Warren Buffett CNBC Interview All Videos

Updated on

not get up — you’ve answered that — first of all i will give andrew a break because he is in a different time zone. and the difference — this was a slight — some average viewer asks — slight variation — what was the — warren’s — because it asked specifically if he’d do deals with other private equity firms. he better get up earlier. i mean some viewer already asked that same question.

welcome back, everybody. let’s get some parting thoughts from our guest today, warren buffett. warren, we’re here because of the annual letter to shareholders you put out. reading through that letter over the weekend, what jumped out is what you said about insurers. berkshire has several insurance businesses, but what you pointed out are the low interest rates we’re in right now. those could pose a serious problem for insurers down the road. they do. can you t a little bit more about that? insurers either make an underwriting profit, and they make money from the investments they hold, which is partly their own capital. when interest rates go down and they own a lot of bonds, like most of them do, they may get decent rates from the bonds that they bought a few years ago, but they keep rolling over. generally speaking, insurance companies don’t own long-term bonds. so they get them rolled over fairly fast. when you roll over bonds, whether you’re a life insurer or property casualty insurer, you get a whole lot lower rate than a few years ago. so in effect, the profitability will go down because of that. do you think investors have figured that out yet, in the valuations for these insurance companies? i think the professionals in the insurance field probably are pretty cognizant of it. it affects us because we do less conventional things with our money. but it still affects us. the $47 billion we had around at year end was earning nothing. and six or seven years ago, it would have been earning 5%, that’s a couple billion dollars a year, just in terms of that money that we have as a reserve fund. let’s get more questions from viewers, because we are getting towards the end of our three hours. this is a question that comes from connor keyhoe in ireland. if you could keep one company that berkshire owns, either a wholly-owned subsidiary, or that berkshire owns a common equity in, which one would you keep and why? i would keep geico. it goes back to the — 62 years ago it change the my life. it’s also a wonderful company. i would have both things going for me. but that if i hadn’t of gone to geico when i was 20 years old and had a fellow there explain the insurance business to me, my life would be vastly different. so i just have to- – i’d have to choose geico. let’s get another question. this is number 200, from steven in texas, who’s writing about with all the continuing airline industry consolidations, do you see the potential for a berkshire acquisition of one of the u.s. major passenger air carriers? well, i have this number i call, if i wake up at midnight with the urge to buy an airline, i call up this airline anonymous and then they talk me down. no, the airline business has been a terrible business over time. if they ever got down to where there was one airline, it would be a very good business. maybe they could get down to where it’s two. it’s got all the ingredients of a bad business. this is number 42. it’s from someone named c fisher. there’s been a lot of talk about average investors, average retail investors feeling like they can’t get a fair shake. part of that comes from concerns about the flash crash. fisher writes in and says, please comment on the high-frequency trading in the flash crash. what are the implications for main street investors? it doesn’t mean a thing. if you own a mcdonald’s stand, would you be worried someone would come along for five seconds and say the stand is ing down 50%? no business was affected by that. every business we own, it didn’t make any difference. if you own things on margin, then you’ve got a problem. but if you own things outright, if the stock market closed for three or four years, it wouldn’t make a difference. the fact that you can get quotes should be an advantage, but people turn it to a disadvantage because they think it’s telling them to do something all the time. so, you know, they can have a flash crash every day and i’ll just put in orders to buy and we’ll see what happens. but do you think, and i ask this because there have been so many scandals, that people think about libor, and a lot of the deals behind the scenes that have been dragged out. and a lot of main street investors think that they can’t get a fair shake on wall street. can they? well, they pay a lot of expenses in many cases. they don’t need to. they with buy a low-cost index fund and participate in the growth of america over the next 20 or 30 or 40 years and they’ll do fine. but if they’re paying high fees to achieve that same result, they’re going to get hurt. and they should look very

Leave a Comment