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The meeting is best known as a forum for the dynamic duo of Warren Buffett and Charlie Munger to field a barrage of investors' questions. This year's meeting didn't disappoint, with questions ranging from driver safety to the story du jour: Berkshire's investment in troubled Goldman Sachs (NYSE: GS ) .
Warren and Charlie spent hours answering these questions. For your viewing pleasure, though, I've condensed the key topics of the day as we witnessed them live from our view in the press box. Enjoy!
On Goldman: Goldman Sachs was the focus on numerous questions, starting with the first. They all ultimately boiled down to this: Did Buffett think Goldman was in the wrong, and he did regret his $5 billion investment in the company?
Many folks thought Buffett would take Goldman out to the woodshed. Think again. After laying out a detailed case that essentially argued that Paulson's counterparties weren't duped, just dupes, Buffett went on to say that, "we love the investment." He also expressed a great deal of confidence in Goldman CEO Lloyd Blankfein.
Frankly, Buffett's ambivalence was surprising considering his track record of holding his managers to the highest of ethical standards. Throwing a bone to those of us who aren't enchanted with investment bankers who pride themselves on ripping their clients' faces off, though, Munger commented that just because Goldman's actions were legal doesn't make them ethical.
On inflation: The outlook isn't great. Buffett commented that, "the prospects for significant inflation have increased. Not only here, but around the world."
Sure, the guys both think inflation poses a serious threat to investors. But keep some context. As Munger added, "If I can be optimistic when I'm almost dead, surely the rest of you can handle a little inflation."
Argue with that. Go ahead, just try.
On derivatives: There was a lot of buzz last week over Berkshire's supposed jockeying to prevent a clause from sliding into the financial reform plan that would have resulted in Berkshire's having to present more collateral against its derivative positions. But while Buffett did criticize such legislation, to Buffett, the bill currently reads such that Berkshire won't have to put up a dime. Buffett mentioned Coca-Cola (NYSE: KO ) as an example of a long-term equity position that he could easily put up as collateral if need be.
On financial reform: Munger believes we need a new version of Glass-Steagall. As for how he'd go after financial reform, Munger said, "I'd like to make Paul Volcker look like a sissy." Do I smell a geriatric cage match?
On Greece: Munger described Greece as just the start of a very interesting situation. That's a whopper of an understatement. Neither of the guys knows how this movie ends, as Buffett put it.
On succession: Buffett's unnamed candidates to replace him all had bounce-back years in 2009 after disappointing results in 2008. Interestingly, Buffett commented that the current group of candidates has evolved since the original four were hinted at.
As for the next CEO of Berkshire, the smart money is on David Sokol. Sokol has been positioned publicly as a right-hand man for Buffett, who has recently stepped in and done a phenomenal job of helping right the NetJets airship. Another nugget: The scuttlebutt in Omaha echoes our read.
On debt vs. equity: One questioner with a wicked case of hindsight bias asked if Buffett regretted rolling with debt investments back in 2008 rather than equity, citing Harley Davidson (NYSE: HOG ) . Buffett rightly pointed out that those fixed-income investments were made in a risk-adjusted context. Buffett also added that he likes "the kind of business where your customers tattoo your name on their chests."
On municipal defaults: Lots of folks are concerned about tight budgets and liquidity on the state level. Here's lookin' at you, Cali. Buffett, though, observed that it seems improbable that a Federal government that would bail out a General Motors or Chrysler would leave a state to dangle in the wind.
On market efficiency: Buffett believes that finding bargains is tougher today than in the past because of easier access to information. No matter how tough the competition among like-minded value investors becomes, though, Buffett believes "there will always be opportunities if you're not working with large amounts of money."
On Kraft: Buffett was pretty blunt on the subject of Kraft's (NYSE: KFT ) recent wheeling and dealing: "We've made our share of dumb deals at Berkshire, so I've gotten more tolerant of other people." He still maintains that Kraft's shares are undervalued, joking that they are especially so if you use the same kind of valuation assumptions that Kraft used in valuing Cadbury.
Yesterday's session with Warren and Charlie is only the beginning -- we'll be attending their special press-only Q&A session this afternoon, along with a special investor presentation from a company widely dubbed as a mini-Berkshire: Markel.
You can follow our ongoing coverage of the rest of the Woodstock for Capitalists at www.Berkshire2010.Fool.com. It also isn't too late to join the thousands who've signed up to receive our trip dispatches delivered straight to your inbox. Registration is free.