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Posted by on June 21, 2008, 11:09 pm
> Buffett's partnership portfolio over ten years grew by a modest 1,156%
> compared to the Dow's 122.9% and other major world indices.
Which ten years was this? 1156% in any ten year period sounds
a bit suspicious. Buffett's long-term annualized average
return was approx 21%. In 10 years, that's a still-spectacular
570+% cumulative return, but still, in most periods where
Buffett was doing great, the broader market did pretty well,
too. In the period where Buffett made 21% long-term, the
S&P500 did 10+% annualized, which, over a 10-year period, is
about 160% return (so same investment in BRK vs SP500 in a
10 year period, one expects some 4+x as much money at the
end from BRK - if one expects the future to behave just like
the past. Don't. Buffett doesn't. Read his own notes about
this.)
> undeserved. Now the market is undervalued and is a bargain. Savvy
> investors, the “smart money”, buy bargain stocks knowing that they
> will be able to sell them higher in the near future. Smart money
The market can stay "undervalued" a long time. There's an
old trader's saw that the market can stay irrational longer
than you can stay liquid. (That's a real danger for anyone
who's leveraged up on it).
The market may be undervalued. The question is _when_ will
it cease to be.
Financial planning is not just about staying in the stock
market, but making sure that one can safely ride out the
periods where it's not behaving as one hopes it does in
the longer term.
--
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?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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