May 22, 2013 (DJIA 15,302.56, S&P500 1,658.03)
The following are my favorite quotes of Warren Buffett from a CNBC interview on May 6, 2013. I think reading these quotes offers a great deal of value to all investors.
“People pay way too— way too much attention to the short term. If you’re getting your money’s worth in a stock, buy it and forget it.”
“I bought my first stock, you know, when— when the United States was losing the war, right after Pearl Harbor. I didn’t buy it because I thought losing the war was a great idea, I bought it because I thought stocks were cheap and that eventually we’d win the war.”
“I like owning stocks. I do not like owning bonds now. There could be conditions under which we would own bonds. But— they’re conditions far different than what exist now.”
“You shouldn’t be 40% in bonds. I would have them having enough cash on hand so they feel comfortable, and then the rest in equities. I would have productive assets. I would favor those enormously over fixed dollars investments now, and I think it’s silly— to have some ratio like 30 or 40 or 50% in bonds. They’re terrible investments now.”
“I bought bonds back in the early ’80s. We bought— we made a lot of money and we bought zero coupon bonds that— I bought ’em personally. And— no, it— it— the price of everything determines its attractiveness. And— the price of stocks was way down a few years ago. The news was terrible, but the stocks were cheap, you know. News is better now. Stocks are higher. They’re still not— they’re not ridiculously high at all, and bonds are priced artificially. You’ve got some guy buying $85 billion a month. (LAUGH) And— that will change at some point. And when it changes, people could lose a lot of money if they’re in long-term bonds.”
“Chasing yield— is— is crazy. You know, just because you’d like to earn eight percent, (LAUGH) or— or— or you’d like to earn ten percent or you’d like to earn six percent. The world isn’t going to adapt to that. You— you have to think about what is the most intelligent thing to do and if— if that produces five p— percent or six percent, that’s the best you’re going to do. But to— to get enticed into some investment that— is riskier that you don’t understand because somebody promises you a higher yield— I mean, I can— you know, I can take it down to the waterfront or something like that and they’ll promise you 15 percent or something. (LAUGH) And it just doesn’t make any sense at all. And— but, pension funds— you know, they— they haven’t been that well managed over time.”
“AIG got in trouble basically ’cause— in terms of the derivative position they had. And I think they’re changing the rules on derivatives. If the rules in terms of collateral and so on had been what they’re going to be— it would’ve been a somewhat different struggle. It was— it was a very recklessly-managed institution.”
As always, we welcome the opportunity to discuss our outlook and investments with you.
Ronald R. Redfield cpa, pfs
Redfield, Blonsky & Co. LLC
15 North Union Avenue
Cranford, NJ 07016-1103
908 276 7226 phone
908 276 7274 fax
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