One on One with Warren Buffett, Chairman & CEO, Berkshire Hathaway
Friday, January 23, 2009
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SUSIE GHARIB: So far this year the Dow is down about 10 percent and that's on top of the big drop in 2008. But none of that worries Warren Buffett. He's buying stocks for his personal portfolio and for his company, Berkshire Hathaway. In part two of my interview with the Berkshire chairman and CEO, I asked Buffett should investors be buying stocks.
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: If they're buying into a business they understand at a sensible price, they should be buying. That's true at any time. There are a lot more things selling at sensible prices now than there were two years ago. So clearly, it's a better time to be buying stocks than a couple of years ago. Is it better than tomorrow? I have no idea.
GHARIB: This financial crisis has been extraordinary in so many ways. How has it changed your approach to investing?
BUFFETT: Doesn't change my approach at all. Any stock I buy, I will be happy owning it if they close the stock market for five years tomorrow. I'm buying a business; I'm not buying a stock. I'm buying a little piece of a business, just like I'd buy a farm and that doesn't change. All the newspaper headlines and everything in the world don't change that. Doesn't mean you can't buy it cheaper tomorrow, may turn out that way, but the real question is, do I get my money's worth when I bought it.
GHARIB: One of your famous investing principles is be fearful when others are greedy and greedy when others are fearful. So is this the time to be greedy, right?
BUFFETT: My greed quotient has risen as stocks have gone down. There's no question about that. The cheaper something gets that you are going to buy, the happier you feel. You're going to buy groceries the rest of your life. Do you want grocery prices to go up or down? You want them to go down. And if they go down, you don't say, gee, I got those groceries sitting in my cabinet at home and I've lost money on those. You think, I'm buying my groceries cheaper. I'm going to keep buying groceries.
GHARIB: Where do you see the opportunities in the stock market right now.
BUFFETT: That one I wouldn't tell you about.
GHARIB: Let me throw out some sectors.
BUFFETT: I'm not going to recommend anything.
GHARIB: Investor confidence was so shattered last year, what do you think it's going to take to restore confidence?
BUFFETT: If people are dependent on the stock market going up to be confident, they're in the wrong business. They ought to be confident because they look at a business and they think I got my money's worth. So they ought to look to the business as to whether to be confident compared to the price they paid. And they ought to forget about what anybody is saying, including me on television or what they're reading in the paper. That's got nothing to do with whether they made a good decision or not. What has got to do with whether they made a good decision is the kind of business they bought and what they paid for it.
GHARIB: People are reeling from this whole Bernie Madoff scandal. What do you say to people who lost trust in the financial system?
BUFFETT: If they are really depending on somebody else and they don't know anything about the somebody else, they've a problem. They shouldn't do that. There are going to be crooks out there and this guy was a crook on a scale that we've never seen before. You ought to know who you're dealing with.
GHARIB: Is there any takeaway lessons from the Bernie Madoff story?
BUFFETT: Well, he was a special case. I wouldn't put my trust in a single individual like that. I would put my trust in a very good business. I would want a business that was so good that if a so-so guy was running it, it would still seem to do well and there are businesses, plenty of businesses like that.
GHARIB: What about Berkshire Hathaway stock? Were you surprised that it took such a hit last year given that Berkshire shareholders are such buy and hold investors?
BUFFETT: I've had three times in my lifetime since I took over Berkshire when Berkshire stock's gone down 50 percent. In 1974 it went from 90 to 40. Did I feel badly? No, I loved it. I got more stock. So I don't judge how Berkshire is doing by its market price. I judge it by how our businesses are doing.
GHARIB: Is there a price at which you would buy back shares of Berkshires, 85,000, 80,000?
BUFFETT: I wouldn't name a number. If I would name a number (INAUDIBLE)
GHARIB: Everyone wants to know your plans, what you're going to do with all the Berkshire Hathaway's cash, some $30 billion. Is this now the right time to do a big exit?
BUFFETT: Well, we've spent a lot of money in the last four months. We spent $5 billion on Goldman Sachs, $3 billion on GE, $6.6 on Wrigley. We've got $3 million committed on Dow. We spent a lot of money and we've got money left, but I love spending money. Cash makes me very unhappy. I like to always have enough and never way more than enough. But I always want to have enough.
GHARIB: As you know, it's the 30th anniversary on NIGHTLY BUSINESS REPORT. As you look back on the past three decades, what would you say is the most important lessons you have learned about investing?
BUFFETT: I learned my lessons before that. I read a book, what is it, almost 60 years ago roughly called "The Intelligent Investor" and I really learned all I needed to know about investing from that book and particularly chapters eight and 20. So I haven't changed anything since.
GHARIB: If we asked for your investment advice back in 1979 when NIGHTLY BUSINESS REPORT first got started, who it be any different than what you'd say today?
BUFFETT: Not at all. If you'd asked the same questions, you'd have gotten the same answers.
GHARIB: Mr. Buffett, thank you so much. Always a pleasure talking to you.
BUFFETT: Thank you, it's been a real pleasure.
