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Who Will Run Berkshire After Buffett? Ask Warren Transcript - Part 2
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Executive Producer
BUFFETT: My enthusiasm for stocks is in direct proportion to how far they go down. I like it when things I like go down in price. Incidentally, if you own a farm in Nebraska and you've been waiting for your neighbor, you know, something to happen so you can buy the farm next to you, you hope farm prices are down when he decides to move or he dies or whatever it may be. And similarly, we are going to have money to invest forever. Money keeps coming in to Berkshire. Am I better off if I have to pay high prices or low prices? So it's not bad news for us when stocks go down at all. Now, you know, it's bad news for us when something goes wrong with a company. But the fact that something gets cheaper, I mean, if I walked into McDonald's tomorrow and they've cut the prices of hamburgers by half, you know, I will be happy because I'm going to be buying hamburgers for a long time.
QUINTANILLA: Sure. But...
BUFFETT: And if they double, you know--go ahead.
QUINTANILLA: Does that mean--does that mean there are--you see fewer bargains right now, obviously, given the rise since March of last year?
BUFFETT: Sure. There's--stocks are a lot less attractive now then they were a year ago. Far less attractive.
KERNEN: Hey, Warren, when...
BUFFETT: And bonds are less attractive. Bonds are less attractive, too.
KERNEN: One of the reasons I brought up that TXU situation was because in the piece it said there's a lot of really great companies that--in the private equity universe that have really lousy balance sheets based on the bubble that was around in 2007. So there's going to be some problems. But is that somewhere where you can look to try to help work out some of the situations? There must be some real gems in there that just, for whatever reason, I look at the fees that the PE firms take, and I look at the dividends that they pay out, and it used to work, but now they actually got to manage some of these things. I mean, couldn't you find some nuggets in there?
BUFFETT: It's possible, Joe, but on balance, if you notice, the private equity firms are very reluctant, it seems to me, to come forth with anything that involves big losses. I mean, they--what they usually try and do is get bond holders to make concessions or something. But I've not seen them wanting to sell the businesses at large losses. Now, you know, if they go into bankruptcy, then you buy them for the bankruptcy process. I mean, if the old TXU gets to 2,014 and they can't meet the maturities that they have at that time or they haven't done it earlier, you know, we may buy--we might think about buying the whole place, you know. But we'll--we might buy it cheaper after a bond default than we would buy it from a private equity place.
KERNEN: Well, you know how to run utilities, and you might get the chance with, I forget how much is coming due.
BUFFETT: We might get the chance.
KERNEN: Yeah, 20 billion or something.
BUFFETT: Yeah, we might get the chance.
QUINTANILLA: We're going to take a quick break. A lot more with Warren coming up this morning. And we'll get some top stories as well, including AIG moving to sell a major business unit, pay back some of the money they own the US government. A lot more, of course, with the Oracle at Omaha. At 8 Eastern time this morning, Pepsi CEO Indra Nooyi will join us. We'll get her take on the global economy and her company's bottling deal later on this morning.
ANNOUNCER: You're watching SQUAWK BOX on CNBC, live today from Piccolo Pete's restaurant in Omaha, Nebraska. Stay tuned.
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