Warren Buffett on market timing: 'We haven't the faintest idea'

[mahatmakanejeeves]

Yahoo Finance

Buffett on market timing: 'We haven't the faintest idea'

Aarthi Swaminathan · Reporter
Sat, April 30, 2022, 12:51 PM

The Oracle of Omaha didn't become the multi-billionaire he is today by timing the market. ... "We haven't the faintest idea what the stock market is gonna do when it opens on Monday — we never have," Berkshire Hathaway (BRK-A, BRK-B) Chairman and CEO Warren Buffett said during the company's annual shareholders meeting on Saturday.

"I don't think we've ever made a decision where either one of us has either said or been thinking: 'We should buy or sell based on what the market is going to do," Buffett added, referring to his longtime business partner Charlie Munger. "Or, for that matter, what the economy is going to do."

{snip}

Buffett added that "if he had any sense of timing," he would have bought stocks in March 2020 as the COVID-19 pandemic started spreading. ... Markets faced a massive rout in March 2020, as the pandemic began spreading across the United States at alarming rates, forcing businesses, schools, and large parts of the economy to shut down.

Despite the market lows, Buffett said he didn't use the chance to load up on equities. ... "I totally missed that opportunity, I totally messed up in March of 2020," he said. "We haven't ever timed anything. We've never figured out insights into the economy."

{snip}

[PoindexterOglethorpe]

1. So true.

Trying to time the market is a fool's game. Be invested for the long run.

I happen to have a wonderful financial advisor -- I know a completely discredited sort of person here -- who has done me very well. In no small part, because of him, my income increases a little bit each year. Among other things, he got me into two annuities -- another dirty word here -- and they are paying off quite well. Especially in the recent market downturn. Oh, and if there is any leftover value when I'm gone (and there probably will be a residual value) my heir will get that value.

Honestly, my advisor has done an excellent job. I am making decent money on my relatively modest investments. As mentioned above, my income has increased in recent years. I'm 73 years old, collect Social Security, a small pension, the two annuities, and take money out from my investments every month. Currently, my income is the highest it has ever been, although actually quite modest by most standards.

[progree]

2. Gee I would hope most people have rising incomes in their investment portfolios

Over the last 10 years, for example, the dividends in the Vanguard U.S. Total Stock Market Index fund VTSMX increased 2.27-fold. Unless one is heavily drawing down their investments.

(Comparing the last 4 dividend payments to the same 4 dividends 10 years prior).

[PoindexterOglethorpe]

3. I have rising income because the investments

themselves have increased. I don't directly get dividends, but I do take out money every month, and over time I can up may payout to myself a bit. I actually have the largest income in my life at this point.

[progree]

4. Me too - the dividends in IRAs gets automatically reinvested. The dividends in regular (non-IRA)

Last edited Wed May 4, 2022, 10:12 PM - Edit history (1)

accounts - those go to the settlement money market / bank fund until it accumulates to a point where I think it is worth investing in something better (so as to cut down on the capital gains accounting and to think about where I want it to go rather than automatically in the same thing).

Since about the beginning of 2017 when I started getting income both my Social Security and my charitable gift annuity, I'm almost certain I've been a net saver (adding more to investments than taking out).

I notice that an investment in the Vanguard U.S. Total Stock Market Index Fund VTSMX grew 3.544 - fold over the past 10 years (including reinvested dividends) -- that's a 13.49%/year annualized rate of return -- so yes, hopefully all U.S. stock market investors have had rising portfolio values, unless they were heavily drawing down on their investments, or panic-sold every time the market dipped, and got back in the market only as it was nearing a peak . And/or did poorly at individual stock picking.

If my investment portfolio was falling in value over a decade when the U.S. stock market had risen at an average 13.49%/year rate, thereby increasing 3.5-fold, I would be in existential panic crisis mode.

[bucolic_frolic]

5. Abby Joseph Cohen on Conseulo Mack WealthTrack yesterday

Equities are not cheap but cheaper than they were. A recurring weekly theme of late is inflation adjustments. Energy, value stocks. Bonds are kaput. TheoTrade weekly video paints a darker picture. No idea where the bottom is, and tech is being hit hard. They usually are in recession.