Warren Buffett calls the coronavirus outbreak “scary” but says he won’t sell shares
Warren Buffett, chairman of the board of directors of Berkshire Hathaway Inc, on Monday called the outbreak of the coronavirus “scary thing,” but said now is not the time to sell shares despite the threat of a pandemic.
Speaking on CNBC, Buffett said that investors with 10–20 year planning horizon and profit-focused companies will feel good about stocks and that outbreak «did not change» its long-term prospects.
«These are scary things», – said Buffett. «I don’t think this should affect what you do in promotions».
Markets globally fell on Monday amid fears that the outbreak of the Covid-19 coronavirus, which began in China and spread to many countries, including Italy, South Korea and Iran, could disrupt supply chains and slow global economic growth..
Buffett, however, said that long-term investors should not be caught in the daily headlines, and that Berkshire «will surely be more inclined» buy stocks than, for example, it was on Friday.
«If you look at the current situation, he said, you get more for your money in stocks than in bonds.».
He said it was true that the US economy, despite a strong economy, had become «a little softer», than six months ago.
The economy grew 2.3% last year, but experienced a decline in consumer spending and industrial production.
Buffett spoke two days after holding company Berkshire said its operating profit fell 3% in 2019 to $ 23.97 billion, hit by losses from insurance underwriting, while unrealized growth of Apple Inc and other investments increased net income to a record $ 81.42 billion.
Berkshire Hathaway, based in Omaha, Nebraska, has over 90 operating businesses, including the BNSF Railroad, auto insurer Geico and Dairy Queen ice cream, and Buffett said a significant number of these businesses have been affected by the coronavirus outbreak..
Many of the approximately 1,000 Dairy Queen outlets in China are closed, while those that are still open, «do not provide any tangible benefit to talk about it», – Buffett said while insulation maker Johns Manville and carpet maker Shaw Industries are experiencing major supply chain disruptions.
«There are always problems», – he said. «The real question is where these businesses will be in five or ten years.».
Berkshire’s share price has followed the Standard over the past decade & Poor&# 39; s 500 (S&P 500), and Buffett said it would not bother the broader market as it once did, reflecting in part its size and market value of roughly $ 558 billion..
Any long-term result «will be minor, but it will be done in a very, very safe way», he said.
Warren Buffett also revealed that he spoke with fellow billionaire and Microsoft co-founder Bill Gates about measures being taken to contain the spread and impact of the coronavirus..
«Now they hope to get a universal flu vaccine, but that’s still a long way off. It’s not impossible. I mean, I asked my – my personal scientific advisor – Bill Gates, so I talk to him, I call him », – Buffett told the presenter «Squawk Box» Becky Quick. «I have spoken to him in the last few days about this, and he is optimistic about the long-term perspective of universal prevention.».
The Bill & Melinda Gates Foundation, one of the largest private foundations in the world, is actively working on methods to combat negative the impact of the coronavirus as part of its broader efforts to improve global health, said Buffett, who along with the Gates is one of the foundation’s three trustees.