Unlike so many others who criticize Bernanke and his bold monetary easing policies, Buffett has always taken a positive view of the Federal Reserve’s chairman. He called Bernanke a ‘gutsy guy’ for his policies and praised him for his timely actions.
While expressing his views on various topics, Buffett said that the over 10 percent gain in S&P 500 should not surprise investors and is not so ridiculously high that it is guaranteed to slump. He said that it is likely that he and others in their lifetimes will see more record highs and lows on these benchmark indices. He said that the Fed’s quantitative easing has brought some life back to the housing market, demand is on the rise and the economy is slowly growing.
Buffett also talked about J.C. Penney Company, Inc. (NYSE:JCP)’s recovery. He said that he did not have a position in the company but was confident in the chain store’s management. He accepted that recovery would not be easy as the company has lost a significant portion of its customer base.
While discussing stocks vs. bonds, Buffett said that this is the time to invest in equities and one should forget about bonds for now. He cautioned that long-dated bondholders will suffer when interest rates start rising from their current low levels. He called bonds a “terrible investment” in the present scenario. The Fed’s monetary stimulus has driven bond yields to historic lows whereas equity markets were given a boost at the same time.
Buffett’s interviews follow Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s annual shareholder meeting held in Omaha over the weekend and included a string of events that were attended by several notable investors.
While talking to Becky Quick, Buffett reaffirmed his support for Jamie Dimon, CEO of JPMorgan Chase & Co. (NYSE:JPM). Buffett said that not only should Dimon keep his place as the CEO of the investment bank but all the other board members of JPM should also remain unchanged. Buffett raised this latest voice of support in response to a proposal backed by Institutional Shareholder Services, which asked for a separation of CEO and chairman roles and called for re-voting on three director seats.
Buffett said that he did not oppose the separation of CEO and Chairman roles but for now Dimon is fully capable of retaining both seats. He also said that for a company that is the size of JPMorgan Chase & Co. (NYSE:JPM), it is impossible for the CEO to know about all trading operations. Dimon and the board has lately come under a lot of criticism for the bank’s multi-billion dollar trading losses in the London Whale fiasco. However Buffett extended his relentless support, and the Oracle personally owns a stake in JPMorgan Chase & Co. (NYSE:JPM). Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) does not have a position in the bank.