Warren Buffett warned people not to think that investing is an easy way to earn a fortune, as he answered various questions at the annual meeting of his conglomerate Berkshire Hathaway.
Speaking in Los Angeles, the legendary billionaire investor said it could be difficult to choose long-term winners. He pointed out that in 1903 there were more than 2,000 automobile companies and almost all of them failed, although cars have since transformed the country.
“There’s a lot more to choosing stocks than figuring out what an amazing industry it will be in the future,” said Buffett, 90. I just want to tell you that it’s not as easy as it sounds.
The meeting was held online for the second year in a row due to the pandemic. It hosted the West Coast for the first time, not the company’s home in Omaha, to house California-based Buffett Vice President Charlie Munger.
Buffett said most people would do better by owning an S&P 500 index fund instead of betting on individual stocks. He said many of the novice investors who jumped into the market recently and increased the value of the video game retailer GameStop, essentially gambling.
Stock trading platforms that allow people to buy and sell stocks for free, such as Robinhood, only encourage a “gambling impulse.”
“There’s nothing illegal, there’s nothing immoral, but I don’t think you’re building a society around the people who do it,” he said.
He spent several hours answering questions Saturday afternoon with Munger and fellow vice presidents Greg Abel and Ajit Jain.
Leaders discussed the meeting on a variety of topics, including Federal Reserve policies and congressional incentives, which Buffett said did a good job of supporting the economy and keeping interest rates low.
He said the government had clearly learned the lessons of the Great Recession in 2009 and acted quickly in response to the pandemic, but it was difficult to predict the long-term consequences of those policies.
“This economy at the moment – 85% of it is working in ultra-high gear and you see some inflation and all that. He reacted in an incredible way, “said Buffett.
As for the value of cryptocurrencies, Munger said he did not welcome a currency that is “so useful to kidnappers and extortionists …” on air. I think I should say modestly that I think all the damn development is disgusting and contrary to the interests of civilization. “
Buffett said he did not regret the sale of Berkshire’s $ 6 billion stake in all major airlines last year, although those stocks have risen significantly since he sold them last spring. Buffett added that he believed that airlines could not provide as much state aid as they had during the pandemic if they still had “a very rich shareholder like us.”
Berkshire, which is based in Omaha, Nebraska, has $ 145.4 billion in cash and short-term investments as Buffett struggles to find major acquisitions for the company for several years.
One investor, Cole Smead, said he would be happy for the company to become more active the next time the market crashes.
“We don’t question whether Buffett and Munger are patient. That’s obvious. The question is whether they have any aggression. That’s not obvious, ‘said Smead.
Buffett, 90, said he wanted to invest more than Berkshire’s money, but the current competition he faces from private equity and other investment funds has made it difficult for Berkshire to find acquisitions at reasonable prices. He said a year ago, it was difficult to predict how the economy would respond to the pandemic and all government incentives.
The meeting has become a legendary event over the years, attracting a crowd of up to 40,000 investors in Omaha.
Author Bob Miles said he failed to “mix with highlights from like-minded and self-elected shareholders” and talked to managers who run Berkshire subsidiaries who regularly spend part of the meeting at their company’s booth in the huge showroom, which is next to the arena.
Berkshire companies such as Geico Insurance, See’s Candy and Fruit of the Loom sell their products to shareholders every year.