“In the 58 years we’ve been running Berkshire, I would say there’s been a great increase in the number people doing dumb things, and they do big dumb things,” said Warren Buffett, CEO of Berkshire Hathaway, at Berkshire Hathaway’s annual meeting last Saturday.
He was speaking on the topic of value investing – an investment strategy that has undoubtedly worked for Buffett over the years.
Buffett’s advice on investing is why many people flocked to Berkshire’s annual meeting nearly a week ago. At the so-called “Woodstock for Capitalists” event, the Oracle of Omaha and Charlie Munger, Berkshire’s vice chairman, answered several hours of questions at the shareholder’s meeting.
So, in today’s Market 360, I’ll review the five key takeaways from last week’s event and Buffet’s comments on the current banking crisis. Plus, I’ll share my own insight on the ongoing banking crisis and how you can be prepared for whatever comes next.
5 Key Meeting Comments
To begin with, Berkshire Hathaway’s first-quarter earnings release coincided with the annual meeting.
For the quarter, the company reported operating earnings of $8.065 billion, up 12.6% from $7.16 billion in the last quarter of 2022. Net earnings, which includes short-term investment gains, came in at $35.5 billion, up substantially from $5.6 billion a year ago. This has to with first-quarter comebacks achieved from Buffett’s equity investments, like Apple Inc. (AAPL), of which Berkshire owns about 6%.
Apple was also one of the many topics covered in the annual meeting.
So, with that, let’s dig into five key takeaways from the meeting…
1. “Apple is Different” – Buffett said, “Our criteria for Apple were different than the other businesses we own. It just happens to be better business than any we own.” He added the iPhone is an “extraordinary product” for its popularity among customers. He even said that he regrets selling some shares of the company years ago. (Apple currently has a B-Rating, or “Buy,” in my Portfolio Grader, up in the last week from the C-Rating, or “Hold,” that it has been at since February.)
2. Deworsification of Portfolios – Munger said, “One of the inane things that’s taught in modern university education is that a vast diversification is absolutely mandatory in investing in common stocks.” He went to say the over-diversifying a portfolio can actually lead to a “deworsification” of an investor’s portfolio.
3. “Old Fashion Intelligence” vs AI – While both Buffett and Munger admitted that they believe AI will “change everything in the world,” Munger expressed that he is “skeptical of some of the hype.” Buffett doesn’t think that AI progress will ever trump human intelligence.
4. Occidental Petroleum – Buffett said that Berkshire Hathaway will not take over Occidental Petroleum Corporation (OXY). He stated, “There’s speculation about us buying control, we’re not going to buy control. … We wouldn’t know what to do with it.”
5. The Reserve Currency – When asked about Bitcoin (BTC) and the dedollarization trend, Buffett said that it is “a joke” to think of any tokens as the reserve currency, and that there is “no option for any other currency to be the reserve currency” besides the dollar. However, both Buffett and Munger did criticize the current over-printing of money.
Plus, given the recent banking crisis, Buffet also shared his thoughts about the banking system…
Buffett and the Banking System
Buffett believes that the banking system “shouldn’t” get stalled, although he said it very well “could.” He also assured depositors that they shouldn’t worry about losing their money.
As we know, though, banks have taken it on the chin recently.
Silicon Valley Bank and Credit Suisse Group AG (CS) collapsed in March, and shares of several regional banks fell near the end of last week. And on Monday, May 1, First Republic Bank (FRC) was sold to JPMorgan Chase (JPM), marking the second-largest bank asset failure in U.S. history.
Buffett did have some hard words about First Republic, saying that the directors and executives who were responsible for mismanagement should face “punishment.”
Then yesterday, shares of PacWest Bankcorp (PACW) ended the day down 23% after the bank announced that deposits dropped 9.5% last week. PacWest said that the outflows of cash started after news hit that the bank was “exploring strategic options.”
So, the banking system has definitely been turbulent lately – and, as I talked about at my Emergency Banking Briefing on Tuesday night, I believe the recent trouble with the banks is just beginning…
In fact, folks, I believe we’re about to see a historic “$8.3 Trillion Banking Shock.”
During Tuesday night’s live event, I’ll discussed in detail about this upcoming banking shock, and how it will leave millions of folks left behind… and why you don’t have to be one of them.
Instead, if you follow my playbook, you’ll have the chance to double your money over and over again in 2023 as the chaos unfolds.
If you missed my Emergency Banking Briefing event, click here for the replay.
Sincerely,
Louis Navellier
Editor, Market 360
P.S. On Tuesday night, I went live on camera to reveal the cold hard facts about the recent banking crisis and revealed 3 things you can do to protect your cash from any future bank failures…
I called the collapse of Silicon Valley Bank and First Republic months before they caught millions of Americans off guard.
And now I’m making what could be the biggest call of my career…
There is no time to waste.
Please click here to watch my Emergency Banking Briefing to prepare for what’s to come…
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
JPMorgan Chase (JPM) and Occidental Petroleum Corporation (OXY)
