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At the general meeting of the Berkshire Hathaway holding company, CEO Warren Buffett repeatedly talked mea culpa about some recent decisions, such as the sale of Apple stock or the timing to ditch all aviation stocks.
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Even the best known and biggest investor guru can sometimes be wrong. This is evident from the surprisingly many apologies that 90-year-old Warren Buffett made during the general meeting of his Berkshire Hathaway holding company
Saturday evening. It did not take place at the headquarters in Omaha in the state of Nebraska, but in Los Angeles, California. Buffett’s 97-year-old companion Charlie Munger, living in California, refused to come to Omaha, while Buffett insisted on having his comrade and business associate at his side to answer the many questions from shareholders. They had to make it virtual for the second year in a row. The digital jamboree became broadcast live via Yahoo Finance. You can watch the event again.
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“The sale of a large portion of Apple stock last year may have been a mistake,” admitted the super investor. Which also Munger agreed. The latter disagreed with Buffett’s decision to reduce its stake in the world’s largest electronics giant. “He also let me know in his usual discreet way,” Buffett joked. He also said that in the decades they’ve worked together, he and Charlie have never had a fight. Berkshire Hathaway sold Apple shares for $ 11 billion last year, but the iPhone maker remains by far the holding’s largest holding at $ 111 billion.
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Bad timing?
Buffet and Munger were also frequently asked why Berkshire did not take advantage of the stock market crash in March last year to put the $ 145.4 billion cash mountain to work. He sold more shares than he bought there and made no major investments other than a purchase of natural gas assets. And why all aviation stocks were dumped at just about the worst possible time. After the sale, Delta Air Lines and Southwest Airlines recovered by nearly 50 percent.
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“I don’t consider this a big moment in Berkshire Hathaway history,” Buffett said. “The US economy has recovered faster and better than anyone could ever imagine, thanks to stimulus from the government and the Federal Reserve. But it would have been difficult for the airlines to get government assistance if a wealthy investor was a major shareholder. By the way, I wouldn’t invest in it again, given the continuing restrictions on travel. ‘
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It is wrong to think that asset managers can always predict the bottom of the market perfectly.
Charlie Munger
Vice Chairman Berkshire Hathaway
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“It is wrong to think that asset managers can always predict the bottom of the market perfectly,” Munger added.
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Buffett also had to take the plunge as to why the ‘Haven’ alliance with bank JP Morgan Chase and internet giant Amazon in health insurance failed. ‘Together we tried to tackle the bookworm that causes the high cost of the American health care system. But changing an industry with so many stakeholders that represents a significant portion of GDP is not that easy. We fought the bookworm, but the bookworm won. ‘
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Insurances
Ajit Jain, who heads Berkshire’s major insurance arm, also admitted making mistakes. ‘Our car insurance company Geico missed the telematics bus to better track drivers and reward them for good handling. Now we have woken up and we will let telematics play a major role in machining policies to the risks of drivers. ‘
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However, Buffett and Munger not only hit mea culpas, but reminded the public that most of Berkshire’s pennies are well invested. This was evident from the quarterly figures which the holding company released before the meeting. Operating profit rose 20 percent.
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Casino
The stock market has become a casino for some.
Warren Buffett
Chairman Berkshire Hathaway
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The eminent stock market watchers also commented on the current situation on the markets. Buffett is concerned about the gambling behavior of many investors. ‘The stock market has become a casino for some. You can see that in the sharp increase in day trading. It creates its own reality for a while until it blows itself up. ‘
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Buffett also questions the success of SPACS (Special Purpose Acquisition Companies), stock market shells that raise money from the general public to subsequently buy companies. The investors buy those SPACS without knowing what will be in it. “That success will not last,” said the billionaire.
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Munger lashed out at the climb of crypto coins. ‘There is nothing behind that. I don’t understand that professionals let retail investors buy those things, because those people just follow their natural instinct to gamble. That’s like fluttering a red flag just in front of the bull, ‘he warned.
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Record
Berkshire Hathaway shareholders should not complain. The share has already risen 19 percent this year and is around a record. With that, Buffett beats the S & P500 index, which has gained 11 percent since New Year. Last year, Buffett underperformed the broad market.
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Neither did a word about the succession at the top of Berkshire. At one point Munger did mention that manager Greg Abel is suitable to maintain the culture of the holding company. Most observers tip Abel as Buffett’s successor. Ajit Jain are given fewer opportunities. The latter appeared very nervous during his interventions at the general meeting.
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