20-09-2013, 10:40 PM
http://www.afr.com/p/world/buffett_havin...WdRLSBmG1I
Buffett having ‘hard time’ looking for purchases
PUBLISHED: 20 SEP 2013 07:27:00 | UPDATED: 20 SEP 2013 12:49:12
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Buffett having ‘hard time’ looking for purchases
Warren Buffett, the founder of Berkshire Hathaway, says the US economy is gradually improving but the QE stimulus has done more for the stock market than economic growth. Photo: AFP
JOHN KEHOE Washington
Legendary investor Warren Buffett says record stock prices are currently around fair value and that the Federal Reserve’s indefinite extension of quantitative easing will support asset prices.
Mr Buffett said on Thursday that share prices were “ridiculously cheap” in recent years until recently when the Fed’s $US85 billion monthly bond buying program helped push US stock markets to record levels this week.
Mr Buffett, the CEO of Berkshire Hathaway, said the US economy was gradually improving but the QE stimulus had done more for the stock market than economic growth.
“The extent that QEIII is keeping interest rates lower than they would otherwise probably keeps asset prices higher,” Mr Buffett said in an interview on CNBC. “We don’t find bargains around but we don’t think that things are way overvalued either.
“We’re having a hard time finding things to buy,” the billionaire said.
The comments came a day after the Fed surprised markets by not paring back its bond buying program because of concerns that the economic recovery was not strong enough.
Billionaire Carl Icahn said his portfolio was up about 30 per cent “for all the wrong reasons”.
“I think right now the market is giving you a false picture,” Icahn said. “I don’t think a lot of companies are doing that well. They’re taking advantage of low interest rates.”
After surging on Wednesday when the Dow Jones Industrial Average and S&P 500 Index hit record highs, stocks gave back some of those gains on Thursday. The Dow fell 40.39 points or 0.26 per cent to 15,636.50, while the broader S&P 500 was 3.18 points or 0.18 per cent, lower at 1722.34.
Mr Buffett said he would like to see Fed chairman Ben Bernanke, who is due to step down at the end of January, finish the QE process and serve a third term.
“I think he’s done a terrific job,” Mr Buffett said. “The last half of this game is very different to the first half of this game. I think Bernanke ought to be given a chance, not just at the buying end of it.”
The White House has advised that Mr Bernanke will finish as Fed chair in January, although it is unclear if the decision was taken by the chairman or President Barack Obama.
Fed vice chair Janet Yellen is the favourite to take over the top job, after Larry Summers exited the race on Sunday.
Mr Buffett said he didn’t know Ms Yellen. She is perceived to be at least as dovish as Mr Bernanke on monetary policy.
The Australian Financial Review
BY JOHN KEHOE
Buffett having ‘hard time’ looking for purchases
PUBLISHED: 20 SEP 2013 07:27:00 | UPDATED: 20 SEP 2013 12:49:12
SHARE LINKS:email
inShare
1 submitsubmit to redditprint-font+fontReprints & permissions
Buffett having ‘hard time’ looking for purchases
Warren Buffett, the founder of Berkshire Hathaway, says the US economy is gradually improving but the QE stimulus has done more for the stock market than economic growth. Photo: AFP
JOHN KEHOE Washington
Legendary investor Warren Buffett says record stock prices are currently around fair value and that the Federal Reserve’s indefinite extension of quantitative easing will support asset prices.
Mr Buffett said on Thursday that share prices were “ridiculously cheap” in recent years until recently when the Fed’s $US85 billion monthly bond buying program helped push US stock markets to record levels this week.
Mr Buffett, the CEO of Berkshire Hathaway, said the US economy was gradually improving but the QE stimulus had done more for the stock market than economic growth.
“The extent that QEIII is keeping interest rates lower than they would otherwise probably keeps asset prices higher,” Mr Buffett said in an interview on CNBC. “We don’t find bargains around but we don’t think that things are way overvalued either.
“We’re having a hard time finding things to buy,” the billionaire said.
The comments came a day after the Fed surprised markets by not paring back its bond buying program because of concerns that the economic recovery was not strong enough.
Billionaire Carl Icahn said his portfolio was up about 30 per cent “for all the wrong reasons”.
“I think right now the market is giving you a false picture,” Icahn said. “I don’t think a lot of companies are doing that well. They’re taking advantage of low interest rates.”
After surging on Wednesday when the Dow Jones Industrial Average and S&P 500 Index hit record highs, stocks gave back some of those gains on Thursday. The Dow fell 40.39 points or 0.26 per cent to 15,636.50, while the broader S&P 500 was 3.18 points or 0.18 per cent, lower at 1722.34.
Mr Buffett said he would like to see Fed chairman Ben Bernanke, who is due to step down at the end of January, finish the QE process and serve a third term.
“I think he’s done a terrific job,” Mr Buffett said. “The last half of this game is very different to the first half of this game. I think Bernanke ought to be given a chance, not just at the buying end of it.”
The White House has advised that Mr Bernanke will finish as Fed chair in January, although it is unclear if the decision was taken by the chairman or President Barack Obama.
Fed vice chair Janet Yellen is the favourite to take over the top job, after Larry Summers exited the race on Sunday.
Mr Buffett said he didn’t know Ms Yellen. She is perceived to be at least as dovish as Mr Bernanke on monetary policy.
The Australian Financial Review
BY JOHN KEHOE