Warren Buffett warns coronavirus will affect business, but he 'certainly won’t be selling' stocks

Sam Ro
Managing Editor

Warren Buffett, chairman and CEO of Berkshire Hathaway (BRK-A, BRK-B), says the stock market rout we’re witnessing today is “good for us.”

“We’re a net buyer of stocks over time,” he said on CNBC. “Most people are savers, they should want the market to go down. They should want to buy at a lower price.”

Buffett’s comments came as Dow futures (YM=F) were down by about 800 points or 3%. Stocks around the world plunged on Monday as the coronavirus outbreak escalated, exacerbating fears that the global economy would seize up.

Regarding the coronavirus specifically, Buffett made clear that he is “not a specialist.” And he warned that “a very significant percentage of our businesses one way are affected.”

However, he reiterated that investors should be more focused on the long-term, not the short-term.

"If you're buying a business, and that's what stocks are... you're gonna own it for 10 or 20 years,” he said. “The real question is: ‘Has the 10-year or 20-year outlook for American businesses changed in the last 24 hours or 48 hours?’"

Buffett noted that many of the stocks in Berkshire Hathaway’s portfolio have been in there for decades.

Berkshire Hathaway Chairman and CEO Warren Buffett speaks during an interview in Omaha, Neb., Monday, May 7, 2018. (AP Photo/Nati Harnik)

‘Anything can happen to stock prices tomorrow’

In his annual letter to Berkshire Hathaway shareholders, which was released on Saturday, Buffett said he expected stocks to beat bonds over time.

"Our perhaps jaundiced view is that the pundits who opine on these subjects reveal, by that very behavior, far more about themselves than they reveal about the future,” he wrote. “What we can say is that if something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments.”

That said, he also reminds folks that market routs happen.

"Anything can happen to stock prices tomorrow,” he said. “Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater.”

All that said, he’s bullish thanks to things like “The American Tailwind.”

Sell-offs are buying opportunities

Later in his CNBC appearance, Buffett noted that ~3% market sell-offs like what we’re seeing today are almost countless in history.

And they ultimately turned out to be opportunities.

“I can’t think of one [3% sell-off] you shouldn’t have bought on,” he said. “How can it be bad news unless you have to sell?”

“We certainly won’t be selling.”

Mark your calendars!

Sam Ro is managing editor at Yahoo Finance. Follow him on Twitter: @SamRo

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