Editor’s note: This article was first published in September 2013. The valuations after five years of gains, US growth below 2% and the Federal Reserve’s quantitative easing under Ben Bernanke reflect that time; Bernanke left the Fed in January 2014.
Warren Buffett has been interviewed on CNBC and has given his view on where stock prices stand.
Warren Buffett said that stocks have come a long way over the last five years, going from ridiculously cheap to fairly reasonable prices, more or less, today.
According to Buffett, they are not finding bargains out there, but they do not think stocks are greatly overvalued either. So they expect to have a somewhat tough time finding stocks to buy.
Buffett said that the US economy is continuing the gradual growth we have seen since the autumn of 2009, and that the Federal Reserve’s quantitative easing has not worked as well as Chairman Ben Bernanke would have liked, but even so, he does not think it has been harmful.
In fact, he added, the economy could be doing even worse if the Fed were not buying assets: had it not been buying them, perhaps we would have seen growth of less than 2%. Who knows?
Buffett says the US economy could carry on growing at this slow pace for quite a while longer, but he pointed out that at Berkshire Hathaway they do not spend much time trying to predict what the economy is going to do.
Our understanding is that, in the short term, Buffett is not planning to buy shares in new companies, at least not in the Wall Street indices.
See also: Warren Buffett turns 83: the best of his advice
Featured image: Medill DC, CC BY 2.0, via Wikimedia Commons.
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