market folly

Berkshire Hathaway's annual meeting was this past weekend and was filled with wit and wisdom from investing legends.  In a separate interview, CNBC's Becky Quick sat down and talked with Warren Buffett, Charlie Munger, and Bill Gates.

Here's some takeaways followed by the full 2-hour video below.  The first hour was just Buffett by himself and then Munger joined in, and finally Gates joins at around 1hr 20.


Buffett, Munger & Gates Interview 2019

- Buffett says continued trade war would be bad for the whole world

- On Kraft Heinz (KHC): "The company has my confidence."  If he just owned Heinz, he says he'd be doing better but they paid too much for Kraft.  On overpaying: "Time usually works it out, but capital could have been better deployed."

- On the Occidental Petroleum (OXY) deal he's backing:  They've committed the $10 billion 100% and they don't have control over what OXY does with the money or the terms of the deal, etc.  While the 8% preferred is a sweet deal for him, he noted that, "It's a bet on oil prices over the long-term more than anything else.  It's also a bet on the fact that the Permian Basin is what it's cracked up to be."  He and Munger feel good about doing the financing of the deal and they could have done $20bn instead of the $10bn if needed.

-  He likes when Apple (AAPL) goes down, "Because they're repurchasing shares and when they repurchase shares our interest goes up and we don't lay out a dime; I love it."  He's "wildly" in favor of the company's $75 billion buyback.

- "I will always react well to declining prices."

- He thinks China and the US will be the two big superpowers over the next 100 years and that the two won't always get along and there will be disagreements over various things.

- On Wells Fargo (WFC):  Munger said: "I think it's a fine company; so they made one bad decision about an incentive plan.  I regard it as an honest mistake not as some deep moral failure ... they just had a blind spot."

-  Buffett said: "Charlie beats this into me all the time:  As soon as you find a mistake, do something about it.  And sometimes that's unpleasant.  But I've gotta do it."

-  Bill Gates on China/US: "It's the most important relationship in the world."

-  Gates is also concerned about intellectual cooperation being slowed down between the two countries and things like artificial intelligence

- "Anger drives out reason." ~ Munger

"  I think people should have modest expectations" about stock returns going forward, Gates says.  He thinks valuations have gotten high and he's amazed at that, but he hasn't made many changes to his Foundation's equity portfolio.

-  "I think stocks are ridiculously cheap... if you believe that 30 year bonds at 3% makes sense." ~ Buffett

- Buffett on what he's been reading lately:  Melinda Gates' book The Moment of Lift


Video of Interview

Embedded below is the 2-hour interview with Warren Buffett, Charlie Munger, and Bill Gates: