WARREN BUFFETT: OK, let's reconvene.

I think we sold 15 [Jimmy Buffett party pontoon] boats, so far, I was told that a while — a little a while ago out there — so get them while they last.

We won't have the first one available for delivery for about a year. But people are getting 10% off, whatever that means, who order one. And I've ordered one myself. And we're – things are going well in the other room.

And we only got seven questions, which is a new low, in the first half. So, we'll try and move a little faster.

I can't imagine why it went that slowly. I mean, who's — who's doing all that talking? (Laughter) OK.

WARREN BUFFETT: Station four.

JEFF VUVOLOY: Hi Warren and Charlie. I'm Jeff Vuvoloy (PH), shareholder from San Francisco.

In recent years, American companies have taken on a more active role in the political realm. Whether it is speaking out against specific bills, or promoting various social causes, often at the behest of shareholder or employee groups.

While the goals of these movements can be laudable, they risk alienating significant portions of customer and employee bases. How should CEOs decide which issues to take a stand on, or whether their companies should engage in the political realm at all? Thank you.

WARREN BUFFETT: That's a terrific question, and that is one obviously I've had to think about plenty.

And at one point I said, "I don't put my citizenship in a blind trust when I take the job as CEO of Berkshire." But I've also learned that — you can make a whole lot more people sustainably mad than you can make temporarily happy by speaking out on any subject.

And on certain subjects, they will take it out on our companies, and that means that the people that are employed by us, some of them we would end up letting go. It means that the shareholders get hurt. And do I really think that it's so important that I talk on every possible subject that people can get very upset about? Whether they should be asked to pay that price?

And I've come to the conclusion, the answer is no. Why in the world do I want to hurt the people in that other room that do all kinds of things for Berkshire. Why do I want to hurt you because I say something that 20% of the country is going to instantly disagree with, and sometimes they will be so upset about it that they will try and take it out.

And since they can't scream at me, they may have campaigns against our companies or anything else. So I think, as it applies to me, I'm not going to go around and take positions where instead of saying, "Warren Buffett says," it will say, you know, "Berkshire Hathaway," or "Warren Buffett of Berkshire Hathaway."

I get identified. And I do not want to make the lives of you — and I've just decided I'm not going to be doing that. And if I want to do that, I should quit my job. If I think my citizenship, speaking out is that important, I'll give up what I love the most, which is having this job. (Laughs)

I don't want to do that. So, I've decidedly backed off, I don't want to say anything that'll get attributed, basically to Berkshire, and have somebody else bear the consequences of what I talk about.

So that's where I stand. And I can tell you that at most companies, or many — that isn't fair. But in the great many companies, you know, CEOs, they have to think about what their board says to them, and they've made a point of electing people to their boards, because it's socially acceptable, who represent different constituencies, sometimes very strongly.

And if they think their stakeholders, for this group and that group and that group, they'll get pressured by their boards to take positions. And it's just a territory that we're not going to get into.

Charlie, how do you feel about that?

CHARLIE MUNGER: Well, even more than you, I have to be very careful about what I say. (Laughter)

Now — (Laughter)

MALE VOICE: Yeah. It's — (Applause)

WARREN BUFFETT: And the difference between the two of us is I can't resist saying a little more. (Laughter) I see headlines in papers, just time after time after time, that say, "Buffett's buying such and such." Well, I'm not buying such and such. Berkshire Hathaway is buying it, and it may be the work of two other people that work at Berkshire."

And people who write the articles don't have the faintest idea whether it was at my instigation or whether I'd even heard of it. But the headline will attract more people if it says, "Buffett buying this," than if it says, "Berkshire Hathaway, and we don't know whether it's the people that work for him or him."

The headline is designed to bring people into the story. So —

The confusion is terrible. And the easiest thing to do is to basically shut up and not have a bunch of people fascinating questions that they didn't ask for in the first place.

But I'm glad you asked that question. That is a good question. And I probably thought more about that question than I think about whether this stock or that stock is cheap.

WARREN BUFFETT: And with that, we'll go to — well, let's see. That was station four. We'll go back to Becky.

BECKY QUICK: On that note, let's go to a question from David Cass.

He writes in, "President Biden's fiscal 2023 budget request would impose a 20% minimum tax on the unrealized capital gains for households worth at least $100 million. What are your views on this issue?"

And if you don't want to answer, maybe Charlie does. (Laughter)

WARREN BUFFETT: Well, we'll find out. (Laughter) And in all honesty, we should both say that we would be affected by it. If it's $100 million, we'd both be affected. So our point of view is — and I have no point of view. Charlie? I have no point of view that I would want attributed to —

CHARLIE MUNGER: I tend to stay out of the income tax things like this. My policy is I pay whatever taxes they pass, and I don't want to engage in lobbying about taxes.

WARREN BUFFETT: Yeah. (Applause) And I would add one thing. Lobbying is really distasteful. I once did it for a candidate, and I ended up in a room with a bunch of lobbyists for cigarette companies. They didn't care about Nebraska. They didn't care about — and they didn't have anything. They were there because they were handing over a contribution. And I was a convenient accessory. And, you know, it made you want to throw up, basically.

On the other hand, we operate in the railroad business, energy business, insurance business, and they're extensively regulated. And I don't also want to be the only railroad that stays out of the railroad group. The only insurance company that stays out of the insurance group.

So, you know, other people can rightly figure that we're a free rider under those circumstances. So I tell the managers generally, you know, "Don't spend Berkshire's money on candidates that you like. Don't pressure suppliers to do —" Berkshire is not a weapon to use — and it's been used by certain people in the organization. But don't use it to muscle money out of anybody else for who you like or what school your wife went to or whatever it may be. And some of it goes on anyway.

But I don't tell our people to don't belong to any trade associations. Charlie wrote one of the great letters of all time, and if you go to search, type in I think 1989 Munger savings and loan or something. We resigned from the U.S. Savings and Loan League, I guess it was.

And we warned them. We said, "We just cannot stand, you know, what you're doing to the country." And when a bunch of very nice people get together, but they decided it's in the interest of their savings and loan to do this or that.

And we warned them, and finally Charlie wrote a letter, which is, like I say, available on search. And it should be one of the proudest letters — certainly one of the proudest letters that's ever come out of Berkshire. And he just said, "We can't stand it anymore, and we're resigning."

But that's a very tough thing to do. It's a tough way to live, to just go around criticizing (Laughs) the people you work with, and neighbors. And they're perfectly decent people, but they're running institutions that are doing things that are very distasteful to them.

And we belong, support some of our subsidiaries in energy. And, you know, I don't want to find people are doing it for personal reasons. I mean in that case, they're in trouble. But I don't say they can't do it, because I don't want their hands tied if something comes up, and essentially either their competitors within the industry or the industry (UNINTEL), we're not going to stand alone and say, "Well, we're morally superior, so you put your money up and buy it." So that's where I end up. Charlie?

CHARLIE MUNGER: I've got nothing to add.

WARREN BUFFETT: OK. Never bothers me when I don't have anything to add, but he seems stuck on that. (Laughs)

Anyway. Becky, did that come from you?

BECKY QUICK: It did.

WARREN BUFFETT: Yeah, OK.

WARREN BUFFETT: Then station five.

SONG YAO: Oh, thank you, Warren and Charlie. My name is Song Yao. I'm from China, and now studying in the University of Chicago. I really admire you two, especially Charlie. You are my idol since I was a child.

And my question is also for Charlie. My question is how to practice the multi-disciplinary framework in making investment decisions and in life? Like, how to make it more practical. Thank you.

WARREN BUFFETT: Charlie? (Applause)

CHARLIE MUNGER: Well, obviously, it helps you to know more than one discipline. There's an old saying, you know, that a man who carries only a hammer thinks everything else is a nail. And you may go on wrong decisions if you don't have some command of all the disciplines.

That's all I ever said. But you do irritate people terribly when you come into their territory, you say, "I'm multi-disciplinary. You're the expert, and I know better than you." They hate you for it. I can attest to it. I've done it several times. (Laughter)

WARREN BUFFETT: And, you know, China — well, to a certain degree, and they have a culture that, to some extent, reveres age. So, Charlie's got me beat. (Laughs)

I don't even try and compete with him on China.

I can't catch him on age. OK.

I'm going to try to, though.

Let's see. We've got Becky coming next.

BECKY QUICK: This question comes from Phillip King. He writes, "In the '70s you wrote an article entitled, 'How Inflation Swindles the Equity Investor.' You said that stocks cannot keep pace with inflation, because companies cannot increase their return on equity. Do you believe that this is still the case?

Yeah. And of course bonds can swindle the equity investor too. (Laughs) Inflation, I should say, swindles the bond investor too. And it swindles the person who keeps their cash under their mattress. It swindles almost everybody. And the problem, if you have a business that doesn't take any capital, and let's just say the dollar depreciates 90% or something, so things cost ten times as much.

If it doesn't take any capital you can charge ten times as much, and you've kept your relative position. But most businesses take some capital. If our utility business — just to say that the dollar is worth 1/10th some years hence from now, we have to have ten times the capital investment, basically. And we get paid a return on that, but we have forced capital investment to essentially keep in the same place.

And I wrote an article that related to that, and I will tell you one famous story, which you will all sympathize with. In that I wrote that story for Fortune, and when I finished it, it was about 7,000 words. And Fortune didn't like publishing 7,000 words, and they had my friend Carol Loomis explain that to me, knowing that I would pay more attention to her than anybody else.

But being stubborn and male, I said, you know, "Every word is precious," and they can either run it or not. So then they sent an editor, a very nice guy, out to Omaha. And this guy explained to me that just wasn't right to use that many words. And I said, "Well, that's fine, but if you don't do it, I'll write it someplace else." Very disgusting behavior on my part.

And then it was beginning to bother me a little, so I sent it to my friend Meg Greenfield. And Meg was a great, great, great editor at The Washington Post, and we were very, very good friends. Wonderful woman. And Meg, who was tough as nails with most writers, but she was kind of nice. She didn't want to really hurt me too much. So I said, "Well, Meg, what do you think?" And she said, "Well, Warren," she says, "You don't have to tell everything you know in this article. (Laughter)

And it made the point. And so I write that article shorter, and I say more or less the same thing. You know? And you're better off — if you really could have a totally stable unit of monetary use for the next 100 years, it would be better for business and investors in general.

Charlie? No? We will go to station six.

Inflation — the question is how much. And the question is whether you can decide that 2% and keep it — the answer is nobody knows. You know? I mean you do not know, and nobody knows. You can listen to all kinds of stuff, but nobody knows how much inflation there will be over the next ten years or 20 years or 50 years or next month.

And people talk about it all the time, because you're interested in knowing the answer to your question. And they don't know the answer, but there are a lot of people that will tell you they know the answer if you pay them enough. And other people that will tell you for nothing, because they think it enhances their prestige and makes them more valuable and all that.

But the answer is they don't know. And we don't know either. The best protection against inflation, though, still is your own personal earning bar. If you play the violin very well, you will do reasonably well during inflation. I mean play it better than other people, people will pay you for doing that. All kinds of things. So your skills will not be taken away, and your money may be.

OK, station six. Oh, wait a second. Was that —?

Is it Becky next? Becky?

BECKY QUICK: That's right. It's station six.

WARREN BUFFETT: Yeah. Station six. OK.

MARTIN WEGAND: My name is Martin Wegand. I live in Nashville, Tennessee. Mr. Buffett and Mr. Munger, thank you for your lifetime of teachings and for hosting us back in Omaha this year. (Applause)

WARREN BUFFETT: Well, thank you.

MARTIN WEGAND: You have mentioned that companies get the shareholders they deserve. And in this year's letter, you mentioned a great satisfaction of yours is working for the individual long-term shareholders. With the growing influence of institutional index funds, how can management teams foster a shareholder culture like the one we have at Berkshire? Thank you.

WARREN BUFFETT: Well, fortunately we have it, and we know more about how to keep it than to institute one. And it's very interesting. We have a 1,470,000 class A shares outstanding today. Fewer than we had a year ago. And those seats are filled. I mean you are the shareholders in place.

We like the group we have. So why in the world, when we got a fixed number of seats, should we go out and recruit other people to replace you? You know? I mean the ideal shareholder group we can have is the group we have today. And, you know, if we had a church, we'd want the people to keep coming back week after week after week.

If we had a limited number of seats, and we had some wonderful parishioners, we would not go out and recruit another 50 or 100 of them and have to throw out 50 or 100 of the ones we already had. We've got. And every company I know, virtually, you know, is wooing new people to come in.

And whether they're improving the group they get or not, I mean it strikes us as basically crazy. We don't want anybody different (Laughter) than we have now. And, you know, we're not going to get rid of the index fund, so we have to get rid of people like you, and we don't want to get rid of people like you. (Laughs)

And I just don't understand why if you had a neighborhood, and the size of the terrain or whatever it was would be such that you could have ten neighbors, and they were all great neighbors, why in the world would you go out and say to a whole bunch of people going up and down the street, you know, "Why don't you buy the house of the guy next to me?"

You know, (Laughs) it is weird, but there's an awful lot of people that make their living by doing that, and they never really question. I would sort of ask any company that's making analyst presentations every month or something, "Which of the present ones are you trying to get rid of?"

You know, basically, because I hope you're not going to have more shares outstanding at the end of the year than you have now. And am I supposed to, you know, get out of the way so (Laughs) some other fund that is thinking about what your stock is going to do next week replaces me? It is a very, very, very weird situation.

And of course, the really crazy process that has developed is people talking to, we'll say, analyst group, you know, sort of the high priests of finance, you know, some companies are doing it more than once a month. Well, just imagine if you work for that company, you go to work for that company, and every month people are repeating these things about their company that, "It's important that we have more services per customer at 6.2 and we got to get to seven," or something like that.

And they'd say that month after month after month, so it becomes a catechism. And CEO says it or his or her representative says it, and how do you go on the next month and say, "By the way, we were really wrong, and this is what we should be working on."

You don't say that. And it's a terrible problem the new CEO has coming in after a previous CEO has said the important thing to do is to hit your earnings targets. Well, you know, he's been meeting them, in all probability, by cheating from some time to time.

And this guy hands you the baton, and are you going to come out and say, "Well, we've really been cheating a little and it's really counterproductive to the development of the, you know, companies, not to make earnings projections and just to give you the results as they come, rather than making up a few things.

And the accounting department, you know, they can't do it. It's not human nature, and besides, you wouldn't get appointed the successor. But you just don't go in and say, "We've been perpetuating these myths that we can always deliver 8% growth or we can do this or do that, or the most important thing is this."

You can't go in and change that if every month you've been preaching to people that this is what we stand for, and just ask another question and carry this message out to the masses, to the analysts and all that. And it's a totally destructive policy.

I mean, you know, I can, within gap accounting, I can play a lot of games with numbers. We've done a lot-ta dumb things at Berkshire. We have never told anybody that the number had to be this or that or to change anything. I mean once you start it, it's all over.

You can't quit. It's like taking $5 out of the cash register. You know, the first time you take the five bucks out, you'll say, "Well, I'm going to put it back." And then do it a few times, and you'll never stop. In fact, do it once and you probably never stop.

But if something is going to be destructive, the thing to do is not start it. And forecasting earnings, I can't imagine anything more destructive. I've got 360,000 people out there, and they know whether I'm lying or not. Many of them.

And they know what they send in figures, and they get changed? You know, what message are you telling? We've got one dramatic illustration of that within Berkshire. And it's just, you know, if you start lying you've got a big problem. It's that simple.

And if you start saying to your team that somehow you've got a job — you've got shareholder relations, your job is to go out and tell everybody that our stock is the best thing among thousands of choices to buy, every day. Well, that's crazy.

So what do you tell them? Well, they try to, you know, see which way the wind is blowing and figure out what they have to tell people. And that they go out and tell them, and then if you're human, and you've said, "We're going to earn $3.59 a share," you can get to $3.59. And get there quite a while.

And, you know, you can have all these processes, but if you have a culture of lying, the processes really don't — they just disappear. And Charlie and I have seen it, well, probably every time we've gone on a board. Charlie, tell them about it? (Laughs)

CHARLIE MUNGER: Well, I think Berkshire's culture's going to last a long time after we're gone. And I think it should, and I think it'll prosper pretty well. The rest of corporate America is quite different, and it gets more different, I think, with each passing decade.

And it's getting very peculiar. Pretty soon they're going to hold all the shareholders' meetings online, and the shareholders won't even come. And it's just it's getting very peculiar. And the index fund's getting more and more important than the voting. And it's like everything else in life. It changes, and not always in ways you like.

WARREN BUFFETT: And it ends up for selecting different CEOs and all kinds of things. I mean, you're not going to appoint a successor CEO that's going to come in and say everything that's been done before, you know, has been kind of fraudulent. You know? I mean if we needed to book an extra sale after the end of the quarter, if we needed to adjust the reserves, once you start lying, it's all over.

And I just don't know any way around that, except to try every way you can to not — if you set the wrong example at the top, you've got a real problem. You know? And we've never told anybody to change a figure. And we never will. And if they had been changing figures, you know, we'd be in all kinds of trouble, because they know it and I'd know it and the next person would know it. And it just deteriorates.

And we've really seen it time after time. The way boards operate, you know, it has to be process-oriented. I mean I understand the problems that Delaware has in writing a statute that judges face when they look at things, but it's just extraordinary what an emphasis on process can do to an organization, because they think they can do anything if it's allowed.

And, you know, eventually the foundation crumbles.

WARREN BUFFETT: OK. Oh, I should make a little news here, so you've all come and you may or may not see this, but it's very possible — one of the things we bought, one of the things I bought, was bought for a different purpose by a different manager months earlier.

They bought roughly 15 million shares of Activision. And I knew about the company, I would just see it at the monthly report. But then on January, I don't know, 17th or 18th, something like that, Microsoft announced they were going to buy Activision for $95 a share.

Now, when they announced that, at that point Activision becomes a different kind of security. It becomes what Charlie and I used to call — well, and everybody did 50 years ago. We'd call them workouts or something like that. And they become known as arbitrage.

Well, they're not really arbitrage, but they're securities that are, in this case a common stock, whose value depends not on what the market price does, but whether a given corporate event occurs. An announced corporate event occurs. Well, Microsoft wants to buy Activision, we'll say — well, they said at $95 a share.

And they've got the money, and obviously mergers, and big mergers, tech companies, all kinds of things, have got all kinds of problems with the world generally in terms of opinion. So you don't know what the Justice Department will do or you don't know what the EU will do and all kinds of things.

But at that point it becomes a different security. And Charlie and I, 50 years ago, we used to do a lot of that sort of thing. And Gus Levy did it at Goldman Sachs. And we even went back one time I think on British Columbia power, didn't we, Charlie?

CHARLIE MUNGER: Yeah. We certainly did.

WARREN BUFFETT: Yeah. (Laughs) A guy named Bennett was up there, and we were trying to figure out some takeover of the power business. I mean we spent a lot of time analyzing the probabilities of announced deals going through, and we called them workouts. Now, the term became arb. And it hasn't worked overall too well in recent years.

Now, every now and then I see something that I want do to in that field. But very seldom, because they've got to be big. The profit is limited. You know, if they say you're going to get $95, you're not going to get $96, and if the deal blows up, you may have a stock that's at $40 or something.

But we did it with Monsanto five or six years ago when Bayer was buying it, and we got very lucky, because it turned out to be a terrible acquisition for Bayer, but it did go through, because Bayer had the money and they went through with the deal, even though Monsanto came with a problem that nobody really understands the extent of. And we did it with Red Hat when IBM bought it.

So in any event, on January whatever it was, 17th, 18th, 19th, Microsoft announces it. And the stock, which had been at $60 — let's see. I may have a slide here, which I'll find. But in any event, the stock, which had been in the 60s, went up to $81 or $82. And that looked like not a big enough spread to me for a few days. And then it settled back a little.

So anyway, we now own 9.5%, something like 9.5% of Activision. And if we went over 10% we would file a report. So in order that the news people don't feel that there's no news here, I can tell you that as of yesterday, we own about 9.5%. If we go past 10%, there'll be a form filed with the SEC and so on.

But it is my purchases, not the manager who bought it some months ago. (SNAPPING) And if the deal goes through we make some money, and if the deal doesn't go through, who knows what happens. But I just want to be sure that if we do file that report, people understand very clearly, because there's been some very mixed up stories on that in the past.

We want to be very clear that it was Warren Buffett's decision in that particular case, and he doesn't know what the Justice Department's going to do. (Laughs) He doesn't know what the EU's going to do. He's never talked to anybody at Microsoft about it.

I think he's just read a document. He's made his own assessment. And it can change. And at one time I think we sold a few shares even when I thought it was a little higher than it should be. It turned out those sales were not a bad sale. And so I just want to create a little news for you.

And I want to, if possible, head off stories which have been incorrect in the past, and which get then picked up by other media and corrections never get written. That all the corrections were written by one inaccurate story. And they apologized even to me. Both are reporter and the editor sent me a personal note of apology. And they didn't expect to make a mistake.

But when the other publications picked up the story, they didn't bother to pick up the correction. And millions of people were misinformed, and probably — literally by the time it gets spread around. And this one I will attempt to head off by telling you exactly what the facts are (Laughs) right now.

And we'll see whether we go beyond 10%. But, you know, it could easily be that if it went up a few dollars — it's still a $95 deal. It's still we don't know what the Justice Department will do. We don't know what the EU will do. We don't know what 30 other jurisdictions will do. One thing we do know is Microsoft has the money. So that takes that one risk out of it. So anyway, Charlie, do you have any news to break? (Laughs)

CHARLIE MUNGER: No.

WARREN BUFFETT: Yeah. (Laughter) And incidentally, I don't talk this over with Charlie. I mean, you know, he knows that occasionally I'll see an arbitrage deal and do it. And, you know, 50 years ago we were doing it together, and his general feeling is, "Why is Warren fooling around with this kind of stuff, even."

But it's the old fire horse that occasionally it looks like the odds are in our favor. But absolutely we can lose money on that company, and, you know, fairly large sums of money, depending on what happened if the deal blows up.

And there will be a lot of people that want the deal to blow up. But Microsoft doesn't want it to blow up, so we'll just have to see what happens.

WARREN BUFFETT: OK. Becky?

BECKY QUICK: You know, Charlie just mentioned index funds in passing, so let's go to this question from Matt Figel. His question is related to the growth of passive investing through index funds and ETFs. He says, "Passive investment vehicles now control upwards of 50% of the United States stock market."

BECKY QUICK: "The actual owners of these passive investment vehicles decided passive investing makes the most sense for them, yet, in doing so, passive investors have empowered the large index funds to become the biggest activists in the market. These passive managers now enjoy enormous, and, I would argue undue influence over corporate governance. Do Warren or Charlie see any benefit or logic to a rule that would prohibit passive investment vehicle managers from voting the shares they control for their passive investment clients?"

CHARLIE MUNGER: Well, I'll take that. I think the guy's right. I think the thing is out of control and counterproductive. And I don't think it's good for the country to have three passive investors, bright young men from Harvard or what all, telling them what proper governance of corporations is. It's not a good development. (Applause) And I think indexing, if it gets to 90%, then it won't work very well at all. But at the moment, it's worked fine.

WARREN BUFFETT: Yeah. Well, the one thing you can count on too is that if it does look like it's going to — if the public opinion shifts over to the idea that it really is a good idea to let three people decide the fate of every company in corporate America, the three people — and they won't collaborate or do anything.

It's not that they're evil people the least. I mean, they're just doing what you and I would do. They would figure they don't care that much about voting. What we do care about is keeping (Laughs) a lot of assets under management. But so we'll figure out something that ends up reflecting public opinion, and then politicians won't get mad at us. And our only threat, really, is the politicians get mad at us, and regulators in some ways. So we'll head it off.

And I would predict fairly confidently that if American public doesn't like the idea of three people controlling things, the three people — and their organizations and everything, but the three, what they want to do is they want to get bigger. (Laughs)

And they wouldn't be where they are in life if they hadn't wanted to get bigger. Those things don't happen by accident. That doesn't mean that it's the only thing they want. They want their investors to get good results and everything. But they are certainly not going to follow a policy which is going to cause a backlash that causes them to be a lot smaller there.

They can figure out their self-interest. And it just so happens that in this case, it would achieve the right result, which is that they would not control America, but they'll do what's good for themselves. And what they have to do, what's politically acceptable.

The only thing that really can mess up what is a very good deal for them is to have Congress change the rules. And, you know, the rules were — the Investment Company Act of 1940 really changed how people behaved, and it's governed things in a big way for a very long time.

And anybody that takes on the federal government loses. You know? And if you're talking about trying to do that sort of thing — and they don't need to do it. They just say, "Well, we'll give up voting, or we'll vote our shares as the rest of the people do."

And of course if you vote your shares as the rest of the people do, then if the index fund's at 90% of the country, you could take over a company by somebody else buying 3% or 4%, because you just automatically get the funds to follow your very small little percentage.

You'll see it all play out. I mean it's a big case, but it's not an unusual case.

WARREN BUFFETT: OK. Station seven.

ERIC ERTA: Yeah. Eric Erta, and I live in Albuquerque, New Mexico. So I want to first say thank you so much for a lifetime of knowledge you've both graciously shared with all of us. You've contributed greatly to push our species forward. Moreover, you've taught all of us here, along with many, many millions not here, how to behave more rationally, treat one another with more love, and lead more fulfilling lives. And for that, I want to say a very sincere thank you. (Applause)

WARREN BUFFETT: Thank you.

CHARLIE MUNGER: Uh-huh (AFFIRM).

ERIC ERTA: As for my question, I want to ask about Berkshire Hathaway energy, and the unique structure that has evolved there, given that Berkshire doesn't own 100% of the company.

The first part of that question is related to Greg's ownership and his corresponding incentive alignment with overall Berkshire.

ERIC ERTA: Now, there's a wise man named Charlie that in 1995, at a speech to Harvard, taught us how important incentives are to human behavior. I would conservatively say that Greg's stake in BHE is worth more than $500 million at present. And I'm curious if you can share any plans that you have to convert is Berkshire Hathaway energy ownership to Berkshire stock? And if there isn't a plan to do this, can you please explain why we shouldn't be concerned about Greg's incentive structure going forward?

ERIC ERTA: The second part is about leverage at the entity. You have always said that BHE operates with an appropriate amount of leverage, given it's earning power. With that said, it's still a very, very large debt figure in relation to current earnings, especially with what we have become accustomed to at Berkshire. And I'm curious if Berkshire owed 100% of Berkshire Hathaway Energy, would you still operate the business with the same amount of leverage?

WARREN BUFFETT: OK. Thank you. The second part is the easiest one to answer, so I'll take that. Then I'll throw the first one back to Charlie. (Laughter) But Berkshire Hathaway Energy actually is required with it's regulated utilities — and it basically started pretty much with regulated utilities, and still is dominated by that. And we're interested in buying more regulated utilities.

It's required in different ways by different states and by different regulatory authorities to have a large amount of debt, because, in Iowa or to pick any state, the regulatory authorities are going to say you can get debt money cheaper than you can get equity money, which historically has largely almost always been true.

And they say that since we're going to allow you a return on equity — we'll say, just pick a figure. But let's say they allow us a return on equity of 9%, and we can borrow a lot of capital at 3%, they say it'll result in higher rates to customers if you put in all equity.

We would love to have all equity (Laughs) in our utilities, but the regulator wouldn't stand for it, because under the trad system it would result in higher prices to consumers. So that's built into the system. And well, our regulator wouldn't allow us, essentially, to get the same return on equity and have an all equity structure.

And the answer is, you know — well, you actually saw in the film earlier, which the people that are hearing the webcast didn't see. But just in Iowa, you know, we recently got approval to spend three and a fraction billion dollars, but they want us — Iowa has a history, and like every other state in the union — except Nebraska, which is all public power.

But every private power, you know, they have a history of wanting X percent to be in debt. They want you to raise a lot of money in debt because it means cheaper power for the consumer. So the answer is if we owned 100% of Berkshire Energy, we would absolutely be following the same. We would be operating pursuant to what the utility commissions tell us they want us to do that. They represent the people of those states. Now Charlie, do you want —

CHARLIE MUNGER: Well, the other one's simple too. It's a historical accident. It's not causing any big tension or breaches of fiduciary duty. We had the same problem with Walter Scott, who was the director for years and years, and owned stock in the same company, also an historical accident. I just don't think it's a big problem at all. I see no behavior from Greg ever that isn't in the best interests of Berkshire.

Yeah. And we've had various percentages of Berkshire Hathaway Energy ever since we bought it in around 2000. And it happened, my sister, who's here, we were at our house, and there was a party going on. And 20 or 30, probably 30 people. And Walter said to me, "Have you got a minute or two? I'd like to talk to you about something."

So we went in the library or someplace, and Walter says, "You know, we've got this company and it doesn't seem to fit the public mold very well. And would you want to buy it and go private?" And I said, "Sure." You know? (UNINTEL) the price.

And when we got back to Omaha — it was out on the West Coast. We got back to Omaha and we met with David Sokol, who was the big holder, beside from Walter. And we agreed on a price. And I remember Walter saying to Dave, "Don't negotiate with Warren. (Laughs) You know, he'll tell you to forget and he'll do something else."

And we bought it. So it was kind of a weird structure from the start, and we had a public utility holding up any (UNINTEL) deal with and all kinds of things. And it's evolved, and it now has us with 91% roughly, and it has Walter's estate — and I don't know where that goes at all. And Walter never talked to me about it, and I never asked him about it.

But it's, one way or another, interest connected with him, and the estate now. Close to eight, I guess. And Greg's got one. And, you know, from our standpoint, if we made a deal with — if they ever came to us and (UNINTEL) just wanted to do something, you know, we'd say, "Fine." We'll do the same thing with Greg if he wanted to, and he probably would want to, I mean.

But from our standpoint, I've never seen any decision remotely — if I thought that would make a difference, you know, he just wouldn't be the right kind of person to run Berkshire. And the problem, of course, is that you've got lots of process that can be involved with insiders and everything.

And as long as I'm alive, you know, my interests are 100% with Berkshire. And the board, and probably and to some extent a little reluctantly, but they'd just say, "Well, Warren thinks the deal's OK. It must be OK." Which is true. (Laughs)

So I could make a deal with anybody and it doesn't get all messed up with process. But on the other hand, if I'm not around, you know, the pressures are to directors to do whatever the lawyers tell them to do, and the lawyers tell them to do this and that.

And then they want to bring in investment bankers to make evaluations. And the whole thing is a game from that point forward. And it's expensive. It takes a lot of time. So it would be better if it happened while I'm alive and around, but there's no reason — we'd rather have 100% than 91%, obviously, because more earnings for Berkshire.

But there's no reason to try and do anything with either the Scott interests or Greg, unless they want to do it. And the logical thing is if anything happened with the Scotts, we'd certainly offer it to Greg. But who knows what happens in the future.

The one thing I can guarantee you, Berkshire Hathaway holders will never be taken advantage of, and, you know, you can sue my estate or something like that (Laughs) if anybody felt differently about that. It isn't going to happen. But it's a lot easier if it's done while I'm around, actually, than if it's done later. But —

CHARLIE MUNGER: I wish we had 20 more conflicts of interest just like it.

WARREN BUFFETT: Yeah. (Laughter) Yeah. That's exactly true. Yeah. No, it's a perfectly logical question. But it was not a problem. And any answer that's arrived at will be good for all concerned. And right now, I've got no feeling that — I have no knowledge at all of where the stock that the Scotts have goes or how they feel about it or anything.

And that's up to them. You know, Walter was our partner. As far as we're concerned, we treat anybody connected with him as our partner. And they know that and they don't have to worry about us taking advantage of them.

And if they don't do anything, we can understand that. If they want to do something, we can understand that. It's a good question, though. Thank you.

WARREN BUFFETT: OK. Becky?

BECKY QUICK: This question comes from Steve Blackmore in Bozemon, Montana. This is to Charlie. He says, "In the past you've made favorable statements about investing in China, in part based upon valuation metrics. What is your opinion now, and how much weight do you put on the actions of the government in your analysis?"

BECKY QUICK: "Do the recent communist party activities in China, including human rights violations, blatant cyber theft from U.S. companies and others, crackdowns on speech from business and media, et cetera, cause you to change your opinion on investing in China? And how do you evaluate the clear dangers of investing under authoritarian regimes, as recently evidenced by Russian atrocities in Ukraine?"

CHARLIE MUNGER: Well, those are good questions, and there's no question about the fact that the government of China has worried the investors from the United States who invest in China. More in recent months in years than he did in the earlier periods. So there's been some tension.

And it's affected the prices of some of the Chinese stocks, particularly internet stocks. Just in the last day or two the Chinese leader has sort of reversed course on that, and said he went too far and he's going to pull way back and so on and so on. So we're having some hopeful signs.

But yes, there are more difficulties investing in, I mean, dealing with a regime in China than there are in the United States. And it's different. It's a long way away, and they've got their own culture and their own loyalties and so on and so on.

And the reason that I invested in China is I could get so much better companies at so much lower prices, and I was willing to take a little bit of a risk to get into the better companies at the lower prices. Other people might reach the opposite conclusion. And everybody is more worried about China now than they were two or three years ago. So that's just the way it is.

WARREN BUFFETT: I have nothing to add. (Laughter) (Applause)

WARREN BUFFETT: OK. Station eight.

TOM RINGE: Hi Warren and Charlie, my name is Tom Ringe. I'm from Wayne, Pennsylvania. It's great to be back here after two years. Thank you very much.

WARREN BUFFETT: Thanks for coming.

TOM RINGE: In this year's letter, you talked about insurance float, the evolution of float, the per share float, the effect on repurchase to increase the per share float. And in regard to the repurchase, I would say thank you as your partner for your careful repurchase, as well as careful issuance of our shares.

TOM RINGE: My question is about your expectation for the likelihood that float will be stable and the cost will be zero or close to that over time, with adverse years from time to time.

What about Berkshire's insurance businesses give you the confidence to make that statement when your competitors are trying to do the same thing, but haven't been able to come close to achieving Berkshire's record in cost and growth of float? Thank you.

WARREN BUFFETT: Yeah, well, they really aren't trying to do the same thing, which is kind of interesting. The answer to your question is we wouldn't be in the business unless it was my judgment that the likelihood, the weighted probabilities are higher that the float will be useful to us rather than costly to us.

And nobody will know the answer to that for a very long time. So far, so good, but it is a judgment. And absolutely I could be wrong about it. But, you know, I think both Charlie and I would say that we think the odds are that it's weighing better, and the odds are pretty good, and that we're quite well-positioned to do it if anybody does it. But, you know, did we know 9/11 was coming? Or, you know, I mean, it is not a sure thing.

CHARLIE MUNGER: Just think of what the potential is, though, when you're reviewing it. If we could buy common stocks we were virtually sure would give us 8% after taxes with our whole float, that would be a hell of a lot of money.

WARREN BUFFETT: Yeah, $11 billion. I can tell you what it'd be. (Laughs) $11 billion or $12 billion.

CHARLIE MUNGER: Yes, and it's an enormous amount of money.

WARREN BUFFETT: Annually.

CHARLIE MUNGER: Yes. And the float has been growing, so relax. (Laughter) But we're glad to have the float.

WARREN BUFFETT: But Charlie's talking a couple of ifs there, if we could earn it, and if we could. The answer is, you know, it's our job and we think we can do it as well as anybody, or we wouldn't be doing it. But it's our job to figure out what businesses we want to be in, and when they don't make sense, reluctantly, occasionally, to give up on them, like the textile business.

But those are the hard decisions. And insurance, I didn't have the faintest idea back in 1967 when Jack Ringwalt stopped by the office at about a quarter of 12:00. And Charlie or I set him up. And Jack, about once a year, he'd get mad at the regulators.

He just didn't like being regulated. And he'd say to himself, you know, "I'm going to sell this damn thing." And Charlie caught him one day and he said, "Jack was in heat." You know, I said, "Bring him around." So he came up quarter of 12:00, and Jack said he wanted to get rid of this damn business.

The regulators were driving him nuts or something. And I said, "Fine, I'll buy it." And I said, "What price do you want?" And he said, "Like, $50 a share then." I said, "Fine, we've done it. We don't need an audit, we don't need anything."

And then Jack started, and then he says, "Well." Immediately he really changed his mind, but he was too honorable to back out. So he said, "Well, I suppose you'll want me to sell you the agencies." And I said, "No." And, of course if I'd said yes, then he'd say, "Well, then we can't do it."

So I just said, "No, you keep them, Jack," you know. And he says, "I suppose you'll want me to do," and I said, "No, no, I won't want you to do that." He was hoping I would just give him an out. But after doing that for 15 or 20 minutes, he saw that I was going to agree to everything he said, and he said he'd sell it to me at $50. So he forward through. And that was that. And, (CHEER) you know, it was pure luck. And Jack —

CHARLIE MUNGER: Now, but Warren, we really like our float, don't we?

WARREN BUFFETT: Pardon me?

CHARLIE MUNGER: We really like our float.

WARREN BUFFETT: Oh, yeah.

CHARLIE MUNGER: We love it.

WARREN BUFFETT: No, we've made the most of it, but we didn't make the most of it until Ajit came along. (Laughs) And, you know, who knew that the guy was going to walk into my office in 1986 and, you know, I would decide that he was the guy to make this damn thing work that I hadn't been able to make work the way I wanted it to?

And who knew that GEICO would come along later? There's just all kinds of things. The one thing you have to do is be prepared when opportunity comes. You really do have to just move. And fortunately I operate in an environment, and I wouldn't operate in any other environment, I'd get out of there, but I operate in an environment where I can do it.

And it would be crazy of the board to say, "We want to set up a committee to review every acquisition," and all that. And I would say, "That's fine, but you can work with somebody else because (Laughs) I just don't like to go through all that stuff."

You know, I've got other things to do with the rest of my life. There's so much luck, but you do have to be mentally prepared to do something when it makes sense, and do it big time, and do it instantly. And then you've got to be sure you've got the resources to do it.

CHARLIE MUNGER: The relative absence of bureaucracy at Berkshire —

WARREN BUFFETT: Unbelievable.

CHARLIE MUNGER: —has made the company a lot of extra money for a very, very long time.

WARREN BUFFETT: And it's made my life happier.

CHARLIE MUNGER: And yes, that's ideal. (Applause)

WARREN BUFFETT: Yeah, but in the end, we are extraordinarily well-positioned to do exactly what we want to do with float, while at the same time never putting ourselves in the position, never coming close to making a promise we can't keep. We had two small insurance subsidiaries well before Ajit, with two companies I had bought.

One I really didn't know that much about, the other one I did it all by myself. And they were disasters.

And left alone, which they could've been, they'd have gone bankrupt. And we just didn't want to do it.

So, you know, we could pay the liabilities if the parent company got involved, or we put it in another insurance company or something, and we did it.

WARREN BUFFETT: I mean, Berkshire, you know, in a crazy way, I look at Berkshire as a painting. You know, and it's unlimited in size. It's got an ever-expanding canvas and I get to paint what I want. And if somebody wants to paint something else, then I'll (Laughs) get a smaller little thing and I'll paint away.

And, you know, I actually, you know, I don't know anything about paintings. Take me to an art museum, and you know, all I really want to know is where the men's room is. But, (Laughter) you know, I'm just not interested. And other people look at paintings and they see something.

And then they see something additionally later on. I mean, they really have a different sort of perception ability in relation to that. And to me Berkshire's a painting and I get to paint. And, you know, the object, obviously I want my partners to come out well in it.

But the real thing I like is the painting. And as long as, you know, it's in my head and I see different things in it as I go along, and you know, it's, you know, the closest thing I can come to enjoying myself every minute of the day. And I don't prescribe it for other people.

And occasionally I, well, not so occasionally, but I see things in the painting, you know, I think, "Well, I should've done that differently." And I go back and paint it over. And it's satisfying. And who knows why human beings react in that manner.

But I do know what makes me happy and what doesn't make me happy. And I found what makes me happy. So why in the world would I change it? (Laughs) So that's a short answer to a question that I can't remember what it was. (Laughter)

WARREN BUFFETT: OK. Becky?

BECKY QUICK: This question comes from Andrew Kesaw (PH) from Minneapolis, Minnesota.

He says, "Last year Warren mentioned that inflation had noticeably impacted the prices that Berkshire's businesses were paying and charging. Given those inflationary trends have continued, and in some cases accelerated since last year's meeting, could you comment on how this particular inflationary period ranks among previous such periods in the United States, like the 1970s and 1980s? And what can American businesses and citizens do to reduce the negative impacts that inflation brings about?"

WARREN BUFFETT: Well, we've sort of attacked them, what you do yourself, and then, you know, you develop the skills that people are willing to pay for in the future, regardless of what the unit of exchange is. But in terms of inflation in our own businesses it's extraordinary how much we've seen.

You know, I think you interviewed Irv Blumkin at the Furniture Mart, and two years, you know, the prices have just kept coming in higher for these things. And we sell them for higher prices, and people have more money than they've had before. And they like to buy.

And there are certain things they can buy. It's like during World War II, you had a lot of money created, and people couldn't buy cars, and they couldn't buy refrigerators, and they couldn't even buy as much sugar or coffee or things as they wanted.

And they had little stamps for gasoline and all kinds of things. Well, eventually if you get a lot of money in people's hands and you don't have very many goods, prices go up. You can do all kinds of things to, you know, try and talk it down.

And, of course, inflation is never the same. Nothing in economics is the same the second time after it happens than the first, because the first affects people's attitudes in the second, and their attitudes always influence the activity itself.

I mean, it is an interesting phenomenon. People write a textbook, and they write it based on the last experience. And people read the textbooks, so they behave differently next time. And then they wonder why they're getting a different result than they got the time before.

So anyway, we have sent out lots and lots and lots, and when I say "we" I mean the United States government, the government has sent out lots of money to people. And at some point, you know, the money can't be worth as much as it was when there was less money out.

Here's an interesting figure that I think probably will astound you. It astounds me, anyway. The Federal Reserve, every Thursday, puts out a balance sheet. And the Federal Reserve and Treasury, they're complicated institutions. But they do put out this kind of consolidated statement of all the various Federal Reserve banks, all these things that have entered into legislation over the years.

But there's a balance sheet. And 15 years ago, roughly, if you look, you know, the Federal Reserve issues those notes I talked about a while back. And there's the current one. (Laughs) And they print these pieces of paper. And they, one way or another, they get into the hands of people.

Well, the interesting thing is, people said cash is dead and all that sort of thing, you know, cashless society. Well, there were $800 billion, go back ten or 15 years, about $800 billion of currency in circulation. And if you look at last Thursday's report, you'll see there's something like, now, $2.2 trillion of currency in circulation.

$2.2 trillion. Now, there's about 330 million people in the United States. Let's look at it that way. And with 330 million people, and you have almost $2.3 trillion of currency in circulation, that's $7,000 per person, every man, woman, and child, in theory, has $7,000 worth of currency.

Well, you know, that isn't right. But you do know that the Federal Reserve's bookkeeping is essentially right. They've got that much that's out there. I don't know where it is. I mean, I don't know whether it's in Russia. I don't know whether it's in South America. I don't know where, you know, I don't know whether Charlie's got it all.

I mean, (Laughter) it's a staggering sum, you know? Cash is dead, and yet we, on average, have $7,000 for every person in the United States. Now, while you're absorbing that, think for a moment what would happen if the U.S. government said, well, they work it out in private and they decide that they're going to send, the Federal Reserve, and I'm not going to blame the Federal Reserve for this, someone back in Washington decides they're going to send out $1 million to every household in the United States.

And there are 130 million households in the United States or something like that, you know? And they're going to mail you $1 million in cash. And there were a couple provisions attached to it. One is if you talked about it in the next 30 days, the money disappeared.

So just like in one of those old TV shows or something, and poof, disappears. And after 30 days you could spend it. Well, all of a sudden, the household wealth of the United States, the Federal Reserve puts out an estimate, is $130 trillion or something like that.

So basically, you've doubled the household wealth. And all you've done is mailed out people, but then you don't tell them you're doing it with everybody. You just say they won the lottery, or whatever it may be. And now you've got an amount equal to household wealth.

On average people have doubled. They've got this extra $130 trillion of wealth. And in a month, they can spend it. Well, what's going to happen? Well, prices are going to go up. But are they going to go up immediately? Well, you don't know the other guy got it, you just know you've got it, so you don't really feel like you've got to rush out and buy things.

But as soon as word gets around, well, we've mailed out, if you look at the amount we've distributed, the federal government, I'm just talking about the distribution of resources, we're talking numbers like that. And it affects prices.

It has to affect prices. If you had ten times as much, if you went home and you found out you had ten times the net worth you had yesterday but everybody else has the same thing, it doesn't increase the amount of bread in the economy or the number of cars.

It just means that the price, the value of this is going to go down. And it's purchasing power. You can't buy more than exists. So it's a very strange period where we have lots of money sent out to people, who one way or another were getting it, that they didn't find as many things to buy as before.

And we had supply chain disruption. And you have all these things happen. But the end of it is they go into the Nebraska Furniture Mart and they just start buying things. And they do it with our other companies. And they do it in very peculiar ways.

And now they're buying, I mean, one thing, jewelry stores were, generally speaking, not a very good business. And two years ago, every landlord that had a jewelry store, or multiple jewelry stores in their mall, you know, was wondering how they were going to get their rent.

And now every jewelry store virtually is doing incredibly better than they ever dreamt with way less inventory, because people just come in and buy. They don't wait for sales. You know, when they walk in the store they're going to walk out and they're going to have bought something.

And they paid for it. They've got the money. So we are seeing an unleashing of the fact that we've just mailed a lot of money to people, one way or another. It's very indirect, and it all gets complicated when you talk about a big system.

But this is what's happened. And I will guarantee you that if we mail out $1 million to every household in the United States, and you don't know that it's happened, you know, you don't really expect much to happen in behavior tomorrow.

But somehow, at some point, and then if you start doing that every month, we'll say, and people really know you're doing it, then they start anticipating it and buying ahead of time and forward. I mean, there's a million things that happen in economics.

But the answer is we've had a lot of inflation and it was almost impossible not to have, if you're going to mail out the kind of money we've mailed out. And it's probably a good thing we did it. In fact, I think there was one point when the Federal Reserve, which in fact creates the money, if they hadn't done it your lives would be a lot worse, a whole lot worse now.

And that was an important decision. And that's why you've had inflation. And heaven knows, I mean, it could end. You can throw the country into recession. You can do all kinds of things. The country's going to have recessions, incidentally, and it's going to have depressions periodically.

And things will happen differently. And you'll read a newspaper today and you'll wonder a year from now, "Why was I reading the newspaper a year ago?" I mean, it's just the way it works. When I bought the first stock in 1942, did I know everything was going to happen afterwards?

Of course not. I didn't know a damn thing. But I just needed to have one idea. And that idea wasn't really well-formed, it was just probably the way practically every kid felt about the country when we'd just gone into a war, you know? We thought America was going to win.

And if America was going to win then, it was going to win just generally. And savings bonds were paying 2.9%. I learned that because we bought them. They called them war bonds originally, and then they called them defense bonds, and then they called them savings (Laughs) bonds.

But they were the same thing. And you print loads of money and money's going to be worth less. Not worthless. I got in trouble doing that one time at CNBC, because I said it was going to be worth, separately, less. But it got contracted down to "worthless". (Laughter) So it took me a few years to learn to separate those words somehow. Anyway, that's everything I know about economics and more. And Charlie can probably improve on it.

CHARLIE MUNGER: Well, it happened on a scale which would never seen before. Those checks are just mailed out to everybody who claimed to have a business and claimed to have employees. They've probably drowned the country in money for a while. And as you say, they probably had to do it. But it was something that had never been done on that scale before.

WARREN BUFFETT: But we had a problem we hadn't had before.

CHARLIE MUNGER: Yes, oh (Laughs) no, I'm not saying it wasn't a good idea.

WARREN BUFFETT: I mean, in my book, [Federal Reserve Chairman] Jay Powell is a hero. I mean, it's very simple. I mean, he did what he had to do, you know? If he had done nothing, I mean, he would be, you know, it'd be very easy to engage in what you would call thumb sucking then. And plenty of, I shouldn't say plenty of, but there are other Fed chairmen that would've been sucking their thumbs. And the world would've fallen around them. And nobody would've exactly blamed them, they would've blamed the virus and the Chinese and all kinds of things.

CHARLIE MUNGER: Well, the really interesting company is Japan, where first they bought back all the debt, then they started buying back all the common stocks. Now, that's really weird. And what did they get? Twenty five years of stasis. Who would've predicted that?

WARREN BUFFETT: Well, nobody predicted anything. I mean, (Laughs) there's nobody's predictions that we're interested in, including our own. I mean, it's very simple. What we do know is that we can deserve your trust, and there's no reason to do things that don't deserve it.

And we can't tell, but basically we think we're trying to build a Berkshire that can't withstand a nuclear exchange, but it can withstand as much as anything that we can do anything about. And that leaves us feeling good. It doesn't leave us feeling perfect. We'd like to even promise you more than that, but we can't promise more than that. So it's very simple.

WARREN BUFFETT: And with that one we'll move on to 18. Let's see, that's station nine.

ELI ABUSHAKAR: Dear Mr. Buffet and Mr. Munger, I'm Eli Abushakar (PH) from Montreal, Canada. I would like to thank you for everything you've done for us, your fellow shareholder.

My question is regarding the GAAP rules. If you were to change it, what would you change? What would it look like? Thank you.

WARREN BUFFETT: Well, I would resign the job. What would you do, Charlie? (Laughter)

No, it's an impossible problem. Because first of all you have to decide what GAAP is supposed to reflect. And it doesn't reflect value. But in certain cases, of course, it is important to say that this is value and so on.

I mean, it's a convention and it is done so that the auditor generally is protected, because otherwise everybody sues everybody in this country for anything. And it's designed to cause people who want to report a given amount of whatever is desired by the market to largely be able to do it.

And I don't know how I would write the rules. I mean, I've watched people who I would be delighted to have live next to me, you know, if I was going away for two weeks and my kids were to stay at somebody's house, it'd be fine with me if they stayed there.

If I lost my wallet someplace and they found it, they'd return it to me. But they'd play games with any number that came to them. And, of course, it's a very awkward thing to be on the audit committee of a company where people are playing around with the numbers.

And they don't want you, if you raise a stink you've got all kinds of problems. And I actually wrote something some years ago. I was kind of anticipating your question about 15 years ago, I guess. And I wrote four suggestions for questions to be asked of the audit committee.

And I don't know whether I was on the audit committee then of Coke or whatever. But anyway, I mean, it was just clear to me what was happening. But you really had to follow the charade, or you got in all kinds of trouble for doing that too. And so, I just put four questions out that I would want to know.

And they were perfectly logical questions. And then nobody adopted them. I mean, (Laughs) and the system was fine as it was. The auditors got sued, but not that often. And the SEC had lots of rules, and I admired the SEC enormously. I think the country's better off because of the SEC.

But it is a hopeless question, or problem to devise rules that people can't get around. My friend that was a writer said, "It's not the illegal things that are outrageous, it's the legal things." It's very hard. You try and it's worthwhile.

You need an SEC. But the SEC can't really stop stuff that, you know, you would find outrageous if explained. And the auditors have the same question. I mean, the auditors, they want rules, and they want processes, and they want it to be so they can operate.

Charlie, he was on the audit committee of Salomon, and we had probably literally millions of contracts where people put numbers in and he found that $20 million, we had the largest auditing firm in the country then, Arthur Andersen, as I remember Charlie —

CHARLIE MUNGER: They're gone now.

WARREN BUFFETT: Yeah, they're gone now. But they were (Laughter) the largest. And Charlie found a $20 million error I think one time in an audit.

CHARLIE MUNGER: They called it a plug.

When your accountant starts talking about a plug, it's not good. (Laughter)

WARREN BUFFETT: Well, I'll tell you a story I haven't told before. (Laughs)

You saw in that movie, people over here saw me testify in August before a subcommittee who were out, you know, to get their way. And I just decided, you know, I was just going to answer every question honestly, and I was not going to try and draw up everything.

And then so I just sat in front of them, and said what I knew and didn't know. And one of the things I said, which was absolutely true, is that I'd only been there ten days or so at Salomon, but I said, "I really haven't seen anything yet that strikes me as terrible in accounting."

But I've been there ten days. But this guy who got us in all this trouble, so far he's the only thing I've found. I don't know what else is going to be found, how in the hell could I know what was going on in a place that was doing, you know, incredible numbers of transactions and everything?

Well, I said, you know, "What I'm seeing, the accounting strikes me as legit." About a month later, I was so happy I'd testified earlier and not later, a very fine CFO, and these are decent people. They're very decent people. And he comes in and he said, "Warren, there's probably something you should know."

And I said, "Well, what's that?" And he said, well, 12 years earlier, or whatever it was, Salomon had merged with Phibro, which was a huge trading company. Salomon was a huge investment banking company. And they became this huge powerhouse.

And he said that 12 years ago when we merged with them, we sort of couldn't find exactly, they were on a trade basis and we were on a settlement basis. And then he said we never really figured out how to put the books together. This was the largest audit company in the United States, Arthur Andersen, that's responsible for signing this thing.

So, we had this number and every day it moves around. And it's just put in there to make assets equal liabilities. (Laughter) And, you know, today it's $173,412,000, you know, and down to the penny. And tomorrow it'll be something different, you know?

And I thought to myself, "I am sure glad I testified before Congress a month ago, because I did not know then." But if they ever ask me again, I'm going to tell them exactly what happened. "We've just got this number that floats around every day, and we haven't found it in 12 years, and Arthur Andersen doesn't know where it is." (Laughter) And, you know, you've got to make the assets equal to the liabilities, right? So what else do you do? And that's exactly what happened. And strange things happen in this world. This one guy —

CHARLIE MUNGER: I think the name was the floating plug. (Laughter)

WARREN BUFFETT: Yeah, you know, yeah. And Charlie's on the audit committee. (Laughter)

Yeah, the one thing I've always suggested, nobody ever wants to do this, and I can understand why, but you've got trillions of dollars worth of contracts and everything that people are putting down little numbers for every day at banks and investment banks and all over the world.

I mean, commodity traders, and at Berkshire we stick down, you know, there's certain hedging the even the regulators want us to do in terms of giving utilities. And we put a little number in. And I made this suggestion once or twice that if you really want to do something sort of interesting, you know, just get some young guy that, give them a couple of weeks and pick the hundred most kind of complicated, long-term, you know, lots of wording derivative contracts.

And look at what one side who promises to do something values it at, and look at what the other side, who also reports. You know, and just let them do it for 100 operations at random. I'd just like to know if we're valuing a contract at $28 million, the other guy's valuing it at $33 million.

You know, and you've got the same auditing firm in both cases. And they're signing their name to it. I don't think anybody's ever done anything (Laughs) with that suggestion. And, you know, that would be the first thing I would do, actually, if I really wanted to sort of dig into what was happening in accounting.

But there's a lot of things in life you can't change. And nobody is going to go looking for ways to create lawsuits and newspaper stories, (Laughs) and all kinds of things. And I don't blame them.

WARREN BUFFETT: Listen, I had brought one thing I just couldn't resist.

I was hoping I'd get a question, so I'll ask it myself. (Laughter)

I was hoping to get a question that how could some guy be so idiotic as to propose a price of $848.02 or whatever it was, or is, for Alleghany Corp? I mean, isn't that getting a little scientific, you know? (Laughs)

And, of course, I did provide, when I made the offer, that it be $850, less whatever was paid to whatever investment banker they wanted to select, Alleghany in this case, and they're bound to have to do it because Delaware law is developed in such a way that the directors are protected if they get expert opinions, all that sort of thing.

So, I don't fault anybody in the system. But I just thought it might be useful, actually, maybe to Delaware judges someday, Delaware statute makers, maybe people that are writing papers, who knows.

But I suggested that we just, since I'm willing to pay $850 a share for the place as is, you know, if the advisory fees are $10 million or $40 million, that it makes a difference to someone.

And it's always made a difference to us as the buyer, but that's just the way the game was. Well, there's a little history to that. And I went back and there's been twice, and nobody's ever paid any attention to this, but there's been twice in the history of Berkshire Hathaway, 57 years, twice that Berkshire was required to get a fairness opinion.

And it was perfectly logical that we be required to get a fairness opinion in those two cases, because in one case Diversified Retailing, which was a company I was invested in, in both of them that came out of our partnership, but one had a group of shareholders that were different than the other group of shareholders at Berkshire, and the two wanted to merge, so you have two companies, with me being the biggest beneficiary between.

And it really wasn't up to me to determine the ratio, I mean, even though I am the most involved. But I had a little more of one company than the other. So anyway, a fairness in opinion was required. And this has only been twice in the history of Berkshire that one was required.

So naturally I went to Charlie, and I said, "Charlie," you know, "We do have," I mean, Charlie told me, he knew it better than I did, "We need a fairness opinion in this case." And I said, you know, "I know what's fair, you know what's fair, Sandy knows what he thinks is fair."

If the three of us owned it, in ten minutes we could've worked out a deal that all three of us regarded as fair. But because there were public shareholders and everything, it wasn't right to do it that way. And the first one, we have two of these, but the first one was November 27th, 1978.

And I told the shareholders, essentially, that my personal belief is that both Diversified and Berkshire shareholders will benefit from the merger, but I will vote for the merger only if a majority of the shares, which are voted by other shareholders of each company, are voted to support, which was fine.

I committed myself, you know, to let the people decide whether this was fair. But on top of that, we needed to get a fairness opinion from an investment bank with a big name and everything. And so I said to Charlie, "You know, these things are going for $1 million or $2 million," where they get some guy that they hired last week and he writes up a little thing, and then we get a bill for $1 million or $2 million.

They really haven't done anything, they don't know either company and, you know, there's a million things they're not going to know about it, but they're going to write an opinion. And we need the opinion. I said, "So what do I do?" And I go to Charlie with these kind of problems.

And Charlie said, "Warren, it's very simple." He said, "Pick out ten prestigious investment banks and do exactly what I say." (Laughs) So, "OK Charlie, what do I do when I get these ten?" And he says, "Well, put them in order, one through ten."

And he said, "Call the guy at the top of the list and tell him you'll pay him $60,000 for doing a fairness opinion. And you know that it's an insulting price and it's ridiculous for him to do it because it'll affect what he can get from other people down the line that will look back and say, 'Well, Buffett only paid $60,000, why should I pay $2 million?'"

And he says, "Just tell them that that's what you'll pay. And if they're insulted by it, which they probably should be, that you'll go to number two and offer them the same deal, and you'll just keep going down till you get to number ten. And if you don't have anybody by number ten, you've told the other people, you'll come back to number one again and you'll say, 'Well, I'll pay $80,000,' and then you'll go down the list and example."

Well, (Laughter) so I picked ten names out and number one name was Jack Shad. And Jack Shad was a friend of Tom Murphy's, he was a friend of Bill Ruane's, and he was running E.F. Hutton. And he was a very, very, very successful investment banker.

I didn't know him as well as the others, but I'd met him through my friends. So, I called him up and I said, "Jack," I said, "I've got this crazy request." And he says, "Only because everybody admires you so much and my friends are your friends," and blah, blah, blah, and E.F. Hutton is so well-regarded.

I said, "I'm going to ask you something that is totally against your interest, and I fully understand the fact that you're going to say, 'You're an idiot to call me on this,' and slam down the phone." But I said, "Jack, here's our procedure."

And I described this procedure that he gets called first, and if he turns it down then I go to Paine Webber, and then I go to, and (UNINTEL). And I tell him, "There's these ten people. And if we don't get any yeses, I'm going to come back to you again and I'll offer you $75,000, and we'll do the same thing till somebody says yes."

And I said, "Jack, you know, but you are the first call, so $60,000 and it's going to screw up your business if you do this, because every client you get in the future is going to say, 'Well, you did it for Diversified Retailing and Berkshire, and why in the world should we pay you $2 million when he paid you $60,000?'"

And Jack said, "Don't worry about it Warren. (Laughs) I can take care of that." He says, "We're in." And so we got a fairness opinion written for one side. And now the next call I made was to Paine Webber, and I gave them the same story. And I said, "E.F. Hutton was dumb enough to take the one side for $60,000." You know, "I don't know why the hell they're doing it, they're destroying their reputation and all that." And Paine Webber said, "We'll take the other side for $60,000." (Laughter) So we have a thing that describes the whole process.

CHARLIE MUNGER: They got (UNINTEL). They sent out an amiable alcoholic that they had to do something with.

Well, what they did (Laughter) was they each billed us for $60,000 and we paid it.

That's what you get for $60,000.

WARREN BUFFETT: No, no, no. (Laughter) We got the same thing everybody else got, Charlie.

CHARLIE MUNGER: Yeah, I know.

WARREN BUFFETT: And, of course, Jack Shad, this was 1978, he was appointed chairman of the SEC (Laughs) for seven years. I mean, but Jack liked to do business. And it was true, it didn't hurt him. They paid us $60,000 and then they went back and charged somebody else $2 million, you know, the next week.

And it's all play money. And so we did the same thing when we got to Blue Chip Stamps, where we were similarly conflicted four or five years later. We went back to the same two guys. And there had been a lot of inflation and everything like that.

So we said $110,000 then. I've got the prospectus for that. And both of them said, you know, "Send it in, don't worry about our other clients, we'll figure out some story to tell them," you know, and whatever it may be. But I just thought it would be interesting to, at some point, have people realize that it's not play money.

Somebody pays it. And it's a game. And, you know, but it's what passes muster in Delaware, and the directors will have it explained to them by the lawyers that they're not going to get sued if they do it in a certain kind of way. And, you know, so I just decided that somebody at some point ought to (Laughs) point out what actually is happening in this situation.

And that's why we did it that way. And, you know, it may go down with our earlier attempts to educate the world on the realities of finance and its various interactions, and why it's better to teach your son to be an investment banker than to be an electrician, you know, or something. But you've got an eccentric chairman and that's what he did. (Laughs) Charlie, how do you feel about this whole matter? It was your idea originally.

CHARLIE MUNGER: Well, we're a little peculiar. (Laughter) And all the peculiarities are not bad.

WARREN BUFFETT: I didn't talk to Charlie before I did this this time. But Charlie has given me four ideas together on extremely practical matters, I mean, they just changed everything. I think you really ought to tell them about the experience with the fraud company, (Laughs) Charlie.

CHARLIE MUNGER: About what?

WARREN BUFFETT: About the fraud claim, you know, the Fidelity claim with the guy, you know, he had the very well-known insurance company that, we don't have to name names. But, you know, when you basically told him, "Just raise the stakes to make the game fair." This was back in the 1960s. Do you remember that?

CHARLIE MUNGER: I don't remember.

WARREN BUFFETT: Oh, well I remember.

CHARLIE MUNGER: Well, tell it then. (Laughter)

WARREN BUFFETT: Charlie had this tiny little operation which he ran his fund, also had a seat on the Pacific Coast Stock Exchange. The firm was called Wheeler and Munger. It was called Wheeler and Munger at first, later it changed itself to Munger Wheeler, and Jack Wheeler said, "Well, pretty soon it'll be Munger and Company, but that's OK." Jack Wheeler was a very interesting guy, and he had the specialist position in General Motors and a few things. And some employee stole, like, I don't know, $12,000 or something like that from the firm.

CHARLIE MUNGER: Yeah. Well, I remember, he had the trading tickets.

WARREN BUFFETT: Yeah. Some guy steals some money, and Charlie's firm, Wheeler and Munger, was required to have a Fidelity bond and all these things that governed dishonest employees and all of that sort. So this guy's clearly dishonest. He's clearly stolen the money.

So Charlie puts in a claim for $12,000 or something like that, whatever the loss was, and sends it to this very big and prestigious insurance company. And, of course, the insurance company denies this claim. They say, you know, "The guy really wasn't employed, he doesn't exist, you don't have a dog," you know, I mean, the whole thing.

And Charlie gets this letter back and they're not going to pay the claim. And so Charlie writes a letter to this very well-known big name person that runs the insurance company. And he said, "Look," he said, "We have this $12,000 claim." And he said, "That guy stole the money and we thought we had an insurance policy against people stealing, and paid us if people stole money."

And he said, "We're in this very interesting position, because you've got a bunch of people on the payroll, and they're going to get their weekly check or monthly check, whatever they do, so they just say, 'We're not going to pay,' and life goes on.

"Whereas I'm sitting here and I've got my time, I've got work on this thing, and it isn't worth the $12,000 for me to fool around with this claim against the company, and they'll appeal it," and all these things. So he said, "I know that you would be offended by the thought that you might be using this inequality of bargaining position to avoid paying the claim.

"That never could be your intention. So, what I suggest in order to really live up to your code of behavior is why don't we make the $12,000 claim, we'll just multiply it by ten and call it $120,000 either way. And if you lose, you pay me $120,000. If I lose, I'll pay you $120,000, and now it's worth my while."

And (Laughter) he addresses the letter to the chairman and says that to the guy. He gets a $12,000 check by return mail. (Laughter)

It's not a bad lesson. He's told me two others, but the tricks are too good. I don't even want to share them now, I may use them myself someday.

WARREN BUFFETT: OK, let's go to Becky.

BECKY QUICK: We got a lot of questions on this topic. I'll ask this one that came from Raj. He says, "Have you changed your views on bitcoin and/or cryptocurrency in any (Laughter) respect? I'm conflicted about this," because his own views have slightly evolved during the past two years from bitcoin is a fraud and waste to bitcoin is in a speculative bubble but might have some uses.

WARREN BUFFETT: Well, (Laughs) I shouldn't answer any question on the subject, but I will. You know, there's all kinds of people watching this that are long bitcoin and there's nobody that's short, and nobody wants their windpipe stepped on. And I don't blame them, I don't like people to step on my windpipe.

But I would say this, that if the people in this room owned all of the farmland in the United States, and you offered me a 1% interest in it, and you said for a 1% interest in all the farmland in the United States, pay our group, well, let's see ten, 20, pay us this bargain price, $25 billion, I'll write you a check this afternoon, $25 billion, now I own 1% of the farmland.

If you tell me you own 1% of the apartment houses in the United States and you offer me a 1% interest, so I'll have a 1% interest in all the apartment houses in the country, and you want whatever it may be for it, call it another $25 billion or something, I'll write you a check. You know, it's very simple.

Now, if you told me you owned all of the bitcoin in the world, and you offered it to me for $25, I wouldn't take it, because what would I do with it? I have to sell it back to you one way or another. I mean, maybe not these same people, but it isn't going to do anything.

The apartments are going to produce rental, and the farms are going to produce food, and if I've got all the bitcoin I'm back where whatever his name was, who may or may not have existed was, you know, 15 years ago. If I've got it all he could create a mystery about it.

But everybody knows what I'm like. I mean, so (Laughs) if I'm trying to get rid of it, you know, people will say, "Well, you know, why should I buy some bitcoin? Why don't you call it Buffett Coin, you know, and make your own or something? Do something. But I'm not going to give you anything for it."

And you'd be right, incidentally. But that explains the difference between productive assets and something that depends on the next guy paying you more than the last guy got. Now, net, if you look at it, a lot of commissions have been paid and, I mean, there's all kinds of fictional costs that are very real that somebody has paid to a bunch of people who facilitate this game.

But whatever one group of the public has taken out, or one group of owners, has come in from other people. I mean, other people have entered the room and they move money around. But there's no more money in the room, it just changed hands with a lot of maybe fraud and costs involved and, you know, a whole bunch of things.

You lose, you know, you forget the numbers or forget the equation. You can do that with a lot of things. I mean, it's been done throughout history. Certain things have value that don't produce something tangible. I mean, you can say a great painting, you know, probably will have some value 500 years from now.

It may not, but the odds are pretty good that if it was a big enough name at some point. There will be a few things. I mean, you know, you can find somebody to pay. If somebody wants to sell you a pyramid or something, and you can charge the viewers, you know, it'll be around a long time and it would produce anything, but people will find it interesting to go there, because they've heard about the pyramids.

But basically assets, to have value they have to deliver something to somebody. And there's only one currency that's acceptable in the United States. I mean, you can come up with all kinds of things. We can put out Berkshire Coins or, you know, we can put out Berkshire Money or anything like that.

But we'd get in trouble, I guess, if we call it money. But in the end, this is money and there's no reason in the world why the United States government, whose currency people prefer. I mean, literally there's just under $2.3 trillion just of these little pieces of paper floating around someplace, $7,000 for every man, woman, and child in the United States, even though most of them probably aren't in the United States. Who knows.

But this is the only thing that's money. And anybody that thinks the United States is going to change to where they let Berkshire Money replace theirs, you know, is out of their mind. So anyway, with those few deficiencies, you know, whether it goes up or down in the next year or five years, ten years, I don't know.

But the one thing I'm pretty sure of is that it doesn't multiply, it doesn't produce anything. It's got a magic to it and people have attached magics to lots of things. I mean, it's a goal in Wall Street, you know, to create magic, you know? We are not an insurance company, we're a tech company.

Well, they're an insurance company. But a dozen people or so have raised a lot of money, they just say, "Just don't pay any attention to the fact that we sell insurance. We are a tech company." Well, in the end they wrote insurance and overwhelmingly they've lost a lot of money since then. You can make up things that work well in getting money from other people and that's why —

CHARLIE MUNGER: I have a slightly different way of looking at it. (Laughter)

WARREN BUFFETT: I'll sell you some then.

CHARLIE MUNGER: Well, (Laughs) in my life I try and avoid things that are stupid and evil and make me look bad in comparison with somebody else. And bitcoin does all three. (Laughter)

And in the first place, it's stupid because it's very likely to go to zero.

In the second place, it's evil because it undermines the Federal Reserve system and the national currency system, which we desperately need to maintain its integrity and government control and company on.

And third, it makes us look foolish compared to the communist leader in China. He was smart enough to ban bitcoin in China, and with all of our presumed advantages of civilization — (applause) — we are a lot dumber than the communist leader in China.

WARREN BUFFETT: Yeah, and when 25% of the people of the country get mad because we've said what we said today, just remember Charlie spoke last, and was the most — (Laughter)

WARREN BUFFETT: The one development that I really do think is actually important, but I don't know any way to do anything about it, but my general sense, and there's no way to prove it, but I essentially believe people are now behaving somewhat more tribal than they have for a long time.

And, I mean, people are always going to be partisan, and they're going to have religious beliefs, they're going to have all kinds of things. But it gets pretty tribal. And I speak from experience because I've been tribal. And, you know, we're confessing today, and, you know, Nebraska football is tribal.

And when I watch a television set, and I see our guy, Nebraska, step out of bounds by a foot, but somehow the ref misses it and calls it "in," and then they show six replays, I'll continue to believe it was "in" even though it's right in front of my eyes that they stepped out. You know, that's tribal behavior.

And it's fun. I mean, (Laughs) to participate in. But it can get very dangerous when one group of people say, "Two plus two is five," and the other say, "Two plus two is three," you know, and they're going to give you those answers if you call them.

And the interesting thing is, to me at least, and partly because of my age. But I actually think, just from memory, that the last time that the country was seen as tribal was actually when I was a kid and Roosevelt was in: Either you hated Roosevelt or you loved him.

I mean, nobody cared about the fact Alf Landon was running, or Wendell Wilkie was running against him. They just had these feelings: They either had Roosevelt's picture on the wall, and named their kids after Roosevelt, or they hated him and they thought he was going to, you know, "Oh, a third term?" and, you know, a million things.

And the country was very, very tribal in the '30s, but Roosevelt's tribe was bigger. And, in my opinion, they did some wonderful things. But I happened to grow up in a household where we didn't get served dessert until we said something nasty about Roosevelt. I mean, and, believe me, if you don't get dessert, you're going to say something nasty about Roosevelt. (Laughs) And so you trained them young, and did, you know, all kinds of things.

And so, I think I've seen a period that wasn't that way, when Eisenhower was running against Stevenson, or whatever it might be. I mean, you know, people had a partisan behavior, and they had a certain amount of "tribal" always. But I don't think it's a good development for society generally when people get tribal, regardless. (Applause) Charlie, what tribes are you a member of? (Laughs)

CHARLIE MUNGER: Well, in California, we have a legislature which is completely jerrymandered so nobody can ever be thrown out by the voters. And, therefore, the only people in the legislature are insane rightist and insane leftists. And they get together every ten years, and there's usually six moderates somewhere in the legislature, and so they re-jigger all the districts to throw them out, because neither part can stand them. Now, that is government in California. (Laughter)

WARREN BUFFETT: Yeah? And you live there and you have to go back? (Laughs)

CHARLIE MUNGER: Yes, yes.

WARREN BUFFETT: I'm sure you'll —

CHARLIE MUNGER: And I prefer living there to living in Russia. (Laughter) (Applause)

WARREN BUFFETT: OK. Who haven't we gotten in trouble with yet? (Applause)

Who was it, Lennie Bruce, that used to say, "Is there anyone I've forgotten to offend?"

WARREN BUFFETT: Yeah. Section 10, I believe.

SAHEJ: Hello, Mr. Buffet and Mr. Munger. My name is Sahej, I am from New Jersey. And I'm currently a freshman at Rutgers University. You knew quite early on that you wanted to be investors, and you've obviously been amazing at it.

What advice would you have for someone who's still trying to figure out what they want to focus on and find their calling?

WARREN BUFFETT: Well, that is a very interesting question. Because I was very, very lucky. In that I found what I wanted to do because my dad happened to be in a business that he wasn't interested in, but they had some books down there, and I loved my dad, and I'd go down and read the books and they interested me.

And, you know, I'm glad he wasn't a professional boxer or something, or, you know, I wouldn't have any teeth left or anything else. (Laughs) It was accident, just totally accident, but I do think you know it when you see it. And it doesn't mean you can follow.

I would tell the students, as I wrote in the report, I mean, you know, "Find out what you love doing." I mean, you spend most of your life doing it, and why in the world would you want to be around for a lifetime working with people that you didn't like? Unless you had to, which sometimes happens. Just work for whomever you admire the most.

I gave a talk at Stanford one time. And somebody showed up at Tom Murphy's office, I think, a couple of days later. That person was right. And, of course, it's what I did when I got out of school. I wanted to work for Ben Graham. I mean, I didn't care what I got paid, it didn't make any di — you know, I just knew that that's what I wanted to do.

And then I pestered him for three years and he finally hired me. And then I found somebody else that I'd even rather work for than Ben, who happened to be myself. (Laughter) And so I've been working for myself ever since. But I had about four bosses in my life. You know, I went down to The Lincoln Journal. Name slips my mind at the moment, he was a wonderful boss. And it was Coopersmith at J.C. Penney's here in Omaha, and they all were wonderful people.

But I still preferred working for myself. And, of course, Charlie and I both worked for my grandfather, and we just didn't find it that interesting. I don't remember, why'd you ever decide to go to work at the store, Charlie? Charlie worked there in 1940, I worked —

CHARLIE MUNGER: Well, I worked just for the experience of working, I didn't need the money. My father gave me an ample allowance and I also had a private business. So, I was kind of working as a lark in your grocery store.

WARREN BUFFETT: Twelve hours a day?

CHARLIE MUNGER: Yes.

WARREN BUFFETT: At — for a lark?

CHARLIE MUNGER: Yeah, as a lark, yes.

WARREN BUFFETT: Do you consider that a good investment of your time? (Laughs) I mean, just looking back on it?

CHARLIE MUNGER: Well, I'd never done it before, and I wanted to have a little of that experience. And I wasn't going to do it very long.

WARREN BUFFETT: Hmm. (Laughter) That sure as hell wasn't the reason I worked. (Laughs)

CHARLIE MUNGER: Well — you know, I could give that young lady the advice. Figure out what you're bad at and avoid all of it.

WARREN BUFFETT: Yeah. (Laughter)

CHARLIE MUNGER: That's the way Warren and I found our profession.

WARREN BUFFETT: Absolutely. You know, we —

CHARLIE MUNGER: We failed at everything else.

WARREN BUFFETT: We worked at everything till we found the ideal employers: ourselves. (Laughs) You know? And that was something we really admired.

CHARLIE MUNGER: I know: Warren said, "Work for somebody you admire." (Laughter) The only one he knew was the one he was shaving.

WARREN BUFFETT: I think he was self-employed.

CHARLIE MUNGER: Because he and I were shaving.

WARREN BUFFETT: But it isn't bad advice. It isn't bad advice. I mean, if they've got an option. I mean, Charlie went into the service in whatever year it was, in the '40s, and he didn't really have a choice of who he was going to work for. And, as I remember, it didn't really work out that well (Laughs) who you worked for, Charlie, did it?

CHARLIE MUNGER: Well — if you stop to think about it, there are two things that neither one of us has ever succeeded at: One, we've never succeeded at anything that didn't interest us, right?

WARREN BUFFETT: Right.

CHARLIE MUNGER: And we've never succeeded at anything that was really hard where we didn't have much aptitude for it.

WARREN BUFFETT: Yeah. And we've been doing whatever we pleased for 60 years.

CHARLIE MUNGER: Yeah, we did.

WARREN BUFFETT: And, you know, we have fun in our way, and —

CHARLIE MUNGER: I'm just amazed. You'd think, if you're smart, you could do things that don't interest you well. But you can't.

WARREN BUFFETT: Well, I've certainly got a lot of examples in my own case. But we won't get into them here.

WARREN BUFFETT: And we will go to Becky.

BECKY QUICK: This question comes from Foster Taylor, in Tulsa, Oklahoma. He said he recently listened to the Berkshire Hathaway 2008 Annual Meeting, where you talked about global oil production.

At the time you talked about major ramifications if global oil production went below 85 million barrels in 25 years.

We are at the 14-year mark, and global oil production looks to be 79 million barrels. At the same time, we're depleting our strategic oil reserves. Should the United States be doing something differently, and do you see consequences to these actions in the next ten years if we do not become more proactive?

WARREN BUFFETT: Well, Charlie's the expert on oil.

CHARLIE MUNGER: Well, but — (Laughs)

WARREN BUFFETT: Only compared to me. (Laughter)

CHARLIE MUNGER: Samuel Johnson said, "It's hard to determine the order of precedency between a louse and a flea." And it's hard to tell which of us is more incompetent in oil. (Laughter)

WARREN BUFFETT: We're still competing. (Laughs)

CHARLIE MUNGER: I have a different view on this subject. I like having big reserves of oil. If I were running the benevolent despot of the United States, I would just leave most of the oil we have here, and I'd pay whatever the Arabs charge for their oil and I'd pay it cheerfully and conserve my own. I think it's going to be very precious stuff over the next 200 years. And nobody else has my view, so it doesn't bother me, I just think they're all wrong.

WARREN BUFFETT: Yeah. (Laughter) Well —

CHARLIE MUNGER: But at any rate, that is not the normal view.

WARREN BUFFETT: And we've been pretty flexible on our own view. I mean, actually, the Federal Government is serving up however many billion barrels of the stuff into the economy. And, you know, it wasn't that long ago that, you know, the idea that anybody produced a barrel of oil was somehow something terrible. I mean, just try doing without 11 million barrels a day and see what happens tomorrow.

It is something that everybody has a feeling on, immediately. And, you know, this gets into a whole bunch of different tribes of sorts, and you offend an awful lot of people if you talk in any way about it. But, in the end I think, at the moment at least, most people feel that it's nicer to have some oil in this country than not have it.

And we're using a lot of it. And if we were to try and change over, in three years, or five years, nobody knows what would happen, but the odds that it would work well are extremely low, it seems to me.

Charlie, why don't you say something more dramatic so you'll be the one that offended the most people? (Laughter)

CHARLIE MUNGER: Well, if you stop to think about it, the oil industry is being so vilified now, I can hardly think of a more useful industry, and I don't know about wildcatters, but certainly the petroleum engineers I know, and the people who design our oil refineries, and pipelines, are some of the finest and most reliable people I know.

And I see very little trouble (Applause) with the oil supply thing in the United States.

So I'm basically in love with Standard Oil. And I don't have this feeling that it's an evil, crazy place. I wish the rest of the world worked as well as our big oil companies.

WARREN BUFFETT: Well, we better move on to station 11. (Laughs) I'm not sure whether station 11 is operative?

GLEN TONGUE: Well, we're here. Greetings from the Overflow Room. My name is Glen Tongue, I'm a shareholder from New York. This is my 20th Berkshire Annual Meeting, and I'm delighted that we're able to, once again, be here in person. You two have brought tremendous joy to all of us through the years, and, speaking personally, your wisdom has not only made me a better investor, but, more importantly, a better, happier person. It's a privilege and honor to thank you. So, Warren and Charlie, thank you. (Applause)

CHARLIE MUNGER: Well, that's my kind of a question.

WARREN BUFFETT: Yeah, that — that's fine.

CHARLIE MUNGER: Let's have more of those. (Laughter)

WARREN BUFFETT: Yeah, or you can say it again. (Laughs)

CHARLIE MUNGER: Maybe you could sing it. (Laughter)

GLEN TONGUE: Maybe I should quit at this point.

WARREN BUFFETT: Glen go to it.

GLEN TONGUE: My question relates to share repurchases. Since you started buying back Berkshire shares, in size two years ago, the repurchases have ranged between $1 billion and $3 billion per month. By my estimate, it appears that the buyback rate is about $3 billion per month when Berkshire's trading at a 20% or so discount to intrinsic value, $2 billion per month at about a 10% discount, and a billion per month at a zero to 10% value. Do I have that approximately right? And do any other factors influence the rate of share repurchases?

WARREN BUFFETT: Well, after you were so nice in your introduction, I have to say that (Laughs) you're actually wrong in that. If somebody had offered us $50 billion worth of stock at a certain point in the last three or four, five months, we'd have taken it. You know, it's that simple.

And, as I mentioned earlier, we haven't bought any stock in April. It's something that, when we can do it, and we know, at least we think the probabilities are very high, we certainly believe it in terms of our own evaluation and our own investment, if we think that we're improving things for the remaining shareholder, we'll buy it back. And if we don't, we don't buy it back.

And if we have the choice of buying businesses that we like, or buying back stock — the controlling factor's how much money we have, we'd rather buy businesses. And so, you know, we don't stay awake at night working out formulas, or anything of the sort. But we don't ever do it if we think that we're not doing something at the time.

If we had a lemonade stand, and Charlie and I and you owned it, and the lemonade stand was making us about a buck a week or something, and we divided it up. And then you said you wanted to get out. And if you said one number, and we'd have the funds in our little lemonade company, we'd buy you out. And if we didn't like the price, we wouldn't buy you out.

And that's the same we feel. But we do feel an obligation to do things that we think are intelligent and in no way risk — absolutely no way present any risk, of financial problems under any circumstances, we can envision, except maybe something like nuclear war, you know, we will do it. But it never can be that big a factor.

Charlie, I think, spoke the other day, in connection with Henry Singleton. I think he bought back 89% of the company over time. And he'd sold stock like crazy, or issued it, much earlier when it was overpriced, and he bought it back underpriced. But the key to that, of course, if having people think you're wrong in doing it, so he was able to buy a ton of it.

And there are some other companies that have bought a ton of it, and Berkshire isn't going to get the chance to do that. Because we've got sensible shareholders is what it amounts to. If we had the same group of shareholders that own two-day puts, and they were our shareholders, we could buy back the whole company, you know, in a very short period of time.

But it's such an easy concept to assess. I mean, the second stock I bought — I bought City Service Preferred, that was the first one. The second stock I bought was a company called "Texas Pacific Land Trust." And that came out of the bankruptcy of the Texas and Pacific Railroad back in the 1880s, or something like that.

And they had three million-some acres, and they owned the minerals, and they owned the surface, and everything else. But it was terrible land in the 1880s. But they had some kind of a charter that said that they could use the proceeds from land sales, whatever it was they were going to buy in stock every year.

And, you know, I sat there, when I was 13 or 14, and I figured, "If I live to be a hundred, I would own the whole place." Well, I haven't lived to be 100 yet, and I wouldn't have bought the whole place. So both calculations are, so far, imperfect. But it's been a remarkable company, just plain remarkable. Because they would talk about grazing fees of $6,000 a year, or something like that, you know, maybe, when they had three million acres.

And then they kept finding oil, and more oil, and more oil. And they've changed the form, and all kinds of things, but they bought stock week after week after week. And I sat there and figured out how long it would take until I owned the whole company. And I obviously made some improper (Laughs) calculations because it wouldn't have worked that way.

But it still was apparent to me that it would be a very good idea, if they had three million acres down there, that if they got all through with it, and they kept their mineral rights, and all kinds of things, which they were doing, you know, at a very cheap price it ought to work out well for anybody that sat around for a long time.

And it has worked out extremely well for anybody who sat around a long time. But nobody knew that they were going to find a lot of oil, and that eventually El Paso would grow out far enough so that the surface lands became worth some money, that were somewhat near El Paso. And you had to go a couple hundred more miles to find the next person, but (Laughs) that was another problem.

So, some of this stuff is so simple, you know? But, you know, if people want to get their Ph.D. or something, so they work out hundreds of pages, and have lots of Greek letters in it, and all that soft of thing, and either you're buying out your partner at an attractive price, or you're not buying him out at an attractive price.

And if you've got the money around to do it, and the price is attractive, and you don't have some other opportunities, you know, why not do it? You've got to come out ahead by doing it.

And if you've got other things that are more intelligent, you don't do it. And if it isn't intelligent on an absolute basis, you also don't do it.

Charlie, have you got anything to add to the — what were you doing in 1943? (Laughs) You were in the Service?

CHARLIE MUNGER: Well, Warren, we'd be crazy if we didn't rather enjoy having come a considerable distance from small beginnings.

And to do that in good company, it's a favored life. We've been very fortunate.

WARREN BUFFETT: Yeah. And, tomorrow — (Applause)

— Monday — I can tell you, it's almost certain that, if anybody offers us — well, there will be shares traded of Berkshire, and we won't buy any.

But it's also a pretty fair chance someday a lot of shares — we'll add a few shares — not a lot.

Berkshire's got the — our shareholders are too smart, that's one of our problems (laughs) if we want to repurchase shares.

But we really don't want to squeeze out anybody. But we also are here to do things that increase the value for the people who stick with us. I mean, it's not very complicated, and there'll be times when we'll do it, and there'll be times when we won't.

There won't be any formula, but there will be the principles that I've just expressed.

And my guess is that my successor, and their successor, will have a similar calculation, because we're looking for people that are rational and devoted to Berkshire.

So, Glen, thanks for coming.

WARREN BUFFETT: And, Becky, you're next.

BECKY QUICK: This question was sent in by Dave Shane (PH) from Brooklyn, New York. He's responding to something he heard earlier today. He said: "In the future, will Greg be able to act with the same spontaneity that you mentioned earlier? And make immediate, multibillion-dollar decisions without board approval?"

WARREN BUFFETT: Well, my guess is that the board will respond as people do.

They'll put some more restrictions, or they'll have some more consultation on a lot of matters, or some matters, than they do with me. I mean, they won't "need" to, but they'll feel that they haven't had the experience, they haven't seen him as long, and a whole bunch of things.

And they'll feel that the Delaware laws protects him better. And, incidentally, they don't have directors and officers liability insurance. I mean, virtually every company on the New York Stock Exchange has it.

And we just don't buy it. I mean, I'm on the board, and you're a trustee for a whole bunch of people with trusts, you and me — I'm talking about the directors and me. You know, fine. But it's very interesting: People go out on museum boards, you know, and they're expected to contribute. People go on college boards, and they're expected to contribute money.

And they say, "It's a great honor to be on a university board," or a museum board, or whatever, "It's a great honor, and therefore you should raise money for us." Well, frankly, I think our board's more interesting than being on a university board, or, you know, a hospital board or something. I wouldn't know what they were talking about anyway, on a museum board or an art board.

But people have found that they can make $300,000 a year, you know, which is enormously important to some people, and is meaningless to others. And, I mean, the chances are, if somehow, they'd arranged it so that directors didn't get paid at all, there'd be plenty of people wanted to be directors, and that'd be a prestigious sort of thing, and all that. But, in effect it's money that comes very easily. The whole idea of the "independent director," frankly, is it just doesn't really make any sense.

CHARLIE MUNGER: You don't think a director is independent who needs $300,000 to be here?

WARREN BUFFETT: He needs the money, yeah. I mean —

CHARLIE MUNGER: He's "independent" the way a slave is independent.

WARREN BUFFETT: I am going to read a few sentences which are absolutely the case, except I'm doctoring it. I don't want anybody to be identified obviously with this. But these are word-for-word excerpts. And I'm not telling whether it's a woman or a man, I'm going to use a male pronoun just because it's easier.

But I picked out a few sentences from a letter I received many years ago. And this letter said: "I'm writing to you with a great deal of reluctance, and a sense of personal embarrassment. I've tried all of the conventional means of raising the money." This person needed a couple million dollars, and I wouldn't have known the person if I saw him on the street, you know, but he wrote this letter and said, "I need a couple million dollars."

And then this is the item that I think you might find interesting, and I've kept the letter. "My income is composed 100% of my board fees." Well, I just looked him up. At the time and he was a director of five prestigious companies, and had been directors of others, and was going to be a director of a whole bunch of things.

But he was desperate for money, and he says he's "getting 100% of it from board fees." And he was an independent director, classified as "an independent director" at every one of these companies. And it's just astounding to me. You know, we're going to have a shareholders meeting in just a couple of minutes, or we're going to start it, and it's just astounding to me that in 2006 we owned 9% of the Coca-Cola Company.

I mean, maybe they gave me a free Coke. But we owned 9% at Berkshire Hathaway, we obviously cared about the views of the Coca-Cola Company. And it just so happened in that era CalPERS and a few others had recommended that we be voted against for something or other.

And at one time there were two big institutional investors that voted because they didn't think I was independent because Dairy Queen bought some Coca-Cola. Or, actually, the people that had our franchise bought some Coca-Cola. I mean, do they think I can't add things in my head? If we've got billions and billions and billions of dollars, that I'm going to be compromised?

But it's just nutty. And so, one year, my vote fell from 96%, maybe it was 98%, voter approval, to 84%. Because — I forget whether it was 2004 or 2006: Somewhere along the line they just decided that I wasn't the right sort of person to be able to handle these responsibilities. (Laughs)

And, you know, the idea that it's an important part of their income, I mean, what they want. They may want to do a lot of other good things, it doesn't mean they're terrible people. But if the difference is how you live, and in this case whether the person might go broke: How in the world you can call somebody like that "independent," and then say that anybody who owns a lot of st — you know, and whether Walter Scott's you know, "not independent," it's just ridiculous. But it's the way the rules are, and we follow the rules.

CHARLIE MUNGER: Well, they don't want them just "independent" now. They want one horse, one rabbit, one cow, one whatever. (Laughter)

WARREN BUFFETT: You know, I feel like Galileo —

CHARLIE MUNGER: Independence is not enough. You've got to have a very diverse kind of independence.

WARREN BUFFETT: Yeah, yeah. And if they desperately need the money, in this case 100% of the income coming from it; and you're on five of the most prestigious boards in the country; and classified as "independent" on each; and all you're hoping is that your CEO gets called by another CEO and says, "Is this guy OK?" And you say, "Of course, he's OK." Which means, "Because he doesn't cause trouble," and so he gets on a sixth board. Anyway.

CHARLIE MUNGER: All I can say is it's not our idea of an "independent director."

WARREN BUFFETT: No. No. It's all a little crazy.

Which brings us to the fact that we're not going to have our annual meeting here in about 15 minutes. We'll reconvene at 3:45 and then we'll do the business of the meeting that is required. And you're all welcome to stay, and it's very — (Applause)

WARREN BUFFETT: We now come to the moment you've all been waiting for.

We will have the annual meeting.

Charlie doesn't join me for this because once or twice in the past, he was caught on camera sleeping. So — (Laughter)

We've solved that one.

And we're now going to have an annual meeting where I follow a script. And you may think that's impossible, but I'll do it. (Laughs)

So, the meeting will now come to order. I'm Warren Buffett, chairman of the board of directors of the company. I welcome you to this 2022 annual meeting of shareholders. Marc Hamburg is secretary of Berkshire Hathaway and he will make a written record of the proceedings.

Rebecca Amick has been appointed inspector of elections at this meeting and she will certify to the count of votes cast in the election for directors and the motions to be voted upon at this meeting. The named proxy holders for this meeting are Greg Abel and Marc Hamburg. Does the secretary have a report of the number of Berkshire shares outstanding entitled to vote and represented at the meeting?

MARC HAMBURG: Yes, I do. As indicated in the proxy statement that accompanied the notice of this meeting that was sent to all shareholders of record on March 2nd, 2022, the record date for this meeting, there were 614,692 shares of Class A Berkshire Hathaway common stock outstanding with each share entitled to one vote on motions considered at this meeting, and 1,287,633,719 shares of Class B Berkshire Hathaway common stock outstanding with each share entitled to one-ten-thousandth of one vote on motions considered at this meeting.

Of that number, 423,719 Class A shares and 759,159,354 Class B shares are represented at this meeting by proxies returned through Thursday evening, April 28th.

WARREN BUFFETT: OK. And I will interrupt this meeting for one second to announce that we're still selling things next door and we've sold 15 boats.

So, with that brief commercial — and if anybody leaves, I will not be offended.

Thank you. The number represents a quorum, and we will therefore directly proceed with the meeting.

First order of business will be a reading of the minutes of the last meeting of shareholders.

I recognize Miss Sue Decker who will place a motion before the meeting.

SUE DECKER: I move that the reading of the minutes from the last meeting of shareholders be dispensed with and the minutes be approved.

WARREN BUFFETT: Do I hear a second?

FEMALE VOICE: I second the motion.

WARREN BUFFETT: The motion is carried.

WARREN BUFFETT: The next item of business is to elect directors.

If a shareholder is present who did not send in a proxy or wishes to withdraw a proxy previously sent in, you may vote in person on the election of directors and other matters to be considered at this meeting. Please identify yourselves to one of the meeting officials in the aisle so that you can receive a ballot. I recognize Miss Sue Decker to place a motion before the meeting with respect to election of directors.

SUE DECKER: I move that Warren Buffett, Charles Munger, Gregory Abel, Howard Buffett, Susan Buffett, Stephen Burke, Kenneth Chenault, Christopher Davis, Susan Decker, David Gottesman, Charlotte Guyman, Agit Jain, Ronald Olson, Wallace Weitz and Meryl Witmer be elected as directors.

FEMALE VOICE: I second the motion.

WARREN BUFFETT: It has been moved and seconded. The 15 individuals named in Miss Decker's motion be elected as directors. The nominations are ready to be acted upon. If there are any shareholders voting in person, they should now mark their ballot on the motion.

Miss Amick, when you are ready, you may give your report.

REBECCA AMICK: My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast not less than 449,190 votes for each nominee. That number exceeds a majority of the number of the total votes of all Class A and Class B shares outstanding.

The certification required by Delaware law of the precise count of the votes will be given to the secretary to place with the minutes of this meeting.

WARREN BUFFETT: Thank you, Miss Amick. The 15 nominees have been elected as directors.

WARREN BUFFETT: The next four items of business relate to four shareholder proposals that are each set forth in the proxy statement that can be accessed at BerkshireHathaway.com. The first proposal requests that the company adopt a policy and amend the bylaws to require the chair of the board of directors to be an independent member of the board. The directors recommended that the shareholders vote against the proposal.

I will now recognize Peter Flaherty, a representative of the National Legal and Policy Center, to present the proposal.

PETER FLAHERTY: Good afternoon. I am Peter Flaherty, chairman of the National Legal and Policy Center. I'm from Washington, D.C., but please don't hold that against me.

Our proposal would separate the roles of chairman and CEO. Sorry, Charlie. But I would take it one step further and suggest that Berkshire remove itself from corporate America's assault on American institutions and culture.

I'm proud to say I'm a capitalist. But it is obvious to me that capitalism is failing to deliver for the American people. Real wages have been falling for years. Wealth disparity has never been greater (BOOING) and right outside my hotel window here in Omaha is a homeless encampment, an all-too familiar sight in American cities.

We don't have a free economy. We have bailout capitalism. When small businesses lose money, they go out of business. But when billionaires bet wrong, government steps in. Money printing by the Federal Reserve and irresponsible, debt-fueled spending by politicians, what they call fiscal stimulus, have artificially inflated asset values.

So, those with the most assets benefit the most. Wage earners get ruinous inflation. But even worse than the wealth gap is the values gap. The top 1% now seek to impose their corrupt morality upon the rest of us whether it's in the form of critical race theory (BOOING), transgenderism and/or the myriad of other woke causes that permeate corporate advertising and messaging.

Why has corporate America embraced both the economic and cultural radicalism? It's pretty simple. When you have so much money, your fortune is going to come into scrutiny. The best way to insulate yourself and keep anti-business off your back is to embrace their causes, even if in the process you undermine the system that produces your wealth.

That is what allowed Mr. Buffett to advocate for higher taxes, even though they will fall on the middle class. The Federal Reserve has offered free money to corporate America for over a decade now, creating a class of oligarchs and greatly enhancing corporate political power.

Executives now believe that they can tell elected governors and legislators what to do, as we've seen in Indiana, Georgia, Texas and Florida. Last year, Coca-Cola CEO James Quincey, a British citizen, sought to kill Georgia's new voter integrity law by making inaccurate and inflammatory statements about it.

He also instituted diversity training whereby white employees were encouraged to try to be less white. Despite being Coke's most celebrated shareholder, Warren Buffett is nothing about Quincey. In fact, Mr. Buffett jumped on the America is racist bandwagon by signing a statement by corporate leaders suggesting that Republicans seek to restrict ballot access based on race.

All this did not prevent Coke from sponsoring the Winter Olympics in China which has never had a free election and where minority communities are the victims of genocidal policies. And what about Apple? A large part of Apple's supply chain is in China.

The company removes apps from the app store at the request of the Chinese government because they're used by human rights activists. And of course, Apple is the world's most successful, corporate tax minimizer, famous for routing profits through off-shore tax shelters.

Over at American Express, the company instituted an anti-racist initiative for employees to teach us that capitalism is fundamentally racist and requires workers to engage in an exercise to determine whether they are the oppressor or the oppressed.

Activism by woke CEOs may be reaching its limits. The people of Florida are fighting back against Disney's Robert Chapek who not only embraces the view that gender is a form of oppression but that kindergartens must be forced to confront it. Mr. Buffett has praised the brand endurance of Disney's characters and the trust parents place in its content to be safe and appropriate for children.

But now the company is adding warnings to Dumbo, Peter Pan and Aladdin about the stereotypes they allegedly portray. And poor Prince Charming has been excised for kissing Snow White, quote, unquote, "Without consent." Warren Buffett has yet to address the crisis gripping corporate America, and I fear he never will.

Yes, Berkshire may be a holding company and Mr. Buffett may stay out of the way of managers. But what happens when these executives use their companies to wage a social revolution that most Americans don't want? Is he not responsible? He can't have it both ways.

In this country, wealth has been admired and even celebrated because our system allows anyone to become rich. But what happens when Americans suddenly find their history and future under attack by corporate America? The social compact that permits such affluence will be broken. Mr. Buffett, if you are the face of the capitalism, why don't you do something to save it? Thank you.

WARREN BUFFETT: OK. (BOOING) Thank you, Mr. Flaherty.

If there are any shareholders voting in person, they now should mark their ballot on the motion. Miss Amick, when you're ready, you may give your report.

REBECCA AMICK: My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 72,298 votes for the motion and 421,181 votes against the motion. As (Applause) the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly cast on the matter, the motion has failed. The certification required by Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting.

WARREN BUFFETT: Thank you, Miss Amick. The proposal fails. (Applause)

The second proposal requests that the company publish an annual assessment addressing how the company manages physical and transitional climate-related risks and opportunities. Directors have recommended the shareholders vote against the proposal. I will now recognize Tim Youmans, a representative of Federated Hermes, to present the proposal.

TIM YOUMANS: I thank the chair, the board and fellow shareholders. I'm Tim Youmans, lead North America EOS at Federated Hermes, here today to talk about ballot item three, a proposal that is cosponsored by Brunel Pension Partnership, limited, represented by EOS, Caisse de Depot et Placement du Quebec, California Public Employees Retirement System, and state of New Jersey Common Pension Fund D, on behalf of their combined millions of ultimate beneficiaries.

EOS, Calpers and CDBQ cosponsored a similar proposal last year asking the company to commence climate-related risk reporting which the company has not started. The context for this year's parent company, climate-reporting proposal is, however, different in three ways.

First, we've added New Jersey Common Pension Fund D; second, we stand before this annual meeting of shareholders backed by, in our estimate, the majority of non-insider votes cast at last year's annual meeting. We provided the company tally showing that the majority of non-insider votes cast supported last year's proposal, and Glass Lewis has also corroborated this result. The company disagrees but has not shared its reasoning.

Third, the parent company began engaging with the cosponsors this year. And the company recently published a supplement to the chair's letter from Vice Chair Abel discussing climate change matters in the company's energy and rail subsidiaries. Also, the parent company's audit committee has amended its charter to now include climate risk oversight.

We welcome the company's new engagement approach, Vice-Chair Abel's supplement and the revised audit committee charter. However, these changes do not address in any meaningful way what last year's non-insider, majority-supported shareholder proposal asked for and what this year's ballot item three asked for, which is that the parent company should A) commence annual climate-related financial reporting for subsidiaries where material and for the parent company as a whole following the recommendations of the task force on climate-related financial disclosures; B) explain how the board oversees climate-related risks for the combined enterprise; and C) explore the feasibility of the parent company and its subsidiaries establishing science-based, greenhouse-gas reduction targets.

Here is why all shareholders, including the non-insider shareholders who supported last year's shareholder proposal, should once again (this year) tell the board to change course and support parent company climate risk reporting. Vice Chair Abel's supplement talks about emissions reductions.

We ask the parent company to report on climate-related financial risks, not just the emissions reductions, as these risks may be material. Abel's letter also talks about emissions reductions in rail and energy, two of the four giants of Berkshire Hathaway as they are referred to in the chair's annual letter.

What about climate risk in insurance? The company has 60 subsidiaries and more than a few large investment holdings. The company should disclose material climate-related financial risks beyond rail and energy in a composite, parent company picture.

We ask the company to allocate a small portion of its more than $100 billion in cash equivalents to climate risk reporting at the parent company level. Climate financial risk may be significant (even material) at the parent company. On page K-26 of the 2021 annual report the company states that climate-related risks could produce losses and significantly affect financial results.

The company audit, however, is silent on climate risk. We have asked the auditor, Deloitte, to explain this inconsistency. We ask the audit committee to explain why Deloitte has not disclosed how it considered climate-related risks in its review of financial statements when the company itself disclosed this is a significant risk.

Investors representing $68 trillion in assets make up the climate action 100-plus collaborative engagement on climate change. Berkshire Hathaway is the only major public company in the U.S. (the only one) to earn now for two years in a row a score of zero on the CA-100-plus net zero assessment of climate progress; the undisputed worst performer.

This stands in stark contrast to Berkshire Hathaway's track record of usually strong, long-term, financial performance. In response to last year's non-insider, majority shareholder vote, the company has made a start towards climate action.

Much more is needed. Vice Chair Abel is the named CEO's successor. His annual meeting remarks, both in 2020 and last year, and his recent letter, show he has a solid grasp of climate risk. We ask Vice Chair Abel to commence climate risk reporting at the parent company level.

This would give the company a headstart in complying with the SEC's new proposed climate disclosure rules that ask for more disclosure than we ask for in item three. We ask all shareholders, both non-insiders and insiders, including the chair, to cast their votes for item three in support of parent company climate risk disclosures starting before the 2023 annual meeting. Thank you.

WARREN BUFFETT: Thank you.

I do think it's worth discussing just a little bit who the actual constituency is on public pension plans.

Generally speaking, we hear from various — and it's not limited to California in the least. But, you know, they're protecting the holders of the pensions and the retired people and all of that.

And therefore, they're usually suggesting something that we may or may not agree with in terms of whether it's actually in the economic interest. But they do and they honestly feel, incidentally, that they are representing the pension holders.

People are going to get these checks every month now. They're getting them now. They may get them later. It's a very understandable position. But of course, in essence, that's not who they represent. The people that are promised the pensions, whether it's in California or any other state in the Union, they're going to get their checks.

It's obvious. The United States, American people, people in California, are simply not going to stand for the fact that people don't get their checks. So, one way or another, they're going to get their checks. To the extent possible, the states will attempt to realize from the taxpayers of the state in the future enough money so they can pay the checks.

I mean, that's why states have adopted pension plans and that sort of thing. And many of the states have found their taxes to go up. I mean, in effect, no state government — public opinion in the United States, they're not going to allow people not to get their pension checks.

And the state does have the right to tax income and property and various things of people within their state and they'll exercise the power or they'll look to the federal government for grants. They'll do anything but the one thing they aren't going to do is stiff the pensioners.

So, you're probably representing if you're on a public pension — essentially are representing the future taxpayers of the state. Now, there's one problem about future taxpayers. They can leave the state. And it gets awkward in certain states particularly when people start leaving the state because the revenue that goes with those people, from income taxes and sales tax and so on.

So, people have a fair amount of freedom of movement. They don't feel the same way about U.S. taxes. Not very many people are going to move from one place to another. In the United States, they move. And it's gradual. Sometimes it isn't so gradual.

And of course, as the tax base goes down, the past pensions stay. So, they become kind of like an aging steel company or something of the sort that whatever it may be, where the pension plans may become insolvent but they're going to keep paying the people just like we're paying on — you know, we've adopted certain policies on multi-employer pension plans and so on in the company.

The United States is not going to stiff a bunch of people, particularly people that vote. The moral feeling is to do it. The people that the trustees should be worried about because they — of course is the future taxpayers. And if they really mess things up, those taxpayers become more and more likely to leave.

And it has a lot of effects. Interestingly enough, you know, one of the calculations that might go on in Berkshire's mind if we're going to build a plant someplace that's going to sit there for 50 years is whether there are going to be any people around that are going to pay the tax, and we can't move our plant.

So, all these invisible decisions go on all the time. I don't think there's anything wrong with representing the taxpayers of the future. I don't think there's anything wrong with sitting on a pension board. But I do think they ought to actually figure out who they really are representing.

And they're representing future taxpayers. And in some cases, they're creating some tremendous problems for future taxpayers because they're like politicians. I mean, you know, they've got promises they're going to fulfill but they've got to do it from revenue that comes in in the future.

And they can't print money and people can leave their state. So, it's an interesting set of problems. And I can't resist mentioning in 1991, you've seen that Salomon tape, when Salomon essentially might or might not have gone down the drain and had a bankruptcy which, in my opinion, would've spread like wildfire.

And who knows what would've happened, just like in 2008 and '09, you know, where Lehman fell and a few things? I mean, who knows what's going to happen after something like that? So, Salomon was bigger relatively by far than Lehman was in 2008 and '09.

And on a Sunday in August, the Treasury Department, the Securities and Exchange Commission, the Federal Reserve all decided on a Sunday that something they did on Sunday morning really was a mistake and that they better change it on a Sunday or the whole economic system might go down the tubes.

And in this book which we have for sale out here, Trillion Dollar Triage, in the first early pages, it describes that period. I didn't know some of the stuff that's in the book, even, that was going on. But essentially, the Federal Reserve, Alan Greenspan was brought in one time, Gerry Corrigan was there, Nick Brady was Secretary of the Treasury, they decided with various degrees of conviction.

But they did decide (because they had to decide) by roughly 2:30 in the afternoon whether something they did at 10:00, which was kind of unprecedented, they were going to reverse themselves. Now, can you imagine trying to get institutions like the (Laughs) Federal Reserve and Treasury Department to reverse themselves?

But they did realize that they had probably done something that was going to cause a huge bankruptcy which could turn into a whirlwind in Wall Street. So, they reversed themselves and it tells the story in this Trillion Dollar Triage. And I knew some of what was going on. There was other parts I didn't know what was going on.

Anyway, all of those institutions reversed themselves very reluctantly. Big institutions do not like to reverse themselves and particularly not four hours later when some guy from Omaha was telling them (Laughs) if they do this, we're going to declare bankruptcy in Tokyo because we're going to have a multi-billion-dollar run and we can't pay it.

And directors who approve preferential payments when they know the place is going bust have all kinds of legal liability. And the whole thing is falling apart. And to their credit (enormous credit), you basically had the Fed and the SEC (mostly it was the Fed and the Treasury) and they said we just can't have this happen. It could produce a national catastrophe.

And for some weeks, we had about $130 or $140 billion of funding. And $130 or $140 billion was a lot of money in those days. We were one of the three or four largest borrowers in the United States and we borrowed daily. And we borrowed against government bonds.

We had inventory there. But we only had $4 billion of equity and we had $130 billion. And there was a guy (a wonderful guy), John McFarland. He was the treasurer. He slept down at the downtown offices, or right near their offices, at Salomon for days and days and days and days because $1 billion a day was draining out.

There was a run on Salomon and it was a run that the Treasury and the Fed and the SEC did not want to have happen; reversed themselves and everything. And a few days into it, for whatever reason — but CalPERS was a big lender to us. And they decided they weren't going to do business with Salomon anymore.

They were going to accelerate the run. And they announced one day that they kind of approved of everything that was going on, but they just didn't want anything to do with us, even though we were giving them government bonds as security. And this was accentuating the problems for the Federal Reserve, the U.S. (Laughs) Treasury, the SEC. And no one knew how it was going to come out.

But they pulled and other people pulled and John McFarland stayed downtown and kept trying to raise $1 billion every day to pay all people in terms of the run that was occurring. And the Fed did not want this run to get out of hand but they couldn't give us the money.

And the Treasury didn't want the run to get out of hand but they couldn't give us money, and so on. You know, it was a terrible problem. And CalPERS, like I say, they said, well, we don't want anything to do with these guys so we won't lend on government securities even though the loan is good.

And then, a little later, they sent word to me that if I would come out to California and talk to the people (the trustees) that then they would reconsider. So, that was what they wanted as part of their deal not to cause — keep participating in this run and take a different position.

And I never would've done this for anything except for the fact that it was Salomon. I mean, so, basically, I got on a plane and I flew to California and I met with the CalPERS people. And I wasn't charging them anything. If I'd been charging them a lot of money, they would've paid attention.

And they still paid attention. They were very nice to me when I went out there. And I talked to them. And they were happy and they clapped and they paid attention to what I said because I wasn't charging them a big fee or anything of the sort.

And I went back to New York and then they started doing business with us and announced that really they had decided Salomon was fit to do business. So, I have a little bias (Laughter) in terms of when they come around. And they present a proposal.

And they say that, in their proposal, and this was in our proxy statement — and we filed this with the SEC. We're not going to say it if it isn't true. And basically, they make a mistake, they and some other people. They make a mistake and say something about the shareholders voting.

It says in 2021 annual meeting, this is part of their supporting proposal, where a significant majority of non-inside shareholders supported a similar version of this resolution. Well, we say in our response, the proponents' assertion that at the 2021 annual meeting, a significant majority of non-insider shareholders supported a similar resolution is incorrect.

In fact, a significant majority of said shareholders did not support the proposal. That's either true or false. And you know, I have the last report submitted by that same firm that handles our material at Broadmoor. What is it? Broadridge.

And it reports the number of shareholders and it's the last day before the voting or something like that. And it's got the number of shareholders that support us and are against us. And it's four to one in our favor, something like that.

And it just doesn't make any difference to them. I mean, it's fascinating to me that — (Applause) and, you know, I would be willing to wager somebody if we could find an impartial judge, that if you go to any group you want to pick that's — take the CEOs of the five leading utility companies in the United States, CEOs of the ten leading, and ask them, you know, whether Berkshire Hathaway energy has been a leader in the field of renewables and so on and they'd all say yes.

But essentially, you've got a group of people that write us letters and say, "We want you to do things our way. And you've got 3 million other shareholders but forget about them, and spend some money on this, and have a meeting with us. And here's our way of measuring the debt."

And admittedly, we've got all kinds of information up about what we've done. And they can come out to Iowa and look around, and it is the renewables capital of the world practically. And we're the ones that have done it. And that isn't what they want. (Applause)

So, I'm for shareholder democracy and all that sort of thing, but the answer is that the resolution, that they pay lots of money to somebody that probably works in these groups. And they've got their way of doing it. I get letters from institutions in Europe.

And they say, "Well, you know, you may have 40 pages or a history going back to 2006 of explaining what you're doing, but here's the way we want you to do it." You know, and how much energy is Garanimals, which we own? And it's just, you have to think as a person sitting here in Omaha, you know, these are the rules. You get on the proxy statement under circumstances.

Most companies they don't want a lot of resolutions, so it's just easier for them to, you know, set up a department and, you know, pay a bunch of people to pay attention to them just like Warren did when he flew across the whole country.

Because it wasn't money. I just was worried about a company surviving that the people in Washington, the supervisor were worried about it surviving. And if I flew across country and paid them sufficient respect, I mean, it's kind of like The Godfather or something, you know.

I just bow down, and then flew back. So, I have a certain reservation. Shareholder proposals should have some meaning. I mean, it's the kind of thing I argued for when I was younger. But, you know, basically it's become, in my opinion, there are certain items that you can put on them now and certain that you can't.

And practically every executive in the country, now as chief executive wants to have a virtual meeting. The last thing he wants to do is have his shareholders and people stand up and propose things. And we'll just keep talking about it. The way we see it is, and in the end, we will have a report that is to the vote this time.

And I can assure you, we're not stuffing the ballot box. We're not doing anything. I mean, voter fraud, you know, it's not like Chicago in the old days where you waited for the cemetery vote to come in and that sort of thing. We don't count the votes, you know.

We don't say where they come from. We don't know where they come from. But we can tell when two or three institutions have got huge amounts of shares, but they're one owner. And they vote a certain way, and then they feel pure. And what they care about is whether we check their boxes and the people that work for them.

Certain number of people are getting employed by them, and their hearts are pure. But ours aren't impure. And with that, I won't do this again. But it's a really interesting development in terms of getting more rules-based type of situation where basically almost every company figures out how to negotiate with the people.

And they all have a good many of the CEOs. I mean, they just figure it's something that they endure. They set up a department to answer the questions and meet with the people and show them the proper respect, and so on. And, you know, it's being done to carry through on something which I think the substance of is pretty silly.

If I thought Berkshire Hathaway Energy was behaving in a way that was bad for society, worse than other utility companies. But no company — and the reason of course is that we don't take dividends out. So, we pump tens of billions of dollars into the business.

In fact, every utility pays out the dividends. And it's not the fault of the utility management. That's just a policy that's been the case in the utility industry. But they don't really have much cash left over. And we have plenty of cash, and we'll put in more cash.

And we're willing to build, you know, whatever amount, transmission lines and all kinds of things that would be helpful to the country. And we're doing a fair amount, but we could do a whole lot more. And we're better positioned to do it really than any utility company in the country.

And I think if you talk to other utility executives, I don't advise you to go and put them on the spot or anything, but they would agree. But they also know that their life is easier if they just have somebody to take care of people that want to be catered to basically.

And I catered to them in the time of Salomon in 1991, because 8,000 people were working there. And John McFarland was trying to raise a billion dollars a day. And the Treasury and the Fed, SEC wanted us to stay alive. And, in fact, that caused me to go and pay my respects to the Godfather and I came back. But I do think a little background is kind of interesting on this. And with that, we'll ask Ms. Amick, can you give your report? (Applause)

REBECCA AMICK: My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening case 127,214 votes for the motion and 370,415 votes against the motion. As the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly cast on the matter, the motion has failed. The certification required by Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting.

WARREN BUFFETT: Yeah, and I will just add that (Applause) I got a report a day or two ago, the last report they sent from this firm. And it's four to one or five to one. I'd be glad to share it with anybody. But in terms of number of shareholders based on what these people in New Jersey tell me the vote was, we're against it.

And, you know, if they would reintroduce the proposal next year, I just hope they leave that line out. Because I would just suggest that somebody read what the proposal is or what the facts are before they announce their proposals and all that sort of thing.

OK, well, the third proposal requests that the company issue a report addressing if and how it intends to measure and disclose and reduce GHG emissions associated with underwriting, insuring and investing activities. The directors will recommend that the shareholders vote against the proposal. I will now recognize Jaylen Spann, representative of Whistle Stop Capital to present the proposal.

JAYLEN SPANN: Chairman, Mr. Buffett, and board members, good afternoon. My name is Jaylen Spann. I want to first thank you for the opportunity to present proposal number four on behalf of shareholder representative, As You Sow. This proposal asks Berkshire to measure, disclose, and begin reducing the greenhouse gas emissions supported by its insuring, underwriting, and investment activities.

In its most simple terms, the proposal asks Berkshire to take responsibility for its contribution to climate change. The U.S. Commodity Futures Trading Commission has acknowledged that climate change can impair the productive capacity of the national economy.

The litany of national and global events associated with climate change, the fires in California and Colorado, the floods across the Midwest, the growing strength of hurricanes, the deep freeze in Texas to name just a few, demonstrate the growing risks and costs of climate change.

2021 was the second most costly year on record for the world's insurers, with insured losses totaling $120 billion from natural catastrophes. Significantly, these losses can no longer be categorized as simply a bad year. As noted by Munich Re, economic losses caused by natural catastrophes are trending upward.

The insurance industry faces year on year growth in insured losses related to climate change. Berkshire is not only exposed to climate-related risks but is actively amplifying these risks through its continued investment in and underwriting of high-carbon activities.

Berkshire is one of the largest providers of coverage to the oil and gas industry, surpassing peers such as Chubb and Liberty Mutual. Its shareholdings in whole alone amounts to $5.1 billion, once again far surpassing its American peers.

A financial institution's investment and underwriting activities are by far the greatest source of its total carbon footprint, highlighting the need for Berkshire to measure, disclose, and begin taking responsibility for the emissions it enables.

The global financial sector is rising to the challenge of meeting the Paris Agreement's goal to maintain global temperature rise at 1.5° Celsius. The Net Zero Insurance Alliance has grown to 22 members, seven of which are in the top 30 largest global insurers by market cap.

All members have committed to reach net zero emissions from their insurance and reinsurance underwriting portfolios by 2050. AIG and the Hartford have also recently committed to reach net zero emissions from their underwriting and investment portfolios by 2050 or sooner.

Berkshire is lagging both its American and its European peers, a position that increases climate risk globally and to its own portfolios. The insurance industry and Berkshire specifically has a key role to play in the ongoing, low-carbon transition.

And we believe Berkshire has the ability to become a climate leader on this critical issue. And the first steps are to quantify the emissions associated with its underwriting and investing activities, disclose those emissions, and begin developing plans to reduce those emissions in alignment with the Paris goal.

To ensure global success in protecting this planet and its inhabitants, every business must take responsibility for its own contribution to climate change. And we look forward to working with Berkshire to address this vital issue. Thank you.

WARREN BUFFETT: Thank you, Ms. Spann. (Applause) The motion's not ready to be acted upon. If there are any shareholders voting in person, they should now — how about a little light up here? They should now mark their ballot on the motion. Ms. Amick, when you are ready, you may give your report.

REBECCA AMICK: My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 127,065 votes for the motion, and 370,630 votes against the motion. As the number of votes against the motion exceeds a majority of the number of the votes of all Class A and Class B shares properly cast on the matter, the motion has failed. The certification required by the Delaware law (Applause) of the precise count of the votes given to the secretary to be placed with the minutes of this meeting.

WARREN BUFFETT: Thank you, Ms. Amick. Proposal fails. The fourth proposal requests the company report to shareholders on the outcome of its diversity, equity and inclusion efforts. Directors are recommending that the shareholders vote against the proposal. We will now recognize Jaylen Spann, representative of Whistle Stop to present the proposal.

JAYLEN SPANN: Hello. My name is Jaylen Spann. I'm speaking on behalf of the nonprofit advocacy organization As You Sow, and Whistle Stop Capital. I formally move proposal number five, asking for Berkshire Hathaway to report on the outcomes of their diversity, equity and inclusion efforts by publishing quantitative data on their workforce composition and recruitment, retention, and promotion rates of employees by gender, race and ethnicity.

Warren Buffett once mentioned that he had grown up with two sisters who, to quote Mr. Buffett, "are absolutely smart as I am and better personalities." He also bravely admitted that he only placed women on his board after his wife suggested it in 2003, 40 years after he started his company.

It's one thing to know that people of all genders, races and ethnicities can contribute to Berkshire Hathaway. It is another thing entirely to intentionally and proactively create the space, opportunity, and training needed within a company for those people to be able to contribute without facing harassment and discrimination.

In the absence of data, we must instead assume that Berkshire Hathaway Companies are no better nor any worse than any company in America. The statistics for American companies are unacceptable, particularly when we consider the strong link found by the Wall Street Journal, McKinsey, Credit Suisse, and others between diversity, equity and inclusion programs, and corporate outperformance.

Forty-two percent of Americans have witnessed or experienced racism at work. Sixty-four percent of Black employees say that discrimination is an issue in their own workplace. Many people of color are barred from entering the workplace at all.

A meta-study reviewing data from 1989 to 2017 found that on average whites received 24% more call-backs than Blacks, and 36% more call-backs than Latinos. If we take a look at Berkshire's executive team, we can see that headquarters should be proud of the gender and racial diversity present in its leadership team.

The culture that exists at Berkshire Hathaway headquarters appears to be one that recruits, hires, promotes, and retains diverse employees. Mr. Buffett stresses the importance of culture and the value that it has on the long-term success of a company.

He said that "Culture more than rule books determines how an organization behaves." Investors are looking for assurances that this culture is successfully implemented within the famously decentralized Berkshire Hathaway Companies as well.

In order to allow their investors to understand their workplace diversity, 87 of the S&P 100 companies have released or have committed to releasing their EEO-1 form, which is a standardized, government-mandated accounting of gender, race, and ethnicity breakdown by employment levels.

By contrast, of the more than 60 companies Berkshire owns, only one has publicly released this form. One company. This is not the leadership that Mr. Buffett is known for. The company's inclusion data on the hiring, retention, and promotion rates of diverse employees must also be shared for investors to have a full understanding of the actual experience of not only Berkshire's employees, but of its portfolio companies' employees as well.

The board has released insufficient information to assure investors that it is attentive to diversity, equity and inclusion at Berkshire Hathaway Companies. We encourage transparency even in the face of imperfection in order to show that the company's leaders are truly committed to change and to attracting, retaining, and promoting the best possible employees. Thank you. (Applause)

WARREN BUFFETT: I certainly agree with you that my sisters were better looking, smarter, had better personalities. And in 1930, they had a father, mother and teachers who loved them like they loved me. And if I'd been born female, Black, in various other countries, I would not have had remotely the life I've enjoyed.

But if what the people at the top believe is important in terms of how our subsidiaries behave, certainly there's everybody that runs any one of our subsidiaries knows how I feel. They also know that they're in charge of their own business.

And that we think we've got great leaders in virtually every company we have. Every now and then, we find we've made a mistake obviously. But if the idea that we should replace any of the people that run the businesses, I just don't think that's the way to operate.

And I will tell you, just so that the question doesn't come up later, in terms of our shareholders, by again a four or five to one vote, voters of the owners of the Berkshire Company, forgetting about A or B shares, you know, basically the big funds that are worried about what their perception is but also may well believe it. Who knows what people's motivations are.

Somebody said that the word motivation should never be used in the singular, because we really don't know. But the one thing is that it's very hard to find people that are running big institutions that, you know, are acting against their self-interest.

Now it doesn't mean they're acting for their self-interest necessarily. They're acting for a lot of reasons. But it's something that if you could change that in people, it would do a lot more for Americans in the future. But you basically can't change that.

I mean, it's a situation of how people behave in protecting essentially their own interests. And their own interests 40 or 50 years ago was essentially to regard corporate America as a boys' club. And that's not acceptable anymore, so they changed.

But they haven't changed as much by a substantial margin in relation to Blacks. And that's where we are as a society. But overwhelmingly, our shareholders don't agree with you, even though you gave them a chance to express their view on it. So Ms. Amick, when you're ready, you may give your report.

REBECCA AMICK: My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 123,614 votes for the motion and 373,925 votes against the motion. As the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly cast on the matter, the motion has failed. The certification required by Delaware law of the precise count of the votes given to the secretary to be placed with the minutes of this meeting.

WARREN BUFFETT: Thank you, Ms. Amick. Proposal failed. (Applause)

FEMALE VOICE: I move that this meeting be adjourned.

FEMALE VOICE: I second the motion to adjourn.