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Buffett talked about the trade deficits US occurred – “Making these purchases that weren’t reciprocated by sales, the U.S. necessarily transferred ownership of its
assets or IOUs to the rest of the world. Like a very wealthy but self-indulgent family, we peeled off a bit of what we owned in order to consume more than we produced”.

And the “reverse compounding” of more interests on interests.

Those two problems, mentioned in 2006, are now the focus of US gov.

Buffett had some other issues to consider – how to retain talents.

It does seem that Buffett’s reputation has helped him a lot in acquiring businesses – the access to deal flows is unparalleled.

Buffett is question if climate changes have happened so that the frequency of hurricanes (or other natural disasters) rises, which costs insurance companies a lot more. Berkshire decided to raise prices for those mega-cat policies.

Buffet again showed his dislike for of all sorts of “helpers”.

On succession – “When their abilities ebb, so usually do their powers of self-assessment. Someone else often needs to blow the whistle. ” “If I become a candidate for that message, however, our board will be doing me a favor by
delivering it.”

Buying others’ life insurance policies sounds like a new type of investments.

On corporate governance, 1) board meetings without CEO and 2) whistleblower line were introduced and looks useful.

Not much lesson learned.

“An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds.”

Buffett didn’t like derivatives –

1. it’s hard to know true earnings (economics) leads to “weak” numbers; easy for frauds or near-frauds to rise
2. it may increase short-term cash illiquidity problems
3. it creates chain risks in the system (counterparty risks)

By focusing on experience, insurance companies received no premium on terrorism risks.

“Predicting rain doesn’t count; building arks does.”

If a company is focused on “winning” market share too much and loses sight on profits, there will be problems.

Buffett recognized several previous mistakes – those happened in General Re, and some in investments like Dexter (shoes).

Buffett made a joke on “clicks-and-bricks”. This phrase was popular back then? And this is just like O2O in the 2010s in China I guess.

Berkshire would “never issue a policy that lacked a cap”.

No fear of near-term result decline – declines “spur sellers and temper the enthusiasm of purchasers who might otherwise compete”.

Market condition changed – junk bonds market dried up, making fewer LBOs.

When an owner cares about whom he sells to, the business usually associates with better qualities.

“Market commentators and investment managers who glibly refer to “growth” and “value” styles as contrasting approaches to investment are displaying their ignorance, not their sophistication.”

What’s good for next q earnings may not be economic operating maneuvers.