Omaha: Billionaire Warren Buffett has warned people against thinking investing is an easy way to make a fortune, as he answered a variety of questions at the annual meeting of Berkshire Hathaway on Saturday.
Buffett said it can be difficult to pick the long-term winners. He noted that in 1903 there were more than 2,000 automobile companies, and nearly all of them failed even though the automobile had changed the country since then.
“ There is a lot more to picking stocks than discovering an amazing industry in the future, ” Buffett said. “ I just want to tell you that it’s not as easy as it sounds. ”
Buffett said most people are doing better with owning an S&P 500 fund rather than betting on individual stocks. He said many of the novice investors who recently jumped into the market and leveraged GameStop, the video game retailer, are mainly gambling.
Buffett said stock trading platforms that allow people to buy and sell stocks for free, like Robinhood, only encourage that gambling.
Buffett spent several hours answering questions on a Saturday afternoon at an online version of Berkshire’s Annual Meeting alongside Vice Presidents Charlie Munger, Greg Appel and Ajit Jane.
Buffett said that the Fed’s policies and the stimulus packages passed by Congress have done an enormous job of shoring up the economy as interest rates remain low. He said the government clearly learned lessons from the Great Recession of 2008 and acted quickly, but it is difficult to predict what the long-term consequences of these policies will be.
“ This economy at the moment – 85% of it is running super fast – and you see some inflation and all of that. It has responded in an incredible way. We learned something from 2008 and 2009 and then implemented it. “ But I don’t think it was a sure thing that would happen, ” Buffett said.
Buffett said he does not regret selling Berkshire’s $ 6 billion stake in all major airlines last year even though those shares have grown significantly since he sold it last spring. Buffett also said he believes airlines may not have been able to secure as much government aid as they did during the pandemic if they still had “ a large shareholder who is very wealthy like us. ”
Omaha, Nebraska-based Berkshire has $ 145.4 billion in cash and short-term investments because Buffett has struggled to find major acquisitions for the company for several years.
Investor Cole Semaid said he would like to see the company become more active the next time the market floods.
We don’t wonder if Buffett and Munger have patience. This is a clear. The question is do they have any aggression. Semolina said.
Buffett has said he wants to invest more Berkshire money, but the current competition he faces from private equity and other investment funds has made it difficult for Berkshire to find affordable acquisitions. A year ago, he said, it was difficult to predict how the economy would respond to the epidemic and all the government stimulus.
Buffett refused to answer a question about Bitcoin, but Munger openly questioned the value of the cryptocurrency.
“I don’t welcome a currency that is very useful to kidnappers, extortionists, etc. I don’t like spending a few billion and billions and billions of dollars extra to someone who just invented a new currency a financial product out of thin air. I think I must say humbly that I think the whole damn development is disgusting and inconsistent with it,” Munger said. The interests of civilization.
It was the second year in a row that the annual meeting was held online due to the Coronavirus pandemic. This year’s event has moved outside of Omaha for the first time – to Los Angeles to be near where the 97-year-old Munger lives.
On Saturday morning, Berkshire announced its first-quarter earnings and said it made $ 11.7 billion, or $ 7,638 per Class A share, as the paper value of its investment portfolio rebounded. A year ago, Berkshire announced it had lost $ 49.7 billion, or $ 30,653 a share.
Along with the investment gains, the group said profits also improved across all of its major divisions – including insurance companies, utilities, railways, manufacturing and retail – as the economy continued to recover from the pandemic during the first three months of this year.
CFRA Research Analyst Cathy Seifert said she was surprised that many of the economically sensitive firms in Berkshire had not improved further given how much the economy had recovered, but that the company appeared to be controlling costs well in its core divisions.
Buffett has always said that Berkshire’s operating profits provide a better view of quarterly performance because it excludes investments and derivatives that can vary widely. By this measure, Berkshire’s operating profits improved to $ 7.018 billion, or $ 4,577.10 per Class A share. That’s up from $ 5.87 billion, or $ 3,617.62 per Class A share a year ago.