ANDY SERWER：Hello, everyone. I'm Andy Serwer. Welcome to “Influencers”and welcome to our very special guest, Warren Buffett, Chairman andCEO of Berkshire Hathaway. Warren, nice to see you.
WARREN BUFFETT：Good to see you.
ANDY SERWER:So it's March 10, and it's the day after the stockmarket crash. The Dow was down over 2000 points. Oil cratered to $30 a barrelor so. The 10-year bond went to below 0.5%. What the heck is going on, WarrenBuffett?
WARREN BUFFETT: I told you many years ago, if you stickaround long enough, you'll see everything in markets. And it may have taken meto 89 years of age to throw this one into the experience. But markets, if youhave to be open second by second, they react to news in a big time way. It'snot like the market for real estate or farms or things of that sort.
ANDY SERWER: Does this remind you of any other time?
WARREN BUFFETT:Well, I've certainly been a fair number of timeswhen panic has reigned in Wall Street. And October 19, 1987 and the periodaround it,there was panic at the close of business on Monday, October 19, mostof the specialist firms, which were important in those days on the New YorkStock Exchange, were broke. And the next morning, there was a check to theclearinghouse in Chicago that didn't get there.
And sometime late in the morning,a decision, I think made thedecision, we're going to stay open. But it was really close. That was, and, ofcourse, the financial panic. There were, you had 35 million people on September1 that weren't worried at all about their money market accounts. On September15 or 16, they were all.
ANDY SERWER: How concerned are you about the coronavirus situation,Warren?
WARREN BUFFETT: Well, you've got to defer to the doctors onthat. But you get an all these figures about flu regularly kills 20 times asmany people in this country as, or 40 times maybe as much as we've seen in theway of deaths, even more than that. But it is a pandemic. It is really spread.So we've got something that we don't know how long it will be with us. We don'tknow how severe it'll be. But there will be uncertainty about that for aconsiderable period of time. There has to be.
ANDY SERWER: What precautions are you taking personally?Have you changed any of your habits?
WARREN BUFFETT: Well, I'm drinking a little more Coca-Colaactually. Seems to have warded off everything else in life.I'm 89. I just hadtwo different doctors tell me how I'm in much better shape than I was a fewyears ago. I'm not sure what I'm doing to get better. But by accident, I had anannual heart check where I wear something around my waist for a couple days.The guy said it's never been better. So I really, I'm the probabilities guy inmy nature. So I, there's going to be to 2.8 million deaths this year. At age89, I'm a little more likely than I was in that group.
But 2.8 million, what we had so far,it will grow. But I've alwaysfelt a pandemic would happen in some time. I've actually used that term indescribing things that can interrupt the progress of not only this country, butthe world. It won't stop the progress of the country or the world.this is aterrible event that's occurring. We don't know how terrible. It may not turnout to be that big a deal when we get through, but it may turn out to be a verybig deal, and we just don't know. And I certainly don't know. And nobody knows.
But there will be other things that happen in the world in thenext five, 10, 20 years. That's the way the world works. It's not a totallyeven course. The progress of mankind has been incredible. And that won't stop. Youflew out here yesterday or today and you flew over a country that 250 yearsago, there wasn't anything here. That's only three of my lifetimes. And therewasn't anything here. And now you've got all these beautiful farms and you'vegot 260 million vehicles in the country. And you've got 80 million owneroccupied homes and and you've got 155 million or whatever it is million peopleworking.It's incredible.
When I had a medical check the other day, I went to incrediblemedical facilities that are just two or three minutes from here. And thatwasn't here-- wasn't even here 100 years ago. So we keep making progress.
We haven't forgotten howto make progress in this country. And we haven't lost interest in makingprogress. And that will benefit to varying degrees, all kinds of people equallyaround the world. But there will be interruptions. And I don't know when theywill occur, and I don't know how deep they will occur. I do know they willoccur from time to time. And I also know all that we'll come out better on theother end.
ANDY SERWER:And then what about the banks? And they have been hitawfully hard.
WARREN BUFFETT: They got hammered. Yeah.
ANDY SERWER: Because of rates and exposure to the energysector. Right?
WARREN BUFFETT:Yeah. And you don't know what other exposurethere is.The credit standards have been pretty darn good. And the quality ofwhat's on the books has been terrific, and the liquidity, and all of that. Thebanks are in a whole different situation than they were during the-- 10 or 11years ago. But there was-- you don't know the dominos that topple when airlinesget bad. And then that affects energy demand, because they're just-- they'reusing less fuel than they were three weeks ago.
So there's ripple effects.And there always will be in recessions. That's the nature of recessions, is youget ripple effects. We get ripple effects on the railroad. but there's just--there's less intermodal traffic moving now because of the supply chaininterruptions and all that sort of thing. But that's-- you look at, again, in1942 when I bought my stock. The Philippines were about to fall.
[LAUGHS] and the day I bought it, the Dow literally was down 2%.And 2%, that was only two points, literally. It broke 100 on the downside.[LAUGHS] But 2%, I felt it.I went to school in the morning and I bought thesethree shares. And when I came home at night, I already had a loss in them.[LAUGHS]
ANDY SERWER: Yeah. Well, I'm glad you kept with it.Because other people might have been discouraged.
WARREN BUFFETT: Yeah. But,all the other kids in the 7thgrade had their money in something else. [LAUGHS]
ANDY SERWER: Right. Getting back to banks for just onesecond, Warren.
WARREN BUFFETT: Sure.
ANDY SERWER: Are you getting frustrated with Wells Fargo?
WARREN BUFFETT: Well, I think they've been through a lot ofproblems. But I don't think that the fundamental franchise and all of that,I'mfine with that. They-- I forget whether it's in one out of every threehouseholds in the country，they are the mortgage servicer.That's huge. It went throughsomething that various other companies-- GEICO, in the early '70s, got-- hadits troubles. American Express, in 1964 when we got into it, it had the saladoil scandal, which everybody's forgotten about. But it was a terrifying eventthen.
So something will happen at some point [LAUGHS]. You can't run aplace with 395,000 people and not know that something that's happening all thetime. And you just hope you catch it fast. And the moral of the Wells Fargostory is when you hear about something, you've got act fact. And you can haveincentives out there that are incentivizing the wrong thing. And we've hadthem. Everybody's had them.
Anybody that has a sales force makes mistakes sometimes in whatthey incentivize. And bad practices will spread if not jumped on. And that'swhat,you saw at Wells. I don't see how in the world they made any money out ofthe phony accounts [LAUGHS]. But,the cost-- again, there's a ripple effect.
When something goes wrong at Berkshire, if it doesn't getcorrected there'll be more problems subsequently. And when I was a Salomon,Charlie gave me the form. He said, get it right, get it fast, get it out, getit over. And any time you see a problem, and you're a responsible partly incorporate America, that means just get it right, get it fast, get it out, getit over. And- don't skip-- [LAUGHS]And just put that right in front of you and goto work on it.
ANDY SERWER: OK. Fair enough. Let's switch over and talk aboutoil. You are an investor in the sector through this Occidental Petroleum deal
WARREN BUFFETT: Right.
ANDY SERWER: From last year. You put in $10 billion
WARREN BUFFETT: Exactly.
ANDY SERWER: And maybe some more after that. I know you getpreferred dividends. But that investment has to be under water at this point.And what's your thinking?
WARREN BUFFETT: Well, that the $10 billion is a preferredstock with warrants. And there is nomarket in it.
ANDY SERWER: OK.
WARREN BUFFETT: It's a private deal. But we also have about 2% ofthe common stock. And that's down significantly. And as I said when I didit,the biggest variable is the price of oil. And I don't know the price of oil.And every day it gets quoted. If you have an opinion on oil, you can buy orsell oil either one year out or two years out or three years out or something ofthe sort.
And when oil was in the 30s, there was a lot of agony in the oilpatch. And the math just changes terrifically.It just doesn't pay to drill in alot of areas. And the Saudis can turn out a lot, but with practically nooperating costs or, they get very, very, very cheap operations.
ANDY SERWER:Between that war between the Saudis and the Russians,and then also perhaps the secular decline of demand given concerns aboutclimate change, is this really a great place to invest?
WARREN BUFFETT:Well, I don't think the secular demand will changethat much. But, certainly, the immediate demand has changed. The airlines needless. And people drive less if they're working out of their homes. And you canchange-- when you're talking aboutsomething close to 100 million barrels a day, if you change it by 5%,that ishuge.
ANDY SERWER:I was reading in your annual letter, on the otherhand, that you're so proud of Berkshire Hathaway Energy, which is so big inwind power and has this whole different business model. So you think thatalternatives actually have a real future?
WARREN BUFFETT: Oh, alternatives have a future, and they arethe future, over time. But you can't change the base of the world. You've got260 million vehicles on the road, or whatever number it is in the UnitedStates, and I don't know how many around the world. And they're not changingwhat they use tomorrow [LAUGHS] .And the average age of the American vehicle,the auto, I think is 11 to 12 years, something like that.
And so the world can't change dramatically. And if anybody thinksyou can change energy sources 10% at a year, it just doesn't work that way.Butthe world is going in the right direction in terms of working towardminimization of carbon.
ANDY SERWER: Speaking of those cars,look at Tesla andwhat Elon Musk is doing.That kind of is a revolution. Right?
WARREN BUFFETT: Well, it's an important change. But if youguessed on the penetration of electric cars-- let's say we, sell 17 million orsomething year in 2030, when I'll be 100 years old. I'd be surprised if morethan a third of those would be electric.That's 2/3 of that cars plus all theones in the total vehicles on the road, it still might be 10% electric orsomething like that, worldwide.
you can't change this mass of transportation. You can't change itin a year or two. It is changing, and it should change. But in terms of justthe math of replacing it-- if we said we're going to junk all the cars we have,the economy would stop. we can't producethat. We couldn't replace it.
ANDY SERWER: What do you think of Elon Musk, though? Haveyou met him? And would you invest in Tesla?
WARREN BUFFETT: [LAUGHS] Well, I think you're trying to baitme a little bit.
ANDY SERWER: I'm just asking you. You can say no, no, andno or yes, yes, and yes.
WARREN BUFFETT: No, listen, he's done some remarkablethings.
ANDY SERWER: Have you met him?
WARREN BUFFETT: Oh, yeah. He's joined The Giving Pledge someyears ago. That-- I've only met him once or twice. But, yeah, I've talked with him, but not for quite awhile.
ANDY SERWER: And would you invest in Tesla?
WARREN BUFFETT: No.
ANDY SERWER: OK. Let's switch over and talk about bondyields and interest rates. Because that's a crazy subject right now.
WARREN BUFFETT: It is really crazy.
ANDY SERWER: Yeah. So what is your thinking on that?
WARREN BUFFETT: I don't know [LAUGHS]. I have never beenable to predict interest rates, and I've never tried. Charlie and I, we believein trying to function on what，or to focus on what's knowable and important. Now interest rates areimportant, but we don't think they're knowable. And there are some things thatare-- it just gets back to something-- who was it? Don Rumsfeld or something[LAUGHS]
ANDYSERWER: Knowns knowns and unknown knows and unknown unknowns.
WARREN BUFFETT: Yeah, and all that.And the question is thebox that says knowns and important。
WARREN BUFFETT: Is there anything in that box? And can youtell what's in that box and what isn't in that box? And that's what I callknowing your circle of competence. And my circle of competence doesn't includethe ability to predict interest rates a day from now or a year from now or fiveyears from now. So I say, can I function without knowing that? It's the sameway as predicting what business is going to do or the stock market's going todo. I can't do any of those things. But that doesn't mean I can't do wellinvesting over time.
ANDY SERWER: Things have changed. They're different nowbecause rates are so low.And you have negative rates.
WARREN BUFFETT: It's unbelievable.
ANDY SERWER: And then you were talking about EdgarLaurence Smith and his discovery about bonds versus retained earnings. And thenI think you were saying that it makes for-- as far as central banks, it makesno sense to lend at 1.4% and then to have 2% inflation.
WARREN BUFFETT: Well, it doesn't make sense for you to buy bondsif somebody is telling you that they're going to try and destroy the unit inwhich the bond[LAUGHS] ， the promise is included. They're going to try to destroy 2% of thata year.
WARREN BUFFETT: And for you to now pay，now receive maybe a half apercent and pay taxes on it.
ANDY SERWER: Right.so where do you think these low superrates are going to go, and negative rates?just what are the implications on？
WARREN BUFFETT: I don't know.I would say that's the mostimportant question in the world. And I don't know the answer. [LAUGHS]If weknew the answer, it wouldn't be the most important question.
ANDY SERWER: I don't like that.
WARREN BUFFETT: [LAUGHS] No, but it's true.
ANDY SERWER: Right.So let me ask this way, What hasinvesting in equities changed given the interest rate environment? It makesequities look super cheap.
WARREN BUFFETT: No, it reduces the hurdle rate.
WARREN BUFFETT: That's why they like to decrease it, is thatit pushes asset values higher. Because, obviously, if you promise to pay mesomething at 3% a year, that would have been a terrible instrument for me toown,almost any time in history. But today, if you're good for it, it'sfabulous. [LAUGHS]
ANDY SERWER: Do negative rates scare you, Warren?
WARREN BUFFETT: They puzzle me, but they don't scare me.
ANDY SERWER: OK. Fair enough. I want to switch over toApple, one of your biggest holdings.
WARREN BUFFETT: Mm-hmm.
ANDY SERWER: Does-- does the amount of shareholderinterest in this company concern you or Todd or Ted? In other words, the marketcapitalization basically relative to the S&P 500. Is that something youlook at?
WARREN BUFFETT: Well, you look at everything and relate oneto another. I mean, that's the nature of markets. So you're always trying tothink about A, what's in my circle of competence, and then what makes the mostsense that's within that circle. But the important thing is know where theperimeter of the circle.
ANDY SERWER: Right.
WARREN BUFFETT:I mean, that's way more important than how big thecircle is or the whole bunch of other factors. So I think Apple is within mycircle of competence. I think it's at an incredible business run by a fellowthat's one of the great managers of all time. And he was underrated for awhile, but now he's being seen for what he really is. It's an astounding-- youcould almost-- if we had a--
ANDY SERWER: I got one.
WARREN BUFFETT: If we had a card table here-- well, yeah. Wecould put all their products on one table.
ANDY SERWER: Right.
WARREN BUFFETT: Can you imagine that?
ANDY SERWER: Yeah.
WARREN BUFFETT: I mean, and I just think of basically theutility of those products to a ecosystem that is demographically terrific, andfinds that instrument useful dozens and dozens of times a day. It's-- it'salmost indispensable not only to individuals, business, I mean, everything.
ANDY SERWER: And you have one of these babies now. Right?
WARREN BUFFETT: I've got-- I've got one of them. I don'thave it on me.
ANDY SERWER: OK.
WARREN BUFFETT: Because I would be afraid it would ring andI wouldn't know what to do with it. [LAUGHS]
ANDY SERWER: It's OK. You can take a call during this. Itwouldn't be-- have a problem with that. And what sort of apps do you have? Doyou have any apps loaded?
WARREN BUFFETT: Well, they've got a lot of apps on it. But--but the other day-- actually, yesterday I was someplace. Normally, I don'tcarry it in town. I carry it out of town. But-- and somehow I was having alittle trouble just getting to the-- but this is only me. Any two-year-oldcould do this. But I-- in fact, I have trouble getting to the part where Iactually phone somebody. [LAUGHS] I use it as a phone.
ANDY SERWER: Right. So you're not—
WARREN BUFFETT: But I got a lot of apps on it.
ANDY SERWER: Have you used any of the apps?
WARREN BUFFETT: No.
ANDY SERWER: No gaming apps or—
WARREN BUFFETT: No. People have shown them to me—
ANDY SERWER: Mm-hmm.
WARREN BUFFETT: --occasionally. They've-- there's even someapp with-- with me involved, on this newspaper boy tossing thing. It's the appthat-- that I revealed a year ago in the movie that-- I went out to California.And-- and to Tim Cook very patiently spent hours trying to-- trying to move meup to the level the average two-year-old. And I didn't quite make it. [LAUGHS]But I supposedly developed an app in this little movie we had. And as I walkedout, I turned to Tim and I said, by the way, what is an app? [LAUGHS] We had alot of fun. He is a terrific guy.
ANDY SERWER: Right. And—
WARREN BUFFETT: And that is a-- that is an unbelievableproduct.
ANDY SERWER: Just one more about those stocks-- you know,the so-called FANG stocks?
WARREN BUFFETT: Yeah.
ANDY SERWER: And, again, you know, does that approach asort of bubble to you, when you just see—
WARREN BUFFETT: No, it's just the opposite. I mean, you'reseeing in this kind of a market, those companies don't need capital. Well,Netflix needs capital. They're new. But, basically, the big-- the big companiesin market value don't need capital. And that will separate them from-- evenmore from the rest of the pack.
I mean, they-- they have a incredible business model. If you lookat the top 10 market value of companies-- go back 10 years, 20 years, 30 years.I mean, go back years. It's, you know, it's AT&T, the old AT&T, and theGeneral Motors, and Standard Oil in New Jersey, as it was called then. You knowthe 500. You worked on it.
And-- but those companies needed money. I mean, when AndrewCarnegie was-- went in the steel business, he built one steel mill, you know,made money that, saved it. Then three or four years later, he built anotherone. And it was-- it was capital retention and-- and oil business, the sameway, whatever it was. And now the really incredible companies are the ones thataccount for just the top five would-- would be well over 10% of the marketvalue of the company-- country. They really don't-- they don't take capitalthat-- they make it-- their suppliers may in some cases, and all that. But--but they are really-- overwhelmingly, they're capital light. And-- and that isreally different.
ANDY SERWER: Then the question is, why don't you own Googleand Amazon, those two in particular? Let's take those two.
WARREN BUFFETT: Well, that's a pretty damn good question.[LAUGHS] But I don't have a good answer. [LAUGHS] The-- I definitely shouldhave owned Google. They-- the guys came to see me before they did a-- when theywere—
ANDY SERWER: Larry and Sergey?
WARREN BUFFETT: Yeah. Yeah. And they-- and we were-- thiswas a long time ago. I mean, this was before they went public. They weretalking to me a little bit about it. And we were using search at GEICO in asignificant way. So I knew the power of search. And I actually used search alot myself, starting with Altavista or something, going way back. And search isincredibly valuable to me. And-- and it was valuable to GEICO.
So I-- I was capable of understanding of that. On the other hand,I had seen that Google was taking out Altavista to some degree. And I thought,you know, maybe somebody else can take out Google. And maybe if they'd startedearlier, somebody else could have taken out Google. So I was always a stepbehind on that.
ANDY SERWER: What do you do? Do you kick yourself? Whatdoes Warren Buffett do?
WARREN BUFFETT: No, I don't. Because I've made so manymistakes. You know, I'd-- if I tried to kick myself, my legs would beexhausted.
No. It-- you don't— you don't kick yourself in the investment. Andincidentally, you don't kick yourself when you make a mistake. I mean, it ispart of what you do.
ANDY SERWER: Right. And what about Amazon, same kind ofthing?
WARREN BUFFETT: Incredible business.
ANDY SERWER: But why-- why-- it's not too late to buythese stocks, is it?
WARREN BUFFETT: I don't know.
ANDY SERWER: But you're not-- you're not buying themright now.
WARREN BUFFETT: No. But I don't buy much.
ANDY SERWER: Mm-hmm.
WARREN BUFFETT: Thos those are the kind of businesses Ithink about a lot. Charlie thinks about them a lot. You can't help but do it. Imean, those are incredible business stories.
ANDY SERWER: Right. I mean, so the door is not closed,necessarily.
WARREN BUFFETT: No, no.
ANDY SERWER: Right.
WARREN BUFFETT: No, not at all.
ANDY SERWER: OK.
WARREN BUFFETT: Well, actually, one of the other fellows nowhas bought a little Amazon. I mean, that-- that showed up in our 13F.
ANDY SERWER: Ted or Todd?
WARREN BUFFETT: One of the two.
ANDY SERWER: One of the two bought some Amazon?
WARREN BUFFETT: Mm-hmm.
ANDY SERWER: Right.
WARREN BUFFETT: Yeah. That-- that was in our 13F. Yeah.
WARREN BUFFETT: Right. There you go. You took the plunge.
WARREN BUFFETT: Not me.
ANDY SERWER: Berkshire-- Berkshire took the plunge.
WARREN BUFFETT: Berkshire took-- yeah, Berkshire. They cando anything they want to do. They can't short Berkshire's a few stocks.
ANDY SERWER: And then speaking a little bit more aboutAmazon and Jeff Bezos, he owns "The Washington Post."
WARREN BUFFETT: Yeah.
ANDY SERWER: They offered it to you, my understanding9 is,when it is for sale. Or-- I mean, you talk to Don a lot.
WARREN BUFFETT: Yeah. I talk to Don a lot. Sure.
ANDY SERWER: Talk to-- and why-- do you regret not buyingit or did you not?
WARREN BUFFETT: No. I-- If I buy anything, it's got to befor Berkshire. You know, I-- I mean, I'm-- I'm just committed that way. I'mmentally-- Berkshire comes before me. And-- and it would have been a mistakefor the-- for Berkshire to own "The Washington Post."
ANDY SERWER: Because of the political stuff?
WARREN BUFFETT: Yeah.
ANDY SERWER: Yeah.
WARREN BUFFETT: People would think-- I will guarantee youthat-- that Jeff Bezos is not telling Fred Hiatt [LAUGHS] or anybody there--Marty Baron-- but I'll bet-- I'll bet 80% of the people, you know, or some hugenumber of people just generally think that-- that if you own a newspaper, youtell them what to run every day. I mean, it's just-- it-- you know, it doesn'thappen very often.
It used to happen with some papers, obviously, and it probablydoes still happen with some papers. But that is not the way it generally works.And that certainly wouldn't be the way it would work at The WashingtonPost."
ANDY SERWER: Yeah. I mean, it sounds like President Trumpmay think that.
WARREN BUFFETT: Yeah. Well, a lot of-- and, I mean, KayGraham did not tell Ben Bradlee what to write. I can—
ANDY SERWER: Right.
WARREN BUFFETT: You know, that, I know. I mean, and-- well,I don't Really know Don and Graham. But, I mean, it-- they just don't do it.But I will guarantee you that, you know, particular among political figures,but really in the- the man on the street, they-- 90% of them probably wouldthink that the-- that the Graham family was telling-- telling editors what todo.
ANDY SERWER: I know you're reluctant to wade intopolitics.
WARREN BUFFETT: Yeah.
ANDY SERWER: But I want to ask you—
WARREN BUFFETT: I may demonstrate that reluctance here.
ANDY SERWER: Right. Good. You will in a second, I'm sure.
ANDY SERWER: But, you know, we've talked about thisbefore, Warren, that the country seems to be fairly divided up. And you've saidit's eventually going to get back together. Do you still feel that way?
WARREN BUFFETT: Oh, sure. Sure.
ANDY SERWER: What will-- how will we get back together?
WARREN BUFFETT: Well, you could have asked me the samequestion in the Vietnam period. And I will tell you, it was-- it was even moreintense. I mean, I watched-- I happened to be in New York at the time. And Iwatched that crowd come up to Wall Street. I mean, it was coming up whicheverstreet that is-- Broad Street. Oh, no. Yeah, may have been Wall and Broad. Butwhatever-- I mean, have seen—
ANDY SERWER: They were demonstrators.
WARREN BUFFETT: Yeah. And during the Vietnam period, I mean,people were just as inflamed, I would say, on both sides. I mean, there were--it was a-- it was-- and it went on a long time. And, you know, caused thepresident not to run again, in the case of Johnson. So this country has been--we had a civil war. I mean, you know, and-- so we've-- we've had-- we've alwayshad-- we're a democracy.
You know, we've got-- we'll have strong opinions on both sides.And sometimes they-- they rev up more than others. But I do not regard this assome unique period in history. All-- everybody-- I've been reading about uniqueperiods in history ever-- [LAUGHS] ever since I was old enough to read. So I—
ANDY SERWER: Some of the things that—
WARREN BUFFETT: My dad-- listen, I grew up in a householdthat-- that it was the family's belief-- and it went beyond my dad and mymother, but went to, you know, all my uncles and all-- I mean, that basically,that-- the country had gone socialist, you know, in the '30s.
ANDY SERWER: Your father was a Republican congressman.
WARREN BUFFETT: Yeah. Yeah, very Republican. We didn't getdessert at dinner until we said something nasty about Roosevelt. I mean--[LAUGHS] my sister's [INAUDIBLE]. It was sort of ritualistic. [LAUGHS]
ANDY SERWER: You said-- shifting gears here a littlebit, you said you might continue to underperform the S&P 500. You mightcontinue to do that.
WARREN BUFFETT: Well, I will from time time, for sure.
ANDY SERWER:But what is the appeal, then, to own BerkshireHathaway stock?
ANDY SERWER:Well, I've got 99% of my money, so[LAUGHS] it appeals to me. But it appeals-- actually, it appeals to a lot ofpeople who feel very comfortable with the fact that we'll never blow it,basically. And I think that they could feel very certain, relative to almostany company, that, you know, we won't be at the bottom quartile or something ofperformance. But they can feel very-- they also should feel very-- we're notgoing to be in the top decile, either.
We-- we run it-- we run-- if you're a shareholder at Birkshire,we-- we are running the business like you've got 100% of your money in it, andyou're going to keep it in. And it's up to us to take care of it.
ANDY SERWER: You said that my market value-- my valueis not so high. And it seems like you're trying to really create a BerkshireHathaway that works well, maybe not in perpetuity but for a very long time.
WARREN BUFFETT: Yeah.
ANDY SERWER:And then you also said, we're wellprepared for a succession. It's almost going to be embarrassing, how well.
WARREN BUFFETT: Yeah. Well--
ANDY SERWER: What does that-- what does that mean?
WARREN BUFFETT: Well, it just means that Berkshire doesn'tneed me. And-- and we've got somebody that's extremely better than I am inmany, many, many respects to succeed me. And that's-- and-- and you want thatcompany, and I want it. I mean, you know, whatever the number may be-- but it'smany billions that will go for vaccines or whatever it may be, education, fordecades to come. That depends on that.
But more important, it's-- it's really a couple-- it's at leasta million people or a disproportionate number, have got something close to theirwhole savings in. And so we're their partner. I mean, Berkshire came out of apartnership. Charlie ran a partnership, I ran a partnership. We actually-- wedo look at the people as partners. And we look at a partner or somebody whotrusts us to make sure that we-- we don't-- they don't get killed in theprocess. [LAUGHS]
And they are not-- if they're shooting for the top 1% ofperformance or 5% of performance, they're not going to find it. They might havefound it in our partnership where I work with tiny sums of money, but we can'tdo it. And we don't want you to think we can do it.
ANDY SERWER: You said a person to succeed me, I thinkjust now. And so is that a person that we know or is it-- I mean, there arevarious people at the top of Berkshire that you've tapped. I mean, there's Gregand Ajit are going to be on stage this year at the meeting.
WARREN BUFFETT: It depends what happens to me and what happensto other people. But—
ANDY SERWER: Mm-hmm. It's not Justin Bieber or someoneout there.
WARREN BUFFETT: No. It isn't even Elon Musk.[LAUGHTER] Butthe interesting thing is, if you take our top 10 holdings at Berkshire-- abouta week ago I got $150 billion in them.
ANDY SERWER: Mm-hmm.
WARREN BUFFETT: I don't know who the successor is to theCEO in any one of those 10. And I've watched a lot of successors come and go inthose holdings. So to think that we wouldn't have somebody able is just crazy,I mean, in our case, that-- that is just the ultimate responsibility of the boardof directors, is to have the right CEO and be prepared for if something happensto that person.
ANDY SERWER: Right. You said that we possess skilledand devoted top managers for whom running Berkshire is far more than simplyhaving a high paying or prestigious job. How do you know that?
WARREN BUFFETT: Well, you don't know for sure. But-- butyou've got to make judgments on that. You make judgments on a marriage. Imean-- [LAUGHS] and you've got more time to look them over, and-- thenselecting successor CEOs. But that's the most important decision, though, thatyou make. It isn't what their IQ is. And it-- it isn't even necessarily thetop, maybe in a given type of managerial skill. I mean, if they're-- if they'rethe kind that will leave you tomorrow-- I mean, you really want somebody thatis devoted to Berkshire.
And incidentally, we look for the same thing in oursubsidiaries. In other words, we've got a group of managers. And dozens anddozens and dozens-- now everyone doesn't feel this way. I mean, but we've got amuch higher percentage that feel that way than, I think, than virtually anybodyelse. But-- but you can't bat 1,000 in that game.
ANDY SERWER: Another topic that people are very keen onright now is student debt. And I know that you are really prided yourself onhelping students. Is this something that really concerns you?
WARREN BUFFETT: Well, it would be a tough considerationfor me if I were going to school, whether I wanted to not only invest about a college,whether I wanted to invest the four years. I didn't want to go to college thatmuch when I went-- got out of high school. But not only the four years, but ifI had to incur, you know, hundreds of thousands of dollars in student debt, I--I don't know which decision I would make.
No. It's-- you know, higher education is really expensive. Andwe've helped out many thousands of students, and the Gates Foundation has donethe same thing, and other foundations that I support. But it's just expensive.It's very expensive.
ANDY SERWER: Is it still worth it?
WARREN BUFFETT: It depends on the individual. It dependson the individual more than the school. I mean, it-- there's a lot to learn inthose four years. I mean, there's a lot you can learn in those four years. Andwhether you do or not depends on-- more on the individual. I don't think it-- Idon't think it makes sense for everybody to go to college. You know, and-- andI'm not so sure it made sense for me to go to college.
ANDY SERWER: Really? Come on.
ANDY SERWER: No, I'm not kidding. I mean, I learned alot by reading. And you know, I spent three or four year-- counting graduateschool, four years, that I could have been doing other things. [LAUGHS] Andthere were a lot of intelligent things to do then. Who knows? No, I don't thinkit was essential. I mean, I had some wonderful people. I met through it.
Main thing when I went to Columbia, though ，with taking BenGraham's-- because I already knew what he was going to say. I mean, I read it.I understood-- you know, I mean, he was a very good writer. But it wasinspirational. It was inspirational more than it was educational.
ANDY SERWER: We have a few questions from our audienceat Yahoo! Finance from Twitter. One is, what advice would you give to a younginvestor today?
WARREN BUFFETT: Well, you've got to understand accounting.You've got to-- that's got to be like a language to you. And so, yeah, you haveto know what you're reading. I mean, and unless you know that language-- andsome people have more aptitude for that than others. You know, but-- and that'sone thing I learned by myself. Now, I took courses in it afterwards, forexample. But I learned it myself in a-- largely.
So you have to do that. And you have to have the attitude thatyou're buying part of a business, and not that you're buying something thatwiggles around on a chart or that has resistance zones or 200 day movingaverages or that you buy puts it calls on or anything like that. You're buyingpart of a business. And if you buy intelligently into a business, you're goingto make money.
And then you have to buy something that, in my view, which youdo if you're buying a business, that you're not going to get a quote on forfive years. That they're going to close a stock exchange tomorrow for fiveyears, and that you'll be happy owning it as a business.
If you ownedCoca-Cola, it didn't make any difference in 1920 if it went public. Theimportant thing was what I was doing with customers. And you probably wouldhave been better off if there wasn't any market in it for 30 or 40 years.Because then you wouldn't have gotten tempted to sell it. [LAUGHS] And you justwatch the business and you'd watch it grow and you'd feel happy. So the-- theproper attitude toward investing is much more important than any technicalskills.
ANDY SERWER: Another question from one of our audiencemembers-- with all your success, what keeps you and Charlie going?
WARREN BUFFETT: We have so much fun. I just talked to himthe other day for an hour. And we have fun every time we talk. And we arehaving-- we are doing what we love to do with people we love every day. And,you know, I've been lucky on health. God knows, you know, how Charlie at 96 ofme at 89 with our habits and everything, it's-- I don't know what it's a testamentto. I think, actually, being happy in what you're doing makes a huge difference.
And you don't want to go around having grudges against people.And, I mean, all these things that cause you to think negatively, whether it'sabout the world or about individuals or about your own bad luck or anything ofthe sort. Just forget it, basically. I think-- I think that helps.
ANDY SERWER: How do you clear that stuff out of yourmind?
WARREN BUFFETT: I don't know whether you're born to someextent that way. But you certainly see the works, and the-- you know, I mean,you just take the people you know. And the ones are sour at the world, theworld gets sour on, you know, basically. [LAUGHS] And so it's-- now it's goingto be tough, you know, in certain situations. And if you've got some majorillness or something, I'm sorry. I mean, that's just-- you can have terribleluck at life, and that's-- it's-- and it can seem very unfair to you.But you'regoing to have-- you're going to have a better experience in life if-- ifbasically you-- you see the positive side of things.
ANDY SERWER: Hm.
WARREN BUFFETT: You know, when I sold shirts at Penney's and Iwas getting $0.75 an hour, I would rather have been doing something else.[LAUGHS] But since I've been certainly 24, I've always-- I've never-- therewasn't anything else I wanted to do. And I had everything I needed, and lifewas wonderful. And-- and I tell those students that comes-- you know, you gotto live. So you may take a job at first for some organization that you don'tadmire or work for somebody you don't admire.
But look for somebody you admire. Look for somebody whereyou're looking forward to working with them that day, and doing something thatyou're looking forward to, that you'd do if you didn't need the money. And Charlieand I found that a long time ago.
ANDY SERWER: And you're going to turn 90, what, in afew months?
WARREN BUFFETT: About five months. Yeah.
ANDY SERWER: So looking back over these years, what areyou most proud of?
WARREN BUFFETT: Oh, I would-- well, I'm-- I'm certainly--well, I have to give all the credit to my mother. But I'm certainly proud of howmy children have worked out. I mean, that's not easy, in a sense, having a namethat becomes famous or, you know, and thought of as having all kinds of money,although they don't. But all three of them are now in their 60s. In fact, you'relooking at a guy whose youngest child is 61. I mean that's-- [LAUGHS] andthey've all-- they've all lived very productive lives. And they-- and they allget along fine with each other, and they-- and I've seen a lot of richfamilies. It doesn't always work out that way.
ANDY SERWER: And another question from the audience--if you were going to start a business today, what kind of company or what industrywould you look to get into?
WARREN BUFFETT: I'd-- I'd do the same thing I've done. Imean, I—
ANDY SERWER: Can everyone do what you do, though? Imean, do you think that?
WARREN BUFFETT: I'm cut out for-- for managing money. [LAUGHS]You know, it doesn't mean it makes-- you know, different people have differentkinds of minds. I-- I play bridge with people who can remember the hand theyplayed 30 years ago, you know, and watch a basketball game at the same time.But-- but-- so there's all kinds of different smarts that people have. And I'vebeen fortunate enough that I-- mine have been in something that pays off big.And I could be, you know, very good at something else that is just as muchutility to society. But it doesn't-- it doesn't fit the market system as well.