Wednesday 26 November 2014

Stocks still reasonable but bonds awful – Buffett

Josh Funk

Published 07/05/2013 | 05:00

Berkshire Hathaway CEO Warren Buffett (L) plays table tennis with Microsoft Chairman Bill Gates in Omaha May 5, 2013 the day after company's annual meeting. Buffett at the meeting on Saturday gave the most extensive comments to date about the future of Berkshire Hathaway Inc after he is gone, saying he still expects the conglomerate to be a partner of choice for distressed companies.  REUTERS/Rick Wilking (UNITED STATES - Tags: BUSINESS)
Berkshire chief Warren Buffett plays table tennis with Microsoft chairman Bill Gates in Omaha during the investment company's annual meeting at the weekend

BILLIONAIRE investor Warren Buffett said even though the stock market is soaring, prices appear reasonable, and stocks would be a better investment than bonds for most people.

Mr Buffett conducted interviews yesterday on CNBC and the Fox Business Network cable channels after a weekend full of events in Omaha for Berkshire Hathaway shareholders.

"Bonds are a terrible investment right now," Mr Buffett said.

He added that bond prices were artificially inflated because the Federal Reserve continued to buy $85bn (€64bn) of bonds a month, and owners of long-term bonds might see big losses when interest rates eventually rose.

He said the average investor should keep enough cash to be comfortable and invest the rest in equities. "Stocks are reasonably priced now. They were very cheap a few years ago."

But MrBuffett said most investors paid too much attention when the stock market reached record highs. He said average investors should pay more attention when stocks hit records in falling prices because that's a sign they were getting cheaper.

The Federal Reserve's efforts to keep interest rates low had helped the stock market soar, Mr Buffett said, but the improving economy also played a role.

He said he remained a fan of Fed chairman Ben Bernanke. He also reiterated his support of JPMorgan Chase chairman and CEO Jamie Dimon. He said that bank, which he has invested in for his personal portfolio, has the right CEO.

Mr Buffett, who heads the Berkshire Hathaway conglomerate, was also asked about aspects of that company, which owns more than 80 companies and holds major investments in Wells Fargo, IBM, Coca-Cola and other iconic companies.

He defended the way the pending $23.3bn takeover of ketchup-maker HJ Heinz was structured. He said he expected Berkshire to own a stake in Heinz forever, and he didn't see a problem in taking a partner – the Brazilian investment firm 3G Capital – in the deal. (AP)

Irish Independent

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