Warren Buffett 10th Annual 'Ask Warren' Show - CNBC 2017 Annual Letter

Buffett opens 2017 annual letter with familiar American optimism theme. 240 years is less than 3 of his lifetimes, yet look what's been built from nothing. Secret sauce hasn't been lost despite hiccups like 2008 panic. Country always comes back and wins.

Responding to Dow 20,000 concerns. Neither investors nor Buffett know when to enter markets. Terrible mistake to stay out trying to time entry. Best approach: buy consistently over time, diversify across companies and time. Like farms - if productive long-term, buy unless absurd price.

Not in bubble territory. Interest rates act like gravity on asset valuations. At 15% in 1982, rates pulled down all asset values. Measured against 2.3% 10-year rates, stocks on cheap side vs historic valuations. Risk is rates going up significantly.

$7-8B invested across all four major airlines. Never met CEOs, no communication. Totally passive investor. Bought at lower prices, not buying now. Index funds also own significant stakes. Liked share repurchases and tax loss carry forwards.

Dow Chemical preferred was callable, would convert to 72M common shares. Buffett doesn't own any chemical company common stocks. Timed sales aggressively as stock rose above conversion price. Successfully exited all shares around call date.

Free trade benefits world overall and should be kept. But creates 'road kill' - workers who lose jobs to cheaper imports. Election was huge referendum showing problem. Both parties moving away from free trade. Rich society should help those displaced after 25 years in industries like shoes/textiles.

Alex Behring (3G/Kraft Heinz chairman) met Unilever CEO twice in London. Got 'neutral' response, gave letter outlining friendly deal. Offer leaked, became clear it was unwelcome. Buffett immediately withdrew when informed. Doesn't work acquisitions via mating dance - prefers upfront yes/no.

Apple now ~$17B position. Irony: loves Apple but no iPhone, loves airlines but hasn't flown commercial in 30+ years. Bezos is best manager he's ever seen. Should have bought Amazon long ago - admired it but didn't understand power of model, price always seemed high. Missed it big time.

Only WSJ and NYT have assured future - successfully developed paid online presence. Washington Post third possibility thanks to Bezos. 1300 daily papers remain vs 1700-1800 recently. Was incredible business when first source for stocks, sports, news. Internet beat them. 1300-1400 papers haven't figured out digital complement to print.

Economy same since fall 2009: steady 2% GDP growth. Not 3-4% but terrific. One generation at 2% adds $19K per capita - kids will live much better. Mnuchin sees path to 3% via tax/regulation reform. Buffett wouldn't bet on 3% but 2% does terrifically. Productivity only thing that creates growth.