When the richest man in the world talks people listen, or they should. Warren Buffett speaks.
Yup, we’ve heard from Warren.
Some key points I want to highlight:
He mentioned that we are going to be seeing a ton of inflation, so holding onto $US cash is silliness. I totally agree, and this jives with my recommendations yesterday.
In the long term he projects that the US economy will come back and when it does that the market will already have priced that in. He relates the price of the DJIA before the end of the great depression and how it took longer before the economy came back but when it did the market had already moved higher. He is looking long term and stresses heavily that he is not in it for the short term. I also agree, and as you can see from my suggestions yesterday, that now could be a good time to dip a toe into equities, and start to stair step in with a heavy emphasis on the stair step. This means that on low days like yesterday’s cheap price of Google around 310 during the day. It was down to 10 P/E which is very low for Google.
I still stand behind my statement yesterday, but after Warren’s statement I would revise it to look more like this:
Equities: $35K (Stair step in) – Only 25% at most in one day, on a low day.
Commodities: $50K (Gold, Silver, Oil) Keep getting better for buying.
Foreign Currency: $15K
All that this does is move all the $US cash to equities and I maintain the other two suggestions.
Related posts:
