Warren Buffett threw his weight behind US stocks yesterday as the man who has always invested his own money in government bonds revealed that he had recently switched most of his personal account into American shares.

In an editorial published in yesterday’s editions of The New York Times, Mr Buffett, the head of the Berkshire Hathaway investment group and the world’s richest man, acknowledged that the economic outlook was dire and described the financial world as being in a mess.

The man known as the Sage of Omaha, wrote: “Its problems, moreover, have been leaking into the general economy and the leaks are now turning into a gusher. In the near-term, unemployment will rise, business activity will falter and headlines will continue to be scary.”

Mr Buffett’s conclusion is to buy shares in US companies. “I have been buying American stocks. This is my personal account I am talking about, in which previously I owned nothing but US government bonds. If prices keep looking attractive, my non-Berkshire net worth will soon be 100 per cent in US equities.”

Although most of Mr Buffett’s wealth is tied up in Berkshire Hathaway, his personal investments are thought to run into tens, if not hundreds, of millions of dollars.

Berkshire Hathaway is in an enviable position, sitting on about $35 billion (£20 billion) of cash at a time when money is at a premium. Since the credit crunch took hold, the group has made three sizeable deals on attractive terms.

In April it helped Mars to finance a $23 billion takeover of Wrigley, the chewing-gum maker, for a cut-price 19 per cent stake. In September, it agreed to invest $5 billion in Goldman Sachs and has the option to buy $5 billion of new Goldman shares at any time over the next five years. It struck a similar deal with General Electric this month, buying $3 billion of its preferred shares with an option on a further $3 billion-worth.

Mr Buffett said that he had always had a simple investment philosophy: buy into well-known brands, with market-leading positions and the rest will take care of itself. His dramatic decision to change the personal investment habit of a lifetime and switch from bonds into shares, is based on a similarly simple idea. He can’t predict short-term movements of the stock market but it is likely that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up.

For Mr Buffett, 78, in a broad sense, past performance is a reliable indicator of future returns.

He said: “Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

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