2018 Berkshire Hathaway Annual Meeting (Full Version)

[Applause]

Hmm, good morning. [Applause] I'm Warren, he's Charlie. Charlie does most things better than I do, but, well, this one's a little tough. Charlie, maybe you can chew on that a while.

Okay, at the formal meeting that will begin at 3:45, we will elect 14 directors. Charlie and I are two of them, and I would like to introduce the other 12. I'll do it in alphabetical order. If they will stand as I announce their names—withhold your applause. It may be hard to do, but give it your best. When we get all through, then you can let loose.

We'll do this alphabetically, beginning with Greg Abel. If you'll stand and stay standing: Howard Buffett, Steve Burke, Sue Decker, Bill Gates, Sandy Otterman, Charlotte Guyman, Ajit Jain, Tom Murphy, Ron Olson, Walter Scott, and Merrill Whitmer. [Applause] [Applause] [Applause]

Uh, this morning we posted both our earnings and our 10-Q. If we can put up slide one, you can take a look at what was reported. As I warned you in the annual report, a new accounting rule was introduced at the beginning of this year, and it provides that our equity securities, whether we sell them or not, are marked to market every day.

So, we can have a gain or loss of a couple billion dollars in our equity securities portfolio on that day. According to the accounting principles now in effect, which are a change, that will be recorded as making a couple billion dollars that day or losing a couple billion. I told you that would produce some very unusual effects from quarter to quarter, and it further explains why I like to release our earnings early Saturday morning, as well as the 10-Q, to give people a chance to read through the explanation.

Because if you just were handed this with a TV monitor at 3:30 in the afternoon or whatever it might be, you would report the net earnings figure understandably very quickly. And it really is not representative of what's going on in the business at all.

So, if you look at the figure of operating earnings, which is what we look at, we actually earned a record amount for any quarter we've ever had. That includes no realized gains or losses on securities or on the few remaining derivatives we have.

Um, you might leave that slide up there just a little longer—maybe this up. The insurance underwriting—Geico had quite a good size turnaround in profitability and a good gain, although not as big a gain as last year, which was a record in terms of policies in force. And really throughout most of our businesses, the details are on the 10-Q, which is up on our website now.

As you can see, the railroad was up significantly, and we had most of our businesses tended to be up. Now, we were aided in that in a material way by the reduction in the federal income tax rate from 35% to 21%. Our businesses were up significantly on a pre-tax basis, but the gain was further enhanced by the change in the income tax rate.

So that pretty well sums up the first quarter. We'll probably get some—may well get some questions on it when we get into the question-and-answer section.

The questions we'll be getting—we've got the press over here, and then we have the analysts on my left. Of course, we have our partners out in front of me. We will rotate among you, and the questions we get as we go for the next six hours or so will understandably relate to a lot of current events.

You know, we may get asked—and we don't know the questions—but we may get asked, you know, about that policy or whether we're seeing any inflation or whether business is speeding up or down or the threats we may face competitively in our businesses as we go along.

Anything goes on the questions, except we won't tell you what we're buying or selling. But it really can be a question sometimes of confusing the forest with the trees.

I would like to just spend a couple of minutes giving you a little perspective on how you might think about investments as opposed…