Warren Buffett at Berkshire Hathaway’s annual meeting
Tech stock valuations. “The Googles and Apples are incredible in terms of what they earn on capital. They don’t require a lot of capital, and they gush out more money,” the Berkshire Hathaway chairman said. In contrast with the prevailing wisdom in the market, mega-cap tech shares are a bargain, Buffett said. “Interest rates basically are to the value of assets what gravity is to matter. The risk-free yardstick against which other values are measured.”
Stock-picking. Buffett showed a slide of the 20 stocks with the largest market capitalization and asked the audience how many of those stocks will be around in 30 years. Subsequently, he put up a similar slide from 30 years ago and elucidated that none of the companies from the 2021 slide were on it. “I would guess that very few of you would have said zero, and I don’t think it will be, but it’s a reminder of what extraordinary things can happen. The world can change in very dramatic ways. There’s a lot more to picking stocks than figuring out what’s going to be a wonderful industry in the future. I do not think the average person can pick stocks,” Buffett said.
Gamifying trading. Robinhood attracted many new retail investors over the past year. The company, that is set to go public this year, has been accused of gamifying investing. “It’s become a very significant part of the casino group that has joined into the stock market in the last year or year and a half. American corporations have turned out to be a wonderful place for people to put and save their money but they also make terrific gambling chips,” Buffett said.
Buybacks. In 2018 Berkshire loosened its buyback policy and at the end of the 2021’s first quarter, Buffett bought back $6.6 billion in Berkshire shares. “We can’t buy companies as cheap as we buy our own and we can’t buy stocks as cheap as our own,” Buffett said. “If you’re repurchasing stock just to bull it higher, it’s deeply immoral. But if you’re repurchasing stock because it’s a fair thing to do in the interest of existing shareholders, it’s a highly moral act, and the people that are criticizing it are bonkers,” Munger underlined.