Berkshire Hathaway's chairman and CEO Warren Buffett sat down with CNBC's Becky Quick on Monday to answer viewer questions and discuss the top news stories of the morning.

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We are here in Omaha, Nebraska this morning with Warren Buffett, the chairman and CEO of Berkshire Hathaway.

He's just released his 50 fifth annual shareholder letter to to the shareholders over this weekend.

And this is actually the 13th year that we are now in Omaha talking to him after that letter.

This is a show that we call Ask Warren so that people can write in their own questions to Mr.

Buffett after they've read that shareholder's letter.

But obviously this morning, given the news, there are a lot of other questions that people have concerning the stock market.

And Warren, thank you for being here today.

Obviously, 1 of the things that you touch on in the level on the letter is when people should be buying stocks.

We're going to dig into a lot of it, but when you're looking at the futures down about 818 points this morning, I think probably the first thing viewers want to hear from you are your thoughts on what's happening with the coronavirus, if this is a reason to panic and if you are worried about this.

Well I don't know I have any special thoughts beyond the news on the coronavirus.

The very first day I bought stocks was March

And the stocks were down about 2 percent that day, as it turned out.

So when I came home in the evening, and my dad told me the execution price, it was down 2 percent.

If you're buying a business, and that's what stocks are, businesses, in fact people will be better off if they say I bought a business today, not a stock today, because that gives you a different perspective on it.

Then presumably you can buy a farm, if you buy an apartment house, if you buy a business you're going to own it for 10 or 20 or 30 years.

And the real question is, has the 10 year or 20 year outlook for American businesses changed in the last 24 hours or 48 hours?

And you'll notice many of the businesses we own partially own American Express we've owned it for 20 years Coca-Cola we've owned it for

years with those are businesses and you know buy or sell your business based on on on today's headlines And if it gives you a chance to buy something that you like and you can buy it even cheaper, then it's your good luck, basically.

Although there are a lot of people who look at the market and they say, look, I want to buy, but I don't want to buy when the market's sitting at new highs, when it's been hitting new records every day.

Maybe it's off 800 points this morning, but maybe there's more of a decline to come because the effect of the coronavirus is going to be an impact on the global economy.

You are going to see weakness as not only China, but other countries try and address this.

You're right, it may not change things over the 5 or 10 year span of things, but if I think that I can buy something for potentially 10% cheaper, maybe more than that if I wait a week or a month, Maybe that's what I'm sitting around 20.

Well if you think that then you've got a you're gonna get fabulously rich if you're right.

All you have to do is just keep buying at 10-day intervals and keep taking your 10-day prediction.

If I knew what the market was gonna do obviously but you don't I don't think anybody knows what the market is going to do.

I think you do know whether you're making an intelligent purchase at a given price.

Everybody when they buy a stock, if you're going to buy say General Motors that has a billion, 400 million shares out, you should be able to take a yellow pad like you have there and on 1 page say Let's say it's selling for

It isn't selling that low, but that'd be 42 billion You should say I am buying the General Motors company for 42 billion dollars because and you should get it on a piece of paper.

And then if you want to have a shepherd piece of paper, since I think I know what the stock market's going to do, so I know whether it'll be higher or lower, but you don't have that.

If I worry that the economy is gonna slow down, not just for the quarter, but for the year, that would impact how many cars I think they may be able to sell or even produce.

I guarantee you, cars are going to slow down someday.

In 1932, General Motors had 19,000 dealers.

That's more than all the auto dealers in the United States today.

There were only 125 million people then, but they had 19,000 dealers.

They produced or sold in, it was 1 month I think when they sold less than a tenth of a car, right at a tenth of a car per dealer.

That was a terrific time to buy General Motors.

If you can predict the market, you don't need to read balance sheets, you don't need to read anything.

You certainly can't predict the market by reading the daily newspaper, that is for sure.

And you really can't, you certainly can't predict the market by listening to me.

And if you had planned to buy a local service station yesterday and it was closing day, I don't think you'd tear your hair out or anything like that.

You've already looked at where it was located and the contract that they had with the suppliers and made a decision on competition.

People because they can make decisions every second in stocks whereas they can't with farms.

They think an investment in stocks is different than an investment in a business or an investment in a farm or an investment in an apartment house.

If you get your money's worth in terms of future earning power over the next 10 or 20 or 30 years, you're going to have made a good investment.

If you can do that, you can, well, I haven't met anybody yet that knows how to do it.

You made a point of that in the letter this year where you highlighted a book that was written by Edgar Lawrence Smith back in 1924.

And you said until he came along nobody really realized the compound interest effect of buying stocks not just buying businesses but buying stocks themselves.

Edgar Warren Smith changed the world with that book.

And people have forgotten all about it now.

Although in the 1920s it became more and more gospel as the boom went on.

But Edgar Orton Smith set out to write a book on bonds versus stocks and he said he went in with the idea that bonds would be a better investment in times of deflation and stocks would be a better investment in times of inflation.

And the first line of his book was to say that he'd been wrong.

But he had enough sense to look at his evidence.

I think Darwin said if you found evidence that was contrary to what you already believed, write it down in 30 minutes or your mind will just block it out.

People have a great resistance to new evidence.

And he said if a stock yields 4%, a bond yields 4%, which was what he was talking about then.

The stock was going to outperform the bonds because there were retained earnings that were building beyond that yield.

And that has been true for a long, long time, but nobody paid any attention to it.

We don't get rich on our dividends that we receive, although we're happy to receive them.

We get rich on the fact that the retained earnings are used to build new earning power, repurchase shares, which increases your ownership in the company.

And Berkshire has retained earnings ever since we started.

That's the only reason Berkshire's worth a lot more, is we retain earnings.

That led Keynes to actually say that this was an important book.

People paid attention to it, but you're right, it added to the frenzy that built up to 1929.

Well, that is true because you can get, my old boss Ben Graham told me very early on, you get more trouble with a good idea than a bad idea.

I mean, it's a good idea to buy a home, for example, and then people go crazy.

The good idea works and it works and it works.

Stocks work out better than bonds most of the time.

And after a while people forget that there were some other limiting conditions.

With Edgar Lawrence Smith's book it was that when bonds yield the same as stocks, which was the case then, that stocks are going to outperform because they have this retained earnings.

So stocks started going up in the 20s and all of a sudden they were selling at 5 or 6 times the prices as when he bought the book.

And The original correct perception on his part had experienced changing conditions, but people just looked.

They got their confirmation through stock prices, and that's what happens in bull markets.

People start out thinking stocks are cheap and then they start thinking stocks have gone up and a stock can be a good buy or a bad buy.

I mean, if his premise was that stocks are always going to be a better investment than bonds.

That's kind of what you hear today, which we've been hearing for a while, is Tina, there is no alternative, right?

You have to buy stocks because bond yields are so low, because interest rates are so low.

Well, if you look at the present situation, we've talked about this before, that you get more for your money in stocks than bonds.

But it's usually been the case in America, very usually been the case.

And if you buy a 30-year bond today with a yield 2%, you're paying 50 times earnings for an investment where the earnings can't go up for 30 years.

Now, if somebody said, I want to sell you a stock that's at 50 times earnings and the earnings can't go up for 30 years, you'd say that doesn't sound very good.

Stocks are way better than 30 year bonds.

And that's 1 of the alternatives people have.

People really have 3 basic alternatives short term cash which is an option of doing something later on long term bonds or or long term stocks and stocks are cheaper than bonds.

Charlie said recently, Charlie Munger, the vice chairman at Berkshire Hathaway, had his daily journal meeting just a couple of weeks ago.

And at that meeting, he said that there's a lot of wretched excess out there and that there's a lot of trouble coming as a result.

There was trouble coming in 1942 when I bought that first stock, all kinds of trouble.

Philippines were going to fall pretty soon.

when I wrote an article for the New York Times.

I said trouble is coming, but I said buy stocks.

If trouble's coming would you still say buy stocks right now?

I would say buy stocks if you get enough for your money.

And we buy a few stocks, but we don't look at – we're not buying the stock market.

million shares out and sells it this morning for $126 or something like that.

So it's selling for roughly $100 billion.

Now, the real question is whether the company is worth more or less than $100 billion.

It isn't what the stock is going to do tomorrow or next week or next month.

You said just a few minutes ago when we asked you on Worldwide Exchange right now Berkshire Hathaway is a net buyer of stocks you are in a net buying position?

We've been a net buyer of stocks or I've been actually been a personal net buyer of stocks ever since I was 11 every year.

There's been 15 American presidents in my lifetime, more than a third.

I was only about 6 months old then, but there have been 7 Republicans after that and 7 Democrats.

There have been a few times I thought stocks were really quite high and I've even written an article once or twice up but that's very seldom.

But you wrapped up your partnership at 1 point.

I wrapped up my partnership once because you thought

We own 240 billion dollars worth of stocks.

Now we look at that as 240 billion dollars worth of businesses that we own parts of, but I love owning those businesses.

You've also got more than 125 billion dollars in cash sitting around.

Yeah Well, we'd like to buy more businesses.

We are here Warren with you at Berkshire Hathaway's headquarters building This is upstairs in the room That's called the cloud room And this is a room where you often take students to kind of talk to them about questions they have when they come to visit you.

You also do some other things up here too, other presentations.

Yeah, I had students there for dozens of years.

And for Many years, 40 schools would come in.

and when I got to about 88, I thought, I'll take a rest.

Well, there are a lot of questions that are coming in from viewers that have been hitting here today.

They're waking up this morning looking at the stock market, indicated down by almost 800 points for the Dow.

We're actually off our worst levels of the morning, which is something to say when you're still looking at the Dow down by about 786 points.

But people have a lot of questions about the economy.

They're wondering what's happening right now, particularly with the coronavirus out there.

You have a lot of economic data at your fingertips because not only are the many businesses that Berkshire owns, but the businesses you own pieces in.

What are you seeing right now around the globe?

I get some commentary monthly with from from almost all of the companies and a good many of them had some comment about how it was affecting them and how it was affecting them.

But they've been affected by they were affected by tariffs.

They're affected by the most thing is they're affected by competitors in supply and demand over time.

And I don't have the faintest idea what our businesses will be doing 6 months from now or 12 months from now.

I do think that not only our businesses, but American business generally, we're doing fabulously better 30 years from now or 20 years from now.

And the long term is very, in my view, is very easy to predict in a general way but an important way.

I don't think there's any way to predict what the stock market will do 10 minutes from now, 10 days from now or 10 months from now.

So I work on what I think I'm able to do and as desirable as it might be to know what was going to happen 10 minutes from now.

That's just not something I'll ever be able to master.

So fortunately, I can come to a pretty firm conclusion that 20 or 30 years from now, America's business and probably over the world will be far better than it is now.

What are the momentary implications that you've seen from coronavirus?

Well an example, for example, we have maybe a thousand Dairy Queen franchises in China here and they're just treat only so they're the older type, not with food.

But a great number of them were closed, but the ones that were open weren't doing any business to speak of.

And Apple, I mean, our much bigger holding is Apple.

We own 5.6% of Apple, and the company came out and said that it's affecting not only its stores but all kinds of things, supply chain and I find that certain of our companies have got supply chain arrangements that are being affected by this that I didn't even know had those.

Well I got 1 from Johns Manville the other day, for example.

You wouldn't normally think of them as having a big supply chain.

I'll guarantee you that a very significant percentage of our business is 1 layer affected by it.

But they're being affected by a lot of other things, too.

And the real question is, is where are those businesses going to be in 5 or 10 years?

Our candy business is a wonderful business, but it loses money 7 months out of the year.

But the nice thing is, Christmas comes every year.

When you look at the economy and how things were kind of chugging along, let's say, beginning of this year, when first things, things first picked up, how would you gauge the U.S.

Well, it's strong, but a little softer than it was 6 months ago.

But that's over a broad range of business.

You look at car loadings, rail car loadings, that's moving goods around.

And there again, that was affected by the tariffs too because people front-ended purchases, all kinds of things, always a lot of variables.

So I would say that looking at our 70 businesses, and that actually, they represent hundreds in addition, They're a little softer.

On the other hand, I was out with the fellows from the Nebraska Furniture Market just Saturday night, and their business was up quite a bit in February, but that's because weather was good.

Why do you think business was down, let's say, the last 6 months?

Is that a decline in confidence or is it coming off of levels where there was unusual activity ahead of that?

It's just leveled off and a little softer maybe now.

But well, tariffs, The tariff situation was a big question mark for all kinds of companies and still is to some degree.

But that that was front and center for a while.

Something else will be front and center 6 months from now and a year from now and 2 years from now.

Real question is is where you're where are these businesses going to be 5 and 10 and 20 years from now.

Some of them will do sensationally, some of them will disappear, and overall I think America will do very well.

But you still watch things like rail carloading very closely.

But I don't do it to make specific investment decisions.

But I enjoy, I mean I want to know what's going on, but I also don't think that I can make money by predicting what's going to go on next week or next month.

I do think I can make money by predicting what's going to happen in 10 years.

All right, well tell us more about what's going on, just since you like knowing about those things.

Well, as I say, you know, certain businesses depend on weather to quite an extent in retail, for example, in given months.

I mean, in terms of the movement to online commerce.

But we've got a big investment in the airline business and I just heard, you know, even more flights are canceled and all that.

This all happens in this case, they're gonna be canceled for longer because of coronavirus.

But if you own airlines for 10 or 20 years, you're going to have some ups and downs in current business, and some of them will be weather-related, and they can be all kinds of things.

The real question is, is, you know, how many passengers are they going to be carrying 10 years from now and 15 years from now and what will margins be and what will the competitive position be?

And, but I still look at the figures all the time.

You, you mentioned the airlines and you own stakes in all the major airlines, but not as much as Delta.

I think you own north of 11 percent of Delta at this point?

1 of the positions is 1 of the other fellows of the 4 positions.

But we own a very roughly close to 10% of the 4 largest airlines.

In fact, some of the questions that came in over this weekend were questions about those airlines, wondering if you would buy any of them outright.

Have you considered buying any of those companies outright?

I'm not saying it's impossible, but it's complicated.

Well, for 1 thing, they're regulated and there's an interplay.

I'll just give you an example, not that we'd be doing, but with Delta, we own 18 percent of American Express, and American Express is a bank holding company, and bank holding companies have limits as to what they can do and we're a passive holder of a bank holding company with American Express but if we owned an airline that was tied up with them they'd have lots of arrangements.

There's there's there's a lot of complications because it's a regulated industry.

Anytime you get in a regulated industry, you have more complications in transactions.

So is it fair to say you like these stocks and you would own more if it wasn't complicated?

Well, to go beyond 15 percent in any company, we would have to go in on hard Scott Rodino I mean there's a lot of rules as you increase your ownership obviously almost anything we own we'd like to own more of

are you buying more of any of those stakes right now

Apple right I get pretty close mouth when it comes to what we're buying.

But it's fair to say that anything that we own, we like.

And I look at them as part ownerships in businesses.

There's very few that are Selling at some price where I would sell them a little higher.

Well, let me ask a question that came from Tony Dickinson He said in the fourth quarter Berkshire sold 55 million shares of Wells Fargo should shareholders view this as a lack of confidence in the new CEO turnaround planned and what is Warren's future outlook for Wells Fargo?

Well I won't give him any advice specifically on Wells Fargo but it's absolutely true that we've sold down our position.

Some of it was sold down to avoid being over 10% because then you do have some filings with the Fed and so on.

Yeah, we've sold we've sold well more than that.

And now we've we've we've sold we sold Wells Fargo in the fourth quarter, and we sold it earlier.

Only because I did get a number of questions.

But we just don't want to give any advice on what we're doing, because I could change what I'm doing tomorrow.

We talk about everything except we don't give stock advice.

I'll try 1 more from Dickinson just because I think I got 15 or 20 different questions on this.

Berkshire owns 32.58 billion of Bank of America and $17.39 billion of Wells Fargo.

1 position's been increasing while the other's been decreasing.

Does Warren like Bank of America twice as much as Wells Fargo, and how should shareholders view the holdings?

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