We Study Billionaires - The Investor’s Podcast Network - TIP551: Berkshire Hathaway Annual Shareholders Meeting 2023

Episode Date: May 12, 2023

In this episode, Clay Finck presents his favorite clips from the 2023 Berkshire Hathaway annual shareholder meeting, featuring insightful responses from Buffett and Munger during the marathon Q&A session, along with his own thoughts on their answers. IN THIS EPISODE YOU’LL LEARN: 00:00 - Intro. 05:30 - Buffett and Munger’s thoughts on the commercial real estate. 09:37 - Why value investors must evolve to the increasingly competitive world of investing. 17:36 - How Buffett allocates capital to balance profits versus building out a competitive moat. 33:04 - Munger’s stance on position sizing. 38:16 - Buffett’s updated thoughts on Taiwan Semiconductor which is a business Berkshire entered and fully exited over a matter of months. 40:09 - Buffett’s thoughts on the US Dollar’s status as the world’s reserve currency. 54:40 - Common mistakes to avoid to live a good life. 01:01:21 - Buffett and Munger’s most recent thoughts on Occidental. 01:12:23 - How Berkshire can continue to attract high quality subsidiary managers. Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences. BOOKS AND RESOURCES Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members. Check out the full video of the Berkshire Hathaway meeting here. Check out our recent episode covering Mark Leonard’s Letter’s and Constellation Software. Watch the video here. Check out Clay’s YouTube video calculating the intrinsic value of Constellation Software here. Follow Clay on Twitter. NEW TO THE SHOW? Check out our We Study Billionaires Starter Packs. Browse through all our episodes (complete with transcripts) here. Try our tool for picking stock winners and managing our portfolios: TIP Finance Tool. Enjoy exclusive perks from our favorite Apps and Services. Stay up-to-date on financial markets and investing strategies through our daily newsletter, We Study Markets. Learn how to better start, manage, and grow your business with the best business podcasts.  SPONSORS Support our free podcast by supporting our sponsors: River Toyota Sun Life The Bitcoin Way Meyka Sound Advisory Industrious Range Rover iFlex Stretch Studios Briggs & Riley Public American Express USPS Shopify HELP US OUT! Help us reach new listeners by leaving us a rating and review on Apple Podcasts! It takes less than 30 seconds, and really helps our show grow, which allows us to bring on even better guests for you all! Thank you – we really appreciate it! Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm Learn more about your ad choices. Visit megaphone.fm/adchoices Support our show by becoming a premium member! https://theinvestorspodcastnetwork.supportingcast.fm

You're listening to TIP. Hey everyone, welcome to the Investors podcast. I am your host, Clay Fink. And on today's episode, I'll be walking through our favorite clips from the 2023 Berkshire Hathaway shareholders meeting in Omaha. This year, many members of the TIP team made it to Omaha. And we hosted four free events from Thursday through Sunday for the TIP community to connect and socialize.

Our events were a big hit as well over 100 people attended each one. And I'll speak for everyone here at TIP. we really appreciate everyone who made the trip to Omaha and attended our events. Your support for TIP is very much appreciated and we're grateful to have one of the best audiences in the world. Our TIP meetups was one of the big highlights of my weekend, as I love connecting with like-minded individuals and meeting members of the audience in person. The main event was on Saturday, which was at the CHI Center where Warren and Charlie hosted the Woodstock of capitalism, attracting roughly 40,000 attendees in doing the Marathon Q&I,

session in the morning and that afternoon. If you missed the Berkshire meeting this year, I'm sure we'll be there next year as well. We'd love to meet you, and I can assure you that pretty much everyone I met was absolutely ecstatic to be there in Omaha. Many people at our events came from all over the world. Hopefully, we're lucky enough to have the opportunity to see Warren and Charlie in person next year again as well. In this episode, I'll be walking through our favorite clips in adding my thoughts around each one of them. These clips in this episode touch on commercial real estate, why value investors must adapt to new environments, position sizing, the U.S. dollar status as a reserve currency, major mistakes we should avoid, and much more.

Warren and Charlie, as always, were on top of their game this year, and this year's Berkshire weekend in particular was really special due to all of the people I got to meet in person, including countless fans of our audience, as well as around a dozen of our TIP Mastermind community members, which is a new community we recently launched for our audience. Without further ado, here is our episode covering the 2023 Berkshire Hathaway Annual Shareholder Meeting. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. So diving right in, to kick off the meeting, Buffett showed the results

on the big screen for Q1 of 2023. Operating earnings came in at just. just over $8 billion, which was up from $7.1 billion in the previous year. And Buffett mentioned that he expected business to not be as good in 2020 as it was in the previous year just because of how good 2022 was. You can see their business results in their most recent 10-Q, but one slide that they showed that I really liked before the Q&A session was the number of shares outstanding each year. When Berkshire has extra cash and not many opportunities to deploy that cash, at times they'll

repurchase shares given the shares are trading as. an attractive value. Buffett harps over and over, I feel like each year, how much he loves when businesses he owns repurchases their shares, and he isn't afraid to do it for Berkshire itself. From 2019 to 2020, Berkshire repurchased 5% of shares outstanding. In 2021, they repurchased 4.3% of shares, and in 2022, they repurchased 1.2% of shares. So on a cumulative basis, from 2019 to the end of 2022, Berkshire shareholders increased their stake in the the company by over 11% without having to purchase more shares themselves. Over time, this compounding makes a significant difference, especially when Berkshire repurchases shares at attractive prices

because they're getting more bang for their buck when they get the shares for cheap. It's just really a special moment to see Warren and Charlie enter the stage and thousands of like-minded people giving them a standing ovation. You can almost feel the sense of community and camaraderie in the room as everyone is just so friendly and it's a really good reason to get a way. way and come back home with a renewed sense of energy and purpose. It's something that's really hard to explain and something you just really have to experience yourself. And it feels really good to have people tell me that they listened to our episode on the Berkshire meeting last year, and they decided to book their ticket to Omaha because of that. Having people recognize how

valuable of an event this is for meeting like-minded people is really difficult to overstate. All right, so here's the first clip I wanted to play related to commercial real estate. We'll go ahead and play the clip here. This question comes from Tom Seymour. He says the first sentence of a recent Financial Times article read, Charlie Munger has warned of a brewing storm in the U.S. commercial property market with American banks full of what he said were bad loans

as property prices fall. Please elaborate on what's going on in commercial real estate. How bad will the losses be and what sectors or geographies look particularly bad? I'll just add an addendum. from another viewer who wrote in and wanted to know if Berkshire would be more active in commercial real estate as a result? Well, Berkshire's never been very active in commercial real estate. It works better for taxable investors than it does for corporations tax the way Berkshire is.

So I don't anticipate huge effects on Berkshire. But I do think that the hollowing out of the downtowns in the United States and elsewhere in the world is going to be quite significant and quite unpleasant. I think the country will get through it all right, but as they say, it will often involve a different set of owners. Yeah, and the buildings, the buildings don't go away, but... The owners do.

Well, but most people like to buy with non-recourse in real estate. And one time I asked, Charlie, there was some real estate guy we were talking to, and, you know, how do they decide how much they can, a building like this is worth? And the answer is, whatever they can borrow without signing their name. And if you look at real estate generally, you'll understand what the phenomenon that's happening if you remind yourself that that's the

attitude of most people that have become big in the real estate business. And it does mean that the lenders are the ones that get the property. And of course, they don't want the property usually. So the real estate operator counts on negotiating with them. And the banks tend to, you know, extend and pretend. There's all kinds of activities that arrive out of commercial real estate development, which occurs on a big scale.

But it all has consequences, and I think we're about, well, we are starting to see the consequences of people who could borrow it 2.5% and find out it doesn't work at current rates, and they hand it back to somebody that gave them all the money they needed to build them.

Charlie's had more experience and really, Charlie got it started, real estate, though. I mean, Charlie, Charlie. Yes, it's difficult. I like what we do better. Well, Charlie once said to me when I was leaving his house a few months ago. I was busy. We talked for a couple of hours, and I said to Charlie as I left, I wasn't anybody else in the house. I said, except one daughter. And I said, Charlie, I'll just keep doing what we've been doing. and Charlie said, without looking up or pausing a second, he said, that's all you know how to do, Warren. Yeah.

He was right, too. So there you see that Berkshire generally isn't interested in purchasing commercial real estate, and generally they prefer to buy great businesses that they can hold forever. It sounds like Buffett and Munger both believe that commercial real estate could be in some trouble in the coming years due to things like more businesses going remote, higher borrowing costs, higher interest rates, and these can all push down the purchase prices of these properties. Next, I wanted to play a clip that discusses the future of value investing. Now, this is a hot topic nowadays as people are aware that they have to adapt as their

environment changes. Here's a clip on this subject. Hi, my name is Jala Z. I'm from Santa Clara, California. And my question is to Charlie and Warren. Given the rise of disruptive technologies that can improve productivity significantly, and AI being one of them, how do you envision the future of value investing in this new era? And what adaptations or new principles do you think investors should adopt?

And any recommendations for investors to remain successful in this rapid changing landscape? Thank you. Well, I'm glad to take that one. I think value investors are going to have a harder time now that there's so many of them competing for a diminished bunch of opportunities. So my advice to value investors is to get used to making less. And Charlie has been telling me the same thing the whole time we've known each other. I mean, we get all wonderfully because... We are making less.

Yeah, well, but that's because mostly, I think, is because it's larger. We were younger. We never thought we could manage $5008 billion. No. But I would argue that there's going to be plenty of opportunities. And part of the reason they're going to be plenty of opportunities, the tech doesn't make any difference or any of that. I mean, if you look at how the world's changed in the years since 1942,

when I started to say, well, how does a kid that doesn't know anything about airplanes, it doesn't know anything about engines and cars, and doesn't know anything about electricity and all that. But that really isn't the, that's not the world changing doesn't, or new things coming along don't take away the opportunities. What gives you opportunities is other people doing dumb things. And I would say that, well, the 58 years we've been running Berkshire, I would say there's been a great increase in the number of people. doing dumb things and they do big dumb things and the reason they do it to some extent is because they can get money from other people so much easier than when we started so you could start 10 or

15 dumb insurance companies in the last 10 years and you could become rich if you were adroit at it whether the business succeeded or not and the underwriters got paid and the lawyers got paid and And that creates, if that's done on a large scale, which it couldn't be done, what, 58 years ago, you couldn't get the money to do some of the dumb things that we wanted to do, fortunately. And so I think that investing has disappeared so much from this huge capitalistic market that anybody can play in, but that the big money is in selling other people ideas. it isn't outperforming, in outperforming. And I think that, I think if you don't run too much money, which we do, but if you're running small amounts of money, I think, I think the opportunities

will be greater. But then Charlie and I were always different on this subject. He likes to tell me how gloomy the world is. And I like to tell him, we'll find something. And so far, we've both been kind of right. Charlie, wouldn't we budget an inch on that or not? There is so much money now in the hands of so many smart people, all trying to outsmart one another, and out-promote one another, getting more money out of other people. And it's a radically different world from the world we started in. And I suppose it will have its opportunities,

but it's also going to have some unpleasant episodes. But they're trying to outsmart each other in arenas. that you don't have to play. I mean, if you look at that government bond market, the Treasury bill market, I mean, you've got this one bill that's out of line with the others. We bought over $3 billion, you know, it's the other day. But those are people.

The world is overwhelmingly short-term focused. And if you go to an investor relations call, they're all trying to figure out how to fill out a sheet to show the earnings for the year. And the management is interested in feeding them expectations that will slightly be beaten. I mean, that is a world that's made to order for anybody that's trying to think about what you do that should work over five or ten or twenty years.

And I just think that I would love to be born today and go out with not too much money and hopefully turn it into a lot of money. And Charlie would too, actually. He would find something to do, I will just guarantee you. And it wouldn't be exactly the same as before, but he would have a big, big, big pile. I would not like the thrill of losing my big pile into a small pile. I like my big pile to the way it is. Well, I like.

We agree on that, incidentally. Yes, we do. You're one of the most extreme lovers of the big pile. I love this discussion on how we must evolve as value investors. Value investing can be really difficult nowadays because it's easy. easier than ever to learn about investing and get into it with the internet and things, but again, human emotions are still a large part of the market. People still become fearful and they still become greedy, and that can create mispricings

for us as value investors to capitalize on when the prospective returns are attractive relative to the risk that is associated. Also, index investing seems to be really popular nowadays, and as more and more people pile into the index, this potentially pushes down the expected returns of just investing in the overall through an index fund. This also can create distortions and potentially create opportunities in certain pockets of the market where many investors aren't really looking. One of my favorite books related to the evolution of value investing is a book called Where the Money is by Adam Ziesel. I had Adam on our millennial investing show a year ago on episode 196, and Trey had him on

We Study Billionaires back on episode 465 as well to chat about his book and why value investors must evolve with the times to stay relevant. Another interesting advantage I think individual value investors can have is what is referred to as time arbitrage. In a world that is very short-term focused, huge advantages can be gained by owning businesses who think in terms of optimizing long-term shareholder value. And then it's just a matter of holding a number of different types of these companies for a really long time.

While Wall Street is focused on the quarter to come, thinking long-term gives investors a massive advantage. Related to this idea of adapting to the times, business owners must adapt to the times as well as they are capital allocators within their business and need to decide what sort of investments they should be making. So I'll go ahead and play a clip here related to this idea. Hello, my name is Adal Flores and I've been a sheholder for about 16 years and I'm coming from Guadalajara, Mexico. My question is for Warren and Charlie. Companies have the eternal internal dilemma between building products that can make profits and increase their company competitive position. In the best case, you can build products that have both characteristics at the same time,

like Google did. But most of the time, companies need to choose between short-term profits and long-term defensibility. For example, Amazon was focused on building their famous Amazon flywheel, with limited profits initially in order to obtain stronger network effects with the hope of getting more defensible profits in the future. When you invest, you constantly speak about the importance of building competitive modes. What advice would you give to CEOs about how to balance this dilemma, which is essentially short-term profits versus long-term defensibility? Thank you. Well, the answer is to control your destiny, which we've been able to do at Berkshire. So we feel no pressure from Wall Street. You know, we don't have investor calls.

We don't have to make promises. We get a chance to make our own mistakes and occasionally find something that works well. But we recognize that the people in this room and people like them are the ones that we're working for. And we're not working for a bunch of people that care about whether we meet the court or estimate or anything. So we have a freedom that we get to use. and we're interested in owning a wonderful business forever. Well, there aren't very many wonderful businesses, but we do learn a lot as we go along.

Charlie and I have often mentioned how we learned so much when we bought Seas Candy, which we did. But we learned when we bought Ben Rogers' chain of women's dress shops spread all over the eastern part of the country. We learned when we tried getting into the department store business. back in 1966, and as the ink was drying on our purchase price, we realized we'd done something dumb. But we're learning all the time how consumers behave. I'm not going to be able to learn the technical aspects of businesses, but that'd be nice if I knew it, but it isn't essential. And, you know,

we are obviously, we've got a business at Apple, which is larger than our energy business, and We may only own 5.6 or 7 percent, but our ownership goes up every year. And I don't understand the phone at all, but I do understand consumer behavior. And I know how people think about whether to buy a second car. I know how they go out to different. We own auto dealerships. We own, we're earning all the time from all of our businesses, how people react to or animals versus, you know, selling them something else.

And so C's was a sort of breakthrough, but we just keep learning as to more about how people behave and how a good business can turn into a bad business and how some good businesses can maintain their competitive advantage over time. And so we don't have some formula. But we can also tell in 10 seconds whether it's something of interest. I mean, you know, when I get these calls and we want to send decks and all that sort of thing, which is nonsense. I mean, it's a bunch of guys sitting that get paid for drawing up these projections of the future and everything like that. If they knew the future, you know, we don't know the future, but we do know certain kinds of businesses.

We know what the right price is and we know what we think we can project out in terms of consumer behavior. And consumer and threats to a business. And that's what we've been about. and that's what we'll continue to go. We do get, we don't get smarter over time. We get a little wiser, though, following it over time, and you can do it while sitting in the office with a telephone, too, which we like, Charlie.

Well, tell them the story of the Japanese investment. That should be told again. That's a nice story. Yeah. Well, it was pretty simple. I mean, I, you know, back when I started, other people were going through Playboy, and I was going through Moody's.

to them, you know, basically. And there's a movie out called Turn Every Page, which I saw again for the second time a couple of days ago. Lizzie Gottlieb, and I recommend everybody in this world watch that because I turned every page in the past. And I did it for thousands and thousands of pages in Moody's, and I did it at the Department of Public Utilities in Boston. I did it in the insurance department. It just kept turning pages. Well, that goes on for a while. But now we need big ideas in order to find things.

And what was your question, Charlie? To tell them about the Japanese. Well, the Japanese thing was simple. I mean, I like looking at companies. I mean, I like looking at figures about companies. And here were five very, very substantial companies, understandable companies. Most of them, maybe all of them, we'd done business with in a dozen different ways. If you go a couple miles from where this place is, our last.

coal-generating plant was built by one of the companies. So here they were. They were sitting as a group where they were earning, we'll say, 14% on what we were going to pay to buy them. They were paying decent dividends. They were going to repurchase shares in some cases. They owned a whole bunch of businesses that we could understand as a group, although we didn't mean we had deep understanding on any, but we seen them operate and everything. There wasn't anything to it. And at the same time, we could take out the currency risk by financing in the end.

And that was going to cost us to half of 1%. Well, if you get 14% on one side, a half a percent on the other side, and you've got money that, you know, forever, and they're doing intelligent things, and they're sizable. So we just started buying them. I didn't even probably tell Greg until maybe six months after we'd gotten going. And then when we hit 5%, in all of them, we announced on my birth. day and at 90th. We owned over 5% and recently went over for the first time to visit with them

and we were more than pleasantly surprised, delighted with what we find there and now we own 7.4% of them. We won't go over 9.9 without their agreeing and we sold another 164, whatever it is. Billion of a yen. They would have done for us if we only had $5 billion or something and and it made $10 billion simply in that way. Yeah. We would look like heroes. Now $10 billion just sort of disappears as a little dot in Berkshner's reports. But it's fun.

It is fun, and it is $10 billion. And Charlie says it keeps me out of bars when I try to talk to about it. And I probably talked to Charlie about this the year after I started. But who knows? I mean, I knew he'd like it. I mean, obviously. And we tried to do every dollar we would do. We could only do about $10 billion.

Yeah. Well, not even that, quite that much. Yeah. But, you know, we are $4 or $5 billion a head plus dividends, and we got a carry that's terrific. And, you know, and they welcome us, and they should welcome us. But we love it the way they're operating. We're not there to tell them what to do in the least.

So we didn't. But we did say we never go over $9.9, and we meet it. And they know that we'll be true to our way. And I went over there partly to introduce Greg to those people because we're going to be with them 10, 20, 30, 40 years from now. And they may occasionally find something that we can do jointly. And they look forward to doing that and we look forward to it. And in addition, we have some other operating businesses in Japan. So, Greg, do you have anything?

The only thing I would add is that one, as Warren, you went over there, was to build the trust with these, Japanese companies because we do hope there's long-term opportunities, but fundamentally, as you highlighted, they're an incredible, they've been a very good investment. I'd also highlight the five meetings we had, were really quite remarkable. I mean, these companies, the culture and the history around it and how proud they are, you know, there's just moments of learning from them. So it was, it was just a great experience to spend really two days with the five companies. And an issue that we intended to be 56 billion of the end that we were issuing and selling turned out to be 160. 64.4 or something like that.

Everything, everything works so well. And as Charlie says it, you know, it doesn't move 500 billion of net worth that much. But this one is, you know, it will keep adding over the years to Berkshire's value. It's very widespread, probably $400 million a year. And, you know, we'll just keep looking for more opportunities. And Japan, we are, Berscher is the largest borrower outside of corporate borrower, outside of Japan, that exists. And we didn't set out to be that, but it's turned out that way. And we're not done. I mean, you know, in terms of what may come along there. And we have some direct operations there, as I mentioned. And we've got some really wonderful partners working for us.

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Back to the show. Now, the next question I wanted to play here is related to position sizing, which I feel is a topic that a lot of people love learning about, including myself, to me, it's all about a person's temperament and their own abilities and where they are at in their own journey. Someone that is much more comfortable with diversifying might put a position's limit to, say, 5%, whereas someone like Charlie is more than happy to bet big when he finds something he really, really likes. Here's a clip on position sizing. The next question comes from Ellie Amin Tibet, who asks during an episode of Investing the Templeton

Way podcast, Professor Damodaran, who he respects almost as much as Warren and Charlie, mentioned that he is not comfortable with positions becoming a large part of his portfolio. For example, when they reached 25 to 35 percent, he mentioned that Apple is now 35 percent of Berkshire's portfolio and thinks that that is near a danger zone. Wonders if Warren and Charlie can comment. I'll leave him one comment first, but Charlie will come up with... I think he's all of his mind. Yeah, I knew that that was coming.

But Apple is not 35% of Berkshire portfolio. Berkshire's portfolio includes the railroad, the energy business, garadibles, you name it, seize candy. They're all businesses. And, you know, the good thing about Apple is that we can go up. They buy in their stock, and instead of owning 5.6%, you know, they get down to, they got about 15,700 and some million shares outstanding. they get down to 15 and a quarter billion without us doing anything we got 6%.

So we can't own more than 100% of the BNSF. We can't own more than 100% of granables or seize candy. And it'd be nice. We'd love to own 200% but this isn't doable. But they're all the same. They're good businesses. And to think that our criterion, our criteria for Apple is different than the other businesses we own, It just happens to be a better business than any we own.

And we put a fair amount of money in it, but we haven't got more money in it than we've got in the railroad. And Apple is a better business. Our railroad is a very good business, but it's not remotely as good as Apple's business. Apple, you know, has a position with consumers where they're paying, you know, maybe they're paid $1,500 or whatever it may be for a phone. And these same people pay $35,000 for having a second. car. And if they had to give up a second car or give up their iPhone, they'd give up their second car. I mean, it's an extraordinary. We don't have anything like that that we own 100% of, but we're very, very, very happy to have 5.6 or whatever it may be percent, and we're delighted every

tenth of a percent that goes up. That's like adding $100 million to our earnings. I mean, our share of the earnings, and they use their earnings to buy out our partners, which we're glad to see them sell out, too. The index funds have to sell them. They bring the number of shares down. And, you know, we went up slightly last year, and I made a mistake a couple of years ago, and I sold some shares when I had certain reasons why gains were useful to take that year from a tax standpoint. But having heard me say that, it was a dumb decision. And probably you've already given your comment about it, but we do not have 35% of Berkshire's portfolio.

Berkshire's portfolio is the funds we have to work with, and we want to own good businesses, and we also want to have plenty of liquidity. And beyond that, you know, the sky's the limit or our mistakes, who knows what the bottom is. Charlie, do you want to add anything to your earlier comment? Well, I think one of the inane things that's taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks. That is an insane idea. It's not that easy to have a vast plethora of good opportunities that are easily identified.

And if you've only got three, I'd rather be in my best ideas instead of my worst. And now, some people can't tell their best ideas from their worst. And in the act of deciding the investment already is good, they get to thinking it's better than it is. I think we make fewer mistakes like that than other people. And that is a blessing to us. We're not so smart, but we kind of know where the edge of our smartness is. That is a very important part of practical intelligence. And a lot of people who are geniuses on IQ tests think they're a lot smarter than they are.

And what they are is dangerous. But if you know the edge of your own ability pretty well, you should ignore most of the notions of our experts about what I call de-worsification of portfolios. I love this wisdom from Munger and the willingness to bet big when the odds are heavily in your favor. Of course, we need to be mindful and aware of our on blind spots and biases and not go all in when you think you're really certain on a business, but we should also be mindful that in order to have the opportunity to get outsized returns, we need to make our allocation high enough that it will make a sizable difference to the returns of the overall portfolio. At the end of 2020, I did an episode that chatted about Buffett's purchase of Taiwan Semiconductor.

One audience member asked Buffett why he exited so quickly, given that not much change happened geopolitically since he entered the position. Here's the question on Taiwan Semiconductor and what Buffett had to say on the situation. This question comes from Roheek-Belany. Berkshire bought a substantial position in Taiwan Semiconductor, and contrary to its normal holding timeline, sold almost the entire position within a few short months. While you cited in a CNBC interview that geopolitical issues were the catalyst,

these issues were seemingly no different when you acquired that stock. So what else, if anything, changed in those few months and prompted the firm to offload close to $5 billion worth of Taiwan Semiconductor shares? Taiwan Semiconductor is one of the best managed companies and important companies in the world. And there is not, and I think you'll be able to say the same thing, five or 10 or 20 years from now. I don't like its location and I've re-evaluated that. I mean, I don't think it should be any place but Taiwan, although they will be obviously opening a chip capacity in this country.

And actually, one of our subsidiaries that we got in Allegheny is participating in their Arizona construction activities. But it's a question of we would rather have the same kind of company. And there's nobody in the chip company. There's no in the chip industry that's in their league. in our bit, at least in my view. And the man that was a 91-year-old or so that connected with us

that I think I played bridge with in Albuquerque. And the marvelous people, marvelous company, but I'd rather find a marvelous people, I won't find it in the ship industry, but marvelous people and marvelous competitive position and everything.

I'd rather find it in the United States. I feel better about the capital that we've got deployed in Japan than Taiwan. I wish it weren't so, but I think that's the reality, and I re-evaluated that in the light of certain things that we're going on. Try. Well, my view is that Warren ought to feel comfortable if you wants to. Yeah, yeah, put that in the minutes.

The next question might have been one of my favorite ones from the meeting. First is because I loved the question. And second is that it came from a 13-year-old of all people who, I know has asked great questions in the past, as they mentioned. in this clip. So here's the next question regarding the U.S. dollars reserve currency status. Mr. Buffett and Mr. Munger. Hi. My name is Daphne. I'm 13 years old, and this is my six annual Berkshire halfway chain holders meeting. And I've had the privilege to ask you both questions in years past. My question for you today is the following. As you know, the U.S. national debt is currently at an estimated 31 trillion.

million dollars, making up about 125% of the US GDP. In the meantime, over the past few years, the Federal Reserve has telegraphed that they intend to monetize the debt by printing trillions of dollars, even as they insist that they're fighting inflation. Already, other major economies in the world, such as China, Saudi Arabia, and Brazil are moving away from the dollar in anticipation of this. My question is, are we likely to face a time in the future when the U.S. dollar is no longer the global reserve currency? How is Berkshire prepared for this possibility? And what can we do as American citizens to attempt to shelter ourselves from what's beginning to look like the beginnings of de-dollarization? Well, I should ask you to come up here and answer some questions. I mean, they, uh, it's very important.

very interesting. I mean, we are the reserve currency, and I see no option for any other currency to be the reserve currency. And I think that nobody understands the situation better than Jay Powell. And I, but he's not in control of physical policy. And every now and he drops a few hints. And there was no question that when the, when the pandemic broke out, I mean, it was a semi-warlike situation. but nobody knows how far you can go with the paper currency before it gets out of control, and particularly if you're the World's Reserve currency. Nobody knows the answer to that. And you don't want to try and pick out the point of where it does become a problem because then it's all over. And I think we should be very careful. I mean, you know, we all learned Keynesianism

and we applied it in World War II to the advantage of the country. And we did every, we could to prevent inflation during the war. And then the war ended in August of 45. And I think in January 46, and I'm not giving you exact figures at all now. But in January 46, I think the rate of inflation was at, you know, something like 1% or thereabouts. And by the end of the year, I think it was at like 15%. And again, I'm doing this from long memories. But it's easy for America to do us a lot.

but if we do too much, it's very hard to see how you recover once you let the genie out of the bottle and people lose faith in the currency. And they behave in an entirely different manner than they do when they feel that if they put some money in the bank or have a pension plan or whatever it may be that they're going to get to have something with roughly equal purchasing power. And it just changes the economy and all kinds of things can happen then. I can predict them and nobody else can predict them, but I do know they aren't good. And we will see.

And I do this as, you know, I've voted for both parties. And it's, it's not limited to politicians to be the party or anything of the sort. People take positions. Some of them understand what they're doing. Some don't understand what they're doing. And, you know, if they put me on some medical board, I don't understand what I'm doing. You know, there's nothing wrong with the fact. that you can't master everything. It can all be Isaac Newton, but you can't go around

pretending you do or making decisions on it. And we are not as well off in relation to curbing inflation expectations, which become self-fulfilling. And we are not as well off as we were earlier. And Berkshire is better prepared than most investments for that kind of a period. But I said this in the annual report, but we aren't perfectly prepared because there's no way to perfectly prepare. You don't know what course of action will occur. And it's a very political decision now. It's a tribal discussion to some degree. And you'll hope for leadership that actually will do something. Recognizes the problem. And America's an incredible society, rich, you know, we got everything going for us. But that doesn't mean we can just print money indefinitely.

that as that, as that, and it'll be interesting to see how it turns out, Charlie. Well, and at some point, printing money to buy votes will be counterproductive. Yep. And we don't know exactly where that comes. And if something is going to be dangerous and unproductive, you ought to keep it a fair distance away. Now, if you have a culture that is exceptionally strong, like Japan, They have done some strange things there. But they couldn't have been a reserve currency.

No, of course not. But Japan bought back most of the national debt and a lot of the common stocks. And just the Federal Reserve owns practically everything in Japan. And the country's working. It's in 30 years of economic stasis, but it's not going to hell. I really admire Japan. But I don't think we should try and imitate it. I don't think we're as good at Japan.

They have a cohesive culture and we don't, Charlie. Yeah, that's exactly right. Yeah. In Japan, everybody's supposed to suck out and cope and in America we complain. So I hope you come next year with a tougher question. But and thank you. And I predict I would love to be being born again today in the United States. I mean, we can do a lot of dumb things and get away with it.

We can't do an unlimited number. There are people who care about that. And, you know, you have to be willing to be extraordinarily unpopular. I mean, Paul Volcker, there are other Federal Reserve chair people that would not have done what he did. It's just, it's too uncomfortable. And there used to be a politician in Nebraska. And if you ask them some really tough question, like, you know, how do you stand on abortion? He would look you right in the eye and say, I'm all right on that one.

And then he moved next to. Well, that's what people are. have done basically on inflation. And they, they, one way or another, they say, I'm all right on that. And then they, they don't really think about what the consequences of their actions could be, particularly. And it's so much fun. There's 435 of you to just be one of 435 instead of being the person actually responsible. Anyway, I am still next to the question of two superpowers and when you get into really destroying a planet, destroying the reserve currency of the world when there's really no substance, and forget about all the toys, you know, with, I mean, it's a joke to think of any

tokens or that sort of that, that's madness, but it's also madness to just keep printing money. Yeah, and we know how to do it, and we actually came from a money printing, money printing economy in World War II, which was required, and we suffered significant inflation, the price level. I mean, there's a million ways to judge it, but maybe ten times what it was then or something. like that, well, that's, that's getting close to the edge of where you don't want to, you don't want to hold dollars anymore. You want to hold something else. You want to hold real estate. You want to hold an interest in a business. There's a lot of good, your best defense is your own earning power. If you're the best doctor in town, if you're the best lawyer in town, if you're the best teacher in town, or even if you're the 10th best,

you're going to make a good living. I mean, you know, the economy is productive, and you will succeed with your talents, but you won't succeed by hoarding dollars. You'll just succeed by the fact that your value to the community, which is a rich community overall, is sustained. And so the best investment is always in yourself. That's the answer I would give you. Well, we have a situation where we've learned to print money in gobs and let a big chunk of our young people go right into wealth management.

Like we did. Like we did. Yes, we've been bad. examples. And I want to say that I didn't realize wealth management it was going to get so big when I went into it. And I all apologize for what's happened. Yeah. Well, anyway, you did well. Let's take a quick break and hear from today's sponsors. No, it's not your imagination. Risk and regulation are ramping up. And customers now expect proof of security just to do business. That's why VANTA is a game changer. Vanta automates your

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I do generally agree that Berkshire is a better inflation hedge than most companies, and this is because the capital allocators are mindful that high inflation is a possibility, and they know what a great business looks like when they see it. Additionally, most of the businesses that Berkshire Invest in does not require a lot of additional capital to maintain their operations, and the businesses they own have pricing power. And these types of businesses are in the best position on a relative basis to have a good handle on inflation. This next question I wanted to play is about what major mistakes people should try and avoid. Here's a clip. Good afternoon, Mr. Buffett, Mr. Munger. My name is J.C. I'm 15 years old and I'm from

Ohio. This is my fourth in-person Berkshire meeting. I have a lot of passion learning from your speeches, interviews, and articles. Thank you for sharing your wisdom all the time. Mr. Buffett, in your annual shareholder letter this year, you said that Berkshire's journey consisted of continuous savings, the power of commanding, the American tailwind, and avoidance of major mistakes. You have humbly admitted in the past that you have made many mistakes, but this is the first time that major mistakes stood out to me. Could you please advise us on what major mistakes we should learn, we should avoid in both investing and in life?

I would also like to have Mr. Munger's thoughts, too, please. Thank you very much. Well, let me. Charlie, Charlie said the major mistake you can make, you know, you're lucky to be in the United States. To go around the world, you don't have a lot of choices. some in some places, but you should write your obituary and try and figure out how to live up to it. And, you know, that's something you get wiser on as you go along.

The business mistakes, you just want to make sure you don't make any mistakes to take you out of the game or come close to taking out of your game. You should never have a night when you're worried about investing. I mean, assuming you have any money to invest at all, and you should spend a little bit less than your earn. And you can spend a little bit more than you earn, and then you've got debt. and the chances are you'll never get out of debt. I'll make an exception in terms of a mortgage on your house. But credit card debt, we're in the credit card business big time, and we'll stay in the credit card business.

But why get behind the game? And if you're effectively paying 12 or 14 or whatever percent, they're paying out a credit card, you know, you're saying I'm going to earn more than 14% on money. And if you can do that, come to Berkshire Hathaway. So it's, I hate to say this when Charlie's around me, but it's straight out of Ben Franklin. And it's not that complicated.

But you, well, I'll give you a couple lessons. You know, Tom Murphy, the first time I met him, said two things to me. He said, you know, always tell someone to go to hell tomorrow. Well, that was great advice then. And think of what great advice it is when you can sit down on the computer and screw your life on forever. By telling somebody to go to hell or something else, in 30 seconds and you can't erase it. And, you know, you haven't lost the option. And he said, you know, praise my name.

Criticized by category. Well, what makes more sense than that? I mean, who do you like to criticize you all the time? And you don't need to, you don't need to belify anybody to make your point on sub-eutual discussion. And then give you another general piece of advice. I've never known anybody that was basically kind that died without friends. And I've known plenty of people with money that died without friends, including their family. But I've never known anybody.

And, you know, I've seen a few. people, including Tom Murphy, Sr., and maybe Jr., who's here, but certainly his dad. He, I never saw him, I watched him for 50 years. I never saw him do an unkind act. I didn't, I didn't seem to do very many stupid acts either. I mean, it wasn't that he was non-discriminating. He just, he just decided that there was no reason to do it. And, uh, wow, what a difference that makes in life, Charlie? Well, it's so simple to spend less than you earn and invests. shrewdly and avoid toxic people and toxic activities and try and keep learning all your life,

et cetera, et cetera, and do a lot of deferred gratification because you prefer life that way. And if you do all those things, you are almost certain to succeed. And if you don't, you're going to need a lot of luck, a lot of luck. And you don't want to need a lot of luck. You want to go into a game where you're very likely to win without having any unusual look. I'd add one more thought too you need to know how people can manipulate other people

and you need to resist the temptation to do it yourself. Oh yes the toxic people who are trying to fool you or lie to you who aren't reliable in meeting their commitments. A great lesson of life is get the hell out of your life.

Yeah. And do it fast. Do it fast. And I would add But Charlie wouldn't totally agree with me. Do it tactfully if possible, too. But do get them out of your life. Yes. I don't mind a little tact.

Or even a little financial cost. But the question is getting him a hell out of the law. This all falls well in line with Charlie's thesis on avoiding standard stupidities. He's not really trying to do anything extraordinary from day to day. he's just trying to continuously not do things that a dumb person would do. And I really like that point of surrounding yourself with like-minded people and really positive people to help encourage those positive behaviors and then avoid the negative behaviors that don't really do you any good.

And this is what brought me to value investing, because value investing when done right is a reliable way to build wealth over time, especially when you diversify into a number of great businesses that are pretty likely to continue to increase their earnings. power year after year after year. Next, I wanted to play this question regarding oil. This is a question from Monroe Richardson. The Wall Street Journal reported in March that oil producers are producing less oil and may have reached their peak in the Permian Basin, given the major positions of both

Occidental Petroleum and Chevron in the Permian. Would you please explain the rationale for Berkshire's significant holdings of both those companies, considering that future outlook for oil there? Well, there's no question. It's really interesting about oil. And Charlie knows way more about oil. When did you buy that royalty in Herbakersfield or wherever it is? That was before I met you, right?

Yes. No, it wasn't before. It was. But it was. Yes, it was. It was just before. You're right. And that kind of moral is still paying me $70,000 a year.

Would you pay for the $1,000? $1,000. Yeah. Yeah. Now, that's the opposite of the Permian. My dad bought $1,000 or $5,000. $100 with the royalties before he died in 1964. He left him to my mother. My mother left him to her two daughters. And my older sister died and my younger sister's here today. And she

gets these checks every month. And she knows about all these different fields and what they're producing. And that's the reality of half of the oil production or something around that in the United States. And then the other half is shale. And, you know, if you've gone to the movies, I never watched oil. You've never watched the things that are pumping. Charlie's Royalties in California, you see these gushers of oil. Well, in the Permian, and I'm like, this should sink in on you. In the first day, the first day when you bring in a well, you know, it may be 12,000 barrels or maybe 15,000 barrels.

And it's even, it's dangerous. At Occidental had one come into, I think, in 19,000 barrels or something I got one day. And in a year, year and a half, it becomes practically nothing. It's just, it's a different business in effect. And the United States, it's interesting. We use whatever we use, maybe 11 or a fraction, well, we produce 11 and a fraction million barrels of oil equivalent a day. But if shale stopped, I mean, it would drop to 6 million, very fast.

Well, just imagine taking 5 million barrels a day out of the production in the world. And then we're also taking down our strategic petroleum reserve. Strategic petroleum reserves, the ultimate oil field. You don't have to drill. It's just like we've got it. And it was supposed to be strategic, but it gets involved in part. politics. And so there's all, when you're about the oil business, you're talking with different kinds of businesses, basically. And we like Occidental's position in the Permian, and we,

we wouldn't like that position. Well, I got to minus one day. It got to minus $30 a barrel. That was crazy, of course. But if oil sells at X, you know, you do very well, and it sells at half of X, your costs are the same. And it doesn't change the production. And it doesn't work as well. But it also brings down the oil production of the United States very fast. So we don't know what oil prices will be, but we do very much like the Occidental position they have, and that's why we financed them a few years ago, and it looked like it was a terrible mistake, when the oil market just totally collapsed, and then it changed around, and we bought a lot of the common stock. In the last few months, they've reduced our preferred, which we don't like, obviously, but we'd be disappointed in them.

If they didn't reduce it, it's intelligent from their standpoint. So we've taken, of the $10 billion preferred. We've got maybe four or five hundred million dollars of it retired at a hundred and a percent apart. But Vicki Hollab is a, she's an extraordinary manager of Occidental. Her first job was the city service. That was the first stock I bought in 1942. She knows what happens beneath the surface. I know the math of it. I wouldn't know, I wouldn't have the faintest idea what to do if I was in an oil field. I mean, I don't, I can dig to the feet down. I can't in my backyard and I can, That's my understanding of subsoil in the world. I can't picture the field that Charlie has been collecting that monthly checked from 50 plus years, 60, 60 years roughly.

Or my sister's getting at various fields where they just keep pumping and bumping and bumping in. And we in the United States are lucky to have the ability to produce the kind of oil we've got from shale, but it is not a long-term source like you might think by watching movies about oil or something of the sort. Charlie, do you have anything? Yeah, it really dies fast, those shale wells. If you like quick death of your oil wells, we have them for you. No. But Occidental, they're doing a lot of good things.

Yeah, they do a lot of new wells. Yeah. They're doing it in a profit, but it's a different kind of oil business. It's just different. Yeah. Yeah. And that's true of almost half the oil. oil produced in the United States. And there's a lot of oil down there that nobody knows how to produce.

And they've been working at it for like 50 years. But they worked at the existing shale production for about 50 years before they figured it out. And it was weirdly complicated when they found they were able to do it. There's only one type of sand that works. Can you imagine a horizontal pipe? You know, maybe a mile a half or something. It's just so different than what you think about. They go laterally for three miles, two miles down. How the hell do you build two or three miles laterally when you're already two or three miles under the earth? They've mastered a lot of very tricky technology. Do we able to get any oil out of these wells at all?

And we love the position with Occidental. Yeah. We love having Bickey run it. And there's a lot more oil down there if anybody can figure out another magic trick. That's all we need is another magic trick. But Occidental has some other things, too. Yes, yes, but the price of oil still is incredibly important in terms of the economics of short-lived oil. I mean, no question about that.

Well, if it's... And we will, incidentally, you know, there's speculation about us buying control. We're not going to buy control. We don't want to, we've got the right management money. We wouldn't know what to do with it. Charlie wouldn't mind know what to do in an oil field. In admitting you're buying coal would be like going out and seeking to acquire a cancer or something. You can't even borrow to expand a coal mine now.

It's really, it got very unfashionable. Yeah. And we think, frankly, some of the things that are ridiculous. And on both sides, on both, in both extremes. I mean, you're dealing with physics. You're dealing with, you know, it's the politicization of positions on something that's enormously important in terms of energy. It just lends itself to demagogues and fundraisers and advisory organizations. and everybody in sight.

We will make rational decisions, and we do not think it's an American to be producing oil. And there is no oil basin in the United States that compares to the Permian in terms of promise. Yeah, we were lucky. We didn't know it was there until not that many years ago. It has sort of been used up, and they always knew the shale oil was there,

but they thought it was going to stay unrecoverable forever. The second or third stock I bought was Texas, Pacific Land Trust, and they owned three million acres down there and they were grazing revenues of 10,000 a year or something like that. They were sitting on this incredible amount of oil, and basically that company is now actually part of Chevron, and went through Texaco and did all kinds of things, and there's still a Texas Pacific Land Trust, but a lot of that property is fee owned by their minerals are owned by Chevron, which is some advantage.

but it's an interesting subject, I'll put it that way, and we will not be making any offer for control of Oxenano, but we love the shares we have. We may or may not own more in the future, but we certainly have warrants on which we got as part of the original deal, on a very substantial amount of stock at around $59 a share, and those warrants last a long time, and I'm glad we have them. The facts that Munger is receiving checks every month for $70,000. from just a $1,000 initial investment is simply amazing, and it really helps illustrate the power of long-term compounding and the type of thinking it really takes to take advantage of that compounding.

A good episode we have here on our network chatting about why Buffett purchased a large position in oil is Trey Lockerbie's episode with Josh Young back on episode 468 from 2022. Buffett during this clip specifically mentioned the Strategic Petroleum Reserve for the U.S. The SPR has been drawn down to 364 million barrels of crude oil, and that's down 50% from its highs in 2011. And that's really drawn down sharply since the middle of 2021. Next, I wanted to play a clip talking about incentives, which, again, is one of my very favorite topics, and how Berkshire can attract high-quality managers that want to have their business sold to Warren and Charlie. Here's the clip.

Hi, Warren. Hi, Charlie. My name's Anderson Fuller, and I'm from Averickshire. import Nova Scotia in Canada. And before I ask my question, I just want to thank you for all you've done to give us insight into your minds as investors. So for me, the most compelling takeaway from Berkshire is your guys' emphasis on and successful use of properly aligned incentives. In my view, owning and leading a business has two central benefits. First, you directly benefit as the company goes through your equity in it. And second, you have autonomy. Incentives for employees are a bit easier to understand, such as offering benefits, fair pay, and creating a strong culture, but I've always struggled to understand them at the highest level.

Even though you say Berkshire gives its managers significant flexibility, it must be less than what they have when they were independent. Additionally, you would think passion and a willingness to sell would be inversely correlated. So how exactly does Berkshire bridge this gap and incentivize owners of its subsidiaries to give up these benefits to Berkshire? Thank you. Well, what we really hope to find is managers who love their business, but don't like a lot of what comes with it as a public company. I mean, if they have to spend a lot of time listening to people tell them what to do about this or that, and they can't afford to irritate them, or they have to go along with their trade association, or whatever they may call it, because you don't want to look like a free rider.

There's all kinds of things, compromises that people have to. have to make in most jobs. And Charlie and I solve that problem. I had five bosses in my life, and I liked all five of them, and two of them were just huge factors in making my life better. But I like all five of them. A couple of them are, you know, some people here, J.C. Penny, Cooper Smith. You know, I've worked with 75 since an hour, and I love working at pennies. Well, I didn't I love working at pennies, but I love working for Cobur Smith and, you know, it was 75 cents an hour. But I had to do what they told me to do, which was to sell men's shirts first, then men's clothing, then children's clothing, and so on. And I love working for the newspaper, and I had a great manager when I was University of Nebraska.

Got to work for Ben Graham. I mean, everything worked out, but there's nothing like working for yourself. And if you can't own a big company, working at Berkshire Hathaway for running a company, is the closest thing you will get. You don't have to spend time courting analysts who you probably have contempt for in many cases. You don't have to spend time with banks, you know, getting money, and particularly in terrible times. There's all kinds of, you get a lot in the way of freedom that I would think would be meaningful to me. And it might be better if you own the whole place yourself,

but maybe you've got siblings that want to. Maybe, there's a million reasons why you may not be able to achieve that unless you home to Berkshire. And that's easier probably if you have a family business where people want to go in different directions than it is with a public company. But there's still possibilities there. So that's why, that's why I think if I owned a public company and it was worth many, great many billions of dollars, and Berkshire Hathaway wanted to buy it.

And shareholders were willing to vote it. I would consider it the way I would feel about life. But one thing I wouldn't want to retire at 65. I'd want to keep working. And, you know, we just, we've, there are reasons to Salter Berkshire, which Charlie and I, in certain positions, if we were on the other side, would take the deal. And, but it isn't for everybody, Charlie. I think we have a pretty good one.

We've been very lucky. And I don't know. It seems to be that most of the people. people who are going to end up the way we did, they almost already know how to do it. Well, the most important purchase in retrospect that we may have made was national indemnity, not because specifically what it did, but what it led to. And Jack Ringwall controlled the company, and I knew him and liked him, and he knew me. And once a year, he'd get irritated when the Nebraska Department of Insurance or somebody

would come around and he'd set. They always came around when the exorbin racetrack was open, you know, so they could, I mean, he had all these theories about why it was a pain in the neck to be regulated. And I told Charlie Hider next time Jack is in that mood where he's ready to sell just because he's tired of fooling around with all these guys. Be sure and find him. And so Charlie called me one day and he says, Jack is in the heat. And I said, bring him over. And we made a deal. Well, that's why Jack sold.

And he was happy after he made the deal. And I was happy after we made the deal. So there's a man that controlled the business, but just decided, these people didn't seem to bother them as much once they were my problem and not his. And you just can't tell when lightning will strike. And that didn't do magnificent things for us initially, but just look at what it led to. You know, and then, so you never, you know, if you knew how you were going to, again, if you knew how you were going to shoot all 18 holes, it wouldn't be any fun playing,

you wouldn't get on the first tee. I mean, it's the, it's the, it's the, you know, uncertainty, the fun of playing the game, the opponents, all kinds of things that make a game interesting. And I think Charlie are in the most interesting game in the world. So really the advantage of selling to Berkshire is that it may be easier and may cause a lot less headaches than going public. You know that Warren will be holding your business into perpetuity. You get to run your business however you like. There's a lot of different reasons. And Berkshire has really built this reputation that they're a really favorable place to sell your

businesses for the business owners who really care about who they're selling to, and they really care about what happens to their business after it's under new ownership. To wrap up this episode, I thought there was no better way than to close it out with some humor from Charlie Munger, which he really always seems to deliver on every single year. Here's the final clip I wanted to play. Dear Warren, dear Charlie, my name is Victoria Rwantrop. I am 22 years old, and I study in Munich at the CDTM, the Center of Digital Technology and Management. As your grandchildren are more in my age group, let me ask you, how do you transfer your wisdom to your grandchildren and heirs,

how do you lead them to investing, do you see value in investing as a family or individually? Thank you. I'm going to let Charlie do the answering on it. He's got more. Well, I have more grandchildren, but I am quite philosophical about my grandchildren not thinking exactly the way I do. It seems to me that's almost the natural course of life.

And I just live my life my own way and they can observe it as an example if they want to. And if they don't, they can try some other way. I don't like it when they try some other way. I have to pretend that I like some of the boyfriends and girlfriends I don't like. But I just struggle through like everybody else. And usually I just bite my tongue and keep silent. That's my way of handling it. Well, I would say that I think that in my case, my three children have grown a lot smarter

in the last 30 years, and I think I've grown smarter. Well, I know, but you needed a lot of help. That is for sure. No, I would totally acknowledge that. That's why I had the room to go. I mean, I had plenty of room for improvement. We all had a lot to grow. I worked a year for U.S. Steel, which was in their fabrication department in Los Angeles, a big operation.

The thing was utterly doomed. And three years later, it went back to Greenfields. The whole thing was raised to the ground. I did not see it coming. Now, to be that ignorant as I was at that age, it was a sin. it was a sin and my professors by and large were even more eager than I was. We just nobody had observed the basic economics of business in a scientific way at all when I was young. Well, if we're getting into confession time, I have to tell you, it's 3.30.

So we don't want to keep going on. Who knows what we'll be saying another half hour. All right. So that's all we have for today's episode. There's really nothing like being in Omaha. and being around thousands of other Berkshire shareholder owners who have an owner's mindset, they're lifelong learners, they understand the true power of compounding, and most importantly, they're just really good people.

There's really nothing like the energy in CHI Center and actually seeing Warren and Charlie in person, as well as being around many other popular people in the crowd, such as Tim Cook, Monish Paburai, Guy Speer, the list goes on. Thank you again to those of you who joined us at our events. If you didn't make it this year, we do plan on being in Omaha again next year as always. So stay tuned if you'd like to attend our events that we'll be hosting in Omaha. We never know how many more years we'll have the chance to listen to both Warren and Charlie on stage. So I know I'll definitely be there again next year if I have the opportunity.

With that, I'll see you all again next week. Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by the Investors Podcast Network. how to achieve financial independence. To access our show notes, transcripts or courses, go to theinvestorspodcast.com. This show is for entertainment purposes only, before making any decision consult a professional. This show is copyrighted by the Investors Podcast Network. Written permission must be granted before syndication or rebroadcasting.