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

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

ETF DAILY DATA

The AlphaDex financial fund 'FXO' led inflows on Tuesday, May 26, but net outflows and falling stocks pulled total U.S.-listed ETF assets down to $2.152 trillion.

A slew of redemptions from a number of iShares bond funds helped fuel that firm's issuer-leading outflows on Tuesday, May 26. Meanwhile, net outflows and a falling market dragged down total U.S.-listed ETF assets to $2.152 trillion.

ETF.COM ANALYST BLOGS

By Olly Ludwig

Yields will one day head higher, so is it time to get bond exposure outside the U.S.?

By Rachael Revesz

Stop dancing around the subject, call women ‘women’ and let’s be a more visible part of this industry.

By Olly Ludwig

It’s no secret that hedge funds love ETFs, but what’s less appreciated is that their love of ETFs will likely spell their demise.

By Olly Ludwig

Yes, bond yields are ticking higher these days, but it’s important to keep the whole yield-curve picture in mind.

ETF INDUSTRY PERSPECTIVE

By Nasdaq Global Indexes

Bond exposure or bond performance? Only defined maturity indexes provide the latter.

By Invesco PowerShares

Invesco PowerShares and Market Strategies International’s second annual survey provides vital insights about smart beta and ETFs overall.

By Invesco PowerShares

Investors are implementing smart-beta exchange-traded funds (ETFs) in their portfolios in a variety of ways and for different reasons.