Watch CNBC's full interview with Berkshire Hathaway CEO Warren Buffett

We are here in Omaha Nebraska this morning with Warren Buffett the chairman and CEO of Berkshire Hathaway he's just released his 55th annual shareholder letter to 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 that people can write in their own questions to mr. Buffett after They've read that shareholders 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 I want to talk about the letter obviously one of the things that you touch on in 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 want to hear from you are your thoughts on what's happening with the coronavirus if this is a reason to

panic and if you are worried about this well I I don't know I have any special thoughts be on the news on the coronavirus the very first day I bought stocks was March 12th 1941 40 40 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 with the evening and my dad told me the execution price it was down 2% if you're buying a business and 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 a different perspective on it then presumably good then people buy a farm if you buy apartment house if you buy a business you're gonna own it for 10 or 20 or 30 Years and the real question is this has the ten year or 20 year outlook for 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 owned American Express we voted for 20 years coca-cola we've owned it for 40 years

with those our businesses and you know buy or sell your business based on 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 your good luck basically although there are a lot of people who look at the market and they say look I want to buy but I don't want to buy when the markets 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 that I can buy something for potentially ten percent cheaper maybe more than that if I wait a week or a month maybe that's what I'm sitting around well if you think that then you've got it you're gonna get

Fabulously rich if you're right just keep buying at ten day intervals people take your 10 day prediction if I knew what the market was gonna obviously but you don't I don't think anybody knows what the market is going to do I think you do know whether you're making an intelligent person the purchase at a given price everybody when they buy a stock if you're gonna buy say General Motors it has a billion four hundred million shares out you should be able to Take a yellow pad like you have there and on one page say let's

say it's selling for thirty it isn't something that low but that'd be 42 billion you should say I am buying the General Motors company for forty two billion dollars because and you should get it on a piece of paper and then if you want to have a Shepherd piece of paper since I think I know what the stock market is going to do so I know whether it'll be higher or lower but you don't you don't Have that I worry that the economy is going to 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 cars are going to slow down someday yeah in 1932 General Motors had 19,000 dealers that's more than all the auto dealers in the United States today they're only other than 25 million people that but they had 19,000 dealers they produced or sold and there was one month I think when they Sold less than a tenth of a car right at 1/10 of a car per dealer that was a terrific time to buy General Motors forget about the bargain

if you can pretty good market you don't read balance sheet on it he 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 don't already looked at where it was located and the contract that 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 the farm or investment or an apartment house but it Isn't that if you get your money's worth in terms of future earning power over the next 10 or 20 or 30 years you're gonna made a good investment and you can't pick them from day to day I couldn't do that you can well I haven't met anybody yet that knows how to do it you you made a

point of that in the 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 Edgar Lorenz haveth changed the world with that book and if people have forgotten all about it now although in the 1920s it would it became more and more gospel as the boom went on but girls myth set ought to write a book on bonds versus stocks and he said if

he went in with the idea the bonds would be a better investment in times of Deflation and stocks would be a better investment 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 on it I think Darwin said if you found evidence that was contrary to what you already believed write it down in 30 minutes or you're black 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% of bond yields 4% Which was what he was talking about then the stock was going to outperform the bonds because there were retained earnings that were building beyond that he'll that's that has been true for a long long time but nobody paid any attention to it oh we don't get rich on our dividends that we receive all the way happy to receive them we get rich on on the fact that the retained earnings are used to build new earning power Repurchase shares which increases your ownership in the company and and and Berkshire

is retained earnings ever since we started that's the only reason Berkshires worth a lot more as we retain earnings that 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 well that is true because you can get my old boss Ben Graham totally very early on you get 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 Lorne Smith's book it was that when bonds yield the same as Sox which was the case Then the stocks are going to outperform because they have this retain earnings so stocks started going up in the 20s and all of a sudden they were selling it 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 got their confirmations for the stock prices and people that's what happens in ball markets people people start out thinking stocks are cheap and Then they start thinking stocks have gone up and and the stock can be a good buyer a bad buy a bond can be a good buyer bad buy it depends on price but that leads us to today I mean if his premise was that stocks are always going to be a better better investment than bonds that's kind of 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 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 the case in America very usually been the case and if you buy a 30-year bond today with the 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 I want to sell you the stuff is it 50 times or easy or you can go up for 30 years you say that doesn't sound very good it's not sure way better than 30-year bonds I mean it's that's clear and and that's one of the alternatives people have people really have three basic alternative short-term cash which is an option of doing something later on long-term bonds or long term stocks and stocks are cheaper than bonds Charlie said recently Charlie Munger the vice-chairman at

Berkshire Hathaway had His daily journal meeting just a couple of 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 there's always trouble coming yeah there was trouble coming in 1942 when I bought that first stock all kinds of trouble Philippines were gonna fall pretty soon I mean 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 would you repeat that this time if troubles coming would you still say buy stocks right now I would say buy stocks if you get enough for your money and 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 800 15 million shares out insulted this morning 126 or something Like that so it's selling for roughly a hundred billion dollars now the real question is whether the company's worth more

or less than hundred billion it isn't what the stock is gonna do tomorrow or next week or next month you said just a few minutes ago when we asked you on worldwide exchange right now Berkshire Hathaway has a net buyer of stocks you are in a net buying because we've been in that buyer of stocks or I've been actually been a Personal net buyer stocks ever since I was 11 every year and there's been 15 American presidents in my lifetime more than a third I've lived under a third of the line I didn't buy stock

senator Hoover I was only about six months old in but but there been seven Republicans after that and seven Democrats I bought stocks under every one of them now I'm what stocks every day there have been a few times I've thought stocks were we're Really quite high and have even written an article once or twice up but that's very seldom but you wrapped up your partnership at once I wrapped up my partnership because it was too expensive yeah okay but this is not a time like that we own two hundred and forty billion dollars worth

of socks now we look at that as two hundred and forty billion dollars worth of businesses that we all parts up but I love owning those businesses you've also got more than one Hundred and twenty five billion dollars in cash sitting around yeah well we'd like to buy more businesses 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 to kind of talk to them about questions they have when they come to visit you

you also do some other things up here too other presentations yeah I had Students here for dozens of years and for many years 40 schools would come in they'd come in groups of eight five days I'd spend a year and they come from all the world we haven't from Peru Leon from China and from Israel and we had a good time all he said again 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 take a rest well there are a

lot of 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 Dower 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 lot of questions about the economy they were wondering what's happening right now particularly with the coronavirus out there you have a lot of economic data at your fingertips because not only on the Many businesses that

Berkshire owns but the businesses you own pieces in what are you seeing right now around the globe well it affects various businesses on I would I would say that I received commentary I get some commentary monthly but from from almost all of the companies and and a good many of them had some comment about I was affecting them and however it was affecting them that at that time I'm sure it's Accentuated but they've been affected by a were affected by terrorists are affected by taxes they're affected by the most thing is they're affected by competitors

in supply and demand over time and I don't have the faintest idea what our businesses will be doing six months from now or twelve months from now I do think that not only our businesses but American business generally we doing fabulously better thirty years from our twenty years now And the 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 am 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 America's business and probably over the world will be far better than it is now what are the momentary implications that you've seen from coronavirus what's an example of a business well an example who's not we have maybe a thousand Dairy Queen

franchises in China here and there just treat only so they're they're the old older type not with food but a great number of them were closed but the ones that were open we're doing any business To speak of and an apple is it what I mean are much bigger holding as Apple will and 5.6 percent of Apple and and 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

by this that I didn't even know had those like what well I got one from Johns Manville the other day for example you wouldn't normally think Of them as having a big supply chain but Shaw carpenter you name it I'll guarantee you that a very significant percentage of our business is one layer affected but they're being affected by a lot of other things too and the real question is is where are those businesses going to 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 when you look at the economy and how things were kind of chugging along let's say beginning of this year yeah when first things things first picked up but how would you gauge the US economy well it's it's strong but a little softer than it was six months ago but that's over a broad range of business you look at car loadings rail car loadings that that's moving goods around and there again that was affected by the tariffs Too because people front

ended purchases all kinds of things always a lot of variables but business is down and and but it's down from a very good level so I would say that looking at our seventy businesses and that actually they represent hundreds in addition they're a little softer and then and I was out with the fellows from 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 why do you think business was down let's say the last six

months is that a decline in confidence or is it coming off of levels where there was unusual activity ahead of that well it wasn't really down it's just the level off and the little softer may be now but well tariffs the tariff situation was a big question mark for all kinds of companies and and still is to some degree but that that was front and center for a while now coronaviruses Front and center day something else be front and center six months from now and a year from now in two years from now real question

is is where you're where these business is gonna be five and ten and twenty years now someone will do sensationally some will mold disappear and overall I think America will do very well you know it has in 1776 but you still watch things like railcar look very close i watch everything but i don't do it to make in specific Investment decisions I but I enjoy I mean I don't know what's going on but I also don't think that I can make money by predicting what's gonna go on next week or next month I do think

I can make money by predicting what's gonna happen in ten years all right we'll tell us more about what's going on just since you like knowing about that as I said you know the certain businesses depend on whether to quite an extent in retail For example in given months but the big trends you see are going on I mean in terms of the movement to online commerce and I mean the big stuff keeps moving but we've got to make an investment airline business and I just heard you know even more flights are canceled and all

that but flights are canceled for weather this all happens in this case they're going to cancel them for longer because of coronavirus but if you own Airlines for 10 or 20 years you're gonna Have some ups and downs in current business and some of the weather-related they can be all kinds of things the real question is is you know how many passengers they can be carrying ten years from now in 15 years now and what will margins be and what was the competitive position be and but I still look at the figures all the time

I'll admit that you you mentioned the airlines and you own stakes and all the major airlines but not as much as Delta I think you own or north of 11% of dortmund Delta at this point well right you know the largest position is in Delta three of the four positions they're mine one of the positions is one of the other fellows of the four positions but we own a very roughly ten close to ten percent of the four largest airlines there's been a lot of speculation in fact some of the questions that came in over

this weekend were questions about those airlines Wondering if you would buy any of them outright have you considered buying any of those companies I'd be very unlikely we would do that I'm not saying it's impossible but it's complicated why well for one thing they're regulated and there's an interplay I'll just give you an example not that would be doing but with Delta we own 18% of American Express an emergency press is a bank holding company and bank holding companies have Limits as to what they can do and we're a passive holder of a bank holding

company with American Express but if we owned an airline that was tied up with them they have lots of arrangements there's there's there's a lot of complications because it's a regulated industry anytime get in a regulated industry you have more complications in and and and transactions so is it fair to say you like these stocks and you would own more if it didn't if it wasn't Complicated well we if to go beyond 15% in any company we would have to go in on hart-scott-rodino I mean there's a lot of rules as you increase your ownership

obviously almost anything we own we'd like to own more of are you buying more of any of those stakes right now I get pretty close mouth when it comes to what we're buy to say that anything that we own we like you know and there's very few stocks that we own and I look at Them as part ownership sand businesses there there's very few that are selling at some price where I would sell them a little higher all right well let me ask a question that came from Tony Dickinson he said in the fourth quarter

Berkshire sold 55 million shares of Wells Fargo should shareholders view this as a lack of confidence in the new CEO turnaround planned and what is Warren's future outlook for Wells Fargo well I won't give many advice specifically on was Fargo but it's absolutely true that we've sold down our position some of it was sold down to avoid being over 10% because then you do have some filings with the feds and so on but more than that's asked yeah we've sold we've sold well more than that I think 8.4 percent was the last yeah that sounds

right and and now we leave we've sold at least all Wells Fargo in the fourth quarter and we sold earlier can I ask why only because I did get a number of questions yeah Well I can understand that but but we just don't we don't want to give any advice on what we're doing because I could change what I'm doing tomorrow no no we we talk about everything except we don't give stock advice I try one more folks Dickinson just because I think I got 15 or 20 different questions on this Berkshire owns 30 to

0.58 billion of Bank of America and 17.3 9 billion of Wells Fargo 1 positions been increasing while the others been decreasing there's Warren like Bank of America twice as much as Wells Fargo and how should shareholders me the whole day yeah well I think they seen that we bought we bought Bank of America we sold some Wells Fargo all right let me ask you a broader question that comes in just on interest rates or the impact that that might have as well Varun Jane writes in on Facebook hi I'm a huge fan and a student

of mr. Buffett please ask him what impact does the zero interest rate Environment to cross places like Japan and Europe have on their banks whether the business is still good and does the prolonged low interest rate regime in the United State hurt the prospects of American banks like JP Morgan etc and in such circumstances do Indian banks which have high return on equity look attractive to mr. boffin I can't comment on that but generally speaking with a lot of it but there's a lot of other variables too but the banks Are going to make more

money if there's if there are higher rates with a with a steeper curve there's a curve makes is more important than in other words the 10-year versus short term rates may make more difference than the absolute level but American banks have made very good money with very low interest rates around the world if you look in the UK or Europe or Japan even lower rates have made it pretty tough for banks the returns on equity or not is high and They have to use more leverage they even get the same returns and I don't like

that as well if you are talking about the curve that we're looking at this morning the five year to year is inverted then it's not right now but the ten years below 1.4 percent this morning and think about the ten year at 14.4% that means you're paying 70 times earnings for for something that can't increase its earnings for ten years they say we can Do with a stock and said you know we this is a terrific stock it sells 270 times earnings the earnings can't go up for ten years yeah yeah you'd say well explain

that it took me again right but no the interest that we've never seen a situation like this in the world literally I mean you can go back and read Keynes and you can read Adam Smith and you can read you know all the great ones and they don't talk about negative entropy and never cost there might have A supply in the band all these a marginal costs but brilliant economists never really anticipated that you would have negative you've got 13 trillion or something like that worldwide of negative interest rates and we don't know what that

means and if we've got a lot of people to speculate what it means but 10 years from now or 15 years will from now we'll look back and say well it's obvious what we'll we'll see it but it is not a normal Situation and it's it's a well interest rates are the basis of all value I mean you know that if if you knew interest rates we're gonna be zero for a hundred years you would think one percent was a great rate return but you also would know if you want something was yielding one percent

or that was what a bate and rates went to eight percent you'd lose practically all your capital so it's an enormous factor and we don't know the answer central banks don't know the Answer all we know is that it it's been useful in stimulating things and particularly asset prices now for ten years and what we thought was temporary in 2008 and nine in the way of monetary policy to stimulate we've just put our foot on the gas even further the whole world has you made a point in the letter of saying that you don't know

how long these interest rates will last you and Charlie never trying to figure these things out but we did have st. Louis Fed President Jim Bullard on the program last week and he said that he expects to see these low interest rates for a long time to come that does raise a lot of questions that happens about what this means for the stock market what that means for banks what that means for insurance companies what you touched on in the letter - it's bad for insurance companies but but it's good for stocks bad for insurance

companies and what Happens to insurance companies as a result are they getting more insurance company except those ones that really get hurt on our are either life or annuity companies that have promised returns the property casualty business doesn't promise returns it still holds money so it hurts them but if you promise somebody an annuity that's closer to pay them three or four percent and now you find that you're reinvesting your money at one percent or something You know you're going to disappear our insurance company is being forced to make riskier and riskier bets well they

shouldn't I mean the answer if if you need you get three percent and you're only getting one percent the answer is to quit giving three percent it's not to try and get the one up to three and do more dangerous thing you should always adapt your consumption to your income you shouldn't try and adjust your income to your consumption that's a basic Principle for individuals businesses and everything else and reaching for yield is really stupid but it's very human I mean and I understand it and people say well I've saved all this money on my

life and I can only get 1% on what do I do the answer is you learn to live on 1% unfortunately and and you don't go and listen to some salesman come along and tell you I've got some magic way to get you 5% do you think though that that's What should be happening do you think that there is more risk taking place in the intra market and you see that and you see that in what they call leveraged loans and weaker covenants at all no people are reaching for yield there's no question about that

and that's stupid and it has consequences over time but it's very human consequences that could have a big market impact that's how far it goes yeah yeah it's the it's it's something that the things that get Billed and slowly people going crazy and and tech companies in the late 1990s it can take a lot longer than you think but eventually you get to midnight and everything turns to pumpkins and mice you know that's the downside of yellow interest rates pensions savers anybody who gets left in a raw position of that on the alternate side of

things if rates were to rise rapidly or not you maybe not even so rapidly what does that mean for the federal debt well it depends on The average maturity of the debt but our maturities are fairly short they've gotten lengthened a little but but if you take 22 trillion or and and you're borrowing at a 2% you've got you got 400 what have you got a dude who's really until 200 billion I mean you have 40 billion of the expense but if it goes to 5% you gotta billion of expense I mean it I know

what 5% you got you got a trillion of expense I'm sorry it's we are benefiting enormous Lee in our National budget by the fact that interest rates are very low and and so interest cost has not gone up as you would have anticipated if you were looking at the scene 20 or 30 years ago would the increase in national debt you know Austria issued 100-year bonds you know what two percent or thereabouts and then gone way way out but yeah and I think maybe they yield 1.1 or something like that I don't know where they

are now but it's great if you're a borrowed Object Jake might have made everybody to refinance their mortgage is that an argument for the Federal Reserve or I'm sorry for the treasury department here issuing longer longer notes well yeah but I would not have the same thing five or six years ago been wrong but if we under the president's slope it still would cost more to lengthen it out but you're lengthening out a very very low rates and it would be what I would be inclined to do if I were secretary Treasurer but I'd have

missed a lot of bets in the last ten years to Warren again for people who are just wake you up tuning in and they want to know what you think about this sell-off this morning to see the Dow down 700 800 points in the morning what's your reaction when you see something like that well my reaction is that I like to buy stock so I I don't wish it on anybody else but I like the if they want to sell them could Be cheaper I I prefer it so if that's a roughly a 3% decline

or there abouts I don't know how many three percent declines I've had in my lifetime but there have been a lot of them and I I can't think of one that you shouldn't have bought on you know basically that doesn't mean stocks are gonna go up or down next week or next month or next year but but if there's something if you like to own American businesses you're getting a chance to buy a 3% cheaper I Don't consider that a lot cheaper I mean but but but how can it be bad news unless you have

to sell stocks now if you have to sell them for some reason that's what you're worse off if you don't have to sell them I mean somebody can come around and offer you over quote on your house today and it could be 2% less than they offered you yesterday but if you like the house it maybe doesn't make any difference does that mean Berkshire will be buying stocks today It's well we certainly won't be selling and and yeah we made we could easily be buying something sure let's talk a little bit about a Barron's cover

story that was just out last week the good news on the cover story is they think the Berkshire is worth more than it's selling for right now the bad news is they said they think that's in part because there's it's got a big conglomerate discount and they think if you weren't running it that it might get Broken up what's your response to that line of logic well conglomerates have had a bad name and for good reason over the years I mag I closed my partnership up at the end of the 1960s and there was a

run a very abusive running conglomerates where they played with numbers and they had dirty pooling as they called it of accounting they they wanted to have their stocks up and put out stories to do it so they could issue more stock they were kind of Chain letter arrangements there there have been a lot of there have been a lot of bad conglomerates and probably disproportionately so compared to sort of honest-to-god single industry businesses over time we don't think we're that kind of a conglomerate we've certainly never wanted issue shares we've never tated shares weight at

all and it's it's it's done for business reasons in our case the interesting thing is of course is The American public has been going wild in their enthusiasm burg conglomerates in the last few years if you think about it I mean it's been the incredibly popular area but they call them index funds you buy 500 businesses 500 businesses all put together and that's the ultimate conglomerate isn't it I mean I've recommended index funds to lots of people and when they do it they're buying into 500 businesses and they're gonna have 500 businesses a year From

now and five years now and they think that group of businesses that will do very well and I think our group will do okay the difference with an SP 500 index is its 500 different companies run by 500 different management teams who are all focused on their business maybe not having a centralized operation that is loosely running all of those balances we've got our businesses are run by separate people I mean I we just finished Valentine's Day and I Did not I did not so like what pieces are wet in the boxes and it's been

probably been ten years at least since I've been to a See's Candies Factory now you know I get the figures every month but I I don't have I don't know how to make chocolate yeah think of the sort I don't pick out the new locations we we have managers for our businesses that are very much like the managers we have for the businesses that we own pieces of like American Express or coca-cola and There's a couple things we can do we can determine the dividend policy of our subsidiaries we can control their capital allocation to

some extent but on most capital allocation whether to buy new equipment or anything like that they make the decisions of the BNSF railroad is gonna spend three and a half billion dollars and I I don't I don't approve a single dollar of that in terms of capital expenditures they they know what they need to do or they need to lay Track how many locomotives and whatever it may be so our managers are I would say in a sense they're almost more independent than the managers are the estimate 500 who go out and report to Wall

Street week after week they could have investor relations meeting and they're always explaining what they're doing and trying to get the approval of the analysts and all that sort of things and we just tell our managers to do what Makes sense okay outside of the idea of them not having to report to individual shareholders or the investment community what's the advantage of having you there the capital allocation part of it well we couldn't yeah we can move capital within if you move capital from one stock to another and you got a game but I mean

you pay a tax and that may be a dividend tax if you sell but there's a there's a lot of taxes incurred in moving from one business to another Either at the corporate level in some cases but certainly at the individual level and we can move capital well just exceeds candy again we bought that in 1972 we've moved a several billion dollars from the candy business to other types of businesses and we'd love it if we could use it all in the candy business but it just isn't that sort of business and in addition to

that we free up our managers from all dealing with a Wall Street dealing with baggers they Own all kinds of things that are what I regard as less productive use of their time however you also have a situation where you have gotten some activists who've been interested in the stock including Bill Ackman he's built up a stake hasn't said too much about it but I think he has made some comments about how maybe Burlington Northern Santa Fe is marginally improved you can look back at Bill Ackman's experience with the Canadian Pacific Railway and kind of

Wonder if he is building up a position because he would like to see you take a more active role there well we noticed one of the railroads earner when their margins are better I mean and we we certainly put way less pressure on than Wall Street might who would want a next week or but we our managers are well aware of what's going on in other industries and and we've made changes where we don't think some businesses are performing as well as they should Overwhelmingly we've got managers there that are very very good they've got

capital available to them for anything that makes sense and we decide how much they distribute where the capital moves and sometimes it moves from one industry to another and in certain industries a consolidated tax position really is very helpful to us there's a viewer question that came in from been constant and he asks it was recently pointed out by Bill Ackman that Some subsidiaries like Geico BNSF flagged their peers in some areas would you agree with that and how can your success or push improvement in subsidiaries while maintaining a decentralized management structure well as Geico

we bought control in 1995 we had about two-and-a-half percent of the market for auto insurance and we're at about 13.7 percent of the market so we've gone from two and a half billion a premium volume or there abouts to 35 Billion premium we're number two now to State Farm we were number six or seven at that time so I would say that not due to Berkshire at all but due to Tony Knicely during almost all those years Geico has been the envy of every other company and the auto insurance business except for progressive but they've

done a good job too but I like oh it's worth tens and tens and tens of billions more than one we water in addition to all the earnings We go just the goodwill value so that's been extraordinarily well run and with Burlington we I think we paid a dividend of five billion last year and we paid thirty five billion for it so it's gained and market share and its business its operating margins have improved but they haven't improved as much as some other railroads do you believe in precision scheduling railroading well we'll see I mean

that we watched it plenty and and and for those who don't Know what that is it's something that kind of irritates customers because it makes things a little more rigid but it doesn't yeah it makes the customers adapt to the railroad more than the railroad adapting the customers and practically everybody's done it in a fellow named hunter Harrison was enormously successful we worked with Bill Ackman at the Canadian Pacific at the NSF if you go back far enough he and There's a book about its variants but he's at the Illinois Central the Canadian National the

Canadian Pacific and then he was going over to the CSX he he he developed a method of railroading where the customer doesn't adapt more to the to the railroad and improve margins dramatically our margins are close to what the better railroads well there's only a few the get from precision railroading other than we've gained share because because the railroads Apparently are very old customers like us better and over the over the long term we'll see but it isn't like it's something we can't do here's the latest on the coronavirus China reported an additional 150 deaths

and 409 new cases overnight South Korea raised its coronavirus alert to the highest level after the number of cases their balloon from 31 to more than 750 in less than a week stocks in Asia falling overnight Hong Kong's Hang Seng FL 1.8% South Korea's kospi fell nearly 3.9 percent shares of South Korea's two largest airlines down as they canceled flights to the city of Daegu where many of the new cases were detected meantime Italy's government is scrambling to deal with the biggest outbreak of the corona virus outside of Asia stocks there were lower overnight the

government placed at least 10 towns in northern Italy under quarantine and canceled the last few days of the Venice Carnival elsewhere in At least schools museums universities and cinemas were closed and major soccer matches were cancelled at this point I mean Boris Johnson out earlier today and ER saying that the risk to UK citizens just over there remains low I would say that our officials would say that here to the US u.s. citizens remains low but there's a significant difference between supply chain disruption slowing dozens and dozens and actually hundreds of Companies absolutely and that's

dampening global growth what worries me is that we don't know three three months six months nine months if it ever gets to the point where we start to see in a lot of countries around the world these these break outs where they're don't even know the origin of some of these and if they multiply like that that's when I think it could really get at this point it's still a it's still a global growth slowdown nobody in in most of the World is worried that they're gonna catch coronavirus right and they can't go out and

they can't you know go to the movies or the health club or to a restaurant but that I just wonder what we don't know they're a major travel that's being changed right now conferences are being cancelled there was an article in Time magazine speculating when the weather the Olympics in Japan over the summer will be canceled so there there's real Implications here that could reverberate having said that the farther we get to the spring the better it gets it was a weather there's a whole sort of it about how the flu you know you know

I was looking at gyms someone gyms tweets earlier if you go too far with with the the fear and the panic you're accused of one thing if you don't go far enough you're accused of the other thing so we really just need to sit here and in each day report On the facts and try to remain attached but there's something something about a pandemic that just is different than other black swans it's it's it's a frightening prospect name of let's get right back to our guest of the morning Warren Buffett joins Becky in Omaha following

the release of his annual letter to shareholders over the weekend Becky you took a plane I mean we it's in the back of our minds it's just in the back there's no where and this goes back To 1918 it goes back to 1980 if you look at the numbers of what happened in that pandemic when it came around the globe up to 50 million people were killed in that it was a third of the planets population that was infected it was 500 million people that were infected at that point 675 thousand Americans died at that

point so inevitably your mind kind of goes back to what's happened in the past because as humans we always look back to history to try And predict the future doesn't always work it's not always prophetic but it does give you something of what to kind of play out if this were to get worse and worse now Andrew brought up the idea that it's warm weather we're approaching spring and a lot of parts of the country or a lot of parts of the planet that may be good news we just don't know if this time around

if this is one of those viruses that that does die off in warmer weather wait and see and kind of hope Actually I think there's from what I've heard from people that know a lot more about viruses than I do that that unfortunately this will make it for the summer and and in terms of having a vaccine it's you know a long ways off so you've got you know it is scary stuff that I don't think it should affect what you're doing stocks but but in terms of in terms of the human race it's scary

stuff when you have a pandemic yeah I guess this one's particularly Frightening because it's new so there's no natural immunity that's built up in any of the populations and you wonder what happens particularly in areas where there's not the same healthcare structure that we have in America or in some of the developed nations I guess that's a big part of the question to him yeah it's it's uh well I think about a nervous of our annual meeting I mean that which is made a second I mean it it could very well affect by that time

it Could affect oh we've got questions from viewers asking just that will the annual meeting be any different this year particularly because you have a large Chinese contingency of shareholders I don't think that yeah then that certainly will be affected and and and incidentally I mean flow is particularly tough on old people gonna have two guys on the stages combined ages 185 so well well we won't be looking for people and showing any signs of contagion but That's one of the problems with this is it does have a long gestation period and it's highly transmissible

and again you did talk about it earlier it's something that you see and the results of the businesses even some of your own fully owned furnaces that you had didn't anticipate well we hold Airlines for example it infects businesses now actually my dad used to tell me story was 14 in 1918 and they he told me what went on in Omaha you know During the big Spanish flu epidemic uh me that it was it was something in those days and and pandemics will occur in the in the future now what they hope to get is

is a universal flu vaccine but that's a long way off it isn't impossible I mean I asked my my own science advisors Bill Gates so I talked to him I call him I talked him the last few days about about it and he's bullish on the long-term outlook for a universal prevention of it but but so they're not Going to come you know for not gonna be here in ten years what are what are Bill's concerns as somebody who spends a lot of time traveling around the globe as somebody who is trying to help medicine

in some of the less develop art of the world yet the Gates Foundation is is very active and trying to be helpful on this and and Bell says the CDC is the best in the world and I mean we've got terrific resources in this country but a pandemic is a pandemic and and there's Just no evaluating and but I have heard that the summer is not likely to cause the end of this do you know why but I don't know and you know you shouldn't be asking III shouldn't be offering my opinion on that because

I I pass along things right here from people I think are smart but but I'm actually asking for Bill's opinion not yours well I shouldn't and I shouldn't really quote it but I do a he's the guy I asked and I didn't talk to one just a few days ago And he loves the talk science and he could make it so I could understand it which is quite a trick at the Gates Foundation they're taking it very seriously I'll put it that way is money going from the Gates Foundation to try and I'm sure we're

expending human and financial resources have I mean maybe this is more than you know but you know if they have put human resources out either into China or other places whether I don't know that's I don't want To comment on that spectrum Bob din as human health and and and and even particularly this bill knows a lot about vaccines let's talk a little bit about Berkshire Hathaway we were in the middle of a conversation when we had to go to a break before but there has been this question raised not only by Baron's in the

cover story there but by other places too about whether Berkshire Hathaway would be worth more if it were split up that's a good question that I Will tell you that that if you were to say and let's say the stock market didn't change for two years and interest rates didn't change so you had a two year period and you said we'll sell off all the businesses I don't think I mean you have the expenses of selling them now if you sold them all the people who leveraged them up to their maximum you might get a

little more than the stock is selling for it would be very taxing efficient very tax inefficient Interestingly enough up till 1986 it wouldn't have been I mean there was a general utilities doctrine that governed corporate break ups and so you could dispose of businesses or securities if you did it right you could dispose of securities or businesses that are depreciated without a tax at the corporate level that was done regularly in various ways up till 1986 they revised the tax code big time they killed general utilities you can't do That now now you can go

up you can have spin-offs this business or that business you probably have to lie a little in terms of your purpose in order to get the best tax ruling and it takes time but you cannot break up you cannot dispose of the entire business business by business without having very substantial tax I though it would not produce again on the other hand having them together produces there there's some very valuable Synergies in there now we don't use leverage as much as the people who would buy and piece-by-piece would do so we could leverage Berkshire up

to the sky I promise people we won't because we have insurance promises to people out 50 or 100 years and we've got shareholders they're gonna own the stock for 50 years and they do not want us to tell leverage to the sky but there would not be a profit if if we were simply to announce that over the next 24 months that you Can come in and buy any business we had and we'd sell them to the highest bidder you made a point of talking about this in the annual letter you said key to my

only Berkshire or key to my Berkshire only institutions is my faith in the future judgment and fidelity of Berkshire directors they will regularly be tested by Wall Streeters barring fees and many companies the super salesman might win I do not however expect this to happen that's not exactly true I Think by writing it it helps a little to know there's no question that that Wall Street would love to come along and sell anything that we've got I mean though there's a V every time that there's a transaction and they're big fees and and there's fees

for an answer you gotta be this so we've had all kinds of people snoop around that then they know they're not getting it done with me but they won't it won't get done later on either I I am leaving Every every share of per tribe goes to charity and its 99 percent of my net worth so I got nobody cares more than I do about getting the most money to those philanthropies over the forward the years following my deaths and that's going to take place over 15 years and I say keep it all in Berkshire

but if I thought that it was going to be run in a way responsive the Wall Street I would I would instead do something else and and have the money distributed these Philanthropies and not have it all tied to Berkshire but Berkshire has a very unusual shareholder base I mean we have individuals that own Berkshire and a lot of them alone in 50 years just like its but people buy it to own for lifetime and and we're gonna run it in a way that they won't be disappointed me do you think the people who are

Neuer relatively newer shareholders buying the b shares have the same mentality as the people who have been in It for fifty years in the age well we tried it because that's who we encourage I mean in effect we don't want everybody to buy our stock I mean there's only so many seats there's about a million six hundred and some thousand a shares out all the seats are filled I love the shareholders we have I don't want to go to Wall Street and try and get some new shareholders they're gonna replace the people we have so

what we want to have is people in those seats That are in sync with us you can run a French restaurant or you can run a hamburger stand and if you serve good hamburgers you'll do good business stammers and you at the french fries shouldn't you do the same thing there but you can't run the French restaurant and serve hamburgers inside and you can't run the hamburgers down at serve the French food inside so we advertise in our deeds and our words and every way we can What we're about and we're looking to have the

seats filled at our church by people who are in sync with us and we do have them there we get the same people every Sunday and I see no advantage in going out and telling everybody and also we're gonna do wonderful things and having those seats for place because the only way you can get a seat is to throw somebody else on that seat there's only so many seats and they're all full and you want them filled with people who are In the sink with the with the policies of the company and therefore you have

to explain those policies and you have to live up to those policies and for 55 years we've tried to so you get the shareholders you deserve exactly it's all right not to mix metaphors but can you have a decentralized central office running both the French restaurant and the hamburger place well they aren't trying we're not trying to have the railroad management run the hotel of the Year decentralized that's what I mean a decentralized headquarters that's in charge a conglomerate in charge of all those different businesses well you we could run well we have decentralized management

as it is we could have somebody in charge of all the little companies is another one no the big and we could divisional eyes in all kinds of ways I think we'd have more overhead I think we'd have a different sort of manager or managers like running Their own and they they like they never have to finance their businesses I mean we they never have to go to Wall Street they never they probably saved 25 percent of their time and and I want them to feel they own their businesses and that's all they're responsible for

if we mess up some other way you know they still they get paid based on how they do and they're again we attract managers who like to operate on that basis we don't Attract managers particularly who think they're gonna keep moving step by step through various divisions and eventually run the whole place one of the things that that people wrote in a lot of people had questions about the bank's about what's happening with the banks but you've changed with some of your investments over time Jason Goldberg writes in and he says please ask Warren about

his views on the bank stocks in general and on Wells Fargo in particular over the last few quarters he sold almost a quarter of his long-standing work Wells Fargo stake also in the fourth quarter he dumped a third of his Goldman stock goldman sachs shares although he still owns over seventy five billion dollars in bank equities so what do you think about banks not necessarily the sell-off today because you don't look at day by day well banking is a good business if you don't do dumb things on the outside and I mean basically and it's

a business that the banks we own earn between the commercial banks earn between 12 percent and 16 percent or so on tangent that tangible assets that's a good business it's a fantastic business against the long-term bond you know a two percent they have a choice between a two percent instrument a twelve percent net so which one's gonna win over time so so if you ask me whether I think banks are going to go down where they only earn three or Four percent on tangible assets I don't think that'll happen the question is really whether they

do something massively dumb I mean which periodically a number of banks have done and I feel very good about the bank's wheel and I they're they're very attractive compared to most other securities I see and and most of them are buying Bank of America's in a lot of stock every year so our ownership of the Bank of America this Year probably will go up seven or eight percent without a spending a dime I think I'd like doing any business any good business where my ownership fix is up seven or eight percent every year without me

spending any money and on top of it I get a dividend so it they're very they're very attractive both against interest rates and against or against bonds and against other stocks in my build you say occasionally they do dumb things maybe you're talking about Wells Fargo with the scandal that it had it just settled on Friday with a number of the regulatory institutions that were kind of looking into it the investigator implications that were taking place for three billion dollars does this mean that they have kind of finally gotten through that and can move forward

I don't know the answer to that I know that because I don't know what else is outstanding but Wells Fargo's classic in in in terms of one lesson my partner Charlie martyred he's you know what he says whenever we have a problem you attack it immediately says announce a perversion isn't an ounce of prevention is not worth a pound of cure an ounce of prevention is worth a ton of cure and we've seen that time after time and the interesting thing I I and I don't know the details at all but the original thing was

a bunch of whole bunch of phony accounts now I don't know how if you open up a couple million phony Accounts you make any money on it I don't the shareholders didn't make money people say the Santa structure was set up so that some of the it's almost a system you can thing and as soon as you learn you can devise dumb incentive systems we've done ourselves I mean you can you could cause people to do the wrong thing because they will do what their incentive to do and they had a obviously a very dumb

incentive system people started playing at various ways And the big thing is they ignored nor that when they found out about it I mean you you're gonna do dumb things in business and we do them every day you know but they yeah absolutely have to attack a problem as soon as it occurs and yet and you know about it and if that had happened well Fergus are olders would be a lot better off but what for Fargo shareholders does not did not profit from opening up accounts that Were phony accounts that had nothing in them

I mean somebody was getting paid so much Burke out so the and the practice spread because bad practices do spread if they're allowed to spread and they were ignored which is a total disaster and and look at the consequences of two or three years later who's paying the shareholders are paying for something that didn't do them any good whatsoever is that why you've sold off some of the shares no that's not specifically I know You don't want to get specific on recommending what stocks people have to make up their own minds out of that but

okay I want to ask you a question about Todd combs and his new role at Geico I got several questions that came in from that and let's just use this one from Peter Lam Paris during last year's interview on CNBC after the 2018 letter was released you were asked about succession at Geico and you mentioned that at a recent meeting at Geico you Met about 40 of their top executives and after each introduce themselves they stated their length of time with the company the shortest was 19 years please explain why none of these 40 top

executives were qualified to take over a CEO after the retirement of Bill Roberts again that's Pete Lam Paris from Chicago bill Roberts took over not even two years ago and last and he's done a terrific job in connection with Tony nicely I mean Geico is my first love Absolutely I tell the other companies that do you can't compete for my second love but you can't compete for my first love was just Geico because it goes back sixty sixty nine years and it did wonders for me anyway Geico Bill Roberts took over the lesson two years

ago and then in October November last year he said he would he'd like to retire in a year he would adjust it in any way that made it the easiest for us and and we did not have the Person in my view to replace him at that point and Todd combs who's worked with Berkshire now for 10 years he actually was a product manager at progressive in the past and he knows a lot about insurance insurance is probably the only business I know something about the world all right summer no confusion but I understand the

insurance business in some degree Todd understands it very well at the operator level and so Todd is there and I hope Very much that that he's not there very long because I'd like to get him back home aha but our intention always is to promote them within and we would hope to have pick out the right person at Geico it isn't if there isn't somebody there it's just you want to have the right one because when you put somebody in you're going to keep him there for a long time and and or her and does

that suggest Todd is not going to be there for a long time I don't think you know no the plan Is not for him to be I mean he has not made a permanent career shift and he I don't know how long it'll be there we have we have one important problem which is which all insurance companies have but progressive has done a better job of managing of correlated risk with with rate and that is what we're focused on now correlating rate in other words having the proper rate right charging the right amount charging right

about if you were in the life insurance business And you thought that 80 year olds had the same life expectancy is 20 years old you'd have a big problem and what happened is you'd write all the 80 year olds and somebody would write all the 20 year olds so in auto insurance the same thing there's a lot of insurance I'm not sure I might prefer the 80 year olds over the 20-year well you might and yep he certainly would prefer the 80 year olds to the 16 year olds I mean yeah and you'd prefer the

16 year old female with 16 year old male there's a whole bunch of things so you've got a core you really got to segment risks and that's enormous ly important and every company's trying to do it better all the time we do it far better than we did 50 years ago we have room for improvement on that we're focused on that and the meantime we're growing faster they were gaining market share with Geico is a fantastic As that Todd job is to focus on that but it's also to work himself out of a job very

quickly and and preferably to work definitely that preferably to work himself out of a job with with somebody from Geico Eric Lafont writes a follow-up question he says Warren why did you and Ajit decide to appoint Todd combs as the CEO of Geico that part you've answered but how will he be able to run Geico manage a thirteen billion dollar investment Portfolio oversee Haven and be on the board of JP Morgan yeah well let's keep him busy and we're and we've totally unlimited use of him that judge oh sure I mean we wanted to be

efficient that's what that just is for it and and and you know I'll be working 70 hour weeks the the question about the portfolio is interesting most months neither tender Todd makes a single change in their portfolio I mean portfolio management is something that you learn over decades And when I ran Salomon I you know I was running bursary portfolio it's not something that you have to sit there day by day and new people do it that way but if there are many years where if I just left the portfolio entirely the same it didn't

make any change that we'd be better off so it that's not about but but you're right in terms of JP Morgan's border he's he's gonna be a very busy guy Geico is the top priority but it doesn't go to say the top priority For a long long time let me run to another question that max Oh 205 wrote in have Todd combs and Ted Weschler outperformed the S&P 500 since they began working at Berkshire why don't you disclose their record why don't why don't you disclose their record they said well we're not disclosing I I

think it would be very unusual form to discover disclose everybody sales last year among their salespeople or anything like that I think that they're titled to Work and relative anonymity our directors know how they do I know how they do we made a lot of money with them I feel very good I mean I feel very good about it Ben always but we're not going to we're not going to tell you how much each candy store sells its See's candy r who was the top the top person that at any place brought in the sales

or whatever it may be all right let's jump to Berkshires overall record versus S&P a Berkshire has now underperformed the S&P 500 on one year three year five year and tenure marks is that because it's too big and will it ever be able to outperform well certainly being too big as part of it and but I would say this during that same time I mean last year we achieved now I don't like a gap earnings very well but we achieved the highest gap earnings of any company in the world has ever achieved that's investor owned

and we have the highest net worth of any company in the World investor owned any company in the world so it I would say related to safety of principal over time I feel good about it and I feel good about the fact that 99% of my money's in it and that it will be the source of all the philanthropic contributions that are made for fifteen or dozen years after I die so but I don't think I do not think it will be in the top 10 percent of stocks performing over the next ten years I

don't think it'll be in the top 15 percent of stocks performing in the next 10 or 15 years I also don't think it'll be in the bottom 10% or 20% or 30% so but our ability to have a huge edge over the market generally with a 550 billion dollar market value and it's just it'll be minor but it'll be done in a very very safe manner is an investment in the sp500 a better investment it could be it could be you know unbalanced I think we'll do a little better but it'll be it'll be minor

depends on the Kind of market workers who are in a down market we're gonna beat it I mean it's that simple and times we will be the last ten years we haven't been but over 55 years it's worked and and it will continue working but it will not work at all like it did when we were working with a hundred million dollars or a billion dollars there's no question about that but we've got good businesses and there we won't be in the bottom quartile over any long Period of time there are people like there were

back in 1999 who have said maybe you've lost your edge it was a similar thing at the in 1999 where you saw the technology stocks that were the big high flyers that people were pouring their money into the dot-com companies and a lot of others associated with that if you look at the markets again it's the technology companies that have the big runs this time you're participating in Apple which is one of those Frontrunners but is this a cyclical thing to you you think there'll be another market downturn and then turn some diamond okay Berkshire

outperforms at that point or Oh little outperform in a down market but but that may not be satisfactory the people but we will because we have these businesses are making money and that I mean weird we're not weird somewhat away from a full market participation on in either direction but that's fine we own if you Think about it we're 80 some percent in equities yeah we may so to show two hundred and thirty or forty billion in equities and that looks like we're against our market cap we're 40 percent but we own a hundred percent

of these other businesses those are equities too I mean we own a right and we own insurance companies and those are those are equities so we're about 80 percent in roughly inequities and about 20 percent in cash and I'd rather I'd Rather have that 20 percent and other good businesses but but that is to some extent a curse of size and it's to some extent the fact that that it's very hard if interest rates stay at this level will wish we'd for the next 10 or 20 years who wish we'd been a hundred and twenty

five percent in equities I mean that did you know equities are so much cheaper than bonds long bonds that you know some something will change in a major way I just don't know what and I want to be prepared for anything obviously so that's why you keep so much cash around you want to be able to be prepared for a downturn and you want to be prepared for a crisis we want to be prepared for anything we want to be prepared for pandemics we want to be prepared for anything comes along yeah that is the

chief job I have I have people's money they gave it to me fifty or sixty years ago on some of them still have 100 Percent of their money here essentially in it and and the one thing and I've got the responsibility for five foundations that presently are going to get 80 billion and I think we'll get a lot more over time probably we don't want to permanently lose money and and you don't want to get that so that you go into a shell and don't do anything but we have obligations to people on workers compensation

claims and auto accidents they've got to go out 50 years and you Know we have to run the place so that every check clears under any circumstances and that's why incident we own Treasury bills we don't we don't know commercial paper we don't rely on bank lines or anything when people get terrified and they will occasionally everything freezes you know and and you're gonna have to stand on your own feet at a time like that won't happen very often but it'll happen occasionally I know you've developed a thick skin Over the years but does it

tick you off when people start questioning whether you've lost it whether you can still well I I'm sure I've lost all kinds of things I'm lost that happens but we haven't lost Geico or the railroads Berkshire without me this is worth essentially the same as Berkshire with me I mean I that my value-added is not high but but I don't think I'm subtracting value but the big thing is how our businesses do and what What what we get to add in the way of businesses over time and we can add them through marketable securities I

mean we own five and a half or a little over a percent of Apple that's probably the best business I know in the world and we own five and a percent of it and that is a bigger commitment that we have in anything except insurance and the railroad so it's it's our third largest business yeah made the point that it was bigger Than your biggest acquisition a precision no it's our third largest business all right let me test you on your thick skin okay here was the kicker of that Barron's cover story said there's reasons

to think that the company will be a market beater when he's gone in the meantime happy 90th yeah well its iio but as a market beater what I'm counting on I'm telling my estate and then the trustees that succeed my Executor Xin the estate I'm telling him to keep every share of Berkshire they have until they have this pattern they're giving it away I mean look I want them to look back and say gee we should have made this change earlier because it's going to determine how much we by the way of vaccines and you

know and and all kinds of things education and all these things and I feel terrific about Berkshire after I leave I want to talk about another issue that we have Not touched on yet and that's politics here in the United States we just watched the Nevada that Nevada caucus Bernie Sanders walked away with the most delegates after that he looks to be mcclure front-runner for the nomination for the Democrats this time around you have long been a supporter of the Democratic Party what do you think well I think I'm gonna wait and see who gets

the nomination but I'm a Democrat but I'm not a card-carrying Democrat and I Voted for him hold against I've contributed a Republican seat in fact I've i-i've only run for two offices in my life one was head of the Young Republicans at the University of Pennsylvania and the other time I was actually on the ballot running for a delegate to the Republican National Convention this 1960 but normally I vote for Democrats and we will see what happens Wow that's the first time I've ever Heard you say something like that well it's I've kept it a

secret for all these years but now it comes out you just said that you're not a card-carrying Democrat it's true you are a card-carrying capitalist actually have one of those in your wallet yeah I've seen it I don't know whether I'm a card-carrying capitalist right I don't think that's consistent with inconsistent with what I said on politics yeah here it is Can't see I'll show you on this camera right are you caring capitalist and this is what you carry in your wallet yeah and I think I think we will have some of those available of

the annual meeting do I think Andrews got a question that he wanted to jump in with here Andrew I was just gonna follow up on that question Warren which was about a year ago we had asked you about Michael Bloomberg and you had said that if he ever entered the race he Was somebody you would support would you support him is he your candidate well I would he I would certainly I would certainly vote for him I don't think I don't think another billionaire supporting him it would be the best thing to announce but sure

I would I would have no trouble voting for Mike Bloomberg well I don't think I want to get into handicapping the race but I would say this in terms of Sanders I actually agree with him in terms of Certain things he would like to accomplish I don't agree with them in many ways but in terms of the fact that that we ought to do better by the people to get left behind by our capitalist system I don't think we should have killed the capitalist system in the process I think we should make sure that the

golden goose keeps laying more eggs and it's worked wonderfully since 1776 but it doesn't work as well for people whose talents aren't really geared to a Market economy and I don't think anybody should be left behind by an economy that has over 60,000 dollars of GDP per capita and so I'm a big fan of increasing the Earned Income Tax Credit and I'm I'm you know I think there should be some changes made but but if given a choice I wouldn't certainly vote for Mike Bloomberg as opposed to Sanders there is a let's talk about some

of Sandra's plans you said you agree with some of what his Intentions are but let's talk about some of those actual plans one of those plans would be to give 20% of company stock to employees and put workers on the board what do you think about that that would be for any company public company that has more than hundred million dollars in annual revenue or 100 million dollar balance well I don't want to get Baba's evaluating his whole plan but I think that would be a particularly bad idea because I just I don't think that

I Don't think putting 20% of the capitalist auto labor you could ID and I I I think the market system works very very well in terms of developing more goods and services I mean when you flew out here to Omaha if you've gone out there and you're gonna be able to fly in 1776 you wouldn't have seen anything everything you see is the product of a system that's worked like nothing's ever worked in the history of the world so I I do not believe in Messing up our system of developing output I do believe that

that anybody's willing to work 40 hours a week and has a couple kids should not have to have an extra there's a second job and I believe in having a higher income for people not necessarily a higher minimum wage but I I do not think it's at all unreasonable that the Income Tax Credit produces at least is $15 an hour maybe higher in certain areas so I I've been very much in sympathy with the fact that that that Senator Sanders believes that a lot of people are getting left behind and through no fault of their

own and there's all kinds of aspects of capitalism that can need in some ways to be regulated but I don't believe in giving up the capitalistic system all right let me slip in some questions that viewers have written in on this front Michael blank writes in please ask Warren if he thinks the market will sell off if it becomes clear that Bernie Sanders will win the Democratic nomination I think I normally would never make a comment on something like that but I would say that if you had Sanders and a Democratic House and Senate or

if you had Trump with a Republican House and Senate there would be a significant difference but I don't think I would necessarily vote on what in fact I know I wouldn't vote on what I thought necessarily would affect the market the Better I think it's a very poor yardstick I would not want to cast my vote in a presidential election based on which would be better for the market in the next 30 or 60 or 90 days after the election but your reservations with Bernie Sanders I assume come with your concerns about what it means

for the economy not over 30 69 is over a much broader period certain aspects of the economy just certain things you know I'd like to see done I would like to see the Earned Income Tax Credit change dramatically upward Allen Bucky writes in a letter he says if Michael Bloomberg becomes the Democratic candidate would you consider buying his company no [Laughter] because of the price because of there'd be there'd be some pay more Warren we've talked this morning about the corona virus but there are people who are waking up across the country now kind of

tuning in at this hour so maybe we Should address this again with the market syndicated down 750 points with concerns about coronavirus spreading and now worries about what that will mean for the global economy this year I know this isn't not something you look at a day-by-day basis but how do you kind of wake up and read this and think through it I don't think it makes no difference in our investments I mean there's always gonna be some news good or bad every day and in fact if you go back and read all The papers

for the last 50 years probably most of the headlines tend to be bad but but if you look at what happens to the economy most of the things happen are extremely good I mean it's incredible what will happen over time so if if somebody came told me that the global growth rate was gonna be down 1% instead of 1/10 of a percent I'd still buy stocks if I felt like the business and I like the price at which they and I like the price better today Than I like to last Friday do you like prices

better today will Berkshire of you're buying stock today well we'll certainly be more inclined to buy stock today than on Friday yeah yeah anything we were buying Friday we were behind the day and and feeling better about buying it you know one of the things we talked about in the annual letter was stock buybacks of Berkshire Hathaway and for the first time you told people to call Marc Maillard in your office outright if they have 20 million dollars worth of Berger shares and they're ready to sell right that's a really unusual move why didn't you

do that well we did it because it's very hard to buy blocks in the market of the Berkshire we probably never see blocks except we do see him from estates or occasionally but if somebody's going to sell honour'd million shares a hundred million dollars worth of Berkshire and we want to buy it We'd like him to call us and if it's if it's if we're buying at that price level we'll be buying Leviathan Dan Mahoney actually wrote in with a very similar question he just said is it hard to buy back the shares it's harder

to buy back Berkshire shares and say Bank of America I was buying back their share Bank of America bought back eight or nine percent of their stock last year and they can really do it without moving the market I mean Apples been buying back a ton of stock they were buying stock at the same time we were buying stock but it was easier for us to buy Apple stock even though Apple itself was buying a lot of stock than it is to buy Berkshire Berkshire is well it's held by people but really plan to keep

it there I think the amount of speculation and Berkshire stock is relatively low compared to most stock sense and so it's it's it's it's it's well we bought five billion dollars Worth last year but that's only one percent of the market cap and and I would say with a great many companies you can buy four or five percent of the company fairly easily a year without disturbing the market market expres has been buying it every year so with you putting out an ad in the letter to shareholders does that basically mean you are eager to

buy more shares back ends on the price but but we'll let anybody know if they and we told him to Call us before the opening or after the close but but and only of only with blocks and only if they're ready to do business now there'll be a few people probably they'd probably try and call just to see whether we're buying or not I mean we will we will not show a lot of patience with those let's talk about shares of Apple both from you just mentioning it with the share buybacks with it being such

a huge holding of yours you've got more than 5.3 percent of the company right now in these five six but goes up every day well we've seen with the slow down with the coronavirus because Apple is one of the companies that has said it's going to have an impact not only at the stores that they've closed there with the behavior of Chinese customers but also what happens with the supply chain sure what how do you read through any of that what are you hearing do you know more than we do on all right no I

don't know One thing more I see I may see Tim Cook at the annual meeting I see him in Sun Valley once a year no I I don't think I don't think that placed a phone call to Tim Cook in two or three years I mean it no I it all kinds of things are gonna happen that for the next ten years the real question is is you know what is the degree of pervasiveness and strength of that product five or ten years from now and I don't think of Apple as a stock I think

it's our third largest business It's also a high-flying technology company it's one that's been at the forefront but you've said in the past you didn't buy it because it's a technology company I think it's a consumer product so in fact I think I've said this on the program a couple of years ago I mean it is obviously it's a consumer product company to use this technology but we've got a lot of parts that use technology that Berkshire but it's an incredible company and and I Should have appreciated it earlier there's a question that came in

from I guess the handle is GPG this is a question that came in on Twitter and the writer asks you've said that you can do fair value estimates of companies you follow at any time in your head so please do one now for Apple what went wrong with your estimate for IBM and how is that amiss how is that miscalculation different than for Apple IBM two entirely different business than Apple I Mean I Apple does it resemble IBM anymore Arizona but it resemble C's can't even way more I mean it is a incredibly useful the

people that grows more useful as the number of people I mean it's really interesting you know they get we call them smart phones if you go back and look at the old telephone that was an incredible useful PI changed my mother's life and my dad's I changed lives in every way and they they took a long time To become pervasive and it was very expensive initially but it it changed the world and the smartphone is part of hundreds and hundreds of millions of people's lives in all aspects of their lives it's used for as all

kinds of utility it's a consumer product are you a consumer of its products at this point you've had a lot of fun for forever ah I am now using not very often I'm using the latest model and I'll give You a little preview of our our movie for the NE we haven't done it yet but there will probably showing me crushing with my foot my old phone when did you get smartphone I've been given several of them but including by Tim Cook one finally stuck one finally stuck yeah yeah absolutely no I I my flip

phone is permanently gone the numbers been changed by yeah yeah I mean you're looking at an 89 year old guy that's barely beginning to be with it what do You like best about the phone and what do you like the least well I don't I don't use all it's for somebody's like most people I'm in most people are living their lives around and I use it as a phone as a phone and no I don't like it investment bankers talk about evide which I read translate his earnings that was Berkshire Hathaway vice-chairman Charlie Munger about

a week and a half ago when he was speaking At the annual shareholders meeting for his other company The Daily Journal answering questions giving his usual straight answers when things come up his questions a war and that was Charlie talking about EBIT da Ernie yes calling them be s earnings although he said it a little more explicitly you and your shareholder letter for Berkshire Hathaway also wrote about how you don't believe in gap earnings what how do you guys come about this what do you think You still have to report these numbers but you're basically

telling shareholders don't listen to them well the the yeah it's two different principles I mean the gap numbers which show us earning eighty billion which is more than any company's ever earned in history aha and we explained why then that really isn't the relevant statistic because a lot of that was just the stock market going up which now gets counted in our earnings and Charlie was Expressing an opinion we both have a try Charlie's the shy reticent one but one of the pair but Charlie is the best partner anybody could possibly have we've been partners

now for 60 years and and you could not have a better partner he at 96 a woman since that meeting actually in the last couple of weeks a woman said to him is it to mr. Munger that you have eight children and Charlie's reply was so far Charlie Charlie is very much an active partner We'll put it that way next time I see them I'll get an update on that does it well that's so farst you know we watch pretty closely charlie shareholder meeting for the daily journal or we'd send cameras out we watch it

I've been out myself do you watch that meeting too to see what is I watched it all on YouTube after word after word said but my sister and my good friends and my niece we're all there and and no I end up watching it and I actually end up Reading it usually to it I wouldn't but I don't go out for it was there anything he said that surprised you this time around I'm just looking through some of is actually nothing Charley says can surprise me is there anything that enlightened you or changed your opinion

on something maybe something like that but you I learned from Charley every time I talk to him Charley he has the best 30 second mind in the world so I can go to him with an a new question no Problem any kind and it goes through about eight filters in his mind in in ten seconds and he gets to the essence of any problem there is nobody better to talk to than Charley at age 96 is there anything you've talked to them about recently that you might be able to share I don't know if you

want to share the conversations you guys have privately but anything where you bounce something off of them any my mom's we we talk About a lot of things and we talk a lot of we talk particularly about things we don't know the answer to and and you know we find the whole scene so interesting whether it's politically or economically of the world I mean it it it's incredibly interesting to us and and we're particularly interested in each other's view although I think I'm more interested in his views he said my that would be a correct

decision to make for somebody over here I guess what's Something you guys don't understand right now oh we do not understand at all what the outcome will be in a world where thirteen trillion is being borrowed at less than zero and even Greece went on short term I think Greece the ten-year bond is one percent for example and and at the same time in this country we're having under very good business and market conditions we're having a four-and-a-half percent federal deficit and nobody is concerned and at Least and we're talking about massive new programs and

so on everybody talks about how they'll pay for them but they really you know the deficits gonna widen and so we don't know what world comes out of something where you start with extremely low interest rates and high rates of growth and then what you do for stimulus later on but the whole game I mean the game always unfolds differently than you expect and and that's what makes it so interesting you know the ten Year speaking of these low rates just a little bit ago hit its lowest yield since July of 2016 this morning I

think it was one point three seven seven percent we're back at one point three nine six percent but ten-year rates below one point four percent do you have anticipated it it makes no sense to lend money at one point four percent to the US government when it's government policy to change to have two percent of your inflation I mean you've got you've Got the government is telling you we're going to give you one point four percent and tax you on it and on the other hand we're going to presumably devalue that money at two percent

a year so these are very unusual conditions and classical economics it doesn't appear that you know what do people do under such circumstances is everybody buy a mattress and stick their money under the mattress or what and it particularly seems unusual when the world is Generally prosperous and you know but that's the game is always changing but it always looks logical in retrospect in it and it's always looks puzzle again prospectively but there's always things to do that make sense to like what well I hope that's what we're doing it's buying good businesses at decent

prices whether all of the businesses or parts of the businesses through the stock market you know you told me a year and a half ago maybe longer that when you went Out to try and buy whole businesses right now it just looks too expensive which is why you started buying pieces of companies more stocks but like Apple is that still the case is it still a huge premium to try and buy a company outright there's quite a premium and part of the premium is because you can borrow so much money so cheap just so cheaply

in buying those businesses obviously you can pay more for a business that you can borrow a very high Percentage of the purchase price and of the future cash flow committed to it and you can borrow a little race with with very little in the way of restrictions restrictive covenants or anything of the sort I mean that that's going to higher prices and the he demand for that is huge and people look at those race on the thirty-year the ten-year and they say to themselves gee I can't live on that and so they they stretch and

buy poor credits but that's that's just part Of the human cycle overtime and that that leads to something else and that leads to something else in the end if you own good businesses at the right price you're gonna do fine you're often quoted as saying that you don't know who's skinny-dipping until the tide goes out and who's swimming naked yeah it goes out maybe you get the sense with a high tide right now that there's a lot of skin well we're certainly doing we're allowing people to Borrow money on much weaker terms than we were

five or ten years ago he couldn't borrow money at all or from ten years ago I mean literally you could Berkshire couldn't borrow money I mean everything stopped and now we've the pendulum was swung dramatically and yet we still have you know we have very very very alright it's hard to believe that 10 years or 20 years now we will have a substantial continuation of negative interest rates but I've already seen Things I didn't think could happen zoom ahead who knows what could happen that's what makes it interesting let's get back out to Omaha where

Becky quick is with Warren Buffett and there's a lot of important things happening but don't forget that March Madness is right around the corner Becky and you should see what he's doing right now Joe it was rubbing his hands as I said that now you're talking his language yeah well Creighton it was 72 35 at one point and I had Creighton yesterday I don't know if you were paying attention to that that were you watching that at all Warren Nebraska plays tonight we pay attention to Creighton out here we talked about it earlier this morning

I'm thinking I think they're peaking I mean they're getting better and better better that the three-point shooting was I think that one guy was seven four seven at one point yesterday which is I'd be like seven for Todd bad for Three-pointers I think anyway get back to business I just said I'm looking forward to a warning and I know we always have our own personal bet if I get them all right you give me Berkshire Hathaway which would would be cool for me I'll tell you if you get if you get it all the way

I'll give you my Berkshire Hathaway shares all the way to the 64 against that's we give it to ya yeah it's how sure he is that you won't be able to do it Andrew I hear you I Hear you have a question to Andrew I hope I actually have a couple and I thought that I read the letter like everybody else over the weekend it was fascinated by so many of your comments Warren specifically I wanted to ask you you talked about diversity on boards in this letter and one of the things I wanted you

to weigh in on if you could is I don't if you saw but David Solomon the CEO of Goldman Sachs on our air actually announced a couple of weeks ago That he won't be taking any companies public Goldman won't unless they have at least one diverse board member and we're likely going to push that to two you know in the state of California they put a law into place saying that you needed to have a female board member and I'm curious what you think of not just the the push towards more diversity on boards but

the requirement because I also note in your letter that you have very specific thoughts about what it Means to be a board member what it means to be an independent board member how wealth is involved in all of that what are your thoughts well at Berkshire for decades we've given the three factors in addition to integrity but for board membership and and and we want people who are business savvy we want them do have a a strong personal interest in in Berkshire itself and we've we've got directors who really represent shareholders basically at Berkshire and

I think they do a great job now that doesn't mean that they don't think that we should delight our customers that we should treat associates well but that we should be the Abe well in our community both local and national but but our sure that our directors represent the shareholders so Warren just to just to follow up on it though what's your thought about both the requirement that that may be banks and others investors are going to force Companies to have diverse candidates on their board laws as I mentioned in California yeah I actually there

there maybe there's been sent to us a proposal which unless it's withdrawn will be on our proxy I can't tell you precisely what it says but the release of this issue and we will get our shareholders view on it I I personally and I watch shareholders that I want directors that represent the shareholders even you know in terms of my estate you know with with Maybe currently 80 billion dollars worth of shares did you have to fall out to be I I hope that we have we do have a group of Directors that I think

will be very conscious of doing the right thing the reason I ask the question is because the other point you made which I think is a very smart one and is often misconstrued in the corporate governance land is that an independent director these days isn't always independent in large part and you make the point that those that don't Come to the table with some form of wealth often need the job they need the money they want the money and therefore that makes them less independent and the reason I ask this is one of the things

as we've been trying to get more diverse candidates on boards more women on boards as you know there there are there are fewer CEOs fewer people who have made enormous amounts of money and people therefore they can question their independence it becomes a very tricky Issue and that's what I was hoping you might weigh in on yeah Andrew I've been on 21 publicly on the boards of publicly owned companies and I've seen them in operation and I would say that the people that I have often seen and that's perfectly understandable I have often seen people

to request classified as independent directors and they are getting three hundred thousand dollars a year for a job that takes them a couple of days Maybe six times a year maybe four times a year and the company flies them to their office and it's very enjoyable than the company's good and and who wouldn't want a job like that I mean I it's it's an incredible job and people I get calls from I get calls from headhunters I get calls from CEOs and they ask you know who I think would make a quote good end quote

director and what they are asking is you know who is not going to cause too much trouble and Who's going to reflect who their name is going to reflect credit on the institution and they are not looking for somebody that that that I would regard as really independent and I don't blame them I mean if if if I had spent my life being a you know a teacher or whatever might be I mean my IQ is just as high as the average or higher than the people on the boards and all that but on the

other hand I want to get on a board I mean three hundred thousand bucks a year Would look terrific and you're about to retire probably in most cases is sixty five or anything of the sort so to call them independent is ridiculous and if you're if you're on one board like that you want to really go on another one than me and make six hundred thousand a year and you are not going to do things that irritate your present CEO so and he or she gets a call and says would this guy make a good

director that the answer is no I hate it it's it's It's just ridiculous to ignore the factor of compensation with board members okay all right let me let me ask a follow-up question that is similarly related yeah Warren and that's just having to do with sustainability all these issues that are out there guys in the control room sorry this is not where I told you I was going but check vara wrote in a question he said Larry Fink recently said that our investment conviction is that Sustainability and climate integrated portfolios can provide better risk adjusted

returns to investors what's your view on sustainable investing well III don't happen to make that decision when I'm buying stocks in our portfolio I'm I what their individual policies are I think they're all pro-social I mean obviously okay you've got to be in tune with your society but if you if you think that I look down at a bunch of stocks and decide whether to buy Apple Or whether to buy JP Morgan or I am not I'm not using the factors and and the delays out okay I want to run through a series of questions

that have been in these are kind of all over the map so forgive me will bounce around but these are questions that came in from viewers that I thought were good ones Lucas writes in he said did Justin's son change your mind on cryptocurrency anybody who doesn't know Justin's son bought the dinner or the lunch that you Just had from the last glide Foundation fundraiser he is actively involved in Bitcoin after that meeting his PR people put out some notes saying that you know you kind of listened the cryptocurrency and maybe you're a little more

in tune with the idea of Bitcoin now well I would say this when Justin and four friends came they'd be a perfectly and we had a good three and a half hour dinner and the whole thing was a very friendly exchange of ideas but crypto Currencies basically have no value and they don't produce anything so you can look at your little ledger item for the next 20 years and it says you've got X of this crypto currency or that it doesn't reproduce it doesn't it doesn't deliver it it can't mail you a check it can't

do anything and what you hope is that somebody else comes along and pays you more money for it later on but then that person's got the problem but in terms of value no zero so it sounds like He did not change your present change as either I I had a very pleasant dinner and those people were they behaved more than well and they gave four points there Justin gave four point six million collided and that will buy a lot of meals and provide a lot of beds for people in San Francisco so I thank him

he gave you some Bitcoin what's it feel like to be a Bitcoin I don't have any Bitcoin you don't know no you don't know a bit cause I know I do Not own what I don't know any cryptocurrency I never will and you know in the end I may start a war on currency you know maybe I can create one and I'll say there's only gonna be 21 million of them and you can have a little ledger sheet from me and everything that says you have it and and you can have it after I die

and you but you can't do anything with it except sell it to somebody else and the interesting thing of course is that bitcoins been out There a long time and people talked about how it would be used in in various kinds of exchange but none of our companies are doing business in in Bitcoin or anything yeah that coin has been used I think to move around a fair amount of money illegally so the logical move from the introduction of Bitcoin is to go short suitcases because the money that was taken him suitcases from one country

to another suitcases are probably fall off in demand I mean that So you can look at that as the economic contribution of a Bitcoin to the society is it alright let's talk about a question that comes in from rusty Thomas and he has he's got a question on baseball he said given Warren's love of baseball and the contrast between his deft management of the Solomon brothers scandal and Major League Baseball's inexplicable mismanagement of the Astros sign stealing debacle what advice would Warren provide MLB Commissioner Manfred To restore confidence and integrity in the game yeah well

it survived the Black Sox game 1920 and people will continue to love baseball but it was one thing to steal signs if you were on second base but it's bad baseball we'll get past this baseball fan where you I mean you're a huge baseball family surprised to hear about yeah I was surprised to hear about it yeah but then I find out the Bobby Thompson's home somebody just stole the Sign I think I'll break it or somebody ate on it so people were gonna in any games including the stock market game you know certain number

of people cheat and and generally we have people that administer things to try and minimize them the cheating and and I'm sure them Major League Baseball will address the problem the Astros players get off scot-free oh I'm not gonna make a judgment on that but Joe Jackson certainly didn't yeah Let me ask you about a question that came in from several viewers actually and that's about the ETF's de Mosely management wrote this version of the question and news agencies have reported the Berkshire Hathaway purchased two ETFs so can you talk about if this purchase happened

and if the purchase happened who purchased the ETF for Berkshire Hathaway and how was the decision made to purchase it yeah it wasn't me or it wasn't taught or wasn't Ed and yeah it happened in some pension fund and we have a few pension funds that aren't actually managed by this but I all I can tell you is that nobody at nobody that manages money at Berkshires buying ETS nor do I see any possibility that they will another purchase that came up recently Kroger and Jason Escamilla writes in was that one of yours or or

lieutenant spec it was one of the others and you know I know coverage covers done a good job but it's In a very tough business I mean when you have when you have Amazon and Walmart slugging it out and Costco taking a special part of it everything it's a tough business but they've done a good job and and one of our managers decided to buy that and then Kraft Heinz this comes in from David Hall he says mr. Buffett while Kraft Heinz continues to whittle down their total debt do you feel that the current dividend

payout is appropriate or should it be reduced Further to free up more cash flow to reduce debt more rapidly I think Krabs should pay down his death and that should but I think under present circumstances it appears that it conveyed the dividend and pay down debt at a reasonable rate and it has too much debt but it doesn't have some it doesn't have debt it can't pay down and this the debt holders are gonna get the interest and then the debt should come down year By year and I think it will and I think it

can with the president dividend but who knows for sure in the future you know feel those rights in a similar question and says do you still believe in the company and management it's still a great business in the sense that it earns will say five billion dollars after depreciation pre taxing on seven billion of tangible assets that uses about seven billion of fixed assets it doesn't know that working out well I Mean the it's a very valuable business but we paid too much for a furniture craft and we we took on more debt than that

and but we paid too much another question comes in from Bo again on Kraft Heinz and this person writes in private labels have performed very well against brands like Kraft Heinz but they haven't made a dent against other brands like coca-cola or C's why do you think that is and how do you think about brands modes given your experience with Kraft brands are always going to be in a fight with the retailer and it varies by country enormous Lee it varies by product category if people I worked in a grocery store in 1941 Charlie worked

with say one in 1940 people would call him they'd ask for a can of peas and I'd write down a can of peas they called it and they'd it asked for Heinz ketchup and I better get it given mine's ketchup they didn't care which brand the peas were they didn't care that much whether The two quarts of milk we said I'm worth this brand or that brand but they cared whether but it was it was it was Heinz ketchup that was it you know 1941 some brands are terribly strong you can't bring out a private

label : do very well with it and people have tried for a long long time on the other hand you can bring up private labels and lots of products and and they saw very well and you know you take Costco with their Own Kirkland label I mean that that like will grows dramatically it cuts across categories it it you know it it's done since 1992 or whatever was introduced to what other people spend out of years you know with huge amounts of advertising and special display all kinds of things so the battle goes on I

would say that the retailer has gained ground against brands to some degree but brands are still terribly important I mean that try and give me a ten billion dollar budget And ask me to bring out another called Co love it makes a dent in coca-cola and I can't do it one of the questions that did come in it was something that you wrote about in the annual letter was the role that Gregg and Ajit play Gregg able AG Jane the two vice chairman who were recently added as vice chairman the role that they're going to

be playing in the annual meeting with shareholders you said that they will play a larger role in the shareholder meeting how will that Work well it will mean that any shareholder or any of the journalists there who are presenting questions from shareholders have been sent to them can direct those questions to either a gene or to Gregg so if they were insurance questions they might want a direct analogy not insurance questions to Gregg but they will be there and will have 60 years old questions we don't know what they're gonna be and and if anybody

says I would like Gregg dancer this or I Would like Ajit answer this then they're right there adjacent to listen they'll be sitting on stage with you and Charlie well yeah there's nobody sitting in front of the crowd there's two different levels and tiers there again you said you did this because you've gotten a lot of questions from directors shareholders other people who had kind of advised you that they thought it was good for them to be playing a bigger role well everybody I Heard from quite a few more people not we directed questions out

to them where they were sitting with the directors out in front then the spotlight went down but this may encourage more questions directly of them and that'll be terrific okay Jim Beam writes in a question he says in the past both you and Bill Gates have stated that half of the board meetings are spent discussing succession how has this changed since Ajit and Gregg are on the Board do they leave the room they leave the room but if I die tonight the board tomorrow morning knows exactly what they're gonna do I hope they're polite about

it let the body cool off basically they know what they're gonna do and the interesting thing about it is we own a you know the Apple and JP more than all those things I don't know who's gonna succeed the CEOs of of any of the companies I think that we own stock but we're well prepared for accept Succession calm is going to be embarrassing how well alright let's get to a few more share holder questions chip crook writes in a note and says it was reported that Boeing was looking for a large cash loan were

you ever approached about Berkshire loaning the money kind of like the goldman sachs deal from yours exact steal from you don't know I think I think Boeing's raised about thirteen billion but that's Bank type Money in other words I my memory is it's maybe 1% male that they're looking for they're looking for traditional bank loans and we don't make traditional bank loans you also talked in the letter about how Berkshire Hathaway has Berkshire Hathaway energy I should say has the ability and the talent to manage big investments a hundred billion dollars and more I think

you wrote we stand ready and willing and able on such opportunities California governor Gavin Newsom asked you at one point to bid on PG&E is that such an opportunity PG&E we obviously I mean we work with them for decades have been familiar with them but but that doesn't that doesn't fit Berkshire but if there were a hundred billion of transmission lines or whatever it might be Berger could do it I mean and we would love it that happens to be a very tough thing to do cuz across all these states and everybody does not in

my backyard And all that but but there can be huge intelligent investment may than the utility energy area and no one is better equipped to do it than Berkshire and both talent and resources why does PG&E not fit that bill it's too tough I don't know the to it I mean that rearranging that utility and I think I know governor Newsom I think he's a very very very smart guy and and in terms of solving this problem it's just not easy you've Got so many constituencies and they're at each other's throats and there's lots of

money involved and I don't want to be the guy I don't know how to solve all that okay let's go on to a question that is posed by Ken Ducey he says you sold 31 newspapers after buying them over 40 years as a self-described newspaper addict you said recently that most newspapers were toast I know that's not exactly that's not true this isn't his question you can answer that yeah do you Believe the problem with local newspapers is a lack of demand or a lack of innovation and a new business model well bomb is that

well getting back to the toast comment Andy serwer actually as a fellow since he was interviewing me and I repeated it but the the problem is and even everyday the circulation of the papers in every every sprint print circulation goes down and the interesting thing about it of course is that the three survivors so far that Look promising online of the New York Times in The Wall Street Journal and The Washington Post all three of those papers sold their smaller papers the New York Times sold I think 11 papers about seven or eight years ago

the Dow Jones which owned the Wall Street Journal and that was owned by News Corp they sold the Ottawa newspapers eight papers Washington Post sold the upper hair on so they all saw the handwriting on the wall before I did and they all sold Their papers that was their reaction they did not they did not try and figure out the online solutions they they got out of them and unfortunately I bought some and we're still and I mean we are financing Lee and we think Lee has by far the best opportunity to continue print as

long as anybody and to find an online solution for these papers so we put new money into the newspaper industry here or we've committed to do a little close in a month or two and then Finally very quickly we are in the Berkshire Hathaway's headquarters building here in Omaha Strom writes in a question and says why did you decide to rent you're off for all these years instead of buying the building or building your own office building well we only use 1/4 of the 15 floors here but we haven't signed a lease for the next

20 years on one more floor so it shows just how flexible are thinking is about the future we don't Want a big headquarters office if we had a big headquarters office and we'd fill it believe me I mean if we had 15 floors of our own we'd have 15 floors worth of people warned before we let you go let's just go back to the futures again this morning because right now the Dow is indicated to open down about a hundred or 830 points weakness again on concerns about coronavirus and what that means what's your mentality

today as you kind of go out and look at stock market and Decide what you're going to do we're buying businesses down for 20 or 30 years we buy them at Whole we bought them in part they're called stocks when we buy them in part and we think the 20 and 30 year outlook has not changed by coronavirus Warren want to thank you for your time today we really appreciate it your generosity with your time and we hope to see you again soon come every year you You