Warren Buffett On The Presidential Election, Drug Prices & Brexit | May 2, 2016

Transcript

warren first of all thanks so much for being here with us today enjoy it thanks you're coming off of a big weekend a long weekend and uh this was the 51st shareholders meeting uh what's your takeaway from the meeting what'd you think about how things went this time everything went well we uh you know had this experiment with yahoo on streaming it a... Read More

Summary

In this video, Warren Buffett discusses various topics including the annual shareholder meeting, the impact of central banks on currencies, the state of the economy, Berkshire's top holdings, and the upcoming US presidential election. He also shares his views on the valuation of American Express, the business practices of Valeant Pharmaceuticals, and the effectiveness of active investing in hedge funds.

Questions & Answers

Q: What was Warren Buffett's takeaway from the annual shareholder meeting?

Warren Buffett mentioned that everything went well and praised the experiment with livestreaming the meeting. Although attendance was slightly down, he noted that many of Berkshire's companies achieved record sales. He specifically mentioned the success of Nebraska Furniture Mart, which made $9.3 million in one day.

Q: How did the yen's rise and central bank actions affect Berkshire?

Warren Buffett admitted that he is not knowledgeable about currency movements, especially since Berkshire operates globally. However, he acknowledged that a stronger yen can benefit US companies looking to export and suggested that a weaker dollar helps exports. He also mentioned that Berkshire holds foreign currency investments and stocks in companies like IBM and Coca-Cola, which do business abroad.

Q: What does Warren Buffett think about the current low interest rate environment?

Warren Buffett believes that the recovery since the 2008 financial crisis has been positive and generally agrees with the Federal Reserve's policies. He commends the US government for implementing measures that helped the country recover substantially. He also emphasized the importance of considering global economic factors and the actions of other major countries' central banks.

Q: Does Warren Buffett think the US economy is growing at a slow pace?

While acknowledging that some aspects of the US economy have been slow, Warren Buffett highlighted that Berkshire's employment numbers have been growing modestly. He mentioned that certain sectors like the railroad industry have experienced job cuts due to factors such as efficiency improvements and lower rail traffic. However, he mentioned that Omaha, where Berkshire is headquartered, has low unemployment rates and feels prosperous overall.

Q: Does Warren Buffett have a strong affinity for his top holdings like American Express, IBM, and Coca-Cola?

Warren Buffett clarified that while he generally likes those companies, he does not have an emotional attachment that would prevent him from selling them if needed. He mentioned that Berkshire has policies regarding the sale of controlled businesses, but when it comes to companies where Berkshire is a shareholder without control, there are no specific guidelines. He emphasized the importance of buying stocks for less than their intrinsic value and mentioned that taxes play a role in the decision-making process.

Q: What are Warren Buffett's thoughts on Valiant Pharmaceuticals?

Warren Buffett expressed his negative views on Valiant Pharmaceuticals, stating that their business model of drastically increasing drug prices was not justified. He criticized Valiant's former CEO, Michael Pearson, for implementing this policy, and mentioned that it was no surprise to him that such decisions came from the top. He also highlighted the scrutiny Valiant faced during Senate hearings and the negative reputation it developed.

Q: Does Warren Buffett consider hedge funds a wise investment?

Warren Buffett believes that active investing, especially in hedge funds, generally leads to worse results for investors due to the high fees involved. He argued that by simply holding a diversified portfolio of stocks for the long term, investors can achieve average returns. He pointed out that hedge fund managers often fail to outperform the market, especially after accounting for their fees, which can result in negative net results for clients.

Takeaways

Warren Buffett emphasized the success of Berkshire's annual shareholder meeting and discussed various topics including the impact of central banks on currencies, the state of the economy, and the upcoming US presidential election. He also shared his thoughts on Berkshire's top holdings and the value of active investing in hedge funds. Overall, he expressed confidence in the resilience of the US economy and highlighted the importance of buying stocks at a discount to their intrinsic value.