Warren Buffett: Avoiding Down Years Is Just A ‘Fluke’

Johnny HopkinsCharles Munger, Warren BuffettLeave a Comment

During the 2000 Berkshire Hathaway Annual Meeting, Warren Buffett explains why its been a fluke that his investments have consistently increased in underlying value without downturns, and acknowledges that there will be down years in the future. Here’s an excerpt from the meeting:

Buffett: The interesting thing about those figures, actually the figures go back before that because the very best period was pre the partnership days but because the amount I was working with was so small.

But there’s nothing magic about a one year period. I mean it’s the way the measurements come out. If you took all the half year periods for example I’m sure… well I know that there were a number that were down you know.

And they’re going to be lots of years in the future, assuming I live long enough, though we will have we will have plenty of down years.

It’s been a fluke to some degree that we have not had any down years in terms of underlying value that the stock has gone up and down in ways that are not related to intrinsic value a few times, but that is totally a fluke.

I mean we’re not going to be up every day, we’re not going to be up every week, we’re not going to be up every month, or even every year.

And it’s the fact that you know the the earth revolves around the sun, and really is not totally connected to most business activities, or the fruition of most investment ideas or anything of the sort.

So we have to report every year and you know I care about the yearly figures in that sense I don’t really care about them totally as a measure of what we’re doing, and like I say if we could have… the capital allocation job that I did in 1999 was very very poor.

You can watch the entire discussion here:

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