OMAHA, Neb. (AP) — Billionaire investor Warren Buffett says he doesn't like owning bonds right now, and he doesn't think average investors should either.
The CEO and chairman of investment conglomerate Berkshire Hathaway says individual investors should keep enough cash on hand to be comfortable if the unexpected happens.
The rest should be invested in stocks, he added, even though stock prices are well above the rock-bottom levels they hit several years ago during the Great Recession.
Buffett said on CNBC financial news network Monday that bonds are a "terrible" investment at the moment and that owners of long-term bonds may see big losses when interest rates eventually rise.
The famed investor, dubbed the Oracle of Omaha for his long-term winning track record, said stocks are generally selling for reasonable prices even at the record high levels of the Dow Jones industrial average and the Standard & Poor's 500 index.
The 82-year-old Buffett, who says he has no plans to retire anytime soon, believes the Federal Reserve's efforts to keep rates low are helping stocks. But an improving economy is also playing a role.
He said he remains a fan of Fed chair Ben Bernanke, but Buffett also said he thinks bond prices are artificially inflated because of the Fed's ongoing stimulus, which includes keeping rates low and buying $85 billion of bonds a month. Bond yields, which move inversely to prices, are near historic lows.
Buffett gave interviews Monday to CNBC and Fox Business News networks following a star-studded weekend of events surrounding Berkshire's annual shareholders meeting.
Berkshire owns more than 80 companies and holds major investments in Wells Fargo, IBM, Coca-Cola and other companies with iconic brands.
Buffett reiterated his support of Jamie Dimon, CEO and chairman of JPMorgan Chase. He said the bank, whose stock he owns in his personal portfolio, has the right person at the helm.
He expects Berkshire to own a stake in ketchup-maker H.J. Heinz forever, and Buffett said he doesn't see a problem in taking a partner — the Brazilian investment firm 3G Capital — in a recently announced $23.3 billion deal. He added that he hopes Berkshire's stake in Heinz will grow over time.
He has been questioned about whether the structuring of the Heinz deal, which gives Berkshire a 50% stake in Heinz, represents a change in the company's investment style. Typically, Berkshire buys companies outright and allows them to operate without significant intervention.
But 3G is not a typical private equity firm, Buffett said, because it invests a significant amount of its own money in deals and it runs businesses.
Buffett said traffic is picking up at BNSF railroad, which Berkshire owns, as the economy improves. He said the railroad will likely deliver record earnings this year, but will probably still haul fewer carloads than it did before the recession.
BNSF "has been a terrific acquisition for Berkshire," Buffett said.
BNSF contributed $798 million to Berkshire's $4.9 billion first-quarter profit the company reported Friday. The Omaha-based company's overall profit soared 51%over the previous year's $3.3 billion net income.
Contributing: USA TODAY's Beth Belton, The Associated Press
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