Buffett the Bear

["Ian Murray" <seamus2001@xxxxxxxx>]

Misery will last, says Buffett

Jane Martinson in New York
Saturday August 25, 2001
The Guardian

Warren Buffett, the world's second richest man and most successful
money manager, has warned investors to expect another eight years of
economic stagnation and weak US stock markets.

The septuagenarian head of Berkshire Hathaway has been telling
executives to prepare for a famine of almost biblical proportions
after the feast of the late 1990s, according to a report in the latest
issue of Business Week magazine.

One private equity investor said that Buffett believes the stock
market will suffer from a prolonged "hangover" after the party of the
last decade.

Buffet, who has shunned technology stocks for those with high cash
flows, has seen returns at his own company improve dramatically over
the past year.

Vinay Saqi, analyst at Morgan Stanley, said: "He has clearly been one
of the better investors through thick and thin. He didn't benefit from
the tech boom but, on the positive side, he didn't fall apart from it
either."

Mr Buffett's bearish prediction came as the technology-laden Nasdaq
stock market enjoyed its best day for more than a month. The market
rose more than 50 points, or 3% to touch the 1900 benchmark by midday
yesterday.

Shares were boosted by networking group Cisco, which said it had begun
to see signs of stabilisation in the tech market. Wall Street also
welcomed news that Microsoft had successfully shipped the final
version of its new operating software to computer manufacturers.

Mr Buffett, a close friend of Microsoft founder Bill Gates, has often
said that he could not buy technology shares as he did not understand
them. Last year, Berkshire paid $8bn for companies which sell paint,
bricks and carpets. Last month, the Omaha company announced the $590m
acquisition of Xtra, which leases truck trailers and cargo containers.

In Berkshire's annual letter to shareholders in March, the man dubbed
the Sage of Omaha said he prefers purchasing companies over stocks
because the long-term prospects for stocks are "far from exciting".

One pleased shareholder stood up at the annual company meeting in
April and said: "Last year, a shareholder implored you to buy tech
stocks to juice our returns. I would like to this year thank you for
not having done that."

Last year, shares in Berkshire Hathaway rose 27% while the Nasdaq
composite index fell 39% - its worst performance ever.