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2023 Annual Meeting Summary

The 2023 meeting — held May 6, 2023 — was the last Berkshire annual gathering with Charlie Munger on stage. Approximately 40,000 shareholders attended. It was emotionally and intellectually the richest meeting in recent memory: Munger's commentary on AI, bank crises, commercial real estate, printing money, and the Buffett-Munger partnership delivered with characteristic bluntness and occasional self-deprecation. The meeting's structural theme — spoken implicitly throughout — was succession and institutional survival: who is Greg Abel, what does he understand, and will Berkshire's culture survive the founders? Buffett's answers were unequivocal: Abel understands capital allocation as well as Buffett does; the culture is in the architecture of the institution, not the person of the founder. The Charlie Munger who appeared here — 99 years old, cracking jokes, endorsing Buffett's views with one-word summaries ("out of his mind"), and delivering his own precise formulations on everything from AI to bank regulation to the good life — was a man operating at full force. His death six months later, on November 28, 2023, closed a chapter.

Historical Stats

  • Attendance: ~40,000 in person at CHI Health Center, Omaha
  • Q1 2023 Operating Earnings: Reported at the meeting; strong insurance performance noted
  • BNSF 2023 Outlook: Lower earnings vs. 2022 expected (wages exceeding inflation goals)
  • BHE Capital Projects: $70B in known projects over coming ten years; spent ~$7B/year (depreciation ~$4B + ~$3B additional)
  • Japanese Trading Houses: ~$8B unrealized gain; 7.4% ownership in all five at meeting date
  • Property Cat Reinsurance Exposure: ~$15B max loss (Florida hurricane scenario)
  • Apple Berkshire Ownership: ~5.6% (growing via Apple's own buybacks)
  • Cash & T-Bills: ~$128 billion (generating substantial investment income at normalized T-bill rates)
  • Bank of America: Sole major bank equity holding retained post-SVB crisis
  • U.S. National Debt: $31 trillion at time of question (~125% of GDP) — audience member question

🏢 Operational Highlights

Insurance: The Fortress Performs

  • GEICO: Working through pricing and telematics transformation under Todd Combs. Discussions underway with automakers about point-of-sale insurance. Ajit Jain's candid assessment: EV insurance at point of sale is harder than it sounds (driver data matters, not just vehicle data).
  • Ajit Jain's Reinsurance: Property catastrophe pricing dramatically improved at April 1 renewal after disappointing January 1. Berkshire increased cat exposure to ~$15B maximum Florida hurricane loss — a 50% increase from prior portfolio. Jain: "very happy with the portfolio." Buffett approved a $2B additional exposure in under 30 seconds.
  • The Ajit Jain Origin Story: Ajit walked into the office on a Saturday in 1986 with zero insurance experience. After one conversation, Buffett knew he had "struck gold." 17 years of wilderness wandering in reinsurance ended that day. "If I had the top ten insurance managers in the world, I could not replace Ajit."

BHE: The Regulatory Rupture (First Public Discussion)

  • Greg Abel leads the detailed explanation: BHE has $70B of known projects over the next decade. The grid transformation is real and underway — Iowa wind production already exceeds total customer usage — but the regulatory-state fragmentation makes national coordination nearly impossible.
  • The WWII Analogy: Buffett argues the only precedent for the kind of coordinated industrial transformation needed in energy is World War II — when a czar in Washington could simply tell Henry Kaiser to build ships, or Ford to build tanks. In peacetime, 50 states and competing jurisdictions make this impossible. "We have the capital, the people, the objective. We just don't seem to be able to do it in peacetime where we're used to following a given set of procedures."
  • The Forest Fire Acknowledgment: Buffett's first public signal that BHE's western utility operations face a structural liability problem — explicitly referenced in the 2023 letter. At the meeting, the tone is more forward-looking (solutions, capital, transformation) than the letter's retrospective reckoning.

BNSF: Derailments and the Common Carrier Reality

  • A shareholder challenged Buffett on BNSF's tribal land violations and a derailment on tribal land. Greg Abel answered directly: the violation was real; the company had exceeded the agreed number of oil trains crossing the easement; lessons have been learned; dialogue continues with the tribe.
  • Buffett's Defense: Railroads have 1,000+ derailments per year across North America. BNSF has 23,759 miles of main track, 13,495 bridges, 7,521 locomotives. They carry hazardous freight as common carriers — legally required to do so. "We're not making a mistake because we have a derailment. We will have derailments ten, 20, 30 years from now."

Japan: The $10 Billion That "Disappears"

  • Munger prompted Buffett to retell the Japan story: bought July 4, 2019 (Buffett's 89th birthday); bought quietly over six months; announced at 5%+ on his 90th birthday.
  • The currency hedge: yen bonds issued at ~0.5% against a ~14% earnings yield on the positions. Simple arbitrage executed with long-term certainty.
  • By 2023, the five positions (Itochu, Marubeni, Mitsubishi, Mitsui, Sumitomo) had generated ~$10B of gain. Munger: "And it made $10 billion simply in that way. We would look like heroes. Now $10 billion just sort of disappears as if it's a little dot in Berkshire's reports."
  • Greg Abel introduced to all five CEOs during the Tokyo trip — signaling Berkshire's multi-generational commitment to the positions.

Core Themes & Insights

🤖 AI: "We Have No Idea" — Munger's Verdict

The Question: Multiple shareholder questions probed AI's impact on Berkshire's businesses and the economy generally. Buffett and Munger were notably candid about not knowing.

Buffett's Bomb-to-AI Analogy: Once a transformative genie is out of the bottle — the atomic bomb in 1945, AI today — it cannot be returned. The question is how humanity manages what it has unleashed. Buffett drew a direct parallel: the atomic bomb changed warfare forever; AI may change everything forever. "We haven't figured out the consequences of the atom bomb in the way we should have." The same may be true of AI.

Munger's Characterization: "I am personally skeptical of some of the hype." Munger's skepticism is not ignorance — it is pattern-recognition. He has seen transformative technologies before; most of the hype around them accrued to investors who were early but also to investors who were wrong. Identifying the genuine permanent shifts from the transient hype cycles is harder than it looks.

The Practical Implication: Berkshire does not need to understand AI to own businesses with durable moats. Consumer behavior — the kind Buffett understands viscerally — changes more slowly than technology does.

🏦 Banking Crisis: Silicon Valley Bank, First Republic, and the FDIC

Buffett's Core Argument: The banking system's fundamental problem in 2023 was a messaging failure. The FDIC effectively guarantees all demand deposits — this has been true since 2008 and was demonstrated at SVB. But the American public doesn't understand this, and politicians and the press have not communicated it clearly.

The Speed Problem: In prior generations, bank runs required physical presence — get in line, wait, hope. Now: press a button. A modern bank run can happen in seconds. "Deposits are not sticky anymore." The historical precedents (Knickerbocker Trust, 1907; state bank failures, 1931) were tamed by FDIC because they required physical coordination. Digital bank runs are categorically different.

The Punishment Imperative: CEOs and directors of failed banks should bear personal financial consequences. "The CEO gets the bank in trouble, both the CEO and the director should suffer." The stockholders of the future — people who buy shares after the failure — should not bear the cost. Those who created the problem should.

Munger's Glass-Steagall Nostalgia: "I'm so old fashioned that I kind of liked it when banks didn't do investment banking." Banks should be more like engineers — engineering against failure — than like wealth managers engineering toward personal enrichment. "I don't think having a bunch of bankers, all of whom are trying to get rich, leads to good things."

Commercial Real Estate: Mentioned explicitly as the next wave of bank-adjacent stress. Properties financed at 100% margin (effectively), with loans now not being extended, will force losses onto those who made the leveraged bets. "Depositors will not lose money. Stockholders and debt holders, the holding company — they should lose money."

🔋 Energy Transition: The Democracy Problem

Buffett's WWII Frame: The only successful precedent for the scale of energy system re-engineering that climate change demands is WWII mobilization — when the U.S. government brought $1/year men to Washington, gave them extraordinary power, and reoriented the entire industrial economy toward a single goal. In peacetime democracy, with 50 states and competing regulatory jurisdictions, this is nearly impossible.

The BHE Record: BHE has invested more in renewable energy than virtually any U.S. utility. Iowa MidAmerican produces more wind energy than its entire customer base consumes. The multi-state western transmission project (begun 2006) is still years from completion after spending $7B+. "We'd love to be spending more, but there are people all over that don't want the pipeline to go through there."

Munger's Counter: Munger is personally skeptical about the certainty of climate impact projections. He agrees on the practical side — conserving hydrocarbons that have unique uses and cannot be replaced makes sense regardless of climate views. But he doesn't pretend to certainty about sea-level rises or temperature trajectories.

🧑‍💼 Succession: Abel Understands Capital Allocation "As Well As I Do"

The Most Important Statement: Buffett, when asked about Greg Abel's future buyback authority, said: "Greg understands capital allocation as well as I do." This is the succession statement Berkshire shareholders needed. Not "Greg will follow the framework" but "Greg understands the framework" — the distinction between rule-following and principle-internalization.

Abel's Own Confirmation: "The framework's been laid out. We know how you and Charlie have approached it. And really don't see that framework changing."

The Charlie Munger Succession View: Munger's contribution: "We have a lot of good people that have risen in the Berkshire subsidiaries. And there's a reason why our operations have by and large done better than other big conglomerate companies. And one of them is that we change managers way less frequently than other people do."

The Honest Caveat: Buffett acknowledges that assessing successor management in great businesses is genuinely hard — because great businesses can run successfully on momentum for years before the quality of new management becomes evident. The board has a real challenge. He doesn't pretend otherwise.

🇺🇸 The American Tailwind — "Tribalism" as the New Risk

The Japan Admirer's Question: A former Salomon Brothers employee who survived the 1990s crisis thanks to Buffett asked about what could undermine American strength. Buffett's answer moved from optimism to a genuine worry: partisanship has become tribalism, and tribalism is different in kind.

The Tribalism Distinction: In a partisan system, you disagree with the other side but you can still hear them. In a tribal system, the other side doesn't register as legitimate human input — their arguments are noise. Tribes can become mobs. "It flows. You've seen it. We've seen it to a degree here." This is the 2023 version of the American Tailwind worry — not nuclear risk (2022) but democratic-institutional degradation.

Munger's Slightly Darker View: "I'm slightly less optimistic than Warren is. I think the best road ahead to human happiness is to expect less." The solution of sending the brightest young Americans into wealth management rather than medicine, engineering, or manufacturing is — in Munger's assessment — a civilizational misallocation.

🏛️ 2023 Annual Meeting: "The Last Meeting with Charlie"

"Greg understands capital allocation as well as I do, and that's lucky for us." — Warren Buffett, 2023 Annual Meeting

🎭 The Narrative Context

The 2023 meeting was the last chapter of a 60-year partnership, though no one on stage said so. Munger — 99 years old, born January 1, 1924 — was as sharp as he had ever been. He was also, in retrospect, delivering his valedictory: on AI, on banking, on energy, on America's tendency toward tribalism, on what it means to live well. The meeting's most memorable passage — Munger's formula for a good life, delivered in response to a 15-year-old from Ohio — may be the most important thing he said from any Berkshire stage: "It's so simple to spend less than you earn, invest shrewdly, avoid toxic people and toxic activities, keep learning all your life, and do a lot of deferred gratification. And if you do all those things, you are almost certain to succeed."

Buffett's succession framing was its clearest: Greg Abel understands capital allocation. The culture is baked into the institution. Berkshire is built to last. The succession question has an answer, and Buffett gave it.

The financial backdrop — a record insurance year, Japan compounding quietly, BNSF and BHE facing headwinds — was less important than the institutional and philosophical content. The meeting was less about what Berkshire earned and more about what Berkshire is and how it will survive the people who built it.

💡 Philosophical Gems

Munger's Valedictory Formula

  • "It's so simple to spend less than you earn, and invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, et cetera, et cetera, and do a lot of deferred gratification because you prefer life that way. And if you do all those things, you are almost certain to succeed. And if you don't, you're going to need a lot of luck. And you don't want to need a lot of luck. You want to go into a game where you're very likely to win without having any unusual luck."
  • This is the distillation of 99 years. Delivered to a 15-year-old. At what proved to be his final annual meeting.
  • See Charlie Munger, Munger's Mental Models, The Good Life.

"Deworsification" — Munger on Diversification Dogma

  • Munger coined the term at this meeting in response to a question about Apple's concentration: "I think one of the inane things that's taught in modern university education is that vast diversification is absolutely mandatory in investing in common stocks. That is an insane idea."
  • "If you've only got three good ideas, I'd rather be in my best ideas instead of my worst."
  • "We're not so smart, but we kind of know where the edge of our smartness is. That is a very important part of practical intelligence."
  • See Circle of Competence, Capital Allocation, Concentration vs. Diversification.

The AI Analogy: The Genie and the Bomb

  • Buffett's frame for AI: it is a transformative tool, like the atomic bomb, that cannot be put back in the bottle. The question is not whether to use it but how to manage it. "We haven't figured out the consequences of the atom bomb in the way we should have. I don't know how to evaluate AI."
  • Munger's practical wisdom: be skeptical of hype; identify what is genuinely durable versus what is transient excitement; stay within your circle of competence.
  • See Technology Risk, Circle of Competence, Macro Risk.

Buffett on Toxic People — Tom Murphy's Two Rules

  • Murphy Rule #1: "You can always tell someone to go to hell tomorrow." Never send the angry email. Never make the irreversible decision in the emotional moment. You have not lost the option by waiting.
  • Murphy Rule #2: "Praise by name, criticize by category." Praise individuals specifically; criticize types of behavior generally. People you've praised by name trust you more; people you've criticized by category don't feel personally attacked.
  • Buffett: "I've never known anybody that was basically kind that died without friends. And I've known plenty of people with money that have died without friends, including their family."
  • See Charlie Munger, Culture of Trust, Owner's Manual.

🗣️ Verbatim Masterclass

  • "Greg understands capital allocation as well as I do, and that's lucky for us." — Buffett
  • "I'm slightly less optimistic than Warren is. I think the best road ahead to human happiness is to expect less." — Munger
  • "It's so simple to spend less than you earn, and invest shrewdly, and avoid toxic people and toxic activities..." — Munger
  • "I think one of the inane things taught in modern university education is that vast diversification is absolutely mandatory. That is an insane idea." — Munger, on "deworsification"
  • "We don't get smarter over time, we get a little wiser, though, following it over time." — Buffett
  • "We've made a few really good decisions. We'll never make a decision that kills us. Only things that are a threat to the planet — we don't have any answer for those." — Buffett
  • "I think the thing is that tribalism has grown. And tribalism just doesn't work as well. When it gets to tribalism, you don't even hear the other side." — Buffett
  • "It is madness to just keep printing money." — Buffett
  • "A banker should be more like an engineer — he's more, like, into avoiding trouble than getting rich." — Munger
  • "He said, 'I hear you're the fastest draw in the West. Draw.'" — Munger, on Ben Rosner's deal-closing technique
  • "At Berkshire we have a simple problem of estate planning. Just hold the goddamn stock." — Munger (Applause)

[!TIP] The 2023 meeting is the Munger farewell. Knowing what came six months later, every exchange takes on different weight — his laconic endorsements ("out of his mind"), his precise summaries ("just hold the goddamn stock"), his formula for a good life delivered to a 15-year-old. The substance is exceptional: the AI-bomb analogy, the tribalism warning, the Abel succession confirmation, and Munger's "deworsification" are four of the most quotable ideas in the meeting's history. But the meeting's emotional and historical weight is in the presence of a mind operating at full force, in public, for the last time.

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