Warren Buffett tells us that the economy is steadily improving since the fall of 2009, and even though Russia advanced into then Ukraine, he is still very optimistic.
Buffett made an appearance on CNBC this past Monday once he released his upbeat annual letter over the weekend to Berkshire Hathaway shareholders. Buffett is the CEO and chairman of the conglomerate based out of Omaha, Nebraska.
In the report he said that based upon the 80 some odd businesses under the Berkshire Hathaway umbrella, the economy is growing moderately, even though investors swing the markets.
“The American economy for five years has been moving at a fairly steady rate upwards – not as fast as people would like – but I think that absolutely continues now,” said Buffett.
He also mentioned that he doesn’t make his investment decisions based on world events or the economy, and Berkshire will continue to buy an unnamed stock in the United Kingdom. He focuses on the prospects of a business, as well as the price, when looking at potential investments.
Russia’s advancing into the Ukraine with their military should not convince investors that it’s time to sell stocks in good United States businesses, Buffett said.
“People react too much to short-term things in the stock market whereas they behave quite rationally when they get into other investments,” he said.
Buffett talked about a number of things during his three-hour interview on CNBC.
He also mentioned that it’s quite clear that railroad tank cars carrying crude oil must be updated because certain types of oil from some regions are more dangerous than anyone originally expected.
Berkshire Hathaway owns a manufacturer of tank cars and the Burlington Northern Santa Fe railroad.
“There will be changes made and there should be changes made,” he said. “We have found in the last year that it’s more dangerous to move certain types of crude certainly than was thought previously.”
Buffett tells us that crude oil coming from the south Texas Eagle Ford oil field and the Montana and North Dakota Bakken oil field having to be a lot more volatile than anyone originally anticipated.
This volatility could certainly have contributed to a number of fiery do Relman’s that took place in the past year, including one that happened last summer that killed 47 people in Lac-Megantic, Québec.
Buffett restated on Monday that he feels that is a wonderful idea to build the currently proposed Keystone XL pipeline TransCanada wants to construct in order to carry Canadian oil south across the Great Plains in order to connect refineries in the Gulf Coast.
He mentions that he does not feel this pipeline will reduce the amount of oil being carried by railroads all that significantly.
When natural disasters strike, Berkshire’s reinsurance and insurance divisions will typically have to pay large claims when this happens. Buffett tells us that Berkshire’s reinsurance and insurance companies have not seen a major rise in disaster payouts due to climate change your extreme weather.
“I calculate the probabilities of catastrophes no different than a few years ago,” said Buffett.
Strong results in insurance help the Berkshire Hathaway earn $19.48 billion in 2013 on $182.15 billion revenue. This is up hire from the previous year of $14.28 billion on $162.46 billion revenue that they earned in 2012.
Berkshire Hathaway owns 80 + subsidiaries, and they include jewelry, clothing, furniture and railroad firms. The utility and insurance divisions typically make about half of the company’s total net income. They also have large investments in stocks like Wells Fargo, American Express and IBM.