Warren Buffett on Saturday forcefully defended Berkshire Hathaway’s heavy investment in company stocks such as Apple as he works through a four-year drought since his last major acquisition of a company.
Buffett, 89, also used his annual letter to Berkshire shareholders to assure they should not worry about the future of the company, which is “100% prepared” for when he and 96-year-old Vice Chairman Charlie Munger are no longer around…
Buffett, whose $90.2 billion net worth makes him the world’s fourth-richest person according to Forbes magazine, said that while he still prefers buying whole companies, stocks are a better bet than low-yielding bonds.
He attributed that in part to the “American Tailwind,” or the economy’s ability to grow despite roadblocks such as war, high inflation and financial panic. “If something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments,” he wrote.
Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc, on Monday called the coronavirus outbreak “scary stuff” but said stocks remain a good long-term investment and that he won’t sell stocks despite the threat of a pandemic.
Speaking on CNBC, Buffett said investors with a 10- to 20-year time horizon and focused on companies’ earnings power will fare well in stocks. “It is scary stuff,” Buffett said referring to the outbreak. “I don’t think it should affect what you do in stocks.” He said Berkshire would “certainly be more inclined” to buy stocks following a selloff, at a time the U.S. economy was “strong, but a little softer” than it was six months ago.
Buffett spoke two days after Berkshire said operating profit fell 3% in 2019 to $23.97 billion, hurt by losses from insurance underwriting, while unrealized gains in Apple Inc and other investments boosted net income to a record $81.42 billion.
MacDailyNews Take: Since early 2016, Warren Buffett’s Apple investment has grown to a reported $78.5 billion stake in the Cupertino-based tech company, based on Berkshire’s latest reported holdings as of the end of 2019.
Be fearful when others are greedy. Be greedy when others are fearful. — Warren Buffett