this was the 54th annual shareholder
meeting from Berkshire Hathaway and
while shareholder meetings are known for
being lightly attended stayed and
downright boring this was anything but
more than 40,000 people attended here
including business leaders like
Activision Blizzard CEO Bobby Kotick
Quicken Loans founder dan Gilbert and
Spanx founder Sara Blakely and for the
first time Apple CEO Tim Cook was in
attendance Apple is now Berkshires
largest equity holding and Berkshires
Apple's third largest shareholder we
caught up with Cook this weekend and
asked him what he thought about it all I
think it's incredible I've never been to
an annual meeting like this before you
know I thought ours was lively but
there's 40 plus thousand people here and
I love the fact that Warren and Charlie
take every question and of course
through all of it not just the wisdom
that they exude but you can feel the
integrity and the humility coming out I
think it's a great learning experience
for me and for everybody in the audience
I'm sure
joining us now is Berkshire chairman and
CEO Warren Buffett and warned that what
does it mean to you to have gone through
this weekend it's a lot of fun I mean
you see who you're working for and they
see you when you interact with them and
and they come in sort of a Mardi Gras
spirit I would say in the last 10 years
who's now maybe 40 well from out of town
not 40,000 but but a great many from
around the world I just never get a
letter of complaint I mean I know that
somebody misses planes or has a car
rental isn't available or a hotel room
but they they they they just come in the
spirit of enjoying it and and and the
people and all that way so so people go
wrong with smiles on their faces I mean
we have 600 of our own people would come
in from our various subsidiaries and
work for a couple of days and and it was
anything but smiles on their faces well
there unfortunately we're not going to
allow you to rest on your laurels this
week because we have some major news
that's breaking this morning you see the
markets already down by almost 500
points the futures here for the Dow what
do you think about the potential for
trade tariffs coming back on and what
that might mean for the trade dogs well
I can't I can't gauge out both sides
will play the game and they're always
some people negotiate different ways and
and if we actually have a trade war it
will be that for the whole world and and
could be very bad depending on the
extent of the war but there's times in
negotiations when you talk tough the one
thing you can't do though is you can't
you can't shake your fist first and then
shake your finger later on I made it
that is not a technique that works well
so when you do push ahead you don't know
exactly what the outcomes gonna be
well you can't shake your fist first and
then shake which finger later understand
I have actually
but well that's that's what you're
worried about if you get the other
figure back and and and you have to mean
it after a while otherwise it doesn't
mean anything obviously when you when
you do that and you're gauging a
response from someone else that also has
their own calculus and has their own
internal political considerations and so
on so it's it's a dangerous game doesn't
mean it's a game that shouldn't be
engaged in but it's a dangerous game you
negotiate a lot of deals too
would this be your tactic well it is
mine at all but but you know talk about
the Occidental deal later on the
illustrate but but but I've had a
consistent way of negotiating and that
has its advantages though has its
disadvantages too but but I just say
what I'll do and and I don't do anything
else so people really know that's what I
mean and they can decide whether what
I've said is acceptable or not but they
know that I don't go through it a game
now there's lots of people with
acquisitions that really like to play
games and and there you stood in their
own business and and it's their way of
doing it and that's fine but it doesn't
work with me
and I don't want it I can't afford to
spend the time on it I mean it you know
you don't know whether you're ever gonna
get there and you spent weeks and months
and it's just it it it would be a huge
time waster we did it you know I don't
know that this is blessed are coming
from President Trump though he's already
put the tariffs on and I don't know that
I would take this lightly and think that
we're not going to be seeing something
Friday you can't but if you're playing
you're playing the game you have to
solve that way I mean if it's with some
people in negotiations the best
technique is act half-crazy I mean that
that know with your kids you can see how
it works
negotiating things with no you're not
gonna shoot them so it really got the
edge and that's that goes on all the
time and it's interesting kind of with
the reputation industry we bought a very
large auto dealership operation a few
years ago and and we didn't make more or
less our kind of day of winning the
price and and probably 20 times since
then people come out they say we want to
do something and they just never found
one that we could do the same way I mean
they just it's just part of their lives
to negotiate and it's part of my life
not to negotiate so I mean to come in
with a high offer I'm sure you're going
to say and I understand that I mean
that's that's the way a lot of things
takes take place but but probably a
majority of transactions and but it's
nice that reputation for not doing it
because it makes it a lot easier you
save a lot of time well let's talk about
what it would mean if tariffs on Chinese
goods rose to 25 percent from 10 percent
done on that two hundred billion dollars
worth of goods at the end of the week
how significant is that what would it
mean for Berkshires businesses well it
would mean a lot to the world the it
isn't just the countries involved
because you know they they take the
dollars they've received from us net and
they buy goods in other places I mean
there there there there trade surpluses
considerably less overall than their
trade surplus with us so everything is
everything intersects in the world and
and it depends who gets retaliatory with
us or with them and it it's it's easier
to start it than it is to stop it and
and the effects would be huge it's
conducted on a major scale over time
just imagine Becky that that our
Constitution was set up different
and that states could erect tariffs and
Michigan will put a tariff in on that
cars and we would have wanted corn and
that the degree to which trade would
contract in this country the MIS located
plants they the migration of workers the
way I mean it would it would be well if
it sounds ridiculous to talk about it
because it is ridiculous but you've got
countries where you would have similar
effects if you if you get country after
country after country because you can't
just have it between two countries that
did it will it was right now the very
fact that it's sort of a nuclear threat
is what brings people to the table so
that means that's with it many play the
game but you don't want to have too many
nuclear threats out there because
someday somebody may feel they have to
fulfill one right obviously that's why
the global markets are under pressure
it's not just Chinese markets that are
down you saw the Korea kospi was down by
about 3% markets down it was just about
everywhere it affects everything so
that's a you're saying the markets
reaction is the right one it's not an
ovary it's rational and and then we'll
see what happens next but but obviously
if if you went to bed a week ago and you
thought there was a 1% chance of a trade
war and then subsequent events makes you
think there's a 10% chance markets
reflect that very quickly what would you
put in terms of I mean you're you're an
actuarial mind in terms of odds would
you put on it when you talk about two
leaders of the two major economic powers
in the world that's not the sort of
thing I can lay odds on I mean you were
talking about two personalities who are
very much used to getting their way and
and and and and in politics and you're
talking about how they will be perceived
in their own country
in terms of our behavior and it gets
very complicated yeah there's no way I
know how to predict that although you've
written insurance contracts on weirder
things than this yeah what would you
what would it take for you to ensure
that there was a deal done at the end of
this it would take a big premium yeah
this would not be the kind of thing I
would look to ensure frankly because
it's so unknowable yeah yeah and and you
wouldn't you wouldn't need to have a
hard time finding the the the risk
precisely because if they lasted for a
month and then so you get into the
duration of how long it was you know a
lot of trouble writing the contract and
but there's the sort of thing not not
precisely identical but it's a that we
do take on unusual risk but this is a
big one what will it mean for Berkshire
businesses specifically and I just think
on Friday we spoke with Jim Weber who's
the head of Brooks running they've
already relocated and and and moved a
lot of their operations to Vietnam
because of this concern they've been in
the process of doing that since these
trade talks first it's kind of well
we've seen in them in our rail car log
in or more all the stuff that rides on
the west coast I meant everybody stocks
up at a time and it distorts things just
thinking about it you can imagine the
distortion if you get into it and then
you really can't predict the speed or
the degree of effect because it spreads
you can't do something between US and
China in a big way without it affecting
all the major markets as they go around
and and you're starting a game that you
don't know the ending of but you know it
isn't a good game I could say it may be
necessary to play another game to avoid
that sort of thing I mean that does
that's what mutually assured destruction
was I mean yet as he felt as long as
mutually assured destruction nobody
would actually launch a missile and this
is a similar can be a similar type game
a little bit of chicken in it
you say that intermodal rail loadings
that were affected by it meaning that
you saw an increase in in rail car
loadings months ago months ago because
people were trying to get people loaded
up on inventory that they thought might
I mean if you thought there's a mid 25%
I mean if I thought there was gonna be a
25% tax on coca-cola next week I would
have my house filled with coca-cola
[Laughter]
vague guys are transported my house
would be doing great everything and boom
it all ends well that's a big concern I
mean if we've been looking at this great
economy and thinking things are
wonderful but it was really just pulling
things forward and then you get into a
situation where it stops down does that
concern you just about well they're
posting forward I think actually in the
GDP figures there was a big inventory
adjustment and know if you think the
flow of something is going to either
stop or get more expensive and you need
it you're gonna load up ahead of time
well that's will this change your
behavior in any way when it comes to
purchasing securities or making deals
no we will buy the same stocks today
where everything last week just I won't
tell you their names but what do you buy
more if you get them down 5g where they
get the more I buy but it doesn't mean
that you don't think the markets
couldn't go there I'm not buying because
I think they're gonna hope the next day
or the next week yeah so it's something
you're watching very closely yeah oh
yeah but we watch the prices of things
we do more than current events because
in the end we aren't buying them because
what's gonna happen next month third in
that next quarter you know we're really
buying them because we think they'll be
good businesses ten years now if
somebody came to us with a good business
today we'd buy it and we buy it
regardless of what's going on in the
sort of situation we might have this is
the case but you might were more likely
perhaps to get something when other
people are are fearful and you see that
in a big way instantly in a market you
know in the market for businesses it's
but it's it's still there with people's
minds welcome back everybody we are here
and news is breaking there's just an SEC
filing that came out from Crabb
Tynes that's obviously a big berkshire
hathaway holding craft ein says that it
will restate earnings for 2016 and 2017
due to miss statements in the original
filings it does not however believe that
the mistake Minh SAR what they call
quantitatively material to any
individual reporting period it says that
the impact on adjusted earnings it's
expected to be less than 2% for each
year craft ein says that it has now
completed an investigation that shows
several employees in its procurement
operation engaged in misconduct but none
of those were members of senior
management our guest today again is
Warren Buffett he's the chairman of
Berkshire Hathaway whit's owns a major
portion of Kraft Heinz and Warren what
do you think of this this news just
hitting while we're sitting here well
that's more or less what I've heard I'm
not on the board anymore but but great
able and crazy a bit cooler on and so
I've heard from them and this is this is
an update that I heard last night that
and they can't they can't issue the
first quarter reports until the 10k is
filed and they can't file with 10k til
Price Waterhouse signs off on it and and
that apparently is going to require a
restatement of a few years and we could
not report any earnings from Kraft Heinz
in the first quarter because if we get a
dividend from Bank of America that
dividend goes into earnings but because
we have over 20% of Kraft Heinz we don't
report report the dividends we report
the earnings so we received a dividend
of about one hundred and thirty million
in the first quarter but that we don't
report that and and we expected to get
the earnings before we issued our own
report but when the time came to our
report and we didn't have anything we
just we put a zero in there and
explained it in our release last
Saturday and it's just a further
indication of the facts as they stand
now at some point Price Waterhouse
Oh we'll need to be happy with the
figures that are reporting and that
evidently involves Restatement and at
that time my guess is the quarterly
figures have become quite current and
that we keep picking up our share of the
the earnings I mean this has been a long
standoff period between PwC and the
company if they've missed all the
deadlines to get the numbers to you at
that point what we didn't expect it I
thought that we would have the earrings
on on time and and Kraft announced
earnings for last year but they had not
been signed off on by their auditors so
while they released them publicly
they couldn't file the 10k with the SEC
subsequently that's not unusual for
companies to announce earnings before
they've actually got the sign-off but in
any event it's just you know we thought
we were gonna get them this week or next
week whatever might be and and then last
Saturday came and that's our time for
releasing quarterly earnings we did not
have them so we stuck nothing in there
and a footnote and we put in our press
release as well that we just didn't have
the figures if they're restating their
earnings does that mean Berkshire
Hathaway will also have to restate its
earnings Annelle bad it would it would
be sullen material by the time you take
just our share or a much larger company
so there I don't know exactly what we do
when we get if it gets into the second
quarter I don't whether we pick up two
quarters in one quarter or exactly how
that works they said that this is the
they've wrapped up this investigation
are you satisfied with what you've heard
from that part of the investigation or
do you know that I don't know about that
I do know that because I've been I've
been kept abreast of some of the things
I don't listen and on directors calls or
anything like that but but Gregg tells
me what's the high points of what or the
low points of what's happened and and we
have a terrific head of the auto company
jack
he's an independent director he he knows
this sort of thing and he and he and
he's put in the hours on it and so I
feel very good about about the fact that
jacket is he's really in charge of
things from the standpoint of the
directors does the company have your
confidence the company has my competence
you had talked about it over the weekend
where you said that what you paid for
craft was too much in hindsight exactly
not what you paid for Heinz that's
correct
we just want Heinz would it be a better
investment and we don't we don't fifty
odd just over 50% of it of the business
of doing fine in relation to the what we
paid for it but in a situation where you
determine that you've now paid too much
what do you do I paid too much for
stocks I paid too much for a lot of
things time usually works it out but it
it means that capital could have been
better deployed in other in other areas
you can always pay too much for a
business and I've done it with stocks
many times I've done it with businesses
we've got we've got at Berkshire we have
at least a half a dozen businesses and I
can't even use a we there I got to say I
paid and if we make the next ten deals
we make then there will be a couple
worlds or not that I paid to let you
warren there was other news the cross
the wires just last night and another
deal that you're involved in that would
be backing up Occidental and it's been
to try and take over Anadarko which is
also engaged in talks with Chevron who's
also got a bit out there last night
Occidental put out its own statement and
said that it's going to be revising its
proposal it's now talking about a deal
still seventy six dollars a share offer
but seventy eight percent cash and
twenty two percent stock by increasing
that cash portion it allows what they
call significant immediate value greater
closing starting to enhanced creation
because with this they no longer have to
ask their shareholders for permission on
this what are your thoughts about where
the deal stands and what this latest
updates
yeah I got a call by yesterday after an
evening first time I I talked Occidental
actually since we can go yesterday
Sunday and they told me that they were
going in this direction which I like but
I have nothing to do with it I mean that
we committed 10 billion and it had
nothing to do with whether how they
frame frame their offer how much they
offered or anything else that all they
knew was that they were sure they could
get ten billion dollars from us if they
complete the deal without an article one
of the pieces of the letter that Vicki
Holub the president and CEO of
Occidental put out in its letter back to
Anadarko surprised me a little bit with
just how it still seems like this is a
hostile bid there's not good faith talks
that seem to be taking place between
them based on her letters she said this
we remain perplexed at your apparent
resistance to obtaining far more value
for Anadarko shareholders which has been
expressed clearly through our
interactions over the last week it
sounds to me like that is still kind of
a hostile bid what well it's my
understanding and bear in mind the first
thing heard about this was that we can
go Friday what Brian White had called us
said the people Occidental like to talk
to you and and I talked to them on
Sunday a week ago yesterday
my understanding is Anadarko and
Occidental had talked much earlier well
before the Chevron bed and we're talking
about a transaction and then Chevron
made an offer which Anadarko accepted
but Anadarko was for sale I mean they
and and so it it ended it held talks
about something itself to to Occidental
s this is my understanding and so they
were talking maybe they were talking to
more than two parties for that matter I
wouldn't know that but they decided that
that they were willing to sell I'm sure
subject to price
obviously and they accept that an offer
and Occidental felt they had a better
offer and and that's apparently where
things still stand but I don't know part
of the details part of the the idea
behind it had been that well would
Occidental be able to get approval from
its shareholders because its stock was
under pressure some of the shareholders
obviously didn't like the deal by using
your cash instead of issuing as much
stock as they had anticipated originally
that will keep them from having to go to
their shareholders to ask permission for
this and as they're saying in their own
level letter that certainly increases
the certainty of this deal taking place
and remove some of that uncertainty yeah
I would I would also think that the
shareholders own Occidental you're
bullish on oil over over the years and
and you probably would polish on the
Permian Basin because they've such a
significant portion of their assets
there so the idea that they will reduce
use less stock and more cash as part of
the deal although they're getting the
cash from from us but I would think net
it if I'd been a holder at Occidental
over time I probably would like that
kind of a deal like at Berkshire I hate
their stock so generally speaking if any
company we own is buying something we
like it better when they buy it for cash
than they use stock because we like
their stock so I will see what the
reaction is to this but but I would just
imagine it had been an all stock offer
to begin with I wouldn't think people
would net their shareholders but the
shareholders will be speaking out but I
would think that share their
shareholders would like the the shift
Andrews got a question from beckon
studio to Andrew hey Warren I was just
curious whether whether you were
surprised that Anadarko hadn't engaged
with Occidental on this at this price
and also if there was a price at which
you would think that Anadarko rather
that Occidental shouldn't pay meaning if
Chevron were to come back in there
you know five times the size of oxen I
think they could just write a check and
this could be over with if they wanted
to but if the price were to go up I know
you get preferred shares ultimately is
there a price at which you wouldn't look
at this favourably
well we've committed the ten billion
dollars of 100% but we do not have any
control nor did we want any control over
what Occidental's did with our 10
billion in the terms of reading there's
nothing in our deal that provides that
they have to come back to us and request
permission really to do anything it's a
remarkable deal but that's the way we do
them and and in that respect and they so
they get our ten billion if and when
they close the deal without an arco and
and and they don't have to consult us
that certainly don't need our vote they
don't it was a matter of courtesy I got
to call you yesterday but it was not a
matter of necessity on their part that's
one of the advantages of dealing with
Berkshire I mean we can do things that
other people don't like to do where
their lawyers don't like them to do and
this is not a deal but our lawyers would
have written is this deal a bet on the
Permian Basin and on oil prices or is
this just a bet on it's great to have an
eight percent preferred well I'm Gregg
that but a percent preferred in any oil
it's about its bet on oil prices over
the long term more than anything else
it's also a bet on the fact that the the
Permian Basin is what it's cracked up to
be and all of that sort of thing but but
it
oil prices will determine will determine
whether almost any oil stock is a good
investment over time whether it's Exxon
or some Wildcat Rover that oil goes way
down you don't solve that
by hardly anything and if it was way up
you make you make a lot of money and
edit it's not what it does next next
week or next month or next year you're
buying reserves that go far out into the
future so you have to have a view on oil
over time and Edie Charlie and I have
got some views on that not too specific
because they're not that well informed
but they are we we feel good about about
doing the financing why don't you just
buy it yourself it's only a thirty-five
billion dollar deal and you've got 110
billion and cash sitting around well
that might have happened if an arc
husband but we we wouldn't jump into
some other deal that we just heard about
through somebody coming to us and
seeking financing no we hope we hope
people come down on businesses but I had
no idea that this transaction was going
to happen I mean we could go Friday when
I got the call from Brian Moynihan
well I'd read in the paper about the
deal but I that I've never had any
contact without an R :
any sort David Faber reported last week
that you had said you would offer up to
20 billion dollars double the 10 billion
dollars that you did do on this deal is
that the case if they needed it but I
think they I mean they have a
arrangement obviously with the Bank of
America who called us I don't know
anything about that deal I just know
that the eBay is as arranged that that
financing if there were a different sort
of thing but what am what I'm meant to
some except with that as I'd be also
very happy if somebody calls tomorrow
and needs 20 billion occidental just
needed the 10 billion okay but but you
like doing these deals at bigger sizes
not smaller sizes exactly back to
Andrews point this is there for forever
it doesn't matter if the bids go up
doesn't matter what happens along the
way your 10 billion dollars is in this
deal for whatever happens yeah there's a
the lawyers don't write deals like this
but we tell them to the there's no
material adverse change there's no if
the stock market closes but the steel
closes we're there
we're there under all all circumstances
and we don't we have not written any
outs into it and but that's part of the
attraction of doing business with
Berkshire and and besides that we do it
all ourselves so it isn't something
that's a parcel out among ten parties
and each one comes in and has to get
their permission to make changes and all
that when they came to my office at ten
o'clock on Sunday we did Sunday they
knew that if we agreed which we did by
eleven o'clock they knew Berkshire was
honor percent and now they had their own
Board of Directors meeting the following
evening but they they could say to their
board you're gonna get ten billion
dollars from Berkshire one discloses you
don't need to give a thought to it
obviously many stocks are under some
pressure of from what they were seeing
from these Chinese trade talks what the
implications are from all of that one
share that in one stock that is under
pressure today shares of Apple if you
want to take a look at the chart closed
on Friday at two eleven seventy five
this morning the bids at 204 ninety one
the ask is at 205 ten and that's because
China has been such a huge component for
Apple Tim Cook talked in the last
earnings last week about how things seem
to be really improving there Tim Cook
also traveled to Omaha this weekend he
was here for the Berkshire Hathaway
annual meeting it's his first time
coming here but for for Berkshire Apple
is now the biggest investment that they
have in their equity portfolio it's also
Berkshires also the third largest
investor in shares of Apple so when we
sat down with Tim Cook this weekend I
got the chance to ask him what he
thought and how he found out that
Berkshire was first buying into shares
of Apple listening I found out probably
like you did which is the 13f gets filed
and
somebody tells me about it and oh this
is really cool
Buffett is investing in Apple you know
we we welcome all shareholders but we
run the company for the long term and so
the fact that we've got the ultimate
long-term investor in the stock is is
incredible because our our interests are
aligned and then if I knew Warren before
then but we had no idea that we're
looking at the company they do all that
obviously secretly and have their own
method of doing that and it's it's been
a privilege and I'm super happy they've
been accumulated what happened when you
found out was there talk around the
office were there any high-fives or was
it a oh boy now what what it seemed like
a it seemed like recognition in a way
and in a like an honor and a privilege
and I don't mean that been a
light-hearted kind of way I mean wow
it's more in Buffett isn't investing in
the company and yeah and so it felt
great I think for the whole company
because we knew that he didn't he's been
very clear he didn't invest in
technology companies and companies he
didn't understand he's been totally
clear with that and so he obviously
views Apple as a consumer company and in
a different kind of way I think that's
the that's that's really special a
Warren what did you think hearing this
because when I told you we were gonna
tell you how he found out you said oh
good I'd like to hear the story you've
never talked to him about that
and that not about that specifically no
I have known him a little over the years
I'd seen him maybe at least once a year
and and maybe maybe twice year and I've
talked to him on the phone a few times
and Salmon Ladder I sent him a Martin
Luther King speech some years ago that
was kind of lost to history that was
terrific and I thought they'd enjoy but
no I didn't I didn't call him up while
we were buying I try to keep as quiet as
I can what would buy anything China
though is a huge issue for Apple it's
why the stock had
under pressure earlier this year at the
end of last year last week on the
earnings call it certainly sounded like
they thought China the situation there
was improving what what does this news
today mean for this for you well the
important thing is really what the
relationship is with China three years
five years ten years twenty years from
now at this I mean this all enters in
and certainly it it's hard for me to
imagine that the two most important
countries in the world would do dumb
things over a long period of time but
they could I mean that the the
possibility always exists that you get
miscalculations or egos or or national
pride or whatever it may be and that
things do escalate
I don't think that will happen I know it
shouldn't happen I think it's a little
probability but but but that would be
bad be bad for everything Brooks you're
owns I mean it isn't a question of Apple
or have a very negative effect on our
economy or the world economies and and
there's there's chain reaction shorts
type of things so I don't think it will
happen but I don't think it's a zero
that probably you say it would be bad
for virtually all the businesses that
Berkshire owns but apples are in a
pretty unique position because it is so
front and center because it's already
come up as a potential target for some
of these things do you think Apple runs
a special risk or not well it would have
I mean obviously in terms of our
electric utility in Iowa it's going down
we'd have a very minor effect relative
to the other types of businesses but the
ripple effect if you in a recession and
it hits everything almost eventually and
so I think it's very unwise it's kind of
like having a have a nuclear war you
don't want to say ha ha ha you know if
you're in Canada because don't we
attacking United States or something
it's impossible to contain it if you
have two superpowers and in trade and by
the and and and you can't predict
exactly how it spreads Apple shares are
down three percent this morning I'm just
looking at a chart yeah that's good why
well because they're repurchasing shares
and when they repurchase shares our
interest goes up and we don't lay out a
dime I love it you know and and
obviously it's better to buy it at
excellent 2x they've said they'll
purchase they've reauthorized up to
seventy five billion dollars in
additional shares your fine not you're
in favor of that I should say wildly I'm
favor of it we're gonna talk a little
bit more about share repurchases not
just with Apple but more broadly because
it is a question that came up pretty
frequently this weekend at the annual
meeting to repurchases can be the
dumbest thing in the world or the
smartest thing I've seen both but
they're just repurchases by the company
or just like purchases by us they're
dumb at one price and they're smarter
than other price and I like it when
companies
I like it when we're invested in
companies where they understand that
many companies just repurchase and
repurchase you know it's the thing to do
and they're encouraged to by some
shareholders and by their brokers and
repurchase it can be done they can be
smart at Apple they've been smart warm
we did talk at the top of the last hour
about what the China tariffs potentially
mean for business and what they mean for
Berkshire but you're looking at the
markets down almost 500 points this
morning and for people who are just
waking up and just kind of trying to
figure out what this means for them for
their portfolios for their businesses
today I'm sure they've got some
questions what what what can you tell
them what what do you say when you look
at the markets I guess down 460 points
right now for the Dow well I'm saying if
you own a farm and you're worried about
something your farm because you read the
newspaper this morning or you own a
perfectly decent business in your town
and you're worried about something you
think you should worry about selling
your business today because then you
should think about worried about
thinking about about selling stocks but
if you look at stocks as businesses as
you own little pieces of why in the
world should you solid based on on
headlines of any sort I mean if you
expect a business if you expect the farm
to be a good investment over ten years
if you expect to an apartment house to
be a good investment over ten years and
if you want a marketable security which
is an interest in the business and you
expect that business to be a good
business over ten years
it's nonsense to get feeling good or bad
about what stock prices do in a day
unless you have extra money and they go
down and then you feel better because
you can buy more of them cheaper just
like if you could buy the farm right
next to cheaper you'd love that if you
were a farmer you know usually that's an
analogy that I understand and agree with
but this time around a farm in
particular I would be pretty worried if
I was the farmer trying to figure out if
I should be planting soybeans or if I
think I'm going to be able to make
enough money to get things back this
time around tariffs have hit the farmers
particularly hard and a lot of them have
said they're behind the president they
want to see us get to a better situation
but many of them are also in a position
where look they've already asked been
asked to give a lot they thought we were
about to reach a deal and they're hoping
that the
when they're making decisions for this
planting season they have some players
well it's true that business generally
has improved markets and programming and
the farmer has not participated in that
so this has been a very good economy for
a long time I mean that we've been
coming back for eight or nine years and
businesses kept getting better interest
rates have been low for business stocks
have gone up and the farmer has not
participated the same way so maybe I
shouldn't have used that example but
they if you have a decent business I
mean you buy into a business you don't
buy a stock that Wiggles around you know
and and people understand that but then
they behave as if it's bad news when the
business that the price goes down it if
you had a half interest in a wonderful
business and the person that all the
other half came in and they were
depressed by these headlines today and
it's also do you my my share of the
business
a lot cheaper than yesterday because I
think this whole thing is going to just
end the world just say here I wish you
were proud to be cheaper you know the
business is gonna be here five years
from now and ten years from now and all
the headlines you don't know what the
world's gonna look like in three years
or five years or ten years what you do
know isn't the United States is going to
grow over time and the businesses are
going to generally do well and if you
own decent businesses you'll make money
that's a great long-term perspective but
for the shorter term not just for stock
prices even for companies that are
trying to think about their quarterly
earnings or trying to figure out how
they're gonna be able to pay for some
items or figuring out how the
relationship with the supplier is going
to work at this point it could be an
impact and pretty that's fairly new
terms are owned subsidiaries obviously
where they thought that
tariffs could be increased they've
loaded up more on inventory I mean know
you you make business decisions but you
don't make a decision about whether to
buy or sell the business if you've got a
good business and you've got it if
you're gonna own the business for ten
years you're gonna see a lot of terrible
headlines
you know I'm bought into my first
business in 1942 they didn't notice that
I did
but just imagine all those headlines at
that time in the world you know the
Philippines were falling I mean we were
losing the war and but the United States
is going new kids are gonna look better
than you did and your grandchildren but
better than they do and and generally
speaking productive assets are going to
be worth more in this country and if you
own a diversified group of productive
assets you'll do fine as long as you
don't read the papers although you did
say an hour ago that the sell-off when
the Dow was down by about 500 points was
not an undue sell-off was not overdone
at that point if we actually get into
raising tariffs right well India it may
not be undue I mean the day or the week
but you shouldn't I don't have the
faintest idea how to buy and sell stocks
for a day or a week or a month I know
how to buy businesses for a long period
of time I'll be wrong on some of them
you won't be wrong on America in terms
of that when you look at the markets
today if you see cheaper prices would
that mean that you would buy more of a
stock that you might have bought last
week yeah some one more hit levels that
I've might have been below you know I
will always react well to declining
prices but if I like I like to buy a
business you know if I could buy this
hotel we're in and they drop the price
is that good news or bad news for me if
I like to buy hotels so but the
fundamental point some people get it
some don't but when you are buying a
stock you want you're buying something
Wiggles around or is on a charter has a
target price you're buying part of a
business if you're right about the
business you know that crazy price you
can be right about the stock as long as
you don't do dumb things yourself over
the weekend a lot of questions came up
about share buybacks people were asking
specifically about Berkshire
why don't you buy back more shares of
Berkshire especially when you have a
hundred and ten billion dollars in cash
on hand what's your answer - well we
want to buy we will only by Berkshire if
we think that the shareholder the next
day is or that say
is wealthier after we've bought the
stock in other words we bought it for
shade less or maybe a lot less but but
at least a shade less that it's actually
worth and we don't set up to buy any
given amount we set out to buy stock at
prices below intrinsic value for sure
now intrinsic value for sure is not
something that is is precise to the
penny or it's probably a band of 10% or
something like that and my partner
Charlie Munger if you asked us to give
you a slip of paper with intrinsic value
per share on it would not be the same
figure but it'd be close and we both
would have the band or something of the
sort if you're buying it both at figure
you know if I'm we've got a dollar and
you'll sell me yeah and we put it on the
table and you can't reach it for a while
you say well I can't reach it it's also
a my share for ninety-five cents I'll
give you a ninety-five cents
you know she's a $1 - yeah guys so it's
not complicate maybe it may be beyond my
ability to figure out the intrinsic
value of certain kinds of businesses but
with Berkshire I've got a reasonable
idea and I tried to give the
shareholders the same information that I
regard as important in calculating that
now it can change presumably
who wanted to change upward over time
because we retainer and said we should
be building more value but but that's
the question first of all you have to
have the cash you need to run the
business I mean that's Steve Jobs called
me one time I mean he called me I don't
know how many years ago but but I even
think was thinking about repurchasing
shares and I said Steven there's just
two questions I said you know a you have
all the business all the money that you
need to develop the kind of business
that you've got in your head for the
next five or ten years and all he says
we got plenty of money
and then I said then the second question
is is your stock selling for less than
it's worth and he said it's Allianz so
and for a lot less than it's worth and I
said well you've answered your own
question and bottle-feed answered we
need we need the money we've got here
actually to fully develop our business
and we've got opportunities to do it
it's
forget about it you know build the new
planets and do that maybe the cash will
come in later where you can buy stuff
and secondly if he said the stock isn't
really cheap what's the reason for
buying it in did he buy back shares
after that he didn't like I think he was
hoping I was going to give a different
answer but I think maybe he was hoping
for a different answer it's interesting
that you say that because Tim Cook the
current CEO of Apple was here this
weekend and we got the chance to ask him
about share buybacks too because share
buybacks have been such a big deal for
Apple they've deployed so much cash
doing that and just announced last week
at the earnings that they'd be buying
back an additional 75 billion dollars
worth of Apple shares or at least
they've authorized the repurchase of
that much again we sat down with Tim
Cook this weekend
and here's what he had to say about that
to listen in Warren this is a funny
story of debt is back in 2012 I been in
the CEO spot maybe a year or so we were
we had a growing amount of cash I think
we had just cost 100 billion kind of
market my memory is correct and I was
and I was getting lots of input from a
lot of different people as you you can
guess and I when I don't have experience
in something I always make a list of the
people that I think are the smartest
people that I can contact to talk to
them and get advice and Warren was on
the top of the list as you can imagine
I'd never met Warren before and so I get
his number I call out in to Omaha and
I'm saying I wasn't sure you take a call
you know sorry calling out of the blue
he doesn't know me from Adam and but he
took the call and I had a great
conversation with him and that was the
first time that I'd met Warren and he
was very clear to me
I still remember he said he goes let me
just cut through it if you believe your
stock is undervalued you should buy your
stock and I thought that was just the
simplest
way of looking at it so here's what we
do is we first and foremost take care of
our people and we take care of the
company in the future of the company and
we've been investing a ton in both this
country and some others we're gonna
spend three hundred fifty billion
dollars in United States and building
their sites and we just found such a new
expansion in Austin so forth so all of
that is number one right and then if we
have money left over we look to see what
else we do
part of what else they do he said its to
make acquisitions and what I didn't
realize is he said they're making an
acquisition every week or two they make
a lot of small like he said they've made
twenty to thirty acquisitions over the
last six months
small acquisitions that they don't
really talk about and don't tell people
things about yeah you knew that if you
look at the 10-q and you know you can
see but they they they make a lot of
acquisitions yeah and and is it I hope
Berkshire makes a lot of acquisitions
and I'd rather buy a an attractive
business than buy our own stock at its
intrinsic business value if our stock
gets well below that I've still got this
strong and I can do both fortunately but
but why how an executive it can pay say
we're going to spend ten billion dollars
buying stock and then not paying the
attention to the price at which they buy
it they wouldn't buy any other business
that way and and so we're price
sensitive on it on the other hand when
the price is right there's no easier way
to make money for your shareholders you
say you like Apple buying back shares so
you think the price is right there well
they've done a terrific job of it
they've done a terrific job they've made
their shareholders a lot wealthier
because Kim has done that aggressively
when the price was right what I mean how
do you know in hindsight if do you know
and how can you tell when a company's
doing a bad job repurchasing and if you
have to be able to figure out how to
value these guys properly it's easier
than you're making it said about the
dress the truth is if you look back and
I was director of the company but
coca-cola kept repurchasing their shares
at a time when it didn't make sense if
you look at it in the years earlier they
just they they they had a terrifically
good idea of repurchasing one to come
company only had a market value of you
know in the less than ten billion and
they bought a lot of stock and they were
aggressive about it and but they fell in
love with the idea and I was a
a director at the time and and but
they're one of many I mean the same
thing happened that you'll add to it
every eight it's interesting sometimes
it's difficult for CEOs to be objective
about their own stock price and they
think this but they think the higher it
sells the better you know and that's a
fine way to feel example if you're
repurchasing and you purchased at a
prices up to the sky when coca-cola was
buying back shares and it turned out it
was a too high of a price and you are a
director did you know that at the time I
had a pretty good idea why didn't you
say something well I may I may have made
some comments but I the management had
done a sensational job I mean that's one
of the reasons it got so high they done
a terrific job there made me a ton of
money and and if it belch too often at
the dinner table you don't get invited
to parties anymore which is the
difficulty I think with probably any it
just that you don't get to be a director
if you look maybe you're an activist or
something but yeah people don't like it
if you speak and some some CEOs like it
a whole lot less than others some CEOs
actually encourage a fair amount of
dialogue and others you know make sure
that all the important stuff comes up at
5 of 12 1 you have to leave at 12 to
catch your plane explain six hours later
that's interesting
boards are managed in different ways
have you known every board you've been
on which has been managed well and which
is not well some an aged well in some
respects and they can be dumb
financially I mean you have some sub
management's that really have a money
sense and then you've got others that
that they're very good managers but but
they're not good at I always love it
when I hear management you know and I
asked the guy what he's doing with his
own money and he says well I couldn't
possibly you know about you like stocks
and everything I turned that over to
somebody else and and then he goes out
makes a five billion dollar acquisition
or something doesn't really don't want
to think about
just buying a whole lot of stock some
are good at some art that's true of our
managers we have terrific managers some
of them are good at bold on acquisitions
and some of them would be terrible do
you let the ones who would be terrible
at it go ahead and make it both on it
very often some of them don't have have
great operational sense they don't have
a money sense exactly you know that you
talk to a lot of managers CEOs and they
don't want to run their own stock
portfolio well those are those are
decisions and those are capital
allocation decisions and they know a lot
of they know a lot about businesses and
they know how to value the things you'd
think they'd be good investors but but I
used one thought it was a big partner
and back when I was running a prior ship
a long long time ago and he had stock
options places and he would regularly
exercise and take the money and buy
Berkshire well he actually was you know
that's unique to have somebody who
understands both operations and the
money side of some some really do and
I'm thinking I was I would say Tim Cook
for example does x-ray he has a real
grasp I mean he has he has a operational
minor knee and someone in mind as well
what about Greg able energy I asked it
because a you know Berkshires in a
unique position and you have people who
are doing all kinds of things some who
are managing money some who are managing
operations yeah can somebody do both of
those guys happen to have extreme money
sides but I don't want to get startled I
understand can't help but try welcome
back to squawk box President Trump
tweeting just minutes ago the United
States but has been losing for many
years 600 to 800 billion dollars a year
on trade
now with China we lose 500 billion
dollars sorry we're not going to be
doing that anymore take a quick look at
the futures continue to be down close to
500 points 471
Point 472 Nasdaq down 161 that's a P
down down 50 I guess Becky if I were to
pose a question Warren it would just be
that those trade deficit numbers you can
you know we get bogged down and talking
about whether they're good or bad or how
to fix them and it's a symptom of really
what it's a symptom more than a cause of
what what happens with China
I was just wondering Warren you've done
great over the years with the status quo
with how the United States is approached
China and China trade Berkshires done
great we've all done great everything's
fine do you wish that Trump hadn't
confronted China at all and we just
aren't addressing any of these long-term
problems with intellectual property or
you know take your pick of which issue
we're trying to solve but you just wish
you'd left it alone and just let
Berkshire do its business the way it's
been doing or do you think there's some
rationale to to confronting China China
in the United States for the next
hundred years I can tell you two facts
about it there'll be the two superpowers
of the world
and we'll always have some tensions with
them and and it can well be about
intellectual property certainly has over
the last you know 20 years or they're
about 30 years and it will be about
trade it will be about policies that
they're carrying out you know in terms
of their neighbors or we're doing
there's no way you can have to come
countries so dominant in the world
without them having unless you you just
don't you know you they're gonna be
tensions they're gonna be negotiations
and sometimes we'll both come away
thinking we lost but it's inevitable so
I and how you play the game if you're
negotiating with some people that are
tough negotiators on the other side I
mean it's it's not those are not easy
decisions to make I mean if you're doing
with the labor you know nobody really
wants to strike it's bad for both sides
but it's sometimes things developed at
that point so I
I think I think you should get very used
to the fact that if you're a young
person you're going to see a lot a lot
of different tensions over time and a
little bit on the individuals involved
and on the specifics of the situation
but every time we sit down you know it
won't be like a garden party
Warren um you mentioned that there are
gonna be times where both sides walk
away and feel like they lose are there
times that both sides could walk away
and feel like they win because that's
usually the sign of a successful one you
want both sides of feel like they want
to be and you know the idea of a
negotiation is to to take something that
that you have the other person needs and
and and and in a sense trade that for
something that they have that you need
and and it's it's gonna be constant and
and and and there's times when it's
going to be tense it's just the nature
of things
you have that yes that a much different
level when you're when you're
negotiating nuclear arms reductions or
something those sorta I mean we know
it's in the interest to get the nuclear
stockpiles down and all of that but that
doesn't mean it's easy and and you you
you you try to come up with deals that
are good for both sides but that's
that's not always easy I mean I try and
think about that in this scenario and it
it may be particularly different
difficult in this scenario because for a
long time we've been dealing with China
as if they were still not a superpower
as if they were still and so we've been
giving them better sides of deals it's
really hard to all of a sudden say we're
taking some of the that back what what
do they get out of this deal when we are
trying to change a negotiation that we
think has been unfair to this well it
it's difficult for us to accept the fact
most difficult for us to accept the fact
after World War two that that that the
Soviet was a superpower in terms of
military power and and there were I mean
as you know obviously there are all
kinds of tensions involved in that and
negotiations and and it's still a worry
that you have to we have the two big
nuclear stockpiles in the world
and you worry in terms of mistakes being
made I mean that it's a big game and
with China it's overwhelmingly an
economic game and it's an economic game
we game we didn't think we'd be in 40 or
50 years ago I mean the Chinese the rise
of their economy has been extraordinary
and they do some things we don't like in
connection with that and and sometimes
you have to get tough to to make changes
and we do some things they don't like
but it but it's a reality now and it's
going to be a bigger reality as the
years go by and and it it's very easy
for it to become a huge political issue
I mean that so you'll have people
fanning the flames for their own
personal interest in politics or their
own interest in in business manat
easy-to-navigate
but but leadership has that's the job of
leadership is to take on the top
problems having said that the economy
has held up very well in the face of any
tensions that we've seen to this point
jobs report incredibly strong on Friday
the last GDP report was very strong too
so you can't stop America you can't stop
China though either but you can't stop
America I mean we're good we live as a
country you know it's extraordinary what
we have compared to 30 or 40 years ago
that even in agriculture makes it tough
in agriculture because we get more
productive all the time and and and that
that tends to depress prices but this
country is going to move forward I mean
there's no question about that but
China's going a little forward and the
way to try to do it is to do it that
maximizes what both company the
countries can do well and and and and
more trade is better but trade in
specific industries can hurt specific
industries here and that that's a huge
problem that the president the heads of
both countries have to be the educators
in chief and they have to
explain why trade is good for the
populace as a whole and it can be
terrible for people in certain
industries and that a rich country takes
care of those people that become
roadkill in the process of producing
about our life for 330 million Americans
lots of people on Wall Street are not
going to be as sanguine about this news
today I've been reading some reports
last night Goldman Sachs saying that
this is not only rapidly increases the
odds that we don't get a trade pact with
China but also increases the odds that
you could see Trump announced that he's
going to pull out of NAFTA or that he's
going to put Auto tariffs on European
imports what do you think of that and
what would that mean it's the problem of
escalation and in anything we have the
problem of that was with nuclear weapons
I mean the escalation and and it gets
more and more dangerous
as people become feeling more and more
threatened and their own local political
situation demands more and more action I
mean that's that's the dynamic that
you're facing anytime you get to these
major problems between countries and
that requires the the wisdom of the
leaders but to some extent it requires
the wisdom of the people I mean and then
and how the leaders conveyed people and
how they conduct themselves but we will
have this sort of thing happen we've had
it happen obviously and occasionally we
would turn into wars in the past we
can't do that anymore in the nuclear
world you you can't get to that point
and at any same person realizes but you
don't want to you don't want to get too
too close to that tinderbox us MCA also
better known as new NAFTA that deal is
out there but now I think Pelosi is
saying that they're not going to bring
it for a vote at this point what are you
in favor over the new knife to do well I
was in favor of the original one I we
are very very lucky to have
Canada and Mexico bordering us I mean
that and then oceans on the other side I
mean it's it's geographically it's a
very attractive position compared our
countries are situated around the world
and and we've got lots and lots and lots
of common interests and and and we are
the big guy in the game and there's the
big guy in the game we should we should
do more than our share of making sure
that our neighbors are growing in and
prospering at a rate that is consistent
with our doesn't mean they're equal but
but that when we live better they live
better and trade with Mexico and Canada
enormous ly important we should treat
them as as neighbors and not not
adversaries we are live in Omaha where
we've been talking for the last hour and
a half plus with Warren Buffett who's
the chairman and CEO of Berkshire
Hathaway right now we're joined by
Charlie Munger who's the vice chairman
of Berkshire Hathaway he is also the
chairman of the Good Samaritan Hospital
in Los Angeles chairman of The Daily
Journal and he's on the board at Costco
and Charlie thank you very much for
being here with us this morning
glad to be here it's great to see you we
are coming off of the annual
shareholders meeting and obviously we're
going to talk to you guys about the news
of the day but first I'd like to take
the opportunity while I have the two of
you here together just to talk a little
bit about what your partnership has
meant to each other how many years
weren't have you been partners with
Charlie I met him in 1959 and we
instantly became partners in thinking
and then over the years we've developed
all these financial relationships but I
knew immediately Charlie that that we
were going to be we were in sync and
we've lasted a lot longer than I thought
we would but yeah but we have had a
incredible fun together we've done all
kinds of things some work some haven't
worked and we've never had an argument
we we we disagree on things sometimes
but they've never we've never had an
argument and you never second-guess me I
try not to second-guess him
it's a great relationship Charlie 60
years did you know at that first meeting
that you'd have a partnership well I
knew that we were on the same page but
it's been very lucky that a little
company became as big as it did doesn't
it we've had the run we've had what's it
like I think we're very talented and all
that but we've also had a tailwind of
good luck what's it like in terms of how
how you all kind of use each other as
sounding boards how does that work here
if you will collaborate in their own way
they're better off
Einstein would neither be able to do
what he did if he didn't have various
people to talk to it's more fun - yeah
the ideas are better net but it's also
more fun and when we disagree Charlie
says will you'll end up agreeing with me
because you're smart and I'm right
[Laughter]
you're you're both pretty you both act
pretty unilaterally though you both kind
of do your own things and then come to
each other facto he knows what I'm
thinking I know what he's thinking
and either one of us would ever do
anything we really thought the other
ones opposed to we might we might feel
that with a little something - no but we
we are in sync let's talk about a deal
you did recently occidental right where
you agreed to back them up you you cut
that deal and then you call charlie
but you knew what he was thinking
already I didn't want to wake him up
doctors at the coast I thought be very
unverified yeah or I knew I'd be for
that deal sure I do
how did how did you know that howhow do
you know so much about each other and
how you think well Occidental's in my
part of the world and of course I've
followed to some extent the developments
that are interesting and what do you
think of the accidental deal why do you
like I like it why I think it's got
potential because well because I think
the Occidental is right to want to do it
to buy into the Permian Basin to get
more assets absolutely and what is it
about the Permian Basin that you like
it's got a lot of don't like it desert
just for his own sake I asked Warren
this earlier today if it's such a great
deal in the Permian Basin is such a
great deal why didn't you just buy in a
Darko nobody asked us to that may sound
strange but but who knows if they'd come
to us you know we do we do usually wait
till people come to us so it isn't like
we if we wanted to buy into the field we
necessarily then you know start dialing
and flying around and everything that
that
occidental knows a lot about the basin
and we don't actually like having
somebody with us that know something
about it yeah one word Salomon we had
something called anglo-american that
some promotional operation but there's
no person selling it anyway
but there was for something but it was
it was neither it was neither and Swiss
actually angle Swiss and they came to
the directors and had this big plan for
drilling in Russian and we were gonna
put a lot of money and send it to
Siberia and hope that we got oil back
and Charlie said you know who's Anglo
and and who's Swiss it was Swiss and and
of course none of these people were I
mean so they were lying in the name of
the company and I did not go over so
what was a Salomon board would Charlie
pointed out and he sent a lot of money
to Siberia and they got one little vial
of oil the guy came to see me one time
after I become chairman he showed me
this magnificent you know exactly the
kind of oil they wanted that's the only
oil Weavers saw and it was producing
50,000 barrels a day toward the end they
just kept it off and yeah and go Swiss
Anglo Swiss no anglers are no Swiss just
wise all the way down
let me ask you though about Occidental
and the steel in particular if you like
the Permian Basin but you've also both
commented on times when you think you've
paid too much in the past is there a
number that would hit that you would
think okay this is paying too much for
the Permian Basin to Charlotte of course
all the time we always think that way
yeah but it's not anywhere near it the
price that they're paying right now yeah
we don't know we don't know it may be
the last dollar all we know is we're
willing to do it you both have made some
comments about it recently to us that
you think prices are very high in terms
of what you have to pay for a premium
for buying a company outright is that
because it's having more competition for
buying companies by people who are using
other people's money and therefore have
less sensitivity to price and who are
willing to borrow a whole lot more and
are being offered the ability to borrow
a whole lot more with less than the way
of covenants the competition is tough on
it and make it part of the upside and
none of the idea of not none of the
downside I think they make money on the
downside yeah so that that is really
terrible competition for us it gets
worse every year is that why you're
sitting on such a big pile of cash at
this point part of the residual on the
other hand you know I would much rather
own many common stocks than bonds and of
course that's I think stocks compared to
bonds and you have to compare they are
the old woman we've talked about bond
yields and fact being gravity and when
they're very low there's very little
growing gravity to pull down stocks and
and that condition that's exists today
you know weed so much rather on America
the business of America then get a 3%
for 30 years from the government that
and people were making those choices all
the time in the investment world that
stocks actually in many cases it looked
like perfectly intelligent investments
Charlie you agree with that sure let's
talk about some of the IPOs that have
been coming to market recently because
there has been a bit of a fervor many of
these IPOs have done very well although
not all of
lyft shares are under pressure uber
comes to market this week and Warren you
mentioned this weekend and you talked
once again about how you had looked at
uber about 18 months ago and and passed
on that what do you think about new burr
coming to market now well because I
looked at I really don't want to that
discuss right I don't have any special
feelings about it then any other coming
to Martin but we I would say that in in
54 years well I don't think Berkshire
has ever bought a delicious I mean the
idea of saying the best place in the
world I can put my money is something
where all the selling incentives are
there commissions are higher you know
the animal spirits are rising that
that's going to be better than a
thousand other things I can buy where
there is no similar selling enthusiasm
and the desire to get the deal done and
extra commissions that that's the single
best thing to buy at a given day I mean
it's and I can't think that time we've
ever done ever bought an idea yeah never
well but how could it be the best single
thing to use your money for in a given
day is it something that you've got they
got everybody the world out pushing it
you know it it just doesn't make any
sense I mean I'm not saying that
necessarily what we're buying is going
to work out better but there have to
always be better things then one single
issue if you make one decision on
investing if you can't find something
among all the choices we see that is
better than something that and like I
say you know the Commission's used I
come down I think now on this but I mean
the highest Commission thing that a
stock salesman's gets out of securities
was the new issue so yep all this push
why don't we like to buy things we're
nobody making a dime sell them to us
Charlie just specifically on some of
these companies and I won't talk about
uber versus any of the others but a lot
of these companies are coming very late
in the cycle they've had mass
of private capital that's been put to
work to this point and they they still
have massive losses and the need for
more capital what's even worse than that
some of them have preference for each
round and so the rounds are really fair
rounds there's a lot of lying and modern
finance so you're not in favor of any of
these big dollar lying
what what do you think of these I ask
this because we have a lot of retail
investors who watch and who are looking
at this and they feel the excitement
behind it was about 5 euros whatever you
buy a stock let's say your bike and
General Motors 1.4 billion shares I will
say the stocks for it is a little below
that you should be able to take out a a
one-page sheet of paper and say I am
buying the General Motors company that's
56 billion dollars because and if you
can't answer that question if you can't
write that out then y'all go on to
something else and if you're buying
Berkshire you have to say I am buying
Berkshire Hathaway at 500 billion
dollars because and if the answer isn't
something you can write you can't say
I'm buying it because my neighbor thinks
it's got to go up or because you know
everybody's talking about on on CNBC
this morning or whatever it may be I
like already round over yeah no yeah you
have yeah that's the question you answer
now when you buy you know buy groceries
buy everything else you can answer that
question but if you can't answer it on
something that you're bobbing your
savings you know may here's more well
why in the world should you
why should you be doing it let me ask
you gentlemen about a topic that came up
over the weekend at the annual
shareholders meeting and that's shares
of Wells Fargo and and just the company
to this point I got a lot of questions
that were sent to me by shareholders
questioning why you all have been
standing behind Wells Fargo without
saying more about what went on there
Charlie what do you think well I think
it's a fine company and so they made one
bad decision about an incentive plan I
regarded as an honest mistake not as
some deep moral failure nobody was being
under my ranks of Wells Fargo
they just had a blind spot they had a
blind spot when it cleared up very
quickly though that's the problem
yeah yeah but we get it on you don't
they lost their jobs over a blind spot
and huh
but I don't think Tim Sloan had a blind
spot I think he just lost his job
because life is hard
you thought dick kvass I don't like it
you thought dick cavasso much had a
blind spot yeah sure
and and the following guy john stunk
yeah but you don't think there was any
criminal activity of course not but a
car like tell you is filled whoa
and that was forgivable they were under
a crazy insanity system is the problem
fixed now I think so I think a very a
very very high percentage of what would
be it certainly the intent this is
correct I mean it's it's cost the
shareholders you know a lot of money and
and they want to correct that when I
went into Sol and I wanted to correct it
- I never could quite say it was over
though people kept asking is over I
don't know I wanted to be over I hope
it's over and I'm trying to make it over
and I'm looking for things but when you
have 200 well they have 260 or so
thousand people it's a it it's it's a
scary job to be running a city of
260,000 people with no cops and we have
something we have some things wrong at
Berkshire now that I don't know about
the Charlie meats this into me all the
time you know
as soon as you find a mistake do
something about it and and sometimes
that's unpleasant but I've got to do it
I mean it I may have people that are
deputized to do it but it's my own yeah
and you do do it too fast is Wells Fargo
different because it's a shareholding
and not an actual Berkshire company that
you own outright of course we don't have
any control over you know what they do
who should be the new CEO Charlie well
I've been taking it it would have been
Tim Sloan but now they're gonna get
somebody sometimes a new person is
better and sometimes worse about it I
think
about half and half yeah that's
something yeah I met two weeks ago or
thereabouts with four people and
including Betsy Duke the Chairman and
and and I never thought the first time I
met her of my life or talked to her and
as it but we talked about it then and
it's it's a tough position to fill what
did you tell you you talked to the
chairman chairwoman of Wells Fargo and
told her that you think what about no
they think they called me I didn't call
them I mean I I was I didn't jump into
it but they they just asked what I
thought that's first time they had best
but I thought about it and I'm I gave
him a suggestion or two and these people
but I've suggested I well I suggested
publicly that you know not be something
from Wall Street not because aren't even
good people on Wall Street I just think
that that politicians are looking for
the next one to be a pot and it's good
television or the place right into the
campaign and and you need somebody
running it that does not bear the extra
baggage of having a label on their
forehead that says Wall Street which
will cause half the viewers to cheer for
whoever's you heard at the top all of
this concern about China
this is spooking the markets a little
bit today Joe's right it's a decline of
under 2% for the day but still down 460
points as a number that catches your
attention and when you look at China's
markets down five and a half percent and
down seven percent that is certainly
something that is catching their
attention today too I can't think of
three better people to talk about this
this morning bill you've spent so much
time going back and forth with China you
know the Chinese leadership very well
and can understand maybe what they're
thinking on some of these things Charlie
you've spent so much time getting
excited about investing there and Bill
you've invested there as well
Warren same thing all three of you have
traveled there and spent this time I
just wonder what you're thinking about
this morning as you hear these headlines
and Bill you're the new one at the table
today so I'll ask you to start off with
this what are you
thoughts on what you hear with this
tweet and the potential for a real trade
war I think good trade relations are
incredible win-win for both countries
and it's dangerous that people think
this is a zero-sum game and so I'm
hopeful that despite the latest
announcement there is a trade agreement
in the the two countries can find ways
to work together it's the most important
relationship in the world both sides
bring a lot of strengths so it's I
understand why markets are a little bit
worried that that the these tariffs are
gonna get higher and higher when we
first got the tweet there had been some
initial reports that Lee who and the
delegation from China might not be
coming here that's what we were hearing
last night this is the first I've heard
just a moment ago that the the Chinese
have confirmed that they will be sending
that delegation this week that in itself
is good news but how do the Chinese kind
of deal with this when when they're
forced when they're faced with a real
force like I think that tweet yesterday
was well I'm not an expert on
negotiation but it creates a a dynamic
where both sides could start escalating
against each other which would be a lose
for both sides so you know they you know
this week will be it'll be interesting
you know they did even though China is
not a democracy that the political
dynamics don't allow them to look like
they're caving in to a unilateral
position Charlie you are an expert of
negotiation what do you think well
hardly but well if you back we we put a
tariff on trucks to Varennes the
Japanese from totally squelchy in the
whole American auto industry and that
lasted a long time it wasn't the end of
the world
so if we ended up with some
trade settlement that involves something
tariffs on both sides I don't get
excited about it at all I rarely as part
of normal life generally speaking I
think a good settlement is better than
lovely World War some tariffs are one
thing 10% we seem like our economy has
gone along just fine even with the 10%
tariffs that existed on those 200
billion dollars today it's 25% tariffs
on potentially all 500 billion plus of
the imports coming in would that concern
you about the American economy well I
don't think we want a full-scale tariff
or as it's just as high as both sides
can make it
that would be massively stupid and if
both of them are a little disappointed
with the negotiations would feel a
little roughed up that's so they should
feel what do you mean they should feel
roughed up well both sides since a
settlement is so much better for the war
trade war for both sides they ought to
just get used to having a little loss of
face and make some kind of a settlement
and I think they will what do you think
about us taking a stance as being
America taking a stance with China to
this point well I don't think Trump is
totally crazy to say that in some
occasions you put a tariff on to save
some no as the end industry is he right
that we have been on the losing side of
the deal for some time there's a lot of
Americans I think he thinks of it more
as a loss of we've got a trade deficit
and I don't think that's it all
automatic so I don't totally agree with
him but I agree with Jonathan barge war
on what do you think in terms of who
pays the tariffs I mean that has boosted
the US Treasury but a lot of those
tariffs are being paid by the companies
that import the goods and then passed on
to consumers
yeah their attacks on consumers and and
you know as such that it changes what
people buy it changes where things are
produced it readjusts you can readjust
the world
you know it was through tariffs and and
generally speaking I mean there's
obviously exceptions for key equipment
military equipment or you know but I
generally think that a world that
adjusts to something very close to free
trade more people will live better than
in the world that was significant
tariffs and shifting tariffs over time I
was a subject of constant negotiations
and war two of this heavy crate on both
sides yeah not not a trade war you mean
a real war yes yes but you gotta
remember that like our country the
United States ran on tariffs for the
first 150 years that was all we had
this is not like some novel new thing is
coming in this is an old subject is it a
good thing or a bad thing
well of course I'd rather have total
goodwill and everybody getting along but
I don't think it's the end of the world
there's some little tension on the
subject there has been since the start
of the country bill just now said he's
not surprised by the market's reaction
warrants is the same thing earlier this
morning what about you well what do I
care about a brief temporary reaction
over some over or over trade
negotiations does that mean they're all
so many little rebels in the space time
to me look if you look at Chinese stocks
in one market down five and a half
percent and the other in the Shenzhen
market down by over seven percent are
our futures are down but that's still a
decline of less than 2% this morning
does that mean it's more painful to
China than to us well I don't think
China likes its market going down as a
consequence of a trade uproar I think
people are more like this settle a thing
because they had this uproar today the
settling is it sounds like a great
alternative but it certainly does there
have been a lot of friction along the
way the biggest one may be just how do
you enforce it and the
at least among many of the trade
negotiators and the negotiators in the
United States that when we've cut deals
with China in the past they say things
and then don't follow through on it how
do you make sure that if we have a deal
it's actually enforceable I think China
buying larges is a pretty good place it
certainly worked well for the Chinese
and I think it's desirable but it's
worth it
it works well we want China to prosper
this yeah we do if you postulate a world
where in the next 50 years the China or
for that matter of the United States but
it feel like they're being abused and
the word isn't being kept and yeah it's
for one thing and then you want to ask
for one thing more I mean you're gonna
have always have tension between the two
countries all all we doesn't
disagreements but you can't you can't
really turn it where it gets not if
there's something working out of control
and things can't get out of their
control partner but I guess I'm going
back to try and figure out which side
you think is right nobody wants to say
that does anybody think they're both
right to be as concerned as they are and
I predict they'll settle it would you
all agree with that same prediction
though what do you think you know the
it's a dilemma when it appears you're
reacting to a an ultimatum you know in
the in the Chinese case there's no
elections scheduled so their leader
won't be unelected simply because
they've had to take a tough stance on on
trade negotiations
you know I markets up until recently
were assuming this deal would get closed
so that's a little bit why you see the
Delta the rationale thing would be for a
deal to get closed and I you know I'd
still rate that as as likely
I agree with bill deadlines are tricky
thing so I mean that yeah they produce
reactions and people and they they can
think of you're responding to public
opinion they couldn't they can't inflame
people and then they start reacting
their own the tricky things on the other
hand sometimes it's best way to get
things done a good sign though may be
that the they just said that the Chinese
delegation will continue to come because
I had real questions about that or
doubts about that myself after seeing
that yesterday you want to conduct a
negotiation so it doesn't look like the
other guy has to cave or something
exactly the ideal thing is to make a
hero out of him and still get the deal
you want over the weekend at the annual
meeting you two had an aside on stage a
lot of people kind of picked up on you
didn't follow up on it so I thought we
could do that here you were talking
about Dairy Queen and how your presence
in China is not large but you do have a
presence in China
for Dairy Queen it is a very large
presence but not for Berkshire Hathaway
no but you made the comment Warren that
you you would have been a much larger
presence had a big deal gone through you
made it as a side to Charlie I was over
the mics
well Dairy Queen no not turning Dairy
Queen into some global giant yeah we've
looked at good sized things in China I
would anyway you know we've done a
couple things in China and Charlie's
done more individually and and it's
logical I mean with the kind of capital
we have the big markets outside the
United States they're gonna be the place
where you're most likely to do something
and certainly China's gonna be the
biggest market and then outside the
United States and there should be
opportunities there and I think we are
someone at Berkshire I think that that
if they're looking for capital around
the world
we're a very logical prospect why did
that deal not work out was it because of
the trade tensions I can't go into the
details on that thought I'd try you'll
be the first to know in terms of what
you do with your businesses do these
trade talks have any impact on you on
your investments even your own personal
ones because you all have a large
individual portfolio that you do and
Charlie I know you focus on others no
you focused a lot on China does this
diminish your enthusiasm for Chinese
investments in any way no no it doesn't
really if we got a call today from some
business we understood and liked from
China and they were looking for a lot of
it was big you know we would be
delighted to get that call and we would
follow through and we'd see whether
something happened but that that would
be that would be very interesting to us
bill how about you well certainly you
know there is in parallel with the trade
talks talks about what the technology
export regime will look like in terms of
things like artificial intelligence and
so I have some concerns about whether
that will try and partition you know
Chinese students from American students
the general sentiment towards China
right now is has gone down a bit and so
there are businesses or business deals
that have to go through a new process
and they're talking about even making
that tighter
cepheus are beyond I think so I you know
I'm I'm worried about even just sort of
intellectual cooperation being slowed
down well we'll see where that goes but
it's a
if they take our intellectual property
at Dairy Queen no we can handle it
we've talked an awful lot on our air
recently about socialism vs. capitalism
defending capitalism all of the
different political pressures that are
kind of being brought as we get into
another election year and I thought
maybe we could talk about that this
morning - over the weekend several
questions came up about defending
capitalism in Warren you you did step
out and and say that you're a
card-carrying member a card-carrying
capitalist in front of everyone what do
you think about the attacks that we've
seen to this point on capitalism well I
think don't think people exactly even
know what they're talking about it isn't
the capitalism it's perfect but if you
look at what was here in 1776 and look
at what is here now this country is an
incredible job in terms of the
deployment of resources and and and
human ingenuity and that is a product of
the system and now does that mean that
every decision should be made simply by
open market determinants know that
there's need for regulation obviously
and there are things that have long term
costs and might not get built in but the
idea of people unleashing their
potential using the resources they have
to create what we have now from what was
here two hundred forty something years
ago it's it's absolutely a miracle and
yet what all three of us have seen
during our lifetime and if you compare
that with any centralized planned
economy I you know I think we win hands
down and I I think I think we've just
started with what capitalism couldn't
produce in the United States but I do
think it obviously it it needs certain
rules and regulations well you did an
interview in Davos with someone and I
you made a pretty innocuous statement
that you looked around you thought
capitalism was the best system and you
can attacked online from all these
people who came up with these crazy
statements about how could you say
things like
I mean what do you think about the
climate when you see things like that
well some people think when you defend
capitalism you're defending the tax
rates we have today and saying that
higher absolute tax rates are more
progressive tax rates that you disagree
with them in I I don't think
Warren and I are disagreeing that you
could make the taxes more progressive in
fact we've been very explicit in some
areas like the estate tax and saying we
think that would be a good thing
socialism you got your where she came
back socialism used to mean that the
state controlled the means of production
and a lot of people who are promoting
socialism actually aren't using that
classic definition so what we're gonna
have is capitalism with some level of
Taxation most people really aren't
arguing against capitalism there may be
a few but most people are just saying
that the taxes should should change
although you do have someone who I think
is pulling the second-highest and the
Democratic Party right now who was a
socialist until very recently Bernie
Sanders well whether or not he was a
socialist by the full term about now
there there is some money areas when you
start to say there shouldn't be any
billionaires that you have some cap on
wealth or something like that that goes
beyond what I think and and you could
say I'm self-interested but the present
ones a government needs to reallocate
some resources I mean extreme case would
be in World War two I mean that's the
closest we've come to socialism you had
an office of Price Administration you
had a war production board yeah
but during peacetime you're always
prepared for warned you do that through
government government government needs
to reallocate some resources but the the
market system which exists under
capitalism is an extraordinarily
effective way and is proven it
of using resources human and other kinds
to produce incredible goods and Henry
Ford could learn devise a system that
could turn out a couple million cars a
year but he could only use half a dozen
himself or his whole family could use 50
I mean he had to turn out a couple of
million cars that other people got deals
and that that would not have in my view
I I think if you'd set up a government
Bureau in 1850 and given them a hundred
years you'd have ever come up with
anything like the assembly lines of Ford
and all of the things that have happened
human ingenuity is incredible and you
want something that maximizes its use
and and then curbs a few of the people
may have just sort of evolved for
themselves Charlie you've made the great
proof of the how capitalism works is
China when China copied Singapore and
let the farmers on their own plots and
let the manufacturers on their own
businesses and so forth
China's productivity increased many
times and they went from rural poverty
to modern extreme wealth and they did it
by adopting a fair amount of capitalism
no the Democratic politician doesn't
understand that he's nuts you've made
the same point though Charlie that you
think private sector does it much better
than the government sector however a lot
of these people who are running also
want to make government much bigger do
you have a quarrel with that or now well
as they say if you love your post office
you're gonna love socialized medicine
they don't necessarily want to make it
bigger in terms of redistributing mean
wanna the market system
brutal and it leaves behind people who
are perfectly wonderful people who don't
have market related talents and who are
just unlucky
yeah just plain unlucky and in a rich
society believe me if we have a war or
something like that we call on those
people and you know pay them practically
nothing to go fight for us and it and
then we want goods slowing but it's
going to displace the textile worker
that we used to happens on so so the the
function of government is not
necessarily get bigger it may be in an
important way to take care of people who
for one reason or another get left
behind in a market system that you also
regarded as the is essentially this huge
source of wealth and goods and services
so how do you fix the problems or at
least the perception of problems which
there's a huge perception out there and
the American bloating right now
obviously the help of our government
we're wiser and it would be wiser if the
two sides didn't hate each other so much
anger drives out reason and there is
absolute cold fury between politicians
on one side and politicians on the other
it's quite counterproductive for that
reason I don't allow myself to get angry
at politicians how would you fix it well
I just don't let myself get that angry
well there's I don't expect them to the
Bursar's work better because Charlie and
I've never done that each other it just
does I mean way better we got mad each
other I'd you know I try and kill his
deals you don't my deal it just doesn't
work that way we don't need a couple of
alpha males bluster handling or this
stuff just cool it and take a little
reputational hit and get get the
feathers but we Otto down we ought to
worry about the people that don't then
end of the system but we want the system
and a lot of people are getting left
further and further behind because as
capitalism gets more advanced it gets
more specialized and there actually is
greater difference between the haves and
the have-nots and the haves can take
care of that
at interesting is both parties and
basically agree on that they just yes
how you get there like examine and come
Tax Credit can make a huge jump in that
direction I mean you know Social
Security all that we've done various
things over the years we have improved
we've improved the public school systems
we've been proved them things that do
give people more of an equal chance and
take care of people who fall by the
wayside we just got to keep doing it
well you've spent a lot of time on
education in this country trying to
figure out how to fix it and how to make
things work what's the answer if that's
one of the problems that we're not
getting people the advantages they need
before they get into that system what
how do how do we fix that aspect of it
yeah I think better education is so key
to the United States living up to the
dream of equal opportunity and
particularly as more and more of our
students are in the inner-city coming
from low-income households we really
have to to take the best teachers
understand what they do and spread that
further that is the best path to a
reform of equality the progress has been
pretty modest but there's a lot of you
know smart people it's not just
technology it's helping the the teachers
finding out the ones who are doing
things super well and spreading that
around even the college system we still
have very high dropout levels and and
the way you you catch kids early when
they get off track some use of online
I'm hopeful in the education area
although progress has been slow
surprisingly slow yes when we compare
the improvements in global health which
is the other big area for the Gates
Foundation to the improvement in
education education was proven to be
tougher to make big gains
over the last decade was that what you
expected when you got started no it's
actually the opposite because global
health involved going out to poor
countries whose governments are really
weak and there's not even stability
there's some corruption we thought that
would be the slow area to work in but
very important that we've been surprised
by how how much progress have been in
the overall statistics like cutting
child to death in half in education
although there's some points of light
some great schools some are charter
schools some are using new curriculum
the overall figures us math scores
dropout rates have moved only slightly
Charlie just getting back to your idea
of people not hating each other so much
and getting along how do we make that
happen how do you try and push towards
that because it seems like things like
that I think you have to do it one
relationship at a time and of course I
think would help but both parties did
not commit suicide in the primaries we
get these extremists on both sides and
they take over each party it's just
awful the California Legislature has two
kinds of evil right is not cakes and
left us nut cakes they've kicked
everybody else out this is not a good
system why did it wind up like that
particularly in California hatred lots
of hatred is it we district ma how would
you disappearing as part of a mostly
it's just a wonderful product of hatred
gentlemen just taking a look at what
we've been watching with the markets
today obviously things are under a
little bit of pressure today but we have
been looking at much higher markets if
you go back to the Christmas Eve low and
the concern that about what would the
fed what might or might not be doing
since that time the Fed has sounded much
more dovish and I just wonder if you
couldn't talk a little bit about your
own take on the markets and Bill again
I've spoken with with Warren and Charlie
earlier about this a little bit so how
about your take when you hear that the
Federal Reserve is probably
not gonna be raising interest rates
anytime soon how does that change your
outlook on on equities or equities
versus Treasuries well the interest rate
is like gravity and all these valuations
are dramatically affected by it at the
start of the year people didn't think
that ten-year bond would be where it is
today and that's provided a lot of lift
so it's a big first quarter for US
equities we still if you look forward or
at these very high valuation levels and
so it's hard to see that the mark will
be gaining a lot over the next few years
I think people should have fairly modest
expectations on what what their
portfolios will make in the year the
years in front of us have you changed
your your position so in your own
portfolio as a result of this have you
done any major no it's it's a very
equity oriented portfolio
it's overweight in the u.s. even though
it's got a lot of overseas exposure you
know it's a bullish portfolio that the
American economy over time will do well
you know fortunately even if we have a
few years here where markets aren't are
doing that well you know we've been
lucky we have a cushion the foundation
continue to spend generously but I'm in
prayer I'm amazed at how high the
valuations are if you look broadly
charlie do you think that well sure I
think that if you drive interest rates
down to zero and all the countries print
money like crazy it's it lifted the
asset vote for everybody and I think it
really is a didn't have anything else to
do in the Great Recession and so they
took the only weapon they had and you
aggressively I don't think we should
quarrel that it did cause the people
were already rich to get richer and that
wasn't done purpose or anything like
that and I think that will correct or am
i automatically do you think we should
still be using that weapon aggressively
which is what president Trump would like
to see happen he wants them to cut
interest rates again I think he said by
1% and also push up quantitative easing
once again but I am so afraid of a
democracy getting the idea that you can
just rent money to solve all problems
and eventually I know that will fail
Singapore which has a marvelous economy
has zero debt if I were running the
world I would like the United States to
be in that position that is not the
typical that's that's nobody's position
you know all these politicians in Europe
and America have learned to print money
and if we keep at these extraordinary
measures for the Fed I guess not just
the Fed here but central banks around
the globe
yes but who knows when money for any
runs out of control and we at the end if
you print too much you end up in
something like Venezuela you're not
suggesting that happens no I don't like
the ideas and both parties that you at
politician to say what we've learned is
we printed all the one who want they
don't have to raise taxes we just print
Warren you share those concerns yeah I
probably could not have conceived of a
world recently is ten years ago I'd
learned not have conceived world where
you would have full employment 5% budget
deficits with actually the probability
of those rising from that level and at
the same time have the long bar the 3% I
would have said that that couldn't
happen and then then people now you
modern monetary theory which there's no
question he's your Marlin any country
should borrow money and its own currency
I'm a dad that is not like it's some
great discovery dollars but yeah and
that's the point I mean it that isn't
solved anything just to say well it's
much safer to buy your own currency but
the the convergence of these factors
would have seen impossible to me and
generally if I feel something is
impossible it's going to change over
time I don't know and in what way but I
don't think we can continue to have
these variables in this relationship now
if we can then stocks are ridiculously
cheap the one thing I will say though is
this is a conversation I feel like we've
had for at least four or five years
right where you're watching and
continuing to wait for these interest
rates the yields to rise we're still
sitting at two-and-a-half percent on the
ten-year which and we're sitting with
very very little inflation with a
Federal Reserve that put a target for 2%
on it not that long ago and it looks
like nirvan it looks like we've found
the promised land where we just
essentially money doesn't cost anything
and you can put lots of money and have
full employment and no inflation and I
would have thought that something would
have happened before now I don't know
what would have happened but I didn't I
wouldn't think you could have these
things in in at these these levels the
long-term rates inflation rates
budget deficits and to have that be a
stable situation for a long period of
time and I still believe that but I so
far I'm wrong so in the meantime you
haven't really changed how you
I think stocks are ridiculously cheap
compared if you believe that you're
going to have the 3% interest 30-year
bonds makes sense that's a big if
that's what makes going to work
interesting
well this three so it's comfortable if
everything goes down not by 90 percent
so we're not a fair cross-section I'm
sorry Charlie what was that say this
threesome is comfortable if everybody if
everything goes down by 90 Rozonda don't
know the rest yeah but we wouldn't want
that kind of a world out really
everybody else right can we talk a
little bit about health care because you
all have spent plenty of time focusing
on health care in the United States and
abroad bill you're probably the foremost
authority on on global health care your
foundation has spent billions and
billions of dollars on it I think more
than 13 billion dollars just from
inception through 2017 on global
healthcare initiatives what what's the
progress you touched on it a little bit
earlier that that you've seen more
progress here than in the education
front in the United States would house
that kind of shown up
what's phenomenal that by taking the new
vaccines and getting them out to more
kids and a few other tools like malaria
bed nets that we've gone from over 10
million children dying every year to now
less than 5 million now 5 million still
a lot we need a few more tools but
actually the pipeline of innovation
looks very good
so you know this is a a phenomenally
positive story that that those doubts
are weighed down and that that'll
continue what's the thing that brings
you the most hope or gives you the most
hope about advancements that you've made
or research that you've found well one
that were we were working on is to
reduce malnutrition because of a kid is
growing well their ability not only to
avoid these diseases like diarrhea
killing them but also the degree to
which they'll develop their full mental
and physical capacities and therefore
contribute
for their own life for their country's
well-being dramatic reduction and
malnutrition would be a huge thing and
we we're now gaining understanding that
we think that that will be possible
it's been a long scientific Germany
having to do with the gut inflammation
and the microbiome but now we see that
we'll get more of those kids on their
growth path and so I'm super excited
about them but malnutrition is not just
them not having the food to eat even in
cases where they do have the food to eat
there's a problem that's right what
happens is that because they're their
diet doesn't have much protein in it
they're got their intestines get into an
inflamed state and that means you get a
set of bacteria in there that don't let
them absorb nutrition and so that's a
downward path and so you can see even
two twins one will get that and not be
growing and the other one will achieve
normal growth and so an intervention
that stops the inflammation shifts the
microbiome to a more healthy mix that
would get rid of malnutrition for that
child so what is a really cheap
intervention where you can see the
problem and stop it with probiotics or
something yes that's the kind of thing
although those tend to be broad-spectrum
here we're gonna be to make it scale it
up and have it be a cheap probably a
pill it'll probably be a couple of
vitamins and drugs does that translate
to things that could be useful here in
in the United States and other day well
the basic understanding you're got and
will finally lead us to understand not
just malnutrition but over nutrition why
is it so hard to control
people's hunger over time people have
tried to have pills to control hunger
I'd say over the next decade that will
finally succeed so even though that's
not the foundation side we're focused on
malnutrition the science of the gut
microbiome has a lot of companies
working on things that will reduce over
nutrition worn back here in the United
States one of the big problems is trying
to figure out how to pay for health care
and and stop some the cost that's a
problem you've been focused on at
Berkshire along with JPMorgan and Amazon
what what have you found we haven't
gotten any updates recently other than
the name of this new organization is
going to be Haven where are you on that
process we are taking the first step on
what is bound to be a very long journey
I mean it I would say it's not more
difficult than I expected but I expected
to be ungodly difficult and you have an
industry which basically is about the
same size as the US government's
receipts and everybody always says every
dollar in the budget you know has a
constituency and every dollar and in an
industry expenditure has a constituency
and we've got the right person we've got
the right partners capital isn't the key
part to it but we've got people who are
willing spend of money but what we'll
spend whatever money it takes if we're
making progress and and it is going to
be a long tough pull to make major
journey to make major changes and
there's you know it's it has an old
guarantee of success sir at all but
there's nobody I think that's in a
better position in terms of number of
ploys and totally of the people that are
partnering to get along and all kinds of
things to perhaps come up with something
that makes the system more efficient and
and you know we will try but it's
nothing will happen quicker so there's
no there's no revolutionary move or
anything of the sort and there there
will be lots of opposition to any change
in interviewing people to run the place
we interview people in all aspects of
the medical profession and activity and
and they all agreed 100% you know this
system needs change but of course not my
part that's very understandable we
expect that and we'll find out what
happens but I I know this I would rather
have the private sector come up with a
solution and throw it all the government
and and if the private sector doesn't
come up with some solutions of the
increase and cost qualities it you know
in many ways is unbelievable just
hearing Bill talk about the advances
that can be made what is the cost 5% of
GDP and in my lifetime or even in my
adulthood up to 18% it's the federal
budget the state kind of constant around
17% everybody thinks is out of control
and here our federal receipts I should
say and now this is gone from five to 18
and nobody really thinks is going to
stop charlie
you've been oh go ahead you've been a
good Samaritan the chairman there for
how many years long for 40 years the if
you take Senate war which is tends to
have an intelligent government and do
things right they spend about 20% of
what we spend on health care and they're
healthier and there are all kinds of
abuse and and counter productivity they
don't have insane were that we do have
and Warren is right we're not gonna hell
of a time getting incidents and board's
direction because human beings are
profiting or the existing system if you
know it may look like an unnecessary
operation to me in fact it does but did
the helmet looks like God's work
where would you suggest after your years
at Good Samaritan where would you say
focus here first I think we this system
is out of control the deductibles in
ordinary corporate health insurance are
ridiculous
if you're a poor family you get a $5,000
bill for a baby that you don't have
medical insurance they just changed the
system and and and then if you take the
utterly unnecessary treatment that where
people find a way to tap into these
government's streams of money and do a
lot of unnecessary work like belonging
you know inevitable death and all kinds
of ghastly things they do it's it's I
would say we have a pretty disgusting
system on the other hand it's the best
in the world in terms of its ultimate
scientific capacity but you take all the
unnecessary operations and all the
unnecessary procedures and all the
rackets and the thing which Singapore is
pretty well take it out it's
discouraging as I look at Singapore I
look at the United States and how the
hell do we get from where we are to
there and if you ask me what's going to
happen I think we're gonna fail to get
to it to a intelligent system well and
that cheery note we are just about out
of time if I can ask you gentlemen we
have about a minute left if I can just
ask you what you're reading because
that's something we hear back from our
viewers often warm what are you reading
right now I'm just finished reading very
recently and I read it at one sitting
and it captivated me so much either a
book by Melinda Gates which just came
out very recently and bestseller them
the moment of lost it it is a terrific
it's a story but but it's it's it's it's
learned much about the world that you
should know and and I would say most
people don't know I mean this is a story
of her experiences as experience it's
absolutely sensational yeah Warren took
all your time bill I guess you're not
you