BerkshireHathawayAnnualMeeting2015

May2,2015

Thesenotesarerecollectionsonly,withouttheaidofarecordingdevice.Theyshouldnotbereliedupon.PB

[standingovationafterthemovie]
WB:Thankyou.ImWarren,thisisCharlie.Hecanhear,Icansee,weworktogether.[laughter]
WB:Inafewmoments,wellmovetoregularprocedures.FirstisJohnLandis,directedandconceived
theFloydMayweathermovie,alsodidAnimalHouse,TradingPlaceswithDanAkroydandEddie
Murphy,andCharliesfavoriteJamieLeeCurtis,DonAmici.WellJohn,thankyou,thankyou.Wereally
appreciateit.Theotherspecialthanks,ayoung30yearoldwoman,with1yearoldbabyathome,she
putsonthiswholeevent.CarrieSilva,thanks![clapping].Carrie,afewmonthsago,IsaidtoherthatI
thoughtitwouldbenicetohavecommemorativebook,aretrospective,doyoumindputtingittogether
inyoursparetime.Ithinkitsreallyspecial.Wesold5,000yesterday,printed15,000.Ijustwantto
thankherpersonally,andIhopeyoullthankher.Wellhaveannualmeetingat3:30pm,andatthat
timewellbevotingondirectors.Manywontbehere,alltheoverflowroomsmaybefull,andwehave
seatsatGrandBallroomatHilton.Ifyoucantfindseathereatleastgiveitatry.Wegotalltherooms
possible.Attendancemayhaveoutgrowntheseatsthistime.Youllvoteondirectorsafter3:30pm.
Withholdapplauseuntilend,andyoucanwithholdthentooifyoulike.HowardBuffett,SteveBurke,
SueDecker,BillGates,SandyGottesman,CharlotteGuyman,ThomasMurphy,RonOlson,WalterScott,
MerylWittmer.Theyareagreatbunchofdirectors.[clapping]WearemissingDonKeogh.Hewas
Butternutcoffeesalesman,broadcastfootballgames.HewasfollowedbyJohnnyCarson.Usedtoday,
Don,whateverhappenedtothatCarsonfellow?Dondiedafewweeksago,andsowearevery
gratefulthatMickeyKeoghhiswifehasjoinedustodayletshaveahandforMickey.Mickey
practicallyraisedourkids,soiftheyhaveanyfaults,talktoMickeyaboutit.
Hereisoneslideonourquarterlyearnings.Nothingremarkable,BNSFdiddramaticallybetterthanlast
year,operationallyintermslikeaveragevelocityandontimeaswellasearningswegotbehindlast
yearearlyinyear.Lotsofmoneyandeffortspenttogetrailroadoperatinglikeitshouldbe,earnings
improveddramaticallyrelativetootherrailroads,improvementhasbeenhuge,MattRoseandCarlIce
thanksMattandCarl.
[Shoutfromaudience:Weloveyou.]
Ididntquitegetitbutassumeitwascomplimentary.
Welltakequestionsfromjournalists,analysts,andthentheaudience.Takeabreakforhouratnoon,
startingat54questionswelltakethemallfromaudience.Eachpersonselectedbydrawingtoask
questions.
Thewomanwhowillstartjustretiredaftersixtyyears,arecordatTimeInc.,andinmyopinionsheis
thebestprintjournalistinworld.Andthatdoesntsoftenherupatallfolks.[laughter]

Q1:CL:Wevebeengettingquestionsfor2monthstherearealotofthem.Idontnormallysoften
themup.Lotsofgoodones,sorryifwedontaskyours.FrankGifford,Texas.Ivebeenashareholder
for15years,butnowsufferingheartburn.Ethicalcompany,benefittingsocietythruAcmeandBNSF.
OneSeattleTimesstoryonpredatorypracticesatClayton,mustassumefactsarecorrect.Growing
partnershipatTimHortons,gutted20%ofstaff,guttedawellruncompany.Inpast,avoidedantisocial
investmentsliketobacco.Capitalismandcompassion?Whatismoralcasefor3G?
WB:Claytonarticlefirst.Itisbettertobackuptothesituationinmortgagelendingthathadtaken
place,Claytonfollowsapatternwhichisextraordinaryreally.Ifyoulookbackatbubble,thegreatest
causewasthatmortgageholderbecamedivorcedfromhomebuilderandservicer.Homebuildersoldit
didntmattertowhom.Originatorpackagedmortgage,andsolditaroundworld.Originatorsuffered
nolossifloanwentbad.Theyhadnoconnectionwithoutcome,whethergoodmortgageornot.We
offermortgagestoallthebuyersofhomes,andwehaveretained$12bilon300khomes.Whena
mortgagegoesbad,twopeoplelose;thepersonwhoownshouseandthepersonwhoownsmortgage.
Itisalosstousandlosstothem.Muchtalkinchangestorulestokeeporiginatortokeepskiningame.
Wekeep100%ofthemortgage.Wehaveexactlythesameinterestassocietyandhomebuyer,not
makingloanstopeoplewhowillgetintrouble.Manufacturedhousinghitslowerendofmarket.New
homessellingfor$150korless,70%aremanufactured.ManybuyersdontqualifyonFICOscorefor
governmentguarantee.Canyoulendintelligentlytopeoplewhowillkeephouse?About3%of
mortgagesdefaultperyearandwhentheydowelosemoney.97%dont,andmostwouldntliveinthe
nicehouseslikeyouseeinauditorium.For$69,500thathousewillbetransportedanderectedand
readytogo.Youneedtheland.Withappliances,a/c,1200sqf.Youllputanother$25kintoland,so
$95kallincostmakeyourownjudgementonwhetherdecentvalue.Wehelpthosewhoaspiretolive
inthosehomes.Withourownmoneyatrisk,ifwemakemistake,ithurtsthemandus.Thisisunusual
inthefinancialindustry.Ireadthestoryyoureferredto,butitemsinitarenottrue.Theauthorsaida
Claytonexecutivesaidaverageprofitwas$11,700or20%profitmargin.Butnowheredoesitsaythatin
theaffidavit.4%ofgrossprofits.25xcommissionyoucomeupwith$11,170.Grossprofitisnotsame
thingasprofit.Macys40%gross,pretax8.5%,posttax5.4%.Theyhavecostslikesalespeoplerent
utilitiesandothercosts,sogrossprofitisnotthesame.Ourgrossmarginis20%,butwriterofstorysaid
netprofit,andournetprofitmarginisactually3%.IneveryretailClaytonestablishmentwehavea
lenderboard,whichshowswhatavarietyoflendersarewillingtodoandwhattheirtermsare,andwe
alsohaveasheetwhichislessthanfullpage,setsoutlendersavailable,attopitsayscheckoutmore
thanonelender.Nosmallprintonthispage.Multiplelendersareonit.Sometimesthelocalcredit
unionwilllend.Youwilllikelytaketheloanthathasthebestterms.Ihavenotreceivedonecallfrom
anypartyinconnectionwithClaytonhome,on300kloans.Weareregulatedinalmosteverystate.In
last3years,wevehad91examinationsbythestatetomakesureweconformwiththelaw.Inthose
91,thelargestfinewas$5500dollars.Thelargestgroupofrefundswas$110k.Wereregulatedby
states,byallkindsofpeople.WetrytogetthemanFHAloan,butmostborrowersarebelow630fico.
Averageprincipalandinterestis$600permonthforawellequippedhouse.Claytonhasbehavedvery
well,over4yearsagowesaidwonthave30yearmortgages.Weput30kpeopleinhomesatlowcost,
averygoodhome,averyhighpercentagewillhavepaidoffin20years.Illgetto3Ginasecond,but
wanttoletCharliehaveachancetocomment.Charlie?

CM:IdontknowalotaboutthemortgagepracticesofClayton.Wesoldanenormousnumberof
houses,wehavea50%share.Ivealwayswonderedwhymanufacturedhomesdonthavelargershare.
Capitalismmadetrackhousingverycompetitive.Wecantmakelendingtopoorpeopledefaultless,if
wedidtoomanypeoplewhodeservedcreditwouldntgetit.Deathanddisabilityorjoblossareoften
reasonsforlosinghouse,shouldntpenalizepeopleclosetoedge.Ourdelinquencyis3%andsopeople
wanttoliveinthosehousesandtheydeserveto.Oneofthesehomeswassoldtocameramanonmovie
youjustsaw.MattMasonisveryhappywiththehousehebought.
WB:Regarding3G,Idontthinkweveeversaidthereshouldbemorepeoplethanareneeded.Theyve
builtmarvelousbusinesses,wheremorepeoplearerunningthebusinessthanneeded.Afterthey
reducedtheheadcount,companieshavedoneextremelywell.BurgerKingoutgrewmaincompetitor,
TimHortonshasverygoodfiguresin1Q.Manycompanies,but3Ggetsitdowntowhattheyneed.
Berkshirecompaniestypicallydonthavemorethantheyneed.If3Gcanfind50peopletodoworkof
100thenwethinkthatmakessense.
CM:Thealternatetorightsizingcompanies,waswhathappenedinRussia,whereeveryonehasajob.
Theyusedtosay,theypretendtopayusandwepretendtowork.Ofcoursewewantrightnumberof
peopletohavejobs.
WB:1.6milpeopleinrailroadbusinessin1952.Capitalwasshort,businesswaspoor.Nowthereare
lessthan200k.From1.6mtolessthan200k,andtheyhavemorefreight,moredistance,andsafetyup.
Ifbettertorunrailroadwith1.6m,aterriblebusiness.Efficiencyisrequiredincapitalism.Itipmyhatto
3G.
Q2:JB:VanTuyl,averyproductiveautodealer.Negotiatedmodel,profitableaddonfinancialand
insurance.Butothershavefixedpricesandnoforcedselling.Howhardtochange?
WB:Ifchangeisrequired,changeswillbemade,andhaveexperimentedwithitbefore.Verymany
wouldlikenohaggling,butitseemstobreakdownforsomereason.Negotiationgoesoninalotof
businesses.Peoplesaytheydontlikeit,butitiswhathappens.VanTuylwilladapttowhattheworld
wants.Iwouldntbesurprisedifsystemstaysthesame,butwouldntbesurprisedifitchangestoo.I
cantpredictoutcome.VanTuylwillbeaprofitableandimportantpartofBerkshire.
CM:Ilikethatacquisitionbecausewecandoalotmorelikeit.
WB:Willwebenegotiating?
CM:Itsbeenamazinglyresistanttochangemywholelifetime.Peopleseemtowanttonegotiate.
Wouldhousestradeatlistprice?Inbigticketitems,thenaturaldesireistonegotiateandbid.
Q3:Station1.Canyouname5characteristicsofacompany?
CM:Wedonthaveaonesizefitsallsystem.Everyindustryisdifferent.Whatwedidtenyearsago,we
dobetternow.

WB:BNSFrailroadalotgoesthroughourmind,manythingsstopusfromgoingforward.Ifweseeit
inabusiness,wewontgoon.Verydifferenttypesofstops.Wearelookingforreasonablefixonhowit
willlookin5to10years.Notthesamequestions.Thebigquestion,dowewanttobeinpartnership
withthisperson,andcountonthemtobehaveinfuturewhentheydontownthebusinessasinthe
pastwhentheydid.Wedonthavelistoffive,ifwedoCharliesbeenkeepingitfromme.[laughter]
Q4:BQ:IsIBMliketextilemillsin1960s?
CM:No,IBMtotallydominatedpunchcard,anddominatedcomputingforawhile.Itsrarecompany
sinceIBMadaptsaswell.PChasbeenmixedbagforIBM.Itsaverycrediblecompany.Weownalotof
companiesthathavetemporaryreverses,ormightbemightierinfuture.
WB:Whenweboughtit,itwasa20vote.[laughter]
WB:Peoplethinkwewanttotalkthemupwehavenointerestinencouragingotherstobuyittoo
especiallyifcompanyisbuyingbackshares.Itisntbetterifitgoesup.Ifwetalkedourbook,wewould
saypessimisticthingsaboutourbigfourholdings
CM:Ifpeoplewerentsooftenwrong,wewouldntbesorich.[laughter]
WB:Hesfinallyexplainedittome.[laughter]
Q5:GaryRansom:Agreethatcantrepeatinsurancesuccesstoday,andwhatconditionswouldinhibita
repeatperformance?
WB:Wehavehadthreeextraordinarypiecesofluckwithinsurancebusiness.OnewhenIwas20years
old,NormDavisonspentfourhourswithkidhedidntknow,andIgotthatatage20whatIcouldnt
havegottenthatatanybusinessschool.Hespentfourhourswithme.IjustwenttoWashington.In
1967,JackRingwaldt,for5minuteseveryyear,wantedtosellhiscompany.SoIsaidnexttimehesin
mood,gethiminmyoffice.Wecouldnthaveboughtitadaylateroranhourlater.Inmid80s,on
Saturday,someguycameintomyoffice,AjitJain,saidneverworkedininsurancebusinessThat
trifectawouldbehardtorepeat.Inbusiness,ideaistobeopentoideasastheycomealong.Warren
Davis,hehitacordwithme.AndIcouldunderstandNationalIndemnity.Havetokeepyourselfopento
goodaccidentsinlife,andavoidbadones.Wecouldntexpecttohavethreelikethathappenagain.
Butifwewerestartingoveragain,wedfindsomethingtodo.Charlie?
CM:Wewouldntfindthatsuccess.ReinsurancecreatedoutofclothhereinOmaha.Insurancehas
beendifferentforus.
Q6:Station2.Germany.Youarerolemodelsforintegrity.Howcanweasinvestorsjudgethestateof
cultureafteryoudepart?
WB:Fairthatyoudoquestion,butIthinkyouwouldbepleasedwithoutcome.Berkshirescultureruns
asdeepasanycompanyinworld.34daysagoweclosedontransactionwithMs.Louis,whospent35
yearsbuildingretailshopsdealingwithmotorcycleownersinGermany.Husbanddiedafewyearsago.

ShewantedtoselltoBerkshire.Thatwouldnothavebeencase3040yearsago.Itisvitalpartof
Berkshiretohaveclearlydefinedandembeddedculture.Itisreflectedinourshareholders,where97%
ofshareholdersvotedfornodividend,notanothercompanylikeitinworld.Wehavedirectorswho
lookatitasgreatopportunityofstewardship.Theybuystockinmarketlikeyoudo.Wetrytomake
clearthatcultureineverywaypossible.Peoplewhojoinusbelieveinit,itisselfreinforcing.Virtual
certaintytocontinue,itisinstitutionalized.Itwillcontinuefordecadestocome.
CM:AsIsaidinannualreport,Berkshirewilldofineafterwearegone.Thereareworsetragediesinlife
thanwehaveassetswedoandgrowthslows.
WB:Nameone.
CM:.[Laughter]
WB:Cultureisimportant.HardtoturnSalomonintoBerkshire.
CM:IdontthinkanyonehasdoneitonWallStreet.
WB:Berkshirenotamonastery.ButCarrieSalvosheandeveryoneelsewantbetteroutcomefor
Berkshirethanforthemselves.Thatisgood.
Q7:ARS:Sugarbadforus.Inflectionpoint?Sugarconsumption,moatnarrowing?
WB:Enormouslywidemoat,buttrendsyoudescribearehappening.1.9bilproductsofcokeconsumed
today.Wontseeanythingrevolutionary.Allfoodandbeveragecompanieswilladjusttoexpressed
preferencesofconsumers.Nocompanydoeswellignoringconsumers.Ipredict20yearsfromnow
moreCocaColacasesconsumedbysomemargin.In1980sfortunesaidCokegrowthwasover.When
weboughtin1980speoplewerententhused.IamonequarterCocaCola,judgingfromallmycalories
consumedinlast25years.IfIeatbroccoliIdontthinkIdliveaslong,everymealwouldbelikegoingto
jail.[PassesCharliesomepeanutbrittle,laughter]
CM:Sugarisenormouslyhelpfulsubstance,itpreventsprematuresofteningofarteries.IfIdiealittle
sooner,Illbeavoidingafewmonthsofdroolinginanursinghome.[laughter]
WB:Damnthegreenvegetables.Butthereisashift,butitisremarkablehowdurablethingsare.We
werelargestshareholderofGeneralFoods,until1980swhenboughtbyPhilipMorris.Weregoingto
ownthosebrandsagaininKraft.Heinzgoesbackto1870orso.Cokeis1886.Itisprettygoodbetthat
awfullotofpeoplewilllikesamething.WhenIcomparedrinkingCocaColatosomethingsomebody
wouldsellmeatWholeFoods,IjustdontseesmilesonfacesofpeopleatWholeFoods.[laughter]I
likethebrandswearebuyingAndrew.
Q8:GW:Autodealerswhatwasattractive?Returnfromrollingupautodealersorfullservicemodel?
WB:Nothugeadvantageofscaleinowninglotsofdealers.Itisalocalbusiness.Itisagoodbusiness.
Thereare17kdealersincountry.Youdontwidenmarginsbyhaving1000dealersvs.100oreven1
verygooddealer.Wewillbebuyingmoredealerships.Itwillbelocalconsideration.Financeside,we

bringnothingtothat.WellsFargohascostoffundsadvantage.Johnsliabilitiescosthim12bps.They
arenaturallenders,sowewontbeinfinancebusiness.Wewillkeeplookingfordealerships,itdoesnt
giveusbuyingdiscountfrommanufacturers,anditisregardedaslocalbusinessbythecustomers.But
wontbewideningoutmargins,unlessincaseswecanrunbetter.
CM:VanTuylhassystemofmeritocracy,rightpeoplegetpower.Kiewitbusinessverysimilarright
peopleareprosperinginVanTuyl.
Q9:Station3.StewartKay,StamfordCT.Culturestewardship.Tipsfromyou,whatcharacteristics
whatdidyouthinkabout45yearsago?
WB:Culturehastobefromtop,rewardedwhenfollowed,punishedwhennot,mucheasiertodoif
inheritcultureyoulike,easierinsmallfirms.CanthinkofmanylargecompanieswhereifCMandIwere
aroundwecouldntdoanything.Childseeswhatyoudo,notwhatyousay.Peopleseehowpeople
abovethemmove.Wehave330kpeopleworkingforus,andIguaranteesomeofthemaredoingwhat
theyshouldntbedoing.Whenyoufindout,youhavetodosomethingaboutit.Ididntlikemaking30
yearmortgages5yearsagoatClayton.Kirbyhadsomesalespractices,witholderpeople,sonowifyou
areover65,andforanyreason,youcangetallyourmoneybackwithinyear.AtGEICO,wellsettle
millionsofclaims.Whentwopeopleinaccident,theyoftendontagreeonwhoisatfault.Weworkall
thetimeastryingtobehaveinwayincasepositionsreversed.Ifkeepworkingatit,youllgetresults.
CM:Wewerealwaysdissatisfiedwithwhatweknew,wantedtoknowmore.Ifwewerefrozenintime,
notsameresult.Wewerelearning.
Q10:CL:PercentageofmarketcaprelativetoGDP.Bestmeasure.Thisindicatorat125%.Thatratioof
captoGNP.Thatiswhatitwasin1999shortlybeforebubblebroke.2ndindicatorfrom1999speech,
articleinfortune,corporateprofitsas%ofGDP.46.5%overlongperiodoftime,19511999.Now
10.5%accordingtoStLouisFederalReserve.Areeitheroftheseamatterofconcernforpublic?
WB:Thesecondfigure,profitsaspercentageofGDP,segmentsofsocietymaycare,terrible
disadvantage,prosperedincredibly.Firstcomparisonisverymuchaffectedbyinterestrate
environmentwhichCMandIwouldhavethoughtalmostimpossiblenotmanyyearsago.Profitsare
worthawholelotmoreifyield1%insteadof5%.Alternativesandopportunitycostformanyisbonds
payingnothing,orstocksathighpriceshistorically,butnotinsameinterestrateenvironment.Ilookat
numbers,andworldhaslowinterestratesJapansituation?Ifwegetbacktonormalinterestrates
stockswilllookhigh.Butifratesstaylow,thenstockslookcheap.
CM:Ifwefailedtopredictitinpast,whyaskustopredictagainthefuture.
WB:CMandIhaveneverdoneornotdonesomethingonmacrofactors.BNSFweboughtatterrible
time.Weknowwedontknowwhatnext12monthslooklike.Butdoesntmakedifferenceifwehold
100years.Howstrongismoat?Anycompanythathaseconomist,hasoneemployeetoomany.CM,
canyouthinkofanythingrudetosaythatIhaventsaid?[laughter]
CM:Hardtotopthatone.[laughter]

Q11:JB:Brakes,speedlowerfortrainsoverlylongtimescheduleforrules.Donewrulesstrikeright
balanceofsafety?Marmontankcarsubsidiary?5000tankcarsbuyingforBNSF?
WB:2daysago300pages.IvetalkedbrieflytoMattandFrankPtak,interestofrailroadandtankcar
maydivergeattimes.Wehaveinterestindevelopingsafercars.Carswethoughtsafearelessthanwe
thought.Wehavetocarryammoniaandchlorine.Wearerequiredtocarryascommoncarrier.More
logicaltotransportbyrailthantruckorpipeline.Iwouldsayeverybodywillbeunhappywithrules.Itis
uptoWashingtontodeviserulesforsomethingdangeroustobetransported.Pipelineshaveproblems,
railroads.Safetyfiguresdramaticallybetteryearafteryear.BNSFleadsindustry.Butwillhave
derailments.
CM:Bigcompanies,havealotofengineers,andlonghistoriesoftryingtobewaysafer.Youdhaveto
beoutofyourmindnottofocusonsafety.Wearenotoutofourminds
CM:Condensateitismisnamed.Itismorevolatile.
WB:BNSFhasbestsafetyrecord.BerkshireEnergyamazingrecord.Whattheybuygetssafer.Omaha
pipelinehadbeenmismanaged,andwewatchedtheBerkshirepeopleworkdayandnight.They
didntwantexplosions.Wewentfromlastinsafetytofirst.Orsecond,becauseourotherpipelinewas
first.
Q12:Station4.Howtonetworkwithinfluentialpeoplewithoutexistingnetwork?
CM:Youshoulddobestyoucanplayinghandyouvegot.
WB:CharlieisveryOldTestament,didntgetpastGenesis.[laughter]
CM:Ineverhadbusinessschooltrainingwhyshouldyouhaveit?[laughter]
WB:Businessesschoolswereteachingperfectpricing,efficientmarkets.
CM:Youwereluckytoavoidwhatyouhaveavoided.Lawfirms,itisapieeatingcontest,ifyouwinyou
gettoeatalotmorepie.
Q13:BQ:IsBerkshireprotectedfromlargelossfortrainaccident?
WB:Weoffered$5billionexcessliabilityrisktootherrailroads.Ifyouhadexactwrongcircumstances,
inurbanareathepossibilityexists.Verysmallprobabilities,butmillionsofmilesyearafteryear,
somethingwillhappen.So,youminimizeit,youruntrainsslowerinurbanareas(35mphintownsof
100,000).Alwaysworkingtobesafer,nevercanbeperfectlysafe.Wedontneedtoinsureat
Berkshire,wecantakeit.Railroadindustrydidntlikeourrates.Sotheyhaventboughtbutdoesnt
meantheywontinfuture.ToJonathan,Idontthinkwellbuythe5000railcars.Thereislotgoingon
atMarmon,onceweknowwhatretrofittingrequires,wellbeworking3shiftsretrofitting.Industryis
waiting.Q115therewerepracticallynonewtankcardsordered,becauseneedtoseeregulations.
Activeinretrofitting.Historicallyrailshaveneverownedtankcars.Havingcarlessorswilllikely
continueinfuture,ratherthanhavingrailroadowning.

Q14:GaryRansom,intracompanyGEICOtoNationalIndemnity,andmovedClaytonupfromGEICOto
holdco.Moreactivitythannormal?Whatispurpose?Whynow?
WB:Whynowwellwejustgotaroundtoit.HugechunkofcapitalisatNationalIndemnity.Weve
movedpremiumvolumegeneratedatGEICOorothersuptoparentjustsimplerthatwayandkeeping
allofmoneyinvested.Insteadof50pocketsyouhaveacouplemainpockets.Norealchangein
certaintyofpaymentofpolicies.Lifeisalittleeasierjusteasiertohaveitoneplace,inNational
Indemnity.WehadsomeinGEICOcorp,justdecidedtomoveituptotop.Butweliketokeepplaces
loadedwithcapital,solikelymorecashwillgotoNationalIndemnity.
Q15:Station5,MinneapolisMinnesota.USnotfoundingmemberofAIIB[AsianInfrastructureBank].If
trendofnext50years,howwillimpactUSmultinationalcorporations?
WB:ThatissubjectIknownothingabout,perhapsCharliedoes?
CM:Iknowlessthanyou.
Q15,cont:dollarasreservecurrency?
WB:Itwillbereservecurrencyin50years.
CM:Imhappierifweprintmoneytoimproveinfrastructureratherthanspreaditaroundwith
helicopter.Alwaysmoredangerousthaneconomicprofessionalsthink.
Q16:ARS:RenamingsubsidiariestoBH.Discussriskstoname.Fruitofloomchangetoo?
WB:WedidcreateBerkshireHathawayHomeServices,anditisafranchise,webought2/3rdsof
Prudential,andwillbuyremainingthird.WewillloserighttoPrudentialnameovertime.GregAbel
askedandIsaidyes.Butifabusedwouldbeyanked.Wehadnoideaonhouseholdnameand
creatingextravalue.VanTuylwearecallingBerkshireHathawayautomotivegroup.Ifproblems,well
changeit.IfproblemsmaybeIhearaboutitfaster.Wedontanticipatewewillbrandabunchof
products.
CM:WedbecrazytotrytosellBerkshireHathawaypeanutbrittle,thoseoldnamesareworthalotof
money.
Q17:GregWarren,generatorstostoreenergy.Batteriesforthehome.Howlongdoyouthink
distributedgenerationbecomesthreattoutilities?
WB:Youputfingeronitwithstorageathome.Wepayalotofattention.Bestdefenseisverylowcost
energy.MidAmericanisdoinggreatjob.Solarinourterritoriesisstillsmall.
CM:Obviouslywewillusemorerenewableenergy.Berkshireisveryaggressiveandverywelllocated.I
grewuphere.Tohave20%ofIowapowertocomefromwind,itishugestunt.Desirableinplacelike
Iowa,wellneedbetterstorage.Technologyimproving.Itisnotthreat,hugebenefittohumanityand
hugebenefittoBerkshire.IloveowningMidAmericanwithmorestorageandgrid.Whatthehell

wouldwedoasfossilfuelsranout?Ofcoursemorestorageandmoredisruption,butIthinkmore
opportunitythandisruption.
WB:Justinlastweek,400MWinNebraska,andapprovedfor$1.5bilmoreofIowawind.IfGregAbel
couldtakemicrophonemaybeitisahighernumberthan20%.Greg,whatpercentagewillwebeinIowa
whenpresentprojectscompleted?
GA:Weannouncedour10thprojectinIowa,4000MWinIowa,and58%ofenergyinIowawillbefrom
windby2018.Ifcontinuetolookatotherutilities,wenowhave$18bilcommittedtorenewableassets.
NVenergywevecommittedtoretire76%ofcoalby2017.Muchreplacedbyrenewable,itis
continuedcommitment.
CM:Moredisruptiontofearortolove?
GA:Moredisruptiontolove.
CM:Sowecouldntbeluckier.
WB:Windandsolardependentonsubsidies.BecauseBHEnergyispartoflargercorporation,ableto
investfarmoremoneythanonstandalonebasis.Nooneisbettersituatedbecausepartofconsolidated
taxreturn,putfoottofloortobebiggest,andlikelytocontinuetobe.Andmostutilitiesdontpaythat
muchincometax,solimitedonhowfartheycanpush.
Q18:Station6.Chicago/Berkeley.Firstmeeting,plantoattendonceevery50yrs.Thanksforessayon
pastpresentfuture.Mostmemorablefailure,howdealwithit?
WB:WevediscussedDextermanytimesinannualreport.Ilookedatshoebusinessandpaid$400m
forsomethingworthzeroinafewyears.Berkshirestockthatwasusednowworth$67bilnow.
Nobodymisleadmeonthat.Ilookedatitandcameupwithwronganswer.Almostanytimeweve
issuedsharesithasbeenamistake.RightCharlie?
CM:Ofcourse.
WB:Wedontdoitmuchanymore.Familyandfriendsareinthecompany,manyhavehalfoftheirnet
worthinthecompany.Wevebeenverycautious.Weprobablycouldhavestretchedalittleafew
times.Ijustdontwanttotakea1%chanceonAuntieKatiesnetworth.Idratherbe99%cautiousvs.
1%incautious.
CM:Ifwehadusedleverageothersdid,Berkshirewouldhavebeenalotbigger.Itscrazytosweatat
night.
WB:Overfinancialthings.[laughter]Wewontpursuethatfurther.Carol?
Q19:CL:Inflation?Isitcoming?Consequences?HowinflationwhathappenstoBerkshire.James
Cook,Maine.
WB:Ivebeenverywrong.Charliesbeenalittlewrong.

CM:Ofcourse.[laughter]
WB:Iwouldnothavepredictedyoucouldhave56yearsofclosetozerorates,andrunlargedeficits.
Countrycansustain22.5%debtonaverageandnotincreasetheratio.Deficitisnotadirtyword.We
tookFedReservefrom1trillionto4trillion.Peoplewhosavedhavegottenkilledonincomefromtheir
savings.MuchofitwasnotinanEcon101book.Stillhardtoseeifyoutossmoneyfromhelicopters,
inflationissupposedtohappen.WhenPolandissuesbondsatnegativeinterestrateIdidnthavethat
inmyforecast.Weareinworldwedontunderstandverywell.ButBerkshire,willdobetterthanmost
bigcompanies.Wearepreparedforanything.Wearepreparedtoact.Thatisrealadvantage.We
dontcountonanyoneelse.Wehave$60bilnow.Idratherbesittingwith$20bilandhavegreat$40bil
acquisition.Butwewillactquicklyandmostwont.
CM:Wehavemadelittleprogresstryingtooutguessmacro.Weswimwithtideandstopworrying
aboutdirection.Theproblemispeoplewhopredicttidesgraduallythinktheyknowsomething,itis
muchbettertosaytheyareignorant.
WB:Youcanbesureyouwillseethingsyoudidntthinkwerepossible.Youhavetobeprepared
psychologically.
Q20:JB:cashtaxesandreportedtaxesnow$37bildifference.Doyouconsideranyofthateconomic
earnings?Orwillcashandtaxesflip.Givenmassiveappetiteforspending,orwilldeferredtaxnever
havetobepaid,andwillthatformoffloatgrow?
WB:Floatfromdeferredtaxesoneisunrealizedappreciationonsecurities.Otherisdepreciation
around$37billion,butIthinktotaldeferredtaxesisabout$60bil.Mostofthatisaccelerated
depreciation.Certainlyinutilitybusiness,thathelpsourcustomerbutdoesnthelpus.Wegetareturn
onequityandregulatorycommissiontakesthatintoaccount.Idontthinkwebenefitenormouslyfrom
that.Wedontneedtoborrowasmuch.IdontthinkIdlookatitashiddenformofequity.Idrather
haveitthannothaveitaccruedat35%taxrate,andifratechangedthenmaybemajorchange.
CM:Itwouldbebookequitychange,noncash.Itwouldntmeanmuch.
WB:Floatininsuranceisabigasset.Deferredtaxisassetbutnothugeone.
Q21:Station7.HenrySingletonsTeledyne?Unwound?Different?
WB:Charlieknewhimpersonally.Thereisalottobelearnedduringoperatingyears,andsubsequently.
CM:HenrywassmarterthanmeorWarren.Hegot800ateverytestandleftearly.Playedblindchess.
Warrendidbetterinvestingheworkedatit.HehadhorribledeficitofIQcomparedtoSingleton.
Henryhadverycleverincentivesonallthekeyexecutives.Theyweretoughandmeaningful.Buthegot
intotroublewiththreedifferentdefensedepartments.Peoplewenttoofarindealingwithgovernment.
Wehaventhadtroublelikethat.

WB:Webelieveinpowerofincentives.Wetrytoavoidhiddenincentives.Weveseendecentpeople
misbehavebecausetheyfelttherewasloyaltytoCEOtodelivercertainnumbers,becauseCEOmade
forecastsaboutwhattoearn.IfIsaidBerkshiretoearnXX,andifwehadexecutivesthatsetloss
reserves,andotherswhocanloadupchannelsatendofyear.ItismisbehaviortomakeCEOnotlook
bad.Whentheygetegoinvolved,theydostufftheyshouldntdo.
CM:Attheend,HenrywantedtosellbusinesstoBerkshireforstock.Hewassmartrighttotheend.
WB:Youshouldunderstandhumanbehaviorifyouaregoingtorunabusiness.AtNationalIndemnity
in1960s,JackRingwaldtwasmarvelousman.Histennispartnerwasinchargeofclaims.Ifclaimfor
$25kcamein,Jackwouldsay,howcanyoudothistome?Fellowhewasjokingtostartedhiding
claims,andstuckthemindrawer.Sowemisinformedourreinsurersandregulators.Fellowdidnthave
anyfinancialinterest,justdidntliketohaveJackyellathim.Ifyoutellmanagersyouneverwantto
disappointWallStreet,theymightstarttofudge.WetrytoavoidthatatBerkshire,weveseentoo
muchtroublewithit.[clapping]
Q22:BQ:LincolnNE.IfgovernmentregulatorsdeemBHInsurancetoobigtofail,howwoulditaffect
BH?
WB:Europeangrouplookingatinsurersgenerally,andhasdesignatedninecompanieswithspecial
attention.OnemorerelevantinUSisFinancialStabilityandOversightCommitteeanditdesignatesSIFIs
[SystemicallyImportantFinancialInstitutions].DesignatedGEandPrudentialandMetropolitan.
Metropolitanisfightingdesignation.WalmartandApplearelargebutnoonethinksofthemasSIFIs.
85%ofrevenuesneedtocomefromfinancialmatters.Wedontcomeclose,wearelike20%.Problems
Berkshireencounterscoulditdestabilizefinancialsystemincountry?Theyspentayearwith
Metropolitanbeforedesignating.Wedontthinkwewillbedesignated.Wewereabouttheonlyparty
supplyinghelptofinancialsystemduringthelastcrisis.Wearealmostuniqueinthelayersofsafety
wevebuiltintosystem,cashandoperatingbusinesses.Itismootquestion,lawexists,wehaventbeen
approached,takesayearorsotobeassessed,IdontthinkwecomewithinmilesofqualifyingasaSIFI.
CM:Thatistrue,butgenerallytherestillistoomuchriskinhighfinance.DoddFrankhasntremovedit.
Derivativesarelikebucketshopsin1920s,gamblingparlors.Theylikemakingmoneywiththeir
gamblingparlor.Thereisdangerinfinancialsystem.Ourcompetitorsdontlikeitthatwearenot
deemeddangerousandimportant,andthereisdangerinthattoo.
WB:DoddFrankweakenedtheFedandtheTreasuryfromtakingtheactionstheytookin2008and
thosewereneededin2008tokeepsystemfromgoingintoutterchaos.FederalReservecanbackup
whatitsays.WhenHankPaulsonsaidmoneymarketdepositswereguaranteed,moneymarketshad
lost$175bilindepositsinthreedays,systemwouldhavegonedown,wouldhavebeen$1trilwithina
fewdaysmore.Youhavetohavesomeonesomewhereduringpanic,whosaysheorshewilldo
whateverittakes.YousawinEuropewhathappenedwhenDraghisaidit,andinUSwhenPaulsonsaid
it.Ifyoudont,panicswillaccelerate.Inolddays,peoplewouldcometoputupgoldtheywouldpile
itupinsideabank,ondisplay,thatwasonlythingthatstoppedrunonthebank.Standinginfrontand
sayingBasel2Ratiois11.4%doesntgetjobdone.Bernankegotjobdone,hesaid,were

guaranteeingnewcommercialpaper,andDoddFrankweakensthatandthatisaterriblethingto
weaken.
Q23:GR:Youhavestartedworkerscompensationonline.Whatisstrategy?Channelconflict?
WB:Progressivedidokwithchannelconflict.Wevedonewellwithdirectauto.Channelconflictnota
bigproblemforus,maybemoreforothercompanies.WewritecommercialautothroughGEICO.
Hasntachievedwhatprivatepassengerautohasdone.Wehaveknowhowtowritethatbusiness.We
haveawfullygoodinsurancebusiness,buteverythingchanges.Wasalldirectmailin1930s.Basicidea
continues.ButmovedfromdirectmailtoTV.Nowinternet.Nowmobile.Worldmoveson.Keyisto
savemoneyforcustomerandgivegoodservice.Whateverwaywinswelltrytostayontopofit.
Q24:Station8.Whatneveraskedthatyoudliketoliketoanswernow?
WB:Ivebeenaskedalmostallofthem.
CM:Idliketoaskher,whatisworstthingyouhavedone?
Q24cont:CanIbuyyoulunch?
CM:Imsoheavilyinvolvedwiththosegirlsfromthemovie,Idonthavetimeonmylist.
Q25:ARS:Takeprideinmanagersrunningtheircompanies,stayinguninvolved.Investment
characteristics.Is3Gsmanagementmethodcongruent?
WB:Therewouldbesomecompaniesthatweownwheretheywouldmakechanges.GEICOisrunas
3Gwouldrunithowever.Wecouldhave500peopleatheadquarters.Floorforstrategy,finance,etc.
Newspaperstheyhavecutbackasrevenueisshrinking.Wecutbackintextiles,IclosedWaumbecmill
early.Ihaddrawerfullofproposalsforimprovements,weputinloomtoreducelaborcosts.Idont
thinkanythingtherearesomebusinesseswhereweemploytoomany.Iwilltolerateitinamanager.
Wehaveafew,butveryfew.Ithinkbetterof3G.Iwouldneverabdicaterunningbusinessatalossif
goingtocontinue.YoullseeinourOwnersManual,for30years.Ourattitudeissameatheadquarters.
CM:Wehave2/3rdsof1inLA.[laughter]
Q26:GW:Consumerbrands,wouldKraftHeinzbeaconsolidator,orcouldNestleorothersslowit
down?
WB:GeneralFoodsin1980shadalotofbrandswhichKraftownsnow.CocaColasoldmorecasesof
beveragelastyearthananyyearinhistory.Astrongbrandispotentstuff.60%brandsharehereinUS,
higherinothercountries.Retailerandbrandswillalwaysfight.Retailermaywanttoshifttoprivate
label.Privatelabelhasbeenaroundforever.ItastedfirstsixpackofSamsCola30yearsago,and
Walmarthasalotofpower.ButsodoesCocaCola.Youhavetonourishbrands.RCColafirstdiet
productin1960s.Wilkinsonhadbladein1960,butGillettehas70%marketsharegloballynow.In1972
weboughtSeesCandiesweworriedhowmuchdamageRussellStovercoulddotoSees.Ifyouve

protectedit,itisafabulousasset.Brandswillhavetroublewithgreatretailersalways,andeachwill
stickaround.
CM:Wevealmostexhaustedthistopic.Wavesoflayoffsfrightenpeople.Itisnosmallthingtolosea
job.Butwhatwouldourcountrybeifwekepteveryoneonthefarm?Weneedourbusinessestobe
rightsized.
Q27.Station9.Veryexcitingtoseemysuperstars.China.Performancepressure.Doyouthinkvalue
investingcanbeappliedinallmarkets?Anysuggestionsforvalueinvestors?
WB:NotsureIgotallofthatbutCharliewillhelp.Investmentprinciplesdonotstopatborders.I
wouldusesameprinciplesasfromIntelligentInvestor.FocusattentiononbusinesseswhereI
understoodcompetitiveadvantage.
CM:Chinesehavehistoryofbeingentrepreneurial.Alsogamblingwhentheyhaveopportunity.
VolatilityinChinesestockmarketsishigh.ChinalooksalotlikeSiliconValley.IthinkChinawouldbe
betteroffwithmorevalueinvestingandlessspeculation.TobemorelikeBerkshireisbetterforChina.
WB:Ironyisthatwewoulddobestinmarketwherepeopleoperatefoolishly.Wildenthusiasm,orwild
depressionallowspeopletomakemoneyinsecurities.CharlieandIhavebenefittedenormouslyina
fewperiods,like1973/1974whenstockswereunbelievablycheap,cheaperthan2008/2009.Itdoesnt
makesense,butifyouareyounginvestorandcanstandback,andinvestwhenthingsarecheap,no
matterwhatisonTV,notareallytoughgameifyoucancontrolyouremotions.Chinesemarketmay
havemorespeculativeinfluencesinit,andasanewdevelopmentmayfacegreaterextremes.
CM:Greatopportunitiesforexcessandnastycontractionsafternaturalbooms.Chinaiswisetoreduce
excess.Whowantsanythingelsethanvaluewhenbuyingsomething.Peoplearelookingforeasierway.
Itlookseasier,butinfactisharder.Thereisalotofmiseryfrommisusingstocks.
WB:Noonebuysfarmfornextweekornextmonth.Noquoteonit.Betterwaytolookatstocks.
Q28:CL:SuperioreconomicsysteminUSA?Chemicalandnuclearriskandbiologicandcybersecurity
thenewCNBC.Effectyouroutlook?
WB:Theyaregreatthreat.Grandchildrenwilllivebetter.Wemoveinfitsandstarts.Lookatthis
countrystartingin1776andeverythingsincethenisprofitandunleashingbrains.Thathasntbeenlost
atall.2%growthwith1%populationgrowth,isa20%GDPgaininageneration,soanother$10kofGDP
percapitainnextgeneration.Thatcanallbenullifiedbyroguestatesorreligiousfanatics,cannowcan
addchemicalandcybertothelist.HugenumbersofpeoplewishharmonUS,thosepeoplewontgo
away.Theylllookforwaystoutilizerawmaterials.Weneedanextremelyvigilantsecurityoperationin
USA.Weliveincountrywhichwilldoverywell,soweneedtowardoffthethreats.Babybeingborn
todayinUSAisbestinhistoryprobabilistically.
CM:Wewerefavoredplacewithfavoredoutcome,besttimeinhistory.Chinahascomeupalotfaster
thananyotherbignation.

WB:Ithinkthatisgoodforus.
CM:Nothingismoreimportantthanfutureclosecollaborationandtheneedtolikeandtrustone
another,andworktogethertoavoidbadconsequences.BothChinaandUSarecrazynottocollaborate
andincreasetrust.Nothingismoreimportantthatwecoulddoforourrespectivesafetyandbenefitof
world.
WB:Wouldyouratherbebornnoworwhenyouwereborn?
CM:Wellveryinterestingnow.Alwaysinteresting.Idontliketheseverytheoreticalquestions.Id
ratherthinkabouthowwegainadvantageorhowsomeoneelsecan.
Q29:JB:Allocatingcapitalamongstbusinesses.Capitalallocationiskey.WhynotCEOasinvestorand
COOasoperations?
WB:Notinconceivable,butveryunlikely.CIOshouldhavesignificantarrayofskillsusefulforchief
executiveoffice.ButIwouldntwanttoputsomeonewithjustinvestingexperienceinchargeofan
operationlikeBerkshire,withoutoperatingexperience.IvelearnedalotthroughoperationsthatI
wouldnothavelearnedbybeinginfinance.Ifyouhadsomeonewithdualexperience,ok,buthard.
CM:OwnedandcontrolledbusinessesgetmoreimportanttoBerkshire,soweneedtogowithtide.We
needexpertisebeyondtypicalportfolioanalyst.
WB:Iveseenmanywhodontunderstandmathverywell.Someofouroperatingmanagersknowalot
aboutinvesting.
Q30:Station10.Caracas,VZ.TedWeschler.Investmentphilosophyandqualities?
WB:TedandToddareverysmartaboutbusinessesandinvestments.Itisacompetitivestrength.They
havequalitiesofcharacterwhichareincrediblyimportanttomeandCharlie.Weveseendozensand
dozensofmanagers,weusedtodropintoseethem.Iknew20peoplewhenIclosedwhohadgreat
recordsoverlast6to10years.IpickedBillRuane.$10kthenisnow$4mil.Heisterrificmanagerbut
alsoterrificman.Iwanteveryaspectofpersonalityyoujustwanttobearoundthem.Charliemet
Toddfirst.ImetTedfirst.Wetalkedmoreonwhatkindofpeopletheywere.
CM:Wholethingworkingwell.Theyareusefulapartfromhandlingsecurities.Eachhashelpedtobuya
businessrecently.
WB:Theyknowrighttouch.Toddworkedon[CharterBrokerage].TedworkedonGermanoperation.
Heknowshowtodealwithpeople.Werunintomoredysfunctionalpeoplewith160IQs,Salomongave
usourshare.
CM:Wevespecializedinit.

WB:MorepeoplewithhighIQshaveselfdestructedtomakemoneytheydidntneed.Wehavevery
solidpeopleinTedandTodd,andtheyareverybright.TheyidentifywithBerkshiremorethan
themselves.
CM:Trustworthinessismoreimportantthanbrains.Wewouldnthireanyoneifwedidnttrustthem.
WB:Ok,everyyearIputupthisslide,whichmeasuresagroupof5hedgefundsversustheS&Por
Vanguard.Ibetfeeswouldntbeovercomebymanagerialbrilliance.Paying2/20andoverridefor
Fundswasok.InfirstyearIfellfarbehind,butsevenyearsintoit,63%vs20%.Interestingthingisthat
someofthatisunderperformance.2/20at$1bilyouget$20mjustforcomingtooffice.Investors
havepaidaprice.Hedgefundmanagershavedonefine.WeconvertedtoBerkshireafewyearsago.
Winnerwillgetmorethan$1mil.Ifyouwanttoentertainyourself,findlongbets.comonlinetheyare
inWashingtonandhundredsofbetsareupthere.Youcangothereandmakebets.Peoplegive
reasons,arguments.Ifyoudonthaveanythingbettertodo.Innexthourwellhavealunchandsee
youbackhereat1pm.
LUNCHBREAK
WB:MydaughtersuggestedthatIremindyouthatCaroldidnttellmethequestionshewouldask,butI
didexpectaquestionaboutClaytonandsoIpreparedthoseslides.
Q31:BQ.Inflationastapeworm.WhichbusinessesatBerkshirewillthriveduringinflation,whichwill
suffer?
WB:Realestateingeneralgoodduringinflation.Inflationaryexpansionincapital.Pricedintermsof
replacementcostovertime,getinflationarykick.Utilityandrailroadeatingupmoremoney,tendsto
bepoorbusinessduringinflation.Abrandisawonderfulthingtoownduringinflation.Wevehadto
nourishitaswegoalong.Valueincreasesduringinflation.ThinkofimpressionsofGillettebuyingrights
toWorldSeriesin1939,andtryingtohavesimilarimpressionsnowwillcostafortune.Great
investmentin1939dollars,anditpaysoffin1989dollars.
CM:Butifinflationgoesoutofcontrol,neverknowhowitholdsup.Twosomeofgreatdepressionand
WeimerRepublicbroughtusHitler.WedontwantinflationbecauseitisgoodforSeesCandy.
WB:Idont.
Q32:GR,Berkshirespecialty.Hasitreplacedideaofbuyinglargecompany?
WB:Almostcertainitwonttakeoverlargecommercialinsurance.BerkshireHathawaySpecialtywe
haverightsetup,morecapitalthananycompanyinworld,ourpoliciesbetterthananyoneelse.Ifwe
buysomeoneelse,wepaysubstantialacquisitionpremium.Canbeverybigoperationfivetotenyears
fromnow.Charlie?
CM:Icertainlyagreewithyou.
WB:Thatshowhekeepshisjob.[laughter]

WB:Weapologizetothosewhocouldntgetaseatthismorning.
Q33:Station11.Intheletter,yourefertopracticalmentalmodel,whichwouldyousuggesttobuild
companiesofdistinction.WhyisSeessmaller?
WB:Charlie?
CM:ThankyouWarren.
WB:Youretheguywhowroteit.
CM:Lindberghgotbestreputationquickly.Restofusacquirereputationslowly.Iseeopportunities
comeallthetime,andcredibilityinpastgivesthemthenewopportunity.Thereisnothingbetterthan
behavingwellinlife.Wehavetriedtobehavebetteraswevegainedmorerecognition.Nothingcan
guaranteetotalapowerhousebrand.
WB:Whenyougetold,youllgetreputationyoudeserve,saidAgnelliofFiattome.Sameistrueof
companies.Hasreputationforbeingsomewhatdifferentcompany.Wedidntsetouttodothat,butit
hasworkedoutthatway.
Q34:ARS:Climatechangeasriskfactor?AreBerkshiresmodelsdifferent?
WB:SECrequiresriskfactors,lawyershaveyouputineverything.Peopleputinweather,orsome
modelthatshowsit.Wepriceiteveryyear.Lifeinsurance,youvesetapricefor6070yearsinfuture.
Ipriceannually.Iseenothingthatshowsmethatglobalwarmingshouldchangemypricesalot.It
doesntmeanthatitisnotthreattohumanity.Justin1yearcontract,Iamnotthinkingaboutglobal
warming,inmaterialway,inmyjudgment.Ifwriting50yearwindstormpolicyIwouldthinkveryhard
aboutwhatglobalwarmingmightdotoincidenceandpotentialofhurricanes.NotsomethingIwould
putinthe10k.
CM:Notclearwhateffectsofglobalwarmingwillbeonextremeweather.Lotsofhowlingabout
calamitiespeoplegetsoexcitedandarenotnecessarilycorrect.
WB:Wouldyouchangeratetomorrow?Idoubtit.Oneyear?No.
CM:Iwouldnot.
WB:Idowantourunderwritersthinkingaboutclimatechange,IwanttothinkmoreaboutMarvinthe
Torch,whoalwaysburnedhisbuilding.Heexplained:Idontburnbuildings,Icreatevacantlots.
Q35:GW:Commoditybusinesses,notgood.Manysoldatloss.MakesenseforGregtodecide?
WB:Wecallitenergy,butnotmuchoilandgas.WearelookingforopportunitiesforBHEnergyto
spendbigmoney.Wepaid$35persharetobuythestock.Investmentbankersspentaweekdoing
nothing.SoIsaidIwouldpay35.05andthentheycouldsaytheygotlastnickeloutofme.Ineverpaid
dividend.Probablymakes$30persharethisyear,andwewillgetto$35pershare.WewroteConoco

down,thoughactuallywemadesomemoneyinit,alsoExxon.Welookatcashandavailable
opportunities.Notlastoilandgascompanywewillbebuying.Wepassedup1or2largeones.
CM:Notabadcashsubstituteifyouthinkofitthatway,withdividendExxonvscash.
Q36:Station1.Thankyouforhostingmeeting.Taxcodeisbroken,atindividualandatcorporatelevels.
2.5triloverseas,highincomeratesofover50%.Realchangeandsimpler?
WB:Ittakes218membersofHouseofRepresentatives,and51senatorsandaPresidenttosignbill.
Questionofhowmuchshouldgovernmentspendandfromwhomdoyougetit?Despitetaxrate,share
ofGDPfromcorporateprofitsishigh.Revenuesfromcorporateswas4%ofGDPandnowitis2%.Imay
beoptimistonthis,OrrinHatchandRonWydenonSenateFinanceCommittee,maymakesomething
neitherlikebutbothcanagreeon.Ifwespend22%ofGDP,weshouldprobablyraise19%.19%of17.5
trillion,nowthatsrealmoney.Howmuchfromcorporates,individuals,estatetax?Youcanbringcash
backfromabroad,ourcorporateratesare35%(wehaveoperatedat52%).Idontshedanytearsfor
Americanbusiness.Therecouldbeanequitabletax.Getting%onCDs,andbusinessesmaking15%on
tangibleequity,equityholdersaregettingtreatedverywellinthiseconomy.
CM:Iagreewithyou,andIdontdieoverlittledifferencesintaxcode.13%statetaxinCAoncapital
gainsdrivesrichaway.Andtheydontevenburdentheschools,soIthinkCAhasstupidtaxpolicy.ButI
dontthinkUStaxpolicyisstupidatall.Theydiditonpurpose.
WB:Callitearlystagesofparanoia...[laughter]
CM:Theideaofdrivingtherichpeopleout,itisdemented.Whodoesntwantrichpeoplecomingto
spendinyourstate?[laughter]
WB:Ithinkachancethereisadealthisyear,they{Hatch/Wyden]arepatrioticandsmart,andthey
knowtheycantgetanyplacetogetdone.Ithinkthatiswaytogetitdone.CMalwayssayswhat
wouldhavehappenedatConstitutionalCongressifitallhappenedinfrontofTVcameras.Ittakes
compromisetogetitdone,whenpeoplehavefundamentallydifferentviewsontaxcode.Idontthink
impossiblethatwehavenewcorporatetaxcodebyendofyear.
Q37:CL:Fourbooksyouhavementionedyoucherishinsecurityanalysis.AdamSmithWealthof
Nations,1776,thoughyouhaveseldomdiscussedthisbook.Whatdidyoulearn,howdoesitshapeyou?
WB:MyfriendBillGatesgavemeanoriginalcopyofit.IfyoureadAdamSmith,Keynes,Ricardo,and
WhereAreCustomersYachtsyouwillhavealotofwisdom.DownstairswedohaveBerkshireBomber
tshirts,butalsoFredSchwedsWhereAreCustomersYachts.YoushouldreadWealthofNationstoo.
CM:AdamSmithhaswornwell,oneofwisestpeoplethatcamealong.Lessonsaresameas
communismfailingandSingaporewinning,thatproductivepowerofcapitalismisawesome.
WB:Iappliedspecialtyoflabortophilanthropy.Ifsomeoneelsebetter,shoveofftothosethatare
better.

CM:Youdidntdoyourownbowelsurgeryeither.[laughter]
WB:Ihavenoreplytothat.[laughter]
Q38:JB:SomeformerlypubliccompaniesatBerkshirehavemoretroublemakingdecisionsforlonger
term.Anythingtodotocombatthis?Compensation,multiyearor12month?
WB:Publiccompaniesvs.privatethatweboughtaggregateofpublicvsprivatenotsureIdrather
own.
CM:Idontknowwherehegetsidea,notapparenttous.
WB:Whenwesay100yearswemeanit,andwesetrightexample.Wetrytoconveyasstronglyaswe
can.Wevebeenhammeringsamemessageforlongtime.Wedontignoreyearlyresults,wejustdont
livebythem.Igetmonthlynumbers,andwhatreallycountsiswherewellbein510years.Butdoesnt
meanweshouldbethrowingawaymoneyinshortterm.ButIdontreallyagreewiththepremiseofthe
question.
Q39:Station2:Thanksfor50greatyears,fromBonnGermany.YouowncompaniesinUSand
Germany,whatdifferencesisthereincultureandperformancebetweenGermanandUS?
CM:Hewasasking
WB:Iknowthequestion,Imlookingtoyoufortheanswernotthequestion.[laughter]
CM:WevehadhardtimebuyingthingsinEurope.Traditionsandfamilytraditionsaredifferent,andin
someothercountries.Germanyhaslongtraditionofbeinggoodattechnologyandcapitalism.Weve
admired.Theyworkfewerhoursandproducealotmore,andofcourseWarrenandIareprettygoodat
that.WeadmiretheGermans,particularlytheengineeringside.
WB:ButIllpredictwebuyaGermancompanyinnext5years.Wehavewomanovertherewho
broughtLouistous[DetlevLouisMotorradvertriebs].Wevetriedtogetwordout.Iwouldlook
forwardtothatdealwewouldbeveryveryhappy.Weveboughtfourtofivebusinesses,butvery
small.Weareeagerandwehavethemoney.Pricesmaybealittlemoreattractive.Reasonablechance
priceofferedwouldcatchmyattention,morethanUS.
Q40:BQ:WifeandIarestockholders.Inour70s,calledGeicobutcouldntbeatourcurrentratewhy?
WB:Wecanbeattherate40%ofthetime.Wehaveourownunderwriting,oneisage.Wehavemany
variables.Allstateandothershavedifferentunderwriting,butnonewillbelowergenerally.Iseehow
manyquoteswemake,howmanycustomerssold.Wearesellingthem.Somecoupleswillgetbetter
rate.Interestingquestionabouthowtobestevaluatedrivers.16yearoldboysareworst.16yearold
girlsbetter.Weaskalotofquestions.Itsdefinitelyworth15minutestocallGeico.
CM:Youmaybepayinganunfairpriceforinsuranceifyouarentdeterioratingasfastasyourpeers,but
itisagoodtradeoff.[laughter]

WB:Ihadntthoughtofitthatway.[laughter]
Q41:GR:Whatareyoudoinginreinsurancedifferently?
WB:Wouldntourcompetitorsliketoknow?[laughter]Itissomethingyoucansellpeople,insurance
andreinsuranceisanecessaryforbusiness.Butitwillgetlessattractive,anditishappeningonlarger
scale.Overnext510yearsreinsurancewontbeasgood,asprospectshaveturnedforworse.Not
muchwecandoaboutit.ThereareafewthingsonlyBerkshirecando.Forinstance,eightcontracts
havebeenwrittenwithpremiumof$1bilormore,andwevebeenonalleight.Butmarketnotasgood
asitwas.
CM:Itwillbeharder,thereiscompetition.Weplaygameonlywithlongpole,otherspretendtodoso.
WB:Wecouldattractatonofmoneyandgetanoverrideonit.Wedontparticularlyadmirehowitis
beingplayed.
Q42.Station3.7thgrade,Florida.Howtomakefriendsandgetpeopletolikeyouandworkwithyou?
WB:Verygoodquestion.
CM:Iwasobnoxiousandaskedimpertinentquestions,andnoteveryonelikedme.Theonlywaytoget
peopletolikeme,Ihadtogetrichandverygenerous.
WB:Peopleseeallsortsofvirtueswhenyoucanwriteacheck.[laughter]
WB:Ivehadgreatteachers,andpeopleIadmired.WhydoIadmirethem?WhyshouldntItakeon
theirqualities.Ifyoulookatpeopleyoulikeinschool.Writedownqualitiesyoulike,andalsotheones
youdontlike.Generous,friendly.Peoplewilllikeitinyou.Ifyouarelate,negative,claimingcredit
getridoftheminyourself,andyoullfindoutitworksprettywell.
CM:Itreallyworksinmarriage.Ifyoucanchangeyourselfratherthanyourspouse,itisagoodidea.
[laughter]
WB:CMsaysdontlookforintelligenceorhumorinaspouse,insteadyoulookforsomeonewithlow
expectations.
Q43:ARS:Netjetspilotspicketing.Returnoninvestmentsforaircraftonorder?Wasitamistake?
WB:Idontthinkrightwaytolookatreturnoninvestment.Weresellthoseplanes,theyareheld
largelybyownersthemselves.Thatplaneismyinvestment,notNetJets.Wevehadhundredsoflabor
unions.In50yearswevehad3strikesIcanremember.Wehad4daystrikeatBHTextile,4daysat
BuffaloNews.AlsoSeesCandy.Wearenotantiunion,wehavesensationalpilots.Wevehadgreat
pilots,friendly.Itishumannaturetohavedisagreementsoverpay.$145kperyear,7dayson,7days
off.Wepaytogetanywhere,socanliveanywhere.Itisperfectlyunderstandabledifferencesarisefrom
timetotime.Butdoesntcomeinadayorweekormonth.Volumesareupforflighthours,upon

owners.Verygladweown.Moretrainingtopilotsthananyoneelse.Ifly,mykidsfly,ourmanagersfly
onit.Igetsameplanesothersget,samepilots.Intenseinterestinsafety.Professionalpilots.
CM:IhaveneverinallyearsmetaNetJetspilotwhowasntdutifulandreliable.IcanthinkofnoNetJet
pilotdissatisfiedwithhislife.Imnotcertainunionisfairlyrepresentingthepilots.Wehavealotof
womenpilotstoo.
Q44:GW:Duracellcorebusinessindecline,alkalinelowerusage.HavingDuracellwasnotoutof
ordinary.Buthowmuchdidtaxplanninghavearoleindoingthisdeal.Wouldyouhavedonewithout
taxconsiderations?
WB:BothBerkshireandP&Ggottaxbenefitssobothsideswerehappy.Somewhatsimilartoreal
estateexchange.Wekeepoldertaxbasis.Section1231realestateexchanges.Decliningbusiness
yesbatteriesdeclining,butstrongworldwidepresence,andyesitwillhaveunitdeclines.ButIthink
welldoDuracellbusiness.Willtakeuntil4Q.P&Ghasbeengreattoworkwith,couldntbebetter.Ill
beveryhappywhenweownit.
Q45:Station4.FromTexas.ExcitedaboutnewNFM.5companiesnowdownthere.Estateplanning
notsomuchsokidscandonothing.Giftpledge.Assettocharityandinheritancetokids?
WB:Ipromised99%.Estatetaxexemption,ImighthavedifferentfeelingifIhadkidwhoworked
activelyinbusiness.AsCharliesays,optionsgetlimited.Wherehesgoing,moneywontdohimmuch
goodanyway.NoForbes400ingraveyard.Wheredoesitdomostgood?WhenIlookatstock
certificatesinsafetydepositboxputthere50yearsago.Theyhavenoutility,theycanthelpme
consume7,000caloriesperday.Theygiveallsortsofutilitytoothersinrestofworld.Theycando
goodnow,buteveryoneneedstheirownfeelingsaboutit.Ithinktheymightaskthemselves,wherewill
itdomostgood?Icouldbuyhoteltolivein,butwouldIbehappier?Itwouldbecrazy.Wedontjudge
itbywhatothersthink.Icalledsomeoneongivingpledge,andhewasa70yearoldandhesayshe
didntwanttothinkaboutit.AndIwonder,willyoumakebetteradecisionwhenyoure95withblonde
onyourlap?
CM:Cannowleave$5mtokids,thatwasverydesirablechangeIthink.
Q46:CL:Woulditmakesense,andbepermissible,todistributelongtermequityinvestments,intax
efficientway,likeYahoowithAlibaba.UseassetsBerkshirenotmanaging,anddontwanttosellfor
incometaxcosts.Passive.
WB:Yahoodidntsolveit.
CM:Wehavenowayofdoingit.
WB:Therewasawaytodoit,Isawexamplesofit.Undercodenowaytouseappreciatedsecuritiesto
distributetoshareholderswithoutpayingfullcapitalgains.
CM:Spinofftoshareholders.

WB:WhatYahoodidhasnotgottenridofthetax,maygivethemanotheroptionifAlibabawantsto
redeem.Idontthinktheyhavegottenridofthetax,unlesssubsequentlytheydosomethingwithit.
Havenotseenhowtogetittoshareholderswithoutpayingtaxatcorporatelevel.
Q47:JB:Mitek,Shaw,Acme,etc.Youngadultswouldgetsickofit,sonormalrateswillreturn.But
householdformationstillslow.Highstudentdebt,orstrictmortgageterms.CouldUSbemorelikeEU,
orsomethingchanging?Singlefamilyhomestarts?
WB:Whatarelastsetoffigures?Haveyouseenfigures?Ididbestsellingthatringtotheguyinthe
moviesandtheywillformahouseholdprettysoon.Italwaysturnsdowninarecession.Yourguessis
asgoodasmine.
CM:Ifeelsameway.IhavesomegrandchildrenthatIwishwouldmarrysomeonesuitablepromptly.
[laughter]
WB:Aretheyinaudience?[laughter]
CM:Idontwanttonamenames.[laughter]
Q48:Station5.EmmanuelVisionfoundation.Poor,fundedbyGatesfoundation.Contrastnotmore
dramatic.Modelofcaring.Howcancorporationsbeencouragedtomakedifferenceinimpactoflives?
WB:Iagreewithvision,butIbelieveinvisionofindividualphilanthropy.Itistheirmoney.Iencourage
companiestocontinuephilanthropicactivitiestheyalreadyhaveinplace.Idontthinkmybusinessto
writechecktomyalmamater,anddoitoncompanyfunds.Notmymoney.Wehadsystemwhere
shareholderscoulddesignate,andIhatedtogiveitup,buthadtodoit.Ihavenevergivenupamovie,
atrip.EverythingIvegivenhasbeensurplus.PeoplelikeyoursonIreallyadmire.
CM:Mytasteforgivingawaysomeoneelsesmoneyisreallyquiterestrained.
WB:Iwasboardoforganizationwhichneededtoraisemoney.Icalledon45corporates,besuretoask
corporatenotpersonalIsaidIwouldntdoit.Ihavereservationsaboutcorporatephilanthropy.
Q49:BQ:DoyouandCharliethinkEurocurrencypositiveforEurozone,shouldFrancequitandgobackto
franc?
WB:Thatstooeasyforme,IllgivetoCharlie.
CM:Ihaventfaintestidea.Eurohasnobleaspiration.Straining,thebigstrainsareinGreeceand
Portugal.Theycreatedsomethingthatwasprobablyunwise.Theygotcountriesinthatshouldntbe
there.Youshouldntformabusinesspartnershipwithyourshiftlessdrunkenbrotherinlaw.[laughter]
Theyloweredtheirstandardsalittleandithascausedstrains.
WB:Everythinghereisofftherecordbytheway.[laughter]

WB:Ithascausedstrains,ithasflaws,canbecorrected,wewroteConstitutionin1779andittooksome
amendments.Butifthereareflawstheyneedtofaceuptothem.Wecouldhavehadcommon
currencywithCanadaandwecouldhavemadeitwork.
CM:Wesurelycouldhaveworkeditout.
WB:Itmighthavebeenuseful.Wecouldnthavehemispherewide.
CM:WithArgentina.[laughter]
WB:Helovestonamenames.Praisebyname,criticizebycategory.[laughter]Enforced.
WB:TherewererulesonEurothatgotbrokenbyGermansandFrench.
CM:Investmentbankershelpedthempreparephonyfinancialstatements.Notexactlynovel.
Investmentbankeraidedfraud.
WB:Euroneedssomechanges,anditwillgoindirectionofmorecohesionorless,butinpresentformit
wontwork.CM?ImnotsurewhyImgivingyouanothershot[laughter]
CM:IthinkIveoffendedenoughpeople[laughter]
WB:Thereare1or2inthebalcony.[laughter]
Q50:GR:SellGeicothroughautodealers?
WB:Nothistoricallyagreatchannel.Itislowcostdelivery.Mayhavetocompensatedealers?Idoubt
wedoanythingalongthoselines,Ithinkbothwilldobetterrunasindependentbusinesses.CMandI
haveseenalot.
CM:Iagree,averydumbideaandwerenotgoingtodoit.
Q51:Station6.Overvaluedstockmarket.Silver?
WB:Idontfollowitanymore.Atonetimeweowned100mounces.Iknowafairbitaboutsupplyand
demand.Haventpaidattentiontoit.
CM:Andthatsagoodthing.Wedidntdosowell.
WB:Itisabyproduct,sodoesntrespondasmuchtoownsupplyanddemand,butmoretothehost
products.WecameoutbetterthanHuntbrothers.Wedontthinkaboutsilveranymore.
Q52:ARS:Activism.Gettingworseorbetter?Therewillbeatimewhenyouwontbeheretoman
store
WB:Irejectsuchdefeatism.[laughter]
Q53:GW:AndshouldBerkshirebebrokenup?Whatpremium?

WB:Somelistsomesubsidiaryfor20x.Therearebenefitsfromsamecorporatetaxreturn.Ithink
unlikelythatanylongtermthatvalueofpartswillbegreaterthanwhole.Bestdefenseagainstactivism
isperformance,butsomuchmoneypouringintoactivism,ithasbeensuccessful,institutionalmoney
startsflowing,andIwouldsaypeoplearereallyreaching.TypesofcompaniesIthinkreallyreaching.
Ifyouaretalkingaboutmysharesgettingdispensedovertenyears.IthinkBerkshiremarketvaluewill
besogreatalltheactivistswontbeabletodomuchaboutit.Berkshirewillbeverylargeorganization
in1020yrs.
CM:Buffettsupervotingpower.
WB:Itell[otherCEOs]tosendthemtome,wearetheplacetodumptheiractivists.[laughter]
CM:Inolddaysstockstradedforwaybelowintrinsic,butnowsayingbuybackwhenstocksare
overvalued.
WB:Simpledecisiononlyrepurchaseifneedsofbusinesscompleteandstocksellingforlessthan
worth.Ifpartnerwantstoselltoyouat120%ofvalueyoudsayno,and80%yes.Butitisasillyand
contorteddiscussion.Ifyoulookathistoryofsharerepurchases,fallsofflikecrazywhencheap.Wewill
buyitbackbushelloadat120%ofbook.Wewontdoitat200%.Manybuystockregardlessofprice,
theydontseemtowanttostop.
CM:Icertainlyagreewithyou.Idontthinkitisagreatage,ageofactivism.Hardformetothinkof
anyactivistsIwanttomarryintofamily.
WB:Ibetterstopbeforehenamesnames.[laughter]
Q54:Station6:Americanexpress,1in10withCostco.Restrictiononinterchangefees,andmobile,and
doesntmarket.HowdoesAmericanExpressdefendmoat?
WB:Theyvebeengood,particularlyunderKenChennault.Paymentsunderattack.AmericanExpress
isspecialcompany,guidingittodifferentmarkets.Debitcards.Alotofloyalty.Aproprietarycardis
betterthanothercard.BetternottogetintoitwithCostcodirectornexttome.
CM:Ilikeditbetterwhentheyhadlesscompetition.
WB:Itwassuccessfulstock,butmanydidntpayattentionin1963.Firstexpresscompany,thenmoved
totravelerschecks,thencreditcardssohadatravelandentertainmentcard,priceditat$3,AmEx
priceditat$5,andbrandgotbetter,cardlookedbetteratthedinnertable.Imdelightedweown15%
ofcompany.
Q55:Station7.SouthKorea.Investments,theydontknowhowtosavemoney.SouthAmericanschools
forteachingfinancetochildren?
WB:Charlie,anycomment?
CM:Ifailedinthisactivitywithsomeofmyrelatives.Ifyoudontknowhowtosave,Icanthelpyou.

WB:Habitsmakeenormousdifference.Isntthereasaying,Chainsaretoolighttobefeltuntiltoo
heavytobreak.MillionairesClub,Ithinkhavingaprettygoodeffect.Inafewdayswellhave8
finaliststhathavedevelopedbusinessesoftheirown.Encouraginggoodhabitswithkidsandmoneycan
changetheirlives.Iwas$9,000aheadwhenIgotoutofcollege,andwehadkidsquicklyIhadhead
start.IthinksecretMillionairesClubgreatwaytoteachlesson.
Q56:Station8.GenoaItaly.Whatisrightlevelforliability?Canyouusecashtoreduceliabilitieson
balancesheet?Ifunwindingputs,wouldyouunwindthem?
WB:Onequityputs?Excesscash,cashbeyond$20bil.Wewanttobuybusinesses.Wewillgetcalls
andputmoneytowork.Ifsomeonehadtoldus2yearsagothateuroratessocheap,balancesheet
mighthavebeendifferentbutwedontwanttodropourstandardsbecauseliabilitiessidesolow.
Unlikelywithcontractswehave,andIthinkverylikelytheyrunoutovertime.Wecarry$4bilagainstit
andnowisworth$400m.WewontdeleverageBerkshire.Thefloatisreallyessentiallycloseto
permanent.Couldgoupanddownabit.Logicallyweshouldtakeonmoredebtattheseprices.Ifwe
findbigdeal,maybemoredebt.
CM:Wedlovetofeelcapitalconstrained,thathasnthappenedinalongtime.Tostretchalittle,that
wouldbeglorious.
Q57:Station9.Shanghai.Israteofreturnhighwithdealers?Dealershipsdifferentinchina?
WB:IwouldsayIdontthinkwellgetsignificantbenefitsofscaleformoreunitsinautos,whatwe
reallyneedismanagersintheindividualdealershipswithskiningameandrunfirstclassbusinesses.I
dontknowChinaside.
CM:IdontthinkwedbegoodrunningdealershipsinChina,andwereverygoodhere.
WB:17,000dealers,wehave81ofthem.Multiplesprobablytickingup.Wewillusethatpriceas
yardstick.Wemaybuyalot,wemaybuyveryfewdependsonprice.Ifprofitsaregood,wewantto
paylowermultiple.Rather1012xmultipleofbadyear.
Q58:Station10.ShanghaiChina.Wealthmanagement.NOAH?Whatissecrettosayingsoyoung?
Pleasedontsaycoke.Doyouunderstandinternet?
CM:Warrenisabiginternetusercomparedtome.
WB:Iloveit.Iusesearch.Playbridge.Hugechangeinmylife.IfIhadtogiveupplaneorinternet,Id
giveupplanethantheinternet.Internetcosts$10permonth,planecostsme$1.5m.
CM:Interesting.
WB:Charliesgivingupboth.

CM:Internetisgrowinginimportance.Likeitornotdraggedintomodernreality.Idontlike
multitasking.Theideaofmultitaskingmywaytogloryisnotmything.Youngerpeoplepronetouseit.
AtBerkshirewehave3internsnotpayingforone.
WB:Internetchangedbusiness,GEICOespecially.PessimisticaboutAmerica,andhowdramatically
Internethaschangedthings,Ithinkworldimproved.
CM:IfIhadyourpartnerIdthinkitwasimprovedtoo.
Q59:Station11.WhitneyTilson.Iapplaudyourpoliticalengagementrisingincomeinequality.
Campaigntoraiseminimumwage?Raisewage?Profitability?
WB:IncomeinequalityisextraordinaryinUS,seehowfarwehavegone.Sincebornin1930,GDPup
6:1,andparentsthoughtreasonablygoodeconomythen.Iftheyhadknown$8kto$54kintodays
dollar.Itisahugefactor.Everyonethatiswillingtowork,shouldhavereasonablydecentlivelihoodin
countryinUS.Howthatisbestachieved,Ihavenothingagainstminimumwage,buttodosowouldcost
alotofjobs.IthinkIllwritesomethingsoon.IfanyoneIhaventmademadyet,theyllbethenextone.
CM:ThatwasaDemocrat,andheresaRepublican.Iagreewithit.Raiseitalotandhurtthepoor.
Bettertomakeearnedincomecreditbetter.
Q60:Station1.LongIsland.Goodcollegecost$60kormore.HowwillaverageAmericanfamilypayin
future.
CM:AverageAmericanfamilygoestolessexpensiveplacesgettingmassivesubsidies.Mostarepaying
lessorgettingsubsidies.ButIthinkproblemthateducationcontinuestoraisetheprice.Butcollege
educateddobetterbutmaybetheywerebetterbeforetheywenttocollege?
WB:Oneofsillieststatistics,twouniverses.Whataboutthedifferencesbetweenthepools?
CM:Hesitationofrelyingonfellowman.Bigtendencytoraisepricetowhatcanbeborne,andthatis
terrible.Manyofthepeoplewouldntlearnmuchfromanything.Ithinkalotwrong.Whengreat
recessioncame,everyAmericanuniversitylaidoffpeople,andthentheyworkedbetter.Idontthink
collegeinAmericaitisrealproblemonstickershock.Figureoutyourbestoption,andlivewithit.We
cantchangeVillanova,aslongasitworkstheywillraiseprices.
WB:Anditwillkeepworking.
CM:LittleaccidentswerecostingsomuchinLA,autoinsurancecouldntafford.Theyputtheplaintiffs
attorneystotrialeverytime.
Q61:Station2.Chinaundergoingstructuralchanges.Anyadvice?
WB:IthinkChinawilldoveryfineoverperiodoftime.
CM:ImabigfanofwhatishappeninginChina.IjustorderedabustofLeeKuanYewcontributedto
stoppingcorruption,andChinadoingsomeofsamesmartestthingIveseen.Hardtoberunby

kleptocrats.Leepaidmoreandrecruitedbettersystem.Chinaiswidelycopyinghim.Imveryhighon
whatishappeninginChina.Ithinklikelytowork.Theyveactuallyshotafewpeople.Thatreallygets
peoplesattention.[laughter]
WB:Nowweregettingsomepracticaladvice![laughter]Strikesmeastotallymiraculous,sofarso
fast.
CM:Neverhappenedsofastinhistory.80%illiteratewhenIwasaboy.IgiveCommunistPartycredit
forcopyingLeeKuanYew.ThatisallBerkshiredoesiscopytherightpeople.
WB:in1790,Chinahad290mpeople,wehad4mil.Theyhadhardworkingpeople.NowUShas25%of
GDP,andChinadidntgoanyplace.Thosesamepeopleinfortyyearsnotsmarter,justlookwhathas
beenaccomplished.Wefoundsystemthatunleashedpotentialacouplehundredyearsago,andthey
foundit40yearsago.Amazingtohavepeoplegonowhereintheirlives,andsamehumanbeings,and
foundwaytounlockpotentialIcongratulatethem.ChinaandUSwillbesuperpowers,itisgoodforus
thatChinesehavefoundwaytounlockpotential.Inthisworld,theyneedtofindvirtuesineachother
ratherthantheflaws.Wearebothbetteroffiftheotheronedoingwell.
Q62.Station3.SanFrancisco.Fiftyyearsagohowdidyoufigureoutoperationalmetricswhereyou
didnthaveexperience?
WB:Wedidnthaveitthoughtoutthatwellatthattime.Welookedforcompanieswherewecould
understandfuture.Weneededfeelforit.Knowlimitations.Westayedawayfromalotofthings.
Pricesweredifferent,sodecisionswereeasier.Noplanningsessions.Keptreadingandthinking.In
thosedayscapitalconstrained,measuringsomethingyouholdagainstwhathascomealong.Wealways
leanedtocertainresultsversushopeful.
CM:Thatisexactlywhatwedid.Partofitwassplendidpeople,butwewerealsolucky.Notevery20
yearoldwasknockingondoorsseekingwisdom.Werecommendyoumakingluck.Andnothing
increaseswisdomlikegettingyournosewhacked.Wethoughtweknewdepartmentstoresandtrading
stampsanditsharpensyourdistinctions.Ifenjoyingwhatyouaredoing,betterthangoingtoworkwith
teethclenched.
CM:Wecamefromfamilieswithstrongpeople,andwewereadvantagedbythefamilieswecame
from.
WB:Youstillhaveyourdadsbriefcase?
CM:Yes,butIdontknowwhereitis.Wornout.
WB:IhavemyDadsdeskfrom75yearsago.
Q63:Station5.Iwalkamonggiants.Howwereyouabletopersuadeyourearlyinvestorstogetover
theirfears?
CM:Wedidntdoverywelluntilwehadawinningrecord.

Q63,cont:90%graham10%fisher,still?
WB:Iwastwentyandsellingstocks,actedlikeIwassixteenandlookedlikeIwastwelve.Myaunt,my
fatherinlaw,myroommatefromcollege.Myfatherinlawgavemeeverythingtheyhad.TheyknewI
haddonereasonablywell,Ihadbeeninvesting56years.Ihad$175katage26sotheygavemetheir
money.BenGrahamwindinguppartnership,recommendedme.DoctorfamilycalledandthatshowI
metCharlie.Recordlateronofpartnershipattractedmoney.Westartedwith$105k.
CM:Ofcoursethatisthewayyoustart.ThepeoplethatfollowtheGrahamNewmanpath,theyhave
alldonewell.Ifyouavoidbeingaperfectidiot,anddoitdayafterdayitsamazinghowwellitworks.
WB:Manyaskedwhatbuying,IwonttellyouwhatImdoing.Itwasntplannedout.ImetCharlieand
saidbeingalawyerisokashabitbutlousybusiness.
Q64:Station6.ArthurfromLA.Whatmatterstoyoumostandwhy?
WB:Whatmatterstoyoumost?
CM:Well,IthinkIhaveanunfortunatechannelingdevice.Iwasbetterfiguringthingsout,Iwasnever
goingtobeanactororathlete.Maindutytobecomeasrationalasyoucanbe.JudgeMunger
worshippedrationality.Ithinkitismoralduty.ItisreasonIlikeConfucius.Berkshiresortofatempleof
rationality.Whatisadmiredispeoplewhoseeitthewayitis.Thatgoesbeyondatechnique,forme
thatisamoralprinciple.Ifyouhaveignoranceanddontremoveit,Ithinkitisdishonorable.Tostay
stupiderthanyouneedtobe.Youhavetobegeneroustoo,wearesocialpeopleandtiedtoeach
other.
WB:WhatmatterstomemostisthatBerkshiredoeswell.1milpeopleinvolvedwithus.Ican
rationalizetheactivity.IwouldnotbehappyifBerkshireweredoingpoorly.ButifIfeltwewerent
buildingsomethingbettereveryyearIwouldntbehappy.Thatishappy
CM:Wehatelosingsomeoneelsesmoney.
WB:IhatelosingatBerkshire.IfIdosomethingwhichcostsBerkshirelongtermvalue,Idonotlikelife
thatday.
CM:Thegooddoctordoesntlikeitwhenpatientdiesontableeither.Notanewthought.[laughter]
Q65:Station7.Denmark.WhatanswertomostintelligentquestionIcouldaskyourightnow?
CM:Idontthinkitisaverygoodquestion.Youareaskingtoomuchofsomeone.
WB:Idonthavesuccessinanswering.
Q66:Brooklyn.Whysuccesswithsmallcapital,whattodotoimprove?
WB:Ihadgreatteacher.Ihadexceptionalfocus.Rightemotionalqualities.Ienjoyedthegame.You
giveitallbackintheend.Gamewasfun.GeneMcCarthyitsjusthardenoughtobeinteresting,but

notbeyondcapabilities.Itactuallyisprettyeasygame,requirescertainemotionalstability.Iwas
enjoyingwhenIdidit.Betweenage7and19,Ihadsameenthusiasm,butnoguidingprinciple.Thenhit
intelligentinvestor,andBenjaminGraham,andnowIhadphilosophy.Gamebecameevenmorefun.
Notmorecomplicatedthanthat.
CM:Donthaveanythingtoadd.Easygameifhavetemperamentandhelikesit.Ihaveproblem.I
dontlikebeinganexampletopeople,ifyouamassafortuneinlifeforbeingshrewderandbuying
piecesofpaper.Shrewdinpickingstocks.RunningBerkshirefarmorefunthanrunningthepartnership.
Hopeyoullmorphintodoingsomethingmore.
Q67:Station9.Massachusetts.OldWallStreetJournal.Someunrealizedcompetitiveadvantages?
WB:DowJoneswhichownedtheWSJinthe1960sand1970s,theyownedthefield.Theyhadnews
ticker,theJournal,startingwiththat,financewasgrowthindustry.Chainofsmallnewspaperstotally
missedwhatwasgoingtohappen.MichaelBloombergtookawayfanaticalinformation.Theydidntsee
variousopportunities.Afamilyownedit,alawyercontrolledthefamilysbehavior,andtheywere
gettingdividends,noonewithimagination.Theylettheworldpassthemby.Rupertchangingthe
newspaper,hesgoneintocompetitionwithNYT.
CM:Theydidendupwith$67bildollars.
WB:IfTomMurphyhadhadthehand,hundredsofbillions.
CM:MurphymorelikemethanBillGates.
WB:Idliketobuyintothatretroactively.Its3:30pmandwellstarttheannualmeetinginafew
minutes.

END

NotescourtesyofPeterBoodell.EditscourtesyofPatrickTodd,AnalystatHardingLoevner,locatedinBridgewater,NJ.Please
addressanycommentsorconcernsaboutthisdocumenttopeter@boodellco.com.Ofnote,norecordingdeviceswereusedto
createthesenotes.Assuch,theyshouldnotbereliedupon.Petershighschooltypingteacher,Mr.Eagle(mayherestin
peace),deserveswhatevercredit,ifany,isdue.