Warren Buffett reveals his investment strategy and mastering the market

Warren Buffett needs little introduction, he is the godfather of modern investing for almost 50 years, Buffett ran Berkshire Hathaway, which owned more than 60 companies such as Geico and Dairy Queen, plus minority stakes in Apple, Coca-Cola and many others, his eighty-two point five billion dollars. Fortune makes him the third richest person in the world and he has promised to give away almost everything. The Oracle of Omaha is here to talk about what shaped his investing

strategy

and how to dominate today's

market

. I'm Andy Serwer, welcome to a special edition. from Omaha Nebraska influencers, it's my pleasure to welcome Berkshire Hathaway CEO Warren Buffett Warren, welcome, thanks for coming on, so let's get started and talk a little bit about the economy and obviously we've had a good long term here, a long term and still.

Does that surprise you and what signs would he look for to see that things are calming down? Well, I look at a lot of numbers just in relation to our businesses. I like to receive numbers, but not like this, I am receiving reports. weekly in some businesses, uh, that, but that doesn't tell me what the economy will do in six months or three months, it tells me what's happening now with our businesses and it doesn't really make any difference in what I do. today in terms of buying stocks, we are buying businesses, which those numbers tell me are interesting, but they are not, they are not a guide to do, yes, if we buy businesses, we will be old forever, so we will improve your years bad between years it could be a disastrous year something here and we care a lot about the price we don't care about the next 12 months but are you surprised how long this economy has been expanding?

All kinds of things have surprised me. in the last ten years on the economy, I mean, I don't think I've read any economists who have talked about negative interest rates for long periods of time. I mean, if you go back and read Keynes or read Samuelson, you read anything that doesn't get into a negative rate environment. I think now there's still 11 trillion of public debt around the world that's at a negative rate, so we've never seen that before and we've never seen at least the conventional wisdom Otto this. It's the same period of long, growing deficits as the economy improves, extremely low interest rates, and really very little inflation, so something different is happening, but something different is happening all the time, and that's one of the reasons why. that economic predictions simply do not enter into our decisions.

Charlie Munger, my partner, you know, we've never made a decision based on a whim of economic prediction in 54 years, and we make business predictions about individual businesses that will put in overtime and we compare that to what we have to pay, but we've never done that. saying. Yes to something because we thought the economy would do well in the next year or two years and we never said no to anything because we were right in the middle of panic, even if the price was right, that's fine, so don't do it. If I don't pay much attention to the shady scientists, then I guess well, I don't pay any attention to them in the sense of a guide to doing whatever I do, it's entertainment.

I mean, you know, it's like going on a variety show or something, but I just don't do it. I don't know any economist that that's actually what makes businesses as successful or successful in stocks. Paul Samuelson didn't know he was a big shareholder, but you know they make educated guesses and even though there are so many variables, I mean, in the hard sciences, you know, you know, if an apple falls from a tree, that's going to change over the centuries. due to whatever or political development or 400 other variables that go into it, but when you get into economics, there are so many variables and the truth. is that you have to expect good times and bad times in business and if you were to buy a car dealership and you know where you live locally or a McDonald's franchise or something like that, you wouldn't try to time the purchase, you try to make the right purchase at the right price and you want be sure that you have a good business, but you wouldn't say, "I'm going to buy it" because the growth this year will be 3% instead of 2.8 percent or something is fair enough: you have more than a hundred billion dollars in cash, Berkshire has over 100 billion in cash and you say you always want this company to be a strength, so how much cash should a typical investor have in percentage terms does it depend?

In a personal situation, I have had this situation: if you are working and living off your paycheck week in and week out, you want to have a little cash or something and you certainly don't want to have a maxed out credit card or something, but if You know if your house is paid for, you don't have big living expenses, you have a portfolio of decent diversified businesses, we need cash so you can be more cash free than Berkshire. Yes, I have liabilities, you know, we have insurance claims, we could have hurricanes, you know what happened, all kinds of things, we could have to pay billions of dollars and I have over a million people who own stocks that are going up, They run the place, so we went through periods like that, but if I was retired, I would have stocks in a million dollar portfolio that would pay me 30 grand a year in dividends or something like that and my kids were growing up, the house was paid off. out of everything, but you know, I wouldn't worry too much about having a lot of cash, let's talk about Apple a little bit, everyone always wants to talk about animals, right, it's kind of a stock company, you have forty-five billion dollars .

Bet roughly how closely you follow the company. You know people are worried because they haven't really introduced any new products. If you have to follow our company closely, you shouldn't not really know that I made it. I mean, if you buy a business, you bought a farm, you know you go and look, you know every two weeks to see how high corn has gone up and you know you worry too much if someone says this is going to be a year of low prices. because their exports are being affected or something, you know, you buy a farm and you keep it because I have a farm that I bought in the 1980s and my son runs it, but I was there once, you know, I'm serious, no It won't grow faster if I go and look at it, you know, I can't encourage it, you know forever and I know there will be some years when prices will be good, prices won't be good, I know those years when returns will be better than others, what about the shape?

If it's just and I don't care about economic predictions or anything like that, I do care that over the years it's well taken care of in terms of crop rotation and I hope the yields increase. better what they generally have, in fact, that farm a hundred years ago, what about the timber that produced 30 bushels, maybe 35 bushels of corn per acre now, in a good year, you know it would be 200? I mean, we've really made progress in this country, that's one of the reasons commodity prices have moved so little since a couple hundred years ago is because we've gotten better and better at whether it's cotton or corn or soybeans it's all kinds of things and you and I have benefited from that so Apple is like a farm well it's a long term

investment

and if you owned the best car dealership in town, the best brand and had something good going, I wouldn't come every day and say you know how many people have come today or you know, I think interest rates are going up a little bit, maybe that will slow down our sales or Not anyway, you buy it knowing that there are 365 days in a year and that you will own it for 20 years.

So it's 70,300 days and you know things will be different from day to day and dear, you shouldn't buy the day to day things that are important, let's move on to talk about buybacks which is another hot topic. these days and they did quite a bit if you look at the annual report, you can see that between December 13th and December 24th it looks like you guys bought about two hundred and thirty-three million dollars worth of Berkshire, which was close to that particular stock. bottom of the

market

, how did you know what was going on in your mind?

If you only knew, it's not really a big purchase for us and now, at Berkshire, we'll just have a lot of excess cash, all the business needs are taken care of. fourteen billion dollars in plant property equipment last year, much more than appreciation, so we take care of the needs of the business, so we have excess cash and if we find

investment

s, we would love to do is find other companies to buy them, but if our shares If I think the shares and my partner Charlie Munger thinks that the shares are selling below the intrinsic market value, we will buy shares, so obviously it was at that time, well, we thought so, yes, but what is really intriguing is that this is when it goes down. a lot, I mean, when you buy our bills for 60 or 70 cents, which you periodically have the opportunity to do in stocks, then you know that you know, assuming you have the cash that you know, what you know, so that some surprise really I could get you out somehow, but if we have excess cash, we'll buy it as fast as we can, but at that point it would be more like a 2009 instead of just yeah, ember, yeah, but it's you.

You know if you and I own a McDonald's franchise together and it's worth a million dollars and you own 50% of it, you come to me and say I'll sell it for four thousand, you know I'll buy you out, you say, be suspicious. of that, but tomorrow, so we will continue with the buybacks. Senators Schumer and Sanders want the government to step in to sort of legislate when companies can do buybacks and then there was also a report recently about executives using insider trading, it looks like buyback times are coming, so our Buybacks are kind of a problem, well there will be some people who misbehave and respect whatever you do so they really wouldn't have much to do with buybacks.

I think buybacks are the degree to which they have been part of nefarious activities and I have watched them for many years and they are very close to zero, but that made me the throne of opportunity, but that article did not. I didn't follow the conclusion. I mean, you're distributing to shareholders essentially in Dubai dividends and presumably American companies should distribute money to their owners from time to time and we do, we do it through buybacks or we've done some and we don't do it through dividends, but most companies do it by having a dividend policy and then if they had, but it would be in the needs of the business and I think that if their shares are undervalued, it only makes sense for the government to tell companies when do it or at least impose conditions under which they cannot do it well. restrict yourself a little bit in terms of whether you're some general SEC rule if you have some kind of this is not the right word but manipulative activity or something like that in stocks, but no I don't think I don't think the government should decide its policy of dividends.

I don't even think they should direct their capital investments. They can make it attractive to make certain types of capital investments that they do with renewable energy, for example. I mean the government has an interest in encouraging certain developments in this country over time and they do, there is a special subsidy for oil depletion, you know, 50 years ago and so on, that was more political than government policy, but certainly renewables are a great example of that, but the idea of ​​deciding whether you have the right to return cash to shareholders and the way in which you do it, I don't think makes a lot of sense.

The 2020 election will be here before we know it and I know it. You had some good things to say about Mike Bloomberg, but it looks like he won't be running now. Yes, it's hard to win with just a billionaire's vote, but I admire Menorah. I wish he had applied. I want to be very clear about this. President Trump was a business executive, so two questions: Is a business executive the right kind of person to be president? What characteristics do you look for in a president he would support well? I think a business executive may be the right person, but no, I don't know.

I don't think that because they are a business you give them extra points and number one. I want a president who wakes up every morning and realizes the biggest threat to a country that has all kinds of things going on. weapons of mass destruction and that we live in a world where grassroots organizations and occasionally countries could have people who want to eliminate a large percentage of the American people or maybe other countries as well and who now have capabilities that have always Recently thought I could classify it like a chemical and nuclear biological, but I think you have to add the cybernetic, now you know that you have an evil genius somewhere who has crazy reasons, just like what happened with anthrax, you know who knows what motivates someone who starts sending . to them letters of anthrax and if you havesomeone who thinks it would be cool to send a false alarm to the Soviets and the Russians and the US that the other side was launching or something, you know, it's very, very dangerous.

The world is a wonderful world, but now it has dangers that began in August of 1945 and on January 9, Stein said, "You know, this changes everything in the world except how men think," so I want a president who has the same filter than all these others. Things are important, but protecting the country and reducing the chances of successful use of weapons of mass destruction against us is job number one and I think most of the presidents I've talked to are a couple of kumano along of the years and I really think they realize that they can get lost in the events of each day as they go.

And then beyond that, I want a president who has two goals with the economy: one is to make sure that there are wonderful mistakes that we have continued to lay more golden eggs and then I want a president who also feels that if the GDP is 60,000 dollars per capita in the United States, that no one should be left behind, we have a market system that works wonderfully and produces more, better goods and services year after year, I have done this throughout my life. Would you ever talk to a candidate and say, hey, what do you think?

About these three things, well, don't tell me what I want to hear, I want to hear what they say to the people who don't agree with them on the subject. I always like to ask a candidate, they usually tricked me somewhere, I know, but I'm saying? What are you? that's why most of your followers are against it, I know, I know you really believe in that and that's reading the proof, but I'm not sure that except under some kind of sodium pentathol there is a great actress, that's great, But that's the question you're asking. presidential candidates or presence that you would talk to him about if he really wanted to get it and then I was like oh, that's why Bernie Sanders was so successful. 90 percent of the people who voted for Bernie Sanders probably hadn't heard of him two years before, but they felt like they knew exactly what he would do, I mean, they were probably authentic and, if you asked him, you know for what he was for that most people might be against, I would tell you you know some questions about Kraft Heinz.

It was a mistake, but we'll find out over time, but in my opinion, we paid too much for Kraft, we didn't pay too much for Heinz, so when we started, it was originally a non-public partnership between us and but, in my opinion, we paid too much. by Kraft and there's not much you can do about it if you pay too much and secondly, there's always been a fight between the retailer and the brands, meaning if I have a terribly weak brand and I want to get into Walmart, I'm not going to being able to do it, you know, I mean, I offer all kinds of crazy concessions, you know, and I want to be at Walmart if I have some kind of super-packaged product, the bargain.

It's very different if you have something essential versus non-essential 10 years ago Costco tried to get rid of Coca-Cola. Costco has tremendous customer loyalty and you know, and their own Kirkland brand is a thirty-nine billion dollar brand now and they went from category to category and they just started in 1992, so they know the brands and they ended up coming back. to put Coca-Cola if it had been a royal crown. Cola had to put it back, so there is always that fight between the brands. I mean, and there always will be, but the retail network has been moving in your direction, particularly I think because of the Amazon revolution, first Walmart and then Walmart Walmart, yes, yes, but it has been accentuated.

I think we have a new retail environment now. I'm serious. It's like it's nighttime today, but it moves someone and the brands. People spend billions of dollars developing and sponsoring television shows or sponsoring radio shows in the old Campbell's soup. He was always there with Jack Benny or something, you know when I was. I was a kid and I was big and I built brands and people obviously like the product too, but people are more willing to change and it's harder, it's a bit of a different world than day and night. I mean, it was highly unlikely that you would keep changing. marks every day, but I was really surprised that Gillette lost position.

I mean, men don't like men, they don't like to experiment a lot. I move better by experimenting, but you know, if you were a kid, when you were a kid, the Gillette cavalcade of sports was. your friend and he brought you the Rose Bowl and the World Series and all those kinds of things that you didn't create, you would just shape it, you would love the rest of your life and you still do it to a large extent, but it's not exactly the same as before . Even about five years ago, when we were shopping for crafts, you mentioned Amazon as a game changer.

I have to ask you, you haven't bought the shares, you are a fan of Jeff Bezos, the list of the richest people in the United States appeared. He is the number. one, I think your friend Bill Gates is number two, you're number three, so you can see what he's done in countless ways and of course the question is how come you haven't bought from Amazon? Is there still time to buy? Would you still buy? I always admired Jeff, I mean, I met him about 20 years ago and I thought he was something special, but I didn't realize that you could go from the books to what happened there, no, I mean, he had a vision and the executed in an incredible way.

In some ways, something you wouldn't know, but there are a lot of games I miss. He would have lost me. You know, I would have missed Microsoft even if I had met Bill early or something. Those just aren't my games. Don't know. worrying about things I miss that are outside my circle of evaluation competence. I do. I miss things that are within my circle and that is a terrible mistake. Those are my biggest mistakes. You haven't seen them, but no. It is not. a mistake because I miss Netscape or something like that there I would say that maybe the 5% of the companies or the 10% of the companies that are most within an area of ​​my circle of competence there is something that I should be able to understand well So let me change the topic and ask them a little about leverage and corporate debt.

People are worried about the $22 trillion federal debt. Should we reduce, let's just say, the federal debt and how would we do it right if we are having a deficit approaching 5% when things are really good. You know, it's a new world and no one, not even the Republicans, are Democrats. You're particularly worried about that and we're not having much inflation. It's not supposed to happen, you know, but it's happening, which is why I say you don't really want to obsess over trying to do economic analysis because no one's good at it, you don't get rich doing that if you look. in the invention on that Forbes list, if it's listed the number of people from I've done it through economic analysis, I think you're almost as old as Shawn, okay, that's fair, um income inequality, wealth inequality, You have talked about the The Earned Income Tax Credit is something more than that, if we adjust the tax policy, it seems that at this moment it is going in the opposite direction, well, it is going in the opposite direction, but I think that I think that I think that the Tax Credit by Earned Income is the best way to put it. money in the pockets of people who don't fit well into the market system but who are perfectly decent citizens and who have contributed greatly to the success of someone like the one I had with Berkshire or something possible would not have happened without the United States that We have and if you go back 200 years and we're all working, 80 percent of us work on farms, the person who is best at working on that farm, whatever it is, is worth maybe twice as much as everyone else.

That's the worst thing, you know, I mean, that's the difference between super talent and no talent in the agricultural economy picking cotton or whatever. Now, if you're the best middleweight fighter in the world, you know you can make twenty or thirty million dollars and if you're just a good citizen, you raise nice kids who help the neighborhood and everything else, but you have no skills related to the market, you would be good at that farm stone and earn something comparable, but most of the people around you, but you don't get any of that as it becomes more and more specialized and will continue to become more specialized.

You want two things for that person, you want them to have a decent life, that is, to live in a country with 60,000 GDP per person, you want them to have a decent life and be able to. I also think you want them to have a feeling of accomplishment, so you wanted to have a job assuming they're not disabled in some way that you wanted to have a job, but minimum wage would be one way and you'd say, well, we'll make sure we don't. have. I'm using your pocket, but that has a lot of effects in disrupting the market system, they just need more. cash, they don't need a higher salary, they need more cash in their pocket and the government, in a relatively local place, comes to give them a decent, friendly life, but it is a life that works forty hours a week and has a couple of children and we are gone. in that direction and it is a kind of bipartisanship and you find both Republicans and Democrats.

I think it would be better not to have an annual payment, you know, for them to receive it monthly and I think there are several things you could do, but you want it, you want them to feel part of the system and you want them to get more and more of these golden eggs. or you want them to get a little bit more of their share, I mean if you don't don't do that and the Democrats win, we might get big taxes on the rich, free college for everyone and those are bigger plans you want, you want more money in everyone's pockets and everyone is willing to work or unable to work. and we can do it, a rich family would do that.

You know, I had six or seven children and I had some businesses that I wanted to pass on. You know, you would choose the most capable person or mother because that's the market system to do that. but you make sure that in the seven family members who participated you didn't get more than the one you could give more to the one who kept producing the golden eggs, but you wouldn't just tell the other the one on the lower end who might be the one. best boy ever and in most aspects you know that he is the one who shares with everyone, wouldn't you tell that Emperor that you know very badly that this is how the market system works?

Be, buddy, get your spouse a housing job somewhere, why don't we update on the healthcare initiative that the company now has a name for? Yes, we are Haven, that was your idea, no, no, I didn't worry. a name that we could have followed, there is no name operation for ten years, that is, we have a wonderful association in the sense that it has a law, it is large and it has a reasonable market force with them, more than a million employees, one of us three. We have three CEOs who can get things done in organizations, so they are so big that normally they would become very bureaucratic.

I mean, if you try to do this with a lot of large companies, you take it into account legally and then you know. and public relations where you know we don't have any of that, they may have it in certain areas, but I don't, but Jamie isn't worried about doing that kind of thing and neither is Jeff, so we have a unit of commitment and a ability to execute the commitment, the only problem is that we have a three point four trillion dollar industry, which is as much as what the federal government collects each year, which basically feels pretty good about the system they as we were talking with the people to find a leader for the group, for example, you know, everyone says that you know the system, you know that it is a very good medicine, but you cannot go from five percent of the GDP to 18, you know, without without really make it less competitive among other things in the world, so everyone thought the system needed some adjustment, but their portable system didn't have it and that's very human.

I do the same. I'm sure if it were in the same place, then it is there. enormous resistance to change, whereas there will need to be a similar recognition of change and of course if the private sector doesn't provide that over a period of time, you know people will say so, you know we give up, we have to deliver the ones that have. ruined, which will probably be even worse. How often do you talk to Jamie and Jeff about it? I know Todd Combs. I think Roger God really does all the work on our, but if this works, you have credit to the Berkshires dads.

Haven has to buy companies to gain experience and what do you know? No. I realized the plan. I mean, Eddie, the plan is to support a very, very good thinker on this topic who was once a practicing doctor and who commands the respect of the medical community. to actually find some way that we can provide even better care and make people feel better about their care, too. I mean, they have to perceive that they are receiving better care over time and stop the cost increase in relation to the country's production we have thisincredible economic machine, but we shouldn't, we shouldn't spend eighteen percent when other countries are doing something quite competent in terms of doctors per capita, hospital beds per capita, it's not the best in medicine.

I think it's very focused on this country and that's great. I want us to be leaders, but we just aren't. I think we are paying a price if we pay seven extra points of GDP, that's 1.4 trillion a year, yes. the administration focusing on drug prices is kind of a rabbit hole as I'm missing the big one, I mean they're trying and Congress in general, I mean talking to the average congressman you read, They consider it a problem and specific cases are made and seen, you know, about drug prices or something like that, but it's a big problem to change it.

I mean, the problem is that it intersects in many ways and that's why we have the quantity leading the way and we have Three larger organizations behind it. We're not trying to do it to make money. I mean, that's not a goal that we'll end up with some business where we'll make money and he'll be talking to health insurers, for example, well, he'll talk to everyone, but his game plan is not something we're trying to establish. . because he is in his head to a certain extent, I mean, we select him by listening and reading etc., what he has done, but he will learn if we always work well, we will perform certain experiments or he will know and try it.

Discover a community where one of us has many employees, perhaps in their various ways of experiencing gear shifting, where do you find things like that? Abe Lincoln Tail and Leg Quotes. I mean, you read Bartlett's book of quotes, probably fifty years ago. I looked at a few quotes from Bartlett, but I mean, I read a lot and if you remember this stuff and you ask for 88 years, you don't know what happened yesterday, but you remember the old business, you have a lot of interesting quotes in your head. that's great, so one company he invested in was GE, yeah, and you did well with that investment and yeah, I came in too soon.

In fact, if you look back, I was very active in the last half of September and early October and then I wrote that article in Later in October and I knew things were going to get bad, I wrote the articles that were going to get bad. bad, but I didn't think the stock market would react as much as it did between then and March, so I had more or less exhausted our gunpowder long before it started. It hit rock bottom, that's interesting, how have you avoided not coming back to GE more recently? I mean, I'm sure they've contacted you.

Everyone says, so what is Warren Buffett doing investing in GE, saving it, and taking it to the promised destination? get this great American company, well I actually think Larry is doing a good job there, Colton is the Danaher, yeah there we go, but for Danaher it's a good sell and I think his priorities are clear and I think he's a guy very capable and right. track and I'm a fan of G ease in the sense that we're a big buyer of him, we're a big seller for him, knowing the managers, you know, I mean, Jack Welch is a very good friend of On mine, no We agree on politics, I never said it, but we have a lot of fun together, I love it, so I really want GE to do well, right?

He just didn't seem that attractive to me, right? you talked about the growth of the trees and the cards, the shareholder one was the third forest, which was a kind of intermediate share between the shareholdings, yes, it is true that those are not the healthiest forest of trees and everything that I would be no, the Flying J pilot, where you know they are companies that, according to GAAP accounting, we have to record according to an equity method, we own more than twenty percent, but we do not control them, so it is treated according to the accounting GAAP. a special category and it didn't fit well when the other one was growing, so I had to make it a separate growth on its own, it's not, it's not, it's not that significant of a growth, you say some of Berkshire's have a higher Have you ever tried calculate how much is it?

Depends on the circumstances. I mean, there are times when the insurance flow can be very valuable, sometimes when the ability to use production tax credits will tell you in the future. utility business, but having them as part of our consolidated performance helps, but that varies a lot, but it is an advantage and we can move capital, well, let's take a business like See's Candy, which we bought 40-odd years ago, it's a small business marvelous. Outside of capital we've tried 50 different ways to expand it graphically, we do all kinds of things, it doesn't work and we'll try again and it won't work, but we can move that capital to buy BNSF railroad aid or do all kinds of other things so that we have a smooth and tax efficient way, it takes words to move capital and we have some companies that really consume capital and we have others that start it and we can move.

If you try to do that with your investments, you will incur some taxes as you go and it is less efficient than what we have done. You talked a lot about tax cuts and benefits for Berkshire. I don't really go into the costs of the tax cut, which surprised me a little. What are your costs? I mean, is it just free money? Well, it makes a difference the tax cut we get, for example, our public services, as I mentioned in the report. that goes to the customers, that's just the nature of utility regulation, but net, we were a significant beneficiary of the tax, I mean, basically let's say we had one class of shares, we have two, but it's not you and me We own a business together and I think we own all the shares, but the truth is that before the tax cut the government had a 35% share of the income.

No, I didn't have a share of the assets but I had a share of the income and if you want to change it. For Fort, he could have changed it, but fortunately he changed it to 21 and if we had a private business, if we had a McDonald's franchise together or a car dealership together, you know, the third shareholder, that invisible shareholder, the governor just gave us back a lot of the stock and and they left and our shareholders benefited, a lot of other shareholders benefited, right, you talked about Ajit Jain and Gregg Abel saying that the blood of Berkshire flows through their veins, have they made a difference since they became in vice presidents and then they are like?

Warren and Charlie don't, they have no interaction and they each run a separate business inside and she doesn't think about the other businesses, he thinks about the insurance business and Gregg doesn't think about the insurance business at all and and I think about the money and capital and so on, but they run two very large businesses, I mean a Jeets business, you know, in total, at least a couple hundred billion in assets, you know, and Greg's business has a hundred and a litle more. fifty billion in revenue, I mean, they would both fit in the top ten that you know in the country in terms of value, so maybe top 15, but they're very big businesses, but they're not exactly like you guys , it's oh no, no, no, Charlie and I have a partnership, think about the whole place and we've done it forever, you know, and we still do it, and Todd and Ted, I didn't see them mentioned, well, they, they.

They have 13 billion dollars each, including the pension funds that they manage and we saw 173 billion that we had at the end of the year in stocks. They had well, we got along well in 73. Buffy had another 8 billion in pension funds over 180 years old. They had 26 between them and her manager had complete discretion over that. They don't ask me at the end of the month. I look and see what they did. They don't do much. They don't do a lot of transactions or anything else. I look to see what changes they made and Todd, for example, I mean he made a couple of small investments in private placement type deals and I know what the companies do, but I can't tell you their names.

You know, maybe it was one of those that you made this investment in Oracle and then you sold it was something they did and no, that wasn't something they did, that was something I did, yeah, and you said you didn't understand it, that's why you saw both and why understand it in the first one, yeah, well, that's a good question that I'm never going to answer. I know how I feel. I know enough about the club to know. I don't know enough about the cloud. Alright? Then Barclays came out with a note that they said they were lowering Berkshire's estimates for EPS.

Did you read those things not right? I mean, I can actually read that money, but I don't see it to read it, put it that way, but there it just doesn't. There is no difference at all. I mean, if I spent time reading that, I wouldn't have time to read ten cases and we're not going to do anything different. I don't know what we're going to learn while I put it on. the annual report and I really think this is unique. I mean, we don't prepare financial statements monthly for Berkshire and there's no other company that would do it there, but there's no point in doing it.

I know where the money is and I know what I know. How are companies doing overall, but what difference does it make? Because I'm not going to try to hit any numbers for the quarter, you know, have an insurance sale or do something even worse, so Charlie and he, I mean, he knows that he knows. where we are and we know which businesses are doing well Wishart and we certainly know where the money is another UBS survey of Berkshire investors says the five things most important to them are succession investment performance a share buyback opportunity profit margins Sure, have you read that? but I don't disagree, I mean, I'm glad someone understands us, their own investors, yeah, well, that's important. 54 well, to go back to when I started my partnership in 1956, when Berkshire came up, there were seven people sitting at a table having dinner relatives primarily and I said here is the partnership agreement that is made under Nebraska law, which is four or five pages, you don't have to read it, but I said here's a small half page, what I call the ground rules and I want you to read them and If you feel good about that interaction, what are the expectations and all that kind of stuff , then we will join forces and if you don't, it's okay for other people you know, but not us, we shouldn't be partners.

I mean, you know if I'm going to have a partnership with someone that I want to be compatible with, you know that and when you have a public company you can't control who comes in. I can't control a guy who comes in and thinks we were going to pay big dividends that they're supposed to store in stocks or something, so through stocks and my communications and everything I want to attract the people I want from the public market and I want to keep the others out, Costco was built by Saul Price, who started the Price Club, sat down and figured out the customer he didn't want and set up a system that would keep out the customer he didn't want, who didn't want, who didn't want him. someone will buy a liter of milk with someone behind him with a basket waiting for $200 worth of products, so we put it on a membership fee and by putting a membership fee it eliminated all the drop in business between companies to belong to the 7- eleven we want Bircher to not exclude people who have different expectations of us than we do.

I mean, it's good for them and I hope they find someone who fits, but if you're going to run a church, you want, you want your seats to be filled by people who generally want to hear some kind of religion and you don't want it to change every week. and you say, wow, I need a new group and I'm going to go out and talk to a group of investors. and have them come to my church on this sunny day because there are a limited number of seats in the church, there are one million six hundred and forty-five thousand approximately equivalent shares and those are the seats and I want them filled by people who are on the same page .

I am the Church of Berkshire. It sounds like you have a long wait in finance and of course you have finally invested in Jamie Diamonds Company, why banks right now are businesses. I understand it and I like the price they are at. selling relative to their future prospects, I think in 10 years they will be worth more money and I think there is a very high probability that I am right and I don't think they will turn out to be the best investments in You all know the whole panoply of things they could do , but I'm pretty sure they won't let me down.

Climate change is changing your insurance business. Now the insurance business does not change. Does the model change or something? No business, I would change our insurance business by writing 20-year policies. I mean, if there was something that changed the mortality of life in a way that was adverse to life insurance interests, coming here you would be stuck with a policy for 20 years if you write the life insurance policy and that's what you know. . you will pay your premiums and it is adverse to me, that is what happened in long term care insurance for example, but when you write a policyfree one year at a time, see what the developments are and, if you know, cars, for example. they are much safer to drive than before there used to be 15 deaths per 100 million miles driven now there is a little over 1 on the other hand they have become much more expensive to fix I'm on that little side right get married which used to cost ten dollars, now you know a thousand dollars or something like that, so you have things that are changing in terms of if you are writing collision experience insurance, you have a permit for the fact that that that windshield Bumper, all kinds of things are the mirror rearview mirror and all that, their aim, but if you're writing, if you're responsible for writing, you know those people aren't going to die that often, so the weather changes like the weather.

The automobile has been changing, but the truth is that you can now buy really large catastrophe caps cheaper than you could in 2005 or thereabouts, allowing for changes in the dollar and population concentration, so So far rates have gone down. The reason we largely got out of the cat business was because we were a big writer on the cat business ten or twelve years ago. We are not out of the cat business because of climate change. the prices are not right and the world will change and it will have very serious consequences, but it will not change that much from year to year, you know, we have done very well during a period of some climate change that you have talked about.

Technology is moving faster than our ability to understand it and I'm wondering if social media and Facebook and Google and Russian trolls are coming in and that's maybe an example of that are you still worried about that problem? Well, I think cyber poses real risks. Do you mind? Forgetting about the problems. even misinformation, I'm just thinking about you know, we have railroads that run over 22 thousand miles of track and some of them carry ammonia and some of them return, you know, chlorine and things that we have to transport, we have no choice about that number required. by law to upload it and you know, I would rather do it in a non-cyber world in a cyber world and there would be all kinds of things.

The problem with something like cyber is that it's moving and it's just unpredictable if you're going to get some guy crazy like sucking on anthrax there you know what they can do it's magnified I mean when when you saw what you know 19 guys, didn't you know that September 11? I mean, I had tools in the hands or potentially in the hands of crazy individuals, crazy groups or even some crazy governments that you know are really something and we don't necessarily know what all the tools that I have and that they move around all the time, I mean to you.

I know again Einstein said that he said I don't know with what but with what weapons. I thought World War III will be felt, but World War IV will be fought with sticks and stones, you know, I mean, it's a dangerous world, I don't know if I've been following this warning, but what do you think of Elon Musk's behavior as Executive Director? Well, I think he has room for improvement, yes, and I would say the same thing, it's just that some people have a talent for interesting quotes and others, others have a little. There's more of a blocker up there saying this key and a problem, but he's an extraordinary guy, but I don't see, I just don't see the need to reach out to you, you know, I've never done it, I think I have seven tweets. because a friend of mine signed me up and called me about a hundred times, she said: can I tweet this or that? and I said yes two or seven times, I guess, or something like that.

I've never actually written one. I don't even know how to do it. Have you ever talked to Elon? I joined The Giving Pledge, so once or twice that was many years ago, seven or eight years ago. No, I mean, he hasn't come. our annual meeting, so I haven't seen him in seven or eight years, so let's talk about this trade war that's been going on a little bit with China and I guess I'd like to ask him if he thinks Donald Trump was right. By calling the Chinese government and basically letting them know, I won't make any comments about it, in terms of political activity, I don't put my citizenship on the spot, a blind trust, so when the elections come, people elsewhere will.

Interpret the things I say about any president you know as if he comes to some extent from Berkshire and they don't come from Berkshire. I'm just an individual, so I think I'm happy to talk about China, but it's fair to say I can't talk to you about that part. I mean, do you think there was room for improvement then in terms of the trade relationship between China and the United States, that China and the United States were absolutely destined to be the superpowers that you had? I know that beyond the lifetime of my great grandchildren and there will always be competitors and we will be competitors and in business working with lyrics and ideas in many ways and there is no other way to be and we just have to make sure that that competition doesn't.

We have not yet reached a point where we do not realize that the best world is the one in which both the United States and China prosper. I mean, we don't want to have an island of prosperity in the rest of the world that envies us. A nuclear age and China not Russia does not mean that we all recognize the dangers of letting competition get out of control and becoming competitors without being enemies and that is what all powerful nations have to do. I realize over time, I mean, it's different than 200 years ago, when you could have a dominant country and then they may have done some things that they didn't like, but they didn't threaten the existence of the world.

You really threaten the existence of the world as such. We know this if major countries don't constantly recognize that they can compete and fight over certain things, but they can't see this as essentially the equivalent of war. Here's a question from Kevin Chen, a Berkshire shareholder and New York University professor. he says and this is kind of a long lie what you just said Warren, but do you think the United States and China will be able to resolve their differences or are our conflicts inevitable? Well, I don't think conflicts are inevitable, but I think I believe.

There has to be active thinking on the part of every enormously powerful country and Russia is enormously powerful. I mean 90% of the nuclear weapons in the world between the US and Russia, so they have to recognize that the best world for them is one where Basically, don't try to grab all the apples and we have to recognize that and we can't in the United States, we can't think that our ideas rule the world, you know, or we start to be aggressive about things and China does. I don't believe that and Russia can't think that and that's obvious, you just have to do things, you have to make sure that things don't escalate into World War I, you know, with an Archduke, you know, I mean, you understand, you understand, these can have random incidents. and you really want to, I asked one of the presidents once, but you know in terms of what he would do if someone woke up in the middle of the night and someone came up to him and said absolutely and about something that they would also release, would you would you do?

In that, you have an extra 10 minutes and I wouldn't want to have that responsibility, but you'll want to make sure you don't get to that point. Would you ever make a big acquisition in China? and if not, aren't you missing a big part of the answer? Not us, we would have looked at you. Oh, we have been informed of some things. Yes, are you worried about the other side of the coin? Are you concerned that if the rule of law is different, accounting could be opaque. Well, I would like to make sure I understand accounting, obviously some businesses would be easier to do than others, but I know the laws, the customs, the accounting, the people. better in the United States than anywhere else, so in many countries there is some small obstacle to overcome that I can overcome, I mean, but I just don't, it's not as easy as looking at something where I already know the answer. you know from previous transactions or something, so it's easier to make a big acquisition in the United States, not do more work if I look beyond the borders, but I love the idea of ​​doing it when we made the acquisition in Israel. a dozen years ago and didn't know what the tax rates were there.

I didn't know what corporate law you know it was. I suspected everything would be answered satisfactorily, which one it was, but I didn't. I automatically know, it seems like you're more open to making a deal in China than in previous conversations. I don't think so, no I know, I'm open, yes, we did let you know that we did two decent sized stock acquisitions there and that worked well, those are good PetroChina Andy, why do you think of that? Yes, yes, I, Whitey, was Charlie's, but Charlie's, yes, well versed in China, um, trade, the US trade deficit has been widening and, of course, a lot of that has to do with Our trade with China is something that worries them.

I wrote an article about this for Fortune and the business situation many years ago and I was wondering what our deficit was relative to P. I don't think that's the case. I don't think it's an essential level trade balance, but I think a trade deficit gets big and there seems to be no way out, that can be a real problem over time. I mean, you know you're sending little pieces of paper. to the rest of the world and they send you products. I mean, there are people working on making underwear or shoes somewhere and they get little pieces of paper from us and it becomes very tempting if you've done that enough to make sure that those little pieces of paper aren't worth much at all. overtime when they want to charge for something you don't want to have, we have no problem having trade deficits, but if we had really big deficits and we somehow worked ourselves into a box where they were we really didn't have a solution to get the numbers down, it could be a problem and I wrote about it once, but it's actually a good thing, I just want to say, wouldn't you like that? have something where you should just have little pieces of paper and someone keep supplying them, was there food or yes, okay and the last question China is facing its slowest growth in almost three decades, the leadership, I think they have lowered the targets to around six point five. percent six percent are you worried about this slowdown in growth and the impact on global markets?

Well, I don't worry in terms of global markets. I mean, China is going to grow a lot over time. I mean when you think about what happened it was in 1949. or where you know but there really hasn't been anything like that I mean they had 20% of the world's population at that time maybe and even though they really hadn't reached even remotely their potential I want I mean, and what happened there is almost unbelievable and that game is not over, but we have had incredible events in the United States. I mean, you know, real GDP per capita is six times what it was the day I was born in the United States.

United States six times and we thought we were pretty. I am a country that doesn't do everything, my parents wouldn't believe it. I mean, they use the thought that you know this kid really got it. It was true. I mean, we had this tailwind and and. China has had a mine of hurricanes that you know and in the last few decades in a good way absolutely because it was being compared to the tailwind, yes, the hurricane behind, yes, on your back and in and, they have found a way to life that is dramatically different then it existed for the billion there was a billion then maybe maybe maybe a billion two or whatever now and they have changed a country really in size, I don't think it has ever been anything like that, we have done it too, but it took a little longer, I mean, longer, but it was an extraordinary period, but you know, when you go on my first visit, I went there in 1995 and then they considered it a miracle, then I came back, it was a completely different beyond that.

Oh, Warren Buffett, thank you so much for joining us. I'm Andy Serwer. You've been watching influencers. See you next time.