Warren Buffett On Interest Rates, Capitalism & The Oil Industry | May 6, 2019

Transcript

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Summary

This was the 54th annual shareholder meeting for Berkshire Hathaway, attended by more than 40,000 people, including business leaders like Tim Cook, CEO of Apple. Warren Buffett, chairman and CEO of Berkshire Hathaway, shares his thoughts on the meeting and the potential for trade tariffs. He also discusses Berkshire's involvement in the Occidental deal and the recent news of Kraft Heinz restating earnings. Tim Cook expresses his excitement about Berkshire's investment in Apple.

Questions & Answers

Q: What did Tim Cook think about attending the Berkshire Hathaway shareholder meeting?

Tim Cook expressed his excitement about attending the meeting, noting that he had never been to one like it before. He appreciated the lively atmosphere and the fact that Warren Buffett and Charlie Munger took every question. He felt it was a great learning experience for him and everyone in the audience.

Q: What does Warren Buffett think about the annual shareholder meeting?

Warren Buffett finds the meeting a lot of fun and enjoys interacting with the shareholders. He sees it as an opportunity to work for the shareholders and appreciates the positive and joyful spirit of the attendees. He feels grateful that he never receives any complaints and sees smiles on people's faces.

Q: How does Warren Buffett feel about the potential for trade tariffs?

Warren Buffett acknowledges that a trade war could have a significant and negative impact on the world economy. He points out that negotiation tactics involving threats can be dangerous and ineffective. He believes it's important not to escalate the situation and to find a way to negotiate without endangering global trade.

Q: Would Warren Buffett use the same negotiation tactics as President Trump in trade talks?

Warren Buffett emphasizes that his negotiation style is different from President Trump's. He prefers to be straightforward and transparent about his intentions and doesn't engage in games or bluster. He believes in saying what he'll do and sticking to it, without playing games.

Q: What would it mean if tariffs on Chinese goods were raised to 25%?

Warren Buffett notes that it would have significant effects on the global economy, as trade relationships are interconnected. The effects would depend on how countries retaliated and the extent of the trade war. He mentions that if tariffs spread to many countries, similar effects would be seen as when individual states in the US enacted tariffs.

Q: How would a trade war affect Berkshire Hathaway's businesses?

Warren Buffett explains that a trade war would have broad consequences, affecting all major markets and various businesses in the Berkshire Hathaway portfolio. The misallocation of resources, job migration, and economic contraction would be significant. He highlights the importance of avoiding a trade war and the potential dangers that it poses.

Q: What are Warren Buffett's thoughts on the Kraft Heinz restatement of earnings?

Warren Buffett acknowledges that Kraft Heinz will need to restate earnings for 2016 and 2017 due to misstatements in their original filings. While not quantitatively material, it affects the ability to report Q1 earnings. He mentions the ongoing investigations into misconduct in the procurement operation but assures that no one in senior management was involved.

Q: How does Warren Buffett feel about the deal between Occidental and Anadarko Petroleum?

Warren Buffett explains that Berkshire Hathaway has committed $10 billion to support Occidental's bid to acquire Anadarko. He indicates that they have confidence in Occidental's management and vision for the deal. While not involved in the specifics of the offer, Warren Buffett supports the use of cash for the deal rather than issuing more stock, as it benefits Berkshire Hathaway's interests.

Q: What risks does Apple face in the current trade environment?

Warren Buffett acknowledges that Apple faces risks due to the ongoing trade tensions and its exposure to the Chinese market. He emphasizes that the important factor is the long-term relationship between the US and China, rather than short-term market fluctuations. He points out that a trade war between the two major economic powers would have negative consequences for not just Apple but for overall economies.

Q: What does Warren Buffett think about Apple's share repurchase program?

Warren Buffett is enthusiastic about Apple's share repurchase program and believes it can be a smart move if done at the right price. He emphasizes that repurchases are like any other investment, where they can be either dumb or smart, depending on the price. He supports companies that understand the value of repurchases and their potential benefits.

Q: How should investors approach market volatility and focus on the long term?

Warren Buffett advises investors to focus on the intrinsic value of businesses, just as they would for owning a farm or a real estate property. He suggests not being swayed by short-term fluctuations in stock prices and instead thinking long-term. He reminds investors that if they have extra money, market declines can present opportunities to buy stocks at cheaper prices.