It has been a crazy year in the stock market, so investors were paying particularly close attention to what Wall Street legend Warren Buffett had to say at the recent Berkshire Hathaway (BRK/B) shareholder meeting in Omaha, Nebraska. Between the Berkshire meeting and a recent interview with Yahoo Finance, the "Oracle of Omaha" shared his take on a wide range of market topics, from Tesla (TSLA) to airlines to government bailouts. He also provided investors with some of his classic American optimism about where the country is headed. Here are seven things Buffett is saying about the market.
Buffett is not buying Tesla
Tesla has been one of the hottest stocks in the market in the past year. Buffett told Yahoo that he's an admirer of some of Tesla CEO Elon Musk's accomplishments. "He's done some remarkable things," Buffett said. Buffett met Musk in person several years ago, when Musk joined the Giving Pledge, Buffett's campaign aimed at encouraging the world's richest individuals to donate their wealth to charity. But Buffett's admiration for Musk stopped short of investing in his company. When Buffett was asked whether he would invest in Tesla, Buffett gave a simple one-word answer: "No."
Buffett regrets missing out on Google
Buffett has historically shied away from tech companies and has never owned high-growth stocks such as Facebook (FB) and Netflix (NFLX). But Buffett told Yahoo that Alphabet subsidiary Google (GOOG, GOOGL) is the one that got away. Yahoo asked Buffett why he never pulled the trigger on investing in Google. "Well, that's a pretty damn good question. But I don't have a good answer. I definitely should've owned Google," he said. Buffett said he doesn't see a bubble in the valuations of Alphabet, Facebook, Netflix and Amazon.com (AMZN) today, but he also isn't buying shares of them.
Oil isn't going away
Oil prices have gotten crushed in 2020 as travel restrictions and a pricing war between Saudi Arabia and Russia have dramatically shifted supply and demand balances. Buffett said immediate demand for oil has dried up, but investors should be careful to write off oil investments too soon. Berkshire Hathaway Energy is investing heavily in wind power, and Buffett said alternative energy is the future. But he also said the transition away from fossil fuel will be a long, slow grind. "If anybody thinks you can change energy sources 10% in a year, it just doesn't work that way," he said.
Airline stocks are too risky
One of the biggest headlines out of the Berkshire meeting was news that Buffett had dumped roughly 10% ownership stakes in Delta Air Lines (DAL), American Airlines (AAL), Southwest Airlines (LUV) and United Airlines (UAL). Buffett said he exited airlines because the health crisis has simply created too much uncertainty in the space. "The world has changed for the airlines. And I don't know how it's changed, and I hope it corrects itself in a reasonably prompt way," Buffett said. Buffett took responsibility for Berkshire's losses due to his airline bets and said "excellent" airline CEOs are not to blame.
Stocks are still the place to be
Buffett said stocks are still the best place for long-term investors to put their money. "Equities are going to outperform the 30-year Treasury bond, and they're going to outperform Treasury bills. They're going to outperform that money you stuck under your mattress," Buffett said at the Berkshire meeting. Buffett's latest comments echo what he wrote earlier this year in Berkshire's annual shareholders letter, before the Federal Reserve issued emergency interest-rate cuts in March. Buffett said there will occasionally be large drops in the stock market, but U.S. economic growth will eventually drive stock prices higher.
The U.S. will not default on its debt
The U.S. Treasury recently said it will need to borrow $3 trillion in the second quarter to pay for economic stimulus measures. In a single quarter, the Treasury will borrow more than double the $1.28 trillion it borrowed in all of fiscal 2019. National debt now stands at more than $25 trillion, and the U.S. debt-to-GDP ratio is 117.2%. But Buffett said investors shouldn't fear a U.S. default. "If I could issue a currency, 'Buffett bucks,' and I had a printing press, and I could borrow money in that, I would never default," Buffett said.
America will recover
Buffett has often expressed gratitude for the opportunities America has provided and has long been an optimist when it comes to the future of the U.S. economy. At the Berkshire meeting, Buffett said America always bounces back from adversity, and the coronavirus crisis will eventually pass. "Never bet against America," Buffett said. "That is as true today as it was in 1789, during the Civil War, and in the depths of the Depression." Although he encouraged investors to bet on America, Buffett warned that they still need to be careful about how they make those bets in the near term.
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