Warren Buffett was interviewed on CNBC from 6:00 a.m. – 9:00 a.m.
Q4 2019 hedge fund letters, conferences and more
These are 30 highlights:
(1) Buying stocks is the equivalent of buying businesses.
(2) Stocks grow in value because of companies investing retained earnings.
(3) Stocks are cheaper than bonds. The 30 year U.S. Treasury is yielding 2% and, therefore, selling for 50 times earnings.
(4) Berkshire is a net buyer of stocks.
(5) Businesses will be worth a lot more in 20 years and 30 years from now. He cannot predict the stock market 6 months or a year from now.
(6) Retail is moving to online.
(7) 3 of 4 Berkshire airline positions are Buffett’s investments. The other is the position of one of his portfolio managers. Berkshire is not interested in buying an airline.
(8) Berkshire is selling Wells Fargo gradually over time.
(9) We have never seen such low interest rates. This hurts insurance companies paying 3% annuities while investing at 1%. This is good for the U.S. budget and borrowers.
(10) It’s better to adjust your consumption to your income rather than try to adjust your income to accommodate your consumption.
(11) He likes to buy stocks on 3% declines. He is not selling today.
(12) Berkshire allocates capital among its companies.
13) Coronavirus likely to last past summer and could affect Berkshire annual meeting.
(14) Barron’s recommended breakup of Berkshire would be tax inefficient.
(15) Berkshire shareholders are long-term holders.
(16) Wells Fargo did not attack their problem immediately.
(17) Geico is Buffett’s first love. Todd Combs’ role at Geico is not long term. He hopes Todd will return to Omaha soon. Progressive doing better job on pricing insurance.
18) Berkshire will outperform market in down markets and slightly outperform S&P 500 over time. It is comprised of 80% equities (stocks and businesses) and 20% cash.
(19) Reluctant to endorse Sanders even though he is a Democrat. He would vote for Bloomberg. Opposes giving employees 20% of stock and board seats (Sanders proposal).
(20) If Bloomberg was elected, Buffett would not buy his company.
(21) He has retired his flip phone and now uses a smart phone, but uses it only as a phone. Buffett said he’s been given several smart phones, including one from Apple’s Tim Cook.
(22) It makes no sense to buy Treasuries paying 1.4% (taxable) with government policy producing 2% inflation.
(23) “I don’t think of Apple as a stock. I think it’s our third largest business. It’s an incredible company and I should have appreciated it earlier”
(24) Directors are not independent when they are compensated $350,000 per year.
(25) Cryptocurrency has no value.
(26) Kroger’s investment made by one of his portfolio managers.
(27) Kraft Heinz can reduce its debt and pay its dividend. It is a good business but we paid too much.
(28) Ajit Jain and Greg Abel will sit near the front at the annual meeting so they can be available to answer questions.
(29) He is buying businesses every day without regard to coronavirus
(30) Major league baseball will recover from the Houston Astros sign stealing scandal.
Article by Dr. David Kass
