ABC news had an article, that asked if we could "Still Believe in Buffett."
ABC News' Bianna Golodryga reports: On a day when the Dow lost another 400 points or so, when Citigroup touched below $10 a share, GE is below $16 and Goldman is down another 9 percent, one major investor points out that the Oracle of Omaha's investment strategy has disappointed even his staunchest supporters.
Both Buffett's personal and business (Berkshire Hathaway) holdings are tanking, like everyone else's, and the insurance part of his business has seen huge losses from hurricane claims this year following hurricanes Gustav and Ike.
To his credit, Buffett has lived up to his nickname of "sage" during the current financial crisis. His voice, his rhetoric, his humor and his easy-to-understand logic have together made a welcome and reassuring voice for everyone from President-elect Barack Obama to the average man on the street. He's the toughest man to get an interview with these days, and his every word can move a stock. He's said this is the worst financial crisis he's seen in a long time, if ever.
The article points out that there are three (3) perspectives to look at this from.
- When he says he's a long-term investor, he really means just that, long term!
- No one is perfect, and even the smartest investor in the world makes mistakes.
- Today's Buffett is more of a symbolic and iconic figure than a master stock picker.
The article was very well written. To answer the question, there are going to be up's and downs, I invest for the long term, and do not pay attention to the market that closely. If I were, then I would just be sick to see the hit my investments (what little, I have). No, instead, I just sit back and hold on, because it is going to be quite a roller coaster ride. In 20-years, the investments and retirement accounts will up quite substantially. That is, unless the government gets a hold of those retirement accounts.
There has been reports, that President-elect Obama wants to confiscate 401(k)'s and retirement accounts and merge them with the Social Security funds only earning 4%. If that were to happen, then I would lose the average 12% my retirement accounts could earn over the long haul. In fact, if, and I think it is a big if, that were to happen, I would cut my retirement investments and invest the difference privately (in non-retirement accounts).
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go ahead share your thoughts with me now.
5 comments:
Dave Ramsey explained the 401k comments on the air, he said it was all right wing lies...
I like the idea of encouraging all people to get into a 401k plan. I like the idea of an additional tax credit for those, under a certain income level, who do put money into a 401k. I have not heard Obama say anything that makes me think he's intending to move everyone's 401k's into some big government owned fund....
In terms of Buffet, I still think he has the right idea. For investors that don't need their money anytime soon, this is a good time to buy. Stocks are on sale! Lord knows we consumers will buy almost anything else when it's on sale - whether we need it or not.
With regard to your 401k's - in Australia ours are called "Superannuation Funds" and they are like highly regulated managed funds into which your employer MUST put an additional 9% of your salary.
I just recieved my statement, and despite our share market loosing 46% in the last year, my fund is down only 3.85%, but has maintained over 10%pa for the last 5 years.
Also, our government will give workers who earn under $40k an additional $1500 if they contribute $1000 of their after-tax money. In addition we can salary sacrifice - which means put money in out of our before tax income, and some employers pay more than 9% (I have heard of up to 15%.
It kind of sounds like this is the road he would like to go down, and despite its complexities I think it's a real benefit to our retirement savings - it happens without us thinking about it, we can't get at it and it saves the government money in the long term.
I don't know much about any of that stuff, just stopping buy to say hi. I still check your blog every few days.
Buffet is suffering the same way that everyone else is. That's why they call it systemic risk. When the entire market gets crushed, there simply isn't a way to avoid it unless you take a highly concentrated position and pick the right niche. Regardless, the market continues to work just fine and this market decline is actually normal. If you pull up a chart on the Dow going back to the Great Depression, you will see that we run in 15-20 year cycles alternating between zero growth and exponential growth. During those zero growth periods, there are market ups and downs that will swing 50% on the downside (like now) and 100%+ up from the bottom. It's nonsense to think our system doesn't work and for anyone thinking of taking away our right to invest in companies is nuts. Thanks for the solid post!
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