Warren Buffett has warned against buying or selling shares. He doesn’t think that the behavior of investors should be influenced by the coronavirus panic.
Many people have revealed reactions in response to the heavy plunge the stock markets took as a result of the coronavirus. A lot of companies shed some weight which ended up significantly affecting some of the world’s richest people. As with occurrences like this, many businessmen, as well as market analysts and traders alike, have aired their two cents on the matter. One very interesting one has now come from Berkshire Hathaway chairman Warren Buffett who doesn’t believe anyone should sell their shares because of the epidemic.
In a recent conversation with CNBC, Warren Buffett has said that the current coronavirus epidemic should not influence how people handle their shares. According to him what should be more important is whether there really will be any long-term effects from the outbreak. Buffett said:
“The real question is: ‘Has the 10-year or 20-year outlook for American businesses changed in the last 24 or 48 hours?’”
According to Buffett, playing in the stock market and purchasing shares isn’t something you do based on temporary market trajectories. He believes that decisions like that should only be made if they have a long-term effect on the shares.
“You will notice many of the businesses we partially own, American Express, Coca-Cola – those are businesses and you don’t buy or sell your business based on today’s headlines. If it gives you a chance to buy something you like and you can buy it even cheaper then it’s your good luck.”
Warren Buffett also spoke specifically about the coronavirus and how it will impact shares. According to him, a conversation with his own ‘science advisor’ Bill Gates put things into perspective. He said Gates is quite confident that there will be a proper solution. Speaking on this, Buffett said:
“Now what they hope to get is a universal flu vaccine, but that’s a long way off. It isn’t impossible…I talked to [Gates] in the last few days about it and he’s bullish on the long-term outlook for a universal prevention of it.”
Regardless of the progress being made with the coronavirus, Buffett still believes that shares could still plunge in the short-term. Whether or not there is a health epidemic, price swings are not strange. In the recently released Berkshire Hathaway annual letter, Buffett wrote:
“Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater.”
In the letter, Buffett also gave his two cents about shares. According to him, if certain conditions stay constant, shares are bullish in the long-term. He said if current rates hold for much longer and “corporate tax rates also remain near the low-level businesses now enjoy”, equities performing better than bonds is “almost certain.”
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
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