Every time I read
this speech it makes me blood boiling. It was delivered by Buffett in 1999
during the Sun Valley. Usually, for Buffett, this is a good time to have a
family gathering. Of course golf, bridge and social activities. In 1999, when
the Dow-Jones is at more than 10000 point, tripled in half a year, Buffett, who
is known as an investor not interested in high tech companies at that time was
thought as outdated.
In fact, Buffett
had prepared for weeks on this speech. He took this speech quite serious. And
this is the first time for him in the 30 years to predict the market. Buffett
nearly bought no shares of internet companies at that time. Before reading the intelligent
investor, I thought his attitude about internet companies must be a story full
of conspiracies. But after having read the book, I have changed my opinion. Not
to buy the shares of Dot Com companies should be a natural behaviour that is consistent
with Graham’s thought. I listed the speech separately because these are the
insights of investors rather than a more academic one.
And here is the
speech
Finally, at the
end of the speech, with several jokes made the silence was broken. But after a
while, resentment has been spread in the house. Unlike most of the people in
the hall, some body thought they were benefited from the speech. “Basic
knowledge about stock market in one lesson.” Gates said.
As an investor,
Buffett is very sensitive to bubbles. He used to divide asset into three types:
fixed income asset (the risk is mainly caused by the inflation); asset that is
not productive like gold; asset that can produce fortune and the best example
is a farm (asset with less threaten of inflation is preferred. Companies like
Coca Cola is preferred than the utilities in that they will not be greatly
influenced during high inflation). In the general meeting of shareholders of
2011, Buffett expressed his concern about the bubble of gold. During the
meeting, he was queried by some shareholders about why he didn’t buy some gold
to hedge the risk during that time when it was of relatively high inflation. From
his point of view, gold is not productive. And it is expensive. Asset with reasonable
cause to hold at the first can became bubble if having been hyped excessively. Buying
gold is like gambling, he said you can only hope somebody else to buy it rather
than it manifests itself with producing value and wealth. Nearly rigid.
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