"Mr. Buffett said that while we "certainly" had an overshooting, eventually "stocks will behave in sync with business."
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>>>Friday July 19, 8:24 pm Eastern Time
Reuters Company News
Markets may be out of sync for a long time-Buffett
WASHINGTON, July 19 (Reuters) - Billionaire investor Warren Buffett on Friday said he believed the stock market could remain "out of sync" with the rest of the U.S. economy for a long time.
"It would not surprise me if there was a long period of stagnation or whatever maybe in the market, even though business may be making some progress," he said on NBC's evening news show.
Stocks plunged on Friday with the Dow Jones industrial average hitting lows last seen in 1998, as a slew of corporate scandals and dim prospects for earnings continued to take their toll on investor confidence.
Despite recent economic data that indicates the world's richest economy is still expanding, albeit at a modest pace, since the July 4 holiday some $1.5 trillion in investor wealth has evaporated from the stock market, based on the Wilshire 500 Total Market Index (AMEX:^TMW - News).
"We've had this history where the market gets out of sync with the business world for long periods of time; usually it's because it overshoots in one direction and then over-corrects in the other," he said.
Buffett said that while we "certainly" had an overshooting, eventually "stocks will behave in sync with business."
On Friday the blue-chip average Dow posted the seventh-largest points decline in its history, sinking 390.23 points, or 4.64 percent, to 8.019.26.
For the week, the Dow gave up 7.7 percent, the S&P 500 dropped 8 percent and the technology-heavy Nasdaq shed 4 percent of its value.
Economists, many of whom are downgrading their U.S. economic growth forecasts, are growing concerned that the tumbling U.S. stock market could toll on consumer psychology.
The White House on Friday said said it still believed the fundamentals of the U.S. economy remained strong.
Buffett advised small investors to sit out the market for a while or invest in a low-cost index fund, according to NBC.
Shares in Buffett's holding company, Berkshire Hathaway Inc. (NYSE:BRKa - News), closed up $500 or 0.75 percent at $67,000 each on Friday.<<< |
