“Stock god” Warren Buffett once said a famous investment quote: I'm greedy when others are fearful, and I'm afraid when others are greedy. At a time when market volatility is increasing, the regional banking sector is in turmoil, and the Federal Reserve is taking active steps to curb inflation, this quote seems to provide investors with a glimmer of wisdom.

Investors are now looking at the Berkshire Hathaway (BRK.A.US) Annual Shareholders' Meeting to be held on Saturday local time. Some of the company's CEO Buffett's wise remarks at the conference may be worth watching.

CFRA analyst Cathy Seifert said, “The market is at a strange inflection point. The market is highly volatile. I think many people will be interested to hear what he has to say. Especially as the debt ceiling deadline approaches, this shareholders' meeting is about to be held.”

This year's annual conference was held offline for the second time since 2019. Last year, Berkshire just bought the insurance company Alleghany and greatly increased its holdings in Occidental Petroleum (OXY.US) and HPQ.US (HPQ.US). Since then, Berkshire has been less active. Although Buffett participated in a three-hour program from Japan in April of this year, he did not announce any major news relating to the Alleghany deal.

Berkshire Hathaway's legendary stock selection method has also become more low-key, with the company showing greater interest in reducing its holdings of certain stocks rather than investing heavily in new projects; for example, Berkshire Hathaway's investment in TSMC (TSM.US) attracted people's attention, but it reduced its holdings by 86% next quarter. Buffett attributed this decision to concerns about geopolitical tension, even though he appreciated the chipmaker.

Berkshire's reduction in risk appetite is not unusual in the market. The market has been in turmoil since this year. The turmoil in the banking sector and concerns about recession are at odds with optimism that the Fed's interest rate hike cycle is nearing its end.

At the same time, Berkshire's “post-Buffett era” was as clear and unspeakable as mirrored. Buffett, the chairman of Berkshire, is 92 years old, and his partner Munger, the company's vice chairman, is also 99 years old. Investors will also pay attention to whether Berkshire's shareholders' meeting will have a relevant successor.

Here are the things to look out for at this year's Berkshire Shareholders' Meeting:

Buffett's successor

Shareholders will have an opportunity to learn the details of what will become of the conglomerate after Buffett leaves. As time went on, the issues surrounding succession planning became more urgent. Of these, Greg Abell is probably the clearest answer. Abell is also Berkshire's vice chairman. He made Berkshire's energy business one of the largest in the US.

In an interview, Buffett once joked that Abell did “all the work” and investors might use this annual meeting as an opportunity to evaluate this comment.

“Even at last year's conference, Abel's role was far more prominent, and people will look for signs that Greg Abell is taking on more of the heavy lifting,” Seifert said.

In terms of investment focus, Abel also revealed that his attention to the energy industry will naturally be higher. Compared to the railway business, he will obviously spend more time in the energy sector. Since his career background comes from the energy industry, he will naturally learn more about opportunities. This is also in line with his move to make Berkshire's energy business one of the largest energy businesses in the US.

However, Berkshire's senior board member Ron Olsen said on Thursday that investors should not expect changes in the company's senior management anytime soon. Olson told a group of investors that after extensive contact with the two legendary investors, he didn't think the time for Buffett's successor, Greg Abell, as CEO would come soon.

Olson said that Abell had the advantage of working closely with Buffett for many years, and was deeply influenced by Berkshire's unusual corporate culture, which allowed its companies to basically operate on their own. Olson said he believes maintaining this culture of trust will be the most important part of Abell Management's job.

Bank crisis

Another topic Buffett might have touched on was banking. Buffett has been a major buyer of financial stocks for a long time, becoming the largest shareholder of companies such as Bank of America (USB.US). But he has been reducing his exposure to the industry, exiting Wells Fargo (WFC.US) positions and reducing his holdings in the United States of America. However, Berkshire remains the largest shareholder of Bank of America (BAC.US).

Since March of this year, four regional banks in the US have gone out of business amid the recent market turmoil, which clearly provided Buffett with an opportunity to step in and invest capital. Buffett held talks with Biden administration officials about the stock market turmoil, but no related investments were announced.

Edward Jones analyst Jim Shanahan said in a telephone interview: “Actually, I don't expect him to do much. Berkshire's current exposure to the industry and recent efforts to reduce exposure could have an impact.”

In an interview, Buffett said that we haven't seen the last scene of a bank collapse, and his passion for the industry is cooling down.

Inflation, performance

Berkshire Hathaway and its diversified subsidiaries are representative of the state of the US economy. Buffett has repeatedly linked the company's growth and his own financial success to the performance of the US economy. This means that Berkshire's performance is very sensitive to the inflationary pressures affecting the economy. Currently, commodity costs are soaring for some companies, and the profitability of others is being eroded, including Geico's auto insurance business.

However, the current economic performance of the US is also unprecedentedly complex. Economic data is mixed. On the one hand, many industries are still laying off workers, and many price indicators, such as the housing price index, used car prices, and building materials prices, have all shrunk sharply; various economic indicators have declined, credit is shrinking rapidly, and treasury bond yields are seriously inverted. But on the other hand, the service industry is still facing huge job vacancies, consumer spending has not deteriorated across the board, and core inflation is still showing stickiness, and the market still seems uncertain whether the US economy will decline.

Investors will see Berkshire's latest financial details ahead of the annual shareholders' meeting on Saturday morning local time. “I expect some good earnings results in the first quarter,” Shanahan said. He said the “moderate” slowdown in revenue from certain businesses will be offset by a sharp increase in net interest income from cash holdings.

Artificial intelligence (AI)

This year, ChatGPT dominated social media headlines around the world. The disruptive launch of generative human AI has sparked a buzz, making people wonder if a new technological revolution has arrived. From Nvidia (NVDA.US), which produces chips needed for AI, to Microsoft (MSFT.US), which has ChatGPT, etc., companies from upstream to midstream and downstream have all been pushed to the forefront, and stock prices have taken off along with the trend. As one of the hot topics on Wall Street this year, the future of artificial intelligence may also be mentioned by investors.

Buffett said in an interview with the media in April that he had no expertise in artificial intelligence. Regarding artificial intelligence technology such as ChatGPT, Buffett is currently uncertain whether it is beneficial to humans. He once said, “In terms of capabilities, this is an incredible technological advance, which is truly extraordinary.”

Earlier this year, when asked how he viewed the recent popularity of ChatGPT and what impact it might have on the Daily Journal's newspaper business, Munger responded: “Artificial intelligence is very important, but there's a lot of crazy hype and nonsense on this issue. I think it's mixed. ”

At this annual meeting, investors will pay attention to Berkshire's comments on AI, including the impact of AI on the economy and employment, and whether it will invest in related companies or fields.