March 3, 2008, 6-9am EST, Berkshire Hathaway Chairman Warren Buffett sat down at the Nebraska Furniture Mart for a CNBC radio "speaker" Live interview with column host Becky Quick.
The following is the full text of the day's program compiled by Burrelles Luce, a major media testing agency in the United States.
Asked by: I'm Eric Jones from Los Angeles, California. Mr. Buffett , spring football season is about to start, what's your prediction for the Nebraska football team?
Buffett: This question is very simple. Tom Osborne is coaching our team again, we have a lot of talented players and we can win at least 8 games. It was a desperate situation a year or two ago when the coach was looking for a 6-foot-4, 120-pound guard. Someone said: "It's a bit strange to have such a player as a defender." But only such a player can break through when the defense is torn apart. Today our team is stronger and will achieve good results.
Becky: An audience member named Tony from Springfield, New Jersey asked, "I got a tax refund and want to invest the money. Which of the following investments would you choose? 1. Go to the Casino Gamble money (directly to the city of Atlanta I guess); 2. Buy a lottery ticket; 3. Invest in Ambac.
Buffett: Well, I'll answer his question. I'll pick four, at a very low fee Buy a commission-free neutral fund .
Becky: Okay, you returned the question to him again.
Finally, Cara Bruder of Oklahoma City, Oklahoma asked, “I’m most Favorite Relief Recipient is my children and your favorite charity is Gates Foundation . When I send money over $12,000 to my kids, it pays about 50% tax, whereas when you give money to the Gates Foundation, you pay no tax. Why don't you pay? Why can't I enjoy the zero tax rate like you? "
Buffett: You pay taxes only after you use up your lifetime tax exemption. I think next year the lifetime tax exemption will increase to $3.5 million, which you and your wife both have. So you can Give your kids $7 million next year and it's tax free. Unless you've already given $7 million to your kids, you can still give your kids a lot of money, or give money to his dog, like Leona Same as Helmsley, no tax. But the difference is one is for your self-interest and the other is for the benefit of society.
Becky: Okay, we had a lot of similar questions, and the audience asked some about Estate tax and other issues.
We have the honor of having Mr. Buffett today.There is some noise in the market right now and he will tell us what he sees in the current economy and the market from various companies under his umbrella .We'll be sending back more live coverage from the Nebraska Furniture Mart in Omaha.
Cal: It's not a lucky day for the dollar, Joey. , discussingBuffett was there when the dollar was traded. As Carl said, this morning is a little bit special for Speakers.
We're broadcasting Warren Buffett's replies to emails live from the Nebraska Furniture Mart in Omaha, just log on to CNBC.com to send us your questions. Becky is staying with Mr. Buffett right now, and I know he's wearing a receiver. Becky, he probably just heard where the dollar is at.
Becky: Yes.
Joey: We will discuss this topic with him.
Becky: That's awesome, Joey. It's a great opportunity, because when there's noise and chaos in the market, who better to ask than perhaps the most dedicated investor in the world? He is Warren Buffett with us today.
Mr. Buffett, let's look at the specific situation, Joey thinks this is a perfect starting point, you have made negative comments on the dollar before, what do you think of the current dollar quotes?
Buffett: We've been talking about the dollar for 5 years. In my opinion, the various policies implemented by the US 5 years ago must depreciate the dollar in the long run. I never know what the dollar will do in a month or a year, but I think I know what the dollar will do in the next 5 years. As long as we continue to forcibly pump $2 billion a day into other countries—whether other countries are willing to accept it or not, because we import $2 billion more a day than we export—the dollar will continue to lose value.
The government can say how and how a strong dollar is in the interests of the United States, but the policies we actually implement do not support a strong dollar, and it is these policies that lead to this outcome, and the dollar will continue to depreciate. If you repeat the same thing over and over again, you get the same result, and we are doing what we did 2, 3 or 5 years ago, so I think the dollar will fall from time to time in the future.
Becky: You have already mentioned these in your letter to shareholders.
Buffett: Yes.
Becky: You also talked about how was long Brazilian Real. If you think the dollar will continue to depreciate, why not short the dollar?
Buffett: More and more of the businesses we buy are making profits outside of the U.S. If we have a business that makes money in yen, whether it's one or two, we're going to end up making more dollar profits than before . But with US interest rates being very low and foreign interest rates high, it would be costly for us to have foreign exchange positions outright, and it would be a smarter approach if we benefited from the depreciation of the dollar by investing in other areas .
But if the interest rate differential keeps widening, you can make money even with low interest rates in the US. We have a relatively small position in the Brazilian real at the moment because there has been a saying for decades that if you put your money anywhere in South Africa, you end up with nothing. In fact, people in South Africa keep their money in the US. Over the past five years, the Brazilian real has more than doubled at to the dollar. If you are a brazilian and convert your money to dollars, you are half of your wealth, which has been depreciating since 5 years ago.
Becky: But that hasn't stopped you from being bearish on the dollar. What changed your mind?
Buffett: At that time we obtained interest income. We not only profit from currency appreciation, but also earn interest income, we hold a foreign exchange position of 20 billion US dollars,But today such a position will give us negative interest income, and the cost of holding certain foreign exchange has also become a bit expensive. Suppose you hold a EUR position and want to sell it after 6 months, in order to break even the EUR must appreciate.
"CNBC's Interview with Buffett in the Furniture City" · 7
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