"Do not Keep Money During a War": Beware of This - by Warren Buffett (2014)

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"Do not Keep Money During a War": Beware of This - by Warren Buffett (2014)
Credit: © Reuters.

By Laura Sanchez

Investing.com - Warren Buffett has warned against hoarding cash and buying Gold Futures or Bitcoin during times of war and believes that investing in companies is the best way to build wealth over time.

The billionaire investor and CEO of Berkshire Hathaway (NYSE: BRKa ) already told CNBC in March 2014 that a Russia-Ukraine war at the time would not prompt him to sell shares.

"One thing you can be sure of if there's a war is that the value of money will go down. If stocks are cheaper, you're more likely to buy them," he said at the time, according to Business Insider, celebrating the fact that a stock you were actively buying had dropped in price. The tycoon added that he would not sell even if the conflict escalated into another cold war or World War III.

“This has happened in virtually every war that I am aware of,” Buffett noted. "So the last thing you want to do is save money during a war."

The famed investor, who has said he avoids doing business in Russia after running into trouble there, emphasized that the US stock market rose during World War II and had risen over time.

Buffett bought his first stock at age 11 in the spring of 1942, as the United States suffered heavy losses in World War II, he recalled in his 2018 letter to shareholders.

He exchanged his $115 in savings for three shares of Cities Service. Had he invested that sum in an S&P 500 fund reinvested all dividends, he said, he would have taken out $607,000 in 2019, a 5,288-fold gain. In contrast, if I had panicked and bought $115 in gold, the value would have risen to just $4,200," Buffett recalls, according to Business Insider.

"All I had to do was realize that America would eventually do well, that we would get through the current difficulties," he said at Berkshire's 2018 annual shareholder meeting about investing in an index fund in 1942.

"American companies will be worth more money," Buffett said. "Dollars will be worth less, so that money won't allow you to buy as much.

"But it will be much better to have productive assets for the next 50 years than to have pieces of paper," Buffett concludes.

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  • Bob Franz @Bob Franz
    I love Warren Buffet but what if you had bought shares in German companies?  Can’t blindly assume America wins the next war.
    Like 0
  • Ramesh Kannan @Ramesh Kannan
    Crude or metal or whatever commodity you name it, what goes up will come down. When the demand outplays the supply, prices shoot up. When prices shooot up, demand wanes down which will eventually lead to prices going down. May be its time to short whatever came up so quickly
    Like 3
  • Ramesh Kannan @Ramesh Kannan
    History tends to repeat itself time and again. Greed and fear dont change. Therefore the probability of market rallying is very much in the offing. Remember stock market always climb that wall of fear. As long as you have the conviction of holding the right picks, all that you need to do is sit tight
    Like 7
  • rakesh Bansal @rakesh Bansal
    This what he said longback. Now in present scenario of this conflict what he wants to say?
    Like 1
  • Kausik Mondal @Kausik Mondal
    Berkshire has $149 billion in cash on its balance sheet, the largest cash hoard in the company's history. On a similar note, while Berkshire has made some relatively small stock purchases in its portfolio recently, it has spent more on a single stock in 2021 than on all others combined.why then he himself keeps so much cash? He could have invested it.
    Like 11
  • mani M S @mani M S
    beware this is going to be long drawn out war, there will be lots of up & down .
    Like 2
    at the age of 11 yes, who had money. may be Sir had. I started to see money after I started earning.
    Like 6
      these guys work at small businesses like lemonade ,beverage dispensers , deliver newspapers etc while we generally avoid doing such work . Thats how he got the seed capital I guess
      Like 6
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  • arvind bhalsod @arvind bhalsod
    very nice sir
    Like 0
  • Rajesh Chaware @Rajesh Chaware
    Long term investment in a war like situation is the test of temperament, temptation control because we are the stake holders. Keeping cool and taking a reasonable risk is the key.
    Like 2

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