Our 72 hours with Warren Buffett

Bryce: [00:01:21] Welcome back to another episode of Equity Mates coming at you from downtown Omaha for the Equity Mates U.S. Tour. Now, if you've just joined us for the very first time, a massive welcome. Congratulations for starting your investing journey. If you are still getting up to speed, we have a podcast called Get Started Investing. Now a reminder that we are licensed, but we are not aware of your financial circumstances. So any information on this show is for education and entertainment purposes only. But let's kick on. My name is Bryce and it is with great excitement that not only am I bringing back my regular co-host, Ren. Hello, Ren, we have Maddy from your own good company as well. Maddy, how are you? 

Maddy: [00:02:01] I'm good. How are you?

Bryce: [00:02:02] I'm pumped. So we are here in downtown Omaha, sitting in a park. We've just finished the five K fun run after the Berkshire Hathaway annual AGM. How are you feeling, Ren? 

Alec: [00:02:14] I'm feeling pretty good. What was my time? 28 minutes. What was your time?

Bryce: [00:02:21] 30.03. 

Alec: [00:02:23] Well, I reckon if we did a poll on who would win the five K, I certainly would have won that. 

Maddy: [00:02:29] Well, Darcy did win the 5K. 

Alec: [00:02:31] That's crazy. Darcy got an internship at Berkshire Hathaway because he won the Invest in yourself 5K. 

Bryce: [00:02:36] That's it. So we are at the end of the Berkshire sort of weekend of festivities, the Berkshire Bonanza. So in this episode, we're going to bring you inside the AGM with some thoughts of how the days unfolded. Morning session, afternoon session, then close out with some of our favourite quotes from the big dogs on stage and close out with our favourite question of the day. 

Maddy: [00:02:58] I wish you guys could say what is happening right next to us right now. There is a giant flamingo ing day flight right next to our recording. 

Alec: [00:03:05] We should say so. Bryce has said we're in downtown Omaha, but let's describe the scene. So we would finish the 5K and we're sitting on a park table next to a big grassy area, a few high rises. It's it's, it's aggressively pleasant at the moment. 

Bryce: [00:03:22] As I was saying to Ren, Omaha is not a town I would choose to come to, but I've been pleasantly surprised. It has been awesome. But when we wouldn't be able to be here if it weren't for Milford, a massive thank you to Milford for sponsoring the Equity Mates U.S. tour. They are a leading New Zealand fund manager and they are now available for Australian investors and advisors. 

Alec: [00:03:39] Milford's Flexible active management strategies and high performing globally. Experienced investment team aim to deliver strong long term returns while managing downside risk. 

Bryce: [00:03:49] Its team also invests in the same funds as their clients. So you know they are highly motivated because they are on the journey with you. 

Alec: [00:03:55] Find the Milford funds on your trading platform or at milfordasset.com.au And before you invest, be sure to read the Fund's product disclosure statement and target market determination found at milfordasset.com.au. a massive thank you to Milford you're sending us over here? To this beautiful part of downtown. 

Bryce: [00:04:13] Oh, my Goodness. What an experience it has been. And it all started at 4 a.m. Saturday morning , it actually started then. 

Maddy: [00:04:22] I was going to say, I think, well, my alarm was set for 345. 

Alec: [00:04:25] Oh, I actually didn't sleep. 

Bryce: [00:04:27] Yeah. It actually started the night before so we, we knew that we needed to get to Berkshire early. There's 40,000 people descending on the town to come and watch Warren and Charlie. 

Alec: [00:04:39] I mean, we knew we had to get there early because we went to pick up our tickets the day before and the line was literally out the door and down street. 

Maddy: [00:04:46] We were in the line for probably almost an hour. 

Bryce: [00:04:49] Yeah. It was unbelievable.

Alec: [00:04:51] We knew. There would be some queuing. 

Bryce: [00:04:52] Yes. So we knew we had to get there early. We were told if it's your first time, you want to make the most of it. Get a good seat, get in there, get prepped. So we went to bed the night before. 

Alec: [00:05:01] It's in a basketball stadium. That's how they fit everyone. 

Maddy: [00:05:05] Yes, but it as packed. 

Bryce: [00:05:08] Packed. Absolutely packed. Maddy, did you sleep the night before? 

Maddy: [00:05:11] No. 

Bryce: [00:05:12] So you went. You got up at four. Without sleep? 

Maddy: [00:05:15] Yeah.

Bryce: [00:05:16] Ren. Did you sleep?

Alec: [00:05:17] I did not.

Bryce: [00:05:18] Did you try? 

Alec: [00:05:18] I tried.

Maddy: [00:05:20] We're Excited.

Bryce: [00:05:21] So both Ren and Maddy were often at home with the rest of the team. Sascha, Alf. A lot of whom had struggled to sleep the night before. 

Alec: [00:05:29] Did you sleep?

Bryce: [00:05:30] I went from ten through to one, then was awake for half, and then 133.

Alec: [00:05:35] This was living in luxury. 

Bryce: [00:05:37] I was okay. 

Alec: [00:05:39] Well, scooters are massive over here. And we've been scooting away around Omaha. And the night before we'd gone to a steakhouse. Every steakhouse in Omaha, claims that they've got Warren's favourite steaks. Yes. 

Maddy: [00:05:52] Give them a shot. At Cascio's.

Alec: [00:05:55] Yeah, yeah, yeah. 

Maddy: [00:05:56] Warren's favourite steak. 

Alec: [00:05:58] It's. It's like, you know, in Australia everyone's got the Australia's best pie or the world's best pie. 

Maddy: [00:06:03] Every country bakery has. 

Alec: [00:06:04] Yeah, yeah, yeah. Here it's. Everyone's got Warren's favourite steak and we had picked up as many scooters as we could because at 4 a.m. we were going to scoot down to the stadium. 

Maddy: [00:06:17] Yeah. We're prepared. 

Bryce: [00:06:18] We came out and two had already been scooted away, so we were down to.

Maddy: [00:06:21] Scooters and they don't whack before 5 a.m. in the morning, apparently.

Alec: [00:06:26] Lift a game over. 

Bryce: [00:06:28] Yeah. So we couldn't use the scoots. We jumped in and over and we were down at 430 in line. We're about 25 metres from the front of the of the line we were in. 

Alec: [00:06:38] We were so close to the front that I kind of thought we'd got there too early that the line wasn't really big enough. Yeah, but the line quickly grew behind us, so then it felt pretty good. 

Maddy: [00:06:48] We're actually nailed it. Sash and I went to the front and we were filming some videos, just chatting to people and the people at the front got there at 1 a.m.. 

Bryce: [00:06:56] Unbelievable. On reflection, I don't think we needed to get there that early, but it was worth it. We got in. we're running right in. Yeah, we knew it's safe. We're going to back to 16. It's first in first to serve.

Alec: [00:07:12] It would have been ridiculous if there were sighting numbers. Why would we have got there full time? 

Bryce: [00:07:16] And they should do it. They should do it. Anyway, We got in and then we had to wait for about another 2 hours. By the time we got in there, they were giving out free coffee, Free food. 

Alec: [00:07:26] Our biggest mistake of the weekend was we had all sort of questions to ask and then we were so excited, so tired, and we forgot to go to the question bay to do artworks is there are what, like ten question bays and you go and you get a number and then it's a lottery at each question bay and by the time we got there, they were doing the lottery. Yeah. So we didn't get a chance to ask the question. 

Bryce: [00:07:53] So we're sitting there and music's playing the stadiums filling and all of a sudden all of a sudden you could start telling some of the team members from Equity Mates, we're starting to get a little tired. This is when we it had barely kicked off and people were starting to say, oh dear, this is going to be a long day. 

Alec: [00:08:10] Not for me, the time. And so at that point it was still adrenalin. I was still going. They would have, as you said, free coffee in there, the movie, which we'll get to in a second. The movie, it was like just crescendoing still and it was like it was fast enough pace that it was going. But it was when Warren and Charlie came out and they started putting up the on the balance of financials. Yeah, that's on the big screen. And that was taken pretty slowly. And then that was when I started to look at that. 

Bryce: [00:08:42] So it kicked off at 830 with a rendition of what's the name of the song.

Maddy: [00:08:48] New York, New York I'll Never Be Out of here At the. 

Alec: [00:08:51] Empire State of Mind. A cover with a twist. If we find a clip of it, it's going here.

Maddy: [00:09:03] If not, I'll give you a demo. The financial statements were dreams and made of. 

Bryce: [00:09:10] Good lyrics. 

Maddy: [00:09:10] Now we're at Berkshire. 

Bryce: [00:09:13] And so then I walked out. We also had the likes of Bill Gates was there. They'll remember Tim Cook was there some really big dogs down at the front in the crowd. And then we kicked into proceedings. We had 45 minutes of what Warren called a movie, interspersed with ads for all of the subsidiary companies that he owns.

Alec: [00:09:30] Now, I was told that Warren starred in the ads and that they were like mock ads for these companies with Warren and I. In my mind, I was thinking like Michael Scott appearing in his movie sort of thing. Turns out they weren't. Turns out they were just heaps of ads. Yeah.

Bryce: [00:09:46] Yeah. So that 45 minutes of Apple, MasterCard, burger chains, you name it, interspersed with a movie of Charlie Munger, Warren Buffett and Jamie Lee Curtis. It was weird.

Maddy: [00:10:03] It started with Jamie Lee Curtis in bed with a shape wrapped around her on the foreign talk. Like doing, like, sexy talk to Warren. 

Alec: [00:10:11] No, no. So Warren wanted to invest in Internet stocks and Charlie didn't want to start. Warren called Jamie Lee Curtis to convince him because Charlie has a thing for Jamie Lee Curtis and which is certain scenes of his movies over and over again. So then Jamie Lee Curtis is in bed in Coles Charlie and convinces him. 

Bryce: [00:10:31] Yeah and essentially infers that he was going to cheat on his wife with Jamie Lee. Really Inappropriate? 

Alec: [00:10:38] And then we get pumped with some more ads and then we get a second part of the movie where Warren goes to Jamie Lee Curtis, his house. 

Bryce: [00:10:45] Yeah, Yeah, she was selling knives. 

Maddy: [00:10:48] And she. 

Alec: [00:10:49] Just keeps asking about. 

Bryce: [00:10:50] Charlie. 

Maddy: [00:10:50] Yeah, he was that the ad? Maybe that was bad because it was the ad for knives. Yeah. 

Bryce: [00:10:57] So that finished 45 minutes and then. And then the uys came on stage. We had Warren, Charlie, Greg.

Alec: [00:11:09] Greg runs everything but insurance. 

Maddy: [00:11:13] And his next in line. 

Bryce: [00:11:15] Well, he's going to be the CEO. Yeah. And then it was Ajit who runs the insurance business and then pretty much the flow of the day and we're going to get into it in a second if there's a mix of questions that come from the audience. And then there's a a mix that come from online that is curated by CNBC. They tried to get through 60 questions through the day. 

Maddy: [00:11:38] We started strong.

Alec: [00:11:39] They got 25 in the morning session and they didn't tell us how many. They got that. Yeah. 

Bryce: [00:11:43] When they started rambling. So let's move into the morning session. There were plenty of questions, as Ren said, 25 questions we got through. So we've pulled up a bit of a montage together of some of the highlights from the morning session.

Warren: [00:11:55] Good morning. Good morning and thanks for coming. Omaha loves it. I love it. Charlie loves it. We're glad to have you here. 

Host: [00:12:03] The first question comes in from Randy Jeffs in Irvine, California. And his question is, if Silicon Valley banks deposit had not been fully covered, what do you think the economic consequences would have been to the nation?

Warren: [00:12:17] Well, I would just simply say it would have been catastrophic. And that's why they were covered. And even though the FDIC limit is $230,000, that's what the statute raised. But that is not the way the U.S. is going to behave any more than they're going to let the debt ceiling cause the world to go into turmoil. And I think it was inevitable, Charlie, do you have any.

Charlie: [00:12:48] No, I have nothing to add.

Audience: [00:12:51] Hi. Nirav Patel here from Massachusetts. Mr. Buffett. Mr. Munger, it seems like you've found the sweet spot between being too conservative and too aggressive as investors. Do you ever make bad investment decisions because of your emotions? And what do you do to try to keep that from happening? 

Warren: [00:13:13] I can't recall. Any time. And that's true of Berkshire. We made an emotional decision that I know the movie had Jamie Lee in there, but that that was for laughs. I mean, Jamie, Jamie Lee, she's good, but she's not good enough to get me or Charlie to make an emotional decision. Yeah. Charlie, I'm sure you have something to add on that. But have we ever made an emotional decision?

Charlie: [00:13:51] No. Oh. 

Audience: [00:13:53] I have a question on A.I. and robotics. Guess my questions. As A.I. and robotics continue to advance, what do you believe will be the positive and the negative impact of this technology on both the stock market and society as a whole? And are there any specific industrials and companies that you believe will be most impacted? 

Warren: [00:14:19] Karen, I thank you for asking Charlie that question. Bill Gates brought me out of the latest and maybe not the latest version, but one he thought maybe I could handle, which I have to be careful of in terms of leading me too fast. And then there's remarkable things it didn't, but it couldn't tell jokes, though Bill told me that ahead of time prepared me. And it just isn't there. But, you know, things like charging all the legal opinions on, you know, since the beginning of time and everything and eliminating all. So I can do all kinds of things and something can do all kinds of things. I get a little bit worried and because I know we won't be able to invent it. And, you know, we did invent for very, very good reason the atom bomb. Well, Einstein said after the atom bomb, he said, this has changed everything in the world except how men think. 

Audience: [00:15:25] So what are your thoughts on the continued development of new energy? How may the new energy firm achieve better development in future? 

Warren: [00:15:37] So you've raised a question. I want to just take an extra minute because it's so important. And and I don't really know whether our form of government is ideal at all in terms of solving the problem you describe. We have solved at one time in World War Two, we took a country loose semi limping along and we found ourselves in a world war. And what we did in a world war is we brought a bunch of people to Washington and a dollar a year, you know, whether it was Sidney Weinberg of Goldman Sachs or you, you just name them. And we gave them enormous power to re-orient the resources of the United States to face the problem that they faced, which was to create a war machine. 

Host: [00:16:35] The next question comes from Ellie. I mean, to bet during an episode of Investing the Templeton Wei 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 reach 25 to 35%. He mentioned that Apple is now 35% of Berkshire's portfolio and thinks that that is near a danger zone. Wonders if Warren and Charlie can comment.

Warren: [00:17:05] I'd like to make one comment first, but Charlie will come up with. Yeah, I know that, but. Apple is not 35% of a Berkshire portfolio. Berkshire's portfolio includes the railroad, the energy business or animals, you name it, seas, candy. They're all businesses. And, you know, the good thing about Apple is that we can go up buying their stock and instead of owning 5.6%, you know, they get down to about 15 billion, 700 and some million shares outstanding. They get down to 15 and a quarter billion without doing anything. We've got 6%. So we can't own more than 100% of the BNSF. We can own more than 100% of animals or see's candy, 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. Charlie, do you want to add anything to your earlier comment? 

Charlie: [00:18:17] Well, one of the main things that's taught and modern university education is that a vast diversification is absolutely mandatory and 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. If you only got the three, I'd rather read my best ideas instead of my worst. 

Audience: [00:18:45] I'm Tom Nelson, a podcaster from North Oaks, Minnesota. Charlie, in 2022 you use phrases like really massively stupid, massive kind of ignorance and crazy to describe what you said. Was the 30% of Americans hesitant to submit themselves to untested MRNA Covid gene therapy? Do you stand behind those quotes today? 

Warren: [00:19:14] Yeah, sure. Yeah.

Alec: [00:19:18] Charlie Munger going bang there to finish the morning session.

Maddy: [00:19:22] He was such a classic. He was so entertaining all day. 

Alec: [00:19:26] He's 99 and he's so sharp. 

Maddy: [00:19:28] I was worried at the start because I think it took him like, almost like, 45 minutes to say.

Bryce: [00:19:33] Any first word. He was really warming up. I mean, impressive from both of them, to be honest. 93 one is just like an answer for everything. Without pause. And I just love the dynamic between the two of them. 

Alec: [00:19:45] Yeah, there was some great banter between them. They disagreed at certain points as well. Yeah, I'd say. 

Bryce: [00:19:51] So. What we've done, we've pulled some of the best responses from Charlie. It felt like we couldn't leave them out. And so he he's a bit of a montage of King Charlie. 

Warren: [00:20:01] We've got our own King Charles here today. I am personally sceptical of some of the hype that has gone into artificial intelligence. I think old fashioned intelligence works pretty well. I would not like the thrill of losing my big pile into a small. Probably like right back to the way it is. Well, I like. It's a radically different world from the world we started in. Certainly in my, well Charlie had a lot of experience to work with.

Charlie: [00:20:39] In Berkshire, we have a simple problem of estate planning. Just hold the goddamn stock. Well, we don't need as many wealth managers we have in Japan. Everybody's supposed to suck up and cope. And in America we go blame policy. Well, I'm slightly less optimistic the more I know. I think the best road to end human happiness is to expect less. I have nothing to add. 

Bryce: [00:21:11] Now, before we take a quick break, I must mention that we're at the point where some of our team members had been up for multiple hours on end and there were rumours going around that people were going to be heading home for a lunchtime nap. Now, Sascha, our producer, did do that. 

Maddy: [00:21:26] Disappointing. 

Bryce: [00:21:27] My friend that Ren and Alf both left to go for a nap and rightly so. A great on the way home that it was bucket list moment turned around and on their way back had a skater. 

Alec: [00:21:39] Went for a beer instead. 

Bryce: [00:21:40] Went for a beer instead. Darcy was nodding off throughout the first half. It was a funny sight. So we're just going to take a quick break. And on the other side, we're going to hear them share their thoughts on Elon Musk and go through our favourite questions from the day. 

Alec: [00:22:02] Now Equity Mates, we want to say a massive thank you to Milford for sponsoring our U.S. trip and getting us over to Omaha so we could see Warren and Charlie in person. If you want to give you a portfolio, an offensive and defensive strategy, check out Milford's Award winning Milford, Australia, an absolute growth fund. 

Bryce: [00:22:19] That's it. Ren utilising the skills of Milford's experienced investment team. The Milford Australian Absolute Growth Fund has been focusing on delivering a smoother journey for investors for over half a decade. 

Alec: [00:22:29] With an emphasis on managing risk and generating absolute returns. This low volatility equity fund can play a key role in a diversified portfolio. The fund strives for long term capital growth, while mitigating the ups and downs typically experienced when investing in the share market. 

Bryce: [00:22:44] Find the Milford Australian Absolute Growth Fund ticker symbol MFOA on your trading platform or at milfordasset.com.au And before you invest, be sure to read the Fund's products. Disclosure statement and target market determination founded at milfordasset.com.au. 

Alec: [00:23:13] All right, Equity Mates. Well, we are here sitting in a park in downtown Omaha. We have just finished the Brooks Invest in yourself 5k fun run.

Maddy: [00:23:21] Got my medal on 

Alec: [00:23:23] Side note I am still perplexed why it's a5k fun run when we're in America and they hate the metric system. 

Bryce: [00:23:30] To get it right. You've been talking about it for 3 days. 

Alec: [00:23:35] No one give me a good answer. And until someone does, I'm going to keep asking questions. But we are here unpacking what was an epic day yesterday. We saw Warren Buffett and Charlie Munger, 92 and 99 years old, respectively. 

Maddy: [00:23:50] 93, isn't it?

Alec: [00:23:51] Yeah, I think, you know, I think it's 93.

Maddy: [00:23:55] They're both January babies.

Alec: [00:24:03] I'm trying to set up our site here. We have recapped the morning session and heard some questions and answers from the two great investors. We are now over to the afternoon session. As Bryce said, there was a risk of a few team members, myself included, ducking home for a quick pound up producer Sascha, who's sitting next to us here. Did go home for a quick nap while the two nine year olds kept powering on. I guess they didn't get up at 4:30 a.m., 4 a.m.. 

Bryce: [00:24:35] I mean, to Give a sense of why that is the case. There's no control over the questions. So some of them were just like, Yeah, really? Come on, guys. And as you can imagine, to 90 plus sitting on stage, it did drag on. 

Alec: [00:24:47] Well, you know. 

Maddy: [00:24:47] You've been rambling. 

Alec: [00:24:48] Because we didn't sleep the night before. 

Maddy: [00:24:51] And we had just flown in from Australia. 

Alec: [00:24:55] Bryce on its high horse.

Maddy: [00:24:58] I think the real winner is Maddy who had no sleep and still powered through. 

Bryce: [00:25:03] Maddy was the MVP. All right, well, let's kick into it. Here's a montage of what happened in the second session. 

Audience: [00:25:08] Mr. Buffett and Mr. Munger. Hi. My name is Daphne. I'm 13 years old, and this is my sixth annual Berkshire Hathaway and Holders meeting. My question is, are we likely to face a time in the future when the US dollar is no longer the global reserve currency? How has 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 deDollarisation? 

Warren: [00:25:43] Well. I. I should ask you to come up here and answer some questions. I mean. It's 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. But he's not in control of fiscal policy. And every now and then he drops a few hints. And there was no question that when the pandemic broke out, I mean, it was a semi war like situation, but nobody knows how far you can go with the paper currency before it gets out of control. And particularly if you are the reserve world's reserve currency, nobody knows the answer to that. 

Host: [00:26:54] 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? 

Warren: [00:27:13] If oil sales and Exxon, you do very well? What's also the half of action to consider 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 finance them. A few years ago, when it looked like it was a terrible mistake when the oil market just totally collapsed and then it changed around. We won a lot of the common stock in the last few months. They reduced our preferred, which we don't like. Obviously. I think we'd be disappointed in them if they didn't reduce it. It's intelligent from their standpoint. So we've taken the $10 billion preferred. We've gotten maybe four or $500 million of a retired and a hundred members on the part, but she's an extraordinary manager. 

Audience: [00:28:22] My name is Max Dole. And from Toronto, Canada. I have a question for Charlie. Regard his statement you made in the past. You once mentioned that you would prefer to hire someone with an IQ of 130 who believes it's 120 over Someone with an IQ of 150 who thinks he's 170. I understand that You were referring to Elon Musk. Given the recent success of his ventures such as Tesla, SpaceX, and StarLink, I'm curious to know if you still hold the view that Elon Musk overestimates himself. Thank you so much. 

Charlie: [00:29:13] Well, yes, I think Elon Musk overestimates himself, but he is very talented. So he's overestimating somebody who doesn't need to overestimate to be very talented.

Warren: [00:29:28] There's a Bill Maher program about a week old, maybe two weeks old, but he interviews Elon. Elon does a terrific job toe to toe with Bill Maher, who is worth watching and ElonAnd he's a brilliant, brilliant guy. And I would say that, you know, he might score over 70, but he you know, it's he he dreams about things. And they his dreams have got a foundation. 

Charlie: [00:30:07] He would not have achieved what he has in life if he hadn't tried for unreasonably extreme objectives. He likes taking on the impossible job and doing it. We're different. I and I are looking for the easy job that we can do down the path. 

Warren: [00:30:26] Yeah. If we could do it playing tic tac toe, we'll do it, you know. I mean, we have a totally different way of going in the hallway, but we don't want to compete with each other in a lot of things. I mean, we don't want that much failure. Yeah. 

Host: [00:30:44] This question comes from Lindsay Peter Schumacher in Cedar Rapids, Iowa. Does the current size of the Federal Reserve balance sheet concern you, in particular the results of quantitative easing? The Federal Reserve expanded its balance sheet out of nothing. The net effect is in essence as a form of single entry accounting, creating something of value out of nothing other than a series of book injuries and injuries, and wondering what Mr. Munger thinks about this as well.

Charlie: [00:31:14] Well, I don't think the Federal Reserve is the problem, and I think they can't solve the fiscal problem. I don't I don't I do not worry about the Federal Reserve. And I think it's fulfilling the functions for which it was established. I probably would not have been. They have two objectives. I would not have been one probably that would have changed the inflation objective to 2% a year from zero. I think that and, you know, I think that if tell you people that you're shooting to depreciate your currency at 2% a year, that was. A lot of implications. All of it feels good to people. A lot of people want a little inflation. The most important one, one of the most interesting figures to me is currency in circulation. I mean, it is gone. They were saying cash is crashed back in 2007 and eight. All of that cash is going to disappear. Well, if you look at the Federal Reserve balance sheet, it's gone from 800 billion to 2.2 trillion and most of those in $100 belt overwhelmingly. And if you're not, I think there's about 50 $100 bills per person, babies, everybody in the United States. And I would really like to know where all of that is. 

Warren: [00:32:46] It's been very extreme. I think you could be pretty extreme in fighting depressions and so forth if you reverted afterwards to a period of some discipline. But if you got some decimal but if you're going to just keep borrowing, printing money and spending it, I think eventually it causes bad trouble. While we're getting into confession, I have to tell you, it's 330, so we don't want to keep going on. Who knows what we'll be saying in another half hour or so. So I thank you all very much for coming at 430. We will have the shareholders meeting here. 

Bryce: [00:33:35] So it is a quick finish there from Warren. We were pretty stoked because it meant we could either hit the high or go and have some drinks at the Hilton, which is the place to be. But let's close out the episode with a question that we found. Let's close the episode with one of our favourite questions from the day. Maddy, do you want to kick us off? 

Maddy: [00:33:53] Yeah. So I think my favourite question of the day was the effect of AI on value investors. 

Audience: [00:33:59] My name is Saluzzi. I'm from Santa Clara, California. And my question is to Charlie and then Warren. Given the rise of disruptive technologies that can improve productivity significantly and I 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 the recommendations for investors to remain successful in this rapidly changing landscape? Thank you. 

Charlie: [00:34:34] Well, I'm glad to take that. I think value investors are going to have a harder time now that there's so many of them competing versus a diminished bunch of opportunities. So my advice to value investors is to get used to making less. 

Warren: [00:34:55] And Charlie has been telling me the same thing the whole time. We've known each other lately. We get our wonderful life because. 

Charlie: [00:35:02] We are making less. 

Warren: [00:35:04] Yeah, well, but that's good. That's mostly I think it's great. It is larger. We were younger. It was. We never thought we could manage 508 billion. What? Yeah, but I would argue that. That there are going to be plenty of opportunities. And part of the reason that we'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 changed in the years since 1942 when I started say, well, how does it get that doesn't know anything about aeroplanes, it doesn't know anything about engines and cars and doesn't know anything about electricity and all that. But that isn't the that's not the world changing. Those are new things coming along. Don't take away the opportunities. What gives you opportunities is other people doing dumb things and. Is that? 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 ten or 15 dumb insurance companies in the last ten years and you could become rich if you were adroit at it. Whether the business succeeds or not, the underwriters got paid and the lawyers got paid. And that creates it. That's done on a large scale, which it couldn't be done 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 don't think that investing has disappeared so much from this huge capitalistic market that anybody can play in. But the big money is in selling other people ideas. It isn't outperforming. And I think that 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 will always differ on this subject. He likes to help me out, will make the world listen. And I like to tell him we'll find something. And so far, we've both been kind of right. Charlie, wouldn't you bet your budget on that or not? 

Maddy: [00:37:52] Sorry. I feel like this has been a question on my mind for a little while now. I know that with so much with technology changing so rapidly at the moment and it feels extra relevant at the moment with the latest developments in AI, but is how do we value invest in this environment when things are growing so rapidly and not really feels like where the biggest opportunities are in terms of investing? I guess thematics? 

Bryce: [00:38:16] Speaking of opportunities, they kept saying throughout the day that there are less opportunities, less opportunity. 

Alec: [00:38:24] Yeah. But that's also a function of how big they are. 

Bryce: [00:38:26] Yeah, that's so much cash.

Alec: [00:38:29] I think investing I like what works in investing is constantly changing and you know, even everyone talks about Ben Graham style of investing and everyone talks about security analysis as like the seminal book that everyone should read lets people talk about the fact that Ben Graham, when he was close to dying, had walked back and he said the style of investing that I wrote about doesn't work and done. And then, you know, that whole like cigar box net net value, true value investing, that's kind of an arbitrage in a way because of all this technology. 

Maddy: [00:39:02] Well Charlie, you say that value investors need to get used to making less money. 

Alec: [00:39:07] But then like there's a whole new breed of value investors which that kind of like growth value investors. Yeah, yeah, yeah. Value is cheap based on what it's going to be in three. 

Maddy: [00:39:18] Warren's answer that question was like PayPal. The way to value investor, the way that you can make money is because there are so many people doing dumb things. 

Alec: [00:39:28] Yeah, and you know, Charlie said there are a lot of smart people out there with money, which is true, but there are lot dumb people with money as well.

Bryce: [00:39:37] Munger also had an interesting take on A.I., generally, one of his quick quips on a throw from Buffet with his thoughts on AI was, I think old fashioned intelligence works pretty well. Do you he have ever Used chatgpt 

Maddy: [00:39:54] I was just about to ask. 

Alec: [00:39:56] Definitely not. 

Bryce: [00:39:56] No.

Maddy: [00:39:57] No. Yeah, Eventually someone's showed it to him. 

Bryce: [00:40:01] Well, he was saying that Gates shows them the latest. The latest stuff. And we were talking with Mark Nelson afterwards at the Hilton Bar, and he's the executive chairman of Caledonia and is fortunate enough to be in the Breakfast Club with like, we have Munger every week. And he was speaking to Gates at a dinner the night before and Gates was giving him the download and how they're quickly taking market share over Google. Yeah. 

Maddy: [00:40:30] That catch up with? Mark is probably some of my favourite shot of the day. 

Alec: [00:40:36] Yeah, but have you seen the leaks Google memo that both losing market share to Facebook in AI rise. Oh yeah yeah yeah. Because Facebook's AI chat bot is open source and both Google and Microsoft will openAI closed source. Oh is like closed and anyway yeah meta killing it at the moment. My final takeaway from this whole thing though, is we everyone who ask them a question, ask them a question as if they had the answer to everything. And it's like these guys. , two of the world's greatest investors, history's greatest investors, but like to think that they're experts on US-China relations or in this instance, like the effect that technology is going to have on investing. Part of me was just like, there are probably better people. Bill Gates would have a better. 

Maddy: [00:41:22] Yeah, of course. But I'm going to be interesting to hear their perspective given they have been around so long.

Alec: [00:41:27] Of course. Yeah. 

Bryce: [00:41:28] And and given particularly to Buffett like it was never a I'm I'm not going to try and answer that but he would always have at least 10 minutes whereas. 

Maddy: [00:41:38] Charlie said yeah yeah he had nothing to add. Bryce, What about you? What was your biggest takeaway from the day?

Bryce: [00:41:46] Biggest takeaway from the day. So that was a question towards the end of the day around their position in Paramount. That is one thing that I, what my actual biggest takeaway is I left the day feeling like I didn't really get a lot of insight in their portfolio because they refused to obviously whole Actually talk about their positioning. Yeah like they spoke about Apple which was good but like yeah they were pretty caged around like. Obviously what they're currently looking at and yeah, and like they don't talk a lot about what they're doing, They talk about current position. But I felt like, yeah, just a didn't really like his. 

Maddy: [00:42:23] Idea were ideal. Well, you'd be like, what would you invest? Yeah, what do I mean now? 

Alec: [00:42:29] I think at one stage Warren said, We're not your financial advisors. Yeah, yeah, but, um, I, I think we did get some insight. So the biggest question is one of the biggest moves over the last six months has been building out this position in Occidental, the shale oil company, and they said we're not going to buy it. We got like 20% and we want to remain minority shareholders, which was like if you went on sale and they say after that was sort of like, Oh, they actually did tell us something. 

Bryce: [00:42:55] Yeah, yeah.

Alec: [00:42:56] But they just don't do a lot like they are, which none of us should. We should all be patient and slow moving.

Maddy: [00:43:02] Yeah. 

Alec: [00:43:03] But yeah. 

Bryce: [00:43:04] Anyway, so right towards the end of the day there was a question around their position in Paramount. Which is, which is suffering at the moment. I think stock dropped. What did they say. 25% last week off the back of poor performance. But more broadly, what was interesting was their commentary around streaming services as a business. So let's have a listen. 

Host: [00:43:24] Berkshire owns about 94 million shares of Paramount Global. As of the last published data, this asset rich company has disappointed on recent quarterly earnings reports in just this week slashed its dividend by 80%. How do you see the streaming wars evolving and do you still have conviction in your investment thesis? Is your investment thesis based on the company being an acquisition target or based on its fundamentals? 

Warren: [00:43:46] So I would say it's not good news when any company taxes this dividend culture similar dramatically. And the streaming business is extremely interesting to watch because there's people people love to use their eyeballs watching, being entertained. I'm on a screen in front of them or a phone or whatever it may be, but there's a lot of companies doing it and you need fewer companies or you need higher prices. Well, you need higher prices. There doesn't work. 

Bryce: [00:44:20] So thoughts and feelings, nothing new there, I don't think from that. Hasn't already been sort of spoken about. But they're going to stay strong with Paramount plus very competitive industry. Bit of a chit chat around owning the real thing movies. 

Alec: [00:44:36] Yeah. To that comment around, they're going to stay strong. And to what you were saying earlier about them not giving us a lot of insight, like it wouldn't surprise me based on what they were saying. You know, there's there's no competitive advantage here and new profits are determined by your competitors. Wouldn't surprise me if that got the gong. Yeah.

Bryce: [00:44:53] Yeah. 

Maddy: [00:44:54] I think the perspective of to make streaming a more interesting or sort of compelling investment around you just need less companies and higher prices. And the fact that they're all in competition with each other is just continuing to drive the prices down. It makes a lot of sense, right? But where's the moat? Which is what they always talk about? 

Bryce: [00:45:12] Well, he said something around like there's a bunch of them that just don't want to quit. Yeah, I'm just burning cash. 

Alec: [00:45:17] Yeah, Yeah. Surely, like, it's been like the coal for the last two years. But surely some mergers and acquisitions happen in this space because you're not going to ever get a content moat in streaming because someone will always be able to create the next Game of Thrones on the next. 

Maddy: [00:45:31] Yeah. Yes, mergers and acquisitions. But then the point that they made was that they're all such big players in this space, like they're all massive companies who are behind these streaming services. 

Alec: [00:45:40] Yeah, well I think where you get the moat is in like Amazon Prime. 

Maddy: [00:45:44] Or Disney is the one that they used as an example because that they get the moat from the content that they have. [00:45:49][4.8]

Bryce: [00:45:50] So Berkshire owned 15% of Paramount. They started buying in 2022 but have lost a bucketload over I think the stock's down about about 50% since they stopped buying. So ouch, ouch, ouch. Anyway, Ren. What was your favourite? 

Alec: [00:46:03] Yes. So there was a few questions about climate change. And in the morning session, Greg Abel, who runs all the portfolio businesses but has really driven Berkshire Hathaway Energy and really made it a big player, got some questions around renewable investment and stuff like that. But I think the most challenging question, shall we say, was actually from an Iowa high school in the afternoon session. So Warren couldn't hide behind Greg anymore. And so she challenged them, I guess, on how Berkshire Hathaway Energy is responding to the challenge of climate change. 

Audience: [00:46:42] Good afternoon. My name is Hannah Hayes, and I'm a high schooler from Iowa. You said earlier today that transitioning to renewable energy has the people and capital to support it. So with enough investment in renewables, the development of energy storage technology to soon meet, I was energy needs and support from the government sources, some through Inflation Reduction Act funding. Why hasn't Berkshire Hathaway Energy truly invested in the future by accelerating retirement plans for the coal plants, which have high operating costs and are currently Iowa's biggest carbon polluter and will continue to be until they're finally retired in 2049, which is too late to be kerbing emissions, according to the IPCC. 

Warren: [00:47:35] And it's very interesting. We we in Iowa, we have actually produced more wind energy than is used the total amount of energy used by our our customers. But it's not it's not produced for 24 hours a day necessarily. So the there's problems. And incidentally, in Iowa, a significant majority of counties welcome us when we come around and want to put in wind and some don't want it. I mean it you know, it is it is a there's a not in my backyard someplace. There's other places where they love the money they get from a small part of the ground. And people know like the taxes that are paid. But I would say that if there's one state in the union that stands out in the development, it's it's Iowa. But what's also interesting in Iowa is that we have one other major company. There's always loads of little co-ops and all kinds of things that sell electricity. But we have one major competitor and our prices are significantly lower. And matter of fact, we are now in the almost public power district. And three miles or four miles away, we're selling electricity in Iowa and we are selling it cheaper. Even though public power was invented in Nebraska and has been I think it's George North did it back in the 1930s and it's done it's Nebraska's resisted to some extent wind power more than Iowa. But I guess our competitor or alternative force hasn't really pursued as the way we have. But I would say that our record in wind and solar has not been topped by any utility, the United States. And of course, it's been aided by the fact that most utilities pay out 70 or 80% of earnings and dividends. And we haven't taken a common dividend out of that. A little tiny bit for women taking a common level of, you know, for 20 years we reinvested I don't know how many billion. That's the reason why their earnings have gone from 200 million to 4 billion. But we're not earning a higher rate of return on capital than we were when we started, which is way more capital into the business as we went along and kept reinvesting, they got Bill. So I wish Greg were to tell you more details about it. But but, but, I would say that we'd really put Berkshire Hathaway energy's record against any utility. The United States petroleum. You watched it. 

Charlie: [00:50:43] Well, I have and. I'm not personally at all sure how bad global warming is going to be. I think I don't think anybody knows for sure whether the seas are going to rise two inches or 20 feet and. So I think it a lot of false. Claims here in the world where much is not known. Yeah, we Wyoming. 

Alec: [00:51:15] I mean, the number one takeaway there has to be Charlie's feelings about climate change. He got a big round of applause from it as well. 

Maddy: [00:51:23] It was uncommon. They were. At that point, I was like, Debate is clap every time you talk. 

Bryce: [00:51:28] It's a bit of a cult. But yeah, I think. 

Alec: [00:51:31] There were questions where they just finished and they went on and then Warren was like, All right, basics like. Yeah, that would. That was a clap for his view on climate change. Yeah, that wasn't just a clap for Charlie. 

Maddy: [00:51:42] That surprised me. 

Bryce: [00:51:44] Anyway, I don't, don't agree with that. 

Alec: [00:51:46] Don't agree. Yeah. 

Bryce: [00:51:47] I don't think they responded to any of the climate stuff well. 

Maddy: [00:51:50] I agree. Yeah. 

Alec: [00:51:51] Well yeah. 

Maddy: [00:51:52] A lot of waffles.

Alec: [00:51:52] I do remember watching the doco back in the day about I think the energy grid in Nevada and how Berkshire Hathaway energy was really challenging a lot of the investments that were trying to happen in renewables. So I think they've got a bit of a track record of saying an opportunity and legacy energy infrastructure. Which, you know, that's really all they're focussed on is earning returns. So in some ways a leopard can't change that spot. Yeah, exactly.

Bryce: [00:52:20] Yeah, yeah. And they did come into the Berkshire, a lot of the media coming into it was a huge expectation on how they would address the climate change pace because it's something that I think a lot of people have felt they haven't done a very good job at. But I don't think they I don't think they did too well. 

Alec: [00:52:39] To be fair to Warren, in another answer, he did talk about how he doesn't think there's been energy come any energy company that has invested more in renewables and renewable transition. Yeah Berkshire Hathaway energy. And he said a big reason why that is the case is we don't pay a dividend. So most energy companies that are competing with pay out 80% of their profits in dividends, Berkshire reinvest all of their profits or keep them on their balance sheet, which is now 135 billion short term investments. Yeah, and that does mean that they can invest more. And so, you know, they've got a fair argument that whilst Charlie may not think it's as bad, they're doing more than most of their competitors. 

Maddy: [00:53:17] There were some interesting comments around that being we're very aware of the problem. We know what needs to be fixed. We know what we need to do to get there. We've got the people and the capital to do it, but for some reason we're not doing it. And he was sort of talking about how he actually spoke a lot about like World War Two throughout the day. But he talked about that being a point in history in which there was so much like uplift and change that allowed sort of a lot of, I guess, development to happen off the back of that. And he seems to be off of the impression that it would take something really big to happen sort of in society. And I guess Covid, you could argue, has done a little bit there. But in order for us to really sort of make that transition to renewable energy. 

Alec: [00:53:58] All right. So that feels like a good point. To wrap it. Any final thoughts of the day? Anything, any big learnings, any big changes you're going to make to how you invested? Anything that would surprise people who didn't watch it or just watched it on TV. 

Maddy: [00:54:15] I don't know if this would surprise people, but Charlie did not stop eating lollies all day. He was just munching constantly. 

Bryce: [00:54:23] I thought it was just an awesome day, I think. I think you asked me at the end at the bottom and if it all maybe was Sascha, if it met my expectations. I think I think the overall couple of days has exceeded. There were moments throughout the day that were obviously low points in a bit. Everyone was a bit quiet and whatnot. We really pushed through, but overall, an epic experience. I don't think I would go so early next year. I don't I don't think it really matters where you sit in the crowd. Too much song is not behind the stage, but that was probably my key takeaway for 2024. 

Alec: [00:54:55] Yeah. So come on back. 

Bryce: [00:54:57] Oh, I'd love to come back. 

Alec: [00:54:58] Well, I guess we can only come back if Milford help us get there again. So let's close this out by saying another massive thank you to Milford for getting us to Omaha and letting us not quite meet our heroes, but at least see them in person. 

Bryce: [00:55:12] We got down close, Milford, our leading New Zealand fund manager, and they are now available for Australian investors and advisors. Milford's talented and globally experienced investment team aim to deliver strong long term returns while managing downside risks, and they also invest in the same funds as their clients. 

Alec: [00:55:28] You can strive for a smoother investing journey with Milford's experienced active management and their award winning Milford Australian Absolute Growth Fund ticker symbol MFOA.

Bryce: [00:55:37] So find the Milford Australian Absolute Growth Fund and other Milford funds on your trading platforms or at milfordasset.com.au. And remember before you invest, be sure to read the Fund's product disclosure statement and target market determination found at milfordasset.com.au. Well guys first outdoor live podcast other than the very first one we did back in 2017. Ren bringing back a lot of memories sitting outside recording. It's been awesome down here in Omaha. Yeah, it's quite nice. Maddy, thank you so much for joining us. And hello to all of you. You're In Good Company crew that are listening. You can follow along on the continued journey of us on tour, on both of our social feeds. And over the next month we're going to be bringing plenty of content from the tour. We've got our Wealth Builders series kicking off on Thursday, where we're looking at some of Warren's biggest investments and the lessons we've learnt. And then next Monday, we're going to be coming at you from New York City, really interviewing some fund managers over there and heading down to Wall Street. So, I'm looking forward to it. Massive shout out to Milford as well for supporting the Equity Mates US tour. But guys, we'll leave it there. 

Alec: [00:56:43] Sounds good. 

Maddy: [00:56:44] See ya.