Money and Finance
Looks like Carol Loomis, Doris Burke and me (and Will, who emailed me about this months ago) are all on the same page.
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According to investing guru Warren Buffett, U.S. stocks are a logical investment when their total market value equals 70% to 80% of Gross National Product.
- Bill Gates' Book Review Of "tap Dancing To Work"
I never pass up the chance to spend time with my friend, Warren Buffett, because time with him is the essence of time well spent. Every time we get together, I learn a lot. I laugh a lot. And I leave hungry for more. So it’s no surprise that I’m really...
- Warren Buffett & Carol Loomis On Marketplace
Found via the Corner of Berkshire & Fairfax. Link to: Warren Buffett & Carol Loomis on Marketplace …………….. Related book: Tap Dancing to Work Related previous posts: Carol Loomis and Warren Buffett on Charlie Rose Warren Buffett and...
- The Wit And Wisdom Of Warren Buffett – By Carol J. Loomis
Fortune met Warren Buffett by accident in 1966. I was writing an investing article about another man, Alfred Winslow Jones, who wasn't famous at that moment, but was about to be because of the article. Jones was running something called a hedge fund,...
- Warren Buffett: Read All About Him – By Jason Zweig
Thanks to Shai for passing this along. This fall, two more books on Warren Buffett come out. The first, Tap Dancing to Work(Portfolio/Penguin), is a compilation of more than 80 articles about (and several by) Buffett. It’s edited by Carol Loomis, who...
- Fortune: December 2001 - Warren Buffett On The Stock Market
It's always a decent time to go back and read Mr. Buffett's old thoughts, but now is probably a better time than most.-To break things down another way, we had three huge, secular bull markets that covered about 44 years, during which the Dow...
Money and Finance
Fortune: Loomis, Burke - Buffett's metric says it's time to buy
Looks like Carol Loomis, Doris Burke and me (and Will, who emailed me about this months ago) are all on the same page.
-
-
According to investing guru Warren Buffett, U.S. stocks are a logical investment when their total market value equals 70% to 80% of Gross National Product.
Is it time to buy U.S. stocks?
According to both this 85-year chart and famed investor Warren Buffett, it just might be. The point of the chart is that there should be a rational relationship between the total market value of U.S. stocks and the output of the U.S. economy - its GNP.
Fortune first ran a version of this chart in late 2001 (see "Warren Buffett on the stock market"). Stocks had by that time retreated sharply from the manic levels of the Internet bubble. But they were still very high, with stock values at 133% of GNP. That level certainly did not suggest to Buffett that it was time to buy stocks.
But he visualized a moment when purchases might make sense, saying, "If the percentage relationship falls to the 70% to 80% area, buying stocks is likely to work very well for you."
Well, that's where stocks were in late January, when the ratio was 75%. Nothing about that reversion to sanity surprises Buffett, who told Fortune that the shift in the ratio reminds him of investor Ben Graham's statement about the stock market: "In the short run it's a voting machine, but in the long run it's a weighing machine."
Not just liking the chart's message in theory, Buffett also put himself on record in an Oct. 17 New York Times op-ed piece, saying that he was personally buying U.S. stocks after a long period of owning nothing (outside of Berkshire Hathaway (BRKB) stock) but U.S. government bonds.
He said that if prices kept falling, he expected to soon have 100% of his net worth in U.S. equities. Prices did keep falling - the Dow Jones industrials have dropped by about 10% since Oct. 17 - so presumably Buffett kept buying. Alas for all curious investors, he isn't saying what he bought.
According to both this 85-year chart and famed investor Warren Buffett, it just might be. The point of the chart is that there should be a rational relationship between the total market value of U.S. stocks and the output of the U.S. economy - its GNP.
Fortune first ran a version of this chart in late 2001 (see "Warren Buffett on the stock market"). Stocks had by that time retreated sharply from the manic levels of the Internet bubble. But they were still very high, with stock values at 133% of GNP. That level certainly did not suggest to Buffett that it was time to buy stocks.
But he visualized a moment when purchases might make sense, saying, "If the percentage relationship falls to the 70% to 80% area, buying stocks is likely to work very well for you."
Well, that's where stocks were in late January, when the ratio was 75%. Nothing about that reversion to sanity surprises Buffett, who told Fortune that the shift in the ratio reminds him of investor Ben Graham's statement about the stock market: "In the short run it's a voting machine, but in the long run it's a weighing machine."
Not just liking the chart's message in theory, Buffett also put himself on record in an Oct. 17 New York Times op-ed piece, saying that he was personally buying U.S. stocks after a long period of owning nothing (outside of Berkshire Hathaway (BRKB) stock) but U.S. government bonds.
He said that if prices kept falling, he expected to soon have 100% of his net worth in U.S. equities. Prices did keep falling - the Dow Jones industrials have dropped by about 10% since Oct. 17 - so presumably Buffett kept buying. Alas for all curious investors, he isn't saying what he bought.
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Related previous posts:
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Fortune: December 2001 - Warren Buffett on the Stock Market
Buy American. I Am. - By WARREN E. BUFFETT
Warren Buffett's 4 Market Call Articles
- Bill Gates' Book Review Of "tap Dancing To Work"
I never pass up the chance to spend time with my friend, Warren Buffett, because time with him is the essence of time well spent. Every time we get together, I learn a lot. I laugh a lot. And I leave hungry for more. So it’s no surprise that I’m really...
- Warren Buffett & Carol Loomis On Marketplace
Found via the Corner of Berkshire & Fairfax. Link to: Warren Buffett & Carol Loomis on Marketplace …………….. Related book: Tap Dancing to Work Related previous posts: Carol Loomis and Warren Buffett on Charlie Rose Warren Buffett and...
- The Wit And Wisdom Of Warren Buffett – By Carol J. Loomis
Fortune met Warren Buffett by accident in 1966. I was writing an investing article about another man, Alfred Winslow Jones, who wasn't famous at that moment, but was about to be because of the article. Jones was running something called a hedge fund,...
- Warren Buffett: Read All About Him – By Jason Zweig
Thanks to Shai for passing this along. This fall, two more books on Warren Buffett come out. The first, Tap Dancing to Work(Portfolio/Penguin), is a compilation of more than 80 articles about (and several by) Buffett. It’s edited by Carol Loomis, who...
- Fortune: December 2001 - Warren Buffett On The Stock Market
It's always a decent time to go back and read Mr. Buffett's old thoughts, but now is probably a better time than most.-To break things down another way, we had three huge, secular bull markets that covered about 44 years, during which the Dow...