Warren Buffett Tells Value Investors To Resist The Temptation To Speculate

- Berkshire Hathaway Chairman Warren Buffet, 86, and his Vice Chairman Charlie Munger, 93, fielded questions from analysts, journalists, and shareholders for several hours on May 6 at the company's annual meeting in Omaha.

Speaking at an annual conference of his company's shareholders in Omaha, Nebraska, on Saturday, Buffett said that healthcare costs were the biggest problem facing United States businesses, adding that his federal income taxes previous year would have gone down 17 percent had the new healthcare law been in effect.

Charles Munger, the vice chairman of Warren Buffett's Berkshire Hathaway Inc, said the decision to take on insurance liabilities from American International Group Inc (AIG) offers plenty of risk, and also the chance for a substantial reward.

Ranged against them are sceptics such as the billionaire ex-mayor of New York, Michael Bloomberg, who see the decline as more due to automation and the shift to more easily accessible fossil fuels such as oil and natural gas.

"Massive trade should be - and is actually - enormously beneficial to both the USA and the world", he said. "I can't think of any business where [Berkshire Hathaway is] in where our tax rate puts us at a - and we're in a lot of businesses - significant disadvantage with foreign countries", Buffett told CNBC's Becky Quick.

"They may become like cattle cars", Buffett said. He said the company had too much cash it could not reasonably deploy.

"They've been very good about severance pay and all of that, but they have followed the standard capitalist formula, market system formula, of trying to do business with fewer people", Buffett said.

Current iPhone users "could have a much cheaper smartphone selling right next to it, and they don't look at it", Buffett said.

"Change is painful for a lot of people", he said. In the past year alone, almost all of Buffett's stocks are up, particularly Apple (aapl), which now happens to be the world's top-paying dividend stock in terms of dollars paid out.

But he also said it would be a "terrible mistake" if capital allocation were not the "main talent" of his successor.

On 3G, with which Berkshire controls Kraft Heinz Co and tried to merge it with Unilever NV, Buffett acknowledged a dislike for the cost-cutting for which the Brazilian firm is known. Berkshire bought the BNSF railroad in 2010. "I don't value IBM the same way that I did six years ago when I started buying", he said, adding that the company as "run into some pretty tough competitors".

He disclosed this week that Berkshire has sold about one-third of the IBM stake, even as it bulks up its holdings in Apple Inc (AAPL.O), which Buffett said he thinks of more as a "consumer" company that a technology company. "It was huge what they did on cutting taxes for the rich", he said.

"I was impressed with Jeff early".

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