Billionaire Warren Buffett is increasing his bet against the US dollar and seeking acquisitions because he sees no bargains in US stocks and wants to "rapidly deploy" Berkshire Hathaway Inc's US$36 billion in cash.
"Our hope is we can deploy the money in businesses that are just as good as the ones we have," Buffett, 73, told a crowd of 19,500 people this weekend at Berkshire's annual shareholder meeting near its headquarters in Omaha, Nebraska. "We think the odds are good that we will."
PHOTO: AP
Buffett, Berkshire's chairman, said the US Federal Reserve may be keeping interest rates too low and the trade deficit is swelling, hurting the dollar even as the US economy expands.
Buffett this weekend said he increased his investment in foreign currencies by "more than a little bit" this year from US$12 billion at year-end.
"We think that over time that the dollar is likely to decline in value against some of the major currencies," Buffett, the world's second-richest man, said in an interview before the annual meeting.
The foreign currency investments don't signal a greater focus by Berkshire on overseas acquisitions, Buffett said. He has doubled his money to about US$1 billion by investing in Hong Kong-listed PetroChina Co. He met earlier this year with foreign Berkshire holders for the first time.
"We've had no luck in Germany, the UK or any other country with someone picking up the phone and saying that `I have a business that requires a lot of capital and would you be interested in acquiring us.' They know the name but it doesn't jump out of their mind like it does in the United States," he said.
The foreign exchange purchases are Buffett's biggest investment in the last two years. Buffett started betting against the dollar in 2002 on concern that the US trade deficit would erode the value of the currency. The dollar has dropped about 6 percent against the euro in the past 12 months.
Buffett said the US Federal Reserve probably should raise interest rates as the economy and inflation pick up.
"They've perhaps been a little slow in terms of moving up because the economy has heated up considerably," he said.
"People are passing along price increases. It gets into housing.
"Housing doesn't get into the CPI much, but it gets into people's pockets. You get feedback effects with labor costs, and a ball gets rolling that is hard to stop," he said.
Buffett said he has become an economic adviser to Democratic presidential contender John Kerry. He said President George W. Bush's tax cuts are "tilted toward the rich."
"I support John Kerry," Buffett said. "I've got way more money in my pocket because of the tax change and I don't think it's a good idea."
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