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CNBC Excerpts: Legendary Investor Warren Buffett Speaks with CNBC's "Squawk Box" Today

WHEN: Today, Thursday, October 2nd

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC interview with Billionaire investor Warren Buffett today on CNBC's "Squawk Box." Video from the interview is available on CNBC.com.

All references must be sourced to CNBC.

BUFFETT ON BERKSHIRE HATHAWAY BUY

I DO HAVE SOME GOOD NEWS AND IT INVOLVES LARRY. YESTERDAY WE SIGNED AN AGREEMENT, BERKSHIRE HATHAWAY SIGNED AN AGREEMENT TO BUY VAN TUYL AUTO WHICH IS OWNED AND RUN BY LARRY AND WE HAVE KNOWN EACH OTHER FOR SOME TIME. LARRY HAS 78 DEALERSHIPS, VOLUME OF ABOUT 9 BILLION.

BUFFETT ON VAN TUYL DEAL

SIX MONTHS OR THEREABOUTS, LARRY CAME BY AGAIN. HE'D BEEN TO OUR ANNUAL MEETINGS AND HE KNEW HE WANTED TO DO BUSINESS WITH BERKSHIRE. AND THIS IS JUST A VERY, VERY GOOD OPERATION. THIS PARTNERSHIP APPROACH THAT HE HAS WORKED EXTRAORDINARILY WELL. HE'S JUST KEPT ADDING DEALERSHIPS OVER THE YEARS. THERE'S AN INSURANCE COMPANY INVOLVED, THERE'S REAL ESTATE INVOLVED. AND HE WANTED TO BE SURE THAT VAN TUYL ENDED UP IN A PERMANENT HOME. SO WE WORKED OUT A DEAL VERY QUICKLY.

BUFFETT ON BILL GROSS

CERTAINLY WHAT I KNOW ABOUT HIS RECORD HAS BEEN TERRIFIC AND IT IS NOT EASY TO RUN, YOU KNOW, HUNDREDS OF BILLIONS OR MAYBE TRILLIONS OF DOLLARS. THAT IS A REAL TASK. SO TO HAVE A GOOD RECORD – AND IT MAY HAVE GOTTEN MORE DIFFICULT AS THE NUMBERS GOT LARGER, I DON'T KNOW. CERTAINLY THAT IS TRUE IN EQUITIES. THERE IS NO QUESTION ABOUT THAT, BEING THE SITUATION IN EQUITIES. BUT HIS RECORD HAD TO BE – HE DIDN'T ATTRACT THAT MONEY JUST ON HIS PERSONALITY.

BUFFETT ON BOND MARKET

STEVE LIESMAN: WHAT DO YOU SEE WHEN YOU LOOK AT THE BOND MARKET TODAY? THE U.S. TREASURY AT 240?

WARREN BUFFETT: WELL I DON'T START SALIVATING, I'LL PUT IT THAT WAY. NO, I MEAN, YOU KNOW YOU ARE GOING TO DO BETTER THAN 240 IF YOU OWN EQUITIES OVER A LONG PERIOD OF TIME. YOU KNOW, AND THEN SO, IF YOU TALK ABOUT 240 FOR TEN YEARS, YOU KNOW, I WOULD JUST LOVE TO TAKE A BET ON EQUITIES.

BUFFETT ON DEMAND FOR CARS

CARS AREN'T GOING LIKE THAT. DEALERSHIPS MAYBE. THAT MEANS EVERY DEALERSHIP IS GOING TO SELL MORE CARS, ON AVERAGE. SO THE PATTERN HAS CHANGED, BUT THE FUNDAMENTAL DEMAND FOR CARS IS NOT GOING DOWN. THE AVERAGE DEALERSHIP WILL DO A LOT MORE BUSINESS NOW THAN IT DID 30 OR 40 YEARS AGO IN TERMS OF UNITS.

BUFFETT ON STOCKS

WE ACTUALLY BOUGHT A FEW STOCKS YESTERDAY, BUT WE BOUGHT THE BUSINESS YESTERDAY, TOO. AND IF YOU TOLD ME THE MARKET WAS GOING TO GO DOWN 500 POINTS NEXT WEEK, I WOULD HAVE BOUGHT THOSE SAME BUSINESSES AND STOCKS YESTERDAY. I DON' KNOW HOW TO TELL WHAT THE MARKET IS GOING TO DO, I DO KNOW HOW TO PICK OUT REASONABLE BUSINESSES TO OWN OVER A LONG PERIOD OF TIME. AND A LOT OF PEOPLE DO.

BUFFETT ON TESCO

BECKY QUICK: ALTHOUGH, THERE ARE TIMES WHEN THE BUSINESS IS NOT WHAT YOU THINK IT IS, LIKE A TESCO.

BUFFETT: WELL, IF YOU MAKE A MISTAKE –

QUICK: TALKING ABOUT GROCERIES REMINDS ME OF TESCO, THOUGH.

BUFFETT: WELL, YEAH, TESCO WE DEFINITELY MADE A MISTAKE – I MADE A MISTAKE ON THAT ONE. IT WASN'T ANYONE ELSE WHO MADE IT. YEAH, THAT WAS A HUGE MISTAKE BY ME. BUT, I'M GOING TO MAKE MISTAKES. BUT I'M NOT GOING TO MAKE MISTAKES BECAUSE I BUY BUSINESSES I LIKE AS THEY GO DOWN IN PRICE. I'M JUST GOING TO BE WRONG SOMETIMES ON THE FACTS. BUT THE IDEA OF BUYING A STOCK BECAUSE IT HAS GONE UP, TO ME IS JUST TOTALLY –

BUFFETT ON COCA-COLA PAY

THE NEW PLAN MAKES GREAT, GREAT SENSE. THEY'RE NOT REDUCING THE AMOUNT THEY PAY. I MEAN, A LOT OF PEOPLE WILL GET CASH INSTEAD OF STOCK. THEY RE-EXAMINED THE COST OF THE COMPANY IN TERMS OF GIVING UP SHARES. AND WHICH PEOPLE WOULD BE MOTIVATED BY SHARES AND WHICH ONES WOULDN'T. AND THEY CHANGED THE MIX TO PERFORMANCE SHARES.

BUFFETT ON AMERICAN BUSINESSES

ANYBODY WHO OWNED A CROSS SECTION OF AMERICAN BUSINESS OVER THE LAST 10 YEARS, 20 YEARS, 30 YEARS, 40 YEARS, 50 YEARS, 60 YEARS, HAS DONE FINE. NOW, IF THEY THINK THEY CAN DANCE IN AND OUT, YOU KNOW, AND BUY AND SELL STOCKS, I MEAN, THEY OUGHT TO HEAD FOR LAS VEGAS. I MEAN, THEY CAN'T DO THAT. BUT WHAT THEY CAN DO, IS DETERMINE THAT THERE ARE A NUMBER OF SOLID AMERICAN BUSINESSES, A GREAT NUMBER OF THEM, AND IF YOU OWN A CROSS SECTION OF THEM, AND PARTICULARLY IF YOU BUY THEM OVER TIME, YOU BASICALLY CAN'T LOSE.

BUFFETT ON BURGER KING AND TAX INVERSION

THERE WAS ALL THIS MATERIAL WRITTEN ABOUT HOW TAX MOTIVATED THIS PURCHASE MIGHT BE. ALL KINDS OF COMMENT. I DID NOT READ ONE ARTICLE ANY PLACE. NEVER. WHERE ANYBODY LOOKED UP AND SAW WHAT BURGER KING WAS PAYING IN TAXES. HOW MUCH WAS BURGER KING PAYING IN FEDERAL INCOME TAXES IN THE LAST THREE YEARS? THE HIGHEST FIGURE. NOBODY KNOWS. BECAUSE ALL THEY KNOW IS IT MUST BE A TAX DEAL. THE HIGHEST NUMBER IN THE LAST THREE YEARS THAT BURGER KING PAID IN TAXES WAS $30 MILLION. NOW, THIS IS AN $11 BILLION DEAL. ANYBODY CAN IMAGINE PAYING $11 BILLION FOR A BUSINESS BECAUSE SOMETHING IS PAYING $30 MILLION IN FEDERAL INCOME TAXES. IT WAS NOT A TAX MOTIVATED DEAL.

BUFFETT ON BURGER KING

IT DOESN'T HAVE ANYTHING TO DO WITH TAXES. I MEAN, IT HAS TO DO WITH THE FACT THAT TIM HORTON EARNS TWICE AS MUCH MONEY AS BURGER KING DOES. AND THE DEAL HAS TO BE APPROVED BY THE CANADIAN GOVERNMENT. IT HAS TO GO BEFORE INVESTMENT GROUP AND THEY HAVE TO SEE A BENEFIT. NOW, WHAT IS THE BENEFIT TO CANADA IF SOME COMPANY THAT EARNS TWICE AS MUCH AS THEY ACQUIRE IS GOING TO BE BOUGHT BY AN AMERICAN COMPANY? I'M NOT SURE HOW YOU GET THAT ONE BY.

BUFFETT ON CHANGING THE TAX CODE

I AGREE THAT THE TAX CODE SHOULD REALLY BE CHANGED. THE INTERESTING THING IS YOU'VE GOT RON WYDEN AND YOU'VE GOT ORRIN HATCH. THEY ARE INTELLIGENT, THEY'RE PATRIOTIC, THEY'RE PERFECTLY DECENT INDIVIDUALS. THEY COULD WRITE A BETTER CORPORATE TAX CODE THAN EXISTS NOW. NEITHER ONE WOULD LIKE IT PERFECTLY WHEN THEY GOT THROUGH. BUT IF THEY WRITE ONE AND IT'S REVENUE NEUTRAL THAT MEANS A LOT OF PEOPLE ARE GOING TO HAVE THEIR TAXES INCREASED AMONG CORPORATIONS. AND THEY WILL BE THE ONES WHO WILL BE LOBBYING LIKE CRAZY.

BUFFETT ON GETTING CORPORATE TAX REFORM

I WILL GUARANTEE YOU THAT RON WYDEN AND ORRIN HATCH DISAGREE SIGNIFICANTLY ON A LOT OF POINTS, BUT I THINK THEY COULD WRITE SOMETHING THAT THEY WOULD BOTH AGREE IS BETTER THAN WHAT WE HAVE AND NOT WHAT THEY WOULD LIKE. AND I WOULD LOVE TO SEE THEM DO THAT. AND THEN I WOULD LOVE TO SEE CONGRESS TAKE IT UP. BUT IF YOU'RE TALKING ABOUT ANYTHING THAT'S REVENUE NEUTRAL. YOU ARE GOING TO HAVE A LOT OF PEOPLE WHO ARE GOING TO PAY MORE. AND YOU KNOW, THEY WILL MAKE OCCUPY WALL STREET, IT'LL BE OCCUPY K STREET, IS WHAT WILL HAPPEN. I ACTUALLY THINK THERE'S SOME CHANCE OF IT GETTING DONE IN CORPORATE REFORM. BECAUSE IT SHOULD BE.

BUFFETT ON U.S. ECONOMY

IT'S REALLY AMAZING TO ME. SINCE THE THIRD QUARTER OF 2009, LOOKING AT OUR BUSINESSES, THEY'VE IMPROVED AT A RATHER CONSTANT PACE. NOW, WE HEARD TALK ABOUT DOUBLE DIPS. WE HEARD TALK ABOUT EVERYTHING. THEY'VE NEVER DECELERATED MUCH, THEY'VE NEVER ACCELERATED MUCH. NOW, AUTOS ARE DOING WAY BETTER THAN AVERAGE. HOUSING IS DOING WORSE THAN I WOULD HAVE ANTICIPATED. BUT IF YOU LOOK AT THE OVERALL, IT'S BEEN REMARKABLY CONSISTENT. AND THE MOOD SWINGS HAVE BEEN SUBSTANTIAL, BUT IT HAS BEEN FIVE YEARS. BUT THIS WAS A RECESSION LIKE NONE WE'D EVER HAD. I MEAN, THIS IS A RECESSION WHERE EVERYBODY THROUGHOUT THE COUNTRY JUST GOT PLAIN SCARED. NOW, WE'VE HAD A LOT OF RECESSIONS WHEN SOME PEOPLE GOT WORRIED OR SOMETHING LIKE THAT AND WE KNEW WE WERE IN ONE. BUT YOU HAD – OUR BASELINE HERE WAS PEOPLE WANTING TO PUT MONEY UNDER THE MATTRESS. AND THAT IS A DIFFERENT SORT OF RECESSION THAN, YOU KNOW, WE'VE HAD IN MY LIFETIME. BUT WE'RE COMING BACK.

BUFFETT ON INVESTING

YOU WANT TO INVEST IN THINGS YOU KNOW. I KNOW BUSINESSES. I DON'T KNOW ALL BUSINESSES. I MEAN, THERE ARE THOUSANDS OF THEM I DON'T UNDERSTAND WELL, BUT I KNOW ENOUGH. AND YOU WANT TO INVEST IN THINGS YOU KNOW. IF YOU DON'T INVEST IN THINGS YOU KNOW, YOU'RE JUST GAMBLING, BASICALLY. AND SO YOU LOOK FOR WHAT YOUR CIRCLE OF COMPETENCE IS. YOUR COMPETENCE MAY BE REAL ESTATE, IT MAY BE FARMING, IT MAY BE BUSINESSES. MINE OVERWHELMINGLY IS BUSINESSES, ALTHOUGH EVERY NOW AND THEN I DO A LITTLE SOMETHING ELSE. SO I DON'T THINK YOU CAN ANSWER SOMETHING LIKE THAT CATEGORICAL. THE ONE THING YOU SHOULDN'T DO IS YOU SHOULDN'T BUY ANYTHING WHERE YOU DON'T THINK YOU HAVE A REASONABLY GOOD IDEA WHERE IT WILL BE IN FIVE OR TEN YEARS.

BUFFETT ON HEDGE FUNDS

I MADE A BET SEVEN YEARS AGO AND I MADE THIS OFFER TO ANYBODY IN THE UNITED STATES. I SAID I BET A MILLION DOLLARS THAT THEY COULD PICK ANY GROUP OF FUND-TO-FUNDS OF HEDGE FUNDS AND I WOULD TAKE THE S&P 500 RUN BY VANGUARD AND THE WINNER WOULD GET TO PICK THE CHARITY THAT THE MONEY WENT TO. AND ALL I CAN TELL YOU IS I'M QUITE AWAYS AHEAD ON THAT BET NOW. HEDGE FUNDS AFTER FEES ARE NOT GOING TO DELIVER, IN MY VIEW, A RETURN AS WELL AS BUYING A LOW-COST INDEX FUND. BUT THEY ARE GOING TO MAKE A LOT OF MONEY FOR THE PEOPLE WHO RUN THEM.

BUFFETT ON VIRGINIA ROMETTY

I THINK SHE IS DOING EXACTLY THE RIGHT THING. YOU KNOW, WE NOW OWN SLIGHTLY OVER 7% OF IBM. AT THE TIME WE BOUGHT IT, I THINK THEY HAD 1.6 BILLION SHARES OUT. NOW THEY HAVE UNDER A BILLION. SHE IS MAKING THE RIGHT MOVES. IT'S A BIG COMPANY. SO MAKING CHANGES IS NOT EASY.

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