Warren Buffett has cautioned against stockpiling cash, gold, or bitcoin in times of war - and declared stocks are the safest long-term play

• Warren Buffett has advised against switching out stocks for cash, gold, or bitcoin during wars.
• The Berkshire Hathaway CEO favors productive businesses over dollars, crypto, or haven assets.
• Buffett touted Russia's invasion of Ukraine in 2014 as a buying opportunity for long-term investors.

Warren Buffett has cautioned against dumping stocks, hoarding cash, and buying gold or bitcoin when war breaks out, as he believes investing in businesses is the best way to build wealth over time.

The billionaire investor and Berkshire Hathaway CEO told CNBC in March 2014 that Russia's invasion of Ukraine at the time wouldn't spur him to sell any stocks.

"If stocks are cheaper, I'll be more likely to be buying them," he said, celebrating the fact that a stock he was actively buying had dropped in price. The investor added that he wouldn't cash out even if the conflict escalated into another cold war or World War III.

"Well, if you tell me all of that is going to happen, I will still be buying the stock," he said. "You're going to invest your money in something over time. The one thing you could be quite sure of is if we went into some very major war, the value of money would go down.

"I mean, that's happened in virtually every war that I'm aware of," Buffett continued. "So the last thing you'd want to do is hold money during a war."

Buffett, who has said he avoids doing business in Russia after running into problems there, emphasized that the US stock market rose during World War II and had marched higher over time.

"American businesses are going to be worth more money," Buffett said. "Dollars are going to be worth less, so that money won't buy you quite as much.

"But you're going to be a lot better off owning productive assets over the next 50 years than you will be owning pieces of paper, or I might throw in bitcoins," he added.

Betting on America

Buffett bought his first stock at age 11 in the spring of 1942, when the US was suffering heavy losses in World War II, he recalled in his shareholder letter for 2018.

He swapped his $115 in savings for three shares of Cities Service. If he'd invested that sum in a no-fee S&P 500 index fund and reinvested all the dividends, he said, it would have been worth $607,000 by 2019 — a 5,288-fold gain.

In contrast, he said, if he had panicked and bought $115 worth of gold, its value would have grown to only $4,200.

"All you had to do was figure that America was going to do well over time, that we would overcome the current difficulties," he said at Berkshire's annual shareholder meeting in 2018 about investing in an index fund in 1942.

"You didn't have to pick out winning stocks," he continued. "You didn't have to pick out a winning time or anything of the sort. You basically just had to make one investment decision in your life."

Buffett reiterated his faith in America's long-term prospects during Berkshire's 2020 meeting.

"I was convinced of this in World War II. I was convinced of it during the Cuban Missile Crisis, 9/11, the financial crisis — that nothing can basically stop America," he said, adding, "We faced tougher problems, and the American miracle, the American magic, has always prevailed, and it will do so again."

Buffett acknowledged that the Civil War, the Great Depression, and the COVID-19 pandemic disrupted US progress, but he argued that the country always comes out ahead. "Never bet against America," he said.

Read more: Warren Buffett's Berkshire Hathaway is facing rampant inflation and interest-rate hikes. Veteran analyst Luis Torras breaks down how it will conquer those challenges — and says many investors will succumb to them.