Warren Buffett Remains Optimistic on America's Future

Warren Buffett explains why most American children will live far better than their parents

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Jan 08, 2018
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A great way to start the new year is to read a letter about America's bright future from none other than Berkshire Hathaway (BRK.A, Financial)(BRK.B, Financial) Chairman and CEO Warren Buffett (Trades, Portfolio). In a letter to TIME Magazine, Warren Buffett (Trades, Portfolio) explained why most American children will live far better than their parents and the improved standard of living will continue for generations.

The letter is truly a must-read if you ever felt pessimistic about America's future and also explains why Buffett is often very bullish on America's economy and stocks market. Each year he dedicates a section of Berkshire Hathaway's annual letter to this optimism. I don't think I have ever seen a Buffett interview in which he says to put your money elsewhere.

Even during the financial crisis of 2008, in which everything seemed so gloomy, he wrote an op-ed in the New York Times titled "Buy American: I Am," in which he said it was the time to purchase American securities. If you pull up a stock chart of the S&P 500, indeed it was a good time to purchase stocks. But if you read the news headlines at the time, it felt like we were in Armageddon. House prices were losing their value and families were losing their homes. Wall Street giants were going bankrupt, the Fed constantly held emergency meetings, global markets were collapsing, unemployment was on the rise. That was in the short term.

In the same article Buffett also said, "Most major companies will be setting new profit records five, 10 and 20 years from now." Here we are 10 years later and everything is rosy again. The stock market is at record highs, the unemployment rate near lows and corporate profits are at all-time highs, just like Buffett said they would be, 10 years ago.

Part of Buffett's optimism comes from America's ability to constantly innovate and find ways to boost productivity.

"This game of economic miracles is in its early innings. Americans will benefit from far more and better 'stuff' in the future," Buffett wrote.

But as the economy moves away from "general labor" and in the direction of "specialists" Buffett fears some children will be left behind and advises we take care of those left behind just like the rich take care of their own children.

"In the years of growth that certainly lie ahead, I have no doubt that America can both deliver riches to many and a decent life to all. We must not settle for less," he said.