MoneyMerc

Warren Buffet’s famous Letter to Shareholders of Berkshire Hathaway was released this past Saturday.

The letter is long, but an enjoyable read – I was cracking up during lot’s of it – Buffett can be hilarious.  I’ll share some comments on parts that I think readers will find particularly interesting.  There are tidbits here that speak to our economy, investing in index funds, and owning a home.  As usual, I urge you to think for yourself and to draw your own conclusions – yes he’s Warren Buffett, but even he makes mistakes (many of which he covers in the letter – including his 89% loss recently in ConocoPhillips.) I am going to break this post up into parts, to separate topics and make the posts shorter.

The first part is on our economy, which is most likely one of the foremost topics in reader’s minds.

On the present state of our economy:

Amid this bad news, however, never forget that our country has faced far worse travails in the past. In the 20th Century alone, we dealt with two great wars (one of which we initially appeared to be losing); a dozen or so panics and recessions; virulent inflation that led to a 211⁄2% prime rate in 1980; and the Great Depression of the 1930s, when unemployment ranged between 15% and 25% for many years. America has had no shortage of challenges.

Without fail, however, we’ve overcome them. In the face of those obstacles – and many others – the real standard of living for Americans improved nearly seven-fold during the 1900s, while the Dow Jones Industrials rose from 66 to 11,497. Compare the record of this period with the dozens of centuries during which humans secured only tiny gains, if any, in how they lived. Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America’s best days lie ahead.

I think the major message here is:  keep thinking long-term.  If you are not following my advice and are paying attention to CNN, then you probably think the world is going to end tomorrow.  But look at your situation -you are alive.  You still have your family and friends.  Your investments are probably worth a lot less, but you are still surviving.  Maybe you lost your job for the time being, but the search isn’t over any you have lot’s of options that don’t involve dying.  You are finding some way to eat, and some place to live.  In the words of my wise mother – “this too shall pass.”