Warren Buffett: America Has Never Been Greater | February 26, 2016 | Summary and Q&A

Transcript

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Summary

In this video, Warren Buffett, the chairman and CEO of Berkshire Hathaway, discusses the recent market volatility, his views on stock buying, and the state of the economy. He also talks about his annual letter to shareholders and the upcoming annual meeting.

Questions & Answers

Q: What does Warren Buffett think about the recent market volatility?

Warren Buffett believes that market volatility is normal and that it's impossible to predict short-term market movements. He believes that over the long-term, stocks will go up.

Q: Is Warren Buffett buying more stocks now that prices have come down?

Warren Buffett is almost always a buyer of stocks and has been buying more stocks since the end of the year. He believes that when stock prices go down, it's good news for him as a net buyer of stocks.

Q: How does Warren Buffett view the state of the economy?

Warren Buffett believes that American business will do well over time and that stocks will be a lot higher in the future. However, he acknowledges that the economic outlook can be uncertain in the short run.

Q: Why is Warren Buffett not concerned about the recent softness in the economy?

Warren Buffett is not too concerned about the recent softness in the economy because he takes a long-term view and believes that businesses will do fine over time. He also points out that he has seen similar economic challenges in the past, such as during World War II, but the economy has always bounced back.

Q: What does Warren Buffett think caused the recent weakness in the industrial areas?

Warren Buffett attributes the recent weakness in the industrial areas to a variety of factors. He mentions that the industrial recession and the decline in coal usage have had an impact. He also believes that lower oil prices have had a negative effect on the oil industry.

Q: How does Warren Buffett view the impact of lower oil prices on the economy?

Warren Buffett explains that lower oil prices have a slower positive impact on the consumer, as they save money on gasoline. However, the immediate impact is negative on the oil industry, as the capital values of oil companies decrease rapidly, leading to job losses and other negative effects.

Q: Is there a point where lower oil prices will benefit the economy and stock prices?

Warren Buffett believes that lower oil prices are ultimately good for the economy and stock prices. However, he points out that in the short run, the negative effects, such as job losses and decreased business activity in the oil industry, overshadow the benefits.

Q: How does Warren Buffett assess the performance of his businesses?

Warren Buffett states that most of Berkshire Hathaway's businesses did well last year, and the goal is to add to the fundamental earning power of the businesses every year. He mentions that the acquisition of Precision Castparts will add to the earning power of the company.

Q: Did Geico's profits decline last year, and if so, why?

Warren Buffett explains that Geico's profits declined last year because there was an increase in deaths and accidents, which drove up costs. He attributes this increase to factors such as distracted driving and more miles driven. However, he expects the underwriting experience to improve in 2016.

Q: Has IBM been a good investment for Berkshire Hathaway?

Warren Buffett acknowledges that IBM's stock price has declined since Berkshire Hathaway started buying shares. However, he believes that the business itself is valuable and that the stock will be worth more in the future. He mentions that Berkshire Hathaway has not sold any shares of IBM.

Q: How does Warren Buffett assess the management of IBM?

Warren Buffett mentions that while having good management is important, the most crucial aspect is the business itself. He believes that faith in the management is secondary to having faith in the business and its long-term prospects.

Q: Has Berkshire Hathaway gained any competitive advantage by using IBM's Watson?

Warren Buffett explains that they are experimenting with Watson at Geico, where they are trying to teach it about insurance. He mentions that the partnership with IBM is aimed at using Watson's capabilities to improve decision-making in the insurance industry.

Q: Why is Berkshire Hathaway webcasting its annual meeting for the first time?

Warren Buffett states that they have decided to webcast the annual meeting because they have maxed out the physical capacity in Omaha and want to accommodate more shareholders. He also mentions that the webcast will allow shareholders to see the CEOs in action.

Q: Are there any other changes planned for the annual meeting?

Warren Buffett reveals that Berkshire Hathaway is introducing an "Ultimate Office Bracket Contest" for employees, where they can win a hundred thousand dollars for correctly predicting the most consecutive games in a bracket. He also adds that if someone makes it to the Sweet 16, they will win a million dollars per year for life.

Takeaways

Warren Buffett remains optimistic about the long-term prospects of the economy and stocks. He believes that American businesses will do well over time and that stocks will be higher in the future. He advises investors to take a long-term view and not get swayed by short-term market movements. Buffett also emphasizes the importance of focusing on the business itself rather than just management. Additionally, he announces a new contest for Berkshire Hathaway employees and highlights the upcoming webcast for the annual meeting to accommodate more shareholders.