Warren Buffet Takes Shareholder Questions

Warren Buffet may not be a particularly smart man in the book-learning sense of the word. However, as the second richest man in America and the richest whose wealth doesn't rely on a mediocre computer operating system, when he talks about investing, it is wise to listen. Over the week-end, his company, Berkshire Hathaway had its annual meeting at which the Oracle of Omaha took shareholder questions. Some of his observations are worth repeating verbatim.

On Stocks: "If you had to make a choice between long-term bonds at around 4.5% and equities for the next 20 years, I would certainly prefer equities. But if people think they can earn more than 6-7% a year, they're making a big mistake." Also, "Charlie [Munger, his right-hand man] and I spend no time talking about what the stock market is going to do, because we don't know. We're not operating on [the] basis of a market forecast."

On America: "Overall, I'm an enormous bull on the country. This is the most remarkable success story in the history of the world. It does not make sense to bet against America. I do not get pessimistic about the country. The real worry is what can be done by terrorists or governments that may have access to nuclear or other weapons."

On the NYSE/Archipelago Merger: "I personally think it would be better if the NYSE remained as a neutral not-for-big-profit institution. The exchange has done a very good job over the centuries. It's one of the most important institutions in the world. The enemy of investment is activity . . . . I know the American investor will not be better off if volume doubles on the NYSE."

On the Trade Deficit and the Dollar: "It seems to me that a $618 billion trade deficit, rich as we are, strong as this country is, well, something will have to happen that will change that. Most economists will still say some kind of soft landing is possible. I don't know what a soft landing is exactly, in how the numbers come down softly from levels like these . . . ."

And from Mr. Munger On the Big Picture: "A great civilization will bear a lot of abuse, but there are dangers in the current situation that threaten anyone who swings for the fences."


© Copyright 2005 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.
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