Feb. 2017 - Mr. Buffett's Letter

Legendary investor Warren Buffett published his annual letter to shareholders last week, and the central theme was one that he’s been pushing for nearly six decades. Warren Buffett is bullish on the long-term prospects for America. Over the course of one, three, or five years, anything can happen, but long-term investors are likely to be rewarded for staying invested through thick and thin.

Mr. Buffett writes: “You need not be an economist to understand how well our system has worked. Just look around you. See the 75 million owner-occupied homes, the bountiful farmland, the 260 million vehicles, the hyper-productive factories, the great medical centers, the talent filled universities, you name it – they all represent a net gain for Americans from the barren lands, primitive structures and meager output of 1776. Starting from scratch, America has amassed wealth totaling $90 trillion.”

He goes on to point out how America’s corporate gains have been passed on to individual stockholders: “During the 20th century the Dow-Jones Industrials advanced from 66 to 11,497, a 17,320% capital gain that was materially boosted by steadily increasing dividends. The trend continues: By year-end 2016, the index had advanced a further 72%, to 19,763.”

Mr. Buffett is not in the business of guessing when the next crash might come. He’s not delusional, and he knows that stock markets go up and down. But he is in the business of investing for the long-term, and that is a valuable lesson for any investor. Short-term fluctuations are a certainty, but longer-term gains cannot be garnered without maintaining an investment strategy for the long haul.

Back to Mr. Buffett for the final word: “American business – and consequently a basket of stocks – is virtually certain to be worth far more in the years ahead. Innovation, productivity gains, entrepreneurial spirit and an abundance of capital will see to that. Ever-present naysayers may prosper by marketing their gloomy forecasts. But heaven help them if they act on the nonsense they peddle.”

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Also In This Issue:
The Power of Markets
Is Funding Your 401(k) a "No Brainer"
91 Years of U.S. Stock Market Returns
The High Yield Dow Investment Strategy
Recent Market Statistics
The Dow Jones Industrials Ranked by Yield
Recommended Investment Vehicles

 

 

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