2010 Berkshire Hathaway Annual Meeting (Full Version)

[Applause] Good morning. I'm Warren, he's Charlie. He can hear, I can see. We work together for that reason. I'd like to make one correction: in the movie, my fastball was filmed in slow motion. They tried it the regular way, and you couldn't even see it.

[Applause] Our approach today will be to announce a couple of things—our earnings—and introduce you to the directors. But as soon as that's through, we'll move on to questions. We'll have those until noon, we'll break for an hour, and we'll come back at one o'clock. Those of you who are in the overflow rooms may find that you can get into the main arena here at that time. We'll go until 3:30 with the questions, and then we'll have the annual business meeting for those of you who are still around at that point. At that time, we will have the election of directors.

But because not all of you may be here at that time, I would like to introduce the directors to you. I'll ask them to stand, and if you'll hold your applause until they're all done standing, or you can even hold it after that, it will make for a very orderly meeting. So let's start in with Howard Buffett. I'm the next one alphabetically: our new director Steve Burke. They didn't hear the part about staying standing, but that's okay; they're generally fairly obedient.

[Laughter] Susan Decker, Bill David Gottisman, Sandy Gottisman, Charlotte Guyman, Don Keow is unable to be with us today. He's had a serious operation, but he's recovering very well, and he's got a lot of friends in this audience. He'll be with us next year. Charlie, we've already introduced Tom Murphy, Ron Olson, the manager in our movie, and Walter Scott. Now you can go wild with applause for the girl.

[Music] [Applause] Now, before we start with the questions, we do have preliminary earnings figures for the first quarter. I'd like to ask the projectionist to put up slide A. There's nothing really very surprising in these numbers, but we'd like to give them to you. Are they up there? Okay, yeah. If you have any questions on these later on, what we're seeing in our businesses is that what was sort of a sputtering recovery a few months ago seems to have picked up steam in March and April.

So in our businesses that kind of serve broad industry, such as the railroad or Marmon or Iscar, we're seeing a pretty good uptick. It's a long way from where it was a couple of years ago, but what was very spotty in the recovery a couple of months ago, the trends really seem a fair amount stronger in the last few months. We always encourage you to focus on operating earnings.

We have the figures there for our investments in derivative businesses. We don't really think they mean anything on a quarterly basis; obviously, they're meaningful over the years. I mean, we've piled up a lot of net worth over the years with capital gains, but in any quarter, they mean absolutely nothing.

You'll notice another thing about our report: we don't even put down—we have to when we publish generally—but we don't even put on the earnings per share. We're not focused on that number in any quarter in a year; we're focused on the buildup of value. We really think that an undue focus on quarterly earnings not only is probably a bad idea for investors, but we think it's a terrible idea for managers.

If I had told our managers that we would earn three dollars and seventeen and a half cents for the quarter, you know, they might do a little fudging in order to make sure that we actually came out at that number. There was a very interesting study that was published a few months ago, where thousands of earnings reports were examined.

Instead of taking it out to the penny, which is customary in the reporting, they took it out one further digit. Of course, if you go out one further digit and it's four or less, you round downwards; and if it's five or more, you round upwards. They found out that a statistically impossible number of small number of fours showed up because if they got to four tenths of a cent...