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Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc., speaks during the virtual Berkshire Hathaway annual shareholders meeting seen on a laptop computer in Arlington, Virginia, U.S., on Saturday, May 2, 2020.
Bloomberg
What a difference a year makes. Sitting on a stage in an empty arena in Omaha, Nebraska and in the absence of his usual sidekick Charlie Munger, the 89-year-old Warren Buffett commenced Berkshire Hathaway‘s 2020 annual shareholder meeting on Saturday with a firm message: “Nothing can stop America.”
The “Woodstock for Capitalists,” which has drawn tens of thousands of attendees for years, was hosted virtually for the first time ever. This year, the “Oracle of Omaha” shared the stage with Greg Abel, vice chairman of non-insurance operations at the conglomerate and a top contender as Buffett’s successor.
The four-hour live-streamed presentation and Q&A gave an insight into Buffett’s investing mindset amid the coronavirus crisis. While he’s still a believer in the “American miracle” at heart, the pandemic did lead to some rare moves by the legendary investor. Buffett also explained why he’s been sitting on sidelines with a record $137 billion cash pile.
Here are the five best moments from this event. For the full meeting replay, visit CNBC’s Buffett Archive.
Nothing can stop America
Minutes into his remarks, Buffett offered a reassurance to investors, many of whom got burned by the virus-triggered sell-off, that the U.S. economy will withstand this global pandemic as it has with all of the previous battles and crises.
“Nothing can basically stop America,” Buffett said. “The American miracle, the American magic has always prevailed and it will do so again … In World War II, I was convinced of this,” he added. “I was convinced of this during the Cuban Missile Crisis, 9/11, the financial crisis.”
The outbreak, that has affected more than 1 million people in the U.S., has led to nationwide economic shutdowns, which resulted in unprecedented job losses. In the first quarter, the U.S. economy suffered its biggest contraction since the financial crisis.
Berkshire reported a massive $50 billion loss in the first quarter, a record for Buffett’s conglomerate and mostly due to stock losses.
Berkshire sold all its airline stocks
“The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way,” he said. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”
Demand for air travel has plunged since March as the virus and precautions like shelter-in-place orders keep potential passengers home. The airline stocks that Buffett dumped have dropped as much as 70% this year as of Friday. It was a rare move for the buy-and-hold investor.
Why he hasn’t made any big investments
The billionaire also addressed the “elephant-sized acquisition” he has yet to make.
Buffett hasn’t made any big investments in several years as Berkshire’s massive cash pile ballooned to a record $137 billion by the end of March. He said the reason is simply that he hasn’t found anything “attractive.”
“We have not done anything because we haven’t seen anything that attractive,” Buffett said. “We are not doing anything big obviously. We are willing to do something very big. I mean you could come to me on Monday morning with something that involved $30, or $40 billion or $50 billion. And if we really like what we are seeing, we would do it.”
Buy an index fund
Buffett believes average investors should buy the broad market for a long period of time instead of following stock-picking advice of others.
“In my view, for most people, the best thing is to do is owning the S&P 500 index fund,” Buffett said. “There are huge amounts of money people pay for advice they really don’t need.”
“If you bet on America and sustain that position for decades, you’d do far better than buying Treasury securities, or far better than following people who tell you” what to invest, he added.
He added people should not borrow money to participate in the market ever and especially now given the uncertainty around the pandemic.
“When something like the current pandemic happens, it’s hard to factor that in. That’s why you never want to use borrowed money, at least in my view, into investments,” Buffett said.
Buffett and Munger are in good health
Vice Chairmen Charlie Munger, 96, wasn’t in attendance, though Buffett said his longtime business partner was in fine shape and will return to the annual meeting next year.
Buffett said that Munger added Zoom Video to his repertoire and is having virtual meetings every day.
Asked about future management who will allocate capital at Berkshire, Buffett listed Greg Abel, Todd Combs, Ted Weschler, his two key investing deputies.
“Charlie and I are around. We like capital allocation ourselves. We are not going any place voluntarily, but we probably will be going some places involuntarily before that long,” Buffett said.
“Charlie is in good health. I’m in good health,” he added.
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