Legendary investor, Warren Buffett, sat down with Becky Quick from CNBC today to discuss the markets, life, and what it takes to be a gangster.
Here were some of the highlights.
Source: CNBC
On Apple
“I can very easily determine the competitive position of Apple now and who’s trying to chase them and how easy it is to chase them,” Buffett said on “Squawk Box” from Omaha, Nebraska, following Saturday’s Berkshire’s annual meeting.
“We happened to be well situated in terms of having these massive home furnishing stores. I can learn very easily how consumers react to different things there,” he said, referring to Berkshire’s ownership of Nebraska Furniture Mart. “You can’t move people by price in the smartphone market remotely like you can move them in appliances or all kinds of things. People want the product. They don’t want the cheapest product.”
On Amazon
When Warren Buffett was asked why he’s not buying Amazon shares, the billionaire investor had a simple answer.
“Stupidity,” Buffett said. He was speaking Monday on CNBC’s “Squawk Box.”
“I was impressed with Jeff early. I never expected he could pull off what he did … on the scale that it happened,” Buffett said to CNBC Monday. “At the same time he’s shaking up the whole retail world, he’s also shaking up the IT world simultaneously.”
“These are powerful, powerful ideas with big potential, and he’s executed,” Buffett said.
“I was too dumb to realize. I did not think [Bezos] could succeed on the scale he has,” Buffett said, adding that he “really underestimated the brilliance of the execution.” The investor humbly admitted that he and partner Charlie Munger “miss a lot of things, and we’ll keep doing it.”
On Google
On CNBC’s “Squawk Box” on Monday, Buffett said, “If I was forced to buy [Google-parent Alphabet] or short it, I’d buy it; same way with Amazon. But it’s as little hard when you look at something at ‘X’ and it sells at 10X to buy it.”
“That’s cost people a lot of money at Berkshire,” he said.
On Wells Fargo
Billionaire investor Warren Buffett told CNBC on Monday that Wells Fargo’s reputation has been hurt by the fake account sales scandal.
“[But] the fundamental earnings power of the bank over a period of years has not been hurt in any material way,” Buffett said on “Squawk Box,” two days after he held court at Berkshire Hathaway’s annual meeting.
“At Wells Fargo, you knew some stuff was coming up through the branches. Somebody didn’t pay attention to it,” Buffett said. “It’s just totally bad news.”
“They obviously came up with an incentive system that incentivized the wrong thing,” Buffett said. “Most businesses do that from time to time.”
“The big mistake was when whenever sufficient information had come back that this is producing a counterproductive effect … that’s the moment of truth,” he said. “If you don’t do it immediately and you let it run for a while, now you’ve got the ultimate problem.”
On a personal note, Buffett talked about Stumpf’s role. “I know John Stumpf and I don’t think it had anything to do with making money.”
On market exposure after events, like French elections
In an exclusive interview on “Squawk Box,” Buffett said he doesn’t make knee-jerk reactions about stocks after events like the French presidential election.
“It’s not a question of being in the market,” he said. “It’s a question of owning businesses. If I wanted to own farms, I wouldn’t be buying and selling them based on an election. I wouldn’t try to figure that sort of thing out.”
Buffett said he wasn’t waiting on the election results to make investment decisions. “I can’t think of what I really (would) have done much about purchases or sales in any election,” he said.
“When I was a kid, every time a Democrat got elected … there was a wake in our house, and my father would start storing sugar in the basement. So, I’ve learned to not put too much weight in any given election,” he said. Buffett’s father, Howard, was a four-term Republican congressman from Nebraska.
On IBM
“I would think the biggest value will come in when it actually replaces human labor, and machines don’t come round annually and ask for higher wages, and they don’t need health care, and maybe a little maintenance,” Buffett said on CNBC’s “Squawk Box.”
“It should replace people in a big way, unless some other products do the same thing,” he said, noting Watson’s potential for reading X-rays faster and better than humans.
“Watson is a pretty amazing invention,” Buffett said. “I’m sure the revenue is growing very significantly but from a very small base.”
“I think it has great potential. It has not come along as fast commercially as you would have hoped,” he said.
On GOP healthcare bill
One clear take away from the GOP health-care bill: We’re going to ‘cut the hell out of income taxes’ for the rich, says Warren Buffett
Warren Buffett is walking the floor at #BRKLiveStream https://t.co/kivJPf6OR2 https://t.co/yY9ChQtbi5
— Yahoo Finance (@YahooFinance) May 6, 2017
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I was a bit surprised by his comment, “Bonds are a terrible choice vs stocks.”
Buffet knows FANG stocks are winners, but he likes to have influence and Apple, Amazon, Google and the likes will take his money, but not his advice.