Warren Buffett is bullish on America — and bullish on the stock market. And he’s putting his money where his mouth is — buying stocks and companies!
I interviewed Buffett at a benefit that raised more than $1 million for Junior Achievement of Chicago. The audience of Chicago executives included several from Marmon Group, a company that Buffett owns, and Career Builder, which contributed $500,000 for its seats and a private reception.
Blending folksy commentary with economic wisdom, one of America’s richest citizens said he didn’t mind having a tax-increase proposal named after him.
“That’s been my childhood dream,” he said, getting a laugh.
He went on to explain that to reduce our federal budget deficit, some promises for Social Security and Medicare will have to be diminished. And he believes in “shared sacrifice” to create opportunities for all.
Buffett was adamant that America would continue to grow, noting that “there have always been tough times,” but America has always continued to move forward.
“We have not exhausted our potential,” he said.
Buffett was not shy about expressing his views on:
- The stock market: The market will be much higher 10 years from now, he said, but he can’t tell where it will be 10 months from now.
- The dollar: It will be a worth a lot less 10 years from now — a good reason to buy stocks!
- Time to invest? His company, Berkshire Hathaway, just spent $9 billion last month to buy Lubrizol Corp. and $7 billion on other investments and capital improvements. “We continue to buy,” he said.
- The housing market: “A lot of people paid too much for their houses!” he said. When you build 2 million houses a year and there are only 1 million new households being formed to live in them, you have an oversupply and prices drop. Buffett said he supports a plan to refinance underwater mortgages for those who have continued to pay on time.
- Jobs: The 260,000 Berkshire employees do not wake up worrying about their job security or worrying about making their mortgage payments. Jobs will come back.
- Politics: Gerrymandering election districts to create “safe” seats has allowed extremists to be elected, making compromise tough.
- Our children: Parenting is the most important job anyone has. We need to improve our public school system to create equal opportunities, he said.
- China: They finally found a market system that allows them to unleash their potential. Growth is not a zero-sum game. Their growth will benefit us.
- Greek debt: The banks holding Greek bonds accept a 50 percent haircut on the value, but will others accept that cut in value? He’s not sure the European debt crisis is solved.
Finally, when asked why he supports President Barack Obama (for whom he was in town for a fund-raiser), Buffett explained that the president’s vision of America as a place that offers opportunity for all is closest to his own vision for this country.
There is no doubting Buffett’s sincerity and optimism — two characteristics that have helped make him America’s most successful long-term investor.
And that’s The Savage Truth.