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Buffett: stocks 'overvalued'
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March 17, 1997: 7:43 a.m. ET
Despite 'overheated market,' the legendary investor isn't selling
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NEW YORK (CNNfn) - Legendary investor Warren Buffett, the chairman of Berkshire Hathaway, said in his annual letter to shareholders he thinks that most stocks are overvalued.
"The overpayment risk surfaces periodically and, in our opinion, may now be quite high for the purchasers of nearly all stocks," he said.
He added, "Investors making purchases in an overheated market need to recognize that it may often take an extended period for the value of even an outstanding company to catch up with the price they paid."
Buffett indicated that such overvaluation might apply to some of the stocks in which Berkshire owns big stakes. But he said he had no intention of selling them.
Excluded in his letter were the shares of his own company, and Berkshire's latest annual report shows that he has been loading up on shares of McDonald's Corp.
At the end of last year, Berkshire owned 30.2 million shares of McDonald's, or a 4.3 percent stake in the fast-food giant.
Berkshire owns more than 10 percent of American Express and Washington Post Co., and more than 8 percent of Coca-Cola, Gillette, Federal Home Loan Mortgage Corp. and Wells Fargo.
It also holds more than 3 percent of Walt Disney.
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