Warren Buffett On His Successor, Cryptocurrencies & China | January 10, 2018 | Summary and Q&A

Summary

Warren Buffett, the Chairman and CEO of Berkshire Hathaway, discusses the recent appointments to the Berkshire Hathaway board and the movement towards succession planning. He explains that the new appointments, Greg Abel and Ajit Jain, have been promoted to vice chairman and will have their own portfolio to run in the company. Buffett also discusses the timing of the succession plan and explains that it could have happened years ago, but there was value in having both Abel and Jain gain more experience and familiarity with different operations. He emphasizes that there is no magic timing for succession and that the directors were eager for him to make this move. Buffett also talks about his health, the impact of the new appointments on operations at Berkshire Hathaway, and the future of the company. He concludes by discussing the recent tax law changes and their potential impact on the markets and American businesses.

Questions & Answers

Q: What are the recent appointments to the Berkshire Hathaway board?

The recent appointments to the Berkshire Hathaway board are Greg Abel and Ajit Jain, who have been promoted to vice chairman and will have their own portfolio to run in the company.

Q: Is this the closest we've heard to a succession plan at Berkshire Hathaway?

Yes, this is the closest we've heard to a succession plan at Berkshire Hathaway. The new appointments and movement towards succession have been part of a transition period that may last a long time or could happen more immediately if something happened to Warren Buffett.

Q: Why were these appointments made now?

These appointments should have been made a few years ago, but Buffett explains that everything had been working fine and there was value in having Abel and Jain gain more experience and familiarity with different operations. He also wanted to provide them with institutional knowledge and guidance.

Q: How did the directors react to the suggestion of these appointments?

The directors jumped at the suggestion of these appointments and were eager for Buffett to make this move. They didn't need any persuasion and saw the value in having Abel and Jain in these positions.

Q: Should people be concerned about Buffett's health?

Buffett assures that he is in remarkably good health, considering the life he has led. While there may be some slippage in physical abilities, it has been fairly minor and he feels terrific. He emphasizes that if there were any health concerns, he would immediately disclose them to shareholders.

Q: How will these appointments change operations at Berkshire Hathaway?

These appointments will not result in any physical changes to operations. Abel will be running all the non-insurance parts of Berkshire Hathaway, while Jain will be running all the insurance parts. There will be no changes in the office and smaller acquisitions will be handled by the respective divisions.

Q: Will Abel and Jain be running Berkshire Hathaway at some point?

When Buffett is no longer the CEO, there will be another CEO who will decide how to organize and run the company. Abel and Jain will have their own portfolios and responsibilities, but the exact roles and structure will be determined by the future CEO.

Q: How did these appointments come about?

Buffett decided to make these appointments about six weeks ago, as he saw the value and benefits of having Abel and Jain in these positions. He individually talked to the directors before the vote and they all agreed without any dissent.

Q: Is this succession planning a response to external pressure?

Buffett acknowledges that there have been people pushing for him to make his succession plans public for years. However, he explains that the timing was based on internal considerations and the value it provides in terms of experience and knowledge transfer.

Q: What does Buffett think about the markets and interest rates?

Buffett believes that the stock market is not richly valued relative to interest rates. He explains that stocks are worth more when interest rates are low, as it increases their present value. He also discusses the impact of the recent tax law changes on valuation and the importance of interest rates in determining the value of investments.

Takeaways

Warren Buffett, the Chairman and CEO of Berkshire Hathaway, announces the recent appointments to the Berkshire Hathaway board and discusses the movement towards succession planning. He emphasizes the value of having Greg Abel and Ajit Jain in these positions and explains that the timing was based on internal considerations. Buffett also discusses his health, the impact of the appointments on operations at Berkshire Hathaway, and the recent tax law changes. He expresses his optimism about the future of the company and the markets.