Berkshire Hathaway CEO Warren Buffett acknowledged that the deadly coronavirus outbreak and free-falling oil prices, which pushed major U.S. indexes briefly into a bear market on Monday, were a “one-two punch,” but said that the October crash in 1987 was worse.
“If you stick around long enough, you'll see everything in markets,” Buffett told Yahoo Finance during a Tuesday interview. “And it may have taken me 89 years of age to throw this one into the experience, but the markets, if you have to be open second by second, they react to news in a big-time way.”
The Dow Jones Industrial Average closed in bear market territory on Wednesday, down 20 percent from its most recent highs, following days of extreme swings including a drop of more than 2,000 points, or 7.8 percent, on Monday, it’s worst one-day percentage drop since the financial crisis, while the S&P 500 and Nasdaq Composite were lower by 7.9 percent and 7.2 percent, respectively. The S&P 500 and Nasdaq dipped briefly into bear market levels.
Earlier this week Buffett scooped up more shares of Delta Airlines, a sign he is confident the hard-hit sector will recover.
“It wasn’t October 1987, but it was an imitation,” the investing legend, known as the “Oracle of Omaha,” said. “And the combination actually of the coronavirus and what happened with oil over the weekend, that’s a big one-two punch.”
Buffett was referring to the day known as Black Monday, when the Dow plummeted by close to 22 percent, the largest one-day percentage drop in history. It triggered a global market decline and caused the Securities and Exchange Commission to implement protective measures, such as circuit breakers, to prevent panic selling. On Monday, the S&P 500 dropped by 7 percent, activating the first circuit breaker level, which halts trading for 15 minutes.
Buffett also called the market collapse in the fall of 2008, in the midst of the financial crisis, “much more scary, by far, than anything that happened yesterday.”
Stocks have gyrated in recent weeks as the coronavirus, which causes a disease known as COVID-19, has quickly spread around the world. The virus has killed at least 4,373 people, with close to 121,500 cases reported worldwide, mostly in China, according to a database published by Johns Hopkins University. There have been more than 1,000 confirmed cases of coronavirus in the United States and 29 deaths.