Berkshire Hathaway Inc. (BRK.A)

ASM 2020

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May 2, 2020

Well, it's 345 in Omaha, and this is the annual meeting of Berkshire Hathaway. It doesn't look like an annual meeting. It doesn't feel exactly like an annual meeting, and it particularly doesn't feel like an annual meeting because my partner of 60 years, Charlie Munger, is not sitting up here and I think most of the people who come to our meeting really come to listen to Charlie, but I want to assure you Charlie at 96 is in fine shape. His mind is as good as ever. His voice is as strong as ever, but it just didn't seem like a good idea to have him make the trip to Omaha for this meeting. Charlie is really taking to this new life. He's added Zoom to his repertoire, so he has meetings every day with various people and he's just skipped right by me technologically, but that really isn't such a huge achievement. It's more like, you know, kind of like stepping over a peanut or something. But nevertheless, I want you to assure you, Charlie is in fine shape and he'll be back next year and we'll try to have everything in the show that we normally have next year. Ajit Jain also who is the Vice Chairman in charge of insurance safely in New York and again it just did not seem worthwhile for him to travel to Omaha for this meeting. But on my left, we do have Greg Abel and Greg is the Vice Chairman in charge of all operations except insurance. Greg manages a business that has more than $150,000,000,000 in revenues and crosses across dozens of industries and has more than 300,000 employees and he's been at that job a couple of years and frankly I don't know what I'd be doing today if I didn't have a G and Greg handling the duties that I was doing only about a quarter as well a couple of years ago, so I owe a lot of thanks to Greg and you'll get exposed to him more as this meeting goes along. The meeting will be divided into 4 parts in a moment or 2. I will talk sort of a monologue with slides. I've never really used slides before. I've taught college classes intermittently but pretty steadily from age 21 to age 88 and I never recall using a single slide, but who says you can't teach an old dog a new trick. So we'll see whether you can or not. And I've got a number of slides and I would like to take you through those in the first section, which will start in just a minute, and then we'll move on to the a brief recap of Berkshire's Q1 results now. We put those up in the 10 Q which was posted on the Internet on bircherathaway.com this morning and there's lots and lots of detail in there. So I'm not going to go through that. I'll just have I'll point out 1 or 2 things that may be of interest to you and actually I'll talk a little bit about what we did in April which is something that is new to Berkshire to be that current, but I'll give you that. Then we'll have the formal meeting which will take maybe 15 or 20 minutes and from there we'll go to Becky Quick who for a couple of hours will grill me and Greg on questions she's selected from a huge batch that I'm told she's received. They went to Carol Loomis and Andrew Ross Sorkin as well as to Becky, but to simplify things we've consolidated all those questions that Becky will ask and like I say, we'll go for a couple of hours and there's no specified cutoff time at present. We'll just see how things develop. What's of course on everybody's mind the last 2 months or so is what's going to be the situation on terms of health in the United States and what's going to be the situation in terms of the economy in the United States in the months and perhaps the years to come and I don't really have anything to add to your knowledge on health. In school I did okay in accounting, but I was a disaster in biology and I'm learning about these various matters the same way you are and I think personally I feel extraordinarily good about being able to listen to Doctor. Fauci who I never heard of a year ago, but I think we're very, very fortunate as a country to have somebody at 79 years of age who appears to be able to work 24 hours a day and keep a good humor about him and communicate in a very, very straightforward matter about fairly complex subjects and tell you when he knows something and when he doesn't know something, so I'm not going to talk about any political figures at all or politics generally this afternoon, but I do feel that I owe a huge debt of gratitude to Doctor. Fauci for educating and informing me, actually along with my friend Bill Gates too, as to what's going on and I know I get it from a straight shooter when I get it from either one of those, so thank you, Doctor. Fauci. When this hit us and as I said here in this auditorium with 17,000 or 18,000 empty seats, the last time I was here it was absolutely packed. Creighton was playing Villanova and there were 17,000 or 18,000 whatever it holds, it was full and there wasn't one person in that crowd, this was in January, wasn't one person in that crowd that didn't think that March Madness wasn't going to occur. It's been a flip of a switch in a huge way in terms of national behavior, the national psyche, it's dramatic. And when we started on this journey, which we didn't ask for, it seemed to me there was an extraordinary wide variety of possibilities on both the health side and on the economic side. I mean it was in other words, DEFCON 5 on one side and DEFCON one on the other side and nobody really knows, of course, all the possibilities that there are and they don't know what probability factor to stick on them, but in this particular situation, it did seem to me that that there was an extraordinary range of things that could happen on the health side and an extraordinary range in terms of the economy. And of course they intersect and affect each other, so they're bouncing off each other as you go along. And I would say again, I don't know anything you don't know about health matters, but I do think the range of possibilities has narrowed down somewhat in that respect. We know we're not getting a best case and we know we're not getting a worst case. The possibility initially of the virus was hard to evaluate and it's so hard to evaluate. There's a lot of things we've learned about it and a lot of things we know we don't know, but at least we know what we don't know and some very smart people are working on it and we're learning as we go along. But the virus obviously has been very transmissible and it's but on the good side and it's not that good, but it is not as lethal as it might have been. We had a we had a Spanish flu in 1918 and my dad and 4 siblings and his parents went through it, and they have a terrific story in the March 15th edition of the Omaha World Herald that you can go to omaha.com and look up. It's also on the first page, I believe, on Google, if you put in Spanish flu, Omaha. And during that particular time, in maybe 4 months or so, Omaha had 974, I believe, deaths. And that was a half of 1 percent of the population. And that figure wasn't greatly different than around the country. So if you think about half of 1% of the population now, you're talking 1,000,000 7 or thereabouts people. And unfortunately, in terms of the worst case, this does not appear to in fact, I think you can almost rule out it being as lethal as the Spanish flu was, but it's very, very transmissible. And of course, we have the problem, we don't know the denominator in terms of exactly how lethal it is because we don't know how many people have had and didn't know they had it. But in any event, the range of probabilities on health narrowed down somewhat. I would say the range of probabilities or possibilities on the economic side are still extraordinarily wide. We do not know exactly what happens when you voluntarily shut down a substantial portion of your society. In 2,008 and 2009, our economic train went off the tracks. And there were some reasons why the roadbed was weak in terms of the banks and all of that sort of thing. But this time we just pulled the train off the tracks and put it on a siding. And I don't really know of any parallel of in terms of a very, very well, the most important country in the world, most productive, huge population, in effect, sidelining its economy and its workforce and obviously and unavoidably creating a huge amount of anxiety and changing people's psyche and causing them to somewhat lose their bearings in some many cases, understandably. This is quite an experiment and we may know the answer to most of the questions reasonably soon, but we may not know the answers to some very important questions for many years. So it still has this enormous range of possibilities. But even facing that, I would like to talk to you about the economic future of the country because I remain convinced as I have. I was convinced of this World War II, I was convinced of it. During the Cuban Missile Crisis, nineeleven, the financial crisis that nothing can basically stop America. And we faced great problems in the past. We haven't faced this exact problem. In fact, we haven't really faced anything quite resembles this problem. But we faced tougher problems And the American miracles, American magic has always prevailed and it will do so again. And I would like to take you through a little history to essentially make my case that if you were to pick one time to be born and one place to be born, and you didn't know what your sex was going to be, you didn't know what your intelligence would be, you didn't know what your special talents or special deficiencies would be. That if you do that one time, you would not pick 'seventeen, 'twenty, you would not pick 'eighteen, 'twenty, you would not pick 'nineteen, 'twenty. You'd pick today and you would pick America. And of course the interesting thing about it is that ever since America was organized in 17/89, George Washington took the oath of office. People have wanted to come here. Can you imagine that for 231 years? There's always been people that have wanted to come here now. My friend, I think, has jumped to gone just to shade on putting up Slide 1, but I'm going to call from some slides as we go along. But the interesting thing about this country is what is on Slide 1. Let's put it up. And this is an extraordinarily young country. Now I'm comparing it to a couple of guys that are pretty old, but when you think about the fact that my age, Charlie's age, or our life experience, and then we'll throw in this young guy over here, Greg Abel, and if our life experiences combined exceed the life of the United States, we are a very, very young country. But what we've accomplished is miraculous. Now just think of this as a little spot in history. And if we go to Slide 2, I've tried to estimate well, let's go back and stay with Slide 2, but the population in 1790, we had 3,900,000 people here. It's funny when you look up census figures, you find out that the they had a big fire in the Department of Commerce building in 1921, so they lost a lot census records. So these are not quite as there's some things where there's a few gaps. But there were 3,900,000 people in the United States. And actually, I've got 0 point 100,000. It's closer to 700,000. There were 700,000 of those people were Schlage at the time. But those 3,900,000 people were 1 half of 1 percent of the population of the planet. And if you'd asked any of those 3,900,000 people, any of them, to imagine what life would be like 231 years later, even the most optimistic person and let them they could have been drinking heavily and even had a little pot and they still could not in their wildest dreams have thought that in 3 lifetimes, Charlie's mine and Greg's, that in that period you would be looking at a country with 2 80,000,000 vehicles shuffling around its roads. Airplanes, maybe not today so much, but they'll be back again and then flying people at 40,000 feet coast to coast in 5 hours, that great universities would exist in one state after another, great hospital systems, and entertainment would be delivered to people in a way nobody could have dreamt of in 1790s. This country in 231 years has exceeded anybody's dreams. I went to the Internet, trying to prepare for this, And I tried, if you'll move to the next slide, I tried to find out what was the wealth of the country in 17/89, our starting point. And I punched in United States wealth. I tried 17.89, I tried 17.90, I thought it might be a little easier in terms of a round year. And I think 4,000,000 or so references came up. And I didn't look at all 4,000,000, but I can tell you the data collection in those early days on many fronts was not anything mine today. You really can't find what I would consider reliable figures. You can find out how many mules there were in the country and a few things like that and trying to add them up. But in real estate, when you find them, when you're looking at houses or apartment houses or office buildings that they're each slightly different than each other, but they look to comparable sales. So it's hard to find a lot of countries that have been sold where the wealth has been estimated. But it was interesting to go back and think about the fact that in 18/03, we purchased for $15,000,000 we made the Louisiana purchase. That's a little later than 17/89. But that's the best comp as they say. And it was that's the best comp we could find for land mass anyway. And when we purchased made that purchase, that was equal incidentally to about a quarter on 800,000 plus square miles. But it was about a quarter of what the lower forty eight states now contain. So we bought about a quarter of the lower forty eight for this $15,000,000 back in 18/03. And if you live in Texas and your grandfather is close to dying and he calls the grandchildren, children around them, grandchildren, children around them. Well, the French sold us some mineral rights on that $15,000,000 deal as well. So we got that whole strip there. We got all of Kansas and essentially all of Oklahoma and they produced 21,000,000,000 barrels of oil for us, amount of natural gas since the purchase. One of the sidelines is that we paid our $15,000,000 for the Louisiana purchase. We paid $3,000,000 of it, 20 percent of it. We paid with 200,000 ounces of gold valued at $15 an ounce. And that $3,000,000 that the French took. And we got South Dakota as part of the Louisiana purchase. And the Homestake mine up there before it closed produced well over 40,000,000 ounces of gold and 40,000,000 ounces of gold and comes to about $60,000,000,000 worth. And like I say, we 200,000 ounces took care of 20 percent of our purchase price. So the Louisiana purchase was a bargain, but it's what the going price was for 800,000 square miles, I guess, at the time, and $0.03 an acre. And so I decided by playing around with various numbers such as that, that it has a reasonable estimate of the worth of the country, in 17/89, dollars 1,000,000,000 was not a crazy figure. Now if I'd been an academician or something, I would have put $1,107,000,000 $400,000 or something like that. I would have made it look respectable, but it's a wild guess. But it's not a crazy figure. So what has happened? Let's move on to the next slide, to the wealth of the country since then. And here we have some figures that come out pretty regularly, well they do come out regularly, where the Federal Reserve estimates the net household worth of people in the United States, all the households in the United States. And you can look these up and you'll see that there's $30,000,000,000,000 of stocks and I think maybe single family homes, whether there's $82,000,000 or so owner occupied single families and maybe $45,000,000 rental apartments and so on. So you start adding all these up and the Federal Reserve tells us and I invite you to look at the data, it's kind of interesting, that we now in the United States, 231 years later, we have $100,000,000,000,000 we have more than $100,000,000,000,000 of household wealth even though the stock market's gone down somewhat since the last quarterly report. So you say, well, we've got a lot of inflation, everything. We actually, in the United States, for the first half of our existence roughly, we didn't really have that much inflation. We had inflationary periods and deflationary periods, but the general price level did not change that dramatically. But I will assume again for this calculation that there's been 20 for 1 inflation. It's way less than that in many commodities, but it's and it's very hard to measure and talk about equivalent benefits from different kinds of products and so on and costs. But I think it's reasonable to say that the United States in real terms has increased and wealth, that's something in the area of 5,000 for 1, which is really it's mind blowing, 5,000 for 1 in real terms in a country that had a 0.5% of the and a bunch of raw land. But a vision that accomplished that in 231 years, there's just no denying that that that's beyond what anybody could have dreamt earlier. But it was not done, and this is important, because we've now hit a bump in the road. It was not done without some very, very serious bumps in the road. It was not 231 years of steady progress. And matter of fact, we had been in the in this birth of this country, we've been what into it 70 2 years. And if we go to the next slide, 18/61, we now had about 31,000,000 people. With the 1960s, it showed around 31,000,000 people or airpods in the country, and 4,000,000 of them were slaves, and we had never really resolved the very much unfinished business of what was involved in compromises in 17/89 and we'll have more to say about that later. But we had something that not too many countries experienced. And if you told people in 17/89 and 72 years, you were going to have a division that caused the President of the United States at Gettysburg to say that testing whether that nation or any nation so conceived and dedicated can long endure. Imagine the President of the United States wondering aloud whether the country that he was presiding over could long endure only 72 years or 74 years ago had taken place. So while this marvelous dream was being played out, roughly a third of the way through it, we faced this really moment of decision. And we entered into a contest that if we'll go to the next slide, made an estimate, they literally killed roughly 6% of the males in the country over between 1860, I'm assuming that there were more than 600 1,000 deaths in the war. And I think it's a reasonable estimate that 18 to 60 group was males were by far the great proportion. So imagine 6% of your working prime age, males in the country are wiped out in 4 years. So when we look at the progress of this country and we think of our own problems now, I just ask you to ponder, and we'll move to the next slide. That would be equivalent today to having 4,000,000,000 males in that same age group similarly wiped out. So that was one incredible interruption which this country nevertheless worked through while compiling this American dream that is one of the wonders of the world, perhaps the wonder of the world in many senses. So let's move on to the another crisis of a different sort that hit the country. And this, of course, is the 1929 crash, which led to the Great Depression. And here, the Dow Jones average which we'll use through this at that time that's the one everybody paid attention to, actually the 2nd most important average at that time. If you look at the papers, it was The New York Times average, which has disappeared. And of course, the Standard and Poor's has probably regarded as a superior yardstick. But the Dow Jones is a perfectly adequate yardstick. And on September 3, 1929, the Dow Jones average closed at 38,117, and people were very happy and buying stocks on margin had worked wonderfully. And the roaring 20s had a good feeling to it with the auto coming of age and the day of air travel coming along and all kinds of new appliances and the telephone getting wider use, believe it or not, hadn't really caught on that much prior there too. But the movies were coming on. It was a happy place. And then of course, if we move to the next slide, we'll look at what happened in the couple of months after September 3. And the Dow Jones average almost got cut in half. And that was pretty impressive until we had this recent situation where in a shorter period of time, we lost about a third. But the crash, and there's a great book about it called The Great Crash by John Kenneth Galbraith. Let me interject one little plug here. There's a small business in Oman. I hate what this what truncating this meeting or changing it so dramatically has done to many of the businesses in Oman, because I think small business is beneficial. We're the beneficiaries of a really they got a lot of business with the Berkshire meeting and they're going to get it in the future. But they suffered during a period like this and they just had a story about the bookworm. Well, the bookworm, if you buy any books that come out of it, I think I recommend, think about just putting bookworm in Omaha. And The Great Crash is a wonderful book, John Galbraith describes it. But I would like to get into a bit of a personal note, which will have some relevance, not too much, but some relevance to the story of the Great Depression because in 1929, my dad, who was 26 years of age then, was employed as a securities salesman by a local small bank. And he sold stocks and bonds, but he mostly sold stocks. And when stocks fall 48% and you were selling them to people a few months ago, you really don't feel like going out and facing those same people. So I think my dad probably like to do as they say now shelter in place, which means stay at home. And there really wasn't that much in our house. We just had a small yard. It was wintertime anyway. My dad wouldn't have been puttering on the yard anyway. And television wasn't there. And he and my mother got along very well. So under those conditions, if you'll turn to the next slide, I was born about 9 months later. So at but at that time, I was actually born on August 30th, but the stock market was closed that day and so I'm using the previous day figures. But the it wasn't I didn't notice at the time that the market was closed, but the stock market had actually recovered over 20% during that 9.5 month period or thereabouts. People did not think in the fall of 1930, they did not think they were in the Great Depression. They thought it was a recession very much like had occurred at least a dozen times, although not always when stock markets were important. But we'd have many recessions in the United States over the time and this did not look like it was something dramatically out of the ordinary. But and for a while, actually for about 10 days after my birth, that view held on. And the stock market actually managed to go up all of 1% or 2% there in those 10 days. But that's the last day. Well, from that point, if you'll turn to the next slide, the stock market went from a level of $2.40 to $2.41 which was a noticeable decline because if somebody had given me $1,000 on the day I was born and I bought stocks with it and bought the Dow average, my $1,000 would have become $170 in less than 2 years. And that is something that none of us ever experienced that may have got it with one stock, but in terms of having a broad range of America, markdown 83% in 2 years and markdown 89% of the peak was in September 3, 1929, was extraordinary. And in that intervening period less than 1 year after I was born, slightly less than 1 year, my dad went to the bank where he worked and had his account and of course the bank had a sign on it closed. And so he had no job. And he had 2 kids at that point. And his father had a grocery store, but Charlie and I both worked for my grandfather. Charlie worked there in 1940. I worked there in 1941, so we didn't know each other. But my grandfather said to my father that, Don't worry about your groceries. Howard, he says, I'll just let your bill run. That was my grandfather's not exactly. He was he cared about his family, but he wasn't going to go crazy. And one of the things as I look back on that period is And I don't think the economists generally like to give it that much of a point of importance. But if we'd had the FDIC 10 years earlier, we the FDIC started on January 1, 1934. It was part of the sweeping legislation that took place when Rosewill came in. But if we'd had the FDIC, we would have had a much, much different experience, I believe, in the Great Depression. People blame it on smooth haul here. And I mean, there's all kinds of things in the margin requirements in 'twenty nine and all of those things entered into creating a recession. But if you have over 4,000 banks fail, that's 4,000 local experiences where people save and save and save and put their money away and then someday they reach for it and it's gone. And that happens in all 48 states and it happens to your neighbors and it happens to your relatives. It has to have an effect on the psyche. That's incredible. So one very, very, very good thing that came out of the depression in my view As the FDIC, it would have been a somewhat different world, I'm sure, if the bank failures hadn't just rolled across this country and with people that thought that they were sabers found out that they had nothing when they went there and there was a sign that said closed. Incidentally, the FDIC, I think very few people know this, but or at least they don't appreciate it. But the FDIC has not cost the American tax paradigm. I mean its expenses have been paid, its losses have been paid, all through assessments on banks. It's been a mutual insurance company of the banks backed by the federal government associated with the federal government. But now it holds $100,000,000,000 and that consists of premiums that were paid in and investment income on the premiums less the expenses and paying of all the losses. And think of the incredible amount of peace of mind that's given to people that are not similarly situated in when the Great Depression hit. So the Great Depression went on and it lasted a very long time, but it lasted a lot longer in the minds of people than it did actually in its effects. World War II came along and on sort of an involuntary manner, we adopted Keynesianism. We started running fiscal deficits, of course, that were absolutely huge and took our debt up to a percentage of GDP, which we've never reached, had never reached before and never reached since. So we had an enormous economic recovery, but the minds of people had been so scarred, the memories. Parents told their children. 1929 became a symbol in people's minds. I mean, if you said 1929, it was like saying 1776 or 1492. I mean, everybody knew exactly what you were talking about. And it affected stock prices in a rather remarkable way to the point if you'll change to the next slide. It was January 4, 1951 that the kid who was born on August 30, 1930 had finished college before the stock market got back to where it was at that earlier time. So take the years from 1920, 1930 or 1929, really, to 1951 or take the year from my birth, 20 years, And bear in mind that the country was only 140 years old when they started that. That's 20 years out of this amazing 231 year lifetime of our country that was flat out a time of for a long time of no economic growth and no feeling by people in terms about the wealth of the country, about what American economy was worth, what all these corporations that were doing far, far, far better than they were on and off, but it took all of that time to restore in the market a price level that was equal to what it was when I was born 20 years earlier. So if you think about the fact that we're enduring a few months and we'll endure some many more months, but and we don't know how it comes out. And people in the '30s didn't know how it was going to come out, but they endured, persevered, prospered. And the American miracle continued. But it's interesting in that I actually don't have a slide for the next one because last night I was thinking after all the slides have been prepared, I was actually thinking about this a little bit, and I remembered that in 'nineteen at the start of 1954, the stock market was the Dow was only at about 2.80. And I remember 1954 because it was the best year I ever had in the stock market. And the Dow went from essentially, what, to 80 or thereabouts at the start of the year to a little over 400 at the end of the year. And when it went to 400, as soon as it went across 381, that famous figure from 1929, When it went to 400, this will be hard for some of you to believe, but everybody wondered, is this 1929 all over again? And it seems a little far fetched because it was a different country in 1954, But that was the common question and it actually achieved it was it achieved such a level of worry about whether we were about to jump off another cliff just because the 381 of 1929 have been exceeded, that they held Senator Fulbright, Bill Fulbright of Arkansas, who became very famous later in terms of the Foreign Relations Committee, but he had a dissent of Banking Committee. And he called a special for special investigation, and he called it the, what do you call it, the stock market study. But it really, if you read through it, he really was questioning whether we had built another house of cards again. And on his committee it's interesting to see the Senate Finance Committee, one of the members was Prescott Bush, the father of George H. W. Bush and grandfather of George W. Bush, and had some illustrious names. And his committee in March of 1955, with the Dow at 405, assembled 20 of the best minds in the United States to testify as to whether we were going crazy again because the market was at 400, the Dow was at 400, and we've gotten in this incredible trouble before. But that was the mindset of the country. It's incredible. We didn't really believe America was what it was. And my boss, the reason I'm familiar with this, 1,000 page book that I have here, I found it last night, in the library, I never was that I was working in New York for 1 of the 20 people that was called down to testify before Senator Fulbright. And he testified right before Bill Martin, who was running the Federal Reserve, testified and right after General Wood, who was running Sears, testified Sears was very, very important then. And Bill Martin, of course, is the fellow that longest running Chairman in the history of the Fed, and he's the one that gave the famous quote about the function of the Fed was to take away the punch balls just when the party started to get really warmed up. But Ben Graham, my boss, sent me over to the public library in New York and to gather some information for him. Something you could do in 5 minutes with computer now and I dug out something and he went to testify. And on Page 545 of this book, I knew where to look, I didn't have to go through it all, but he had the quote which I remember. And I remember because Ben Graham was the one of the 3 smartest people I've met in my life, and he was the Dean of People in Securities Business. He wrote the classic security analysis book in 1934. He wrote the book that changed my life, Intelligent Investor in 1949. He was unbelievably smart. And when he testified with the Dow at 404, he had one line in there right toward the start in his written testimony and he said the stock market is high, looks high, it is high, but it's not as high as it looks. But he said it is high. And since that time, if we'll turn to the next slide, of course, we felt the American tailwind at full force. And the Dow let's see, the Dow was went down Friday, but when we made the slide it was about 24,000. So you're looking at a market today that has produced $100 for every dollar. All you did was had to believe in America, just buy a cross section of America. You didn't have to read the Wall Street Journal, you didn't have to look up the price of your stock, you didn't have to pay a lot of money and fees to anybody. You just had to believe that the miracle was intact. But you'd had this testing period between 1929 and well really certainly 1954 is indicated by what happened when it got back up to 380. You had this testing period and people really had lost faith to some degree. They just didn't see the potential of what America could do. And we found that nothing can stop America when you get right down to it. And it's been true all along, it may have been interrupted One of the scariest of scenarios when you had a war with 1 group of states fighting another group of states. And it may have been tested again in the Great Depression and it may be tested now to some degree. But in the end, the answer is never bet against America. And that, in my view is true today as it was in 17/89 and even was true at the during the Civil War and the depths of the Depression. Now I'm now about to say something that and don't change the slide yet. I'm now about to say something that some of you will be tempted to argue with me about, but I would make the case that we are imperfect in great, great, great many ways. But I would say, and if you put up the next slide, that we are now a better country as well as an incredibly more wealthy country than we were in 17/89. We're far, far, far from what we should be, will be. But we have gone dramatically in the right direction. It's interesting. We said in 17/76, he said, We hold these truths to be self evident that all men are created equal, endowed by their or endowed by their creative and certain unalienable rights. Among these are life, liberty, and pursuit of happiness. And yet, 14 years later, a year after we really officially began the country in 17/89, adopted a constitution, we found that more than 15% of the people in the country were slaves. And we wrestled with that, but when you say the word self evident, that sort of sounds like you're saying any damn fool can recognize that. And you certainly say, you can argue maybe a little bit about life and the pursuit of happiness, but I don't see how in the world anybody can reconcile liberty with the idea that 15% of the population was enslaved. And it took us a long time to at least partially correct that the economy took a civil war and took losing 6% of those people that males that were between 18 60 years of age. But we've moved in the right direction. We've got a long ways to go, but we've moved in the right direction now. In addition, going back again to that 17/76 statement, that all men are created equal and endowed by their creator, etcetera. I think it was self evident to the 50% of the population that they were getting a fair deal for over half the lifetime of the country. It took 131 years of our countries. 231 years, it took 131 years until women were guaranteed the right to vote for our country's leaders. And then what's even more remarkable is that after we adopted the 19th Amendment in 1920, It took 61 more years until a woman was allowed to join those 8 males on the Supreme Court. I grew up thinking that the Supreme Court, you know, must have been said it had to be 9 men. But it at 61 years, so it took 192 years before Sandro de O'Connor was appointed to the court. And now you can say that there was a pipeline problem. Half the population may have been women in 'nineteen, 'twenty, but they weren't half the lawyers or 10% of the lawyers probably. So you can understand some delay, but 61 years is a long time to go and to pick 33 mails in between. If that was entirely by chance, then the odds against that you were flipping coins is about $8,000,000,000 to 1. Now like I said, there was a pipeline problem. But it took us a long, long time, and it's not done yet. But I think it does give meaning to the fact that we are a better society. We have a lot of room to go, but we are a better society that existed in 17/89. When you go to Colonial Williamsburg, you have that I've been there a couple of times. As a matter of fact, I watched the debate between Jimmy Carter and Gerald Ford there in 1976. And it was not a great time to be black. It was not a great time to be a woman. And both of those categories still certainly got potential for significant improvement in terms of fulfilling that pledge made in 17/76 about how we believe that it's self evident all men are created equal. But we have made progress. We are a better society and we will as figures go by. If you'll move to the next slide. And I believe that and I think let's see if I can get these slides in the proper order here. I believe that when you get through evaluating all of the qualitative facts, what we have done toward meeting the aspirations of what we wrote in 1776. What was we wrote in 17/76 wasn't a fact, but it was an aspirational document, and we have worked toward those aspirations. And we have a long way to go, but I'll repeat if you move to the next slide that never, never bet against America. Now let's move on now to a much broader subject, what I don't know. And I don't know. And perhaps with a bias, I don't believe anybody knows what the market is going to do tomorrow, next week, next month, next year. I know America is going to move forward over time, but I don't know for sure. And we learned this on September 10, 2000 and we learned it a few months ago in terms of the virus. Anything can happen in terms of markets. And if you can bet on America, but you have to be careful about how you bet. Because simply because markets can do anything. On October, whatever it was in 1987, October 11th, I believe, Monday, markets went down 22% in one day. In 1914, they closed the stock market for about 4 months. After nineeleven closed the market for 4 days, we hustled to get it going again. But nobody knows what's going to happen tomorrow. So when you when you better, I tell you to bet on America and I tell you that that's what's really gotten me through ever since I was bought my first stock when I was 11. I mean, I caught a huge, huge, huge tailwind in America, but it didn't wasn't going to blow in my direction every single day, and you don't know what's going to happen tomorrow. And I would like to, in the context of the present news, point out something you may find kind of interesting. If you go to YouTube, you'll find on June 17, 2015, 4 plus years ago, you'll find Sam Nunn, who's one of the people I admire the most in the United States and in the world, enormous patriot, tremendous senator. And he's carried on thankless work. Since leaving the Senate and I'd say heading something called the Nuclear Threat Initiative which most of you haven't heard of but have been slightly involved in it. Sam unfounded that. And the Nuclear Threat Initiative, simply organizations devoted to trying to reduce the chances of something of a nuclear, chemical, biological and now cyber nature from either malevolent or accidental or whatever it may be from causing deaths to millions of Americans and among the things in Sam co founded it and but he's been the heart and soul of the organization subsequently. And these talked about, worried about pandemics among along with the nuclear threat for decades. And he's participated in war games where they play out various scenarios, including malevolent pandemics that could be started by the same kind of nut that sent the anthrax letters in around nineeleven or a little after. And Sam, paired on this YouTube presentation, And I'm sure he's been on many others. I just happened to look this one up and talked about the dangers of a pandemic. And anybody should listen to Santen on any time he talks. So I said at that time, terms don't have borders, which we certainly learned the last couple of months. And I when I clicked on YouTube, if you'll go to the next I found out that recently it had 831 views and this was only a few days ago I looked it up and maybe I don't know whether most of those views have just been the last few days because in the last few months I should say because of the interest in pandemics. But it is hard to think about things that haven't happened yet. And so we can experience when something like the current pandemic happens, it's just it's hard to factor that in and that's why you never want to use borrowed money and at least in my view margin to buy into investments. And we run Berkshire that way. We run it so that we literally try to think of the worst case of not only just one thing going wrong, but other things going wrong at the same time, maybe partly caused by the first, but maybe independent even of the first. And you learned in I don't know what grade now, probably earlier than when I went to school, but in 5th or 6th grade that anything, you're going to have any series of numbers times 0 and just need one 0 in there and the answer is 0. And there's no reason to use borrowed money to participate in the American tailwind, but there's every other reason to participate. Now I can't resist pointing out that in October of 2019, a large 300 page, I got it right here, a book was brought out. And Johns Hopkins, one of the most respected institutions in the country, Nuclear Threat Initiative, NTI, and the Intelligence Group at The Economist collaborated to evaluate the problems of the worldwide preparedness for pandemics essentially. And I think in November, Sam came out to see me with Ernie Maurice, former Secretary of Energy, who now is the CEO of NTI. He and Sam are co Chairman. And Beth Cameron, who did a lot of work on this report, came out to see me and they gave me in November I believe of last year, they gave me this appraisal. And the opening line, if you'll turn the page, this is the opening line of this 300 page tome. Biological threats, natural, intentional or accidental, in any country can pose risk to global health, international security and the worldwide economy. And this book was prepared in order to evaluate the preparedness of the various countries and rank them. We rank pretty well, but all of us got a failing all of the countries got a failing grade basically. Now you would think that the prestige of Johns Hopkins and the economists along with people like Sam and Ernie, etcetera, that this would have gotten some attention. And again, Sam I'll turn the next page. Sam and the others went on YouTube on October 24, 2019, and they have racked up as of a couple of days ago, 1498 views. Now my friend Bill Gates was delivering the same warning at a TED talk some years back and he's gotten a lot more views, but it just says something about the fact that you're going to get bolts from the blue and you can read papers about them and you can talk about what will happen if some, as they used to tell us at Sigma, Solomon used to tell me some 25 Sigma event comes along and then, you know, they'd say this, that'll happen once in the life of the universe, you know, and then it happens to them a couple of times in a month and they go broke. You just don't know what's going to happen. You know, at least in my view, you know that America's tailwind is not exhausted. You're going to get a fine result if you own equities over a long period of time. The idea that equities will not produce better results than the 30 year treasury bond which yields 1.25 percent now. It's taxable income. It's the aim of the Federal Reserve to have 2% a year inflation. Equities are going to outperform that. They're going to outperform treasury bills. They're going to outperform that money you've stuck under your mattress. I mean, they are a enormously sound investment as long as they're an investment and they're not a gambling device or something that you think you can safely buy on margin or whatever it may be. It's interesting that stocks offer, which and stocks are a we always look at stocks as just being a part of a business. I mean, stocks are a small part of a business. If in 17/89, you'd saved a small amount of money and it wasn't easy to save. You might have bought with those savings. You might have bought a tiny, tiny plot of property. Maybe you bought a house that could be rendered to somebody. But you didn't really have the chance to buy in with 10 different people who were developing businesses and who were putting presumably putting their own money and then that would have the American tailwind behind. And of the 10, a reasonably high percentage would succeed in a way and earn decent returns. But those are the choices you might have had to do with savings. And they started offering bonds originally and there again you got a limited return, but the return may have been in those days may have been 5% or 6% or something of the sort. But you can't buy risk free bonds. I mean the yardstick for me is always the U. S. Treasury. And when somebody offers you quite a bit more than the U. S. Treasury, there's usually a reason that there's more risk. But going back to stocks, people bring the attitude to them too often that because they are liquid and quoted minute by minute, that it's an important that you develop an opinion on them minute by minute. That's really foolish when you think about it. And that's something Graham taught me in 1949. I mean that single thought stocks were parts of businesses and not just little things that moved around. On charts were very popular in those days and whatever it may be. Imagine for a moment that you decided to invest money now and you bought a farm and the farmland around here, let's say you bought 160 acres and you bought it at X per share per acre. And the farmer next to you had 160 identical acres, same contour, same quality of soil quality. So it was identical. And that farmer next door to you was a very peculiar character because every day that farmer with the identical farm said, I'll sell you my farm or I'll buy your farm at a certain price, which he would name. Now that's a very obliging neighbor. I mean, that's got to be a plus to have a fellow like that with the next farm. You don't get that with farms. You get it with stocks. You want 100 shares of General Motors on Monday morning somebody will buy your 100 shares or sell you another 100 shares at exactly the same price and that goes on 5 days a week. But just imagine if you had a farmer doing that. When you bought the farm, you look to what the farm would produce. That was what went through your mind. You're saying to yourself, I'm paying X dollars per acre. I think I'll get so many bushels of corn or soybeans on average. Some years good, some years bad, some years the price will be good, some years the price will be bad, etcetera. But you think about the potential of the farm, and now you get this idiot that buys the farm next to you, and on top of that he's sort of manic depressive and drinks, maybe smokes a little pot. So his numbers just go all over the place. Now the only thing you have to do is to remember that this guy next door is there to serve you and not to instruct you. You bought the farm because you thought the farm was had the potential. You don't really need a quote on it. If you bought in with John D. Rockefeller or Andrew Carnegie, there were never any quotes well, there were quotes later on. But basically, you bought into the business and that's what you're doing when you buy stocks. But you get this added advantage that you do have this neighbor who you're not obliged to listen to at all, who is going to give you a price every day and he's going to have his ups and downs and maybe he'll name a selling price that they'll buy at in which case you sell if you want to or maybe he'll name a very low price and you'll buy as far from them. But you don't have to, and you don't want to put yourself in a position where you have to. So stocks have this enormous inherent advantage of people yelling out prices all the time to you. And many people turn that into a disadvantage. And of course, many people can profit in one way or another from telling you that they can tell you what this farmer is going to yell out tomorrow or next your neighboring farmer is going to yell out tomorrow or next week or next month. There's huge money in it. So people tell you that it's important and they know and that, you should pay a lot of attention to their thoughts about what price changes should be or you tell yourself that there should be this great difference. But the truth is if you own the businesses you liked prior to the virus arriving. It changes prices and it changes but nobody is forcing you to sell. And if you really like the business and you like the management you're in with and the business hasn't fundamentally changed and I'll get to that a little when I report on Berkshire, which I will soon, I promise. The stocks have an enormous advantage and you still can bet on America, but you can't bet unless you're willing and have an outlook to independently decide that you want to own a cross section of America because I don't think most people are in a position to pick single stocks. A few maybe, but on balance, I think people are much better off buying a cross section of America and just forgetting about it. If you've done that if I've done that when I got out of college, it's all I had to do to make 100 for 1 and collect dividends on top of it, which increased would increase substantially over time. The American tailwind is marvelous. American business represents it's going to have interruptions and you're not going to foresee the interruptions and you don't want to get yourself in a position where those interruptions can affect you either because you're leveraged or because you're psychologically unable to handle, looking at a bunch of numbers. If you really had a farm and you had this neighbor and one day he offered you $2,000 an acre and the next day he offers you $1200 an acre and maybe the day after that he offers you $800 an acre. Are you really going to feel that at $2,000 an acre when you had evaluated what the farm would produce, are you going to let this guy drive you into thinking I better sell because this number keeps coming in lower the time. It's a very, very, very important matter to bring the right psychological approach to owning common stocks. But I will tell you if you bet on America and sustain that position for decades, you're going to do better than in my view, far better than owning treasury securities or far better than following people who tell you that what the farmers going to yell out next. There's huge amounts of money that people pay for advice they really don't need. And for advice where the person giving it can be very well meaning in it and believe their own line. But the truth is that you can't have you can't deliver superior results to everybody by just having them trade around a business. If you bought into a business, it's going to deliver what the business produces. And the idea that you can outsmart the person next to you or the person advising you can outsmart the person sitting next to you is, well, it's really the wrong approach. So, find businesses, get a cross section. In my view, for most people, the best thing to do is to own the S and P 500 index fund. People will try and sell you other things because there's more money in it for them if they do. And I'm not saying that that's a conscious act on their part. Most good sales people believe their own baloney. I mean that's part of being a good salesperson and I'm sure I've done probably that in my life too. But it's very human. If you keep repeating something, often that's why lawyers get the witnesses keep saying things over and over again that by the time they got on the witness stand, they'll believe it whether it was true in the 1st place or not. The you are dealing with something fundamentally advantageous in my view in owning common stocks. I will bet on America the rest of my life and I hope my successors at Berkshire do it. Now we do it in 2 different ways. We do it by buying entire businesses and we buy parts of businesses. And I would like to emphasize that while I'd like to give you a few figures that will tie in from our activities in the Q1 and also what we've done in April. We are not right about we do try to pick businesses that we think we understand. We don't buy the S and P 500. And we like to buy the entire businesses when we buy them, but we don't get a chance to do that very often. Most of the best businesses are not available for sale in their entirety. But we don't mind in the least buying partial interests in businesses and we would rather own 6% or 7% or 8%. You know, a wonderful company and regard it as a partnership interest essentially in that company. And we get an opportunity to do that through marketable securities and sometimes we get more opportunities than others. And with that, I hope I've convinced you to bet on America. I'm not saying that this is the right time to buy stocks, if you mean by right that they're going to go up instead of down. I don't know what they're going to go in the next day or week or month or year, But I hope I know enough to know. Well, I think I can buy a cross section and do fine over 20 or 30 years. And I think that's kind of for a guy, 89, optimistic viewpoint. But I hope that really everybody would buy stocks with the idea that they're buying partnerships and businesses and they wouldn't look at them as chips to move around up or down. So we will just now take a quick look. And I see we've got the Becky's e mail address. So if you have questions on what I've said or other things, you can e mail these questions and she is back there probably sort of a matter of trying to handle questions coming in and pick out the one she's going to prioritize. But feel free to anything I've talked about so far to send along to her. And we'll keep her address up when I later hold the formal part of the meeting too. Very briefly in terms of Berkshire in the Q1, you'll put up we have the slides on that. There we are. We our operating earnings were and there's much more about this in the 10 Q and it's really not worth spending any real time on. But the operating earnings for the Q1 have no meaning whatsoever in terms of forecasting what's going to happen the next year. And I don't know the consequences of shutting down the American economy. I know eventually it will work whatever we do. We may make mistakes. We will make mistakes and I'm not during this talk and later on, I'm not going to be second guessing people on this because nobody knows for sure what any alternative action would produce or anything of sort. But what we do know is that for some period, certainly during the balance of the year, but it could go on a considerable period of time, who knows. But our operating earnings will be less considerably less than if the virus hadn't come along. I mean it hurts some of our businesses a lot. I mean you shut down. Some of our businesses effectively have been shut down. It affects others much less. Our 3 major businesses of insurance and the BNSF Railroad and our energy business, those are our 3 largest by some margin. They're in a reasonably decent position. They will spend more than their depreciation. So some of the earnings will go along with depreciation, will go toward increasing fixed assets. But basically, these businesses will produce cash even though their earnings declined somewhat. And if we'll go to part 2, we virtually keep ourselves in extraordinarily strong position. We'll always do that. That's just fundamental. We ensure people we're a specialist to some extent and a leader. It's not our main business, but we sell structured settlements. That means somebody gets in a terrible accident, usually an auto accident. And they're going to require care for 10, 30, 50 years. And their family or their lawyer is wise enough in our view to rather than take some big cash settlement to essentially arrange to have money paid over the lifetime of the individual to take care of their medical bills or whatever it may be. And we're large, we've got many, many, many people that in effect have staked their well-being on the promises of Berkshire to take care of them. But like I said, 50 years or longer into the future. Now I would be I would never take real chances with money under of other people's money under any circumstances. Both Charlie and I come from a background where we ran partnerships. I started mine in 1956 for really 7, either actual family members or the equivalent. And Charlie did the same thing 6 years later. And we never, neither one of us I think, I know I didn't, I'm virtually certain the same is true of Charlie. Neither one of us ever had a single institution investment with us. I mean every single bit of money we managed for other people was from individuals, people with faces attached to them or entities, money with faces attached to them. And so we've always felt that our job is basically that of a trustee and hopefully a reasonably smart trustee in terms of what we're trying to accomplish. But the trustee aspect has been very important. It's true for the people with the structured settlements. It's true for up and down the line, but it's true for the owners very much too. So we always operate from a position of strength. Now I show on a slide that's up, I show our let's go back one. Yes. I show our net our cash and treasury both position on March 31st. And you might look at that and say, well, you've got $125,000,000,000 or so in cash and treasury bills and you've got at least at that point we had about $100,000,000,000 or so in equities and you can say well that's a huge position to have in treasury bills versus just $180,000,000,000 in equities. But we really have far more than that in equities because we own a lot of businesses. We own 100% of the stock of a great many businesses, which to us are very similar to the marketable stocks we own. We just don't own them all. They don't have a quote on them. But we have 100 of 1,000,000,000 of wholly owned businesses. So they are $124,000,000,000 is not some 40% or so cash positions is far less than that. And we will always keep plenty of cash on hand. And for any circumstances, if the nineeleven comes along, if the stock market is closed as it was in World War, one it's not going to be, but I didn't think we were going to be having a pandemic when I watched that Creighton and Villanova game in January. So we want to be in a position at Berkshire where well, you remember Blanche DuBois and the street car named Desire that goes back before many of you, but she said she didn't want them. In Pancho's case, she said that she's dependent on the kindness of strangers. And we don't want to be dependent on the kindness of friends even, because there are times when money almost stops. And we had one of those interestingly enough. We had it of course in 2,008 'nine, but right around the day or 2 leading up to March 23rd, We came very close, but fortunately we had a Federal Reserve that knew what to do. But money was investment grade companies were essentially going to be frozen out of the market. CFOs all over the country have been taught to sort of maximize returns on equity capital. So they finance themselves to some extent through commercial paper because that was very cheap and it was backed up by bank lines and all of that. And they let the debt creep up quite a bit of many companies and then of course they had the hell scared out of them by what was happening in markets, particularly the equity markets. And so they rushed to draw down lines of credit and that surprised the people who extended those lines of credit, they got very nervous. And the capacity of Wall Street to absorb a rush to liquidity that was taking place in mid March was strained to the limit to the point where the Federal Reserve observing these markets decided they had to move in a very big way. We got to the point where the U. S. Treasury market, the deepest of all markets, got somewhat disorganized. And when that happens, believe me, every bank and CFO in the country knows it and they react with fear and fear is the most contagious disease you can imagine. It makes the virus look like a piker. And we came very close to having a total freeze of credit to the largest companies in the world who were depending on it. And to the great credit of Jay Powell, I've always had Paul Volcker up on a special place, special pedestal in terms of Federal Reserve Chairman over the years. We've had a lot of very good Fed Chairman. But Paul Volcker, I had them at the top of the list and I'll recommend another book. Paul Volcker died about here, I don't know. Less maybe a year ago or less. But not much before he died, he wrote a book called Keeping at It. And if you call my friends with the bookworm, I think you'll enjoy reading that book. Paul Volcker was a giant. In many ways, he was a big guy too. He and Jay Powell couldn't see more in temperament or anything. But Jay Powell, in my view, and the Fed Board, long up there on a pedestal because with them because they acted in the middle of March, probably somewhat instructed by what they'd seen in 2,008 and 'nine, reacted in a huge way and essentially allowed what's happened since that time to play out the way it has. March, when the market had essentially frozen close a little after mid month ended up because the Fed took these actions on March 23rd, it ended up being the largest month for corporate debt issuance, I believe, in history. And then April followed through and was even a with even a larger month. And you saw all kinds of companies grabbing everything coming to market and spreads actually narrowed and every one of those people that issued bonds in late March April, I sent a thank you letter to the Fed because it would not have happened if they hadn't operated with really unprecedented speed and determination. And we'll know the consequences of swelling the Fed's balance sheet. You can look at the Fed's balance sheet, they put it out every Thursday, kind of interesting reading if you're sort of a nut like me. But it's up there on the Internet every Thursday and you'll see some extraordinary changes there in the last 6 or 7 weeks. And like I say, we don't know the consequences of that and nobody knows exactly. And we don't know the consequences of what undoubtedly we'll have to do, but we do know the consequences of doing nothing. And that's would have been the tendency of the Fed in many years past not doing nothing, but doing something inadequate. But Mario Draghi brought the whatever it takes to Europe and the Fed in mid March sort of did whatever it takes squared and we owe him a huge thank you, but we're prepared at Berkshire. We always prepare on the basis that maybe that will not have a Chairman that acts like that. And we really want to be prepared for anything. So that explains some of the $124,000,000,000 in cash and bills. We don't need it all. But we do never want to be dependent on the not only the kindness of strangers, but the kindness of friends. Now in the next slide, we have the what we did in equities. And these numbers are tiny when you get right down to it. I mean, for having $500,000,000,000 or so in net worth I mean, not in net worth, but in market value at the start of the year or something close to that. We bought in $1,700,000,000 of stock and our purchases were a couple of $1,000,000,000 more than our sales of equities. But as you saw on the previous slide, we had operating earnings of 5 almost $6,000,000,000 And so we did very little in the Q1. And then I've added another figure, which I wouldn't normally present to you, but I want to be sure that if I'm talking to you about investments in stocks more than I usually have, I want you to know what Berkshire is actually doing now. You'll see in the month of April that we net sold $6,000,000,000 or so of securities and that's basically that isn't because we thought the stock market was going to go down or anything of this sort or because somebody changes their target price or they change this year's earnings forecast. I just decided that I'd made a mistake in evaluating that was an understandable mistake, it was a probability weighted decision when we bought that we were getting an attractive amount for our money when investing across the airlines business. So we bought roughly 10% of the 4 largest airlines and we probably this doesn't it's not 100% of what we did in April, but we probably paid $7,000,000,000 or $8,000,000,000 somewhere between $7,000,000,000 $8,000,000,000 to own 10% of the foreign large companies in the airline business and we felt for that. We were getting $1,000,000,000 roughly of earnings. Now it wasn't getting $1,000,000,000 of dividends, but we felt our share of the underlying earnings was $1,000,000,000 and we felt that that number was more likely to go up than down over a period of time that it would be cyclical, obviously. But it was as if we bought the whole company, but we bought it through New York Stock Exchange and we can only effectively buy 10% roughly of the 4%. And we didn't we treated mentally exactly as if we were buying a business. And it turned out I was wrong about that business because of something that was not in any way the fault of 4 excellent CEOs. I mean, believe me, no joy being a CEO of an airline, but the companies we bought were well managed. They did a lot of things right. It's a very, very, very difficult business because you're dealing with millions of people every day and if something goes wrong for 1% of them, they are very unhappy. So I don't envy anybody the job of being CEO of an airline, but I particularly don't enjoy being in a period like this where essentially nobody and people have been told basically not to fly. I've been told not to fly for a while. I'm looking forward to flying. May not fly commercial, but that's another question. But the airline business, and I may be wrong and I hope I'm wrong, but I think it changed in a very major way and it's obviously changed in the fact that there are 4 companies are each going to borrow perhaps an average of at least $10,000,000,000 or $12,000,000,000 each way you have to pay that back out of earnings over some period of time. I mean, you're $10,000,000,000 or $12,000,000,000 worse off if that happens. And of course, in some cases they're having to sell stock or sell the right to buy a stock at these prices and that takes away from the upside down. And I don't know whether 2 or 3 years from now that as many people will fly as many passenger miles as they did last year. They may and they may not. But the future is much less clear to me, how the business will turn out through absolutely no fault of the airlines themselves. That's something that was a low probability event happened and it happened to hurt particularly whether it's the travel business, the hotel business, cruise business, theme park business, but the airline business in particular and of course the airline business has the problem that if the business comes back 70% or 80%, the aircraft don't disappear. So you've got too many planes and it didn't look that way when the orders were placed a few months ago and arrangements were made. But the world changed for airlines and I wish them well, but it's one of the businesses we have. We have businesses we own directly that are going to be hurt significantly. The virus will cost Berkshire money. It doesn't cost money because our stock and various other businesses moves around. I mean, if XYZ, which is, say, is one of our holdings and we own it as a business and we like the business, the stock was down 20% or 30% or 40%. We don't feel we're poor in that situation. We felt we were poor in terms of what actually happened to those airline businesses just as if we don't 100 percent of them. So that explains those sales which are relatively minor, but I want to make sure that nobody thinks that, that involves a market prediction. And that pretty well wraps it up for Berkshire. So now we move into the formal part of the meeting, which will be followed by fairly extended question and answer period if there are a lot of questions with Becky. And while we're doing this formal part of the meeting, it's not too exciting. So feel free to leave your whatever you're viewing this through and if you want to send questions to Becky, we'll keep her contact information up on the screen or if you want to picture yourself as now as you're doing anything else, we will now move or you can pay attention to the formal part of the meeting. But we will do this and won't take too long. And then we will move on to the question and answer meeting. So with that, I will call the meeting to order. And this follows the script, if you can't tell by what I'm saying. I'm Warren Buffett, Chairman of the Board of Directors of the company, and I welcome you to this 2020 Annual Meeting of Shareholders. Mark Hamburg is Secretary of Berkshire Hathaway, and he will make a written record of the proceedings. Dan Jaksich has been appointed Inspector of Elections at this meeting. He will certify to the count of votes cast in the election for directors and the motion to be voted upon at this meeting. The named proxy holders for this meeting are Walter Scott and Mark Hamburger. Does the secretary have a report of the number of Berkshire shares outstanding entitled to vote and represented at the meeting? Yes, I do. As indicated in the proxy statement that accompanied this note the notice of this meeting that was sent to all shareholders of record on March 4, 2020, the record date for this meeting, that were 699,123 shares of Class A Berkshire Hathaway common stock outstanding, with each share entitled to one vote on motions considered at the meeting and 1,382,000,370 shares of Class B Berkshire Hathaway common stock outstanding, with each share entitled to 1 10000th of one vote and motions considered at the meeting. Of that number, 472,037 Class A Shares and 834,000,000 802,274 Class B shares are represented at this meeting by proxies returned through Thursday evening, April 30. Thank you. That number represents a quorum, and we will therefore directly proceed with the meeting. First order of business will be a reading of the minutes of the last meeting of shareholders. I recognize Ms. Debbie Pozanyk who will place a motion before the meeting. I move that the reading of the minutes of the last meeting of shareholders be dispensed with and the minutes be approved. Do I hear a second? I second the motion. The motion is carried. The next item of business is to elect directors. I recognize Ms. Debbie Pisonic to place motion before the meeting with respect to election of directors. I move that Warren Buffett, Charles Munger, Gregory Abel, Howard Buffett, Steven Burke, Kenneth Chenault, Susan Decker, David Gottesman, Charlotte Guyman, Ajit Jain, Thomas Murphy, Ronald Olson, Walter Scott, and Merrill Whitmer be elected as directors. I second the motion. It has been moved and seconded that Warren Buffett, Charles Munger, Greg Gable, Howard Buffett, Steve Burke, Ken Chenault, Susan Decker, David Gottesman, Charlotte Guymon, Ajit Jain, Tom Murphy, Ron Olson, Walter Scott and Merle Whitmer be elected as Directors. The nominations are ready to be acted upon. Mr. Jackson, when you're ready, you may give your report. My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast not less than 543,203 votes for each nominee. That number exceeds majority of the number of the total votes of all Class A and Class B shares outstanding. The certification required by Delaware law of the precise count of the votes will be given to the secretary to be placed with the minutes of this meeting. Thank you, Mr. Jafske. Warren Buffett, Charles Munger, Greg Abel, Howard Buffett, Steve Burke, Ken Chenault, Susan Decker, David Gottesman, Charlotte Guyman, G. Kane, Tom Murphy, Ron Olson, Walter Scott and Merle Littmer have been elected as Directors. And Ken, if you're watching or listening, Ken Chenault, our new director, actually got the highest vote of all the directors well ahead of me, I might add. So congratulations, Ken. The next item on the agenda is an advisory vote on the compensation of Berkshire Hathaway's executive officers. I recognize Ms. Debbie Posnick to place a motion before the meeting on this item. I move that the shareholders of the company approve on an advisory basis the compensation paid to the company's named executive officers as disclosed pursuant to item 402 of Regulation S. K, including the compensation discussion and analysis, the accompanying compensation tables and the related narrative discussion in the company's 2020 annual meeting proxy statement. I second the motion. It has been moved and seconded that the shareholders of the company approve on an advisory basis the compensation paid at the company's named executive officers. Mr. Daxos, when you are ready, you may give your report. My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast not less than 519,750 votes to approve on an advisory basis the compensation to the company's named executive officers, the compensation paid to the company's named executive officers. That number exceeds majority of the number of the total votes of all Class A and Class B shares outstanding. Certification required by Delaware law of the precise count of the The motion The motion to approve on an advisory basis the compensation paid at the company's named executive officers has passed. The next item on the agenda is an advisory vote on the frequency of a shareholder advisory vote on compensation of Berkshire Hathaway's executive officers. I recognize Ms. Debbie Psonek to place a motion before the meeting on this item. I move that the shareholders of the company determine on an advisory basis the frequency whether annual, biennial or triennial with which they shall have an advisory vote on the compensation paid to the company's named executive officers as set forth in the company's 2020 annual meeting proxy statement. I second the motion. It's been moved and seconded that the shareholders of the company term the frequency with which they have they shall have an advisory vote on compensation of named executive officers with the option being every 1, 2 or 3 years. Mr. Jackson, when you are ready, you may give your report. My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 131,443 votes for a frequency of every year, 2,228 votes for a frequency of every 2 years and 419,984 votes for a frequency of every 3 years of an advisory vote on the compensation paid to the company's named executive officers. The certification required by Delaware law of the precise count of the votes will be given to the secretary to be placed with the minutes of this meeting. Thank you, Mr. Jackson. The shareholders of the company have determined on an advisory basis that they shall have an advisory vote on the compensation paid to the company's named executive officers every 3 years. Now we're through with sort of the boilerplate resolutions and this next item is of more importance. And we have put up on the birkcherhathaway.com site some material relating to this motion which I hope shareholders and others read because it's important and it's well, I'll describe it as the script says. The next item of business is a motion put forth by the Boards of Trustees of the New York City Employees Retirement System, the New York City Teachers Retirement System, the New York City Police Pension Fund, and the New York City Fire Pension Funds collectively called the systems. The motion is set forth in the proxy statement. The motion requests that the company adopt the policy for improving Board and top management diversity. The directors have recommended the shareholders vote against the proposal. I'd like to interrupt the script here just a second to point out that we, when we saw that it would be impossible to have shareholders attend this meeting and traveling to Omaha and gathering and gatherings which really neither the governor, the mayor, the public safety people thought would be advisable. We were hoping to have somebody from the Comptroller's office come and present the motion and then have a good discussion at the meeting of the pros and cons because it's a serious important subject. And I can tell you on a personal basis, I think I'm in sync with the controller and how he wants the world to evolve and I'm not disagree on the specifics of this motion as applied to Board generally and to Berkshire's Board in particular. And we've been very outspoken over the years. We probably written more on qualifications for directors than probably any company I can think of and we've been consistent over the years and we've explained the reasons for our position and we know a great many people disagree with that position. So I was I welcome the idea of really presenting to our meeting and having our shareholders hear what they had to say and evaluate what we had to what our thoughts were. And when we had to essentially not allow shareholders at the meeting, we immediately got in touch with the Controller's office. And we said we'd make an exception if anybody from the Controller's Office wanted to come out and present the proposition or the proposal and engage in our discussion of the pros and cons. And as you might expect, they were not in a position to send somebody. And we also so we offered we may have made it even in the 1st place. We'd be glad to have somebody introduce the motion on their behalf. And that we would also, if they would send along a supporting statement, we would be glad to have the person that was their proxy in effect present the motion, we'd be happy to have them read the supporting statement. And we said we'd appreciate it if they keep it to 5 minutes or less. And they wrote back immediately and or emailed back immediately and said that they'd be delighted to do it that way and they'd even try and keep it down to 3 minutes. So they have sent a supporting statement which is going to be read to you in a minute and I'm glad they did it. I do hope shareholders will or have already and others will read, will listen to what the supporting statement says and will also read the original arguments that they made in the proxy for their proposal and they will read our reasons for voting against, the suggest voting against because it's an important topic. And I really hope that next year that somebody from the Controller's office wishes to come out, we'd be glad to have even a more fulsome discussion of the subject. So with that, I will now recognize Mr. Hamburg to read a statement prepared by the Controller of the City of New York in support of the motion. Thank you. Mr. Chairman, members of the Board, fellow share owners, I'm Mark Hamburg from Berkshire Hathaway, and I'm here to present Proposal 4 on behalf of the New York City Comptroller, Scott Stringer, and the New York City Pension Funds. The funds have approximately $211,000,000,000 in assets as of February and are substantial long term Berkshire Hathaway share owners with 2,500,000 shares. Our proposal request that Berkshire Hathaway Board adopt a diversity search policy requiring that the initial candidates from which new director nominees and external CEOs are chosen include qualified female and racially or ethnically diverse candidates. First of all, we would like to commend the directors for the addition of Mr. Kenneth Chenault and the fact that 21% of the Board is made up of women. We would also like to recognize that the executive pipeline includes diverse candidates, including Mr. Ajit Jain, another Board member. Secondly, we applaud Mr. Buffet's recognition that women in the Board room have historically won the right to have their voices heard in a voting booth a century ago, attaining similar status in the Board room remains a work in progress. With our shareowner proposal, what we are seeking is to nudge this particular process forward. Thirdly, one of the things that Mr. Buffet mentions is that he only buys businesses that have 3 criteria, the second of which is able and honest managers and that the most important duty for a Board is to find and retain a talented CEO. We would note that in reviewing Berkshire Hathaway's largest stock market holdings of businesses, all 10 of these companies have boards that meet our board diversity requirement. In essence, the companies that Berkshire Hathaway has found fit to invest in are those that have more diverse boards. Fourthly, we would like to clarify that through this shareholder proposal, we are not asking for the Berkshire Hathaway Board, our guardians, to have a quantifiable end result in terms of its composition, but that an initial pool of candidates for a Board seat include a woman and another individual who is racially or ethnically diverse. We believe these candidates, if qualified, would also have very high integrity, business savvy, shareholder orientation and a genuine interest in the company. According to a 2016 Harvard Business Review study, including more than 1 woman or a member of a racial minority in a finalist pool helps combat the unconscious biases amongst interviewers and increases the likelihood of a diverse hire. What we are requesting is a small step in that direction to include diverse candidates at the beginning of the search. Finally, we would like to applaud Berkshire Hathaway's robust internal CEO succession plans. Our proposal states that a CEO diversity policy should only apply in the case of an external search. The New York City Comptroller's Office is disappointed that we never had the opportunity to discuss our proposal with directors or management, but remain open to constructive engagement. In the interim, we strongly earned Berkshire Hathaway share owners to support Proposal 4. Thank you. Okay. Thanks, Mark. And thank you to the Controller for the for presenting that supporting statement. The motion is now ready to be acted upon. Mr. Jackson, when you are ready, you may give your report. My report is ready. The ballot of the proxy holders in response to proxies that were received through last Thursday evening cast 65,925 votes for the motion and 485,824 votes against the motion. As the number of votes against the motion exceeds a majority of the number of votes of all Class A and Class B shares properly cast on the matter as well as all votes outstanding, the motion has failed. The certification required by Delaware law of the precise count of the votes will be put will be given to the secretary to be placed with the minutes of this meeting. Thank you, Mr. Jagadish. The proposal fails. I move that this meeting be adjourned. I second the motion to adjourn. Motion has been made and seconded. The meeting is adjourned. So thank you. I just looked at my watch and I talked a lot longer than I said it probably. And that's not a unique experience of mine that just occurred.

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