Berkshire Hathaway 2008 annual meeting

This year's meeting had over 31,000 attendees, up from around 28,000 last year. The current site is essentially at capacity, and Buffett has hinted at other plans for next year, including the use of two sites.....

Each meeting begins with a humorous movie with a certain theme, this year's spoofed the primary campaigns, with Munger running for President. It also highlighted Buffett's interest in soap operas, with a guest appearance by Susan Lucci, as the supposed new CEO of Berkshire, with Buffett trading places with a new career on her soap. Past years have included appearances by Tiger Woods, Lebron James, and Arnold Schwarzenegger.

As usual, questions and topics were wider-ranging, since anyone can go to one of several microphones and everything is done live.

Some of the highlights include:

• Muni Bond Unit - Disclosure about the new bond insurance unit, Berkshire Hathaway Assurance, which in the first quarter wrote $400 million in premiums, very significant considering it's the first quarter of operation. Of interest was the fact that most of the deals already had insurance, from one of the existing players...a clear sign of lack of confidence in these supposedly AAA-rated entities. This is an excellent example of some of the opportunities Buffett is able to take advantage of.
• Credit Market Problems - Another example of how Buffett was able to take advantage of the recent turmoil was the auction-rate securities market. These are debt securities (often munis) whose rates are set weekly, at auction, with high penalty rates if there are no bidders. Berkshire accumulated as much as $4 billion worth at rates as high as 11%. He noted that the same security was priced at widely varying rates from week to week and that this reflected market inefficiencies, in contrast to the 'efficient market' hypotheses widely taught in business schools for over 25 years.
• Financial Markets - Several comments were made about all the problems in the financial markets earlier this year. Buffett and Munger agreed that Bear Stearns had to be saved, but were critical of the 'gestalt' of Wall Street, encompassing greed, overleverage, aggressive accounting, and poor risk management.
• Future returns - Buffett and Munger suggested investors not expect returns as high as seen in the past, confirming other comments made by them. They didn't give any specific numbers but somewhere in the range of 8-9% is likely.
• Other - Numerous other questions were answered, which contributed to the overall atmosphere....just to be present while Buffett and Munger shared their knowledge was such a privilege. These questions covered subjects such as whether Berkshire would consider buying the Chicago Cubs, how to grow oneself personally, recommended readings (Influence and Yes! by Cialdini)