Oldman Buffet!
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Wednesday March 3 2:10 AM ET
Buffett Sees Danger In Stock Market
WASHINGTON (Reuters) - Billionaire investor Warren Buffett said Tuesday the U.S. stock market had seen virtually unprecedented increases in recent years and was in a ''dangerous'' period that could see stock values drop sharply.
Stocks had risen ''terrifically'' over the past 15 years, driven higher by lower interest rates and rising return on equity, Buffett told the ABC News ''Nightline'' program.
''After a while the very act of stocks going up starts drawing in other people who get excited about the fact that their neighbor made some money ... and that's when you get into the dangerous periods,'' he said.
Asked when the bubble would burst, Buffett said, ''You never know. You know that valuations are high, by historic standard. You know that the level of speculation is high, by any historic standards, and you now that it doesn't go on forever ... but you don't know when it ends.''
Buffett told ABC's Ted Koppel the ongoing market rally had ''gathered a lot of momentum in the last few years,'' signaling that a downturn could be around the corner.
''The last three years prior to this one, when the S & P (Standard & Poor's index) has gone up 20 percent a year, that's almost unprecedented,'' he said in the television interview, filmed at a Dairy Queen restaurant in Omaha, Nebraska, where the investor lives.
Buffett's holding company, Berkshire Hathaway Inc (), owns Dairy Queen.
Buffett told ABC he had built a $30 billion endowment fund -- essentially his personal net worth -- for philanthropic purposes when he dies and said a team of six well-qualified people helped determine how that money would be put to use.
He said one area he was particularly concerned about was the proliferation of nuclear weapons and technology, and said he was funding some efforts to study the problem. But he acknowledged that he did not know how to ''attack the problem with money.''
He said his three children would receive some money from his estate after he died, but he did not believe in the ''divine right of the womb'' and felt they should prove themselves in society, rather than inherit the great wealth he has amassed in his lifetime.
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