Throughout his career, Warren Buffett has generally -- and wisely -- refrained from making broad economic predictions, instead applying a bottom-up approach to his analysis.
But that doesn't stop the Oracle of Omaha from calling a spade a spade and, speaking on CNBC this morning, Buffett said that the United States economy is in a recession even if it doesn't technically meet the criteria. He said that the economy is in a recession "by any commonsense definition."
Economists define a recession as being two consecutive quarters of negative gross domestic product growth.
It's worth noting, however, that his grim assessment of the current state of the economy aside, he continues to invest aggressively in stocks he believes are undervalued. Last month, he became the largest shareholder in Kraft (NYSE: KFT) and also picked up shares of GlaxoSmithKline (NYSE: GSK).
The point is that investors seeking to emulate Buffett probably shouldn't be scared away from stocks by broad macroeconomic trends. Recession or no, Warren Buffett invests zealously in companies he believes in.
Last updated: February 12, 2012: 10:02 PM
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Reader Comments (Page 1 of 1)
3-03-2008 @ 11:52AM
Robert Bennett said...
Warren Buffet should have wisely kept his big mouth shut again. The Weenies on Wall Street have had enough problems coping with off hand comments from Greenspan and Bernacke. He is simply adding fuel to the fire. Have to wonder whether their making such comments are from poor judgement or with the full knowledge that the result will give them and their friends another chance to buy low and sell high.
3-03-2008 @ 4:28PM
bewitt7 said...
I agree Warren Buffet, Greenspan and Bernarke
shoud keep out of it all of them have their pockets full probably some of ours. With the kind of money theyhave it will help them if everything goes to rock bottom they can make another killing but Buffet and Greenspan better remember they are not going to live forever!!!!!!!!!!!!!!!!
3-05-2008 @ 6:44AM
Michael Schneider said...
Warren Buffett's big purchase of Kraft stock looks more interesting in light of his recent comments on agricultural commodities. Noting that his son is a farmer, he said the ag commodities have had a good run and productivity has been improving fast in agriculture so it isn't like oil where we have a finite amount available. (see the synopsis of Warren Buffett's extensive comments in the Billionaire Watch- yellow label, top- at http://www.Barrelomoney.com). If he thinks ag prices are close to a top it certainly clarifies why he would buy so much of a struggling food stock like Kraft Foods. Kraft is cheap but it has been a poor performer and it has been hobbled by high costs for ingredients- especially items like cheese. If ag commodity prices slow, that would help companies like Kraft. Kraft has been behind the curve in raising prices as costs have risen and they are working to correct that but some moderation in commodity costs would sure help.