Tags: Buffett | Stocks | Homes | Investments

Buffett: Stocks, Single Family Homes Are Great Investments Now

Monday, 27 Feb 2012 07:46 AM

Stocks will continue climbing, while single-family homes are a good investment as the housing sector is due to recover fueled by demand from new families coming into the market, says legendary stock picker Warren Buffett.

"Equities are still cheap relative to any other asset class," Buffett tells CNBC.

"I would say that single family homes are cheap now, too. If I had a way of buying a couple of hundred thousand single family homes and had a way of managing them ... I would load up on them and I would take mortgages out a very low rates," Buffett adds.

Editor's Note: Wall Street Insider Exposes Death of Main Street America

Prices can only go so low, while news families coming into the marketplace are going to demand new homes.

Stocks, meanwhile, have come up in recent years, although they have room to climb even more.

While the optimal time to get into the market has passed, the asset class is still on the upswing.

"If you wait to see the first robin, spring will be over. Well spring is over but we are not in the dead of winter either," Buffett says.

Cash and Treasury bonds aren't going to return well thanks to low interest rates, which leaves stocks as a wise alternative.

"They are not as cheap as they were, but would you rather have cash? Would you rather have Treasury bonds? I would rather own great businesses," Buffett says.

Still, some high-profile managers see a place for Treasury bonds.

They're great for retirees looking for a safe but dull venue to stash their nest eggs, says Bill Gross, founder of Pimco, the world's largest bond fund.

"If the Fed is good to its promise, then interest rates aren’t going anywhere for the next two or three years. Does a 3 percent yield from a longer-term Treasury, and a 2 percent yield from a medium-term Treasury, does that represent value? Not really," Gross tells Bloomberg TV.

"Certainly, the saver and investor is being hair-cutted, in historical terms."

However, stocks can fall.

"Demographically, boomers prefer certainty as opposed to speculative capital gain," Gross says.

"They're beginning to get older and require more certainty. Do they find appeal in a Johnson & Johnson at 3.5 percent dividend yield with growth potential? Sure they do, but they also believe they want that money back, and if there is a 2008 and 2009 scenario, perhaps they won't. So there are demographic tradeoffs here that have to be considered."

Editor's Note: Wall Street Insider Exposes Death of Main Street America



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Monday, 27 Feb 2012 07:46 AM
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