Berkshire Annual Meeting 2022: All you need to know
At the Berkshire Hathaway Annual Meeting 2022, chairman and CEO Warren Buffett and vice-chairman Charlie Munger talked about their investment decisions, made interesting comments on market trends and follies, etc.
Below are the key highlights from the meeting:
The stock market has become a gambler's parlour - They said that the market has been extraordinary. Sometimes it is quite investment-oriented and other times it is almost a total casino, a gambling parlor that existed to an extraordinary degree in the last couple of years, encouraged by Wall Street.
You can never do well timing the market - On being asked how Berkshire has always done well with timing the markets, Buffett replied that Berkshire has never done well with timing the markets. He said that he missed the opportunity in March 2020. Berkshire is simply good at figuring out if a good company is going cheap. Sometimes the team hopes the target company stays cheap so that they can buy more of it.
Inflation is worrisome for almost everybody - On being asked if Buffet thinks that inflation will eat into equity returns, Buffet said that the damage from rising prices affects everybody including equity investors, bond investors, and even those who keep their cash under the mattress. He said that it would be better for both business and investors in general if we could have a totally stable unit of monetary use, but he added that it is difficult to tell.
Cash is like oxygen - Warren Buffett and Charlie Munger have always been advocates of holding cash. In 2021, Berkshire Hathaway had $144 billion in cash and treasury bills and, as of March 31, 2022, it had come down by a third after buying equities but it was still substantial at $103 billion. Cash is like oxygen. If you don’t have it for a few minutes, it’s all over. They had decided early on to always hold $30 billion in cash, and Buffett had reiterated this in the 2021 annual report.
On Cryptocurrency - Buffett said that he would write a check for a 1% stake in all the farmland in the US or for the same percentage in all the apartment houses in the country. But instead, if someone offered him all the Bitcoin in the world for $25, he wouldn’t take it. According to him, assets must deliver something to someone to have value. Things cannot claim value only because someone else is willing to pay more for them.
Munger called bitcoin stupid and evil. Stupid because he expects its value to come down to zero, and evil because it can destabilize the US financial system.
Chinese companies at cheap valuations - Buffet said that at Berkshire, they have been bullish on the country for a long time. Munger added, "The reason I stay invested there is I get so much better companies at so much lower prices. I am willing to take a little bit more risk to get into the better companies with the lower prices."