Dien Rice
May 8, 2008, 12:34 AM
there's still a lot we can learn from the "Oracle of Omaha"!
Here's a great article with highlights from what he said... (Thanks to my brother Thomas for pointing it out!)
http://money.cnn.com/2008/05/05/news/companies/buffet.pm.wrap/
One thing I'd like to highlight is Buffett's thoughts when the stock market goes down... Here it is...
(Quoting from the article...)
Then Buffet said one of the most remarkable things I've ever heard him say: "There's no reason we should become fearful if a stock goes down. If a stock goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month."
[...]
"We don't predict stock prices," he went on to say. "All we know is, the lower they go, the more interesting they get. I think it was Agatha Christie, who was married to an archeologist, who said: 'I don't mind getting older, because the older I get, the more interested my husband becomes in me.' Well, the lower stock prices go, the more interested we get in them..."
(End of quoting)
Note how this is the opposite of how most investors think... Buffett is a "bargain hunter". He's looking for assets he can buy at bargain-basement prices. In that way, he's not too different from someone shopping at a flea market, looking for bargains. That's why he's happy when prices are down - there are plenty of bargains to be bought! (Which he expects will go up in price later...)
(The question remains, though, you still need to know "when" to sell... So it's also good to know when you feel the prices are "too high", so you can sell out, and use the money to buy more bargains...)
In chatteling, you "make your money" when you buy (by buying at a low price). With stocks, it's similar...
(Quoting from the article...)
When a Korean journalist asked whether Berkshire would buy any other Korean companies in addition to its existing holding in steelmaker Posco, Buffett revealed that he had bought "a number of" Korean stocks for his personal portfolio "a few years ago," when "that stock market got about as cheap as any market I've seen in my lifetime."
But most Korean stocks are too small to have a significant impact on Berkshire's portfolio, so Buffett and Munger don't expect to put much money there. Nevertheless, "Korea represents sound value," said Munger, and Buffett added: "It's one of the better stock markets in the world."
(End of quoting)
This also got my attention... Even when the local stock market doesn't have anything you feel good about, you can go international. It's become easier and easier over the last 10 years or so to buy stocks internationally... (However, with international investments, currency fluctuations can also be a factor, so it's important to be aware of that.)
Anyway, just some food for thought! (There's more great stuff in the article too, that I didn't quote. So if the stock market interests you, make sure you read it...)
Best wishes,
Dien
Here's a great article with highlights from what he said... (Thanks to my brother Thomas for pointing it out!)
http://money.cnn.com/2008/05/05/news/companies/buffet.pm.wrap/
One thing I'd like to highlight is Buffett's thoughts when the stock market goes down... Here it is...
(Quoting from the article...)
Then Buffet said one of the most remarkable things I've ever heard him say: "There's no reason we should become fearful if a stock goes down. If a stock goes down 50%, I'd look forward to it. In fact, I would offer you a significant sum of money if you could give me the opportunity for all of my stocks to go down 50% over the next month."
[...]
"We don't predict stock prices," he went on to say. "All we know is, the lower they go, the more interesting they get. I think it was Agatha Christie, who was married to an archeologist, who said: 'I don't mind getting older, because the older I get, the more interested my husband becomes in me.' Well, the lower stock prices go, the more interested we get in them..."
(End of quoting)
Note how this is the opposite of how most investors think... Buffett is a "bargain hunter". He's looking for assets he can buy at bargain-basement prices. In that way, he's not too different from someone shopping at a flea market, looking for bargains. That's why he's happy when prices are down - there are plenty of bargains to be bought! (Which he expects will go up in price later...)
(The question remains, though, you still need to know "when" to sell... So it's also good to know when you feel the prices are "too high", so you can sell out, and use the money to buy more bargains...)
In chatteling, you "make your money" when you buy (by buying at a low price). With stocks, it's similar...
(Quoting from the article...)
When a Korean journalist asked whether Berkshire would buy any other Korean companies in addition to its existing holding in steelmaker Posco, Buffett revealed that he had bought "a number of" Korean stocks for his personal portfolio "a few years ago," when "that stock market got about as cheap as any market I've seen in my lifetime."
But most Korean stocks are too small to have a significant impact on Berkshire's portfolio, so Buffett and Munger don't expect to put much money there. Nevertheless, "Korea represents sound value," said Munger, and Buffett added: "It's one of the better stock markets in the world."
(End of quoting)
This also got my attention... Even when the local stock market doesn't have anything you feel good about, you can go international. It's become easier and easier over the last 10 years or so to buy stocks internationally... (However, with international investments, currency fluctuations can also be a factor, so it's important to be aware of that.)
Anyway, just some food for thought! (There's more great stuff in the article too, that I didn't quote. So if the stock market interests you, make sure you read it...)
Best wishes,
Dien
