CNBC's Becky Quick traveled to Omaha, Nebraska recently to shoot additional material for her one-hour special focusing on Warren Buffett's whirlwind tour of Asia.
While she was there, Buffett gave Becky an on-camera tour of the Berkshire Hathaway offices. He talked about some of the mementos he's collected and their personal significance to him, and to his investing style.
A small portion of that tour and conversation appears inWarren Buffett: The Billionaire Next Door - Going Global. (CNBC tonight, Friday, November 30, at 9p ET and 12 midnight ET.)
Here on Warren Buffett Watch you can see the entire walk-and-talk with Buffett and Becky. (My thanks to Becky and her ace producer Lacy O'Toole.)
The first portion appears in this post. The tour continues with a discussion of why even strong strong companies with good products don't always make great investments in the next WBW post.
Becky: Warren, why don't you just show me around the office, maybe a couple of your favorite things?
Buffett: Well, a couple of my favorite things. Well, my very favorite thing is a few years ago at the, at the baseball game which was held in association with the (Berkshire Hathaway) annual meeting. Bob Gibson pitched to me. And I was a little worried about him throwing at my head but he wasn't worried about me as a batter, so he actually threw one over and I managed to get a little wood on it.
Becky: You did! Yeah, this is, so you knocked it out of the park right here. That's just after you swung.
Buffett: You can see that ball flying out there toward the outfield. Actually it's dribbling towards the shortstop.
Becky: But you took a hit off of him.
Buffett: I managed to get some wood out of the ball. It was a 55-mile an hour pitch too, I checked that out.
Becky: It was?
Buffett: Yeah, yeah.
Becky: That's pretty good.
Buffett: That's the last hit I've gotten. And that's 3 years ago, 4 years ago, well maybe even a little more now, even 4, 5 now.
Becky: Now, what about this one?
Buffett: This is back in the early 70s when we had a little weekly newspaper here and we won the, we won a Pulitzer prize, and we won an award from (inaudible) for a story we did on Boys Town, which was really an exciting story. That, we found out that essentially they had not been telling the truth about their financial condition and it involved getting their tax return from Washington. I was filling out my own tax return for my own foundation and I thought if I had to file one, maybe Boys Town did too. So we got it, and it showed that huge amounts of money were spending very little, number of boys were going down, but they've changed their behavior.
Becky: As a result?
Buffett: Oh yeah. The behavior is 100% now, those days are long past, but we did win a Pulitzer for that.
Becky: And this one I know you told me about this one.
Buffett: Well, this was given to me by a good friend who ran RC Willey in Salt Lake City. And the fellow just carved, this is all one piece of wood, the baseball.
Becky: That's impressive!
Buffett: Yeah, you like that, eh?
Becky: I do. But I always forget that it's wood.
Becky: And of course Coca-Cola.
Buffett: Coca-Cola, yeah, we got a lot of Coca-Cola stuff around here. And this is the dollar bill, when I worked at Solomon for 9 months and 4 days as chairman, my salary was a dollar a year. But they rounded it up when I left, so they gave me the full dollar.
Becky: That was generous of them.
Buffett: Yeah, I think they thought I was kind of a sap for working for them, but they were very nice about giving me that.
Becky: You know I was gonna ask you about the Coca-Cola, because when we were in Asia, you said that you drink five 12-ounce bottles a day, or cans a day, of Coca-Cola. Is that where you get all your energy?
Buffett: Well, I owe my life to it if you think about it. Because there's about 150 calories in a can, which means 750 a day, every 5 days that's a pound. So I would lose 70 pounds a year. I'd be gone long ago if I wasn't drinking Coca-Cola.
Becky: OK, in that respect we get it.
Buffett: It works well. I don't drink coffee so I do get a fair amount of caffeine. That's my caffeine.
Becky: OK, well I probably drink five cups of coffee a day.
Buffett: We own a lot of Wells Fargo stock and they were nice enough to give me the stagecoach some years ago. And my bridge partner used to work for Wells Fargo, and she covets this. So this is the only thing in my will that gets left, right.
Becky: That's good.
Buffett: She gets the stagecoach. Carol Loomis, who edits my annual reports, she gets all the copyrights to the annual report.
Becky: That's it, those two things though, right?
Buffett: Yeah, those are the only two, two specific type, peculiar bequests, you might say.
Becky: Last night, you know, we were at Piccolo's and we got to go in and we talked to Donna and Dee and we shot a bunch of the different things in there and they were just so nice. They walked us around. She was telling me the story about how you came in, I guess it was 2 1/2 years ago. She remembers the date, I think it was Feb. 18th or something. She remembers the date, and said that you knew her father, too?
Buffett: I knew about him. Right.
Becky: And um, what brought you back into Piccolos?
Buffett: Well, I hadn't been there for a long time. I can't remember the specific thing. But once I went back there, I love the food, the two sisters are just terrific that run it, it just couldn't be a better place. But I take, if A-Rod's in town, Jeff Immelt's coming into town tomorrow, we'll have dinner there, uh, whomever, and they always like it and we always finish with a root beer float.
Becky: I had one last night.
Buffett: Good for you. There's more there. Actually we have the students go there now and they all get root beer floats.
Becky: That's what she said, she made something like 123 of them or something one day.
Buffett: Kids love 'em.
Becky: They're great. They're great. Anything in particular that stands out the most here?
Buffett: Well, All My Children, where they tried me out as a soap opera star, told me to go back to Omaha
Becky: That's Susan Lucci.
Buffett: Yeah, that's Susan Lucci, she carries the show. I mean this is Tom Murphy working with me and we flubbed our lines and everything, but she is really good, you know. And they just go through this. It's an hour show, and they do it daily. So you don't have a lot of extra takes or anything and she, we would mess up sometimes and she would work it right back in. She was really good.
Becky: Let's see. What about? Here's another one, too.
Buffett: Yeah, that's another, I frame checks but someday I'll break these pictures open and cash them all.
Becky: That's when we'll be worried. And Ted Williams?
Buffett: Ted Williams is a hero. And that's his first game as a Red Sox playing against Holy Cross in an exhibition. But Ted Williams in The Science of Hitting talks about waiting for the right pitch. And that's what investing is. I mean, there are a lot of parallels. If you swing at bad pitches and feel you have to swing at every pitch, you're gonna have a terrible batting average. But if you wait for the right pitch, and .. Here, this is from The Science of Hitting and that shows the batter's box and he said if you only swung a pitches there you'd bat .400 and if you only swung pitches down here, you'd bat .230. So now, in baseball once you get two strikes on you, you have to swing at a bad pitch if it's in the strike zone. In investing, you just wait till you get the right pitch.
Becky: Did it take you time to learn that lesson or is that something you thought from the very beginning?
Buffett: It took me time. I mean, I started investing at 11 and I was not thinking about waiting for the right pitch when I was 11.
Becky: I was gonna ask you about those, those were Cities shares.
Buffett: Cities Service preferred. Originally it was a utility. It became an oil company, but it had this preferred, which had not paid dividends for a lot of years, so that it had bigger rearages on it in 1942 when I bought it. And I bought it at 38 and sold at 40, and it went to 200.
Becky: And it made you think...
Buffett: Maybe patience was a good, better thing.
Buffett: What made you pick that stock though?
Buffett: I'm sure it was from listening to my dad. I'd like to say I went though thousands of annual reports, but it wouldn't be true. Undoubtedly, I asked my dad what he would do and he suggested that. That's where the idea came from. I started picking them myself a little later.
Becky: Not surprising he'd be late. I recognize this one.
Becky: And what's this?
Becky: Well, that was at Salomon and you notice they have these clocks and it says London, Tokyo. They used to have New York, but we changed it to Omaha. That's Deryck Maughan who was terrific with me and Bob Denham. Those two fellows saved my life back in 1991.
Becky: How so?
Buffett: Well, they just performed in an extraordinary way when they didn't need to. Bob came back from the west coast. And I called him Friday, almost Saturday. He had a wonderful life, his wife had a wonderful job, great colleagues and everything. And I just said, 'Bob, I need you and there isn't any second choice. He came back and just worked tirelessly to solve the legal problems and Derek worked tirelessly to solve the operational problems. Those were two great guys.
Becky: OK, I recognize Tiger.
Buffett: Yeah, that's when I caddied for Tiger.
Becky: You didn't caddy for him!
Buffett: Yeah, I caddied for him, sure I did. Oh yeah, I caddied for him, yup. That's uh, I didn't get 10% of his winnings, but I caddied for him. I gave him a lot of advice. I don't know whether you noticed but his whole game changed after that.
Becky: Absolutely. I can probably pinpoint that day.
Buffett: He was a terrific guy. He was doing this for charity. There were some people from the west coast that had bought it and he acted like they were doing him a favor. I mean through the whole thing, he was just terrific.
Becky: That's great. I see Bill Gates here.
Becky: He used to run when you came to his house?
Buffett: Pardon me?
Becky: You said he ran away from the door.
Buffett: He ran away because I was always looking for money for my partnership. He thought, why should I give it to some guy who sits around his house all day? I used to work out of my house then.
Becky: Do you remember the first stock you picked on your own?
Buffett: Oh I think, I mean I bought Puroil (spelling uncertain) early, I bought Barton Warner (spelling uncertain), I bought a number of stocks. And I was charting, I was big into charting, believe it or not.
Becky: Really, I didn't know that. I would never guess that in a million years.
Buffett: Well, I read all these books and they're about technical analysis and all that. I was always kind of fascinated with numbers and that sort of thing, so yeah I did a lot of charting.
Becky: You don't do that now do you?
Buffett: No, no no no, no way.
Becky: Yeah, I thought that was so different than your philosophy.
Buffett: My whole life changed when I read Ben Graham's book when I was 19, yeah.
Becky: And you threw charting out the window at that point?
Buffett: I threw everything out the window except for what he said, yeah.
Becky: Wow, OK.
Buffett: I'm a great one for stealing ideas.
Becky: Can we look at they ah, ah ..
Buffett: Sure, I’ll follow you.
Becky: Oh, I do love how you have Coca-Cola machines everywhere.
Buffett: Definitely, definitely, unlimited Coke here.
Becky: They had Coke out on all the ... Cheerwine, what’s that? .. They had Coke out on all the counters in the Nebraska Furniture Mart when we were there today.
Buffett: Is that right?
Becky: And they said that's all they put out.
Buffett: Yeah, well it’s a good thing. Cheerwine actually is big in a place called Salisbury, NC, where some friends of mine are, so they...
Becky: It looks like Coca-Cola.
Buffett: It tastes somewhat like Cherry Coke, it's sort of like Dr. Pepper, Cherry Coke, yeah.
Becky: And this is from A-Rod?
Buffett: Yeah, Alex gave me that when he came out one time and so we're very proud of that.
Becky: Has he talked to you about leaving the Yankees?
Buffett: Well, we talked a little bit, but I won't give you the details.
NEXT: WHY WARREN BUFFETT SAYS MAKING GOOD PRODUCTS ISN'T ENOUGH
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