Buffett Watch

  Tuesday, 26 Mar 2019 | 12:36 PM ET

7 mistakes millionaires like Warren Buffett and Bill Gates never make—that average people do all the time

There are two things we know for certain about millionaires: They know exactly where their money is going, and they know exactly what not to do with it.

If you want to reach millionaire status, the single most important thing you can do is to learn from the likes of the super wealthy, from Microsoft co-founder Bill Gates to Google's ex-CEO Eric Schmidt to Berkshire Hathaway CEO Warren Buffett.

Here are seven things you'll never find the world's richest people doing, and how you can adopt their healthy financial habits into your own life:

»Read more
  Monday, 25 Mar 2019 | 9:00 AM ET

Here's what Warren Buffett thinks about climate change and investing

Warren Buffett, Charlie Munger and Bill Gates attend a product launch in Beijing, China for BYD, the electric battery, car, and solar energy company in which Munger long ago led an investment for Berkshire Hathaway.
VCG | Getty Images
Warren Buffett, Charlie Munger and Bill Gates attend a product launch in Beijing, China for BYD, the electric battery, car, and solar energy company in which Munger long ago led an investment for Berkshire Hathaway.

Warren Buffett, chairman and CEO of Berkshire Hathaway, is for many people the first source to consult when it comes to the development of an investing philosophy. The billionaire investor has has never shied away from sharing his views with the public, either — and not only when it comes to stock market value. Issues of politics, social policy, ethics and simply making money the right way are themes that Buffett has returned to many times.

But one place where Buffett has always drawn the line is making clear his personal views have no place in how he runs Berkshire Hathaway for shareholders. He may be for more taxes on the super-rich, but that doesn't mean he is against a tax break that helps a Berkshire business. He isn't going to tell a company he owns how to respond to calls for more corporate support for gun control, an issue that came up at least year's Berkshire Hathaway annual meeting.

"I don't believe in imposing my political opinions on the activities of our businesses," Buffett said.

On one issue of rising social and investing importance, Buffett is still making many trade-offs: climate change.

Berkshire Hathaway Energy, Buffett's large utility conglomerate, owns western utility PacifiCorp, which has a sizable fleet of coal power plants. Berkshire's Burlington Northern railroad ships a lot of coal, too. But the Berkshire utility company also is one of the biggest wind energy producers in the U.S. through its MidAmerican Energy utility affiliate based in Iowa, while its NV Energy in Nevada is increasing its renewable generation from 24 percent to a percentage in the high 40s by 2023, mostly using geothermal and solar power.

Berkshire's largest business of all is insurance, which in recent years has seen massive claims related to natural disasters.

»Read more
  Friday, 22 Mar 2019 | 10:25 AM ET

Ex-Goldman director Rajat Gupta says he's innocent seven years after insider trading conviction

Rajat Gupta, retired head of consulting firm McKinsey & Co. and a former Goldman Sachs board member, was convicted nearly seven years ago of insider trading, and spent 19 months behind bars.

Now, in his first interview since his release from prison in 2016, Gupta maintained his innocence, and said he wants to rebuild his life.

Gupta told CNBC's Andrew Ross Sorkin that he is innocent, despite being found guilty by a jury of three counts of securities fraud and one conspiracy charge, and not guilty on two other charges. He said his biggest regrets are speaking too freely about Goldman's corporate secrets, and not testifying at his trial.

"I was going to testify. And in the very end, they wore me down and convinced me I shouldn't. And to me, it was a personal failure," he told Sorkin.

Gupta was convicted of illegally sharing information about Goldman Sachs to hedge fund manager Raj Rajaratnam, who is serving 11 years in prison for insider trading. The case involving Gupta revolved around the day in 2008 when Warren Buffett agreed to invest in Goldman Sachs. After the board discussed that investment, Gupta was charged with calling Rajaratnam just 16 seconds later and divulging the Buffett news.

At the time of his sentencing, Gupta was one of the most prominent figures to face prison in the government's widespread crackdown on insider trading.

Gupta told Sorkin that he spent time with Rajaratnam in prison, and ultimately forgave him. "We played Scrabble in prison together. We played chess. We had breakfast together."

"I told him, 'Raj, I am here because of you,'" Gupta said. "He's not the apologizing type, so he didn't say, 'I'm sorry.'"

»Read more
  Thursday, 21 Mar 2019 | 12:26 PM ET

If you invested $1,000 in General Motors in 2012, here's how much you would have now

Shares of automaker General Motors fell more than 3 percent Wednesday after BMW warned of lower profits thanks to international trade tension and potential ripple effects from Brexit.

Still, if you invested in GM in 2012 — after the company officially came out of bankruptcy and began recovering from the major financial crisis that hit the auto industry — you would have made a profit, although a small one: According to CNBC calculations, a $1,000 investment made then would be worth just over $1,800 as of March 21, 2019, a total return over 80 percent. In the same time frame, by comparison, the S&P 500 was up more than 100 percent.

While the company's stock has trended slightly upward over the years, any individual stock can over- or under-perform and past returns do not predict future results.

Some analysts anticipate problems for the auto industry overall. Per BMW's annual report, "political and economic developments in Europe remain increasingly uncertain," and the "unforeseeable impact of Brexit" could elevate trade tensions with the European Union and China.

CNBC: GM stock as of Mar. 21, 2019

"A possible introduction of further trade barriers … could have a significantly adverse impact on the BMW Group's operations through less favorable conditions for importing vehicles," the report read. "Moreover, ountermeasures by the USA's trading partners could slow down global economic growth and have a greater-than-expected adverse impact on the export of vehicles."

In an email to CNBC last month, CFRA analyst Garrett Nelson said, "we are very concerned about GM's worsening vehicle sales trends," which were down more than 13 percent in the fourth quarter, "and the company's exposure to a slowing China market, which we think could challenge the company's ability to hit their full year earnings guidance."

President Donald Trump — who slammed GM in November after it announced plans to cut 14,000 U.S. and Canadian jobs and cancel some of its popular car models — could also impose tariffs on cars imported to the United States, an idea causing further investor anxiety.

At a rally in Ohio on Wednesday, Trump also put pressure on the company to reopen its plant in the state and reverse its plan to invest $2.65 billion in two of its Brazilian plants in Sao Paulo.

»Read more
  Thursday, 21 Mar 2019 | 10:06 AM ET

Warren Buffett: 'This $100 course gave me the most important degree I have'—and it's why I'm successful today

To say that Warren Buffett is a wealth of wisdom is an understatement.

A few years ago, I got the once-in-a-lifetime opportunity to interview him for my book, "Getting There: A Book of Mentors," which features essays and interviews from the some of the world's most successful people, as well as their indispensable career and life lessons.

In getting to know "The Oracle of Omaha," I learned something incredibly surprising: Up until the age of 20, he had a fear of public speaking. "Just the thought of it made me physically ill," the billionaire shares in his "Getting There" essay. "I would literally throw up."

Who would have thought that one of the most successful investors in the world once had a fear of public speaking?

The Berkshire Hathaway CEO divulges that he purposely selected courses in college where he didn't have to stand up in front of the class and arranged his life so that he would never find himself in front of a crowd. If he somehow found himself in that situation, he admits that he could 'hardly even say' his own name.

During Buffett's time at Columbia Business School, he saw an ad in the paper for a Dale Carnegie public speaking course for college students. "I figured it would serve me well," he recalls. "I went to Midtown, signed up and gave them a check. But after I left, I swiftly stopped payment. I just couldn't do it. I was that terrified."

After he graduated, Buffett returned to Omaha and got a job as a salesman of securities. But the problem still lingered: "I knew that I had to be able to speak in front of people," he writes. "So again, I saw the ad in the paper and went down to sign up; but this time, I handed the instructor $100 in cash. I knew if I gave him the cash I'd show up."

And he did show up.

»Read more
  Thursday, 21 Mar 2019 | 9:05 AM ET

The winner of Warren Buffett's March Madness office pool could get $1 million a year for life

Your office's March Madness pool most likely pales in comparison to what billionaire Warren Buffett is offering his employees if they can predict which teams make this year's Sweet 16 of the men's NCAA tournament.

The investor known as the "Oracle of Omaha" has a penchant for making multimillion-dollar bets that test his employees' predictive abilities, and this year's no different. Buffett is once again offering to pay $1 million a year for life to any of the employee of Berkshire Hathaway or its subsidiaries who accurately predicts the results of the first week of March Madness games.

Buffett confirmed that the multimillion-dollar challenge is back on this year in an interview with CNBC in February. Unfortunately for most basketball fans, the billionaire's offer is only available to the roughly 375,000 people who either work for Buffett's investment firm, Berkshire Hathaway, or one of that company's various subsidiaries (including insurance company Geico and fast-food chain Dairy Queen).

"All you have to do is get through the first bracket to win $1 million, assuming nobody else wins at the same time—then you split the million," Buffett told Becky Quick on CNBC's "Squawk Box."

If more than one employee manages to fill out a March Madness bracket that correctly picks the college teams that reach this year's Sweet 16, then those winners will split the $1 million prize each year for the rest of their lives, Buffett explained. And, if no one submits a perfect bracket for the first weekend of March Madness, then whoever lasts the longest into the tournament without missing a pick will win $100,000 (or split that amount in the case of multiple winners).

Buffett first offered a big March Madness prize in 2014, with a whopping $1 billion offer to the public (not just his employees) for anyone with a perfect bracket all the way through the NCAA tournament. Unsurprisingly, no one claimed that prize, since the odds of picking a perfect bracket are roughly one in 2.4 trillion, according to one estimate. (In fact, according to the NCAA, no one has ever officially picked a perfect bracket and the best anyone has ever done is to predict the first 39 games of the 67-game tournament, in 2017.)

However, in recent years, Buffett has tried to make his March Madness challenge a little bit easier (you only have to be perfect up to the Sweet 16, instead of the entire tournament) while limiting the contest to his many employees. Still, no one has yet claimed the big prize from Buffett.

»Read more
  Monday, 18 Mar 2019 | 11:15 AM ET

Warren Buffett says US health care must be revamped or the government could make it worse

Posted ByLiz Moyer
Jeff Bezos, Warren Buffett and Jamie Dimon.
Jeff Bezos, Warren Buffett and Jamie Dimon.

Complacency will make fixing the nation's health-care system a daunting task, according to Warren Buffett, whose Berkshire Hathaway recently joined with J.P. Morgan Chase and Amazon to develop a new model for their 1 million employees.

Buffett along with Amazon's Jeff Bezos and J.P. Morgan's Jamie Dimon recently formed the health-care joint venture Haven to figure out how to deliver better health care at a lower cost. One of the problems with the current system, Buffett said in an interview for Yahoo Finance, is that health-care providers and others entrenched in the current model don't have any incentive to change things.

"We have a $3.4 trillion industry, which is as much as the federal government raises every year, that basically feels pretty good about the system," Buffett said. "There's enormous resistance to change while a similar acknowledgement that change will be needed. And of course if the private sector doesn't supply that over a period of time, people will say 'we give up, we've got to turn this over to the government,' which will probably be even worse."

»Read more
  Monday, 18 Mar 2019 | 9:43 AM ET

Want to make a great first impression at your new job? Here are 4 things every boss is dying to hear

Succeeding in the workplace is highly predicated upon communication. This is especially important when it comes to interactions with your boss.

If you want to make a first great impression (and get a promotion quickly), make it a priority to communicate the following—starting on day one:

»Read more
  Friday, 15 Mar 2019 | 6:46 PM ET

If you invested $1,000 in Boeing 10 years ago, here's how much you'd have now

Shares of aircraft-manufacturing company Boeing took a hit early this week, losing $26.6 billion in market value Monday and Tuesday, following a deadly crash of one of its 737 Max 8 airplanes in Ethiopia.

That model has since been grounded by the Federal Aviation Administration, as well as by aviation regulators around the world.

Still, if you invested in Boeing 10 years ago, that decision would have paid off: According to CNBC calculations, a $1,000 investment in 2009 would be worth more than $14,000 as of March 15, 2019, a total return over 1,000 percent. In the same time frame, the S&P 500 was up 270 percent. So, your $1,000 would be worth just over $3,700, by comparison.

Any individual stock can over- or under-perform, however, and past returns do not predict future results. Boeing paused delivery of 737 Max planes after the Ethiopia crash, which came less than five months after another deadly crash in Indonesia involving the same model.

This left several major airlines, including United, American and Southwest scrambling to rebook passengers and reassign planes. Those companies said they would waive ticket-change fees and fare differences for those affected by the FAA's grounding order.

Flight-booking site Kayak even introduced a new search feature that allows users to exclude specific plane models, according to co-founder and chief executive officer Steve Hafner.

CNBC: Boeing stock as of Mar. 15, 2019

Fortunately for Boeing, while shares plunged more than 10 percent early this week, they ticked back up by as much as 3 percent Friday. And the company announced plans to roll out a software fix in the next few weeks.

Though, Bank of America analyst Ronald Epstein said Thursday that the fix could take a lot longer: "Once Boeing identifies the issue … the most likely scenario is the company will take about 3-6 months to come up with and certify the fix," he said in a note.

Hafner says he expects the 737 models to be grounded only a few months and that travelers will likely be booking flights on them again soon: "They're out of service on a temporary basis," he said on CNBC's "Squawk Alley." "In reality, airlines are still planning on flying those planes in the summer. People want security and comfort when they fly."

In the meantime, Boeing said in a statement it will "continue to build 737 Max airplanes, while assessing how the situation, including potential capacity constraints, will impact our production system."

»Read more
  Thursday, 14 Mar 2019 | 9:33 AM ET

The 1 question successful investors—like Warren Buffett—always ask themselves

Imagine taking a six-hour flight from New York to Los Angeles, but right before taking off you learn the airline has a new policy: Reclining your seat is negotiable.

This poses two questions: First, how much are you (the recliner) willing to pay the person behind you (the reclinee) in order to push your seat back four inches? Second, what does your legroom cost the reclinee?

Researchers ran an experiment and found that recliners were only willing to pay about $12 to recline, while reclinees weren't willing to sell their legroom for less than $39.

The difference can be explained by what behavioral economists call the "endowment effect," where a person places more value on what they have than what they don't have. So if you were the reclinee, your legroom is $27 more valuable than your neighbors, simply because it belongs to you.

In his book, "Stumbling on Happiness," the psychologist and author Daniel Gilbert explains how the endowment effect is woven throughout our lives. "Consumers evaluate kitchen appliances more positively after they buy them, job seekers evaluate jobs more positively after they accept them, and high school students evaluate colleges more positively after they get into them," he writes.

In other words, a toaster, a job and a university are all shiny and lovely. But once they become ours, they instantly become shinier and lovelier.

»Read more

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.