Six Luminaries Share Their Outlooks and Investment Strategies

By on October 26, 2009

Elizabeth Ody presents the views of six investment heavyweights:

  • Warren Buffett, chairman of Berkshire Hathaway: I have no idea what the stock market’s going to do tomorrow, or next week, or next month or next year. But over a 10-year period you will do considerably better owning a group of equities than you will owning Treasuries. In fighting the economic war, we’ve taken action that sows the seeds of substantial inflation down the road. Not in the next six months or year, but 10 years from now the dollar will buy a lot less than it buys today.
  • Robert L. Rodriguez, chief executive of First Pacific Advisors: Don’t run with the herd. Being surrounded by people who are doing the same thing as you offers a false sense of protection. Today, being a loner means owning short-maturity, high-quality debt on the bond side. And if the U.S. government continues to blow up the nation’s balance sheet through massive deficits, you should probably move at least 20 to 40 percent of your assets out of the United States.
  • Jeremy Grantham, chief investment strategist at Grantham, Mayo, Van Otterloo: The recent rally has been very speculative, favoring risky assets over the past few months. I’m sorry if you missed investing at the market’s March lows, but don’t compound the damage to your portfolio by chasing gains in risky assets. We’re at the beginning of a seven-year period of lean returns. You should only be buying the highest-quality blue-chip companies, where valuations are most attractive.
  • Bill Gross, co-chief investment officer at Pacific Investment Management: The biggest danger right now is that you’ll earn zero percent on mattress money, or virtually zero percent in a money-market account or at the bank. Yes, that money is safe, but the economy and inflation may come roaring past you at higher levels. You also have to consider diversifying outside of the United States. The dollar is a weak currency, and as it devalues against other currencies, our standard of living will suffer. Higher returns relative to risk lie in Asia and Brazil.
  • Martin J. Whitman, co-chief investment officer at Third Avenue Management: Do what we do; find extremely well-financed companies that do not rely on continuous access to the bond or stock markets for refinancing, that are run by competent management teams and that have favorable prospects for growth. Buy these companies’ stocks when they are available at a meaningful discount. All other systems of investing are concerned with predicting stocks’ near-term price movements.
  • Jim Rogers, chairman of Rogers Holdings: Diversification is garbage — it’s something brokers invented to avoid getting sued. You only need four or five good ideas in your life to get really rich if you avoid mistakes. And the one way to avoid mistakes is to stick with what you know. Then, when you see a major development in your area of expertise, you’ll know better than Wall Street when to buy or sell.



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