An interview with Warren Buffett at the MPW Summit - Part 1

During October, Warren Buffet had an interview with the Chinese media at the Most Powerful Women Summit. Here are the extracts.

Investment guru who likes to joke
Since the start of the financial crisis, a lot of US company's CEO called up Buffett, the main reason being that they need Buffett's help in terms of funding. Buffett said that the market actually treat them like toads and Berkshire Hathaway is treated like a princess. If they were to receive a kiss from the princess, they will become a handsome prince. If they says no, then they will remain a toad. Buffett said mockingly that they have a lot choices but they only accept the few minorities kisses and will provide them funding. He said that if you have no money, no body will kiss you.

Buffett: I am optimistic about the China market
Buffett was asked whether are there any characteristics for every economy cycle turning point and can he discuss based on China actual situation. Buffett said that in every economic cycle, there are no rules to base on especially in an emerging market like China which is constantly changing. When asked about which industry he sees that he is optimistic about, Buffett said that he is not interested in all industries even though some may have good future prospects. To select stocks based on a certain industry does not work he said. Every stock has its own set of complicated selection criteria. Normally you need to consider various situations and cannot select based on a certain industry.

When asked about his thoughts for the China market, Buffett said that he is optimistic about the China market. Not considering the short term situation, in the coming 10 years, China stock market will be the world's top performers.

MidAmerican, which is 87.4%-held by Berkshire Hathaway , said on 27 September it would buy 225 million shares of BYD, equivalent to a 10% stake, for HK$1.8 billion. BYD deals mainly on re-chargeable batteries and cars and slightly more outstanding in the field of electric vehicles development. Because of Bufett's buying into it, BYD's stock price rose by about 89% within 3 trading days.
[Read here for more information on Buffett's buying of BYD.]

About buying into GE
Buffett's Berkshire Hathaway, came out with 3 and 5 billion USD and bought GE and Goldman Sachs preference shares. When people lost confidence in the market, Buffett went in the market and bought.

When asked why he bought into GE, Buffett said smilingly that he likes to call cards, a term used in the Bridge card games. He said that GE is a landmark enterprise that US presents to the world. For the past few decades, he has been GE and its leaders' friend and admirer. Buffett said that GE is a very famous US company. Basically, it has lots of financial businesses going on everyday. They need a sum of backup fund and without that sum, they could not adequately proceed with their next program.

Buffett went on to further explain that he was thinking that Berkshire will be having a constant 10% return yearly to earn back the 3 billion USD and that the assessment was very interesting. The proposal actually came out not long before the investment was made. Buffett said that fast and timely action can bring big profits. People know that they can call him directly to ask questions and they will get an answer quickly. For example, when GE calls, GE will ask him when he will settle the problem. The same applies for Buffett's investment on Goldman Sachs. Buffett said that Goldman Sachs will get an answer and it will materialize. It was a big profit and Berkshire Hathaway will try to let them pay back the debts themselves which is good for them.

[An interview with Warren Buffett at the MPW Summit - Part 2 here.]
[An interview with Warren Buffett at the MPW Summit - Part 3 here.]