World Stock Markets: Buffet - US Economy 'Fallen Off A Cliff'
Thursday March 19, 2009
According to Warren buffet, one of the world's richest men and most successful investors of all time, the US economy has 'fallen off a cliff' and found itself close to a worst-case scenario. However, he believes that within the next five years, the machine will be working correctly again.
Buffet states that we have the greatest economic machine that man has ever created, and he believes that banks and key institutions will earn their way out of a recession. He named Wells Fargo & Co and US Bancorp in his predictions for banks that will be better than ever within the next three years.
These are Berkshire Hathaway holdings (Buffet's own company), and it too realised losses. Its book value per share fell 9.6% in 2008 - its worst performance since 1965.
In a talk on America's CNBC, Buffet also warned of potential future inflation worse than previously experienced in the late '70s. He stated that some of things currently being done to fix the economy could cause future trouble, and remarked, "In economics, there is no free lunch."
Although this does not signal respite for short term investors, it is good news for world stock markets and investors everywhere. Buffet's final piece of advice for individuals is to reduce reliance on debt, such as credit cards. For more information on shares, check out our section on buying and selling shares.
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