Saturday, August 30, 2008

Warren Buffett Comments on China

Recently, Warren Buffett mentioned in an interview on CNBC that he has tried to bid on one Chinese stock but was not accepted. This has become a very hot topic in Hong Kong media and everyone is interested in finding which stock it is. But very few people are interested in what Warren Buffett has told CNBC in the interview. Actually Mr Buffett also talked about his view on China economy and its future which is very meaningful for us. The name of the program is :


"THREE HOURS WITH WARREN BUFFETT - LIVE FROM OMAHA" ON CNBC'S SQUAWK BOX WITH BECKY QUICK, FRIDAY, AUGUST 22, 2008.


You may find the full part of his interview on CNBC.com (http://www.cnbc.com/id/19206666/). For those who are interested in his view on China, you should pay attention to TRANSCRIPT/VIDEO PART ONE and TRANSCRIPT/VIDEO PART SIX. Mr Buffet has told Becky about China that "But it's a terrific--it's going to be a terrific area for business. So, under the right circumstances, you could see us with a lot of money there."


It seems that Mr Buffett is very optimistic about China's Economy and its future!

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Sunday, August 17, 2008

Stock market as weighing machine

Facing the recent fluctuations in stock markets around the world, many investors were heavily affected. Very few people can really ignore the price fluctuations of stocks. This is really a good test for a value investor. One article from Warren Buffet may help us in facing such situation. In 1978, he wrote an article noting that the Dow had dropped 20 percent in the prior six years, book value had risen 40 percent, and these stocks were earning about 13 percent on book value. The Dow was trading at or below book value for parts of 1979. On 21st December 2001, Warren Buffet wrote another article in Fortune to respond to his previous article. Some of the contents are abstracted as below :

"At the time of the [1978] article, long-term corporate bonds were yielding about 9.5 percent. So I asked the seemingly obvious question : "Can better results be obtained, over 20 years, from a group of 9.5 percent bonds of leading American companies maturing in 1999 than from a group of Dow-type equities purchased, in aggregate, around book value and likely to earn, in aggregate, about 13 percent on that book value?" The question answered itself." "Now, if you had read the article in 1979, you would have suffered - oh, how you would have suffered! - for about three years. I was no good then at forecasting the near-term movements of stock prices, and I'm no good now. I never have the faintest idea what the stock market is going to do in the next six months, or the next year, or the next two." "But I think it is very easy to see what is likely to happen over the long term. Ben Graham to us why : "Though the stock market functions as a voting machine in the short run, it acts as a weighing machine in the long run." Fear and greed play important roles when votes are being cast, but they don't register on the scale."


Let's don't forget the famous sentence :
"Though the stock market functions as a voting machine in the short run, it acts as a weighing machine in the long run."

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