Warren Buffett: MAJOR Updates from the Berkshire Hathaway Shareholders Meeting 2023

Well, we made it everyone! I'm here in Omaha with Hamish, and just a few days ago we were lucky enough to go to the Berkshire Hathaway annual shareholders meeting to get all the latest news from the man himself, Mr. Warren Buffett. And of course, the real king, Charles—that being Charles T. Munger. The meeting went for about six hours, and Warren and Charlie pretty much discussed everything you could possibly think of—from the state of the economy, the bank stocks, money printing, to investing in China, AI, Apple, TSMC, Activision Blizzard, and a whole lot more.

Before we get stuck into the juiciest bits of the meeting, I just wanted to say, really, a massive thank you to everybody that came up and said hello to myself and Hamish. We had an absolute blast meeting all of you guys and just hanging out, talking stocks. I had a really, really good time. Other things to note: I got to hang out again with Matt Peterson at a barbecue he hosted, and that was really, really cool. I finally met Guy Spier in person as well; I went to a dinner that he hosted, which was epic. And if all that wasn't already crazy enough, I even got to hang out and have a solid chat with the man himself, Monish, standing in the line before the meeting. Holy smokes, it was awesome!

All right, with that said, we've got a lot to cover in this video. So, Warren and Charlie covered a lot of topics in the meeting, way more than I can get to in this video, but I'm going to do my best to cover as many topics as possible. So be sure to check the chapters down in the description in case there’s a specific topic you're particularly interested in hearing about. But with that said, let's start with the stock that we are all very familiar with, and that being Apple.

More specifically, Warren addressing the concern that Apple is now around 39% of the Berkshire Hathaway equity portfolio. Apple is now 35% of Berkshire's portfolio and thinks that that is near a danger zone. Wonders if Warren and Charlie can comment. I'll leave them in one comment first, but Charlie will come up with it.

"Yeah," [Laughter] "but Apple is not 35 percent of Berkshire's portfolio. Purchase portfolio includes the railroad, the energy business, Garanimals, you name it. See's Candy—they're all businesses. And to think that our criterion for Apple is different than the other businesses we own, it just happens to be a better business than any we own, and we put a fair amount of money in it. But we haven't got more money in it than we've got in the railroad. Our railroad is a very good business; it's not remotely as good as Apple's business."

Warren raises a really good point there: that really, Berkshire itself is just one huge portfolio of businesses, of which Apple forms a part. Remember, they started in 1965 as just a textile manufacturer, and then over time they progressively bought businesses to add under their umbrella. The equity portfolio of Berkshire Hathaway is really just the collection of businesses that they have partial ownership of instead of total ownership because, of course, if they buy it outright, it just gets absorbed into the company.

So, in reality, Apple is not 39% of the Berkshire portfolio; it's actually a lot less when you consider the insurance business and the railroad business—Berkshire Hathaway Energy, that sort of thing. But one other thing to think about, and this is what Charlie talks about in this next clip, is, you know, if you do just look at this as a stock portfolio, is it really a problem if Apple makes up 30, 40, 50%?

"Things that's taught in modern university education is that vast diversification is absolutely mandatory in investing in common stocks. That is an insane idea! It's not that easy to have a vast plethora of good opportunities that are easily identified, and if you've only got three, I'd rather be in my best ideas instead of my worst. But if you know the edge of your own ability pretty well, you should ignore most of the notions of our experts about what I call diversification of portfolios."

This has always been more on Charlie's perspective, and it just makes logical sense. Now, I'm not saying don't diversify, but if you have one investment that is clearly a better option, you should, of course, be putting more into that one and less into the others. You know, say you've got two companies that look equally cheap. If one's growing way faster, it's cashed up, has no debt, has a big fat moat, are you going to put half of your money in each stock? Probably not.

However, with that said, I do just want to clarify that this notion of less diversification doesn't mean you should simply hold one stock in your portfolio. There are, of course, valid reasons to diversify. For example, to ensure unknown unknowns don't just come in and destroy your portfolio. But what Charlie is really saying is, you know, why would you put money into your 20th best idea when you could just put more money into your best one?

All right, that was everything said on Apple and the concentration of the Berkshire portfolio. Next up, after we thank our sponsors, Seeking Alpha, let's hear Warren Buffett's explanation of what was one of the strangest moves in Berkshire's portfolio we've seen in a very, very long time—that being the huge buy and then the sudden sell of Taiwan Semiconductor.

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"Taiwan Semiconductor is one of the best-managed companies and important companies in the world, and I think you’ll be able to say the same thing 5, 10, or 20 years from now. I don't like its location, and I have reevaluated that. I feel better about the capital that we've got deployed in Japan than in Taiwan. I wish it weren't so, but I think that's a reality, and I've reevaluated that in the light of certain things that were going on."

"Charlie, my view is that we're not to feel comfortable if he wants to put that in the minutes."

So there you go—confirmation that Buffett's 180 on TSMC was a result of the tensions between China and Taiwan. And this is what we were guessing considering, you know, TSMC is a really solid business. It’s not usual behavior from Buffett to just leave great positions immediately, but of course, it's good to actually hear it now from the man himself.

And while we're here, there was actually further discussion from Warren and Charlie around the geopolitical tensions with China, so let's take a listen.

"There's been some tension in the economic relationship of the United States and China. I think that tension has been wrongly created on both sides. I think we're equally guilty of being stupid. There's one thing we should do: let's get along with China, and we should have a lot of free trade with China in our mutual interest. It's just so obvious. Everything that increases the tension between the two companies is stupid—stupid! And I'll be stopped on each side, and each side ought to respond to the other side's stupidity with reciprocal kindness—that’s my view."

Charlie Munger has always been at the viewpoint that the US and China are far better off as friends than enemies, and I think his reasoning makes sense. You know, if the two biggest superpowers work together, then there would be incredible stability in the world. The two powers would continue to grow even faster, some might argue, because they would end up helping each other out. But also, there would likely be a long period of relative peace in the world as nobody would even think about upsetting the united forces of, say, China and the US.

Although, as Warren is about to explain, usually self-interest and competition ultimately get in the way of this happening, and it creates one enormous problem, of course, which is that you have the two superpowers of the world and they know they have to go along with each other. Either one can destroy the other, and they're going to be competitive with each other. But part of it always, in a game like that, is trying to judge how far you can push the other guy without them reacting.

You know, if either side is a bully in some ways, they can get away with it to an extent because the alternative would drive them both into destruction. So, it’s one of those game theory dilemmas, keeping haters aside from trying to play the game too hard and thinking the other side will go along. You know, it's like playing chicken and driving toward a cliff.

So, clearly Warren feels uncomfortable with the ongoing poking and prodding between the US and China. So following his rule number one of investing—which is don't lose money—he's just decided to keep his cash away from that entire region.

Okay, moving on to another Berkshire stock Buffett spoke about at the meeting: we get to Activision Blizzard. Of course, as per their last 13F filing, Buffett still holds a considerable stake in Activision Blizzard. However, since that last release, we've seen big news in the space, and that is, of course, that the British regulators in late April moved to block the merger. This comes on the back of the FTC moving to do the exact same thing late last year.

Since the UK regulator has blocked its acquisition by Microsoft, has Berkshire reduced or sold its stake?

"Well, I think in terms of what we do with stocks, we don't give information except one required to which is in the 13F filings. I would say this: I think Microsoft has been remarkably willing to cooperate with governing bodies. I mean, they want to do the deal, and they've met the opposition that seems to me more than halfway. But that doesn't mean that it gets done. If, if a given country, in this case, the UK, wants to block it, they're in a better position to block it than the United States. But just the way the world works, that doesn't get solved by offering more money or so. I don't know how it turns out, but if it doesn't go through, I don't think it's due to any shortcoming by either Microsoft or Activision. Not everything that should happen, does happen."

"What we do will depend on a lot of things."

"Charlie?"

"Well, I think…well, you kissed that one off beautifully."

So how do you know exactly what Buffett has done with the position from this clip? Personally, the vibe I got from hearing it live with everybody around is that they probably sold, particularly because he hinted to look at the 10-Q. If you do that, it shows that Berkshire sold nine billion dollars worth of securities in the quarter, and the Activision stake is only worth around four billion. So it is certainly possible that they've sold out, but we just won't be sure for about another week or so until that 13F comes out.

You can definitely hear Warren's frustration in that clip though, particularly as both Microsoft and Activision have just done so much to appease the regulators. But as he says, not everything that should happen does happen.

Okay, so that was Warren Buffett's thoughts on Activision Blizzard. Next up, let's hear Warren and Charlie's thoughts on a topic that's really swept through the investing community over the last six months or so—that is, of course, artificial intelligence.

"I'm personally skeptical of some of the hype that has gone into artificial intelligence. I think old-fashioned intelligence works pretty well. There won’t be—there won’t be anything in AI that replaces the…um, state that unqualifiedly they can do amazing things. Bill Gates brought me out of the latest—maybe not the latest version, but one he thought maybe I could handle, which I have to be careful with in terms of leading me too fast—and it did these remarkable things. And when something can do all kinds of things, I get a little bit worried because I know we won't be able to uninvent it. And, you know, we did invent, for very good reason, the atom bomb in World War II, and it was, you know, it was enormously important that we did so. But is it good for the next 200 years of the world with AI? It can change everything in the world, accept it all men think and behave, and that's a big step to take. It's a good question, and it's the best answer we can give.”

So some general concerns for Warren and Charlie, but I think the main takeaway here is that it doesn’t look like AI will ever play into their investing at all. And that's because, as Warren Buffett was discussing, the one thing that AI will never do is change the way humans react—which is obviously the main driver of stock movements and general market volatility. So it seems his view is that it’s unlikely to have a big impact on what they do, although he does see some concerns in the future.

Also, one anecdote I have about AI from the weekend is that I was actually talking to Monish in the line for the meeting, and he had actually just sat down with Bill Gates the night before for dinner. He was saying Bill is convinced that Google won't close the gap in AI to what Microsoft is already doing with OpenAI and ChatGPT, which I thought was really quite interesting. You can't read too much into that, but I just thought it was an interesting anecdote.

Anyway, with that said, I've got one more clip for you guys. This is more of a fun one, and this is Warren and Charlie's thoughts on Elon Musk.

"Well, yes, I think Elon Musk overestimates himself, but he is very talented. So, he's over—it's a meeting with somebody who doesn't need to overestimate to be very talented. He would not have achieved what he has in life if he hadn't tried for unreasonably extreme objectives. He likes taking on the impossible job and doing it. We're different. Iowa and I are looking for the easy job that we can identify. If we can do it playing Tic-Tac-Toe, we'll do it, you know? I mean, we have a totally different way of going into the hall.

Yeah, but we don't want to compete with Elon on a lot of things. I mean, you know, we don't want that much failure. It takes over your life in a way that it just doesn't fit us. But, you know, there are going to be—well, there have been important things done by Elon already, and it requires…fanaticism isn't the word. Yeah, it is the word. Okay, well, it isn't quite the word, but yeah, but it's a dedication to solving the impossible. And every now and then they'll do it, and it would be torturous to Mayor Charlie."

I find this clip really interesting because for so long, the media have really just tried to hype up some sort of beef between Elon and Charlie and Warren. But I think this clip kind of lays that to rest. There's definitely a huge amount of respect towards Elon from Warren and Charlie. All they're really saying is that the way that they run companies is just a lot different from the way that Elon does. They don’t like taking big risks, whereas Elon definitely does take big risks.

But anyway, guys, they were my main takeaways from the Berkshire meeting. Buffett also went in-depth, talking about the bank stocks, owning bank stocks, and, you know, the state of the US economy right now. But I think he spoke about that in so much detail, I'm actually going to come back later in the week and I'll make a standalone video on that topic. So make sure you subscribe to see that. But with that said, I think I'll wrap things up here. So, guys, definitely leave a like on the video if you did enjoy it. Subscribe if you’d like to see more, and I'll see you later in the week.