[Romans:] Susan Lisovicz joins us now as she does every week from the New York Stock Exchange. She took a field trip last week to the annual Berkshire Hathaway Shareholders meeting, it is also know as the Woodstock for Capitalist. Susan we hear you actually spoke with the oracle of Omaha himself.
[Susan Lisovicz, Cnn Correspondent:] Yes and you know he spoke to a lot of people, Christine. So this was by no means an exclusive.
[Romans:] Don't downplay it Susan, because any time you can talk to Warren himself, it's an important meeting.
[Lisovicz:] It's true, Christina. He was very forthcoming to not only to members of the media but to the 27,000 shareholders who attended. When you think about it, where a chief executive officer, one with an annual rate of return of 23 12 percent over the last 42 years, that's pretty remarkable in and of itself. Someone who takes questions for six hours on just about anything, it was not only insightful, it was also very entertaining. Before with the meeting, Buffet did indeed speak to us on a wide variety of topics, ranging from the housing slumps to gas prices to executive pay.
[Warren Buffet, Ceo, Berkshire Hathaway:] Housing is sick. Housing will stay sick for quite a while, in my view and particularly certain areas of the country. We have the second largest residential brokerage in the country. I get figures from certain markets. There will be certain markets, where I'm sure it will be sick for at least a couple years and other parts of the country will not be that weak. There were a whole lot of houses brought by people putting very small maybe non- existent down payments, making small initial payments on their mortgages and hoping to flip them in some cases. There are a whole lot more houses around than natural than the natural supply at the present time.
[Lisovicz:] Gas prices, on the other hand going in a different direction. In fact there are some forecasts say it could hit all time highs. At what point do you think it will reign in consumer spending?
[Buffett:] Well I've have been surprised that it hasn't the American economy is always resourceful. When you look at the last century, we had the World War II, nuclear bombs, the Cold War, all these things, but at the end of the century, people are living seven times better than the beginning and gasoline is still cheap compared to costs around the world. We can overcome a lot of things that seem like temporary problems in this country.
[Lisovicz:] What about executive pay? You yourself take a meager salary, and despite all the negative press, all the scandals, there hasn't been any significant change. Why is that?
[Buffett:] It's a because the CEOs have a good game and they're not about to give it up. Somebody said the CEO pay is like the honor system. The shareholders have the honor and the CEOs have the system. Here is a system where an individual CEO cares enormously about how much he gets paid, much more compared to the way other people get paid. On one side, you have one who makes a few dollars a year and then you this ratcheting that occurs because you can look at what everybody else gets paid in the business, and every company sits around and says our CEO is better than their CEO so we will pay them more money, so it's just ratcheted upward. There's no natural check on it. If a company sits down with labor union and negotiates wages, both sides care and they stay up until 2:00 in the morning and they have impasse that last for weeks. Tell me the last time you heard about an impasse where bargaining had to be suspended for a week or month, cooling-off period between the CEO and his company. So it is just a different sort of thing, there is an inner quality of intensity in the bargaining process.
[Lisovicz:] Something different at this year's Berkshire meeting, some people who attended among the thousands said they would like to succeed him after Buffett's bombshell announce that in March that he is looking for a new chief investment officer. We spoke to a couple of them.
[Buffett:] We're looking for a new investment officer at Berkshire. That may mean that I'll be unemployed.
[Lisovicz:] Ever the populist, the oracle of Omaha says the talent search will be modeled after the hit show, "American Idol". Are you the Simon Cowell?
[Buffett:] People think I'm a little more like Simon, I think.
[Lisovicz:] Buffet can afford to be a tough judge. His astute stock picks have resulted in average annual returns of 23 12 percent over the last forty-two years. One aspiring candidate attending the Berkshire Hathaway meeting said he would work for free.
[Mohnish Pabrai, Job Applicant:] I would do whatever Warren asked me to do. So if he asked me to sweep the floors, I'd be happy to do that or take the trash out.
[Lisovicz:] Another said he would apply his yoga practice as an investment strategy.
[Klaus Kostenbauer, Job Applicant:] Between patience, development of mastery of your emotions, specifically mastery of greed and fear. By staying with those topics, by centering yourself regularly, you avoid incredibly contagious emotions always in the marketplace.
[Lisovicz:] And job applicants will have to keep their cool to impress Buffet who says this job search will be the ultimate survivor.
[Buffett:] I could have them on an Island and keep throwing them off here and there.
[Lisovicz:] Buffett is 76 years old, but he doesn't plan on going anywhere soon, he says he is in excellent health that is amazing what Cherry Coke and hamburgers will do for a fellow. That seems to be the case.
[Velshi:] What did that one guy say, that one job applicant about mastery of greed?
[Lisovicz:] Greed and fear. You kind of need it, right? Those are the two dynamic forces in the marketplace.
[Velshi:] Are these real job applicants?
[Lisovicz:] They are real job applicants. First of all they are real shareholders. You can't get into the meeting unless you are a shareholder. And as we all know Berkshire Hathaway is pretty much the most expensive stock there is. Class a shares are in excessive of $100,000 a share. Whether they're real candidates, they have a real chance, that's a whole other story.
[Romans:] He made some comments about he is looking for a big elephant and he has a big elephant gun. He'd like to buy something.
[Velshi:] I'll put up $500 million.
[Romans:] He is such an easygoing guy and then he talks about taking out a company.
[Lisovicz:] He also says he has no job stress, that is one of the reasons why he's in such excellent health. No job stress. He said in letters to shareholders in March and also at the meeting, the last few days, he repeated his stance, he is looking, he has his elephant gun, as you said, and it's loaded. He's looking for game, talking about in excess of $5 billion. Why is that? Because Berkshire has a lot of cash. About $46 billion by some estimates and he is looking to use it. And he is looking all over the world. We know about all these private equity deals in the U.S. and that he is a value investor. He's also made a big play, he won't say which currency but on a single currency, he says he'll let us all know next year and says that his pick will be surprising, in his words.
[Velshi:] All right, Susan, thank you so much for joining us.
[Lisovicz:] My pleasure. Talk to you next week.
[Velshi:] Did you notice in the back of the shot while they were interviewing Warren Buffett?
[Romans:] Camel heads?
[Velshi:] I was looking at the bull, is that a symbolical message about the markets?
[Romans:] I don't'know. Susan says maybe he's bullish. All right. Coming up after the break. There is talk of a gas hike this month and find out why big oil is not running scared.