Warren Buffett, the chairman of Berkshire Hathaway and one of the canniest investors in the world, is of the opinion that stocks in the United States of America continue to be cheap when compared against present interest rates levels. He made this opinion known during one of his interviews with a prominent media house.
Optimistic about the US economy
Buffett published his annual letter on February 25, an event keenly read by other investors. He wrote that the American economy will continue to chug on to its excellent boom. He said that the beauty of stocks is that they can be consistently bought over time. The billionaire investor also added that investors must diversify risks by owning a diversified and variety set of companies. He said that any investor will make a huge mistake if the person believes that it is possible to time the market.
Buffett said that his present investment in stocks since before the presidential election is in the region of $20 billion. The stocks have extended their upside during the last week of February, with a record high closing of Dow Jones Industrial Average. The DJIA closed at peak highs for the 11th consecutive session. This is the longest upside streak since 1987. It is to be mentioned that even prior to the rise of stock markets post elections, a number of valuation measures threw up results which showed that stock markets are as expensive as they were once during the terrifying tech bubble era.
The stocks were considered pricey as median P/E ratio went above the historic average figures. These indicated steeper prices than that was justified by underlying earnings centric value of companies. The billionaire investor also said that he has upped his stake in Apple. He presently owns 130 million shares of the company. This is twice the amount he held during December 31.
Buffett warned investors that they will rue the day they did not purchase stocks in case 10 year Treasury yield remains around the present 2.3 percent during the coming decade. He added that the prices of stocks would be abnormally high of the interest rates hover around seven or eight percent. The astute investor also said that the economy of the United States is a highly dynamic one. He mentioned that there will be the inevitable swings of growth. He said that whatever the event, the United States will always win.