THIS IS A LIVE BLOG OF WARREN BUFFETT'S APPEARANCE ON CNBC'S SQUAWK BOX DURING THE 6am 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.
Becky introduces Warren Buffett. Always looking for a way to make some money, Buffett jokingly says even though it's early, you can still buy something at the (empty) Nebraska Furniture Mart.
Buffett says there's been a lot of de-leveraging, and there's still more to come. In many cases, the de-leveraging is happening at crazy prices. People who were out on a limb are having the limb cut off.
Economy and markets now are nothing like 1973-74, at least not yet. Seeing more fixed-income forced liquidation. Easy money in terms of price, but not easy money in terms of availability.
On offer to insure muni bonds now guaranteed by Ambac, MBIA: "We tossed our hat into the ring and they tossed it right back."
Buffett says bond insurers are "hoping for new money .. and they may get it." But they still "haven't totally faced up to the mistakes they made."
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: Can't rule out the possibility that trouble we've experienced could lead to something very bad.
Joe Kernen asks if stock market valuations will reach a "secular bear" level." Buffett: I'm not good at predicting the stock market. I know it when I see it. Stocks are not cheap but they're not extreme. Watching for when stocks become very cheap.
We made a bid on a big portfolio of muni bonds Friday and didn't get it. May see another opportunity today. We make offers on muni bonds for very short period of times. "We want the fellow on the other end to be prepared to act" and not use our price to go out and shop around.
Buffett's prior offer to bond insurers to re-insure muni bonds guaranteed by big insurers is no longer on the table.
"I would not be surprised" if big bond insurers will be able to raise some capital, wouldn't be surprised if they didn't. Buffett says his bond insurer is making a lot of money insuring bonds on the secondary market.
Buffett elaborates on his Letter to Shareholders last Friday in which he argues Corporate America is greatly overestimating its investment portfolio returns when it comes to pension funds. The higher the estimated return, the less money is needed for the fund. That allows companies to report higher earnings than they would otherwise. Buffett's question to CNBC viewers and web site users was designed to illustrate the dramatic difference between what appears to be small differences in projected annual percentage return rates.
Becky says we'll be asking Warren Buffett some of your email questions later in the hour. Joe says he hopes the store Becky and Buffett are in doesn't look as empty during the day as it does now. Buffett assures Joe that it brought in $400 million dollars last year.
As Frank Sinatra's My Way plays during the introduction to the 6:30am ET half-hour, Becky notes that Buffett like the song. She says that Buffett will be answering some emails from the audience, and that he had suggested the idea to her. Becky says we've received many emails and she's narrowed them down somewhat and hopes to get through as many as possible. She says she didn't choose many questions about individual stocks because Buffett generally doesn't talk about them.
Time to answer some email questions. Warren asks for some "easy ones."
Brad in Atlanta asks do you think returns from hedge funds justify their fees. Warren says no. "Defies logic" to charge so much since so few hedge funds will outperform.
Jake in Cleveland asks what company's CEOs are doing a good job. Buffett mentions Costco and General Electric. He says he may think or more as he goes on. 6:45 AM
David in Ohio asks what's the definition of a recession. Buffett notes the formal definition of two quarters of negative economic growth but: "By any common sense definition, we are in a recession." Certainly people's net worth is heading south, especially when it comes to homes.
Roy from Pennsylvania asks about breakdown of Berkshire shareholders. Buffett says Microsoft's Bill Gates owns a large number of Berkshire shares. Have 400,000 shareholders. Believes we have lowest turnover of any stock on the NYSE and that's what he likes. "We want investors." Says he doesn't want someone to buy the stock and sell it a month later. "We don't want all shareholders." He want people in it for the long run. "We like talking to the same congregation every week."
CNBC asked LeBron James of the Cleveland Cavaliers to write in. He asked if you ever bought a major sports team, what would it be? Buffett says he would buy a major sports team in a city in which he lived, but more interested in playing for a sports team than buying one. "I took on LeBron one-on-one last year, and I notice he hasn't asked for a rematch."
Nebraska football should win at least eight games this year. Have a stronger team this year than in the past.
Buffett says rather than buy a lottery ticket, gamble at Atlantic City or invest in Ambac, emailer should buy a low-cost no-load mutual fund.
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