The Canadian Investor - What We Learned from Buffett’s Last Meeting as Berkshire CEO

Episode Date: May 12, 2025

In this episode, we break down the key insights from the 2025 Berkshire Hathaway Annual Meeting. We go over our takeaways from the meeting including Buffett’s thoughts on U.S. trade policy, fiscal unsustainability, and long-term currency debasement—and why he’s still optimistic about America’s resilience.  We also discuss what Buffett and Greg Abel said about cash positioning, balance sheet strength, and the importance of patience when investing. Simon shares why he’s comfortable with Berkshire’s leadership transition and what retail investors can learn from Buffett’s comments about acting quickly by being prepared.  Tickers of stocks discussed: BRK-B Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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This is the Canadian investor where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Bélanger. Welcome to the Canadian Investor podcast. I am back with Dan Kent. We are doing a fun episode today because there was the Berkshire Hathaway

annual shareholder meeting that happened last weekend on Saturday, so they always stream it live. You can watch it. I think it's always a partnership with CNBC. It's about six hours so it's quite the lengthy meeting. As we were talking before we started the recording, sometime it'll be a little bit dry but still a lot of good information coming out of that. And of course the big news that Warren Buffett will be leaving as CEO at the end of this year. However, he did mention that he was going to stay on, well, he did mention that during the meeting,

but the day after the Monday, the board approved that he would stay on as chairman of the board. So he's still going to have a strategic place in Berkshire Hathaway at least for a little bit of course until he doesn't want to do it or passes away because Lord knows that he jokes a lot about passing away. Yeah during the meeting. Oh my god he must have mentioned it like so I don't know how many times but he joked quite a bit about that so he's well aware that he's closer to the end but he's all still good and fun and makes fun of himself. Yeah I think he like I think this is gonna be a situation where he ultimately sticks

around to the end like I don't see him just cutting ties for what probably the last maybe he gets another 10 years like if he's lucky that would put him what at 104 or 105 but I think he'll stick around I mean that meeting apparently they've set records for three consecutive years or something in terms of attendance he didn't know for sure if this year would be a record but he he seemed pretty uh pretty set that it would be and uh yeah I mean a lot of people tune into this meeting I mean I don't listen to the full thing because like you said, there's a lot of, I don't wanna say he rambles on,

but he goes on kind of a bit of tangents where like you kind of fall asleep. They had one guy they were talking to about the meeting. He said he had fallen asleep, and he woke up to the applause when he said he was gonna to resign. So that snapped him out of it, woke him up. But yeah, they're very interesting meetings. Yeah. And speaking of the applause, so after, of course, he made the announcement, really

at the end of the meeting, like literally like a few minutes before the meeting was over, he basically announced that he was stepping down as CEO. Greg Able, who is Canadian by the way, will be taking over as CEO. And the round of applause was pretty amazing, well deserved. But you can also tell, and you know, I'm that kind of person as well. Like I like, I do the podcast and stuff, but I don't like to be the center of attention when there's like groups of people in meeting. That's how I am. And you could tell he's the same thing because he was touched by it. You could tell he was definitely touched by the round of applause, but you can also tell that he doesn't like to be the center of attention.

And as quickly as he could, he's basically like, lack a better word, he pretty much said the news and then he was like, okay, see you at the meetings. That's pretty much how it happened. There was a round of applause, but I've been guilty of doing that before. Even when I left my job, which I was at for like eight years, I, a couple of meetings where I, people I worked with over the years,

I would just like would say I was leaving my work to pursue the podcast. And then I continue on on what we were talking about and I've had a few people I kind of had to stop me and say wait wait What did you say like oh, it's just like it's no big deal And it's I it felt a little bit that way for Buffett where it wasn't a big deal for him He didn't want it to be all on him. That's really the sense I got when he announced that Yeah, I mean, he's a pretty modest guy.

Yeah. I mean he's arguably the the best investor of all time and I mean he doesn't want any attention on himself. He primarily focused it mostly on the fact that it's going to be in good hands really. So yeah, I mean it's the end of an era for sure. He was what? Well he said that was his 60th meeting. yeah six decades yeah yeah he started around your age yeah and and my god now it what a what a track record and I don't die metal loss for awards but there was some a really good takeaways so we broke it down we'll give our commentary and what we think about what he said so the first thing one of the first questions he was asked was the kind of his thoughts

on trade. Of course, that's also in the, with the background of that like fake video saying that he was embracing tariffs and it was the best movie of thought that went on social media and got reposted by Trump, which by the way way the Berkshire site still has a notice Saying that basically Buffett was not like it was not him and they're not endorsing that It still is on their Berkshire Hathaway website, but to get back to the trade He said the US should do what it does best and the rest of the world should do what it does best When it comes to trade.

So if a country is better at producing certain goods they should focus on that and if the US is better at producing certain other goods they should focus on that and then trade kind of resolves everything in the middle. And trade should not be a weapon because it can be seen as an act of war and that is, I mean he's not wrong and it's not to scare people but yes like I mean you oftentimes will start seeing bargos and trade wars before all out actual military wars break out. So yes he's not wrong, I'm here hoping that we're not going to see that but he's not wrong

by saying that and it's a mistake to have 7.5 billion people who don't like you very well speaking of the world versus the US. And the most prosperous the rest of the world becomes, the safer the US will feel. And I don't think he's wrong on those two things either, because at the end of the day, I think even before Trump, country around the world had various trade barriers, whether it was through tariffs, currency manipulation, or regulations. From a US perspective, it's not hard to find very smart people that agree with Trump on the actual problems like unsustainable fiscal situation, eroding middle class, trade unfairness.

Where the issue I think we're seeing the more is more the approach that the Trump administration is taking. Because they are using force and it erodes trust with allies and in a lot of cases it pisses people off with a lack of better words. And that's going to hurt the US. Like Buffett said, when people don't like you, when you don't like a certain country, are you going to start to book travel to that country? You are not going to go and travel to that country because you want to stick it to them And you don't want to encourage them and that lack of travel and that's just an example It's going to impact their whole hospitality industry restaurants the ripple effects that happens there

So it's not necessarily a good thing, especially when you think about allies to do that because we've already seen it with airline companies that are saying that there's been a substantial drop in Canadians traveling to the US, but also international travel. I mean, I can't remember. I think it was Air Canada or WestJet that just announced recently that they're kind of reducing the amount of routes that they have to the US and increasing them to the rest of Canada and internationally. So that's just an indication that yes, I agree with them. You have to really be careful the approach you take because the unintended consequences can be pretty big

for your country and thinking about it from a US perspective. Yeah, I mean, these tariffs have the chance to like materially impact the economies of many of these countries. And I mean, that like that type of situation, that type of I don't really know the correct word for it, but it doesn't just go away after trade agreements are made either. I mean, there's there's damage there. I mean, even if say Canada and the United States come to an agreement, I still think people would be a bit bitter in that regard. And I mean, yeah, like there's no doubt

the US is going through some issues, but I mean, to take this hyper aggressive of an approach is probably what people really don't like overall. And yeah, I don't have too many more comments on the trade side of things. I think we've talked about it enough over the last while that yeah, it's kinda, I mean, this Buffett has said this, it wasn't even at the AGM only.

I mean, he said this over the last six months when they've been asking him on it. Ultimately, they're not really, really good long-term. Hopefully, they get resolved quickly before anything escalates. Yeah. No, that's fair. Yeah, and the trust thing, right?

Like if people wanna wrap their heads around it, just think about it, right? Like you've seen whether it may have happened to you, whether you've seen it with other people, you can have like a marriage or a long-term relationship with someone and the trust that's built over 20, 30, 10 years, whatever the amount of time can be lost in a moment because just of one action of the couple in the relationship. So that's a little bit the comparison

that I would make here is yes, you could have been an allied for so long, but now this one action is really putting that trust into doubt. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Quest Trade now offers $0 commissions on stocks and ETFs. But Quest Trade isn't just about commission free trading. You can also get USD accounts, so I avoid forced currency conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile.

I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long term portfolio or making active trades. Don't miss out. Start trading commission free stocks and ETFs today. Visit questrade.com to learn more. TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking, why not put it to use, make some extra income by hosting it on Airbnb?

Hosting feels like the smart thing to do, but it can also feel overwhelming to some. But Airbnb's new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host.

Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades,

their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account, you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning, Duolingo style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there.

I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment ideas and using the analytics tools. So go ahead, blossom social in the app store and I'll see you there. Now Buffett, when he had a question on his cash holdings, because they are at records high, I posted something on X that showed the current cash compared to the assets or the cash in short term investments, mostly in the form of US Treasury bills, and it's right around

30%. It's just been increasing. And that's really the ratio you want to look at. You want to be careful just thinking about absolute dollars, because as I responded to someone who was saying, well, don't they mean the same thing? Not really, because if you look back in the past decade, there were actually decades where their cash pile actually increased, but their cash as a percentage

of their total asset actually decreased during that same period of time. So that's why the ratio is so important because it puts things in perspective. But he said that they run a business that is very opportunistic. They've made a lot of money by not being fully invested all the time. Buffett said that Charlie Munger used to say that over the span of 50 years, they'll make most of their money on eight or nine ideas. So that's really interesting.

I think that's a lot, that's worth reflecting on it a little bit because I think I know you, I know myself, I know Brayden too. When we look at our portfolio, it's always, he's not wrong. Like there's usually just a couple names that are really driving the returns of the portfolio. And then you'll have maybe a handful that are doing pretty well but maybe like more in line with what the

market is doing as a whole and then you'll have a few laggards but you really want to have those like top names really those top ideas those are the ones that will drag your portfolio and he continued and said nobody knows what the market will do next week next month next year at some point He doesn't know when they'll be bombarded with amazing opportunities That and they want to make sure that they have the cash to act on those So what are your thoughts on that? I have some more thoughts on it, but I'll let you go while I drink a little bit of my energy drink

Yeah, I think it was Buffett that said I think it was Buffett that had the quote that, you know, you never get, you're never going to get rich off your seventh best idea or something like that. I don't know. Yeah. I think it was either him or, or Munger that said that. But, uh, in terms of the cash holdings, I think the one thing that a lot of retail investors misinterpret when they see Buffett sitting on a large stock cash stockpile is they should somehow mimic a similar strategy.

And I really don't think this is a case. There's a difference between a retail investor managing their five, six, seven figure portfolio and a conglomerate business managing hundreds of billions of dollars. I mean, when you're deploying this amount of money into the market, you get into a situation of liquidity issues. And there's also an element that this scale of money is generally difficult to move around and deploy. I mean, a retail investor making, you know,

routine weekly dollar cost averaging purchases is a tad different than Berkshire dumping 100 billion plus into equities. It's an entirely different situation. And there's also an element that Berkshire is an insurance company. I mean, there's regulatory requirements in terms of the liquidity they have to have. And I mean, there's also that added element that they are a conglomerate and they do invest heavily in the businesses that they already own. So, you know, there's a strategic focus here on keeping some cash on hand because, you know, some businesses may require capital, things like that. What I guess I'm trying to say is if you're hoarding cash because Buffett is, your financial position and Berkshire's financial position couldn't be farther apart.

It's a very different type of situation. You're just not talking about small amounts of money here. A lot of people, they just use this cash pile to make some headlines about how he's stockpiling cash, the market is going to crash, things like that. It's really an entirely different situation and it's important that you take that with a grain of salt. That said, he does view the market generally as expensive. So I do believe that to a degree, the buildup in cash position is because he thinks stocks

are expensive. I mean, I don't even think he, I think he even stopped buybacks of his own shares here. So that is an element to it, but there's also, there's a lot of moving parts when you're talking about a trillion dollar conglomerate with hundreds of different companies. Yeah, exactly. It's very different. And obviously you'll talk about that a bit later. But essentially, they view it as a huge advantage over other companies as well. So,

they can't rely and they don't need to rely on any third party. They have sufficient money to do basically whatever they want. So lack of better words. So that gives them a lot of flexibility. And like you said, there's limits to what Berkshire can do because first of all, if they, you know, there are certain companies that are worth just a few billion dollars. I mean, they'd have to literally buy out the company outright for it to move like the needle a tiny bit. And if they don't want to buy it outright, then it would just won move like the needle a tiny bit. And if they don't want to buy it outright,

then it just won't move the needle and won't make any difference. So that's just an example where retail investors don't have that issue. And I know a lot of people aren't fully invested or have just small allocation of cash and that's completely fine. I think given the highest valuation we're seeing,

the uncertainty with trade, economic growth, the ever-growing risk of a sovereign debt crisis, which you'll see what Buffett talks about a bit later on that he clearly is stating that in the way he talks that he also thinks that it's not, it's a very real possibility, a sovereign debt crisis. You know, I think there is definitely some value in having some cash I can you can get easily right now 3% or more on your cash So whether you get that through treasury bills or like Buffett does or you put in a bank account or sponsor a Q Bank Offer some very competitive rates. It's not that hard to get at least 3% on your cash right now

So if you have a little portion of cash, it doesn't have to be 30, it could be just 5%, a couple percentage, that's fine. So that you can be opportunistic if there's some really good opportunities. I don't think that's, there's anything wrong with that, but you have to be careful with having too much cash because long term, that's going to get debased and it's not going to keep up with inflation. I mean, that's going to get debased and it's not going to keep up with inflation. I mean, that is a near certainty. Nothing is certain in life, but that is a near certainty

that holding cash over long periods of time will mean that you will lose purchasing power. Yeah, and I mean, I think like Buffett, he talks about the fiscal policy. I think he's talked about that his entire career. And he does warn that they've come pretty close to it a few times. But yeah, in terms of the cash, like I think a lot of people might see a headline about how Buffett has or Berkshire has 350 billion dollars

in cash and that's some sort of, you know, that seems like a large amount of money. So it kind of instills some sort of You know panic that the markets are gonna go down. I mean, obviously I have a small cash position It's it's completely appropriate. It's not not the end of the world But if you're you know hoarding cash because you think the markets are gonna are gonna bomb or something like that I mean, I think that's where it gets pretty difficult. It can come in my camp. I'm hoarding some cash. Yeah. No, but people who follow on Joint TCI would know that, yes, my aim was to get around 15

to 20% cash. It's way higher. It's above 30% right now, mostly because you know what it is. Since I left my job, I had money from my pension. And instead of having the pension plan force sell my investment before transferring it to Questrade, I decided to sell them on my own accord, if you'd like, so put all the money in a money market fund

because things were so volatile, and that's why I gained a pretty large cash portion because when you're looking at pensions, you cannot do a fund to fund transfer. You can't do an in-kind transfer. It has to be a cash because those investments are institutional grade. They cannot be bought through retail platforms.

So that's why. But I am slowly deploying capital, more on a dollar cost average basis. So yes, my cash hoard is slowly coming down, still pretty elevated yeah diminishing exactly the next year is Buffett on the US dollar and fiscal spending so like I was referencing earlier the first thing so I'll go over what he said really interesting comment so fiscal policy scares him in the US governments will debase currency over time it is not limited to the US it's all over the world so for not limited to the US. It's all over the world. So for those who say the US dollar is going into the drain, I mean, I'll show you another like 50 examples

of governments that are spending way beyond their means. It's not just the US. The US has the luxury of being the reserve currency. So when they print, there still is typically quite a bit of demand for that asset compared to, you know, who the hell needs a Canadian dollar outside of Canada? Not a lot of people, right? So that's the easiest example of people can wrap their heads around it. And there was a really good quote here. The natural course of government is to make the currency be worth less over time, and

it's got important consequences. So I think that's worth remembering because you can look at whatever chart you won. You can remember when you were a kid and the cost of things. I mean things that you could buy a Coke. I think when I was a kid for like a can of Coke, 50 cents or a dollar, that was pretty common. I don't think you can see them see that anytime now So there the examples are all around us is very is a hundred percent correct. He's not wrong about that No, definitely not. I mean, it's yeah, I don't know it just kind of I don't know I have nothing else to say he he made a good point on especially when he starts getting into

Doge about how he doesn't want to have that job because government, government spending, like there's no real way to monitor it. And he definitely wouldn't want to be the person who's got to crack down on this because it's like, as he mentioned, and like I said, as he mentioned for, you know, 50 plus years, like government spending, it's getting more out of hand now, I think. He did say it's getting worse now than it has been prior, but yeah, I mean, it's, no, he's not wrong. And he had like, so the main points on Doge, and for those not familiar, Doge is the Department

of Government Efficiency that was ran by Musk, Elon Musk and Vivek, I believe, in the US were the two main figures there. So he just said that and he had a question specific to that around the four hours 46 mark if I remember correctly. Government like corporations can always be run better, that's what he answered. That's why the future of the currency concerns him because government can print money and he's not wrong there. It's easy to spend money for elected representatives, but it's much harder to cut spending.

It's very difficult to make major changes in an elected system. The problem is how you control revenue and expenses, which has never been fully solved. The US is operating on a fiscal deficit that is not sustainable and if things are not sustainable they cannot go on forever. At some point you just end up losing control and the US has come close to that multiple times like you had mentioned earlier and you wouldn't want the job to reduce the deficit because there is a significant challenge ahead because right now and he's not wrong these are the correct figures there is a 7% gap between the revenues and the expenses so the government in the US is taking basically is spending 7% more than it gets in tax receipt and other revenues and that's a

problem and Ray Dalio has said that in view, is around like a 3% deficit is where the target should be and that longer term is more sustainable. At the point it is now, and the US is very close to that, you get into a point where your interest expense just starts ballooning and ballooning and ballooning because the debt gets bigger, the interest cost gets bigger, it just compounds over time. And that's what the US is flirting with right now.

And it's a job that should be done, but Congress doesn't seem to want to do it. And he said, look, it's not something you'd want to do. But he also said that Berkshire is in a position that when there is trouble for the government or the financial system, they are an asset and not a liability. Yeah, and I mean if you think about it like what who would want to actually be responsible for that because I mean once you start cutting spending you start, you know hitting a lot of different areas. Yeah, like it. Yeah, because a lot of people don't even you know, a lot of people don't even pay attention to stuff like this all they would see is something like that, you know, a lot of people don't even pay attention to stuff like this. All they would see is something like that, a lot of things getting cut and again, you

just don't get reelected and obviously, you need a job. And I mean, yeah, it just gets to the point. I mean, if you think of this from a personal perspective and you can't even, you can't just make money out of thin air from a personal perspective But if you're spending 7% more than you're making I mean eventually you're gonna have to pay the piper there's gonna come a time where it's it's unsustainable and Yeah, I mean again, he's talked about this for quite a while and it hasn't you know ever really become a huge issue But again, he did mention that it's been amplified as of late which obviously brings

more issues overall Mm-hmm, and I think it's been amplified for in the last well ever since the pandemic But I think it obviously I think it started after the Greek financial financial crisis. Yeah Yeah but it definitely was amplified with a pandemic and the fact that governments around the world were spending After the pandemic the economy was reopened They were still having these massive deficits when the economy was doing well

Typically the when the economy does well the logic is that you spend less because the economy is going well You have more tax receipt you have more revenues coming in because the economy is going well, you have more tax receipt, you have more revenues coming in, so you don't need to stimulate the economy either because it's going well. So you should be reducing those deficits and hopefully balance the budget. But that's not what governments did. And now they're in a situation where they could potentially be facing a slowdown. So what do they do? Of course, they'll want to spend more because they'll want to stimulate the economy So you didn't really get to reduce your debt reduce those deficits you're just going to have to increase them again, and that's I think is the

Difficult situation that we are entering right now not just in Canada and the US and around the world So I thought was pretty fascinating. I like this kind of stuff, but that's just me. As an investor, I'm always looking to reduce my fees, which is why I'm excited that Questrade now offers zero dollar commissions on stocks and ETFs. But Questrade isn't just about commission free trading. You can also get USD accounts. So I avoid forced currency

conversion fees when trading US stocks. Plus, get access to their advanced edge trading platform available on desktop, web, and mobile. I've been using Questrade for many years, and so has Simon. And their platform makes trading seamless, whether you're managing a long-term portfolio or making active trades. Don't miss out.

Start trading commission-free stocks and ETFs today. Visit questrade.com to learn more. TCI listeners, you know that I'm having to constantly travel for work. One week, you're up for meetings. Next time in Montreal, meeting potential investors. And while I'm away, my place at home sits empty. So I've been thinking why not put it to use, make some extra income by hosting it on Airbnb. Hosting feels like the smart thing to do but it can also feel overwhelming to some but Airbnb's

new co-host network makes it a lot easier. I can hire a local vetted co-host to manage everything. Handling reservations, guest check-ins, and even cleaning. If you've been thinking about hosting on Airbnb as well, and you could with the right help, why not let your home work for you? Find a co-host at airbnb.ca forward slash host. Calling all DIY do-it-yourself investors, Blossom is an essential app for you. It has been blowing up with now more than 50,000 Canadians plus and growing who are using the app. Every time I go on

there, I am shocked. The engagement is amazing. This is a really vibrant community that they're building. And people share their portfolios, their trades, their investment ideas in real time. And it's all built on the concept of transparency because brokerage accounts are linked. And then once you link your brokerage account,

you can get in-depth portfolio insights, track your dividends, and there's other stuff like learning, Duolingo-style education lessons that are completely free. You can search up Blossom Social in the App Store and join the community today. I'm on there. I encourage you go on there and follow me. Search me up. Some of the YouTubers and influencers and podcasters that you might know, I bet you they're already on there. People are just on there talking, sharing their investment

ideas and using the analytics tools. So go ahead, blossom social in the App Store and I'll see you there. Now they had a few questions on insurance. I know we have some nodes there. So Ajit Jain, I believe is their head of insurance, probably butchering the name here. He was asked if their thoughts on what AI, what kind of impact AI would have on the insurance business. And he said, no doubt that it will have an impact on the insurance business, but they are doing a wait and see approach because there's no point in spending in his view, huge amounts of money without knowing the benefits it will provide.

And he said companies are already spending tons of money on AI, other insurance companies, and they're happy to just sit back and see what works. And that's probably a really good approach. That's actually a very smart approach because we're seeing it in others, not just in insurance, but all this hype around AI. You're seeing companies spend millions, if not billions of dollars to get AI into their business. And what you are seeing more and more is that the investment might not,

the return on investment might not be as good as they thought. So I think it really comes down to, yes, you want to leverage AI, yes, you want to be more efficient with it, but why not do it in a way where you're maximizing your return on your investment in AI? Yeah, I mean, wait a little bit till the technology is more developed. I mean the one thing, like you would think once artificial intelligence gets good enough, it should be able to just completely replace human underwriting. Yeah.

I mean at this time I don't think it's quite there yet. Insurance is a bit nuanced and you know certain risks are probably difficult for AI to judge. But I mean what I can imagine happens over the short term, at least as insurers move to more of a hybrid model and let artificial intelligence manage the simple stuff where humans kind of manage the complex cases. I mean, but we're in the very early innings, I would say, of AI. And I just can't see this not being a thing in the next decade, couple decades. I mean, if we look to, it's a different industry, but Propel Holdings, which is an

alternative lender, Canadian traded alternative lender that primarily focuses in the United States. I mean, they utilize AI for their underwriting. I don't think it's a hundred percent AI, but they use a ton of AI to kind of make their underwriting decisions. And I mean, if it gets good enough, these insurance companies would probably be able to become ridiculously efficient and probably make a lot less human errors. But again, as you mentioned, I don't really think there would be any particular

advantage to being the first ones to be in that area. So I can definitely see why they aren't necessarily in all that big of a rush. Yeah, no, exactly. And then there was a question, it was asked about US exceptionalism. So something that's been cited quite a bit that a bit less now, I would say with now the markets being a bit more choppy, but last year that was pretty relevant

where you saw the US market just reach new all-time highs after new all-time highs And the common thing was like well this time is different the US Exceptionalism is really showing itself That's why it's trading at a premium and it makes the whole sense in the world that it is trading at a premium Well, Buffett said that the US has faced periods of change throughout its history and has adapted well. So he thinks that the US will be able to adapt to whatever big challenges will happen in the future.

So that was kind of interesting, not a whole lot that he said there was a pretty quick question and answer. Not sure if there's anything you wanted to add to that. No, not really. I mean, I guess the only thing I would say is he did, this wasn't at the AGM, but I think he mentioned a few months ago that they're still going to invest the vast majority of their portfolio in US equities.

They're still pretty bullish on the US. Whereas a lot of people might not feel the same after the the you know last few months here But they're still gonna be big-time players in the US market, which I mean makes sense. It's It's been killing it over the last while. Yeah, exactly And one of the questions was about you know acting quickly or being being patient and their approach So what the answer was really interesting might sound a bit bizarre, contradicting. What Buffett and Gregg said, Gregg Abels, of course,

when asked a question about acting quickly was that they want to have confidence to take quick action if a very good deal comes their way. That's because that deal may or may not be on the table for very long. So they wanna make sure that when a really good deal comes their way, they are ready to pounce. And what they do is that when they are being patient,

they use that time to research and do their due diligence on a bunch of different investment ideas or opportunities that might come or investments that they like, but maybe the price is not the right price, but they know these investment very well so that when they do come, they're ready to pounce. And I think that's really important if you like to invest in individual companies, because it's not super hard to find quality. What really is hard is finding quality at a reasonable price. And you really wanna also make sure that

when you find quality companies, you understand these businesses well, because at some point it may take some time, but that quality company will have a drawdown. And you have to know the company well enough to know whether this is just a blip on the radar and the company will do well five, ten years down the line. It may struggle a little bit. It may be some headwinds in the short term, but you know it well enough that you say,

you know what, this drawdown is actually a great buying opportunity. Yes, there might be some short-term headwinds, but long-term it's going to be fine. Or, you know, you've researched a company, you know it very well, and then there is a drawdown, but you know it well enough to say, you know what, this drawdown is actually warranted, and I have some doubts about the long-term prospects of this company, so I'm not going to pounce on it because it's actually a falling knife. It's not a buying opportunity. So I think that's how, in my view, individual investors can incorporate this kind of hybrid between acting quickly and having a patient approach.

Yeah, I think it's pretty much a key element for, you know, the know what you own and why you own it. Yeah. I mean, it probably goes back to what I would view as probably the most important chapter of any book for individual investors and that would be chapter eight of The Intelligent Investor, which is like it was written by Ben Graham, who is a big Buffett, you know, a big mentor for Buffett. And I mean, the book in its entirety would probably put most investors to sleep, but I do think chapter eight is pretty important. Chapter 20 is very important as well. Those two chapters are, I think, are pretty much a mandatory requirement for investors.

And chapter eight introduces a concept of, you know, Mr. Market and kind of illustrates how prices are erratic, but fundamentals aren't. The difficulty with taking advantages of the fluctuations due to that Mr. Market type mentality is that if you don't have a strong understanding of the businesses you own, you have no idea whether it's an emotional drawdown or it's actually a fundamental shift. So I think that's what they're getting at by, you know, patient approach to acting quickly. But the only way you can act quickly is if you truly understand the businesses you own,

which, I mean, not all retail investors, but I think a lot of people, especially with, you know, the amount of stuff on social media these days, I mean, a lot of people don't really fully understand what they own. They might just own it because somebody else does or, you know, concepts like that. And I mean, I think it will eventually get you into trouble. Usually doesn't during, you know, bull markets. But yeah, it's it's that was a good pretty good segment. Yeah. Yeah. And like Brayden would always say, you cannot borrow convictions. Yeah, well a lot of people do but it doesn't end up working out too well. Then he had a really good quote on balance sheet. I guess I put a random quote but I'm still paraphrasing here. So he said Wall

Street doesn't really pay attention to balance sheets but I like to look at balance sheets over a 8 to 10 year period before I look at an income statement. And in his view, you learn more from a balance sheet than most investors give it credit for. And this is so true. Like there's, it's a hundred percent true here. If you look at financial media, I mean, us we are guilty of that sometimes when we do earnings Because we're looking at the earnings, but we do try to look at the balance sheet as well It's something when I look at investment I always have a good look at the balance sheet because at the end of the day

It's super important to know exactly the strength of the business Because the income statement is fine, you have to be aware of it, don't get me wrong, but it's about sales and earnings, and that's important, but the way I view the balance sheet is the foundation of a company. So if it's poor, then all of its operations could be in jeopardy at some point in the future.

And just take a company that has a lot of debt and is due to refinance at a much higher rate. If you're not looking at the balance sheet and understanding that debt and when it is due, earnings might look okay right now, but if you start looking at the balance sheet, you'll know that there's a big risk that interest expense can go up,

that actually earnings may be going down the gutter because they're going to have to put so much to pay the interest payments or they're going to have to find a way to actually pay off a chunk of that debt which will impact their results as well. So it's really important to not just focus on the income statement but also understand the balance sheet of the company that you own pretty well or you're looking to buy Yeah, I think you know you can still drive profitability

Over the short term but destroy long term value and the balance sheet is probably going to show you where That is actually happening I mean obviously yeah on the on the news we talk about top and bottom line numbers because that's, you know, that's probably what's going to attract the headline clicks. So that's what you know, investors are naturally going to focus on the most. And it is important. But I mean, the balance sheet, particularly, you know, along the lines of say something like retained earnings, debt to equity can give you a pretty good picture for a wide variety of things. I mean, give you a pretty good picture for a wide variety of things. I mean, a company that can consistently grow retained earnings over the years is probably one that's operating in an industry with large moat pricing power, things like that. I mean, if we think of two acquisition heavy companies in Canada, two tech companies, we can look to something like Constellation Software. So retained earnings on the balance sheet have grown from 350 million 2015 to over 4.2 billion today.

And then you can look at a company who is another tech company was also acquisition heavy and is one I also owned. I actually did end up selling it would be Lightspeed Commerce. I mean, retained earnings have fallen from a loss of 248 or a negative balance of 248 million to a negative balance of $3 billion. So I mean, obviously, as a shareholder, you own those retained earnings. So I mean, you can see a lot of value there. And it can also give you a snapshot of the company's overall health and what's to come. Companies with heavy current liabilities relative to current assets might be in a And it can also give you a snapshot of the company's overall health and what's to come. Companies with heavy current liabilities relative to current assets might be in a position where

they have to issue more equity or more debt to satisfy a lot of those short-term obligations. And again, it'll give you a better snapshot of overall health where the income statement is more so an immediate picture of profitability. But again, companies can easily drive profitability over the next year or two and the balance sheet can kind of give you a figure as to whether or not it's sustainable. Yeah, no, exactly. So I think just reinforcing the balance sheet is definitely important.

You should understand. I think I agree wholeheart sheet is definitely important. You should understand. I think I agree wholeheartedly with what you said. I think for me it's the foundation of the company. You should be aware of it, especially if you're a long-term investor. If you're a trader, then have at it. It probably doesn't matter as much as long as they don't go bankrupt while they're trading this stuff, I guess. On the future with Greg, Greg Abels, who will be coming with the, becoming the next CEO

at the end of the year. Greg mentioned something really interesting. They want to keep having a fortress balance sheet and they consider their large cash pile as a huge asset and advantage. Not surprising, even Buffett reinforced that during the meeting. Berkshire has great values and culture that sets Berkshire well for the future. He wants to maintain the reputation of Berkshire and the various companies they own. They want to continue having a fortress balance sheet. I guess I put that twice in my notes.

I apologize here. Their cash is an enormous asset and is a strategic asset for Berkshires. It allows them to not be dependent on anyone like I had mentioned a bit earlier in the podcast. They want to keep managing risk carefully and that's on all of their managers, not just him. They have a great set of operating companies that produce significant cash flow and they want to ensure that it continues to be a strength of Berkshire going forward. And they will keep the same philosophy as they always have. They want to use the cash they have to first support the companies they own and second purchase new companies that they can bring under the Berkshire Hathaway umbrella. So I think that's very in line with what Buffett and Munger had done over the years.

My own view is that I don't have really I really don't have much concerns about Greg Abels becoming CEO. Very little concern. I don't know about you but I'm not I know some people are there's probably some people going to be selling because Buffett is leaving but personally I thought it was actually a good opportunity to start a position in Berkshire on Monday when this shares were down about 5-6%. Greg has been with Berkshire over 25 years. I know he's not Buffett but if you listen to him you notice a lot of similarities with Buffett. He's also very humble. He looks like a very patient and good human being if

I had to put it as well. Just like Buffett as well. So I mean, I don't have any concerns plus Ajit Jain, his staying on as the head of their insurance division and having listened to Buffett over the years, he deflects to Ajit a whole lot when it comes to the insurance business Like he relies on him and that's not gonna be any difference So that's a big part of their business and the guy leading it will still be there for probably some time Yeah, I mean this has been well, I think he officially said that he plans for Greg able to be the successor I think it was in like 2020 or 2021 but he had like 2020 or 2021, but he's been with a company so long. I mean, if a lot of people could probably understand that that Buffett has been

very, very good, arguably the best ever at picking companies to invest in, you would imagine he would be pretty good at identifying a successor to take over the company. So, I mean, it's not really a worry for me. I mean, he'll never be replaced, but there's been a lot of talk as to what is going to happen when he's gone, as if the company probably hasn't been working on this for the last decade. Because I mean, even 10 years ago, he was 84 years old, it's probably coming to the to the point where they're like, yeah, we probably gotta do something.

It was a young whippersnapper 30 years ago. And I mean, like he has the final say, but I mean, he has two investment managers, Todd Combs and Ted Weschler, who have been managing many, I believe they take over like the smaller equity portions. And I mean, back in 2013 at their AGM, Buffett had mentioned that he gave them one billion dollars to do with whatever they pleased with. He didn't pay attention to it.

He gave him each a billion dollars to invest. And as of the end of 2023, I believe they're handling 30 billion. So, I mean, it's yeah, yeah, yeah. I don't know if that, I don't know if they actually, if they gave them more money or if they've actually done that. It's tough to say because I've never outright said, but I mean, these guys are very smart. They're actually one of the driving forces of, of Buffett buying Apple because he did not want to buy it.

And they convinced him to buy it. Um's probably one of his one of his greatest investments over the last while at least and I mean as you mentioned the insurance side of the business is staying intact and I think he has like relatively little involvement with that and that's arguably been one of the best performing segments of the business over the last few years. Which is a big reason why I started a position because I didn't have any exposure to insurance and it's something that is honestly like I understand insurance generally but when if you want to really understand insurance like it's it gets pretty complicated. So that is something that I'm happy to leave in the hands of Ajit and let him take care of that.

And I think the whole thing about Buffett leaving and I think a lot of people got caught by surprise for whatever reason, but like take a step back. Like the guy's 94. Like I think people were almost like in the mindset like he's going to be what immortal or something and yeah stay on like until like forever like I'm not quite sure but you're right like it's been several years that We've known that Greg would be the one taking over when Buffett steps down. So that's not news I think it's just surprised people that it would be this year. But again, he's 94 like how surprised can you be I don't

know that that part was a bit of a head-scratcher for me I would have personally guessed that he would have ran it till he passed away that would have been my guess I would have thought he would have never stepped down but kind of like this is a good way to do it like yeah but you still have a role but you could take a little bit of a step back as chairman of the board and you act there more as kind of a strategic voice and Greg and the rest of the management team can bounce ideas off of him while he's still with us hopefully for years to come. So I think that's a pretty smart way to go with it. I think it's definitely the better way to do it because if he passes away and it's just an immediate transition, he's not around anymore.

Whereas this, you know, he passes on the reins and he's still involved for a while, probably providing some guidance, things like that. But I mean, this was a long, long time coming. I mean, it was going to happen. And we knew the one thing that kind of confuses me about the dip is, like you said, like we knew who was gonna happen. And we knew the one thing that kinda confuses me about the dip is like you said, like we knew who was taking over. I mean, I believe they have to, they would obviously have, the board would have to vote them in,

but I mean, they're gonna. Yeah. I don't know if it was the announcement or I think they also had, and we didn't touch much on the actual earnings just because I think that there's more value in listening to what he was saying than the actual earnings. But I think they had a bit of a dip on the operational earnings, if I remember correctly.

It was a bit of a soft quarter. Yeah, a soft quarter. So maybe that was part of it. But who knows? Now you took some note. I had a segments on Japan, but I wasn't sure if I wanted to add it. So you added it back. So I'll let you lead the way there. Yeah. some note I had a segments on Japan but I wasn't sure if I wanted to add it so you added it back so I'll let you lead the way there yeah yeah so he spoke on

five Japanese companies they took major positions in and I think they started buying these companies six or seven years ago and they they've kind of continued to accumulate them and they've up their overall by. Which they love by the way. Yeah. They really like, they went on about how much they love those Japanese companies. They're pretty, they're pretty bullish. And I mean, they've even, they've even upped their stakes over the last while. I think, like, it's not exactly 10%, but they own pretty close to 10% of all of them. And they did, they did mention that, you know, the, the customs traditions, you know, ways of operating the businesses are certainly different there, but they're kind of looking for ways to learn and adapt. But again, yeah, they're bullish. They even outright stated that they see these companies being inside the portfolio for 50 plus years, likely indefinitely.

And they also did mention that it was Greg who was primarily dealing with these companies. I would imagine that's because at Buffett's age, he probably doesn't want to be flying back and forth to Japan. Yeah, I did mention that. He wasn't a fan of flying all that much anymore. Yeah, that's quite the flight, especially 94 years old a couple of times a year. So it owns high single digit weightings in, and I probably, I might butcher some of these names, but Mitsui, Mitsubishi, Sumamoto, Itochi and Maru-Beni. So these are called Japanese trading companies. I guarantee you, you butchered some of these names.

Yeah. I would have as well. So yeah. They're called Japanese trading companies or general trading companies and they're effectively conglomerates that deal with a ton of variety of products. And I think these are pretty popular in Japan. So for example, Mitsui, did I get that one right? Do you know that one?

I think so. I don't know. I'm not, I need to brush off my Japanese a little bit. But they, my Mandarin's a bit better, but my Japanese, no. They deal with like, steel. We're talking infrastructure development. They have like health and wellness, cell phones, IT, food. So I mean, they do these, they buy the, they bought steaks in these huge conglomerates. And I mean, Buffett pretty much says

they just take a cheer and clap approach. They let them run themselves and let the companies do their thing. And I was just, you know, the commentary on how bullish they are on these Japanese companies was pretty interesting. Yeah, no, exactly. That's what I had with my notes. It was just I was trying to condense things a little bit, but that's okay.

We had enough time to continue. And I know you had, I missed that one. I thought I listened to the old thing, but I must've missed it in one of the questions, Slipa. So do you wanna go over that? This might be the best portion of the annual meeting, but they had a guy that flew in for the meeting and got the opportunity to ask a question.

And if you don't know about the meetings, I'm pretty sure they run it like a lottery. So you kind of sign up and they'll draw names and you get to ask a question, like if you get drawn. And I don't exactly know how hard it is, but I would imagine it is crazy hard to be able to get up and ask them a question. So this guy flew in for the meeting and got the opportunity to ask a question.

So he asked Buffett about Portillo's hot dogs and why they decided to pull the trigger on the company. And this was, I think it was like back in 2014 and Buffett pretty much stated he has absolutely no idea about any of that. He must have not been involved in that acquisition. And I mean, these guys, they do make a lot of acquisitions. They own a lot of companies. So I mean, to keep tabs on all of them would be effectively impossible. So he deferred the question to Greg

and then Greg proceeded to pretty much say he has absolutely no idea about the acquisition. He actually said he had to use his phone a friend lifeline. But I mean, this is because Portillo's was actually acquired by Berkshire Partners back in 2014, not Berkshire Hathaway. So Berkshire Partners... It's a P.E. firm. Yeah, is a private equity firm. So I mean, it was just kind of comical to try these two to try and figure out where this was coming from. They were trying to figure out whether it was a subsidiary

of a company that they owned in Chicago, but it couldn't really wrap their heads around it. And yeah, it was just, it was probably one of the more, the funnier portions of the AGM. I mean, you finally, you know, get the opportunity to ask a guy a question and you don't do the, you don't do the research to figure out it's not even the actual company that acquired this hot dog company in Chicago. So he got the chance and I feel bad for him but he completely blew it. Yeah, before you're gonna ask a question, maybe you should do your research but you know, the first name is the same Berkshire so I guess, I don't know, must have done a quick Google and just saw Berkshire and just assume it was Berkshire H I guess I don't know must have done a quick Google and just saw

Berkshire and just assume it was Berkshire Hathaway so yeah that's funny but it was overall I think a really good really good annual meeting like I said I think in the previous episode like these are pretty long what I usually do I'll listen to them at like 1.5 to X speed and then I slow it down when there's something that really piques my interest. I feel like that question didn't really pique my interest. I must have just kind of skipped it and kept the 2x going until the next one. Yeah, it was a pretty funny question because he's talking about this hot dog stand and Buffett's... You can tell he has absolutely no idea what he's talking about. So he just kind of tosses the grenade over. But yeah, yeah it was a good... I mean these meetings again, like I said, they're kind of a bit of a snooze

fest through a lot of it but then you do find a lot of valuable information inside them. They're definitely worth a watch or a summary from somebody else because yeah it's it's hard to find the information if it's not timestamped because they talk about a lot of stuff. Yeah exactly like they they had a question I think like what he thought about like you know educating teenagers for like investing and stuff like that like I'm just kind of paraphrasing because those are some of the questions that I did not reduce the 2X speed. But there are like, for some people,

it would be really interesting. So if you wanna see what he had to say on a various of other topics, and he talks about whole different kind of stuff. And sometimes he does go a little bit on a rant too. Sometimes he'll kind of answer something. It doesn't have to do really with the question, but it's still, I mean, I still love listening to him talk.

And I mean, I hope that, I don't know what form it's going to take next year, but I would hope that he still is at the annual meeting. I assume that he will. I would imagine so. Yeah, I would imagine that he will and that we have at least, you know, a good five years to go with to Buffett if not more. I mean, obviously at 94 he doesn't have that too many years left in front of him, but every time I listen to him I feel like I learned something. them but every time I listen to them I feel like I learned something. Yeah, 94 Coca-Cola and sausage McMuffins.

Yeah, exactly. That's it. Well, I think that's a good point to wrap it up. Thank you everyone for listening. We had some fun here. It was a really fun episode to do. It took a lot of time listening to the annual meeting, taking the notes, having to rewind some of the segments because I wanted to take as much notes as I could. I know you as well.

So it was fun to do, took some more work, but it's something I feel like we just can't pass over when the most famous investor I would say of our generation or not our generation but our lifetime. As an annual meeting and he announced he's leaving the role of CEO you got to do a deep dive on that. Yep the end of an era. Exactly so thanks again for listening everyone. The Canadian investor podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.