One of the great things about listening to Warren Buffett speak, and I suspect one reason why thousands gather each year in Omaha for his company's annual meeting, is that despite the fact that he is a brilliant man he speaks in plain, logical language that is easy to follow and usually hard to argue with. If you want the truth, without the media spin, and in as few simple words as possible, just ask Buffett.Here are excerpts from a Buffett blurb on latimes.com from Thursday discussing current financial market conditions:
Buffet:"It's sort of a little poetic justice, in that the people that brewed this toxic Kool-Aid found themselves drinking a lot of it in the end," he said.
"I wouldn't quite call it a credit crunch," he said. "Money is available, and it's really quite cheap because of the lowering of rates that has taken place."
He added: "What has happened is a repricing of risk and an unavailability of what I might call 'dumb money,' of which there was plenty around a year ago."
He is so right on this. People in the media keep complaining that "banks aren't lending money anymore" and the Fed has to help boost liquidity. Banks are still lending money, they are just doing so only to people who have good credit (and thus actually deserve to be given loans).
It's funny that people complained that the banks were giving loans to anyone and everyone, and now they are upset because many people can't get loans anymore. You can't have it both ways. The fact that "dumb money" is no longer available is a good thing. Perhaps retail sales drop a few percentage points and loan losses increase a few because of it, but overall our financial system will be less leveraged and healthier as a result.
If you can't put any money down or verify your income, you can't afford to buy a home. I'm glad the banks are finally realizing this. And for those who are credit worthy, the Fed is lowering borrowing rates so the banks can make money on the loans they are willing to extend.
Seeking Alpha website, article by: Chad Brand
I have a sweet tender nature, however I enjoy sharing my thoughts and opinions.
Early on I spent most of my money on booze and women and the rest I just wasted. With that said, remarried and now 38, my wife and I are committed to getting out of debt. Its an up hill battle but one I recommend highly. With any luck, in two years we'll only have a car and house payment with goals of
a motorhome some time after that. It will be nice to get up in the mornings and not have to worry about such trivial things.
In the Personal Finance course I teach, we usually spend at least three classes discussing debt, particularly, credit card debt. Most are amazed/confused when I show them that the $2,000 big screen TV they just purchased at 14% will take nine years, nine months (or about twice as long as it will last) to pay off at the minimum payment of 3% or $15 and they will have paid over 3,000 for that TV instead of 2,000. That is if they cut the card up and never use it again. The older students perk up and pay attention as they are just starting to see why they are constantly in debt and can't seem to get ahead. The 18-20 year olds just yawn and nod their heads as they could care less!
John & Doris 2006 Four Winds Hurricane 34N, F53 - V10
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Wildbuc wrote: So, what should investors do now? Stay the course or move away from stocks?
I have been a stock market investor....notice I said "investor" and not a trader....for over 40 years.
I was relatively inexperienced and had never seen a major correction until 1987 when the market went into a tremendous freefall, got scared, and sold a bunch....only to watch a full recovery within a year or two with me on the sidelines kicking myself in the rear.
I vowed never to allow that happen to me again and have weathered several market gyrations and the major crash that occurred after 9/11/2001......which also recovered within a couple of years.
The overall tendency of the market is to go up and it manages to do that on a year to year average of between 8 and 9 percent. There are often factors that cause corrections and we are in one now....there are even ways to make money on corrections and I often think that the real movers and shakers can create or manipulate these corrections to their advantage.
Anyway, if you trust and believe in the long term survival and continued growth of the American....even the world economies...you might as well be a part of it by owning stock in some of the major players.
That's my story and I'm sticking to it.
2001 F550,PSD,Crew Cab,4.88 gears,Royal Sport Bed,GearVendor,Cyclone Fan,Banks Power Elbow,110 gal.fuel,TireSentry, Pulling 35SRV toyhauler with a HD RoadKing or a Polaris RZR in the "garage".
2001 Triple E Regal class C with a 1990 Daihatsu Rocky toad.
Warren Buffett is one of 3 people in the investing and finance world I trust and rely on.The Other two are John Bogel of the Vanguard Fund family and Clark Howard;consumer advocate out of Atlanta.When either of these men speak,I listen.The American public is led around by the nose.We can be divided into three groups:those who make things happen, those who watch things happen and those who wonder what happened.The above three men can't spoon feed us but a good listener can glean enough from facts they present to get a picture of the economy.I wonder why energy and food were taken off the consumer price index.Could it be that we would have real inflation indicated to be around 10% and the markets would tank even further. Or could it be to avoid raising social security payments to the real level of inflation and thus save the govt.money.The three men above know these answers and they know how to cope with and prosper from the situation.Keep your powder dry investors.We are due for another exchange of wealth and some of us will prosper and some of us will not.Is America a great place to live or what?----------Labtek
labtek wrote: Warren Buffett is one of 3 people in the investing and finance world I trust and rely on.The Other two are John Bogel of the Vanguard Fund family and Clark Howard;consumer advocate out of Atlanta.When either of these men speak,I listen.The American public is led around by the nose.We can be divided into three groups:those who make things happen, those who watch things happen and those who wonder what happened.The above three men can't spoon feed us but a good listener can glean enough from facts they present to get a picture of the economy.I wonder why energy and food were taken off the consumer price index.Could it be that we would have real inflation indicated to be around 10% and the markets would tank even further. Or could it be to avoid raising social security payments to the real level of inflation and thus save the govt.money.The three men above know these answers and they know how to cope with and prosper from the situation.Keep your powder dry investors.We are due for another exchange of wealth and some of us will prosper and some of us will not.Is America a great place to live or what?----------Labtek
I've added Bob Brinker and Dave Ramsey to that list. However, hiring Warren to manage the majority of my portfolio in 1984, was the best thing I ever did. Some people can't comprehend an average compounded return of over 22% per annum on their money invested. That's fine with me.
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