At the Berkshire Hathaway Shareholders' Meeting in Omaha on Saturday, Warren Buffett talked about the impact of artificial intelligence and autonomous driving on his company, as well as on society and politics. Buffett reviewed his investment strategy for technology companies and believed that artificial intelligence would subvert more than one industry.
Warren Buffett, CEO of Berkshire Hathaway, is known as "not in the technology world." The legendary god has perfectly avoided the smartphone and has only recently started investing in technology companies.
At the Berkshire Hathaway Shareholders' Meeting in Omaha on Saturday, Buffett said that advances in the field of artificial intelligence forced him to think about the impact of technology on his company, and the impact was bad. Speaking of autonomous vehicles alone may have a double blow to Berkshire Hathaway, and the company will be hurt in more than one competitive industry.
Buffett said at the shareholders meeting: "I think that for us, the driverless truck brings more threats than opportunities." He refers not only to Berkshire's railway business, but also to insurance. business. “These two, the universal application of driverless vehicles, will hurt us.â€
Berkshire Hathaway (BRK.A, + 0.18%) owns the Burlington Northern Santa Fe Rail Transit Company (BNSF), which greatly reduces the cost of trucking if the trucks do not require human drivers. The company may lose many customers. Buffett said another impact of the same trend is likely to significantly reduce the profitability of Berkshire's auto insurance business Geico.
"If drone trucks become common, it will only be because they are safer," Buffett said. “This means that the overall economic cost of car-related losses has dropped, which will reduce Geico’s insurance business income.†In other words, driverless vehicles reduce accidents, so people don’t have to pay for car insurance.
Of course, if unmanned vehicles become commonplace, the benefits to society far outweigh the losses of Geico, and Buffett acknowledges this. He said, "If you can make the world safer, this will be a very good thing, but for auto insurance companies, this is not a good thing."
On the other hand, the investor, known as the “Omaha Prophetâ€, predicts that artificial intelligence (AI) and automation may “cause huge problems in democracy†because under the same productivity, people need to adapt to a need only Economic society with less human labor.
“This will lead to subversive changes, including interpersonal connections, people’s expectations of the government, and almost everything will change.†Buffett said, “I believe that artificial intelligence will bring very beneficial social effects. But if it is too fast, it can have a very unpredictable political impact, and this is what I think will happen."
“If you fire half of the employees and other employees can continue to have jobs, I think the consequences are very unpredictable.†Buffett explained: “I think we have seen some in this election.â€
As for the speed at which these changes occur, Buffett believes that 20 years is feasible and time may be shortened.
Buffett is 86 years old. I don't know if he will live until then to see the changes he predicted. But partner Charlie Munger said to Buffett: "I don't think you have to worry, it won't come soon."
Buffett talks about technology stocks: IBM is wrong, Apple is very different from IBM
Investors asked Berkshire to avoid buying technology stocks because Buffett and Munger said they didn't understand the field. But in 2011 Berkshire bought IBM and bought Apple stock in 2016. Recently, Buffett changed his view of IBM and sold a third of his shareholding. So what does Berkshire think about investing in Apple?
Buffett said that the judgment of IBM was wrong. But Apple and IBM are very different companies, and Apple is more inclined to a company that produces consumer goods. He said: "This is two different analyses. It is not necessarily correct. We will get answers over time. But this is two different decisions."
In terms of assessing Apple's capabilities, Buffett said that he would not pretend to be "like a 15-year-old child who is interested in technology," but he may have a good judgment on consumer behavior. He said: "I have no real understanding of technology."
Munger evaluates Buffett's investment in Apple: either he is crazy or is learning
Munger said, I think buying a stock of Apple is a very good phenomenon, a good momentum. This is the process of our learning. Although Buffett took his grandson's iPad away, they didn't let them start using it, but he bought their stock. We are still learning, we will not easily give up the traditional knowledge we have learned in the past.
Asking questions about whether investors have changed their stance on technology investments, he said that Apple is more like a consumer goods company, despite its “great technical componentâ€. Speaking of his ability to evaluate (tech) companies, Buffett claims that he is not as good at the intelligence level of any 15-year-old who is interested in technology, but he believes he has a set of insights about the value of consumer behavior. He said that when Berkshire invested in Apple, he said Buffett: "Either you are crazy, or he is learning."
Missed two opportunities to invest in the giant: Google and Amazon
Buffett and Munger said they missed two opportunities to invest in technology giants: Google and Amazon. They are very optimistic about the two companies, but no investment.
Buffett used to say that he would avoid technology stocks because he often wonders how these technology companies make money and whether they can stay profitable for a long time. In Google's case, Buffett said he could have found the company to have a huge advertising business because his own company has also contributed to Google's advertising business profits. “In the technology industry, this investment was a very long-term investment for me. I also underestimated its development potential and underestimated the level of excellence in their execution.â€
Buffett also said that Berkshire is a Google consumer and therefore invested in Geico. Buffett learned very early that every time a customer clicks into Geico via Google, Geico needs to pay. This transaction cost is low and has a scale effect. But he still missed the opportunity to invest in Google.
When it comes to Amazon and founder Bezos, Buffett and Munger are extremely acclaimed, Buffett said, Bezos impressed Amazon and the management of the Washington Times.
Munger said that Berkshire also made mistakes in investing in Wal-Mart, which sold most of the shares held at the end of 2016. Buffett said that in the past they did not expect Amazon to threaten the retail industry.
Munger: Don't regret missing Amazon
Buffett said that he "underestimated the talent of Amazon CEO Jeff Bezos, not only his foresight, but also execution. "The possibility of his success is not obvious." However, Munger Immediately added: "I don't feel any regrets", he pointed out that he wanted to find out that Amazon's investment value was more difficult than finding Google. Munger also joked that although he missed Amazon, he also gained in the process. Some other investments, "This is our secret, I don't miss them."
Munger’s favorite investment is See's Candies.
When Munger was asked about his favorite transaction in this life, he did not hesitate to answer immediately that he invested in See's Candies. Munger said that this is an investment that taught him the most things. He talked about his life experience is "learning, learning, learning, and learning." Munger said that if he did not keep learning, he would not appear here today.
Buffett talks about China's stock market: speculation is a less intelligent approach
When asked about China's stock market volatility, Buffett said that the Chinese stock market is sometimes like a casino.
Compared to those markets where stock markets have existed for hundreds of years, people tend to be more likely to speculate in the early stages of market development. The United States used to be the same.
Buffett said: "The market has the characteristics of a casino. This attracts a lot of people, especially those who have friends around because of the stock market. Compared with those who have experienced crazy speculation, those who have not experienced the stock market storms are even more It's easy to speculate. Of course, I think speculation is not very smart and requires a lot of luck to make it happen."
Munger said that Chinese stocks are cheaper than US stocks. China has a bright future, but it will also experience the troubles of growth.
The NYSE began trading in the 18th century, while the Shanghai Stock Exchange began trading in 1990.
No reinvestment in Chinese companies
About 3,000 Chinese investors came here to attend the shareholders meeting this year. For many Chinese reporters asking about China's investment plans, Buffett avoided answering, but he admitted that BYD is the only Chinese company invested by Berkshire so far, and this is the decision of partner Munger. "He should know more than I do (about BYD)," Buffett said.
In addition, Buffett mentioned, "We will find opportunities in China. The problem is that this opportunity must be big enough. There is also this problem in the United States. There is no precise standard for size, but if it is $5 billion, it is more interesting."
He also mentioned that he is not quite sure whether there is a bubble in the Chinese real estate market.
Buffett: Artificial intelligence will reduce employment, but it is good for society.
Ten years ago, a teenage boy asked Buffett what effect the Internet had on Berkshire’s business.
Ten years later, he asked the same question, what impact artificial intelligence would have on Berkshire's business.
Buffett replied that artificial intelligence can lead to a significant reduction in employment in certain areas, but it is good for society.
Buffett hypothesized that if a person with artificial intelligence can create all the output of the country at the push of a button without 150 million people, the world will be better. However, the externalities and unintended consequences of this situation will be related to politics, similar to the situation in today's trade.
Buffett: Autopilot may not be a good thing for insurance companies
Buffett said, "I want to know about the impact of this autonomous driving or self-driving vehicle on insurance. This is a question to expand the discussion in the future. If their technology can make the world safer, I think this is a good thing. But For our car insurance company, it may not be too good."
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