The Federal Reserve is giving us the gift of low interest rates. Warren Buffett recommends taking advantage of this opportunity to borrow money at these low rates.
“This is a very good time to borrow money, which means it may not be such a great time to lend money, but it’s good for the country that it’s a good time to borrow money,” he said in at his Berkshire Hathaway company’s online shareholders meeting this past May.
For those looking to invest in real estate, rates on new and refinanced mortgages are the lowest on record . Some rates are as low as under 3%.
Warren Buffett Berkshire Hathaway (NYSE:BRK.A) sold off his airline stocks. One in particular is Delta Air Lines The stock price lost half its value since the beginning of the year. He says, “The airline business, and I may be wrong, and I hope I’m wrong, changed in a major way,”
Listen to the Oracle of Omaha- Warren Buffet told his shareholders in a letter that it would be some kind of “total surprise” that would dwarf devastating hurricanes Katrina and Michael.
Warren Buffett recommends to start paying down those high interest credit cards.
Warren Buffett is confident the U.S. economy will bounce back from the COVID-19 pandemic.
Here is an excerpt from his 2003 letter to shareholders on why he invests in bank stocks.
Berkshire Hathaway (NYSE:BRK.A) The question about banking, you know, banking — if you can just stay away from following the fads, and really making a lot of bad loans, banking has been a remarkably good business in this country. And there are many — there are certain banks, I should say — in this country that are quite large that are earning, you know, maybe 20% on tangible equity. And when you think you’re dealing in a commodity like money, that’s fairly surprising to me. So, I would say that I guess I’ve been surprised by the degree to which margins in banking have not been competed away in something as fundamental as money. Now, part of it is that they push — they have pushed the loan-to-capital ratios higher than 30 or 40 years ago, but that — nevertheless they earn high rates of returns. They earn much higher rates of returns on assets alone, and then they have greater leverage of assets-to-capital so that produces returns on capital that really are pretty extraordinary.”
Even today Warren Buffett believes banks can still earn attractive returns on tangible capital.
Warren Buffett is an American investor, business tycoon, and philanthropist, who is the chairman and CEO of Berkshire Hathaway. He is considered one of the most successful investors in the world and has a net worth of US$88.9 billion as of December 2019, making him the fourth-wealthiest person in the world.[i]
Warren Buffett Current Holdings
Ticker Company Industry Market Cap $Mil Shares Value ($1000) Shares Change % Weighting % Trade Impact % % of Shares outstanding 3M Change % YTD Change %
PNC PNC Financial Services Group Inc Banks 45,162.53 9,197,984 880,431 +6.08% 0.50 +0.03% 2.17 +15.91% -33.80%
DAL Delta Air Lines Inc Transportation 17,864.41 71,886,963 2,050,935 +1.38% 1.17 +0.02% 11.27 +1.67% -52.56%
UAL United Airlines Holdings Inc Transportation 10,075.59 22,157,608 699,073 +1% 0.40 0% 7.63 +0.21% -62.46%
AAPL Apple Inc Hardware 1,581,338.78 245,155,566 62,340,609 0% 35.52 0% 5.66 +46.18% +23.16%
BAC Bank of America Corp Banks 214,461.10 925,008,600 19,637,932 0% 11.19 0% 10.66 +14.08% -31.37%
KO Coca-Cola Co Beverages – Non-Alcoholic 192,969.47 400,000,000 17,700,001 0% 10.08 0% 9.31 +14.22% -17.85%
AXP American Express Co Credit Services 78,742.31 151,610,700 12,979,391 0% 7.39 0% 18.83 +14.11% -22.61%
WFC Wells Fargo & Co Banks 112,175.94 323,212,918 9,276,210 0% 5.28 0% 7.88 -7.92% -49.55%
KHC The Kraft Heinz Co Consumer Packaged Goods 38,952.01 325,634,818 8,056,205 0% 4.59 0% 26.65 +41.50% +2.49%
MCO Moody’s Corporation Capital Markets 51,727.52 24,669,778 5,217,658 0% 2.97 0% 13.16 +35.93% +12.32%
USB U.S. Bancorp Banks 57,314.29 132,459,618 4,563,233 0% 2.60 0% 8.79 +19.52% -37.11%
BK Bank of New York Mellon Corp Asset Management 33,779.65 79,765,057 2,686,487 0% 1.53 0% 9.01 +21.10% -24.80%
CHTR Charter Communications Inc Media – Diversified 105,297.47 5,426,609 2,367,684 0% 1.35 0% 2.63 +21.12% +4.72%
V Visa Inc Credit Services 426,095.13 10,562,460 1,701,823 0% 0.97 0% 0.50 +24.06% +2.19%
COST Costco Wholesale Corp Retail – Defensive 132,691.11 4,333,363 1,235,572 0% 0.70 0% 0.98 +4.84% +1.85%
MA Mastercard Inc Credit Services 299,124.65 4,934,756 1,192,040 0% 0.68 0% 0.49 +24.19% -1.27%
KR The Kroger Co Retail – Defensive 25,771.23 18,940,079 570,475 0% 0.33 0% 2.41 +9.39% +14.32%
MTB M&T Bank Corp Banks 13,485.29 5,382,040 556,665 0% 0.32 0% 4.20 +5.32% -38.07%
LSXMA Liberty SiriusXM Group Media – Diversified 12,964.18 14,860,360 470,925 0% 0.27 0% 4.74 +23.28% -29%
GL Globe Life Inc Insurance 7,733.78 6,353,727 457,278 0% 0.26 0% 5.97 +9.17% -32.02%
[i] https://en.wikipedia.org/wiki/Warren_Buffett
