Has Buffett changed anyones mind

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stemikger
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Has Buffett changed anyones mind

Post by stemikger » Fri Feb 10, 2012 8:15 am

There have been several posts about Buffett stating in an article that investors should stay away from bonds and they should come with a warning label.

Has this advice changed anyone's mind.

Dave Ramsey has been advising people to stay away from bonds forever, and I always shrugged it off as bad advice, but coming from someone like Buffett, I don't know, he is hard to ignore.

On a side note, many years ago my friends father who was 68 at the time said he is and always will remain 100% in equities. I recently found out, he still is invested like that and he is 79 now.

So I ask this question, do you think staying in bonds is not good advice going forward and do you know people who always invested in equities no matter what the weather.
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Shireman28
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Re: Has Buffett changed anyones mind

Post by Shireman28 » Fri Feb 10, 2012 8:31 am

I don't think Bonds are a good idea going forward at such low interest rates, seems like a small loser vs. inflation. Last fall we shifted our retirement accounts from Target 2020 31% Bonds to Target 2040 and 10% Bonds.

The 10% should be enough for the re-balancing bonus and we have a 30 year investing horizon. If we needed immediate income, or were close to retirement we'd be much more conservative.

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Re: Has Buffett changed anyones mind

Post by sscritic » Fri Feb 10, 2012 8:36 am

Read the thread on being a couch potato. Why is anyone reading anything that Warren Buffet is saying? I am too busy on my couch watching soap operas to pay attention to Warren Buffet. He's just more noise distracting me from the dialog.

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Re: Has Buffett changed anyones mind

Post by Grt2bOutdoors » Fri Feb 10, 2012 8:39 am

I thought long and hard......... :?

I liquidated all my equities, reits and money markets...... :shock:

I went all in........ :o

30 Year Fixed Rate Treasuries....... :dollar

April Fool's 2 months early give or take a few days.... :lol
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Re: Has Buffett changed anyones mind

Post by FinanceFun » Fri Feb 10, 2012 8:41 am

Bonds as a real-return investment right now are bad. As a risk hedge, they are good. I would NOT advise eliminating bond. Instead, I would shorten the duration of my bond portfolio - make 1-1.5% yield (real loss) - and wait for yields to return to levels where they can produce a real return before extending duration to intermediate term.

The way I look at it:
- Intermediate government and long term corporate, government, muni = bad
- Intermediate term corporate, short term corporate - muni - government, cash = good
- Overweight equities = good
Last edited by FinanceFun on Fri Feb 10, 2012 8:42 am, edited 1 time in total.

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Re: Has Buffett changed anyones mind

Post by Grt2bOutdoors » Fri Feb 10, 2012 8:42 am

stemikger wrote:There have been several posts about Buffett stating in an article that investors should stay away from bonds and they should come with a warning label.

Has this advice changed anyone's mind.

Dave Ramsey has been advising people to stay away from bonds forever, and I always shrugged it off as bad advice, but coming from someone like Buffett, I don't know, he is hard to ignore.

On a side note, many years ago my friends father who was 68 at the time said he is and always will remain 100% in equities. I recently found out, he still is invested like that and he is 79 now.

So I ask this question, do you think staying in bonds is not good advice going forward and do you know people who always invested in equities no matter what the weather.

Does your friends father have the following?:

A pension
Social Security
Other cash on the side
A paid off home
Income producing assets

If you answer yes to any of the above, your friends father is NOT totally invested in equities.
Enjoy the snow.
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Rodc
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Re: Has Buffett changed anyones mind

Post by Rodc » Fri Feb 10, 2012 8:42 am

Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.

If like in the 30s stocks drop 90% and stay down for a prolonged period of time you will be darn glad for anything you have in bonds, especially treasuries.

Insurance always costs money, but when you need it you are mighty glad to have it.

I'm ignoring Buffet.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Has Buffett changed anyones mind

Post by Erwin » Fri Feb 10, 2012 8:42 am

It is a fact that in today's environment bonds are not an attractive asset class, specially since it is a matter of time before interest rates begin climbing, thus, most of the bonds that one hold should be of short term duration, meaning that the yield is minimum. However, before jumping to all stocks, one has to straight a balance between risk and return, and depending on the investor's situation the percent of stocks relative to bonds can be dialed.
Erwin

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Re: Has Buffett changed anyones mind

Post by gd » Fri Feb 10, 2012 9:01 am

I've read what is presumably an excerpt from a longer statement by a famous and fashionable person, apparently making a dramatic and fairly extreme investment recommendation, presented in a mass media outlet whose profits depend on attracting eyeballs, during a period of great global economic uncertainty and when almost all financial pundits have been gloriously wrong at some point in the last 10 years. No, it hasn't changed my mind about how I'm going to keep the rest of my life funded.

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Liquid
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Re: Has Buffett changed anyones mind

Post by Liquid » Fri Feb 10, 2012 9:02 am

Many of you are missing the point.

Buffett is not directing his comments at the average Boglehead holding a market portfolio, he is directing it at hot money holding 100% gold or bonds, because they overheard it at the water cooler.

Berkshire has "liquidity requirements" and therefore holds short-term securities.... guess what, individual investors have "liquidity requirements" as well.

Buffet does not "hate half your portfolio" as a recent thread claimed.

This outcry is extremely overblown.

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Re: Has Buffett changed anyones mind

Post by jebmke » Fri Feb 10, 2012 9:07 am

No ..
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: Has Buffett changed anyones mind

Post by Wagnerjb » Fri Feb 10, 2012 9:13 am

Not me either. I don't get my investing advice from him.
Andy

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Re: Has Buffett changed anyones mind

Post by rkhusky » Fri Feb 10, 2012 9:15 am

If I had enough money that I could lose 95% of it and still lead a comfortable life, I might take more risks too.

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renditt
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Re: Has Buffett changed anyones mind

Post by renditt » Fri Feb 10, 2012 9:21 am

No, stocks are overpriced.

Bonds are overpriced too, so I currently have a lot of cash.

FinanceFun
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Re: Has Buffett changed anyones mind

Post by FinanceFun » Fri Feb 10, 2012 9:24 am

renditt wrote:No, stocks are overpriced.

Bonds are overpriced too, so I currently have a lot of cash.
Yes. 20% under historical mean for forward PE ratio's clearly indicates overpriced. Thanks!

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Re: Has Buffett changed anyones mind

Post by staythecourse » Fri Feb 10, 2012 9:40 am

I don't think anyone will argue if you play the % that one should be in 100% equity for any period over 20 years. It give the BEST possible chance of exceeding inflation over every 20 year period in HISTORY!!

Then why doesn't everyone do it? 1. Volatility and 2. Need to take short term risk of volatility.

Everyone is not like Mr. Buffett who has an iron clad stomach when it comes to volatilty and has SO MUCH money that he can go all in and go 100% equity and withstand all the short term volatility and not alter his LBYM lifestyle.

If I had his emotional fortitude, his money, and most importantly his LBYM lifestyle I would do nothing different then him and be 100% equities no matter what the bond market was doing.

Problem is I don't. :(

Good luck.
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Re: Has Buffett changed anyones mind

Post by FredPeterson » Fri Feb 10, 2012 9:57 am

Buffett can also afford to lose half his wealth and not even blink.

Not so for the average investor.

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Re: Has Buffett changed anyones mind

Post by Grt2bOutdoors » Fri Feb 10, 2012 10:06 am

FredPeterson wrote:Buffett can also afford to lose half his wealth and not even blink.

Not so for the average investor.

His comment is almost no different than Larry Fink - investors should allocate 100% to equities. Come on, printing this stuff in media is a disservice to the average guy who knows nothing about volatility, risk and has limited marbles to play with. We all know what happens when one loses their marbles.
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FinanceFun
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Re: Has Buffett changed anyones mind

Post by FinanceFun » Fri Feb 10, 2012 10:12 am

Why is everyone so damn ego-centric as to take Buffett's comments as advise? He isn't giving advise. He is giving an opinion. Frankly, a well thought out and articulated opinion. It was not an attempt to help the average investor with proper AA...

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Re: Has Buffett changed anyones mind

Post by Liquid » Fri Feb 10, 2012 10:16 am

GRT2BOUTDOORS wrote:
FredPeterson wrote:Buffett can also afford to lose half his wealth and not even blink.

Not so for the average investor.

His comment is almost no different than Larry Fink - investors should allocate 100% to equities. Come on, printing this stuff in media is a disservice to the average guy who knows nothing about volatility, risk and has limited marbles to play with. We all know what happens when one loses their marbles.
Buffet never said anything about individual investors and 100% equities. Nor did he say his company is 100% equities. Did anyone read the article?

Lets all keep attacking the straw man.
Last edited by Liquid on Fri Feb 10, 2012 10:18 am, edited 1 time in total.

trico
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Re: Has Buffett changed anyones mind

Post by trico » Fri Feb 10, 2012 10:18 am

My allocation of 85% bonds and 15% stocks has served me well over the last decade. This decade I was thinking of changing my allocation to 95% bonds and 5% stocks. Good luck my freinds.

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Re: Has Buffett changed anyones mind

Post by Grt2bOutdoors » Fri Feb 10, 2012 10:24 am

Liquid wrote:
GRT2BOUTDOORS wrote:
FredPeterson wrote:Buffett can also afford to lose half his wealth and not even blink.

Not so for the average investor.

His comment is almost no different than Larry Fink - investors should allocate 100% to equities. Come on, printing this stuff in media is a disservice to the average guy who knows nothing about volatility, risk and has limited marbles to play with. We all know what happens when one loses their marbles.
Buffet never said anything about individual investors and 100% equities. Nor did he say his company is 100% equities. Did anyone read the article?

Lets all keep attacking the straw man.
Not strong in reading comprehension? This is what I said - Buffett is ALMOST no different. What does that mean? Well, Buffett should at his age, be cognizant of how media distorts what is said and only hones in on sensationalistic publishing. Hence, we have articles flying all over the place saying "Buffett says to get out of bonds, etc.,etc. Now, we have Larry Fink whose company is dependent upon grabbing assets to turn a substantial profit making comments that folks should have a 100% allocation to equities.

Each of those fellows know they have the ability to influence markets through uninformed investors/speculators who use "news" to act upon without analyzing the impact to them. A little foresight by those two fellows would have had them "cage" their verbiage to properly convey their message.
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Re: Has Buffett changed anyones mind

Post by bottlecap » Fri Feb 10, 2012 10:44 am

Nothing Buffett says ever changes my mind. Not only has Buffett been wrong in the past, he is a sly dog with his own agenda. I always try to remember that just before I ignore him...

JT

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Liquid
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Re: Has Buffett changed anyones mind

Post by Liquid » Fri Feb 10, 2012 10:49 am

GRT2BOUTDOORS wrote:
Liquid wrote:
GRT2BOUTDOORS wrote:
His comment is almost no different than Larry Fink - investors should allocate 100% to equities. Come on, printing this stuff in media is a disservice to the average guy who knows nothing about volatility, risk and has limited marbles to play with. We all know what happens when one loses their marbles.
Buffet never said anything about individual investors and 100% equities. Nor did he say his company is 100% equities. Did anyone read the article?

Lets all keep attacking the straw man.
Not strong in reading comprehension? This is what I said - Buffett is ALMOST no different. What does that mean? Well, Buffett should at his age, be cognizant of how media distorts what is said and only hones in on sensationalistic publishing. Hence, we have articles flying all over the place saying "Buffett says to get out of bonds, etc.,etc. Now, we have Larry Fink whose company is dependent upon grabbing assets to turn a substantial profit making comments that folks should have a 100% allocation to equities.

Each of those fellows know they have the ability to influence markets through uninformed investors/speculators who use "news" to act upon without analyzing the impact to them. A little foresight by those two fellows would have had them "cage" their verbiage to properly convey their message.
This thread is about Buffett not Fink (reading comprehension).

Because we have posts flying all over the place saying "Buffett says to get out of bonds, etc," does not mean that he actually suggested that for the individual investor (reading comprehension).

The Buffet article was an adaptation from a shareholder letter (noted at the top of the article for those who read it), it was not directed at Joe Sixpack.

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Re: Has Buffett changed anyones mind

Post by KSActuary » Fri Feb 10, 2012 11:22 am

Nothing Buffett says is directed towards the average Joe because he could care less about the average Joe. He is more interested in affecting public opinion for his own reasons. Biggest hypocrit in the US regarding US tax policy.

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Re: Has Buffett changed anyones mind

Post by KyleAAA » Fri Feb 10, 2012 11:23 am

I don't think Buffett was saying investors shouldn't own bonds.

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Re: Has Buffett changed anyones mind

Post by GregLee » Fri Feb 10, 2012 11:24 am

GRT2BOUTDOORS wrote: Does your friends father have the following?:

A pension
Social Security
Other cash on the side
A paid off home
Income producing assets

If you answer yes to any of the above, your friends father is NOT totally invested in equities.
Enjoy the snow.
That's a good point. Although not the friend's father, I'll try standing in for him. I'm almost 70, and my portfolio is 97% stocks (and I'm very sympathetic to Buffet's views). However, I do have a pension, Social Security, and a paid off home. Looking at the proportion of my net worth in my portfolio and using the values that turned up in bubblehead's table, my portfolio is only about 12% of my net worth and stocks, then, a little less than that.
Greg, retired 8/10.

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Liquid
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Re: Has Buffett changed anyones mind

Post by Liquid » Fri Feb 10, 2012 11:34 am

GregLee wrote:
GRT2BOUTDOORS wrote: Does your friends father have the following?:

A pension
Social Security
Other cash on the side
A paid off home
Income producing assets

If you answer yes to any of the above, your friends father is NOT totally invested in equities.
Enjoy the snow.
That's a good point. Although not the friend's father, I'll try standing in for him. I'm almost 70, and my portfolio is 97% stocks (and I'm very sympathetic to Buffet's views). However, I do have a pension, Social Security, and a paid off home. Looking at the proportion of my net worth in my portfolio and using the values that turned up in bubblehead's table, my portfolio is only about 12% of my net worth and stocks, then, a little less than that.
Wow this puts some perspective when people report 100% stock allocations.

SteveB3005
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Re: Has Buffett changed anyones mind

Post by SteveB3005 » Fri Feb 10, 2012 11:40 am

Yes, I will never spend $2000 on a tailored suit in my senior years. I can see you hit an age where they all look like J.C. Penney , "Stafford House" on you.

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Re: Has Buffett changed anyones mind

Post by Grt2bOutdoors » Fri Feb 10, 2012 11:51 am

Liquid wrote:
GRT2BOUTDOORS wrote:
Liquid wrote:
GRT2BOUTDOORS wrote:
His comment is almost no different than Larry Fink - investors should allocate 100% to equities. Come on, printing this stuff in media is a disservice to the average guy who knows nothing about volatility, risk and has limited marbles to play with. We all know what happens when one loses their marbles.
Buffet never said anything about individual investors and 100% equities. Nor did he say his company is 100% equities. Did anyone read the article?

Lets all keep attacking the straw man.
Not strong in reading comprehension? This is what I said - Buffett is ALMOST no different. What does that mean? Well, Buffett should at his age, be cognizant of how media distorts what is said and only hones in on sensationalistic publishing. Hence, we have articles flying all over the place saying "Buffett says to get out of bonds, etc.,etc. Now, we have Larry Fink whose company is dependent upon grabbing assets to turn a substantial profit making comments that folks should have a 100% allocation to equities.

Each of those fellows know they have the ability to influence markets through uninformed investors/speculators who use "news" to act upon without analyzing the impact to them. A little foresight by those two fellows would have had them "cage" their verbiage to properly convey their message.
This thread is about Buffett not Fink (reading comprehension).

Because we have posts flying all over the place saying "Buffett says to get out of bonds, etc," does not mean that he actually suggested that for the individual investor (reading comprehension).

The Buffet article was an adaptation from a shareholder letter (noted at the top of the article for those who read it), it was not directed at Joe Sixpack.
Your barbs will get you nowhere and this isn't the first time I've seen you tossing out your agenda on the forum.
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Re: Has Buffett changed anyones mind

Post by yobria » Fri Feb 10, 2012 11:54 am

His comments have had no effect on my 100% stock allocation.

Nick

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Re: Has Buffett changed anyones mind

Post by Liquid » Fri Feb 10, 2012 12:17 pm

Buffet wrote:The riskiness of an investment is not measured by beta (a Wall Street term encompassing volatility and often used in measuring risk) but rather by the probability -- the reasoned probability -- of that investment causing its owner a loss of purchasing power over his contemplated holding period.
People may or may not agree with Mr. Buffett's view of risk. However, a typical Boglehead's balanced allocation to stocks and bonds, does meet his criteria of both preserving and growing buying power.

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Re: Has Buffett changed anyones mind

Post by umfundi » Fri Feb 10, 2012 9:23 pm

Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
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Re: Has Buffett changed anyones mind

Post by dharrythomas » Fri Feb 10, 2012 10:48 pm

While Buffett expresses plently of political and social opinions that I disagree with, I don't know why anyone would slam Buffett for promoting stock ownership.

Apparently he's lived by that his entire life, even when he didn't have enough money so that losing 95% would make no difference.

Frankly, he also had better returns as a manager BEFORE he had the benefit of size so that he could leverage special inside deals.

Jack Bogle has said that the best estimate of future return on bonds in current interest rates...so negative after the FEDs inflation target and taxes. :annoyed While I don't practice 100% equities, it's not completely unreasonable in the current environment.

Good Luck.

Harry

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Re: Has Buffett changed anyones mind

Post by CyberBob » Sat Feb 11, 2012 9:33 am

I prefer the advice of Buffett's mentor, Benjamin Graham, who suggested that you shouldn't go more than 75/25 in either direction towards stocks or bonds.
But it seems true that bonds don't really look so great at the moment with such low yields. Using a down-and-dirty Graham-esque valuation comparison, the MSCI U.S. 750 index (VLCAX) had an end-of-year earnings yield of 6.94% and the Intermediate-Term bond index (VBILX) had a yield of 2.46%, suggesting a definite tilt towards stocks as being the better 'value' at the moment.

Bob

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Re: Has Buffett changed anyones mind

Post by JPH » Sat Feb 11, 2012 10:14 am

I'm ignoring Buffett, too. I need that money I have in bonds and don't want to see it go away.
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Re: Has Buffett changed anyones mind

Post by NAVigator » Sat Feb 11, 2012 12:07 pm

Has Buffett changed anyones mind?
No, I still haven't been to Margaritaville, although it sounds appealing at times.

Similarly, I tune out "advice" in other areas such as investing.

Jerry
"I was born with nothing and I have most of it left."

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Re: Has Buffett changed anyones mind

Post by Valuethinker » Sat Feb 11, 2012 12:09 pm

umfundi wrote:
Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
Keith

I don't have the time to look this up, but the UK stock market 1973-75 fell about 90%. It then recovered (but 100% of 10% is still only 20%).

Other examples are the US stock market 1929-1939 which, from memory, fell by something around 50%. I don't believe the Dow recrossed its 1929 high until the 1950s.

During the period 1968-1980, the Dow, having peaked above 1000, did not do so again. Adjusted for inflation, returns were about -40% over that time.

And of course we have Japan, where the Nikkei is about 30% of the level it reached in 1990.

Whereas in the above cases, the stock market paid c. 4-6% dividend yield, so your total return picture was not so bad, in the Japanese case the Japanese bear started with a yield of around 0.5%, so the total return picture really is that bad.

We could of course name endless 3rd world crashes: not sure you've made any money (adjusted for inflation) in Argentina since 1900.

The real danger is this, investors have been conditioned by 1987, 2000-3003, 2008-09 that crashes are violent, but end quickly.

As Taylor Larrimore, remembering his family in the 1930s, will be the first to tell you, there is another model of stock market decline. One that may begin violently, includes a number of sharp rallies, but, fundamentally, goes on for more than a decade, destroying wealth at each turn. Hence his constant admonition, founded on the hard lessons of experience, not to ignore bonds in your investment strategy.

Japan is much closer to the latter model.

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Re: Has Buffett changed anyones mind

Post by Muchtolearn » Sat Feb 11, 2012 12:53 pm

I frankly could care less what that blowhard says.

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Ricola
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Re: Has Buffett changed anyones mind

Post by Ricola » Sat Feb 11, 2012 1:36 pm

I like all of this talk about going 100 percent into equities. Keep it up, and maybe it will spread...that way I can get back to even in equities from where I was in 2007. :)

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Re: Has Buffett changed anyones mind

Post by Harold » Sat Feb 11, 2012 1:54 pm

umfundi wrote:
Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
To me the evidence for the assertion lies more in the fundamentals of how prices are determined -- the relatively sparse actual data we have (i.e. a short timeframe in a strong industrial economy) while it could be used to support the assertion, is less convincing because we've experienced nowhere near the full range of possible scenarios.

While the prices for bond cash flows (i.e. dividends) will vary due to demand for capital at any given time, the prices for stock cash flows (i.e. dividends/earnings) will vary because we don't even know what those cash flows are! Not only are stock prices subject to fluctuations similar to bond prices due to the demand for capital, they are subject to fluctuations because estimates of future cash flows are continually changing, at times dramatically. It's an added level of mathematical complexity, and by probably any definition -- a significant added dimension in risk.

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Re: Has Buffett changed anyones mind

Post by alanf56 » Sat Feb 11, 2012 2:13 pm

I think Jimmy Buffett has the better plan... It just makes more sense to me! :)

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Re: Has Buffett changed anyones mind

Post by umfundi » Sat Feb 11, 2012 2:32 pm

RodC, and Harold:

My objection is in the appeal to people's behavioral fears about investing. The severity of the consequences of an event do not increase the probability of it occurring, though they do raise our fear.

With hindsight, 1987, 2000-3 and 2008-9 were simple hiccups on the Boglehead voyage. They are absolutely not any evidence that investing should be avoided, or is specially risky.

People are afraid (or optimistic) about events completely out of proportion to their probability. Investing - the stock market will drop and never recover. Flying - I will die in a plane crash, when the chances of your being killed driving to the airport are many times higher. Winning the PowerBall lottery.

Anyway, this is the wrong thread for this. I do apologize, though I was reacting to RodC's comment.

Best wishes,

Keith
Déjà Vu is not a prediction

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Re: Has Buffett changed anyones mind

Post by patelbhavesh » Sat Feb 11, 2012 2:54 pm

one thing , buffett has definitely helped me reconfirm my beliefs in index funds against hedge funds is his bet with Protege hedge funds(biggest hedge fund in US) that in a 10 year period , S&P 500 will beat the best hedge fund after the costs & fees.

http://longbets.org/362/

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Re: Has Buffett changed anyones mind

Post by Leesbro63 » Sat Feb 11, 2012 8:03 pm

dharrythomas wrote: Jack Bogle has said that the best estimate of future return on bonds in current interest rates...so negative after the FEDs inflation target and taxes. :annoyed While I don't practice 100% equities, it's not completely unreasonable in the current environment.

Good Luck.

Harry
What if the expected eventual rise in rates tanks stocks even worse than it tanks bonds?

Rodc
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Re: Has Buffett changed anyones mind

Post by Rodc » Mon Feb 13, 2012 10:27 am

umfundi wrote:
Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
You have heard of the Great Depression I presume? Or the 1970s?

Not to mention that history of investing in the US in no way includes all that could have happened here. This is not really as simple minded as looking at the last few decades in one country.

If you have read anything about the last crash you would know it could have been much worse.

Do you honestly believe that markets must always rise decade to decade?

For what is worth, I have no idea why you think my comment was grounded in behavioral issues. The hard cold truth is stocks are risky, you can lose money, even if they do come back you may need to liquidate at an unfortunate time.
Last edited by Rodc on Mon Feb 13, 2012 10:35 am, edited 2 times in total.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Midpack
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Re: Has Buffett changed anyones mind

Post by Midpack » Mon Feb 13, 2012 10:31 am

Liquid wrote:Buffett is not directing his comments at the average Boglehead holding a market portfolio, he is directing it at hot money holding 100% gold or bonds, because they overheard it at the water cooler.

Berkshire has "liquidity requirements" and therefore holds short-term securities.... guess what, individual investors have "liquidity requirements" as well.

Buffet does not "hate half your portfolio" as a recent thread claimed.
+1
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GregLee
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Re: Has Buffett changed anyones mind

Post by GregLee » Mon Feb 13, 2012 12:29 pm

umfundi wrote:
Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
I see nothing to take issue with here, because there is essentially no content to the observations in the first place. Are stocks risky? Of course -- everybody knows that. They may crash? Of course, that's possible. Could the 2008 crash been worse? Obviously. I don't see what there is to argue about, nor what is interesting. Maybe, if we could just get some better idea of what "may" means in this context, we could find something to argue about. Let's quantify. Let's agree that stocks may crash, and try to decide whether we think the chance of that happening in the next 50 years is one in a hundred, one in ten, one in two, or virtually certain. Then maybe we'll have a real argument.
Greg, retired 8/10.

Rodc
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Re: Has Buffett changed anyones mind

Post by Rodc » Mon Feb 13, 2012 12:42 pm

GregLee wrote:
umfundi wrote:
Rodc wrote:Stocks are risky. They may pay off and they may crash long term. The 2008 crash could very easily have been far worse and far longer.
Really? Like 2001? Like Black Monday? Since you invoke history, please give an example.

Statements like this absolutely infuriate me. There is no supporting data.

Keith
I see nothing to take issue with here, because there is essentially no content to the observations in the first place. Are stocks risky? Of course -- everybody knows that. They may crash? Of course, that's possible. Could the 2008 crash been worse? Obviously. I don't see what there is to argue about, nor what is interesting. Maybe, if we could just get some better idea of what "may" means in this context, we could find something to argue about. Let's quantify. Let's agree that stocks may crash, and try to decide whether we think the chance of that happening in the next 50 years is one in a hundred, one in ten, one in two, or virtually certain. Then maybe we'll have a real argument.
No need to quantify the unknown really.

There are people who think if you hold bonds (typo, I meant stocks) for 10 or 20 years stocks have essentially no risk. Why just look at history (of the last few decades in one very fortunate country)! Believing otherwise is just fear mongering, "all completely out of proportion to their probability", cashes are just "simple hiccups", fear there may be real risks is like fear of dying in an aircraft crash.

The observation that stock have actual risk would be, should be, trite. But somehow the fact that stocks have real risk and those risks should be factored into investment planning is not universal.

I can't quantify the risk. No one can. But that is no reason to ignore the risk.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: Has Buffett changed anyones mind

Post by umfundi » Mon Feb 13, 2012 8:06 pm

You said, and I paraphrase.
There are people who think if you hold stocks for 10 or 20 years stocks have essentially no risk. Believing otherwise is just fear mongering.
Your honor, I have no objection. :sharebeer
Déjà Vu is not a prediction

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