Warren Buffett CNBC highlights Feb. 27, 2017

February 27, 2017

Warren Buffett spoke on CNBC this morning for 3 hours and here are points that I thought were noteworthy:

  • The stock market is not in a bubble territory.
    • If rates were 7-8%, valuations are exceptionally high.
    • Measured against current interest rates, stocks are on the cheap side.
    • If rates remain low for the next 10 years, you’ll regret not owning stocks.
  • It baffles him why someone would buy a 30 year US treasury bond. It doesn’t make any sense.
  • His recent purchases of stocks has nothing to do with the Fed or the elections, it has a little something to do with interest rates.
  • He bought more Apple shares in January. He has stopped buying after the recent earnings report, because of price.
    • He bought $123M worth and his lieutenant bought $10M.
    • He bought because he likes it. He thinks the iPhone is a sticky and useful product. He also thinks that Tim Cook is a good capital allocator.
    • He thinks Apple will reach a $1T market cap sooner than Berkshire.
  • He regards Jeff Bezos as possibly the best CEO he has ever seen.
    • He regrets not buying it, but he didn’t understand the business model before.
    • Retailing is tough for him to figure out.
    • He wouldn’t buy the shares today.
  • In the investment industry, good salespeople attract more money than good investors.
  • He will judge Trump on 3 things:
    • How safe the country is.
    • Economy.
    • The width of participation on economic growth.
  • He guesses that 1986 like comprehensive tax reform is difficult.
  • He received 2 pieces of good advice.
    • Praise by name and criticize by category.
    • You can always tell someone to go to hell tomorrow. You haven’t lost that option.
  • His metric for all of his investments is evaluating the future discounted cash generated by the business compared to the current outlay of present cash. He also evaluates each investments against other investments.

Here is the link for the complete transcript of Warren Buffett’s interview: http://www.cnbc.com/2017/02/27/billionaire-investor-warren-buffett-speaks-with-cnbcs-becky-quick-on-squawk-box.html

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