Buffett says economy is in shambles, but still likes stocks
Speaking on CNBC before his annual charity lunch, Berkshire Hathaway (BRK.A, BRK.B) CEO Warren Buffett talked down speculation of an economic recovery.
"Everything that I see about the economy is that we've had no bounce... in terms of the economy coming back, it takes a while." Although Buffett said that measures taken in the fall of 2008 to stabilize the financial system had worked, the stimulus efforts had not made an immediate difference. He said that weak demand still existed across all business areas he receives data on, including retail, manufacturing, and even electricity.
Deflation is not a concern for Buffett and he granted that monetary policy may be setting the scene for inflation down the road. Today, the Federal Reserve voted to leave the Fed Funds rate in a range from 0% to 0.25%, citing significant slack in the economy, which the Fed anticipates will reduce inflation pressures for some time.
Between the potential for inflation and the current valuation of the stock market, Buffett said that he favored buying equities as opposed to fixed income on a ten year time horizon. Those holding money markets or other fixed income assets, may believe their money is safe, when in fact they risk seeing inflation eat away at most or all of their returns, he said.
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Reader Comments (Page 1 of 3)
6-24-2009 @ 4:53PM
LARRY JACKSON said...
THIS MAN IS CORRECT AND THE BOTTOM IS NOT IN SIGHT! WHEN SHE HAS COMPLETELY SUNK SHE WILL SADLY LIE ON THE BOTTOM FOR SOME EXTENDED PERIOD OF RAPID DECAYING. THE HOLES ARE BEING DRILLED AND VERY FEW BEING PLUGGED.
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6-26-2009 @ 10:57AM
LARRY said...
BUFFETT WON'T VOTE FOR OBAMA-THE ECONOMIC IDIOT AGAIN--OBAMA IS DESTROYING THE U. S.--------
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6-25-2009 @ 8:01AM
Norm Achin said...
Larry, I'm very rarely as rude as some of you respondents, but I have to say, just this one time: shut up! If you knew anything about economics, you'd know that Obama is not to blame for this mess we are in.
6-25-2009 @ 7:49AM
Carmine said...
Hey Larry....
"Obama destroying our Country"????
Listen, I am an independant, and let me tell you this, Bush was lucky his term was up. He just had what we call.."Bad Timing". The House of cards that Bush Administration built, fell before he was out of office.
If you are educated, which I think you are, due to the fact you wouldn't be interested in what Warren thinks, you need to take a better look at the big picture.
Health Care needs to be addressed immediately. 9-12% annual increases will bankrupt medicare in the next decade.
I have a fantastic Health Care Package my employer provides. recently, my co-pays have increased, my medicines were restricted to generic, and my Hospital "out of pocket" expenses rocketed.
I am sceptical of any Government run agency. But after listening to Obama's speech yesterday, I have to agree that we need to curtail spiralling costs.
Obama may not be who I voted for, but I personally am starting to like his open format. Not only Intelligent, he is personable and reasonable.
Say what you will, I do not believe anybody could have handled our "House of Cards" any better. I think Warren agrees!
6-24-2009 @ 5:17PM
dan said...
With petroleum fueling the world's economy there will never be a global recovery.
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6-24-2009 @ 5:24PM
James said...
Bush should be put in prison for what he did to this economy. Thank god we'll never have to see another crooked Republican President again. The Republican Party is finally dead.
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6-24-2009 @ 7:01PM
mitch said...
I suppose that those who blame Bush for all this think Barney Frank has had nothing to do with the downfall of the housing market? Wasn't he the one who said Freddie and Fannie were well capitalized just a month prior to the implosion? And isn't he now saying that they should ease the guidelines for condo's? Te economic mess is the only thing "bipartisan" that has happened in the last 20 years.
6-24-2009 @ 9:28PM
Jean said...
Barney Frank was on tv night saying how fannie & freddie need to lax their lending standards for condo buyers. To blame Bush is just stupid. The dems created this fiasco and next year the dems will lose control of the house and/or senate to try and bring back some checks and balances to the system. The dems will go down hard on this mess, as they should.
6-25-2009 @ 1:02AM
Kev said...
Crooked republicans? You have a Kenyan in the presidents office! How can you be more crooked?
6-25-2009 @ 3:02AM
marc said...
Show me proof of any crimes George and Dick committed. This
is america, you know. You have to back up your mouth with proof.
And as for the republicans being dead, wait till next year. It will be
1994 all over again. Then the "president" (not mine) can spend
his time and our money on nonsense trips to NYC.
MARC
6-25-2009 @ 8:25AM
DON said...
WHY DON'T YOU WAKE UP,BUSH THIS BUSH THAT WHAT ARE THE JERKS THAT ARE RUNNING THING DOING TO IMPROVE THE JOBLESS RATE,BUYING BANKS,CAR CO.
HEALTH CAREThere is little doubt that Obama's massive deficit spending will doom the dollar and our economy?"
6-24-2009 @ 5:30PM
bob said...
If the old geiser would simply die, the market would go down at least 2000 points, all the eclectic stocks he owns would go to an all time bottom, and you would get the chance of a life time to make a good investment. Otherwise, the Omaha prophet never really says anything to the public but the obvious.
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6-24-2009 @ 5:47PM
Kenny said...
You people really need to pull your head out of your asses and wake up. The economy is designed to work EXACTLY the way it is working. You have good times and you have bad times. Maybe you people should have SAVED your money rather than seeing how deep in debt you could put yourselves into and blame it on someone or something else OTHER than yourselves. Get an EFFING GRIP !! Mommy and daddy aren't here to bail you dumb asses out this time.
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6-24-2009 @ 6:05PM
Dave said...
Buffet is responible for this economy him self. The idiot voted for the "Creep" President. Look at yourself moron
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6-24-2009 @ 6:09PM
bob said...
I hope when Im Buffetts age my mind isnt occupied on trying to figure out how much money i can make every day..money is not all there is..once you have a few millions why the heck do you spend all your days trying to make more?
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6-25-2009 @ 12:18AM
PJ said...
I mean, how many BILLIONS does the man need? To all these high end investors it is just a game. We small fry are just suckers. We suffer in all there greed.
6-24-2009 @ 6:16PM
DANIEL BEIRO said...
How convenient, to forget who got us into this mess and blaming the man who has been in office only three months I don't believe our economy will through some miracle rebound anytime soon but to blame a man who is honestly trying to eliviate the damage is not only stupid but downright irrational.
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6-24-2009 @ 6:23PM
James Cullen said...
Now everyone, play nice. Both parties protected their interests in ways which made things worse. Once we can acknowledge that, maybe we can work together on a solution...
6-24-2009 @ 6:38PM
norider96 said...
James. when your taxes raised so high that your life changes( if you pay taxes) you might want to study some facts, Democrats in Congress and senate caused this financial upheaval with the cavorting greedy bankers. Lack of regulation was the cause. You need to pray that the republicans can somehow hold fast to stop these stupid outrageous costly bills the democrats are proposing. I know you dont care but the grandchildren are going to have to pay. what a legacy you are giving them
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6-24-2009 @ 11:01PM
garyberni@aol.com said...
Democrats caused this financial mess? Have you been asleep for 8 years?