Is that What He Said

[cannew]

Read an article where the writer quotes Warren Buffett, but did he really say to buy an Index Fund?

Quote:The Oracle of Omaha warns investors against an incredibly common mistake: You shouldn’t try to time the market. He says it’s a mistake to predict or listen to others who predict the short-term movement of stocks. By the same token, he says you shouldn’t try to flip stocks like high-frequency traders do.
Instead, Buffett says the best thing the average investor can do is buy an index fund over time. That’s it. From USA Today:
“You don’t need to look at the prices of the stocks you own from week-to-week, or month-to-month, or even year-to-year,” says Buffett. “If you own a cross-section of American businesses, and you don’t get excited (and buy) just at the very top, and if you buy in over time, you are going to do well.”

I don't think so, index funds don't beat the market or generally provide any Income. I'm sure he'd prefer the DG strategy we talk about here.

[EricL]

(10-30-2013, 09:05 AM)cannew Wrote: Read an article where the writer quotes Warren Buffett, but did he really say to buy an Index Fund?

Quote:The Oracle of Omaha warns investors against an incredibly common mistake: You shouldn’t try to time the market. He says it’s a mistake to predict or listen to others who predict the short-term movement of stocks. By the same token, he says you shouldn’t try to flip stocks like high-frequency traders do.
Instead, Buffett says the best thing the average investor can do is buy an index fund over time. That’s it. From USA Today:
“You don’t need to look at the prices of the stocks you own from week-to-week, or month-to-month, or even year-to-year,” says Buffett. “If you own a cross-section of American businesses, and you don’t get excited (and buy) just at the very top, and if you buy in over time, you are going to do well.”

I don't think so, index funds don't beat the market or generally provide any Income. I'm sure he'd prefer the DG strategy we talk about here.

I believe he was making a blanket statement about inexperienced investors. It is often true that people would be best off just making a monthly contribution to an index. Stock picking, trading in and out of positions and market timing can lead to bad results.

[Dan Mac @DGSInvesting]

I believe the "average investor" probably is better off dollar cost averaging into an index fund over the long term and sitting tight. The problem is most people overreact and do stupid things such as buying when stocks are really high valued and popular in the news but then selling everything when it's doom and gloom in the media and stocks have already taken that 20-30% hit.

I believe dividend growth investors would be considered "above average investors". We have taken the time to learn more about investing than the general population. We have taken the time to learn a strategy, craft a plan around that strategy and then execute that plan. The hope is that our time was well spent and will result in better than average results.

So I think that average investors should stick with index funds. If anyone is willing to put in a little extra work and effort, then I think they can become above average and hopefully achieve better results.

[hendi_alex]

I don't see any evidence that Warren B invests in that way. He always waits on the price to come to him, such that the asset represents a value plus has some moat of protection. His comments must have been taken out of context, maybe referring to a better alternative for the typical John Doe who lets emotion rule and most often buys high and sells low, as the emotions always get pulled the wrong way at almost the worst possible times.

[Kerim]

Or instead of an index fund, the average investor could just buy some shares of BRK-B and let Buffett do the investing for you!

[Markrichard]

In My opinion that was just to warn about involved market risks such as price and growth fluctuations to new investors who are bit illiterate about investment in stock market and who wants to trade in dividend stocks. Many thinks like it's quite safe for new investors to invest their money in index stocks over long time,sit back and watch the growth. While this can't be a proper money making scenario for one as I think. To earn income, you have to bet on stocks which can possibly take a boom within a week and that's where I think real excitement begins.

[Dividend Mantra]

Warren Buffett has often been adamant that most retail investors are better off averaging into a few index funds and forgetting about them. In fact, he has a bet going on with a hedge fund of funds that they can't beat a classic index fund over a 10-year time frame. I believe that Buffett is currently winning that bet, but it's not over yet.

I tend to agree with him. Most people don't have the time or interest necessary to value companies, manage a sizable portfolio, keep tabs on dividend growth, listen in on conference calls, check annual reports, etc.