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Our stake in American Express grows every year. Last year, they bought out 6% of the company, and in the first quarter they were buying back shares at a rate exceeding 6%. So when our share of a great business is growing 6% per year and we're not spending a cent, I love it. Warren Buffett is the largest shareholder of American Express, owning 15% of the company's shares, how about that, Warren?
It grows when they buy back their shares, even a little more. Okay, so let's talk about this. It fell by 15% compared to last year. IBM, which you've been keen to invest in recently, you've taken a really big position. What level is she at now? I think it's about 8% of the company. 8%. This is 15% less than last year.
You know , the question is, have you been in some of these stocks for too long, that maybe some of your followers and shareholders feel like it's time to get out? If we like a business and it goes down, we just buy more and hope the company buys back shares and our stake grows. And I would rather have Well, I would prefer that the stock I buy goes down.
Mhm. Uh -huh. Well, that's crazy, Warren. Explain why. Well, that's because if I'm going to eat hamburgers for the rest of my life, I'd rather the price of hamburgers go down tomorrow, the day after tomorrow, and so on. And if I'm buying a business and I can buy it for a cheaper price, I mean, we just bought a company called Precision Cast Parts, you know, I'd like to buy it for a cheaper price.
If we buy IBM, I hope we can buy more and cheaper. And when they buy back shares, they are actually buying them for us. Listen, you're buying as a long-term investor. You always said that. So you don't get nervous when something has dropped 15% in the last year. What about these companies, these old, conservative companies, that get complacent and then they invite, I don't know, your friends at 3G Capital who came to Kraft and Heinz, and they come in and attack because the companies have become too complacent.
Well, sometimes complacency is a terrible disease, whether you're a new company, an old one, an individual, or anyone else. I said it's ABC, you know, that, you know, it's arrogance, bureaucracy, and complacency. And you have to deal with that whether you're Berkshire Hathaway , or US Steel, or any other company, but you have to deal with that if you're Facebook.
I mean, success breeds what I call the "ABCs," and good managers struggle with that. So, IBM, do you think it has maximized the potential of its brand? I guess I don't find them complacent at all. I think they are working very hard to adapt to changes in what people expect from IT departments and so on.
And I think the competition is very high. I think this is a very good company, and we'll see how it all ends. We know you love Coca-Cola. We know you drink Coca-Cola, but there was a shareholder question that really caught people's attention during the meeting, and it was essentially, "Why would you invest in something that is destroying you from the inside?" » Well, it has sugar in it.
I mean, sugar is in thousands of products . There were three chocolate bars on the table, and each of them had over 200 calories. Mostly sugar. And this is significantly more than in regular Coca-Cola. I mean, if you don't like consuming sugar, then just give it up , but I like eating sugar, I'm 85, I've eaten it my whole life and I'll continue to.
If you gave me the choice: live to be 100 eating only broccoli, asparagus, or Brussels sprouts, or live to be 95 eating everything I love at every meal, which would I choose? Then you probably didn't like Mayor Michael Bloomberg's attempts to ban large portions of drinks and sugary sodas. Do you think the government should interfere in such things?
Well, I suppose if you don't like sugar, that is, if the government decides that you shouldn't drink Coke, that means you should get rid of all sugar. And the average person in the United States seems to consume over 125 pounds of sugar per year in dry form. So, that's a lot of products that will have to be disposed of.
Yes, you mean that you shouldn't impose requirements only on carbonated drinks. There is no difference between the sugar in sodas and in all other foods. By the way, about the “ sugar rush”—the Fed provided the markets with a “ sugar rush.” I know, this is a really interesting twist. Yes, okay. transition, friends.
We say the obvious. But the Federal Reserve keeps us at such low rates. A year ago, when we were sitting here, you said: if it were me, I wouldn't raise the rates. The Fed didn't listen to you, Warren. It raised rates in December, and now there are rumors and feelings that they will continue to raise them, perhaps once or twice before the end of the year.
Will the US economy withstand this? Oh, we can hold out, but I actually think they raised rates less than expected a year ago, by the way. No, they...I think they were partly held back by events in Europe, which is why I explained a year ago that I thought it would be difficult to raise rates very much, and I think they are really difficult to raise.
the same question I asked you a year ago. If you were running the Fed today, would you raise rates again in June? I probably wouldn't. But... but I... it's not important for our investment. I mean, it doesn't even affect 1 % of any of our business buying decisions. So this...this is not my concern. You know, the concern is where the business will be in a year, 5 or 10 years .
And in 5 years we won't remember when rates were raised or lowered or anything like that. We will look at the business and whether they are making significantly more money. Guys, he has a long-term view, friends. He really is
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