|
03-05-2006, 05:36 AM
|
#1
|
Recycles dryer sheets
Join Date: Apr 2005
Posts: 184
|
Buffett 2005 letter out
Buffett letter out:
http://www.berkshirehathaway.com/letters/letters.html
He's still bearish on the dollar, but converting some of his foreign currency position into foreign equities
Interesting question demonstrating the power of compounding:
"Between December 31, 1899 and December 31, 1999, to give a really long-term example, the Dow rose from 66 to 11,497. (Guess what annual growth rate is required to produce this result; the surprising
answer is at the end of this section.)"
The answer is 5.8 percent - suprisingly low - of course 100 years is a lot of time.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
Re: Buffett 2005 letter out
03-05-2006, 06:19 AM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Feb 2005
Posts: 2,032
|
Re: Buffett 2005 letter out
Quote:
Originally Posted by Delawaredave
Buffett letter out:
The answer is 5.8 percent - suprisingly low - of course 100 years is a lot of time.
|
What he fails to mention (ok, he gives a minor mention) is that for a good chunk of that 100 years the dividend yield on the dow was close to that 5.6% so add that in too.
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 08:16 AM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: Buffett 2005 letter out
But isnt it also true that when the dividend was higher, annual rates of price appreciation were a bit lower?
And dont those growth rates include a number of long deflationary periods, which we are probably not going to happen in the future?
Just a sampler of why history, especially very long term history, may not be a very good indicator of whats going to happen. Even if you can wrap your brain around all the things that are different, how those will collectively affect investing is hard to determine.
Hell, we cant even predict the weather and there are fewer influences, better measurements, and good science on that.
Wasnt Buffet bearish on the dollar last year too, yet the dollar has done well? I'm not questioning the guy, he's usually right...it just occasionally takes some time for his rightness to show up.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 08:51 AM
|
#4
|
Moderator Emeritus
Join Date: Feb 2004
Location: minnesota
Posts: 13,228
|
Re: Buffett 2005 letter out
Quote:
Originally Posted by Cute n' Fuzzy Bunny
Hell, we cant even predict the weather and there are fewer influences, better measurements, and good science on that.
|
Not to be argumentative but I have read that there have been tremendous strides since the 1980s in predicting near term weather (1 to 7 day forecasts).
__________________
.
No more lawyer stuff, no more political stuff, so no more CYA
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 09:01 AM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
|
Re: Buffett 2005 letter out
Jimmy Buffett sent a letter??
__________________
Have Funds, Will Retire
...not doing anything of true substance...
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 09:05 AM
|
#6
|
Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,860
|
Re: Buffett 2005 letter out
Quote:
Originally Posted by Martha
Not to be argumentative but I have read that there have been tremendous strides since the 1980s in predicting near term weather (1 to 7 day forecasts).
|
My spouse the meteorologist confirms that (especially typhoon/hurricane forecasting) but she also says that "persistence" is still beating the heck out of all the other forecasters and their software.
"Persistence" simply forecasts that tomorrow's weather will be the same as today's weather.
The rest of the debate is pretty much like "active vs passive mutual fund management", SWRs, paying off the mortgage or not, and "tastes great, less filling".
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 09:42 AM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,708
|
Re: Buffett 2005 letter out
Our local forecaster, who my wife refers to as "Mark 'I dont know what I'm talking about' Finan" gets it right about half the time...and california weather in our region is pretty predictable.
From my time in new england...good luck ever forecasting that region. "If you dont like the wetha, just wait a while..."
We're all going to find out what happens. If you guessed right, you were just lucky.
Tastes great/less filling is easy. It tastes like rat urine. Isnt filling at all because its undrinkable.
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 09:50 AM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
|
Re: Buffett 2005 letter out
Tastes filling, less great...
__________________
Have Funds, Will Retire
...not doing anything of true substance...
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 11:36 AM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,899
|
Re: Buffett 2005 letter out
Quote:
Originally Posted by Delawaredave
The answer is 5.8 percent - suprisingly low - of course 100 years is a lot of time.
|
Typo? When I plugged 1.058^100 the math didn't work.
The letter actually says 5.3%. That makes sense (within rounding errors).
It is not clear (to me) if he adjusted the Dow values 66 to 11,497 to include dividends or not. I'm guessing he did not. If not adjusted, you would have got 5.3% PLUS the dividends. Seems reasonable?
-ERD50
|
|
|
Re: Buffett 2005 letter out
03-05-2006, 02:24 PM
|
#10
|
Full time employment: Posting here.
Join Date: Feb 2004
Location: Okanagan Valley
Posts: 808
|
Re: Buffett 2005 letter out
Hardly makes any difference. The Dow is not very representative of the market. And no one mentions the switches that have gone on in the Dow over all that time too.
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|