- Warren Buffett and Charlie Munger spoke at Berkshire Hathaway's annual meeting on Saturday.
- The pair are set to discuss stocks, market speculation, the economy, and other subjects.
- The billionaire investors cautioned amateur investors against betting on fads.
- See more stories on Insider's business page.
Warren Buffett has kept an extremely low profile over the past year. He finally broke his silence at Berkshire Hathaway's annual shareholder meeting on Saturday, which was livestreamed by Yahoo Finance.
The famed investor and Berkshire CEO was joined by his company's right-hand man, Charlie Munger, on the stage in Los Angeles on Saturday. Berkshire's heads of insurance and non-insurance operations, Ajit Jain and Greg Abel, were also in attendance.
Buffett and Munger signaled a return to normality at the meeting, which is being held remotely this year due to the coronavirus pandemic. They positioned themselves on either side of a box of Peanut Brittle from See's Candies, one of Berkshire's oldest and best-known businesses. Munger had a couple of cans of Coca-Cola – one of the five biggest holdings in Berkshire's stock portfolio -stationed in front of him.
Follow along for live updates as the meeting continues:
Buffett said that Berkshire's businesses have done "really quiet well" in extraordinary circumstances.
The billionaire investor opened his presentation this year by highlighting how the biggest companies in the world change from decade to decade. He pointed out that investors and Wall Street were as sure of themselves in the 1980s as they are today, yet many of the era's most successful companies have fallen by the wayside since then.
"Everybody's starting something now where you can get money from people," Buffett said, slamming the surge in speculative ventures aiming to capitalize on investor enthusiasm in recent months.
Taking cover during the market downturn in March 2020
"I'm the chief risk officer of Berkshire, that's my job," Buffett said. He pointed out that Berkshire sold 1% of its roughly $700 billion of businesses when the pandemic struck.
Buffett discussed the government bailout of the airlines last spring. He suggested that Berkshire, which boasts more than $130 billion in cash and short-term investments, might have had to foot the bill for helping the airlines if the company hadn't sold its stakes.
"You're looking at probably a different result than if we had kept our stock," he said.
"I do not consider it a great moment in Berkshire's history," he said about the company exiting the airlines, but points out that the company remains one of the most valuable in America.
Selling bank stocks
"We didn't like having as much money in banks as we had at the time," Buffett said.
Why didn't Berkshire use more of its cash during the crash?
Buffett has previously said he would never reduce Berkshire's cash reserves below $20 billion, but appears to have raised that number significantly, estimating Berkshire could have spent $50 billion or $70 billion out of its roughly $130 billion in cash last year.
Buffett also commented on the Federal Reserve pumping liquidity into markets at the onset of the coronavirus pandemic last spring.
"They took a market where Berkshire couldn't sell bonds a day before, and turned it into one where Carnival Cruise or whatever could sell them," Buffett said. "It was as dramatic a move as you can imagine."
"This economy right now, 85% of it is running in super-high gear," Buffett said.
"We don't want to depend on anybody," the investor said. "You can't depend on the kindness of friends if things really stop." He added that the banks were caught offguard by a bunch of businesses drawing down their credit lines.
"I give great credit on both the monetary and fiscal side to what was done," Buffett said.
Munger also protested the idea that Berkshire could have bought at the bottom of the market last spring.
"That's too tough a standard," Munger said. "Anybody who expects that of Berkshire is really out of their mind."
Why should investors own Berkshire rather than an index fund?
"I've never recommended Berkshire to anybody," Buffett said, highlighting that upon his death, his widow will have 90% of his estate put into index funds and 10% into Treasuries.
"I do not think the average person can pick stocks," Buffett said, trumpeting index funds as a safer and more reliable option.
Is Berkshire happy to own Chevron given the ongoing backlash against oil and gas?
"People that are on the extremes of both sides are a little nuts," Buffett said about the battle over the environmental impacts of the oil-and-gas industry.
Buffett said that the world will need hydrocarbons for at least the next few years, but climate-change concerns are real.
"I don't like making the moral judgments on stocks," he said, adding that he had no qualms about owning Chevron, which Berkshire added to its stock portfolio in the fourth quarter of 2020.
Why did Buffett recommend shareholders vote no on disclosing more about diversity and environmental impacts?
"It's asinine frankly," Buffett said about the proposal that all of Berkshire's scores of businesses fill out reports on their diversity and climate-change progress. He argued that many of the shareholders who supported the motion haven't read the company's annual report or know much about its green initiatives.
Abel, CEO of Berkshire Hathaway Energy, touted his segment's environmental credentials. He said the company has transformed how it does business and invested billions of dollars in renewable energy.
This story is being updated. Check back for more updates.
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