Warren Buffett On The Problems With American Healthcare | February 26, 2018 | Summary and Q&A

Transcript

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Summary

In this video, Berkshire Hathaway CEO Warren Buffett discusses various topics including his annual letter to shareholders, the tax changes in the US, accounting changes, and his thoughts on Wells Fargo and General Electric. He also addresses questions about corporate social responsibility and gun ownership.

Questions & Answers

Q: Why did Warren Buffett decide to break from the usual formatting of his annual letter to shareholders?

Warren Buffett decided to break from the usual formatting because he felt that the previous format had become repetitive and there was information in the letter that was already included in the 10k report. He decided to append the entire 10k report to address this issue.

Q: How significant was the $65.3 billion increase in Berkshire Hathaway's net worth in 2017?

The increase in net worth was significant due to two primary factors. One was the reduction in deferred tax liability, which came from the tax reform, and the other was a reduction in deferred income taxes related to fixed assets. These factors resulted in a lower tax rate for the company and an increase in net worth.

Q: How does Warren Buffett view the impact of the tax reform on American business overall?

Warren Buffett sees the tax reform as a significant tailwind for American business, especially for companies that have had substantial depreciation and taken bonus depreciation upfront. It means that corporations will pay significantly less in taxes, which will have a positive impact on their profitability.

Q: Does Warren Buffett think American business was previously overtaxed?

Warren Buffett has previously stated that American business was not overtaxed. However, he believes that the lower tax rate resulting from the tax reform will benefit corporations and the economy in general.

Q: What accounting change will affect Berkshire Hathaway's reported earnings?

The accounting change requires unrealized gains or losses on stocks to be reflected in the income account, rather than just the balance sheet. This means that the reported net income figure will be deceptive and not a reflection of operating results for the company.

Q: Does Warren Buffett have confidence in Wells Fargo CEO Tim Sloan?

Warren Buffett has confidence in Tim Sloan and believes that he has been working hard to clean up the company. However, he acknowledges that Wells Fargo had significant issues with its incentive system, which encouraged bad behavior.

Q: Is Wells Fargo out of the woods in terms of uncovering misconduct?

While Warren Buffett believes that Wells Fargo has tried to uncover and address the misconduct, he acknowledges that with a large number of employees, it is difficult to be certain that all problems have been resolved.

Q: Would Warren Buffett consider buying parts of General Electric (GE)?

Warren Buffett would consider buying parts of GE if the businesses align with Berkshire Hathaway's criteria, such as being understandable and having adequate management. However, he points out that GE may not be interested in selling its bigger businesses.

Q: What is Warren Buffett's favorite stock other than Berkshire Hathaway?

Warren Buffett has bought more shares of Apple than any other stock over the past year. However, he does not consider it his favorite stock overall.

Q: How does Warren Buffett feel about corporate social responsibility?

Warren Buffett believes in corporate social responsibility but does not dictate investment decisions regarding controversial industries like gun manufacturers. However, Berkshire Hathaway does not own any gun manufacturers.

Q: Does gun ownership affect property and casualty insurance premiums?

Warren Buffett states that gun ownership does not typically impact property and casualty insurance premiums from an actuarial perspective.

Takeaways

In summary, Warren Buffett discusses various topics in this video, including his annual letter to shareholders, the tax reform, accounting changes, Wells Fargo, General Electric, and corporate social responsibility. He emphasizes the positive impact of the tax reform on American businesses and addresses concerns about gun ownership and insurance premiums. Overall, Buffett remains confident in Berkshire Hathaway and its investment decisions while acknowledging the challenges faced by companies such as Wells Fargo and GE.