Warren Buffett Reveals Specific Investment Advice For Average Investors

FTMDaily.com – Each year, I look forward to reading Warren Buffett’s annual letter to shareholders. With a net worth of $58.2 billion, Buffett is considered the world’s greatest investor. He is a self-made investor and made his fortune buying great companies and holding them in his own company, Berkshire Hathaway. (As of this morning, one share of Berkshire Hathaway’s stock will set you back $186,400! If that’s too steep, you can choose to buy a B-share of the company for around $124/share.)

Regardless, in his latest annual letter to shareholders, Buffett shares highly specific investing advice for the average investor. According to Buffett, this is the same investing strategy that he has laid out in his will to be applied to his own wife’s inheritance. Here’s a quote directly from the letter to shareholders:

“What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

Put simply, Buffett is saying that the average investor could get better long-term investing results by simply placing 90% of their investable assets into an S&P index fund. Buffett specifically recommends the Vanguard 500 Index Fund (Ticker: VFINX.)

He suggests that the other 10% be placed into short-term government bonds.

It’s hard to argue with the world’s greatest investor. And it is true that over a long period of time, this strategy would have beaten most other investing strategies.

However, that being said, I believe that it is highly unlikely that the performance of U.S. stocks for the next 50 years will resemble that of the previous 50 years. The headwinds facing the U.S. economy are fierce. Shifting demographics, failing entitlements, and bankrupt institutions threaten to engulf America’s future prosperity.

So, I must take issue with Buffett’s optimistic advice, especially for younger Americans with a longer time horizon. This is a stock-picker’s market. As long as the Fed keeps pumping into the system, the party will continue. But when the next major market crash comes, it will rock investors to their core.

FTMDaily has long recommended to remain highly diversified. Some stocks, some precious metals, some real estate, and even investing in your own business.

These are difficult and trying times for all investors. Unfortunately, I just don’t think throwing all of your money into the U.S. stock market — and walking away — will work in this current environment. These are extreme times… And they call for extreme vigilance.

Inside this Issue

“Preparing — and Profiting — From the Coming Collapse”

Fed Chair Bernanke Held 84 Secret Meetings in the Lead Up to the Wall Street Collapse

For unexplained reasons, the Fed Chairman, Ben Bernanke continues to redact 84 meetings from his appointment calendar that occurred between January 1, 2007 and the pivotal collapse of Bear Stearns on the weekend of March 15-16, 2008.

McDonald’s Sales Hurt by Fourth-Straight U.S. Drop

McDonald’s Corp. (MCD), the world’s largest restaurant chain, said sales at stores open at least 13 months fell 0.3 percent in February as its U.S. business slumped for the fourth straight month amid harsh weather.

Gold Holds Below 4-Month High as Investors Weigh Taper, Ukraine

Bullion has already risen 11 percent this year even as the Federal Reserve, which next meets March 18-19, announced a $10 billion reduction to bond buying at each of its past two meetings, leaving purchases at $65 billion.

Copper Futures Post Biggest Two-Session Drop in 28 Months

On the Comex in New York, copper dropped below $3 a pound for the first time since June.

Buying A Home Is Now 38% Cheaper Than Renting

New report shows buying beats renting until mortgage rates hit 10.6%

Check Your Utility Bill For Fraud From This New Scam

A new scam is costing innocent people hundreds, if not thousands of dollars. Here’s what you need to know to protect yourself.

View the Investor Wire Archive >>

U.S. Financial Markets Real-time Gold and Silver Prices

Precious Metals Market Update with Tom Cloud

View Our Precious Metals Investing Resources Here >>

---

“World News Headlines That We Are Tracking”

Ukraine May Go Nuclear, Says Kiev Lawmaker

Expect the U.S. to turn a blind eye…

Russia Stands Fast on Crimea as Ukraine Drills Military

Russia showed no signs of yielding in the Crimea standoff as Ukraine’s prime minister prepared to meet U.S. President Barack Obama and western nations threatened further repercussions if Russia failed to defuse tensions.

Fukushima Radiation Set to Hit U.S. West Coast Next Week

The news comes three years after the devastating Japan tsunami and resulting nuclear accident.

Pope Francis to Stop Condemning Same-Sex Civil Partnerships

Pope Francis has suggested that the Vatican could support gay civil unions in the future, according to one of the church’s most senior cardinals.

North Korea’s Kim Jong Un ‘Elected’ with 100% of the Vote

With only one name on the ballot, North Koreans have the choice of voting “YES” or “NO.”

Harvard: Fluoride Can Increase Autism and Attention Deficit Disorder

Our understanding of the effects of fluoride is similar to our understanding of lead in the 1970s.

Disney Bets Big on Visitor-Tracking Technology

MyMagic+ is a $1 billion experiment in crowd control, data collection, and wearable technology that could change the way people play — and spend — at the “Most Magical Place on Earth.”

Edward Snowden: NSA is ‘Setting Fire to the Future of the Internet’

Snowden calls on liberty lovers to be the ‘firefighters.’

---

PODCAST: Gold and Stock Update

Broadcast Every Saturday Morning – Hosted by Jerry Robinson

Topic: No new radio show this week as Jerry Robinson was out sick with pneumonia…

Download Now >>
(Right click link above and ‘save as’ to your device)

Other Listening Options

---

“Daily Investment Trends for the Savvy Investor”

You are attempting to view premium content for subscribers only. If you are a subscriber, log in here. If you are not currently subscribed, you can learn more here.

View the Daily Chart Archive >>

---

“A Daily Stock Trading Idea for Short-Term Traders”
— Subscribers Only —

You are attempting to view premium content for subscribers only. If you are a subscriber, log in here. If you are not currently subscribed, you can learn more here.

Enter the Trading Room to View all Trading Activity >>

View our Trading Performance >>

Not a subscriber? Learn more here >>

---

“A Daily Dose of Financial Wisdom from God’s Word”

“Give generously to him and do so without a grudging heart; then because of this the Lord your God will bless you in all your work and in everything you put your hand to.”
Deuteronomy 15:10

---

Sign up now and join the tens of thousands who get the FTMDaily Briefing in their inbox every morning! >>

What will I get?

---

Comments are closed.