The 2022 Berkshire Annual Meeting in 28 Quotes: Munger Says China Is Still Worth Investing In

On April 30, 2022, Berkshire Hathaway held its annual shareholders’ meeting in Omaha, Nebraska — the hometown of its founder, Warren Buffett. It was the first time the meeting had returned to an in-person format since the pandemic broke out in 2019.

The meeting ran from 9:30 a.m. to 3:30 p.m. local time, lasting more than six hours in all. Before a stadium crowd of 40,000, the 92-year-old Buffett and the 98-year-old Munger fielded questions from investors both online and in the room.

Buffett’s longtime friend Bill Gates, JPMorgan CEO Jamie Dimon, and Apple CEO Tim Cook were all in attendance.

The following is compiled from a selection of the Q&A, drawn from Taylor of China Fund News and from Andy’s own viewing of the online broadcast.

1. Buffett: Berkshire lost money versus last year

Berkshire’s first-quarter 2022 revenue was $7.04 billion, up 0.3% year on year, while net profit was $5.46 billion, down 53% year on year — largely because of a $1.58 billion net loss on investments and derivatives, versus a net gain of $4.69 billion in the same period a year earlier.

2. Buffett: A sharp increase in stock holdings in Q1

In the first quarter Berkshire bought a total of $51.8 billion in stocks while selling $10.3 billion. Of that, $41 billion was concentrated between late February and mid-March. Even though its cash levels fell sharply, Buffett still said the company would keep enough cash to stay safe; Berkshire had not conducted any share buybacks since April.

In the first quarter it mainly added to Occidental Petroleum and Chevron, and acquired 11.4% of HP for $4.2 billion.

3. Buffett: Berkshire holds a great deal of cash

In his opening remarks, Buffett said: “One thing that will not change is that we will always have a great deal of cash on hand.”

He spoke of the caution he and vice-chairman Charlie Munger bring to shareholders’ money: “The idea of permanently losing other people’s money — people who have trusted us — is a future I do not want to have.”

As of December 31, 2021, the company held $143.9 billion in cash and U.S. Treasuries; by March 31, 2022, that had fallen to $102.7 billion.

4. Buffett: The stock market is as hard to read as a casino

At the meeting Buffett said the market had been turbulent and hard to read over the past two years, like a casino in which everyone is gambling.

“Over the past two years the market has been very hard to read, with great turbulence,” Buffett said. “Sometimes it seems to be investment-oriented. You may have read in books how capital markets are supposed to behave, and you study that. But at other times the market is like a casino, with everyone gambling inside it — and that has been especially true over the past two years, driven by Wall Street, because the market has indeed been very bullish these two years. Think about it: if you had bought Berkshire in 1965 and held the stock, fine — but if you were a trader who kept holding on and trading right up to now, you’d have starved.”

“So the way Wall Street makes money is through speculation. Two hundred years ago many people probably never imagined capitalism would still be going today. Investment managers and traders only make money when others want to act; they make far more when everyone is speculating and gambling. Think of someone trading twenty times a day, like pulling a slot machine — that’s how they make their money. They love watching people trade, and the market has come to be dominated by this.”

5. Buffett: Berkshire is far stronger than the banks

Buffett has a long history of teasing investment bankers and financial institutions. He said investment banks encourage mergers and spin-offs in order to earn fees, not to improve companies.

He noted that Berkshire is always flush with cash and, when needed, does “a better job than the banks” at extending credit lines to companies that need them.

6. Buffett: Thanks to the Federal Reserve

At the meeting Buffett heaped praise on Fed Chair Powell’s decisive, swift action, saying we should “take our hats off” to him.

Buffett said that if a similar crisis were to recur, a cash-rich Berkshire could act much as a rescuing Fed does. Back in the 1980s, then-Fed Chair Volcker told me the Fed could do whatever it needed to do. That was true in 2008 and in 2020, and it will happen again; when it does, you’ll want Berkshire to be there operating alongside the Fed. If the economy falters, this can always happen.

7. Buffett: Beware “new forms of money”

Warren Buffett warned shareholders to beware “new forms of money.” He recalled the 2008 financial crisis and said Berkshire “will always keep a great deal of cash on hand.”

Buffett held up an image of an old $20 bill, saying, “The U.S. government regards this as legal tender that can be exchanged within the United States.”

Although Buffett has in the past likened Bitcoin to “rat poison” and dismissed it as having no special value, today he did not name Bitcoin or any other cryptocurrency. Charlie Munger has also voiced hostility toward crypto.

“This is money,” he added. “It may well turn out to lose a great deal of its purchasing power, as the paper currencies of many countries have. But when people tell you they are developing new forms of money, this is the only thing that can pay your bills.”

8. Munger: The market has never been as crazy as it is now

At the meeting Munger said we have never seen a situation as crazy as this — crazy gambling, buying fast and selling fast; it really doesn’t look good. I wouldn’t call it the glory of capitalism either; it’s just a bunch of people throwing dice, and after they throw, they close their eyes and see what happens. Of course, getting rich is not a bad thing, but you also need to find yourself in it, and work out how to place yourself within such a system.

Munger said there was almost a speculative frenzy in the market. Computers running algorithms trade with other computers running algorithms; participants with little market experience take advice from brokers who have even less; it’s contemptible. Warren Buffett added, “But they understand commissions.”

Speaking of Robinhood — the well-known retail brokerage nicknamed the “home base of retail investors” — Munger said it had drawn everyone into short-term gambling and speculation: “I think this is a disgusting way to behave,” and Buffett agreed.

“Look at how much money they made last year selling stocks through speculation — and now you can see their comeuppance. A lot of the insider traders are the traders on their platform, and we’re watching them get their just deserts,” Munger said. “I don’t think we should criticize, but I really can’t help it.”

Buffett said: “They built a system where, if you want to buy a three-day call option on a stock, great — they make more money selling you the call than selling you the stock, so they teach you about calls. Nobody pays attention to a cold call trying to sell them a farm. That’s why the market does such crazy things. Occasionally Berkshire gets a chance to do something too, but it’s not because we’re smarter — it’s because we’re more rational, which is the basic requirement of this business.”

9. Buffett: I missed the opportunity of March 2020

Question: Every one of Berkshire’s decisions has caught the timing, and caught it well. How do you time it so well?

Buffett said he had never figured out how to time the market and never would: “We haven’t the faintest idea how the stock market will move. I don’t think we’ve ever made a decision where one of us said, or felt, that we should buy or sell based on where the market or the economy is headed. We just don’t know.”

Buffett answered that they do not buy or sell because of market or economic conditions, because they aren’t clear about the actual situation either.

Buffett said that during the 2008 financial crisis everyone was panicking, and we didn’t seize the timing then either; we only buy when we think something is cheap — which is a lesson you could grasp in the fourth grade. We also missed the market crash of March 2020. So we’re not especially good at timing investments precisely; we simply buy when we think something is cheap.

“I completely missed that opportunity — the opportunity of the market crash back in March 2020,” Buffett said. “We’re not especially good at timing; we may do it reasonably well, but we haven’t managed to do it with any precision. We were also hoping the downturn would last a little longer so we could invest more. Because if prices are cheap, we’ll certainly buy more.”

9. Buffett: Acquiring the insurer Alleghany was quite accidental

Question: In the shareholder letter you wrote on February 26, you seemed to say there wasn’t much in the market to excite us — yet on March 10 you went and acquired the insurer Alleghany, and later added to HP. Between the day you wrote the letter and the day you made this big move, what happened? How did such a large move come about in the space of a month and a half?

Munger: We found something more attractive than bonds. It’s that simple.

Buffett: Charlie usually gives everyone the complete answer, and I hardly know what to add. Our shareholder letter was dated February 26, but let me be honest with you: it was actually the day before, February 25, that I received an email. One day my assistant Debbie had a big pile of things on her desk — sometimes I collect the things she leaves there — and there was this note, just a few lines. It was from a friend of mine at Berkshire from a few years back; that day was February 25. In the note he wrote that he had now become the president of a company called Alleghany, and I had been following Alleghany for sixty years — not only that company, of course; every company is one I’m interested in tracking.

But I did know quite a lot about Alleghany from following it over those sixty years. In the note, John mentioned that this was his first annual report as CEO, and that he wanted to send it to me. I was writing my own annual report — rather as if I were writing you a letter — so I wrote a note back to John and said I’d read it over the weekend, and that I was very much looking forward to it. I also mentioned, by the way, that I’d be in New York on March 7 — should we meet and talk? Before that day I had absolutely no plan to acquire this company, no thought of doing so; but I knew I wanted to buy Alleghany. If he hadn’t sent me that note, it might not have happened; or if we hadn’t met on March 7, it wouldn’t have happened. As it turned out, John had just sent me — quite by coincidence — that annual report.

So that’s how it happened. That’s our decision-making process. I didn’t call an investment bank and say I wanted to look at so-and-so’s annual report; it was purely by chance.

10. Munger: Removing Buffett is absurd

Charlie Munger sharply attacked a shareholder proposal to remove Buffett from his role as chairman. Munger called it “the most ridiculous criticism I have ever heard.”

Alluding to the ancient Greek epic the Odyssey, Munger said: “It’s as if Odysseus came home in triumph after winning the battle of Troy, and someone criticized him by saying, ‘Though you won that war, I don’t like the way you held your spear.’”

On April 19, CalPERS — the largest public pension fund in the United States — disclosed that it would vote in favor of a shareholder proposal to “remove Buffett as chairman of Berkshire Hathaway.” That fund is the largest state public pension fund in the U.S., with more than $450 billion in assets and around $2.3 billion in Berkshire shares.

Munger said: “Some people have never run any business and know nothing.”

11. Buffett: To fight inflation, invest in yourself

Question: If you could choose only one stock to fight high inflation, what would it be, and why?

Buffett said the best thing you can do is to be exceptionally good at something. Whether or not there’s an economic benefit, people will give you some of what they produce in exchange for what you can offer — your skill. The best investment is to invest in yourself. Do what you’re good at, be useful to society, and you won’t have to worry about your money losing value to inflation.

Munger said that when you have your own retirement account and your money manager tells you to put it all into Bitcoin, say “No.”

Buffett said: my answer isn’t one stock, it’s several — do what you’re good at. So the best investment is to develop yourself. Developing yourself is not taxed; that’s what I’m doing at this time.

Buffett said what matters more at a time like this is your own ability; what others trade for is your ability, and the best investment is to develop yourself.

The 98-year-old Munger said: I can give you some investment advice too — if someone tells you to invest in some Bitcoin, just turn them down.

12. Buffett: When the economy stalls, the company can still operate

Buffett said: “We want Berkshire Hathaway to be able to keep operating when the economy stalls.” “It will always happen — it will always happen.”

Buffett played an important role during the Great Recession, providing capital at critical moments to companies such as Bank of America and Goldman Sachs. The move drew criticism from those who disapproved of supporting big banks.

The billionaire investor made these remarks while also praising the Fed’s role in the 2008 financial crisis and the pandemic.

“The Fed didn’t leave,” Buffett said. He added that the Fed would “do whatever it takes… That’s what happened in 2008 and 2009, and what happened in 2020, and you want it to happen next time too.”

13. Buffett: We are powerless against nuclear war

At the meeting Buffett said that if atomic or nuclear war were to break out, we too would be powerless. Neither Berkshire nor anyone else in the world wants to think about such things, but it cannot be denied that among the world’s great powers today, a miscalculation or a misunderstanding could bring us very close to such a situation.

It has been this way in the past — several near-misses, such as the Cuban Missile Crisis. Charlie and I both lived through that period, and we know how close the world came to weapons of mass destruction being used in an outbreak of war. So, in a latent sense, many terrible things can happen out of human desire, and we humans have not yet found a place where technology can counter it. A single spark, and we could be back in the caves of old overnight.

Berkshire has no answer to the question you just asked. There’s no way for us to write a policy for such a situation; if it truly happened, we too would be helpless. That risk is shared by everyone, and Berkshire has no way to protect you against it. So far we’ve been relatively lucky.

Berkshire vice-chairman Ajit Jain said: to the example Warren just gave, another issue that worries me is the use of nuclear weapons. I may genuinely lack the ability to estimate how large our exposure really is. If a nuclear war truly broke out, our exposure would be very hard to estimate. Other natural disasters I can at least estimate reasonably — I can gauge fairly accurately how large our exposure is and how much we’d lose. But with an actual nuclear war, I can only throw up my hands; it’s very hard to predict how bad it would be, and there would be many lines of exposure affecting us. In all of our contracts we try to exclude situations like nuclear weapons, but if such a situation occurred, our regulators and the courts would take a position against insurers, and we would certainly rewrite our policies under those conditions rather than pay out as required. So we would presumably have a policy that we’d redo, one that excludes the risk of nuclear war. For instance, what about fire insurance — what if a nuclear war caused a fire? People ask me that too. So this question remains very complex, and we’ll keep wrestling with it. For the insurance industry it’s a hard problem — how to argue it out with our regulators and bankers over what can and cannot be covered.

14. Buffett: The second half of life is not like the first

Buffett joked that Charlie told him to just find out where you’re going to die and never go there — and said it had worked well so far. Buffett also said he was honored that everyone had chosen him as a partner, and thanked them for their trust.

Over the experience of the past forty years, in terms of human and all animal behavior, things get better and better. So the second half of life may not be like the first; we should think about how to do the present better, forget everything you chose before, and be sure to enjoy the second half of your life.

15. Munger: Robinhood drew everyone into gambling

Munger: Look at Robinhood — it shot up so fast. Do you think that was obvious? After it went public, it drew everyone into short-term gambling, into speculation; I think this is a disgusting way to behave.

Buffett: Yes, that’s right. Last year they made a lot of money selling stocks through speculation — and now you can see their comeuppance, can’t you?

Munger: Now they’re getting their comeuppance; a lot of the insider traders are the traders on their platform.

Buffett: Now we’re watching them get their just deserts.

Munger: Yes, I have to agree with that. We shouldn’t go around making enemies everywhere — why do we keep criticizing others here? I don’t think we should, but I really can’t help it.

Munger said: “Look at what happened to Robinhood from peak to trough.” “This kind of thing was bound to happen — isn’t it obvious?”

Munger said the “hidden kickbacks” of this business model were “disgusting.” Robinhood makes money through a practice called payment for order flow, collecting part of the spread on trades it passes forward to larger trading firms.

Buffett: This 98-year-old sage beside me still can’t manage to hold his tongue even a little. Now it’s the lunch break; everyone, have your lunch.

16. Buffett: Our departure won’t affect the company

Buffett noted that Berkshire’s culture is, first, that this is a hard-working company, and second, that the company will always care about shareholders’ interests. Culture accounts for 99.9% of how a company operates, and Berkshire is no different.

Berkshire’s goal is to still exist in the next hundred years. Berkshire builds a better, less shakable relationship with its shareholders, and it hopes shareholders can stay in step with the company. Berkshire will hand the company to people it believes in.

17. Buffett: My “epiphany” moment

A trip to the New York Stock Exchange at age 9 deeply inspired Warren Buffett, and he began investing at 11.

“I went to the New York Stock Exchange, and I was in awe of it,” Buffett said. “I was very interested in technical analysis and stock charts, did all kinds of crazy things, saved money to buy other stocks and tried short-selling. I just did everything.”

He said that at 19 or 20, after reading Benjamin Graham’s The Intelligent Investor, he completely changed the way he invested.

Buffett said: “I read that book, and I came to a passage, and it told me I’d been doing everything wrong. I’d simply had the whole approach wrong.”

Buffett said that at 19 or 20 he read a book (Graham’s The Intelligent Investor) and then discovered that everything he’d thought before was wrong. On stage he showed two slides, meaning to illustrate that different people can see different things in the same two images (two faces or a vase; a rabbit or a duck).

18. Buffett: Become a better person in the second half of life

Buffett spoke about his outlook on life, using marriage as an example: people tend to hide their weaknesses before marriage and show a better version of themselves, at which Charlie Munger chimed in, “It’s all right — people do improve.” Buffett believes that becoming a better person in the second half of life matters more than flaunting wealth.

19. Buffett: We don’t casually talk politics

Responding to a question on “how he views U.S. public companies becoming more active on political issues,” Buffett said that if he really wanted to keep speaking out all the time, without having to worry about affecting shareholders, then he would give up the CEO role — but he doesn’t want to do that. Buffett said he doesn’t want certain things blamed on Berkshire, leaving others to bear the consequences.

Both Buffett and Munger said they wouldn’t say things that damage the company’s image. Buffett said: what I say and do should not override Berkshire itself; otherwise I ought to resign.

20. Buffett: To fight inflation, raise your earning power

Buffett: The tool against inflation is your own earning power. Nobody knows what inflation will be in ten or twenty years. But everyone is talking about it.

Buffett said inflation “swindles almost everyone.” Asked about his earlier comment that inflation “swindles” stock investors, Buffett said the damage from rising prices goes far beyond that. “Inflation swindles bond investors too. It swindles the person who hides cash under the mattress. It swindles almost everyone.”

Buffett noted that inflation also increases the amount of capital a company needs to hold, and that this is not as simple as raising prices to maintain inflation-adjusted profits. Buffett cautioned against listening to anyone who claims to be able to predict the path of inflation. “Everyone is talking about inflation. The question is how much… and the answer is nobody knows. Nobody knows what inflation will be in ten or twenty years.”

Buffett reiterated that the best protection against inflation is to invest in your own skills.

21. Buffett: I’m not the only one picking stocks

Buffett said: “Time and again I see newspaper headlines saying, ‘Buffett bought this stock, bought that stock.’” “In fact, it isn’t I who bought something — it’s Berkshire Hathaway that bought it.”

Buffett said other financial professionals at his firm may have bought a stock without his ever having heard of it.

Buffett said: “But if the headline says Buffett bought this company, rather than saying Berkshire, it draws more readers — that kind of headline is designed to pull people into the story.”

22. Buffett: We don’t allow a culture of lying

Buffett said: under GAAP accounting standards I could actually play a lot of games and pull a lot of tricks; at most, we’ve done some foolish things in the past, but we have never told anyone that a number must reach a certain level, nor told anyone to fudge or falsify — we have absolutely never done that. Think about it: once you start faking, first you take five dollars out of my account, then later you put it back. But do enough of these bad things and the snowball grows bigger and bigger, and you can’t stop.

So this kind of behavior will always lead your company to ruin someday. I really can’t imagine such a situation — my company has tens of thousands of people, and I can’t let them be harmed by my behavior. They’re all listening to the messages we send them every day; if you start lying, you’ll have a big problem. It’s that simple a truth. You have a responsibility to your team, and your relationship with shareholders is your responsibility. I have to tell them our stock is their best choice compared with thousands of others, so we need to lead by example. You have to tell them where the wind is blowing, and know what to tell them. For instance, you tell them how much you’ll earn per share — even if you say you’ll earn 3.59 but you can earn 5.59, that’s a good thing. Sometimes you’re audited too; we want to make the process healthier. We cannot allow a culture of lying in the company.

23. Munger: In China you can buy companies worth investing in

Responding to a question about investing in China, Munger acknowledged that investing in China is indeed somewhat harder than in the United States. But his reason for investing in China is that he can buy better companies there at lower prices.

24. Buffett: I treat Berkshire as a painting

In Warren Buffett’s eyes, the possibilities for Berkshire Hathaway are endless; he compared the company to a work of art.

“I regard Berkshire Hathaway as a painting,” Buffett said. “It is unlimited in size; it has an ever-expanding canvas, and I can paint whatever I want.”

Buffett admitted he really knows little about art, but added: “Other people look at a painting and see something, and then they see more, and they really do have different views of it. To me, Berkshire is a painting, and I get to paint.”

Buffett said: “It’s in my mind, and as I develop, I see different things.” “Very satisfying.”

25. Buffett: Helicopter money was the right choice

Responding to a shareholder’s question about how inflation is affecting Berkshire’s businesses, Buffett said that in their view many of the companies were doing “very well.” He went on to explain that this round of inflation is very different from earlier experience. At the company’s furniture stores, even though furniture prices were rising fast, wealthy people were still willing to pay. But in earlier years there were times when people had no money in hand and couldn’t even afford candy.

Buffett said the government had handed out a lot of money to people, and at some point that money simply could not be worth that much. Still, Buffett defended the decision behind the “helicopter money” policy, calling it the right choice.

Speaking of the massive stimulus during the pandemic as a key reason for today’s rising prices, he said: “You printed a lot of money, and money becomes worthless.”

But he did not criticize the Fed’s actions. “Powell is a hero. It’s simple. He did what he had to do,” Buffett said.

26. Buffett: Bitcoin has no value

At the meeting Buffett once again attacked cryptocurrency, saying that unlike a farm or an apartment, Bitcoin produces no value; its price depends only on how much the next person who buys it is willing to pay. Crypto may seem to hold a magical allure right now because of hype, but it has no productive capacity of its own.

Commenting on cryptocurrency, Munger said: “It’s stupid because it’s likely to go to zero; it’s evil because it undermines the Federal Reserve system.”

Munger said: why is Bitcoin evil? It really diminishes the capacity of our national currency and the Federal Reserve system — which we absolutely need, and which is key to maintaining the credibility of our government.

27. Munger: Find what you’re not good at, and avoid it

Question: You knew early on that you wanted to be an investor. If someone doesn’t yet know what they want to do, do you have any advice?

Buffett said: I wanted to be an investor, and it happened that my father did this and loved it. There were plenty of books at home for me to read. It was a matter of chance. But I do think that finding what you truly want to do and doing it for a lifetime — finding what kind of world you want to live in, working for people you genuinely respect — that’s what I did after graduating. I wanted the world of Benjamin Graham (the “father of modern securities analysis”). Later he did hire me, and then I worked for myself; I just wanted to work for myself.

Munger: My advice is to find what you’re truly not good at, and then avoid it.

28. Buffett: We’ll keep buying back our own company

At the meeting Buffett said the company will still consider buybacks in the future, but that this depends on the company’s own valuation and the investment opportunities available at the time; the company will weigh whether to use its funds to buy back stock or to invest in other companies.