Warren Buffett Watch

  Friday, 22 Jun 2018 | 11:26 AM ET

Warren Buffett: 'Any time the market takes a sharp dive,' read this book

Despite a generally positive economic outlook, one asset manager warns that signs of a potential market crash are now appearing.

Regardless of whether it happens sooner rather than later, any time the market drops, Oracle of Omaha Warren Buffett recommends keeping a level head and picking up a copy of "The Intelligent Investor."

"Any time the market takes a sharp dive and you get tempted to sell or something, just pull out this book and re-read it," he says in a video posted on Gates Notes, adding, "When I read this book, it changed my life."

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  Friday, 22 Jun 2018 | 8:29 AM ET

Goldman Sachs: GE should suspend dividend for the next 18 months

General Electric should suspend its quarterly dividend for the next 18 months, Goldman Sachs wrote in a Thursday night note to clients.

"To avoid another dividend cut and potential rating downgrade we think the most prudent action would be for GE to consider suspending its common dividend for the next 18 months," Goldman Sachs said in the note.

Goldman Sachs said a dividend suspension would solve the two risks GE faces of a dividend cut and a credit rating downgrade "without sacrificing the long-term."

The embattled industrial conglomerate cut its dividend in half on Nov. 13, to 12 cents per share from 24 cents per share.

Some investors and analysts fear GE CEO John Flannery's turnaround plan for the embattled conglomerate will have to include another cut to the dividend. This concern sent GE shares tumbling on May 23 in theirworst single day of trading since April 2009. Flannery declined to comment that day about whether the company would cut its dividend again in 2019, instead telling analysts at a conference that GE would "have to see how this plays out" before deciding.

A cut to the dividend in 2019 is not in GE's plans, people familiar with the situation told CNBC's David Faber, who reported the news May 24. Flannery's remarks at the conference may have been misinterpreted, according to Faber's sources.

The company's shares fell Thursday after Faber reported GE was expected to make a significant announcement about its future by the end of the second quarter. Faber said it might not be a full breakup "as some had anticipated." But it will be a "significant announcement around reorganization of the company, including potentially something being spun."

GE stock rose 0.3 percent to $12.80 per share in trading Friday. Shares of GE are on track to decline 4 percent this week after GE was removed from the Dow Jones Industrial Average on Tuesday.

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  Thursday, 21 Jun 2018 | 1:24 PM ET

Mark Zuckerberg is the richest he's ever been — and he's about to beat Warren Buffett

Mark Zuckerberg is the wealthiest he has ever been and is poised to overtake Warren Buffett in net worth.

The two founders remain neck and neck on Bloomberg Billionaires Index on Thursday, both worth an estimated $81.6 billion, with Zuckerberg's Facebook fortune rising and Buffett's net worth falling. (The daily ranking of billionaire net worth is updated at the end of the trading day in New York.)

The gap between the two men's net worth was only $29 million as of Wednesday, according to Bloomberg. That day, Facebook shares rose 2.3 percent, landing Zuckerberg an extra $1.7 billion, according to Forbes.

Currently the fourth richest person in the world, Zuckerberg's net worth is the highest it has ever been, according to Bloomberg's tracking, which goes back to 2012 when Facebook went public.

Ninety-eight percent of Zuckerberg's wealth is in Facebook stock, according to an analysis by WealthX. He also owns a house estimated to be worth $9 million in Palo Alto, California, and land in Hawaii estimated to be worth $100 million, as well as liquid assets.

Facebook's stock price was trading up above $200 Thursday as of 1 p.m. EST.

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  Wednesday, 20 Jun 2018 | 3:59 PM ET

Meet Atul Gawande, CEO of the new Buffett-Bezos-Dimon initiative to reform health care

Surgeon, bestselling author and MacArthur Foundation "genius" Atul Gawande has been selected to lead the joint health-care venture formed by Amazon, J.P. Morgan and Berkshire Hathaway to tackle rising health-care costs, the companies announced Wednesday.

"I'm thrilled to be named CEO of this health-care initiative," Gawande, who starts on July 9, said in a statement. "I have devoted my public health career to building scalable solutions for better health-care delivery that are saving lives, reducing suffering, and eliminating wasteful spending both in the U.S. and across the world.

"Now I have the backing of these remarkable organizations to pursue this mission with even greater impact for more than a million people, and in doing so incubate better models of care for all. This work will take time but must be done," he said. "The system is broken, and better is possible."

Berkshire Hathaway CEO Warren Buffett, J.P. Morgan CEO Jamie Dimon and Amazon CEO Jeff Bezos have not yet rolled out an exact plan for the company or given it a name, but their goal is to lower health-care costs for employers while also improving treatment outcomes.

Gawande has been one of America's foremost authorities on health-care for years. He is a professor at the Harvard T.H. Chan School of Public Health and Harvard Medical School, and he practices general and endocrine surgery at Brigham and Women's Hospital. He's also the founder and executive director of Ariadne Labs, a health systems innovation center.

His bestselling books include "Being Mortal" and "The Checklist Manifesto," and he is a regular contributor to the New Yorker magazine.

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  Wednesday, 20 Jun 2018 | 3:14 PM ET

Buffett's partner once gave $20,000 to doctor picked to lead Berkshire, Amazon, JP Morgan venture

Dr. Atul Gawande, the newly selected CEO of the Amazon, J.P. Morgan and Berkshire Hathaway joint health-care venture, was once given $20,000 by Warren Buffett's longtime investing partner Charlie Munger.

Buffett, chairman and CEO of Berkshire Hathaway, made that revelation on CNBC's "Squawk Box" back in 2010.

At the time, Buffett said that Munger wrote a check after Gawande published an article in The New Yorker on high U.S. medical costs.

"[Munger] never met him, never had any correspondence with it," Buffett told CNBC's Becky Quick in March 2010. "[Munger] just mailed it to The New Yorker and he said, `This article is so useful socially,' he says, 'Just give this as a gift to the — to Dr. Gawande.'"

The article that caught Munger's eye was a 2009 story, "The Cost Conundrum."

Gawande, who has been a staff writer at The New Yorker since 1998, explored why two different towns in Texas that had similar demographics had huge variances in their health-care spending. He found the primary cause for the extreme costs in one town was "across-the-board overuse of medicine."

"Americans like to believe that, with most things, more is better. But research suggests that where medicine is concerned it may actually be worse," Gawande wrote in The New Yorker article.

"Spending on doctors, hospitals, drugs, and the like now consumes more than one of every six dollars we earn." He continued, "The financial burden has damaged the global competitiveness of American businesses and bankrupted millions of families, even those with insurance."

According to the Huffington Post, Gawande did not take the money from Munger and instead accepted it as a donation to the Brigham and Women's Hospital, where he practices as a surgeon.

CNBC has reached out to Gawande for comment.

Gawande will officially begin in his new role with the Amazon, J.P. Morgan and Berkshire venture next month, the three companies announced on Wednesday.

He will not give up his positions at Harvard or Brigham and Women's Hospital and will keep writing, including for The New Yorker.

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  Wednesday, 20 Jun 2018 | 9:52 AM ET

Jay-Z and Warren Buffett agree — having this mindset will help you succeed

Posted ByAli Montag

At first blush, 48-year-old rapper Jay-Z and 87-year-old investor Warren Buffett may seem like opposites: Jay-Z, born Shawn Carter, grew up during the 1970s in public housing in Brooklyn, New York. Buffett was raised in the '30s in Omaha, Nebraska, the son of a stockbroker and congressman. Carter is an artist and Buffett loves numbers.

And yet, the pair have more in common than their outrageous success (Carter's net worth is estimated to be more than $900 million and Buffett's tops $81 billion). The two share a mindset that they say has been critical in business: long-term thinking.

"It's the discipline not to get caught up in the moment," Carter told Forbes in a 2010 joint interview with Buffett.

There's always "the hot thing of the moment," Carter explained.

In music, it's "a hot, electro sound, or the hot auto-tune voice or the hot whatever's new and exciting," he said. In Buffett's world, it could be whatever stock is up.

"People tend to make emotional decisions based on that," Carter told Forbes. "They don't stick with what they know, you know, 'This is who I am. This is what I do.' They jump on this next hot thing.

"People fall in love with shiny things."

But being shortsighted isn't the way to build lasting success, say the pair.

"What you need is emotional stability," Buffett told Forbes during the interview with Carter. "You have to be able to think independently, and when you come to a conclusion you have to really not care what other people say. Just follow the facts and your reasoning."

For Carter, who released album "Everything Is Love" with Beyoncé on June 16, "It's just having the discipline, and the confidence in who I am," he told Forbes. "If I go into a studio and find my truth of the moment, there are a number of people in the world who can relate to what I'm saying, and are going to buy into what I'm doing. Not because it's the new thing of the moment, but because it's genuine emotion."

With Buffett, it's evident in his "buy and hold" investing style.

"If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes," Buffett wrote in his 1996 letter to shareholders for Berkshire Hathaway.

"The money is made in investments by investing," Buffett told CNBC in 2016, "and by owning good companies for long periods of time. If [investors] buy good companies, buy them over time, they're going to do fine 10, 20, 30 years from now."

It's true that Buffett has missed out on investing in buzzy companies that later turned out to be winners, like Amazon and Google ("The problem is when I think something will be a miracle, I tend not to bet on it," he said at the Berkshire Hathaway 2018 annual shareholder meeting in May). But big picture, Berkshire Hathaway has performed enormously: Its rising market value generated a 20.9 percent annual return from 1965 to 2017. In that time, the S&P 500 returned only 9.9 percent.

"It never bothered me if people disagreed with what I thought," Buffet told Forbes, "as long as I felt I knew the facts."

Don't miss: Warren Buffett and Mark Cuban met for lunch at Dairy Queen — here's what happened

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  Wednesday, 20 Jun 2018 | 9:28 AM ET

Buffett, Bezos, Dimon appoint Dr. Atul Gawande as CEO of their newly formed health care company

Dr. Atul Gawande will lead the joint health-care venture between Amazon, J.P. Morgan and Berkshire Hathaway, the three companies announced Wednesday.

Berkshire Hathaway CEO Warren Buffett, J.P. Morgan CEO Jamie Dimon and Amazon CEO Jeff Bezos announced a partnership in January to tackle rising health-care costs.

They will form a new company for the venture, which will be headquartered in Boston, a hub for biotechnology and medical research. It will be "free from profit-making incentives and constraints."

Gawande will start July 9. He currently practices general and endocrine surgery at Brigham and Women's Hospital and is a professor at the Harvard T.H. Chan School of Public Health and Harvard Medical School.

He is founding executive director of Ariadne Labs, a health systems innovation center. He's also written numerous books, including "Being Mortal" and "The Checklist Manifesto."

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  Wednesday, 20 Jun 2018 | 8:30 AM ET

Warren Buffett bought a pinball machine for $25 in 1946 to start 'the best business I was ever in'

Before Warren Buffett started making billions, he was a teen hustling to grow his bank account. His various early business schemes earned him $5,000, the equivalent of about $53,000 today, before he turned 20.

One of his most lucrative ideas involved setting up pinball machines in barber shops, he told longtime friend Bill Gates during a visit to a candy store in Omaha during this year's Berkshire Hathaway shareholder meeting: "I bought a machine for $25 in 1946 and built a small empire out of it."

Buffett was 17 at the time and let his friend Don Danley in on his business idea. Danley's side of the deal was to fix up the old pinball machine while Buffett handled negotiations with the barber, Frank Erico.

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  Wednesday, 20 Jun 2018 | 3:35 AM ET

The ‘crypto sculpture’ and how hyped things have become

Posted ByArjun Kharpal
Crypto Connection Sculpture

The cryptocurrency world has its detractors, with J.P. Morgan CEO Jamie Dimon and legendary investor Warren Buffett topping a long list. But, sometimes it seems to be inviting ridicule.

Eidoo, a company that bills itself as a cryptocurrency wallet and exchange, commissioned a 3-meter bronze sculpture showing a pregnant woman with a baby in her womb holding a smartphone. Located in London, it's meant to show what the future of cryptocurrencies could be.

But, quite frankly, it's ridiculous and undermines what companies are actually trying to do with cryptocurrencies.

Before I go on, I want to make clear that my feelings are ambivalent towards cryptocurrencies. Like any new technology, I don't want to dismiss or overhype it; I want to see how it develops. And while bitcoin, for example, has many well-publicized problems, many still believe it has a future as a global currency and store of value.

As part of its sculpture stunt, Eidoo also released a "Pokemon Go"-style game that allows users to walk around collecting real cryptocurrency. They are literally giving away money. And it's stunts like these that allow people to call out the crypto industry as a bubble or a fad and could hamper development in the sector.

For an outside observer, the statue and game highlight an immaturity among many of the firms in the space. And actually, I'd be less inclined to trust a business giving money away. As a company this could also put off investors.

The price of many of these cryptocurrencies, like bitcoin, ether and XRP, reached record highs and then plummeted. It was undoubtedly pure speculation.

Many start-ups are trying to position themselves as blockchain companies to distance themselves from the cryptocurrency world. Blockchain is the technology that underpins many of these cryptocurrencies. But at a recent fintech conference I heard someone joke (or say seriously, it was hard to tell): "Let's just call it a blockchain anyway, we'll get funding."

That comment highlights the way in which the term blockchain is being used by companies of all sizes, often in the wrong way.

Everywhere you look, whether it is about the cryptocurrencies themselves, or the blockchain technology that underpins it, there is hype. There will be a burst of the bubble where many companies and digital coins fail and investors get burned. Only a handful of these will remain as solid as Eidoo's crazy bronze statue.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.

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  Wednesday, 20 Jun 2018 | 12:39 AM ET

The inspiration for tech titan Jack Ma's Alibaba was an unlikely politician

Jack Ma may be seen today as an e-commerce visionary, but the billionaire businessman has revealed that he was first inspired to build his empire by the dreams of another Asian icon: Malaysia's current prime minister.

The Alibaba founder told reporters on Monday of how Prime Minister Mahathir Mohamad's plans to turn Malaysia's capital into a high-tech business center had driven him to launch a digital business aimed at similarly revolutionizing China's tech scene.

Ma said the idea had dawned on him 20 years ago when he read in a newspaper about Mahathir's "Multimedia Super Corridor," or MSC — part of an agenda to modernize the country.

"My inspiration came from the MSC," Ma said on a visit to Putrajaya, a city just outside of Malaysia's capital, Kuala Lumpur.

"I started my business in 1995. [I] started the China Pages — the first internet company in China — and I was wondering where to go," recalled Ma. "[I was wondering] how internet, how this kind of technology, digital technology can empower society, empower people."

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About Buffett Watch

  • Warren Buffett is arguably America’s most-admired and most-followed investor. Buffett is the largest shareholder and CEO of Berkshire Hathaway and one of the world’s most famous and most generous philanthropists. Legions of investors - from all walks of life - follow Buffett's homespun investment philosophy: invest in what you know, invest in value. Here on CNBC.com's Warren Buffett Watch, we’ll keep you up to date on what the “Oracle of Omaha” is doing by following Buffett's trades, words and deeds.