One of the most highly anticipated events of the year in the markets is the Berkshire Hathaway annual shareholder’s meeting in which Chairman and CEO Warren Buffett and Vice Chairman Charles Munger sit down with their investors to share Berkshire stock updates and their overall take on current market trends and health.
During the 3 ½ hour event — held in Los Angeles, CA — the “Oracle of Omaha” and his loyal side kick Charlie dove into a multitude of market related topics. Here are the key takeaways…
Buffett’s Take on Index Funds and Investment Longevity
The meeting started out with the two sitting front and center, Buffett carrying his “normalizing” box of peanut brittle and a can of Coke. The discussions began with the familiar introductions and a review of Berkshire’s earnings. After which Buffett announced he would share some investment “lessons” with the growing list of new investors that have found their way into this market.
Starting things off, Buffett and Munger praised a list of today’s 20 biggest companies, cautioning that none of the companies listed in the Top 20 of 1980 were on today’s list and warning that “The world can change in very, very dramatic ways,” recommending the comparable safety of index fund investments while also singling out the longevity of such powerhouses as: Apple, Microsoft, Amazon, Alphabet, Saudi Aramco, and Facebook.
Buffett’s Regrets
As the discussions continued, Buffett shared one of his most recent regrets which was his selling off of some of his shares in Apple last year, suggesting this move was “probably a mistake.”
In the 4th quarter of last year Buffett cut 3.7% of its Apple holdings to about 944 million shares. Talking about this move, Buffett stated that Apple stock is a “huge, huge bargain.” Adding that the part the company plays in people’s day-to-day lives is “indispensable” suggesting his belief that the tech giant isn’t going anywhere anytime soon.
Munger’s Take on D.C.
When discussing the current economic position the United States finds itself in, Vice Chair Munger stated that he thought the continuation of recent unchecked federal spending would “end in disaster.” Munger stated that he didn’t think this type of government spending was sustainable and shared that he thought the professional economists had been too confident in their analysis and the continuation of these recent moves by Washington could come back to bite us in the long run.
While on the topic of Washington, Buffett and Munger both stated their beliefs that the proposed corporate tax hikes from the Biden administration would most likely be a negative for current shareholders but the overall companies themselves would adapt to the new high tax environment. Buffett is a well-known Democrat and supporter of the Biden administration but makes a point not to get into policy issues during these types of meetings but did point out that the corporate tax rate was around 50% early in his career. A rate much higher than the proposed Biden rate as it stands.
Thoughts on Bitcoin and Robinhood
As the meeting came to an end, Buffett and Munger discussed current trending topics such as the rise of Bitcoin and recent Robinhood interest. Munger made his thoughts on Bitcoin well known, calling the digital currency, “disgusting and contrary to the interests of civilization” and calling it a currency for “kidnappers and extortionists.”
Buffett chose to stay quiet on discussions of Bitcoin but did make his thoughts known on the recent gamification of trading by Robinhood, suggesting the commission-free app was feeding off the speculative trading in the markets and merely “part of the casino group that has joined into the stock market in the last year.”
Munger was not so eloquent in his take on the trading app, stating that he thought the controversial practice called “payment for order flow” in lieu of regular commissions was “God awful” stating his distaste that it brought investments from “civilized men and decent citizens” and concluding his rant by stating his belief that the practice is “…deeply wrong” and that he and Buffett “don’t want to make our money selling things that are bad for people.”
The Wrap Up
It’s easy to see why so many traders and investors eagerly await this meeting every year as, obviously for a market minded individual, hearing the thoughts of one of the most highly respected investors in the world is a very valuable privilege. Buffett is set to return to the stage next year in Omaha for the 2022 shareholder’s meeting, but if you find yourself having a hard time waiting a full year for more valuable market info, we’ve got just the solution for you…
Join DTI founder and head trader Tom Busby below as he dives into the details of turning today’s markets into tomorrow’s profits!
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