Warren Buffett 3-Hour CNBC Interview - 2018 Berkshire Annual Meeting

Buffett opened 2018 annual meeting with teaching moment instead of jumping into Q&A: 'I really thought that maybe...giving a little bit the wrong lesson...all the questions would naturally tend toward current events.' Went back to 1942: 'When I bought my first stock as an illustration of all the things that have happened since 1942 we've got 14 presidents seven Republicans seven Democrats...world wars...9/11...Cuban missile crisis...all kinds of things.' The lesson: 'The best single thing you could have done on March 11 1942...buy an index fund and...never look at a headline never think about stocks anymore just like you would do if you bought a farm.' The math: 'If you put ten thousand dollars in an index fund that reinvested dividends...it would come to 51 million dollars now.' Only requirement: 'The only thing you had to really believe in' was America.

Buffett on bitcoin controversy: 'Charlie said bitcoins like rat poison...I said well it's probably more like rat poison squared...Charlie went on...to then basically call bitcoin turds.' The fundamental critique: 'When you buy a farm...you look at the crop every year...when we buy a business we look at what the business earns...we are buying something that at the end of the period we not only have what we bought in the first place but we have something that the asset produced.' Bitcoin: 'When you buy non-productive assets...all you're counting on is whether the next person is going to pay you more because there are even more other next person coming along but the asset itself is creating nothing.' Gold comparison: 'If you go back to the time of Christ...how many hours of labor...to buy an ounce of gold...compound rate maybe a tenth or two tenths of one percent.' Greater fool: 'It's buying something because you expect the pool of people who want to buy it because they want to sell it to somebody else will grow.' Like '17th century...Amsterdam' tulips.

Wells Fargo incentive failure: Employees pressured by cross-selling targets created fake accounts. Pattern recognition: 'Geico had a ceo in the early 70s who refused to accept the fact that the lost reserves were developing badly...if you refuse to accurately assess your loss reserves you also don't know your costs...you get in a hole...it's just easier to shut your eyes and hope that something good happens and...it essentially bankrupted the company.' Opportunity from crisis: 'That was a huge opportunity for us because Geico was a solid company underneath but their balance sheet was a mess...we bought half the company for less than 50 million bucks.' Wells parallel: 'The fundamental business that Wells Fargo they've still got the accounts...got the loan customers we do business with them every day.' Insider solution: Tim Sloan 'was an insider...can you be an insider and still be the one who cleans it up?' Yes - Deryck Maughan at Salomon: 'I had to have an insider...I arrived there on a Friday...they were about closing us up...somebody had to run a business...doing maybe hundreds of billions...I interviewed people on a Saturday...had to come up with somebody by Saturday afternoon...the guy behaved magnificently.'

Buffett's regrets: 'I should have bought Amazon...Jeff Bezos is achieving miracles...I didn't know whether...this really was the one that would stop the competitive race.' The evaluation failure: Not about understanding technology but about 'whether there'd be more entrance I didn't know enough about technology to know whether this really was the one that would stop the competitive race and all that.' Also: 'I should have done Google too.' Admission: 'Silicon Valley and a lot of things that happen there it's not really your field of expertise.' The missed insight was about durable competitive advantage (moat), not the technology itself.

Not temporary news: 'The regulatory issues concerning the fang stocks...that's important...if if you 60 Minutes had it two different ones...illustrated the effect of...the fellow said Facebook...won the election...for Trump the fellow who managed their operation...in the last election out of San Antonio.' The power: 'They really knew how to target everybody in the country basically with things that would appeal directly to them and...that could not only affect them in encouraging the followers to...bring out the vote but it could suppress votes.' Integration: 'They had Facebook embedded the fellow used to determine better there.' Scale: 'It's a very very important issue...probably Congress has just begun to scratch the surface of it.' Obama vs Trump: 'They took a first step and then...my guess is they thought they were doing it as well in the Democratic campaign in 2016 as a Republican but the Republicans were technologically advanced.' Counter-democratic: 'The trick...is to get your vote out and then the trick which is...really tricky and is very counter-democratic is to suppress the other guy's vote.'

Buffett's real-time indicators: 'I see a lot of numbers...get them pretty fast...generally pretty strong...you could look at railroad car loadings for example...every week...you can see them by category 22 different categories...18 of the 22 are up and overall they're up...they're carrying stuff because people are buying stuff they're adding inventory.' Inflation signals: 'You're seeing some inflation...in in some building materials we've seen it particularly...in electronic components.' TTI business: 'We have an operation most people probably don't even know anything about called TTI and it carries close to a million different types of electronic...you can order any one of a million items...they're very small but people buy it because they're using them.' Demand: 'We have a hard time filling orders...in that business and...that's kept getting stronger now for a year right up to when we're talking here.' Overall: 'We're seeing pretty good business most places.'

Structure change: 'Ajit Jain and Greg Abel named as co-vice chairman along with...Charlie.' Warren's life: 'Made it easier it was already easy to start with...but...the five percent that I didn't like I just said oh those are your responsibilities that's the way I selected what their responsibilities would be...it's changed our lives very little but all for the better.' Charlie's view: 'You can only find two people who've done better in their jobs in all of America very outstanding people.' Timing: 'The truth is we're too late' promoting them. Not succession horse race: 'That's...not a good way to characterize it.' The reality: 'The number of businesses that report to Warren is a pretty unbelievable number...have gone from one person with all those businesses reporting to him to three people.' Lean structure: 'The company's not adding...a lot of staff...under Greg and under Ajit you just have three great business minds managing...over 50 business entities so it's still one of the leanest management structures you've ever seen.'

The initiative: 'Berkshire's move to go along with JPMorgan and Amazon to try and come up with a way to rein in health care costs.' Bill Gates scale: 'Other than improving the education system making sure the health care costs don't continue to go up so rapidly is the...biggest issue.' Impact: 'State governments over time they've had to shift money away from education and infrastructure into the various health care expenses.' Charlie's assessment: 'Rampant waste is a good phrase of course our system is shot through with rampant waste and a lot of the medical care we do deliver is wrong...expensive and wrong is...ridiculous.' The immoral part: 'A lot of our medical providers artificially prolong death so they can make more money I regard that as deeply immoral and there's a lot of it.' Political prediction: 'I think the first time the Democrats control all three branches of government we will get single-payer medicine...it's so bad that people will reach out for a complete change forced by the government.' Example: 'To have a young person have a $5,000 deductible when he has a baby that's not insurance anymore.'