Warren Buffett On CNBC: Stock Market Can’t Be Rigged

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CNBC’s Becky Quick interviewed Warren Buffett on Squawk Box early this morning, just a couple of days after he released Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B)’s annual letter and most recent earnings report.

Buffett says stock market is “America business”

This morning’s interview carried similar themes to those addressed in Buffett’s annual letter. He offered some tips for non-professional investors when he was asked about the U.S. stock market. The interviewer asked him whether non-professional investors would be able to get a fair shake when investing in it because many say that it’s rigged.

However, Buffett doesn’t think it can be rigged. He said people “should stop calling it the stock market” and said instead that it represents “American business” rather than a market.

He also recommended that the non-professional investors who want to get into the markets buy a Vanguard S&P 500 stock index fund because it follows the performance of the broader market. He said it also helps keep costs low, which is important because investing fees are sort of like a tax on investment returns.

Buffett sees consistent growth

Last year was certainly a bull market, and Buffett himself has said that his investing strategies don’t work as well in a bull market. Investors have been concerned about a pull-back, but Buffett doesn’t see the market in constant dips and accelerations. He said the same thing has been happening since late 2009. He said although the U.S. economy hasn’t sloped upward at the level most investors would like to see, it’s been “almost a straight line” but not a flat one.

“Exactly what’s been going on since the fall of 2009 continues,” Buffett said. “Moderate but consistent growth for four and a half years. Every now and then we get excited about a speeding up and every now and again we worry about a double dip.”

Buffett asked about Keystone, railroad industry

This morning Warren Buffett also spoke about the shale oil boom and how it has helped one of Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B)’s subsidiaries, BNSF. One of the hot topics that’s been up for debate has been the Keystone pipeline, which is controversial because of its potential effect on the environment. Buffett thinks the pipeline is a good idea—even though it will likely mean less business for his railroads after it is built.

What’s Warren Buffett working on now?

Warren Buffett and his Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) are known for their monstrous whale-like investments, and he told CNBC that he isn’t negotiating any “hot” deal at the moment, although there are some other things they are focusing on.

When asked about his 2013 acquisition of Heinz, he said he thinks Berkshire will keep the company “forever,” although they might do an initial public offering.

CNBC asked him whether Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) will ever be considered “too big to fail” and face the restrictions placed on many large investment banks and firms. He thinks it’s “very unlikely” they would ever be categorized, comparing Berkshire to Exxon Mobil Corporation (NYSE:XOM).

What lawmakers could do for the economy

The network also asked him about a number of other matters related to politics and the U.S. economy. He sees Washington as being “more or less a stalemate” and can’t imagine that it will get any worse than it already is.

On the minimum wage, he said he sees both sides of the argument and suggested that instead of raising minimum wage, lawmakers could raise the earned income tax credit because lawmakers could “accomplish way more.”

Buffett also touted more “fiscal stimulus” to create new jobs in the U.S., but noted that “you pay a price for that.” Many suggest that the ultra-low interest rates set by the U.S. Federal Reserve is making the U.S. economy worse, but Buffett dismissed that view.

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