THIS IS A LIVE BLOG OF WARREN BUFFETT'S APPEARANCE ON CNBC'S SQUAWK BOX DURING THE 8am ET HOUR. BUFFETT IS LIVE AT THE NEBRASKA FURNITURE MART (A BERKSHIRE HATHAWAY SUBSIDIARY) IN OMAHA WITH OUR BECKY QUICK TO ANSWER YOUR EMAIL QUESTIONS.
Buffett says there's nothing in the Letter to Shareholders about bond insurance business because its relatively recent and he writes the letter in November and December. He expects he'll have something to say on bond insurance at the annual meeting in May.
Fed Chairman Bernanke has a tough balancing act, and rate cuts could trigger inflation in the U.S.
Hedge fund mania will fade with time as have past manias.
Q: Does Buffett advise an older investor to buy all Berkshire. A: Nothing should be 100%. Buffett says best investment is to buy a low-cost index mutual fund over time.
Several emails asks about Buffett's stake in Moody's. Was it a mistake? Buffett: Wasn't a mistake at the price he paid for it. No question that "intrinsic business value" of Moody's fell last year. It has less of a moat around it and will be affected for many years. Would he sell? Buffett says when you have 48 million shares it's hard to find a buyer. Hard to sell stocks in general due to the quantities involved.
CNBC has scheduled a one-hour special program on Buffett's unprecedented Squawk Box appearences.
It's called Warren Buffett - The Billionaire Next Door: Face to Face. It will be hosted by Becky Quick and airs tonight, Monday, March 3 at 9pm ET.
Buffett says sometimes he makes mistakes judging the honesty of a person, and sometimes they change over time. He says when buying a company that's why he likes to buy from the second of third generation of a family business.
Buffett says in general Democrats do more to help people who have the "short stick in life" while people like him can take care of themselves. He sometimes will vote for a Republican.
Joe Kernen asks about recent purchases of Glaxo and Sanofi? Why? Buffett says he made the decision to buy those stocks and that with drug companies he knows less specifically about those companies than, say, a candy company. Hard to make a bet on a specific drug company based on a drug that might be in the pipeline. "If you have a group" of drug companies, you'll "probably do OK." Would he buy a domestic drug company? Yes, but he does like earnings coming from abraod than earnings coming from the United States. Most big drug companies in the U.S. do get a lot of their profits from overseas.
Joe asks about alternative energy? Any "earth changing" areas you're considering right now? Buffett says he usually doesn't try to make money by guessing that something that's a dream now will be doing really well 10 years from now. People will keep eating candy, chew gum, use Tide, 10 to 20 years from now. "I can't pick the winners."
Are soveriegn wealth funds bad? Buffett says they're inevitable, made necessary by fact that U.S. is sending so much money overseas. We must expect those overseas to "use those little pieces of paper" (dollars) in an intelligent way, which means investing them.
"People will think in dollars for a long time." Even though the U.S. dollar is getting weaker, it's still a very, very, very important currency and things like oil will continue to be priced in U.S. dollars in the future.
Back to emails. Larry in New York asks how shareholders can get accountability for CEO pay? Buffett says only the very largest shareholders can get through to the "big shots" on a company's board when CEO pay is egregious. Large shareholders, says Buffett, could be even more vocal. "I'm a big fan of pay for performance."
Allan from New Hampshire asks if Berkshire Hathaway wil change after Buffett's death. Buffett says less chance of Berkshire's coporate culture changing after his death than might see in other companies. He would come back and "haunt" anyone who made big changes.
Why is Buffett more visible lately? Buffett says I like talking about Berkshire Hathaway. "I think you should be able to defend your policies" through various avenues. "I'm not saying Berkshire is a buy, I never do." But I will explain the long-standing principles that Berkshire is about.
Q. Why Coke and not Pepsi? I bought Coke in 1988. Pepsico is also a great company. Joes that maybe he made a mistake not buyign Pepsi, too.
Buffett says he checks railroad car loading every week on the internet. Business that depend on housing are, on balance, getting worse, but would still buy such a company tomorrow if it had the right business or management. Knowing where the exact bottom might be doesn't matter when buying a stock.
Hopes the next company he buys will be overseas, but "I just go down to the office and wait for the phone to ring and hope it's not a wrong number." Would be encouraging if he gets more calls from overseas, especially from "Sophia Loren in Italy" but he's still waiting.
Joe asks if Buffett would go below $10 billion in cash. Buffett says wouldn't go much below that. Money is coming in faster than he can spend it, but he does like to spend.
Alex Rodriguez of the Yankees asks what kind of company would he start today. He answers it would be the same kind of company he started years ago, money management. He says he's a "little bit better at money management than anything else." He'd stay in the field unless he could hit a baseball like A-Rod.
"Not impossible" that Berkshire might create a Class C share that would go for a smaller per-share price. Not inconceivable. but we don't want anyone to buy Berkshire stock based on what they think some coporate event might be. We want to discourage short-term speculators from buying the stock.
In response to an email question: "Love is the most complicated and rewarding thing" when compared to business or science.
Buffett says no interest in being U.S. president. "Compromises you'd have to make just wouldn't appeal to me." Buffett says he loves his current job.
Agricultural commodities have had a quite a run, although wouldn't want to predict exactly where they'll be in the future. Oil, on other hand, looks like it will go up as production is outpaced by consumption, since oil supply is essentially limited. Land can get more productive in growing things but I think oil is finite. Oil fields are "depleting at a pretty good rate."
Is there a next generation play in energy? Buffett: We have a lot of wind farms and we're going to have more, but that is not big answer to the kind of energy demand that is going to come along. We have to do all we can on alternative energy but it won't be a cure-all.
Succession plan for annual letters? Buffett: Whomever takes over will probably write the same kind of letters I did. "We've set a tone for that."
Buffett: "Maybe once or twice" has bought and sold a stock on the same day but can't remember when.
Q. Who's smart when it comes to financial matters? Buffett: Bill Gross, Charlie Munger, the four people we've identified to be possible successors as investment chief for Berkshire Hathaway, are all smart. plenty of smart people out there, although he doesn't know many of the younger ones.
Many thanks to Warren Buffett for appearing during Squawk's three hours. Joe jokes that next time he'll want to read the headlines, too.
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