Warren Buffett On Housing, Interest Rates & Strong Dollar | April 30, 2015 | Summary and Q&A

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November 20, 2020
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Warren Buffett On Housing, Interest Rates & Strong Dollar | April 30, 2015

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Summary

In this video, Warren Buffett discusses various topics including the economy, housing market, Clayton Homes, NetJets, and the union situation. He mentions that Berkshire businesses are experiencing steady growth of around two percent since 2009. He believes it's unlikely for growth to be flat and expresses concern about the impact of negative rates and a strong dollar on the economy. Buffett acknowledges that the housing recovery has stalled and while businesses like Shaw Carpets and Clayton Homes are doing better, it's not significantly dramatic. He plans to address the negative press regarding Clayton Homes at a meeting and defends the company's practices. Buffett also discusses NetJets as a proxy for business spending and stock market performance, indicating a strong correlation between the two. Finally, he mentions the ongoing union situation but states that there's no need for him to intervene as he believes it will eventually get resolved.

Questions & Answers

Q: What kind of growth has Berkshire businesses been experiencing since 2009?

Berkshire businesses have been experiencing steady growth of around two percent since 2009.

Q: Is there a chance for flat growth in the economy?

Warren Buffett doubts the possibility of flat growth in the economy.

Q: How does Warren Buffett view tightening rates in the United States?

Warren Buffett believes that if negative rates exist elsewhere in the world and the United States keeps raising rates, it will inevitably result in tremendous flows of capital from other countries. He thinks it would be prudent to wait for Europe to sort things out before considering rate hikes to avoid any adverse effects on the economy.

Q: What is the current state of the housing market according to Warren Buffett?

There has been a stall in the housing recovery, and although businesses like Shaw Carpets, Clayton Homes, and Acme Bricks are doing better, it is not a significant improvement. Raw material costs, specifically for Shaw Carpets, have affected margins.

Q: How does Warren Buffett plan to address the negative press about Clayton Homes?

Warren Buffett plans to present documents and figures defending Clayton Homes at a meeting to address the negative press.

Q: How does NetJets perform as a proxy for business spending and stock market performance?

NetJets reflects the performance of the stock market, and there is a strong correlation between their sales volume, flying volume, and the stock market. Currently, there are decent gains in ownership and increased sales of planes in the United States.

Q: When will Warren Buffett step in regarding the ongoing union situation?

Warren Buffett believes there is no need for his intervention at the moment. While the union situation has been ongoing for a long time without any resolution, he is confident that it will eventually get resolved.

Takeaways

Warren Buffett's comments highlight the steady growth experienced by Berkshire businesses since 2009. He expresses caution regarding the impact of negative rates and a strong dollar on the economy and urges patience until Europe resolves its issues. The housing market recovery has stalled, but companies like Shaw Carpets, Clayton Homes, and Acme Bricks are showing modest improvements. Buffett plans to defend Clayton Homes against negative press and shares that NetJets serves as an indicator for stock market performance. Lastly, he remains optimistic that the ongoing union situation will reach a resolution without his direct involvement.

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