By Callum Keown
Global stocks plunged on Monday after the number of virus cases outside China surged over the weekend, particularly in Italy, South Korea and Iran.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.89% lost 1,031.60 points on Monday - the third-largest point drop in history.
However, Warren Buffett told investors not to buy or sell stocks, which he referred to as businesses, based on the day’s headlines.
“The real question is: ‘Has the 10-year or 20-year outlook for American businesses changed in the last 24 or 48 hours?’” the billionaire investor said on CNBC.
“You’ll notice many of the businesses we partially own, American Express /zigman2/quotes/203805826/composite AXP +3.09% , Coca-Cola /zigman2/quotes/209159848/composite KO +0.44% — those are businesses and you don’t buy or sell your business based on today’s headlines. If it gives you a chance to buy something you like and you can buy it even cheaper then it’s your good luck,” the chairman and CEO of Berkshire Hathaway /zigman2/quotes/200060694/composite BRK.B +0.71% added.
In his annual investor letter over the weekend, Buffett said equities would outperform bonds for years to come due to low tax rates.
“If something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments,” he said.