Key takeaways on the markets and economy from Berkshire's annual meeting

Obviously, the big story of the weekend was the Berkshire Hathaway annual shareholder meeting. What do you think about Berkshire growing its cash pile and trimming its Apple holdings? So that makes a lot of sense to us. That’s very similar to what our members are doing. Public markets are frothy right now and we have patient investors with patient capital. Our investors are very similar to what Warren is doing and we’re just sitting in the markets waiting, as Warren Buffett called it, for some enchanted evening. You know, we’re going to talk much more about some of the things that the Oracle of OMA had to say. Annika, I want to come over to you. So hard to even remember this now after the Berkshire Hathaway annual meeting, but before that we got a very soft jobs report, 175,000 jobs, about 25% below the estimates. And then after that, we see the S&P and the NASDAQ have their best day in two months. In your mind, what does that say about what’s driving the market? Does that mean that earnings are no longer driving the market because earnings have been great, 10% higher year over year? Is it simply all about the Fed, You know, so it there was a long period of time unfortunately where it was really all about the Feds and I think luckily markets have moved away from that because to your point earnings have been really, really strong. Let’s let’s zoom out a couple of months ago, well beginning of this year markets were expecting 4-5 rate cuts this year and our expectations are about only one. That’s a massive change in expectations. Yet markets are around all time highs. So I think we need to zoom out and be grateful for the fact that markets are behaving better more fundamentally and that one day move, I mean it’s it’s part of being in a dynamic stock market. So Barbara, coming back over to you, you said Berkshire Hathaway and Warren Buffett of course the Oracle of Omaha growing their cash pilings, trimming Apple made sense. I want to bounce another investment idea off you and I’m sure you and your members have already talked about it. I’m talking about Elon Musk, of course, the CEO of Tesla, inviting Warren Buffett to invest. What’s your take on that? What do you think about that idea? Of course, Tesla shares a van under quite a bit of pressure over the last couple months. Well, obviously Elon is brilliant for getting the most famous investor possible behind him. And you know, I think Warren will make the right decision. And now I think it’s a bigger team than just Warren. The, the take away that I had from the meeting was all about succession and that was the priority. And I think that it’s about Greg now and and his direction and Warren is steering him to make the right decisions. But it’s a very smart move on Elon Musk part. You know, I want to stick with this for a minute. Not only do I want to talk to you about investment decisions, of course, Warren Buffett saying that it’s his wishes that Greg Abel not only run the company but also run the stock portfolio, but just also some of the, I guess, emotional and investor reaction. Of course it’s the first annual meeting without Charlie Munger. And then you also just heard very directly from, I got to say a noticeably older another Warren Buffett about what he wants to see and him even saying he hopes that he’s there next year. So I I thought that that was very sweet and he was very focused on giving Greg the opportunity to speak. He prioritized the succession just like we do at R 360. We have a program for rising leaders because this is the most important thing you can do is to build a company and train the next generation. And I thought he was very kind bringing Greg in and really dedicating time to him so that he could establish himself up and calm investors going forward. So Annika, back over to you. We mentioned Berkshire increasing its cash position very significantly by more than $20 billion. Most of it’s parked in short term treasuries. I want to talk to you about what that means to other investors. Possibly so many people turn to the work of Omaha for investment decisions. Right now he’s saying basically cash is king stand short term treasuries while he looks for an opportunity. Do you think other investors are going to follow his lead is what he’s saying? Does it just make sense right now in your mind? Well, I think there’s two parts. One is the short term side of the treasuries and the other part is just the cash pile. And I think also what was mentioned earlier, you know cash is always king and looking for opportunities to lower your average buying cost of fantastic companies is always extremely wise. It’s what we talk about with our investors all the time. And the fact that he’s choosing shorter dated treasuries in our view is also very logical because again looking at the current yield curve, why take duration risk if you are being well remunerated at the shorter end of the curve at at the shorter end. So I think it’s, of course it’s, it seems very, very logical, all right, seems logical to you. One other thing that was discussed quite a bit by Warren Buffett with the investment in Japan, he actually said he’d put more money in there if he could. What’s your view on Japan right now? I know you’re bullish on Japan. Any concerns about what’s going on with the yen? Yeah, well we, we are bullish on Japan and I mean of course you know the yen, the yen has its has its elements of uncertainty, well with every FX. But I think let’s again take a step back. Japan has the most monetary policy, accommodative, sorry that Japan has the most accommodative monetary policy of all central banks globally. And let’s not underestimate how incredibly powerful that is. Next to that, if you look at Japanese companies, the Japan region has been quite uninvestable for many investors across the globe. Yield curve controlled etcetera has been very cumbersome and that essentially means you’ve got great businesses which have extremely under levered balance sheets. You see more corporate action coming into play and at the same time you’ve got a very accommodative monetary policy backdrop. So we, we are excited about it. But again, we go back to the nitty gritties, roll up your sleeves, following our investment manifesto. What is a brilliant business? And if it happens to be listed in Japan, great. OK, Barbara, I’m going to give you the last word. I’m a lot of talk about Japan. Do you wish that Berkshire Hathaway, you and your members, I should say, do you wish they would invest more in Japan? Is there some other economy that you think might have even better opportunity that Berkshire Hathaway should take a look at? Well, I think we are investing in Japan and Berkshire Hathaway Investments in Japan went up 47% last year. So we have not lost sight of that. We’re also looking at India and there are many other markets like Saudi Arabia that have attracted some attention, but the priority is just to focus on businesses that we understand. So Warren emphasizes circle of confidence, not it’s not what you know, it’s what you don’t know. So we prioritize the businesses we understand and stay within our edge and that was his advice to his shareholders as well.