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 Warren what's 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
was in the last ten 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
available or a hotel room but they they
they just come in the spirit of enjoying
it and and and the people and all my
welcome them that way so some people go
around with smiles on their faces I mean
we have 600 of our own people that come
in from our various subsidiaries and and
they work for a couple of days and and I
never see anything but smiles on their
faces well they're unfortunately we're
not gonna 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 talks well I can't I can't gauge
how 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 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 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 well that's what you're
worried about is 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 engaging a response from someone
else that also has their own calculus
and has their own internal political
considerations and also it's it's a
dangerous game doesn't mean it's a game
that shouldn't be engaged it but it's a
dangerous game you negotiate a lot of
deals to would this be your tactic well
it is mine at all but but you know we
talk about the Occidental deal later on
to illustrate but but but I've had a
consistent way of negotiating and that
has its advantages now 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
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 yeah 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 god I
mean if with some people in negotiations
the best technique is act half crazy I
mean that that no with your kids you can
see how it works
[Laughter]
I've gotta count to three and if you
don't do this or that they know you're
not gonna shoot up and they haven't
really got the edge and that's that goes
on all the time and it's interesting
kind of with the reputation industry
we've got a very large bottle 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 we've never found one that we could
do the same way I mean they just it's
just part of their lives to negotiate
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 they and I
understand that I mean that's that's the
way a lot of things takes take place 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 they're they're they're
their 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 if conducted on a major scale over
time just imagine Becky that that our
Constitution was set up differently and
that states could erect
tariffs and Michigan will put a tariff
in on that cars and we would have wanted
horn and that the degree to which trade
would contract in this country the Miss
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 isn't 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
waited 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
market's 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 it's you went to bed a week
ago and you thought there was a 1%
chance of a trade war and then the
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 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 in politics and you're talking
about how they will be perceived in
their own country in terms of their
behavior and
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 you wouldn't you wouldn't need
to have a hard time defining 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 they'd have
a lot of trouble writing the contract
and but there's the sort of thing not
not precisely identical but it's 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 cars
in turmoil 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 they're starting a game that you
don't know the ending of but you know it
isn't a good game like you 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 he had
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 to that 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 was a mid
25% I mean if I thought there was a mid
25% tax on coca-cola next week I would
have my house filled with coca-cola
[Laughter]
would look terrific guys are transported
my house would be doing great everything
and boom it all ends 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 whether
pulls things forward and 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
we're paying 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 help 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 with 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
Seraph situation we might happen 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 Kraft Heinz
that's obviously a big Berkshire
Hathaway holding Kraft Heinz says that
it will restate earnings for 2000
Sene and 2017 due to misstatements in
the original filings it does not however
believe that the mistake meant tsar 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 Kraft Heinz 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 gray Abel 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 this filed and
they can't file the 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 a 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 and this is just a further
indication of the facts as they stand
now at some point Price Waterhouse
will 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 it 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 and they'll bet it
would it would be sewing material by the
time you take just our shares we're much
larger company so that I don't exactly
what we do when we get if it gets into
the second quarter I don't whether to
pick up two quarters and 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 the dude 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 in
on directors calls or anything like that
but but Greg tells me what's the high
points of what or the low points of
what's happened and we have a terrific
head of the Audit Committee Jack Pope
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 the jackets is he's really in
charge of things from the standpoint of
the directors does the company have your
confidence company has my competence you
had talked about it over the weekend
where you said that what you paid for
Kraft 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 fifty percent of it of the
business that we doing fine in relation
to the what we paid for it 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 so and and
if we make the next ten deals we make
then there will be a couple worlds or
not that I paid to but you warned 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 chrétien
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
update says
I got a call about yesterday after an
evening first time I I talked Occidental
actually since we can go yesterday
Sunday and that 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 or 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 could
go Friday what Brian Moynihan called us
said the people oxyde I don't like to
talk to you and and I talked to them on
Sunday and a week ago yesterday
my understanding is Anna Darko 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
would
know that but they decided that that
they were willing to sell
I'm sure subject to price obviously and
they accepted 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 your own occidental you're
bullish on oil over over the years and
and you're probably 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 occidental over
time I probably would like that kind of
a deal I at Berkshire I hate does your
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 share over
would like the shift Andrews got a
question from beckon studio - Andrew hey
Warren I was just curious whether
whether you were surprised that Anadarko
hadn't engaged but with occidental on
this at this price and also if there was
a price at which you
think that Anadarko rather that
Occidental shouldn't pay meaning if
Chevron were to come back and they're
you know five times the size of
Occidental 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 favorably well
we've committed the ten billion dollars
of 100 percent 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 10 billion if and when they
close a deal without an arco and and and
they don't have to consult us that
certainly don't need our boat they don't
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 virtue 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 that 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 great that but I
prefer 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 that the the Permian Basin is
what it's cracked up to be and all of
that sort of thing but but
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
if oil goes way down you don't solve
that by hardly anything and if it was
way up you make it make a lot of money
and and it 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 and 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 with
Anton are : of any sort
David favorite reported last week that
you had said you would offer up to 20
billion dollars double the 10 billion
dollars that you did do in 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 B of A is has arranged that debt
financing if there were a different sort
of thing but what am I 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
go up doesn't matter what happens along
the way your ten billion dollars is in
this deal for whatever happens yeah
there's 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 seal 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 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
Fundy 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 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
Warren 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 interests are
aligned and then I knew Warren before
then but we had no idea that we're
looking at the company they did 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 their talk around the
office what are 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 Warren 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 know I have
known him a little over the years I'd
see 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 he'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
word buy anything China though is a huge
issue for Apple it's why the stock had
been under pressure earlier this year at
the end of last year last week on the
earnings call it 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 maybe and that things
do escalate it 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 big bad for
everything Brooks your owns it 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
a chain reaction of sorts type of things
so I don't think it will happen but I
don't think it's a zero that probably
you 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
they have a nuclear war you don't want
to say hahaha you know if you're in
Canada because it's not way attacking
United States or something it's
impossible to contain it if you have two
superpowers and trade and buy 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 chairs 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
excellent 2x they've said they'll
purchase they've reauthorized up to
seventy five billion dollars in
additional shares you're behind that
you're in favor of that I should say
wildly unfavorably 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 to me
they're dumb at one price and they're
smarter than other price and I like it
when companies I like it when who are
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 forum 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 you solid based on
on headlines of any sort I mean if you
expect a business if you expect a farm
to be a good investment over 10 years if
you expect to an apartment house to be a
good investment over 10 years and if you
want a marketable security which is an
interest in a business and you expect
that business to be a good business over
10 years it's nonsense to get feeling
good or bad about what stock price is
doing today 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 you 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 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
gonna just end the world just say here I
wish you weren't so depressed 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 would look
like in three years or five years or ten
years what you do know is that 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 I mean they're sort doing
in terms our own subsidiaries obviously
where they thought that tariffs could be
increased they've loaded up more on
inventory I mean hello 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 on a business for ten years you're
gonna see a lot of terrible headlines
you know I 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 going to look
better than you did and you're
graduating 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 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
five hundred points was not an undue
sell-off was not overdone at that point
if we actually get into raising tariffs
well India it may not be undue imeem in
the day or the week
but you shouldn't I don't have the
faintest idea how to buy and sell stocks
it 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 about 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 notice 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 buy berkshire
if we think that the shareholder the
neck
today is or that same day is wealthier
after we 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 would 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 each got a dollar and
you'll sell me yeah and we put it on the
table yes and you can't reach it for a
while you say well I can't reach it
it's also your my share for 95 cents
I'll give you a 95 cents you know say a
dollar - yeah guys so it's not
complicated 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 I
tried to give the shareholders the same
information that I regard as important
in calculating that now it can change
presumably you want it to change up or
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
anybody 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 oh 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 all yeah it's selling for a
lot less it was 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
suddenly got opportunities to do it I
said forget about it you know build the
new planets and do that maybe the casual
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 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 anymore this is a funny story
of debt is back in 2012 i I've 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 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 fallen 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 because let me
just cut through it if you believe your
stock is undervalued you should buy your
stock
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 the United States and
building their sites and we just mounted
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 is to
make acquisitions and what I didn't
realize is he said they're making an
acquisition every week or two now they
make a lot of small likely 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 ten q you know you can see
but they they they make a lot of
acquisitions yeah and and they 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 couldn't 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 they wouldn't buy any other business
that way uh 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 made
their shareholders a lot wealthier
because tim 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 you
have to be able to figure out how to
value these guys properly it's easier
than you're making it setting out the
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 early 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 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
at the time and and but they're one of
many I mean the same thing happened at
your lat do it agree 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
and that's a fine way to field exam if
your repurchasing you're purchasing the
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 were 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
matters been a done a sensational job I
mean that's one of the reasons it got so
high they've done a terrific job there
made me a ton of money and and it belts
too often at the dinner table you don't
get invited to parties anymore which is
the difficulty I think with probably
anyone it's 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 five of twelve one you
have to leave at twelve to catch your
plane the next place you said 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 somewhere managed well in
some respects and they can be done
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 evaluate stocks and everything
I turned that over to somebody else and
and then he goes out makes a five
billion dollar acquisition and some he
doesn't really don't want to think about
just buying a whole lot of stock
some are good out of 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 bolt on it very often don't have
have great operational sense they don't
have a money sense exactly you know that
a lot of you talk to a lot of managers
CEOs and they didn'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 about businesses and they
know how to value the things you'd think
they'd be good investors but but I used
one dollar who was a big partner and
back when I was running a partnership a
long long time ago and he had stock
options in his places and he would
regularly exercise and take the money in
by Berkshire well actually you know
that's unique to have somebody who
understands both operations and the
money side of those I'm really doing I'm
thinking I was I would say Tim Cook for
example does x-ray he has a real grasp
of he he has a operational mind and he
has no money mind as well what about
Greg Abel I ask you because 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 started going through the
list understand can't help but try
welcome back to squawk box President
Trump tweeting just minutes ago the
United States has been losing for many
years 600 to 800 billion dollars a year
on trade 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
four hundred and seventy one point four
seventy two Nasdaq down one six
the 1sp down down 50 I guess Becky if I
were to pose a question war and 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 Burke's was 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 they'll be the two super powers
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 I'm having god bless 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 develop to
that point so I I think I think you
should get very used to the fact
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 in of 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
going to be times where both sides walk
away and feel like they lose are there
times that both sides can walk away and
feel like they win because that's
usually the sign of a successful one you
want both sites 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
gonna be tense it's just the nature of
things I mean you have that yes then 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 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'd 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's difficult for
us to accept the fact almost 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 they're wrong 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 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 and it's
it's not 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 we
live as a country you know it's
extraordinary what we have compared to
30 or 40 years ago even in agriculture
makes it tough in agriculture because we
get more productive all the time and and
and that tends to depress prices but
this country is going to move forward I
mean there's no question about that but
China's gonna move forward and the way
to try to do it is to do it that
maximizes what both come 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 requires the
wisdom of the people I mean and how the
leaders convey at people and how they
conduct themselves but we will have this
sort of thing happen we've had it happen
obviously and occasionally 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 and any sane
person realizes but you don't want to
you don't want to get too too close to
that tinderbox u.s. 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 deal 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
geographically as a
a very attractive position comparative
our countries are situated on the world
and and we've got lots and lots and lots
of common interests in and and we are
the big guy in the game and is 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 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
Warren have you been partners with
Charlie I met him in 1959 and we
instantly became partners in thinking
and then over the years we developed all
these financial relationships but I knew
immediately what 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 I we have had a
incredible fund together we've done all
the 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 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 know
that we were on the same page but
it's been very lucky that a little
company became as big as it did isn'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 oh 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 well you'll end up agreeing with me
because you're smart and I'm right not
always 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
sure facto sure he knows what I'm
thinking I know what he's thinking
and neither 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 called charlie
but you knew what he was thinking
already I didn't want to wake him up
doctors at the coast time I thought be
very unfair fight yeah or I knew I'd be
for that dish sure I do how did how did
you know that how 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
yeah I 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 knew 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 then we don't actually like having
somebody with us that knows something
about it yeah one word Solomon we had
something called anglo-american that
some promotional operation but there's
no anglo-persian something anyway but
there was 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 I've become chairman he showed me
this magnificent you know exactly the
kind of oil they wanted that's the only
way we ever saw and it was producing
50,000 barrels a day toward the end they
just kept it all angry yeah and go Swiss
Anglo Swiss no anglers are no Swiss just
flies all the way down let me ask you
though about Occidental in the steel in
particularly 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 Charlie 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 as its telling 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 I
love the idea of not none of the
downside in fact they make money on the
downside yeah so 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 reason commercial on the other hand
you know I would much rather own many
common stocks and than bonds and of
course that's I think stocks compared to
bonds and you have to compare they are
the ultimen we've talked about bond
yields and effect being gravity and when
they're very low there's very little
gravity to pull down stocks and and that
condition that's exist today I you know
would so much rather own 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 they look 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 them lift shares are under
pressure
uber comes to market this week and
Warren you mentioned this weekend
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 who were coming to
goodnight well because I looked at I
really don't want to that disgust 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
undelicious I mean the idea of saying
the best place in the world I can put my
money as something where all the selling
incentives are there Commission's are
higher you know the 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 an extra Commission's that
that's the single best thing to buy at a
given day I mean it's I can't think that
time we've ever done yeah ever bought an
idea yeah
never 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 has
stocked salesman's gets out of surgeries
was the new issue so yep all this bush
buy don't what we like to buy things
where nobody making a dime solemn 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 massive 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 in modern finance
so you're not in favor of any of these
but I don't know why 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
my hobby oohs whatever you buy a stock
let's say your bike in General Motors
1.4 billion stairs I will say the stock
sport is a little below that you should
be able to take out a a a one page sheet
of paper and say I am buying the General
Motors company at fifty six 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
five hundred 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 going to
go up or because you know everybody's
talking about on on CNBC this morning or
whatever it may be or I like you're
right around 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 involving your
savings you know may here's four well
why in the world should you why should
you be doing it let me ask you gentlemen
a topic that came up over the weekend at
the annual shareholders meeting and
that's the 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 rank of Wells Fargo they
just had a blind spot
they had a blind spot we cleared up very
quickly though that's the problem
yeah yeah but we don't you don't they
lost their jobs over a blind spot
but I don't think Tim Sloan had warrants
but 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 Stumpf
yeah but you don't think there was any
criminal activity of course not well 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 it would 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 song and I wanted to correct
it to I never could quite say it was
over though people kept asking me is
over I don't know I wanted to be over
and I hope it's over and I'm trying to
make it over and I'm looking for things
but when you have two hundred well they
have 260 or so thousand people it's 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 meets this into me all the
time but 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
all 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
but I've been paying it it would have
been Tim Sloan but now they're gonna get
somebody sometimes a new person is
better and sometimes worse somebody I
think it's about half and half
yeah that's something yeah I met two
weeks ago or thereabouts with four
people and including Betsy to the
Chairman and
I've never talked first time I'm matter
of my life or talk to her and and 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 was I didn't jump into it but they
they just asked what I thought that's
first on the hat best what I thought
about and I'm I gave him a suggestion or
two and these people have names but I've
suggested I well I suggested publicly
that you know not be somebody from Wall
Street not because are plenty of good
people on Wall Street I just think that
that politicians are looking for the
next one to be helped on and that 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 this is 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 doubt 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 your thoughts on what you
hear with this tweet and the potential
for a real trade war I think good trade
relations are an 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 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 put a
tariff on trucks to Varennes the
Japanese I'm totally squatchy in the
whole American auto industry and that
lasted a long time it wasn't the end of
the world so if we end up with some
trade settlements that have involved
something tariffs on both sides I don't
get excited about all I rarely as part
of normal life generally speaking I
think a good settled one is better
Lu oral or some tariffs are one thing
10% we seem like our economy has gone
along just fine even with the 10% tariff
that existed on those 200 billion
dollars to date is 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 Wars
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 and feel a little
roughed up that's what 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
something known 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 American I think he thinks of it
more as a loss of we've got a trade
deficit and I don't think that's at all
automatic huh
so I don't totally agree with him but I
agree with drum littlebark Warren 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 there are tax on
consumers and and you know as such that
it changes what people buy it changes
where things are produced I'm it
readjusts you can readjust the world in
US 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 adjust 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
2 there's heavy crates 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 hundred 50
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 Warren said the
same thing earlier this morning what
about you well what do I care about a
brief temporary reaction over some
uproar over trade negotiations does that
mean 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 and the
Shenzhen market down by over seven
percent are our futures are down but
that's still 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 the people more like this settle a
thing because they had this uproar ago
today 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 feeling at least
among many of the trade negotiators and
the negotiators in the United States
that when we've cut deals with China and
the
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 by enlarges 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 yeah we do
if you postulate a world where the next
50 years the China or for that matter
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 always have
tension between the two countries you'll
always have disagreements but you can't
it can't really turn it where it gets it
if there's something working out of
control and things can't get out of
control 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 them
deadlines are tricky thing so I mean
that yeah they produce reactions and
people and they they can particularly
responding to public opinion they
couldn't they can't inflame people and
then they start reacting their own
they're tricky they've got that ahead
sometimes it's best way to get things
done a good sign though may be that the
the 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 here a lot of them 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 or June for
Dairy Queen it is a very large presence
but not for Berkshire Hathaway no but
you made the comment warned that 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 no not turning Dairy
Queen into some global giant yeah yeah
we've looked at good sized things in
China 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 that virture 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 though 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
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 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 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
sophia's 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 concern if they take our
intellectual property a Dairy Queen
we can handle it we've talked an awful
lot on our air recently about socialism
versus 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 nothing 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 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 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 could produce in the
United States but I do think it
obviously it it it major rules or
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 that and I
mean what do you think about the climate
when you see
like that well that 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 you could say
I'm self-interested but the present
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 I mean
but during peacetime
you're always prepared for war 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 of using resources human
and other kinds to produce incredible
goods and Henry Ford could learn a
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 to use 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 afford 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 all for themselves Charlie
you've made really really the great
proof of 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 quarrel with that or no well as
they say if you love your post office
you're going to love socialized medicine
they don't necessarily want to make it
bigger in terms of redistributing main
wanna the market system is 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 him practically
nothing to go fight for us and it and it
we want Goods slowing but it's going to
displace the textile worker but we just
happens on so so the the function of
government is not certainly 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 or 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
politicians I don't expect them burgers
worked better because Charlie and I've
never been mad at each other yeah it
just does I've been way better we got
mad each other I'd you know I try and
kill his deals he'd try to kill my deal
it just doesn't work that way we don't
need a couple of alpha males bluster
handling or this stuff they oughta just
cooler them 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 could take care of that nots
it means both parties and basically
agree on that they just yes how you get
their income tax credit can make a huge
jump in that direction I mean no Social
Security all that we've done various
things over the years we have improved
we've improved the public school systems
we can prove 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 is 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 helped involve 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 have been I think you have to do
it one relationship at a time and of
course I think it 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 a 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 redistricting how would
you miss doing this part of it but
mostly it's just the 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 when you hear that
the Federal Reserve is probably not
going to be raising interest rates
anytime soon how does that
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 10-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 used
it aggressive
I don't think we should quarrel that it
did cause the people who were already
rich to get richer and and but 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
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 with something like Venezuela
you're not suggesting that happens no I
don't like the ideas and both parties
that you have politician to say what we
learned as we read it all the one who
want we 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 10
years ago I learned out of 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 bought the 3% I would have
said that that couldn't happen and then
then people now you have this modern
monetary theory what
there's no question he's your Marlin any
country should borrow my money in its
own currency I'm a dad that is not like
it's something great discovery dollars
but yeah and that's the point I mean it
that isn't solved anything just to say
what 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 at 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 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 that 3% interest 30-year
bonds make sense that's a big info
that's what makes going to work well
there's 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 percent
don't hurt us know the rest
yeah but we wouldn't want that kind of a
world that rain to 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
global health care your foundation has
spent billions and billions of dollars
on it I think more than thirteen 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 ten
million children dying every year to now
less than five million now five millions
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 found
well one that were we were working on is
to reduce malnutrition because of a kid
is
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
in 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 journey
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 that but malnutrition is not just
them not having the food 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
the
today it's another day well the basic
understanding of your God 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 we're 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 JP
Morgan and Amazon 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 and 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 Lord willing
spend 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 boys and totally the people that
are partnering to get long and all kinds
of things to perhaps come up with
something that makes the system more
efficient and and you know we'll try but
it's nothing will happen quicker so
there's no there's no old 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 you know in
many ways it's unbelievable just hearing
Bill talk about the advances that can be
made but it costs 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 eighteen 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 it intelligent government 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 into the Sambora's
direction
as human beings are profiting or the
existing system if you know may look
like an unnecessary apparition to me in
fact it does but did the helmet looks
like God's work where would you suggest
after your years a 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 five
thousand dollar 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 for longing 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 so it's all about
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 the United
States how in 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 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've just finished
reading very recently and I read it in
one sitting and it captivated me so much
I a book by Melinda Gates which just
came out very recently and bestseller
the the moment of list 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