This marked my eighth time attending the Berkshire Hathaway annual meeting in the US. This year, however, felt tinged with a hint of melancholy, as it was the first meeting without Warren Buffett on the stage. Buffett only delivered an opening address and then sat in the audience, listening alongside everyone else as his successor, Greg Abel, answered investor questions.
Over the past 60 years, the investment legend Warren Buffett has generated a return of 60,000 times, an unprecedented achievement unlikely to be matched. When he first announced at last year's meeting that he would step down as CEO of Berkshire Hathaway at year-end, I sensed that the company's peak might have passed. Berkshire's success is inextricably linked to Buffett's personal charisma, and investing is a highly personal endeavor. With a new leader, significant doubt exists about whether they can overcome human greed and fear like Buffett, maintain discipline to buy good companies, and avoid chasing market trends. Buffett's retirement announcement suggests the "Buffett premium" will gradually fade. I commented last year that the announcement moment might mark the peak for Berkshire's stock price, followed by a gradual decline. Over the past year, Berkshire's stock has fallen over 20%, while the S&P 500 hit new highs and has outperformed Berkshire by 10 percentage points year-to-date. This indicates that the premium investors assigned to Berkshire was largely due to Buffett himself; once he stepped aside, that premium began to diminish.
Although Buffett has resigned as CEO, he remains Chairman and continues to work at the company every weekday, meaning his oversight and guidance are not entirely absent. I believe Abel will still consult Buffett on major decisions, such as continuing to reduce US stock holdings and maintaining a large cash reserve to capitalize on a market crash. For Abel, the best current strategy is to follow established practices and not impose his own style too quickly. However, in five or ten years, when Buffett is truly gone, the biggest concern is whether Abel can independently steer the massive ship of Berkshire smoothly. Many shareholders have reduced their holdings, and Berkshire's stock price has been in a steady decline. They need to observe Abel's subsequent operational skill and investment capability before deciding whether to buy back in. Therefore, Berkshire's short-term outlook remains cautious.
At the meeting, Buffett addressed strategic, philosophical questions, while Abel focused on tactical aspects, such as specific industry performances, investment rationales, and profit contributions from various business units. Abel comes across more as an investment manager, whereas Buffett is a philosopher and an investment sage. After the meeting, I attended a Sino-US investor reception and gave a keynote speech; attendees agreed with this perspective. There is immense respect and expectation for Buffett; nearly every third sentence he speaks becomes a widely circulated quote. After a full day of listening to Abel, however, no particular statement was memorable—this highlights the fundamental difference. Abel is fundamentally a skilled operator, an investment manager at the practical level, who has not yet ascended to the height of investment philosophy. Within the pool of Buffett's potential successors, Abel was the optimal choice, as others may possess even less comprehensive capabilities.
Attendance at this year's meeting was lower, with many attendees appearing discouraged and disappointed. Previously, the 40,000-seat stadium would be packed, with people standing in the back and aisles. This time, there were many empty seats—about one-third fewer—with only two-thirds of the seats filled. In the past, people would queue for four or five hours in the cold starting at 2 a.m. to get inner-section seats by 7 a.m. This time, a friend who arrived at 6 a.m. managed to secure an inner-section seat, clearly indicating significantly reduced attendance. Last year, when Buffett announced his retirement, I debated with Professor Chen Kaifeng of New York University: he believed attendance wouldn't drop much even without Buffett, while I predicted it would halve if Buffett wasn't present. The outcome aligns closely with my prediction. There aren't many true Berkshire shareholders; most attendees are Buffett's fans. People come to hear Buffett discuss value investing philosophy and life lessons, not the specifics of the companies Berkshire invests in, which can be found in the online annual reports.
People come on a pilgrimage. What Buffett leaves us with is a philosophical spirit for investing. The principle is simple, summarized in just a few sentences, but people from different countries, ethnicities, skin colors, genders, and investment philosophies travel thousands of miles, flying over 20 hours to Omaha, a small town in the US Midwest, just to see Buffett. This is his personal charisma and proves that value investing is indeed the key to long-term investment success.
I attended the Berkshire meeting with Lin Yuan in 2019, but he hasn't returned since. We often meet at the Moutai shareholder meetings, and he questions why I go every year, citing the long, exhausting flight. I explain that I attend not just to see Buffett personally, but to promote the philosophy of value investing, helping it take root and flourish among investors again. Value investing faces skepticism every five years, even with Buffett in the US market. It's often during bear markets that people sigh, "The Oracle is still the Oracle." In the A-share market in recent years, value investors have struggled; blindly applying Buffett's principles to buy consumer stocks or low-valuation stocks has often failed. During periods of intense economic change, one must adapt with the times and recognize shifting trends.
Regarding views on AI, whether from Buffett, Abel, or Jain, the message was to pay attention to AI but not invest purely to chase the trend. Investment would only occur if AI integrates with actual business and generates performance, not for speculative purposes. This reflects their uncertainty about the application of new AI technology and an inability to predict its economic benefits. As cautious investors, they are unwilling to participate early unless the industry offers very certain future returns. If Buffett were no longer involved, Abel might participate, given his younger age and greater receptivity to new technology. However, this coincides with what may be the peak of a US tech bubble, which is inflating rapidly and will eventually burst. Buffett has prudently significantly reduced US stock holdings, waiting for the bubble to burst. As he quipped, "when people stop answering the phone," that's when he will buy. He offered a fitting analogy: the current US stock market is like a casino next to a church. People sometimes go to the church, but the casino's allure is growing. Fewer people are in the church now, having gone to gamble. Value investors like Buffett remain in the church, expressing their market view by reducing exposure. This analogy is quite vivid. Investors should consider whether they are in the church or the casino—speculating or investing.
Buffett's bullishness on Apple and his decision to reduce holdings are not contradictory. He is bullish on Apple's business model, approving of the company at an industrial level. However, Apple's stock price has risen significantly since his initial purchase, generating over $100 billion in profits. As he mentioned last year, Tim Cook has made more money for Berkshire shareholders than he has. After such a rise,泡沫 risk emerges. As a cautious investor, Buffett typically reduces holdings substantially before a bubble bursts, hoarding cash to buy back during a market crash, potentially at half or even lower than current prices. So, while praising Cook as a genius and Apple as the world's greatest company, Buffett has been selling Apple stock for two years. This isn't a lack of faith in Apple, but risk reduction through position sizing. This is precisely where Buffett excels. Another admirable trait is his immunity to moral suasion. He is never swayed by external noise, selling decisively when necessary, just as he buys decisively.
Regarding the Apple investment, Duan Yongping mentioned that he helped Buffett select it. Duan bought Apple first and recommended it to Buffett, arguing that Apple's business model was far superior to Coca-Cola's and suggesting a heavy allocation. Buffett took the advice, made a significant purchase, and Apple once became his largest holding, with Buffett being Apple's largest shareholder. The BYD investment was recommended by Li Lu, who manages the芒格 family assets. A famous photo shows芒格 handing his wallet to Li Lu, saying that with such a good investor found, they need look no further. Li Lu is indeed one of the best value investors among Chinese professionals. He recommended BYD to芒格, introduced Wang Chuanfu, and they visited BYD's US factory, eventually persuading Buffett.
Interestingly, Buffett once said he wouldn't invest in companies with "wings" or "wheels." "Wings" referred to airlines, which he believed were highly susceptible to external shocks and major losses. He humorously suggested a shortcut to becoming a millionaire: first become a billionaire, then buy airline stocks. Later, he broke his own rule, buying US airline stocks, thinking the industry had consolidated into an oligopoly with pricing power. Then the pandemic hit, airline stocks plunged 50%, and he immediately admitted his mistake, selling at a loss of $2.5 billion. In contrast, the BYD investment succeeded. He was initially reluctant because he requires a minimum ROE of 15% for investments, while manufacturing often has ROEs below 5% with high leverage. He prefers debt ratios below 30%, but BYD's was 75%, far outside his criteria. However, Buffett mentioned last year that he and芒格 typically agree before buying, with only two exceptions where芒格 insisted strongly: BYD and Costco. Both investments later succeeded, with BYD rising 38 times and Costco also multiplying. He used this to illustrate that芒格 might be smarter.
Therefore, Buffett's investment approach is highly objective and rational, devoid of emotional attachment or moral judgment. This contrasts with many A-share investors who develop deep emotional ties to stocks they own. They might hold a stock for ten years without selling, sometimes even adding when it rebounds to their cost price. Furthermore, after buying, if anyone dares criticize the stock, they may cut ties, only accepting positive news while ignoring negative information. This is self-deception. It's crucial to learn from Buffett not to develop emotional attachments to any company. Investing is about profiting from a company's growth; if a bubble becomes too large, one should sell decisively.
Many investors have experienced holding a stock as it falls deeply, unwilling to cut losses. Even non-investors have asked me, "Mr. Yang, are stock investors foolish? Some stocks fall for three years without a rebound; why hold onto them?" This question stumped me. Indeed, when initially down 10%, one waits for a rebound; at a 20% loss, still no stop-loss, even knowing the trend is down, holding on until breakeven. Eventually, the loss reaches 80% or 90%, making the account unbearable with little hope of recovery. At such extreme losses, investors often can't bear the pain and are forced to sell, or are tempted to switch to other rising stocks. An A-share market saying goes: "Holding a stock is harder than remaining a widow." When deeply stuck in a losing position while market hotspots rotate and stocks frequently hit limit-ups, the temptation daily tests an investor's discipline. If "remaining a widow" is difficult, how much harder is holding a continuously losing position? Ultimately, most people capitulate and sell at the bottom. Hindsight begs the question: why not act sooner?
Investment master Buffett's approach warrants deep reflection: avoid emotional attachment to any stock. Once a trend reverses and the asset keeps depreciating, it becomes a "toxic asset." The rational choice for a toxic asset is decisive disposal, not prolonged entanglement. Reviewing recent years, certain consumer stocks, pharmaceutical stocks impacted by volume-based procurement, and solar sector stocks with overcapacity have fallen for three consecutive years, with some down 90%. Many investors get trapped deeper primarily due to a lack of correct understanding of their holdings and an unwillingness to let go even after the trend has clearly changed.
Therefore, investors should learn from Buffett's operational philosophy and deeply reflect on their own trading psychology. Only by breaking the attachment to individual stocks and establishing strict stop-loss discipline can one continuously progress on the investment path.
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