OMAHA, Nebraska (AP) —
Billionaire Warren Buffett said Monday that stocks remain relatively
cheap compared to other investments as the U.S. economy continues to
improve. He also said that the company he heads is prepared to replace
him whenever the need arises.
The chairman and chief executive of
Berkshire Hathaway Inc. addressed a variety of topics during an
interview on the cable TV network CNBC, two days after his annual letter
to the conglomerate's shareholders was released.
Buffett said
even though stocks aren't as cheap as they were during the depths of the
recession in 2008, they're still a more attractive long-term option
than bonds, gold, cash or anything else.
"Equities are still cheap
relative to any other asset class," Buffett said. In his letter, he
devoted two pages to explaining why he prefers owning a piece of a
productive business instead of bonds or gold.
Houses are another
attractive investment at current prices, Buffett said. He added he might
buy a couple hundred thousand homes if only he could figure out a way
to manage them effectively. He said he isn't very handy.
"Single-family homes are really cheap now too," Buffett said.
Buffett
conceded in his letter released Saturday that he was dead wrong to
predict the housing market would recover by now. He said Monday that he
believes conditions will improve in 2012.
The reports Buffett gets
from Berkshire's roughly 80 subsidiaries, including utility, insurance,
retail and railroad firms, show the overall economy has been steadily
improving since the summer of 2009 in every area except businesses
related to housing construction.
Over the weekend, Buffett created
a stir by writing that Berkshire's board had chosen someone to succeed
him as CEO someday with two backup candidates. Previously, Buffett had
said only that the board had three internal candidates to replace him.
None
of the CEO candidates have been identified, and Buffett said Monday
that the likely successor doesn't know he would be the board's pick.
Buffett
said Monday that the new language he used to describe the succession
plan in his annual letter to Berkshire shareholders wasn't a sign of
change but was only trying to clarify the plan.
Buffett, who is
81, said he doesn't think investors should worry that much about who
will replace him. He pointed out that Berkshire owns sizeable stakes of
more than 5 percent of Coca-Cola Co., International Business Machines
Corp., American Express Co. and Wells Fargo & Co., yet he has no
idea who would replace the CEOs of those companies.
"I know they have wonderful businesses, and they are developing great talent," Buffett said.
He
also said last year's departure of a top executive, David Sokol, did
not affect the board's choice for successor. Many investors had
speculated that Sokol was the likely successor before he resigned amid
questions about stock he bought in the Lubrizol chemical company
Berkshire later acquired.
Buffett was also asked about the news
business because Berkshire just bought a second newspaper last fall to
go along with its sizeable stake in the Washington Post Co. Monday's
interview was conducted in front of the presses for Berkshire's newest
paper, the Omaha World-Herald.
Buffett says newspapers face
challenges because of competition from Internet news sources and the
rising cost of newsprint, but they will have a decent future if they
continue delivering information that can't be found elsewhere. And they
need to stop offering news free online.
"You shouldn't be giving away a product you're trying to sell," he said.
Buffett
reiterated his call for tax reforms and a higher tax rate for wealthy
investors like himself. He has said for years that he believes his tax
rate is too low compared with what middle-income wage earners pay.
"The
real question is whether this is a tax code that the United States can
be proud of," Buffett said. But he says neither Democrats nor
Republicans want to talk about reforms now because it is an election
year.
Buffett said the nation's $1.2 trillion deficit won't be
fixed by contributions from individuals. He said the country is simply
spending too much and bringing in too little revenue, like a rich family
that has promised too much.
Buffett said Congress should vote on
the proposals developed last year by the deficit-reduction commission
led by Republican Alan Simpson and Democrat Erskine Bowles. That package
included cutting about $4 trillion from budget deficits over a decade,
but few of its recommendations have been embraced.
Buffett said Europe's debt problems remain a concern, and he doesn't think those countries have solved their problem yet.
"The basic problem is they gave up their right to print their own money, he said.
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Online:
Berkshire Hathaway Inc.: www.berkshirehathaway.com
Copyright 2012 The Associated Press.