The spread of the corona virus has left deep marks on the markets in recent days. Investor legend Warren Buffett has his own way of dealing with the new burden.
• Virus worries cause stock markets to crash
• Coronavirus “scary stuff”
• Buffett sees the time of entry
The corona virus could kill the longest bull market in history. Not only in Germany, but worldwide, the stock markets are trending down. After the US leading index Dow Jones only reached a new all-time high of over 29,500 points on February 13, it slid below the psychologically important 27,000 unit mark just twelve days later. The German stock exchange barometer DAX showed a similar tendency: it slipped sharply after it reached a new record high at 13,795.24 points on February 17. In the face of these extreme fluctuations, not only private investors have to weigh their investments carefully, greats like Warren Buffett cannot ignore the economic effects of the virus.
Warren Buffett sees positive things in the Stock Market crash
While the Omaha oracle, Warren Buffett, said in an interview with CNBC that the corona virus was “scary stuff,” he said, investors shouldn’t let it influence their investment decisions. The 89-year-old sees the fact that the stock markets are going down worldwide as an advantage. For example, private investors should take advantage of the momentum and get started now. “Most are savers, they should want the market to go down,” Buffett said. The star investor also warns against an overvaluation of the situation. Market slumps of around three percent have occurred countless times in the history of the stock exchange.
Value strategy plays into Warren Buffett’s hands
Buffett’s biggest argument is that of the investment horizon. The legend is known for its value strategy. He chooses stocks that are held in the custody account of his investment vehicle Berkshire Hathaway according to a certain philosophy. Among other things, this consists of the fact that the investments are long-term. Buffett is also particularly taken with so-called moat companies. Such corporations have a decisive competitive advantage over their competitors. Finally, the 89-year-old is guided by his personal understanding. He only invests in companies that he fully understands. It is this combination that should minimize the impact of the coronavirus on the Berkshire portfolio. Because although it is currently going down significantly, Buffett’s long-term investment tragie should compensate for the setback. In the short term, however, he admits that “a very significant percentage of our business will be affected”. “We will definitely not sell,” the investor legend makes clear.
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