The Berkshire Hathaway Q&A is very long, and more than a little funny. Shareholders have often been compared to a cult, and it's clear why listening to many of the unscreened questions from shareholders, who ask Buffett to opine on things like financial literacy in America, national health care, and the Future of Youth, which have an at-best tangential relationship to the company.
The shareholders are clearly mad about the government bailouts, particularly of the banks. And more than one has taken to phrasing an indictment of the government's action as a sort-of-question that's really more of a thinly veiled invitation for "Warren" and "Charlie" to denounce this decidedly un-frugal endeavor.
Buffett replies that these things are institution-specific, and there's quite a lot of underlying common equity left in his holdings, so there's no reason to worry about a cramdown. But this whole line of question highlights something for me: regulatory risk is a gigantic concern this year. Every third question seems to be about some major government project, and what sort of havoc it might wreak on his business.
Last night, I went to dinner with some investors, where a long conversation about the difference between investment and gambling ensued. Warren Buffett followers aim to invest, not gamble. But when the government is involved, it's all gambling--none of the people I've spoken to, and (I'd wager) virtually none of the people in the arena, have any particular insight into the workings of the government processes. Hell, these days, the people I speak to at Treasury and the Fed don't seem all that certain about what they're going to do next.
An investment in Goldman Sachs and Wells Fargo is a bet that, first, the world economy won't really collapse, and second, the government won't get mad and take your money. There's no reason to believe that Warren Buffett, or anyone else, has any good way to assess the probability of those beliefs.
Update: The journalist sitting next to me points out that Warren Buffett is good friends with the current administration, which probably limits the regulatory risk. This would no doubt cheer me if I were a Buffett shareholder, rather than a libertarianish journalist.
Update II: In the afternoon question session, Buffett, responding to another question, talks about the AIG 90% bonus tax, and says "That was uncontrolled fury. They just wanted to do something, and they did it. They still want to do something, maybe not something that spectacular, but Berkshire Hathaway will be affected by some of this."