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Berkshire Hathaway Inc. Message Board

  • johncthay johncthay Jan 9, 2008 11:26 AM Flag


    I believe that we are headed for a serious recession that will take everything down to support levels we haven't seen in a few years. However, being relatively new to BRK-B, I wonder if the effects of the recession will be as significantly felt here. Thoughts?

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    • Anyone else following the French Bank Societe Generale scandal: The most poignant statement I found in the article is, "The point of a financial system is to lend money for economic activities which, in turn, generate profits... It is not to go and speculate on different activities which create enormous flows and profits in a few hours." If only the philosophy held true for all banks.

      So are we facing a global recession? Britain has their own credit crisis. The four largest European economies, Britain, France, Germany and Italy, are seeing slower growth. Is this trend related to the US economy? Or is there sufficient decoupling of European, Asian and US economies to prevent a global recession?

    • If you really believe yourself then you should sell first thing in the AM and hold all the money in hand and wait till the market falls and BRK/B falls 25%. then buy, Then you can have 5 shares for every 4 you sold. Now the main question is do you really believe yourself?

    • guestr00m Jan 21, 2008 5:50 PM Flag

      GR8 observation.

    • Wise advice, especially in the core area (large cap). You can find active managers that consistently outperform the market in the small, mid and international arenas but it's very tough for an active manager to keep up when he has to make up 1% per annum (in fees). We have built an investment firm built on this concept; fee-only, conservative on the core, seeking active winners in the other areas. The most important and impactful component of any portfolio's performance is the allocation and that is where you should be the main focus. Picking individual funds, timing the market, fees and everything else will not change the performance of your portfolio if your allocation is off.

    • If you don't have it, John Bogle's book on mutual funds is as solid as you can find. The bottom line is that the vast majority have tried and failed to outperform the indicies. Think about it: If the mkts. historical norm is 10% per year, a fund whose fixed costs are %1.5 would have to match the passively managed index + %15. Never mind the tax inefficiencies of active trading. To buy when others are selling takes a tremendous set of stones. In every other area of economics, the buyer welcomes a sale: winter hats in summer, air units in winter. Somehow, with investing, this logic of buying on sale goes out the window. As I said in my previous post, little strokes fell great oaks. Accumulate shares...Keep the costs low and build a core portfolio out of low cost ETF's or index funds..Arrange for automatic investments..It takes a long time, but time passes quickly...A lot of it is counterintuitive....I still like BRK-B long term. I also like LTR...The insurance business is just one of the best ways to accumulate wealth over time. Give a guy like Buffet or the Tisch family access to low cost funds and magic happens. .

    • JWIRTEL: Your investment philosophy is spot on.

    • I'm not a doomsayer. It's just that the forces of greed and fear have remained in constant oscillation in the human psyche since the advent of capitalism...So things are never as good nor as bad as they seem to be because there is such a strong emotional element imbedded in investing. Everybody's got a system, a way that he/she feels gives one a leg up on everybody else. The facts are that nobody knows, and if you had a fool proof system, go on margain, borrow from your credit cards, leverage your daughter's college fund and plunge...I'm tired of "foolproof systems". The only "approach" to wealth acculation and preservation that I know that has worked over time is to established a well diversified portfolio including both foreign and domestic stocks. Keep the costs of these funds down by either investing in index funds or ETF's. Add to these funds on a regular basis regardless of mkt. conditions, and have a hell of a long time horizon. With 10%-20% of excess funds, go ahead and take fliers on some wild ass genetics company. Diversification, low costs and dollar cost averaging: pretty boring stuff, but, in the long run, it's the only approach that I know of that will stack the odds in your favour. Best books on investing? 1. Bogle on Mutual Funds 2. Jeremy Siegal "Stocks for the Long Run 3. David Dreman "The Contrarian Investor".

    • Well said..
      The cost of fuel is up also..

    • During the Great Depression 2 businesses thrieved 1. booze 2. entertainment. If you want to go to the most accurate predictor of the economy, one needs to look no further than the stock mkt. Forget factory orders, same store sales and trade figures....The major stock indicies will tell you all you need to know..I'd say a 15% fall from the mkt. high is a pretty damned decisive statement in the bearish corner. When you started to hear lay people claim that "you can't lose when you buy real estate" you know it was time to cash in the chips.Fort Lauderdale/Miami saw 3 consecutive years of 30% + gains in prices while median incomes were flatlining..Taxes and insurance were up...Either the water level had to change or you had to raise the bridge. The whole thing was made sustainable via the availability of credit. Well, that's changed and the chickens are coming home to roost.

    • Play it safe.. get CD's.. I speak from experience, was in this stock 10 years... all I can say is the pain wasn't worth the gain...

      Do yourself a favor, rest easy at night, otherwise your life will be a hell, getting rich from the stock market is for the lucky few,and the big boys, for the rest it's more of a pain in the you know what.

      • 2 Replies to starcommand777
      • Telling people to put their money in CDs is the worst advice ever. Net loss after inflation. People make the stock market much harder than it is. Put your money with great companies that have been in business for a long time and you will do fine.

      • Better to be an owner than a loaner...Business go up in value over time....The operative words> "over time"..It's time in the mkt, not "timing" the mkt.
        Dollar cost in over a working life time and you will be rich..Fidelity 4 in 1 Index is a great place to start..Don't forget the foreign mkts..Hell Coke and Boeing do 75% of their biz overseas; shouldn't you?

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