It was a lively session hosted by Becky Quick of CNBC.

The full transcripts of the session can be read here:

Warren Buffett and Bill Gates Columbia Business School Full Transcript

Excerpts and Images From the Event

Burlington Northern, the nation’s second-largest railroad, is the biggest hauler of food products like corn and coal for electricity, making it an indicator of the country’s economic health.

Analysts say Buffett is planting both feet in an industry that is poised to grow as the economy gets back on solid ground.

Berkshire Hathaway already owns about 22 percent of Burlington Northern and will pay $100 a share in cash and stock for the rest of the company.This is a 31.5 percent premium on Burlington Northern’s Monday closing price.

Shareholders have the option to convert their stock for a cash payment of $100 per share or receive Berkshire Class A or Class B common stock. Up to 60 percent of the deal is cash and 40 percent is in stock.

Berkshire’s board also approved a 50-for-1 split of its Class B common stock for holders of smaller amounts of Burlington shares who opt for a share exchange rather than cash.

Some points from the interview include:

• Warren Buffett is optimistic about the U.S. economy over the long term, but has no idea how it will be in the short term. It will ultimately turn; he just don’t know when.
• The time to buy stocks is when business sentiment is bad and nobody is buying.
• The more cheap things become, the more he will buy. He likes to buy when things are cheap. While it is not the most attractive time now (it was in 1974 and 1975), it is among the more attractive now.
• He reads 5 newspapers a day but the future of newspapers companies is very bleak.
• The U.S. will need more tax revenue. Countries which has a huge debt always end up inflating their way out of it.

Complete transcripts of the interview can be downloaded here.

You can watch the clips below:

The start of the letter shows a comparison of Berkshire versus the S&P. Since 1965, the per-share book value of Berkshire has only gone down twice (on an annual basis). 2001 saw a 6.2% drop while 2008 saw a 9.6% drop. The book value has risen from $19 to $70,530, or 20.3% compounded annually. $2000 invested with Berkshire in 1965 would have grown to almost $7 million today.

The share is currently trading close to book value at about $70,000.

S&P had 11 years where it went down, with a total 8.9% compounded return. It had a 37% drop in 2008.

Here are some points from the rest of his letter:

• The extent of the economic response to the crisis is unprecedented. This will almost certainly bring about unwelcome aftereffects. One possible outcome is an onslaught of inflation.
• However, the response was neccessary to prevent a total breakdown of the system.
• The country has faced far worse challenges in the past and has always overcome them. Standard of living has gone up seven-fold during the 1900s.
• In the last 44 years, the S&P had gone up in 75% of those years. No one can predict the winning and losing years in advance no matter what the economic situation is.
• Berkshire’s retail businesses were hit quite badly in 2008, but his utility and insurance businesses continue to deliver outstanding results.
• There were also opportunities to buy businesses and securities at prices that would be unavailable in normal conditions.
• Price declines in his portfolio does not bother him. It gives him opportunities to increase his positions at good prices.
• Berkshire has a company Clayton which deals in manufactured homes. Unlike most of their competitors, their foreclosure rate has not changed much despite Clayton’s borrowers having a worse credit rating. The reason is because most of their borrowers bought their homes with the intention of paying them off with their regular income. And not by means of refinancing, some teaser rate or selling the home at a profit if the mortgage payments becomes unmanageable.
• The point is most homeowners do not walk away just because housing prices drop. They walk away when they can’t make the monthly payments.
• There is a big spread between the borrowing costs at Treasury rates and normal rates. Ironically, lenders with shaky balance sheets are able to get “cheap loans” from the government and this makes it hard for companies like Clayton to compete profitably.
• Investors should be skeptical of history-based models. Beware of geeks bearing formulas and always look at the assumptions behind the models.
• Derivatives are dangerous as they often go unsettled for years or even decades. Your risk is not only with your counterparty, but also includes their counterparties. It took Warren Buffett 5 years and $400 million of losses to unwind 23,218 derivative contracts of General Re when they bought it in 1998. And that was in benign markets.
• Despite the pitfalls of derivatives, Berkshire does have some positions in them. One type is the long term equity put option. Due to the use of mark-to-market accounting, wild swings in reported earnings (losses) might be reported. He expects most of them to be profitable in the long run.

You can find out more but reading this article:

Warren Buffett- Buy America, I am

• The bailout by the US government
• His recent purchases in GE and Goldman Sachs
• The recession that we are currently in and how long it will last
• The innovators, the imitators, and the idiots
• The loss of confidence in the credit market and it’s consequences

You want to be greedy when others are fearful.  You want to be fearful when others are greedy.

You can watch the video of the interview below.

The complete text transcript is also available at the CNBC website.

Constellation Energy, a company which is the nation’s largest competitive supplier of electricity to large commercial and industrial customers and the nation’s largest wholesale power seller, was bought over by MidAmerican Energy Holdings Company, a subsidairy of Berkshire Hathaway.

The purchase was paid for in cash for abuot $4.7 billion, or $26.50 per share. For the record, Constellation’s stock closed at $58.37 last Friday and finished 2007 at $102.53.

This would be a classic case of Buffett buying a good company at a great price.

“MidAmerican has been a wonderful steward of its energy assets and the acquisition of Constellation Energy, when completed, will prove beneficial to all constituents,” said Warren Buffett.

This is a good lesson we should all bear in mind. Always focus on the fundamentals of the company and the price you are paying. Do not let market sentiments distract you from your investment objectives. Often, it is when there is blood in the streets that you can get a fantastic price.

Warren Buffett Interview Complete Transcripts and Video

Quick Summary of Warren Buffett Interview

There was one portion which made a great impression on me:

BUFFETT: I mean, if you’ve got a great deal in this country, you don’t have to go to Beijing, you know, or the Middle East to find somebody with money to fund it. It’s like when oil prospectors would come up here from Texas and they’d say, `We got a wonderful deal for you in Texas,’ I always thought, there are all these oil men in Texas, you know, why didn’t they call on them?

QUICK: So you think the sovereign wealth funds are getting the raw end of the deal when they buy into some of the financials?

BUFFETT: I think that they are buying what is being sold to them, and in securities you should not buy what’s being sold to you. You should buy what comes from your own analysis and looks the cheapest. The idea that somebody is going to come and call on you and say, you know, `Buy $2 billion worth–this is the best thing to buy in the world,’ it isn’t the best thing to buy in the world.

The best thing to buy in the world is something that you’ve dug out and that people aren’t talking about and that, you know, you find yourself. Securities that are being sold to you have a special push in it. Usually, there’s extra commissions in them or all kinds of things. So I don’t–I don’t want to get ideas from other people, basically. I want to get ideas from a bunch of facts that I uncover someplace.

Moral of this story: Always do your own homework when it comes to investing!

Thought I drop in for a quick update of an event that’s happening in Singapore.

Robert Miles, an expert on Warren Buffett, will be in Singapore to give a couple of talks at the Invest Fair 08. This event will be held over the coming weekend at Suntec Convention Center.

For more details about this event, you can refer to the Invest Fair website.

Zhao is an early investor in China’s class-A shares and has an investment philosophy very similar to Warren Buffett.

He has previously liquidated all five of his firm’s mainland funds to lock in profits from China’s market enormous gains. He started selling when price to earnings ratio grew too high.