Buffett tells students: "The bottom has come in stocks"

Capitalism is still alive and well, say the world's two richest men, despite lingering shocks from the longest, deepest recession since the Great Depression.
JAN 21, 2010
Capitalism is still alive and well, say the world's two richest men, despite lingering shocks from the longest, deepest recession since the Great Depression. "The financial panic is behind us," said famed investor Warren Buffett, who recently made what he called an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe. "The bottom has come in stocks. Don't pass on something that's attractive today." Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what's the next Microsoft. There were at first reassurances that the U.S. economy had not collapsed since the last time the two sat in front of a student audience, in Nebraska in 2005. "We proved that we can make mistakes," said Gates. "But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that's continued." Even in the country's "darkest hour," he said, American businesses were still innovating. "Last fall was really blindsiding," Buffett said later. Still, "I did not worry about the overall survival of our economy." The worst recession since the 1930s may be over, but the recovery isn't expected to be strong enough to stem job losses and get businesses hiring again. Employers shed a net total of 190,000 jobs in October, a government survey showed Thursday. It was the 22nd straight month of losses. And the unemployment rate jumped last month to 10.2 percent, a 26-year high. Buffett also commended the Bush administration's actions last September, saying "only the government could have saved things" after the collapse of Lehman Brothers triggered a freeze-up in credit markets and panic on Wall Street. In the future, however, Buffett said "there should be more downside to the head of any institution that has to go to the federal government to be saved for reasons of the greater society. And so far, we have been better at carrots and sticks in rewarding CEOs at the top. But I think some more sticks are called for." The two endeared themselves to the audience with tips. Buffett exhorted students to "marry the right person" and said, "The worst investment you can have is cash." Gates, meanwhile, said he sees big opportunities in environmentally friendly energy and medicine. "Capitalism is great," he said. Gates wore a suit and tie, flashing the inner red lining of his jacket as he walked to his chair. Buffett, who earned a master's degree from Columbia in 1951, wore a sweater with the Columbia insignia. Students in the audience said they were glad the two were so confident about the economy. "That probably weighs a lot to a lot of people to hear Buffett say we're out of the crisis," said Andrea Basche, an Earth Institute student at Columbia.

Latest News

Carnegie Investment Counsel sued over valuation suppression
Carnegie Investment Counsel sued over valuation suppression

Retiring RIA seller David Laidlaw alleges the Carnegie valued his stake on $11.7 million EBITA while pitching potential buyers on $21.3 million.

Arch pushes AI portfolio monitoring into pre-investment due diligence
Arch pushes AI portfolio monitoring into pre-investment due diligence

New tool gives RIAs and family offices AI help vetting private market deals, with some users reportedly halving review time.

$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending
$4.5M raised on trust alone: SEC alleges affinity fraud in merchant lending

Investors got projected returns dressed up as real ones, SEC says

Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children
Treasury sets auto-enrollment rules for Trump Accounts, potentially adding 60 million more children

Parents must still act to get the $1,000 federal seed and employer contributions, giving financial advisors a role in the rollout.

FINRA bars former LPL broker for stealing $1.7 million from customers
FINRA bars former LPL broker for stealing $1.7 million from customers

FINRA booted Rudy Anguiano from the industry for “conversion - the intentional and unauthorized taking of another person’s property.”

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains