Warren Buffett said stocks are still 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 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, the chairman and chief executive of Berkshire Hathaway Inc., said he'd rather own stocks than other options such as farmland, junk bonds, real estate trusts, or long-term government bonds.
Stocks are "not as cheap as they were four years ago" during the financial crisis and stock market sell-off, he said in an interview on CNBC. "But you get more for your money" compared to other investments.
He called long-term government bonds "the dumbest investment." Interest rates are much lower than usual. If they rise, bond investors could see the price of their bonds drop. That's because bond prices fall when interest rates rise.
Buffett has long been bullish on stocks. 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.
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 H.J. Heinz Co. Last month he agreed to work with 3G Capital to buy the company.
He noted that he bought his first stock in 1942 during World War II when the United States was losing the war in the Pacific.
Buffett said the automatic spending cuts that went into effect over the weekend are a "meat-ax way" to cut spending. But considering all the government spending and Federal Reserve cash infusions, spending probably has to be cut one way or another.
"You may have to use the meat ax first," he said, "and then people kind of look at their handiwork and say, 'We have to do better than this.' "