Warren Buffett Abouth Coronavirus and Oil Stock Market

Interview with Warren Buffett, Interviewer - Yahoo Finance's Editor in Chief Andy Serwer

It’s March 10th and it’s the day after the stock market crash, the Dow was down over 2,000 points oil to $ 30 a barrel or so. The ten-year bond went to below 0.5 %. What the heck is going on, Warren Buffett?

Warren Buffett

I told you many years ago if you stick around long enough you’ll see everything in the markets. It may have taken me to 89 years of age to throw this one at the end of the experience. Markets, they have to be open second by second, they react the news in a big-time way. I mean it’s not like the market for real estate or farms or things of that sort. So, you have to have a price. Of course, we hit a certain break yesterday but it still wasn’t October 19, 1987, but it was a sign, an imitation anyway. And the combination actually of the Coronavirus and what happened with oil over the weekend. I mean that is a big 1-2 punch.

Interviewer:

Does this remind you of any other time?

Warren Buffett:

Well, I’ve certainly been there a number of times when panic has reigned in Wall Street and October 19, 1987, and period around it. I mean there was panic at the close of business on Monday, October 19th. Most of the specialists important those days in New York Stock Exchange were broke.

And the next morning there was a check to the Clearing House in Chicago that didn’t get there and sometime late in the morning you know the decision. I think a lender made the decision we’re gonna stay open but it was really close. And of course the financial panic, there were 35 million people on September 1st that weren’t worried about at all, about their money accounts on September 15th or 16th they were all panicked.

Interviewer:

What year was that?

Warren Buffett:

That was 2008.

Interviewer:

2008?

Warren Buffett:

Absolutely. You literally have 3.5 trillion in money market accounts, which people regarded as the equivalent of cash or bank deposit. That was half the amount of all the insured bank deposits in the country but these weren’t insured. I remembered because you know, then all my friends have money market accounts because I didn’t have one but I was at a birthday party and that’s all they talked about and I suddenly became very popular. I was like a sports hero or something for a very brief period of time. And Hank Paulson, they had a hundred and seventy-five billion withdrawals in a few days.

That’s when I think anybody knew what was going on, and panicked basically. Hank Paulson did the very good thing abusing I think Exchange Stabilization Fund that was set up in the 30s because of the revaluation of gold. It had nothing to do with this but he stepped in and 3.5 billion dollars worth of deposits fell or trillion I should say of deposits fell a whole lot better. If that move hadn’t been made because those funds held all the commercial paper and you couldn’t roll commercial but everything had come to a stop and that was much scarier by far than anything happened yesterday

Sources www.finance.yahoo.com