Here’s What Warren Buffett Says About The Coronavirus And His Outlook On Stocks


May kicked off with one of the biggest events of the investment calendar the Berkshire Hathaway annual meeting. Hey hurrah but instead of forty thousand people flocking to Omaha. Warren Buffett sat at a table in a near Empty Auditorium. Under did either of you watch it at all. It was kind of the surreal experience. Now I saw two seconds of it. I haven't gotten around to it but it is always. It still blows my mind. That forty thousand people go to Omaha just to maybe get a chance to see Warren Buffett. That's crazy and it's crazy that he can sit up there for that long and answer question after question after question now usually also joined by Charlie. Munger this year he was not instead he was joined by Greg able able. Who is the vice chairman in charge of all operate operate instead of Insurance? But it still went on for more than four hours. Wow I more than an hour was a presentation that he gave so I listened to the entire meeting. Impasse episodes I would. I've said that sort of my personal investing philosophy is be a short-term pessimist at a long-term optimist and that sorta seems to me was the message of the whole meeting so on the pessimistic side. They're clearly not doing anything you know. They've still kept most of their one hundred thirty billion in cash. He did not use the downturn as an opportunity to go on a buying spree. He essentially he likened previous downturns to train. That is slowing down. This time. He said we took the economic train off the tracks. And I don't know of any historical parallel in the range of possibilities on the economic side are still extraordinarily wide in other words. They're still sitting pat on what they're going to do. He also said quote. We have not done anything because we don't see anything that attractive to do. Heels actually spent a good deal of time talking about some of the past challenges and failings America's history so for example. He pointed out that. Despite the fact that we have a declaration of independence that claims that all men are created equal. When you look at the three point nine million people living in the original thirteen states and seven thousand nine hundred fifteen percent were slaves pointed out that during the civil war six percent of the male population between the ages of eighteen and sixty died. The twenty twenty equivalent of that would be four million deaths according to Warren Buffett and then it took one hundred thirty one years for women to have the right to vote at another sixty one years until a woman was appointed to the Supreme Court so we often talks about the long term success of America. He did spend a good bit of time talking about some of the things that we have not done so well. He spent a particular amount of time on going over the Great Depression I think partially because he was born in the middle of the Great Depression so he pointed out. It's September nine hundred twenty nine. The Dow was at three eighty one. Five hundred didn't exist back then so he just using the Dow and then in a little more than two months it was down forty nine percent to one ninety eight. You Move Ahead to August twenty ninth nineteen thirty. Which is the day before he was born. It was backed up to two forty so and it rebounded twenty percent. People have found that like okay. Stocks went down but there. They've gone back up back then. People were thinking that they were on the verge of the Great Depression. You go ahead less than two years to July thirty two. The Dow is down to forty one so from the peak went from three eighty one to forty one a decline of eighty nine percent and the Dow did not get back to its nineteen twenty nine peak until nineteen fifty four. Wow he did point out that people got dividends at back then. Dividends were higher but still price percentage the market was down for more than twenty years so buffet called the Great Depression a testing period. That caused some people that lose faith in America. I don't know if he was playing out to say like times ahead could be tougher than we think or just pointing out that America has seen worse times but regardless he says that anyone's going to lose faith in America that's a big mistake which brings us to his persistent message of being a long-term optimistic pointed out that despite all these challenges from seventeen eighty nine until today the wealth of the of the United States has grown five thousand percent and that's adjusted for inflation. He also pointed out that since the year he graduated from college in Nineteen Forty nine at the age of nineteen one dollar in the Dow has grown to one hundred dollars. So how do people benefit from what he calls the American miracle? Well as he often does and I think it's always interesting that he does this during the Berkshire hathaway annual meeting because it's an annual meeting of people who own individual stocks. He thinks the vast majority of people should just by an S. and P. Five Hundred Index Fund and. He mentioned that's what he does. That's what he has directed his will when he passes away swimming. He predeceased. His wife. Ninety percent of that wealth will go into an SAP hundred index fund. In fact one question asked about Berkshires underperformance as a stock. It's underperformed this year as well as the last decade a something. I know personally because I've owned Berkshire for more than a decade and he was basically said. I agree that that's an issue. He said that the truth is that I recommended. Sap Five Hundred Index Fund. To most people. And I happen to believe that Berkshire is about a solid is any single investment can be in terms of earning over time. But I would bet my life on whether we beat the sap five hundred over the next ten years so as always with buffet. It comes down to betting on America for the long term. But it's clearly means the long term to be like very long-term it mentioned the timeframe twenty to thirty years a couple of times the only truly positive thing he said about shorter timeframe at least that I can remember was in response to a question about whether Berkshire expect significant significant layoffs among its workforce which at this point. It employs almost four hundred thousand people in response. He said that some businesses will have to make adjustments. See's candies closed down. Nebraska Furniture Mart. Some of their factories may have issues. It's the funniest list of companies. I'm sorry Oh it's like it's very clean seas it's like what. Why Energy facturing? Yeah it's it's everything it's all these companies that you like. Yeah I think I've I think I've heard of Kim or have it at all. It's quite amazing. But well while he expects it some there will be have to be some layoffs. He doesn't expect them to be significant in that five years from now he expects Berkshire we'll be employing considerably more people so that to me says he expects five years from now. Things will fully recover and I think that's a reasonable timeframe. I certainly expected in five years. This time period will feel like somewhat of a distant memory. I certainly hope so But it's certainly possible that over the next year or two things could turn out to be pretty rocky

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