7 things Warren Buffett says about the stock market

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Berkshire Hathaway (ticker: BRK.A, BRK.B) Legendary CEO and investor Warren Buffett has always been generous in sharing his time and investment philosophy. In two recent interviews with CNBC, Buffett touched on a range of important market topics. For decades, Buffett's long-term investment strategy has consistently outperformed the S & P 500. Even in the past five years, when many stocks and investors have fallen behind in the market , Berkshire's overall 88.5% gain surpassed that of the S & P 500's 72.4%. Here are seven things that investors have learned from Buffett in recent times.

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When Buffett was asked if US stocks were expensive, Buffett frankly said that US stocks were "definitely" expensive for the moment. Buffett said there was no reliable way to predict whether stock prices would rise or fall over the next week or year, but high-yielding stocks will always outperform reporting only 3% per year. "If you had the choice between buying and holding a 30-year bond for 30 years or keeping a basket of US stocks, there's no question that you'd better own stock," Buffett said.

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Berkshire currently has more than $ 100 billion in cash on its balance sheet. In the past, Buffett had stated that he would only redeem Berkshire Hathaway shares if the stock price was equal to or less than 120% of book value. Buffett said he was using intrinsic book value as a gauge rather than book value, and Berkshire is buying back a limited number of Berkshire shares. "We need a sufficient discount, so we buy it at a price that, we know, will be better for the remaining shareholders," Buffett said.

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Buffett's most aggressive investment in recent years has been a $ 56 billion stake in Apple (AAPL), which is now Berkshire's largest stake. Buffett owns more than 5% of Apple, but he buys more and more. When asked if he was adding to his holdings in Apple since the end of the second quarter, Buffet responded that he was selectively adding to his stakes in Apple. "I bought a bit," he says. "I like to buy them cheaper." Since Berkshire started buying AAPL shares in 2016 around 100 USD, shares have risen 129%.

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Buffett raised a few eyebrows on Wall Street when Berkshire acquired a roughly 10% stake in Delta Air Lines (DAL), American Airlines Group (AAL), United Continental Holdings (UAL) and Southwest Airlines Co. (LUV) . Some analysts have speculated that Buffett might consider a full takeover of Southwest or another airline. However, Buffett said he maximized his investment in the airlines and gave no indication as to a larger deal ahead. "I would have been happy to buy 20 per cent [of the four airline stocks]but we have what we can manage, "he says.

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Several measures have been put in place in Washington and Wall Street since the last financial crisis to help protect the financial markets from disasters, but Buffett said another crisis was inevitable just because of the nature human. He said that Americans felt tremendous pressure during financial bubbles, as these gave the impression that it was easy to win huge amounts of money. "The next guy, who they know to be more stupid than them, gets rich and they are not," Buffett says. He says that this type of contagious thought never disappears, nor does financial crisis.

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President Donald Trump has suggested US companies switch from quarterly financial information to information once every six months. Trump even asked the US Securities and Exchange Commission to investigate the potential impact of moving to a six-month reporting schedule. Buffett and Jamie Dimo, CEO of JPMorgan Chase & Co. (JPM), had previously objected to companies issuing quarterly forecasts, but Buffett was opposed to eliminating quarterly results. "I like to read quarterly reports as an investor and we have common stocks valued at a few hundred billion dollars," Buffett said.