Warren Buffett appeared live on CNBC’s “Squawk Box” on Monday, February 24, 2020, when the stock market was expected to open 3% in futures due to concerns about the coronavirus pandemic.
But Buffett wasn’t worried. In fact, he was happy that the stock price was going down.
Becky Quick: Let’s talk a little bit about the fact that the market was down almost 800 points this morning.
Warren Buffett: Yeah.
Becky Quick: Are you worried?
Warren Buffett: No, that’s actually good for us.
In other words, we are net buyers of stocks over the long term. And just as I am a net purchaser of food, I expect to buy food for the rest of my life and hope that food prices will go down tomorrow.
Therefore, when the stock price drops, you will need to consider the balance when purchasing stocks. And who wouldn’t want to buy at a lower price than at a higher price?
People are really weird about it. So they, most people, most of your listeners are savers, which means they’re going to be net buyers and they’re going to want the stock market to go down. They should want to buy at a lower price.
But they had a sense that they felt better when stock prices rose.
2) 6:03am (Eastern Standard Time)
BECKY QUICK: As you’re watching futures down about 818 points this morning, I think the first thing our viewers probably want to hear from you is your thoughts on what’s going on with the coronavirus, is this a reason to panic and are you worried about it?
Warren Buffett: Well, I don’t know if I have any particular thoughts other than the news about the coronavirus…
If you’re buying a business, and that’s what stocks are, companies — people actually feel better today when you say you bought a business instead of a stock. Because it gives you a different perspective on it — maybe if you buy a farm, if you buy an apartment, if you buy a business, you’re going to own it for 10, 20, 30 years.
And the real question is this: Have the 10- or 20-year outlook for American companies changed in the past 24 or 48 hours?
And you’ll notice that a lot of the businesses that we own are partially owned, we’ve owned American Express for 20 years. Coca-Cola, we’ve owned it for 40 years, it’s our business. And don’t buy or sell a business based on today’s headlines.
3) 6:05 a.m. Eastern Time
Becky Quick: But if I think I can buy something for maybe 10% less, maybe even more if I wait a week or a month, then maybe that’s what I’m sitting around waiting for.
Warren Buffett: Well, if you think you have, and you’re right, you can become incredibly rich (laughter). All you have to do is keep buying at 10 day intervals and keep forecasting for 10 days.
If you knew what the market was going to do, obviously—
But you’re not. I don’t think anyone knows what the market will do.
I think I know if I’m making a smart purchase at a given price.
4) 6:07 a.m. ET
Warren Buffett: You certainly can’t predict the market by reading the daily newspaper, that’s for sure.
And actually you can’t do that. It is certainly impossible to predict the market by listening to me.
5) 6:46 a.m. ET
BECKY QUICK: People who just woke up want to know what you think about this sharp drop this morning, when you see the Dow drop 700, 800 points in the morning and you see something like that, what do you think?
Warren Buffett: Well, my reaction is, I like buying stocks. So, I don’t mean to feel bad about other people, but I like it – if they want to sell me cheap, I like it better. (lol)
So, if that’s roughly a 3% drop, I don’t know how many 3% drops I’ve had in my life, but it’s been a lot.
Basically, I can’t think of anything I shouldn’t have bought.
It doesn’t mean the stock price will go up or down next week, next month, or next year.
But if there’s one thing, it’s that if you want to own an American company, you have a chance to buy it for 3% less.
Becky Quick: So does that mean Berkshire will buy the stock today?
Warren Buffett: Well, we certainly don’t sell. And sure, we might just buy something.
6) 8:02 a.m. ET
BECKY QUICK: Warren, we talked about the coronavirus this morning, but maybe we should bring this up again because people are waking up at this hour across the country.
How do you get up and read this and think through it when the market is down 750 points?
Warren Buffett: I don’t think so – it makes no difference to our investments. In other words, there is always some kind of news every day, good or bad.
In fact, if you read all the newspapers from the past 50 years, most of them (headlines) are probably bad.
But if you look at what’s happening with the economy, most of what’s happening is very good. I mean, it’s incredible what happens over time.
So, if someone came to me and said global growth would go down by 1% instead of by a tenth, I would still be interested in the business and would buy the stock if I liked the price. And I like today’s prices better than I liked last Friday’s prices.
7) 8:59 a.m. ET
Becky Quick: Before we wrap up, let’s go back to futures this morning. Because right now, the Dow is showing a decline of about 100 points, or 830 points. Bearish again on concerns about coronavirus and what it means.
How is your mental state today when you go out and look at the stock market and decide what to do?
Warren Buffett: We buy companies to own for 20 or 30 years. You can buy the whole thing, or you can buy it in parts. When you buy pieces, they are called stocks.
And I don’t think the outlook for the next 20 or 30 years has changed due to the coronavirus.
