"Buffett Sees Danger In Stock Market" -- Reuters
[The Reuters article copied below tries to make Buffett sound much more alarmist than he actually was. In fact, Buffett deftly deflected all of Koppel's invitations to cry "Wolf!", as would be expected of a great statesman of finance.
porx recollection is that, in response to Koppel's question about what a 25-yr old making $20,000 to $30,000 per year should do, Buffett mentioned an Index fund, as one possibility. However, he was practically muffling the answer into his jacket sleeve, such was his lack of real enthusiasm. Perhaps he viewed it as porc does -- the lesser evil, when compared to timing.
Yet, Buffett was quite emphatic on one point -- don't make any purchases on borrowed money. Not only does this mean not using margin, but, as he mentioned earlier in the interview, it means paying off credit card debts before committing any funds in the Market, as there is no realistic possibility of earning more in equities, at these inflated prices, as the 15% or more that credit cards charge annually.]
WASHINGTON (Reuters) - Billionaire investor Warren Buffett said
Tuesday the U.S. stock market had seen virtually unprecedented
increases in recent years and was in a ''dangerous'' period that
could see stock values drop sharply.
Stocks had risen ''terrifically'' over the past 15 years, driven
higher by lower interest rates and rising return on equity,
Buffett told the ABC News ''Nightline'' program.
''After a while the very act of stocks going up starts drawing in
other people who get excited about the fact that their neighbor
made some money ... and that's when you get into the dangerous
periods,'' he said.
Asked when the bubble would burst, Buffett said, ''You never
know. You know that valuations are high, by historic standard.
You know that the level of speculation is high, by any historic
standards, and you now that it doesn't go on forever ... but you
don't know when it ends.''
Buffett told ABC's Ted Koppel the ongoing market rally had
''gathered a lot of momentum in the last few years,'' signaling
that a downturn could be around the corner.
''The last three years prior to this one, when the S & P
(Standard & Poor's index) has gone up 20 percent a year, that's
almost unprecedented,'' he said in the television interview,
filmed at a Dairy Queen restaurant in Omaha, Nebraska, where the
investor lives.
Buffett's holding company, Berkshire Hathaway Inc (), owns Dairy
Queen.
Buffett told ABC he had built a $30 billion endowment fund --
essentially his personal net worth -- for philanthropic purposes
when he dies and said a team of six well-qualified people helped
determine how that money would be put to use.
He said one area he was particularly concerned about was the
proliferation of nuclear weapons and technology, and said he was
funding some efforts to study the problem. But he acknowledged
that he did not know how to ''attack the problem with money.''
He said his three children would receive some money from his
estate after he died, but he did not believe in the ''divine
right of the womb'' and felt they should prove themselves in
society, rather than inherit the great wealth he has amassed in
his lifetime.
porc --''''> |
