Warren Buffett can’t find anything to buy

Warren Buffett can't find anything to buy

Stocks not cheap says world's greatest investor

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published September 20, 2013 11:26 am AEST

The world's greatest and most well-known investor, Warren Buffett says he is struggling to find things to buy.

"The extent that QEIII is keeping interest rates lower than they would otherwise probably keeps asset prices higher," Buffett said in an interview on CNBC. "We don't find bargains around but we don't think that things are way overvalued either."

Buffett said share prices were ridiculously cheap in recent years, until the recent quantitative easing program by the US Federal Reserve helped push stocks up to record levels. While the US economy is improving, the QE stimulus had done more for the stock market than economic growth. That suggests that markets are overdue to fall, and likely will when the Fed begins its tapering program, unless the US economy improves dramatically before then.

Billionaire Carl Icahn agreed with Buffett, saying his portfolio was up 30% "for all the wrong reasons." "I think right now the market is giving you a false picture," Icahn said. "I don't think a lot of companies are doing that well. They're taking advantage of low interest rates."

Despite the record high levels, Buffett says while he can't find any bargains, he doesn't think that things are way overvalued either.

The US Dow Jones Industrial Average has risen more than 24% since November 2012, while the S&P 500 Index has soared more than 27%. Closer to home, the S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) is up a leisurely 17% over the same time period, mainly driven by the big four banks. National Australia Bank (ASX: NAB) is up an astounding 45% since November, while ANZ Bank (ASX:ANZ) and Westpac Banking Corporation (ASX: WBC) are up around 28%.

Foolish takeaway

Uncle Warren (Buffett) may be hoping for a stock market fall, so he can pick up some bargains. And that's exactly the mentality that Foolish investors need to consider adopting. Be brave when others are fearful, and take a positive view of a market fall as an opportunity to pick up stocks on sale.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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