WHEN: Today, Monday, February 29th
WHERE: CNBC's "Squawk Box"
Following are excerpts from the unofficial transcript of a CNBC interview with billionaire investor Warren Buffett live on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today, Monday, February 29th. Video from the interview is available at CNBC.com.
All references must be sourced to CNBC.
BUFFETT ON OPEN OIL
Overall, it is good for an oil importing country, which we are, to have lower oil prices.
BUFFETT ON NCAA BRACKET
We are going to announce to our managers in about an hour that this year, if you are employed by Berkshire Hathaway or any of its subsidiaries, tomorrow, on March 1st, you are eligible for the ultimate office bracket contest. Somebody wins. They get $100,000. If they tie, they split it. And after every game, we will report how many are left in and maybe what company they work for. But, if they make it to the sweet sixteen, if they go through two bracket tests, and they get to the sweet sixteen only, they get $1 million a year for the rest of their life.
BUFFETT ON MARKETS
There has never been a time in my life when I – I know what markets are going to do over a long period of time. They are going to go up. But in terms of what is going to happen in a day or a week or a month or a year even, I've never felt that I knew it. And I've never felt it was important. I will say that in 10 or 20 or 30 years, I think stocks will be a lot higher than they are now.
BUFFETT ON AMERICAN BUSINESS
American business will do fine over time and if you own a piece of it, and if you don't beat yourself – the only person that can cause you to get a bad results in stocks is yourself.
BUFFETT ON STOCKS
We are almost always a buyer of stocks. We are a more aggressive buyer when they are going down. I mean, I feel much better when they are going down. But, it is hard to think of very many months when we haven't been a net buyer of stocks.
BUFFETT ON OIL PROFITS
If you are sitting with an oil industry in this country that is producing 10 million barrels a day or something of the sort, at $100, you know 10 million barrels a day is $1 billion of revenue, $365 billion a year, capital values maybe $2 trillion based on that. Now, all of a sudden, you take it down to where you are not making any money, and the $2 trillion of capital values disappears very quickly. The bank loans against it get sour very quickly. They quit buying from the service companies very quickly. So the negative effects to this huge capital value happen very quickly whereas it feeds into the consumer very slowly. So even though it is good for the country net when you are an importing economy, it can be very bad in the immediate effects it has.
BUFFETT ON GASOLINE DIVIDEND
The American public got a big gaosline dividend in effect. That is an interesting point which we can get to if you'd like as to why lower oil prices, which should be good for oil importing countries, really may not be in the short run. And we saw what happened on that.
BUFFETT ON RUNNING A BUSINESS EFFICIENTLY
I think every business should be run as efficiently as possible. And some are, and some aren't. We try to buy the ones that are. We don't think there is a thing that needs doing at Precision Castparts that would make it more efficient. They have run it efficiently from the start. Actually, we think Berkshire headquarters, for example, are efficient. We've got 25 people there and it is the same 25 as a year ago. So I believe enormously in efficiency. I mean, it is the only way living improves is to get more output per unit of input.
BUFFETT ON COCA-COLA
Coca-Cola continues to sell more drinks – wider portfolio than they used to have many years ago. More every year than the year before. But the growth rate in carbonated soft drinks 20 years ago was a lot greater than it is today. It's still very strong. I mean, I think they sell like 1.9 billion eight-ounce servings of some drink every day. And a lot of that is Coca-Cola.
BUFFETT ON SECURITY
Certainly, if you were in the early days of September 2001 and you were receiving credible information that something major was happening and you had reason to believe that it might be connected with certain people, you know, I think in that case security trumps privacy. On the other hand, I think that if you've got people who are just fishing around on smaller type things and low probabilities of finding things or anything like that, I think privacy trumps security.
BUFFETT ON PRIVACY LIMITS
Privacy has its limits and the national security has its limits in the other direction. You can't call everything national security.
BUFFETT ON THE RAIL BUSINESS
I would have expected the industry to do better in which case we would have done even better. But we were coming off a bad year, which helps in comparison. And we ran the railroad a lot better last year than the year before. But overall, the rail industry had a disappointing year. It got poor during the fourth quarter. It's been poor in the first quarter of this year. And there again, some of that is secondary.
BUFFETT ON COAL
The big culprit has been coal. And that's going to continue. It's exacerbated by the fact that coal stocks at electric utilities are at a very high level. They measure it in days of usage. And they were low a couple of years ago so there was somewhat of a catch up. Now there's somewhat of an under shipment to work off excess stocks at the utilities.
BUFFETT ON GEICO
Cars are safer so people are not driving as well. And on top of that, what they call the severity also went up. So, as a consequence, our rates were behind experience during the year. I would guess, but this is a guess, we're a couple months into the year, I would guess that now the rates are more adequate for what the current experience is. If I had to bet and people at Geico won't like me saying this, but I think our underwriting experience will be better in 2016 than it was in 2015.
BUFFETT ON IBM
I don't think so, but it could be. We own stocks and we've lost money and sometimes, when stocks go down, we're wrong when we sell them. And sometimes, we think we're right and we buy more. Sometimes it turns out we are…A stock going down is a good thing, unless the company itself is losing value. Sometimes, that is the case. Sometimes, it isn't. I don't think that's the case with IBM, but I could be wrong.
BUFFETT ON DOW STOCK
The company would like the stock to sell at a level that would allow them to force them to force conversion. That's perfectly sensible. I would want the same thing were I in their position. If it – we are unlikely to be an owner of the common.
Becky Quick: Because?
Buffett: Because we bought a preferred that we liked. And we did not buy the common. We have not bought the common ever since. So there are other stocks that we would like better as a common stock.
BUFFETT ON GRAVITY
We are doing something the world hasn't seen. It does have an effect of making all assets more valuable. Interest rates are like gravity in valuations. If interest rates are nothing, values can be almost infinite. If interest rates are extremely high, that's a huge gravitational pull on values.
BUFFETT ON BERNIE SANDERS
What I like about Bernie Sanders is he saying exactly what he believes. He is not tailoring his message week by week. You'll find with some of the candidates they shifted around or they don't answer the question. With Bernie you know exactly what he thinks. In certain areas I would agree with him and in certain areas I would agree with Charlie…Bernie has a tendency to demonize institutions and he think the solution would be simpler and he would turn the system I think somewhat upside down. And there's part of it that I might agree with him on in terms of campaign finance, I think it should be turned upside-down but I think we have a marvelous system in terms of delivering more and more of what people want.
BUFFETT ON DECISION 2016
I've been amazed at what's happened in the Republican Party. I wasn't amazed at all. What Christie did was very predictable. I mean that did not surprise me at all. But Trumps popularity has surprised me, but its among Republicans and I happen to be a fan of Hillary and I think that she will be the winner in the fall.
BUFFETT ON SOLAR
We don't have a problem with meters. We're the leading in renewables in the country among regulated utilities. The only thing is, we do not want our million-plus customers that do not have solar to be buying solar at 10.5 cents when we can turn it out for them at 4.5 cents or buy it at 4.5 cents. So, we do not want the non-solar customers, of whom there are over a million, to be subsidizing the 17,000 solar customers.
BUFFETT ON ROBOTS
Wouldn't it be wonderful if someday we got to the point where there were robots everyplace, they were running farms, they were running Apple, they were running Berkshire Hathaway. And all you had to do was one person could punch a button at the start of every morning and all the goods and services that we're getting now would be turned out by robots or whatever and we'd have the goods. We'd have 18 million cars a year, we'd have a million and one housing starts, we'd have all the iPads being sold. And if all of that came from one person pushing a button, would that be a tragedy? I mean, just think of how well we'd live. I mean, now we'd have – instead of having to work 35 hours a week, we might work an hour a week or something of the sort. I mean basically, the more output you can get from people, it frees them up to do other things. And one of the things it frees them up to do is work less.
BUFFETT ON OIL PRODUCTION
In the oil production business, it all depends upon the price of oil whether you're going to make money in the future. In the refining business it all depends on basically what is the crack spread, which is basically what it costs you to buy oil and sell it. You can make just as much money or more with $30 oil or $100 oil but not if you are a producer.
Becky Quick: So you like the crack spread right now?
Buffett: It's not so good right now. It was better last year.
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