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

Published 04-03-2022, 02:16 pm
Updated 04-03-2022, 02:20 pm
© 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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