Buffett: It would surprise me if stock prices drop 50%

Warren Buffett said he would be “surprised a lot” if stock prices around the world fell 50 percent from their current levels.

He predicted there will be another financial crisis “someday” in the years ahead that will shock financial markets, but he doesn’t think it will happen anytime soon.

“Humans will behave in crazy ways, both on the upside and the downside in the next 50 years. It’s very unlikely they do it in the next few years because after something like 2008, once they get out of the emergency room, they’re a little more careful for awhile.”

He said that within Joe Kernen’s lifetime the “Squawk” host will see 100,000 on the Dow. “I won’t, but you will.”

Buffett pointed out that Berkshire stock has dropped 50 percent four times in its history, but always recovered.

While he now thinks his characterization of the 2008 crisis as an “economic Pearl Harbor” now looks understated in hindsight, the U.S. did recover and he believes “this country will come through anything.”

Buffett said he’s been bullish on the U.S. economy since the fall of 2008, but he doesn’t expect it to rapidly accelerate this year. Instead, he thinks it will continue its slow upward trajectory.

Getty Images Warren Buffett

Getty Images
Warren Buffett

Buffett said he’d advise people to “stay away” from bitcoins because they are a “mirage” without any intrinsic value, although they are an efficient way to transfer dollars.

Buffett also said Berkshire Hathaway has “almost entirely eliminated” its catastrophe insurance in the U.S. because rates have dropped too much.

Buffett said, “The rates came down dramatically and we do not regard the exposure as having come down dramatically.”

Berkshire is still writing policies in Asia.

Asked about the controversy over faulty ignition switches in General Motors cars, Buffett said CEO Mary Barra has a “new chance” because she just started in the post but the company needs to tell the truth and act quickly to fix any problems.

He said his advice is to “Get it right, get it fast, get it out, get it over, but get it right first.”

Buffett was appearing live on CNBC’s “Squawk Box” with Dan Gilbert to promote their “Quicken Loans Billion Dollar Bracket Challenge with Yahoo Sports” in which anyone who correctly predicts the outcome of every game in the NCAA basketball tournament will win $1 billion.

(Read more: Buffett insures billion dollar bracket madness)

Buffett’s Berkshire sold the insurance that will fund the prize in the extremely unlikely event someone wins it. Odds against winning can’t be calculated precisely but estimates involve the word “quintillion.”

By CNBC’s Alex Crippen. Follow him on Twitter: @alexcrippen

This entry was posted in Warren Buffett Watch. Bookmark the permalink.

Leave a Reply