The One Investment Warren Buffett Can't Figure Out
Is Warren Buffett Becoming a Prepper?
One of the richest people in the world is offering his opinion on the greatest threats to the global economy. Warren Buffett is telling the public what he sees as the major threats to Americans, yet he has little in the way of solutions to deal with them.
Buffett has termed these threats “CNBC”. Perhaps there is some irony, given that Buffett is considered by many to be the greatest investor ever. But Buffett is not referring to the financial cable station when he says “CNBC”.
Instead, this term is an acronym for cyber, nuclear, biological, and chemical attacks. He sees these four things as the greatest threats to the American way of life and the entire global economy.
While I have many disagreements with Buffett when it comes to economics and politics, on this I think he is right. There is probably a fifth thing you could add, and that is big government, but we already live with that and that is something that Buffett tends to promote.
Obviously the nuclear threat is the biggest. If there were an all-out nuclear war between the U.S. and another major power such as China or Russia, then this could literally mean the end of the world. The U.S. alone possesses far more nukes than it would take to destroy the planet many times over.
Luckily, tensions are not as high now as they have been in the past. Think about the Cuban Missile Crisis in the early 1960s. There were other close calls with the Soviets, and I’m not sure that many people realize just how thankful they should be that there was not a nuclear war.
This is a controversial topic, but I’m not sure why so many people freak out when Donald Trump says he wants to talk to Putin. It doesn’t mean that we have to subsidize Putin and his government (as is done with Saudi Arabia). It doesn’t mean we have to be best friends with the guy. It just means some diplomacy in avoiding a major war. This is not a bad thing.
There is always a threat of some rogue group getting a hold of nuclear weapons. While this would be bad, some terrorist organization is not going to destroy the world. They could inflict some damage and cause a lot of fear, but it wouldn’t be the end of the world.
This is the same case with cyber attacks, biological attacks, and chemical attacks. It might be theoretically possible to end all human life with a virus, but it is highly unlikely. An attack would probably be more local. Again, it would cause a lot of fear, which in itself would hurt economic activity, but it wouldn’t mean the end of the world.
As for a cyber attack, it would not cause people to stay home from work. There are already cyber attacks. They can cause disruptions and be expensive, but they are not life changing for most people.
Preparing for Disaster
Even though I think Buffett gets many things wrong, there is little question that he is a smart guy. I don’t know if he has any motivations for pointing out these threats, but they are certainly worth considering.
When Buffett brought up this topic during a Q&A session at Berkshire Hathaway’s annual shareholder meeting, he wasn’t referring to such attacks as a remote possibility.
In a letter to shareholders, Buffett said, “If there is only one chance in 30 of an event occurring in a given year, the likelihood of it occurring at least once in a century is 96.6%.”
Buffett is typically very conventional with his words. He may be going a little outside the mainstream with such comments. Before you know it, the prepping community is going to be quoting Buffett and egging him on to offer more such comments.
I don’t think Buffett is what you would call a prepper. I don’t consider myself a “prepper” by today’s standards, but there is something to be said for being prepared.
If there is some huge disaster that completely breaks down our high division of labor society, then almost everyone will be in trouble. Even if you have a couple of months worth of food saved up, what are you going to do after that? Even for those who live in the country, you better hope you don’t get sick and need antibiotics, or that you wear out your last pair of shoes. Believe me, the list can get very long of what we take for granted.
Still, I think it is wise to be prepared for disruptions. This could be a weather disruption, rioting (for city people), or even one of the events that Buffett talked about. You should be able to survive comfortably in your home for a couple of weeks without having to leave. This is really just common sense.
While Buffett is justified in stating what he sees as the biggest threats, it is a little scary that someone with his resources really has no clue in taking even a first step in preventing such attacks. He basically admits that he doesn’t know of a good way to reduce the probability of such an attack.
While there isn’t much any of us can do to stop such an event, just being aware of the possibilities can go a long way. We shouldn’t live our lives in fear. But similar to other risks in life, sometimes it is a good idea to have insurance.
In the case of a “CNBC” type attack, we should be prepared to stay at home until the disaster settles down. If the trucks stop delivering food to the grocery stores for an extended period of time, then more than 99% of Americans are in major trouble.
You will have to change your lifestyle if you think it will be months of the trucks not delivering food. I am not necessarily recommending this. But it is a good idea to prepare for a week or two without a trip to the grocery store. Maybe Buffett would agree with this.
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