Topline: Following his annual letter to Berkshire Hathaway shareholders over the weekend, billionaire investor Warren Buffett told CNBC in an interview on Monday that the coronavirus is “scary stuff” for businesses and investors, but that the outbreak has “not changed” his long-term optimistic outlook on stocks.
- Stocks plunged on Monday, with all three major U.S. benchmark indexes losing more than 3%, as a rising number of coronavirus cases outside of China stoked fears that the outbreak could turn into a global pandemic.
- Speaking with CNBC on Monday morning, Buffett called the coronavirus “scary stuff,” saying that the outbreak is now “front and center” the main threat to U.S. companies and the economy.
- He further warned that a “very significant percentage” of Berkshire Hathaway’s businesses—it owns more than 90, from American Express and Coca-Cola to Geico and Dairy Queen—could “very well” be negatively impacted by the coronavirus, though he remains optimistic about their long-term prospects.
- More broadly, Buffett said that the U.S. economy is still “strong,” though it had become “a little softer” than it was six months ago: “Business is down but it’s down from a very good level,” he described.
- Despite the coronavirus’ impact on markets, Buffett, who is famous for his long-term investing, said that investors shouldn’t panic by selling stocks based or get caught up in “today’s headlines.”
- The Oracle of Omaha actually sees a positive in the ongoing market sell-off, telling CNBC that Berkshire Hathaway would “certainly be more inclined” to buy stocks at the lower prices caused by the coronavirus.
What to watch for: Buffett also spoke to CNBC about some of his favorite investments right now. He called Apple, which is Berkshire Hathaway’s third-largest holding (with a roughly 5.5% stake) behind insurance and railroad companies, “probably the best business I know in the world.” Buffett added that he especially likes bank stocks, which are a big part of Berkshire Hathaway’s portfolio—with big names like Goldman Sachs, JPMorgan Chase and Bank of America among its top holdings. Buffett called banks “very attractive compared to most other securities I see.”
Surprising fact: Buffett also recently spoke about the coronavirus to his “science advisor,” billionaire Microsoft founder Bill Gates: “I talked to him in the last few days about it, and he’s bullish on the long-term outlook for a universal prevention of it,” he said.
Crucial quote: “We’re buying businesses to own for 20 or 30 years,” Buffett, who Forbes estimates has a net worth of $87.3 billion, said on CNBC. “We think the 20- and 30-year outlook is not changed by the coronavirus.”
Key background: Stocks plummeted sharply on Monday, amid news that the coronavirus outbreak has now infected more than 79,000 people globally and killed over 2,600. The number of cases outside of China surged over the weekend, causing concern among global investors as countries like Italy, South Korea and Iran emerge as new coronavirus hot spots. The Dow Jones industrial average fell more than 1,000 points, dropping 3.5% for its worst day since February 2018. The S&P 500 similarly fell 3.5%, its worst drop since October 2018. Monday’s sell-off completely erased both indexes’ gains so far in 2020. The Nasdaq Composite index, on the other hand, declined 4%.
Tangent: Buffett was also asked about U.S. politics during his interview. The billionaire investor said he would “certainly” vote for Mike Bloomberg. “I don’t think another billionaire supporting him would be the best thing to announce,” Buffet said, “but sure, I would have no trouble voting for Mike Bloomberg.” While he said he sympathizes with Democratic front-runner Senator Bernie Sanders’ (I-Vt.) message about income inequality, Buffett doesn’t think socialism is the answer, saying instead, “I don’t believe in giving up the capitalist system.”
Further reading: Buffett’s Letter To Berkshire Shareholders Reveals $5 Billion In Stock Buybacks And Plans For His Berkshire Stake
–Sergei Klebnikov, Forbes Staff, Markets.