Article by Warren Buffett on why he's investing now

[LDFerguson]

Here's a link to an article in today's New York Times by Warren Buffett, detailing why he's investing heavily in US shares at the moment, to the point that he expects that 100% of his personal fortune will shortly be invested 100% in equities.

Bear in mind that this is a man who has been a professional investor for over 60 years, making him the richest man on the planet.

http://www.cnbc.com/id/27231171/

 

[Jim Davis]

Excellent piece. Pity you cant share it on facebook.

It reminds me of when Mark Shipman was on the late late and he said he knew it was time to get out of property when his postman had told him he had bought his second property.

 

[johnnygman]

I am a firm believer in equity investing for the long term and respect the knowledge and wealth that this man has acumulated. but i find his piece overly simple and lacks no real direction but to plough into equities regardless, obviously its difficult if not impossible to time the markets but wouldnt even the most optimistic person see further downside at present before a recovery appears on the horizon? i still feel that holding on for at least 6 month still some clear signals of recovery become apparent and the market has more solid fundamentals to kick start any type of recovery? although i admit i am somewhat contradicting myself, perhaps its as Warren says regarding fear :O)

 

[woods]

He has already bought and it would suit him if all the rest of us followed as this would bring the price up and make him money. He is chasing too much publicity on this move. He seems to be on lots of channels and newspapers spreading his message.

 

[GOBSTOPPER]

"Be fearful when others are greedy ,and be greedy when others are fearful " he's only living by his rule . Putting his money where his mouth is ,what a legend !

 

[LDFerguson]

Of course, cute ol' sage that he is, he doesn't specify in the article which shares he's buying, although a few big trades have become public knowledge.

 

[Simeon]

Getty's 'Buy when everybody is selling and sell when everyone is buying' is another variation.

 

[GeneralZod]

Interesting to note that all of his personal funds were in US government bonds. No subscribing by the pro Buffett to the myth of buying and holding on to equities through market downturns. I only wish the genius fund managers taking hefty commissions while they run down the typical Irish pension fund were half as prescient.

 

[Chris]

Interesting to note that all of his personal funds were in US government bonds. No subscribing by the pro Buffett to the myth of buying and holding on to equities through market downturns. I only wish the genius fund managers taking hefty commissions while they run down the typical Irish pension fund were half as prescient.

You're missing one crucial point: 99% of Buffett's actual wealth is in Berkshire Hathaway stock, but all of this will be drip-fed to charities over the coming years. What he refers to as his personal wealth is the 'small' amount of bonds that he holds/held, and is now investing in stocks.

Of course, cute ol' sage that he is, he doesn't specify in the article which shares he's buying, although a few big trades have become public knowledge.

Only stock acquisitions over a certain size (note sure how much) need to be be made public, these can all be looked up on the SEC's EDGAR web-site.

 

[limerickboy1]

it is his own personal wealth he is buying stocks with but that is 500 million dollars. by the way buffet readily admits he is very bad at buying at the bottom, he is always early.

 

[Markjbloggs]

Before you all go canonising Mr Buffett, have a look to what Berkshire has done for the past decade -

http://bigcharts.marketwatch.com/pr...rl=/advchart/frames/main.asp&prms=qcd&sid=817

Depending on your starting point, you could say it has "doubled" in 10 years, annualised that makes 7-8%. Not bad, but not that much better than the market as a whole. Also, some of his more recent deals involve putting the likes of GS over a barrel and getting a much better purchase price than would be on offer to a "normal" investor.

"Be fearful when others are greedy ,and be greedy when others are fearful " he's only living by his rule . Putting his money where his mouth is ,what a legend !

 

[galwegian44]

Buffet is already down by hundreds of millions in his recent foray into the stock market (GE and GS) but I'm sure he is not too worried as they will correct over the long term.

Even Buffet will say that he cannot time the markets and investors should not worry unduly about this. When doing your due diligence just ensure that the company's fundamentals point towards a strengthening company (and future growth) in relation to price, purchase and just wait. If the price continues to drop don't worry, you can be relaxed knowing your research has paid off and it will eventually rebound.

Whether you buy at $20 and then see it drop to $15 (buying early) or wait for the bottom and see it rise again to $20 (buying late) is immaterial. You can get lucky and buy at $15 but it is pure luck.

There are great opportunities out there right now.

I am a firm believer in equity investing for the long term and respect the knowledge and wealth that this man has acumulated. but i find his piece overly simple and lacks no real direction but to plough into equities regardless, obviously its difficult if not impossible to time the markets but wouldnt even the most optimistic person see further downside at present before a recovery appears on the horizon? i still feel that holding on for at least 6 month still some clear signals of recovery become apparent and the market has more solid fundamentals to kick start any type of recovery? although i admit i am somewhat contradicting myself, perhaps its as Warren says regarding fear :O)

 

[johnnygman]

Buffet is already down by hundreds of millions in his recent foray into the stock market (GE and GS) but I'm sure he is not too worried as they will correct over the long term.

Even Buffet will say that he cannot time the markets and investors should not worry unduly about this. When doing your due diligence just ensure that the company's fundamentals point towards a strengthening company (and future growth) in relation to price, purchase and just wait. If the price continues to drop don't worry, you can be relaxed knowing your research has paid off and it will eventually rebound.

Whether you buy at $20 and then see it drop to $15 (buying early) or wait for the bottom and see it rise again to $20 (buying late) is immaterial. You can get lucky and buy at $15 but it is pure luck.

There are great opportunities out there right now.

Exactly why you are quoting me at the bottom of your piece i am unsure?
I gave my opinion for what its worth, if people feel what Warren's doing at present is worthwhile then so be it, but i am far from convinced about the value that is out there at present if i am looking for value in the medium term, in simple, i feel further downside to come, and would not suggest that it is luck taking a position to hold off, obviously impossible to be sure when or if we have reached the bottom, but its a calculated risk in determining what level of value you percieve or will be bourne out to prove this decision correct or incorrect.
From what you are saying the same analagy could be used in relation to the Irish housing market in that it has fallen and there is good value which of course will rise over time, but like the markets is it not fairly plain to be seen that there is further dowside risks which greatly outweight the upside. This is just my opinion of course which i made clear.
I take on board your point re research and values which of course are sound for the longer term and anyone investing should always stick by these principles if you dont then your are just gambling and have no reason for expecting a price increase/profit.

 

[galwegian44]

Johnny - just a tenuous link to the comment about when to 'time' the market. Imo, the gamblers are trying to time their entry points (not insinuating you are one of these) as against the investors who are looking at fundamentals and not worrying if their investment in stocks continue to drop in the short term.

I definitely think there is value out there right now, which is not to say that 3 months from now I would not get a better deal. I do agree with you though that the market as a whole will still drop as the overall P/E ratio for the S&P will increase again next year as total corporate earnings get downgraded and disappoint. The next bull run will not start with market average P/E rates in the low 20's.

Exactly why you are quoting me at the bottom of your piece i am unsure?
I gave my opinion for what its worth, if people feel what Warren's doing at present is worthwhile then so be it, but i am far from convinced about the value that is out there at present if i am looking for value in the medium term, in simple, i feel further downside to come, and would not suggest that it is luck taking a position to hold off, obviously impossible to be sure when or if we have reached the bottom, but its a calculated risk in determining what level of value you percieve or will be bourne out to prove this decision correct or incorrect.
From what you are saying the same analagy could be used in relation to the Irish housing market in that it has fallen and there is good value which of course will rise over time, but like the markets is it not fairly plain to be seen that there is further dowside risks which greatly outweight the upside. This is just my opinion of course which i made clear.
I take on board your point re research and values which of course are sound for the longer term and anyone investing should always stick by these principles if you dont then your are just gambling and have no reason for expecting a price increase/profit.

 

[johnnygman]

Point taken m8, though i did clearly say it was/is impossible to time the market & am aware of the contradiction my article somewhat makes...
Maybe i might be better of gambling after the last 6 months my funds have experienced :O)