For years I have admired Warren Buffett. Moreover, his eternal optimism is contagious. That is, it is hard to listen to Warren without buying America. Nothing seems to deter his belief that America is the Greatest Country in the World, and one should be a long-term investor in our country.

Central Bank

Buffett feels that on balance our Federal Reserve has done an admirable job since 2009, when we suffered through the Greatest Recession.

Buffett is surprised not only by the prevalence of long-term low interest rates, but the outlook for an extended period of low rates. In the case of Berkshire Hathaway, they have about $60 billion earning about 25 basis points. A one percent increase is worth about $600 million annually to their bottom line.

Buffett in defending his holdings of Bank of America and Wells Fargo feels that both of these banks will do well when interest rates eventually rally.

Politics

Buffett feels that over the long term the election of any unfit President will not unduly burden America. That said, he is a supporter of Hilary Clinton, the likely winner in November.

Stock Holdings

Some of Berkshire Hathaway’s biggest holdings have been mediocre to poor performers in recent years. He feels that his successors as equity managers might not be as loyal to his big holdings as he is. However, he reminded Betsy Quick that in cases such as Wells Fargo, Coca Cola, and American Express, the tax on selling his position would be 35%. Thus, he would have to be very bullish on another company to make the switch! (Capital Gains on corporations is 35%, while for high income individuals is 23%).

Coca Cola

Buffett feels that governments should not single out Coca Cola for extra tax because of the high sugar content of cokes. Buffett feels sugar in general should be taxed if the government feels that consumption of sugar is unhealthy.

Buffett points out that if one includes all of Coke’s beverages, close to 2 billion drinks are sold daily—some 700 billion on annual basis. Moreover, people have been drinking cokes since approximately 1884. Buffett maintains that he drinks 6 cokes every day and he is very happy. He argues (Tongue in cheek) that if “had a twin, who only ate broccoli, spinach, etc. the “twin” would have died years ago and would have been unhappy.

American Express

American Express has underperformed over last year, last five years, and last ten years. Nevertheless, Buffett still loves the company and points out that AXP is buying back 6% of their shares annually.

Unlike, his colleague Charlie Monger, Buffett supports AXP decision to forego the alliance with Costco, given the economics.

Buffett points out that AXP enjoys more cards outstanding and more balances on their cards every year.

IBM

IBM, unlike Berkshire Hathaway’s other holdings, has a significant loss. His average cost is about $170. The stock currently sells for $146.

Buffett indicated that he owns 8.5% of IBM and also is benefitting from the company’s buy back of stock. On occasions, Berkshire Hathaway had added to its position of IBM at levels near current prices.

Unlike Coke or AXP, I did not hear any one-liners supporting why he likes IBM so much. Buffett did indicate that would add to his position over time.

Amazon

Buffett does not own Amazon, but thinks Jeff Bezos is a marketing genius. He not only admires Bezos’s marketing savvy, but Amazon’s incredible position in the Cloud.

WMT

Buffett owns close to $2 billion of WMT. He supports WMT efforts to “toughen up” on its suppliers. Buffett acknowledges while WMT has a strong physical presence, the company must do more to compete with Amazon.

Trade Balance

Buffett does not think that America can sustain a $500 billion trade deficit on an on-going basis. He reminded listeners that up until the early 1970’s when we were the greatest economy in the world, we ran trade surpluses. While in the short term America wins giving countries like Japan, Mexico and China paper, we get all kinds of articles. Nevertheless, he worries as I do that this is not long term sustainable.

European Union

Buffett would like Great Britain to remain in the European Union. As of today, a majority of the British population favors exiting the European Union.

Buffett does not feel that British exiting would be a disaster for either Britain or the United States. I feel differently than Buffett. My reason is looking at the political landscape of Europe. I see thousands of years of on-going conflict. The only reason why this terrible legacy might stop is because of the European Union. Leaving continental Europe to Germany, France, and Russia worries me.

Conclusion

Buffett gave one one-liner supporting his optimism. At the beginning of the 20th century, the Dow Jones was around 30 points. Today, it is close to 18,000. This is a 600 times increase!

Originally published in the Sarasota Herald-Tribune