Billionaire Buffett has a bear-y bad feeling
___________________________
By Brett Arends
Friday, January 21, 2005
business.bostonherald.com
Is Warren Buffett still the market seer of legend, or is he just a grumpy old man?
The 74-year old ``Sage of Omaha'' took to the airwaves yesterday to warn that pretty much everything was overpriced and bound to go down.
Biggest dislike: the dollar, thanks to the huge U.S. trade deficit.
``We are force-feeding dollars on the rest of the world at the rate of close to a couple billion dollars a day,'' he said in an interview on cable channel CNBC. ``That's going to weigh on the dollar . . . unless we have a major change in trade policies, I don't see how the dollar avoids going down.''
But, he added, ``I don't know if it's going to be this month, next month or next year.''
Buffett is sitting on a cash pile that swelled to $43 billion last autumn because he cannot find any bargains. That's a record sum for his financial conglomerate Berkshire Hathaway, whose entire market value is $135 billion.
He doesn't like the stock market: ``I'm having a hard time finding things to buy,'' he said. He doesn't like commodities, such as steel, copper or coffee: ``We haven't been buying commodities.'' And he doesn't like bonds: ``I think you're going to see more inflation,'' he said.
Rising prices are the Black Death for bonds, whose coupon payments are fixed.
Nor is Buffett tempted by the recent slump in airline stocks. ``I have an 800 number I call when I get the urge to buy an airline stock, and I call them up at midnight and say, `My name is Warren and I'm an air-holic.' And they talk me down.''
Is Buffett being too gloomy?
Perhaps. But investors should be wary of disregarding his warnings lightly. In 50 years on the stock market, Buffett has built a $43 billion personal fortune from a standing start through his investment acuity, making himself the world's second-richest man. He began betting against the dollar three years ago, just as the greenback was beginning its long slide on currency markets. |
