warren buffett's awesome 2005 letter

[Island Son]

http://www.berkshirehathaway.com/letters/2005ltr.pdf

If you invest in the market, you should read page 18.

This guy is just honest and straightforward.

 

[MattTheSkywalker]

yeah, and yet people are clamoring to get into fields like private equity and others.

 

[bran987]

yep, he echoes a lot of the same ideas over and over again, like those I posted in this thread:

http://www.elitefitness.com/forum/showthread.php?t=450033

"So I come back to my postulation of 5% growth in GDP and remind you that it is a limiting factor in the returns you're going to get: You cannot expect to forever realize a 12% annual increase--much less 22%--in the valuation of American business if its profitability is growing only at 5%. The inescapable fact is that the value of an asset, whatever its character, cannot over the long term grow faster than its earnings do."

That is the main idea here. People tend to disassociate a stock from a company for some reason.

I guess it was Munger who said "In the short run, the market is a voting machine. In the long run, the market is a weighing machine."

Friction costs should be minimized. Tax advantages should be maximized, if you never sell, you never have to pay taxes, your kids can inherit equities etc. Unless the company is going in the crapper, Buffett & Munger believe the best time to sell a great company is probably NEVER! I hope I can hold the companies I own forever.

As far as hedge funds and private equity, Wall Street has been there a long time, it ain't going anywhere. Names will continue to change, but people will always be looking for the person who can hand them the golden ticket.

 

[Razorguns]

"castles in the sky"

 

[Hiatussin]

I dont really know what private equity or hedge funds really are