 Good day, fellow investors. I just enjoyed six hours of listening to Warren Buffett and Charlie Munger discuss and answer shareholders' questions. However, to save you six hours, I decided to just go through my notes and share you in a summarized time what went on and what I think are the key investing points from the latest conference. If you like such an investment mindset focused on Buffett and Munger, please subscribe to this channel and smash that like button. So let's start with the content so that you don't lose much time. Two parts with our lunch break. We're going to discuss the buybacks, intrinsic value, how the world is changing, how to invest, alternative investments, Apple holding, China, foreign stocks, Brexit, their home country buyers, Kraft Heinz investment, Amazon investment, massive defaults in the junk bond markets that could happen. The part two was a little bit slower. Charlie also almost dosed off at the moment. But okay, tech stocks, what's the tech mode, competitive investment environment, electricity demand from EV, cannabis, Anadarko investment, detailed versus overview when it comes to investing and how focused should you be on an investment. Acquisitions, compounding, is Berkshire better than an SAP 500? Index, investing formula on risk and reward from Berkshire, Tesla insurance on cars and online shipping of cars. Geico, Berkshire insurance and their auto dealerships Berkshire after Buffett and Munger 50% per year on a million dollar portfolio is possible to make in arbitrage. Let's start and don't forget if you haven't already to subscribe and smash that like button. So to go over the summary Warren Buffett started with his first quarter after tax earnings and here you have to really be focused on, okay, stock markets went up, therefore the next net earnings look extraordinary. However, you have to look a little bit higher at the operating earnings and then for the net earnings to take the real earnings of the investment and derivative gains and losses, stock prices going up and down that now have to be included into the accounting. You should go and look at their holdings, look at the earnings of those holdings and consequently connect those earnings of the holdings to Berkshire's stake in them and then attach them to the first quarter earnings. That's something we might do in another video down the road. The float, very important later we'll discuss insurance business 124 billion that Warren can invest freely without paying any cost of that. Then the first questions, the topic was really close to Berkshire buybacks, what happened, why didn't he buy earlier, more etc. In the last quarter he bought more than in 2018 and then he discussed how he would love to spend 100 billion on buybacks which would be 20% more of the company when the stock is lower but it has to be on a discount and it has to be below the intrinsic value he and Charlie attached to Berkshire. So as Manger says, when it gets obvious we will be good at it. And there are of course going to buy more B shares than A shares when doing buybacks simply because of volume. Now on the intrinsic value of the insurance business, how to value that unit was the question and he says that the biggest value of Berkshire's insurance business is the float. Not so much the operating earnings but the float as they can use the 124 billion for free and nobody's going to withdraw it forever. So it took a long time to develop. There are no interest rates on that. There are some earnings on insurance too but that's not the core of the business. Worst case situation, reinsurance, it's not a good business if you have the intention to pay claims when the disaster strikes. So they are keeping the capital required, invested it around in investments that have good returns, buffet investments and therefore Berkshire is the ideal form to own such insurance businesses. All big free insurers globally almost went bust in the last 30 years without a worst case scenario. So it's key the structure Berkshire insurance capital requirements the cash Berkshire has is key in having such a business. Not a good standalone business insurance is. How the world is changing 5G mode chain challenge businesses will deal with that on an individual basis. Internet infrastructure, furniture, impacting internet online furniture sales impacting Nebraska furniture market. That is a competitive but then again the business itself will deal with it and then going on to alternative investments. As he discussed how private equity closed end funds actually have low long term returns because there is a trillion committed to buying such assets on leverage which means free trillion chase private equity investments supply demand is not positive and it has changed from 30 40 years ago. So proposals that they get and the returns are not calculated honest honestly. So be careful with those new IPOs and also pension funds have to be careful where they invest their money. You have to check the motivation of the people who are selling such products because if they get 1% on a million that's a huge amount of money for them. And that's usually their top priority motivation. Lying a little bit to make the money is what Munger says. Apple holding the problem for Buffett and Munger is that the stock has gone up 100 billion in buybacks. The price lower is what would be very good for Buffett and Munger but unfortunately the price is going up. So that's what are they going to discuss not getting into the details and then Charlie simply says it in my family. The people that have Apple phones is the last thing they will give up. On China foreign stocks Brexit and the home country bias Munger says we will buy more in China. They don't have to disclose their foreign ownership so we don't know what Buffett owns in China or around the world. And they are not going to do that in the future because it's not required and why would they find more competition for their assets. They like big markets so they can probably only invest in 15 countries in the world. They missed some investments but okay they are always looking and he did just an interview with the Financial Times about the Brexit and how it doesn't impact his investment. If they find a good investment in the UK or in Europe they would invest no matter the Brexit. My key conclusion here is okay China we will buy more because they really really like China. On Kraft Heinz they said they overpaid not on Heinz but on Kraft 50 billion for 7 billion in cash operating earnings and it's a tough environment it's a margin fight with other brands and with private labels and some investments go good some don't 3G had a great track record of great investments and the last didn't do so well in this case Kraft so that's usually how it goes in the investment world. You cannot win on all and that's Buffett's message we will make mistakes in the future too. On the Amazon investment whether is that different than Berkshire's value investing or not well it's not material to Berkshire and it's not done by Buffett is done by Todd or Ted the other two investment managers at Berkshire and they are also value investors and this is very important because value comes in a lot of forms. So it's not just price to book value or earnings but they look at hundreds of securities they estimate the cash of the business between now and judgment day and then they decide on what they should buy. So it is about risk and reward obviously for one of those investment managers Ted or Todd the risk reward of Amazon was better than other things they had on their plates. Charlie describes Amazon as a pass as Bezos is really a miracle worker but Google for them was a big miss because they were using Google ads for Geico ads they were seeing what were they paying in relation to the cost and they didn't buy big on Apple. Also succession planning Ted Todd they're just investment managers Greg Abel are the operating managers so they're very happy with what is there and they really hope that Berkshire will remain peculiar as it is being different and this works better so as Charlie says sticks to us. On the massive defaults in the junk bond markets they say it's usual to have people like Ted and Todd analyzing what is going into default and what's the value of the defaulted asset so that they can buy it like they bought the assets in Canada. So that's why they have cash they know how to behave in panic and that's a great value of Berkshire as it is and as it will be in the future. Tech stocks the tech mode Munger says maybe we should invest maybe we shouldn't Buffett says we will not go into something just because somebody else is doing that most other people are doing that and he says how we missed a lot and we will miss a lot of them in the future that's not a problem as long as what we hit on is good. The competitive investment environment building a circle of competence you need to do a lot of reading and learn as much as you can about as many businesses and focus on those where you can know more than your investment competitors. Find small areas don't act too often and wait for the perfect pitch Buffett would say no one think very well it will give you an edge at some point in time and this is something so crucial I see so many investors chasing investments around the world what do you think about these stocks when what do you think about that stock and I am more as more and more research that I do as more I learn more I see okay I need to find a sector okay I know a lot about mining let's say copper mining and then I simply have to wait for those stocks to come to me when there is practically no risk and huge upside if you find five sectors like that and you wait a decade for those stocks to hit your risk reward you will have five ten transactions over a decade and you will make huge amounts because the risk is low and the upside is unlimited so that's what Buffett is doing and this is where I think the circle of competence is really so important on electricity demand from electrical vehicles Cannabis, Gregg said and there's Bill Gates in the corner there how they are investing it's a long-term process forum projects to development in the energy field they are investing they are investing the most in the USA so they are really focused not paying dividends like other energy companies so they are really focused on doing really well so we will put a lot of money into energy and one way of doing that is the Anadarko investment just a question at the end of the conference call where Warren Buffett commits 10 billion to Occidental for the acquisition of that but this is a typical Buffett deal no risk huge upside he will receive 100,000 shares of cumulative perpetual preferred stock with the liquidation value of 100,000 there you have the 10 billion with an annual 8% dividend he can redeem those shares whenever he wants and or he can hold them if those shares explode he will just hold the shares and get even more of his return of investment so he practically can't lose plus he will also receive warrants to purchase up to 80 million shares of common stock with an exercise price of 62.50 per share receive warrants so again no risk if Occidental stocks explode it's a huge win for him and he says that he would love to spend 100 billion on such deals of course these are deals that have very little risk and huge upside Charlie said I like it on investing in detail knowing about something very closely every detail versus having a good overview of the important things he says that you might miss the big picture when focusing on details if you know in detail the textile business in the 1970s it wouldn't help you it was a terrible investment it might be interesting to an analyst but little help to shareholder so we're always be careful when listening to analysts that know what's going on very very well on acquisitions other people are paying what we would not so they are leveraged they have no downside and total upside we will not be like everybody else so that's the problem why they are not shooting that big elephant gun because everybody else is chasing those assets and paying too much compounding they're slowing down to size but will do well what is better the SAP 500 or Berkshire Hathaway corporate tax on stocks is a downer for Berkshire but they say that if there is another bull market like this one they will probably underperform but if there is a bear market they will outperform so think about that whether you're considering investing in Berkshire or the SAP 500 Buffett says his estates will have nothing but Berkshire message to trustees ignore diversification keep in Berkshire Charlie I don't own any indexes you need free stocks not 50 if you know what you're doing so this is a clear message against the index funds own Berkshire Hathaway or something better something smaller where you can compound faster on what is their investing formula on risk and reward he simply says they haven't got one it's really being careful about accounting adjustments being careful about formulas and really understanding the business at the end there was the Tesla insurance car competition and online shipping from Tesla Buffett immediately said GM tried it other auto companies tried it and the likelihood of success of an auto company getting into the insurance business is the same as the success rate of an insurance company getting into the car business so this is a message directly to Elon Musk and he says I would bet against any company entering into such a venture they bring no advantage into the insurance business even if data is important but insurance is a tough business on the car business 6% gross margin on new cars isn't that much for buying a car online so it is a competitor but not dangerous because people will still go to the auto dealer services Charlie had nothing to comment on Tesla Berkshire after Buffett and Munger Munger says it's going to work fine how to make 50% per year on a million dollar portfolio he says mostly arbitrage but different way of arbitrage today and that would be with no risk 1 million to 100 million if you have 100 million to manage the return goes down like a rock it's doable but not on huge sums so this is the summary I tried really to get the most important things of what was going on the message is clear invest in businesses find good returns calculate the cash from today to judgement date from those businesses compare to other investments have a circle of competence know about something very well compare it to others have an overview a common sense investing mindset ok this is too expensive don't chase what other people do and over the very long term like Warren, like Munger you will do very very well the key is the very long term here we are measuring things in decades thank you for watching please subscribe to the channel we will focus more on Buffett's mindset on really value investing investing for the long term not chasing the crazy investments other chase and thank you for watching looking forward to your comments smash that like button share the video if you enjoyed it and I'll see you in the next video discussing Ray Dalio's monetary policy free and how will that impact and how will that change our financial lives financial markets and the economies over the next decade thank you and I'll see you in the next video