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| Warren Buffett’s Optimistic? Pessimistic? No, Realistic | Warren Buffett’s Optimistic? Pessimistic? No, Realistic |
| (about 16 hours later) | |
| You could always count on the folksy and cheery optimism of Warren Buffett. | You could always count on the folksy and cheery optimism of Warren Buffett. |
| But if you listened closely to Mr. Buffett over the weekend during Berkshire Hathaway’s shareholders’ meeting — his annual “Woodstock for Capitalists” was conducted virtually because of the coronavirus pandemic — his words often betrayed a deep sense of concern about the immediate future. That should be a warning to all investors and policymakers. | But if you listened closely to Mr. Buffett over the weekend during Berkshire Hathaway’s shareholders’ meeting — his annual “Woodstock for Capitalists” was conducted virtually because of the coronavirus pandemic — his words often betrayed a deep sense of concern about the immediate future. That should be a warning to all investors and policymakers. |
| While many of the headlines about the meeting were about Mr. Buffett’s positive aphorisms — “Nothing can basically stop America,” “You can bet on America” — underneath those long-term proclamations was a decidedly different message. | While many of the headlines about the meeting were about Mr. Buffett’s positive aphorisms — “Nothing can basically stop America,” “You can bet on America” — underneath those long-term proclamations was a decidedly different message. |
| Each year for the last decade, I sat onstage at this big meeting in Omaha with Mr. Buffett and his best friend, Charlie Munger, as one of several journalists asking him questions sent in by the public. His positivity, even during difficult economic moments, always radiated with a clear sense of certainty. After all, he is known as the Oracle of Omaha. | Each year for the last decade, I sat onstage at this big meeting in Omaha with Mr. Buffett and his best friend, Charlie Munger, as one of several journalists asking him questions sent in by the public. His positivity, even during difficult economic moments, always radiated with a clear sense of certainty. After all, he is known as the Oracle of Omaha. |
| That’s why it was unsettling on Saturday to hear him repeatedly say “I don’t know.” He was careful to say the markets would improve in the long term — though his time frame for certainty was decades, not months or not even necessarily years from now. About the current climate, he said, “You can bet on America, but you kind of have to be careful about how you bet.” He added “simply because markets can do anything.” | That’s why it was unsettling on Saturday to hear him repeatedly say “I don’t know.” He was careful to say the markets would improve in the long term — though his time frame for certainty was decades, not months or not even necessarily years from now. About the current climate, he said, “You can bet on America, but you kind of have to be careful about how you bet.” He added “simply because markets can do anything.” |
| At a time when the stock market has been buoyed by politicians pushing to reopen America and hopeful investors often willing to overlook the immediate economic carnage, Mr. Buffett sounded a note of realism about the challenges ahead. | At a time when the stock market has been buoyed by politicians pushing to reopen America and hopeful investors often willing to overlook the immediate economic carnage, Mr. Buffett sounded a note of realism about the challenges ahead. |
| He talked about the possibility of a second wave of coronavirus infections. He acknowledged that the world might profoundly change for years to come. And he spent a notable portion of the meeting detailing the economy’s performance since 1789, with a particular focus on the years between 1929 and 1951, a period in which the stock market took 22 years to get back to its highs. | He talked about the possibility of a second wave of coronavirus infections. He acknowledged that the world might profoundly change for years to come. And he spent a notable portion of the meeting detailing the economy’s performance since 1789, with a particular focus on the years between 1929 and 1951, a period in which the stock market took 22 years to get back to its highs. |
| More than his words, he spoke with his wallet. He usually relishes a down stock market to take advantage of lower prices. Not this time. He hadn’t made any purchases recently; he didn’t buy up stocks when they had fallen last month during what felt like a mini-panic: “We have not done anything, because we don’t see anything that attractive to do.” | More than his words, he spoke with his wallet. He usually relishes a down stock market to take advantage of lower prices. Not this time. He hadn’t made any purchases recently; he didn’t buy up stocks when they had fallen last month during what felt like a mini-panic: “We have not done anything, because we don’t see anything that attractive to do.” |
| Juxtapose that with his actions in the midst of the financial crisis of 2008. Back then, he wrote an op-ed in The New York Times a month after Lehman Brothers filed for bankruptcy: “In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So … I’ve been buying American stocks.” | Juxtapose that with his actions in the midst of the financial crisis of 2008. Back then, he wrote an op-ed in The New York Times a month after Lehman Brothers filed for bankruptcy: “In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So … I’ve been buying American stocks.” |
| This time, he is husbanding his capital. “Our position will be to stay a Fort Knox,” he said. | This time, he is husbanding his capital. “Our position will be to stay a Fort Knox,” he said. |
| In other words, he is hoping to protect the company if things get worse, and he is clearly worried enough that it might. | In other words, he is hoping to protect the company if things get worse, and he is clearly worried enough that it might. |
| He said the $137 billion he had on hand “isn’t all that huge when you think about worst-case possibilities.” | He said the $137 billion he had on hand “isn’t all that huge when you think about worst-case possibilities.” |
| Let that seep in. He added: “We don’t prepare ourselves for a single problem, we prepare ourselves for problems that sometimes create their own momentum.” | Let that seep in. He added: “We don’t prepare ourselves for a single problem, we prepare ourselves for problems that sometimes create their own momentum.” |
| That’s coming from the same man who once famously said, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.” | That’s coming from the same man who once famously said, “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. When downpours of that sort occur, it’s imperative that we rush outdoors carrying washtubs, not teaspoons.” |
| In this crisis, he has done the opposite: He sold his entire stake in the nation’s four major airlines. His rationale seemed to have larger economic implications for the globe and country than simply airlines’ financial challenges. | In this crisis, he has done the opposite: He sold his entire stake in the nation’s four major airlines. His rationale seemed to have larger economic implications for the globe and country than simply airlines’ financial challenges. |
| “I don’t know whether two or three years from now that as many people will fly as many passenger miles as they did last year,” he said. “They may and they may not, but the future is much less clear to me.” | “I don’t know whether two or three years from now that as many people will fly as many passenger miles as they did last year,” he said. “They may and they may not, but the future is much less clear to me.” |
| A drop in travel, depending on its depth, would have a huge domino effect on the larger economy and employment: Fewer people traveling means fewer jobs in all sorts of industries. | A drop in travel, depending on its depth, would have a huge domino effect on the larger economy and employment: Fewer people traveling means fewer jobs in all sorts of industries. |
| Updated June 16, 2020 | Updated June 16, 2020 |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. | The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April. |
| Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. | Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission. |
| States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. | States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. | Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications. |
| The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. | The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing. |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. | If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested. |
| He also said the energy, real estate and retail industries are all facing problems that could reverberate throughout the economy, and into the banking system. | He also said the energy, real estate and retail industries are all facing problems that could reverberate throughout the economy, and into the banking system. |
| With oil prices so low, loans to energy companies could squeeze banks’ balance sheets, he said, and “you can imagine what happens to the equity holders.” | With oil prices so low, loans to energy companies could squeeze banks’ balance sheets, he said, and “you can imagine what happens to the equity holders.” |
| About real estate, he added, “If you’ve owned a shopping center, you’ve got a bunch of tenants that don’t want to pay you right now, and the supply and demand for retail space may change fairly significantly.” He described a worst-case cascade: Landlords not paying their mortgages could ultimately create problems for banks. Berkshire has investments in JPMorgan Chase and Bank of America. Still, he said the banks were much better prepared for challenges than in 2008. | About real estate, he added, “If you’ve owned a shopping center, you’ve got a bunch of tenants that don’t want to pay you right now, and the supply and demand for retail space may change fairly significantly.” He described a worst-case cascade: Landlords not paying their mortgages could ultimately create problems for banks. Berkshire has investments in JPMorgan Chase and Bank of America. Still, he said the banks were much better prepared for challenges than in 2008. |
| One statement might have offered his most immediate insight: “This is a very good time to borrow money, which means it may not be such a great time to lend money.” | One statement might have offered his most immediate insight: “This is a very good time to borrow money, which means it may not be such a great time to lend money.” |
| What is driving Mr. Buffett’s caution? | What is driving Mr. Buffett’s caution? |
| In truth, he has always been cautious. He has always been more willing to lose out on an opportunity than to jump too soon. “I don’t worry about the things that I miss,” he often says. | In truth, he has always been cautious. He has always been more willing to lose out on an opportunity than to jump too soon. “I don’t worry about the things that I miss,” he often says. |
| If there is a silver lining, it is that Mr. Buffett was not predicting doom and gloom, just that he wasn’t sure which way we are headed, though, of course, he is wishing for the best. If the right deal came along, he would jump, he said. | If there is a silver lining, it is that Mr. Buffett was not predicting doom and gloom, just that he wasn’t sure which way we are headed, though, of course, he is wishing for the best. If the right deal came along, he would jump, he said. |
| “The American miracle, the American magic has always prevailed and it will do so again,” he said. | “The American miracle, the American magic has always prevailed and it will do so again,” he said. |
| At a time of such polarized political battles about reopening and seeming uncertainty among many business leaders and investors about what should happen next, Mr. Buffett’s humble approach is something we should all take to heart: “I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year.” | At a time of such polarized political battles about reopening and seeming uncertainty among many business leaders and investors about what should happen next, Mr. Buffett’s humble approach is something we should all take to heart: “I don’t believe anyone knows what the market is going to do tomorrow, next week, next month, next year.” |