Warren Buffett: Crisis, what crisis?

tmarket · Oct 25, 2009

Irrational markets

Mr Buffett says the turnover on Berkshire Hathaway shares is a tenth of that on most stocks.

"We look on our shareholders as partners. They buy into Berkshire to be part of a business. It's something they expect to die with."

The current financial crisis has put Mr Buffett's message about long-term thinking to the test: Berkshire Hathaway's businesses are in a mix of sectors, some of which (construction, confectionary) were more vulnerable to the downturn than others (energy, insurance).

Berkshire shares lost almost half their peak value - and have since recovered to be about 25% down on their 2008 peak.

At this year's annual shareholder meeting in Omaha, 35,000 shareholders turned up to hear Mr Buffett's take on things.

It looked as if his years of patient training had paid off. He was still smiling, and telling people that the carnage in the markets was just what you should expect once in a while.

"If you take the couple of centuries we've had, the 19th and the 20th, we've had about 15 bad years in both centuries," he told shareholders, "and we'll have fifteen bad years in centuries to come.

"Capitalism overshoots, and market people do get irrationally exuberant sometimes, but that's the nature of it. You want a dynamic system, and you want a market system that's free to make mistakes to some degree."
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http://news.bbc.co.uk/2/hi/business/8317072.stm

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Warren Buffett: Crisis, what crisis?

tmarket