In Los Angeles, California, Warren Buffett spoke at Berkshire Hathaway’s annual meeting. 1st of May, 2021 CNBC’s Gerard Miller The economic effects of the epidemic are disproportionately affecting small businesses, according to legendary investor Warren Buffett, and the unpredictability of Covid-19 is far from ended. “The economic impact has been this extremely uneven thing where… many hundreds of thousands or millions of small businesses have been badly hurt, but most of the big companies have overwhelmingly done fine,” the Berkshire Hathaway CEO said in an interview with Becky Quick on CNBC’s special “Buffett & Munger: A Wealth of Wisdom,” which aired on Tuesday. In March 2020, the pandemic wreaked havoc across the United States, causing a $20 trillion economy to grind to a halt. Thousands of small businesses were forced to close their doors as customers were absorbed by big-box shops and e-commerce giants. The first quarter of last year saw a 31.4 percent decrease in GDP, which was unparalleled in post-World War II America. The 90-year-old investor stated, “It’s not over.” “In terms of unpredictability, it’s been very unpredictably unpredictable, but for the most part, it’s worked out better than most individuals and organizations expected. And it’s simply devastated all kinds of people and their hopes for no fault of their own.” ‘Fabulous success’ was produced by Covid. According to Charlie Munger, Berkshire’s vice chairman and Buffett’s lifelong business partner, the epidemic delivered windfall profits to some industries, such as auto dealers. “It didn’t simply bring things back to normal; it brought them great results they hadn’t expected,” Munger remarked. “Auto dealers are making money they wouldn’t have had if it hadn’t been for the pandemic.” Automakers and dealers have seen broader, if not record, profits as a result of manufacturing shutdowns and a global semiconductor shortage, and have even sold automobiles before they arrive at dealerships. With over 78 independently run dealerships, Berkshire Hathaway Automotive is one of America’s largest dealership groupings. The BNSF Railway and NetJets, a private corporate jet charter and aviation management company, are also owned by the corporation. “Every single dealer with whom we have a partnership felt very strongly that they were going to have a major problem in March and April,” Buffett remarked. “Some may have wanted to apply for government aid, but we wouldn’t let them since their father was wealthy… we didn’t know what would happen with NetJets in terms of demand.” The most important lesson The most important thing Buffett took away from the extraordinary pandemic, he said, is how ill-prepared the world may be for emergency crises that are unavoidable. “People don’t know as much as they think they do, I discovered. But the most important thing you learn is that a pandemic was bound to happen, and this one isn’t even close to being the worst “According to Buffett. “Society has a hard time planning for things that are far away but could happen at any time.” In the United States, more than 600,000 people have died from Covid, and countries are grappling with new forms as vaccines are rolled out. The delta form, which is already found in at least 92 nations, including the United States, is anticipated to become the disease’s main variant globally. The strain’s incidence in the United States is doubling every two weeks. “We all know there will be another pandemic. There is a nuclear, chemical, biological, and now cyber threat, as we all know. Each of them has the potential to be a disaster “According to Buffett. “And we do some things about that,” she says, “but it’s just not something that society appears to be especially capable of truly grasping.” This year has seen a continuous increase in sweeping cyberattacks, which have directly touched Americans and impeded logistics and services in the US. Colonial Pipeline was forced to shut down nearly 5,500 miles of pipeline in May due to a ransomware attack. “In many ways, Charlie and I have been really fortunate. But being present at this time and place was the luckiest thing I could have done “According to Buffett. “How do we actually execute this such that mankind enjoys the enormously improved life that could be enjoyed while not screwing it up in 50, 100, and 200 years?” Have you found this article to be interesting? For unique stock recommendations, investment ideas, and access to the CNBC worldwide livestream, visit www.cnbc.com. Become a CNBC Pro subscriber. Begin your risk-free trial now. Continue reading
