8 Most Important Lessons from the 2022 Berkshire Hathaway Annual Meeting

Every year, 40,000 people travel to Omaha, Nebraska to listen to investing legends Warren Buffett and Charlie Munger speak. They share their thoughts on practically everything, from what they see going on in the stock market and in the economy, all the way to inflation and even Bitcoin. These question and answer sessions have become legendary and are a great opportunity to learn about investing, whether you're just starting out or manage a multi-billion dollar portfolio. These Q&A sessions typically last for five hours, but I’ve condensed it down to the 20 most important minutes that you need to see. So make sure to hit the like button because I spent hours pouring through the footage to find the best parts for you. Enjoy!

“Well, that's why—well, look what happened to Robin Hood. For its peak to its trough, wasn't that pretty obvious that something like that was going to happen? Robin Hood, when they came out and went public and alerted everybody in all the short-term gambling and big commissions and hidden kickbacks and so on and so on, it was disgusting. Yeah, and it says the last year, and they got mad at you, and they sold a bunch of their stock and they got the money. Yeah, but now it's unraveling. God, God is getting just— but a lot of the insiders have great—no, but they've gotten a lot of money from it. I mean, they were big sellers as I remember that.

Maybe, but yeah, there's been some justice. There's all kinds of people watching this that are long Bitcoin, and there's nobody that's short, and nobody—nobody wants their windpipe stepped on. I don't blame them. I don’t like people to step on my windpipe. But I would say this, that if all the people—if the people in this room owned all of the farmland in the United States and you offered me a one percent interest in it and you said, from one percent interest in all the farmland in the United States, 'Hey, it says bargain price: 25 billion dollars. I'll write you a check this afternoon. 25 billion! Now I own one percent of the farmland.' If you told me you owned one percent of the apartment houses in the United States and you offered me a one percent interest, so I'll have a one percent of all the apartment houses in the country, and you want whatever it may be for 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 I have the 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, you know, 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 if I'm trying to get rid of it, you know, people will say, 'Well, you know, why should I buy some Bitcoin from you? I mean, why don't you call it Buffett coin, you know? Make your own or somewhat 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 there's—I mean, there's all kinds of frictional 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 no money has—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 and get the equation; you can do that with a lot of things. I mean, it's been done throughout history. Certain things have value that produce something tangible. I mean, you can—you can say a great painting, you know, probably will have some value 500 years from now; 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—you can find something brave if somebody wants to sell you a pyramid or something, and you can charge the viewers, and you know it'll be around a long time and won't produce anything, but people will find it interesting to go there because I brought about the pyramids.

But basically, assets to be valued, they have to deliver something to somebody. And there's only one currency that's acceptable, and I'd say, I mean, you can come up with all kinds of things. We can put out Berkshire coins or, you know, we put out Berkshire money or anything like that, but we 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—literally, there's 2.3, just under 2.3 trillion just of these little pieces of paper floating around, some places seven thousand for every man, woman, or child in the United States. And, of course, most of them probably are 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, it's out of their mind.

I mean, so anyway, with those few deficiencies, whether it goes up or down in the next year or five years or 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. Look at the gold on Wall Street—great magic! You know, 'We are not an insurance company; we're a tech company.' Well, they're an insurance company, but a dozen people ourselves raise a lot of money. They just say, just don't pay attention to the fact that we sell insurance. We are a tech company. Well, in the end, they wrote insurance, and the government of China has worried the investors from the United States who invest in China more in recent months and years than he did in 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. I mean, dealing with the regime in China than there are in the United States. And it's different; it's a long way away, and they have their own culture and their own loyalties and so on and so on. The reason that I invested in China is I could get so much more, so much better companies at so much lower prices. And I was willing to take a little political risk to get them—to get into the better companies at lower prices. Other people might reach the opposite conclusion.

My question is on market timing. You have always said that it is impossible to time the markets, yet if we look at your track record, you have had amazing timings with some of your key decisions. You got out of the stock markets in 1969-70; you got back in 72-70 to 74 when the markets were really cheap. You did the same thing in '87, '99, 2000, and today we are sitting on a significant amount of cash when the markets are going down. My question is, how do you time the big market moves so well?

“We'd like to offer you a job.”

“First, I will take it. The interesting thing is, you know, obviously we have the faintest idea what the stock market is going to do when it opens on Monday. We never have had. We have never made—Charlie and I, I don't think in all the time we work together, and I'll tell you something later on maybe about how learning takes place, but we have—we have never, I don't think, we've ever made a decision that either one of us has either said or been thinking we should buy or sell based on what the market is going to do. No, or for that matter, on what the economy is going to do. We don't know.

And the interesting thing is, sometimes I get some credit someplace for the fact that, you know, how wonderful it was that we were optimistic in 2008, and when everybody was down on stocks and all that sort of thing, you know, we spent a big percentage of our net worth in a very dumb time. And I shouldn’t say we; it's I. We spent about 15 or 16 billion dollars, which was a lot bigger to us then than it is now. We spent, in the last few weeks, a period of three or four weeks between Wrigley and Goldman Sachs and generally at a terrible time, as it turned out. I mean, I didn’t think—I didn’t know it was going to be a good time or a bad time, but it was a really dumb time, and I wrote an article for the New York Times and ‘Buy American’ and all these things. Well, if I’d had any sense of timing and waited six months until—I think the low was in March, and in fact, I think I was on CNBC maybe that day or something, but—but I totally missed that opportunity. I totally missed, you know, in March of 2020, we—we have not been good at timing. We’ve been reasonably good at figuring out when we were getting enough for our money, and we hadn’t had no idea when we bought anything.

Well, we always hoped it would go down for a while so we could buy more, and we hoped even after we were done buying and ran out of money that if it was cheap, the company would keep buying, in effect taking our interest up. I mean, that stuff you could—you could learn it in fourth grade, but it's not what's taught in school. And I mean, so never give us any credit—well, actually give us all the credit. I mean, go out and tell everybody how smart we are, but we aren’t. We haven’t ever timed anything. We’ve never figured out insights into the economy.

When I was about 11 years old, March—March 12th, I guess, 1942, you know, at March 11th, you know, but I bought stock when the Dow was 90. It was 101 in the morning; it was 99 at the end of the day, I think. And, you know, now it’s 34,000. Or in the last couple of years, because our market is probably—it's always been a combination of a casino. And when I talk about Wall Street, I'm talking about the whole capital formation market, but the trading market, etc. But the market has been extraordinary sometimes—but it's quite investment-oriented, kind of like it always—you read about in the books and everything, what capital markets are supposed to do, and you study it in school and all that.

And other times it’s almost totally a casino, and it’s a gambling parlor. And that existed to an extraordinary degree in the last couple of years, encouraged by Wall Street because the money is in—the money has turned—is in turning over stocks. I mean, people say how wonderful you’ve done if you bought Berkshire in 1965 or something and held it, but you broke even or starved to death. I mean, it's Wall Street makes money one way or another, catching the crumbs that fall off a table of capitalism and an incredible economy that nobody could have ever dreamed of a couple hundred years ago. They don't make money unless people do things, and they get a piece of them, and they make a lot more money when people are gambling than when they're investing. I mean, it's much better to have somebody that's going to trade 20 times a day and get all excited about just like pulling the handle on the slot machine. You may not say that you want that person; you'd like the other kind of person too maybe, but that's where you make the money.

Bonds can swindle the equity investor too; everything inflation, I should say, swindles the bond investor too. It swindles a person who keeps their cash under their mattress. It swindles almost everybody. The problem, if you have a business that doesn’t take any capital, let's just say the dollar depreciates 90 or something, so things cost ten times as much. 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 say that the dollar worth one-tenth 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 them in the same place.

And I wrote an article related to that, and I will tell you a very one famous story, which you will all sympathize with. I wrote that story for Fortune, and when I finished it, it was about seven thousand words, and Fortune didn’t like publishing seven thousand words. And they had my friend Carol Willis 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. Then 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 it 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,’ over here, very disgusting behavior on my part. And then I sent it—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 was—she didn’t want to really hurt me too much, so she said, ‘Well, Warren,’ she says, ‘you don’t have to tell everything you know in this article.’ And it made—it made the point, and so I write that letter; I’d write that article shorter, and but I’d say more or less the same thing.

No, and you're better off. If you really could have a totally stable unit of a monetary use for the next hundred years, it would be better for business and investors in general. Well, it happened on a scale we’d never seen before. Those checks that were just mailed out to everybody who claimed to have a business and claimed to have employees, they probably drowned the country in money for a while. And then if you say they probably had to do it, but it was something that had never been done on that scale before. But we had a problem; we hadn’t had before. Yes, no, I'm not—I'm not saying it wasn’t a good idea. I mean, in my book, Jay Powell is a hero. I mean, it’s very simple. I mean, he did what he had to do. You know, when—if he had done nothing, it would be the—I mean, he would be very easy to engage in what you would call thumb sucking then. And plenty of—I shouldn’t say plenty, but there are other Fed chairmen that would have been sucking their thumbs, and the world would have fallen around them.

We will always have a lot of cash on hand, and when I say cash, I don’t mean commercial paper. When 2008 and 2009 financial panic came along, we didn’t own anybody’s commercial paper. Yeah, we didn’t have money market funds. We didn’t—we had treasury bills. We believe in having cash, and there have been a few times in history and will be more times in history where if you don’t have it, you know, you don’t get to play the next day. I mean, it’s like oxygen. You know, it’s there all the time, but if it disappears for a few minutes, it’s all over.

So our cash was down on March 31st because, as you saw, we spent that large sum there in that brief period during the quarter, 40 billion. We’ve committed to buy Allegheny Court for something over 11 billion, but we will always have a lot of cash. We don’t—we don’t—some of our companies have buying bank lines. I don’t know why they have the bank lines; we’re better than the banks, and we will give them the money if they need it. But, you know, the local banker’s been calling on them and they need something to do. Everybody else has bank lines, so it’s harmless, but there’s no reason for any of our subsidiaries that bank lines when Berkshire is stronger than the banks that they're.

I didn’t hear exactly; I don’t know whether that was a banker screaming or—I don’t really like to torture—I don’t like to torture anybody. I mean, but money's kind of an interesting thing. People seem to like to talk to me about it. I mean, they don’t—they don’t ask me how to dance or anything like that, but they ask about money. And so 20-1—it’s a photo of a 20 bill and it says at the top “Federal Reserve Notes.” Now, Federal Reserve—no, we’ve done all kinds of things with money in this country. It’s an amazing country, only a couple hundred years old—the number of different experiences we’ve made with banks and everything. But we finally just decided to let the Federal Reserve do the issuing of money. Down in the lower left-hand corner, it said, I think Rosie Rios, who signed this note, I think she signed more—more U.S. currency than any other person in history. So if you see Rosie, you know, you cozy up to her. I mean, this is a woman who has issued a lot of currency. But it says, 'This note is legal tender for all debts public and private,' and that makes it money.

You can go in and go to our candy store, and if you offer us enough bushels of wheat, we’ll probably give you a box of candy. But money is the only thing that the IRS is going to take from you. You can offer them paintings; you’re going to offer them all—whatever—but this is what settles debts in the United States, and I thought that you’ll hear a lot about various kinds of money. This is the only kind of money you’re going to see, in my opinion, throughout your lifetime or even throughout Charlie’s lifetime.”