BerkshireHathawayAnnualMeeting April30,2011

Thesenotesarerecollectionsonly,withouttheaidofarecordingdevice.Theyshouldnot

Goodmorning,ImWarren,hesCharlie.Icansee,hecanhear,thatiswhyweworktogeth rsnamessometimes. Wearegoingtointroducedirectors,thefirstquarterresultsandth zol commentarytranscriptwillbeputuppromptly,maybethisafternoon.Wewantallshar atter.1 Introducedirectors.Pleaseholdyourapplauseuntiltheend,andyoucanwithhol telyifyouchoose.HowardBuffett,StevenBurke,SusanDecker,BillGates,SandyGottesma onKeough,RonOlson,TomMurphy,WalterScott,andSusieDecker. Nowwehaveafewslides mphasizethesearepreliminary.This isearliestmeetingwehavehad,usuallyfirstfull lofourbusinesseswith exceptionofthoserelatedtoresidentialhousingaregettingbet aveover 70,andMarmonhasover100.WearecrosssectionoftheAmericaneconomy,andw uarter,likesincefall2009,mostofournonresidentialconstructionsbusinessesandother ttingbetter,butwhatwasdifferentwasthatwehadsecondworstquarterinthe insurance ophesaroundglobe.Normallythirdquarterisworst,when hurricanesappearinUS.Inf emajorcatastrophesinPacificarea, andthathitreinsuranceindustryhard.Probablyco allyparticipate35%.You canseewerecorded$821mdown,andwehavemarkedupSwissRe ormalizedearningspowerof$17bpretaxand$12baftertax,assumingbreakevenon insuranc edonebetterthanbreakevenforeightyears.Butitisunlikelywewill haveanunderwri blewecouldbreakeven,butthatisimprobable assumption.Firsttimeinnineyears,wew ss.Ourrecordshouldbebetter thanmostothers.Thisdoesntchangemyexpectationtha eakeven, andthenwegetfreeuseoffloat.Ifyoulookatotherlines,insuranceinvestm scalledinAprilandGEwillbecalledinOctober.Wecalledthe12%SwissRe,especially reeveryhighyieldinvestmentssothatlinewillgodown. Atendofquarterwehad$38b eyisearningalmost nothing.Wedonotexpectthatthatcashwillearnzeroforeveran llions. WehadfullownershipofBNSFinfirstquarterofthisyear(vs.onlysinceFeb arterofownership.BSNFshouldhaveverygoodyearthisyear.Competitive advantageof dent,almostbytheday,especiallywithfuelpriceincreases. 1 AuditCommitteeReportdatedApril26,2011here. 1

Wegothitininsurancebusiness.Wethink$1.6blosspretaxoninsurance,butsubjectto matenow.Over40%ofunderwritinglosscomesfromacontractwithSwissRe.We get20% ract.Theytoldusnotrenewing.Wishtheytoldus thatacouplemonthsearlier!Weve sesgoupward.The tornadoesinApriljustatGeicoweestimatethat25kcarswillget .Ithasbeenanextraordinarytornadoseason.Wedontdolifeinsurance,andwedont ryhard.Ithasbeenmultipleevents(notasingle),andnotlike NZearthquake.Ibelie tthatinperspective,thepopulation ofNZCharliewhatisit? CM:Idontknow,4or ichis10xKatrina.Thesehavebeenextraordinary earthquakes.Worstpartofseasonisc ancemanywillremember, buttheywouldprefertoforget. Wehavesomegoodnewsinins es.GoodwillofGeicois carriedat1bil.Thatvalueisneverincreased,butdoesgrow. timateitsvaluecurrentlyat$14bil.Everypolicyholderhasavalueofabout$1500dollar ter(381kasofyesterday)weadded$500mtobookvalue,anditdoesntinclude profits hisvalueonthebalancesheetbutitiseverybit asreal.Wearegainingmarketsharee dwillof $100k.Itwilltakecareofsomeofexpensesofthemeeting. Onemoreitemon ciousnessofaccounting.Itrelatestohowwe valueoursecurities,andwhetherwetakew orary impairment.Ifyoupaidxforit,andselling80%ofxforquiteawhile,youshou roughincomestatement.Wemarkitdownforbalancesheetforbookvalue, butonlywheni argo,withcostof$8b.Marketvalueis now$11bil.Somehadbeenboughtathigherprice wnthe higherpricepurchases,andignoredthe$3.7bofgaininincomeaccountfromthesh .Therearetwowaystovaluesecuritiesifweusedaveragecostmethodwewouldnt ha thodsavesusmoney,andgivesusthetimeuseof money,bcuasewhenwesellshareswecan lduseaverage costmethod,toavoidwritedowns,butweprefertoignorethegainsorlos . Wemakeownestimateofintrinsicvalue.Iapologizefortheaccountinglesson,andwhi aystheallimportantfigureitisactuallythealldeceptivenumber.Wespendtime tryin nancials. Idliketocommentforafewminutes,andaskCharlietogivehisthoughtsonD zolstock.ThemovieclipfromSolomonoccurred20yrsagothisAugust.Atthattimeit olomonat3pminafternoon,andIwentdowntoaddress 2

apressgroup.Someoneasked,Whathappened?Thephrasethatcameoutofmymouth(som )whathappenedwasinexplicableandinexcusable.Iwillnever understandwhysomeoft nspire.Whenlookingatthissituation,David Sokoldidntnotifymethathehadanycont sesofstockpriorto recommendingtoBerkshire.Idontthinkthereisanyquestionabou d acodeofethics,insidertradingrules,andprinciplesIlayouteverytwoyearstoall ditcommitteereport. Inexplicablepartitisinexplicable.Illtellyouwhatgoesthr disguisethathewasbuyingthestock.OftenthistradingisdoneintrustsinLuxembourg oksattradingactivitytheydontseenamesassociatedwiththedeal.Dave leftaclea ly,andnormallyalways,wehadtoreporttoFinra whoknewaboutitwhen.Wethenlists ttimes.Then,awhile later,wegetalistofnamesandFinraasksifanynameringsab st,theoddsareverymuchagainstyou.Davedidnotdisguisethetrade.Itisinexplicab dinghediditrightoutinopen.ThesecondfactwasthatDave hasanetworthinvery .Wegotourmoneys worth.Thereareplentyofactivitiesthatareunsavory,butIwil tMidAmericanattheendof1999.Webought80%,andthereweretwooperatingpeople, Dav .Ivetoldthisstoryprivately,notpublicly.WalterScott cametome,andsaidIthin rrangementforDaveandGreg, iftheyperforminamazingmanner.Iscribbledsomethingon lapalooza. Itprovidedforlargecashpayoutbasedonfiveyearcompoundedgains,onhigh rewasachieved.Itwas$50mtoDaveand$25mtoGregAble.IsatdownwithDaveandsaid inkofthisplan?Ithadfiguresandpayout.Hesaidthis ismorethangenerous,butyou venlyformeandGreg.It shouldbe$37.5meach.Sohegave$12.5mtohisjuniorpartner s.Therewasnothinginitforhim.Then$3mdollarstenyearslaterleadstothesecurre ble.TwentyyearsfromnowCharliewillbe107.Iwontunderstand20 yearsfromnowwha atewithoutanycredit,andbuya significantamountofstock.The10kand10qaredated ave calledme,hesaidnothingaboutCitigroup.Idontknowcompany,butDavesaiditmi kshiretypecompany.Imadeamistakenotaskinghimwhenhebought. Wellundoubtedly ietocomment. CM:Itisgenerallyamistaketoassumethatrationalitywillbeperfecti ttyregularlyourselves. WB:Whatcontributestoirrational? CM:Ithinkhubriscontrib WB:Ok,letsgotowork. 3

WB:Ishouldintroduceourgroup.Carol,AndrewRossSorkinandBeckyQuickofCNBC. Ca onsforacouplemonths.Somesenttoallthree,someto oneofus.Hardtocount,close tion. Whateverwedoask,WarrenandCharliehavenohints,theyhavenoideaaboutanyo oideaoftheanswereither. Q1/CL:Iamalongtermshareholder,andwhenyoufoundoutd ely yourealizedimmediatelyitwoulddamageBerkshiresreputation.Pressreleasewasin dedtherelease,withoutexpressinganyanger.Whywereyounotincensed?Whydidyou no ondsoinadequately? WB:IlearnedonMarch14thabouttheCitigroupinteraction.Igot ourthingsfordecades.Hecalledandsaidcongratulations,andarentyouproudofourte quisitionandtheywereproudtobepartofit.Thatwasallnewsto me.Thatsetupsom lDave,andDavereadilygave theinformationonwhenheboughtthestockandhowmuch.H ecalledaguytogettheirphonenumber.Lubrizolneededtoprepareaproxystatement. rkonproxystatement.Weeagerlyawaitedtoseefirstdraftof that.Iwasleavingfor roxystatementisthehistoryofthe transaction.Itgivesyouablowbyblowofwhathas idaythe 18th,withfairamountofmaterialofDavesinvolvementwithCitigroup.Ibelie mgotinvolved.RonOlsendirectorofBerkshirewasontriptoAsia.Wetraveledtogether athispartnersatMungerTolleswereinterviewingDaveaboutstock purchasesandhistory tigroup.Idonthaveablackberry.Ronwouldgetsome informationwhilewewereoverth edmeetingof Berkshireboard.WedlearnaboutwhatattorneysatMungerTolleshadlearn ingtobringwebroughtCharlieinbeforeboardmeeting.At5pmorso,aletterwas deliv lue.Hewasretiringonahighpoint,Idontknowif questioninghadaffectedattitude. ouldhavebeenawith orwithoutcause.Andaretirementeliminatedtheissueofcause.I beenthesubjectofcriticism.Hehasdonemanygoodthings,andsomeextraordinarythings eemtobeunlawful.ItalkedwithCharlieandRonaboutthatwording.Ronwould havebee tthesentenceaboutbeingthesuccessor.Isentitto himasecondtime.Hewasokaywi owthatLubrizolhad aninterestintalkingtousonDecember17th.HeappearedonCNBCa rectfacts.Itwasnewstotheboard.Theygotreleasealittleaheadoftime.Theyalso tthefactsofthestockpurchasesandanythingelsethey wantedtoknow.Weactedveryp ementdivisiontobewell versed.Davewasgone,atminimumcost,withminimumchancesof mningevidencetopublicandSEC.WhatIthinkbotherspeoplewasthattherewasntsomeb 4

outrage.Ipleadguiltytothat.Hehaddonemanygoodthingsforus.Iwantedtolisth mforyearstocome.Thatishistoryofmythinkingonit. CM:Wecanconcedethatthat eleaseinhistoryofthe world.Wedidnotforeseethenaturalreaction.Youdontwant oaddonesingleiotaofruthlessness.TomMurphyusedtotellhispeople,Youcanalway hagoodidea.TheangerpartIdontthinkitiswrongto rememberthemansvirtues s.Weveneverhadanargument. Q2/Audience:WhatwillbetheimpactofthePOMOprogra e.Thereisnosecretwhattheyaregoingtodo.Itismost advertisedopenmarketpurcha tpermonth,andwhatbalance sheetwilllooklike.Idontthink,ifsomethingisthatw countedbythispointintime.Ifyousayyouaregoingtoincreasetaxrates,anditis yitgoesthroughtobuildintoprices.Iseenoreasonwhysimplyhaving thatprogramco t.Alargemarketforcewillbewithdrawn.Youbuy $600byouleavesometraces.Govtis rent. CM:Ihavenothingtoadd. Q3/BQ:IdliketoaskaquestionfromRoninKansas.Y ainingtalent.RecenteventsaroundMr.Sokolsuggestwewerentfarfromhavingmanagerr thical.Howdoweknowthesuccessionplandoesntincludeamanagerwith similarethical onaboutSokolbeingnextinlinewhichisntwarranted,buthecertainlywasa candidate. dBuffettshouldbeChairmanisbecausewecan makemistakes.Hewillgetpaidnothingan pany.Oddsofusmakinga mistakearelow.Leadingcandidatenowisstraightasanarrow earth.Thequestionis,willtheystaymeek?Independentchairmanwillbevotingalargeb de,itallowsforchange,andnowchairmanshipnotlockedinwithCEO.IftheCEO isnot ,butnotveryeasy.ItishardertoremovemediocreCEO. Hecontrolsagenda.Independe govertheplaceitisasafety measureforthepossibilityhoweverremotethatwrongde rewillbe thinkingaboutqualityofhumanbeingaswellasmanagementskills.Hemustca self. CM:RockefellersleftmanagementofStandardOil,butstayedonboard.Andtheydi EOofStandardOilofIndianaonmoralgrounds.Itaddsanotherstringinourbow. Q4/Audi s,whatsectororassetclasswouldyouwanttoaddtoyour circleofcompetency? 5

WB:Itisagoodquestion,andIlikethepreamble.Youwouldpicksomethinglarge.IfI uldbutitisntgoingtohappen.Itwillbehugefield,afewenormous winnersandal ajoroilcompanies,nobigedgebetween anyofthem.Degreeofdisparityonlargetechco ic.Youllhave betterluckwithCharlieonthisone. CM:Itwouldbeeithertechorene rtise.Ifweweregoing todoit,itwouldhavealreadyhappened.Wemight,however,ide t welike.Ithasbeenhardforus,butwevedonebetterlately. WB:Itwasagoodques dwithLubrizol.Whatmadeyouwarmtocompany?What changed?WhatwasDavidsrolein sIdidntknowanythingabout.Iwouldneverunderstandthechemistry, butdidIunderst ry.CharlieisalotsmarteraboutoilthanIam,why notgivehimacall?Idontknow e,andhesaidI dontunderstanditeither.Isaidforgetit,hesasbadasIam.Wh ambreck,andIlaterconfirmedIthoughtIgotagoodunderstandingof industrydynamic atrelationshipoilcompanieswouldhavefor chemicaladditives.Theyhavegottenoutof ated,Ilookedateaseofentry.In 1972,withSeescandy,Iaskedmyself,couldItake tartasoftdrinkcompanyandcompetewithCocaCola?RichardBransontriedit,andbythe iseonVirginCola[laughter].Thereisrelativelylowcostofwhat Lubrizolbringstopa akethemonIfeltthereprettygoodsizemoat onthisbusiness.Theyhavelotsofpate ships.IfeltIhad understandingofeconomicsofbusiness,likewithIscar.Taketungst idetoolsbutIthinktheyhavedurablecompetitiveadvantage.Lubrizol,as#1companyin ssustainable.Whenmetalisonmetal,lubricantsareimportantandtheywill alwaysben gcompanyforawhile.Ididnothaveafixonthat,nordid Charlie,priortoDaverelay tiontoit.IthoughtI understooditandstillthinkIunderstandit.Ithinkwillbeg n aftertheuproar,theyregarditasidealhome. CM:IscarandLubrizolaresistersunde harenotattractiveto anyonewithsensetoenter.Andtheyarebothfanaticsonservice enacall. Q6/Audience:Ontario.Valuationeachshareis95kofsecurities,andannual scountratemeansBerkshireshouldtradefor$180k.Iscomplexityavaluetrap? WB:Youa ,andyourfiguresarepretax,soyoudhavetoadjustforthatin yourdiscountrate.I creasetheyarealmostcertainto 6

increase.Thatislikelytogoup.Investmentsareaboutsameastheywereatyearend.O rygoalistobuildoperatingearningsfigures.IfCharlieandIhadtostick anumberin gurewhatwedowithcapitalinthefuture. Rangeswoulddiffermodestly.Maybediffert lsfrommeonceor twice,whenwesaidwewouldbuyinstock,whenstockwascheap.Wedi ingany.Thereisaselfdefeatingfactorabouttakingthekindofapproachwe do.Only heap.SometimescorporateAmericabuysstock whenitishighratherthanlow.Wedonotr .Recentlywehadlarge internationalcompanythatmighthavewantedtodosomethingwith company.Itwasaverylargedeal,andweneededtousestock,butwewontusestock,as llyvalueditisamistaketouseascurrency.Weused30%for stockinBNSF.Wehadno estock.Wewouldbegivingaway thebusinessesweownfortoolittle.Togiveawayapo e uspoorer.Drawyourownconclusions. CM:Youarelookingatthetworightfigures.We ytodointeresting things.Weshouldbedoingalotmoredeals.Wewontbethisinactiv 9bofour$12bofannualearningpower.Wouldyouuse stockCharlie? CM:Foragoodenou allynotwisetopartwiththe businesseswedoowntogetbusinesswedontown. Q7/CL: yeconomymakeyousohappy.WhenlookingatUnited States,howcanyouseegoldwhereot nbeanythingbutenthusedaboutthiscountry.Lookat1776,ithasbeen themostextraor ryofworld.IwasbornAugust30th,1930,andif someonehadcometomeinthewomb,and 4,000banks,havingadustbowl,andgrasshoppersaretakingoveritsliketheWoodyAll hathashappenedsince1930isthattheaveragestandardof livinghasincreased6for1. .Wehavesystemthatworksmagnificently. Systemalwayshastroublesandgetsgummedup sachild hearingabouthowthingsweregoingtohell,myfatherhatedtheNewDeal.Iw d,andDocThompsonsatinchairforacouplehours.Warrenyouaregoing tofailbutit tarvedanyway.Itisnotyourfault,itis becausetheDemocratsareinandtakingworld t married.WhenIgotoutofschoolin1951,myDadandBenGrahambothtoldmedontsta nthathigh.Therearealwaysnegatives.Ithasgonethrough allkindsofthings.Weve d.Wellalwayshavealist.Itdoesntdo itinastraightline.Thepowerofcapitali ession.In fallof2008,governmentwasneededinahuge,hugeway.Theywereonlyone.

in1800swhenpeopledidntknowwhatmonetarypolicywas.Recusitativepowersofcapitali eisnotup.Restofworldhascaughtup,andstatecapitalisminplaceslikeChinaare t t100years,therewillprobablybefifteenortwentylousy yearsbutwellbesofarahea able. CM:Wecouldgobackfather.EuropesurvivedtheBlackDeath.Theworldisgoing harlie. CM:Hamberg[whohadsentinthequestion]acedmeoutofchiefcandlesnufferat nbecheerfulevenifthingsareslightlydeteriorating.Ihaveasaying,thatthe politi ivetowantthemback. Q8/Audience:CambridgeMA.ArehighROIClowcapitalbusinessesth ry environment,orisahighfixedassetbusinesslikearailroadbetter? WB:Thefirstg ttertohavehigherreturns.Ifyoucanhaveaproduct whichuseslowcapitaltogrow,th ion.Yourownearningabilityis testamenttothis.Asinflationgoesalongyourservice hnomore investmentinyourself.Peoplethinkalonglivedrealestateorfarmwhereno ,butitisalwaysbettertohavehighreturns.Theworsttypeofbusinessesarewherevol oumustdoubleyourreceivablesandworkingcapitalrequiredtodo thebusinessthatis sandrailroad,eachareentitledtoearnreturns onassetswhicharemoreandmorevaluab olumewhenwe boughtit,andtheysold16mpoundsofcandy.Itwasa$30mofbusinessthe lecapitalthenandnow$40moftangiblecapital,and$1.5bofpretaxcashflow sincethat flation. CM:Whatisinterestingiswedidntalwaysknowthis. WB:Andsometimeswef tinuouslearningisrequiredtohaveanysignificantcontributionintheworld. WB:Youw ntin1970sthatwasntcreatingreturnsforequityinvestors.Ideal assetisaroyaltyon ation.Itisbasedontheirsalesvolume.No receivables,nofixedassets.Eventhough usinessitreflectsfact thatwecantdeploythecapitalwehave.Wearentdoingasw usnowbillionsayear.Thereisadisadvantagetosize.Wejusthopeproblemgrows. CM: gsoon,andIwillneedincomeIneedtogeneratecashflow.Sometimeswesella shareo xpectdividends? 8

WB:Whenwepayoutdividendsperhapsweshouldpayout100%.Wewilldoitifweloseway llarofvalue.Letsassumeyouhadsavingsaccountpaying 5%.Youcantake$50out,or ollarinvestedcreated morethan$1.Itismoreintelligenttoleavedollarinselling epinvestingtoincreasevalue?Sofar,byleaving$160bilinthebusiness,shareholdersh llcomeatimewhenwedonotthinkwecanlayout1520bayearandget somethingworthm meswhen$1buys90c,wellgive ittoyou.IthinkdayBerkshiredeclaresadividendthe ngwithsellingBerkshiretobuyjewelryifyouareintherightplace. WB:Yesterdaymyn esterday.Hermotherdidthesamething.SoI recommendtoyougooutthere,andsee tts.HowaboutWellsFargoandUSBancorpwithnegativemacrooutlook? Whatisoutlookfo tasattractiveasbefore,buttheworstisprobablyover.WellsFargoandUSBancorpare heyaredifferentthanmoneycenterbanks.Wellsis4xlargerthanUSB. Bankingprofitab ssinperiodaheadthaninearlythiscentury,because leverageisreduced.Itwillbeba gswithleverage,andsothe actionsofonehadconsequencesforeveryone.Iwouldsayre arsago,buttherearelessassetsforcommonequitysoreturnonequitywillbeless.Wel tionsandverydecentbusinesses,butarenotasattractiveaswhen leveragewashigher. ngyouveseenworstinthepast.Loanlossesare trendingdown.JohnStumpfoncesai olose moneywhenoldwaysworkedsowell.Federalgovernmenthasnthadtopayout.FDI ce1930s.AndithasnotcosttheUStaxpayerapennyitisamutualassurance company ubleontheassetside.Ithasanimplicit federalguarantee,andyougettoleverageup. iesarevery wellrun.Ithinkreturnfigureswere25%to30%ontangibleequityandth . CM:M&Tbankisheadedbyreallysensiblefellow.Ithasbeenawonderfulinvestment. outtheAmericanFinancialEconomyandhehasgood observations.Readthesecondpartabo lsoJamieDimonsletteratJPMis tourdeforce.Hehassomerealinsights.Wedontown from. CM:Forthosewholikemoralityinbusiness,Wilmersoundslikeanoldtestamentpro akingmoneyoutoftrading.Theyaretryingtomakemoneytradingagainsttheirown custo omersinweboftrust. 9

WB:Marketsystemcreatesrewardsystemwheremoneyflowstothosewhoworkwithmoney. athasevercomeoutofbanking,rightoutofBuffalo. Q11/ARS:Commodities.Willgoldco areinBerkshirewasworthofanounceofgoldwhenwestarted.Evenat$1500anounceo er]Ithinkheisrightaboutinflation.Thereare threemajorcategoriesofinvestment. oriesfirst.Categoryone: anythingdenominatedinacurrency.Iamgoingtotakeoutmy sis historiceventandnotethisisaonedollarbill.Onback,itsays,InGodwetr erehere,shewouldsay,ingovernmentwetrust.Godhasnothingto dowithit.Anycurr ernmentnowandinfuturewillbehave. IfyoulivedinZimbabweandmadecurrencyrelated ldhaveleftyouby now.Almostallcurrencieshavedeclinedinvalueovertime.Itisa titiseasiertoworkwithcurrenciesthatdeclineinvalue.TheJapanesewouldlikelyag akemuchsense.Thesecondcategoryisitemsyoubuythatdontproduce anythingthat kegold,whichtheydigoutofthe ground,shiptoNewYork,andputitbackunderthegro ntocubeitwillbeacube67feetonaside,165kmetrictons.Ifyouownedallthegold adderandclimbontopandsaythatyouweresittingon topofworld,youcouldfondleit, g!Youarehoping someoneelseayearfromnowwillpayyoumoreforsomethingthatcant oplewerenowaboutpapermoneyandALSOaboutwhathappenstwoyearsfromnow. Keynessa teveryonewillthinkismostbeautiful.Wedidit withsilver,butithadindustrialuse asthirteenyearsoff.Thethird categoryistobuyassetsbasedonwhattheycanproduce erover time.Thereissomelogicalfollowon.Howmanybushelsofcorn,soybean,howmu ion.Doesitmeetexpectations?Logicallyyoushouldntcareifyougetaquoteon busin ,whenwelookatBerkshire,wearelookingatwhat wethinkcanbedeliveredontheprodu rice,soitisgoodifyou owncottonfortheright6or8monthsinthepastyear.Buti t.Pickaproduct,crudeoil,cotton,goldsilver,etc.Cottonhasutility,golddoesnt cingbusinessestooutperform.Risingpricescreatetheirown excitement,whichcanimpact ourwifetellsyouthejerknextdoorismaking moneybybuyinggold,whydontyou?Peop ing.Overtime itisnotthewaytogetrich. CM:Iagree.Itispeculiartobuyanasse untries youwouldgotowouldbescrewedup.Peoplewhoreallybelievethatshouldbuygo athaway.Thereisanotherclassofpeoplebuypaintingsofsoupcans.Idont recommend 10

WB:Theotherthingaboutgoldisthattheyareminingmoreeveryyear.Everyyearyouhav tdoesntaddanyutility.TheydigitoutofgroundinSouthAfricaandputit backint eworldisworthabouteighttrilliondollars. ComparethattoAmericawhichhasabout1 habout2trillion.TenExxon Mobilsis4trillion.Soyoucouldownallthefarmlandin ionof walkingaroundmoney.Oryoucouldhavea67footcubeofgoldthatyoucouldfond osome,butnottome. CM:Youwouldalsoneedanarmytodefendthegold.Itisnotago ndgrowyourbusinessearlyon? WB:Soundslikesomeoneisstartingahedgefund.Imoved fmyfamilywantedmetopickstocks.Ididntlikesellingstocks,ifpricewentfrom20 hesameway.Icouldmanagebetterinaroombymyself.Iwould bedoingwithmyownmon amrecommended me.Lateinthefallanotherfellowcamein.Wejuststumbledalongfora se,withnoemployees.Ipickedupstockcertificatespersonally,didmyowntaxes.AndI wisokayasahobby,butnoplaceforamanwithyourintellecttospendhis time. CM:I ntfeeltoopoorlyifyouarehavingaslowtime toacceptagoodidea.Youpoundedonm M:Ithelpsifyouconductedyourselfinlifesothatotherstrustyou.Ithelpsevenmore aissimple.Firstone,thentheother. WB:Withcurrentfees,attractingmoneyisveryl supbeingbetter.I neverchargedanyfixedmanagementfee. CM:Westoppedtakingove henwestillhadarelativelysmall amountofassets. Q13/CL:Berkshirelookslikeacong uedforsumofparts. WB:Weareaconglomerate,atleastoneofadvantagesofbeingac ney,frombusinessesthatdogeneratemoney.Ifcarriedoutintelligently,itisagoodbu atImfamiliarwithwerestockissuancemachinestobuyearningsbought withexpensivesh heme.Gulf&WestonandLittonsoftheworld. Likeanunspokenconspiracy,kindofape yedgame,then Teledyneboughtinstockwhenunderpriced.Itstartedbyissuingwhenover ionalrecord.MostofthosecompanieshadlittlerelationshiptoBerkshire.HaroldGeneen doutmanagersandtheymadenumberswhetherrealornot.Thegogostocks 11

wereprimarilythinkingabouthowtopumpstocktobuyestablishedbusinessesatlowermult sinesseswekeepforever.Throwoffcash.Itisaconglomerate.Itisarationalway to usinessesandnotstockissuancemachine. CM:Somegotintoheavymanipulationofthenum mgoingto report,IjustdontknowhowImgoingtodoit.Wedontknowwhatwerego aughter] Q14/Audience:Onehundredyearsfromnow,whatdoyouwanttobeyourlegacy? W ywillsay,ThatistheoldestlookingcorpseIeversaw. CM:Ihaveanothersayingfrom ortunehonestlygained andfairlyused.[Ednote:Blogssaywidelyusednotmyrecoll dasateacher.Iliketeaching.SomesayIdotoomuchofit.I benefittedfromgreatt atteachers.WrittenonWilt ChamberlainstombstoneatlastIsleepalone. Q15/BQ:F ng,howdoyouthinkaboutUSDweakness? WB:Wehadsignificantshortpositionincurrenci urrencies.We arenotreallyactive.ThereisnoquestionisUSDwilldeclineovertime, hdoyoushortitagainst?Shortpositionisjustviewofwhichcurrencydeclinesatfaste aColawhere80%ofearningsarenondollar.Wehaveexposureinvarious otherways.We rrencybet.IdothinkUSDpurchasing powerwilldecrease.Ihavefearsofitdeclining hatdollarof1930 isworth6centsnow,16to1.Wevebothdoneprettywellinspiteof ldwewouldhaveaworldwarwhichwewerelosingbriefly,andthatdollarwillhave6c pu einflation,butweveadaptedandwehaventhad runawayinflationthatisharmfulforso sheaded.Buttheworldmuddlesthrough.Lookataplacewithagod awfulcultureGre neyandpaytaxes.The placeisatouristcenter,anditisclosedduringsummertourist said,Agreatcivilizationhasalotofruininit.[Easiergamethanlivinganddying.] oice,IdratherbeborninUStodaythanatanyothertime inhistory. Q16/Audience:R oloadmutualfund? 12

WB:Iadvisepeopletobuyindexfundifyouarentgoingtobeactive.Anaverageindivid lldoverywell.Itwillneverbeagreatinvestment,butitwillbeperfectly satisfacto rrentpricesvs.indexfund.IlikeBerkshirebetter. CM:Ilikeitalotbetter,andId ragefundreturnwill doworsethanBerkshire,buttheaverageBerkshirereturnovernext past.Reducedexpectationsaregoodwaytoincreasechanceofsuccess. WB:Charlieisb :ThatishowIgotmarried.Ireducedherexpectations. WB:Andheliveduptothem! Q17 adingpolicyandshouldntyouhaveruleslikeothercompanies regardingpretradeclearan paniesdothat.Wehaveonlyoneassetmanagementgroup.Therearethree peoplethatcan eclericalpeoplewhoseeorders.Wearenota mutualfundorinvestmentadvisoryfirm. llbelookedatagain, butIdontthinkanythingambiguous.Toextendthoseoutthepr randspirit.IwasonauditcommitteeofCocaCola.Ithasonefifthasmanyemployees deviolations.Berkshirehas260kpeople,aboutsame numberofhouseholdsinOmaha.Iti ryhighup.Weoncehada casewhereafellowwasafriendofmine,VPofsubsidiary,an shappened.WehadanemployeeinWoodburyNYarrestedintheoffice.Wewanttomake cl teesaid,thisisreality.April27thletterfromJohn Mansville,readsthatauditcommit cswasviolated,Thereisnogreyarea forintegrity.Wehavesentmorethanoneperson lus theyaretradingincousinsname.Wewillhaveoccasionsinfuturewhenpeopledow iarylevel,withakickbackfromavendororsomethingsimilar.Itisverypainfulto hav nrulestomakeitclearthatrulesarenotmadetobe dancedaround,evenpasttheedges, tgreatestinstitutionsinworld,theyselecttrustworthypeople,anditisa lotoffunt ttitudeoftrust.Justmakingcompliancedepartment biggerwontnecessarilyaddvalue. partmentssometimeshavemost scandals.Berkshirehasnthadthatmanyscandalsofconseq :Illinois.Overseaseconomiesaredoingbetter.Anythingwecandobettertogetthings r.ChairmanBernankesaidwewillbelikethisforextendedperiod.When hewasasked, endedperiod.Wehadastimulusbill.If youdidnthaveadeficitwithastimulus,it 3

takingin15%ofGDPandspending25%ofGDP.Wehaveusedthoseleversinanunprecedente otsuretheyhavebeenasimportantassomepeoplethink.I thinkthenaturalresuscitati reimportant.Residentialconstructionwillcome back,buttakesworkingoffcrazyexcess sandcomesback,youllseemuch moreofpickupinemploymentthanyouthink.Shawcarp ngthere.Therearemanyindirectreservoirsofjobsthatwillbedrawnuponwhenresident k.Itwillcomeback.Ithoughtyouwouldbeseeingitbyendofthisyear.We arecrea singunits.Thatproblemwillgetcured.Idont thinkweareprogressingmoreslowly,v cehasbeenslow,but economywasparalyzed,andithascomebackalot.Peakrailcarloa unning190know.TTIdistributeselectroniccomponentsgloballyitissettingnewreco stry.Businessisgoingupandupandup.Economyiscomingback,and whenresidentialc ementinemploymentpicture. CM:Oneplacewearemakingmistakeisnotlearningenoughfr hrottle thelessonsoutofitweshouldhave.Thereisalottobesaidfortakinganaxe ethataxe? CM:Allthefinancialpanicswereprecededbyasininebehavior.Illmakemys ledtodothat.Iwouldhavetaxsystemdiscouragetrading.AddTobintaxes.Iwouldhav tate,andgetridofhighfrequencycomputertradingitislike legalizedfrontrunning. tofpeoplewhosucceedinstocktrading. Itiscrazythat25%ofengineersgotofinance esomeinfinancial sector.ItmakesDavidSokollooklikeahero. WB:Hesgettingwarme ds,yourprofitis60%longterm gains.Congresssaysyouarespeciallytreatedandless ooms.Itis prettyextraordinarythatwehavedecidedthatthatparticularactivityis60 CM:Hedgefundoperatorsgetlowertaxratethanprofessorsofphysicsordriversoftaxis tingtoourbreak.WehavebeenputtingupeveryyearourbetwithTedSeidesandhis fri ocomeback.S&P500hasntcaughtupyet,8.2%vs thehedgefundoffunds4.2%.Carol leahead aretheinvestmentmanagers.Wehaveclosetoanhourforlunch,andwewilltak LunchBreak] 14

RonOlson:LegalteamstartedworkingaweekearlierthanWarrenmentioned.Berkshirehas sinanysecuritiesonprohibitedlist[Ed.Note:Ronspokeforlonger,please referencet oingtogoto330pm,thenwilladjournforregularmeeting. Q19/CL:doesBYDremainasatt aunchdelays? WB:CharlieisBYDexpert. CM:ThepriceisstillwayhigherthanwhenBer tisnotquiteascheapas itwasthen.AnycompanythattriestomoveasfastasBYDwil severyyearfor6yrs,anditworkedthefirstfivetimes.Iamquiteoptimistic. WB:I demoneytradingoil,butnotsurewhattodonow.Whatareyoursentiments regardingoil rfromyou.Wetookapositioninoilonce. CM:Itwas$10abarrel. WB:Itwasntthat arrelsofoilthatisa lotofoiltotakeoutofgroundeveryday.Wevestuckaloto .HowmanyproducingoilwellsinUS?500kwells.TherearewellsnearCharliegoingfor ilisbeingfound,countriesaregrantingmuchmore complicatedconcessions.Theyareget oreintelligentdeals,andnotletting peoplemakeasmuchmoneyasinthepast.BNSFhed foil.Ididnt thinkwecouldguessoilprice,ittakesalotoftimetorunarailroad. ubsidiariesdohedge.IthinkUSDwillbecomelessvaluableovertime.USD priceofcomm epurchasingpoweronnominalgainsisanother question.Ithinkanintelligentpersonca gassets. CM:Ifwehaddonenothingbutoilsincethebeginning,Iamconfidentwewouldn sierthanwhatyouaretryingtodo. WB:Idontknowawaytohaveanedgeinthatacti ethatIfeelwouldhaveedge.Wehaveanedgeincommonstocks,distressedbonds. CM: heNigerians.Thatisnotourmilieau. WB:ThatisnotapositionIveheardbefore.[lau timportantthingyouvelearnedthisyear? 15

CM:Iveignoredhightechallmylife.IreadthebookInthePlexaboutGoogle,anditw ures,differentthanwhatIhaveatBerkshire.WillIeveruseit?Idoubtit. Butitw orethanIknewbefore. WB:ThatImgoingtohaveCharliewritethenextpressrelease. eshareholdersareinterribletroubletorelyonmetocorrectyour errors. Q22/Audience sinesspeople.Wearenottoobigtofail.Butisthiscountryonthe samepathtaxpay titutionsaroundworldthatgovernmentswouldproperlysaveequityholdersnot saved,bo nstitutionsshouldnotbeallowedtofail.FannieandFreddiethat iseffectivelywhat gautocompanies.MyhatsofftoChrysler. Theysavedafragileeconomyandtheymaderi ingifcountriesare toobigtofail.Thatproblemwillalwaysbewithus.Youneedtor ,andthereshouldbesysteminplacewhereCEOandthespouseareleftdeadbroke.Theup nt.Boarddirectorsshouldhaveseverepenaltiesaswell.Ifyourunan institutionthat vepoliciesmustbepainfulandreduceleverage.Butthere willbetoobigtofailinstit igtofigureout.Itismoreimportantto haverightsolutionthanimmediatesolutionto uestionoftoobigtofail. CM:PastpanicsstartedinWallStreetwithwavesofexcessive rmarket makersorpromoters.Thislastmessshouldhavecausedsituationwherenewmess he1930s.Partlyitisstupidityratherthanfraud,andfinanceandeconomicacademic ins nceandeconomicsarenothardsciences.Financeattractspeoplewho shouldhavegoneint S:WashDC.YouandMelindaGatesresignedfromWashingtonPost.Isthisbecauseyouare aplan? WB:Wemadestatementthatwewouldnotbesellingshares.MyenthusiasmforWash lhigh.Icouldsavethetravel.NormallyIdontcomment,Iamunequivocalhere though. fpostmanagementneedsadvice.Ididitbecauseof ageMelindaIdontthinkso.Id oards Charlie? CM:IreallyadmireCostco.Pleasureofmylifeisinterfacingwiththose n boardsisforthebirds. Q24/Audience:Melbourne,AU.WeakerUSD,itwillerodevalue eoffset currency? CM:No. 16

WB:WeownedAUDlastyearandhelpedour$100m.ItiseasierforAUDtogodown.Icant icineitherdirection.Wedoeverydaytrytothinkabout earningpowerandintrinsicva edontknowhowto compoundcurrentsumsatrateslikewhenwewereworkingwithsmaller penpitmines.IcanttellyouhowBerkshirewilldoversusminesin Australia.Ithink L:AppetiteforequityatBerkshireappearsanafterthought,areyoumostlyfocusedonoper avesaidyoulikebigelephants,thatyoupreferlargeacquisitions. WB:Wespendmoret o.Wehopewegetlucky,andgetsomebig acquisitions.Wehavehadseveralyoudontre d chancestoearnsignificantlymoreinyearstocome.Wehave$157bofcashandsecuriti lesecuritiesbecauseofinsurancebusiness.Welldolesswellasour fieldgetssmaller e,wehopetohaveasmallone. CM:Wehaveadvantagewhendealingwithpeople.Morefun le paperjustoutsmartingpeople. Q26/Audience:WhitneyTilson.Arenttheinsurancebus causeyoucangetan underwritingprofit?Areyoubeingoverlyconservative? WB:Idag imatewhatnormalunderwritingprofitmightbeover nexttwentyyearsorso.Idontthin nservative.Wecouldlose significantmoneyinunderwriting,weexpectthatevery5thor ropriate toincludesomeextravalueforunderwritingprofits. CM:Whitneyletmehelpby n,wouldyouswitchBerkshireforanyotherlarge insuranceoperationintheworld? W geinsuranceoperationIwouldtradeforours?Geicoidea hasbeentheresince1936.Ge ing.Geicowascloseto8ptsin firstquarter,thoughlikelythebestquarterofyear.A ne.Itdidexist beforehegotthere.TadMontrose,verydisciplinedbusiness.Wehaves sualfranchises. CM:InvestwithanOmahaboy,andnowownthebestinsurancebusinessin mnitysamebusinessandbuildinghereweoperatedoutofin1967.Wehavemore networt . 17

CM:Casualtyinsurance,atoughgame,temptationstobestupid.Ifyouareinit,youveg .Inhighinflation,whichBerkshirebusinessisthebestandworst? WB:Abusinesswith tcanhavegrowthandincreaseprices.Thevalueof dollarsinourcandybusinesshasfal sofcandy,but10x revenues.Businesseslikeourutilitiesgetabondlikereturn,twice ty wontdothatwellhasaspectofbondlikeinvestmentandbondswontdowellininfl soneofbestinworld,andutilityoperationsareoneofbestutility operations.Itisn rnmenttalkedaboutbuilding800milesofhighspeedtrack,andestimated costwas$43bil. ymuchmoreoftenthangettingreduced.Wepaid$43b includingdebtforonewith22kmile idges.Anyonewanttobuya bridge?Replacementvalueofthatassetisalreadyhuge.O portation.Itisaterrificassettoown. Q28/Audience:UCLAProfessorIworkindisrup nce.SplittingtypeA shares?Ifso,whatareprosandconsinyouropinion?Whatares plit1500:1.Companywillneverbesold,butifsoAshareswillbetreatedthesame. Th .Wehaveasplitstockavailable.Waltshouldnotcounton Astockbeingsplit. CM:Ma ldlovetomakethatdeal. Q29/ARS:NorthAndover,MA.AsAjitJainmaybenextCEO,can icyAjithasmadeorhowhethinks? WB:Ajitisnotexactlyapublicityhound.Icantt rove.Hetellsmeaboutbigonesandinterestingones.Heisasrationalathinkerasany inative.Wehavemovedintooneareaafteranother,when otherscopying.Iftherehappen aveopportunitytowritemore covers.Ajitsmindworkslikeamachine.Idontknowwha CM:AquotefromOsler,whobuiltthemodelmedicalschoolforworld:Secretforsuccessi ryThanksgivingAjitfliestoLondonbecausetheydonthaveaThanksgiving. WB:Imnote nextraordinarydegreeAjitthinksaboutBerkshire first.Peoplewouldhandhimasignifi ty,hecouldcreateafewhundredmillions ofwealth.Itdoesntcrosshismindtodotha dIfeellikeIve 18

leftoffazero.Hehasfun,hehascadreof30people.Manymorearesettlingclaimsand tinbusinessworld. CM:Whatareourworstbusinesses? WB:Ingeneral,smallerbusinesse altobecomebig.ProbablyIwouldcall retailing,butFurnitureMartisterrificoperati usinessesforalongtime,we havenotcreatedmajorearningpowerinretail. CM:Thatha ealittlesmarterwecouldhavefigureditout. WB:Wedidgeneratealotofcapitalfrom tomoreretail liketheduckonpondwhenitisraining.Wethinkwearerisinginwor tisproperwaytothinkofreturnsoncapitalwhenintangibleslikegoodwill arealarge giblecapitalishigh,butreturnonallocatedequitylooks drab.Foranintangible,don nieshavegoodwill,andunitsalesdecline. Maybeamortize?ShouldAOLamortize? WB: f.Donotincludegoodwillwhenevaluatingthefundamental attractivenessofbusiness.F enconsideringeconomicsforgetaboutit.Butin evaluatingourpricepaidandallocati houldntamortizegoodwill ofCocaCola,butshoulduseourgoodwilltojudgepricespaid. esense.But lookatreturnonnettangibleassets. CM:Wenevergetahugebargain,but dwhen0%forcost ofourinsurancefloat. WB:Paying$9bilforequityofLubrizol,cur olitselfisemploying$2.5bil ofequitytoearnthat$1bilpretax.Butwepaypremium. dgeJamesHambreckon$2.5b.JudgetheCEOonreturnsofcapitalontangibleassets.Wec dabusiness.CanyoumakethatclearerCharlie? CM:Wearenotgoingtobuygoodoperat imate. Q31/CL:Lookingathistory,whatareexamplesofcompanieswhodidsomethingright harliewilltalkaboutCostco. CM:Costcobeganbestintheworldinitscategory.Itis ysan extremeethicaldutytotakeallitspriceadvantagesandpassthemtocustomer,gen yalty.OnestoreinKoreadoes$400minyear.Thiscantexistinretail.Butitdoes. emsitisquiteararecombination.Ifonceortwiceinlifetimeyou areaffiliatedwit tthebestbusinessinworld,then wipedoutshareholderslastyear.Relatedataingraph onizedbusiness andgreatsuccesswithverytoughcompetitorsthatisarealproblem.

you,yoursuccessfromhurtingyoumanydontdoit.Butnobusinessschoolincountryd reaucracies.AlotofthathappenedinGM.Thatiswayitshould betaught.Harvardonc oseeacasestudyonwhythey stopped.Therealproblemisthatacademicbureaucraciesa s.Itisthe subdisciplinesthatgetintheway.Theysaythisisthebaronofmarketin eep. WB:Therewasaninterestingcase.Aplanehadbeenhijacked.Thereweretwodirty e.Eachgetsonerequest.Charliewhatwouldyoulike?Iwouldliketogiveonce morem rations.WhatwouldyoulikeMr.Buffett?Shootme first. Q32/Audience:SumitMehra,I gsisincentives.Itishardtogetkidsto workhard.Ifyoudecidedtohaveakidinne B:Itwouldtakemorethanadecision![laughter] WB:Iwasafraidyouweregoingtosay, nued]:HowwouldyouincentivizethemtocompeteagainstthemotivatedkidsfromBRIC? WB: mrightwomb,CharlieraisedeightchildrenandIdontthinkanyof themhavethatsense, hem.Youwontgetagoodresult,butnot necessarilyabadresult.Youalsodontwant r parentsatwhattheirparentshappentobegoodat.Ifyouhaveaproblemwiththis,po hinkyoucanraisekidsinanaffluentfamilyandhavethemlikeworkingsixtyhoursaweek seyourfightasgracefullyasyoucan.Thekeyistogetthem interestedinsomething. her. CM:Ifyouwereaproctologistyoumightnotlikeyourday. WB:Movingon Q33/BQ ouonlypay$100k? WB:ThenextCEOshouldmakealotofmoney.Jobshouldpaywell.Wha dbesupplementedbyanoptionsystemthatincorporatesacouplethingsthatareunusual. dbewhatbusinessisworthattime(notanabnormallylowmarketprice), plusincreasein inusdividendpaid.Saya7%hurdleasbaseless3% fordividend,so34%perannumhurdl hoptionvalue.They 20

deservesignificantpremiumiftheycandoit.Presentschemehasnothingtodowiththen oney.Peoplemakewellintoeightfigures,becausetheyearnit.Main thingistogetth M:Ihopeitwillbealongtimeinthefuture.Idontregarditasinconceivablethatit meoneneedstobeexemplarwhodoesntgrabeverythinghe can. Q34/Audience:Kansas.Wha ewableenergyanddepletingnatural resources,lossofcleanwateranddecliningfoodstoc tsubject,butdoesntaffectourinvestmentstrategy.WedlovetobuyGeicoor BNSF,bu imeframe.Thereareanumberofsocietalissues thatdontenterintoourpurchasedecis ntowaterifthereisenoughenergyyourwaterproblemsgoaway. Israeldesalinizesa uralproductivityoneofmainreasonsfor beingconstrainedwithhydrocarbonsisthatmo ithoutthem.Dontuseit allonheatinghousesorcars.Also,itisprobablygoodtous :Fromaprominentinvestorintheaudience(whowantstoremainanonymous):Yourpurchase edtransaction.Youdidnotpermitcompanytogoshop.Didtheirboard breachduty? CM: achitsduty.Wewouldnotparticipateinthe transactioniftheydidntdoitourway. easkedrecentlytodoone.Theywouldhavegottenless money.Wewillnotpaywhatwew icantprice.Theygota certaindeal.Wewouldhavesaidgoodluck. CM:Anyoneelsehav laughter] Q36/Audience:StamfordCT.Abigpartofjobisallocatingcapital.Howcanwe oneallocatingcapital? WB:Realtestiswhetherearningsprogressataratecommensurate ined.Over time,thetestiswhetherthemarketvalueislessthanthecapitalretained. count.Notaperfectmeasurement.Overtime,ifwekeepyourmoney,wehavetoearnbette hervaluation.Wehavedoneokay,butjobtoughereveryyear. Wehavecontinuedtobeat . CM:Wearebeatingthemarket,butnotattherateofthepast. 21

Q37/CL:Goldman,GE,SwissRe,Marscomparingthefivedeals,whyweretermsdifferent? redstockhadunusualcharacteristics.Allweredoneatunusual times.Ouropportunityc ransaction.IwasearlyonGEandGoldman.Iwas thinkingwhatIcoulddowith4bil.I oulddolater.Past dealsdontmakeanydifference.Manymakeamistake,wheretheytry tdealtheyevermade.Theyaredeterminedtomakesimilardeals.Goalisnottomakebet lthatyoucandobasedonopportunityattime. CM:Ofcoursewewillmakedealsatdiffer tunitycosts. Q38/Audience:Makeworldbetterplacecontinuouslearning.Youreadalot anttoreadfaster? WB:Ireadlotsofpapersand10ksand10qs.ImnotasfastasIuse ngclassescanbe.IwishIcouldreadfaster.Itisahugeadvantagetoreadfast.But tnightin20minitsaboutRussia.Idont knoweffectivenessofspeedreading. CM erthanmyroommateincollegecould,buthe nevermadeamistake.Dontbediscouragedt oesitmake?Pass thatpeanutbrittleWarren?[crunchingsounds] Q39/BQ:Worriedabout tceiling? WB:ItismostasinineactCongresseverperformed.Ithinktheypassedabill nabecauseeasierforschoolchildrentomemorize.Thatisonlybillthatgivescompetitio btceiling.Deficitis100bilamonth.Havingadebtceilingisamistake.2011 debtce tryandshouldhaveagrowingamountofdebt. Somuchtimegetswastedonthisissue,it uldbespending timeon.Nochancetheydontincreaseit,andtheyshouldeliminateit. ses.USwonthaveadebtcrisis.Aslongaswekeepissuingourowncurrency,difference yversusanotherisnightandday.Givinguprighttoissuedebt inothercurrencyisnot oGDP.Theyhaveconsistently borrowedinowncurrency.Weweretryingtobuyabankin oney.OnlyplacewecouldfindmoneywasKuwaitidinars.Wedidntborrowdinars,wedidn rliedoyouhaveacomment? CM:No.Irememberbipartisanforeignpolicy.Theyweregene eems theyarecompetingtobemoststupid,andtheykeeptoppingoneanother.[laughter] naccurateincometax,hesnotworried. Q40/Audience:NuclearpowerinIowa.Doyoubeli ymegacatastrophe risk? 22

WB:Idontthinkitdoesposethatrisk.Idontthinkitisanythingliketheexposure rtofreducingworldemissions,butwewontchangeinstalledbaseinany hurry.France clear.USgets20%fromnuclear.Omahapublicpower facilityisproposingnuclear.Ith .Idontthinkitwillgoanywherefora while.WhathappenedatTepcodoesntchangem etback,butdoesntchangemyviewthatnuclearpowerisimportant. CM:Wecantbesoris nceofhappeningmakingadentina subsidiary.Wearerequiredtocarrytoxicmaterials sksthat threatentheenterprise.Derivatives,leverage,etc.wearenotdoinganything rplantwillbehellofalotsafer.Rememberwearelearningaswegoalong here. WB:M ingeveryyeartheneverinnuclearpowerinthis country,anditproduces20%ofourelec ylargetsunamitoreachIowa. Q41/ARS:Shareholderssince1971.Reinstatingcharitableg bletosupport charitableprogram. WB:Ilovedit.Charlielovedit.Shareholdersloved hareholdersgive moneyaway.Nootherscopiedushowever.PlannedParenthooddonationsk ttlebusinesswithus.PamperedChefitwasadifferentsituation.Weoperatedthrough rs,largelywomenwhosupplementtheirincome.These50kwereindependent contractorsand ecauseBerkshiregavetoprochoiceorganizations.Theywere threatenedwithboycotts.I orswerehurt,withincomedisruption.Itwashurting innocentpeople.Wereluctantlycl tedhurtingindividuals,andcutoff theirlivelihooditwasunfairtothem. CM:Wedon ythesocialissuesoftheday.AlotofBerkshirestockis givenaway. Q42/Audience:Ta castlongtermcashflows,doyoutrytoestimate growth? WB:Growthispartofinvestmen ofitablegrowth.Ifwecouldfind areasofgrowthwithSees,wewould.CocaCola,in20 egyfor100 yrs.Someproductstravelbetter.Welovecompanieswithgrowthandhighret edontruleoutnogrowth.Itisafactorineveryinvestmentdecisionandinfuturecapi panieswithslowgrowthornogrowth. CM:Businessschoolsteachstudentstoforecastyear oseprojectionsas doingmoreharmthangood.Wethrowthemasidewheninvestmentbankers

precisionjustthefactthattheyarethere,thattheycamefromacomputer,thattheyar ealorimportantormeaningful. WB:IwroteScottFetzersayingwellpay$60pershare. r upthisletter.FellowfromFirstBostonwasthereandhadntcontactedusatall.He t.Inmomentofexuberance,hesaid,Well,wepreparedthisbook.Maybeyou wouldlike liondollarsifyoudontshowmethe book.Davetoldmesomeprojectionsoutto2015,b ons.Dontaskabarberifyouneedahaircut.Wedoprojectionsinourhead.Wearethi nafewyears.Wealsothinkabouthowfaroffwecanbe. CM:Thoseofyouabouttoen etendto doittheirway. Q43/CL:SecuritiesheldbyWEB? WB:Marc? MarcHamburg:T loyeebenefitplans.Hesconsideredtobe controllingshareholderofBerkshire.Wefile s. WB:Iownveryveryfewsecurities.Ispendmytimethinkingaboutsecurities.Ih :BusinessesinChina?Whatcharacteristicsdoyoulookfor?Anydifferentgeneral princ robabilities.WhenboughtPetrochina,Yukoswassimilarlycheap.IdecidedI wasmoreco hinathanYukos.IwouldhavebeenmorecomfortablewithUS company.Buttheyhadapoli sanindicationofintent.We makeallowancesforourlackofunderstanding. CM:Wema erthestoryaboutthemanwhotravelledout West,andcamebackandsaid,IvelearnedI dhedid. WeveonlyhadacouplethingsinChinaitsliketheoneIndian.Youcant scinatinggame,tohearaboutcompaniesthatarenew tome.Universemuchsmallerdueto anythatmakes$3bilayearaftertaxes.[Ed.Note:Thereismorethan one] WB:Illget BQ:Alaska.Wheredoyouputyourcash? 24

WB:Choicesarelousyforshorttermmoney.Wedidnotowncommercialpaperin2004.Iti rbackwhenwewantit.InSeptemberof2008wehadcommitted toput$6.5binWrigley.W laceliketheydid.Butwehad themoney.OnOct6thweneeded$6.5bil.Virtuallyonly surybills.Overwhelminglyitisintreasuries. CM:Iveseenpeoplestrugglewhowanted y.Somepipelinescame forsaleonaSaturdayandclosedonMonday. WB:Sellerwaswor ngweek.WeneededHartScottRudino clearance,soIwrotealettertoFTCthatwewilld uys needthemoney.Ourabilitytocomeupwithcash,whenworldpetrifiedthatcouldh ftoSouthAmericawParisHilton.[laughter]Leavethatofftranscribedreport. Q46/A ting? CM:TherewillbeanafternoonwithCharlie,onlyforhardcoreaddicts. Q47/ARS:W errific,butonlywhenthewindblows.Itonlyblowsabout35%oftimeinIowa.Youcant riscleanestenergybutcantbereliedon. Economicsonlymakesensewithtaxcredit. eanadequate returnoncapital.Governmentissubsidizingwindpower.Iowaisagoodwi t.ItmadesensetolocatealotofmegawattsinIowa.Ithinkwearenumber#1incountr otoftaxes,andmanyutilitieswhichget100%depreciation theydonthavethetaxpaying anBerkshire.Weveprobablypaid2%ofall corporatetaxesinUSinlast5yrs.Wecan okeep ratesabsolutelyunchangedformorethanadecade. CM:Nothingtoadd. Q48/Audi mentonNetJets,thatitwasdestinedforbankruptcy.How closetobankruptcy? WB:Dest nedbyBerkshire.Ifastandalone,theywouldhavegone bankrupt.Wehavehadtwoinsura ebankruptapart.Weputmoney intoBerkshireownedcompanies.Wegotitupto$1.9bil. ngit. CM:Nocomment. WB:WepointedthatouttoS&P.WelookatBerkshireasone tmakingthemwhole. Q49/Audience:Howtohelpyouthgetjobwithafuture? 25

WB:Anythingyoudotoimproveyourownskills,youneverknowwhenitwillpayoff.Ihav ce,anditisfora$100DaleCarnegiecoursefrom1951.Itis incalculablethevalueIr rstareaIwouldworkon.IfIhadstayedin samepositionintermsofcommunicatingmy ugetlucky, youfindyourpassionearlyon. CM:Economicsisatoughsubject.Oncein sagree.Iwouldnt hurrytofieldswhereexpertscantagree.Iwouldmastertheeasyst mics.Iwouldntregardthemaspushingmeforwardinany significantway. Q50/CL:Munic tofdirectreinsuranceyoucando? WB:Itisa$4bilinvestment,or2.5%ofnetworth.T isks wearewillingtobearinreinsurancefield.$17bilregularpretaxandthatissoun nvestmentsarenoconstraintforus.Wewouldlovetowritemoreriskatrightprice. CM: ss.Ithastakenyoualongtimetodoaswellasyoudo.If notforAjit,wedbemuch ess.Itlookseasymostofthetime. CM:Thatistrouble,itlookseasierthanitis. W lls.Youcanmakemoneyalongtimeatwrong odds.Butifyoudoitlongenoughitwill heyaresmarterthancustomers,withyieldandhigh losses.Newonesareworse. Q51/Audi sesshisprogress? CM:Hesentmealetter.Ihaddinner.Wehaveaverycomplicatedbu ures.[Laughter] WB:Toddhasbeenthinkingaboutfinancialcompaniesformanyyears,abo hire. Thatisuseful. Q52/BQ:Chicago.JNJbigholding,recentacquisitiononSynthesa upport? WB:IhaventtalkedtoanyoneatJNJmanagement.Iwouldlikedealbetterifall resentbusinessforsomethingnew,youcandrawinferencethatJNJisnot valuingitsown yasyouthinkitshouldbevalued.Thereareprobablynotalot ofsynergies. 26

CM:Thereisadisadvantage,asyouknowmoreaboutchocolateandpizzathanmedicaldevice gue.PreLubrizol.Whatsizeistoobig?Whatcanwedotohelp? WB:Wewerelookingat tock,andwerenot goingtoborrowalotofmoney.Wearenotgoingtoissueshares,nev .Ourcashbalanceswillbuildmonthtomonth.Lubrizolrequires$9bilofcash.Looking ldbecomfortable.Theyareworthdoing.Wewontstretch.Wevenever takenanyrisks. ssueshares.Ihavefriendwhosoldouttoasocialist companyforstock.Thesocialist inessfornothing. WB:Companiesininternetperiodcouldntissuesharesfastenough.I outofgas.Weveneverbeeninthatgame.Wehateissuingshares.Weresellingaporti 4/ARS:Builtoracquiredresidentialrealestatemarket.Currentconditions?Whatmightw B:Immediatesituationisterrible,itaffectsShaw[Ed.note:Isteppedawaybrieflyand on]Ithoughtovertimebeingabrickmanufacturerwouldbegood,butIknowIwont be anydontlikecyclicalbusinesses.Wedontcareiflumpy.Nooneelsewasbidding for bout.Seescandylosesmoneyeightmonthsayear. WedontworryinJulythatChristmas rside. Obviouslycyclicalbusinesseswontbehavesameasseasonal.Therewillbeterri sing,ifIbuyassetsatrightprice. WB:Wewilladjournforfiveminutes. NotescourtesyofPeterBoodell,PortfolioManagerandManagingPartner,Boodell&Company tLLC,with editsbyRickSchmidt,PortfolioManagerandManagingPartnerofOrandaCapita ity.Please addressanycommentsorconcernsaboutthisdocumenttoinfo@boodellco.com. evine,ithasbeen suggestedthatsomebelieverecordingdeviceshavebeenusedtocreate e.Theywerenot,andas suchthesenotesshouldnotbereliedupon.MytypingteacherM atevercredit,ifany, isdue. 27