THIS IS THE SIXTH PART OF A TRANSCRIPT OF WARREN BUFFETT'S SERIES OF LIVE APPEARANCES THIS MORNING (MONDAY, MARCH 3) ON CNBC'S SQUAWK BOX.
ANNOUNCER: Live from Omaha, Nebraska, here again, Becky Quick with special guest Warren Buffett.
QUICK: Welcome back, everyone. As you know, we are taking your viewer e-mail questions. They've been coming in, and we haven't shown Mr. Buffett any of these questions. We've been catching him by surprise, asking him on the fly. So I'd like to go back to one of the questions from earlier because Warren said he's been thinking about it and has another answer for him. This is from Jake again from Cleveland, Ohio. And again, if you missed this earlier he'd asked him, `Among the CEOs within the universe of publicly traded companies in which Berkshire doesn't have an ownership position, which CEO do you believe is doing the best job on behalf of shareholders?' Now Warren, you mentioned some CEOs, but you told me you just thought of another.
BUFFETT: Yeah, I think Bob Iger at Disney has done an absolutely terrific job since coming in a couple of years ago, and he--it's a--it's not an easy company to manage and he is--he's done a first class job. He's shareholder oriented. He works well--extraordinarily well with the people that are involved. He understands his business. He's moved them into new areas, so I give Bob high marks. And actually, Jim Kilts, who was at Gillette when we were there, he's not running the company now, but if I find out he's going to run a company, I'm going to buy stock in it.
QUICK: Well, let me ask you that. You mentioned both Disney, and you mentioned Jeff Immelt of General Electric. Why don't you own those stocks if you think they're doing such a great job?
BUFFETT: Well, unfortunately, the market recognizes the fact they're doing that job, to some degree, although neither one of them think that, incidentally. They both think their stocks way underpriced, and it may well be, but I have to--I have a universe of $20 trillion worth of stocks and bonds and everything to decide where to put the money, and every day I look at what's going to make the most sense for us. And they're close.
QUICK: They're close. OK. Stephen Battaglia writes in from Alexandria, Virginia. He asks, `Why do you think that you are afforded the exemption from the SEC to avoid revealing certain positions when others in your same position have to reveal theirs?' He also points out that he's a professional investor.
BUFFETT: Yeah, well, I think there are actually certainly many, many dozens, if not hundreds--you're entitled to get an exemption if you're in the--if you have a purchasing or a selling program going on. That's not a special rule for us at all. So if we--if we're buying X, Y, Z at the end of the quarter, we or any other institution that reports to the SEC is entitled to ask for an exemption for that, and they grant it. So it's not a special exemption at all for Berkshire.
QUICK: OK. We also got a lot of e-mails that came in from international places. This one came in from Switzerland and D.L. Frischnecht writes in, he says in regards to the subprime loan and banking crisis, he says, `In physics we know the fundamental principle of conservation of energy, so where did all these billions go? Was it burned in heaps at the Pall Mall, or is economics maybe not really a science?'
BUFFETT: Well, he's a little beyond me there, but the mistake was in lending, you know, unwisely, as Shakespeare would say. There were a lot of dumb lending practices that were dumb lending practices in private equity financing, and that's why the banks are hung up with the loans. It isn't that the companies are terrible, but if you loan too much money on anything, you're going to lose money. And if a house has doubled in price, and somebody lends 95 percent of the price that's doubled in a couple of years, there's a good chance they're going to lose money. If they--if they lend money to people where their income isn't going to make the payments--allow them to make the payments, they're going to lose money. So there's of ways to lose money, and for a while people thought houses could do nothing but go up, so they paid no attention to any other factor. They didn't pay attention to borrowers' income, they didn't, you know, and you know...
QUICK: But somebody's making that money, right? Somebody's on the other side of the train.
BUFFETT: Well, the person who--the person who buys the house--well, the person who sold the house got a bubble-type price. The person who buys the house now buys it cheaper than other ways. I mean, every time anybody tells about somebody losing a lot of money by selling a house, there's somebody else that's buying it at a more attractive price than they would've paid a year or two ago.
QUICK: OK. Here's an easier one for you.
QUICK: Gordon writes in from Meadville, Pennsylvania and he asks, `What do you put on your hamburgers?'
EMAIL TEXT: What do you put on your hamburgers? Gordon Barrett, Meadville, PA
BUFFETT: I put a lot of salt.
BUFFETT: Oh, yeah, well, I salt everything a lot, and I--sometimes I put tomato and mayonnaise, sometimes I put pickles and, you know, and then I top it all off with a little See's Candy, wash it down with Cherry Coke.
QUICK: Well, happy breakfast everyone for anybody who's looking at home. Sam from Tarnation, Texas, writes in, `In December on CNBC, you said that if unemployment rose to 5+ percent, some quote "very large dominoes" would start to fall. So what are those dominoes and have they started to fall?'
BUFFETT: Well, I think--I don't think 5, I said it was at 4.7 then, but if it started moving up significantly.
BUFFETT: Five is still not a really high level at all, but it's going the wrong direction, and some factors are in play that I think will keep it going that way, but when people aren't employed, then a lot of bad things happen.
BUFFETT: And we're closer to seeing that now than we were when we talked in December.
QUICK: OK. Tory from Bellevue, Nebraska, writes in and said, `You support Barack Obama and Hillary Clinton to be President and Chief Executive of the United States. Would you support either one of them to your successor as President and Chief Executive of Berkshire Hathaway?'
EMAIL TEXT: You support Barack Obama and Hillary Clinton to be the President and Chief Executive of the United States. Would you support either one to be your successor as President and Chief Executive of Berkshire Hathaway? Tory L. Lucas, Bellevue, NE