Transcripts For CNBC Squawk Box 20150302 : comparemela.com

Here are the big stories were watching China Central bank cutting the bench mark interest point. The move giving stocks a boost in asia today. And then this one is deep. A big deal. Check this out. Nxp, andrew is buying free scale. Check out the nxp price. Its in cash and stock about 12 billion is what they said. No premium initially because it closed at 36. 11 free scale did. And theyre paying 36. 14 in cash and stock. Look what happened to the acquiring company nxp is up 14 or 15 . So the tieup between the two companies are getting more valuable by the second. But its more than 40 billion. Both make a lot of things for cars. You know, some mobile stuff but i think free scale was mostly microcontrollers and nxp has recently gotten into stuff for payments, too. Which is getting both have been in private equity hands and come out. Freescale used to be motorolas semiconductor and nxp was part of philips. You know this . I did. Did you really . Youre acting like everything im telling you yeah yeah yeah. I was almost boring you with some of that. I read the papers. I read the papers. Thats where i got it all. And twitter said it is working with Law Enforcement agencyies to investigate an alleged isis threat to cofounder jack door si. The post in question depicts a mans face in cross hairs and the message is addressed to dorsi directly and condemns twittertwit twitter for having shut down isisrelated accounts and warns we always come back. It it. Lets take a quick check on the markets. Futures at this hour take a look see what is going on with the opening bell. We have a couple of hours to go. Nasdaq up about 13 points and the s p 500 up close to three points. Among the stocks lumber liquid daters. They sold flooring with higher levels of formaldehyde. They said it complies with regulations regarding the products and argues they are driven by a small group. Lets get back to becky and warren buffet. I need to thank warren buffet for giving me a lot of reading over the weekend. Yes. A lot of us with a lot of reading over the weekend. This is a big year andrew for Berkshire Hathaway. Part of the reason the letter was longer because 50 year anniversary. There was more in the letter something about 50 or 60 more words than average. Yeah. Normally its 12 or 13,000 words. The letter itself was then another 8500 by me and another 2500 by charlie that looked back 50 years and 50 years. That is an amazing feat. Were live at the National Company lunchroom. The reason we choice this location is because when you first started Holding Annual Shareholders Meetings in omaha. This is the location you choose. How did you pick this room in particular . We wanted something grand that would impress the shareholders. It was larger than the office i was working on at that time. And we expected eight or ten people so we could get ten chairs in here and preside. We had vending machines to supplement the income. And we still have the vending machines. Eight to ten people would sit around here and it was the annual Shareholders Meeting . It was my. My uncle fred and aunt katie were regulars. There would be a couple of others and, you know, the meetings didnt last long. But just like today, we held it for questions as long as people asked questions and my aunt katie would ask if i was coming over for dinner on sunday. That was about it. We looked at video what the annual Shareholders Meeting has become i think 40,000 people showed up. I think well top it this year. No longer being able to use the lunchroom. One of the things that jumped out from the letter you talk about national indemnity. You said it was one of the best deals you made. You paid 8. 6 million for this company back in 1967 it now has a gap net worth of about 111 billion. How did you get from there to here . One day at a time. It was a business i like so i was always looking for ways to add on to it, and at various times we got pretty good sized jumps. We developed a reinsurance operation which probably added 30 to 40 billion over the net worth to indemnity over time. Its a combination of having good people in the Insurance Business and compound interest and the industrials worked out well. So one way or another the number got up to 111 billion. Its carried at a price considerably less than its worth. You could say the real net worth is substantially higher. Thats an odd construct. Why is the Burlington Northern owned by national indemnity. We bought some stock through national indemnity. We had an significant investment here. It was decided when we made the offer to do it through national indemnity. It put even more financial fire power into the insurance company. So it seems happy there. You know you brought up jane and your letter and charlies letter in addition to that kicked off a fire storm of people trying to figure out what the success of Berkshire Hathaway is. Theres a story in the money and invest headline. A jane and able story. You say clearly in your letter that the board has one person in mind. Charlie went out of his way to say that both jane and greg able would be excellent managers. In fact even better managers than you would be in some prospects. What is the story . The journal said this is creating some sort of a jockeying position between the two. No theres not jockeying position at all. Charlie and i each wrote our individual letter about the last 50 years and the next 50 years. We kept to it. Neither would change a word of their own letter based on what the other had written. When charlies letter came in it referenced greg and jane that was news he was writing that. And hes right. Theyre very very good. Each one of them. Incidentally i wanted to see what charlie had written. He had no interest in seeing what i had written. You didnt change anything the other wrote. By putting those two in even though you say theres no jockeying between the two it creates that public perception. Do the two of them know who the next successor is . No. No. The board has talked about at every meeting for i dont know how many years, and we have a precise plan in mind. Very detailed as to what happens later today if i pass out on this show or something of the sort. So its all in place. And it wouldnt take 24 hours to implement, and, you know, its knowing everything about it in place. Each would have a role in the new company. You envision both being key active players. They would be key. As key as anybody. Lets talk about the letter that both you and charlie laid out. Youve been working with charlie for how many years now . Well, weve been partners ever since we met in 1959. Charlie didnt really join berkshire until we merged in 1982. But and i talked all the time. He knew what i was doing in berkshire and he didnt own a share in berkshire until 18982 when we merged. But it didnt make any difference on me. I like having a twin brother or something that you talk to all the time. Hes doing one thing and youre doing little bit Different Things. He had a huge impact way before that and how i managed berkshire. But like said when we merged blue chip stamps. Which we had an interest in charlie had an interest in. At this point, he had a lot of berkshire stock instead of blue chip stock. He became vice chairman. We formalized a little bit what had been going on for a long time. We got the chance to talk with charlie, and i have lot of people have sent in questions, charlie included. If you dont mind. Here is one question he sent in for you. I hope youll listen to it for a moment. Guys, this is charlie monger vice chairman of Berkshire Hathaway. Here is his question. Do you have any regrets about using Berkshire Hathaway in an effort to teach a wide audience . I spoke with charlie about it. What hes talking about is using your annual letter. He pointed out you wanted to be known as a teacher. He just that was his question for you in terms of the annual shareholder letter . I like teaching. I started teaching formally when i was 21 what was then the university of omaha, and done it off and on. In fact on friday i had eight schools, one from canada and harvard was out here and we had 160 students. Ive enjoyed teaching. I regard the annual report i regard the annual meeting as a teaching venue. And i think charlie does too incidentally. I think he thinks hes teaching me. He probably is too. In the past when you disagreed its simple. He said, warren we never argued when we disagree he said warren youll end up agreeing with me because youre smart and im right. A good comeback to give to someone. A little hard think. I dont want to argue with that. On the subject of teaching we have a question that came in from twitter. This question is from a viewer. He says are you a better investor in your mid 70s to 80s than say, your 40s to 60s . Zbl no well i would say this. Ive got a different investment problem at this time than i had 30 years ago and more so 50 years ago. The universe of things i can invest in can have a significant effect on berkshires net worth is very limited. Lets assume were going to buy a 5 position in a company. If were going to give 1 of berkshires net worth in that company, that would be roughly 2 billion. That means a 40 billion cap company. Thats just to give 1 of the net worth. If that stock goes up 50 weve made a half percent pretax and about 30 some basis points after tax. So i dont have the opportunities remotely that i had particularly if you go back to when i was in my 20s and 30s when anything would change my net worth. Is part of the reason you were explicit in the letter who should be buying berkshire shares and who shouldnt. If youre not looking for a five year time verizon stay out. Dont buy the stock. Ive always felt that way. I dont know and i dont think anybody knows. I certainly dont know. Charlie doesnt know. We dont have the faintest idea what stocks will do next year or what berkshire will do next year. We know over time were doing enough things that make sense and compound first of all, takes effect. So if you pay if you dont pay some terribly excessive price over a fiveyear period that, you know, at that point value takes hold. But we dont have any idea what berkshire stock is going to do in the near term or intermedia term. We never have. It doesnt make any difference either. You have a lot of stocks youve been purchasing. Some in particular like ibm some people have huge questions about. If you dont mind were going to slip in a quick break now. When we come back we would like to talk about the investments. Some of the biggest investments that berkshire ones. Ibm has been the worst performing component for the last two years, despite that others have been running for the hills. Warren buffett has been buying additional shares. Well ask him in a bit. Ill you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Hey mom, you want to live by the lake, right . Yeah. Theres here. Did you just share a listing with me . Look at this one. Its got a great view of the lake. Its really nice mom. Your dad wouldve loved this place. Youre not just looking for a house. Youre looking for a place for your life to happen. Zillow it occurred to me the music were playing this morning is the year 1965. The music is just a reminder that is this your anniversary. Were here today. You have a lot of news that people have been waiting to hear more about you. Very recently we saw the filings. The fcc filings that showed that youve been buying even more shares of ibm. There were huge questions about this. While the stock was underperforming people assumed maybe you made a mistake and backing out. Your holdings grew. Why are you buying more ibm . Im buying it because i like it. Its been doing exactly what i like. Ever since we first started buying it. There were a billion shares outstanding when we started buying. And a fair number of options out there. Maybe 40 million shares or Something Like that. That overhang has been reduced significantly and the number of shares is 990 million. I actually wrote a couple of years ago when we bought it the best thing that could happen if the stock did nothing for five years because they were going to buy in a lot of stock. And the cheaper they bought it the more share in this case bought. Youve done even better. The stock has gone down. Yeah. People have the conception misconception when we buy a stock we like it to go up. Thats the last thing we want it to do. Were going to buyieuy billions of dollars in stocks in companies we like. If it goes up im unhappy. Sometimes i kick it out. What we like and particularly the company itself is buying the stock as most companies are, you know our interest in the company is increasing day after day and the company is buying it were not laying out a dollar. If were buying it were laying out some money. Were buying it cheaper. And i like buying anything. I like buying things cheap. Look around the room. There theres a reason that the stock has been going down. Theres a reason the market doesnt like it. The revenue has been declineing substantially over time. I know jenny said because they dont like the empty calories the stuff theyre not making any money off the revenue. But if you look at the company it has declining revenue that continue to borrow money to buy back shares and there are some who say its a huge problem. How do you combat that . We expect the revenue to be going down. We expected a year like this where Foreign Exchange will take a big whack off revenues. But they also dispose 7 billion in revenue last year. There have been no surprises at ibm since we started buying it a few years ago, and the pleasant surprise is stock has gone down and that therefore, theyve been able to reduce the shares to 990 million. If it stayed at 200, you know there would be a billion or 20 million shares outstanding, and you bring the shares down far enough we own 77 million shares or Something Like that. Ill be happy. Youve said that you dont understand technology. So what makes you think you understand ibms competitive mode. I dont understand it. I dont technology as well as i understand the railroad or insurance. I dont understand every aspect 77of insurance. Same thing with the railroad. Ive made i know a lot of things about parts of the railroad that lead to an economic conclusion. But there are a lot of things i dont understand. And thats true of industry after industry. We competed i personally was chairman of the board of a company that competed with ibm for ten years in the 1960s and i didnt understand all of ibms business. We did quite well in the business i was chairman of. I think i know enough to make an investment decision. But whatever remember you said we were competing in the tab card business. This is the punch cards. Its not the cloud its not the stuff it changes. It changes and ibm changed with it. There was one time when they didnt change so well then they made enormous progress under lou. Yeah. So the business the Insurance Business has changed. I mean, we used to sell by direct mail primarily and then it went to phone then the internet and now mobile. Companies have to change. But i think theyve done a great job of fostering change at ibm. It doesnt happen overnight. Andrew has a question as well. Hey, warren. Talking about the stickiness issue and the mote. One of the theses i think you presented when we talked about this a couple of years ago on this show was that you felt it was one of those businesses that was so sticky. If it was a big Enterprise Company draft used and had a contract with ibm it would be so difficult to get out of that contract just because of the pain and cost involved. Have you you said you werent surprised. Have you been surprised over the past couple of years how easy or less sticky that business is and that relatively cheap or cheaper to jump into the cloud with competitor . Well, and ibm is helping people jump to the cloud or with a hybrid cloud. We have 70 some businesses at berkshire. We have investments in other. If you take a wells fargo or American Express and youll find theyre doing a lot of business with ibm as our direct subsidiaries are. It changes. And weve actually put in something a hybrid cloud. But theres a lot of reasons why we stick with ibm. But its not a winner take all business with the cloud. Theres some businesses that are winner take all. But i thats not true in i. T. , in my view at all. And like i said i see company after company after company with which were associated doing significant business. But its being done. Itsmy grating to different forms that these companies. I think if you check with the ten largest banks, i think youll find theyre doing a lot of business with ibm. And if you ask them whether theyll be doing a lot of business with ibm ten years from now. They will say yes. One more question on the subject it comes from facebook. Facebook question that came in from mark hall. This is again, in the same thing. He said i own ibm and it stinks. Why are you buying more and why should i hang on to my shares which ive had for decade. Give me some hope, please. The follow up question are prngsz areare you buying more shares . Imed in the business of giving hope. You should only own stock if you think you have reasons. Whether you own Berkshire Hathaway or not its an individual decision. The last thing in the world is you should own it because somebody else own it is. I said it one time in college. It was an annual meeting in jersey city. I was 20 years old. There were only four of us at the meeting. A fellow named lou green a famous figure in wall street said why do you own the stock . And i said i own it because ben graham own it iss it. He said strike one. It was not a good answer even though ben graham was the dean its not a reason. You dont own a stock because somebody else own it is. You own it because you do your own analysis and you decide where the future will be. If you dont know the answer you dont own it. Its a terrible mistake it to own it because somebody else does. Ive never bought a stock, except for that in 1950. Ive never bought a stock because somebody else owned it. That was me joe. You must know your exact cost or average cost on ibm. Do you know offhand what it is exactly . Well, i can come within a dollar or two, probably. Probably around 170 a share or China Central<\/a> bank cutting the bench mark interest point. The move giving stocks a boost in asia today. And then this one is deep. A big deal. Check this out. Nxp, andrew is buying free scale. Check out the nxp price. Its in cash and stock about 12 billion is what they said. No premium initially because it closed at 36. 11 free scale did. And theyre paying 36. 14 in cash and stock. Look what happened to the acquiring company nxp is up 14 or 15 . So the tieup between the two companies are getting more valuable by the second. But its more than 40 billion. Both make a lot of things for cars. You know, some mobile stuff but i think free scale was mostly microcontrollers and nxp has recently gotten into stuff for payments, too. Which is getting both have been in private equity hands and come out. Freescale used to be motorolas semiconductor and nxp was part of philips. You know this . I did. Did you really . Youre acting like everything im telling you yeah yeah yeah. I was almost boring you with some of that. I read the papers. I read the papers. Thats where i got it all. And twitter said it is working with Law Enforcement<\/a> agencyies to investigate an alleged isis threat to cofounder jack door si. The post in question depicts a mans face in cross hairs and the message is addressed to dorsi directly and condemns twittertwit twitter for having shut down isisrelated accounts and warns we always come back. It it. Lets take a quick check on the markets. Futures at this hour take a look see what is going on with the opening bell. We have a couple of hours to go. Nasdaq up about 13 points and the s p 500 up close to three points. Among the stocks lumber liquid daters. They sold flooring with higher levels of formaldehyde. They said it complies with regulations regarding the products and argues they are driven by a small group. Lets get back to becky and warren buffet. I need to thank warren buffet for giving me a lot of reading over the weekend. Yes. A lot of us with a lot of reading over the weekend. This is a big year andrew for Berkshire Hathaway<\/a>. Part of the reason the letter was longer because 50 year anniversary. There was more in the letter something about 50 or 60 more words than average. Yeah. Normally its 12 or 13,000 words. The letter itself was then another 8500 by me and another 2500 by charlie that looked back 50 years and 50 years. That is an amazing feat. Were live at the National Company<\/a> lunchroom. The reason we choice this location is because when you first started Holding Annual<\/a> Shareholders Meeting<\/a>s in omaha. This is the location you choose. How did you pick this room in particular . We wanted something grand that would impress the shareholders. It was larger than the office i was working on at that time. And we expected eight or ten people so we could get ten chairs in here and preside. We had vending machines to supplement the income. And we still have the vending machines. Eight to ten people would sit around here and it was the annual Shareholders Meeting<\/a> . It was my. My uncle fred and aunt katie were regulars. There would be a couple of others and, you know, the meetings didnt last long. But just like today, we held it for questions as long as people asked questions and my aunt katie would ask if i was coming over for dinner on sunday. That was about it. We looked at video what the annual Shareholders Meeting<\/a> has become i think 40,000 people showed up. I think well top it this year. No longer being able to use the lunchroom. One of the things that jumped out from the letter you talk about national indemnity. You said it was one of the best deals you made. You paid 8. 6 million for this company back in 1967 it now has a gap net worth of about 111 billion. How did you get from there to here . One day at a time. It was a business i like so i was always looking for ways to add on to it, and at various times we got pretty good sized jumps. We developed a reinsurance operation which probably added 30 to 40 billion over the net worth to indemnity over time. Its a combination of having good people in the Insurance Business<\/a> and compound interest and the industrials worked out well. So one way or another the number got up to 111 billion. Its carried at a price considerably less than its worth. You could say the real net worth is substantially higher. Thats an odd construct. Why is the Burlington Northern<\/a> owned by national indemnity. We bought some stock through national indemnity. We had an significant investment here. It was decided when we made the offer to do it through national indemnity. It put even more financial fire power into the insurance company. So it seems happy there. You know you brought up jane and your letter and charlies letter in addition to that kicked off a fire storm of people trying to figure out what the success of Berkshire Hathaway<\/a> is. Theres a story in the money and invest headline. A jane and able story. You say clearly in your letter that the board has one person in mind. Charlie went out of his way to say that both jane and greg able would be excellent managers. In fact even better managers than you would be in some prospects. What is the story . The journal said this is creating some sort of a jockeying position between the two. No theres not jockeying position at all. Charlie and i each wrote our individual letter about the last 50 years and the next 50 years. We kept to it. Neither would change a word of their own letter based on what the other had written. When charlies letter came in it referenced greg and jane that was news he was writing that. And hes right. Theyre very very good. Each one of them. Incidentally i wanted to see what charlie had written. He had no interest in seeing what i had written. You didnt change anything the other wrote. By putting those two in even though you say theres no jockeying between the two it creates that public perception. Do the two of them know who the next successor is . No. No. The board has talked about at every meeting for i dont know how many years, and we have a precise plan in mind. Very detailed as to what happens later today if i pass out on this show or something of the sort. So its all in place. And it wouldnt take 24 hours to implement, and, you know, its knowing everything about it in place. Each would have a role in the new company. You envision both being key active players. They would be key. As key as anybody. Lets talk about the letter that both you and charlie laid out. Youve been working with charlie for how many years now . Well, weve been partners ever since we met in 1959. Charlie didnt really join berkshire until we merged in 1982. But and i talked all the time. He knew what i was doing in berkshire and he didnt own a share in berkshire until 18982 when we merged. But it didnt make any difference on me. I like having a twin brother or something that you talk to all the time. Hes doing one thing and youre doing little bit Different Things<\/a>. He had a huge impact way before that and how i managed berkshire. But like said when we merged blue chip stamps. Which we had an interest in charlie had an interest in. At this point, he had a lot of berkshire stock instead of blue chip stock. He became vice chairman. We formalized a little bit what had been going on for a long time. We got the chance to talk with charlie, and i have lot of people have sent in questions, charlie included. If you dont mind. Here is one question he sent in for you. I hope youll listen to it for a moment. Guys, this is charlie monger vice chairman of Berkshire Hathaway<\/a>. Here is his question. Do you have any regrets about using Berkshire Hathaway<\/a> in an effort to teach a wide audience . I spoke with charlie about it. What hes talking about is using your annual letter. He pointed out you wanted to be known as a teacher. He just that was his question for you in terms of the annual shareholder letter . I like teaching. I started teaching formally when i was 21 what was then the university of omaha, and done it off and on. In fact on friday i had eight schools, one from canada and harvard was out here and we had 160 students. Ive enjoyed teaching. I regard the annual report i regard the annual meeting as a teaching venue. And i think charlie does too incidentally. I think he thinks hes teaching me. He probably is too. In the past when you disagreed its simple. He said, warren we never argued when we disagree he said warren youll end up agreeing with me because youre smart and im right. A good comeback to give to someone. A little hard think. I dont want to argue with that. On the subject of teaching we have a question that came in from twitter. This question is from a viewer. He says are you a better investor in your mid 70s to 80s than say, your 40s to 60s . Zbl no well i would say this. Ive got a different investment problem at this time than i had 30 years ago and more so 50 years ago. The universe of things i can invest in can have a significant effect on berkshires net worth is very limited. Lets assume were going to buy a 5 position in a company. If were going to give 1 of berkshires net worth in that company, that would be roughly 2 billion. That means a 40 billion cap company. Thats just to give 1 of the net worth. If that stock goes up 50 weve made a half percent pretax and about 30 some basis points after tax. So i dont have the opportunities remotely that i had particularly if you go back to when i was in my 20s and 30s when anything would change my net worth. Is part of the reason you were explicit in the letter who should be buying berkshire shares and who shouldnt. If youre not looking for a five year time verizon stay out. Dont buy the stock. Ive always felt that way. I dont know and i dont think anybody knows. I certainly dont know. Charlie doesnt know. We dont have the faintest idea what stocks will do next year or what berkshire will do next year. We know over time were doing enough things that make sense and compound first of all, takes effect. So if you pay if you dont pay some terribly excessive price over a fiveyear period that, you know, at that point value takes hold. But we dont have any idea what berkshire stock is going to do in the near term or intermedia term. We never have. It doesnt make any difference either. You have a lot of stocks youve been purchasing. Some in particular like ibm some people have huge questions about. If you dont mind were going to slip in a quick break now. When we come back we would like to talk about the investments. Some of the biggest investments that berkshire ones. Ibm has been the worst performing component for the last two years, despite that others have been running for the hills. Warren buffett has been buying additional shares. Well ask him in a bit. Ill you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Hey mom, you want to live by the lake, right . Yeah. Theres here. Did you just share a listing with me . Look at this one. Its got a great view of the lake. Its really nice mom. Your dad wouldve loved this place. Youre not just looking for a house. Youre looking for a place for your life to happen. Zillow it occurred to me the music were playing this morning is the year 1965. The music is just a reminder that is this your anniversary. Were here today. You have a lot of news that people have been waiting to hear more about you. Very recently we saw the filings. The fcc filings that showed that youve been buying even more shares of ibm. There were huge questions about this. While the stock was underperforming people assumed maybe you made a mistake and backing out. Your holdings grew. Why are you buying more ibm . Im buying it because i like it. Its been doing exactly what i like. Ever since we first started buying it. There were a billion shares outstanding when we started buying. And a fair number of options out there. Maybe 40 million shares or Something Like<\/a> that. That overhang has been reduced significantly and the number of shares is 990 million. I actually wrote a couple of years ago when we bought it the best thing that could happen if the stock did nothing for five years because they were going to buy in a lot of stock. And the cheaper they bought it the more share in this case bought. Youve done even better. The stock has gone down. Yeah. People have the conception misconception when we buy a stock we like it to go up. Thats the last thing we want it to do. Were going to buyieuy billions of dollars in stocks in companies we like. If it goes up im unhappy. Sometimes i kick it out. What we like and particularly the company itself is buying the stock as most companies are, you know our interest in the company is increasing day after day and the company is buying it were not laying out a dollar. If were buying it were laying out some money. Were buying it cheaper. And i like buying anything. I like buying things cheap. Look around the room. There theres a reason that the stock has been going down. Theres a reason the market doesnt like it. The revenue has been declineing substantially over time. I know jenny said because they dont like the empty calories the stuff theyre not making any money off the revenue. But if you look at the company it has declining revenue that continue to borrow money to buy back shares and there are some who say its a huge problem. How do you combat that . We expect the revenue to be going down. We expected a year like this where Foreign Exchange<\/a> will take a big whack off revenues. But they also dispose 7 billion in revenue last year. There have been no surprises at ibm since we started buying it a few years ago, and the pleasant surprise is stock has gone down and that therefore, theyve been able to reduce the shares to 990 million. If it stayed at 200, you know there would be a billion or 20 million shares outstanding, and you bring the shares down far enough we own 77 million shares or Something Like<\/a> that. Ill be happy. Youve said that you dont understand technology. So what makes you think you understand ibms competitive mode. I dont understand it. I dont technology as well as i understand the railroad or insurance. I dont understand every aspect 77of insurance. Same thing with the railroad. Ive made i know a lot of things about parts of the railroad that lead to an economic conclusion. But there are a lot of things i dont understand. And thats true of industry after industry. We competed i personally was chairman of the board of a company that competed with ibm for ten years in the 1960s and i didnt understand all of ibms business. We did quite well in the business i was chairman of. I think i know enough to make an investment decision. But whatever remember you said we were competing in the tab card business. This is the punch cards. Its not the cloud its not the stuff it changes. It changes and ibm changed with it. There was one time when they didnt change so well then they made enormous progress under lou. Yeah. So the business the Insurance Business<\/a> has changed. I mean, we used to sell by direct mail primarily and then it went to phone then the internet and now mobile. Companies have to change. But i think theyve done a great job of fostering change at ibm. It doesnt happen overnight. Andrew has a question as well. Hey, warren. Talking about the stickiness issue and the mote. One of the theses i think you presented when we talked about this a couple of years ago on this show was that you felt it was one of those businesses that was so sticky. If it was a big Enterprise Company<\/a> draft used and had a contract with ibm it would be so difficult to get out of that contract just because of the pain and cost involved. Have you you said you werent surprised. Have you been surprised over the past couple of years how easy or less sticky that business is and that relatively cheap or cheaper to jump into the cloud with competitor . Well, and ibm is helping people jump to the cloud or with a hybrid cloud. We have 70 some businesses at berkshire. We have investments in other. If you take a wells fargo or American Express<\/a> and youll find theyre doing a lot of business with ibm as our direct subsidiaries are. It changes. And weve actually put in something a hybrid cloud. But theres a lot of reasons why we stick with ibm. But its not a winner take all business with the cloud. Theres some businesses that are winner take all. But i thats not true in i. T. , in my view at all. And like i said i see company after company after company with which were associated doing significant business. But its being done. Itsmy grating to different forms that these companies. I think if you check with the ten largest banks, i think youll find theyre doing a lot of business with ibm. And if you ask them whether theyll be doing a lot of business with ibm ten years from now. They will say yes. One more question on the subject it comes from facebook. Facebook question that came in from mark hall. This is again, in the same thing. He said i own ibm and it stinks. Why are you buying more and why should i hang on to my shares which ive had for decade. Give me some hope, please. The follow up question are prngsz areare you buying more shares . Imed in the business of giving hope. You should only own stock if you think you have reasons. Whether you own Berkshire Hathaway<\/a> or not its an individual decision. The last thing in the world is you should own it because somebody else own it is. I said it one time in college. It was an annual meeting in jersey city. I was 20 years old. There were only four of us at the meeting. A fellow named lou green a famous figure in wall street said why do you own the stock . And i said i own it because ben graham own it iss it. He said strike one. It was not a good answer even though ben graham was the dean its not a reason. You dont own a stock because somebody else own it is. You own it because you do your own analysis and you decide where the future will be. If you dont know the answer you dont own it. Its a terrible mistake it to own it because somebody else does. Ive never bought a stock, except for that in 1950. Ive never bought a stock because somebody else owned it. That was me joe. You must know your exact cost or average cost on ibm. Do you know offhand what it is exactly . Well, i can come within a dollar or two, probably. Probably around 170 a share or Something Like<\/a> that. Im happier to have it at 150 or 160 now or whatever it is. Ill happy to have it at 160 than the 200. Ill tell what people have said to me. That is that youve, you know, for the stock coming down that much you havent bought it with both hands even though you got it cheaper than your acquisition. It almost looks like youre tiptoeing in to say ive bought more so it wouldnt indicate that you were enthralled with it. How would we know that youre going to sell the entire stake and throw in the towel . If its the worst performer in the dow. Its not something youre going marry forever if it happens year after year. Its hard to tell joe. I mean the lower it goes the more ill buy. Ill run an ad when it happens. They continue to lower the flow. It kept getting cheaper and cheaper, too. Thats true and they went out of business and i make all kinds of companies. Incidentally a stock like that when it went down i sold it. Im capable of selling a stock when it goes down. Im capable of buying a stock when it goes down. It depends on the underlying facts. I just dont i havent heard you make the case for the actually fundamentals of the turn around and its been turned around a couple of times already. And it gets harder and harder i think, we were talking last week. I think old tech now is google. New tech i dont know what it is. I have to talk to andrew about it. Ibm i dont know what it is anymore. Its almost like a service stock or something well, thats up to you. Thats nice thing about stocks. You look at the company and hopefully the way you do it is you look at the company and try to evaluate it and look where it will be in five or ten years. If you think its cheap you buy it. And everybody should do that. Thats exactly what we do. And we dont, you know, if we decide we like it then we like it better as it goes down. If we decide we dont like it we sell it. So it has nothing do with a movement of the stock determining what we think of the business. All though Berkshire Hathaway<\/a> three times while ive run it has gone down 50 . In 1973 and 74 it went from 80 to 40. I bought stock at 70 60 50 04. I loved it. On the other hand ive been in business, you know, been headed for the junk yard and ive sold stock and losses when theyre going down. I bought stocks when theyre going upanddown. It doesnt have anything to do with the price action except what it offers you in future value. Thats what every investor has to make a decision on. Warren, can i ask you about another stock in this last go around that was missing from some of the fcc files. Exxonmobil. Yeah. People assume you sold the entire stake. Ive seen commentary people wondering are you buying more and kind of holding off on telling people . Can you tell us, did you sell it all . We stole off in the fourth quarter. Why . We thought we might have other uses for the money. Exxonmobil is a wonderful company. Its current earning power, obviously, is diminished significantly from where it was a year ago as is true with all oil companies. But exxonmobil has been one of the great investments of all time. One of the reason you sold it i think i may have some use for the money. Are you talking about other stocks or . Both. All right. Thats a good tease. Why dont we leave it there and well ask you a little bit more about it. It still may remain a tease. When we come back well try to dig more information out of warren on what he was talking about. Well talk about from going from one major stake in iibm to another company. Well ask about the latest purchase which is deere. Building aircraft, the likes of which the world has never seen. This is what we do. Thats the value of performance. Northrop grumman. Welcome back to squawk box. Were live from omaha, nebraska this morning with a special guest Warren Buffett<\/a>. Weve been talking with mr. Buffet about his investments, because weve seen the fcc filings, warren that show the latest purchases and sales youve made in stocks and securities. People very interested about that. One new not a new stock but one you definitely added to your position i think you went from 360 million in deere at the end of 2014. What attracted you to deere . Its a good company and theyre going to have some tough years coming up and in the end ten years from now it will be worth more money than it is now. And that stock actually was bought by one of the other managers and me. I mean that was something we both bought. That actually leads to a question from twitter. Someone wrote in how do we know if its you, todd, or ted who is buying a selling a position. How does anyone know . They dont. Yeah. Ted and todd are separate portfolios. They occasionally buy the same stock themselves. They might occasionally buying a stock that i would be buying. I dont look at their tickets every day. I do not see their orders placed or anything of the sort. At the end of the month, i get a sheet that shows their holdings and they dont change them much. Nor do i change mine much but i give them a few things that they shouldnt buy because theres some rule we might trigger or something of the sort. What do you mean . Well, like if we were lets just take wells fargo or something where were 9 . We need the feds permission to go over 10. I dont want to wake up some morning and find ive broken some rule with the fed. There are occasional rules like that. Very few, and its conceivable we could be working on a deal on something and i wouldnt want them, obviously, to be buying stock. Then they wouldnt know about the deal. So we have a few little checks to make sure that we dont break any rules but, i mean, they are there free agents in terms of what theyre doing. And in the case of john deere. One of the managers was buying it. Who was the other manager buying it . You dont want to tell us . Its up to them. There was another question that came in on this. A question from a viewer on twitter. What is the major upside of deere compared to caterpillar . The current levels for longterm position . Im not the Investment Advisory<\/a> business. You really shouldnt ask other people their opinion about stocks. Because lets say i give an opinion on the x, y dz and i could change my mind. You have to have your own reasons for buying a stock. You should make your own judgments in stocks. Weve always made our own judgment in stocks. Is deere a longterm bet on the strength of agricultural and the need for more and more food to feed more people. Obviously people are going to eat. You can say that about ten other Farm Implement<\/a> companies, too. Its not one variable. Again, you should make your own decisions. If you dont feel capable of making your own decisions you should buy an index fund. Its that simple. You should not try to pick up stocks from listening to me or anybody else talk about this company or that company or why they bought it. They may be doing Something Different<\/a> the next day. If you havent made the decision for your own reasons, youre going to be subject to somebody else saying something negative, you know, a week later. Its just bad to try to pick stocks based on commentary by this person or that person when you can do well buying an index fund and forgetting about it. You realize that people watch very closely what youre buying and its not uncommon for people to buy things simply because theyve seen you move it. I cant help that but i dont encourage it. Do you think that you owning shares of ibm has boosted that company right now . It might be something a little higher. We knew it was selling lower. So you can buy more. We can buy more or if the company is spending it. Companies spend many billions of dollars of buying their stock. Our ownership goes up dramatically more we dont Like Companies<\/a> buying their stock. We like it when they buy it below what theyre worth. Were making money without laying out a dollar. How much do you think ibm is worth right now . [ laughter ] its time to slip in another quick break. Still to come well be asking more warren buffet will be answering more of your questions including the issue of succession. Who might run Berkshire Hathaway<\/a> in the future . Stay tuned. Squawk box will be right back. Its more than the cloud. Its security and flexibility. Its where great ideas and vital data are stored. With centurylink you get advanced Technology Solutions<\/a> from a trusted it partner. Including cloud and hosting services all backed by an industry leading Broadband Network<\/a> and people committed to helping you grow your business. You get a company thats more than just the sum of its parts. Centurylink. Your link to whats next. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant<\/a> to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks<\/a> all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless<\/a> 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless<\/a> smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back everybody to our annual ask warren show. The questions have been pouring if in are the berkshire boss. We have a number of questions that have come in and here is one from a surprise guest that came in via video. Why dont you listen in. Warren in preparation for this years meeting, i was reviewing prior years annual reports, which reminded me of a question that has been troubling me for some time. One of the problems with gap accounting is reported Financial Results<\/a> could conflate the perception of actual performance. Namely from the disparities that emanate from a cruel versus cash account accounting. It this can be particularly exacerbated in insurance results which can be viewed through gap or statutory accounting. Im curious how you reconcile this in looking at acquisitions or your own Insurance Business<\/a>. Glenn close. She has been doing her homework open the stuff. I just saw her a few weeks ago but im glad she didnt grill me then. I finished the last couple of days watching seven hours of damages. Its great. Shes great accounting is the language of business and you have to be as comfortable with that as you are with your own native language to really evaluate businesses. And accounting tells you a lot and it can be used in many ways to deceive. You saw it in enron, for example. In fact in the seven hours of damages im watching one of the characters is playing around with accounting dramatically. But you have to understand what can be done with accounting when it gives you correct answers and when it gives you wrong answers. Particularly with Insurance Companies<\/a>, over the years there have been a number of Insurance Companies<\/a> that have played games with reserves and any time you play a game with a liability account like a loss reserve, youre playing a game with the earnings. And there have been some no or ittous examples of that. My job going back to when i was 20 years old and used to go to lincoln, nebraska to look at the Big Convention<\/a> reports and analyze to determine whether people were giving me honest numbers. I have to know enough about the business to be evaluate that. Most people dont. Okay. Were going to continue this conversation in a moment. When we come back next. Well be talking about berkshire. To say its big would be a huge understatement. Up next well break it down. Well talk everything from trains to cars. A rapid fire session on berkshires businesses when squawk box comes back. Barbara just bought a bike. She wrote a tweet about it. You cant learn much from that. But take data from millions of tweets combine that with your companys supply chain and sales data. Apply ibm analytics and expertise, and all of a sudden, you can learn which bikes to build what to make them from, where to sell them. Because barbara and the world just told you how to build a better bike. Theres a new way to work and its made with ibm. Why do we do it . Why do we spend every waking moment, thinking about people . Why are we so committed to keeping you connected . Why combine performance with a conscience . Why innovate for a future without accidents . Why do any of it . Why do all of it . Because if it matters to you its everything to us. The s60 sedan. From volvo. Lease the wellequipped volvo s60 today. Visit your local volvo showroom for details. Good morning everybody. Welcome back to a special edition of squawk box. Were live in omaha, nebraska with Warren Buffett<\/a> this morning. Morning. Weve talked about a lot of things this morning. But one of the things people look forward to in your annual letter is to lay out a breakdown of the company and where things stand. Youve been building bigger and bigger companies. At this point you point out you have 490. 5 or you now have 9. 5 of companies that if they were stand alone would be large enough to be in the s p 500. So you said in the fortune. Im sorry. I say this every time. In the fortune 500. You point out that leaves 490. 5 to go and that our lines are out. What does that mean . That means im not going to be happy with 9. 5. And i hope that this year next year somewhere along the line that we have more that join us. We probably will over time. Do you have a specific target in mind right now . Well we always have something that we see swimming out there. And whether it comes to our lines or not. But theyre we always see a few fish in the sea. We dont see 490. 5 fish in the sea. But theres usually Something Big<\/a> swimming around. And well find out if they go for our bait. You do go out of your way to point out the good news and the bad news in every report. This year you point out that Burlington Northern<\/a> disappointed many of its customers. What happened . Well, what happened was that in terms of ontime performance in terms of our coal customers, they never ran out of coal. But they got lower in terms of what they had than they would have liked. If youre running a utility and your coal gets down to 10 or 12 days of supply youre worried. If theres a blackout youre going to get blamed. Not the railroad. So we made sure they got their coal but we worried those customers. In terms of fertilizer, you know, need to get that in time. And there were enormous demands and we got it there. But there again, it was a lastminute situation with many. And then in terms of the we had this huge grain harvest. And in terms of getting cars in that case or the big shortage of grain cars you know farmers worried if they cant get the crop to market. So we had much more congestion. We had a slowdown of the trains. Other people experience this too. But ours was particularly severe. Canadian pacific had plenty of problems too. And we spent a fortune. We spent more money in 2014 than any railroad had spent, to my knowledge, trying to solve problems. And were spending even a lot more money this year. And that means double tracking and doing various things. But you cant double track 60 miles overnight. And the very act of improving service sometimes slows it down because youre working on the track. But its our job to foresee that sort of thing. We got the money to do things. And its our job to have satisfied customers. The metrics of the last three months have been significantly better in terms of ontime performance and reduction of bag logs and all of that sort of thing. Okay. But i want it to get even better. I know joe has a question as well. Joe . Warren i cant believe its been a year since last time we talked about something. And i dont know whether you found out a way to slow time down as we get older. For me, i know is it because its 1 59 of my life. Anyway, youre very wise. And im not sucking up to you. Youre very saged. Do you remember a year ago you said that the Insurance Business<\/a> hadnt seen any adverse effect of Climate Change<\/a> in the past five years and that you cant expect any adverse effect over the next five years. Do you remember saying that . Well i certainly remember saying Something Like<\/a> that, sure. Ive said it many times. All right. Just summarizing the year and im just i love the way you do with your hands like this after that Hurricane Season<\/a> from about ten years ago. 2014 there were only eight named storms in the atlantic. Thats the fewest since 1997. Only one major hurricane made landfall and that was the first one, hurricane arthur. And it was a two. In terms of your Property Casualty<\/a> results with hurricanes last year you absolutely cleaned up didnt you, for insurance . Well we didnt write that much last year because the rates had come down a lot. Its been remarkably benign particularly in florida. In the United States<\/a> you think of florida first and then texas. But florida is the big kahuna. And floridas gone a number of years now without any severe hurricane. So the rates have come down a lot. So we did not write a lot of cap business in the United States<\/a>. We wrote a fair amount of cap business around the world. New zealand had a couple of quakes a few years ago, so there was a demand there. And thailand had the floods a few years back. So we wrote more around the world than in the United States<\/a>. And were not writing much this year. The rates are way down this year. Are you at least amused or bemused or thankful to climate alarmists that keep your rates high . I mean this is the biggest problem facing humanity. Are you seeing anything to validate that in terms of insurance claims in the past five years. No. I would say there was a category five over in queensland just in the past couple of weeks. We had some insurance over there, but its nothing huge. But you know what im saying. Yes. At times you listen to what Mainstream Media<\/a> says. I listen to you, joe. You have been telling me im not going to have a problem and i havent had a problem. So thanks. Well thats bad because i was listening to you where i got my info. That sounds a bit circular. But thank you. Virtuous circle. Anyway, we have already covered a lot of ground with Warren Buffett<\/a>. We still have much more to come. Up next well talk about Berkshire Hathaway<\/a>s plans. And well have more juicy nuggets from his annual letter. And you know mr. Buffett likes cherry coke. Thats his favorite drink. Also one of his favorite stocks. Well ask him what he thinks of the company now. Stick around. Squawk box will be right back. We are live from omaha, nebraska. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions<\/a> and a thousand other things. So you call pwc. The right people to get the extraordinary done. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks<\/a> all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless<\/a> 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless<\/a> smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back to a special edition of squawk box. Its the 50th anniversary of the Berkshire Hathaway<\/a> annual meeting. Theres been no surprises at ibm since we started buying it a couple years ago. The pleasant surprise is the stock has gone down. And becky is live in omaha with Warren Buffett<\/a>. This hour the oracle of omaha with his stakes in American Express<\/a> and costco. His read on the economy. Ditching energy stocks. And possible successors. The second hour of squawk box starts right now. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernen along with andrew ross sorkin. As you know becky is live in omaha with Warren Buffett<\/a>. Well get baa tok them in a moment. But first andrew has the top stories. The big deal this morning, the semiconductor world, nxp buying freescale in cash and stock. The price tag for that deal 12 billion. The tieup value in the combined company more than 40 billion. Were also watching this mornings shares of Lumber Liquidators<\/a>. They had higher level of formaldehyde than in the safety standards. They said they comply regarding its products and argued that hacks are driven Bay Small Group<\/a> of short sellers. We will see what happens with that stock this morning. Down 11. 5 already. It is jobs week. Economists expect an increase of 235,000 nonfarm jobs in february and a decrease of. 1 in the unemployment rate. Futures at this hour indicated up a little bit at this point. And the s p up 1. 5. The nasdaq up about 10. I cannot believe its jobs week. We just did it. I asked that question about time flying. I think february was exactly four weeks this year right . Sure. Lets take a quick look at crude. Crude is at 48. 78. I dont know. You know warren wouldnt say you know he had 490 companies or how many he could have sold to raise money for an acquisition. Didnt have to be exxon. Does he think its staying at 48 . He could have raised money anywhere. Why exxon. Does he think oil is staying down here . Were not running a stock Advisory Service<\/a> at berkshire. Exxon is a wobblenderful company. If you sold your entire stake of exxon you wouldnt be that positive about crude. Ive been a very very long time since i i think back in the 90s when crude got down to 12 or something we bought some. But commodities are something i think in 50 years i cant remember more than two or three trades in those. I have no opinion as to what oil is going to be six months from now. The forward curve is i think the 48 spot contrasts with 61 or 62 12 months out. And do i have a better insight where it should be than the market . The answer is no. So whyd you buy exxonmobil to begin with . I thought it was attractive. And i still think its attractive for a tenyear deal. But theres other things i would be buying. Lets talk a little bit more about Berkshire Hathaway<\/a> and suck e session. Again, this is one of the huge questions people have been following berkshire for a long time. You gave more hints in your annual letter this time than ever before. You pointed out there is one person in mind that the boshdard is looking at to keep in mind as the next ceo of Berkshire Hathaway<\/a>. Talked about ajit jain. And abel. How in the past the reason you had not named a successor is because you didnt want to horse race. How does this not create a horse race . Theres not a horse race. And that story comes from charlie saying that those two are world class, which they are. In fact, he said describing world class was probably an understatement. I would totally agree with that. Either one of those men could run just about any company you could name. Wouldnt just be berkshire. They are incredible managers. And we are lucky to have them. And as charlie said in his letter and he wrote his letter without me seeing it. That was our deal ahead of time. That we would not look at the other letter. He said in that letter that not only were they world class, but they werent going to go any place. I believe that too. They love berkshire. And berkshire loves them. We are very lucky to have those two. You criticized some of burlington trying to keep up with demand and other things. Matt rose has been listed as a potential candidate to run as the next ceo. Does this mean hes out of the race . No. Weve had tough years in insurance. If you go back and read 50 years of the annual report weve had tough years in insurance. Weve had tough years in other businesses. I mean that happens in business. It particularly happens in a business thats really an outdoor sport. I mean the biggest thing that i really worry about with the railroad is floods. You know theyre we could have floods that theres nothing we can do about it. Unfortunately they tend to build railroads along river beds. We have 13,000 bridges. I mean can you imagine that. So there are things that can happen with a railroad. You cant expect every bridge to work right all the time. But over the years, both in terms of safety and in terms of derailments, in terms of all kinds of factors, the railroads have run better and better and thats the case. But last year you know we had too many trains that didnt come in on time. Andrew has a question as well. Hey, warren. On bnsf because in the letter you did seem to be so disappointed, what do you think the screwup was . Was it avoidable . And secondarily given all of what you are going to spend, is there a way to measure what return youre going to get on that capital . Well we have to spend the capital whether we get a return or not because weve got an obligation on service. The history would be that we would get decent returns. And the Railroad Business<\/a> is a good business. It wasnt for a long time. Its like the chicago cubs. Had a bad century. But then its really improved dramatically since the act 30 years ago by every measurement. And its a very decent business. Its very capital intensive. But obviously if you had your entire system double tracked, youd have a whole lot fewer problems than if you were single tracked. And there are all other kinds of variables. The big thing i think over the next ten years thats going to be a real problem for the industry is chicago. Because the rail system you know was designed 150 years ago, gets modified all the time. But chicago is where everything went. And things got switched there. I think 40 or so had of the interchange takes place at chicago between the east and the west. So as the city grows, i mean you just run into real problems. And theyre expensive to fix. And in the case of Something Like<\/a> that, it takes a lot of coordination among all the railroads that go in there and city and county and you name it. But to have the Railroad System<\/a> we want to have 20 30 40 years from now, we will have to do some big expensive things in chicago. Wow. You know warren another thing we should bring up are two of the managers who you also talked about. Obviously the investment gurus who have been doing a lot of the investing. Theres a question that came up from twitter. This is from jim ladd. He says are they Value Investors<\/a> in the same way you consider yourself to be . Theyre Value Investors<\/a>. Anybody thats i always say if you arent investing for value, what are you investing for . And the idea that value and growth are two Different Things<\/a> makes no sense. I mean, growth is part of the value equation and a company that grows and uses little capital is obviously worth more money than one that doesnt grow. That doesnt make the one that doesnt grow valueless. So they have a very similar approach to investing than charlie and i do. But its not identical. But essentially they are trying to figure out what a business is going to look like five ten years if you were buying a farm youd like to see what they were going to produce years from now. If you buy an apartment house, you think what will it produce years from now. Thats what we do with stocks. Theyre just pieces of businesses. If were right about the business, were right about the stock. And so they are doing the same thing. They are looking at whatever company theyre looking at and theyre trying to figure out where that company is going to be five or ten years from now. And many companies, they will say i cant figure it out which is exactly what charlie and i say. But you dont have to figure every company out. Just figure out a few companies. And theyre doing the same thing. Todd and ted came here because they wanted to learn from you. But are there things youve learned from them too . Oh sure. As i mentioned the annual report, we bought two Smaller Companies<\/a> in the last few months and i made each one chairman of one of them. Because you learn something from actually running a business. Interacting with people. I mean people are part of a business. And the better you understand human nature and are able to distinguish between different types of individuals, the better type of investor you are going to be. Its all worked out very well. We have lunch once a week and they tell me some things. You know i talk about some of whats going on with me. Were learning all the time. Okay. Well continue this conversation in just a moment but andrew right now, well send it back to you. Okay. Thank you, becky. Were going to dig into Berkshire Hathaway<\/a>s portfolio and ask warren about some of the companys big holdings including 13 billion in the major credit card companies. Well be back in a moment from the 50th anniversary of the berkshire meeting. Back in a moment. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Welcome back everybody. We are live in omaha, nebraska where we are speaking with Warren Buffett<\/a>. The chairman and ceo of Berkshire Hathaway<\/a>. Weve been talking about some of berkshires ownership stakes in different securities. One of the things we havent got to talk to you about is American Express<\/a>. Its been in the headlines because it lost exclusivity with costco. What did you think of that . Obviously American Express<\/a> and costco that have been linked up for well over ten years, each in terms of negotiating an extension of a contract that runs out march 31st of 2016 that American Express<\/a> made their best offer and costco thought they could do better elsewhere. Its simply a question. The question on the street has been that a lot of people didnt understand just how important that relationship was to American Express<\/a>. There have been some people that even said the company wasnt completely straightforward in that relationship. Would you agree with that . I just read the public material but the costco relationship obviously you knew it was an exclusive anybody that shopped at costco could not use another credit card. They could use a debit card. But clearly if you have a retailer with the size and scope of costco and youve got the exclusive credit card, you know thats a very important relationship. And of course that brand of card gets used outside of costco as well. In fact, a majority of it comes from outside of costco. But costco did not renew in canada on december 31st of 2014. So already the knowledge that is out there that at least in canada they have not come to terms. And now its become apparent that they have not come to terms in the u. S. Youre stake in American Express<\/a> increased but its because the company was buying back shares. We have an arrangement. We American Express<\/a> has become a Bank Holding Company<\/a> since we originally bought our stock. Were over 10 . We cant buy another share. But because American Express<\/a> buys in its own stock, our percentage interest has gone up. And we love it. Theyre getting very close to a billion shares outstanding. When they get to a billion shares, well own 15. 2 , i think it is. You have about 12. 5 billion in American Express<\/a> shares . We have 150 million shares. We have about 12 billion, yeah market. Guys i know there was a question from back in the studio. Yeah. I wanted to ask on amex specifically, some people believe over time its going to erode the margins of the Company Given<\/a> theyre going to have to compete more on price with potentially visa and mastercard. Did you agree with the decision . Do you think theyll win on appeal . And what are the implications to the business . Well, i if you ask me i do think theyll win on appeal. But they also have a period of time when they can suggest a remedy to the court. And if the court accepted that i guess the Justice Department<\/a> probably would have to too. So theres a possibility still of a negotiated settlement at the trial court level. And i think if they dont get that, therell be an appeal and that will probably take a couple of years. But ive read some of the material in connection with the case. I think American Express<\/a> has a very strong position. Actually i think in a sense losing the costco account might even further strengthen that position. You know warren lets run through some of the biggest holdings. You point out in your annual letter the biggest are cocacola, American Express<\/a>, and ibm. The four giants . The Fabulous Four<\/a> i think. And our we the bank of america. Bank of would be your second or third largest. It depends on the day. Right now we have we can exercise that using our preferred stock if we want to. So i dont know whether if its 16 or 17 youre talking 11 billion. That you pay about 5 billion for. Exactly. But were not obligated to exercise. We get 6 on the preferred which we might use as a as the medium of exchange in order to exercise the warrant. But by all guesses youre going to exercise this. Yeah. I think the odds are very high well exercise. I think thats something that people forget that that is equally up there and just as big of a position. Yeah. Its up there. Our share of the earnings of the i mean we get the 6 or 300 million a year there. But we have an interest in the undistributed earnings and thats building value for us. Were going to continue our conversation with Warren Buffett<\/a> in just a moment. When we come back well get his take on the economy, tax inversions and the economy. Stick around. Squawk box will be right back. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. Welcome back to a special edition of squawk box. We are live in omaha, nebraska, with Warren Buffett<\/a>. When we talked about a lot of things this morning. But what we generally hit you up for first and what we havent gotten to yet even though weve been here for an hour and a half this morning is what you think of whats happening in the economy right now. You have incredible access to all kinds of statistics and numbers and figures that other people dont. How do you see it . Since the fall of 2009 weve kept coming back at a moderate pace. And people occasionally get very excited and think its going to spurt much faster. Sometimes they get worried and say its going to be a double dip. We see it in virtually all of our businesses. If you see the top earners, i think 17 of the 20 had improved earnings. Looks to me like most of them will have improved earnings. If you think about it population grows 1 and you have real growth of 2 , thats 20 in a generation. 20 . 20 is another in real terms of household incomes. Thats fantastic. And we have a terrific economy right here in nebraska. Theyve got an employment thats 2. 9 . Our businesses are doing well. Housing has come back at a slower rate than i would have anticipated. Autos have come back in a faster rate than i anticipated. 2 growth though isnt great when you consider what weve been able to do in this country for some time. Productivity gains are down. Are you surprised we havent grown at a faster clip . Not really. I know what youre saying but in my life time its been 6 for 1. I mean the numbers are incredible. But at 2 itll be for a baby born today, itll double in their lifetime. And that is not bad. Particularly when you start from where were starting. But do you think 2 is just the way its going to be in the United States<\/a> . I dont know that. But i would be surprised if its less over time. I think itll probably be better. But our economic machine really works. Its worked since 1776. And its worked throughout my lifetime. Weve had depressions and wars and panic after panic. But look at where we are now compared to what we were. Any milestone you want to pick in the past. You mentioned those gains will not be distributed equally. Theres a question that came in from twitter saying yellen remarked that the greatest risk to the u. S. Is income inequality. How would you combat this everincreasing problem . I would change the earned income tax credit bigtime. I think that the nature of a market system is such that results become less equal over time. If you go back 200 years and you had a society, had the best person in town in terms of ability and they both could work on the farm and the best one would do somewhat better in terms of productivity. But both had jobs and there was not a great disparity. And then you went on to henry fords Assembly Line<\/a> and ability differentiation. And their top income is a little over 21,000. And thats happening in a world where the average household is 125,000 or so. So that isnt because anybodys either or or anything of the sort, its just the economy becomes more specialized. The rewards are more and more at the top. And more and more people get left behind. Education will not solve that. It will help. The minimum wage distorts. Takes care of those who didnt have the wiring to participate in the economy. I talked to progressive economists that would say sure were happy with the earned income tax credit. But we think it should be done in combination with the higher minimum wage. It does at some point. Otherwise we change it. We have a whole lot of people that wouldnt have a job. And markets are very effective deployers of resources. But a more specialized market deploys those more than a total a aguarian. I dont quarrel with a change in the minimum wage but i dont really think thats the answer. I think it does result in less employment. Weve seen some companies, though kind of taking it on themselves. Etna walmart. Saying were raising wages on our own. Thats the market. Thats the market. I think walmart obviously made a good decision for walmart. I think if you set them at a certain level, at 20 bucks, youre going to have a whole bunch unemployed. But you can earn something to give people whose talents, theyre not valued that high in a market economy but theyre doing useful things. Its just not high value stuff. Theyre good citizens. You want them feeling part of the system. You want them contributing. And as long as they work an earned income tax credit could give them a better life they have now than with messing up the market system. Andrew back to you and joe in the studio. Great. Thank you warren and becky. Back to you in a moment. Coming up a closer look at the Berkshire Hathaway<\/a> annual letter. Well tell you about it when we come back this morning. Tigers, both of you. Tigers . Dont be modest. I see how youve been investing. Setting long term goals. Diversifying. Dip you got our attention. We did . Of course. Youre type e well, i have been researching retirement strategies. Well thats what type e s do. Welcome home. Taking control of your retirement . E trade gives you the tools and resources to get it right. Are you type e . Its more than a network and the cloud. Its reliable uptime. And multilayered security. Its how you stay connected to each other and to your customers. With centurylink you get advanced Technology Solutions<\/a>, including an industry leading Broadband Network<\/a>, and cloud and hosting services all with dedicated responsive support. With centurylink as your trusted Technology Partner<\/a> youre free to focus on growing your business. Centurylink. Your link to whats next. Welcome back to squawk box. Another tune from 1965. That is 50 years ago. Deduced that. That is when all this started with berkshire. And well be back with Warren Buffett<\/a> and becky in a second. But lets look at futures indicated up higher. Dow up about 18 points. The s p up about 1 point. And the nasdaq 9. In our headlines, iraqs army has launched a campaign against strongholds north of baghdad held by isis. Its the biggest military operations there since isis fighters seized that territory last year. And this has been awhile in coming. And both sides a lot swirling around. Israeli Prime Minister<\/a> netanyahus visit to the United States<\/a>. He accepted invitations from republicans to address congress tomorrow. And he will warn against doing a possible nuclear deal with iran. Israel fears that such a deal could allow iran to develop atomic weapons. But i dont know. Kerr are i and the president are really want to try to get something done diplomatically. Lets get back to becky and Warren Buffett<\/a> in omaha. I bet you 50 years i worry about this. This is one of my things becky. How quickly time is passing. Ill bet warren remembers 1965 like it was yesterday. Warren . It moves fast. The good news is that you can have just as much fun at 84 as you were having at 24. Oh do tell. Charlies 91. Hes my canary in the coal mine. I was thinking about that. Exactly. Because i think youre 25 years older and i was thinking hey, if i could be im not going to be rich. But i think were rich in just being healthy and living long lives, warren. Thats what we shoot for. You watch your kids grow up and watch your grand kids and everything. Its all good. Im trying to take a positive view. Warren lets talk a little bit about dividends at Berkshire Hathaway<\/a>. Back in 2011 at the annual meeting i asked a question the shareholder had written in about dividends. Your response at that time was i think the day berkshire declares a dividend is the day when the stock goes down as it should. This year in the annual letter you wrote a different take. You said you think some time in the next 10 to 20 years there will come a day berkshire has more cash than it can adequately figure out how to properly invest to get a better result on it. So you think they could try to determine whether they should pay dividend or buy back more shares. How did you change so drastically on the idea of the dividend. The numbers keep going. I think what i said was is it going to do it some day, yes. Because because of compounding numbers. Theres nothing magical about the 10 to 20 but when i was writing that section, it seemed to me i kind of project in my mind how much cash well have coming in in that 10 to 20 year period. It would seem to me it would get difficult to deploy it all in the business. And then you have a decision to make between dividends and repurchases or both. And to me that seemed to be simple. Youre doing the shareholders are going out of favor and youre doing the shareholders are in favor. And nobodys getting cash that they dont want. So i would hope at that time that huge repurchases. I guess its a tax retraction for those who dont want the cash out. And they enhance their interest in the company and they do it at a modest price. Its a wonderful equation. Let me ask you this. Because i cant figure out exactly what i think about this. But its something ive been kicking around. If you think that in the next 10 to 20 years, if you think berkshire wont have enough cash to deploy it properly does it still make sense for the Insurance Companies<\/a> to be part of berkshire . Because obviously the Insurance Companies<\/a> have done very well. Youve been very smart about where youve written policies. But i think one of the biggest advantages to having Insurance Companies<\/a> is it creates this massive float. You can take the money now, invest it wisely. And even if you have to pay out those returns, two years, five years, ten years down the road youve made up more money because you invested it smartly. If you have more cash than how to invest it does it make sense to still have the companies . Oh yeah. Even when youre paying out a dividend or repurchasing shares it still has value. It doesnt have as much value as obviously if you cant use it all in things that are intelligent other than paying dividends or repurchasing shares, its not quite as attractive as it has been for us over the years. But costfree float is always valuable. Does it change the nature of the Insurance Business<\/a> and some of the contracts that you write . Because jane has come up with some clever business waves that nobody thinks of. Some of those, though, are taking bets over a long period of time. Does it change that inherently . That business stands on its own. Any time we can do something we think is mathematically intelligent, we have the resources to do most anything. So we can take on anything. Then the question is does the math make sense . And well always thats the way well evaluate things forever. But we wont always have one to think it through as well as he can. You say when you look out 10 to 20 years, you can see in your mind how much money berkshire will have coming in. Whats the ballpark figure . Vague. But ive always ive always had numbers in my mind. When i was in grade school before i learned those things i would do compound tables of my own. All right. Were going to continue this conversation in just a moment. We have a lot more to get to. Back to you in the studio right now. Thank you. Coming up Warren Buffett<\/a> once told lebron james if he got winded during a game the cavaliers just put buffett in and no one would know the difference. Were going to have a question from him. Hes got one of video for the oracle of omaha. Thats coming up after the break. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant<\/a> to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Help an oil company overcome minus 47 degree temps, 5 foot ice, and 16 foot waves, to safely keep crude oil flowing 365 days a year. When emerson takes up the challenge its never been done before simply becomes consider it solved. Emerson. [ male announcer ] at northrop grumman, we know in the cyber world, threats are always evolving. At first we were protecting networks. Then, we were protecting the transfer of data. And today its evolved to infrastructure. Finance. And military missions. Were constantly innovating to advance the front line in the cyber battle, wherever it takes us. Thats the value of performance. Northrop grumman. Welcome back everybody. Weve had a lot of questions for Warren Buffett<\/a>. Heres one from a cleveland cavalier, lebron james. Actually i have two questions i would like to ask Warren Buffett<\/a>. My first question would be yeah, what should i invest in next . Can i have some tips . And my second question would be im not doing too well with the profession im in right now. Can you teach me how to play a little basketball please . Those would be my two questions to Warren Buffett<\/a>. Warren . First one was what should he invest in now. Right. I think somebody like lebron and weve talked about it but i think you and lebron have talked about it . Occasionally. I think actually through the rest of his career and beyond in terms of earning power, just making monthly investments in the low Cost Index Fund<\/a> makes a lot of sense. I think somebodys position ought to have a significant cash reserve. Whatever makes him comfortable. And then beyond that owning a piece of america, a diversified piece bought over time held for 30 or 40 years, its bound to do well. And the income will go up over the years. And theres really nothing to worry about. You think hes listened to you on that . Youd have to ask him. His second question . People toend get proend to get promoted. Usually the simpest is the best. What does that mean . Something like owning the United States<\/a> at a decent average price over time. You really cant go wrong with that. Now, somebody else will end up doing better with this or that but somebody will do a lot worse with this or that too. And their expertise is making a lot of money doing something they do extremely well. But they arent going to be generally able to take the time to become a professional investor too. Its the same advice i give 99 of the people. Buying an index fund. And doing it over time and starting early, starting young in life. And nobodys ever followed that and gotten other than a decent result. Nobody. All right. Warren, well continue this conversation. Joe, back to you right now. I missed the second question. Im sorry, the second question wait wait. Timeout. Let me take it out. Second question was if hes not doing well in his own current career, what would you tell him to do . Help me out here. Hes doing fine in his present career. He wants what . Oh. He wants advice on how to play basketball. Well, we went oneonone for a considerable period and his game went up after that. Im kidding. We went up for a jump ball one time and he got it went the length of the court, dunked it just as i was starting to jump. He does not have much to learn from me. All right. Joe, back over to you. Thanks. Coming up were going to talk politics with Warren Buffett<\/a>. Find out what he thinks about the race for the next american president. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls<\/a> eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Now with the xfinity tv go app, you can watch live tv anytime. Its never been easier with so Many Networks<\/a> all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless<\/a> 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless<\/a> smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back to squawk box, everyone. We have Warren Buffett<\/a> live in omaha, nebraska. Its time to Start Talking<\/a> politics this morning, warren. There was a story this morning saying Hillary Clinton<\/a> could announce her run for presidency as early as next month. We had sorry. Wrong page. This one from the panic. Would you still bet money Hillary Clinton<\/a> will run and win in 2016 . Thats referencing something you said at fortunes most powerful womens conference. Yeah. Id bet money on both of those. I dont know whether intrade started their calculations yet. The odds may be up on that. But im sure shes a things could always happen in politics. But shes extremely likely to be the democratic nominee. And i think shes very likely to be the president of the United States<\/a>. Guys . Back in the studio im not sure if you wanted to play in on this one. Ive heard before hot potato. No no. I thought of a couple ways of approaching it i guess. I know how warren feels about this. Weve had him on i think eight years ago you were saying the same thing that you it wasnt eight now. Im jumping the gun at 2016. But it was six and you didnt care you thought either president obama or Hillary Clinton<\/a> would be great nominees for the democratic party. And, you know you were positive on the prospects for both as president. If you had to pick lets just say that you know that i can promise you ibm would be at 1,000 by the end of next year if you were to pick a republican to run, are there any of them that are less distasteful to you than others . Who do you think they should run . Oh i think well of a number of republicans. I vote for republicans. I contributed to republicans in the last few years. Yeah, i can think of certain republican candidates i would vote for in preference to certain democratic candidates. But im not going to give you names. But that is the case. I mean if you theres a couple of democrats that if they were the nominees i would end up voting for the republican probably. Would you vote if Elizabeth Warren<\/a> were the nominee, would you vote for ted cruz . Im not giving specifics, joe. Were not going to get dont get out the phone book. But im just telling you, i am not a card carrying democrat. I vote democrat most of the time and i agree with their position on social matters to a significant degree. But im not a straight down the road democrat. Warren what do you make of Elizabeth Warren<\/a> and especially her views of wall street . Well i think that she would do better if she was less angry and demonize less. I believe in hate the sin, love the sinner. And i also believe in praising by name and criticizing by category. Have you tried to convince her . Oh, go ahead. No. Listen, dont pick her out of theres plenty of other candidates that their styles are not 100 my style. But i do think its i think its a mistake to get angry with your with people that disagree with you. I mean in the end we do have to work together. I think the whole nature of governing particularly when you have divided government is youll end up with bills that each side doesnt like but they like it better than doing nothing. I mean thats thats the way government has to function. And it does not help when you demonize or get too violent with the people youre talking to. Warren hatch talks about how he had this great relationship with ted kennedy. They certainly didnt agree on many things but they got some things done. I tip my hat to both of them. Incidentally, i think theres a reasonable chance of a Corporate Tax<\/a> change because i think orrin hatch and ron, they are two people that if they do it in private can forge something that again neither one of them likes but they like it better than the present system. Thats whats going to have to happen in government. Warren you say you like to criticize by category, not by name. Right. You certainly did a lot of that in the annual shareholder letter this year. You took on investment banker conglomerates, private equity and a lot more. Were going to talk about more of those names in a moment when we come back. Because you were not shy on a lot of these categories. Im not shy about my views. Theres plenty to criticize. But i dont name names. Okay. Andrew, well send it back to you with more on this in a moment. Just before he goes about having fun. Were getting a lot of comments on that at 84. Can you give us an idea of that too . Are you talking about playing bridge or other things . What can you golf . What is it . I probably play bridge ten hours a week. But that just depends what games you like. Across the board . I mean youre doing everything you were doing at 24 . I mean well im doing all my daytime activities are similar. I would say i was having a lot of fun at 24 or 44. But at 84 i will tell you. If youre working with people you love at a job you love it doesnt get any better than that. Okay. Warren buffett, dont let him take you there. You know where hes trying to go. No. Get your mind out of the gutter. When we come back a lot more of Warren Buffett<\/a> in the next hour. Well look at the 50th annual letter. Well get warrens take on walmart wage hikes. Also another celebrity video question. Were coming back in a moment. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets<\/a> and drive forward with broader possibilities. Cme group how the world advances. I already feel like were the most connected but i think this solo date will seal the deal. Sure i offer multicar, safe driver, and so many other discounts that people think im a big deal. And boy, are they right. Ladies, i can share hundreds in savings with all of you just visit progressive. Com today. But right now, its choosing time. Ooh we have a winner. All what . [chuckles] hes supposed to pick one of us. This is a joke, right . That was the whole point of us being here. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Time to ask warren. The oracle of omaha sounds off on issues of the economy and your money. Some are doing better. Housing has come back at a slower rate than i anticipated. Autos faster than i anticipated. From Berkshire Hathaway<\/a> to his biggest oldings, plus your investment questions answered. You try to evaluate it and where it will be in five or ten years. If you think its cheap, you buy it. And everybody should do that. One of the richest investors in america right here on the biggest name in business news. Ill run an ad on cnbc when we sell. As the final hour of squawk box begins right now. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with andrew ross sorkin. Were in a our midtown manhattan studios. Becky is in omaha this morning with Berkshire Hathaway<\/a> chairman and ceo Warren Buffett<\/a>. Were going to hear one of them. I was thinking about becky trying to get out there. Did she go out yesterday . I dont know. We can ask. More snow again yesterday. Here are the futures so far. I think theyve turned around or at least theyre okay. Theyre not up as much as they were. Up about 8 points at this point on the dow. Its jobs week again. Were going to get the number on friday for the january employment. Weve got as i said up 8 on the dow. The nasdaq up about 7. 5. Well see whether we need to have that big party of the new high on the nasdaq any time soon. Greece down again. I think thursday and friday of last week when we were watching as well. 861. 49. Lets keep that in our mind that thats where it is. And there are some headlines. Lets get you through some of those headlines right now. Nxp is buying semiconductor freescale. 12 billion that tieup. And shares of Lumber Liquidators<\/a> are getting slammed this morning. A report on 60 minutes last night suggested they sold floors with higher levels of formaldehyde than was allowed. And they argue the attacks were driven by a group of short sellers. The stock is now down more than 40 than last week when the ceo said 60 minutes was planning that story. Were also watching shares of oil prices. Because theyre dropping again. Okay. Lets get back to omaha. Beckys there with Warren Buffett<\/a>. Thanks again, guys. We are spending the morning with warren guf fete. Weve been talking about his letter to shareholders which was released this weekend. It was a lot of reading. A lot of people going through with all this. One of the things that jumped out at us is you really didnt hold back. This was no holds barred in terms of your opinions and everybody on wall street got scathed in one way or another. Lets talk about a couple things you said. You said conglomerates it should be acknowledged have a terrible relationship with investors and they deserve pipt. Absolutely. Why . Theres nothing wrong with the structure, its just they were they have been the source of enormous abuse including accounting manipulations over the years. And they led themselves to that. And actually the worst period was in the late 60s. It contributed to me winding up my partnership. Because there were it was just a feast of accounting manipulation and promotion. And i didnt want to engage in it, but i also didnt like having lousy figures against people that were just basically playing games with the numbers. But the conglomerate form for us is perfect. I mean we can move capital which capitalism is all about intelligently withdrawing capital from place where is theit is not good and moving it where it is better. And we can do that without taxes seamlessly and in a way that doesnt upset people. So we have a good form but that form has been abused in the past. That forms been abused in the past. Do you see excesses like that taking place the the marketplace right now . Accounting fraud, i should say. Accounting games. There almost always are accounting games going on. Theres huge peaks and valleys of that. Thats a big generalization. But that hadnt been true all year. And in the past, too often their auditors helped them. I have sat in more meetings when a company has been acquired and heard the auditors outside auditors explain ways that Purchase Price<\/a> accounting can be used to goose the earnings in subsequent years. That was regarded as they thought that was their job. A lot of that has been improved. In fact, ive been on a lot of committees where i tried to improve it. But accounting, its just very tempting. I mean youre putting out little numbers that people capitalize and create billions and billions of dollars. Andrew i believe you have some breaking news right now. Yes, becky. Relates to Warren Buffett<\/a> to some degree. Costco which as you know last week or two weeks ago announced it was going to be ending its relationship with American Express<\/a> has Just Announced<\/a> it has now signed a deal with citigroup and visa. Thats what will replace the American Express<\/a> card. Of course American Express<\/a> a company Warren Buffett<\/a> owns a stake in. But that is the news. This deal goes into effect april 1, 2016. Is i would toss it back to both of you but also ask warren if you have views about this deal. I imagine you knew some deal like this would be coming. Yeah. Somebody was going to get the bid. And American Express<\/a> learned a week or two ago that they were not the one that was going to get it. I dont know the terms of the new deal but i dont think citi will get rich off it. You dont think there was much margin to begin with . That would be my guess. I thought it wasnt the margin helping as much as the business. Im counting all of that. The business should get outside of costco and everything. I mean the cobranded cards and this isnt just through costco. The airlines and such. The cobranded cards have become quite a competitive business. Its better to have your own proprietary card is worth more than a cobranded card. Okay. Lets get back to some of the insults that you handed out in the annual letter. I dont know. Commentary. Commentary that i know you look at as teaching people. Lets talk about some of these things. Sure. You say when it comes to prieft private equity its a dirty word for many privateequity buyers. Debt is piled on in virtually all private equity purchases. Right. And as a matter of fact private equity is grumbling to some extent about the fact the fed sort of said six times is what the banks, its okay to lend. Six times leverage. Six times leverage. And private equity would like to see it higher. They want to borrow every time they can. In most cases. Theres some exceptions to that. And thats why they call themselves leverage buyout operations originally. Thats what they do. They do lenchverage buyouts. That got a dirty name. And so they changed the name. But they didnt change the activity. And i dont blame them. I mean if you can get all the money from somebody else and you get the upside and if they get the downside to a great degree theres nothing unamerican about that. But it that is what it is. And if youre selling your firm to a private equity firm you can expect it to be loaded with debt. The equity will it will become less of an equityrich company after the deal. And like i said theres nothing unamerican about that its just not the way we operate and not the way some sellers want their companies to operate after they sell. And when they dont, then were the logical guys. However, youve done deals with 3g. Right. And they like to leverage up. And theyre very good at running businesses and were delighted to be their partners. Its not what we would do in buying businesses. But we are partnered with them. And they are exceptionally good operators. I feel fine about the debt. Actually bought a little debt personally of some of the ones theyve done. But they like leverage. And they can pay more because they like leverage than we could pay on an allequity basis. Whats your point in the letter . Its a bad practice unless youre really good at it . Im saying its a different practice than some Companies Want<\/a> to have for their businesses. And so we get the people who do not want their companies loaded up with debt. But theres nothing improper about loading something up with debt. Its just one of several forms of selling out and to anybody that doesnt want their company hocked to the gills, its for us. So its a big ad why to sell to berkshire. Its an ad why people who dont like a lot of debt should sell to berkshire. If you want the best price, you probably get it by auctioning it off to somebody whos going to borrow as much as they can. Theres nothing wrong with that. But if they dont want that were a good place to call. All right. Lets talk about what you had to say about Investment Bankers<\/a>. One of the comments you made is that Investment Bankers<\/a> being paid as they are for action constantly urge acquirers to pay 20 to 50 premiums over market price for publicly held businesses. Youve had thoughts on Investment Bankers<\/a> in the past. You dont necessarily always listen to their opinions. In fact you rarely listen to their opinions. They are in the business of selling companies. And therefore they see the virtues of people buying and selling them. Theyre very smart people. Sometimes they can contribute in a helpful way. But they like having transactions. You know, again, theres nothing evil about it. Just better be aware of it. I mean if youre if you go to a dentist and he only gets paid by the number of teeth that he removes, then you better start taking a little bit and making judgment about which teeth you want to keep. Okay. Well continue this conversation in just a moment. Andrew, joe, well send it back to you guys in the studio right now. Thank you, becky. Were going to talk to warren about walmart with over 60 million shares about 2 of the company his stake. Worth more than 4 billion. Warren buffett on walmart and retail coming up after the break. 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Its never been easier with so Many Networks<\/a> all in one place. Get live tv whenever you want. The xfinity tv go app. Now with live tv on the go. Enjoy over wifi or on Verizon Wireless<\/a> 4g lte. Plus enjoy special savings when you purchase any new Verizon Wireless<\/a> smartphone or tablet from comcast. Visit comcast. Com wireless to learn more. Welcome back, everybody. We are live in Warren Buffett<\/a> this morning. Weve been talking about a lot of things but also talking about Major Investments<\/a> for Berkshire Hathaway<\/a>. One of those stocks warren that you do own a big chunk in. I think 5 billion we were just talking about this is walmart. Uhhuh. Yes. We and the Walton Family<\/a> control the company. Im not sure they see it that way. Almost all huge errors of Berkshire Hathaway<\/a> were in not making a purchase including not purchasing walmart stock that was sure to work out well. Berkshires net worth would now be at least 50 billion higher if it had seized several opportunity it was not smart enough to recognize at sure things. Our biggest errors have been errors of omission no comission. Now, to some extent thats because were basically so conservative. We have never wanted to push. So there have been times even in the 2008 panic we bought 15 billion worth of things in three weeks. But we kept a lot because we always believed in the company. So we could have played that harder, but we just never wanted to get close to the edge. What do you think about some of the recent moves . We talked very beliefly about walmart raises its own minimum wage internally. Do you think that was the right move . Well i think the management is very good there. I think doug is doing a great job. Ill see him again in a month. But i think he really has a feel for the business. But i think ecommerce has been to be enormously important to them. I think theyre in 12 billion now or Something Like<\/a> that. But, you know thats a game theyve got to become very very competitive in. I know another ceo who youve met with in omaha is mary barra. That you bought a new cadillac. She was instrumental, i think, in convincing you to buy that cadillac. We have questions from kyle bass. Kyle bass is an investor in General Motors<\/a>. Hes been pushing for the company to buy back more shares and increase the dividend. Put a fellow on the board. That is harry wilson. Who hes been pushing for that. Harry wilson was involved with resetting gm. But he points out that he thinks its trading at a significant discount to intrinsic value. Marys only been in there a short period. Theres a lot of things to do. Having had to go to the government a few years ago to stay alive, you can go through cash very fast. I dont if i were running it would i be buying the stock . I dont know if i would or not. But it doesnt bother me at all when shes not doing it. I think shes exactly the right person for the job. Ive met her a couple times and she is very very good. And i think it i just think the idea of trying to do something now to get a pop in the stock should not be on her agenda or the shareholders agenda. I think the main thing to do is build the strengths of General Motors<\/a> which they had in the past. And i think marys the right one to do it. And i totally disagree with the idea of putting somebody on the board who has an option on some other peoples stock which is only good for two years. To have somebody sitting there in the bedroom who has a twoyear rise when they make money that goes to zero after that. Its just not the way to run a business. Berkshire would not be where it is today if wed had a bunch of directors over the years that had horizons on when to make money off of the stock. What do you think about corporate activism in general . Sometimes i think its justified. And sometimes its just way, way off the mark. I mean i think of cocacola when David Winters<\/a> who runs the fund is underperformed through every inception. And who draws a 150 basis point fee when you can go to vanguard and do it for less points. He complains about it not being commensurate with coke. I think hes a fellow living in an allglass house. You agreed with some of his points when he first came out against cocacola though. I thought last year was excessive in terms of stock. And the cocacola Comp Committee<\/a> has done a sensational job of reengineering that plan. Ive seen the model of proxy should be written and in terms of what theyve been doing. But they went from the top quartile to the bottom in terms of cash issueants. I give great credit to mel. She has really worked at devising and explaining. Youve been in close contact about that . I saw her last week yeah. And what did they lay out . They just showed me the proxy material thats going out and how the plan is put together. They already described this a few months ago. These are the specifics. They thought it through like an owner. Thats all you can ask. And theyve spent lot of time doing pipt i noticed the but its a really they went at it just like an owner should go at it. I think its crazy of winters whos getting incredible fees for negative production to complain about cocacola. But again you agreed with his points when he first came out. When did he start saying things you didnt agree with . I agreed total will i with the fact that the plan that was put out last year was way too big on stock issuing. I felt it had flaws in it. And so did the cocacola Compensation Committee<\/a> when they looked at it again and looked at it hard. There was to say there was a service performed by david when he pointed out the fact that there was too much stock involved in it. But then unfortunately that when the facts changed, he didnt. But he was the one who first brought it to your attention. No he didnt bring it to my attention. But he brought it to the publics attention. But i read it. All right. Warren, thank you. And joe . Yeah. I love coke. I mean i love i do too. Five a day. I know. And not diet coke right . I like i drink a six pack of coke classic every day if i could. But i need to do those calories elsewhere. But i love it. But im sworn off it. You know what i mean . Yeah. Thats why i only have five a day. But i agree with you on that. I like the real thing. Im not a big diet goo i. I do too. Even coke zero. And i like cherry. I like all of those. But i dont know. I need id rather have a clark bar or something. I dont know. Thank you. I hear a lot of people complimenting you on your physique and just general appearance. Now i know why. Youre right. Yeah. So youre hearing that too, huh . Its all over omaha. All over omaha. I cant go down the street without i have a trainer. 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Reaching constantly evolving threats before they reach us. Thats the value of performance. Northrop grumman. Welcome back everybody. We are live in Warren Buffett<\/a> this morning. Warren i cant believe that its already two and a half hours into the show and we havent even gotten a chance to talk to you about some of the headlines coming out from greece and the eurozone. We heard the headlines at the top of the show. You said you had comments on it. Id like to run another question for you that was sent in by Charlie Munger<\/a>. He had some questions for you as well on that. Listen in to this. We think the new guidelines are all fizz. And it really doesnt address the fundamental problem that was raised that it was excessive and we believe it is now all right. Sorry, live tv does this sometimes nap is not the question we were waiting for. There was a question that Charlie Munger<\/a> had on the eurozone and on greece. He had some very specific thoughts on this. And lets run that one. In the eurozone should the rich nations simply give the poor nations all they want in order to avoid an unusual share of economic decline . That was his question. Should the rich nations just give into the poor nations to make sure theres not an undue amount of economic decline . Becky, if you have behavior you want to get rid of its probably not the smartest idea to reward it. If you have a dog thats peeing on your carpet you do not want to give it a bunch of dog biscuits. Or youre going to have some your carpet after awhile ill sell you a new carpet. And essentially if people find they can break the rules and you kind of threaten the rest of them by the fact theyll cause you more trouble. And youre going to have a more stains carpet if you essentially give into them. Just keep modifying the rules as you go along. Okay. I would in general agree with that comment, but the situation in greece i think is more complicated. First of all the eurozone stepped in in the beginning and bought a bunch of bonds that they were kind of trying to that is a lot of the debt loaded up on them. And quite frankly germany and some of the other rich nations have benefitted greatly from being linked to weaker economies and having their currency devalued. Germany has been a huge beneficiary of this. Is there anything that says they should be sharing the wealth with some of the poorer nations . Well if they want to engage in foreign aid and just say that these people can play the game any way you want. I suppose thats up to them. But the what greece has done is exposed the weakness of the original concept. And the idea that youre going to link currency in lock step among a large group of countries that have different fiscal policies, different cultures different labor laws and everything. It has a structural weakness to it. Just imagine we had a western hemisphere zone that we linked ourselves to. And, you know you name it. It wouldnt work. And you have to you have to either get further in or recognize the fact that the structure will not work over time. And it may but it may work in some modified form. You would tell greece to take a walk. Yeah. I would tell them you know heres what you can do. And if you want to do it, fine. But it isnt going to work if youre going to go in a different direction in terms of fiscal policies and all of that. And if you decide then youd like to give foreign aid to them, thats fine. Weve done it with countries. But you shouldnt i mean just imagine if we tried to link our currency to 18 or so other countries in the western hemisphere and we pick some that had way different fiscal policies and a whole different approach to government. It wouldnt work over time. I mean you either have to have a greater conformity. Lincoln talked about the nation not being able to exist half slave and half free. And essentially youre taking things that are really desperate types of economies and saying you can operate in all these way different ways but were going to keep our currencies in line. Currencies dont work that way. It sounds like a really dumb idea when you put it that way. Do you think the eu exists in 10 years, 20 years, 50 years . I think they will but it will be modified. Weve had amendments to our constitution, right . We thought we wrote a pretty good document. And we did. But we still have to amend it occasionally. And there was probably a boost to enthusiasm that they have to do the other half of the job. The biggest security investment is in wells fargo, there have been a lot of questions about the big banks and whether the big banks need to be broken up. Theres also a huge question with the change in the regulatory structure if it is going to make as much sense to be an investor in big banks down the road. What do you think . Well you can make if you have different Capital Requirements<\/a> based on size which you do to some degree now, and based on other things. But you can make banking unprofitable. You make a decent return on equity equity. And you earn on you earn on your liabilities plus your capital. And if you have to have more and more capital relative to other liabilities, you bring it down to where its attractive. I think our Banking System<\/a> is doing a terrific job. And it is not our banks are not as large relative to the economy remotely as in many other countries and our banks are in better shape than much of the rest of the worlds. But big banks are now being jpmorgan number one, i believe, but penalized on capital. And you can make it an unattractive business. And i suppose if you push that hard enough people will say, well, they dont like big banks. They didnt like big oil back when the trust existed. They broke it into pieces. All the pieces have done pretty well. I think the present Banking System<\/a> is its a pretty damn good system for the United States<\/a>. Let me ask you also youre not only in the business of banking through your investments, but now with the purchase of van tile youre a car salesman too. Yeah a good one. Which leads to a conversation on a story thats out from dealbook. They talked about how wells fargo is putting a ceiling on the subprime autoloans. In terms of how frequently and how easily you can get these things. Wells fargos not participating anymore and thats putting a freeze on the rest of the industry and raising concerns. What do you think . I think they put a lid on the percentage they want to have. I just saw the figures on a subprime lender the other day where 50 of the loans they made defaulted in the first year. Theres something wrong with an operation like that. You dont need the degree of misery that occurs with hundreds of thousands of borrowers if 50 of them default within a year. Your lending standards are wrong in that respect. I dont say anybody thats kind of marginal doesnt have a right to get a shot at owning a home maybe with a low down payment or a car. But have it become the norm bigtime. I think its a mistake. You said earlier though that car sales have rebounded more quickly than you expected. Do you think its in part of these loans being handed out . And do you think the auto sales will be hampered by this . I think that just from what ive seen on one or two operations, i think that theres been a weakening of credit standards that is probably unwise. Okay. Andrew, joe . Thank you. We also have breaking news to give you. Just happened the past couple minutes. Hewlettpackard announced it is buying Aruba Networks<\/a> for 2. 7 billion. Hewlett sees the deal adding to earnings in the first full year. Following the close of that deal. Of course they make wireless equipment for businesses. That stock up just in the past week because people thought this deal was coming. There were rumors and speculation about it. That stock had traded sliegts slightly higher on friday. Also, when we come back warren has been answering your questions all morning long here on squawk box. Up next a question from former california governor and celebrity arnold schwarzenegger. He once tapped warren as his economic adviser. Well talk californias debt and the nations economy with mr. Buffett after the break. You just got a big bump in miles. So this is a great opportunity for an upgrade. Sound good . Great. Because youre not you youre a whole airline. And its not a ticket youre upgrading its your entire operations, from domestic to international. Which means you need help from a whole team of advisors. From workforce strategies to Tech Solutions<\/a> and a thousand other things. So you call pwc. The right people to get the extraordinary done. In new york state, were reinventing how we do business so businesses can reinvent the world. From pharmaceuticals to 3d prototyping, biotech to clean energy. Whether your business is moving, expanding or just getting started. Only new york offers you zero taxes for 10 years with startup ny business incubators that Partner Companies<\/a> with universities, and Venture Capital<\/a> funding for high growth industries. See how new york can grow your business and create jobs. Visit ny. Gov business welcome back, everybody. This is our annual ask warren show. The questions have been pouring in for the berkshire boss. Warren, weve got another question that came into you on video. Take a listen and see what you think. Warren youve been very outspoken about the unfunded liabilities, the pensions that you talk about here. And in california we have a huge problem. We have over 500 billion in unfunded liabilities when it comes to pensions and Health Benefits<\/a> for the retirees. But in the book we only show maybe 90 billion or 100 billion of debt. Really pulling wool over peoples eyes not telling them the truth. Is your solution to this big problem we have not only in california but all over the United States<\/a> . Arnold schwarzenegger asking about the pension liabilities that could be a lot bigger than we even admit in terms of what we tell the public. What do you think . Well they can be. Theres such as investments. It doesnt change how long the pensioner lives or the pension. So its been particularly easy for politicians to make promises on pensions because theyre not around to pay them and it makes the union youre negotiating with the state or local union, very happy to get a pension increase. They vote for it at the next election. By the time the bill comes due, youre long gone. It is true that many illinois is in terrible shape. New jersey is in bad shape. Talked about curing it but they didnt. Californias in bad shape. Those pension obligations can be met, but they cant be met if you pretend they dont exist. And you never start making large payments into trust funds essentially to deal with them as they come due. You know you promise somebody that youre going to pay them for 30 years after they quick working, you better start accumulating something now to make those payments. And state and local governments have been particularly remiss in that compared to corporations although there have been plenty of corporations coming up short as well. Okay. Well continue this conversation with warren in just a minute. Joe . Becky, hey, warren. Whats your favorite ice cream flavor . Well this morning i had a little strawberry haagendazs before i came down. That was at about 4 00 this morning. Youve had greater, i know. Did you ever look at greaters and think about buying it . I know you probably know that old cincinnati company, right . I dont know that one. But if youre telling me its good, ill believe you. Going to send you some. So you like strawberry right . I like strawberry. I like chocolate chip. I like of hard to find an ice cream i dont like. You finish off the montgomery, you finish off with greaters. I eat it right out of the carton. I do too. For some reason then i feel like if i dont leave a dish in the sink, no one knows, you know what i mean . And i dont go down very far. I kind of make it flat. You know you cant really tell the way i do it. Anyway when we return were going to go downtown. Jim cramer is going to get into the mix. Well talk monday markets plus what warren sees in ibm that others might be missing. The stock down. Is this a buying opportunity . Well revisit that. Well find out more from the worlds greatest investor. At mfs, we believe in the power of active management. Every day, our teams collaborate around the world to actively uncover, discuss and debate investment opportunities. Which leads to better decisions for our clients. Its a uniquely collaborative approach you wont find anywhere else. Put our global active management expertise to work for you. Mfs. There is no expertise without collaboration. Theres something happening right here in this country. Its the sound of america. Working with american materials. In american factories. At weathertech all we do is create the highest quality Automotive Accessories<\/a> including laser measured custom fit floor liners. Order yours today at weathertech. Com or call 1800carmats weathertech floor liners. Proudly made in america. Welcome back, everybody. Lets get down to the new york stock exchange. Jim cramer joins us right now. You had sent in a question. I wanted you to get the chance to ask the question yourself. Thank you so much, becky. The Energy Business<\/a> that you have, warren, is just phenomenal. Tremendous pipeline business phenomenal, but also great Railroad Business<\/a>. I was wondering whether keystone shelving that isnt a terrific opportunity for Burlington Northern<\/a> which you were somewhat critical of in the report. And i kind of felt bad for those guys because that is one of the best railroads in the world. I think they could be a winner from the president blocking the pipeline. Well, i agree with you about burlington being a great railroad. I dont know how keystone you know, theres pluses and minuses in terms of how it cuts for our particular railroad. But i think i would have passed keystone. I think that we have an enormous interest in working with canada as they have and working with us. That oil is going to get sold. If we make it more difficult for them who knows theyll feel about making things more difficult for us someday. That is a valuable resource of north america, and canada has been a terrific partner over the decades. And for us to kind of thumb our nose at them you know, not what i would do. Wow. Look, i think thats great. I wanted to also ask you, if youre managing Burlington Northern<\/a>, you read the letter obviously you say that Union Pacific<\/a> did a better job. You put more money in it. Is this the type of thing when youre the managing in a very decentralized business that you have, you wake up and you say oh, my im the guy that didnt do as well as i should have for mr. Buffett . Matt rose has done a terrific job for us. And the u. P. If you remember i know you do jim, about a dozen years ago, u. P. Had some Major Service<\/a> problems. And we gained a lot of share against them. And theyre a terrific competitor. But we are spending a lot more money than they are now to improve service. And my guess is that over the next 20 or 30 or 50 years, a few years when we surge in a few years, when they surge and that we both come out a whole lot better off than we are now. All right. Look i wanted to congratulate you. I thought the letter was just unbelievable. I read it twice. Everyone has to read it. They should be in an index fund i agree with you, but it was brilliant. I learned so much. I just wanted to thank you. Thank you for what youve done for investing and for making it so that its accessible but also for recognizing peoples own lilt axs s limitations and being in index funds if they cant spend the time like you do. Thanks jim. Appreciate it. Jim, thank you. And we will see you in just a few minutes coming up at the top of the hour. When we come back were going to wrap up loose ends with Warren Buffett<\/a>. Join us tomorrow. Another great lineup including guest host David Rubenstein<\/a> the ceo of the carlyle group. Stick around. Much more with Warren Buffett<\/a> on squawk box right after this break. Can it make a dentist appointment when my teeth are ready . Can it tell the doctor how long you have to wear this thing . Can it tell the Flight Attendant<\/a> to please not wake me this time . The answer is yes, it can. So, the question your customers are really asking is can your business deliver . Over the next 40 years the United States<\/a> population is going to grow by over 90 Million People<\/a> and almost all the growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved info safe clean, Affordable Housing<\/a>, places that have access to great School Systems<\/a> access to jobs and multiple transportation modes then neighborhood begins to thrive and really really take off. The oxygen of Community Redevelopment<\/a> is financing and all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities so we are now working in chicago, and in washington d. C. , and newark. Its amazing how important safe Affordable Housing<\/a> is to the future of our society. Welcome back everybody. We are coming to the end of three hours live with Warren Buffett<\/a>. Time seems to fly when youve got a lot to talk about, and we have had a lot to talk about today. There are still some questions that are coming in warren. In fact, david tepper wrote in a little bit. Ago. Obviously, the hedge fund manager. He says first of all, what does buffett think about transparency of compensation plans, particularly in regard to have Companies Make<\/a> Capital Allocation<\/a> decisions . And enthis he wrote me another email and says and how does capitalal indication relate to how much cash is on the Balance Sheet<\/a> . Well its a pretty broad question. Transparency of compensation relative to Capital Allocation<\/a>. Yeah. The compensation figures that we publish are the ones that are required by the s. E. C. I think a terrible mistake, just like in your business i mean if everybody knew how much each anchor got paid it would tend to escalate payments. I mean and is that good for the shareholders or not . So i think publishing everybodys earnings would be it would be antishareholder in the end. It would satisfy a lot of curiosity, and a lot of people would get very envious of those around him. I saw at salomon how envyious people could get about others compensation. I dont see how it relates to Capital Allocation<\/a> exactly. I dont get that part of the question. Maybe david will write in if hes got additional thoughts on that. Meantime harry wilson wrote in. We were talking about gm earlier. Wilson has been proposed by a group of activist investors as a potential addition to the board of General Motors<\/a>. We had comments. He wrote in to clarify. I want to give him a say. I wont read it all but he does say that the underlying rationale of his candidacy is to do exactly what you said to help General Motors<\/a> build for the longterm strength it needs to become a worldclass company and thrive for many years to come. He points out hes been a shareholder since 2011. And as he said he expects to be a shareholder for many years to come. As he said to the company, hes perfectly willing to take all of my compensation in stock and have it locked up for an extended period of time. This is not by any means a twoyear deal. Yeah. Well, maybe im wrong, but my understanding was that he was getting the profit on 4 of roughly 30 million shares owned by three huj funds. So thats a 1. 2 million share position. Where the money that was made in the next two years counted and nothing afterwards. So i dont know the size of these other positions compared to the 1. 2 million or whatever it may be that he has an option on. I dont think its wise to i dont think its wise to compensate any director based on what happens in the next two years and have them overwhelming overwhelmingly focused on that which may or may not be the case. If mareharry has a ton of stock hes going to put away. I dont know the answer to that. He does write in and say that he does away with you on mary barra, that hes a big supporter of her and thinks shes doing a good job. I think hes dead right. I think hes dead right. Its not easy running General Motors<\/a>. And walking in now in the last year, a whole lot of things on her plate. Its a worldwide organization. And i believe in giving somebody like that a lot of slack. We do it with our own managers. Ill also point out, emails are coming in fast and furious. David faber just writing in saying you are exactly right. 4 of 31 million shares at two and three years is what hes talking about with that. Warren, if you had one message that you wanted to get out to people, obviously this is 50 years for Berkshire Hathaway<\/a>. Looking back reflecting, you had a very long letter anybody who hasnt read it yet, i would suggest they do that. Theres a lot of good information in it. One quick message . If youre a 20 or 30yearold and you can invest for your next 50 years and you consistently buy american business, american businesses are going to do wonderful over that time but you have to do it consistently and you shouldnt try and dance in and out or pick this stock or that stock. Just own the country. The best days of america lie ahead, and the best day of american investors lie ahead as long as they dont beat themselves. Warren, thank you so much for joining us today. We really appreciate your time. Joe and andrew we will all be back in new york city tomorrow, and the three of us will join us. Weve got great guest hosts coming up including David Rubenstein<\/a>. That does it for us today. Right now its time for squawk on the street. Everybody dance now what a show. Congratulations to becky and squawk. Good monday morning. Welcome. Im Carl Quintanilla<\/a> with jim cramer and david faber. Nxp buying freescale. Were going to talk to their ceo about his companys 12 billion deal in just a moment. Meantime we begin the month of march with the premarket relatively steady. Oil is slightly in the red and","publisher":{"@type":"Organization","name":"archive.org","logo":{"@type":"ImageObject","width":"800","height":"600","url":"\/\/ia800206.us.archive.org\/7\/items\/CNBC_20150302_110000_Squawk_Box\/CNBC_20150302_110000_Squawk_Box.thumbs\/CNBC_20150302_110000_Squawk_Box_000001.jpg"}},"autauthor":{"@type":"Organization"},"author":{"sameAs":"archive.org","name":"archive.org"}}],"coverageEndTime":"20240621T12:35:10+00:00"}