2008 Berkshire Hathaway Annual Shareholders' Meeting (Day 2, May 3rd)

The meeting always starts with a cartoon movie. This year it was about election campaign for president of Charlie Munger. Charlie's solution to health problem was to drink coke and eat See's candies every day. He would even give voters two dimes for a quarter.

The questions and answer session started from 9am and ended at 3 pm, with 30 minutes lunch break in between. Below are some notes from us that are legible.

Q: I own a small business myself. How can I grow it successfully?

W: It takes time. Never try to do a massive stroke. Charlie and I keep doing things we understand and keep doing the same thing over the years. There is an automatic formula for getting ahead, but not an automatic formula for galloping ahead.

C: Most small businesses never became big businesses. Most big businesses became mediocre eventually.


Q: If you couldn't talk to the management of the company, couldn't see the stock market and all you could do is to look at the company financials, what attributes of conclusions can you make to judge a business?
W: Take an example of the farm. Look at the assets yourself. Do you understand the asset? I've done the same thing by only looking at financials. There is no way you could judge and know the nature of the business by pure financials.

C: One metric that we use is that we tend to prefer the business that draws cash. Take an example of a business that rents construction equipment, we hate busines like that. All you get at the end of the year is the equipment in your yard.


Q: What do you think about the Klamoth River? The pollution to it killed fish in the river.
W: There are competing ideas and desires in how to generate electricity. There are societal problems that the state government would have to find out. We have to figure out what is the best way to generate electricity. I'll let Dave speak to the technical issues.

Dave: We're not polluting the river. We're not adding anything to the river.

C: I think burning carbon do worse in polluting the environment than generating electricity.


Q: I'm 12 years old and in my 7th grade. What kind of things should I read?

W: Get a habit of reading a daily newspaper. Try to know as much about the world around you. The more you learn, the more you want to learn.


Q: See's Candies has sent $1.3 billion cash profit to Omaha over the years. They have incurred 20% profit growth on the sales they generated. The chocolate industry in Germany that you're eyeing on doesn't generate a high growth and profit. Would you prefer high profitability and high growth or low profitability and low growth when you invest? Is there a particular reason that you're looking at family businesses in Germany now?

W: If a private business is doing great, there is no reason for people to sell a $1 million business. We never urge people to sell their business. We are the logica buyer. We want to be on the radar screen when people want to sell for different reasons. It's our job to look at hundreds of things. We never buy businesses at bargain prices. The stock market gives you bargain prices while the individual owners don't.

C: I know a California guy who ran a great business. He sold the business to a known crook for a bit higher price. That's bad thing to do for your business.


Q: How do you hedge the dollar as dollar is depreciating?

W: We do not hedge the dollar. We're happy to invest in businesses that make money. The US is going to continue to weaken the dollar in the coming years. If I land from Mars today with a billion Mars Dollars, I would think of what to do with that. But we own 200 million shares of Coke. If it's making $3/share per year, we're making $600 million earnings per year.


Q: What should I do with small amounts of money? How does your investments strategy comply with the non-stock environment in 50s and 60s?

W: There are thousands of possibilities. There are mis-priced bonds and stocks in US and elsewhere, but it won't be currencies. Charlie?

C: Sure.


Q: What would you do differently if you were a presidential candidate?

W: (Chuckles) I'd ask for a recount like Bill Buckley did 40 years ago. We have 3 good candidates this year. I think no matter who takes this position, they'll do a great job. When you're going through the campaigns, you are indulged in this environment to try to make other candidates look bad. We have a country that works awefully well. I think for these 3 candidates, their motivations are better than proclamations. Charlie?

C: After Enron shocked the nation, politicians rolled out Sarbane-Oxley. They're shooting an elephant with a pea shooter.

W: It's a corruptive process. It's situational policy-making. I don't think I would behave any better than the 3 candidates if I were in their shoes. I am a human being as well. You should not expect more of a human being.


There were a lot more other questions and answers, but both Biajee and I feel that the questions this year were not as good as the questions last year. Most people do not understand business at all. Nobody raised the question of General Re, whose executives got convicted crimes of faulse accounting with AIG.

Biajee and I bought a lot of books and DVDs this year. We spent a lot of money in Omaha. We need to buy more stock of BRK to fund our trips next year.