I found a fascinating article about predictions Warren Buffett made for 2008 which are helpful for us as we go into 2009:
“Last year around this time, Warren Buffett Watch offered its Eight Predictions for ’08 .. and Beyond.
Warren Buffett became one of the wealthiest people in the world by making predictions and putting money behind those predictions. Every time he buys a stock or a business or some other investment, he’s forecasting the future.
1. Recessions can’t be avoided forever. “It is the nature of capitalism to periodically have recessions. People overshoot.”
2. We’ll survive current and future recessions just as we’ve survived past problems. “We’ve got a wonderful economy… There’s never been anything like that in the history of the world. We live seven times better than the people did a century ago on average… We’ve had problems all along. If you look at the last century, we had that Great Depression and World War Two, we had the Cold War, we had the atomic bomb, but the country does well.”
3. Recessions will create opportunities. “I made by far the best buys I’ve ever made in my lifetime in 1974. And that was a time of great pessimism and the oil shock and stagflation and all those sort of things. But stocks were cheap.”
4. All stocks won’t be cheap. “What’s nice about investing is you don’t have to swing at pitches. You can watch pitches come in one inch above or one inch below your navel, and you don’t have to swing. No umpire is going to call you out.”
5. The crowd will make mistakes. Buffett cites this piece of advice from his mentor Benjamin Graham: “You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.”
6. Investors will mistakenly think falling stock prices are bad.
7. Good times will prompt bad decisions.
8. There will be more dancing at another wild party followed by another painful hangover. Looking back at the Internet bubble, Buffett is quoted as saying, “The world went mad. What we learn from history is that people don’t learn from history.”
