Warren Buffett released his annual letter this past weekend. Nerds like myself enjoy his annual letter and I wanted to share a few highlights with you. However, the letter is less than 30 pages so anyone can give it a quick read.
Optimism – This is a topic near and dear to my heart. So much of the reporting we hear about the market is negative. At the same time, we are all concerned about being caught in another tech bubble or mortgage crisis. Mr. Buffett acknowledges these events and still declares now as the best time for a child to be born in the US: “American business – and consequently a basket of stocks – is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that. Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle.”
Fear of the market – “First, widespread fear is your friend as an investor, because it serves up bargain purchases. Second, personal fear is your enemy. It will also be unwarranted. Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well.”
Hedge Funds and Warren’s hero – He spent quite a bit of time shredding the hedge fund industry and again revisited his hedge fund vs index bet (If you are not familiar with this, visit Google). Additionally, he referenced who he thinks should have an investing statue erected in his honor. “If a statue is ever erected to honor the person who has done the most for the American investor, the hands down choice should be Jack Bogle (Vanguard). For decades, Jack has urged investors to in ultra-low cost index funds…He is a hero to them and me.”
High Fees and Waste – He took some time to call out how Wall Street is still set up to send too many investors into under-performing active vehicles. “My calculation, admittedly very rough, is that the search by the very elite for superior investment advice has caused it, in aggregate, to waste more than $100 billion over the last decade.”
Again, these are just some of the highlights. I would share some great thought here, however, I think it is best left at me saying it is worth taking a few minutes to read the commentary of one of the greatest investors.
Dan Johnson CFP™ is the President and CCO of
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