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Warren Buffett Defends Goldman Sachs At Berkshire Shareholders Meeting, "Loves" Investment

Published: Saturday, 1 May 2010 | 10:32 AM ET

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By: Alex Crippen
Executive Producer

HIGHLIGHTS FROM WARREN BUFFETT AND CHARLIE MUNGER'S Q&A WITH SHAREHOLDERS AT BERKSHIRE'S 2010 ANNUAL MEETING

ECONOMY IMPROVING BUT WATCH INFLATION

Buffett says the economy has shown significant improvement starting in March, with Berkshire companies "picking up steam."
But prospects for "significant inflation" have increased, a view he's expressed before
"If you had to bet your life on higher or lower inflation I'd bet on higher, and maybe a lot higher."
"Weaning ourselves from the medicine" of government economic stimulus may be very difficult
Nation faces "significant unemployment" that won't "go away fast, although it is going to go away." Berkshire shouldn't be a "social safety net."

KRAFT UNDERVALUED

Buffett: Kraft paid "fancy price" for Cadbury but Kraft "still selling for considerably less than the value of its constituent parts" [KFT Loading... ()

]

Kraft's deal to sell pizza unit to Nestle was "particularly dumb"
Kraft CEO Irene Rosenfeld is "perfectly capable manager"
Buffett jokes that since Berkshire has had its share of "dumb" deals in the past, he's become more tolerant of other people's bad decisions

GREECE CRISIS

Buffett says the Greece debt crisis "will be high drama" and possibly a "test case" for bailing out a country using a common currency. "I really don't know how this movie ends, and I try not to go to movies like that."
Buffett is "more bearish" on whether currencies will be able to hold their value in coming years

CNBC/Lacy O'Toole
Shopping for books on the sales floor at Berkshire Hathaway's shareholder meeting
INDIA

Buffett: "We do not rule out India" as a place to buy companies or marketable securities
"People in India will be living a lot better 20 years from now."
Buffett plans trip to India in March on behalf of subsidiary Iscar, and another visit to China in September for BYD, the Chinese electric-car company in which Berkshire has invested

FINANCIAL REFORM

Buffett says Berkshire would comply if Congress passes a financial reform bill that requires the posting of collateral on its existing derivative contracts, but says, "We would lose substantial money." He would be concerned if finreg had "some sweeping requirement that all companies have to post collateral " on existing contracts.

RATINGS AGENCIES

In response to question about whether Berkshire will accelerate sales of its stake in Moody's [MCO Loading... ()

] and unload entire position, Buffett says while Berkshire doesn't pay attention to ratings on bonds when it makes investment decisions, the credit rating agencies still have excellent business model with strong pricing power

BERKSHIRE EARNINGS IMPROVE

Buffett gives a preview of next Friday's first quarter earnings release. Berkshire expects Q1 earnings of $3.633 billion, reversing last year's $1.5 billion Q1 loss, and operating earnings of $2.222 billion.
The company racked up $1.411 billion in investment and derivative gains in the quarter.
Repeats his belief that investors shouldn't focus on quarterly earnings.
Berkshire has issued a news release with its preliminary earnings summary for the quarter.

BERKSHIRE'S STOCK AND CULTURE

Gates Foundation sales of donated Berkshire stock are not affecting the stock's price
Buffett: Berkshire's culture is very strong. Anyone coming into Berkshire and trying to change it would find that the culture would reject those changes.

CNBC/Lacy O'Toole
Camera operators chase Warren Buffett at Berkshire Hathaway annual shareholders meeting
ON BUYING HARLEY-DAVIDSON DEBT

Buffett: "I kind of like a business where customers tattoo your company name on their chest." [HOG Loading... ()

]

NETJETS

Buffett says NetJets now operating at a "very decent" profit, earning more than $50 million pre-tax in the first quarter
MidAmerican Chairman David Sokol, brought in to replace NetJets founder Richard Santulli as CEO, has done a "tremendous" job that deserves "big thanks" from shareholders
Operating costs had been allowed to "get out of line"

THE WISDOM OF CHARLIE MUNGER

Munger: The secret to happiness is to lower your expectations
Asked whether one should be worried about the future after hearing Buffett's forecast of higher inflation, "If I can be optimistic when i'm almost dead, surely the rest of you can handle a little inflation."

THE WISDOM OF WARREN BUFFETT

Buffett: "Find your passion and then don't let anything stop you."

THE MOVIE

The movie shown to shareholders before the Q&A featured a cameo of Buffett in a trailer for the upcoming Wall Street movie sequel, a fantasy sequence of Buffett striking out the Yankees' A-Rod to win the pennant for the Boston Red Sox, and a section with the stars of Desperate Housewives.

Current Berkshire stock prices: