With the virus spreading to Europe and the IMF warning that the epidemic will have an impact on the global economy, investors are panicking and dumping shares as fast as they can. In the US, the Dow Jones Index fell by 3.5 percent or more than 1,000 points, while the UK’s FTSE 100 share index closed 3.3 percent lower, the sharpest drop since January 2016. Italy, which has seen Europe’s worst outbreak of the virus, saw is stock market plunge by six percent.
Mr Buffet, who is considered one of the most successful investors in the world, with a net worth of around US$90 billion, advised investors to take a long term view and not to overreact to the latest news.
He argued that investors would be much better served by regarding stocks as businesses, as this would better inform their investment strategy.
In an interview with CNBC on Monday, the chairman and CEO of Berkshire Hathaway said: “If you are buying a business and that’s what stocks are – businesses – in fact people would be better off if they said ‘I bought a business today’ and not a stock today, because that gives a different perspective on it.
“Then presumably if you buy a farm, or if you buy an apartment-house, you are going to own it for ten or twenty to thirty years.
“So the real question is, has the ten year, twenty year outlook for American businesses changed in the last 24 hours or 48 hours?
“You’ll notice that many of the businesses we own, partially own – American Express, we’ve owned it for 20 years, Coca Cola for 40 years – these are businesses.
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“And you don’t buy and sell your businesses based on today’s headlines.”
The “Sage of Omaha” continued: “People, because they can make decisions every second with stocks, whereas they can’t with farms, they think an investment in stocks as different from an investment in a business or an investment in a farm, or an investment in an apartment-house.
“But it isn’t. If you get your money’s worth in terms of future earning power over the next ten, twenty or thirty years, you’re going to have made a good investment and you can’t pick them from day to day.”
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The comes as a seventh person was reported to have died in Italy, after contracting the coronavirus.
Italian authorities have responded to a spike in infection rates in Lombardy and Venetto by ordering a lockdown.
More than 50,000 people have been placed in quarantine by the Italian Government, prevented from leaving their towns and cities until further notice.
Speaking at an emergency press conference, Italian Prime Minister Giuseppe Conte said: “We have decided that in the areas identified as decease outbreaks, entry and exit are not allowed unless specific exceptions are permitted assessed on a case-by-case basis.”
Some of the disease clusters identified in recent days have shown no link to China, a worrying sign that the virus is spreading out of control.
In Italy’s northern Lombardy region, which includes the nation’s financial capital Milan, the governor announced the number of confirmed cases stood at 110.
The country now has the latest number of cases outside Asia with over 200 infections and seven deaths.
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