What Warren DIDN"T tell you
October 21, 2008
– Comments (7)
In his op ed piece...Mr. Buffett, in justifying buying stocks now makes the following statement:
Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.
First, let's make one point clear...No One can see the future.....not Mr. Buffett, Alstry,nor anyone else for that matter. So when playing with stats, for the deft hand, one can come up with almost any persuasive conclusion to meet their desired ends.
Yes, from 1900 to 2000, the DOW rose from 66 to something over 11,500 producing about a 6% compounded rate of return INCLUDING dividends. What Buffet fails to mention is that almost all of that return was produced in the second half of the century...from 1950 to 2000....the years Buffett enjoyed his high returns.
Since 2000, the DOW has produced NEGATIVE returns. If last century is any indication if this century...which it is NOT, we only have 42 years to go before we can expect to get some decent returns.
The point here is to think each time you read something...there is always two sides to a coin....Warren throwing in a small percentage of his net worth is very different than someone going all in with his retirement plan waiting for 10 years after they die to see their money come back.
Again, no one knows where things are going...hyperinflation or deflation..rising market or crashing market...but becareful drawing any conclusion from a limited biased perspective presented by anyone....especially Alstry.
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