warren buffet

Warren Buffett says the latest jobs numbers are “not terrible figures, they’re just not good figures.” He adds that “if you could guarantee to the American people a 2.2% real GDP gain for the next century, it would be nirvana.”

let’s continue our special interview with warren buffett following this weekend’s berkshire hathaway annual meeting. they are in carter lake, iowa, which is next to omaha, iowa, which is what it should have been. the more i think about it — the next time warren sends you a brick, he’s going to throw it at your head. what’s a brick go for? that didn’t cost as much as a sneaker, as a shoe lace even, right? personalized bricks bring big money. they do? but a regular brick is not that expensive, is it? yes, but you’ve got a very special brick. if you keep talking this way, you’ll get another special brick. you’re very generous with the brick. that is at home in the study in a very prominent place. i won’t ask where. what joe really wants is he wants a brick on a net jet. there you go, there you go. go ahead, joe. i was just wondering whether do you have enough, warren, enough resolution — you must in all your businesses — to have felt this latest semi-swoon we’ve seen in the last three months and do you think it makes for a repeat of the last two years or is it different? what we’ve really seen, joe, since the fall of 2009 is very steady but very slow improvement in business, everything except residential construction. and there’s been no acceleration in the rate of improvement in the last few months but there hasn’t ban big deceleration either. our businesses in the first four months, if you look at our five largest businesses outside of insurance, they look to me at the present time like they’ll all set records this year. and our businesses are getting better. they’ve already in most cases ten quite good but they’re getting better at a slow pace. there’s not been any noticeable deceleration. there hasn’t been any acceleration either but i don’t really see much change. i see a little but it could be a false pickup, but i see a little pickup in the residential construction arena but i wouldn’t want to bet on the fact that means a lot. so why did we get the worst jobs report on friday we’ve seen in six months? it’s still 100 some thousand, had you a revision upward in the previous months. that may be what you see until residential construction comes back. maybe it will be 200, maybe a 100, maybe 150. that’s aren’t terrible figure, they’re just not good figure. we have come back from what was an incredible shock to our economic system but we’ve kept coming back. what would it take and could we get the country moving back at a ddp of 4% to 5%? well, we can’t keep 4% to 5% over time but we could have a jolt upward and we will when housing construction comes back. when we’re building a million residential units a year, things will be growing faster. but you have to realize if you 2% and have you 1% population growth, that’s a 1% gain in real output per capita. that means in a generation in 20 years, you have over a 20% gain in gdp on a real basis per capita. that’s tremendous. if every generation lives 20% better than the generation before, that’s pretty dramatic. we need more than that right now to come back from the big dip we took, but if you could guarantee 2% real gdp gain for the next century it, would be nirvana. we talked a little bit very briefly about the elections, the french elections, the german elections and what’s happening right here in the united states. right now usa today has something that puts romney and obama almost at a dead heat. it got obama at 47, romney at 45 but i saw another poll that had romney at 48 and obama at 47. how much is tied right to the economy? a lot will be tied to economy. overwhelm overwhelmingly it will be tied to the economy in my view come november. you’re talking about an economy that’s not going to improve that quickly, which means the jobs numbers aren’t going to improve quickly. what does that mean in the fall? it probably means you have a close election. you and romney weren’t in the same businesses obviously but you must look at his track record at bain and think he was a pretty talented businessman, right? well, i thought they bought some of those businesses very well. they bought them at the right cases. some of them turned out very well and others did not turn out so well. because leverage, the financial results when things worked out well, financial results turned out far better than the basic economics of the business and of course in some cases they took a lot of money out of the businesses and then the businesses failed. but overall, you know, i have no fault with him as a business person. you’re in a different business. i had one other totally separate question that i was saying. you love single-family houses. you’ve expressed that again and again and again as like the best investment out there and you said i wish i could own a hundred thousand of them but it’s too hard to do that because you got to like manage each one. a guy like you, i figure you’ve been sitting around figuring out the way to do that and i wondered have you come up with a way to — are you already — i mean, bricks obviously one way to do it but have you come up with a better way to make a big investment in single familiar lip houses? what would be the easiest way to do that? it’s very difficult to do in scale. since i made that statement, i’ve had a lot of letters from very promoters around the country saying join my fund and we’ll do it in the fund. but if you look at the cost of doing it and everything, it’s going to work out fine for the fund manager and how it works out for the vestor is a different thing. wall street has a way of creating products for it than it does for the industry. there’s a lot of frictional costs to managing single houses. if you contract with someone and pay them them a very significant amount of revenues to manage it, you’ve taken a lot of the return away. but what i said was particularly attractive that has some skills perhaps, i think they’re going to do very well. i know they’re going to do very well if they buy into a city with rising population over time. what about mortgage servicing? there must be some way can you do it, something connected to the whole industry that you could buy in bulk that would make sense for berkshire. well, obviously i think about it. the truth is when housing comes back, and it will, all of our businesses will do well. they’re doing pretty well anyway. we’ve got a big better on the american economy and we will have it — our railroad will do better when there’s a million housing units. a lot of our businesses will. i don’t have to play it directly. warren, i wanted to switch gears for half a second just to what seemed like one of the big headlines that came out of the weekend, which was your remark that you had almost spent $22 billion buying a company a couple months ago. i was hoping you could give us a little bit of color. i’d love if you want to tell us whoit or hint about what happened but more necessarily about why you didn’t buy the company. we couldn’t come to terms. but we’re always looking, andrew. and there aren’t lots of big companies that you can make a deal on. there are lots of big companies that i don’t understand so they’re outside my circle of competition. there are some that have no intense of selling but there are others that — big deals aren’t going to happen very often but occasionally they will. is it possible your $22 billion elephant comes back? it’s always pe. when a girl hangs up on my me once, i try again. that hasn’t been too successful, though. i hope my batting average is better with companies. when you call back and her husband answers, normally that puts a damper on thing, right? it’s cebeen tough when i call your house. ow! warren, let’s talk a little bit about what you see with stocks. we did talk about this at the top of the 6. but there are people just waking up now and they see the markets are down and it’s on a day when people are very worried about the outcome of europe. what are you doing today in the markets? we’ll be buying something today. i feel better by b buying it today as the same things i bought on friday because i’m buying them cheaper. the ten-year, 20-year prospects hasn’t changed. i liked the price on friday, i like the price better today. if mcdonald’s lowers the price of hamburgers today, the fact i paid more for one on friday, i’m even more enthused about biography a hamburger today. are you talking about serious amounts of money you put into the market? well, we put as much as wes can buy without disturbing the price. how much did you sprend on friday? we probably spent about $60 million. we try to buy maybe 10% of what trades. when we were buying ibm, day by day i would just account for 10% of the trading. wow. but it was done very quietly, you kind of moved your way through? yeah, i put duct tape over my mouth. particularly when i talk to you. again, if you are a retail investor, that’s what you would be telling people to do, don’t pay attention to the headlines? retail investors should not pay any attention to the day’s news and they’re trying to buy and sell stocks based on the day’s news, they’re never going to be successful investors. the idea is to buy a good business. it the same way if you and your brother went out to buy a business, you’d look around for a company that had some little price difference. you wouldn’t read the newspaper before do you it. my partner charlie munger and i have working together for — we have never talked about that day’s news or that week’s news or month’s news. we’re looking at where the business is going to be ten years from then because we’re going to own it then. that’s what counts.