I'm a big fan of Mr. Buffett, but his pronouncements on the future direction of the market the last 3-4 hears are confusing.
Here is a brief synopsis of his views:
November 1999 (S&P ~1400) Mr Buffett states that people who expect returns similar to the previous 17 years are going to be disappointed (Fortune magazine)
April 2001 (S&P ~1250) Mr Buffett states that a 6% return is realistic
December 2001 (S&P ~1150) Mr Buffett states in Fortune magazine that returns over the next decade or two after costs for investors would be approximately 7% per year
January 2002 (S&P ~1150) Mr Buffett reiterates same viewpoint on CNBC
July 2002 (S&P ~975) At annual meeting, Mr Buffett states that LT returns will be in the range of 6-7% per year
July 22, 2002 (S&P ~875) Mr Buffett states on CNBC that market may be in period of stagnation for an extended period of time and urges investors to sit out market for a while (author's note: If Mr Buffett expected 7% annual returns after costs when S&P 500 was at about 1150, surely he would have expected slightly if not much better with the same index at 875 (say 8% after costs). Certainly not a market that can be characterized as stagnant for an extended period!!
October 2002 (S&P ~800) Mr Buffett declares in Milan newspaper that US market is not undervalued. Again, with the market almost 25% lower than in December 2001, Mr Buffett seems to indicate a prolonged slump.
He reiterates basically the same sentiment in his annual report for 2002.
Mr Buffett seems to be behaving almost like the folks on wall street, namely, that as the market drops, he in concert drops his LT expectations for annual returns. From all that I've seen and read of Mr Buffett, he is way too smart to follow that herd mentality.
I would love to get people's views on what he really means about the LT (say next 10-20 years)future for the market.