The panic associated with coronavirus causes investment opportunities to appear on the stock market, says Warren Buffett.
The panic associated with coronavirus may mean that there is an opportunity to buy shares at a reduced price, said Warren Buffett in an interview with CNBC.
"Apple is the largest portion of the Berkshire Hathaway portfolio. This is the best business I know. Better than See's Candies. I like this business. We treat the investment in Apple as part of our business, not a typical portfolio investment, "the Oracle of Omaha told in an interview with CNBC. Here's what else he said in an interview after publishing a letter to Warren Buffett's shareholders.
Buffett on actions and coronavirus:
"I don't have any special thoughts about coronavirus. What is happening is certainly scary. I suspect that there will be various pandemics in the future. However, I remind you that buying shares mean buying part of the business. It is best to do it in the perspective of at least a dozen years or maybe several decades. The panic associated with coronavirus may mean that there is an opportunity to buy shares at a reduced price. Even if there is panic on the stock exchanges, I will hold shares. Of course, nobody knows what the market will do in the future. But generally, you can be optimistic about the future of business, especially the American one. "
"I don't understand why people are more speculative about buying stock than buying real estate. Shares are part of the business that is expected to generate a specific stream of money in the future. People focus too much on the price of shares, whether they are cheap or expensive, and too little on the fundamental value of the business. "
"When you see problems on the horizon and hard times come, it's worth buying shares. When I bought shares for the first time in 1942, black clouds hung over the markets. It was similar in 1949 and so on. In 2008, I wrote an article for the New York Times in which I wrote that a severe crisis is approaching, so you have to buy shares. "
The figure above shows Berkshire Hathaway listing on the S & P500 background - 2 years
Buffett about Apple:
"Apple is the largest portion of the Berkshire Hathaway portfolio. It's the best business I know, even better than See's Candies. I like this business. We treat the investment in Apple as our next business, not an investment. I use the Apple smartphone myself, I got it from Tim Cook. I know that this equipment has great capabilities, it changes the lives of hundreds of millions of people around the world. But I use it as a telephone and it works great too. "
"I know that Apple can be quite badly damaged by the coronavirus. Perhaps Apple shares will get cheaper. But Apple will remain an amazing company that provides great consumer products. We've invested in Apple because it's a great business that provides fantastic products and services, not because it's a technology company. "
The figure above shows Apple listing on the background of the Nasdaq Composite - 5 years
Buffett on banks and low rates:
"I am concerned about what will lead to keeping such a low level for so long. This is not a normal situation. It is not known what it will lead to. Of course, low rates mean that banks are harder to earn. Low rates hit especially European banks, American ones are doing better in this environment. "
"I'm calm about the banks in Berkshire's wallet. Their shares are a better investment in the long run than bonds. Banking is good business as long as you don't do stupid assets. "
Buffett on investing in bonds:
"In my opinion, it makes no sense to invest in bonds when you can invest in shares. Shares are currently cheaper than bonds if we take into account the risk and take a long investment horizon. In addition, in a period of heightened inflation that can be seen on the horizon, 2% of interest-bearing bonds will prove to be a poor investment. ", says the former richest man in the world.
Buffett on the future of Berkshire Hathaway after his departure:
"Berkshire is like an ETF fund - when buying shares in our conglomerate, investors take exposure to dozens of businesses. I think that such conglomerates will be popular among investors. Berkshire cannot do without me, my added value to this company is not great anymore. In the future, BRK will probably buy back its own shares. "
"Trust me, Berkshire is ready for my death. If I die tonight, tomorrow morning the management will know what to do, what decisions to make. They will make certain steps before my body cools down. "
"I am happy with Berkshire investment managers. Todd Combs and Ted Weschler have already made a lot of money. Since they've been working for us, they've beat S & P500. However, it is not excluded that in the near future the S & P500 indices will prove to be a better investment than Berkshire shares. The Berkshire problem is the size of the conglomerate, it is not a growth company. On the other hand, during the Berkshire decline, one should behave better than the market, because it has companies in the portfolio that earn. "
"Berkshire's strong cash position is an expression of our caution. We want to be ready for anything. For a crisis, for a crash, for a pandemic, for the purchase of shares at an occasional price. "
"Ajit Jain and Greg Abel will appear at the next general Berkshire. Questions about the insurance business will be directed to Ajit and some others to Greg. They will sit in the first row. "
The figure above shows the largest positions in the Berkshire Hathaway portfolio at the end of 2019
Buffett on ETFs in the Berkshire Hathaway wallet:
"ETFs on the BRK account are purchases for a pension fund. I, Todd Combs, and Ted Weschler didn't make the purchase. "
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