Berkshire Hathaway Annual Meeting 2020 – 5 Highlights From Warren Buffett
- May 5, 2020
- 3 min read
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Warren Buffett spoke openly on the US economy, airlines, profit losses, and more during the Berkshire Hathaway Annual Meeting on Saturday. The event was live-streamed by Yahoo Finance.
The event held in Omaha, Nebraska was hosted by the aptly named “Oracle of Omaha” Warren Buffett the CEO of Berkshire Hathaway and Greg Abel, vice chairman of non-insurance operations.
Berkshire Hathaway is one of the largest public trading companies in the world. (NYSE: BRK.A) has increased an overall 751,113% between the initial share offering in 1964 and 2014. Stocks were sold from 1964 for around $19 each. There was an all-time high closing stock price on Jan 17, 2020, of $344970.00.
Berkshire Hathaway’s portfolio is diverse and profits substantially from its wholly owned subsidiaries, many of which are insurance companies. They do have major holdings in other industries from airlines (up until April 2020), Coca-Cola, Amex, and Johnson and Johnson.
Buffett, 86 years old, has a personal fortune that currently sits at over 73 billion USD making him the 4th richest man in the world to date. He became a billionaire at 55 years old. Early in his investment career, he acquired a textile manufacturing company called Berkshire Hathaway. He assumed its name and transformed it into a diversified holding company.
In the annual meeting on Saturday, Buffett confirmed that Berkshire exited positions in the “big four” airlines America, Delta, Southwest, and United in April 2020. On Saturday Buffet said “That was my mistake…We have sold the entire positions.”.
He went on to discuss their position, which is, as usual, sell high and buy low when the prices drop. However, Buffett confirmed that the bought in 2016 for between $7 – 8 billion and sold much lower than that. It may not have been his smartest move but with an increased cash pile from $128 billion to $137 in the first quarter, the company is ready and waiting for their next opportunity.
$50 Billion lost in 1st quarter
During the annual meeting, Warren Buffett confirmed the loss of around $50 billion in the first quarter of this year. He attributes the loss to the on-paper value of some investments.
History of Economic Disruptions
Buffett discussed the history of global financial disruptions. The CEO opened up about his personal childhood experience of his father having to run an account at the grocery store because he couldn’t afford to pay for food for their family.
He talked about when the Dow Jones passed 381 in the 1950s. Investors were fearful that the market would burst, and the 1929 Great Depression would happen again. Yet the Dow is now above 23,700.
During the annual meeting opening discussion, Buffett referred to the global recession in 2008 as “a train that was going off the track.” He compared that to our current economic environment, which in his words, “this time we just pulled the train off the track and put it on its side.
Invest in Stocks
Buffett reiterated his view that stocks are still a sound investment. They are a much better investment than treasury bills or people keeping money under their mattresses.
He encourages investors not to sell stocks in times of crisis but to “sustain that position for decades,” and the rewards will come. He continued to say that if investors sustain long term stock positions for decades, “you’re going to be ok.”
The Future For Investors
The CEO of Berkshire discussed the future of investment and where people should consider placing their money. His recommendation f is the S&P 500 index, which would allow investors to diversify their funds across strong American companies.
While he acknowledged that some of the Berkshire Hathaway companies have been affected and believe that their operating earnings “will be considerably less than if the virus didn’t come along.”
Buffett openly expressed in response to the pandemic, “I don’t know the immediate consequences of shutting down the economy.” However, he was firm on his belief in America, “I bet on America” and “I hope I’ve convinced you to bet on America.”
Where do you think the investment future will lead us? Comment below.