Buffett Buying In

Warren Buffett, famous investor and CEO of Berkshire Hathaway Inc.,  has been getting a lot of attention recently for his company’s large purchases in Financial Firms.  He has also been very political during the election year.  His actions are what really count.  In the past, he has made investments in the right companies at the right times, this has made his holding company, Berkshire Hathaway, famous and successful.  Outside of his holding company, Warren Buffet told Bloomberg.com he was buying US stocks and may move his entire personal investment portfolio to US stocks.  Justifying his move to buy US stocks he said,

While short-term stock-market movements can’t be foretold, the likelihood is that the market will recover before the economy or general investor sentiment do so, and ‘if you wait for the robins, spring will be over.’

He talks more about the Great Depression and how much stocks increased from 1932 to 1933 (30%).  Read full article here.

It has long been known that Warren Buffett took after Benjamin Graham, author of “Security Analysis” and the father of value investing.  What’s interesting about Graham is that at the end of his career, he quits stocks altogether because of the uncertainy involved.  Here’s a quote from a WSJ article WSJ Article about Graham and his book “Security Analysis”

Just as the roughly 90% fall between 1929 and 1932 had seemed to be fading, the stock market dropped sharply again in the late 1930s. As market historian James Grant puts it, by the time Graham was ready to finish the 1940 edition, “He had had it.”

That helps explain one of the great ironies of market commentary. Graham himself stuck largely with stocks in his investment fund. But at the conclusion of his book, he advised the institutional investors among his readers to shun the stock market entirely and invest in bonds. Graham doubted they could stomach “the heavy responsibilities and the recurring uncertainties” stirred up by stocks.

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