Warren Buffett's Full Birthday Interview

we'll talk about whatever they like to talk about and for as long as they want to talk and so any subject they want to get into except what I'm buying currently oh I I love to talk about what they but what they they want to talk about is it common to be asked for stop text optics stock pingas in these lunches no actually it isn't I think I can't recall ever being asked but we talk about family actually the the couple of water fish are bringing along two small children and then we talk about the children raising raising kids a lot of things it's not it's not all soccer or business or finance at all well let me be the skunk at the garden party and start asking you about some of those things you are joining us on a day when we have watched the stock market continue to set new highs the S&P the Russell and the Nasdaq the Dow is not far off and the question we always ask you is do stocks look expensive to you at these prices oh they are definitely you had your choice between buying and holding a 30-year bond for 30 years or holding a basket of American stocks there's just no question you're gonna be do better owning stocks so it's it's more attractive than considerably more attractive than fixed income securities that doesn't mean they're gonna go up or down tomorrow or next week or next year but over time a bunch of businesses that are earning high returns on capital are going to beat a bond that's fixed it roughly 3% for 30 years and I it's not my field of specialty but but actually they look stocks generally which are their businesses they're American businesses thirty trillion worth of them and they look cheaper than then generally a real estate is that the only thing that makes stocks look attractive right now is the comparison with with fixed income well that's what you have to do and investing I mean you're sitting with some cash in your pocket you've had savings and the question is what do you do with it you can buy a duplex next door and rent it out to people and do fine overtime or you can you can buy small piece of farmland or something the disorder or you can put it into something fixed income bonds or bank deposits or whatever it may be and stocks if you look at American equities American business is earning a lot of money relative to the capital put in and the reason stocks are worth a whole lot more than they were 20 years ago or 50 years ago or 100 years ago as companies have plowed back part of the earnings with the mana to get it all out on interest you know you get your 3% or whatever it is and that's what you have with stocks you're gonna maybe a 3% dividend but they're plowing money back or the repurchasing shares are doing something and over time that just makes a huge difference the reason I ask about stocks sitting at these new highs and whether you think the market's expensive is because there are retail investors who are sitting at home and when nightly news starts talking about how the markets are at new highs some of those retail investors who have been sitting on the sidelines think oh my gosh I missed my opportunity again the last time we talked to you you said you were still buying stocks are you still right now we're buying stocks this morning and I'd rather buy them cheaper but I've been mine stocks since March 11th 1942 and I really I bought him under every president seven Republicans seven Democrats I've bought them quarter after quarter some of the buys were terrific some of them were such good times and I don't know when to buy stocks but I know whether to buy stocks and then and assuming you're going to hold them would you rather hold an interest in a variety of great businesses and have a piece of paper this is going to pay a 3% of 30 years or a short term deposit that patient maybe 2% or something the sort yeah no argument although your concentration in the stocks you own has gotten a little more concentrated recently there was a filing that came out not too long ago that showed Berkshire Hathaway was continuing to buy shares of Apple that stock is also a new all-time high last night it's now you own 5% of the shares outstanding of Apple it's the biggest holding for Berkshire Hathaway a 56 billion dollars have you continued to buy even since that filing was just a little about 6 million the shares are attributable to another fellow in the office that's owned a considerable period rester my portfolio but I bought just a little bit I like I like to buy him cheaper on me very different I we started buying or I started buying when the stock was maybe a hundred where I was buying it kind of as fast as I could and I ended up buying some as high you know a whole lot higher I wouldn't exact replica for one thing if it goes down Apple is going to buy a lot of stock back they're already buying stock back and if it goes down 10% it means they get the by 10% more shares and my interest will go up 10% more for spending that money and buying chairs so I am benefited by going down if I were to talk my book I would talk it down I spoke with an analyst today Gene Munster and he pointed out that the interesting thing about Apple is that for a long time it was a very volatile stock it kind of traded in this boom and bust cycle every time they had a phone that came out it would push the stock higher if they didn't have a new release it would drop he said that it's still 65% of the business but a lot of people are maybe looking at it a little differently and he wonders how you look at it is this a boom and bust cycle or is there something on release time I don't you know I'd like to see that new release do well or you know that but I do not focus on the sales in the next quarter or the next year I focus on them they won't tell you exactly how many but hundreds and hundreds and hundreds of millions of people will practically live their lives by it and if you look at that little a piece of whatever it is haha you that is some of the most valuable real estate in the world I mean that is just Fifth Avenue will never come close to that I mean it is you've got you've got hundreds and hundreds of millions of people with loads of buying power and able to do business or learn information or whatever it may be and then and it's part of their habit of living I mean they spend hours a day and it does all kinds of things for them so that that real estate is worth a fortune and it's nice to have it added to as they sell new phones and of course a lot of our replacement phones but that they're adding to the hundreds and hundreds of millions of consumers they're never going to get the fifth or they're never it and and you weren't dispensable part of their lives I mean it's it's an extraordinary product so you don't even look at it like a tech analyst would or like a tech company for that matter I look at iPad all you mean isn't and just in terms of how you value this is well other products well they they've got to keep having the product that they're this huge clientele regards is indispensable so they it's got to be the best thing that they can tell us the one when airplanes will arrive or you know whatever it may be what the weather will be what stocks are doing you know million play games whatever it may be and that's important that their replacement products are looked at as super desirable but one of the things that I do to understand was we have a very large retailing operation Nebraska Furniture Mart and if people went in to buy the latest iPhone or whatever it might be for some reason we didn't have it you couldn't sell them anything else yeah well they're 1x door which we didn't want them to do where they they came back but I mean it was it it wasn't an alternative and when you have a product that is that personal that valuable and you know they talked about their iPhone 10 costing $1,000 in that lot of my I have a plane that costs me a lot maybe a million dollars a year or something of the sort if I used the iPhone I used an iPad a lot if I use the iPhone like all my friends do I would rather give up the plane which is a million or billion a happier for something cost a thousand bucks it may be that the iPhone was an enormous lee under price now it's got competition so you can't push the price but in terms of its utility to people and what they get for $1,000 someplace else you can have a dinner party here this is and what it does for you it's incredible you mentioned airplanes and Airlines and I just wonder are the airline stocks that you also still find attractive have you been adding to your positions well we can't add what I mean technically we couldn't but I don't want to go above 10% except in rare circumstances of the security so we own nine and a fraction percent of the four largest and I actually have to trim them just a little if they're repurchasing chairs to stay under 10% if I could buy 20 percent I would have been happy to buy 20 percent but so we we've got about what we could handle well let me ask you a little bit about the news of the day Campbell's came out with its own business initiatives a strategic initiative oh so you saw that they're selling off a couple of Units the fresh foods in the International does that make it more attractive or less attractive as a buying opportunity for something that could get wrapped in potentially to Kraft Heinz well I don't I don't know that it changes the picture a lot I mean presumably they're gonna get fair value for that so it they would be calculated and then by any acquire as being worth X now it may be it may or may not be tax efficient I don't know the tax basis on those assets but if it if they have a low tax basis on those assets then it actually decreases value a little bit for another buyer because you've you've given some of the government in the process but I don't think I don't think in terms of any other company looking at it for acquisition they're probably selling the assets that those companies would have particularly looking for I think but I don't I don't know Campbell that well you saying you don't know it that well makes me think that you haven't been looking at over considering it as a purchase because there Dan Loeb would like to see somebody buy it and my question is when Berkshire be interested with Kraft Heinz be interested well Berkshire certainly wouldn't be but but that's partly because we own craft I'm still we wouldn't do any but I think it's very hard to offer a significant premium for a package whose company and have it make financial sense they package good business makes high returns on tangible assets than it has but if there's a tougher business than it was ten years ago and the stocks are higher they were 10 years ago so hey we back in the 80s we were the largest shareholder of general Fu's I've always liked brands and they're very good brands but in terms of the Battle of the retailer's versus the brands and then and the willingness of people to change their habits probably have them higher propensity for that than twenty or thirty years ago so branded goods Brenda packaged goods art a very very very good business in terms of return on tangible assets but they're not a sensational business in terms of where you can be five or ten years from now let me ask you about some news that Berkshire made a little over a month ago I'm not sure it received quite the attention that it should have you you said that you were changing your views on buying back Berkshire shares for a long time you've said that if it got above 120 percent of Book value you would buy it back that created a floor for the stock now you say that you're throwing that out the window if you and Charlie look at it and you and Charlie Munger and agree on it I think it's worth it you'll you'll buy back stock have you bought back any stock since then we've bought back a little yeah and and and we tie it now to intrinsic business value which we should have done all along but for a while Book value was a good proxy of her it didn't fully describe intrinsic beauty about you but it tracked it and it was a reasonable proxy and it's gotten to have less and less importance as we move to operating businesses from investments so so what really counts is what are the business is worth along with the securities we own and if it's at a discount to that figure Charlie and I will will buy and and we bought some Charlie talk about it well we don't have to talk very awesome because they yeah if it's so close we have to talk every time it moves one percent it isn't worth buying itself there should be a margin of error in our calculation so we don't we never talked day to day or week to week on it but but I know that what's it in his mind I know what's in mine we're totally in sync and we need a big enough discount so we're buying it at what we know is a price where the continuing shareholders are going to be better off because we we bought it we're running business for the people who are going to stay not the ones that are going to leave about a week and a half ago or just about a week ago I spoke with Brian Cornell he's the CEO at Target and he said that in his career he's never seen a better environment for the consumer that things seem to be firing on all cylinders I just wonder what you see when it comes to the economy what you see when it comes to the consumer well the economy really since the fall of 2009 has progressively gotten better but it started from of very low base its it started from panic and we've now had nine but very soon we've got nine full years of improvement in business I mean quarter by quarter now sometimes it looks like one percent or one hundred percent sometimes two and a half now it looks even better than that but business is good across the more businesses business is good it was good two years ago it keeps getting better but the American public the American public household wealth is over a hundred trillion dollars and two hundred and fifty years ago you know it's an island worth nothing there wasn't anything here I mean 24 bucks for viewit but the economy is firing on all cylinders one issue that people have worried about is what's happening with trade and tariffs have you seen any impact on Berkshires businesses or higher costs associated with with any tariffs that have got yeah yeah there are feel definitely and then we buy steel I mean at my tech are we buying all the bottle places and we are seeing some effects from that and we're seeing some effects from ventilation we've seen more in the way of cost increases in the last year if you go across all of our businesses but particularly building materials are what we saw paint I mean the the can it comes and that is a lot more expensive than it was a year ago how much of the inflation is directly tied to the tariffs and how much is just from an improved economy and and inflation you would expect to creep there I can't tell you exactly yea then some of them are kicking well lose Brent we you know there it pops up in different places III haven't really done that but I bet I was seeing it in raw materials well before that the terrorist situation came up but then the tariff situation will aggravate it significantly let's just talk about that if you are seeing price increases coming through that that may lead you to the conclusion that you think the Fed should raise rates or continue to raise rates as they've been doing the president Donald Trump tweeted out and talked in an interview about how he doesn't like to see the Fed raising rates what do you think about that Joe I think Jay Powell is a terrific Jeremy the Fed unknown I don't know well but I'd live I've known em I know people he worked with and I've listened to what he's had to say so I love the fact Jay Paul was chairman of that and and I he will do the right thing as he he gets a lot more figures in that I do I may get him a little faster on some things that the Fed they may work their way through but he he will see and he'll he'll do what in his judgment is best for the American economy over time there's no question about that and and maybe you'll make mistakes I know I'll make mistakes but but he he knows what his job is and he'll do it the president also tweeted about another initiative and I just wondered what you thought about it he said that after speaking with Indra Nooyi we later found out that she was the one who talked to him that he would like to do something that he thinks will help American business that's to say stop reporting every quarter maybe do it on a six-month basis what do you think of that idea because you have focused on long-term ism yeah Jamie Dimon and I came out wow back but I've always focused on the idea that hey I like to read quarterly report as an investor and we've got a couple hundred billion dollars where they're common stocks so I I like to get get those quarterly reports I do not like guidance and I think the guidance leads to lots of bad things that I've seen that lead to lots of bad things I don't think quarterly reporting itself it's when you get into promising people what you're going to do every quarter because I can't promise it what's going to happen you know we're in the we're in the hurricane season Helen you could change our earnings dramatically put the storm or something of the sort so I I think I think it's a very bad practice to being in the game of earnings guidance and it is a game I mean you know people play it as a game and then people adjust to numbers and all that but I like to get the figures quarterly and I don't I hope that stays I don't know if you follow Twitter very closely my expectation is that you don't about that there was a fake Twitter account a fake Warren Buffett Twitter account that went from 20,000 followers to 200,000 followers in 24 hours by tweeting out all kinds of pithy sort of sound advice things that said folks these sayings that sounded like they could have come from you why don't you tweet more often well I just don't see a reason I put on any report and I do not have a daily view on things and and and maybe have got a guy in this in this copycat or imitator maybe he's putting up better stuff than I went if he puts on it up good advice all thank credit for it we have seen some CEOs who to tweet very frequently including Elon Musk yeah he's certainly somebody who's tweeted a lot what do you think about people who do tweet oh I don't think it was helped a lot no I I think it's pretty well it'd be particularly dangerous to certain commenting on Berkshire daily which I never would do with you but no I other things than tweet I mean I'm not that desperate for somebody to hear my opinion on a warrant it's your your birthday today your 88th birthday and we want to wish you a happy birthday in fact we have something that we've ordered up the chefs here at Smith the Lewinsky put together just to celebrate your eighth birthday this year they went out of their way to focus on the koch holdings it's your fifth largest holdings happy birthday cake well it's terrific I just wanted to talk to you about an 88 you know you there's probably not a lot of new tricks that you can get taught but I know that even though you don't have a smartphone you do have an iPad I have an iPad I use a lot what do you do with it well I keep it around on my desk during the day and if I want to check anything in the financial markets I'd know that's an easy very easy way to do it but I look up things I mean it's what I do with a computer at all and a computer computers are mostly useful to me and the iPad is you know the one I have in the office and in effect did you ever listen to any podcast you ever follow anybody else what other kinds of things hey I listen to a podcast from my friend Todd at Tom Murphy Thursday but my podcasts are normally you know they take a while I can read faster than I can listen to one but but I recommend that it was done with David Novak it's the 28th and minute podcast and anytime you get to listen to Tom Murphy I think it's serving but generally I don't because of the time element hey wait what did you learn from Tom and Murphy in the podcast well I I've learned I've been learning from her since I met him in nineteen sixty eight or nine I mean I very first time I met him I'd learn and Tom Tom Murphy like Charlie Munger is maybe a better person and I would otherwise be I mean that's the only gift you can give to somebody and tomber if he's given that to me and and then Charlie Munger's giving it to me my dad earlier my wives and so on but but he's a human being that if you study mind just talking about business but just as human being and you want to have the right heroes and I've had the right arrows and Tom Murphy is one of them Tom Murphy's from cap cities/abc warren happy birthday thank you for spending time with us today and good luck with the lunch time thank you and I may I may need a second helping actually a little skimpy on the coke there but guys we'll send it back to you in the studio Carl thank you

Channel: CNBC

Views: 381,052

Keywords: CNBC, business news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, financial news, Stock market news, stocks, warren buffett, buffett, warren buffett cnbc, warren buffett letter 2018, warren buffett net worth, warren buffett worth, warren buffett stock

Id: 9kke_CGNpFE

Length: 22min 2sec (1322 seconds)

Published: Thu Aug 30 2018