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16 takeaways from Berkshire Hathaway's AGM

Here are the most notable things that Warren Buffett and Charlie Munger said at the 2018 annual general meeting

16 takeaways from Berkshire Hathaway's AGM

Future of the world is promising
I'm bullish on the future of the United States, but I'm bullish on the future of China, and to a significant extent the rest of the world. People are going to be living better 10, 20, 50 years from now, and I don't think that's something that can be stopped, absent weapons of mass destruction [Buffett].

Don't worry about trade wars
I don't think the United States or China - they'll be some jockeying back and forth and will leave some people unhappy - but I don't think either country will dig themselves into something that precipitates and continues any kind of real trade war in this country. [Buffett]

Stay away from long-term bonds
The one thing we know is we think long-term bonds are a terrible investment at current rates or anything close to current rates. So basically all of our money that is waiting to be placed is in Treasury bills that I think have an average maturity of four months, or something like that, at most. [Buffett]

Beware of cryptocurrencies
When you buy something because you're hoping tomorrow morning you're going to wake up and the price will be higher, you need more people coming into it than are leaving. And you can get that and it will feed on itself for a while, and sometimes for a long while, and sometimes to extraordinary numbers, but they come to bad endings, and cryptocurrencies will come to bad endings. And along with the fact that there's nothing being produced in the way of value from the asset, you also have the problem that it draws in a lot of charlatans and that sort of thing, who are trying to create various sorts of exchanges or whatever it may be. It's something where people who are of less-than-stellar character see an opportunity to clip people who were trying to get rich because their neighbour's getting rich buying this stuff neither one of them understands. It will come to a bad ending. [Buffett]

Why Buffett invested in Apple
We're betting on the success of Apple products like the iPhone, and I see characteristics in that that make me think it's extraordinary. And I didn't go into Apple because it was a tech stock in the least. I went into Apple because I came to certain conclusions about both the intelligence with the capital they deploy but more important the value of an ecosystem and how permanent that ecosystem could be and what the threats were to it and a whole bunch of things... It's much more the nature of consumer behaviour, and some things strike me as having a lot more permanence than others. [Buffett]

Investing isn't about formulas
I can't give you a formulaic approach, because I don't use one. And I just mix all the factors and if the gap between value and price is not attractive, I go on to something else. And sometimes it's just quantitative. For instance, when Costco was selling for 12 or 13 times earnings, I thought that was a ridiculously low value just because the competitive strength of the business was so great and it was so likely to keep doing better and better. But I can't reduce that to a formula for you. I liked the cheap real estate, I liked the competitive position, I liked the personnel system - I liked everything about it. And I thought even though its three times book or whatever it was then, that it's worth more. But that's not a formula. If you want a formula, you should go back to graduate school. They'll give you lots of formulas that won't work. [Munger]

Investing is about patience
He sits around reading most of the time and thinking, and every once in a while he talks on the phone. I can't see any difference. When there is nothing to do, Warren is very good at doing nothing. [Munger]

Disliking cryptocurrencies
I like cryptocurrencies a lot less than you do [Warren]. And so to me it's just dementia. And I think that people who are professional traders that go into trading cryptocurrencies, it's just disgusting. It's like somebody else is trading turds and you decide I can't be left out. [Munger]

Interest-rate cuts hurt the savers
Well, it really wasn't fair for our monetary authorities to reduce the savings rates mostly to old people with savings accounts as much as they did, but they probably had to do it to fight the recession effectively but it really wasn't fair. And it's only happened once in my lifetime. And it benefited the people in this room enormously because it drove the prices of public securities up including Berkshire Hathaway stock. So we're all a bunch of undeserving people. [Munger]

Going wrong with the newspaper business
Well, the decline was faster than we thought it was going to be. So it was not our finest bet of economic prediction. And I think it's even worse. To the extent we miscalculated, we may have done it because we both love newspapers and have considered them so important in our country. These little local newspaper monopolies tended to be owned by people who behaved well and tended to control the politicians. And we're going to miss these newspapers if they disappear. We're going to miss them terribly. And I hope to God it doesn't happen, but the figures are not good. [Munger]

Coping with a little mismanagement
My theory is if it can't stand a little mismanagement, it's no business. [Munger]

Futility of takeovers
I don't envy these people that are in these unfriendly uproars all the time. Imagine doing that after you were already rich. It's insane. [Munger]

Distrustful of AI and machine learning
I'm afraid the only intelligence I have is being provided by something that's not a machine, and I don't think I'm going to learn machine intelligence. If you ask me how to beat the game of Go with my own intelligence, I couldn't do it, and I think it's too old for me to learn computer science. Generally, I think the machine intelligence has worked -after all the machine now can beat the best human player of Go -but I think there's more hype in that field than there is probably achievement. So I don't think the world is going to be changed that much by machine intelligence. Some, but not hugely."

Be a life-long learner
If you're going to live a long time, you have to keep learning - what you formerly knew is never enough. So if you don't learn to constantly revise your earlier conclusions, and get better ones, you are - I always use the same metaphor - you're like a one-legged man in an ass-kicking contest. [Munger]

Adapting to time
Shareholders have one thing to be thankful for: Some of the age-related stupidity at headquarters has been ameliorated by Ted and Todd joining us. We are looking at the world with the aid of some younger eyes now. And they've had a contribution, beyond their own investments. And so you're very lucky to have them as shareholders because there's a lot of ignorance in the older generation that needs removal. [Munger]

Hold onto the Berkshire stock
Those of you who after we are gone sell your Berkshire stock and do something else with it, I think are going to do worse. So I would advise you to keep the faith. [Munger]