OMAHA, Neb. -- Speaking to more than 14,000 adoring fans who packed the Omaha Civic Auditorium to capacity Saturday morning, Warren Buffett was upbeat about this year's Berkshire Hathaway (BRK.A) annual meeting. "I feel great," Buffett said as he entered the civic center shortly after 7 a.m. to a spontaneous round of applause and cheers. "I can't recall having any more fun than I'm having now."
Behind that grin is a track record that put a lid on critics who had questioned his ability to keep pace with the New Economy: Berkshire stock is up nearly 35% for the past two years, while the S&P 500 is down nearly 25% for the same period.
Addressing the crowd that spilled over into an adjacent concert hall, Buffett and Berkshire Vice Chairman Charlie Munger took on everything from why Berkshire dumped its McDonald's (MCD - Get Report) and Disney (DIS - Get Report) stock to a repeat of his rail against corporate greed and misbehavior. Buffett also explained his bullishness on housing stocks and expressed confidence in the economy.
A Slight Change in TuneGiven Buffett's preferred stock-holding period of "forever," one shareholder wanted to know why Berkshire liquidated its McDonald's and Disney positions during recent years.
"It is not our inclination to sell," Buffett said, noting he has never sold a share of Berkshire stock and has held steady positions of The Washington Post (WPO), Gillette (G - Get Report)and Coca-Cola (KO - Get Report) for more than a decade. "We would sell if we need money to buy something else. That hasn't been a problem in the last 15 years. I used to have more ideas than money. Now I have more money than ideas," he said, suggesting he still believes equity valuations are stretched.However, Buffett did acknowledge changing his sell discipline in recent years. "Now we sell when we are re-evaluating the economic characteristics of the business." Although not directly, Buffett hinted McDonald's and Disney lost their edge. "We had one view of the competitive characteristics of the company and that changed," he said. "It may mean we were wrong when we made the initial decision or it could mean we are wrong now.
"People Have Misbehaved"As he did in his annual letter to shareholders this year, Buffett railed against corporate malfeasance. "It is history repeating itself, but I would say that Enron is a big scandal," Buffett said. "It is a big scandal and it has certain aspects to it that are a canary in a coal mine in terms of things that go on in accounting and things that have gone on in management. It's nothing good. People have misbehaved." Buffett has been outspoken about a wide range of corporate misdeeds but is focused on accounting manipulation as the root of the problem. "It isn't the norm but there were more
Unusual RecessionStocks remain pricey and businesses weak, but Buffett said consumers are resilient. "The
Coming next: The afternoon Q&A session plus more from Omaha in a dispatch later this afternoon. And, for RealMoney.com subscribers, real-time comments from Omaha as the meeting continues on the Columnist Conversation. (For Chris Edmonds' earlier missive from Omaha, click