Every year, Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) – holds one of the most anticipated events on the investing calendar. The annual meeting of Berkshire Hathaway shareholders is often branded the ‘Woodstock for capitalists’ for its wide following.
In this meeting, Buffett, along with his sidekick Charlie Munger, give their opinions on the current state of the share market and the economy, as well as answer questions from shareholders. Since Buffett and Munger are regarded as two of the best investors of all time, what these gentlemen have to say is widely followed.
Berkshire’s 2021 meeting occurred over the weekend just gone. And, as always, Buffett gave us some very interesting insights into the current state of the markets. You can watch the full meeting here, but here are some takeaways.
Buffett: Inflation is here
Buffett was surprisingly upfront about the prospects for the dreaded scourge of inflation. He noted that “We’re seeing very substantial inflation… It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted”.
He did note that this inflation was being caused by a “red hot” economic recovery in the United States. But he seemed to warn that it couldn’t go much hotter without increasing said inflationary pressures. “It just won’t stop… People have money in their pocket and they’ll pay the higher prices”.
Arguably, this is something that all investors should note. Especially given the recent comments on the matter by the Reserve Bank of Australia (RBA) and the US Federal Reserve.
Thumbs down for Robinhood
Another notable point that Buffett made was his ongoing distaste for the popular brokering platform Robinhood. He labelled the millennial-focused app as being “a very significant part of the casino aspect, the casino group, that has joined into the stock market in the last year or year and a half”. He went on to say that:
American corporations have turned out to be a wonderful place for people to put their money and save but they also make terrific gambling chips… If you cater to those gambling chips when people have money in their pocket for the first time and you tell them they can make 30 or 40 or 50 trades a day and you’re not charging them any commission but you’re selling their order flow or whatever…I hope we don’t have more of it.
Berkshire’s recent moves
Many investors were disappointed in the lack of activity from Berkshire Hathaway last year. Berkshire and Buffett have long enjoyed a reputation as crisis dealmakers. Buffett stitched together more than a few lucrative deals during the global financial crisis more than a decade ago.
But last year, Berkshire and Buffett seemed caught in the headlights. There were no big deals or large purchases made during the worst throes of the market crash last year. In fact, Berkshire’s most prominent move was to aggressively sell down stakes in airlines during the worst of the crash.
Buffett and Munger defended this action (and inaction). Munger stated that it would have been “crazy” for Berkshire to open its chequebook amid such uncertainty. In regards to the airline businesses, Buffett said that the politics of the government bailouts that the airlines received would likely result in a different outcome if the airlines were backed by Berkshire.
Still not wild on Bitcoin
Buffett and Munger have long been some of the most vocal critics of Bitcoin (CRYPTO: BTC) and other cryptocurrencies. It looks as though the recent rally in the pricing of these assets hasn’t changed any minds over at Berkshire.
“Of course I hate the Bitcoin success”, Munger said at one point. “I don’t welcome a currency that’s so useful to kidnappers and extortionists, nor do I like just shovelling out a few extra billions and billions of dollars to somebody who just invented a new financial product out of thin air. I think I should say modestly that I think the whole damned development is disgusting and contrary to the interests of civilisation”.
Ok Charlie, let us know how you really feel!