MENU

Warren Buffett can’t find anything to buy

The world’s greatest and most well-known investor, Warren Buffett says he is struggling to find things to buy.

“The extent that QEIII is keeping interest rates lower than they would otherwise probably keeps asset prices higher,” Buffett said in an interview on CNBC. “We don’t find bargains around but we don’t think that things are way overvalued either.”

Buffett said share prices were ridiculously cheap in recent years, until the recent quantitative easing program by the US Federal Reserve helped push stocks up to record levels. While the US economy is improving, the QE stimulus had done more for the stock market than economic growth. That suggests that markets are overdue to fall, and likely will when the Fed begins its tapering program, unless the US economy improves dramatically before then.

Billionaire Carl Icahn agreed with Buffett, saying his portfolio was up 30% “for all the wrong reasons.” “I think right now the market is giving you a false picture,” Icahn said. “I don’t think a lot of companies are doing that well. They’re taking advantage of low interest rates.”

Despite the record high levels, Buffett says while he can’t find any bargains, he doesn’t think that things are way overvalued either.

The US Dow Jones Industrial Average has risen more than 24% since November 2012, while the S&P 500 Index has soared more than 27%. Closer to home, the S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up a leisurely 17% over the same time period, mainly driven by the big four banks. National Australia Bank (ASX: NAB) is up an astounding 45% since November, while ANZ Bank (ASX:ANZ) and Westpac Banking Corporation (ASX: WBC) are up around 28%.

Foolish takeaway

Uncle Warren (Buffett) may be hoping for a stock market fall, so he can pick up some bargains. And that’s exactly the mentality that Foolish investors need to consider adopting. Be brave when others are fearful, and take a positive view of a market fall as an opportunity to pick up stocks on sale.

Interested in a dividend-paying stock that’s not a bank? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.