Warren Buffett likes down days “because we buy ‘em cheaper.” But, other than that, he doesn’t pay much attention to market volatility.
“I’m no good on what’s going on in markets. I have no idea what will happen tomorrow or next week,” the chairman and CEO of Berkshire Hathaway told CNBC. “Sometimes they get very volatile like this and other times they put you to sleep, but the important thing is where they’re going to be in 5 to 10 years. And I’m confident that they’ll be considerably higher in 10 years, and I really have no idea where they’ll be in 10 days or 10 months.”
Buffett shared his views on the recent market volatility and overall economy during an interview Tuesday on CNBC’s “Squawk Alley.”
“If we’re buying a stock we usually try to buy a given percentage of the volume that trades that day. Same way if we’re selling, although we don’t sell that often,” Buffett said. “So, down days I like because we buy ‘em cheaper and we don’t try to really figure out what’s going on in markets. I’ve never been any good at it.”
That being said, he doesn’t necessarily see the recent pullback in the markets as a reason to be buying.
“We’re buying because we like what we’re buying in relation to its long-term prospects,” he told CNBC.
On the overall U.S. economy
To Buffett, the economy may not be as strong as the most recent numbers look.
“I think we’re still on that path we’ve been on for six years where it’s growing at 2 percent to a little bit better than 2 percent annually,” he said. “And that’s not a bad rate, but it’s not a booming rate, either.”
That’s why Buffett warns about getting “too excited” when looking at the quarterly GDP statistics, which he sees as misleading.
“If you look at year-over-year figures on GDP, they’re two-and-a-fraction percent and they’ve been that way quarter after quarter after quarter,” Buffett said. “But the quarterly figures – you know when you multiply something by four, little changes get multiplied a lot. So the seasonal adjustments, both of the current period and the last period, they control those quarterly numbers a lot when you report sequentially. In a way I think it’s better to look at them year over year. And, year over year, we’ve been in the 2 percent to 2.5 percent range now for six quarters or something like that.”
On the Fed’s potential rate hike
“I’ve never made a position based on what I think the Fed is going to do near term or long term,” he said, adding, “When we decided to buy Precision Castparts, there wasn’t one word of conversation with my partner Charlie [Munger] or with our board of directors about Fed action. And the same thing goes with our purchase of … Philllips 66.”
Buffett is worried, though, about the effect a rate hike could have globally.
“If our rates got substantially higher than Europe’s, I would not think that would necessarily be good for exports for this country,” he told CNBC. “In economics, you can never do just one thing. There’s always ‘And then, what?’ I think the ‘And then, what?’ of moving rates up substantially while Europe’s trying to keep them very low could have some consequences down the line.”