrase. And that means something, means, you know, attention to margins or maybe some compensation things. Maybe just, you know, a closer eye on some stuff.

Becky Quick (9:04)

The other thing I'll say from this, when Ajit sat down with him, the two of them kind of going back and forth, that was a more comfortable conversation and a more philosophical. Philosophical, philosophical conversation, I should say, than I've heard in the past with those two. And it was a little more reminiscent of Charlie and Warren sitting on stage together, where they kind of riffed off each other a little bit. And that not on the same level, but there was a new level of comfort and a new level of kind of stepping into their roles and not worrying about looking over their shoulders about what anybody else was paying attention to with it, what Ajit was just saying, where he was speaking about how they get down to the idea that you don't want to do. Like the key to doing something great in insurance is to not do anything. Saying your job is to stop everything and then to tell all of your. The people that you have underneath you to make sure that their compensation is not based on them writing insurance for them to, to get paid. It's on making sure you're making the right choices and you're going to have a flat, a flat compensation structure no matter what. So you're not incentivized to go out

Becky Quick (10:05)

and do the very thing that's going to wind up leaving Berkshire on the hook.

Mike Santoli (10:08)

Yeah. The investment discipline was. Was certainly a key, A key kind of theme that came through as well. And that was one of those ways. I totally agree with that. I mean, they were, you know, kind of peers within the company for a pretty long period of time. Running separate parts of it.

Becky Quick (10:22)

Yeah, it's just, it's. It's nice to kind of hear more from them. Not that this, like a semi evolution that took place over the last five months. This is obviously something that was always there, but they're able to speak a little more plainly and openly, probably than they did before.

Mike Santoli (10:37)

So in the room, did people think that the Warren asking the question was for real or what was?

Becky Quick (10:44)

No, I don't think so. You'd already seen him on the floor, right?

Warren Buffett (10:46)

Well, right.

Mike Santoli (10:47)

Or that it was a straight video as opposed to an AI.

Becky Quick (10:49)

Yeah, it was a deep fake. And I'm glad Greg acknowledged that at

Becky Quick (10:53)

the end because I was thinking nobody

Becky Quick (10:54)

thinks this is real.

Vicki Holub (10:55)

Right.

Becky Quick (10:55)

Although there's probably a few people who

Becky Quick (10:57)

might have gotten fooled otherwise.

Becky Quick (10:58)

But, I mean, that's an interesting question by itself, how good deepfakes are at this point. You have to not, you know, it's no longer believe half of what you read and are not half of what you see and nothing of what you read. It's now believe nothing of what you hear, read or see. Yeah. Trust but verify, I guess on every.

Mike Santoli (11:17)

Verify first, maybe trust later.

Vicki Holub (11:19)

Yeah.

Becky Quick (11:19)

All right. Berkshire is Occidental Petroleum's largest shareholder, and earlier this year, it acquired Oxy Chem. That's a deal worth almost $10 billion. That is thanks in part to the relationship that was forged by CEO Vicki Hollab of Occidental. She now joins us live in Omaha. And Vicki, first of all, welcome. It's great to see you.

Vicki Holub (11:39)

Thank you. It's great to be here.

Becky Quick (11:40)

The big news yesterday is that you announced that after 10 years as the CEO and 40 years with Occidental, that you're going to be stepping down next month. That's some big news. What brought you to that decision?

Vicki Holub (11:53)

Well, the reality is that with an incredible leadership team, amazing employees and a strong board, we have over the past 10 years, accomplished everything that we set out to do in 2016 when I took the role. What we've done is transformed our portfolio. We've taken it from a company that was 50% production in the Middle east with a lot of risk, to now geopolitically, much better, where 83% of our production is in the United States. We've taken it from, from production of 650,000 barrels a day to 1.4 million barrels a day. We've doubled our resource, more than doubled. We've gone from 8 billion boe of resource of oil and gas to 16.5 billion. And we've also been able to, to ensure that we had sustainability along Runway. The portfolio is not just double, more than double, it's higher quality assets, so higher margin assets. And so now we've got 30 years of Runway in our portfolio, assuming activity at the current level. But now we're not going to keep the current level. We will take advantage of accelerating this, this Runway, these, this 16 and a half billion. We can accelerate that when the macro allows. And what that's going to do, it's going to be a massive value creator for Oxy. And now that we've done all that we needed to do to get the portfolio straightened out to, to get to where we are with the assets and the sustainability now it's just a matter of developing it. So now we don't. We control our own destiny from that standpoint. We don't have to depend on M and A or any future contracts from anybody in the Middle east or anywhere internationally. We can decide when we want to develop and at what pace. And so when we can, we're going to develop it and we're going to develop it as quickly as we can, as long as. And it won't happen until we get that last debt payment down so that we're down to 10 billion in debt, principal debt. After that, we're free to take what the macro will give us while also spending some of our capital, returning it back to the shareholders through share repurchases and dividend growth. So we have the ability to grow organically, to then grow the dividend and to provide shares repurchases. I'm so excited about it too. And the reason I'm stepping down is we have for a long time had a great succession planning process in place and while I've had the support of it, as I said, an amazing leadership team. So we were able to accomplish all of this while building the culture and increasing our technical capabilities. So we did all that. So we've checked all those boxes. But now we looked at our top successor and what we need to do now in the next 10 years and we felt like he was better to do that. He's better. He's going to be better at doing that than I would have done.

Becky Quick (15:03)

Well, what's the goal for the next 10 years?

Vicki Holub (15:05)

Next thing, 10 years. Is this organic growth?

Becky Quick (15:07)

Yeah.

Katie Kramer (15:08)

Okay.

Vicki Holub (15:08)

And so that's going to drive our stock price up, I think, tremendously over the next three to five years.

Mike Santoli (15:14)

You said when the macro allows and take what the macro will give us, that's, you know, kind of a significant len. And if, I suppose what does that look like when things clear up?

Vicki Holub (15:25)

Yeah. And I'll point out one other thing. While, while we're going to take what the macro gives us with the, with the growth, what we're doing now is creating incremental free cash flow by just reducing our cost and increasing our efficiencies. I think that we have the lowest capital intensity of anybody in our industry. And part of that's what Richard Jackson has been driving and to get us to that level. So now with respect to what the macro is going to give us, I think that this disruption in the world with respect to oil, I think that's going to have a hangover effect that's going to carry on. That's going to, I think, cause shortages. And probably starting by mid next year, we're going to be in a scenario where there's going to be a lot of places that need to start developing oil faster. And because of our lower break even cost than anybody else. We shouldn't be one of the ones that are first to the gate to start that process because we have a break even of lower than $40.

Becky Quick (16:27)

If you think that there's going to be the shortage in the middle of next year, where do you think oil prices are going to be as a result?

Vicki Holub (16:33)

I think oil prices are a bit suppressed now because of what's coming out of all the strategic petroleum reserves around the world. So I believe that by mid summer this year, this year we're going to start seeing that prices without some growth starting to happen will, will start to go up. And so I think that by the time that we're ready to start our growth and again that that would be when we get to the 10 billion that would be later this year, first of next year. So we'll be a part of that process to help build back the supply of oil for the world.

Mike Santoli (17:09)

You're undergoing a CEO transition same time Berkshire Hathaway is. What's your I guess the relationship with Greg and has he bought into to the plant from here on out? Obviously they're very large shareholders.

Vicki Holub (17:20)

Yes. And we do with, with Greg what we do with our other large shareholders or and our team does with any shareholders. We, we want our shareholders to understand what we're doing, how we're doing it. So Greg has been involved in a part of the process of, of understanding what the business is going to look like. And I, I think Greg is amazing. He's the oxychem deal. Now he's a tough negotiator but, but he's honest and he's fair and so we've built a great relationship.

Becky Quick (17:54)

Explain that tough negotiator as in what the oxychem deal or other stuff that was going on, only oxychem was going on.

Vicki Holub (18:01)

Let me clarify. So on the oxychem deal he is into the details and he doesn't forget. That's why he could sit there and talk about all those businesses. Yeah, he knows those businesses like the back of his hand. And now he knows Oxychem in the same way and we had great discussions around it. That turned out to be an incredibly good win win for us and for them because we that debt reduction we were able to accomplish with that frees us up so that just right now we're at 13.8 billion in debt principal. I believe that by the end of this year, first of next year we'll be down to the 10 and then that resets everything that we can do that finalizes the transformation for us and then we're off and running.

Becky Quick (18:48)

Great.

Becky Quick (18:49)

Vicki, thank you very much for being with us today. Vicki Holop, it's a pleasure seeing you and thanks for talking to us about the succession planning and congratulations.

Vicki Holub (18:58)

Thank you.

Becky Quick (18:58)

Appreciate it.

Mike Santoli (19:00)

All right. Well, Berkshire Hathaway's almost 70 holding companies give it a unique view onto the economy and the consumer. We caught up with some of the company CEOs here on the floor to talk about just how the consumer is faring right now.

Steve Mendelik (19:13)

I certainly have to acknowledge that the consumer attitude is a little bit different. I watch the University of Michigan numbers very closely. I know exactly where it is. And what I know is our numbers are up for the year and I'm very thankful for that because I also know the confection industry fairly well and I don't know that others can say quite that.

Warren Buffett (19:29)

It's definitely a headwind for Benjamin Moore. Number one drivers. Housing churn at Benjamin Moore and with affordability issues, mortgage rate issues and confidence, it's been a strain, there's no doubt about it.

Steve Mendelik (19:40)

Yeah, we've probably seen, you know, a little bit of a change in our trends over the last month or so. But you know, there's a lot of factors influencing the consumer. So sometimes it's a little bit hard to tell, you know, what factors those are.

Unnamed Consumer Analyst (19:55)

When we think about the consumer, it really you end up in two tiers right now. If you are affluent and you are looking at your retirement accounts, the market's doing really well and those consumers are looking for new experiences. However, if you're in a lower income demographic right now, when you think about persistent inflation, interest rates that are still relatively high, not by historical averages, but for recent years, these consumers are pressed. They're trying to manage strained family budgets. I think that what we're trying to do at the end of the day is just be mindful of that. We do have a consumer base that is ultimately forced to spend more money on certain other things that they may have been had more money in their wallet before. Gas prices are obviously rising.

Mike Santoli (20:43)

Let's hear from one more Berkshire CEO on the consumer. Dan Sheridan, CEO of Brooks Running, is right here with us. Good to see you, Dan.

Dan Sheridan (20:50)

Thanks for having me.

Mike Santoli (20:52)

So in general, been a pretty competitive environment for a while for running shoes and things like that. You did report your results have pretty decent growth. What are you seeing, broadly Speaking?

Dan Sheridan (21:01)

Yeah, customers Q1 was fantastic for us, grew 23% globally. A very broad growth story for us all regions growing double digit. Our core markets really really strong. And we're seeing the consumer be very, very durable and strong right now. So we're excited about the future, for our growth and obviously for the category we're competing in.

Mike Santoli (21:24)

What do you attribute that strength to? I mean, I guess you say the category. It strikes me that while we talk about a lot of the relatively newer entrants into running shoes in particular, there's also such a focus on the technology and on like the new thing and how it can help performance.

Dan Sheridan (21:39)

Yeah, well, the first thing we always track is participation. And participation in health and wellness, specifically in run and walk, is at an all time high. We think there's 52 million runners in the US that run twice a week. Globally we think that's up to 600 million. So that's the, the foundation of our business. On top of that is performance. Performance matters in people's lives. The last couple weeks in the marathon we've seen epic athletic achievement and under two hours. So what a great spotlight for our sport and that's driving interest as well. The general theme of health and wellness around the world though is a one way street, we think, and more people than ever are running, walking and staying healthy.

Becky Quick (22:22)

There was a big deal about the under two hours though. That under two hour marathon was wearing, what was it? Adidas shoes. Yeah, and that was a big deal because Nike had been talking about that for so long. Obviously you guys are shooting towards that and I know you're hitting records in other places, but how important is that specific mile marker and how do you compete for that?

Becky Quick (22:40)

How do you go after that?

Dan Sheridan (22:42)

Yeah, well, first off, epic athletic achievement, so good for our sport. Running is at the center of everybody talking about it. So we sit right in the middle of that one with innovation. Becky. And, and we were talking off air about this. The shoe matters for the athletes. And so we have always been a company on innovation and R and D for our athletes and everybody that moves and, and that's why we have the number one market share here in the US in run. We just became the number one brand in Germany too. Highly technical markets and our products and brand is right in the center of that. So we, we love it when there's epic athletic achievement level.

Mike Santoli (23:20)

You have kind of a new sub CEO running your group. The consumer products and services area of Berkshire Hathaway, Adam Johnson, what does that mean for you at this point?

Dan Sheridan (23:29)

Yeah, well, new obviously for us. And, and what I've been talking about this week is just the consistency of leadership at Berkshire. We've seen it with Greg over the years, but now we're seeing it without him. And I couldn't be more excited to, to have more interaction with Adam and start to learn from him. But consistency, this deserved trust, empowerment that has the bedrock of Berkshire culture is still the same things that I'm feeling from Adam and from Greg.

Becky Quick (23:57)

You know, Dan, we were just talking about whether there are kind of ways to cooperate with other Berkshire businesses. And I don't know. Brooks is such a unique company. I don't know if that's the case, but you tell me, are there, you're here with the managers. I think you. Everybody had lunch yesterday. I'm sure you're talking to all of your colleagues all the time on this. What, what do you learn from each other and are there ways that you can work together?

Dan Sheridan (24:21)

Yeah, I think this weekend is a moment for us to network as peers and the lunch is one way. But what I try and do is, is spend time one on one with some of my peers to suck all the information I can and experience experience from them. And so this is a moment where we get to network and those networks, you know, last throughout the year. And so it's more one on one networking than, than in groups. And we've been fortunate to do that this weekend.

Mike Santoli (24:49)

Is it about requesting further resources or requesting the freedom to do more of your own thing or any of those things?

Dan Sheridan (24:56)

Yeah, there's not one way. This is the, the best part about Berkshire's empowerment and decentralized. I think all of us independently operate, but there's access to be able to share ideas and, and solve different problems. We are, we are solving very different businesses here. But there's some common themes in the macroeconomic environment, in geopolitical ways. And so we do find times to connect and, and share what we're all dealing with.

Becky Quick (25:23)

That's great.

Mike Santoli (25:24)

What's, I was going to say what's the, the kind of frontier in terms of your technology innovation? Like what's next and how tightly are you trying to squeeze out little bits of performance?

Dan Sheridan (25:36)

Yeah, sounds like you're on it, Mike. I mean this is, this is the game. Innovation in our space is just ramping both in terms of how fast innovation is coming for runners. Midsole compounds and weight in running right now is really the arms race. And so we've got great midsole compounds that are, that are reducing weight still giving the runner cushioning and resiliency and rebound. And so all of us in this category are in this arms race to create performance products that improve people's lives, which Brooks has done for 25 years. 25 years. Now we're on a 14% compounded annual growth rate. So consistent growth over that time based in product.

Mike Santoli (26:20)

So an arms race for the foot race.

Warren Buffett (26:21)

That's right.

Mike Santoli (26:22)

That's right. Dan, good to talk to you. Thank you very much. Thanks for Dan Sheridan, CEO of Brooks Running let's get down to the floor here in Omaha. CBC producer Katie Kramer is at the Oriental Trading Company's booth. So, Katie, what are this year's hot items?

Katie Kramer (26:37)

I get the best assignment every year, Mike. I get to check out what shareholders are shopping for on the exhibit hall floor. And this year, Greg Abel is a new character in so many different branded items. We've got squishmallows, we have got candy. We've got spatulas from Pampered Chef and collectible ducks from Oriental Trading. This year, Warren Buffett, Charlie Munger and Greg Abel available as rubber ducks. And Oriental Trading CEO Steve Mendelik is here. How fast are these sell it?

Steve Mendelik (27:08)

Yeah, they're selling like hotcakes. Warren, obviously, is still a feature for us, but Greg has reached icon status this year. He's on the Mount Rushmore with, with Charlie and Warren here. And we're selling, we're selling a lot of them. They're hot.

Katie Kramer (27:24)

How many? Like a thousand, I heard.

Steve Mendelik (27:26)

Yeah, we're over a thousand ducks sold so far. So our top seller, this is the

Katie Kramer (27:32)

liveliest that the floor has been, I think through the shareholders meeting. We've got crowds of people here around. We've got Flo, the Oriental Trading Flamingo. We've got tons of materials that people are taking home to share, to enjoy their experience here in Omaha. Are you going to sell out of

Vicki Holub (27:47)

the ducks, do you think?

Steve Mendelik (27:48)

You better hurry. If you're in the building, you better hurry.

Katie Kramer (27:54)

Supplies are limited very much. You've also got squishmallows that have got Greg Abel's face on them. This year you've got some collaborative items with BNSF, with NetJets, with See's Candies. See's Candies has got 11 tons of chocolate over there. So this is the moment when shareholders really empty their wallets and fill their luggage for all the great stuff they're taking home with them.

Becky Quick (28:19)

Excellent, Katie. Thank you very much. Looks like there's a lot of activity back there, too. Right now we're joined by a longtime shareholder of Berkshire, former Activision Blizzard CEO Bobby Kotick, who has been coming to this meeting for how many years? I ask you this every year. It's more than 30, right?

Bobby Kotick (28:35)

More than 30 years.

Becky Quick (28:36)

More than 30 years you've been here. Bobby, I just want to ask you, as a long term shareholder, as a long term Berkshire follower, what did you think of the meeting so far? What was it like sitting out there?

Bobby Kotick (28:48)

It was fantastic. I have to say Greg handled himself fantastically well. I think Ajit adds a great dimension to the stage. Warren's presence, especially his AI presence, I think added special value and I think the business is in terrific shape. If you were to think about this company, its current market value, if you were to revalue the equity portfolio to, let's say, the historic mean of the S and p, let's say 17 times. Yeah, that's maybe about 70 or $80 billion of risk. The operating businesses trade way below 17 times, probably closer to 10 times. So there's a lot of upside in Berkshire.

Becky Quick (29:38)

Well, you know, that's been a question that has come up. We haven't gotten a chance to ask of them on stage yet, but Berkshire has underperformed the s and P500 pretty significantly over the last year. S and P has been up by about 29%. I think Berkshire is down maybe 12% over that. The same period. Maybe a little less. Maybe it's 9% over that.

Vicki Holub (29:54)

Yeah, over that period of time.

Becky Quick (29:56)

Time. But when you look at that, what does that tell you as a shareholder yourself? What do you want to see? What do you think of it all?

Bobby Kotick (30:03)

Well, I think it was one of the first slides. They're buying stock and maybe not as

Becky Quick (30:09)

much as people anticipated, but I think

Bobby Kotick (30:11)

we saw today, you know, there is a substantial amount of stock purchased and we're sitting on $400 billion of cash. So I see nothing but opportunity. You know, I like to buy when they like to buy.

Becky Quick (30:26)

Are you buying back shares? Are you buying more shares of Berkshire?

Bobby Kotick (30:30)

Rather not say. But I think, you know, I like to buy when they're buying. And I think that was a vote of confidence.

Becky Quick (30:38)

Okay.

Mike Santoli (30:39)

I did find it interesting. First of all, Gregory was at pains to say that it wasn't quite as much cash as is portrayed in the 10Q filing. 97 million.

Becky Quick (30:47)

The second, $17 billion they still have

Mike Santoli (30:50)

of a T bill purchase that hadn't settled yet. So there's some double counting. So, fine, $380 billion. But it seems as if some of the things that Greg said were meant to kind of put the investment portfolio a bit off to the side.

Warren Buffett (31:04)

Right.

Mike Santoli (31:05)

He emphasizes the four very large core holdings, which are kind of there forever as well as The Japanese businesses and the rest of it. He sort of says, well, it's not really that big and it's not all that actively managed. Does that say to you that he's mostly focusing his energies and attention on just the operating businesses and what else in terms of bolt on acquisitions he can do as opposed to the portfolio?

Bobby Kotick (31:27)

No, I don't think so.

Mike Santoli (31:28)

No.

Bobby Kotick (31:28)

I think he's very, he's very engaged with Warren on those discussions. I think he's thinking a lot about the investment portfolio. I think if you look at Apple and Coke in particular, they're both going through CEO transitions and they're being managed with excellence and I think inspired a lot by the Berkshire transition. In fact, I talked to Tim Cook last night and as the first thing he said is he wants to be recognized as the person who's managed succession better than anyone. I said, well, you've got a tough, tough comparison on both ends.

Mike Santoli (32:03)

Right when he took over for Jobs and now he's handing it off again. I was joking that, you know, Warren was polite enough not to say, why are you retiring at 65?

Vicki Holub (32:13)

Right.

Mike Santoli (32:13)

You get 30 more good years left.

Becky Quick (32:15)

You know, Bobby, I want to talk to you about that as a former CEO yourself and somebody who knows the stresses that come with that and the huge responsibilities with that. We've seen a lot of executive turnover of some very long term, well known names and of big companies. You mentioned Coca Cola, where you were a board member before too. Tim Cook with Apple. You've also got Bob Iger turning over. There's Vicki Holland was just sitting here. Doug McMillan, he stepped down. There's just this long, this big number of relatively young people. In a lot of cases. Doug McMillan was what, 60, James Quincy, 60 years old too. So you're talking about people who are young and some of them, when they've sat down with me, have said, look, it's really tough to think of what AI is going to do and that's going to be a five year transition.

Becky Quick (33:04)

How do you think that through?

Becky Quick (33:06)

Is, is that what's happening here? Is there something else? Is it just a good time to step down? What's your take on all of this as somebody who's been in that role?

Bobby Kotick (33:13)

You know, I think in every one of these cases it's something different. I think in Apple's case, Tim's done this for a long time. I think he has realized that there's an opportunity for product innovation and somebody like John, you know, is head of hardware engineering. You probably couldn't pick a Better person for the next decade of Apple and the need for innovation. I think at Coke, Enrique is a fabulous successor. I would have loved to have seen James stay longer. But I think that, you know, the demands of these jobs are great, especially companies like Coca Cola, where you're operating 240 countries around the world and you're traveling to those countries. But I think Enrique will be an excellent successor. I think in Doug's case, he acknowledged that the AI transition is going to be one that probably needs different leadership. And I think in a lot of these cases that you're citing, you have CEOs who realize their limitations and the opportunities for somebody new that's going to continue to create shareholder value for the businesses that they've run. And they're so convicted to the future success of the company, like you see at Berkshire, that they're making the right choices.

Mike Santoli (34:25)

As you look at Berkshire, I mean, and it's understandable that would be portrayed. I could be much more of an enhancement to a lot of what's done there as opposed to, you know, them being disrupted by it in various businesses. But I was fascinated by what Ajit said about cyber risk related to AI and how he just has a hard time figuring out how to model it. Like was.

Greg Abel (34:45)

Was.

Mike Santoli (34:45)

Is one incursion going to proliferate? How are you going to aggregate that risk?

Bobby Kotick (34:50)

Well, the beauty of the AI is it will model the risks for you

Mike Santoli (34:54)

or show them to you. Yeah.

Bobby Kotick (34:56)

It will give you an opportunity to then assess, you know, how right or wrong has the AI actually given you the ability to assess it. But those AI tools, tools are going to be incredibly useful. Then you look at, like, these operating businesses, they're run incredibly efficiently from an SGA perspective, but there's no question that there's optimization opportunities. Like, just think about, like, risk calculation in the insurance business, AI will be an enormous contributor to reassessment of risk, reassessment of pricing. I just think all these operating businesses over time are going to have a great benefit. Inefficiencies and opportunities from a.

Becky Quick (35:35)

What do you want to hear more? What have you not heard so far that maybe you'd like to hear in the second Q&A session? Asking for a friend. Well,

Bobby Kotick (35:46)

you know, I think

Ajit Jain (35:49)

they're not

Bobby Kotick (35:50)

going to talk a lot about the macro environment, but I would like to hear their perspectives about the macro environment. I just don't think that that's something that historically they've spent a lot of time talking. I think when you look at where the S and P is trading and you think about 26 times multiple and 100 year mean at 17 times, we will regress to the meat. And so, but I almost think it's implicit in the cash balances, what they think about the opportunities going forward.

Mike Santoli (36:26)

You would think. I mean, because Berkshire was so somewhat early in identifying Japan as an opportunity for kind of rejuvenation, whether he might have a view on that, if he gets a question on that. Because I know that Greg was kind of close to that transaction.

Becky Quick (36:39)

Right.

Bobby Kotick (36:40)

I think they answered that with Tokyo Marie.

Mike Santoli (36:42)

True enough. Yeah. Through your actions. Yeah.

Becky Quick (36:47)

I keep going back to just the structure and how it's changed. And I will tell you, I've been hearing from a lot of people who have been kind of texting me and telling me what they're thinking from the arena while they're sitting in there. The general impression is people were pleasantly surprised by how much they learned in this meeting. Structures changed. But I think they're, they're looking at it as a, an evolution that, hey, may not be in what they wanted, but they, they're enjoying it.

Vicki Holub (37:15)

To this point, I have to say,

Bobby Kotick (37:17)

I, I love, I love the fact that they're actually doing more of a deep dive into the businesses. And I think that that's a great pivot. You know, you're never going to replace the Warren Charlie dynamic that can never be replaced. But for a company that's so big and so complex, has so many operating subsidiaries going and actually doing a deep dive and showing the depth of, of the management teams across all of these businesses, I think that's a great pivot and not what I expected, but something that I'm actually really enjoying.

Becky Quick (37:50)

That's great. Bobby, want to thank you very much for sitting here with us and talking this through. It's been a pleasure.

Bobby Kotick (37:57)

Thank you for having me.

Becky Quick (37:58)

And by the way, I'm going to head out at the same time. We've got Warren Buffett coming up in just a little bit. We might get the chance to ask him about some of those macro issues that you were just referencing about what

Becky Quick (38:07)

he sees happening with the economy and

Becky Quick (38:08)

stocks right now, too.

Bobby Kotick (38:09)

That'd be great.

Warren Buffett (38:10)

Thank you.

Becky Quick (38:10)

Thank you.

Mike Santoli (38:12)

All right, well, get on back in there. I'll see in a little bit. One other newsy nugget from this morning was a question about insurance and the current risk around shipping in the Strait of Hormuz. Here's what Vice Chairman of Insurance Operations RJ Jain had to say about that.

Becky Quick (38:27)

The question is, how and when can you offer Insurance to ships crossing the Strait of Hormuz.

Ajit Jain (38:36)

I mean, the short answer is depends on the price.

Greg Abel (38:50)

Ajit, I like your Charlie answer. Obviously some thought has gone into that because there's a lot of dynamics there.

Ajit Jain (39:04)

Yeah, there is a lot of chatter. There's a lot of need. Fortunately, there's enough capacity in the industrial world today that would like to right that risk for no other reason. But people are sitting on excess capital and they'd like to find a way to deploy that excess capital. We ourselves have taken small participation in a program that's been put in place so as to write insurance for the ships in the, in the state of Hormuz. We haven't written any deals as yet. It's still being fine tuned. But if we can get our terms in terms of the underwriting decisions and the fact that the US Navy will escort these ships, we have put a price on which we will be comfortable underwriting that risk. But nothing's happened as yet.

Mike Santoli (39:58)

Greg Abel also highlighted what makes Berkshire's business special and spelled out his ethos for running the company going forward.

Greg Abel (40:06)

How are we unique as a conglomerate? We live by the fact that we hate bureaucracy. We do not embrace.

Mike Santoli (40:17)

Thank you.

Warren Buffett (40:18)

Yes,

Greg Abel (40:22)

Jeet's the biggest fan. He reminds me constantly and I love it, I treasure it. But no, we've heard many times the ABCs, the arrogance, bureaucracy, complacency that can creep into a company, will kill a company. And we intend to never allow that to happen. So we have this unique opportunity to both take the businesses we have today, take that foundation and build upon it.

Mike Santoli (40:51)

Let's get a deeper dive into this morning's Q and A session with our Yoon Lee. So, Yoon, you looked at the numbers this morning. Of course, you were in on the session from Greg Abel this morning. So what are your headline thoughts?

Yoon Lee (41:03)

Yeah, he really spent a good chunk of time talking about the equity portfolio, which I think a lot of shareholders really appreciated because there were some doubts about how he's able to be this hands on operator at the same time running this massive portfolio. Right. So he talked about how he's thinking about it. The Core 4, that's Apple, American Express, Coca Cola and Booties and then the Japanese holdings and then some other significant stake like bank of America and Google. Yeah. So I think it's really interesting and I think a lot of people appreciate it. And also like you said last quarter, Berkshire Hathaway was actually a net seller of stock stocks once again selling about, you know, a net $8 billion of stocks. And that's just not slight tweaking. Right. That's. There's a lot of repositioning going on.

Warren Buffett (41:54)

Right.

Mike Santoli (41:54)

Because there was $24 billion in gross sales and then $16 billion in purchases netting out to minus 8 billion. So. Yeah, that's. That's not trivial. It's interesting. He definitely spent a lot of time on the portfolio, characterizing how he views, I guess, different pieces of it. But those things that were not mentioned, like all the rest, I think it still leaves open the question of whether he considers them either too small to matter or maybe not worth spending a lot of time.

Bobby Kotick (42:22)

Right.

Yoon Lee (42:22)

That's a good question. What happens to the rest of the stock he didn't mention? And also the selling we talked about, a part of it, I think is likely tied to the departure of Todd Combs, you know, the unwinding of the positions he used to run. Right. And because he left for JP Morgan at the end of last year and we don't know exactly which stocks they were, but I know he said in the past that Visa and MasterCard were the two first stocks he bought for Berkshire 15, 16 years ago. So we'll see if those ones are still there, if they survive.

Mike Santoli (42:54)

Yeah, exactly. I think there was a lot, a little bit of suspense about how much share repurchase activity there was in the corporate quarter. Obviously, Greg Abel had said they had restarted the job, the buyback program over 200 million. And then it turns out it was 235 million total in the quarter. Obviously a pretty small amount relative to a trillion dollar market cap.

Yoon Lee (43:14)

Right. That's very small. And he, he still sounded very, you know, conservative and he signaled this, you know, disciplined approach to buyback. You know, they're evaluating the intrinsic value with Warren Buffett and yeah, I think people want to hear more, more aggressive buyback approach.

Mike Santoli (43:33)

Yeah. Especially when you consider, you know, all the cash that they have. And now, you know, that's obviously a cushion and it's obviously ammunition to go and do something down the road if they want to do it. But a lot of folks feel as if. Well, if you feel as if there's a positive expected return to buying your shares at these levels, maybe do more of that or they want to just wait for a bigger discount to their estimate of intrinsic value.

Yoon Lee (43:54)

Right, Totally. But he did say sound like he's ready to buy new either companies or stocks when the price is right.

Mike Santoli (44:01)

Yeah.

Yoon Lee (44:01)

And just judging by how comfortable he was talking about AI and tech and, you know, lands in the deep fake video which we saw, I wonder if there's a sign that maybe Berkshire will be more open to technology investments going forward. Because as we know, Buffett was a little bit hesitant because it was outside of his circle of confidence before.

Mike Santoli (44:22)

It's true. Yeah, it is interesting, especially when you consider, you know, some of these big formerly blue chip software companies that have actually come down so much in valuation because of AI disruption, fear. If Berkshire would see that as a dislocated deal, that they could, they could get in there.

Yoon Lee (44:37)

Yeah, totally. And to that point they added that Alphabet stake. It was pretty significant, more than $4 billion last year. And then he did mention it in this session. So I think there are signs that they're getting more into technology.

Mike Santoli (44:53)

You and I think we. With tech being a big topic in discussion this morning, Abel did take a moment to speak about the role data centers will play in Berkshire's energy investments. Listen up.

Greg Abel (45:03)

If I look at our peak load, that is the amount of energy being used from those data centers, it's at 8% of their peak load. And the only reason I highlight that is 8% is when I hear people in the industry and all the utilities around us, a lot of states, they're talking about this great opportunity and geez, hopefully in the next five years they'll be from a relatively starting point. They want to get to the 5 to 10% and we're already at 8 and we see opportunities to grow that by 50% over the next five years or potentially more. But we'll do it in a way, and you're starting to hear more and more of this across the US we'll do it in a way where we're not going to impact the costs of our other customers. These users of the, that is those, the hyperscalers, the data centers and the users of the energy, they have to bear their full cost.

Mike Santoli (46:04)

Interesting. He's able to portray the utility business as essentially, you know, kind of newly a growth business, pretty ahead of the industry in terms of data center exposure, but able to do it in a way that's not going to harm local.

Yoon Lee (46:15)

Right, totally.

Mike Santoli (46:16)

And customers.

Yoon Lee (46:17)

I think it's definitely welcome news that, you know, he's trying to expand into data center infrastructure. Build out is such a growth area.

Mike Santoli (46:25)

Yeah, yeah, for sure. I mean, I guess the other pieces of it at this point, they highlighted some of the connections among some of the industrial businesses. They talk about the building products area, even though they don't want to say that this is all meant to, you know, fit together like some kind of a top down machine Right. There are linkages between these companies.

Yoon Lee (46:45)

Yeah. And he's talking about. He also talked about AI in a broader sense, and he's evaluating ways that can be additive to Berkshire's array of different businesses. Right. And how they can be more productive and efficient.

Mike Santoli (46:58)

For sure. Yeah, for sure. You know, that's a big part of the priorities here as well as in the insurance business. With Jee Jun Lee, thank you so much. Enjoy the second part of this session. Now, we're now awaiting what was just announced a little while ago as an interview between our Becky Quick and Warren Buffett, who of course, remains chairman.

Becky Quick (47:20)

We are sitting down right now with Warren Buffett, the chairman of Berkshire Hathaway,

Becky Quick (47:26)

who for the first time in 60 years has been watching all of this

Becky Quick (47:29)

from the audience instead of being on stage.

Becky Quick (47:31)

And, you know, last year at this time, Warren, you surprised everyone with the

Becky Quick (47:34)

announcement that you were stepping down as CEO. Fast forward a year, and here we are. What do you think?

Warren Buffett (47:40)

Well, I think it's all working. It's all working. It isn't our ideal surrounding area or environment, I should say, in terms of deploying cash for Berkshire, but in terms of how we got the right management, we got the right arrangement, and, you know, we can pick our spots and nobody can tell us what to do. Exactly. And so sometimes we're doing nothing, but other times we get quite active.

Becky Quick (48:21)

I mean, you know, a Jeep spent

Becky Quick (48:23)

some time on the stage today talking about how one of his keys is to do nothing when it comes to insurance, when it comes to writing insurance, which is the same thing that you have always talked about with whether to invest or not.

Warren Buffett (48:34)

Yeah. The world is full of people that are offering you things to do, and then the question is to find one that, you know makes sense. And there may be 20 out there that make sense that you don't understand, and you just leave them alone.

Becky Quick (48:51)

You said that the world or the

Becky Quick (48:53)

surrounding environment is not ideal. And I guess that points to the idea that there's almost $400 billion in cash on hand, although Greg took some pains to show it's really more like $380 billion in cash on hand. But there's a lot of cash on hand, and you're still active in managing the portfolio, too. And looking at stocks, you're looking around and you don't see a lot that

Becky Quick (49:13)

you want to invest in.

Warren Buffett (49:15)

Well, then we don't do anything. I mean, we've been in. Of the 60 years I've been in the business, you know, probably five of them really juicy you know, and I think it was Tom Watson Sr. Of IBM that said they asked him the reason why IBM had been so successful or something like that. And he said I'm smart at spots and I stay around those spots and that's the whole thing. And IBM was in three different businesses including time clocks and a couple. And two of the three turned out to be no good. But so they just focused on the one.

Becky Quick (50:03)

What is it when you look around? It's just prices are too high at this point I would imagine there are.

Becky Quick (50:08)

Greg said this from the stage too.

Becky Quick (50:10)

There are businesses that you like just

Warren Buffett (50:12)

prices and I would say I understand fewer of the businesses as a percentage of the whole than I did 10 years ago. I have not learned new industries or some years, you know, and, and so I don't kid myself on that. I'm, I'm not going to learn. I'm not going to have an edge on, you know, a whole bunch of younger people that have actually grown up with them, used the product, seen things. But well, as I mentioned, you know, you don't have to understand too many if they're like Apple.

Becky Quick (50:56)

But looking around, let's just get some macro thoughts on this because I don't know that this is something that Greg is going to comment on per se. Just looking at the macro stock market environment, what does this feel like to you? Is, does it feel expensive? Does it feel like there are opportunities in some cases?

Warren Buffett (51:14)

Well, it feels like, you know, I've compared the markets to a church with a casino attached and people can move between the church and casino and I would say there are more people in the church and more people in the casino but the casino's gotten very attractive to people. You know, if you're buying one day options or selling them, I mean that is, that's not investing, it's not speculating, it's gambling. You know, just totally. There's nobody that can explain why they're buying an option for one day unless they maybe, maybe the funnel that, that you know, made the four hundred and some thousand dollars from knowing when we were going in the vents away like doing. But I mean that's pretty. And the quantity of those things is just incredible. So we've never had people in a more gambling mood than now. But that doesn't mean that investing is terrible. It does mean that, that prices for an awful. A lot of things will look very silly. I mean they, you know, they had a squeeze and then in Avis of all things. Well, Avis has been around for 50 years but just this past week and we have lots more regulation and everything now, but people spend their time figuring out how to get around the rules rather than follow the rules. That's just a challenge.

Becky Quick (52:51)

The type of investor you are. Those is you laid it out yourself. In the 60 years you've been doing this in the business, you've had maybe five juicy years. I guess that means you're always looking for the next juicy year. What do you think it would take to make a juicy year or a juicy opportunity for you?

Warren Buffett (53:08)

It's a phone call and many in some cases, you know, but what a business last year it was that wasn't big enough to be meaningful. We got a letter.

Becky Quick (53:19)

Bell Labs.

Warren Buffett (53:20)

Yeah, Bell Labs. And sometimes there's more zeros attached to them than others. And we're big enough to handle anything and we can make decisions faster than anybody and our word is good. There's an awful lot of people that they're. When they, they're in the business of reselling something or, you know, it's. And there's. It's a lot better if you're a good salesperson. There's no reason to be selling vacuum cleaners or you know, as well so stock. You'll make way more money. It's where the money is. And there's, and there's more money around than ever and.

Becky Quick (54:09)

But the best opportunities have probably come when the macro environment needs to be most likely.

Warren Buffett (54:15)

Well, the most likely time to buy things is when nobody else will answer their phones. You know, everybody else talks about their wonderful trading departments and everything. Just try them out sometime. When markets are collapsing, they don't answer the phones. And if they do, the bids are subject and the offers are subject and the spread is wide and, and they'll use the information they get from you about what you want to do to go out and kill you some other way. I mean, it's, it's really like going to a slaughterhouse. I mean, you know, you don't feel like eating hot dogs for a while.

Becky Quick (54:54)

I guess what I'm trying to get

Becky Quick (54:55)

at is do you see the circumstances building up anywhere that could lead to a time like that? Again, any sort of panic in the market. Where do you see them?

Warren Buffett (55:05)

Well, if you saw them, they wouldn't happen. Okay. I mean, you've got all kind. You don't worry about what people are talking about can happen. It's something that comes out of the blue. But something will come out of the blue. I mean, a nuclear bomb can come out of the blue.

Becky Quick (55:27)

Well, let's knock on wood on that.

Warren Buffett (55:29)

Well, it doesn't do any good to knock on wood. That's the point. It was the Archduke getting shot in 1914 or something like that for World War I. It just take everything in life. And if it's something people are talking about and thinking about, it's not going to happen. But there are things that can happen out of the blue. And actually that's particularly true to use that phraseology now, because the things that can come out of the sky,

Vicki Holub (56:12)

you

Warren Buffett (56:12)

know, we don't know what can happen tomorrow. I don't like to talk that way to people, whether it's you or anybody else. I mean, because whether it does you a lot of good to worry about that. I don't think it does do any good to worry about it. I think it's good to be cognizant of it. But the worrying about it is terrible. And I don't like to even cause that belief with people. I don't like to go around, tell them the end is coming, the end is coming, or something like that.

Becky Quick (56:49)

A friend told me yesterday he's recently started using the phrase I don't fret, I don't worry. And that's probably a good way to go about life.

Becky Quick (56:55)

But let's talk about some of the

Becky Quick (56:57)

issues that are out there right now.

Becky Quick (57:00)

Inflation is up.

Becky Quick (57:01)

That's an issue.

Becky Quick (57:02)

So how does Berkshire.

Becky Quick (57:03)

How does Berkshire handle that with its business?

Warren Buffett (57:05)

Well, we can't handle runaway inflation, except not to be there in the way of it. And if you look at the number of countries that have had runaway inflation Since World War II, you know, in my lifetime, it's very large. And once you create that, it becomes a different world. You know, in Germany, obviously, very soon after World War I, but there are dozens and dozens of countries that have experienced that. And of course, you have countries that go on bankrupt like six or seven times. I mean, it's just amazing what people do in financial markets.

Becky Quick (57:56)

What about the inflation that we're dealing with right now, which is, you know, not excessive. It's north of 3% at this point, but we're not even back at the levels we were during COVID 8 to 9%. So what about just higher energy prices, how that works through the line and how you handle it?

Warren Buffett (58:11)

Well, it came close before Volcker. I mean, it was just. It was cash is trash, you know, and people were losing faith in the currency and they felt they could borrow and 12% earn 6% on farming or something like that. And they had a Huge farmers in this state, Nebraska, collapse because they bought beyond the earning power. They're paying interest rates beyond the earning power just because they felt that the dollar was going to disappear and the land wouldn't disappear. It's tragic for many people. And if you're the best doctor in town or the best lawyer in town, you'll always make money under any the bus the best TV personality. But what not having faith in the money does to a country, it turns it into something else. And I've always hoped that the US Never does it. But we are not immune from it happening. We have a lot of control over whether rates may go up a half a point or down a half a point, but we may have less control over whether they go up 50 points.

Becky Quick (59:46)

You've long been a supporter of Jay Powell's.

Warren Buffett (59:50)

Exactly.

Becky Quick (59:50)

He had his last FOMC meeting as chairman just this last week. He did say that he's going to be sticking around, staying on the Fed, staying in that position for this foreseeable future, in part because of the threats that he's faced.

Warren Buffett (60:06)

I'll feel better when he's there when he's not. I mean, I just felt better when Volcker was there. But you economists aren't the best. It's this sort of thing. Read any old economics book from 1950 or 1970 that Paul Samuelson was a terrific guy and smart as hell. He had the standard textbook for 25 years and if you looked up, you know, zero interest rates and year after year after year it was a 900 page book and that wasn't an entry for was the most important economic development in terms of the impact it would have and everything during the lifetime of the students reading it. But it's what you don't think of that does all the damage.

Becky Quick (61:15)

Let's talk a little bit about CEOs and some of the Berkshire holdings you mentioned Apple's Tim Cook and just the phenomenal job you think he's done.

Warren Buffett (61:25)

Incredible.

Becky Quick (61:26)

He's not the only one of your major holding CEOs who stepped down. James Quincy recently stepped down from Coca Cola, too. And we just spoke with Vicki Holub who announced that she is retiring and stepping down from that position at Occidental. Part of what Greg's talked about is how stable that portfolio is. And these holdings are companies that he knows and managers that he knows.

Becky Quick (61:48)

There's going to be some new managers

Becky Quick (61:49)

in some of those major holdings coming in. Is that a problem?

Warren Buffett (61:52)

Well, it was certainly a problem in Coca Cola there for a good many Years around the company. Sure. And you have the most problems with a really good company because it'll continue. I mean, if you're selling some product that people are buying every day, you make the wrong decision for a long time. But that's one of the problems with investing. Tim Cook, I felt, was very, very good from the start. And most of our managers are very good at the smaller problems, but they can't anticipate the overwhelming problems. That's my job, or now Greg's job.

Becky Quick (62:51)

Do you feel good about those holdings still? Have you met any of the new managers of those businesses?

Warren Buffett (62:56)

I haven't met the old manager

Becky Quick (63:00)

of

Becky Quick (63:00)

the new businesses, of the new CEOs that are coming in. Tim Price replacement. Enrique at Coca Cola.

Warren Buffett (63:06)

I certainly met the people at Bell Labs that we did, you know, and obviously I met Vicki. We made the deal. And so I enjoy meeting the people and. But you can make mistakes with people. I mean, look at the divorce rate. You know, that's. That's more important than whether you got the right CEO or anything else. And. And now you've got years of trial. I mean, back when I was young, I mean, you had to make the decision. You know, you didn't have to make a decision. A good many people made the decision when they were 20 or 21 to get married. Yeah, they got married. Now they spend five years. They still make the same mistakes.

Becky Quick (63:53)

So you think we're getting worse at our judgment?

Warren Buffett (63:55)

Well, I don't know. And maybe the people behave differently before the marriage than after. Who knows? Exactly. I would say that almost everybody feels either their marriage is better or worse than they anticipated a month after they were married. But I don't know which.

Becky Quick (64:14)

Warren, let's talk a little bit about

Becky Quick (64:15)

deepfakes, because the deepfake Warren that popped up early in this session was pretty good.

Becky Quick (64:23)

They had somebody standing up.

Becky Quick (64:24)

You know, Greg was joking about it. But, you know, the first question went to a guy from Warren up in the Rafters who lives in Omaha. You've been concerned about some of these AI deepfakes and what that means for the world.

Warren Buffett (64:38)

Yeah, I would be concerned if everybody was. Well, actually, the worst thing would be a really good imitator of any president that came along. I mean, just imagine. Well, yet we had that famous thing before, way back in New Jersey, where they had the Martians coming and everything like that.

Becky Quick (65:02)

War of the Worlds, the Thorsom Wells.

Warren Buffett (65:04)

What you can do? Well, if you convince people to lend you money, you shouldn't be borrowing it. I mean, It's Scary. And it's particularly scary when you nine countries or so with the nuclear weapons and people working on something even more late. We haven't dealt with us. We don't know what's going to happen.

Becky Quick (65:34)

Yeah. Let's circle back to Berkshire and the Berkshire of today. I think I was speaking with you yesterday or the day before, and we were talking a little bit about Greg Abel and what a nice guy he is.

Warren Buffett (65:46)

He's a terrific guy.

Becky Quick (65:47)

You said something interesting to me, though, about how you picked him, and it wasn't because he was a nice guy. Why did you pick him?

Warren Buffett (65:55)

Well, he's very, very, very smart about businesses. Incidentally, he's getting his Canadian. I mean, he's getting his American citizenship here very soon. And he was going over with me all the things he had to learn about. And I've actually spent a little time in the past with groups of individuals. Of course, my wife still became an American citizenship, American citizen. And the things they have to learn about the Constitution and all these. And they're usually so proud when they become American citizens. And I think I detect, I mean, you know, as successful he's been, everything else, I mean, he is. It means something to him to become an American citizen. And, you know, he sits there with his young son, you know, and son knows more about some of the answers to questions, you know, that he may get asked or something about becoming a citizen. It's really interesting. Where else does that happen in the world? I mean, what people, you know, that America's special and it's a miracle what America's accomplished. I mean, it's just an absolute miracle. And yet the miracle, the division of the output and everything is about as inequitable as you can come up with, while at the same time it's got these great attractions. There is some secret sauce. Never been able to find it. Precisely. But when you run a country for 200 and some years and people want to come here every year, I mean, there's really something about it. And what Greg Abel is very, you know, is looking forward to becoming an American citizen that means something to him. And you can't buy that any place or package it or, you know, it won't work for a Madison Avenue approach, you know, being American or something like that. But that feeling just goes in my 95 years, I've seen it time after time. So I felt, I felt good when I just volunteered that in the last day or two to me that he was. He's up there for his final exams here pretty soon becoming A citizen.

Becky Quick (68:34)

I didn't realize he wasn't a dual citizen already. I knew he was Canadian, but I thought he had dual citizens.

Warren Buffett (68:38)

He doesn't have a full. Whatever the complete citizenship requirement is. And, and you can say, why does he care? I mean, he's gotten along fine without it here and everything. He still wants to be a citizen.

Greg Abel (68:50)

Yeah.

Becky Quick (68:51)

250 years. We're celebrating our 250th anniversary. You pointed out that you've been around for 95 of them. You think we have the special sauce that. That will continue in this country, or what do we need to do to preserve that and make sure that it does continue?

Warren Buffett (69:05)

We've got a special sauce that's a secret sauce. It's such a good secret that I don't know what exactly it is, but I do know this, that anybody that has a choice would choose to be born in America. I mean, you know, you can pick some very small little country, they're very happy that they're. But this. Is there any other country that everybody's, for a couple hundred years has wanted to emigrate to? I mean, and it attracted some terrible people, you know, too, but, but it worked. And they had the mafias from the different groups, not, not just the Italian Mafia, but I mean, it wasn't that they were all. We had some system for picking out the, the wonderful people from some other countries. But it has, it has worked. But it's worked. The extremes to which it works don't seem to belong to that kind of a society. I mean, if you were drawing up dreams for the ideal society and you would have this kind of GDP per cap and everything, you wouldn't design, you wouldn't design the, you wouldn't decide the inheritance laws. You wouldn't. I mean, you'd just do all kinds of things differently, but somehow it's worked. But that doesn't mean that we can't do better, I mean, at all.

Becky Quick (70:48)

You know, Warren, there are thousands of people, shareholders and partners of yours for decades in some cases, who are sitting out in this arena right now. And I just wonder if there's a message you'd like to give to them, those who've been following you for years and who've been partners of yours for years.

Warren Buffett (71:07)

The number one rule I give them is just that, give them the golden rule. I'm not a religious guy, but I mean, nobody said it any better in a couple thousand years than that, which may be why it's lasted a certain degree too. I mean, more people are reading a 2000 year old book about how to behave than anything that anybody's coming up with lately. Now it's got a lot of particularly Old Testament, it's got different kinds of stories to some extent, but if the whole world lived by the Golden Rule, it would be such a more wonderful society.

Becky Quick (71:57)

Do unto others as you'd have them do unto you.

Warren Buffett (71:59)

Yeah, and that's true for everything from parenthood to being a boss to being. I mean just everything in life and it doesn't cost you anything. In fact it's reflected in better behavior toward you. So I mean, it's a very selfish sort of thing in one sense. But I've never seen anybody that's unhappy that behave that way and I've seen a lot of people in a lot of different kinds of situations.

Becky Quick (72:34)

Warren, I want to thank you for taking this time to sit down with us today. Warren Buffett, the chairman of Berkshire Hathaway, Greg Abel is going to be taking the stage in just a moment and you will see more from him in just a moment.

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Becky Quick (74:58)

Thanks for listening to our coverage of the Berkshire Hathaway Annual Shareholder Meeting. There is more to come in a third podcast. If you already follow Squawkpod, that should

Becky Quick (75:08)

be coming up right in your feed.

Becky Quick (75:09)

You can check out our show notes

Becky Quick (75:11)

as well for links to to more

Becky Quick (75:12)

resources and a listening guide to this podcast.

Becky Quick (75:15)

I'm Becky Quick. Stay tuned.

Warren Buffett (75:22)

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