BUFFETT: Stocks won't look cheap if interest rates rise

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(REUTERS/Rick Wilking)

Stocks are definitely on the "high side of valuation," Berkshire Hathaway CEO Warren Buffett says.

Buffett was on CNBC's Squawk Box on Monday morning with Becky Quick in Omaha, Nebraska. Berkshire Hathaway held its annual investors conference this past weekend.

Quick asked Buffett what he thought of stocks and whether they were overvalued, a topic many investors like to hear about from Buffett specifically.

If low rates persist, Buffett said, stocks will look cheap.

"If interest rates normalize, we'll look back and say stocks weren't so cheap."

The Federal Reserve has kept short-term interest rates near zero for about seven years, and investors have pointed to this environment as being responsible for pushing stocks to record highs and to lofty valuations.

Buffett said the Fed and the European Central Bank had done the "right thing" with their handling of monetary policy.

He added that even though rates may rise soon, they would not rise significantly — definitely not near 4%, as they were before the Fed started slashing rates in 2007.

That, Buffett said, was because with negative rates in Europe, "this is a very unusual situation and I don't know how it plays out."

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(FRED)

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