Warren Buffett said this weekend that he admires Tesla CEO Elon Musk. And the Berkshire Hathaway CEO believes electric vehicles will bring big changes to the auto market. But he doubts any carmaker will be able to hold a dominant position.
“You will see a change in the vehicles, but you won’t see anybody that owns the market because they changed the vehicle,” Buffett said this weekend at Berkshire Hathaway’s annual conference. The investing legend and his partner, vice chairman Charlie Munger, shared their thoughts on EVs and the auto industry in general during a Q&A session.
“The electric vehicle is coming big time, and that’s a very interesting development,” said Munger. But, he added, “at the moment, it’s imposing huge capital costs and huge risks—and I don’t like huge capital costs and huge risks.”
“Charlie and I for long have felt that the auto industry is just too tough,” Buffett said. “It’s just a business where you’ve got a lot of worldwide competitors, they’re not going to go away. And it looks like there are winners at any given time, but it doesn’t get you a permanent place.”
In February, Musk answered a Twitter user’s question about what Berkshire Hathaway should invest in, writing, “Starts with a T…”
Musk added, “Munger could’ve invested in Tesla at ~$200M valuation when I had lunch with him in late 2008.” Tesla’s market cap is now about $530 billion.
The Berkshire Hathaway conglomerate includes all kinds of companies—Duracell, Dairy Queen, and Fruit of the Loom are among the brands under its umbrella—but Buffett and Munger have never been especially enthusiastic about carmakers. It does own General Motors shares and one of the largest car dealers in the U.S., Berkshire Hathaway Automotive.
And in China, Berkshire Hathaway has invested in Tesla rival BYD. Earlier this year, Munger said it’s “almost ridiculous” how much BYD was beating Tesla in China, and he called BYD his best investment at Berkshire Hathaway. Musk has unleashed a price war in China.
Musk has also slashed Tesla prices in the U.S., forcing rivals to follow suit. Ford, for example, this week announced price cuts for the Mustang Mach-E, the bestselling EV last year not built by Tesla. That marked the second time this year that Ford cuts costs after Tesla did so.
Musk warned on an April 19 earnings call that he might be prepared to accept zero profit per vehicle sold, drawing swift backlash from investors worried about a damaging race to the bottom.
Buffett did express confidence in one carmaker this weekend. “I would say Ferrari is in a special place, but they only sell 11,000 or 12,000 cars a year,” he said. According to Reuters, the Italian luxury sports car maker reached 13,221 deliveries in a strong 2022.
“I think I know where Apple’s going to be in 5 or 10 years,” Buffett added, but “I don’t know what the car companies are going to be in 5 or 10 years.”
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
