People Listen When Buffett Talks

When the head of Berkshire Hathaway, Warren Buffett, appeared on CNBC yesterday morning, people always tend to jot down the things that he says.

Charlie Munger and Warren Buffett were asked about their views on high-frequency trading. This is in light of all of the attention generated by the book “Flash Boys” by Michael Lewis.

Munger immediately blasted the practice, and said that it is the “functional equivalent of rats in a granary.” Buffett had a much more measured response, and he said that high-frequency trading may “create more volume but doesn’t create liquidity.” He then went on to mention that the “small investor never had it so good” and that high-frequency trading has a small impact on investors “who don’t trade often.” Michael Lewis’s book makes the argument that high-frequency traders use the advantage of speed and have the ability to front run institutional equity orders.

It’s obvious that what people really care about is Buffett’s take on the current stock market, and he sounded very optimistic. He even mentioned that the market is not “in crazy territory” and then he added that it is in a “zone of reasonableness,” which has typically been the case for the majority of his career.

Also joining Munger and Buffett on CNBC was Bill Gates, who is also a Berkshire Hathaway board member as well as a member of the board of Microsoft. When asked about his stock market views, Bill Gates said “relative to interest rates, equities are still a bargain.” He also mentioned that the new CEO of Microsoft, Satya Nadella, is “off to an amazing start.”

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