Tags: Buffett | market | stocks | rates

Buffett Really 'Doesn't Care' if Fed Is Going to Hike Rates

By    |   Thursday, 02 October 2014 11:14 AM

Stocks dropped sharply Wednesday, with the S&P 500 down 1.3 percent, and Warren Buffett took advantage of the move to buy shares.

While he wouldn't tell CNBC which stocks he purchased, Buffett did cite them as "names you'd recognize."

Obviously the aim of the stock game is to buy low and sell high, and that's what Buffett's Berkshire Hathaway tries to do. "The more [the market] goes down, the more I like to buy."

Trying to time the market precisely is often a "fool's game," he asserts.

Owning shares of U.S. companies in a variety of industries has placed investors in very good stead over the past 20 years, Buffett said.

"Particularly if you buy them over time. You can't lose."

He notes that his investment decisions aren't dictated by the Federal Reserve's interest rate policy.

"I really don't care about whether the Fed is going to raise interest rates," Buffett proclaims.

"Interest rates to valuations are like gravity is to physical objects, basically," he explains. "If interest rates are 10 percent, everything is worth less than if interest rates are worth 1 percent. Everything is a function of interest rates. Everything. Any financial asset."

With rates being held near zero for so long, "that has caused all other asset classes to go up in value. Whether you are talking about holding oil, you name it, anything. That will always be true."

Instead, Buffett simply buys businesses he thinks will perform for the next 50 years, such as Thursday's deal to purchase the country's largest privately held car dealership company, Van Tuyl Group.

Uncertainty now reigns in the stock market.

"There may be a bit of a wait-and-see attitude for U.S. markets over the next couple of days," Veronika Pechlaner, a fund manager at Ashburton Ltd., tells Bloomberg.

"The geopolitical background hasn't been great for U.S. stocks. In the case of small caps, they re-rated and traded at much higher valuations, so investors are asking themselves if it will really get better than this when interest rates start going up."

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Stocks dropped sharply Wednesday, with the S&P 500 down 1.3 percent, and Warren Buffett took advantage of the move to buy shares.
Buffett, market, stocks, rates
341
2014-14-02
Thursday, 02 October 2014 11:14 AM
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