Buffett confident in U.S., Berkshire; flags risk of market ‘turmoil’ By Reuters
© Reuters. Investors and guests arrive for the Berkshire Hathaway annual shareholders’ meeting in Omaha, Nebraska, U.S. May 6, 2023. REUTERS/Rachel Mummey
By Jonathan Stempel, Carolina Mandl and John McCrank
OMAHA/NEW YORK (Reuters) -Warren Buffett on Saturday offered a vote of confidence in the United States while warning about growing partisanship in Washington, ahead of a looming debt ceiling showdown he said could bring “turmoil” to the global financial system.
Speaking at the annual meeting of his conglomerate Berkshire Hathaway (NYSE:) Inc, Buffett also warned of growing “tribalism” in Washington where partisanship causes people to talk past each other.
“We have to refine, in a certain way, our democracy as we go along,” he said. “But if I still had a choice, I would want to be born in the United States. It is a better world than we’ve ever had.”
Buffett also said regulators were right to guarantee depositors of Silicon Valley Bank, whose March seizure following a bank run precipitated a crisis of confidence in regional banks.
He said refusing to protect depositors with more than $250,000 in a single bank “would have been catastrophic,” and that he could not imagine politicians or regulators having to otherwise explain their willingness to “disrupt the world’s financial system.”
But he said Berkshire’s diverse array of businesses are well-protected from such shoals, in part as rising interest rates boost income from investments.
Buffett spoke hours after Berkshire posted a $35.5 billion quarterly profit and said it bought back $4.4 billion of its own stock, a sign it considered the shares undervalued. In contrast, it sold $13.3 billion of other companies’ stocks.
The meeting features Buffett, 92, who is Berkshire’s chairman and chief executive, and Charlie Munger, 99, a vice chairman, answering five hours of shareholder questions.
Vice Chairman Greg Abel, 60, who is Buffett’s designated successor as CEO, and Vice Chairman Ajit Jain, 71 also took questions.
Buffett, the world’s sixth-richest person, has run Berkshire since 1965.
The company owns dozens of businesses including Geico car insurance, the BNSF railroad and familiar consumer names such as Dairy Queen and Fruit of the Loom, as well as $328 billion of stocks led by Apple Inc (NASDAQ:).
Saturday’s meeting is the centerpiece of a weekend Buffett calls “Woodstock for Capitalists” that draws tens of thousands of people to Omaha, Nebraska, its hometown.
Attendance is up significantly from 2022, with Buffett saying Berkshire received ticket requests from 45 countries, and unlike last year the downtown arena hosting the meeting was filled to capacity.
MUNGER: GET USED TO LESS
In discussing Berkshire’s performance, Buffett said perhaps a majority of its operating businesses may fare worse in 2023 than in 2022 as economic activity slows, but this can be offset by rising investment income.
He said it added $7 billion of Treasury bills in April, and recently bought another $3 billion yielding close to 6%.
Buffett defended the size of Berkshire’s $151 billion Apple investment, saying consumers are less likely to shed their $1,500 iPhones than, for example, their $35,000 second cars.
“Apple is different than the other businesses we own,” Buffett said. “It just happens to be a better business.”
Munger prompted muffled groans by saying value investors like himself and Buffett–and much of the audience–“should get used to making less” in part because so many investors are following similar strategies.
A longtime China bull who spearheaded Berkshire’s investment in electric car company BYD Co (OTC:), Munger also generated a smattering of applause in calling for lowered tensions between that country and the United States.
“One thing we should do is get along with China, and have a lot of free trade with China,” he said. “It’s in our mutual interest.”
Abel also said BNSF railroad, one of the dozens of non-insurance businesses he oversees, takes seriously the recent spate industrywide of train derailments, and that “it comes down to responding properly.”
WAITING ON LINE
Prior to the meeting, dozens of uniform-clad pilots at Berkshire-owned NetJets demonstrated outside the arena, protesting low pay, long hours and fatigue.
Thousands more lined up outside the arena before its 7 a.m. CDT (1200 GMT) opening, often to get seats close to the stage.
Many recognized it could be one of their last chances to see Buffett and Munger, given their advanced ages.
Vidhya Vivekananda, an investment associate from Vancouver, said she and her husband showed up 30 minutes earlier for their first meeting.
“It has been on our bucket list for a long time,” she said. “We don’t know how long it will be with Warren and Charlie before they pass it on.”
Yongsheng Zhao, who lives in Shanghai and is a researcher for an asset management firm, said he showed up at midnight to attend his eighth Berkshire meeting. He brought his own chair.
“I am inspired by their passion and normalcy,” he said, referring to Buffett and Munger. “I would hope they can go another five years, or more.”