Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B) CEO Warren Buffett’s thoughts about the future of our country can be summed up in four words he said in January 2017: “Never bet against America.” Buffett believes that America’s market system, and the growth it has produced, is a powerful force. And while there will undoubtedly be some bumps along the road, the future is extremely bright.
Here’s what Buffett has said about the past, present, and future of our country, and what it means to investors.
America’s achievements have been miraculous
In his most recent letter to Berkshire Hathaway’s shareholders, Buffett said one word sums up our country’s achievements: miraculous.
“From a standing start 240 years ago – a span of time less than triple my days on earth – Americans have combined human ingenuity, a market system, a tide of talented and ambitious immigrants, and the rule of law to deliver abundance beyond any dreams of our forefathers.”
In his 2015 shareholder letter, Buffett pointed out that America’s GDP per capital is now about $56,000. In real terms, adjusted for inflation, that’s roughly six times the GDP in 1930, the year Buffett was born. Americans work more efficiently in past generations and produce more as a result. And this trend is virtually certain to continue.
Buffett credits America’s market system with enabling America’s prosperity, and also with efficiently allocating the rewards of our achievements. People who invested in American business have been handsomely rewarded: Buffett pointed out that the Dow Jones Industrial Average climbed from 66 to 11,497 during the 20th century alone, and that gain doesn’t even take dividends into account.
The future is bright, no matter who’s in charge
Buffett believes that America’s market system will continue to deliver growth and prosperity for the foreseeable future, and that the babies being born today are the “luckiest crop in history.”
And he believes that to be true no matter who’s in charge of the country. Buffett was an outspoken Hillary Clinton supporter, but he isn’t worried about Donald Trump’s presidency, at least as far as investing goes. In a CNBC interview shortly after Trump took office, Buffett pointed out that he’s had a president other than the one he’s voted for during about half of his adult life, and that’s never caused him to stop investing in stocks.
“American business — and consequently a basket of stocks — is virtually certain to be worth far more in the years ahead,” Buffett wrote to Berkshire’s shareholders. He acknowledged that many companies will underperform the market or fail entirely, which is why he often advises most Americans to invest in a diverse index fund, to mitigate the risk of any single company’s performance.
There will be bad times: Don’t fear them; embrace them
In addition, Buffett acknowledges that the future will not always be great for investors: “[T]he years ahead will occasionally deliver major market declines — even panics — that will affect virtually all stocks.” However, Buffett encourages investors with a long-term focus to embrace these times, not fear them. In one of my new favorite Buffett quotes, the Oracle of Omaha says that “widespread fear is your friend as an investor, because it serves up bargain purchases.”
The bottom line is that Buffett advises investors to believe in American ingenuity and enterprise, and to invest accordingly. In his pre-election discussion about America’s economic prosperity, Buffett concluded with some sound investment advice: “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start.”
Matthew Frankel owns shares of Berkshire Hathaway (B shares). The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy.