3 Big Trends Buffett Sees in the Stock Market

A full transcript follows the video.

This video was recorded on May 8, 2017.

Gaby Lapera: The other thing he talked a little bit about during the conference was big trends he had noticed, and one in particular that could be a threat to Berkshire Hathaway, which is driverless cars, which you might not initially think of as a threat to Berkshire, but if you think about it, they make a ton of money off of Geico. That’s where they get their float to invest things. If you have driverless cars, people need less insurance.

Michael Douglass: Yes. If they — driverless cars — make the world safer, it’s going to be a very good thing. But it won’t be a good thing for auto insurers like Geico. That’s definitely a threat. Of course, on the flip side — and he highlighted another threat, actually, to Berkshire’s business, BNSF, the freight railroad, that, basically, coal is on a long-term decline. People talk about bringing coal back, but economically speaking, it appears that it’s just not going to happen over the long term. Freight railways like BNSF are going to suffer as a result, and they are looking for other things to carry instead of coal. So that’s going to be an issue too. On the flip side, there were some positives. One thing he highlighted was AI [artificial intelligence]. He said he sees a lot of real opportunity in AI. Does that mean Warren Buffett is going to invest in AI? I don’t know, you don’t know, nobody knows. Warren Buffett probably doesn’t know right now. But you can think about a lot of really good implications there for insurance. Imagine if your actuarial tables are built out by a computer that is able to find a little bit more efficiency than the average human being. There’s a lot of opportunity if used correctly. He was definitely very bullish on it as a concept in the coming decades.

Lapera: Definitely. Actually, just to get back to the coal thing really quick, even though he’s not very bullish on coal, he is pretty bullish on renewable energy, right? And they’re making some investments in that space.

Douglass: Incredibly. It’s Berkshire Hathaway Energy; they are a big wind and solar provider. Or a big wind provider. 

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