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Buffett, Welch stand firm

Investment guru and corporate icon preach market confidence

September 17, 2001: 5:39 a.m. ET

http://cnnfn.cnn.com/2001/09/17/investing/wires/buffett_re/

WASHINGTON (Reuters) - U.S. billionaire investor Warren Buffett says he will not sell any of his stocks when the market reopens on Monday – and, in fact, if the markets fall significantly he may use it as a buying opportunity.

The New York Stock Exchange is due to open after four days of closure brought about by last Tuesday's air attacks that leveled New York's World Trade Center and heavily damaged the Pentagon building outside Washington, D.C.

"I won't be selling anything," Buffett told the CBS program "60 Minutes." "If prices would fall significantly, there's some things I might buy."

The influential investor said the country is no different economically than a week ago. "And certainly if you owned a piece of an American business that you felt good about a week ago, it would be crazy, in my view, to be selling it at 9:30 tomorrow (Monday) morning," he said.

Jack Welch, the recently retired chairman of General Electric Co., also said he would be holding onto his stocks on Monday.

"I'll probably just hold," he said. "My view is that this is the best place in the world to invest. We have the strongest economy."

Buffett pointed out that the economy was already in a slowdown before last week's events.

"There was a slowdown going on last week, and there'll be a slowdown going on next week," he said but added that the attacks are likely to have "some impact" on third-quarter earnings.

The U.S. economy barely grew in the second quarter, with GDP managing a tiny 0.2 percent gain.

Another guest on the show, former Treasury Secretary Robert Rubin and now Citigroup board member, was also upbeat on the fundamentals on the economy.

"I think the right message...is to keep your eyes on the long term strength of our economy and our society, and react calmly and sensibly, and thoughtfully, just as you always would," he said.

President Bush and Treasury Secretary Paul O'Neill have both insisted that economic prospects are still good despite the tragic events of last week.

However, earlier Sunday, Vice President Dick Cheney said the economy could "quite possibly" tip into a recession.

Asked in an interview on NBC's "Meet the Press" if the United States was now in both a war and a recession, Cheney said: "Quite possibly. We clearly have a war against terrorism and we don't know yet what the third quarter is going to be like" in the economy.

Insurance payouts

Buffett also said his company, Berkshire Hathaway Inc. , which owns General Re, a reinsurer set to take a share of insurance losses arising from the destruction of the World Trade Center, is well-equipped to pay out a great deal of money.

"We will pay out, at Berkshire, a great deal of money, more money than we've ever paid out -- in respect to any catastrophe -- before this. But we're well equipped to take it," he said.

Buffett said there is no doubt that some insurers will be hit badly by the crashes which may result in the failure of some companies.

Another sector that has been hit hard is the airline industry, and Welch said the government would likely have to step in to bail it out.

"I mean there's just no question that industry has been impacted uniquely," he said.

The House of Representatives failed last week to adopt a measure that would have offered $12.5 billion in loan guarantees to the airline industry and another $2.5 billion in direct aid, but lawmakers are expected to try again to move legislation to help the already ailing industry in the coming days.

However, Buffett was not so enthusiastic about such a proposal.

"There have been a lot of airlines that have gone bankrupt without having the sort of events you've had in the last week," he said. "So we have to be very careful about any mass subsidization."