Sun May 3, 2009 7:54pm BST
The pair, as they do every year, drank cherry Coke (Berkshire is a large Coca-Cola investor) and nibbled on chocolates throughout the annual meeting on Saturday, but save for occasional quips, the tone this year was decidedly more sober.
ON THE ECONOMIC CRISIS:
Buffett: "We will have bad years in capitalism. Right now we're sputtering somewhat in terms of the economy."
"Negative yields on U.S. Treasury bills is an extraordinary thing. I am not sure you will see that again in your lifetime. It has been an extraordinary year."
"Basically five years ago, virtually everyone in the country had this model in their mind that house prices could not fall significantly. They were wrong."
"The government last year was facing anything as close to a financial meltdown as you can imagine. To expect perfection out of people working 20-hour days,...when you are getting punched from all sides and you have to make policy and think about Congressional reaction, and the reaction of all of the American people, they have my sympathy."
"When the American public pulls back the way they have, the government does need to step in ... It is the right thing to do, but it won't be a free ride."
"It is certain that we will have inflation in time."
"We have not raised taxes at all in this country. The people who are really paying will probably be those buying U.S. bonds. The Chinese are ultimately paying the most with loss of purchasing power they will have with fixed-dollar investments down the road."
"I will guarantee you the dollar will buy less five, 10, 20 years from now. It may buy substantially less."
Munger:"I don't get too excited about these oddball things that happen every 50 years."
In answer to an 11-year-old boy's question on inflation: "The young man should become a brain surgeon and invest in Coca-Cola rather than in government bonds."
Buffett: "All investing is is laying out cash now to get back more at a later date."
"The world depends on calculators instead of people sitting down with actual arithmetic. If you need to use a computer or calculator you shouldn't buy it."
"Our luck in changing behavior is very low. We think if you buy stock in a company you better not count on changing their (management's) course of action."
"If you are in the investment business and you have a high IQ sell 30 points to the next person. You do not have to be a genius at all. But you do have to have emotional stability, and you have to have some peace about your decisions. I don't know how much is innate and how much can be taught. If you have that quality you will do very well. As I have said many times it is simple, but not easy."
Munger: "You do have the basic problem that half the investors in the world are going to be in the bottom 50 percent."
"Every investment manager I know in America, they all got creamed last year."
Buffett:"The only time we felt strongly that Berkshire should repurchase its shares was in 2000 when demonstrably below intrinsic value. I don't think that situation exists now."
"Picking bottoms is basically not our game. Pricing is our game, and that's not difficult."
"Our definition of comfortable is really comfortable, we want to have billions and billions and billions around, and then we'll decide what to do."
Munger:"Of course you prefer a business that will prosper even if it is not managed well. We are not looking for mismanagement; we like the capacity to withstand it if we stumble into it."
ON CANDIDATES TO SUCCEED BUFFETT AS CEO:
Buffett: "They are ready for the job right now. They are 100 percent ready, they know how to allocate capital.
"The biggest job they will have is to develop relationships with potential sellers of businesses. That will take some time, not much time."
ON RECORD ATTENDANCE OF 35,000:
Buffett: "If they all spend appropriately, it will be a good day."
(Reporting by Jonathan Stempel and Lilla Zuill)
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