Dow 1,000,000? That’s Warren Buffett’s latest call

https://www.forbes.com/sites/antoinegara/2017/09/20/dow-1000000-thats-warren-buffetts-latest-call/#4113af4f40e0

When it comes to betting on American ingenuity, no one has done it better than Warren Buffett. His confident, common sense approach to capitalism has yielded Berkshire Hathaway’s 20%-plus annualized returns since 1965 and its powerhouse $450 billion stock market status. When Forbes Magazine celebrated its first century on Tuesday evening, Buffett was on hand to remind the world there’s no stopping this entrepreneurial spirit, which powers his portfolio and has filled Forbes’ pages for 100 years.

“Whenever I hear people talk pessimistically about this country, I think they’re out of their mind,” Buffett told a rapt audience of business leaders. He graces the cover of our centennial issue holding Forbes’ first-ever magazine issue. Inside our magazine is an unprecedented collection of stories from the world’s 100 greatest living business minds; many were on hand Tuesday to celebrate. To this audience, Buffett offered a quick lesson in the simple math that underpins his relentless optimism.

Standing beside entrepreneurs such as Vanguard founder Jack Bogle, hotelier Steve Wynn, philanthropist Jacqueline Novogratz, “Motown” creator Berry Gordy, investor Henry Kravis, musician Sean Combs, and Dallas Cowboys owner Jerry Jones, Buffett pointed out that the Dow Jones Industrial Average traded for about $81 when Forbes was first published in September 1917. The index has risen over 275-fold in the ensuing century (an average of about 5.8% annually, or 10% when including dividends), thus “being short America has been a loser’s game,” said Buffett. “I predict to you it will continue to be a loser’s game,” he added, offering a forecast that the Dow will trade to 1,000,000 in the next hundred years.

Before Buffett ceded the stage to Stevie Wonder, who performed My Cherie AmourYou Are the Sunshine of My Life, and Superstition, the ‘Oracle’ made clear his prediction was equal parts a bold hundred-year stock market call and a sleight of hand. After all, the Dow would need to compound at less than 4% annually to hit Buffett’s 1,000,000 target. Double the forecast if the Dow gains 4.6% annually; increase it to 10,000,000 if it returns 6.4%.

Later in the evening, Buffett returned to the stage to sing The Glory of Love alongside Stevie Wonder in a duet. Stevie Wonder capped off our party with a rendition of Higher Ground. But maybe just buy Berkshire Hathaway?

With Buffett’s Dow math in mind consider the following: Even if Berkshire only returns 10% annually (half its historic return over 51 years) during the next century, an owner of a single share today will easily join the billionaire ranks. The conglomerate’s Class A shares, worth $275,630 at Wednesday’s close, would rise to $3.9 billion. A 20% annual return would turn shareholders into ‘trillionaires.’

That’s the force of free market capitalism and Buffett’s own obsession with the power of compound returns over time. No wonder he thinks the pessimists are out of their mind.

———-

wb..wtf?

“being short America has been a loser’s game,” said Buffett. “I predict to you it will continue to be a loser’s game,” he added, offering a forecast that the Dow will trade to 1,000,000 in the next hundred years.”

if you say so..

“Even if Berkshire only returns 10% annually (half its historic return over 51 years) during the next century, an owner of a single share today will easily join the billionaire ranks. The conglomerate’s Class A shares, worth $275,630 at Wednesday’s close, would rise to $3.9 billion.”

wow..

401

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~ by seeker401 on September 26, 2017.

4 Responses to “Dow 1,000,000? That’s Warren Buffett’s latest call”

  1. Buffet might be correct. As long as the bubbles are kept in the central banks who increasingly buy private shares, bonds, etc., then the stock market has no place to go but up. Also, as long as new markets keep opening, mainly due to war, the continual push for increased medical shots and other pharmaceuticals, AI programming ventures, internet security (also aka spying), Green Religion expenditures, and cryptocurrencies, the pressure on the markets will be given space to expand. Oh, and the new movement, that may have legs (will see in Catalonia), political independence and federalization will be a cause for new structures and policies, which always means new and more money spaces, too.

  2. I was too busy working to realise this and was pessimistic most of the time
    – if only , if only , if only – I could have been a billionaire – money does not make you happy but I would have loved to have tested this saying.

    • i know some billionaires, believe me you dont want to be them.

      on the other hand, i do think that people who are comfortable are happier than those that are forced to struggle.

      the very rich and the very poor have some things in common – an obsession with money and a lack of life options. the latter might seem counterintuitive for the rich, but consider that at a certain level you are basically required to send your children off to ‘the right’ boarding schools for indoctrination, limiting their life options forever.

      meanwhile the comfortable middle (which has ben shrinking lately) does not have to obsess over money, and has all the options in the world.

      • I didn’t need the money for myself since I had and still have a good lifestyle but would loved to have righted some wrongs in the world with a billion or two . Its the stingy ones who are miserable.

        Plus the last 50 years did seem like an easy time for any class to invest and jump on the tech driven growth more than any other century . There is still bubbles there to burst though – but after WW2 growth has been incredible
        for even a modest investor .

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