Buffett tells investors to lower expectations
Malaysia Sun
Sunday 4th May, 2008
Things have changed, and lofty earnings should no longer be expected, says Warren Buffett.
The Berkshire Hathaway CEO was addressing investors at the company's annual general meeting on Saturday at the Qwest Center in Omaha, Nebraska. A record 31,000 shareholders were in attendance.
Investors need to lower their expectations, the tycoon told his audience.
Asked if Buffet's latest purchases would yield returns of more than 7 to 10% over time, Buffett candidly answered, 'No.'
'We would be very happy if we earned 10%, pre-tax' on the additions to Berkshire's equity portfolio,' he said. 'Anyone that expects us to come close to replicating the past should sell their stock; it isn't going to happen.'
'We'll get decent results over time, but not indecent results,' he added.
Buffett was also cool on U.S. dollar assets, saying he preferred to invest in assets and companies that generated foreign exchange.
'We are happy to invest in businesses that earn their money in euros in France or Italy, or sterling in the UK, because I don't have a feeling that those currencies are likely to depreciate against the dollar. Overall I think that the U.S. continues to follow policies that will make the dollar weaken against other major currencies.'
'I feel no need to hedge purchases of companies that earn profits in other currencies.'
Asked about the future, he said, 'I haven't the faintest idea. We never talk about it, it never comes up in our board meetings or other discussions. We're not in that business [of economic forecasting], we don't know how to be in that business. If we knew where the economy was going, we'd do nothing but play the S&P futures market.'
Investors need to lower their expectations, the tycoon told his audience.
Asked if Buffet's latest purchases would yield returns of more than 7 to 10% over time, Buffett candidly answered, 'No.'
'We would be very happy if we earned 10%, pre-tax' on the additions to Berkshire's equity portfolio,' he said. 'Anyone that expects us to come close to replicating the past should sell their stock; it isn't going to happen.'
'We'll get decent results over time, but not indecent results,' he added.
Buffett was also cool on U.S. dollar assets, saying he preferred to invest in assets and companies that generated foreign exchange.
'We are happy to invest in businesses that earn their money in euros in France or Italy, or sterling in the UK, because I don't have a feeling that those currencies are likely to depreciate against the dollar. Overall I think that the U.S. continues to follow policies that will make the dollar weaken against other major currencies.'
'I feel no need to hedge purchases of companies that earn profits in other currencies.'
Asked about the future, he said, 'I haven't the faintest idea. We never talk about it, it never comes up in our board meetings or other discussions. We're not in that business [of economic forecasting], we don't know how to be in that business. If we knew where the economy was going, we'd do nothing but play the S&P futures market.'
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