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Berkshire Hathaway Annual Meeting: Key Takeaways From Call With Warren Buffett

You should not buy stocks if you not prepared to hold them for a long time. You are not going to pick the bottom. You should be comfortable with the holding of stock even if it is 50% down

Photo Credit : Reuters

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Amid COVID-19 situation, Berkshire Hathaway held its 2020 annual meeting of shareholders as a Livestream-only event from its headquarters in Omaha, Nebraska.

Here are the key takeaways:

On the strength and resilience of the US economy


o 1930 Depression: Dow Jones lost 48% in 1929, recovered 20% by 1930 and it was not apparent that USA was headed into Depression; during depression - $1000.00 became $170 in less than 2 years (by 1932)
o If we had Federal Deposit Insurance (FDIC), we would had much different experience
o Took 20 years, to recover Dow Jones
o Have long way to go before creating wealthier and equitable society
o You can bet on America, but you have to be careful on how to bet
o We don’t know what will happen but eventually we will come out of this

On market movements…

o No one knows market will do tomorrow or next month or next year
o We came very close to get frozen on credit….
o S&P 500 Index fund investing is great idea.
o We don't know consequences of what Fed is doing, but we do know consequences if Fed had not done
what they have done
o Its good time to borrow money

On airlines & aerospace…

o Four Airlines (American, United, Southwest, Delta) would have to borrow 10-12 Billion$ and would have to pay back or find means (mostly via earnings)
o I don't know if as many people will fly in years from now, as they did before; World has changed for airlines, Americans will change their habits for airlines for prolonged period
o Yes, we sold the whole Stake in airlines. We don’t trim position, when we sell something, we sell all of it
o Boeing borrowed $14 billion and then $25 Billion. How the aircraft makers will pan out is yet to be determined… We're going to have aircraft in this. We're going to be flying. But the real question is if we need a lot of new planes or not

On Berkshire…

o Sold 6B$ of Stock in April (3% of portfolio)
o Remain Convinced about America - have seen resilience during WW2, 9/11, Financial Crisis, Cuban crisis
o Manufacturing - demand could be dramatically reduced because of virus. Causing Unemployment
o Retailers - doors are shut currently. But when stores will reopen, employment numbers will be better 5 years from now (using owned business as a proxy)
o Berkshire has 97 different businesses and these exhibiting different consumer behavior. Business that had problems before, continue to increase. For ex, Newspaper, Auto
o On the topic of buying stocks currently: “I would say there are things that are quite improbable, but that does not mean that they won’t happen. We don’t see all problems the first day….there are things that trip other things.”
o You should not buy stocks if you not prepared to hold them for a long time. You are not going to pick the bottom. You should be comfortable with the holding of stock even if it is 50% down


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