Buffett speaks: Stocks a good buy; ketchup is forever

(AP) Warren Buffet says stocks are a good investment, long-term government bonds are a dumb one, and ketchup is forever.

The billionaire investor covered a range of topics in a CNBC interview on Monday, including his purchase of ketchup maker Heinz, the “meat ax” of automatic budget cuts, and what’s going to happen when the Federal Reserve stops pumping money into the economy.

Buffett has long been bullish on stocks, and still is. But they’re likely to be hurt when interest rates rise, he said. Cheap loans make it easy to get money to invest. And low returns on bank savings make stocks more attractive.

Buffett predicted that those low interest rates won’t go on forever. “If interest rates go up dramatically, all assets will go down in value,” he said.

Buffet says he’d still rather own stocks than other options such as farmland, junk bonds, real estate trusts, or long-term government bonds. He called long-term government bonds “the dumbest investment.”

Buffett said that in 50 years of deciding whether to buy companies, he has never taken long-term economic worries into account. That includes his recent deal to buy Heinz. Last month he agreed to work with 3G Capital to buy the H.J. Heinz Co. for $23.3 billion. Buying a company cheaply enough means that future economic shocks won’t wreck a deal. He predicted that Berkshire Hathaway will own Heinz 100 years from now. “Heinz is forever, as far as we’re concerned,” he said.