2024: Has Buffett's view on Apple changed since 2016?

BECKY QUICK: Thanks, Warren. Let’s start. Just given what you mentioned, there was some news that came out in the 10-Q this morning.

It shows that Berkshire sold another 115 million shares of Apple in this last quarter. That’s Berkshire’s largest holding. And I think in that vein, we’ll start with a question from Sherman Lamb. He is a 27-year-old Berkshire Hathaway Class B shareholder from Malaysia. And he asks, last year you mentioned Coca-Cola and American Express being Berkshire’s two long-duration partial ownership positions, and you spent some time talking about the virtues of both these wonderful businesses.

And your recent shareholder letter, I noticed that you have excluded Apple from this group of businesses. Have you or your investment managers’ views of the economics of Apple’s business or its attractiveness as an investment changed since Berkshire first invested in 2016?

WARREN BUFFETT: No, I would… But we have sold shares, and I would say that at the end of the year, I would think it extremely likely that Apple is the largest common stock holding we have now. One interesting thing is that Charlie and I look at common stocks or marketable equities as businesses.

And so when we own a Dairy Queen or we own whatever it may be, we look at that as a business. And when we own Coca-Cola or American Express, we look at that as a business. Now, we can buy really wonderful companies in the market as businesses. We can’t buy all of them, I mean, all of their shares. We can’t buy 90% or 80% or anything like that. But when we look at Coca-Cola and American Express and Apple, we look at them as businesses.

Now, there are differences in taxes, factors, there’s a difference in managerial responsibility, a whole bunch of things. But in terms of deploying your money, we always look at every stock as a business, and we don’t… We have no way, no attempt is made to predict markets. We have no attempt made to pick stocks. I went through many, many years doing the wrong thing. I got interested in stocks very early, and I was fascinated by them.

I wasn’t wasting my time, because I was reading every book possible and everything else. But finally, I picked up a copy of The Intelligent Investor in Lincoln, and there were a few sentences in there that said, much more eloquently than I can say it, if you look at stocks as a business and treat the market as something that doesn’t tell you, isn’t there to instruct you, but it’s there to serve you, you’ll do a lot better over time than if you try to take charts and listen to people talk about moving averages and look at the pronouncements and all of that sort of thing. And so that made a lot of sense to me then, the way I’ve been allowed to deploy it. Charlie and I talked about this, of course, constantly.

It’s changed over the years, the amount of capital we have has changed and all that. But the basic principle was laid out by Ben Graham in that book, which I picked up for a couple of dollars, and which basically said to me, “You’ve been wasting your time now, but maybe you can use what you’ve learned or been reading about and put it to better use.” And then Charlie came along and told me how to put it to even better use. And that’s sort of the story of why we own American Express, which is a wonderful business. We own Coca-Cola, which is a wonderful business, and we own Apple, which is an even better business.

And we will own, unless something really extraordinary happens, we will own Apple and American Express and Coca-Cola when Greg takes over this place. And it’s such a simple approach that it’s almost deceptive. Most things, if you keep working harder and harder at it, you learn a little more math or you learn a little more physics, but investments, you don’t really have to do that. You really have to have your mindset properly. So, we will end up, if something dramatically happens that really changes our capital allocation strategy, we will have Apple as our largest investment, but I don’t mind at all, under current conditions, building the cash position. I think when I look at the alternative of what’s available, the equity markets, and I look at the composition of what’s going on in the world, we find it quite attractive.

And one thing that may surprise you, but we… Almost everybody I know pays a lot more attention to not paying taxes, and I think they should. We don’t mind paying taxes at Berkshire, and we are paying a 21% federal rate on the gains we’re taking in Apple. And that rate was 35% not that long ago, and it’s been 52% in the past when I’ve been operating. And the government owns… The federal government owns a part of the earnings of the business we make. They don’t own the assets, but they own a percentage of the earnings, and they can change that percentage any year.

And the percentage that they’ve decreed currently is 21%. And I would say, with the present fiscal policies, I think that something has to give, and I think that higher taxes are quite likely, and if the government wants to take a greater share of your income, or mine or Berkshire’s, they can do it. And they may decide that someday they don’t want the fiscal deficit to be this large, because that has some important consequences, and they may not want to decrease spending a lot, and they may decide they’ll take a larger percentage of what we earn, and we’ll pay it.

We always hope, at Berkshire, to pay substantial federal income taxes. We think it’s appropriate that a company, a country that’s been as generous to our owners… It’s been the place… I was lucky. Berkshire was lucky, was here. And if we… If we send in a check like we did last year, we sent in over $5 billion to the US federal government. And if 800 other companies had done the same thing, no other person in the United States would have had to pay a dime of federal taxes, whether income taxes, no Social Security taxes, no estate taxes. It’s open down the line now. That’s…

I would like to… I hope things develop well enough with Berkshire that we say we’re in the 800 club and maybe even move up a few notches. It doesn’t bother me in the least to write that check. I would really hope, with all America has done for all of you, it shouldn’t bother you that we do it. And if I’m doing it at 21% this year and we’re doing it at a higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year.