A version of this article first appeared on TKer.co
Berkshire Hathaway’s annual shareholder meeting was set to be as exciting as the first without retired CEO, Warren Buffett, MC’ing the event.
But Buffett, who is now Berkshire’s board chairman, made a few cameos. One of them was very scary.
We start the Q&A on Saturday morning, the highlight of which is the video where “Warren from Omaha” asked the first question:
Hello. My name is Warren from Omaha. I just had a, let’s call it, big change in role. And, let’s just say, not a small portion of my remaining money is tied up in Berkshire stock. Now, Greg, I’ve been watching this company for a long, long time. And I’ve been telling people that I’m not willing to sell one share, not one. So my question is simple. I am 95 years old. I have nothing but time and Cherry Coke. And I want to know, just so I have something to tell my fellow shareholders: Why should they hold onto their Berkshire shares for a long time?
The fun moment quickly changed when CEO Greg Abel informed the audience that he was not Warren Buffett.
“Since you all are fine, that was a lie,” Abel said. “But here’s the interesting thing. That was done without input from Warren. The voice, the picture…we were able to find that with the information that was available, and we replicated those actions and that voice.”
It’s worth noting that they rely on deepfake because it’s a problem that Buffett has been fighting for years. A few months ago, Berkshire issued a rare press release about deepfakes titled: “It’s not me.”
“Fake has always been part of the American scene,” Buffett said of deepfakes at the 2024 meeting. “If I am interested in investing in fraud – it will be a growth industry of all time.”
Although Buffett has had to warn directly about deepfakes of his likeness being used by fraudsters, Berkshire and its management team have long flagged cyber as a major risk. In fact, the second item identified in the “Risk Factors” section of the company’s annual report:
Cybersecurity risks can result in economic losses to our businesses and reputational damage.
We rely on technology in almost every aspect of our business. Like those of many large businesses, some of our information systems have been subject to cyber threats, including computer viruses, malicious codes, unauthorized access, phishing attempts, denial of service attacks and other cyber attacks. We expect to continue to be exposed to such attacks in the future and attacks have become more sophisticated and frequent. A major disruption or failure of our technical systems may result in service interruptions, security failures, security events, compliance failures, inability to protect information and assets from unauthorized users and other operational difficulties. Cyber attacks on our systems could result in the loss of assets and valuable information and expose us to remediation costs and reputational damage.
Therefore, it is not surprising that it was the first topic they discussed during the Q&A session of the meeting.
“That’s what we face when we think about Berkshire and how we have to protect it every day,” Abel said Saturday. “It can go to deepfakes, and they use it to try to get into our business. It can be a cyber attack. It’s a good reminder for our team, because that’s a big risk across Berkshire that we manage every day. Cyber risk. And it’s one we take very seriously.”
Are the markets ignorant of cyber risks?
While it’s absurd to think about the risks posed by cyber attacks, it’s encouraging to hear executives, not just at Berkshire, confirm that it makes sense.
The fact that we haven’t experienced a market-destroying cyber-related event perhaps speaks to how effective companies and regulators have been at keeping bad actors at bay.
I hope it stays that way.
Because, at the moment, market participants are undoubtedly relaxed about cyber risks. It rarely appears in research about risk. For example, in BofA’s recent Global Fund Manager study, cyberay did not break down the list of “tail risks” identified by market experts.
This can be a problem. Because according to TKer Truth No. 8: “The most disturbing risks are the ones people don’t talk about.”
Investors and traders not talking about risk suggests that risk is not priced in the markets. That means that where risk is present, volatility is likely to increase with prices likely to go lower.
Especially with the rise of AI and the growing number of scare stories about related risks, it’s never been more important to be vigilant.
In the meantime, we put our trust in our business leaders and policy makers and hope they will continue to be at the forefront of this.
On Saturday, CNBC’s Becky Quick asked Buffett about the morning rush and the dangers AI brings to the world.
“It’s scary,” Buffett said. “It’s especially scary when you have nine or more countries with nuclear weapons and people working on them. We haven’t faced it. We don’t know what’s going to happen.”
Investing is risky. Bad things often happen. And sometimes, worse things happen.
A version of this article first appeared on TKer.co
