Billionaire investor Warren Buffett on Monday warned investors not to get caught up in the headlines, as global markets tanked over growing concerns with the coronavirus outbreak.
“It is scary stuff,” Buffett told CNBC news network. “I don’t think it should affect what you do in stocks.”
Warren, who is chairman of Berkshire Hathaway Inc., said that investors with a 10-to-20-year time horizon will fare well in stocks. The virus outbreak has “not changed” his long-term outlook, he added.
But markets worldwide fell on Monday as concerns about the COVID-19 coronavirus outbreak spread. New cases were reported over the weekend in Iran, Italy, and South Korea. On Monday, Kuwait, Bahrain, Afghanistan, Iraq and Oman reported their first infections from the coronavirus.
The coronavirus outbreak has killed 2,600, most of them in mainland China. It has also disrupted supply chains as many factories in China remain closed.
But Buffett on Monday said 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.”
While the United States economy is still strong, it has become “a little softer” than it was six months ago, he added. The US economy grew 2.3 percent last year but has experienced slower consumer spending and industrial production.
Buffett spoke two days after Berkshire said operating profit fell 3 percent in 2019 to $23.97bn, hurt by losses from insurance underwriting. Unrealized gains in Apple Inc and other investments boosted Berkshire’s net income to a record $81.42bn in 2019.
Berkshire, based in Omaha, Nebraska, has more than 90 operating businesses including the BNSF railway, Geico auto insurer and Dairy Queen ice cream.
Buffet did say that the coronavirus outbreak was affecting a significant number of Dairy Queens in China. 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,” he said. Other companies like Johns Manville insulation and Shaw carpeting have seen supply chain disruptions, Buffet added.
“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 over the last decade. Buffett said it will not trounce the broader market as it once did, in part reflecting its size and roughly $558bn market value.
Any long-term outperformance “will be minor, but it will be done in a very very safe manner,” he said.