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Andy Serwer

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So what was it like yesterday at the Warren Buffett’s annual meeting?

Surreal.

Or about what you’d expect when you replace 40,000 people with 12 people.

Maybe lonely’s a better word for it.

Yesterday I wrote about my journey to Omaha and what to expect. Today, I’ll tell you what I saw.

Because of the coronavirus, Berkshire Hathaway’s meeting was a shadow affair. The CHI Health Center arena was empty, save for Buffett, vice chairman Greg Abel, CFO Marc Hamburg and a few others.

And you could tell Buffett missed it. He came up on the stage early and listened to our pre-game show. (Buffett laughed when one of our guests complimented Abel, who turned slightly red.) And when the meeting began, Buffett told a few zingers and looked up to get his normal reaction from the crowd, but there was no crowd so there was none of the usual laughter.

When Buffett first told me about the meeting this year, he envisioned an hour in total. Say 15 minutes of formal proceedings and 45 minutes of Q&A.

Instead we got four and half hours.

As we got closer to the meeting, Buffett obviously got fired up. For the first 90 minutes plus, Buffett delivered a pep talk to America in the form of a history lesson. It was positive of course, but he mentioned our major warts too. Like how our Founding Fathers were hypocrites about slavery. And how badly our society has short-shrifted women.

But in the end, more like a preacher than a history professor, he was trying to lift us up, repeating on numerous occasions, “Don’t bet against America.” And again, “Don’t bet against America.”

The stamina of the man is incredible. The passion. You try talking intelligently for 270 straight minutes when you’re 89-years-old. I only saw him look at his watch once! As Whitney Tilson pointed out, he’s still got it. Abel didn’t weigh in that much (And director Ron Olson told us not to read too much into just Abel being up there, he lives nearby.) It was 95% Buffett. And you could tell Buffett missed Charlie Munger, you could see it. When Greg said he had “nothing to add.” Buffett said, “We have another Charlie here.”

Warren Buffett and Greg Abel on stage staring at an empty CHI Health Center for the 2020 Berkshire Hathaway annual shareholder meeting. [Credit: Yahoo Finance]

Buffett still likes and holds the banks, but boy did he kiss off the airlines. Told us he sold off his entire holding; lock, stock and fuselage. Said he “wished them well.” Their road (flight?) back would just be too stomach churning for Buffett. In fact while Buffett is bullish on America long term he was rather cautious about the present, suggesting that the coronavirus made things seriously uncertain and reminding us it took until 1954 for the market to recover from the Great Depression.

Why is he not buying now? Because, Buffett suggested, the Fed has been doing too good a job. Jay Powell and company acted too quickly and too forcefully for companies to come begging to Buffett for capital. So, drat! There has been no sweeping in for Buffett so far.

“We have become a very, very, very rich country,” Buffett said near the end of the meeting. And yet—he said in response to a question from the actor Bill Murray asking about recognizing our health care workers as heroes during this crisis—we need to do better particularly when it comes to the have-nots in our society. Shortages? Yes, he seemed to be saying, we have them now. But how important are those wasabi-flavored Doritos anyway in comparison to an out of work waiter, or an EMT working around the clock?

An empty CHI Health Center, where the Berkshire Hathaway annual shareholder meeting was held. [Credit: Yahoo Finance]

You could tell this meeting was emotional for Buffett. You could hear it in his voice, and see it in his face and demeanor. And his hair was shaggy, (“not cut for seven weeks,” he said.) It’s a tough time for him, but not anywhere nearly as difficult as it is for millions of Americans—and he 100% recognizes that.

“See you next year, here,” he said to close the meeting. And then he lingered on the stage for several minutes or so with Abel, gathering his things, watching us do our post-game show and looking out at the empty arena,

And you could tell he wants it to come back. The meeting, the economy, and America too.

And it will come back. It will.

Author: Andy Serwer

Source: Finance. Yahoo: Here’s what you didn’t see inside Warren Buffett’s annual meeting

If you’re wondering what ultra-low or even negative interest rates will do to the financial markets, you are not alone. Warren Buffett is wondering too. To be clear though, he’s not particularly freaked out. Vexed, but not freaked.

As yields on U.S. Treasury securities fall to record lows — the 10-year Treasury yield (^TNX) dropped to 0.398% at one point this week — many worry that negative interest rates, already prevalent in Japan and Europe, will soon arrive on our shores. If that were to be the case, what the heck would it mean?

I asked Warren Buffett about negative rates last week during an interview at Berkshire Hathaway (BRK-A, BRK-B) headquarters in Omaha.

First, Buffett conceded that in general the bond market with its super low rates, and wildly swinging yield curve, “is really crazy.” But then he made it clear that neither he nor his partner Charlie Munger have any expertise or any interest in predicting where interest rates are headed.

“Charlie and I focus on what’s knowable and important,” he said. “Now, interest rates are important, but we don’t think they’re knowable.”

Warren Buffett

Buffett talked to me about his circle of competence: “My circle of competence doesn’t include the ability to predict interest rates a day from now, or a year from now, or five years now. Can I function without knowing that? It’s the same way as predicting what business is going to do, what the stock market’s going to do. I can’t do any of those things. But that doesn’t mean I can’t do well investing over time.”

“The most important question in the world”

As for negative rates per se, Buffett says the situation is “unbelievable.”

When I asked Buffett specifically what are the actual implications of negative rates, he went positively Yoda on me.

“I would say that’s the most important question in the world,” said the Oracle of Omaha. “And I don’t know the answer. Now, if we knew the answer, it wouldn’t be the most important question.”

Ohhhh….

Me: “I don’t like that.”

Buffett: “No, but it’s true.”

Another question to Warren: Has investing in equities changed given the interest rate environment?

“It reduces the hurdle rate,” he says. “That’s why they [business people, investors, governments] like to decrease it. It pushes asset values higher.”

Final question: “Do negative rates scare you, Warren?”

“They puzzle me,” Buffett said. “But they don’t scare me.”

That’s an answer which should give us some, but not total, comfort.

Author: Andy Serwer

Source: Finance. Yahoo: Warren Buffett on negative rates and ‘the most important question in the world’

Not as bad as 2008 or 1987.

That’s what Warren Buffett said about the current coronavirus, oil shock market maelstrom.

“If you stick around long enough, you’ll see everything in markets,” Buffett said. “And it may have taken me to 89 years of age to throw this one into the experience, but the markets, if you have to be open second by second, they react to news in a big time way.”

In an interview with the Berkshire Hathaway (BRK-A, BRK-B) CEO in his Omaha headquarters on Tuesday, Buffett called the recent market shock “a one-two punch” with coronavirus and the plunge in oil prices, but indicated that the October crash of 1987 which he called a “financial panic” was worse.

As for the market collapse in the the fall of 2008, he said that was “much more scary, by far, than anything that happened yesterday [Monday of this week.]”

Market volatility has exploded in recent weeks with the spread of COVID-19. The S&P 500 (^GSPC) has plunged 19.4% from its Feb. 19 high of 3,393.52 to its March 9 low of 2,734.43, that P/E has come down sharply.

Things really crescendoed on Monday with the major indices dropping 7% in a single day. The Dow Jones Industrial Average (^DJI) fell 2,013 points or 7.8%.

Author: Andy Serwer

Source: Finance. Yahoo: Warren Buffett reacts to the stock market rout, oil crash amid the coronavirus outbreak

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