President Warren Buffett cautioned people not to think there is an easy way to invest as he answered questions at Berkshire Hathaway's annual meeting on Saturday.
Buffett said it can be hard to pick long-term winners. He said that in 1903 there were more than 2,000 car companies, and almost all of them failed, although cars have changed the country since then.
"There's a lot more to a stock taking than figuring out what will be an incredible industry in the future," Buffett said. "I want to tell you that it is not as easy as it seems."
Buffett has said that most people would fare better by owning an S&P 500 index fund than betting on individual stocks. He added that many novice investors have recently jumped into the market and exaggerated the value of video game retailer GameStop.
Buffett said stock trading platforms that allow people to buy and sell stocks for free, such as Robinhood, are only encouraging that gamble.
Buffett spent several hours on Saturday afternoon answering questions at the online edition of Berkshire's annual meeting.
Buffett said the Federal Reserve's policies and stimulus packages passed by Congress have done a tremendous job of propelling the economy as interest rates remain low. He said the government clearly learned lessons from the Great Recession in 2008 and acted quickly, but it is hard to predict what the long-term consequences of those policies will be.
“This economy right now – 85% of it is running in super high gear – and you are seeing some inflation and all that. It has responded in an unbelievable way. We learned something in 2008 and 2009, and then we implemented it. But I don't think it was a sure thing that would happen: Buffett said.
Buffett said he doesn't regret selling Berkshire's $6 billion stake in all major airlines last year, though those shares have risen significantly since he sold them last spring. Buffett also said he thinks airlines would not be able to receive government aid during the pandemic if they were still a very wealthy major shareholder like us. Berkshire, based in Omaha, Nebraska, is sitting on $145.4 billion in cash and short-term investments as Buffett has struggled for several years to find major acquisitions for the company.
Investor, Cole SMED, said he would love to see the company more active the next time the market turns bullish. “We don't question whether Buffett and Manger, have the patience. It's an obvious thing. The question is whether they have any aggression. It is not clear,” SMED said.
Buffett said he wants to invest more of Berkshire's cash, but the current competition he faces from private equity and other investment funds has made it difficult for Berkshire to get a fair value.
This was the second year in a row that the annual meeting was held online due to the coronavirus pandemic. This year's event was moved outside Omaha for the first time - near Los Angeles, where Manager, 97, lives.
Meetings typically fill the 40,000, 18,300-seat arena in Omaha and every nearby overflow room. No other company can match those crowds.
Writer Bob Miles said he would miss "meeting with minded and self-selected shareholders" and talking to executives who run Berkshire subsidiaries, at his company's booth in the 200,000-square-foot Footie Hall. The arena spends part of the meeting. Berkshire companies such as GEICO, Insurance, See's Candy and Fruit of the Loom sell their products to shareholders every year.
Meeting fun isn't just for shareholders. Jim Webber, who runs Berkshire's Brooks Running, said he longs for the chance to compare notes with fellow Berkshire managers at an annual event that brings together the leaders of dozens of subsidiaries in the decentralized group.
"We definitely missed that opportunity to connect with our teammates," Weber said.
Saturday Morning, Berkshire, -0.95%
BR K -1.29% of its reported first-quarter earnings and said it made $11.7 billion, or $7,638 per Class A share, as the paper value of its investment portfolio. A year ago, Berkshire reported losing $49.7 billion, or $30,653 per share.
The group said that apart from investment gains, profits also improved across all its major divisions - including insurance, utility, railways, manufacturing and retail companies - during the first three months of this year as the economy continued to recover from the pandemic.
Cathy Seifert, research analyst at CFR, said she was surprised that many of Berkshire's financially sensitive businesses haven't improved further, given how much the economy has improved, but it appears the company has taken a hit on its major divisions. Well controlled cost.
Buffett has long said that Berkshire's operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely. By that measure, Berkshire's operating income improved to $7.018 billion, or $4,577.10 per Class A share. That's $5.87 billion, or $3,617.62 from a year earlier.
You must be logged in to post a comment.