Investing

Warren Buffett suggests investors stay optimistic despite the pandemic: The US has 'always prevailed'

Bloomberg

Berkshire Hathaway chairman and CEO Warren Buffett hosted the company's first-ever virtual annual meeting on Saturday. The event, which usually brings tens of thousands of people to Omaha, was more downbeat this year, but Buffett is steadfast in his belief that the U.S. will persevere.

"I remain convinced," Buffett said, "that nothing can basically stop America." He continued: "We've faced great problems in the past," he said, but the U.S. has "always prevailed."

And though his tone on Saturday was decidedly more cautious — especially after Berkshire lost $50 billion during the first quarter of 2020 — Buffett's optimism ultimately shone through.

That's an important cue for investors. Because of Buffett's impressive record over the decades, people's ears perk up whenever he has something to say — and that's never been more pertinent than now, as the economy is reeling due to the coronavirus pandemic. Despite the recent market volatility, and the uncertainty as to how and when the U.S. economy can fully reopen, Buffett says investors should be optimistic, though cautious.

"I don't believe anybody knows what the market is going to do tomorrow, next week, next month, next year," he said.  "You can bet on America, but you have to be careful about how you bet. Simply because markets can do anything. ... Nobody knows what's going to happen tomorrow."

Buffett's takeaway: Be optimistic but realistic

The coronavirus pandemic is the single biggest variable that's creating havoc in the markets right now, and it's unclear as to when or if we'll have some clarity about how it's going to play out. That's what kept Buffett on his toes for most of the meeting, as he attempted to strike a balance of being cautious in the short term and bullish on the markets in the long term.

"This is quite an experiment," he said. "We don't know what happens when you voluntarily shut down a substantial portion of your society."

Buffett's advice for investors is the same as it's always been: Invest for the long term. And because there's so much uncertainty as to what will happen over the next year or two — the pandemic will subside at some point, but there's also a presidential election this year — thinking about the long term is the most realistic choice many investors have.

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Just about every other financial professional or investing expert agrees with Buffett. Howard Marks, another billionaire and famous investor, recently called on investors to go on "offense" and start putting more money into the market, as it should reap bigger returns with time.

"I feel it's a time when previously cautious investors can reduce their overemphasis on defense and begin to move toward a more neutral position or even toward offense," Marks wrote last month in his latest memo to clients about the state of the markets.

James P. Stewart, a columnist and reporter at The New York Times who has been investing for 40 years, recently shared similar insights and lessons with Grow. He, like Buffett, said investors should keep the long term in mind and remember that "time is on every investor's side."

There are reasons for investors to begin to feel more optimistic, too. Effective coronavirus treatments seem to be on the way and some states are allowing businesses to reopen under certain conditions. Other experts say that the worst may be behind us

So though the market may continue to seesaw day to day, do what you can to keep the future in mind. Because, as Buffett has said in the past, the future is "easy to predict" when it comes to the stock market.

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