Friday, November 1, 2013

Buffett's Wisdom

The Wall Street Journal reminded us yesterday that it was five years ago when Warren Buffett wrote an op-ed for the New York Times, urging investors that it was time to buy stocks. This is a controversial and much-derided opinion at the time; the market was in the midst of a frightening collapse that had started earlier in 2008 and showed no signs of letting up.

Most investors didn't follow Buffett's wisdom. Americans have taken nearly $450 billion out of equity mutual funds over the past five years, and removed $150 billion from mutual funds in 2009 alone.

And as it turns out, the market was not done dropping when Buffett wrote his op-ed. It wouldn't bottom out until five months later, in March 2009. But even after withstanding those losses, an investor who followed Buffett's advice would have gained nearly 90 percent on his investments in the S&P 500 over the last five years.

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