Buffett: Stocks are still more attractive than bonds

Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., said the rally in markets over the last several years has made it harder to find bargains, but that stocks remain his choice over bonds.

When asked why cash has been piling up at Berkshire, he told “It tells us stocks aren’t as cheap as they’ve been most of the time.” Buying shares after the 2008 financial crisis, Buffett said, was like “shooting fish in a barrel.”

Stocks “have gotten less attractive as they’ve gone along,” Buffett told. “They’re still very attractive compared to bonds” because interest rates are so low.

Even as valuations make it harder for Buffett to find new investments, some of his older ones are paying off. On Tuesday, Bank of America Corp. said that Berkshire had converted its preferred stake into common shares. The transaction locked in a paper gain of more than $11 billion on an investment that Buffett made six years ago, when the bank’s shares were tumbling amid probes tied to the housing meltdown.

“They were in significant trouble, but that’s like a great athlete being in the hospital for an accident,” he told. The decision to convert the stake, he added, was “fairly automatic” since Bank of America’s common shares now pay a higher dividend than the preferred did.

Source: Bloomberg Pro Terminal

Trader Bozhidar Arabadzhiev