Buffett’s Words Powerful Enough To Topple Stock Markets, Part Seas

“The economy has fallen off a cliff”. Thus spake Buffett in his lengthly CNBC interview that we looked at yesterday, and when Buffett speaks, the reverberations from his Midwestern drawl are felt around the world. This man’s words have a near-mystical power to effect change on the stock market.

After he expressed faith in America’s banks, shares in those banks rose, particularly in Wells Fargo, whose price jumped nearly 25% after Buffett said they would “come out fine”. Meanwhile, he prompted an increase in American Express, of which he owns 151.6m shares, by saying they were “going to be around forever”. The guy is acknowledging his awesome power and wielding it to shore up his portfolio. After announcing record losses last week, he knew something needed to be done – 3 hours of CNBC coverage later, and he’s right back in the game. Add that to his talk of convening with “animal spirits” and I think we may can presume he’s working on a higher plane.

Despite his rosy picture of an America coming together under the unity bred by strong, Buffett-backed banks, some clearly listened mostly to the doom and gloom at the beginning of his interview. Forbes suggests that both American and Asian stocks were adversely affected by his “cliff” comment; Bloomberg suggested it was the cause of disruption in the European stock market. Whether this is news companies trying to jazz up dry stocks stories with a bit of Buffett twinkle, or the stock markets really are aligned with Buffett’s moods, it’s not clear. But just the idea of a 78-year-old ukelele fan and collector of nuns fingerprints, surrounded by acres of soft furnishings, making pronouncements on the world economy that are not only listened to but devotedly acted upon, is so wonderfully weird that I really want it to be the real driving force behind the world economy.

Posted by Ben Beaumont-Thomas in Hot Money | March 10, 2009 11:40AM |