On Saturday, May 3, the annual Berkshire Hathaway shareholder meeting was held in Omaha. This year’s meeting, as Berkshire Hathaway celebrates its 60th anniversary under the leadership of investment legend Warren Buffett, attracted significant attention.
During the meeting, Buffett, who is 94 years old, along with Vice Chairman Greg Abel and insurance business executive Ajit Jain, spent four and a half hours discussing topics such as investment, artificial intelligence (AI), risk management, and corporate succession with investors.
Buffett expressed his preference for stocks over real estate when it comes to investment. He mentioned that real estate transactions are more time-consuming and less attractive compared to stocks. According to him, the securities market offers more diverse, updated, and transparent investment opportunities than real estate.
When discussing the intricacies of real estate investment, Buffett emphasized the challenges involved. He pointed out that real estate transactions often require negotiations and time-consuming processes, involving multiple stakeholders beyond just shareholders. Despite some real estate properties being sold at lower prices at times, Buffett noted that stocks are generally cheaper and trading them is easier.
Interestingly, Buffett mentioned his late partner Charlie Munger’s enjoyment of real estate transactions and his active involvement in them in the last five years of his life. However, Buffett reiterated that he believes there are far more opportunities in the securities market, at least in the United States, compared to the real estate market.
Buffett highlighted his concerns about real estate transactions, emphasizing the efficiency and ease of trading stocks on exchanges compared to real estate deals, which can be more cumbersome and prolonged. He explained that executing a multimillion-dollar stock trade on a stock exchange can be completed within seconds with full anonymity, a stark contrast to the complexities and negotiations involved in real estate transactions.
Reflecting on past real estate transactions Berkshire Hathaway engaged in during 2008 and 2009, Buffett emphasized the time and effort required for such deals, which he believes do not compare favorably to potentially wiser strategies in the securities industry. Each step in a real estate transaction, he emphasized, is crucial and can significantly impact the outcome, making it a fundamentally different game compared to stock trading.
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