Warren Buffett CNBC Interview April 2023: Video & Full Transcript

Becky Quick had another CNBC interview with the Warren Buffett and Greg Abel of Berkshire Hathaway, likely as a preview to the annual shareholder meeting that is coming up soon in May. You can watch a replay of the interview via this CNBC YouTube playlist and/or read the full text transcript. I appreciate that CNBC provides the transcripts, and they are the most efficient way for me to digest the information and take notes. Below are a few highlights (bolded emphasis is mine).

With higher interest rates upon us, Buffett reminds us that those 30-year fixed rate mortgages at 3% or 4% were and are a great deal for the borrowers, but not great for the banks (or investors in those mortgages). This is one of the reasons I don’t own mortgage-backed securities (MBS) or a Total US Bond index fund, which many people don’t know consist of roughly 25% mortgage-backed securities.

WARREN BUFFETT: I think that they that there will be problems when and, you know, people had anybody that’s got a fixed rate in, locked in for a while when the fixed rate goes away and they gotta reprice it now has got a problem. And the holder of a 30-year Freddie Mac or Fannie, they’ve got the best deal in the world. And they should. I love the program. But—

BECKY QUICK: You mean somebody who has their 30-year mortgage—

WARREN BUFFETT: Yeah, who has the mortgage. But the reason it’s for the very fact that it’s very advantageous. The person who has the mortgage means it’s a very dumb holding for banks. But I also believe in the system that produces I think net the country is better off because it but I don’t wanna hold any 30-year mortgages myself. And the idea that if you’ve got a 30-year mortgage, you personally, you can call off the deal 10 minutes later, and if, and if the banks got a bad deal they’re stuck with it for 30 years. Berkshire cannot make the deal with our credit than you can make if you qualify for making a Freddie or Fannie Mae. I think that’s a good thing for society. I don’t think it’s a very good investment for banks.

Regarding FDIC insurance, Buffett is willing to bet anyone a million dollars that not a single US depositor will lose a penny of money within the next year due a bank failure. The media likes to stoke the fear. Buffett is realistic and is willing to put his money where his mouth is. I don’t lose sleep about my cash in any bank with FDIC insurance that is under the $250k limits ($500k for a joint account, by the way).

WARREN BUFFETT: But I will be glad to put a million dollars of my own money in the bank that or any place else actually that anybody takes a differing view takes and have them put a million dollars in, and at the end of the year from when we do it if any American depositor has lost money from a bank failure, the other fellow gets to name where the $2 million goes to what charity.

In many ways, the world is better today than it was for previous generations. It’s trendier to complain the other way, but that is human nature.

I think I was very, very, very lucky that Berkshire happened to be in America and I happened to be an American. And I was born in 1930 and I’ve been in a golden age ever since I was born. The GDP per capita’s up, like, six-fold or seven-fold. In one person’s lifetime there’s never been anything like that in the history of mankind. And so and, you know, we love to complain about wherever we are, but, you know, most people don’t work on Saturdays and don’t work on Sundays and when I was a kid everybody worked on Saturdays. And I mean, it the world has changed so much for the better in terms of, you know, how well off people are compared to any other time in history. If I’d been born 150 years ago and I went to the dentist, I mean, you know, they’d pour whiskey down me and all kinds of things. There’s just all kinds of improvements. And but it’s man nature to be dissatisfied. And politics does stir that up. And you’ve gotta say, if you’re out of power, that the other guy’s screwing up and you could do better. And that’s just built into the system. But that was the case when I was a kid, and it’s the case today.

Ignore economic forecasts and interest rate predictions. I’m always amused when Warren Buffett sits there and says “I ignore the noise” and all around him on the screen is all this… noise. S&P 500 up 5 points since 10 minutes ago! DOW down 10 points! 5-year yield up 8 points!

WARREN BUFFETT: I would say that I’ve been in business, running Berkshire for 58 years, and I’ve never opined an economic forecast of any use to the company. And all you have to do is keep running every business as well as we can, and we got to keep plenty of cash on hand so that people are going to keep making intelligent decisions, rather than those forced upon them. And that’s all we know how to do. And if I depended in my life on economic forecasts, you know, I don’t think we’d make any money. I don’t know how to do it. And, you know, people want to get them, so they get them. But it has no utility.

And but we haven’t changed our course, you know, in 58 years. And we just wanna buy good businesses run by people we like and trust and at a decent price. And we’ll keep doing that. And we’ll keep buying Treasury bills every Monday, and we haven’t missed a Monday yet. And we keep all our money short. We keep it in Treasuries.

And we were getting four basis points, which was $40 million on $100 billion worth. And now we get almost 5%, which is $5 billion. So we’ve got 100 times the earnings. But it doesn’t make any difference. I mean, that is there to be the strongest company you can imagine. And also, to take opportunities when they come along.

Warren Buffett buys US Treasuries because they are the absolute safest and most liquid instrument available to him. Notice he has never kept Berkshire Hathaway’s cash in a bank, even a huge megabank like Bank of America or Chase (and certainly not Silicon Valley Bank), because he KNOWS he is not covered by FDIC insurance. As an individual investor, I also KNOW that I am different that I am covered by FDIC insurance up to clear limits. Buffett cares about the interest earned on his cash, but not at the expense of safety. There is a big gap between safe 99% of the time and safe 100% of the time. Any time you have to multiply by zero, you get zero. It sounds stupidly simple, but zero happens.