Buffett: Us Residential Housing Starting to Pick Up
Warren Buffett, Berkshire Hathaway CEO, discusses the global slowdown, saying the stock market is generally the best place for investors to have their money.
Qualivian Investment Partners performance update for the month ended July 31, 2022. Q2 2022 hedge fund letters, conferences and more Dear Friends of the Fund, Please find our July 2022 performance report below for your review. Qualivian reached its four year track record in December 2021. We are actively weighing investment proposals. Starting in November Read More
Warren Buffett: Global Economy ‘Slowing Down’
In this “Squawk Box” excerpt, Warren Buffett tells Becky Quick there’s “no question” the global economy is slowing down, but the U.S. is “inching along” as the U.S. residential housing market starts to improve.
Buffett: Instincts Go Against QE3
Warren Buffett, Berkshire Hathaway CEO, weighs in on the Federal Reserve’s decision to issue another round of quantitative easing; adding, he has “enormous respect” for Bernanke but has concerns over “expanding the balance sheet of the Fed.”
box, we are speaking to warren buffett and becky is out there.mr. buffett telling us he’s beenying wells fargo this week. that stock has now turned positive since those comments. becky, they told me to ask a question. is that okay? i’m not going to presume — yeah, go ahead. warren, you like to buy. you just said you like to buy. peter sellers liked to watch, but you like to buy. buying doesn’t preclude watching. no, not with you, i’m sure. but that — i figure anything that moves the market higher,you’re not going to — better than a sharp stick in the eye. so qe-3 is great. market’s been going up. but if you were a voting member, and they’ve got another one of the meetings today, two day — i don’t know, they come so quickly, i don’t even remember. if you were there when they voted for qe-3, would you have voted yes for qe-3 if you were a voting member? i hadn’t thought about that, but i would say this. i would listen very carefully to bernanke, but my instincts would probably be to go the other direction. but i would listen to his arguments. you said with qe-2, you thought maybe it was going too far at that point. so qe-3 is doubling down on that. my instincts are to goagainst it. i think it’s much easie if you’re a central bank and youcan print money. it’s much easier to acquire $2.7 trillion of securities than it will to be unwind that operation. and you can expand it indefinitely. if he wanted qe-2 to be $100 billion a month or qe-3, he’s the one guy that can do it. he has unlimited buying power. mited selling power could be a little different. you need some cooperation on that. warren, you’re a supporter ofthe president, though, governor romney suggested tha would — i wouldn’t suggest he would fire bernanke, but he wouldn’t pick him up for a third term. not clear, by the way, that bernanke wants a third term even under obama, but how does that in terms of politics? i think bernanke has done an absolutely superb job. i mean, what he did in the fall of 2008 was gutty, it was basically right, you know, everybody can talk abouttinkering at the edges, but i will say this, if ben bernanke hadn’t been there in 2008, i’m not sure where we would be now. i have enormous respect for him. he’s a very, very intelligent man.you’ve got to respect him enormously. and, you know, he sees an omy that he’s sort of fighting by himself to get started when you look over at a congress that’s more or less paralyzed. and i would never bet against him. i would say that i get a littleworried about continuously expanding the balance sheet of the fed. and, you know, we now are getting 3% of our revenues from the profit that the fed is running on its carry trade if you look — the united states gets 3%? yeah. that 2.4 trillion or 2.5trillion of revenue, the fourth biggest item, the first item ispersonal income taxes and then payroll taxes, then corporateincome taxes, the fourth is dividend from the fed. he makes $70 billion or $80 billion last year. this is unheard of if you go back a few years. when he borrows, he’s got $1.25 trillion, then $1 trillio of money in circulation,ch he doesn’t pay anything for except for the cost of the paper. do you worry about inflation down the road? is this something we’ll see coming? will we be able to put the brakes on in time and try to get the liquidity back out of the system? nobody understands that problem better than bernanke. yeah. that doesn’t mean i necessarily think the solution is going to be perfect. i’d rather have him thinkingabout it and trying to modify the impact of — but to andrew’s point, if he doesn’t have another term or if he chooses not to stand for another term and there’s someone else there, that person’s going to have a pretty difficult job. yeah, depends who it is. but i would vote for bernanke again. you know, i get my kids out and everybody else to vote for. but if bernanke says thathe’s not even interested in staying. they worry that he knows what he’s leaving behind. he says he maye hav done enough time there. well, i think he probably feels that way, particularlyafter his congressional testimony. but i do think if the presidentof the united states asks someone like ben bernanke to stay on, i think he will stay on. i think he’s that devoted to thecountry. all right. and i would rather have him there than anybody else. warren, do you think where the bond market is right now given the extraordinary action by the fed, do you think it’s not that far from where it would be if they hadn’t been asactive? and then i guess it’s okay. but if it be long way fromwhere it is without them, doesn’t that cause some dislocations that eventually are going to come back to haunt us? i like when stocks go up too. and i can see it in your eye, you like when the market’s going up. i’m wondering, is it worth it? no, no — you do. who doesn’t like when the market goes up for whatever reason. but if it gets to a point where it’s not up based on theunderlying fundamentals, seems like sooner or later somethinghas to happen, no? interest rates are — the prices of all assets, you know, li gravity is to the function of the earth. everything is based off interest rates. it may not seem obvious that the value of some plantation in brazil or something is geared off of it. but everything relates to interest rates. you start with what you can get risk-free interest rate. and so it has a huge, hugegravitational pull. affects what i’m doing. it affects what everybody’s doing. affects what you’re doing at berkshire?yeah. if i’m getting 0% on money, i am going to look at other assets somewhat differently, whether it’s buying a farm or anapartment house or anything else. and of course, the people who will lend money to me to buy the apartment house are going to lend it to me cheaper. it’s one of the reasons irecommended housing six months ago because the low interest rates caused low mortgage rates and low mortgage rates and when you can sign up for 30 years off a policy that may be in effect for another year or two, you’re getting a tremendous deal. but, no,joe, the fed has had an enormous effect on interest rates. but it’s okay. well, i don’t know if it’sokay or not. but i know that — the price is going up. well, i would say that it’s marvelously okay if you’re buying a house or something like that. but in terms of policy. in terms of policy, the chairman of the fed and the members of the fed made a decision that the economy needed enough of a jolt. and it wasn’t going to get it through enlightened fiscal policy and they were going to basically carry the whole load themselves. i don’t think they enjoy it, but i think bernanke, i think he’s avery responsible gu now, it doesn’t mean he calls them all right, but i think he’s
Buffett: ‘We Mostly Buy Stocks For Future Earnings’
Warren Buffett, Berkshire Hathaway CEO, discusses his long-range investment strategy, and weighs in on IBM.
i don’t know why buffet doesn’t put all his money in verizon andat&t. do you ever look at those companies? i don’t know what it would look like five or ten years from now. there he goes again, 100 years from now, so 5% in the meantime, you know, that’s true, though, warren. people would say, i’ve got a 5% yield, doesn’t take much for stock to go down 5%, does it? that yield doesn’t necessarily hold up if the market’s headed south. like toll booths — yeah. we mostly buy stocks for future earnings. if you used all the money to repurchase shares that could beeven more advantageous. because you end up owning a bigger and bigger chunk o the company. ibm spent 3 billion in eachquarter of this year. the cheaper they buy it, the more our interest goes up. you still like ibm after all the troubles technologycompanies have seen? they’re struggling a little. it was kind of interesting. in the — we owned — we own a little more than we owned at year end and we got great confidence over the years.but in the third quarter, they had a sale of a subsidiary rss that produced about 288 million, i think after tax, which was all the gain. and to my knowledge, the wall street journal did not have a line on it. it was one line in the report and it counted for all the gain in earnings and it was a sale of part of a business. you know, i think the reporting missed the boat on that one.
Buffett: ‘We’ll Add 8,000 Jobs Organically’
Warren Buffett, Berkshire Hathaway CEO, weighs in on what Berkshire Hathaway is doing to create jobs, adding “we’ll probably add another 10,000 or 15,000 jobs on acquisitions” this year.
welcome back, everybody. we are with warren buffett thismorning in columbus, ohio, at the summit sponsored by general electric and ohio state university’s business schoolhere. we talked an awful lot about businesses. the reason we’re here today is because of this focus on mid-sized businesses. an awful lot of questions about jobs and the jobs picture out there. mid-size companies account for a lot of the job growth we’ve seen over the last several years. can you talk to us a little bit about what berkshire’s been doing in terms of jobs. berkshire probably has at least 50 of the 75 companiesthat would fit the middle market 10 million to 1 billion of salescategory. it looks to me, there’s a few months left. but it looks to me like we’ll add at berkshire on a base of 270,000, we’ll probably add about maybe 8,000 jobs organically. and then we’ll probably add another 10,000 or 15,000 on acquisitions.for this year that we’re in right now? yeah. certain businesses like geico and burlington northern have added people. then we bought a fair number of what we call build on acquisitions. in terms of the jobs growth, what about the companies that are related to housing. you’ve been talking about how you’ve seen a turn there. has that translated into jobs growth? there’s some job growth. our clayton homes is going to produce something like 15% more homes this year and that takes more people.and geico is going to sell more insurance policies and thattakes more people. and the — our furniture businesses are doing very well. we’re selling a lot of carpet and furniture. and so we add people, but we’ve also got to add — moreacquisitions this year than ever before in our history by somemargin. and they bring with them thousands and thousands ofpeople. how much cash do you have onhand right now? bly have at least 40 billion. are you on the hunt for another big acquisition? i’m salivating. yeah. a fellow handed me a card last night and said this will cost you $6 billion. and he didn’t give me the financials, but i’m going to call him when i get — i know the company. so when i get home, i’ll call him and ask him for the financials. have you looked at any other big acquisitions? we had two acquisitions this year. possibilities that were plus and minus $20 billion. and where the ceo wanted to do it, but it didn’t get done. prices are tough. prices are tough right now. yeah. all right — and cheap money makes that a factor in it.
Buffett: ‘We Buy on an All Equity Basis’
Warren Buffett, Berkshire Hathaway CEO, says he feels some of the acquisition prices are getting out of control, but adds he is “salivating” to do another acquisition.
welcome back, everybody. we are coming to you live from ge capital’s middle market summit taking place at ohio state university in columbus. i’m joined by berkshire hathaway ceo warren buffett. and you’ve been talking about how you’ve been on the prowl looking for big acquisitions around $20 billion or so. a couple have fallen through, but part of it is becausepricing’s difficult. pricing’s difficult and money’s cheap. we don’t leverage our purchases and we’re buying on an all-equity basis. but people that do leverage are getting significant portions of the purchase price at very, very low rates, probably as low as they’ve gotten. so that enables them to bid pretty aggressively and doesn’t factor into our thinking. you think at this point maybe some of these acquisition prices are getting a little out of control? well, that’s the way i feel. but, you know, that’s natural when you’re getting beaten out. but you won’t raise your prices to compete? no. but now we had a record for boldon acquisitions. we’ve probably done, i don’t know, maybe 15 different acquisitions, but probably add up to $2 billion or something of the sort. and they’re good and fit in withcompanies we have. but what i really like is the elephant. so you’re always out elephant hunting. absolutely. with your elephant gun. and they’re more likely to come along when monditions are fairly tight or something of the sort. if you can borrow money at these rates, you can pay a lot of money. and other people if they pay the wrong price, they walk away fromthem. but if we pay the wrong price, we live with them forever. if these deals haven’t gone through, that means you’ve beenlooking more aggressively for stocks to buy in the market. well, we’re always looking for stocks and i’ve got two fellows working for me that are really looking for stocks all the time. but i usually end up buying more of something i already know. any new company, any new stock i look at, i measure it against the best idea i’ve got among the present ones, and i’m perfectly willing to just keep adding to the present ones. so it has to beat them.and i know those companies pretty well, so it’s a pretty high threshold. let’s go back to ibm. you were talking a moment agoabout ibm, have you added any shares to that company in thelast couple of months? maybe — we’ve added shares this year.we haven’t had a lot of shares. but we’ve — well, we probablyadded, you know, being many hundreds of millions. wells we probably added maybe $1 billion worth, something like that.when you first announced your stake in ibm, it caught a lot ofpeople by surprise because you have always stayed away fromtechnology companies, you’ve said it’s something you didn’treally understand and so you didn’t want to get involved with it.right. in looking at ibm, you said it was a little different situation, it made senseu at that point. i guess part of that is the services factor ofit. but when you look at these big technology companies, looks like some of them may be maturing, have you regretted getting into ibm shares at all? no, i’m delighted to be in it. uh-huh. and i think they’ll probably do better abroad than in united states over time. when we buy something like that, i go to our companies and see what they’re doing and plan to be doing in future years. and how tied in they are with given suppliers and how much stickiness there is to it. and so we — i — even though, you know, if you put me in a computer room and spin me around, i’m lost, you know, i just hoping it helps me get out. but i do know what our managers tell me about their plans.and the degree to which they’re involved. and i had one manager tell me something that isn’t quite repeatable in terms of — you get pretty locked in sometimes with your supplier.what’s not repeatable? well, i asked him how sticky — i won’t name the company, he said, well, it’s like — so it sticks. it really does. i should bring up the insurance companies. they’re big.jim cramer had said he’s very interested in hearing more aboutwhat’s happening with insurance because a lot of insurancecompanies have been doing very well lately. what can you tell us about berkshire’s? they’re doing very well. we have about$70 billion of other people’smoney, we call it flow. and when we run a underwriting profit, i get to earn the money on this. and this year we’ve had an underwriting profit. not only have they given us $70 million, but they give us more money to hold it. so when insura