At the Berkshire Annual Shareholders Meeting, Buffett Reaffirms Confidence in the U.S. Economy but Issues Stern Warning on Risks of Currency Depreciation Due to Fiscal Policy
(Background: Coca-Cola stock price hits a new high against the trend! Can learning from Buffett protect your investments from economic recession?)
(Additional context: Buffett holds a large amount of U.S. Treasury bonds! Berkshire’s holdings exceed $300 billion, far surpassing the Federal Reserve. What strategy is the investment guru employing?)
Investment Guru Warren Buffett Shares Insights on the U.S. Economy and Investment Strategies
Warren Buffett, the renowned investment guru, shared his profound insights on the U.S. economy and investment strategies at the highly anticipated Berkshire annual shareholders meeting. Buffett firmly reiterated his confidence in the long-term advantages of the United States and the concept of “American exceptionalism.” However, he also expressed rare and serious concerns about the current fiscal policies in the U.S., particularly warning about the potential risks of currency depreciation.
Firm Belief in American Exceptionalism: History Proves Its Resilience
When asked whether the concept of American exceptionalism (the view that the U.S. economy uniquely demonstrates resilience and continues to thrive amidst adversity) would endure in the face of current “transformative” global changes, Buffett responded affirmatively:
“I won’t be discouraged by the current unfavorable outlook; after all, the U.S. has solved every problem it has faced in history.”
He emphasized that the current changes are a natural continuation of historical processes, not a sign of America’s decline. Reflecting on the U.S.’s evolution from an agrarian nation to its current state, he noted the numerous significant economic and social transformations that demonstrate the country’s robust economic resilience.
Concerns Over Fiscal Policy: Beware of Currency Depreciation Risks
However, despite his optimism for America’s long-term outlook, Buffett expressed profound concerns regarding certain specific policies currently in place. He specifically mentioned that he feels “afraid” about U.S. fiscal policy, primarily due to the government’s tendency to make decisions that could lead to currency depreciation.
In his annual report, he echoed this concern, clearly stating that the prevalence of “fiscal foolishness” could gradually erode the value of the currency. He noted that such reckless behavior is widespread, and historically, the U.S. has faced near-collapse due to similar practices.
He stressed that fixed coupon bonds cannot provide sufficient protection against the risks of uncontrolled currency depreciation. Buffett believes that this concern over excessive spending is not unique to the U.S., but represents a common threat to monetary stability on a global scale. Therefore, Berkshire tends to avoid holding currencies that may depreciate and emphasizes the importance of choosing stable currencies for investment.
Market Environment and Buffett’s Perspective
Considering the broader market context, Buffett’s concerns regarding U.S. fiscal policy and currency depreciation are not unfounded. Recently, the dollar has shown a significant trend of depreciation against major currencies, with investor confidence weakened by concerns over the sustainability of fiscal policy and global trade tensions. Some market analysts even predict that the dollar may further decline by 10-15% in the coming years.
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In terms of financial performance, Berkshire’s investment business spans insurance, transportation, dining, and technology companies. The first-quarter profit expectation has drastically decreased by 64%, falling from $12.7 billion to $4.6 billion. Buffett admitted that the impact of tariffs is difficult to quantify, stating that achieving prosperity is not a zero-sum game; the success of one country does not equate to the loss of another, and both countries can thrive.
“I truly believe that the increasing prosperity of other countries in the world does not come at our expense; the more we prosper, the more secure we feel.”
Despite the market volatility, Berkshire’s stock price has risen by 18.9% this year, significantly outperforming the S&P 500 index’s -3.3% performance, reflecting investors’ confidence in its investment acumen.
