Berkshire Hathaway If you care to comment, email me at bradley@wogsland.org with "Political Vloggery" in the Subject line. All links are good on the day of posting, but you know how some tend to die after a while.

I find it somewhat fitting that this year's Capitalist Woodstock, as the annual Berkshire Hathaway shareholder's meeting is often called, was held on May Day. We came to hear the Oracle of Omaha pontificate on investing, running a business and macroeconomics with his sidekick Charlie Munger throwing in the occasional aside. The event filled up the Qwest Center by 7:30 even though the meeting wasn't starting until 8:30 and Buffett wasn't speaking until an hour later after the annual video. The video was a long string of commercials for Berkshire Hathaway subsidiaries leavened with some Buffett footage including a running Red Sox relief gag. The Q&A with Buffett and Munger alternated between one news media question and one "chosen shareholder" question. Both, however, seemed to be a bit staged, although with Buffett's volumous knowledge it was hard to tell. The fact that question one from a journalist led Buffett to call for slide one to elucidate his answer seemed less than coincidental. Also, the multitude of countries represented by the shareholders asking questions vs. the predominately white male audience would lead one to believe multiculturalism was a factor in choosing who got to ask questions. Nevertheless, there were pearls of wisdom to be gleaned: * They've been doing business with Goldman Sachs for decades and plan to continue to despite recent allegations of impropriety. Buffett also thinks that the Goldman Sachs didn't do anything wrong. * Buffett and especially Munger want to see stronger financial regulation. This is in keeping with their statist approach to macroeconomics as opposed to their libertarian take on individual finances. They don't like derivatives and would be happy to see them made illegal. Buffett in particular commented on how business schools have in recent years been spending more of their time teaching how to valuate derivatives rather than valuating the underlying business. * They see Greece as the possible tip of the iceberg in a loss of government credit as investors begin to realize government deficit spending by the western world can't last forever. Nevertheless, they have no plans to involve Berkshire Hathaway in any currency plays. If anything they would bet against all currencies as mounting government debt will create inflationary pressure. * There was much discussion of succession plans with Buffett getting older every year, but he and Munger believe the culture of the company is ingrained enough to survive his death. * Buffett still believes he is a better investor than his shareholders. Thus, despite the economies of scale which make it difficult for him to find large enough investments that will yield high returns, there are no plans for Berkshire Hathaway to start issuing dividends. * China and India still have legal structures that, in Buffett's opinion, limit foreign investors too much to make a decent profit. * NetJets was an accounting failure, buying more planes than could be sold at a profit. * Berkshire Hathaway will continue to have no headquarters and no HR department because Buffett sees both as negative to corporate culture and a drain on profits. * Reputation is more important than profit and a focus on quarterly earnings can also really distort the culture. Pictures, videos and even cellphones were forbidden during the meeting, but these prohibitions were primarily observed in the breach.