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Warren Buffett Tells CNBC He Sees "Enormous Divergence" Ahead for Financials

Tuesday, 11 Dec 2007 | 7:48 PM ET

In a live interview with CNBC's Becky Quick a few minutes ago, Warren Buffett predicted "enormous divergence" ahead in the stock performance for financial companies. In response to a question about whether financials might be the best-performing stock sector next year, Buffett advised against buying financials as a group. He said some will do well but others have done some "really dumb things."

CLICK HERE FOR THE VIDEO AND TRANSCRIPT OF THE FIRST PART OF THE BUFFETT INTERVIEW

CLICK HERE FOR THE VIDEO AND TRANSCRIPT OF THE SECOND PART OF THE BUFFETT INTERVIEW


He also tells Becky that while there has been enormous weakness in housing, so far it hasn't been felt in the employment market. But, he says, there are a lot of "dominoes" that could fall in the economy should housing weakness spread. The result, he fears, could be a recession.

Oracle's Take on Financials
Billionaire investor Warren Buffett discusses the financial sector with CNBC's Becky Quick

As for sales at the retailers owned by his Berkshire Hathaway holding company, Buffett says they're not looking "buoyant" this holiday season, and he's not sure they'll beat last year's sales results. But he notes, it is the nature of capitalism to have recessions and he hopes to live long enough to see several more in the United States.

He recalls that he made some of his best stock buys during recessions, especially the downturn of 1974. but he says the current economic situation is nowhere near as bad as that one.

Buffett gave the Bush administration's plan to encourage lenders to freeze some variable interest rates a qualified endorsement, saying it isn't in anybody's interest to throw people out of a house if they continue to make the payments.

A reminder that CNBC.com will live stream today's Hillary Clinton fund-raiserhosted by Warren Buffett at about 3:30p ET and that Becky Quick will be interviewing Buffett and Clinton together, live at about 5:10p ET on Fast Money.

Questions? Comments? Email me at buffettwatch@cnbc.com

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