Buffett: Stocks are good buy; ketchup is foreverBy JOSHUA FREED
The Associated Press | March 05,2013Warren Buffet says stocks are a good investment, long-term government bonds are a dumb one, and ketchup is forever.
The billionaire investor covered a range of topics Monday, including his purchase of ketchup maker Heinz, what’s going to happen when the Federal Reserve stops pumping money into the economy, and newspapers.
Stocks fall as rates rise
Warren Buffett has long been bullish on stocks, and still is. But they’re likely to be hurt when interest rates rise, he said.
Cheap loans make it easy to get money to invest. And low returns on bank savings make stocks more attractive.
Buffett predicted that those low interest rates won’t go on forever.
“If interest rates go up dramatically, all assets will go down in value,” he said.
The dumbest investment
Buffet says he’d still rather own stocks than other options such as farmland, junk bonds, real estate trusts, or long-term government bonds.
“They’re not as cheap as they were four years ago” during the financial crisis and stock market selloff, he said in an interview on CNBC on Monday. “But you get more for your money” compared to other investments.
He called long-term government bonds “the dumbest investment.” Interest rates are much lower than usual. If they rise, bond investors could see the price of their bonds drop. That’s because bond prices fall when interest rates rise.
Big shift ahead
Buffett said money managers will be selling some investments when the Fed stops pumping extra money into the economy. He says it will be a “very interesting day” when it becomes clear the Fed has reversed direction.
“We’ve never had the degree of disgorgement that might be called for down the line, and who knows how it will play out. It will be noticeable,” he said.
Buffett said he has never taken long-term economic worries into account. That includes his recent deal to buy Heinz. Last month he agreed to work with 3G Capital to buy the H.J. Heinz Co. for $23.3 billion.
“Charlie and I will talk about the business, we will not get into discussions about the Fed or whatever,” he said, referring to Charles Munger, Berkshire’s vice chairman.
He predicted that Berkshire Hathaway will own Heinz 100 years from now. “Heinz is forever, as far as we’re concerned,” he said.
Auto spending cuts
Buffett said the automatic spending cuts that went into effect over the weekend are a “meat-ax way” to cut spending. But considering all the government spending and Federal Reserve cash infusions, spending probably has to be cut one way or another.
“You may have to use the meat ax first,” he said, “and then people kind of look at their handiwork and say, ‘We have to do better than this.’”
Buffett’s company has been buying papers. Berkshire Hathaway will own 28 daily newspapers in small and mid-sized cities once its acquisition of the Tulsa World is complete.
And there are more to buy. Last month Tribune Co. said it has hired investment bankers to help it sell its newspapers, which include the Chicago Tribune and the Los Angeles Times.
“No thanks,” Buffett said when asked about buying those two papers.
He said the papers that are going to make money will be those in a tight-knit community that wants local news.MORE IN National / World BusinessWASHINGTON — President Barack Obama declared Friday that Sony Pictures Entertainment “made a... Full StoryWASHINGTON — President Barack Obama declared Friday that Sony Pictures Entertainment “made a... Full Story
- Most Popular
- Most Emailed
- TOMORROW'S HEADLINES TODAY: Vermont Gas Systems puts Phase 2 on hold as the latest estimate for Phase 1 takes a 27 percent leap upward, to a total of $157 million; U.S. Attorney Tristram Coffin quits for job with private firm; police cite man in pot bust.
- RICHARD'S POOR ALMANACK: In 1972, Christmas bombing of North Vietnam ordered by President Richard Nixon, most lethal strikes of the war; in 1989, U.S. invades Panama to depose, arrest and charge Gen. Manuel Noriega with drug trafficking, racketeering.
- TOMORROW'S HEADLINES TODAY: Gov. Peter Shumlin announces demise of his single-payer health insurance initiative; convicted first-degree murderer Alan Prue sentenced to 50 years for killing teacher Melissa Jenkins; veterans chafed about park naming snub.
- RICHARD'S POOR ALMANACK: In 497 BC, first Saturnalia festival celebrated in Rome, Scandinavians retain 'Yule Goat' as symbol of season, Krampus, evil side of holiday cheer, terrorizes children into better behavior, more advice from Christopher Hitchens.
- RICHARD'S POOR ALMANACK: In 533 AD, Byzantine Emperor Justinian I gets the old empire back together again routing the Vandals from Carthage; in 1890, Lakota Chief Sitting Bull is killed at his home in South Dakota; in 1970, Soviets land probe on Venus.
- DUANE CARLETON: Rutland Herald Events Editor George Nostrand interviews musician Duane Carleton, whose new CD 'A GIRL LIKE THAT' drops Thursday, Dec. 18, 2014, and will be celebrated that evening with a show at 9:30 p.m. at Killington's Pickle Barrel.