Buffett bullish on investing, apprehensive about Europe

Sees ‘pain’ ahead until EU solves fiscal crisis

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OMAHA, Neb. | Billionaire Warren Buffett said Monday that Europe will have a hard time resolving its fiscal problems because of the structure of the European Union and this weekend’s election results in Greece and France.

But he said the turmoil in Europe won’t keep him from investing and that Berkshire would add to its stakes in two U.S. companies. He did not identify the two companies.

Mr. Buffett appeared on CNBC on Monday morning, two days after meeting with more than 30,000 people at Berkshire Hathaway Inc.’s annual meeting.

Berkshire’s chairman and CEO said Europe has “got a lot of problems. They’ll solve them, but not without a lot of pain.”

Mr. Buffett said part of the challenge is that the European Union’s 17 countries don’t have similar monetary policies. He said it’s not surprising that people in Greece and France voted against the pain of austerity.

He said he wouldn’t hesitate to buy a European business if he found an attractive one to add to Berkshire’s portfolio of more than 80 companies, which includes the Burlington Northern Santa Fe railroad, Geico insurance and MidAmerican Energy.

Mr. Buffett said American banks are in much better financial shape than European counterparts because of measures taken as a result of the financial crisis of 2008.

He said the United States has injected more capital into its banks and forced them to clean up their balance sheets.

Mr. Buffett said the United States did a better job imposing austerity measures and improving its fiscal situation since the crisis. What helped, too, he said, was a better structure in the U.S. to deal with the problems.

“We have a whole different banking system in the United States. Plus, we have our own currency,” he said.

Mr. Buffett said he doesn’t really have an opinion on Facebook and Google because it’s hard to determine their value and how they will fare in the future.

“I’m an agnostic on a company like Facebook. Anytime you get a truly extraordinary business - and it’s obvious it’s an extraordinary business - they’re the hardest ones to value,” Mr. Buffett said.

Over the weekend, Mr. Buffett told Berkshire Hathaway shareholders that initial public offerings are almost always bad investments. He said there is so much hype involved that IPOs won’t be the most-attractive value.

Mr. Buffett said Monday that one of the worst mistakes investors make is buying or selling based on the day’s headlines.

He said investors should be looking for good businesses to buy and trying to determine how those companies will fare in 10 years.

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