Corona and oil price shock: Warren Buffett on the stock market crash: “It took 89 years for me to experience this” message

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indices in this article

— Oil price shock and corona panic result in “Black Monday”
Buffett unimpressed by market slump
Also price shock only short-term phenomenon

The second “Black Monday”

It will surely go down in history as one of the blackest stock exchange days. The massive sell-off on the international stock markets on March 9, 2020 should have driven the pearls of Swiss pearls on the forehead of some investors. 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 government cutbacks in the OPEC and OPEC + member states.

Buffett stays cool

Since then, the capital markets worldwide have been in free fall. Every attempt to recover has failed so far and the long-lasting bull market has come to an abrupt end. Another raven-black 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 of Yahoo Finance.

A look back in time

Nevertheless, the market reaction was less violent than, for example, 1987, as Buffett points out, even if the oracle of Omaha was an “imitation” of the collapse at that time. The first stock market crash after the end of the Second World War occurred on October 19, 1987. The US leading index, Dow Jones Industrial, had lost 22.6 percent of its value in just one day. However, the Berkshire Hathaway CEO rumored that coronavirus concerns coupled with the oil price shock were a “big double strike” for the markets.

Buffett also sees parallels to the stock market slump in 2008 in the wake of the financial crisis. “35 million people would have stayed here on September 1st [2008] in no way worried about their money in the overnight deposit account. On September 15th or 16th, they were all panicked. “However, the situation at that time was” much more frightening than anything else [am 9. Mrz 2020] has happened”.

The oil price shock also leaves Brsen-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. Even 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 l-heavyweight Occidental Petroleum. The multi-billion dollar investment represents a private investment and is therefore unaffected by the company’s share price. Beyond that, 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 l was still a front-runner in the face of conflict between countries, with Saudi Arabia and Russia, and the uncertain future of oil companies in the face of 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,” says Buffett, also referring to the change in consumer behavior in view of the corona virus.

Favorable 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-lasting bull market that company shares were too expensive. Maybe 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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