Buffett defends stock investments

Warren Buffett’s company provided disappointing returns to shareholders last year, but on Saturday, the billionaire investor vigorously defended Berkshire Hathaway (NYSE:)’s move to invest heavily in stocks of companies like Apple (NASDAQ:).

In his closely scrutinized annual letter to shareholders, the man known as the “Oracle (NYSE:) of Omaha” for his investing prowess called stocks a far better bet than low-yielding bonds in light of low rates for interest and corporate taxes. He said he would prefer buying whole companies but argued that stocks often are the better bet.

Shares of Berkshire, whose holdings include Geico and Dairy Queen, rose just 11% last year, far underperforming the S&P 500’s 31.5% total return. His company’s operating earnings slipped 3%.

Berkshire ended the year with a cash pile of $128 billion. Buffett, the world’s fourth richest person according to Forbes, is also known as a shrewd dealmaker, but his company has not made any major acquisitions since 2016.

In his letter, the 89-year-old CEO also sought to assuage shareholders who are worried about who would succeed him and his 96-year-old vice chairman, Charlie Munger. He said the company – in his words – “is 100% prepared for our departure.” He also said Berkshire will give “more exposure” to the two leading contenders at its annual meeting in May.

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