Highlights From Liz Claman’s Interview With Buffett, Munger, Witmer, Gates [2013]

Warren Buffett Bill Gates Liz Claman FOX 2013

On Monday, May 6 2013, FOX Business Network’s (FBN) Liz Claman spoke with Berkshire Hathway’s CEO & chairman, Warren Buffett, vice-chairman, Charles Munger, Berkshire’s newest board member, Meryl Witmer, and Microsoft chairman & Berkshire director, Bill Gates.  For those of you who don’t know, Bill Gates is a long time friend of Buffett, and also a long time investor in Berkshire Hathaway. Meryl Witmer is a general partner at Eagle Capital, and will be the company’s first new director since 2009.

During the interview Buffett answered questions regarding the economy, interest rates and housing, his recently acquired newspaper businesses, as well as the U.S. Sequester, and the markets.  Bill Gates also discussed Apple stock, the competitive dynamics of the computer market, the market cap of Berkshire, and Education.  Charlie Munger commented on Bitcoin, corporate taxes, and his motivation.

I like Liz Claman’s interviews with Buffett, Munger, Gates, particularly because it includes Bill Gates known to most people because of his affiliation with Microsoft.  However, Bill Gates has extraordinary business acumen and is a very successful investor in his own right!

Thank you to FOX Business Network, for sharing this with The Investment Blog!

 

Excerpts from the FOX Business Network interview:

CREDIT: FOX Business Network

On interest rates:

“Eventually interest rates are going to go up and I don’t know when that will happen.  And certainly low interest rates have helped our business, they’ve helped the economy, they’ve hurt savers who are relying on fixed income type investments.  I think overall the policy has been sound and there’s no question that Berkshire Hathaway is better off today and the American people are better off today because of the actions of Ben Bernanke and keeping interest rates so low.  It won’t go on forever and it’s going to be very interesting when the first signal comes out that they’re going to advance.”

On how he is positioning now for interest rates to increase or remain low:

“When we borrow money, we’re thinking in terms of long maturities.  Now, we don’t borrow much money.  I rarely borrow money and our railroad borrows money and our utility business borrows money, and we are doing a fair amount of 30-year maturities when we do that.  Anybody who’s borrowing money should borrow out for a long period of time.  And if you ever want to get a mortgage, today is the day to get a mortgage.”

On whether he thinks the mortgage interest deduction will be eliminated:

“I think it’s unlikely to happen.  If it were to happen, it would be part of an enormous tax package.  It’s certainly not going to happen in isolation or just with a few items.  And there’s a big constituency out there for maintaining the mortgage interest deduction.”

On whether he is part of the silent lobbyist to keep the mortgage deduction in place:  

“No, we wouldn’t be lobbying on something like that at all.  But the question is whether you get a whole package that encompasses that and many other things.  If you eliminate deductions perhaps you would have lower rates, for example.  So you have to look at the package that finally gets introduced.”  

On whether he thinks eliminating the mortgage deduction would derail the housing recovery:

“It would depend what it was combined with.  I mean, if you had lower tax rates, but eliminated the interest deduction, it’s hard to measure.  You’d have more than one variable affecting them.”

On what he thinks of single-family dwelling as an investment:

“I said a year ago that I thought it was a very good investment for people that knew they were going to live in that locale for a considerable period of time, found a house I liked and I told them to take out a very, very long-term mortgage.  And I would say the same thing today.  It’s not quite as attractive as it was a year ago, but it’s still an attractive holding, but only if you’re going to keep it for a long time.”

On how long the Federal Reserve can continue quantitative easing:  

“I don’t know the answer to that.  I do know that it surprised me how long we’ve done it already and it has had no inflationary effect.  And of course I would expect that — I’ve been — I’ve been wrong on expecting inflation for some time, but I would say if you keep building the Fed’s balance sheet and building the reserves of banks and so on, A, I think it’s an interesting question how do you reverse that and, secondly, I do think it has inflationary consequences down the road.  But I’ve been wrong.”

On whether the consequences of quantitative easing will be an issue for Federal Reserve Chairman Ben Bernanke to solve or his successor:

 “Well, if I were the president, I’d have him keep the baton.”

On whether he is considering buying local radio stations or local TV stations:

“No, I’ve got a special place in my heart for newspapers.  They’re not going to be — they’re not going to grow in value.  Look, we bought them at very reasonable prices.  We will get a decent return on our money, but they’re not going to move the needle at Berkshire.”

On whether he is happy with the way the Washington Post has done:

“Well, Don Graham’s done a great job, sure, but the trends are against — in my view, the trends are more adverse with the really big metropolitan papers.  So we’re — we’re in decent sized communities, but not the big metropolises.”

On whether the Washington Post should spin off the Stanley Kaplan business:

“I’m not big on spin-offs generally.  I mean, if you bring them into the fold for a reason, unless that reason changes in some dramatic way, why spin them off?”

On which company sales surprised him the most this weekend:

“Well I haven’t gotten in all the figures in yet, but it looks to me for example that our furniture store in one week is going to do $40 million. And if any of you are running furniture stores, $40 million in a week is extraordinary.  We did $8.3 million on Saturday.”

On whether GEICO will do a million policies this year:

“I’m sure hoping we do.  And that’s a million gain in policies, on a base of 11-million-4.  So I think we’ll grab a lot of market share this year.”

On what he thought of Seabreeze Partners president Doug Kass’ questions:

“Well he was there to represent the short interest.  And I’m a little prejudiced, but I don’t think the short interest has much of a case, actually, so he had a difficult assignment.  And here he is with 37 or 38,000 people that are long the stock, so we put him in a difficult situation and, you know, I think he — it wouldn’t be easy for him.  But we invited him, he was an invited guest.”

On whether Kass will be the short seller he has next year:  

“I don’t know.”

On whether he will have another short seller next year:

“I think so.  We’ll wait and see what playback we get.  We always get a lot of reaction from shareholders and they tell us what they’d like changed and we’ll see what we do next year.”

On how we get gridlock eliminated in D.C.:

“I don’t know the answer on that, but eventually we will– right now, we have this situation where people were focused on primaries, overwhelmingly, and that drives them further to the right and left and makes them more intractable.  But in the end, 535 people cannot thwart the desires of 315 million.  We’ll get past this. I can’t tell you exactly how it will happen, but we’ve had worse things happen in this country.”

On whether this is our nation’s worst hour:

“No, not by a long shot.  This is a country that’s had a civil war.”

On sequester:

“Well, it was put in motion a year and a half ago and essentially Congress said we’re going to do something — we’re going to put the prospect of doing something in that’s so dumb that we can’t possibly let it happen.  And then of course, then they let it happen.   I mean, they designed an intentionally dumb way of attacking a budget on the theory that it was unthinkable and then they did the unthinkable.  So now they’re reaping the rewards of that…they can cut some spending, but this was done with a meat ax and everything done almost intentionally in a stupid way because they thought if we make it stupid enough, we won’t do it.  But then you saw what happened.”

On whether it’s realistic to think that the stock market will continue to go higher and higher:

“Well, the stock market over time will go higher and higher, I can say that for sure.  I don’t know what it will do next week or next month or next year, but I certainly know that over time it will go higher.”

On whether he still reads hard copy annual shareholder reports:

“Yes. I get hundreds of them and I like getting them. I can read them very quickly. There’s some that take me at least maybe even 2 hours to read. There’s some I read very carefully.”

On what the number one issue is that the board discusses:

“We always discuss succession.  That’s a main issue.  And we want to have and we do have and we’ll meet and talk about it again today, but we have 100 percent agreement on who should take over Berkshire if I die tonight.  And we’ve got multiple people who could do the job and the number one candidate is a unanimous choice, but we’ll talk about that subject.  

We have got a new member of the board joining us this year, Meryl Witmer, and she will be part of that discussion, and hear everybody’s views.”

On what keeps him motivated and coming to the office every day:

“I am 82 and I am getting social security now so I don’t need to do it for the money. I am doing what I love the most in life. I always advise students as much as possible to try and find the job they would have if they were indecently rich. I have found that job. I work with people I love I get to paint my own painting at the office, there is no better job in the world. it’s true I could be doing all kinds of other things. I would so much rather be coming to the office every day than sitting on a yacht, no comparison. I know people who retire, they spend all week planning their next haircut. That’s not my idea of a lot of fun.”

 

Charlie Munger’s comments to FOX Business Network:

Munger on Bitcoin:

“I think it’s rat poison…I regard it as deeply flaky.”

Munger on what keeps him motivated:

“I think Warren has somewhat understated the advantage of being in our position. we are two of the luckiest people alive. Who wants to sit and do nothing?”

 

Videos Of The Interview:

In case you missed the interview, you can watch clips on FOX Business Network’s website.

Berkshire Hathaway Shares Trading at All-Time High
http://video.foxbusiness.com/v/2358736497001

Buffett: Not Our Nation’s Worst Hour
http://video.foxbusiness.com/v/2358737907001

Buffett: Market Will Continue to Move Higher
http://video.foxbusiness.com/v/2359643589001

Buffett’s Take on the Housing Market
http://video.foxbusiness.com/v/2358736498001

Gates and Buffett on Print Investment
http://video.foxbusiness.com/v/2359743921001

Which Piece of Tech Does Bill Gates Use Most?
http://video.foxbusiness.com/v/2359743925001

Gates: Need to Make Education More Affordable
http://video.foxbusiness.com/v/2359743924001

Munger/Buffett Disagree on Corporate Tax Rates
http://video.foxbusiness.com/v/2359385547001

KO’s Great Investors Tackle Battle Against Soda
http://video.foxbusiness.com/v/2359385546001

BRK’s Newest Board Member
http://video.foxbusiness.com/v/2359743943001

Is Meryl Witmer Ready to Challenge the Oracle of Omaha?
http://video.foxbusiness.com/v/2359767049001


Thanks & Happy Investing! — The Investment Blogger

Author: The Investment Blogger

I’m a private investor based out of Canada, and developed the “function-centric investing” paradigm. I am an investor who blogs a little here and there, rather than a blogger who invests a little here and there. I'm passionate about investing and sharing investment knowledge!

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