MENU

Warren Buffett’s take on Ukraine

U.S. markets closed lower overnight, with the benchmark S&P 500 down 0.74%. That may have something to do with the fact that Russian soldiers have boots on the ground on Ukrainian soil in what appears to be a volatile, unpredictable situation. The Russian rouble fell to a record low against the dollar today and the RTS Cash Index of Russian stocks was down sharply.

These are the sort of headlines that can cause many investors to act rashly and in a manner contrary to their long-term interests.

Taking a deep breath

Thankfully, Berkshire Hathaway (NYSE: BRK-A, BRK-B) CEO Warren Buffett, appearing on US cable channel CNBC overnight, offered some much-needed perspective from someone who bought his first stock in 1942 (“I will tell you the macro factors were not looking good!”).

Unruffled by the news out of Ukraine, Buffett is actually buying a stock this morning — and he likes it better today than he did on Friday:

“When I got up this morning, I actually looked at a stock on the computer that trades in London that we’re buying and it’s down and I felt good. … It was an English stock. … I had a price limit on it and we were buying it on Friday, but it’s cheaper this morning and that’s good news.”

What about war?

What of the potential threat of World War III or a return to the Cold War, countered CNBC’s Becky Quick? Buffett responded:

“If you tell me all of that’s going to happen, I will still be buying the stock. You’re going to invest your money in something over time. The one thing you can be quite sure of is if we went into some very major war, the value of money would go down — that’s happened in virtually every war that I’m aware of. The last thing you’d want to do is hold money during a war.”

The ‘safety’ of cash

So if you don’t want to hold cash, what do you want to own?

“You might want to own a farm, you might want to own an apartment house, you might want to own securities. During World War II, the stock market advanced — the stock market is going to advance over time. American businesses are going to be worth more money, dollars are going to be worth less, so that money won’t buy you quite as much, but you’re going to be a lot better off owning productive assets over the next 50 years, than you will be owning pieces of paper.”

Foolish takeaway

The farm analogy is one Buffett warmed to in his recently released letter to Berkshire Hathaway shareholders. He was warning against exactly the sort of short-termism that is now gripping investors in the face of possible trouble in Ukraine:

“Forming macro opinions or listening to the macro or market predictions of others is a waste of time.

Indeed, it is dangerous because it may blur your vision of the facts that are truly important”

Oh, and before you are tempted to think ‘yes, but it’s different this time’, that comment comes out every time. And the result? It rarely – if ever – is!

If you're looking for quality shares that have been selected based on quality and strong dividends, Foolish, dividend loving investors can click here to request a Motley Fool free report entitled Secure Your Future with 3 Rock-Solid Dividend Stocks.

Alex Dumortier is a Motley Fool columnist. You can follow The Motley Fool on Twitter @TheMotleyFoolAu. The Motley Fool's purpose is to educate, amuse and enrich investors. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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.