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Warren Buffett is a name that is synonymous with authority on business investment in the corporate world. He is the chairman of Berkshire Hathaway, an Omaha-based international conglomerate with a $700 billion market cap. Buffett is known for his business acumen and accurate analysis.
Recently, he spoke at Berkshire Hathaway’s annual general meeting about several issues related to investments, the U.S.-China trade conflict, the future of oil and A.I., and so much more. We have chosen a few essential points from the conversation that you may find valuable and insightful. He was joined by the company’s vice chair Charlie Munger.
Tensions with China can be Problematic
The 7 Most Important Moments from Berkshire Hathaway’s Annual Meeting – Are You Up to Date?
- Tensions with China can be Problematic
- Apple Paid off as an Investment
- Oil Still Has a Part to Play In The Future
- Government’s Intervention in Banking Crisis Helped
- Nothing Like Working for Yourself
- Investors Should Expect Fewer Returns
- Impact of Artificial Intelligence on Decision Making
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China and U.S. have had a trade conflict for a few years. However, Warren Buffett and Charlie Munger agree that this can linger on for too long and negatively impact both countries. Buffet believes that the leadership on both sides needs to be wise. “U.S. and China are always going to test how much they can push each other, but if they push too far, things can go bad. So need good leaders,” Buffett said.
Munger also expressed similar sentiments and believed that working together helps both sides grow. The one thing we should do is have a lot of free trade with China,” Munger said. “Think of what Apple has done by engaging with China as a big supplier. Everything that increases the tension is stupid.”
Apple Paid off as an Investment
Warren quite frankly called Apple an excellent investment, suggesting that the returns are better than Berkshire gets from other investments. He clarified that his company owns about 5.6% of Apple, and it does not amount to 35% of their total portfolio as someone had earlier suggested. The stock exchange mogul also pointed out that the people have a lot of trust and dependability associated with the brand. Carlie Munger also commented that Apple was one of the smarter buys in terms of returns received over the years.
Oil Still Has a Part to Play In The Future
The business mogul, who usually doesn’t divulge into stock holdings by the company on public platforms, spoke about Occidental Petroleum (OXY). Berkshire is one of Occidental Petroleum’s largest shareholders, with a 23.6% stake, if not the largest. Buffett said he doesn’t know how much the oil will be in the future, but he admires Occidental Petroleum’s position in the Permian basin and management. Warren did not rule out that his company would acquire further shares. However, he did not comment on whether his company will pursue a majority stake in OXY. Warren Buffett clearly isn’t jumping off the oil wagon any time soon due to a changing world.
Government’s Intervention in Banking Crisis Helped
Warren said that a timely intervention by the U.S. Government helped control a potentially even more significant banking crisis by intervening at the right time. He said that the failure of the banks was not a surprise as the industry has become complicated to understand. Buffett said he had been divesting n the bank since the start of Covid-19 and has upped the ante in the last few months. His company still owns a 13% stake in Bank of America and maintains positions in several other U.S. banks. He also wants actions against executives responsible for banks’ poor performance. Charlie Munger’s summary of the situation bluntly suggested that “a bunch of bankers trying to get rich doesn’t lead to good things.”
Nothing Like Working for Yourself
Making compromises is part and parcel of the job. Buffett recalled that as an employee, he had to follow instructions. However, there is nothing like running your own business. Even a smaller business concern gives you freedoms one cannot afford in a job. He also suggested that a family-run business was less hectic than a public company. They further suggested that you learn the craft along the way. You become better at identifying opportunities and taking your chances when it matters.
Investors Should Expect Fewer Returns
More and more people are not investing, leading to fewer profits compared to yesteryear. Warren, however, said that people make money because of the other investors’ mistakes. He pointed out that most companies now have a short-term focus and look for better results in the coming quarters. There is no long-term planning looking to grow the company further. However, during his early days, the focus was on building a solid company. Buffett said that his company grew stronger over the years by not offering dividends.
Impact of Artificial Intelligence on Decision Making
Artificial intelligence facilitates humans, and it is here to stay. Its advancement will help people in all fields of life. However, one fundamental issue that nothing can address is how humans think. A.I. may not necessarily change the human decision-making process in the business world. Both Buffet and Munger expressed some skepticism about the technology and its future role, suggesting it will help more on the production side rather than the business decision-making.
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