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SMT Perspectives and Prospects: Warren Buffett’s Perpetual Wisdom, Part 2

(Editor’s note: This is the second of a two-part series on the Berkshire Hathaway annual shareholders meeting.)

Over the years, I have cherished the lessons by Warren Buffett and Charlie Munger at the Berkshire Hathaway annual shareholders meeting in Omaha, Nebraska.

This year, I was among the more than 40,000 who attended the May 3 meeting. Millions more from around the world, including from the UK, Germany, Japan, China, Panama, and Guatemala, tuned in remotely and via CNBC’s livestream.

Last year had special meaning when Buffett took the stage alone. His longtime friend and trusted business partner, Charlie Munger, had passed away on Nov. 28, 2023, a few weeks shy of his 100th birthday.

This year held another poignant moment: During the closing remarks of the five-hour Q&A session, Buffett made a surprising announcement: He is stepping down as CEO in December, though he will remain on the board.

During the meeting, Buffett responded to an array of questions, alternating between those submitted by audience members (selected by lottery within each arena zone) and those chosen by CNBC from viewers around the globe.

All questions and answers were spontaneous, and Buffett addressed them with great insight. Last month, I focused on life lessons. This month, I’m including his comments about the United States, capitalism, and investment.

The U.S.
Over the years, Mr. Buffett explicitly and repeatedly stated that one should never bet against the United States. At the meeting, he was asked, “You’ve long been a strong believer in the American tailwind and the resilience of the United States, and history has proven you correct. Today, the U.S. appears to be undergoing significant and potentially revolutionary changes. Some investors are now questioning the concept of American exceptionalism. In your view, are investors overly pessimistic about the U.S. economy, or is the country entering a period of fundamental change that requires a reassessment from a new perspective?”

Buffett replied, “We started as an agricultural society with high promises that we didn’t deliver on very well. We said all men were created equal, and then we wrote a constitution that counted blacks as three-fifths of a person. In Article 2, you’ll find male pronouns used 20 times and no female pronouns. So, it took until 1920, with the 19th Amendment, to finally give women the vote that we had promised back in 1776. We’re always in the process of change, and we’ll always find all kinds of things to criticize in the country.

“But the luckiest day in my life is the day I was born, because I was born in the United States. At that time, about 3% of all births in the world were taking place in the United States. I was just lucky. If you don’t think the United States has changed since I was born in 1930, you’re not paying attention. We’ve gone through all kinds of things: great recessions, world wars, the development of the atomic bomb that we never dreamt of when I was born. So, I would not get discouraged that we haven’t solved every problem that’s come along. If I were born today, I would just keep negotiating in the womb until they said I could be in the United States. We’re all pretty lucky.”

He continued, “We didn’t have to have perfection. We just had to be better than the other guy for quite a while. We started out with nothing and ended up with close to 25% of the world’s GDP, faster growth rates, generally sounder currencies, and all kinds of things.”

This is the depth and strength of Buffett’s belief in the United States. Never bet against the United States.

Japan’s Economy
Berkshire historically has focused on U.S. investment, but in the past five years, the company began purchasing shares in five Japanese companies. With Berkshire’s increased investment in Japanese companies, a foreign attendee asked Buffett about the economy in Japan. Buffett “confidently” replied, “The people of Japan determine their best course of action in terms of economics.”

He rightfully deflected the question with proper prudence as well as confidence.

Apple, Inc.
As of May 2025, Berkshire’s largest equity holding was Apple, Inc., owning approximately 300 million shares, valued at around $66.6 billion, making up about 28% of Berkshire’s total equity portfolio. Apple CEO Tim Cook attends Berkshire’s annual meeting every year, and in his opening remarks, Buffett praised Tim Cook’s leadership. “Nobody but Steve Jobs could have created Apple, but nobody but Tim Cook could have developed it like he has,” Buffett said.

U.S. Capitalism
When asked about his views on capitalism, Buffett proudly stated that the one difference that he and Charlie had from others was that they put all their own money into it, and they did share the losses with their own capital, but they got an override on other people’s capital. People have made advances where they get the override on other people’s capital without putting up any of their own capital to speak of. That’s a very good business, but it can lead to a lot of abuse.

“Capitalism in the United States has succeeded like nothing you’ve ever seen,” he told the audience. “But it’s a combination of this magnificent cathedral, which has produced an economy like nothing the world’s ever seen, and then it’s got this massive casino attached. In the casino, everybody’s having a good time and there’s lots of money changing hands, but the cathedral is what you’ve got to make sure gets fed too. The temptation is very high now to go over to the casino, where people say we’ve got magic boxes and all kinds of things that’ll do wonderful things for you. That’s where people are happiest, where you get the most promises, where the most money is for the people who are pushing things.

“It’s very important that the United States, in the next hundred years, ensures that the casino does not overtake the cathedral. People like to go to casinos because it’s just so much more fun. They ring bells when you win, they bring you drinks, and everything else. It’s designed to move money from one pocket to another. In the cathedral, they’re designing things that will produce goods and services for 300 and some million people, like it’s never been done before in history.

“It’s an interesting system we developed, but it has worked. It dispenses rewards in what seems like a capricious manner. The idea that people get what they deserve in life—it’s hard to make that argument. But if you argue with it, that any other system works better, the answer is we haven’t found one.”

Patience vs. Investment vs. Cash
Multiple questions were raised regarding the unusually high cash holding by the company: Berkshire holds over $335 billion in cash and short-term investments, representing about 27% of total assets, a historically high figure compared to the 13% average over the last 25 years. Observers wonder where the company will find its next deal and where the money should be invested.

Buffett thoroughly addressed the questions. In a nutshell, he explained that the cash holding stems inevitably from the absence of “good buying opportunities.” Patience finds its place here.

“The problem with the investment business is that things don’t come along in an orderly fashion, and they never will,” he said. “Charlie always thought I did too many things. He thought if we did about five things in our lifetime, we would end up doing better than if we did 50, and that we never concentrated enough. We would rather have conditions develop where we would have like $50 billion in cash rather than $335 billion in treasuries.

“But that’s just not the way the business works. We have made a lot of money by not wanting to be fully invested at all times. We don’t think it’s improper for passive investors to make a few simple investments and sit with them for life. But we’ve decided to be in the business, so we think we can do a little better by behaving in a very irregular manner. If you told me that I had to invest $50 billion every year until we got down to $50 billion in cash, that would be the dumbest thing in the world.

“Things get extraordinarily attractive very occasionally. The long-term trend is up. But nobody knows what the market is going to do tomorrow, next week, or next month. Now and then, you find something. Occasionally, very occasionally—it’ll happen again, I don’t know when—we will be bombarded with offerings that we’ll be glad we have the cash for. It would be a lot more fun if it happened tomorrow, but it’s very unlikely to happen tomorrow. The probabilities get higher as you go along. It’s kind of like death: If you’re 10 years old, the chances that you’re going to die the next day are low. If you get to be 115, it’s almost a certainty.”

He further commented, “You will see a period in the next 20 years that will be a 'hair curler' compared to anything you’ve seen before. That just happens periodically. The world makes big mistakes, and surprises happen in dramatic ways. The more sophisticated the system gets, the more surprises can come out of left field. That’s part of the stock market, and that’s what makes it a good place to focus your efforts if you’ve got the proper temperament for it, and a terrible place to get involved if you get frightened by markets that decline and get excited when stock markets go up. I don’t mean to sound particularly critical; I know people have emotions, but you’ve got to check them at the door when you invest.”

Stock vs. Real Estate
When asked about buying stocks instead of more real estate property and the challenges of value investing in stocks due to the high interest rate and geopolitical uncertainty, Buffett expressed that there’s much more opportunity, at least in the United States, that presents itself in the securities market than in real estate. The amount of time that real estate would take compared to doing something intelligent and probably better in securities, there was just no comparison.

Conclusive Ovation
Buffett and Munger’s wisdom flows from the confluence of a lifelong commitment to learning, teaching, reading, and a long life, enriched by the depth and perspective that come only with age.

We celebrate Mr. Buffett’s phenomenal 60-year leadership and unparalleled performance at Berkshire Hathaway. The wisdom and knowledge that Buffett and Munger have passed on to so many people across the globe are ageless and enduring, which will be profoundly treasured.

This column originally appeared in the August 2025 issue of SMT007 Magazine.