Warren Buffett: Why Market Crashes Are Your Biggest Opportunity | Berkshire 2025

[Transcript]

AUDIENCE MEMBER: Dear Warren, dear Greg, dear fellow owners, it’s such a pleasure to be here. My name is Revi Panidha. I was born in communist Albania, but I’m now teaching economics in London, England. And the wonderful writing of Warren and Charlie has significantly shaped my thinking and teaching. I thank you both very much for the many insights over the years.

Warren has often written about the importance of Berkshire’s earning power to owners. My question is, what was in your estimate Berkshire’s earning power in the latest fiscal year? It would be great if you can comment on any significant items that either increased or decreased the earning power as compared to reported net income measures for Berkshire. Thank you.

WARREN BUFFETT: Yeah. Well, I think our underlying earning power was affected negatively here a while back by what happened in the utility field. I think that our earning power was not enlarged by any large acquisitions that come along, but they come along periodically. So we will see something at some point that – Well, on the one that was 10 billion, we would have added to earning power. I mean, why else would we do it?

So that’s very situational, and of course it depends so much on what the general market is doing and what interest rates are doing and what psychology is doing. We will make our best deals when people are the most pessimistic. You know that’s been true ever since 1930. I was born in 1930.

When I was born, things got much more attractive over the next two years, and apparently, I didn’t do anything about it then. (Laughter) But you know, that was the opportunity of a lifetime, and I blew it by you know worrying about the kid in the next crib or something. But – (Laughter)

Over my lifetime, you know, I’ve had fabulous opportunities sometimes, and they happen because humans are human.

And I don't – you know I’m fearful of all kinds of things. I don't want to try and you know be one of the Wallendas and walk on a tiny strip between a couple of twin towers or something or whatever it may be. But I don’t get fearful by things that other people get afraid of in a financial way.

You know the idea that if Berkshire went, let’s say Berkshire went down 50% next week, I would regard that as a fantastic opportunity, and then it wouldn’t bother me in the least, and most people aren’t, they just react differently.

And so it doesn't – It’s not that I don’t have emotions, but I don’t have emotions about the prices of stocks. I mean, those decisions get all the way to my brain, whereas emotions can get bogged down some other place.

So Berkshire will increase its earning power over time, as we retain money, I mean, we are doing things, making decisions every day, people are working or retaining earnings. We will build the earning power, but it won’t be coming in any even stream, and it certainly won’t be matched dollar for dollar on either the upside or the downside in market prices, and that’s what makes it a good business, and you know the investment businesses is that everything isn’t properly appraised and the sillier other people get, the better your opportunities get.

Source: https://buffett.cnbc.com/2025-berkshire-hathaway-annual-meeting/

 

[YAPSS Takeaway]