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Are you ready for a rate hike? You better be, because we're going to get one on Wednesday when the FOMC concludes its two day meeting on monetary policy. The Fed is expected to raise its benchmark federal funds rate by 50 basis points to range of between 75 and 100 basis points, following that 25 basis point increase last March. The federal funds rate is now projected to end the year in the range of between 2 and 2.25%, which is 0.5% higher than previously anticipated. Rates are rising. In addition, the Fed is expected to begin winding down its record $9 trillion balance sheet as early as next month. U.S. Treasury bonds for sale. But will the buyers stick around?
Rate hikes are coming. Growth is slowing, and inflation is spreading like poison ivy. For all you chart lovers out there, keep an eye on the 4,000 level for the S&P 500. According to BofA's Technical Analysis team, if it drops below that level, the wheels may come off completely. Now, passengers, we've been through some slippery rails before, but nothing that's lasted more than a few months at least while we've been together. Still, we got this. If you're a long-term investor with some balance in your portfolio, or even a barbell strategy to keep you on your feet around these tracks, remember this: The S&P 500 has returned 9.2%, including dividends, every year on average for the last 80 years. Stocks generally move higher over the long term. The longer the term, the better the returns.
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The Express has rolled its way into Omaha, Nebraska, for the Berkshire Hathaway annual shareholders meeting. They used to call this “Woodstock for Capitalists,” now it’s just the Warren Buffett and Charlie Munger show. There are 40,000 shareholders coming in this weekend to hear pearls of wisdom from the nonagenarians. Berkshire Hathaway has over 60 subsidiaries, many of them household names. They are all here, and they are all selling merchandise at a discount for shareholders. Ever the capitalist, Buffett knows his shareholders like to shop, especially when he is attached to the products. But they’re also here to pay homage to the Oracle of Omaha and Charlie Munger and listen to pearls of wisdom from the two legends at Saturday’s shareholder meeting. Buffett and Munger took questions from shareholders for over six hours on Saturday. You can hear most of that Q&A on CNBC.com, which had the streaming rights to the conference this year.
Long-term shareholders have done very well investing in Berkshire Hathaway. Since 1970, Berkshire shares have risen more than 3000%. The Class A shares have never split and are priced today around $492,000 apiece. The stock has delivered a 20% average annual return, compared to just 10% for the S&P 500. Today, there are around 3 million shareholders of record, and many families have become multimillionaires through their ownership. At least seven people, not including Warren and Charlie, have become billionaires through Berkshire Hathaway. Hero worship? You betcha. I caught up with several shareholders roaming around the convention center, buying everything from new cowboy boots to bracelets and more. Tell me your name and where you're from?
Bruce:
"Bruce. I'm from, Nebraska, south of Lincoln."
Caleb:
“How long have you been a Berkshire Hathaway shareholder?”
Bruce:
"Late eighties. I don't remember the exact year, but… Yep."
Caleb:
"How's it been being a Berkshire Hathaway shareholder?" 
Bruce:
"Oh, great. I think I bought… it was an A share for it was $18,000 something. And I just bought one. Should have bought several!"
Caleb:
"You and me both."
"Tell me where you're from."
Mozart:
"I'm from Brazil."
Caleb:
"What's your name?"
Mozart:
"Mozart."
Caleb:
"How long have you been a shareholder, Mozart?"
Mozart:
"Probably three years now, I think."
Caleb:
"Has that been good for you?"
Mozart:
"Oh, yeah. It's been doing great."
Caleb:
"Why did you invest in Berkshire Hathaway?"
Mozart:
“Well, I actually work in investments. I’m a portfolio manager. I work for a management company. I mean, obviously, you know who Warren Buffett is and Berkshire and all of that. And yeah, I literally just bought the shares to be part of the meeting and see what it’s all about and see Warren. So, here I am.”
Caleb:
"What's your impressions of the shareholder meeting so far? It's a big shopping festival, huh?"
Mozart:
"Yeah, it's fascinating. I mean, I really didn't know what to expect, but this is absolutely like really going over the expectations that I had and just… big party. Everyone's very friendly and having fun. So yeah, it's been great."
Caleb:
"Obrigado."
"Tell me your name."
Joseph:
"My name is Joseph."
Caleb:
"And where are you from, Joseph?"
Joseph:
"Also from Brazil."
Caleb:
"What brings you to Omaha, Nebraska?"
Joseph:
"Well, the convention for sure, and I came with my friend."
Joseph:
“What do you guys know about… what’s Warren Buffett and Charlie’s reputation down in Brazil?”
Joseph:
"Oh, he's a well known, and… I think that's pretty much it. There's a lot of investors that invest here. We actually met a lot of Brazilians here already. So… it's been very interesting to see how many people came here."
Caleb:
"Obrigado. Thank you." 
"First, tell us your name."
Carl:
"Carl Hughes."
Caleb:
"Carl, where are you from?"
Carl:
"Marion, Ohio."
Caleb:
"What brings you to the shareholder meeting? Have you been a shareholder for a long time?"
Carl:
"Yes, long-time shareholder."
Caleb:
"How many times have you come to the shareholder meeting?"
Carl:
"This is my second visit, though."
Caleb:
"How has it been being a Berkshire Hathaway shareholder over the years? I imagine pretty good, right?"
Carl:
"It's been really good."
Caleb:
"And how… if you had any questions for Charlie or Warren, what would you ask if you had the opportunity?"
Carl:
"I just… 'keep doing a great job.' They're performing well. They have a good business model and just stay focused."
Caleb:
"Tell me your name and where you're from."
Ludvig:
"I'm Ludvig. I'm from Munich in Germany."
Caleb:
"And how long have you been a shareholder?"
Ludvig:
"Since 2015, I've been investing."
Caleb:
"You've been a Berkshire Hathaway shareholder since 2015?"
Ludvig:
"No. I've missed the boat and just bought it in 2018."
Caleb:
"And what's it like being a shareholder, especially living in Germany? You follow along pretty closely?"
Ludvig:
“Yeah, I’m working in the equity research department, and so I’m always engaged with stocks and investing. And Berkshire Hathaway is, of course, the the leader in the space and… Yeah, that’s… So, we’re always following it.”
Caleb:
"What's Warren and Charlie's reputation like over in Germany?"
Ludvig:
"It's pretty good, especially in the investment circles. Everybody is looking up to them and learning from them all the time."
Caleb:
"What do you think of the shareholder meeting so far? Is this your first one?"
Ludvig:
"Yeah, it's the first one. And we actually just arrived one hour ago, so… but we're really impressed by all the different companies, the diversified holdings, and really looking forward to tomorrow."
Caleb:
"Doing a little shopping while you're here?"
Ludvig
"Yeah, we're just getting around and see what's a good product."
Caleb:
"I'd like to see you in some Justin cowboy boots before the end of the weekend to take back to Germany."
Ludvig:
"Yeah, that would be very nice."
Caleb:
"Tell me your name and where you're from."
Chris:
"Chris Freed from Philadelphia, Pennsylvania." 
Caleb:
"And how long have you been a Berkshire shareholder?"
Chris:
“2001. My first stock I purchased when I was a student at the University of Pennsylvania was Berkshire, Class B shares.”
Caleb:
"And remember the price when you bought them?"
Chris:
“$1,500, I believe? That was before the split because of the BNSF railroad acquisition.”
Caleb:
"Still a pretty good return for the baby Bs over those years, right?" 
Chris:
"Absolutely. Been buying ever since."
Caleb:
"Is this your first shareholder meeting?"
Chris:
"This is my eighth. So, I think it's the first one I have been to since 2019."
Caleb:
"Yeah, it's been a while since I've been here too. What are your impressions? Really hasn't changed. Still a shopping fest and a lot of people so excited to see Warren and Charlie and the crew here."
Chris:
"Absolutely, yeah. It looks like it was back in 2019, which is great. The last few years have been just… we've been locked at home, just waiting. So, it's great to see people moving about again. And Charlie and Warren, there's only a few more opportunities we get to see and interact with them. So, it's it's great to be back in Omaha."
Caleb:
"If you could ask them any question, any one question, what would it be?"
Chris:
“Conversion, share buybacks… As the share buybacks and the conversion from A to B continue, economic ownership is shifting to Class B shareholders, but voting power/concentration has actually increased underneath the A shares. And I’m growing concerned. It’s not an issue as long as Warren and Charlie are around, but when they’re not here anymore, there could be an issue with institutions having too much power over the future of Berkshire at that point.”
Caleb:
"Sounds like you've been following it pretty closely. We really appreciate your time."
Chris:
"No problem. Thank you."
Jorge:
"My name is Jorge. I'm from Minneapolis, Minnesota."
Caleb:
"How long have you been a Berkshire shareholder?" 
Jorge:
"I've been a Berkshire shareholder since 2018."
Caleb:
"Is this your first annual meeting?"
Jorge:
"This is my first annual meeting. And like everybody else, I'm enjoying everything. I didn't know if I really ever wanted to go because I know that it's free, but to me, it's a rite of passage. Warren's 91. I knew that if I didn't go, I would regret it 100%. And so, I wanted to go last year. I want to go the year before that with the pandemic. Canceled two years in a row. And so, I'm finally here and I'm happy to be here."
Caleb:
"How are you satisfied with being a shareholder here? Are you happy with the return?"
Jorge:
“Very, very happy with the returns. Love reading his annual letter that comes in the mail every year. It’s nice and pretty. And I get to read it, and I feel like a partner with the way that he treats us and things like that. And so, very, very happy with the way… very happy being a shareholder.”
Caleb:
"And if you could ask Warren or Charlie any question that's on your mind this weekend, what would it be?"
Jorge:
"Oh, man. I'm gonna have to think about that one for a second. I've listened to a lot of his shareholders meeting, so I feel like he's been asked every single question one way or the other. I mean, I guess I'll go with the generic one, but one that I hope that… it's more specific (he's not always as detailed), which is, 'What keeps him up at night.' Like what in particular keeps him up at night? I know he kept a lot of money for the pandemic and he didn't spend money because he was worried about potential downfall. And I would just be curious what what keeps him up at night when he thinks about his painting of Berkshire Hathaway in the future and he thinks about what it's going to be in the future? What is he most worried about when he thinks about Berkshire Hathaway 20, 30, 40 years from now that could potentially cut into the profits that he has now?"
Caleb:
"First of all, just tell us your name and where are you from?"
Arlene:
"Arlene Weber. Buffalo girl of Illinois, outside of Chicago."
Caleb:
"How long have you been a shareholder?"
Arlene:
"At least 20 years, if not more. I used to watch Warren play baseball in the old stadium."
Caleb:
"He used to throw out the first pitch at the stadium."
Arlene:
"Right."
Caleb:

"Don't think we're going to be seeing him do that this year. He's 91, but I think he's still got it. Something on his fastball. What's the thing you like most about coming to these meetings?" 
Arlene:
"Oh, the camaraderie. Oh, my gosh. It's so much fun. And you just feel like he cares about the stock. And a lot of these people, they own different stocks, but they just own them. This is like a family."
Caleb:
"And I imagine owning the stock for so long has been pretty good for you, right?"
Arlene:
"It has been pretty good for me. I don't… Anytime somebody tells me to sell. I always say no because he's my safety."
Caleb:
"What are your concerns as a shareholder as you watch this company? It's been going strong for so long. What are you worried about?"
Arlene:
"I don't worry about Warren Buffett. I sincerely don't worry about it. I worry if they mess with the way he manages money that I worry about. But right now, I still think he has it in him to manage well."
Caleb:
"Well, there is a succession plan in place, but there's also some outcry for him to split that chairman and CEO role. You in favor?"
Arlene:
"Not gonna agree with that at all. At all."
Caleb:
"Why not?"
Arlene:
"I just think you can only have one boss. You start you start adding a boss, adding a boss, adding a boss… It's not going to work."
Caleb:
"Great. So what do you want to hear from him tomorrow?"
Arlene:
"I want to hear that he's not retiring. Really, I do. I think he's doing a great job, and I think he's careful with the money. And that's what's important to me. It's like buying a fancy house and you want it to stay, you know?"
Caleb:
"Great point. Thank you so much for your time."
Arlene:
"I enjoyed talking to you and your subscribers."
Caleb:
"You get the point. Shareholders worship Buffett and Munger. They've made their money, but more importantly, they feel like partners, owners of the business. If you've ever read any of Buffett's letters to shareholders and you should, because they are works of art, he's talking to them like partners. As Buffett said this weekend, when he writes those letters, in his mind, he's writing to his two sisters. They were among his first investors, so he wanted to make sure he was clear and that they were in this together."
“But what about running a company owned by Berkshire Hathaway? That’s got to be a lot of pressure, right? It is. But Buffett and Munger are ultra-serious about letting great leaders lead. You rarely see a case where Berkshire buys a company, fires the CEO and recruits some hotshot to put in the corner office. That’s antithetical to the way they approach their empire. The philosophy is simple: buy great businesses that are undervalued, run by smart people with large addressable markets, and moats around them. They want companies that are already well-run with defensible market positions corporate raiders, activist investors, private equity sharks they are not. They are long-term buy and hold investors. Period. I caught up with the CEO of Dairy Queen to find out what it’s really like running a Berkshire Hathaway subsidiary. And full disclosure. I had a couple of Dilly Bars while I waited for him.”
Troy:
"Troy Bader, I'm president and CEO of International Dairy Queen."
Caleb:
"And you've been with DQ, Dairy Queen, for many years. You were the COO up until about 2017, am I right?"
Troy:
"Yep. I been with the company since 2001 and took over this role in January of 18."
Caleb:
"So what is it like being a subsidiary of Berkshire Hathaway? They are notoriously hands off because they trust great managers. But is that as true as it sounds from the inside out?" 
Troy:
“Yeah, it really is. And we couldn’t… we were… Dairy Queen, prior to Berkshire’s purchase, was publicly traded. And Berkshire’s purchase was really, really important to the Dairy Queen system because it really allowed Dairy Queen to take a long view. It wasn’t quarter to quarter from that point forward, and it really allowed us to reinvest much more heavily and much more deeply into the system and into our franchisees. And that has really spurred a lot of growth, both from a unit level but also from an expansion on an international basis as well as domestically. So, it is wonderful because they do give us latitude, but there’s also… you know what you need to do. Integrity is important, brand is important, your consumer is important. And if you live by those values and you follow those values, usually good things are going to flow from it. But I would also say some people say, ‘Oh, they’re hands off, they’re not there to support you.’ That’s never an issue. We always have the support whenever we need it, and we just couldn’t be more fortunate than to be owned by Berkshire Hathaway.”
Caleb:
"Yeah, well, you're in good company. So many companies, over 60 companies, subsidiaries, are owned by Berkshire Hathaway, so many of them here in Omaha for the shareholder meeting. What time what type of reporting do they expect from you? I know you don't have to report to shareholders on a quarterly basis, but for the operating company, for Berkshire Hathaway, do they want to hear from you on the quarterly? On the monthly? How frequently?"
Troy:
"We have to report quarterly because, obviously, everything is going to roll up to Berkshire's reporting. So, we have detailed reporting every quarter, but we also provide them with information on a monthly basis. How are we performing on a monthly basis, looking at the numbers, and then, obviously, as we want new initiatives, new investments. Challenging things come up in the business. Ongoing communication with Greg Abel."
Caleb:
“So, now that you report frequently, what are the key operating metrics? Obviously we know your industry is into same-store sales, year-end spend per customer, but what are the key operational metrics for Dairy Queen that are important to you as CEO and are important to them as as the holding company?”
Troy:
“Yeah. A lot of times people will say, ‘Oh, it’s our revenue, and it’s our bottom line.’ Actually, for us, it starts with our franchisees. We want to know how our franchisees are doing from a sales and profit perspective. We have… we own two corporate stores. Every one of our other stores is franchised. So, the heart and soul and success of our business is the success of our franchisees. So, we continue to look at our franchisees from a perspective of not only same-store sales, but total AUV. If we have a new store, how are we performing in terms of the sales, but also what’s happening with labor? what’s happening with cost of goods? What’s happening with some of those other controllable costs? Because at the end of the day, that manageable profit and ultimately the bottom line is what’s important. When our franchisees make money, when their sales grow, all ships rise because we are generally paid as a percentage of their sales, obviously traditional franchise model. So, if we focus as we do on their success, we will be successful.”
Caleb:
"So, how is the consumer doing right now in the U.S.? They've been holding up but there seems to be some sketchiness is going on. I know you guys are coming off of two really strong years, but how is it feeling right now? What are your franchisees telling you?"
Troy:
“Yeah, we’ve had we did have two very, very strong years. Record sales in 2021 of more than $5.5 billion have gone to worldwide basis. And right now, though, it’s certainly flattening out if you think about just what’s happening in the world, right? Wages may still be high, but now we’re dealing with something called inflation and some decline in consumer confidence. So, what we’re really trying to balance is with inflation, prices have to go up. But we also know that our consumer today is spending more on fuel, they’re spending more on housing, they’re spending more on food and many other things. So, that means their discretionary dollars available for away-from-home occasions is shrinking. And every time they go out, they’re paying more. So, we’re trying to thread that needle between we’ve got to make sure that our franchisees remain reasonably profitable. And when they’re setting their prices, and they set their own prices, they’re trying to make sure that they don’t impact their transactions in the frequency that the guests can visit them. But they’re doing enough to make sure that they can remain in business and then they can remain reasonably profitable.”
On the economic front, the Personal Expenditures Index (PCE) showed U.S. inflation rising by 5.2% in March year over year. That’s the Fed’s preferred measure of inflation, since it strips out food and energy costs, but that’s where the cost of the steepest. Consumer spending did increase by 1.1% in March, but how long can we keep up the spending?
Caleb:
“His managers love him, his shareholders love him. But it’s not always creamsicle and cherry cokes at the shareholder meeting, at least outside the meeting. Every year, and this year was no different, there were protesters. Not a lot, but a few were out there on a cold, windy, and rainy day in Omaha, Nebraska. About a dozen or so members of the Brotherhood of Locomotive Engineers and Trainmen, part of the Teamsters Union, walked up and down 10th Street in front of the convention center entrance with protest signs whipping in the wind. I caught up with the president of the Union.”
Dennis:
"Dennis Pearson, national president of the Brotherhood of Locomotive Engineers and Trainmen." 
Caleb:
"What are you out here protesting?"
Dennis:
“BNSF is one of the bright stars of the Berkshire Hathaway portfolio. The union-represented employees at BNSF have not had a contract pay raise in over almost three years. We’ve been at the bargaining table. They’re not bargaining in good faith and the employees deserve better. They’re part of what makes all these profits here.”
Caleb:
"And in terms of compensation and fairness for your workers. What specifically are you looking for?" 
Dennis:
“Well, they haven’t had a raise in three years. The cost of living is spiking in the 7 to 8% range. And all of this is a national negotiation with all the railroads. Union Pacific up the street here is part of that. Their employees haven’t had a pay raise either. So, we’re at the table trying to get something fair for these folks that covers cost of living and gives them meaningful wage increases.”
Caleb:
"What kind of response have you had from Berkshire Hathaway or BNSF and the leadership there?" 
Dennis:
"BNSF, instead of coming to the table and actually meeting with us in a fair and I think decent manner, is misrepresenting that the employees have all this time off that they don't. They're not even telling the truth to the public about what's going on out there on the railroad right now."
Caleb:
"So, when you see these tens of thousands of shareholders gathering to celebrate Berkshire Hathaway and shop and hear from Warren and Charlie, what is what's your impression?"
Dennis:
"Well, I call… I told a guy yesterday, this is technically a celebration of profit. That's what this Berkshire Hathaway things about. And our guys are the guys who help make a big hunk of that profit and they got left behind."
Caleb:
"Have you had a chance to address anybody inside the shareholder meeting? Do you have a representative who's been able to ask questions?"
Dennis:
"No, we didn't get things in advance and in time to do that. But we're out here making sure they know we're here."
Caleb:
"Hey, take it from us here at the Express. You better take care of your locomotive engineers and trainmen and women, for that matter. Meanwhile, inside the shareholders meeting, the questions ranged from softballs about how Buffett and Munger picked great businesses, to beach balls about how they've been able to beat the market for so many years, to some smart questions about strategy, long-term plans, and the company's equity holdings. Berkshire is the largest shareholder of Apple, Coca-Cola, HP, and a few other pretty big public companies. But no tough questions about its oil investments and climate change, succession planning. Although Greg Abel, who runs Berkshire's day to day operations, was on the stage for part of the meeting, and he took a few questions. The plan's in place, and Buffett stressed that Berkshire is built to last and will be around in 100 years. The crowd really liked that."
"And no questions about some of the shareholder proposals, like the one backed by the California Public Employees Retirement System, CalPERS, we like to call it. It wants to replace Buffett as chairman as long as he's CEO. There's a growing drumbeat for that across American companies. Remember, Arlene from Illinois didn't like that idea. CalPERS has more than $450 billion in assets, including about $2.3 billion in Berkshire Class A shares. But Buffett controls a lot more of those voting shares, so that's not likely to pass. CalPERS also said it backed four other shareholder proposals that the Berkshire board opposes, including one that would require the conglomerate to provide shareholders with an annual assessment of how it manages physical and transitional climate related risks and opportunities."
“But Buffett and Munger did take a few questions about what Berkshire has been up to lately, including some heavy spending. Berkshire made $41 billion of net purchases in the first quarter, including a boost to its stake in Chevron, which is now one of Berkshire’s top four common stock holdings. Buffett also disclosed that the company holds an expanded 9.5% stake in Activision Blizzard stock, an arbitrage bet on the video game maker in the midst of being acquired by Microsoft. That and its $11.5 billion purchase of Insure Allegheny put a nice little dent in Berkshire’s cash pile for the first time in a long time. It ended the first three months of 2022 with about $106.3 billion in cash, down from nearly $147 billion at the end of 2021. Buffett and Munger also took a few questions about Bitcoin, and they swatted them out of the air like flies.”
"All in? It was good to be back in Omaha at the shareholder meeting. I'm not a shareholder, but there's something special about the way that those shareholders revere Buffett and Munger. It's the way they feel like they can relate to them, like family. A family brought together through one of the biggest experiments in capitalism we've ever seen. I hope to go again next year."

It’s terminology time. Time for us to get smart with the investing term we need to know this week. And this week’s term comes to us from Heather in Milbridge, Maine, right there on Narragansett Bay, in the heart of wild blueberry country, where you’ll find Jasper Wyman & Son, the nation’s leading grower, packer, and marketer of wild blueberries. Heather suggests a stop-loss order this week. And we like that term, given how trepidatious a lot of us are feeling about investing in stocks these days. A stop-loss order is in order place with a broker or online broker to buy or sell a specific stock once the stock reaches a certain price.
A stop loss is designed to limit an investor’s loss on a security’s position. For example, setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. Not a bad way to inch you way back into the market if you’re feeling a little more losses may be blowing in, protect your downside. We like that suggestion, Heather, and you’re going to be getting a pair of our Investopedia stocks for your next walk along the bay in beautiful Milbridge.
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