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Europe's road to recovery filled with pain: Buffet

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Warren Buffett says that Berkshire Hathaway is buying shares in two US companies and will continue to buy them on Monday. He adds that Europe will solve its problems, but not without some "pain".

Warren Buffett says that Berkshire Hathaway is buying shares in two US companies and will continue to buy them on Monday, especially if they become cheaper in Monday's global stock sell-off. As usual, he's not naming those stocks, but does say they are names that are already in the Berkshire portfolio.

Buffett also says Europe will solve its problems, but not without some "pain".  He's not surprised by the results of European elections over the weekend, saying they highlight how hard it is to get 17 countries to agree, especially when people are being asked to vote for austerity measures.

Buffett spoke live on CNBC's "Squawk Box". Also watch the accompanying video

Buffett says Berkshire spent about USD 60 million on the stocks on Friday.  He tries not to buy more than 10% of a stock's trading volume in any one day.

His advice over the years hasn't changed: "don't buy or sell stocks based on the day's headlines.  Buy stocks because they represent a good long-term value". "I think equities are very attractive for the long term," he says, but he has no idea if they'll go up or down in price in the coming weeks and months.

Is he against "high-speed trading?"  Buffett says he's against "active trading of any kind". You can't know exactly when to buy or sell stocks, he thinks.  "The time to buy stocks is consistently over time."

Buffett also says Europe will solve its problems, but not without some "pain".  He's not surprised by the results of European elections over the weekend, saying they highlight how hard it is to get 17 countries to agree, especially when people are being asked to vote for austerity measures.

Still, Europe will not be going away, he says.  It's a "huge" market that will grow. Buffett thinks the US is on a "different path," with its bank problems already addressed.

He sees the US economy continuing to improve, but at a very slow pace.  He doesn't expect major gains until residential construction comes back.  That will happen, he says, eventually, but he doesn't know when.

He also doesn't know a good way to do a large-scale investment in single-family homes, although he still expects they'll be going up in value.   Funds that invest in homes will do well for the fund managers, but he's not so sure investors will benefit as much.

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Buffett on Gold

After repeating his regular argument that gold is an unproductive asset that will be outperformed by stocks, or even farmland, over the long run, Buffett does acknowledge that gold fans are "right" to be afraid of paper money.

They have a "correct basic premise" that paper money will be worth less in coming years. He disagrees with them on the strategy of buying gold to avoid that decline in value.  "Where they run from that, and they should run from it, is, in my view, where they make their mistake."

Buffett also notes that many gold buyers are emotional about the metal, and want other people to agree with them and be as "scared" as they are since more buying boosts its price.

"They want everybody to be so scared they run to a cave with gold.  Caves might be a better investment than gold.  At least they're not producing new caves all the time".

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Buffett would like to see the US reduce spending and increase revenues to start reducing its deficit, but he sees big political barriers to that in Washington.

Buffett on Wal-Mart

Buffett says Mexican bribery allegations at Wal-Mart, a Berkshire holding, don't affect his view of the stock.

Yahoo

Buffett tells Becky he doesn't know too much about the revelation that Yahoo  made an "inadvertent mistake" by including a non-existent college degree on CEO Scott Thompson's resume, but said he would "do something" if something was misrepresented to him over a period of time.

Buffett's 'Mistake'

As he has in the past, Buffett admits that he made a mistake in buying shares of ConocoPhillips  for Berkshire, saying he has no special insight into the future movements of oil prices.