
Mr. Buffett on the Stock Market (1999) - tim_sw
http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm
======
lujim
Ahem... Facebook. Somehow Facebook is "worth" more than GE and analysts LOVE
it. They are beating earnings but their numbers just don't look all that great
to me. A P/E of 107 which wouldn't be insane if the growth was there to back
it up. The "growth" that they do have is in selling ads that people don't
click on. Yes they are a treasure trove of marketing data, but are they really
more valuable than General friken Electric? What am I missing here?

Downvotes? Is Zuck already checking out hacker news this morning ;)

~~~
lakeeffect
I think if more people realized that p/e was the equivalent to years to
payback they might reassess their portfolio. 107 years of current earnings is
a long time to get your money back. Earnings growth is the only thing that
lowers this number when consumer stock preference is based on brand
recognition.

~~~
charlesdm
Amazon is trading at nearly 1000x P/E. Even with their strategy and their
scale, I don't see it. I really don't.

------
bobm_kite9
My favourite piece of advice here:

| Sometimes, incidentally, it's much easier in these transforming events to
figure out the losers. You could have grasped the importance of the auto when
it came along but still found it hard to pick companies that would make you
money. But there was one obvious decision you could have made back then __it
's better sometimes to turn these things upside down __and that was to short
horses. Frankly, I 'm disappointed that the Buffett family was not short
horses through this entire period. And we really had no excuse: Living in
Nebraska, we would have found it super-easy to borrow horses and avoid a
"short squeeze."

~~~
lujim
The problem with shorting anything right now is that the Fed can keep things
going higher with zero interest rates and you can get squeezed out of that.
You might be able to see trouble spots in the market, but you can't even make
an educated guess on when a few people with various political and financial
incentives will quit flip flopping and make a decision.

------
cconcepts
There is something revealing about human nature when you consider that Buffett
gives his proven wisdom away for free while a whole industry of
prognostication thrives based on a track record not half as reliable as his.

~~~
lujim
Totally true. The "problem" with Buffett is that his advice is a bit of a
bitter pill because it's slow, steady and takes decades. It's hard not to
trick yourself into believing that you can beat the market consistently (as a
retail investor at least). He's totally right, it just isn't all that
exciting.

~~~
samclearman
Actually a bigger problem is that his advice is just straight up hard to
follow. If correctly valuing public companies were easy, the market would be a
lot less volatile.

------
samclearman
... Since then interest rates went to zero and corporate profit as percent of
GDP went to 10. I guess that's why he doesn't like to try to predict the
market :)

