ウィスパリング同時通訳研究会コミュのCNBC's full interview with Berkshire Hathaway CEO Warre Part 1n Buffett

We are here in Omaha, Nebraska this morning with Warren Buffett, the chairman and CEO of Berkshire Hathaway. He has just released his 55th annual shareholder letter to the shareholders over this weekend. And this is actually the 13th year that we are now in Omaha talking to him after that letter. This is a show that we call ask Warren so the people can write in their own questions to Mr. Buffett after they’ve read that shareholder’s letter. But obviously this morning given the news there are a lot of other questions that people have concerning the stock market. Let’s jump right into it with Mr. Buffett who is here with us right now. And-- Warren, thank you for being here today.

WARREN BUFFETT: Oh thanks for having me.

BECKY QUICK: It’s good to see you. I wanna talk about the letter-- obviously one of the things that you touch on the level-- on the letter is when people should be buying stocks. We’re gonna dig into a lot of it. But when you’re looking at the futures down about 818 points this morning, I think probably the first thing viewers wanna hear from you are your thoughts on what’s happening with the Coronavirus, if this is a reason to panic and if you were worried about this.

WARREN BUFFETT: Well, I-- don’t know if I have any special thoughts beyond the news on the Coronavirus. The very first day I bought stocks was March 12th, 1941 ’42. And-- the stocks were down about 2% that day as it turned out. Unfortunately I bought in the morning. So when I came home in the evening and my dad told me the execution price it was down 2%. If you’re buying a business-- and-- that’s what stocks are, businesses, in fact, people would be better off if they say, “I bought a business today,” not a stock today because that gives you a different perspective on it than presumably good and buy a farm, if you buy an apartment, a house, if you buy a business you’re gonna own it for ten or 20 or 30 years. And the real question is is has the ten-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours? And we’re gonna-- you’ll notice many of the businesses we own-- partially own, American Express, we’ve owned it for 20 years, Coca-Cola, we’ve owned it for 40 years-- but those are businesses. And—you don’t buy or sell your business based on-- on-- today’s headlines. And-- if it gives you a chance to buy something that you like and you can buy it even cheaper then it’s-- you’re in good luck basically.

BECKY QUICK: Although there are a lotta people who look at the market and say, “Look, I wanna buy but I don’t wanna buy when the market’s sitting at new highs, when it’s been hitting new records every day. Maybe it’s off 800 points this morning but maybe there’s more of a decline to come because the effect of the Coronavirus is going to be an impact on the global economy.” IMF said that over the weekend. You are going to see weakness as not only China but other countries try and address this. You’re right, it may not change things over the five or ten-year span of things. But if I think I can buy something for potentially 10% cheaper, maybe more than that if I wait a week or a month, maybe that’s what I’m sitting around--

WARREN BUFFETT: Well, if you think that then you gotta-- you’re gonna get fabulously rich if you’re right. All you have to do is just keeping buying in ten-day intervals and keep making your ten-day prediction. If I knew what the market was gonna do obviously. But you-- don’t-- I don’t think anybody knows what the market’s gonna do. I think you know-- do know whether you’re making an intelligent purchase at a given price. Everybody when they buy a stock, if you’re gonna buy, say, General Motors that has a billion-- 400 million shares out, you should be able to take a yellow pad like-- there and on one page say-- let’s say it’s selling for 30. It isn’t selling that low but that’d be $42 billion. You should say, “I am buying the General Motors company for $42 billion because--” and you should get it on a piece of paper. And then if you wanna have a separate piece of paper that says, “I think I know what the stock market’s gonna do so I know whether it’ll be higher or lower in a week,” but you don’t. You don’t have that--
BECKY QUICK: You don’t but if I worry that the economy is gonna slow down, not just for the quarter but for the year that would impact how many cars I think they might be able to sell or even produce.

WARREN BUFFETT: I guarantee you cars are gonna slow down some day. They-- and-- in 1932 General Motors had 19,000 dealers. That’s more than all the auto dealers in the United States today. There are only 125 million people. But they had 19,000 dealers. They produced-- or sold and-- there was one month I think when they sold less 1/10 of a car or right at a 1/10 of a car per dealer. That was a terrific time to buy General Motors. And-- forget about the market, if you can put a good market, you know, you don’t even have to read balance sheets. You don’t-- you don’t even need-- you don’t even read any-- you certainly can’t predict the market by reading the daily newspaper. That is for sure. And you really can’t-- you certainly can’t predict the market by listening to me. But you’re buying businesses. And if you plan to buy a local service station yesterday and it was closing today I don’t think you’d tear your hair out or anything like that. You’d have already looked at it where it was located, the contract that they had with the suppliers and made a decision on competition. People-- because they can make decisions every second in stocks, whereas they can’t with farms, they think an investment in stocks is different than an investment in a business or an investment in a farm or investment in an apartment house. But it isn’t. If--- you get your money’s worth in terms of future earning power over the next ten or 20 or 30 years you’re gonna have made a good investment. And you can’t pick them from day to day. If you can do that you can, well, I haven’t met anybody yet that-- that knows how to do it.

BECKY QUICK: You-- made a point of that in a letter this year where you-- highlighted a book that was written by Edgar Lawrence Smith back in 1924. And you said until he came along nobody really realized the compound interest effect of buying stocks. Not just buying businesses but buying stocks themselves.

WARREN BUFFETT: Edgar Lawrence Smith changed the world with that book. And people have forgotten all about it now. Although in the 1920s it became more and more gospel as the boom went on. But Edgar Lawrence Smith set out, “I’d like to write a book on bonds versus stocks.” And he said-- he went in with the idea that bonds would be a better investment in times of deflation and stocks would be a better-- investment in times of inflation. And the first line of his book was to say that he’d been wrong. But he had enough sense to look at his evidence. And, I mean, I think Darwin said if you found evidence that was contrary to what you already believed write it down in 30 minutes or your mind will just block it out. I mean, people have a great resistance to new evidence. And he said, “If a stock yields 4% a bond yields 4%,” which is what he was talking about then, “The stock was going to outperform the bonds because there were retained earnings that we’re building beyond that yield.” And that’s-- that has been true for a long, long time but nobody paid any attention to it. We don’t get rich on our dividends that we receive. While we happy to receive them. We get rich on-- the fact that the retained earnings are used to build new earning power, repurchase-- shares which increases your ownership in the company. And- Berkshire has retained earnings ever since we started. That’s the only reason Berkshire is worth a lot more as we retain earnings.

BECKY QUICK: That-- led Keynes to actually say that this was an important book. People paid attention to it. But you’re right, it added to the frenzy that built up to 1929.

WARREN BUFFETT: Well, that is true because you can get-- an old boss Ben Graham told me very early on, “You can get in more trouble with a good idea than a bad idea,” because the good idea works. I mean, it’s a good idea to buy a home, for example. And then people go crazy sometimes. A good idea works and it works and it works. Stocks work out better than bonds most of the time. And after a while, people forget that there were some other limiting conditions. With Edgar Lawrence Smith’s book it was that when bonds yield the same as stocks, which was the case then, that stocks are gonna outperform because they have this retained earnings. So stocks started going up in the ’20s. And all of a sudden they were selling at five or six times the prices as when he bought the book. And the original correct-- perception on his part had experienced changing conditions. But people just looked-- they-- they got their confirmations for the stock price. And that’s what happens in bull markets. People-- start out thinking stocks are cheap and then they start thinking stocks have gone up. And-- a stock can be a good buy or a bad buy. A bond can be a good buy or a bad buy. It depends on price.

BECKY QUICK: And-- but that leads us to today. I mean, if his premise was that stocks are always going to be a better-- a better investment than bonds that’s kinda what you hear today which we’ve been hearing for a while is TINA, there is no alternative. Right? You have to buy stocks because bond yields are so low because interest rates are so low.

WARREN BUFFETT: Well, if you look at the present situation, we’ve talked about this before, that you get more for your money in stocks than bonds. That doesn’t have to be the case. I mean-- but it’s usually been in the case in America. Very usually been the case. And-- if you buy a 30-year bond today with yield 2% you’re paying 50 times earnings for an investment where the earnings can’t go up for 30 years. Now if somebody said to you, “I wanna sell you a stock that’s at 50 times earnings. The earnings can’t go up for 30 years,” you’d say that doesn’t sound very good. Stocks are way better than 30-year bonds. I mean, it’s--that’s clear. And--that’s one of the alternatives people h-- people really have three basic alternatives, short-term cash which is an option of doing something later, long-time bonds or-- long-term stocks. And stocks are cheaper than bonds.

BECKY QUICK: Charlie said recently-- Charlie Munger, vice chairman at Berkshire Hathaway had his daily journal meeting just a couple weeks ago. And at that meeting he said that there’s a lot of wretched excess out there and that there’s a lot of trouble coming as a result. Do you agree with that?

WARREN BUFFETT: There’s always trouble coming. Yeah, there was trouble coming in 1942 when I bought that first stock. All kinds of trouble. Phillipines were gonna fall pretty soon. there’s all kinds of trouble in 1949. There was trouble-- certainly trouble in 2008 when I wrote an article for The New York Times. I said, “Trouble is coming.” But I said, “Buy stocks.”

BECKY QUICK: Would you repeat that this time, if trouble’s coming would you still say buy stocks right now?

WARREN BUFFETT: I would say buy stocks if you get enough for your money. You know, we buy a few stocks. But we don’t look at-- we’re not buying the stock market. We’re saying I am buying-- say American Express. We own American Express. There’s 815 million shares out. And sells at-- this morning it was $126 or something like that. So it’s selling for roughly $100 billion. Now the real question is whether the company’s worth or more less than $100 billion. It isn’t what the stock is gonna do tomorrow or next week or next month.

BECKY QUICK: You said-- just a few minutes ago when we asked you on worldwide exchange, right now Berkshire Hathaway is a net buyer of stocks. You are in a net buying position?

WARREN BUFFETT: We’ve been a net buyer of stocks-- or I’ve b-- actually been a personal net buyer of stocks ever since I was 11, every year. And-- there’s been 15 American presidents in my lifetime, more than 1/3. I’ve lived under 1/3 of the I didn’t buy stocks under Hoover. I was only about six months old then. But there’ve been seven Republicans after that and seven Democrats. I bought stocks under every one of ’em. Now I haven’t bought stocks every day. There’ve been a few times I’ve bought stocks where-- were really quite high. And I’ve even written an article once or twice. But that’s very seldom.

BECKY QUICK: But you wrapped up your partnership at one point too.
WARREN BUFFETT: I wrapped up my partnership once because of that.
BECKY QUICK: Because you thought it was too expensive.
WARREN BUFFETT: Yeah.
BECKY QUICK: Okay. But this is not a time like that?
WARREN BUFFETT: We own $240 billion worth of stocks now. We look at that as $240 billion worth of businesses-- that we own parts of. But-- I love owning those businesses.
BECKY QUICK: You’ve also got more than $125 billion in cash sitting around.
WARREN BUFFETT: Yeah, well, that’s-- we’d like to buy more businesses.

BECKY QUICK: All right, we’re gonna talk more about that in just a little bit. When we come back we have much more from Warren Buffett. Right now though I’ll send it back to Joe and Andrew. Guys, back over.
JOE KERNEN: All right, thanks, Becky. Much more to come-- from The Oracle.

BECKY QUICK: Good morning, everybody. And welcome back to Squawk Box here on CNBC. I’m Becky Quick, I’m live in Omaha with Warren Buffett, the chairman and CEO of Berkshire Hathaway. He’s just released his 55th annual letter to shareholders over this weekend. We’ve been taking questions from you. We’ll be getting some of those questions in through this morning. We are here, Warren, with you at Berkshire Hathaway’s headquarters building. This is upstairs in the room that’s called the cloud room. And this is a room where you often take students, kinda talk to them about questions they have when they come to visit you. You also do some other things up here too, other presentations.

WARREN BUFFETT: Yeah, I-- have students here for dozens of years. And-- for many years, 40 schools would come in. They’d come in groups of eight-- at-- five days I’d spend-- a year. And they-- come from all over the world. We have them from Peru, we have them from China, we have from Israel. And-- we have a good time obviously. Ag-- I’ve given it up now. I-- but I-- started teaching when I was 21. And I-- when I got to about 88 I thought I’ll take a rest.

BECKY QUICK: Well, there are a lotta questions that are coming in from viewers that have been hitting here today. They’re waking up this morning, looking at the stock market indicated down by almost 800 points for the DOW. We’re actually off our worst levels of the morning which is something to say when you’re still looking at the DOW down by about 786 points. But people have a lotta questions about the economy. They’re wondering what’s happening right now, particularly with the Coronavirus out there. You have a lotta economic data at your fingertips because not only are the many businesses that Berkshire owns but the businesses you own pieces in. What-- are you seeing right now around the globe?

WARREN BUFFETT: Well, it-- affects various businesses. I would say that I received commentary-- I get some commentary monthly with-- from-- from almost all of the companies. And-- a good many of them had some comment about how it was affecting them and how it was affecting them at-- that time I’m sure it’s sure it’s accentuated. But they’ve been affected by-- they were affected by tariffs, they’re affected by taxes, they’re affected by-- the most thing is they’re affected by competitors and supply and demand over time. And I don’t have the faintest idea what our businesses will be doing six months from now or 12 months from now. I do think that not only our businesses but American business generally will be doing fabulously better 30 years from now or 20 years from now. And the-- long-term is very-- in my view is very easy to predict in the general way. But an important way. I don’t think there’s any way to predict what the stock market will do ten minutes from now, ten days from now or ten months from now. So I work on what I think I-- I’m able to do. And as desirable as it might be to know what was gonna happen ten minutes from now that’s just-- not something I’ll ever be able to master. So fortunately I can come to a pretty firm conclusion that 20 or 30 years from now American business and probably all over the world will be far better than it is now.

BECKY QUICK: What are the momentary implications that you’ve seen from Coronavirus? What’s an example of the business--

WARREN BUFFETT: Well, an example-- is that we have maybe 1,000 Dairy Queen-- franchises in-- China here. And they’re just treat only, so they’re-- the old type of-- food. But-- a great number of them were closed. But the ones that were open weren’t doing any business to speak of. And-- Apple is-- I mean, a much bigger holding is Apple. We own 5.6% of Apple. And-- the company came out and said that it’s affecting not only its stores but all kinds of things, supply chain and I find that certain of our companies have got supply chain arrangements that are being affected that I didn’t even know I had those.
BECKY QUICK: Like what?

WARREN BUFFETT: Well, I got one-- from John Mandal the other day, for example, you wouldn’t normally think of them as having a big supply chain, but Shaw Carpets or you name it. I’ll guarantee you that a very significant percentage of our businesses one way are affected by this. But they’re being affected by a lot of other things too. And the real question is where are those businesses gonna be in five or ten years. They’ll have ups and downs. Our-- candy business is a wonderful business. But it loses money seven months out of the year. But the nice thing is Christmas comes every year.

BECKY QUICK: When you look at the economy and how things were kind of chugging along, let’s say, beginning of this year, when-- first things-- first picked up, how would you gauge the U.S. economy at that point?

WARREN BUFFETT: Well, it-- it’s-- strong but a little softer than it was six months ago. But that’s over a broad range of-- you look at car holdings-- railcar holdings, that-- that’s moving goods around. And there again, that was affected bythe tariffs too because people front-ended purchases, all kinds of things, all-- a lotta variables. But-- business is down. And-- but it’s down from a very good level. So I would say that looking at our 70 businesses-- and that actually-- they represent hundreds-- in addition-- they’re a little softer. And on the other hand I was out with the fellows from the Nebraska Furniture Mart just Saturday night and--their business was up quite a bit in February. But that’s because weather was good. So you have a lot of variables that hit.