Without Charlie Munger, Warren Buffett is Nothing? Will He Embrace Crypto and AI?

A Poignant Farewell at Berkshire Hathaway

For decades, the annual Berkshire Hathaway meeting was a spectacle. Not just for the financial insights, but for the dynamic duo at the helm – Warren Buffett and Charlie Munger.

This year, however, the stage felt a little less magical. Munger, the financial wizard who stood beside Buffett for over 50 years, was gone.

A Legacy Forged in Partnership

The 99-year-old financial titan passed away last November, leaving a void that Buffett openly acknowledged. Buffett, visibly emotional, paid tribute to his "best friend" and business partner.

He spoke of Munger's unparalleled acumen, emphasising their unwavering partnership:

“In terms of managing money, there wasn't anybody better in the world to talk to for many, many decades than Charlie.”

He further shared,

“I simply cannot recall a single conversation I had with Charlie where he misled me or steered it in his favour.”

This meeting was a stark reminder of Munger's pivotal role.

Buffett Warns: AI Scams Poised to Become the "Growth Industry of All Time"

Buffett unleashed a bombshell at Berkshire Hathaway's annual meeting, claiming artificial intelligence could fuel a terrifying new industry: scamming.

Buffett, shaken by a recent encounter with an AI-generated video that perfectly mimicked him, voiced his concerns. The video, so realistic it fooled even his family, presented a scenario where Buffett himself "delivered a message that no way came from me."

This chilling experience sparked a stark warning:

"If I was interested in investing in scamming, it's going to be the growth industry of all time."

AI is A Double-Edged Sword

Buffett acknowledges AI's vast potential for positive advancements. However, his encounter highlights the technology's dark side. The ability to generate convincing fake images and voices raises serious concerns about future scams.

Drawing a chilling parallel to nuclear weapons, Buffett expressed,

"We let a genie out of the bottle when we developed nuclear weapons... And the power of that genie scares the hell out of me."

He acknowledges the world's struggle to manage the dangers of nuclear technology, leaving the question: Are we prepared for the potential havoc AI could wreak?

Can Buffett Shine Without Munger?

The absence of Munger hung heavy. Buffett, ever the optimist, shared a bittersweet anecdote: even in his twilight years, Charlie was a magnet for big names, from Elon Musk to the Dalai Lama.

Yet, Munger preferred the company of historical figures through books.

This anecdote, though humorous, sparked a question that lingered throughout the meeting: Is Buffett, without Munger, still the Oracle of Omaha?

Berkshire Hathaway's Story – From Textile Mill to Multinational Giant

Berkshire Hathaway, a name synonymous with financial titans Warren Buffett and Charlie Munger, wasn't always the investment behemoth it is today.

Founded in 1839 as a humble textile mill, Berkshire underwent a dramatic shift under Buffett's leadership in 1965. He steered the company away from textiles and towards insurance and strategic investments, transforming it into a diversified conglomerate.

Munger, who joined as vice chairman and also as Buffett's right-hand man since 1978, played a pivotal role in this metamorphosis.

Hailed as the "architect" behind Berkshire's success, Munger's sharp wit, value investing philosophy, and unwavering partnership with Buffett were instrumental in building the company's empire. Buffett himself acknowledged Munger's brilliance, calling him "the best person in the world to talk to about managing money."

Munger's influence transcended mere financial acumen. He instilled a culture of long-term thinking, value investing, and a dash of witty sarcasm that became Berkshire's hallmark.

Their partnership, spanning over five decades, built a conglomerate with tentacles in insurance, retail, and beyond.

Cherish Who Matters

Buffett's advice during the Q&A resonated deeply:

“Ask yourself who you’d want to spend the last day of your life with and then figure out how you could meet them tomorrow and then meet with them as often as you can"

This poignant message, coupled with his Freudian slip of calling his successor "Charlie," underscored the irreplaceable nature of their partnership.

Berkshire Hathaway's market performance

Berkshire Hathaway has seen its stock price rise nearly 10% so far in 2024, outperforming the broader market (S&P 500 which is up 7.5%).

However, the company has also made some significant changes to its investment portfolio. Berkshire significantly reduced its stake in Apple in the first quarter, while also selling its position in Paramount Global at a loss.

Cash hoard swells, but deal activity slows

Despite the strong stock market performance, Berkshire Hathaway has not been as active on the deal-making front. The company's cash hoard has swelled to a record US$189 billion, suggesting that Buffett may be waiting for more attractive investment opportunities.

However, he did indicate that the firm is looking at potential investments in Canada.

Succession plan in place

With the recent passing of Charlie Munger, Berkshire Hathaway's longtime partner, questions have been raised about the company's succession plan. Buffett has assured investors that a plan is in place, with Abel Abela being named heir apparent in 2021.

Solid first-quarter earnings

Berkshire Hathaway reported solid earnings for the first quarter of 2024. The company's operating profits rose to $8,825 per Class A share.

Buffett Hates Crypto, But Berkshire Hathaway Bets Big on It

Buffett famously called Bitcoin "rat poison squared" and wouldn't touch it with a ten-foot pole. He sees no intrinsic value in crypto, believing it's just a speculative bubble waiting to burst.

But Berkshire Hathaway, his holding company, hasn’t followed suit. They made a surprise $1 billion bet on Nu Holdings, a Latin American bank heavily invested in the crypto space.

Nu offers traditional banking services but also boasts over 1 million active users on its crypto platform, Nucripto. With Nucoin, its own digital currency, and constant expansion into new cryptocurrencies, Nu Holdings is positioned as a leader in the region's crypto market.

So, while Buffett may shun crypto, Berkshire Hathaway seems to be betting on its future through Nu.

Buffett Shuns Bitcoin, But Should He?

MicroStrategy CEO Michael Saylor throws shade at Warren Buffett after the Berkshire Hathaway shareholder meeting. Saylor, a famous Bitcoin bull, posted on X that Berkshire Hathaway, with its recent loss of Charlie Munger, should consider Bitcoin as an investment.

Saylor's suggestion isn't baseless. Not only has Bitcoin surpassed Berkshire Hathaway's market cap, but MicroStrategy itself has thrived since its Bitcoin buying spree began in 2020.

With Bitcoin surging 7% recently, could Berkshire Hathaway be missing out on a golden opportunity?

A Standing Ovation for a Legacy

The meeting concluded with a touching tribute. As the arena lights dimmed, illuminating the space in Munger's honour, the 30,000 shareholders erupted in a standing ovation. Buffett, ever the showman, ended with a hopeful chuckle,

"I hope you come next year. I hope I come next year."

Overall, Berkshire Hathaway appears to be in a good financial position. The company's stock price is up, and its earnings are strong. However, the future of Berkshire Hathaway is shrouded in uncertainty.

While Buffett maintains his optimism, the absence of Munger looms large, leaving questions about whether the Oracle of Omaha can sustain his remarkable track record independently.