Hmm ... what can retail investors learn from him on market timing?
Companies in deep shit that need cash injection to survive will know who has that cash resources to save them.
At 2018 AGM; he mentioned he is still waiting for phone calls to deploy cash.
Market looks for him and that why he no need to bother with market timing. Naturally market timing at its best!
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CW,
ReplyDeleteJust ask Goldman Sachs who "had to" pay Warren Buffett a 10% dividend when Warren pumped $5 billion into their preferred stocks and warrants during the 2008 financial crisis.
If this is not market timing... What is?
Its better to listen to what others do; not what they say ;)
P.S. By the way, did Warren Buffett bought and hold these Goldman preferred shares? Shhh...
Buffett should revise his 1994 statement ... coz in Oct 2008 he took out a full page Opinion Editorial in the NY Times telling everybody to "Buy US Stocks!" LOL!!
ReplyDeleteWhat he did in 2008 was remarkably similar to what JP Morgan did 100 years ago in 1907 ... using his reputation & money to "bail out" key companies to backstop panic driven crash.
Actually Buffett practices dynamic asset allocation, where some portion will always be invested ... but other portions which are more tactical or opportunistic.
In his opinion piece, he actually revealed that he uses market timing even for his own personal portfolio ... a big portion is his controlling stake of Berkshire stocks that is always invested & he never sells, except for charity donations. The other big portion Buffett actually kept in 100% govt bonds / treasuries until 2008!
https://www.nytimes.com/2008/10/17/opinion/17buffett.html
I think his advice will be more useful if he emphasized in context of asset allocation.
Just telling people to buy good companies or S&P500 index may work for a fresh grad putting 100% spare cash into investments. But for someone who needs the money in 10 yrs or less, that may be dangerous.
Even for the young grad ... if he can't tahan the losses to his 100% equity portfolio & sells out at the lows ... also defeats the purpose.
In general, I agree with Buffett's "no need market timing" advice if done in the context of 50:50 or 70:30 or whatever allocation that prevents the investor from selling at the lows. People can also use the cash / safe bonds portion (i.e. warchest) to make opportunistic stock investments.