More than 30,000 shareholders attended the Berkshire Hathaway (NYSE:BRK.A) annual meeting on Saturday, with chairman Warren Buffett and vice chairman Charlie Munger once again answering a wide array of shareholder questions.
Here are our Top 5 quotes in three categories:
Top 5 Quotes by Warren Buffett
- On market timing: "We don’t try to pick bottoms. To sit around and not do something sensible because you think there might be something better…. doesn’t make sense. Picking bottoms is not our game. Pricing is our game. And that’s not so difficult. Picking bottoms is, I think, impossible."
- On keeping Berkshire as one entity: "We’ve got this ability in terms of moving money around into various opportunities without tax consequences. So if See’s Candies is a wonderful business, which it is and generates capital that can’t be used in that business - we can use it toward another business…"
- On Berkshire's credit rating: "We’re still a AAA in my mind and in Standard & Poor’s mind."
- On contracts: "We don’t want relationships that are based on contracts. I can’t really think of a formal contract that we have. We have understandings about bonus arrangements with various managers. We have different arrangements because all the businesses are different. We don’t try to hold people by contracts and it wouldn’t work. We basically don’t like engaging in them."
- On government action to save economy: "Overall I commend the actions that were taken. To expect perfection from people working 20 hour days and getting hit by new and sometimes bad information - when you’re getting punched from all sides - you’re not gonna do everything perfectly. I think overall they did a very good job…"
Top 5 Quotes by Charlie Munger
- On the future: "Now that I’m so close to the age of death - I am getting more cheerful about the economic future. What I find cheerful is that we will be able to harness the energy of the sun and have electric power. That will enable countries to turn sea water into fresh."
- On China: "Their rate of advance is so great and meaningful that if they lost a bit of their purchasing power on their dollar holdings - it’s a trifle for them. They’re going to be very hard to compete with - all over the world. I think the U.S. and China should be very friendly nations. We’re going to be joined at the hip."
- On executive compensation: "I would argue that a liberally paid board of directors is counterproductive. You keep raising me and I keep raising you. It gets very club-like."
- On Berkshire's relationship with its operating unit leaders: "Our model is a seamless web of trust that’s deserved on both sides. That’s what we’re aiming for. The Hollywood model where everyone has a contract and no trust is deserved on either side is not what we want at all."
- On the credit ratings agencies: "I think the ratings agencies eagerly sought stupid assumptions that enabled them to do clever mathematics. It’s an example of being too smart for your own good."
Top 5 Quotes on Public Companies
- Buffett on General Electric (NYSE: GE): "GE is a very,very important American institution."
- Munger on Bank of America's (NYSE: BAC) purchase of Merrill Lynch: "You can criticize the decision of BAC to buy Merrill and the contract they signed. But once they had signed that contract - I think Treasury behaved honorably and so did Bank of America."
- Buffett on selling Johnson & Johnson (NYSE: JNJ) to buy into Goldman Sachs (NYSE: GS): "We got a call on Goldman on a Wednesday [in September 2008] - that couldn’t have been done the previous Wednesday or the next Wednesday. We were faced with opportunity-cost - and we sold something that under normal circumstances we wouldn’t - J&J."
- Buffett on dealing with investee companies, and on the business of Moody's (NYSE: MCO): "I don’t think I’ve ever made a call to Moody’s. We don’t tell Burlington Northern (NYSE: BNI) what safety procedures to put in or AmEx who they should lend to. When we own stock - we are not there to try and change people. If you buy stock in a company - better not count on fact that you’ll change their course of action.In terms of selling the stock [Moody's] - the ratings agency business is still good -but subject to attack. It’s a biz with very few people in it - it affects large segment of the economy. I think there will be ratings agencies in the future and doesn’t require capital. ..It has fundamentals of a pretty good business."
- Buffett on use of balance sheet analysis when valuing Coca-Cola (NYSE: KO): "If you look at Coca-Cola today, for example, and just looked at a balance sheet, it wouldn’t tell you anything at all about Coca-Cola,” the billionaire investor said. “It’s what the product is."
Note: The above quotes are sourced from notes and published sources believed to be reliable. However, some of the quotes may be paraphrased.
Disclosure: Affiliates of The Manual of Ideas have a long position in BRK.B. No positions in any other companies mentioned in this article.