"Equities are still cheap relative to any other asset class," Buffett said. In his letter, he devoted two pages to explaining why he prefers owning a piece of a productive business instead of bonds or gold.
Single-family houses are another attractive investment at current prices, Buffett said. He added he might buy a couple hundred thousand homes if only he could figure out a way to manage them effectively. He said he isn't very handy.
Buffett conceded in his letter released Saturday that he was dead wrong to predict the housing market would recover by now. He said Monday that he believes conditions will improve in 2012.
The reports Buffett gets from Berkshire's roughly 80 subsidiaries, including utility, insurance, retail and railroad firms, show the overall economy has been steadily improving since the summer of 2009 in every area except businesses related to housing construction. In Utah, Berkshire owns Rocky Mountain Power and home furnisher RC Willey.
Over the weekend, Buffett created a stir by writing that Berkshire's board had chosen someone to succeed him as CEO someday with two backup candidates. Previously, Buffett had said only that the board had three internal candidates to replace him.
None of the CEO candidates have been identified, and Buffett said Monday that the likely successor doesn't know he would be the board's pick.
Buffett said Monday that the new language he used to describe the succession plan in his annual letter to Berkshire shareholders wasn't a sign of change but was only trying to clarify the plan.
Buffett, who is 81, said he doesn't think investors should worry that much about who will replace him. He pointed out that Berkshire owns sizeable stakes of more than 5 percent of Coca-Cola Co., International Business Machines Corp., American Express Co. and Wells Fargo & Co., yet he has no idea who would replace the CEOs of those companies.
Buffett was also asked about the media industry because Berkshire just bought a second newspaper last fall to go along with its sizeable stake in the Washington Post Co. Monday's interview was conducted in front of the presses for Berkshire's newest paper, the Omaha World-Herald.
Buffett says newspapers face challenges because of competition from Internet news sources and the rising cost of newsprint, but they will have a decent future if they continue delivering information that can't be found elsewhere. And they need to stop offering news free online.
"You shouldn't be giving away a product you're trying to sell," he said.
Buffett weighs in
Taxes • Reiterated his call for tax reforms and a higher tax rate for wealthy investors such as himself.
Europe • Debt problems remain a concern because countries "gave up right to print their own money."
Newspapers • They have a decent future if they stop giving away a product they're trying to sell.
Succession • He says investors shouldn't worry any more about his replacement than they do other CEOs.
Housing • With homes so cheap, he might buy thousands if only he could figure out a way to manage them.
Stocks • "Equities are still cheap relative to any other asset class," including bonds, gold or cash.