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Warren Buffett calls coronavirus outbreak 'scary stuff,' but says he won't be selling stocks

Stock Markets Feb 24, 2020 09:50AM ET
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© Reuters. Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc's annual shareholder meeting in Omaha

By Jonathan Stempel

(Reuters) - Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc (N:BRKa), on Monday called the coronavirus outbreak "scary stuff" but said that it was no time to sell stocks despite the threat of a pandemic.

Speaking on CNBC, Buffett said investors with a 10- to 20-year time horizon and focused on companies' earnings power will fare well in stocks, and that the outbreak has "not changed" his long-term outlook.

"It is scary stuff," Buffett said. "I don't think it should affect what you do in stocks."

Markets worldwide fell on Monday on concern about how the Covid-19 coronavirus outbreak, which began in China and has spread to countries including Italy, South Korea and Iran, could disrupt supply chains and slow global economic growth.

Buffett, however, said long-term investors should not get caught up in daily headlines, and that Berkshire would "certainly be more inclined" to buy stocks than on Friday.

"If you look at the present situation," he said, "you get more for your money in stocks than bonds."

He said this was true though the U.S. economy, while sill strong, had become "a little softer" than it was six months ago.

The economy grew 2.3% last year but has experienced slower consumer spending and industrial production.

Buffett spoke two days after Berkshire said operating profit fell 3% in 2019 to $23.97 billion, hurt by losses from insurance underwriting, while unrealized gains in Apple Inc (O:AAPL) and other investments boosted net income to a record $81.42 billion.

Berkshire, based in Omaha, Nebraska, has more than 90 operating businesses including the BNSF railroad, Geico auto insurer and Dairy Queen ice cream, and Buffett said the coronavirus outbreak has affected a significant number.

Many of the roughly 1,000 Dairy Queens in China are closed, while those that are open "aren't doing any business to speak of," Buffett said, while Johns Manville insulation and Shaw carpeting have seen supply chain disruptions.

"There's always trouble coming," he said. "The real question is where are those businesses going to be in five or 10 years."

Berkshire's stock price has trailed the Standard & Poor's 500 (SPX) over the last decade, and Buffett said it will not trounce the broader market as it once did, in part reflecting its size and roughly $558 billion market value.

Buffett said Berkshire over the long term is unlikely to be in the top 15% or bottom 30% of stocks, but will outperform in down markets.

Any long-term outperformance "will be minor, but it will be done in a very very safe manner," he said.

Warren Buffett calls coronavirus outbreak 'scary stuff,' but says he won't be selling stocks
 

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Comments (10)
john doe
batman876 Mar 09, 2020 5:04PM ET
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Because he sold them already. 🙄
Anand Krishnan
Anand Krishnan Feb 24, 2020 10:03AM ET
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Just trade the charts and indicators until things stabilize. Vix is way above bollinger bands and pcall is ticking up. Keep eyes on those closely if you are shorting and exit appropriately.
JJ MM
JJ MM Feb 24, 2020 9:57AM ET
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He has to say that, so many follow him so that will try to keep people from pulling their money and besides, hes on the Fed’s payroll, he gets bailout.
Michael Koe
Michael Koe Feb 24, 2020 9:49AM ET
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does he ever sell?
Aaron Last Name
Aaron Last Name Feb 24, 2020 9:46AM ET
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This guy needs to lose a billion or two
vincent li
vincent li Feb 24, 2020 9:20AM ET
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buffet ofcourse will say this...he is 70% in the market... he will be buying the discounts soon
Nick Marone
Nick Marone Feb 24, 2020 8:50AM ET
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goes down with the ship.
Nick Marone
Nick Marone Feb 24, 2020 8:48AM ET
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What a Champion.
Ng Zen ng
Ng Zen ng Feb 24, 2020 7:56AM ET
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The Guru of stock and the legend.
Peter Dikeakos
Peter Dikeakos Feb 24, 2020 7:35AM ET
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Mr. Buffett talks like he has always.. What he does on his own is not much now. His book is already written. Even if he thinks a little different now he's not allowed to tell.
Ephraim Shavit
Ephraim Shavit Feb 24, 2020 7:35AM ET
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Considering that he has done much better than yourself
Sahil Jain
Sahil Jain Feb 24, 2020 7:35AM ET
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ya..that is the reason why we comment in this box and he is the billionaire sitting there. i hope u well understand!!
Xin Zhang
Xin Zhang Feb 24, 2020 7:35AM ET
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Yes, the news is quite misleading, Warren is sitting on an epic cash pile and waiting to buy. What in his pocket is usually very resistant during a recession, maybe less profitable during bubble time.
 
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