didn't cost anything. i thought berkshire hathaway was that kind of a company. it wasn't much of a puff either. >> your company's named berkshire hathaway. you sold that company many years ago. did you ever think of changing the name? >> no. i don't do much of that. >> so when you started, originally you were buying stocks, you picked stocks, but then you started buying whole companies. was that a different skill set? how did you learn to buy and operate these companies? >> when i buy 100 shares of xyz company, i look at it as buying the whole company. so i've always looked at buying stocks as buying businesses. so it really wasn't a different situation. i couldn't resell it. and i couldn't -- if i owned the stock i couldn't change management, which i could if i owned the whole company. but it was basically the same approach. i'm a better investor because i'm a business person and i'm a better business person because i'm an investor. they cross over. >> today berkshire hathaway has how many different companies that are part of the --

>> about 75. but some of those own more companies. >> so you have 75 companies. you have about -- >> 270,000 employees. >> 270,000 employees. how do you manage all -- you have a very small office. how many people do you have in your office managing all this? >> we're now up to 24. we're on floor. we're never going to leave one floor. i tell them they can hire all the people they want but we're never going to leave one floor. so if they want people sitting in their lap go to it. >> sow sit in your office during the day looking at new ideas for companies? is that how you spend your time? >> i like to read a lot. so i read newspapers. and i read all kinds of financial information. and basically, i'm looking for one good idea a year. >> and do people send you letters over the transom? have any of those ideas ever worked? >> occasionally. not very often. but i only need one a year. we're in june, incidentally, david, if you want to help me out. >> we have a couple companies we'd like to sell to you.

you don't pay high prices. do you have a computer in your office? >> not in my office. but other people have them. >> i know you're not a famous technology person. but do you have an ipad or do you -- >> no. >> -- do internet things? >> i do internet things. i love the internet. it's fascinating to me because it's probably affected my life almost as much as, say, bill gates. when bill and i appear together, sometimes we use the trick question of aside from e-mail, which one of us is on the computer more? and the answer is me. >> you play bridge -- >> i play bridge. >> and every night you spend -- >> a couple hours a night. >> and after all these years of doing it are you a champion? >> no. i'm not even close. i just have a good time. it's the most interesting game i've found. >> and do people know they're playing with you over the --

>> i use the name t-bone. and it's gotten around i'm t-bone. i used to put my age 103 so people would say for a guy 103 he's not bad when i'd do something dumb. >> you met over the years bill gates. how did you first meet bill? >> i met him on july 5th, 1991. meg greenfield, who some of the people here probably knew, had a house out on bainbridge island there in seattle. and she'd call me in the late '80s, and she said, warren, i love seattle, do i have enough money to buy a second place? and i said, megan, anybody that calls me an ass does have someone. it's the ones who don't call. actually, kay graham, i, rolly evans, maybe one or two others went out there and visited meg. and then meg new the senior. so she called up bill sr. and mary gates and said i've got this crew out here, could we

drop down? mary said fine. mary called up bill and said warren buffett's coming down and would you like to come down? he said hell no. what do i have in common with that guy? he doesn't understand technology. he's hopeless. and mary was very determined. and she said you're going to come, bill. so they negotiated a while, and finally they got down to where he said he'd come down for, i don't know, an hour and 27 minutes or something like that. and he came down and we hit it off, and we were still talk ten hours later and we became good friends. >> but he never convinced you to buy mikcrosoft stock or buy technology companies? >> he didn't try to. he tried to get me to use a computer. >> did that work? >> eventually. when i learned i could play bridge on it i got interested. i still don't understand what happens with it. >> i thought he originally said i'll get the most beautiful woman working at microsoft to -- >> that's what he did. but he was engaged to her. melinda. so it didn't work. >> as you got to know bill better, did he influence your

views on how to make investments or did he influence your views on philanthropy? >> i wouldn't say too much. we have a group of maybe 50 people that started getting together in 1968. we meet every other year. don graham who's here tonight is -- >> the butler group. >> yeah. at those meetings we'd talk about various subjects. and philanthropy was an important subject. i think it was maybe in 1993 or something like that. we had a meeting. i think it was in ireland at that time. i actually brought along the gospel of wealth for everyone to read. we discussed it then. our thinking sort of evolved together in a way. >> but have you ever regretted not getting involved in giving away money earlier in your life? >> no. my wife regrelted that. she liked the idea of giving away -- we both agreed on the idea of giving away all the money. we once we had everything we wanted. and we've had everything we

wanted. the surplus wealth i have has no utility to me. it has all kinds of utility to the rest of the world if used properly. we agreed on that early. she would have liked the idea of giving away more of it earlier. and i felt that i was going to be a better compounding machine than most places and that there would be a whole lot more to give away later on. i told her i'll pile it up and you unpile it. >> now, your father was a very conservative republican congressman. and you are probably a liberal democrat. is that a fair -- >> yeah, but i would -- i was very conservative back -- >> you were conservative when he was alive. >> right. >> you later moved further to the left. and it's fair to say you're a liberal democrat now? >> yeah. i'm not a card-carrying democrat. i support certain republicans. and i gave some money to a republican congressman. >> you've become famous recently in washington for among other things the buffett rule, which

says that tax rates should be at least as high as their secretaries'. >> yeah. in terms of the aggregate of payroll and income taxes. i couldn't get a disease named after me. so i decided to settle for a tax. >> and have any of your friends suggested that you compensate your secretary in capital gains kind of things so they could pay a lower rate? >> she's been suggesting that lately. right. she's always on the phone with some tax adviser now. the interesting thing is people speculate about how much money she made. but the tax rate actually above $106,000 for most people goes down if you take the aggregate of payroll and income taxes out of it because the payroll tax is the most regressive of all and quits at that point. so actually above 106 in most cases the rate would go down. >> your financial acumen's pretty well known. so we now have in our country $15.5 trillion of debt in our federal government and 1

trillion a year or so adding up. what would you do if you were able to wave a wand and try to fix our debt problem or deficit problem? >> i think i would do what everybody in this room could do. if you asked everybody here how much the federal government should be raising annually or in aggregate over the next ten years, the answers would come in somewhere between 18 1/2 and 19 1/2%, which is close to what's been the situation since world war 2. if you asked what the government should be spending it would probably come in at 21 1/2. you can have a two percentage point deficit relative to gdp and the debt to gdp will not grow. in fact, it probably will shrink just a touch. you can have a couple percent deficit. and i would take the plan that 90% of the people would come up with to get to that 19% of

revenue. it can be simpson-bowles. no one's going to agree on every point. but i think we do agree on the fact that we probably should be raising 18 1/2% to 19% and we should be spending 21% or thereabouts, and that means getting more from taxes and it means cutting expenditures. and the problem is the democrats don't want to talk about what expenditures they would can you and the republicans don't want to talk about increasing revenues. >> so would you be in favor of increasing the capital gains tax or -- >> i would be in favor of that. but we can come to -- we're raising, say, 2.4, 2.5 trillion now. we have to raise, you know, probably 300 or 400 billion more than that. that can be done. we've done it straight through. i've operated under all kinds of tax rates including 39.6% on capital gains. the country has grown under all these circumstances. our country works.

but somebody has to step up and say -- it won't come from -- just talking about reform doesn't solve anything on either the expenditure side or the revenue side. you've got to get specific about it. and like say, i would -- i bet if everybody in this room designed a plan i could sign on to 90% of them. >> today the economy in the united states is thought to be growing about 2 1/2% a year. do you agree with that? do you think there's any chance of a recession in the near term? >> i think it's very low unless events in europe develop in some way that spill over here big-time. but incidentally, if the economy grows 2% a year and population grows 1% a year, that means each generation is living 20% better than the generation before and it means in a century people are living three times as well as they lived at the start of the century. our rates of gain in the way people live has been dramatic. in my lifetime. i was born in 1930. there's six times the real gdp

per capita as when i was born. six times in one person's lifetime. we have a system that works. and it'll keep working. it may not work at six times for the next 80 years but it will be 2 1/2 times or three times. >> are you worried about the euro going away? do you think europe would allow the euro to go away? >> that's the big question. lincoln said that a house divided cannot stand and half slave half free wouldn't work. and we've got a system where they're half in and half out. they're in on a common currency and they're 99 on common fiscal policy or common -- the house will fall. it doesn't mean it has to. but it means they have to reconcile some of these things. it can't be half slave half free. >> you invest most of your money i guess in the united states. >> yeah. >> have you increasingly been investing outside, particularly in the emerging markets or you're not as comfortable investing in the emerging

markets? >> i'm comfortable anywhere i understand the business well and where i've got the right management. we will buy a business in any one of 40 countries tomorrow if it's the right kind of business. but most businesses i think of are in the united states. >> i understand somebody from israel sent you a letter over the transom, a 1 1/2-page letter, and you ultimately bought that company that person was talking about for 4-plus billion. >> we bought 80% of it for 4 billion. he wanted me to go see it. he told me what a wonderful plant it is and everything. and i said i don't go to iowa, you know, as far as that's concerned. he said you've never seen a plant like this. and i said eitan, i said i love your business, i love you, i'll give you $4 billion but i'm not going to go to -- i've got to start cross oceans or anything. he said if you buy the business

lu come? i said yes. and then i bought it and came to israel. and i said if i'd seen this i would have paid you more money. that's why i don't go visit businesses. >> what about china? do you go to china very much? >> i was sitting in 2002 or 2003 reading the report of pet petrochina. fortunately, it was in english. i the government of china owned 90% of it. we owned 1.3%. so between the two of us we controlled the company. one of the huge oil companies in the world. the whole company was selling for 35 billion in market. that was ridiculous. >> one of your most famous investments is coca-cola. you bought it relatively cheaply. >> it's very good for everybody. i don't care whether you drink it. just pour it on your neighbor.

but open the can. >> when you were a young boy, you were addicted i was told to pepsi. how did you switch to coke? >> well, i would like to say of course that i just finally grew up. but when i was a kid pepsi was 12 ounces for a nickel. and coke was 6 1/2 ounces for a nickel. and if you have any insights into my personality you'll know which i bought. >> so of the investments you've made over the years at berkshire hathaway which one would you say is the best investment? is there one you're most proud of? >> the one i'm probably the most attached to is geico because of a bunch of reasons but it goes back to a day in january of 1951, a saturday. and that -- what rormer davidson did for me changed my life. i walked in there some 20-year-old kid on a saturday, and he spent four hours educating me. and then he became a friend for

life. and then subsequent people, jack burn and tony nicely who's here tonight. it's just been a wonderful association. whether we made any money or not. but we've done pretty well on the investment, too. beyond that it has a special meaning to me. >> are there investments you really wish you had never done? what's your worst investment? >> i made a lot of terrible deals. the worst -- it's hard -- probably the worst deal will be one i make in the future. but the current title -- i bought a company -- and incidentally, i did it. we done have people with power points around. i go out and do it. george mitchell's here tonight. he knows the company pe we paid $400 million for it, which went to zero. but we paid 400 million in stock. and the stock we gave up is probably worth maybe 3 or 4 billion today.

whenever berkshire goes down i feel better about that deal. >> you famously passed on intel when it was getting started i thought. >> i knew bob nois pretty well. and we bought the converts when they were private. because of bob. we bought them at granall college. and the endowment went from 8 billion to 14 billion. and intel was -- in the end i don't worry about things i don't understand. tom watson sr. said i'm no genius but i'm smart in spots and i stay around those spots. there's a lot to that. and knowing your circle of confidence is enormously important. there was all kinds of things i can't do. and there's plenty of companies i can't analyze. >> of all the companies you bought maybe the one that brout

the most trouble was salomon. when you bought it it was almost in effect put into bankruptcy and you had to go and run the company. was that the most difficult experience you had at berkshire hathaway? >> i would say that was. i was their ceo for nine months and four days. it was 21 years ago. i remember every day of it. >> today when you have all these managers running your 75 different companies do they call you every day and say i have this problem or that problem? how often do you talk to them? >> no. if they need to call me they're in trouble. we buy businesses where the managers come with them. there are some managers i don't talk to once a year. and there's one i talk to almost every day. but after the one i talk to almost every day i would say the next highest frequency would be once a week. but they always call me. i don't call them. >> when you want to make an investment, you have a board of directors. do you ever ask them, i've heard that you will buy a railroad for

20-some billion and not tell your board of directors. >> i told a few of them. >> okay. >> that was an exception. that i told them. part of why we're able to make deals is because we can act fast. they know we have the money. they know we'll do the deal. we closed on october 6th, 2008 on a $6.5 billion investment in wrigley in conjunction with mars. and they knew we would have the 6 1/2 billion and we would close on it. people weren't closing on anything. it's a real advantage to be able to pull the trigger. and if we have to go through lots of presentations and everything -- i've been on 19 corporate boards. every deal works on the powerpoi powerpoint. it's a show and tell type thing. i don't really participate in it. >> so it recently came out in

court, discussion that the insider trading thing that's going on related to an investment you had made in gold marngs it came out that you had set the deal and you told the investment banker this is the deal and they had to get back to you but you said don't call for a few hours because you're going to dairy queen with your grandchildren. is that right? >> that's true. >> you didn't want to be disturbed? >> i told him what i would do and if they wanted to do it fine, if they didn't want to do it fine. we don't really negotiate at berkshire. i don't have enough time to spend the rest of my life negotiating with people. i'll tell them what i do. if it works, fine. if it doesn't work, fine. >> famously, people wonder who will be your successor. and i wonder if tonight you want to give us any insights into that. >> well, i have left the directors a ouija board and i plan to keep in contact with them.

i don't want to disappoint you, but you're not on the short list. [ applause ] >> could i be on the long list? so -- >> we're in perfect shape for it, though. i will say that. we've got successors that in most ways are better than i am. >> but you expect berkshire will be around for 20, 30, 40 periye? >> forever. it has a special culture. it has managers. we have an organization that would reject anyone that tried to tamper with that culture. it is special and it can stay special. >> so today achieving all you've achieved, you've got the admiration of virtually everybody in the world. what are your aspirations for the next five years or so? >> i'm having the time of my life. i get to do every day exactly

what i like to do with people who i love and who seem to like me pretty well. i tell the students who come to see me, and i have 48 universities come out every year, i tell the students take the job you would take if you didn't need the job. i don't need a job, and i've got that job. >> you're giving away 9% of your wealth. you have three children, seven grandchildren, and nine great chnd grirnld. >> that's it. >> any of them ever say maybe you could leave some of that to me or -- >> well, i'm going to leave some of it to them. i don't write a will very often but when i write a will i give it to my children first before i sign it. they're the executors. and i want two things. i want them to understand exactly what's in it. and secondly i want them to agree with it. and if they don't i want them to talk it it out now and figure

out what makes sense. every five or six years or whatever, seven years, they read it and sometimes there is something they don't understand what their duties might be. and then in terms of equating -- i've got one son that likes a farm. i've got a farm he'll get. i've got a daughter that likes a particular house. i've got various ways of equating that in percentages and all that. in the end i think they feel very lucky in life. >> so the average person who doesn't have your investment skills and they want to not lose their money, would you recommend that they play the stock market? they buy mutual funds? what do you recommend to the average investor? >> well, playing is not a word i would choose. i would recommend they put a similar sum. save something every month and basically put it in an index fund. they are not in a position to

make judgments on stocks themselves. they're not in the game anymore that i can prescribe in medicine or something of the sort. they will get a good result. the american economy's done wonderfully. if you take the 20th century, the dow started at 66 and ended at 11,400. how can anybody get a bad result -- a lot of people do because they jump in at the wrong time or they think they know this stock versus that stock. but the average person to just consistently buy equities, which to me are by far the most attractive investment choice around, and put it in. if they do that for 20 or 30 years, they'll do well. >> you don't subscribe to the efficient market theory that says basically you can't beat the stock market? you subscribe to that idea you can't -- >> i'd still be delivering papers. no, i think -- i don't think there's any question that certain people who evaluate

stocks as businesses can make intelligent decisions about businesses which will enable them to do very well in the securities accurate. but i don't think somebody who is listening to a tv channel tell them what to do or even some salesperson who's getting paid more money for selling something and getting them to change tomorrow is the key to it. >> you gave away or committed to give away the bulk of your money to a foundation set up by other people. why not give it away to a foundation you would control? how did that idea come about? >> i thought my first wife would outlive me and she would give away the money. so it would go to a foundation that she run. the idea was to get the money spent. you say it's run by other people. if you if you sipt the ford foundation or the carnegie foundation they're being run by

other people. it's just that carnegie didn't go who they would be or ford didn't know who they would be. they're going to be run by other people if they extend beyond your lifetime i picked people who had i enormous confidence in that they would have similar judgment about where money should go. and in the case of the gates foundation i get people that are putting up their own money big-time who are very able people. working full-time at it themselves who aren't charging me anything. and i've got these foundations that are run by my children that it's been wonderful for them. and they each have a separate foundation so they can follow their own interests and not have to roll logs as to who goes for this one or that one. it's all worked out perfectly. >> what was bill gates' reaction when you called him and said i'm giving you $50 billion eventually? >> shouldn't joke about this. i don't remember what he said but i think he was surprised.

>> and did he suggest you put your name on the foundation as well? >> i don't want my name on anything. there are all kinds of people that do want their names on it. so if you can sell it to some other guy, why should you give it to me where you don't get anything out of it? >> okay. i understand. as you go forward now, are there certain things you would like to accomplish beyond what you've accomplished? are there certain social problems you'd like to see being solved or economic problems or is your goal to keep the company doing well and give away money? >> well, i'd like berkshire -- that is my painting it all my life and i want to keep painting it and have it become even more of what it already is. that's what i love. anything that works positively for berkshire in terms of adding better businesses, having better managers around.

anything that gives them the position of being abling to get full potential from the companies they love. i'll do that as long as i can. i like the idea basically the frau fruits of that will be to improve the lot of people who weren't as lucky as i was. >> did you realize that as a young person or did it take much longer for to you realize you were much better than everybody else? >> it sounds obnoxious but i thought i was going to be pretty good early on. i went through this period at woodrow wilson where i was really bad at -- i was working out of woodrow wilson. i had these teachers i caused some trouble to but they did think i knew a lot about those stocks. nvg those days teachers put all their money in at&t. that was the ultimate safe investment. so when i was feeling particularly obnoxious i shorted

at&t and brought the confirmation, showed it to the teachers and let them worry a little. no, you can't love anything as much as i love noichlts and not get very good at it. i read every book at the omaha public library by the time i was 11 and we moved back here. i said get everything the congress i want to read it. >> there's one company in washington i didn't mention. you obviously bought geico and that's one of your most famous investments. but you made a famous investment in the "washington post" years ago. what attracted you to the "washington post" and how long have you held that investment? >> i love the business as such. but when i bought the "washington post" company it was pretty split. they had about 4.8 million shares outstanding and the stock got down to 16. but thanks to the nixon challenge, their tv stations and a few things, b.b.rabozo and the rest the stock cascaded down from 37. when we bought it the whole valuation of the washington post

company was about $100 million. if you'd asked any reporter at the "washington post" to go out and do a story on what the "washington post's" constituent businesses were worth they'd come back and say 400 or 500 million. you bought a wonderful business at 20 cents or thereabouts on the dollar. it's almost a classic investment. if you'd asked any of the people who were selling our stock stous, what's the washington post company worth they would have said three or four times what we're selling it for. but they sold it because they thought it was going to go down the next day. and it did for a while. >> you've owned it for? >> 39 years. >> you're an optimist about this country? >> it's a cinch. we haven't lost the secret sauce. when i was born in 1930, dpou was 252 on the day before. friday was 252. that was the high for the ye.