Buffett Watch

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In October 2008, in the midst of the financial crisis, Berkshire Hathaway CEO Warren Buffett made a late-night phone call to then-Treasury Secretary Henry "Hank" Paulson, with an idea about how the government might be able to turn the economy around.

Paulson was asleep. He'd had a busy night working through various policy ideas with his team to restore confidence in Wall Street.

"I was exhausted," he recounts on Vice Special Report's "Panic: The Untold Story of the 2008 Financial Crisis," a documentary that debuted Monday night on HBO. It features interviews with private sector and government officials on the front lines of the crisis, including former Presidents Barack Obama and George W. Bush.

At the time, Congress had just passed the Emergency Economic Stabilization Act, or the "bailout bill" as it came to be known, and created a $700 billion Troubled Assets Relief Program to purchase assets of failing banks. But these actions were not enough to calm investors.

WATCH: In-depth interview with Warren Buffett on the 2008 financial crisis

Mall and shopping center owners across the U.S. are starting to talk about change, realizing that if their centers keep the same antiquated models, anchored solely by department stores, they risk them going dark in the coming years.

Roaming the halls of the largest retail real estate conference on the East Coast this past week, put on by ICSC, were more digital brands than traditional ones. Companies that started selling goods on the web — like Warby Parker, Untuckit, Allbirds, M.Gemi and Winky Lux — were taking meetings with landlords about opening stores. Also making a big splash were new concepts like Neighborhood Goods, Fourpost, Brand Box and HiO, which are pushing a new model where a slew of brands come together in one space, on a rotating basis, to sell merchandise targeting younger generations of shoppers.

"We are all getting more creative," Michael Glimcher, CEO of Starwood Retail Partners, told CNBC. Starwood is privately held and owns 30 malls and lifestyle centers across the U.S., including Metreon in San Francisco and The Shops at Willow Bend in Plano, Texas.

"What you realize as a landlord is that — by being more creative — it makes every mall different and every [shopping] trip different" for customers, he said. "It historically has been us asking: What is the best retail use for a property? Now it's: What is the highest and best use for this real estate" no matter if it's a Macy's store, an office complex, a medical facility or apartments.

As 2018 comes to an end, it's been announced that more than 146 million square feet of retail space will be shut across the U.S. in malls and shopping centers, according to real estate research group CoStar. That's far more than the roughly 105 million square feet of space that was announced for closure in 2017.

Sears, typically occupying more than 100,000 square feet for each of its stores, has contributed to a large share of closures this year, in addition to Toys R Us and Bon-Ton. And Sears' future is still uncertain as it's in the midst of bankruptcy court proceedings, with hundreds of stores still open for business. But many real estate owners and investors said this week at ICSC that they've already started to plan for a complete liquidation, should the department store chain be forced to shut all of its remaining locations.

"The [mall] anchors going out of business deserve to go out of business," Pyramid CEO Steve Congel told CNBC. Pyramid is a privately held company that runs more than a dozen malls across the country, including Palisades Center in New York.

"The consumer changes and preferences change," Congel said. "You have to not only reinvest but you have to provide people with what they want. … We're letting the consumer dictate what to put in our mall."

An industry that has long been opposed to negotiating short-term deals with tenants — because they promise a less stable flow of rent income — is now welcoming pop-up marketplaces like Brand Box or The Edit. And that's as digital brands, which were initially not thinking about opening stores, are investing heavily in bricks and mortar. Commercial real estate firm JLL has predicted e-commerce companies including Casper and Adore Me will open at least 850 stores, altogether, in the next five years.

According to Glimcher, the retail real estate industry is "turning a corner." And Sears filing for bankruptcy helped with that, he said, even though it meant hundreds of Sears and Kmart stores going dark. "Now it can all wash out."

Landlords including Simon and Seritage have already come out and said they see Sears store closures as opportunities to create more profitable centers. Seritage in particular is in a unique position in that its business was created entirely from Sears stores — as a spinoff — in 2015. But Seritage CEO Ben Schall has told shareholders that the real estate investment trust has the ability to redevelop its assets thanks to a $2 billion loan it received from Warren Buffett's Berkshire Hathaway.

"One would like to believe there's a mass answer [to fill closed stores] but there's not," Neill Kelly, head of the retail restructuring practice at commercial real estate services provider CBRE, told CNBC. "But that doesn't mean the better-positioned malls won't use the opportunity to create value, provided the ... store closures don't exceed their ability from a capital standpoint to repurpose those spaces."

Business strategist and bestselling author Tony Robbins knows the importance of surrounding yourself with leaders: That's why he pays attention to some of the world's most successful people, including billionaire investors Warren Buffett, Ray Dalio, Carl Icahn and Richard Branson.

There's a lot to learn from these business leaders, but Robbins says the most important takeaway might be that "none of them let the motion of the market control them," he tells CNBC Make It.

"Most people live with so much fear and anxiety in their lives and these people just learn to say: 'This is part of life. There's going to be ups, there's going to be downs, and my job is never to let what's happening in the moment define me.'"

In other words, they stay calm, and stay the course, even when the market is fluctuating.

This lesson is particularly relevant right now, given recent stock market volatility. On Thursday, the Dow Jones Industrial Average dropped nearly 800 points, bringing two-day losses to more than 1,500 points.

Legendary investor and billionaire Warren Buffett has a tip for young people: Focus on learning how to write and speak clearly.

"The one easy way to become worth 50 percent more than you are now — at least — is to hone your communication skills — both written and verbal," says Buffett in a video posted on LinkedIn on Monday.

The video was posted by Michael Hood, the co-founder of the Toronto based start-up Voiceflow, which enables users to design, build and launch skills for Amazon's smart speaker, Alexa, without needing to know how to code.

"If you can't communicate, it's like winking at a girl in the dark — nothing happens. You can have all the brainpower in the world, but you have to be able to transmit it," Buffett continues.

"And the transmission is communication," says Buffett, who is currently worth more than $86 billion, according to Forbes.

In May of 2007, as the markets were reaching new records (and moving closer to a bear market precipice and the financial crisis), Warren Buffett and Charlie Munger were discussing intrinsic value at the annual Berkshire Hathaway conference. The decade-long run for the current bull market and widespread concerns about elevated values in U.S. stocks leading to days like Tuesday, when the Dow Jones Industrial Average fell by close to 800 points, are reminders that getting at the true value of corporations is as important as it has ever been.

The concept of intrinsic value came up earlier this year when Buffett made the decision to change his trigger for buying back Berkshire shares from a quantifiable discount to the company's book value (1.2 times book value) to a discount to intrinsic value. In moving back to monitoring intrinsic value, Buffett invoked the method also used by J.P. Morgan CEO Jamie Dimon.

As buybacks across the corporate sector continue to reach new records, it becomes more questionable whether all of these companies are basing their share repurchases on a valuation metric that uncovers a discount in a stock's trading price to intrinsic value — or are just buying back stock to keep shareholders happy and prop up earnings. Jamie Dimon said on Tuesday at a Goldman Sachs conference that buying back stock when market prices are high is not a wise idea, and companies should be reinvesting in the business instead.

Now the issue of valuation isn't limited to buyback analysis. As many sectors within the S&P 500, including one of Buffett's favorites (banking) are in correction, every investor should be questioning the value of what they own in their stock portfolio.

Last year, Alexandria Ocasio-Cortez, the youngest woman ever elected to Congress, was working as a waitress at a restaurant near Union Square in New York City. Warren Buffett is the chairman and CEO of Berkshire Hathaway and, according to Forbes, he's worth $87.4 billion.

It may seem like the two would have little in common, but they have a similar take on the subject of taxes.

"Taxes should respect a person's station in life, including working people + parents. It's ludicrous that we tax Warren Buffet[t]'s secretary more than we tax him — and he has said as much," tweeted Ocasio-Cortez. "Sensible + conscientious people of all incomes want a fair society."

The 29-year-old included a link to a CNN article from 2013 that quotes an interview Buffett did with CNBC, in which he says that he is probably "the lowest paying taxpayer in the office" at Berkshire Hathaway. Buffett, who's long been vocal on the subject, explained that even if the marginal tax rate rose for wealthy wage earners, because much of his wealth comes from investment gains he would still pay a lower percentage in taxes than his secretary.

During the 2012 State of the Union address, Buffett's then-secretary Debbie Bosanek was seated next to Michelle Obama when President Barack Obama said,"Right now, Warren Buffett pays a lower tax rate than his secretary."

The stock market, which has had a volatile year, is plunging again. The Dow Jones industrial average fell over 700 points on Tuesday and the S&P 500 dropped 2.8 percent, as traders fretted about a possible economic slowdown and trade between the U.S. and China.

But for the average person, shifts in the market, even ones as dramatic as the ones we've seen this year, shouldn't be cause for panic. During times of volatility, seasoned investors Warren Buffett and Ray Dalio agree that it's best to stay calm and stick to the basics.

"Don't watch the market closely," Buffett told CNBC in 2016 amid wild market fluctuations. "If they're trying to buy and sell stocks, and worry when they go down a little bit … and think they should maybe sell them when they go up, they're not going to have very good results."

Buffett emphasized that holding onto investments long-term is crucial to having them pay off. "The money is made in investments by investing and by owning good companies for long periods of time," the Berkshire Hathaway CEO told CNBC. "If they buy good companies, buy them over time, they're going to do fine 10, 20, 30 years from now."

Dalio, the founder of investment firm Bridgewater Associates who is worth an estimated $14.5 billion, agrees. Though it's tempting to sell when the market begins to drop, he says, giving in to your fear is not a sound strategy.

"You can not possibly succeed that way," Dalio said at the Harvard Kennedy School's Institute of Politics. "You've got to do the opposite. It's when you're not scared you probably want to sell, and when you are scared, you probably want to buy."

Books shaped the lives of top investors, leaders and entrepreneurs in important ways. One book equipped Warren Buffett with the investing mindset that helped him become a business magnate. Another book influenced the outlook that helped Oprah Winfrey create the distinctive talk show that made her a household name.

CNBC Make It has gathered 10 books that 10 billionaires say changed how they live, think or work. From fiction to self-help, these books helped influence some of the most memorable careers of our time.

Stocks traded higher Wednesday after some major tech shares, including Apple and Facebook, saw steep losses earlier in the week.

On Tuesday, what are called FAANG stocks — Facebook, Apple, Amazon, Netflix and Google — were down more than 20 percent from their highs. But Facebook is now beginning to rebound.

And, despite all the recent volatility, an investment in the social-media giantat the time of its initial public offering on May 18, 2012, would have been a safe bet. A $1,000 investment then would be worth more than $4,600 as of Nov. 21, according to CNBC calculations, including price appreciation and dividend gains reinvested.

While Facebook's stock has performed well over the years, any individual stock can over- or under-perform and past returns do not predict future results.

And the company still faces a number of challenges.

CNBC: Facebook stock as of Nov. 20, 2018.

On Tuesday, Facebook shares hit their lowest level since February 2017 and were poised to close their third straight month in the red. That would mark the company's longest quarterly losing streak since 2013 and its first full year of losses since its IPO. Shares have declined about 25 percent so far this year.

This series of losses come amid criticisms of chief operating officers Mark Zuckerberg and Sheryl Sandbergfor their handling of several high-profile issues, including Russian attempts to influence the U.S. election in 2016 and the Cambridge Analytica scandal, and signs that the company may have a hard time continuing to grow at a rapid pace, especially as younger users peel off.

So many investors remain wary. "The market has been absolutely punishing companies with decelerating growth and that's exactly what you're seeing with Facebook," said Mark Tepper, chief executive officer of wealth-management firm Strategic Wealth Partners, on CNBC's "Trading Nation."

"I don't think there's any light at the end of the tunnel anytime soon. They're making some pretty aggressive investments to deal with improving their ad transparency, getting rid of fake accounts, eliminating fake news, and that's going to be a drag on profits in the near term."

Everyone is concerned about an overvalued stock market. And they should be. You don't reach a full decade of a bull run without asking the reasonable question about stock values. A simple explanation that Warren Buffett once gave for knowing when the market is overvalued doesn't present a full-throated endorsement of market bargains being plentiful right now.

The Berkshire Hathaway chairman and billionaire investor told attendees at the Berkshire annual conference back in May 1998, only a few months before stocks plummeted, that the easiest way to gain confidence that the market is not overvalued is if two conditions are met: "Interest rates remain at or near present levels or go lower, and that corporate profitability in the U.S. stay at the present — or close to the present — levels," which at the time Buffett was speaking were "virtually unprecedented."

"If the two conditions are met," he said, "I think it's not overvalued. And if either of the conditions is breached in an important way, I think it will turn out to be overvalued."

The comments were actually a reinforcement of what Buffett had written in his annual letter to shareholders the year before.

Anyone who follows the markets knows there are widespread concerns right now that stocks are at peak earnings power. Meanwhile, the Federal Reserve is raising interest rates, and it is not only President Donald Trump blaming it for the recent stock market woes, hedge fund giant Ray Dalio said on Thursday that the Fed is causing asset prices to go down.

It would seem that there is good reason to be reminded of Buffett's words about interest rates. In the late '90s, Buffett also provided a rare presentation at the Allen & Co. conference for industry moguls, in which he said that when interest rates are low, companies get too much easy money and there is no place for investors that makes sense but stocks. Ultimately, the problems will surface and no longer support a rising market. Some of today's tech giants would have been good long-term bets regardless, but about many other stocks, Buffett was right.

Other than his huge stake in Apple — which certainly fits another Buffett mantra, buying great brands that maintain a competitive moat around their value — the billionaire investor hasn't made a major acquisition in years, even though he is sitting on more than $100 billion in cash. The biggest deal he recently made was to buy back near-$1 billion in shares of his own company's stock, a buyback decision he said would be made only at times when he felt Berkshire was trading below its intrinsic value.