Looking Back on Buffett’s Predictions for 2008

Dec 28, 2008: 11:37 AM CST

CNBC.com published a list of Warren Buffett’s “Eight Predictions for 2008” and hinted that “Nine Predictions for 2009” might be coming out soon, but I thought it would be interesting to view Buffett’s predictions and wisdom now that 2008 has finally come to a close.

View the article for all predictions, but I wanted to cull out some of the wisdom quotes for your enjoyment.

Buffett’s first prediction was that “Recessions cannot be avoided forever” and he noted that if unemployment fell, we would plunge into a recession but that we would survive it as always because we have a fundamentally strong economy, much improved from that of the times of the Great Depression.  Further, he was surprised then that we were not already in a recession because the housing market was deteriorating so rapidly.  Ultimately, it did and economists now state that a recession officially began in December, 2007.

Buffett further described opportunities in recessions but noted that “All stocks won’t be cheap.”  Further, “Like Ted Williams waiting for the right pitch, a successful investor waits for the right stock at the right price, and it doesn’t happen every day….  No umpire is going to call you out.  You get in trouble… when you listen to the crowd chanting “Swing, batter, swing!“”

Further sage advice from Buffett:

“You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.”

Buffett compared buying at unreasonably high levels – like in 2000 – was comporable to participants at Cinderella’s ball.  “Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.Interesting thought.

Finally, “What we learn from history is that people don’t learn from history.”

Also, CNBC.com has set up a special webpage entitled “Predictions 2009” which may also give you interesting weekend reading.

Corey Rosenbloom
Afraid to Trade.com

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