Perhaps “Mattress Money” will become the New Normal

Perhaps “Mattress Money” will become the New Normal

$DIA, $SPY, $QQQ, $VXX

Billionaire investor Warren Buffett, 85 anni, said he would consider taking money out of banks, especially if negative interest rates result in customers being charged to park their money in accounts.

“There could be a point where you’d really want to start withdrawing currency,” Mr. Buffett said Monday.

“If currency in a bank is worth less than currency in your hands … that could produce something in the way of behavior,” he said. “It’s a different world. If you have a lot of money in euros, as we do … you are better off putting it under your mattress than in a bank.”

Mr. Buffett says the US Fed, and other policymakers are generally doing a good job, but it is difficult to predict all the effects of interest rates remaining so low for so long.

Mr. Buffett said that no one can predict the effects of prolonged low rates because it has never happened before, but the US economy has recovered some from the depths of the Great Recession in Y 2008.

Mr. Buffett said he does not try to wager on central bank actions.

Many global central banks have kept interest rates low, with many pondering negative rates.

“We have close to $60-B that’s out invested at about a 1/4% or less,” the Berkshire Chairman/CEO said. “One point on $60-B is $600-M a year. If we were getting 3 or 4% on that money, that’s a couple billion to us. You notice it.”

Warren Buffett appeared on TV Monday after spending more than 5 hours answering questions at Berkshire Hathaway’s annual meeting Saturday. He estimates roughly 40,000 people attended the shareholders meeting.

Buffett says he would be willing to sell Berkshire Hathaway’s (NYSE:BRK-A, BRK-B) big investments in American Express (NYSE:AXP), Coca-Cola (NYSE:KO), and other companies if he found a significantly better option, but he still believes in those companies.

Berkshire Hathaway Inc. has held major stakes in American Express and Coca-Cola for decades, so the company would face a significant tax bill on the gains if he did ever sell those investments. So, the tax implications are a big factor in Mr. Buffet’s decisions.

Mr. Buffett says choosing the next President will be important for the world, but it will not derail the US economy. He claims supports Democrat Hillary Clinton, but he says choosing the wrong President will not damage the economy, as some of the nation’s past Presidents have not been great, but business has thrived over time.

Monday, the US major stock market indexes finished at: DJIA +117.52 at 17891.16, NAS Comp +42.23 at 4817.59, S&P 500 +16.13 at 2081.43

Volume: Trade was above average with 950-M/shares exchanged on the NYSE.

• DJIA +2.7 % YTD
• S&P 500 +1.8% YTD
• Russell 2000 +0.4% YTD
• NAS Comp -3.8% YTD

Stay tuned…

Paul Ebeling

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