Transcription
We are sitting down right now with Warren Buffett, uh, the chairman of of Berkshire Hathaway, who for the first time in 60 years has been watching all of this from the audience instead of being on stage. And, you know, last year at this time, Warren, you surprised everyone with the announcement that you were stepping down as CEO. Fast forward a year and here we are. What do you think?
>> Well, I think it's all working. It's all working. I It It isn't our ideal uh surrounding area. uh or environment I should say uh in terms of deploying cash for Bergkshire uh but in terms of how we got the right management, we got the right arrangement and uh you know we can pick our spots and and and uh nobody can tell us what to do exactly and and uh so sometimes we're doing nothing But other other times we get quite active.
I mean >> you know Ajet spent some time on the stage today talking about how one of his keys is to do nothing when it comes to insurance when it comes to writing insurance which is the same thing that you have always talked about with whether to invest or not.
>> Yeah. The world is full of people that are offering you things to do and then the question is to find find one that you know makes sense. And there may be 20 that out there that make sense that you don't understand and you just leave them alone.
>> You you said that the world or the surrounding environment is not ideal. And I guess that points to the idea that there's almost $400 billion in cash on hand. Although Greg took some pains to show it's really more like $380 billion in cash on hand.
>> But that there's a lot of cash on hand. And you're still active in managing the portfolio too and looking at stocks. You're looking around and you don't see a lot that you want to invest in. Well, then we don't do anything. I mean, we've been in the of the 60 years I've been in the business, uh, you know, there probably five of them been really juicy, you know, and, uh, I think it was Tom Watson senior of IBM that, uh, said they asked him the reason why IBM had been so successful or something like that. And he said, "I'm smart of spots and I stay around those spots." And that's that's the whole thing. And IBM was in three different businesses including time clocks and a couple and two of the three turned out to be no good. But they so they just focused on the one.
>> What what is it when you look around that it's just prices are too high at this point? I I would imagine there Greg said this from the stage too. There are businesses that you like just >> and I would say I understand fewer of the businesses as a percentage of the whole than I did 10 years ago. I have not learned uh new industries uh for some years, you know, and and so I don't kid myself on that. I'm I'm not going to learn. I'm not going to have an edge on, you know, a whole bunch of younger people that have actually grown up with it, used the product, seen things, but that uh well, as I mentioned, you know, you don't have to understand too many of them like Apple,
>> but looking around, um let's just get some macro thoughts on this because I don't know that this is something that that Greg is going to comment on per se. Just looking at the macro stock market environment, what does this feel like to you? Is does it feel expensive? Does it feel like there are opportunities in some
>> Well, it feels like, you know, I' I've compared it the markets to a church with a casino attached and and people can move between the church and casino and and I always said there are more people in the church and more people in the casino. But the casino's gotten very attractive to people. You know, if you're buying one day options or selling them. I mean, that is uh that's not investing. It's not speculating. It's gambling, you know, just totally. There's nobody that can explain why they're buying an option for one day unless they may maybe maybe the fellow that that uh you know made the $400 and some thousand dollars from knowing when we were going into Venezuela could do it. But I mean that's pretty and the quantity of those things is just incredible. So we've never had people in a more gambling mood than now. But that doesn't mean that investing is terrible. That it does mean that uh that prices for an awful lot of things will look very silly. I mean they, you know, they had a squeeze and and then in and Avis of all things. Well, has been around for 50 years, but just this past week uh uh and uh we have lots more regulation and everything now, but uh but people spend their time figuring out how to get around the rules rather than follow the rules. That's just a challenge.
The type of investor you are though is is you laid it out yourself. In the 60 years you've been doing this in the business, you've had maybe five juicy years. I guess that means you're always looking for the next juicy year. What do you think it would take to make a juicy year or a juicy opportunity for you?
>> It's a phone call in many in some cases. You know, we we bought a business last year. It wasn't It wasn't big enough to be mean meaningful. We got a letter.
>> Bell Labs.
>> Yeah. Bell Labs. And no. And And uh you know, and and and sometimes there's more zeros attached to them than others. And and we're big enough to handle anything and we can make decisions faster than anybody. And our word is good. uh it uh there's an awful lot of people that they're when they they're in the business of reselling something or you know it's uh and there's it's a lot better if you're a good salesperson. There's no reason to be selling vacuum cleaners or you know as we'll sell stock you'll make way more money. It's where the money is.
>> Yeah.
>> And there's and there's more money around than ever. And it uh you know,
>> but the best opportunities have probably come when the macro environment needs to
>> most likely well the most likely time to buy things is when nobody else will answer their phones. You know, everybody else talks about their wonderful trading departments and everything. Just try them out. Sometime when uh markets are collapsing, they don't answer the phones.
>> Right. Right.
>> And and if they do, the bids are subject and the offers are subject and the spread is wide and then and they'll use the information they get from you about what you want to do to go out and kill you some other way. I mean, it it's it's uh it's really like going to a slaughter house. I mean, you don't you don't feel like eating hot dogs for a while.
I guess what I'm trying to get at is do you see the circumstances building up anywhere that could lead to a time like that again? Any any sort of panic in the market?
>> Where do you see them?
>> Well, if you saw them as they wouldn't happen.
>> Okay.
>> I mean, you've got all kind you don't worry about what what people are talking about can happen. It's it's something comes out of the blue. Huh. But some something will come out of the blue.
>> Yeah. I mean, a nuclear bomb could come out of the blue, you know.
>> Well, let's knock on wood on that.
>> Well, well, I it doesn't do any good to knock on wood. That's it. It it that's the point.
>> Yeah.
>> It, you know, was the arch duke getting shot, you know, in 1914 or something like that for World War uh one. And I'm it just take everything in life and it if it if it's something people are talking about and thinking about it's not going to happen.
>> Yeah.
>> But there are things that can happen out of the blue. And actually that's particularly true to use that phraseiology now because the things that can come out of the sky that you know we don't know what can happen tomorrow. I don't like to talk that way to people whe whether it's you or anybody else. I mean, because uh you know whether it does you a lot of good to worry about that. I don't think it does do any good to worry about it. I think it's it's good to be cognizant of it but the worrying about it is terrible. I don't like to I don't like to even cause that belief with people. I don't like to go around
>> Yeah. Yeah, tell them the end is coming. The end is coming. Or something like that.
>> A friend told me yesterday he's recently started using the phrase, I don't fret, I don't worry. And that's probably a good way to go about life. But let let's talk about some of the issues that are out there right now. Um
>> inflation is up. That's an issue. So how does Bergkshire how does Bergkshire handle that with its businesses?
>> Well, we can't handle runaway inflation except not to be there in the way of it. And if you look at the number of countries that have had runaway inflation since World War II, you know, in my lifetime, it's very large, you know, it uh and uh once you create that, it it becomes a different world. uh you know, Germany obviously experienced it after World War I and but but but there are dozens and dozens of countries that have experienced it. And of course, you have you have countries that gone bankrupt like six or seven times. I mean, it's just amazing what people do. But uh in financial markets,
>> what about the inflation that we're dealing with right now, which is, you know, not excessive. was north of 3% at this point, but we're not even back at the levels we were during co 8 to 9%. So, what about just higher energy prices? How that works through the line and how you handle it?
>> Well, it came close before Vulker. I mean it was just it was cash is trash you know and and people were losing faith in the currency and they felt they could borrow and 12% to earn 6% on on farming or something like that and they they had huge farmers in this state Nebraska uh collapsed because they bought beyond the earning power or paid interest rates beyond the earning power just because they felt that that that uh the dollar was going to disappear and the the land wouldn't disappear. And I'm it's it's it's tragic for many people. And and uh and if you're the best doctor in town or the best lawyer in town, you'll always make money under any situation. The best the best TV personality. I mean, it's it's but uh what not having faith in the money does to a country it it turns it into something else.
>> Yeah.
>> And I you know I've always hope that you know US never does it but we are not immune from it happening. Uh we have a lot of control over whether rates may go up a half a point or down a half a point, but but we may have less control over whether they go up 50 points or you you've long been um a supporter of Jay Powell's.
>> Exactly.
>> He had his last FOMC meeting as chairman uh just this last week. He did say that he's going to be sticking around, staying on the Fed, staying in that position um for the foreseeable future in part because of the threats that he's faced. Um
>> I'll feel better when he's there uh than when he's not. I mean, it uh it uh you know I just I felt better when Boer was there but you that's economists aren't the best at this sort of thing read any old economics book from 1950 1970 that was that uh Paul Paul Samuelson who was a terrific guy and smart as hell uh he had the standard textbook for 25 years and if you looked up you know zero interest rates and year after year after year it was a 900page book and it wasn't an entry for it you know I mean it was the most important economic development I mean in terms of the impact it would have and everything during the lifetime of the students reading it but uh Uh,
>> it's what you don't think of that that does all the damage.
>> Yeah.
>> Let's talk a little bit about CEOs um in some of the Berkshire holdings. You mentioned Apple's uh Tim Cook and just the phenomenal job you think he's done.
>> Incredible.
>> Uh he's not the only one of your major holding CEOs who stepped down. James Quincy recently stepped down from Coca-Cola, too. And we just spoke with Vicky Halib who announced that she is retiring and stepping down from that position at accidental. Um part of what Greg's talked about is how stable that portfolio is is and these holdings are companies that he knows and managers that he that he knows. There's going to be some new managers in some of those major holdings coming in. Is that a problem?
>> Well, it was certainly a problem at Coca-Cola there for good many years when I was around the company. I mean, sure. It's it's uh and you have the most problems with with with a really good company because it'll it'll it'll it'll continue. I mean, if you're selling some product that people are buying every day, you can make the wrong decision for a long time. Yeah.
>> Uh uh but that's one of the problems with investing at uh uh Tim Cook I I I felt was very very good from the start and and our most of our managers uh are very good at the smaller problems. They they can't anticipate the the overwhelming problems. That's that's that's my job or now Greg's job.
>> Do you feel good about those holdings still? Have you met any of the new managers
>> of those businesses?
>> I haven't met the old managers
>> of the new business of the new CEOs that are coming in. Tim replacement
>> Enrique at Coca-Cola.
>> I certainly met the people that at at Bell Labs that we
>> Yeah. You know, and obviously I met Vick. He we made the deal and and so I I enjoy meeting the people and uh uh uh but you can make mistakes with people. I mean look at the divorce rate, you know, that's that's more important than whether you got the right CEO or anything else and and now you've got years of trial. I mean, back when I was young, you had to make the decision, you know, or you didn't have to make a decision. A good many people made the decision when they were 20 or 21 now
>> to get married.
>> Yeah. They got married. And
>> now they they they spent five years and they still make the same mistakes.
>> So, you think we're getting worse at our judgment?
>> Well, I don't know. Maybe that people behave differently before the marriage than after. Who knows exactly? Yeah,
>> I would say that almost everybody feels either their marriage is better or worse than they anticipated a month after they were married, but I don't know which.
>> Um, Warren, let's talk a little bit about deep fakes because the deep fake Warren that popped up early in this session was pretty good. Um, they had somebody standing up, you know, Greg was joking about it, but, you know, the first the first question went to a guy from Warren up in the rafters who lives in Omaha. Um, you've been concerned about some of these AI deep fakes and what that means for the world.
Yeah, I would I would be concerned if everybody was well actually the worst thing would be to that have a a really good imitator of any president that came along. I mean, just imagine. Well, yeah, we had that famous thing before way back in in New Jersey where they the Martians coming and everything like that.
>> War of the worlds with Orson Wells.
>> What you what you can do uh well, if you convince but people lend you money for it, they shouldn't you shouldn't be borrowing it. I mean, it's it's scary. And it's it's particularly scary when you have nine countries or so with the nuclear weapons and and people working on something even more. We haven't dealt with this. We don't know what's going to happen.
>> Yeah. Let's circle back to Bergkshire and the Bergkshire today. Um I think I was speaking with you yesterday or the day before and we were talking a little bit about Greg Ael and what a nice guy he is and he said
>> he's a terrific guy. You said something interesting to me though um about how you picked him and it wasn't because he was a nice guy. Why did you pick him?
>> Well, he's very very very smart about businesses. Incidentally, he's getting his Can Canadian I mean he's getting his American citizenship here very soon and he was going over with me all the things he had to learn about. And I've actually spent a little time in the past with groups of individuals. Of course, my wife did it too became an American citizenship, American citizen, and the things they have to learn about the Constitution and all these and they're usually so proud when they become American citizens. And I think I I think I detected Greg, but I mean, you know, as successful he's been and everything else, I mean, he is it it means something to him to become an American citizen. And uh you know he sits there with this this young son you know and son knows more about some of the answers to the questions you know that he may get asked or something about becoming a citizen. It's it's really interesting and where else does that happen in the world? I mean what people you know that and America is special and and uh it's a miracle uh what America's accomplished. I mean it's just an absolute miracle and yet the miracle the division of the of of the output and everything is about as inequitable as it you can come up with while at the same time it's got these great attractions. There is some secret sauce. I've never been able to define it precisely, but that uh when you run a country for 200 and some years and people want to come here every year, I mean there's there's really something about it. And when Greg Ael is very, you know, is looking forward to becoming an American citizen, that means something to him. And you can't buy that at any place or package it or, you know, won't work for a Madison Avenue approach, you know, and you know, be an American or something like that. But that that that feeling just goes in my 95 years. I've I've seen it, you know, it's time after time. So I felt I felt good when I Greg just volunteered that in the last day or two to me that he was he was up there for his final exams here pretty soon becoming a citizen.
>> I didn't realize he wasn't a dual citizen already. I knew he was Canadian, but I thought he had dual citizen.
>> He doesn't have a full whatever the complete citizenship requirement is. And and you can say, why does he care? I mean, he's gotten along fine without it here and everything. He still wants to be a citizen.
>> Yeah. 250 years we're celebrating our 250th anniversary. Um you pointed out that you've been around for 95 of them. You think we have the special sauce that that will continue in this country or what do we need to do to preserve that and make sure that it does continue?
>> We've got a special sauce there. That's a secret sauce. It's such a good secret that I don't know what exactly it it is. But I do know this that that anybody that has a choice would choose to be in born in America. I mean, you know, you can pick some very small little country. They're very happy that they're but is is there any other country that everybody's for couple hundred years has wanted to immigrate to? I mean it it uh and it attracted some terrible people, you know, too. But but uh it worked and they had the mafias from the different groups, not not just the Italian mafia, but all I mean it it wasn't that they were all we had some system for picking out the the wonderful people from some other countries, but it has it has worked. But it's work the extremes to which it works uh don't seem to belong to that kind of a society. I mean if you were drawing up dreams for the ideal society and you would have this kind of GDP per cap and everything you wouldn't design you wouldn't design the you wouldn't decide the inheritance of laws. you wouldn't I mean, you just do all kinds of things differently but somehow it's worked but that doesn't mean that we can't do better I mean at all.
You know, Warren, there are thousands of people shareholders and partners of yours for decades in some cases who are sitting out in this arena right now and I just wonder if there's a message you'd like to give to them um those been following you for yours and who've been partners of yours for years.
>> The number one rule I give them is just not give them the golden rule to others. I'm not a religious guy, but I mean nobody said it any better and and and in a couple thousand years than that, which may be why it's lasted a certain degree, too. I mean that uh you know more people are reading a 2,000-year-old book about how to behave than anything that anybody's coming up with lately. uh uh now it's got a lot of particularly old testaments got different kinds of stories to some extent but uh if the whole world lived by the golden rule it would be such a more wonderful society.
>> do unto others as you'd have them do unto you.
>> Yeah. And that's true for everything from parenthood to being a boss to being all I mean, just everything in life. And it doesn't cost you anything. In fact, it it it's reflected in better behavior toward you. So I mean, it's a very selfish sort of thing in in one sense, but I've never seen anybody that's unhappy that behaves that way. they uh uh and I've seen a lot of people
>> in a lot of different kinds of situations.
>> Warren, I want to thank you for taking this time to sit down with us today. Warren Buffett, the chairman of Berkshire Hathaway. Uh Greg Ael is going to be taking the stage in just a moment and you will see more from him in just a moment.