Tags: warren buffett | economy | housing | homebuilder | berkshire

Buffett: Economy Getting Better, 'Homebuilding Best Sector' This Year

(Getty/Saul Loeb)

Monday, 08 May 2017 08:47 AM

Investing guru Warren Buffett says he thinks the U.S. economy and housing markets are steadily getting better and that "homebuilding will be the best sector this year, in my view."

He also said he doesn't make knee-jerk reactions about stocks after events like the French presidential election.

"It's not a question of being in the market," he told CNBC. "It's a question of owning businesses. If I wanted to own farms, I wouldn't be buying and selling them based on an election. I wouldn't try to figure that sort of thing out," he said.

"I can't think of what I really (would) have done much about purchases or sales in any election," he said.

"When I was a kid, every time a Democrat got elected ... there was a wake in our house, and my father would start storing sugar in the basement. So, I've learned to not put too much weight in any given election," he said. Buffett's father, Howard, was a four-term Republican congressman from Nebraska, CNBC reported.

Turning to Apple, he said it's "amazing" how Apple has resonated with consumers, and that's why Berkshire Hathaway bought the stock. 

"I can very easily determine the competitive position of Apple now and who's trying to chase them and how easy it is to chase them," Buffett told CNBC.

"We happened to be well situated in terms of having these massive home furnishing stores. I can learn very easily how consumers react to different things there," he said, referring to Berkshire's ownership of Nebraska Furniture Mart. "You can't move people by price in the smartphone market remotely like you can move them in appliances or all kinds of things. People want the product. They don't want the cheapest product."

Despite softer sales in the most recent quarter, consumer loyalty to the iPhone is "huge," Buffett said. "It's a very, very, very valuable product to people that build their lives around it. And that's true of 8-year-olds and 80-year-olds," he added.

Asked why Berkshire Hathaway bought Apple stock, Buffett said, "The shares when we bought them at least were much more reasonable in relation to current earnings."

Turning to other tech matters, Buffett told CNBC that IBM's artificial intelligence unit Watson should one day take the place of humans.

"I would think the biggest value will come in when it actually replaces human labor, and machines don't come round annually and ask for higher wages, and they don't need health care, and maybe a little maintenance," Buffett said on CNBC's "Squawk Box."

"It should replace people in a big way, unless some other products do the same thing," he said, noting Watson's potential for reading X-rays faster and better than humans, CNBC reported.

"Watson is a pretty amazing invention," Buffett said. "I'm sure the revenue is growing very significantly but from a very small base," he said.

"I think it has great potential. It has not come along as fast commercially as you would have hoped," he said.

Elsewhere, Buffett has admitted he made a mistake by not buying Google shares years ago, when the company was getting $10 or $11 per advertising click from Berskhire Hathaway consumer insurance company subsidiary Geico.

On CNBC's "Squawk Box" on Monday, Buffett said, "If I was forced to buy [Google-parent Alphabet] or short it, I'd buy it; same way with Amazon. But it's as little hard when you look at something at 'X' and it sells at 10X to buy it."

"That's cost people a lot of money at Berkshire," he said.

Meanwhile, Buffett was asked why he's not buying Amazon shares, the billionaire investor had a simple answer.

"Stupidity," Buffett said. 

In a wide-ranging CNBC interview, the Berkshire Hathaway CEO also said:

  • Google has aspects of a natural monopoly.
  • He has never made a trade based on GDP numbers.
  • The slowdown in oil & gas effected a lot of sectors.
  • The U.S. credit card market better than expected.

(Newsmax wires services contributed to this report).

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Investing guru Warren Buffett says he thinks the U.S. economy and housing markets are steadily getting better and that "homebuilding will be the best sector this year, in my view."
warren buffett, economy, housing, homebuilder, berkshire
Monday, 08 May 2017 08:47 AM
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