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Can Warren Buffett Really Time the Market? | Berkshire 2022



[Transcript]

RAJID ERDUWAL

My question is on market timing. You have always said that it is impossible to time the markets.


Yet if we look at your track record, you have had amazing timings with some of your key decisions.


You got out of the stock markets in 1969 and 1970. You got back in 1972, ’74, when the markets were really cheap. You did the same thing in ’87, ’99, 2000.


And today we are sitting on a significant amount of cash when the markets are going down.


My question is how do you time the big market moves so well?


WARREN BUFFETT

We’d like to offer you a job first. (Laughter)


RAJID ERDUWAL

I will take it. (Laughter)


WARREN BUFFETT

The interesting thing is, you know, obviously we haven’t the faintest idea what the stock market is going to do when it opens on Monday. We never have had. We have never made —


Charlie and I — I don’t think in all the time we’ve worked together — and I’ll tell you something later on maybe about how learning takes place — but we have never — I don’t think we’ve ever made a decision where either one of us has either said or been thinking, we should buy or sell based on what the market’s going to do.


CHARLIE MUNGER

No.


WARREN BUFFETT

Or for that matter, on what the economy’s going to do. We don’t know.


And the interesting thing is, sometimes I get some credit some place for the fact that, you know, how wonderful it was that we were optimistic in 2008 when everybody was down on stocks and all that sort of thing.


You know, we spent a big percentage of our net worth at a very dumb time. (Laughs)


I shouldn’t say we, it’s I.


We spent about 15 or 16 billion dollars — which was a lot bigger to us then than it is now — we spent it in the last few weeks, over a period of three or four weeks — between Wrigley and Goldman Sachs and generally — at a terrible time, as it turned out.


I mean, I didn’t know whether it was going to be a good time or a bad time, but it was a really dumb time.


And I wrote an article for The New York Times, “Buy American,” and all these things.


Well, if I’d had any sense of timing and waited six months until — I think the low was in March — and in fact I think I was on CNBC maybe that day, or something.


But I totally missed that opportunity. I totally missed, you know, in March of 2020.


We have not been good at timing. We’ve been reasonably good at figuring out when we were getting enough for our money. And we had no idea when we bought anything — well, we always hoped it would go down for a while so we could buy more, and we hoped even after we were done buying and ran out of money that if it was cheap the company would keep buying, in effect, taking our interest up.


I mean, that’s stuff you can learn it in fourth grade. But it’s not what’s taught in school.


And so never give us any credit. Well, actually, give us all the credit. I mean, go out and tell everybody how smart we are, but we aren’t. (Laughter)


We haven’t ever timed anything. We’ve never figured out insights into the economy.


I mean, when I was 11 years old, March 12th, I guess, 1942 — or March 11th — you know, I bought stock when the Dow was 90 — well, it was 101 in the morning — It was 99 at the end of the day I think — and, you know, now it’s 34,000, or maybe it’s 1,000 less than it was on Thursday. (Laughter)


But, you know, it’s one decision that it’s a good thing to own American business.


And, you know, if the Harvard endowment had come to see me as an 11-year-old, (laughs) you know, or General Motors’ pension fund or something and, you know, they say, well, no, but we have to have a balance. And we have to maybe have 60%. And then we have to sit around every three months and listen to a bunch of managers.


They’d have just done better if they’d just taken some darts and thrown them and just said, we’re going to be in America 50 years from now and 100 years from now, and we’ll do better in stocks than we will in bonds.


It’s amazing how hard people make what a simple game it is.


But of course, if they told everybody what a simple game it was then 90% of the income or more of the people that were speaking would disappear.


So, it’s really a little too much of us to expect of human nature that people will explain why they really aren’t adding any value to what you can do by yourself.


Or actually, you’re, you know — I hate to use the example — but you can have monkeys throwing darts at the page. And, you know, take away the management fees and everything, I’ll bet on the monkeys.


But I don’t consider them a superior species. And I don’t want them to move next-door instead of my next-door neighbor or (laughs) anything, but that's the way — it’s just the way it has to be.


(Source: https://buffett.cnbc.com/2022-berkshire-hathaway-annual-meeting/)

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[YAPSS Takeaway]

It is impossible to time the market and so don't do it.

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