Warren Buffett on the stock market crash: "It took me 89 years to experience it" - News-Credit-Mortgage-Coin

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Monday, March 16, 2020

Warren Buffett on the stock market crash: "It took me 89 years to experience it"

Worldwide, the stock markets are in a state of emergency. The spreading coronovirus and the oil price shock have caused prices to spin worldwide and earned the nickname "Black Monday" on March 9th. Another crash followed on Thursday. Stock exchange guru Warren Buffett is largely unaffected by this.

Oil price shock and corona panic result in "Black Monday"
• Buffett unimpressed by market slump
• Even oil price shock is only a short-term phenomenon



The second "Black Monday"

It will surely go down in the history books as one of the blackest trading days. The massive sell-off on the international stock markets on March 9, 2020 may have driven the sweat beads on some investors' foreheads. The downward spiral was triggered, on the one hand, by the still uncontrolled corona pandemic, the economic effects of which are still not entirely clear to investors, and by the oil price shock that resulted from the failed negotiations on oil cuts in the OPEC and OPEC + member states.

Buffett stays cool
Since then, the capital markets around the world have been in free fall. Every attempt to recover has so far failed and the long-lasting bull market came to an abrupt end. Another razor-black stock exchange day followed on Thursday. Only one seems to be unaffected by the infectious corona panic: Investor legend Warren Buffett was largely relaxed in an interview with Yahoo Finance, which he gave a day after "Black Monday", even if he admitted: "It has been 89 years took until I experienced that ". However, the star investor indicated that "if you stick with it long enough, you will have seen everything in the markets at some point". He did not find the panicky slide on the stock markets so unusual. In his opinion, this is just the way things are going: "Markets that need to be open second by second react to news in a big way," the 89-year-old told Andy Serwer from Yahoo Finance.
A look back in time
Nevertheless, the market reaction was less violent than, for example, in 1987, as Buffett points out, even if, according to the Omaha Oracle, it was an "imitation" of the collapse at that time. On October 19, 1987, the first stock market crash occurred after the end of the Second World War. The US leading index, Dow Jones Industrial, had lost 22.6 percent of its value in just one day. However, the Berkshire Hathaway CEO conceded that coronavirus concerns coupled with the oil price shock were a "big double strike" for the markets.

Buffett also sees parallels to the 2008 stock market crash in the wake of the financial crisis. Here "35 million people on September 1st [2008] were not worried about their money in the overnight deposit account. On September 15th or 16th they were all panicked". Still, the situation at the time was "far more frightening than anything that happened [on March 9, 2020]".

The oil price shock also leaves stock market guru cold

Warren Buffett's numerous investments with the help of his holding company Berkshire Hathaway have not only affected the developments on the stock market. The rapidly falling oil price, which had its worst trading day since 1991 on "Black Monday", should not have left the stock market guru cold. Finally, Buffett is also closely linked to developments in the oil market through a $ 10 billion stake in heavyweight oil Occidental Petroleum. The multi-billion dollar investment represents a private investment and is therefore unaffected by the company's share price. In addition, however, Buffett still holds a 2% stake in Occidental shares, the value of which has lost massive value with the sale on the stock exchanges.
When asked by Serwer whether oil was still at the forefront in the face of the oil-producing countries' dispute with Saudi Arabia and Russia, and the uncertain future of oil companies with regard to growing concerns about climate change, Buffett showed that However, the current drop in oil prices is also largely unaffected: "I don't think long-term demand will change that much, but of course current demand has changed," Buffett said, also with regard to the changing consumer behavior in view of the corona virus.

Cheap entry opportunity?

Once again, Warren Buffett's long-term strategy helps to keep calm in times of general unrest. It is also not unlikely that the stock market legend will use the current fall in prices to buy or buy cheaply from companies it has chosen. After all, he had complained more than once during the long bull market that company shares were too expensive. Perhaps the Oracle of Omaha is currently getting one or two bargains with the help of its gigantic cash reserves of $ 128 billion.


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