Berkshire Hathaway
Warren Buffett stated on CNBC on Friday, “Some people should not own stocks at all,” as they can be easily swayed by price fluctuations, such as the stock market crash this week.
The 94-year-old billionaire remarked, “If you are going to do stupid things because your stocks go down, you shouldn’t own stocks at all.”
His comments came on the same day that the U.S. stock market experienced a $3.5 trillion reduction due to retaliatory tariffs from China against President Donald Trump announced on April 2.
Buffett argued that selling when stock prices drop is a bad idea.
According to CNBC market data, the Dow Jones Industrial Average fell by 2,231 points, a decrease of 5.5%, pushing the index into correction territory, defined as a drop of 10% or more from its recent peak.
In the past two trading days, the S&P 500 index dropped nearly 6%, losing over $6 trillion in market value, marking the worst two-day performance since the pandemic began. The Nasdaq Composite also showed bearish trends, falling over 20% from its December highs, closing below that threshold for the first time since 2022.
On global markets, the MSCI All-Country World Index decreased by 5.37%, marking its largest weekly decline since 2020. The oil market also suffered, with Brent crude futures falling by 6.5% to $65.58 per barrel, and U.S. crude dropping by 7.4% to $61.99, hitting a three-year low.
The economic downturn followed a jobs report indicating that the U.S. economy added 228,000 jobs in March, far exceeding market forecasts of 135,000. Nevertheless, this positive labor news did not alleviate investor concerns about the foreseeable economic impacts of President Trump’s tariffs.
However, Buffett, known for his long-term value investing approach, urged investors to view equity as ownership in a business. He advised stock investors against making hasty decisions based on daily price fluctuations that tend to be negative.
“If you buy a house for $20,000 and the next day someone offers you $15,000, you don’t sell it,” he explained. “You look at the house or the potential. But some people are emotionally or psychologically unfit to own stocks.”
He further explained that the longer stocks are held, the lower the risk becomes, while bonds tend to become riskier as they mature.
Berkshire Hathaway’s stock, like the rest of the stock market, closed down more than 6% on Friday. However, the company sold $134.1 billion in stocks last year, increasing its cash reserves to $334.2 billion and experiencing a 9.41% rise in stock price.
Federal Reserve
Jerome Powell, in a speech at an event in Arlington, Virginia, stated that Trump’s tariffs could lead to higher inflation and slower economic growth.
Powell said, “These new tariffs are larger than expected. The economic consequences, including higher inflation rates and slower growth, may also follow.”
Federal Reserve officials acknowledged that several private sector forecasts are leaning towards the possibility of a U.S. recession. Investment bank JP Morgan recently raised its global recession probability by the end of the year to 60%, up from 40%.
Peter Cardillo, Chief Market Economist at Spartan Capital Securities, stated that Powell’s comments may disappoint investors hoping for imminent central bank intervention.
“I think his comments will be disappointing for those who believe the Fed will act soon,” Cardillo said.
However, the U.S. dollar showed some strength after a decline on Thursday, with the dollar index rising by 0.6% on Friday. The euro fell 0.63% to $1.10976, reversing much of its 1.8% gain from the previous day, which was the largest single-day increase since November 2022. Against the yen, the dollar rose by 0.58% to 146.9.
