Comments on: Warren Buffett on Market Fluctuations: Investors Gain When the Market Falls http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/ personal finance that makes cents Fri, 16 May 2008 03:10:22 +0000 http://wordpress.org/?v=2.5.1 By: GL http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-131410 GL Thu, 08 May 2008 22:38:25 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-131410 @ Caitlin: "Once you buy them, you want them to rise." And they will - over long term. Well, unless the company you've invested in went belly up... (Which is why Buffett recommends index funds for beginner investors.) Give it enough time, and things will even out and get better. When the prices are low, it's a good time to buy. When they eventually get high again, it's a good time to either sell or keep them and gloat. :D @ Caitlin:
“Once you buy them, you want them to rise.”
And they will - over long term. Well, unless the company you’ve invested in went belly up… (Which is why Buffett recommends index funds for beginner investors.) Give it enough time, and things will even out and get better.

When the prices are low, it’s a good time to buy. When they eventually get high again, it’s a good time to either sell or keep them and gloat. :D

]]> By: bhogan at Financial Independence http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-131401 bhogan at Financial Independence Thu, 08 May 2008 21:03:03 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-131401 I hope that everyone understands the wisdom that warren espouses. when he buys stock he is not actually buying stock. He is buying a company that he wants to be profitable and generally is very profitable. The key to his ways is buy a business that uses its money wisely and reinvests it in those things that are also profitable. The effect in turn effects stock price which in the long run goes up. I hope that everyone understands the wisdom that warren espouses. when he buys stock he is not actually buying stock. He is buying a company that he wants to be profitable and generally is very profitable.

The key to his ways is buy a business that uses its money wisely and reinvests it in those things that are also profitable. The effect in turn effects stock price which in the long run goes up.

]]> By: Caitlin http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-131333 Caitlin Thu, 08 May 2008 09:59:47 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-131333 This is a little disingenous. We all know it's not quite as simple as that. You buy hamburgers and cars to consume/use, not as an investment. Falling stock prices are good if you want to buy stocks but it's not so good for stocks you already own. Once you buy them, you want them to rise. There are parallels to the housing market as well, of course. Personally I'm cheering the falls in house prices because I would like to buy a house in the medium term future. I wouldn't be happy if I already owned a house though. This is a little disingenous. We all know it’s not quite as simple as that. You buy hamburgers and cars to consume/use, not as an investment.

Falling stock prices are good if you want to buy stocks but it’s not so good for stocks you already own. Once you buy them, you want them to rise.

There are parallels to the housing market as well, of course. Personally I’m cheering the falls in house prices because I would like to buy a house in the medium term future. I wouldn’t be happy if I already owned a house though.

]]> By: GL http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-131152 GL Wed, 07 May 2008 06:54:16 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-131152 @ Alyson Wiley: Buffett has been saying the same thing for decades. He may be right this time, but his Berkshire-Hathaway is still better than 95% of the rest of the market. @ Katrina R: When Buffett bought a piece of PacifiCorp, he had to sign a contract that he would not intervene with its actions. In other words, he wouldn't be able to do a thing about the Klamath River dam even if he wanted to. Oh, and it's Buffett with two t's, not "Buffet." :^p @AJC: I second that... I really wish they pre-screen questions. Three (!) q's from the Klammath River hippies, 1 from the religious guy from Oklahoma, and 1 from the Florida lady who just kept going on and on about how she teaches her students. *sigh* We could've had 5 normal (or good, if we're lucky) questions instead of those.. @ Alyson Wiley:
Buffett has been saying the same thing for decades. He may be right this time, but his Berkshire-Hathaway is still better than 95% of the rest of the market.

@ Katrina R: When Buffett bought a piece of PacifiCorp, he had to sign a contract that he would not intervene with its actions. In other words, he wouldn’t be able to do a thing about the Klamath River dam even if he wanted to.
Oh, and it’s Buffett with two t’s, not “Buffet.” :^p

@AJC:
I second that… I really wish they pre-screen questions. Three (!) q’s from the Klammath River hippies, 1 from the religious guy from Oklahoma, and 1 from the Florida lady who just kept going on and on about how she teaches her students. *sigh* We could’ve had 5 normal (or good, if we’re lucky) questions instead of those..

]]> By: AJC @ 7million7years http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130931 AJC @ 7million7years Tue, 06 May 2008 07:09:41 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130931 I went ... it was like Woodstock, and Warren and Charlie even signed T-shirts and books for all (hundreds) of International Shareholders ... I brought my passport so that I looked like a 'foreigner'. His advice, as usual, was excellent ... but, too many questions from the audience were political/irrelevant/cr*p. AJC. I went … it was like Woodstock, and Warren and Charlie even signed T-shirts and books for all (hundreds) of International Shareholders … I brought my passport so that I looked like a ‘foreigner’.

His advice, as usual, was excellent … but, too many questions from the audience were political/irrelevant/cr*p. AJC.

]]> By: Ron@TheWisdomJournal http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130907 Ron@TheWisdomJournal Tue, 06 May 2008 02:16:52 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130907 Wasn't it Buffet who said, "Buy when others are fearful and sell when others are greedy?" Wasn’t it Buffet who said, “Buy when others are fearful and sell when others are greedy?”

]]> By: Katrina R. http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130824 Katrina R. Mon, 05 May 2008 18:53:01 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130824 Off topic, but I question Warren Buffet right now because of his lack of concern with an issue about the environment he has the power to fix right now: I read an article in the SF Chronicle Magazine two weeks ago about Buffet stonewalling Yurok tribal leaders who are trying to get the hydroelectric company he owns, PacifiCorp Power, to address the salmon population issues caused by daming up the Klamath River. Off topic, but I question Warren Buffet right now because of his lack of concern with an issue about the environment he has the power to fix right now: I read an article in the SF Chronicle Magazine two weeks ago about Buffet stonewalling Yurok tribal leaders who are trying to get the hydroelectric company he owns, PacifiCorp Power, to address the salmon population issues caused by daming up the Klamath River.

]]> By: Alison Wiley http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130821 Alison Wiley Mon, 05 May 2008 18:29:15 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130821 I'm paying attention to Mr. Buffett's statement that we shouldn't expect "stellar returns" ever again, but only "decent growth". I think he's being grounded and realistic in this. I also think that the recent downturn in retail is bringing us into a more sustainable situation -- and that there is still plenty for all of us in an economy that becomes right-sized. More at Diamond-Cut Life, http://alison97215.wordpress.com. I’m paying attention to Mr. Buffett’s statement that we shouldn’t expect “stellar returns” ever again, but only “decent growth”. I think he’s being grounded and realistic in this. I also think that the recent downturn in retail is bringing us into a more sustainable situation — and that there is still plenty for all of us in an economy that becomes right-sized. More at Diamond-Cut Life, http://alison97215.wordpress.com.

]]> By: JerichoHill http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130819 JerichoHill Mon, 05 May 2008 18:08:07 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130819 Dang it JD! I would've gone to Omaha. I've been meaning to go for two years now, but convinced myself not to this year. I'm going next year for sure. Dang it JD! I would’ve gone to Omaha. I’ve been meaning to go for two years now, but convinced myself not to this year. I’m going next year for sure.

]]> By: Red http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130814 Red Mon, 05 May 2008 17:41:25 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130814 Excellent article! I've been enjoying getting my retirement mutual funds at a discount the past 6 months. Excellent article! I’ve been enjoying getting my retirement mutual funds at a discount the past 6 months.

]]> By: John Clark http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130806 John Clark Mon, 05 May 2008 16:36:29 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130806 Just returned from Omaha. With a couple exceptions, I've attended every Berkshire annual meeting over the past decade and a half. Being at the meeting in person is worth every penny it takes to get there. The intangible, psychic rewards alone are worth it. I've already made my hotel reservations for next year. If I'd only discovered Berkshire about a quarter century earlier... Just returned from Omaha. With a couple exceptions, I’ve attended every Berkshire annual meeting over the past decade and a half. Being at the meeting in person is worth every penny it takes to get there. The intangible, psychic rewards alone are worth it. I’ve already made my hotel reservations for next year.

If I’d only discovered Berkshire about a quarter century earlier…

]]> By: jtimberman http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130798 jtimberman Mon, 05 May 2008 15:18:25 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130798 This is why, when the stock market is "down", Dave Ramsey squawks, "You're at K-Mart and the blue light is flashing!" He knows that 97% of the rolling 5 year periods in the stock market's history have made money, and 100% of the 10 year periods have as well. This is why, when the stock market is “down”, Dave Ramsey squawks, “You’re at K-Mart and the blue light is flashing!”

He knows that 97% of the rolling 5 year periods in the stock market’s history have made money, and 100% of the 10 year periods have as well.

]]> By: J.D. http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130794 J.D. Mon, 05 May 2008 14:09:30 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130794 Hey, GL: <a href="http://www.berkshirehathaway.com/letters/letters.html" rel="nofollow">Buffett's annual letters to shareholders</a> I picked up a copy of "Poor Charlie's" via Amazon just last week. It's sitting on my bedstand. Great stuff. Hey, GL:

Buffett’s annual letters to shareholders

I picked up a copy of “Poor Charlie’s” via Amazon just last week. It’s sitting on my bedstand. Great stuff.

]]> By: GL http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130793 GL Mon, 05 May 2008 14:04:02 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130793 @ The Financial Philosopher: "When he dies, I imagine shares of his company will drop sharply, at least in the short-term, especially if his death comes sooner than later." True, but the drop will be temporary. The intrinsic value wil not change: Coca-Cola, GEICO, See's Candies, and all the other Berkshire-Hathaway companies will go on uninterrupted. Buffett has a succession plan in place, so when (or if? :)) this unfortunate event takes place, it would be a great day to buy. ;) @ JD: Could you post a link to the page with all the annual letters? I don't have it at my hand, but I'm sure your readers would appreciate this free resource of financial wisdom. :D By the way, I attended their meeting and it was brilliant - a Woodstock in every senseof the word, with a record 31,000 people in attendance! The exhibit hall was great, and all of the products there were being sold at a significant discount. (I managed to get a brand new edition of "Poor Charlie's Almanack" for 20% off.) Hope to see you there next year! ;) @ The Financial Philosopher:
“When he dies, I imagine shares of his company will drop sharply, at least in the short-term, especially if his death comes sooner than later.”

True, but the drop will be temporary. The intrinsic value wil not change: Coca-Cola, GEICO, See’s Candies, and all the other Berkshire-Hathaway companies will go on uninterrupted. Buffett has a succession plan in place, so when (or if? :)) this unfortunate event takes place, it would be a great day to buy. ;)

@ JD:
Could you post a link to the page with all the annual letters? I don’t have it at my hand, but I’m sure your readers would appreciate this free resource of financial wisdom. :D By the way, I attended their meeting and it was brilliant - a Woodstock in every senseof the word, with a record 31,000 people in attendance! The exhibit hall was great, and all of the products there were being sold at a significant discount. (I managed to get a brand new edition of “Poor Charlie’s Almanack” for 20% off.)

Hope to see you there next year! ;)

]]> By: KC http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130787 KC Mon, 05 May 2008 13:28:17 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130787 I want prices of the stocks I own to go higher and the rest to go lower, so I can buy them if neccessary :) I want prices of the stocks I own to go higher and the rest to go lower, so I can buy them if neccessary :)

]]> By: The Financial Philosopher http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130781 The Financial Philosopher Mon, 05 May 2008 13:11:14 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130781 It's interesting to note that the stock market is the only "market" in the world where consumers do not like to see a "sale." In the long-term, as Buffett has iterated, the prudent investor makes tremendously more money during down markets than in up markets. With regard to Berkshire, I would be tempted to buy shares if Buffett were 10 years younger. Buffett's name represents a significant portion of the value built in to the shares. When he dies, I imagine shares of his company will drop sharply, at least in the short-term, especially if his death comes sooner than later. I hope he lives long but his words and wisdom will always be with us, regardless of his fate... Thanks for the post... It’s interesting to note that the stock market is the only “market” in the world where consumers do not like to see a “sale.”

In the long-term, as Buffett has iterated, the prudent investor makes tremendously more money during down markets than in up markets.

With regard to Berkshire, I would be tempted to buy shares if Buffett were 10 years younger. Buffett’s name represents a significant portion of the value built in to the shares. When he dies, I imagine shares of his company will drop sharply, at least in the short-term, especially if his death comes sooner than later.

I hope he lives long but his words and wisdom will always be with us, regardless of his fate…

Thanks for the post…

]]> By: Trent Hamm http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130780 Trent Hamm Mon, 05 May 2008 13:10:57 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130780 B. Smith is right - our actions often betray what we know to be the right choice. That's why personal finance is so tough. B. Smith is right - our actions often betray what we know to be the right choice. That’s why personal finance is so tough.

]]> By: B Smith at Wealth and Wisdom http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130775 B Smith at Wealth and Wisdom Mon, 05 May 2008 13:02:49 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130775 Everyone knows to buy low and sell high. Knowing and doing are two different things. Their actions are more consistent with buy high and sell low. Everyone knows to buy low and sell high. Knowing and doing are two different things. Their actions are more consistent with buy high and sell low.

]]> By: Sam http://www.getrichslowly.org/blog/2008/05/05/warren-buffett-on-market-fluctuations-investors-gain-when-the-market-falls/#comment-130771 Sam Mon, 05 May 2008 12:26:53 +0000 http://www.getrichslowly.org/blog/?p=1725#comment-130771 My husband and I remind ourselves, regularly - almost every morning when we watch the news, that a down market allows us to by stocks/funds at a bargain. Its easy to get sucked in by the daily doom and gloom but if you remind yourself that you are in for the long haul then a down market is actually to your benefit. This is true for the real estate market too. My husband and I remind ourselves, regularly - almost every morning when we watch the news, that a down market allows us to by stocks/funds at a bargain.

Its easy to get sucked in by the daily doom and gloom but if you remind yourself that you are in for the long haul then a down market is actually to your benefit.

This is true for the real estate market too.

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