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WHEN: Today, Monday, March 2nd 6AM-9AM ET
WHERE: CNBC's "Squawk Box "
Following are excerpts from the unofficial transcript of a CNBC interview with Berkshire Hathaway Chairman & CEO Warren Buffett on CNBC's "Squawk Box" today. Video from the interview is available on CNBC.com.
All references must be sourced the CNBC.
BUFFETT ON IBM
BUFFETT: THE BEST THING THAT COULD HAPPEN WOULD BE IF THE STOCK DID NOTHING FOR FIVE YEARS BECAUSE THEY WERE GOING TO BUY IN A LOT OF STOCK. AND THE CHEAPER THEY BOUGHT IT THE MORE SHARES THEY BOUGHT
QUICK: IN THAT CASE YOU'VE DONE EVEN BETTER. THE STOCK HAS GONE DOWN.
BUFFETT: YEAH. PEOPLE HAVE THE CONCEPTION -- MISCONCEPTION WHEN WE BUY A STOCK WE LIKE IT TO GO UP. THAT'S THE LAST THING WE WANT IT TO DO.
BUFFETT ON BUYING CHEAP
WHAT WE LIKE AND PARTICULARLY IF THE COMPANY ITSELF IS BUYING THE STOCK AS MOST COMPANIES ARE, YOU KNOW, OUR INTEREST IN THE COMPANY IS JUST INCREASING DAY AFTER DAY AND THE IF COMPANY IS BUYING IT WE'RE NOT LAYING OUT A DOLLAR. IF WE'RE BUYING IT WE'RE LAYING OUT SOME MONEY, BUT WE'RE BUYING IT CHEAPER. AND I LIKE BUYING ANYTHING. LOOK AROUND THE ROOM YOU CAN SEE I LIKE BUYING THINGS CHEAP.
BUFFETT ON EXXONMOBIL
BUFFETT: WE SOLD IT ALL. WE SOLD IT OFF IN THE FOURTH QUARTER.
BUFFETT: WE THOUGHT WE MIGHT HAVE OTHER USES FOR THE MONEY. EXXONMOBIL IS A WONDERFUL COMPANY. IT'S CURRENT EARNING POWER, OBVIOUSLY, IS DIMINISHED SIGNIFICANTLY FROM WHERE IT WAS A YEAR AGO AS IS TRUE WITH ALL OIL COMPANIES. BUT EXXONMOBIL HAS BEEN ONE OF THE GREAT INVESTMENTS OF ALL TIME.
QUICK: BUT THE REASON YOU SOLD IT IS YOU THOUGHT YOU COULD BETTER DEPLOY THAT IN OTHER
BUFFETT: I THINK I MAY HAVE SOME USE FOR THE MONEY.
BUFFETT ON GETTING BETTER
IT'S CONSISTENTLY GOTTEN BETTER AND COMPARED TO THE REST OF THE WORLD, WE'RE DOING VERY WELL. AND INCIDENTALLY, EVEN 2% REAL GROWTH IS NOT AT ALL BAD. I MEAN IF YOU THINK ABOUT IT, IF POPULATION GROWS 1% AND YOU HAVE REAL GROWTH OF 2%, THAT'S 20% IN A GENERATION.
BUFFETT ON BNSF
IN TERMS OF ON-TIME PERFORMANCE IN TERMS OF OUR COAL CUSTOMERS, THEY NEVER RAN OUT OF COAL. BUT THEY GOT LOWER IN TERMS OF WHAT THEY HAD THAN THEY WOULD HAVE LIKED. IF YOU'RE RUNNING A UTILITY AND YOUR COAL BIN GETS DOWN TO 10 OR 12 DAYS OF SUPPLY, YOU'RE WORRIED. IF THERE'S A BLACKOUT, YOU'RE GOING TO GET BLAMED. NOT THE RAILROAD. SO WE MADE SURE THEY GOT THEIR COAL, BUT WE WORRIED THOSE CUSTOMERS.
BUFFETT ON BNSF 2
WE HAD MUCH MORE CONGESTION. WE HAD A SLOWDOWN OF THE TRAINS. OTHER PEOPLE EXPERIENCE THIS TOO. BUT OURS WAS PARTICULARLY SEVERE. CANADIAN PACIFIC HAD PLENTY OF PROBLEMS TOO. AND WE SPENT A FORTUNE. WE SPENT MORE MONEY IN 2014 THAN ANY RAILROAD HAD SPENT, TO MY KNOWLEDGE, TRYING TO SOLVE PROBLEMS. AND WE'RE SPENDING EVEN A LOT MORE MONEY THIS YEAR.
BUFFETT ON ACCOUNTING
ACCOUNTING IS THE LANGUAGE OF BUSINESS, AND YOU HAVE TO BE AS COMFORTABLE WITH THAT AS YOU ARE WITH YOUR OWN NATIVE LANGUAGE TO REALLY EVALUATE BUSINESSES. AND ACCOUNTING TELLS YOU A LOT AND IT CAN BE USED IN MANY WAYS TO DECEIVE. YOU SAW IT IN ENRON, FOR EXAMPLE. IN FACT, IN THE SEVEN HOURS OF DAMAGES I'M WATCHING ONE OF THE CHARACTERS IS PLAYING AROUND WITH ACCOUNTING VERY DRAMATICALLY SO MAYBE THAT'S WHERE GLENN GOT HER EXPERIENCE. BUT YOU REALLY HAVE TO UNDERSTAND WHAT CAN BE DONE WITH ACCOUNTING WHEN IT GIVES YOU CORRECT ANSWERS AND WHEN IT GIVES YOU WRONG ANSWERS.
BUFFETT ON JAIN AND ABEL
THERE IS NOT A HORSE RACE. AND THAT STORY COMES FROM CHARLIE SAYING THAT THOSE TWO ARE WORLD CLASS, WHICH THEY ABSOLUTELY ARE. IN FACT, HE SAID DESCRIBING WORLD CLASS WAS PROBABLY AN UNDERSTATEMENT. I WOULD TOTALLY AGREE WITH THAT. EITHER ONE OF THOSE MEN COULD RUN JUST ABOUT ANY COMPANY YOU COULD NAME. WOULDN'T JUST BE BERKSHIRE. THEY ARE INCREDIBLE MANAGERS. AND WE ARE LUCKY TO HAVE THEM.
BUFFETT ON RAILROADS
THE BIGGEST THING THAT I REALLY WORRY ABOUT WITH THE RAILROAD IS FLOODS. YOU KNOW, THEY'RE -- WE COULD HAVE FLOODS THAT THERE'S NOTHING WE CAN DO ABOUT IT. UNFORTUNATELY THEY TENDED TO BUILD RAILROADS ALONG RIVER BEDS. IT WAS A VERY LOGICAL PLACE TO BUILD THEM. WE HAVE 13,000 BRIDGES. I MEAN, CAN YOU IMAGINE THAT. SO THERE ARE THINGS THAT CAN HAPPEN WITH A RAILROAD. YOU CAN'T EXPECT EVERYTHING IS GOING TO WORK RIGHT ALL THE TIME. BUT OVER THE YEARS, BOTH IN TERMS OF SAFETY AND IN TERMS OF DERAILMENTS, IN TERMS OF ALL KINDS OF FACTORS, THE RAILROADS HAVE RUN BETTER .
BUFFETT ON VALUE VS. GROWTH
I ALWAYS SAY IF YOU AREN'T INVESTING FOR VALUE, WHAT ARE YOU INVESTING FOR? AND THE IDEA THAT VALUE AND GROWTH ARE TWO DIFFERENT THINGS MAKES NO SENSE. I MEAN, GROWTH IS PART OF THE VALUE EQUATION AND A COMPANY THAT GROWS AND USES LITTLE CAPITAL IN DOING IT GETS HIGH RETURNS ON INCREMENTAL CAPITAL IS OBVIOUSLY WORTH MORE MONEY THAN ONE THAT DOESN'T GROW. THAT DOESN'T MAKE THE ONE THAT DOESN'T GROW VALUELESS THOUGH.
BUFFETT ON PRIVATE EQUITY
THEY WANT TO BORROW EVERY DIME THEY CAN, IN MOST CASES. THERE'S SOME EXCEPTIONS TO THAT. AND THAT'S WHY THEY CALL THEMSELVES LEVERAGE BUYOUT OPERATIONS ORIGINALLY. AND THAT'S WHAT THEY DO. THEY DO LEVERAGE BUYOUTS. THAT GOT A DIRTY NAME, PARTICULARLY AFTER RJR. AND SO THEY CHANGED THE NAME. BUT THEY DIDN'T CHANGE THE ACTIVITY. AND I DON'T BLAME THEM. I MEAN, IF YOU CAN GET ALL THE MONEY FROM SOMEBODY ELSE AND YOU GET THE UPSIDE AND IF THEY GET THE DOWNSIDE TO A GREAT DEGREE, THERE'S NOTHING UN-AMERICAN ABOUT THAT.
BUFFETT ON DAVID WINTERS
WHEN DAVID WINTERS WHO RUNS A FUND THAT HAS UNDERPERFORMED BY EVERY MEASURE FROM INCEPTION, FIVE YEARS, ONE YEAR AND WHO DRAWS A 150 BASIS POINT FEE WHEN YOU CAN GO TO VANGUARD AND DO IT FOR 17 BASIS POINTS AND HE COMPLAINS ABOUT COMPENSATION NOT BEING COMMENSURATE WITH PERFORMANCE AT COKE. AND THEN HE HAS THAT KIND OF RECORD HIMSELF, I THINK HE'S A FELLOW LIVING IN AN ALL-GLASS HOUSE.
BUFFETT ON GREECE
WHAT GREECE HAS DONE IS EXPOSED THE WEAKNESS OF THE ORIGINAL CONCEPT. AND THE IDEA THAT YOU'RE GOING TO LINK CURRENCY IN LOCK STEP AMONG A LARGE GROUP OF COUNTRIES THAT HAVE DIFFERENT FISCAL POLICIES, DIFFERENT CULTURES, DIFFERENT LABOR LAWS AND EVERYTHING. IT HAS A STRUCTURAL WEAKNESS TO IT. JUST IMAGINE WE HAD A WESTERN HEMISPHERE ZONE THAT WE LINKED OURSELVES TO LINKED TO VENEZUELA AND, YOU KNOW, YOU NAME IT. IT WOULDN'T WORK.
BUFFETT ON EU
I THINK IT WILL BE MODIFIED. LISTEN, THE FIRST TIME AROUND, WE'VE HAD AMENDMENTS TO OUR CONSTITUTION, RIGHT? WE THOUGHT WE WROTE A PRETTY GOOD DOCUMENT. AND WE DID. BUT WE STILL HAVE TO AMEND IT OCCASIONALLY. AND THERE WAS PROBABLY A BURST OF ENTHUSIASM THAT THEY REALLY GOT – THEY DID HALF THE JOB, AND THEY WILL HAVE TO DO THE OTHER HALF OF THE JOB.
BUFFETT ON U.S. BANKS
IF YOU PUSHED THAT HARD ENOUGH, PEOPLE WOULD SAY, WELL, THEY DON'T LIKE BIG BANKS. THEY DIDN'T LIKE BIG OIL BACK WHEN THE STANDARD OIL TRUST EXISTED. THEY BROKE IT INTO PIECES. ALL THE PIECES HAVE DONE PRETTY WELL. I THINK THE PRESENT BANKING SYSTEM IS A PRETTY DAMN GOOD SYSTEM FOR THE UNITED STATES.
BUFFETT ON SUBPRIME
YOU DON'T NEED THE DEGREE OF MISERY THAT OCCURS WITH HUNDREDS OF THOUSANDS OF BORROWERS IF 50% OF THEM DEFAULT WITHIN A YEAR. YOUR LENDING STANDARDS ARE WRONG IN THAT RESPECT. I DON'T SAY ANYBODY THAT'S KIND OF MARGINAL DOESN'T HAVE A RIGHT TO GET A SHOT AT OWNING A HOME MAYBE WITH A LOW DOWN PAYMENT OR A CAR. BUT HAVE IT BECOME THE NORM BIG TIME. I THINK IT'S A MISTAKE.
BUFFETT ON HOUSING AND AUTOS
OUR BUSINESSES ARE DOING WELL, SOME ARE DOING BETTER THAN OTHERS. HOUSING HAS COME BACK AT A SLOWER RATE THAN I WOULD HAVE ANTICIPATED. AUTOS CAME BACK AT A FASTER RATE THAN I WOULD HAVE ANTICIPATED.
BUFFETT ON MARY BARRA
IN THE AUTO BUSINESS YOU CAN GO THROUGH A LOT OF CASH VERY FAST. AND THEY ARE ALSO BUILDING THEIR FINANCE UNIT BACK UP. I DON'T – IF I WERE RUNNING IT, WOULD I BE BUYING THE STOCK? I DON'T KNOW WHETHER I WOULD OR NOT. BUT IT DOESN'T BOTHER ME AT ALL THAT SHE'S NOT DOING IT. I THINK SHE'S EXACTLY THE RIGHT PERSON FOR THE JOB. I'VE MET HER A COUPLE TIMES AND SHE IS VERY, VERY GOOD. AND I JUST THINK THE IDEA OF TRYING TO DO SOMETHING NOW THAT GETS A LITTLE POP IN THE STOCK IS JUST – SHOULD NOT BE ON HER AGENDA OR THE SHAREHOLDERS' AGENDA.
BUFFETT ON GENERAL MOTORS BOARD
I TOTALLY DISAGREE WITH THE IDEA OF PUTTING SOMEBODY ON THE BOARD WHO HAS AN OPTION ON SOME OTHER PEOPLE'S STOCK WHICH IS ONLY GOOD FOR TWO YEARS. TO HAVE SOMEBODY SITTING THERE IN THE BOARDROOM WHO HAS A TWO-YEAR HORIZON WHEN THEY MAKE MONEY THAT GOES TO ZERO AFTER THAT. IT'S JUST NOT THE WAY TO RUN A BUSINESS.
BUFFETT ON COSTCO VS. AMERICAN EXPRESS
OBVIOUSLY, COSTCO AND AMERICAN EXPRESS, WHO HAVE BEEN LINKED UP FOR WELL OVER TEN YEARS – IN TERMS OF NEGOTIATING AND EXTENSION OF A CONTRACT THAT RUNS OUT MARCH 31, 2016 THAT AMERICAN EXPRESS MADE THEIR BEST OFFER AND COSTCO THOUGHT THEY COULD DO BETTER ELSEWHERE. CLEARLY, IF YOU HAVE A RETAILER WITH THE SIZE AND SCOPE OF COSTCO AND YOU'VE GOT THE EXCLUSIVE CREDIT CARD, YOU KNOW THAT'S A VERY IMPORTANT RELATIONSHIP.
BUFFETT ON ECONOMY
SINCE THE FALL OF 2009, THE ECONOMY HAS JUST KEPT COMING BACK AT A MODERATE PACE AND PEOPLE OCCASSIONALLY GET VERY EXCITED AND THEY THINK IT'S GOING TO SPURT MUCH FASTER. SOMETIMES THEY GET WORRIED AND SAY IT'S GOING TO BE A DOUBLE DIP. I'VE BEEN LISTENING TO ALL OF THAT. NOW IT'S FIVE AND A HALF YEARS AND IT JUST KEEPS IMPROVING AT A MODEST PACE. WE SEE IT IN VIRTUALLY ALL OF OUR BUSINESSES.
BUFFETT ON MINIMUM WAGE
I DON'T QUARREL WITH THE CHANGE IN THE MINIMUM WAGE, BUT I DON'T REALLY THINK THAT'S THE ANSWER. AND I THINK IT DOES RESULT IN LESS EMPLOYMENT IF YOU KICK IT A WHOLE LOT. I THINK WALMART OBVIOUSLY MADE A GOOD DECISION FOR WALMART. THEY WOULDN'T HAVE MADE IT OTHERWISE. IT ISN'T THAT I DON'T BELIEVE IN WAGES GOING UP, I JUST THINK THAT IF YOU SAID I'M AT A GIVEN LEVEL – I MEAN, IF YOU SET THEM AT $20, YOU'RE GOING TO HAVE A WHOLE LOT OF PEOPLE UNEMPLOYED. BUT YOU CAN ACHIEVE SOMETHING SIMILAR TO THAT THROUGH THE EARNED INCOME TAX CREDIT TO GIVE PEOPLE WHOSE TALENTS DON'T REALLY – THEY'RE NOT VALUED THAT HIGH IN A MARKET ECONOMY, BUT THEY'RE DOING USEFUL THINGS.
BUFFETT ON ADVICE TO LEBRON JAMES
THROUGH THE REST OF HIS CAREER AND BEYOND, IN TERMS OF EARNING POWER, JUST MAKING MONTHLY INVESTMENTS IN THE LOW-COST INDEX FUND MAKES A LOT OF SENSE. I THINK THAT SOMEBODY IN HIS POSITION OUGHT TO HAVE A SIGNFICANT CASH RESERVE AT WHATEVER MAKES HIM COMFORTABLE AND THEN BEYOND THAT, OWNING A PIECE OF AMERICA, A DIVERSIFIED PIECE BOUGHT OVER TIME HELD FOR 30 OR 40 YEARS, IT'S BOUND TO DO WELL.
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