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LAST UPDATE: 01:20
“Nothing can really stop the United States,” Warren Buffett said in his first statement since the colonial pandemic erupted, damaging global and US economies and financial markets, expressing confidence that the United States could overcome them. Today’s unprecedented challenges.
The 89-year-old investor, one of the world’s most respected, who chose his words very carefully during Berskhire Hathaway’s annual general meeting of shareholders, noted that the U.S. economy faces an unprecedented challenge and uncertainty is high because of it. coronary pandemic.
However, he reiterated his long-held belief that the United States could overcome even the most terrifying challenges, such as the current global pandemic. “The American miracle, American magic, has always prevailed and will continue to do so,” he said.
In making some comparisons to the Spanish flu of 1918-1919, Buffett noted that he did not have in mind a “similar” situation, where the economy and the workforce have been marginalized, which inevitably causes enormous uncertainty. He stressed that the current crisis is very different from the 2008 financial crisis.
“In 2008 and 2009 the economy derailed and there were some reasons why this happened, such as the weakness of the banking system. But today, we got off the train and left it at the station. And I really don’t know any other” It is the country The world’s largest, most productive, with a huge population, which has effectively marginalized the economy and its workforce, “Buffett told Berkshire Hathaway shareholders.
He stressed that it was difficult to assess the severity of the epidemic, as “we are learning about the virus as we go along,” adding that it is more contagious than expected but not as deadly as it could be.
“Despite the challenge we face, I am still convinced, as I have been in the past, that I was convinced of this in World War II, as well as during the Cuban missile crisis of September 11 and the financial crisis of 2008. “That nothing can really stop the United States,” he added.
Referring to the economic impact of the pandemic, he noted that it is huge, but noted that the current invitation is not the most important that the United States has faced in its history.
Referring to the previous crises the United States faced since its inception, and specifically to the 1929 financial crisis, Buffett noted that many people “really lost faith” at the time. “But in the end,” he added, “the answer was never to bet against the United States.”
No one knows how the markets will react
Omaha’s “Wise Man” also said stocks would move better than long-term government bonds or savings, but cautioned investors to be very careful about their positions.
“I don’t think anyone knows what the market will do tomorrow, next week, next month, or next year. I know it will go away over time, but I’m not sure when we found out on September 10, 2001.” And we learned it again a few months ago with the virus. Anything that can happen in the markets. And you can bet on the United States, but you must be careful how to do it. Because markets can react in any way, “he added.
Omaha’s “Wise Man” emphasized that, in his opinion, the average investor should bet more broadly on the market and its long-term prospects rather than on selected stocks.
“In my opinion, for most people, the best thing to do is to invest in the S&P 500 index fund,” Buffett said. “People are paying large sums for advice they really don’t need. If you bet on the United States and hold that position for decades, you will do much better than buying bonds or following those who tell you where to invest,” he added. .
Buffett also made special reference to the management by the Federal Reserve and Jerome Powell of the crisis in the market and the economy due to the current crisis due to the pandemic, comparing the current president of the Fed with the late president of the Federal Reserve. from United States. Volker (ss. Accredited with managing inflation in the late 1970s and early 1980s
As he noted, the Fed’s immediate and unprecedented response prevented the market from collapsing further, at a time when conditions were causing fear and “fear is the most contagious disease imaginable.”
“I have always put Paul Walker (former Fed Chairman Jimmy Carter and Ronald Reagan) in a special position after the chairman of the Federal Reserve for many years … Jay Powell, in my opinion, and” They are on the same podium than in mid-March. They probably learned a lesson from what they saw in 2008 and 2009. They reacted in an unprecedented way and really contributed to what followed, “he said.
As you noted, March, although the market “froze” during it, it was finally the best month for corporate debt issuance in history. “Everyone who issued bonds in late March and April should send a letter of thanks in the Fed, because that would not have happened if they had not worked with truly unprecedented speed and determination, “said the Berkshire Hathaway chief.
Although he added that no one knows exactly what the consequences of this major expansion of the Federal Reserve’s balance sheet will be, he added that we know what the consequences of not reacting would be, a position adopted by the Federal Reserve for many years.
He added that such situations, such as the current coronation pandemic crisis, justify Berkshire’s stance on maintaining a large supply of cash and government bonds, so that it is prepared for a scenario in which the Fed will not be able to act. aggressively
