Here is a link to the thoughts of Warren Buffet…

I more than agree with most of the article…also because I believe it, you could call it affirmative bias.

I know people who have made fantastic returns in property trading, gold trading etc. However I do not believe that real estate, bonds, and gold can give the kind of returns that even dull boring shares like Cholamandalam Finance, Coromandel International, EiD parry, Tata Steel, Tata Motors, Hindalco, Cummins, Hdfc, KcP, Areva, Hero Honda, Colgate, Proctor and Gamble, Gillette, MRF, LMW, Tata Power, Tata Chemical, L&T, etc…..(not in any particular order) have given over long periods of time.

However when WB says American companies will deliver…going forward, it looks difficult to believe. Not that the US economy is faltering or anything of that sort, but the way people look for value may change.

Also do remember that the big man has also technically missed the ‘gold’ – past decade of success. If you had invested in gold in the past 10-14 years, your returns would have been good. Here I belong to the same school of thought…about gold.

So ..surely read it, but also please remember his OWN SAYING “If all that you have is a hammer, the world looks like a nail”….but surely read and remember I am also equity biased and missed the gold run (except what physical gold I hold)…

 

http://finance.fortune.cnn.com/2012/02/09/warren-buffett-berkshire-shareholder-letter/

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  1. it is easy to be equity biased like shri buffet when all one does for a living is analysing businesses and waiting patiently for them to get cheap in value.gold is obviously not like equities -that is why people who have an equity bias often have a visceral reaction at the mention of gold and throw all their available tools(cash flow,dividends,instrinsic value,gold mining companies risk etc) at gold ‘bugs’. gold is a bet against the wisdom of central planning.against the wisdom of paper money.it is mainly a savings instrument and today similar to catastrophe insurance and not a way to invest in wealth creating businesses.it is a way for the simple man to keep away from rigged stock markets and unstable banking systems.in the past if an ordinary person wanted to ‘save’ for a rainy day ,all he needed to do was hold on to his gold coins-even under his mattress.today he has to put it into savings accounts in banks(and hope it doesnt go bust) or invest in stocks -which is not for the average emotional person.
    the paper money has taken the savings option out for the poor person and made it compulsory for him to indulge in serious analysis and develop emotional fortitude -without which he will surely be slaughterd like pigs in the capital market.

    i gues to be convinced of gold,studying monetary history is very important.many books exist,but they are often arcane for the average disinterested person

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