Thai VI

Warren Buffett appeared live on CNBC's Squawk Box for a two-hour interview with Becky Quick. During their conversation, Buffett said there's "no question" the global economy is slowing and he's "salivating" for Berkshire Hathaway to make a "big acquisition."

He also offered some timeless advice on investing in stocks.

http://www.cnbc.com/id/49533493/
Warren Buffett's Timeless Advice: 'Don't Make This Mistake'
Published: Wednesday, 24 Oct 2012 | 9:51 AM ET
Text Size
By: Alex Crippen

..
Warren Buffett has some timeless advice for investors that he can't repeat too many times.

At the end of his live, two-hour appearance with Becky Quick on CNBC's "Squawk Box" this morning, she gave him a chance to do a free association reaction to a single word: "buy."

Here's his response:

"I say, basically, 'hold.' The idea that the European news or slowdown in this or that or anything like that, that would not cause you to, if you owned a good farm and had it run by a good tenant, you wouldn't sell it because somebody says, 'Here's a news item,' you know, 'This is happening in Greece' or something of the sort.

"If you owned an apartment house and you got to raise the rents a little and it was well located and you had a good manager, you wouldn't dream of selling it.

"If you had a good business personally, a local McDonald's franchise, you wouldn't think of buying or selling it every day.

(Read more: Berkshire's Biggest Stock Holdings)

"Now, when you own stocks, you own pieces of businesses, and they're wonderful businesses. You can pick the best businesses in the world.

"And to buy or sell on current news is just crazy. You're in a wonderful business. You've got people running it for you. You know you're going to do well over five to ten years. And to think news events should cause you to dance in or out of something that's a wonderful game is a terrible mistake.

BUFFETT: Maybe in the past week we've done some things. Yeah, we —but basically I like to buy and, you know, so if the market is down, you know, I'm happier buying, I like to buy. If I got to a supermarket and they reduce prices, you know, I feel better. If I got to a men's clothing shop and they've reduced prices, I feel better. So if I go to the stock exchange and they reduce prices, I still feel better.

BUFFETT: Well, we're always looking for stocks, and I've got two fellows that are working for me that are really looking for stocks all the time. And —but I usually end up buying more of something I already know. Any new company, any new stock I look at, I measure it against the best idea I've got among the present ones. And I'm perfectly willing to just keep adding to the present ones. So it has to beat them. And I know those companies pretty well so it's a pretty high threshold.

BUFFETT: No. I'm delighted to be in it. But —and I think they'll probably do better abroad than in the United States over time. But I do —when we buy something like that, I go to our companies and see what they're doing and what they plan to be doing in future years and how tied in they are with given suppliers and how much stickiness there is to it....

BECKY: What's not repeatable?

BUFFETT: Well, I asked him how sticky —I won't name the company —necessarily was when you got in there, and he said, `Well, it's like getting AIDS.'

BECKY: So it sticks and it sticks around.

BUFFETT: And it's the basic product. Now it's got a whole bunch of extensions, too. But Coca-Cola's physical volume, not dollar sales but physical volume, was up 4 percent in the first nine months, and that's in a world that's growing maybe at 1 percent. So their per capita usage or Coca-Cola products has gone up almost every year since 1886. I mean, they — (CEO) Muhtar Kent has done a terrific job running that company. It's a huge distribution machine.

BECKY: In the past, you've said that when you sell a stock, it's because you find something else that is a better investment, a better place to put your money. Did you sell that stock to —for any other particular purchase or was it just...

BUFFETT: No. We sold that, we've sold Kraft [KFT Unavailable () ], we've sold some companies that are very, very good companies. And we've used that money, we've used it to buy, what, 11 or $12 billion worth of IBM in the last 12 months.

BUFFETT: First of all, I've got to say Dairy Queen sales were up 5.8 percent in September, same store. So that —we did quite a bit better than McDonald's [MCD 87.28 -0.68 (-0.77%) ].

I've got four stocks that aggregate over 50 billion that I manage.

BUFFETT: Very little of it's mine. I mean, if it's Wells Fargo or IBM or Coca-Cola, I mean, I've got four stocks that aggregate over 50 billion that I manage. And then I've got a bunch of other things, too. But the action is with Ted and Todd. And they're building up portfolios,