Saturday, October 25, 2008

Warren Buffet Letter's...A Time to Resynchronise Our Mind

Having been blasted with bloomberg, reuters, buy, sell calls, reports, announcements, opinions, news,CNBC and all the jazz matazz surrounding us today, the SGDividends team decided to retreat to the beach side, taking with us some letter's from Warren Buffet to realign our thoughts again.It's not that we believe everything he says, cos we don't believe anything unless we have researched, verified with common sense and pondered with facts before we believe. However, since he did mention something about a person not needing a high IQ to invest wisely, just some common sense, so we thought hey, it seems like a good fit to us, given that our peabrain monkey has averaged down the group's IQ. Therefore, his letters we brought. These letters were sent to us last year, and we have cut and paste the letters in soft copy (below) to show our dear readers the things which stood out.


Quote: "The presence of layers of consultants and high priced managers ("helpers")........Beware the glip helper who fills your head with fantasies while he fills his pockets with fees." Does it ring a bell? Minibonds? In fact, its plain common sense that the more middlemans you have between your investments and you, the less net cash is actually invested after deducting expenses to line their pockets. Yes,yes, we are hearing some people now saying: but these middlemans have the expertise and we, don't have the expertise, what if we invest wrongly. Let Warren Buffet answer this question. "....but this group will incur high ...advisory cost...their returns diminished by a far greater percentage than will their inactive brethren." So the morale of the story is : invest by yourself, minimise your churning, and if you really know nothing, maybe you just copycat warren buffet?Like the recent GE or Goldman Sachs...and guess what you will be buying at a cheaper price than him as of now...so you will beat him...sounds good?
Quote: "I should mention that people who expect to earn 10% annually from equities during this century, envisioning that 2% of that will come from dividends and 8% from price appreciation- are implicitly forecasting a level of 24,000,000 on the DOW by 2100" . Warren is implying that 10% annually is unrealistic, isn't he..that Old Fogey! But then again, GIC raked in an annualized real return of 4%, so maybe this dude's right. That's a sobering thought though..But here at SGDividends we will show him that he is wrong...grrrgh.

Now now, what does Warren Buffet says about Airlines. He hates it and we believe he is right. Look at where we are now! A typical cyclical industry where even in bad times, expenses are still high and oil prices in our opinion is only going up up up and away ( in the long run). Anyway, before we pen off, just to let you know how low our group IQ has becomed, our peabrain monkey just said: Happy Hari Raya...Adilfitri.




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