Warren Buffett addressed shareholders at the Berkshire Hathaway annual meeting on Saturday.

For the second year in a row, Berkshire held the AGM virtually from a conference room in Los Angeles where, Buffett and his vice-chair Charlie Munger, spent hours fielding questions about the company and the strength of the US economy. They also gave advice to first time investors.

Here are the key highlights from Berkshire’s much-anticipated AGM:

Berkshire’s cash pile and the influence of SPACs 

As Berkshire has not made any major acquisitions in the past few years, the company is still sitting on a pile of cash worth USD $145.439 billion.

During the AGM, Buffett attributed this partially to the influence of special purpose acquisition companies (SPACs) creating an anti-competitive market. 

Buffett expressed his dislike of SPACs business models as most need to find investments within the first two years.

“If you put a gun to my head and said you’ve got to buy a business in two years, I’d buy one. But it wouldn’t be much of one.” Buffett said.

Buffett regrets selling Apple stocks

Although shareholders still saw their proportional stake in Apple increase, Buffett expressed regret for selling Apple stocks last year. He said Apple is an ‘extraordinary’ business and CEO Tim Cook has accomplished things that even founder Steve Jobs could not. 

It is always refreshing to see an investment mastermind make mistakes too!

Looking back at Berkshire’s airline sell offs

In last year’s AGM, Berkshire Hathaway’s decision to sell off stocks in Delta Air Lines, Southwest Airlines, United Airlines Holdings, and American Airlines Group generated a lot of discussion.

Berkshire decided to do this due to major industry disruptions like reduced fleet sizes and capacity. If he had foreseen the extraordinary stimulus the industry received, Buffett said he may have held onto the shares.

Nonetheless, he stated that Berkshire’s stakes in American Express and aerospace components specialist Precision Castparts offer enough exposure.

Buffett believes in the strength of the US economy

Buffett is a great believer in American-style capitalism. He emphasised the ongoing importance of the US economy going forward, pointing out that of the top 6 global companies, 5 are American. 

He also expressed optimism for Berkshire Hathaway’s future.

“We’ve seen some strange things happen in the world in the last year, 15 months,” Buffett said.  “It has reinforced our desire to figure out everything possible to make sure that Berkshire is, 50 or 100 years from now, every bit the organization and then some that it is now.”

Concerns about low interest rates

Despite the overall optimism of the state of the US economy, both Buffett and Munger expressed concerns about the Fed’s extraordinarily low interest rates.

“There’s a good chance that this extreme conduct is more feasible than anybody thought,” Munger said, “but if you keep just doing it without any limit, it’ll end in disaster.”

Berkshire’s advice to new investors

Although investing apps and cryptocurrency have introduced millions of newcomers to investment, Buffett and Munger cautioned against them.

Buffett said that popular trading platform Robinhood has “become a very significant part of the casino group that’s joined the stock market in the last year and a half.”

“Occasionally it gets an enormous shove and conditions lead to this place where more people are entering the casino than are leaving everyday,” Buffett said. “And it creates its own reality for a while and nobody tells you when the clock’s going to strike 12 and it all turns to pumpkins and mice.”

Quoting famed economist John Maynard Keynes, Buffett warned new investors about these market conditions:

“When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

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Sources:

• Live Mint, Warren Buffett at Berkshire Hathaway AGM 2021: 10 key highlights
• Nasdaq, 10 Key Takeaways From Warren Buffett and Charlie Munger at Berkshire Hathaway’s 2021 Shareholder Meeting