Warren Buffett recommends buying U.S. stocks


B

beliavsky

I am posting this for discussion and do necessarily agree.

http://www.nytimes.com/2008/10/17/opinion/17buffett.html
Buy American. I Am.
By WARREN E. BUFFETT
Published: October 16, 2008

THE financial world is a mess, both in the United States and abroad.
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.

So ... I’ve been buying American stocks. This is my personal account
I’m talking about, in which I previously owned nothing but United
States government bonds. (This description leaves aside my Berkshire
Hathaway holdings, which are all committed to philanthropy.) If prices
keep looking attractive, my non-Berkshire net worth will soon be 100
percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy,
and be greedy when others are fearful. And most certainly, fear is now
widespread, gripping even seasoned investors. To be sure, investors
are right to be wary of highly leveraged entities or businesses in
weak competitive positions. But fears regarding the long-term
prosperity of the nation’s many sound companies make no sense. These
businesses will indeed suffer earnings hiccups, as they always have.
But most major companies will be setting new profit records 5, 10 and
20 years from now.

Let me be clear on one point: I can’t predict the short-term movements
of the stock market. I haven’t the faintest idea as to whether stocks
will be higher or lower a month — or a year — from now. What is
likely, however, is that the market will move higher, perhaps
substantially so, well before either sentiment or the economy turns
up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41,
on July 8, 1932. Economic conditions, though, kept deteriorating until
Franklin D. Roosevelt took office in March 1933. By that time, the
market had already advanced 30 percent. Or think back to the early
days of World War II, when things were going badly for the United
States in Europe and the Pacific. The market hit bottom in April 1942,
well before Allied fortunes turned. Again, in the early 1980s, the
time to buy stocks was when inflation raged and the economy was in the
tank. In short, bad news is an investor’s best friend. It lets you buy
a slice of America’s future at a marked-down price.

<rest at link>

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J

joetaxpayer

I am posting this for discussion and do necessarily agree.
You have a typo here? Sounds like you meant to say " don't ".
Joe

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P

PeterL

I am posting this for discussion and do necessarily agree.

http://www.nytimes.com/2008/10/17/opinion/17buffett.html
Buy American. I Am.
By WARREN E. BUFFETT
Published: October 16, 2008

THE financial world is a mess, both in the United States and abroad.
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.

So ... I’ve been buying American stocks. This is my personal account
I’m talking about, in which I previously owned nothing but United
States government bonds. (This description leaves aside my Berkshire
Hathaway holdings, which are all committed to philanthropy.) If prices
keep looking attractive, my non-Berkshire net worth will soon be 100
percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy,
and be greedy when others are fearful. And most certainly, fear is now
widespread, gripping even seasoned investors. To be sure, investors
are right to be wary of highly leveraged entities or businesses in
weak competitive positions. But fears regarding the long-term
prosperity of the nation’s many sound companies make no sense. These
businesses will indeed suffer earnings hiccups, as they always have.
But most major companies will be setting new profit records 5, 10 and
20 years from now.

Let me be clear on one point: I can’t predict the short-term movements
of the stock market. I haven’t the faintest idea as to whether stocks
will be higher or lower a month — or a year — from now. What is
likely, however, is that the market will move higher, perhaps
substantially so, well before either sentiment or the economy turns
up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41,
on July 8, 1932. Economic conditions, though, kept deteriorating until
Franklin D. Roosevelt took office in March 1933. By that time, the
market had already advanced 30 percent. Or think back to the early
days of World War II, when things were going badly for the United
States in Europe and the Pacific. The market hit bottom in April 1942,
well before Allied fortunes turned. Again, in the early 1980s, the
time to buy stocks was when inflation raged and the economy was in the
tank. In short, bad news is an investor’s best friend. It lets you buy
a slice of America’s future at a marked-down price.

<rest at link>

"Be fearful when others are greedy. Be greedy when others are
fearful."

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B

beliavsky

You have a typo here? Sounds like you meant to say " don't ".
Joe
You are correct. Sorry for the typo.

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D

dapperdobbs

I agree that today is a better buying opportunity than last November
for the majority of stocks, and we may indeed be watching a market
that has discounted the kitchen sink and the family pet, as well. I'm
curious as to your definition of American stocks though.

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W

Will Trice

I am posting this for discussion and do necessarily agree.

http://www.nytimes.com/2008/10/17/opinion/17buffett.html
Buy American. I Am.
By WARREN E. BUFFETT
Published: October 16, 2008
I absolutely love the restaurant sign mentioned at the end of the article...

:)

-Will

william dot trice at ngc dot com

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W

Will Trice

dapperdobbs said:
I'm
curious as to your definition of American stocks though.
Do you think Buffett has a weird definition of "American"?

-Will

william dot trice at ngc dot com

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D

dapperdobbs

Do you think Buffett has a weird definition of "American"?

-Will
I don't know what his definition of American is. The NY Times requires
log-in and I didn't read the article. Maybe See's Candy sells
domestically only (I don't know), but American Express certainly has a
worldwide presence. What is his definition of American? I didn't mean
to sound offensive.

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I

Igor Chudov

The amount of money that is currently planned to be spent on
"stimulating" the economy is estimated to be approximately 1/3 of
GDP. That amount is, of course, subject to revision, probably
upwards.

(I believe that the US has decided to inflate itself out of its debt,
government and consumer. It is unspoken, yet, but may prove to be the
case).

As Buffett is pointing out, this stimulation will likely prove
inflationary and, therefore, holding cash may be costly. What we have
seen is that, first, those who invested in homes lost money, then
those who invested in stocks lost money, and then now those who hold
cash will lose also. We'll be collectively poorer afterwards.

So far Buffett has been right about more or less everything. So I put
my money where Buffett's mouth is and I will move quite a bit of my
cash (I was 75-80% cash prior, not counting my Berkshire shares) into
stocks. I already did so with all cash of my 401(k).

i

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H

honda.lioness

Igor Chudov said:
So far Buffett has been right about more or less everything.
He is celebrated as a messiah, I think because this sells copy for the
media.

The truth is he has made some pretty large mistakes. To his credit,
and perhaps what makes him pretty successful, is that he tries to
admit his mistakes. He may be right that this is a good time to buy.
Yet many are saying this. I am not impressed when it comes out of
Buffett's mouth too. I would put more faith in the collection of
sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately I
put the greatest faith in the realities of economies: It is human
nature to want to make life easier. Technologies develop as a result.
Plus the population grows. In the long run, betting on stocks is a bet
on the nature of economies.

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W

Will Trice

dapperdobbs said:
I don't know what his definition of American is. The NY Times requires
log-in and I didn't read the article. Maybe See's Candy sells
domestically only (I don't know), but American Express certainly has a
worldwide presence. What is his definition of American? I didn't mean
to sound offensive.
Not to worry, you didn't sound offensive - to me anyway. The link B
posted does not require a login to read the article. It appears that
Buffett means "American" in the broadest sense: incorporated in the U.S.
So both See's and Anerican Express would qualify.

-Will

william dot trice at ngc dot com

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I

Igor Chudov

He is celebrated as a messiah, I think because this sells copy for the
media.
I think that a more proper term would be "oracle".
The truth is he has made some pretty large mistakes. To his credit,
and perhaps what makes him pretty successful, is that he tries to
admit his mistakes. He may be right that this is a good time to buy.
Yet many are saying this. I am not impressed when it comes out of
Buffett's mouth too. I would put more faith in the collection of
sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately
I put the greatest faith in the realities of economies: It is human
nature to want to make life easier. Technologies develop as a
result. Plus the population grows. In the long run, betting on
stocks is a bet on the nature of economies.
I would love to know more about what their recommendations are.

To me, betting on anything is a lot safer when the price is cheap,
than when it is expensive.

Personally, I hate losing money even more than I like making money, so
I am glad that I did not lose anything in 2001 and 2008, yet.
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http://improve-usenet.org/

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D

dapperdobbs

Not to worry, you didn't sound offensive - to me anyway.  The link B
posted does not require a login to read the article.  It appears that
Buffett means "American" in the broadest sense: incorporated in the U.S.
  So both See's and Anerican Express would qualify.

-Will
Thanks for the definition. Wanted to make sure I wasn't misinterpreted
as sarcastic (which I did not intend). Many of the great American
corporate names have half of their business overseas, the bulk of that
half in Europe, but with increasing expansion plans for the Far East.
(I did try B's link again, and got the log-in page.)

Isn't it nice to have a garage sale of stocks? :) PG, UTX, FAST, DD,
IR, EMR, even D ... I've been rummaging around looking for the ones
that aren't too used or broken. Just wish the seller would get those
hand-scrawled pricing stickers sorted out ... XOM jumps around almost
10% a day.

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I

Igor Chudov

He is celebrated as a messiah, I think because this sells copy for the
media.

The truth is he has made some pretty large mistakes. To his credit,
and perhaps what makes him pretty successful, is that he tries to
admit his mistakes. He may be right that this is a good time to buy.
Yet many are saying this. I am not impressed when it comes out of
Buffett's mouth too. I would put more faith in the collection of
sentiments expressed by Robert Shiller and Jeremy Siegel. Ultimately I
put the greatest faith in the realities of economies: It is human
nature to want to make life easier. Technologies develop as a result.
Plus the population grows. In the long run, betting on stocks is a bet
on the nature of economies.
I had a second look at his book. I have not read it and bought it at
Amazon a few minutes ago. This guy's website is very insistent on
selling, signing up people and generally self promotion, which is a
turn off for me.

I will read his book and will try to see if I can make any comments.

Personally, I never trusted the "buy stocks at any price" theory,
especially when it is believed by too many people.

--
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P

PeterL

I had a second look at his book. I have not read it and bought it at
Amazon a few minutes ago. This guy's website is very insistent on
selling, signing up people and generally self promotion, which is a
turn off for me.
Whose book are you talking about?

I will read his book and will try to see if I can make any comments.

Personally, I never trusted the "buy stocks at any price" theory,
especially when it is believed by too many people.

But buy stock at the right price is an excellent theory.

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I

Igor Chudov

Whose book are you talking about?
Stocks for the long run.
But buy stock at the right price is an excellent theory.
Hard to disagree.

If anyone believes the "buy stocks at any price" theory, it becomes
self defeating.

--
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D

dapperdobbs

"Stocks for the Long Run" was written by Jeremy Siegel.
"Security Analysis" is Ben Graham, David L. Dodd, & Sidney Cottle.
Warren E. Buffett was Ben Graham's student.

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I

Igor Chudov

"Stocks for the Long Run" was written by Jeremy Siegel.
"Security Analysis" is Ben Graham, David L. Dodd, & Sidney Cottle.
Warren E. Buffett was Ben Graham's student.
Berkshire used to sell a compendium of Buffett's letters to
shareholders, which was a great and very useful reading, as far as I
am concerned.

i


======================================= MODERATOR'S COMMENT:
Thank you for trimming the previous post and for being succinct.

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H

honda.lioness

Igor Chudov said:
Personally, I never trusted the "buy stocks at any price" theory,
especially when it is believed by too many people.
I do not consider this the main theme of Siegel's books. Instead, his
focus is on buying index funds and holding for the long run. In
particular I like how he emphasizes the importance of reinvesting
dividends through thick and thin. We cannot time the market, and at
times like today by continuing to buy stocks we get the triple
compounding effect of dividends generally increasing over time; buying
more shares because they are at bargain prices; appreciating as stock
prices do over the long run.

Siegel has a more recent book out, as I recall, that updates or adds
to _Stocks for the Long Run_.

But a disclaimer is appropriate. Siegel is now an advisor of a major
index yada fund company, wisdomtree.com .

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B

BreadWithSpam

Igor Chudov said:
Berkshire used to sell a compendium of Buffett's letters to
shareholders, which was a great and very useful reading, as far as I
am concerned.
The Berkshire Hathaway quarterly and annual reports going
back to 1995 are all online in either html or pdf format
at <http://www.berkshirehathaway.com/reports.html>

Buffett's annual Letters to the Shareholders are also
all online, going back to 1977:
<http://www.berkshirehathaway.com/letters/letters.html>

Moreover, Buffett makes a point of releasing these documents
each year over a weekend, rather than during the trading
week.

Those letters are a goldmine.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
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