- Associated Press - Monday, February 27, 2012

OMAHA, Neb. — Billionaire Warren Buffett said Monday that while stock prices have gone up, they remain relatively cheap compared to other investments as the economy continues to improve.

During an interview Monday on the cable TV network CNBC, two days after his annual letter to Berkshire Hathaway Inc. shareholders was released, he also said the company is prepared to replace him whenever the need arises.

Mr. 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,” Mr. 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, he said, adding that 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,” he said.

Mr. Buffett conceded in his letter released Saturday that he was dead wrong to predict the housing market would recover by now, though he maintained Monday that he thinks conditions will improve in 2012.

The reports Mr. Buffett gets from Berkshire’s roughly 80 subsidiaries, including utility, insurance, retail and railroad firms, show the overall economy has been steadily improving since summer 2009 in every area except businesses related to housing construction.

Over the weekend, Mr. Buffett created a stir by writing that Berkshire’s board had chosen someone to succeed him as CEO someday with two backup candidates. Previously, he had said only that the board had three internal candidates to replace him.

None of the CEO candidates have been identified, and Mr. Buffett said Monday that the likely successor doesn’t know he would be the board’s pick.

Mr. 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 sizable 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,” he said.

Mr. Buffett was also asked about the news business because Berkshire just bought a second newspaper last fall to go along with its sizable 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.

Mr. 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 stop offering news free online.

“You shouldn’t be giving away a product you’re trying to sell,” he said.