2016 Berkshire Hathaway Annual Meeting (Full Version)

Good morning. I'm Warren Buffett. This is Charlie Munger.

I'm the young one, and you may notice in the movie, incidentally, that Charlie is always the one that gets the girl. He has one explanation for that, but I think mine is more accurate: that, as you know, every mother in this country tells her daughter at an early age, if you're choosing between two very old and very rich guys, pick the one that's older.

[Applause] I'd especially, uh, we're webcasting this for the first time, so I'd especially like to welcome our visitors, uh, from all over the world. We're having, uh, this meeting simultaneously, uh, translated into Mandarin and that poses certain problems for me and Charlie, because I'm not sure how sensible all our comments, uh, will come out once translated into Mandarin. In fact, I'm not so sure how sensible they come out initially sometimes, but, uh, we're delighted to have people around the world joining us.

Now, the drill today is that, uh, I'll make a couple of introductions, and we'll show a couple of slides, and then we'll go on to, uh, questions from both our two panels and from the audience. We'll rotate them, and, uh, we'll do that until about noon. Actually, about a quarter of 12, I'll give you a rundown on a bet that was made that we report on every year, but then also, in connection with that, uh, explain — and it ties in with it — what I really think is probably the most important investment lesson, uh, in the world.

So, uh, we'll have that about a quarter of 12, and I hope that keeps you around. Then, uh, we'll break at noon for an hour for lunch. We'll reconvene at one o'clock. We'll proceed until 3:30 with questions. We'll then adjourn for 15 minutes, and at 3:45, convene the formal meeting.

I'd like to just make a couple of introductions. I hope Carrie Silva is here. Do we have a spotlight? Carrie puts this whole meeting together. There she is: Wonder Woman!

[Applause] Carrie joined us as a receptionist about six years ago, and I just kept throwing more and more problems at her. She put together the 50th anniversary book, which we've, uh, actually expanded further this year. We have a revised edition. Charlie and I autographed 100 of them, and we interspersed them among the group being sold.

And Carrie, while doing that, she also had a young baby girl, her second baby, late in January, but then she's gone ahead to put on this whole annual meeting. It's a remarkable achievement, and I really want to thank her. It's been terrific.

[Applause] Actually, uh, we have one surprise guest. I think my youngest great-grandchild will be about seven months old, is also here today, and, uh, if he happens to break out crying a lot, don't let it bother you. It's just his mother's explaining to him my views on inherited wealth.

We, uh, we also have our directors with us, and they're here in the front row. I'll introduce them if they'll stand when introduced. Withhold your applause no matter what, how extreme the urge to applaud them individually. And, uh, when we finished, uh, then you can go wild.

Uh, first of all, Howard Buffett, first of all, Howard Buffett, Steve Burke, Sue Decker, Bill Gates, Sandy Otisman, Charlotte Guyman, Tom Murphy, Ron Olson, Walter Scott, and Merle Whitmer, and that's our wonderful group.

[Applause] Now, we just have two slides to show you. Now the first one is a preliminary summary figures for the first quarter, and you'll notice that insurance, uh, underwriting — these are after-tax figures by category — are down somewhat. The basic underwriting at Geico is actually improving, but we had some important hail storms in Texas toward the end of the quarter.

We've actually had some since the end of the quarter too, so there were more cat losses in the first quarter than last year, and the railroad earnings are down significantly. Railroad car loadings throughout the industry — all of the major railroads were down significantly in the first quarter and probably will continue to be down. Almost certainly will continue to be down the balance of the year.

We have two companies which we added to the manufacturing service and retailing field: Precision Cash...