Do you think Warren Buffet was being irresponsible

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stemikger
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Do you think Warren Buffet was being irresponsible

Post by stemikger »

This year with all the negative talk about bonds and bond funds, Warren Buffett has been quoted numerous times that the average 55 year old saving for retirement should put everything in an index fund that buys America and just keep adding to it. You will do very well overt time. He also has been saying that bonds are a terrible and dangerous investment. He even wrote a detailed paper explaining why.

Do you think Warren was being irresponsible when giving this advice.
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Re: Do you think Warren Buffet was being irresponsible

Post by WendyW »

Warren Buffett: Why stocks beat gold and bonds
http://finance.fortune.cnn.com/2012/02/ ... er-letter/
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Re: Do you think Warren Buffet was being irresponsible

Post by stemikger »

WendyW wrote:Warren Buffett: Why stocks beat gold and bonds
http://finance.fortune.cnn.com/2012/02/ ... er-letter/
Thanks, I have a cold and I was being lazy. I appreciate the assist.
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Re: Do you think Warren Buffet was being irresponsible

Post by corner559 »

I wonder what he thinks a good alternative would be for those close to retirement or currently retired.
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Re: Do you think Warren Buffet was being irresponsible

Post by Call_Me_Op »

Buffet is, of course, right. However, he has defined the question in such a way that he will be right. He has defined safety as having a high probability of a positive real return over one's holding period. If I define safety as having a high probability of avoiding running out of money over the rest of my life, the answer would probably involve a mix of assets. Certainly, if I want to sleep at night, a balanced portfolio is the answer.
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Re: Do you think Warren Buffet was being irresponsible

Post by JoMoney »

No.
He doesn't have any responsibility to anyone's retirement account in the first place. He's not our financial adviser. He speaks his view, and with all the people pitching various investment advice, I think it's commendable that he comes out and offers his opinion. He doesn't tip-toe around it trying to appeal to sensibilities that might attack him, he just stated what he believed, and gives his rationale. I believe his trustworthiness and position mean something to him, and he wouldn't say something like that if he didn't truly believe it was right (even if he turns out to be wrong). It would be unfair of someone to expect that he does have a responsibility to only say things that meet some guideline of financial planners or whatever. Nobody is paying him for advice, he's just offering it for those who want to listen. The responsibility is on those of us managing our investments to decide the path we think is prudent.

I happen to agree with his opinion on bonds. Even today, I don't consider bond yields rewarding enough to justify a position for my money that I expect to leave invested for decades. For someone with near term needs of the money the situation is different, he's not advocating people invest money they may need in a few years time. The above article quotes him explaining the approach they use for Berkshire's potential short-term needs, keeping billions of dollars in short-term Tbills.
There is a lot of things Buffett does though, that may seem "easy" to him that many people who've tried to imitate failed. When prices go up or down a lot, it seems to provoke people to want to do something and change course. "Don't do something, just stand there" may be easier said than done. Benjamin Graham had suggested having a percentage to rebalance with may be worthwhile if for no other purpose than to give the investor something to do (essentially to busy themselves so they can stay the course).
Benjamin Graham , The Intelligent Investor CH.8 wrote:It is for these reasons of human nature, even more than by calculation of financial gain or loss, that we favor some kind of mechanical method for varying the proportion of bonds to stocks in the investor’s portfolio. The chief advantage, perhaps, is that such a formula will give him something to do. As the market advances he will from time to time make sales out of his stockholdings, putting the proceeds into bonds; as it declines he will reverse the procedure. These activities will provide some outlet for his otherwise too-pent-up energies.
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Re: Do you think Warren Buffet was being irresponsible

Post by VictoriaF »

I don't think Warren Buffett is irresponsible. He expresses his opinions and describes the principles by which he manages his company. His goals are different from the goals of individual investors. Buffett must generate value for his shareholders. In contrast, individual investors balance their human capital, financial assets, spending needs, and risk tolerance. Luck plays an important role in one's investment history. Buffett was lucky in many ways, but individual investors are not guaranteed to get similar to the Buffett's outcomes even if they replicated his actions. Therefore, his note is interesting and not irresponsible, but it should not be used as a guide for one's own financial management.

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Re: Do you think Warren Buffet was being irresponsible

Post by nisiprius »

1) He's an entrepreneur. He has an entrepreneurial spirit. Not surprising that he might think something different from those of us who do not.

2) I don't pretend to understand the complex web of law and NON-LEGAL regulation, starting from "freedom of speech" in the Constitution down to whatever it is that FINRA does, but it allows a lot of people to spout off what we think--as in this forum--AND spout off self-serving and misleading propaganda--as on cable TV investment-firm ads--as long as we're not issuing it as specific advise for a specific person's situation. Shrug.

3) I'm honestly not sure who he thinks his audience is. It's a shareholder letter. He might be speaking to my distant inlaw who has a chunk of her retirement savings in BRK, goes to the shareholder meetings, and comes back with a box of See's candy talking about "Warren" and "Bill" (Gates), but I don't actually think so. I think he may be speaking to a very wide audience but intending the message for a much narrower one.

4) His much-quoted message--WendyW's link--was much discussed in this forum at the time, and although I found it annoying, someone slapped me on the wrist for accusing him of "TIPS blindness." His message in retelling was often to "bonds suck," but his phrasing is actually very careful. It wasn't all bonds, and it wasn't just bonds. My boldfacing:
Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as "safe." In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge.

Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control.
Notice that although the press abbreviated it to "bonds," he is only talking about nominal "instruments"--those that pay off in a specific number of dollars (or euros or Venezuelan bolivars). And notice that it is not at all limited to "bonds"--
he includes bank deposits "among the most dangerous of assets".

This is not really investing advice. It is a political-economical-ideological rant. To which he is entitled. It is not really about "bonds," it is about inflation. And, I as I read it, the seeming inevitability of very-high-inflation surprises due to untrustworthiness of governments in the long run.

He is not talking about MPT-optimums on the efficient frontier curve.

He is not talking safe withdrawal rates for different mixes as calculated by the Vanguard retirement nest egg calculator.

He is not talking about normal interest rate risk or what will happen when the Fed raises the overnight rate.

He is not talking about whether Dan Solin (author and professional wealth manager) was wise to have such a high personal stock allocation that he panic-sold some of it in 2008-2009.

He is talking about things like Germany in 1923, Zimbabwe in 2008, perhaps Venezuela in 2013.
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Re: Do you think Warren Buffet was being irresponsible

Post by pkcrafter »

VictoriaF wrote:I don't think Warren Buffett is irresponsible. He expresses his opinions and describes the principles by which he manages his company. His goals are different from the goals of individual investors. Buffett must generate value for his shareholders. In contrast, individual investors balance their human capital, financial assets, spending needs, and risk tolerance. Luck plays an important role in one's investment history. Buffett was lucky in many ways, but individual investors are not guaranteed to get similar to the Buffett's outcomes even if they replicated his actions. Therefore, his note is interesting and not irresponsible, but it should not be used as a guide for one's own financial management.

Victoria
Nicely analyzed. +1

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Re: Do you think Warren Buffet was being irresponsible

Post by RNJ »

nisiprius wrote:1) He's an entrepreneur. He has an entrepreneurial spirit. Not surprising that he might think something different from those of us who do not.

2) I don't pretend to understand the complex web of law and NON-LEGAL regulation, starting from "freedom of speech" in the Constitution down to whatever it is that FINRA does, but it allows a lot of people to spout off what we think--as in this forum--AND spout off self-serving and misleading propaganda--as on cable TV investment-firm ads--as long as we're not issuing it as specific advise for a specific person's situation. Shrug.

3) I'm honestly not sure who he thinks his audience is. It's a shareholder letter. He might be speaking to my distant inlaw who has a chunk of her retirement savings in BRK, goes to the shareholder meetings, and comes back with a box of See's candy talking about "Warren" and "Bill" (Gates), but I don't actually think so. I think he may be speaking to a very wide audience but intending the message for a much narrower one.

4) His much-quoted message--WendyW's link--was much discussed in this forum at the time, and although I found it annoying, someone slapped me on the wrist for accusing him of "TIPS blindness." His message in retelling was often to "bonds suck," but his phrasing is actually very careful. It wasn't all bonds, and it wasn't just bonds. My boldfacing:
Investments that are denominated in a given currency include money-market funds, bonds, mortgages, bank deposits, and other instruments. Most of these currency-based investments are thought of as "safe." In truth they are among the most dangerous of assets. Their beta may be zero, but their risk is huge.

Over the past century these instruments have destroyed the purchasing power of investors in many countries, even as these holders continued to receive timely payments of interest and principal. This ugly result, moreover, will forever recur. Governments determine the ultimate value of money, and systemic forces will sometimes cause them to gravitate to policies that produce inflation. From time to time such policies spin out of control.
Notice that although the press abbreviated it to "bonds," he is only talking about nominal "instruments"--those that pay off in a specific number of dollars (or euros or Venezuelan bolivars). And notice that it is not at all limited to "bonds"--
he includes bank deposits "among the most dangerous of assets".

This is not really investing advice. It is a political-economical-ideological rant. To which he is entitled. It is not really about "bonds," it is about inflation. And, I as I read it, the seeming inevitability of very-high-inflation surprises due to untrustworthiness of governments in the long run.

He is not talking about MPT-optimums on the efficient frontier curve.

He is not talking safe withdrawal rates for different mixes as calculated by the Vanguard retirement nest egg calculator.

He is not talking about normal interest rate risk or what will happen when the Fed raises the overnight rate.

He is not talking about whether Dan Solin (author and professional wealth manager) was wise to have such a high personal stock allocation that he panic-sold some of it in 2008-2009.

He is talking about things like Germany in 1923, Zimbabwe in 2008, perhaps Venezuela in 2013.
And he is talking about Deep Risk and long time periods.

@ Nisi - That Dan Solin quote really stuck with you! It did with me, as well.
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Re: Do you think Warren Buffet was being irresponsible

Post by linenfort »

Perhaps not irresponsible, but potentially hazardous. It's not Mr Buffett's fault, but a great many people are bound to glibly follow his advice. They will not take the time to get the details straight and they will forgo bonds for stocks. Of course, these same people may also sell their stocks when the market crashes, and that's really not Buffett's fault.

Were the bright sparks who conceived and created collateralized debt obligations being irresponsible when they released them into the wild? Or was it those who actually sold CDOs?
Last edited by linenfort on Sat Dec 28, 2013 9:00 am, edited 1 time in total.
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Re: Do you think Warren Buffet was being irresponsible

Post by WendyW »

Buffett has demonstrated time and time again that he has the discipline to buy equities when others are selling.

The average investor, on the other hand, can be relied on to panic and sell equities when markets fall.

This is why an all-equity portfolio makes sense for Buffett, but doesn't make sense for individual investors.
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Re: Do you think Warren Buffet was being irresponsible

Post by Howard Donnelly »

No. His advice helped me.
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Re: Do you think Warren Buffet was being irresponsible

Post by MnD »

The comments about bonds by Warren Buffet and Jack Bogle during the 1.5% "trough" (late 2011 through spring 2013) spurred me to liquidate all fixed income with interest risk in favor of the G Fund. I had been looking at it and just didn't see any upside, protection or safety in 1.5% bonds with significant duration. When both those guys expressed basically the same opinion that helped me pull the trigger. Thanks guys.... :beer
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Re: Do you think Warren Buffet was being irresponsible

Post by Calm Man »

This may sound "cruel". I don't care what Warren Buffet says and I wish he would "go away". His interests are not aligned with ours or anybody else's except his company, shareholders and charity.
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Re: Do you think Warren Buffet was being irresponsible

Post by Gamedaymusings »

This article didn't seem to attack bond investments as much as the discussion seemed to suggest. He is merely explaining why he avoids two specific investment vehicles: Currency and Gold.

The way I see it (and to completely oversimplify the idea), investing in gold is like chasing the most famous, non-dividend paying, growth stock in the world without seeing any of its financials. The return on gold 30 years from now will simply be whatever the value of gold will be less what you paid to acquire it. Kind of like antique furniture in your closet (that you can't sit on or use to decorate your place).

Currency values are actively controlled and manipulated by governments, and as Buffett suggests, these government interests are not necessarily aligned with those of it's currency investors.

One question: With the heavy lean towards inflation in the article, aren't things like ficed-rate mortgages (for the maker, not the holder) a good thing for investors? With a mortgage, you are essentially shorting the US dollar (or whatever currency your mortgage is in). Inflation makes your fixed mortgage and your fixed mortgage payments look better and better, especially if the proceeds are going into a productive asset.

To paraphrase the article: A US fixed mortgage payment of $268 in 1965, when he first took over management of Berkshire, would be the equivalent of $2,000 in today's dollars. Fast-track to today when your mortgage payment is still only $268 a month on an asset that has presumably increased in value (The average cost of a house was around $21,000 in 1965) and/or produced income over that time span. Nice payment.

Obviously the time frame is unreasonably long in this example, but the idea remains.
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Re: Do you think Warren Buffet was being irresponsible

Post by afan »

Buffet is taking about a company with an infinite time horizon, a substantial cash position and no need to worry about poverty. Although he certainly manages BRK to avoid it, the worse that could happen to the company would be bankruptcy and liquidation. The worse that could happen to a person would be homelessness and starvation. The person appropriately should accept lower expected returns to guard against the more severe possible outcome.

Buffet is paid to manage a company aggressively. People should not put their safe money in BRK or any other stock. BRK manages its risk by balancing its exposures and diversifying. But its value is tightly tied to the stock market and the economy. People who want less exposure to those risks have to limit their exposure to stocks. Then what do they do with the money? Invest in something that may not trail inflation by too much, or might even have a positive real return. But these are not held for their return. They are held as an alternative to stock risk.

If I expected to live, and keep working, for 300 years, I would invest differently. Probably like an endowment rather than like a person. Lots more illiquid assets, much less low volatility assets, perhaps private equity, definitely not hedge funds. But as a mortal who gets closer to retirement everyday I limit my equity risk and put the balance in fixed income.
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Re: Do you think Warren Buffet was being irresponsible

Post by nedsaid »

Warren Buffett was not irresponsible. He was pointing out the largest danger to an investor and that is inflation. Another danger to investors is taxation. The combination of the two dangers make it pretty hard to maintain purchasing power in fixed income type of investments.

For example, cash as represented by short term treasuries has over long periods of time kept up with inflation and very slightly beaten it. Take the tax bite out and you likely trail inflation. Of course, since the financial crisis cash has earned essentially nothing and it is taking the full hit from gradual loss of purchasing power. Even the zero fixed rate I-Bonds I purchased that keep me exactly even with inflation will lose purchasing power when I cash them in and pay the tax.

But I have money in the bank, savings bonds, and money market funds because I need liquidity. Since stocks can fall 50% or more in a bear market, they are not a suitable place for emergency money. Murphy's law would dictate that a personal financial crisis would hit right at the time your stocks are down 50%.

Warren Buffett has a longer time horizon than most of us. He is looking at the lifespan of Berkshire-Hathaway which will outlive him, probably all of us, and perhaps the next generation ahead of us. I am 54 and I am subject to the limits of human mortality. So I need a good helping of fixed income investments so that I can deal with the volatility of the stock
market. Plus he is a whole lot richer than any of us on the forum.

So I have reached a compromise between my rational self and my emotional self. My emotional self wants a 60/40 or a 50/50 stock to bonds portfolio. My rational self doesn't think much of bond yields that are close to the historical rates of inflation which are 2 1/2 to 3 percent. My rational self believes that bonds even at better prices than just a few months ago will pretty much be dead money when one figures in inflation. My compromise is the 69% stocks/31% fixed income portfolio that I have now.

And yes, inflation right now is really low and bonds have a real yield over inflation right now. I don't expect that to last. Since I started my career in 1983, prices have gone up 2 1/2 to 3 times. We are awash in money right now but a lot of it is sitting in the banks as reserves, sitting on corporate balance sheets, or as cash in wealthy investors portfolios. There is still slack in the economy. As the economy picks up steam, inflation should pick up also. Perhaps not to high levels but at least to historical levels. Hopefully, interest rates will move up as well.

So my portfolio is still built to fight inflation though it is pretty tame right now.
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Re: Do you think Warren Buffet was being irresponsible

Post by BolderBoy »

Calm Man wrote:This may sound "cruel". I don't care what Warren Buffet says and I wish he would "go away". His interests are not aligned with ours or anybody else's except his company, shareholders and charity.
+1
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Re: Do you think Warren Buffet was being irresponsible

Post by abuss368 »

I always enjoy commentary from Warren Buffett. I watched him on CNBC last summer where he again stated to Becky Quick that most investors should buy "a few index funds" and that they would be well off.

Bonds are not an ideal investment at this time but there is a NEED for them. Even for Berkshire Hathaway who holds BILLIONS of bonds. Income streams, liquidity, and the ability to rebalance into stocks (as Mr. Buffett did in 2008) is PRICELESS.
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Re: Do you think Warren Buffet was being irresponsible

Post by Clever_Username »

nisiprius wrote:3) I'm honestly not sure who he thinks his audience is. It's a shareholder letter. He might be speaking to my distant inlaw who has a chunk of her retirement savings in BRK, goes to the shareholder meetings, and comes back with a box of See's candy talking about "Warren" and "Bill" (Gates), but I don't actually think so. I think he may be speaking to a very wide audience but intending the message for a much narrower one.
This is something I keep forgetting whenever I read something by Buffet, and I need to remember it more. For that matter, I'm not good at remembering who the target audience is when I read many things. Either way, great reminder, particularly given the context. Thanks!
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Re: Do you think Warren Buffet was being irresponsible

Post by SGM »

No. I think Warren Buffet has faith in American business long term and is warning against inflation's potential devastation.

I once read twenty years ago that he was writing off his special $400MM USAir special preferred stock as a loss. This caused some that held "risky" positions in USAir preferred stock that was in arrears to sell their holdings. (All arrears in preferred dividends must be paid before common stock dividends can be paid). Those who did not sell their USAir preferred eventually received their back dividends despite Buffet's writing off of his special preferred and they had an increase in the value of the preferred. I don't think he advised others to sell their positions, but some might have concluded, "What do I know that Warren does not?" Does anyone know how he did with his special preferred? I suspect he did extremely well and may have been trying to pressure USAir management.

Generally, I would be careful about following anyone's advice no matter how eloquently presented. "Talk is cheap," still holds true.
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Re: Do you think Warren Buffet was being irresponsible

Post by YDNAL »

stemikger wrote:This year with all the negative talk about bonds and bond funds, Warren Buffett has been quoted numerous times that the average 55 year old saving for retirement should put everything in an index fund that buys America and just keep adding to it. You will do very well overt time. He also has been saying that bonds are a terrible and dangerous investment. He even wrote a detailed paper explaining why.

Do you think Warren was being irresponsible when giving this advice.
What advice?
Warren Buffett wrote:Investing is often described as the process of laying out money now in the expectation of receiving more money in the future..... More succinctly, investing is forgoing consumption now in order to have the ability to consume more at a later date.
http://finance.fortune.cnn.com/2012/02/ ... er-letter/
If the goal is the hope of "more money in the future, more consumption later" and we have Need, Ability & Willingness for risk, then history is on the side of investing in the Equity Market(s). Even so, Buffett [sort-of] contradicts himself.
Warren Buffett wrote:Under today's conditions, therefore, I do not like currency-based investments. Even so, Berkshire holds significant amounts of them, primarily of the short-term variety. At Berkshire the need for ample liquidity occupies center stage and will never be slighted, however inadequate rates may be. Accommodating this need, we primarily hold U.S. Treasury bills, the only investment that can be counted on for liquidity under the most chaotic of economic conditions. Our working level for liquidity is $20 billion; $10 billion is our absolute minimum.
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Re: Do you think Warren Buffet was being irresponsible

Post by JoMoney »

Maybe this would have been a better reference:
https://www.youtube.com/watch?v=1N3g47P-iRc#t=10

(Buffett specifically replying about the average man on the street ):
"I don't think you should be 40% in bonds... My Family... anybody I advise... not super wealthy or anything of the sort... bear in mind they have the proper attitude, and if stocks go down 20% next month they're not going to be bothered... I would have them having enough cash on hand so they feel comfortable, and the rest in equities - or farms, or apartment houses, or other things.. productive assets... I would favor those enormously over fixed dollar investments now, and I think it's silly to have some ratio like 30, 40, 50 percent in bonds, they're terrible investments now"...
Note 10YR Treasuries were 1.74% at the time of this quote, but there are other quotes of him suggesting similar all equity portfolios for average people even prior to the financial meltdown, just not with the same emphasis on how horrible bonds are/were. I've never heard him address people already at retirement, it's usually addressed to people still accumulating.
Buffett has also made the point in the past: "I recommend John Bogle's books -- any investor in funds should read them. They have all you need to know..."
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Re: Do you think Warren Buffet was being irresponsible

Post by IlliniDave »

I have to agree with the "not irresponsible" contingent. Two things come in to play. First, the idea that a person cannot state their opinion on what amounts to an academic topic without incurring some sort of culpability goes against my notion of free and open dialogue. Second, and maybe related, is that anyone who reads/listens to Buffet or anyone else is not absolved of their own personal responsibility for their finances.

If you look at it as a "dry" economics/math problem (and in a society with a safety net program like SS for the vast majority of us), over 20+ year timeframes involved, stocks do provide the highest probability of getting the highest returns. Bogle made similar remarks at the conference this year. (I don't remember which video segment, but one of the more recently posted ones). If they didn't, no one would invest a nickel in them. When you throw behavior in, it becomes a more complicated problem to be sure. But we can't suppress all information/dialogue that could be problematic when mixed with human behavior.
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Re: Do you think Warren Buffet was being irresponsible

Post by dbr »

What is irresponsible is taking intelligent analysis of the properties of various assets and turning it into unconsidered advice for oneself or anyone else.

More specifically, no one is making a choice of only one of three possible assets that one might own and depending exclusively on that choice when investing for the purpose of supporting retirement.
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Re: Do you think Warren Buffet was being irresponsible

Post by Caduceus »

Much of what is cited as "advice" in this article is actually consistent with what Buffett has been saying for decades. If you take a look at his early shareholder letters and his other articles (collected by his friend Carol Loomis), his ideas on gold, bonds and equities have been fairly consistent. Buffett's investment style is not about diversifying across asset classes, so he's not coming at this in the way that Bogleheads expect. It doesn't mean he's wrong.

Dr. Bernstein and I believe Mr. Bogle have at various points discussed the dangers of holding bonds (especially long-term bonds) too, have they not? Bernstein's argument is that over long periods of time, bonds are actually more dangerous than stocks because of the effects of inflation. This is Buffett's point, although he sees it as a particularly relevant risk now given a low interest-rate environment.
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Re: Do you think Warren Buffet was being irresponsible

Post by stemikger »

dbr wrote:What is irresponsible is taking intelligent analysis of the properties of various assets and turning it into unconsidered advice for oneself or anyone else.

More specifically, no one is making a choice of only one of three possible assets that one might own and depending exclusively on that choice when investing for the purpose of supporting retirement.
I really enjoyed reading all the replies, and for the record, I personally don't feel Warren Buffett was being irresponsible. It is the identical advice Jack gives but without the bonds.

DBR, are you related to Yogi Berra by any chance? LOL.
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Re: Do you think Warren Buffet was being irresponsible

Post by Akiva »

VictoriaF wrote:I don't think Warren Buffett is irresponsible. He expresses his opinions and describes the principles by which he manages his company. His goals are different from the goals of individual investors. Buffett must generate value for his shareholders. In contrast, individual investors balance their human capital, financial assets, spending needs, and risk tolerance. Luck plays an important role in one's investment history. Buffett was lucky in many ways, but individual investors are not guaranteed to get similar to the Buffett's outcomes even if they replicated his actions. Therefore, his note is interesting and not irresponsible, but it should not be used as a guide for one's own financial management.

Victoria
It's also worth noting that Buffett has notably higher risk-tolerance than most investors. Looking at the massive amounts of leverage he uses and the volatility of his investment portfolio should convince you of that.
MathWizard
Posts: 6560
Joined: Tue Jul 26, 2011 1:35 pm

Re: Do you think Warren Buffet was being irresponsible

Post by MathWizard »

First note that this was an adaptation of an upcoming Berkshire letter to shareholders, which would be explaining
his BH investments.

Second note that this is in Fortune magazine, not the Sunday supplement. I would hope that readers of Fortune
are more financially astute than the average person.

All investments have risks, even bonds. I think that gold is a very bad investment, it is a hedge at best, and pure
speculation at worst.

Given the current interest environment, I favor equities over bonds.
jwa
Posts: 219
Joined: Sat Aug 04, 2012 3:53 pm

Re: Do you think Warren Buffet was being irresponsible

Post by jwa »

With the Schuler 10 year pe index at slightly over 26, at this juncture, and given my age I will not move everything over to stocks. Yes interest rates may go up causing bond values to go lower. While I have some uneasiness with the Schuller index and don't completely trust it I do think it signals that the odds are greater for a decline in stock values than continous increases.

I think I will just stick to my aa and ride it out. Stay the course.
fareastwarriors
Posts: 1405
Joined: Tue Feb 14, 2012 11:31 am

Re: Do you think Warren Buffet was being irresponsible

Post by fareastwarriors »

BolderBoy wrote:
Calm Man wrote:This may sound "cruel". I don't care what Warren Buffet says and I wish he would "go away". His interests are not aligned with ours or anybody else's except his company, shareholders and charity.
+1

He can say whatever he wants. It is up to the individual to make a choice to follow his "advice" or not. In more words or less, he advocated many times for the average investor to just buy index funds instead of chasing hot stocks or paying high management fees. I can live with that.
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