In this 2-hour CNBC interview from February 2020, as markets crashed due to COVID-19, Berkshire Hathaway Chairman Warren Buffett explains investment fundamentals. Core messages: look at 10-20 year business value not short-term fear, mindset of buying companies not stocks, 2% bond yield equals P/E 50 (no-growth asset), compounding power makes stocks dominate bonds long-term, don’t “reach for yield” by adding risk in ultra-low rate era, Berkshire’s $125B cash waits for good opportunities, and historical optimism from surviving 15 presidents and countless crises while American business kept growing.
1. Warren Buffett – Oracle of Omaha
- Born: August 30, 1930, Omaha, Nebraska (89 years old at interview)
- Education: Columbia Business School (studied under Benjamin Graham)
- Career: Berkshire Hathaway Chairman & CEO (1965-present)
- Net Worth: ~$130B (2024, world’s 5th-6th richest)
- Style: Value investing, long-term holding, compound growth
Interview Context: February 2020
- COVID-19 spreading from China globally
- S&P 500 crashed 10%+ in days
- Investors panic selling
- US 30-year Treasury at ~2%, some countries negative
2. Core Principle 1: Look at 10-20 Years, Not Fear
“Has today’s headline fundamentally changed the value of American business 10, 20 years from now?”
In most cases, the answer is “No.”
Historical Example: 1942 First Stock Purchase
- Situation: WWII ongoing, Depression aftermath, uncertain future
- Result: American companies grew thousands of times since
- Lesson: That era’s “fear” was historically “opportunity”
“Be fearful when others are greedy, and greedy when others are fearful.”
3. Core Principle 2: Buy Companies, Not Stocks
Right thinking: “I bought a piece of Apple the company today”
Yellow Pad Test
“I’m buying this entire company at $XXX market cap. Here’s why…”
If you can’t explain it in one page, don’t buy the stock.
Farm & Real Estate Analogy
- Farm: Don’t check daily price. “How much will this farm harvest?”
- Real Estate: Don’t check daily quotes. “How much rent will this generate?”
- Stocks: Why obsess over daily price? “How much will this company earn?”
4. Core Principle 3: Bonds 2% vs. Stock Compounding
30-year Treasury at 2% = 2% annual return
= 50 years to recover investment
= P/E 50 asset
= And earnings cannot grow for 30 years
If you can buy growing stock at same P/E 50?
= Earnings grow 5-10% annually
= Effective P/E drops to 25, 15 over 10 years
= Far better long-term
Compound Growth Example
Bonds 2%: $100,000 → $181,136 (1.8x)
Stocks 7%: $100,000 → $761,226 (7.6x)
Stocks 10%: $100,000 → $1,744,940 (17.4x)
Difference: Power of compounding
5. Core Principle 4: Don’t Reach for Yield
Situation: Savings 1%, bonds 2% → “Not enough!”
Response: Move to risky assets (junk bonds, leverage, emerging markets)
Risk: Chasing 2% more yield, losing 50% principal
“If yields are low, don’t increase risk to compensate.
Instead, reduce spending and adjust return expectations realistically.”
6. Berkshire’s $125B Cash: Why Hold It
Cash Purposes
- Safety margin: Berkshire survives any situation
- Opportunity capture: Large-scale buying in market crashes
- Acquisition waiting: Immediately acquire good companies at fair prices
- Insurance obligations: Pay claims in catastrophes
Past Examples: Crisis Actions
- 2008 Financial Crisis: $5B Goldman Sachs, $3B GE
- 2011 Bank of America: $5B preferred stock
- 2016 Apple: Started massive buying during market anxiety
7. Index Funds: Best for Individual Investors
“For most individual investors, S&P 500 index fund is most rational.”
Buffett’s Will Instructions for Wife
- 90%: S&P 500 index fund
- 10%: Short-term Treasuries
- Reason: “Hard to find better long-term strategy”
Buffett vs. Hedge Fund Bet (2008-2017)
- Buffett: S&P 500 index fund
- Opponent: 5 “best” hedge funds
- Result: Index fund 126% vs. hedge funds average 36%
8. Historical Optimism: 15 Presidents, Countless Crises
Crises Buffett Experienced
- Great Depression, WWII, Korean War, Cuban Missile Crisis
- Vietnam War, Oil Shocks, Black Monday (22% one-day crash)
- Dot-com Bubble, 9/11, 2008 Financial Crisis, COVID-19
Despite All Crises
– 1930 Dow Jones: ~250
– 2024 Dow Jones: ~40,000
– Growth: 160x (excluding dividends)
– S&P 500 (1957-2024): ~10.5% average annual return
– $10,000 invested (1957): ~$7,000,000 (700x)
“Betting on America has worked for 200 years. It will continue to work. Problems always come. But American business solves problems and grows.”
Practical Q&A
5 Core Principles
- Look at 10-20 years: Judge by long-term business value, not short-term news
- Buy companies: Mindset of buying “piece of business” not “stock ticker”
- Trust compounding: Stocks dominate bonds long-term through retained earnings reinvestment
- Don’t chase risk: Even if low rates are uncomfortable, avoid unaffordable risk
- Trust history: Crises always came, but American business always grew
Conclusion
The core message from 89-year-old Warren Buffett‘s 2-hour interview is simple: Investing is buying businesses.
Stock prices fluctuate daily, but good businesses’ long-term value grows steadily. Even with crises like COVID-19, American business 10-20 years from now will be “definitely better.” This is Buffett’s conviction from 90 years of market observation.
2% bond yield is P/E 50 no-growth asset. If you can buy growing stocks at same price, compounding magic creates overwhelming difference long-term. But “reaching for yield by increasing risk” is forbidden.
Buffett holds $125B cash waiting for opportunities. But for individual investors, steadily buying S&P 500 index fund is most rational. “Time in market” matters more than timing.
Buffett’s final message: “Own pieces of good companies, at reasonable prices, for a long time. That’s the essence of investing.”