One of the most successful investors in history released his annual letter to Berkshire Hathaway stockholders this week.
On CNBC this morning, Warren Buffett mentioned and praised Berkshire property BNSF Railroad saying we were coming off a bad year and we ran the railroad a lot better last year than the year before. However, he says the rail business isn’t what it used to be.
Buffett stated it is highly likely that all U-S railroads will have lower earnings that last year – and last year was disappointing for most of them. He says not as many carloads are moving and the big culprit is coal.
Buffett told CNBC, “What partly happened was our service got bad a couple years ago, a year and a half or whatever it was and utilities got very worried about their stockpiles coming down so perhaps they over compensated a little bit and wanted to make sure that didn’t happen again. Coal piles are high at utilities but even leaving out that factor coal usage is going down with utilities. Many utilities can shift between natural gas and coal with a lot of their generation and natural gas prices being what they are hurts coal a lot.”
Buffett also talked to CNBC this morning about timing stocks, which is never a good idea. He says you should never look at the next six months and try to decide if now is the time to buy. He says you need to look at what the asset will likely produce over time and what you have to pay for it. He says this especially true if you are looking at buying a farm, an interest in a local business or an apartment building.