Warren Buffet, one of the most successful and admired investors of our time, held the 2020 Berkshire Hathaway Annual Shareholders Meeting from the company’s Omaha, Nebraska headquarters on the first Saturday of May.
The Berkshire annual meeting, which has become a Woodstock-like event for investors around the world, drew a record 40,000 visitors last year. But this year, the event was live-streamed instead, due to COVID-19. The meeting was also limited to the 89-year-old Buffet holding court, without his 96-year-old friend and colleague Charlie Munger, who did not attend given the stay-at-home orders.
The almost five hour event, even without the fans, did not disappoint.
Buffet’s presentation covered a lot of ground: The performance of Berkshire Hathaway, the airlines, stock buy backs, succession plans, cash positions, the coronavirus, the Federal Government’s response and his office attire during the shutdown (sweatpants) and America’s prospects going forward.
Here are just a few takeaways from the oracle of Omaha.
Before the annual meeting, there was a lot of chatter about Berkshire Hathaway’s selling of airline stocks in April, positions Berkshire started making in late 2016. In fact, Berkshire held 10.1% of South West, 10% of American, 9.2% of Delta and 7.6% of United as of December 31st… and he sold all of it. His reasons for selling? In his own words, “It turned out that I was wrong about the business.” When pressed, he said that he, “just decided that I made a mistake.” When asked why he didn’t just trim his airline positions, he responded with, “When we sell something, very often it’s going to be our entire stake. We don’t just trim positions — that’s just not the way we approach it…” When pressed even further about the prospects for airlines going forward, Buffet responded with, “The world changed for airlines, and we wish them well.”
High regards for the Federal Reserve chair. As has been well-documented since early March, the Federal Reserve has taken bold and drastic actions to combat COVID-19, with many suggestions that such drastic actions haven’t been taken by the Fed since the great financial crisis of 2008. In all, the Federal Reserve’s actions have provided the bulk of more than $6 trillion dollars worth of liquidity to our financial system, because they adopted:
- An emergency 50 basis point rate cut on March 3rd, and another 100 basis point rate cut on March 15th.
- Quantitative easing, originally capped at $700 billion of asset purchases, but now unlimited.
- Over $2 trillion in a new lending program.
Here’s what Warren Buffet said about the Federal Reserve and its current chairman, Jerome Powell: “I’ve always had Paul Volcker on a pedestal, in terms of Fed Chairman, Jay Powell, in my view, belongs with him on that pedestal. He acted with unprecedented speed and determination. We don’t know what the consequences of that are, but we do know the consequences of doing nothing — and we owe the Fed a great thank you.”
“Never bet against America.” Those are the exact words spoken by Buffett when asked about the impact of COVID-19 — and he had a lot more to say. He acknowledged that the range of possibilities are wide, and it will likely take years before investors truly understand the impact of the virus, from an economic perspective, but also from an emotional perspective. But he left no doubt that the markets would regain their footing, especially in the U.S. On comparing the current virus to the financial crisis of 2008, “In 2008 and 2009, our economic train went off the tracks. This time, we pulled the train off the tracks and put it on the siding.” On whether America will rebound, “Never bet against America. That is as true today as it was in 1789 during the Civil War and the depths of the Depression.” Those are encouraging words from an investing legend.
Get instructions on how to enable our Flash News Briefing skill to your Amazon devices: