Blog

Buffett: Just Buy Index Funds

May 04, 2008
Share:

Related ETFs

Ticker Fund name
DONWisdomTree MidCap Dividend
Related ETF Lists
Dividend ETFs, Mid Cap ETFs

We've heard it before. Play the odds and buy the market rather than try to beat it all of the time.

But when the man who most personifies the exception to the rule reinforces those views, it's always nice to note.

Well, this weekend featured another annual meeting for Warren Buffett and his Berkshire Hathaway faithful. Thousands turned out, apparently spurred by mixed economic signals and an interest in hearing the latest from a money manager who truly breaks the mold.

Here's how Jason Zweig of Money magazine reported it on Saturday:

"In the Q&A session Saturday morning at Berkshire Hathaway's annual meeting, CEO Warren Buffett and vice chairman Charlie Munger repeatedly warned investors to lower their expectations. When a shareholder asked whether Buffett's recent purchases of publicly traded stocks were likely to generate returns greater than 7% to 10% over time, Buffett promptly said no."

Zweig also quoted Buffett as saying:

"We are happy to invest in businesses that earn their money in euros in France or Italy or sterling in the UK, because I don't have a feeling that those currencies are likely to depreciate against the dollar. Overall I think that the U.S. continues to follow policies that will make the dollar weaken against other major currencies.... I feel no need to hedge purchases of companies that earn profits in other currencies."

When asked about his predictions for the economy, Buffett said he didn't have a clue and doesn't care.

But here's the payoff for most of us average Joes with a taste for indexing:

When a shareholder asked for the single best specific investment idea Buffett could recommend to an individual in his 30s, Buffett said: "I would just have it all in a very low-cost index fund from a reputable firm, maybe Vanguard. Unless I bought during a strong bull market, I would feel confident that I would outperform ... and I could just go back and get on with my work."

So there you have it ... the dollar's slide isn't over, and buy index funds (does Warren realize exchange-traded funds are even cheaper and come in a wider assortment?) ...

ETF.COM CHANNELS

Trying to figure out alternatives ETFs? Use our alternatives ETFs channel, library and ETF screener!

Want to learn more about smart-beta ETFs? Check out our smart-beta guide, essentials library and ETF screener!

ETF DAILY DATA

Investors yanked more than $2 billion from U.S. equity funds on July 31. Among the day's biggest redemptions were 'SPY', 'QQQ' and 'IWM.'

State Street, iShares and Invesco PowerShares each faced sizable outflows on July 31, as total U.S. listed ETF assets ended the day at $2.142 trillion.

ETF.COM ANALYST BLOGS

By Matt Hougan

Eaton Vance offering radical pricing with its exchange-traded managed funds.

By Matt Hougan

The median ETF tracks its index perfectly excluding expenses. But different firms and funds perform quite differently.

By Paul Britt

Toss and turn about whether to hedge currency risk, but don’t lose sleep over the derivatives themselves.

By Dave Nadig

With the China A-share market half-broken, ETF investors should be very, very cautious.

ETF INDUSTRY PERSPECTIVE

By Invesco PowerShares

A more in-depth look at the smart-beta survey's results.

By Invesco PowerShares

Smart beta appears to be poised for further growth.