Buffett on Stock Buybacks, Oil Prices

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Buffett on Stock Buybacks, Oil Prices Warren Buffett, Berkshire Hathaway chairman/CEO discusses why he would be happy to see companies buy back stocks adding, “the cheaper they buy it the better for me as a shareholder.” Buffett also discusses the rise in gas prices and the impact on consumers.


buffett this morning. a last few minutes of questions before we’re finished up here. warren, jim cramer was making comments about your view on stock buy backs, especially owning ibm. in your annual letter you laid out your cause for why you would be happy to see them buying back stock and you’re not necessarily looking for that stock to go up over the last few years. that’s a little controversial. i don’t know if it’s going up or not. i’m saying, if they’re going to buy back stock, they’ll buy back a lot of stock, they’ve announced they’re going to do that, if they buy it cheaper and i’m a continuing shareholder, i’m better off. i mean, if three people own mcdonald’s stand and you can buy out — one of the three for a fifth of the total value of it, the other two are better off at the end. any time you — any time you buy your partner out at a discount, you benefit. now, there’s no moral problem attached to that in the stock market because markets set prices. you wouldn’t want to do that in a private partnership. i’ll love it if ibm buys a ton of stock. the cheaper, the better i’ll do over time. let’s talk about gas prices once again because we did have a lot of people who wrote in who said they are feeling the pinch of gas prices already. i guess gas prices up around $3.80, somewhere in that realm. we could very likely see it push back above $4. there are people, again, writing in who say they feel it and it could end up cutting into what they spend in other places. could it eat into the economy? well, it is a minus. there’s no question about it. if you spend more on gas, you have less to spend on other things. we have — you know, we had $147 a barrel oil, too. we’ve lived through it in the past. $30 a barrel was a shock in the ’70s and it had an effect on the economy. any time an important part of the american’s expenditure goes up in price, whether it’s food or gas, you know, it has an effect on everything else, no question about it. i know you look at a lot of different factors and overall you’re very optimistic about the future not only of this country but also of the stock market. if you have a list of worries, what’s at the top of that list? the biggest worry is nuclear, chemical and biological attack of some sort. whether by a government or by a rogue group. that will happen some day in our future and it will be anything from a large tragedy to an unbelievable tragedy. right now it’s not on the forefront of americans’ minds although a lot of things happening in the middle east are creeping back up there. yeah, it will happen some time when it isn’t on our mind, just like the attack on 9/11. i mean, this are people that wish us ill and they wish us a lot of ill if they can pull it off. so, nuclear, chemical and biological knowledge has spread. there are plenty of people that would like — wish us ill, so that is the biggest worry we have. in items of the economy, the luckiest person born in the history of the world is the baby being born in the united states. in items of the outlook for their lives, they are going to live better than john d. rockefeller lived or better than i lived and so on. i mean, our country’s future is just — it’s fantastic. warren, if had you to compare the stock market and how you feel about it right now versus where you did back in october of 2008, when you told people to buy stocks you were, how would you briefly sum that up? well, they were cheaper at that time. it’s become clearer now that the dominos aren’t going to fall. so people are less worried now. but the time to buy stocks is when people are most worried. and october of 2008 was a better time than now. this is a better time than ten years will be. warren, we want to thank you very much for joining us here this morning and being so generous with your time. thanks for having me. we appreciate it. guys, back to you in the studio. you won’t come to the correspondents’ dinner with me. that’s fine. i’m sending you another brick. it’s in the mail. i’ll ask bill murray. if you’re not coming, i’m asking bill murray. but i asked you first. the. if i took ed asner, that okay or off limits? i think he got overlooked in the oscars. i’m amazed. he’s a little more — they have no judgment of talent. he’s a little more conservative than you are. than you — than you are, andrew. a meeting of the minds. we have to run.

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